[EXHIBIT 4.3]
TRUST AGREEMENT
between
Trans-World Insurance Company, d/b/a Educaid
as Depositor
and
-----------------------------
not in its individual capacity but solely
as Eligible Lender Trustee
Dated as of ______, 199_
TABLE OF CONTENTS
PAGE
ARTICLE I
Definitions and Usage............................................ 1
ARTICLE II
ORGANIZATION
SECTION 2.1. Name.............................................. 1
SECTION 2.2. Office............................................ 1
SECTION 2.3. Purposes and Powers............................... 1
SECTION 2.4. Appointment of Eligible Lender Trustee............ 2
SECTION 2.5. Initial Capital Contribution of Trust
Estate ......................................... 3
SECTION 2.6. Declaration of Trust.............................. 3
SECTION 2.7. Liability of the Certificateholders............... 3
SECTION 2.8. Title to Trust Property........................... 4
SECTION 2.9. Representations and Warranties of the
Depositor....................................... 4
SECTION 2.10. Federal Income Tax Allocations.................... 5
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
SECTION 3.1. Initial Beneficial Ownership......................... 7
SECTION 3.2 The Trust Certificates............................... 7
SECTION 3.3. Authentication of Trust Certificates................. 7
SECTION 3.4. Registration of Transfer and Exchange
of Trust Certificates and
Originators' Interests............................. 9
SECTION 3.5. Restrictions on Transfer . . . . . . . . 10
SECTION 3.6. Mutilated, Destroyed, Lost or Stolen
Trust Certificates................................ 12
SECTION 3.7. Persons Deemed Owners............................... 12
SECTION 3.8. Access to List of Certificateholders
Names and Addresses............................... 12
SECTION 3.9. Maintenance of Office or Agency..................... 13
SECTION 3.10. Appointment of Certificate Paying Agent............. 13
SECTION 3.11. Disposition by TMS Student Holdings................. 14
SECTION 3.12. Book-Entry Certificates............................. 15
SECTION 3.13. Notices to Clearing Agency.......................... 16
SECTION 3.14. Definitive Certificates............................. 16
SECTION 3.15. Determination of Auction Rate ...................... 17
ARTICLE IV
ACTIONS BY ELIGIBLE LENDER TRUSTEE
SECTION 4.1. Prior Notice to Certificateholders with
Respect to Certain Matters........................ 17
SECTION 4.2. Action by Certificateholders with
Respect to Certain Matters........................ 18
SECTION 4.3. Action by Certificateholders with
Respect to Bankruptcy............................. 18
SECTION 4.4. Restrictions on Certificateholders'
Power ............................................ 18
SECTION 4.5. Majority Control ................................... 18
ARTICLE V
APPLICATION OF TRUST FUNDS;
CERTAIN DUTIES
SECTION 5.1. Application of Trust Funds......................... 19
SECTION 5.2. Method of Payment.................................. 20
SECTION 5.3. No Segregation of Moneys; No Interest.............. 21
SECTION 5.4. Accounting and Reports to the Note-
holders, Certificateholders,
the Internal Revenue Service and
Others .......................................... 21
SECTION 5.5. Signature on Returns; Tax Matters
Partner.......................................... 21
SECTION 5.6. Subrogation ....................................... 21
ARTICLE VI
AUTHORITY AND DUTIES OF ELIGIBLE LENDER TRUSTEE
SECTION 6.1. General Authority.................................. 22
SECTION 6.2. General Duties..................................... 23
SECTION 6.3. Action upon Instruction............................ 24
SECTION 6.4. No Duties Except as Specified in this
Agreement, the Sale and Servicing
Agreement, the Supplemental Sale
and Servicing Agreement or in
Instructions..................................... 25
SECTION 6.5. No Action Except Under Specified
Documents or Instructions........................ 25
SECTION 6.6. Restrictions....................................... 26
ARTICLE VII
CONCERNING THE ELIGIBLE LENDER TRUSTEE
SECTION 7.1. Acceptance of Trusts and Duties.................... 26
SECTION 7.2. Furnishing of Documents............................ 28
SECTION 7.3. Representations and Warranties..................... 28
SECTION 7.4. Reliance; Advice of Counsel........................ 29
SECTION 7.5. Not Acting in Individual Capacity.................. 29
SECTION 7.6. Eligible Lender Trustee Not Liable for
Trust Certificates or Financed
Student Loans.................................... 29
SECTION 7.7. Eligible Lender Trustee May Own Trust
Certificates and Notes........................... 30
ARTICLE VIII
COMPENSATION OF ELIGIBLE LENDER TRUSTEE
SECTION 8.1. Eligible Lender Trustee's Fees and
Expenses......................................... 30
SECTION 8.2. Payments to the Eligible Lender
Trustee.......................................... 31
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.1. Termination of Trust Agreement..................... 31
SECTION 9.2. Dissolution upon Insolvency of
TMS Student Holdings, Inc........................ 32
ARTICLE X
SUCCESSOR ELIGIBLE LENDER TRUSTEES AND
ADDITIONAL ELIGIBLE LENDER TRUSTEES
SECTION 10.1. Eligibility Requirements for
Eligible Lender Trustee.......................... 33
SECTION 10.2. Resignation or Removal of Eligible
Lender Trustee................................... 34
SECTION 10.3. Successor Eligible Lender Trustee.................. 35
SECTION 10.4. Merger or Consolidation of Eligible
Lender Trustee................................... 36
SECTION 10.5. Appointment of Co-Eligible Lender
Trustee or Separate Eligible Lender
Trustee.......................................... 36
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. Supplements and Amendments......................... 38
SECTION 11.2. No Legal Title to Trust Estate in
Certificateholders............................... 40
SECTION 11.3. Limitations on Rights of Others.................... 40
SECTION 11.4. Notices............................................ 40
SECTION 11.5. Severability....................................... 41
SECTION 11.6. Separate Counterparts.............................. 41
SECTION 11.7. Successors and Assigns............................. 41
SECTION 11.8 No Petition........................................ 41
SECTION 11.9 No Recourse........................................ 41
SECTION 11.10 Headings........................................... 42
SECTION 11.11 Governing Law...................................... 42
SECTION 11.12 Rights of Surety Provider.......................... 42
SECTION 11.13 Creation of Trust and Delivery of
Trust Agreement................................... 42
EXHIBIT A Form of Trust Certificate
EXHIBIT B Notice of Change in Auction Date
EXHIBIT C Form of Purchaser's Letter
APPENDIX A Definitions
APPENDIX B Certificate Auction Procedures
TRUST AGREEMENT dated as of ______, 199_, between Trans- World
Insurance Company, d/b/a Educaid, an Arizona corporation, as Depositor (the
"Depositor"), and __________, a ____________ bank and trust company, not in its
individual capacity but solely as Eligible Lender Trustee (the "Eligible Lender
Trustee")
The Depositor and the Eligible Lender Trustee hereby agree as
follows:
ARTICLE I
DEFINITIONS AND USAGE
Capitalized terms used but not defined herein are defined in
Appendix A attached hereto, which also contains rules as to construction and
usage that are applicable herein.
ARTICLE II
ORGANIZATION
SECTION 2.1. NAME. The Trust created hereby shall be known as
"[Trust 199_-_]," in which name the Eligible Lender Trustee may conduct the
business of the Trust, make and execute contracts and other instruments on
behalf of the Trust and ▇▇▇ and be sued.
SECTION 2.2. OFFICE AND SITUS OF THE TRUST. The
registered office in __________ and situs of the Trust shall be at the
corporate trust office of the Eligible Lender Trustee located at
--------------------------.
SECTION 2.3. PURPOSES AND POWERS. The purpose of the
Trust is to engage in the following activities:
(i) to issue one or more Classes of Trust
Certificates pursuant to this Agreement and, if applicable, one or more
Trust Supplements, and to sell the Trust Certificates in one or more
transactions;
(ii) to issue the Originators' Interests pursuant to this
Agreement and one or more Trust Supplements and to sell the
Originators' Interests in one or more transactions;
(iii) to issue one or more Series of Notes pursuant to the
Indenture and the applicable Terms Supplement and to sell the Notes in
one or more transactions in accordance with instructions received from
the Administrator;
(iv) with the proceeds of the sale of the Notes and the
Trust Certificates, to purchase, from time to time, the Financed
Student Loans and to fund one or more Pre-Funding Accounts pursuant to
the Sale and Servicing Agreement;
(v) to assign, grant, transfer, pledge, mortgage and
convey the Indenture Trust Estate pursuant to the Indenture and the
applicable Terms Supplement and to hold, manage and distribute to the
Certificateholders pursuant to the terms of the Sale and Servicing
Agreement and any related Supplemental Sale and Servicing Agreement any
portion of the Indenture Trust Estate released from the Lien of, and
remitted to the Trust pursuant to, the Indenture and the applicable
Terms Supplement;
(vi) from time to time to sell and dispose of the
Financed Student Loans in accordance with the terms of the Basic
Documents;
(vii) to enter into and perform its obligations under
the Basic Documents to which it is to be a party;
(viii) to engage in those activities, including entering
into agreements, that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected
therewith; and
(ix) to engage in such other activities as may be required
in connection with conservation of the Trust Estate and the making of
distributions to the Certificateholders, the Noteholders and the others
specified in Article V of the Sale and Servicing Agreement and or
contemplated by the Basic Documents.
The Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this Agreement
or the other Basic Documents.
SECTION 2.4. APPOINTMENT OF ELIGIBLE LENDER TRUSTEE. The
Depositor hereby (i) appoints the Eligible Lender Trustee as trustee of the
Trust effective as of the date hereof, to have all the rights, powers and duties
set forth herein, and (ii) ratifies all actions of the Eligible Lender Trustee
taken on behalf of the Trust prior to the execution hereof.
SECTION 2.5. INITIAL CAPITAL CONTRIBUTION OF TRUST ESTATE.
The Depositor hereby sells, assigns, transfers, conveys and sets
over to the Eligible Lender Trustee, as of the date hereof, the sum of $10.00.
The Eligible Lender Trustee hereby acknowledges receipt in trust from the
Depositor of the foregoing contribution, which shall constitute the initial
Trust Estate and shall be deposited in the Collection Account. The Depositor
shall pay the organizational expenses of the Trust as they may arise or shall,
upon the request of the Eligible Lender Trustee, promptly reimburse the Eligible
Lender Trustee for any such expenses, including reasonable fees and expenses of
counsel, paid by the Eligible Lender Trustee.
SECTION 2.6. DECLARATION OF TRUST. The Eligible Lender Trustee
hereby declares that it will hold the Trust Estate in trust upon and subject to
the conditions set forth herein for the use and benefit of the
Certificateholders, subject to the obligations of the Trust under the other
Basic Documents. It is the intention of the parties hereto that the Trust
constitute a business trust under _________ law and that this Agreement
constitute the governing instrument of such trust. If for any reason it is
determined that the Trust does not qualify as a business trust under
___________, it shall be a trust, nonetheless, under the common law of
__________. It is the intention of the parties hereto that, solely for Federal
income tax purposes, the Trust shall be treated as a partnership, with the
assets of the partnership being the Financed Student Loans and other assets held
by the Trust, the partners of the partnership being the Certificateholders and
the Notes being debt of the partnership. The parties agree that, unless
otherwise required by appropriate Federal tax authorities, they shall treat the
Trust as a partnership for Federal tax purposes, and the Trust will file or
cause to be filed annual or other necessary returns, reports and other forms
consistent with the characterization of the Trust as a partnership for Federal
tax purposes. Effective as of the date hereof, the Eligible Lender Trustee shall
have all rights, powers and duties set forth herein with respect to
accomplishing the purposes of the Trust.
SECTION 2.7. LIABILITY OF THE CERTIFICATEHOLDERS. (a) TMS
Student Holdings, Inc., as holder of no less than a 1% interest in the Trust
Certificates and the Originators' Interests, shall be liable directly to and
will indemnify the injured party for all losses, claims, damages, liabilities
and expenses of the Trust (including Expenses, to the extent not paid out of the
Trust Estate) to the extent that TMS Student Holdings, Inc. would be liable if
the Trust were a partnership under the _____________ Revised Uniform Limited
Partnership Act in which TMS Student Holdings, Inc. were a general partner;
PROVIDED, HOWEVER, that TMS Student Holdings, Inc. shall not be liable for any
principal of or interest on the Certificates, the Originators' Interests or the
Notes. In addition, any third party creditors of the Trust (other than in
connection with the obligations described in the preceding sentence for which
TMS Student Holdings, Inc. shall not be liable) shall be deemed third party
beneficiaries of this paragraph. The obligations of TMS Student Holdings, Inc.
under this paragraph shall be evidenced by the Trust Certificates and the
Originators' Interests described in Section 3.11, which shall be deemed to be a
separate class of Trust Certificates and Originators' Interests from all other
Trust Certificates and Originators' Interests issued by the Trust; PROVIDED that
the rights and obligations evidenced by all Trust Certificates and Originators'
Interests, respectively, regardless of class, except as provided in this
Section, Section 5.1 hereof and Article V of the Sale and Servicing Agreement,
shall be identical.
(b) No Certificateholder, other than to the extent set forth
in paragraph (a), shall have any personal liability for any liability or
obligation of the Trust.
(c) TMS Student Holdings, Inc. shall maintain a minimum
capital value (not including its interest in the Trust or its interest in
[Educaid Student Loan Trust 1994-1]) equal to the greater of (a) $2,000,000 and
(b) two percent of the sum of the Certificate Balance and the [Educaid Student
Loan Trust 1994-1] Certificate Balance.
SECTION 2.8. TITLE TO TRUST PROPERTY. Legal title to all the
Trust Estate shall be vested at all times in the Trust as a separate legal
entity except where applicable law in any jurisdiction requires title to any
part of the Trust Estate to be vested in a trustee or trustees, in which case
title shall be deemed to be vested in the Eligible Lender Trustee, a co-trustee
and/or a separate trustee, as the case may be; provided that legal title to the
Financed Student Loans shall be vested at all times in the Eligible Lender
Trustee on behalf of the Trust.
SECTION 2.9. REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR.
The Depositor hereby represents and warrants to the Eligible Lender Trustee and
the Surety Provider that:
(a) The Depositor is duly organized, validly existing and in
good standing under the laws of its jurisdiction of incorporation, with
corporate power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is
presently conducted.
(b) The Depositor has the corporate power and authority to
execute and deliver this Agreement and to carry out its terms; the
Depositor has full corporate power and authority to sell and assign the
property to be sold and assigned to and deposited with the Trust (or
with the Eligible Lender Trustee on behalf of the Trust) and the
Depositor has duly authorized such sale and assignment and deposit to
the Trust (or to the Eligible Lender Trustee on behalf of the Trust) by
all necessary corporate action; and the execution, delivery and
performance of this Agreement has been duly authorized by the Depositor
by all necessary corporate action.
(c) This Agreement constitutes a legal, valid and binding
obligation of the Depositor enforceable in accordance with its terms,
subject to the effect of applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws relating to or
affecting creditors' rights generally and court decisions with respect
thereto and subject to the application of equitable principles in any
proceeding, whether at law or in equity.
(d) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time or both) a default
under, the articles of incorporation or by-laws of the Depositor, or
any material indenture, agreement or other material instrument to which
the Depositor is a party or by which it is bound; nor result in the
creation or imposition of any Lien upon any of its properties pursuant
to the terms of any such indenture, agreement or other instrument
(other than pursuant to the Basic Documents); nor violate any law or,
to the Depositor's knowledge, any order, rule or regulation applicable
to the Depositor of any court or of any Federal or State regulatory
body, administrative agency or other governmental instrumentality
having jurisdiction over the Depositor or its properties.
(e) No consent of any Federal or state governmental or
administrative authority is required to be obtained by the Depositor
prior to its entering into this Agreement or in connection with its
consummation of the transactions contemplated by the Basic Documents,
other than those that have been obtained.
SECTION 2.10. FEDERAL INCOME TAX ALLOCATIONS. Net income of
the Trust for any month as determined for Federal income tax purposes (and each
item of income, gain, loss and deduction entering into the computation thereof)
shall be allocated:
(a) among the Certificateholders as of the close of business
on the last day of such month, in proportion to their ownership of
principal amount of Trust Certificates on such date, an amount of net
income up to the sum of (i) the portion of the Certificateholders'
Interest Distribution Amount and the Certificateholders' Auction Rate
Interest Carryover, if any, for the related Distribution Date allocable
to such month, (ii) interest on the excess, if any, of the
Certificateholders' Interest Distribution Amount for the preceding
Distribution Date over the amount in respect of interest that is
actually distributed to Certificateholders on such preceding
Distribution Date, to the extent permitted by law, at the Certificate
Rate for such month and (iii) the portion of the market discount on the
Financed Student Loans accrued during such quarter that is allocable to
the excess, if any, of the initial aggregate principal amount of the
Trust Certificates over their initial aggregate issue price; and
(b) to TMS Student Holdings, Inc., in its capacity as a Trust
Certificateholder, to the extent of any remaining net income.
If the net income of the Trust for any month is insufficient for the allocations
described in clause (a) above, subsequent net income shall first be allocated to
make up such shortfall before being allocated as provided in the preceding
sentence. Net losses of the Trust, if any, for any month as determined for
Federal income tax purposes (and each item of income, gain, loss and deduction
entering into the computation thereof) shall be allocated to TMS Student
Holdings, Inc. to the extent TMS Student Holdings, Inc. is reasonably expected
to bear the economic burden of such net losses, and any remaining net losses
shall be allocated among the remaining Certificateholders as of the close of
business on the last day of such month in proportion to their ownership of
principal amount of Trust Certificates on such Record Date. TMS Student
Holdings, Inc. is authorized to modify the allocations in this paragraph if
necessary or appropriate, in its sole discretion, for the allocations to fairly
reflect the economic income, gain or loss to TMS Student Holdings, Inc. or to
the Certificateholders, or as otherwise required by the Code. Moreover, TMS
Student Holdings may modify the allocations upon the issuance of Certificates
pursuant to a Trust Supplement in order to ensure that the allocations reflect
the Certificateholders' economic interests in the partnership.
ARTICLE III
TRUST CERTIFICATES, ORIGINATORS' INTERESTS
AND TRANSFER OF INTERESTS
SECTION 3.1. INITIAL BENEFICIAL OWNERSHIP. Upon the formation
of the Trust by the contribution by the Depositor pursuant to Section 2.5 and
until the initial issuance of the Trust Certificates, the Depositor shall be the
sole beneficial owner of the Trust.
SECTION 3.2. THE TRUST CERTIFICATES. Each Class of Trust
Certificates shall be issued in denominations of $50,000 or in integral
multiples in excess thereof; PROVIDED, HOWEVER, that the Trust Certificates
issued to TMS Student Holdings, Inc. pursuant to Section 3.11 may be issued in
such denomination as to include any residual amount (but in no case less than
$50,000 in principal amount). The Trust Certificates shall be executed on behalf
of the Trust by manual or facsimile signature of an authorized officer of the
Eligible Lender Trustee. Trust Certificates bearing the manual or facsimile
signatures of individuals who were, at the time when such signatures shall have
been affixed, authorized to sign on behalf of the Trust, shall be valid and
binding obligations of the Trust, notwithstanding that such individuals or any
of them shall have ceased to be so authorized prior to the authentication and
delivery of such Trust Certificates or did not hold such offices at the date of
authentication and delivery of such Trust Certificates. No Trust Certificates
may be subdivided for resale into amounts smaller than a unit the initial
offering price of which would have been at least $20,000.
SECTION 3.2.A. THE ORIGINATORS' INTERESTS. The Originators'
Interests shall be issued with minimum offering prices of $20,000. The
Originators' Interests shall be executed on behalf of the Trust by manual or
facsimile signature of an authorized officer of the Eligible Lender Trustee.
Originators' Interests bearing the manual or facsimile signatures of individuals
who were, at the time when such signatures shall have been affixed, authorized
to sign on behalf of the Trust, shall be valid obligations of the Trust,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the authentication and delivery of such Originators'
Interests or did not hold such offices at the date of authentication and
delivery of such Owners' Interests. No Originators' Interest may be subdivided
for resale into amounts smaller than a unit the initial offering price of which
would have been at least $20,000.
SECTION 3.3. AUTHENTICATION OF TRUST CERTIFICATES.
Concurrently with the initial sale of Financed Student Loans to the Trust
pursuant to the Sale and Servicing Agreement and the initial sale of the
Certificates to the Initial Purchaser pursuant to the Purchase Agreement, the
Eligible Lender Trustee shall cause the Trust Certificates in an aggregate
principal amount equal to the Initial Certificate Balance to be executed on
behalf of the Trust, authenticated and delivered to or upon the written order of
the Depositor, signed by its chairman of the board, its president or any vice
president, without further action by the Depositor, in authorized denominations.
Such Trust Certificates shall be designated as the Class 1 Certificates. From
time to time after such initial issuance of Trust Certificates, with the written
consent of the Surety Provider additional Classes of Trust Certificates may be
issued in an aggregate principal amount and with such terms and designation as
shall be provided in a related Trust Supplement. The Eligible Lender Trustee
shall cause such additional Trust Certificates, if any, to be executed on behalf
of the Trust, authenticated and delivered to or upon the written order of the
Depositor, signed by its chairman of the board, its president or any vice
president, without further action by the Depositor, in authorized denominations.
No Trust Certificate shall entitle its holder to any benefit under this
Agreement, or shall be valid for any purpose, unless there shall appear on such
Trust Certificate a certificate of authentication substantially in the form set
forth in Exhibit A, executed by the Eligible Lender Trustee by manual signature;
such authentication shall constitute conclusive evidence that such Trust
Certificate shall have been duly authenticated and delivered hereunder. All
Trust Certificates shall be dated the date of their authentication. No further
Trust Certificates shall be issued except pursuant to Section 3.4, 3.5 or 3.14
hereunder. The Final Maturity Date for each Class of Trust Certificates shall
occur later than the Final Maturity Date for each Class of Notes.
SECTION 3.3.A. AUTHENTICATION OF ORIGINATORS' INTERESTS.
