EXHIBIT 10.5
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THE NATIONAL COLLEGIATE STUDENT LOAN TRUST 20____-____
TRUST AGREEMENT
Among
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as OWNER TRUSTEE
and
THE NATIONAL COLLEGIATE FUNDING LLC
and THE EDUCATION RESOURCES INSTITUTE, INC.
as OWNERS
Dated as of
__________, 20_____
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TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS.......................................................................................................1
Section 1.01 Capitalized Terms..........................................................................1
ARTICLE II
ORGANIZATION......................................................................................................9
Section 2.01 Name.......................................................................................9
Section 2.02 Office.....................................................................................9
Section 2.03 Purposes and Powers........................................................................9
Section 2.04 Appointment of the Owner Trustee..........................................................10
Section 2.05 Declaration of Trust......................................................................10
Section 2.06 No Liability of Owners for Expenses or Obligations of Trust...............................10
Section 2.07 Situs of Trust............................................................................10
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTEREST......................................................................11
Section 3.01 Issuance of Trust Certificate.............................................................11
Section 3.02 Registration and Transfer of Certificates.................................................11
Section 3.03 Lost, Stolen, Mutilated or Destroyed Certificates.........................................12
Section 3.04 Limitation on Transfer of Ownership Rights................................................12
Section 3.05 Assignment of Right to Distributions......................................................13
ARTICLE IV
CONCERNING THE OWNERS............................................................................................13
Section 4.01 Action by Owners with Respect to Certain Matters..........................................13
Section 4.02 Action Upon Instructions..................................................................14
Section 4.03 Super-majority Control....................................................................15
Section 4.04 Representations and Warranties of the Depositor...........................................15
Section 4.05 Power of Attorney.........................................................................15
ARTICLE V
INVESTMENT AND APPLICATION OF TRUST FUNDS........................................................................16
Section 5.01 Investment of Trust Funds.................................................................16
Section 5.02 Application of Funds......................................................................16
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ARTICLE VI
CAPITAL..........................................................................................................16
Section 6.01 Tax Characterization......................................................................16
Section 6.02 Initial Capital Contributions of Owners...................................................17
Section 6.03 Capital Accounts..........................................................................17
Section 6.04 Interest..................................................................................17
Section 6.05 No Additional Capital Contributions.......................................................18
Section 6.06 Investment of Capital Contributions.......................................................18
Section 6.07 Repayment and Return of Capital Contributions.............................................18
ARTICLE VII
ALLOCATION OF PROFIT AND LOSS; DISTRIBUTIONS.....................................................................18
Section 7.01 Profit....................................................................................18
Section 7.02 Loss......................................................................................18
Section 7.03 Special Allocations.......................................................................19
Section 7.04 Curative Allocations......................................................................20
Section 7.05 Other Allocation Rules....................................................................21
Section 7.06 Distribution of Net Cash Flow.............................................................21
Section 7.07 Distribution Date Statement...............................................................21
Section 7.08 Allocation of Tax Liability...............................................................21
Section 7.09 Method of Payment.........................................................................22
Section 7.10 No Segregation of Funds; No Interest......................................................22
Section 7.11 Interpretation and Application of Provisions by the Administrator.........................22
ARTICLE VIII
AUTHORITY AND DUTIES OF THE OWNER TRUSTEE........................................................................22
Section 8.01 General Authority.........................................................................22
Section 8.02 Specific Authority........................................................................22
Section 8.03 General Duties............................................................................23
Section 8.04 Accounting and Reports to the Owners, the Internal Revenue Service and Others.............23
Section 8.05 Signature of Returns......................................................................23
Section 8.06 Right to Receive and Rely Upon Instructions...............................................23
Section 8.07 No Duties Except as Specified in this Agreement or in Instructions........................24
Section 8.08 No Action Except Under Specified Documents or Instructions................................24
Section 8.09 Restriction...............................................................................24
ARTICLE IX
CONCERNING THE OWNER TRUSTEE.....................................................................................24
Section 9.01 Acceptance of Trusts and Duties...........................................................24
Section 9.02 Furnishing of Documents...................................................................25
Section 9.03 Reliance; Advice of Counsel...............................................................25
Section 9.04 Not Acting in Individual Capacity.........................................................26
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Section 9.05 Representations and Warranties of Owner Trustee...........................................26
ARTICLE X
COMPENSATION OF OWNER TRUSTEE....................................................................................26
Section 10.01 Owner Trustee's Fees and Expenses........................................................26
Section 10.02 Indemnification..........................................................................26
Section 10.03 Lien on Trust Property...................................................................27
Section 10.04 Payments to the Owner Trustee............................................................27
ARTICLE XI
TERMINATION OF TRUST.............................................................................................27
Section 11.01 Termination of Trust.....................................................................27
Section 11.02 Distribution of Assets...................................................................27
Section 11.03 No Termination by Depositor or Owners....................................................28
ARTICLE XII
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES...........................................................28
Section 12.01 Resignation of Owner Trustee; Appointment of Successor...................................28
Section 12.02 Appointment of Additional Owner Trustees.................................................29
ARTICLE XIII
TAX MATTERS PARTNER..............................................................................................30
Section 13.01 Tax Matters Partner......................................................................30
Section 13.02 Notice of Tax Audit......................................................................30
Section 13.03 Authority to Extend Period for Assessing Tax.............................................30
Section 13.04 Choice of Forum for Filing Petition for Readjustment.....................................30
Section 13.05 Authority to Bind Owners by Settlement Agreement.........................................30
Section 13.06 Notices Sent to the Internal Revenue Service.............................................30
Section 13.07 Indemnification of Tax Matters Partner...................................................30
Section 13.08 Approval of Tax Matters Partner's Decisions..............................................31
Section 13.09 Participation by Owners in Internal Revenue Service Administrative Proceedings...........31
ARTICLE XIV
MISCELLANEOUS....................................................................................................31
Section 14.01 Supplements and Amendments...............................................................31
Section 14.02 No Legal Title to Trust Property in Owner................................................31
Section 14.03 Pledge of Collateral by Owner Trustee is Binding.........................................32
Section 14.04 Limitations on Rights of Others..........................................................32
Section 14.05 Notices..................................................................................32
Section 14.06 Severability.............................................................................32
Section 14.07 Separate Counterparts....................................................................32
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Section 14.08 Successors and Assigns...................................................................32
Section 14.09 Headings.................................................................................32
Section 14.10 Governing Law............................................................................33
Section 14.11 General Interpretive Principles..........................................................33
SCHEDULE A CAPITAL CONTRIBUTIONS, INITIAL SHARING RATIOS AND PERCENTAGE INTERESTS
SCHEDULE B LOAN ORIGINATORS
SCHEDULE C LOAN PURCHASE AGREEMENTS
SCHEDULE D GUARANTY AGREEMENTS
EXHIBIT 1 FORM OF TRUST CERTIFICATE
EXHIBIT 2 FORM OF ACCESSION AGREEMENT
EXHIBIT 3 FEE SCHEDULE
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TRUST AGREEMENT, dated as of __________, 20____, among The National
Collegiate Funding LLC, a Delaware limited liability company (the "Depositor"),
The Education Resources Institute, Inc., a private non-profit corporation
organized under Chapter 180 of the Massachusetts General Laws, and
_______________________________ (the "Owner Trustee").
WHEREAS, the parties hereto intend to amend and restate that certain
Interim Trust Agreement, dated as of __________, 20_____ (the "Interim Trust
Agreement"), by and between the Depositor and the Owner Trustee, on the terms
and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and of the mutual
agreements herein contained and of other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
amend and restate the Interim Trust Agreement in its entirety and further agree
as follows:
ARTICLE I
DEFINITIONS
Section 1.01 CAPITALIZED TERMS. For all purposes of this Agreement, the
following terms shall have the meanings set forth below:
"Administration Agreement" means the Administration Agreement, dated as
of __________, 20_____, among the Trust, the Indenture Trustee, the Owner
Trustee and First Marblehead Data Services, Inc., as Administrator, as it may be
amended from time to time.
"Administrator" means First Marblehead Data Services, Inc., a
Massachusetts corporation, as Administrator under the Administration Agreement,
or any successor Administrator as appointed pursuant to the terms of the
Administration Agreement.
"Affiliate" means with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement" means this Trust Agreement, as it may be amended or
restated from time to time.
"Assignment of Servicing Agreements" means the Servicer Consent Letter,
dated as of __________, 20____, among the Trust, The First Marblehead
Corporation and the Pennsylvania Higher Education Assistance Agency, and the
Servicer Consent Letter, dated as of __________, 20____, among the Trust, The
First Marblehead Corporation and [SERVICER], each relating to the assignment of
the Servicing Agreements to the Trust, and any Servicer Consent Letter among the
Trust, The First Marblehead Corporation and [SERVICER].
"Auction Agency Agreement" means the Auction Agency Agreement, dated as
of __________, 20____, among the Indenture Trustee, the Trust, [AUCTION AGENT]
and the Administrator.
"Authorized Officer" means any officer of the Owner Trustee who is
authorized to act for the Owner Trustee in matters relating to, and binding
upon, the Trust and whose name appears on a list of such authorized officers
furnished by the Owner Trustee as such list may be amended or supplemented from
time to time.
"Back-up Agreement" means the Back-up Note Administration Agreement,
dated as of __________, 20____, among the Trust, the Owner Trustee, First
Marblehead Data Services, Inc. and the Indenture Trustee.
"Bankruptcy Action" has the meaning set forth in Section
4.01(b)(iv)(G).
"Beneficial Interest" as to any Owner, means all or any part of the
interest of that Owner in the Trust, including without limitation its (a) right
to a distributive share of the Profit and Loss of the Trust, (b) right to a
distributive share of the assets of the Trust, and (c) right to direct or
consent to actions of the Owner Trustee and otherwise participate in the
management of and control the affairs of the Trust.
"Broker-Dealer Agreements" means each of the Broker-Dealer Agreements,
dated as of __________, 20_____, among the Trust, the Administrator, [AUCTION
AGENT] and each of [UNDERWRITERS], respectively.
"Business Day" means any day that is not a Saturday, Sunday or any
other day on which commercial banking institutions in Delaware are authorized or
obligated by law or executive order to be closed.
"Capital Account" means the Capital Account maintained for each Owner
pursuant to Article VI of this Agreement.
"Capital Contribution" means the amount of money contributed or deemed
to have been contributed by an Owner to the capital of the Trust, which shall be
as set forth on Schedule A to this Agreement.
"Certificate of Trust" means the Certificate of Trust filed with the
Secretary of State by the Owner Trustee on behalf of the Trust.
"Class A Notes" means the Class A student loan asset backed notes
issued by the Trust pursuant to the Indenture.
"Class B Notes" means the Class B student loan asset backed notes
issued by the Trust pursuant to the Indenture.
"Custodial Agreements" means (a) each of the Custodial Agreements,
dated as of __________, 20_____, among the Trust, the Indenture Trustee and the
Pennsylvania Higher
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Education Assistance Agency and [SERVICER], respectively, and (b) any Custodial
Agreement entered into among the Trust, the Indenture Trustee and [SERVICER].
"Deposit and Security Agreement" means the Deposit and Security
Agreement, dated as of __________, 20______, entered into among the
Administrator, XXXX and the Trust.
"Depositor" means The National Collegiate Funding LLC, a Delaware
limited liability company.
"Distribution Date" means the first Business Day following a day on
which the Owner Trustee obtains receipt of funds or, if instructed by the
Owners, such other Business Day as they shall specify in writing.
"Distribution Date Statement" means the statement described as such in
Section 7.07.
"Distributions" means any money or other property distributed to an
Owner with respect to its Beneficial Interest.
