Draft of 10/16/97
-----------------
EXHIBIT 4.1
================================================================================
INDENTURE OF TRUST
between
EDUCATION LOANS INCORPORATED
and
FIRST BANK NATIONAL ASSOCIATION
as Trustee
------------------------------------------------
Dated as of July 1, 1997
------------------------------------------------
================================================================================
CROSS REFERENCE TABLE
TIA Indenture
Section Section
------- ----------
310(a)(1)...................................................... 7.13
(a)(2)...................................................... 7.13
(a)(3)...................................................... 7.12
(a)(4)...................................................... N.A./2/
(a)(5)...................................................... 7.13
(b)......................................................... 7.8; 7.13
(c)......................................................... N.A.
311(a)......................................................... 7.14
(b)......................................................... 7.14
(c)......................................................... N.A.
312(a)......................................................... 12.1
(b)......................................................... 12.2
(c)......................................................... 12.2
313(a)......................................................... 12.4
(b)(1)...................................................... 12.4
(b)(2)...................................................... 12.4
(c)......................................................... 13.4
(d)......................................................... 12.4
314(a)......................................................... 12.3
(b)......................................................... 13.12;13.13
(c)(1)...................................................... 1.4
(c)(2)...................................................... 1.4
(c)(3)...................................................... 1.4
(d)......................................................... 1.4
(e)......................................................... 1.4
(f)......................................................... 1.4
315(a)......................................................... 7.1
(b)......................................................... 7.3; 13.4
(c)......................................................... 7.1
(d)......................................................... 7.1
(e)......................................................... 6.11
316(a)(last sentence).......................................... 1.1
(a)(1)(A)................................................... 6.4
(a)(1)(B)................................................... 6.13
(a)(2)...................................................... N.A.
(b)......................................................... 6.9
(c)......................................................... N.A.
317(a)(1)...................................................... 6.3
(a)(2)...................................................... 6.10
(b)......................................................... 7.17
318(a)......................................................... 13.11
-----------
1 Note: This Cross Reference Table shall not, for any purpose, be deemed to
be part of this Indenture.
2 N.A. means Not Applicable.
TABLE OF CONTENTS
-----------------
Page
-----
PARTIES........................................................... vii
RECITALS.......................................................... vii
GRANTING CLAUSES.................................................. viii
ARTICLE ONE -- DEFINITIONS AND GENERAL PROVISIONS................. 1-1
Section 1.1. Definitions...................................... 1-1
Section 1.2. Definitions of General Terms..................... 1-29
Section 1.3. Computations..................................... 1-29
Section 1.4. Compliance Certificates and Opinions, etc........ 1-29
Section 1.5. Evidence of Action by the Corporation............ 1-32
Section 1.6. Exclusion of Notes Held By or For the
Corporation...................................... 1-32
Section 1.7. Exhibits......................................... 1-32
Section 1.8. Incorporation by Reference of Trust Indenture Act 1-33
ARTICLE TWO -- NOTE FORMS......................................... 2-1
Section 2.1. Forms Generally................................... 2-1
Section 2.2. Form of Notes..................................... 2-1
ARTICLE THREE -- THE NOTES......................................... 3-1
Section 3.1. General Title..................................... 3-1
Section 3.2. General Limitations; Issuable in Series; Purposes
and Conditions for Issuance; Payment of Principal
and Interest...................................... 3-1
Section 3.3. Terms of Particular Series........................ 3-3
Section 3.4. Form and Denominations............................ 3-4
Section 3.5. Execution, Authentication and Delivery............ 3-4
Section 3.6. Temporary Notes................................... 3-5
Section 3.7. Registration, Transfer and Exchange............... 3-5
Section 3.8. Mutilated, Destroyed, Lost and Stolen Notes....... 3-7
Section 3.9. Interest Rights Preserved; Dating of Notes........ 3-8
Section 3.10. Persons Deemed Holders............................ 3-8
Section 3.11. Cancellation...................................... 3-8
Section 3.12. Class B and Class C Notes......................... 3-8
ARTICLE FOUR -- CREATION OF FUNDS AND ACCOUNTS; CREDITS THERETO
AND PAYMENTS THEREFROM............................ 4-1
Section 4.1. Creation of Funds and Accounts.................... 4-1
Section 4.2. Acquisition Fund.................................. 4-1
Section 4.3. Administration Fund............................... 4-4
-i-
Section 4.4. Reserve Fund..................................... 4-6
Section 4.5. Rebate Fund...................................... 4-8
Section 4.6. Revenue Fund..................................... 4-13
Section 4.7. Note Fund........................................ 4-15
Section 4.7.1. Interest Account................................. 4-16
Section 4.7.2. Principal Account................................ 4-19
Section 4.7.3. Retirement Account............................... 4-25
Section 4.8. Surplus Fund..................................... 4-26
Section 4.9. Termination...................................... 4-32
Section 4.10. Pledge........................................... 4-33
Section 4.11. Investments...................................... 4-34
Section 4.12. Transfer of Investment Securities................ 4-35
ARTICLE FIVE -- COVENANTS TO SECURE NOTES; REPRESENTATIONS AND
WARRANTIES....................................... 5-1
Section 5.1. Trustee to Hold Financed Student Loans........... 5-1
Section 5.2. Credit Enhancement Facilities, Demand Purchase
Agreements and Swap Agreements................... 5-1
Section 5.3. Enforcement and Amendment of Guarantee
Agreements....................................... 5-2
Section 5.4. Enforcement and Amendment of Certificates
of Insurance and Contract of Insurance........... 5-2
Section 5.5. Acquisition, Collection and Assignment of
Student Loans.................................... 5-2
Section 5.6. Enforcement of Financed Student Loans............ 5-3
Section 5.7. Servicing and Other Agreements................... 5-4
Section 5.8. Administration and Collection of Financed Student
Loans............................................ 5-4
Section 5.9. Books of Account; Annual Audit................... 5-5
Section 5.10. Punctual Payments................................ 5-5
Section 5.11. Further Assurances............................... 5-5
Section 5.12. Protection of Security; Power To Issue Notes
and Pledge Revenues and Other Funds.............. 5-5
Section 5.13. No Encumbrances.................................. 5-6
Section 5.14. Tax Covenant..................................... 5-7
Section 5.15. Limitation on Administrative Expenses and
Note Fees; Reports............................... 5-8
Section 5.16. Continuing Existence; Merger and Consolidation... 5-8
Section 5.17. Fidelity Bonds................................... 5-9
Section 5.18. Amendment of Student Loan Purchase Agreements.... 5-9
Section 5.19. Enforcement and Amendment of Guarantee
Agreements, Certificates of Insurance and
Contract of Insurance............................ 5-9
Section 5.20. Amendment of Remarketing Agreements and
Depositary Agreements............................ 5-10
-ii-
Section 5.21. Additional Covenants of the Corporation After
Section 150(d)(3) Transfer......................... 5-10
Section 5.22. Representations and Warranties of the Corporation.. 5-13
Section 5.23. Trustee to Furnish Monthly Servicing Report........ 5-15
Section 5.24. Use of Trustee Eligible Lender Number.............. 5-15
ARTICLE SIX -- DEFAULTS AND REMEDIES.............................. 6-1
Section 6.1. Events of Default.................................. 6-1
Section 6.2. Acceleration....................................... 6-3
Section 6.3. Other Remedies; Rights of Beneficiaries............ 6-5
Section 6.4. Direction of Proceedings by Acting Beneficiaries
Upon Default....................................... 6-7
Section 6.5. Waiver of Stay or Extension Laws................... 6-7
Section 6.6. Application of Moneys.............................. 6-7
Section 6.7. Remedies Vested in Trustee......................... 6-11
Section 6.8. Limitation on Suits by Beneficiaries............... 6-11
Section 6.9. Unconditional Right of Noteholders To Enforce
Payment............................................ 6-11
Section 6.10. Trustee May File Proofs of Claims.................. 6-12
Section 6.11. Undertaking for Costs.............................. 6-13
Section 6.12. Termination of Proceedings......................... 6-13
Section 6.13. Waiver of Defaults and Events of Default........... 6-13
Section 6.14. Inspection of Books and Records.................... 6-14
ARTICLE SEVEN -- FIDUCIARIES...................................... 7-1
Section 7.1. Acceptance of the Trustee.......................... 7-1
Section 7.2. Fees, Charges and Expenses of the Trustee, Paying
Agents, Note Registrar, Authenticating Agents,
Deposit Agents, Remarketing Agents, Depositaries,
Auction Agents and Broker-Dealers.................. 7-4
Section 7.3. Notice to Beneficiaries if Default Occurs.......... 7-4
Section 7.4. Intervention by Trustee............................ 7-5
Section 7.5. Successor Trustee, Paying Agents, Authenticating
Agents, Deposit Agents and Depositaries............ 7-5
Section 7.6. Resignation by Trustee, Paying Agents,
Authenticating Agents, Deposit Agents
and Depositaries................................... 7-5
Section 7.7. Removal of Trustee................................. 7-6
Section 7.8. Appointment of Successor Trustee................... 7-6
Section 7.9. Concerning any Successor Trustee................... 7-7
Section 7.10. Trustee Protected in Relying Upon Resolutions,
Etc................................................ 7-7
Section 7.11. Successor Trustee as Custodian of Funds............ 7-7
Section 7.12. Co-Trustee......................................... 7-7
Section 7.13. Corporate Trustee Required; Eligibility;
Disqualification................................... 7-9
-iii-
Section 7.14. Preferential Collection of Claims Against
Corporation........................................ 7-10
Section 7.15. Statement by Trustee of Funds and Accounts
and Other Matters.................................. 7-10
Section 7.16. Trustee, Authenticating Agent, Note Registrar,
Paying Agents, Deposit Agents, Remarketing Agents,
Depositaries, Auction Agents and Broker-Dealers
May Buy, Hold, Sell or Deal in Notes............... 7-10
Section 7.17. Authenticating Agent and Paying Agents; Paying
Agents To Hold Moneys in Trust..................... 7-11
Section 7.18. Removal of Authenticating Agent and Paying Agents;
Successors......................................... 7-12
Section 7.19. Appointment and Qualifications of Deposit Agents... 7-12
Section 7.20. Appointment and Qualifications of Depositaries..... 7-13
Section 7.21. Remarketing Agents................................. 7-15
Section 7.22. Qualifications of Remarketing Agents............... 7-15
ARTICLE EIGHT -- SUPPLEMENTAL INDENTURES............................ 8-1
Section 8.1. Supplemental Indentures Not Requiring Consent of
Beneficiaries...................................... 8-1
Section 8.2. Supplemental Indentures Requiring Consent of
Beneficiaries...................................... 8-2
Section 8.3. Rights of Trustee.................................. 8-3
Section 8.4. Opinion and Rating Agency Approval Required Prior
to Execution of Supplemental Indenture............. 8-4
Section 8.5. Consent of Depositaries............................ 8-4
Section 8.6. Consent of Remarketing Agents...................... 8-4
Section 8.7. Consent of Auction Agents.......................... 8-4
Section 8.8. Consent of Broker-Dealers.......................... 8-4
Section 8.9. Conformity With Trust Indenture Act................ 8-5
ARTICLE NINE -- NOTEHOLDERS' MEETINGS.............................. 9-1
Section 9.1. Purposes for Which Noteholders' Meetings May Be
Called............................................. 9-1
Section 9.2. Place of Meetings of Noteholders................... 9-1
Section 9.3. Call and Notice of Noteholders' Meetings........... 9-1
Section 9.4. Persons Entitled To Vote at Noteholders' Meetings.. 9-2
Section 9.5. Determination of Voting Rights; Conduct and
Adjournment of Meetings............................ 9-2
Section 9.6. Counting Votes and Recording Action of Meetings.... 9-3
Section 9.7. Revocation by Noteholders.......................... 9-3
ARTICLE TEN -- REDEMPTION AND PREPAYMENT.......................... 10-1
Section 10.1. Right of Redemption and Prepayment................. 10-1
-iv-
Section 10.2. Election to Redeem, Prepay or Purchase;
Notice to Trustee; Senior Asset Requirement...... 10-1
Section 10.3. Selection by Trustee of Notes To Be Redeemed..... 10-2
Section 10.4. Notice of Redemption............................. 10-2
Section 10.5. Notes Payable on Redemption Date and Sinking
Fund Payment Date................................ 10-3
Section 10.6. Notes Redeemed or Prepaid in Part................ 10-4
Section 10.7. Purchase of Notes................................ 10-4
ARTICLE ELEVEN -- DEFEASANCE; MONEYS HELD FOR PAYMENT
OF DEFEASED NOTES................................ 11-1
Section 11.1. Discharge of Liens and Pledges; Notes No Longer
Outstanding and Deemed To Be Paid Hereunder...... 11-1
Section 11.2. Notes Not Presented for Payment When Due;
Moneys Held for the Notes after Due Date
of Notes......................................... 11-3
ARTICLE TWELVE -- NOTEHOLDERS' LISTS AND REPORTS................... 12-1
Section 12.1. Note Registrar To Furnish Trustee Names
and Addresses to Noteholders..................... 12-1
Section 12.2. Preservation of Information; Communications
to Noteholders................................... 12-1
Section 12.3. Reports by Corporation........................... 12-1
Section 12.4. Reports by Trustee............................... 12-2
ARTICLE THIRTEEN -- MISCELLANEOUS.................................. 13-1
Section 13.1. Consent, Etc., of Noteholders.................... 13-1
Section 13.2. Limitation of Rights............................. 13-1
Section 13.3. Severability..................................... 13-1
Section 13.4. Notices.......................................... 13-2
Section 13.5. Counterparts..................................... 13-3
Section 13.6. Indenture Constitutes a Security Agreement....... 13-3
Section 13.7. Payments Due on Non-Business Days................ 13-3
Section 13.8. Notices to Rating Agencies....................... 13-3
Section 13.9. Governing Law.................................... 13-3
Section 13.10. Rights of Other Beneficiaries.................... 13-3
Section 13.11. Conflict with Trust Indenture Act................ 13-3
Section 13.12. Opinions as to Trust Estate...................... 13-4
Section 13.13. Recording of Indenture........................... 13-4
Section 13.14. No Petition...................................... 13-5
Section 13.15. Income Tax Characterization...................... 13-5
SIGNATURES........................................................... 13-6
EXHIBIT A Eligible Loan Acquisition Certificate............ A-1
EXHIBIT B Eligible Loan Origination Certificate............ B-1
-v-
EXHIBIT C Student Loan Acquisition Certificate............. C-1
EXHIBIT D Form of Updating Eligible Loan Acquisition
Certificate...................................... D-1
-vi-
THIS INDENTURE OF TRUST, dated as of July 1, 1997, between EDUCATION
LOANS INCORPORATED, a nonprofit corporation duly organized and existing under
the laws of the State of South Dakota (herein called the "Corporation"), and
FIRST BANK NATIONAL ASSOCIATION, a national banking association duly
established, existing and authorized to accept and execute trusts of the
character herein set out under and by virtue of the laws of the United States
(herein called the "Trustee");
RECITALS OF THE CORPORATION
WHEREAS, the Trustee has entered into certain contracts and
agreements, herein identified, with the Secretary of Education (hereinafter,
together with the former United States Commissioner of Education, referred to
as the "Secretary of Education") and each Guarantee Agency (as hereinafter
defined), to provide an insurance or guarantee program for student loans
incurred under the Higher Education Act of 1965, as amended, and the
regulations promulgated by the United States Department of Education thereunder
(hereinafter referred to as the "Higher Education Act"), that the Trustee on
behalf of the Corporation may acquire with the proceeds of the sale of the
Corporation's bonds, notes or other obligations, and it is contemplated that
the Trustee may in the future enter into comparable agreements with other
Guarantee Agencies; and
WHEREAS, each Guarantee Agency has entered into agreements with the
Secretary of Education for the payment by the Secretary of Education of amounts
authorized to be paid pursuant to the Higher Education Act, including
reimbursement of certain amounts to be paid upon certain defaulted student
loans guaranteed or insured by such Guarantee Agency, and interest subsidy
payments and Special Allowance Payments to holders of loans guaranteed or
insured by such Guarantee Agency, and it is contemplated that any other
Guarantee Agency as described in the preceding paragraph will enter into
comparable agreements; and
WHEREAS, the Corporation has duly authorized the execution and
delivery of this Indenture to provide for the issuance of its Notes, to be
issued in one or more series (hereinafter referred to as the "Notes") and for
the purposes as in this Indenture provided; and
WHEREAS, all things necessary to make the Notes, when executed by the
Corporation and authenticated and delivered by the Trustee hereunder, the valid
obligations of the Corporation, and to make this Indenture a valid agreement of
the Corporation in accordance with their and its terms, have been done;
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
The Corporation, in consideration of the premises and the acceptance
by the Trustee of the trusts hereby created and of the purchase and acceptance
of the Notes by the Holders thereof, the execution and delivery of any Swap
Agreement (as
-vii-
hereinafter defined) by any Swap Counterparty (as hereinafter
defined), the execution and delivery of any Credit Enhancement Facility (as
hereinafter defined) by any Credit Facility Provider (as hereinafter defined),
the execution and delivery of any Demand Purchase Agreement (as hereinafter
defined) by any Credit Facility Provider, and the acknowledgment thereof by the
Trustee, in order to secure the payment of the principal of, premium, if any,
and interest on and any Carry-Over Amounts (and accrued interest thereon) with
respect to the Notes according to their tenor and effect and the performance
and observance by the Corporation of all the covenants expressed or implied
herein and in the Notes and in any such Swap Agreement, Credit Enhancement
Facility or Demand Purchase Agreement, does hereby grant to the Trustee,
and to its successors in trust, and to them and their assigns, forever, a
security interest in the following:
GRANTING CLAUSE FIRST
All rights, title, interest and privileges of the Corporation (1)
with respect to Financed Student Loans, in, to and under the Contract of
Insurance, the Federal Reimbursement Contracts, the Certificate of Insurance,
any Servicing Agreement, the Student Loan Purchase Agreements (including, but
not limited to, those agreements described in Exhibits H-1 through H-6 to the
First Supplemental Indenture), any Non-Delivery Fees and the Guarantee
Agreements, (2) in, to and under all Financed Student Loans (including the
evidences of indebtedness thereof and related documentation), the proceeds
of the sale of the Notes (until expended for the purpose for which the Notes
were issued) and the revenues, moneys, evidences of indebtedness and securities
(including any earnings thereon) in and payable into the Acquisition Fund,
Note Fund, Revenue Fund, Reserve Fund, Administration Fund, Rebate Fund
and Surplus Fund, in the manner and subject to the prior applications provided
in Article Four hereof, and (3) in, to and under any Credit Enhancement
Facility, any Demand Purchase Agreement, any Swap Agreement, any Swap
Counterparty Guarantee, any Depositary Agreement, any Remarketing Agreement, any
Auction Agent Agreement and any Broker-Dealer Agreement, all as hereinbefore
and hereinafter defined, including any contract or any evidence of indebtedness
or other rights of the Corporation to receive any of the same whether now
existing or hereafter coming into existence, and whether now or hereafter
acquired;
GRANTING CLAUSE SECOND
All proceeds from any property described in these Granting Clauses
and any and all other property of every name and nature from time to time
hereafter by delivery or by writing of any kind conveyed, pledged, assigned or
transferred, as and for additional security hereunder by the Corporation or by
anyone in its behalf or with its written consent to the Trustee, which is
hereby authorized to receive any and all such property at any and all times
and to hold and apply the same subject to the terms hereof;
-viii-
TO HAVE AND TO HOLD all the same with all privileges and appurtenances
hereby conveyed and assigned, or agreed or intended so to be, to the Trustee and
its successors in said trust and to them and their assigns forever;
IN TRUST NEVERTHELESS, upon the terms and trust herein set forth (i)
for the equal and proportionate benefit, security and protection of all present
and future Senior Beneficiaries (as hereinafter defined), without privilege,
priority or distinction as to lien or otherwise of any of the Senior
Beneficiaries over any of the other, (ii) for the equal and proportionate
benefit, security and protection of all present and future Subordinate
Beneficiaries (as hereinafter defined), without privilege, priority or
distinction as to the lien or otherwise of any of the Subordinate Beneficiaries
over any of the other, but on a basis subordinate to the Senior Beneficiaries on
the terms described herein, and (iii) for the equal and proportionate benefit,
security and protection of all present and future Holders of Class C Notes (as
hereinafter defined), but on a basis subordinate to the Senior Beneficiaries and
the Subordinate Beneficiaries on the terms described herein;
PROVIDED, HOWEVER, that if the Corporation, its successors or assigns,
shall well and truly pay, or cause to be paid, the principal of and premium, if
any, on the Notes and the interest and any Carry-Over Amounts (and accrued
interest thereon) with respect thereto due and to become due thereon, or provide
fully for payment thereof as herein provided, at the times and in the manner
mentioned in the Notes, according to the true intent and meaning thereof, and
shall make the payments into the Trust Funds as required under Article Four
hereof, or shall provide, as permitted hereby, for the payment thereof by
depositing with the Trustee sums sufficient for payment of the entire amount due
and to become due thereon as herein provided, and shall well and truly keep,
perform and observe all the covenants and conditions pursuant to the terms of
this Indenture to be kept, performed and observed by it, and shall pay to the
Trustee, any Swap Counterparty and any Credit Facility Provider all sums of
money due or to become due to them in accordance with the terms and provisions
hereof, then (except as provided in Sections 4.5 and 5.14 hereof or otherwise
provided in a Supplemental Indenture) this Indenture and the rights hereby
granted shall cease, terminate and be void; otherwise, this Indenture shall be
and remain in full force and effect.
NOW, THEREFORE, it is mutually covenanted and agreed for the benefit
of all Holders of the Notes and for the benefit of any Swap Counterparty and any
Credit Facility Provider, as follows:
-ix-
ARTICLE ONE
DEFINITIONS AND GENERAL PROVISIONS
Section 1.1. Definitions. In this Indenture the following terms have
the following respective meanings unless the context hereof clearly requires
otherwise:
"Account" shall mean any of the Accounts created or established by
this Indenture.
"Accountant" shall mean ▇▇▇▇ ▇▇▇▇▇▇▇ PLLP, Certified Public
Accountants, Aberdeen, South Dakota, any other registered or certified public
accountant or firm of such accountants duly licensed to practice and practicing
as such under the laws of the State, selected and paid by the Corporation, who
is Independent and not under the domination of the Corporation, but who may be
regularly retained to make annual or similar audits of the books or records of
the Corporation.
"Acquisition Fund" shall mean the Acquisition Fund created and
established by Section 4.1 hereof.
"Acting Beneficiaries Upon Default" shall mean, as such term is used
in Article Six hereof:
(a) at any time that any Senior Obligations are Outstanding,
(i) for purposes of clause (i) of Section 6.2(A) hereof, (x) the
Holders of a majority in aggregate Principal Amount of Class A Notes
Outstanding or (y) (unless the Trustee shall, in its sole discretion,
determine that acceleration of the maturity of the Outstanding Notes is not
in the overall interest of the Senior Beneficiaries) any Other Senior
Beneficiary,
(ii) for purposes of clause (ii) of Section 6.2(A) hereof, (x) the
Holders of one hundred percent (100%) in aggregate Principal Amount of
Class A Notes Outstanding, or (y) (unless the Trustee shall, in its sole
discretion, determine that acceleration of the maturity of the Outstanding
Notes is not in the overall interest of the Senior Beneficiaries) all Other
Senior Beneficiaries,
(iii) for purposes of Sections 6.2(B), 6.3, 6.4 and 6.13 hereof, (x)
the Holders of a majority in aggregate Principal Amount of the Class A
Notes Outstanding, unless the Trustee shall have received or shall
thereafter receive conflicting requests or directions from one or more
Other Senior Beneficiaries; or (y) any Other Senior Beneficiary, unless
1-1
the trustee shall, in its sole discretion, determine that the requesting
action is not in the overall interest of the Senior Beneficiaries or shall
have received or shall thereafter receive conflicting requests or
directions from one or more Other Senior Beneficiaries or the Holders of
a majority in aggregate Principal Amount of the Class A Notes Outstanding;
and
(iv) for all other purposes hereunder, the Holders of a majority in
aggregate Principal Amount of Class A Notes Outstanding or any Other Senior
Beneficiary;
(b) at any time that no Senior Obligations are Outstanding but
Subordinate Obligations are Outstanding,
(i) for purposes of clause (i) of Section 6.2(A) hereof, (x) the
Holders of a majority in aggregate Principal Amount of Class B Notes
Outstanding or (y) (unless the Trustee shall, in its sole discretion,
determine that acceleration of the maturity of the Outstanding Notes is
not in the overall interest of the Subordinate Beneficiaries) any Other
Subordinate Beneficiary,
(ii) for purposes of clause (ii) of Section 6.2(A) hereof, (x) the
Holders of one hundred percent (100%) in aggregate Principal Amount of
Class B Notes Outstanding or (y) (unless the Trustee shall, in its sole
discretion, determine that acceleration of the maturity of the Outstanding
Notes is not in the overall interest of the Subordinate Beneficiaries) all
Other Subordinate Beneficiaries,
(iii) for purposes of Sections 6.2(B), 6.3, 6.4 and 6.13 hereof, (x)
the Holders of a majority in aggregate Principal Amount of the Class B
Notes Outstanding, unless the Trustee shall have received or shall
thereafter receive conflicting requests or directions from one or more
Other Subordinate Beneficiaries, or (y) any Other Subordinate
Beneficiaries, unless the Trustee shall, in its sole discretion, determine
that the requested action is not in the overall interest of the Subordinate
Beneficiaries or shall have received or shall thereafter receive
conflicting requests or directions from one or more Other Subordinate
Beneficiaries or the Holders of a majority in aggregate Principal Amount
of the Class B Notes Outstanding; and
(iv) for all other purposes hereunder, the Holders of a majority in
aggregate Principal Amount of Class B Notes Outstanding or any Other
Subordinate Beneficiary; and
1-2
(c) at any time that no Senior Obligations are Outstanding and no
Subordinate Obligations are Outstanding, for all purposes hereunder, the Holders
of a majority in aggregate Principal Amount of Class C Notes Outstanding.
