INDENTURE
between
SMS STUDENT LOAN TRUST 1998-A,
as Issuer
and
BANKERS TRUST COMPANY,
not in its individual capacity but
solely as Indenture Trustee
Dated as of May 1, 1998
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Usage
SECTION 1.01. Definitions and Usage...................... 2
SECTION 1.02. Incorporation by Reference of Trust
Indenture Act.............................. 2
ARTICLE II
The Notes
SECTION 2.01. Form....................................... 3
SECTION 2.02. Execution, Authentication and Delivery..... 3
SECTION 2.03. Temporary Notes............................ 4
SECTION 2.04. Registration; Registration of Transfer
and Exchange............................... 4
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen
Notes...................................... 7
SECTION 2.06. Persons Deemed Owner....................... 8
SECTION 2.07. Payment of Principal and Interest;
Defaulted Interest; Noteholders' Interest
Basis Carryover............................ 8
SECTION 2.08. Cancellation............................... 10
SECTION 2.09. Release of Collateral...................... 11
SECTION 2.10. Book-Entry Notes........................... 11
SECTION 2.11. Notices to Clearing Agency................. 12
SECTION 2.12. Definitive Notes........................... 12
SECTION 2.13. [Reserved]................................. 12
ARTICLE III
Covenants
SECTION 3.01. Payment to Noteholders..................... 12
SECTION 3.02. Maintenance of Office or Agency............ 13
SECTION 3.03. Money for Payments to Be Held in Trust..... 13
SECTION 3.04. Existence.................................. 15
SECTION 3.05. Protection of Indenture Trust Estate....... 15
SECTION 3.06. Opinions as to Indenture Trust Estate...... 16
SECTION 3.07. Performance of Obligations; Servicing of
Student Loans.............................. 16
SECTION 3.08. Negative Covenants......................... 19
SECTION 3.09. Annual Statement as to Compliance.......... 20
SECTION 3.10. Issuer May Consolidate, etc., Only on
Certain Terms.............................. 20
SECTION 3.11. Successor or Transferee.................... 22
SECTION 3.12. No Other Business.......................... 22
SECTION 3.13. No Borrowing............................... 22
SECTION 3.14. Obligations of Servicer and
Administrator.............................. 23
SECTION 3.15. Guarantees, Loans, Advances and Other
Liabilities................................ 23
SECTION 3.16. Capital Expenditures....................... 23
SECTION 3.17. Restricted Payments........................ 23
SECTION 3.18. Notice of Events of Default................ 23
SECTION 3.19. Further Instruments and Acts............... 24
SECTION 3.20. Removal of Administrator................... 24
ARTICLE IV
Satisfaction and Discharge
SECTION 4.01. Satisfaction and Discharge of Indenture.... 24
SECTION 4.02. Application of Trust Money................. 25
SECTION 4.03. Repayment of Monies Held by Paying
Agent...................................... 26
SECTION 4.04. Auction of Financed Student Loans.......... 26
ARTICLE V
Remedies
SECTION 5.01. Events of Default.......................... 26
SECTION 5.02. Acceleration of Maturity; Rescission and
Annulment.................................. 28
SECTION 5.03. Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee........... 29
SECTION 5.04. Remedies; Priorities....................... 31
SECTION 5.05. Optional Preservation of the Indenture
Trust Estate............................... 34
SECTION 5.06. Limitation of Suits........................ 34
SECTION 5.07. Unconditional Rights of Noteholders to
Receive Principal and Interest............. 35
SECTION 5.08. Restoration of Rights and Remedies......... 35
SECTION 5.09. Rights and Remedies Cumulative............. 36
SECTION 5.10. Delay or Omission Not a Waiver............. 36
SECTION 5.11. Control by Noteholders..................... 36
SECTION 5.12. Waiver of Past Defaults.................... 37
SECTION 5.13. Undertaking for Costs...................... 37
SECTION 5.14. Waiver of Stay or Extension Laws........... 37
SECTION 5.15. Action on Notes............................ 38
SECTION 5.16. Performance and Enforcement of Certain
Obligations................................ 38
ARTICLE VI
The Indenture Trustee
SECTION 6.01. Duties of Indenture Trustee................ 39
SECTION 6.02. Rights of Indenture Trustee................ 40
SECTION 6.03. Individual Rights of Indenture Trustee..... 41
SECTION 6.04. Indenture Trustee's Disclaimer............. 41
SECTION 6.05. Notice of Defaults......................... 41
SECTION 6.06. Reports by Indenture Trustee to
Noteholders................................ 42
SECTION 6.07. Compensation and Indemnity................. 42
SECTION 6.08. Replacement of Indenture Trustee........... 43
SECTION 6.09. Successor Indenture Trustee by Merger...... 44
SECTION 6.Appointment of Co-Trustee or Separate
Trustee.................................... 45
SECTION 6.Eligibility; Disqualification................... 46
SECTION 6.Preferential Collection of Claims Against
Issuer..................................... 46
SECTION 6.Declaration of Default or Termination
Event under the Swap Agreement............. 46
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.01. Issuer to Furnish Indenture Trustee Names
and Addresses of Noteholders............... 47
SECTION 7.02. Preservation of Information;
Communications to Noteholders.............. 47
SECTION 7.03. Reports by Issuer.......................... 48
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.01. Collection of Money........................ 48
SECTION 8.02. Trust Accounts............................. 49
SECTION 8.03. General Provisions Regarding Accounts...... 53
SECTION 8.04. Release of Indenture Trust Estate.......... 54
SECTION 8.05. Opinion of Counsel......................... 55
ARTICLE IX
Supplemental Indentures
SECTION 9.01. Supplemental Indentures Without Consent
of Noteholders............................. 55
SECTION 9.02. Supplemental Indentures with Consent of
Noteholders................................ 57
SECTION 9.03. Execution of Supplemental Indentures....... 58
SECTION 9.04. Effect of Supplemental Indenture........... 59
SECTION 9.05. Conformity with Trust Indenture Act........ 59
SECTION 9.Reference in Notes to Supplemental
Indentures................................. 59
ARTICLE X
Redemption of Notes
SECTION 10.01. Redemption................................ 59
SECTION 10.02. Form of Redemption Notice................. 60
SECTION 10.03. Notes Payable on Redemption Date.......... 61
ARTICLE XI
Miscellaneous
SECTION 11.01. Compliance Certificates and Opinions...... 61
SECTION 11.02. Form of Documents Delivered to Indenture
Trustee................................... 63
SECTION 11.03. Acts of Noteholders....................... 64
SECTION 11.04. Notices to Indenture Trustee, Issuer,
Subordinate Note Insurer, Swap Counterparty
and Rating Agencies....................... 65
SECTION 11.05. Notices to Noteholders; Waiver............ 66
SECTION 11.06. Alternate Payment and Notice
Provisions................................ 66
SECTION 11.07. Conflict with Trust Indenture Act......... 66
SECTION 11.08. Effect of Headings and Table of
Contents.................................. 67
SECTION 11.09. Successors and Assigns.................... 67
SECTION 11.10. Separability.............................. 67
SECTION 11.11. Benefits of Indenture..................... 67
SECTION 11.12. [Reserved]................................ 67
SECTION 11.13. Governing Law............................. 67
SECTION 11.14. Counterparts.............................. 67
SECTION 11.15. Recording of Indenture.................... 68
SECTION 11.16. Trust Obligations......................... 68
SECTION 11.17. No Petition............................... 68
SECTION 11.18. Inspection................................ 68
SECTION 11.19. Consents.................................. 69
EXHIBIT A-1 - Form of Class A-1 Note EXHIBIT A-2 - Form of Class A-2 Note
EXHIBIT A-3 - Form of Subordinate Note EXHIBIT B - Senior Note Depository
Agreement EXHIBIT C - Form of Transferor Certificate EXHIBIT D - Form of
Investment Letter
INDENTURE dated as of May 1, 1998, between SMS STUDENT LOAN TRUST 1998-A,
a Delaware trust (the "Issuer"), and BANKERS TRUST COMPANY, a New York banking
corporation, as trustee and not in its individual capacity (the "Indenture
Trustee").
Each party agrees as follows for the benefit of the other party and for
the equal and ratable benefit of the holders of the Issuer's Class A-1 Floating
Rate Asset-Backed Senior Notes (the "Class A-1 Notes"), Class A-2 Floating Rate
Asset-Backed Senior Notes (the "Class A-2 Notes" and, together with the Class
A-1 Notes, the "Senior Notes") and Floating Rate Asset-Backed Subordinate Notes
(the "Subordinate Notes" and, together with the Senior Notes, the "Notes"):
GRANTING CLAUSE
The Issuer (and, with respect to the Financed Student Loans, the Eligible
Lender Trustee) hereby Grants to the Indenture Trustee at the Closing Date, as
trustee for the benefit of the Noteholders, the Subordinate Note Insurer and the
Swap Counterparty, all the Issuer's right, title and, interest in and to, but
none of its obligations under, the following:
(a) the Financed Student Loans, and all obligations of the Obligors
thereunder including all monies paid thereunder on and after the Cutoff
Date (or, in the case of New Loans or Serial Loans, on and after the
related Subsequent Cutoff Date, in the case of Consolidation Loans, on and
after the related date of origination, in the case of Consolidation Loans
the principal balances of which have been increased by the principal
balances of any related Add-on Consolidation Loans, on and after the
related Add-on Consolidation Loan Funding Date, and in the case of
Qualified Substitute Student Loans, on and after the date of assignment
thereof to the Issuer);
(b) the Loan Sale Agreement, including the right of the Issuer to
cause the Seller to repurchase or substitute for, Financed Student Loans
from the Issuer under circumstances described therein;
(c) the Servicing Agreement, including the right of the Issuer to
cause the Servicer to purchase Financed Student Loans from the Issuer
under the circumstances described therein;
(d) each Guarantee Agreement, including the right of the Issuer to
cause the related Guarantor to make Guarantee Payments in respect of the
Financed Student Loans;
(e) the Administration Agreement;
(f) the Swap Agreement
(g) all funds on deposit from time to time in the Trust Accounts,
including the Reserve Account Initial Deposit, and in all investments and
proceeds thereof (including all income thereon); and
(h) 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, accounts, accounts receivable, notes, drafts, acceptances,
chattel paper, checks, deposit 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 under the Swap
Agreement, and to secure compliance with the provisions of this Indenture, all
as provided in this Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the Noteholders,
the Subordinate Note Insurer and the Swap Counterparty, 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 to
the best of its ability to the end that the interests of the Noteholders, the
Subordinate Note Insurer and the Swap Counterparty may be adequately and
effectively protected.
ARTICLE I
Definitions and Usage
SECTION 1.01. Definitions and Usage. Except as otherwise specified herein
or as the context may otherwise require, capitalized terms used but not defined
herein are defined in Appendix A to the Administration Agreement, dated as of
May 1, 1998, among the Issuer, USA Group Secondary Market Services, Inc., as
Administrator, and the Indenture Trustee, which also contains rules as to usage
that shall be applicable herein.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act. Whenever
this Indenture refers to a provision of the TIA, the provision is incorporated
by reference in and made a part of this Indenture. The following TIA terms used
in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Indenture Trustee.
"obligor" on the indenture securities means the Issuer and any
other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
ARTICLE II
The Notes
SECTION 2.01. Form. The Class A-1 Notes, the Class A-2 Notes and the
Subordinate Notes, together with the Indenture Trustee's certificate of
authentication, shall be in substantially the form set forth in Exhibits ▇-▇,
▇-▇ ▇▇▇ ▇-▇, 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 officers executing such Notes, as evidenced by their
execution of the Notes. Any portion of the text of any Note may be set forth on
the reverse thereof, with an appropriate reference thereto on the face of the
Note.
The Definitive 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 officers executing such Notes, as
evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The terms of the
Notes set forth in Exhibits ▇-▇, ▇-▇ and A-3 are part of the terms of this
Indenture.
SECTION 2.02. Execution, Authentication and Delivery. The
Notes shall be executed on behalf of the Issuer by any of its
Authorized Officers. The signature of any such Authorized Officer
on the Notes may be manual or facsimile.
Notes bearing the manual or facsimile signature of individuals who were at
any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee shall upon Issuer Order authenticate and deliver
Class A-1 Notes for original issue in an aggregate principal amount of
$150,000,000, Class A-2 Notes for original issue in the aggregate principal
amount of $433,650,000 and Subordinate Notes for original issue in an aggregate
principal amount of $21,350,000. The aggregate principal amount of Class A-1
Notes, Class A-2 Notes and Subordinate Notes outstanding at any time may not
exceed such respective amounts except as provided in Section 2.05.
Each Note shall be dated the date of its authentication. The Senior Notes
shall be issuable as registered Book-Entry Notes in the minimum denomination of
$1,000 and in integral multiples of $1,000 in excess thereof. The Subordinated
Notes shall be issuable as registered, certificated Notes in the minimum
denomination of $250,000 and in integral multiples of $1,000 in excess thereof
except for one Note in the amount of $215,000 issued to Secondary Market
Company, Inc.
No Note shall be entitled to any benefit under this Indenture or be valid
or obligatory for any purpose, unless there appears on 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 upon any Note shall be conclusive evidence, and the only
evidence, that such Note has been duly authenticated and delivered hereunder.
SECTION 2.03. Temporary Notes. Pending the preparation of Definitive
Notes, the Issuer may execute, and upon receipt of an Issuer Order the Indenture
Trustee shall authenticate and deliver, temporary Notes which are printed,
lithographed, typewritten, mimeographed or otherwise produced, of the tenor of
the Definitive Notes in lieu of which they are issued and with such variations
not inconsistent with the terms of this Indenture as the officers executing such
Notes may determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause Definitive Notes to
be prepared without unreasonable delay. After the preparation of Definitive
Notes, the temporary Notes shall be exchangeable for Definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 3.02, without charge to the Noteholder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute and the Indenture Trustee shall authenticate and deliver in exchange
therefor a like principal amount of Definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as Definitive Notes.
SECTION 2.04. Registration; Registration of Transfer and Exchange. The
Issuer shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe and the restrictions on
transfers of the Subordinate Notes set forth herein, the Issuer shall provide
for the registration of Notes and the registration of transfers of Notes. The
Indenture Trustee shall be "Note Registrar" for the purpose of registering Notes
and transfers of 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.
If a Person other than the Indenture Trustee is appointed by the Issuer as
Note Registrar, the Issuer will give the Indenture Trustee and the Subordinate
Note Insurer 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 and the Subordinate Note Insurer shall have the right to
inspect the Note Register at all reasonable times and to obtain copies thereof,
and the Indenture Trustee and the Subordinate Note Insurer 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 principal amounts and number of such Notes.
Subject to the restrictions and limitations set forth below, upon
surrender for registration of transfer of any Note at the office or agency of
the Issuer to be maintained as provided in Section 3.02, if the requirements of
Section 8-401(1) of the UCC are met, the Issuer shall execute, and the Indenture
Trustee shall authenticate and the Noteholder shall obtain from the Indenture
Trustee, in the name of the designated transferee or transferees, one or more
new Notes in any authorized denominations, of a like aggregate principal amount.
The Subordinate Notes have not been and will not be registered under the
Securities Act and will not be listed on any exchange. No transfer of a
Subordinate Note shall be made unless such transfer is made pursuant to an
effective registration statement under the Securities Act and any applicable
state securities laws or is exempt from the registration requirements under the
Securities Act and such state securities laws. In the event that a transfer of a
Subordinate Note is to be made in reliance upon an exemption from the Securities
Act and state securities laws, in order to assure compliance with the Securities
Act and such laws, the Noteholder desiring to effect such transfer and such
Noteholder's prospective transferee shall each certify to the Indenture Trustee
and the Issuer in writing the facts surrounding the transfer in substantially
the forms set forth in Exhibit C (the "Transferor Certificate") and Exhibit D
(the "Investment Letter"). No transfer of a Subordinate Note shall be made
unless the proposed transferee has confirmed that it is a "qualified
institutional buyer" as such term is defined in Rule 144A under the Securities
Act. In the event of a transfer of a Subordinate Note to a "qualified
institutional buyer" that is not made in reliance on Rule 144A, there shall also
be delivered to the Indenture Trustee an Opinion of Counsel that such transfer
may be made pursuant to an exemption from the Securities Act and state
securities laws, which Opinion of Counsel shall not be an expense of the Issuer,
the Eligible Lender Trustee or the Indenture Trustee (unless such party is the
transferee from which such opinion is to be obtained) or of the Seller;
provided, however, that such opinion of counsel in respect of the applicable
state securities laws may be a memorandum of law rather than an opinion if such
counsel is not licensed in the applicable jurisdiction. The Seller shall cause
the Administrator to provide to any Noteholder and any prospective transferee of
a Subordinate Note designated by any such Noteholder information necessary to
satisfy the condition to eligibility set forth in Rule 144A(d)(4) under the
Securities Act for transfer of any such Subordinate Note without registration
thereof under the Securities Act pursuant to the registration exemption provided
by Rule 144A. Each Noteholder desiring to effect such a transfer of a
Subordinate Note shall, and does hereby agree to, indemnify the Issuer, the
Eligible Lender Trustee, the Indenture Trustee, the Subordinate Note Insurer and
the Seller against any liability that may result if the transfer is not so
exempt or is not made in accordance with federal and state securities laws.
In addition, no transfer of a Subordinate Note shall be made to any
proposed transferee that is not a United States Person. Notwithstanding anything
to the contrary contained herein, no resale or other transfer of a Subordinate
Note or any interest therein shall be made unless (i) immediately after giving
effect to such resale or other transfer, there would be fewer than 100
Subordinate Noteholders and (ii) if the transferee (or any Person for whom such
transferee is acting as agent or custodian in connection with the acquisition of
such Subordinate Note) is a partnership, grantor trust or S corporation for
federal income tax purposes (a "Flow-Through Entity"), any Subordinate Notes
owned by or on behalf of such Flow-Through Entity will represent less than 50%
of the value of all assets owned by or on behalf of such Flow- Through Entity
and no special allocation of income, gain, loss, deduction or credit from such
Subordinate Notes will be made among the beneficial owners of such Flow-Through
Entity.
The Issuer shall cause each Subordinate Note to contain a legend stating
that transfer of the Subordinate Notes is subject to certain restrictions and
referring prospective purchasers of the Subordinate Notes to this Section 2.04
with respect to such restrictions.
At the option of the Noteholder, Notes may be exchanged for other Notes of
the same class in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, if the requirements of
Section 8-401(1) of the UCC are met, the Issuer shall execute, and the Indenture
Trustee shall authenticate and, the Noteholder shall obtain from the Indenture
Trustee, the Notes which the Noteholder making the exchange is entitled to
receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
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, all in accordance with the
Exchange Act.
No service charge shall be made to a Noteholder or the Subordinate Note
Insurer for any registration of transfer or exchange of Notes, but the Indenture
Trustee 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 Notes, other than exchanges pursuant to Section 2.03 or
9.06 not involving any transfer.
The preceding provisions of this Section notwithstanding, the Issuer shall
not be required to make and the Note Registrar need not register transfers or
exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to such Note.
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen 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 Subordinate
Note Insurer such security or indemnity as may be required by it to hold the
Issuer, the Indenture Trustee and the Subordinate Note Insurer 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 of the same category; provided, however, that if
any such destroyed, lost or stolen Note, but not a mutilated Note, shall have
become or within 15 days shall be due and payable, or shall have been called for
redemption, instead of issuing a replacement Note, the Issuer may pay such
destroyed, lost or stolen Note when so due or payable or upon the Redemption
Date without surrender thereof. If, after the delivery of such replacement Note
or payment of a destroyed, lost or stolen Note 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 for payment such original Note, the
Issuer, the Indenture Trustee and the Subordinate Note Insurer 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, the Indenture Trustee or the Subordinate Note Insurer in
connection therewith.
Upon the issuance of any replacement Note under this Section, the Issuer
may require the payment by the Noteholder thereof 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) connected therewith.
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 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.
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 2.06. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee, the
Subordinate Note Insurer and any agent of the Issuer, the Indenture Trustee or
the Subordinate Note Insurer may treat the Person in whose name any Note is
registered (as of the day of determination) as the owner of such Note for the
purpose of receiving payments of principal of, interest (and any Noteholders'
Interest Basis Carryover), 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 or the Subordinate Note Insurer or any agent of the Issuer,
the Indenture Trustee or the Subordinate Note Insurer shall be affected by
notice to the contrary.
SECTION 2.07. Payment of Principal and Interest; Defaulted Interest;
Noteholders' Interest Basis Carryover. (a) The Notes shall accrue interest as
provided in the forms of Class A-1 Note, Class A-2 Note and Subordinate Note set
forth in Exhibits ▇-▇, ▇-▇ ▇▇▇ ▇-▇, respectively, and such interest shall be
payable on each Quarterly Payment Date as specified therein, subject, in each
case, to Section 3.01. 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 Quarterly
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 holds Notes in an aggregate original principal amount in excess of
$1,000,000 and 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 2.12, with respect to Senior 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 Quarterly
Payment Date or on the Class A-1 Note Final Maturity Date, the Class A-2 Note
Final Maturity Date or the Subordinate Note Final Maturity Date, as the case may
be, which shall be payable as provided below. The funds represented by any such
checks returned undelivered shall be held in accordance with Section 3.03.
(b) The principal of each Note shall be payable in installments on each
Quarterly Payment Date as provided in the forms of the Class A-1 Notes, Class
A-2 Notes and Subordinate Note set forth in Exhibits ▇-▇, ▇-▇ ▇▇▇ ▇-▇,
respectively. Notwith standing the foregoing, the entire unpaid principal amount
of the Notes shall be due and payable, if not previously paid, on the date on
which an Event of Default shall have occurred, if the Indenture Trustee (with
the prior written consent of the Subordinate Note Insurer) or the Noteholders of
the Notes representing not less than a majority of the Outstanding Amount of the
Notes (with the prior written consent of the Subordinate Note Insurer) have
declared the Notes to be immediately due and payable in the manner provided in
Section 5.02. All principal payments on each class of Notes shall be made pro
rata to the Noteholders of such class. 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 Quarterly 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 Quarterly 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 payment of such installment. Notices in connection
with redemptions of Notes shall be mailed to Noteholders as provided in Section
10.02.
(c) 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 applicable Note Rate in any lawful manner. The Issuer
may pay such defaulted interest to the Persons who are 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.