"Eligible Investments" means one or more of the following (it being
acknowledged by the parties hereto that Eligible Investments will have the
meaning set forth in the Indenture until such time as the Notes are no longer
outstanding):
(a) Obligations of or guaranteed as to principal and interest by
the United States or any agency or instrumentality thereof when such obligations
are backed by the full faith and credit of the United States;
(b) Repurchase agreements on obligations specified in clause (a)
maturing not more than one month from the date of acquisition thereof, provided
that the unsecured obligations of the party agreeing to repurchase such
obligations are at the time rated by each of the Rating Agencies in its highest
short-term rating available;
(c) Federal funds, certificates of deposit, demand deposits, time
deposits and bankers' acceptances (which shall each have an original maturity of
not more than 90 days and, in the case of bankers' acceptances, shall in no
event have an original maturity of more than 365 days or a remaining maturity of
more than 30 days) denominated in United States dollars of any U.S. depository
institution or trust company incorporated under the laws of the United States or
any state thereof or of any domestic branch of a foreign depository institution
or trust company; provided that the debt obligations of such depository
institution or trust company at the date of acquisition thereof have been rated
by each of the Rating Agencies in its highest short-term rating available; and,
provided further that, if the original maturity of such short-term obligations
of a domestic branch of a foreign depository institution or trust company shall
exceed 30 days, the short-term rating of such institution shall have a credit
rating in one of the two highest applicable categories from each of the Rating
Agencies;
(d) Commercial paper (having original maturities of not more than
365 days) of any corporation incorporated under the laws of the United States or
any state thereof which on the date of acquisition has been rated by each of the
Rating Agencies in its highest short-term rating
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available; provided that such commercial paper shall have a remaining maturity
of not more than 30 days;
(e) A money market fund rated by each of the Rating Agencies in
its highest rating available which may be a money market fund of the Owner
Trustee; and
(f) Other obligations or securities that are acceptable to each of the
Rating Agencies as an Eligible Investment hereunder;
PROVIDED, HOWEVER, that no instrument shall be an Eligible Investment if it
provides for either (i) the right to receive only interest payments with respect
to the underlying debt instrument or (ii) the right to receive both principal
and interest payments derived from the obligations underlying such instrument
and the principal and interest payments with respect to such instrument provide
a yield to maturity greater than 120% of the yield to maturity at par of such
underlying obligations; and PROVIDED FURTHER that so long as the Notes are
outstanding, no instrument that is not a permitted investment under the
Indenture shall be an Eligible Investment for purposes of this Agreement.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Fiscal Year" means the twelve month period ending on June 30 each year
or such portion thereof as the Trust may be in existence.
"Indemnification Agreements" means each of the Indemnification
Agreements, dated as of __________, 20_____, between The First Marblehead
Corporation and _____________ and _____________, respectively.
"Indenture" means the Indenture between the Trust and U.S. Bank
National Association, as Indenture Trustee, dated as of __________, 20_______,
as amended or supplemented from time to time pursuant to which the Notes are to
be issued.
"Indenture Trustee" means the bank or trust company acting as Indenture
Trustee under the Indenture.
"Interested Noteholders" shall have the meaning set forth in the
Indenture.
"Issuer Order" means the Issuer Order to the Indenture Trustee from the
Trust dated __________, 20_____.
"Issuer Order to Authenticate" means the Issuer Order to Authenticate
to the Indenture Trustee from the Trust dated __________, 20_____.
"Loan Originators" means each of the originators of the Student Loans,
as set forth on Schedule B attached hereto, as amended or supplemented from time
to time.
"Loan Purchase Agreements" means each of the loan purchase agreements
entered into between each of the Loan Originators and The First Marblehead
Corporation and the Trust, as set forth on Schedule C attached hereto, as
amended or supplemented from time to time.
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"Market Agent Agreements" means each of the Market Agent Agreements,
dated as of __________, 20___, among the Trust, the Administrator and each of
[UNDERWRITERS], respectively.
"Net Cash Flow" means with respect to any fiscal period of the Trust,
all revenues of the Trust decreased by (a) cash expenditures for operating
expenses (including interest on indebtedness of the Trust but not including
expense items which do not require current cash outlay), (b) reserves for
contingencies and working capital established in such amounts as the Owner
Trustee, with the consent of the Owners, may determine, (c) repayments of
principal on any Trust indebtedness and (d) taxes.
"Note Purchase Agreement" means the Note Purchase Agreement, dated as
of __________, 20_____, among the Trust, [UNDERWRITERS]
"1933 Act" has the meaning set forth in Section 3.02(a).
"Notes" mean the collateralized student loan asset backed notes to be
issued by the Trust pursuant to the Indenture.
"Noteholder" means any holder of the Notes.
"Owner" means each of the Depositor, XXXX and any other Person who
becomes an owner of a Beneficial Interest.
"Owner Trustee" means _____________, a national banking association
with its principal place of business in the State of Delaware, not in its
individual capacity but solely as trustee.
"Percentage Interest" means the initial undivided beneficial interest
in the Trust Property of an Owner expressed as a percentage of the total initial
undivided beneficial interests in the Trust Property. References to Percentage
Interests herein shall be solely for the purpose of certificating Owners'
interests hereunder and for any other purpose specified in this Agreement.
"Periodic Filings" means any filings or submissions that the Trust is
required to make with any state or Federal regulatory agency or under the Code.
"Person" means any individual, corporation, partnership, joint venture,
limited liability company, association, trust (including any beneficiary
thereof), estate, custodian, nominee, unincorporated organization or government
or any agency or political subdivision thereof.
"Plan" has the meaning set forth in Section 3.04(d).
"Plan Assets" has the meaning set forth in Section 3.04(d).
"Rating Agencies" means Xxxxx'x Investors Service, Inc., Fitch, Inc.
and Standard & Poor's Rating Services, a division of The XxXxxx-Xxxx Companies,
Inc.
"Secretary of State" means the office of the Secretary of State of the
State of Delaware.
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"Servicers" mean the Pennsylvania Higher Education Assistance Agency,
[SERVICERS].
"Servicing Agreements" means the Alternative Servicing Agreement, dated
October 16, 2001, as amended, between the Trust and The First Marblehead
Corporation, [SERVICING AGREEMENTS].
"Sharing Ratio" means, with respect to any Owner, the ratio (expressed
as a percentage) specified on Schedule A attached hereto.
"Statutory Trust Statute" means the Delaware Statutory Trust Act, 12
Del. Codess.3801 et seq.
"Structuring Advisor" means The First Marblehead Corporation.
"Structuring Advisory Agreement" means the Structuring Advisory
Agreements between the Structuring Advisor and the Trust, dated as __________,
20____.
"Student Loans" means the education loans to or for the benefit of
students originated under one of the Student Loan Programs.
"Student Loan Notes" means the promissory notes to be sold to the Trust
by the Loan Originators pursuant to the Loan Purchase Agreements representing
education loans to or for the benefit of students originated under the Student
Loan Programs.
"Student Loan Programs" means each of the programs for the origination
of the Student Loans by each of the Loan Originators pursuant to the Loan
Purchase Agreements.
"Super-majority Owners" shall have the meaning set forth in Section
4.03.
"XXXX" means The Education Resources Institute, Inc., a private
non-profit corporation organized under Chapter 180 of the Massachusetts General
Laws.
"XXXX Deposit Account" means the special deposit account established by
XXXX pursuant to the Deposit and Security Agreement.
"XXXX Guaranty Agreements" means each of the Guaranty Agreements
entered into between each of the Loan Originators and XXXX as set forth on
Schedule D attached hereto, as amended or supplemented from time to time.
"XXXX Guaranteed Loans" means Student Loans originated under the
Student Loan Programs owned by the Trust and guaranteed by XXXX pursuant to the
Guaranty Agreements.
"Transfer" means the sale, transfer or other assignment of all of an
Owner's right, title and interest in all or a portion of such Owner's Beneficial
Interest.
"Trust" means the trust established by this Agreement.
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"Trust Certificate" means a certificate evidencing the Beneficial
Interest of an Owner in substantially the form attached hereto as Exhibit 1.
"Trust Property" means all right, title and interest of the Trust or
the Owner Trustee on behalf of the Trust in and to any property contributed to
the Trust by the Owners or otherwise acquired by the Trust, including without
limitation all distributions, payments or proceeds thereon.
"Trust Related Agreements" means any instruments or agreements signed
by the Owner Trustee on behalf of the Trust, including without limitation, the
Indenture, the Loan Purchase Agreements, the Administration Agreement, the
Deposit and Security Agreement, the Structuring Advisory Agreement, the
Assignment of Servicing Agreements, the Auction Agency Agreement, the Market
Agent Agreements, the Back-up Agreement, the Note Purchase Agreement, the
Custodial Agreements, the Notes, the Indemnification Agreements, the Issuer
Order, the Issuer Order to Authenticate and the Broker-Dealer Agreements.
TAX TERMS:
"Adjusted Capital Account Deficit" means, with respect to any Partner,
the deficit balance, if any, in such Partner's Capital Account as of the end of
the relevant Fiscal Year, after giving effect to the following adjustments:
(a) Credit to such Capital Account the minimum gain chargeback
that such Partner is deemed to be obligated to restore pursuant to the
penultimate sentences of sections 1.704-2(g)(1) and 1.704-2(i)(5) of the
Regulations and the amount of such Partner's share of Partner Nonrecourse Debt
Minimum Gain; and
(b) Debit to such Capital Account the items described in sections
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) and 1.704-1(b)(2)(ii)(d)(6) of
the Regulations.
The foregoing definition of Adjusted Capital Account Deficit is
intended to comply with the provisions of section 1.704-1(b)(2)(ii)(d) of the
Regulations and shall be interpreted consistently therewith.
"Code" means the Internal Revenue Code of 1986, as amended.
"Nonrecourse Deductions" has the meaning set forth in section
1.704-2(b)(1) of the Regulations.
"Nonrecourse Liability" has the meaning set forth in section
1.704-2(b)(3) of the Regulations.
"Partner Nonrecourse Debt" has the meaning set forth in section
1.704-2(b)(4) of the Regulations.
"Partner Nonrecourse Debt Minimum Gain" means an amount, with respect
to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain that
would result if such
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Partner Nonrecourse Debt were treated as a Nonrecourse Liability, determined in
accordance with section 1.704-2(i)(3) of the Regulations.
"Partner Nonrecourse Deductions" has the meaning set forth in sections
1.704-2(i)(1) and 1.704-2(i)(2) of the Regulations.
"Partners" means the Owners.
"Partnership" means the Trust.
"Partnership Minimum Gain" has the meaning set forth in sections
1.704-2(b)(2) and 1.704-2(d) of the Regulations.
"Profit and Loss" means, for each Fiscal Year, an amount equal to the
Partnership's taxable income or loss for such Fiscal Year, determined in
accordance with section 703(a) of the Code (for this purpose, all items of
income, gain, loss, or deduction required to be stated separately pursuant to
section 703(a)(1) of the Code shall be included in taxable income or loss), with
the following adjustments:
(a) Any income of the Partnership that is exempt from federal
income tax and not otherwise taken into account in computing Profit or Loss
pursuant to this definition shall be added to such taxable income or loss;
(b) Any expenditures of the Partnership described in section
705(a)(2)(B) of the Code or treated as expenditures under section 705(a)(2)(B)
of the Code pursuant to section 1.704-1(b)(2)(iv)(i) of the Regulations (other
than expenses in respect of which an election is properly made under section 709
of the Code), and not otherwise taken into account in computing Profit or Loss
pursuant to this definition, shall be subtracted from such taxable income or
loss;
(c) Notwithstanding any other provisions of this definition, any
items which are specially allocated pursuant to Section 7.03 or 7.04 shall not
be taken into account in computing Profit or Loss.
The amounts of the items of Partnership income, gain, loss, or
deduction available to be specially allocated pursuant to Sections 7.03 and 7.04
shall be determined by applying rules analogous to those set forth in clauses
(a) and (b) above.
"Regulations" means the federal income tax regulations promulgated by
the United States Treasury Department under the Code as such Regulations may be
amended from time to time. All references herein to a specific section of the
regulations shall be deemed also to refer to any corresponding provision of
succeeding Regulations.
"Regulatory Allocations" has the meaning set forth in Section 7.04.
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ARTICLE II
ORGANIZATION
Section 2.01 NAME. The Trust continued hereby shall be known as The
National Collegiate Student Loan Trust 20____-____, in which name the Owner
Trustee may take any action as provided herein.
Section 2.02 OFFICE. The principal place of business and principal
office of the Trust shall be in care of the Owner Trustee, at the address set
forth in Section 14.05. The Trust shall also have an office at 000 Xxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000.
Section 2.03 PURPOSES AND POWERS. (a) The purpose of the Trust is to
engage in the following activities and only those activities:
(i) To acquire a pool of Student Loans, to execute the
Indenture and to issue the Notes;
(ii) To enter into the Trust Related Agreements and to provide
for the administration of the Trust and the servicing of the Student
Loans.
