EXHIBIT NO. 4.1
INDENTURE
between
KEYCORP STUDENT LOAN TRUST [ ],
as Issuer
and
[ ],
not in its individual capacity but
solely as Indenture Trustee
Dated as of [ ], [ ]
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Usage
SECTION 1.01. Definitions and Usage................................................................. 3
SECTION 1.02. Incorporation by Reference of Trust Indenture Act..................................... 3
ARTICLE II
The Notes
SECTION 2.01. Form.................................................................................. 4
SECTION 2.02. Execution, Authentication and Delivery................................................ 4
SECTION 2.03. Temporary Notes....................................................................... 5
SECTION 2.04. Registration; Registration of Transfer and Exchange................................... 5
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes............................................ 6
SECTION 2.06. Persons Deemed Owner.................................................................. 7
SECTION 2.07. Payment of Principal and Interest; Defaulted Interest; Noteholders' Interest Index
Carryover............................................................................. 8
SECTION 2.08. Cancellation.......................................................................... 10
SECTION 2.09. Release of Collateral................................................................. 10
SECTION 2.10. Book-Entry Notes...................................................................... 10
SECTION 2.11. Notices to Clearing Agency............................................................ 11
SECTION 2.12. Definitive Notes...................................................................... 11
ARTICLE III
Covenants
SECTION 3.01. Payment to Noteholders................................................................ 11
SECTION 3.02. Maintenance of Office or Agency....................................................... 12
SECTION 3.03. Money for Payments To Be Held in Trust................................................ 12
SECTION 3.04. Existence............................................................................. 14
SECTION 3.05. Protection of Indenture Trust Estate.................................................. 14
SECTION 3.06. Opinions as to Indenture Trust Estate................................................. 14
SECTION 3.07. Performance of Obligations; Master Servicing of Financed Student Loans................ 15
SECTION 3.08. Negative Covenants.................................................................... 18
SECTION 3.09. Annual Statement as to Compliance..................................................... 19
SECTION 3.10. Issuer May Consolidate, etc., Only on Certain Terms................................... 19
SECTION 3.11. Successor or Transferee............................................................... 21
SECTION 3.12. No Other Business..................................................................... 21
SECTION 3.13. No Borrowing.......................................................................... 21
SECTION 3.14. [Reserved]............................................................................ 21
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SECTION 3.15. Guarantees, Loans, Advances and Other Liabilities..................................... 21
SECTION 3.16. Capital Expenditures.................................................................. 22
SECTION 3.17. Restricted Payments................................................................... 22
SECTION 3.18. Notice of Events of Default........................................................... 22
SECTION 3.19. Further Instruments and Acts.......................................................... 22
ARTICLE IV
Satisfaction and Discharge
SECTION 4.01. Satisfaction and Discharge of Indenture............................................... 23
SECTION 4.02. Application of Trust Money............................................................ 24
SECTION 4.03. Repayment of Moneys Held by Paying Agent.............................................. 24
SECTION 4.04. Put Options and Auction of Financed Student Loans..................................... 24
ARTICLE V
Remedies
SECTION 5.01. Events of Default..................................................................... 27
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.................................................................. 32
SECTION 5.05. Optional Preservation of the Financed Student Loans................................... 42
SECTION 5.06. Limitation of Suits................................................................... 43
SECTION 5.07. Unconditional Rights of Noteholders To Receive Principal
and Interest......................................................................... 44
SECTION 5.08. Restoration of Rights and Remedies.................................................... 44
SECTION 5.09. Rights and Remedies Cumulative........................................................ 44
SECTION 5.10. Delay or Omission Not a Waiver........................................................ 44
SECTION 5.11. Control by Noteholders................................................................ 44
SECTION 5.12. Waiver of Past Defaults............................................................... 45
SECTION 5.13. Undertaking for Costs................................................................. 46
SECTION 5.14. Waiver of Stay or Extension Laws...................................................... 46
SECTION 5.15. Action on Notes....................................................................... 46
SECTION 5.16. Performance and Enforcement of Certain Obligations.................................... 47
ARTICLE VI
The Indenture Trustee
SECTION 6.01. Duties of Indenture Trustee........................................................... 48
SECTION 6.02. Rights of Indenture Trustee........................................................... 49
SECTION 6.03. Individual Rights of Indenture ....................................................... 50
SECTION 6.04. Indenture Trustee's Disclaimer........................................................ 50
SECTION 6.05. Notice of Defaults.................................................................... 50
SECTION 6.06. Reports by Indenture Trustee to Noteholders........................................... 51
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SECTION 6.07. Compensation and Indemnity............................................................ 51
SECTION 6.08. Replacement of Indenture Trustee...................................................... 51
SECTION 6.09. Successor Indenture Trustee by Merger................................................. 52
SECTION 6.10. Appointment of Co-Trustee or Separate Trustee......................................... 53
SECTION 6.11. Eligibility; Disqualification......................................................... 54
SECTION 6.12. Preferential Collection of Claims Against Issuer...................................... 54
SECTION 6.13. Set-Off Rights........................................................................ 54
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.01. Issuer To Furnish Indenture Trustee Names and Addresses of Noteholders................ 54
SECTION 7.02. Preservation of Information; Communications to Noteholders............................ 55
SECTION 7.03. Reports by Issuer..................................................................... 55
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.01. Collection of Money................................................................... 56
SECTION 8.02. Trust Accounts........................................................................ 56
SECTION 8.03. General Provisions Regarding Accounts................................................. 59
SECTION 8.04. Release of Indenture Trust Estate..................................................... 60
SECTION 8.05. Opinion of Counsel.................................................................... 60
SECTION 8.06. Demands under the Group II Notes Guaranty Insurance Policy............................ 61
ARTICLE VIII-A
SECTION 8A.1. Claims Under the Group II Notes Guaranty Insurance Policy............................. 61
SECTION 8A.2. [Reserved] ........................................................................... 63
SECTION 8A.3. Surrender of the Group II Notes Guaranty Insurance Policy............................. 63
SECTION 8A.4. Rights of the Securities Insurer...................................................... 63
SECTION 8A.5. Replacement Group II Notes Guaranty Insurance Policy.................................. 63
ARTICLE IX
Supplemental Indentures
SECTION 9.01. Supplemental Indentures Without Consent of Noteholders................................ 64
SECTION 9.02. Supplemental Indentures with Consent of Noteholders................................... 65
SECTION 9.03. Execution of Supplemental Indentures.................................................. 67
SECTION 9.04. Effect of Supplemental Indenture...................................................... 68
SECTION 9.05. Conformity with Trust Indenture Act................................................... 68
SECTION 9.06. Reference in Notes to Supplemental Indentures......................................... 68
ARTICLE X
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Redemption of Notes
SECTION 10.01. Redemption............................................................................ 68
SECTION 10.02. Form of Redemption Notice............................................................. 69
SECTION 10.03. Notes Payable on Redemption Date...................................................... 70
ARTICLE X
Miscellaneous
SECTION 11.01. Compliance Certificates and Opinions, etc............................................. 70
SECTION 11.02. Form of Documents Delivered to Indenture Trustee...................................... 72
SECTION 11.03. Acts of Noteholders................................................................... 73
SECTION 11.04. Notices, etc., to Indenture Trustee, Issuer, Securities Insurer and Rating Agencies... 73
SECTION 11.05. Notices to Noteholders; Waiver........................................................ 74
SECTION 11.06. Alternate Payment and Notice Provisions............................................... 74
SECTION 11.07. Conflict with Trust Indenture Act..................................................... 75
SECTION 11.08. Effect of Headings and Table of Contents.............................................. 75
SECTION 11.09. Successors and Assigns................................................................ 75
SECTION 11.10. Separability.......................................................................... 75
SECTION 11.11. Benefits of Indenture................................................................. 75
SECTION 11.12. Legal Holidays ....................................................................... 75
SECTION 11.13. Governing Law......................................................................... 75
SECTION 11.14. Counterparts.......................................................................... 76
SECTION 11.15. Recording of Indenture................................................................ 76
SECTION 11.16. Trust Obligations..................................................................... 76
SECTION 11.17. No Petition........................................................................... 76
SECTION 11.18. Inspection............................................................................ 76
SECTION 11.19. Third-Party Beneficiaries............................................................. 77
SECTION 11.20. Rights of the Securities Insurer to Exercise Rights of Noteholders.................... 77
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APPENDIX A Definitions and Usage
SCHEDULE A Schedule of Initial Financed Student Loans
SCHEDULE B-1 Schedule of Subsequent Student Loans
SCHEDULE B-2 Schedule of Other Student Loans
SCHEDULE C Location of Financed Student Loan Files
EXHIBIT A-1 Form of Class I-[ ] Note
EXHIBIT A-2 Form of Class I-[ ] Note
EXHIBIT A-3 Form of Class I-[ ] Note
EXHIBIT A-4 Form of Class II-[ ] Note
EXHIBIT A-5 Form of Class II-[ ] Note
EXHIBIT A-6 Form of Class II-[ ] Note
EXHIBIT A-7 Form of Class II-[ ] Note
EXHIBIT A-8 Form of Class II-[ ] Note
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INDENTURE dated as of [ ], [ ], between KEYCORP STUDENT LOAN
TRUST [ ], a Delaware statutory trust (the "Issuer"), and [ ], a [ ] 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
Floating Rate Class I-[ ] Asset Backed Notes (the "Class I-[ ] Notes"), Floating
Rate Class I-[ ] Asset Backed Notes (the "Class I-[ ] Notes"), Floating Rate
Class I-[ ] Asset Backed Notes (the "Class I-[ ] Notes"), Floating Rate Class
II-[ ] Asset Backed Notes (the "Class II-[ ] Notes"), Floating Rate Class II-[ ]
Asset Backed Notes (the "Class II-[ ] Notes"), Floating Rate Class II-[ ] Asset
Backed Notes (the "Class II-[ ] Notes"), 0.[ ]% Class II-[ ] Asset Backed Notes
(the "Class II-[ ] Notes") and Floating Rate Class II-[ ] Asset Backed Notes
(the "Class II-[ ] Notes" and together with the Class I-[ ] Notes, the Class I-[
] Notes, the Class I-[ ] Notes, the Class II-[ ] Notes, the Class II-[ ] Notes,
the Class II-[ ] Notes and the Class II-[ ] Notes, the "Notes"):
GRANTING CLAUSE
The Issuer (and, with respect to the Financed Student Loans as
acquired from time to time, the Eligible Lender Trustee on behalf of the Issuer)
hereby Grants to the Indenture Trustee at the Closing Date, as trustee for the
benefit of the holders of the Group I and Group II Notes, the Securities Insurer
and the Swap Counterparty, as their interests may appear herein all the Issuer's
right, title and interest in and to the following:
(X) with respect to the Group I Notes:
(a) the Group I Student Loans, and all obligations of the
Obligors thereunder including all moneys paid thereunder on or after
the Cutoff Date (or, in the case of Additional Student Loans that are
Group I Student Loans, on or after the related Subsequent Cutoff Date);
(b) the Sale and Servicing Agreement, including the right
of the Issuer to cause the Depositor to repurchase or the Master
Servicer to purchase, Group I Student Loans from the Issuer under
circumstances described therein, and including all of the related
Assigned Rights;
(c) each related Guarantee Agreement, including the right
of the Issuer to cause the related Guarantor to make Guarantee Payments
in respect of the Financed Group I Student Loans;
(d) all funds on deposit from time to time in the Trust
Accounts related to the Group I Notes (and sub-accounts thereof),
including the Group I Reserve Account Initial Deposit and the Group I
Pre-Funded Amount;
(e) all rights under the Group I Interest Rate Swap and
all payments due or received from the Swap Counterparty pursuant
thereto;
(f) all rights under the Group I Basis Risk Cap Agreement
and all payments due or received from the Cap Provider pursuant
thereto;
(g) all rights under the Group I Put Option Agreement and
all payments due or received from the Put Option Provider pursuant
thereto; 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 "Group I Collateral").
(Y) with respect to the Group II Notes:
(a) the Group II Student Loans, and all obligations of
the Obligors thereunder including all moneys paid thereunder on or
after the Cutoff Date (or, in the case of Additional Student Loans that
are Group II Student Loans, on or after the related Subsequent Cutoff
Date);
(b) the Sale and Servicing Agreement, including the right
of the Issuer to cause the Depositor to repurchase or the Master
Servicer to purchase, Group II Student Loans from the Issuer under
circumstances described therein, and including all of the related
Assigned Rights;
(c) each related Guarantee Agreement, including the right
of the Issuer to cause the related Guarantor to make Guarantee Payments
in respect of the Group II Student Loans;
(d) all funds on deposit from time to time in the Trust
Accounts related to the Group II Notes (and sub-accounts thereof),
including the Group II Reserve Account Initial Deposit and the Group II
Pre-Funded Amount;
(e) all rights under the Group II Cap Agreement and all
payments received from the Cap Counterparty pursuant thereto;
(f) all rights under the Group II Basis Risk Cap
Agreement and all payments due or received from the Cap Provider
pursuant thereto;
(g) all rights under the Group II Put Option Agreement
and all payments due or received from the Put Option Provider pursuant
thereto;
(h) any rights of the Trust under the Group II Insured
Notes Guaranty Insurance Policy and all payments from the Securities
Insurer received thereunder; and
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(i) 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 "Group II Collateral," and together with the Group I
Collateral, "Collateral").
The foregoing Grant is made in trust to secure the payment of
principal of and/or interest on, as applicable, and any other amounts owing in
respect of, the Group I Notes (with respect to the Group I Collateral) and the
Group II Notes (with respect to the Group II Collateral), within each group
equally and ratably, without prejudice, priority or distinction, to secure
payment of all amounts owing to the Securities Insurer, the Cap Counterparty and
the Swap Counterparty, 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
holders of the Notes, the Swap Counterparty, and the Securities Insurer
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 holders of the Notes, the Securities 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 hereto, 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 holder of the Notes.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Indenture Trustee.
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"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 I-[ ] Notes, Class I-[ ] Notes,
Class I-[ ] Notes, Class II-[ ] Notes, Class II-[ ] Notes, Class II-[ ] Notes,
Class II-[ ] Notes and Class II-[ ] Notes together with the Indenture Trustee's
certificate of authentication, shall be in substantially the forms set forth in
Exhibits A-1 through A-8, 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 the 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 Class I-[ ] Notes, Class I-[ ] Notes, Class I-[ ] Notes, Class II-[
] Notes, Class II-[ ] Notes, Class II-[ ] Notes, Class II-[ ] Notes and Class
II-[ ] Notes set forth in Exhibits A-1 through A-8, respectively, 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 Notes for original issue in (i) an aggregate principal amount of $[ ]
with respect to the Class I-[ ] Notes, $[ ] with respect to the Class I-[ ]
Notes, $[ ] with respect to the Class I-[ ] Notes, $[ ] with respect to the
Class II-[ ] Notes, $[ ] with respect to the Class II-[ ] Notes, $[ ] with
respect to the Class II-[ ] Notes and $[ ] with respect to the Class II-[ ]
Notes, and (ii) an aggregate principal notional amount of $[ ] with respect to
the Class II-[ ] Notes, except as provided in Section 2.05.
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Each Note shall be dated the date of its authentication. The
Notes shall be issuable as registered Notes in the minimum denomination of
$1,000 and in integral multiples of $1,000 in excess thereof.
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 holder of the Notes. 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 initial principal amount or
initial notional principal amount, as applicable, 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, 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
Securities 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 Securities 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 Securities 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 holders of the
Notes and the principal amounts or notional principal amount, as applicable, and
number of such Notes.
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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 holder of the
Notes shall obtain from the Indenture Trustee, in the name of the designated
transferee or transferees, one or more new Notes in any authorized denominations
and a like aggregate initial principal amount or notional principal amount, as
applicable.
At the option of the holder of the Notes, Notes may be
exchanged for other Notes in any authorized denominations, a like class and a
like aggregate initial principal amount or notional principal amount, as
applicable, 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 holder of the Notes shall obtain
from the Indenture Trustee, the Notes which the holder of the Notes 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.
The Issuer initially appoints The Depository Trust Company
("DTC") to act as depositary (the "Depositary") with respect to the each Class
of the Notes.
The Issuer initially appoints the Indenture Trustee to act as
custodian with respect to the Notes.
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 Indenture Trustee duly
executed by the holder of the Notes thereof or such holder'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 holder of the Notes 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 the
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
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Indenture Trustee such security or indemnity as may be required by it to hold
the Issuer, the Securities Insurer and the Indenture Trustee harmless, then, in
the absence of notice to the Issuer, the Note Registrar or the Indenture Trustee
that such Note has been acquired by a bona fide purchaser, and provided that the
requirements of Section 8-405 of the UCC are met, the Issuer shall execute and
upon its request the Indenture Trustee shall authenticate and deliver, in
exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a
replacement Note; provided, however, that if any such destroyed, lost or stolen
Note, but not a mutilated Note, shall have become or within 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 and the Indenture Trustee shall be
entitled to recover such replacement Note (or such payment) from the Person to
whom it was delivered or any Person taking such replacement Note from such
Person to whom such replacement Note was delivered or any assignee of such
Person, except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Issuer or the Indenture Trustee or the Securities
Insurer in connection therewith.
Upon the issuance of any replacement Note under this Section,
the Issuer may require the payment by the holder of the Notes 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
Securities Insurer and any agent of the Issuer, the Securities Insurer or the
Indenture Trustee 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 (with respect to each Class of Notes other
than the Class II-[ ] Notes), interest (and any related Noteholders' Interest
Index Carryover (with respect to each Class of Notes other than the Class II-[ ]
Notes) and payments made under the Group I or Group II Basis Risk Cap
Agreements, as applicable, with respect to the related group of Notes and such
Class of Notes), if any, on such Note and for all other purposes whatsoever,
whether or not such Note be overdue, and neither the Issuer, the Securities
Insurer or the Indenture Trustee nor any agent of the Issuer, the Securities
Insurer or the Indenture Trustee shall be affected by notice to the contrary.
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SECTION 2.07. Payment of Principal and Interest; Defaulted
Interest; Noteholders' Interest Index Carryover.
(a) The Class I-[ ] Notes, Class I-[ ] Notes, Class I-[ ]
Notes, Class II-[ ] Notes, Class II-[ ] Notes, Class II-[ ] Notes, Class II-[ ]
Notes and Class II-[ ] Notes shall accrue interest as provided in the forms of
the Class I-[ ] Note, Class I-[ ] Note, Class I-[ ] Note, Class II-[ ] Note,
Class II-[ ] Note, Class II-[ ] Note, Class II-[ ] Note and Class II-[ ] Note
set forth in Exhibits A-1 through A-8, respectively, and such interest shall be
payable on each Distribution Date as specified therein, subject to Section 3.01.
Any installment of interest (and any related Noteholders' Interest Index
Carryover with respect to each Class of Notes other than the Class II-[ ] Notes)
or principal, if any, with respect to each Class of Notes other than the Class
II-[ ] Notes, payable on any applicable Note which is punctually paid or duly
provided for by the Issuer on the applicable Distribution 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 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 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 Distribution Date or on the applicable
Note Final Maturity Date which shall be payable as provided below. The funds
represented by any such checks returned undelivered shall be held in accordance
with Section 3.03.