"Administration Fund" shall mean the Administration Fund created and
established by Section 4.1 hereof.
"Administrative Expenses" shall mean the Corporation's actual
expenses, excluding Note Fees but including Servicing Fees and any other
expenses of the Corporation incurred in connection with the servicing of
Financed Student Loans, of carrying out and administering its powers, duties and
functions under (1) its articles of incorporation, its bylaws, the Student Loan
Purchase Agreements, any Servicing Agreement, the Contract of Insurance, the
Guarantee Agreements, any Certificate of Insurance, the Program, the Higher
Education Act or any requirement of the laws of the United States or the
Statutes with respect to the Program, as such powers, duties and functions
relate to Financed Student Loans, (2) any Swap Agreement, Credit Enhancement
Facility or Demand Purchase Agreement (other than amounts payable thereunder
which constitute Other Obligations), (3) any Remarketing Agreement, Depositary
Agreement, Auction Agent Agreement or Broker-Dealer Agreement, and (4) this
Indenture. Such expenses may include, without limiting the generality of the
foregoing, salaries, supplies, utilities, mailing, labor, materials, office
rent, maintenance, furnishings, equipment, machinery, telephones, travel
expenses, insurance premiums, and legal, accounting, management, consulting and
banking services and expenses, and payments for pension, retirement, health and
hospitalization and life and disability insurance benefits; but shall not
include (i) debt service on the Notes or any other bonds, notes or other
evidences of indebtedness of the Corporation, (ii) amounts payable under any
Other Obligation or (iii) Costs of Issuance or the fees, costs or expenses of
the Corporation with respect to any other bonds, notes or indebtedness of the
Corporation.
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control," when used with respect to any specified Person, means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Aggregate Value" means on any calculation date the sum of the Values
of all assets of the Trust Estate, less moneys in any Fund or Account which the
Corporation is then entitled to receive for deposit into the Rebate Fund but has
not yet removed from the Trust Estate, and less any funds to be used to pay
Costs of Issuance unless, under the provisions of a Supplemental Indenture, such
funds are not to be applied to the payment of Costs of Issuance to the extent
the Senior Asset Requirement would not be met after such payment.
1-3
"Arbitrage Regulations" shall mean the Treasury Regulations pertaining
to Section 148 of the Code, now or hereafter promulgated, including Treasury
Regulations, Sections 1.148-0 through 1.148-11 and 1.150-1.
"Auction Agent" shall mean, with respect to any series of Notes, any
bank, national banking association or trust company designated as such with
respect to such Notes pursuant to the provisions of a Supplemental Indenture,
and its successor or successors, and any bank, national banking association or
trust company at any time substituted in its place pursuant to such Supplemental
Indenture.
"Auction Agent Agreement" shall mean, with respect to any series of
Notes, an agreement among an Auction Agent, the Trustee and the Corporation
setting forth the rights and obligations of the Auction Agent acting in such
capacity with respect to such Notes under this Indenture and the related
Supplemental Indenture, including any supplement thereto or amendment thereof
entered into in accordance with the provisions thereof.
"Authenticating Agent," when used with respect to a series of Notes,
shall mean a bank or trust company appointed for the purpose of receiving,
authenticating and delivering Notes of that series in connection with transfers,
exchanges and registrations as in this Indenture provided, and its successor or
successors and any other bank or trust company which may at any time be
substituted in its place as Authenticating Agent pursuant to this Indenture.
"Authorized Officer," when used with reference to the Corporation,
shall mean the chairman of the Board, the president, any vice president, the
secretary or other person designated in writing to the Trustee from time to time
by the Board.
"Balance," when used with reference to any Account or Fund, shall mean
the aggregate sum of all assets standing to the credit of such Account or Fund,
including, without limitation, Investment Securities computed at the Value of
Investment Securities; Notes purchased with moneys standing to the credit of
such Fund or Account computed at the Principal Amount of such Notes; Financed
Student Loans computed at the Principal Balance thereof; and lawful money of the
United States; provided, however, that (1) the Balance of the Interest Account
shall not include amounts standing to the credit thereof which are being held
therein for (A) the payment of past due and unpaid interest on Notes, or (B) the
payment of interest on Notes that are deemed no longer Outstanding as a result
of the defeasance thereof pursuant to subparagraph (ii) of the first paragraph
of Section 11.1 hereof, and (2) the Balances of the Principal Account and the
Retirement Account shall not include amounts standing to the credit thereof
which are being held therein for the payment of principal of or premium, if any,
on Notes which are deemed no longer Outstanding in accordance with the
provisions of subparagraph (ii) of the first paragraph of Section 11.1 hereof.
1-4
"Beneficiaries" shall mean, collectively, all Senior Beneficiaries,
all Subordinate Beneficiaries and all Holders of any Outstanding Class C Notes.
"Board" shall mean the Board of Directors of the Corporation.
"Board Resolution" shall mean a copy of a resolution certified by the
secretary or an assistant secretary of the Corporation to have been duly adopted
by the Board and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Bond Counsel" shall mean any Counsel of nationally recognized
standing in the field of law relating to municipal bonds.
"Bond Year," when used with respect to a series of Tax Exempt Notes,
shall have the meaning ascribed thereto in the Supplemental Indenture providing
for the issuance of such series of Notes.
"Broker-Dealer" shall mean, with respect to any series of Notes, any
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
relating to such Notes, designated as such with respect to such Notes pursuant
to the provisions of a Supplemental Indenture, and its successor or successors,
and any broker or dealer, commercial bank or other entity at any time
substituted in its place pursuant to such Supplemental Indenture.
"Broker-Dealer Agreement" shall mean, with respect to any series of
Notes, an agreement between an Auction Agent and a Broker-Dealer, and approved
by the Corporation, setting forth the rights and obligations of the Broker-
Dealer acting in such capacity with respect to such Notes under this Indenture
and the related Supplemental Indenture, including any supplement thereto or
amendment thereof entered into in accordance with the provisions thereof.
"Budgeted Administrative Expenses" shall mean, with respect to each
Fiscal Year, subject to the provisions of Section 5.15 hereof, an amount of
Administrative Expenses budgeted by the Corporation for such Fiscal Year, as
evidenced by a Board Resolution adopted prior to the commencement of such Fiscal
Year; provided that such Budgeted Administrative Expenses shall not exceed (and,
in the absence of a Board Resolution with respect thereto, shall be assumed to
be equal to) the amount of Administrative Expenses permitted to be paid, or
reimbursed to the Corporation, from the Administration Fund pursuant to any
Supplemental Indenture providing for the issuance of a series of Notes.
"Business Day" shall mean, except as otherwise provided in a
Supplemental Indenture, a day of the year other than a Saturday, a Sunday or a
day on which banks located in the city in which the Principal Office of the
Trustee is
1-5
located, in the city in which the Principal Office of any
Authenticating Agent is located, in the city in which the Principal Office of
any Paying Agent (other than the Trustee) is located, in the city in which the
Principal Office of any Auction Agent is located, or in the city in which the
Principal Office of any Depositary is located, are required or authorized by law
to remain closed, or on which The New York Stock Exchange is closed.
"Carry-Over Amount" shall mean, if and to the extent specifically
provided for as such in a Supplemental Indenture with respect to a series of
Variable Rate Notes, the amount, if any, by which (i) the interest payable on
such series with respect to a given interest period is exceeded by (ii) the
interest that otherwise would have been payable with respect to such interest
period but for a limitation on the interest rate for such interest period based
upon the anticipated return on Financed Student Loans, together with the unpaid
portion of any such excess from prior interest periods. To the extent required
by a Supplemental Indenture providing for any Carry-Over Amount, interest will
accrue on such Carry-Over Amount until paid. Any reference to "principal" or
"interest" in this Indenture and in the related Notes shall not include, within
the meanings of such words, any Carry-Over Amount or any interest accrued on any
Carry-Over Amount.
"Cash Flow Projection" shall mean a projection as to future revenues
and cash flow through the final Stated Maturity of the Outstanding Notes based
upon existing facts and, to the extent not so based, upon assumptions accepted
by each Rating Agency (including, without limitation, assumptions relating to
variable rates of interest under Swap Agreements, Credit Enhancement Facilities
and Demand Purchase Agreements and on any Notes) and the following assumptions:
(1) a thirty (30)-day lag in receipt of borrower payments, and a sixty (60)-day
lag in receipt of federal payments, with respect to Financed Student Loans; (2)
no prepayments of principal of Financed Student Loans; (3) bond-equivalent rates
of 91-day or 52-week U.S. Treasury bills (for purposes of determining returns on
Financed Student Loans that are based upon such rates or averages thereof) equal
to known rates (or averages) for such time as they are known, and thereafter
equal to ________________ percent (_______%) per annum; and (4) a reinvestment
rate of ________________ percent (_______%) per annum. The foregoing
assumptions may, pursuant to a Supplemental Indenture as provided in
Section 8.1(h) hereof, be replaced with or supplemented by such other reasonable
assumptions as will not result in the withdrawal or reduction of the then-
current rating of any of the Unenhanced Outstanding Notes, as evidenced by
written confirmation to that effect from each Rating Agency, or, if no
Unenhanced Notes are then Outstanding, but Other Obligations are Outstanding, as
are acceptable to the Other Beneficiaries holding such Other Obligations, as
evidenced in writing to the Trustee by each such Other Beneficiary.
"Certificate of Insurance" shall mean a certificate of federal loan
insurance issued with respect to an Eligible Loan by the Secretary of Education
pursuant to the provisions of the Higher Education Act.
1-6
"Class A Notes" shall mean any Notes designated in a Supplemental
Indenture as Class A Notes, which are secured under this Indenture on a basis
senior to any Subordinate Obligations and any Class C Notes (as such seniority
is described in Section 3.12 hereof), and on a parity with Other Senior
Obligations.
"Class B Notes" shall mean any Notes designated in a Supplemental
Indenture as Class B Notes, which are secured under this Indenture on a basis
subordinate to any Senior Obligations (as such subordination is described in
Section 3.12 hereof and elsewhere herein), on a parity with Other Subordinate
Obligations but on a basis senior to any Class C Notes (as such seniority is
described in Section 3.12 hereof and elsewhere herein).
"Class C Notes" shall mean any Notes designated in a Supplemental
Indenture as Class C Notes, which are secured under this Indenture subordinate
to any Senior Obligations and any Subordinate Obligations (as such subordination
is described in Section 3.12 hereof and elsewhere herein).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Consolidation Loan" shall mean a Student Loan authorized under
Section 428C of the Higher Education Act.
"Contract of Insurance" shall mean the Contract of Federal Loan
Insurance, dated January 28, 1981, entered into between the Trustee and the
Secretary of Education, and any other document evidencing the eligibility of the
Trustee to receive payments of principal and interest from the Secretary of
Education with respect to Insured Loans Financed hereunder (or, in the event a
co-trustee has been appointed pursuant to Section 7.12 hereof, such Contract of
Federal Loan Insurance and other documentation relating to such co-trustee), and
any amendment thereof which is hereafter entered into.
"Corporation" shall mean (1) Education Loans Incorporated, a nonprofit
corporation duly organized and existing under the laws of the State, (2) upon
completion of the Section 150(d)(3) Transfer, EdLinc, (3) any successor thereto
under this Indenture, and (4) for purposes of any provision contained herein and
required by the TIA, each other obligor on the Notes.
"Corporation Request," "Corporation Order," "Corporation Certificate"
or "Corporation Consent" shall mean, respectively, a written request, order,
certificate or consent signed in the name of the Corporation by an Authorized
Officer and delivered to the Trustee.
"Corporation Swap Payment" means a payment due to a Swap Counterparty
from the Corporation pursuant to the applicable Swap Agreement (including, but
not limited to, payments in respect of any early termination of such Swap
Agreement).
1-7
"Costs of Issuance" shall mean all items of expense directly or
indirectly payable by or reimbursable to the Corporation and related to the
authorization, sale and issuance of a series of the Notes, including, but not
limited to, printing costs, costs of preparation and reproduction of documents,
filing fees, initial fees and charges of the Trustee, any Authenticating Agent,
any Deposit Agent, any Remarketing Agent, any Depositary, any Auction Agent or
any Broker-Dealer, legal fees and charges, fees and disbursements of
underwriters, consultants and professionals, underwriters' discount, costs of
credit ratings, fees and charges for preparation, execution, transportation and
safekeeping of such Notes, other costs incurred by the Corporation in
anticipation of the issuance of such Notes and any other cost, charge or fee in
connection with the issuance of such Notes.
"Counsel" shall mean a person, or firm of which such a person is a
member, authorized in any state to practice law.
"Counterparty Swap Payment" means a payment due to or received by the
Corporation from a Swap Counterparty pursuant to a Swap Agreement (including,
but not limited to, payments in respect of any early termination of such Swap
Agreement) and amounts received by the Corporation under any related Swap
Counterparty Guarantee.
"Credit Enhancement Facility" shall mean, if and to the extent
provided for in a Supplemental Indenture described in Section 8.1(i) hereof,
with respect to Notes of one or more series of the same class, an insurance
policy insuring, or a letter of credit or surety bond providing a direct or
indirect source of funds for, the timely payment of principal of and interest on
such Notes (but not necessarily principal due upon acceleration thereof under
Section 6.2 hereof), and all agreements entered into by the Corporation or the
Trustee with respect thereto.
"Credit Facility Provider" means, if and to the extent provided for in
a Supplemental Indenture entered into pursuant to Section 8.1(i), any Person or
Persons engaged by the Corporation (i) pursuant to a Demand Purchase Agreement,
to provide credit enhancement or liquidity for the Corporation's obligation to
repurchase or redeem Notes of one or more series of the same class subject to a
remarketing which have not been remarketed, or (ii) pursuant to a Credit
Enhancement Facility, to provide credit enhancement for the payment of the
principal of and interest on any or all of the Notes of one or more series.
"Debt Service" shall mean: (1) with respect to any Notes, as of any
particular date and with respect to any particular period, the aggregate of the
moneys to be paid or set aside on such date or during such period for the
payment (or retirement) of the principal of, premium, if any, and interest on
Notes, after giving effect to any Corporation Swap Payments and Counterparty
Swap Payments, and (2) with respect to Other Obligations, as of any particular
date and with respect to any particular period, the aggregate of the moneys to
be paid or set aside on such date or during such period for the payment of
amounts payable by the Corporation under
1-8
any Swap Agreements, Credit Enhancement Facilities or Demand Purchase
Agreements, including, inter alia, fees payable by the Corporation to the
Credit Facility Provider thereunder.
"Defaulted Interest" shall have the meaning given in Section 3.2
hereof.
"Deemed Tendered" shall mean, with respect to any Note, a Note deemed
tendered in accordance with the provisions of the Supplemental Indenture
providing for the issuance thereof.
"Demand Note" shall mean a Note required to be purchased by or on
behalf of the Corporation, at the option of the Holder thereof, upon receipt of
a Purchase Demand.
"Demand Purchase Agreement" shall mean any or all of the credit
facilities, reimbursement agreements, standby purchase agreements and the like,
pertaining to Notes of one or more series issued with a tender right granted to
or tender obligation imposed on the Holder thereof, if and to the extent
provided for in a Supplemental Indenture described in Section 8.1(i) hereof.
"Deposit Agent" shall mean any bank or banking association having
trust powers or trust company designated as such pursuant to the provisions of
Section 7.19 hereof and its successor or successors and any other bank or
banking association having trust powers or trust company at any time substituted
in its place pursuant to this Indenture.
"Depositary" shall mean, with respect to any series of Notes, any
commercial bank or banking association having trust powers or trust company
designated as such with respect to such Notes pursuant to the provisions of
Section 7.20 hereof and its successor or successors and any other commercial
bank or banking association having trust powers or trust company at any time
substituted in its place pursuant to this Indenture.
"Depositary Agreement" shall mean an agreement among a Depositary, the
Trustee, the Corporation, any Remarketing Agent and/or any related Credit
Facility Provider setting forth the rights and obligations of the Depositary
acting in such capacity under this Indenture and otherwise meeting the
requirements of Section 7.20 hereof, including any supplement thereto or
amendment thereof entered into in accordance with the provisions thereof.
"EdLinc" shall mean Education Loans Incorporated, a corporation duly
organized and existing under the laws of the State of Delaware.
"Eligible Borrower" shall mean a borrower who is eligible under the
Higher Education Act to be the obligor of a loan for financing a program
1-9
post-secondary education, including a borrower who is eligible under the Higher
Education Act to be an obligor of a Plus Loan.
"Eligible Loan" shall mean: (A) a Student Loan which: (1) has been or
will be made to an Eligible Borrower for post-secondary education; (2) is either
(a) Insured, or (b) Guaranteed by a Guarantee Agency to the extent of not less
than ninety-eight percent (98%) of the principal thereof and all accrued
interest thereon; (3) is an "eligible loan" as defined in Section 438 of the
Higher Education Act for purposes of receiving Special Allowance Payments (other
than nonsubsidized ▇▇▇▇▇▇▇▇ Loans originally financed by the Corporation); and
(4) bears interest at a rate per annum not less than or in excess of the
applicable rate of interest provided by the Higher Education Act, or such lesser
rates as may be approved by each Rating Agency; or (B) any other Student Loan if
the Corporation shall have caused to be provided to the Trustee: (1) written
advice from each Rating Agency that treating such type of loan as an Eligible
Loan will not adversely affect any rating or ratings then applicable to any of
the Unenhanced Notes or, if no Unenhanced Notes are then Outstanding, but Other
Obligations are Outstanding, such Other Beneficiaries holding such Other
Obligations consent to the treatment of such type of loan an Eligible Loan, as
evidenced in writing to the Trustee by each such Other Beneficiary, and (2) a
written opinion of Bond Counsel to the effect that treating such type of loan as
an Eligible Loan will not, under then existing law, affect the exclusion from
gross income for federal income tax purposes of interest on any Tax Exempt Notes
then outstanding.
"Eligible Loan Acquisition Certificate" shall mean a certificate
signed by an Authorized Officer of the Corporation and substantially in the
form attached as Exhibit A hereto.
"Eligible Loan Origination Certificate" shall mean a certificate
signed by an Authorized Officer of the Corporation and substantially in the
form attached as Exhibit B hereto.
"Event of Default" shall mean one of the events described as such in
Section 6.1 hereof.
"Excess Earnings" shall mean, with respect to any series of Tax Exempt
Notes, the amount, if any, which, if applied to reduce the yield on all Student
Loans Financed, in whole or in part, with amounts allocated to such Notes, would
be necessary to reduce such yield to the yield on such Notes plus such
additional spread as would not cause such Notes to be "arbitrage bonds" under
Section 148 of the Code.
"Excess Earnings Account" shall mean the Account by that name created
and established by Section 4.1 hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
1-10
"Federal Reimbursement Contract" shall mean any agreement between a
Guarantee Agency and the Secretary of Education providing for the payment by the
Secretary of Education of amounts authorized to be paid pursuant to the Higher
Education Act, including (but not necessarily limited to) reimbursement of
amounts paid or payable upon defaulted Financed Student Loans and other student
loans guaranteed or insured by the Guarantee Agency and interest subsidy
payments to holders of qualifying student loans guaranteed or insured by the
Guarantee Agency.
"Financed," when used with respect to Student Loans or Eligible Loans,
shall mean Student Loans or Eligible Loans, as the case may be, acquired or
originated by the Trustee on behalf of the Corporation with moneys in the
Acquisition Fund or the Surplus Account, any Eligible Loans received in exchange
for Financed Student Loans upon the sale thereof or substitution therefor in
accordance with Section 4.2 hereof and any other Student Loans deemed to be
"Financed" with moneys in the Acquisition Fund and the Surplus Account pursuant
to this Indenture, but does not include Student Loans released from the lien of
this Indenture and sold, as permitted in this Indenture, to any purchaser,
including a trustee for the holders of the Corporation's bonds, notes or other
evidences of indebtedness.
"Fiscal Year" shall mean the fiscal year of the Corporation as
established from time to time.
"FISL Loans" shall mean student loans insured under the FISL Program.
"FISL Program" shall mean the federal loan insurance program created
under the Higher Education Act whereby the Secretary of Education directly
insures the repayment of at least eighty percent (80%) of the principal of (or
in certain cases up to one hundred percent (100%) of the principal of and
accrued interest on) student loans under the Higher Education Act.
"Fitch" shall mean Fitch Investors Service, L.P., its successors and
their assigns, and, if such partnership shall be dissolved or liquidated or
shall no longer perform the functions of a securities rating agency, "Fitch"
shall be deemed to refer to any other nationally recognized securities rating
agency designated by the Trustee, at the written direction of the Corporation.
"Government Obligations" shall mean direct obligations of, or
obligations the full and timely payment of the principal of and interest on
which are unconditionally guaranteed by, the United States of America.
"Governor" shall mean the chief executive officer of the State.
"Guarantee" or "Guaranteed" shall mean, with respect to a Student
Loan, the insurance or guarantee by a Guarantee Agency, to the extent provided
in
1-11
the Higher Education Act, of the principal of and accrued interest on such
Student Loan, and the coverage of such Student Loan by one or more Federal
Reimbursement Contracts providing, among other things, for reimbursement to the
Guarantee Agency for losses incurred by it on defaulted Financed Student Loans
insured or guaranteed by the Guarantee Agency to the extent provided in the
Higher Education Act.
"Guarantee Agency" shall mean (1) Education Assistance Corporation,
and its successors and assigns, including, without limitation, the Secretary of
Education, (2) Pennsylvania Higher Education Assistance Agency, and its
successors and assigns, including, without limitation, the Secretary of
Education, (3) United Student Aid Funds, Inc., and its successors and assigns,
including, without limitation, the Secretary of Education, (4) Student Loans of
North Dakota, and its successors and assigns, including, without limitation, the
Secretary of Education, (5) Northstar Guarantee Inc., and its successors and
assigns, including, without limitation, the Secretary of Education, (6) Great
Lakes Higher Education Corporation, and its successors and assigns, including,
without limitation, the Secretary of Education, (7) Educational Credit
Management Corporation (formerly known as Transitional Guaranty Agency, Inc.),
and its successors and assigns, including, without limitation, the Secretary of
Education, (8) Iowa College Aid Commission, and its successors and assigns,
including, without limitation, the Secretary of Education, (9) Missouri
Coordinating Board for Higher Education, and its successors and assigns,
including, without limitation, the Secretary of Education, (10) Illinois Student
Assistance Commission, and its successors and assigns, including, without
limitation, the Secretary of Education, (11) California Student Aid Commission,
and its successors and assigns, including, without limitation, the Secretary of
Education, or (12) any other state agency or private nonprofit institution or
organization which administers a Guarantee Program, subject to confirmation of
ratings on any Outstanding Unenhanced Notes or, if no Unenhanced Notes are then
Outstanding but Other Obligations are Outstanding, consent of each Other
Beneficiary holding such Outstanding Other Obligations, as evidenced in writing
to the Trustee by each such Other Beneficiary.
"Guarantee Agreements" shall mean, collectively, (1) that certain
Lender Agreement for Guarantee of Student Loans With Federal Reinsurance, dated
July 3, 1997, between the Trustee and Education Assistance Corporation, (2) that
certain Lender Agreement for Guarantee of Student Loans With Federal
Reinsurance, dated February 28, 1994, between the Trustee and Pennsylvania
Higher Education Assistance Agency, (3) that certain Agreement to Guarantee
Loans, dated July 11, 1997, between the Trustee and United Student Aid Funds,
Inc., (4) that certain Lender Participation Agreement for Insurance, dated July
8, 1997, between the Trustee and Student Loans of North Dakota, (5) that certain
Lender Agreement for Guarantee of Student Loans With Federal Reinsurance, dated
July 15, 1997, between the Trustee and Northstar Guarantee, Inc., (6) that
certain Student Loan Guaranty, dated July 15, 1997, between the Trustee and
Great Lakes Higher Education Corporation, (7) that certain Agreement for Payment
on Guarantee of Student Loans
1-12
With Federal Reinsurance, dated December 15, 1994, between the Trustee and
Educational Credit Management Corporation (formerly known as Transitional
Guaranty Agency, Inc.), (8) that certain Agreement to Guarantee Loans, dated
July 15, 1997, and that certain Agreement to Guarantee PLUS/SLS Loans, dated
July 15, 1997, each between the Trustee and Iowa College Aid Commission, (9)
that certain Agreement to Guarantee Federal ▇▇▇▇▇▇▇▇ Loans (Subsidized and
Unsubsidized), Federal PLUS Loans, Federal SLS Loans, dated July 15, 1997,
between the Trustee and Missouri Coordinating Board for Higher Education, (10)
that certain Holder Agreement, dated July 7, 1997, between the Trustee and
Illinois Student Assistance Commission, (11) that certain Agreement to Guarantee
Loans Made by a Commercial Lender, dated July 10, 1997, that certain Agreement
to Guarantee CLAS Program Loans Made by a Commercial Lender, dated July 10,
1997, that certain Consolidation Loan Program Lender Participation Agreement,
dated July 6, 1997, each between the Trustee and California Student Aid
Commission, and (12) any other agreement between a Guarantee Agency and the
Trustee providing for the insurance or guarantee by such Guarantee Agency, to
the extent provided in the Higher Education Act, of the principal of and accrued
interest on Student Loans acquired by the Trustee from time to time, including
any supplement thereto or amendment thereof entered into in accordance with the
provisions thereof and hereof.