(iii) To engage in those activities and to enter into such
agreements that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and
(iv) To engage in such other activities as may be required in
connection with conservation of the Trust Property and distributions to
Owners. Until the Indenture is discharged, the Trust shall not engage
in any business or activities other than in connection with, or
relating to, the foregoing and other than as required or authorized by
the terms of this Agreement and the Indenture, except as are incidental
to and necessary to accomplish such activities, unless the Interested
Noteholders consent to the Trust engaging in other activities.
(b) Until the Indenture is discharged, the operations of the Trust
shall be conducted in accordance with the following standards:
(i) The Trust will act solely in its own name and the Owner
Trustee or other agents selected in accordance with this Agreement will
act on behalf of the Trust subject to direction by the Owners as
provided herein, but such action shall not be in violation of the terms
of this Agreement;
(ii) The Trust's funds and assets shall at all times be
maintained separately from those of the Owners and any of their
respective Affiliates;
(iii) The Trust shall maintain complete and correct books,
minutes of the meetings and proceedings of the Owners, and records of
accounts;
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(iv) The Trust shall conduct its business at the office of the
Owner Trustee and will use stationary and other business forms of the
Trust under its own name and not that of the Owners or any of their
respective Affiliates, and will avoid the appearance (A) of conducting
business on behalf of any Owner or any Affiliate of an Owner or (B)
that the assets of the Trust are available to pay the creditors of the
Owner Trustee or any Owner;
(v) The Trust's operating expenses shall be paid out of its
own funds;
(vi) The Trust shall not incur, guarantee or assume any debt
(other than the Notes) nor hold itself out as being liable for the
debts of any entity, including any Owner or any Affiliates of any
Owner;
(vii) For so long as any of the Notes are outstanding, the
Trust shall not (A) merge or consolidate with or into any other entity,
(B) convey or transfer all or substantially all of its assets to any
other entity (other than to the Indenture Trustee pursuant to the
Indenture), or (C) dissolve, liquidate or terminate in whole or in
part; and
(viii) For so long as any of the Notes are outstanding, the
Trust shall not own or acquire any financial asset that requires the
Trust, the Owners or the Administrator to make any decisions regarding
such asset other than the servicing of the asset.
Section 2.04 APPOINTMENT OF THE OWNER TRUSTEE. The Depositor hereby
appoints the Owner Trustee as trustee of the Trust, to have all the rights,
powers and duties set forth herein and in the Statutory Trust Statute. The Owner
Trustee acknowledges receipt in trust from the Depositor, of the sum of one
dollar ($1), constituting the initial Trust Property.
Section 2.05 DECLARATION OF TRUST. The Owner Trustee hereby declares
that it will hold the Trust Property in trust upon and subject to the conditions
set forth herein for the use and benefit of the Owners, subject to the
obligations of the Owner Trustee under the Trust Related Agreements. It is the
intention of the parties hereto that the Trust constitute a statutory trust
under the Statutory Trust Statute and that this Agreement constitute the
governing instrument of the Trust.
Section 2.06 NO LIABILITY OF OWNERS FOR EXPENSES OR OBLIGATIONS OF
TRUST. No Owner shall be liable for any liability, expense or other obligation
of the Trust.
Section 2.07 SITUS OF TRUST. The Trust will be located and administered
in the State of Delaware. The Trust shall not have any employees in any state
other than in the State of Delaware and payments will be received by the Owner
Trustee on behalf of the Trust only in the State of Delaware and payments will
be made by the Owner Trustee on behalf of the Trust only from the State of
Delaware.
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ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTEREST
Section 3.01 ISSUANCE OF TRUST CERTIFICATE.
(a) As of the date hereof, as set forth on Schedule A attached hereto,
the Depositor has been issued a Trust Certificate evidencing 75% of the
Beneficial Interest in the Trust and XXXX has been issued a Trust Certificate
evidencing 25% of the Beneficial Interest in the Trust.
(b) Each Trust Certificate shall be executed by manual signature on
behalf of the Owner Trustee by one of its Authorized Officers. Trust
Certificates bearing the manual signature of an individual who was, at the time
when such signature was affixed, authorized to sign on behalf of the Owner
Trustee shall bind the Trust, notwithstanding that such individual has ceased to
be so authorized prior to the delivery of such Trust Certificate or does not
hold such office at the date of such Trust Certificate. Each Trust Certificate
shall be dated the date of its issuance.
Section 3.02 REGISTRATION AND TRANSFER OF CERTIFICATES.
(a) The Owner Trustee shall maintain at its office referred to in
Section 2.02, or at the office of any agent appointed by it and approved in
writing by the Owners at the time of such appointment, a register for the
registration and Transfer of Trust Certificates. No Transfer of a Beneficial
Interest shall be made unless such Transfer is made pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the "1933
Act"), and state securities laws, or is exempt from the registration
requirements under the 1933 Act and state securities laws.
(b) The registered Owner of any Trust Certificate may Transfer all or
any portion of the Beneficial Interest evidenced by such Trust Certificate upon
surrender thereof to the Owner Trustee accompanied by the documents required by
Section 3.04. Such Transfer may be made by the registered Owner in person or by
its attorney duly authorized in writing upon surrender of the Trust Certificate
to the Owner Trustee accompanied by a written instrument of Transfer and with
such signature guarantees and evidence of authority of the Persons signing the
instrument of Transfer as the Owner Trustee may reasonably require. Promptly
upon the receipt of such documents and receipt by the Owner Trustee of the
transferor's Trust Certificate, the Owner Trustee shall (i) record the name of
such transferee as an Owner and its Percentage Interest in the Trust Certificate
register and (ii) issue, execute and deliver to such Owner a Trust Certificate
evidencing such Percentage Interest. In the event a transferor Transfers only a
portion of its Beneficial Interest, the Owner Trustee shall register and issue
to such transferor a new Trust Certificate evidencing such transferor's new
Percentage Interest. Subsequent to a Transfer and upon the issuance of the new
Trust Certificate or Trust Certificates, the Owner Trustee shall cancel and
destroy the Trust Certificate surrendered to it in connection with such
Transfer. The Owner Trustee may treat the Person in whose name any Trust
Certificate is registered as the sole Owner of the Beneficial Interest in the
Trust evidenced by such Trust Certificate.
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(c) As a condition precedent to any registration of Transfer, the Owner
Trustee may require the payment of a sum sufficient to cover the payment of any
tax or taxes or other governmental charges required to be paid in connection
with such Transfer and any other reasonable expenses connected therewith.
Section 3.03 LOST, STOLEN, MUTILATED OR DESTROYED CERTIFICATES. If (i)
any mutilated Trust Certificate is surrendered to the Owner Trustee, or (ii) the
Owner Trustee receives evidence to its satisfaction that any Trust Certificate
has been destroyed, lost or stolen, and upon proof of ownership satisfactory to
the Owner Trustee together with such security or indemnity as may be requested
by the Owner Trustee to save it harmless, the Owner Trustee shall execute and
deliver a new Trust Certificate for the same Percentage Interest as the Trust
Certificate so mutilated, destroyed, lost or stolen, of like tenor and bearing a
different issue number, with such notations, if any, as the Owner Trustee shall
determine. In connection with the issuance of any new Trust Certificate under
this Section 3.03, the Owner Trustee may require the payment by the registered
Owner thereof of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
reasonable fees and expenses of the Owner Trustee) connected therewith. Any
replacement Trust Certificate issued pursuant to this Section 3.03 shall
constitute complete and indefeasible evidence of ownership of a Beneficial
Interest, as if originally issued, whether or not the lost, stolen or destroyed
Trust Certificate shall be found at any time.
Section 3.04 LIMITATION ON TRANSFER OF OWNERSHIP RIGHTS.
(a) No Transfer of all or any part of a Beneficial Interest shall be
made to any Person unless (i) such Person delivers to the Owner Trustee an
accession agreement substantially in the form of Exhibit 2 hereof, (ii) except
for the initial transfer of the Beneficial Interest of the Depositor, the Owner
Trustee shall have received a written opinion of counsel in form and substance
satisfactory to the Owner Trustee stating that such Transfer is exempt from the
1933 Act and any applicable state securities law.
(b) At any time that there is more than one Owner, no Transfer of a
Beneficial Interest shall be valid unless the Owner making such Transfer shall
have received the prior written consent to such Transfer of the Owners holding
at least 80% of both the Percentage Interests and the Sharing Ratios in the
Trust at such time, which consent may not be unreasonably withheld; PROVIDED,
HOWEVER, that in calculating the total Beneficial Interests in the Trust there
shall be excluded the Beneficial Interest owned by the transferor or (unless the
transferor and its Affiliates are the only Owners) any Affiliate thereof.
(c) Except for the initial issuance of the Trust Certificates to the
Depositor, no Transfer shall be valid if, as a result of such Transfer, (i) any
Person would have a Percentage Interest or a Sharing Ratio of 100%, considering
for such purpose all interests owned by any Affiliate of such Person as owned by
such Person, or (ii) such Transfer would result in a termination of the Trust
for Federal income tax purposes.
(d) No Transfer of all or any part of a Beneficial Interest shall be
made to any employee benefit plan or certain other retirement plans and
arrangements, including individual retirement accounts and annuities, Xxxxx
plans and bank collective investment funds and
12
insurance company general or separate accounts in which such plans, accounts or
arrangements are invested, that are subject to Title I of ERISA, or Section 4975
of the Code (each, a "Plan"), any Person acting, directly or indirectly, on
behalf of any such Plan or any Person acquiring the Beneficial Interest with
"plan assets" of a Plan within the meaning of the Department of Labor regulation
promulgated at 29 C.F.R. ss. 2510.3-101 ("Plan Assets") unless the Owner Trustee
is provided with an opinion of counsel which establishes to the satisfaction of
the Owner Trustee that the purchase of the Beneficial Interest is permissible
under applicable law, will not constitute or result in any prohibited
transaction under ERISA or Section 4975 of the Code and will not subject the
Owners, the Owner Trustee or the Trust to any obligation or liability (including
obligations or liabilities under ERISA or Section 4975 of the Code) in addition
to those undertaken in this Agreement, which opinion of counsel shall not be an
expense of the Owners, the Owner Trustee or the Trust.
(e) No Transfer of all or any part of a Beneficial Interest shall be
permitted, and no such transfer shall be effective hereunder, if such transfer
would cause the Trust to be classified as a publicly traded partnership, taxable
as a corporation for federal income tax purposes by causing the Trust to have
more than 100 Owners at any time during the taxable year of the Trust.
Section 3.05 ASSIGNMENT OF RIGHT TO DISTRIBUTIONS. An Owner may assign
all or any part of its right to receive distributions hereunder, but such
assignment (in the absence of a permitted Transfer) shall effect no change in
the ownership of the Trust.
ARTICLE IV
CONCERNING THE OWNERS
Section 4.01 ACTION BY OWNERS WITH RESPECT TO CERTAIN MATTERS.
(a) The Owner Trustee will take such action or refrain from taking such
action under this Agreement or any Trust Related Agreement as it shall be
directed pursuant to an express provision of this Agreement or such Trust
Related Agreement or, with respect to nonministerial matters, as it shall be
directed by all the Owners for so long as any of the Notes are outstanding.
(b) Without limiting the generality of the foregoing, in connection
with the following nonministerial matters, the Owner Trustee will take no
action, and will not have authority to take any such action unless it receives
prior written approval from all the Owners for so long as any of the Notes are
outstanding:
(i) The initiation of any claim or lawsuit by the Trust and
the compromise of any claim or lawsuit brought by or against the Trust,
except for claims or lawsuits initiated in the ordinary course of
business by the Trust or its agents or nominees for the collection of
the Student Loans owned by the Trust;
(ii) The amendment, change or modification of this Agreement
or any Trust Related Agreement;
(iii) The filing of a voluntary petition in bankruptcy for the
Trust, which in no event shall the Owner Trustee be permitted to do or
be instructed to do until at least 367
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days after the payment in full of the Outstanding Notes (as defined in
the Indenture) issued by the Trust; and
(iv) (A) Institute proceedings to have the Trust declared or
adjudicated bankrupt or insolvent, (B) consent to the institution of
bankruptcy or insolvency proceedings against the Trust, (C) file a
petition or consent to a petition seeking reorganization or relief on
behalf of the Trust under any applicable federal or state law relating
to bankruptcy, (D) consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or any similar official)
of the Trust or a substantial portion of the property of the Trust, (E)
make any assignment for the benefit of the Trust's creditors, (F) cause
the Trust to admit in writing its inability to pay its debts generally
as they become due or (G) take any action, or cause the Trust to take
any action, in furtherance of any of the foregoing (any of the above, a
"Bankruptcy Action"). No Owner shall have the power to take, and no
Owner shall take, any Bankruptcy Action with respect to the Trust or
direct the Owner Trustee to take any Bankruptcy Action with respect to
the Trust.
