EXHIBIT 10.71
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INDENTURE
DATED AS OF AUGUST 21, 2002
AMONG
AMS-2 2002, LP,
AS ISSUER,
AND
BANK ONE, NATIONAL ASSOCIATION,
AS INDENTURE TRUSTEE AND ELIGIBLE LENDER TRUSTEE
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TABLE OF CONTENTS
PAGE
Article I THE NOTES.............................................................................3
Section 1.01. Form of Notes..............................................................3
Section 1.02. Execution, Authentication and Delivery.....................................3
Section 1.03. Registration; Registration of Transfer and Exchange........................4
Section 1.04. Mutilated, Destroyed, Lost or Stolen Notes.................................5
Section 1.05. Persons Deemed Owner.......................................................6
Section 1.06. Certain Issuance and Transfer Restrictions.................................6
Section 1.07. Legending of Notes.........................................................8
Section 1.08. Provision of Information to Prospective Purchasers of the Notes; Rule 144A
Matters....................................................................9
Section 1.09. Cancellation...............................................................9
Section 1.10. Book-Entry Notes..........................................................10
Section 1.11. Notices to Clearing Agency................................................11
Section 1.12. Definitive Notes..........................................................11
Section 1.13. Payment of Principal and Interest; Defaulted Interest; Noteholders'
Interest Basis Carryover..................................................11
Article II REPRESENTATIONS AND WARRANTIES.......................................................15
Section 2.01. Representations and Warranties of the Issuer..............................15
Section 2.02. Reassignment upon Breach..................................................17
Section 2.03. Representations and Warranties of General Partner.........................18
Section 2.04. Representations and Warranties of Indenture Trustee.......................19
Section 2.05. Representations and Warranties of Eligible Lender Trustee.................19
Article III GENERAL COVENANTS OF THE ISSUER......................................................20
Section 3.01. Payment to Noteholders....................................................20
Section 3.02. Money for Payments to Be Held in Trust....................................20
Section 3.03. Existence.................................................................22
Section 3.04. Protection of Indenture Trust Estate......................................22
Section 3.05. Performance of Obligations................................................23
Section 3.06. Reporting Requirements of the Issuer......................................25
Section 3.07. Servicing Covenants.......................................................26
Section 3.08. Negative Covenants of the Issuer..........................................27
Section 3.09. Issuer May Consolidate, etc., Only on Certain Terms.......................28
Section 3.10. Successor or Transferee...................................................29
Section 3.11. No Other Business.........................................................30
Section 3.12. No Borrowing..............................................................30
Section 3.13. Guarantees, Loans, Advances and Other Liabilities.........................30
Section 3.14. [Reserved]................................................................30
Section 3.15. The Funding Account.......................................................30
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TABLE OF CONTENTS
PAGE
Article IV SATISFACTION AND DISCHARGE...........................................................30
Section 4.01. Satisfaction and Discharge of Indenture...................................30
Section 4.02. Application of Trust Money................................................32
Section 4.03. Repayment of Monies Held by Paying Agent..................................32
Article V REMEDIES.............................................................................32
Section 5.01. Events of Default.........................................................32
Section 5.02. Acceleration of Maturity; Rescission and Annulment........................33
Section 5.03. Collection of Indebtedness and Suits for Enforcement by Indenture Trustee.34
Section 5.04. Remedies; Priorities......................................................37
Section 5.05. Optional Preservation of the Indenture Trust Estate.......................39
Section 5.06. Limitation of Suits.......................................................39
Section 5.07. Unconditional Rights of Noteholders to Receive Principal and Interest.....40
Section 5.08. Restoration of Rights and Remedies........................................40
Section 5.09. Rights and Remedies Cumulative............................................40
Section 5.10. Delay or Omission Not a Waiver............................................40
Section 5.11. Control by Noteholders....................................................40
Section 5.12. Waiver of Past Defaults...................................................41
Section 5.13. Undertaking for Costs.....................................................41
Section 5.14. Waiver of Stay or Extension Laws..........................................42
Section 5.15. Action on Notes...........................................................42
Section 5.16. Performance and Enforcement of Certain Obligations........................42
Article VI INDENTURE TRUSTEE....................................................................44
Section 6.01. Acceptance of the Trusts..................................................44
Section 6.02. Fees, Charges and Expenses of Indenture Trustee...........................46
Section 6.03. Notice if Default Occurs..................................................46
Section 6.04. Intervention by Indenture Trustee.........................................46
Section 6.05. Successors................................................................46
Section 6.06. Resignation...............................................................46
Section 6.07. Removal...................................................................47
Section 6.08. Appointment of Successor..................................................47
Section 6.09. Concerning Any Successor..................................................47
Section 6.10. Appointment of Co-Trustee.................................................47
Section 6.11. Successor Indenture Trustee as Trustee of Funds...........................48
Section 6.12. Indemnification...........................................................48
Section 6.13. Eligibility Requirements for Indenture Trustee............................49
Section 6.14. Tax Information...........................................................49
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TABLE OF CONTENTS
PAGE
Article VII [RESERVED]...........................................................................49
Article VIII SETTLEMENTS..........................................................................49
Section 8.01. Trust Accounts; Investments by Indenture Trustee..........................49
Section 8.02. Collection of Moneys......................................................51
Section 8.03. Collection Account........................................................52
Section 8.04. Reserve Account...........................................................54
Section 8.05. Funding Account...........................................................54
Section 8.06. [Reserved]................................................................55
Section 8.07. [Reserved]................................................................55
Section 8.08. [Reserved]................................................................56
Section 8.09. Capitalized Interest Account..............................................56
Article IX REDEMPTION...........................................................................57
Section 9.01. Redemption................................................................57
Section 9.02. Form of Redemption Notice.................................................57
Section 9.03. Notes Payable on Redemption Date..........................................58
Article X MISCELLANEOUS........................................................................58
Section 10.01. Amendments, Etc...........................................................58
Section 10.02. Notices, Etc..............................................................60
Section 10.03. No Waiver; Remedies.......................................................60
Section 10.04. Binding Effect; Survival..................................................60
Section 10.05. Costs, Expenses and Taxes.................................................60
Section 10.06. No Proceedings............................................................61
Section 10.07. Captions and Cross References.............................................61
Section 10.08. Integration...............................................................61
Section 10.09. Governing Law.............................................................61
Section 10.10. Waiver of Jury Trial......................................................62
Section 10.11. Execution in Counterparts.................................................62
Section 10.12. Usury.....................................................................62
Section 10.13. Compliance Certificates and Opinions......................................62
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APPENDICES
APPENDIX A Definitions
APPENDIX B [Reserved]
APPENDIX C Student Loan Schedule
APPENDIX D [Reserved]
SCHEDULE
SCHEDULE 2.01(k) List of Offices of the Issuer where Records Are Kept
EXHIBITS
EXHIBIT 1.01(a) Form of Class A Note
EXHIBIT 1.01(d) Form of Class B Note
EXHIBIT 1.01(a) Form of Purchaser's Letter
EXHIBIT 1.06(b)(i) Form of Transfer Certificate for Class A Notes
EXHIBIT 1.06(b)(ii) Form of Transfer Certificate for Class B Notes
EXHIBIT 3.06(d) Form of Quarterly Report
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INDENTURE
Dated as of August 21, 2002
THIS IS AN INDENTURE, among AMS-2 2002, LP, a Delaware limited
partnership, ("Issuer") and BANK ONE, NATIONAL ASSOCIATION, a national banking
association organized under the laws of the United States ("Bank One"), as
indenture trustee hereunder (in such capacity, and together with any successor
thereto in such capacity, the "Indenture Trustee") and as eligible lender
trustee (in such capacity, and together with any successor thereto in such
capacity, the "Eligible Lender Trustee"). Unless otherwise indicated,
capitalized terms used in this Indenture are defined in Appendix A.
BACKGROUND
(i) The Issuer is a limited partnership with Academic Management
Services Corp., a Delaware corporation ("AMS") as its Limited Partner and AMS-2
SPC-1, Inc., a Delaware corporation, as its General Partner (the "General
Partner").
(ii) Pursuant to the Purchase and Contribution Agreement, Bank One, in
its capacity as Eligible Lender Trustee, has purchased and from time to time
will continue to purchase, in each case, at the direction of and on behalf of
the Issuer, from Bank One, in its capacity as eligible lender trustee for AMS,
Student Loans. The legal title to the Student Loans is held or will be held by
the Eligible Lender Trustee on behalf of the Issuer.
(iii) The Issuer intends to finance the purchase of the Student Loans
by issuing the Class A Notes and Class B Notes, which it will sell to the
Initial Purchaser identified in the Note Purchase Agreement.
(iv) The payment of the principal of and interest on the Notes will be
secured by the Financed Student Loans and other Collateral.
(v) The Class B Notes are subordinated in right of payment to the Class
A Notes to the extent set forth herein.
(vi) Bank One has been requested, and is willing, to act as the
Indenture Trustee.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
GRANTING CLAUSE
The Issuer and, with respect to the legal title of the Student Loans,
the Eligible Lender Trustee hereby Grant to the Indenture Trustee at the Closing
Date, as trustee for the benefit of the Noteholders and the Swap Counterparties,
all the Issuer's right, title and interest in and to, but none of its
obligations under, the following:
(i) the Initial Financed Student Loans, and all obligations of the
Obligors thereunder including all monies paid thereunder on and after the
Initial Cutoff Date, including all Subsidy Payments and all Related Security
with respect thereto;
(ii) the Additional Financed Student Loans, and all obligations of the
Obligors thereunder including all monies paid thereunder on and after the Cutoff
Date, including all Subsidy Payments and all Related Security with respect
thereto;
(iii) the Purchase and Contribution Agreement;
(iv) the Servicing Agreement;
(v) each Student Loan Guarantee Agreement with respect to the Student
Loans comprising part of the Financed Student Loans, including the right of the
Issuer and the Eligible Lender Trustee to cause the related Student Loan
Guarantor to make Guarantee Payments in respect of the Financed Student Loans;
(vi) the Trust Agreement;
(vii) all funds on deposit from time to time in the Trust Accounts and
in all investments and proceeds thereof (including all income thereon);
(viii) all books and records (including computer tapes and disks)
related to the foregoing; and
(ix) all present and future claims, demands, causes and choses in
action in respect of any or all of the foregoing and all payments on or under
and all proceeds of every kind and nature whatsoever in respect of any or all of
the foregoing, including all proceeds of the conversion, voluntary or
involuntary, into cash or other liquid property, all cash proceeds, Trust
Accounts, Trust Accounts receivables, notes, drafts, acceptances, chattel paper,
checks, deposit Trust Accounts, insurance proceeds, condemnation awards, rights
to payment of any and every kind and other forms of obligations and receivables,
instruments and other property which at any time constitute all or part of or
are included in the proceeds of any of the foregoing (collectively, the
"Collateral").
The foregoing Grant is made in trust to secure the payment of principal
of and interest on, and any other amounts owing in respect of, the Notes,
equally and ratably without prejudice, priority or distinction and to secure
compliance with the provisions of this Indenture, subject to, and as further
provided in this Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the
Noteholders, acknowledges such Grant, accepts the trusts under this Indenture in
accordance with the provisions of this Indenture and agrees to perform its
duties required in this Indenture and the Transaction Documents in accordance
with their terms.
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Article I
THE NOTES
Section 1.01. Form of Notes.
(a) The Class A Notes and Class B Notes in each case together with the
Indenture Trustee's certificate of authentication, shall be in substantially the
form set forth in Exhibit 1.01(a) and Exhibit 1.01(b), respectively, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may, consistently herewith, be determined by the Authorized Officer of the
General Partner executing such Notes on behalf of the Issuer, as evidenced by
such Authorized Officer's execution of such Notes only. The Notes shall be
issued on the Closing Date in minimum denominations of $1,000 and integral
multiples of $1,000 in excess thereof, and will be available in book-entry form
only.
(b) With respect to each Class of Notes, the Indenture Trustee shall
record in its records the interest rate for each Interest Period with respect to
such Class, each repayment thereof, and the other information provided for
thereon. The Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods (with or without steel engraved
borders), all as determined by the Authorized Officer of the General Partner
executing each such Note on behalf of the Issuer, as evidenced by such
Authorized Officer's execution of such Note. Each Note shall be dated the date
of its authentication, and the terms of the Notes set forth in Exhibit 1.01(a)
and Exhibit 1.01(b), respectively, are part of the terms of this Indenture.
Section 1.02. Execution, Authentication and Delivery.
(a) Execution of the Notes. The Notes shall be executed on behalf of
the Issuer by any of the Authorized Officers of the General Partner. The
signature of any such Authorized Officer on any Note may be original or
facsimile. Any Note bearing the original or facsimile signature of an individual
who was at any time an Authorized Officer of the General Partner of the Issuer
shall bind the Issuer, notwithstanding that such individual has ceased to hold
such office prior to the authentication and delivery of such Note or did not
hold such offices at the date of such Note.
(b) Authentication of the Notes. The Indenture Trustee shall upon
receipt of the Issuer Order, authenticate and deliver (i) the Class A Notes for
original issue in an aggregate principal amount of $288,000,000 (the "Class A
Original Note Principal Amount") and (ii) the Class B Notes for original issue
in an aggregate principal amount of $12,000,000 (the "Class B Original Note
Principal Amount"). The aggregate principal amount of each Class of Notes
outstanding at any time shall not exceed its respective Original Note Principal
Amount except as provided in Section 1.04. Each of the Notes shall be dated the
date of its authentication. No Note shall be entitled to any benefit under this
Indenture or be valid or obligatory for any purpose, unless there appears
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attached to such Note a certificate of authentication substantially in the form
provided for herein executed by the Indenture Trustee by the manual signature of
one of its authorized signatories, and such certificate attached to any such
Note shall be conclusive evidence, and the only evidence, that such Note has
been duly authenticated and delivered hereunder.
Section 1.03. Registration; Registration of Transfer and Exchange.
(a) Note Register; Note Registrar. The Issuer shall cause to be kept a
register (the "Note Register") in which, subject to such reasonable regulations
as it may prescribe, the Issuer shall provide for the registration of the Notes
and the registration of transfers of the Notes. The Indenture Trustee shall be
"Note Registrar" for the purpose of registering Notes and transfers of the
Notes, as herein provided. Upon any resignation of any Note Registrar, the
Issuer shall promptly appoint a successor or, if it elects not to make such an
appointment, assume the duties of Note Registrar.
(b) Appointment of Note Registrar. If a Person other than the Indenture
Trustee is appointed by the Issuer as Note Registrar, the Issuer will give the
Indenture Trustee prompt written notice of the appointment of such Note
Registrar and of the location, and any change in the location, of the Note
Register, and the Indenture Trustee shall have the right to inspect the Note
Register at all reasonable times and to obtain copies thereof. The Indenture
Trustee shall have the right to rely upon a certificate executed on behalf of
the Note Registrar by an Executive Officer thereof as to the names and addresses
of the Noteholders and the related principal amounts and numbers of such Notes.
(c) Transfer of the Notes. Upon surrender for registration or transfer
of a Note at the office or agency of the Issuer to be maintained as provided in
Section 1.03(e), and if the requirements of Section 8-401(l) of the UCC are met,
the Issuer shall execute and cause the Indenture Trustee to authenticate a new
Note, in any authorized denominations of like aggregate principal amount. Any
Note issued upon any registration of transfer thereof shall be the valid
obligation of the Issuer, evidencing the same debt, and entitled to the same
benefits under this Indenture, as the Note surrendered upon such registration of
transfer. Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Note Registrar duly executed by, the
Noteholder thereof or such Noteholder's attorney duly authorized in writing,
with such signature guaranteed by an "eligible guarantor institution" meeting
the requirements of the Note Registrar, which requirements include membership or
participation in Securities Transfer Agent's Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Note Registrar
in addition to, or in substitution for, STAMP.
(d) No Service Charge. No service charge shall be made to a Noteholder,
for any registration of transfer or exchange of any Note, but the Note Registrar
may require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of a Note.
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(e) Maintenance of Office or Agency. The Issuer will maintain in
New
York,
New York, an office or agency where the Notes may be surrendered for
registration of transfer thereof, and where notices and demands to or upon the
Issuer in respect of the Notes and this Indenture may be served. The Issuer
hereby initially appoints the Indenture Trustee to serve as its agent for the
foregoing purposes. The Issuer will give prompt written notice to the Indenture
Trustee of the location, and of any change in the location, of any such office
or agency. If at any time the Issuer shall fail to maintain any such office or
agency or shall fail to furnish the Indenture Trustee with the address thereof,
such surrenders, notices and demands may be made or served at the Corporate
Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent
to receive all such surrenders, notices and demands.
Section 1.04. Mutilated, Destroyed, Lost or Stolen Notes.
(a) Replacement of Notes. If (i) any mutilated Note is surrendered to
the Indenture Trustee, or the Indenture Trustee receives evidence to its
satisfaction of the destruction, loss or theft of any Note, and (ii) there is
delivered to the Indenture Trustee and the Issuer such security or indemnity as
may be required by them to hold the Issuer and the Indenture Trustee harmless,
then, in the absence of notice to the Issuer, the Note Registrar or the
Indenture Trustee that such Note has been acquired by a bona fide purchaser, and
provided that the requirements of Section 8-405 of the UCC are met, the Issuer
shall execute and upon its request the Indenture Trustee shall authenticate and
deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or
stolen Note, a replacement Note; provided, however, that if any such destroyed,
lost or stolen Note, but not a mutilated Note, shall have become or within seven
days shall be due and payable, the Issuer may, instead of issuing a replacement
Note, direct the Indenture Trustee, in writing, to pay such destroyed, lost or
stolen Note when so due or payable without surrender thereof. If, after the
delivery of a replacement Note or payment of a destroyed, lost or stolen Note or
pursuant to the proviso to the preceding sentence, a bona fide purchaser of the
original Note in lieu of which such replacement Note was issued presents such
original Note for payment, the Issuer and the Indenture Trustee shall be
entitled to recover such replacement Note (or such payment) from the Person to
whom it was delivered or any Person taking such replacement Note from such
Person to whom such replacement Note was delivered or any assignee of such
Person, except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Issuer or the Indenture Trustee in connection
therewith.
