EXHIBIT 3.1
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THE NATIONAL COLLEGIATE TRUST 1996-S2
TRUST AGREEMENT
Between
DELAWARE TRUST CAPITAL MANAGEMENT, INC.,
as OWNER TRUSTEE
and
THE NATIONAL COLLEGIATE TRUST
as DEPOSITOR
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TABLE OF CONTENTS
ARTICLE I
DEFINITIONS
Section 1.01. CAPITALIZED TERMS ..........................................
ARTICLE II
ORGANIZATION
Section 2.01. NAME .......................................................
Section 2.02. OFFICE .....................................................
Section 2.03. PURPOSES AND POWERS ........................................
Section 2.04. APPOINTMENT OF THE OWNER TRUSTEE ...........................
Section 2.05. DECLARATION OF TRUST .......................................
Section 2.06. OTHER EXPENSES, LIABILITIES OF TRUST .......................
Section 2.07. SITUS OF TRUST .............................................
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTEREST
Section 3.01. ISSUANCE OF TRUST CERTIFICATE ..............................
Section 3.02. REGISTRATION AND TRANSFER OF CERTIFICATES ..................
Section 3.03. LOST, STOLEN, MUTILATED OR DESTROYED CERTIFICATES ..........
Section 3.04. LIMITATION ON TRANSFER OF OWNERSHIP RIGHTS .................
Section 3.05. ASSIGNMENT OF RIGHT TO DISTRIBUTIONS .......................
ARTICLE IV
CONCERNING THE OWNERS
Section 4.01. ACTION BY OWNERS WITH RESPECT TO CERTAIN MATTERS ...........
Section 4.02. ACTION UPON INSTRUCTIONS ...................................
Section 4.03. SUPER-MAJORITY CONTROL .....................................
Section 4.04. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR ............
Section 4.05. LIABILITY OF THE OWNERS ....................................
Section 4.06. POWER OF ATTORNEY ..........................................
ARTICLE V
INVESTMENT AND APPLICATION OF TRUST FUNDS
Section 5.01. INVESTMENT OF TRUST FUNDS ..................................
Section 5.02. APPLICATION OF FUNDS .......................................
ARTICLE VI
CAPITAL
Section 6.01. TAX CHARACTERIZATION .......................................
Section 6.02. CAPITAL CONTRIBUTIONS OF OWNERS ............................
Section 6.03. CAPITAL ACCOUNTS ...........................................
Section 6.04. INTEREST ...................................................
Section 6.05. ADDITIONAL CAPITAL CONTRIBUTIONS ...........................
Section 6.06. INVESTMENT OF CAPITAL CONTRIBUTIONS ........................
Section 6.07. REPAYMENT AND RETURN OF CAPITAL CONTRIBUTIONS ..............
ARTICLE VII
ALLOCATION OF PROFIT AND LOSS; DISTRIBUTIONS
Section 7.01. PROFIT .....................................................
Section 7.02. LOSS .......................................................
Section 7.03. SPECIAL ALLOCATIONS ........................................
Section 7.04. CURATIVE ALLOCATIONS .......................................
Section 7.05. OTHER ALLOCATION RULES .....................................
Section 7.06. DISTRIBUTION OF NET CASH FLOW ..............................
Section 7.07. DISTRIBUTION STATEMENT .....................................
Section 7.08. ALLOCATION OF TAX LIABILITY ................................
Section 7.09. METHOD OF PAYMENT ..........................................
Section 7.10. NO SEGREGATION OF FUNDS; NO INTEREST .......................
Section 7.11. INTERPRETATION AND APPLICATION OF PROVISIONS BY THE
ADMINISTRATOR ..............................................
ARTICLE VIII
AUTHORITY AND DUTIES OF THE OWNER TRUSTEE
Section 8.01. GENERAL AUTHORITY ..........................................
Section 8.02. SPECIFIC AUTHORITY .........................................
Section 8.03. GENERAL DUTIES .............................................
Section 8.04. ACCOUNTING AND REPORTS TO THE OWNERS, THE INTERNAL REVENUE
SERVICE AND OTHERS .........................................
Section 8.05. SIGNATURE OF RETURNS .......................................
Section 8.06. RIGHT TO RECEIVE AND RELY UPON INSTRUCTIONS ................
Section 8.07. NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT OR IN
INSTRUCTIONS ...............................................
Section 8.08. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR INSTRUCTIONS .