(c) No Owner shall take any action to cause the filing of an
involuntary petition in bankruptcy against the Trust.
Section 4.02 ACTION UPON INSTRUCTIONS.
(a) The Owner Trustee shall take such action or actions as may be
specified in this Agreement or in any instructions delivered in accordance with
this Article IV or Article VIII; PROVIDED, HOWEVER, that the Owner Trustee shall
not be required to take any such action if it shall have reasonably determined,
or shall have been advised by counsel, that such action (i) is contrary to the
terms hereof or of any document contemplated hereby to which the Trust or the
Owner Trustee is a party or is otherwise contrary to law, (ii) is likely to
result in personal liability on the part of the Owner Trustee, unless the Owners
shall have provided to the Owner Trustee indemnification or security reasonably
satisfactory to the Owner Trustee against all costs, expenses and liabilities
arising from the Owner Trustee's taking such action, or (iii) would adversely
affect the status of the Trust as a partnership for Federal income tax purposes.
(b) No Owner shall direct the Owner Trustee to take or refrain from
taking any action contrary to this Agreement or any Trust Related Agreement, nor
shall the Owner Trustee be obligated to follow any such direction, if given.
(c) Notwithstanding anything contained herein or in any Trust Related
Agreement to the contrary, the Owner Trustee shall not be required to take any
action in any jurisdiction other than in the State of Delaware if the taking of
such action will (i) require the consent or approval or authorization or order
for the giving of notice to, or the registration with or taking of any action in
respect of, any state or other governmental authority or agency of any
jurisdiction other than the State of Delaware; (ii) result in any fee, tax or
other governmental charge under the laws of any jurisdiction or any political
subdivision thereof in existence on the date hereof other than the State of
Delaware becoming payable by the Owner Trustee; or (iii) subject the Owner
Trustee to personal jurisdiction in any jurisdiction other than the State of
Delaware for causes of action arising from acts unrelated to the consummation of
the transactions by the Owner Trustee contemplated hereby.
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(d) The Owner Trustee shall not have the power to remove the
Administrator under the Administration Agreement or appoint a successor
Administrator pursuant to the Administration Agreement without written
instruction by the Owners.
Section 4.03 SUPER-MAJORITY CONTROL. Except as otherwise expressly
provided in this Agreement, any action which may be taken or consent or
instructions which may be given by the Owners under this Agreement may be taken
by the Owners holding in the aggregate at least 80% of both the Percentage
Interests and the Sharing Ratios in the Trust at the time of such action (the
"Super-majority Owners"). Any written notice of the Owners delivered pursuant to
this Agreement shall be effective if signed by the Super-majority Owners at the
time of the delivery of such notice.
Section 4.04 REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR. The
Depositor hereby represents and warrants to the Owner Trustee as follows:
(a) Upon the receipt of the Trust Property by the Owner Trustee under
this Agreement, the Owner Trustee on behalf of the Trust will have good title to
the Trust Property free and clear of any lien.
(b) The Trust is not, and will not be upon conveyance of the Trust
Property to the Owner Trustee, an "Investment Company" or under the "control" of
an "Investment Company," as such terms are defined in the Investment Company Act
of 1940, as amended.
(c) Except for the filing of the Certificate of Trust with the
Secretary of State, no consent, approval, authorization or order of, or filing
with, any court or regulatory, supervisory or governmental agency or body is
required under current law in connection with the execution, delivery or
performance by the Depositor of this Agreement or the consummation of the
transactions contemplated hereby; PROVIDED, HOWEVER, that no representation or
warranty is made herein as to compliance with federal securities laws or the
securities or "blue sky" laws of any state.
(d) This Agreement has been duly and validly authorized, executed and
delivered by, and constitutes a valid and binding agreement of, the Depositor,
enforceable in accordance with its terms.
Section 4.05 POWER OF ATTORNEY. (a) GENERAL. Each Owner hereby
irrevocably constitutes and appoints the Administrator, with full power of
substitution, such Owner's true and lawful attorney-in-fact, in such Owner's
name, place and stead, with full power to act jointly and severally, to make,
execute, sign, acknowledge, swear to, verify, deliver, file, record and publish
the following documents:
(i) Any certificate, instrument or document to be filed by the
Owners under the laws of any state, or by any governmental agency in
connection with this Agreement;
(ii) Any certificate, instrument or document which may be
required to effect the continuation or the termination of the Trust,
including any amendments to the Agreement; provided such continuation
or termination is in accordance with the terms of this Agreement; and
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(iii) Any written notice, instruction, instrument or document
under Article XII of this Agreement.
(b) DURATION OF POWER OF ATTORNEY. It is expressly intended by each of
the Owners that the Power of Attorney granted under this Section 4.05 is coupled
with an interest, and it is agreed that such Power of Attorney shall survive (i)
the dissolution, death or incompetency of the Owner and (ii) the assignment by
any Owner of the whole or any portion of such Owner's Beneficial Interest.
ARTICLE V
INVESTMENT AND APPLICATION OF TRUST FUNDS
Section 5.01 INVESTMENT OF TRUST FUNDS. Unless otherwise directed in
writing by the Owners, income with respect to and proceeds of the Trust Property
which are received by the Owner Trustee more than one day prior to a
Distribution Date shall be invested and reinvested by the Owner Trustee in
Eligible Investments. Interest earned from such investment and reinvestment
shall be credited to the Trust Property.
Section 5.02 APPLICATION OF FUNDS. Income with respect to and proceeds
of Trust Property held by the Owner Trustee on a Distribution Date shall be
remitted directly to the Indenture Trustee for application in accordance with
the Indenture for so long as any of the Notes is outstanding, and thereafter
shall be applied by the Owner Trustee on such Distribution Date in the following
order;
(i) FIRST to pay any amounts due to the Owner Trustee under
this Agreement;
(ii) SECOND, to pay any amounts due to the Administrator under
the Administration Agreement and to the Structuring Advisor under the
Structuring Advisory Agreement;
(iii) THIRD, to pay any amounts then due to any Person under
the Trust Related Agreements;
(iv) FOURTH, to pay any other expenses of the Trust; and
(v) FIFTH, to the Owners in accordance with Section 7.06.
All payments to be made under this Agreement by the Owner Trustee shall be made
only from the income and proceeds of the Trust Property and only to the extent
that the Owner Trustee has received such income or proceeds.
ARTICLE VI
CAPITAL
Section 6.01 TAX CHARACTERIZATION. It is intended that the Trust be
characterized and treated as a partnership for federal income tax purposes. All
references to a "Partner," the
16
"Partners" and to the "Partnership" in this Agreement and in the provisions of
the Code and Regulations cited in this Agreement shall be deemed to refer to an
Owner, the Owners and the Trust, respectively. The Tax Matters Partner of the
Trust shall be as set forth in Article XIII.
Section 6.02 INITIAL CAPITAL CONTRIBUTIONS OF OWNERS. The Depositor
shall make an initial Capital Contribution in the amount of one dollar ($1) upon
execution of this Agreement. Upon their accession to this Agreement as Owners
and the issuance of Trust Certificates to them in accordance with Section
3.01(c), the Owners will be deemed to have made initial Capital Contributions in
the amounts set forth on Schedule A attached hereto.
Section 6.03 CAPITAL ACCOUNTS. A capital account shall be maintained
for each Owner throughout the term of the Trust in accordance with the rules of
section 1.704-1(b)(2)(iv) of the Regulations as in effect from time to time,
and, to the extent not inconsistent therewith, to which the following provisions
apply:
(a) To each Owner's Capital Account there shall be credited (i) the
amount of money contributed by such Owner to the Trust (including each Owner's
share of any liabilities of the Trust assumed by such Owner as provided in
section 1.704-1(b)(2)(iv)(c) of the Regulations, (ii) the fair market value of
any property contributed to the Trust by such Owner (net of liabilities secured
by such contributed property that the Trust is considered to assume or take
subject to under section 752 of the Code), and (iii) such Owner's share of
Profit and items of income and gain that are specially allocated pursuant to
Sections 7.03 and 7.04 (other than any income or gain allocated to such Owner
pursuant to Section 7.03(f) in accordance with section 704(c) of the Code). The
initial Capital Contributions of each Owner are set forth on Schedule A attached
hereto.
(b) To each Owner's Capital Account there shall be debited (i) the
amount of money distributed to such Owner by the Trust (including any
liabilities of such Owner assumed by the Trust as provided in section
1.704-1(b)(2)(iv)(c) of the Regulations) other than amounts that are in
repayment of debt obligations of the Trust to such Owner, (ii) the fair market
value of property distributed to such Owner (net of liabilities secured by such
distributed property that such Owner is considered to assume or take subject
to), and (iii) such Owner's share of Loss and items of loss or deduction that
are specially allocated pursuant to Sections 7.03 and 7.04 (other than any
deduction or loss allocated to such Owner pursuant to Section 7.03(f) in
accordance with section 704(c) of the Code).
(c) The Capital Account of a transferee Owner shall include the
appropriate portion of the Capital Account of the Owner from whom the transferee
Owner's interest was obtained.
(d) In determining the amount of any liability there shall be taken
into account section 752(c) of the Code and any other applicable provisions of
the Code and Regulations.
The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with section
1.704-1(b) of the Regulations, and shall be interpreted and applied in a manner
consistent with such Regulations.
Section 6.04 INTEREST. No Owner shall be entitled to interest on its
Capital Contribution or on any Profit retained by the Trust.
17
Section 6.05 NO ADDITIONAL CAPITAL CONTRIBUTIONS. No Owner shall make
an additional Capital Contribution to the Trust, or receive a distribution from
the Trust, of property unless this Agreement shall have first been amended to
the extent necessary to comply with the requirements of sections 704(b) and (c)
of the Code regarding the distributive shares of, and the allocation of income,
gain, loss, deduction and credit among, partners of a partnership.
Section 6.06 INVESTMENT OF CAPITAL CONTRIBUTIONS. The cash Capital
Contributions of the Owners shall be invested by the Owner Trustee in accordance
with Section 5.01.
Section 6.07 REPAYMENT AND RETURN OF CAPITAL CONTRIBUTIONS. The Owner
Trustee shall have no personal liability for the repayment of any Capital
Contributions of the Owners.
ARTICLE VII
ALLOCATION OF PROFIT AND LOSS; DISTRIBUTIONS
Section 7.01 PROFIT. After giving effect to special allocations set
forth in Section 7.03 and Section 7.04, Profit for any Fiscal Year shall be
allocated to the Owners in proportion to their respective Sharing Ratios.
Section 7.02 LOSS. After giving effect to the special allocations set
forth in Sections 7.03 and 7.04, Loss for any Fiscal Year shall be allocated as
follows:
(a) SPECIAL ALLOCATION OF LOSS ATTRIBUTABLE TO NOTE DEFAULTS ON XXXX
GUARANTEED LOANS. To the extent of any positive balance in TERI's Capital
Account as an Owner, XXXX shall be specially allocated all Losses for such
Fiscal Year resulting from defaults, as determined pursuant to the XXXX Guaranty
Agreements, on the XXXX Guaranteed Loans owned by the Trust to the extent that
the Trust is not reimbursed such Losses by XXXX as a guaranty payment pursuant
to the XXXX Guaranty Agreements.
(b) OTHER LOSS. All Loss not allocated pursuant to Section 7.02(a)
shall be allocated to the Owners in proportion to their Sharing Ratios.
(c) EFFECT OF ADJUSTED CAPITAL ACCOUNT DEFICIT. The Loss allocated
pursuant to Section 7.02(a) and (b) shall not exceed the maximum amount of Loss
that can be so allocated without causing any Owner to have an Adjusted Capital
Account Deficit at the end of any Fiscal Year. In the event some but not all of
the Owners would have Adjusted Capital Account Deficits as a consequence of an
allocation of Loss pursuant to Section 7.02(a) and (b), the limitation set forth
in this Section 7.02(c) shall be applied on an Owner by Owner basis so as to
allocate the maximum permissible Loss to each Owner under section
1.704-1(b)(2)(ii)(d) of the Regulations.