(b) Payment of Tax. Upon the issuance of any replacement Note under
this Section, the Issuer or the Indenture Trustee may require the payment by the
related Noteholder of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other reasonable expenses
(including the fees and expenses of the Indenture Trustee or the Note Registrar)
connected therewith.
(c) Enforcement of Replacement Notes. Every replacement Note issued
pursuant to this Section in replacement of any mutilated, destroyed, lost or
stolen Note shall constitute an original additional contractual obligation of
the Issuer, whether or not
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the mutilated, destroyed, lost or stolen Note shall be at any time enforceable
by anyone, and shall be entitled to all the benefits of this Indenture equally
and proportionately with any and all other Notes duly issued hereunder.
(d) Exclusiveness of Section. The provisions of this Section are
exclusive and shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Notes.
Section 1.05. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee and any
agent of the Issuer and the Indenture Trustee may treat the Person in whose name
any such Note is registered (as of the Record Date) as the owner of such Note
for the purpose of receiving payments of principal of and interest, if any, on
such Note, and for all other purposes whatsoever, whether or not such Note be
overdue, and none of the Issuer, the Indenture Trustee nor any agent of the
Issuer or the Indenture Trustee shall be affected by notice to the contrary.
Section 1.06. Certain Issuance and Transfer Restrictions.
(a) Issuance and Transfer of the Notes. The Notes may be resold only
(i) to "qualified institutional buyers" within the meaning of Rule 144A under
the Securities Act, (ii) to non-U.S. Persons in transactions outside the United
States in accordance with Rule 903 of Regulation S under the Securities Act, or
(iii) pursuant to any other available exemption from the registration
requirements of the Securities Act, subject to certain restrictions.
Additionally, each purchaser of Notes will be deemed to have represented and
agreed as follows:
(A) It is (i) purchasing the Notes for its own
account or an account with respect to which it exercises sole
investment discretion and it or such account is a "QIB"
("Qualified Institutional Buyer") and is aware that the sale
to it is being made in Reliance on Rule 144A under the
Securities Act ("Rule 144A") and is acquiring such Notes for
investment and not with a view to, or for offer or sale in
connection with, any distribution (within the meaning of the
Securities Act of 1933) or fractionalization thereof or with
any intention of reselling the Notes or any part thereof,
subject to any requirement of law that the disposition of its
property or the property of such account or accounts be at all
times within its or their control and subject to its or their
ability to resell such Notes pursuant to Rule 144A or (ii) not
a U.S. person (as such term is defined in Regulation S under
the Securities Act) and is purchasing Notes outside the United
States pursuant to Regulation S.
(B) It acknowledges that the Notes have not been
registered under the Securities Act of 1933 and may not be
sold within the United States or to, or for the account of,
U.S. persons except as permitted below.
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(C) If (1) it is a person other than a foreign
purchaser outside the United States, it agrees that (i) if it
should reoffer, resell, pledge or otherwise transfer its Note
prior to the second anniversary of the later of (a) the
original issuance of such Note (or any predecessor Note), and
(b) the sale of such Note (or any predecessor Note) by the
Issuer or any affiliate of the Issuer (computed in accordance
with paragraph (d) of Rule 144 under the Securities Act of
1933), or (ii) if it was at the date of such transfer or
during the three months preceding such date of transfer an
affiliate of the Issuer it will do so in compliance with any
applicable state securities or "Blue Sky" laws and only (A) to
the Issuer or (B) in compliance with Rule 144A, and (unless
such Notes are being transferred in book-entry form as
beneficial interests in one or more Class A Global Notes or
Class B Global Notes, as applicable) only if a certificate in
the form attached hereto as Exhibit 1.06(b)(i) with respect to
the Class A Notes and as Exhibit 1.06(b)(ii) with respect to
the Class B Notes is delivered by the transferee to the
Indenture Trustee or (2) it should reoffer, resell, pledge or
otherwise transfer Notes outside the United States to a
non-U.S. person (as such term is defined in Regulation S under
the Securities Act of 1933) it will do so only in a
transaction complying with Rule 903 or Rule 904 of Regulation
S under the Securities Act of 1933. It will give the
transferee notice of any restrictions on resale of the Notes.
(D) It understands that such Note will bear a legend
substantially as set forth in Section 1.07.
(E) It has received the information, if any,
requested by it pursuant to Rule 144A, has had full
opportunity to review such information and has received all
additional information necessary to verify such information.
(F) It (i) has such knowledge and experience in
financial and business matters as to be capable of evaluating
the merits and risks of its investment in the Notes, and (ii)
has the ability to bear the economic risks of its prospective
investment and can afford the complete loss of such
investment.
(G) It understands that the Issuer, the Initial
Purchaser, the Indenture Trustee and others will rely upon the
truth and accuracy of the foregoing acknowledgments,
representations and agreements and agrees that if any of the
foregoing acknowledgments, representations or agreements
deemed to have been made by it are no longer accurate, it will
promptly notify the Issuer and the Initial Purchaser. If it is
acquiring any Notes as a fiduciary or agent for one or more
investor accounts, it represents that it has sole investment
discretion with respect to each such account and it has full
power to make the foregoing acknowledgments, representations
and agreements on behalf of such account.
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(H) It acknowledges that it has had the opportunity
to ask questions and receive answers concerning the terms and
conditions of the transaction contemplated by the Indenture
and to obtain additional information necessary to verify the
accuracy and completeness of any information furnished to it
or to which it has had access.
(I) It will not sell, transfer, assign, participate,
pledge, or otherwise dispose of such Note (or any interest in
such Note) other than by unconditional sale of the entire
right, title and interest of the purchaser or transferee in
and to a principal amount of such Note not less than the
minimum denomination of such Note.
(J) It is acquiring such Note for its own account,
for investment purposes only and not with a view to a
distribution, and is the sole beneficial owner of such Note,
recognizing that the disposition of its property shall at all
times be and remain within its control.
(b) Transfer Certificate. Notwithstanding the provisions of Section
1.06(a) and Section 1.06(b), (i), an Owner of a Class A Note is required to
deliver to the Issuer, the Indenture Trustee and the Note Registrar a
certificate substantially in the form of Exhibit 1.06(b)(i) hereto unless it is
purchasing a Book-Entry Note or a Note from the Initial Purchaser and (ii) an
Owner of a Class B Note is required to deliver to the Issuer, the Indenture
Trustee and the Note Registrar a certificate substantially in the form of
Exhibit 1.06(b)(ii) hereto unless it is purchasing a Book-Entry Note or a Note
from the Initial Purchaser.
(c) Void Transfers. If (i) any Note is issued, sold, transferred,
assigned, participated, pledged or otherwise disposed of in contravention of the
provisions of this Section 1.06, (ii) at any time the foregoing representations
of such purchaser or transferee are not true, or (iii) the purchaser or
transferee breaches the foregoing agreements, then the purchase or transfer of
such Note shall be void ab initio and of no effect.
Section 1.07. Legending of Notes.
(a) Legending of Class A Notes. The Class A Notes shall each bear a
legend in substantially the following form:
THIS CLASS A NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT").
THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES FOR THE BENEFIT OF
THE ISSUER THAT THIS NOTE MAY NOT BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED (A) OTHER THAN IN COMPLIANCE WITH THE SECURITIES ACT AND
OTHER APPLICABLE LAWS (1) TO THE ISSUER OR ANY OF ITS AFFILIATES OR (2)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT TO AN INSTITUTIONAL
INVESTOR THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER, WITHIN THE MEANING OF RULE 144A, OR PURCHASING FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER WHOM THE HOLDER HAS
INFORMED,
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IN EACH CASE, THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE
IN RELIANCE ON RULE 144A, OR (B) OUTSIDE THE UNITED STATES TO A
NON-U.S. PERSON ONLY IN A TRANSACTION COMPLYING WITH RULE 903 OR 904 OF
REGULATION S UNDER THE SECURITIES ACT, AND IN EACH CASE UPON THE
RECEIPT BY THE ISSUER OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE ISSUER
THAT SUCH RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS. ADDITIONAL TRANSFER
RESTRICTIONS ARE SET FORTH IN THE INDENTURE.
(b) Legending of Class B Notes. The Class B Notes shall each bear a
legend in substantially the following form:
THIS CLASS B NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT").
THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES FOR THE BENEFIT OF
THE ISSUER THAT THIS NOTE MAY NOT BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED (A) OTHER THAN IN COMPLIANCE WITH THE SECURITIES ACT AND
OTHER APPLICABLE LAWS (1) TO THE ISSUER OR ANY OF ITS AFFILIATES OR (2)
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT TO AN INSTITUTIONAL
INVESTOR THAT THE HOLDER REASONABLY BELIEVES IS A QUALIFIED
INSTITUTIONAL BUYER, WITHIN THE MEANING OF RULE 144A, OR PURCHASING FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER WHOM THE HOLDER HAS
INFORMED, IN EACH CASE, THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A, OR (B) OUTSIDE THE UNITED STATES
TO A NON-U.S. PERSON ONLY IN A TRANSACTION COMPLYING WITH RULE 903 OR
904 OF REGULATION S UNDER THE SECURITIES ACT, AND IN EACH CASE UPON THE
RECEIPT BY THE ISSUER OF SUCH OTHER EVIDENCE ACCEPTABLE TO THE ISSUER
THAT SUCH RESALE, PLEDGE OR TRANSFER IS IN COMPLIANCE WITH THE
SECURITIES ACT AND OTHER APPLICABLE LAWS. ADDITIONAL TRANSFER
RESTRICTIONS ARE SET FORTH IN THE INDENTURE.
Section 1.08. Provision of Information to Prospective Purchasers of the
Notes; Rule 144A Matters. For so long as any of the Notes remain outstanding and
are a "restricted security" within the meaning of Rule 144(a)(3) under the
Securities Act, any Noteholder may request that the Indenture Trustee forward to
the Issuer a request that the Issuer provide the information specified in, and
meeting the requirements of, Rule 144A(d)(4) under the Securities Act. Upon
receipt of such request, the Indenture Trustee shall forward such request
promptly to the Issuer. The Issuer shall provide such requested information
promptly to the Indenture Trustee, who shall forward such requested information
promptly to the requesting Noteholder.
Furthermore, Purchasers agree to treat and to take no action
inconsistent with the treatment of the Notes, for tax and accounting purposes,
as debt.
Section 1.09. Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly canceled
9
by the Indenture Trustee. The Issuer may at any time deliver to the Indenture
Trustee for cancellation any Notes previously authenticated and delivered
hereunder which the Issuer may have acquired in any manner whatsoever, and all
Notes so delivered shall be promptly canceled by the Indenture Trustee. No Notes
shall be authenticated in lieu of or in exchange for any Notes canceled as
provided in this Section, except as expressly permitted by this Indenture. All
canceled Notes may be held or disposed of by the Indenture Trustee in accordance
with its standard retention or disposal policy as in effect at the time unless
the Issuer shall direct by an Issuer Order that they be destroyed or returned to
it; provided that such Issuer Order is timely and the Notes have not been
previously disposed of by the Indenture Trustee.
Section 1.10. Book-Entry Notes. The Notes, upon original issuance, will
be issued in the form of typewritten Notes representing the Book-Entry Notes, to
be delivered to The Depository Trust Company, the initial Clearing Agency, by,
or on behalf of, the Issuer. Such Notes shall initially be registered on the
Note Register in the name of Cede & Co., the nominee of the initial Clearing
Agency, and no Note Owner of any Class of Notes will receive a Definitive Note
(as defined below) representing such Note Owner's interest in such Book-Entry
Note, except as provided in Section 1.12. Unless and until definitive, fully
registered Notes (the "DEFINITIVE NOTES") have been issued to Note Owners
pursuant to Section 1.12:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Issuer, the Note Registrar and the Indenture Trustee
may deal with the Clearing Agency for all purposes (including the
payment of principal of and interest and other amounts on the
Book-Entry Notes) as the sole holder of the Notes, and shall have no
obligation to the Note Owners of any Class of Notes;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions of
this Section shall control;
(iv) the rights of Note Owners of each Class of Notes shall be
exercised only through the Clearing Agency and shall be limited to
those established by law and agreements between such Note Owners and
the Clearing Agency and/or the Clearing Agency Participants pursuant to
the Note Depository Agreement. Unless and until Definitive Notes are
issued pursuant to Section 1.12, the initial Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and receive
and transmit payments of principal of and interest and other amounts on
the Book-Entry Notes to such Clearing Agency Participants;
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Noteholders of any Class
of Notes evidencing a specified percentage of the Note Principal Amount
of such Class of Notes, the Clearing Agency shall be deemed to
represent such percentage only to the extent that it has received
instructions to such effect from Note Owners and/or Clearing Agency
Participants owning or representing, respectively, such required
10
percentage of the beneficial interest in the applicable Class of Notes
and has delivered such instructions to the Indenture Trustee; and
(vi) each Note Owner, by its acceptance of its interest in a
Note, shall be deemed to have made the representations and to have
bound itself by the agreements set forth pursuant to Section 1.06 and
to have agreed to treat the Notes as indebtedness for all tax and
financial reporting purposes.
Section 1.11. Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to Section
1.12, the Indenture Trustee shall give all such notices and communications
specified herein to be given to Noteholders of any Class of Notes to the
Clearing Agency, and shall have no obligation to the Note Owners to enforce such
notices or communications.
Section 1.12. Definitive Notes. If (i) the Issuer advises the Indenture
Trustee in writing that the Clearing Agency is no longer willing or able to
properly discharge its responsibilities with respect to the Book-Entry Notes,
and the Issuer is unable to locate a qualified successor, (ii) the Issuer at its
option advises the Indenture Trustee in writing that it elects to terminate the
book-entry system through the Clearing Agency or (iii) after the occurrence of
an Event of Default, Note Owners representing beneficial interests aggregating
at least a majority of each of the Class A Note Principal Amount and Class B
Note Principal Amount of the Book-Entry Notes advise the Clearing Agency (which
shall then notify the Indenture Trustee and the Issuer) in writing that the
continuation of a book-entry system through the Clearing Agency is no longer in
the best interests of the Note Owners, then the Indenture Trustee will cause the
Clearing Agency to notify all Note Owners, through the Clearing Agency, of the
occurrence of any such event and of the availability of Definitive Notes to Note
Owners requesting the same. Upon surrender to the Indenture Trustee of the
typewritten Notes representing the Book-Entry Notes by the Clearing Agency,
accompanied by registration instructions, the Issuer shall execute and the
Indenture Trustee shall authenticate the Definitive Notes in accordance with the
instructions of the Clearing Agency. None of the Issuer, the Note Registrar or
the Indenture Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Notes, the Indenture Trustee
shall recognize the holders of the Definitive Notes as Noteholders.
Section 1.13. Payment of Principal and Interest; Defaulted Interest;
Noteholders' Interest Basis Carryover.
(a) Notes.
(i) The Class A Notes shall accrue interest as provided in the
form of Class A Note set forth in Exhibit 1.01(a) and such interest
shall be payable on each Payment Date as specified therein, subject to
Section 3.01. The Class B Notes shall accrue interest as provided in
the form of Class B Note set forth in Exhibit 1.01(b), and such
interest shall be payable on each Payment Date as
11
specified therein, subject to Section 3.01. The Class B Noteholders'
Interest Distribution Amount will not be paid to the Class B
Noteholders on the applicable Payment Date unless the Class A
Noteholders' Interest Distribution Amount for such Payment Date shall
first have been paid to the Class A Noteholders. Any installment of
interest (and any Noteholders' Interest Basis Carryover) or principal,
if any, payable on any Note which is punctually paid or duly provided
for by the Issuer on the applicable Payment Date, shall be paid to the
Person in whose name such Note (or one or more Predecessor Notes) is
registered on the Record Date by wire transfer if such Person provides
appropriate written instructions to the Indenture Trustee no later than
such Record Date, and otherwise by check mailed first-class, postage
prepaid to such Person's address as it appears on the Note Register on
such Record Date, except that, unless Definitive Notes have been issued
pursuant to Section 1.12, with respect to Notes registered on the
Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be Cede & Co.), payment will be made by
wire transfer in immediately available funds to the account designated
by such nominee and except for the final installment of principal
payable with respect to such Note on a Payment Date which shall be
payable as provided below. The funds represented by any such checks
returned undelivered shall be held in accordance with Section 3.02.
(ii) The principal of each Class A Note shall be payable in
installments on each Payment Date after the end of the Acquisition
Period (plus, if applicable, a single principal payment occurring at
the end of the Funding Period pursuant to Section 8.05) as provided in
the form of the Class A Note set forth in Exhibit 1.01(a). The
principal of each Class B Note shall be payable in installments on each
Payment Date after the end of the Acquisition Period (plus, if
applicable, a single principal payment occurring at the end of the
Funding Period pursuant to Section 8.05) as provided in the form of the
Class B Note set forth in Exhibit 1.01(b). No payments of principal
with respect to the Class B Notes will be paid until the Class A Notes
have been paid in full. Notwithstanding the foregoing, the entire
unpaid principal amount of the Notes shall be due and payable, if not
previously paid, if an Event of Default shall have occurred and if the
Indenture Trustee or the Noteholders of the Notes representing not less
than a majority of the Controlling Class, have declared the Notes to be
immediately due and payable in the manner provided in Section 5.02. All
principal payments on the Notes shall be made, first, to the Class A
Notes pro rata until the Class A Note Principal Amount has been paid in
full, and then to the Class B Notes pro rata until the Class B Note
Principal Amount has been paid in full. The Indenture Trustee shall
notify the Person in whose name a Note is registered at the close of
business on the Record Date preceding the Payment Date on which the
Issuer expects that the final installment of principal of and interest
(and any Noteholders' Interest Basis Carryover) on such Note will be
paid. Such notice shall be mailed or transmitted by facsimile prior to
such final Payment Date and shall specify that such final installment
will be payable only upon presentation and surrender of such Note and
shall specify the place where such Note may be presented and
surrendered for
12
payment of such installment. Notices in connection with redemptions of
Notes shall be mailed to Noteholders as provided in Section 9.02.