Section 8.09. RESTRICTION ................................................
ARTICLE IX
CONCERNING THE OWNER TRUSTEE
Section 9.01. ACCEPTANCE OF TRUSTS AND DUTIES ............................
Section 9.02. FURNISHING OF DOCUMENTS ....................................
Section 9.03. RELIANCE; ADVICE OF COUNSEL ................................
Section 9.04. NOT ACTING IN INDIVIDUAL CAPACITY ..........................
ARTICLE X
COMPENSATION OF OWNER TRUSTEE
Section 10.01. OWNER TRUSTEE'S FEES AND EXPENSES ..........................
Section 10.02. INDEMNIFICATION ............................................
Section 10.03. LIEN ON TRUST PROPERTY .....................................
Section 10.04. PAYMENTS TO THE OWNER TRUSTEE ..............................
ARTICLE XI
TERMINATION OF TRUST
Section 11.01. TERMINATION OF TRUST .......................................
Section 11.02. DISTRIBUTION OF ASSETS .....................................
Section 11.03. NO TERMINATION BY DEPOSITOR OR OWNERS ......................
ARTICLE XII
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 12.01. RESIGNATION OF OWNER TRUSTEE; APPOINTMENT OF SUCCESSOR .....
Section 12.02. APPOINTMENT OF ADDITIONAL OWNER TRUSTEES ...................
ARTICLE XIII
TAX MATTERS PARTNER
Section 13.01. TAX MATTERS PARTNER ........................................
Section 13.02. NOTICE OF TAX AUDIT ........................................
Section 13.03. AUTHORITY TO EXTEND PERIOD FOR ASSESSING TAX ...............
Section 13.04. CHOICE OF FORUM FOR FILING PETITION FOR READJUSTMENT .......
Section 13.05. AUTHORITY TO BIND OWNERS BY SETTLEMENT AGREEMENT ...........
Section 13.06. NOTICES SENT TO THE INTERNAL REVENUE SERVICE ...............
Section 13.07. INDEMNIFICATION OF TAX MATTERS PARTNER .....................
Section 13.08. APPROVAL OF TAX MATTERS PARTNER'S DECISIONS ................
Section 13.09. PARTICIPATION BY OWNERS IN INTERNAL REVENUE SERVICE
ADMINISTRATIVE PROCEEDINGS .................................
ARTICLE XIV
MISCELLANEOUS
Section 14.01. SUPPLEMENTS AND AMENDMENTS .................................
Section 14.02. NO LEGAL TITLE TO TRUST PROPERTY IN OWNER ..................
Section 14.03. PLEDGE OF COLLATERAL BY OWNER TRUSTEE IS BINDING ...........
Section 14.04. LIMITATIONS ON RIGHTS OF OTHERS ............................
Section 14.05. NOTICES ....................................................
Section 14.06. SEVERABILITY ...............................................
Section 14.07. SEPARATE COUNTERPARTS ......................................
Section 14.08. SUCCESSORS AND ASSIGNS .....................................
Section 14.09. HEADINGS ...................................................
Section 14.10. GOVERNING LAW ..............................................
Section 14.11. GENERAL INTERPRETIVE PRINCIPLES ............................
EXHIBIT 1 FORM OF TRUST CERTIFICATE
EXHIBIT 2 FORM OF ACCESSION AGREEMENT
EXHIBIT 3 FORM OF CERTIFICATE OF TRUST
EXHIBIT 4 FEE SCHEDULE
TRUST AGREEMENT, dated as of November 7, 1996, between The
National Collegiate Trust, a Delaware business trust (the "Depositor"), and
Delaware Trust Capital Management, Inc., a Delaware trust company (the "Owner
Trustee").
ARTICLE I
DEFINITIONS
Section 1.01. CAPITALIZED TERMS. For all purposes of this
Agreement, the following terms shall have the meaning set forth below:
"Administration Agreement" means the Administration Agreement,
dated as of November 1, 1996, among the Trust, the Indenture 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
Delaware corporation, as Administrator under the Administration Agreement, or
any successor Administrator as appointed pursuant to the terms of the
Administration Agreement.
"Affiliate" 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.
"Allocable Bonds" means, as to any Owner, the then outstanding
aggregate principal balance of Bonds which are collateralized by such Owner's
Allocable Student Loans. The initial Allocable Bonds for each Owner are set
forth on Schedule A attached hereto. Thereafter, the Allocable Bonds as to any
Owner shall be determined by multiplying the then outstanding aggregate
principal balance of the Bonds by a percentage derived by dividing the initial
Allocable Bonds for such Owner by the initial aggregate principal balance of the
Bonds.