(d) REMAINING LOSS. In the event that there is any remaining Loss in
excess of the limitation set forth in Section 7.02(c), such remaining Loss shall
be allocated among the Owners in proportion to their respective Sharing Ratios.
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Section 7.03 SPECIAL ALLOCATIONS.
(a) MINIMUM GAIN CHARGEBACK. Except as otherwise provided in section
1.704-2(f) of the Regulations, notwithstanding any other provision of this
Section 7.03, if there is a net decrease in Partnership Minimum Gain during any
Fiscal Year, each Owner shall be specially allocated items of Trust income and
gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an
amount equal to such Owner's share of the net decrease in Partnership Minimum
Gain, determined in accordance with section 1.704-2(g) of the Regulations.
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Owner pursuant thereto. The
items to be so allocated shall be determined in accordance with sections
1.704-2(f)(6) and 1.704-2(j)(2) of the Regulations. This Section 7.03(a) is
intended to comply with the minimum gain chargeback requirement in section
1.704-2(f) of the Regulations and shall be interpreted consistently therewith.
(b) OWNER MINIMUM GAIN CHARGEBACK. Except as otherwise provided in
section 1.704-2(i)(4) of the Regulations, notwithstanding any other provision of
this Section 7.03, if there is a net decrease in Partner Nonrecourse Debt
Minimum Gain attributable to a Partner Nonrecourse Debt during any Fiscal Year,
each Owner who has a share of the Partner Nonrecourse Debt Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance with
section 1.704-2(i)(5) of the Regulations, shall be specially allocated items of
Partnership income and gain for such Fiscal Year (and, if necessary, subsequent
Fiscal Years) in an amount equal to such Partner's share of the net decrease in
Partner Nonrecourse Debt Minimum Gain attributable to such Partner Nonrecourse
Debt, determined in accordance with section 1.704-2(i)(4) of the Regulations.
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Partner pursuant thereto.
The items to be so allocated shall be determined in accordance with sections
1.704-2(i)(4) and 1.704-2(j)(2) of the Regulations. This Section 7.03(b) is
intended to comply with the minimum gain chargeback requirement in section
1.704-2(i)(4) of the Regulations and shall be interpreted consistently
therewith.
(c) QUALIFIED INCOME OFFSET. In the event any Owner unexpectedly
receives any adjustments, allocations, or distributions described in section
1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5) or 1.704-1(b)(2)(ii)(d)(6) of
the Regulations, items of Trust income and gain shall be specially allocated to
the Owner in an amount and manner sufficient to eliminate, to the extent
required by the Regulations, the Adjusted Capital Account Deficit of the Owner
as quickly as possible, provided that an allocation pursuant to this Section
7.03(c) shall be made only if and to the extent that the Owner would have an
Adjusted Capital Account Deficit after all other allocations provided for in
this Article VII have been tentatively made as if this Section 7.03(c) were not
in this Agreement.
(d) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any Fiscal Year
shall be specially allocated among the Owners in proportion to their Sharing
Ratios.
(e) PARTNER NONRECOURSE DEDUCTIONS. Any Partner Nonrecourse Deductions
for any Fiscal Year shall be specially allocated to the Owner who bears the
economic risk of loss with
19
respect to the Partner Nonrecourse Debt to which such Partner Nonrecourse
Deductions are attributable in accordance with section 1.704-2(i)(1) of the
Regulations.
(f) MANDATORY ALLOCATIONS UNDER SECTION 704(C) OF THE CODE.
Notwithstanding the foregoing provisions of this Section 7.03, in the event
section 704(c) of the Code or section 704(c) of the Code principles applicable
under section 1.704-1(b)(2)(iv) of the Regulations require allocations of
income, gain, deduction or loss in a manner different than that set forth above,
the provisions of section 704(c) of the Code and the Regulations thereunder
shall control such allocations. Any item of Trust income, gain, loss and
deduction with respect to any property (other than cash) that has been
contributed by a Partner to the capital of the Trust or which has been revalued
for Capital Account purposes pursuant to section 1.744-1(b)(2)(iv) of the
Regulations and which is required to be allocated to such Partner for income tax
purposes under section 704(c) of the Code so as to take into account the
variation between the tax basis of such property and its fair market value at
the time of its contribution shall be allocated solely for income tax purposes
in the manner required or permitted under section 704(c) of the Code using the
"traditional method" described in section 1.704-3(b) of the Regulations,
PROVIDED, HOWEVER, that curative allocations consisting of the special
allocation of gain or loss upon the sale or other disposition of the contributed
property shall be made in accordance with section 1.704-3(c) of the Regulations
to the extent necessary to eliminate any disparity, to the extent possible,
between the Partners' book and tax Capital Accounts attributable to such
property; FURTHER PROVIDED, HOWEVER, that any other method allowable under
applicable Regulations may be used for any contribution of property as to which
there is agreement between the contributing Partner and the Administrator.
(g) GROSS INCOME ALLOCATION. In the event any Owner has an Adjusted
Capital Account Deficit, such Owner shall be specially allocated items of Trust
income and gain in the amount of such excess as quickly as possible, provided
that an allocation pursuant to this Section 7.03(g) shall be made only if and to
the extent that such Owner would have an Adjusted Capital Account Deficit after
all other allocations provided for in this Section 7.03 have been made as if
Sections 7.03(c) and 7.03(g) were not in this Agreement.
Section 7.04 CURATIVE ALLOCATIONS. The allocations set forth in
Sections 7.02 and 7.03(a) through (e) (the "Regulatory Allocations") are
intended to comply with certain requirements of the Regulations. It is the
intent of the Owners that, to the extent possible, all Regulatory Allocations
shall be offset either with other Regulatory Allocations or with special
allocations of other items of Trust income, gain, loss, or deduction. Therefore,
notwithstanding any other provision of this Article VII (other than the
Regulatory Allocations), offsetting special allocations of Trust income, gain,
loss, or deduction shall be made so that, after such offsetting allocations are
made, each Owner's Capital Account balance is, to the extent possible, equal to
the Capital Account balance such Owner would have had if the Regulatory
Allocations were not part of the Agreement and all Trust items were allocated
pursuant to Sections 7.01 and 7.02. In making such offsetting allocations, there
shall be taken into account future Regulatory Allocations under Section 7.03(a)
and (b) that, although not yet made, are likely to offset other Regulatory
Allocations previously made under Section 7.03(d) and (e).
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Section 7.05 OTHER ALLOCATION RULES.
(a) For purposes of determining the Profit, Loss, or any other items
allocable to any period, Profit, Loss, and any such other items shall be
determined on a daily, monthly, or other basis, as determined by the Owner
Trustee, under the direction of the Super-majority Owners, using any method
permissible under section 706 of the Code and the Regulations thereunder.
(b) The Owners are aware of the income tax consequences of the
allocations made by this Article VII and hereby agree to be bound by the
provisions of this Article VII in reporting their shares of Trust income and
loss for income tax purposes.
(c) Solely for purposes of determining an Owner's proportionate share
of the "excess nonrecourse liabilities" of the Trust within the meaning of
section 1.752-3(a)(3) of the Regulations, the Owners' interests in Trust profits
are in proportion to their Sharing Ratios.
(d) To the extent permitted by section 1.704-2(h)(3) of the
Regulations, the Owner Trustee shall endeavor to treat distributions of Net Cash
Flow as having been made from the proceeds of a Nonrecourse Liability or a
Partner Nonrecourse Debt only to the extent that such distributions would cause
or increase an Adjusted Capital Account Deficit for any Owner.
Section 7.06 DISTRIBUTION OF NET CASH FLOW. Except to the extent
prohibited by any other agreement to which the Trust is a party or is otherwise
bound, Net Cash Flow on each Distribution Date shall be distributed on such
Distribution Date to each Owner in an amount equal to (i) the Profit allocated
to such Owner under this Article VII and not previously distributed to such
Owner less (ii) the amount of Losses allocated to such Owner to the extent such
Losses were not applied in reduction of the amount of any previous distribution
of Net Cash Flow to such Owner and less (iii) with respect to a distribution to
XXXX, the amount of money paid to XXXX by the Trust in accordance with paragraph
4 of the Section 2.05 Supplement to Master Loan Guaranty Agreement between XXXX
and The First Marblehead Corporation dated April 30, 2001, as amended. All
payments to be made under this Agreement by the Owner Trustee shall be made only
from the income and proceeds of the Trust Property and only to the extent the
Owner Trustee has received such income or proceeds.
Section 7.07 DISTRIBUTION DATE STATEMENT. With each distribution to an
Owner pursuant to Section 7.06, the Owner Trustee shall deliver a Distribution
Date Statement setting forth, for the period since the preceding Distribution
Date:
(a) Income and proceeds received by the Owner Trustee with
respect to the Trust Property;
(b) Amounts paid to the Owner Trustee;
(c) Amounts paid to any Person pursuant to a Trust Related
Agreement; and
(d) Amounts paid for other expenses of the Trust.
Section 7.08 ALLOCATION OF TAX LIABILITY. In the event that any tax is
imposed on the Trust, such tax shall be charged against amounts otherwise
distributable to the Owners in
21
proportion to their respective Sharing Ratios. The Owner Trustee is hereby
authorized to retain from amounts otherwise distributable to the Owners
sufficient funds to pay or provide for the payment of, and then actually pay,
such tax as is legally owed by the Trust (but such authorization shall not
prevent the Owner Trustee from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings).
Section 7.09 METHOD OF PAYMENT. All amounts payable to an Owner
pursuant to this Agreement shall be paid by the Owner Trustee to such Owner or a
nominee therefor by check payable to such Owner, mailed first class to the
address of such Owner appearing on the register maintained pursuant to Section
3.02, or by crediting the amount to be distributed to such Owner to an account
maintained by such Owner with the Owner Trustee or by transferring such amount
by wire transfer in immediately available funds to a banking institution with
bank wire transfer facilities for the account of such Owner, as instructed in
writing from time to time by such Owner. The Owner Trustee may require an Owner
to pay any wire transfer fees incurred in connection with any wire transfer made
to such Owner.
Section 7.10 NO SEGREGATION OF FUNDS; NO INTEREST. Subject to Sections
2.03(b)(ii) and 5.01, funds received by the Owner Trustee hereunder need not be
segregated in any manner except to the extent required by law and may be
deposited under such general conditions as may be prescribed by law, and the
Owner Trustee shall not be liable for any interest thereon.
Section 7.11 INTERPRETATION AND APPLICATION OF PROVISIONS BY THE
ADMINISTRATOR. The Owner Trustee shall appoint and authorize the Administrator
to interpret and apply the provisions set forth in Articles V, VI, VII and XI
regarding application of funds, allocations of Profit and Loss and Distributions
of Net Cash Flow, to resolve any ambiguities that may result from such
application and to provide the Owner Trustee and the Owners with clarification
of any provision as may be necessary or appropriate. The determinations of the
Administrator shall be binding upon the Owners.
ARTICLE VIII
AUTHORITY AND DUTIES OF THE OWNER TRUSTEE
Section 8.01 GENERAL AUTHORITY. The Owner Trustee is authorized to take
all actions required or permitted to be taken by it pursuant to the terms of
this Agreement, the Trust Related Agreements and the Statutory Trust Statute.
The Owner Trustee is further authorized from time to time to take such action as
the Administrator directs with respect to the Trust Related Agreements.
Section 8.02 SPECIFIC AUTHORITY. The Owner Trustee is hereby authorized
and directed to take the following actions:
(a) Execute the Certificate of Trust;
(b) Execute and deliver the Administration Agreement and the Back-up
Agreement and on behalf of the Trust, the Trust Related Agreements, including
without limitation, the Trust Certificates and any other document contemplated
by the foregoing; in each case, in such form as
22
the Administrator shall approve, as evidenced conclusively by the Owner
Trustee's execution thereof; and
(c) Execute and deliver on behalf of the Trust any documents necessary
or appropriate, in such form as the Administrator shall approve, as evidenced
conclusively by the Owner Trustee's execution thereof, to cause the repurchase
by XXXX or the Trust, as the case may be, of any Student Loan Note required to
be repurchased in accordance with the XXXX Guaranty Agreements.