(d) The Class A-1 Noteholders' Interest Basis Carryover, the Class A-2
Noteholders' Interest Basis Carryover and the Subordinate Noteholders' Interest
Basis Carryover on each Quarterly Payment Date including all such unpaid
carryover from prior Quarterly Payment Dates and interest accrued thereon at the
Class A-1 Note LIBOR Rate, the Class A-2 Note LIBOR Rate or the Subordinate Note
LIBOR Rate, respectively, for each applicable LIBOR Reset Period, shall be
payable on each Quarterly Payment Date solely to the extent of funds required
and available to be distributed to Noteholders by the Indenture Trustee pursuant
to Section 2(e)(ii)(b) (iii) of the Administration Agreement (and shall be
allocated among the classes of Notes as provided in Section 8.02(d)). Any
Noteholders' Interest Basis Carryover for a class of Notes, if any, payable with
respect to such class of Notes on the applicable Quarterly Payment Date shall be
paid by wire transfer to the Person in whose name such Note (or one or more
Predecessor Notes) is registered on the applicable Record Date if such Person
holds Notes in an aggregate original principal amount in excess of $1,000,000
and 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 2.12,
with respect to the Senior 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. The funds represented by any such checks
returned undelivered shall be held in accordance with Section 3.03.
(e) Promptly following the date on which the principal of and interest on
the Subordinate Notes have been paid in full and the Subordinate Notes have been
surrendered to the Indenture Trustee, the Indenture Trustee shall, if the
Subordinate Note Insurer has paid any amount in respect of the Subordinate Notes
under the Subordinate Note Insurance Policy that has not been reimbursed to the
Subordinate Note Insurer, deliver such surrendered Subordinate Notes to the
Subordinate Note Insurer.
SECTION 2.08. 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 cancelled 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 cancelled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes cancelled as provided in this Section, except as expressly permitted
by this Indenture. All cancelled 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 returned to it and so long as such Issuer Order is timely and the Notes
have not been previously disposed of by the Indenture Trustee.
SECTION 2.09. Release of Collateral. Subject to Section 11.01 and the
terms of the Basic Documents, the Indenture Trustee shall release property from
the lien of this Indenture only upon receipt by it, the Subordinate Note Insurer
and the Swap Counterparty of an Issuer Request accompanied by an Officers'
Certificate of the Issuer, an Opinion of Counsel and Independent Certificates in
accordance with TIA ▇▇.▇▇. 314(c) and 314(d)(1) or an Opinion of Counsel in lieu
of such Independent Certificates to the effect that the TIA does not require any
such Independent Certificates. The Indenture Trustee shall surrender to the
Subordinate Note Insurer the Subordinate Note Insurance Policy upon satisfaction
of the conditions in Section 4.01.
SECTION 2.10. Book-Entry Notes. The Class A-1 and Class A-2 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 will receive a
Definitive Note (as defined below) representing such Note Owner's interest in
such Book-Entry Note, except as provided in Section 2.12. Unless and until
definitive, fully registered Notes (the "Definitive Notes") have been issued to
Note Owners pursuant to Section 2.12:
(i the provisions of this Section shall be in full
force and effect;
(ii 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 authorized
representative of the Note Owners;
(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 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 2.12, 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; and
(v whenever this Indenture requires or permits actions to be taken
based upon instructions or directions of Noteholders of Notes evidencing a
specified percentage of the Outstanding Amount of the 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 percentage of the beneficial interest in the Notes and has
delivered such instructions to the Indenture Trustee.
SECTION 2.11. 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
2.12, the Indenture Trustee shall give all such notices and communications
specified herein to be given to Noteholders of the Senior Notes to the Clearing
Agency.
SECTION 2.12. Definitive Notes. If (i) the Administrator 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 Administrator is unable to locate a qualified successor, (ii) the
Administrator 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, a Servicer Default or an
Administrator Default, Note Owners representing beneficial interests aggregating
at least a majority of the Outstanding Amount of the Book-Entry Notes advise the
Clearing Agency (which shall then notify the Indenture Trustee) 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, the
Indenture Trustee or the Subordinate Note Insurer 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 2.13. [Reserved]
ARTICLE III
Covenants
SECTION 3.01. Payment to Noteholders. The Issuer will duly and punctually
pay the principal of (subject to the parenthetical in the following sentence),
interest, if any, on and any on Noteholders' Interest Basis Carryover (but only
to the extent provided in Sections 2.07(d) and 8.02(d)) with respect to the
Notes in accordance with the terms of the Notes and this Indenture. Without
limiting the foregoing, subject to Section 8.02(d), the Issuer will cause to be
distributed to the Senior Noteholders and the Subordinate Noteholders in
accordance with the Administration Agreement and Section 8.02 hereof that
portion of the amounts on deposit in the Trust Accounts on a Quarterly Payment
Date which the Noteholders are entitled to receive pursuant to the
Administration Agreement. 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. Maintenance of Office or Agency. The Issuer will maintain in
the Borough of Manhattan, The City of New York, an office or agency where Notes
may be surrendered for registration of transfer or exchange, 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 and the Subordinate Note Insurer 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 and the Subordinate Note Insurer 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 3.03. Money for Payments to Be Held in Trust. As provided in
Section 8.02, 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 Trust 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 or before the Business Day next preceding each Quarterly Payment Date
and Redemption Date, the Issuer shall distribute or cause to be distributed to
the Indenture Trustee (or any other Paying Agent) an aggregate sum sufficient to
pay the amounts then becoming due under 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, the
Subordinate Note Insurer and the Swap Counterparty 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 and the Subordinate Note Insurer
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;
(ii give the Indenture Trustee, the Subordinate Note Insurer and
the Swap Counterparty 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 either (i) the Issuer on Issuer Request and with the prior
written consent of the Subordinate Note Insurer or (ii) the Subordinate Note
Insurer if and to the extent such money or any portion thereof was paid by the
Subordinate Note Insurer to the Indenture Trustee for payment of interest on or
principal of the Subordinate Notes; 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).
SECTION 3.04. Existence. The Issuer will keep in full effect its
existence, rights and franchises as a trust under the laws of the State of
Delaware (unless, subject to the prior written consent of the Subordinate Note
Insurer, 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.
SECTION 3.05. Protection of Indenture Trust Estate. The Issuer will from
time to time execute and deliver all such supplements and amendments hereto and
all such financing statements, continuation 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 (and the
priority thereof) 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 enforce any of the Collateral; or
(iv preserve and defend title to the Indenture Trust Estate and the
rights of the Indenture Trustee, the Subordinate Note Insurer, the Swap
Counterparty 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 execute any financing statement, continuation statement or
other instrument required to be executed pursuant to this Section.
SECTION 3.06. Opinions as to Indenture Trust Estate.
(a) On the Closing Date, the Issuer shall furnish to the
Indenture Trustee, the Subordinate Note Insurer and the Swap Counterparty 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.
(b) On or before April 30 in each calendar year, beginning in 1999, the
Issuer shall furnish to the Indenture Trustee, the Subordinate Note Insurer and
the Swap Counterparty an Opinion of Counsel either stating that, in the opinion
of such counsel, such action has been taken with respect to the recording,
filing, re-recording and refiling 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 maintain the lien and security interest created by this Indenture and
reciting the details of such action or stating that in the opinion of such
counsel no such action is necessary to maintain such lien and security interest.
Such Opinion of Counsel shall also describe the recording, filing, re-recording
and refiling of this Indenture, any indentures supplemental hereto and any other
requisite documents and the execution and filing of any financing statements and
continuation statements that will, in the opinion of such counsel, be required
to maintain the lien and security interest of this Indenture until April 30 in
the following calendar year.
SECTION 3.07. Performance of Obligations; Servicing of Student Loans. (a)
The Issuer will not take any action and will use its best efforts not to permit
any action to be taken by others 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 Loan Sale 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, the Subordinate Note Insurer and the Swap
Counterparty in an Officers' Certificate of the Issuer shall be deemed to be
action taken by the Issuer. Initially, the Issuer has contracted with the
Servicer and the Administrator to assist the Issuer in performing its duties
under this Indenture.
(c) The Issuer will punctually perform and observe all its obligations and
agreements contained in this Indenture, the other Basic Documents and in the
instruments and agreements included in the Indenture Trust Estate, including
filing or causing to be filed all UCC financing statements and continuation
statements required to be filed by the terms of this Indenture, the Loan Sale
Agreement and the Servicing Agreement in accordance with and within the time
periods provided for herein and therein. Except as otherwise expressly provided
therein, the Issuer shall not waive, amend, modify, supplement or terminate any
Basic Document or any provision thereof without the consent of the Indenture
Trustee or the Noteholders of at least a majority of the Outstanding Amount of
the Notes (and, in either such case, the Subordinate Note Insurer and the Swap
Counterparty).
(d) If the Issuer shall have knowledge of the occurrence of a Servicer
Default under the Servicing Agreement or an Administrator Default under the
Administration Agreement, the Issuer shall promptly notify the Indenture
Trustee, the Rating Agencies, the Subordinate Note Insurer and the Swap
Counterparty thereof, 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 Basic Documents in respect of such failure.
(e) As promptly as possible after the giving of notice of termination to
the Servicer of the Servicer's rights and powers pursuant to Section 6.01 of the
Servicing Agreement, the Issuer shall (or if the Senior Notes are not
Outstanding, the Subordinate Note Insurer may) appoint a successor servicer
acceptable to the Subordinate Note Insurer (the "Successor Servicer"), and such
Successor Servicer shall accept its appointment by a written assumption in a
form acceptable to the Indenture Trustee and the Subordinate Note Insurer. In
the event that a Successor Servicer has not been appointed and accepted its
appointment at the time when the Servicer ceases to act as Servicer, the
Indenture Trustee without further action shall automatically be appointed the
Successor Servicer. The Indenture Trustee may resign as the Servicer by giving
written notice of such resignation to the Issuer, the Subordinate Note Insurer
and the Swap Counterparty and in such event will be released from such duties
and obligations, such release not to be effective until the date a new servicer
enters into an agreement with the Issuer as provided below; provided, however,
that nothing herein shall require or permit the Indenture Trustee to act as
Servicer, or otherwise service the Financed Student Loans, in violation of the
Higher Education Act. Upon delivery of any such notice to the Issuer and the
Subordinate Note Insurer, the Issuer shall (or, if the Senior Notes are not
Outstanding, the Subordinate Note Insurer may) obtain a new servicer as the
Successor Servicer under the Servicing Agreement. Any Successor Servicer other
than the Indenture Trustee shall (i) be an established institution (A) that
satisfies any requirements of the Higher Education Act applicable to servicers,
(B) the appointment of which satisfies the Rating Agency Condition and (C) the
regular business includes the servicing or administration of student loans (ii)
enter into a servicing agreement with the Issuer having substantially the same
provisions as the provisions of the Servicing Agreement applicable to the
Servicer, and (iii) be acceptable to the Subordinate Note Insurer. If within 60
days after the delivery of the notice referred to above, neither the Insurer nor
the Subordinate Note Insurer shall have obtained such a new servicer, the
Indenture Trustee may appoint, or may petition a court of competent jurisdiction
to appoint, a Successor Servicer; provided, however, that such right to appoint
or to petition for the appointment of any such Successor Servicer shall in no
event relieve the Indenture Trustee from any obligations otherwise imposed on it
under the Basic Documents until such Successor Servicer has in fact assumed such
appointment. In connection with any such appointment, the Indenture Trustee may
make such arrangements for the compensation of such Successor Servicer as it,
the Subordinate Note Insurer, the Swap Counterparty and such Successor Servicer
shall agree, subject to the limitations set forth below and in the Servicing
Agreement, and in accordance with Section 6.02 of the Servicing Agreement, the
Issuer or the Indenture Trustee shall enter into an agreement with such
Successor Servicer for the servicing of the Financed Student Loans (such
agreement to be in form and substance satisfactory to the Indenture Trustee and
the Subordinate Note Insurer). If the Indenture Trustee shall succeed as
provided herein to the Servicer's duties as servicer with respect to the
Financed Student Loans, it shall do so in its individual capacity and not in its
capacity as Indenture Trustee and, accordingly, the provisions of Article VI
hereof shall be inapplicable to the Indenture Trustee in its duties as the
successor to the Servicer and the servicing of the Financed Student Loans. In
case the Indenture Trustee shall become successor to the Servicer under the
Servicing Agreement, the Indenture Trustee, with the prior written consent of
the Subordinate Note Insurer, shall be entitled to appoint as Servicer any one
of its affiliates, provided that such appointment shall not affect or alter in
any way the liability of the Indenture Trustee as a successor for the
performance of the duties and obligations of the Servicer in accordance with the
terms hereof.
(f) Upon any termination of the Servicer's rights and powers pursuant to
the Servicing Agreement, the Issuer shall promptly notify the Indenture Trustee
and the Subordinate Note Insurer. As soon as a Successor Servicer is appointed,
the Issuer shall notify the Indenture Trustee and the Subordinate Note Insurer
of such appointment, specifying in such notice the name and address of such
Successor Servicer.
(g) 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 or the Noteholders of at least a majority in
Outstanding Amount of the Notes (and, in either such case, the Subordinate Note
Insurer and the Swap Counterparty), 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 Basic Documents,
except to the extent otherwise provided in the Servicing Agreement, or waive
timely performance or observance by the Servicer, the Seller, the Issuer, the
Administrator or the Eligible Lender Trustee under the Loan Sale Agreement, the
Servicing Agreement or the Administration 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, or (ii) reduce the aforesaid percentage of
the Notes which are required to consent to any such amendment, without the
consent of the Noteholders of all the Outstanding Notes. If any such amendment,
modification, supplement or waiver shall be so consented to, the Issuer agrees,
promptly following a request by the Indenture Trustee, the Subordinate Note
Insurer or the Swap Counterparty 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, the Subordinate Note Insurer or the Swap
Counterparty may deem necessary or appropriate in the circumstances.
SECTION 3.08. Negative Covenants. So long as any Notes are
Outstanding, the Issuer shall not:
(i except as expressly permitted by this Indenture or any other
Basic Document, 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 each of the Rating Agencies and the Subordinate Note
Insurer);
(ii claim any credit on, or make any deduction from the principal
or interest (including any Noteholders' Interest Basis Carryover) 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
(iii (A) 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 respect to the Notes
under this Indenture except as may be expressly permitted hereby, (B)
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 Basic Documents) or
(C) 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. Annual Statement as to Compliance. The Issuer will deliver
to the Indenture Trustee, the Subordinate Note Insurer and the Swap
Counterparty, within 120 days after the end of each fiscal year of the Issuer
(commencing with the fiscal year 1998), an Officers' Certificate of the Issuer
stating that:
(i a review of the activities of the Issuer during such year and
of performance under this Indenture has been made under such Authorized
Officers' supervision; and
(ii to the best of such Authorized Officers' knowledge, based on
such review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such year, or, if there has been a default
in the compliance of any such condition or covenant, specifying each such
default known to such Authorized Officers and the nature and status
thereof.
SECTION 3.10. 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, the Subordinate Note Insurer and the
Swap Counterparty, in form satisfactory to the Indenture Trustee, the
Subordinate Note Insurer and the Swap Counterparty, 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 Rating Agency Condition shall have been
satisfied 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, the Subordinate
Note Insurer and the Swap Counterparty) 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;
(vi the Issuer shall have delivered to the Indenture Trustee, the
Subordinate Note Insurer and the Swap Counterparty an Officers'
Certificate of the Issuer and an Opinion of Counsel each 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 (including any filing required
by the Exchange Act); and
(vii the Subordinate Note Insurer shall have given its prior written
consent.
(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:
(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 (A) 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 assumes, by an indenture supplemental hereto,
executed and delivered to the Indenture Trustee and the Subordinate Note
Insurer, in form satisfactory to the Indenture Trustee, the Subordinate
Note Insurer and the Swap Counterparty, 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 agrees
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, the Subordinate Note Insurer and the Swap Counterparty,
(D) unless otherwise provided in such supplemental indenture, expressly
agrees to indemnify, defend and hold harmless the Issuer, the Subordinate
Note Insurer and the Swap Counterparty against and from any loss,
liability or expense arising under or related to this Indenture and the
Notes and (E) expressly agrees 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 Rating Agency Condition shall have been
satisfied 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, the Subordinate
Note Insurer and the Swap Counterparty) 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;
(vi the Issuer shall have delivered to the Indenture Trustee, the
Subordinate Note Insurer and the Swap Counterparty an Officers'
Certificate of the Issuer and an Opinion of Counsel each 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 (including any filing required
by the Exchange Act); and
(vii each of the Subordinate Note Insurer and the Swap Counterparty
shall have given its prior written consent.
SECTION 3.11. Successor or Transferee. (a) Upon any consolidation or
merger of the Issuer in accordance with Section 3.10(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.
(b) Upon a conveyance or transfer of all the assets and properties of the
Issuer pursuant to Section 3.10(b), SMS Student Loan Trust 1998-A 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 and the
Subordinate Note Insurer stating that SMS Student Loan Trust 1998-A is to be so
released.
SECTION 3.12. No Other Business. Except as contemplated by this Indenture
or the other Basic Documents, the Issuer shall not engage in any business other
than financing, purchasing, owning, selling and managing the Financed Student
Loans, and originating Consolidation Loans during the Revolving Period, in the
manner contemplated by this Indenture and the other Basic Documents and
activities incidental thereto.
SECTION 3.13. No Borrowing. Except as contemplated by this Indenture or
the other Basic Documents, the Issuer shall not issue, incur, assume, guarantee
or otherwise become liable, directly or indirectly, for any indebtedness except
for the Notes.
SECTION 3.14. Obligations of Servicer and Administrator. The Issuer shall
cause the Servicer to comply with Sections 3.07, 3.08, 3.09 and 3.10 of the
Servicing Agreement and shall cause the Administrator to comply with Section
2(g) of the Administration Agreement.
SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities. Except as
contemplated by the Basic 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 3.16. Capital Expenditures. The Issuer shall not
make any expenditure (by long-term or operating lease or otherwise)
for capital assets (either realty or personalty).
SECTION 3.17. Restricted Payments. The Issuer shall not, directly or
indirectly, (i) pay any dividend or make any distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, to the Eligible Lender Trustee or any owner of a beneficial interest in
the Issuer or otherwise with respect to any ownership or equity interest or
security in or of the Issuer or to the Servicer or the Administrator, (ii)
redeem, purchase, retire or otherwise acquire for value any such ownership or
equity interest or security or (iii) set aside or otherwise segregate any
amounts for any such purpose; provided, however, that the Issuer may make, or
cause to be made, distributions to the Servicer, the Eligible Lender Trustee,
the Indenture Trustee, the Noteholders, the Administrator, the Subordinate Note
Insurer, the Seller and the Company as contemplated by, and to the extent funds
are available for such purpose under, this Indenture, the Loan Sale Agreement,
the Servicing Agreement or the Administration Agreement. The Issuer will not,
directly or indirectly, make payments to or distributions from the Collection
Account or the Collateral Reinvestment Account except in accordance with this
Indenture and the other Basic Documents.
SECTION 3.18. Notice of Events of Default. The Issuer shall give the
Indenture Trustee, the Rating Agencies, the Subordinate Note Insurer and the
Swap Counterparty prompt written notice of each Event of Default hereunder and
each default on the part of the Seller, the Servicer or the Administrator of its
obligations under the Loan Sale Agreement, the Servicing Agreement or the
Administration Agreement. In addition, the Issuer shall deliver to the Indenture
Trustee and the Subordinate Note Insurer, within five days after the occurrence
thereof, written notice in the form of an Officers' Certificate of the Issuer of
any event which with the giving of notice and the lapse of time would become an
Event of Default under Section 5.01(iii), its status and what action the Issuer
is taking or proposes to take with respect thereto. The Indenture Trustee shall
provide notice to the Noteholders, the Subordinate Note Insurer and the Swap
Counterparty of each default or other event of which it receives notice pursuant
to this Section 3.18, promptly after receipt of such Notice.
SECTION 3.19. Further Instruments and Acts. Upon request of the Indenture
Trustee, the Subordinate Note Insurer or the Swap Counterparty, the Issuer will
execute and deliver such further instruments and do such further acts as may be
reasonably necessary or proper to carry out more effectively the purpose of this
Indenture.
SECTION 3.20. Removal of Administrator. So long as any Notes are
Outstanding, the Issuer shall not remove the Administrator unless the Rating
Agency Condition shall have been satisfied in connection with such removal and
the Subordinate Note Insurer shall have given its prior written consent.
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 3.03, 3.04, 3.05, 3.08, 3.10, 3.12, 3.13,
3.15, 3.16 and 3.17 (v) the rights, obligations and immunities of the Indenture
Trustee hereunder (including the rights of the Indenture Trustee under Section
6.07 and the obligations of the Indenture Trustee under Section 4.02) and (vi)
the rights of Noteholders, the Subordinate Note Insurer and the Swap
Counterparty 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 2.05 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
3.03) have been delivered to the Indenture Trustee for cancellation
and the Subordinate Note Insurance Policy has been returned to the
Subordinate Note Insurer 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 Class A-1 Note
Final Maturity Date, the Class A-2 Note Final Maturity Date or
the Subordinate Note Final Maturity Date, as the case may be,
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 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 Class A-1
Note Final Maturity Date, the Class A-2 Note Final Maturity Date or
the Subordinate Note Final Maturity Date, as the case may be, and all
amounts due to the Subordinate Note Insurer;
(B) the Issuer has paid or caused to be paid all other sums
payable hereunder and under the Swap Agreement by the Issuer; and
(C) the Issuer has delivered to the Indenture Trustee, the
Subordinate Note Insurer and the Swap Counterparty an Officers'
Certificate of the Issuer, an Opinion of Counsel and (if required by
the TIA or the Indenture Trustee) an Independent Certificate from a
firm of certified public accountants, each meeting the applicable
requirements of Section 11.01(a) and, subject to Section 11.02, each
stating that all conditions precedent 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), to the
Subordinate Note Insurer of all amounts due to the Subordinate Note Insurer
under the Basic Documents and to the Swap Counterparty of all amounts due to the
Swap Counterparty under the Swap Agreement; but such monies need not be
segregated from other funds except to the extent required herein, in the
Servicing Agreement or the Administration 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 3.03 and thereupon such Paying Agent shall be released from all further
liability with respect to such monies.
SECTION 4.04. Auction of Financed Student Loans. The Indenture Trustee
shall offer the Financed Student Loans for sale as of the last day of the
Collection Period that ends in June 2008 and shall accept bids on behalf of the
Issuer for such purpose. If with respect to the last date of such Collection
Period, the Indenture Trustee receives no bid to purchase the Financed Student
Loans, or no bid that it may, as specified below, accept, the Indenture Trustee
may at its discretion, but shall not be obligated to, offer the Financed Student
Loans for sale as of the last day of each, or any, of the succeeding Collection
Periods until a bid is received that may, as specified below, be accepted by the
Indenture Trustee. With respect to any attempt to arrange for the purchase of
the Financed Student Loans, the Indenture Trustee shall accept the highest bid
submitted so long as (i) at least two bids (one of which is from a Person that
is not the Seller or an Affiliate of the Seller) to purchase the Financed
Student Loans as of the last day of the applicable Collection Period are
received and (ii) the highest such bid is at least equal to the Minimum Purchase
Price as of the last day of the applicable Collection Period. Any attempt to
arrange for the purchase of the Financed Student Loans and the consummation of
any such sale shall be conducted by the Indenture Trustee in a commercially
reasonable manner. The Indenture Trustee shall provide notice of any such
attempt at least 60 days prior to the last day of the related Collection Period
to the Seller, the Company, the Servicer, the Eligible Lender Trustee, the
Rating Agencies, the Subordinate Note Insurer, the Swap Counterparty and each
Noteholder, and any such Person or their respective Affiliates or any other
Person may submit a timely bid for the purchase of the Financed Student Loans.
