EXHIBIT 4.2
[FORM OF]
TRUST AGREEMENT
between
EFG Funding Corporation,
as Depositor,
and
[TRUSTEE],
not in its individual capacity but solely
as Trustee
Dated as of [________ __, 1999]
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND USAGE
ARTICLE II.
ORGANIZATION
SECTION 2.1. Name.....................................................................................1
SECTION 2.2. Office...................................................................................1
SECTION 2.3. Purposes and Powers......................................................................1
SECTION 2.4. Appointment of Trustee...................................................................2
SECTION 2.5. Initial Capital Contribution of Trust Estate.............................................2
SECTION 2.6. Declaration of Trust.....................................................................2
SECTION 2.7. Liability of the Depositor...............................................................3
SECTION 2.8. Title to Trust Property..................................................................3
SECTION 2.9. Representations and Warranties of the Depositor..........................................3
SECTION 2.10. Tax Treatment............................................................................4
ARTICLE III.
CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1. Initial Beneficial Ownership.............................................................5
SECTION 3.2. The Certificates.........................................................................5
SECTION 3.3. Authentication of Certificates...........................................................5
SECTION 3.4. Registration of Transfer and Exchange of Certificates....................................5
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates........................................6
SECTION 3.6. Persons Deemed Owners....................................................................7
SECTION 3.7. Access to List of Certificateholders' Names and Addresses................................7
SECTION 3.8. Maintenance of Office or Agency..........................................................7
SECTION 3.9. Appointment of Certificate Paying Agent..................................................7
SECTION 3.10. Book-Entry Certificates..................................................................8
SECTION 3.11. Notices to Clearing Agency...............................................................9
SECTION 3.12. Definitive Certificates..................................................................9
ARTICLE IV.
ACTIONS BY TRUSTEE
SECTION 4.1. Prior Notice to Certificateholders with Respect to Certain Matters......................10
SECTION 4.2. Action by Certificateholders with Respect to Bankruptcy.................................10
SECTION 4.3. Restrictions on Certificateholders' Power...............................................11
ARTICLE V.
APPLICATIONS OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1. Application of Trust Funds..............................................................11
(i)
SECTION 5.2. Method of Payment.......................................................................12
SECTION 5.3. No Segregation of Moneys; No Interest...................................................12
SECTION 5.4. Accounting and Reports to the Noteholders, the Internal Revenue Service and
Others..................................................................................12
SECTION 5.5. Incentive Programs......................................................................13
SECTION 5.6. Check-The-Box Regulations at State Level................................................13
ARTICLE VI.
AUTHORITY AND DUTIES OF TRUSTEE
SECTION 6.1. General Authority.......................................................................13
SECTION 6.2. General Duties..........................................................................14
SECTION 6.3. Action upon Instruction.................................................................14
SECTION 6.4. No Duties Except as Specified in this Agreement, the Transfer Agreement,
the Servicing Agreement, the Administration Agreement or in Instructions................15
SECTION 6.5. No Action Except Under Specified Documents or Instructions..............................16
SECTION 6.6. Restrictions............................................................................16
SECTION 6.7. Origination of Consolidation Loans during the Revolving Period..........................16
ARTICLE VII.
CONCERNING THE TRUSTEE
SECTION 7.1. Acceptance of Trusts and Duties.........................................................18
SECTION 7.2. Furnishing of Documents.................................................................19
SECTION 7.3. Representations and Warranties..........................................................19
SECTION 7.4. Reliance; Advice of Counsel.............................................................20
SECTION 7.5. Not Acting in Individual Capacity.......................................................20
SECTION 7.6. Trustee Not Liable for Certificates, Notes or Student Loans.............................20
SECTION 7.7. Trustee May Own Certificates and Notes..................................................21
ARTICLE VIII.
COMPENSATION OF TRUSTEE
SECTION 8.1. Trustee's Fees and Expenses.............................................................21
SECTION 8.2. Payments to the Trustee.................................................................21
ARTICLE IX.
TERMINATION OF TRUST AGREEMENT
SECTION 9.1. Termination of Trust Agreement..........................................................21
SECTION 9.2. Dissolution upon Bankruptcy of the Depositor............................................22
ARTICLE X.
SUCCESSOR TRUSTEES AND ADDITIONAL TRUSTEES
SECTION 10.1. Eligibility Requirements for Trustee....................................................23
SECTION 10.2. Resignation or Removal of Trustee.......................................................23
SECTION 10.3. Successor Trustee.......................................................................24
(ii)
SECTION 10.4. Merger or Consolidation of Trustee......................................................24
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee...........................................25
ARTICLE XI.
MISCELLANEOUS
SECTION 11.1. Supplements and Amendments..............................................................26
SECTION 11.2. No Legal Title to Trust Estate in Certificateholders....................................27
SECTION 11.3. Limitations on Rights of Others.........................................................27
SECTION 11.4. Notices.................................................................................28
SECTION 11.5. Severability............................................................................28
SECTION 11.6. Separate Counterparts...................................................................28
SECTION 11.7. Successors and Assigns..................................................................28
SECTION 11.8. No Petition.............................................................................28
SECTION 11.9. No Recourse.............................................................................29
SECTION 11.10. Headings................................................................................29
SECTION 11.11. Governing Law...........................................................................29
(iii)
TRUST AGREEMENT dated as of [________ __, 1999], between EFG Funding
Corporation, a Delaware Corporation , as Depositor, (the "Depositor") and
[TRUSTEE], a national banking association, not in its individual capacity but
solely as Trustee (the "Trustee").
The Depositor and the Trustee hereby agree as follows:
ARTICLE I.
Definitions and Usage
Capitalized terms used but not defined herein are defined in Appendix A to
the Administration Agreement, dated as of [________ __, 1999], among EFG Student
Loan Trust 1999-[_], as Issuer, Educational Finance Group, Inc., as
Administrator, and [Indenture Trustee], as Indenture Trustee, which also
contains rules as to construction and usage that shall be applicable herein.
ARTICLE II.
Organization
SECTION 2.1. Name. The Trust created hereby shall be known as "EFG Student
Loan Trust 1999-[_]", in which name the Trustee may conduct the business of the
Trust, make and execute contracts and other instruments on behalf of the Trust
and xxx and be sued.
SECTION 2.2. Office. The office of the Trust shall be in care of the
Trustee at its Corporate Trust Office or at such other address as the Trustee
may designate by written notice to the Depositor.
SECTION 2.3. Purposes and Powers. The purpose of the Trust is to engage in
the following activities:
(i) to issue the Notes pursuant to the Indenture and Certificates
pursuant to this Agreement and to sell the Notes and the Certificates in
one or more transactions;
(ii) with the proceeds of the sale of the Notes and the Certificates,
to purchase the Initial Student Loans, to deposit the Reserve Account
Initial Deposit in the Reserve Account, and to pay the organizational,
start-up and transactional expenses of the Trust and to pay the balance to
the Depositor pursuant to the Transfer Agreement;
[{(iii) to originate Consolidation Loans during the Revolving Period
pursuant to Section 6.07 hereof, to increase the principal balance of
Consolidation Loans by adding the principal balances of any related Add-on
Consolidation Loans to the principal balances of such Consolidation Loans,
to acquire and hold any New Loans to be conveyed to the Trust during the
Revolving Period pursuant to the Transfer
Agreement directly or, in the case of legal title to FFELP Loans, through
the Eligible Lender Trustee, and to acquire and hold any Serial Loans or
other Student Loans to be conveyed to the Trust subsequent to the Closing
Date pursuant to the Transfer Agreement directly or, in the case of legal
title to FFELP Loans, through the Eligible Lender Trustee;}]
(iv) to assign, grant, transfer, pledge, mortgage and convey the Trust
Estate pursuant to the Indenture;
(v) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
(vi) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and
(vii) subject to compliance with the Basic Documents, to engage in
such other activities as may be required in connection with conservation of
the Trust Estate and the making of distributions to the Noteholders and the
others specified in Section 2(d) of the Administration Agreement.
The Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this Agreement
or the other Basic Documents.
SECTION 2.4. Appointment of Trustee. The Depositor hereby appoints the
Trustee as trustee of the Trust effective as of the date hereof, to have all of
the rights, powers and duties set forth herein.
SECTION 2.5. Initial Capital Contribution of Trust Estate. The Depositor
hereby sells, assigns, transfers, conveys and sets over to the Trustee, as of
the date hereof, the sum of $1.00. The Trustee hereby acknowledges receipt in
trust from the Depositor, as of the date hereof, of the foregoing contribution,
which shall constitute the initial Trust Estate and shall be deposited in the
Collection Account. The Depositor shall pay the organizational expenses of the
Trust as they may arise or shall, upon the request of the Trustee, promptly
reimburse the Trustee for any such expenses paid by the Trustee.
SECTION 2.6. Declaration of Trust. The Trustee hereby declares that it will
hold the Trust Estate in trust upon and subject to the conditions set forth
herein for the use and benefit of the [Certificateholders], subject to the
obligations of the Trust under the other Basic Documents. It is the intention of
the parties hereto that the Trust constitute a trust under the Business Trust
Statute and that this Agreement constitute the governing instrument of such
trust. Effective as of the date hereof, the Trustee shall have all rights,
powers and duties set forth herein and in the Business Trust Statute with
respect to accomplishing the purposes of the Trust. The Trustee and the Delaware
Trustee shall file the Certificate of Trust with the Secretary of State of the
State of Delaware pursuant to ss. 3810 of the Business Trust Statute on or
before the Closing Date.
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SECTION 2.7. Liability of the Depositor. The Depositor shall be liable
directly to and will indemnify the injured party for all losses, claims,
damages, liabilities and expenses of the Trust (including Expenses, to the
extent not paid out of the Trust Estate) to the extent that the Depositor would
be liable if the Trust were a partnership under the Delaware Revised Uniform
Limited Partnership Act in which the Depositor were a general partner; provided,
however, that the Depositor shall not be liable for any losses incurred by a
Noteholder or a Note Certificateholders in the capacity of an investor in the
Notes. In addition, any third party creditors of the Trust (other than in
connection with the obligations described in the preceding sentence for which
the Depositor shall not be liable) shall be deemed third party beneficiaries of
this paragraph.