"Guarantee Program" shall mean a Guarantee Agency's student loan
insurance program pursuant to which such Guarantee Agency guarantees or insures
Student Loans.
"Guaranteed Loan" shall mean a Student Loan which is Guaranteed.
"Higher Education Act" shall mean the Higher Education Act of 1965, as
amended or supplemented from time to time, and all regulations promulgated
thereunder.
"Holder," when used with respect to any Note, shall mean the Person in
whose name such Note is registered in the Note Register.
"Income Account" shall mean the Account by that name created and
established by Section 4.1 hereof.
"Indemnification Account" shall mean the Account by that name created
and established by Section 4.1 hereof.
"Indenture" shall mean this Indenture of Trust, including any
supplement hereto or amendment hereof entered into in accordance with the
provisions hereof.
"Independent," when used with respect to any specified Person, means
such a Person who (i) is in fact independent; (ii) does not have any direct
financial
1-13
interest or any material indirect financial interest in the Corporation, other
than the payment to be received under a contract for services to be performed
by such Person; and (iii) is not connected with the Corporation as an official,
officer, employee, promoter, underwriter, trustee, partner, affiliate,
subsidiary, director or Person performing similar functions. Whenever it is
herein provided that any Independent Person's opinion or certificate shall be
furnished to the Trustee, such Person shall be appointed by the Corporation or
the Trustee, as the case may be, and such opinion or certificate shall state
that the signer has read this definition and that the signer is Independent
within the meaning hereof.
"Independent Certificate" shall mean a certificate or opinion to be
delivered to the Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 1.4, made by an
Independent appraiser or other expert appointed by a Corporation Order and
approved by the Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of "Independent"
in this Indenture and that the signer is Independent within the meaning thereof.
"Initial Notes" shall mean the Notes of the initial twelve (12) series
hereunder issued contemporaneously with the execution and delivery of this
Indenture.
"Insurance" or "Insured" or "Insuring" shall mean, with respect to a
Student Loan, the insuring by the Secretary of Education (as evidenced by a
Certificate of Insurance or other document or certification issued under the
provisions of the Higher Education Act) under the Higher Education Act of one
hundred percent (100%) of the principal of and accrued interest on such Student
Loan; provided, however, that a Student Loan for which an application for
insurance commitment was received by the Secretary of Education prior to March
1, 1973, shall be deemed Insured if insured by the Secretary of Education to the
extent of one hundred percent (100%) of the principal amount of such Student
Loan.
"Insured Loan" shall mean a Student Loan which is Insured.
"Interest Account" shall mean the Account by that name created and
established by Section 4.1 hereof.
"Interest Payment Date" shall mean each regularly scheduled interest
payment date on the Notes [which, except in the case of any Variable Rate Notes,
including those Initial Notes constituting Variable Rate Notes (as to which such
dates shall be specified in the Supplemental Indenture providing for the
issuance thereof), shall be each June 1 and December 1] or, with respect to the
payment of interest upon redemption or acceleration of a Note, purchase of a
Note by the Trustee on a Mandatory Tender Date (to the extent such Mandatory
Tender Date is designated as an Interest Payment Date in the related
Supplemental Indenture) or
1-14
the payment of Defaulted Interest, such date on which such interest is payable
under this Indenture.
"Investment Securities" shall mean any of the following:
1. Government Obligations;
2. Interest-bearing time or demand deposits, certificates of deposit
or other similar banking arrangements with any bank, trust company,
national banking association or other depository institution (including the
Trustee or any of its affiliates), provided that, at the time of deposit or
purchase, if the investment is for a period exceeding one year, such
depository institution shall have long-term unsecured debt rated by each
Rating Agency not lower than in its highest applicable Specific Rating
Category or, if the investment is for a period of less than one year, such
depository institution shall have short-term unsecured debt rated by each
Rating Agency not lower than its highest applicable Specific Rating
Category;
3. Obligations issued or guaranteed as to principal and interest by
any of the following: (a) the Government National Mortgage Association;
(b) the Federal National Mortgage Association; or (c) the Federal Farm
Credit Banks, the Federal Intermediate Credit Banks, the Export-Import Bank
of the United States, the Federal Land Banks, the Student Loan Marketing
Association, the Federal Financing Bank, the Federal Home Loan Banks, the
Federal Home Loan Mortgage Corporation or the Farmers Home Administration,
or any agency or instrumentality of the United States of America which
shall be established for the purpose of acquiring the obligations of any of
the foregoing or otherwise providing financing therefor, provided that any
such obligation described in this clause (c) shall either be rated by Fitch
or, if not rated by Fitch, rated by Moody's, (i) if such obligation has a
term of less than one year, not lower than in its highest applicable
Specific Rating Category, or (ii) if such obligation has a term of one year
or longer, not lower than in its highest applicable Specific Rating
Category;
4. Repurchase agreements or reverse repurchase agreements with banks
(which may include the Trustee or any of its affiliates) which are members
of the Federal Deposit Insurance Corporation or with government bond
dealers insured by the Securities Investor Protection Corporation, which
such agreements are secured by securities which are Government Obligations
to a level sufficient to obtain a rating by each Rating Agency in its
highest Specific Rating Category, or with brokers or dealers whose
unsecured long-term debt is rated by each Rating Agency in its highest
Specific Rating Category;
5. Any money market fund, including a qualified regulated investment
company described in Internal Revenue Service Notice 87-22,
1-15
1987-1 C.B. 466, rated by each Rating Agency not lower than its highest
applicable Specific Rating Category;
6. Any debt instrument; provided that if such instrument has a term
of less than one year, it is rated by each Rating Agency not lower than in
its highest applicable Specific Rating Category, and if such instrument has
a term of one year or longer, it is rated by each Rating Agency not lower
than in its highest applicable Specific Rating Category;
7. Any investment agreement which constitutes a general obligation of
a Person, or the obligations under which are unconditionally guaranteed by
a Person, whose debt, unsecured securities, deposits or claims paying
ability is rated by each Rating Agency, (a) if such investment agreement
has a term of less than one year, not lower than in its highest applicable
Specific Rating Category, or (b) if such investment agreement has a term of
one year or longer, not lower than in its highest applicable Specific
Rating Category; and
8. Any other investment if the Trustee shall have received written
evidence from each Rating Agency that treating such investment as an
Investment Security will not cause any rating then applicable to any
Unenhanced Outstanding Notes to be lowered or withdrawn or, if no
Unenhanced Notes are then Outstanding, but Other Obligations are
Outstanding, is acceptable to such Other Beneficiaries, as evidenced in
writing to the Trustee by each such Other Beneficiary.
"Joint Sharing Agreement" shall mean any agreement entered into in
accordance with Section 5.24(2) hereof.
"Lender" shall mean any "eligible lender" (as defined in the Higher
Education Act and the applicable Student Loan Purchase Agreement) permitted to
participate as a seller of Student Loans to the Corporation under the Program
and which has received an eligible lender designation from the Secretary of
Education with respect to Insured Loans or from a Guarantee Agency with respect
to Guaranteed Loans.
"Mandatory Tender Date" shall mean, with respect to any Note, a date
on which such Note is required to be tendered for purchase by or on behalf of
the Corporation in accordance with the provisions in the Supplemental Indenture
providing for the issuance thereof.
"Maturity," when used with respect to any Note, shall mean the date on
which the principal of such Note becomes due and payable as therein or herein
provided, whether at the Stated Maturity thereof or by declaration of
acceleration, call for redemption or otherwise.
1-16
"Monthly Payment Date" shall mean the 12th day of each calendar month
(or, in the event such 12th day is not a Business Day, the next preceding
Business Day); provided that any transfers to be made from the Revenue Fund on
a Monthly Payment Date shall, as to amounts therein constituting payments in
respect of Financed Student Loans, include only such payments as have been
deposited in the Revenue Fund as of the last day of the preceding calendar
month.
"Monthly Servicing Report" shall mean the monthly report prepared by
the Servicer in accordance with any Servicing Agreement.
"Moody's" shall mean ▇▇▇▇▇'▇ Investors Service, Inc., its successors
and their assigns, and, if such corporation shall be dissolved or liquidated or
shall no longer perform the functions of a securities rating agency, "Moody's"
shall be deemed to refer to any other nationally recognized securities rating
agency designated by the Trustee, at the written direction of the Corporation.
"Non-Delivery Fee" shall mean any fee received by the Corporation or
the Trustee from a Lender upon the failure of the Lender, in whole or in part,
to perform its obligation to sell Eligible Loans to the Corporation pursuant to
a Student Loan Purchase Agreement.
"Note Fees" shall mean the fees, costs and expenses, excluding Costs
of Issuance, of the Trustee and any Paying Agents, Authenticating Agent, Deposit
Agents, Remarketing Agents, Depositaries, Auction Agents, Broker-Dealers,
Counsel, Note Registrar, Accountants and other consultants and professionals
incurred by the Corporation in carrying out and administering its powers, duties
and functions under (1) its articles of incorporation, its bylaws, the Student
Loan Purchase Agreements, any Servicing Agreement, the Contract of Insurance,
the Guarantee Agreements, any Certificate of Insurance, the Program, the Higher
Education Act or any requirement of the laws of the United States or any State
with respect to the Program, as such powers, duties and functions relate to
Financed Student Loans, (2) any Swap Agreement, Credit Enhancement Facility or
Demand Purchase Agreement (other than any amounts payable thereunder which
constitute Other Obligations), (3) any Remarketing Agreement, Depositary
Agreement, Auction Agent Agreement or Broker-Dealer Agreement and (4) this
Indenture.
"Note Fund" shall mean the Fund by that name created and established
by Section 4.1 hereof.
"Note Register" shall mean the register maintained by the Note
Registrar pursuant to Section 3.7 hereof.
"Note Registrar" shall mean the Trustee, or, if so designated pursuant
to the terms of a Supplemental Indenture, the Authenticating Agent, serving in
such capacity under the terms of this Indenture, unless and until a Corporation
Order is delivered to the Authenticating Agent and the Trustee directing that
the
1-17
Authenticating Agent or the Trustee, as the case may be, become the Note
Registrar and the Authenticating Agent or the Trustee, as the case may be,
agrees to serve in such capacity hereunder.
"Noteholder" shall mean the Holder of any Note.
"Notes" shall mean all Notes issued pursuant to this Indenture in
accordance with the provisions of Article Three hereof.
"Other Beneficiary" shall mean an Other Senior Beneficiary or an
Other Subordinate Beneficiary.
"Other Obligations" shall mean, collectively, Other Senior
Obligations and Other Subordinate Obligations.
"Other Senior Beneficiary" shall mean a Person who is a Senior
Beneficiary other than as a result of ownership of Class A Notes.
"Other Senior Obligation" shall mean the Corporation's obligations to
pay any amounts under any Senior Swap Agreements, any Senior Credit Enhancement
Facilities and any Senior Demand Purchase Agreements.
"Other Subordinate Beneficiary" shall mean a Person who is a
Subordinate Beneficiary other than as a result of ownership of Class B Notes.
"Other Subordinate Obligation" shall mean the Corporation's
obligations to pay any amounts under any Subordinate Swap Agreements, any
Subordinate Credit Enhancement Facilities and any Subordinate Demand Purchase
Agreements.
"Outstanding," (1) when used with respect to any Note, shall (a) have
the construction given to such word in Sections 1.6, 3.7 and 11.1 hereof, i.e.,
a Note shall not be Outstanding hereunder if such Note is at the time not deemed
to be Outstanding hereunder by reason of the operation and effect of Section
1.6, Section 3.7 or Section 11.1 hereof, and (b) not include any Note Deemed
Tendered; and (2) when used with respect to any Other Obligation, shall mean all
Other Obligations which have become, or may in the future become, due and
payable and which have not been paid or otherwise satisfied.
"Paying Agent" shall mean the Trustee and any other commercial bank
designated herein or in accordance herewith as a place at which principal of,
premium, if any, or interest on any Note is payable.
"Person" shall mean any individual, corporation, limited liability
company, partnership, joint venture, association, joint stock company, trust,
1-18
incorporated organization or government or any agency or political subdivision
thereof.
"Plus Loan" shall mean a Student Loan made pursuant to Section 428B
of the Higher Education Act.
"Prepayment Date," when used with respect to any Note, a portion of
the Principal Amount of which is to be paid prior to its Stated Maturity, shall
mean the date fixed for such prepayment by or pursuant to this Indenture.
"Principal Account" shall mean the Account by that name created and
established by Section 4.1 hereof.
"Principal Amount," when used with respect to a Note, shall mean the
original principal amount of such Note less all payments previously made to the
Holder thereof in respect of principal.
"Principal Balance," when used with respect to a Student Loan, shall
mean the unpaid principal amount thereof (including any unpaid capitalized
interest thereon that is authorized to be capitalized under the Higher Education
Act for purposes of Special Allowance Payments, federal interest subsidy
payments, a borrower's liability to a lender and the amount of the lender's
loss on a guarantee or insurance claim) as of a given date.
"Principal Office" shall mean (i) when used with respect to the
Trustee, the principal office of the Trustee for the performance of its duties
as trustee hereunder, which office as of the date of execution of this Indenture
is located at the address specified in Section 13.4 hereof, and (ii) when used
with respect to a Paying Agent (other than the Trustee), an Authenticating
Agent, the Note Registrar, a Depositary, a Remarketing Agent, an Auction Agent
or a Broker-Dealer, such office designated in writing to the Trustee and the
Corporation as the location of its principal office for the performance of its
duties as Paying Agent, Authenticating Agent, Note Registrar, Depositary,
Remarketing Agent, Auction Agent or Broker-Dealer, as the case may be, under
this Indenture.
"Principal Payment Date" shall mean the Stated Maturity of principal
of any Serial Note and the Sinking Fund Payment Date for any Term Note, which,
unless otherwise specified with respect to any Variable Rate Notes, including
those Initial Notes constituting Variable Rate Notes, in the Supplemental
Indenture providing for the issuance thereof, shall occur on a June 1 or an
December 1.
"Program" shall mean the program to be administered by the Corporation
(or, after the Section 150(d)(3) Transfer, the Servicer) for the purchase of
Student Loans from Lenders or origination of Student Loans in order to increase
the supply of moneys available for new Student Loans, thereby assisting students
in obtaining a post-secondary school education.
1-19
"Purchase Date" shall mean, with respect to a Demand Note, the date
specified in a Purchase Demand (provided that such date is not less than the
required number of calendar days after receipt of such Purchase Demand by the
Depositary) as the date on which the Holder of the Demand Note identified in
such Purchase Demand is demanding purchase of such Note, or a specified portion
thereof, in accordance with the applicable provisions of the related
Supplemental Indenture, or the next preceding or succeeding Business Day, as
specified in such Supplemental Indenture, if such date is not a Business Day.
"Purchase Demand" shall mean, with respect to a Demand Note, a written
demand, in the form required by the related Supplemental Indenture, by the
Holder thereof that such Note, or, in the case of a partial purchase demand, a
specified portion thereof, be purchased in accordance with the applicable
provisions of such Supplemental Indenture.
"Rating Agency" shall mean any rating agency that shall have an
outstanding rating on any of the Notes pursuant to request by the Corporation.
"Rating Agency Condition" shall mean, with respect to any action, that
each of the Rating Agencies shall have notified the Corporation and the Trustee
in writing that such action will not result in a reduction, qualification or
withdrawal of the then-current rating of any of the Notes.
"Rating Category" shall mean one of the general rating categories of a
Rating Agency, without regard to any refinement or gradation of such rating
category by a numerical modifier or otherwise.
"Rebate Account" shall mean the Account by that name created and
established by Section 4.1 hereof.
"Rebate Amount" shall have the meaning ascribed thereto in Section
4.5(A) hereof.
"Rebate Fund" shall mean the Rebate Fund created and established by
Section 4.1 hereof.
"Redemption Date," when used with respect to any Note to be redeemed,
shall mean the date fixed for such redemption by or pursuant to this Indenture.
"Redemption Price," when used with respect to any Note to be redeemed,
means the price at which it is to be redeemed pursuant to this Indenture.
"Regular Record Date" shall mean, with respect to an Interest Payment
Date for any series of Notes, unless the Supplemental Indenture authorizing the
issuance of such series of Notes otherwise provides, the fifteenth day (whether
or
1-20
not a Business Day) of the calendar month immediately preceding such Interest
Payment Date.
"Regulations" shall mean the regulations promulgated from time to time
by the Department of the Treasury under the Code relating to the tax exemption
of interest on Tax Exempt Notes, including, without limitation, Treasury
Regulations, Sections 1.144-0 to 1.144-2, 1.148-0 to 1.148-11, 1.149(b)-1,
1.149(g)-1, 1.150-1 and 1.150-2.
"Remarketing Agent" shall mean, with respect to any series of Notes,
any securities dealer designated as such with respect to such Notes pursuant to
the provisions of Section 7.21 hereof and its successor or successors and any
securities dealer at any time substituted in its place pursuant to this
Indenture.
"Remarketing Agreement" shall mean an agreement between a Remarketing
Agent and the Corporation setting forth the rights and obligations of the
Remarketing Agent acting in such capacity under this Indenture and otherwise
meeting the requirements of Section 7.21 hereof, including any supplement
thereto or amendment thereof entered into in accordance with the provisions
thereof.
"Repayment Account" shall mean the Account by that name created and
established by Section 4.1 hereof.
"Reserve Fund" shall mean the Reserve Fund created and established by
Section 4.1 hereof.
"Reserve Fund Requirement" shall mean, at any time, an amount equal to
the greater of (1) two percent (2.00%) of the aggregate Principal Amount of
Class A Notes and Class B Notes then Outstanding, and (2) $500,000; or, as
determined upon the issuance of any Class A Notes or any Class B Notes, such
lesser or greater amount as will not cause any Rating Agency to lower or
withdraw any rating on any Unenhanced Outstanding Notes, as confirmed in writing
to the Trustee by each Rating Agency or, if no Unenhanced Notes are then
Outstanding, but Other Obligations are Outstanding, and the Reserve Fund
Requirement is to be reduced, such lesser amount as is acceptable to the Other
Beneficiaries holding such Other Obligations, as evidenced in writing to the
Trustee by each such Other Beneficiary.
"Retirement Account" shall mean the Account by that name created and
established by Section 4.1 hereof.
"Revenue Fund" shall mean the Revenue Fund created and established by
Section 4.1 hereof.
"Secretary of Education" shall mean the Commissioner of Education,
Department of Health, Education and Welfare of the United States, and the
Secretary
1-21
of the United States Department of Education (who succeeded to the
functions of the Commissioner of Education pursuant to the Department of
Education Organization Act), or any other officer, board, body, commission or
agency succeeding to the functions thereof under the Higher Education Act.
"Section 150(d)(3) Transfer" shall mean the transfer of all of the
Corporation's right, title and interest in and to the Trust Estate from
Education Loans Incorporated, a South Dakota nonprofit corporation, to SLFC, and
from SLFC to EdLinc, together with the assumption by EdLinc of all of the
obligations and liabilities of the Corporation hereunder and under the Notes and
any Other Obligations, all in accordance with Section 150(d)(3) of the Code.
"Senior Asset Requirement" shall mean, as of the date of
determination, that:
(a) the Senior Percentage is at least equal to one hundred ten percent
(110%) (or such lower percentage specified in a Corporation Certificate
delivered to the Trustee which, if Unenhanced Class A Notes are
Outstanding, shall not result in the lowering or withdrawal of the
outstanding rating assigned by any Rating Agency to any of the Unenhanced
Class A Notes Outstanding prior to such action being taken by the
Corporation, as evidenced in writing to the Trustee by each such Rating
Agency, or, if no Unenhanced Class A Notes are Outstanding but Other Senior
Obligations are Outstanding, is acceptable to the Other Senior
Beneficiaries holding such Other Senior Obligations, as evidenced in
writing to the Trustee by each such Other Senior Beneficiary), and
(b) the Subordinate Percentage is at least equal to one hundred
percent (100%) (or such lower percentage specified in a Corporation
Certificate delivered to the Trustee which, if Unenhanced Class B Notes are
Outstanding, shall not result in the lowering or withdrawal of the
outstanding rating assigned by any Rating Agency to any of the Unenhanced
Class B Notes Outstanding prior to such action being taken by the
Corporation, as evidenced in writing to the Trustee by each such Rating
Agency, or, if no Unenhanced Class B Notes are Outstanding but Other
Subordinate Obligations are Outstanding, is acceptable to the Other
Subordinate Beneficiaries holding such Other Subordinate Obligations, as
evidenced in writing to the Trustee by each such Other Subordinate
Beneficiary).
"Senior Beneficiaries" shall mean (1) the Holders of any Outstanding
Class A Notes, and (2) any Other Senior Beneficiary holding any Other Senior
Obligation that is Outstanding.
"Senior Credit Enhancement Facility" shall mean a Credit Enhancement
Facility designated as a Senior Credit Enhancement Facility in the
1-22
Supplemental Indenture pursuant to which such Credit Enhancement Facility is
furnished by the Corporation.
"Senior Credit Enhancement Provider" shall mean any Person who
provides a Senior Credit Enhancement Facility or a Senior Demand Purchase
Agreement.
"Senior Demand Purchase Agreement" shall mean a Demand Purchase
Agreement designated as a Senior Demand Purchase Agreement in the Supplemental
Indenture pursuant to which such Demand Purchase Agreement is furnished by the
Corporation.
"Senior Obligations" shall mean, collectively, the Class A Notes and
any Other Senior Obligations.
"Senior Percentage" shall mean, as of the date of determination, the
percentage resulting by dividing the Aggregate Value by the sum of (i) the
aggregate Principal Amount of Outstanding Class A Notes plus accrued interest
thereon and (ii) accrued Corporation Swap Payments under Senior Swap Agreements
and (iii) other payments accrued and owing by the Corporation on Other Senior
Obligations.
"Senior Swap Agreement" shall mean a Swap Agreement designated as a
Senior Swap Agreement in the Supplemental Indenture pursuant to which such Swap
Agreement is furnished by the Corporation.
"Senior Swap Counterparty" shall mean any Person who provides a Senior
Swap Agreement.
"Serial Notes" shall mean all Notes other than Term Notes.
"Servicer" shall mean, after the Section 150(d)(3) Transfer, SLFC, and
any other organization with which the Corporation and the Trustee have entered
into a Servicing Agreement, subject to confirmation of ratings on any then
Outstanding Unenhanced Notes, as evidenced by written confirmation to the
Trustee to that effect from each Rating Agency, or, if no Unenhanced Notes are
then Outstanding but Other Obligations are Outstanding, consent of each Other
Beneficiary holding such Outstanding Other Obligations, as evidenced in writing
to the Trustee by each such Other Beneficiary.
"Servicing Agreement" shall mean, after the Section 150(d)(3)
Transfer, the Servicing Agreement, dated as of July 1, 1997, among the
Corporation, the Trustee and SLFC, as servicer, and any other agreement among
the Corporation, the Trustee and a Servicer under which the Servicer agrees to
act as the Corporation's agent in connection with the administration and
collection of Financed Student Loans in accordance with this Indenture.
1-23
"Servicing Fees" shall mean any fees payable by the Corporation to a
Servicer in respect of Financed Student Loans pursuant to the provisions of a
Servicing Agreement.
"Sinking Fund Payment Date" shall mean the date on which any Term Note
is to be called for redemption pursuant to subsection (A) or (B) of Section
4.7.2 hereof and the applicable provisions of the Supplemental Indenture
providing for the issuance thereof, or, if not redeemed, the Stated Maturity
thereof.
"SLFC" shall mean Student Loan Finance Corporation, a corporation duly
organized and existing under the laws of the State of South Dakota.
"SLS Loan" shall mean a Student Loan made pursuant to former Section
428A of the Higher Education Act.
"Special Allowance Payments" shall mean special allowance payments
authorized to be made by the Secretary of Education by Section 438 of the Higher
Education Act, or similar allowances authorized from time to time by federal law
or regulation.
"Special Record Date" shall mean, with respect to the payment of any
Defaulted Interest, a date fixed by the Trustee pursuant to Section 3.2 hereof.
"Special Redemption and Prepayment Account" shall mean the Account by
that name created and established by Section 4.1 hereof.
"Special Redemption and Prepayment Account Requirement" shall mean the
amount specified for a series of Notes in the Supplemental Indenture authorizing
the issuance of Notes of such series.