(b) The principal of each Note, other than the Class
II-[ ] Notes, shall be payable in installments on each Distribution Date as
provided in the form of Class I-[ ] Note, Class I-[ ] Note, Class I-[ ] Note,
Class II-[ ] Note, Class II-[ ] Note, Class II-[ ] Note and Class II-[ ] Note
set forth in Exhibits ▇-▇, ▇-▇, ▇-▇, ▇-▇, ▇-▇, A-6 and A-8, respectively, to the
extent the amount of funds required and available to be distributed in respect
of principal on such Class of Notes pursuant to the Sale and Servicing
Agreement; provided, however, the entire unpaid principal amount of each Class
of Notes, other than the Class II-[ ] Notes, shall be due and payable on its
respective Final Maturity Date. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes, other than the Class II-[ ] Notes, shall be due
and payable, if not previously paid, on the date on which an Event of Default
shall have occurred and is continuing, if the Indenture Trustee, or (with
respect to the Group I Notes only) the Group I Controlling Parties holding a
majority of the Outstanding Amount of the related Classes of Group I Notes, or
(with respect to the Group II Notes only) the Securities Insurer (provided that
the Class II-[ ] Notes or Class II-[ ] Notes remain outstanding and no
Securities Insurer Default shall have occurred and is continuing, then by the
Group II Controlling Noteholders holding a majority of the Outstanding Amount of
the related Classes of Group II Notes) have declared the related group of Notes
to be immediately due and payable in the manner provided in Section 5.02. All
principal payments on each Class of Notes, other than the Class II-[ ] Notes,
shall be made pro rata to the holders of such Class of Notes entitled thereto.
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 Distribution Date on
which the Issuer expects that the final installment of principal of and interest
on any Class of Notes, other than the Class II-[ ] Notes, and interest on the
Class II-[ ] Notes, and any related Noteholders' Interest Index Carryover
8
with respect to each such Class of Notes other than the Class II-[ ] Notes, on
such Note will be paid. Such notice shall be mailed or transmitted by facsimile
prior to such final Distribution 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 the holders of the Notes as provided in Section 10.02.
(c) If the Issuer defaults in a payment of interest on
any Class of the Notes, the Issuer shall pay defaulted interest (plus interest
on such defaulted interest to the extent lawful) at the applicable Note Interest
Rate in any lawful manner. The Issuer may pay such defaulted interest to the
persons who are holders of such Class or Classes of Notes on a subsequent
special record date, which date shall be at least three 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 each holder of the affected Class or
Classes of Notes a notice that states the special record date, the payment date
and the amount of defaulted interest to be paid.
(d) The Noteholders' Interest Index Carryover with
respect to the Group I or Group II Notes (other than the Class II-[ ] Notes), as
applicable, for each Distribution Date (including all unpaid Noteholders'
Interest Index Carryover for such Group I or Group II Notes (other than the
Class II-[ ] Notes), as applicable, for prior Distribution Dates and interest
accrued thereon at the applicable Note Interest Rate for each applicable
Interest Period) shall be payable to the Group I or Group II Notes (other than
the Class II-[ ] Notes), as applicable, pro rata based on the amount of related
Noteholders' Interest Index Carryover then owing on each such Group I or Group
II Notes (other than the Class II-[ ] Notes), as applicable, on each
Distribution Date solely to the extent of funds required and available
(including any Group I or Group II Basis Risk Cap Funds, as applicable) to be
distributed to the holders of the Group I or Group II Notes (other than the
Class II-[ ] Notes), as applicable, by the Indenture Trustee pursuant to Section
5.05(c)(X)(8) with respect to the Group I Notes, Section 5.05(c)(Y)(11with
respect to the Group II Notes, or 5.06(d) of the Sale and Servicing Agreement.
The Noteholders' Interest Index Carryover with respect to the Class I-[ ] or
Class II-[ ] Notes, as applicable, for each Distribution Date (including all
unpaid Noteholders' Interest Index Carryover for such Class I-[ ] or Class II-[
] Notes, as applicable, for prior Distribution Dates and interest accrued
thereon at the applicable Note Interest Rate for each applicable Interest
Period) shall be payable to the Class I-[ ] or Class II-[ ] Notes, as
applicable, on each Distribution Date solely to the extent of funds required and
available (including any Class I-[ ] or Class II-[ ] Basis Risk Cap Payment
actually available for distribution to the Class I-[ ] or Class II-[ ] Notes,
respectively, on such Distribution Date) to be distributed to the holders of
such Class of Notes by the Indenture Trustee pursuant to Section 5.05(c)(X)(9)
with respect to the Group I Notes, Section 5.05(c)(Y)(11) with respect to the
Group II Notes or 5.06(d) of the Sale and Servicing Agreement. Any Noteholders'
Interest Index Carryover payable on any Distribution Date shall be paid to the
Person in whose name such Note (or one or more Predecessor Notes) is registered
on the applicable Record Date 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 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
9
account designated by such nominee. The funds represented by any such checks
returned undelivered shall be held in accordance with Section 3.03.
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 of an Issuer Request
accompanied by an Officers' Certificate of the Issuer, an Opinion of Counsel and
Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(l) or
an Opinion of Counsel in lieu of such Independent Certificates to the effect
that the TIA does not require any such Independent Certificates.
SECTION 2.10. Book-Entry Notes. The Notes, upon original
issuance, will be issued in the form of typewritten Notes representing the
Book-Entry Notes, to be delivered to The Depository Trust Company, the initial
Clearing Agency, by, or on behalf of, the Issuer. Such Notes shall initially be
registered on the Note Register in the name of Cede & Co., the nominee of the
initial Clearing Agency, and no Note Owner will receive a Definitive Note (as
defined below) representing such Note Owner's interest in such 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 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
Agreements. Unless and until Definitive Notes are issued pursuant to
Section 2.12, the initial Clearing Agency will make book-entry
transfers
10
among the Clearing Agency Participants and receive and transmit
payments of principal of and interest and other amounts on the Notes to
such Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions
to be taken based upon instructions or directions of the holders of the
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 holders of the Notes 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 the holders of the
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
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 Master Servicer Default or an
Administrator Default, Note Owners representing beneficial interests aggregating
at least a majority of the Outstanding Amount of such Class of 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 of such Class of Notes, then the
Indenture Trustee will cause the Clearing Agency to notify all Note Owners of
such Class of Notes, through the Clearing Agency, of the occurrence of any such
event and of the availability of Definitive Notes to such Note Owners requesting
the same. Upon surrender to the Indenture Trustee of the typewritten Notes
representing the Book-Entry Notes by the Clearing Agency, accompanied by
registration instructions, the Issuer shall execute and the Indenture Trustee
shall authenticate the Definitive Notes in accordance with the instructions of
the Clearing Agency. None of the Issuer, the Note Registrar or the Indenture
Trustee shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the
holders of the Definitive Notes as the Noteholders for such Class of Notes.
ARTICLE III
Covenants
SECTION 3.01. Payment to Noteholders. The Issuer will duly and
punctually pay the principal of and on interest each Class of Notes other than
the Class II-[ ] Notes, and interest on the Class II-[ ] Notes, and any unpaid
Noteholders' Interest Index Carryover for each Class of Notes other than the
Class II-[ ] Notes (but only to the extent provided in Sections 2.07(d) and
8.02(c)) with respect to each applicable Class of Notes in accordance with
11
the terms of such Notes and this Indenture. Without limiting the foregoing,
subject to Section 8.02(c), the Issuer will cause to be distributed to the
holders of the each Class of Notes in each group of Notes that portion of the
amounts on deposit in the Trust Accounts related to such group of Notes on a
Distribution Date, to which the holders of each Class of Notes are entitled to
receive pursuant to the Sale and Servicing Agreement. Amounts properly withheld
under the Code by any Person from a payment to any holder of the Notes of
interest on (including any Noteholders' Interest Index Carryover with respect to
each Class of Notes other than the Class II-[ ] Notes) and/or principal of,
other than the Class II-[ ] Notes, shall be considered as having been paid by
the Issuer to such holder of the applicable Notes for all purposes of this
Indenture. The Notes will be non-recourse obligations of the Issuer and shall be
limited in right of payment to amounts available from the Indenture Trust Estate
as provided in this Indenture and the Issuer shall not be otherwise liable on
the Notes.
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. The
Issuer hereby initially appoints the Indenture Trustee to serve as its agent for
the foregoing purposes. The Issuer will give prompt written notice to the
Indenture Trustee of the location, and of any change in the location, of any
such office or agency. If at any time the Issuer shall fail to maintain any such
office or agency or shall fail to furnish the Indenture Trustee with the address
thereof, such surrenders 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 in respect of the Notes.
SECTION 3.03. Money for Payments To Be Held in Trust. As
provided in Section 8.02(a) and (b), all payments of amounts due and payable
with respect to any Notes that are to be made from amounts distributed from the
applicable sub-account of the Collection Account or any other Trust Account
pursuant to Section 8.02(c) shall be made on behalf of the Issuer by the
Indenture Trustee or by another Paying Agent, and no amounts so distributed from
the applicable sub-account of the Collection Account for payments of Group I or
Group II Notes, as applicable, shall be paid over to the Issuer except as
provided in this Section. The Indenture Trustee is hereby appointed as the
initial "Paying Agent" hereunder and the Indenture Trustee hereby accepts such
appointment.
On or before the Business Day next preceding each Distribution
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 each Class of 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 Securities 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 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:
12
(i) hold all sums held by it for the payment of amounts
due with respect to each Class of 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 Securities 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 any Class of
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 each applicable Class 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 Class of the
Notes of any applicable withholding taxes imposed thereon and with
respect to any applicable reporting requirements in connection
therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds,
any money held by the Indenture Trustee or any Paying Agent in trust for the
payment of any amount due with respect to any Note and remaining unclaimed for
two years after such amount has become due and payable shall be discharged from
such trust and be paid to the Issuer on Issuer Request; and the holder of such
Notes 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 the holders of the Notes whose Notes have been
called but have not
13
been surrendered for redemption or whose right to or interest in moneys 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
holder of the Notes).
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 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, and the holders of the
Notes, the Swap Counterparty and the Securities Insurer in such
Indenture Trust Estate against the claims of all persons and parties.
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
Securities 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 [ ] [ ] in each calendar year, beginning
in [ ], the Issuer shall furnish to the Indenture Trustee, the Securities
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
14
supplemental hereto and any other requisite documents and with respect to the
execution and filing of any financing statements and continuation statements as
is 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; Master Servicing of
Financed 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 Sale and
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 Securities 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 Master Servicer and the Administrator to assist the Issuer in
performing its duties under this Indenture.
(c) The Issuer will enforce all of its rights under this
Indenture and the Basic Documents and will punctually perform and observe all of
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 and
the Sale and 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,
(with respect to the Group I Notes only) the Group I Controlling Parties holding
a majority of the Outstanding Amount of the related Classes of Group I Notes,
and (with respect to the Group II Notes only) the Securities Insurer (provided
that the Class II-[ ] Notes or Class II-[ ] Notes remain outstanding and no
Securities Insurer Default shall have occurred and is continuing, then by the
Group II Controlling Noteholders holding a majority of the Outstanding Amount of
the related Classes of Group II Notes).
(d) If the Issuer shall have knowledge of the occurrence
of a Master Servicer Default or an Administrator Default under the Sale and
Servicing Agreement, the Issuer shall promptly notify the Indenture Trustee, the
Group I Controlling Noteholders (with respect to Master Servicer Defaults only),
the Securities Insurer, the Group II Controlling Noteholders (with respect to
the Master Servicer Defaults only), the Swap Counterparty and the Rating
Agencies thereof, and shall specify in such notice the action, if any, the
Issuer is taking with
15
respect to such default. If a Master Servicer Default shall arise from the
failure of the Master Servicer to perform any of its duties or obligations under
the Sale and Servicing Agreement, or an Administrator Default shall arise from
the failure of the Administrator to perform any of its duties or obligations
under the Sale and Servicing Agreement or the Administration Agreement, as the
case may be, 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
a partial or complete termination to the Master Servicer of the Master
Servicer's rights and powers with respect to either or both of the Group I or
Group II Student Loans, or to the Administrator of the Administrator's rights
and powers, pursuant to Section 8.01 of the Sale and Servicing Agreement, the
Issuer shall appoint, with the consent of the Securities Insurer (with respect
to the Group II Student Loans only and provided that a Securities Insurer
Default has not occurred and is continuing), a successor master servicer (the
"Successor Master Servicer"), or, with the consent of the Securities Insurer
(provided that a Securities Insurer Default has not occurred and is continuing),
a successor administrator (the "Successor Administrator"), and such Successor
Master Servicer or Administrator, as the case may be, shall accept its
appointment by a written assumption in a form acceptable to the Indenture
Trustee. In the event that a Successor Master Servicer or Administrator has not
been appointed and accepted its appointment at the time when the Master Servicer
or Administrator, as the case may be, ceases to act as Master Servicer or
Administrator, as the case may be, the Indenture Trustee without further action
shall automatically be appointed a Successor Master Servicer or Administrator,
as the case may be. The Indenture Trustee may resign as the Master Servicer or
the Administrator pursuant to the terms of the Sale and Servicing Agreement by
giving written notice of such resignation to the Issuer, the Securities 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 master
servicer or a new administrator 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 Master Servicer, or otherwise master service
Financed Student Loans, in violation of the Higher Education Act. Upon delivery
of any such notice to the Issuer, the Issuer shall obtain a new master servicer
or a new administrator as a Successor Master Servicer or Administrator under the
Sale and Servicing Agreement, with the consent of the Securities Insurer (so
long as no Securities Insurer Default has occurred and is continuing). Any
Successor Master Servicer or Administrator, as the case may be, other than the
Indenture Trustee shall (i) be an established institution (A) that satisfies any
requirements of the Higher Education Act applicable to servicers and (B) whose
regular business includes the servicing or administration of student loans and
(ii) enter into a master servicing agreement or an administration agreement with
the Issuer having substantially the same provisions as the provisions of the
Sale and Servicing Agreement applicable to the predecessor Master Servicer or
the provisions of the Sale and Servicing Agreement and the Administration
Agreement applicable to the Administrator and, in any case, approved by the
Securities Insurer (provided that no Securities Insurer Default has occurred and
is continuing). If within 30 days after the delivery of the notice referred to
above, the Issuer shall not have obtained such a new master servicer or
administrator, as the case may be, the Indenture Trustee may appoint, or may
petition a court of competent jurisdiction to appoint, in each case, so long as
no Securities Insurer Default has occurred and is continuing, with the consent
of the Securities Insurer, which consent will not be unreasonably withheld, a
Successor Master Servicer
16
or Administrator; provided, however, that such right to appoint or to petition
for the appointment of any such successor shall in no event relieve the
Indenture Trustee from any obligations otherwise imposed on it under the Basic
Documents until such successor 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 as the Indenture Trustee,
the Securities Insurer and such successor shall agree, subject to the
limitations set forth below and in the Sale and Servicing Agreement, and in
accordance with Section 8.02 of the Sale and Servicing Agreement, the Issuer
shall enter into an agreement with such successor for the servicing or
administration of the Financed Student Loans (such agreement to be in form and
substance satisfactory to the Indenture Trustee and the Securities Insurer). If
the Indenture Trustee shall succeed as provided herein to the Master Servicer's
duties with respect to Financed Student Loans or the Administrator's duties with
respect to the Issuer and the Financed Student Loans, as the case may be, 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
Master Servicer or the Administrator, as the case may be, and the servicing or
administration of the Financed Student Loans. In case the Indenture Trustee
shall become successor to the Master Servicer or the Administrator, as the case
may be, under the Sale and Servicing Agreement, the Indenture Trustee shall be
entitled to appoint as Master Servicer or as Administrator, as the case may be,
any one of its affiliates or agents, 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 Master Servicer or the
Administrator in accordance with the terms hereof.
(f) Upon any partial or complete termination of the
Master Servicer's rights and powers pursuant to the Sale and Servicing
Agreement, or any termination of the Administrator's rights and powers pursuant
to the Sale and Servicing Agreement, as the case may be, the Issuer shall
promptly notify the Indenture Trustee, the Swap Counterparty and the Securities
Insurer. As soon as a Successor Master Servicer or a Successor Administrator is
appointed, the Issuer shall notify the Indenture Trustee and the Securities
Insurer of such appointment, specifying in such notice the name and address of
such Successor Master Servicer or such Successor Administrator.
(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, (with respect to amendments
affecting the Group I Notes) the Group I Controlling Parties holding a majority
of the Outstanding Amount of the related Classes of Group I Notes, and (with
respect to amendments affecting the Group II Notes) the Securities Insurer
(provided that the Class II-[ ] Notes or Class II-[ ] Notes remain outstanding
and no Securities Insurer Payment Default shall have occurred and is continuing,
then by the Group II Controlling Noteholders holding a majority of the
Outstanding Amount of the related Classes of Group II Notes), 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
therein, or waive timely performance or observance by the Master Servicer, the
Administrator, the Depositor, the Issuer or the Eligible Lender Trustee under
the Sale and Servicing Agreement; provided, however, that no such amendment
shall (i) increase or reduce in any manner the amount of, or accelerate or delay
the
17
timing of, collections of payments with respect to Group I or Group II Student
Loans or distributions that shall be required to be made for the benefit of the
holders of Group I or Group II Notes, (ii) amend the aforesaid percentage of the
Outstanding Amount of the related Class or Classes of Notes, which are required
to consent to any such amendment, without the consent of all outstanding holders
of all Classes of Notes affected by such amendment (notwithstanding anything to
the contrary contained herein or in the Trust Agreement, such rights of consent
granted to the holders of the Notes contained in clauses (i) and (ii) of this
proviso shall not be exercisable by the Group I Controlling Parties on behalf of
all of the Group I Noteholders or by the Securities Insurer on behalf of all of
the Group II Insured Noteholders (unless the Class II-[ ] Notes and the Class
II-[ ] Notes are no longer outstanding and a Securities Insurer Payment Default
has occurred and is continuing, then the Group II Controlling Noteholders),
(iii) amend any rights of the Securities Insurer, without the consent of the
Securities Insurer, or (iv) amend any rights of the Swap Counterparty, without
the consent of the Swap Counterparty. If any such amendment, modification,
supplement or waiver shall be so consented to by the Indenture Trustee and the
Securities Insurer (provided that no Securities Insurer Default has occurred and
is continuing) or such holders of the Notes, the Issuer agrees, promptly
following a request by the Indenture Trustee, the Securities 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 Securities Insurer or the Swap Counterparty may deem
necessary or appropriate in the circumstances.
(h) Notwithstanding the foregoing, in the event that the
Master Servicer is being replaced by a Successor Master Servicer with respect to
only one group of Financed Student Loans, pursuant to Section 8.01(a) of the
Sale and Servicing Agreement, the Indenture Trustee shall continue to recognize
KBUSA as Master Servicer, and KBUSA shall be permitted continue in its role of
Master Servicer, with respect to the other group of Student Loans and the
foregoing provisions shall only apply to the Successor Master Servicer in its
capacity as Master Servicer of one group of Student Loans.
