EXHIBIT 3(i)
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THE NATIONAL COLLEGIATE TRUST 1997-S2
TRUST AGREEMENT
Between
DELAWARE TRUST CAPITAL MANAGEMENT, INC.,
as OWNER TRUSTEE
and
THE NATIONAL COLLEGIATE TRUST
as DEPOSITOR
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TABLE OF CONTENTS
PAGE
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ARTICLE I
DEFINITIONS...........................................................................................1
Section 1.01. CAPITALIZED TERMS......................................................................1
ARTICLE II
ORGANIZATION..........................................................................................9
Section 2.01. NAME...................................................................................9
Section 2.02. OFFICE................................................................................10
Section 2.03. PURPOSES AND ▇▇▇▇▇▇...................................................................10
Section 2.04. APPOINTMENT OF THE OWNER TRUSTEE......................................................11
Section 2.05. DECLARATION OF TRUST..................................................................11
Section 2.06. OTHER EXPENSES, LIABILITIES OF TRUST..................................................11
Section 2.07. SITUS OF TRUST........................................................................11
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTEREST..........................................................12
Section 3.01. ISSUANCE OF TRUST CERTIFICATE.........................................................12
Section 3.02. REGISTRATION AND TRANSFER OF CERTIFICATES.............................................12
Section 3.03. LOST, STOLEN, MUTILATED OR DESTROYED CERTIFICATES.....................................13
Section 3.04. LIMITATION ON TRANSFER OF OWNERSHIP RIGHTS............................................13
Section 3.05. ASSIGNMENT OF RIGHT TO DISTRIBUTIONS..................................................14
ARTICLE IV
CONCERNING THE OWNERS................................................................................14
Section 4.01. ACTION BY OWNERS WITH RESPECT TO CERTAIN MATTERS......................................14
Section 4.02. ACTION UPON INSTRUCTIONS..............................................................15
Section 4.03. SUPER-MAJORITY CONTROL................................................................16
Section 4.04. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.......................................16
Section 4.05. POWER OF ATTORNEY.....................................................................16
ARTICLE V
INVESTMENT AND APPLICATION OF TRUST FUNDS............................................................17
Section 5.01. INVESTMENT OF TRUST FUNDS.............................................................17
Section 5.02. APPLICATION OF FUNDS..................................................................17
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ARTICLE VI
CAPITAL..............................................................................................18
Section 6.01. TAX CHARACTERIZATION..................................................................18
Section 6.02. CAPITAL CONTRIBUTIONS OF OWNERS.......................................................18
Section 6.03. CAPITAL ACCOUNTS......................................................................20
Section 6.04. INTEREST..............................................................................20
Section 6.05. OTHER ADDITIONAL CAPITAL CONTRIBUTIONS................................................20
Section 6.06. INVESTMENT OF CAPITAL CONTRIBUTIONS...................................................21
Section 6.07. REPAYMENT AND RETURN OF CAPITAL CONTRIBUTIONS.........................................21
ARTICLE VII
ALLOCATION OF PROFIT AND LOSS; DISTRIBUTIONS.........................................................21
Section 7.01. PROFIT................................................................................21
Section 7.02. LOSS..................................................................................22
Section 7.03. SPECIAL ALLOCATIONS...................................................................23
Section 7.04. CURATIVE ALLOCATIONS..................................................................25
Section 7.05. OTHER ALLOCATION RULES................................................................25
Section 7.06. DISTRIBUTION OF NET CASH FLOW.........................................................26
Section 7.07. DISTRIBUTION STATEMENT................................................................26
Section 7.08. ALLOCATION OF TAX LIABILITY...........................................................26
Section 7.09. METHOD OF PAYMENT.....................................................................27
Section 7.10. NO SEGREGATION OF FUNDS; NO INTEREST..................................................27
Section 7.11. INTERPRETATION AND APPLICATION OF PROVISIONS BY THE ADMINISTRATOR.....................27
ARTICLE VIII
AUTHORITY AND DUTIES OF THE OWNER TRUSTEE............................................................27
Section 8.01. GENERAL AUTHORITY.....................................................................27
Section 8.02. SPECIFIC AUTHORITY....................................................................27
Section 8.03. GENERAL DUTIES........................................................................28
Section 8.04. ACCOUNTING AND REPORTS TO THE OWNERS, THE INTERNAL REVENUE SERVICE AND
OTHERS......................................................................................28
Section 8.05. SIGNATURE OF RETURNS..................................................................28
Section 8.06. RIGHT TO RECEIVE AND RELY UPON INSTRUCTIONS...........................................28
Section 8.07. NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT OR IN INSTRUCTIONS....................29
Section 8.08. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR INSTRUCTIONS............................29
Section 8.09. RESTRICTION...........................................................................29
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ARTICLE IX
CONCERNING THE OWNER TRUSTEE.........................................................................30
Section 9.01. ACCEPTANCE OF TRUSTS AND DUTIES.......................................................30
Section 9.02. FURNISHING OF DOCUMENTS...............................................................31
Section 9.03. RELIANCE; ADVICE OF COUNSEL...........................................................31
Section 9.04. NOT ACTING IN INDIVIDUAL CAPACITY.....................................................31
ARTICLE X
COMPENSATION OF OWNER TRUSTEE........................................................................32
Section 10.01. OWNER TRUSTEE'S FEES AND EXPENSES....................................................32
Section 10.02. INDEMNIFICATION......................................................................32
Section 10.03. LIEN ON TRUST PROPERTY...............................................................32
Section 10.04. PAYMENTS TO THE OWNER TRUSTEE........................................................32
ARTICLE XI
TERMINATION OF TRUST.................................................................................33
Section 11.01. TERMINATION OF TRUST.................................................................33
Section 11.02. DISTRIBUTION OF ASSETS...............................................................33
Section 11.03. NO TERMINATION BY DEPOSITOR OR OWNERS................................................34
ARTICLE XII
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES...............................................34
Section 12.01. RESIGNATION OF OWNER TRUSTEE; APPOINTMENT OF SUCCESSOR...............................34
Section 12.02. APPOINTMENT OF ADDITIONAL OWNER TRUSTEES.............................................35
ARTICLE XIII
TAX MATTERS PARTNER..................................................................................36
Section 13.01. TAX MATTERS PARTNER..................................................................36
Section 13.02. NOTICE OF TAX AUDIT..................................................................36
Section 13.03. AUTHORITY TO EXTEND PERIOD FOR ASSESSING TAX.........................................36
Section 13.04. CHOICE OF FORUM FOR FILING PETITION FOR READJUSTMENT.................................36
Section 13.05. AUTHORITY TO BIND OWNERS BY SETTLEMENT AGREEMENT.....................................36
Section 13.06. NOTICES SENT TO THE INTERNAL REVENUE SERVICE.........................................36
Section 13.07. INDEMNIFICATION OF TAX MATTERS PARTNER...............................................37
Section 13.08. APPROVAL OF TAX MATTERS PARTNER'S DECISIONS..........................................37
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Section 13.09. PARTICIPATION BY OWNERS IN INTERNAL REVENUE SERVICE ADMINISTRATIVE
PROCEEDINGS.................................................................................37
ARTICLE XIV
MISCELLANEOUS........................................................................................37
Section 14.01. SUPPLEMENTS AND AMENDMENTS...........................................................37
Section 14.02. NO LEGAL TITLE TO TRUST PROPERTY IN OWNER............................................37
Section 14.03. PLEDGE OF COLLATERAL BY OWNER TRUSTEE IS BINDING.....................................38
Section 14.04. LIMITATIONS ON RIGHTS OF OTHERS......................................................38
Section 14.05. NOTICES..............................................................................38
Section 14.06. SEVERABILITY.........................................................................38
Section 14.07. SEPARATE COUNTERPARTS................................................................39
Section 14.08. SUCCESSORS AND ASSIGNS...............................................................39
Section 14.09. HEADINGS.............................................................................39
Section 14.10. GOVERNING LAW........................................................................39
Section 14.11. GENERAL INTERPRETIVE PRINCIPLES......................................................39
EXHIBIT 1 FORM OF TRUST CERTIFICATE
EXHIBIT 2 FORM OF ACCESSION AGREEMENT
EXHIBIT 3 FORM OF CERTIFICATE OF TRUST
EXHIBIT 4 FEE SCHEDULE
TRUST AGREEMENT, dated as of November 1, 1997, between The National
Collegiate Trust, a Delaware business trust (the "Depositor"), and Delaware
Trust Capital Management, Inc., a Delaware trust company (the "Owner Trustee").
ARTICLE I
DEFINITIONS
Section 1.01. CAPITALIZED TERMS. For all purposes of this Agreement,
the following terms shall have the meaning set forth below:
"Administration Agreement" means the Administration Agreement,
dated as of November 1, 1997, among the Trust, the Indenture Trustee and First
Marblehead Data Services Inc., as Administrator, as it may be amended from time
to time.
"Administrator" means First Marblehead Data Services Inc., a
Delaware corporation, as Administrator under the Administration Agreement, or
any successor Administrator as appointed pursuant to the terms of the
Administration Agreement.
"Affiliate" with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agreement" means this Trust Agreement, as it may be amended
or restated from time to time.
"Allocable Bonds" means, as to any Owner, the then outstanding
aggregate principal balance of Bonds which are collateralized by such Owner's
Allocable Student Loans. The initial Allocable Bonds for each Owner are set
forth on Schedule A attached hereto. Thereafter, the Allocable Bonds as to any
Owner shall be determined by multiplying the then outstanding aggregate
principal balance of the Bonds by a percentage derived by dividing the initial
Allocable Bonds for such Owner by the initial aggregate principal balance of the
Bonds.
"Allocable Student Loans" means, as to any Owner, the then
outstanding aggregate principal balance of Student Loans originated by the
Originator and made to students who were attending or recently graduated from
such Owner. The initial Allocable Student Loans for each Owner are set forth on
Schedule A attached hereto.
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"Assignment of Servicing Agreement" means the Assignment of
Servicing Agreement, dated December 3, 1997, among the Owner, the Trust and the
Servicer, relating to the assignment of the Servicing Agreement to the Trust and
the Indenture Trustee.
"Authorized Officer" means any officer of the Owner Trustee
who is authorized to act for the Owner Trustee in matters relating to, and
binding upon, the Trust and whose name appears on a list of such authorized
officers furnished by the Owner Trustee as such list may be amended or
supplemented from time to time.
"Beneficial Interest" as to any Owner, means all or any part
of the interest of that Owner in the Trust, including without limitation its (i)
right to a distributive share of the Profit and Loss of the Trust, (ii) right to
a distributive share of the assets of the Trust, and (iii) right to direct or
consent to actions of the Owner Trustee and otherwise participate in the
management of and control the affairs of the Trust.
"Bonds" means collateralized student loan bonds to be issued
by the Trust pursuant to the Indenture.
"Bond Insurer" means MBIA Insurance Corporation.
"Business Day" means any day that is not a Saturday, Sunday or
any other day on which commercial banking institutions in Delaware are
authorized or obligated by law or executive order to be closed.
"Business Trust Statute" means the Delaware Business Trust
Act, 12 Del. Code ss.3801.
"Call Date" means any Payment Date for the Bonds.
"Capital Account" means the Capital Account maintained for
each Owner pursuant to Article VI of this Agreement.
"Capital Contribution" means the amount of money contributed
by an Owner to the capital of the Trust, which shall be deemed to be such
Owner's share of the Securitization Reserves (as defined in the Master
Securitization Agreement or the Note Purchase Agreement, as the case may be,
with respect to the related Originator) plus (i) the excess of the aggregate
principal balance of such Owner's Allocable Student Loans over the aggregate
principal balance of such Owner's Allocable Bonds as of the Closing Date, as set
forth on Schedule A to this Agreement, (ii) the amount of any Mandatory Capital
Contribution made by such Owner pursuant to this Agreement and (iii) the amount
of any Liquidity Capital Contribution made by such Owner pursuant to this
Agreement and not returned as provided herein.
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"Certificate of Trust" means the Certificate of Trust to be
filed with the Secretary of State by the Owner Trustee on behalf of the Trust
pursuant to Section 8.02.
"Closing Date" means December 3, 1997.
"Default Losses" means the losses described as such in Section
7.01(b)(i).
"Depositor" means The National Collegiate Trust, a Delaware
business trust.
"Distributions" means any money or other property distributed
to an Owner with respect to its Beneficial Interest.
"Distribution Date" means the first Business Day following a
day on which the Owner Trustee obtains receipt of funds or, if instructed by the
Owners, such other Business Day as they shall specify in writing.
"Distribution Date Statement" means the statement described as
such in Section 7.07.