(iii) If the Issuer defaults in a payment of interest on the
Notes, the Issuer shall pay defaulted interest (plus interest on such
defaulted interest to the extent lawful) at the Class A Note Rate or
the Class B Note Rate, as applicable, in any lawful manner. The Issuer
may pay such defaulted interest to Noteholders on a subsequent special
record date, which date shall be at least five Business Days prior to
the payment date. The Issuer shall fix or cause to be fixed any such
special record date and payment date, and, at least 15 days before any
such special record date, the Issuer shall mail to the Indenture
Trustee a notice which the Indenture Trustee will, as soon as
practicable, distribute to each Noteholder that states the special
record date, the payment date and the amount of defaulted interest to
be paid.
(iv) The Noteholders' Interest Basis Carryover on each Payment
Date, including all unpaid carryover from prior Payment Dates for each
Class of Notes for each applicable Collection Period, shall be payable
on such Payment Date, solely to the extent that the funds required are
available to be distributed to Class A Noteholders and Class B
Noteholders by the Indenture Trustee pursuant to Section 8.04(b).
(v) The Indenture Trustee shall determine LIBOR for purposes
of calculating the Class A Note Rate and Class B Note Rate for each
Interest Period on the second business day prior to the commencement of
each LIBOR Reset Period with respect to such Interest Period (or, in
the case of the first LIBOR Reset Period, on August 19, 2002 (each, a
"LIBOR Determination Date"). For purposes of calculating LIBOR, a
business day is any day on which banks in London, England,
New York,
New York, Chicago, Illinois and the Commonwealth of Massachusetts are
open for the transaction of business. Interest due for any Interest
Period shall be determined based on the actual number of days in such
Interest Period over 360-day year. "LIBOR" means, with respect to any
LIBOR Reset Period, the London interbank offered rate for deposits in
U.S. dollars having a maturity of 90 days commencing on the related
LIBOR Determination Date (the "Index Maturity") which appears on
Telerate Page 3750 as of 11:00 a.m., London time, on such LIBOR
Determination Date. If such rate, on any LIBOR Determination Date, does
not appear on Telerate Page 3750, the rate for that day shall be
determined on the basis of the rates at which deposits in U.S. dollars,
having the Index Maturity and in a principal amount of not less than
U.S. $1,000,000, are offered at approximately 11:00 a.m., London time,
on such LIBOR Determination Date to prime banks in London interbank
market by the Reference Banks. The Indenture Trustee shall request the
principal London office of each of such Reference Banks to provide a
quotation of its rate. If at least two such quotations are provided,
the rate for that LIBOR Determination Date shall be the arithmetic mean
of the quotations. If fewer than two quotations are provided, the rate
for that day shall be the arithmetic mean of the rates quoted by three
major banks in
New York City, selected by the Indenture
13
Trustee, at approximately 11:00 a.m.,
New York City time, on such LIBOR
Determination Date for loans in U.S. dollars to leading European banks
having the Index Maturity and in a principal amount equal to an amount
of not less than U.S. $1,000,000; provided that if the banks selected
as aforesaid are not quoting as mentioned in this sentence, LIBOR in
effect for the applicable LIBOR Reset Period shall be LIBOR in effect
on the previous LIBOR Reset Period. "LIBOR Reset Period" means the
period commencing on each Payment Date and ending on the day
immediately preceding the following Payment Date; provided, however,
that the initial LIBOR Reset Period for the Class A Notes and Class B
Notes, as applicable, will commence on the Closing Date. "Telerate Page
3750" means the display page so designated on the Dow ▇▇▇▇▇ Telerate
Service (or such other page as may replace that page on that service
for the purpose of displaying comparable rates or prices). "Reference
Banks" means four major banks in the London interbank market selected
by the Indenture Trustee.
14
Article II
REPRESENTATIONS AND WARRANTIES
Section 2.01. Representations and Warranties of the Issuer. The Issuer
represents and warrants as follows:
(a) Organization, Powers. The Issuer is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware, has all necessary power as a limited partnership to carry on its
present business, is duly licensed or qualified in all jurisdictions where the
nature of its activities require such licensing or qualifying and where its
failure to be so licensed or qualified would not have a Material Adverse Effect
on the Issuer or the Notes; and has full power, right and authority to enter
into this Indenture, the other Transaction Documents to which it is, or will be,
a party and the transactions contemplated hereby and thereby, to issue the Notes
and to perform each and all of the matters and things herein and therein
provided for. The Issuer has not been known by any name other than "AMS-2 2002,
LP" and has not had any office other than its office at One AMS Place, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and that office is its chief
executive office and principal place of business.
(b) Issuer Authority, etc. The execution, delivery and performance by
the Issuer of this Indenture, the Notes and the other Transaction Documents to
which it is, or will be, a party and the transactions contemplated hereby and
thereby have been duly authorized by all necessary limited partnership action
and this Indenture, the Notes and such Transaction Documents constitute the
legal, valid and binding obligations of the Issuer enforceable against the
Issuer in accordance with their terms, except to the extent that enforceability
may be limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally and general principles of equity, regardless of
whether such enforceability is considered in a proceeding in equity or law.
(c) Compliance with Laws and Contracts. The execution, delivery and
performance by the Issuer of this Indenture, the Notes and the other Transaction
Documents to which the Issuer is a party do not and will not (i) violate, in any
material respect, any provision of any law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award to which the Issuer or its
property is subject, or of the limited partnership agreement and certificate of
limited partnership of the Issuer; (ii) result in a material breach of or
constitute a material default under the provisions of any indenture, loan or
credit agreement or any other material agreement, lease or instrument to which
the Issuer may be or is subject or by which it, or its property, is bound; or
(iii) result in, or require, the creation or imposition of any Lien on or with
respect of any of the material properties of the Issuer other than the Lien in
favor of the Indenture Trustee provided herein; and the Issuer is not in
violation of, or in default under, any such law, rule, regulation, order, writ,
judgment, injunction, decree, determination or award or any such indenture,
agreement, lease or instrument except for violations or defaults that singly or
in the aggregate have not had nor would not have a Material Adverse Effect on
the Issuer.
15
(d) Governmental Approvals. The Issuer has obtained all authorizations,
consents, approvals, exemptions of or filings or registrations with all
governmental commissions, regulatory bodies, boards, bureaus, agencies and
instrumentalities, domestic or foreign, necessary to the conduct of its business
and with respect to which the failure to obtain would not have a Material
Adverse Effect on the Issuer, or necessary to the valid execution, delivery and
performance by the Issuer of this Indenture, the Notes and the other Transaction
Documents to which the Issuer is, or will be, a party (the "Approvals"), and
such Approvals remain in full force and effect.
(e) Litigation. There is no action, suit, proceeding, inquiry or
investigation at law or in equity or before or by any court, public board or
body pending or, to the knowledge of the Issuer, overtly threatened in writing
against or affecting the Issuer wherein an unfavorable decision, ruling or
finding would have a Material Adverse Effect on the Issuer or which affects, or
purports to affect, the validity or enforceability against the Issuer of any
Transaction Document.
(f) Employee Benefit Plans. All "employee benefit plans" (as such term
is defined in ERISA) of the Issuer and each of its ERISA Affiliates (as defined
in ERISA) (individually, a "Plan" and collectively the "Plans") are in
compliance in all material respects with any applicable provisions of ERISA and
the regulations and published interpretations thereunder, except for compliance
amendments which may be required due to changes in such laws and regulations and
which were not addressed by the latest determination letters and for which the
retroactive amendment period has not expired. No Plan is insolvent or in
reorganization. No proceedings have been instituted to terminate any Plan, and
no conditions exist which would permit the institution of proceedings to
terminate any such Plan.
(g) Perfected Interest. Each Financed Student Loan, including the
related Student Loan Note, is owned by the Issuer or by the Eligible Lender
Trustee, on behalf of the Issuer, free and clear of any Lien other than the Lien
created hereby. Except for the filing of the financing statements being executed
and filed in connection with the closing of the transaction, no further action,
including any filing or recording of any document, is necessary in order to
establish, protect and perfect the first priority security interest of the
Indenture Trustee, for the benefit of the Noteholders, in the Collateral as
against any third party in any applicable jurisdiction, including, without
limitation, any purchaser from, or creditor of, the Issuer. No financing
statement or other instrument similar in effect covering any of the Collateral
or any interest therein is on file in any recording office except such as may be
filed (i) in connection with any Lien arising solely as the result of any action
taken by the Indenture Trustee, (ii) in favor of the Indenture Trustee or (iii)
for which UCC termination statements have been filed or with respect to Liens
which by their terms do not require that a release be filed for the security
interest of the Indenture Trustee to be of first priority.
(h) Accuracy of Information. All information (including each Quarterly
Report, Student Loan Schedule and computer tape) supplied by, or on behalf of,
the Issuer in writing to the Indenture Trustee in connection with this Indenture
or the transactions contemplated hereby is true and accurate in all material
respects as of the
16
date thereof stated or certified. No information, exhibit or report furnished by
the Issuer to the Indenture Trustee in connection with this Indenture contained
any material misstatement.
(i) Defaults. No Event of Default or Unmatured Event of Default exists.
(j) Margin Regulations. The use of all funds obtained by the Issuer
under this Indenture will not conflict with or contravene any of Regulations G,
T, U and X promulgated by the Board of Governors of the Federal Reserve System
from time to time.
(k) Offices. The chief place of business and chief executive office of
the Issuer are located at the address of the Issuer referred to in Section
10.02, and the offices where the Issuer keeps all its books, records and
documents evidencing the Financed Student Loans are located at the addresses
specified in Schedule 2.01(k) (or at such other locations, notified to the
Indenture Trustee in accordance with Section 10.02, in jurisdictions where all
action necessary to maintain the Indenture Trustee's first priority perfected
interest, for the benefit of the Noteholders, in the Collateral has been taken
and completed).
(l) Eligible Student Loans. Each Student Loan, as of the date of its
inclusion in the Collateral, is an Eligible Student Loan.
(m) [Reserved]
(n) The Issuer Not an Investment Company. The Issuer is not required to
register as an "investment company" within the meaning of the Investment Company
Act.
Section 2.02. Reassignment upon Breach. The Issuer or the Indenture
Trustee, as the case may be, shall inform the other parties to this Indenture
and the Noteholders promptly, in writing, upon the discovery of any breach of
the representations and warranties made by the Issuer pursuant to Sections
2.01(g) or (l) or any of the covenants of the Issuer made pursuant to Section
3.07 that materially and adversely affects the interest of the Noteholders in
any Financed Student Loan (any such breach that does not affect any Student Loan
Guarantor's obligation to guarantee payment of such Financed Student Loan shall
not be considered to have a material adverse effect). Unless any such breach
which materially and adversely (subject to the preceding parenthetical) affects
the interests of the Noteholders in the affected Financed Student Loan shall
have been cured within 30 days (or in the sole discretion of a majority of the
outstanding principal amount of the Notes comprising the Controlling Class, 60
days) following the discovery thereof by the Issuer or receipt by the Issuer of
written notice from the Indenture Trustee of such breach, the Financed Student
Loan as to which such representation and warranty or covenant relates shall be
released from the Collateral and reassigned to the Eligible Lender Trustee, (a
"Reassignment"), as of the first Determination Date succeeding the end of such
30-day or 60-day period, respectively. In consideration of and simultaneously
with the reassignment of such Financed Student Loan, the Issuer shall
17
deposit to the Collection Account on such Determination Date immediately
available funds equal to the Purchase Amount. Notwithstanding the foregoing, so
long as no Event of Default shall have occurred and be continuing the Issuer
may, at its option in lieu of depositing such Purchase Amount to the Collection
Account on such date, cause the Eligible Lender Trustee to pledge to the
Indenture Trustee on such date for inclusion in the Collateral a new Eligible
Student Loan in substitution for such Eligible Student Loan which was a Financed
Student Loan having a Principal Balance plus accrued and unpaid interest at
least equal to the Substitution Amount of the Eligible Student Loan which was a
Financed Student Loan being substituted and bearing an interest rate that is the
maximum allowed by law for the related student loan program, by delivering an
updated Student Loan Schedule to the Indenture Trustee reflecting such
substitution (a "Substitution"). The Indenture Trustee shall execute such
documents reasonably requested by the Issuer in order to effect such
reassignment and to release the Indenture Trustee's Lien thereunder. The sole
remedy of the Indenture Trustee or the Noteholders with respect to a breach of
representations and warranties pursuant to Sections 2.01(g) and (l) and the
covenants contained in Section 3.07 shall be to require the Issuer to deposit
the Purchase Amount or substitute Financed Student Loans as provided above.
Section 2.03. Representations and Warranties of General Partner. The
General Partner hereby represents and warrants as follows:
(a) Organization, Corporate Powers. The General Partner is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, has all necessary corporate power to carry on its
present business, is duly licensed or qualified in all jurisdictions where the
nature of its activities require such licensing or qualifying and where its
failure to be so licensed or qualified would not have a Material Adverse Effect
on the Issuer.
(b) Issuer Authority, etc. The execution, delivery and performance by
the General Partner of the limited partnership agreement of the Issuer and the
transactions contemplated thereby have been duly authorized by all necessary
corporate action.
(c) Compliance with Laws and Contracts. The execution, delivery and
performance by the General Partner of its duties under the limited partnership
agreement of the Issuer will not (i) violate, in any material respect, any
provision of any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award to which the General Partner or its property is
subject, or of the certificate of incorporation or bylaws of the General
Partner; (ii) result in a material breach of or constitute a material default
under the provisions of any indenture, loan or credit agreement or any other
material agreement, lease or instrument to which the General Partner may be or
is subject or by which it, or its property, is bound; or (iii) result in, or
require, the creation or imposition of any Lien on or with respect of any of the
material properties of the General Partner, which in any case would have a
Material Adverse Effect on the General Partner; and the General Partner is not
in violation of, or in default under, any such law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award or any such
indenture, agreement, lease or instrument except for violations or defaults that
singly or in the
18
aggregate have not had nor would not have a Material Adverse Effect on the
General Partner.
(d) Governmental Approvals. The General Partner has obtained all
authorizations, consents, approvals, exemptions of or filings or registrations
with all governmental commissions, regulatory bodies, boards, bureaus, agencies
and instrumentalities, domestic or foreign, necessary to the conduct of its
business and with respect to which the failure to obtain would not have a
Material Adverse Effect on the General Partner.
(e) Litigation. There is no action, suit, proceeding, inquiry or
investigation at law or in equity or before or by any court, public board or
body pending or, to the knowledge of the General Partner, overtly threatened in
writing against or affecting the General Partner wherein an unfavorable
decision, ruling or finding would have a Material Adverse Effect on the General
Partner or which affects, or purports to affect, the validity or enforceability
against the General Partner of the limited partnership agreement of the Issuer.
Section 2.04. Representations and Warranties of Indenture Trustee. The
Indenture Trustee hereby represents and warrants as follows:
(a) Due Organization. It is a national banking association duly
organized and validly existing in good standing under the laws of the United
States. It has all requisite corporate power and authority to execute, deliver
and perform its obligations under this Indenture.
(b) Authorization. It has taken all corporate action necessary to
authorize the execution and delivery by it of this Indenture, and this Indenture
will be executed and delivered by one of its officers who is duly authorized to
execute and deliver this Indenture on its behalf.
(c) Eligible Lender. It is an "eligible lender" as such term is defined
in Section 435(d) of the Higher Education Act, for purposes of being pledgee of
the Financed Student Loans as contemplated by this Indenture.
(d) Binding Obligation. This Indenture constitutes, and each other
Transaction Document to be executed by the Indenture Trustee when duly executed
and delivered, will constitute, a legal, valid and binding obligation of the
Indenture Trustee, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization, or
other similar laws affecting the enforcement of creditors' rights generally and
by general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
Section 2.05. Representations and Warranties of Eligible Lender
Trustee. The Eligible Lender Trustee hereby represents and warrants as follows:
19
(a) Due Organization. It is a national banking association duly
organized and validly existing in good standing under the laws of the United
States. It has all requisite corporate power and authority to execute and
deliver this Indenture.
(b) Eligible Lender. It is an "eligible lender" as such term is defined
in Section 435(d) of the Higher Education Act.
Article III
GENERAL COVENANTS OF THE ISSUER
Section 3.01. Payment to Noteholders. The Issuer will duly and
punctually pay the principal of, interest, if any, on and any interest on
Noteholders' Interest Basis Carryover (but only to the extent provided in
Sections 1.13(a)(iv) and 8.03(b)) with respect to the Notes in accordance with
the terms of the Notes and this Indenture. Without limiting the foregoing,
subject to Section 8.03(b), the Issuer will cause to be paid to the Class A
Noteholders on the Payment Date that portion of the amounts on deposit in the
Trust Accounts which the Class A Noteholders are entitled to receive, and will
cause to be paid to the Class B Noteholders on the Payment Date that portion of
the amounts on deposit in the Trust Accounts which the Class B Noteholders are
entitled to receive. Amounts properly withheld under the Code by any Person from
a payment to any Noteholder of interest (including any Noteholders' Interest
Basis Carryover) and/or principal shall be considered as having been paid by the
Issuer to such Noteholder for all purposes of this Indenture.
Section 3.02. Money for Payments to Be Held in Trust. All payments of
amounts due and payable with respect to any Notes that are to be made from
amounts distributed from the Collection Account or any other Account shall be
made on behalf of the Issuer by the Indenture Trustee or by another Paying
Agent, and no amounts so distributed for payments of Notes shall be paid over to
the Issuer except as provided in this Section.
On each Payment Date the Issuer shall allocate or cause to be allocated
to the Indenture Trustee (or any other Paying Agent) an aggregate sum sufficient
to pay the amounts then becoming due on the Notes, such sum to be held in trust
for the benefit of the Persons entitled thereto and (unless the Paying Agent is
the Indenture Trustee) shall promptly notify the Indenture Trustee of its action
or failure so to act.