SECTION 3.08. Negative Covenants. So long as any Notes are
Outstanding or any amounts are owing to the Securities Insurer or the Swap
Counterparty, 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, with the consent of the Securities Insurer so long
as no Securities Insurer Default has occurred and is continuing;
(ii) claim any credit on, or make any deduction from the
principal or interest (including any Noteholders' Interest Index
Carryover, as applicable) payable in respect of, the applicable 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 holder of the Notes 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
18
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 Securities Insurer and the Swap
Counterparty, on or before [ ], [ ] and on or before [March 1] of each year
thereafter, an Officers' Certificate of the Issuer stating that:
(i) a review of the activities of the Issuer during the
previous calendar 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, without the prior written consent of the Securities Insurer (provided
that no Securities Insurer Payment Default has occurred and is continuing) and
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 Indenture Trustee,
the Securities Insurer and the Swap Counterparty, in form satisfactory
to the Indenture Trustee, the due and punctual payment of the principal
of and interest on and any Noteholders' Interest Index Carryover, if
any, with respect to each Class of Notes other than the Class II-[ ]
Notes, and the due and punctual payment of the interest on the Class
II-[ ] 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 Default shall have occurred and be continuing;
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(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
Securities Insurer and the Swap Counterparty) to the effect that such
transaction will not have any material adverse Federal or Pennsylvania
state tax consequence to the Issuer, any holder of the Notes or any
holder of the Certificates;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture
Trustee, the Securities 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).
(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 without the prior written consent of the
Securities Insurer (provided that no Securities Insurer Default has occurred and
is continuing) and, 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,
the Securities Insurer and the Swap Counterparty, in form satisfactory
to the Indenture Trustee and the Securities Insurer, the due and
punctual payment of the principal of and interest on and any
Noteholders' Interest Index Carryover, if any, with respect to each
Class of Notes other than the Class II-[ ] Notes, and the due and
punctual payment of the interest on the Class II-[ ] Notes, all amounts
then due and owing to the Securities Insurer and the Swap Counterparty,
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
holders of the Notes, the Securities Insurer and the Swap Counterparty,
(D) unless otherwise provided in such supplemental indenture, expressly
agrees to indemnify, defend and hold harmless the Issuer against and
from any loss, liability or expense arising under or related to this
Indenture and the Notes and (E) expressly 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;
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(ii) immediately after giving effect to such transaction,
no 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
Securities Insurer and the Swap Counterparty) to the effect that such
transaction will not have any material adverse Federal or Pennsylvania
state tax consequence to the Issuer, any holder of the Notes or any
holder of the Certificates;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture
Trustee, the Securities 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).
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), KeyCorp Student Loan Trust
[ ] will be released from every covenant and agreement of this Indenture to be
observed or performed on the part of the Issuer with respect to the Notes
immediately upon the delivery by the Issuer of written notice to the Indenture
Trustee stating that KeyCorp Student Loan Trust [ ] is to be so released.
SECTION 3.12. No Other Business. The Issuer shall not engage
in any business other than financing, purchasing, owning, selling and managing
the Financed Student Loans and making Additional Fundings in the manner
contemplated by this Indenture and the other Basic Documents and activities
incidental thereto.
SECTION 3.13. No Borrowing. 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. [Reserved].
SECTION 3.15. Guarantees, Loans, Advances and Other
Liabilities. Except as contemplated by the Sale and Servicing Agreement 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
21
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 Depositor, the Master
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
Depositor, the Master Servicer, the Eligible Lender Trustee, the Indenture
Trustee, the Securities Insurer, the Swap Counterparty, the holders of the
Certificates, the holders of the Notes, the Administrator and either of the
Sellers as contemplated by, and to the extent funds are available for such
purpose under, the Sale and Servicing Agreement. The Issuer will not, directly
or indirectly, make payments to or distributions from the Collection 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 Securities Insurer, the Group I Controlling
Parties, the Group II Controlling Parties, the Swap Counterparty and the Rating
Agencies prompt written notice of each Event of Default hereunder and each
default on the part of the Depositor of its obligations under the Sale and
Servicing Agreement, or the Master Servicer of its obligations under the Sale
and Servicing Agreement or the Administrator of its obligations under the Sale
and Servicing Agreement or the Administration Agreement. In addition, the Issuer
shall deliver to the Indenture Trustee, the Securities Insurer and the Swap
Counterparty, 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.
SECTION 3.19. Further Instruments and Acts. Upon request of
the Indenture Trustee, 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.
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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 holders of the Notes
to receive payments of principal thereof and interest (including any
Noteholders' Interest Index Carryover with respect to each Class of Notes other
than the Class II-[ ] Notes) thereon, (iv) Sections 3.03, 3.04, 3.05, 3.08,
3.10, 3.12 and 3.13, (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 holders of the Notes, 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) a period of 367 days has expired after
either
(1) all Group I and Group II 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; 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 I-[ ] Final Maturity Date, the Class I-[ ]
Final Maturity Date, the Class I-[ ] Final Maturity
Date, the Class II-[ ] Final Maturity Date, the Class
II-[ ] Final Maturity Date, the Class II-[ ] Final
Maturity Date, the Class II-[ ] Final Maturity Date
or the Class II-[ ] 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
23
purpose, in an amount sufficient to pay and discharge the
entire indebtedness on such Notes not theretofore delivered to
the Indenture Trustee for cancellation when due to the Class
I-[ ] Final Maturity Date, the Class I-[ ] Final Maturity
Date, the Class I-[ ] Final Maturity Date, the Class II-[ ]
Final Maturity Date, the Class II-[ ] Final Maturity Date, the
Class II-[ ] Final Maturity Date, the Class II-[ ] Final
Maturity Date or the Class II-[ ] Final Maturity Date, as the
case may be;
(B) a period of 367 days has expired after the
later of (i) the date on which no Group I or Group II Notes
are outstanding or (ii) the date on which the Issuer has paid
or caused to be paid all other sums due to the Securities
Insurer and the Swap Counterparty or otherwise payable
hereunder by the Issuer; and
(C) the Issuer has delivered to the Indenture
Trustee, the Securities 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 moneys 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 Group I and
Group II Notes and this Indenture, to the payment, either directly or through
any Paying Agent, as the Indenture Trustee may determine, to the holders of the
particular Group I or Group II Notes for the payment or redemption of which such
moneys have been deposited with the Indenture Trustee, of all sums due and to
become due thereon for principal of and interest on each Class of Notes other
than the Class II-[ ] Notes, and interest on the Class II-[ ] Notes, including
any related Noteholders' Interest Index Carryover with respect to each Class of
Notes other than the Class II-[ ] Notes, to the Swap Counterparty of all amounts
due to the Swap Counterparty under the Group I Interest Rate Swap and the
Securities Insurer for all amounts due under the Insurance Agreement; but such
moneys need not be segregated from other funds except to the extent required
herein or in the Sale and Servicing Agreement or required by law.
SECTION 4.03. Repayment of Moneys Held by Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect to
the Notes, all moneys 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 moneys.
SECTION 4.04. Put Options and Auction of Financed Student
Loans. (a)(i) With respect to each of the Put Options, on or before the
Distribution Date that is three months prior to the Put Option Exercise Date,
the Indenture Trustee (or the Administrator acting on its behalf) shall solicit
exercise instructions from the Group I and Group II Controlling Noteholders
regarding the Group I and Group II Put Option, respectively. The Indenture
Trustee (or the
24
Administrator acting on its behalf) shall provide a description of the Group I
or Group II Put Option, as applicable, and copies of such other related
documents as it deems advisable, in its sole judgment (or as is reasonably
requested by any Noteholder), to assist the applicable Noteholders in
determining whether to direct the exercise of the Group I or Group II Put
Option, as the case may be. If a majority in interest (based on then respective
Outstanding Amounts) of the Group I or Group II Controlling Noteholders, as
applicable, direct the Indenture Trustee, in writing, within 5 Business Days of
the Put Option Exercise Date, to exercise the Group I or Group II Put Option, as
the case may be, then the Indenture Trustee shall exercise the Group I or Group
II Put Option, as applicable, on the Put Option Exercise Date, in accordance
with the procedures set forth in the Group I or Group II Put Option Agreement,
as applicable.
(ii) Notwithstanding the provisions of clause (a)(i)
above, the Indenture Trustee shall not exercise the Group I or Group II Put
Option, as applicable, on the Put Option Exercise Date if the related Put Option
Exercise Price to be received from the Put Option Provider (plus all amounts
then on deposit in the Group I or Group II Reserve Account, as applicable) would
be less than the related Minimum Acceptable Put Exercise Option Price.
(iii) In the event that the Indenture Trustee is not
directed by a majority in interest of the Group I or Group II Controlling
Noteholders, as applicable, to exercise the Group I or Group II Put Option,
respectively, all distributions on the Group I or Group II Notes, respectively,
will continue to be made on each succeeding Distribution Date in the manner
provided in Section 5.05(c) of the Sale and Servicing Agreement, and the
provisions of Section 4.04(b) below shall not be applicable.
(iv) In the event that the Indenture Trustee is directed
to exercise the Group I or Group II Put Option, as the case may be, by a
majority in interest of the Group I or Group II Controlling Noteholders,
respectively, but is unable to comply with such directions due to the conditions
set forth in clause (a)(ii) above being applicable, the Specified Collateral
Balance for the Group I or Group II Notes, as applicable, shall be reduced to
zero for all subsequent Distribution Dates and distributions on the Group I or
Group II Notes, respectively, will continue to be made on each succeeding
Distribution Date in the manner provided in Section 5.05(c) above, and the
provisions of Section 4.04(b) below shall be applicable.
(b)(i) In the event that (x) the Group I or Group II Put
Option is exercised and the Put Option Provider defaults on its obligations with
respect to the Group I or Group II Put Option Agreement, as the case may be, or
(y) the Indenture Trustee is directed in writing to exercise the Group I or
Group II Put Option, as the case may be, by a majority in interest the Group I
or Group II Controlling Noteholders, respectively, but is unable to comply with
such directions due to the conditions set forth in clause (a)(ii) above being
applicable, any related Group I or Group II Student Loans, as applicable,
remaining as part of the Trust Estate as of the end of the Collection Period
immediately preceding the [ ] [ ] Distribution Date will be offered (and shall
be offered again at the end of each or any subsequent Collection Period if so
instructed in writing by a majority of the Group I or Group II Controlling
Noteholders, as the case may be, with respect to the Group I or Group II Student
Loans, respectively) for sale by the Indenture Trustee as both a single pool
relating to both groups of
25
Financed Student Loans (but only in the event that both groups of Financed
Student Loans are affected by sub-clause (x) or (y) above) (a "Single Pool
Sale") and in two separate pools, one relating to each group of Financed Student
Loans (but only in the event that such group of Financed Student Loans is
affected by sub-clause (x) or (y) above) (a "Two Pool Sale"). [Notwithstanding
the foregoing, that if a Coordination Agreement requires the offering of the
Access Loans to PHEAA, ▇▇▇▇ and/or LAI, the Indenture Trustee shall, in
accordance with Section 10.06(a) of the Sale and Servicing Agreement, separately
offer for sale the Financed Student Loans that are Access Loans as one or two
separate sub-pools and shall combine the bids received with respect to such
sub-pool or sub-pools with the bids received with respect to the other related
group or groups of Financed Student Loans in determining whether the related
Minimum Purchase Amount requirement has been met.]
(ii) If at least two bids are received, with respect to a
Single Pool Sale, the Indenture Trustee will solicit and resolicit bids from all
participating bidders until only one bid remains for all related Financed
Student Loans or until the remaining bidders decline to resubmit bids; and, with
respect to a Two Pool Sale, if at least two bids are received for either pool of
Group I or Group II Student Loans, as applicable, the Indenture Trustee will
solicit and resolicit bids from all participating bidders until only one bid
remains with respect to each such pool of Group I or Group II Student Loans, as
applicable, or until the remaining bidders decline to resubmit bids.
(iii) At the conclusion of the bidding process, the
Indenture Trustee shall accept the higher of the results produced from a Single
Pool Sale or from a combination of two bids from a Two Pool Sale; provided,
however, that in either case, no such bid or bids shall be accepted unless such
single bid or combination of two bids meets or exceeds the related Minimum
Purchase Amount; and provided, further, that with respect to a Two Pool Sale, if
the related Minimum Purchase Amount is met or exceeded with respect to either,
but not both, of the Group I and Group II Student Loans, the Indenture Trustee
shall accept the bid and consummate the sale of the Group I or Group II Student
Loans, as applicable, that at least meets the related Minimum Purchase Amount,
and reject the bid and not consummate a sale of the Group I or Group II Student
Loans, as applicable, with respect to the bid that does not at least meet the
related Minimum Purchase Amount.
(iv) In connection with the determination of the related
Minimum Purchase Amount, the Indenture Trustee may consult, and, at the
direction of a majority in interest of the Group I or Group II Controlling
Noteholders, as applicable, shall consult, with a financial advisor (which may
be the Administrator) to determine if the fair market value of the Financed
Student Loans has been offered. The proceeds of any such sale with respect to
the Group I or Group II Student Loans will be applied in the order of priority
set forth in Section 5.04(b)(X)or (Y) hereof, as applicable. If a sale of either
the Group I or Group II Student Loans is not consummated in accordance with the
foregoing, the Indenture Trustee may, (or shall, at the written direction of the
Group I or Group II Controlling Noteholders, as applicable), solicit bids to
purchase the Group I or Group II Student Loans, as the case may be, on future
Distribution Dates upon terms similar to those described above. In addition, the
Indenture Trustee, the Securities Insurer, the Swap Counterparty, the Eligible
Lender Trustee and each Rating Agency shall be provided with an Opinion of
Counsel that any such sale of the Financed Student Loans would not constitute a
fraudulent conveyance.
26
(v) In the event of any auction of Group I or Group II
Student Loans, neither KeyCorp nor any of its Affiliates (including, without
limitation, KBUSA, the Depositor and the Put Option Provider) or agents
appointed for such purpose may offer bids to purchase any such 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);
provided, however, that an Event of Default that occurs with respect to any
specific Class or Classes of Notes in either group of Notes (as set forth in
clauses (i) or (ii) below) will not be an event of Event with respect to any
Class of Notes in the other group of Notes, and the remedies exercisable by the
affected Noteholders will not be exercisable by the other group of Noteholders:
(i) default in the payment of any interest (including,
subject to the limitations of Sections 2.07(c) and 8.02(c), any
Noteholders' Interest Index Carryover (with respect to each Class of
Notes other than the Class II-[ ] Notes), but excluding any interest
due on but not paid to the holders of the Class I-[ ] or Class II-[ ]
Notes, as applicable, as the result of the existence of a related
Subordinate Note Interest Trigger on any Distribution Date), on any
Group I or Group II Note when the same becomes due and payable, and
such default shall continue for a period of three (3) Business Days
(provided, however, so long as the Group I or Group II Senior Notes, as
applicable, are outstanding, each holder of any Class I-[ ] or Class
II-[ ] Note, respectively, or the Note Owner of any such Class I-[ ] or
Class II-[ ] Note, as applicable, by such holder's acceptance of such
Class I-[ ] or Class II-[ ] Note, as applicable, or beneficial interest
therein, as the case may be, shall be deemed to have consented to the
delay in payment of interest on such Class I-[ ] or Class II-[ ] Note,
as applicable, and to have waived its right to institute suit for
enforcement of any such payment); or;
(ii) default in the payment of the principal of any Note,
other than the Class II-[ ] Notes (x) when the same becomes due and
payable (but only to the extent there exists sufficient Group I or
Group II Available Funds, as applicable, therefor), or (y) on the Final
Maturity Date with respect thereto (without regard to a payment under
the Group II Insured Notes Guaranty Insurance Policy); or
(iii) default in the observance or performance of any
covenant or agreement of the Issuer made in this Indenture or any other
Basic Document (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 any other Basic Document 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
27
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 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 (x) with respect to defaults hereunder affecting the Group I
Notes, the Group I Controlling Parties, representing not less than 25%
of the Outstanding Amount of the related Group I Notes, and (y) with
respect to defaults hereunder affecting the Group II Notes, the
Securities Insurer (unless the Class II-[ ] Notes and Class II-[ ]
Notes are no longer outstanding or a Securities Insurer Default shall
have occurred and is continuing, and then the Group II Controlling
Parties, representing not less than 25% of the Outstanding Amount of
the Group II Notes); 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; 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;
or
(vi) the occurrence of an Event of Default as defined in
the Insurance Agreement.
SECTION 5.02. Acceleration of Maturity; Rescission and
Annulment. If an Event of Default with respect to either group of Notes should
occur and be continuing, then and in every such case the Indenture Trustee at
the direction of (x) with respect to the Group I Notes, the Group I Controlling
Parties, representing not less than a majority of the Outstanding Amount of the
related Group I Notes, and (y) with respect to the Group II Notes, the
Securities Insurer (unless the Class II-[ ] Notes and Class II-[ ] Notes are no
longer outstanding or a Securities Insurer Default shall have occurred and is
continuing, and then the Group II Controlling Parties, representing not less
than a majority of the Outstanding Amount of the Group II Notes), shall declare
all the Group I or Group II Notes, as applicable, to be immediately due and
payable, by a notice in writing to the Issuer, the Swap Counterparty and the
Securities Insurer (and to the Indenture Trustee if given by the holders of the
Notes), and upon any such declaration the unpaid
28
principal amount of such group of Notes (but not the other group of Notes),
together with accrued and unpaid interest thereon through the date of
acceleration, shall become immediately due and payable.
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, (x) with respect to the Group I Notes, the Group I Controlling
Parties, representing not less than a majority of the Outstanding Amount of the
related Group I Notes, and (y) with respect to the Group II Notes, the
Securities Insurer (unless the Class II-[ ] Notes and Class II-[ ] Notes are no
longer outstanding or a Securities Insurer Default shall have occurred and is
continuing, and then the Group II Controlling Parties, representing not less
than a majority of the Outstanding Amount of the related Group II Notes), by
written notice to the Issuer and the Indenture Trustee, 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 Group I or Group II Notes (other than the Class II-[ ]
Notes), as applicable, all interest on the Class II-[ ] Notes,
and all other amounts that would then be due hereunder or upon
such Group I or Group II Notes, respectively, 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 and the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and its
agents and counsel; and
(ii) all Events of Default, other than the nonpayment of
the principal of the Group I or Group II Notes (other than the Class
II-[ ] Notes), as the case may be, that have 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(c) and 8.02(c), any unpaid related Noteholders' Interest Index
Carryover on each Class of Notes other than the Class II-[ ] Notes) on any Group
I or Group II Note, as applicable, when the same becomes due and payable, and
such default continues for a period of three Business Days, or (ii) default is
made in the payment of the principal of or any installment of the principal on
the related Final Maturity Date of a Class of Group I or Group II Notes (other
than the Class II-[ ] Notes), as applicable, when the same becomes due and
payable in accordance with Section 2.07(b), the Issuer will, upon demand of the
Indenture Trustee or, with respect to the Group II Insured Notes only, the
Securities Insurer if the Securities Insurer has made an Insured Payment under
the Group II Insured Notes
29
Guaranty Insurance Policy, pay to the Indenture Trustee, for the benefit of the
holders of the Group I or Group II Notes, as the case may be, or the Securities
Insurer, if applicable, the whole amount then due and payable on such Group I or
Group II Notes, or amounts owed to the Securities Insurer, as applicable, for
principal and interest (and any unpaid related Noteholders' Interest Index
Carryover on each Class of Group II Notes other than the Class II-[ ] Notes) or
amounts owed pursuant to the Insurance Agreement, as applicable, 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
unpaid related Noteholders' Interest Index Carryover on each Class of Notes
other than the Class II-[ ] Notes) at the rate specified in Section 2.07 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 Securities Insurer, if
applicable, and its 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 respect to the Group II Insured Notes only) with
the consent of the Securities Insurer (provided that no Securities Insurer
Default has occurred and is continuing), or shall at the written direction of
(x) with respect to the Group I Notes, the Group I Controlling Parties,
representing not less than a majority of the Outstanding Amount of the related
Group I Notes, and (y) with respect to the Group II Notes, the Securities
Insurer (unless the Class II-[ ] Notes and Class II-[ ] Notes are no longer
outstanding or a Securities Insurer Default shall have occurred and is
continuing, and then the Group II Controlling Parties, representing not less
than a majority of the Outstanding Amount of the Group II Notes), institute a
Proceeding for the collection of the sums so due and unpaid, and prosecute such
Proceeding to judgment or final decree, and enforce the same against the Issuer
or other obligor upon such Group I or Group II Notes, as applicable, and collect
in the manner provided by law out of the property of the Issuer or other obligor
upon such Group I or Group II Notes, as applicable, wherever situated, the
moneys adjudged or decreed to be payable.