SECTION 2.8. Title to Trust Property. Legal title to the Trust Estate shall
be vested at all times in the Trust as a separate legal entity except where
applicable law in any jurisdiction requires title to any part of the Trust
Estate to be vested in a trustee or trustees, in which case title shall be
deemed to be vested in the Trustee, a co-trustee and/or a separate trustee, as
the case may be; provided that legal title to the FFELP Student Loans shall be
vested at all times in the Trustee on behalf of the Trust.
SECTION 2.9. Representations and Warranties of the Depositor. (a) The
Depositor hereby represents and warrants, as to itself, to the Trustee that:
(a)......It is duly organized and validly existing as a corporation in
good standing under the laws of the jurisdiction of its organization , with the
organizational power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is presently
conducted (subject with respect to the Depositor and its FFELP Student Loans, to
the vesting of legal title thereto in the Trustee or another eligible lender, as
trustee for the Depositor).
(b)......It is duly qualified to do business as a foreign organization
in good standing, and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the conduct of its
business shall require such qualifications except where failure to do so (both
singly and in the aggregate) will not have a material adverse effect on the
conduct of its business, operations or financial condition.
(c)......It has the organizational power and authority to execute and
deliver this Agreement and to carry out its terms; and the execution, delivery
and performance of this Agreement has been duly authorized by it by all
necessary corporate action.
(d)......This Agreement constitutes its legal, valid and binding
obligation enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization and similar laws relating to creditors'
rights generally and subject to general principles of equity.
(e)......The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time or both) a
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default under, its articles of incorporation or by-laws, or any indenture,
agreement or other instrument to which it is a party or by which it is bound;
nor result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement or other instrument
(other than pursuant to the Basic Documents); nor violate any law or, to the
best of its knowledge, any order, rule or regulation applicable to it of any
court or of any Federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over it or its properties.
(f)......There are no proceedings or investigations pending or, to its
best knowledge, threatened before any court, regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the
Depositor or its properties: (A) asserting the invalidity of this Agreement, (B)
seeking to prevent the consummation of any of the transactions contemplated by
this Agreement or (C) seeking any determination or ruling that might materially
and adversely affect the performance by it of its obligations under, or the
validity or enforceability of, this Agreement.
SECTION 2.10. Tax Treatment. (a) The Depositor has entered into this
Agreement, and the Notes will be issued to and acquired by the Noteholders, with
the intention that, for federal, state, foreign and local income and franchise
tax and usury law purposes, the Notes will be indebtedness of the Depositor
secured by the Trust Estate. The Depositor, by entering into this Agreement, and
each Noteholder, by the acceptance of its Note, agrees to treat the Notes for
purposes of federal, state and local income and franchise taxes and for any
other tax imposed on or measured by income and usury law purposes as
indebtedness of the Depositor secured by the Trust Estate. In accordance with
the foregoing, the Trustee hereby agrees to treat the Trust as a security device
only, and shall not file tax returns or obtain an employer identification number
on behalf of the Trust (except as may be required as a result of changes in law
or as may otherwise be required in the Opinion of Counsel for the Depositor).
(b) In the event that the foregoing characterization is not honored, or
for income tax purposes the Trust is to be treated as an association taxable as
a corporation, it is the intention of the Depositor and all holders of interests
in the Trust that the Trust shall be treated as a partnership for all federal,
state and local tax purposes.
ARTICLE III.
Certificates and Transfer of Interests
SECTION 3.1. Initial Beneficial Ownership. Upon the formation of the Trust
by the contribution by the Depositor pursuant to Section 2.5 and until the
issuance of the Certificates, the Depositor shall be the sole beneficial owner
of the Trust.
SECTION 3.2. The Certificates. The Certificates shall be issued in
denominations of $100,000 or in integral multiples of $1,000 in excess thereof.
The Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of an authorized officer of the Trustee. Certificates bearing the
manual or facsimile signatures of individuals who were, at
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the time when such signatures were affixed, authorized to sign on behalf of the
Trust, shall be valid and binding obligations of the Trust, notwithstanding that
such individuals or any of them shall have ceased to be so authorized prior to
the authentication and delivery of such Certificates or did not hold such
offices at the date of authentication and delivery of such Certificates.
SECTION 3.3. Authentication of Certificates. Concurrently with the sale of
the Trust Student Loans to the Trust pursuant to the Purchase Agreement, the
Trustee shall cause the Certificates in an aggregate principal amount equal to
the Initial Certificate Balance to be executed on behalf of the Trust,
authenticated and delivered to or upon the written order of the Depositor,
signed by its chairman of the board, its president or any vice president,
without further action by the Depositor, in authorized denominations. No
Certificate shall entitle its holder to any benefit under this Agreement, or
shall be valid for any purpose, unless there shall appear on such Certificate a
certificate of authentication substantially in the form set forth in Exhibit B,
executed by the Trustee or [____], by manual signature; such authentication
shall constitute conclusive evidence that such Certificate shall have been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication. No further Certificates shall be issued except pursuant
to Section 3.4, 3.5 or 3.12 hereunder.
SECTION 3.4. Registration of Transfer and Exchange of Certificates. The
Certificate Registrar shall keep or cause to be kept, at the office or agency
maintained pursuant to Section 3.8, a Certificate Register in which, subject to
such reasonable regulations as it may prescribe, the Trustee shall provide for
the registration of Certificates and of transfers and exchanges of Certificates
as herein provided. [_____] shall be the initial Certificate Registrar.
Upon surrender for registration of transfer of any Certificate at the
office or agency maintained pursuant to Section 3.8, the Trustee shall execute,
authenticate and deliver (or shall cause [_____] as its authenticating agent to
authenticate and deliver), in the name of the designated transferee or
transferees, one or more new Certificates in authorized denominations of a like
aggregate amount dated the date of authentication by the Trustee or any
authenticating agent. At the option of a Certificateholder, Certificates may be
exchanged for other Certificates of authorized denominations of a like aggregate
amount upon surrender of the Certificates to be exchanged at the office or
agency maintained pursuant to Section 3.8.
Every Certificate presented or surrendered for registration of transfer or
exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
Certificateholder or his attorney duly authorized in writing, with such
signature guaranteed by a member firm of the New York Stock Exchange or a
commercial bank or trust company. Each Certificate surrendered for registration
of transfer or exchange shall be canceled and subsequently disposed of by the
Trustee in accordance with its customary practice.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Trustee or the Certificate Registrar may
require payment of a sum
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sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
The preceding provisions of this Section notwithstanding, the Trustee shall
not be required to make and the Certificate Registrar need not register
transfers or exchanges of Certificates for a period of 15 days preceding any
Distribution Date with respect to the Certificates.
The Certificates and any beneficial interest in such Certificates may not
be acquired by (a) employee benefit plans (as defined in section 3(3) of ERISA)
that are subject to the provisions of Title I of ERISA, (b) plans described in
section 4975(e)(1) of the Code, including individual retirement accounts
described in Section 408(a) of the Code or Xxxxx plans, or (c) entities whose
underlying assets include plan assets by reason of a plan's investment in such
entities (each, a "Benefit Plan"). By accepting and holding a Certificate or an
interest therein, the Certificateholder thereof or Certificate Owner thereof
shall be deemed to have represented and warranted that it is not a Benefit Plan,
is not purchasing Certificates on behalf of a Benefit Plan and is not using
assets of a Plan to purchase any Certificates and to have agreed that if the
Certificate is deemed to be a plan asset, the Certificateholder will promptly
dispose of the Certificate.
SECTION 3.5. Mutilated, Destroyed, Lost or Stolen Certificates. If (a) any
mutilated Certificate shall be surrendered to the Certificate Registrar, or if
the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Certificate, and (b) there shall be delivered
to the Certificate Registrar and the Trustee such security or indemnity as may
be required by them to save each of them and the Trust harmless, then in the
absence of notice that such Certificate shall have been acquired by a bona fide
purchaser, the Trustee on behalf of the Trust shall execute and the Trustee
shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and denomination. In connection with the issuance of any new Certificate
under this Section, the Trustee and the Certificate Registrar may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith. Any duplicate Certificate issued
pursuant to this Section shall constitute conclusive evidence of ownership in
the Trust, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be found at any time.
SECTION 3.6. Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, the Trustee and the Certificate
Registrar and any agent of either of them may treat the Person in whose name any
Certificate shall be registered in the Certificate Register as the owner of such
Certificate for the purpose of receiving distributions pursuant to Section 5.1
and for all other purposes whatsoever, and neither the Trustee, the Certificate
Registrar nor any agent thereof shall be bound by any notice to the contrary.
SECTION 3.7. Access to List of Certificateholders' Names and Addresses. The
Trustee shall furnish or cause to be furnished to the Depositor, within 15 days
after receipt by the Trustee of a request therefor from the Depositor in
writing, a list, in such form as the
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Depositor may reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date. If three or more
Certificateholders or one or more Certificateholders evidencing not less than
25% of the Certificate Balance apply in writing to the Trustee, and such
application states that the applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Trustee shall,
within five Business Days after the receipt of such application, afford such
applicants access during normal business hours to the current list of
Certificateholders. Upon receipt of any such application, the Trustee shall
promptly notify the Depositor by providing a copy of such application and a copy
of the list of Certificateholders produced in response thereto. Each
Certificateholder, by receiving and holding a Certificate, shall be deemed to
have agreed not to hold any of the Depositor, the Certificate Registrar or the
Trustee accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
SECTION 3.8. Maintenance of Office or Agency. The Trustee shall maintain in
the [_____], an office or offices or agency or agencies where Certificates may
be surrendered for registration of transfer or exchange and where notices and
demands to or upon the Trustee in respect of the Certificates and the other
Basic Documents may be served. The Trustee initially designates[_____], as its
principal Corporate Trust Office. The Trustee's New York office and its
authenticating agent's office are located at [_____], Attention: [_____]. The
Trustee shall give prompt written notice to the Depositor and to the
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
SECTION 3.9. Appointment of Certificate Paying Agent. The Certificate
Paying Agent shall make distributions to Certificateholders from the amounts
received from the Indenture Trustee out of the Trust Accounts pursuant to
Section 5.1 and shall report the amounts of such distributions to the Trustee.