"Allocable Student Loans" means, as to any Owner, the then
outstanding aggregate principal balance of Student Loans originated by the
Originator and made to students who were attending or recently graduated from
such Owner. The initial Allocable Student Loans for each Owner are set forth on
Schedule A attached hereto.
"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.
"Beneficial Interest" as to any Owner, means all or any part
of the interest of that Owner in the Trust, including without limitation its (i)
right to a distributive share of the Profit and Loss of the Trust, (ii) right to
a distributive share of the assets of the Trust, and (iii) 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.
"Bonds" means collateralized student loan bonds to be issued
by the Trust pursuant to the Indenture.
"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
by an Owner to the capital of the Trust, which shall be deemed to be such
Owner's share of the Securitization Reserves (as defined in the Master
Securitization Agreement or the Note Purchase Agreement, as the case may be,
with respect to the related Originator) plus the excess of the aggregate
principal balance of such Owner's Allocable Student Loans over the aggregate
principal balance of such Owner's Allocable Bonds as of the Closing Date, as set
forth on Schedule A to this Agreement.
"Certificate of Trust" means the Certificate of Trust to be
filed with the Secretary of State of the State of Delaware by the Owner Trustee
on behalf of the Trust pursuant to Section 8.02.
"Closing Date" means November 7, 1996.
"Depositor" means The National Collegiate Trust, a Delaware
business trust.
"Distributions" means any money or other property distributed
to an Owner with respect to its Beneficial Interest.
"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.
"Eligible Investments" means one or more of the following:
(i) 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;
(ii) repurchase agreements on obligations specified
in clause (i) 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 the Rating Agency in its
highest short-term rating available;
(iii) 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 has been rated by the Rating
Agency 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
the Rating Agency;
(iv) 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 the Rating Agency in
its highest short-term rating available; provided that such
commercial paper shall have a remaining maturity of not more
than 30 days;
(v) a money market fund rated by the Rating Agency in
its highest rating available; and
(vi) other obligations or securities that are
acceptable to the Rating Agency as an Eligible Investment
hereunder and will not result in a reduction in the then
current ratings of the Bonds, as evidenced in writing;
provided, however, that no instrument shall be an Eligible Investment if it
represents either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) 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, Eligible Investments shall
include only such obligations or securities that mature on or before the
Business Day immediately preceding the next Distribution Date. In addition, no
Eligible Investment which incorporates a penalty for early withdrawal shall be
acquired unless the maturity of such Eligible Investment is on or before the
Business Day immediately preceding the next Distribution Date.
"Fiscal Year" means the calendar year or such portion thereof
as the Trust may be in existence.
"Indenture" means the trust indenture between the Trust and
the Indenture Trustee pursuant to which the Bonds are to be issued.
"Indenture Trustee" means the bank or trust company acting as
Indenture trustee under the Indenture.
"Master Securitization Agreement" means that certain Master
Purchase and Securitization Agreement between the Owner and The First National
Bank of Boston, as the Originator.
"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) capital
expenditures to the extent not made from reserves, (c) reserves for capital
expenditures, contingencies and working capital established in such amounts as
the Owner Trustee, with the consent of the Owners, may determine, (d) repayments
of principal on any Trust indebtedness and (e) taxes.
"Net Interest Income Attributable to Student Loans" means,
with respect to a Fiscal Year, the interest income from the Student Loans minus
any servicing fees and expenses, other operating expenses of the Trust and
interest expense of the Bonds.
"Net Interest Income Attributable to Student Loans as to Each
Owner" means Net Interest Income Attributable to Student Loans (i) multiplied by
the interest rate on such Owner's Related Owner's Notes divided by the weighted
average interest rate on the Notes and (ii) such product multiplied by such
Owner's Allocable Student Loans as at the end of such Fiscal Year divided by the
aggregate principal balance of the Student Loans as at the end of such Fiscal
Year.
"Net Interest Income Attributable to Reserve Accounts" means,
with respect to a Fiscal Year, interest income from investments of all funds
held by the Indenture Trustee for the benefit of the holders of the Bonds and/or
the Trust and all funds, if any, held by the Owner Trustee or its agents for the
benefit of the Owners.