The Issuer will cause each Paying Agent other than the Indenture
Trustee to execute and deliver to the Indenture Trustee an instrument in which
such Paying Agent shall agree with the Indenture Trustee (and if the Indenture
Trustee acts as Paying Agent, it hereby so agrees), subject to the provisions of
this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and pay such sums to such
Persons as herein provided;
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(ii) give the Indenture Trustee notice of any default by the
Issuer of which it has actual knowledge (or any other obligor upon the
Notes) in the making of any payment required to be made with respect to
the Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith pay to
the Indenture Trustee all sums held by it in trust for the payment of
Notes if at any time it ceases to meet the standards required to be met
by a Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such trust
and be paid to the Issuer on Issuer Request, and the Noteholder thereof shall
thereafter, as an unsecured general creditor, look only to the Issuer for
payment thereof (but only to the extent of the amounts so paid to the Issuer),
and all liability of the Indenture Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that the Indenture
Trustee or such Paying Agent, before being required to make any such repayment,
shall at the expense and direction of the Issuer cause to be published once, in
a newspaper published in the English language, customarily published on each
Business Day and of general circulation in The City of
New York, notice that
such money remains unclaimed and that, after a date specified therein, which
shall not be less than 30 days from the date of such publication, any unclaimed
balance of such money then remaining will be repaid to the Issuer. The Indenture
Trustee shall also adopt and employ, at the expense of the Issuer, any other
reasonable means of notification of such repayment (including mailing notice of
such repayment to Noteholders whose Notes have been called but have not been
surrendered for redemption or whose right to or interest in monies due and
payable but not claimed is determinable from the records of the Indenture
Trustee or of any Paying Agent, at the last address of record for each such
Noteholder).
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Section 3.03. Existence. The Issuer will keep in full effect its
existence, rights and franchises as a limited partnership under the laws of the
State of Delaware (unless subject to the prior written consent of a majority of
the outstanding principal amount of the Notes comprising the Controlling Class,
it becomes, or any successor Issuer hereunder is or becomes, organized under the
laws of any other State or of the United States of America, in which case the
Issuer will keep in full effect its existence, rights and franchises under the
laws of such other jurisdiction) and will obtain and preserve its qualification
to do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Indenture, the
Notes, the Collateral and each other instrument or agreement included in the
Indenture Trust Estate. The Issuer will maintain its status as a pass-through
entity for federal income tax purposes.
Section 3.04. Protection of Indenture Trust Estate.
(a) The Issuer will from time to time execute or authenticate and
deliver all such supplements and amendments hereto and all such financing
statements, continuation or amendment statements, instruments of further
assurance and other instruments, and will take such other action necessary or
advisable to:
(i) maintain or preserve the lien and security interest of
this Indenture or carry out more effectively the purposes hereof;
(ii) perfect, publish notice of or protect the validity of any
Grant made or to be made by this Indenture;
(iii) collect payments due on the Financed Student Loans; or
(iv) preserve and defend title to the Indenture Trust Estate
and the rights of the Indenture Trustee and the Noteholders in such
Indenture Trust Estate against the claims of all persons and parties.
It shall be the responsibility of the Issuer to prepare such
instruments.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to, if it fails to do so itself, execute or authenticate any
financing statement, continuation or amendment statement or other instrument
required to be executed, authenticated or filed pursuant to this Section.
(b) Opinions as to Indenture Trust Estate. On the Closing Date, the
Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either
stating that, in the opinion of such counsel, such action has been taken with
respect to the recording and filing of this Indenture, any indentures
supplemental hereto, and any other requisite documents, and with respect to the
execution and filing of any financing statements and continuation statements, as
are necessary to perfect and make effective the lien and security interest of
this Indenture and reciting the details of such action, or stating that, in the
opinion of such counsel, no such action is necessary to make such lien and
security interest effective.
22
Section 3.05. Performance of Obligations.
(a) The Issuer will not take any action and will use its best efforts
not to permit any action to be taken by others (if such action is within the
Issuer's control) that would release any Person from any of such Person's
material covenants or obligations under any instrument or agreement included in
the Indenture Trust Estate or that would result in the amendment, hypothecation,
subordination, termination or discharge of, or impair the validity or
effectiveness of, any such instrument or agreement, except as expressly provided
in this Indenture, the Purchase and Contribution Agreement, the Servicing
Agreement or such other instrument or agreement.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Indenture Trustee in an Officer's Certificate of
the Issuer shall be deemed to be action taken by the Issuer. Initially, the
Issuer has contracted with the Servicer to assist the Issuer in performing its
duties under this Indenture.
(c) If the Issuer shall have knowledge of the occurrence of a Servicer
Default, the Issuer shall promptly notify the Indenture Trustee and the Rating
Agencies, and shall specify in such notice the action, if any, the Issuer is
taking with respect to such default. If a Servicer Default shall arise from the
failure of the Servicer to perform any of its duties or obligations under the
Servicing Agreement with respect to the Financed Student Loans, the Issuer shall
take all reasonable steps available to it to enforce its rights under the
Transaction Documents in respect of such failure and shall take all reasonable
steps available to it to enforce its rights in respect of such failure at the
direction of a majority of the outstanding principal amount of the Notes
comprising the Controlling Class.
(d) Upon any termination of the Servicer's rights and powers pursuant
to the Servicing Agreement, the Issuer shall promptly notify the Indenture
Trustee. As soon as a successor Servicer is appointed with the consent of a
majority of the outstanding principal amount of the Notes comprising the
Controlling Class, the Issuer shall notify the Indenture Trustee of such
appointment, specifying in such notice the name and address of such successor
Servicer.
(e) Without derogating from the absolute nature of the assignment
granted to the Indenture Trustee under this Indenture or the rights of the
Indenture Trustee hereunder, the Issuer agrees that it will not, without the
prior written consent of the Indenture Trustee and a majority of the outstanding
principal amount of the Notes comprising the Controlling Class, amend, modify,
waive, supplement, terminate or surrender, or agree to any amendment,
modification, supplement, termination, waiver or surrender of, the terms of any
Collateral or the Transaction Documents, except to the extent otherwise provided
in the Servicing Agreement, or waive timely performance or observance by the
Servicer, AMS, the Issuer or the Eligible Lender Trustee under a material
provision of the Purchase and Contribution Agreement, or the Servicing
Agreement; provided, however, that no such amendment shall (i) increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
distributions that are required to be made for the benefit of the Noteholders,
(ii) reduce the aforesaid
23
percentage of the Notes which are required to consent to any such amendment,
without the consent of the Noteholders of all the Outstanding Notes, or (iii)
result in a deemed exchange of Notes for new notes under Section 1001 of the
Code. If any such amendment, modification, supplement or waiver shall be so
consented to, the Issuer agrees, promptly following a request by the Indenture
Trustee to do so, to execute and deliver, in its own name and at its own
expense, such agreements, instruments, consents and other documents as the
Indenture Trustee may deem necessary or appropriate in the circumstances.
(f) The Issuer shall maintain and implement administrative and
operating procedures (including, without limitation, an ability to recreate
records identifying and evidencing the Financed Student Loans in the event of
the destruction of the originals thereof), and keep and maintain, or cause to be
kept and maintained, all documents, books, records and other information
reasonably necessary or advisable for the collection of all the Financed Student
Loans (including, without limitation, records adequate to permit the daily
identification of each new Financed Student Loan included in the Collateral from
time to time and all Collections of and adjustments to each existing Financed
Student Loan).
(g) At its expense, the Issuer shall timely and fully perform and
comply, and cause the Eligible Lender Trustee to perform and comply, with all
material provisions, covenants and other promises required to be observed by
each of them under the Higher Education Act, Student Loan Notes, the Student
Loan Guaranty Agreements, the Servicing Agreement and other agreements to which
the Issuer is a party related to the Collateral.
(h) The Issuer shall administer, operate and maintain, or cause the
Eligible Lender Trustee to administer, operate and maintain, its student loan
program in such manner as to ensure that such program and the Financed Student
Loans will benefit, to the extent applicable and in all material respects, from
(i) the Student Loan Guaranty Agreements, and (ii) the Federal Family Education
Loan Program authorized under the Higher Education Act and the federal program
of reimbursement for Student Loans pursuant to the Higher Education Act, or from
any other federal statute providing for such Federal Family Education Loan
Program.
(i) The Issuer shall (i) maintain, and, where applicable, cause the
Eligible Lender Trustee to maintain, in effect all Student Loan Guaranty
Agreements and the Servicing Agreement, diligently and promptly enforce its
rights thereunder and take, or use commercially reasonable steps to cause the
Servicer to take, all reasonable steps, actions and proceedings necessary or
appropriate for the enforcement of all material terms, covenants and conditions
of each Financed Student Loan, including the prompt payment of all principal and
interest payments and all other amounts due with respect to such Financed
Student Loan, including all Subsidy Payments, and all Student Loan Guaranty
Payments under the applicable Student Loan Guaranty Agreement, except for such
deferments and forbearance permitted under the Higher Education Act, and (ii)
enter and, where applicable, cause the Eligible Lender Trustee to enter, into
Student Loan
24
Guaranty Agreements and the Servicing Agreement so that all Financed Student
Loans are covered thereby.
Section 3.06. Reporting Requirements of the Issuer. From the date
hereof until the Final Scheduled Payment Date, the Issuer shall furnish to the
Eligible Lender Trustee and the Indenture Trustee:
(a) Quarterly Financial Statements. As soon as available and in any
event within 60 days after the end of each of the first three quarters of each
fiscal year of the Issuer, the Issuer's consolidated statement of income and
statement of changes in cash flow for such quarter and balance sheet as of the
end of such quarter presented fairly in accordance with generally accepted
accounting principles;
(b) Annual Financial Statements. As soon as available and in any event
within 120 days after the end of each fiscal year of the Issuer, the Issuer's
statement of income and statement of changes in cash flow for such year and
balance sheet as of the end of such year in each case presented fairly in
accordance with generally accepted accounting principles;
(c) Quarterly Officer's Certificate. Within 30 days after the last day
of each calendar quarter, an officer's certificate executed by the chief
financial officer or treasurer of the General Partner, certifying that, as of
such calendar month, (i) the Issuer is in compliance with all of the terms,
conditions and requirements of the Transaction Documents, and (ii) no Event of
Default or Unmatured Event of Default under this Indenture or other event of
default as described in any other Transaction Documents exists;
(d) Quarterly Report. No later than the tenth Business Day of each
January, April, July and October, a Quarterly Report for the immediately
preceding quarter, substantially in the form of Exhibit 3.06(d);
(e) DOE Audit Materials. Within 30 days after the last day of each
calendar month, notice of all DOE audits of or any other actions of a material
nature by the DOE with respect to, the Issuer or any Affiliate thereof, to the
extent that it has knowledge thereof, of the Servicer or Student Loan Guarantor,
under any Student Loan Guaranty Agreement, and, in each case, notice of the
results thereof (including, but not limited to, the rate of reimbursement by the
DOE for the Student Loan Guarantors under the related Student Loan Guaranty
Agreements, to the extent that such rate is below the maximum permitted under
the Higher Education Act (i.e., 95% for Student Loans disbursed on or after
October 1, 1998, 98% with respect to Student Loans disbursed on or after October
1, 1993, and 100% for Student Loans disbursed prior thereto));
(f) Reports of Independent Accountants. As promptly as practicable,
copies of any reports or written comments (including, without limitation, audit
reports, management letters and any other reports or communications with respect
to the internal control structure) relating to the Issuer submitted by its
independent accountants;
25
(g) Event of Defaults. Immediately upon becoming aware of the existence
of any Event of Default or Unmatured Event of Default, a written statement of an
Authorized Officer of the Issuer setting forth details of such event and the
action that the Issuer proposes to take with respect thereto; and immediately
upon becoming aware of a Servicer Default, written notice thereof;
In addition, the Issuer shall promptly furnish a copy of each Quarterly
Report upon delivery thereof to the Indenture Trustee and the Eligible Lender
Trustee, to (i) Moody's at ▇▇▇▇▇'▇ Investors Service, Inc., ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ABS Monitoring Department, (ii) Fitch, Inc.
at Fitch, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Asset Backed Monitoring Unit and (iii) S&P at Standard and Poors, a division of
The McGraw Hill Companies, Inc., ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ABS
Surveillance Department.
The Issuer shall also inform each Rating Agency in writing at the above
addresses immediately upon the occurrence of any resignation, substitution or
replacement of the Eligible Lender Trustee, the Servicer or any Subservicer. In
addition, at any time at which the Issuer provides the Indenture Trustee with
notice of the occurrence of any other event pursuant to the terms of this
Indenture, it shall concurrently provide such notice to each Rating Agency.
Section 3.07. Servicing Covenants. From the date hereof until the Final
Scheduled Payment Date, the Issuer shall comply with the following covenants.
(a) Servicing. The Issuer shall cause the Servicer to service,
administer and make collections with respect to the Financed Student Loans in
accordance in all material respects with all applicable Federal and State laws,
including all applicable standards, guidelines and requirements of the Higher
Education Act and any Student Loan Guaranty Agreement, the failure to comply
with which would adversely affect the eligibility of one or more of the Financed
Student Loans for Subsidy Payments or Student Loan Guaranty Payments, as
applicable, or would have a Material Adverse Effect on the Issuer.
(b) Collection of Financed Student Loan Payments. The Issuer shall
cause the Servicer to make reasonable efforts (including all efforts that may be
specified under the Higher Education Act or any Student Loan Guaranty
Agreement), in each case in accordance with the terms of the Servicing
Agreement, to collect all payments called for under the terms and provisions of
the Financed Student Loans as and when the same shall become due.
(c) Collection of Student Loan Guaranty Payments. The Issuer (i) shall
(or shall cause the Servicer to) make reasonable efforts to claim, pursue and
collect all Student Loan Guaranty Payments from the Student Loan Guarantors
pursuant to the Student Loan Guaranty Agreements with respect to any of the
Student Loans that are Financed Student Loans as and when the same shall become
due and payable, and (ii) comply, and shall cause the Servicer to comply, in all
material respects with all applicable laws and agreements with respect to
claiming, pursuing and collecting such payments in each case in accordance with
the terms of the Servicing Agreement. In
26
connection therewith, the Servicer is hereby authorized and empowered to convey
to any Student Loan Guarantor the Student Loan Note and the related Financed
Student Loan file representing any Financed Student Loan in connection with
submitting a claim to such Student Loan Guarantor for a Student Loan Guaranty
Payment in accordance with the terms of the applicable Student Loan Guaranty
Agreement whereupon the Lien of the Indenture Trustee relating to such Financed
Student Loan shall be released without any further action of any kind.
(d) Collection of Subsidy Payments. The Issuer shall make or cause to
be made reasonable efforts to claim, pursue and collect all Subsidy Payments
from the DOE with respect to any of the Financed Student Loans as and when the
same shall become due and payable, shall comply or undertake commercially
reasonable efforts to cause compliance with in all material respects with all
applicable laws and agreements with respect to claiming, pursuing and collecting
such payments. All amounts so collected by the Issuer or otherwise shall
constitute Collections for the applicable Collection Period and shall be
deposited into the Collection Account in accordance with Section 8.03(a). In
connection therewith, the Issuer, shall prepare and file or cause there to be
prepared with the DOE on a timely basis all claims, forms and other documents
and filings necessary or appropriate in connection with the claiming of Subsidy
Payments and otherwise pursuing and collecting such Subsidy Payments from the
DOE.
(e) Realization upon Financed Student Loans. The Issuer shall cause the
Servicer to use reasonable efforts consistent with customary servicing practices
and procedures and subject to the Servicing Agreement, including all efforts
that may be specified under any applicable Student Loan Guaranty Agreement and
the Higher Education Act, in its servicing of any delinquent Financed Student
Loans.
Section 3.08. Negative Covenants of the Issuer. The Issuer shall not:
(a) except as expressly permitted by this Indenture or any other
Transaction Document and except for properties and assets released from the
Indenture Trust Estate in accordance with this Indenture, sell, transfer,
exchange or otherwise dispose of any of the properties or assets of the Issuer,
including those included in the Indenture Trust Estate, unless directed to do so
by the Indenture Trustee (which direction the Indenture Trustee shall not give
without the prior written consent of a majority of the outstanding principal
amount of the Notes comprising the Controlling Class);
(b) claim any credit on, or make any deduction from the principal or
interest (including any Noteholders' Interest Basis Carryover or interest
thereon) payable in respect of, the Notes (other than amounts properly withheld
from such payments under the Code or applicable state law) or assert any claim
against any present or former Noteholder by reason of the payment of the taxes
levied or assessed upon any part of the Indenture Trust Estate; or
(c) (i) permit the validity or effectiveness of this Indenture to be
impaired, or permit the lien of this Indenture to be amended, hypothecated,
subordinated, terminated or discharged, or permit any Person to be released from
any covenants or obligations with
27
respect to the Notes under this Indenture except as may be expressly permitted
hereby, (ii) permit any lien, charge, excise, claim, security interest, mortgage
or other encumbrance (other than the lien of this Indenture) to be created on or
extend to or otherwise arise upon or burden the Indenture Trust Estate or any
part thereof or any interest therein or the proceeds thereof (other than tax
liens and other liens that arise by operation of law, in each case arising
solely as a result of an action or omission of the related Obligor, and other
than as expressly permitted by the Transaction Documents) or (iii) permit the
lien of this Indenture not to constitute a valid first priority (other than with
respect to any such tax or other lien) security interest in the Indenture Trust
Estate.
Section 3.09. Issuer May Consolidate, etc., Only on Certain Terms.
(a) The Issuer shall not consolidate or merge with or into any other
Person, unless:
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized and
existing under the laws of the United States of America or any state
and shall expressly assume, by an indenture supplemental hereto,
executed and delivered to the Indenture Trustee, in form satisfactory
to the Indenture Trustee, the due and punctual payment of the principal
of, interest on and any Noteholders' Interest Basis Carryover, if any,
with respect to all Notes and the performance or observance of every
agreement and covenant of this Indenture on the part of the Issuer to
be performed or observed, all as provided herein;
(ii) immediately after giving effect to such transaction, no
Event of Default shall have occurred and be continuing;
(iii) the consent of a majority of the outstanding principal
amount of the Notes comprising the Controlling Class shall have been
obtained with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee) to the
effect that such transaction will not have any material adverse tax
consequence to the Issuer or any Noteholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee
an Officer's Certificate of the Issuer stating that such consolidation
or merger and such supplemental indenture comply with this Article III
and that all conditions precedent herein provided for relating to such
transaction have been complied with.