Any Certificate Paying Agent shall have the revocable power to receive such
funds from the Indenture Trustee for the purpose of making the distributions
referred to above. The Trustee may revoke such power and remove the Certificate
Paying Agent if the Trustee determines in its sole discretion that the
Certificate Paying Agent shall have failed to perform its obligations under this
Agreement in any material respect. The Certificate Paying Agent shall initially
be the Trustee, and any co-paying agent chosen by the Trustee and consented to
by the Administrator (which consent shall not be unreasonably withheld). The
copaying agent shall initially be the Indenture Trustee. The Trustee shall be
permitted to resign as Certificate Paying Agent upon 30 days' written notice to
the Trustee. In the event that the Trustee shall no longer be the Certificate
Paying Agent, the Trustee shall appoint a successor to act as Certificate Paying
Agent (which shall be a bank or trust company). The Trustee shall give notice to
the Rating Agencies of the appointment of a successor Paying Agent. The Trustee
shall cause such successor Certificate Paying Agent or any additional
Certificate Paying Agent appointed by the Trustee to execute and deliver to the
Trustee an instrument in which such successor Certificate Paying Agent or
additional Certificate Paying Agent shall agree with the Trustee that as
Certificate Paying Agent, such successor Certificate Paying Agent or additional
Certificate Paying Agent will hold all sums, if any, held by it for payment to
the Certificateholders in trust for the benefit of the
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Certificateholder entitled thereto until such sums shall be paid to such
Certificateholder. The Certificate Paying Agent shall return all unclaimed funds
to the Trustee and upon removal of a Certificate Paying Agent such Certificate
Paying Agent shall also return all funds in its possession to the Trustee. The
provisions of Sections 7.1, 7.3, 7.4, 7.5 and 8.1 shall apply to the Trustee
also in its role as Certificate Paying Agent, for so long as the Trustee shall
act as Certificate Paying Agent and, to the extent applicable, to any other
paying agent appointed hereunder. Any reference in this Agreement to the
Certificate Paying Agent shall include any copaying agent unless the context
requires otherwise.
SECTION 3.10. Book-Entry Certificates. The Certificates, upon original
issuance, will be issued in the form of a typewritten Certificate or
Certificates representing Book-Entry Certificates, to be delivered to The
Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the
Trust. Such Book-Entry Certificate or Book-Entry Certificates shall initially be
registered on the Certificate Register in the name of Cede & Co., the nominee of
the initial Clearing Agency, and no Certificate owner will receive a Definitive
Certificate representing such Certificate Owner's interest in such Certificate,
except as provided in Section 3.12. Unless and until definitive, fully
registered Certificates (the "Definitive Certificates") have been issued to
Certificate owners pursuant to Section 3.12:
(i) the provisions of this Section shall be in full force and effect;
(ii) the Certificate Registrar and the Trustee shall be entitled to
deal with the Clearing Agency for all purposes of this Agreement (including
the payment of principal of and interest on the Certificates and the giving
of instructions or directions hereunder) as the sole Certificateholder and
shall have no obligation to the Certificate owners;
(iii) to the extent that the provisions of this Section conflict with
any other provisions of this Agreement, the provisions of this Section
shall control;
(iv) the rights of Certificateholders shall be exercised only through
the Clearing Agency and shall be limited to those established by law and
agreements between such Certificate Owners and the Clearing Agency and/or
the Clearing Agency Participants. Pursuant to the Certificate Depository
Agreement, unless and until Definitive Certificates are issued pursuant to
Section 3.12, the initial Clearing Agency will make book-entry transfers
among the Clearing Agency Participants and receive and transmit
distribution in respect of the Certificate Balance and return on the
Certificates to such Clearing Agency Participants; and
(v) whenever this Agreement requires or permits actions to be taken
based upon instructions or directions of Certificateholders of Certificates
evidencing a specified percentage of the Certificate Balance, the Clearing
Agency shall be deemed to represent such percentage only to the extent that
it has received instructions to such effect from Certificate Owners and/or
Clearing Agency Participants owning or representing, respectively, such
required percentage of the beneficial interest in the Certificates and has
delivered such instructions to the Trustee.
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SECTION 3.11. Notices to Clearing Agency. Whenever a notice or other
communication to the Certificateholders is required under this Agreement, unless
and until Definitive Certificates shall have been issued to Certificate Owners
pursuant to Section 3.12, the Trustee shall give all such notices and
communications specified herein to be given to Certificateholders to the
Clearing Agency, and shall have no obligations to the Certificate Owners.
SECTION 3.12. Definitive Certificates. If (i) the Administrator advises the
Trustee in writing that the Clearing Agency is no longer willing or able to
discharge properly its responsibilities with respect to the Certificates, and
the Administrator is unable to locate a qualified successor, (ii) the
Administrator at its option advises the Trustee in writing that it elects to
terminate the book-entry system through the Clearing Agency or (iii) after the
occurrence of an Event of Default, a Servicer Default or an Administrator
Default, Certificate Owners representing beneficial interests aggregating at
least a majority of the Certificate Balance advise the Clearing Agency (which
shall then notify the Trustee) in writing that the continuation of a book-entry
system through the Clearing Agency is no longer in the best interest of the
Certificate Owners, then the Trustee shall cause the Clearing Agency to notify
all Certificate Owners of the occurrence of any such event and of the
availability of the Definitive Certificates to Certificate Owners requesting the
same. Upon surrender to the Trustee of the typewritten Certificate or
Certificates representing the Book-Entry Certificates by the Clearing Agency,
accompanied by registration instructions, the Trustee shall execute and
authenticate the Definitive Certificates in accordance with the instructions of
the Clearing Agency. Neither the Certificate Registrar nor the Trustee shall be
liable for any delay in delivery of such instructions and may conclusively rely
on, and shall be protected in relying on, such instructions. Upon the issuance
of Definitive Certificates, the Trustee shall recognize the registered holders
of the Definitive Certificates as Certificateholders. The Definitive
Certificates shall, at the expense of the Depositor, be printed, lithographed or
engraved or may be produced in any other manner as is reasonably acceptable to
the Trustee, as evidenced by its execution thereof.
ARTICLE IV.
Actions by Trustee
SECTION 4.1. Prior Notice to Certificateholders with Respect to Certain
Matters. With respect to the following matters, the Trustee shall not take
action unless at least 30 days before the taking of such action, the Trustee
shall have notified the Certificateholders and the Rating Agencies in writing of
the proposed action and the Certificateholders shall not have notified the
Trustee in writing prior to the 30th day after such notice is given that such
Certificateholders has withheld consent or provided alternative direction:
(i) the initiation of any material claim or lawsuit by the Trust
(except claims or lawsuits brought in connection with the collection of the
Financed Student Loans) and the compromise of any material action, claim or
lawsuit brought by or against the
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Trust (except with respect to the aforementioned claims or lawsuits for
collection of Student Loans);
(ii) the election by the Trust to file an amendment to the Certificate
of Trust;
(iii) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(iv) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interests of the
Certificateholders;
(v) the amendment, change or modification of the Administration
Agreement, except to cure any ambiguity or to amend or supplement any
provision in a manner or add any provision that would not materially
adversely affect the interests of the Certificateholders; or
(vi) the appointment pursuant to the Indenture of a successor
Certificate, Registrar, successor Note Registrar or Indenture Trustee, or
the consent to the assignment by the Note Registrar or Indenture Trustee of
its obligations under the Indenture.
SECTION 4.2. Action by Certificateholders with Respect to Bankruptcy. The
Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to the Trust without the prior approval of the
Certificateholders and the delivery to the Trustee by the Certificateholders of
a certificate certifying that it reasonably believes that the Trust is
insolvent.
SECTION 4.3. Restrictions on Certificateholders' Power. The
Certificateholders shall not direct the Trustee to take or refrain from taking
any action if such action or inaction would be contrary to any obligation of the
Trust or the Trustee under this Agreement or any of the other Basic Documents or
would be contrary to Section 2.03 nor shall the Trustee be permitted to follow
any such direction, if given.
ARTICLE V.
Applications of Trust Funds; Certain Duties
SECTION 5.1. Application of Trust Funds.
(a)......On each Distribution Date, the Trustee shall distribute to
Certificateholders (i) [the Certificateholders' Return Distribution Amount for
such Distribution Date on a pro rata basis according to amounts payable in
respect of Certificateholders' Return Distribution Amount, (ii) the Certificate
Balance Distribution Amount for such Distribution Date, if any, on a pro rata
basis according to amounts payable in respect of the Certificate
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Balance, and (iii) the Certificate Return Carryover for such Distribution Date,
if any, on a pro rata basis according to amounts payable in respect of
Certificate Return Carryover, as received from the Indenture Trustee pursuant to
Sections 2.7 and 2.8 of the Administration Agreement on such Distribution Date].
(b)......On each Distribution Date, the Trustee shall send to each
Certificateholder the statement provided to the Eligible Lender Trustee by the
Administrator pursuant to Section 2.9 of the Administration Agreement on such
Distribution Date.
(c)......In the event that any withholding tax is imposed on the
Trust's payment (or allocations of income) to a Certificateholder, such tax
shall reduce the amount otherwise distributable to the Certificateholder in
accordance with this Section. The Eligible Lender Trustee is hereby authorized
and directed to retain from amounts otherwise distributable to the
Certificateholders sufficient funds for the payment of any tax that is legally
owed by the Trust (but such authorization shall not prevent the 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). The
amount of any withholding tax imposed with respect to a Certificateholder shall
be treated as cash distributed to such Certificateholder at the time it is
withheld by the Trust to be remitted to the appropriate taxing authority. The
Trustee shall withhold or cause to be withheld at the maximum applicable rate
provided in section 1441, 1442 or 1446 of the Code with respect to all
distributions made to persons that are not known to be U.S. Persons, within the
meaning of the Code, unless it is otherwise determined in the opinion of
counsel. In the event that a Certificateholder wishes to apply for a refund of
any such withholding tax, the Trustee shall reasonably cooperate with such
Certificateholder in making such claim so long as such Certificateholder agrees
to reimburse the Trustee for any out-of-pocket expenses incurred.