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):
(i default in the payment by the Issuer of any interest
(including, subject to the limitations of Sections 2.07(d) and 8.02, any
Noteholders' Interest Basis Carryover) on any Note when the same becomes
due and payable, and such default shall continue for a period of five
days; or
(ii default in the payment by the Issuer of the
principal of any Note when the same becomes due and payable;
or
(iii default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is
elsewhere in this Section specifically dealt with), or any representation
or warranty of the Issuer made in this Indenture or in any certificate or
other writing delivered pursuant hereto or in connection herewith proving
to have been incorrect in any material respect as of the time when the
same shall have been made, and such default shall continue or not be
cured, or the circumstance or condition in respect of which such
misrepresentation or warranty was incorrect shall not have been eliminated
or otherwise cured, for a period of 30 (or, in the circumstances provided
below, 90) days after there shall have been given, by registered or
certified mail, to the Issuer by the Indenture Trustee or to the Issuer
and the Indenture Trustee by the Noteholders of at least 25% of the
Outstanding Amount of the Notes or the Subordinate Note Insurer, a written
notice specifying such default or incorrect representation or warranty and
requiring it to be remedied and stating that such notice is a notice of
Default hereunder; provided, however, that, if at the end of such 30-day
period, the Indenture Trustee (with the prior written consent of the
Subordinate Note Insurer) determines that a good faith effort to cure or
eliminate the Default has commenced, the Indenture Trustee may extend such
30-day period to 90 days; or
(iv 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
(v 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 and in every such case the Indenture Trustee
(with the prior written consent of the Subordinate Note Insurer) or the
Noteholders of Notes representing not less than a majority of the Outstanding
Amount of the Notes (with the prior written consent of the Subordinate Note
Insurer) may declare all the Notes to be immediately due and payable, by a
notice in writing to the Issuer and the Swap Counterparty (and to the Indenture
Trustee if given by Noteholders), 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; provided, however, that if the Senior Notes have been paid in full, the
Subordinate Note Insurer shall have the exclusive right to determine whether or
not to accelerate payment on the Notes.
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 in this Article V provided,
either (x) the Noteholders of Notes representing a majority of the Outstanding
Amount of the Notes (with the prior written consent of the Subordinate Note
Insurer), by written notice to the Issuer and the Indenture Trustee, or (y) if
the Senior Notes are not Outstanding, the Subordinate Note Insurer may rescind
and annul such declaration and its consequences if:
(i the Issuer has paid or deposited with the
Indenture Trustee a sum sufficient to pay:
(A) 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
(B) all sums paid or advanced by the Indenture Trustee hereunder
plus all amounts owed to the Subordinate Note Insurer and the Swap
Counterparty under the Basic Documents and the reasonable
compensation, expenses, disbursements and advances of the Indenture
Trustee, the Subordinate Note Insurer, the Swap Counterparty and
their respective agents and counsel; and
(ii 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
2.07(d) and 8.02, any Noteholders' Interest Basis Carryover) on any Note when
the same becomes due and payable, and such default continues for a period of
five days, or (ii) default is made in the payment of the principal of or any
installment of the principal of any Note when the same becomes due and payable,
the Issuer will, upon demand of the Indenture Trustee (with the prior written
consent of the Subordinate Note Insurer or, if the Senior Notes are not
Outstanding, at the written direction of the Subordinate Note Insurer), pay to
it, for the benefit of the Noteholders, the Subordinate Note Insurer and the
Swap Counterparty, 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), at the rate specified in
Section 2.07 and all amounts due under the Swap Agreement 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, the Subordinate Note
Insurer, the Swap Counterparty and their respective agents and counsel.
(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 (with the prior written consent of the Subordinate Note Insurer)
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.
(c) If an Event of Default occurs and is continuing, the Indenture Trustee
may, as more particularly provided in Section 5.04, in its discretion (with the
prior written consent of the Subordinate Note Insurer or, if the Senior Notes
are not Outstanding, at the direction of the Subordinate Note Insurer), proceed
to protect and enforce its rights and the rights of the Noteholders and the
Subordinate Note Insurer, 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.
(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, with the prior written consent of the Subordinate Note
Insurer, and shall, at the written direction of the Subordinate Note Insurer, 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) 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 or bad faith) and of the Noteholders
allowed in such Proceeding;
(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, the Subordinate Note Insurer,
the Swap Counterparty 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, the Subordinate Note Insurer, the Swap Counterparty 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 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, the Subordinate Note Insurer and the Swap
Counterparty.
(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.
SECTION 5.04. Remedies; Priorities. (a) If an Event of Default shall have
occurred, the Indenture Trustee may, with the prior written consent of the
Subordinate Note Insurer or, if the Senior Notes are not Outstanding, at the
written direction of the Subordinate Note Insurer, shall 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, the Subordinate Note Insurer, the Swap
Counterparty 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 Outstanding Amount of the Notes, the Subordinate Note
Insurer and the Swap Counterparty (but, in the case of the Swap Counterparty,
only to the extent that the Indenture Trustee determines that the Swap
Counterparty would not receive all amounts due under the Swap Agreement) consent
thereto, (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 and under the Swap Agreement 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
Noteholders of 66-2/3% of the Outstanding Amount of the Notes, the Subordinate
Note Insurer and the Swap Counterparty (but, in the case of the Swap
Counterparty, only to the extent that the Indenture Trustee determines that the
Swap Counterparty would not receive all amounts due under the Swap Agreement).
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: to the Indenture Trustee for amounts due under
Section 6.07;
SECOND: to the Senior Noteholders for amounts due and unpaid on the
Senior Notes for interest (other than any Senior Noteholders' Interest
Basis Carryover) and to the Swap Counterparty for amounts due under the
Swap Agreement, to the extent that the Trust is the Defaulting Party (as
such term is defined in the Swap Agreement) (provided, however, that this
priority shall apply only with respect to any Trust Swap Payment Amount
(and not the remainder of the Termination Payment) to the extent that the
Trust is the Defaulting Party with respect to an Event of Default
specified in Section 5 (a)(i) of the Swap Agreement), ratably, without
preference or priority of any kind, according to the respective amounts
due and payable on the Senior Notes for interest and to the Swap
Counterparty for the amounts due and payable under the Swap Agreement to
the extent that the Swap Counterparty is not the Defaulting Party
(provided, however, that this priority shall apply only with respect to
any Trust Swap Payment Amount (and not the remainder of the Termination
Payment) to the extent that the Trust is the Defaulting Party with respect
to an Event of Default specified in Section 5 (a)(i) of the Swap
Agreement);
THIRD: to the Subordinate Note Insurer for all due and
unpaid Subordinate Note Insurance Policy Premiums;
FOURTH: to the Subordinate Noteholders for amounts due
and unpaid on the Subordinate Notes for interest (other than
any Subordinate Noteholders' Interest Basis Carryover),
ratably, without preference or priority of any kind, according
to the amounts due and payable on the Subordinate Notes for
interest;
FIFTH: to the Senior Noteholders for amounts due and
unpaid on the Senior Notes for principal, ratably, without
preference or priority of any kind, according to the amounts
due and payable on the Senior Notes for principal;
SIXTH: to the Subordinate Noteholders for amounts due
and unpaid on the Subordinate Notes for principal, ratably,
without preference or priority of any kind, according to the
amounts due and payable on the Subordinate Notes for
principal;
SEVENTH: to the Subordinate Note Insurer for all due and
unpaid Reimbursement Amounts;
EIGHTH: to the Servicer for due and unpaid Servicing
Fees;
NINTH: to Senior Noteholders for any unpaid Senior
Noteholders' Interest Basis Carryover, ratably, without
preference or priority of any kind, according to the amounts
due and payable on the Senior Notes for such Senior
Noteholders' Interest Basis Carryover;
TENTH: to Subordinate Noteholders for any unpaid
Subordinate Noteholders' Interest Basis Carryover;
ELEVENTH: to the Swap Counterparty for all amounts due under the Swap
Agreement, to the extent that the Swap Counterparty is the Defaulting
Party (as such term is defined in the Swap Agreement), the Early
Termination Date (as such term is defined therein) arises from a
Termination Event or the Trust is the Defaulting Party with respect to an
Event of Default specified in Section 5 (a)(i) of the Swap Agreement
(exclusive of any Trust Swap Payment Amount paid pursuant to Clause SECOND
hereof); and
TWELFTH: to the Issuer, for distribution in accordance
with the terms of the Administration Agreement.
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, the Indenture Trustee and
the Subordinate Note Insurer 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 (with the prior written
consent of the Subordinate Note Insurer), but need not, and shall, if the Senior
Notes are not Outstanding and the Subordinate Note Insurer so directs, 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 Amount
of the Notes 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 Amount of the Notes or the
Subordinate Note Insurer; and
(vi the Subordinate Note Insurer shall have given its prior written
consent if such action could adversely affect the interests of the
Subordinate Noteholders or the Subordinate Note Insurer.
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.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Noteholders
pursuant to this Section 5.06, each representing less than a majority of the
Outstanding Amount of the Notes, the Indenture Trustee in its sole discretion
may determine what action, if any, shall be taken, notwithstanding any other
provisions of this Indenture.
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 or after the Redemption Date) 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, the Subordinate Note Insurer 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, the Subordinate Note Insurer or
to such Noteholder, then and in every such case the Issuer, the Indenture
Trustee, the Subordinate Note Insurer 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, the Subordinate Note Insurer 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, the Subordinate Note
Insurer 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 or the Subordinate Note Insurer 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, to the Noteholders or to the Subordinate
Note Insurer may be exercised from time to time, and as often as may be deemed
expedient, by the Indenture Trustee, the Noteholders or the Subordinate Note
Insurer, as the case may be.
SECTION 5.11. Control by Noteholders. If the Senior Notes are Outstanding,
the Noteholders of a majority of the Outstanding Amount of the Notes, with the
prior written consent of the Subordinate Note Insurer, 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 Amount of the
Notes;
(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 Amount of the Notes 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 Amount of the
Notes, with the prior written consent of the Subordinate Note Insurer and the
Swap Counterparty, or, if the Senior Notes are not Outstanding, the Subordinate
Note Insurer may waive any past Default or Event of Default and its consequences
except a Default or Event of Default (a) in payment when due of principal of or
interest (including, subject to the limitations of Sections 2.07(d) and 8.02,
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, the Subordinate Note Insurer and the Swap
Counterparty; provided, however, that all Noteholders and the Subordinate Note
Insurer may waive events described in clauses (a) and (b) hereof. In the case of
any such waiver, the Issuer, the Indenture Trustee, the Subordinate Note Insurer
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 Default or Event of Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to be 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 or other Default or 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 or the Subordinate Note Insurer, (b) any suit instituted by
any Noteholder, or group of Noteholders, in each case holding in the aggregate
more than 10% of the Outstanding Amount of the Notes 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 this Indenture (or, in
the case of redemption, on or after the Redemption Date).
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 or the Subordinate Note Insurer, 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, the Subordinate Note Insurer or the Noteholders shall
be impaired by the recovery of any judgment by the Indenture Trustee or the
Subordinate Note Insurer 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 or the Subordinate Note
Insurer to do so and at the Administrator's expense, the Issuer shall take all
such lawful action as the Indenture Trustee may request to compel or secure the
performance and observance by the Seller, the Servicer, the Administrator and
the Swap Counterparty, as applicable, of each of their obligations to the Issuer
under or in connection with the Loan Sale Agreement, the Servicing Agreement,
the Administration Agreement and the Swap Agreement and to exercise any and all
rights, remedies, powers and privileges lawfully available to the Issuer under
or in connection with the Loan Sale Agreement, the Servicing Agreement and the
Administration Agreement to the extent and in the manner directed by the
Indenture Trustee or the Subordinate Note Insurer, including the transmission of
notices of default on the part of the Seller, the Servicer, the Administrator or
the Swap Counterparty thereunder and the institution of legal or administrative
actions or proceedings to compel or secure performance by the Seller, the
Servicer, the Administrator or the Swap Counterparty of each of their
obligations under the Loan Sale Agreement, the Servicing Agreement, the
Administration Agreement or the Swap Agreement.
(b) If an Event of Default has occurred, the Indenture Trustee, with the
written consent of the Subordinate Note Insurer, may, and at the direction
(which direction shall be in writing or by telephone (confirmed in writing
promptly thereafter)) of, if the Senior Notes are Outstanding, the Noteholders
of 66-2/3% of the Outstanding Amount of the Notes or, if the Senior Notes are
not Outstanding, of the Subordinate Note Insurer, shall, exercise all rights,
remedies, powers, privileges and claims of the Issuer against the Seller, the
Servicer, the Administrator or the Swap Counterparty under or in connection with
the Loan Sale Agreement, the Servicing Agreement, the Administration Agreement
or the Swap Agreement, including the right or power to take any action to compel
or secure performance or observance by the Seller, the Servicer, the
Administrator or the Swap Counterparty of each of their obligations to the
Issuer thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Loan Sale Agreement, the Servicing Agreement, the
Administration Agreement or the Swap Agreement and any right of the Issuer to
take such action shall be suspended.
ARTICLE VI
The Indenture Trustee
SECTION 6.01. Duties of Indenture Trustee. (a) If an Event of Default has
occurred and is continuing, the Indenture Trustee shall exercise the rights and
powers vested in it by this Indenture and use the same degree of care and skill
in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs.
(b) Except during the continuance of an Event of Default:
(i 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; and
(ii in the absence of bad faith on its part, the Indenture Trustee
may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; provided, however, that the Indenture
Trustee shall examine such certificates and opinions to determine whether
they conform to the requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i this paragraph does not limit the effect of
paragraph (b) of this Section;
(ii the Indenture Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer unless it is proved
that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(iii the Indenture Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Sections 5.02, 5.11, 5.12 and 5.16.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b), (c) and (g) of this
Section.
(e) The Indenture Trustee shall not be liable for interest on any money
received by it except as the Indenture Trustee may agree in writing with the
Issuer.
(f) Money held in trust by the Indenture Trustee need not be segregated
from other funds except to the extent required by law or the terms of this
Indenture or the Servicing Agreement.
(g) No provision of this Indenture shall require the Indenture Trustee to
expend or risk its own funds or otherwise incur 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 to believe that repayments
of such funds or adequate indemnity satisfactory to it against any loss,
liability or expense is not reasonably assured to it.
(h) Except as expressly provided in the Basic Documents, the Indenture
Trustee shall have no obligation to administer, service or collect the Financed
Student Loans or to maintain, monitor or otherwise supervise the administration,
servicing or collection of the Financed Student Loans.
(i) In the event that the Indenture Trustee is the Paying Agent or the
Note Registrar, the rights and protections afforded to the Indenture Trustee
pursuant to this Indenture shall also be afforded to the Indenture Trustee in
its capacity as Paying Agent or Note Registrar.
(j) 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 and to the provisions of the TIA.
(k) Notwithstanding any other provision in this Agreement or the other
Basic Documents, nothing in this Agreement or the other Basic Documents shall be
construed to limit the Indenture Trustee's legal responsibility to the U.S.
Secretary of Education or a Guarantor in its capacity as Eligible Lender Trustee
for any violations of statutory or regulatory requirements that may occur with
respect to loans held by the Indenture Trustee, pursuant to 34 CFR 682.203(b) or
any successor provision thereto.
SECTION 6.02. Rights of Indenture Trustee. (a) The
Indenture Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper Person.
The Indenture Trustee need not investigate any fact or matter
stated in such document.
(b) Before the Indenture Trustee acts or refrains from acting in
connection with any matter contemplated by this Indenture or other Basic
Documents, it may require an Officers' Certificate of the Issuer or an Opinion
of Counsel from the appropriate party. The Indenture Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on such
Officers' Certificate or Opinion of Counsel from the appropriate party.
(c) The Indenture Trustee may exercise any of the trusts and powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee appointed with due care by it
hereunder.
(d) The Indenture Trustee shall not be liable for any action it takes or
omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Indenture Trustee's conduct does
not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the written advice
or opinion of counsel with respect to legal matters relating to this Indenture
and the other Basic Documents and the Notes shall be full and complete
authorization and protection from liability in respect to any action taken,
omitted or suffered by it hereunder in good faith and in accordance with the
advice or opinion of such counsel.
(f) Subject to clauses (a), (b), (c) and (g) of Section 6.01 hereof, the
Indenture Trustee shall be under no obligation to exercise any of the rights or
powers vested in it by this Indenture at the request or direction of any
Noteholder pursuant to this Indenture, unless such Noteholder shall have offered
to the Indenture Trustee security or indemnity reasonably satisfactory to the
Indenture Trustee against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.
SECTION 6.03. Individual Rights of Indenture Trustee. The Indenture
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Issuer or its Affiliates with the same
rights it would have if it were not Indenture Trustee. Any Paying Agent, Note
Registrar, co-registrar or co-paying agent may do the same with like rights.
However, the Indenture Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.04. Indenture Trustee's Disclaimer. The Indenture Trustee shall
not be responsible for and makes no representation as to the validity or
adequacy of this Indenture or the Notes, it shall not be accountable for the
Issuer's use of the proceeds from the Notes, and it shall not be responsible for
any statement of the Issuer in the Indenture or in any document issued in
connection with the sale of the Notes or in the Notes other than the Indenture
Trustee's certificate of authentication.
SECTION 6.05. Notice of Defaults. If a Default occurs and if it is
actually known by, or written notice of the existence thereof has been delivered
to, a Responsible Officer of the Indenture Trustee, the Indenture Trustee shall
mail notice of the Default to each Noteholder, the Subordinate Note Insurer, the
Swap Counterparty and the Rating Agencies promptly after the Indenture Trustee
obtains such knowledge or receives such notice of the Default. Except in the
case of a Default in payment of principal of or interest (including any
Noteholders' Interest Basis Carryover) on any Note (including payments pursuant
to the mandatory redemption provisions of such Note), the Indenture Trustee may
withhold the notice to the Noteholders if and so long as a committee of its
Responsible Officers in good faith determines that withholding the notice is in
the interests of Noteholders.
SECTION 6.06. Reports by Indenture Trustee to Noteholders. The Paying
Agent shall deliver to each Noteholder (and to each Person who was a Noteholder
at any time during the applicable calendar year) such information as may be
required to enable such holder to prepare its federal and state income tax
returns. Within 60 days after each December 31 beginning with the December 31
following the date of this Indenture, the Indenture Trustee shall mail to each
Noteholder a brief report as of such December 31 that complies with TIA ss.
313(a) if required by said section. The Indenture Trustee shall also comply with
TIA ss. 313(b). A copy of each such report required pursuant to TIA ss. 313(a)
or (b) shall, at the time of such transmission to Noteholders, be filed by the
Indenture Trustee with the Commission and with each securities exchange, if any,
upon which the Notes are listed, provided that the Issuer has previously
notified the Indenture Trustee of such listing.
SECTION 6.07. Compensation and Indemnity. The Issuer shall cause the
Administrator to pay to the Indenture Trustee from time to time reasonable
compensation for its services and shall cause the Administrator to reimburse the
Indenture Trustee for all reasonable out-of-pocket expenses incurred or made by
it, including costs of collection, in addition to the compensation for its
services. Such expenses shall include the reasonable compensation and expenses,
disbursements and advances of the Indenture Trustee's agents, counsel,
accountants and experts. The Indenture Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Issuer
shall cause the Administrator to indemnify the Indenture Trustee, its officers,
directors, employees and agents against any and all loss, liability or expense
(including attorneys' fees and expenses) incurred by it in connection with the
administration of this trust and the performance of its duties hereunder and
under the other Basic Documents. The Indenture Trustee shall notify the Issuer
and the Administrator (with a copy to the Subordinate Note Insurer) promptly of
any claim for which it may seek indemnity. Failure by the Indenture Trustee to
so notify the Issuer and the Administrator shall not relieve the Issuer or the
Administrator of its obligations hereunder and under the other Basic Documents.
The Issuer shall cause the Administrator to defend the claim and the
Administrator shall not be liable for any additional legal fees and expenses of
the Indenture Trustee after it has assumed such defense; provided, however,
that, in the event that there may be a conflict between the positions of the
Indenture Trustee and the Administrator in conducting the defense of such claim,
the Indenture Trustee shall be entitled to separate counsel the fees and
expenses of which shall be paid by the Administrator on behalf of the Issuer.
Neither the Issuer nor the Administrator need reimburse any expense or indemnify
against any loss, liability or expense incurred by the Indenture Trustee through
the Indenture Trustee's own willful misconduct, negligence or bad faith.
All amounts payable to the Indenture Trustee under this Section 6.07 shall
be payable solely by the Administrator or from amounts otherwise payable to the
Company under Section 2(e)(ii)(b)(vi) of the Administration Agreement. The
Indenture Trustee agrees to continue to perform its obligations under the Basic
Documents notwithstanding any failure of the Administrator to pay any amounts
owed to the Indenture Trustee.
The Issuer's and Administrator's payment obligations to the Indenture
Trustee pursuant to this Section shall survive the discharge of this Indenture.
When the Indenture Trustee incurs expenses after the occurrence of a Default
specified in Section 5.01(iv) or (v) with respect to the Issuer, the expenses
are intended to constitute expenses of administration under Title 11 of the
United States Code or any other applicable federal or state bankruptcy,
insolvency or similar law.
SECTION 6.08. Replacement of Indenture Trustee. No resignation or removal
of the Indenture Trustee and no appointment of a successor Indenture Trustee
shall become effective until the acceptance of appointment by the successor
Indenture Trustee pursuant to this Section 6.08. The Indenture Trustee may
resign at any time by so notifying the Issuer, the Subordinate Note Insurer and
the Swap Counterparty. The Noteholders of a majority in Outstanding Amount of
the Notes may, with the prior written consent of the Subordinate Note Insurer
or, if the Senior Notes are not Outstanding, the Subordinate Note Insurer may,
remove the Indenture Trustee by so notifying the Indenture Trustee and may
appoint a successor Indenture Trustee acceptable to the Subordinate Note
Insurer. The Issuer shall remove the Indenture Trustee if:
(i the Indenture Trustee fails to comply with Section
6.11;
(ii an Insolvency Event occurs with respect to the
Indenture Trustee;
(iii a receiver or other public officer takes charge of
the Indenture Trustee or its property;
(iv the Indenture Trustee otherwise becomes incapable
of acting; or
(v the Indenture Trustee is in breach of any representation,
warranty, covenant or other material obligations of the Indenture Trustee
under any Basic Document.
