EXHIBIT 4.3
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TRUST AGREEMENT
between
EFG FUNDING CORPORATION
as Grantor
and
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as Trustee
Dated as of___________________,
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TRUST AGREEMENT
THIS AGREEMENT is made on _________________, 1999 between EFG Funding
Corporation (the "Grantor") and ______________________ (the "Trustee").
WITNESSETH:
WHEREAS, the Grantor is not an eligible lender under the Higher
Education Act of 1965, as amended, and implementing regulations promulgated by
the U.S. Secretary of Education (the "Act"), and, as such, cannot hold loans
reinsured under Title IV of the Act as an eligible lender;
WHEREAS, the Grantor wishes to become beneficial owner of certain
loans meeting the qualifications described in Section 2 hereof made to persons
for post secondary education at eligible institutions ("Student Loans")
(hereinafter collectively referred to as the "Portfolio") by directing,
funding, and otherwise causing the origination and/or acquisition of such loans
by the Trustee on behalf of the Trust created hereunder;
WHEREAS, the Trustee is an eligible lender under the Act;
WHEREAS, the Trustee has agreed to hold legal title to the Student
Loans in the Portfolio;
WHEREAS, the Trustee and certain Guarantors have entered or will
enter into Contracts of Guarantee with respect to loans reinsured under Title
IV of the Act; and
WHEREAS, the Grantor intends to provide the Trustee with written
instruction on all aspects of the management of the Portfolio;
NOW, THEREFORE, for and in consideration of the promises and of the
mutual covenants contained herein, and for other valuable consideration, the
receipt of which is hereby acknowledged, the Grantor covenants and agrees with
the Trustee as follows:
1. Definitions. Capitalized terms used herein and not
otherwise defined shall have the meanings specified in this Section 1:
"Contract of Guarantee" shall mean a contract between a
Guarantor and the Trustee providing for, or a certificate or other evidence of,
the Guarantee of Student Loans.
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"Guarantor" shall mean any body or organization which
has entered into a federal reinsurance agreement with the Secretary of
Education.
"Interest Subsidy Payments" shall mean the interest
subsidy payments authorized to be made by the Secretary of Education pursuant
to section 428 of the Act, or similar subsidies authorized from time to time by
federal law or regulation.
"Person" shall mean an individual, a corporation, a
partnership, a trust, an unincorporated organization or a government, or any
agency or political subdivision thereof.
"Secretary of Education" shall mean the Secretary of
Education, the United States Department of Education, or any other officer,
board, body, commission or agency succeeding to the functions thereof under the
Act.
"Special Allowance Payments" shall mean special
allowance payments authorized to be made by the Secretary of Education pursuant
to Section 438(b) of the Act, or similar allowances authorized from time to
time by federal law or regulation.
2. Creation of the Trust Estate.
(a) The Grantor hereby assigns, transfers and sets over
to the Trustee, in trust for the benefit of the Grantor, all of Grantor's
right, title and interest in and to the Student Loans that at any time may
comprise the Portfolio, the receipt of which right, title, and interest is
hereby acknowledged by the Trustee and which trust is hereby accepted by the
Trustee, upon the following express terms and conditions and with the powers
and limitations hereinafter conferred and set forth.
(b) The Portfolio and any other properties held in
trust hereunder are collectively referred to herein as the "Trust Estate."
(c) No loan shall be included in the Trust Estate which
is not a loan serviced by ___________________________________________________
or another servicer mutually agreed to in writing by the parties hereto.
3. [Reserved.]
4. Servicing Agreements. Subject to Section 2(c)
hereof, servicing of loans included in the Portfolio shall be
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carried out by an eligible third-party FFELP servicer pursuant to a servicing
agreement executed with such entity.
5. Trustee's Execution of Agreements Pertaining to
Loans Solely in Capacity as Trustee. The Grantor shall cause all agreements for
the origination, purchase, servicing, financing or sale of student loans in the
Trust Estate to which the Trustee is a party to indicate clearly that the
Trustee is executing each such agreement solely in its capacity as Trustee and
to contain a provision substantially as follows:
[Other contracting party] acknowledges that the Lender has entered
into this Agreement solely in its capacity as trustee for , and not
in its individual capacity.