Originators' Interests may from time be issued with such terms, including
restrictions on transfer, as may be set forth in a related Trust Supplement. The
Eligible Lender Trustee shall cause such Originators' Interests, if any, to be
executed on behalf of the Trust, authenticated and delivered to or upon the
written order of the Depositor, signed by its chairman of the board, its
president or any vice president, without further action by the Depositor, in
authorized denominations. No Originators' Interest shall entitle its holder to
any benefit under this Agreement, or shall be valid for any purpose, unless
there shall appear on such Originators' Interest a certificate of authentication
substantially in the form set forth in an exhibit to the related Trust
Supplement, executed by the Eligible Lender Trustee by manual signature; such
authentication shall constitute conclusive evidence that such Originators'
Interest shall have been duly authenticated and delivered hereunder. All
Originators' Interest shall be dated the date of their authentication. No
further Originators' Interest shall be issued except pursuant to Section 3.4,
3.5 or 3.14 hereunder.
SECTION 3.4. REGISTRATION OF TRANSFER AND EXCHANGE OF TRUST
CERTIFICATES AND ORIGINATORS' INTERESTS. The Certificate Registrar shall keep or
cause to be kept, at the office or agency maintained pursuant to Section 3.8, a
Certificate Register in which, subject to such reasonable regulations as it may
prescribe, the Eligible Lender Trustee shall provide for the registration of
Trust Certificates and Originators' Interests and of transfers and exchanges of
Trust Certificates and Originators' Interests as herein provided. The Eligible
Lender Trustee shall be the Certificate Registrar.
Upon surrender for registration of transfer of any Trust
Certificate or Originators' Interest at the office or agency maintained pursuant
to Section 3.9, and compliance with the provisions set forth in Section 3.5, the
Eligible Lender Trustee shall execute, authenticate and deliver in the name of
the designated transferee or transferees, one or more new Trust Certificates or
Originators' Interests, as the case may be, in authorized denominations of a
like aggregate amount dated the date of authentication by the Eligible Lender
Trustee or any authenticating agent. At the option of a Certificateholder, Trust
Certificates or Originators' Interests, as the case may be, may be exchanged for
other Trust Certificates or Originators' Interests, as the case may be, of
authorized denominations of a like aggregate amount upon surrender of the Trust
Certificates or Originators' Interests, as the case may be, to be exchanged at
the office or agency maintained pursuant to Section 3.8.
Every Trust Certificate or Originators' Interest, as the case
may be, presented or surrendered for registration of transfer or exchange shall
be accompanied by a written instrument of transfer in form satisfactory to the
Eligible Lender Trustee and the Certificate Registrar duly executed by the
Certificateholder or his attorney duly authorized in writing, with such
signature guaranteed by an entity acceptable to the Eligible Lender Trustee.
Each Trust Certificate or Originators' Interest, as the case may be, surrendered
for registration of transfer or exchange shall be cancelled and subsequently
disposed of by the Eligible Lender Trustee in accordance with its customary
practice.
No service charge shall be made for any registration of
transfer or exchange of Trust Certificates or Originators' Interests, as the
case may be, but the Eligible Lender Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge that
may be imposed in connection with any transfer or exchange of Trust Certificates
or Originators' Interests, as the case may be.
The preceding provisions of this Section 3.4 notwithstanding,
the Eligible Lender Trustee shall not be required to make and the Certificate
Registrar need not register transfers or exchanges of Trust Certificates or
Originators' Interests, as the case may be, for a period of 15 days preceding
any Certificate Distribution Date with respect to the Trust Certificates or
Originators' Interests, as the case may be.
SECTION 3.5. RESTRICTIONS ON TRANSFER. (a) Except for the
transfer of Trust Certificates to TMS Student Holdings, Inc. pursuant to Section
3.11, the Trust Certificates may not be offered or sold except to institutional
"accredited investors" (as defined in Rule 501(a)(1)-(3) under the Securities
Act who are U.S. Persons (as defined in Section 7701(a)(30) of the Code) in
reliance on an exemption from the registration requirements of the Securities
Act.
Each purchaser of the Trust Certificates (except, with respect to (i)
below, TMS Student Holdings, Inc.) will be deemed to have represented and agreed
as follows:
(i) It is an institutional "accredited investor" as defined in Rule
501(a)(1)-(3) under the Securities Act and is acquiring the Trust Certificates
for its own institutional account or for the account of an institutional
accredited investor.
(ii) It is not (i) an employee benefit plan, retirement arrangement,
individual retirement account or ▇▇▇▇▇ plan subject to either Title I of the
Employee Retirement Income Security Act of 1974, as amended, or Section 4975 of
the Internal Revenue Code of 1986, as amended, or (2) an entity (including an
insurance company general account) whose underlying assets include plan assets
by reason of any such plan's arrangements or account's investment in any such
entity.
(iii) It is a U.S. Person as defined in Section 7701(a)(30) of
the Code.
(iv) It understands that the Trust Certificates will be offered in a
transaction not involving any public offering within the meaning of the
Securities Act, and that, if in the future it decides to resell, pledge or
otherwise transfer any Trust Certificates, such Trust Certificates may be
resold, pledged or transferred only (a) to a person who the seller reasonably
believes is an institutional "accredited investor" as defined in Rule
501(a)(1)-(3) under the Securities Act that purchases for its own account or for
the account of another institutional accredited investor or (b) pursuant to an
effective registration statement under the Securities Act.
(v) It understands that except for the Trust Certificate transferred to TMS
Student Holdings, Inc. pursuant to Section 3.11, each Trust Certificate will
bear a legend substantially to the following effect:
"UNLESS THIS TRUST CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER (AS
DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS TRUST CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"). THE HOLDER HEREOF, BY PURCHASING THIS TRUST CERTIFICATE,
AGREES THAT THIS TRUST CERTIFICATE MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED ONLY IN ACCORDANCE WITH ANY APPLICABLE STATE SECURITIES LAWS AND (1)
TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS AN INSTITUTIONAL ACCREDITED
INVESTOR WITHIN THE MEANING OF RULE 501(A)(1)-(3) UNDER THE ACT THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF AN INSTITUTIONAL ACCREDITED INVESTOR,
OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT.
THIS TRUST CERTIFICATE MAY NOT BE TRANSFERRED DIRECTLY OR INDIRECTLY TO (1)
EMPLOYEE BENEFIT PLANS, RETIREMENT ARRANGEMENTS, INDIVIDUAL RETIREMENT ACCOUNTS
OR ▇▇▇▇▇ PLANS SUBJECT TO EITHER TITLE I OF THE EMPLOYEE RETIREMENT INCOME
SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE CODE
OF 1986, AS AMENDED, OR (2) ENTITIES (INCLUDING INSURANCE COMPANY GENERAL
ACCOUNTS) WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF ANY SUCH
PLAN'S ARRANGEMENTS OR ACCOUNT'S INVESTMENT IN SUCH ENTITIES. FURTHER, THIS
TRUST CERTIFICATE MAY BE TRANSFERRED ONLY TO A UNITED STATES PERSON WITHIN THE
MEANING OF SECTION 7701(A)(30) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
THIS TRUST CERTIFICATE IS NOT GUARANTEED OR INSURED BY ANY
GOVERNMENTAL AGENCY."
(b) Each purchaser of Trust Certificates (except for TMS
Student Holdings, Inc.) shall be required, prior to purchasing a Trust
Certificate, to execute an deliver to the Broker-Dealer a Purchaser's Letter
substantially in the form attached hereto as Exhibit C. The Eligible Lender
Trustee shall be under no duty or obligation to ensure compliance with the
provisions of this Section 3.5(b).
(c) Restrictions on transfer relating to the Originators'
Interests will be as set forth in the related Trust Supplements.
SECTION 3.6. MUTILATED, DESTROYED, LOST OR STOLEN TRUST
CERTIFICATES AND ORIGINATORS' INTERESTS. If (a) any mutilated Trust Certificate
or Originators' Interest shall be surrendered to the Certificate Registrar, or
if the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss or theft of any Trust Certificate or Originators' Interest,
and (b) there shall be delivered to the Certificate Registrar, the Eligible
Lender Trustee and the Surety Provider such security or indemnity as may be
required by them to save each of them harmless, then in the absence of notice
that such Trust Certificate shall have been acquired by a bona fide purchaser,
the Eligible Lender Trustee on behalf of the Trust shall execute and the
Eligible Lender Trustee shall authenticate and deliver, in exchange for or in
lieu of any such mutilated, destroyed, lost or stolen Trust Certificate or
Originators' Interest, as the case may be, a new Trust Certificate or
Originators' Interest, as the case may be, of like tenor and denomination. In
connection with the issuance of any new Trust Certificate or Originators'
Interest, as the case may be, under this Section, the Eligible Lender Trustee
and the Certificate Registrar may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith. Any duplicate Trust Certificate or Originators' Interest, as the case
may be, issued pursuant to this Section shall constitute conclusive evidence of
ownership in the Trust, as if originally issued, whether or not the lost, stolen
or destroyed Trust Certificate or Originators' Interest, as the case may be,
shall be found at any time.
SECTION 3.7. PERSONS DEEMED OWNERS. Prior to due presentation
of a Trust Certificate or Originators' Interest, as the case may be, for
registration of transfer, the Eligible Lender Trustee, the Certificate Registrar
or the Surety Provider and any agent of any thereof may treat the Person in
whose name any Trust Certificate or Originators' Interest, as the case may be,
shall be registered in the Certificate Register as the owner of such Trust
Certificate or Originators' Interest, as the case may be, for the purpose of
receiving distributions pursuant to Section 5.1 and for all other purposes
whatsoever, and neither the Eligible Lender Trustee, the Certificate Registrar,
the Surety Provider nor any agent of any thereof shall be bound by any notice to
the Contrary.
SECTION 3.8. ACCESS TO LIST OF CERTIFICATEHOLDERS' NAMES AND
ADDRESSES. The Eligible Lender Trustee shall furnish or cause to be furnished to
the Depositor or TMS Student Holdings, Inc., as applicable, within 15 days after
receipt by the Eligible Lender Trustee of a request therefor from the Depositor
or TMS Student Holdings, Inc. in writing, a list, in such form as the Depositor
or TMS Student Holdings, Inc. may reasonably require, of the names and addresses
of the Certificateholders as of the most recent Record Date. If three or more
Certificateholders or one or more Certificateholders evidencing not less than
25% of the Certificate Balance apply in writing to the Eligible Lender Trustee,
and such application states that the applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Trust Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Eligible Lender
Trustee shall, within five Business Days after the receipt of such application,
afford such applicants access during normal business hours to the current list
of Certificateholders. Upon receipt of any such application, the Eligible Lender
Trustee will promptly notify the Depositor by providing a copy of such
application and a copy of the list of Certificateholders produced in response
thereto. If an Event of Default occurs, the Eligible Lender Trustee shall
furnish to the Surety Provider, upon its request, a copy of the list of
Certificateholders within 5 days of receipt of such request. Each
Certificateholder, by receiving and holding a Trust Certificate or Originators'
Interest, as the case may be, shall be deemed to have agreed not to hold any of
the Depositor, the Certificate Registrar or the Eligible Lender Trustee
accountable by reason of the disclosure of its name and address, regardless of
the source from which such information was derived.
SECTION 3.9. MAINTENANCE OF OFFICE OR AGENCY. The Eligible
Lender Trustee shall maintain in ________, an office or offices or agency or
agencies where Trust Certificates and Originators' Interests may be surrendered
for registration of transfer or exchange and where notices and demands to or
upon the Eligible Lender Trustee in respect of the Trust Certificates, the
Originators' Interests and the other Basic Documents may be served. The Eligible
Lender Trustee initially designates its corporate trust office at ________, as
such office. The Eligible Lender Trustee shall give prompt written notice to the
Depositor, the Surety Provider and to the Certificateholders of any change in
the location of the Certificate Register or any such office or agency.
SECTION 3.10. APPOINTMENT OF CERTIFICATE PAYING AGENT. The
Certificate Paying Agent shall make distributions to Certificateholders from the
amounts received from the Indenture Trustee out of the Trust Accounts pursuant
to Section 5.1 and shall report the amounts of such distributions to the
Eligible Lender Trustee. Any Certificate Paying Agent shall have the revocable
power to receive such funds from the Indenture Trustee for the purpose of making
the distributions referred to above. The Eligible Lender Trustee may revoke such
power and remove the Certificate Paying Agent (i) if the Eligible Lender Trustee
determines in its sole discretion that the Certificate Paying Agent shall have
failed to perform its obligations under this Agreement in any material respect,
or (ii) for any other reason with the consent of the Administrator or the Surety
Provider. The Certificate Paying Agent shall initially be the Eligible Lender
Trustee, and any co-paying agent chosen by the Eligible Lender Trustee
acceptable to the Administrator and the Surety Provider, which consent shall not
be unreasonably withheld. The Eligible Lender Trustee shall furnish the
Indenture Trustee and the Surety Provider notice identifying each co-paying
agent within two days of any such appointment. The Eligible Lender Trustee shall
be permitted to resign as Certificate Paying Agent upon 30 days' written notice
to the Eligible Lender Trustee and the Surety Provider. If the Eligible Lender
Trustee shall no longer be the Certificate Paying Agent, the Eligible Lender
Trustee, subject to the prior written consent of the Surety Provider (which
consent shall not be unreasonably withheld), shall appoint a successor to act as
Certificate Paying Agent (which shall be a bank or trust company). The Eligible
Lender Trustee shall cause such successor Certificate Paying Agent or any
additional Certificate Paying Agent appointed by the Eligible Lender Trustee to
execute and deliver to the Eligible Lender Trustee an instrument in which such
successor Certificate Paying Agent or additional Certificate Paying Agent shall
agree with the Eligible Lender Trustee that, as Certificate Paying Agent, such
successor Certificate Paying Agent or additional Certificate Paying Agent will
hold all sums, if any, held by it for payment to the Certificateholders in trust
for the benefit of the Certificateholders entitled thereto until such sums shall
be paid to such Certificateholders. The Certificate Paying Agent shall return
all unclaimed funds to the Eligible Lender Trustee and upon removal of a
Certificate Paying Agent such Certificate Paying Agent shall also return all
funds in its possession to the Eligible Lender Trustee. The provisions of
Sections 7.1, 7.3, 7.4, 7.5 and 8.1 shall apply to the Eligible Lender Trustee
also in its role as Certificate Paying Agent, for so long as the Eligible Lender
Trustee shall act as Certificate Paying Agent and, to the extent applicable, to
any other paying agent appointed hereunder. Any reference in this Agreement to
the Certificate Paying Agent shall include any co-paying agent unless the
context requires otherwise.
SECTION 3.11. DISPOSITION BY TMS STUDENT HOLDINGS, INC. On
each Closing Date, TMS Student Holdings, Inc. shall acquire from the Initial
Purchaser, pursuant to the Purchase Agreement and as agreed to by the Depositor,
and shall thereafter retain, beneficial and record ownership of Trust
Certificates in an amount such that the aggregate amount of Trust Certificates
then owned by TMS Student Holdings, Inc. represents at least 1% of the
Certificate Balance. Such Trust Certificates also shall be deemed to represent
beneficial and record ownership of 1% of each Originators' Interest that may be
issued hereafter. Any attempted transfer of any Trust Certificate that would
reduce TMS Student Holdings, Inc.'s interest below 1% of the Certificate Balance
shall be void. The Eligible Lender Trustee shall cause any Trust Certificate
issued to TMS Student Holdings, Inc. on the Closing Date (and any Trust
Certificate issued in exchange therefor) to contain a legend stating "THIS
CERTIFICATE IS NONTRANSFERABLE".
SECTION 3.12. BOOK-ENTRY CERTIFICATES. The Trust Certificates,
upon original issuance, will be issued in the form of a typewritten Trust
Certificate or Trust Certificates representing Book- Entry Certificates, to be
delivered to the Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Trust; provided, HOWEVER, that one Definitive Certificate (as
defined below) of each Class may be issued to TMS Student Holdings, Inc.
pursuant to Section 3.11 and the Purchase Agreement. Such Book-Entry Certificate
or Book- Entry Certificates shall initially be registered on the Certificate
Register in the name of Cede & Co., the nominee of the initial Clearing Agency,
and no Certificate Owner (other than TMS Student Holdings, Inc.) will receive a
Definitive Certificate representing such Certificate Owner's interest in such
Trust Certificate, except as provided in Section 3.14. Unless and until
definitive, fully registered Trust Certificates (the "Definitive Certificates")
have been issued to Certificate Owners pursuant to Section 3.14 and except for
the Trust Certificates issued to TMS Student Holdings, Inc.
pursuant to Section 3.11:
(i) the provisions of this Section shall be in full force
and effect;
(ii) the Certificate Registrar and the Eligible Lender Trustee
shall be entitled to deal with the Clearing Agency for all purposes of
this Agreement (including the payment of principal of and interest on
the Trust Certificates and the giving of instructions or directions
hereunder) as the sole Certificateholder and shall have no obligation
to the Certificate Owners;
(iii) to the extent that the provisions of this Section conflict
with any other provisions of this Agreement, the provisions of this
Section shall control;
(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency and shall be limited to those established
by law and agreements between such Certificate Owners and the Clearing
Agency and/or the Clearing Agency Participants. Pursuant to the
Certificate Depository Agreement, unless and until Definitive
Certificates are issued pursuant to Section 3.14, the initial Clearing
Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit payments of principal of and
interest on the Trust Certificates to such Clearing Agency
Participants; and
(v) whenever this Agreement requires or permits actions to be
taken based upon instructions or directions of Certificateholders of
Trust Certificates evidencing a specified percentage of the Certificate
Balance, the Clearing Agency shall be deemed to represent such
percentage only to the extent that it has received instructions to such
effect from Certificate Owners and/or Clearing Agency Participants
owning or representing, respectively, such required percentage of the
beneficial interest in the Trust Certificates and has delivered such
instructions to the Eligible lender Trustee.
SECTION 3.13. NOTICES TO CLEARING AGENCY. Whenever a notice or
other communication to the Trust Certificateholders is required under this
Agreement, unless and until Definitive Certificates shall have been issued to
Trust Certificate Owners pursuant to Section 3.14 and except for the Trust
Certificate issued to TMS Student Holdings, Inc. pursuant to Section 3.11, the
Eligible Lender Trustee shall give all such notices and communications specified
herein to be given to Trust Certificateholders to the Clearing Agency, and shall
have no obligations to the Trust Certificate Owners.
SECTION 3.14. DEFINITIVE CERTIFICATES. If (i) the
Administrator advises the Eligible Lender Trustee in writing that the Clearing
Agency is no longer willing or able to discharge properly its responsibilities
with respect to the Trust Certificates, and the Administrator is unable to
locate a qualified successor, (ii) the Administrator at its option advises the
Eligible Lender Trustee in writing that it elects to terminate the book-entry
system through the Clearing Agency or (iii) after the occurrence of an Event of
Default, a Servicer Default or an Administrator Default, Certificate Owners
representing beneficial interests aggregating at least 50.1% of the Certificate
Balance advise the Clearing Agency (which shall then notify the Eligible Lender
Trustee) in writing that the continuation of a book-entry system through the
Clearing Agency is no longer in the best interest of the Certificate Owners,
then the Eligible Lender Trustee shall cause the Clearing Agency to notify all
Certificate Owners of the occurrence of any such event and of the availability
of the Definitive Certificates to Certificate Owners requesting the same. Upon
surrender to the Eligible Lender Trustee of the typewritten Trust Certificate or
Trust Certificates representing the Book-Entry Certificates by the Clearing
Agency, accompanied by registration instructions, the Eligible Lender Trustee
shall execute and authenticate the Definitive Certificates in accordance with
the instructions of the Clearing Agency. Neither the Certificate Registrar nor
the Eligible Lender 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 Certificates, the Eligible
Lender Trustee shall recognize the registered holders of the Definitive
Certificates as Certificateholders. The Definitive Certificates shall, at the
expense of the Depositor, be printed, lithographed or engraved or may be
produced in any other manner as is reasonably acceptable to the Eligible Lender
Trustee, as evidenced by its execution thereof.
SECTION 3.15. DETERMINATION OF INTEREST RATE. Each Class of
Trust Certificates shall accrue interest during each Interest Period at the
Certificate Rate determined in accordance with the Auction Procedures attached
hereto as Annex I or as otherwise set forth in the related Trust Supplement.
ARTICLE IV
ACTIONS BY ELIGIBLE LENDER TRUSTEE
SECTION 4.1. PRIOR NOTICE TO CERTIFICATEHOLDERS WITH RESPECT
TO CERTAIN MATTERS. With respect to the following matters, the Eligible Lender
Trustee shall not take action unless at least 30 days before the taking of such
action the Eligible Lender Trustee shall have notified the Trust
Certificateholders and the Surety Provider in writing of the proposed action and
neither the Trust Certificateholders nor the Surety Provider shall have notified
the Eligible Lender Trustee in writing prior to the 30th day after such notice
is given that such Trust Certificateholders or the Surety Provider has withheld
consent:
(a) the initiation of any material claim or lawsuit by the
Trust (except claims or lawsuits brought in connection with the
collection of the Financed Student Loans) and the compromise of any
material action, claim or lawsuit brought by or against the Trust
(except with respect to the aforementioned claims or lawsuits for
collection of Financed Student Loans);
(b) the amendment of the Indenture or a Terms Supplement
by a supplemental indenture in circumstances where the consent of
any Noteholder is required;
(c) the amendment of the Indenture or a Terms Supplement by a
supplemental indenture in circumstances where the consent of any
Noteholder is not required and such amendment materially adversely
affects the interest of the Trust Certificateholders;
(d) the amendment, change or modification of the
Administration Agreement, except to cure any ambiguity or to amend or
supplement any provision in a manner or add any provision that would
not materially adversely affect the interests of the Trust
Certificateholders; or
(e) the appointment pursuant to the Indenture or a Terms
Supplement of a successor Note Registrar or Indenture Trustee or
pursuant to this Agreement of a successor Certificate Registrar or
Certificate Paying Agent, or the consent to the assignment by the Note
Registrar, Certificate Paying Agent or Indenture Trustee or Certificate
Registrar of its obligations under the Indenture or this Agreement, as
applicable.
SECTION 4.2. ACTION BY CERTIFICATEHOLDERS WITH RESPECT TO
CERTAIN MATTERS. The Eligible Lender Trustee shall not have the power, except
upon the direction of the Surety Provider or, with the Surety Provider's
consent, the Certificateholders, to (a) remove the Servicer or the Administrator
under the Sale and Servicing Agreement pursuant to Section 8.1 thereof or (b)
except as expressly provided in the Basic Documents, sell the Financed Student
Loans after the termination of the Indenture. The Eligible Lender Trustee shall
take the actions referred to in the preceding sentence only upon written
instructions signed by the Surety Provider.