SECTION 5.2. Method of Payment. Subject to Section 9.1(c), distributions
required to be made to Certificateholders on any Distribution Date shall be made
to each Certificateholder of record on the preceding Record Date either by wire
transfer, in immediately available funds, to the account of such
Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder shall have provided to the Certificate
Registrar appropriate written instructions signed by two authorized officers, if
any, at least five Business Days prior to such Distribution Date and such
Certificateholder's Trust Certificates in the aggregate evidence a denomination
of not less than $1,000,000, or, if not, by check mailed to such
Certificateholder at the address of such Certificateholder appearing in the
Certificate Register; provided, however, that, unless Definitive Certificates
have been issued pursuant to Section 3.12, with respect to Trust Certificates
registered on the Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be Cede & Co.), distributions will be made by wire
transfer in immediately available funds to the account designated by such
nominee. Notwithstanding the foregoing, the final distribution in respect of any
Trust Certificate (whether on the Certificate Final Maturity Date or otherwise)
shall be payable only upon presentation and surrender of such Trust Certificate
at the Corporate Trust Office of the Eligible Lender Trustee or such other
location specified in writing to the Certificateholder thereof.
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SECTION 5.3. No Segregation of Moneys; No Interest. Moneys received by the
Trustee hereunder need not be segregated in any manner except to the extent
required by law or the Basic Documents and may be deposited under such general
conditions as may be prescribed by law, and the Trustee shall not be liable for
any interest thereon.
SECTION 5.4. Accounting and Reports to the Noteholders, the Internal
Revenue Service and Others. No federal income tax return shall be filed on
behalf of the Trust unless either (i) the Trustee shall receive an Opinion of
Counsel that, based on a change in applicable law occurring after the date
hereof, or as a result of a transfer by the Certificateholders permitted by
Section 3.01, the Code requires such a filing or (ii) the Internal Revenue
Service shall determine that the Trust is required to file such a return. In the
event that the Trust is required to file tax returns, the Trustee shall prepare
or shall cause to be prepared any tax returns required to be filed by the Trust
and shall remit such returns to the Certificateholders at least five (5) days
before such returns are due to be filed. The Certificateholders shall promptly
sign such returns and deliver such returns after signature to the Trustee and
such returns shall be filed by the Trustee with the appropriate tax authorities.
In no event shall the Trustee, the Certificateholders or the Depositor be liable
for any liabilities, costs or expenses of the Trust or the Noteholders arising
out of the application of any tax law, including federal, state, foreign or
local income or excise taxes or any other tax imposed on or measured by income
(or any interest, penalty or addition with respect thereto or arising from a
failure to comply therewith) except for any such liability, cost or expense
attributable to any act or omission by the Trustee, the Certificateholders or
the Depositor, as the case may be, in breach of its obligations under this
Agreement.
SECTION 5.5. Incentive Programs. Subject to compliance by the Administrator
with Section 2(i) of the Administration Agreement, the Trust shall offer each
Incentive Program to all qualified Borrowers except any Incentive Program which
the Administrator terminates pursuant to Section 2(i) of the Administration
Agreement. Upon the effective date specified in the notice of termination
required by Section 2(i) of the Administration Agreement, the Trust shall cease
offering the terminated Incentive Program to Borrowers affected by the
termination.
SECTION 5.6. Check-The-Box Regulations at State Level. If applicable
[Delaware, Indiana and Texas] tax statutes or regulations are such that the
Trust would not be classified as an association taxable as a corporation if the
requirements of Sections 2.07 and 9.02 hereof and Section 2.13 of the Indenture
(collectively, the "Partnership Qualification Provisions") were no longer
applicable and the Trust made any necessary elections to avoid classification as
an association taxable as a corporation required by such statutes or regulations
(such an amendment, a "Tax Characterization Amendment"), the Partnership
Qualification Provisions shall no longer be applicable or part of this Agreement
or the Indenture; provided, however, that the Partnership Qualification
Provisions shall no longer be applicable or part of this Agreement or the
Indenture only if the Trustee first obtains an Opinion of Counsel stating that
(i) a Tax Characterization Amendment has been adopted (or is not necessary) and
(ii) the deletion of the Partnership Qualification Provisions will not cause the
Trust to be subject to an entity level tax for state or federal income tax
purposes. If the Depositor determines in its sole
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discretion that the Trust should make any filing or take any other action as a
result of a Tax Characterization Amendment, the Depositor and the Trustee, at
the expense of the Depositor, shall take all actions (including, but not limited
to, obtaining the approval of one or both classes of Noteholders) determined by
the Depositor in its sole discretion as necessary or advisable under such
statutes and regulations for the Trust to be treated as a partnership for
[Delaware, Indiana and Texas] state income tax purposes.
ARTICLE VI.
Authority and Duties of Trustee
SECTION 6.1. General Authority. The Trustee is authorized and directed to
execute and deliver the Basic Documents to which the Trust is to be a party and
each certificate or other document attached as an exhibit to or contemplated by
the Basic Documents to which the Trust is to be a party, in each case, in such
form as the Depositor shall approve as evidenced conclusively by the Trustee's
execution thereof, and, on behalf of the Trust, to direct the Indenture Trustee
to authenticate and deliver Senior Notes in the aggregate principal amount of $[
] and Subordinate Notes in the aggregate principal amount of $[ ]. The Trustee
is also authorized and directed on behalf of the Trust (i) to acquire and hold
legal beneficial title to the FFELP Student Loans and legal and beneficial title
to the Private Student Loans from the Depositor and (ii) to take all actions
required pursuant to Section 3.02(c) of the Servicing Agreement, and otherwise
follow the direction of and cooperate with the Servicer and the Eligible Lender
Trustee in submitting, pursuing and collecting any claims to and with the
Department with respect to any Interest Subsidy Payments and Special Allowance
Payments relating to the FFELP Student Loans.
In addition to the foregoing, the Trustee is authorized, but shall not be
obligated, to take all actions required of the Trust pursuant to the Basic
Documents. The Trustee is further authorized from time to time to take such
action as the Administrator directs or instructs with respect to the Basic
Documents and is directed to take such action to the extent that the
Administrator is expressly required pursuant to the Basic Documents to cause the
Trustee to act.
SECTION 6.2. General Duties. It shall be the duty of the Trustee to
discharge (or cause to be discharged) all its responsibilities pursuant to the
terms of this Agreement and the other Basic Documents to which the Trust is a
party and to administer the Trust, subject to and in accordance with the
provisions of this Agreement and the other Basic Documents. Notwithstanding the
foregoing, the Trustee shall be deemed to have discharged its duties and
responsibilities hereunder and under the other Basic Documents to the extent the
Administrator has agreed in the Administration Agreement to perform any act or
to discharge any duty of the Trustee hereunder or under any other Basic
Document, and the Trustee shall not be held liable for the default or failure of
the Administrator to carry out its obligations under the Administration
Agreement. Except as expressly provided in the Basic Documents, the Trustee
shall have no obligation to administer, service or collect the Student Loans or
to maintain,
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monitor or otherwise supervise the administration, servicing or collection of
the Student Loans.
SECTION 6.3. Action upon Instruction. (a) Subject to Article IV, Section
7.01 and in accordance with the terms of the Basic Documents, the
Certificateholders may by written instruction direct the Trustee in the
management of the Trust. Such direction may be exercised at any time by written
instruction of the Certificateholders pursuant to Article IV.
(b) The Trustee shall not be required to take any action hereunder or
under any other Basic Document if the Trustee shall have reasonably determined,
or shall have been advised by counsel, that such action is likely to result in
liability on the part of the Trustee or is contrary to the terms hereof or of
any other Basic Document or is otherwise contrary to law.
(c) Whenever the Trustee is unable to determine the appropriate course
of action between alternative courses of action permitted or required by the
terms of this Agreement or under any other Basic Document, the Trustee shall
promptly give notice (in such form as shall be appropriate under the
circumstances) to the Certificateholders requesting instruction as to the course
of action to be adopted, and to the extent the Trustee acts in good faith in
accordance with any written instruction of the Certificateholders received, the
Trustee shall not be liable on account of such action to any Person. If the
Trustee shall not have received appropriate instruction within 10 days of such
notice (or within such shorter period of time as reasonably may be specified in
such notice or may be necessary under the circumstances) it may, but shall be
under no duty to, take or refrain from taking such action, not inconsistent with
this Agreement or the other Basic Documents, as it shall deem to be in the best
interests of the Certificateholders, and shall have no liability to any Person
for such action or inaction.
(d) In the event that the Trustee is unsure as to the application of
any provision of this Agreement or any other Basic Document or any 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 permits any determination by the Trustee or is silent or is incomplete
as to the course of action that the Trustee is required to take with respect to
a particular set of facts, the Trustee may give notice (in such form as shall be
appropriate under the circumstances) to the Certificateholders requesting
instruction and, to the extent that the Trustee acts or refrains from acting in
good faith in accordance with any such instruction received, the Trustee shall
not be liable, on account of such action or inaction, to any Person. If the
Trustee shall not have received appropriate instruction within 10 days of such
notice (or within such shorter period of time as reasonably may be specified in
such notice or may be necessary under the circumstances) it may, but shall be
under no duty to, take or refrain from taking such action, not inconsistent with
this Agreement or the other Basic Documents, as it shall deem to be in the best
interests of the Certificateholders and shall have no liability to any Person
for such action or inaction.
SECTION 6.4. No Duties Except as Specified in this Agreement, the Transfer
Agreement, the Servicing Agreement, the Administration Agreement or in
Instructions. The
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Trustee shall not have any duty or obligation to manage, make any payment with
respect to, register, record, sell, service, dispose of or otherwise deal with
the Trust Estate, or to otherwise take or refrain from taking any action under,
or in connection with, any document contemplated hereby to which the Trustee is
a party, except as expressly provided by the terms of this Agreement, the
Transfer Agreement, the Servicing Agreement, the Administration Agreement or in
any document or written instruction received by the Trustee pursuant to Section
6.03; and no implied duties or obligations shall be read into this Agreement or
any other Basic Document against the Trustee. The Trustee shall have no
responsibility for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder or to prepare or file any
Commission filing for the Trust or to record this Agreement or any other Basic
Document. The 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 Estate that result from actions by, or claims against, the
Trustee in its individual capacity or as the Trustee that are not related to the
ownership or the administration of the Trust Estate.
SECTION 6.5. No Action Except Under Specified Documents or Instructions.
The Trustee shall not manage, control, use, sell, service, dispose of or
otherwise deal with any part of the Trust Estate except (i) in accordance with
the powers granted to and the authority conferred upon the Trustee pursuant to
this Agreement, (ii) in accordance with the other Basic Documents to which it is
a party and (iii) in accordance with any document or instruction delivered to
the Trustee pursuant to Section 6.03.