"Net Interest Income Attributable to Reserve Accounts as to
Each Owner" means Net Interest Income Attributable to Reserve Accounts
multiplied by such Owner's Allocable Bonds divided by the then outstanding
aggregate principal balance of the Bonds.
"Note Purchase Agreement" means that certain Note Purchase
Agreement between the Owner and Bank of America National Association as the
Originator.
"Notes" means the promissory notes to be sold to the Trust by
each Originator pursuant to the Master Securitization Agreement or the Note
Purchase Agreement, as the case may be.
"Originator" means either Bank of America National Association
or The First National Bank of Boston.
"Owner" means the Depositor and each of its successors in
interest as beneficiaries of the Trust pursuant to Article III hereof.
"Owner Trustee" means Delaware Trust Capital Management, Inc.,
a Delaware trust company.
"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.
"Rating Agency" means Xxxxx'x Investors Service, Inc. or
Standard & Poor's Ratings Services, A Division of the XxXxxx-Xxxx Companies,
Inc.
"Related Owner Notes" means, with respect to any Owner, all of
the Notes transferred to the Trust which represent Student Loans to students who
were attending or recently graduated from such Owner at the time such Student
Loans were originated.
"Sharing Ratio" means, with respect to any Owner and as of any
date, the ratio (expressed as a percentage) of (i) the sum of such Owner's
unreturned Capital Contribution and the aggregate unpaid principal balance of
such Owner's Related Owner Notes that are not in default to (ii) the sum of all
of the Owners' unreturned Capital Contributions and the aggregate unpaid
principal balance of the Notes that are not in default.
"Student Loan" means the education loans to students
originated under the GATESM (Guaranteed Access to Education) student loan
program.
"Super-majority Owners" shall have the meaning set forth in
Section 4.03.
"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.
"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
Owner Trustee 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 the Administration
Agreement.
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:
(i) 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 Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) Debit to such Capital Account the items
described in Section 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 Liability" has the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
"Nonrecourse Deductions" has the meaning set forth in Section
1.704-2(b)(1) of the Regulations.
"Partners" means the Owners.
"Partnership" means the Trust.
"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 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.
"Partnership Minimum Gain" has the meaning set forth in
Section 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 Code Section 703(a) (for this purpose, all items of income,
gain, loss, or deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:
(i) 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;
(ii) Any expenditures of the Partnership described in
Code Section 705(a)(2)(B) or treated as Code Section
705(a)(2)(B) expenditures pursuant to Regulations Section
1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing Profit or Loss pursuant to this definition, shall be
subtracted from such taxable income or loss;
(iii) Notwithstanding any other provisions of this
definition, any items which are specially allocated pursuant
to Section 7.03 or Section 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 Section 7.03
and 7.04 shall be determined by applying rules analogous to those set
forth in clauses (i) and (ii) 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.
ARTICLE II
ORGANIZATION
Section 2.01. NAME. The Trust created hereby shall be known as The
National Collegiate Trust 1996-S2, in which name the Owner Trustee may take any
action as provided herein.
Section 2.02. OFFICE. The 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:
(i) to prepare and deliver a Prospectus, a Prospectus
Supplement and other offering materials in connection with
public issuance and sale of the Bonds;
(ii) to acquire a pool of Student Loans and to issue
the Bonds;
(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.
(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;
(iv) the Trust shall conduct its business at the
office of the Owner Trustee and will use stationery 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 (x) of conducting business on behalf of
any Owner or any Affiliate of an Owner or (y) 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 hold itself out as being
liable for the debts of any Owner or any Affiliates of any
Owner; and
(vii) the Owners of the Trust Certificates shall meet
at least once each year (which meeting may be by telephonic
conference, if not held in the State of Delaware) and take
such actions as may be necessary to authorize actions of the
Trust, copies of the minutes of such meetings shall be
promptly delivered to the Owner Trustee; provided, that any
Owner that has the right to vote as to any matter shall be
given notice thereof at least seven days in advance of any
such vote, which notice may be waived by such Owner in
writing.
Section 2.04. APPOINTMENT OF THE OWNER TRUSTEE. The Depositor
hereby appoints the Owner Trustee as trustee of the Trust effective as of the
date hereof, to have all the rights, powers and duties set forth herein. The
Owner Trustee acknowledges receipt in trust from the Depositor as of the date
hereof, of the sum of one hundred dollars ($100), 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 business trust
under Chapter 38 of Title 12 of the Delaware Code.