(b) The Issuer shall not convey or transfer all or substantially all
its properties or assets, including those included in the Indenture Trust
Estate, to any Person, unless:
28
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of which
is hereby restricted shall be a United States citizen or a Person
organized and existing under the laws of the United States of America
or any state, (B) expressly assume, by an indenture supplemental
hereto, executed and delivered to the Indenture Trustee, in form
satisfactory to the Indenture Trustee, the due and punctual payment of
the principal of, interest on and Noteholders' Interest Basis
Carryover, if any, with respect to all Notes and the performance or
observance of every agreement and covenant of this Indenture on the
part of the Issuer to be performed or observed, all as provided herein,
(C) expressly agree by means of such supplemental indenture that all
right, title and interest so conveyed or transferred shall be subject
and subordinate to the rights of Noteholders, (D) unless otherwise
provided in such supplemental indenture, expressly agree to indemnify,
defend and hold harmless the Issuer against and from any loss,
liability or expense arising under or related to this Indenture and the
Notes and (E) expressly agree by means of such supplemental indenture
that such Person (or if a group of Persons, then one specified Person)
shall make all filings with the Commission (and any other appropriate
Person) required by the Exchange Act in connection with the Notes;
(ii) immediately after giving effect to such transaction, no
Default or Event of Default shall have occurred and be continuing;
(iii) the consent of a majority of the outstanding principal
amount of the Notes comprising the Controlling Class shall have been
obtained with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel (and
shall have delivered copies thereof to the Indenture Trustee) to the
effect that such transaction will not have any material adverse tax
consequence to the Issuer or any Noteholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture Trustee
an Officer's Certificate of the Issuer stating that such conveyance or
transfer and such supplemental indenture comply with this Article III
and that all conditions precedent herein provided for relating to such
transaction have been complied with.
Section 3.10. Successor or Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance with
Section 3.09(a), the Person formed by or surviving such consolidation or merger
(if other than the Issuer) shall succeed to, and be substituted for, and may
exercise every right and power of, the Issuer under this Indenture with the same
effect as if such Person had been named as the Issuer herein.
29
(b) Upon a conveyance or transfer of all the assets and properties of
the Issuer pursuant to Section 3.09(b), ▇▇▇-▇ ▇▇▇▇, ▇▇ will be released from
every covenant and agreement of this Indenture to be observed or performed on
the part of the Issuer with respect to the Notes immediately upon the delivery
by the Issuer of written notice to the Indenture Trustee stating that ▇▇▇-▇
▇▇▇▇, ▇▇ is to be so released.
Section 3.11. No Other Business. Except as contemplated by this
Indenture, its limited partnership agreement or the other Transaction Documents,
the Issuer shall not engage in any business other than financing, purchasing,
owning, selling and managing the Financed Student Loans in the manner
contemplated by this Indenture, its limited partnership agreement and the other
Transaction Documents and activities incidental thereto.
Section 3.12. No Borrowing. Unless a majority of the outstanding
principal amount of the Notes comprising the Controlling Class shall have given
consent with respect to such issuance, the Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes.
Section 3.13. Guarantees, Loans, Advances and Other Liabilities. Except
as contemplated by the Transaction Documents or this Indenture, the Issuer shall
not make any loan or advance or credit to, or guarantee (directly or indirectly
or by an instrument having the effect of assuring another's payment or
performance on any obligation or capability of so doing or otherwise), endorse
or otherwise become contingently liable, directly or indirectly, in connection
with the obligations, stocks or dividends of, or own, purchase, repurchase or
acquire (or agree contingently to do so) any stock, obligations, assets or
securities of, or any other interest in, or make any capital contribution to,
any other Person.
Section 3.14. [RESERVED].
Section 3.15. The Funding Account. Neither the Issuer, nor the Eligible
Lender Trustee on behalf of the Issuer, shall acquire any Student Loans with
proceeds from amounts on deposit in the Funding Account which, as of the date of
acquisition of such Student Loans would in the aggregate differ materially in
terms of loan type, interest rate and the delinquency rate from the Initial
Financed Student Loans.
Article IV
SATISFACTION AND DISCHARGE
Section 4.01. Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest (including any Noteholders' Interest Basis
Carryover) thereon, (iv) Sections 3.02 and 6.14, (v) the rights, obligations and
immunities of the Indenture Trustee hereunder (including the rights of the
Indenture Trustee under Sections 6.02 and 6.12 and the obligations of the
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Indenture Trustee under Section 4.02) and (vi) the rights of Noteholders as
beneficiaries hereof with respect to the property so deposited with the
Indenture Trustee payable to all or any of them, and the Indenture Trustee, on
demand of and at the expense of the Issuer, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture with respect to the
Notes, when:
(A) either
(1) all Notes theretofore authenticated and
delivered (other than (i) Notes that have been
destroyed, lost or stolen and that have been replaced
or paid as provided in Section 1.04 and (ii) Notes
for whose payment money has theretofore been
deposited in trust or segregated and held in trust by
the Issuer and thereafter repaid to the Issuer or
discharged from such trust, as provided in Section
3.02) have been delivered to the Indenture Trustee
for cancellation; or
(2) all Notes not theretofore delivered to
the Indenture Trustee for cancellation
(i) have become due and payable,
(ii) will become due and payable at
the Final Scheduled Payment Date within one
year, or
(iii) are to be called for
redemption within one year under
arrangements satisfactory to the Indenture
Trustee for the giving of notice of
redemption by the Indenture Trustee in the
name, and at the expense, of the Issuer,
and the Issuer, in the case of (i), (ii) or (iii)
above, has irrevocably deposited or caused to be
irrevocably deposited with the Indenture Trustee cash
or direct obligations of or obligations guaranteed by
the United States of America (which will mature prior
to the date such amounts are payable), in trust for
such purpose, in an amount sufficient, as certified
by an independent certified public accountant, to pay
and discharge the entire indebtedness on such Notes
not theretofore delivered to the Indenture Trustee
for cancellation as of such day of discharge or when
due on the Final Scheduled Payment Date;
(B) the Issuer has paid or caused to be paid all
other sums payable hereunder by the Issuer; and
(C) the Issuer has delivered to the Indenture Trustee
an Officer's Certificate of the Issuer stating that all
conditions precedent
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herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with.
Section 4.02. Application of Trust Money. All monies deposited with the
Indenture Trustee pursuant to Section 4.01 hereof shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent, as the
Indenture Trustee may determine, to the Noteholders of the particular Notes for
the payment or redemption of which such monies have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal and
interest (including any Noteholders' Interest Basis Carryover), but such monies
need not be segregated from other funds except to the extent required herein or
in the Servicing Agreement or required by law.
Section 4.03. Repayment of Monies Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all monies then held by any Paying Agent other than the Indenture Trustee under
the provisions of this Indenture with respect to such Notes shall, upon demand
of the Issuer, be paid to the Indenture Trustee to be held and applied according
to Section 3.02 and thereupon such Paying Agent shall be released from all
further liability with respect to such monies.
Article V
REMEDIES
Section 5.01. Events of Default. "EVENT OF DEFAULT", wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) default for two days or more in the payment by the Issuer of any
interest (provided, however, that any Noteholders' Interest Basis Carryover
shall not constitute interest for this purpose) on any Note after the same
becomes due and payable (provided, further, that no default in the payment of
interest under this clause (a) with respect to the Class B Notes will constitute
an Event of Default so long as any Class A Notes are Outstanding); or
(b) default in the payment by the Issuer of the remaining principal
balance of any Note when the same becomes due and payable on the Final Scheduled
Payment Date; or
(c) default not otherwise constituting an Event of Default under either
clause (a) or (b) above for three Business Days or more in the payment of
interest or any installment of the principal of any Note when the same becomes
due and payable and when Available Funds are sufficient to make such payment; or
(d) default in any material respect in the observance or performance of
any covenant or agreement of the Issuer made in this Indenture and the
continuation of any
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such default for a period of 30 days after notice thereof is given to the Issuer
by the Indenture Trustee or to the Issuer and the Indenture Trustee by the
holders of at least 25% in principal amount of the Notes then outstanding;
provided, however, that if the Issuer demonstrates that it is making a
good-faith attempt to cure such default, such 30 day period may be extended by
the Indenture Trustee (with the prior consent of a majority of the outstanding
principal amount of the Notes comprising the Controlling Class) to 90 days; or
(e) any representation or warranty made by the Issuer in this Indenture
or in any certificate delivered pursuant hereto or in connection herewith having
been incorrect in a material adverse respect as of the time made, and such
breach not having been cured within 45 days after notice thereof is given to the
Issuer by the Indenture Trustee or to the Issuer and the Indenture Trustee by
the holders of at least 25% in principal amount of the Notes then outstanding;
provided, however, that if the Issuer demonstrates that it is making a
good-faith attempt to cure such breach, such 45 day period may be extended by
the Indenture Trustee (with the prior consent of a majority of the outstanding
principal amount of the Notes comprising the Controlling Class) to 90 days; or
(f) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial part of
the Indenture Trust Estate in an involuntary case under any applicable federal
or state bankruptcy, insolvency or other similar law now or hereafter in effect,
or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official of the Issuer or for any substantial part of the Indenture
Trust Estate, or ordering the winding-up or liquidation of the Issuer's affairs,
and such decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or
(g) the commencement by the Issuer of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or the consent by the Issuer to the entry of an order for
relief in an involuntary case under any such law, or the consent by the Issuer
to the appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Issuer or for any
substantial part of the Indenture Trust Estate, or the making by the Issuer of
any general assignment for the benefit of creditors, or the failure by the
Issuer generally to pay its debts as such debts become due, or the taking of
action by the Issuer in furtherance of any of the foregoing.
Section 5.02. Acceleration of Maturity; Rescission and Annulment. If an
Event of Default should occur, then the Indenture Trustee may, with the consent
of, or shall, at the direction of, a majority of the outstanding principal
amount of the Notes comprising the Controlling Class, declare all the Notes to
be immediately due and payable, by a notice in writing to the Issuer, and upon
any such declaration the unpaid principal amount of such Notes, together with
accrued and unpaid interest thereon through the date of acceleration, shall
become immediately due and payable. The Indenture Trustee shall provide each
Rating Agency with written notice of any acceleration of maturity of the Notes.
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At any time after such declaration of acceleration of maturity has been
made and before a judgment or decree for payment of the money due has been
obtained by the Indenture Trustee as hereinafter provided in this Article V, the
Noteholders representing a majority of the Class A Note Principal Amount and the
Class B Note Principal Amount may rescind and annul such declaration and its
consequences if:
(a) the Issuer has paid or deposited with the Indenture Trustee a sum
sufficient to pay:
(i) all payments of principal of and interest on all Notes and
all other amounts that would then be due hereunder or upon such Notes
if the Event of Default giving rise to such acceleration had not
occurred; and
(ii) all sums paid or advanced by the Indenture Trustee
hereunder under the Transaction Documents and the reasonable
compensation, expenses, disbursements and advances of the Indenture
Trustee and its agents and counsel; and
(b) all Events of Default, other than the nonpayment of the principal
of the Notes that has become due solely by such acceleration, have been cured or
waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or impair any
right consequent thereto.
Section 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.
(a) The Issuer covenants that if (i) default is made in the payment of
any interest (including, subject to the limitations of Sections 1.13(a)(iv) and
8.03(b), any Noteholders' Interest Basis Carryover or interest thereon) on any
Note when the same becomes due and payable, and such default continues for a
period of two days, or (ii) default is made in the payment of the remaining
principal balance of any Notes when the same becomes due and payable on the
Final Scheduled Payment Date, or (iii) default for three Business Days or more
is made in the payment of interest or any installment of the principal of any
Note when the same becomes due and payable and when Available Funds are
sufficient to make such payment, the Issuer shall, upon demand of the Indenture
Trustee, pay to it, for the benefit of the Noteholders, the whole amount then
due and payable on such Notes for principal and interest (and any Noteholders'
Interest Basis Carryover), with interest upon the overdue principal, and, to the
extent payment at such rate of interest shall be legally enforceable, upon
overdue installments of interest (and any Noteholders' Interest Basis Carryover
together with interest thereon), at the rate specified in Section 1.13 and in
addition thereto such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and its respective agents
and counsel.
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(b) In case the Issuer shall fail forthwith to pay such amounts upon
such demand, the Indenture Trustee, in its own name and as trustee of an express
trust, may (and with the prior written consent of a majority of the outstanding
principal amount of the Notes comprising the Controlling Class, shall) institute
a Proceeding for the collection of the sums so due and unpaid, and may prosecute
such Proceeding to judgment or final decree, and may enforce the same against
the Issuer or other obligor upon such Notes and collect in the manner provided
by law out of the property of the Issuer or other obligor upon such Notes,
wherever situated, the monies adjudged or decreed to be payable, in each case
subject to Section 10.06 hereof.
(c) If an Event of Default occurs and is continuing, the Indenture
Trustee may, in its discretion, proceed to protect and enforce its rights and
the rights of the Noteholders by such appropriate Proceedings as the Indenture
Trustee shall deem most effective to protect and enforce any such rights,
whether for the specific enforcement of any covenant or agreement in this
Indenture or in aid of the exercise of any power granted herein, or to enforce
any other proper remedy or legal or equitable right vested in the Indenture
Trustee by this Indenture or by law, in each case subject to Section 10.06
hereof.
(d) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Indenture Trust Estate, Proceedings under Title 11 of the United States Code
or any other applicable federal or state bankruptcy, insolvency or other similar
law, or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceeding relative to the Issuer or
other obligor upon the Notes, or to the creditors or property of the Issuer or
such other obligor, the Indenture Trustee, irrespective of whether the principal
of any Notes shall then be due and payable as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, and shall, at the written direction of a majority of the
outstanding principal amount of the Notes comprising the Controlling Class, act,
by intervention in such proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount
of principal and interest (including any Noteholders' Interest Basis
Carryover and interest thereon) owing and unpaid in respect of the
Notes and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Indenture Trustee
(including any claim for reasonable compensation to the Indenture
Trustee and each predecessor Indenture Trustee, and their respective
agents, attorneys and counsel, and for reimbursement of all expenses
and liabilities incurred, and all advances made, by the Indenture
Trustee and each predecessor Indenture Trustee, except as a result of
negligence, willful misconduct or bad faith) and of the Noteholders
allowed in such Proceeding;
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(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Noteholders in any election of a trustee, a
standby trustee or Person performing similar functions in any such
Proceeding;
(iii) to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and the
Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims
of the Indenture Trustee or the Noteholders allowed in any judicial
Proceeding relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other similar official in
any such Proceeding is hereby authorized by each of such Noteholders to make
payments to the Indenture Trustee, and, in the event that the Indenture Trustee
shall consent to the making of payments directly to such Noteholders, to pay to
the Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence, willful
misconduct or bad faith.
(e) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Noteholder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(f) All rights of action and of asserting claims under this Indenture,
or under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceeding relative thereto, and any such action or Proceeding instituted by the
Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
benefit of the Noteholders.
(g) In any Proceeding brought by the Indenture Trustee (and also any
Proceeding involving the interpretation of any provision of this Indenture to
which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Noteholders, and it shall not be necessary to make any
Noteholder a party to any such Proceeding.
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Section 5.04. Remedies; Priorities.
(a) If an Event of Default shall have occurred and be continuing and
the Notes have become due and payable, the Indenture Trustee may, and shall, at
the direction of a majority of the outstanding principal amount of the Notes
comprising the Controlling Class, do one or more of the following (subject to
Section 5.05):
(i) institute Proceedings in its own name and as trustee of an
express trust for the collection of all amounts then payable on the
Notes or under this Indenture with respect thereto, whether by
declaration or otherwise, enforce any judgment obtained, and collect
from the Issuer and any other obligor upon such Notes monies adjudged
due;
(ii) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Indenture
Trust Estate;
(iii) exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and enforce the rights
and remedies of the Indenture Trustee and the Noteholders; and
(iv) sell the Indenture Trust Estate or any portion thereof or
rights or interests therein, at one or more public or private sales
called and conducted in any manner permitted by law;
provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Indenture Trust Estate following an Event of Default, other than
an Event of Default described in Section 5.01(i) or (ii), unless (A) the
Noteholders of 100% of the Class A Note Principal Amount and the Class B Note
Principal Amount consent, (B) the proceeds of such sale or liquidation
distributable to the Noteholders are sufficient to discharge in full all amounts
then due and unpaid upon such Notes for principal and interest or (C) the
Indenture Trustee determines that the Indenture Trust Estate will not continue
to provide sufficient funds for the payment of principal of and interest on the
Notes as they would have become due if the Notes had not been declared due and
payable, and the Indenture Trustee obtains the consent of 66-2/3% of the
outstanding principal amount of the Notes comprising the Controlling Class. In
determining such sufficiency or insufficiency with respect to clauses (B) and
(C), the Indenture Trustee may, but need not, obtain and rely upon an opinion of
an Independent investment banking or accounting firm of national reputation as
to the feasibility of such proposed action and as to the sufficiency of the
Indenture Trust Estate for such purpose.