(c) If an Event of Default occurs and is continuing, the
Indenture Trustee may (with respect to the Group II Notes only) with the consent
of the Securities Insurer (provided that no Securities Insurer Default has
occurred and is continuing), or shall at the written direction of (x) with
respect to the Group I Notes, the Group I Controlling Parties, representing not
less than a majority of the Outstanding Amount of the related Group I Notes, and
(y) with respect to the Group II Notes, the Securities Insurer (unless the Class
II-[ ] Notes and Class II-[ ] Notes are no longer outstanding or a Securities
Insurer Default shall have occurred and is continuing, and then the Group II
Controlling Parties, representing not less than a majority of the Outstanding
Amount of the Group II Notes), as more particularly provided in Section 5.04,
proceed to protect and enforce its rights, the rights of the holders of the
Group I or Group II Notes, as applicable, and the rights of the Securities
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.
30
(d) In case there shall be pending, relative to the
Issuer or any other obligor upon the Group I or Group II Notes, as applicable,
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 Proceedings relative to the Issuer
or other obligor upon the Group I or Group II Notes, as applicable, or to the
creditors or property of the Issuer or such other obligor, the Indenture
Trustee, irrespective of whether the principal of any Group I or Group II Notes,
as applicable, 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 (with
respect to the Group II Notes only) with the consent of the Securities Insurer
(provided that no Securities Insurer Default has occurred and is continuing), or
shall at the written direction of (x) with respect to the Group I Notes, the
Group I Controlling Parties, representing not less than a majority of the
Outstanding Amount of the related Group I Notes, and (y) with respect to the
Group II Notes, the Securities Insurer (unless the Class II-[ ] Notes and Class
II-[ ] Notes are no longer outstanding or a Securities Insurer Default shall
have occurred and is continuing, and then the Group II Controlling Parties,
representing not less than a majority of the Outstanding Amount of the Group II
Notes), be entitled and empowered, by intervention in such proceedings or
otherwise:
(i) to file and prove a claim or claims for the whole
amount of principal of and interest on each Class of Notes other than
the Class II-[ ] Notes (including any unpaid related Noteholders'
Interest Index Carryover with respect to each Class of Notes other than
the Class II-[ ] Notes), and interest on the Class II-[ ] Notes owing
and unpaid in respect of the Group I or Group II Notes, as applicable,
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) the holders of the Group I or Group II Notes,
as applicable, and of the Securities Insurer allowed in such
Proceedings;
(ii) unless prohibited by applicable law and regulations,
to vote on behalf of the holders of the Group I or Group II Notes, as
applicable, in any election of a trustee, a standby trustee or Person
performing similar functions in any such Proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the holders of the Group I or
Group II Notes, as applicable, the Securities Insurer, if applicable,
the Swap Counterparty and of the Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims
of the Indenture Trustee or the holders
31
of the Group I or Group II Notes, as the case may be, allowed in any
judicial proceedings 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 holders of
the Group I or Group II Notes, as the case may be, 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 holders of the Group I or Group II
Notes, as applicable, 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 holder of the Group I or Group II Notes, as applicable, or the
Securities Insurer, if applicable, any plan of reorganization, arrangement,
adjustment or composition affecting the Group I or Group II Notes, as
applicable, or the rights of any holder of the Group I or Group II Notes, as
applicable, or the Securities Insurer, if applicable, thereof or to authorize
the Indenture Trustee to vote in respect of the claim of any holder of the Group
I or Group II Notes, as applicable, or the Securities Insurer, if applicable, 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 Group I or Group II Notes, as applicable,
may be enforced by the Indenture Trustee without the possession of any of the
Group I or Group II Notes, as applicable, or the production thereof in any trial
or other Proceedings relative thereto, and any such action or Proceedings
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 ratable benefit of the holders of the Group I or Group II Notes, as
applicable.
(g) In any Proceedings brought by the Indenture Trustee
(and also any Proceedings 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 holders of the Group I or Group II
Notes, as applicable, and it shall not be necessary to make any holder of the
Group I or Group II Notes, as applicable, a party to any such Proceedings.
SECTION 5.04. Remedies; Priorities. (a) If an Event of Default
with respect to the Group I or Group II Notes, as the case may be, shall have
occurred and be continuing, the Indenture Trustee may (with respect to the Group
II Notes only) with the consent of the Securities Insurer (provided that no
Securities Insurer Default has occurred and is continuing), or shall at the
written direction of (x) with respect to the Group I Notes, the Group I
Controlling Parties, representing not less than a majority of the Outstanding
Amount of the related Group I Notes (or such different percentage as set forth
below), and (y) with respect to the Group II Notes, the Securities Insurer
(unless the Class II-[ ] Notes and Class II-[ ] Notes are no longer
32
outstanding or a Securities Insurer Default shall have occurred and is
continuing, and then the Group II Controlling Parties, representing not less
than a majority of the Outstanding Amount of the related Group II Notes (or such
different percentage as set forth below)), 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 Group I or Group II Notes, as applicable, 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 Group I or Group II Notes, as applicable, moneys 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 securing the Group I and/or Group II Notes, as
applicable;
(iii) exercise any remedies of a secured party under the
UCC and take any other appropriate action to protect and enforce the
rights and remedies of the Indenture Trustee and the holders of the
Group I or Group II Notes, as applicable, the Securities Insurer, if
applicable, and the Swap Counterparty; and
(iv) sell the Indenture Trust Estate securing the Group I
and/or Group II Notes, as applicable, or any portion thereof or rights
or interest 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 securing the Group I and/or Group II Notes,
as applicable, following an Event of Default, other than an Event of Default
described in Section 5.01(i) or (ii), unless (i) (x) with respect to the Group I
Notes, 100% of Group I Noteholders, or (y) with respect to the Group II Notes,
the Securities Insurer (unless the Class II-[ ] Notes and Class II-[ ] Notes are
no longer outstanding or a Securities Insurer Default shall have occurred and is
continuing, and then by 100% of the Group II Noteholders), consent to such sale,
(ii) the proceeds of such sale are sufficient to pay in full the principal of
and the accrued interest on the outstanding Group I or Group II Notes (other
than the Class II-[ ] Notes), as applicable, and the accrued interest on the
Class II-[ ] Notes, plus (with respect to the Group II Notes only) all amounts
due and owing to the Securities Insurer under the Insurance Agreement, and (with
respect to the Group I Notes only) all amounts owed to the Swap Counterparty
under the Group I Interest Rate Swap at the date of such sale or (iii) the
Indenture Trustee determines that the collections on the Group I or Group II
Student Loans, as the case may be, would not be sufficient on an ongoing basis
to make all payments on the Group I or Group II Notes, respectively, as such
payments would have become due if such obligations had not been declared due and
payable, and the Indenture Trustee obtains the consent of (x) with respect to
the Group I Notes, the holders of the Group I Notes representing not less than
66.67% of the Outstanding Amount of the Group I Notes, and (y) with respect to
the Group II Notes, the Securities Insurer (unless the Class II-[ ] Notes and
Class II-[ ] Notes are no longer outstanding or a Securities Insurer Default
shall have occurred and is continuing, and then by the holders of Group II
Notes, representing not less than a 66.67% of the Outstanding Amount of the
Group II Notes); provided further, that the Indenture Trustee may not sell or
otherwise liquidate that portion of the Indenture Trust Estate related to the
Group II Notes
33
following an Event of Default, other than an Event of Default with respect to
the Group II Notes described in Section 5.01(i) or (ii), unless, in addition to
the foregoing, the proceeds of the sale or liquidation of the Trust Estate are
sufficient to pay all amounts due and owing to the Securities Insurer, plus
interest thereon as provided in the Insurance Agreement, unless the Securities
Insurer consents thereto (provided that a Securities Insurer Default has not
occurred and is continuing). In addition, notwithstanding anything herein to the
contrary, the Indenture Trustee's rights hereunder to sell the Group I or Group
II Student Loans, as applicable, shall be subject to the provisions of Section
10.06 of the Sale and Servicing Agreement.
(b) (X) If the Indenture Trustee collects any money or
property under this Article V following the occurrence and during the
continuation of an Event of Default with respect to the Group I Notes and
Sections 5.01(i), 5.01(ii), 5.01(iv) or 5.01(v) above or following the
acceleration of the Group I Notes pursuant to Section 5.02, it shall pay out the
money or property in the following order:
FIRST: to the Indenture Trustee for amounts due under Section
6.07 allocated to the Group I Notes, not to exceed $[ ] per annum;
SECOND: pro rata to the Master Servicer for due and unpaid
Master Servicing Fees with respect to the Group I Student Loans and to
the Administrator for due and unpaid Administration Fees allocated to
the Group I Notes;
THIRD: (x) to the holders of the Group I Class [ ] Notes for
amounts due and unpaid on the Group I Class [ ] Notes for interest
(other than any related Noteholders' Interest Index Carryover),
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Group I Class [ ] Notes for interest;
and (y) and to the Swap Counterparty, the related Net Payment, if any,
for such Distribution Date pursuant to the Group I Interest Rate Swap,
and the remainder of any related Termination Payment resulting from an
Event of Default (as defined in the Group I Interest Rate Swap) to the
extent that the Trust is the Defaulting Party (as defined in the Group
I Interest Rate Swap) (other than an Event of Default specified in
Section 5(a)(i) of the Group I Interest Rate Swap), pro rata, --- ----
based on the ratio of each such amount to the total of such amounts;
FOURTH: to the holders of the Group I Class [ ] Notes for
amounts due and unpaid on the Group I Class [ ] Notes for principal,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Group I Class [ ] Notes for principal,
until the Outstanding Amount of each such Class of Group I Class [ ]
Notes is zero;
FIFTH: to the holders of the Class I-[ ] Notes for amounts due
and unpaid on the Class I-[ ] Notes for interest (other than any
related Noteholders' Interest Index Carryover);
SIXTH: to the holders of the Class I-[ ] Notes for amounts due
and unpaid on the Class I-[ ] Notes for principal, until the
Outstanding Amount of the Class I-[ ] Notes is zero;
34
SEVENTH: to the Indenture Trustee for all amounts due under
Section 6.07, but only to the extent not paid pursuant to priority
FIRST above;
EIGHTH: to the holders of the Group I Class [ ] Notes for any
unpaid Noteholders' Interest Index Carryover with respect to the Group
I Class [ ] Notes, ratably, without preference or priority of any kind,
according to the amount of related Noteholders' Interest Index
Carryover attributable to each such Group I Class [ ] Note;
NINTH: to the holders of the Class I-[ ] Notes for any unpaid
Noteholders' Interest Index Carryover with respect to the Class I-[ ]
Notes;
TENTH: to the Swap Counterparty, all Termination Payments and
other amounts due to the Swap Counterparty under the Group I Interest
Rate Swap, to the extent not paid pursuant to THIRD above;
ELEVENTH: to the Cap Provider all previously unreimbursed
Class I-[ ] Basis Risk Cap Payments, Class I-[ ] Basis Risk Cap
Payments, and Class I-[ ] Basis Risk Cap Payments;
TWELFTH: after all payments shown above are made, and if Group
II Available Funds are insufficient to make all required payments to
the Group II Noteholders, the Master Servicer, the Administrator, the
Securities Insurer, the Swap Counterparty and/or the Cap Provider, each
with respect to the Group II Student Loans, as applicable, on such
Distribution Date, any remaining amounts shall be paid to the Group II
Noteholders, the Master Servicer, the Administrator, the Securities
Insurer and/or the Cap Provider, as applicable, in the order and for
the purposes set forth in Section 5.05(c)(Y) of the Sale and Servicing
Agreement or Sections 5.04(b)(Y) or 5.04(c)(Y) of this Indenture, as
applicable, up to the amount of such deficiency in Group II Available
Funds; and
THIRTEENTH: to the Eligible Lender Trustee (on behalf of the
Issuer), for distribution to the Certificateholder in accordance with
the terms of the Trust Agreement.
(Y) If the Indenture Trustee collects any money or property
under this Article V following the occurrence and during the continuation of an
Event of Default with respect to the Group II Notes and Sections 5.01(i),
5.01(ii), 5.01(iv) or 5.01(v) above or following the acceleration of the Group
II Notes pursuant to Section 5.02, it shall pay out the money or property in the
following order:
FIRST: to the Indenture Trustee for amounts due under Section
6.07 allocated to the Group II Notes, not to exceed $[ ] per annum
(provided that, if a Securities Insurer Payment Default has occurred
and is continuing or the Securities Insurer is removed pursuant to
Section 8A.5, such $[ ] per annum limitation shall not apply;
SECOND: pro rata to the Master Servicer for due and unpaid
Master Servicing Fees with respect to the Group II Student Loans and to
the Administrator for due and unpaid Administration Fees allocated to
the Group II Notes;
35
THIRD: so long as no Securities Insurer Payment Default has
occurred and is continuing, to the Securities Insurer for all Insurer
Premiums due and owing under the Insurance Agreement;
FOURTH: to the holders of the Group II Class [ ] Notes for
amounts due and unpaid on the Group II Class [ ] Notes for interest
(other than any related Noteholders' Interest Index Carryover with
respect to each Class of Group II Notes other than the Class II-[ ]
Notes), ratably, without preference or priority of any kind, according
to the amounts due and payable on the Group II Class [ ] Notes for
interest;
FIFTH: to the holders of the Group II Class [ ] Notes, other
than the Class II-[ ] Notes, for amounts due and unpaid on the Group II
Class [ ] Notes, other than the Class II-[ ] Notes, for principal,
ratably, without preference or priority of any kind, according to the
amounts due and payable on the Group II Class [ ] Notes, other than the
Class II-[ ] Notes, for principal;
SIXTH: to the holders of the Class II-[ ] Notes for amounts
due and unpaid on the Class II-[ ] Notes for interest (other than any
related Noteholders' Interest Index Carryover);
SEVENTH: to the holders of the Class II-[ ] Notes for amounts
due and unpaid on the Class II-[ ] Notes for principal, until the
Outstanding Amount of the Class II-[ ] Notes is zero;
EIGHTH: sequentially, in the following order, first to the
Securities Insurer for any and all amounts due and owing to the
Securities Insurer pursuant to the Insurance Agreement, including all
unpaid Insurer Premiums, and second, to the Indenture Trustee for all
amounts due under Section 6.07, but only to the extent not paid
pursuant to priority FIRST above;
NINTH: to the holders of the Group II Class [ ] Notes, other
than the Class II-[ ] Notes, for any unpaid Noteholders' Interest Index
Carryover with respect to the Group II Class [ ] Notes, other than the
Class II-[ ] Notes, ratably, without preference or priority of any
kind, according to the amount of related Noteholders' Interest Index
Carryover attributable to each such Group II Class [ ] Note;
TENTH: to the holders of the Class II-[ ] Notes for any unpaid
Noteholders' Interest Index Carryover with respect to the Class II-[ ]
Notes;
ELEVENTH: to the Cap Provider all previously unreimbursed
Class II-[ ] Basis Risk Cap Payments, Class II-[ ] Basis Risk Cap
Payments, Class II-[ ] Basis Risk Cap Payments and Class II-[ ] Basis
Risk Cap Payments;
TWELFTH: after all payments shown above are made, and if Group
I Available Funds are insufficient to make all required payments to the
Group I Noteholders, the Master Servicer, the Administrator, the Swap
Counterparty and/or the Cap Provider, with respect to the Group I
Student Loans, as applicable, on such Distribution Date, any remaining
amounts shall be paid to the Group I Noteholders, the Master Servicer,
the
36
Administrator, the Swap Counterparty and/or the Cap Provider, as
applicable, in the order and for the purposes set forth in Section
5.05(c)(X) of the Sale and Servicing Agreement or Sections 5.04(b)(X)
or 5.04(c)(X) of this Indenture, as applicable, up to the amount of
such deficiency in Group I Available Funds; and
THIRTEENTH: to the Eligible Lender Trustee (on behalf of the
Issuer), for distribution to the Certificateholder in accordance with
the terms of the Trust Agreement.
The Indenture Trustee may fix a record date and payment date
for any payment to the holders of the Group I or Group II Notes, as applicable,
pursuant to this Section. At least 15 days before such record date, the Issuer
shall mail to each holder of the Group I or Group II Notes, as applicable, the
Securities Insurer, and the Indenture Trustee a notice that states the record
date, the payment date and the amount to be paid.