"Eligible Investments" means one or more of the following:
(i) obligations of or guaranteed as to principal and interest
by the United States or any agency or instrumentality thereof when such
obligations are backed by the full faith and credit of the United
States;
(ii) repurchase agreements on obligations specified in clause
(i) maturing not more than one month from the date of acquisition
thereof, provided that the unsecured obligations of the party agreeing
to repurchase such obligations are at the time rated by the
Rating Agency in its highest short-term rating available;
(iii) federal funds, certificates of deposit, demand deposits,
time deposits and bankers' acceptances (which shall each have an
original maturity of not more than 90 days and, in the case of bankers'
acceptances, shall in no event have an original maturity of more than
365 days or a remaining maturity of more than 30 days) denominated in
United States dollars of any U.S. depository institution or trust
company incorporated under the laws of the United States or any state
thereof or of any domestic branch of a foreign depository institution
or trust company; provided that the debt obligations of such depository
institution or trust company at the date of acquisition thereof has
been rated by the Rating Agency in its highest short-term rating
available; and, provided further that, if the original maturity of such
short-term obligations of a domestic branch of a foreign depository
institution or trust company shall exceed 30 days, the short-term
rating of such
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institution shall have a credit rating in one of the two highest
applicable categories from the Rating Agency;
(iv) commercial paper (having original maturities of not more
than 365 days) of any corporation incorporated under the laws of the
United States or any state thereof which on the date of acquisition has
been rated by the Rating Agency in its highest short-term rating
available; provided that such commercial paper shall have a remaining
maturity of not more than 30 days;
(v) a money market fund rated by the Rating Agency in its
highest rating available; and
(vi) other obligations or securities that are acceptable to
the Rating Agency as an Eligible Investment hereunder and will not
result in a reduction in the then current ratings of the Bonds, as
evidenced in writing;
provided, however, that no instrument shall be an Eligible Investment if it
represents either (1) the right to receive only interest payments with respect
to the underlying debt instrument or (2) the right to receive both principal and
interest payments derived from the obligations underlying such instrument and
the principal and interest payments with respect to such instrument provide a
yield to maturity greater than 120% of the yield to maturity at par of such
underlying obligations; and, provided further, that, Eligible Investments shall
include only such obligations or securities that mature on or before the
Business Day immediately preceding the next Distribution Date. In addition, no
Eligible Investment which incorporates a penalty for early withdrawal shall be
acquired unless the maturity of such Eligible Investment is on or before the
Business Day immediately preceding the next Distribution Date.
"Fiscal Year" means the calendar year or such portion thereof
as the Trust may be in existence.
"Funding Amount" means the aggregate Liquidity Capital
Contributions (to the extent not returned to such Funding Owner) and Mandatory
Capital Contributions as of the Closing Date which may be required to be made by
a Funding Owner as set forth on Schedule A attached hereto. For the purpose of
determining whether the aggregate Liquidity Capital Contributions (to the extent
not returned to such Funding Owner) and Mandatory Capital Contributions equal or
exceed the "Funding Amount," each Liquidity Capital Contribution and Mandatory
Capital Contribution shall be reduced by applying a discount rate of 7.24% per
annum for the period beginning on the Closing Date and ending on the date of
such Liquidity Capital Contribution or Mandatory Capital Contribution.
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"Funding Date" means the sixth Business Day prior to any
Payment Date for the Bonds which is also a Call Date.
"Funding Owner" means each of the Owners designated as Funding
Owners on Schedule A attached hereto.
"Indenture" means the trust indenture between the Trust and
the Indenture Trustee, dated as of November 1, 1997, pursuant to which the Bonds
are to be issued.
"Indenture Trustee" means the bank or trust company acting as
Indenture trustee under the Indenture.
"Liquidity Capital Contribution" means any Capital
Contribution from a Funding Owner required pursuant to Section 6.02(b).
"Mandatory Capital Contribution" means any Capital
Contribution from a Funding Owner required pursuant to Section 6.02(c).
"Master Securitization Agreement" means that certain Master
Purchase and Securitization Agreement between the Owner and The First National
Bank of Boston, as the Originator.
"Net Cash Flow" means with respect to any fiscal period of the
Trust, all revenues of the Trust decreased by (a) cash expenditures for
operating expenses (including interest on indebtedness of the Trust but not
including expense items which do not require current cash outlay), (b) capital
expenditures to the extent not made from reserves, (c) reserves for capital
expenditures, contingencies and working capital established in such amounts as
the Owner Trustee, with the consent of the Owners, may determine, (d) repayments
of principal on any Trust indebtedness and (e) taxes.
"Net Interest Income Attributable to Student Loans" means,
with respect to a Fiscal Year, the interest income from the Student Loans minus
any servicing fees and expenses, other operating expenses of the Trust and
interest expense of the Bonds.
"Net Interest Income Attributable to Student Loans as to Each
Owner" means Net Interest Income Attributable to Student Loans (i) multiplied by
the interest rate on such Owner's Related Owner's Notes divided by the weighted
average interest rate on the Notes and (ii) such product multiplied by such
Owner's Allocable Student Loans as at the end of such Fiscal Year divided by the
aggregate principal balance of the Student Loans as at the end of such Fiscal
Year.
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"Net Interest Income Attributable to Reserve Accounts" means,
with respect to a Fiscal Year, interest income from investments of all funds
held by the Indenture Trustee for the benefit of the holders of the Bonds and/or
the Trust and all funds, if any, held by the Owner Trustee or its agents for the
benefit of the Owners.
"Net Interest Income Attributable to Reserve Accounts as to
Each Owner" means Net Interest Income Attributable to Reserve Accounts
multiplied by such Owner's Allocable Bonds divided by the then outstanding
aggregate principal balance of the Bonds.
"Note Purchase Agreement" means that certain Note Purchase
Agreement between the Owner and Bank of America National Association as the
Originator.
"Notes" means the promissory notes to be sold to the Trust by
each Originator pursuant to the Master Securitization Agreement or the Note
Purchase Agreement, as the case may be.
"Originator" means either Bank of America National Association
or The First National Bank of Boston.
"Owner" means the Depositor and each of its successors in
interest as beneficiaries of the Trust pursuant to Article III hereof, including
any Funding Owner.
"Owner Trustee" means Delaware Trust Capital Management, Inc.,
a Delaware trust company, not in its individual capacity but solely as trustee.
"Payment Date" means any day specified as a payment date for
the Bonds pursuant to the Indenture.
"Percentage Interest" means the initial undivided beneficial
interest in the Trust Property of an Owner expressed as a percentage of the
total initial undivided beneficial interests in the Trust Property. References
to Percentage Interests herein shall be solely for the purpose of certificating
Owners' interests hereunder and for any other purpose specified in this
Agreement.
"Periodic Filings" means any filings or submissions that the
Trust is required to make with any state or Federal regulatory agency or under
the Code.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, trust (including any
beneficiary thereof), estate, custodian, nominee, unincorporated organization or
government or any agency or political subdivision thereof.
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"Rating Agency" means ▇▇▇▇▇'▇ Investors Service, Inc. or Fitch
Ratings Services.
"Related Owner Notes" means, with respect to any Owner, all of
the Notes transferred to the Trust which represent Student Loans to students who
were attending or recently graduated from such Owner at the time such Student
Loans were originated.
"Secretary of State" means the office of the Secretary of
State of the State of Delaware.
"Servicer" means Pennsylvania Higher Education Assistance
Agency.
"Servicing Agreement" means the Servicing Agreement, dated
January 6, 1995, by and between the Owner and the Servicer.
"Sharing Ratio" means, with respect to any Owner and as of any
date, the ratio (expressed as a percentage) of (i) the sum of such Owner's
unreturned Capital Contribution and the aggregate unpaid principal balance of
such Owner's Related Owner Notes that are not in default to (ii) the sum of all
of the Owners' unreturned Capital Contributions and the aggregate unpaid
principal balance of the Notes that are not in default.
"Student Loan" means the education loans to students
originated under the GATESM (Guaranteed Access to Education) student loan
program.
"Super-majority Owners" shall have the meaning set forth in
Section 4.03.
"Transfer" means the sale, transfer or other assignment of all
of an Owner's right, title and interest in all or a portion of such Owner's
Beneficial Interest.
"Trust" means the trust established by this Agreement.
"Trust Certificate" means a certificate evidencing the
Beneficial Interest of an Owner in substantially the form attached hereto as
Exhibit 1.
"Trust Property" means all right, title and interest of the
Trust or the Owner Trustee on behalf of the Trust in and to any property
contributed to the Trust by the Owners or otherwise acquired by the Trust,
including without limitation all distributions, payments or proceeds thereon.
"Trust Related Agreements" means any instruments or agreements
signed by the Owner Trustee on behalf of the Trust, including the Administration
Agreement and the Assignment of Servicing Agreement.
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TAX TERMS:
"Adjusted Capital Account Deficit" means, with respect to any
Partner, the deficit balance, if any, in such Partner's Capital Account as of
the end of the relevant Fiscal Year, after giving effect to the following
adjustments:
(i) Credit to such Capital Account the minimum gain
chargeback that such Partner is deemed to be obligated to
restore pursuant to the penultimate sentences of Regulations
Sections 1.704-2(g)(1) and 1.704-2(i)(5); and
(ii) Debit to such Capital Account the items
described in Section 1.704-1(b)(2)(ii)(d)(4),
1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6) of the
Regulations.
The foregoing definition of Adjusted Capital Account Deficit
is intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the
Regulations and shall be interpreted consistently therewith.
"Code" means the Internal Revenue Code of 1986, as amended.
"Nonrecourse Liability" has the meaning set forth in Section
1.704-2(b)(3) of the Regulations.
"Nonrecourse Deductions" has the meaning set forth in Section
1.704-2(b)(1) of the Regulations.
"Partners" means the Owners.
"Partnership" means the Trust.
"Partner Nonrecourse Debt" has the meaning set forth in
Section 1.704-2(b)(4) of the Regulations.
"Partner Nonrecourse Debt Minimum Gain" means an amount, with
respect to each Partner Nonrecourse Debt, equal to the Partnership Minimum Gain
that would result if such Partner Nonrecourse Debt were treated as a Nonrecourse
Liability, determined in accordance with Section 1.704-2(i)(3) of the
Regulations.
"Partner Nonrecourse Deductions" has the meaning set forth in
Sections 1.704-2(i)(1) and 1.704-2(i)(2) of the Regulations.
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"Partnership Minimum Gain" has the meaning set forth in
Section 1.704-2(b)(2) and 1.704-2(d) of the Regulations.
"Profit and Loss" means, for each Fiscal Year, an amount equal
to the Partnership's taxable income or loss for such Fiscal Year, determined in
accordance with Code Section 703(a) (for this purpose, all items of income,
gain, loss, or deduction required to be stated separately pursuant to Code
Section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:
(i) Any income of the Partnership that is exempt from
federal income tax and not otherwise taken into account in
computing Profit or Loss pursuant to this definition shall be
added to such taxable income or loss;
(ii) Any expenditures of the Partnership described in
Code Section 705(a)(2)(B) or treated as Code Section
705(a)(2)(B) expenditures pursuant to Regulations Section
1.704-1(b)(2)(iv)(i), and not otherwise taken into account in
computing Profit or Loss pursuant to this definition, shall be
subtracted from such taxable income or loss;
(iii) Notwithstanding any other provisions of this
definition, any items which are specially allocated pursuant
to Section 7.03 or Section 7.04 shall not be taken into
account in computing Profit or Loss.
The amounts of the items of Partnership income, gain, loss, or
deduction available to be specially allocated pursuant to Section 7.03
and 7.04 shall be determined by applying rules analogous to those set
forth in clauses (i) and (ii) above.
"Regulations" means the federal income tax regulations
promulgated by the United States Treasury Department under the Code as such
Regulations may be amended from time to time. All references herein to a
specific section of the Regulations shall be deemed also to refer
to any corresponding provision of succeeding Regulations.
ARTICLE II
ORGANIZATION
Section 2.01. NAME. The Trust created hereby shall be known as The
National Collegiate Trust 1997-S2, in which name the Owner Trustee may take any
action as provided herein.
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Section 2.02. OFFICE. The office of the Trust shall be in care of the
Owner Trustee, at the address set forth in Section 14.05. The Trust shall also
have an office at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
Section 2.03. PURPOSES AND POWERS. (a) The purpose of the Trust is to
engage in the following activities:
(i) to prepare and deliver a Prospectus, a Prospectus
Supplement and other offering materials in connection with public
issuance and sale of the Bonds;
(ii) to acquire a pool of Student Loans, to execute the
Indenture and to issue the Bonds;
(iii) to enter into the Administration Agreement and the
Servicing Agreement and to provide for the administration of the Trust
and the servicing of the Student Loans.
(iv) to engage in those activities and to enter into such
agreements that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and
(v) to engage in such other activities as may be required in
connection with conservation of the Trust Property and distributions to
Owners. Until the Indenture is discharged, the Trust shall not engage
in any business or activities other than in connection with, or
relating to, the foregoing and other than as required or authorized by
the terms of this Agreement and the Indenture, except as are incidental
to and necessary to accomplish such activities.
(b) Until the Indenture is discharged, the operations of the Trust
shall be conducted in accordance with the following standards:
(i) the Trust will act solely in its own name and the Owner
Trustee or other agents selected in accordance with this Agreement will
act on behalf of the Trust subject to direction by the Owners as
provided herein, but such action shall not be in violation of
the terms of this Agreement;
(ii) the Trust's funds and assets shall at all times be
maintained separately from those of the Owners and any of their
respective Affiliates;
(iii) The Trust shall maintain complete and correct books,
minutes of the meetings and proceedings of the Owners, and records of
accounts;
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(iv) the Trust shall conduct its business at the office of the
Owner Trustee and will use stationary and other business forms of the
Trust under its own name and not that of the Owners or any of their
respective Affiliates, and will avoid the appearance (x) of conducting
business on behalf of any Owner or any Affiliate of an Owner or (y)
that the assets of the Trust are available to pay the creditors of the
Owner Trustee or any Owner;
(v) the Trust's operating expenses shall be paid out of its
own funds; and
(vi) the Trust shall not hold itself out as being liable for
the debts of any Owner or any Affiliates of any Owner.