SECTION 6.6. Restrictions. The Trustee shall not take any action (a) that
is inconsistent with the purposes of the Trust set forth in Section 2.03 or (b)
that, to the actual knowledge of the Trustee, would result in the Trust's
becoming taxable as a corporation for Federal income tax purposes. The
Certificateholders shall not direct the Trustee to take action that would
violate the provisions of this Section.
{SECTION 6.7. Origination of Consolidation Loans during the Revolving
Period. (a) From time to time during the Revolving Period the Servicer will
identify those FFELP Student Loans as to which a Borrower qualifies to receive a
Consolidation Loan under the Federal Consolidation Loan Program from the Trustee
and will inform the Administrator of the identity of such loans. The
Administrator will determine, in accordance with customary industry standards,
whether a Consolidation Loan should be offered to such Borrower; provided that,
a Consolidation Loan will not be offered to a Borrower if any Student Loan of
such Borrower which is not beneficially owned by the Trust and which is proposed
to be discharged by the making of such Consolidation Loan is more than 30 days
past due; and provided further that a Consolidation Loan will not be offered to
a borrower if the aggregate principal amount of all Consolidation Loans
originated pursuant to this Section would thereby exceed the limitations set
forth in Section 6.7(d).
(b) If the Administrator determines that it is appropriate to offer a
Consolidation Loan to a Borrower in accordance with this Section, it will so
inform the Servicer who will send the necessary documentation to such Borrower
and will process such
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documentation on behalf of the Trustee and the Eligible Lender Trustee, all in
accordance with industry standards, the Higher Education Act and the related
Guarantee Agreement. The Servicer will inform the Trustee and the Eligible
Lender Trustee of the completion of the loan underwriting process and the
necessary documentation, whereupon the Eligible Lender Trustee, on behalf of the
Trust and upon the direction of the Administrator, will be directed by the
Trustee to execute any documents required to be executed by it to complete the
origination of such loan and to subject such loan to the related Guarantee
Agreement. The Servicer will not permit any Consolidation Loan to be originated
which would violate the representations and warranties of Section 3.01 of the
Transfer Agreement. Any Consolidation Loan which is determined to violate any of
such representations and warranties will be subject to repurchase by the Seller
as provided in Section 3.02 of the Loan Sale Agreement.
(c) Each Consolidation Loan originated pursuant to this Section 6.7
shall be owned by the Trust and be part of the Trust Estate and the Collateral
from and after the time of such origination. Upon origination of such loan and
such loan becoming part of the Trust Estate and the Collateral, the
Administrator will instruct the Indenture Trustee, pursuant to Section 2(f) of
the Administration Agreement, to authorize the transfer from the Collateral
Reinvestment Account of an amount sufficient to prepay in full any Student Loan
that is to be consolidated through such origination, including any Add-on
Consolidation Loan that is prepaid in full as a result of the principal balance
of such Add-on Consolidation Loan being added to the principal balance of a
related Consolidation Loan held as part of the Trust Estate. The Administrator
will cause to be taken all actions, and the Trustee will direct the Eligible
Lender Trustee to cooperate with the Administrator in the execution of any
instruments or documents, required to establish and maintain the ownership
interest of the Trust and the first perfected security interest of the Indenture
Trustee in each Consolidation Loan originated pursuant to this Section.
(d) In no event shall the Trust originate, or the Trustee direct the
Eligible Lender Trustee on behalf of the Issuer to originate, Consolidation
Loans in excess of $[ ] (including the addition of the principal balances of any
Add-on Consolidation Loans) in the aggregate during the Revolving Period;
additionally, no Consolidation Loan may be originated by the Issuer or the
Trustee on behalf of the Issuer having a scheduled maturity after [ ] if at the
time of such origination the aggregate principal balance of all Consolidation
Loans held as part of the Trust Estate that have a scheduled maturity date after
[ ] exceeds, or after giving effect to such origination, would exceed $[ ];
provided, however, that the Trustee will be permitted to direct the Eligible
Lender Trustee to fund the addition of the principal balance of any Add-on
Consolidation Loan in excess of such amounts, if the Eligible Lender Trustee is
required to do so by the Higher Education Act. In addition, in no event shall
the Issuer make or the Trustee direct the Eligible Lender Trustee on behalf of
the Issuer to make Consolidation Loans after the Revolving Period; provided,
however, that the Trustee may direct the Eligible Lender Trustee to increase the
principal balance of any Consolidation Loan by the principal balance of any
related Add-on Consolidation Loan during the Add-on Period if the Eligible
Lender Trustee is required to do so by the Higher Education Act. After the
Revolving Period, upon the addition of the principal balance of such Add-on
Consolidation Loan, and such amounts becoming part of the Trust Estate and the
Collateral, the
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Administrator will instruct the Indenture Trustee, pursuant to Section
2(d)(iii)(A) of the Administration Agreement, to authorize the transfer from the
Collection Account of an amount sufficient to prepay in full such Add-on
Consolidation Loan.
(e) All Consolidation Fees payable with respect to
Consolidation Loans originated and the principal balances of any Add-on
Consolidation Loans added to the Trust pursuant to this Section will be payable
by the Issuer as provided in Section 2(d)(ii) of the Administration Agreement.
All other costs or fees incurred in originating Consolidation Loans (or in
adding the principal balances of any Add-on Consolidation Loans) shall be
payable by the Administrator.}
ARTICLE VII.
Concerning the Trustee
----------------------
SECTION 7.1. Acceptance of Trusts and Duties. The Trustee accepts the
trusts hereby created and agrees to perform its duties hereunder with respect to
such trusts but only upon the terms of this Agreement. The Trustee also agrees
to disburse all moneys actually received by it constituting part of the Trust
Estate upon the terms of this Agreement and the other Basic Documents. The
Trustee shall not be answerable or accountable hereunder or under any other
Basic Document under any circumstances, except (i) for its own willful
misconduct or negligence or (ii) in the case of the inaccuracy of any
representation or warranty contained in Section 7.03 expressly made by the
Trustee. In particular, but not by way of limitation (and subject to the
exceptions set forth in the preceding sentence):
(i) the Trustee shall not be liable for any error of judgment
made by a responsible officer of the Trustee;
(ii) the Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in accordance with the
direction or instructions of the Administrator or the
Certificateholders;
(iii) no provision of this Agreement or any other Basic
Document shall require the Trustee to expend or risk funds or otherwise
incur any financial liability in the performance of any of its rights
or powers hereunder or under any other Basic Document, if the Trustee
shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not
reasonably assured or provided to it;
(iv) under no circumstances shall the Trustee be liable for
indebtedness evidenced by or arising under any of the Basic Documents,
including the principal of and interest on the Notes;
(v) the Trustee shall not be responsible for or in respect of
the validity or sufficiency of this Agreement or for the due execution
hereof by the Depositor or for
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the form, character, genuineness, sufficiency, value or validity of
any part of the Trust Estate or for or in respect of the validity or
sufficiency of the Basic Documents, and the Trustee shall in no event
assume or incur any liability, duty, or obligation to any Noteholder
or to the Certificateholders, other than as expressly provided for
herein and in the other Basic Documents;
(vi) the Trustee shall not be liable for the action or
inaction, default or misconduct of the Administrator, the Seller, the
Depositor, the Indenture Trustee or the Servicer under any of the other
Basic Documents or otherwise and the Trustee shall have no obligation
or liability to perform the obligations of the Trust under this
Agreement or the other Basic Documents that are required to be
performed by the Administrator under the Administration Agreement, the
Indenture Trustee under the Indenture or the Servicer under the
Servicing Agreement; and
(vii) the Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation under this Agreement or
otherwise or in relation to this Agreement or any other Basic Document,
at the request, order or direction of the Certificateholders, unless
the Certificateholders has offered to the Trustee security or indemnity
satisfactory to it against the costs, expenses and liabilities that may
be incurred by the Trustee therein or thereby. The right of the Trustee
to perform any discretionary act enumerated in this Agreement or in any
other Basic Document shall not be construed as a duty, and the Trustee
shall not be answerable for other than its negligence or willful
misconduct in the performance of any such act.
SECTION 7.2. Furnishing of Documents. The Trustee shall furnish to the
Certificateholders promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Trustee under
the Basic Documents.
SECTION 7.3. Representations and Warranties. The Trustee hereby
represents and warrants to each of the Depositor that:
(i) It is a [national banking association] duly organized and
validly existing in good standing under the laws of the United States.
It has all requisite corporate power and authority to execute, deliver
and perform its obligations under this Agreement.
(ii) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement, and this Agreement
will be executed and delivered by one of its officers who is duly
authorized to execute and deliver this Agreement on its behalf.
(iii) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any Federal or state law,
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governmental rule or regulation governing the banking or trust powers
of the Trustee or any judgment or order binding on it, or constitute
any default under its charter documents or by-laws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or
by which any of its properties may be bound.
(iv) It is an "eligible lender" as such term is defined in
Section 435(d) of the Higher Education Act.
SECTION 7.4. Reliance; Advice of Counsel. (a) The Trustee shall incur
no liability to anyone in acting upon any signature, instrument, direction,
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 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 method of the determination of which is not specifically
prescribed herein, the Trustee may for all purposes hereof rely on a
certificate, signed by the president or any vice president or by the treasurer
or other authorized officers of the relevant party, as to such fact or matter
and such certificate shall constitute full protection to the Trustee for any
action taken or omitted to be taken by it in good faith in reliance thereon.
(a) In the exercise or administration of the trusts
hereunder and in the performance of its duties and obligations under this
Agreement or the other Basic Documents, the Trustee (i) may act directly or
through its agents or attorneys pursuant to agreements entered into with any of
them, and the Trustee shall not be liable for the conduct or misconduct of such
agents or attorneys if such agents or attorneys shall have been selected by the
Trustee with reasonable care, and (ii) may consult with counsel, accountants and
other skilled persons to be selected with reasonable care and employed by it.
The Trustee shall not be liable for anything done, suffered or omitted in good
faith by it in accordance with the written opinion or advice of any such
counsel, accountants or other such persons and not contrary to this Agreement or
any other Basic Document.