(c) (X) If the Indenture Trustee collects any money or
property under this Article V following the occurrence and during the
continuation of an Event of Default with respect to the Group I Notes, other
than with respect to Events of Default under Sections 5.01(i), 5.01(ii),
5.01(iv) or 5.01(v) above or following the acceleration of the Group I Notes
pursuant to Section 5.02, it shall pay out the money or property on the related
Distribution Date in the following order:
(1) to the Indenture Trustee for amounts due
under Section 6.07 of this Indenture allocated to the Group I
Notes, not to exceed $[ ] per annum;
(2) to the Master Servicer, the Master Servicing
Fee with respect to the Group I Student Loans due on such
Distribution Date and all prior unpaid Master Servicing Fees
allocated to the Group I Student Loans;
(3) from the amount of Group I Available Funds
remaining after the application of clauses (1) and (2), to the
Administrator, the portion of the Administration Fee allocated
to the Group I Notes and all unpaid Administration Fees from
prior Collection Periods allocated to the Group I Notes;
(4) from the amount of Group I Available Funds
remaining after the application of clauses (1) through (3),
(x) to the holders of the Group I Class [ ] Notes, the
Noteholders' Interest Distribution Amount for the Group I
Class [ ] Notes pursuant to Section 8.02(c)(X)(i), and (y) and
to the Swap Counterparty, the Net Payment with respect to the
Group I Interest Rate Swap, if any, for such Distribution
Date, and the remainder of any related Termination Payment
resulting from an Event of Default (as defined in the Group I
Interest Rate Swap) to the extent that the Trust is the
Defaulting Party (as defined in the Group I Interest Rate
Swap) (other than an Event of Default specified in Section
5(a)(i) of the Group I Interest Rate Swap), pro rata, based on
the ratio of each such amount to the total of such amounts;
(5) from the amount of Group I Available Funds
remaining after the application of clauses (1) through (4), to
the Group I Reserve Account, an
37
amount, up to the amount, if any, necessary to reinstate the
balance of the Group I Reserve Account to the related
Specified Reserve Account Balance;
(6) from the amount of Group I Available Funds
remaining after the application of clauses (1) through (5) and
provided that a related Subordinate Note Interest Trigger is
not in effect on such Distribution Date, to the holders of the
Class I-[ ] Notes, the Noteholders' Interest Distribution
Amount for the Class I-[ ] Notes, in each case pursuant to
Section 8.02(c)(X)(ii);
(7) from the amount of Group I Available Funds
remaining after the application of clauses (1) through (6), to
the holders of the Group I Notes, the Group I Principal
Distribution Amount pursuant to Section 8.02(c)(X)(iii) or
(v), as applicable, in the following order of priority: (a)
prior to the Stepdown Date, or after the Stepdown Date if a
related Subordinate Note Principal Trigger is in effect, the
Group I Principal Distribution Amount for the Group I Notes
will be payable solely to the Group I Senior Notes in
sequential order beginning with the Class I-[ ] Notes until
paid in full and then to the Class I-[ ] Notes until paid in
full; and (b) after the Stepdown Date and so long as no
related Subordinate Note Principal Trigger is in effect, the
related Senior Percentage of the Principal Distribution Amount
for the Group I Notes will be payable to the Group I Senior
Notes (in the same order of priority as described in the
preceding sentence) and the related Subordinate Percentage of
the Group I Principal Distribution Amount will be payable to
the Class I-[ ] Notes;
(8) from the amount of Group I Available Funds
remaining after the application of clauses (1) through (7) and
in the event that a related Subordinate Note Interest Trigger
is in effect with respect to such Distribution Date, to the
holders of the Class I-[ ] Notes, the Noteholders' Interest
Distribution Amount for the Class I-[ ] Notes pursuant to
Section 8.02(c)(X)(iv);
(9) from the amount of Group I Available Funds
remaining after the application of clauses (1) through (8) to
the Indenture Trustee for all amounts due under Section 6.07,
but only to the extent not paid pursuant to clause (1) above;
(10) from (x) the amount of Group I Available
Funds remaining after the application of clauses (1) through
(9), and (y) the Group I Basis Risk Cap Funds, if any, to the
holders of the Group I Class [ ] Notes on a pro rata basis
based on the amount of any related Noteholders' Interest Index
Carryover owing on each such Class of Group I Class [ ] Notes,
the aggregate unpaid amount of such Noteholders' Interest
Index Carryover, if any, with respect to the Group I Class [ ]
Notes;
(11) from (x) the amount of Group I Available
Funds remaining after the application of clauses (1) through
(10), and (y) the Group I Basis Risk Cap Funds remaining after
application of clause (10), if any, to the to the holders of
the Class I-[ ] Notes, the aggregate unpaid amount of
Noteholders' Interest Index Carryover, if any, with respect to
the Class I-[ ] Notes;
38
(12) from the amount of Group I Available Funds
remaining after the application of clauses (1) through (11),
to the Swap Counterparty, all Termination Payments and all
other unpaid amounts owed to the Swap Counterparty under the
Group I Interest Rate Swap not paid pursuant to clause (4)
above;
(13) from the amount of Group I Available Funds
remaining after the application of clauses (1) through (12),
to the Cap Provider, an amount sufficient to reimburse the Cap
Provider for all Class I-[ ] Basis Risk Cap Payments, Class
I-[ ] Basis Risk Cap Payments, Class I-[ ] Basis Risk Cap
Payments, and any other amounts due to the Cap Provider under
the Group I Basis Risk Cap and not previously reimbursed; and
(14) from the amount of Group I Available Funds
remaining after the application of clauses (1) through (13),
after all payments shown above are made, and if Group II
Available Funds are insufficient to make all required payments
to the Group II Noteholders, the Master Servicer, the
Administrator, the Securities Insurer and/or the Cap Provider,
with respect to the Group II Student Loans, as applicable, on
such Distribution Date, any remaining amounts shall be paid to
the Group II Noteholders, the Master Servicer, the
Administrator, the Securities Insurer and/or the Cap Provider,
as applicable, in the order and for the purposes set forth in
Section 5.05(c)(Y) of the Sale and Servicing Agreement or
Sections 5.04(b)(Y) or 5.04(c)(Y) of this Indenture, as
applicable, up to the amount of such deficiency in Group II
Available Funds; and
(15) to the Eligible Lender Trustee for
distribution to the Certificateholder in accordance with the
terms of the Trust Agreement, the amount of Group I Available
Funds remaining after the application of clauses (1) through
(14).
(Y) If the Indenture Trustee collects any money or property
under this Article V following the occurrence and during the continuation of an
Event of Default with respect to the Group II Notes, other than with respect to
Events of Default under Sections 5.01(i), 5.01(ii), 5.01(iv) or 5.01(v) above or
following the acceleration of the Group II Notes pursuant to Section 5.02, it
shall pay out the money or property on the related Distribution Date in the
following order:
(1) to the Indenture Trustee for amounts due
under Section 6.07 of this Indenture allocated to the Group II
Notes, not to exceed $[ ] per annum (provided that, if a
Securities Insurer Payment Default has occurred and is
continuing or the Securities Insurer has been removed pursuant
to Section 8A.5, such $[ ] per annum limitation shall not
apply);
(2) from the amount of Group II Available Funds
remaining after the application of clause (1), to the Master
Servicer, the Master Servicing Fee with respect to the Group
II Student Loans due on such Distribution Date and all prior
unpaid Master Servicing Fees allocated to the Group II Student
Loans;
39
(3) from the amount of Group II Available Funds
remaining after the application of clauses (1) and (2), to the
Administrator, the portion of the Administration Fee allocated
to the Group II Notes and all unpaid Administration Fees from
prior Collection Periods allocated to the Group II Notes;
(4) from the amount of Group II Available Funds
remaining after the application of clauses (1) through (3),
and provided that a Securities Insurer Payment Default has not
occurred and is continuing, to the Securities Insurer, the
Insurer Premium and all unpaid Insurer Premiums from prior
collection periods;
(5) from the amount of Group II Available Funds
remaining after the application of clauses (1) through (4), to
the holders of the Group II Class [ ] Notes, the Noteholders'
Interest Distribution Amount for the Group II Class [ ] Notes
pursuant to Section 8.02(c)(Y)(i) of the Indenture;
(6) from the amount of Group II Available Funds
remaining after the application of clauses (1) through (5) and
provided that a related Subordinate Note Interest Trigger is
not in effect on such Distribution Date, to the holders of the
Class II-[ ] Notes, the Noteholders' Interest Distribution
Amount for the Class II-[ ] Notes, in each case pursuant to
Section 8.02(c)(Y)(ii);
(7) from the amount of Group II Available Funds
remaining after the application of clauses (1) through (6), to
the Securities Insurer, provided that a Securities Insurer
Payment Default has not occurred and is continuing,
reimbursement for all amounts owed pursuant to draws with
respect to any payments of interest under the Group II Insured
Notes Guaranty Insurance Policy, plus interest thereon as
determined in accordance with the Insurance Agreement;
(8) from the amount of Group II Available Funds
remaining after the application of clauses (1) through (7), to
the Group II Reserve Account, an amount, up to the amount, if
any, necessary to reinstate the balance of the Group II
Reserve Account to the related Specified Reserve Account
Balance;
(9) from the amount of Group II Available Funds
remaining after the application of clauses (1) through (8), to
the holders of the Group II Notes, other than the Class II-[ ]
Notes, the Group II Principal Distribution Amount pursuant to
Section 8.02(Y)(iii) or (v), as applicable, in the following
order of priority (a) prior to the Stepdown Date, or after the
Stepdown Date if a related Subordinate Note Principal Trigger
is in effect, first, to the holders of the Class II-[ ] Notes,
the applicable Noteholders' Principal Distribution Amount,
until their outstanding principal balance has been reduced to
zero, second, to the Securities Insurer, provided that a
Securities Insurer Payment Default has not occurred and is
continuing, reimbursement for all amounts owed pursuant to
draws with respect to any payments of principal under the
Group II Insured Notes Guaranty Insurance Policy made to the
holders of the Class II-[ ] Notes, plus interest thereon
determined in accordance with the Insurance Agreement, third,
to the holders of the Class II-[ ] Notes, the applicable
Noteholders' Principal Distribution
40
Amount, until their outstanding principal balance has been
reduced to zero, fourth, to the Securities Insurer, provided
that a Securities Insurer Payment Default has not occurred and
is continuing, reimbursement for all amounts owed pursuant to
draws with respect to any payments of principal under the
Group II Insured Notes Guaranty Insurance Policy made to the
holders of the Class II-[ ] Notes, plus interest thereon
determined in accordance with the Insurance Agreement and,
fifth, to the holders of the Class II-[ ] Notes, the
applicable Noteholders' Principal Distribution Amount, until
their outstanding principal balance has been reduced to zero;
and (b) after the Stepdown Date and so long as no related
Subordinate Note Principal Trigger is in effect, the related
Senior Percentage of the Principal Distribution Amount for the
Group II Notes will be payable to the Group II Senior Notes
(in the same order of priority as described in the preceding
sentence) and the related Subordinate Percentage will be
payable to the Class II-[ ] Notes;
(10) from the amount of Group II Available Funds
remaining after the application of clauses (1) through (9) and
in the event that a related Subordinate Note Interest Trigger
is in effect with respect to such Distribution Date, to the
holders of the Class II-[ ] Notes, the Noteholders' Interest
Distribution Amount for the Class II-[ ] Notes pursuant to
Section 8.02(c)(Y)(iv);
(11) sequentially, in the following order, first
to the Securities Insurer, from the amount of Group II
Available Funds remaining after application of clauses (1)
through (10), an amount equal to all unreimbursed Insured
Payments made on prior Distribution Dates, together with
accrued interest thereon, to the extent not previously
reimbursed above, and all other amounts owed to the Securities
Insurer under the Insurance Agreement, including all unpaid
Insurer Premiums, and second, to the Indenture Trustee for all
amounts due under Section 6.07, but only to the extent not
paid pursuant to priority (1) above;
(12) from (x) the amount of Group II Available
Funds remaining after the application of clauses (1) through
(11), and (y) the Group II Basis Risk Cap Funds, if any, to
the holders of the Group II Class [ ] Notes, other than the
Class II-[ ] Notes, on a pro rata basis based on the amount of
any Noteholders' Interest Index Carryover owing on each such
Classes of Group II Notes, other than the Class II-[ ] Notes,
the aggregate unpaid amount of Noteholders' Interest Index
Carryover, if any, with respect to the Group II Class [ ]
Notes, other than the Class II-[ ] Notes;
(13) from (x) the amount of Group II Available
Funds remaining after the application of clauses (1) through
(12), and (y) the Group II Basis Risk Cap Funds remaining
after application of clause (12), if any, to the to the
holders of the Class II-[ ] Notes, the aggregate unpaid amount
of Noteholders' Interest Index Carryover, if any, with respect
to the Class II-[ ] Notes;
(14) from the amount of Group II Available Funds
remaining after the application of clauses (1) through (13),
to the Cap Provider, an amount sufficient
41
to reimburse the Cap Provider for all Class II-[ ] Basis Risk
Cap Payments, Class II-[ ] Basis Risk Cap Payments, Class II-[
] Basis Risk Cap Payments and Class II-[ ] Basis Risk Cap
Payments and any other amounts due to the Cap Provider under
the Group II Basis Risk Cap and not previously reimbursed;
(15) from the amount of Group II Available Funds
remaining after the application of clauses (1) through (14),
after all payments shown above are made, and if Group I
Available Funds are insufficient to make all required payments
to the Group I Noteholders, the Master Servicer, the
Administrator, the Swap Counterparty and/or the Cap Provider,
with respect to the Group I Student Loans, as applicable, on
such Distribution Date, any remaining amounts shall be paid to
the Group I Noteholders, the Master Servicer, the
Administrator, the Swap Counterparty and/or the Cap Provider,
as applicable, in the order and for the purposes set forth in
Section 5.05(c)(X) of the Sale and Servicing Agreement or
Sections 5.04(b)(X) or 5.04(c)(X) of this Indenture, as
applicable, up to the amount of such deficiency in Group I
Available Funds; and
(16) to the Eligible Lender Trustee (on behalf of
the Issuer) for distribution to the Certificateholder in
accordance with the terms of the Trust Agreement, the amount
of Group II Available Funds remaining after the application of
clauses (1) through (15).
The Indenture Trustee may fix a record date and payment date
for any payment to the holders of the Group I or Group II Notes, as applicable,
pursuant to this Section. At least 15 days before such record date, the Issuer
shall mail to each holder of the Group I or Group II Notes, as applicable, the
Securities Insurer, and the Indenture Trustee a notice that states the record
date, the payment date and the amount to be paid.
SECTION 5.05. Optional Preservation of the Financed Student
Loans. If either the Group I or Group II Notes have been declared to be due and
payable under Section 5.02 following an Event of Default with respect to the
Group I and/or Group II Notes and such declaration and its consequences have not
been rescinded and annulled, the Indenture Trustee may, (with respect to the
Group II Notes only) with the written consent of the Securities Insurer
(provided that no Securities Insurer Default has occurred and is continuing), or
shall at the written direction of (x) with respect to the Group I Notes, the
Group I Controlling Parties, representing not less than a majority of the
Outstanding Amount of the related Group I Notes, and (y) with respect to the
Group II Notes, the Securities Insurer (unless the Class II-[ ] Notes and Class
II-[ ] Notes are no longer outstanding or a Securities Insurer Default shall
have occurred and is continuing, and then by the Group II Controlling Parties,
representing not less than a majority of the Outstanding Amount of the Group II
Notes), elect to maintain possession of the related Indenture Trust Estate. It
is the desire of the parties hereto, the Securities Insurer, the Swap
Counterparty and the holders of the Group I and Group II Notes that there be at
all times sufficient funds for the payment of principal of and interest on each
Class of Group I and Group II Notes other than the Class II-[ ] Notes (including
any unpaid Noteholders' Interest Index Carryover with respect to each Class of
Notes other than the Class II-[ ] Notes), and interest on the Class II-[ ]
Notes, and the Indenture Trustee shall take such desire into account when
determining whether or not to maintain possession of the Indenture Trust Estate.
In
42
determining whether to maintain possession of the Indenture Trust Estate, 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.
SECTION 5.06. Limitation of Suits. No holder of the Group I or
Group II Notes 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 the following conditions
listed below are satisfied and, (with respect to the Group II notes only) so
long as a Securities Insurer Default has not occurred and is continuing, the
Securities Insurer has consented in writing thereto:
(i) such holder of the Group I or Group II Notes, as the
case may be, has previously given written notice to the Indenture
Trustee of a continuing Event of Default;
(ii) the holders of not less than 25% of the Outstanding
Amount of the Group I or the Group II Notes, as applicable and in each
case, in the aggregate, 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 holder of the Group I or Group II Notes, as
applicable, 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; and
(v) no direction inconsistent with such written request
has been given to the Indenture Trustee during such 60-day period by
the holders of a majority of the Outstanding Amount of the Group I or
Group II Notes, as applicable and in each case, in the aggregate;
it being understood and intended that no one or more holders of the
Group I or Group II Notes, as the case may be, 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 holders of the Group I
or Group II Notes, as applicable, or to obtain or to seek to obtain priority or
preference over any other holders of the Group I or Group II Notes, as
applicable, 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 (x) two or more groups of either the
Group I or Group II Noteholders, as the case may be, each representing less than
a majority of the Outstanding Amount of the Group I or Group II Notes,
respectively, or (y) two groups from both the Group I and Group II Noteholders,
each representing at least a majority of the Outstanding Amount of the Group I
or Group II Notes, respectively, the Indenture Trustee in its sole discretion
may determine what action, if any, shall be taken, notwithstanding any other
provisions of this Indenture.
43
SECTION 5.07. Unconditional Rights of Noteholders To Receive
Principal and Interest. Notwithstanding any other provisions in this Indenture,
any holder of the any Class of Notes, other than the Class II-[ ] Notes, shall
have the right, which is absolute and unconditional, to receive payment of the
principal of and interest, if any, on such Note, or with respect to the Class
II-[ ] Notes, shall have the right, which is absolute and unconditional, to
receive payment of the interest, if any, on such Class II-[ ] 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 holder of any such Class of Notes.
SECTION 5.08. Restoration of Rights and Remedies. If the
Indenture Trustee, the Securities Insurer (in the case of the Group II Notes
only) or any holder of the Group I or Group II Notes, as the case may be, 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 Securities Insurer or to
such holder of the Group I or Group II Notes, as applicable, then and in every
such case the Issuer, the Indenture Trustee, the Securities Insurer and the
holders of the Group I or Group II Notes, as applicable, 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 Securities Insurer and the holders of the Group I or
Group II Notes, respectively, 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
Securities Insurer (in the case of the Group II Insured Notes only) or to the
holders of the Group I or Group II Notes, as the case may be, 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, the Securities Insurer or any holder of Group
I or Group II Notes, as the case may be, to exercise any right or remedy
accruing upon any Default shall impair any such right or remedy or constitute a
waiver of any such Default or an acquiescence therein. Every right and remedy
given by this Article V or by law to the Indenture Trustee, the Securities
Insurer or to the holders of the Group I or Group II Notes, as applicable, may
be exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee, the Securities Insurer or by the holders of the Group I or
Group II Notes, as the case may be.
SECTION 5.11. Control by Noteholders. With respect to the
Group I Notes, the Group I Controlling Parties, representing not less than a
majority of the Outstanding Amount of the related Group I Notes, and (y) with
respect to the Group II Notes, the Securities Insurer (unless the Class II-[ ]
Notes and Class II-[ ] Notes are no longer outstanding or a Securities Insurer
Default shall have occurred and is continuing, and then by the Group II
Controlling Parties, representing not less than a majority of the Outstanding
Amount of the related Group II Notes) (or, in each case, if only one Class is
affected thereby, a majority of the Outstanding
44
Amount of such Class) shall have the right to direct the time, method and place
of conducting any Proceeding for any remedy available to the Indenture Trustee
with respect to the Group I or Group II Notes, as applicable, or exercising any
trust or power conferred on the Indenture Trustee; provided 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 relating to the Group I Notes or Group II Notes, shall, in
the case of the Group I Notes, be by the holders of not less than 100%
of the Outstanding Amount of the Group I Notes and, in the case of the
Group II Notes, be by the Securities Insurer (provided that, if the
Class II-[ ] Notes and Class II-[ ] Notes are no longer outstanding or
a Securities Insurer Default has occurred and is continuing, then by
the holders of not less than 100% of the Outstanding Amount of the
Group II 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 holders of less than 100% of the Outstanding
Amount of the Group I Notes or the Securities Insurer (or, if a
Securities Insurer Default has occurred and is continuing, the holders
of less than 100% of the Outstanding Amount of the Group II 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;
provided, however, 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 holders of the Group I or
Group II Notes, as applicable, not consenting to such action.