(b) If the Indenture Trustee collects any money or property pursuant to
this Article V, it shall pay out the money or property in the following order:
FIRST: on a pari passu basis (based on the ratio of each such
amount to the total of such amounts), to the Indenture Trustee
for all due and unpaid Indenture Trustee Fees and to the
Eligible Lender Trustee for all due and unpaid Eligible Lender
Trustee Fees.;
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SECOND: to the Servicer for all due and unpaid Servicing Fee
Amounts due to the Servicer under the Servicing Agreement;
THIRD: (i) to the Class A Noteholders for amounts due and
unpaid on the Class A Notes for interest (other than any
Noteholders' Interest Basis Carryover) ratably as between
Noteholders within such Class, without preference or priority
of any kind and (ii) to a Swap Counterparty, all net amounts,
if any, due and owing a Swap Counterparty (other than any
termination payments under the related Swap Agreement) (such
amounts to be deposited or paid, as the case may be, under (i)
and (ii) of this clause third pari passu);
FOURTH: to the Class B Noteholders for amounts due and unpaid
on the Class B Notes for interest (other than any Noteholders'
Interest Basis Carryover) ratably as between Noteholders
within such Class, without preference or priority of any kind;
FIFTH: to the Class A Noteholders for amounts due and unpaid
on the Class A Notes for principal ratably as between
Noteholders within such Class, without preference or priority
of any kind until the Class A Note Principal Amount has been
paid in full;
SIXTH: to the Class B Noteholders for amounts due and unpaid
on the Class B Notes for principal ratably as between
Noteholders within such Class, without preference or priority
of any kind until the Class B Note Principal Amount has been
paid in full;
SEVENTH: to the Class A Noteholders for any unpaid Class A
Noteholders' Interest Basis Carryover ratably as between
Noteholders within such Class, without preference or priority
of any kind;
EIGHTH: to the Class B Noteholders for any unpaid Class B
Noteholders' Interest Basis Carryover ratably as between
Noteholders within such Class, without preference or priority
of any kind;
NINTH: to a Swap Counterparty an amount equal to any amounts
due and owing to a Swap Counterparty (other than amounts paid
in accordance with clause third above);
TENTH: to the Servicer for all amounts due to it under the
Servicing Agreement and not paid to it pursuant to priority
SECOND above;
ELEVENTH: to the Persons entitled thereto, any amounts due
under Section 10.05; and
TWELFTH: to the Issuer, free and clear of the lien of this
Indenture.
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The Indenture Trustee may fix a record date and payment date for any
payment to Noteholders pursuant to this Section. At least 15 days before such
record date, the Issuer shall mail to each Noteholder and the Indenture Trustee
a notice that states the record date, the payment date and the amount to be
paid.
Section 5.05. Optional Preservation of the Indenture Trust Estate. If
the Notes have been declared to be due and payable under Section 5.02 following
an Event of Default and such declaration and its consequences have not been
rescinded and annulled, the Indenture Trustee may elect to maintain possession
of the Indenture Trust Estate. It is the desire of the parties hereto and the
Noteholders that there be at all times sufficient funds for the payment of
principal of and interest (including any Noteholders' Interest Basis Carryover)
on the Notes, and the Indenture Trustee shall take such desire into account when
determining whether to maintain possession of the Indenture Trust Estate. In
determining whether to maintain possession of the Indenture Trust Estate, the
Indenture Trustee may, but need not, obtain and rely upon an opinion (which
shall be obtained at the expense of the Issuer) of an Independent investment
banking or accounting firm of national reputation as to the feasibility of such
proposed action and as to the sufficiency of the Indenture Trust Estate for such
purpose.
Section 5.06. Limitation of Suits. No Noteholder shall have any right
to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Noteholder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(ii) the Noteholders of not less than 25% of the outstanding
principal amount of the Notes comprising the Controlling Class have
made written request to the Indenture Trustee to institute such
Proceeding in respect of such Event of Default in its own name as
Indenture Trustee hereunder;
(iii) such Noteholder or Noteholders have offered to the
Indenture Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute
such Proceeding;
(v) no direction inconsistent with such written request has
been given to the Indenture Trustee during such 60-day period by the
Noteholders of a majority of the outstanding principal amount of the
Notes comprising the Controlling Class; and
it being understood and intended that no one or more Noteholders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other
Noteholders or to obtain or to seek to obtain priority or preference over any
other Noteholders or to enforce any right under this Indenture, except in the
manner herein provided.
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Section 5.07. Unconditional Rights of Noteholders to Receive Principal
and Interest. Notwithstanding any other provisions in this Indenture, any
Noteholder shall have the right, which is absolute and unconditional, to receive
payment of the principal of and interest, if any, on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture (or, in
the case of redemption, on the applicable Payment Date for redemption) and to
institute suit for the enforcement of any such payment, and such right shall not
be impaired without the consent of such Noteholder.
Section 5.08. Restoration of Rights and Remedies. If the Indenture
Trustee or any Noteholder has instituted any Proceeding to enforce any right or
remedy under this Indenture and such Proceeding has been discontinued or
abandoned for any reason or has been determined adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the Issuer, the
Indenture Trustee and the Noteholders shall, subject to any determination in
such Proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights and remedies of the Indenture
Trustee and the Noteholders shall continue as though no such Proceeding had been
instituted.
Section 5.09. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee or to the Noteholders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
Section 5.10. Delay or Omission Not a Waiver. No delay or omission of
the Indenture Trustee or any Noteholder to exercise any right or remedy accruing
upon any Default or Event of Default shall impair any such right or remedy or
constitute a waiver of any such Default or Event of Default or an acquiescence
therein. Every right and remedy given by this Article V or by law to the
Indenture Trustee or to the Noteholders may be exercised from time to time, and
as often as may be deemed expedient, by the Indenture Trustee or the
Noteholders, as the case may be.
Section 5.11. Control by Noteholders. The Noteholders of a majority of
the outstanding principal amount of the Notes comprising the Controlling Class
shall have the right to direct the time, method and place of conducting any
Proceeding for any remedy available to the Indenture Trustee with respect to the
Notes or exercising any trust or power conferred on the Indenture Trustee;
provided, however, that
(i) such direction shall not be in conflict with any rule of
law or with this Indenture;
(ii) subject to the express terms of Section 5.04, any
direction to the Indenture Trustee to sell or liquidate the Indenture
Trust Estate shall be by the Noteholders of 100% of the outstanding
principal amount of the Notes comprising the Controlling Class;
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(iii) if the conditions set forth in Section 5.05 have been
satisfied and the Indenture Trustee elects to retain the Indenture
Trust Estate pursuant to such Section, then any direction to the
Indenture Trustee by Noteholders of less than 100% of the outstanding
principal amount of the Notes comprising the Controlling Class to sell
or liquidate the Indenture Trust Estate shall be of no force and
effect; and
(iv) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such
direction;
and provided, further, that, subject to Section 6.01, the Indenture Trustee need
not take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not consenting to such
action.
Section 5.12. Waiver of Past Defaults. Prior to the time a judgment or
decree for payment of money due has been obtained as described in Section 5.02,
the Noteholders of not less than a majority of the outstanding principal amount
of the Notes comprising the Controlling Class may waive any past Event of
Default and its consequences except an Event of Default (a) in payment when due
of principal of or interest (including, subject to the limitations of Sections
1.13(a)(iv) and 8.03(b), any Noteholders' Interest Basis Carryover) on any of
the Notes or (b) in respect of a covenant or provision hereof which cannot be
modified or amended without the consent of each Noteholder; provided, however,
that all Class A Noteholders and Class B Noteholders may waive events described
in clauses (a) and (b) hereof. In the case of any such waiver, the Issuer, the
Indenture Trustee, and the Noteholders shall be restored to their former
positions and rights hereunder, respectively; but no such waiver shall extend to
any subsequent or other Event of Default or impair any right consequent thereto.
Upon any such waiver, such Event of Default shall cease to exist and be
deemed to have been cured and not to have occurred for every purpose of this
Indenture to the extent specified in such waiver but no such waiver shall extend
to any subsequent Event of Default or impair any right consequent thereto.
Section 5.13. Undertaking for Costs. All parties to this Indenture
agree, and each Noteholder by such Noteholder's acceptance of any Note shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture Trustee, (b) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the Note
Principal Amount or (c) any suit instituted by any Noteholder for the
enforcement of the payment of principal of or interest (including any
Noteholders' Interest Basis Carryover) on any Note on or after the respective
due dates expressed in such Note and in
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this Indenture (or, in the case of redemption, on or after the applicable
Payment Date for redemption).
Section 5.14. Waiver of Stay or Extension Laws. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or at any time
hereafter in force, that may affect the covenants or the performance of this
Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Indenture Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
Section 5.15. Action on Notes. The Indenture Trustee's right to seek
and recover judgment on the Notes or under this Indenture shall not be affected
by the seeking, obtaining or application of any other relief under or with
respect to this Indenture. Neither the lien of this Indenture nor any rights or
remedies of the Indenture Trustee or the Noteholders shall be impaired by the
recovery of any judgment by the Indenture Trustee against the Issuer or by the
levy of any execution under such judgment upon any portion of the Indenture
Trust Estate or upon any of the assets of the Issuer. Any money or property
collected by the Indenture Trustee shall be applied in accordance with Section
5.04(b).
Section 5.16. Performance and Enforcement of Certain Obligations.
(a) Promptly following a request from the Indenture Trustee to do so,
the Issuer shall take all such lawful action as the Indenture Trustee may
request to compel or secure the performance and observance by AMS or the
Servicer, as applicable, of each of their obligations to the Issuer under or in
connection with the Purchase and Contribution Agreement, the Servicing Agreement
and the other Transaction Documents and to exercise any and all rights,
remedies, powers and privileges lawfully available to the Issuer under or in
connection with the Purchase and Contribution Agreement, the Servicing Agreement
and the other Transaction Documents to the extent and in the manner directed by
the Indenture Trustee, including the transmission of notices of default on the
part of the Servicer thereunder and the institution of legal or administrative
actions or proceedings to compel or secure performance by AMS or the Servicer of
each of their obligations under the Purchase and Contribution Agreement, the
Servicing Agreement or the other Transaction Documents.
(b) The Indenture Trustee, with the written consent of 66-2/3% of the
outstanding principal amount of the Notes comprising the Controlling Class,
shall exercise all rights, remedies, powers, privileges and claims of the Issuer
against AMS and the Servicer under or in connection with the Purchase and
Contribution Agreement, the Servicing Agreement or the other Transaction
Documents, including the right or power to take any action to compel or secure
performance or observance by AMS or the Servicer of each of their obligations to
the Issuer thereunder and to give any consent, request, notice, direction,
approval, extension or waiver under the Purchase and Contribution
42
Agreement, the Servicing Agreement or the other Transaction Documents and any
right of the Issuer to take such action shall be suspended.
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Article VI
INDENTURE TRUSTEE
Section 6.01. Acceptance of the Trusts. The Indenture Trustee accepts
and agrees to execute the trusts granted to it by this Indenture, but only upon
the terms and conditions set forth herein. The Indenture Trustee undertakes to
perform such duties and only such duties as are specifically set forth in this
Indenture and no implied covenants or obligations shall be read into this
Indenture against the Indenture Trustee.
In case an Event of Default has occurred of which the Indenture Trustee
has, or is deemed to have, notice in accordance with this Indenture and has not
been cured, the Indenture Trustee agrees to act in accordance with the
instructions and orders of the Noteholders as set forth in the applicable
provisions of this Indenture, but in any such event, only upon and subject to
the following expressed terms and conditions:
(a) The Indenture Trustee may execute any of the trusts or powers
hereof and perform any of its duties by or through attorneys, agents, receivers,
employees or co-trustees and shall not be answerable for the conduct of the same
if appointed in accordance with the standard specified above, and shall be
entitled to an Opinion of Counsel or advice of counsel concerning all matters of
trusts hereof and the duties hereunder, and may in all cases pay such reasonable
compensation to all such attorneys, agents, receivers, and employees as may
reasonably be employed in connection with the trusts hereof. The Indenture
Trustee may act upon an Opinion of Counsel or the opinion or advice of an
attorney or accountant rendered by it in the exercise of reasonable care. The
Indenture Trustee shall not be responsible for any loss or damage resulting from
any action or nonaction of such Person which is in good faith and in reliance
upon such opinion or advice. The Indenture Trustee shall not be responsible for
any action or inaction of the Servicer or any party hereto except as provided
herein or under applicable laws, rules and regulations.
(b) The Indenture Trustee shall not be responsible for any recital
herein, or in any Note, or for the validity of the execution by the Issuer or
the other parties of this Indenture or the other Transaction Documents, or of
any supplemental indentures or instruments of further assurance, or for the
sufficiency of the security for the Notes issued hereunder or intended to be
secured hereby, or for the value or title of the property herein conveyed or
otherwise as to the maintenance of the security hereof.
(c) The Indenture Trustee shall not be accountable for the use or
application by the Issuer of the Notes or the proceeds thereof or for the use or
application of any money paid over by the Indenture Trustee in accordance with
the provisions of this Indenture or for the use and application of other money
received by the Indenture Trustee.
(d) The Indenture Trustee shall be protected in acting upon any notice,
requisition, request, consent, certificate, order, opinion, affidavit, letter,
telegram or other paper or document reasonably believed to be genuine and
correct and to have been signed
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or sent by the proper Person or Persons. Any action taken by the Indenture
Trustee pursuant to this Indenture upon the request or authority or consent of
any Person who at the time of making such request or giving such authority or
consent is the owner of a Note shall be conclusive and binding upon all future
owners of the Notes and upon any Notes issued in exchange therefor or in place
thereof.
(e) Except as otherwise expressly provided in this Indenture, as to the
existence or nonexistence of any fact or as to the sufficiency or validity of
any instrument, paper or proceeding, the Indenture Trustee shall be entitled to
rely upon a certificate of an officer of any Noteholder as sufficient evidence
of facts therein contained, and prior to the occurrence of a default of which
the Indenture Trustee has been notified as provided in subsection (g) of this
Section, or of which by said subsection it is deemed to have notice, shall also
be at liberty to accept a dealing, transaction or action as necessary or
expedient, but may at its discretion secure such further evidence deemed
necessary or advisable, but shall in no case be bound to secure the same.
(f) The permissive right of the Indenture Trustee to do things
enumerated in this Indenture shall not be construed as a duty and the Indenture
Trustee shall not be answerable for other than its negligence or willful
misconduct; provided, however, that the Indenture Trustee shall not be liable
for any error of judgment made in good faith, unless it shall be proved that
such Person was negligent in ascertaining the pertinent facts.
(g) The Indenture Trustee shall not be required to take notice or be
deemed to have notice of any default hereunder except failure by the Issuer to
cause to be made any of the payments to it for the account of the Noteholders
required to be made by Section 3.01, or defaults under Section 5.01, unless the
Indenture Trustee shall be specifically notified in writing of such default by
the Issuer or a Noteholder.
(h) The Indenture Trustee shall not be required to give any bond or
surety in respect of the execution of the said trusts and powers or otherwise in
respect of the premises.
(i) No provision of this Indenture shall require the Indenture Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(j) All moneys received by the Indenture Trustee shall, until used or
applied or invested as herein provided, be held in trust for the purposes for
which they were received in the Collection Account, Reserve Account, Capitalized
Interest Account, Funding Account and Acquisition Account.
(k) Whether or not herein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Indenture Trustee shall be subject to the provisions
of this Section.
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(l) NOTWITHSTANDING ANY OTHER PROVISION OF THIS INDENTURE OR THE OTHER
TRANSACTION DOCUMENTS, NOTHING IN THIS INDENTURE OR THE OTHER TRANSACTION
DOCUMENTS SHALL BE CONSTRUED TO LIMIT THE LEGAL RESPONSIBILITY OF THE INDENTURE
TRUSTEE TO THE SECRETARY OF EDUCATION OR A FEDERAL GUARANTOR FOR ANY VIOLATIONS
OF STATUTORY OR REGULATORY REQUIREMENTS THAT MAY OCCUR WITH RESPECT TO STUDENT
LOANS HELD BY THE INDENTURE TRUSTEE PURSUANT TO, OR TO OTHERWISE COMPLY WITH ITS
OBLIGATIONS UNDER, THE HIGHER EDUCATION ACT OR IMPLEMENTING REGULATIONS.
Section 6.02. Fees, Charges and Expenses of Indenture Trustee. The
Indenture Trustee shall be entitled (i) to payment of the Indenture Trustee's
Fees for its services rendered hereunder pursuant to the priorities set forth in
Section 8.03(b) and (ii) to payment by the Issuer of, or reimbursement for, all
advances, reasonable counsel fees and expenses and other out-of-pocket expenses
reasonably and necessarily made or incurred by the Indenture Trustee, in
connection with such services, which shall be paid to it.
Section 6.03. Notice if Default Occurs. If a default occurs of which
the Indenture Trustee is by Section 6.01(g) required to take notice or if notice
of default be given as provided in said Section 6.01(g), then the Indenture
Trustee shall give written notice thereof by registered or certified mail to the
Issuer and the Noteholders.
Section 6.04. Intervention by Indenture Trustee. In any judicial
proceeding to which the Issuer is a party, the Indenture Trustee shall intervene
if directed to do so in writing by a majority of the outstanding principal
amount of the Notes comprising the Controlling Class.
Section 6.05. Successors. Any corporation or association into which the
Indenture Trustee may be converted or merged, or with which it may be
consolidated, or to which it may sell or transfer its corporate trust business
and assets as a whole or substantially as a whole, or any corporation or
association resulting from any such conversion, sale, merger, consolidation or
transfer to which it is a party, ipso facto, shall be and become successor
Indenture Trustee hereunder and vested with all of the title to the whole
property or trust estate and all the trusts, powers, discretions, immunities,
privileges and all other matters as was its predecessor, without the execution
or filing of any instrument or any further act, deed or conveyance on the part
of any of the parties hereto, anything herein to the contrary notwithstanding.
Section 6.06. Resignation. The Indenture Trustee may at any time resign
from the trusts hereby created by giving 90 days' written notice to the Issuer
and the Noteholders, and such resignation shall take effect at the end of such
90 days, or upon the earlier appointment and acceptance of a successor Indenture
Trustee, as provided in Section 6.08 hereof, or removal as provided in Section
6.07 hereof. Notwithstanding the foregoing, resignation of the Indenture Trustee
shall not be effective until a successor or temporary Indenture Trustee is
appointed and has accepted such appointment; provided, however, if an instrument
of acceptance shall not have been delivered within 120 days
46
after giving such notice of resignation, the resigning Indenture Trustee may
petition a court of competent jurisdiction for the appointment of a successor,
and any attorneys' fees and expenses incurred in connection with such petition
shall be payable by the Issuer.