Section 2.06. OTHER EXPENSES, LIABILITIES OF TRUST. The Owners
shall be jointly and severally liable for any and all liabilities and
obligations of the Trust; provided, however, that the Owners shall have rights
of contribution in proportion to their respective Percentage Interests; and
provided further, that an Owner shall be liable only for liabilities and
obligations of the Trust incurred from the date such Owner became duly
registered as an Owner in accordance with Sections 3.02 and 3.04 and such Owner
shall continue to be liable for such liabilities and obligations after such
Owner transfers its Beneficial Interest pursuant to Article III hereof or
otherwise is no longer an Owner for the purposes of this Agreement. Within ten
business days of receipt or a statement delivered by the Owner Trustee to the
effect that amounts necessary to pay expenses or to meet any obligation of the
Trust are not available in the Trust Property, and setting forth the basis for
such expenses and such Owner's allocable share of such expenses, each Owner
shall deliver to the Owner Trustee immediately available funds in the amount or
such Owner's allocable share of such expenses.
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 Trust only in the State of Delaware and payments will be made by the Trust
only from the State of Delaware.
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTEREST
Section 3.01. ISSUANCE OF TRUST CERTIFICATE.
(a) As of the date hereof, the Owner Trustee has issued and
delivered to the Depositor a Trust Certificate in the name of the
Depositor evidencing 100% 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.
(c) On the Closing Date, the Owner Trustee is authorized to
issue Trust Certificates to each of the Persons set forth on Schedule A
as Owners. Upon the issuance of the first additional Trust Certificate,
the Depositor shall be deemed to have withdrawn as the initial Owner
and to have contributed its Trust Certificate to the Trust.
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
record the name of such transferee as an Owner and its Percentage
Interest in the Trust Certificate register and 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.
(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 an 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, and (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 66 2/3% of both the Percentage Interests
and the Sharing Ratios in the Trust at such time, which consent may 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 an 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.
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.
(b) Without limiting the generality of the foregoing, in
connection with the following nonministerial matters, the Owner Trustee
will take no action unless it receives written approval from all the
Owners:
(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;
(ii) the amendment, change or modification of this
Agreement, the Administration Agreement or any Trust Related
Agreement;
(iii) the merger or consolidation of the Trust;
(iv) the adoption of a plan of liquidation; and
(v) 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 366 days
after the payment in full of all Bonds issued by 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.
(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 66 2/3% 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 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. LIABILITY OF THE OWNERS. The Owners shall be
jointly and severally liable for all obligations of the Trust.
Section 4.06. 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;
(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
(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 4.06 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 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;
(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 "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.
Section 6.02. CAPITAL CONTRIBUTIONS OF OWNERS. The Depositor
shall make a Capital Contribution in the amount of one hundred dollars ($100)
upon execution of this Agreement. Upon their accession to the Trust 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 Regulation ss.1.704- 1(b)(2)(iv) 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 Regulation Section 1.704- 1(b)(2)(iv)(c)),
(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 Code
ss.752), and (iii) such Owner's share of Profit and items of income and
gain that are specially allocated pursuant to Section 7.03 and 7.04.
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
liabilities of such Owner assumed by the Trust as provided in
Regulation Section 1.704-1(b)(2)(iv)(c)) 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.
(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 Code Section 752(c) 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 Regulations
Section 1.704-1(b), 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.
Section 6.05. 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.
(a) The Owner Trustee shall have no personal liability for the
repayment of any Capital Contributions of the Owners.
(b) Following redemption or payment of the Bonds in full,
principal payments received by the Trust in a Fiscal Year on account of
the Student Loans, including prepayments of principal and amounts
recovered in liquidation of a Student Loan allocable to outstanding
principal thereof, shall be distributed to the Owners in proportion to
the positive balances in their respective Capital Accounts.