Section 8.03 GENERAL DUTIES. It shall be the duty of the Owner Trustee
to discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and to administer the Trust in the interest of the
Owners. Notwithstanding the foregoing, the Owner Trustee shall have deemed to
have discharged its duties and responsibilities hereunder under the Trust
Related Agreements to the extent the Administrator has agreed in the
Administration Agreement to perform such acts or to discharge such duties of the
Owner Trustee hereunder or under any Trust Related Agreement, and the Owner
Trustee shall not be held liable for the default or failure of the Administrator
to carry out its obligations under the Administration Agreement.
Section 8.04 ACCOUNTING AND REPORTS TO THE OWNERS, THE INTERNAL REVENUE
SERVICE AND OTHERS. The Administrator shall (a) maintain or cause to be
maintained the books of the Trust on a calendar year basis using the accrual
method of accounting, (b) deliver to each Owner, within 60 days of the end of
each Fiscal Year, or more often, as may be required by the Code and the
Regulations thereunder, a copy of the annual financial statement of the Trust
for such Fiscal Year and a statement in such form and containing such
information as may be required by such Regulations, and as is necessary and
appropriate to enable each Owner to prepare its federal and state income tax
returns, (c) file such tax returns relating to the Trust, and make such
elections, including an election for the first taxable year of the Trust,
necessary for the Trust to qualify as a partnership, or as may from time to time
be required under any applicable state or federal statute or rule or regulation
thereunder, (d) cause such tax returns to be signed in the manner required by
law, (e) collect or cause to be collected any withholding tax required by the
Code to be withheld by the Owner Trustee with respect to distributions to Owners
who are nonresident aliens or foreign corporations, and (f) cause to be mailed
to each Owner copies of all such reports and tax returns of the Trust.
Section 8.05 SIGNATURE OF RETURNS. The Owner Trustee shall sign on
behalf of the Trust the tax returns and other Periodic Filings of the Trust,
unless applicable law requires an Owner to sign such documents, in which case,
so long as the Depositor is an Owner and applicable law allows the Depositor to
sign any such document, the Depositor shall sign such document. At any time that
the Depositor is not an Owner, or is otherwise not allowed by law to sign any
such document, then the Owner required by law to sign such document shall sign.
Section 8.06 RIGHT TO RECEIVE AND RELY UPON INSTRUCTIONS. In the event
that the Owner Trustee is unable to decide between alternative courses of
action, or is unsure as to the application of any provision of this Agreement or
any Trust Related Agreement, or such provision is ambiguous as to its
application, or is or appears to be, in conflict with any other applicable
provision, or in the event that this Agreement or any Trust Related Agreement
permits
23
any determination by the Owner Trustee or is silent or is incomplete as to the
course of action which the Owner Trustee is required to take with respect to a
particular set of facts, the Owner Trustee may give notice (in such form as
shall be appropriate under the circumstances) to the Owners requesting
instructions and, to the extent that the Owner Trustee shall have acted or
refrained from acting in good faith in accordance with any instructions received
from the Owners, the Owner Trustee shall not be liable on account of such action
or inaction to any Person. If the Owner Trustee shall not have received
appropriate instructions within ten days of such notice (or within such shorter
period of time as may be specified in such notice) the Owner Trustee may, but
shall be under no duty to, take or refrain from taking such action, not
inconsistent with this Agreement or the Trust Related Agreements, as the Owner
Trustee shall deem to be in the best interests of the Owners, and the Owner
Trustee shall have no liability to any Person for such action or inaction.
Section 8.07 NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT OR IN
INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to manage,
make any payment in respect of, register, record, sell, dispose of or otherwise
deal with the Trust Property, or to otherwise take or refrain from taking any
action under, or in connection with, any document contemplated hereby to which
the Owner Trustee or the Trust is a party, except as expressly provided by the
terms of this Agreement and no implied duties or obligations shall be read into
this Agreement against the Owner Trustee. The Owner Trustee nevertheless agrees
that it will, at its own cost and expense, promptly take all action as may be
necessary to discharge any liens on any part of the Trust Property which result
from claims against the Owner Trustee personally that are not related to the
ownership or the administration of the Trust Property or the transactions
contemplated by the Trust Related Agreements.
Section 8.08 NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Trust Property except (a) in accordance
with the powers granted to and the authority conferred upon the Owner Trustee
pursuant to this Agreement, and (b) in accordance with instructions delivered to
the Owner Trustee pursuant to Section 8.06 and Article IV hereof.
Section 8.09 RESTRICTION. Notwithstanding anything herein to the
contrary, the Owner Trustee shall not take any action (a) that is inconsistent
with the purposes of the Trust or (b) that would result in the Trust being
treated as an association taxable as a corporation for Federal income tax
purposes.
ARTICLE IX
CONCERNING THE OWNER TRUSTEE
Section 9.01 ACCEPTANCE OF TRUSTS AND DUTIES. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to the same but only upon the terms of this Agreement. The Owner Trustee
shall not be personally liable under any circumstances, except (a) for its own
willful misconduct or gross negligence, (b) for liabilities arising from the
failure by the Owner Trustee to perform obligations expressly undertaken by it
in the last sentence of Section 8.07, or (c) for taxes, fees or other charges
on, based on or measured by any fees, commissions or compensation received by
the Owner Trustee in
24
connection with any of the transactions contemplated by this Agreement or the
Trust Related Agreements. In particular, but not by way of limitation:
(i) The Owner Trustee shall not be personally liable for any error of
judgment made in good faith by an Authorized Officer of the Owner Trustee;
(ii) The Owner Trustee shall not be personally liable with respect to
any action taken or omitted to be taken by the Owner Trustee in good faith in
accordance with the instructions of the Administrator or the Owners;
(iii) No provision of this Agreement shall require the Owner Trustee to
expend or risk its personal funds or otherwise incur any financial liability in
the performance of any of its rights or powers hereunder, if the Owner Trustee
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured or
provided to it;
(iv) Under no circumstance shall the Owner Trustee be personally
liable for any indebtedness of the Trust under any Trust Related Agreement;
(v) The Owner Trustee shall not be personally responsible for or in
respect of the validity or sufficiency of this Agreement or for the due
execution hereof by the Depositor, or for the form, character, genuineness,
sufficiency, value or validity of any Student Loan or Trust Certificate (other
than with respect to the due execution thereby by an Authorized Officer), or for
or in respect of the validity or sufficiency of the Administration Agreement or
the Trust Related Agreements; and
(vi) The Owner Trustee shall not be liable for the default or
misconduct of the Administrator under any of the Trust Related Agreements or
otherwise and the Owner Trustee shall have no obligation or liability to perform
the obligations of the Trust hereunder or under any Trust Related Agreement that
are required to be performed by the Administrator under the Administration
Agreement.
Section 9.02 FURNISHING OF DOCUMENTS. The Owner Trustee shall furnish
to the Owners, promptly upon receipt thereof, duplicates or copies of all
material reports, notices, requests, demands, certificates, financial statements
and any other instruments furnished to the Owner Trustee hereunder (other than
documents originated by or otherwise furnished to such Owners).
Section 9.03 RELIANCE; ADVICE OF COUNSEL.
(a) The Owner Trustee shall incur no liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, note or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Owner Trustee may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the manner of ascertainment of
which is not specifically prescribed herein, the Owner Trustee may for all
purposes hereof rely on a certificate, signed by the president or any vice
president or by the treasurer or any assistant treasurer or the secretary of the
relevant party,
25
as to such fact or matter, and such certificate shall constitute full protection
to the Owner Trustee for any action taken or omitted to be taken by it in good
faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under any of the Trust Related
Agreements, the Owner Trustee (i) may act directly or, at the expense of the
Trust, through agents or attorneys pursuant to agreements entered into with any
of them, and the Owner Trustee shall not be liable for the default or misconduct
of such agents or attorneys if such agents or attorneys shall have been selected
by the Owner Trustee with reasonable care; and (ii) may, at the expense of the
Trust, consult with counsel, accountants and other skilled persons to be
selected with reasonable care and employed by it, and the Owner Trustee shall
not be liable for anything done, suffered or omitted in good faith by it in
accordance with the advice or opinion of any such counsel, accountants or other
skilled persons.
Section 9.04 NOT ACTING IN INDIVIDUAL CAPACITY. Except as expressly
provided in this Article IX, in accepting the trusts hereby created the Owner
Trustee acts solely as trustee hereunder and not in its individual capacity, and
all Persons having any claim against the Owner Trustee by reason of the
transactions contemplated by this Agreement or the Trust Related Agreements
shall look only to the Trust Property for payment or satisfaction thereof.
Section 9.05 REPRESENTATIONS AND WARRANTIES OF OWNER TRUSTEE. The Owner
Trustee represents and warrants to the Depositor that (a) the Owner Trustee
meets the requirements of (i) Rule 3(a)(7) promulgated under the Investment
Company Act of 1940, as amended, and (ii) section 3807 of the Statutory Trust
Statute and (b) the Owner Trustee or the Owner Trustee's parent entity has a
combined capital and surplus of at least $50,000,000.
ARTICLE X
COMPENSATION OF OWNER TRUSTEE
Section 10.01 OWNER TRUSTEE'S FEES AND EXPENSES. The Owner Trustee
shall receive compensation from the Administrator and, to the extent not paid by
the Administrator, from the Trust Property for its services hereunder as set
forth on the fee schedule attached hereto as Exhibit 3. The Owner Trustee shall
be entitled to be reimbursed by the Administrator and, to the extent not paid by
the Administrator, from the Trust Property for its reasonable expenses
hereunder, including the reasonable compensation, expenses and disbursements of
such agents, representatives, experts and counsel as the Owner Trustee may
employ in connection with the exercise and performance of its rights and duties
under this Agreement and the Trust Related Agreements.
Section 10.02 INDEMNIFICATION. The Depositor and XXXX shall be
jointly and severally liable for, and hereby agree to indemnify [OWNER TRUSTEE],
individually and as Owner Trustee, and its successors, assigns, agents and
servants, from and against, any and all liabilities, obligations, losses,
damages, taxes (other than taxes incurred as the result of the payment of fees
and expenses pursuant to Section 10.01), claims, actions, suits, costs, expenses
and disbursements (including legal fees and expenses) of any kind and nature
whatsoever which may be imposed on, incurred by or asserted at any time against
the Owner Trustee (whether or not
26
indemnified against by other parties) in any way relating to or arising out of
this Agreement, any Trust Related Agreement, the administration of the Trust
Property or the action or inaction of the Owner Trustee hereunder, except only
that the Owners shall not be required to indemnify the Owner Trustee for
expenses arising or resulting from any of the matters described in the second
sentence of Section 9.01. The indemnities contained in this Section 10.02 shall
survive the termination of this Agreement. The obligations of the Depositor and
XXXX pursuant to this Section 10.02 shall be borne in proportion to their
respective Percentage Interests. The indemnities contained in this Section 10.02
extend only to the Owner Trustee in its individual capacity.
Section 10.03 LIEN ON TRUST PROPERTY. Following the retirement of the
Notes the Owner Trustee shall have a lien on the Trust Property for any
compensation or expenses and indemnity due hereunder which lien shall be prior
to all other liens.
Section 10.04 PAYMENTS TO THE OWNER TRUSTEE. Any amounts paid to the
Owner Trustee from the Trust Property pursuant to this Article X shall be deemed
not to be part of the Trust Property immediately after such payment.
ARTICLE XI
TERMINATION OF TRUST
Section 11.01 TERMINATION OF TRUST.
(a) The trust created hereby shall dissolve and terminate and, except
as otherwise provided in this Article XI, this Agreement shall be of no further
force or effect, upon the earlier of (i) if the Notes are no longer outstanding,
the unanimous consent of the Owners, (ii) if the Notes are no longer
outstanding, the sale or other final disposition by the Owner Trustee of the
Trust Property and the final distribution by the Owner Trustee of all funds or
other property or proceeds of the Trust Property in accordance with the terms of
this Agreement and the Trust Related Agreements, and (iii) 21 years less one day
after the death of the survivor of the descendants living on the date of this
Agreement of Xxxxxx X. Xxxxxxx, the late Ambassador of the United States to the
Court of St. Xxxxx.
(b) The bankruptcy, death, incapacity, dissolution or termination of
any Owner shall not operate to dissolve or terminate this Agreement, nor entitle
such Owner's legal representatives or heirs to claim an accounting or to take
any action or proceeding in any court for a partition or winding up of the Trust
Property, nor otherwise affect the rights, obligations and liabilities of the
parties hereto.