If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the
Subordinate Note Insurer may, and, if it fails to do so, the Issuer shall,
promptly appoint a successor Indenture Trustee acceptable to the Subordinate
Note Insurer. Any successor Indenture Trustee shall be satisfactory to the Swap
Counterparty. A former Indenture Trustee shall not be liable for any acts or
omissions of any successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee, the Issuer and the Subordinate
Note Insurer and shall notify the Rating Agencies in writing of such acceptance.
Thereupon the resignation or removal of the retiring Indenture Trustee shall
become effective, and the successor Indenture Trustee shall have all the rights,
powers and duties of the Indenture Trustee under this Indenture. The successor
Indenture Trustee shall mail a notice of its succession to Noteholders. The
retiring Indenture Trustee shall promptly transfer all property held by it as
Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 60 days after
the retiring Indenture Trustee resigns or is removed, the retiring Indenture
Trustee, the Issuer, the Subordinate Note Insurer, the Swap Counterparty or the
Noteholders of a majority in Outstanding Amount of the Notes may petition any
court of competent jurisdiction for the appointment of a successor Indenture
Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder, with the prior written consent of the Subordinate Note Insurer, may
petition any court of competent jurisdiction for the removal of the Indenture
Trustee and the appointment of a successor Indenture Trustee acceptable to the
Subordinate Note Insurer.
Notwithstanding the replacement of the Indenture Trustee pursuant to this
Section, the Issuer's and the Administrator's obligations under Section 6.07
shall continue for the benefit of the retiring Indenture Trustee.
SECTION 6.09. Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation or
banking association without any further act shall be the successor Indenture
Trustee; provided, however, that such corporation or banking association shall
be acceptable to the Subordinate Note Insurer and otherwise qualified and
eligible under Section 6.11. The Indenture Trustee shall provide the Rating
Agencies and the Subordinate Note Insurer prior written notice of any such
transaction.
In case at the time such successor or successors by merger, conversion or
consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee. (a)
Notwithstanding any other provisions of this Indenture, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any part
of the Indenture Trust Estate may at the time be located, the Indenture Trustee,
with the prior written consent of the Subordinate Note Insurer, shall have the
power and may execute and deliver all instruments to appoint one or more Persons
to act as a co-trustee or co-trustees, or separate trustee or separate trustees,
of all or any part of the Indenture Trust Estate, and to vest in such Person or
Persons, in such capacity and for the benefit of the Noteholders, the
Subordinate Note Insurer and the Swap Counterparty, such title to the Indenture
Trust Estate, or any part hereof, and, subject to the other provisions of this
Section, such powers, duties, obligations, rights and trusts as the Indenture
Trustee or the Subordinate Note Insurer may consider necessary or desirable. No
co-trustee or separate trustee hereunder shall be required to meet the terms of
eligibility as a successor trustee under Section 6.11 and no notice to
Noteholders of the appointment of any co-trustee or separate trustee shall be
required under Section 6.08 hereof. The Indenture Trustee shall notify the
Rating Agencies of any appointment of a co-trustee or separate trustee
hereunder.
(b) Every separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(i all rights, powers, duties and obligations conferred or imposed
upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such separate trustee
or co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Indenture
Trustee joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed
the Indenture Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Indenture Trust Estate or any
portion thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the direction
of the Indenture Trustee;
(ii no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder;
and
(iii the Indenture Trustee may at any time accept the resignation of
or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Indenture and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Indenture on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all its
estates, properties, rights, remedies and trusts shall vest in and be exercised
by the Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 6.Eligibility; Disqualification. The Indenture Trustee shall at
all times satisfy the requirements of TIA ss. 310(a). The Indenture Trustee
shall be acceptable to the Subordinate Note Insurer and shall have a combined
capital and surplus of at least $50,000,000 as set forth in its most recent
published annual report of condition and it shall have a long term debt rating
of "Baa3" or better by Moody's. The Indenture Trustee shall comply with TIA ss.
310(b), including the optional provision permitted by the second sentence of TIA
ss. 310(b)(9); provided, however, that there shall be excluded from the
operation of TIA ss. 310(b)(1) any indenture or indentures under which other
securities of the Issuer are outstanding if the requirements for such exclusion
set forth in TIA ss. 310(b)(1) are met.
SECTION 6.Preferential Collection of Claims Against Issuer. The Indenture
Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship
listed in TIA ss. 311(b). An Indenture Trustee that has resigned or been removed
shall be subject to TIA ss. 311(a) to the extent indicated.
SECTION 6.Declaration of Default or Termination Event under the Swap
Agreement. The Indenture Trustee shall not declare the Swap Counterparty to be
in Default or declare a Termination Event under the Swap Agreement without the
prior written consent of the Subordinate Note Insurer.
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.01. Issuer to Furnish Indenture Trustee Names and Addresses of
Noteholders. The Issuer will furnish or cause to be furnished to the Indenture
Trustee (a) not more than five days after the earlier of (i) each Record Date
and (ii) three months after the last Record Date, a list, in such form as the
Indenture Trustee may reasonably require, of the names and addresses of the
Noteholders as of such Record Date, and (b) at such other times as the Indenture
Trustee may request in writing, within ten days after receipt by the Issuer of
any such request, a list of similar form and content as of a date not more than
ten days prior to the time such list is furnished; provided, however, that so
long as the Indenture Trustee is the Note Registrar, no such list shall be
required to be furnished. The Indenture Trustee or, if the Indenture Trustee is
not the Note Registrar, the Issuer shall furnish the Subordinate Note Insurer,
in writing on an annual basis and at such other times as the Subordinate Note
Insurer may request, a copy of the list of the Noteholders.
SECTION 7.02. Preservation of Information; Communications to Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Noteholders contained in the most
recent list furnished to the Indenture Trustee as provided in Section 7.01 and
the names and addresses of Noteholders received by the Indenture Trustee in its
capacity as Note Registrar. The Indenture Trustee may destroy any list furnished
to it as provided in such Section 7.01 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA ss. 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA ss. 312(c).
(d) The Indenture Trustee shall furnish to the Noteholders and the
Subordinate Note Insurer promptly upon receipt of a written request therefor,
duplicates or copies of all reports, notices, requests, demands, certificates,
financial statements and any other instruments furnished to the Indenture
Trustee under the Basic Documents.
(e) The Indenture Trustee shall provide notice to the Noteholders, the
Subordinate Note Insurer and the Swap Counterparty as provided in Section 9.02
of the Trust Agreement, and shall provide notice to the Noteholders and the
Subordinate Note Insurer of any amendment or supplement to the Trust Agreement
as provided in Section 11.01 of the Trust Agreement.
SECTION 7.03. Reports by Issuer. (a) The Issuer shall:
(i file with the Indenture Trustee, within 15 days after the
Issuer is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Issuer may be
required to file with the Commission pursuant to Section 13 or 15(d) of
the Exchange Act;
(ii file with the Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by the
Commission such additional information, documents and reports with respect
to compliance by the Issuer with the conditions and covenants of this
Indenture as may be required from time to time by such rules and
regulations; and
(iii supply to the Indenture Trustee (and the Indenture Trustee
shall transmit by mail to all Noteholders described in TIA ss. 313(c))
such summaries of any information, documents and reports required to be
filed by the Issuer pursuant to clauses (i) and (ii) of this Section
7.03(a) as may be required by rules and regulations prescribed from time
to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the Issuer
shall end on December 31 of each year.
(c) Copies of all reports to be sent to the Indenture Trustee under this
Section 7.03 shall be mailed to the Subordinate Note Insurer, the Swap
Counterparty and the Rating Agencies by the Issuer at the same time.
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.01. Collection of Money. 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 on behalf of itself and the
Noteholders pursuant to the Loan Sale Agreement, the Servicing Agreement or the
Administration Agreement 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. 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.
SECTION 8.02. Trust Accounts. (a) On or prior to the Closing Date, the
Issuer shall cause the Administrator to establish and maintain, in the name of
the Indenture Trustee, for the benefit of the Noteholders and the Subordinate
Note Insurer, the Trust Accounts as provided in Section 2(c) of the
Administration Agreement.
(b) On or before the Business Day preceding each Monthly Payment Date and
Quarterly Payment Date, all Monthly Available Funds with respect to the
preceding Monthly Collection Period (or in the case of a Quarterly Payment Date,
Available Funds with respect to the preceding Collection Period) will be
deposited in the Collection Account as provided in Section 4.01 of the Servicing
Agreement. On each Quarterly Payment Date, the Noteholders' Distribution Amount
and the Subordinate Note Insurance Policy Premium with respect to such Quarterly
Payment Date will be distributed from the Collection Account and from the
Reserve Account to the Indenture Trustee (or other Paying Agent) on behalf of
the Noteholders and the Subordinate Note Insurer as provided in Sections
2(d)(v)(C) and 2(e)(iv)(C) of the Administration Agreement. On each Quarterly
Payment Date, the Reserve Account Excess for such Quarterly Payment Date will be
distributed to the Indenture Trustee (or other Paying Agent) on behalf of the
Noteholders as provided in clauses (b)(ii) and (b)(iii) of Section 2(e)(ii) of
the Administration Agreement (and in the case of clause (b)(iii) whether
allocated thereto pursuant to the proviso to Section 2(e)(ii)(a) or pursuant to
Section 2(e)(ii)(b)). On the Quarterly Payment Date referred to in Section
10.01(a) with respect to a redemption pursuant to Section 10.01(a), the amount
on deposit in the Collateral Reinvestment Account on such Quarterly Payment Date
will be distributed therefrom to the Indenture Trustee (or other Paying Agent)
on behalf of the Noteholders as provided in Section 2(f)(ii) of the
Administration Agreement.
(c) On each Quarterly Payment Date, the Indenture Trustee (or any other
Paying Agent) shall distribute all amounts received by it from the Collection
Account and the Reserve Account pursuant to the second sentence of paragraph (b)
above to Noteholders and the Subordinate Note Insurer in respect of the Notes to
the extent of amounts due and unpaid on the Notes for principal and interest
(but not for any Noteholders' Interest Basis Carryover) and the Subordinate Note
Insurer in the following amounts and in the following order of priority
(provided, however, that amounts received from the Subordinate Note Insurer
under the Subordinate Note Insurance Policy shall only be available to pay
amounts to the Subordinate Noteholders):
(i the Class A-1 Noteholders' Interest Distribution Amount, the
Class A-2 Noteholders' Interest Distribution Amount, the Trust Swap
Payment Amount, if any, and any Termination Payment (to the extent such
Termination Payment is owed to the Swap Counterparty following a default
by the Trust under the Swap Agreement other than an Event of Default by
the Trust specified in Section 5(a)(i) of the Swap Agreement), to the
Class A-1 Noteholders, the Class A-2 Noteholders and the Swap
Counterparty, respectively; provided, however, that if there are not
sufficient funds to pay the Class A-1 Noteholders' Interest Distribution
Amount, the Class A-2 Noteholders' Interest Distribution Amount, the Trust
Swap Payment Amount, if any, and any Termination Payment, the amounts so
received shall be applied to the payment of such Class A-1 Noteholders'
Interest Distribution Amount, the Class A-2 Noteholders' Interest
Distribution Amount, the Trust Swap Payment Amount, if any, and any
Termination Payment, on a pro rata basis based on the ratio of each such
amount to the total of such amounts;
(ii the Subordinate Note Insurance Policy Premium and
all overdue Subordinate Note Insurance Policy Premiums, to the
Subordinate Note Insurer;
(iii the Subordinate Noteholders' Interest Distribution
Amount, to the Subordinate Noteholders;
(iv if the Revolving Period has terminated, the Senior Noteholders'
Principal Distribution Amount, to the Senior Noteholders (such amount to
be allocated among the Senior Noteholders as provided in Section 8.02(f))
until the Outstanding Amount of the Senior Notes is reduced to zero; and
(v after the Outstanding principal amount of the Senior Notes is
reduced to zero, the Subordinate Noteholders' Principal Distribution
Amount to the Subordinate Noteholders until the Outstanding principal
amount of the Subordinate Notes is reduced to zero.
(d) On each Quarterly Payment Date, the Indenture Trustee (or any Paying
Agent) shall distribute all amounts received by it on behalf of Noteholders in
respect of Reserve Account Excess pursuant to the second to the last sentence of
paragraph (b) above in the following amounts and order of priority:
(i to the Subordinate Note Insurer, any Reimbursement
Amounts;
(ii if the Revolving Period has terminated, any remaining such
amounts to Senior Noteholders (such amounts to be allocated among the
Senior Noteholders as provided in Section 8.02(f)) until the Outstanding
principal amount of the Notes is equal to the Pool Balance as of the close
of business on the last day of the related Collection Period and until the
Outstanding principal amount of the Senior Notes is reduced to zero;
(iii if the Revolving Period has terminated, any remaining such
amounts, after the Outstanding principal amount of the Senior Notes is
reduced to zero, to the Subordinate Noteholders until the Outstanding
principal amount of the Subordinate Notes is equal to the Pool Balance as
of the close of business on the last day of the related Collection Period;
(iv the Senior Noteholders' Interest Basis Carryover, if any, to
the Senior Noteholders; provided, however, that if insufficient funds are
received to pay the entire Senior Noteholders' Interest Basis Carryover,
the amounts so received shall be applied to the payment of the Class A-1
Noteholders' Interest Basis Carryover and the Class A-2 Noteholders'
Interest Basis Carryover on a pro rata basis based on the ratio of each
such amount to the total of such amounts;
(v the Subordinate Noteholders' Interest Basis
Carryover, if any, to the Subordinate Noteholders; and
(vi to the Swap Counterparty, all Termination Payments due under
the Swap Agreement, to the extent that the Swap Counterparty is the
Defaulting Party (as such term is defined in the Swap Agreement), the
Early Termination Date (as such term is defined therein) arises from a
Termination Event or the Trust is the Defaulting Party with respect to an
Event of Default specified in Section 5(a)(i) of the Swap Agreement
(exclusive of any Trust Swap Payment Amount paid pursuant to Clause SECOND
of Section 5.04 (b) hereof.
(e) On the Quarterly Payment Date referred to in Section 10.01(a) with
respect to redemption pursuant to Section 10.01(a), the Indenture Trustee (or
any other Paying Agent) shall distribute all amounts received by it from the
Collateral Reinvestment Account pursuant to the last sentence of Section (b)
above in the following amounts and order of priority:
(i to the Swap Counterparty, an amount equal to any
unpaid Net Trust Swap Payment Carryover Shortfalls;
(ii after any Net Trust Swap Payment Carryover Shortfalls have been
paid to the Swap Counterparty, any remaining such amounts to the Senior
Noteholders (such amount to be allocated among the Senior Noteholders as
provided in Section 8.02(f)) until the Outstanding principal amount of the
Senior Notes is reduced to zero;
(iii after the Outstanding principal amount of the Senior Notes is
reduced to zero, any remaining such amounts to the Subordinate Noteholders
until the Outstanding principal amount of the Subordinate Notes is reduced
to zero.
(f) Amounts payable to Senior Noteholders as provided in Sections
8.02(c)(iv), 8.02(d)(ii) and 8.02(e)(ii) shall be payable in the following
amounts and order of priority:
(i to the Class A-1 Noteholders in an amount necessary to reduce
the Outstanding principal amount of the Class A-1 Notes to zero;
(ii after the Outstanding principal amount of the Class A-1 Notes
is reduced to zero, to the Class A-2 Noteholders until the Outstanding
principal amount of the Class A-2 Notes is reduced to zero;
provided, however, that from and after any acceleration of the Notes following
an Event of Default, such amounts shall be payable to the Class A-1 Noteholders
and the Class A-2 Noteholders pro rata.
(g) (i) Prior to 12:00 noon, New York City time, on the second
Business Day prior to each Quarterly Payment Date, the Indenture Trustee
shall determine if a Deficiency Amount for such Quarterly Payment Date
exists and, if so, shall complete the Notice and submit such Notice in
accordance with the Subordinate Note Insurance Policy to the Subordinate
Note Insurer no later than 12:00 noon, New York City time, on the second
Business Day immediately preceding such Quarterly Payment Date, as a claim
for an Insured Payment in an amount equal to such Deficiency Amount. If
any time the Indenture Trustee determines that a Preference Amount is
payable under the terms of the Subordinate Note Insurance Policy, the
Indenture Trustee shall take the actions required by the terms of the
Subordinate Note insurance Policy to obtain payment of such Preference
Amount by the Subordinate Note Insurer.
"Notice" under the Subordinate Note Insurance Policy shall be defined
as the telephonic or telegraphic notice, promptly confirmed in writing by
facsimile substantially in the form of Exhibit A attached to the
Subordinate Note Insurance Policy, the original of which is subsequently
delivered by registered or certified mail, from the Indenture Trustee
specifying the Insured Payment which shall be due and owing on the
applicable Quarterly Payment Date.
(ii Upon receipt of an Insured Payment from the Subordinate Note
Insurer on behalf of the Subordinate Noteholders, the Indenture Trustee
shall deposit such Insured Payment in the Collection Account and shall
distribute such amount only to pay the Subordinate Noteholders in
accordance with the terms of the Subordinate Note Insurance Policy, and
such amount may not be applied in any other manner. All such amounts on
deposit in the Collection Account shall remain uninvested. The Indenture
Trustee shall include on each Quarterly Payment Date the Deficiency Amount
for such Quarterly payment Date in the amount distributed to the
applicable Subordinate Noteholders pursuant to Sections 8.02(c)(iii) and
8.02(c)(v) of the Indenture. If on any Quarterly payment Date, the
Indenture Trustee or the Administrator determines that the Subordinate
Note Insurer has paid more under the Subordinate Note Insurance Policy
than is required by the terms thereof, the Indenture Trustee shall
promptly return the excess amount to the Subordinate Note Insurer.
(iii The Indenture Trustee shall keep a complete and accurate record
of the amount of Insured Payments paid into the Collection Account in
respect of the Subordinate Notes from monies received under the
Subordinate Note Insurance Policy. The Subordinate Note Insurer shall have
the right to inspect such records at reasonable times during normal
business hours upon two Business Days' prior notice to the Indenture
Trustee.
(iv The Indenture Trustee shall (i) receive as attorney-in-fact of
each Subordinate Noteholder any Insured Payment from the Subordinate Note
Insurer and (ii) distribute such Insured Payment to such Subordinate
Noteholders as set forth in subsection (ii) above. Insured Payments
disbursed by the Indenture Trustee from proceeds of the Subordinate Note
Insurance Policy shall not be considered payment by the Trust with respect
to the Subordinate Notes, nor shall such disbursement of such Insured
Payments discharge the obligations of the Trust with respect to the
amounts thereof, and the Subordinate Note Insurer shall become owner of
such amounts to the extent covered by such Insured Payments as the deemed
assignee of such Subordinate Noteholders. The Indenture Trustee hereby
agrees on behalf of each Subordinate Noteholder (and each Subordinate
Noteholder, by its acceptance of its Subordinate Note, hereby agrees) for
the benefit of the Subordinate Note Insurer that, to the extent the
Subordinate Note Insurer makes Insured Payments, either directly or
indirectly (as by paying through the Indenture Trustee), to the
Subordinate Noteholders, the Subordinate Note Insurer shall be subrogated
to the rights of the Subordinate Noteholder to the extent of such
payments.
(v All notices, statements, reports, notes or opinions required by
this Indenture or the other Basic Documents to be sent to any other party
hereto or thereto or to the Noteholders at any time shall also be sent to
the Subordinate Note Insurer.
(h) In the event that the Swap Counterparty is replaced by a successor
swap counterparty pursuant to the terms of the Swap Agreement, the Indenture
Trustee shall pay any amounts owing to the Swap Counterparty in accordance with
the terms of the Swap Agreement.
SECTION 8.03. General Provisions Regarding Accounts. (a) So long as no
Default or Event of Default shall have occurred and be continuing, all or a
portion of the funds in the Trust Accounts shall be invested in Eligible
Investments and reinvested by the Indenture Trustee upon Issuer Order, subject
to the provisions of Section 2(c) of the Administration Agreement. All income or
other gain from investments of monies deposited in the Trust Accounts shall be
deposited by the Indenture Trustee in the Collection Account, and any loss
resulting from such investments shall be charged to such Trust Account. The
Issuer will not direct the Indenture Trustee to make any investment of any funds
or to sell any investment held in any of the Trust Accounts unless the security
interest granted and perfected in such account will continue to be perfected in
such investment or the proceeds of such sale, in either case without any further
action by any Person, and, in connection with any direction to the Indenture
Trustee to make any such investment or sale, if requested by the Indenture
Trustee, the Issuer shall deliver to the Indenture Trustee, the Subordinate Note
Insurer and the Swap Counterparty an Opinion of Counsel, acceptable to the
Indenture Trustee, the Subordinate Note Insurer and the Swap Counterparty, to
such effect. All Eligible Investments shall mature on the Business Day prior to
the Monthly Payment Date or Quarterly Payment Date, as applicable, and shall not
be sold prior to their maturity.
(b) Subject to Section 6.01(c), the Indenture Trustee shall not in any way
be held liable by reason of any insufficiency in any of the Trust Accounts
resulting from any loss on any Eligible Investment included therein except for
losses attributable to the Indenture Trustee's failure to make payments on such
Eligible Investments issued by the Indenture Trustee, in its commercial capacity
as principal obligor and not as trustee, in accordance with their terms.
(c) If (i) the Issuer (or the Administrator pursuant to Section 2.(a)(U)
of the Administration Agreement) shall have failed to give investment directions
for any funds on deposit in the Trust Accounts to the Indenture Trustee by 10:00
a.m. New York time (or such other time as may be agreed by the Issuer and
Indenture Trustee) on any Business Day; or (ii) a Default or an Event of
Default, shall have occurred and be continuing with respect to the Notes but the
Notes shall not have been declared due and payable pursuant to Section 5.02, or,
if such Notes shall have been declared due and payable following an Event of
Default, amounts collected or receivable from the Indenture Trust Estate are
being applied in accordance with Section 5.05 as if there had not been such a
declaration; then the Indenture Trustee shall, to the fullest extent
practicable, invest and reinvest funds in the Trust Accounts in one or more
Eligible Investments which mature prior to the next Monthly Payment Date or
Quarterly Payment Date, as applicable, and are not sold prior to their maturity.
SECTION 8.04. Release of Indenture Trust Estate. (a) Subject to the
payment of its fees and expenses pursuant to Section 6.07, the Indenture Trustee
may, and when required by the provisions of this Indenture shall, execute
instruments to release property from the lien of this Indenture, or convey the
Indenture Trustee's interest in the same, in a manner and under circumstances
that are not inconsistent with the provisions of this Indenture. No party
relying upon an instrument executed by the Indenture Trustee as provided in this
Article VIII shall be bound to ascertain the Indenture Trustee's authority,
inquire into the satisfaction of any conditions precedent or see to the
application of any monies.