SECTION 4.3. ACTION BY CERTIFICATEHOLDERS WITH RESPECT TO
BANKRUPTCY. The Eligible Lender Trustee shall not have the power to commence a
voluntary proceeding in bankruptcy relating to the Trust without the unanimous
prior approval of all Certificateholders and the Surety Provider and the
delivery to the Eligible Lender Trustee by each such Certificateholder of a
certificate certifying that such Certificateholder reasonably believes that the
Trust is insolvent.
SECTION 4.4. RESTRICTIONS ON CERTIFICATEHOLDERS' POWER. The
Certificateholders shall not direct the Eligible Lender Trustee to take or
refrain from taking any action if such action or inaction would be contrary to
any obligation of the Trust or the Eligible Lender Trustee under this Agreement
or any of the other Basic Documents or would be contrary to Section 2.3 nor
shall the Eligible Lender Trustee be permitted to follow any such direction, if
given.
SECTION 4.5. MAJORITY CONTROL. Except as expressly provided
herein, any action that may be taken by the Certificateholders under this
Agreement may be taken by the Certificateholders evidencing not less than 50.1%
of the Certificate Balance. Except as expressly provided herein, any written
notice of the Certificateholders delivered pursuant to this Agreement shall be
effective if signed by Certificateholders evidencing not less than 50.1% of the
Certificate Balance at the time of the delivery of such notice.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
SECTION 5.1. APPLICATION OF TRUST FUNDS. (a) No later than the
close of business on the day it receives funds distributed by the Indenture
Trustee pursuant to Sections 5.5, 5.6 and 5.10 of the Sale and Servicing
Agreement, the Certificate Paying Agent will distribute such amounts (i) to
Trust Certificateholders of the applicable Class on a pro rata basis with
respect to interest and pursuant to the procedures set forth in subsection (d)
below with respect to principal and (ii) to holders of the Originators'
Interests, as set forth in the related Trust Supplement; PROVIDED, HOWEVER, that
if the Eligible Lender Trustee receives funds for distribution to
Certificateholders after 11:00 a.m. on any day it shall use all reasonable
efforts to distribute such funds to the applicable Certificateholders on such
day but shall not be liable for any damages if such funds are distributed on the
following Business Day. Notwithstanding the foregoing, all amounts received by
the Eligible Lender Trustee from the Indenture Trustee representing amounts in
the Reserve Account in excess of the Specified Reserve Account Balance shall be
distributed to the holders of the Originators' Interests, if any, and then to
TMS Student Holdings, Inc. (but such distributions shall not reduce the
principal amount of the Trust Certificate held by TMS Student Holdings, Inc. or
its portion of the Originators' Interests) and no other Certificateholder shall
be entitled to or have a claim for such amounts. TMS Student Holdings, Inc.
shall not receive any distributions of principal until all other Trust
Certificateholders have been paid in full.
(b) No later than the Business Day following its receipt
thereof, the Eligible Lender Trustee shall send to each Trust Certificateholder
(and if a distribution is being made to holders of Originators' Interests, to
each such holder) the statement provided to the Eligible Lender Trustee by the
Administrator pursuant to Section 5.7 of the Sale and Servicing Agreement
relating to such Certificate Distribution Date.
(c) If any withholding tax is imposed on the Trust's payment
(or allocations of income) to a Certificateholder, such tax shall reduce the
amount otherwise distributable to the Certificateholder in accordance with this
Section. The Eligible Lender Trustee is hereby authorized to and shall, upon
receipt of written instructions of the Administrator identifying the appropriate
amount, to retain from amounts otherwise distributable to the Certificateholders
sufficient funds for the payment of any tax that is legally owed by the Trust
(but such authorization shall not prevent the Eligible Lender Trustee from
contesting any such tax in appropriate proceedings, and withholding payment of
such tax, if permitted by law, pending the outcome of such proceedings). The
amount of any withholding tax imposed with respect to a Certificateholder shall
be treated as cash distributed to such Certificateholder at the time it is
withheld by the Trust to be remitted to the appropriate taxing authority. If
there is a possibility that withholding tax is payable with respect to a
distribution (such as a distribution to a non-U.S. Certificateholder), the
Eligible Lender Trustee in its sole discretion may (but unless otherwise
required by law shall not be obligated to) withhold such amounts in accordance
with this paragraph (c). In the event that a Certificateholder wishes to apply
for a refund of any such withholding tax, the Eligible Lender Trustee and the
Administrator shall reasonably cooperate with such Certificateholder in making
such claim so long as such Certificateholder agrees to reimburse the Eligible
Lender Trustee and the Administrator for any out-of-pocket expenses incurred.
(d) The Certificates that will receive payments of principal
on each Certificate Distribution Date after each Class of Notes has been paid in
full will be selected no later than 15 days prior to each such Certificate
Distribution Date by the Eligible Lender Trustee by lot in such manner as the
Eligible Lender Trustee in its discretion may determine and which may provide
for the selection for payment of principal in minimum denominations of $50,000,
and integral multiples in excess thereof.
Notice of the Certificates to receive payments of principal is
to be given by the Eligible Lender Trustee by first-class mail, postage prepaid,
mailed not less than 15 days but no more than 30 days before the applicable
Certificate Distribution Date at the address of the applicable Certificateholder
appearing on the registration books. Any defect in or failure to give such
mailed notice shall not affect the validity of proceedings for the payment of
any other Certificates not affected by such failure or defect. All notices of
payment are to state (i) the applicable Certificate Distribution Date; (ii) the
amount of principal to be paid; and (iii) the Certificates to be paid.
SECTION 5.2. METHOD OF PAYMENT. Subject to Section 9.1(c),
distributions required to be made to Certificateholders on any Certificate
Distribution Date shall be made to each Certificateholder of record on the
applicable Record Date either by wire transfer, in immediately available funds,
to the account of such Certificateholder at a bank or other entity having
appropriate facilities therefore, if such Certificateholder shall have provided
to the Certificate Registrar appropriate written instructions (which may be
standing instructions) at least five Business Days prior to such Distribution
Date and such Certificateholder's Trust Certificates in the aggregate evidence a
denomination of not less than $50,000 (or, in the case of Originators'
Interests, an initial offering amount of not less than $20,000), or, if not, by
check mailed to such Certificateholder at the address of such Certificateholder
appearing in the Certificate Register; provided, however, that, unless
Definitive Certificates have been issued pursuant to Section 3.14, with respect
to Trust Certificates registered on the Record Date in the name of the nominee
of the Clearing Agency (initially, such nominee to be Cede & Co.), distributions
will be made by wire transfer in immediately available funds to the account
designated by such nominee. Notwithstanding the foregoing, the final
distribution in respect of any Trust Certificate or Originators' Interest
(whether on the Final Maturity Date or otherwise) will be payable only upon
presentation and surrender of such Trust Certificate or Originators' Interest,
as the case may be, at the Corporate Trust Office of the Eligible Lender Trustee
maintained pursuant to Section 3.9 hereof or such other location specified in
writing to the Certificateholder thereof.
SECTION 5.3. SEGREGATION OF MONEYS; NO INTEREST. Subject to
Section 5.1, moneys received by the Eligible Lender Trustee hereunder shall be
deposited in the Certificate Distribution Account and invested in Eligible
Investments in accordance with instructions received from the Administrator. The
Eligible Lender Trustee shall not be liable for any interest thereon.
SECTION 5.4. ACCOUNTING AND REPORTS TO THE NOTEHOLDERS,
CERTIFICATEHOLDERS, THE INTERNAL REVENUE SERVICE AND OTHERS. The Administrator,
on behalf of the Eligible Lender Trustee, shall (a) maintain (or cause to be
maintained) the books of the Trust on a calendar year basis on the accrual
method of accounting, (b) deliver to each Certificateholder (and to each Person
who was a Certificateholder at any time during the applicable calendar year), as
may be required by the Code and applicable Treasury Regulations, such
information as may be required (including Schedule K-1) to enable each such
Certificateholder to prepare its Federal and state income tax returns, (c) file
such tax returns relating to the Trust (including a partnership information
return, Internal Revenue Service Form 1065), and make such elections as may from
time to time be required or appropriate under any applicable state or Federal
statute or rule or regulation thereunder so as to maintain the Trust's
characterization as a partnership for Federal income tax purposes, (d) cause
such tax returns to be signed in the manner required by law and (e) collect or
cause to be collected any withholding tax as described in and in accordance with
Section 5.1(c) with respect to income or distributions to Certificateholders.
The Administrator, on behalf of the Eligible Lender Trustee, shall elect under
Section 1278 of the Code to include in income currently any market discount that
accrues with respect to the Financed Student Loans. Neither the Eligible Lender
Trustee nor the Administrator on behalf of the Eligible Lender Trustee shall
make the election provided under Section 754 of the Code.
SECTION 5.5. SIGNATURE ON RETURNS; TAX MATTERS PARTNER.
(a) TMS Student Holdings, Inc. shall sign on behalf of the Trust the
tax returns of the Trust unless otherwise required by applicable law.
(b) TMS Student Holdings, Inc. shall be designated the
"tax matters partner" of the Trust pursuant to Section 6231(a)(7)(A) of
the Code and applicable Treasury Regulations.
SECTION 5.6. SUBROGATION. Each of the Depositor and the
Eligible Lender Trustee acknowledges that to the extent of any payment made by
the Surety Provider pursuant to any Certificate Surety Bond, the Surety Provider
is to be fully subrogated to the extent of such payment and any additional
interest due on any late payment to the rights of the Holders of the
Certificates to any moneys paid or payable in respect of the Certificates under
this Trust Agreement or otherwise. Each of the Depositor and the Eligible Lender
Trustee agrees to such subrogation and, further, agrees to execute such
instruments and to take such actions as, in the sole judgment of the Surety
Provider, are necessary to evidence such subrogation and, subject to the
priority of payment provision of this Trust Agreement, to perfect the rights of
the Certificateholders to receive any moneys paid or payable in respect of the
Certificateholders under this Trust Agreement or otherwise.
ARTICLE VI
AUTHORITY AND DUTIES OF ELIGIBLE LENDER TRUSTEE
SECTION 6.1. GENERAL AUTHORITY. The Eligible Lender Trustee is
authorized and directed to execute and deliver the Basic Documents to which the
Trust is to be a party and each certificate or other document attached as an
exhibit to or contemplated by the Basic Documents to which the Trust is to be a
party, in each case, in such form as the Depositor shall approve as evidenced
conclusively by the Eligible Lender Trustee's execution thereof, and, on behalf
of the Trust, to direct the Indenture Trustee to authenticate and deliver such
Notes as may from time to time be authorized by the Indenture and any related
Terms Supplement. The Eligible Lender Trustee is also authorized and directed on
behalf of the Trust (i) to acquire and hold legal title to the Financed Student
Loans from the Depositor or upon the direction of the Depositor and (ii) to take
all actions required pursuant to Section 4.2(c) of the Sale and Servicing
Agreement, and otherwise follow the direction of and cooperate with the
Administrator in submitting, pursuing and collecting any claims to and with the
Department, the Secretary and any Guarantor with respect to any Interest Subsidy
Payments, Special Allowance Payments, HEAL Insurance Payments and any other
payments relating to the Financed Student Loans.
The Eligible Lender Trustee is also authorized and directed on
behalf of the Trust Certificateholders, in the case of any Certificate Surety
Bond, to take any and all action necessary to collect any payments from the
Surety Provider with respect to any Certificate Surety Bond, including the
preparation and submission of the notice to the Surety Provider (a form of which
is attached as an exhibit to each of the Surety Bonds), in accordance with the
Certificate Surety Bonds and Article X of the Sale and Servicing Agreement. Any
money so received by the Eligible Lender Trustee from the Surety Provider
pursuant to a Certificate Surety Bond will be distributed to Trust
Certificateholders in the same manner as amounts received from the Indenture
Trustee pursuant to Section 5.1.
In addition to the foregoing, the Eligible Lender Trustee is
authorized to take all actions required of the Trust pursuant to the Basic
Documents. The Eligible Lender Trustee is further authorized from time to time
to take such action as the Administrator directs or instructs with respect to
the Basic Documents or with respect to the administration of the Trust and is
directed to take such action to the extent that the Administrator is expressly
required pursuant to the Basic Documents to cause the Eligible Lender Trustee to
act.
SECTION 6.2. GENERAL DUTIES. It shall be the duty of the
Eligible Lender Trustee to discharge (or cause to be discharged) all its
responsibilities pursuant to the terms of this Agreement and the other Basic
Documents to which the Trust is a party and to administer the Trust in the best
interests of the Certificateholders, subject to and in accordance with the
provisions of this Agreement and the other Basic Documents. Notwithstanding the
foregoing, the Eligible Lender Trustee shall be deemed to have discharged its
duties and responsibilities hereunder and under the other Basic Documents to the
extent the Administrator has agreed in the Administration Agreement to perform
any act or to discharge any duty of the Eligible Lender Trustee hereunder or
under any other Basic Document, and the Eligible Lender Trustee shall not be
held liable for the default or failure of the Administrator to carry out its
obligations under the Administration Agreement. Except as expressly provided in
the Basic Documents, the Eligible Lender 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.
SECTION 6.3. ACTION UPON INSTRUCTION. (a) Subject to Article
IV, Section 7.1 and in accordance with the terms of the Basic Documents, the
Certificateholders may by written instruction direct the Eligible Lender Trustee
in the management of the Trust, subject to the Surety Provider's approval. Such
direction may be exercised at any time by written instruction of the
Certificateholders pursuant to Article IV, subject to the Surety Provider's
approval.
(b) The Eligible Lender Trustee shall not be required to take
any action hereunder or under any other Basic Document if the Eligible Lender
Trustee shall have reasonably determined, or shall have been advised by counsel,
that such action is likely to result in liability on the part of the Eligible
Lender Trustee or is contrary to the terms hereof or of any other Basic Document
or is otherwise contrary to law.
(c) Whenever the Eligible Lender Trustee is unable to
determine the appropriate course of action between alternative courses of action
permitted or required by the terms of this Agreement or under any other Basic
Document, the Eligible Lender Trustee shall promptly give notice (in such form
as shall be appropriate under the circumstances) to the Certificateholders
requesting instruction as to the course of action to be adopted, and to the
extent the Eligible Lender Trustee acts in good faith in accordance with any
written instruction received from the Certificateholders of Certificates
evidencing not less than 50.1% of the Certificate Balance at the time of
delivery of such instructions, the Eligible Lender Trustee shall not be liable
on account of such action to any Person. If the Eligible Lender Trustee shall
not have received appropriate instruction within 30 days of such notice (or
within such shorter period of time as reasonably may be specified in such notice
or may be necessary under the circumstances) it may, but shall be under no duty
to, take or refrain from taking such action, not inconsistent with this
Agreement or the other Basic Documents, as it shall deem to be in the best
interests of the Certificateholders, and shall have no liability to any Person
for such action or inaction.
(d) If the Eligible Lender Trustee is unsure as to the
application of any provision of this Agreement or any other Basic Document or
any agreement entered into by the Eligible Lender Trustee on behalf of the Trust
or any such provision is ambiguous as to its application, or is, or appears to
be, in conflict with any other applicable provision, or if this Agreement
permits any determination by the Eligible Lender Trustee or is silent or is
incomplete as to the course of action that the Eligible Lender Trustee is
required to take with respect to a particular set of facts, the Eligible Lender
Trustee may give notice (in such form as shall be appropriate under the
circumstances) to the Certificateholders requesting instruction and, to the
extent that the Eligible Lender Trustee acts or refrains from acting in good
faith in accordance with any such instruction received from Certificateholders
evidencing not less than 50.1% of the Certificate Balance at the time of
delivery of such instructions, the Eligible Lender Trustee shall not be liable,
on account of such action or inaction, to any Person. If the Eligible Lender
Trustee shall not have received appropriate instruction within 30 days of such
notice (or within such shorter period of time as reasonably may be specified in
such notice or may be necessary under the circumstances) it may, but shall be
under no duty to, take or refrain from taking such action, not inconsistent with
this Agreement or the other Basic Documents or such other agreements, as it
shall deem to be in the best interests of the Certificateholders, and shall have
no liability to any Person for such action or inaction.
SECTION 6.4. NO DUTIES EXCEPT AS SPECIFIED IN THIS AGREEMENT,
THE SALE AND SERVICING AGREEMENT, ANY SUPPLEMENTAL SALE AND SERVICING AGREEMENT
OR IN INSTRUCTIONS. The Eligible Lender Trustee shall not have any duty or
obligation to manage, make any payment with respect to, register, record, sell,
service, dispose of or otherwise deal with the Trust Estate, or to otherwise
take or refrain from taking any action under, or in connection with, any
document contemplated hereby to which the Eligible Lender Trustee is a party,
except as expressly provided by the terms of this Agreement, the Sale and
Servicing Agreement, any Supplemental Sale and Servicing Agreement or in any
document or written instruction received by the Eligible Lender Trustee pursuant
to Section 6.3; and no implied duties or obligations shall be read into this
Agreement or any other Basic Document against the Eligible Lender Trustee. The
Eligible Lender Trustee shall have no responsibility for filing any financing or
continuation statement in any public office at any time or to otherwise perfect
or maintain the perfection of any security interest or lien granted to it
hereunder or to prepare or file any Commission filing for the Trust or to record
this Agreement or any other Basic Document. The Eligible Lender Trustee
nevertheless agrees that it will, at its own cost and expense, promptly take all
action as may be necessary to discharge any liens on any part of the Trust
Estate that result from actions by, or claims against, Dauphin Deposit Bank and
Trust Company in its individual capacity or as the Eligible Lender Trustee that
are not related to the ownership or the administration of the Trust Estate.
SECTION 6.5. NO ACTION EXCEPT UNDER SPECIFIED DOCUMENTS OR
INSTRUCTIONS. The Eligible Lender Trustee shall not manage, control, use, sell,
service, dispose of or otherwise deal with any part of the Trust Estate except
(i) in accordance with the powers granted to and the authority conferred upon
the Eligible Lender Trustee pursuant to this Agreement, (ii) in accordance with
the other Basic Documents to which it is a party and (iii) in accordance with
any document or instruction delivered to the Eligible Lender Trustee pursuant to
Section 6.3.
SECTION 6.6. RESTRICTIONS. The Eligible Lender Trustee shall
not take any action (a) that is inconsistent with the purposes of the Trust set
forth in Section 2.3 or (b) that, to the actual knowledge of the Eligible Lender
Trustee, would result in the Trust's becoming taxable as a corporation for
Federal income tax purposes. The Certificateholders shall not direct the
Eligible Lender Trustee to take any action that would violate the provisions of
this Section.
ARTICLE VII
CONCERNING THE ELIGIBLE LENDER TRUSTEE
SECTION 7.1. ACCEPTANCE OF TRUSTS AND DUTIES. The Eligible
Lender Trustee accepts the trusts hereby created and agrees to perform its
duties hereunder with respect to such trusts but only upon the terms of this
Agreement for the benefit of the Certificateholders. The Eligible Lender Trustee
also agrees to disburse all moneys actually received by it constituting part of
the Trust Estate under the terms of this Agreement and the other Basic
Documents. The Eligible Lender Trustee shall not be answerable or accountable
hereunder or under any other Basic Document under any circumstances, except (i)
for its own willful misconduct or negligence or (ii) in the case of the
inaccuracy of any representation or warranty contained in Section 7.3 expressly
made by the Eligible Lender Trustee. In particular, but not by way of limitation
(and subject to the exceptions set forth in the preceding sentence):
(a) the Eligible Lender Trustee shall not be liable for
any error of judgment made by a responsible officer of the Eligible
Lender Trustee;
(b) the Eligible Lender Trustee shall not be liable with
respect to any action taken or omitted to be taken by it in accordance
with the direction or instructions of the Administrator, the Depositor,
the Surety Provider or Certificateholders of Certificates evidencing
the requisite percentage of the Certificate Balance;
(c) no provision of this Agreement or any other Basic Document
shall require the Eligible Lender Trustee to expend or risk funds or
otherwise incur any financial liability in the performance of any of
its rights or powers hereunder or under any other Basic Document, if
the Eligible Lender Trustee shall have reasonable grounds for believing
that repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured or provided to it;
(d) under no circumstances shall the Eligible Lender Trustee
be liable for indebtedness evidenced by or arising under any of the
Basic Documents, including the principal of and interest on the Notes
or for any amounts owing under the Trust Certificates or the
Originators' Interest;
(e) the Eligible Lender Trustee shall not be responsible for
or in respect of the validity or sufficiency of this Agreement or for
the due execution hereof by the Depositor or for the form, character
genuineness, sufficiency, value or validity of any of the Trust Estate
or for or in respect of the validity or sufficiency of the Basic
Documents, other than the certificate of authentication on the Trust
Certificates and the Originators' Interests, and the Eligible Lender
Trustee shall in no event assume or incur any liability, duty or
obligation to any Noteholder or to any Certificateholder, other than as
expressly provided for herein and in the other Basic Documents;
(f) the Eligible Lender Trustee shall not be liable for the
action or inaction, default or misconduct of the Depositor,
Administrator, the Seller, TMS Student Holdings, Inc., the Indenture
Trustee or the Master Servicer under this Agreement or any of the other
Basic Documents or otherwise and the Eligible Lender Trustee shall have
no obligation or liability to perform the obligations of the Trust
under this Agreement or the other Basic Documents that are required to
be performed by the Administrator under the Sale and Servicing
Agreement, any Supplemental Sale and Servicing Agreement or the
Administration Agreement, the Indenture Trustee under the Indenture or
any Terms Supplement or the Master Servicer under the Sale and
Servicing Agreement or any Supplemental Sale and Servicing Agreement;
and
(g) the Eligible Lender Trustee shall be under no obligation
to exercise any of the rights or powers vested in it by this Agreement,
or to institute, conduct or defend any litigation under this Agreement
or otherwise or in relation to this Agreement or any other Basic
Document, at the request, order or direction of any of the
Certificateholders, unless such Certificateholders have offered to the
Eligible Lender Trustee security or indemnity satisfactory to it
against the costs, expenses and liabilities that may be incurred by the
Eligible Lender Trustee therein or thereby. The right of the Eligible
Lender Trustee to perform any discretionary act enumerated in this
Agreement or in any other Basic Document shall not be construed as a
duty, and the Eligible Lender Trustee shall not be answerable for other
than its negligence or willful misconduct in the performance of any
such act.