SECTION 7.5. Not Acting in Individual Capacity. Except as provided in
this Article VII, in accepting the trusts hereby created, Trustee acts solely as
Trustee hereunder and not in its individual capacity and all Persons having any
claim against the Trustee by reason of the transactions contemplated by this
Agreement or any other Basic Document shall look only to the Trust Estate for
payment or satisfaction thereof.
SECTION 7.6. Trustee Not Liable for Certificates, Notes or Student
Loans. The recitals contained herein (other than the representations and
warranties in Section 7.03) shall be taken as the statements of the Depositor,
and the Trustee assumes no responsibility for the correctness thereof. The
Trustee makes no representations as to the validity or sufficiency of this
Agreement the Certificates or any other Basic Document or the Notes, or of any
Financed Student Loan or related documents. The Trustee shall at no time have
any responsibility (or liability except for willfully or negligently terminating
or allowing to be terminated either of
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the Guarantee Agreements, in a case where the Trustee knows of any facts or
circumstances which will or could reasonably be expected to result in any such
termination) for or with respect to the legality, validity, enforceability and
eligibility for Guarantee Payments, Interest Subsidy Payments or Special
Allowance Payments, as applicable, of any Financed Student Loan, or for or with
respect to the sufficiency of the Trust Estate or its ability to generate the
payments to be distributed to the Noteholders under the Indenture, including:
the existence and contents of any computer or other record of any Financed
Student Loan; the validity of the assignment of any Financed Student Loan to
the Trust; the completeness of any Financed Student Loan; the performance or
enforcement (except as expressly set forth in any Basic Document) of any
Financed Student Loan; the compliance by the Depositor or the Servicer with any
warranty or representation made under any Basic Document or in any related
document or the accuracy of any such warranty or representation or any action
or inaction of the Administrator, the Indenture Trustee or the Servicer or any
subservicer taken in the name of the Trustee.
SECTION 7.7. Trustee May Own Certificates and Notes. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
and Notes and may deal with the Depositor, the Administrator, the Indenture
Trustee and the Servicer in banking transactions with the same rights as it
would have if it were not the Trustee.
ARTICLE VIII.
Compensation of Trustee
-----------------------
SECTION 8.1. Trustee's Fees and Expenses. The Trustee shall receive as
compensation for its services hereunder such fees as have been separately agreed
upon before the date hereof between the Depositor and the Trustee, and the
Trustee shall be entitled to be reimbursed by the Depositor for its other
reasonable expenses hereunder, including the reasonable compensation, expenses
and disbursements of such agents, representatives, experts and counsel as the
Trustee may employ in connection with the exercise and performance of its rights
and duties hereunder. The Trustee shall have no recourse to the Issuer for its
fees and expenses hereunder.
SECTION 8.2. Payments to the Trustee. Any amounts paid to the Trustee
pursuant to Section 8.01 hereof or pursuant to Section 4.03 of the Transfer
Agreement or pursuant to Section 24 of the Administration Agreement shall be
deemed not to be a part of the Trust Estate immediately after such payment.
ARTICLE IX.
Termination of Trust Agreement
------------------------------
SECTION 9.1. Termination of Trust Agreement. (a) This Agreement (other
than Article VIII) and the Trust shall terminate and be of no further force or
effect upon the earlier
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of (i) the final distribution by the Trustee of all moneys or other property
or proceeds of the Trust Estate in accordance with the terms of the Indenture,
the Administration Agreement, Article V and the Servicing Agreement, and (ii)
the time provided in Section 9.2. The bankruptcy, liquidation, dissolution,
death or incapacity of any Certificateholder, other than the Depositor as
described in Section 9.2, shall not (x) operate to terminate this Agreement or
the Trust, nor (y) entitle such Certificateholder'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 all or any part of the Trust or Trust Estate
nor (z) otherwise affect the rights, obligations and liabilities of the parties
hereto.
(a) Except as provided in Section 9.1(a), neither the
Depositor nor the Certificateholders shall be entitled to revoke or terminate
the Trust.
(b) Notice of any termination of the Trust shall be given
promptly by the Trustee by letter to the Certificateholders mailed within five
Business Days of receipt of notice of such termination from the Administrator
given pursuant to Section 2(b)(vii) of the Administration Agreement.
(c) Upon the winding up of the Trust and its termination,
the Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State of the State of Delaware
in accordance with the provisions of Section 3810 of the Business Trust Statute.
SECTION 9.2. Dissolution upon Bankruptcy of the Depositor. In the event
that an Insolvency Event shall occur with respect to the Depositor, this
Agreement shall be terminated in accordance with Section 9.01 90 days after the
date of such Insolvency Event unless, before the end of such 90-day period, the
Trustee shall have received written instructions from (a) Subordinate
Noteholders (other than the Depositor) representing more than 50% of the
aggregate outstanding principal amount (not including the principal amount of
the Certificateholders Note) of the Subordinate Notes and (b) Senior Noteholders
representing more than 50% of the aggregate outstanding principal amount of the
Senior Notes, to the effect that each such party disapproves of the liquidation
of the Financed Student Loans and termination of the Trust, in which event the
Trust shall continue in accordance with the Basic Documents. Promptly after the
occurrence of any Insolvency Event with respect to the Certificateholders, (i)
the Certificateholders shall give the Indenture Trustee, the Trustee and the
Rating Agencies written notice of such Insolvency Event, (ii) the Trustee shall,
upon the receipt of such written notice from the Certificateholders, give prompt
written notice to the Indenture Trustee of the occurrence of such event and
(iii) the Indenture Trustee shall, upon receipt of written notice of such
Insolvency Event from the Trustee or the Certificateholders, give prompt written
notice to the Noteholders of the occurrence of such event; provided, however,
that any failure to give a notice required by this sentence shall not prevent or
delay, in any manner, a termination of the Trust pursuant to the first sentence
of this Section 9.02. Upon a termination pursuant to this Section, the Trustee
shall direct the Indenture Trustee promptly to sell the assets of the Trust
(other than the Trust Accounts) in a commercially reasonable manner and on
commercially reasonable terms. The proceeds of such a sale of the
-21-
assets of the Trust shall be treated as collections under the Servicing
Agreement and the Administration Agreement.
ARTICLE X.
Successor Trustees and
----------------------
Additional Trustees
-------------------
SECTION 10.1. Eligibility Requirements for Trustee. The Trustee shall
at all times be a corporation or association (i) qualifying as an "eligible
lender" as such term is defined in Section 435(d) of the Higher Education Act;
(ii) being authorized to exercise corporate trust powers and hold legal title to
the Student Loans; (iii) having in effect Guarantee Agreements with the Initial
Guarantors and any Additional Guarantors; (iv) having a combined capital and
surplus of at least $[50,000,000] and being subject to supervision or
examination by Federal or state authorities; and (v) having (or having a parent
which has) a rating of at least Baa3 by Xxxxx'x, ___________ by S&P and BBB- by
Fitch. If the Trustee shall publish reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purpose of this Section, the combined capital and
surplus of the Trustee shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. In case at any
time the Trustee shall cease to be eligible in accordance with the provisions of
this Section, the Trustee shall resign immediately in the manner and with the
effect specified in Section 10.02. In addition, at all times the Trustee or a
co-trustee shall be a Person that satisfies the requirements of Section 3807(a)
of the Business Trust Statute (the "Delaware Trustee").
SECTION 10.2. Resignation or Removal of Trustee. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving written
notice thereof to the Administrator. Upon receiving such notice of resignation,
the Administrator shall promptly appoint a successor Trustee meeting the
eligibility requirements of Section 10.01 by written instrument, in duplicate,
one copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor Trustee. If no successor Trustee shall have been so
appointed and have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor Trustee; provided, however, that
such right to appoint or to petition for the appointment of any such successor
shall in no event relieve the resigning Trustee from any obligations otherwise
imposed on it under the Basic Documents until such successor has in fact assumed
such appointment.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 10.01 and shall fail to resign after written
request therefor by the Administrator, or if at any time the Trustee shall be
legally unable to act, or an Insolvency Event with respect to the Trustee shall
have occurred and be continuing, then the Administrator may remove the Trustee.
If the Administrator shall remove the Trustee under the authority of the
immediately preceding sentence, the Administrator shall promptly appoint a
successor Trustee by written
-22-
instrument, in duplicate, one copy of which instrument shall be delivered to
the outgoing Trustee so removed and one copy to the successor Trustee and
payment of all fees owed to the outgoing Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section shall not
become effective until acceptance of appointment by the successor Trustee
pursuant to Section 10.03 and payment of all fees and expenses owed to the
outgoing Trustee. The Administrator shall provide notice of such resignation or
removal of the Trustee and to each of the Rating Agencies.
SECTION 10.3. Successor Trustee. Any successor Trustee appointed
pursuant to Section 10.02 shall execute, acknowledge and deliver to the
Administrator and to its predecessor Trustee an instrument accepting such
appointment under this Agreement, and thereupon the resignation or removal of
the predecessor Trustee shall become effective and such successor Trustee,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor under this
Agreement, with like effect as if originally named as Trustee. The predecessor
Trustee shall upon payment of its fees and expenses deliver to the successor
Trustee all documents, statements, moneys and properties held by it under this
Agreement and shall assign, if permissible, to the successor Trustee the lender
identification number obtained from the Department on behalf of the Trust; and
the Administrator and the predecessor Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Trustee all such rights,
powers, duties and obligations.
No successor Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Trustee shall be
eligible pursuant to Section 10.01.
Upon acceptance of appointment by a successor Trustee pursuant to this
Section, the Administrator shall mail notice of the successor of such Trustee to
the Certificateholders, the Indenture Trustee, the Noteholders and the Rating
Agencies. If the Administrator shall fail to mail such notice within 10 days
after acceptance of appointment by the successor Trustee, the successor Trustee
shall cause such notice to be mailed at the expense of the Administrator.
SECTION 10.4. Merger or Consolidation of Trustee. Any corporation into
which the 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 Trustee shall be a party, or any corporation
succeeding to all or substantially all the corporate trust business of the
Trustee, shall, without the execution or filing of any instrument or any further
act on the part of any of the parties hereto, anything herein to the contrary
notwithstanding, be the successor of the Trustee hereunder; provided that such
corporation shall be eligible pursuant to Section 10.01; provided further that
the Trustee shall mail notice of such merger or consolidation to the Rating
Agencies not less than 10 Business Days prior to the closing date of such merger
or consolidation.