(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding and all sums due the Indenture Trustee pursuant to Section 6.07 have
been paid and all amounts due to the Subordinate Note Insurer and the Swap
Counterparty under the Basic Documents have been paid, release any remaining
portion of the Indenture Trust Estate that secured the Notes from the lien of
this Indenture and release to the Issuer or any other Person entitled thereto
any funds then on deposit in the Trust Accounts. The Indenture Trustee shall
release property from the lien of this Indenture pursuant to this Section
8.04(b) only upon receipt by it, the Subordinate Note Insurer and the Swap
Counterparty of an Issuer Request accompanied by an Officers' Certificate of the
Issuer, an Opinion of Counsel and (if required by the TIA) Independent
Certificates in accordance with TIA ▇▇.▇▇. 314(c) and 314(d)(1) meeting the
applicable requirements of Section 11.01.
SECTION 8.05. Opinion of Counsel. The Indenture Trustee and the
Subordinate Note Insurer shall receive at least seven days' notice when
requested by the Issuer to take any action pursuant to Section 8.04(a),
accompanied by copies of any instruments involved, and the Indenture Trustee,
the Subordinate Note Insurer and the Swap Counterparty shall also require, as a
condition to such action, an Opinion of Counsel, in form and substance
satisfactory to the Indenture Trustee, the Subordinate Note Insurer and the Swap
Counterparty, stating the legal effect of any such action, outlining the steps
required to complete the same, and concluding that all conditions precedent to
the taking of such action have been complied with and such action will not
materially and adversely impair the security for the Notes or the rights of the
Noteholders in contravention of the provisions of this Indenture; provided,
however, that such Opinion of Counsel shall not be required to express an
opinion as to the fair value of the Indenture Trust Estate. Counsel rendering
any such opinion may rely, with respect to factual matters without independent
investigation thereof, on the accuracy and validity of any certificate or other
instrument delivered to the Indenture Trustee in connection with any such
action.
ARTICLE IX
Supplemental Indentures
SECTION 9.01. Supplemental Indentures Without Consent of Noteholders. (a)
Without the consent of any Noteholders but with the prior written consent of the
Subordinate Note Insurer and the Swap Counterparty and the prior notice to the
Rating Agencies, the Issuer and the Indenture Trustee, when authorized by an
Issuer Order, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as in force at the date of the execution thereof), in form
satisfactory to the Indenture Trustee, for any of the following purposes:
(i to correct or amplify the description of any property at any
time subject to the lien of this Indenture, or, better to assure, convey
and confirm unto the Indenture Trustee any property subject or required to
be subjected to the lien of this Indenture, or to subject to the lien of
this Indenture additional property;
(ii to evidence the succession, in compliance with the applicable
provisions hereof, of another Person to the Issuer, and the assumption by
any such successor of the covenants of the Issuer herein and in the Notes
contained;
(iii to add to the covenants of the Issuer, for the benefit of the
Noteholders, the Subordinate Note Insurer and the Swap Counterparty, or to
surrender any right or power herein conferred upon the Issuer;
(iv to convey, transfer, assign, mortgage or pledge
any property to or with the Indenture Trustee;
(v to cure any ambiguity, to correct or supplement any provision
herein or in any supplemental indenture which may be inconsistent with any
other provision herein or in any supplemental indenture or to make any
other provisions with respect to matters or questions arising under this
Indenture or in any supplemental indenture; provided, however, that such
action shall not materially adversely affect the interests of the
Noteholders;
(vi to evidence and provide for the acceptance of the appointment
hereunder by a successor trustee with respect to the Notes and to add to
or change any of the provisions of this Indenture as shall be necessary to
facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI; or
(vii to modify, eliminate or add to the provisions of this Indenture
to such extent as shall be necessary to effect the qualification of this
Indenture under the TIA or under any similar federal statute hereafter
enacted and to add to this Indenture such other provisions as may be
expressly required by the TIA.
The Indenture Trustee is hereby authorized to join in the execution of any
such supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may also, without the consent of any of the Noteholders but with the
prior written consent of the Subordinate Note Insurer and the Swap Counterparty
and prior notice to the Rating Agencies, 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 such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Noteholder.
SECTION 9.02. Supplemental Indentures with Consent of Noteholders. The
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may,
with prior notice to the Rating Agencies and with the written consent of the
Subordinate Note Insurer, the Swap Counterparty and the Noteholders of not less
than a majority of the Outstanding Amount of the Notes, by Act of such
Noteholders delivered to the Issuer and the Indenture Trustee, 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 such supplemental indenture
shall, without the consent of the Noteholder of each Outstanding Note affected
thereby:
(i change the date of payment of any installment of principal of
or interest (including any Noteholders' Interest Basis Carryover) on any
Note, or reduce the principal amount thereof, the interest rate thereon or
the Redemption Price with respect thereto, change the provisions of this
Indenture relating to the application of collections on, or the proceeds
of the sale of, the Indenture Trust Estate to payment of principal of or
interest (including any Noteholders' Interest Basis Carryover) on the
Notes, or change any 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 the provisions of this Indenture
requiring the application of funds available therefor, as provided in
Article V, to the payment of any such amount due on the Notes on or after
the respective due dates thereof (or, in the case of redemption, on or
after the Redemption Date);
(ii reduce the percentage of the Outstanding Amount of the Notes,
the consent of the Noteholders of which is required for any such
supplemental indenture, or the consent of the Noteholders of which is
required for any waiver of compliance with certain provisions of this
Indenture or certain defaults hereunder and their consequences provided
for in this Indenture;
(iii modify or alter the provisions of the proviso to
the definition of the term "Outstanding";
(iv reduce the percentage of the Outstanding Amount of the Notes
required to direct the Indenture Trustee to direct the Issuer to sell or
liquidate the Indenture Trust Estate pursuant to Section 5.04;
(v modify any provision of this Section except to increase any
percentage specified herein or to provide that certain additional
provisions of this Indenture or the other Basic Documents cannot be
modified or waived without the consent of the Noteholder of each
Outstanding Note affected thereby;
(vi modify any of the provisions of this Indenture in such manner
as to affect the calculation of the amount of any payment of interest
(including any Noteholders' Interest Basis Carryover) or principal due on
any Note on any Quarterly Payment Date (including the calculation of any
of the individual components of such calculation) or to affect the rights
of the Noteholders to the benefit of any provisions for the mandatory
redemption of the Notes contained herein; or
(vii 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, except as otherwise permitted or contemplated herein,
terminate the lien of this Indenture on any property at any time subject
hereto or deprive any Noteholder of any Note of the security provided by
the lien of this Indenture.
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture and any such determination
shall be conclusive upon the Noteholders of all Notes whether theretofore or
thereafter authenticated and delivered hereunder. The Indenture Trustee shall
not be liable for any such determination made in good faith.
It shall not be necessary for any Act of Noteholders under this Section to
approve the particular form of any proposed supplemental indenture, but it shall
be sufficient if such Act shall approve the substance thereof.
Promptly after the execution by the Issuer and the Indenture Trustee of
any supplemental indenture pursuant to this Section, the Indenture Trustee shall
mail to the Noteholders of the Notes to which such amendment or supplemental
indenture relates and to the Rating Agencies a notice setting forth in general
terms the substance of such supplemental indenture. Any failure of the Indenture
Trustee to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture.
SECTION 9.03. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article IX or the modifications thereby of the trusts created
by this Indenture, the Indenture Trustee shall receive, and subject to Sections
6.01 and 6.02, 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 such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise. The Indenture Trustee shall provide a fully executed
copy of any supplemental indentures to the Indenture to the Subordinate Note
Insurer, the Swap Counterparty and each Rating Agency.
SECTION 9.04. Effect of Supplemental Indenture. Upon the execution of any
supplemental indenture pursuant to the provisions hereof, this Indenture shall
be and be deemed to be modified and amended in accordance therewith with respect
to the Notes affected thereby, and the respective rights, limitations of rights,
obligations, duties, liabilities and immunities under this Indenture of the
Indenture Trustee, the Issuer, the Noteholders, the Subordinate Note Insurer and
the Swap Counterparty shall thereafter be determined, exercised and enforced
hereunder subject in all respects to such modifications and amendments, and all
the terms and conditions of any such supplemental indenture shall be and are
deemed to be part of the terms and conditions of this Indenture for any and all
purposes.
SECTION 9.05. Conformity with Trust Indenture Act. Every amendment of this
Indenture and every supplemental indenture executed pursuant to this Article IX
shall conform to the requirements of the Trust Indenture Act as then in effect
so long as this Indenture shall then be qualified under the Trust Indenture Act.
SECTION 9.06. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article IX may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee and the Subordinate
Note Insurer as to any matter provided for in such supplemental indenture. If
the Issuer or the Indenture Trustee shall so determine, new Notes so modified as
to conform, in the opinion of the Indenture Trustee and the Issuer, to any such
supplemental indenture may be prepared and executed by the Issuer and
authenticated and delivered by the Indenture Trustee in exchange for Outstanding
Notes.
ARTICLE X
Redemption of Notes
SECTION 10.01. Redemption. (a) In the event that on the Quarterly Payment
Date on which the Revolving Period ends (or on the Quarterly Payment Date on or
immediately following the last day of the Revolving Period, if the Revolving
Period does not end on a Quarterly Payment Date) any amount remains on deposit
in the Collateral Reinvestment Account after giving effect to the making of all
Additional Fundings, including any such Additional Fundings on such Quarterly
Payment Date and the payment to the Swap Counterparty of any prior unpaid Net
Trust Swap Payment Carryover Shortfalls as provided in Section 8.02(e), one or
more classes of the Notes will be redeemed in part, in the order of priority
specified in Section 8.02(e), in an aggregate principal amount equal to the
amount then on deposit in the Collateral Reinvestment Account after giving
effect to such Additional Fundings and such payment to the Swap Counterparty.
(b) In the event that the Financed Student Loans are sold pursuant to
Section 4.04 hereof, that portion of the amounts on deposit in the Trust
Accounts to be distributed to the Noteholders shall be paid to the Noteholders
up to the Outstanding Amount of the Notes and all accrued and unpaid interest
thereon and any accrued Noteholders' Interest Basis Carryover with respect
thereto (but only to the extent provided by Sections 2.07(d) and 8.02 hereof).
If amounts are to be paid to Noteholders pursuant to this Section 10.01(b), the
Administrator or the Issuer shall, to the extent practicable, furnish notice of
such Event to the Indenture Trustee, the Subordinate Note Insurer and the Swap
Counterparty not later than 25 days prior to the Redemption Date whereupon all
such amounts shall be payable on the Redemption Date.
(c) The Notes are subject to redemption in whole, but not in part, on any
Quarterly Payment Date on which the Company exercises its option to purchase the
Trust Estate pursuant to Section 5.01 of the Loan Sale Agreement. If the Notes
are to be redeemed pursuant to this Section 10.01(c), the Company shall furnish
notice of such election to the Indenture Trustee not later than 20 days prior to
the Redemption Date and the Issuer shall deposit by 10:00 a.m. New York time on
the Redemption Date with the Indenture Trustee in the Collection Account the
Redemption Price for the Notes, whereupon the Notes shall be due and payable on
the Redemption Date upon furnishing a notice complying with Section 10.02 to
each Noteholder, the Subordinate Note Insurer and the Swap Counterparty.
(d) No redemption of the Notes pursuant to Section 10.01(b) or 10.01(c)
shall occur until the Trustee shall have first paid to the Subordinate Note
Insurer all Reimbursement Amounts owed to the Subordinate Note Insurer and to
the Swap Counterparty any prior unpaid Net Trust Swap Carryover Shortfalls and
any other amounts owed to the Swap Counterparty under the Swap Agreement.
(e) Any redemption pursuant to this Section 10.01 shall require the
Subordinate Note Insurer's prior written consent if (i) a claim has previously
been made under the Subordinate Note Insurance Policy, (ii) such redemption
would result in a claim on the Subordinate Note Insurance Policy or (iii) such
redemption would result in any amount owing to the Subordinate Note Insurer or
any other Person and remaining unpaid under the Basic Documents.
SECTION 10.02. Form of Redemption Notice. Notice of redemption under
Section 10.01 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 the Subordinate Note Insurer, to the Swap
Counterparty and 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
(iii 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 3.02).
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 10.03. 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 XI
Miscellaneous
SECTION 11.01. Compliance Certificates and Opinions. (a) Upon any
application or request by the Issuer to the Indenture Trustee to take any action
under any provision of this Indenture, the Issuer shall furnish to the Indenture
Trustee, the Subordinate Note Insurer and the Swap Counterparty (i) an Officers'
Certificate of the Issuer stating that all conditions precedent, if any,
provided for in this Indenture relating to the proposed action have been
complied with, (ii) an Opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with and (iii)
(if required by the TIA) an Independent Certificate from a firm of certified
public accountants meeting the applicable requirements of this Section, except
that, in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture,
no additional certificate or opinion need be furnished.
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 brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii 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
(iv a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other property or
securities with the Indenture Trustee that is to be made the basis for the
release of any property or securities subject to the lien of this
Indenture, the Issuer shall, in addition to any obligation imposed in
Section 11.01(a) or elsewhere in this Indenture, furnish to the Indenture
Trustee and the Subordinate Note Insurer an Officers' Certificate of the
Issuer certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such deposit) to the
Issuer of the Collateral or other property or securities to be so
deposited.
(ii Whenever the Issuer is required to furnish to the Indenture
Trustee and the Subordinate Note Insurer an Officers' Certificate of the
Issuer certifying or stating the opinion of any signer thereof as to the
matters described in clause (i) above, the Issuer shall also deliver to
the Indenture Trustee and the Subordinate Note Insurer an Independent
Certificate as to the same matters, if the fair value to the Issuer of the
securities to be so deposited and of all other such securities made the
basis of any such withdrawal or release since the commencement of the then
current fiscal year of the Issuer, as set forth in the certificates
delivered pursuant to clause (i) above and this clause (ii), is 10% or
more of the Outstanding Amount of the Notes, but such a certificate need
not be furnished with respect to any securities so deposited, if the fair
value thereof to the Issuer as set forth in the related Officers'
Certificate is less than $25,000 or less than one percent of the
Outstanding Amount of the Notes.
(iii Other than any property released as contemplated by clause (v)
below, whenever any property or securities are to be released from the
lien of this Indenture, the Issuer shall also furnish to the Indenture
Trustee and the Subordinate Note Insurer an Officers' Certificate of the
Issuer certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such release) of the
property or securities proposed to be released and stating that in the
opinion of each such person the proposed release will not impair the
security under this Indenture in contravention of the provisions hereof.
(iv Whenever the Issuer is required to furnish to the Indenture
Trustee and the Subordinate Note Insurer an Officers' Certificate of the
Issuer certifying or stating the opinion of any signer thereof as to the
matters described in clause (iii) above, the Issuer shall also furnish to
the Indenture Trustee and the Subordinate Note Insurer an Independent
Certificate as to the same matters if the fair value of the property or
Securities and of all other property, other than property as contemplated
by clause (v) below, or securities released from the lien of this
Indenture since the commencement of the then-current calendar year, as set
forth in the certificates required by clause (iii) above and this clause
(iv), equals 10% or more of the Outstanding Amount of the Notes, but such
certificate need not be furnished in the case of any release of property
or securities if the fair value thereof as set forth in the related
Officers' Certificate is less than $25,000 or less than one percent of the
then Outstanding Amount of the Notes.
(v Notwithstanding Section 2.09 or any other provision of this
Section, the Issuer may, without compliance with the requirements of the
other provisions of this Section, (A) collect, liquidate, sell or
otherwise dispose of Financed Student Loans as and to the extent permitted
or required by the Basic Documents and (B) make cash payments out of the
Trust Accounts as and to the extent permitted or required by the Basic
Documents, so long as the Issuer shall deliver to the Indenture Trustee,
the Subordinate Note Insurer and the Swap Counterparty every three months,
commencing July 25, 1998, an Officers' Certificate of the Issuer stating
that all the dispositions of Collateral described in clauses (A) and (B)
above that occurred during the immediately preceding three calendar months
(or the period from the Closing Date in the case of the July 25, 1998
Officers' Certificate) were in the ordinary course of the Issuer's
business and that the proceeds thereof were applied in accordance with the
Basic Documents.
SECTION 11.02. Form of Documents Delivered to Indenture Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a certificate or
opinion of, or representations by, an officer or officers of the Servicer, the
Seller, the Issuer or the Administrator, stating that the information with
respect to such factual matters is in the possession of the Servicer, the
Seller, the Issuer or the Administrator, unless such counsel knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VI.
SECTION 11.03. Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided such action shall become effective when such
instrument or instruments are delivered to the Indenture Trustee, and, where it
is hereby expressly required, to the Issuer. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Noteholders signing such instrument or instruments. Proof
of execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Section
6.01) conclusive in favor of the Indenture Trustee and the Issuer, if made in
the manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other action by the Noteholder of any Notes shall bind the Noteholder of
every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
SECTION 11.04. Notices to Indenture Trustee, Issuer, Subordinate Note
Insurer, Swap Counterparty and Rating Agencies. Any request, demand,
authorization, direction, notice, consent, waiver or act of Noteholders or other
documents provided or permitted by this Indenture shall be in writing and if
such request, demand, authorization, direction, notice, consent, waiver or act
of Noteholders is to be made upon, given or furnished to or filed with:
(a) the Indenture Trustee by any Noteholder, by the Subordinate Note
Insurer, by the Swap Counterparty or by the Issuer, it shall be sufficient
for every purpose hereunder if made, given, furnished or filed in writing
to or with the Indenture Trustee at its Corporate Trust Office, or
(b) the Issuer by the Indenture Trustee, by the Subordinate Note
Insurer, by the Swap Counterparty or by any Noteholder, it shall be
sufficient for every purpose hereunder if in writing and mailed,
first-class, postage prepaid, to the Issuer addressed to: SMS Student Loan
Trust 1998-A, in care of First Chicago Delaware, Inc., as Trustee, FCC
National Bank, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, with a copy to
the Eligible Lender Trustee at the Corporate Trust Office of the Eligible
Lender Trustee, or at any other address previously furnished in writing to
the Indenture Trustee by the Issuer. The Issuer shall promptly transmit
any notice received by it from the Noteholders to the Indenture Trustee.
Notices required to be given to the Subordinate Note Insurer by the
Issuer, the Indenture Trustee or the Eligible Lender Trustee shall be in
writing, personally delivered or mailed by certified mail, return receipt
requested, to the following address: MBIA Insurance Corporation, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Insured Portfolio
Management--Structured Finance (IPM-SF), SMS Student Loan Trust 1998-A,
$21,350,000 Floating Rate Asset-Backed Subordinate Notes, or at such other
address as shall be designated by written notice to the other parties.
Notices required to be given to the Swap Counterparty by the Issuer, the
Indenture Trustee or the Eligible Lender Trustee shall be in writing, personally
delivered or mailed by certified mail, return receipt requested, to the
following address: General Re Financial Products Corporation, Rockefeller
Center, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Head
of Operations, or at such other address as shall be designated by written notice
to the other parties.
Notices required to be given to the Rating Agencies by the Issuer, the
Indenture Trustee or the Eligible Lender Trustee shall be in writing, personally
delivered or mailed by certified mail, return receipt requested, to the
following address: (i) in the case of ▇▇▇▇▇'▇ Investors Service, Inc., at the
following address: ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of ABS
Monitoring Department and (ii) in the case of Fitch IBCA, Inc., at the following
address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of Asset
Backed Monitoring Unit; or as to each of the foregoing, at such other address as
shall be designated by written notice to the other parties.
SECTION 11.05. Notices to Noteholders; Waiver. Where this
Indenture provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may be
waived in writing by any Person entitled to receive such notice, either before
or after the event, and such waiver shall be the equivalent of such notice.
Waivers of notice by Noteholders shall be filed with the Indenture Trustee but
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure
to give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Default or an Event
of Default.
SECTION 11.06. Alternate Payment and Notice Provisions. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Noteholder providing for a method of
payment, or notice by the Indenture Trustee or any Paying Agent to such
Noteholder, that is different from the methods provided for in this Indenture
for such payments or notices, provided that such agreement is reasonably
acceptable to the Indenture Trustee. The Issuer will furnish to the Indenture
Trustee a copy of each such agreement and the Indenture Trustee will cause
payments to be made and notices to be given in accordance with such agreements.
SECTION 11.07. Conflict with Trust Indenture Act. If any provision hereof
limits, qualifies or conflicts with another provision hereof that is required to
be included in this Indenture by any of the provisions of the Trust Indenture
Act, such required provision shall control.
The provisions of TIA ▇▇.▇▇. 310 through 317 that impose duties on any
Person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 11.08. Effect of Headings and Table of Contents. The Article and
Section headings herein and the Table of Contents are for convenience only and
shall not affect the construction hereof.
SECTION 11.09. Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee in
this Indenture shall bind the successors, co-trustees and agents (excluding any
legal representatives or accountants) of the Indenture Trustee.
SECTION 11.10. Separability. In case any provision in this Indenture or in
the Notes shall be invalid, illegal or unenforceable, the validity, legality,
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 11.11. Benefits of Indenture. Nothing in this Indenture or in the
Notes, express or implied, shall give to any Person, other than the parties
hereto and their successors hereunder, the Subordinate Note Insurer, the Swap
Counterparty and the Noteholders, and any other party secured hereunder, and any
other Person with an ownership interest in any part of the Indenture Trust
Estate, any benefit or any legal or equitable right, remedy or claim under this
Indenture. The Subordinate Note Insurer, the Swap Counterparty and their
respective successors and assigns shall be express third-party beneficiaries to
this Indenture and shall be entitled to rely upon and directly enforce the
provisions of this Indenture; provided, however, that in the case of the
Subordinate Note Insurer such right to enforcement and the right to provide
consents and waivers pursuant to the provisions hereof or to take any other
actions as provided herein are conditioned upon there not having occurred and
being continuing an Insurer Default and, in the case of the Swap Counterparty,
such right to enforcement and the right to provide consents and waivers pursuant
to the provisions hereof or to take other actions as provided herein are
conditioned upon its not being in default under the Swap Agreement.
SECTION 11.12. [Reserved]
SECTION 11.13. Governing Law. This Indenture shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 11.14. Counterparts. This Indenture may be executed
in any number of counterparts, each of which so executed shall be deemed to be
an original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 11.15. Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense and shall be accompanied by an Opinion
of Counsel (which may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee and the Subordinate Note Insurer)
to the effect that such recording is necessary either for the protection of the
Noteholders, the Swap Counterparty or any other Person secured hereunder or for
the enforcement of any right or remedy granted to the Indenture Trustee under
this Indenture.