SECTION 7.2. FURNISHING OF DOCUMENTS. The Eligible Lender
Trustee shall furnish to the Certificateholders 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 Eligible Lender Trustee under the Basic Documents.
SECTION 7.3. REPRESENTATIONS AND WARRANTIES. The
Eligible Lender Trustee hereby represents and warrants to the Depositor, for
the benefit of the Certificateholders, and to the Surety Provider
that:
(a) It is a banking corporation duly organized and validly
existing in good standing under the laws of the State of ___________.
It has all requisite corporate power and authority to execute, deliver
and perform its obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement, and this Agreement
will be executed and delivered by one of its officers who is duly
authorized to execute and deliver this Agreement on its behalf, and
when so executed shall be an enforceable obligation of the Eligible
Lender Trustee in accordance with its terms.
(c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will, to its knowledge, contravene any Federal or ________ state law,
governmental rule or regulation governing the banking or trust powers
of the Eligible Lender Trustee or any judgment or order binding on it,
or constitute any default under its charter documents or by-laws or any
indenture, mortgage, contract, agreement or instrument to which it is a
party or by which any of its properties may be bound.
(d) It is an "eligible lender", as such term is defined in
Section 435(d) of the Higher Education Act, for purposes of holding
legal title to the Federal Loans as contemplated by this Agreement and
the other Basic Documents.
SECTION 7.4. RELIANCE; ADVICE OF COUNSEL. (a) The
Eligible Lender Trustee shall incur no liability to anyone in acting
upon any signature, instrument, direction, notice, resolution,
request, consent, order, certificate, report, opinion, bond, or other
document or paper believed by it to be genuine and believed by it to
be signed by the proper party or parties. As to any fact or matter
the method of the determination of which is not specifically
prescribed herein, the Eligible Lender Trustee may for all purposes
hereof rely on a certificate, signed by the president or any vice
president or by the treasurer or other authorized officers of the
relevant party, as to such fact or matter and such certificate shall
constitute full protection to the Eligible Lender Trustee for any
action taken or omitted to be taken by it in good faith in reliance
thereon.
(b) In the exercise or administration of the trusts hereunder
and in the performance of its duties and obligations under this Agreement or the
other Basic Documents, the Eligible Lender Trustee (i) may act directly or
through its agents, including the Administrator, or attorneys pursuant to
agreements entered into with any of them, and the Eligible Lender Trustee shall
not be liable for the conduct or misconduct of such agents or attorneys if such
agents or attorneys shall have been selected by the Eligible Lender Trustee with
reasonable care or by the Administrator or Depositor, and (ii) may consult with
counsel, accountants and other skilled persons to be selected with reasonable
care and employed by it or selected and employed by the Administrator or
Depositor. The Eligible Lender Trustee shall not be liable for anything done,
suffered or omitted in good faith by it (including, without limitation, the
making of the representation in Section 7.3(d) hereof that it is an "eligible
lender") in accordance with the opinion or advice of any such counsel,
accountants or other such persons.
SECTION 7.5. NOT ACTING IN INDIVIDUAL CAPACITY. Except
for the representations and warranties set forth in Section 7.3, in
accepting the trusts hereby created Dauphin Deposit Bank and Trust
Company acts solely as Eligible Lender Trustee hereunder and not in
its individual capacity and all Persons having any claim against the
Eligible Lender Trustee by reason of the transactions contemplated by
this Agreement or any other Basic Document shall look only to the
Trust Estate for payment or satisfaction thereof.
SECTION 7.6. ELIGIBLE LENDER TRUSTEE NOT LIABLE FOR TRUST
CERTIFICATES OR FINANCED STUDENT LOANS. The recitals contained herein or in any
Trust Supplement and in the Trust Certificates and the Originators' Interests
(other than the signature and countersignature of the Eligible Lender Trustee on
the Trust Certificates and the Originators' Interests) shall be taken as the
statements of the Depositor and the Eligible Lender Trustee assumes no
responsibility for the correctness thereof. The Eligible Lender Trustee makes no
representations as to the validity or sufficiency of this Agreement, the Trust
Certificates, the Originators' Interests or any other Basic Document (other than
the signature and countersignature of the Eligible Lender Trustee on the Trust
Certificates and the Originators' Interests) or the Notes, or of any Financed
Student Loan or related documents. The Eligible Lender Trustee shall at no time
have any responsibility or liability for or with respect to the legality,
validity, enforceability and eligibility for Guarantee Payments of any Financed
Student Loan, or for or with respect to the sufficiency of the Trust Estate or
its ability to generate the payments to be distributed to Certificateholders
under this Agreement or the Noteholders under the Indenture, including without
limitation: the existence and contents of any computer or other record of any
Financed Student Loan; the validity of the assignment of any Financed Student
Loan to the Trust; the completeness of any Financed Student Loan; the
performance or enforcement (except as expressly set forth in any Basic Document)
of any Financed Student Loan; the compliance by the Depositor, Administrator,
Seller or the Master Servicer with any warranty or representation made under any
Basic Document or in any related document or the accuracy of any such warranty
or representation or any action or inaction of the Depositor, Seller,
Administrator, the Indenture Trustee or the Master Servicer or any subservicer
taken in the name of the Eligible Lender Trustee; and the failure of the
Financed Student Loans to be serviced in conformity with applicable regulations.
SECTION 7.7. ELIGIBLE LENDER TRUSTEE MAY OWN TRUST
CERTIFICATES AND NOTES. The Eligible Lender Trustee in its individual or any
other capacity may become the owner or pledgee of the Trust Certificates,
Originators' Interests or Notes and may deal with the Depositor, the
Administrator, the Indenture Trustee, the Master Servicer and the Guarantors in
banking or trust transactions with the same rights as it would have if it were
not Eligible Lender Trustee, including serving as a trustee of other trusts
dealing in any student loans, including trusts which purchase student loans from
the Trust.
ARTICLE VIII
COMPENSATION OF ELIGIBLE LENDER TRUSTEE
SECTION 8.1. ELIGIBLE LENDER TRUSTEE'S FEES AND EXPENSES. The
Eligible Lender Trustee shall receive as compensation for its services hereunder
such fees as have been separately agreed upon by the Depositor and the Eligible
Lender Trustee on or before the date of acceptance hereof by the Eligible Lender
Trustee, and the Eligible Lender Trustee shall be entitled to be reimbursed by
the Depositor, to the extent provided in such separate agreement, for its other
reasonable Expenses hereunder.
SECTION 8.2. PAYMENTS TO THE ELIGIBLE LENDER TRUSTEE. Any
amounts paid to the Eligible Lender Trustee pursuant to Section 8.1 hereof or
pursuant to Section 6.3 or 7.2 of the Sale and Servicing Agreement shall be
deemed not to be a part of the Trust Estate immediately after such payment.
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
SECTION 9.1. TERMINATION OF TRUST AGREEMENT. (a) This
Trust shall terminate upon the earlier of (i) the final distribution by the
Eligible Lender Trustee of all moneys or other property or proceeds of the Trust
Estate in accordance with the terms of the Indenture, any related Terms
Supplement, the Sale and Servicing Agreement, Article V hereof and any Trust
Supplement, whether at the Certificate Final Maturity Date or otherwise, (ii)
the expiration of 21 years from the death of the last survivor of the
descendants of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, the late Ambassador of the United States to
the Court of St. ▇▇▇▇▇, living on the date hereof, and (iii) the time provided
in Section 9.2. The bankruptcy, liquidation, dissolution, death or incapacity of
any Certificateholder, other than TMS Student Holdings, Inc. as described in
Section 9.2, shall not (x) operate to terminate this Agreement or the Trust, nor
(y) entitle such Certificateholder's legal representatives or heirs to claim an
accounting or to take any action or proceeding in any court for a partition or
winding up of all or any part of the Trust or Trust Estate nor (z) otherwise
affect the rights, obligations and liabilities of the parties hereto.
(b) Except as provided in Section 9.1(a), neither the
Depositor nor any Certificateholder shall be entitled to revoke or
terminate the Trust.
(c) Notice of any termination of the Trust, specifying the
Distribution Date upon which the Certificateholders shall surrender their Trust
Certificates or Originators' Interests, as the case may be, to the Certificate
Paying Agent for payment of the final distribution and cancellation, shall be
given promptly by the Eligible Lender Trustee by letter to Certificateholders
mailed within five Business Days of receipt of notice of such termination from
the Administrator given pursuant to Section 9.1(c) of the Sale and Servicing
Agreement, stating (i) the Distribution Date upon which final payment of the
Trust Certificates and Originators' Interests shall be made upon presentation
and surrender of the Trust Certificates or Originators' Interests, as the case
may be, at the office of the Certificate Paying Agent therein designated, (ii)
the amount of any such final payment and (iii) that the Record Date otherwise
applicable to such Distribution Date is not applicable, payments being made only
upon presentation and surrender of the Trust Certificates or Originators'
Interests, as the case may be, at the office of the Certificate Paying Agent
therein specified. The Eligible Lender Trustee shall give such notice to the
Certificate Registrar (if other than the Eligible Lender Trustee) and the
Certificate Paying Agent at the time such notice is given to Certificateholders.
Upon presentation and surrender of the Trust Certificates or Originators'
Interests, as the case may be, the Certificate Paying Agent shall cause to be
distributed to Certificateholders amounts distributable on such Distribution
Date pursuant to Section 5.1 and any related Trust Supplement. Certificates
shall cease to earn interest as of the termination date of the Trust.
If all the Certificateholders shall not surrender their Trust
Certificates or Originators' Interests, as the case may be, for cancellation
within six months after the date specified in the above-mentioned written
notice, the Eligible Lender Trustee shall give a second written notice to the
remaining Certificateholders to surrender their Trust Certificates or
Originators' Interests, as the case may be, for cancellation and receive the
final distribution with respect thereto. If within one year after the second
notice all the Trust Certificates or Originators' Interests, as the case may be,
shall not have been surrendered for cancellation, the Eligible Lender Trustee
may take appropriate steps, or may appoint an agent to take appropriate steps,
to contact the remaining Certificateholders concerning surrender of their Trust
Certificates or Originators' Interests, as the case may be, and the cost thereof
shall be paid out of the funds and other assets that shall remain subject to
this Agreement. Any funds remaining in the Trust after exhaustion of such
remedies and no later than five years after the first such notice shall be
distributed by the Eligible Lender Trustee to TMS Student Holdings, Inc..
SECTION 9.2. DISSOLUTION UPON INSOLVENCY OF TMS STUDENT
HOLDINGS, INC.. If an Insolvency Event shall occur with respect to TMS Student
Holdings, Inc., the Trust shall be terminated in accordance with Section 9.1 90
days after the date of such Insolvency Event, unless, before the end of such
90-day period, the Eligible Lender Trustee shall have received written
instructions from the Surety Provider and Certificateholders (other than TMS
Student Holdings, Inc.) representing not less than 50.1% of the Certificate
Balance (not including the principal amount of Trust Certificates held by TMS
Student Holdings, Inc.), to the effect that each such party disapproves of the
liquidation of the Financed Student Loans and termination of the Trust, in which
event the Trust shall continue in accordance with the Basic Documents. Promptly
after the occurrence of any Insolvency Event with respect to TMS Student
Holdings, Inc., (i) TMS Student Holdings, Inc. shall give the Indenture Trustee,
the Eligible Lender Trustee and the Surety Provider written notice of such
Insolvency Event, (ii) the Eligible Lender Trustee shall, upon the receipt of
such written notice from TMS Student Holdings, Inc., give prompt written notice
to the Certificateholders and the Indenture Trustee, of the occurrence of such
event and (iii) the Indenture Trustee shall, upon receipt of written notice of
such Insolvency Event from the Eligible Lender Trustee or TMS Student Holdings,
Inc., give prompt written notice to the Noteholders of the occurrence of such
event; PROVIDED, HOWEVER, that any failure to give a notice required by this
sentence shall not prevent or delay, in any manner, a termination of the Trust
pursuant to the first sentence of this Section 9.2. Upon a termination pursuant
to this Section 9.2, the Eligible Lender Trustee shall direct the Indenture
Trustee promptly to sell the assets of the Trust (other than the Trust Accounts
and the Surety Bonds) in a commercially reasonable manner and on commercially
reasonable terms. The proceeds of such a sale of the assets of the Trust shall
be treated as collections under the Sale and Servicing Agreement.
ARTICLE X
SUCCESSOR ELIGIBLE LENDER TRUSTEES AND
ADDITIONAL ELIGIBLE LENDER TRUSTEES
SECTION 10.1. ELIGIBILITY REQUIREMENTS FOR ELIGIBLE LENDER
TRUSTEE. The Eligible Lender Trustee shall at all times be a corporation or
association (i) qualifying as an "eligible lender" as such term is defined in
Section 435(d) of the Higher Education Act for purposes of holding legal title
to the Federal Loans on behalf of the Trust, with a valid lender identification
number with respect to the Trust from the Department; (ii) being authorized to
exercise corporate trust powers and hold legal title to the Financed Student
Loans; (iii) having in effect Guarantee Agreements with each of the Guaranty
Agencies then guaranteeing Financed Student Loans; (iv) having a combined
capital and surplus of at least $50,000,000 and being subject to supervision or
examination by Federal or state authorities; (v) incorporated or authorized to
do business in the _________ of ____________ or which is a national bank having
an office located within the __________ of _______; and (vi), with respect to
any successor Eligible Lender Trustees, having (or having a parent which has) a
rating of at least Baa3 by ▇▇▇▇▇'▇ and at least BBB by Standard & Poor's.
Further, prior to the Seller selling any HEAL Loans to the Trust, the Eligible
Lender Trustee shall be qualified as an "eligible lender" within the meaning of
the Public Health Service Act. Also, prior to the Seller selling any Private
Loans to the Trust, the Eligible Lender Trustee shall be qualified under the
applicable Private Loan Program to hold such Private Loans. If the Eligible
Lender Trustee shall publish reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising or examining authority,
then for the purpose of this Section 10.1, the combined capital and surplus of
the Eligible Lender Trustee shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published. In
case at any time the Eligible Lender Trustee shall cease to be eligible in
accordance with the provisions of this Section 10.1, the Eligible Lender Trustee
shall resign immediately in the manner and with the effect specified in Section
10.2.
SECTION 10.2. RESIGNATION OR REMOVAL OF ELIGIBLE LENDER
TRUSTEE. The Eligible Lender Trustee may at any time resign and be discharged
from the trusts hereby created by giving written notice thereof to the
Administrator and the Surety Provider, and the Surety Provider may dismiss the
Eligible Lender Trustee or any co-paying agent at any time for its failure to
act in accordance with the terms of this Agreement; provided, however, that
prior to any such dismissal, the Surety Provider shall have given the Eligible
Lender Trustee or the co-paying agent, as the case may be, notice identifying
such failure, and shall have given the Eligible Lender Trustee or the co-paying
agent, as the case may be, two Business Days to cure such failure, if such
failure relates to the distribution of funds to Certificateholders, and 30 days
to cure all other failures. Upon receiving such notice of resignation or
dismissal, the Administrator shall promptly appoint, with the Surety Provider's
consent, a successor Eligible Lender Trustee meeting the eligibility
requirements of Section 10.1 by written instrument, in duplicate, one copy of
which instrument shall be delivered to the resigning Eligible Lender Trustee and
one copy to the successor Eligible Lender Trustee. If no successor Eligible
Lender Trustee shall have been so appointed and have accepted appointment within
30 days after the giving of such notice of resignation or dismissal, the
resigning or dismissed Eligible Lender Trustee, as the case may be, may petition
any court of competent jurisdiction for the appointment of a successor Eligible
Lender Trustee; PROVIDED, HOWEVER, that such right to appoint or to petition for
the appointment of any such successor shall in no event relieve the resigning or
dismissed Eligible Lender Trustee, as the case may be, from any obligations
otherwise imposed on it under the Basic Documents until such successor has in
fact assumed such appointment.
If at any time the Eligible Lender Trustee shall cease to be
eligible in accordance with the provisions of Section 10.1 and shall fail to
resign after written request therefor by the Administrator, or if at any time an
Insolvency Event with respect to the Eligible Lender Trustee shall have occurred
and be continuing, then the Administrator may remove the Eligible Lender
Trustee. If the Administrator shall remove the Eligible Lender Trustee under the
authority of the immediately preceding sentence, the Administrator shall
promptly appoint, with the prior approval of the Surety Provider, a successor
Eligible Lender Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the outgoing Eligible Lender Trustee so removed
and one copy to the successor Eligible Lender Trustee and payment of all fees
owed to the outgoing Eligible Lender Trustee.
Any resignation or removal of the Eligible Lender Trustee and
appointment of a successor Eligible Lender Trustee pursuant to any of the
provisions of this Section shall not become effective until acceptance of
appointment by the successor Eligible Lender Trustee pursuant to Section 10.3
and payment of all fees and expenses owed to the outgoing Eligible Lender
Trustee. The Administrator shall provide notice of such resignation or removal
of the Eligible Lender Trustee to the Surety Provider and to each of the Rating
Agencies.
SECTION 10.3. SUCCESSOR ELIGIBLE LENDER TRUSTEE. Any successor
Eligible Lender Trustee appointed pursuant to Section 10.2 shall execute,
acknowledge and deliver to the Administrator and to its predecessor Eligible
Lender Trustee an instrument accepting such appointment under this Agreement,
and thereupon the resignation or removal of the predecessor Eligible Lender
Trustee shall become effective and such successor Eligible Lender Trustee,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties, and obligations of its predecessor under this
Agreement, with like effect as if originally named as Eligible Lender Trustee.
The predecessor Eligible Lender Trustee shall upon payment of its fees and
expenses deliver to the successor Eligible Lender Trustee all documents,
statements, moneys and properties held by it under this Agreement and shall
assign, if permissible, to the successor Eligible Lender Trustee the lender
identification number obtained from the Department on behalf of the Trust; and
the Administrator and the predecessor Eligible Lender Trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for fully and certainly vesting and confirming in the successor Eligible Lender
Trustee all such rights, powers, duties and obligations.
No successor Eligible Lender Trustee shall accept appointment
as provided in this Section 10.3 unless at the time of such acceptance such
successor Eligible Lender Trustee shall be eligible pursuant to Section 10.1 and
shall have made the representations and warranties set forth in Section 7.3
(with the exception of any references to the _________ of ________) to the
Depositor, for the benefit of the Certificateholders, and to the Surety
Provider.
Upon acceptance of appointment by a successor Eligible Lender
Trustee pursuant to this Section, the Administrator shall mail notice of the
successor of such Eligible Lender Trustee to all Certificateholders, the
Indenture Trustee, the Noteholders, the Surety Provider and the Rating Agencies.
If the Administrator shall fail to mail such notice within 10 days after
acceptance of appointment by the successor Eligible Lender Trustee, the
successor Eligible Lender Trustee shall cause such notice to be mailed at the
expense of the Administrator.
SECTION 10.4. MERGER OR CONSOLIDATION OF ELIGIBLE LENDER
TRUSTEE. Any corporation into which the Eligible Lender Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Eligible Lender
Trustee shall be a party, or any corporation succeeding to all or substantially
all the corporate trust business of the Eligible Lender Trustee, shall, without
the execution or filing of any instrument or any further act on the part of any
of the parties hereto, anything herein to the contrary notwithstanding, be the
successor of the Eligible Lender Trustee hereunder; PROVIDED that such
corporation shall be eligible pursuant to Section 10.1; PROVIDED FURTHER that
the Eligible Lender Trustee shall mail notice of such merger or consolidation to
the Surety Provider and to the Rating Agencies.
SECTION 10.5. APPOINTMENT OF CO-ELIGIBLE LENDER TRUSTEE OR
SEPARATE ELIGIBLE LENDER TRUSTEE. Notwithstanding any other provisions of this
Agreement, at any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust may at the time be located, the
Administrator and the Eligible Lender Trustee acting jointly shall have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Eligible Lender Trustee and the Surety Provider, meeting
the eligibility requirements of clauses (i) through (iii) of Section 10.1, to
act as co-trustee, jointly with the Eligible Lender Trustee, or separate trustee
or separate trustees, of all or any part of the Trust Estate, and to vest in
such Person, in such capacity, such title to the Trust Estate, or any part
thereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Administrator and the Eligible
Lender Trustee may consider necessary or desirable. If the Administrator shall
not have joined in such appointment within 15 days after the receipt by it of a
request so to do, the Eligible Lender Trustee alone shall have the power to make
such appointment; provided however, that no such appointment shall be made
without obtaining the Surety Provider's prior written consent. No co-trustee or
separate trustee under this Agreement shall be required to meet the terms of
eligibility as a successor trustee pursuant to clauses (iv), (v) and (vi) of
Section 10.1 and no notice of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 10.3. The expenses incurred in
connection with the retention of any co-trustee shall be deemed an Expense of
the Issuer to be borne by TMS Student Holdings, Inc.
Each 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 Eligible Lender Trustee shall be conferred upon and
exercised or performed by the Eligible Lender 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
Eligible Lender 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 Eligible Lender 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
Trust or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or co-trustee,
solely at the direction of the Eligible Lender Trustee;
(ii) no trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under this
Agreement; and
(iii) the Administrator and the Eligible Lender Trustee acting
jointly may at any time accept the resignation of or remove any
separate trustee or co-trustee.
Any notice, request or other writing given to the Eligible
Lender 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
Agreement and the conditions of this Article. 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 Eligible Lender Trustee or separately, as may be provided
therein, subject to all the provisions of this Agreement, specifically including
every provision of this Agreement relating to the conduct of, affecting the
liability of, or affording protection to, the Eligible Lender Trustee. Each such
instrument shall be filed with the Eligible Lender Trustee and a copy thereof
given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the
Eligible Lender Trustee as 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 Agreement on its behalf and in its name. If any separate trustee
or co-trustees 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 Eligible Lender Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1. SUPPLEMENTS AND AMENDMENTS. (a) This Agreement,
including the Exhibits, Attachments and Annexes hereto, may be amended by the
Depositor and the Eligible Lender Trustee, with prior written notice to the
Rating Agencies, without the consent of any of the Noteholders or the
Certificateholders, but with the prior written consent of the Surety Provider,
to cure any ambiguity, to change the registered office of the Trust in
__________ set forth in Section 2.2 hereof, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions in this Agreement or
of modifying in any manner the rights of the Noteholders, the Certificateholders
or the Surety Provider; PROVIDED, HOWEVER, that such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any material respect the
interests of any Noteholder, Certificateholder or the Surety Provider.