"Specific Rating Category" shall mean a specific rating category of a
Rating Agency, taking into account any refinement or gradation of a Rating
Category by a numerical or other qualifier. For so long as any of the Notes are
rated by Moody's: (a) references to the highest applicable Specific Rating
Category shall be, with respect to obligations or investments having a term of
less than one year, to a rating of "P-1" (or, if Moody's revises its rating
schedule from time to time, such rating as Moody's shall advise the Trustee in
writing is comparable to "P-1" under such revised rating schedule), and with
respect to obligations or investments having a term of one year or longer, to a
rating of "Aaa" (or, if Moody's revises its rating schedule from time to time,
such rating as Moody's shall advise the Trustee in writing is comparable to
"Aaa" under such revised rating schedule); and (b) references to the third
highest applicable Specific Rating Category shall be, with respect to
obligations or investments having a term of one year or longer, to a rating of
"Aa2" (or, if ▇▇▇▇▇'▇ revises its rating schedule from time to time, such rating
as ▇▇▇▇▇'▇ shall advise the Trustee in writing is comparable to "Aa2" under such
revised rating schedule). For so long as any of the Notes are rated by Fitch:
(a)
1-24
references to the highest applicable Specific Rating Category shall be, with
respect to obligations or investments having a term of less than one year, to a
rating of "F-1+" (or, if Fitch revises its rating schedule from time to time,
such rating as Fitch shall advise the Trustee in writing is comparable to "F-1+"
under such revised rating schedule), and with respect to obligations or
investments having a term of one year or longer, to a rating of "AAA" (or, if
Fitch revises its rating schedule from time to time, such rating as Fitch shall
advise the Trustee in writing is comparable to "AAA" under such revised rating
schedule); and (b) references to the third highest applicable Specific Rating
Category shall be, with respect to obligations or investments having a term of
one year or longer, to a rating of "AA" (or, if Fitch revises its rating
schedule from time to time, such rating as Fitch shall advise the Trustee in
writing is comparable to "AA" under such revised rating schedule).
"Stated Maturity," when used with respect to any Note or any
installment of interest thereon, shall mean the date specified in such Note as
the fixed date on which principal of such Note or such installment of interest
is due and payable.
"Statutes" shall mean the South Dakota Codified Laws, as amended.
"Student Loan" shall mean a loan to a borrower for post-secondary
education.
"Student Loan Acquisition Certificate" shall mean a certificate signed
by an Authorized Officer of the Corporation and substantially in the form
attached as Exhibit C hereto.
"Student Loan Purchase Agreements" shall mean all agreements between
the Corporation and a Lender providing for the sale by such Lender to the
Corporation of Student Loans Financed or to be Financed under this Indenture and
substantially in the forms which are on file with the Trustee, including
amendments thereto made in accordance with Section 5.18 hereof.
"Subaccount" shall mean any subaccount of an Account created or
established by a Supplemental Indenture.
"Subordinate Beneficiaries" shall mean (1) the Holders of any
Outstanding Class B Notes, and (2) any Other Subordinate Beneficiary holding any
Other Subordinate Obligation that is Outstanding.
"Subordinate Credit Enhancement Facility" shall mean a Credit
Enhancement Facility designated as a Subordinate Credit Enhancement Facility in
the Supplemental Indenture pursuant to which such Credit Enhancement Facility is
furnished by the Corporation.
1-25
"Subordinate Credit Facility Provider" shall mean any Person who
provides a Subordinate Credit Enhancement Facility or a Subordinate Demand
Purchase Agreement.
"Subordinate Demand Purchase Agreement" shall mean a Demand Purchase
Agreement designated as a Subordinate Demand Purchase Agreement in the
Supplemental Indenture pursuant to which such Demand Purchase Agreement is
furnished by the Corporation.
"Subordinate Obligations" shall mean, collectively, the Class B Notes
and any Other Subordinate Obligations.
"Subordinate Percentage" shall mean, as of the date of determination,
the percentage resulting by dividing the Aggregate Value by the sum of (i) the
aggregate Principal Amount of Outstanding Class A Notes and Class B Notes plus
accrued interest thereon, (ii) accrued Corporation Swap Payments and (iii) other
payments accrued and owing by the Corporation on Other Obligations.
"Subordinate Swap Agreement" shall mean a Swap Agreement designated as
a Subordinate Swap Agreement in the Supplemental Indenture pursuant to which
such Swap Agreement is furnished by the Corporation.
"Subordinate Swap Counterparty" shall mean any Person who provides a
Subordinate Swap Agreement.
"Supplemental Indenture" shall mean any amendment of or supplement to
this Indenture made in accordance with Article Eight hereof.
"Surplus Account" shall mean the Account by that name created and
established by Section 4.1 hereof.
"Surplus Fund" shall mean the Fund by that name created and
established by Section 4.1 hereof.
"Swap Agreement" shall mean an interest rate exchange agreement
between the Corporation and a Swap Counterparty, as originally executed and as
amended or supplemented, or other interest rate hedge agreement between the
Corporation and a Swap Counterparty, as originally executed and as amended or
supplemented, in each case approved by each Rating Agency, for the purpose of
converting, in whole or in part, (i) the Corporation's fixed interest rate
liability on all or a portion of any Notes to a variable rate liability, (ii)
the Corporation's variable rate liability on all or a portion of the Notes to a
fixed rate liability or (iii) the Corporation's variable rate liability on all
or a portion of the Notes to a different variable rate liability.
1-26
"Swap Counterparty" shall mean any Person with whom the Corporation
shall, from time to time, enter into a Swap Agreement.
"Swap Counterparty Guarantee" shall mean a guarantee in favor of the
Corporation given in connection with the execution and delivery of a Swap
Agreement under this Indenture.
"Tax Exempt Notes" shall mean each series of Notes that is issued with
the intent that interest thereon be excludable from gross income for purposes of
federal income taxation, as evidenced by an opinion of Bond Counsel to that
effect delivered upon issuance of such series of Notes.
"Tax Matters Certificate" shall mean, with respect to one or all
series of Tax Exempt Notes, the applicable Corporation Certificate or
Certificates relating to arbitrage and other tax matters delivered in connection
with the issuance of such series of Notes, as the same may be amended or
supplemented in accordance with its or their terms.
"Term Notes" shall mean Notes the payment of the principal of which is
provided for from moneys credited to the Principal Account pursuant to
subsection (A) or (B) of Section 4.7.2 hereof.
"Trust Estate" shall mean the Trust Estate as described in the
Granting Clauses hereof.
"Trust Funds" shall mean, in the aggregate, all of the Funds and
Accounts.
"Trust Indenture Act" or "TIA" shall mean the Trust Indenture Act of
1939, as amended, as in force on the date hereof, unless otherwise specifically
provided.
"Trustee" shall mean First Bank National Association, as trustee under
this Indenture, and its successor or successors and any other corporation which
may at any time be substituted in its place pursuant to this Indenture.
"Unenhanced Note" shall mean, with respect to a Class A Note or a
Class B Note, any Note the payment of the principal of and interest on which is
not secured by a Credit Enhancement Facility or a Demand Purchase Agreement.
"Value" shall mean, on any calculation date when required under this
Indenture, the value of the Trust Estate calculated by the Corporation, in
accordance with the following:
1-27
(1) with respect to any Eligible Loan, the Principal Balance thereof,
plus any unamortized premiums, accrued interest and Special Allowance
Payments thereon;
(2) with respect to any funds of the Corporation on deposit in any
commercial bank or as to any banker's acceptance or repurchase agreement or
investment agreement, the amount thereof plus accrued interest thereon;
(3) with respect to any Investment Securities of an investment
company, the bid price of the shares as reported by the investment company;
(4) as to other investments, (i) the bid price published by a
nationally recognized pricing service, or (ii) if the bid and asked prices
thereof are published on a regular basis in The Wall Street Journal (or, if
not there, then in The New York Times): the average of the bid and asked
prices for such investments so published on or most recently prior to such
time of determination plus accrued interest thereon;
(5) as to investments the bid prices of which are not published by a
nationally recognized pricing service and the bid and asked prices of which
are not published on a regular basis in The Wall Street Journal or The New
York Times the lower of the bid prices at such time of determination for
such investments by any two nationally recognized government securities
dealers (selected by the Corporation in its absolute discretion) at the
time making a market in such investments, plus accrued interest thereon;
and
(6) any accrued but unpaid Swap Counterparty Payment, unless the Swap
Counterparty is in default of its obligations under the Swap Agreement.
"Value of Investment Securities" shall mean (i) as to demand bank
deposits, bank time deposits which may be withdrawn without penalty by the
depositor upon fourteen (14) days' or less notice and Investment Securities
which mature not more than six (6) months from the date of computation, the
amount of such deposits and the par value of such Investment Securities, and
(ii) as to Investment Securities, other than demand bank deposits and bank time
deposits described in clause (i), which mature more than six (6) months after
the date of computation, the par value thereof or, if purchased at more or less
than par, the cost thereof adjusted to reflect the amortization or premium or
discount, as the case may be, paid upon their purchase. The computation made
under this paragraph shall include accrued interest.
"Variable Rate Notes" shall mean Notes whose interest rate is not
fixed but varies on a periodic basis as specified in the Supplemental Indenture
providing for the issuance thereof.
1-28
Section 1.2. Definitions of General Terms. Unless the context shall
clearly indicate otherwise, or may otherwise require, in this Indenture the
terms "herein," "hereunder," "hereby," "hereto," "hereof" and any similar terms
refer to this Indenture as a whole and not to any particular article, section or
subdivision hereof.
Unless the context shall clearly indicate otherwise, or may otherwise
require, in this Indenture: (i) references to articles, sections and other
subdivisions, whether by number or letter or otherwise, are to the respective or
corresponding articles, sections or subdivisions of this Indenture as such
articles, sections or subdivisions may be amended from time to time; (ii)
references to articles, chapters, subchapters and sections of the Statutes, or
to any public law or other statute of the United States or any section thereof,
are to the respective or corresponding chapters, subchapters, sections and
statutes as they may be amended from time to time; (iii) the word "heretofore"
means before the date of execution of this Indenture, the word "now" means at
the date of execution of this Indenture, and the word "hereafter" means after
the date of execution of this Indenture.
Section 1.3. Computations. Unless the facts shall then be otherwise,
all computations required for the purposes of this Indenture shall be made on
the assumption that: (i) the principal of and interest on all Notes shall be
paid as and when the same become due; (ii) all credits required by this
Indenture to be made to any Fund or Account shall be made in the amounts and at
the times required; (iii) all Notes required by this Indenture to be redeemed
from moneys credited to the Note Principal Account shall be redeemed on the
respective Sinking Fund Payment Dates therefor in the amounts and at the times
as required by this Indenture; and (iv) all Corporation Swap Payments and
Counterparty Swap Payments (unless the Swap Counterparty is then in default of
its obligations under the Swap Agreement) shall be paid when the same become
due.
Section 1.4. Compliance Certificates and Opinions, etc.
(a) Except as otherwise specifically provided in this Indenture, upon
any application or request by the Corporation to the Trustee to take any action
under any provision of this Indenture, the Corporation shall furnish to the
Trustee (i) a Corporation Certificate stating that all conditions precedent, if
any, provided for in this Indenture relating to the proposed action have been
complied with, (ii) an opinion of Counsel stating that in the opinion of such
counsel all such conditions precedent, if any, have been complied with and
(iii) (if required by the TIA) an Independent Certificate from a firm of
certified public accountants meeting the applicable requirements of this
Section, except that, in the case of any such application or request as to which
the furnishing of such documents is specifically required by any provision of
this Indenture, no additional certificate or opinion need be furnished.
1-29
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or opinion has
read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory, such
signatory has made such examination or investigation as is necessary to
enable such signatory to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such signatory,
such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any property or securities with the
Trustee that is to be made the basis for the release of any property
subject to the lien created by this Indenture, the Corporation shall, in
addition to any obligation imposed in Section 1.4(a) or elsewhere in this
Indenture, furnish to the Trustee (1) a Corporation Certificate certifying
or stating the opinion of each person signing such certificate as to the
fair value (within 90 days of such deposit) to the Corporation of the
property or securities to be so deposited, (2) an opinion of Counsel either
stating that, in the opinion of such Counsel, such action has been taken
with respect to the recording and filing of this Indenture and any other
requisite documents, and with respect to the execution and filing of any
financing statements and continuation statements, as are necessary to
perfect and make effective the first priority lien and security interest in
favor of the Trustee, for the benefit of the Trustee, created by this
Indenture in the property or securities to be so deposited, and reciting
the details of such action, or stating that, in the opinion of such
Counsel, no such action is necessary to make such lien and security
interest effective, and (3) evidence that the Rating Agency Condition has
been satisfied.
(ii) Whenever the Corporation is required to furnish to the Trustee a
Corporation Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (i) above, the Corporation
shall also deliver to the Trustee an Independent Certificate as to the same
matters, if the fair value to the Corporation of the property to be so
deposited and of all other such property made the basis of any such
withdrawal or release since the commencement of the then-current fiscal
year of the Corporation, as set forth in the certificates delivered
pursuant to clause (i) above and this clause (ii), is 10% or more of the
Outstanding Principal Amount of the Notes, but such a
1-30
certificate need not be furnished with respect to any property so
deposited, if the fair value thereof to the Corporation as set forth in the
related Corporation Certificate is less than $25,000 or less than 1% of the
Outstanding Principal Amount of the Notes.
(iii) Other than with respect to any release described in clause (A)
or (B) of Section 1.4(b)(v), whenever any property or securities are to be
released from the lien created by this Indenture, the Corporation shall
also furnish to the Trustee a Corporation Certificate certifying or stating
the opinion of each person signing such certificate as to the fair value
(within 90 days of such release) of the property or securities proposed to
be released and stating that in the opinion of such person the proposed
release will not impair the security created by this Indenture in
contravention of the provisions hereof.
(iv) Whenever the Corporation is required to furnish to the Trustee a
Corporation Certificate certifying or stating the opinion of any signer
thereof as to the matters described in clause (iii) above, the Corporation
shall also furnish to the Trustee an Independent Certificate as to the same
matters if the fair value of the property or securities and of all other
property or securities (other than property described in clauses (A) or (B)
of Section 1.4(b)(v)) released from the lien created by this Indenture
since the commencement of the then current fiscal year, as set forth in the
certificates required by clause (iii) above and this clause (iv), equals
10% or more of the Outstanding Principal Amount of the Notes, but such
certificate need not be furnished in the case of any release of property or
securities if the fair value thereof as set forth in the related
Corporation Certificate is less than $25,000 or less than one percent of
the then Outstanding Principal Amount of the Notes.
(v) Notwithstanding any other provision of this Section, the
Corporation may, without compliance with the other provisions of this
Section, (A) collect, liquidate, sell or otherwise dispose of Student Loans
as and to the extent permitted or required by this Indenture and the
Servicing Agreement, and (B) make cash payments out of the Funds and
Accounts as and to the extent permitted or required by this Indenture.
(c) In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Corporation
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, Counsel, unless such officer knows, or in the
exercise of
1-31
reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer or the Corporation, stating that the information with respect to
such factual matters is in the possession of the Servicer or the Corporation,
unless such Counsel knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to such matters
are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Trustee, it is provided that the Corporation shall
deliver any document as a condition of the granting of such application, or as
evidence of the Corporation's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Corporation to have such application granted or to
the sufficiency of such certificate or report. The foregoing shall not,
however, be construed to affect the Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article VII.
Section 1.5. Evidence of Action by the Corporation. Except as
otherwise specifically provided in this Indenture, any request, direction,
command, order, notice, certificate or other instrument of, by or from the
Corporation shall be effective and binding upon the Corporation for the purposes
of this Indenture if signed by an Authorized Officer.
Section 1.6. Exclusion of Notes Held By or For the Corporation. In
determining whether the Holders of the requisite Principal Amount of Notes
Outstanding have given any request, demand, authorization, direction, notice,
consent or waiver hereunder, Notes owned by the Corporation shall be disregarded
and deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent, or waiver, only Notes which the
Trustee knows to be so owned shall be disregarded.
Section 1.7. Exhibits. Attached to and by reference made a part of
this Indenture are the following Exhibits:
Exhibit A: Form of Eligible Loan Acquisition Certificate;
1-32
Exhibit B: Form of Eligible Loan Origination Certificate;
Exhibit C: Form of Student Loan Acquisition Certificate; and
Exhibit D: Form of Updating Eligible Loan Acquisition Certificate.
Section 1.8. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes and any Other Obligations.
"indenture security holder" means a Noteholder or Other Beneficiary.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the Trustee.
"obligor" on the indenture securities means the Corporation and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by Commission rule
have the meaning assigned to them by such definitions.
1-33
ARTICLE TWO
NOTE FORMS
Section 2.1. Forms Generally. The Notes and the Trustee's
certificate of authentication shall be in substantially the forms set forth in
this Article Two, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture or by the
Supplemental Indenture providing for the issuance thereof, and may have such
letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing such Notes, as evidenced by their signing of the Notes. Any
portion of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note.
Section 2.2. Form of Notes. The Notes shall be in substantially the
following form:
EDUCATION LOANS INCORPORATED
STUDENT LOAN ASSET-BACKED NOTE
[SENIOR] [SUBORDINATE] [JUNIOR SUBORDINATE] SERIES ____
CLASS ___________
No. R__________________________ $
Stated Date of Original Interest
Maturity Date Issue Rate CUSIP
------------- ---------------- -------- -----
REGISTERED HOLDER:
PRINCIPAL AMOUNT:
2-1
FOR VALUE RECEIVED, EDUCATION LOANS INCORPORATED, a nonprofit
corporation organized under the laws of the State of South Dakota (the
"Corporation," which term includes any successor corporation under the Indenture
hereinafter referred to), acknowledges itself indebted and hereby promises to
pay to the registered holder specified above, or registered assigns (the
"Registered Holder"), but solely from the revenues and receipts hereinafter
specified and not otherwise, the Principal Amount specified above on the Stated
Maturity Date specified above (subject to the right of prior redemption
hereinafter mentioned), upon presentation and surrender of this Note at the
Principal Office (as defined in the Indenture) of the Trustee hereinafter
referred to or, at the option of the Registered Holder hereof, at the Principal
Office of any duly appointed Paying Agent, and to pay, from the source and in
the manner hereinafter provided, interest on said principal sum to the
Registered Holder hereof from the date hereof until the payment of said
principal sum in full, at the rate per annum specified above, payable
semiannually on the first day of June and December in each year, commencing
______________________, ________, by check or draft mailed to the Person who is
the Registered Holder hereof as of 5:00 p.m. in the city in which the Principal
Office of the Note Registrar is located on the fifteenth day of the calendar
month, whether or not a Business Day (as defined in the Indenture), preceding
such interest payment date (the "Record Date"), at the address of such
Registered Holder as it appears on the Note Register maintained by the Note
Registrar[; provided that, if the Registered Holder of this Note is the
Registered Holder of Notes of this series in the aggregate Principal Amount of
$1,000,000 or more (or, if less than $1,000,000 in Principal Amount of Notes of
such series is outstanding, the Registered Holder of all outstanding Notes), at
the direction of such Registered Holder such principal and interest shall be
payable by electronic transfer by the Trustee in immediately available funds to
an account designated by such Registered Holder]. In addition, interest on this
Note is payable at the maturity hereof in the same manner as the principal
hereof, unless the date of such maturity is a regularly scheduled interest
payment date, in which event interest is payable in the manner set forth in the
preceding sentence. Any interest not so timely paid or duly provided for shall
cease to be payable to the Person who is the Registered Holder hereof at the
close of business on the Record Date and shall be payable to the Person who is
the Registered Holder hereof at the close of business on a special record date
for the payment of any such defaulted interest. Such special record date shall
be fixed by the Trustee whenever moneys become available for payment of the
defaulted interest, and notice of the special record date shall be given to the
Registered Holder hereof not less than ten days prior thereto by first-class
mail to such Registered Holder as shown on the Note Register on a date selected
by the Trustee, stating the date of the special record date and the date fixed
for the payment of such defaulted interest. The principal of, premium, if any,
and interest on this Note are payable in lawful money of the United States of
America.
This Note is one of an authorized issue of Notes (hereinafter called
the "Notes"), issued and to be issued by the Corporation in one or more series
pursuant to an Indenture of Trust, dated as of July 1, 1997, as [amended and]
supplemented by a ______________________ Supplemental Indenture of Trust, dated
as of __________________________________,
2-2
(collectively, the "Indenture"), each between the Corporation and First Bank
National Association, Minneapolis, Minnesota, as Trustee (the "Trustee," which
term includes any successor trustee under the Indenture). As provided in the
Indenture, the Notes are issuable in series which may vary as in the Indenture
provided or permitted. This Note is one of a series (the "Series __________
Notes") limited to an aggregate Principal Amount of $________________________,
the proceeds of which will be used by the Corporation to ____________________.
Reference is hereby made to the Indenture, copies of which are on
file in the principal corporate trust office of the Trustee, and to all of the
provisions of which any Registered Holder of this Note by his acceptance hereof
hereby assents, for definitions of terms; the description of and the nature and
extent of the security for the various classes of Notes and Other Obligations
(as defined in the Indenture) secured thereunder; the student loan acquisition
program being financed by the issuance of the Notes; the revenues and other
moneys pledged to the payment of the principal of, premium, if any, and interest
on the Notes and the Other Obligations; the nature and extent and manner of
enforcement of the pledge; the conditions upon which Notes may be issued or
Other Obligations may be incurred by the Corporation thereunder, payable from
such revenues and other moneys thereunder as Senior Obligations, Subordinate
Obligations or Class C Notes (each as defined in the Indenture); the conditions
upon which the Indenture may be amended or supplemented with or without the
consent of the Holders of the Notes; the rights and remedies of the Registered
Holder hereof with respect hereto and thereto, including the limitations upon
the right of a Registered Holder hereof to institute any suit, action or
proceeding in equity or at law with respect hereto and thereto; the rights,
duties and obligations of the Corporation and the Trustee thereunder; the terms
and provisions upon which the liens, pledges, charges, trusts and covenants made
therein may be discharged at or prior to the maturity or redemption of this
Note, and this Note thereafter no longer be secured by the Indenture, or be
deemed to be Outstanding (as defined in the Indenture) thereunder; and for the
other terms and provisions thereof.
The Notes and Other Obligations are limited obligations of the
Corporation, payable solely from the revenues and assets of the Corporation
pledged therefor under the Indenture, including certain notes evidencing
Student Loans and the proceeds of the Corporation's bonds, notes or other
evidences of indebtedness, if any, issued with respect to the Notes.
Each Noteholder, by acceptance of a Note, covenants and agrees that
by accepting the benefits of the Indenture and such Note that such Noteholder
will not at any time institute against the Corporation, or join in any
institution against the Corporation, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under any United States
Federal or state bankruptcy or similar law in connection with any obligations
relating to the Notes, the Indenture or the Servicing Agreement.
2-3
The Corporation has structured the Indenture and the Notes with the
intention that the Notes will qualify under applicable federal, state, local and
foreign tax law as indebtedness of the Corporation secured by the Trust Estate.
The Corporation, the Trustee, the Servicer and each Noteholder agree to treat
and to take no action inconsistent with the treatment of the Notes as such
indebtedness for purposes of federal, state, local and foreign income or
franchise taxes and any other tax imposed on or measured by income. Each
Noteholder, by acceptance of its Note, agrees to be bound by the provisions of
this paragraph. Each Noteholder agrees that it will cause any Person acquiring
an interest in a Note through it to comply with the Indenture as to treatment as
indebtedness under applicable tax law, as described in this paragraph.
[The Series ______________ Notes constitute Class B Notes under the
Indenture which are subordinated in right of payment, the direction of remedies
and certain other matters in accordance with the terms of the Indenture to the
rights of Class A Notes issued from time to time under the Indenture and Other
Senior Beneficiaries thereunder. A failure to pay principal of, premium, if
any, or interest on this Class B Note will not constitute an Event of Default
under the Indenture if any Senior Obligation is Outstanding (each as defined in
the Indenture).]
[The Series ______________ Notes constitute Class C Notes under the
Indenture which are subordinated in right of payment, the direction of remedies
and certain other matters in accordance with the terms of the Indenture to the
rights of Class A Notes and Class B Notes issued from time to time under the
Indenture and Other Senior Beneficiaries and Other Subordinate Beneficiaries (as
defined in the Indenture) thereunder. A failure to pay principal of, premium,
if any, or interest on this Class C Note will not constitute an Event of Default
under the Indenture if any Senior Obligation is Outstanding or any Subordinate
Obligation (as defined in the Indenture) is Outstanding.]
[At this point in the Note form of any series should be inserted the
paragraphs, if any, relating to the terms of redemption for that series.]
Notice of redemption shall be given by first-class mail mailed at
least 30 days before the Redemption Date to each Registered Holder of Notes to
be redeemed at his last address appearing on the Note Register; but no defect in
or failure to give such notice of redemption shall affect the validity of
proceedings for redemption of any Note not affected by such defect or failure.
All Notes so called for redemption will cease to bear interest on such
Redemption Date, provided funds for their redemption have been duly deposited,
and, except for the purpose of payment, shall no longer be protected by the
Indenture and shall not be deemed Outstanding thereunder.