Section 2.04. APPOINTMENT OF THE OWNER TRUSTEE. The Depositor hereby
appoints the Owner Trustee as trustee of the Trust effective as of the date
hereof, to have all the rights, powers and duties set forth herein and in the
Business Trust Statute. The Owner Trustee acknowledges receipt in trust from the
Depositor as of the date hereof, of the sum of one hundred dollars ($100),
constituting the initial Trust Property.
Section 2.05. DECLARATION OF TRUST. The Owner Trustee hereby declares
that it will hold the Trust Property in trust upon and subject to the conditions
set forth herein for the use and benefit of the Owners, subject to the
obligations of the Owner Trustee under the Trust Related Agreements. It is the
intention of the parties hereto that the Trust constitute a business trust under
the Business Trust Statute, and that this agreement constitute the governing
instrument of the Trust.
Section 2.06. OTHER EXPENSES, LIABILITIES OF TRUST. The Owners shall be
jointly and severally liable for any and all liabilities and obligations of the
Trust; provided, however, that the Owners shall have rights of contribution in
proportion to their respective Percentage Interests; and provided further, that
an Owner shall be liable only for liabilities and obligations of the Trust
incurred from the date such Owner became duly registered as an Owner in
accordance with Sections 3.02 and 3.04 and such Owner shall continue to be
liable for such liabilities and obligations after such Owner transfers its
Beneficial Interest pursuant to Article III hereof or otherwise is no longer an
Owner for the purposes of this Agreement. Within ten Business Days of receipt or
a statement delivered by the Owner Trustee to the effect that amounts necessary
to pay expenses or to meet any obligation of the Trust are not available in the
Trust Property, and setting forth the basis for such expenses and such Owner's
allocable share of such expenses, each Owner shall deliver to the Owner Trustee
immediately available funds in the amount or such Owner's allocable share of
such expenses.
Section 2.07. SITUS OF TRUST. The Trust will be located and
administered in the State of Delaware. The Trust shall not have any employees in
any state other than in the State of
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Delaware and payments will be received by the Trust only in the State of
Delaware and payments will be made by the Trust only from the State of Delaware.
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTEREST
Section 3.01. ISSUANCE OF TRUST CERTIFICATE.
(a) As of the date hereof, the Owner Trustee has issued and delivered
to the Depositor a Trust Certificate in the name of the Depositor evidencing
100% of the Beneficial Interest in the Trust.
(b) Each Trust Certificate shall be executed by manual signature on
behalf of the Owner Trustee by one of its Authorized Officers. Trust
Certificates bearing the manual signature of an individual who was, at the time
when such signature was affixed, authorized to sign on behalf of the Owner
Trustee shall bind the Trust, notwithstanding that such individual has ceased to
be so authorized prior to the delivery of such Trust Certificate or does not
hold such office at the date of such Trust Certificate. Each Trust Certificate
shall be dated the date of its issuance.
(c) On the Closing Date, the Owner Trustee is authorized to issue Trust
Certificates to each of the Persons set forth on Schedule A as Owners. Upon the
issuance of the first additional Trust Certificate, the Depositor shall be
deemed to have withdrawn as the initial Owner
and to have contributed its Trust Certificate to the Trust.
Section 3.02. REGISTRATION AND TRANSFER OF CERTIFICATES.
(a) The Owner Trustee shall maintain at its office referred to in
Section 2.02, or at the office of any agent appointed by it and approved in
writing by the Owners at the time of such appointment, a register for the
registration and Transfer of Trust Certificates. No Transfer of a Beneficial
Interest shall be made unless such Transfer is made pursuant to an effective
registration statement under the Securities Act of 1933, as amended (the "1933
Act"), and state securities laws, or is exempt from the registration
requirements under the 1933 Act and state securities laws.
(b) The registered Owner of any Trust Certificate may Transfer all or
any portion of the Beneficial Interest evidenced by such Trust Certificate upon
surrender thereof to the Owner Trustee accompanied by the documents required by
Section 3.04. Such Transfer may be made by the registered Owner in person or by
its attorney duly authorized in writing upon surrender of the Trust Certificate
to the Owner Trustee accompanied by a written instrument of Transfer and with
such signature guarantees and evidence of authority of the Persons signing the
instrument of
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Transfer as the Owner Trustee may reasonably require. Promptly upon the receipt
of such documents and receipt by the Owner Trustee of the transferor's Trust
Certificate, the Owner Trustee shall record the name of such transferee as an
Owner and its Percentage Interest in the Trust Certificate register and issue,
execute and deliver to such Owner a Trust Certificate evidencing such Percentage
Interest. In the event a transferor Transfers only a portion of its Beneficial
Interest, the Owner Trustee shall register and issue to such transferor a new
Trust Certificate evidencing such transferor's new Percentage Interest.
Subsequent to a Transfer and upon the issuance of the new Trust Certificate or
Trust Certificates, the Owner Trustee shall cancel and destroy the Trust
Certificate surrendered to it in connection with such Transfer. The Owner
Trustee may treat the Person in whose name any Trust Certificate is registered
as the sole Owner of the Beneficial Interest in the Trust evidenced by such
Trust Certificate.
(c) As a condition precedent to any registration of Transfer, the Owner
Trustee may require the payment of a sum sufficient to cover the payment of any
tax or taxes or other governmental charges required to be paid in connection
with such Transfer and any other reasonable expenses connected therewith.
Section 3.03. LOST, STOLEN, MUTILATED OR DESTROYED CERTIFICATES. If (i)
any mutilated Trust Certificate is surrendered to the Owner Trustee, or (ii) the
Owner Trustee receives evidence to its satisfaction that any Trust Certificate
has been destroyed, lost or stolen, and upon proof of ownership satisfactory to
the Owner Trustee together with such security or indemnity as may be requested
by the Owner Trustee to save it harmless, the Owner Trustee shall execute and
deliver a new Trust Certificate for the same Percentage Interest as the Trust
Certificate so mutilated, destroyed, lost or stolen, of like tenor and bearing a
different issue number, with such notations, if any, as the Owner Trustee shall
determine. In connection with the issuance of any new Trust Certificate under
this Section 3.03, the Owner Trustee may require the payment by the registered
Owner thereof of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expenses (including the
reasonable fees and expenses of the Owner Trustee) connected therewith. Any
replacement Trust Certificate issued pursuant to this Section 3.03 shall
constitute complete and indefeasible evidence of ownership of a Beneficial
Interest, as if originally issued, whether or not the lost, stolen or destroyed
Trust Certificate shall be found at any time.
Section 3.04. LIMITATION ON TRANSFER OF OWNERSHIP RIGHTS.
(a) No Transfer of all or any part of a Beneficial Interest shall be
made to any Person unless (i) such Person delivers to the Owner Trustee an
accession agreement substantially in the form of Exhibit 2 hereof, and (ii)
except for the initial transfer of the Beneficial Interest of the Depositor, the
Owner Trustee shall have received a written opinion of counsel in form and
substance satisfactory to the Owner Trustee stating that such Transfer is exempt
from the 1933 Act and any applicable state securities law.
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(b) At any time that there is more than one Owner, no Transfer of a
Beneficial Interest shall be valid unless the Owner making such Transfer shall
have received the prior written consent to such Transfer of the Owners holding
at least 66 2/3% of both the Percentage Interests and the Sharing Ratios in the
Trust at such time, which consent may not be unreasonably withheld; PROVIDED,
HOWEVER, that in calculating the total Beneficial Interests in the Trust there
shall be excluded the Beneficial Interest owned by the transferor or (unless the
transferor and its Affiliates are the only Owners) any Affiliate thereof.
(c) Except for the initial issuance of the Trust Certificates to the
Depositor, no Transfer shall be valid if, as a result of such Transfer, (i) any
Person would have a Percentage Interest or a Sharing Ratio of 100%, considering
for such purpose all interests owned by any Affiliate of such Person as owned by
such Person, or (ii) such Transfer would result in a termination of the Trust
for Federal income tax purposes.
Section 3.05. ASSIGNMENT OF RIGHT TO DISTRIBUTIONS. An Owner may assign
all or any part of its right to receive distributions hereunder, but such
assignment (in the absence of a permitted Transfer) shall effect no change in
the ownership of the Trust.
ARTICLE IV
CONCERNING THE OWNERS
Section 4.01. ACTION BY OWNERS WITH RESPECT TO CERTAIN MATTERS.
(a) The Owner Trustee will take such action or refrain from taking such
action under this Agreement or any Trust Related Agreement as it shall be
directed pursuant to an express provision of this Agreement or such Trust
Related Agreement or, with respect to nonministerial matters, as it shall be
directed by all the Owners.
(b) Without limiting the generality of the foregoing, in connection
with the following nonministerial matters, the Owner Trustee will take no action
unless it receives written approval from all the Owners:
(i) the initiation of any claim or lawsuit by the Trust and
the compromise of any claim or lawsuit brought by or against the Trust;
(ii) the amendment, change or modification of this Agreement,
the Administration Agreement or any Trust Related Agreement;
(iii) the merger or consolidation of the Trust;
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(iv) the adoption of a plan of liquidation; and
(v) the filing of a voluntary petition in bankruptcy for the
Trust, which in no event shall the Owner Trustee be permitted to do or
be instructed to do until at least 366 days after the payment in full
of all Bonds issued by the Trust.
(c) No Owner shall take any action to cause the filing of an
involuntary petition in bankruptcy against the Trust.
Section 4.02. ACTION UPON INSTRUCTIONS.
(a) The Owner Trustee shall take such action or actions as may be
specified in this Agreement or in any instructions delivered in accordance with
this Article IV or Article VIII; provided, however, that the Owner Trustee shall
not be required to take any such action if it shall have reasonably determined,
or shall have been advised by counsel, that such action (i) is contrary to the
terms hereof or of any document contemplated hereby to which the Trust or the
Owner Trustee is a party or is otherwise contrary to law, (ii) is likely to
result in personal liability on the part of the Owner Trustee, unless the Owners
shall have provided to the Owner Trustee indemnification or security reasonably
satisfactory to the Owner Trustee against all costs, expenses and liabilities
arising from the Owner Trustee's taking such action, or (iii) would adversely
affect the status of the Trust as a partnership for Federal income tax purposes.
(b) No Owner shall direct the Owner Trustee to take or refrain from
taking any action contrary to this Agreement or any Trust Related Agreement, nor
shall the Owner Trustee be obligated to follow any such direction, if given.
(c) Notwithstanding anything contained herein or in any Trust Related
Agreement to the contrary, the Owner Trustee shall not be required to take any
action in any jurisdiction other than in the State of Delaware if the taking of
such action will (i) require the consent or approval or authorization or order
for the giving of notice to, or the registration with or taking of any action in
respect of, any state or other governmental authority or agency of any
jurisdiction other than the State of Delaware; (ii) result in any fee, tax or
other governmental charge under the laws of any jurisdiction or any political
subdivision thereof in existence on the date hereof other than the State of
Delaware becoming payable by the Owner Trustee; or (iii) subject the Owner
Trustee to personal jurisdiction in any jurisdiction other than the State of
Delaware for causes of action arising from acts unrelated to the consummation of
the transactions by the Owner Trustee contemplated hereby.
(d) The Owner Trustee shall not have the power to remove the
Administrator under the Administration Agreement or appoint a successor
Administrator pursuant to the Administration Agreement without written
instruction by the Owners.
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Section 4.03. SUPER-MAJORITY CONTROL. Except as otherwise expressly
provided in this Agreement, any action which may be taken or consent or
instructions which may be given by the Owners under this Agreement may be taken
by the Owners holding in the aggregate at least 66 2/3% of both the Percentage
Interests and the Sharing Ratios in the Trust at the time of such action (the
"Super-majority Owners"). Any written notice of the Owners delivered pursuant to
this Agreement shall be effective if signed by the Super-majority Owners at the
time of the delivery of such notice.
Section 4.04. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR. The
Depositor hereby represents and warrants to the Owner Trustee as follows:
(a) Upon the receipt of the Trust Property by the Owner Trustee under
this Agreement, the Owner Trustee on behalf of the Trust will have good title to
the Trust Property free and clear
of any lien.
(b) The Trust is not, and will not be upon conveyance of the Trust
Property to the Owner Trustee, an "Investment Company" or under the "control" of
an "Investment Company," as such terms are defined in the Investment Company Act
of 1940, as amended.
(c) Except for the filing of the Certificate of Trust with the
Secretary of State, no consent, approval, authorization or order of, or filing
with, any court or regulatory, supervisory or governmental agency or body is
required under current law in connection with the execution, delivery or
performance by the Depositor of this Agreement or the consummation of the
transactions contemplated hereby; provided, however, that no representation or
warranty is made herein as to compliance with federal securities laws or the
securities or "blue sky" laws of any state.
(d) This Agreement has been duly and validly authorized, executed and
delivered by, and constitutes a valid and binding agreement of, the Depositor,
enforceable in accordance with its terms.
Section 4.05. POWER OF ATTORNEY. (a) GENERAL. Each Owner hereby
irrevocably constitutes and appoints the Administrator, with full power of
substitution, such Owner's true and lawful attorney-in-fact, in such Owner's
name, place and stead, with full power to act jointly and severally, to make,
execute, sign, acknowledge, swear to verify, deliver, file, record and publish
the following documents:
(i) Any certificate, instrument or document to be filed by the
Owners under the laws of any state, or by any governmental agency;
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(ii) Any certificate, instrument or document which may be
required to effect the continuation or the termination of the Trust,
including any amendments to the Agreement; provided such continuation
or termination is in accordance with the terms of this Agreement; and
(iii) Any written notice, instruction, instrument or document
under Article XII of this Agreement.