(b) This Agreement may also be amended from time to time by
the Depositor and the Eligible Lender Trustee, with prior written notice to the
Rating Agencies, with the consent of (i) the Noteholders of Notes evidencing not
less than 50.1% of the Outstanding Amount of the Notes, (ii) the
Certificateholders evidencing not less than 50.1% of the Certificate Balance and
(iii) the Surety Provider, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Noteholders or the
Certificateholders; PROVIDED, HOWEVER, that no such amendment shall (a) increase
or reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Financed Student Loans or distributions that shall be
required to be made for the benefit of the Noteholders or the
Certificateholders, (b) reduce the aforesaid percentage of the Outstanding
Amount of the Notes and the Certificate Balance required to consent to any such
amendment, without the consent of all the outstanding Noteholders and
Certificateholders or (c) modify Sections 2.7 or 3.11 or the last sentence of
Section 3.2 (or any other Sections without an Opinion of Counsel that such
amendment will not cause the Trust to be taxed as a corporation).
Promptly after the execution of any such amendment or consent,
the Eligible Lender Trustee shall furnish written notification of the substance
of such amendment or consent to each Certificateholder, the Indenture Trustee,
each of the Rating Agencies and to the Surety Provider.
It shall not be necessary for the consent of
Certificateholders, the Noteholders or the Indenture Trustee pursuant to this
Section to approve the particular form of any proposed amendment or consent, but
it shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents (and any other consents of Certificateholders
provided for in this Agreement or in any other Basic Document) and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Eligible Lender Trustee may
prescribe.
(c) Prior to the execution of any amendment to this Agreement,
the Eligible Lender Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement. The Eligible Lender Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Eligible Lender
Trustee's own rights, duties or immunities under this Agreement or otherwise.
(d) Notwithstanding anything to the contrary contained in this
Section 11.1, or elsewhere in this Agreement, without the consent of any
Certificateholders but with prior notice to the Rating Agencies and the prior
written consent of the Surety Provider, the Depositor and the Eligible Lender
Trustee (upon written direction from the Depositor), at any time and from time
to time, may enter into one or more Trust Supplements to set forth the terms of
any Class of Trust Certificates or Originators' Interests that have not
theretofore been authorized by a Trust Supplement.
(e) Any amendment (including a Trust Supplement) of this
Agreement required to be filed with the _________ Department of State by
_________ shall be so filed and shall become effective upon filing or such later
date and time, if any, as may be set forth in the instrument of amendment. In
any other case, the amendment shall become effective as set forth in the
instrument of amendment.
SECTION 11.2. NO LEGAL TITLE TO TRUST ESTATE IN
CERTIFICATEHOLDERS. The Certificateholders shall not have legal title to any
part of the Trust Estate. The Certificateholders shall be entitled to receive
distributions with respect to their undivided beneficial ownership interest
therein only in accordance with Articles V and IX. No transfer, by operation of
law or otherwise, of any right, title, or interest of the Certificateholders to
and in their beneficial ownership interest in the Trust Estate shall operate to
terminate this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Trust
Estate.
SECTION 11.3. LIMITATIONS ON RIGHTS OF OTHERS. Except for
Section 2.7, the provisions of this Agreement are solely for the benefit of the
Eligible Lender Trustee, the Depositor, the Certificateholders, the
Administrator and, to the extent expressly provided herein, the Surety Provider,
the Indenture Trustee and the Noteholders, and nothing in this Agreement (other
than Section 2.7), whether express or implied, shall be construed to give to any
other Person any legal or equitable right, remedy or claim in the Trust Estate
or under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.
SECTION 11.4. NOTICES. (a) Unless otherwise expressly
specified or permitted by the terms hereof, all notices shall be in writing and
shall be deemed given upon receipt by the intended recipient or three Business
Days after mailing if mailed by certified mail, postage prepaid (except that
notice to the Eligible Lender Trustee shall be deemed given only upon actual
receipt by the Eligible Lender Trustee), if to the Eligible Lender Trustee,
addressed to its Corporate Trust Office at 8 ______________; if to the
Depositor, addressed to Educaid, ▇▇▇▇ ▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, facsimile # (▇▇▇) ▇▇▇-▇▇▇▇, Attention: President; if to the
Surety Provider, addressed to AMBAC Indemnity Corporation, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, facsimile # (212) 509- 9190, Attention:
Structured Finance Department/Student Loans, or, as to each party, at such other
address or facsimile number as shall be designated by such party in a written
notice to each other party.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given (i) by first-class mail, postage prepaid, at
the address of such Certificateholder as shown in the Certificate Register, or
(ii) by facsimile if the Certificate Register contains a facsimile number for
such Certificateholder. Any notice so mailed or sent by facsimile within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder receives such notice.
SECTION 11.5. SEVERABILITY. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 11.6. SEPARATE COUNTERPARTS. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 11.7. SUCCESSORS AND ASSIGNS. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the Depositor and its successors, the Eligible Lender Trustee and its
successors, each Certificateholder and its successors and permitted assigns and
to the Surety Provider as a third party beneficiary, all as herein provided. Any
request, notice, direction, consent, waiver or other instrument or action by a
Certificateholder shall bind the successors and assigns of such
Certificateholder.
SECTION 11.8. NO PETITION. (a) The Depositor will not at any
time institute against the Trust any bankruptcy proceedings under any United
States Federal or State bankruptcy or similar law in connection with any
obligations relating to the Trust Certificates, the Originators' Interests, the
Notes, this Agreement or any of the other Basic Documents.
(b) The Eligible Lender Trustee (not in its individual
capacity but solely as Eligible Lender Trustee), by entering into this
Agreement, and each Certificateholder, by accepting a Trust Certificate or
Originators' Interest, as the case may be, hereby covenant and agree that they
will not at any time institute against TMS Student Holdings, Inc. or the Trust,
or join in any institution against TMS Student Holdings, Inc. or the Trust 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 Trust Certificates or Originators' Interest, as the case may be, the Notes,
this Agreement or any of the other Basic Documents.
SECTION 11.9. NO RECOURSE. Each Certificateholder by accepting
a Trust Certificate or Originators' Interest, as the case may be, acknowledges
that such Certificateholder's Trust Certificates or Originators' Interest, as
the case may be, represent beneficial interests in the Trust only and do not
represent interests in or obligations of the Depositor, the Seller, the Master
Servicer, the Administrator, the Eligible Lender Trustee, the Indenture Trustee
or any Affiliate thereof or any officer, director or employee of any thereof and
no recourse may be had against such parties or their assets, except as may be
expressly set forth in this Agreement, the Trust Certificates, the Originators'
Interests or the other Basic Documents.
SECTION 11.10. HEADINGS. The headings of the various
Articles and Sections herein are for convenience of reference only
and shall not define or limit any of the terms or provisions hereof.
SECTION 11.11. GOVERNING LAW. This Agreement shall be
construed in accordance with the laws of the _________ of ________, 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. The Trust created by this Agreement shall be a business trust subject to
the _________ business trust statute (________ ET SEQ.). This Agreement and any
amendment or supplement thereto shall be filed after its execution with the
___________ Department of State; PROVIDED, HOWEVER, that any failure to make
such a filing shall not affect in any way the validity of the Trust created
hereby or its status as a business trust under _________ law or the
effectiveness of this Agreement.
SECTION 11.12. RIGHTS OF SURETY PROVIDER. The Surety Provider
is a third-party beneficiary of this Trust Agreement. Any right conferred to the
Surety Provider shall be suspended during any period in which the Surety
Provider is in default in its payment obligations under the Insurance Agreement.
During any period of suspension the Surety Provider's rights hereunder shall
vest in the Certificateholders and shall be exercisable by the Holders of a
majority of the aggregate principal amount of Certificates then Outstanding. At
such time as the Certificates are no longer Outstanding hereunder and the Surety
Provider has been reimbursed for all Required Surety Payments to which it is
entitled under the Basic Documents and has been paid all Premium Amounts due and
owing in respect of the Surety Bonds, the Surety Provider's rights hereunder
shall terminate.
SECTION 11.13. CREATION OF TRUST AND DELIVERY OF TRUST
AGREEMENT. This Trust Agreement shall be deemed for all purposes executed and
delivered at the Eligible Lender Trustee's corporate trust office in
_______________ and the Trust shall be created and effective upon delivery of
this Trust Agreement executed by the Depositor to such office and acceptance
thereof by the Eligible Lender Trustee at such office, which acceptance shall be
evidenced conclusively by the Eligible Lender Trustee's execution hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
-------------------------
ATTEST:
by
--------------------------- ----------------------------
Name: Name:
Title: Assistant Secretary Title: Senior Vice President
TRANS-WORLD INSURANCE COMPANY,
D/B/A EDUCAID, Depositor,
by
----------------------------
Name:
Title:
Accepted and agreed
with respect to the
provisions relating to
TMS Student Holdings, Inc.
TMS STUDENT HOLDINGS, INC.
by
--------------------
Name:
Title:
COMMONWEALTH OF ____________)
)SS:
COUNTY OF __________________)
On this, the ____ day of March, 1995, before me, the
undersigned officer, personally appeared _____________________, who acknowledged
himself to be a Senior Vice President of ________________, a __________
corporation, and that he as such Senior Vice President, being authorized to do
so, executed the foregoing for the purpose of creating [Trust 199_-_], with said
_______________ as Trustee, in accordance with the terms of the foregoing
instrument, by signing the name of the corporation by himself as Senior Vice
President.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
--------------------------
Notary Public
(SEAL)
EXHIBIT A
TO THE TRUST AGREEMENT
FORM OF TRUST CERTIFICATE
SEE REVERSE FOR CERTAIN DEFINITIONS
UNLESS THIS TRUST CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
TO THE ISSUER (AS DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE
OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "ACT") OR ANY STATE SECURITIES LAWS. THE HOLDER HEREOF, BY
PURCHASING THIS TRUST CERTIFICATE, AGREES THAT THIS TRUST CERTIFICATE MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY IN ACCORDANCE WITH ANY APPLICABLE
STATE SECURITIES LAWS AND (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS
AN INSTITUTIONAL ACCREDITED INVESTOR WITHIN THE MEANING OF RULE 501(A)(1)-(3)
UNDER THE ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF AN
INSTITUTIONAL ACCREDITED INVESTOR, OR (2) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE ACT.
THIS TRUST CERTIFICATE MAY NOT BE TRANSFERRED DIRECTLY OR INDIRECTLY TO
(1) EMPLOYEE BENEFIT PLANS, RETIREMENT ARRANGEMENTS, INDIVIDUAL RETIREMENT
ACCOUNTS OR ▇▇▇▇▇ PLANS SUBJECT TO EITHER TITLE I OF THE EMPLOYEE RETIREMENT
INCOME SECURITY ACT OF 1974, AS AMENDED, OR SECTION 4975 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED, OR (2) ENTITIES (INCLUDING INSURANCE COMPANY GENERAL
ACCOUNTS) WHOSE UNDERLYING ASSETS INCLUDE PLAN ASSETS BY REASON OF ANY SUCH
PLAN'S ARRANGEMENTS OR ACCOUNT'S INVESTMENT IN SUCH ENTITIES. FURTHER, THIS
TRUST CERTIFICATE MAY BE TRANSFERRED ONLY TO A UNITED STATES PERSON WITHIN THE
MEANING OF SECTION 7701(A)(30) OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED.
THIS CERTIFICATE IS NOT GUARANTEED OR INSURED BY ANY
GOVERNMENTAL AGENCY.
[THIS TRUST CERTIFICATE IS NONTRANSFERABLE.]3
--------
3 To be included only on the Certificates issued to TMS Student
Holdings, Inc. (as defined below) on the Closing Date and any
Certificates issued in exchange therefor.
NUMBER
--- $--------------------------
CUSIP NO.
[TRUST 199_-_]
AUCTION RATE ASSET BACKED CERTIFICATES
evidencing a fractional undivided interest in the Trust, as defined
below, the property of which includes a pool of student loans sold to
the Trust by Trans-World Insurance Company, d/b/a Educaid.
(This Trust Certificate does not represent an interest in or obligation
of the Depositor (as defined below), the Master Servicer (as defined
below), the Eligible Lender Trustee (as defined below) or any of their
respective affiliates, except to the extent described below.)
THIS CERTIFIES THAT is the registered owner of dollars
non-assessable, fully-paid, fractional undivided interest in [Trust 199_-_] (the
"Trust"), a trust formed under the laws of the __________ of ___________ by
Trans-World Insurance Company, d/b/a Educaid (the "Depositor"). The Trust was
created pursuant to a Trust Agreement dated as of _______, 199_ (the "Trust
Agreement") between the Depositor and ____________, a ________ bank and trust
company, not in its individual capacity but solely as eligible lender trustee on
behalf of the Trust (the "Eligible Lender Trustee"), a summary of certain of the
pertinent provisions of which is set forth below. To the extent not otherwise
defined herein, the capitalized terms used herein have the meanings assigned to
them in Appendix A to the Trust Agreement; such Appendix A also contains rules
as to usage that shall be applicable herein.
This Certificate is one of the duly authorized Certificates
designated as "Auction Rate Asset Backed Certificates" (herein called the "Trust
Certificates"). Issued under the Indenture dated as of March 28, 1995, between
the Trust and Bankers Trust Company, as Indenture Trustee, will be one or more
series of notes, each series to be issued under a separate terms agreement (such
notes referred to herein as, collectively, the "Notes"). This Trust Certificate
is issued under and is subject to the terms, provisions and conditions of the
Trust Agreement, to which Trust Agreement the holder of this Trust Certificate
by virtue of the acceptance hereof assents and by which such holder is bound.
The property of the Trust includes a pool of student loans (the "Financed
Student Loans"), all moneys paid thereunder on or after March 17, 1995 (or, in
the case of Financed Student Loans that constitute Additional Student Loans, on
or after the respective Subsequent Cut-off Dates), certain bank accounts and the
proceeds thereof and certain other rights under the Trust Agreement and the Sale
and Servicing Agreement and all proceeds of the foregoing. The rights of the
holders of the Trust Certificates to the assets of the Trust (other than the
Certificate Surety Bond) are subordinated to the rights of the holders of the
Notes, as set forth in the Sale and Servicing Agreement.
Under the Trust Agreement, distributions will be made on the
Trust Certificates on each Certificate Distribution Date, commencing on
___________, in the manner set forth in the Trust Agreement and the Sale and
Servicing Agreement. The Final Certificate Maturity Date is __________.
Each holder of this Trust Certificate acknowledges and agrees
that its rights to receive distributions in respect of this Trust Certificate
from Available Funds and amounts on deposit in the Reserve Account are
subordinated to the rights of the Noteholders as described in the Sale and
Servicing Agreement and the Indenture.
It is the intent of the Depositor, the Master Servicer, the
Administrator and the Certificateholders that, solely for federal income tax
purposes, the Trust will be treated as a partnership and the Certificateholders
(including TMS Student Holdings, Inc. in its capacity as recipient of
distributions from the Reserve Account) will be treated as partners in that
partnership. TMS Student Holdings, Inc. and the other Certificateholders by
acceptance of a Trust Certificate (and the Certificate Owners by acceptance of a
beneficial interest in a Trust Certificate) or an Originators' Interest, agree
to treat, and to take no action inconsistent with the treatment of, the Trust
Certificates for such federal income tax purposes as partnership interests in
the Trust.
Each Certificateholder or Certificate Owner, by its acceptance
of a Trust Certificate or, in the case of a Certificate Owner, a beneficial
interest in a Trust Certificate, covenants and agrees that such
Certificateholder or Certificate Owner, as the case may be, will not at any time
institute against the Seller or the Trust, or join in any institution against
the Seller or the Trust, 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 Trust Certificates, the Notes, the Trust
Agreement or any of the other Basic Documents.
Distributions on this Trust Certificate will be made as
provided in the Trust Agreement by the Eligible Lender Trustee by wire transfer
or by check mailed to the Certificateholder of record in the Certificate
Register without the presentation or surrender of this Trust Certificate or the
making of any notation hereon, except that with respect to Trust Certificates
registered on the Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be Cede & Co.), payments will be made by wire
transfer in immediately available funds to the account designated by such
nominee. Except as otherwise provided in the Trust Agreement and notwithstanding
the above, the final distribution on this Trust Certificate will be made after
due notice by the Eligible Lender Trustee of the pendency of such distribution
and only upon presentation and surrender of this Trust Certificate at the office
or agency maintained for the purpose of the Eligible Lender Trustee in
--------------.
Reference is hereby made to the further provisions of this
Trust Certificate set forth on the reverse hereof, which further provisions
shall for all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have
been executed by an authorized representative of the Eligible Lender Trustee or
its authenticating agent, by manual signature, this Trust Certificate shall not
entitle the holder hereof to any benefit under the Trust Agreement or the Sale
and Servicing Agreement or be valid for any purpose.
IN WITNESS WHEREOF, the Eligible Lender Trustee on behalf of
the Trust and not in its individual capacity has caused this Trust Certificate
to be duly executed as of the date set forth below.
[Trust 199_-_]
by ______________,
not in its individual
capacity but solely as
Eligible Lender Trustee,
ATTEST: by
--------------------- -----------------------------
Authorized Signatory
Date:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates referred to in the
within-mentioned Trust Agreement.
________________________, not in its
individual capacity but solely as
Eligible Lender Trustee,
by
-----------------------------
Authorized Representative
Date:
[Reverse of Trust Certificate]
The Trust Certificates do not represent an obligation of, or
an interest in, the Depositor, the Master Servicer, the Administrator, the
Eligible Lender Trustee or any affiliates of any of them, and no recourse may be
had against such parties or their assets, except as may be expressly set forth
herein, in the Trust Agreement or in the other Basic Documents. In addition,
this Trust Certificate is not guaranteed by any governmental agency or
instrumentality and is limited in right of payment to certain collections
respecting the Financed Student Loans, all as more specifically set forth in the
Sale and Servicing Agreement. A copy of each of the Sale and Servicing Agreement
and the Trust Agreement may be examined during normal business hours at the
principal office of the Seller, and at such other places, if any, designated by
the Seller, by any Certificateholder upon request.
The Trust Agreement permits, with certain exceptions therein
provided, the amendment thereof and the modification of the rights and
obligations of the Seller and the rights of the Certificateholders under the
Trust Agreement at any time by the Depositor and the Eligible Lender Trustee
with the consent of (i) the holders of the Notes evidencing not less than 50.1%
of the outstanding principal balance of the Notes (ii) the Certificates
evidencing not less than 50.1% of the Certificate Balance and (iii) the Surety
Provider. Any such consent by the holder of this Trust Certificate shall be
conclusive and binding on such holder and on all future holders of this Trust
Certificate and of any Trust Certificate issued upon the transfer hereof or in
exchange herefor or in lieu hereof whether or not notation of such consent is
made upon this Trust Certificate. The Trust Agreement also permits the amendment
thereof, in certain limited circumstances, without the consent of the holders of
any of the Trust Certificates.
As provided in the Trust Agreement and subject to certain
limitations therein set forth, the transfer of this Trust Certificate is
registerable in the Certificate Register upon surrender of this Certificate for
registration of transfer at the offices or agencies maintained by Dauphin
Deposit Bank and Trust Company in its capacity as Certificate Registrar, or by
any successor Certificate Registrar, accompanied by a written instrument of
transfer in form satisfactory to the Eligible Lender Trustee and the Certificate
Registrar duly executed by the holder hereof or such holder's attorney duly
authorized in writing, and thereupon one or more new Trust Certificates of
authorized denominations evidencing the same aggregate interest in the Trust
will be issued to the designated transferee.
The Trust Certificates are issuable only as registered Trust
Certificates without coupons in denominations of $50,000 or in integral
multiples in excess thereof; PROVIDED, HOWEVER, that the Trust Certificates
issued to the TMS Student Holdings, Inc. may be issued in such denominations as
to include any residual amount of the Certificate Balance. As provided in the
Trust Agreement and subject to certain limitations therein set forth, Trust
Certificates are exchangeable for new Trust Certificates of authorized
denominations evidencing the same aggregate denomination, as requested by the
holder surrendering the same. No service charge will be made for any such
registration of transfer or exchange, but the Eligible Lender Trustee or the
Certificate Registrar may require payment of a sum sufficient to cover any tax
or governmental charge payable in connection therewith.
The Eligible Lender Trustee, the Certificate Registrar, the
Surety Provider and any agent of the Eligible Lender Trustee, the Certificate
Registrar or the Surety Provider may treat the person in whose name this Trust
Certificate is registered as the owner hereof for all purposes, and none of the
Eligible Lender Trustee, the Certificate Registrar or the Surety Provider or any
such agent shall be affected by any notice to the contrary.
This Trust Certificate may not be transferred directly or indirectly to
(1) employee benefit plans, retirement arrangements, individual retirement
accounts or ▇▇▇▇▇ plans subject to either Title I of the Employee Retirement
Income Security Act of 1974, as amended, or Section 4975 of the Internal Revenue
Code of 1986, as amended, or (2) entities (including insurance company general
accounts) whose underlying assets include plan assets by reason of any such
plan's arrangements or account's investment in such entities. By accepting and
holding this Trust Certificate, the Holder hereof shall be deemed to have
represented and warranted that it is not any of the foregoing entities.
This Trust Certificate may not be transferred to any person
who is not a U.S. Person, as such term is defined in Section 7701(a)(30) of the
Internal Revenue Code, as amended.
Each purchaser of Trust Certificates (except for TMS Student
Holdings, Inc.) shall be required, prior to purchasing a Trust Certificate, to
execute and deliver to the Broker-Dealer a Purchaser's Letter in the form
attached to the Trust Agreement as Exhibit C.
The obligations and responsibilities created by the Trust
Agreement and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Trust Agreement and the Sale and Servicing Agreement and the disposition of all
property held as part of the Trust. The Depositor may at its option purchase the
corpus of the Trust at a price specified in the Sale and Servicing Agreement,
and such purchase of the Financed Student Loans and other property of the Trust
will effect early retirement of the Trust Certificates; however, such right of
purchase is exercisable only as of any Distribution Date on or after the date on
which the Pool Balance is less than or equal to 10% of the Initial Pool Balance.