ARTICLE VII
ALLOCATION OF PROFIT AND LOSS; DISTRIBUTIONS
Section 7.01. PROFIT. After giving effect to special
allocations set forth in Section 7.03, Profit for any Fiscal Year shall be
allocated in the following order and priority:
(a) OFFSET OF SECTION 7.02(C) ALLOCATION. Profit shall first
be allocated to the Owners in proportion to and to the extent of the
excess, if any, of (i) the cumulative Loss allocated to each Owner
pursuant to Section 7.02(b) for all prior Fiscal Years, over (ii) the
cumulative Profit allocated to each Owner pursuant to this Section
7.01(a)(1) for all prior Fiscal Years;
(b) NET INTEREST INCOME ATTRIBUTABLE TO STUDENT LOANS AS TO
EACH OWNER. Net Interest Income Attributable to Student Loans as to
Each Owner shall be allocated as follows:
(i) First, to the extent that cumulative Loss
resulting from defaults on one or more Owner's Related Owner
Notes ("Default Losses") have been allocated to other Owners
(the "Other Owners") pursuant to Section 7.02(a), to the Other
Owners to the extent of and in the same proportions as such
Default Losses were so allocated; and
(ii) Second, to such Owner.
(c) NET INTEREST INCOME ATTRIBUTABLE TO RESERVE ACCOUNTS AS TO
EACH OWNER. Net Interest Income Attributable to Reserve Accounts as to
Each Owner shall be allocated as follows:
(i) First, to the extent that the allocation under
Section 7.01(b)(i) shall not have offset all allocations of
Default Losses to the Other Owners, to the Other Owners to the
extent of and in the same proportions as such Default Losses
which were not so offset were allocated; and
(ii) Second, to such Owner.
(d) OTHER PROFIT. All Profit for any Fiscal Year not allocated
pursuant to Section 7.01 (a), (b) and (c) shall be allocated as
follows:
(i) First, to the extent that the allocation under
Section 7.01 (b)(i) and (c)(i) shall not have offset all
allocations of Default Losses to the Other Owners, to the
Other Owners to the extent of and in the same proportion as
such Default Losses which were not so offset were allocated;
(ii) Second, all income resulting from recoveries on
defaulted Related Owner Notes shall be allocated to the
Related Owner of such Notes to the extent the Related Owner
was previously allocated Loss under Section 7.02(a) with
respect to such Related Owner Notes; and
(iii) Third, to the Owners in proportion to their
Sharing Ratios.
Section 7.02. LOSS. After giving effect to the special
allocations set forth in Section 7.03, Loss for any Fiscal Year shall be
allocated as set forth in Section 7.02(a) and (b), subject to the limitation in
Section 7.02(c).
(a) LOSS ATTRIBUTABLE TO NOTE DEFAULTS. To the extent of any
positive balance in such Owner's Capital Account, each Owner shall be
specially allocated all Default Losses for such Fiscal Year resulting
from defaults on such Owner's Related Owner Notes transferred to the
Trust. If the allocation of such Default Losses would be in excess of
the positive balance in such Owner's Capital Account, such excess shall
be allocated to the Other Owners to the extent of the respective
positive balance in each other Owner's Capital Account and in
proportion to each other Owner's initial Capital Contributions.
(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 a Owner by Owner basis so as
to allocate the maximum permissible Loss to the Owner under Section
1.704-1(b)(2)(ii)(d) of the Regulations.
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 4, 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 Regulations Section 1.704-2(g). 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(b) 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 4, 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 Regulations
Section 1.704-2(i)(4). 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(c) 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), Section
1.704-1(b)(2)(ii)(d)(5), or Section 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(d) 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) GROSS INCOME ALLOCATION. In the event any Owner has a
deficit Capital Account at the end of any Fiscal Year which is in
excess of the sum of the amount such Owner 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, each 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(e) shall be made only if and to the
extent that such Owner would have a deficit Capital Account in excess
of such sum after all other allocations provided for in this Article
VII have been made as if Section 7.03(c) and this Section 7.03(d) were
not in this Agreement.
(e) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any
Fiscal Year shall be specially allocated among the Owners in proportion
to their Sharing Ratios.
(f) 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 respect to the Partner
Nonrecourse Debt to which such Partner Nonrecourse Deductions are
attributable in accordance with Regulations Section 1.704-2(i)(1).
(g) MANDATORY ALLOCATIONS UNDER CODE SECTION 704(C).
Notwithstanding the foregoing provisions of this Section 7.03, in the
event Code Section 704(c) or Code Section 704(c) principles applicable
under Section 1.704-1(b)(2)(iv) of the Regulations require allocations
of Profit or Loss in a manner different than that set forth above, the
provisions of Code Section 704(c) 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 Code Section
704(c) 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 Code Section 704(c) 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.