SECTION 5.12. Waiver of Past Defaults. Prior to the
declaration of the acceleration of the Group I or Group II Notes, as applicable,
as provided in Section 5.02, (x) with respect to the Group I Notes, the Group I
Controlling Parties, representing not less than a majority of the Outstanding
Amount of the related Group I Notes, and (y) with respect to the Group II Notes,
the Securities Insurer (unless the Class II-[ ] Notes and Class II-[ ] Notes are
no longer outstanding or a Securities Insurer Default shall have occurred and is
continuing, and then by the Group II Controlling Parties, representing not less
than a majority of the Outstanding Amount of the related Group II Notes), may
waive any past Default and its consequences except a Default (a) in payment when
due of principal of or interest on any Group I Note or Group II Note other than
the Class II-[ ] Notes (including, subject to the limitations of Sections
2.07(c) and 8.02(c), any related Noteholders' Interest Index Carryover on each
Class of Notes other than the Class II-[ ] Notes) or interest on the Class II-[
] Notes, as applicable, or (b) in respect of a covenant or provision hereof
which cannot be modified or amended without the consent of each holder of the
Group I or Group II Notes, as applicable. In the case of any such waiver, the
45
Issuer, the Securities Insurer, if applicable, the Indenture Trustee and the
holders of the Group I or Group II Notes, as applicable, shall be restored to
their former positions and rights hereunder, respectively; but no such waiver
shall extend to any subsequent or other 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 for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereto.
SECTION 5.13. Undertaking for Costs. All parties to this
Indenture agree, and each holder of the Group I or Group II Notes, respectively,
by such Group I or Group II Noteholder's acceptance of any Group I or Group II
Note, as the case may be, shall be deemed to have agreed, that any court may in
its discretion require, in any suit for the enforcement of any right or remedy
under this Indenture, or in any suit against the Indenture Trustee for any
action taken, suffered or omitted by it as Indenture Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section shall not apply to (a) any suit
instituted by the Indenture Trustee, (b) any suit instituted by any holder of
the Group I or Group II Notes, as applicable, or group of holders of the Group I
or Group II Notes, as applicable, in each case holding in the aggregate more
than 10% of the Outstanding Amount of the Group I or Group II Notes,
respectively, or (c) any suit instituted by any holder of the Group I or Group
II Notes, as applicable, for the enforcement of the payment of principal of or
interest on any Group I Note or Group II Note other than the Class II-[ ] Notes
(including any unpaid related Noteholders' Interest Index Carryover on each
Class of Notes other than the Class II-[ ] Notes) or interest on the Class II-[
] Notes, as applicable, on or after the respective due dates expressed in such
Group I or Group II Note, as the case may be, and in this Indenture (or, in the
case of any redemption, on or after the related 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, 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 Group I or Group II Notes, as applicable, or
under this Indenture shall not be affected by the seeking, obtaining or
application of any other relief under or with respect to this Indenture. Neither
the lien of this Indenture nor any rights or remedies of the Indenture Trustee
or the holders of the Group I or Group II Notes, as applicable, shall be
impaired by the recovery of any judgment by the Indenture Trustee against the
Issuer or by the levy of any execution under such judgment upon any portion of
the Indenture Trust Estate or upon any of the
46
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 Securities Insurer or the
Indenture Trustee, and with the consent of the Securities Insurer (so long as a
Securities Insurer Default has not occurred and is continuing) and in each case
subject to the rights of the Securities Insurer hereunder and under the Sale and
Servicing Agreement, and at the Administrator's expense, the Issuer shall take
all such lawful action as the Indenture Trustee or Securities Insurer, as
applicable, may request to compel or secure the performance and observance by
KBUSA, the Depositor, the Cap Counterparty, the Swap Counterparty, the
Administrator and the Master Servicer, as applicable, of each of their
obligations to the Issuer under or in connection with the Sale and Servicing
Agreement (and with respect to the Administrator only, the Administration
Agreement, with respect to the Swap Counterparty only, the Group I Interest Rate
Swap, with respect to the Cap Counterparty only, the Group II Cap Agreement, and
with respect to the Cap Provider only, each of the Basis Risk Cap Agreements and
with respect to KBUSA only, under the KBUSA Student Loan Transfer Agreement) in
accordance with the terms thereof, and to exercise any and all rights, remedies,
powers and privileges lawfully available to the Issuer under or in connection
with the Sale and Servicing Agreement (and the Administration Agreement, the
Group II Cap Agreement, the Group I Interest Rate Swap, the KBUSA Student Loan
Transfer Agreement or the Basis Risk Cap Agreements, as applicable) to the
extent and in the manner directed by the Indenture Trustee with respect to the
Group I Notes or the Securities Insurer with respect to the Group II Notes
(provided no Securities Insurer Default has occurred and is continuing),
including the transmission of notices of default on the part of the Depositor,
the Cap Counterparty, the Swap Counterparty, the Administrator or the Master
Servicer thereunder and the institution of legal or administrative actions or
proceedings to compel or secure performance by the Depositor, the Cap
Counterparty, the Swap Counterparty, the Administrator or the Master Servicer of
each of their obligations under the Sale and Servicing Agreement (and the
Administration Agreement, the Group II Cap Agreement, the Group I Interest Rate
Swap, the KBUSA Student Loan Transfer Agreement or the Basis Risk Cap
Agreements, as applicable).
(b) If an Event of Default has occurred and is
continuing, the Indenture Trustee shall at the direction (which direction shall
be in writing or by telephone (confirmed in writing promptly thereafter)) of (x)
with respect to the Group I Notes, the Group I Controlling Parties, representing
not less than 66.67% of the Outstanding Amount of the related Group I Notes, and
(y) with respect to the Group II Notes, the Securities Insurer (unless the Class
II-[ ] Notes and Class II-[ ] Notes are no longer outstanding or a Securities
Insurer Default shall have occurred and is continuing, and then by the Group II
Controlling Parties, representing not less than 66.67% of the Outstanding Amount
of the related Group II Notes), exercise all rights, remedies, powers,
privileges and claims of the Issuer against KBUSA, the Depositor, the
Administrator, the Master Servicer, the Cap Counterparty, the Swap Counterparty
or Cap Provider under or in connection with the Sale and Servicing Agreement
(and the Administration Agreement, the Group II Cap Agreement, the Group I
Interest Rate Swap, the KBUSA Student Loan Transfer Agreement and Basis Risk Cap
Agreements, as applicable), including the right or power to take any action to
compel or secure performance or observance by KBUSA, the Depositor, the
Administrator, the Master Servicer, the Cap Counterparty, the Swap Counterparty
and the Cap Provider of each of their obligations to the Issuer thereunder and
to give any
47
consent, request, notice, direction, approval, extension or waiver under the
Sale and Servicing Agreement (and the Administration Agreement, the Group II Cap
Agreement, the Group I Interest Rate Swap, the KBUSA Student Loan Transfer
Agreement and the Basis Risk Cap Agreements) 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 the Sale and Servicing Agreement, 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 a Responsible Officer of the
Indenture Trustee and conforming to the requirements of this Indenture;
provided, however, that the Indenture Trustee shall examine the
certificates and opinions to determine whether or not 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 Section 5.11.
(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 6.01.
(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.
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(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 Sale and 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 6.01.
(k) Notwithstanding any other provision in this Indenture
or the other Basic Documents, nothing in this Indenture or the other Basic
Documents shall be construed to limit the legal responsibility of the Indenture
Trustee to the U.S. Secretary of Education or a Guarantor for any violations of
statutory or regulatory requirements that may occur with respect to loans held
by the Indenture Trustee pursuant to, or to otherwise comply with its
obligations under, the Higher Education Act or implementing regulations, it
being expressly understood that the Indenture Trustee has no obligation or duty
pursuant to this Section except in the event of Foreclosure or pursuant to
Section 8.02 of the Sale and Servicing Agreement as a successor Master Servicer.
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, it may require an Officers' Certificate of the Issuer or an Opinion of
Counsel. 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.
(c) The Indenture Trustee may execute any of the trusts
or powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys or a custodian or nominee, and the Indenture Trustee
shall not be responsible for any misconduct or negligence on the part of, or for
the supervision of, any such agent, attorney, custodian or nominee appointed
with due care by it hereunder.
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(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 advice or opinion of counsel with respect to legal matters relating to this
Indenture 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) In the event that the Person acting as Indenture
Trustee is also acting as securities intermediary all the rights, powers,
immunities and indemnities afforded to the Indenture Trustee under the Basic
Documents shall also be afforded to the securities intermediary.
(g) Absent willful misconduct or fraud, the Indenture
Trustee shall not be liable for any punitive damages, regardless of the form of
action and whether or not any such damages were foreseeable or contemplated.
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 is
continuing and if it is either actually known or written notice of the existence
thereof has been delivered to a Responsible Officer of the Indenture Trustee,
the Indenture Trustee shall immediately notify the Securities Insurer of the
Default and shall mail to each holder of the Notes, the Securities Insurer and
the Swap Counterparty notice of the Default within 90 days after it occurs.
Except in the case of a Default in payment of principal of or interest on the
Group I or Group II Notes other than the Class II-[ ] Notes (including any
related Noteholders' Interest Index Carryover on each Class of Notes other than
the Class II-[ ] Notes), or interest on the Class II-[ ] Notes (including
payments pursuant to the mandatory redemption provisions of such Note), the
Indenture Trustee may withhold the notice to the holders of the Group I or Group
II Notes, as applicable, if and so long as a committee of its Responsible
Officers in good faith determines that withholding the notice is in the
interests of holders of the Group I or Group II Notes, as applicable.
50
SECTION 6.06. Reports by Indenture Trustee to Noteholders. The
Indenture Trustee shall deliver to each holder of the Notes (and to each Person
who was a holder of the Notes 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 holder of the Notes a brief report as of such December 31
that complies with TIA Section 313(a) if required by said section. The Indenture
Trustee shall also comply with TIA Section 313(b). A copy of each such report
required pursuant to TIA Sections 313(a) or (b) shall, at the time of such
transmission to holders of the Notes, 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, pursuant
to Section 3 of the Administration Agreement, shall cause the Administrator to
pay to the Indenture Trustee reasonable compensation for its services in
accordance with a separate agreement between the Administrator and the Indenture
Trustee and shall cause the Administrator to reimburse the Indenture Trustee for
all reasonable out-of-pocket expenses incurred or made by it as provided in such
separate agreement. 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 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 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 the 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.
The Issuer's payment obligations to the Indenture Trustee
pursuant to this Section shall survive the discharge of this Indenture or the
earlier resignation or removal of the Indenture Trustee. 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 Securities Insurer and
the Swap Counterparty. The Securities Insurer (provided that no
51
Securities Insurer Default has occurred and is continuing), or the holders of
Notes of a majority in Outstanding Amount of the Notes, with the consent of the
Securities Insurer (provided that no Securities Insurer Default has occurred and
is continuing), may remove the Indenture Trustee by so notifying the Indenture
Trustee and may appoint a successor Indenture Trustee. 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; or
(iv) the Indenture Trustee otherwise becomes incapable of
acting.
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
Issuer shall promptly appoint a successor Indenture Trustee, with the consent of
the Securities Insurer which consent shall not be unreasonably withheld.
A successor Indenture Trustee shall deliver a written
acceptance of its appointment to the retiring Indenture Trustee, the Securities
Insurer, the Swap Counterparty and the Issuer. 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 the holders of the Notes. The retiring
Indenture Trustee shall promptly transfer all property held by it as Indenture
Trustee to the successor Indenture Trustee upon payment of all monies due and
owing to the retiring 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 Securities Insurer or the holders 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 holder of the Notes may petition any court of competent jurisdiction for the
removal of the Indenture Trustee and the appointment of a successor Indenture
Trustee.
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 without any further act shall be the successor Indenture Trustee;
provided that such corporation or banking association shall be otherwise
qualified and eligible under
52
Section 6.11. The Indenture Trustee shall provide the Rating Agencies, the Swap
Counterparty and the Securities 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
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 holders
of the Notes, 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 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 holders of the Notes of the appointment of any co-trustee or separate
trustee shall be required under Section 6.08 hereof.
(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.
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(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 6.11. Eligibility; Disqualification. The Indenture
Trustee shall at all times satisfy the requirements of TIA Section 310(a). The
Indenture Trustee 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 ▇▇▇▇▇'▇. The
Indenture Trustee shall comply with TIA Section 310(b), including the optional
provision permitted by the second sentence of TIA Section 310(b)(9); provided,
however, that there shall be excluded from the operation of TIA Section
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 Section
310(b)(1) are met.
SECTION 6.12. Preferential Collection of Claims Against
Issuer. The Indenture Trustee shall comply with TIA Section 311(a), excluding
any creditor relationship listed in TIA Section 311(b). An Indenture Trustee who
has resigned or been removed shall be subject to TIA Section 311(a) to the
extent indicated.
SECTION 6.13. Set-Off Rights. So long as no Securities Insurer
Payment Default has occurred and is continuing nor has the Securities Insurer
been removed pursuant to Section 8A.5, the Indenture Trustee shall not have, and
hereby waives, any and all rights of set-off against the Trust Accounts or any
investments thereof.
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 holders of the Notes as of such Record Date, (b) at such other times as
the Indenture Trustee may request in writing, within 30 days after receipt by
the Issuer of any such
54
request, a list of similar form and content as of a date not more than 10 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.
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 holders of the Notes
contained in the most recent list furnished to the Indenture Trustee as provided
in Section 7.01 and the names and addresses of the holders of the Notes 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) Holders of the Notes may communicate pursuant to TIA
Section 312(b) with other holders of the Notes with respect to their rights
under this Indenture or under the Notes. Upon receipt by the Indenture Trustee
of any request by a holder of the Notes to receive a copy of the current list of
holders of the Notes (whether or not made pursuant to TIA Section 312(b)), the
Indenture Trustee shall promptly notify the Administrator thereof by providing
to the Administrator a copy of such request and a copy of the list of holders of
the Notes produced in response thereto.
(c) The Issuer, the Indenture Trustee and the Note
Registrar shall have the protection of TIA Section 312(c).
(d) The Indenture Trustee shall furnish to the holders of
the Notes 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.
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 holders of the Notes described in
TIA Section 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.
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(b) Unless the Issuer otherwise determines, the fiscal
year of the Issuer shall end on December 31 of each year.
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 the holders of the Group I and Group II Notes, as applicable, pursuant
to the Sale and Servicing Agreement and 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 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 holders of the Group I or
Group II Notes, as applicable, the applicable Trust Accounts as provided in
Section 5.01 of the Sale and Servicing Agreement.
(b) On or before the Business Day preceding each
Distribution Date, all Available Funds with respect to the preceding Collection
Period will be deposited in the applicable sub-account of the Collection Account
as provided in the Sale and Servicing Agreement (except with respect to all Net
Receipts with respect to the Group I Interest Rate Swap), which shall be
deposited into the applicable sub-account of the Collection Account on the date
received) as provided in Section 5.02 of the Sale and Servicing Agreement. The
Indenture Trustee shall also remit to the Group II Collection Account
Sub-Account all Insured Payments delivered to the Indenture Trustee pursuant to
a Group II Insured Notes Guaranty Insurance Policy Notice on the date of receipt
thereof from the Securities Insurer. On or before each Distribution Date, (i)
the related Noteholders' Distribution Amount, (ii) any related Noteholders'
Interest Index Carryover, and (iii) with respect to the Group II Insured Notes
only, any Insured Payments with respect to the preceding Collection Period will
be distributed from the applicable sub-account of the Collection Account and any
other Trust Account to the Indenture Trustee (or any other Paying Agent) on
behalf of the holders of the related Group I or Group II Notes, as applicable,
as provided in Sections 5.04, 5.05, 5.06 and 5.08 of the Sale and Servicing
Agreement.
(c) (X) On each Distribution Date and any Redemption
Date, the Indenture Trustee (or any other Paying Agent) shall distribute all
amounts received by it on behalf of the holders of the Group I Notes, pursuant
to paragraph (b) above to the holders of the Group I Notes, to the extent of
amounts due and unpaid on the Group I Notes, for principal, interest and
56
any related Noteholders' Interest Index Carryover in the following amounts and
in the following order of priority (except as otherwise provided in Sections
5.04(b) and 5.04(c)):
(i) the Noteholders' Interest Distribution Amount with
respect to the Class I-[ ] and Class I-[ ] Notes, to the holders of the
Class I-[ ] Notes and the holders of the Class I-[ ] Notes in an amount
equal to the accrued and unpaid interest on such Group I Notes;
provided that if there are not sufficient funds received to pay the
entire amount of accrued and unpaid interest then due on such Group I
Notes, the amounts so received shall be applied to the payment of such
interest on the Group I Notes on a pro rata basis;
(ii) unless a related Subordinate Notes Interest Trigger
is in effect on such Distribution Date, the Noteholders' Interest
Distribution Amount with respect to the Class I-[ ] Notes, to the
holders of the Class I-[ ] Notes in an amount equal to the accrued and
unpaid interest on the Class I-[ ] Notes;
(iii) with respect to any Distribution Date on which a
related Subordinate Notes Interest Trigger is in effect, the applicable
Noteholders' Principal Distribution Amount to the holders of the Class
I-[ ] Notes until the Outstanding Amount of the Class I-[ ] Notes is
reduced to zero, then to the holders of the Class I-[ ] Notes until the
Outstanding Amount of the Class I-[ ] Notes is reduced to zero;
(iv) in the event a related Subordinate Notes Interest
Trigger is in effect on such Distribution Date, the Noteholders'
Interest Distribution Amount with respect to the Class I-[ ] Notes, to
the holders of the Class I-[ ] Notes in an amount equal to the accrued
and unpaid interest on the Class I-[ ] Notes;
(v) the applicable Noteholders' Principal Distribution
Amount, (a) prior to the Stepdown Date, or after the Stepdown Date if a
related Subordinate Note Principal Trigger is in effect, to the Group I
Senior Notes in sequential order beginning with the Class I-[ ] Notes
until paid in full, then to the Class I-[ ] Notes until paid in full,
and then to the Class I-[ ] Notes; and (b) after the Stepdown Date and
so long as no related Subordinate Note Principal Trigger is in effect,
the applicable Senior Percentage of the Group I Principal Distribution
Amount to the Group I Senior Notes (in the same order of priority as
described in the preceding sentence) and the applicable Subordinate
Percentage of the Group I Principal Distribution Amount to the Class
I-[ ] Notes;
(vi) the applicable Noteholders' Interest Index Carryover
with respect to the Group I Class [ ] Notes, if any, to the holders of
the Class I-[ ] Notes and the holders of the Class I-[ ] Notes;
provided that if insufficient funds are received to pay the entire
Noteholders' Interest Index Carryover with respect to the Group I Class
[ ] Notes then outstanding, the amounts so received shall be applied to
the payment of such Noteholders' Interest Index Carryover on a pro rata
basis; and
(vii) the applicable Noteholders' Interest Index Carryover
with respect to the Class I-[ ] Notes, if any, to the holders of the
Class I-[ ] Notes.