This Trust Certificate shall be construed in accordance with
the laws of the __________ of __________, 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.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns
and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
----------------------------------------------------------------
(Please print or type name and address, including postal zip code, of
assignee)
----------------------------------------------------------------
the within Trust Certificate, and all rights thereunder, hereby
irrevocably constituting and appointing
_______________________________________________________ Attorney to transfer
said Trust Certificate on the books of the Certificate Registrar, with full
power of substitution in the premises.
Dated:
_ ________________________________*
Signature Guaranteed:
_ ________________________________*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Trust Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by an approved eligible guarantor institution, an institution which
is a participant in a Securities Transfer Association recognized signature
guarantee program.
EXHIBIT B
[TRUST 199_-_]
AUCTION RATE ASSET-BACKED CERTIFICATES
NOTICE OF CHANGE IN AUCTION DATE
Notice is hereby given by ▇▇▇▇▇ ▇▇▇▇▇▇ INC., as Market
Agent for the captioned Certificates, that with respect to the captioned
Certificates, the Auction Date is hereby changed as follows:
l. With respect to the captioned Certificates, the
definition of "Auction Date" shall be deemed amended by substituting
"_________________ (number) Business Day" in the second line thereof.
2. This change shall take effect on ______________
which shall be the Auction Date for the Auction Period commencing on
--------------.
3. The Auction Date for the captioned Certificates
shall be subject to further change hereafter as provided in the Trust
Agreement.
4. Terms not defined in this Notice shall have the
meanings set forth in the Trust Agreement.
▇▇▇▇▇ ▇▇▇▇▇▇ INC., as Market Agent
Dated: By:
EXHIBIT C
TO BE SUBMITTED TO YOUR BROKER-DEALER WHO MAY THEN
DELIVER COPIES ON YOUR BEHALF TO THE AUCTION AGENT
PURCHASER'S LETTER
Relating to [Trust 199_-_]
Auction Rate Asset Backed Certificates
[Trust 199_-_]
The Auction Agent
A Broker-Dealer
An Agent Member
Other Persons
Dear Sirs:
We may from time to time offer to purchase, purchase, offer to sell
and/or sell Auction Rate Asset Backed Certificates (the "Certificates"), issued
by [Trust 199_-_], a ____________ business trust (the "Company"), as described
in a private placement memorandum relating to the Certificates, including the
attachments thereto (the "Offering Document"). We agree that this Letter shall
apply to such purchases, sales, and offers and to any Certificates owned by us.
We understand that the Certificate Interest Rate for the Certificates will
generally be based on the results of Auctions as set forth in the Offering
Document. We acknowledge that we have received, and have read and understood,
the Offering Document.
Capitalized terms used but not defined herein shall have the meanings
assigned to such terms in the Offering Document.
We represent and agree as follows:
(a) We agree that any Bid or Sell Order placed by us shall
constitute an irrevocable offer by us to purchase or sell the
Certificates subject to such Bid or Sell Order, or such lesser
principal amount of Certificates as we shall be required to sell or
purchase as a result of such Auction, at the applicable price, all as
set forth in the Offering Document, and that if we fail to place a Bid
or Sell Order with respect to Certificates owned by us with a
Broker-Dealer on any Auction Date for such Certificates, or a
Broker-Dealer to which we communicate a Bid or Sell Order fails to
submit such Bid or Sell Order to the Auction Agent, we shall be deemed
to have placed a Hold Order with respect to such Certificates as
described in the Offering Document. We authorize any Broker-Dealer that
submits a Bid or Sell Order as our agent in Auctions to execute
contracts for the sale of Certificates covered by such Bid or Sell
Order. We recognize that the payment by such Broker-Dealer for
Certificates purchased on our behalf shall not relieve us of any
liability to such Broker-Dealer for payment for such Certificates.
(b) We hereby confirm that any purchase of Certificates made
by us will be for our own account, or for the account of one or more
parties (each of whom are institutions) for whom we are acting as
trustee or agent with complete investment discretion and with authority
to bind such parties, and not with a view to any public resale or
distribution thereof. We and each other party for whom we are acting
which will acquire Certificates will be (a) an institution that is an
"acredited investor" as defined in Rule 501(a)(1)-(3) under the
Securities Act of 1933, as amended (the "Act"), (b) knowledgeable,
sophisticated and experienced in business and financial matters and (c)
able and prepared to bear the economic risk of investing in and holding
such Certificates.
(c) We understand and expressly acknowledge that the
Certificates have not been registered under the Act and, accordingly,
that the Certificates may not be reoffered, resold or otherwise
pledged, hypothecated or transferred unless so registered or an
applicable exemption from the registration requirements of the Act is
available and only pursuant to the procedures set forth in this Letter.
(d) We agree that, during the applicable period as described
in the Offering Document, dispositions of Certificates can be made only
in the denominations set forth in the Offering Document, and we will
sell, transfer or otherwise dispose of any Certificates held by us from
time to time only pursuant to a Bid or Sell Order placed in an Auction
to or through a Broker-Dealer or, when permitted in the Offering
Document, to a person that has signed and delivered, or caused to be
delivered on its behalf, to the Auction Agent a letter substantially in
the form of this letter (or other applicable purchaser's letter)
provided that in the case of all transfers other than pursuant to
Auctions we or our Broker-Dealer or our Agent Member shall advise the
Auction Agent of such transfer. We agree to comply with any other
transfer restrictions or other related procedures as described in the
Offering Document.
(e) We agree that, during the applicable period as described
in the Offering Document, ownership of Certificates shall be
represented by a global certificate registered in the name of the
applicable securities depository or its nominee, that we will not be
entitled to receive any certificate representing the Certificates and
that our ownership of any Certificates will be maintained in book-entry
form by the securities depository for the account of our Agent Member,
which in turn will maintain records of our beneficial ownership. We
authorize and instruct our Agent Member to disclose to the Auction
Agent such information concerning our beneficial ownership of
Certificates as the Auction Agent shall request.
(f) We acknowledge that the Broker-Dealers that participate in
an Auction may purchase Certificates and submit orders in Auctions with
respect to any Certificates for their own account and that, because all
orders must be submitted through Broker- Dealers, such Broker-Dealers
may have knowledge of orders placed through it in any such Auction.
(g) We understand and agree that in making decisions as to
whether to purchase or sell Certificates, in Auctions or otherwise, we
must rely on our own examination of the terms of the Certificates, and
that neither the Auction Agent nor any Broker-Dealer, by participating
in auctions, shall be deemed to make any recommendation regarding the
merits of any investment in the Certificates or the suitability of an
investment in the Certificates by us, and that neither the Auction
Agent nor any Broker-Dealer has any obligation to supply to us any
information concerning the Certificates.
(h) We acknowledge that partial deliveries of Certificates
purchased in Auctions may be made to us and such deliveries shall
constitute good delivery as set forth in the Offering Document.
(i) We acknowledge that prior to purchasing any Certificates
we shall have received an Offering Document and acknowledge that we
will have had access to such financial and other information, and have
been afforded the opportunity to ask such questions of representatives
of the Representative and the Seller and receive answers thereto, as we
deem necessary in connection with our decision to purchase
Certificates.
(j) We recognize that the Representative, the Seller and
Broker-Dealers will rely upon the truth and accuracy of the foregoing
investment representations and agreements, and we agree that each of
our purchases of Certificates now or in the future shall be deemed to
constitute our concurrence in all of the foregoing which shall be
binding on us and each party for which we are acting as set forth in
paragraph 2 above.
(k) The undersigned is not, and will not acquire Certificates
directly or indirectly on behalf of, (i) an employee benefit plan,
retirement arrangement, individual retirement account or ▇▇▇▇▇ plan
subject to either Title I of the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), or Section 4975 of the Internal
Revenue Code of 1986, as amended (each a "Plan"), or (ii) an entity
(including insurance company general accounts) whose underlying assets
include plan assets as a result of a Plan's investment in such entity.
(l) Our Agent Member of the Securities Depository, now The
Depository Trust Company, currently is ____________________.
(m) We understand that a restrictive legend will be placed on
the Certificates and stop-transfer instructions will be issued to the
transfer agent for the Certificates, all as set forth in the Offering
Document.
(n) Our personnel authorized to place Orders with Broker-
Dealers for the purposes set forth in the Offering Document in Auctions
currently is/are ____________ ______________________, telephone number
(___) ________.
(o) Our taxpayer identification number is ________________.
(p) This Letter is not a commitment by us to purchase any
Certificates.
(q) The descriptions of Auction Procedures set forth in
Appendix I to the Offering Document are incorporated by reference
herein and, in case of any conflict between this Letter and any such
description, such description shall control.
(r) This Letter supersedes any version of this Letter
delivered by us and dated earlier than the date hereof.
Dated:
-------------------------------
(Name of Purchaser)
By:____________________________
Printed Name:
Title:
Mailing address of Purchaser:
APPENDIX A
DEFINITIONS
A-1
APPENDIX B
CERTIFICATE AUCTION PROCEDURES
SECTION 1.1. DEFINITIONS
"ALL HOLD RATE" means ninety percent (90%) of One-Month LIBOR.
"AUCTION" means the implementation of the Auction Procedures on an
Auction Date.
"AUCTION AGENT" means the Initial Auction Agent under the Initial
Auction Agent Agreement unless and until a Substitute Auction Agent Agreement
becomes effective, after which "Auction Agent" shall mean the Substitute Auction
Agent.
"AUCTION AGENT AGREEMENT" means the Initial Auction Agent Agreement
unless and until a Substitute Auction Agent Agreement is entered into, after
which "Auction Agent Agreement" shall mean such Substitute Auction Agent
Agreement.
"AUCTION AGENT FEE" has the meaning set forth in the Auction Agent
Agreement.
"AUCTION AGENT FEE RATE" has the meaning set forth in the Auction
Agent Agreement.
"AUCTION DATE" means, initially, April 24, 1995 with respect to the
Class 1 Certificates (or such other date as may be set forth in the Trust
Supplement relating to a Class of Certificates), and thereafter, the Business
Day immediately preceding the first day of each Auction Period for each Class of
Certificates, other than:
(i) each Auction Period commencing after the ownership of
Certificates is no longer maintained in Book-Entry Form by the
Securities Depository;
(ii) each Auction Period commencing after and during the
continuance of an Event of Default; or
(iii) each Auction Period commencing less than two Business Days
after the cure or waiver of an Event of Default.
Notwithstanding the foregoing, the Auction Date for one or more Auction Periods
may be changed pursuant to Section 2.2.2 of this Appendix I.
"AUCTION PERIOD" means the Interest Period during which time the
Certificate Rate is determined pursuant to Section 2.2.1 hereof, which Auction
Period (after the Initial Period) initially shall consist generally of 28 days
(except as otherwise set forth in a Trust Supplement), as the same may be
adjusted pursuant to Section 2.2.2 hereof.
"AUCTION PERIOD ADJUSTMENT" means an adjustment to the Auction Period
as provided in Section 2.4 hereof or in the related Trust Supplement.
"AUCTION PROCEDURES" means the procedures set forth in Section 2.2.1
hereof by which the Auction Rate is determined.
"AUCTION RATE" means the rate of interest per annum that results from
implementation of the Auction Procedures and is determined as described in
Section 2.2.1(c)(ii) hereof.
"AUCTION RATE CERTIFICATES" means a Class of Certificates, bearing
interest based upon an Auction Rate.
"AUTHORIZED DENOMINATIONS" means $50,000 and integral multiples of
$50,000 in excess thereof.
"AVAILABLE CERTIFICATES" has the meaning set forth in Section
2.2.1(c)(i)(A) hereof.
"BID" has the meaning set forth in Section 2.2.1(a)(i) hereof.
"BID AUCTION RATE" has the meaning set forth in Section 2.2.1(c)(i)
hereof.
"BIDDER" has the meaning set forth in Section 2.2.1(a)(i) hereof.
"BOND EQUIVALENT YIELD - 91-DAY T-▇▇▇▇" means, in respect of any
security with a maturity of six months or less the rate for which is quoted in
THE WALL STREET JOURNAL (Eastern Edition) on a bank discount basis, a yield
(expressed as a percentage) calculated in accordance with the following formula
and rounded up to the nearest one one-hundredth of one percent:
Bond Equivalent Yield = Q X N x 100
---------------
360 - (91 x Q)
where "Q" refers to the per annum rate for the security quoted on a bank
discount basis and expressed as a decimal, and "N" refers to 365 or 366 (days),
as the case may be.
"BOOK-ENTRY FORM" or "BOOK-ENTRY SYSTEM" means a form or system under
which (i) the beneficial right to principal and interest may be transferred only
through a book entry, (ii) physical securities in registered form are issued
only to a Securities Depository or its nominee as registered owner, with the
securities "immobilized" to the custody of the Securities Depository, and (iii)
the book entry is the record that identifies the owners of beneficial interests
in that principal and interest.
"BROKER-DEALER" means ▇▇▇▇▇ ▇▇▇▇▇▇ Shearson Inc. or any other broker
or dealer (each as defined in the Securities Exchange Act of 1934, as amended),
commercial bank or other entity permitted by law to perform the functions
required of a Broker-Dealer set forth in the Auction Procedures that (a) is a
Participant (or an affiliate of a Participant), (b) has been appointed as such
by the Trust or the Administrator on behalf of the Eligible Lender Trustee
pursuant to the Trust Agreement and (c) has entered into a Broker-Dealer
Agreement that is in effect on the date of reference.
"BROKER-DEALER AGREEMENT" means each agreement between the Auction
Agent and a Broker-Dealer, and approved by the Administrator on behalf of the
Issuer, pursuant to which the Broker-Dealer agrees to participate in Auctions as
set forth in the Auction Procedures, as from time to time amended or
supplemented. Each Broker-Dealer Agreement shall be in substantially the form of
the Broker-Dealer Agreement dated as of _______, 199_ between [Bankers Trust
Company], as Auction Agent, and ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., as Broker-Dealer.
"BROKER-DEALER FEE" has the meaning set forth in the Auction Agent
Agreement.
"BROKER-DEALER FEE RATE" has the meaning set forth in the Auction
Agent Agreement.
"BUSINESS DAY" means any day on which The New York Stock Exchange is
open for trading and any day other than a Saturday, a Sunday or a day on which
banking institutions or trust companies in New York, California, New Jersey or
_______ are authorized or obligated by law, regulation or executive order to
remain closed.
"CERTIFICATE DISTRIBUTION DATE" means, with respect to any Class of
Auction Rate Certificates, the Business Day immediately following the expiration
of each related Auction Period and, with respect to any other Class of
Certificates, the date set forth in the related Trust Supplement.
"CERTIFICATE INITIAL PERIOD" means, for each Class of Certificates,
the period commencing on the Closing Date and continuing through the day
immediately preceding the Certificate Initial Rate Adjustment Date for such
Class.
"CERTIFICATE INITIAL RATE" means (i) with respect to the Class 1
Certificates, the date set forth as such in the Private Placement Memorandum
dated ______, 199_ relating to the offer and sale of the Certificates and (ii)
with respect to each other Class of Certificates, the rate set forth in the
related Trust Supplement.
"CERTIFICATE INITIAL RATE ADJUSTMENT DATE" means ______, 199_, with
respect to the Class 1 Certificates and, with respect to any other Class of
Certificates, the rate set forth in the related Trust Supplement.
"CERTIFICATEHOLDERS' AUCTION RATE INTEREST CARRYOVER" means, with
respect to each Class of Auction Rate Certificates, the excess, if any, of (a)
the amount of interest on such Certificate that would have accrued with respect
to the Interest Period had interest been calculated based on the Auction Rate
over (b) the amount of interest on such Certificate actually accrued with
respect to such Interest Period based on the Net Loan Rate, together with the
unpaid portion of any such excess from prior Interest Periods, together with
interest thereon calculated in accordance with Section 2.2(b) hereof; provided
that any reference to "principal" or "interest" in this Trust Agreement and in
the Certificates shall not include within the meanings of such words any
Certificateholders' Auction Rate Interest Carryover or any interest accrued on
any Certificateholders' Auction Rate Interest Carryover.
"CERTIFICATE RATE" means, with respect to each Class of Auction Rate
Certificates, each variable rate of interest per annum borne by a Certificate
for each Auction Period and determined in accordance with the provisions of
Sections 2.1 and 2.2 hereof; provided, howeve r, that in the event of an Event
of Default, the Certificate Rate shall equal the Non-Payment Rate; provided,
further, however that such Certificate Rate shall in no event exceed the
Certificate Rate Limitation.
"CERTIFICATE RATE LIMITATION" means, for each Class of Certificates, a
rate equal to 18% per annum, except as otherwise set forth in a Trust
Supplement.
"CERTIFICATE RATE ADJUSTMENT DATE" means, with respect to each Class
of Auction Rate Certificates, the date on which an Interest Rate is effective,
a nd means the date of commencement of each Auction Period.
"CERTIFICATE RATE DETERMINATION DATE" means, with respect to each
Class of Auction Rate Certificates, the Auction Date, or if no Auction Date is
app licable, the Business Day immediately preceding the date of commencement of
an Auction Period.
"CLOSING DATE" means (i) with respect to the Class 1 Certificates,
_______, 199_, the date of initial issuance and delivery of such Certificates
and (ii) with respect to any other Class of Certificates, the rate set forth in
the related Trust Supplement.
"EFFECTIVE INTEREST RATE" means, for any Financed Student Loan and any
Collection Period, the per annum rate at which such Financed Student Loan
accrues interest during such Collection Period and, in the case of a Federal
Loan, after giving effect to all applicable Interest Subsidy Payments and
Special Allowance Payments due with respect to such Federal Loan.
"EVENT OF DEFAULT" means with respect to the Certificates, (i) a
default in the due and punctual payment of any installment of interest or
principal on the Certificates, or (ii) a default in the due and punctual payment
of any interest on and principal of the Certificates at their Final Maturity
Date.
"EXISTING CERTIFICATEHOLDER" means (i) with respect to and for the
purpose of dealing with the Auction Agent in connection with an Auction, a
Person who is a Broker-Dealer listed in the Existing Certificateholder Registry
at the close of business on the Business Day immediately preceding such Auction
and (ii) with respect to and for the purpose of dealing with the Broker-Dealer
in connection with an Auction, a Person who is a beneficial owner of any
Certificate.
"EXISTING CERTIFICATEHOLDER REGISTRY" means the registry of Persons
who are owners of the Certificates, maintained by the Auction Agent as provided
in the Auction Agent Agreement.
"FEDERAL FUNDS RATE" means, for any date of determination, the federal
funds effective rate as published on page 118 of the Dow ▇▇▇▇▇ Telerate Service
(or such other page as may replace that page on that service for the purpose of
displaying comparable rates or prices).
"FINAL MATURITY DATE" means _____, with respect to the Class 1
Certificates and, with respect to any other Class of Certificates, the date set
forth in the related Trust Supplement.
"HOLD ORDER" has the meaning set forth in Section 2.2.1(a)(i) hereof.
"INITIAL AUCTION AGENT" means Bankers Trust Company, a New York
banking corporation, its successors and assigns.
"INITIAL AUCTION AGENT AGREEMENT" means the Auction Agent Agreement
dated as of ________, 199_, by and among the Issuer, the Indenture Trustee and
the Initial Auction Agent, including any amendment thereof or supplement
thereto.
"INTEREST PERIOD" means, for each Class of Auction Rate Certificates,
the related Certificate Initial Period and each period commencing on a
Certificate Rate Adjustment Date for such Certificates and ending on the day
before (i) the next Certificate Rate Adjustment Date for such Certificates or
(ii) the Final Maturity Date for such Certificates.
"INTEREST RATE" means, with respect to a Class of Auction Rate
Certificates, the rate of interest per annum borne by such Certificate as of the
time referred to, including, without limitation, the related Certificate Initial
Rate and the Certificate Rate.
"LIBOR DETERMINATION DATE" means for each Interest Period other than
the initial Interest Period, the Business Day prior to the commencement of each
such Interest Period.
"LONDON BANKING DAY" means any Business Day on which dealings in
deposits in United States dollars are transacted in the London interbank market.
"MARKET AGENT" means ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., New York, New York, in such
capacity under the Broker-Dealer Agreement, or any successor to it in such
capacity hereunder.
"MAXIMUM AUCTION RATE" means, with respect to the Auction Rate
Certificates, (i) for Auction Periods of 34 days or less, either (A) the greater
of X One-Month LIBOR plus 0.60% and (Y) the Fed Funds Rate plus 0.60% (if both
ratings assigned by the Rating Agencies to the Certificates are "Aa3" or "AA-"
or better) or (B) One-Month LIBOR plus 1.50% (if any one of the ratings assigned
by the Rating Agencies to the Certificates, is less than "Aa3" or "AA-") or (ii)
for Auction Periods of greater than or equal to 35 days, either (A) the greater
of One-Month LIBOR or Three-Month LIBOR, plus in either case, 0.60% (if both of
the ratings assigned by the Rating Agencies to the Certificates are "Aa3" or
"AA-" or better) or (B) the greater of One- Month LIBOR or Three-Month LIBOR,
plus in either case, 1.50% (if any one of the ratings assigned by the Rating
Agencies to the Certificates is less than "Aa3" or "AA-"). For purposes of the
Auction Agent and the Auction Procedures, the ratings referred to in this
definition shall be the last ratings of which the Auction Agent has been given
notice pursuant to the Auction Agent Agreement.
"NET LOAN RATE" means, for any Interest Period, the weighted average
Effective Interest Rate for the Collection Period immediately preceding such
Interest Period less 1.60%, or such other amount as may be set forth in a Trust
Supplement.
"NINETY-ONE DAY UNITED STATES TREASURY ▇▇▇▇ RATE" means that rate of
interest per annum equal to the Bond Equivalent Yield - 91-Day T-▇▇▇▇ on the
91-Day United States Treasury Bills sold at the last auction thereof that
immediately precedes the Certificate Rate Adjustment Date.
"NON-PAYMENT RATE" means One-Month LIBOR plus 1.50%.
"NOTICE OF FEE RATE CHANGE" means a notice of a change in the Auction
Agent Fee Rate or the Broker-Dealer Fee Rate substantially in the form of
Exhibit E to the Auction Agent Agreement.