SECTION 11.16. Trust Obligations. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Seller, the
Company, the Administrator, the Servicer, the Eligible Lender Trustee or the
Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Seller, the Company, the Administrator, the Servicer, the Indenture Trustee or
the Eligible Lender Trustee in its individual capacity or (ii) any partner,
owner, beneficiary, agent, officer, director or employee of the Seller, the
Company, the Administrator, the Servicer, the Indenture Trustee or the Eligible
Lender Trustee in its individual capacity, any holder or owner of a beneficial
interest in the Issuer, the Eligible Lender Trustee or the Indenture Trustee or
of any successor or assign of the Seller, the Company, Administrator, the
Servicer, the Indenture Trustee or the Eligible Lender Trustee in its individual
capacity, except as any such Person may have expressly agreed (it being
understood that the Indenture Trustee and the Eligible Lender Trustee have no
such obligations in their individual capacity) and except that any such partner,
owner or beneficiary shall be fully liable, to the extent provided by applicable
law, for any unpaid consideration for stock, unpaid capital contribution or
failure to pay any installment or call owing to such entity. For all purposes of
this Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Eligible Lender Trustee shall be subject to, and entitled to the
benefits of, the terms and provisions of Articles VI, VII and VIII of the Trust
Agreement.
SECTION 11.17. No Petition. 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 Seller, the Company or the
Issuer, or join in any institution against the Seller, the Company or the Issuer
of, any bankruptcy, reorganization, arrangement, insolvency, receivership or
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating to
the Notes, this Indenture or any of the other Basic Documents.
SECTION 11.18. Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee or the
Subordinate Note Insurer, during the Issuer's normal business hours, to examine
all the books of account, records, reports, and other papers of the Issuer, to
make copies and extracts therefrom, to cause such books to be audited by
Independent certified public accountants, and to discuss the Issuer' affairs,
finances and accounts with the Issuer's officers, employees, and Independent
certified public accountants, all at such reasonable times and as often as may
be reasonably requested. The Indenture Trustee shall and shall cause its
representatives to hold in confidence all such information obtained from such
examination or inspection except to the extent disclosure may be required by law
(and all reasonable applications for confidential treatment are unavailing) and
except to the extent that the Indenture Trustee may reasonably determine that
such disclosure is consistent with its obligations hereunder.
SECTION 11.19. Consents. With respect to any action to be taken hereunder
that requires the consent of a party hereto or of the Eligible Lender Trustee,
the Subordinate Note Insurer or the Swap Counterparty, such consent shall not be
unreasonably withhold, delayed or conditioned.
BWNY03/143694.8/11830/00274/2136 October 12, 1998
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this
Indenture to be duly executed by their respective officers, thereunto duly
authorized and duly attested, all as of the day and year first above written.
SMS STUDENT LOAN TRUST
1998-A
By: THE FIRST NATIONAL BANK
OF CHICAGO, not in its
individual capacity but
solely as Eligible
Lender Trustee
By:
Name:
Title:
BANKERS TRUST COMPANY, not in
its individual capacity
but solely as Indenture
Trustee
By:
Name:
Title:
Acknowledged and accepted as to the Granting Clause as of the day and year
first above written:
THE FIRST NATIONAL BANK OF CHICAGO, not in its Individual capacity but
solely as Eligible Lender Trustee
By:
Name:
Title:
BWNY03/143694.8/11830/00274/2136 October 12, ▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
) ss.:
COUNTY OF NEW YORK )
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared ______________________, known
to me to be the person and officer whose name is subscribed to the foregoing
instrument and acknowledged to me that the same was the act of the said SMS
STUDENT LOAN TRUST 1998-A, a Delaware trust, and that such person executed the
same as the act of said trust for the purpose and consideration therein
expressed, and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the ____ day of May, 1998.
Notary Public in and for
the State of New York
[Seal]
My commission expires:
BWNY03/143694.8/11830/00274/2136 October 12, ▇▇▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
) ss.:
COUNTY OF NEW YORK )
BEFORE ME, the undersigned authority, a Notary Public in and for said
county and state, on this day personally appeared ______________________, known
to me to be the person and officer whose name is subscribed to the foregoing
instrument and acknowledged to me that the same was the act of the said Bankers
Trust Company, a New York banking corporation, and that such person executed the
same as the act of said corporation for the purpose and consideration therein
expressed, and in the capacities therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this the ____ day of May, 1998.
Notary Public in and for
the State of New York
[Seal]
My commission expires:
BWNY03/143694.8/11830/00274/2136 October 12, 1998
EXHIBIT A-1
TO THE INDENTURE
[FORM OF CLASS A-1 NOTE]
CLASS A-1 NOTE
SEE REVERSE FOR CERTAIN DEFINITIONS
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer (as
defined below) or its agent for registration of transfer, exchange or payment,
and any Note issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THIS NOTE IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY.
REGISTERED CUSIP NO. 784582 AP 3
$--------
No. R-
SMS STUDENT LOAN TRUST 1998-A
CLASS A-1 FLOATING RATE ASSET-BACKED SENIOR NOTES
SMS Student Loan Trust 1998-A, a trust organized and existing under the
laws of the State of Delaware (herein referred to as the "Issuer"), for value
received, hereby promises to pay to ______________________________, or
registered assigns, the principal sum of __________________________________
DOLLARS payable on each Quarterly Payment Date in an amount equal to the result
obtained by multiplying (i) a fraction the numerator of which is $___________
and the denominator of which is $150,000,000 by (ii) the aggregate amount, if
any, payable to Noteholders on such Quarterly Payment Date in respect of
principal of the Class A-1 Notes pursuant to Section 3.01 of the Indenture dated
as of May 1, 1998 (the "Indenture"), between the Issuer and Bankers Trust
Company, a New York banking corporation, as Indenture Trustee (the "Indenture
Trustee") (capitalized terms used but not defined herein shall have the meanings
ascribed thereto in the Indenture, which also references rules as to usage that
shall be applicable herein); provided, however, that no principal shall be
payable on this Note until after the end of the Revolving Period; and provided,
further, that the entire unpaid principal amount of this Note shall be due and
payable on the October 2005 Quarterly Payment Date (the "Class A-1 Note Final
Maturity Date") and the Redemption Date, if any, pursuant to Section 10.01(b) or
10.01(c) of the Indenture.
The Issuer will pay interest on this Note, at the rate per annum equal to
the Class A-1 Note Rate (assigned on the reverse hereof), on each Quarterly
Payment Date until the principal of this Note is paid or made available for
payment, on the principal amount of this Note outstanding on the preceding
Quarterly Payment Date, after giving effect to all payments of principal made on
the preceding Quarterly Payment Date (or, in the case of the first Quarterly
Payment Date, on the Closing Date), subject to certain limitations contained in
Section 3.01 of the Indenture. Interest on this Note will accrue for each
Quarterly Payment Date from the most recent Quarterly Payment Date on which
interest has been paid to but excluding such Quarterly Payment Date or, if no
interest has yet been paid, from May 26, 1998 (each, a "Quarterly Interest
Period"). Interest on this Note will be computed on the basis of the actual
number of days elapsed in each Quarterly Interest Period and a 360-day year.
Such principal of and interest on this Note shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
BWNY03/143694.8/11830/00274/2136 October 12, 1998
A-1-1
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed, manually or in facsimile, as of the date set forth below.
SMS STUDENT LOAN TRUST 1998-A
By: THE FIRST NATIONAL BANK OF
CHICAGO, not in its
individual capacity but
solely as Eligible Lender
Trustee under the Trust
Agreement
By:
Authorized Signatory
Date:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
BANKERS TRUST COMPANY, not
in its individual
capacity but solely as
Indenture Trustee
By:
Authorized Signatory
Date:
BWNY03/143694.8/11830/00274/2136 October 12, 1998
A-1-2
REVERSE OF NOTE
This Note is one of a duly authorized issue of Notes of the Issuer
designated as its Class A-1 Floating Rate Asset-Backed Senior Notes (herein
called the "Class A-1 Notes"), which, together with the Class A-2 Floating Rate
Asset-Backed Senior Notes (the "Class A-2 Notes" and, together with the Class
A-1 Notes, the "Senior Notes") and the Floating Rate Asset-Backed Subordinate
Notes (the "Subordinate Notes" and, together with the Senior Notes, the "Notes")
are issued under the Indenture, to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Indenture Trustee and the
Noteholders. The Class A-1 Notes are subject to all terms of the Indenture.
The Class A-1 Notes are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Allocations of principal will be made among the Class A-1 Notes, the Class A-2
Notes and the Subordinate Notes as provided in the Indenture. The Senior Notes
collectively are senior in right of payment to the Subordinate Notes, all as and
to the extent provided in the Indenture.
Principal of the Class A-1 Notes will be payable on each Quarterly Payment
Date after the end of the Revolving Period in an amount described in the
Indenture. "Quarterly Payment Date" means the twenty-eighth day of each January,
April, July and October, or, if any such date is not a Business Day, the next
succeeding Business Day, commencing July 28, 1998.
As provided in Section 10.01(a) of the Indenture, the Class A-1 Notes may
be redeemed in part on the Quarterly Payment Date on which the Revolving Period
ends (or on the Quarterly Payment Date on or immediately following the last day
of the Revolving Period, if the Revolving Period does not end on a Quarterly
Payment Date) in the event that any amount remains on deposit in the Collateral
Reinvestment Account after giving effect to all Additional Fundings, including
any Additional Fundings, on such Quarterly Payment Date and payments to the Swap
Counterparty of any prior unpaid Net Trust Swap Payment Carryover Shortfalls as
of such date.
As described on the face hereof, the entire unpaid principal amount of
this Note shall be due and payable on the Class A-1 Note Final Maturity Date and
the Redemption Date, if any, pursuant to Section 10.01(b) or 10.01(c) of the
Indenture. Notwithstanding the foregoing, the entire unpaid principal amount of
the Notes shall be due and payable on the date on which (i) an Event of Default
shall have occurred and be continuing and (ii) the Indenture Trustee or the
Noteholders representing not less than a majority of the Outstanding principal
amount of the Notes (with the prior written consent of the Subordinate Note
Insurer) shall have declared the Notes to be immediately due and payable in the
manner provided in Section 5.02 of the Indenture. All principal payments of the
Class A-1 Notes shall be made pro rata to the Class A-1 Noteholders entitled
thereto.
Interest on the Class A-1 Notes will be payable on each Quarterly Payment
Date, commencing July 28, 1998, on the principal amount outstanding of such
Notes until the principal amount thereof is paid in full, at a rate per annum
equal to the Class A-1 Note Rate. The "Class A-1 Note Rate" for each Quarterly
Payment Date and the related LIBOR Reset Period shall be equal to the lesser of
(i) Three-Month LIBOR for the related LIBOR Reset Period plus 0.04% the "Class
A-1 Note LIBOR Rate") and (ii) the adjusted Student Loan Rate for such Quarterly
Interest Period; provided, however, that, notwithstanding the foregoing, the
Class A-1 Note LIBOR Rate for the first Quarterly Interest Period shall be equal
to the Class A-1 Note Rate for such Quarterly Interest Period. The "Student Loan
Rate" for any Quarterly Interest Period will equal the product of (a) the
quotient obtained by dividing (i) 365 (366 in the case of a leap year) by (ii)
the actual number of days elapsed in such Quarterly Interest Period and (b) the
percentage equivalent of a fraction (i) the numerator of which is equal to the
sum of the Expected Interest Collections and, if the Swap Agreement is still in
effect, the Net Trust Swap Receipt, if any, for such Quarterly Interest Period
less the sum of the Servicing Fee, the Administration Fee, the Subordinate Note
Insurance Policy Premium and, if the Swap Agreement is still in effect, the Net
Trust Swap Payment, if any, with respect to such Quarterly Interest Period and
the denominator of which is the aggregate principal amount of the Notes
outstanding as of the last day of such Quarterly Interest Period.
Pursuant to the Administration Agreement, the Administrator will determine
Three-Month LIBOR for purposes of calculating the Class A-1 Note LIBOR Rate for
each Quarterly Interest Period on the second business day prior to the
commencement of each LIBOR Reset period within such Quarterly Interest Period
(or, in the case of the initial LIBOR Reset Period, on the second business day
prior the Closing Date) (each, a "LIBOR Determination Date"). Fur purposes of
calculating Three-Month LIBOR, a business day is any day on which banks in The
City of New York and the City of London are open for the transaction of
international business. Interest due for any Quarterly Interest Period will be
determined based on the actual number of days in such Quarterly Interest Period
over a 360-day year.
"Three-Month LIBOR" means, with respect to any LIBOR Reset Period, the
London interbank offered rate for deposits in U.S. dollars having a maturity of
three months 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 does not appear on Telerate Page
3750, the rate for that day will 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 the London
interbank market by the Reference Banks. The Administrator will request the
principal London office of each such Reference Bank to provide a quotation of
its rate. If at least two such quotations are provided, the rate for that day
will be the arithmetic mean of the quotations. If fewer than two quotations are
provided, the rate for that day will be the arithmetic mean of the rates quoted
by major banks in The City of New York, selected by the Administrator, at
approximately 11:00 a.m. New York 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, however, that if the banks selected as aforesaid are not quoting as
mentioned in this sentence, Three- Month LIBOR in effect for the applicable
LIBOR Reset Period will be Three-Month LIBOR in effect for the previous LIBOR
Reset Period.
"LIBOR Reset Period" means the three-month period commencing on the 28th
day (or, if any such date is not a business day, on the next succeeding business
day) of each January, April, July and October and ending on the day immediately
preceding the following LIBOR Reset Period; provided, however, that the initial
LIBOR Reset Period 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 Administrator.
Any Class A-1 Noteholders' Interest Carryover that may exist on any
Quarterly Payment Date shall be payable to the Class A-1 Noteholders on that
Quarterly Payment Date and any succeeding Quarterly Payment Dates solely out of
the funds available and required to be applied thereto pursuant to the
Administration Agreement.
Payments of interest on this Note due and payable on each Quarterly
Payment Date, and payments of interest together with the installment of
principal, if any, due and payable on each Quarterly Payment Date, to the extent
not in full payment of this Note, shall be made by wire transfer or check mailed
to the Person whose name appears as the Registered Holder of this Note (or one
or more Predecessor Notes) on the Note Register on the Record Date, except that
with respect to Notes registered on the Record Date in the name of the nominee
of the Clearing Agency, unless Definitive Notes have been issued (initially,
such nominee to be Cede & Co.), payments will be made by wire transfer in
immediately available funds to the account designated by such nominee. Such
checks shall be mailed to the Person entitled thereto at the address of such
Person as it appears on the Note Register as of the applicable Record Date
without requiring that this Note be submitted for notation of payment, and the
mailing of such check shall constitute payment of the amount thereof regardless
of whether such check is returned undelivered. Any reduction in the principal
amount of this Note (or any one or more Predecessor Notes) effected by any
payments made on any Quarterly Payment Date shall be binding upon all future
Noteholders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof, whether or not noted
hereon. If funds are expected to be available, as provided in the Indenture, for
payment in full of the then remaining unpaid principal amount of this Note on a
Quarterly Payment Date, then the Indenture Trustee, in the name of and on behalf
of the Issuer, will notify the Person who was the Noteholder hereof as of the
Record Date preceding such Quarterly Payment Date by notice mailed no later than
five days prior to such Quarterly Payment Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Indenture Trustee's Corporate Trust Office or at the office of the Indenture
Trustee's agent appointed for such purposes located in the Borough of Manhattan,
The City of New York.
The Issuer shall pay interest on overdue installments of interest at the
Class A-1 Note Rate to the extent lawful.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Noteholder hereof or his 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
(all in accordance with the Exchange Act), and such other documents as the
Indenture Trustee may require, and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated
transferee or transferees. No service charge will be charged for any
registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder or Note Owner, by its acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in the Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Seller, the Company, the Administrator, the Servicer, the
Eligible Lender Trustee or the Indenture Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Seller, the Company, the Administrator, the Servicer, the
Indenture Trustee or the Eligible Lender Trustee in its individual capacity or
(ii) any partner, owner, beneficiary, agent, officer, director or employee of
the Seller, the Company, the Administrator, the Servicer, the Indenture Trustee
or the Eligible Lender Trustee in its individual capacity, any holder or owner
of a beneficial interest in the Issuer, the Eligible Lender Trustee or the
Indenture Trustee or of any successor or assign of the Seller, the Company, the
Administrator, the Servicer, the Indenture Trustee or the Eligible Lender
Trustee in its individual capacity, except as any such Person may have expressly
agreed (it being understood that the Indenture Trustee and the Eligible Lender
Trustee have no such obligations in their individual capacity) and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder or Note Owner, by its acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Seller, the Company or the Issuer, or join
in any institution against the Seller, the Company or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency, receivership or liquidation
proceedings or other proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations relating to the
Notes, the Indenture or the other Basic Documents.
The Issuer has entered into this Indenture and this Note is issued with
the intention that, for federal, state, foreign, and local income and franchise
tax and usury purposes, this Note will be treated as indebtedness of the Company
secured by the Trust Estate. Each Noteholder, by its acceptance of a Note (and
each Note Owner by its acceptance of a beneficial interest in a Note) agrees to
treat this Note for federal, state, foreign and local income and franchise tax
and usury purposes as indebtedness of the Company secured by the Trust Estate.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes whether or not this Note be
overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Noteholders under the Indenture at any time by the
Issuer with the prior written consent of the Subordinate Note Insurer, the Swap
Counterparty and the Noteholders representing a majority of the Outstanding
Amount of all Notes at the time outstanding. The Indenture also contains
provisions permitting the Noteholders representing specified percentages of the
Outstanding Amount of the Notes, on behalf of all the Noteholders, with the
prior written consent of the Subordinate Note Insurer and the Swap Counterparty,
to waive compliance by the Issuer with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the holder of this Note (or any one or more Predecessor
Notes) shall be conclusive and binding upon such holder and upon all future
holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture with the consent of the Subordinate Note Insurer and the Swap
Counterparty but without the consent of holders of the Notes issued thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Indenture Trustee and the
Noteholders under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note shall be construed in accordance with the laws of the State of
New York, without reference to its conflict of law provisions, and the
obligations, rights and remedies of the parties hereunder and thereunder shall
be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency, herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of Bankers Trust Company in its individual
capacity, The First National Bank of Chicago in its individual capacity, any
owner of a beneficial interest in the Issuer, or any of their respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of principal of or interest on, or performance of, or omission
to perform, any of the covenants, obligations or indemnifications contained in
this Note or the Indenture; it being expressly understood that said covenants,
obligations and indemnifications have been made by the Eligible Lender Trustee
for the sole purposes of binding the interests of the Eligible Lender Trustee in
the assets of the Issuer. The Noteholder of this Note by the acceptance hereof
agrees that, except as expressly provided in the Basic Documents, in the case of
an Event of Default under the Indenture, the Noteholder shall have no claim
against any of the foregoing for any deficiency, loss or claim therefrom;
provided, however, that nothing contained herein shall be taken to prevent
recourse to, and enforcement against, the assets of the Issuer for any and all
liabilities, obligations and undertakings contained in the Indenture or in this
Note.
BWNY03/143694.8/11830/00274/2136 October 12, 1998
A-1-3
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number
of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers unto
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably
constitutes and appoints ______________________, attorney, to transfer
said Note on the books kept for registration thereof, with full power of
substitution in the premises.
Dated:
*/
Signature Guaranteed:
*/
*/ NOTICE: The signature to this assignment must correspond with
the name of the registered owner as it appears on the face of
the within Note in every particular, without alteration,
enlargement or any change whatever. Such signature must be
guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include
membership or participation in STAMP or such other "signature
guarantee program" as may be determined by the Note Registrar
in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as
amended.
BWNY03/143694.8/11830/00274/2136 October 12, 1998
EXHIBIT A-2
TO THE INDENTURE
[FORM OF CLASS A-2 NOTE]
CLASS A-2 NOTE
SEE REVERSE FOR CERTAIN DEFINITIONS
Unless this Note is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the Issuer (as
defined below) or its agent for registration of transfer, exchange or payment,
and any Note issued is registered in the name of Cede & Co. or in such other
name as is requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THIS NOTE IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY.
REGISTERED CUSIP NO. 784582 AQ 1
$--------
No. R-
SMS STUDENT LOAN TRUST 1998-A
CLASS A-2 FLOATING RATE ASSET-BACKED SENIOR NOTES
SMS Student Loan Trust 1998-A, a trust organized and existing under the
laws of the State of Delaware (herein referred to as the "Issuer"), for value
received, hereby promises to pay to ______________________________, or
registered assigns, the principal sum of __________________________________
DOLLARS payable on each Quarterly Payment Date in an amount equal to the result
obtained by multiplying (i) a fraction the numerator of which is $___________
and the denominator of which is $433,650,000 by (ii) the aggregate amount, if
any, payable to Noteholders on such Quarterly Payment Date in respect of
principal of the Class A-2 Notes pursuant to Section 3.01 of the Indenture dated
as of May 1, 1998 (the "Indenture"), between the Issuer and Bankers Trust
Company, a New York banking corporation, as Indenture Trustee (the "Indenture
Trustee") (capitalized terms used but not defined herein shall have the meanings
ascribed thereto in the Indenture, which also references rules as to usage that
shall be applicable herein); provided, however, that no principal shall be
payable on this Note until after the end of the Revolving Period; and provided,
further, that the entire unpaid principal amount of this Note shall be due and
payable on the July 2026 Quarterly Payment Date (the "Class A-2 Note Final
Maturity Date") and the Redemption Date, if any, pursuant to Section 10.01(b) or
10.01(c) of the Indenture.
The Issuer will pay interest on this Note, at the rate per annum equal to
the Class A-2 Note Rate (assigned on the reverse hereof), on each Quarterly
Payment Date until the principal of this Note is paid or made available for
payment, on the principal amount of this Note outstanding on the preceding
Quarterly Payment Date, after giving effect to all payments of principal made on
the preceding Quarterly Payment Date (or, in the case of the first Quarterly
Payment Date, on the Closing Date), subject to certain limitations contained in
Section 3.01 of the Indenture. Interest on this Note will accrue for each
Quarterly Payment Date from the most recent Quarterly Payment Date on which
interest has been paid to but excluding such Quarterly Payment Date or, if no
interest has yet been paid, from May 26, 1998 (each, a "Quarterly Interest
Period"). Interest on this Note will be computed on the basis of the actual
number of days elapsed in each Quarterly Interest Period and a 360-day year.
Such principal of and interest on this Note shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
BWNY03/143694.8/11830/00274/2136 October 12, 1998
A-2-1
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed, manually or in facsimile, as of the date set forth below.
SMS STUDENT LOAN TRUST 1998-A
By: THE FIRST NATIONAL BANK OF
CHICAGO, not in its individual
capacity but solely as Eligible
Lender Trustee under the Trust
Agreement
By:
Authorized Signatory
Date:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
BANKERS TRUST COMPANY, not in
its individual capacity but
solely as Indenture Trustee
By:
Authorized Signatory
Date:
BWNY03/143694.8/11830/00274/2136 October 12, 1998
A-2-2
REVERSE OF NOTE
This Note is one of a duly authorized issue of Notes of the Issuer
designated as its Class A-2 Floating Rate Asset-Backed Senior Notes (herein
called the "Class A-2 Notes"), which, together with the Class A-1 Floating Rate
Asset-Backed Senior Notes (the "Class A-1 Notes" and, together with the Class
A-2 Notes, the "Senior Notes") and the Floating Rate Asset-Backed Subordinate
Notes (the "Subordinate Notes" and, together with the Senior Notes, the "Notes")
are issued under the Indenture, to which Indenture and all indentures
supplemental thereto reference is hereby made for a statement of the respective
rights and obligations thereunder of the Issuer, the Indenture Trustee and the
Noteholders. The Class A-2 Notes are subject to all terms of the Indenture.