It is provided in the Indenture that Notes of a denomination larger
than $[5,000] may be redeemed in part ($[5,000] or an integral multiple thereof)
and that upon any partial redemption of any such Note the same shall be
surrendered in
2-4
exchange for one or more new Notes of the same series in authorized form for the
unredeemed portion of principal.
If provision is made for the payment of principal of, premium, if any,
and interest on this Note in accordance with the Indenture, this Note shall no
longer be deemed Outstanding under the Indenture, shall cease to be entitled to
the benefits of the Indenture and shall thereafter be payable solely from the
funds provided for such payment.
If an Event of Default shall occur, the principal of all the
Outstanding Notes may and, under certain circumstances, shall be declared due
and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Corporation and the rights of the Holders of the Notes and Other Beneficiaries
under the Indenture at any time by the Corporation with, among other things, the
consent of the Holders of two-thirds of the aggregate Principal Amount of Class
A Notes at the time Outstanding, if affected thereby, and with the consent of
the Holders of two-thirds of the aggregate Principal Amount of Class B Notes at
the time Outstanding, if affected thereby. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
Principal Amount of the Class A Notes at the time Outstanding or Other Senior
Beneficiaries or, if no Senior Obligations are Outstanding, the Holders of
specified percentages in aggregate Principal Amount of the Class B Notes at the
time Outstanding or Other Subordinate Beneficiaries, on behalf of the Holders of
all the Notes, to waive certain past defaults under the Indenture and their
consequences. Any such consent or waiver shall be conclusive and binding upon
the Registered Holder of this Note and upon all future Registered Holders hereof
and of any Note issued in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Note.
This Note is transferable by the Registered Holder hereof upon
surrender of this Note for transfer at the Principal Office of the Note
Registrar (which shall be the Trustee unless and until the Authenticating Agent
becomes the Note Registrar under the Indenture) or at the Principal Office of a
duly appointed Authenticating Agent (the "Authenticating Agent," which term
includes any successor Authenticating Agent under the Indenture), duly endorsed
or accompanied by a written instrument of transfer in form satisfactory to the
Note Registrar or the Authenticating Agent, as the case may be, and executed by
the Registered Holder hereof or his attorney duly authorized in writing, with
signature guarantees satisfactory to the Note Registrar or the Authenticating
Agent, as the case may be. This Note may also be exchanged for one or more
other Notes of the same series and Stated Maturity upon surrender hereof at the
Principal Office of the Note Registrar or the Principal Office of an
Authenticating Agent. Thereupon the Corporation shall execute and the Trustee
or the Authenticating Agent, as the case
2-5
may be, shall authenticate and deliver, in exchange for this Note, one or more
new fully registered Notes in the name of the transferee, of an authorized
denomination, in aggregate Principal Amount equal to the Principal Amount of
this Note, of the same series and Stated Maturity and bearing interest at the
same rate.
The Corporation may require payment by the Registered Holder hereof
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of this Note, other than
certain exchanges specifically exempted under the Indenture and not involving
any transfer.
The Corporation, the Trustee, each Paying Agent, any Authenticating
Agent, the Note Registrar and any other agent of the Corporation may treat the
Person in whose name this Note is registered on the Note Register as the
absolute owner hereof for all purposes, whether or not this Note is overdue,
and neither the Corporation, the Trustee, any Paying Agent, any Authenticating
Agent, the Note Registrar nor any other such agent shall be affected by notice
to the contrary.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND DECLARED that all
acts, conditions and things required to have happened, to exist and to have been
performed precedent to and in the issuance of this Note have happened, do exist,
and have been performed in regular and due time, form and manner as so required.
This Note shall not be valid or become obligatory for any purpose or
be entitled to any security or benefit under the Indenture until the Certificate
of Authentication hereon shall have been signed by the Trustee or by the
Authenticating Agent by the manual signature of one of its authorized
representatives.
IN WITNESS WHEREOF, the Corporation has caused this Note to be
executed in its name by the facsimile signatures of its President and Secretary,
and a facsimile of its corporate seal to be reproduced hereon.
EDUCATION LOANS INCORPORATED
____________________________
President
(SEAL)
____________________________
Secretary
Dated:
2-6
CERTIFICATE OF AUTHENTICATION
This Note is one of the Notes of the series designated therein and
issued under the provisions of the within-mentioned Indenture.
FIRST BANK NATIONAL
ASSOCIATION, ____________________________,
as Trustee [or ______________, ____________,
as Authenticating Agent
By_________________________ By__________________________
Authorized Representative Authorized Representative]
___________________________
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto ________________________ the within Note and irrevocably appoints
____________________________, attorney-in-fact, to transfer the within Note on
the books kept for registration thereof, with full power of substitution in the
premises.
Dated _______________________
PLEASE INSERT SOCIAL SECURITY ______________________________
OR OTHER IDENTIFYING NUMBER NOTICE: The signature to this
OF ASSIGNEE assignment must correspond with
the name as it appears upon the
face of the within Note in every
______________________________ particular, without any alteration
whatsoever.
SIGNATURE GUARANTEED:
______________________________
2-7
ARTICLE THREE
THE NOTES
Section 3.1. General Title. There is hereby created and established
an issue of Notes of the Corporation to be known and designated as "Student Loan
Asset-Backed Notes," which Notes may be issued in series as hereinafter
provided. With respect to the Notes of any particular series, the Corporation
may incorporate in or add to the general title of such Notes any words, letters
or figures designed to distinguish that series.
Section 3.2. General Limitations; Issuable in Series; Purposes and
Conditions for Issuance; Payment of Principal and Interest. The aggregate
Principal Amount of Notes that may be authenticated and delivered and
Outstanding under this Indenture is not limited, except as may be limited by
law. The Notes may be issued in series as from time to time authorized by the
Board.
Notes shall be issued only for the purposes of (a) providing funds for
the origination or purchase, or both, by the Corporation of Eligible Loans
(including, for this purpose, the acquisition under this Indenture of Eligible
Loans previously purchased or originated by the Corporation from other available
moneys of the Corporation), or (b) refunding at or before their Stated Maturity
any or all Outstanding Notes issued for that purpose, and (c) paying
Administrative Costs, Note Fees, Costs of Issuance and capitalized interest on
the Notes being issued and making deposits to the Reserve Fund.
The Notes, including the principal thereof, premium, if any, and
interest thereon and any Carry-Over Amounts (and accrued interest thereon) with
respect thereto, and Other Obligations are limited obligations of the
Corporation, payable solely from the revenues and assets of the Corporation
pledged therefor under this Indenture.
The Stated Maturities and Sinking Fund Payment Dates of all Notes
shall occur on a June 1 or an December 1 (unless otherwise specified with
respect to any Variable Rate Notes, including those Initial Notes constituting
Variable Rate Notes, in the Supplemental Indenture providing for the issuance
thereof). All Corporation Swap Payments and other payments to be made by the
Corporation to Credit Facility Providers shall be payable on a regularly
scheduled Interest Payment Date. Except as otherwise provided in a Supplemental
Indenture with respect to the series of Notes authorized thereby, interest on
each Note shall be calculated to accrue on the basis of a 360-day year composed
of twelve 30-day months. In the event a default occurs in the due and punctual
payment of any interest on any Note, interest shall be payable thereon to the
extent permitted by law on the overdue installment of interest, at the interest
rate borne by the Note in respect of which such interest is overdue.
3-1
The principal of and premium, if any, on the Notes, together with
interest payable on the Notes at the Maturity thereof if the date of such
Maturity is other than a regularly scheduled Interest Payment Date, shall,
except as hereinafter provided or as otherwise provided in a Supplemental
Indenture, be payable upon presentation and surrender of such Notes at the
Principal Office of the Trustee or, at the option of the Holder, at the
Principal Office of a duly appointed Paying Agent. Interest due on the Notes on
each regularly scheduled Interest Payment Date shall, except as hereinafter
provided or as otherwise provided in a Supplemental Indenture, be payable by
check or draft drawn upon the Trustee mailed to the Person who is the Holder
thereof as of 5:00 p.m. in the city in which the Principal Office of the Note
Registrar is located on the Regular Record Date relating thereto, at the address
of such Holder as it appears on the Note Register. Any interest not so timely
paid or duly provided for (herein referred to as "Defaulted Interest") shall
cease to be payable to the Person who is the Holder thereof at the close of
business on the Regular Record Date and shall be payable to the Person who is
the Holder thereof at the close of business on a Special Record Date for the
payment of any such defaulted interest. Such Special Record Date shall be fixed
by the Trustee whenever moneys become available for payment of the Defaulted
Interest, and notice of the Special Record Date shall be given to the Holders of
the Notes not less than ten (10) days prior thereto by first-class mail to each
such Holder as shown on the Note Register on a date selected by the Trustee,
stating the date of the Special Record Date and the date fixed for the payment
of such Defaulted Interest. All payments of principal of, premium, if any, and
interest on the Notes shall be made in lawful money of the United States of
America.
After the issuance of the Initial Notes, and from time to time, one or
more additional series of Notes may be issued upon compliance with the
provisions of Article Three hereof (except where specifically indicated
otherwise in this Section 3.2) in such Principal Amounts as may be determined by
the Corporation for any of the purposes hereinbefore specified in this Section
3.2 upon compliance with the following conditions and any additional conditions
specified in a Supplemental Indenture:
A. The Trustee shall have certified that there is no deficiency in
the Rebate Fund or the Note Fund and that, after the issuance of the series
of Notes then to be issued, there will not be a deficiency in the Reserve
Fund.
B. An Authorized Officer of the Corporation shall have certified (as
evidenced by a Corporation Certificate filed with the Trustee) that the
Corporation is not in default in the performance of any of its covenants
and agreements in this Indenture made (unless, in the opinion of Counsel,
any such default does not deprive any Beneficiary in any material respect
of the security afforded by this Indenture).
C. The Trustee shall have been provided with a Cash Flow Projection
giving effect to such issuance of Notes which shall reflect that, after
such
3-2
issuance, the Senior Asset Requirement will be met; provided that no
such Cash Flow Projection shall be required if Unenhanced Notes are then
Outstanding and each Rating Agency confirms in writing to the Trustee that
it will not require such Cash Flow Projection.
D. If such Notes are to be Class A Notes or Class B Notes, the
Trustee shall have been provided with written evidence from each Rating
Agency that such series of Notes is rated (i) if such Notes are to be Class
A Notes, at least as high as the outstanding rating assigned by each Rating
Agency to any Outstanding Class A Notes, and (ii) if such Notes are to be
Class B Notes, at least as high as the outstanding rating assigned by each
Rating Agency to any Outstanding Class B Notes.
E. If any Unenhanced Notes are Outstanding, each Rating Agency shall
have confirmed that no outstanding ratings on any of the Outstanding
Unenhanced Notes will be reduced or withdrawn as a result of such issuance,
as evidenced by written confirmations thereof delivered to the Trustee from
each Rating Agency, or, if no Unenhanced Notes are then Outstanding, but
Other Obligations are Outstanding, the Other Beneficiaries holding such
Other Obligations consent to the issuance of such Notes, as evidenced in
writing to the Trustee by each such Other Beneficiary.
In calculating the Reserve Fund Requirement, all Notes to be defeased by a
series of refunding Notes shall be deemed not Outstanding as of the date of
calculation.
Section 3.3. Terms of Particular Series. Each series of Notes shall
be created by and issued pursuant to a Supplemental Indenture and such
Supplemental Indenture shall designate Notes of each series as Class A Notes,
Class B Notes or Class C Notes. The Notes of each series shall bear such date
or dates, shall be payable at such place or places, shall have such Stated
Maturities and Sinking Fund Payment Dates on June 1 or December 1 (unless
otherwise specified with respect to any Variable Rate Notes, including those
Initial Notes constituting Variable Rate Notes, in the Supplemental Indenture
providing for the issuance thereof), shall bear interest at such rate or rates,
from such date or dates, payable in such installments and on Interest Payment
Dates and at such place or places, may be redeemable at such Redemption Price or
Prices and upon such terms (in addition to the prices and terms herein specified
for redemption of all Notes) and may be prepayable upon such terms as shall be
provided for in the Supplemental Indenture creating that series. The
Supplemental Indenture creating any series of Notes may contain a provision
limiting the aggregate Principal Amount of the Notes of that series or the
aggregate Principal Amount of Notes which may thereafter be issued.
All Notes of the same series shall be substantially identical in tenor
and effect, except as to denomination, the differences specified herein or in a
3-3
Supplemental Indenture between interest rates, Stated Maturities and redemption
provisions.
Section 3.4. Form and Denominations. Except as otherwise set forth
in the Supplemental Indenture providing for the issuance thereof, the Notes of
each series shall be issued in substantially the form set forth in Article Two
hereof. The Notes of each series shall be distinguished from the Notes of other
series and Term Notes shall be distinguished from Serial Notes in such manner as
the Board may determine.
The Notes of any series may be issuable as fully registered Notes
only, of single Stated Maturities.
The Notes of each series shall be issuable in such denominations as
shall be provided in the provisions of the Supplemental Indenture creating such
series. In the absence of any such provisions with respect to the Notes of any
particular series, the Notes of such series shall be in the denomination of
$5,000 in original Principal Amount or any integral multiple thereof.
Section 3.5. Execution, Authentication and Delivery. The Notes shall
be executed on behalf of the Corporation by the president or any vice president
of the Corporation and attested by the secretary or an assistant secretary of
the Corporation, either or both of which signatures may be facsimiles, and a
facsimile of the seal of the Corporation.
Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Corporation shall bind the
Corporation, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Notes or did
not hold such offices at the date of such Notes.
At any time and from time to time after the execution and delivery of
this Indenture, the Corporation may deliver Notes executed by the Corporation to
the Trustee or the Authenticating Agent for authentication; and, upon
Corporation Order, the Trustee or the Authenticating Agent, as the case may be,
shall authenticate and deliver such Notes as in this Indenture provided and not
otherwise.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for in Article
Two hereof executed by the Trustee or the Authenticating Agent by manual
signature of one of its authorized officers, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder.
3-4
Section 3.6. Temporary Notes. Pending the preparation of definitive
Notes, the Corporation may execute and, upon Corporation Order, the Trustee
shall authenticate and deliver, temporary Notes which are printed, lithographed,
typewritten, mimeographed or otherwise produced, in any denomination,
substantially of the tenor of the definitive Notes in lieu of which they are
issued, in fully registered form, without coupons, and with such appropriate
insertions, omissions, substitutions and other variations as the officers of the
Corporation executing such Notes may determine, as evidenced by their signing of
such Notes.
If temporary Notes are issued, the Corporation will cause definitive
Notes to be prepared without unreasonable delay. After the preparation of
definitive Notes, the temporary Notes shall be exchangeable for definitive Notes
upon surrender of the temporary Notes at the Principal Office of the Trustee,
without charge to the Holder. Upon surrender for cancellation of any one or
more temporary Notes, the Corporation shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like Principal Amount of
definitive Notes of the same series and Stated Maturity of authorized
denominations. Until so exchanged the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as definitive Notes.
Section 3.7. Registration, Transfer and Exchange. The Corporation
shall cause to be kept at the Principal Office of the Note Registrar a Note
Register in which, subject to such reasonable regulations as it may prescribe,
the Corporation shall provide for the registration of Notes and of transfers of
Notes as herein provided. The Corporation may, in a Supplemental Indenture,
appoint an Authenticating Agent for the purpose of receiving, authenticating and
delivering Notes in connection with transfers, exchanges and registrations as
herein provided. Unless an Authenticating Agent is designated to serve in such
capacity pursuant to a Supplemental Indenture or is otherwise directed, and
agrees, to so serve in accordance with a Corporation Order, the Trustee shall be
Note Registrar for the purpose of registering Notes and transfer of Notes as
herein provided. At reasonable times and under reasonable regulations
established by the Note Registrar, the Note Register may be inspected and copied
by the Corporation or by the Holders (or a designated representative thereof) of
ten percent (10%) or more in Principal Amount of Notes then Outstanding.
The Trustee and any Authenticating Agent shall adhere, with respect to
transfer of Notes, to the standards for efficiency in transfer agent performance
established in Securities and Exchange Commission Rules 17Ad-2 through 17Ad-7
under the Securities Exchange Act of 1934, most particularly Rule 17Ad-2, which
requires that registered transfer agents process at least ninety percent (90%)
of routine items (such as certificates presented for transfer) received during
any month within three (3) business days of their receipt.
Upon surrender for transfer or exchange of any Note at the Principal
Office of the Note Registrar or at the Principal Office of any Authenticating
Agent, or
3-5
on a Purchase Date or Mandatory Tender Date with respect to Notes which are
Deemed Tendered, whether or not surrendered on such date, the Corporation shall
execute, and the Trustee or the Authenticating Agent, as the case may be, shall
authenticate and deliver, in the name of the designated transferee or
transferees, including transferees designated by a Depositary with respect to
Notes Deemed Tendered, or in exchange for the Note surrendered, one or more new
fully registered Notes of any authorized denomination or denominations, of like
aggregate Principal Amount, of the same series, having the same Stated Maturity
and interest rate and bearing numbers not previously assigned.
All Notes executed, delivered and authenticated pursuant to the
preceding paragraph shall be registered in the name of the Holder presenting the
Note for exchange or the designated transferee, as the case may be, on the Note
Register on the date of such transfer or exchange.
All Notes surrendered upon any exchange or transfer provided for in
this Indenture shall be promptly canceled by the Trustee upon receipt thereof
from the Note Registrar or the Authenticating Agent, as the case may be, and
thereafter disposed of as directed by Corporation Order.
All Notes issued upon any transfer or exchange of Notes, including
Notes issued in lieu of Notes Deemed Tendered, whether or not surrendered, shall
be the valid obligations of the Corporation evidencing the same debt, and
entitled to the same security and benefits under this Indenture, as the Notes
surrendered upon such transfer or exchange or in lieu of which such Notes were
issued.
Every Note presented or surrendered for transfer or exchange shall be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Note Registrar or the Authenticating Agent, as the case may
be, duly executed, by the Holder thereof or his attorney duly authorized in
writing, with such signature guaranteed by an "eligible guarantor institution"
meeting the requirements of the Note Registrar or the Authenticating Agent, as
the case may be, which requirements include membership or participation in a
"signature guarantee program" determined by the Note Registrar or the
Authenticating Agent, as the case may be, in accordance with the Exchange Act,
and such other documents as the Trustee may require.
The Corporation may require payment by the Noteholder of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection with any transfer or exchange of Notes, other than exchanges upon a
partial redemption of a Note not involving any transfer. All other expenses
incurred by the Corporation, the Trustee, the Note Registrar or the
Authenticating Agent in connection with any transfer or exchange of Notes shall
be paid by the Corporation.
3-6
Except in connection with a Purchase Demand, the Corporation shall not
be required to transfer any Note (i) during a period beginning at the opening of
business fifteen (15) days before any selection of Notes of the same series for
redemption and ending at the close of business on the day of such selection,
(ii) selected for redemption in whole or in part, (iii) after receipt by the
Depositary of a properly completed Purchase Demand with respect thereto, or (iv)
on or after the date notice of a Mandatory Tender Date is given through such
Mandatory Tender Date. In the event that a Note is transferred in connection
with a Purchase Demand either during the period referred to in clause (i) or
after being selected for redemption in whole or in part, the Note Registrar or
the Authenticating Agent, as appropriate, shall give written notice to any
transferee thereof that such Note may be, or has been, selected for redemption,
as the case may be.
Section 3.8. Mutilated, Destroyed, Lost and Stolen Notes. If a
mutilated Note is surrendered to the Trustee or the Note Registrar, the
Corporation shall execute and the Trustee or any Authenticating Agent shall
authenticate and deliver in exchange therefor a new Note of the same series and
of like tenor and Principal Amount, Stated Maturity and interest rate, bearing a
number not contemporaneously outstanding. If the Corporation, the Note
Registrar, any Authenticating Agent and the Trustee receive evidence to their
satisfaction of the destruction, loss or theft of any Note, and there is
delivered to the Corporation, the Note Registrar, any Authenticating Agent and
the Trustee such security or indemnity as may be required by them to save each
of them harmless, then, in the absence of notice to the Corporation, the Note
Registrar, any Authenticating Agent or the Trustee that such Note has been
acquired by a bona fide purchaser, the Corporation shall execute and upon its
request the Trustee or any Authenticating Agent shall authenticate and deliver,
in exchange for or in lieu of such destroyed, lost or stolen Note, a new Note of
the same series and of like tenor, Principal Amount, Stated Maturity and
interest rate.
In case any such mutilated, destroyed, lost or stolen Note has become
or is about to become due and payable, the Corporation in its discretion may,
instead of issuing a new Note, pay such Note.
Every new Note issued pursuant to this Section 3.8 in lieu of any
destroyed, lost or stolen Note shall constitute an original additional
contractual obligation of the Corporation, whether or not the destroyed, lost or
stolen Note shall be at any time enforceable by anyone, and shall be entitled to
all the benefits of this Indenture equally and proportionately with any and all
other Notes of such series duly issued and authenticated hereunder. Neither the
Corporation, the Trustee, the Note Registrar nor any Authenticating Agent shall
be required to treat both the original Note and any duplicate Note as being
Outstanding for the purpose of determining the Principal Amount of Notes which
may be issued hereunder or for the purpose of determining any percentage of
Notes Outstanding hereunder, but both the original and duplicate Note shall be
treated as one and the same.
3-7
Upon the issuance of any new Note under this Section 3.8, the
Corporation may require the payment of a sum sufficient to cover any tax or
other governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Note Registrar, any
Authenticating Agent and the Trustee) connected therewith.
The provisions of this Section 3.8 are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Notes.
Section 3.9. Interest Rights Preserved; Dating of Notes. Each Note
delivered under this Indenture upon transfer of or in exchange for or in lieu of
any other Note shall carry all the rights to interest accrued and unpaid, and to
accrue, which were carried by such other Note. Each Note shall bear an original
issue date as provided in the Supplemental Indenture authorizing the issuance of
the series of Notes of which such Note is a part and, upon the original delivery
of a series of Notes or an exchange or transfer of Notes pursuant to Section 3.7
hereof, the Trustee or the Authenticating Agent, as the case may be, shall date
each Note to be delivered as of the date of authentication thereof, except as
may be otherwise provided in a Supplemental Indenture with respect to Notes of
the series authorized to be issued thereby.
Section 3.10. Persons Deemed Holders. The Corporation, the Trustee,
each Authenticating Agent, each Paying Agent, each Note Registrar, each
Depositary and any other agent of the Corporation may, except in the case of
Notes Deemed Tendered, treat the Person in whose name any Registered Note is
registered as the owner of such Note for the purpose of receiving payment of
principal of (and premium, if any), interest on and any Carry-Over Amounts (and
accrued interest thereon) with respect to such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and neither the Corporation,
the Trustee, any Authenticating Agent, any Paying Agent, any Note Registrar, any
Depositary nor any other agent of the Corporation shall be affected by notice to
the contrary.
Section 3.11. Cancellation. All Notes surrendered for payment,
redemption, transfer or exchange, if surrendered to the Trustee, shall be
promptly canceled by it, and, if surrendered to any Person other than the
Trustee, shall be delivered to the Trustee and, if not already canceled, shall
be promptly canceled by it. The Corporation may at any time deliver to the
Trustee for cancellation any Notes previously authenticated and delivered
hereunder, which Notes so delivered shall be promptly canceled by the Trustee.
All canceled Notes held by the Trustee shall be disposed of as directed by a
Corporation Order.
Section 3.12. Class B and Class C Notes. The Corporation may at any
time issue a series of Notes pursuant to Section 3.2 hereof which is subordinate
in rights to the Senior Obligations. Such subordinate obligations shall either
be on a parity with the Subordinate Obligations in all respects or may be
subordinate to the
3-8
Subordinate Obligations in respect of each of the provisions of this Indenture
which express the subordination of the Subordinate Obligations.
3-9
ARTICLE FOUR
CREATION OF FUNDS AND ACCOUNTS;
CREDITS THERETO AND PAYMENTS THEREFROM
Section 4.1. Creation of Funds and Accounts. There are hereby
created and established the following Funds and Accounts to be held by the
Trustee, or, in the case of the Acquisition Fund, the Revenue Fund or the
Administration Fund, by the Trustee or a Deposit Agent, and maintained in
accordance with the provisions of this Indenture:
1. An Acquisition Fund.
2. An Administration Fund.
3. A Reserve Fund.
4. A Rebate Fund, within which there shall be a Rebate Account, an
Excess Earnings Account and an Indemnification Account.
5. A Revenue Fund, within which there shall be a Repayment Account
and an Income Account.
6. A Note Fund, within which there shall be an Interest Account, a
Principal Account and a Retirement Account.
7. A Surplus Fund, within which there shall be a Special Redemption
and Prepayment Account and a Surplus Account.
Section 4.2. Acquisition Fund. With respect to each series of Notes,
the Trustee shall, upon delivery to the initial purchasers thereof and from the
proceeds thereof, credit to the Acquisition Fund the amount, if any, specified
in the Supplemental Indenture providing for the issuance of such series of
Notes. The Trustee shall also deposit in the Acquisition Fund: (i) any funds to
be transferred thereto from the Revenue Fund as provided in Section 4.6 hereof
or from the Surplus Fund as provided in Section 4.8 hereof, and (ii) any other
amounts specified in a Supplemental Indenture to be deposited therein. In
addition, the Trustee shall also credit to the Acquisition Fund any Eligible
Loans transferred thereto from the Surplus Account pursuant to Section 4.8
hereof (any such Eligible Loans so transferred being thereafter deemed to have
been Financed with moneys in the Acquisition Fund).