"ONE-MONTH LIBOR" means the London interbank offered rate for deposits
in U.S. dollars having a maturity of one month commencing on the related LIBOR
Determination Date (the "Index Maturity") which appears on Telerate Page 3750 as
of 11:00 a.m., London time, on such LIBOR Determination Date. If such rate does
not appear on Telerate Page 3750, the rate for that day will be determined on
the basis of the rates at which deposits in U.S. dollars, having the Index
Maturity and in a principal amount of not less than U.S. $1,000,000, are offered
at approximately 11:00 a.m., London time, on such LIBOR Determination Date to
prime banks in the London interbank market by the Reference Banks. The Auction
Agent will request the principal London office of each of such Reference Banks
to provide a quotation of its rate. If at least two such quotations are
provided, the rate for that day will be the arithmetic mean of the quotations.
If fewer than two quotations are provided, the rate for that day will be the
arithmetic mean of the rates quoted by major banks in New York City, selected by
the Auction Agent, at approximately 11:00 a.m., New York City time, on such
LIBOR Determination Date for loans in U.S. dollars to leading European banks
having the Index Maturity and in a principal amount equal to an amount of not
less than U.S. $1,000,000; provided that if the banks selected as aforesaid are
not quoting as mentioned in this sentence, One-Month LIBOR in effect for the
applicable LIBOR Reset Period will be One-Month LIBOR in effect for the previous
LIBOR Reset Period.
"ORDER" has the meaning set forth in Section 2.2.1(a)(i) hereof.
"RECORD DATE" means, with respect to the Certificates, the close of
business on the second Business Day immediately preceding the related
Certificate Distribution Date.
"REMARKETING AGENT" means a remarketing agent designated under a
Remarketing Agreement.
"REMARKETING AGREEMENT" means any remarketing agreement hereafter
entered into by the Issuer and a remarketing agent with respect to the
Certificates, as originally executed and as from time to time amended or
supplemented in accordance with the terms thereof.
"REUTERS SCREEN LIBOR PAGE" means the display designated as page
"LIBOR" on the Reuters Monitor Money Rates Service (or such other page as may
replace the LIBOR page for the purposes of displaying London interbank offered
rates of major banks).
"SELL ORDER" has the meaning set forth in Section 2.2.1(a)(i) hereof.
"SUBMISSION DEADLINE" means 1:00 p.m., eastern time, on any Auction
Date or such other time on any Auction Date by which Broker-Dealers are required
to submit Orders to the Auction Agent as specified by the Auction Agent from
time to time.
"SUBMITTED BID" has the meaning set forth in Section 2.2.1(c)(i)
hereof.
"SUBMITTED HOLD ORDER" has the meaning set forth in Section
2.2.1(c)(i) hereof.
"SUBMITTED ORDER" has the meaning set forth in Section 2.2.1(c)(i)
hereof.
"SUBMITTED SELL ORDER" has the meaning set forth in Section
2.2.1(c)(i) hereof.
"SUBSTITUTE AUCTION AGENT" means the Person with whom the Indenture
Trustee enters into a Substitute Auction Agent Agreement.
"SUBSTITUTE AUCTION AGENT AGREEMENT" means an auction agent agreement
containing terms substantially similar to the terms of the Initial Auction Agent
Agreement, whereby a qualified Person agrees with the Indenture Trustee and the
Issuer to perform the duties of the Auction Agent under this Trust Agreement.
"SUFFICIENT BIDS" has the meaning set forth in Section 2.2.1(c)(i)
hereof.
"TELERATE PAGE 3750" means the display page so designated on the Dow
▇▇▇▇▇ Telerate Service (or such other page as may replace that page on that
service for the purpose of displaying comparable rates or prices).
"THREE-MONTH LIBOR" means the London interbank offered rate for
deposits in U.S. dollars having a maturity of three months commencing on the
related LIBOR Determination Date (the "Three-Month Index Maturity") which
appears on Telerate Page 3750 as of 11:00 a.m., London time, on such LIBOR
Determination Date. If such rate does not appear on Telerate Page 3750, the rate
for that day will be determined on the basis of the rates at which deposits in
U.S. dollars, having the Three Month Index Maturity and in a principal amount of
not less than U.S. $1,000,000, are offered at approximately 11:00 a.m., London
time, on such LIBOR Determination Date to prime banks in the London interbank
market by the Reference Banks. The Auction Agent will request the principal
London office of each of such Reference Banks to provide a quotation of its
rate. If at least two such quotations are provided, the rate for that day will
be the arithmetic mean of the quotations. If fewer than two quotations are
provided, the rate for that day will be the arithmetic mean of the rates quoted
by major banks in New York City, selected by the Auction Agent, at approximately
11:00 a.m., New York City time, on such LIBOR Determination Date for loans in
U.S. dollars to leading European banks having the Three Month Index Maturity and
in a principal amount equal to an amount of not less than U.S. $1,000,000;
provided that if the banks selected as aforesaid are not quoting as mentioned in
this sentence, Three-Month LIBOR in effect for the applicable Interest Period
will be Three-Month LIBOR in effect for the previous Interest Period.
"TRUST AGREEMENT" means this Trust Agreement, as from time to time
amended or supplemented.
"TRUST SUPPLEMENT" means each supplement to the Trust Agreement
pursuant to which a Class of Certificates is authorized.
SECTION 2.1. CERTIFICATES. The Initial Rate Adjustment
Date for each Class of Certificates shall be the related Certificate
Initial Rate Adjustment Date.
During the related Certificate Initial Period, each Class of Auction
Rate Certificates shall bear interest at the Certificate Initial Rate.
Thereafter, except with respect to an Auction Period Adjustment, the
Certificates shall bear interest at a Certificate Rate based on a 28-day Auction
Period (or such other number of days as may be set forth in a Trust Supplement),
as determined pursuant to this Section 2.1 and Section 2.2 hereof.
For the Certificate Initial Period and each Auction Period thereafter,
interest at the Certificate Rate shall accrue daily and shall be computed for
the actual number of days elapsed on the basis of a year consisting of 360 days.
The Certificate Rate to be borne by the Certificates after such
Certificate Initial Period for each Auction Period until an Auction Period
Adjustment, if any, shall be determined as herein described. Except as otherwise
set forth in a Trust Supplement, each such Auction Period shall commence on and
include the first Business Day following the expiration of the immediately
preceding Auction Period and terminate on and include the day immediately
preceding the fourth Business Day of the fourth following week, subject to
adjustment as described below in the event that there are fewer than four
Business Days during any such week; provided, however, that in the case of the
Auction Period that immediately follows the Certificate Initial Period for the
Certificates, such Auction Period shall commence on the Certificate Initial Rate
Adjustment Date. The Certificate Rate for each Auction Period shall be the
lesser of the (i) Net Loan Rate in effect for such Auction Period and (ii) the
Auction Rate in effect for such Auction Period as determined in accordance with
Section 2.2.1 hereof; provided that if, on any Certificate Rate Determination
Date, an Auction is not held for any reason, then the Certificate Rate on the
Certificates for the next succeeding Auction Period shall be the Net Loan Rate.
Notwithstanding the foregoing:
a) if the ownership of a Class of Auction Rate Certificates is no
longer maintained in Book-Entry Form, the Certificate Rate for any Certificate
Interest Period commencing after the delivery of certificates representing such
Certificates shall equal the lesser of (i) the Maximum Auction Rate and (ii) the
Net Loan Rate on the Business Day immediately preceding the first day of such
subsequent Certificate Interest Period; or
b) if an Event of Default shall have occurred, the Certificate Rate on
the Auction Rate Certificates for the Interest Period commencing on or
immediately after such Event of Default, and for the Certificate Interest Period
thereafter, to and including the Interest Period, if any, during which, or
commencing less than two Business Days after, such Event of Default is cured in
accordance with this Trust Agreement, shall equal the Non-Payment Rate on the
first day of each such Interest Period.
In accordance with Section 2.2.1(c)(ii) hereof, the Auction Agent
shall promptly give written notice to the Administrator, the Eligible Lender
Trustee and the Surety Provider of the Certificate Rate (unless the Certificate
Rate is the Non-Payment Rate) and either the Auction Rate or the Net Loan Rate,
as the case may be, when such rate is not the Certificate Rate. The Eligible
Lender Trustee shall notify the Certificateholders of the Certificate Rate
applicable to the Certificates for each Auction Period on the second Business
Day of such Auction Period.
In the event that there are fewer than four Business Days in any week
during which the Auction Period for Certificates would otherwise be scheduled to
expire, the expiration date and Certificate Distribution Date for such Auction
Period then in effect, if applicable, and the Certificate Rate Determination
Date and commencement date for the immediately following Interest Period for the
Certificates may be adjusted to fall on such dates as the Market Agent, with the
consent of the Auction Agent, may determine to be appropriate under such
circumstances. The Market Agent shall promptly notify the Eligible Lender
Trustee and the Administrator and the Surety Provider in writing of any such
determination. The Eligible Lender Trustee, upon receipt of such notice, shall
immediately give written notification of such determination to the
Certificateholders.
Notwithstanding any other provision of the Certificates or the Trust
Agreement and except for the occurrence of an Event of Default, interest payable
on each Class of Auction Rate Certificates for an Auction Period shall never
exceed for such Auction Period the amount of interest payable at the Net Loan
Rate (subject to the Certificate Rate Limitation) in effect for such Auction
Period.
If the Auction Rate for a Class of Auction Rate Certificates is
greater than the Net Loan Rate, then the Certificate Rate applicable to such
Class of Certificates for that Interest Period will be the Net Loan Rate. If the
Certificate Rate applicable to such Class of Certificates for any Interest
Period is the Net Loan Rate, the Eligible Lender Trustee shall determine the
Certificateholders' Auction Rate Interest Carryover, if any, with respect to
such Certificates. Such Certificateholders' Auction Rate Interest Carryover
shall bear interest calculated at a rate equal to One-Month LIBOR (as determined
by the Auction Agent, provided the Eligible Lender Trustee has received notice
of One-Month LIBOR from the Auction Agent, and if the Eligible Lender Trustee
shall not have received such notice from the Auction Agent, then as determined
by the Eligible Lender Trustee) from the Certificate Distribution Date for the
Interest Period with respect to which such Certificateholders' Auction Rate
Interest Carryover was calculated, until paid. For purposes of the Trust
Agreement, any reference to "principal" or "interest" herein shall not include
within the meaning of such words Certificateholders' Auction Rate Interest
Carryover or any interest accrued on any such Certificateholders' Auction Rate
Interest Carryover. Such Certificateholders' Auction Rate Interest Carryover
shall be calculated in sufficient time for the Eligible Lender Trustee to give
notice to the Certificateholder of such Certificateholders' Auction Rate
Interest Carryover as required in the next succeeding sentence. On the
Certificate Distribution Date for an Interest Period with respect to which such
Certificateholders' Auction Rate Interest Carryover has been calculated by the
Eligible Lender Trustee, the Eligible Lender Trustee shall give written notice
to the Certificateholders of the Certificateholders' Auction Rate Interest
Carryover applicable to the Certificates, which written notice may be included
in any other written statement sent by the Eligible Lender Trustee to such
Certificateholders, and shall be mailed on such Certificate Distribution Date by
first-class mail, postage prepaid, to each such Certificateholder at such
Certificateholder's address as it appears on the registration books maintained
by the Registrar. Such notice shall state, in addition to such
Certificateholders' Auction Rate Interest Carryover, that, unless and until the
Final Maturity Date for the Certificates has occurred (after which all accrued
Certificateholders Auction Rate Interest Carryover (and all accrued interest
thereon) that remains unpaid shall be cancelled and no Certificateholders'
Auction Rate Interest Carryover (and interest accrued thereon) shall be paid
with respect to the Certificates), (i) the Certificateholders' Auction Rate
Interest Carryover (and interest accrued thereon calculated at a rate equal to
One-Month LIBOR) shall be paid by the Eligible Lender Trustee on the
Certificates on the first occurring Certificate Distribution Date for a
subsequent Interest Period if and to the extent that (1) during such Interest
Period no additional Certificateholders' Auction Rate Interest Carryover is
accruing on the Certificates and (2) moneys are available pursuant to the terms
of the Trust Agreement in an amount sufficient to pay all or a portion of such
Certificateholders' Auction Rate Interest Carryover and (ii) interest shall
accrue on the Certificateholders' Auction Rate Interest Carryover at a rate
equal to One-Month LIBOR until such Certificateholders' Auction Rate Interest
Carryover is paid in full or the Final Maturity Date for the Certificates
occurs.
The Certificateholders' Auction Rate Interest Carryover for a Class of
Auction Rate Certificates shall be paid by the Eligible Lender Trustee on
Outstanding Certificates of such Class on the Certificate Distribution Date
following the first occurring Certificate Distribution Date for a subsequent
Interest Period if and to the extent that (i) during such Interest Period no
additional Certificateholders' Auction Rate Interest Carryover is accruing on
such Class of Certificates and (ii) moneys are available pursuant to the terms
of the Trust Agreement in an amount sufficient to pay all or a portion of such
Certificateholders' Auction Rate Interest Carryover. Any Certificateholders'
Auction Rate Interest Carryover (and any interest accrued thereon) which is due
and payable on the Final Maturity Date for the Certificates, shall be paid to
the Certificateholder thereof on said Certificate Distribution Date to the
extent that moneys are available therefor in accordance with the provisions of
the Trust Agreement; provided, however, that any Certificateholders' Auction
Rate Interest Carryover (and any interest accrued thereon) which is not yet due
and payable on said Final Maturity Date shall be cancelled with respect to said
Class of Certificates on said Final Maturity Date. To the extent that any
portion of the Certificateholders' Auction Rate Interest Carryover for a Class
of Auction Rate Certificates remains unpaid after payment of a portion thereof,
such unpaid portion of the Certificateholders' Auction Rate Interest Carryover
shall be paid in whole or in part as required hereunder until fully paid by the
Eligible Lender Trustee on the next occurring Certificate Distribution Date or
Dates, as necessary, for a subsequent Interest Period or Periods, for such Class
if and to the extent that the conditions in the second preceding sentence are
satisfied. On any Certificate Distribution Date on which the Eligible Lender
Trustee pays only a portion of the Certificateholders' Auction Rate Interest
Carryover on a Class of Certificates, the Eligible Lender Trustee shall give
written notice in the manner set forth in the immediately preceding paragraph to
the Certificateholder receiving such partial payment of the Certificateholders'
Auction Rate Interest Carryover remaining unpaid on such Class of Certificates.
The Certificate Distribution Date in such subsequent Interest Period
on which such Certificateholders' Auction Rate Interest Carryover for a Class of
Auction Rate Certificates shall be paid shall be determined by the Eligible
Lender Trustee in accordance with the provisions of the immediately preceding
paragraph, and the Eligible Lender Trustee shall make payment of the
Certificateholders' Auction Rate Interest Carryover in the same manner as, and
from the same Account from which, it pays interest on the Certificates on a
Certificate Distribution Date.
In the event that the Auction Agent no longer determines, or fails to
determine, when required, the Certificate Rate with respect to a Class of
Auction Rate Certificates, or, if for any reason such manner of determination
shall be held to be invalid or unenforceable, the Certificate Rate for the next
succeeding Interest Period for such Class of Auction Rate Notes shall be the Net
Loan Rate as determined by the Administrator (which is responsible for notifying
the Auction Agent of such Net Loan Rate), for such next succeeding Auction
Period.
SECTION 2.2. CERTIFICATE RATE.
SECTION 2.2.1. DETERMINING THE INTEREST RATE.
By purchasing Auction Rate Certificates, whether in an Auction or
otherwise, each purchaser of the Auction Rate Certificates, or its
Broker-Dealer, must agree and shall be deemed by such purchase to have agreed
(i) to participate in Auctions on the terms described herein, (ii) to have its
beneficial ownership of the Auction Rate Certificates maintained at all times in
Book-Entry Form for the account of its Participant, which in turn will maintain
records of such beneficial ownership and (iii) to authorize such Participant to
disclose to the Auction Agent such information with respect to such beneficial
ownership as the Auction Agent may request.
So long as the ownership of Auction Rate Certificates is maintained in
Book-Entry Form, an Existing Certificateholder may sell, transfer or otherwise
dispose of Auction Rate Certificates only pursuant to a Bid or Sell Order placed
in an Auction or otherwise sell, transfer or dispose of Auction Rate
Certificates through a Broker-Dealer, provided that, in the case of all
transfers other than pursuant to Auctions, such Existing Certificateholder, its
Broker-Dealer or its Participant advises the Auction Agent of such transfer.
Auctions shall be conducted on each Auction Date, if there is an Auction Agent
on such Auction Date, in the following manner:
(a) (i) Prior to the Submission Deadline on each Auction Date relating
to a Class of Auction Rate Notes:
(A) each Existing Certificateholder of the applicable Class of
Auction Rate Notes may submit to a Broker-Dealer by telephone or
otherwise any information as to:
(1) the principal amount of Outstanding Auction Rate
Certificates of such Class, if any, owned by such Existing
Certificateholder which such Existing Certificateholder desires
to continue to own without regard to the Certificate Rate for the
next succeeding Auction Period;
(2) the principal amount of Outstanding Auction Rate
Certificates of such Class, if any, which such Existing
Certificateholder offers to sell if the Certificate Rate for the
next succeeding Auction Period shall be less than the rate per
annum specified by such Existing Certificateholder; and/or
(3) the principal amount of Outstanding Auction Rate
Certificates of such Class, if any, owned by such Existing
Certificateholder which such Existing Certificateholder offers to
sell without regard to the Certificate Rate for the next
succeeding Auction Period;
and
(B) one or more Broker-Dealers may contact Potential
Certificateholders to determine the principal amount of Auction Rate
Certificates of such Class which each Potential Certificateholder
offers to purchase, if the Certificate Rate for the next succeeding
Auction Period shall not be less than the rate per annum specified by
such Potential Certificateholder.
The statement of an Existing Certificateholder or a Potential
Certificateholder referred to in (A) or (B) of this paragraph (i) is herein
referred to as an "Order," and each Existing Certificateholder and each
Potential Certificateholder placing an Order is herein referred to as a
"Bidder"; an Order described in clause (A)(1) is herein referred to as a "Hold
Order"; an Order described in clauses (A)(2) and (B) is herein referred to as a
"Bid"; and an Order described in clause (A)(3) is herein referred to as a "Sell
Order."
(ii) (A) Subject to the provisions of Section 2.2.1(b)
hereof, a Bid by an Existing Certificateholder shall constitute
an irrevocable offer to sell:
(1) the principal amount of Outstanding Auction Rate
Certificates specified in such Bid if the Certificate Rate
determined as provided in this Section 2.2.1 shall be less than
the rate specified therein; or
(2) such principal amount, or a lesser principal amount of
Outstanding Auction Rate Certificates to be determined as set
forth in Section 2.2.1(d)(i)(D) hereof, if the Certificate Rate
determined as provided in this Section 2.2.1 shall be equal to
the rate specified therein; or
(3) such principal amount, or a lesser principal amount of
Outstanding Auction Rate Certificates to be determined as set
forth in Section 2.2.1(d)(ii)(C) hereof, if the rate specified
therein shall be higher than the Certificate Rate and Sufficient
Bids have not been made.
(B) Subject to the provisions of Section 2.2.1(b) hereof, a Sell
Order by an Existing Certificateholder shall constitute an irrevocable
offer to sell:
(1) the principal amount of Outstanding Auction Rate
Certificates specified in such Sell Order; or
(2) such principal amount, or a lesser principal amount of
Outstanding Auction Rate Certificates set forth in Section
2.2.1(d)(ii)(C) hereof, if Sufficient Bids have not been made.
(C) Subject to the provisions of Section 2.2.1(b) hereof, a Bid
by a Potential Certificateholder shall constitute an irrevocable offer
to purchase:
(1) the principal amount of Outstanding Auction Rate
Certificates specified in such Bid if the Certificate Rate
determined as provided in this Section 2.2.1 shall be higher than
the rate specified in such Bid; or
(2) such principal amount, or a lesser principal amount of
Outstanding Auction Rate Certificates set forth in Section
2.2.1(d)(i)(E) hereof, if the Certificate Rate determined as
provided in this Section 2.2.1 shall be equal to the rate
specified in such Bid.
(b) (i) Each Broker-Dealer shall submit in writing to the Auction
Agent prior to the Submission Deadline on each Auction Date all Orders
obtained by such Broker-Dealer and shall specify with respect to each such
Order:
(A) the name of the Bidder placing such Order;
(B) the aggregate principal amount and Class of Auction Rate
Certificates that are the subject of such Order;
(C) to the extent that such Bidder is an Existing
Certificateholder:
(1) the principal amount and Class of Auction Rate
Certificates, if any, subject to any Hold Order placed by such
Existing Certificateholder;
(2) the principal amount and Class of Auction Rate
Certificates, if any, subject to any Bid placed by such Existing
Certificateholder and the rate specified in such Bid; and
(3) the principal amount and Class of Auction Rate
Certificates, if any, subject to any Sell Order placed by such
Existing Certificateholder;
and
(D) to the extent such Bidder is a Potential Certificateholder,
the rate specified in such Potential Certificateholder's Bid.
(ii) If any rate specified in any Bid contains more than three figures
to the right of the decimal point, the Auction Agent shall round such rate
up to the next higher one thousandth (.001) of one percent.
(iii) If an Order or Orders covering all Outstanding Auction Rate
Certificates of the applicable Class owned by an Existing Certificateholder
is not submitted to the Auction Agent prior to the Submission Deadline, the
Auction Agent shall deem a Hold Order to have been submitted on behalf of
such Existing Certificateholder covering the principal amount of
Outstanding Auction Rate Certificates of such Class owned by such Existing
Certificateholder and not subject to an Order submitted to the Auction
Agent.
(iv) Neither the Issuer, the Eligible Lender Trustee nor the Auction
Agent shall be responsible for any failure of a Broker-Dealer to submit an
Order to the Auction Agent on behalf of any Existing Certificateholder or
Potential Certificateholder.
(v) If any Existing Certificateholder submits through a Broker-Dealer
to the Auction Agent one or more Orders covering in the aggregate more than
the principal amount of the Class of Outstanding Auction Rate Certificates
owned by such Existing Certificateholder, such Orders shall be considered
valid as follows and in the following order of priority:
(A) All Hold Orders shall be considered valid, but only up to the
aggregate principal amount of the Class of Outstanding Auction Rate
Certificates owned by such Existing Certificateholder, and if the
aggregate principal amount of the Class of Auction Rate Certificates
subject to such Hold Orders exceeds the aggregate principal amount of
the Class of Auction Rate Certificates owned by such Existing
Certificateholder, the aggregate principal amount of the Class of
Auction Rate Certificates subject to each such Hold Order shall be
reduced pro rata so that the aggregate principal amount of the Class
of Auction Rate Certificates subject to such Hold Order equals the
aggregate principal amount of the Class of Outstanding Auction Rate
Certificates owned by such Existing Certificateholder.