The Class A-2 Notes are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Allocations of principal will be made among the Class A-1 Notes, the Class A-2
Notes and the Subordinate Notes as provided in the Indenture. The Senior Notes
collectively are senior in right of payment to the Subordinate Notes, all as and
to the extent provided in the Indenture.
Principal of the Class A-2 Notes will be payable on each Quarterly Payment
Date after (i) the end of the Revolving Period and (ii) the outstanding
principal amount of the Class A-1 Notes has been reduced to zero in an amount
described in the Indenture. "Quarterly Payment Date" means the twenty-eighth day
of each January, April, July and October, or, if any such date is not a Business
Day, the next succeeding Business Day, commencing July 28, 1998.
As provided in Section 10.01(a) of the Indenture, the Class A-2 Notes may
be redeemed in part on the Quarterly Payment Date on which the Revolving Period
ends (or on the Quarterly Payment Date on or immediately following the last day
of the Revolving Period, if the Revolving Period does not end on a Quarterly
Payment Date) in the event that any amount remains on deposit in the Collateral
Reinvestment Account after giving effect to all Additional Fundings, including
any Additional Fundings, on such Quarterly Payment Date and payments to the Swap
Counterparty of any prior unpaid Net Trust Swap Payment Carryover Shortfalls as
of such date.
As described on the face hereof, the entire unpaid principal amount of
this Note shall be due and payable on the Class A-2 Note Final Maturity Date and
the Redemption Date, if any, pursuant to Section 10.01(b) or 10.01(c) of the
Indenture. Notwithstanding the foregoing, the entire unpaid principal amount of
the Notes shall be due and payable on the date on which (i) an Event of Default
shall have occurred and be continuing and (ii) the Indenture Trustee or the
Noteholders representing not less than a majority of the Outstanding principal
amount of the Notes (with the prior written consent of the Subordinate Note
Insurer) shall have declared the
Notes to be immediately due and payable in the manner provided in Section 5.02
of the Indenture. All principal payments of the Class A-2 Notes shall be made
pro rata to the Class A-2 Noteholders
--- ----
entitled thereto.
Interest on the Class A-2 Notes will be payable on each Quarterly Payment
Date, commencing July 28, 1998, on the principal amount outstanding of such
Notes until the principal amount thereof is paid in full, at a rate per annum
equal to the Class A-2 Note Rate. The "Class A-2 Note Rate" for each Quarterly
Payment Date and the related LIBOR Reset Period shall be equal to the lesser of
(i) Three-Month LIBOR for the related LIBOR Reset Period plus 0.12% the "Class
A-2 Note LIBOR Rate") and (ii) the Adjusted Student Loan Rate for such Quarterly
Interest Period; provided, however, that, notwithstanding the foregoing, the
Class A-2 Note LIBOR Rate for the first Quarterly Interest Period shall be equal
to the Class A-2 Note Rate for such Quarterly Interest Period. The "Adjusted
Student Loan Rate" for any Quarterly Interest Period will equal the product of
(a) the quotient obtained by dividing (i) 365 (366 in the case of a leap year)
by (ii) the actual number of days elapsed in such Quarterly Interest Period and
(b) the percentage equivalent of a fraction, (i) the numerator of which is equal
to the sum of Expected Interest Collections and, if the Swap Agreement is still
in effect, the Net Trust Swap Receipt, if any, for such Quarterly Interest
Period less the sum of the Servicing Fee, the Administration Fee, the
Subordinate Note Insurance Policy Premium and, if the Swap Agreement is still in
effect, the Net Trust Swap Payment, if any, with respect to such Quarterly
Interest Period and (ii) the denominator of which is the aggregate principal
amount of the Notes outstanding as of the last day of such Quarterly Interest
Period.
Pursuant to the Administration Agreement, the Administrator will determine
Three-Month LIBOR for purposes of calculating the Class A-2 Note LIBOR Rate for
each Quarterly Interest Period on the second business day prior to the
commencement of each LIBOR Reset Period within such Quarterly Interest Period
(or, in the case of the initial LIBOR Reset Period, on the second business day
prior the Closing Date) (each, a "LIBOR Determination Date"). For purposes of
calculating Three-Month LIBOR, a business day is any day on which banks in The
City of New York and the City of London are open for the transaction of
international business. Interest due for any Quarterly Interest Period will be
determined based on the actual number of days in such Quarterly Interest Period
over a 360-day year.
"Three-Month LIBOR" means, with respect to any LIBOR Reset Period, the
London interbank offered rate for deposits in U.S. dollars having a maturity of
three months 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 does not appear on Telerate Page
3750, the rate for that day will 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 the London interbank market by the
Reference Banks. The Administrator will request the principal
London office of each such Reference Bank to provide a quotation of its rate. If
at least two such quotations are provided, the rate for that day will be the
arithmetic mean of the quotations. If fewer than two quotations are provided,
the rate for that day will be the arithmetic mean of the rates quoted by major
banks in The City of New York, selected by the Administrator, at approximately
11:00 a.m. New York 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, however,
that if the banks selected
-------- -------
as aforesaid are not quoting as mentioned in this sentence, Three- Month LIBOR
in effect for the applicable LIBOR Reset Period will be Three-Month LIBOR in
effect for the previous LIBOR Reset Period.
"LIBOR Reset Period" means the three-month period commencing on the 28th
day (or, if any such date is not a business day, on the next succeeding business
day) of each January, April, July and October and ending on the day immediately
preceding the following LIBOR Reset Period; provided, however, that the initial
LIBOR Reset Period 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 Administrator.
Any Class A-2 Noteholders' Interest Basis Carryover that may exist on any
Quarterly Payment Date shall be payable to the Class A-2 Noteholders on that
Quarterly Payment Date and any succeeding Quarterly Payment Dates solely out of
the funds available and required to be applied thereto pursuant to the
Administration Agreement.
Payments of interest on this Note due and payable on each Quarterly
Payment Date, and payments of interest together with the installment of
principal, if any, due and payable on each Quarterly Payment Date, to the extent
not in full payment of this Note, shall be made by wire transfer or check mailed
to the Person whose name appears as the Registered Holder of this Note (or one
or more Predecessor Notes) on the Note Register on the Record Date, except that
with respect to Notes registered on the Record Date in the name of the nominee
of the Clearing Agency, unless Definitive Notes have been issued (initially,
such nominee to be Cede & Co.), payments will be made by wire transfer in
immediately available funds to the account designated by such nominee. Such
checks shall be mailed to the Person entitled thereto at the address of such
Person as it appears on the Note Register as of the applicable Record Date
without requiring that this Note be submitted for notation of payment, and the
mailing of such check shall constitute payment of the amount thereof regardless
of whether such check is returned undelivered. Any reduction in the principal
amount of this Note (or any one or more Predecessor Notes) effected by any
payments made on any Quarterly Payment Date shall be binding upon all future
Noteholders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof, whether or not noted
hereon. If funds are expected to be available, as provided in the Indenture, for
payment in full of the then remaining unpaid principal amount of this Note on a
Quarterly Payment Date, then the Indenture Trustee, in the name of and on behalf
of the Issuer, will notify the Person who was the Noteholder hereof as of the
Record Date preceding such Quarterly Payment Date by notice mailed no later than
five days prior to such Quarterly Payment Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Indenture Trustee's Corporate Trust Office or at the office of the Indenture
Trustee's agent appointed for such purposes located in the Borough of Manhattan,
The City of New York.
The Issuer shall pay interest on overdue installments of interest at the
Class A-2 Note Rate to the extent lawful.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Noteholder hereof or his 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
(all in accordance with the Exchange Act), and such other documents as the
Indenture Trustee may require, and thereupon
one or more new Notes of authorized denominations and in the same aggregate
principal amount will be issued to the designated transferee or transferees. No
service charge will be charged for any registration of transfer or exchange of
this Note, but the transferor may be required to pay a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection with any
such registration of transfer or exchange.
Each Noteholder or Note Owner, by its acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in the Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Seller, the Company, the Administrator, the Servicer, the
Eligible Lender Trustee or the Indenture Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Seller, the Company, the Administrator, the Servicer, the
Indenture Trustee or the Eligible Lender Trustee in its individual capacity or
(ii) any partner, owner, beneficiary, agent, officer, director or employee of
the Seller, the Company, the Administrator, the Servicer, the Indenture Trustee
or the Eligible Lender Trustee in its individual capacity, any holder or owner
of a beneficial interest in the Issuer, the Eligible Lender Trustee or the
Indenture Trustee or of any successor or assign of the Seller, the Company, the
Administrator, the Servicer, the Indenture Trustee or the Eligible Lender
Trustee in its individual capacity, except as any such Person may have expressly
agreed (it being understood that the Indenture Trustee and the Eligible Lender
Trustee have no such obligations in their individual capacity) and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder or Note Owner, by its acceptance of a Note or, in the case
of a Note Owner, a beneficial interest in a Note, covenants and agrees that by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Seller, the Company or the Issuer, or join
in any institution against the Seller, the Company or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency, receivership or liquidation
proceedings or other proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations relating to the
Notes, the Indenture or the other Basic Documents.
The Issuer has entered into this Indenture and this Note is issued with
the intention that, for federal, state, foreign, and local income and franchise
tax and usury purposes, this Note will be treated as indebtedness of the Company
secured by the Trust Estate. Each Noteholder, by its acceptance of a Note (and
each Note Owner by its acceptance of a beneficial interest in a Note) agrees to
treat this Note for federal, state, foreign and local income and franchise tax
and usury purposes as indebtedness of the Company secured by the Trust Estate.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture
Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes whether or not this Note be
overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Noteholders under the Indenture at any time by the
Issuer with the prior written consent of the Subordinate Note Insurer, the Swap
Counterparty and the Noteholders representing a majority of the Outstanding
Amount of all Notes at the time outstanding. The Indenture also contains
provisions permitting the Noteholders representing specified percentages of the
Outstanding Amount of the Notes, on behalf of all the Noteholders, with the
prior written consent of the Subordinate Note Issuer and the Swap Counterparty,
to waive compliance by the Issuer with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the holder of this Note (or any one or more
Predecessor Notes) shall be conclusive and binding upon such holder and upon all
future holders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture with the prior written consent of the Subordinate Note Insurer and
the Swap Counterparty but without the consent of holders of the Notes issued
thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Indenture Trustee and the
Noteholders under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note shall be construed in accordance with the laws of the State of
New York, without reference to its conflict of law provisions, and the
obligations, rights and remedies of the parties hereunder and thereunder shall
be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency, herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of Bankers Trust Company in its individual
capacity, The First National Bank of Chicago in its individual capacity, any
owner of a beneficial interest in the Issuer, or any of their respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of principal of or interest on, or performance of, or omission
to perform, any of the covenants, obligations or indemnifications contained in
this Note or the Indenture; it being expressly understood that said covenants,
obligations and indemnifications have been made by the Eligible Lender Trustee
for the sole purposes of binding the interests of the Eligible Lender Trustee in
the assets of the Issuer. The Noteholder of this Note by the acceptance hereof
agrees that, except as expressly provided in the Basic Documents, in the case of
an Event of Default under the Indenture, the Noteholder shall have no claim
against any of the foregoing for any deficiency, loss or claim therefrom;
provided, however, that nothing contained herein shall be taken to prevent
recourse to, and enforcement against, the assets of the Issuer for any and all
liabilities, obligations and undertakings contained in the Indenture or in this
Note.
BWNY03/143694.8/11830/00274/2136 October 12, 1998
A-2-3
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number
of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers unto
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably
constitutes and appoints ______________________, attorney, to transfer
said Note on the books kept for registration thereof, with full power of
substitution in the premises.
Dated:
*/
Signature Guaranteed:
*/
*/ NOTICE: The signature to this assignment must correspond with
the name of the registered owner as it appears on the face of
the within Note in every particular, without alteration,
enlargement or any change whatever. Such signature must be
guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include
membership or participation in STAMP or such other "signature
guarantee program" as may be determined by the Note Registrar
in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as
amended.
BWNY03/143694.8/11830/00274/2136 October 12, 1998
EXHIBIT A-3
TO THE INDENTURE
[FORM OF SUBORDINATE NOTE]
SUBORDINATE NOTE
SEE REVERSE FOR CERTAIN DEFINITIONS
THIS NOTE HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), OR UNDER THE SECURITIES OR BLUE SKY
LAWS OF ANY STATE IN THE UNITED STATES OR ANY FOREIGN SECURITIES LAWS. [BY ITS
ACCEPTANCE OF THIS NOTE THE HOLDER HEREOF IS DEEMED TO REPRESENT TO THE SELLER
AND THE INDENTURE TRUSTEE THAT IT IS A "QUALIFIED INSTITUTIONAL BUYER" AS
DEFINED IN RULE 144A UNDER THE SECURITIES ACT ("QIB") AND IS ACQUIRING THIS NOTE
FOR ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT OF OTHERS) OR AS A FIDUCIARY OR
AGENT FOR OTHERS (WHICH OTHERS ALSO ARE QIBs).
NO SALE, PLEDGE OR OTHER TRANSFER OF ANY SUBORDINATE NOTES MAY BE MADE BY ANY
PERSON UNLESS EITHER SUCH SALE, PLEDGE OR OTHER TRANSFER IS MADE (i) TO THE
SELLER OR (ii) TO A PERSON WHO THE SELLER REASONABLY BELIEVES AFTER DUE INQUIRY
IS A QIB ACTING FOR ITS OWN ACCOUNT (AND NOT FOR THE ACCOUNT OF OTHERS) OR AS A
FIDUCIARY OR AGENT FOR OTHERS (WHICH OTHERS ALSO ARE QIBs) IN RELIANCE ON, AND
TO WHOM NOTICE IS GIVEN THAT THE SALE, PLEDGE OR TRANSFER IS BEING MADE IN
RELIANCE ON, RULE 144A OR ON ANOTHER EXEMPTION WITH RESPECT TO WHICH, IN THE
CASE OF SUCH RELIANCE ON SUCH OTHER EXEMPTION, BOTH THE PROSPECTIVE TRANSFEROR
AND THE PROSPECTIVE TRANSFEREE CERTIFY TO THE INDENTURE TRUSTEE AND THE SELLER
IN WRITING THE FACTS SURROUNDING SUCH TRANSFER, WHICH CERTIFICATION WILL BE IN
FORM AND SUBSTANCE SATISFACTORY TO THE INDENTURE TRUSTEE AND THE SELLER, AND
PROVIDE A WRITTEN OPINION OF COUNSEL (WHICH WILL NOT BE AT THE EXPENSE OF THE
INDENTURE TRUSTEE OR THE SELLER) SATISFACTORY TO EACH TO THE EFFECT THAT SUCH
TRANSFER WILL NOT VIOLATE THE SECURITIES ACT. NO SALE, PLEDGE OR OTHER TRANSFER
MAY BE MADE TO ANY ONE PERSON FOR SUBORDINATE NOTES WITH A FACE AMOUNT OF LESS
THAN $250,000 AND, IN THE CASE OF ANY PERSON ACTING ON BEHALF OF ONE OR MORE
THIRD PARTIES (OTHER THAN A BANK (AS DEFINED IN SECTION 3(A)(2) OF THE
SECURITIES ACT) ACTING IN ITS FIDUCIARY CAPACITY), FOR SUBORDINATE NOTES WITH A
FACE AMOUNT OF LESS THAN $250,000 FOR EACH SUCH THIRD PARTY.
NO RESALE OR OTHER TRANSFER OF THIS SUBORDINATE NOTE MAY BE MADE UNLESS THE
SELLER AND THE INDENTURE TRUSTEE SHALL HAVE RECEIVED A REPRESENTATION LETTER OR
OPINION OF COUNSEL FROM THE TRANSFEREE OF THIS SUBORDINATE NOTE, ACCEPTABLE TO
AND IN FORM AND SUBSTANCE SATISFACTORY TO THE SELLER AND THE INDENTURE TRUSTEE,
TO THE EFFECT THAT IF SUCH TRANSFEREE (OR ANY PERSON OR ENTITY FOR WHOM SUCH
TRANSFEREE IS ACTING AS AGENT OR CUSTODIAN IN CONNECTION WITH THE ACQUISITION OF
THIS SUBORDINATE NOTE) IS A PARTNERSHIP, GRANTOR TRUST OR S CORPORATION FOR
FEDERAL INCOME TAX PURPOSES (A "FLOW- THROUGH ENTITY"), ANY SUBORDINATE NOTES
OWNED BY OR ON BEHALF OF SUCH FLOW-THROUGH ENTITY WILL REPRESENT LESS THAN 50%
OF THE VALUE OF ALL THE ASSETS OWNED BY SUCH FLOW-THROUGH ENTITY AND NO SPECIAL
ALLOCATION OF INCOME, GAIN, LOSS, DEDUCTION OR CREDIT FROM SUCH SUBORDINATE
NOTES WILL BE MADE AMONG THE BENEFICIAL OWNERS OF SUCH FLOW-THROUGH ENTITY.
NO SALE, PLEDGE OR OTHER TRANSFER OF THIS NOTE MAY BE MADE TO ANY PERSON OTHER
THAN A CITIZEN OR RESIDENT OF THE UNITED STATES, A CORPORATION, PARTNERSHIP OR
OTHER ENTITY CREATED OR ORGANIZED IN, OR UNDER THE LAWS OF, THE UNITED STATES OR
ANY POLITICAL SUBDIVISION THEREOF, OR AN ESTATE WHOSE INCOME IS SUBJECT TO
UNITED STATES FEDERAL INCOME TAX REGARDLESS OF ITS SOURCE, OR A TRUST IF A COURT
WITHIN THE UNITED STATES IS ABLE TO EXERCISE PRIMARY SUPERVISION OVER THE
ADMINISTRATION OF THE TRUST AND ONE OR MORE UNITED STATES FIDUCIARIES HAVE THE
AUTHORITY TO CONTROL ALL SUBSTANTIAL DECISIONS OF THE TRUST. BY ITS ACCEPTANCE
OF THIS NOTE THE HOLDER HEREOF IS DEEMED TO REPRESENT TO THE SELLER AND THE
INDENTURE TRUSTEE THAT IT IS A "UNITED STATES PERSON" AS DEFINED IN ss.
7701(A)(30) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
SECTION 2.04 OF THE INDENTURE CONTAINS FURTHER RESTRICTIONS ON THE
TRANSFER AND RESALE OF THIS NOTE. EACH TRANSFEREE OF THIS NOTE, BY
ACCEPTANCE HEREOF, IS DEEMED TO HAVE ACCEPTED THIS NOTE SUBJECT TO
THE FOREGOING RESTRICTIONS ON TRANSFERABILITY.
EACH NOTEHOLDER, BY ITS ACCEPTANCE OF A NOTE, COVENANTS AND AGREES THAT BY
ACCEPTING THE BENEFITS OF THE INDENTURE THAT SUCH NOTEHOLDER WILL NOT AT ANY
TIME INSTITUTE AGAINST THE SELLER, THE COMPANY OR THE ISSUER, OR JOIN IN ANY
INSTITUTION AGAINST THE SELLER, THE COMPANY OR THE ISSUER OF, ANY BANKRUPTCY,
REORGANIZATION, ARRANGEMENT, INSOLVENCY, RECEIVERSHIP OR LIQUIDATION PROCEEDING
OR OTHER PROCEEDINGS UNDER ANY UNITED STATES FEDERAL OR STATE BANKRUPTCY OR
SIMILAR LAW IN CONNECTION WITH ANY OBLIGATIONS RELATING TO THE NOTES, THE
INDENTURE OR THE OTHER BASIC DOCUMENTS.
BWNY03/143694.8/11830/00274/2136 October 12, 1998
A-3-1
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN.
ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE
LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THIS NOTE IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY.
PAYMENT, ON EACH QUARTERLY PAYMENT DATE, OF THE SUBORDINATE NOTEHOLDERS'
INTEREST DISTRIBUTION AMOUNT AND, ON THE SUBORDINATE NOTE FINAL MATURITY DATE,
OF THE SUBORDINATE NOTEHOLDERS' PRINCIPAL DISTRIBUTION AMOUNT IS UNCONDITIONALLY
AND IRREVOCABLY GUARANTEED PURSUANT TO A SUBORDINATE NOTE INSURANCE POLICY
ISSUED BY MBIA INSURANCE CORPORATION.
REGISTERED CUSIP NO. 784582 AR 9
$---------
No. R-
SMS STUDENT LOAN TRUST 1998-A
FLOATING RATE ASSET-BACKED SUBORDINATE NOTES
SMS Student Loan Trust 1998-A, a trust organized and existing under the
laws of the State of Delaware (herein referred to as the "Issuer"), for value
received, hereby promises to pay to ______________________, or registered
assigns, the principal sum of ___________________________________________
DOLLARS payable on each Quarterly Payment Date in an amount equal to the result
obtained by multiplying (i) a fraction the numerator of which is $____________
and the denominator of which is $21,350,000 by (ii) the aggregate amount, if
any, payable to Noteholders on such Quarterly Payment Date in respect of
principal of the Subordinate Notes pursuant to Section 3.01 of the Indenture
dated as of May 1, 1998 (the "Indenture"), between the Issuer and Bankers Trust
Company, a New York banking corporation, as Indenture Trustee (the "Indenture
Trustee") (capitalized terms used but not defined herein shall have the meanings
ascribed thereto in the Indenture, which also references rules as to usage that
shall be applicable herein); provided, however, that no principal shall be
payable on this Note until the principal balance of the Senior Notes has been
paid in full; and provided, further, that the entire unpaid principal amount of
this Note shall be due and payable on the October 2033 Quarterly Payment Date
(the "Subordinate Note Final Maturity Date") and the Redemption Date, if any,
pursuant to Section 10.01(b) or 10.01(c) of the Indenture.
The Issuer will pay interest on this Note at the rate per annum equal to
the Subordinate Note Rate (as defined on the reverse hereof), on each Quarterly
Payment Date until the principal of this Note is paid or made available for
payment, on the principal amount of this Note outstanding on the preceding
Quarterly Payment Date, after giving effect to all payments of principal made on
the preceding Quarterly Payment Date (or, in the case of the first Quarterly
Payment Date, on the Closing Date), subject to certain limitations contained in
Section 3.01 of the Indenture. Interest on this Note will accrue for each
Quarterly Payment Date from the most recent Quarterly Payment Date on which
interest has been paid to but excluding such Quarterly Payment Date or, if no
interest has yet been paid, from May 26, 1998 (each, a "Quarterly Interest
Period"). Interest on this Note will be computed on the basis of the actual
number of days elapsed in each Quarterly Interest Period and a 360-day year.