Balances in the Acquisition Fund shall be used only for (a) the
acquisition of Eligible Loans pursuant to a Student Loan Purchase Agreement
(including, for this purpose, the acquisition of Eligible Loans previously
purchased or originated by the Corporation or the Trustee on behalf of the
Corporation
4-1
pursuant to a Student Loan Purchase Agreement from other available moneys of the
Corporation), (b) the origination of Eligible Loans, (c) the redemption or
purchase of Notes as provided in a Supplemental Indenture providing for the
issuance of such Notes, (d) the payment of Debt Service on the Class A Notes and
Other Senior Obligations when due (upon transfer to the Note Fund as set forth
in the following paragraph), (e) the payment of the purchase price of any Class
A Notes required to be purchased on a Purchase Date or a Mandatory Tender Date
(upon transfer to the Note Fund as set forth in the following paragraph), or (f)
to cure deficiencies in the Rebate Fund (upon transfer to the Rebate Fund as set
forth in the following paragraph). The Trustee shall make or shall authorize the
Deposit Agent to make payments to Lenders from the Acquisition Fund for the
acquisition of Eligible Loans (such payments to be made at purchase prices not
in excess of the amount specified therefor in the Supplemental Indenture which
created the Account in the Acquisition Fund from which such purchase price is to
be withdrawn), including the payment of reasonable transfer or assignment fees,
if applicable, upon receipt by the Trustee of an Eligible Loan Acquisition
Certificate and all documents, opinions and certificates required thereby.
Within three (3) Business Days after the disbursement of moneys from the
Acquisition Fund for the purchase of Eligible Loans pursuant to an Eligible Loan
Acquisition Certificate, the Corporation shall forward to the Trustee an
updating Corporation Certificate substantially in the form of Exhibit D hereto
with respect to such Eligible Loans. The Trustee shall make or shall authorize
the Deposit Agent to make payments from the Acquisition Fund for the origination
of Eligible Loans upon receipt by the Trustee of an Eligible Loan Origination
Certificate and all documents, opinions and certificates required thereby.
Anything in this Section 4.2 to the contrary notwithstanding, any Eligible Loan
to be Financed from Balances in the Acquisition Fund shall be described in
Section 144(b)(1) (if Financed from the proceeds of Tax Exempt Notes) and
Section 150(d) (if Financed prior to the Section 150(d)(3) Transfer) of the
Code.
Balances in the Acquisition Fund (other than any portion of such
Balance consisting of Student Loans) shall be (i) transferred to the credit of
the Rebate Fund to the extent necessary, after transfers thereto from the
Revenue Fund, the Surplus Fund, the Reserve Fund, the Administration Fund and
the Note Fund, to make any deposit to the credit of the Rebate Fund required by
Section 4.5 hereof, (ii) after such transfer, if any, to be made pursuant to the
preceding clause (i) has been taken into account, transferred to the credit of
the Note Fund on the last Business Day preceding any Interest Payment Date,
Principal Payment Date or Redemption Date to the extent required to pay the Debt
Service due on the Class A Notes and any Other Senior Obligations, all as
provided in Section 4.7 hereof, and (iii) after such transfers, if any, to be
made pursuant to the preceding clauses (i) and (ii) have been taken into
account, transferred to the credit of the Principal Account on any Purchase Date
or Mandatory Tender Date with respect to Class A Notes, to the extent required
by Section 4.7.2(C) hereof. Transfers of amounts from the Acquisition Fund to
the Rebate Fund and the Note Fund pursuant to the preceding sentence shall be
made by the Trustee without any further authorization or direction. In the
event that, after transfers to the Rebate Fund from all other Funds
4-2
and Accounts, a deficiency exists in the Rebate Fund under Section 4.5 hereof,
the Trustee shall use its best efforts to sell Student Loans included in the
Balance of the Acquisition Fund at the best price available to the extent of
such deficiency; and the proceeds of any such sale shall be credited to the
Rebate Fund, to the extent of any deficiency in the Rebate Fund, and otherwise
to the Revenue Fund. If any amounts have been transferred to either or both of
the Rebate Fund or the Note Fund pursuant to this paragraph, the Trustee shall,
to the extent necessary to cure the deficiency in the Acquisition Fund as a
result of such transfer or transfers, transfer to the Acquisition Fund amounts
from the Revenue Fund in the manner provided in Section 4.6 hereof.
The unpaid principal balance of Financed Student Loans in the
Acquisition Fund shall be included in the Balance of the Acquisition Fund until
such Financed Student Loans shall have been paid in full or sold or exchanged as
herein provided. Interest and principal payments, including Insurance payments
and Guarantee payments, and Special Allowance Payments received with respect to
Financed Student Loans (excluding, except as otherwise provided in a
Supplemental Indenture, any federal interest subsidy payments and Special
Allowance Payments that accrued prior to the date on which such Student Loans
were Financed) and proceeds from the sale or other conveyance of Financed
Student Loans (except as otherwise provided in the preceding paragraph) shall be
credited, in the case of such principal and interest, including Insurance
payments and Guarantee payments, and Special Allowance Payments, to the Revenue
Fund as provided in Section 4.6 hereof; in the case of the portion of the
proceeds of such sale or other conveyance which represents payment of the
principal of Financed Student Loans sold, to the Principal Account; and in the
case of the portion of the proceeds of such sale or other conveyance which
represent payment of accrued interest on and Special Allowance Payments with
respect to Financed Student Loans sold, to the Interest Account.
The Corporation may direct the Trustee to sell to any purchaser one or
more Student Loans Financed with moneys in the Acquisition Fund in exchange for
one or more Eligible Loans (of approximately the same aggregate Principal
Balance and accrued noncapitalized borrower interest as such Financed Student
Loans) which (1) evidence the additional obligations of Eligible Borrowers whose
Student Loans have been previously Financed hereunder, or (2) are to be
substituted for Financed Student Loans which are not Eligible Loans; provided
that (I) no such sale and exchange shall cause the Corporation to breach any of
its representations or covenants contained in the Tax Matters Certificate
furnished by the Corporation in connection with the issuance of any series of
Tax Exempt Notes, and (II) prior to any such sale and exchange the Trustee shall
have received an Eligible Loan Acquisition Certificate and an updating
Corporation Certificate substantially in the form of Exhibit D hereto and all
documents, opinions and certifications required thereby with respect to all
Eligible Loans to be so transferred to this Indenture in exchange, together with
(A) except in the case of Eligible Loans referred to in the preceding clause (2)
or unless the Principal Balance of Eligible Loans sold or exchanged within
4-3
the preceding twelve (12)-month period pursuant to this paragraph will not,
together with the Principal Balance of Eligible Loans then proposed to be sold
or exchanged, exceed $1,000,000, a Corporation Certificate that, based on a Cash
Flow Projection, such sale and exchange will not materially adversely affect the
Corporation's ability to pay Debt Service on the Outstanding Notes and
Outstanding Other Obligations, Carry-Over Amounts (including accrued interest
thereon) with respect to Outstanding Notes, Administrative Expenses or Note Fees
or to make the required deposits to the credit of the Rebate Fund, and (B) a
written instrument satisfactory to the Trustee assigning all right, title,
interest and privilege of the Corporation in, to and under the student loan
purchase agreement pursuant to which each such Eligible Loan to be transferred
to this Indenture was acquired by the Trustee on behalf of the Corporation, to
the extent such right, title, interest and privilege relate to such Eligible
Loan; and thereafter the Corporation and the Trustee shall amend the Exhibit or
Exhibits to the applicable Supplemental Indentures to reflect the addition of
such student loan purchase agreements and such agreements shall become Student
Loan Purchase Agreements for all purposes under this Indenture. Any money
received by the Corporation in connection with a sale and exchange of Financed
Student Loans pursuant to this paragraph, including those moneys representing
the excess of the aggregate Principal Balance of and accrued noncapitalized
borrower interest on such Financed Student Loans released from this Indenture
over the aggregate Principal Balance of and accrued noncapitalized borrower
interest on the Eligible Loans transferred to this Indenture in exchange
therefor, shall be deposited to the credit of the Principal Account and the
Interest Account in accordance with the preceding paragraph. Any such Eligible
Loans so transferred to this Indenture in exchange for Student Loans previously
Financed from the Acquisition Fund shall, for all purposes of this Indenture, be
deemed to have been Financed with moneys in the Acquisition Fund and shall be
credited to the Acquisition Fund and included in the Balance thereof.
Pending application of moneys in the Acquisition Fund for one or more
authorized purposes, such moneys shall be invested in Investment Securities, as
provided in Section 4.11 hereof, and any earnings on or income from said
investments shall be deposited in the Revenue Fund as provided in Section 4.6
hereof.
Section 4.3. Administration Fund. With respect to each series of
Notes, the Trustee shall, upon delivery thereof and from the proceeds thereof,
credit to the Administration Fund the amount, if any, specified in the
Supplemental Indenture providing for the issuance of such series of Notes. The
Trustee shall also credit to the Administration Fund all amounts transferred
thereto from the Revenue Fund and the Surplus Account. Except as otherwise
provided in this Section 4.3, amounts in the Administration Fund shall, upon
receipt by the Trustee of Corporation Orders directing the payment to designated
payees in designated amounts for stated services, or, in the case of
reimbursement of the Corporation for its expenses, to the Corporation, and in
each case certifying that such payment is authorized by this Indenture, be used
for and applied only to pay Costs of Issuance,
4-4
Administrative Expenses and Note Fees or to reimburse another fund, account or
other source of the Corporation for the previous payment of Costs of Issuance,
Administrative Expenses or Note Fees. Payments from the Administration Fund for
such purposes shall be made by check or wire transfer by the Trustee or a
Deposit Agent, but only in accordance with such Corporation Orders.
Balances in the Administration Fund shall be applied to the following
purposes in the following order of priority: first, to remedy deficiencies in
the Rebate Fund to the extent and in the manner provided in Section 4.5 hereof;
second, to remedy deficiencies in the Interest Account to the extent and in the
manner provided in Section 4.7.1 hereof for the payment of interest on Class A
Notes or Other Senior Obligations payable therefrom; third, to remedy
deficiencies in the Principal Account to the extent and in the manner provided
in subsections (A) and (C) of Section 4.7.2 hereof for the redemption or payment
of principal or the purchase price of Class A Notes or the payment of Other
Senior Obligations payable therefrom; fourth, to remedy deficiencies in the
Retirement Account to the extent and in the manner provided in Section 4.7.3
hereof for the redemption of Class A Notes or the payment of Other Senior
Obligations payable therefrom; fifth, to remedy deficiencies in the Interest
Account to the extent and in the manner provided in Section 4.7.1 hereof for the
payment of interest on Class B Notes or Other Subordinate Obligations payable
therefrom; sixth, to remedy deficiencies in the Principal Account to the extent
and in the manner provided in subsections (A) and (C) of Section 4.7.2 hereof
for the payment of principal or the purchase price of Class B Notes or the
payment of Other Subordinate Obligations payable therefrom; seventh, to remedy
deficiencies in the Retirement Account to the extent and in the manner provided
in Section 4.7.3 hereof for the redemption of Class B Notes or the payment of
Other Subordinate Obligations payable therefrom; and, eighth, to pay Costs of
Issuance, Note Fees and Administrative Expenses.
Amounts in the Administration Fund may, subject to the last sentence
of this paragraph and any limitations specified in a Supplemental Indenture, be
paid out for Costs of Issuance or Note Fees at any time upon receipt of a
Corporation Order and shall be paid in the full amount designated therein;
provided that the aggregate amount of Costs of Issuance paid or reimbursed from
amounts in the Administrative Fund or any other Fund or Account in respect of a
particular series of Notes shall under no circumstances exceed the amount, if
any, specified therefor in the Supplemental Indenture authorizing the issuance
of Notes of such series. Amounts in the Administration Fund may, subject to the
last sentence of this paragraph and any limitations specified in a Supplemental
Indenture, be paid out for Administrative Expenses, or to reimburse the
Corporation for the prior payment of Administrative Expenses, at any time, in
cumulative amounts in any given Fiscal Year not in excess of (A) the amount of
Budgeted Administrative Expenses for that Fiscal Year, unless an Authorized
Officer of the Corporation shall certify in writing to the Trustee that
Administrative Expenses in an increased amount (i) are reasonable and necessary
in light of all circumstances then existing, (ii) will not materially adversely
affect the ability of the Corporation to pay or perform, as the
4-5
as the case may be, all of its obligations under this Indenture, and (iii) can
be paid out of amounts deposited into the Administration Fund pursuant to the
provisions of this Indenture, plus (B) the amount of Administrative Expenses for
any prior Fiscal Year previously paid by the Corporation from a source other
than the Administration Fund and requested to be reimbursed to such source,
provided that the amount of such Administrative Expenses, together with all
other Administrative Expenses for such prior Fiscal Year previously paid or
reimbursed from the Administration Fund, shall not exceed the Budgeted
Administrative Expenses for such prior Fiscal Year. Notwithstanding the
foregoing provisions of this Section 4.3, no amounts in the Administration Fund
shall be paid out for Costs of Issuance, Note Fees or Administrative Expenses
unless, after giving effect to such payment (taking into account, for this
purpose, all previous such payments from the Administration Fund and all
payments from the Surplus Fund with respect to Costs of Issuance, Note Fees,
Administrative Expenses and any other uses permitted by clause (iii) of the
sixth paragraph of Section 4.8 hereof), as to each series of Tax Exempt Notes,
either (i) at least ninety percent (90%) of the net proceeds of such series
will, at the time of such payment, have been used directly or indirectly to make
or finance student loans described in Section 144(b)(1)(A) of the Code, or (ii)
at least ninety-five percent (95%) of the net proceeds of such series will, at
the time of such payment, have been used directly or indirectly to make or
finance student loans described in Section 144(b)(1)(B) of the Code, as
applicable, all within the meaning of such Section 144(b) of the Code.
The Trustee shall transfer and credit to the Administration Fund
moneys available hereunder for transfer thereto from the sources set forth in
the following paragraph and in such amounts and at such times as an Authorized
Officer of the Corporation shall direct by Corporation Order; provided such
Corporation Order shall certify that the amounts are required and have been or
will be expended within the next ninety (90) days for a purpose for which the
Administration Fund may be used and applied.
Deposits to the credit of the Administration Fund shall be made from
the following sources in the following order of priority: the Income Account to
the extent and in the manner provided in Section 4.6 hereof; and the Surplus
Account to the extent and in the manner provided in Section 4.8 hereof.
Pending transfers from the Administration Fund, the moneys therein
shall be invested in Investment Securities, as provided in Section 4.11 hereof,
and any earnings on or income from such investments shall be deposited in the
Revenue Fund as provided in Section 4.6 hereof.
Section 4.4. Reserve Fund. The Reserve Fund is established only for
the security of the Senior Beneficiaries and the Subordinate Beneficiaries, and
not for the Holders of the Class C Notes (other than to provide funds for
transfers to the Rebate Fund for Tax Exempt Class C Notes as hereinafter set
forth). Immediately upon the delivery of any series of Class A Notes or Class B
Notes, and from the
4-6
proceeds thereof or, at the option of the Corporation, from any amounts to be
transferred thereto from the Surplus Fund pursuant to Section 4.8 hereof and
from any other available moneys of the Corporation not otherwise credited to or
payable into any Fund or Account under this Indenture or otherwise subject to
the pledge and security interest created by this Indenture, the Trustee shall
credit to the Reserve Fund the amount, if any, specified in the Supplemental
Indenture providing for the issuance of that series of Notes, such that upon
issuance of such Notes, the Balance in the Reserve Fund shall not be less than
the Reserve Fund Requirement.
If on any Monthly Payment Date the Balance in the Reserve Fund shall
be less than the Reserve Fund Requirement, the Trustee shall transfer and credit
thereto an amount equal to the deficiency from the following Funds and Accounts
in the following order of priority: the Repayment Account (to the extent not
required for credit to the Rebate Fund, the Note Fund or the Acquisition Fund),
the Income Account (to the extent not required for credit to the Rebate Fund,
the Note Fund, the Acquisition Fund or the Administration Fund) and the Surplus
Fund (to the extent not required for credit to the Rebate Fund, the Note Fund or
the Administration Fund); provided, however, that any such transfer from the
Surplus Fund shall be made only to the extent that that portion of the Balance
thereof not consisting of Eligible Loans is sufficient therefor.
The Balance in the Reserve Fund shall be used and applied solely for
(i) transfers to the Rebate Fund to the extent necessary, after transfers
thereto from the Revenue Fund and the Surplus Fund, to make any deposit to the
credit of the Rebate Fund required by Section 4.5 hereof, and (ii) after such
transfer, if any, to be made pursuant to the preceding clause (i) has been taken
into account, the payment when due of Debt Service on the Class A Notes, the
Class B Notes and the Other Obligations and the purchase price of Class A Notes
and Class B Notes on a Purchase Date or Mandatory Tender Date and the other
purposes specified in Section 4.7 hereof, and shall be so used and applied by
transfer by the Trustee to the credit of the Note Fund, (a) at any time and to
the extent that the Balance therein and the Balances available for deposit to
the credit thereof from the Revenue Fund and the Surplus Fund (other than that
portion of the Balance thereof consisting of Eligible Loans) are insufficient to
meet the requirements specified in Section 4.7 hereof for deposit to the credit
of the Note Fund at such time (provided, however, that such amounts shall be
applied, first, to the payment of interest on the Class A Notes and the payment
of Other Senior Obligations payable from the Interest Account, second, to the
payment of principal and the purchase price of the Class A Notes and the payment
of Other Senior Obligations payable from the Principal Account, third, to the
payment of interest on the Class B Notes and the payment of Other Subordinate
Obligations payable from the Interest Account, and, fourth, to the payment of
principal and the purchase price of the Class B Notes and the payment of Other
Subordinate Obligations payable from the Principal Account), and (b) at any time
when a portion of the Balance therein is required to be transferred to the
Retirement Account to pay a portion of the Redemption Price of Class A Notes or
Class B Notes to be redeemed as provided in a Supplemental Indenture relating
thereto;
4-7
provided, however, that on the Stated Maturity or any Redemption Date
of any Class A Notes or Class B Notes, amounts in the Reserve Fund shall, upon
Corporation Order, be applied to the payment at maturity or redemption of all
Outstanding Class A Notes or Class B Notes of a series, to the extent that such
application, and payment of all deposits to be made to the credit of the Rebate
Fund required by Section 4.5 hereof upon such redemption, will not reduce the
Balance of the Reserve Fund below the Reserve Fund Requirement (calculated as
though the Notes to be retired on such Stated Maturity or Redemption Date were
not Outstanding as of the date of such calculation), and, after giving effect to
such payment or redemption, the conditions of Section 10.2 will be met; and
provided, further, that at any time when the aggregate of the Balances in the
Note Fund, the Reserve Fund and the Surplus Fund (exclusive of Student Loans)
equals an amount sufficient to discharge and satisfy the obligations of the
Corporation with respect to all of the Outstanding Class A Notes, Class B Notes
and Other Obligations and to make all deposits to the credit of the Rebate Fund
required by Section 4.5 hereof, all in the manner described in Section 11.1
hereof, said Balances shall, upon Corporation Order, be so applied.
Notwithstanding the foregoing, if on any Monthly Payment Date the Balance in the
Reserve Fund exceeds the Reserve Fund Requirement, such excess shall, upon
Corporation Order, be transferred to the Principal Account, to the extent
necessary to make the deposits required to be made to the credit of the
Principal Account on such Monthly Payment Date pursuant to the provisions of
Section 4.7.2 hereof, whether or not other moneys are available to make such
deposits.
Pending transfers from the Reserve Fund, the moneys therein shall be
invested in Investment Securities as provided in Section 4.11 hereof, and any
earnings on or income from such investments shall be deposited in the Revenue
Fund as provided in Section 4.6 hereof.
Section 4.5. Rebate Fund. The Corporation and the Trustee recognize
that the exclusion from gross income for purposes of federal income taxation of
the interest paid on Tax Exempt Notes of any series is dependent upon compliance
with the provisions of Section 148 of the Code. For each issue (as defined in
the Regulations) of Tax Exempt Notes, a separate subaccount shall be established
in the Rebate Account and the Excess Earnings Account.
(A) The Corporation and the Trustee shall, unless and until the
Corporation delivers to the Trustee a written opinion of Bond Counsel as
described in the last paragraph of this Section 4.5(A), make the determinations
and take the actions hereinafter by this Section 4.5(A) required and make such
further or different determinations and take such further or different actions
as are necessary, in the opinion of Bond Counsel, to comply with the
requirements of Section 148(f) of the Code and the Treasury Regulations
pertaining thereto with respect to each series of Tax Exempt Notes. In respect
of each series of Tax Exempt Notes, the Trustee, on behalf of, and as agent for,
the Corporation, shall rebate to the United States, not later than sixty (60)
days after the end of the five-Bond Year period for
4-8
such series, and not later than sixty (60) days after the end of each five-Bond
Year period thereafter for such series, an amount which ensures that at least
ninety percent (90%) of the Rebate Amount (as hereinafter defined) for such
series at the time of such payment will have been paid to the United States, and
within sixty (60) days after the payment or redemption of all principal of the
Notes of such series, an amount sufficient to pay the remaining unpaid balance
of the Rebate Amount, all in the manner and as required by Section 148 of the
Code and the Treasury Regulations pertaining thereto. As used herein, "Rebate
Amount" means, with respect to a series of Tax Exempt Notes, the amount
described in Section 148(f)(2) of the Code, computed in accordance with the
provisions of said Section 148(f)(2) and the Arbitrage Regulations. In this
regard, a portion of the proceeds of the Initial Notes will be applied to the
refunding of other tax exempt bonds or notes of the Corporation (the "Refunded
Obligations"), which Refunded Obligations will remain outstanding for varying
periods after the issuance of the Initial Notes. Certain of the Balances in the
Funds and Accounts otherwise to be treated as proceeds of the Initial Notes
will, under applicable Treasury Regulations, be deemed to be proceeds of the
various issues of Refunded Obligations until all outstanding obligations of such
issues have been paid. Notwithstanding anything in this Indenture to the
contrary, the Rebate Amount shall be computed on such Balances, and applied in
the manner and priority, as specified in the Supplemental Indenture providing
for the issuance of the Initial Notes.
The Corporation shall determine the Rebate Amount for each series of
Tax Exempt Notes within forty-five (45) days after the close of each Bond Year
therefor and upon payment or redemption of all principal of the Notes of such
series, and shall, upon each such determination, furnish the Trustee with a
Corporation Certificate verifying such determination and with any supporting
documentation required to calculate or evidence the Rebate Amount in accordance
with the Code and applicable regulations. The Corporation and the Trustee shall
retain records of such determinations until six (6) years after final payment or
redemption of principal of the Notes of such series. Upon each such
determination, the Trustee shall transfer to the subaccount in the Rebate
Account relating to the Notes of such series, from the Balances in the Revenue
Fund, the Surplus Fund (other than that portion of the Balance therein
consisting of Eligible Loans), the Reserve Fund, the Administration Fund, the
Surplus Fund (including any portion of the Balance therein consisting of
Eligible Loans), the Retirement Account, the Principal Account, the Interest
Account and the Acquisition Fund, in that order of priority, the Rebate Amount
so determined, and shall separately account for, or cause to be separately
accounted for, the earnings from the investment thereof.
In determining the Rebate Amount for a series of Tax Exempt Notes, the
Corporation and the Trustee shall take into account all amounts held under this
Indenture and, pending the application of such amounts to the purpose for which
such amounts were removed, all amounts removed from under this Indenture, to the
extent such are allocable under the Regulations to Notes of such series.
4-9
Moneys in a Subaccount in the Rebate Account shall be paid by the
Trustee to the United States at such times and in such amounts as are necessary
to comply with the provisions of Section 148(f) of the Code with respect to the
series of Tax Exempt Notes to which such Subaccount relates. In addition, upon
receipt by the Trustee of a Corporation Certificate certifying that certain
amounts in a Subaccount in the Rebate Account are not subject to rebate and an
opinion of Bond Counsel to the effect that failure to rebate such amounts will
not cause interest on the Notes of the series to which such Subaccount relates
to become includable in gross income of the owners thereof for federal income
tax purposes under both existing laws, regulations, rulings and decisions and
any then pending federal legislation, the Trustee shall transfer any such
amounts to the credit of the Revenue Fund. Moneys in the Rebate Account shall
not be available for transfer to any Fund or Account under this Indenture,
except the Revenue Fund under the circumstances described in the preceding
sentence, and shall be applied solely to meet the Corporation's rebate
obligations.
In making the computations required to make the deposits and rebates
provided for in this Section 4.5(A) with respect to a series of Tax Exempt
Notes, the Corporation and the Trustee shall comply with the applicable
provisions of the Tax Matters Certificate furnished by the Corporation in
connection with the issuance of the Notes of such series, as such may be amended
or supplemented from time to time in accordance with its terms.