The representations, warranties, and covenants of the Lender herein
(other than any representations, warranties and covenants relating to
the Lender's authority, good standing, or execution of this
Agreement) are made solely at the direction of the Grantor without
independent investigation of the Lender, and the Lender has
undertaken only those duties required of it under its trust agreement
with the Grantor. Accordingly, all recourse and remedies of [other
contracting party] hereunder shall be available only against the
Grantor and the assets of such Trust Estate and not against the
Lender in its individual capacity.
This provision is not intended to apply, however, to
Contracts of Guarantee executed by the Trustee pursuant to Section 8 hereof, or
to limit the Trustee's legal responsibility to the Secretary of Education under
34 CFR 682.203(b).
6. Dispositive provisions. The Trustee shall pay to the
Grantor, promptly upon receipt thereof, any and all income and payments (other
than payments made by the Grantor) received by the Trustee in connection with
the Trust Estate, including without limitation the following payments to be
received with respect to Student Loans: scheduled payments of principal,
interest, late fees and penalties by borrowers, prepayments of principal and
interest by borrowers; all grants, subsidies, donations, Interest Subsidy
Payments, and Special Allowance Payments; and all default and other claim
payments made by any Guarantor.
7. Reserved rights of invasion. The Grantor expressly
reserves and retains the right, at any time and from time to time, by a notice
in writing signed by an authorized officer of
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the Grantor and filed with the Trustee, to withdraw from the corpus of the
Trust Estate any or all of the Trust Estate.
It is an express provision and term of this Trust that
any of the powers which the Grantor reserves to itself are to be exercised only
by the Grantor in its sole discretion, and not as a power to be subject to
exercise by any other Person, or under any process of law for the Grantor's
benefit, or for the benefit of Grantor's creditors by any other Person or court
whatsoever.
8. Trustee's duties and powers. The Trustee and any
successor trustee or trustees shall have only the following powers and duties:
(a) Upon receipt of written instructions from the
Grantor, the Trustee shall execute and deliver all written instruments and take
any and all other actions that Grantor may direct in order to (i) maintain all
Contracts of Guarantee covering the Portfolio, (ii) enter into and take other
actions with respect to further agreements as required by the Grantor for the
benefit of the Trust Estate, and (iii) enforce the rights of the Trustee under
all such Contracts of Guarantee and other agreements.
(b) Upon receipt of written instructions from the
Grantor, the Trustee shall execute and deliver all written instruments and take
any and all other actions as may be, in the judgment of the Grantor, required
from time to time in connection with the application for and receipt of grants,
subsidies, donations, Interest Subsidy Payments, Special Allowance Payments,
and default and other claim payments with respect to the Trust Estate.
(c) The Trustee shall meet the qualifications set forth
in Section 14 hereof at all times during which it holds legal title to the
Student Loans comprising the Portfolio.
(d) Upon receipt of written instructions from the
Grantor, the Trustee shall sell, exchange or liquidate all or any portion of
the Trust Estate.
(e) The Trustee shall dispose of any proceeds of such
sale, exchange or liquidation as the Grantor shall, by written instructions to
the Trustee, direct.
(f) The Trustee shall report to the Grantor all claims
for taxes, insurance premiums and other legal assessments, debts, charges or
claims of any type made against any money or other assets belonging to the
Trust, or which may be due
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and owing in connection with the Trust Estate. When directed in writing by the
Grantor, the Trustee shall satisfy approved claims out of any money belonging
to the Trust Estate, but the Grantor expressly reserves the right to satisfy
Trust debts with non-Trust assets.
(g) With the Grantor's express written approval and
indemnification, the Trustee shall compromise, settle, arbitrate or defend any
claim or demand in favor of or against the Trust Estate, and shall enter upon
such contracts and agreements and make such compromises of debts, claims or
controversies respecting the Trust Estate as Grantor shall direct by written
instructions to Trustee.
(h) Subject to the other provisions of this Agreement,
without the Trustee's express written consent, the Grantor may not assign,
pledge, hypothecate, encumber or otherwise transfer, directly or indirectly,
all or any part of its interest in the Trust, voluntarily or involuntarily. The
Trustee may withhold its consent to any assignment, pledge or other transfer of
Grantor's interest in the Trust for any reason, provided, however, that nothing
in this subsection 8(h) shall be construed to limit the Grantor's rights under
Section 7, the Trustee's duty to comply with written instructions of the
Grantor under this Section 8, or otherwise limit the Grantor's authority to
take actions with respect to the Trust Estate hereunder.