(b) DURATION OF POWER OF ATTORNEY. It is expressly intended by each of
the Owners that the Power of Attorney granted under this Section 4.05 is coupled
with an interest, and it is agreed that such Power of Attorney shall survive (i)
the dissolution, death or incompetency of the Owner and (ii) the assignment by
any Owner of the whole or any portion of such Owner's Beneficial Interest.
ARTICLE V
INVESTMENT AND APPLICATION OF TRUST FUNDS
Section 5.01. INVESTMENT OF TRUST FUNDS. Unless otherwise directed in
writing by the Owners, income with respect to and proceeds of the Trust Property
which are received by the Owner Trustee more than one day prior to a
Distribution Date shall be invested and reinvested by the Owner Trustee in
Eligible Investments. Interest earned from such investment and reinvestment
shall be credited to the Trust Property.
Section 5.02. APPLICATION OF FUNDS.
Income with respect to and proceeds of Trust Property held by the Owner
Trustee on a Distribution Date shall be applied by the Owner Trustee on such
Distribution Date in the following order:
(i) FIRST, to pay any amounts due to the Owner Trustee under
this Agreement;
(i) SECOND, to pay any amounts due to the Administrator under
the Administration Agreement;
(iii) THIRD, to pay any amounts then due to any Person under
the Trust Related Agreements;
(iv) FOURTH, to pay any other expenses of the Trust; and
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(v) FIFTH, to the Owners in accordance with Section 7.06.
All payments to be made under this Agreement by the Owner Trustee shall be made
only from the income and proceeds of the Trust Property and only to the extent
that the Owner Trustee has received such income or proceeds.
Section 5.03. PAYMENTS TO INDENTURE TRUSTEE OF LIQUIDITY CAPITAL
CONTRIBUTIONS AND MANDATORY CAPITAL CONTRIBUTIONS. All payments made to the
Owner Trustee on behalf of the Trust of Mandatory Capital Contributions or
Liquidity Capital Contributions made by a Funding Owner on any Funding Date
pursuant to Section 6.02(b) or Section 6.02(c) shall be remitted to the
Indenture Trustee not later than one Business Day following receipt by the Owner
Trustee on behalf of the Trust together with a notice to the Indenture Trustee
and the Bond Insurer describing the payment made and whether any Funding Owner
has failed to make a required payment.
ARTICLE VI
CAPITAL
Section 6.01. TAX CHARACTERIZATION. It is intended that the Trust be
characterized and treated as a partnership for federal income tax purposes. All
references to a "Partner," the "Partners" and to the "Partnership" in this
Agreement and in the provisions of the Code and Regulations cited in this
Agreement shall be deemed to refer to an Owner, the Owners and the Trust,
respectively. The Tax Matters Partner of the Trust shall be as set forth in
Article XIII.
Section 6.02. CAPITAL CONTRIBUTIONS OF OWNERS.
(a) The Depositor shall make a Capital Contribution in the amount of
one hundred dollars ($100) upon execution of this Agreement. Upon their
accession to the Trust Agreement as Owners and the issuance of Trust
Certificates to them in accordance with Section 3.01(c), the Owners will be
deemed to have made initial Capital Contributions in the amounts set forth on
Schedule A attached hereto.
(b) Up to but not exceeding its related Funding Amount (as decreased by
any Capital Contributions made by such Funding Owner pursuant to Section
6.02(c)), each Funding Owner shall make additional Capital Contributions in cash
(each, a "Liquidity Capital Contribution") on each Funding Date whenever there
is a shortfall of cash necessary to fund the Interest Reserve Amount (a "Reserve
Shortfall") in the Reserve Fund as required by Section 3.09(b) of the Indenture
following application of available funds by the Indenture Trustee on such
Funding Date. Each Funding Owner's Liquidity Capital Contribution for such
Funding Date shall be equal to the Reserve Shortfall multiplied by a fraction,
the numerator of which shall be the interest payments
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and related expenses on the Allocable Bonds of such Funding Owner minus actual
Collateral Proceeds received during the related Collection Period with respect
to the Allocable Student Loans of such Funding Owner, and the denominator of
which shall be the aggregate interest payments on the Allocable Bonds of all
Funding Owners and related expense payments made on such Funding Date minus the
actual Collateral Proceeds received during the related Collection Period with
respect to the Allocable Student Loans of all Funding Owners; provided that if
the amount of Liquidity Capital Contributions required from a Funding Owner
would be in excess of such Funding Owner's Funding Amount, each other Funding
Owner shall make an additional Liquidity Capital Contribution (but in no event
in excess of such Funding Owner's Funding Amount) in an amount equal to such
excess multiplied by a fraction, the numerator of which is the aggregate unpaid
principal balance of such Funding Owner's Allocable Student Loans and the
denominator of which is the aggregate unpaid principal balance of the Allocable
Student Loans of all Funding Owners required to make an additional Liquidity
Capital Contribution pursuant to this proviso. "Interest Reserve Amount,"
"Reserve Fund," "Collateral Proceeds" and "Collection Period" shall have the
meanings assigned to such terms in the Indenture.
(c) Up to but not exceeding its related Funding Amount (as decreased by
any Liquidity Capital Contributions by such Funding Owner made pursuant to
Section 6.02(b) that have not been returned to such Funding Owner in accordance
with the Indenture), each Funding Owner shall make additional Capital
Contributions in cash (each a "Mandatory Capital Contribution") on each Funding
Date whenever such Funding Owner's Capital Account is debited by the amount of
the Funding Owner's share of Loss allocated pursuant to Section 7.02(a).
(d) The Owner Trustee, or the Administrator on its behalf, shall make
the determination that any Liquidity Capital Contribution or Mandatory Capital
Contribution is payable not later than ten Business Days prior to each Funding
Date and shall promptly notify each Funding Owner of its obligations hereunder
and shall provide a copy of each such notice to the Indenture Trustee. Any such
notification shall be in writing and shall set forth such Funding Owner's
Default Losses, if any, attributable to such Funding Owner's Allocable Student
Loans, any related Reserve Shortfall, such Owner's Funding Amount, and the
amount of all Mandatory Capital Contributions and Liquidity Capital
Contributions (to the extent not returned).
(e) The Owner Trustee, or the Administrator on its behalf, may, with
the consent of the Bond Insurer so long as any Bonds are outstanding, and shall,
upon the direction of the Bond Insurer, institute proceedings for the collection
of all Mandatory Capital Contributions or Liquidity Capital Contributions
required to be made but not made hereunder, whether by declaration or otherwise,
and enforce any judgment obtained. The Owner Trustee shall not distribute any
Net Cash Flow to any Funding Owner that has not made all Capital Contributions
required to be made by it.
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Section 6.03. CAPITAL ACCOUNTS. A capital account shall be maintained
for each Owner throughout the term of the Trust in accordance with the rules of
Regulation ss.1.704-1(b)(2)(iv) as in effect from time to time, and, to the
extent not inconsistent therewith, to which the following provisions apply:
(a) To each Owner's Capital Account there shall be credited (i) the
amount of money contributed by such Owner to the Trust (including each Owner's
share of any liabilities of the Trust assumed by such Owner as provided in
Regulation Section 1.704-1(b)(2)(iv)(c)), including any Liquidity Capital
Contributions or Mandatory Capital Contributions by a Funding Owner, (ii) the
fair market value of any property contributed to the Trust by such Owner (net of
liabilities secured by such contributed property that the Trust is considered to
assume or take subject to under Code ss.752), and (iii) such Owner's share of
Profit and items of income and gain that are specially allocated pursuant to
Section 7.03 and 7.04. The initial Capital Contributions of each Owner are set
forth on Schedule A attached hereto.
(b) To each Owner's Capital Account there shall be debited (i) the
amount of money distributed to such Owner by the Trust (including any return to
a Funding Owner of a Liquidity Capital Contribution and any liabilities of such
Owner assumed by the Trust as provided in Regulation Section
1.704-1(b)(2)(iv)(c)) other than amounts that are in repayment of debt
obligations of the Trust to such Owner, (ii) the fair market value of property
distributed to such Owner (net of liabilities secured by such distributed
property that such Owner is considered to assume or take subject to), and (iii)
such Owner's share of Loss and items of loss or deduction that are specially
allocated pursuant to Sections 7.03 and 7.04.
(c) The Capital Account of a transferee Owner shall include the
appropriate portion of the Capital Account of the Owner from whom the transferee
Owner's interest was obtained.
(d) In determining the amount of any liability there shall be taken
into account Code Section 752(c) and any other applicable provisions of the Code
and Regulations.
The foregoing provisions and the other provisions of this Agreement relating to
the maintenance of Capital Accounts are intended to comply with Regulations
Section 1.704-1(b), and shall be interpreted and applied in a manner consistent
with such Regulations.
Section 6.04. INTEREST. No Owner shall be entitled to interest on its
Capital Contribution or on any Profit retained by the Trust.
Section 6.05. OTHER ADDITIONAL CAPITAL CONTRIBUTIONS. Except for
Liquidity Capital Contributions and Mandatory Capital Contributions required
pursuant to Section 6.02, no Owner shall make an additional Capital Contribution
to the Trust, or receive a distribution from the Trust, of property unless this
Agreement shall have first been amended to the extent necessary to
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comply with the requirements of Sections 704(b) and (c) of the Code regarding
the distributive shares of, and the allocation of income, gain, loss, deduction
and credit among, partners of a partnership.
Section 6.06. INVESTMENT OF CAPITAL CONTRIBUTIONS. The cash Capital
Contributions of the Owners shall be invested by the Owner Trustee in accordance
with Section 5.01.
Section 6.07. REPAYMENT AND RETURN OF CAPITAL CONTRIBUTIONS.
(a) The Owner Trustee shall have no personal liability for the
repayment of any Capital Contributions of the Owners.
(b) Following receipt by the Owner Trustee from the Indenture Trustee
of any returned Liquidity Capital Contributions on any Payment Date, such
Liquidity Capital Contributions shall be distributed to all Funding Owners who
previously made such contributions, pro rata in proportion to the unreturned
Liquidity Capital Contributions of each such Funding Owner.
(c) Following redemption or payment of the Bonds in full, principal
payments received by the Trust in a Fiscal Year on account of the Student Loans,
including prepayments of principal and amounts recovered in liquidation of a
Student Loan allocable to outstanding principal thereof, shall be distributed to
the Owners in proportion to the positive balances in their respective Capital
Accounts.
ARTICLE VII
ALLOCATION OF PROFIT AND LOSS; DISTRIBUTIONS
Section 7.01. PROFIT. After giving effect to special allocations set
forth in Section 7.03, Profit for any Fiscal Year shall be allocated in the
following order and priority:
(a) OFFSET OF SECTION 7.02(C) ALLOCATION. Profit shall first be
allocated to the Owners in proportion to and to the extent of the excess, if
any, of (i) the cumulative Loss allocated to each Owner pursuant to Section
7.02(b) for all prior Fiscal Years, over (ii) the cumulative Profit allocated to
each Owner pursuant to this Section 7.01(a)(1) for all prior Fiscal Years;
(b) NET INTEREST INCOME ATTRIBUTABLE TO STUDENT LOANS AS TO EACH OWNER.
Net Interest Income Attributable to Student Loans as to Each Owner shall be
allocated as follows:
(i) First, to the extent that cumulative Loss
resulting from defaults on one or more Owner's Related Owner
Notes ("Default Losses") have been allocated to
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other Owners (the "Other Owners") pursuant to Section 7.02(a),
to the Other Owners to the extent of and in the same
proportions as such Default Losses were so allocated; and
(ii) Second, to such Owner.
(c) NET INTEREST INCOME ATTRIBUTABLE TO RESERVE ACCOUNTS AS TO EACH
OWNER. Net Interest Income Attributable to Reserve Accounts as to Each Owner
shall be allocated as follows:
(i) First, to the extent that the allocation under Section
7.01(b)(i) shall not have offset all allocations of Default
Losses to the Other Owners, to the Other Owners to the extent
of and in the same proportions as such Default Losses which
were not so offset were allocated; and
(ii) Second, to such Owner.
(d) OTHER PROFIT. All Profit for any Fiscal Year not allocated pursuant
to Section 7.01 (a), (b) and (c) shall be allocated as follows:
(i) First, to the extent that the allocation under Section
7.01 (b)(i) and (c)(i) shall not have offset all allocations
of Default Losses to the Other Owners, to the Other Owners to
the extent of and in the same proportion as such Default
Losses which were not so offset were allocated;
(ii) Second, all income resulting from recoveries on defaulted
Related Owner Notes shall be allocated to the related Owner of
such Notes to the extent the related Owner was previously
allocated Loss under Section 7.02(a) with respect to such
Related Owner Notes; and
(iii) Third, to the Owners in proportion to their Sharing
Ratios.
Section 7.02. LOSS. After giving effect to the special allocations set
forth in Section 7.03, Loss for any Fiscal Year shall be allocated as set forth
in Section 7.02(a) and (b), subject to the limitation in Section 7.02(c).