(Y) On each Distribution Date and any Redemption Date, the
Indenture Trustee (or any other Paying Agent) shall distribute all amounts
received by it on behalf of the holders of
57
the Group II Notes, pursuant to paragraph (b) above to the holders of the Group
II Notes, to the extent of amounts due and unpaid on the Group II Notes, for
principal (with respect to each Class of Group II Notes other than the Class
II-[ ] Notes), interest and any related Noteholders' Interest Index Carryover
(with respect to each Class of Group II Notes other than the Class II-[ ] Notes)
in the following amounts and in the following order of priority (except as
otherwise provided in Sections 5.04(b) and 5.04(c)):
(i) the Noteholders' Interest Distribution Amount with
respect to the Class II-[ ] Notes, Class II-[ ] Notes, Class II-[ ]
Notes and Class II-[ ] Notes, to the holders of the Class II-[ ] Notes,
Class II-[ ] Notes, Class II-[ ] Notes and Class II-[ ] Notes in an
amount equal to the accrued and unpaid interest on such Group II Notes;
provided that if there are not sufficient funds received to pay the
entire amount of accrued and unpaid interest then due on such Group II
Notes, the amounts so received shall be applied to the payment of such
interest on the Group II Notes on a pro rata basis;
(ii) unless a related Subordinate Notes Interest Trigger
is in effect on such Distribution Date, the Noteholders' Interest
Distribution Amount with respect to the Class II-[ ] Notes, to the
holders of the Class II-[ ] Notes in an amount equal to the accrued and
unpaid interest on the Class II-[ ] Notes;
(iii) with respect to any Distribution Date on which a
related Subordinate Notes Interest Trigger is in effect, the applicable
Noteholders' Principal Distribution Amount to the holders of the Class
II-[ ] Notes until the Outstanding Amount of the Class II-[ ] Notes is
reduced to zero, then to the holders of the Class II-[ ] Notes until
the Outstanding Amount of the Class II-[ ] Notes is reduced to zero,
then to the holders of the Class II-[ ] Notes until the Outstanding
Amount of the Class II-[ ] Notes is reduced to zero;
(iv) in the event a related Subordinate Notes Interest
Trigger is in effect on such Distribution Date, the Noteholders'
Interest Distribution Amount with respect to the Class II-[ ] Notes, to
the holders of the Class II-[ ] Notes in an amount equal to the accrued
and unpaid interest on the Class II-[ ] Notes;
(v) the applicable Noteholders' Principal Distribution
Amount, (a) prior to the Stepdown Date, or after the Stepdown Date if a
related Subordinate Note Principal Trigger is in effect, to the Group
II Senior Notes in sequential order beginning with the Class II-[ ]
Notes until paid in full, then to the Class II-[ ] Notes until paid in
full, then to the Class II-[ ] Notes until paid in full and then to the
Class II-[ ] Notes until paid in full; and (b) after the Stepdown Date
and so long as no related Subordinate Note Principal Trigger is in
effect, the applicable Senior Percentage of the Group II Principal
Distribution Amount to the Group II Senior Notes, other than the Class
II-[ ] Notes (in the same order of priority as described in the
preceding sentence) and the applicable Subordinate Percentage of the
Group II Principal Distribution Amount to the Class II-[ ] Notes;
(vi) the applicable Noteholders' Interest Index Carryover
with respect to the Group II Class [ ] Notes (other than the Class II-[
] Notes), if any, to the holders of the Class II-[ ] Notes, the holders
of
58
the Class II-[ ] Notes and the holders of the Class II-[ ] Notes;
provided that if insufficient funds are received to pay the entire
Noteholders' Interest Index Carryover with respect to the Group II
Class [ ] Notes (other than the Class II-[ ] Notes) then outstanding,
the amounts so received shall be applied to the payment of such
Noteholders' Interest Index Carryover on a pro rata basis; and
(vii) the applicable Noteholders' Interest Index Carryover
with respect to the Class II-[ ] Notes, if any, to the holders of the
Class II-[ ] Notes.
(d) On the Distribution Date next following the Special
Determination Date, the Indenture Trustee shall distribute or transfer, as the
case may be, the amounts remaining on deposit in the Group I Subsequent Loan
Pre-Funding Sub-Account and the Group II Subsequent Loan Pre-Funding Sub-Account
to the Group I and Group II Noteholders or the Group I Other Student Loan
Pre-Funding Sub-Account or the Group II Other Student Loan Pre-Funding
Sub-Account, as applicable, in accordance with the priorities and mandates set
forth in Section 5.08(c)(ii)(x) or (y) of the Sale and Servicing Agreement, as
applicable.
SECTION 8.03. General Provisions Regarding Accounts. (a) So
long as no 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 5.01(b) of the Sale and Servicing Agreement; provided, however, that
any Insured Payments received by the Indenture Trustee shall be held uninvested.
All income or other gain from investments of moneys deposited in the Trust
Accounts shall be deposited by the Indenture Trustee in the applicable
sub-account of 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 Securities
Insurer, the Cap Counterparty, the Cap Provider and the Swap Counterparty an
Opinion of Counsel, acceptable to the Indenture Trustee, to such effect.
(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 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. Eastern Time (or such other time as may be
agreed by the Issuer and Indenture Trustee) on any Business Day; or (ii) a
Default shall have occurred and be continuing with respect to the either the
Group I or Group II Notes, as the case may be, but the Group I or Group II
Notes, respectively, shall not have been declared due and payable pursuant to
Section 5.02, or, if such Group I or Group II
59
Notes, as applicable, 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 5.04 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.
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 moneys.
(b) The Indenture Trustee shall, at such time as there
are no Notes Outstanding, all sums due the Indenture Trustee pursuant to Section
6.07 have been paid and no amounts are due and owing to the Securities Insurer
or the Swap Counterparty, release any remaining portion of the Indenture Trust
Estate that secured the Group I and Group II 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 of an Issuer Request accompanied by an Officers' Certificate of the
Issuer, an Opinion of Counsel and (if required by TIA) Independent Certificates
in accordance with TIA Sections 314(c) and 314(d)(1) and meeting the applicable
requirements of Section 11.01.
(c) Each holder of any Class of the Group I and Group II
Notes, by the acceptance of such Group I or Group Note, respectively,
acknowledges that from time to time during the Funding Period the Indenture
Trustee shall release the lien of this Indenture on those Group I or Group II
Student Loans, respectively, to be sold to the Depositor and as to which the
Depositor will simultaneously deposit the aggregate Purchase Amounts thereof
into the Group I or Group II Escrow Account, as applicable, in accordance with,
and subject to the terms and conditions of, Section 2.03 of the Sale and
Servicing Agreement, and each holder of each Class of the Group I and Group II
Notes consents to such release.
SECTION 8.05. Opinion of Counsel. The Indenture Trustee 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 shall also require, except in connection
with any action contemplated by Section 8.04(c), as a condition to such action,
an Opinion of Counsel, in form and substance satisfactory to the Indenture
Trustee, 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 Group I or Group II Notes,
as applicable or the rights of the holders of the Group I and Group II Notes, as
the case may be, the Securities Insurer or the Swap Counterparty 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
60
may rely, without independent investigation, on the accuracy and validity of any
certificate or other instrument delivered to the Indenture Trustee in connection
with any such action.
SECTION 8.06. Demands under the Group II Insured Notes
Guaranty Insurance Policy. (a) In the event that the Servicer's Report with
respect to any Determination Date shall state that (x) Group II Available Funds
(after giving effect to all required distributions to be made pursuant to either
Section 5.05(c)(Y)(1) through (10) of the Sale and Servicing Agreement, or
Sections 5.04(b)(Y) FIRST through SIXTH or 5.04(c)(Y)(1) through (10) of this
Indenture, as applicable), plus all amounts permitted to be transferred from the
Group II Reserve Account and Group II Pre-Funding Account, pursuant to Sections
5.06(b) and 5.08(d) of the Sale and Servicing Agreement, respectively, on any
Distribution Date, are insufficient to provide for the Noteholders' Interest
Distribution Amount for the Group II Insured Notes for such Distribution Date
(the amount of such insufficiency, the "Interest Deficiency Amount"), (y) on the
Final Maturity Dates for each Class of Group II Insured Notes, as applicable,
Group II Available Funds (after giving effect to all required distributions to
be made pursuant to either Section 5.05(c)(Y)(1) through (7) of the Sale and
Servicing Agreement, or Sections 5.04(b)(Y) FIRST through EIGHTH or
5.04(c)(Y)(1) through (9) of this Indenture, as applicable), plus all amounts
permitted to be transferred from the Group II Reserve Account pursuant to
Section 5.06(b) of the Sale and Servicing Agreement, are insufficient to reduce
the principal balance of each Class of Group II Insured Notes, as applicable, to
zero on such Final Maturity Date (the amount of such insufficiency, the
"Principal Deficiency Amount", and together with an Interest Deficiency Amount,
a "Deficiency Amount"), or (z) any holders of Group II Insured Notes have been
required by a court to return a Preference Amount previously distributed to such
holders of Group II Insured Notes, then after receipt of such Servicer's Report,
the Indenture Trustee shall promptly (and in any event not later than 12:00 p.m.
on the third Business Day prior to the Distribution Date) deliver a completed
Group II Insured Notes Guaranty Insurance Policy Notice to the Securities
Insurer requesting payment in an amount equal to the Insured Payment for such
Distribution Date. The Administrator shall instruct the Indenture Trustee to
distribute, and the Indenture Trustee shall distribute, to the holders of Group
II Insured Notes any Insured Payment deposited into the Collection Account (x)
to the holders of each Class of Group II Insured Notes, pro rata (based on the
Noteholders' Interest Distribution Amount for each such Class and such
Distribution Date), the Interest Deficiency Amount, (y) on the Final Maturity
Date for each Class of Group II Insured Notes, as applicable, the related
Principal Deficiency Amount, and (z) the amount of any Preference Amounts.
ARTICLE VIII-A
The Group II Insured Notes Guaranty Insurance Policy
SECTION 8A.1. Claims Under the Group II Insured Notes Guaranty
Insurance Policy. (a) With respect to the Group II Insured Notes only, in the
event that the Insured Payments for the related Distribution Date are greater
than zero, the Indenture Trustee shall furnish to the Securities Insurer (with a
copy to the Master Servicer) a completed Group II Insured Notes Guaranty
Insurance Policy Notice, specifying, among other things, the form provided and
in accordance with the terms of the Group II Insured Notes Guaranty Insurance
Policy, in the amount of the related Insured Payments. Amounts paid by the
Securities Insurer under the Group II Insured Notes Guaranty Insurance Policy
shall be deposited by the Indenture
61
Trustee into the Group II Collection Account Sub-Account for payment to related
holders of Group II Insured Notes on the related Distribution Date (or promptly
following payment on a later date as set forth in the Group II Insured Notes
Guaranty Insurance Policy).
(b) Any notice delivered by the Indenture Trustee to the
Securities Insurer pursuant to subsection 8A.1(a) shall specify the Deficiency
Amount, if applicable, the Distribution Date or Final Maturity Date for the
Specified Deficiency Amount, the Preference Amount, if applicable, and the
Insured Payment claimed under the Group II Insured Notes Guaranty Insurance
Policy. Any payment made by the Securities Insurer under the Group II Insured
Notes Guaranty Insurance Policy shall be applied solely to the payment of the
Group II Noteholders' Interest Distribution Amount with respect to the Group II
Insured Notes to the extent of any Deficiency Amount, or on the Final Maturity
Date with respect to each Class of Group II Insured Notes, the Group II
Noteholders' Principal Distribution Amount with respect to such Class of Group
II Insured Notes to the extent of any Deficiency Amount, or in repayment of a
required to be returned Preference Amount, and for no other purpose. The
Indenture Trustee shall return to the Securities Insurer any portion of proceeds
received under the Group II Insured Notes Guaranty Insurance Policy not applied
as an Insured Payment.
(c) The Indenture Trustee shall (i) receive, as
attorney-in-fact of each Noteholder, any Insured Payment from the Securities
Insurer and (ii) deposit the same in the Group II Collection Account Sub-Account
for disbursement to the Group II Noteholders as set forth in Section 5.05(d) of
the Sale and Servicing Agreement, and Section 8.02(d) of this Indenture. Any
Insured Payment disbursed by the Indenture Trustee from claims made under the
Group II Insured Notes Guaranty Insurance Policy shall not be considered payment
by the Issuer with respect to such Group II Insured Notes, and shall not
discharge the obligations of the Issuer with respect thereto. The Securities
Insurer shall, to the extent it makes any payment with respect to the Group II
Notes, become subrogated to the rights of the recipients of such payments to the
extent of such payments. Subject to and conditioned upon any payment with
respect to the Group II Notes by or on behalf of the Securities Insurer under
the Group II Insured Notes Guaranty Insurance Policy, the Indenture Trustee
shall assign to the Securities Insurer all rights to the payment of interest or
principal with respect to the Group II Insured Notes which are then due for
payment to the extent of all payments made by the Securities Insurer and the
Securities Insurer may exercise any option, vote, right, power or the like with
respect to the Group II Notes, to the extent that it has made a payment of
principal with respect thereto pursuant to the Group II Insured Notes Guaranty
Insurance Policy. To evidence such subrogation, the Note Registrar shall note
the Securities Insurer's rights as subrogee upon the register of the Group II
Insured Noteholders upon receipt from the Securities Insurer of proof of payment
by the Securities Insurer of any Deficiency Amount.
(d) The Indenture Trustee shall be entitled to enforce on
behalf of the holders of Group II Insured Notes the obligations of the
Securities Insurer under the Group II Insured Notes Guaranty Insurance Policy.
Notwithstanding any other provision of this Indenture, the holders of Group II
Insured Notes are not entitled to make a claim directly under either of the
Group II Insured Notes Guaranty Insurance Policy or institute proceedings
directly against the Securities Insurer.
62
(e) The Group II Insured Notes Guaranty Insurance Policy
is issued for the benefit of the holders of Group II Insured Notes only, and no
amounts due and owed to the holders of the Group I Notes, the Class II-[ ] Notes
or the Class II-[ ] Notes shall be payable by the Securities Insurer from the
Group II Insured Notes Guaranty Insurance Policy or otherwise.
SECTION 8A.2. [Reserved].
SECTION 8A.3. Surrender of the Group II Insured Notes Guaranty
Insurance Policy. The Indenture Trustee shall surrender the Group II Insured
Notes Guaranty Insurance Policy to the Securities Insurer for cancellation upon
the expiration of such Group II Insured Notes Guaranty Insurance Policy in
accordance with the terms thereof or in the event such policy is replaced
pursuant to Section 8A.5.
SECTION 8A.4. Rights of the Securities Insurer. Each Group II
Noteholder by purchase of its Class of Group II Insured Notes held by it
acknowledges that the Indenture Trustee on behalf of the Trust, as partial
consideration of the issuance of the Group II Insured Notes Guaranty Insurance
Policy, has agreed that the Securities Insurer shall have certain rights
hereunder. Except as otherwise provided herein or in the other Basic Documents,
so long as a Securities Insurer Default has occurred and is continuing, any
provision giving the Securities Insurer the right to direct, appoint or consent
to, approve of, or take any action under this Indenture or any of the Basic
Documents (except for the Insurance Agreement), shall be inoperative during the
period of such Securities Insurer Default and such right shall instead vest in
the Indenture Trustee acting at the written direction of Group II Controlling
Noteholders. The Securities Insurer may disclaim any of its rights and powers
under this Indenture (but not its duties and obligations under the Group II
Insured Notes Guaranty Insurance Policy or the Insurance Agreement) upon
delivery of a written notice to the Indenture Trustee. The Securities Insurer
may give or withhold any consent hereunder in its reasonable discretion. In the
event that the Administrator substitutes one or more new guaranty insurance
policies for the Group II Insured Notes Guaranty Insurance Policy pursuant to
Section 8A.5, the new securities insurer shall have all of the rights to direct,
appoint or consent to, approve of, or take any action under this Indenture
vested in the Securities Insurer immediately prior to the occurrence of a Rating
Agency Downgrade as set forth in Section 8A.5.
SECTION 8A.5. Replacement Group II Insured Notes Guaranty
Insurance Policy. In the event of a Rating Agency Downgrade, the Administrator
shall be permitted, but shall not be obligated, to substitute one or more new
guaranty insurance policies for the Group II Insured Notes Guaranty Insurance
Policy or may arrange for any other form of credit enhancement in substitution
for the Group II Insured Notes Guaranty Insurance Policy; provided, however,
that, in each case, such new securities insurer shall have the highest rating
available from each Rating Agency and provided further that the Securities
Insurer is reimbursed for all amounts due under this Indenture and the Insurance
Agreement. It shall be a condition to substitution of any such new guaranty
insurance policy or other form of credit enhancement that there be delivered to
the Indenture Trustee (i) an Officer's Certificate by the Administrator stating
that the conditions to such substitution set forth in this Section 8A.5 (other
than in clause (ii)) have been satisfied and (ii) a legal opinion, acceptable in
form to the Indenture Trustee, from counsel to the provider of such guaranty
insurance policy or other form of credit enhancement
63
with respect to the enforceability thereof and such other matters as the
Indenture Trustee may require. Upon receipt of written notice of any such
substitution from the Administrator and the taking of physical possession of the
replacement guaranty insurance policy or other form of credit enhancement, the
Indenture Trustee shall, within five (5) Business Days following receipt of such
notice and such taking of physical possession, deliver the Group II Insured
Notes Guaranty Insurance Policy marked "Cancelled" to the Securities Insurer,
and the Securities Insurer will have no further liability under the Group II
Insured Notes Guaranty Insurance Policy.
ARTICLE IX
Supplemental Indentures
SECTION 9.01. Supplemental Indentures Without Consent of
Noteholders. (a) Without the consent of the Swap Counterparty or any holders of
the Notes but with prior notice to the Rating Agencies and the Swap
Counterparty, 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), but (unless any
such proposed amendment does not affect the Group II Student Loans or the Group
II Insured Notes or the Securities Insurer as evidenced by an Opinion of Counsel
of the Depositor (who shall not be an employee of KBUSA or any of its
Affiliates) regarding the lack of changes to any legal rights and remedies of
the holders of Group II Insured Notes or the Securities Insurer, and a
confirmation from each Rating Agency that such amendment will not result in the
downgrading of the then current ratings of any of the Group II Insured Notes
(without regard to the Group II Insured Notes Guaranty Insurance Policy), and
provided that no Securities Insurer Default has occurred and is continuing) with
the consent of the Securities Insurer (not to be unreasonably withheld), 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 holders of the Notes, 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
64
questions arising under this Indenture or in any supplemental
indenture; provided that such action shall not materially adversely
affect the interests of the holders of the Notes, the Securities
Insurer, the Cap Counterparty or the Swap Counterparty;
(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, and (unless any
such proposed amendment does not affect the Group II Student Loans or the Group
II Insured Notes or the Securities Insurer as evidenced by an Opinion of Counsel
of the Depositor (who shall not be an employee of KBUSA or any of its
Affiliates) regarding the lack of changes to any legal rights and remedies of
the holders of Group II Insured Notes or the Securities Insurer, and a
confirmation from each Rating Agency that such amendment will not result in the
downgrading of the then current ratings of any of the Group II Insured Notes
(without regard to the Group II Insured Notes Guaranty Insurance Policy), and
provided that no Securities Insurer Default has occurred and is continuing) with
the consent of the Securities Insurer (not to be unreasonably withheld), when
authorized by an Issuer Order, may, also without the consent of the Cap
Counterparty and the Swap Counterparty or any of the holders of the Notes but
with prior notice to the Cap Counterparty, the Swap Counterparty and 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 holders of the Notes 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 holder of the Notes, the Securities
Insurer or the Swap Counterparty.