Section 6.07. Removal. The Indenture Trustee may be removed a majority
of the outstanding principal amount of the Notes comprising the Controlling
Class at any time by an instrument in writing delivered to the Indenture
Trustee. The Issuer shall remove the Indenture Trustee if (i) the Indenture
Trustee fails to comply with Section 6.13, (ii) an Event of Bankruptcy occurs
with respect to the Indenture Trustee, (iii) a receiver or other public officer
takes charge of the Indenture Trustee or its property or (iv) the Indenture
Trustee otherwise becomes incapable of acting. Notwithstanding the foregoing,
removal of the Indenture Trustee shall not be effective until a successor is
appointed and has accepted such appointment.
Section 6.08. Appointment of Successor. In case the Indenture Trustee
shall resign or be removed, or be dissolved, or shall be in course of
dissolution or liquidation, or otherwise become incapable of acting hereunder,
or in case it shall be taken under the control of any public officer or
officers, or of a receiver appointed by a court, a successor meeting the
eligibility requirements of Section 6.13 may be appointed by the Issuer by an
instrument in writing signed by the Issuer. The Issuer shall also inform the
Rating Agencies promptly of any such resignation or removal of the Indenture
Trustee. If no appointment of a successor Indenture Trustee shall have been made
pursuant to the foregoing provisions of this Section within 120 days after the
Indenture Trustee shall have given written notice as provided in Section 6.06
hereof, the Indenture Trustee, the Issuer or a majority of the outstanding
principal amount of the Notes comprising the Controlling Class may apply to a
court of competent jurisdiction to appoint a successor Indenture Trustee. Each
such successor Indenture Trustee shall agree in writing to be bound by the
provisions of Section 10.06.
Section 6.09. Concerning Any Successor. Every successor Indenture
Trustee appointed hereunder shall execute, acknowledge and deliver to its
predecessor and also to the Issuer an instrument in writing accepting such
appointment hereunder, and thereupon such successor, without any further act,
deed or conveyance, shall become fully vested with all the estates, properties,
rights, powers, trusts, duties and obligations of its predecessor; but such
predecessor shall, nevertheless, upon receipt of a request from the Issuer
execute and deliver an instrument transferring to such successor all the
estates, properties, rights, powers and trusts of such predecessor hereunder;
and every predecessor shall deliver all securities and moneys held by it as
Indenture Trustee hereunder to its successor.
Section 6.10. Appointment of Co-Trustee. It is the purpose of this
Indenture that there shall be no violation of any law of any jurisdiction
denying or restricting the right of banking corporations or associations to
transact business as the Indenture Trustee in such jurisdiction. It is
recognized that in case of litigation under this Indenture or any other
Transaction Document or any Student Loan or related agreement, and in particular
in case of the enforcement thereof on default, or in case of a conflict of
interest, or in case
47
the Indenture Trustee deems that by reason of any present or future law of any
jurisdiction it may not exercise any of the powers, rights or remedies herein
granted to the Indenture Trustee or hold title to the properties, in trust, as
herein granted, or take any other action which may be desirable or necessary in
connection therewith, it may be necessary that the Indenture Trustee appoint an
additional institution, which must be a commercial bank with trust powers, as a
separate or co-Trustee. The following provisions of this Section are intended to
accomplish these ends.
In the event that the Indenture Trustee appoints an additional
individual or institution as a separate or co-Trustee, each and every remedy,
power, right, claim, demand, cause of action, immunity, estate, title, interest
and lien expressed or intended by this Indenture to be exercised by or vested in
or conveyed to the Indenture Trustee with respect thereto shall be exercisable
by and vest in such separate or co-Trustee but only to the extent necessary to
enable such separate or co-Trustee to exercise such powers, rights and remedies,
and every covenant and obligation necessary to the exercise thereof by such
separate or co-Trustee shall run to and be enforceable by either of them.
Should any instrument in writing from the Issuer be required by the
separate or co-Trustee so appointed by the Indenture Trustee for more fully and
certainly vesting in and confirming to him, her or it such properties, rights,
powers, trusts, duties and obligations, any and all such instruments in writing
shall, on request, be executed, acknowledged and delivered by the Issuer. In
case any separate or co-Trustee, or a successor to either, shall die, become
incapable of acting, resign or be removed, all the estates, properties, rights,
powers, trusts, duties and obligations of such separate or co-Trustee, so far as
permitted by law, shall vest in and be exercised by the Indenture Trustee until
the appointment of a new Indenture Trustee or a successor to such separate or
co-Trustee.
Section 6.11. Successor Indenture Trustee as Trustee of Funds. In the
event of a change of the Indenture Trustee the predecessor which has resigned or
been removed shall cease to be trustee of any funds then held by it hereunder
and the successor Indenture Trustee shall become such trustee.
Section 6.12. Indemnification.
(a) The Indenture Trustee shall not be under any obligation or duty to
perform any act at the request of the Noteholders or the Issuer or to institute
or defend any suit in respect hereof or to exercise any remedy hereunder unless
properly indemnified to its satisfaction subject to Section 6.01(i) hereof,
except making payment of principal and interest or accelerating the Notes as
provided herein. The Indenture Trustee shall not be required to take notice, or
be deemed to have knowledge, of any default of the Issuer, except as provided in
Section 6.01(g).
(b) The Issuer agrees to indemnify the Indenture Trustee for, and to
hold it harmless against, any loss, liability or expense, including reasonable
attorneys' fees and expenses, incurred without negligence or bad faith or
willful misconduct on its part, arising out of or in connection with the
acceptance or administration of the trust or trusts
48
hereunder, including the costs and expenses of defending itself against any
claim or liability in connection with the exercise or performance of any of its
powers or duties hereunder except as a result of negligence, bad faith or
willful misconduct on its part and except any liability to the DOE on account of
the Indenture Trustee's status as such.
Section 6.13. Eligibility Requirements for Indenture Trustee. The
Indenture Trustee and any successor Indenture Trustee shall at all times be (i)
an institution insured by the Federal Deposit Insurance Corporation, (ii) a
corporation or national bank or national banking association organized and doing
business under the laws of the United States of America or any state thereof,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of not less than $50,000,000 and subject to supervision or
examination by federal and state authority, (iii) an institution whose long-term
senior unsecured debt is rated at least "Ba2", in the case of Moody's, or
"BBB-", in the case of Fitch, Inc. (or in the case of each Rating Agency, such
lower rating as is confirmed by such Rating Agency in writing would not
adversely affect any of the ratings then assigned to the Notes), and (iv)
unaffiliated with the Issuer or AMS. If such corporation, national bank or
national banking association publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then, for the purposes of this Section, the combined capital and
surplus of such corporation, national bank or national banking association shall
be deemed to be its combined capital and surplus as set forth in its most recent
report or condition so published. If at any time the Indenture Trustee shall
cease to be eligible in accordance with the provisions of this Section, the
Indenture Trustee shall resign immediately in the manner and with the effect
specified in Section 6.06. No person shall become a successor trustee hereunder
if the succession of such Person would result in the qualification, downgrading
and withdrawal of any of the ratings then assigned by the Ratings Agencies to
the Notes.
Section 6.14. Tax Information. The Indenture Trustee shall deliver to
each Noteholder such information as may be required to enable such holder to
prepare its federal and state income tax returns, provided that such information
shall consist only of Form 1099's or any successor forms required to be given to
Noteholders pursuant to the Code.
Article VII
[RESERVED]
Article VIII
SETTLEMENTS
Section 8.01. Trust Accounts; Investments by Indenture Trustee.
(a) Trust Accounts. On or before the Closing Date, the Indenture
Trustee shall establish, for the benefit of the Noteholders, to the extent of
their interests therein as provided herein, the Collection Account, Reserve
Account, Capitalized Interest Account,
49
Funding Account and Acquisition Account, which Trust Accounts shall be
maintained as Eligible Deposit Accounts. Subject to the further provisions of
this Section 8.01, the Indenture Trustee shall, upon receipt deposit into such
Trust Accounts all amounts received by it which are required to be deposited
therein in accordance with the provisions hereof. All such amounts and all
investments made with such amounts, including all income and other gain from
such investments, shall be held by the Indenture Trustee in such Trust Accounts
as part of the Collateral as herein provided, subject to withdrawal by the
Indenture Trustee in accordance with, and for the purposes specified in the
provisions of, this Indenture.
(b) Administration of Payments. The Indenture Trustee shall assume that
any amount remitted to it by the Servicer, any Sub-servicer or the Issuer is to
be deposited into the Collection Account pursuant to Section 8.03. The Indenture
Trustee may establish from time to time such deadline or deadlines as it shall
determine are reasonable or necessary in the administration hereof after which
all amounts received or collected by the Indenture Trustee on any day shall not
be deemed to have been received or collected until the next succeeding Business
Day.
(c) No Set-Off. None of the Eligible Lender Trustee or the Indenture
Trustee shall have any right of set-off against Collections, Trust Accounts, or
any investment therein, whether or not commingled to satisfy any other
obligations, and each of the Eligible Lender Trustee and the Indenture Trustee
hereby irrevocably waives any and all such rights.
(d) Investments. Amounts in the Trust Accounts shall be invested and
reinvested by the Indenture Trustee in Eligible Investments. Subject to the
restrictions on the maturity of investments set forth in Section 8.01(f), an
Issuer Order may authorize the Indenture Trustee to make the specific Eligible
Investments set forth therein, to make Eligible Investments from time to time
consistent with the general instructions set forth therein, or to make specific
Eligible Investments pursuant to instructions received in writing or by
facsimile transmission from the employees or agents of the Issuer identified
therein, in each case in such amounts as such Issuer Order shall specify. The
Issuer agrees to report as income for financial reporting and tax purposes (to
the extent reportable) all investment earnings on amounts in the Trust Accounts.
(e) Investments in the Absence of an Issuer Order; Notice of Uninvested
Cash. In the event that either (i) the Issuer shall have failed to give
investment directions to the Indenture Trustee by 11:00 a.m.,
New York City
time, on any Business Day on which there may be uninvested cash deposited in the
Trust Accounts or (ii) an Event of Default or Unmatured Event of Default shall
have occurred and be continuing, then the Indenture Trustee shall invest such
funds in Eligible Investments described in clause (iv) of the definition
thereof. All Eligible Investments made by the Indenture Trustee shall mature no
later than the maturity date therefor permitted by Section 8.01(f).
(f) Maturity of Eligible Investments. All Eligible Investments shall
mature (or, with respect to mutual fund investments, shall be redeemable without
premium or penalty) no later than the Business Day prior to each Fee Remittance
Date or Payment
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Date, as applicable. All income or other gains from the investment of moneys
deposited in the Trust Accounts shall be deposited by the Indenture Trustee in
the Collection Account upon receipt and shall be deemed to constitute a portion
of the Available Funds for the related Payment Date or Fee Remittance Date, as
applicable.
(g) Form of Investment. Any investment of any funds in the Trust
Accounts shall be made under the following terms and conditions:
(i) each such investment shall be made in the name of the
Indenture Trustee, for the benefit of the Issuer and the Noteholders
(to the extent of their respective interests therein), or in the name
of a nominee of the Indenture Trustee; and
(ii) any certificate or other instrument evidencing such
investment shall be delivered directly to the Indenture Trustee, and
the Indenture Trustee shall have sole possession of such instrument,
and all income on such investment.
(h) [Reserved.]
(i) Indenture Trustee Not Liable. The Indenture Trustee shall not in
any way be held liable by reason of any insufficiency in the Trust Accounts
resulting from losses on investments made in accordance with the provisions of
this Section 8.01 (but the institution serving as Indenture Trustee shall at all
times remain liable for its own debt obligations, if any, constituting part of
such investments) except for negligence or intentional misconduct. The Indenture
Trustee shall not be liable for any investment made by it in accordance with
this Section 8.01 on the grounds that it could have made a more favorable
investment.
Section 8.02. Collection of Moneys. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable to
or receivable by the Indenture Trustee pursuant to this Indenture. The Indenture
Trustee shall apply all such money received by it as provided in this Indenture.
Except as otherwise expressly provided in this Indenture, if any default occurs
in the making of any payment or performance under any agreement or instrument
that is part of the Indenture Trust Estate, the Indenture Trustee may take such
action as may be appropriate to enforce such payment or performance, including
the institution and prosecution of appropriate Proceedings in accordance with
the terms hereof. Any such action shall be without prejudice to any right to
claim a Default or Event of Default under this Indenture and any right to
proceed thereafter as provided in Article V.
If at any time the Issuer shall receive any Collections on or in
respect of any Financed Student Loan (including any Student Loan Guaranty
Payment or Subsidy Payment), it shall hold such Collections for the benefit of
the Indenture Trustee (for the benefit of the Noteholders), shall segregate such
payment from the other property of the Issuer and shall deliver such payment in
the form received (endorsed as necessary for
51
transfer) to the Indenture Trustee for deposit in the Collection Account in
accordance with Section 8.03.
Section 8.03. Collection Account.
(a) Deposits. The Issuer shall remit all Collections received by it to
the Collection Account no later than the close of business on the second
Business Day after receipt thereof, and the Servicer shall be instructed to
remit all Collections received by it in accordance with the Servicing Agreement
to the Collection Account for deposit therein. In addition, the Issuer shall
deposit to the Collection Account no later than the close of business on each
Determination Date the aggregate Purchase Amounts payable by the Issuer pursuant
to Section 2.02. If the Issuer shall receive any written statement from the
Servicer stating that any amount previously paid by the Servicer to the
Indenture Trustee or Issuer and deposited into the Collection Account was so
paid and deposited into the Collection Account in error, the Issuer, if it shall
concur as to the truth of such statement, shall forward to the Indenture Trustee
in writing, together with such security or indemnity as may be required by it to
hold the Indenture Trustee harmless, a copy of such written statement from the
Servicer, along with an instruction to the Indenture Trustee to withdraw such
amount from the Collection Account and pay such amount to the Servicer.
Following receipt from the Issuer of the Servicer's statement and the written
instructions set forth in the preceding sentence, so long as no Event of Default
shall have occurred and be continuing, the Indenture Trustee shall withdraw such
amount from the Collection Account and pay such amount to such Servicer.
(b) Payment Date Procedures and Fee Remittance Date Procedures.
(i) Amounts on deposit on any Payment Date in the Collection
Account representing Available Funds received during or with respect to
the Related Collection Period shall be withdrawn from the Collection
Account on such Payment Date as specified below no later than 11:00
a.m. (
New York City time), in the amounts required, and applied in the
following order of priority, in each case to the extent of Available
Funds remaining after application of each clause representing a higher
priority:
first, (a) an amount equal to the Class A Noteholders' Interest
Distribution Amount shall be paid to the Class A Noteholders, and (b) all net
amounts, if any, due and owing a Swap Counterparty (other than any termination
payments under the related Swap Agreement) shall be paid to the Swap
Counterparty (such amounts to be deposited or paid under (a) and (b) of this
clause first pari pasu);
second, an amount equal to the Class B Noteholders' Interest
Distribution Amount shall be paid to the Class B Noteholders;
third, if the amount on deposit in the Reserve Account is less than the
Specified Reserve Account Balance, an amount sufficient to cause the amount on
deposit in the Reserve Account to equal the Specified Reserve Account Balance
will be deposited into the Reserve Account;
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fourth, if such Payment Date occurs after the end of the Acquisition
Period, an amount equal to the Principal Distribution Amount shall be paid as a
distribution of principal FIRST to the Class A Noteholders until the Class A
Note Principal Amount shall be reduced to zero and SECOND to the Class B
Noteholders until the Class B Note Principal Amount shall be reduced to zero;
fifth, if such Payment Date occurs on or after the Parity Date, an
amount equal to the Class A Noteholders' Interest Basis Carryover shall be paid
to the Class A Noteholders;
sixth, if such Payment Date occurs on or after the Parity Date, an
amount equal to the Class B Noteholders' Interest Basis Carryover shall be paid
to the Class B Noteholders;
seventh, an amount equal to any amounts due and owing to a Swap
Counterparty (other than amounts paid in accordance with clause first above)
shall be paid to the Swap Counterparty; and
eighth, any Available Funds remaining in the Collection Account after
the distributions pursuant to clauses first through seventh above (a) on each
Payment Date occurring during the Acquisition Period, shall be deposited into
the Acquisition Account and used to purchase Additional Financed Student Loans
from the Seller and (b) on each Payment Date occurring after the Acquisition
Period shall be paid to the Issuer free and clear of the lien of the Indenture
on such Payment Date.
(ii) Amounts on deposit on any Fee Remittance Date in the
Collection Account representing Available Funds received during or with
respect to the related Collection Period shall be withdrawn from the
Collection Account on such Fee Remittance Date as specified below no
later than 11:00 a.m. (
New York City time), in the amounts required,
and applied in an amount equal to the sum of (i) the Servicing Fee
Amount for the Financed Student Loans with respect to such Fee
Remittance Date, plus any overdue Servicing Fee Amounts, (ii) the
Eligible Lender Trustee's Fees with respect to such Fee Remittance
Date, plus any overdue Eligible Lender Trustee's Fees and (iii) the
Indenture Trustee's Fees with respect to such Fee Remittance Date, plus
any overdue Indenture Trustee's Fees, and shall in each case be paid to
the Servicer, the Eligible Lender Trustee (in the case of the Eligible
Lender Trustee's Fee) and the Indenture Trustee (in the case of the
Indenture Trustee's Fee), pari passu (based on the ratio of each such
amount to the total of such amounts), on such Fee Remittance Date.
(c) [Reserved].
(d) [Reserved].
(e) [Reserved].
(f) [Reserved].
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Section 8.04. Reserve Account.
(a) On the Closing Date, the Issuer shall deposit the Reserve Account
Initial Deposit into the Reserve Account.
(b) On each Payment Date (after giving effect to any deposit to the
Reserve Account pursuant to Section 8.03(b)(i) third, and after giving effect to
any withdrawal from the Reserve Account pursuant to Section 8.04(d)), the Issuer
shall instruct the Indenture Trustee to withdraw from the Reserve Account the
amount of any Reserve Account Excess and deposit such amount into the Collection
Account to be allocated and distributed in accordance with Section 8.03(b).