SECTION 10.5. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal
-23-
requirements of any jurisdiction in which any part of the Trust may at the time
be located, the Administrator and the Trustee acting jointly shall have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Trustee, which, except in the case of any Delaware
Trustee, shall meet the eligibility requirements of clauses (i) through (iii)
of Section 10.01, to act as co-trustee, jointly with the Trustee, or separate
trustee or separate trustees, of all or any part of the Trust Estate, and to
vest in such Person, in such capacity, such title to the Trust Estate, or any
part thereof, and, subject to the other provisions of this Section, such
powers, duties, obligations, rights and trusts as the Administrator and the
Trustee may consider necessary or desirable. If the Administrator shall not
have joined in such appointment within 15 days after the receipt by it of a
request so to do, the Trustee alone shall have the power to make such
appointment. [Pursuant to the Co-Trustee Agreement, dated as of [________ __,
1999] between [Trustee] and [ ], the Trustee shall appoint First Chicago
Delaware Inc. as a co-trustee hereunder for the purpose of its acting as
Delaware Trustee and such agreement is hereby incorporated herein by
reference.] If the Delaware Trustee shall become incapable of acting, resign or
be removed, unless the Trustee is qualified to act as Delaware Trustee, a
successor co-trustee shall promptly be appointed in the manner specified in
this Section 10.05 to act as Delaware Trustee. No co-trustee or separate
trustee under this Agreement shall be required to meet the terms of eligibility
as a successor trustee pursuant to clauses (iv) and (v) of Section 10.01 and no
notice of the appointment of any co-trustee or separate trustee shall be
required pursuant to Section 10.03.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties, and obligations conferred or
imposed upon the Trustee shall be conferred upon and exercised or
performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Trustee joining in such
act), except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed, the Trustee shall
be incompetent or unqualified to perform such act or acts, in which
event such rights, powers, duties, and obligations (including the
holding of title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such separate
trustee or co-trustee, solely at the direction of the Trustee;
(ii) no trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under this
Agreement; and
(iii) the Administrator and the Trustee acting jointly may at
any time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article. Each separate trustee and co-trustee, upon its
-24-
acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Trustee. Each such instrument shall be filed with the
Trustee and a copy thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the Trustee
as its agent or attorney-in-fact with full power and authority, to the extent
not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee, except as otherwise provided in this Section 10.05 in regard
to the Delaware Trustee.
ARTICLE XI.
Miscellaneous
-------------
SECTION 11.1. Supplements and Amendments. This Agreement may be amended
by the Depositor, the Certificateholders and the Trustee, with prior written
notice to the Rating Agencies, without the consent of any of the Noteholders, to
cure any ambiguity, to correct or supplement any provisions in this Agreement or
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions in this Agreement or of modifying in any
manner the rights of the Noteholders; provided, however, that such action shall
not, as evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of any Noteholder.
This Agreement may also be amended from time to time by the Depositor,
the Certificateholders and the Trustee, with prior written notice to the Rating
Agencies, with the consent of the Noteholders of Notes evidencing not less than
a majority of the Outstanding Amount of the Notes, for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement or of modifying in any manner the rights of the Noteholders;
provided, however, that no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Student Loans or distributions that shall be required to be made for
the benefit of the Noteholders or (b) reduce the aforesaid percentage of the
Outstanding Amount of the Notes and required to consent to any such amendment,
without the consent of all the outstanding Noteholders.
The Trustee shall furnish 10 Business Days' prior written notification
of the substance of any such amendment or consent to the Indenture Trustee and
each of the Rating Agencies.
It shall not be necessary for the consent of the Noteholders or the
Indenture Trustee pursuant to this Section to approve the particular form of any
proposed amendment or consent,
-25-
but it shall be sufficient if such consent shall approve the substance thereof.
The manner of obtaining such consents shall be subject to such reasonable
requirements as the Trustee may prescribe.
Promptly after the execution of any amendment to the Certificate of
Trust, the Trustee shall cause the filing of such amendment with the Secretary
of State of the State of Delaware. The Trustee shall furnish the Rating Agencies
with 10 Business Days' prior written notice of any amendment to the Certificate
of Trust.
Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement.
The Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Trustee's own rights, duties or immunities under this
Agreement or otherwise.
SECTION 11.2. No Legal Title to Trust Estate in Certificateholders. The
Certificateholders shall not have legal title to any part of the Trust Estate.
The Certificateholders shall be entitled to receive distributions with respect
to its ownership interest therein only in accordance with the Indenture, the
Administration Agreement and the Servicing Agreement. No transfer, by operation
of law or otherwise, of any right, title, or interest of the Certificateholders
to and in its beneficial ownership interest in the Trust Estate shall operate to
terminate this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Trust
Estate. If, contrary to this Section, the Certificateholders is deemed to have
legal title to any part of the Trust Estate, the Certificateholders shall be
deemed to have granted, and in such event does hereby grant to the Trust, a
first priority security interest in all of the Transferor's right, title and
interest in the Trust Estate, other than in the distributions referred to in the
second sentence of this Section 11.02, and this Agreement shall be deemed to
constitute a security agreement under applicable law with respect to the Trust
Estate.
SECTION 11.3. Limitations on Rights of Others. Except for Section 2.07,
the provisions of this Agreement are solely for the benefit of the Trustee, the
Depositor, the Certificateholders, the Administrator and, to the extent
expressly provided herein, the Indenture Trustee and the Noteholders, and
nothing in this Agreement (other than Section 2.07), whether express or implied,
shall be construed to give to any other Person any legal or equitable right,
remedy or claim in the Trust Estate or under or in respect of this Agreement or
any covenants, conditions or provisions contained herein.
SECTION 11.4. Notices. Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing (or in the form
of facsimile notice, followed by written notice) and shall be deemed given upon
receipt by the intended recipient, if to the Trustee, addressed to its Corporate
Trust Office; if to the Depositor, addressed to EFG Funding Corporation, [ ]
with a copy to Office of the General Counsel, [ ] if to the Certificateholders,
[ ]; or, as to each party, at such other address as shall be designated by such
party in a written notice to each other party.
-26-
SECTION 11.5. Severability. Any provision of this Agreement that 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 11.6. 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 11.7. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the
Depositor, the Certificateholders, the Trustee and their respective successors
and permitted assigns, all as herein provided.
SECTION 11.8. No Petition. (a) The Depositor will not at any time
institute against the Trust or the Certificateholders any bankruptcy proceedings
under any United States Federal or state bankruptcy or similar law in connection
with any obligations relating to the Notes, this Agreement or any of the other
Basic Documents.
(a)(b)...The Trustee, by entering into this Agreement, and the
Indenture Trustee and each Certificateholder and Noteholder by accepting the
benefits of this Agreement, hereby covenant and agree that they will not at any
time institute against the Depositor, or the Trust, or join in any institution
against the Depositor, or the Trust of, any bankruptcy, reorganization,
arrangement, insolvency, receivership or liquidation proceedings, or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, this Agreement or any
of the other Basic Documents.
SECTION 11.9. No Recourse. The Certificateholders acknowledges that its
ownership interest in the Trust represents a beneficial interest in the Trust
only and does not represent an interest in or obligation of the Seller, the
Servicer, the Depositor, the Administrator, the Trustee, the Indenture Trustee
or any Affiliate thereof or any officer, director or employee of any thereof and
no recourse may be had against such parties or their assets, except as may be
expressly set forth or contemplated in this Agreement or the other Basic
Documents.
SECTION 11.10. 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 11.11. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Delaware, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
-27-
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.
[TRUSTEE], not in its individual capacity but
solely as Trustee,
By:
--------------------------------------------
Name:
Title:
EFG Funding Corporation, Depositor,
By:
--------------------------------------------
Name:
Title: President and Chief
Executive Officer
-28-
EXHIBIT A
TO THE TRUST AGREEMENT
CERTIFICATE OF TRUST OF
EFG STUDENT LOAN TRUST 1999-[_]
-------------------------------
THIS Certificate of Trust of EFG Student Loan Trust 1999-[_] (the
"Trust"), dated as of [________ __, 1999], is being duly executed and filed by
[Trustee], a national banking association, and [Delaware Co-Trustee], a Delaware
banking corporation, as trustees, to form a business trust under the Delaware
Business Trust Act (12 Del. Code, ss. 3801 et seq.).
1. Name. The name of the business trust formed hereby is EFG Student
Loan Trust 1999-[_].
2. Delaware Trustee. The name and business address of the trustee of
the Trust resident in the State of Delaware is [Delaware Co-Trustee].
3. This Certificate of Trust will be effective [ 1999].
A-1
IN WITNESS WHEREOF, the undersigned, being the sole trustees of the
Trust, have executed this Certificate of Trust as of the date first above
written.
[TRUSTEE],
not in its individual capacity but
solely as trustee of the Trust
By:
-------------------------------------------
Name:
Title:
[DELAWARE CO-TRUSTEE],
not in its individual capacity
but solely as trustee
By:
-------------------------------------------
A-2
EXHIBIT B
TO THE TRUST AGREEMENT
[FORM OF CERTIFICATE]
[SEE REVERSE FOR CERTAIN DEFINITIONS]
-------------------------------------
Unless this Certificate is presented by an authorized representative of
The Depository Trust Company, a New York Corporation ("DTC"), to the Issuer (as
defined below) or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
THIS CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF A BENEFIT
PLAN (AS DEFINED BELOW). THIS CERTIFICATE IS NOT GUARANTEED OR INSURED BY ANY
GOVERNMENTAL AGENCY.
NUMBER [___________]
____ CUSIP NO. [_____]
EFG STUDENT LOAN TRUST 1998-1
FLOATING RATE STUDENT LOAN-BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined
below, the property of which includes a pool of student loans sold to
the Trust by EFG Funding Corporation.
(This Certificate does not represent an interest in or obligation of
EFG Funding Corporation, the Servicer (as defined below), the Trustee
(as defined below) or any of their respective affiliates, except to the
extent described below.)
THIS CERTIFIES THAT Cede & Co. is the registered owner of [________]
dollars non-assessable, fully-paid, fractional undivided interest in the EFG
Student Loan Trust 1999-[_] (the "Trust"), a trust formed under the laws of the
State of Delaware by EFG Funding Corporation, a Delaware corporation (the
"Depositor"). The Trust was created pursuant to a Trust Agreement dated as of
[_____] (the "Trust Agreement"), between the Depositor and [TRUSTEE], a national
banking association, not in its individual capacity but solely as trustee on
behalf of the Trust (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth below. To the extent not otherwise defined
herein, the capitalized terms used herein have the meanings assigned to them in
Appendix A to the Trust Agreement.