9. Limitation on Trustee's Duties.
(a) The Trustee shall perform only those duties as may be required
from time to time under the terms of this Agreement in connection with the
Trustee's holding of Student Loans that comprise the Trust Estate. The Trustee
shall have no obligation to the Grantor to administer, service or collect such
Student Loans or to maintain or monitor administration, servicing or collection
procedures followed in connection with such Student Loans, except insofar as
specific functions in that regard are required of the Trustee pursuant to the
express terms of Section 8 hereof and appropriate written instructions of the
Grantor if required by such Section 8. The Trustee shall not be required to
expend any of its own funds in connection with this Agreement or its duties
hereunder or under any related documents or agreements pertaining to the Trust
Estate.
(b) NOTWITHSTANDING ANY OTHER PROVISION IN THIS AGREEMENT, NOTHING IN
THIS AGREEMENT SHALL BE CONSTRUED TO LIMIT THE TRUSTEE'S LEGAL RESPONSIBILITY
TO THE SECRETARY OF EDUCATION IN ITS CAPACITY AS TRUSTEE FOR ANY VIOLATIONS OF
STATUTORY OR REGULATORY REQUIREMENTS THAT MAY OCCUR WITH RESPECT TO STUDENT
LOANS IN THE
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PORTFOLIO, PURSUANT TO 34 CFR 682.203(b) OR ANY SUCCESSOR PROVISION THERETO.
THE TRUSTEE AGREES NOT TO DELAY PAYING ANY LIABILITY THE TRUSTEE OWES TO THE
SECRETARY BY REASON OF SUCH A VIOLATION FOR THE PURPOSE OF FIRST BEING
INDEMNIFIED BY THE GRANTOR FOR SUCH PAYMENT.
10. Compensation and Indemnification of Trustee. The
Trustee shall be entitled to reasonable compensation for all services rendered
by it in the execution of the Trust created hereunder and in the exercise and
performance of any of the powers and duties of the Trustee hereunder. Such
compensation shall be comprised of _______________________________. Such
compensation shall be paid 90 days following the end of each calendar quarter
pursuant to an invoice submitted by the Trustee to the Grantor not more than 20
days following the Trustee's receipt of a report as described in Section 15
hereof for such calendar quarter. The Trustee shall also be entitled to
reimbursement from the Grantor for all reasonable costs and out-of-pocket
expenses incurred by the Trustee. Such costs and expenses shall be billed to
the Grantor at the cost of the Trustee. Such expenses shall include all
expenses, disbursements and advances incurred or made by the Trustee in
accordance with the duties required under any of the provisions of this
Agreement (including the reasonable compensation and the expenses and
disbursements of its counsel and of all persons not regularly in its employ)
and those duties expressly required by law which may not be transferred to the
Grantor.
The Grantor hereby agrees to promptly indemnify the Trustee for, and
to hold it harmless against, any loss, liability, expense or advance incurred
or made without gross negligence or bad faith on the part of the Trustee,
including without limitation reasonable attorneys' fees, arising out of or in
connection with the acceptance or administration of the Trust pursuant hereto,
including without limitation, the servicing of the Portfolio by third-party
servicers pursuant to Section 4 above. Such indemnification by Grantor shall
survive the termination of this Agreement and/or the resignation of the Trustee
and shall include, without limitation, any loss, liability, expense or advance
incurred or made by the Trustee as a result of the acts or omissions of any
servicer in the origination or servicing of any of the Student Loans.
11. Resignation and removal of Trustee and appointment
of successor trustee.
(a) The Trustee may at any time resign by giving
written notice to the Grantor. Upon receiving such notice of resignation, the
Grantor shall promptly appoint a successor trustee by an instrument in writing.
If no successor trustee shall have been so appointed and have accepted
appointment within 180
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days after the giving of such notice of resignation, the Grantor shall have an
additional 60 days to secure a purchaser for the Trust Estate. If the Grantor
has not appointed a successor trustee or sold the Trust Estate within 240 days
after the Trustee has given its notice of resignation, the Trustee shall have
the authority to sell the Trust Estate to an eligible FFELP holder without any
further action by the Grantor.