(a) LOSS ATTRIBUTABLE TO NOTE DEFAULTS. To the extent of any positive
balance in such Owner's Capital Account, and, with respect to a Funding Owner,
to the extent of the sum of any positive balance in such Owner's Capital Account
plus any uncontributed Funding Amount, each Owner shall be specially allocated
all Default Losses for such Fiscal Year resulting from defaults on such Owner's
Related Owner Notes transferred to the Trust. If the allocation of such Default
Losses would be in excess of the positive balance in such Owner's Capital
Account, or, in the case
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of a Funding Owner, the sum of the positive balance in such Owner's Capital
Account plus any uncontributed Funding Amount, such excess shall be allocated to
the Other Owners to the extent of the respective positive balance in each other
Owner's Capital Account and, with respect to a Funding Owner, to the extent of
the sum of any positive balance in such Owner's Capital Account plus any
uncontributed Funding Amount, and in proportion to each other Owner's initial
Capital Contributions and to a Funding Owner's aggregate Capital Contributions
plus any uncontributed Funding Amount.
(b) OTHER LOSS. All Loss not allocated pursuant to Section 7.02(a)
shall be allocated to the Owners in proportion to their Sharing Ratios.
(c) EFFECT OF ADJUSTED CAPITAL ACCOUNT DEFICIT. The Loss allocated
pursuant to Section 7.02(a) and (b) shall not exceed the maximum amount of Loss
that can be so allocated without causing any Owner to have an Adjusted Capital
Account Deficit at the end of any Fiscal Year. In the event some but not all of
the Owners would have Adjusted Capital Account Deficits as a consequence of an
allocation of Loss pursuant to Section 7.02(a) and (b), the limitation set forth
in this Section 7.02(c) shall be applied on a Owner by Owner basis so as to
allocate the maximum permissible Loss to the Owner under Section
1.704-1(b)(2)(ii)(d) of the Regulations.
Section 7.03. SPECIAL ALLOCATIONS.
(a) MINIMUM GAIN CHARGEBACK. Except as otherwise provided in Section
1.704-2(f) of the Regulations, notwithstanding any other provision of this
Section 7.03, if there is a net decrease in Partnership Minimum Gain during any
Fiscal Year, each Owner shall be specially allocated items of Trust income and
gain for such Fiscal Year (and, if necessary, subsequent Fiscal Years) in an
amount equal to such Owner's share of the net decrease in Partnership Minimum
Gain, determined in accordance with Regulations Section 1.704-2(g). Allocations
pursuant to the previous sentence shall be made in proportion to the respective
amounts required to be allocated to each Owner pursuant thereto. The items to be
so allocated shall be determined in accordance with Sections 1.704-2(f)(6) and
1.704-2(j)(2) of the Regulations. This Section 7.03(b) is intended to comply
with the minimum gain chargeback requirement in Section 1.704-2(f) of the
Regulations and shall be interpreted consistently therewith.
(b) OWNER MINIMUM GAIN CHARGEBACK. Except as otherwise provided in
Section 1.704-2(i)(4) of the Regulations, notwithstanding any other provision of
this Section 7.03, if there is a net decrease in Partner Nonrecourse Debt
Minimum Gain attributable to a Partner Nonrecourse Debt during any Fiscal Year,
each Owner who has a share of the Partner Nonrecourse Debt Minimum Gain
attributable to such Partner Nonrecourse Debt, determined in accordance with
Section 1.704-2(i)(5) of the Regulations, shall be specially allocated items of
Partnership income and gain for such Fiscal Year (and, if necessary, subsequent
Fiscal Years) in an amount equal to such Partner's share of the net decrease in
Partner Nonrecourse Debt
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Minimum Gain attributable to such Partner Nonrecourse Debt, determined in
accordance with Regulations Section 1.704-2(i)(4). Allocations pursuant to the
previous sentence shall be made in proportion to the respective amounts required
to be allocated to each Partner pursuant thereto. The items to be so allocated
shall be determined in accordance with Sections 1.704-2(i)(4) and 1.704-2(j)(2)
of the Regulations. This Section 7.03(b) is intended to comply with the minimum
gain chargeback requirement in Section 1.704-2(i)(4) of the Regulations and
shall be interpreted consistently therewith.
(c) QUALIFIED INCOME OFFSET. In the event any Owner unexpectedly
receives any adjustments, allocations, or distributions described in Section
1.704-1(b)(2)(ii)(d)(4), Section 1.704-1(b)(2)(ii)(d)(5), or Section
1.704-1(b)(2)(ii)(d)(6) of the Regulations, items of Trust income and gain shall
be specially allocated to the Owner in an amount and manner sufficient to
eliminate, to the extent required by the Regulations, the Adjusted Capital
Account Deficit of the Owner as quickly as possible, provided that an allocation
pursuant to this Section 7.03(c) shall be made only if and to the extent that
the Owner would have an Adjusted Capital Account Deficit after all other
allocations provided for in this Article VII have been tentatively made as if
this Section 7.03(c) were not in this Agreement.
(d) GROSS INCOME ALLOCATION. In the event any Owner has a deficit
Capital Account at the end of any Fiscal Year which is in excess of the sum of
the amount such Owner is deemed to be obligated to restore pursuant to the
penultimate sentences of Sections 1.704-2(g)(1) and 1.704-2(i)(5) of the
Regulations, each such Owner shall be specially allocated items of Trust income
and gain in the amount of such excess as quickly as possible, provided that an
allocation pursuant to this Section 7.03(d) shall be made only if and to the
extent that such Owner would have a deficit Capital Account in excess of such
sum after all other allocations provided for in this Article VII have been made
as if Section 7.03(c) and this Section 7.03(d) were not in this Agreement.
(e) NONRECOURSE DEDUCTIONS. Nonrecourse Deductions for any Fiscal Year
shall be specially allocated among the Owners in proportion to their Sharing
Ratios.
(f) PARTNER NONRECOURSE DEDUCTIONS. Any Partner Nonrecourse Deductions
for any Fiscal Year shall be specially allocated to the Owner who bears the
economic risk of loss with respect to the Partner Nonrecourse Debt to which such
Partner Nonrecourse
Deductions are attributable in accordance with Regulations Section
1.704-2(i)(1).
(g) MANDATORY ALLOCATIONS UNDER CODE SECTION 704(C). Notwithstanding
the foregoing provisions of this Section 7.03, in the event Code Section 704(c)
or Code Section 704(c) principles applicable under Section 1.704-1(b)(2)(iv) of
the Regulations require allocations of Profit or Loss in a manner different than
that set forth above, the provisions of Code Section
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704(c) and the Regulations thereunder shall control such allocations. Any item
of Trust income, gain, loss and deduction with respect to any property (other
than cash) that has been contributed by a Partner to the capital of the Trust or
which has been revalued for Capital Account purposes pursuant to Section
1.744-1(b)(2)(iv) of the Regulations and which is required to be allocated to
such Partner for income tax purposes under Code Section 704(c) so as to take
into account the variation between the tax basis of such property and its fair
market value at the time of its contribution shall be allocated solely for
income tax purposes in the manner required or permitted under Code Section
704(c) using the "traditional method" described in Section 1.704-3(b) of the
Regulations, PROVIDED, HOWEVER, that curative allocations consisting of the
special allocation of gain or loss upon the sale or other disposition of the
contributed property shall be made in accordance with Section 1.704-3(c) of the
Regulations to the extent necessary to eliminate any disparity, to the extent
possible, between the Partners' book and tax Capital Accounts attributable to
such property; FURTHER PROVIDED, HOWEVER, that any other method allowable under
applicable Regulations may be used for any contribution of property as to which
there is agreement between the contributing Partner and the Administrator.
Section 7.04. CURATIVE ALLOCATIONS. The allocations set forth in
Sections 7.03(a) through (g) (the "Regulatory Allocations") are intended to
comply with certain requirements of the Regulations. It is the intent of the
Owners that, to the extent possible, all Regulatory Allocations shall be offset
either with other Regulatory Allocations or with special allocations of other
items of Trust income, gain, loss, or deduction. Therefore, notwithstanding any
other provision of this Article VII (other than the Regulatory Allocations),
offsetting special allocations of Trust income, gain, loss, or deduction shall
be made so that, after such offsetting allocations are made, each Owner's
Capital Account balance is, to the extent possible, equal to the Capital Account
balance such Owner would have had if the Regulatory Allocations were not part of
the Agreement and all Trust items were allocated pursuant to Sections 7.01 and
7.02. In making such offsetting allocations, there shall be taken into account
future Regulatory Allocations under Sections 7.03(a) and (b) that, although not
yet made, are likely to offset other Regulatory Allocations previously made
under Sections 7.03(e) and (f).
Section 7.05. OTHER ALLOCATION RULES.
(a) For purposes of determining the Profit, Loss, or any other items
allocable to any period, Profit, Loss, and any such other items shall be
determined on a daily, monthly, or other basis, as determined by the Owner
Trustee, under the direction of the Super-majority Owners, using any method
permissible under Code Section 706 and the Regulations thereunder.
(b) The Owners are aware of the income tax consequences of the
allocations made by this Article VII and hereby agree to be bound by the
provisions of this Article VII in reporting their shares of Trust income and
loss for income tax purposes.
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(c) Solely for purposes of determining a Owner's proportionate share of
the "excess nonrecourse liabilities" of the Trust within the meaning of Section
1.752-3(a)(3) of the Regulations, the Owner's interests in Trust profits are in
proportion to their Sharing Ratios.
(d) To the extent permitted by Section 1.704-2(h)(3) of the
Regulations, the Owner Trustee shall endeavor to treat distributions of Net Cash
Flow as having been made from the proceeds of a Nonrecourse Liability or a
Partner Nonrecourse Debt only to the extent that such distributions would cause
or increase an Adjusted Capital Account Deficit for any Limited Partner.
Section 7.06. DISTRIBUTION OF NET CASH FLOW. Except to the extent
prohibited by any other agreement to which the Trust is a party or is otherwise
bound and subject to Section 6.02 hereof, Net Cash Flow on each Distribution
Date shall be distributed on such Distribution Date to each Owner in an amount
equal to (i) the Profit allocated to such Owner under this Article VII and not
previously distributed to such Owner (ii) less the amount of Default Losses
allocated to such Owner to the extent such Default Losses were not applied in
reduction of the amount of any previous distribution of Net Cash Flow to such
Owner. All payments to be made under this Agreement by the Owner Trustee shall
be made only from the income and proceeds of the Trust Property and only to the
extent the Owner Trustee has received such income or proceeds.
Section 7.07. DISTRIBUTION STATEMENT. With each distribution to an
Owner pursuant to Section 7.06, the Owner Trustee shall deliver a Distribution
Date Statement setting forth, for the period since the preceding Distribution
Date:
(i) income and proceeds received by the Owner Trustee with
respect to the Trust Property;
(ii) amounts paid to the Owner Trustee;
(iii) amounts paid to any Person pursuant to a Trust Related
Agreement; and
(iv) amounts paid for other expenses of the Trust.
Section 7.08. ALLOCATION OF TAX LIABILITY. In the event that any tax is
imposed on the Trust, such tax shall be charged against amounts otherwise
distributable to the Owners in proportion to their respective Sharing Ratios.
The Owner Trustee is hereby authorized to retain from amounts otherwise
distributable to the Owners sufficient funds to pay or provide for the payment
of, and then actually pay, such tax as is legally owed by the Trust (but such
authorization shall not prevent the Owner Trustee from contesting any such tax
in appropriate proceedings, and withholding payment of such tax, if permitted by
law, pending the outcome of such proceedings).
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Section 7.09. METHOD OF PAYMENT. All amounts payable to an Owner
pursuant to this Agreement shall be paid by the Owner Trustee to such Owner or a
nominee therefor by check payable to such Owner, mailed first class to the
address of such Owner appearing on the register maintained pursuant to Section
3.02, or by crediting the amount to be distributed to such Owner to an account
maintained by such Owner with the Owner Trustee or by transferring such amount
by wire transfer in immediately available funds to a banking institution with
bank wire transfer facilities for the account of such Owner, as instructed in
writing from time to time by such Owner. The Owner Trustee may require an Owner
to pay any wire transfer fees incurred in connection with any wire transfer made
to such Owner.
Section 7.10. NO SEGREGATION OF FUNDS; NO INTEREST. Subject to Section
2.03(b)(ii) and Section 5.01, funds received by the Owner Trustee hereunder need
not be segregated in any manner except to the extent required by law and may be
deposited under such general conditions as may be prescribed by law, and the
Owner Trustee shall not be liable for any interest thereon.
Section 7.11. INTERPRETATION AND APPLICATION OF PROVISIONS BY THE
ADMINISTRATOR. The Owner Trustee shall appoint and authorize the Administrator
to interpret and apply the provisions set forth in this Article VII regarding
allocations of Profit and Loss and Distributions of Net Cash Flow, to resolve
any ambiguities that may result from such application and to provide the Owner
Trustee and the Owners with clarification of any provision as may be necessary
or appropriate. The determinations of the Administrator shall be binding upon
the Owners.
ARTICLE VIII
AUTHORITY AND DUTIES OF THE OWNER TRUSTEE
Section 8.01. GENERAL AUTHORITY. The Owner Trustee is authorized to
take all actions required or permitted to be taken by it pursuant to the terms
of this Agreement, the Trust Related Agreements and the Business Trust Statute.
The Owner Trustee is further authorized from time to time to take such action as
the Administrator directs with respect to the Trust Related Agreements.
Section 8.02. SPECIFIC AUTHORITY. The Owner Trustee is hereby
authorized and directed to take the following actions:
(a) execute the Certificate of Trust substantially in the form of
Exhibit 3 hereto; and
(b) execute and deliver on behalf of the Trust, the Trust Related
Agreements, including without limitation, the Trust Certificates and any other
document contemplated by the foregoing;
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in each case, in such form as the Administrator shall approve, as evidenced
conclusively by the Owner Trustee's execution thereof.