Section 7.04. CURATIVE ALLOCATIONS. The allocations set forth
in Sections 7.03(b) through (g) (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 Sections 7.03(a) and (b) that, although not
yet made, are likely to offset other Regulatory Allocations previously made
under Sections 7.03(e) and (f).
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 Code Section 706 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 a 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 Owner's
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 Limited Partner.
Section 7.06. DISTRIBUTION OF NET CASH FLOW. Except to the
extent prohibited by any agreement to which the Partnership is a party or is
otherwise bound, Net Cash Flow on each Distribution Date shall be distributed on
such Distribution Date to the Owners in the same manner as Profit is allocated
under this Article VII. 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 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:
(i) income and proceeds received by the Owner Trustee
with respect to the Trust Property;
(ii) amounts paid to the Owner Trustee;
(iii) amounts paid to any Person pursuant to a Trust
Related Agreement; and
(iv) 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 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
Section 2.03(b)(ii) and Section 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 this Article
VII regarding 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 and the Trust Related Agreements. 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 substantially in the form
of Exhibit 3 hereto; and
(b) execute and deliver 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 the Administrator shall approve, as
evidenced conclusively by the Owner Trustee's execution thereof.
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 Administrator Agreement.
Section 8.04. ACCOUNTING AND REPORTS TO THE OWNERS, THE
INTERNAL REVENUE SERVICE AND OTHERS. The Owner Trustee shall (i) maintain or
cause to be maintained the books of the Trust on a calendar year basis on the
accrual method of accounting, (ii) 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, (iii) 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, (iv) cause such tax returns to be signed in the manner required by
law, (v) 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 (vi) 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 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 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 (i) in accordance
with the powers granted to and the authority conferred upon the Owner Trustee
pursuant to this Agreement, and (ii) 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
(i) for its own willful misconduct or gross negligence, (ii) 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 (iii) for taxes, fees
or other charges on, based on or measured by any fees, commissions or
compensation received by the Owner Trustee in connection with any of the
transactions contemplated by this Agreement or the Trust Related Agreements. In
particular, but not by way of limitation:
(a) 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;
(b) 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;
(c) 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;
(d) Under no circumstance shall the Owner Trustee be
personally liable for any indebtedness of the Trust under any Trust
Related Agreement;
(e) 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 for
or in respect of the validity or sufficiency of the Administration
Agreement or the Trust Related Agreements; and
(f) 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 Issuer 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, bond 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, 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.
ARTICLE X
COMPENSATION OF OWNER TRUSTEE
Section 10.01. OWNER TRUSTEE'S FEES AND EXPENSES. The Owner
Trustee shall receive compensation from the Trust Property for its services
hereunder as set forth on the fee schedule attached hereto as Exhibit 4. The
Owner Trustee shall be entitled to be reimbursed for its reasonable expenses
hereunder, including, without limitation, 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 Owners shall be jointly
and severally liable for, and hereby agree to indemnify Delaware Trust Capital
Management, Inc., 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 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 Owners 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. 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 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) the unanimous consent
of the Owners, (ii) 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 of the State of Delaware.
Section 11.02. DISTRIBUTION OF ASSETS. Upon 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:
(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 the Owners 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 and
the Owners, 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 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, 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, 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 that meets the requirements of Section 3(a)(7) of
the Investment Company Act of 1940, as amended and whose parent entity
has a combined capital and surplus of as 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.
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 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 Treasury
Regulations) of the Trust for all federal income tax purposes set forth in the
Code shall be the Owner that would be treated as the tax matters partner
pursuant to section 6231(a)(7)(B) of the Code. 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.
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. 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; 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 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.
Section 14.02. NO LEGAL TITLE TO TRUST PROPERTY IN OWNER. 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.
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.
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: Delaware Trust Capital Management, Inc., 000 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust Administration, 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.
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.
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.
DELAWARE TRUST CAPITAL
MANAGEMENT, INC., not in its
individual capacity except as
expressly provided herein, but
solely as Owner Trustee
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
THE NATIONAL COLLEGIATE TRUST, as
Depositor and Owner
By: Delaware Trust Capital
Management, Inc., not in
its individual capacity
but solely as Owner Trustee
By: /s/ Xxxxxxx X. Xxxxx
-----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President
ACKNOWLEDGED WITH RESPECT
TO THE POWER OF ATTORNEY
GRANTED IN SECTION 4.06
FIRST MARBLEHEAD DATA SERVICES INC.