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 consent
of: (x) the Group I Controlling Parties holding a majority of the Outstanding
Amount of the related Classes of Group I Notes, (unless any such proposed
amendment does not affect the Group I Student Loans or the Group I Notes as
evidenced by an Opinion of Counsel of the Depositor (who shall not be an
employee of KBUSA or any of its Affiliates) regarding the lack of changes to any
legal rights and remedies of the Group I Noteholders, and a confirmation from
each Rating Agency that such amendment will not result in the downgrading of the
then current ratings of any of the Group I Notes), and (y) the Securities
Insurer, provided that unless the Class II-[ ] Notes and Class II-[ ] Notes
remain outstanding and no Securities Insurer Default shall have occurred and is
continuing, then by the
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Group II Controlling Noteholders holding a majority of the Outstanding Amount of
the related Classes of Group II Notes (unless any such proposed amendment does
not affect the Group II Student Loans or the Group II Notes or the Securities
Insurer as evidenced by an Opinion of Counsel of the Depositor (who shall not be
an employee of KBUSA or any of its Affiliates) regarding the lack of changes to
any legal rights and remedies of the Group II Noteholders or the Securities
Insurer, and a confirmation from each Rating Agency that such amendment will not
result in the downgrading of the then current ratings of any of the Group II
Notes (without regard to the Group II Insured Notes Guaranty Insurance Policy
with respect to the Group II Insured Notes), may enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to, or
changing in any manner or eliminating any of the provisions of, this Indenture
or of modifying in any manner the rights of the holders of the Group I or Group
II Notes, as applicable, under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the holder of each
Outstanding Note affected thereby:
(i) change the date of payment of any installment of
principal of or interest (including any unpaid Noteholders' Interest
Index Carryover on each Class of Notes other than the Class II-[ ]
Notes) on any Class of Notes and the interest on the Class II-[ ]
Notes, 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 payments
received from the Cap Provider with respect to the Basis Risk Cap
Agreements, collections on, or the proceeds of the sale of, the
Indenture Trust Estate to payment of principal of or interest
(including any unpaid Noteholders' Interest Index Carryover on each
Class of Notes other than the Class II-[ ] Notes) on the applicable
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 related Group of Notes, the consent of the holders of the related
Group of Notes of which is required for any such supplemental
indenture, or the consent of the holders of the related Group of Notes
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 related Group of 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
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other Basic Documents cannot be modified or waived without the consent
of the holder 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 related Noteholders' Interest Index
Carryover) or principal due on any applicable Note on any Distribution
Date (including the calculation of any of the individual components of
such calculation) or to affect the rights of the holders of the Notes
to the benefit of any provisions for the mandatory redemption of the
Notes contained herein;
(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 holder of any Note
of the security provided by the lien of this Indenture; or
(viii) or change the definition of Group I Controlling
Noteholders, Group II Controlling Noteholders, Group I Controlling
Parties or Group II Controlling Parties, as the case may be.
Notwithstanding anything to the contrary contained in this Indenture,
such rights of consent granted to the holders of the Notes contained in clauses
(i) through (viii) of this proviso shall not be exercisable by the Group I
Controlling Noteholders on behalf of all of the Group I Noteholders or by the
Securities Insurer on behalf of all of the Group II Noteholders or, if the Class
II-[ ] Notes and the Class II-[ ] Notes are no longer outstanding or a
Securities Insurer Default shall have occurred and is continuing, by the Group
II Controlling Noteholders on behalf of all of the Group II Noteholders.
It shall not be necessary for any Act of holders of the Notes
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 Securities Insurer, the Swap Counterparty and to the
holders of the related group of Notes to which such amendment or supplemental
indenture relates a notice prepared by the Issuer 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 be entitled to
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
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to, enter into any such supplemental indenture that affects the Indenture
Trustee's own rights, duties, liabilities or immunities under this Indenture or
otherwise.
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 related group or groups of Notes affected thereby,
and the respective rights, limitations of rights, obligations, duties,
liabilities and immunities under this Indenture of the Indenture Trustee, the
Issuer and the holders of the Group I or Group II Notes, as applicable, 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 be 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 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) (i) In the event that on the
Special Determination Date either the Group I Subsequent Loan Pre-Funded Amount
or the Group II Subsequent Loan Pre-Funded Amount, after giving effect to the
purchase of any Group I Subsequent Student Loans and Group II Subsequent Student
Loans, respectively, on such date is greater than $[10,000,000], on the next
following Distribution Date such amount shall be transferred to the Group I or
Group II Collection Account Sub-Account, as applicable, and on such Distribution
Date, each Class of Group I or Group II Notes (other than the Class II-[ ]
Notes), as applicable, will be redeemed in part, on a pro rata basis based upon
the initial principal amount of each such Class, in an aggregate principal
amount equal to the Noteholders' Percentage of such Group I Subsequent Loan
Pre-Funded Amount or Group II Subsequent Loan Pre-Funded Amount, as applicable,
on such Distribution Date. In the event that on the Special Determination Date
the Group I Subsequent Loan Pre-Funded Amount or Group II Subsequent Loan
Pre-Funded Amount, as applicable, after giving effect to the purchase of any
Subsequent Student Loans on such date, is greater than zero but less than or
equal to $[10,000,000], the Indenture Trustee, or the Administrator on its
behalf, will on the next following Distribution
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Date transfer such amounts to the Group I or Group II Other Student Loan
Sub-Account, as applicable.
(ii) In the event that on the Distribution Date on which
the Group I or Group II Funding Period, as the case may be, ends (or on
the Distribution Date immediately following the last day of the Group I
or Group II Funding Period, as applicable, if the Group I or Group II
Funding Period, as applicable, does not end on a Distribution Date) any
amount remains on deposit in the Group I or Group II Pre-Funding
Account, respectively, after giving effect to the making of all related
Additional Fundings during the Group I or Group II Funding Period, as
applicable, including any such related Additional Fundings on such
Redemption Date, the Administrator shall instruct the Indenture Trustee
to withdraw such remaining amounts from the Group I or Group II
Pre-Funding Account as applicable, and deposit such amounts into the
applicable sub-account of the Collection Account and such funds will be
considered collections with respect to the Group I or Group II Student
Loans, respectively, for the related collection period.
(b) In the event that all or some of the assets of the
Trust are sold pursuant to Section 9.01 of the Sale and Servicing Agreement,
that portion of the amounts on deposit in the Trust Accounts to be distributed
to the holders of the Group I or Group II Notes, as applicable shall be paid to
the holders of the Group I or Group II Notes, respectively, up to the
Outstanding Amount of the Group I or Group II Notes, as the case may be, and all
accrued and unpaid interest thereon with respect to each Class of Notes other
than the Class II-[ ] Notes and all accrued and unpaid interest with respect to
the Class II-[ ] Notes and any accrued and unpaid Noteholders' Interest Index
Carryover on each Class of Notes other than the Class II-[ ] Notes with respect
thereto (but only to the extent provided by Sections 2.07(d) and 8.02(c)). If
amounts are to be paid to holders of the Group I or Group II Notes, as the case
may be, pursuant to this Section 10.01(b), the Master Servicer, the
Administrator or the Issuer shall, to the extent practicable, furnish notice of
such event to the Indenture Trustee not later than 25 days prior to the
Redemption Date whereupon all such amounts shall be payable on the Redemption
Date.
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 each holder of the applicable Class or Classes of
Notes, as of the close of business on the Record Date preceding the applicable
Redemption Date, at such applicable 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).
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Notice of redemption of the Group I or Group II Notes, as
applicable, 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 holder of any Group I or Group II Note, as the case may be,
shall not impair or affect the validity of the redemption of any other Group I
or Group II Note, as the case may be.
SECTION 10.03. Notes Payable on Redemption Date. The Group I
or Group II Notes, as the case may be, 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, etc. (a)
Upon any application or request by the Issuer to the Indenture Trustee (with
copies to the Securities Insurer and the Swap Counterparty) to take any action
under any provision of this Indenture, the Issuer shall furnish to the Indenture
Trustee (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 or not 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.
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(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, the
Swap Counterparty and the Securities 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, the Swap Counterparty and the Securities 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
Securities 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 Group I or Group II Notes, as applicable, 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 Group I or Group II Notes, as
applicable.
(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, the Swap Counterparty and the Securities
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 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, the Swap Counterparty and the Securities 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
Securities 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 Group I or Group II Notes, as applicable, 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 Group I or Group II
Notes, as applicable.
(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
71
Section, (A) collect, liquidate, sell or otherwise dispose of Group I
or Group II Student Loans, as the case may be, as and to the extent
permitted or required by the Basic Documents, (B) make cash payments
out of the Trust Accounts as and to the extent permitted or required by
the Basic Documents and (C) convey to the Depositor, in order to allow
the applicable Seller to make Consolidation Loans, those specified
Financed Student Loans as and to the extent permitted or required by
and in accordance with Section 8.04(c) hereof and Section 2.03 of the
Sale and Servicing Agreement, so long as the Issuer shall deliver to
the Indenture Trustee every six months, commencing [March 1], [ ], an
Officers' Certificate of the Issuer stating that all the dispositions
of Collateral described in clauses (A), (B) or (C) above that occurred
during the immediately preceding six calendar months 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 Master Servicer, the Depositor, the Issuer or the Administrator, stating
that the information with respect to such factual matters is in the possession
of the Master Servicer, the Depositor, 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.
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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 holders of the Group I or Group II Notes,
as applicable, may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such holders of the Group I or Group II
Notes, as applicable, 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 holders of the Group I or Group II
Notes, as applicable, 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 Group I or Group II Notes, as
applicable, shall be proved by the Note Register.
(d) Any request, demand, authorization, direction,
notice, consent, waiver or other action by the holder of any Group I or Group II
Notes, as applicable, shall bind the holder of every Group I or Group II Note,
respectively, 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 Group I or Group II Note, as applicable.
SECTION 11.04. Notices, etc., to Indenture Trustee, Issuer,
Securities Insurer and Rating Agencies. Any request, demand, authorization,
direction, notice, consent, waiver or Act of holders of Group I or Group II
Notes, as applicable, 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 holders of Group I or Group II Notes, as
applicable, is to be made upon, given or furnished to or filed with:
(a) the Indenture Trustee by any holder of Group I or
Group II Notes, as applicable, or by the Issuer 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 or by any holder
of Group I or Group II Notes, as applicable, shall be sufficient for
every purpose hereunder if in writing and mailed, first-class, postage
prepaid, to the Issuer addressed to: KeyCorp Student Loan Trust [ ], in
care of [ ], [ ], Attention: Corporate Trust Administration; with a
copy to the Administrator, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: KeyCorp Education Resources, KeyCorp
Student Loan Trust [ ], or at any other address previously furnished in
writing to the Indenture Trustee by the Issuer
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or the Administrator. The Issuer shall promptly transmit any notice
received by it from the holders of the Notes to the Indenture Trustee.
Notices required to be given to the Securities Insurer, the
Swap Counterparty or 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 (i) in the case of Moody's, at
the following address: ▇▇▇▇▇'▇ Investors Service, Inc., ABS Monitoring
Department, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; (ii) in the case of
Standard & Poor's, at the following address: Standard & Poor's Rating Services,
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention of Asset Backed
Surveillance Department; (iii) in the case of the Securities Insurer, at the
following address: [ ]; and (v) in the case of the Swap Counterparty, at the
address of the Administrator given above; 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 holders of Group I or Group II Notes, as
applicable, 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 holder of Group I or Group II Notes, as applicable,
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 holders of the Notes
is given by mail, neither the failure to mail such notice nor any defect in any
notice so mailed to any particular holder of Group I or Group II Notes, as
applicable, shall affect the sufficiency of such notice with respect to other
holders of Group I or Group II Notes, as applicable, 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 holders of the Group I or Group II Notes, as
applicable, 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 holders of the Group I or Group II
Notes, as applicable, 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.
SECTION 11.06. Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Group I or Group
II Notes, as applicable, to the contrary, the Issuer may enter into any
agreement with any holder of the Group I or Group II Notes, as applicable,
providing for a method of payment, or notice by the Indenture Trustee or
74
any Paying Agent to such holder of the Group I or Group II Notes, as applicable,
that is different from the methods provided for in this Indenture for such
payments or notices. 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 Sections 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, and the holders of the
Notes, 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.
SECTION 11.12. Legal Holidays. In any case where the date on
which any payment is due shall not be a Business Day, then (notwithstanding any
other provision of the Notes or this Indenture) payment need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
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.
75
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 accompanied by an Opinion of
Counsel (which may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee) to the effect that such
recording is necessary either for the protection of the holders of the Group I
or Group II Notes, as the case may be, 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
Depositor, the Administrator, the Master 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
Depositor, the Administrator, the Master Servicer, the Indenture Trustee or the
Eligible Lender Trustee in its individual capacity or (ii) any partner, owner,
beneficiary, agent, officer, director, employee or agent of the Depositor, the
Administrator, the Master 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 Depositor, the Administrator, the Master 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 Article VI, VII and VIII of the Trust
Agreement.
SECTION 11.17. No Petition. The Indenture Trustee, by entering
into this Indenture, and each holder of each Class of the Notes, by accepting a
Note, hereby covenant and agree that they will not at any time institute against
a Seller, the Depositor or the Issuer, or join in any institution against a
Seller, the Depositor 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, the Swap Counterparty or the Securities 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's 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
76
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. Third-Party Beneficiaries. This Indenture will
inure to the benefit of and be binding upon the parties hereto, the Noteholders,
the Note Owners, the Securities Insurer, the Swap Counterparty and their
respective successors and permitted assigns. Except as otherwise provided in
this Indenture, no other person will have any right or obligation hereunder.
SECTION 11.20. Rights of the Securities Insurer to Exercise
Rights of holders of Group II Insured Notes. (a) By accepting its Group II
Insured Note, each holder of a Group II Insured Note agrees that unless a
Securities Insurer Default has occurred and is continuing, the Securities
Insurer shall be deemed to be treated as the holder of 100% of each Class of the
Group II Insured Notes (except with respect to the right to direct the Indenture
Trustee to exercise the Group II Put Option, which shall be remain the right of
the Group II Controlling Noteholders, excluding for such purpose the Securities
Insurer), and shall have the right to exercise all rights of the holders of the
Group II Insured Notes (including the rights of the Group II Controlling
Parties, but only for so long as the Group II Insured Notes possess the rights
of the Group II Controlling Parties) as specified under this Indenture without
any further consent of any of the holders of the Group II Insured Notes (unless
otherwise specified herein). During the continuance of a Securities Insurer
Default, the consent of the Securities Insurer must be obtained with respect to
any amendments that may materially adversely affect the Securities Insurer.
(b) Whenever the consent or approval of the Securities
Insurer is required under this Indenture, such consent or approval shall be
reasonably given, except for consents or approvals required under Article V of
this Indenture or Section 3.10 of this Indenture, where such consent or approval
shall be given solely at the discretion of the Securities Insurer.
77
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.
KEYCORP STUDENT LOAN TRUST [ ],
By: [ ], not in its individual
capacity but solely as Eligible
Lender Trustee,
By: _________________________________
Name:
Title:
[ ],
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:
[ ],
not in its individual
capacity but solely as
Eligible Lender Trustee,
By: _________________________________
Name:
Title:
▇▇
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ )
) ss.:
COUNTY OF NEW YORK )
On the [ ]th day of [ ] in the year [ ], before me, the undersigned,
personally appeared ___________________, an Authorized Officer, of [ ], as
Eligible Lender Trustee of KEYCORP STUDENT LOAN TRUST [ ], personally known to
me or proved to me on the basis of satisfactory evidence to be the individual
whose name is subscribed to the within instrument and acknowledged to me that he
executed the same in his capacity, and that by his signature on the instrument,
the individual, or the person upon behalf of which the individual acted,
executed the instrument.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this [ ]th day of [ ], [ ].
_____________________________
Notary Public in and for
the State of New York.
My commission expires:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the [ ]th day of [ ] in the year [ ], before me, the undersigned,
personally appeared ___________________, a Vice President of [ ], personally
known to me or proved to me on the basis of satisfactory evidence to be the
individual whose name is subscribed to the within instrument and acknowledged to
me that he executed the same in his capacity, and that by his signature on the
instrument, the individual, or the person upon behalf of which the individual
acted, executed the instrument.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this [ ]th day of [ ], [ ].
_____________________________
Notary Public in and for
the State of New York.
My commission expires:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On the [ ]th day of [ ] in the year [ ], before me, the undersigned,
personally appeared __________________, an Authorized Officer, of [ ],
personally known to me or proved to me on the basis of satisfactory evidence to
be the individual whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his capacity, and that by his
signature on the instrument, the individual, or the person upon behalf of which
the individual acted, executed the instrument.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, this [ ]th day of [ ], [ ].
_____________________________
Notary Public in and for
the State of New York.
My commission expires:
APPENDIX A
[See Appendix A to the Sale and Servicing Agreement]
SCHEDULE A
TO THE INDENTURE
Schedule of Group I Initial Financed Student Loans
Delivered to the Indenture Trustee.
Schedule of Group II Initial Financed Student Loans
Delivered to the Indenture Trustee.
SCHEDULE B-1
TO THE INDENTURE
Schedule of Subsequent Student Loans that are Group I Student Loans
To be included on Schedule A to each related Subsequent Transfer Agreement.
Schedule of Subsequent Student Loans that are Group II Student Loans
To be included on Schedule A to each related Subsequent Transfer Agreement.
SCHEDULE B-2
TO THE INDENTURE
Schedule of Other Student Loans that are Group I Student Loans
To be included on Schedule A to each related Subsequent Transfer Agreement.
Schedule of Other Student Loans that are Group II Student Loans
To be included on Schedule A to each related Subsequent Transfer Agreement.
SCHEDULE C
TO THE INDENTURE
Location of Financed Student Loan Files - PHEAA
[Documents relating to the Financed Student Loans being sub-serviced by
PHEAA on behalf of the Master Servicer pursuant to the PHEAA Sub-Servicing
Agreements (including original Financed Student Loan Notes) are stored at
PHEAA's facility at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ 17102.]
Location of Financed Student Loan Files - Great Lakes
[Documents relating to the Financed Student Loans being sub-serviced by
Great Lakes on behalf of the Master Servicer pursuant to the Great Lakes
Sub-Servicing Agreement (including original Financed Student Loan Notes) are
stored at Great Lakes' facilities at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, and, on behalf of Great Lakes, at the offices of Datakeep Inc., ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ 53718.]
Location of Financed Student Loan Files - Custodian
[Documents relating to the Financed Student Loans being serviced
directly by Key Bank USA, National Association (including original Financed
Student Loan Notes) are stored, on behalf of Key Bank USA, National Association,
at Deutsche Bank National Trust Company, ▇▇▇▇ ▇▇▇▇ ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇▇▇ 92703.]
EXHIBIT A-1
TO THE INDENTURE
[FORM OF CLASS I-[ ] NOTES]
EXHIBIT A-2
TO THE INDENTURE
[FORM OF CLASS I-[ ] NOTE]
EXHIBIT A-3
TO THE INDENTURE
[FORM OF CLASS I-[ ] NOTE]
EXHIBIT A-4
TO THE INDENTURE
[FORM OF CLASS II-[ ] NOTE]
EXHIBIT A-5
TO THE INDENTURE
[FORM OF CLASS II-[ ] NOTE]
EXHIBIT A-6
TO THE INDENTURE
[FORM OF CLASS II-[ ] NOTE]
EXHIBIT A-7
TO THE INDENTURE
[FORM OF CLASS II-[ ] NOTE]
EXHIBIT A-8
TO THE INDENTURE
[FORM OF CLASS II-[ ] NOTE]