(b) The Grantor may at any time remove the Trustee and
appoint a successor trustee by written instrument.
(c) Subject to the provisions of paragraph (a), any
resignation or removal of the Trustee and appointment of a successor trustee,
pursuant to any of the provisions of this section, shall become effective upon
the effective date of appointment by the successor trustee or the expiration of
the 240-day period described in paragraph (a), whichever is earlier.
12. Assignment; Corporate Changes in Trustee. Any bank,
corporation or other entity into which the Trustee may be merged or converted
or with which it may be consolidated; any bank, corporation or other entity
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party; and any bank, corporation or other entity to which the
Trustee's rights and obligations hereunder are assigned, shall be the Trustee
under this Agreement without any further act, provided the resulting bank,
corporation, assignee or other entity at all times meets the qualifications set
forth in Section 14 hereof. The Trustee's rights and obligations hereunder may
not be assigned to an entity that would not meet the qualifications set forth
in Section 14 hereof upon receipt of such assignment. The Trustee shall take
responsible steps to ensure that an entity that becomes a successor trustee
under this section meets the qualifications set forth in Section 14 at all
times during which such successor trustee holds legal title to the Student
Loans comprising the Portfolio. The Trustee shall use its best efforts to give
the Grantor at least 180 days' prior written notice of any corporate change
described in this section 12.
13. Termination. The Grantor may at any time, in
accordance with the provisions of Section 7 hereof, direct the Trustee to
distribute all of the assets then held in trust to the Grantor or such other
Person as the Grantor may designate in writing, and upon such distribution this
Agreement and the Trust created hereunder shall terminate. In addition, the
Trust shall terminate and dissolve at the earliest of the bankruptcy or the
dissolution of the Grantor. Upon termination of this Agreement, the Trustee
shall promptly refund to the Grantor a fraction of the fee paid pursuant to
Section 10 hereof for the year in which such
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termination takes effect, which fraction shall be equal to the portion of the
year for which such fees were paid that remains as of the effective date of
such termination.
14. Qualifications of Trustee and Successor Trustees.
The Trustee, and any successor trustee, shall at all times during which it
holds legal title to the Student Loans comprising the Portfolio maintain (a)
eligible lender status under the Act; (b) an eligible lender identification
number issued by the Secretary of Education; (c) at the written direction of
the Grantor, all Contracts of Guarantee with all Guarantors on loans as to
which it holds legal title in its capacity as Trustee hereunder; and (d) all
corporate powers and governmental licenses, authorizations, consents, and
approvals required for it to act as Trustee and hold legal title to the Student
Loans comprising the Portfolio.
15. Quarterly Reports to Trustee. Not later than 60
days following the end of each calendar quarter during the term hereof, the
Grantor shall provide to the Trustee a report setting forth the total dollar
amount of loan disbursements made or acquired for the Trust Estate during such
calendar quarter.
16. Governing law. This Trust Agreement shall be
governed by the laws of the State of Massachusetts.
17. Miscellaneous provisions. All covenants and
agreements herein and statements delivered pursuant hereto shall bind and inure
to the benefit of the parties hereto and their respective successors and
assigns. This agreement supersedes all previous agreements and understandings
between the parties with respect to the subject matter hereof. The Agreement
may only be changed, modified, or discharged, and any rights or obligations
hereunder may only be waived, by a written instrument signed by a duly
authorized officer of the party against whom enforcement of any such waiver,
change, modification or discharge is sought.
18. Notice. All communications, notices and approvals
provided for hereunder shall be in writing and personally delivered or mailed
by registered or certified mail, return receipt requested, to [Grantor address]
or [Trustee address], or at such other address as either party may hereafter
designate by notice to the other party. Notice given in any such communication
shall be deemed to have been given upon receipt.
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19. Partial Invalidity. Any provisions of this Trust
Agreement which are 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.
20. Counterparts. This Trust 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.
IN WITNESS WHEREOF, the parties hereto have executed this Trust
Agreement on the day and year first above written.
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Title:
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By:
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