The Trustee shall verify at least annually from the date of delivery
of a series of Tax Exempt Notes that (i) all requirements of this Section 4.5(A)
with respect to such series of Notes have been met on a continuing basis, (ii)
adequate procedures have been established and are being complied with to ensure
continuing compliance with the requirements of the Tax Matters Certificate
furnished by the Corporation in connection with the issuance of the Notes of
such series, as such may be amended or supplemented from time to time in
accordance with its terms, (iii) the proper amounts are deposited into the
Subaccount in the Rebate Account relating to Notes of the series, and (iv) the
timely payment of all amounts due and owing to the United States Treasury from
the Rebate Account has occurred.
Pending payments from the Rebate Account, the moneys in the
Subaccounts therein shall be invested in Investment Securities as provided in
Section 4.11 hereof, and any earnings on or income from such investments shall
be retained in such respective Subaccounts.
Notwithstanding the foregoing, in the event the Trustee is furnished
with a written opinion of Bond Counsel to the effect that it is not necessary
under either existing laws, regulations, rulings and decisions or any then
pending federal legislation to pay any portion of earnings on investments held
under this Indenture or otherwise to the United States in order to assure the
exclusion from gross income for federal income tax purposes of interest on the
Tax Exempt Notes of any series, the requirements set forth in the preceding
portion of this Section 4.5(A) (with
4-10
respect to the portion of such earnings specified in such opinion) need not be
complied with and shall no longer be effective and all amounts at the time on
deposit in the Subaccount in the Rebate Account to which such series of Notes
relates (to the extent covered by such opinion) shall be transferred to the
Revenue Fund.
(B) The Corporation shall calculate the Excess Earnings with respect
to each series of Tax Exempt Notes to the extent and in the manner provided in
the Supplemental Indenture pursuant to which such Notes were issued. In this
regard, a portion of the proceeds of the Initial Notes will be applied to the
purchase of certain Eligible Loans previously financed with the proceeds of
other bonds or notes of the Corporation, thereby refunding such bonds or notes.
Notwithstanding anything in this Indenture to the contrary, Excess Earnings
shall be computed on such Eligible Loans, and applied in the priority, as
specified in the Supplemental Indenture providing for the issuance of the
Initial Notes.
The Corporation shall furnish the Trustee, upon each calculation of
Excess Earnings with respect to a series of Tax Exempt Notes, with a Corporation
Certificate verifying such calculation and with any supporting documentation
required to calculate or evidence the Excess Earnings in accordance with the
Arbitrage Regulations. The Corporation and the Trustee shall retain records of
such calculations until six (6) years after final payment or redemption of
principal of the Tax Exempt Notes of that series. Upon each such calculation
and a determination pursuant to the related Supplemental Indenture that a
transfer is to be made to the Excess Earnings Account, the Trustee shall
transfer to the Excess Earnings Account (but only after any required transfers
to the Rebate Account have been made or taken into account), from the Balances
in the Revenue Fund, the Surplus Fund (other than that portion of the Balance
therein consisting of Eligible Loans), the Reserve Fund, the Administration
Fund, the Surplus Fund (including any portion of the Balance therein consisting
of Eligible Loans), the Retirement Account, the Principal Account, the Interest
Account and the Acquisition Fund, in that order of priority, the amount so
determined.
All amounts in the Excess Earnings Account, including all investment
earnings thereon, shall remain therein until transferred to the Revenue Fund or
paid by the Trustee to the United States Department of the Treasury or for such
other purpose, as the Corporation shall specify, upon receipt by the Trustee of
(a) a Corporation Order directing the Trustee to so transfer or pay a specified
amount, and (b) a written opinion of Bond Counsel to the effect that any such
transfer or payment, upon satisfaction of any conditions set forth in such
opinion (e.g., forgiveness of indebtedness on all or a portion of the related
Financed Student Loans), would not cause interest on the related series of Tax
Exempt Notes to be includable in the gross income of any owners thereof for
federal income tax purposes. The Corporation shall consult with Bond Counsel on
or within thirty (30) days before each date on which, pursuant to the Arbitrage
Regulations or otherwise, amounts are required to be paid to the United States
Department of the Treasury
4-11
with respect to Excess Earnings, to determine what, if any, action may be
necessary to be taken with respect to disposition of any amounts in the Excess
Earnings Account to prevent each applicable series of Tax Exempt Notes from
becoming "arbitrage bonds" under Section 148 of the Code, and the Corporation
agrees to take any such action as shall be necessary to prevent each such series
of Tax Exempt Notes from becoming arbitrage bonds. In any event, the Corporation
and the Trustee shall comply with all provisions and restrictions, including,
but not limited to, those with respect to the Excess Earnings Account, set forth
in the Tax Matters Certificate furnished by the Corporation in connection with
the issuance of each series of Tax Exempt Notes.
Amounts in the Excess Earnings Account shall be used only for the
purposes specified in the preceding paragraph, and shall not be available for
any other purpose, including, but not limited to, payment of Debt Service on or
the purchase price of the Notes or Other Obligations.
The Trustee shall verify at least annually from the date of delivery
of each series of Tax Exempt Notes that (i) all requirements of this Section
4.5(B) have been met on a continuing basis with respect to such series,
(ii) adequate procedures have been established and are being complied with to
ensure continuing compliance with the requirements of the applicable Tax Matters
Certificate, (iii) the proper amounts are deposited into the Excess Earnings
Account with respect to such series of Tax Exempt Notes, and (iv) the timely
payment to the United States Treasury or other disposition of amounts with
respect to Excess Earnings provided for in this Section 4.5(B) has occurred with
respect to such series of Tax Exempt Notes.
Pending payments or transfers from the Excess Earnings Account, the
moneys therein shall be invested in Investment Securities as provided in Section
4.11 hereof, and any earnings on or income from such investments shall be
retained therein.
Notwithstanding the foregoing, in the event the Trustee is furnished
with a written opinion of Bond Counsel to the effect that it is unnecessary
under both existing laws, regulations, rulings and decisions and any then
pending federal legislation to pay any portion of Excess Earnings to the United
States (or take any other action with respect thereto) in order to assure the
exclusion from gross income for federal income tax purposes of interest on one
or more series of Tax Exempt Notes, the requirements set forth in the preceding
portion of this Section 4.5(B) with respect to such series of Notes (but only
with respect to the portion of such Excess Earnings specified in such opinion)
need not be complied with and shall no longer be effective and all amounts at
the time on deposit in the Excess Earnings Account (to the extent covered by
such opinion) shall be transferred to the Revenue Fund.
(C) The Trustee shall, upon receipt of any notice that an amount is
payable from the Trust Estate pursuant to the indemnification provisions of a
Joint
4-12
Sharing Agreement, immediately furnish a copy thereof to the Corporation.
Thereafter, the Corporation and the Trustee shall promptly determine if, and the
extent to which, such amount is so payable and, if and to the extent it is, the
Trustee shall transfer such amount to the Indemnification Account from the
Balances in the Revenue Fund, the Surplus Fund (other than that portion of the
Balance therein consisting of Eligible Loans), the Reserve Fund, the
Administration Fund, the Surplus Fund (including any portion of the Balance
therein consisting of Eligible Loans), the Retirement Account, the Principal
Account, the Interest Account and the Acquisition Fund, in that order of
priority. Any amount so transferred to the Indemnification Account shall be
immediately paid by the Trustee to the appropriate party or parties.
Amounts in the Indemnification Account shall be used only for the
purposes specified in the preceding paragraph, and shall not be available for
any other purpose, including, but not limited to, payment of Debt Service on or
the purchase price of the Notes or Other Obligations.
(D) The provisions of subsections (A) and (B) of this Section 4.5
shall remain in full force and effect notwithstanding the defeasance of the
Notes pursuant to Article Eleven hereof or any other provision hereof.
Section 4.6. Revenue Fund. The Trustee and any Deposit Agent shall
credit to the Revenue Fund: (i) all amounts received as interest, including
federal interest subsidy payments, and principal payments with respect to
Financed Student Loans, including all Insurance payments and Guarantee payments,
and all Special Allowance Payments with respect to Financed Student Loans
(excluding, unless otherwise provided in a Supplemental Indenture, any federal
interest subsidy payments and Special Allowance Payments that accrued prior to
the date on which such Student Loans were Financed), (ii) unless otherwise
provided in a Supplemental Indenture, proceeds of the resale to a Lender of any
Financed Student Loans pursuant to such Lender's repurchase obligation under the
applicable Student Loan Purchase Agreement, (iii) all amounts received as
earnings on or income from Investment Securities in the Acquisition Fund, the
Reserve Fund, the Administration Fund, the Surplus Fund and the Note Fund, (iv)
all Non-Delivery Fees, (v) all amounts to be transferred to the Revenue Fund
from the Rebate Fund, and (vi) any amounts received by the Trustee pursuant to
the indemnification provisions of any Joint Sharing Agreement.
Pending transfers from the Revenue Fund, the moneys therein shall be
invested in Investment Securities as provided in Section 4.11 hereof, and any
earnings on or income from said investments shall be retained therein.
The Corporation shall cause all amounts required to be credited to the
Revenue Fund, upon receipt by the Corporation, a Lender or a Servicer, or any
agent thereof, as the case may be, to be forthwith transmitted to the Trustee or
any Deposit Agent therefor for such credit. On each Monthly Payment Date and on
any other
4-13
date on which the Balance in the Note Fund is not sufficient to pay all amounts
payable therefrom on such date, all such moneys theretofore received and then
held by a Deposit Agent shall be transferred to the Trustee. The Trustee shall
deposit and credit all revenues to be credited to the Revenue Fund as follows:
all such revenues received as payments of principal of Financed Student Loans
shall be credited by the Trustee forthwith upon receipt to the Repayment
Account; and all other revenues and amounts, including all such revenues
received as payments of interest on or Special Allowance Payments with respect
to Financed Student Loans, income from Investment Securities and Non-Delivery
Fees, shall be credited by the Trustee forthwith upon receipt to the Income
Account.
On each Monthly Payment Date and on any other date on which the
Balance in the Note Fund is not sufficient to pay all amounts payable therefrom
on such date, the Trustee shall, from the moneys received since the preceding
Monthly Payment Date in the Repayment Account, (1) make any periodic rebate fee
payments required to be made to the Secretary of Education in connection with
Financed Student Loans, and (2) transfer the remainder of such moneys, as
follows:
First, to the credit of the Rebate Fund to the extent and in the
manner provided in Section 4.5 hereof; second, to the credit of the
Interest Account to the extent and in the manner provided in Section 4.7.1
hereof for the payment of interest on Class A Notes or Other Senior
Obligations payable therefrom; third, to the credit of the Principal
Account to the extent and in the manner provided in subsections (A) and (C)
of Section 4.7.2 hereof for the redemption or payment of principal or the
purchase price of the Class A Notes or the payment of Other Senior
Obligations payable therefrom; fourth, to the credit of the Retirement
Account, to the extent and in the manner provided in Section 4.7.3 hereof
for the redemption of Class A Notes or the payment of Other Senior
Obligations payable therefrom; fifth, to the credit of the Acquisition Fund
to the extent and in the manner provided in Section 4.2 hereof; sixth, to
the credit of the Interest Account to the extent and in the manner provided
in Section 4.7.1 hereof for the payment of interest on Class B Notes or
Other Subordinate Obligations payable therefrom; seventh, to the credit of
the Principal Account to the extent and in the manner provided in
subsections (A) and (C) of Section 4.7.2 hereof for the payment of
principal or the purchase price of Class B Notes or the payment of Other
Subordinate Obligations payable therefrom; eighth, to the credit of the
Retirement Account, to the extent and in the manner provided in Section
4.7.3 hereof for the redemption of Class B Notes or the payment of Other
Subordinate Obligations payable therefrom; ninth, to the credit of the
Reserve Fund to the extent and in the manner provided in Section 4.4
hereof; tenth, to the credit of the Principal Account to the extent and in
the manner provided in Section 4.7.2(B) hereof for the redemption of Class
B Notes; eleventh, to the credit of the Special Redemption and Prepayment
Account to the extent and in the manner provided in Section 4.8 hereof; and
twelfth, to the credit of the Surplus Account in the manner provided in
Section 4.8 hereof.
4-14
On each Monthly Payment Date and on any other date on which the
Balance in the Note Fund is not sufficient to pay all amounts payable therefrom
on such date, the Trustee shall, after transferring all amounts received in the
Repayment Account pursuant to the preceding paragraph, from the moneys received
since the preceding Monthly Payment Date in the Income Account, (1) to the
extent amounts in the Repayment Account were not sufficient therefor, make any
periodic rebate fee payments required to be made to the Secretary of Education
in connection with Financed Student Loans, and (2) transfer the remainder of
such moneys as follows:
First, to the credit of the Rebate Fund to the extent and in the
manner provided in Section 4.5 hereof; second, to the credit of the
Interest Account to the extent and in the manner provided in Section 4.7.1
hereof for the payment of interest on Class A Notes or Other Senior
Obligations payable therefrom; third, to the credit of the Principal
Account to the extent and in the manner provided in subsections (A) and (C)
of Section 4.7.2 hereof for the redemption or payment of principal or the
purchase price of Class A Notes or the payment of Other Senior Obligations
payable therefrom; fourth, to the credit of the Retirement Account, to the
extent and in the manner provided in Section 4.7.3 hereof for the
redemption of Class A Notes or for the payment of Other Senior Obligations
payable therefrom; fifth, to the credit of the Acquisition Fund to the
extent and in the manner provided in Section 4.2 hereof; sixth, to the
credit of the Interest Account to the extent and in the manner provided in
Section 4.7.1 hereof for the payment of interest on Class B Notes or Other
Subordinate Obligations payable therefrom; seventh, to the credit of the
Principal Account to the extent and in the manner provided in subsections
(A) and (C) of Section 4.7.2 hereof for the payment of principal or the
purchase price of Class B Notes or the payment of Other Subordinate
Obligations payable therefrom; eighth, to the credit of the Retirement
Account, to the extent and in the manner provided in Section 4.7.3 hereof
for the redemption of Class B Notes or the payment of Other Subordinate
Obligations payable therefrom; ninth, to the credit of the Administration
Fund to the extent and in the manner provided in Section 4.3 hereof; tenth,
to the credit of the Reserve Fund to the extent and in the manner provided
in Section 4.4 hereof; eleventh, to the credit of the Principal Account to
the extent and in the manner provided in Section 4.7.2(B) hereof for the
redemption of Class B Notes; twelfth, to the credit of the Special
Redemption and Prepayment Account to the extent and in the manner provided
in Section 4.8 hereof; and thirteenth, to the credit of the Surplus Account
in the manner provided in Section 4.8 hereof.
Section 4.7. Note Fund. The Note Fund shall be used only for the
payment when due of principal of, premium, if any, and interest on the Class A
Notes and the Class B Notes, the purchase price of the Class A Notes and the
Class B Notes to be purchased on a Purchase Date or Mandatory Tender Date or
otherwise in accordance with Section 10.7 hereof, Other Obligations and Carry-
Over Amounts
4-15
(including any accrued interest thereon) and to make transfers to the credit of
the Rebate Fund required by Section 4.5 hereof. The principal of and interest on
the Class C Notes shall be payable from the Surplus Fund as provided in Section
4.8 hereof.
The Trustee shall identify the Monthly Payment Date for each
installment of interest, installment of principal for Serial Notes and sinking
fund installment for Term Notes with respect to each series of Notes.
Section 4.7.1. Interest Account. With respect to each series of
Class A Notes or Class B Notes, the Trustee shall, upon delivery to the original
purchasers thereof and from the proceeds thereof, credit to the Interest Account
the amount, if any, specified in the Supplemental Indenture providing for the
issuance of such series of Notes. The Trustee shall also deposit in the
Interest Account (i) that portion of the proceeds from the sale of Financed
Student Loans as is specified in Section 4.2 hereof, (ii) that portion of the
proceeds from the sale of the Corporation's bonds, notes or other evidences of
indebtedness, if any, to be used to pay interest on the Class A Notes or the
Class B Notes, (iii) all Counterparty Swap Payments, (iv) all payments under any
Credit Enhancement Facilities by Credit Facility Providers to be used to pay
interest on Class A Notes or Class B Notes, and (v) all amounts required to be
transferred thereto from the Funds and Accounts specified in the last sentence
of the following paragraph. The moneys in the Interest Account shall be
invested in Investment Securities as provided in Section 4.11 hereof, and any
earnings on or income from such investments shall be deposited in the Revenue
Fund as provided in Section 4.6 hereof.
To provide for the payment of each installment of interest which falls
due upon Class A Notes or Class B Notes on each regularly scheduled Interest
Payment Date and all Corporation Swap Payments and fees to a Credit Facility
Provider payable on such Interest Payment Date, the Trustee shall make six (6)
equal monthly deposits to the credit of the Interest Account not later than the
six (6) Monthly Payment Dates preceding such Interest Payment Date, to aggregate
the full amount of such interest, payment and fees, except that if the first
such Interest Payment Date occurs in six (6) months and fifteen (15) days or
less from the date on which the Class A Notes or Class B Notes of such series
are delivered to the initial purchasers thereof, then the Trustee shall make
equal monthly deposits to the credit of the Interest Account not later than each
Monthly Payment Date beginning with the calendar month following the calendar
month in which such Notes are delivered to the initial purchasers and ending
with the last such Monthly Payment Date prior to such first Interest Payment
Date (provided, however, with respect to any Variable Rate Notes, deposits shall
be made in an amount equal to the interest accrued on such Notes from the last
previous Monthly Payment Date or regularly scheduled Interest Payment Date
therefor, whichever is later, to that Monthly Payment Date or, in the case of
the last Monthly Payment Date preceding a regularly scheduled Interest Payment
Date, to such regularly scheduled Interest Payment Date), to aggregate the full
amount of such interest, payment and fees, and except
4-16
that the Corporation shall receive a credit against such payments for any
accrued Counterparty Swap Payments that are to be paid on or before the next
regularly scheduled Interest Payment Date if the Swap Counterparty is not then
in default in its obligations under the Swap Agreement and if the Swap
Counterparty or any obligor under a related Swap Counterparty Guarantee has
unsecured long-term debt rated by each Rating Agency in any of its three (3)
highest Rating Categories. Anything in this paragraph to the contrary
notwithstanding, the Trustee shall, if so instructed in writing by an Authorized
Officer of the Corporation, deposit to the credit of the Interest Account on any
Monthly Payment Date for any installment of interest a larger amount than is
required to be made on such Monthly Payment Date. If, on any Interest Payment
Date (including any Redemption Date occurring on a date that is not a regularly
scheduled Interest Payment Date) or other date on which Class A Notes or Class B
Notes are to be purchased in accordance with Section 4.7.2(F) or 4.7.3 hereof,
moneys in the Interest Account are insufficient to pay the accrued interest due
on the Class A Notes and Class B Notes and all Corporation Swap Payments and
fees to a Credit Facility Provider payable on such Interest Payment Date or
constituting a portion of the purchase price of Notes to be so purchased, the
Trustee shall immediately deposit to the credit of the Interest Account an
amount equal to such deficiency. In making the deposits required to be deposited
and credited to the Interest Account, the amounts credited to the Interest
Account pursuant to the first two (2) sentences of this Section and other
deposits and credits otherwise made or required to be made to the Interest
Account shall, to the extent available for such purpose, be taken into
consideration and allowed for. Each deposit required by this Section 4.7.1 to
pay the foregoing amounts shall be made by transfer from the following Funds and
Accounts, in the following order of priority: the Revenue Fund, the Surplus Fund
(other than that portion of the Balance thereof consisting of Eligible Loans),
the Reserve Fund, the Administration Fund, the Surplus Fund (including any
portion of the Balance thereof consisting of Eligible Loans), the Retirement
Account, the Principal Account and, as to Class A Notes and Other Senior
Obligations only, the Acquisition Fund (other than that portion of the Balance
thereof consisting of Student Loans); provided that such transfers shall be made
from the Retirement Account or the Principal Account in respect of Subordinate
Obligations only if, and to the extent, any amounts to be so transferred are in
excess of the requirements of such Accounts with respect to Senior Obligations
payable therefrom.
If, as of any regularly scheduled Interest Payment Date, any Carry-
Over Amount (including any accrued interest thereon) is due and payable with
respect to a series of Notes, as provided in the related Supplemental Indenture,
the Trustee shall transfer to the Interest Account (to the extent amounts are
available therefor in the Surplus Account in accordance with the second
paragraph of Section 4.8 hereof, after taking into account all other amounts
payable from the Surplus Fund in accordance with such paragraph on such Interest
Payment Date) an amount equal to such Carry-Over Amount (including any accrued
interest thereon) so due and payable. The Trustee shall make payment of any
Carry-Over Amount (and any
4-17
interest accrued thereon) on an Interest Payment Date in the same manner as it
pays interest on the related series of Notes on such Interest Payment Date.
The moneys in the Interest Account required for the payment of
interest on the Class A Notes or the Class B Notes of any series (including,
without limitation, the payment of that portion of the purchase price of Class A
Notes or Class B Notes purchased pursuant to Section 4.7.2(F) or 4.7.3 hereof
attributable to accrued interest thereon), any Corporation Swap Payments or fees
payable to a Credit Facility Provider under a Credit Enhancement Facility or
Demand Purchase Agreement or any Carry-Over Amount (including any accrued
interest thereon) shall be applied by the Trustee to the payment of such
interest or amounts when due without further authorization or direction.
Balances in the Interest Account shall be transferred to the credit of
the Rebate Fund to the extent necessary, after transfers thereto from the
Revenue Fund, the Surplus Fund, the Reserve Fund, the Administration Fund, the
Retirement Account and the Principal Account, to make any deposit to the credit
of the Rebate Fund required by Section 4.5 hereof.
Balances in the Interest Account shall be transferred to the credit of
the Principal Account to the extent necessary, after transfers thereto from the
Revenue Fund, the Surplus Fund, the Reserve Fund and the Administration Fund, to
make payment of the principal and purchase price of Class A Notes, as provided
in Section 4.7.2 hereof.
The moneys in the Interest Account required for (A) transfer to the
Rebate Fund as hereinbefore provided shall be transferred to such Fund without
further authorization or direction, and (B) transfer to the Principal Account
for payment of the principal or purchase price of Class A Notes, as provided in
Section 4.7.2 hereof, shall be transferred to such Account without further
authorization or direction.
Notwithstanding any other provisions of this Article Four, deposits to
the credit of the Interest Account required to be made on each Monthly Payment
Date by this Section 4.7.1 or on any other date on which the Balance in the
Interest Account is not sufficient to pay all amounts payable therefrom on such
date, and any other amounts at any time on deposit in the Interest Account,
shall be applied in the following order of priority: first, to the extent
hereinabove provided, for transfers to the Rebate Fund; second, to the payment
of interest on all Class A Notes, Corporation Swap Payments under Senior Swap
Agreements and fees payable to Senior Credit Facility Providers under a Senior
Credit Enhancement Facility or Senior Demand Purchase Agreement, and if such
money (after the transfers hereinabove described, including all amounts, to the
extent necessary, in the Principal Account) is less than such interest and Other
Senior Obligations on an Interest Payment Date, such money shall be applied, pro
rata, among such indebtedness based upon such amounts then owing to Senior
Beneficiaries and to be
4-18
paid from the Interest Account; third, by transfer to the Principal Account or
the Retirement Account, to the extent required under Section 4.7.2 and 4.7.3
hereof, in respect of amounts with respect to the principal of the Class A Notes
or other amounts owed to Other Senior Beneficiaries payable therefrom; fourth,
to the payment of interest on all Class B Notes, Corporation Swap Payments under
Subordinate Swap Agreements and fees payable to Subordinate Credit Facility
Providers, and if such money (after the transfers hereinabove described,
including all amounts, to the extent necessary, in the Principal Account over
and above the amount on deposit therein to meet any accrued obligations to pay
principal of the Class A Notes or amounts, other than fees, to Senior Credit
Facility Providers) is less than such interest and Other Subordinate Obligations
on an Interest Payment Date, such money shall be applied, pro rata, among such
indebtedness based upon such amounts then owing to Subordinate Beneficiaries and
to be paid from the Interest Account; fifth, to the payment of all Carry-Over
Amounts (including any accrued interest thereon) due and payable on all series
of Class A Notes, and if such money is less than such Carry-Over Amounts
(including any accrued interest thereon) on an Interest Payment Date, such money
shall be applied, pro rata, among such Carry-Over Amounts (including any accrued
interest thereon) based upon such amounts then otherwise due and payable to
Class A Noteholders and to be paid from the Interest Account; and sixth, to the
payment of all Carry-Over Amounts (including any accrued interest thereon) due
and payable on all series of Class B Notes, and if such money is less than such
Carry-Over Amounts (including any accrued interest thereon) on an Interest
Payment Date, such money shall be applied, pro rata, among such Carry-Over
Amounts (including any accrued interest thereon) based upon such amounts then
otherwise due and payable to Class B Noteholders and to be paid from the
Interest Account.
Other Obligations payable from the Interest Account shall include
reimbursement to any Credit Facility Provider for interest paid on Class A Notes
or Class B Notes from amounts paid by the Credit Facility Provider under a
Credit Enhancement Facility.