(c) Upon the termination of the Trust pursuant to this Article XI, the
Owner Trustee shall cause a Certificate of Termination to be filed with the
Secretary of State.
Section 11.02 DISTRIBUTION OF ASSETS. Upon dissolution and termination
of the Trust, the Owner Trustee shall take full account of the Trust assets and
liabilities, shall liquidate the assets as promptly as is consistent with
obtaining the fair value thereof, and shall apply and distribute the proceeds
therefrom in the following order:
27
(a) To the payment of the expenses of liquidation and the debts and
liabilities of the Trust;
(b) To the setting up of reserves which the Owner Trustee may deem
necessary or appropriate for anticipated obligations or contingencies of the
Trust arising out of or in connection with the operation of the Trust. Such
reserves may be paid over by the Owner Trustee to an escrow agent or trustee
selected by the Owner Trustee to be disbursed by such escrow agent or trustee in
payment of any of such obligations or contingencies and, if any balance remains
at the expiration of such period as the Owner Trustee shall deem advisable, to
be distributed by such escrow agent or trustee in the manner hereinafter
provided;
(c) To each of the Owners, other than XXXX, in accordance with the
positive balances in each such Owner's Capital Account to the extent of the
aggregate unreturned Capital Contributions of such Owner credited therein; and
(d) To the Owners, the balance of any proceeds in accordance with the
positive balances in their respective Capital Accounts; provided that with
respect to any distribution to XXXX, such distribution shall be reduced by the
amount of money paid to XXXX by the Trust in accordance with paragraph 4 of the
Section 2.05 Supplement to Master Loan Guaranty Agreement between XXXX and The
First Marblehead Corporation dated April 30, 2001 less the amount by which
aggregate Distributions to XXXX of Net Cash Flow pursuant to Section 7.06 hereof
have been reduced by the application of subsection (iii) thereof, and any such
reduction shall be distributed to the Owners other than XXXX in accordance with
the positive balances in their respective Capital Accounts.
If at the time of liquidation the Owner Trustee shall determine that an
immediate sale of some or all of the assets would cause undue loss to the
Owners, the Owner Trustee may, in order to avoid such loss and with the consent
of the Owners, defer liquidation.
Section 11.03 NO TERMINATION BY DEPOSITOR OR OWNERS. Except as
provided in Section 11.01, neither the Depositor nor the Owners shall be
entitled to terminate or revoke the Trust established hereunder.
ARTICLE XII
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 12.01 RESIGNATION OF OWNER TRUSTEE; APPOINTMENT OF SUCCESSOR.
(a) The Owner Trustee may resign at any time without cause by giving at
least 60 days' prior written notice to the Administrator, the Owners and the
Administrative Agent, such resignation to be effective upon the acceptance of
appointment by a successor Owner Trustee under Section 12.01(b). In addition,
the Super-majority Owners may at any time remove the Owner Trustee without cause
by an instrument in writing delivered to the Owner Trustee and the
Administrator, such removal to be effective upon the acceptance of appointment
by a successor Owner Trustee under Section 12.01(b). In case of the resignation
or removal of the Owner Trustee, the Owners may appoint a successor Owner
Trustee by an instrument signed by the Owners. If a successor Owner Trustee
shall not have been appointed within 30 days after the
28
giving of written notice of such resignation or the delivery of the written
instrument with respect to such removal, the Owner Trustee or the Owners may
apply to any court of competent jurisdiction to appoint a successor Owner
Trustee to act until such time, if any, as a successor Owner Trustee shall have
been appointed as provided above. Any successor Owner Trustee so appointed by
such court shall immediately and without further act be superseded by any
successor Owner Trustee appointed as above provided within one year from the
date of the appointment by such court.
(b) Any successor Owner Trustee, however appointed, shall execute and
deliver to the predecessor Owner Trustee an instrument accepting such
appointment, and thereupon such successor Owner Trustee, without further act
(except for the filing required under clause (e) below), shall become vested
with all the estates, properties, rights, powers, duties and trust of the
predecessor Owner Trustee in the trusts hereunder with like effect as if
originally named the Owner Trustee herein; but nevertheless, upon the written
request of such successor Owner Trustee and the payment of all fees and
indemnities due the predecessor Owner Trustee, such predecessor Owner Trustee
shall execute and deliver an instrument transferring to such successor Owner
Trustee, upon the trusts herein expressed, all the estates, properties, rights,
powers, duties and trusts of such predecessor Owner Trustee, and such
predecessor Owner Trustee shall duly assign, transfer, deliver and pay over to
such successor Owner Trustee all funds or other property then held or
subsequently received by such predecessor Owner Trustee upon the trusts herein
expressed.
(c) Any successor Owner Trustee, however appointed, shall be a bank or
trust company (i) that meets the requirements of (A) Rule 3(a)(7) promulgated
under the Investment Company Act of 1940, as amended, and (B) section 3807 of
the Statutory Trust Statute and (ii) whose parent entity has a combined capital
and surplus of at least $50,000,000, if there be such an institution willing,
able and legally qualified to perform the duties of the Owner Trustee hereunder
upon reasonable or customary terms.
(d) Any corporation into which the Owner Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Owner Trustee shall be
a party, or any corporation to which substantially all the corporate trust
business of the Owner Trustee may be transferred, shall, subject to the terms of
Section 12.01(c), be the Owner Trustee under this Agreement without further act.
(e) Any successor Owner Trustee appointed pursuant to this Article XII
shall file an amendment to the Certificate of Trust with the Secretary of State
reflecting the name and principal place of business of such successor Owner
Trustee.
Section 12.02 APPOINTMENT OF ADDITIONAL OWNER TRUSTEES. At any time or
times for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Trust Property may at the time be located, the Owner
Trustee and the Administrator, acting jointly, by an instrument in writing, may
appoint one or more individuals or corporations approved by the Administrator
and the Owner Trustee to act as separate trustee or separate trustees of all or
any part of the Trust Property to the full extent that local law makes it
necessary or appropriate for such separate trustee or separate trustees to act
alone. If the Administrator shall not have joined
29
in such appointment within fifteen days after the receipt of such request, the
Owner Trustee, acting alone, shall have the power to make such appointment.
ARTICLE XIII
TAX MATTERS PARTNER
Section 13.01 TAX MATTERS PARTNER. The tax matters partner (within the
meaning of section 6231(a)(7) of the Code and applicable Regulations) of the
Trust for all federal income tax purposes set forth in the Code shall be the
Depositor. Subject to Section 13.08, the tax matters partner shall have the
authority to represent the Trust and perform the duties imposed on the tax
matters partner under the Code, and as set forth in this Article XIII.
Section 13.02 NOTICE OF TAX AUDIT. The tax matters partner shall give
prompt notice to the Owners upon receipt of advice that the Internal Revenue
Service intends to examine Trust income tax returns for any year.
Section 13.03 AUTHORITY TO EXTEND PERIOD FOR ASSESSING TAX. Subject to
Section 13.08, the tax matters partner shall have the authority to extend the
period for assessing any tax imposed on any Owner under the Code by any
agreement as provided for under section 6229(b)(1)(B) of the Code.
Section 13.04 CHOICE OF FORUM FOR FILING PETITION FOR READJUSTMENT. Any
petition for readjustment may, but is not required to, be filed by the tax
matters partner in accordance with section 6226(a) of the Code in the United
States District Court for the district in which the Trust's principal place of
business is located, or the United States Claims Court.
Section 13.05 AUTHORITY TO BIND OWNERS BY SETTLEMENT AGREEMENT. Subject
to Section 13.08, the tax matters partner shall enter into a settlement
agreement in accordance with section 6224(c)(3) of the Code as directed by the
Owners.
Section 13.06 NOTICES SENT TO THE INTERNAL REVENUE SERVICE. The tax
matters partner shall use its best efforts to furnish to the Internal Revenue
Service the name, address, profits interest and taxpayer identification number
of each Owner and any additional information it receives from each Owner
regarding any change in that Owner's name, address, profits interest and
taxpayer identification number. In no event shall the tax matters partner be
liable, responsible or accountable in damages or otherwise to the Owner for any
loss in connection with furnishing such information to the Internal Revenue
Service if the tax matters partner acts in good faith and is not guilty of fraud
or gross negligence.
Section 13.07 INDEMNIFICATION OF TAX MATTERS PARTNER. The Trust shall
indemnify and save harmless the tax matters partner against any loss, damage,
cost or expense (including attorneys' fees) incurred by it as a result of any
act performed or omitted on behalf of the Trust or any Owner or in furtherance
of the Trust's interests or the interests of the Owner, in its capacity as tax
matters partner, without, however, relieving the tax matters partner of
liability for bad faith, fraud or gross negligence.
30
Section 13.08 APPROVAL OF TAX MATTERS PARTNER'S DECISIONS. The tax
matters partner shall call a meeting of the Owners at any time in order to
discuss any decisions the tax matters partner may propose to make, notice of
which shall be included in the notice of such meeting. The tax matters partner
shall make no decision and take no action with respect to the determination,
assessment or collection of any tax imposed by the Code on the Owners unless and
until such decision has been approved by the Owners.
Section 13.09 PARTICIPATION BY OWNERS IN INTERNAL REVENUE SERVICE
ADMINISTRATIVE PROCEEDINGS. Nothing contained in this Article XIII shall be
construed to take away from any Owner any right granted to such person by the
Code to participate in any manner in administrative proceedings of the Internal
Revenue Service.
ARTICLE XIV
MISCELLANEOUS
Section 14.01 SUPPLEMENTS AND AMENDMENTS.
(a) This Agreement may be amended only by a written instrument signed
by the Owner Trustee and all of the Owners at the time of such amendment and
upon satisfaction of the Rating Agency Condition (as defined in the Indenture);
PROVIDED, HOWEVER, that if, in the opinion of the Owner Trustee, any instrument
required to be so executed adversely affects any right, duty or liability of, or
immunity or indemnity in favor of, the Owner Trustee under this Agreement or any
of the documents contemplated hereby to which the Owner Trustee or the Trust is
a party, or would cause or result in any conflict with or breach of any terms,
conditions or provisions of, or default under, the charter documents or by-laws
of the Owner Trustee or any document contemplated hereby to which the Owner
Trustee is a party, the Owner Trustee may in its sole discretion decline to
execute such instrument. The Certificate of Trust shall be amended (except as
required by the Statutory Trust Statute) only upon satisfaction of the Rating
Agency Condition (as defined in the Indenture). The Owner Trustee shall be fully
protected in relying upon a certificate of the Administrator in determining if
the Rating Agency Condition (as defined in the Indenture) has been satisfied.
(b) The Trust shall not change its jurisdiction of formation without
first satisfying the Rating Agency Condition (as defined in the Indenture).
Section 14.02 NO LEGAL TITLE TO TRUST PROPERTY IN OWNER. Legal title to
all Trust Property shall be vested at all times in the Trust as a separate legal
entity, except where the laws of any jurisdiction require title to be vested in
a trustee in which case legal title shall be vested in the Owner Trustee on
behalf of the Trust. The Owners shall not have legal title to any part of the
Trust Property and shall only have an undivided beneficial interest therein. No
transfer, by operation of law or otherwise, of any right, title and interest of
the Owners in and to their undivided Beneficial Interests in the Trust Property
hereunder shall operate to terminate this Agreement or the trusts hereunder or
entitle any successor transferee to an accounting or to the transfer to it of
legal title to any part of the Trust Property.
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Section 14.03 PLEDGE OF COLLATERAL BY OWNER TRUSTEE IS BINDING. The
pledge of any Trust Property to any Person by the Owner Trustee made under any
Trust Related Agreement and pursuant to the terms of this Agreement shall bind
the Owners and shall be effective to transfer or convey the rights of the Owner
Trustee and the Owners in and to such Trust Property to the extent set forth in
such Trust Related Agreement. No purchaser or other grantee shall be required to
inquire as to the authorization, necessity, expediency or regularity of such
pledge or as to the application of any proceeds with respect thereto by the
Owner Trustee.
Section 14.04 LIMITATIONS ON RIGHTS OF OTHERS. Nothing in this
Agreement, whether express or implied, shall be construed to give to any Person
other than the Owner Trustee, the Administrator and the Owners any legal or
equitable right, remedy or claim in the Trust Property or under or in respect of
this Agreement or any covenants, conditions or provisions contained herein
PROVIDED, however, that for so long as any of the Notes are outstanding or any
amounts are owed to the Indenture Trustee and the Noteholders, are third party
beneficiaries hereof.