(B) (1) any Bid shall be considered valid up to an amount equal
to the excess of the principal amount of the Class of Outstanding
Auction Rate Certificates owned by such Existing Certificateholder
over the aggregate principal amount of the Class of Auction Rate
Certificates subject to any Hold Order referred to in clause (A) of
this paragraph (v);
(2) subject to subclause (1) of this clause (B), if more than one
Bid with the same rate is submitted on behalf of such Existing
Certificateholder and the aggregate principal amount of the Class of
Outstanding Auction Rate Certificates subject to such Bids is greater
than such excess, such Bids shall be considered valid up to an amount
equal to such excess;
(3) subject to subclauses (1) and (2) of this clause (B), if more
than one Bid with different rates are submitted on behalf of such
Existing Certificateholder, such Bids shall be considered valid first
in the ascending order of their respective rates until the highest
rate is reached at which such excess exists and then at such rate up
to the amount of such excess; and
(4) in any such event, the amount of the Class of Outstanding
Auction Rate Certificates, if any, subject to Bids not valid under
this clause (B) shall be treated as the subject of a Bid by a
Potential Certificateholder at the rate therein specified; and
(C) All Sell Orders shall be considered valid up to an amount
equal to the excess of the principal amount of the Class of
Outstanding Auction Rate Certificates owned by such Existing
Certificateholder over the aggregate principal amount of the Class of
Auction Rate Certificates subject to Hold Orders referred to in clause
(A) of this paragraph (v) and valid Bids referred to in clause (B) of
this paragraph (v).
(vi) If more than one Bid for a Class of Auction Rate Certificates is
submitted on behalf of any Potential Certificateholder, each Bid submitted
shall be a separate Bid with the rate and principal amount therein
specified.
(vii) An Existing Certificateholder of a Class of Auction Rate
Certificates that offers to purchase additional Auction Rate Certificates
is, for purposes of such offer, treated as a Potential Certificateholder.
(viii) Any Bid or Sell Order submitted by an Existing
Certificateholder covering an aggregate principal amount of a Class of
Auction Rate Certificates not equal to an Authorized Denomination shall be
rejected and shall be deemed a Hold Order. Any Bid submitted by a Potential
Certificateholder covering an aggregate principal amount of a Class of
Auction Rate Certificates not equal to an Authorized Denomination shall be
rejected.
(ix) Any Bid specifying a rate higher than the Maximum Auction Rate
will (a) be treated as a Sell Order if submitted by an Existing
Certificateholder and (b) not be accepted if submitted by a Potential
Certificateholder.
(x) Any Bid submitted by an Existing Certificateholder or a Potential
Certificateholder specifying a rate lower than the Minimum Auction Rate
shall be treated as a Bid specifying the Minimum Auction Rate.
(xi) Any Order submitted in an Auction by a Broker-Dealer to the
Auction Agent at the Submission Deadline on any Auction Date shall be
irrevocable.
(c) (i) Not earlier than the Submission Deadline on each Auction Date,
the Auction Agent shall assemble all valid Orders submitted or deemed submitted
to it by the Broker-Dealers (each such Order as submitted or deemed submitted by
a Broker-Dealer being herein referred to individually as a "Submitted Hold
Order," a "Submitted Bid" or a "Submitted Sell Order," as the case may be, or as
a "Submitted Order," and collectively as "Submitted Hold Orders," "Submitted
Bids" or "Submitted Sell Orders," as the case may be, or as "Submitted Orders")
and shall determine for the applicable Class of Auction Rate Notes:
(A) the excess of the total principal amount of Outstanding
Auction Rate Certificates of such Class over the sum of the aggregate
principal amount of Outstanding Auction Rate Certificates of such
Class subject to Submitted Hold Orders (such excess being herein
referred to as the "Available Auction Rate Certificates" of such
Class), and
(B) from the Submitted Orders whether:
(1) the aggregate principal amount of Outstanding Auction
Rate Certificates of such Class subject to Submitted Bids by
Potential Certificateholders specifying one or more rates equal
to or lower than the Maximum Auction Rate;
exceeds or is equal to the sum of:
(2) the aggregate principal amount of Outstanding Auction
Rate Certificates of such Class subject to Submitted Bids by
Existing Certificateholders specifying one or more rates higher
than the Maximum Auction Rate; and
(3) the aggregate principal amount of Outstanding Auction
Rate Certificates of such Class subject to submitted Sell Orders;
(in the event such excess or such equality exists, other than because
all of the Outstanding Auction Rate Certificates of such Class are
subject to Submitted Hold Orders, such Submitted Bids described in
subclause (1) above shall be referred to collectively as "Sufficient
Bids"); and
(C) if Sufficient Bids exist, the "Bid Auction Rate", which shall
be the lowest rate specified in such Submitted Bids such that if:
(1) (x) each Submitted Bid from Existing Certificateholders
specifying such lowest rate and (y) all other Submitted Bids from
Existing Certificateholders specifying lower rates were rejected,
thus entitling such Existing Certificateholders to continue to
own the principal amount of Auction Rate Certificates of such
Class subject to such Submitted Bids; and
(2) (x) each such Submitted Bid from Potential
Certificateholders specifying such lowest rate and (y) all other
Submitted Bids from Potential Certificateholders specifying lower
rates were accepted;
the result would be that such Existing Certificateholders described in
subclause (1) above would continue to own an aggregate principal amount
of Outstanding Auction Rate Certificates of the applicable Class which,
when added to the aggregate principal amount of Outstanding Auction
Rate Certificates of such Class to be purchased by such Potential
Certificateholders described in subclause (2) above, would equal not
less than the Available Auction Rate Certificates of such Class.
(ii) Promptly after the Auction Agent has made the determinations
pursuant to Section 2.2.1(c)(i) hereof, the Auction Agent shall advise the
Eligible Lender Trustee of the Net Loan Rate, the Maximum Auction Rate and
the All Hold Rate and the components thereof on the Auction Date and, based
on such determinations, the Auction Rate for the next succeeding Interest
Period for such Class of Auction Rate Certificates as follows:
(A) if Sufficient Bids exist, that the Auction Rate for the next
succeeding Interest Period for such Class of Auction Rate Certificates
shall be equal to the Bid Auction Rate so determined;
(B) if Sufficient Bids do not exist (other than because all of
the Outstanding Auction Rate Certificates of such Class are subject to
Submitted Hold Orders), that the Auction Rate for the next succeeding
Interest Period for such Class of Auction Rate Certificates shall be
equal to the Maximum Auction Rate; or
(C) if all Outstanding Auction Rate Certificates of such Class
are subject to Submitted Hold Orders, that the Auction Rate for the
next succeeding Interest Period for such Class of Auction Rate
Certificates shall be equal to the All Hold Rate.
(iii) Promptly after the Auction Agent has determined the Auction
Rate, the Auction Agent shall determine and advise the Eligible Lender
Trustee of the applicable Certificate Rate, which rate shall be the lesser
of (a) the Auction Rate and (b) the Net Loan Rate; provided, however, that
in no event shall the Certificate Rate exceed the Certificate Rate
Limitation.
(d) Existing Certificateholders shall continue to own the principal
amount of Auction Rate Certificates that are subject to Submitted Hold Orders.
If the Net Loan Rate is equal to or greater than the Bid Auction Rate and if
Sufficient Bids have been received by the Auction Agent, the Bid Auction Rate
will be the Certificate Rate, and Submitted Bids and Submitted Sell Orders will
be accepted or rejected and the Auction Agent will take such other action as
described below in subparagraph (i).
If the Net Loan Rate is less than the Auction Rate, the Net Loan Rate
will be the Certificate Rate. If the Auction Rate and the Net Loan Rate are both
greater than the Certificate Rate Limitation, the Certificate Rate shall be
equal to the Certificate Rate Limitation. If the Auction Agent has not received
Sufficient Bids (other than because all of the Outstanding Auction Rate
Certificates of such Class are subject to Submitted Hold Orders), the
Certificate Rate will be the lesser of the Maximum Auction Rate and the Net Loan
Rate. In any of the cases described above, Submitted Orders will be accepted or
rejected and the Auction Agent will take such other action as described below in
subparagraph (ii).
(i) if Sufficient Bids have been made and the Net Loan Rate is equal
to or greater than the Bid Auction Rate (in which case the Certificate Rate
shall be the Bid Auction Rate), all Submitted Sell Orders shall be accepted
and, subject to the provisions of paragraphs (iv) and (v) of this Section
2.2.1(d), Submitted Bids shall be accepted or rejected as follows in the
following order of priority, and all other Submitted Bids shall be
rejected:
(A) Existing Certificateholders' Submitted Bids specifying any
rate that is higher than the Certificate Rate shall be accepted, thus
requiring each such Existing Certificateholder to sell the aggregate
principal amount of Auction Rate Certificates subject to such
Submitted Bids;
(B) Existing Certificateholders' Submitted Bids specifying any
rate that is lower than the Certificate Rate shall be rejected, thus
entitling each such Existing Certificateholder to continue to own the
aggregate principal amount of Auction Rate Certificates subject to
such Submitted Bids;
(C) Potential Certificateholders' Submitted Bids specifying any
rate that is lower than the Certificate Rate shall be accepted;
(D) Each Existing Certificateholders' Submitted Bid specifying a
rate that is equal to the Certificate Rate shall be rejected, thus
entitling such Existing Certificateholder to continue to own the
aggregate principal amount of Auction Rate Certificates subject to
such Submitted Bid, unless the aggregate principal amount of
Outstanding Auction Rate Certificates subject to all such Submitted
Bids shall be greater than the principal amount of Auction Rate
Certificates of the applicable Class (the "remaining principal
amount") equal to the excess of the Available Auction Rate
Certificates of such Class over the aggregate principal amount of
Auction Rate Certificate of such Class subject to Submitted Bids
described in clauses (B) and (C) of this Section 2.2.1(d)(i), in which
event such Submitted Bid of such Existing Certificateholder shall be
rejected in part, and such Existing Certificateholder shall be
entitled to continue to own the principal amount of such Class of
Auction Rate Certificates subject to such Submitted Bid, but only in
an amount equal to the aggregate principal amount of Auction Rate
Certificates of such Class obtained by multiplying the remaining
principal amount by a fraction, the numerator of which shall be the
principal amount of Outstanding Auction Rate Certificates of such
Class owned by such Existing Certificateholder subject to such
Submitted Bid and the denominator of which shall be the sum of the
principal amount of Outstanding Auction Rate Certificates of such
Class subject to such Submitted Bids made by all such Existing
Certificateholders that specified a rate equal to the Certificate
Rate; and
(E) Each Potential Certificateholder's Submitted Bid specifying a
rate that is equal to the Certificate Rate shall be accepted, but only
in an amount equal to the principal amount of Auction Rate
Certificates of the applicable Class obtained by multiplying the
excess of the aggregate principal amount of Available Auction Rate
Certificates of such Class over the aggregate principal amount of
Auction Rate Certificates of such Class subject to Submitted Bids
described in clauses (B), (C) and (D) of this Section 2.2.1(d)(i) by a
fraction the numerator of which shall be the aggregate principal
amount of Outstanding Auction Rate Certificates of such Class subject
to such Submitted Bid and the denominator of which shall be the sum of
the principal amount of Outstanding Auction Rate Certificates of such
Class subject to Submitted Bids made by all such Potential
Certificateholders that specified a rate equal to the Certificate
Rate.
(ii) If Sufficient Bids have not been made (other than because all of
the Outstanding Auction Rate Certificates of the applicable Class are
subject to submitted Hold Orders), or if the Net Loan Rate is less than the
Bid Auction Rate (in which case the Certificate Rate shall be the Net Loan
Rate), or if the Certificate Rate Limitation applies, subject to the
provisions of Section 2.2.1(d)(iv) hereof, Submitted Orders shall be
accepted or rejected as follows in the following order of priority and all
other Submitted Bids shall be rejected:
(A) Existing Certificateholders' Submitted Bids specifying any
rate that is equal to or lower than the Certificate Rate shall be
rejected, thus entitling such Existing Certificateholders to continue
to own the aggregate principal amount of Auction Rate Certificates
subject to such Submitted Bids;
(B) Potential Certificateholders' Submitted Bids specifying (1)
any rate that is equal to or lower than the Certificate Rate shall be
accepted and (2) any rate that is higher than the Certificate Rate
shall be rejected; and
(C) each Existing Certificateholder's Submitted Bid specifying
any rate that is higher than the Certificate Rate and the Submitted
Sell Order of each Existing Certificateholder shall be accepted, thus
entitling each Existing Certificateholder that submitted any such
Submitted Bid or Submitted Sell Order to sell the Auction Rate
Certificates subject to such Submitted Bid or Submitted Sell Order,
but in both cases only in an amount equal to the aggregate principal
amount of Auction Rate Certificates of the applicable Class obtained
by multiplying the aggregate principal amount of Auction Rate
Certificates subject to Submitted Bids described in clause (B) of this
Section 2.2.1(d)(ii) by a fraction the numerator of which shall be the
aggregate principal amount of Outstanding Auction Rate Certificates of
such Class owned by such Existing Certificateholder subject to such
submitted Bid or Submitted Sell Order and the denominator of which
shall be the aggregate principal amount of Outstanding Auction Rate
Certificates of such Class subject to all such Submitted Bids and
Submitted Sell Orders.
(iii) If all Outstanding Auction Rate Certificates of such Class are
subject to Submitted Hold Orders, all Submitted Bids shall be rejected.
(iv) If, as a result of the procedures described in paragraph (i) or
(ii) of this Section 2.2.1(d), any Existing Certificateholder would be
entitled or required to sell, or any Potential Certificateholder would be
entitled or required to purchase, a principal amount of Auction Rate
Certificates of the applicable Class that is not equal to an Authorized
Denomination, the Auction Agent shall, in such manner as in its sole
discretion it shall determine, round up or down the principal amount of
Auction Rate Certificates to be purchased or sold by any Existing
Certificateholder or Potential Certificateholder so that the principal
amount of Auction Rate Certificates purchased or sold by each Existing
Certificateholder or Potential Certificateholder shall be equal to an
Authorized Denomination or an integral multiple of $50,000 in excess
thereof.
(v) If, as a result of the procedures described in paragraph (ii) of
this Section 2.2.1(d), any Potential Certificateholder would be entitled or
required to purchase less than an Authorized Denomination of Auction Rate
Certificates of the applicable Class, the Auction Agent shall, in such
manner as in its sole discretion it shall determine, allocate Auction Rate
Certificates of such Class for purchase among Potential Certificateholders
so that only Auction Rate Certificates of such Class in Authorized
Denominations or integral multiples of $50,000 in excess thereof are
purchased by any Potential Certificateholder, even if such allocation
results in one or more of such Potential Certificateholders not purchasing
any Auction Rate Certificates of such Class.
(e) Based on the result of each Auction, the Auction Agent shall
determine the aggregate principal amount of Auction Rate Certificates of the
applicable Class to be purchased and the aggregate principal amount of Auction
Rate Certificates of the applicable Class to be sold by Potential
Certificateholders and Existing Certificateholders on whose behalf each
Broker-Dealer submitted Bids or Sell Orders and, with respect to each
Broker-Dealer, to the extent that such aggregate principal amount of Auction
Rate Certificates of the applicable Class to be sold differs from such aggregate
principal amount of Auction Rate Certificates of the applicable Class to be
purchased, determine to which other Broker-Dealer or Broker-Dealers acting for
one or more purchasers such Broker-Dealer shall deliver, or from which other
Broker-Dealer or Broker-Dealers acting for one or more sellers such
Broker-Dealer shall receive, as the case may be, Auction Rate Certificates of
the applicable Class.
(f) Any calculation by the Auction Agent, the Administrator or the
Eligible Lender Trustee, as applicable, of the Certificate Rate, One-Month
LIBOR, Three-Month LIBOR, the Maximum Auction Rate, the All Hold Rate, the Net
Loan Rate and the Non-Payment Rate shall, in the absence of manifest error, be
binding on all other parties.
(g) Notwithstanding anything in the Trust Agreement to the contrary
notwithstanding, no Auction will be held on any Auction Date hereunder on which
there are insufficient moneys held under the Trust Agreement and available to
pay the principal of and interest due on the Certificate Distribution Date
immediately following such Auction Date.
SECTION 2.2.2. CHANGES IN THE AUCTION DATE. The Market Agent, with the
written consent of an Authorized Officer, may specify an earlier Auction Date
(but in no event more than five Business Days earlier) than the Auction Date
that would otherwise be determined in accordance with the definition of "Auction
Date" in Section 1.1 of this Appendix I, or any applicable Trust Supplement,
with respect to one or more specified Auction Periods in order to conform with
then current market practice with respect to similar securities or to
accommodate economic and financial factors that may affect or be relevant to the
day of the week constituting an Auction Date and the Certificate Rate borne on
the Auction Rate Certificates of the applicable Class. The Market Agent shall
deliver a written request for consent to such change in the length of the
Auction Date to the Issuer not less than three days nor more than 20 days prior
to the effective date of such change together with a certificate demonstrating
the need for change in reliance on such factors. The Market Agent shall provide
notice of its determination to specify an earlier Auction Date for one or more
Auction Periods by means of a written notice delivered at least 10 days prior to
the proposed changed Auction Date to the Eligible Lender Trustee, the Auction
Agent, the Issuer and the Securities Depository. Such notice shall be
substantially in the form of, or contain substantially the information contained
in, Exhibit C to this Trust Agreement.
In connection with any change described in this Section 2.2.2, the
Auction Agent shall provide such further notice to such parties as is specified
in Section 2.2 of the Auction Agent Agreement.
SECTION 2.3. ADDITIONAL PROVISIONS REGARDING THE CERTIFICATE RATES.
The determination of a Certificate Rate by the Auction Agent or any other Person
pursuant to the provisions of this Appendix B shall be conclusive and binding on
the Certificateholders, and the Issuer and the Eligible Lender Trustee may rely
thereon for all purposes.
In no event shall the cumulative amount of interest paid or payable on
the Certificates (including interest calculated as provided herein, plus any
other amounts that constitute interest on the Certificates under applicable law,
which are contracted for, charged, reserved, taken or received pursuant to the
Certificates or related documents) calculated from the date of issuance of the
Certificates through any subsequent day during the term of the Certificates or
otherwise prior to payment in full of the Certificates exceed the amount
permitted by applicable law. If the applicable law is ever judicially
interpreted so as to render usurious any amount called for under the
Certificates or related documents or otherwise contracted for, charged,
reserved, taken or received in connection with the Certificates, or if the
acceleration of the maturity of the Certificates results in payment to or
receipt by the Certificateholder or any former Certificateholder of any interest
in excess of that permitted by applicable law, then, notwithstanding any
provision of the Certificates or related documents to the contrary, all excess
amounts theretofore paid or received with respect to the Certificates shall be
credited on the principal balance of the Certificates (or, if the Certificates
have been paid or would thereby be paid in full, refunded by the recipient
thereof), and the provisions of the Certificates and related documents shall
automatically and immediately be deemed reformed and the amounts thereafter
collectible hereunder and thereunder reduced, without the necessity of the
execution of any new document, so as to comply with the applicable law, but so
as to permit the recovery of the fullest amount otherwise called for under the
Certificates and under the related documents.
SECTION 2.4. CHANGES IN AUCTION PERIOD OR PERIODS.
(a) While any of the Auction Rate Certificates are Outstanding, the
Issuer may, from time to time, convert the length of one or more Auction Periods
(an "Auction Period Adjustment"), in order to conform with then current market
practice with respect to similar securities or to accommodate economic and
financial factors that may affect or be relevant to the length of the Auction
Period and the Certificate Rate borne by the Auction Rate Certificates. The
Issuer shall not initiate an Auction Period Adjustment unless it shall have
received the written consent of the Market Agent and the Surety Provider, which
consent shall not be unreasonably withheld, not less than three days nor more
than 20 days prior to the effective date of an Auction Period Adjustment. The
Issuer shall initiate the Auction Period Adjustment by giving written notice by
Issuer Order to the Indenture Trustee, the Auction Agent, the Market Agent, the
Surety Provider and the Securities Depository in substantially the form of, or
containing substantially the information contained in, Exhibit D to the First
Terms Supplement at least 10 days prior to the Auction Date for such Auction
Period.
(b) Any such adjusted Auction Period shall not be less than 7 days nor
more than 91 days. If any such adjusted Auction Period will be less than the
number of days in the then current Auction Period, the notice described above
will be effective only if it is accompanied by a written statement of the
Eligible Lender Trustee, the Auction Agent and the Securities Depository to the
effect that they are capable of performing their duties, if any, under this
Appendix B, the Auction Agent Agreement and any Broker-Dealer Agreement with
respect to such changed Auction Period.
(c) An Auction Period Adjustment shall take effect only if (A) the
Eligible Lender Trustee and the Auction Agent receive, by 11:00 a.m., eastern
time, on the Business Day before the Auction Date for the first such Auction
Period, an Issuer Certificate in substantially the form attached as, or
containing substantially the same information contained in, Exhibit E to the
First Terms Supplement, authorizing the Auction Period Adjustment specified in
such certificate along with a copy of the certificate of the Market Agent
described above in subparagraph (a) above and, if applicable, the written
statement of the Eligible Lender Trustee, the Auction Agent and the Securities
Depository described in subparagraph (b) above and (B) Sufficient Bids exist as
of the Auction on the Auction Date for such first Auction Period. If the
condition referred to in (A) above is not met, the Certificate Rate for the
applicable Class of Auction Rate Certificates for the next Auction Period shall
be determined pursuant to the above provisions of Section 2.2 and the Auction
Period shall be the Auction Period determined without reference to the proposed
change. If the condition referred to in (A) is met but the condition referred to
in (B) above is not met, the Certificate Rate for the applicable Class of
Auction Rate Certificates for the next Auction Period shall be the lesser of the
Maximum Auction Rate and the Net Loan Rate and the Auction Period shall be the
Auction Period determined without reference to the proposed change.
In connection with any Auction Period Adjustment, the Auction Agent
shall provide such further notice to such parties as is specified in Section 2.2
of the Auction Agent Agreement.