By: /s/ Xxxxxxx Xxxxxxxx
--------------------
Name: Xxxxxxx Xxxxxxxx
Title: President
SCHEDULE A
Initial Allocable Initial Allocable Capital
Owners Bonds Student Loans Contribution
------ ----- ------------- ------------
EXHIBIT 1
FORM OF TRUST CERTIFICATE
THE NATIONAL COLLEGIATE TRUST 1996-S2
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 TRUST AGREEMENT, DATED
AS OF NOVEMBER 7, 1996
Certificate No. 1
Delaware Trust Capital Management, Inc., not in its individual
capacity, but solely as owner trustee (the "Owner Trustee") under a Trust
Agreement, dated as of November 7, 1996, with The National Collegiate Trust (the
"Depositor"), 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 66 2/3% 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 (a) that it is jointly
and severally liable for all fees, expenses, taxes, indemnity payments and other
charges of the Trust pursuant to the Trust Agreement, (b) 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).
IN WITNESS WHEREOF, the Owner Trustee, pursuant to the Trust Agreement,
has caused this Trust Certificate to be issued as of the date hereof.
DELAWARE TRUST CAPITAL MANAGEMENT, INC.,
not in its individual capacity, but solely as
Owner Trustee
By:__________________________________________
Name:________________________________________
Title:_______________________________________
Dated: , 1996
EXHIBIT 2
FORM OF ACCESSION AGREEMENT
__________________, 1996
Delaware Trust Capital Management, Inc.
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Administration
Dear Sirs:
We refer to the Trust Agreement, dated as of November 7, 1996 (the
"Trust Agreement"), between The National Collegiate Trust (the "Company"), and
Delaware Trust Capital Management, Inc., a Delaware trust company (in its
capacity as trustee thereunder, the "Owner Trustee"). We propose to purchase a
beneficial interest in The National Collegiate Trust 1996-S2, a Delaware 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 hereby agree, as provided and to the extent specified in Section
2.06 of the Trust Agreement, to be jointly and severally liable with any other
holders of Trust Certificates with respect to the Trust for all fees, expenses,
taxes, indemnity payments and other liabilities of the Trust in accordance with
the terms of the Trust Agreement, including (except as otherwise provided in the
Trust Agreement) those incurred by Delaware Trust Capital Management, Inc. in
its capacity as Owner Trustee in the administration of the Trust thereunder, to
the extent such fees, expenses, taxes, indemnity payments and other liabilities
of the Trust or the Owner Trustee, as the case may be, with respect to the
Trust, are not paid out of the Trust Property; provided, however, that we will
be liable only for obligations of the Trust arising on and after the date
hereof.
2. 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.
3. 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.
4. 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 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.
5. 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.
6. 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.
7. 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.
8. 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.
9. We agree to be bound by all the terms and conditions of our Trust
Certificate and the Trust Agreement.
Very truly yours,
[Name of Purchaser]
By:____________________________________
Name:__________________________________
Title:_________________________________
Accepted and Acknowledged this
____ day of ____________, 1996.
DELAWARE TRUST CAPITAL MANAGEMENT, INC., not in its
individual capacity, but solely as Owner Trustee
By:________________________________
Name:______________________________
Title:_____________________________
EXHIBIT 3
CERTIFICATE OF TRUST
OF
THE NATIONAL COLLEGIATE TRUST 1996-S2
THE UNDERSIGNED, Delaware Trust Capital Management, Inc., as trustee,
for the purpose of forming a business trust does hereby certify as follows:
1. The name of the business trust is:
THE NATIONAL COLLEGIATE TRUST 1996-S2
2. The name and business address of the trustee of the business trust
in the State of Delaware is Delaware Trust Capital Management, Inc., 000 Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
3. The business trust reserves the right to amend, alter, change, or
repeal any provision contained in this Certificate of Trust in the manner now or
hereafter prescribed by law.
4. This Certificate of Trust shall be effective upon filing.
THE UNDERSIGNED, being the trustee hereinbefore named, for the purpose
of forming a business trust pursuant to the provisions of the Delaware Business
Trust Act, does make this certificate of trust, hereby declaring and further
certifying that this is its act and deed and that to the best of the
undersigned's knowledge and belief the facts herein stated are true.
DELAWARE TRUST CAPITAL
MANAGEMENT, INC.,
as trustee
By:____________________________
Name: Xxxxxxx X. Xxxxx
Title: Vice President
EXHIBIT 4
FEE SCHEDULE