Section 14.05 NOTICES. Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and delivered by
hand or mailed by certified mail, postage prepaid, if to the Owner Trustee,
addressed to:______________________________, Attention:_______________, or to
such other address as the Owner Trustee may have set forth in a written notice
to the Owners; and if to an Owner, addressed to it at the address set forth for
such Owner in the register maintained by the Owner Trustee. Whenever any notice
in writing is required to be given by the Owner Trustee hereunder, such notice
shall be deemed given and such requirement satisfied 72 hours after such notice
is mailed by certified mail, postage prepaid, addressed as provided above; any
notice given by an Owner to the Owner Trustee shall be effective upon receipt by
an Authorized Officer of the Owner Trustee. A copy of any notice delivered to
the Owner Trustee shall also be delivered to the Administrator, addressed to:
First Marblehead Data Services, Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
Section 14.06 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 14.07 SEPARATE COUNTERPARTS. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 14.08 SUCCESSORS AND ASSIGNS. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the Owner
Trustee and its successors and assigns and each Owner and its successors and
permitted assigns, all as herein provided. Any request, notice, direction,
consent, waiver or other instrument or action by an Owner shall bind the
successors and assigns of such Owner.
Section 14.09 HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
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Section 14.10 GOVERNING LAW. This Agreement shall in all respects be
governed by, and construed in accordance with, the laws of the State of Delaware
(excluding conflict of law rules), including all matters of construction,
validity and performance.
Section 14.11 GENERAL INTERPRETIVE PRINCIPLES. For purposes of this
Agreement except as otherwise expressly provided or unless the context otherwise
requires:
(a) The defined terms in this Agreement include the plural as well as
the singular, and the use of any gender herein shall be deemed to include any
other gender;
(b) Accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date hereof;
(c) References herein to "Articles," "Sections," "paragraphs" and other
subdivisions without reference to a document are to designated Articles,
Sections, paragraphs and other subdivisions of this Agreement;
(d) A reference to a paragraph without further reference to a Section
is a reference to such paragraph as contained in the same Section in which the
reference appears, and this rule shall also apply to subparagraphs and other
subdivisions;
(e) The words "herein," "hereof," "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) The term "include" or "including" shall mean without limitation by
reason of enumeration.
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IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed by their respective officers hereunto duly authorized, as of
the day and year first above written.
_____________, not in its
individual capacity except as
expressly provided herein, but
solely as Owner Trustee
By:___________________________
Name:
Title:
THE NATIONAL COLLEGIATE FUNDING
LLC, as Depositor and Owner
By:___________________________
Name:
Title:
THE EDUCATION RESOURCES
INSTITUTE, Inc., as Owner
By:___________________________
Name:
Title:
ACKNOWLEDGED WITH RESPECT
TO THE POWER OF ATTORNEY
GRANTED IN SECTION 4.05
FIRST MARBLEHEAD DATA SERVICES, INC.
By:_______________________________
Name:
Title:
SCHEDULE A
OWNERS CAPITAL CONTRIBUTION ($) INITIAL SHARING RATIO (%) PERCENTAGE INTEREST (%)
The National Collegiate $1.00 75% 75%
Funding LLC
The Education Resources None 25% 25%
Institute, Inc.
SCHEDULE B
LOAN ORIGINATORS
SCHEDULE C
LOAN PURCHASE AGREEMENTS
SCHEDULE D
GUARANTY AGREEMENTS
EXHIBIT 1
FORM OF TRUST CERTIFICATE
THE NATIONAL COLLEGIATE STUDENT LOAN TRUST 20____-____
TRUST CERTIFICATE
THE BENEFICIAL INTEREST IN THE TRUST REPRESENTED BY THIS TRUST CERTIFICATE HAS
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
ANY STATE SECURITIES LAW, AND MAY NOT BE DIRECTLY OR INDIRECTLY OFFERED OR SOLD
OR OTHERWISE DISPOSED OF (INCLUDING PLEDGED) BY THE HOLDER HEREOF UNLESS IN THE
OPINION OF COUNSEL SATISFACTORY TO THE OWNER TRUSTEE, SUCH TRANSACTION IS EXEMPT
FROM REGISTRATION UNDER THE ACT AND STATE SECURITIES LAWS. THE TRANSFER OF THIS
TRUST CERTIFICATE WILL NOT BE EFFECTIVE UNLESS THE TRANSFEREE HAS DELIVERED TO
THE OWNER TRUSTEE A LETTER IN THE FORM REQUIRED BY SECTION 3.04(A) OF THE TRUST
AGREEMENT AND THE TRANSFEREE PROVIDES THE OWNER TRUSTEE WITH EVIDENCE
SATISFACTORY TO THE OWNER TRUSTEE DEMONSTRATING THE TRANSFEROR'S COMPLIANCE WITH
SECTION 3.04(B) OF THE TRUST AGREEMENT.
TRUST CERTIFICATE
UNDER THE TRUST AGREEMENT, DATED
AS OF __________, 20____
Certificate No. ____
_____________, not in its individual capacity, but solely as owner trustee (the
"Owner Trustee") under the Trust Agreement, dated as of __________, 20____, with
The National Collegiate Funding LLC and The Education Resources Institute, Inc.,
on behalf of the holders from time to time (each an "Owner") of beneficial
interests in the trust created thereby (the "Trust Agreement"), hereby certifies
that ______________________ is the owner of a _____% undivided beneficial
interest in the Trust Property provided for and created by the Trust Agreement.
This Trust Certificate is issued pursuant to and is entitled to the benefits of
the Trust Agreement, and each Owner by acceptance hereof shall be bound by the
terms of the Trust Agreement. Reference is hereby made to the Trust Agreement
for a statement of the rights and obligations of the Owner hereof. The Owner
Trustee may treat the person shown on the register maintained by the Owner
Trustee pursuant to Section 3.02 of the Trust Agreement as the absolute Owner
hereof for all purposes.
Capitalized terms used herein without definition have the meanings ascribed to
them in or by reference in the Trust Agreement.
Transfer of this Trust Certificate is subject to certain restrictions and
limitations set forth in the Trust Agreement, including the requirement that any
transfer requires the prior consent of owners of at least 80% of the Percentage
Interests in the Trust. In the manner more fully set
forth in, and as limited by, the Trust Agreement, this Trust Certificate may be
transferred upon the books of the Owner Trustee by the registered Owner in
person or by his attorney duly authorized in writing upon surrender of this
Trust Certificate to the Owner Trustee accompanied by a written instrument of
transfer and with such signature guarantees and evidence of authority of the
Persons signing the instrument of transfer as the Owner Trustee may reasonably
require, whereupon the Owner Trustee shall issue in the name of the transferee a
Trust Certificate or Trust Certificates evidencing the amount and extent of
interest of the transferee.
The Owner hereof, by its acceptance of this Trust Certificate, warrants and
represents to the Owner Trustee and to the Owners of the other Trust
Certificates issued under the Trust Agreement and agrees not to transfer this
Trust Certificate except in accordance with the Trust Agreement.
This Trust Certificate and the Trust Agreement shall in all respects be governed
by, and construed in accordance with, the laws of the State of Delaware
(excluding conflict of law rules), including all matters of construction,
validity and performance.
IN WITNESS WHEREOF, the Owner Trustee, pursuant to the Trust Agreement,
has caused this Trust Certificate to be issued as of the date hereof.
_____________, not in its
individual capacity, but solely
as Owner Trustee
By:___________________________
Name:_________________________
Title:________________________
Dated: __________, 20_____
EXHIBIT 2
FORM OF ACCESSION AGREEMENT
_________________, __________
[OWNER TRUSTEE]
________________________
________________________
________________________
________________________
Attention: Corporate Trust Administration
Dear Sirs:
We refer to the Trust Agreement, dated as of __________, 20____ (the
"Trust Agreement"), among The National Collegiate Funding LLC (the "Company"),
The Education Resources Institute, Inc. and _____________, a national banking
association (in its capacity as trustee thereunder, the "Owner Trustee"). We
propose to purchase a beneficial interest in The National Collegiate Student
Loan Trust 20____-____, a Delaware statutory trust (the "Trust") formed pursuant
to the Trust Agreement. Capitalized terms used herein without definition have
the meanings given them in the Trust Agreement.
1. We understand that our Trust Certificate is not being registered under
the Securities Act of 1933, as amended (the "1933 Act"), or any state
securities or "Blue Sky" law and is being sold to us in a transaction
that is exempt from the registration requirements of the 1933 Act and
any applicable state laws.
2. We have knowledge and experience in financial and business matters as
to be capable of evaluating the merits and risks of an investment in
the Trust, we are able to bear the economic risk of investment in the
Trust and we are an "accredited investor" as defined in Regulation D
under the 1933 Act.
3. We acknowledge that none of the Trust, the Company or the Owner Trustee
has advised us concerning the federal or state income tax consequences
of owning a beneficial interest in the Trust, including the tax status
of the Trust or the likelihood that distributions from the Trust would
be characterized as "unrelated business income" for federal tax
purposes, and we have consulted with our own tax advisor with respect
to such matters.
4. We are acquiring our Trust Certificate for our own account and not for
the benefit of any other person and not with a view to any distribution
of our beneficial interest in the Trust subject, nevertheless, to the
understanding that disposition of our property shall at all times be
and remain within our control.
5. We agree that our beneficial interest in the Trust must be held
indefinitely by us unless subsequently registered under the 1933 Act
and any applicable state securities or "Blue
Sky" law or unless exemptions from the registration requirements of the
1933 Act and applicable state laws are available.
6. We agree that in the event that at some future time we wish to dispose
of or exchange any of our beneficial interest in the Trust, we will not
transfer or exchange any of our beneficial interest in the Trust unless
we have obtained the prior written consent to such transfer or exchange
pursuant to Section 3.04 of the Trust Agreement, and either:
(A)(1) the transfer or exchange is made to an Eligible Purchaser (as
defined below), (2) a letter to substantially the same effect
as this letter is executed promptly by such Eligible Purchaser
and (3) all offers or solicitations in connection with the
sale (if a sale), whether made directly or through any agent
acting on our behalf, are limited only to Eligible Purchasers
and are not made by means of any form of general solicitation
or general advertising whatsoever; or
(B) our beneficial interest in the Trust is sold in a transaction
that does not require registration under the 1933 Act and any
applicable State "Blue Sky" law.
"Eligible Purchaser" means a corporation, partnership or other entity which we
have reasonable grounds to believe and do believe can make representations with
respect to itself to substantially the same effect as the representations set
forth herein.
7. We understand that our Trust Certificate bears a legend to
substantially the following effect:
THE BENEFICIAL INTEREST IN THE TRUST REPRESENTED BY THIS TRUST CERTIFICATE HAS
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR
ANY STATE SECURITIES LAW, AND MAY NOT BE DIRECTLY OR INDIRECTLY OFFERED OR SOLD
OR OTHERWISE DISPOSED OF (INCLUDING PLEDGED) BY THE HOLDER HEREOF UNLESS IN THE
OPINION OF COUNSEL SATISFACTORY TO THE OWNER TRUSTEE SUCH TRANSACTION IS EXEMPT
FROM REGISTRATION UNDER THE ACT AND STATE SECURITIES LAWS. THE TRANSFER OF THIS
TRUST CERTIFICATE WILL NOT BE EFFECTIVE UNLESS THE TRANSFEREE HAS DELIVERED TO
THE OWNER TRUSTEE A LETTER IN THE FORM REQUIRED BY SECTION 3.04(A) OF THE TRUST
AGREEMENT AND THE TRANSFEREE PROVIDES THE OWNER TRUSTEE WITH EVIDENCE
SATISFACTORY TO THE OWNER TRUSTEE DEMONSTRATING THE TRANSFEROR'S COMPLIANCE WITH
SECTION 3.04(B) OF THE TRUST AGREEMENT.
8. We agree to be bound by all terms and conditions of our Trust
Certificate and the Trust Agreement.
Very truly yours,
__________________________
Name of Purchaser
By:___________________________
Name:_________________________
Title:________________________
Accepted and Acknowledged this
_______th day of ____________________ 20____.
_____________, not in its individual capacity,
but solely as Owner Trustee
By:___________________________
Name:_________________________
Title:________________________
EXHIBIT 3
FEE SCHEDULE
INITIAL FEE - $_____________
ANNUAL ADMINISTRATION FEE - $_______________