Section 8.03. GENERAL DUTIES. It shall be the duty of the Owner Trustee
to discharge (or cause to be discharged) all of its responsibilities pursuant to
the terms of this Agreement and to administer the Trust in the interest of the
Owners. Notwithstanding the foregoing, the Owner Trustee shall have deemed to
have discharged its duties and responsibilities hereunder under the Trust
Related Agreements to the extent the Administrator has agreed in the
Administration Agreement to perform such acts or to discharge such duties of the
Owner Trustee hereunder or under any Trust Related Agreement, and the Owner
Trustee shall not be held liable for the default or failure of the Administrator
to carry out its obligations under the Administration Agreement.
Section 8.04. ACCOUNTING AND REPORTS TO THE OWNERS, THE INTERNAL
REVENUE SERVICE AND OTHERS. The Owner Trustee shall (i) maintain or cause to be
maintained the books of the Trust on a calendar year basis on the accrual method
of accounting, (ii) deliver to each Owner, within 60 days of the end of each
Fiscal Year, or more often, as may be required by the Code and the regulations
thereunder, a copy of the annual financial statement of the Trust for such
Fiscal Year and a statement in such form and containing such information as may
be required by such regulations, and as is necessary and appropriate to enable
each Owner to prepare its federal and state income tax returns, (iii) file such
tax returns relating to the Trust, and make such elections, including an
election for the first taxable year of the Trust, necessary for the Trust to
qualify as a partnership, or as may from time to time be required under any
applicable state or federal statute or rule or regulation thereunder, (iv) cause
such tax returns to be signed in the manner required by law, (v) collect or
cause to be collected any withholding tax required by the Code to be withheld by
the Owner Trustee with respect to distributions to Owners who are nonresident
aliens or foreign corporations, and (vi) cause to be mailed to each Owner copies
of all such reports and tax returns of the Trust.
Section 8.05. SIGNATURE OF RETURNS. The Owner Trustee shall sign on
behalf of the Trust the tax returns and other Periodic Filings of the Trust,
unless applicable law requires an Owner to sign such documents, in which case,
so long as the Depositor is an Owner and applicable law allows the Depositor to
sign any such document, the Depositor shall sign such document. At any time that
the Depositor is not an Owner, or is otherwise not allowed by law to sign any
such document, then the Owner required by law to sign such document shall sign.
Section 8.06. RIGHT TO RECEIVE AND RELY UPON INSTRUCTIONS. In the event
that the Owner Trustee is unable to decide between alternative courses of
action, or is unsure as to the application of any provision of this Agreement or
any Trust Related Agreement, or such provision is ambiguous as to its
application, or is or appears to be, in conflict with any other applicable
provision, or in the event that this Agreement or any Trust Related Agreement
permits any determination by the Owner Trustee or is silent or is incomplete as
to the course of action which
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the Owner Trustee is required to take with respect to a particular set of facts,
the Owner Trustee may give notice (in such form as shall be appropriate under
the circumstances) to the Owners requesting instructions and, to the extent that
the Owner Trustee shall have acted or refrained from acting in good faith in
accordance with any instructions received from the Owners, the Owner Trustee
shall not be liable on account of such action or inaction to any Person. If the
Owner Trustee shall not have received appropriate instructions within ten days
of such notice (or within such shorter period of time as may be specified in
such notice) the Owner Trustee may, but shall be under no duty to, take or
refrain from taking such action, not inconsistent with this Agreement or the
Trust Related Agreements, as the Owner Trustee shall deem to be in the best
interests of the Owners, and the Owner Trustee shall have no liability to any
Person for such action or inaction.
Section 8.07. NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT OR IN
INSTRUCTIONS. The Owner Trustee shall not have any duty or obligation to manage,
make any payment in respect of, register, record, sell, dispose of or otherwise
deal with the Trust Property, or to otherwise take or refrain from taking any
action under, or in connection with, any document contemplated hereby to which
the Owner Trustee or the Trust is a party, except as expressly provided by the
terms of this Agreement and no implied duties or obligations shall be read into
this Agreement against the Owner Trustee. The Owner Trustee nevertheless agrees
that it will, at its own cost and expense, promptly take all action as may be
necessary to discharge any liens on any part of the Trust Property which result
from claims against the Owner Trustee personally that are not related to the
ownership or the administration of the Trust Property or the transactions
contemplated by the Trust Related Agreements.
Section 8.08. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS. The Owner Trustee shall not manage, control, use, sell, dispose of
or otherwise deal with any part of the Trust Property except (i) in accordance
with the powers granted to and the authority conferred upon the Owner Trustee
pursuant to this Agreement, and (ii) in accordance with instructions delivered
to the Owner Trustee pursuant to Section 8.06 and Article IV hereof.
Section 8.09. RESTRICTION. Notwithstanding anything herein to the
contrary, the Owner Trustee shall not take any action (a) that is inconsistent
with the purposes of the Trust or (b) that would result in the Trust being
treated as an association taxable as a corporation for Federal income tax
purposes.
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ARTICLE IX
CONCERNING THE OWNER TRUSTEE
Section 9.01. ACCEPTANCE OF TRUSTS AND DUTIES. The Owner Trustee
accepts the trusts ▇▇▇▇▇▇ created and agrees to perform its duties hereunder
with respect to the same but only upon the terms of this Agreement. The Owner
Trustee shall not be personally liable under any circumstances, except (i) for
its own willful misconduct or gross negligence, (ii) for liabilities arising
from the failure by the Owner Trustee to perform obligations expressly
undertaken by it in the last sentence of Section 8.07, or (iii) for taxes, fees
or other charges on, based on or measured by any fees, commissions or
compensation received by the Owner Trustee in connection with any of the
transactions contemplated by this Agreement or the Trust Related Agreements. In
particular, but not by way of limitation:
(a) The Owner Trustee shall not be personally liable for any error of
judgment made in good faith by an Authorized Officer of the Owner Trustee;
(b) The Owner Trustee shall not be personally liable with respect to
any action taken or omitted to be taken by the Owner Trustee in good faith in
accordance with the instructions of the Administrator or the Owners;
(c) No provision of this Agreement shall require the Owner Trustee to
expend or risk its personal funds or otherwise incur any financial liability in
the performance of any of its rights or powers hereunder, if the Owner Trustee
shall have reasonable grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not reasonably assured or
provided to it;
(d) Under no circumstance shall the Owner Trustee be personally liable
for any indebtedness of the Trust under any Trust Related Agreement;
(e) The Owner Trustee shall not be personally responsible for or in
respect of the validity or sufficiency of this Agreement or for the due
execution hereof by the Depositor, or for the form, character, genuineness,
sufficiency, value or validity of any Student Loan or Trust Certificate (other
than with respect to the due execution thereby by an Authorized Officer), or for
or in respect of the validity or sufficiency of the Administration Agreement or
the Trust Related Agreements; and
(f) The Owner Trustee shall not be liable for the default or misconduct
of the Administrator under any of the Trust Related Agreements or otherwise and
the Owner Trustee shall have no obligation or liability to perform the
obligations of the Issuer hereunder or under any
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Trust Related Agreement that are required to be performed by the Administrator
under the Administration Agreement.
Section 9.02. FURNISHING OF DOCUMENTS. The Owner Trustee shall furnish
to the Owners, promptly upon receipt thereof, duplicates or copies of all
material reports, notices, requests, demands, certificates, financial statements
and any other instruments furnished to the Owner Trustee hereunder (other than
documents originated by or otherwise furnished to such Owners).
Section 9.03. RELIANCE; ADVICE OF COUNSEL.
(a) The Owner Trustee shall incur no liability to anyone in acting upon
any signature, instrument, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or paper believed by it to
be genuine and believed by it to be signed by the proper party or parties. The
Owner Trustee may accept a certified copy of a resolution of the board of
directors or other governing body of any corporate party as conclusive evidence
that such resolution has been duly adopted by such body and that the same is in
full force and effect. As to any fact or matter the manner of ascertainment of
which is not specifically prescribed herein, the Owner Trustee may for all
purposes hereof rely on a certificate, signed by the president or any vice
president or by the treasurer or any assistant treasurer or the secretary of the
relevant party, as to such fact or matter, and such certificate shall constitute
full protection to the Owner Trustee for any action taken or omitted to be taken
by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in
the performance of its duties and obligations under any of the Trust Related
Agreements, the Owner Trustee (i) may act directly or, at the expense of the
Trust, through agents or attorneys pursuant to agreements entered into with any
of them, and the Owner Trustee shall not be liable for the default or misconduct
of such agents or attorneys if such agents or attorneys shall have been selected
by the Owner Trustee with reasonable care; and (ii) may, at the expense of the
Trust, consult with counsel, accountants and other skilled persons to be
selected with reasonable care and employed by it, and the Owner Trustee shall
not be liable for anything done, suffered or omitted in good faith by it in
accordance with the advice or opinion of any such counsel, accountants or other
skilled persons.
Section 9.04. NOT ACTING IN INDIVIDUAL CAPACITY. Except as expressly
provided in this Article IX, in accepting the trusts hereby created the Owner
Trustee acts solely as trustee hereunder and not in its individual capacity, and
all Persons having any claim against the Owner Trustee by reason of the
transactions contemplated by this Agreement or the Trust Related Agreements
shall look only to the Trust Property for payment or satisfaction thereof.
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ARTICLE X
COMPENSATION OF OWNER TRUSTEE
Section 10.01. OWNER TRUSTEE'S FEES AND EXPENSES. The Owner Trustee
shall receive compensation from the Trust Property for its services hereunder as
set forth on the fee schedule attached hereto as Exhibit 4. The Owner Trustee
shall be entitled to be reimbursed for its reasonable expenses hereunder,
including, without limitation, the reasonable compensation, expenses and
disbursements of such agents, representatives, experts and counsel as the Owner
Trustee may employ in connection with the exercise and performance of its rights
and duties under this Agreement and the Trust Related Agreements.
Section 10.02. INDEMNIFICATION. The Owners shall be jointly and
severally liable for, and hereby agree to indemnify Delaware Trust Capital
Management, Inc., individually and as Owner Trustee and its successors, assigns,
agents and servants, from and against, any and all liabilities, obligations,
losses, damages, taxes (other than taxes incurred as the result of the payment
of fees and expenses pursuant to Section 10.01), claims, actions, suits, costs,
expenses and disbursements (including legal fees and expenses) of any kind and
nature whatsoever which may be imposed on, incurred by or asserted at any time
against the Owner Trustee (whether or not indemnified against by other parties)
in any way relating to or arising out of this Agreement, any Trust Related
Agreement, the administration of the Trust Property or the action or inaction of
the Owner Trustee hereunder, except only that the Owners shall not be required
to indemnify the Owner Trustee for expenses arising or resulting from any of the
matters described in the second sentence of Section 9.01. The indemnities
contained in this Section 10.02 shall survive the termination of this Agreement.
The obligations of the Owners pursuant to this Section 10.02 shall be borne in
proportion to their respective Percentage Interests. The indemnities contained
in this Section 10.02 extend only to the Owner Trustee in its individual
capacity.
Section 10.03. LIEN ON TRUST PROPERTY. The Owner Trustee shall have a
lien on the Trust Property for any compensation or expenses and indemnity due
hereunder which lien shall be prior to all other liens.
Section 10.04. PAYMENTS TO THE OWNER TRUSTEE. Any amounts paid to the
Owner Trustee from the Trust Property pursuant to this Article X shall be deemed
not to be part of the Trust Property immediately after such payment.
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ARTICLE XI
TERMINATION OF TRUST
Section 11.01. TERMINATION OF TRUST.
(a) The trust created hereby shall terminate and, except as otherwise
provided in this Article XI, this Agreement shall be of no further force or
effect, upon the earlier of (i) if there are no Bonds outstanding, the unanimous
consent of the Owners, (ii) if there are no Bonds outstanding, the sale or other
final disposition by the Owner Trustee of the Trust Property and the final
distribution by the Owner Trustee of all funds or other property or proceeds of
the Trust Property in accordance with the terms of this Agreement and the Trust
Related Agreements, and (iii) 21 years less one day after the death of the
survivor of the descendants living on the date of this Agreement of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, the late Ambassador of the United States to the Court of St. ▇▇▇▇▇.
(b) The bankruptcy, death, incapacity, dissolution or termination of
any Owner shall not operate to dissolve or terminate this Agreement, nor entitle
such Owner's legal representatives or heirs to claim an accounting or to take
any action or proceeding in any court for a partition or winding up of the Trust
Property, nor otherwise affect the rights, obligations and liabilities of the
parties hereto.
(c) Upon the termination of the Trust pursuant to this Article XI, the
Owner Trustee shall cause a Certificate of Termination to be filed with the
Secretary of State.
Section 11.02. DISTRIBUTION OF ASSETS. Upon termination of the Trust,
the Owner Trustee shall take full account of the Trust assets and liabilities,
shall liquidate the assets as promptly as is consistent with obtaining the fair
value thereof, and shall apply and distribute the proceeds therefrom in the
following order:
(a) To the payment of the expenses of liquidation and the
debts and liabilities of the Trust;
(b) To the setting up of reserves which the Owner Trustee may
deem necessary or appropriate for anticipated obligations or
contingencies of the Trust arising out of or in connection with the
operation of the Trust. Such reserves may be paid over by the Owner
Trustee to an escrow agent or trustee selected by the Owner Trustee to
be disbursed by such escrow agent or trustee in payment of any of such
obligations or contingencies and, if any balance remains at the
expiration of such period as the Owner Trustee shall deem
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advisable, to be distributed by such escrow agent or trustee in the
manner hereinafter provided;
(c) To the Owners in accordance with the positive balances in
their respective Capital Accounts.