Such principal of and interest on this Note shall be paid in the manner
specified on the reverse hereof.
The principal of and interest on this Note are payable in such coin or
currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts. All payments made by the Issuer
with respect to this Note shall be applied first to interest due and payable on
this Note as provided above and then to the unpaid principal of this Note.
Reference is made to the further provisions of this Note set forth on the
reverse hereof, which shall have the same effect as though fully set forth on
the face of this Note.
Unless the certificate of authentication hereon has been executed by the
Indenture Trustee whose name appears below by manual signature, this Note shall
not be entitled to any benefit under the Indenture referred to on the reverse
hereof, or be valid or obligatory for any purpose.
BWNY03/143694.8/11830/00274/2136 October 12, 1998
A-3-2
IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly
executed, manually or in facsimile, as of the date set forth below.
SMS STUDENT LOAN TRUST 1998-A
By: THE FIRST NATIONAL BANK OF
CHICAGO, not in its
individual capacity but
solely as Eligible Lender
Trustee under the Trust
Agreement
By: __________________________
Authorized Signatory
Date:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in the
within-mentioned Indenture.
BANKERS TRUST COMPANY, not
in its individual capacity
but solely as Indenture
Trustee
By: _______________________
Authorized Signatory
Date:
BWNY03/143694.8/11830/00274/2136 October 12, 1998
A-3-3
REVERSE OF NOTE
This Note is one of a duly authorized issue of Notes of the Issuer,
designated as its Floating Rate Asset-Backed Subordinate Notes (herein called
the "Subordinate Notes"), which, together with the Class A-1 Notes Floating Rate
Asset-Backed Senior Notes (the "Class A-1 Notes") and the Class A-2 Floating
Rate Asset-Backed Senior Notes (the "Class A-2 Notes" and, together with the
Class ▇- ▇ Notes, the "Senior Notes"; the Senior Notes and the Subordinate
Notes, collectively, the "Notes") issued under the Indenture, to which Indenture
and all indentures supplemental thereto reference is hereby made for a statement
of the respective rights and obligations thereunder of the Issuer, the Indenture
Trustee and the Noteholders. The Subordinate Notes are subject to all terms of
the Indenture.
The Subordinate Notes are and will be equally and ratably secured by the
collateral pledged as security therefor as provided in the Indenture.
Allocations of principal will be made among the Class A-1 Notes, the Class A-2
Notes and the Subordinate Notes as provided in the Indenture. The Senior Notes
collectively are senior in right of payment to the Subordinate Notes, all as and
to the extent provided in the Indenture.
Principal of the Subordinate Notes will be payable on each Quarterly Date
on or after the date on which the principal amount of the Senior Notes has been
paid in its entirety, in an amount described on the face hereof. "Quarterly
Payment Date" means the twenty-eighth day of each January, April, July and
October, or, if any such date is not a Business Day, the next succeeding
Business Day, commencing July 28, 1998.
As provided in Section 10.01(a) of the Indenture, the Subordinate Notes
may be redeemed in part on the Quarterly Payment Date on which the Revolving
Period ends (or on the Quarterly Payment Date on or immediately following the
last day of the Revolving Period, if the Revolving Period does not end on a
Quarterly Payment Date) in the event that any amount remains on deposit in the
Collateral Reinvestment Account after giving effect to all Additional Fundings,
including any Additional Fundings, on such Quarterly Payment Date and payments
to the Swap Counterparty of any prior unpaid Net Trust Swap Payment Carryover
Shortfalls as of such date.
As described on the face hereof, the entire unpaid principal amount of
this Note shall be due and payable on the Subordinate Note Final Maturity Date
and the Redemption Date, if any, pursuant to Section 10.01(b) or 10.01(c) of the
Indenture. Notwithstanding the foregoing, the entire unpaid principal amount of
the Notes shall be due and payable on the date on which (i) an Event of Default
shall have occurred and be continuing and (ii) the Indenture Trustee or the
Noteholders representing not less than a majority of the Outstanding Amount of
the Notes (with the prior written consent of the Subordinate Note Insurer) shall
have declared the Notes to be immediately due and payable in the manner provided
in Section 5.02 of the Indenture. All principal payments of the Subordinate
Notes shall be made pro rata to the Subordinate Noteholders entitled thereto.
Interest on the Subordinate Notes will be payable on each Quarterly
Payment Date, commencing July 28, 1998, on the principal amount outstanding of
such Notes until the principal amount thereof is paid in full, at a rate per
annum equal to the Subordinate Note Rate. The "Subordinate Note Rate" for each
Quarterly Payment Date and the related Quarterly Interest Period shall be equal
to the lesser of (i) Three-Month LIBOR for the related LIBOR Reset Period plus
0.27% (the "Subordinate Note LIBOR Rate") and (ii) the Adjusted Student Loan
Rate for such Quarterly Interest Period; provided, however, that,
notwithstanding the foregoing, the Subordinate Note Rate for the first Quarterly
Interest Period shall be equal to the Subordinate Note LIBOR Rate for such
Quarterly Interest Period. The "Adjusted Student Loan Rate" for any Quarterly
Interest Period will equal the product of (a) the quotient obtained by dividing
(i) 365 (or 366 in the case of a leap year) by (ii) the actual number of days
elapsed in such Quarterly Interest Period and (b) the percentage equivalent of a
fraction (i) the numerator of which is equal to the sum of the Expected Interest
Collections and, if the Swap Agreement is still in effect, the Net Trust Swap
Receipt, if any, for such Quarterly Interest Period less the sum of the
Servicing Fee, the Administration Fee, the Subordinate Note Insurance Policy
Premium and, if the Swap Agreement is still in effect, the Net Trust Swap
Payment, if any, with respect to such Quarterly Interest Period and the
denominator of which is the aggregate principal amount of the Notes outstanding
as of the last day of such Quarterly Interest Period.
Pursuant to the Administration Agreement, the Administrator will determine
Three-Month LIBOR for purposes of calculating the Subordinate Note LIBOR Rate
for each Quarterly Interest Period on the second business day prior to the
commencement of each LIBOR Reset period within such Quarterly Interest Period
(or, in the case of the initial LIBOR Reset Period, on the second business day
prior the Closing Date) (each, a "LIBOR Determination Date"). Fur purposes of
calculating Three-Month LIBOR, a business day is any day on which banks in The
City of New York and the City of London are open for the transaction of
international business. Interest due for any Quarterly Interest Period will be
determined based on the actual number of days in such Quarterly Interest Period
over a 360-day year.
"Three-Month LIBOR" means, with respect to any LIBOR Reset Period, the
London interbank offered rate for deposits in U.S. dollars having a maturity of
three months 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 does not appear on Telerate Page
3750, the rate for that day will 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 the London interbank market by the
Reference Banks. The Administrator will request the principal London office of
each such Reference Bank to provide a quotation of its rate. If at least two
such quotations are provided, the rate for that day will be the arithmetic mean
of the quotations. If few than two quotations are provided, the rate for that
day will be the arithmetic mean of the rates quoted by major banks in The City
of New York, selected by the Administrator, at approximately 11:00 a.m. New York
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, however, that if the banks
selected as
-------- -------
aforesaid are not quoting as mentioned in this sentence, Three- Month LIBOR in
effect for the applicable LIBOR Reset Period will be Three-Month LIBOR in effect
for the previous LIBOR Reset Period.
"LIBOR Reset Period" means the three-month period commencing on the 28th
day (or, if any such date is not a business day, on the next succeeding business
day) of each January, April, July and October and ending on the day immediately
preceding the following LIBOR Reset Period; provided, however, that the initial
LIBOR Reset Period 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 Administrator.
Any Subordinate Noteholders' Interest Basis Carryover that may exist on
any Quarterly Payment Date shall be payable to the Subordinate Noteholders on
that Quarterly Payment Date and any succeeding Quarterly Payment Dates solely
out of the funds available and required to be applied thereto pursuant to the
Administration Agreement.
Payments of interest on this Note due and payable on each Quarterly
Payment Date, and payments of interest together with the installment of
principal, if any, due and payable on each Quarterly Payment Date, to the extent
not in full payment of this Note, shall be made, if the original principal
amount of this Note is $1,000,000 or more, by wire transfer and otherwise by
check mailed to the Person whose name appears as the Registered Holder of this
Note (or one or more Predecessor Notes) on the Note Register on the Record Date.
Such checks shall be mailed to the Person entitled thereto at the address of
such Person as it appears on the Note Register as of the applicable Record Date
without requiring that this Note be submitted for notation of payment, and the
mailing of such check shall constitute payment of the amount thereof regardless
of whether such check is returned undelivered. Any reduction in the principal
amount of this Note (or any one or more Predecessor Notes) effected by any
payments made on any Quarterly Payment Date shall be binding upon all future
Noteholders of this Note and of any Note issued upon the registration of
transfer hereof or in exchange hereof or in lieu hereof, whether or not noted
hereon.
If funds are expected to be available, as provided in the Indenture, for payment
in full of the then remaining unpaid principal amount of this Note on a
Quarterly Payment Date, then the Indenture Trustee, in the name of and on behalf
of the Issuer, will notify the Person who was the Noteholder hereof as of the
Record Date preceding such Quarterly Payment Date by notice mailed no later than
five days prior to such Quarterly Payment Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Indenture Trustee's Corporate Trust Office or at the office of the Indenture
Trustee's agent appointed for such purposes located in the Borough of Manhattan,
The City of New York.
The Issuer shall pay interest on overdue installments of interest at the
Subordinate Note Rate to the extent lawful.
As provided in the Indenture and subject to certain limitations set forth
therein, the transfer of this Note may be registered on the Note Register upon
surrender of this Note for registration of transfer at the office or agency
designated by the Issuer pursuant to the Indenture, duly endorsed by, or
accompanied by a written instrument of transfer in form satisfactory to the
Indenture Trustee duly executed by, the Noteholder hereof or his 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
(all in accordance with the Exchange Act), and such other documents as the
Indenture Trustee may require, and thereupon one or more new Notes of authorized
denominations and in the same aggregate principal amount will be issued to the
designated transferee or transferees. No service charge will be charged for
any registration of transfer or exchange of this Note, but the transferor may be
required to pay a sum sufficient to cover any tax or other governmental charge
that may be imposed in connection with any such registration of transfer or
exchange.
Each Noteholder, by its acceptance of a Note, covenants and agrees that no
recourse may be taken, directly or indirectly, with respect to the obligations
of the Issuer, the Seller, the Company, the Administrator, the Servicer, the
Eligible Lender Trustee or the Indenture Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Seller, the Company, the Administrator, the Servicer, the
Indenture Trustee or the Eligible Lender Trustee in its individual capacity or
(ii) any partner, owner, beneficiary, agent, officer, director or employee of
the Seller, the Company, the Administrator, the Servicer, the Indenture Trustee
or the Eligible Lender Trustee in its individual capacity, any holder or owner
of a beneficial interest in the Issuer, the Eligible Lender Trustee or the
Indenture Trustee or of any successor or assign of the Seller, the Company, the
Administrator, the Servicer, the Indenture Trustee or the Eligible Lender
Trustee in its individual capacity, except as any such Person may have expressly
agreed (it being understood that the Indenture Trustee and the Eligible Lender
Trustee have no such obligations in their individual capacity) and except that
any such partner, owner or beneficiary shall be fully liable, to the extent
provided by applicable law, for any unpaid consideration for stock, unpaid
capital contribution or failure to pay any installment or call owing to such
entity.
Each Noteholder, by its acceptance of a Note, covenants and agrees that by
accepting the benefits of the Indenture that such Noteholder or Note Owner will
not at any time institute against the Seller, the Company or the Issuer, or join
in any institution against the Seller, the Company or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency, receivership or liquidation
proceedings or other proceedings under any United States federal or state
bankruptcy or similar law in connection with any obligations relating to the
Notes, the Indenture or the other Basic Documents.
The Issuer has entered into this Indenture and this Note is issued with
the intention that, for federal, state, foreign, and local income and franchise
tax and usury purposes, this Note will be treated as indebtedness of the Company
secured by the Trust Estate. Each Noteholder, by its acceptance of a Note,
agrees to treat this Note for federal, state, foreign and local income and
franchise tax and usury purposes as indebtedness of the Company secured by the
Trust Estate.
Prior to the due presentment for registration of transfer of this Note,
the Issuer, the Indenture Trustee, the Subordinate Note Insurer and any agent of
the Issuer or the Indenture Trustee may treat the Person in whose name this Note
(as of the day of determination or as of such other date as may be specified in
the Indenture) is registered as the owner hereof for all purposes whether or not
this Note be overdue, and none of the Issuer, the Indenture Trustee, the
Subordinate Note Issuer or any such agent shall be affected by notice to the
contrary.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Noteholders under the Indenture at any time by the
Issuer with the prior written consent of the Subordinate Note Insurer, the Swap
Counterparty and the Noteholders representing a majority of the Outstanding
Amount of all Notes at the time outstanding. The Indenture also contains
provisions permitting the Noteholders representing specified percentages of the
Outstanding Amount of the Notes, on behalf of all the Noteholders, with the
prior written consent of the Subordinate Note Insurer and the Swap Counterparty,
to waive compliance by the Issuer with certain provisions of the Indenture and
certain past defaults under the Indenture and their consequences. Any such
consent or waiver by the holder of this Note (or any one or more Predecessor
Notes) shall be conclusive and binding upon such holder and upon all future
holders of this Note and of any Note issued upon the registration of transfer
hereof or in exchange hereof or in lieu hereof whether or not notation of such
consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture with the prior written consent of the Subordinate Note Insurer and
the Swap Counterparty but without the consent of holders of the Notes issued
thereunder.
The term "Issuer" as used in this Note includes any successor to the
Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain circumstances, to
merge or consolidate, subject to the rights of the Indenture Trustee and the
Noteholders under the Indenture.
The Notes are issuable only in registered form in denominations as
provided in the Indenture, subject to certain limitations therein set forth.
This Note shall be construed in accordance with the laws of the State of
New York, without reference to its conflict of law provisions, and the
obligations, rights and remedies of the parties hereunder and thereunder shall
be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this Note or of
the Indenture shall alter or impair the obligation of the Issuer, which is
absolute and unconditional, to pay the principal of and interest on this Note at
the times, place, and rate, and in the coin or currency, herein prescribed.
Anything herein to the contrary notwithstanding, except as expressly
provided in the Basic Documents, none of Bankers Trust Company in its individual
capacity, The First National Bank of Chicago in its individual capacity, any
owner of a beneficial interest in the Issuer, or any of their respective
partners, beneficiaries, agents, officers, directors, employees or successors or
assigns shall be personally liable for, nor shall recourse be had to any of them
for, the payment of principal of or interest on, or performance of, or omission
to perform, any of the covenants, obligations or indemnifications contained in
this Note or the Indenture; it being expressly understood that said covenants,
obligations and indemnifications have been made by the Eligible Lender Trustee
for the sole purposes of binding the interests of the Eligible Lender Trustee in
the assets of the Issuer. The Noteholder of this Note by the acceptance hereof
agrees that, except as expressly provided in the Basic Documents, in the case of
an Event of Default under the Indenture, the Noteholder shall have no claim
against any of the foregoing for any deficiency, loss or claim therefrom;
provided, however, that nothing contained herein shall be taken to prevent
recourse to, and enforcement against, the assets of the Issuer for any and all
liabilities, obligations and undertakings contained in the Indenture or in this
Note.
BWNY03/143694.8/11830/00274/2136 October 12, 1998
A-3-4
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number
of assignee
FOR VALUE RECEIVED, the undersigned hereby sells, assigns
and transfers unto
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably
constitutes and appoints ______________________, attorney, to transfer
said Note on the books kept for registration thereof, with full power of
substitution in the premises.
Dated:
*/
Signature Guaranteed:
*/
*/ NOTICE: The signature to this assignment must correspond with
the name of the registered owner as it appears on the face of
the within Note in every particular, without alteration,
enlargement or any change whatever. Such signature must be
guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include
membership or participation in STAMP or such other "signature
guarantee program" as may be determined by the Note Registrar
in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as
amended.
BWNY03/143694.8/11830/00274/2136 October 12, 1998
EXHIBIT B TO THE INDENTURE
Senior Note Depository Agreement
BWNY03/143694.8/11830/00274/2136 October 12, 1998
EXHIBIT C
TO THE INDENTURE
FORM OF TRANSFEROR CERTIFICATE
[DATE]
USA Group Secondary Market Services, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
The First National Bank of Chicago
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Bankers Trust Company
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: SMS Student Loan Trust 1998-A
Floating Rate Asset-Backed Subordinate Notes
Ladies and Gentlemen:
In connection with our disposition of the above-referenced Floating Rate
Asset-Backed Subordinate Notes (the "Notes") we certify that (a) we understand
that the Notes have not been registered under the Securities Act of 1933, as
amended (the "Act"), and are being transferred by us in a transaction that is
exempt from the registration requirements of the Act and (b) we have not offered
or sold any Notes to, or solicited offers to buy any Notes from, any person, or
otherwise approached or negotiated with any person with respect thereto, in a
manner that would be deemed, or taken any other action which would result in, a
violation of Section 5 of the Act.
Very truly yours,
[NAME OF TRANSFEROR]
By:
Name:
Title:
BWNY03/143694.8/11830/00274/2136 October 12, 1998
A-3-1
EXHIBIT D
FORM OF INVESTMENT LETTER
USA Group Secondary Market Services, Inc.
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The First National Bank of Chicago
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Bankers Trust Company
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Ladies and Gentlemen:
In connection with our proposed purchase of $[____________] aggregate
principal amount of Floating Rate Asset-Backed Subordinate Notes (the
"Securities") of SMS Student Loan Trust 1998-A (the "Issuer"), we confirm that:
1. We understand that the Securities have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), and may not
be sold except as permitted in the following sentence. We understand and
agree, on our own behalf and on behalf of any accounts for which we are
acting as hereinafter stated, (x) that such Securities are being offered
only in a transaction not involving any public offering within the meaning
of the Securities Act and (y) that such Securities may be resold, pledged
or transferred only (i) to USA Group Secondary Market Services, Inc. (the
"Seller") or (ii) to a person whom the transferor of the Securities
reasonably believes after due inquiry is a QIB acting for its own account
(and not for the account of others) or as a fiduciary or agent for others
(which others also are QIBs) and in reliance on, and to whom notice is
given that the sale, pledge or transfer is being made in reliance on, Rule
144A or on another exemption from registration under the Securities Act;
provided, that, in the event that reliance is made on an exemption from
registration under the Securities Act other than Rule 144A, the
prospective transferee shall have provided a written opinion of counsel
(which will not be at the expense of the Indenture Trustee or the Seller)
satisfactory to each to the effect that such transfer will not violate the
Securities Act. We will notify any purchaser of the Security from us of
the above resale restrictions, if then applicable. We further understand
that in connection with any transfer of the Security by us that the Seller
and the Indenture Trustee may request, and if so requested we will furnish
such certificates and other information as they may reasonably require to
confirm that any such transfer complies with the foregoing restrictions.
We understand that no sale, pledge or other transfer may be made to any
one person of Securities with a face amount of less than $250,000 and, in
the case of any person acting on behalf of one or more third parties
(other than a bank (as defined in Section 3(a)((2) of the Securities Act)
acting in its fiduciary capacity), of Securities with a face amount of
less than $250,000 for each such third party.
2. We are a "qualified institutional buyer" as defined under Rule
144A under the Securities Act (a "QIB") and are acquiring the Security for
our own account (and not for the account of others) or as a fiduciary or
agent for others (which others also are QIBs). We are familiar with Rule
144A under the Securities Act and are aware that the seller of the
Security and other parties intend to rely on the statements made herein
and the exemption from the registration requirements of the Securities Act
provided by Rule 144A or (if, as set forth above, appropriate
certifications are made and an opinion of counsel given) another exemption
from registration under the Securities Act.
3. We are a citizen or resident of the United States, a corporation,
partnership or other entity created or organized in, or under the laws of,
the United States or any political subdivision thereof, or an estate whose
income is subject to United States federal income tax regardless of its
source, or a trust if a court within the United States is able to exercise
primary supervision over the administration of the trust and one or more
Untied States fiduciaries have the authority to control all substantial
decisions of the trust.
4. With respect to any purchaser that is a partnership, grantor trust
or S corporation (a "Flow-Through Entity") for federal income tax
purposes, less than _____% of the value of the Flow-Through Entity is
attributable to the Securities and such Flow-Through Entity makes no
special allocation of any item of income, gain, loss, or credit
attributable to the Securities to one or more of beneficial owners of such
Flow- Through Entity.
5. We understand that the Seller, the Issuer, Credit Suisse First
Boston Corporation ("First Boston") and others will rely upon the truth
and accuracy of the foregoing acknowledgments, representations and
agreements, and we agree that if any of the acknowledgments,
representations and warranties deemed to have been made by us by our
purchase of the Securities, for our own account or for one or more
accounts as to each of which we exercise sole investment discretion, are
no longer accurate, we shall promptly notify the Seller and First Boston.
6. You are entitled to rely upon this letter and you are irrevocably
authorized to produce this letter or a copy hereof to any interested party
in any administrative or legal proceeding or official inquiry with respect
to the matters covered hereby.
Very truly yours,
[NAME OF PURCHASER]
By: ______________________
Name: ______________________
Title: ______________________
Date: ______________________
BWNY03/143694.8/11830/00274/2136 October 12, 1998
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CROSS-REFERENCE TABLE
TIA Indenture
Section Section
310(a)(1)......................................6.11
(a)(2)......................................6.11
(a)(3)......................................6.10
(a)(4)......................................N.A.
(a)(4)......................................6.11
(b) .......................................... 6.08;
6.10; 6.11
(c) .......................................... N.A.
311(a) .......................................... 6.11
(b) .......................................... 6.11
(c) .......................................... N.A.
312(a) .......................................... 7.01;
7.02(a)
(b) .......................................... 7.02(b)
(c) .......................................... 7.02(c)
313(a) .......................................... 6.06
(b) .......................................... 6.06
(c) .......................................... 11.05
(d) .......................................... 6.06
314(a) .......................................... 3.09; 7.03
(b) .......................................... 3.06
(c) .......................................... 2.09; 4.01
11.01
(d) .......................................... 2.09;
11.01
(e) .......................................... 11.01
(f) .......................................... 3.09
315(a) .......................................... 6.01
(b) .......................................... 6.05
(c) .......................................... 6.01
(d) .......................................... 6.01
(e) .......................................... 5.13
316(a)(1)(A)...................................5.11
(a)(1)(B)...................................5.12
(a)(2)......................................N.A.
(b) .......................................... 5.07
(c) .......................................... 1.01
317(a) .......................................... 5.03
(b) .......................................... 3.03
318(a) .......................................... 11.07
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Note: This Cross-Reference Table shall not, for any purpose,
be deemed to be part of the Indenture.
N.A. means Not Applicable.
D-2