B-1
This Certificate is one of the duly authorized Certificates designated
as "Floating Rate Student Loan- Backed Certificates" (herein called the
"Certificates"). This Certificate is issued under and is subject to the terms,
provisions and conditions of the Trust Agreement, to which Trust Agreement the
holder of this Certificate by virtue of the acceptance hereof assents and by
which such holder is bound. The property of the Trust includes a pool of student
loans (the "Trust Student Loans"), all moneys paid thereunder on or after
[_____], certain bank accounts and the proceeds thereof and certain other rights
under the Trust Agreement, the Sale Agreement, the [_____], the Administration
Agreement and the Servicing Agreement and all proceeds of the foregoing. The
rights of the holders of the Certificates to the assets of the Trust are
subordinated to the rights of the holders of the Notes issued under the
Indenture dated as of [_____], between the Trust and [_____], as Indenture
Trustee, and designated as "Floating Rate Student Loan-Backed Notes" (the
"Notes"), as set forth in the Trust Agreement, the Indenture and the
Administration Agreement.
[Under the Trust Agreement, to the extent of funds available therefor,
return on the Certificate Balance of this Certificate at the Certificate Rate
(as defined below) will be distributed on the 25th day of each January, April,
July and October (or, if such 25th day is not a Business Day, the next
succeeding Business Day) (each a "Distribution Date"), commencing on [_____], to
the person in whose name this Certificate is registered as of the close of
business on the day immediately preceding the Distribution Date (such day the
"Record Date"), in each case to the extent of such certificateholder's pro rata
interest in the amount or amounts to be distributed to Certificateholders on
such Distribution Date pursuant to the Administration Agreement.]
The Certificate Rate for each Accrual Period shall be equal to the
lesser of (a) the daily weighted average of the T-Xxxx Rates within such Accrual
Period plus [___]% per annum and (b) the Student Loan Rate for such Accrual
Period. The "Student Loan Rate" for any Accrual Period shall equal the product
of (a) the quotient obtained by dividing (i) 365 (or 366 in the case of a leap
year) by (ii) the actual number of days elapsed in such Accrual Period and (b)
the percentage equivalent of a fraction, (i) the numerator of which is equal to
Expected Interest Collections for the related Collection Period less the Primary
Servicing Fee, the Administration Fee and any prior unpaid Administration Fees
with respect to such Collection Period and (ii) the denominator of which is the
Pool Balance as of the first day of such Collection Period.
Each holder of this Certificate acknowledges and agrees that its rights
to receive distributions in respect of this Certificate from Available Funds and
amounts on deposit in the Reserve Account are subordinated to the rights of the
Noteholders as described in the Trust Agreement, the Indenture and the
Administration Agreement.
It is the intent of the Depositor, the Certificateholders and the
Certificate Owners that, for purposes of Federal, state and local income and
franchise and any other income taxes, the Trust will be treated as a partnership
and the Certificateholders (including the Depositor in its capacity as
Certificateholder and as recipient of distributions from the Reserve Account)
will be treated as partners in that partnership. The Depositor and the other
Certificateholders by
B-2
acceptance of a Certificate (and the Certificate Owners by acceptance
of a beneficial interest in a Certificate), agree to treat, and to take no
action inconsistent with the treatment of, the Certificates for such tax
purposes as partnership interests in the Trust.
Each Certificateholder or Certificate Owner, by its acceptance of a
Certificate or, in the case of a Certificate Owner, a beneficial interest in a
Certificate, covenants and agrees that such Certificateholder or Certificate
Owner, as the case may be, will not at any time institute against the Depositor
or the Trust, or join in any institution against the Depositor or the Trust of,
any bankruptcy, reorganization, arrangement, insolvency, receivership or
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating to
the Certificates, the Notes, the Trust Agreement or any of the other Basic
Documents.
Distributions on this Certificate will be made as provided in the Trust
Agreement by the Trustee by wire transfer or by check mailed to the
Certificateholder of record in the Certificate Register without the presentation
or surrender of this Certificate or the making of any notation hereon, except
that with respect to Certificates registered on the Record Date in the name of
the nominee of the Clearing Agency, unless Definitive Certificates have been
issued (initially, such nominee to be Cede & Co.), payments will be made by wire
transfer in immediately available funds to the account designated by such
nominee. Except as otherwise provided in the Trust Agreement and notwithstanding
the above, the final distribution on this Certificate will be made after due
notice by the Trustee of the pendency of such distribution and only upon
presentation and surrender of this Certificate at the office or agency
maintained for the purpose by the Eligible Lender Trustee in the [________].
Reference is hereby made to the further provisions of this Certificate
set forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Trustee or its authenticating agent, by
manual signature, this Certificate shall not entitle the holder hereof to any
benefit under the Trust Agreement or the Administration Agreement or be valid
for any purpose.
B-3
IN WITNESS WHEREOF, the Eligible Lender Trustee on behalf of the Trust
and not in its individual capacity has caused this Certificate to be duly
executed as of the date set forth below.
EFG STUDENT LOAN TRUST 1999-[_]
by [_____], not in its individual capacity
but solely as Trustee.
By:
----------------------------------------
Authorized Signatory
Date: _____________
B-4
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Certificates referred to in the within-mentioned Trust
Agreement.
[______], not in its individual capacity
but solely as Trustee,
By:
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Authorized Signatory
OR
[_____], solely in its capacity as
Authenticating Agent for the Trustee,
By:
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Authorized Signatory
Date: _____________
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[REVERSE OF CERTIFICATE]
The Certificates do not represent an obligation of, or an interest in,
the Depositor, Educational Finance Group, Inc., as servicer (the "Servicer"),
Educational Finance Group, Inc., as administrator (the "Administrator"), the
Trustee or any affiliates of any of them, and no recourse may be had against
such parties or their assets, except as may be expressly set forth or
contemplated herein, in the Trust Agreement or in the other Basic Documents. In
addition, this Certificate is not guaranteed by any governmental agency or
instrumentality and is limited in right of payment to certain collections with
respect to the Trust Student Loans, all as more specifically set forth in the
Trust Agreement. A copy of each of the Trust Agreement, the Sale Agreement, the
Administration Agreement, Servicing Agreement and the Indenture may be examined
during normal business hours at the principal office of the Administrator, and
at such other places, if any, designated by the Administrator, by any
Certificateholder upon request.
The Trust Agreement permits, with certain options therein provided, the
amendment thereof and the certification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Trust Agreement at
any time by the Depositor and the Eligible Lender Trustee with the consent of
the holders of the Notes and the Certificates each voting as a class evidencing
not less than a majority of the outstanding principal balance of the Notes and
the Certificate Balance. Any such consent by the holder of this Certificate
shall be conclusive and binding on such holder and on all future holders of this
Certificate and of any Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Certificate. The Trust Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the holders of
any of the Certificates.
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of the Certificates is registrable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies maintained by [_____] in its capacity as
Certificate Registrar, or by any successor Certificate Registrar, [_____],
accompanied by a written instrument of transfer in form satisfactory to the
Eligible Lender Trustee and the Certificate Registrar duly executed by the
holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Certificates of authorized denominations evidencing
the same aggregate interest in the Trust will be issued to the designated
transferee.
The Certificates are issuable only as registered Certificates without
coupons in denominations of $100,000 or in integral multiples of $1,000 in
excess thereof. As provided in the Trust Agreement and subject to certain
limitations therein set forth, Certificates are exchangeable for new
Certificates of authorized denominations evidencing the same aggregate
denomination, as requested by the holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but the
Eligible Lender Trustee or the
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Certificate Registrar may require payment of a sum sufficient to cover any tax
or governmental charge payable in connection therewith.
The Trustee, the Certificate Registrar and any agent of the Eligible
Lender Trustee or the Certificate Registrar may treat the person in whose name
this Certificate is registered as the owner hereof for all purposes, and none of
the Trustee or the Certificate Registrar or any such agent shall be affected by
any notice to the contrary.
The Certificates (including any beneficial interests therein) may not
be acquired by or for the account of (i) an employee benefit plan (as defined in
Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA,
(ii) a plan described in section 4975(e)(1) of the Internal Revenue Code of
1986, as amended (the "Code"), including an individual retirement account
described in Section 408(a) of the Code or a Xxxxx plan or (iii) any entity
whose underlying assets include plan assets by reason of a plan's investment in
the entity (each, a "Benefit Plan"). By accepting and holding this Certificate,
the Holder hereof shall be deemed to have represented and warranted that it is
not a Benefit Plan, it is not purchasing this Certificate on behalf of a Benefit
Plan, is not using assets of a Benefit Plan to purchase this Certificate and to
have agreed that if this Certificate is deemed to be a plan asset, the Holder
will promptly dispose of this Certificate.
The obligations and responsibilities created by the Trust Agreement and
the Trust created thereby shall terminate upon the payment to Certificateholders
of all amounts required to be paid to them pursuant to the Trust Agreement, the
Administration Agreement and the Indenture and the disposition of all property
held as part of the Trust. The Depositor may at its option purchase the corpus
of the Trust at a price specified in the Administration Agreement, and such
purchase of the Trust Student Loans and other property of the Trust will effect
early retirement of the Certificates; however, such right of purchase is
exercisable only on any Distribution Date on or after the date on which the Pool
Balance is less than or equal to 10% of the Initial Pool Balance. Any Trust
Student Loans remaining in the Trust as of the end of the Collection Period
immediately preceding the Trust Auction Date will be offered for sale by the
Indenture Trustee by auction in accordance with the procedure described in the
Indenture.
This Certificate shall be construed in accordance with the laws of the
State of Delaware, without reference to its conflict of law provisions, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
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ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
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PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
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(Please print or type name and address, including postal zip code, of assignee)
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the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
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Attorney to transfer said Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated:
*
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Signature Guaranteed:
*
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* NOTICE: The signature to this assignment must correspond with the name as
it appears upon the face of the within Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature
must be guaranteed by a member firm of the New York Stock Exchange or a
commercial bank or trust company.
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