If at the time of liquidation the Owner Trustee shall determine that an
immediate sale of some or all of the Assets would cause undue loss to the
Owners, the Owner Trustee may, in order to avoid such loss and with the consent
of the Owners, defer liquidation.
Section 11.03. NO TERMINATION BY DEPOSITOR OR OWNERS. Except as
provided in Section 11.01, neither the Depositor nor the Owners shall be
entitled to terminate or revoke the Trust established hereunder.
ARTICLE XII
SUCCESSOR OWNER TRUSTEES AND ADDITIONAL OWNER TRUSTEES
Section 12.01. RESIGNATION OF OWNER TRUSTEE; APPOINTMENT OF SUCCESSOR.
(a) The Owner Trustee may resign at any time without cause by
giving at least 60 days' prior written notice to the Administrator, the Owners
and the Bond Insurer, such resignation to be effective upon the acceptance of
appointment by a successor Owner Trustee under Section 12.01(b). In addition,
the Super-majority Owners may with the consent of the Bond Insurer at any time
remove the Owner Trustee without cause by an instrument in writing delivered to
the Owner Trustee and the Administrator, such removal to be effective upon the
acceptance of appointment by a successor Owner Trustee under Section 12.01(b).
In case of the resignation or removal of the Owner Trustee, the Owners may with
the consent of the Bond Insurer appoint a successor Owner Trustee by an
instrument signed by the Owners. If a successor Owner Trustee shall not have
been appointed within 30 days after the giving of written notice of such
resignation or the delivery of the written instrument with respect to such
removal, the Owner Trustee or the Owners may apply to any court of competent
jurisdiction to appoint a successor Owner Trustee to act until such time, if
any, as a successor Owner Trustee shall have been appointed as provided above.
Any successor Owner Trustee so appointed by such court shall immediately and
without further act be superseded by any successor Owner Trustee appointed as
above provided within one year from the date of the appointment by such court.
(b) Any successor Owner Trustee, however appointed, shall execute and
deliver to the predecessor Owner Trustee an instrument accepting such
appointment, and thereupon such successor Owner Trustee, without further act
(except for the filing required under clause (e)
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below), shall become vested with all the estates, properties, rights, powers,
duties and trust of the predecessor Owner Trustee in the trusts hereunder with
like effect as if originally named the Owner Trustee herein; but nevertheless,
upon the written request of such successor Owner Trustee and the payment of all
fees and indemnities due the predecessor Owner Trustee, such predecessor Owner
Trustee shall execute and deliver an instrument transferring to such successor
Owner Trustee, upon the trusts herein expressed, all the estates, properties,
rights, powers, duties and trusts of such predecessor Owner Trustee, and such
predecessor Owner Trustee shall duly assign, transfer, deliver and pay over to
such successor Owner Trustee all funds or other property then held or
subsequently received by such predecessor Owner Trustee upon the trusts herein
expressed.
(c) Any successor Owner Trustee, however appointed, shall be approved
by the Bond Insurer and shall be a bank or trust company (i) that meets the
requirements of (A) Section 3(a)(7) of the Investment Company Act of 1940, as
amended, and (B) Section 3807 of the Business Trust Statute and (ii) whose
parent entity has a combined capital and surplus of as least $50,000,000, if
there be such an institution willing, able and legally qualified to perform the
duties of the Owner Trustee hereunder upon reasonable or customary terms.
(d) Any corporation into which the Owner Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Owner Trustee shall be
a party, or any corporation to which substantially all the corporate trust
business of the Owner Trustee may be transferred, shall, subject to the terms of
Section 12.01(c), be the Owner Trustee under this Agreement without further act.
(e) Any successor Owner Trustee appointed pursuant to this Article XII
shall file an amendment to the Certificate of Trust with the Secretary of State
reflecting the name and principal place of business of such successor Owner
Trustee.
Section 12.02. APPOINTMENT OF ADDITIONAL OWNER TRUSTEES. At any time or
times for the purpose of meeting any legal requirements of any jurisdiction in
which any part of the Trust Property may at the time be located, the Owner
Trustee and the Administrator, acting jointly, by an instrument in writing, may
appoint one or more individuals or corporations approved by the Administrator
and the Owner Trustee to act as separate trustee or separate trustees of all or
any part of the Trust Property to the full extent that local law makes it
necessary or appropriate for
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such separate trustee or separate trustees to act alone. If the Administrator
shall not have joined in such appointment within fifteen days after the receipt
of such request, the Owner Trustee, acting alone, shall have the power to make
such appointment.
ARTICLE XIII
TAX MATTERS PARTNER
Section 13.01. TAX MATTERS PARTNER. The tax matters partner (within the
meaning of section 6231(a)(7) of the Code and applicable Treasury Regulations)
of the Trust for all federal income tax purposes set forth in the Code shall be
the Owner that would be treated as the tax matters partner pursuant to section
6231(a)(7)(B) of the Code. Subject to Section 13.08, the tax matters partner
shall have the authority to represent the Trust and perform the duties imposed
on the tax matters partner under the Code, and as set forth in this Article
XIII.
Section 13.02. NOTICE OF TAX AUDIT. The tax matters partner shall give
prompt notice to the Owners upon receipt of advice that the Internal Revenue
Service intends to examine Trust income tax returns for any year.
Section 13.03. AUTHORITY TO EXTEND PERIOD FOR ASSESSING TAX. Subject to
Section 13.08, the tax matters partner shall have the authority to extend the
period for assessing any tax imposed on any Owner under the Code by any
agreement as provided for under Section 6229(b)(1)(B) of the Code.
Section 13.04. CHOICE OF FORUM FOR FILING PETITION FOR READJUSTMENT.
Any petition for readjustment may, but is not required to, be filed by the tax
matters partner in accordance with Section 6226(a) of the Code in the United
States District Court for the district in which the Trust's principal place of
business is located, or the United States Claims Court.
Section 13.05. AUTHORITY TO BIND OWNERS BY SETTLEMENT AGREEMENT.
Subject to Section 13.08, the tax matters partner shall enter into a settlement
agreement in accordance with Section 6224(c)(3) of the Code as directed by the
Owners.
Section 13.06. NOTICES SENT TO THE INTERNAL REVENUE SERVICE. The tax
matters partner shall use its best efforts to furnish to the Internal Revenue
Service the name, address, profits interest and taxpayer identification number
of each Owner and any additional information it receives from each Owner
regarding any change in that Owner's name, address, profits interest and
taxpayer identification number. In no event shall the tax matters partner be
liable, responsible or accountable in damages or otherwise to the Owner for any
loss in connection with furnishing such
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information to the Internal Revenue Service if the tax matters partner acts in
good faith and is not guilty of fraud or gross negligence.
Section 13.07. INDEMNIFICATION OF TAX MATTERS PARTNER. The Trust shall
indemnify and save harmless the tax matters partner against any loss, damage,
cost or expense (including attorneys' fees) incurred by it as a result of any
act performed or omitted on behalf of the Trust or any Owner or in furtherance
of the Trust's interests or the interests of the Owner, in its capacity as tax
matters partner, without, however, relieving the tax matters partner of
liability for bad faith, fraud or gross negligence.
Section 13.08. APPROVAL OF TAX MATTERS PARTNER'S DECISIONS. The tax
matters partner shall call a meeting of the Owners at any time in order to
discuss any decisions the tax matters partner may propose to make, notice of
which shall be included in the notice of such meeting. The tax matters partner
shall make no decision and take no action with respect to the determination,
assessment or collection of any tax imposed by the Code on the Owners unless and
until such decision has been approved by the Owners.
Section 13.09. PARTICIPATION BY OWNERS IN INTERNAL REVENUE SERVICE
ADMINISTRATIVE PROCEEDINGS. Nothing contained in this Article XIII shall be
construed to take away from any Owner any right granted to such person by the
Code to participate in any manner in administrative proceedings of the Internal
Revenue Service.
ARTICLE XIV
MISCELLANEOUS
Section 14.01. SUPPLEMENTS AND AMENDMENTS. This Agreement may be
amended only by a written instrument signed by the Owner Trustee, the Bond
Insurer (for so long as there are Bonds outstanding or any amounts are owed to
the Bond Insurer), and all of the Owners at the time of such amendment;
provided, however, that if, in the opinion of the Owner Trustee, any instrument
required to be so executed adversely affects any right, duty or liability of, or
immunity or indemnity in favor of, the Owner Trustee under this Agreement or any
of the documents contemplated hereby to which the Owner Trustee or the Trust is
a party, or would cause or result in any conflict with or breach of any terms,
conditions or provisions of, or default under, the charter documents or by-laws
of the Owner Trustee or any document contemplated hereby to which the Owner
Trustee is a party, the Owner Trustee may in its sole discretion decline to
execute such instrument.
Section 14.02. NO LEGAL TITLE TO TRUST PROPERTY IN OWNER. Legal title
to all Trust Property shall be vested at all times in the Trust as a separate
legal entity, except where the laws
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of any jurisdiction require title to be vested in a trustee in which case legal
title shall be vested in the Owner Trustee on behalf of the Trust. The Owners
shall not have legal title to any part of the Trust Property and shall only have
an undivided beneficial interest therein. No transfer, by operation of law or
otherwise, of any right, title and interest of the Owners in and to their
undivided Beneficial Interests in the Trust Property hereunder shall operate to
terminate this Agreement or the trusts hereunder or entitle any successor
transferee to an accounting or to the transfer to it of legal title to any part
of the Trust Property.
Section 14.03. PLEDGE OF COLLATERAL BY OWNER TRUSTEE IS BINDING. The
pledge of any Trust Property to any Person by the Owner Trustee made under any
Trust Related Agreement and pursuant to the terms of this Agreement shall bind
the Owners and shall be effective to transfer or convey the rights of the Owner
Trustee and the Owners in and to such Trust Property to the extent set forth in
such Trust Related Agreement. No purchaser or other grantee shall be required to
inquire as to the authorization, necessity, expediency or regularity of such
pledge or as to the application of any proceeds with respect thereto by the
Owner Trustee.
Section 14.04. LIMITATIONS ON RIGHTS OF OTHERS. Nothing in this
Agreement, whether express or implied, shall be construed to give to any Person
other than the Owner Trustee, the Administrator and the Owners any legal or
equitable right, remedy or claim in the Trust Property or under or in respect of
this Agreement or any covenants, conditions or provisions contained herein
provided, however, that for so long as there are Bonds outstanding or any
amounts are owed to the Bond Insurer, the Indenture Trustee, the holders of the
Bonds, and the Bond Insurer are third party beneficiaries hereof.
Section 14.05. NOTICES. Unless otherwise expressly specified or
permitted by the terms hereof, all notices shall be in writing and delivered by
hand or mailed by certified mail, postage prepaid, if to the Owner Trustee,
addressed to: Delaware Trust Capital Management, Inc., ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust Administration, or to
such other address as the Owner Trustee may have set forth in a written notice
to the Owners; and if to an Owner, addressed to it at the address set forth for
such Owner in the register maintained by the Owner Trustee. Whenever any notice
in writing is required to be given by the Owner Trustee hereunder, such notice
shall be deemed given and such requirement satisfied 72 hours after such notice
is mailed by certified mail, postage prepaid, addressed as provided above; any
notice given by an Owner to the Owner Trustee shall be effective upon receipt by
an Authorized Officer of the Owner Trustee. A copy of any notice delivered to
the Owner Trustee shall also be delivered to the Administrator, addressed to:
First Marblehead Data Services Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
Section 14.06. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such
-39-
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 14.07. SEPARATE COUNTERPARTS. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
Section 14.08. SUCCESSORS AND ASSIGNS. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the Owner
Trustee and its successors and assigns and each Owner and its successors and
permitted assigns, all as herein provided. Any request, notice, direction,
consent, waiver or other instrument or action by an Owner shall bind the
successors and assigns of such Owner.
Section 14.09. HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 14.10. GOVERNING LAW. This Agreement shall in all respects be
governed by, and construed in accordance with, the laws of the State of Delaware
(excluding conflict of law rules), including all matters of construction,
validity and performance.
Section 14.11. GENERAL INTERPRETIVE PRINCIPLES. For purposes of this
Agreement except as otherwise expressly provided or unless the context otherwise
requires:
(a) the defined terms in this Agreement include the plural as well as
the singular, and the use of any gender herein shall be deemed to include any
other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with generally accepted accounting principles as
in effect on the date hereof;
(c) references herein to "Articles", "Sections", "paragraphs", and
other subdivisions without reference to a document are to designated Articles,
Sections, paragraphs and other subdivisions of this Agreement;
(d) a reference to a paragraph without further reference to a Section
is a reference to such paragraph as contained in the same Section in which the
reference appears, and this rule shall also apply to subparagraphs and other
subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
-40-
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
-41-
IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement
to be duly executed by their respective officers hereunto duly authorized, as of
the day and year first above
written.
DELAWARE TRUST CAPITAL MANAGEMENT, INC.,
not in its individual capacity except as
expressly provided herein, but solely as
Owner Trustee
By:______________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
THE NATIONAL COLLEGIATE TRUST,
as Depositor and Owner
By: Delaware Trust Capital
Management, Inc., not in its
individual capacity but solely
as Owner Trustee
By:______________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
ACKNOWLEDGED WITH RESPECT
TO THE POWER OF ATTORNEY
GRANTED IN SECTION 4.05
FIRST MARBLEHEAD DATA SERVICES INC.