(c) Following the payment in full of the Note Principal Amount and of
all other amounts owing or to be distributed hereunder to the Servicer, the
Indenture Trustee (such Servicer and Indenture Trustee fees to be paid pari
pasu), the Eligible Lender Trustee and the Noteholders (including any
Noteholders' Interest Basis Carryover), any amount remaining on deposit in the
Reserve Account shall be distributed to the Issuer. The Issuer shall in no event
be required to refund any amounts properly distributed pursuant to this Section
8.04(c).
(d) Amounts on deposit in the Reserve Account will be applied (i) on
each Fee Remittance Date to cover any shortfalls (as indicated in Section
8.03(b)(ii)) in payments of the Servicing Fee Amount and the Trustee Fees and
any such amounts that are overdue Servicing Fee Amounts and Trustee Fees (such
fees to be paid pari passu), in each case for which Available Funds allocable on
such Fee Remittance Date are insufficient to pay such amounts, (ii) on each
Payment Date to cover any shortfall in the Noteholders' Interest Distribution
Amount required to be paid on such Payment Date, for which Available Funds
allocable thereto for such Payment Date and, for each Payment Date up through
and including July 2004, amounts on deposit in the Capitalized Interest Account,
are insufficient to make such payments and (iii) only on the Payment Date on
which either (A) the Final Scheduled Payment Date (whether as scheduled or if
accelerated after an Event of Default) for a Class of Notes occurs or (B) after
allocating all Available Funds and making any withdrawals required under clause
(i) and (ii) above, the remaining balance on deposit in the Reserve Account
exceeds the remaining principal balance of the Notes, in the case of clause (A)
to pay the remaining principal balance of the maturing Class of Notes, and in
the case of clause (B), to pay the remaining principal balance of all the Notes
outstanding.
Section 8.05. Funding Account and Acquisition Account.
(a) On the Closing Date, the Issuer shall deposit into the Funding
Account $[94,602,119] from the proceeds of the issuance of the Notes.
(b) On each applicable Transfer Date during the Funding Period, the
Issuer shall instruct the Indenture Trustee to withdraw from the Funding Account
an amount equal to the purchase price to be paid by the Issuer for Additional
Financed Student Loans transferred to the Eligible Lender Trustee on behalf of
the Issuer on such Transfer
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Date and to distribute such amount to or upon the order of the Issuer upon
satisfaction of the conditions set forth in Section 3.2 of the Purchase and
Contribution Agreement with respect to such transfer. In addition, on each
applicable Transfer Date during the Acquisition Period, the Issuer shall
instruct the Indenture Trustee to withdraw from the Acquisition Account an
amount equal to the purchase price to be paid by the Issuer for Additional
Financed Student Loans transferred to the Eligible Lender Trustee on behalf of
the Issuer on such Transfer Date and to distribute such amount to or upon the
order of the Issuer upon satisfaction of the conditions set forth in Section 3.2
of the Purchase and Contribution Agreement with respect to such transfer.
(c) On each Transfer Date during the Funding Period the Issuer shall
instruct the Indenture Trustee as to whether the aggregate purchase price of the
Additional Financed Student Loans then being purchased shall be withdrawn form
the Acquisition Account or from the Funding Account, or alternatively the Issuer
shall specify to the Indenture Trustee the portion of such purchase price that
is to be withdrawn from each such account.
(d) The aggregate amount to be withdrawn from either or both of the
Funding Account and the Acquisition Account on any Transfer Date to pay the
purchase price of any Additional Financed Student Loan shall in no event exceed
the Principal Balance of such Student Loan as of the related Cut-off Date.
(e) If the amount remaining in the Funding Account is less than or
equal to $1,000,000 on the date on which the Funding Period ends, after giving
effect to any reductions in the Funding Account as the result of the purchase of
Additional Financed Student Loans by the Issuer on such date, the Indenture
Trustee shall (i) if the Acquisition Period has not yet terminated, deposit the
amount so remaining in the Funding Account on such date into the Acquisition
Account or (ii) if the Acquisition Period has terminated, apply the amount so
remaining to pay principal of the Notes on the next Payment Date. If the amount
remaining in the Funding Account is more than $1,000,000 on the date on which
the Funding Period ends after giving effect to any reductions in the Funding
Account as the result of the purchase of Additional Financed Student Loans by
the Issuer on such date, the Indenture Trustee shall apply the amounts remaining
on deposit in the Funding Account on such date to pay principal of the Notes on
the next Payment Date. Any amount remaining on deposit in the Acquisition
Account on the date on which the Acquisition Period ends, after giving effect to
any reductions in the Acquisition Account as the result of the purchase of
Additional Financed Student Loans by the Issuer on such date, shall be applied
by the Indenture Trustee to pay principal of the Notes on the next Payment Date.
Section 8.06. [Reserved]
Section 8.07. [Reserved]
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Section 8.08. [Reserved]
Section 8.09. Capitalized Interest Account.
(a) On the Closing Date, the Issuer shall deposit into the Capitalized
Interest Account $2,250,000. On each Payment Date up through and including July
2004, the Issuer shall instruct the Indenture Trustee to transfer from the
Capitalized Interest Account to the Collection Account the Capitalized Interest
Requirement for such Payment Dates.
(b) Immediately after the last Payment Date with respect to which the
Capitalized Interest Requirement may be transferred to the Collection Account as
provided in clause (a) above, any amounts remaining in the Capitalized Interest
Account shall be paid to the Issuer free and clear of the Indenture. Immediately
after such transfers, the Capitalized Interest Account shall be closed.
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Article IX
REDEMPTION
Section 9.01. Redemption.
(a) [Reserved]
(b) [Reserved]
(c) The Issuer, at its option, may elect to redeem the outstanding
Class A Notes, in whole or in part, on each Payment Date, at an aggregate price
equal to the outstanding principal amount of the Class A Notes so redeemed, plus
accrued interest thereon to the respective dates of redemption and any unpaid
Noteholders' Interest Basis Carryover relating to the Class A Notes so redeemed.
Notice of any redemption pursuant to this Section 9.01(c) shall be furnished by
the Issuer to the Indenture Trustee not less than 30 nor more than 60 days prior
to the Redemption Date whereupon all of the amounts set forth above in this
Section 9.01(c) shall be payable on such Redemption Date. To the extent that
redemption pursuant to this Section 9.01(c) is a partial redemption, amounts
paid by the Issuer to the Class A Noteholders to redeem the Outstanding Notes
shall be paid pro rata within such Class.
(d) The Issuer, at its option but only after the Class A Notes have
been paid in full whether by redemption or otherwise, may elect to redeem the
outstanding Class B Notes, in whole or in part, on each Payment Date, at an
aggregate price equal to the outstanding principal amount of the Class B Notes
so redeemed, plus accrued interest thereon to the date of redemption and any
unpaid Noteholders' Interest Basis Carryover relating to the Class B Notes so
redeemed. Notice of any redemption pursuant to this Section 9.01(d) shall be
furnished by the Issuer to the Indenture Trustee not less than 30 nor more than
60 days prior to the Redemption Date whereupon all of the amounts set forth
above in this Section 9.01(d) shall be payable on such Redemption Date. To the
extent that redemption pursuant to this Section 9.01(d) is a partial redemption,
amounts paid by the Issuer to the Class B Noteholders to redeem the Outstanding
Notes shall be paid pro rata within such Class.
Section 9.02. Form of Redemption Notice. Notice of redemption under
Section 9.01 shall be given by the Indenture Trustee by first-class mail,
postage prepaid, or by facsimile, mailed or transmitted on or prior to the
applicable Redemption Date to each Noteholder, as of the close of business on
the Record Date preceding the applicable Redemption Date, at such Noteholder's
address or facsimile number appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
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(iii) in the case of redemption in full, the place where such
Notes are to be surrendered for payment of the Redemption Price (which
shall be the office or agency of the Issuer to be maintained as
provided in Section 1.03).
Notice of redemption of the Notes shall be given by the Indenture
Trustee in the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Noteholder of any Note shall not
impair or affect the validity of the redemption of any other Note.
Section 9.03. Notes Payable on Redemption Date. The Notes or portions
thereof to be redeemed shall on the Redemption Date become due and payable at
the Redemption Price and (unless the Issuer shall default in the payment of the
Redemption Price) no interest shall accrue on the Redemption Price for any
period after the date to which accrued interest is calculated for purposes of
calculating the Redemption Price.
Article X
MISCELLANEOUS
Section 10.01. Amendments, Etc.
(a) Without the consent of any Noteholders, the Issuer and the
Indenture Trustee, at any time and from time to time, may enter into one or more
indentures supplemental hereto, in form satisfactory to the Indenture Trustee,
for any of the following purposes:
(i) to add to the covenants of the Issuer for the benefit of
the Noteholders, or to surrender any right or power herein conferred
upon the Issuer;
(ii) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein; or
(iii) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or to better assure,
convey and confirm unto the Indenture Trustee any property subject or
required to be subjected to the lien of this Indenture; or
(iv) to evidence and provide for the acceptance of the
appointment of a successor Indenture Trustee; or
(v) add, change or eliminate any other provision herein in any
manner;
provided such action pursuant to this Section 10.01(a) shall not
materially and adversely affect the interests of the Noteholders in any respect.
The Indenture Trustee shall promptly deliver to each Noteholder and the
Rating Agencies a copy of any supplemental indenture entered into pursuant to
this Section 10.01(a).
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(b) With the written consent of the Holders of not less than 66-2/3% of
the outstanding principal amount of the Notes comprising the Controlling Class,
the Issuer and the Indenture Trustee may enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Indenture or of
modifying in any manner the rights of the Noteholders under this Indenture;
provided, however, that no supplemental indenture shall, without the written
consent of the Holder of each Outstanding Note affected thereby,
(i) change the Final Scheduled Payment Date of any Note or the
principal payments or interest payments due or to become due on any
Payment Date with respect to any Note, or change the priority of
payment thereof as set forth herein, or reduce the principal amount
thereof or the Note Rate thereon, or change the place of payment where,
or the coin or currency in which, any Note or the interest thereon is
payable, or impair the right to institute suit for the enforcement of
any such payment on or after the maturity thereof;
(ii) reduce the percentage of the Note Principal Amount
required for any such supplemental indenture pursuant to Section
10.01(b) hereof, for any waiver of compliance with provisions of this
Indenture or Events of Default and their consequences, or for any act
of Noteholders;
(iii) modify any of the provisions of this Section except to
increase any percentage or fraction set forth therein or to provide
that certain other provisions of this Indenture cannot be modified or
waived without the consent of the Holder of each Outstanding Note
affected thereby;
(iv) modify or alter the provisions of the proviso to the
definition of the term "Outstanding"; or
(v) permit the creation of any lien ranking prior to or on a
parity with the lien of this Indenture with respect to any part of the
Indenture Trust Estate or terminate the lien of this Indenture on any
property at any time subject hereto or deprive any Noteholder of the
security afforded by the lien of this Indenture; or
(vi) result in a taxable event to any Class of Noteholders.
(c) In executing any supplemental indenture, the Indenture Trustee
shall be entitled to receive and shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated to, enter into any supplemental indenture which affects the
Indenture Trustee's own rights, duties, protections, or immunities under this
Indenture or otherwise.
(d) Upon the execution of any supplemental indenture under this Section
10.01, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes, and
every Noteholder of
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Notes theretofore or thereafter authenticated and delivered hereunder shall be
bound thereby.
(e) Notwithstanding the foregoing, the effectiveness of any amendments
to the Indenture shall be subject to satisfaction of the Rating Agency Condition
with respect to such action.
Section 10.02. Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including facsimile communication) and shall be personally delivered or sent by
express mail or courier or by certified mail, postage prepaid, or by facsimile,
to the intended party at the address or facsimile number of such party set forth
under its name on the signature pages hereof or at such other address or
facsimile number as shall be designated by such party in a written notice to the
other parties hereto. All such notices and communications shall be effective,
(a) if personally delivered or sent by express mail or courier or if sent by
certified mail, when received, and (b) if transmitted by facsimile, when sent,
receipt confirmed by telephone or electronic means.
Section 10.03. No Waiver; Remedies. No failure on the part of the
Issuer, the Indenture Trustee or any Noteholder to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof (unless waived
in writing); nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.
Section 10.04. Binding Effect; Survival. This Indenture shall be
binding upon and inure to the benefit of the Issuer, the Indenture Trustee, the
Noteholders, and their respective successors and assigns. This Indenture shall
create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect until the
Final Scheduled Payment Date. The rights and remedies with respect to any breach
of any representation and warranty made by the Issuer pursuant to Article II and
the indemnification and payment provisions of Article VI, and Section 10.05 and
10.06 shall be continuing and shall survive any termination of this Indenture.
Section 10.05. Costs, Expenses and Taxes. The Issuer agrees to pay
within three Business Days of demand:
(a) all reasonable costs and expenses incurred by the Indenture Trustee
and its Affiliates in connection with the negotiation, preparation, execution
and delivery, the administration (including periodic auditing and monitoring
fees of the Ratings Agencies), the amendment to, or waiver of, or the
enforcement of, or any actual or claimed breach of, this Indenture and the other
Transaction Documents, including, without limitation (i) the reasonable fees and
expenses of counsel to any of such Persons incurred in connection with any of
the foregoing or in advising such Persons as to their respective rights and
remedies under any of the Transaction Documents, and (ii) all reasonable
out-of-pocket expenses (including reasonable fees and expenses of independent
60
accountants), incurred in connection with any review of the Issuer's, the
Servicer's or a Sub-servicer's books and records either prior to the execution
and delivery hereof or pursuant to this Indenture, the Servicing Agreement or a
Sub-servicing Agreement; and
(b) all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of this
Indenture or the other Transaction Documents, and agrees to indemnify the
Indenture Trustee against any liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes and fees.
Section 10.06. No Proceedings. Notwithstanding any provision hereof to
the contrary, the Indenture Trustee, by entering into this Indenture, and each
Noteholder by accepting a Note, hereby covenant and agree that they will not at
any time institute against the Issuer, or join in any institution against the
Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating to
the Notes, this Indenture or any of the Transaction Documents. The provisions of
this Section 10.06 shall survive the termination of this Indenture.
Section 10.07. Captions and Cross References. The various captions
(including, without limitation, the table of contents) in this Indenture are
provided solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Indenture. Unless otherwise indicated,
references in this Indenture to any Section, Appendix, Schedule or Exhibit are
to such Section of or Appendix, Schedule or Exhibit to this Indenture, as the
case may be, and references in any Section, subsection, or clause to any
subsection, clause or subclause are to such subsection, clause or subclause of
such Section, subsection or clause.
Section 10.08. Integration. This Indenture and the other Transaction
Documents, contains a final and complete integration of all prior expressions by
the parties hereto with respect to the subject matter hereof and shall
constitute the entire understanding among the parties hereto with respect to the
subject matter hereof, superseding all prior oral or written understandings.
Section 10.09. Governing Law. THIS INDENTURE, INCLUDING THE RIGHTS AND
DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE
PERFECTION OF THE INTERESTS OF NOTEHOLDERS IN THE COLLATERAL IS GOVERNED BY THE
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK. THE PARTIES AGREE
THAT ALL ACTIONS AND PROCEEDINGS ARISING OUT OF THIS AGREEMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY SHALL BE BROUGHT IN THE COUNTY OF NEW YORK AND,
IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING, SUBMIT TO THE JURISDICTION OF,
AND VENUE IN, SUCH COUNTY.
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Section 10.10. Waiver of Jury Trial. THE ISSUER HEREBY EXPRESSLY WAIVES
ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND
ANY RIGHTS UNDER THIS INDENTURE, ANY OTHER TRANSACTION DOCUMENT OR UNDER ANY
AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY BE IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING OR OTHER
RELATIONSHIP EXISTING IN CONNECTION WITH THIS INDENTURE OR ANY OTHER TRANSACTION
DOCUMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT A JURY TRIAL.
Section 10.11. Execution in Counterparts. This Indenture may be
executed in any number of counterparts and by the different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement.
Section 10.12. Usury. The amount of interest payable or paid on any
Note under the terms of this Indenture shall be limited to an amount that shall
not exceed the maximum nonusurious rate of interest allowed by the applicable
laws of the State of New York or any applicable law of the United States of
America permitting a higher maximum nonusurious rate that preempts such
applicable New York laws, which could lawfully be contracted for, charged or
received (the "Highest Lawful Rate"). In the event any payment of interest on
any Note exceeds the Highest Lawful Rate, the Issuer stipulates that such excess
amount will be deemed to have been paid to the applicable Noteholder as a result
of an error and the Noteholder receiving such excess payment shall promptly,
upon discovery of such error or upon notice thereof from the Indenture Trustee
on behalf of the Issuer, refund the amount of such excess or, at the option of
such Noteholder, apply the excess to the payment of principal of such Note, if
any, remaining unpaid. In addition, all sums paid or agreed to be paid to the
Indenture Trustee for the benefit of Noteholders for the use, forbearance or
detention of money shall, to the extent permitted by applicable law, be
amortized, prorated, allocated and spread throughout the full term of such
Notes.
Section 10.13. Compliance Certificates and Opinions. Every certificate
or opinion with respect to compliance with a condition or covenant provided for
in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as to
whether such covenant or condition has been complied with; and
62
(iii) a statement as to whether, in the opinion of each such
signatory such condition or covenant has been complied with.
[SIGNATURES BEGIN ON FOLLOWING PAGE]
63
IN WITNESS WHEREOF, the parties have caused this Indenture to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
AMS-2 2002, LP,
as Issuer
By: AMS-2 SPC-1, INC.,
as General Partner
By:
---------------------------------------------
Address: One AMS Place
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (508) 235-2944
BANK ONE, NATIONAL ASSOCIATION,
as Indenture Trustee and Eligible Lender Trustee
By:
---------------------------------------------
Name:
Title:
Address: 1 Bank ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust
Services Division
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Solely for the purpose of making
the representations and warranties set
forth in Section 2.03
AMS-2 SPC-1, INC.
By:
-----------------------------------
Name:
Title:
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