By:______________________________________
Name:
Title:
SCHEDULE A
Owners Initial Capital Initial
(excluding Allocable Initial Allocable Contribution Sharing Ratio Percentage
Funding Owners) Bonds ($) Student Loans ($) ($) (%) Interest ($)
--------------- --------- ----------------- --- --- ------------
▇▇▇▇▇▇▇▇ College 118,880 110,030 24,561 1.66 1.41
Allegheny College 87,428 80,920 14,946 1.18 1.00
Babson College 2,772 2,566 436 .04 .03
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 183,563 169,898 36,792 2.55 2.16
College
▇▇▇▇▇-▇▇▇▇▇▇ 168,977 156,398 43,328 2.47 2.09
Aeronaut
University
Franciscan 144,094 133,367 30,143 2.02 1.71
University of
Steubenville
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 305,002 282,297 81,869 4.49 3.81
College
Geneva College 7,454 6,899 1,393 0.10 0.09
Illinois Institute of 39,243 36,322 7,185 0.54 0.46
Technology
Kings College 4,586 4,245 749 0.06 0.05
Linfield College 25,591 23,686 4,777 0.35 0.30
Lycoming College 129,390 119,758 22,404 1.75 1.49
Mount Ida College 27,087 25,071 12,260 0.46 0.39
Oglethorpe College 13,164 12,184 3,695 0.20 0.17
Pt. Loma Nazarene 631,499 584,489 222,387 9.96 8.44
College
Tulane University 40,328 37,326 12,445 0.61 0.52
Utica College 177,545 164,328 39,389 2.51 2.13
Wesleyan College 149,326 138,210 56,133 2.40 2.03
2
Initial Initial
Initial Allocable Capital Funding Sharing
Funding Allocable Student Loans Contributio Amount Ratio Percentage
Owners Bonds ($) ($) n ($) ($) (%) Interest
------ --------- --- ----- --- --- --------
Beaver College 114,137 105,640 4,715 22,885 1.36 1.39
▇▇▇▇▇▇ College 95,206 88,119 (4,724) 20,664 1.03 1.09
▇▇▇▇▇▇▇▇ 1,811,660 1,676,796 (60,904) 408,945 19.95 21.19
University
Elmira College 237,767 220,067 (2,555) 64,500 2.68 2.95
Hartwick 1,602,507 1,483,213 (17,580) 405,934 18.09 19.58
College
Pepperdine 934,836 865,245 (43,924) 232,566 10.14 11.03
University
Presbyterian 123,157 113,989 (2,673) 26,752 1.37 1.44
College
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 265,583 245,812 (13,466) 71,164 2.87 3.18
University
Santa ▇▇▇▇▇ 275,102 254,623 (2,318) 61,428 3.11 3.28
University
St. Anselm 534,115 494,354 (5,611) 139,886 6.03 6.58
College
EXHIBIT 1
FORM OF TRUST CERTIFICATE
THE NATIONAL COLLEGIATE TRUST 1997-S2
TRUST CERTIFICATE
THE BENEFICIAL INTEREST IN THE TRUST REPRESENTED BY THIS TRUST
CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE
DIRECTLY OR INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED OF
(INCLUDING PLEDGED) BY THE HOLDER HEREOF UNLESS IN THE OPINION OF
COUNSEL SATISFACTORY TO THE OWNER TRUSTEE, SUCH TRANSACTION IS EXEMPT
FROM REGISTRATION UNDER THE ACT AND STATE SECURITIES LAWS. THE TRANSFER
OF THIS TRUST CERTIFICATE WILL NOT BE EFFECTIVE UNLESS THE TRANSFEREE
HAS DELIVERED TO THE OWNER TRUSTEE A LETTER IN THE FORM REQUIRED BY
SECTION 3.04(A) OF THE TRUST AGREEMENT AND THE TRANSFEREE PROVIDES THE
OWNER TRUSTEE WITH EVIDENCE SATISFACTORY TO THE OWNER TRUSTEE
DEMONSTRATING THE TRANSFEROR'S COMPLIANCE WITH SECTION 3.04(B) OF THE
TRUST AGREEMENT.
TRUST CERTIFICATE
UNDER TRUST AGREEMENT, DATED
AS OF ____________, 1997
Certificate No. 1
Delaware Trust Capital Management, Inc., not in its individual
capacity, but solely as owner trustee (the "Owner Trustee") under a Trust
Agreement, dated as of ____________, 1997, with The National Collegiate Trust
(the "Depositor"), on behalf of the holders from time to time (each an "Owner")
of beneficial interests in the trust created thereby (the "Trust Agreement"),
hereby certifies that _________________ is the owner of a ___% undivided
beneficial interest in the Trust Property provided for and created by the Trust
Agreement. This Trust Certificate is issued pursuant to and is entitled to the
benefits of the Trust Agreement, and each Owner by acceptance hereof shall be
bound by the terms of the Trust Agreement. Reference is hereby made to the Trust
Agreement for a statement of the rights and obligations of the Owner hereof. The
2
Owner Trustee may treat the person shown on the register maintained by the Owner
Trustee pursuant to Section 3.02 of the Trust Agreement as the absolute Owner
hereof for all purposes.
Capitalized terms used herein without definition have the meanings
ascribed to them in or by reference in the Trust Agreement.
Transfer of this Trust Certificate is subject to certain restrictions
and limitations set forth in the Trust Agreement, including the requirement that
any transfer requires the prior consent of owners of at least 66 2/3% of the
Percentage Interests in the Trust. In the manner more fully set forth in, and as
limited by, the Trust Agreement, this Trust Certificate may be transferred upon
the books of the Owner Trustee by the registered Owner in person or by his
attorney duly authorized in writing upon surrender of this Trust Certificate to
the Owner Trustee accompanied by a written instrument of transfer and with such
signature guarantees and evidence of authority of the Persons signing the
instrument of transfer as the Owner Trustee may reasonably require, whereupon
the Owner Trustee shall issue in the name of the transferee a Trust Certificate
or Trust Certificates evidencing the amount and extent of interest of the
transferee.
The Owner hereof, by its acceptance of this Trust Certificate, warrants
and represents to the Owner Trustee and to the Owners of the other Trust
Certificates issued under the Trust Agreement and agrees (a) that it is jointly
and severally liable for all fees, expenses, taxes, indemnity payments and other
charges of the Trust pursuant to the Trust Agreement, (b) not to transfer this
Trust Certificate except in accordance with the Trust Agreement.
This Trust Certificate and the Trust Agreement shall in all respects be
governed by, and construed in accordance with, the laws of the State of Delaware
(excluding conflict of law rules).
3
IN WITNESS WHEREOF, the Owner Trustee, pursuant to the Trust Agreement,
has caused this Trust Certificate to be issued as of the date hereof.
DELAWARE TRUST CAPITAL MANAGEMENT, INC., not
in its individual capacity, but solely as
Owner Trustee
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Dated: , 1997
EXHIBIT 2
FORM OF ACCESSION AGREEMENT
__________________, 1997
Delaware Trust Capital Management, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Dear Sirs:
We refer to the Trust Agreement, dated as of ____________ 7, 1997 (the
"Trust Agreement"), between The National Collegiate Trust (the "Company"), and
Delaware Trust Capital Management, Inc., a Delaware business trust company (in
its capacity as trustee thereunder, the "Owner Trustee"). We propose to purchase
a beneficial interest in The National Collegiate Trust 1997-S2, a Delaware trust
(the "Trust") formed pursuant to the Trust Agreement. Capitalized terms used
herein without definition have the meanings given them in the Trust Agreement.
1. We hereby agree, as provided and to the extent specified in Section
2.06 of the Trust Agreement, to be jointly and severally liable with any other
holders of Trust Certificates with respect to the Trust for all fees, expenses,
taxes, indemnity payments and other liabilities of the Trust in accordance with
the terms of the Trust Agreement, including (except as otherwise provided in the
Trust Agreement) those incurred by Delaware Trust Capital Management, Inc. in
its capacity as Owner Trustee in the administration of the Trust thereunder, to
the extent such fees, expenses, taxes, indemnity payments and other liabilities
of the Trust or the Owner Trustee, as the case may be, with respect to the
Trust, are not paid out of the Trust Property; provided, however, that we will
be liable only for obligations of the Trust arising on and after the date
hereof.
2. We understand that our Trust Certificate is not being registered
under the Securities Act of 1933, as amended (the "1933 Act"), or any state
securities or "Blue Sky" law and is being sold to us in a transaction that is
exempt from the registration requirements of the 1933 Act and any applicable
state laws.
3. We have knowledge and experience in financial and business matters
as to be capable of evaluating the merits and risks of an investment in the
Trust, we are able to bear the economic risk of investment in the Trust and we
are an "accredited investor" as defined in Regulation D under the 1933 Act.
2
4. We acknowledge that none of the Trust, the Company or the Owner
Trustee has advised us concerning the federal or state income tax consequences
of owning beneficial interest in the Trust, including the tax status of the
Trust or the likelihood that distributions from the Trust would be characterized
as "unrelated business income" for federal tax purposes, and we have consulted
with our own tax advisor with respect to such matters.
5. We are acquiring our Trust Certificate for our own account and not
for the benefit of any other person and not with a view to any distribution of
our beneficial interest in the Trust subject, nevertheless, to the understanding
that disposition of our property shall at all times be and remain within our
control.
6. We agree that our beneficial interest in the Trust must be held
indefinitely by us unless subsequently registered under the 1933 Act and any
applicable state securities or "Blue Sky" law or unless exemptions from the
registration requirements of the 1933 Act and applicable
state laws are available.
7. We agree that in the event that at some future time we wish to
dispose of or exchange any of our beneficial interest in the Trust, we will not
transfer or exchange any of our beneficial interest in the Trust unless we have
obtained the prior written consent to such transfer or exchange pursuant to
Section 3.04 of the Trust Agreement, and either:
(A)(1) the transfer or exchange is made to an Eligible
Purchaser (as defined below), (2) a letter to substantially the same
effect as this letter is executed promptly by such Eligible Purchaser
and (3) all offers or solicitations in connection with the sale (if a
sale), whether made directly or through any agent acting on our behalf,
are limited only to Eligible Purchasers and are not made by means of
any form of general solicitation or general advertising whatsoever; or
(B) our beneficial interest in the Trust is sold in a
transaction that does not require registration under the 1933 Act and
any applicable State "Blue Sky" law.
"Eligible Purchaser" means a corporation, partnership or other entity
which we have reasonable grounds to believe and do believe can make
representations with respect to itself to substantially the same effect as the
representations set forth herein.
8. We understand that our Trust Certificate bears a legend to
substantially the following effect:
THE BENEFICIAL INTEREST IN THE TRUST REPRESENTED BY THIS
TRUST CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
3
SECURITIES LAW, AND MAY NOT BE DIRECTLY OR INDIRECTLY OFFERED OR SOLD
OR OTHERWISE DISPOSED OF (INCLUDING PLEDGED) BY THE HOLDER HEREOF
UNLESS IN THE OPINION OF COUNSEL SATISFACTORY TO THE OWNER TRUSTEE SUCH
TRANSACTION IS EXEMPT FROM REGISTRATION UNDER THE ACT AND STATE
SECURITIES LAWS. THE TRANSFER OF THIS TRUST CERTIFICATE WILL NOT BE
EFFECTIVE UNLESS THE TRANSFEREE HAS DELIVERED TO THE OWNER TRUSTEE A
LETTER IN THE FORM REQUIRED BY SECTION 3.04(A) OF THE TRUST AGREEMENT
AND THE TRANSFEREE PROVIDES THE OWNER TRUSTEE WITH EVIDENCE
SATISFACTORY TO THE OWNER TRUSTEE DEMONSTRATING THE TRANSFEROR'S
COMPLIANCE WITH SECTION 3.04(B) OF THE TRUST AGREEMENT.
9. We agree to be bound by all the terms and conditions of our Trust
Certificate and the Trust Agreement.
Very truly yours,
[Name of Purchaser]
By:_________________________________________
Name:_______________________________________
Title:______________________________________
Accepted and Acknowledged this
____ day of ____________, 1997.
DELAWARE TRUST CAPITAL MANAGEMENT, INC., not in its
individual capacity, but solely as Owner Trustee
By:_________________________________________
Name:_______________________________________
Title:______________________________________
EXHIBIT 3
CERTIFICATE OF TRUST
OF
THE NATIONAL COLLEGIATE TRUST 1997-S2
THE UNDERSIGNED, Delaware Trust Capital Management, Inc., as trustee,
for the purpose of forming a business trust does hereby certify as follows:
1. The name of the business trust is:
THE NATIONAL COLLEGIATE TRUST 1997-S2
2. The name and business address of the trustee of the business trust
in the State of Delaware is Delaware Trust Capital Management, Inc., ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
3. The business trust reserves the right to amend, alter, change, or
repeal any provision contained in this Certificate of Trust in the manner now or
hereafter prescribed by law.
4. This Certificate of Trust shall be effective upon filing.
THE UNDERSIGNED, being the trustee hereinbefore named, for the purpose
of forming a business trust pursuant to the provisions of the Delaware Business
Trust Act, does make this certificate of trust, hereby declaring and further
certifying that this is its act and deed and that to the best of the
undersigned's knowledge and belief the facts herein stated are true.
DELAWARE TRUST CAPITAL
MANAGEMENT, INC.,
as trustee
By:_______________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
EXHIBIT 4
FEE SCHEDULE