Section 4.7.2. Principal Account. In making the payments, deposits
and credits required by subsections (A), (B) and (C) of this Section 4.7.2, an
amount deposited and credited or required to be deposited and credited to the
Principal Account representing premium on Term Notes paid as part of the
purchase price thereof and any other deposits and credits otherwise made or
required to be made to the Principal Account shall, to the extent available for
such purpose, be taken into consideration and allowed for. The Trustee shall
also deposit to the credit of Principal Account: (i) that portion of the
proceeds from the sale of Financed Student Loans as is specified in Section 4.2
hereof, (ii) that portion of the proceeds from the sale of the Corporation's
bonds, notes or other evidences of indebtedness, if any, to be used to pay
principal of the Class A Notes and the Class B Notes on a Principal Payment
Date, (iii) all payments under any Credit Enhancement Facility or Demand
Purchase Agreement to be used to pay principal of Class A Notes or Class B Notes
or the purchase price of Class A Notes or Class B Notes to be purchased on a
Purchase
4-19
Date or Mandatory Tender Date, and (iv) all amounts required to be transferred
thereto from the Funds and Accounts specified in subsection (D) of this Section
4.7.2.
Other Obligations payable from the Principal Account shall include
reimbursement to any Credit Facility Provider for principal or the purchase
price paid on Class A Notes or Class B Notes from amounts paid by the Credit
Facility Provider under a Credit Enhancement Facility or Demand Purchase
Agreement.
(A) To provide for the payment of each installment of principal which
falls due upon Class A Serial Notes, Class B Serial Notes or Class B Term Notes
at the Stated Maturity thereof or Class A Term Notes on a Sinking Fund Payment
Date therefor, the Trustee shall make six (6) (if the principal of Notes of such
series is payable semiannually) or twelve (12) (if the principal of Notes of
such series is payable annually) equal monthly deposits to the credit of the
Principal Account not later than the six (6) or twelve (12) Monthly Payment
Dates, as the case may be, preceding such Principal Payment Date, to aggregate
the full amount of such installment, except that if the first such Principal
Payment Date of a series of Notes occurs within twelve (12) months and fifteen
(15) days after the date on which the Class A Notes or Class B Notes of such
series are delivered to the initial purchasers thereof, then the Trustee shall
make equal monthly deposits to the credit of the Principal Account not later
than each Monthly Payment Date for such installment beginning with the calendar
month following the month in which such Notes are delivered to the initial
purchasers and ending with the last such Monthly Payment Date prior to such
first Principal Payment Date, to aggregate the full amount of such installment.
In making the deposits and credits required by this subsection (A), any amounts
deposited or required to be deposited and credited to the Principal Account
representing premium on Class A or Class B Serial Notes or Class A Term Notes
paid as part of the purchase price thereof and any other deposits and credits
otherwise made or required to be made to the Principal Account shall, to the
extent available for such purpose, be taken into consideration and allowed for.
The moneys in the Principal Account required for the payment of the
principal of Class A Serial Notes, Class B Serial Notes or Class B Term Notes at
the Stated Maturity thereof or of Class A Term Notes on a Sinking Fund Payment
Date therefor or for the payment of Other Obligations (other than fees,
Corporation Swap Payments and reimbursements for amounts paid under a Credit
Enhancement Facility to pay interest on Class A Notes or Class B Notes, all of
which are payable from the Interest Account) shall be applied by the Trustee to
such payment when due without further authorization or direction, subject,
however, to subsection (D) of this Section 4.7.2.
(B) To meet each specified sinking fund installment which falls due
upon Class B Term Notes on each Sinking Fund Payment Date for each series of
Class B Notes which includes Term Notes (other than the Stated Maturity thereof,
as to which subsection (A) of this Section 4.7.2 shall govern), the Trustee
shall:
4-20
(1) determine (commencing as of the Monthly Payment Date not less
than seven (7) calendar months, if such Sinking Fund Payment Dates occur
semiannually, or twelve (12) calendar months, if such Sinking Fund Payment
Dates occur annually, before the first Sinking Fund Payment Date for Class
B Term Notes of such series) with regard to each specified sinking fund
installment which falls due upon such Class B Term Notes on each Sinking
Fund Payment Date (other than the Stated Maturity thereof) the amount
which, if deposited to the credit of the Principal Account on each of the
six (6) successive Monthly Payment Dates, if such Sinking Fund Payment
Dates occur semiannually, or on each of the eleven (11) successive Monthly
Payment Dates, if such Sinking Fund Payment Dates occur annually, for such
installment which are before the last Monthly Payment Date before such
Sinking Fund Payment Date, would in the aggregate equal the full amount of
such installment, except that if the installment due on the first Sinking
Fund Payment Date for the Class B Term Notes of any series is less than
seven (7) calendar months, if such Sinking Fund Payment Dates occur
semiannually, or twelve (12) calendar months, if such Sinking Fund Payment
Dates occur annually, after the month in which such Notes are delivered to
the initial purchasers thereof, the Trustee shall determine the amount
which, if deposited to the credit of the Principal Account on each of the
Monthly Payment Dates occurring during the period beginning with the
calendar month following the month in which such Notes are delivered to the
initial purchasers thereof and ending with the next-to-the-last Monthly
Payment Date prior to such Sinking Fund Payment Date, would in the
aggregate equal the full amount of such installment;
(2) express the monthly amount so determined for each such sinking
fund installment on a cumulative basis, so that the cumulative amount for
any Monthly Payment Date for that installment will be the sum of the amount
for such Monthly Payment Date and the amounts of the preceding such Monthly
Payment Dates; and
(3) on each such Monthly Payment Date (a) determine whether in fact
and to what extent the contingency, if any, specified in the Supplemental
Indenture authorizing the issuance of such Notes has been satisfied which
requires a deposit on such Monthly Payment Date to the credit of the
Principal Account on account of such sinking fund installment, as specified
in the Supplemental Indenture authorizing such series of Notes, (b)
determine the amount of any such deposit if so required, which for each
such Monthly Payment Date shall not exceed the cumulative amount therefor,
less the sum of all prior deposits made on account of such sinking fund
installment, and (c) deposit to the credit of the Principal Account any
amount so determined to be required to be deposited on such Monthly Payment
Date.
To the extent that on any such Sinking Fund Payment Date (other than
the Stated Maturity of such Notes) the aggregate of the deposits thus actually
made
4-21
to the credit of the Principal Account as of the next-to-the-last Monthly
Payment Date before such Sinking Fund Payment Date on account of the sinking
fund installment due on such Sinking Fund Payment Date shall be less than the
full amount of such sinking fund installment, the amount of such deficiency
shall be added to the amount of the sinking fund installment otherwise due on
the next Sinking Fund Payment Date and the increased amount shall thereupon be
deemed to be the amount due for the next sinking fund installment. However,
nothing contained in this paragraph shall be construed to create an Event of
Default in the event of any such deficiency unless a sinking fund installment of
such Class B Term Notes shall not only be due and not applied to the redemption
or purchase of Notes in accordance with the provisions of the Supplemental
Indenture authorizing the issuance of the Notes of such series and subsection
(F) of this Section 4.7.2, but also all contingencies, if any, specified in such
Supplemental Indenture upon the obligation so to apply it as of such time shall
in fact have been satisfied. Any such contingencies specified in a Supplemental
Indenture authorizing the issuance of a series of Class B Notes must be
identical to the contingencies, if any, specified in any other Supplemental
Indenture authorizing a series of Class B Notes any Note of which is then
Outstanding.
Subject to subsection (D) of this Section 4.7.2, in the event that, in
any year in which sinking fund installments are due with respect to two (2) or
more series of Class B Notes, payments on account of such sinking fund
installments are not deposited and accumulated in the Principal Account in the
full amount thereof (taking into account any reduction in or credit against such
installments as provided in the Supplemental Indenture pursuant to which such
Class B Notes were issued) on or before the next-to-the-last Monthly Payment
Date prior to the Sinking Fund Payment Date with respect thereto, such payments
as shall have been accumulated shall be allocated as follows: (i) first, to the
payment of any such Class B Term Notes whose Stated Maturity is such Sinking
Fund Payment Date (as provided in subsection (A) of this Section 4.7.2), and
(ii) otherwise, between the series of Class B Notes in proportion to the
respective total amounts of sinking fund installments due on such Sinking Fund
Payment Date.
The Trustee shall without further authorization or direction apply the
moneys deposited to the credit of the Principal Account pursuant to this
subsection (B), on each Sinking Fund Payment Date, to the retirement of the
Class B Term Notes in accordance with the provisions in the Supplemental
Indenture pursuant to which such Notes were issued; subject, however, to
subsection (D) of this Section 4.7.2. The Trustee shall give notice of all such
redemptions, in the name and on behalf of the Corporation, in accordance with
the provisions of Article Ten hereof.
(C) In the event that the Corporation is required to furnish moneys
to the Depositary to purchase Notes on a Purchase Date or Mandatory Tender Date,
the Trustee shall, subject to the applicable provisions of the related
Supplemental Indenture, immediately deposit to the credit of the Principal
Account moneys sufficient to pay the purchase price thereof. Moneys in the
Principal Account
4-22
required for the payment of the purchase price of such Notes shall, subject to
the applicable provisions of the related Supplemental Indenture, be applied by
the Trustee to such payment without further authorization or direction.
(D) Each deposit required to be made to the credit of the Principal
Account by subsections (A), (B) and (C) of this Section 4.7.2 shall be made by
transfer from the following Funds, in the following order of priority: (1) in
the case of subsection (A) and subsection (C), the Revenue Fund, the Surplus
Fund (other than that portion of the Balance thereof consisting of Eligible
Loans), the Reserve Fund, the Administration Fund, the Surplus Fund (including
that portion of the Balance thereof consisting of Eligible Loans), and (2) in
the case of subsection (B), the Revenue Fund and the Surplus Fund (other than
that portion of the Balance thereof consisting of Eligible Loans); provided,
however, that if principal is payable on Class A Notes at the Stated Maturity
thereof or upon a Sinking Fund Payment Date therefor, or the purchase price is
payable on Class A Notes on a Purchase Date or Mandatory Tender Date, and money
credited to the Principal Account, after the foregoing transfers, is
insufficient to pay such principal or purchase price, funds shall be
transferred, to the extent necessary, to the Principal Account for this purpose
from (i) the Interest Account, but only to the extent that the Balance in the
Interest Account exceeds any then accrued payments of interest on the Class A
Notes, Corporation Swap Payments under Senior Swap Agreements and fees owing to
Senior Credit Facility Providers and (ii) thereafter from the Acquisition Fund
(other than that portion of the Balance thereof consisting of Student Loans).
Notwithstanding any other provisions of this Article Four, deposits to
the credit of the Principal Account required to be made on each Monthly Payment
Date by this Section 4.7.2 or on any other date on which the Balance in the
Principal Account is not sufficient to pay all amounts payable therefrom on such
date, and any other amounts on deposit in the Principal Account, shall be
applied in the following order of priority: first, to the extent required by
subsection (E) of this Section 4.7.2, for transfer to the Rebate Fund; second,
to the extent required by Section 4.7.1, to the Interest Account for the payment
of interest on Class A Notes and Other Senior Obligations payable therefrom;
third, to the payment of Class A Notes at their Stated Maturity or on a Sinking
Fund Payment Date or amounts due on Other Senior Obligations payable from the
Principal Account; fourth, to the payment of the purchase price of Class A Notes
on a Purchase Date or Mandatory Tender Date; fifth, to the extent required by
Section 4.7.1, to the Interest Account for the payment of interest on Class B
Notes and Other Subordinate Obligations payable therefrom; sixth, to the amounts
due with respect to Class B Notes to be paid at their Stated Maturity or amounts
due on Other Subordinate Obligations payable from the Principal Account;
seventh, to the payment of the purchase price of Class B Notes on a Purchase
Date or Mandatory Tender Date; and, eighth, to the amounts due with respect to
Class B Term Notes to be redeemed on a Sinking Fund Payment Date. Any moneys in
the Principal Account required to be so transferred to the Interest Account
shall be transferred by the Trustee to such Account without further
authorization or direction.
4-23
(E) Balances in the Principal Account shall be transferred to the
credit of the Rebate Fund to the extent necessary, after transfers thereto from
the Revenue Fund, the Surplus Fund, the Reserve Fund, the Administration Fund
and the Retirement Account, to make any deposit to the credit of the Rebate Fund
required by Section 4.5 hereof. Any moneys in the Principal Account required to
be so transferred to the Rebate Fund shall be transferred by the Trustee to such
Fund without further authorization or direction.
(F) Subject to Section 10.2 hereof, balances in the Principal Account
may also be applied to the purchase of Class A Notes or Class B Notes at a
purchase price (including any brokerage or other charges) not to exceed the
Principal Amount thereof plus accrued interest, in accordance with the
provisions of Section 10.7 hereof, as determined by the Corporation at such
time, provided the Trustee shall have first certified that no deficiencies exist
at such time in the Note Fund or the Rebate Fund. Any such purchase shall be
limited to those Class A Notes or Class B Notes whose Stated Maturity or Sinking
Fund Payment Date is the next succeeding Principal Payment Date. If any moneys
credited to the Principal Account for the retirement of the Term Notes are
applied to the purchase of such Notes as provided in this subsection (F), the
Principal Amount of such Notes to be redeemed on the next respective Sinking
Fund Payment Date shall be reduced by the Principal Amount of the Notes so
purchased; provided, however, that no Term Notes shall be so purchased during
the interval between the date on which notice of redemption of said Notes on a
Sinking Fund Payment Date is given and the date of redemption set forth in such
notice, unless the Notes so purchased are Notes called for redemption in such
notice or are purchased from moneys other than those credited to the Principal
Account with respect to sinking fund installments.
Any purchase of Class A Notes or Class B Notes pursuant to this
subsection (F) may be made with or without tenders of Notes and at either public
or private sale.
(G) All Class A Notes or Class B Notes retired by redemption,
purchase (other than on a Purchase Date or Mandatory Tender Date) or payment at
maturity pursuant to this Section 4.7.2 shall be canceled and shall not be
reissued. The accrued interest to be paid on the redemption, purchase (other
than on a Purchase Date or Mandatory Tender Date) or payment at Stated Maturity
of such Notes shall be paid from the Interest Account. Any Notes purchased or
otherwise Deemed Tendered on a Purchase Date or Mandatory Tender Date with
moneys furnished pursuant to this Section 4.7.2 shall not be canceled or the
indebtedness represented thereby otherwise extinguished except at the direction
of the Corporation, it being the intention of the Corporation that, absent such
a direction, such Notes remain outstanding and represent a continuing
indebtedness of the Corporation, whether such Notes are held by the Corporation,
the Remarketing Agent or others for the account of the Corporation, any
Remarketing Agent for its own account, any Depositary, the Trustee, any Credit
Facility Provider or any other purchaser.
4-24
(H) The moneys in the Principal Account shall be invested in
Investment Securities as provided in Section 4.11 hereof, and any earnings on or
income from such investments shall be deposited in the Revenue Fund as provided
in Section 4.6 hereof.
Section 4.7.3. Retirement Account. The Trustee shall deposit to the
credit of the Retirement Account (i) any amounts transferred thereto from the
Reserve Fund and the Surplus Fund, (ii) that portion of the proceeds from the
sale of the Corporation's bonds, notes or other evidences of indebtedness, if
any, to be used to pay the principal or Redemption Price of Class A Notes or
Class B Notes on a date other than the Stated Maturity thereof or a Sinking Fund
Payment Date therefor, and (iii) all payments made by a Credit Facility Provider
under a Credit Enhancement Facility to be used to pay the Redemption Price of
Class A Notes or Class B Notes payable from the Retirement Account. All Class A
Notes or Class B Notes which are to be retired other than with moneys in the
Principal Account, or the principal of which is to be prepaid, shall be retired
or prepaid with moneys deposited to the credit of the Retirement Account.
Other Obligations payable from the Retirement Account shall include
reimbursement to any Credit Facility Provider for the Redemption Price or amount
or prepayment paid on Class A Notes or Class B Notes from amounts paid by the
Credit Facility Provider under a Credit Enhancement Facility.
Balances in the Retirement Account shall be transferred to the credit
of the Rebate Fund to the extent necessary, after transfers thereto from the
Revenue Fund, the Surplus Fund, the Reserve Fund and the Administration Fund, to
make any deposit to the credit of the Rebate Fund required by Section 4.5
hereof. Any moneys in the Retirement Account required to be so transferred to
the Rebate Fund shall be transferred by the Trustee to such Fund without further
authorization or direction.
After taking into account any transfers required by the preceding
paragraph, Balances in the Retirement Account shall be transferred to the credit
of the Interest Account to the extent required by Section 4.7.1 hereof in
respect of any accrued obligation in respect of payment of interest on Class A
Notes or Class B Notes and payment of Other Obligations payable from the
Interest Account. Any moneys in the Retirement Account required to be so
transferred to the Interest Account shall be transferred by the Trustee to the
Interest Account without further authorization or direction.
Subject to Section 10.2 hereof, balances in the Retirement Account may
also be applied to the purchase of Class A Notes or Class B Notes at a purchase
price (including any brokerage or other charges) not to exceed the Principal
Amount thereof plus accrued interest plus any then applicable redemption
premium, in accordance with the provisions of Section 10.7 hereof, as determined
by the
4-25
Corporation at such time; provided the Trustee shall have first certified that
no deficiencies exist at such time in the Note Fund or the Rebate Fund.
In the event that Class A Notes or Class B Notes are to be redeemed
from the Retirement Account on a date other than a regularly scheduled Interest
Payment Date or are to be purchased from Balances in the Retirement Account
pursuant to the preceding paragraph, accrued interest on such Notes shall
nonetheless be paid from the Interest Account.
The moneys in the Retirement Account required for the payment of the
Redemption Price of Class A Notes or Class B Notes to be redeemed or for the
prepayment of Class A Notes or Class B Notes to be prepaid shall be applied by
the Trustee to such payment or prepayment when due without further authorization
or direction.
The moneys in the Retirement Account shall be invested in Investment
Securities as provided in Section 4.11 hereof, and any earnings on or income
from such investment shall be deposited in the Revenue Fund as provided in
Section 4.6 hereof.
Section 4.8. Surplus Fund. On each Monthly Payment Date the Trustee
shall transfer from the Revenue Fund to (I) the Special Redemption and
Prepayment Account any amounts which are not then required to be transferred
from the Revenue Fund to the Rebate Fund, the Note Fund, the Acquisition Fund,
the Administration Fund or the Reserve Fund to the extent necessary to increase
the Balance in the Special Redemption and Prepayment Account to equal the
aggregate of the Special Redemption and Prepayment Account Requirements for each
series of Notes any Note of which is then Outstanding, and (II) the Surplus
Account any amounts which are not then required to be transferred from the
Revenue Fund to the Rebate Fund, the Note Fund, the Acquisition Fund, the
Administration Fund, the Reserve Fund or the Special Redemption and Prepayment
Account. The Trustee shall also credit to the Surplus Account the proceeds of
the resale to a Lender of any Student Loans previously purchased with moneys in
the Surplus Account pursuant to the repurchase obligation of the Lender under
the applicable Student Loan Purchase Agreement.
Balances in the Surplus Fund shall be applied to the following
purposes in the following order of priority: first, to remedy deficiencies in
the Rebate Fund to the extent and in the manner provided in Section 4.5 hereof;
second, to remedy deficiencies in the Interest Account to the extent and in the
manner provided in Section 4.7.1 hereof for the payment of interest on Class A
Notes or Other Senior Obligations payable therefrom; third, to remedy
deficiencies in the Principal Account to the extent and in the manner provided
in Section 4.7.2 hereof for the payment of Class A Notes at the Stated Maturity
thereof or on a Sinking Fund Payment Date therefor, the purchase price of Class
A Notes on a Purchase Date or Mandatory Tender Date therefor or Other Senior
Obligations payable therefrom;
4-26
fourth, to remedy deficiencies in the Retirement Account to the extent and in
the manner provided in Section 4.7.3 hereof for the redemption or payment of
Class A Notes or for the payment of Other Senior Obligations payable therefrom;
fifth, to remedy deficiencies in the Interest Account to the extent and in the
manner provided in Section 4.7.1 hereof for the payment of interest on Class B
Notes and Other Subordinate Obligations payable therefrom; sixth, to remedy
deficiencies in the Principal Account to the extent and in the manner provided
in Section 4.7.2 hereof for the payment of Class B Notes at the Stated Maturity
thereof, the purchase price of Class B Notes on a Purchase Date or Mandatory
Tender Date therefor and Other Subordinate Obligations payable therefrom;
seventh, to remedy deficiencies in the Retirement Account to the extent and in
the manner provided in Section 4.7.3 hereof for the redemption or payment of
Class B Notes or for the payment of Other Subordinate Obligations payable
therefrom; eighth, to make deposits to the credit of the Administration Fund to
the extent and in the manner provided in Section 4.3 hereof (provided that such
transfers shall only be made from Balances in the Surplus Account); ninth, to
remedy deficiencies in the Reserve Fund to the extent and in the manner provided
in Section 4.4 hereof; tenth, to remedy deficiencies in the Principal Account to
meet the sinking fund installment with respect to Class B Term Notes on a
Sinking Fund Payment Date (other than the Stated Maturity thereof); eleventh, to
make transfers to the credit of the Retirement Account to redeem or prepay Class
A Notes or Class B Notes as provided in a Supplemental Indenture relating
thereto (provided that any such transfers shall only be made from Balances in
the Special Redemption and Prepayment Account); and twelfth, to make deposits to
the credit of the Interest Account for the payment of Carry-Over Amounts (and
accrued interest thereon) to the extent and in the manner provided in Section
4.7.1 hereof (provided that such transfers shall only be made from Balances in
the Surplus Account). Notwithstanding the foregoing, Balances in the Surplus
Fund consisting of Eligible Loans shall not be required to be applied (1)
pursuant to priorities first through seventh in the preceding sentence until
after any transfers from the Reserve Fund have been taken into account, and (2)
in any event pursuant to priorities eighth through twelfth in the preceding
sentence. If the amounts in the Surplus Fund are to be used to remedy any such
deficiency or to make a transfer to the credit of the Administration Fund or the
Retirement Account, transfers shall be made first from any cash or Investment
Securities included in the Surplus Account and the Special Redemption and
Prepayment Account, in that order of priority, and thereafter from the proceeds
of any sale of Student Loans included in the Surplus Account.
Balances in the Special Redemption and Prepayment Account may also be
transferred to the Acquisition Fund for the acquisition or origination of
Eligible Loans as provided in Section 4.2 hereof and as further authorized or
limited in a Supplemental Indenture. Balances in the Special Redemption and
Prepayment Account shall be transferred to the Acquisition Fund to be so used
upon receipt by the Trustee of a Corporation Request directing such transfer,
accompanied by an Eligible Loan Acquisition Certificate or an Eligible Loan
Origination Certificate and all documents, opinions and certificates required
thereby.
4-27
Subject to Section 10.2 hereof, balances in the Special Redemption and
Prepayment Account (other than any portion thereof to be applied to the
mandatory prepayment of principal of any Notes) may also be transferred to the
Note Fund for the purchase of Notes at a purchase price (including any brokerage
or other charges) not to exceed the greater of the Principal Amount thereof or,
if such purchase occurs during the period when such Notes are subject to
redemption at the option of the Corporation from such funds, the Redemption
Price set forth in the Supplemental Indenture authorizing the issuance of such
Notes that would be applicable to the redemption of Notes pursuant thereto on
the date of such purchase, in either case plus accrued interest, in accordance
with the provisions of Section 10.7 hereof, as determined by the Corporation at
such time, provided that the Trustee shall have first certified that no
deficiencies exist at such time in the Note Fund, the Rebate Fund or the Reserve
Fund, any such Balances to be so used are not required to be applied to the
prepayment of principal of any Notes and, if the purchase price of any Note to
be so purchased is to exceed the Principal Amount thereof plus accrued interest
thereon, the Trustee shall have been provided with a Corporation Certificate
certifying that, based on a Cash Flow Projection, any such purchase of Notes
will not materially adversely affect the Corporation's ability to pay Debt
Service on the Outstanding Notes, Outstanding Other Obligations, Carry-Over
Amounts (including accrued interest thereon) with respect to Outstanding Notes,
Administrative Expenses or Note Fees or to make required deposits to the Rebate
Fund.
Balances in the Surplus Fund may, subject to the last sentence of the
following paragraph, also be applied, as determined by the Corporation from time
to time, to the payment of principal of, premium, if any, or interest on Class C
Notes when due or upon the redemption thereof at the option of the Corporation;
provided that (A) the Trustee shall have certified that no deficiencies exist at
such time in the Note Fund, the Rebate Fund or the Reserve Fund, (B) after
taking into account any such payments of interest on the Class C Notes, the
Senior Percentage will not be less than one hundred ________ percent (1______%)
(or such lower percentage specified in a Corporation Certificate delivered to
the Trustee which, if Unenhanced Class A Notes are Outstanding, shall not result
in the lowering or withdrawal of the outstanding rating assigned by any Rating
Agency to any of the Unenhanced Class A Notes Outstanding, as evidenced in
writing to the Trustee by each such Rating Agency, or if no Unenhanced Class A
Notes are Outstanding but Other Senior Obligations are Outstanding, is
acceptable to the Other Senior Beneficiaries holding such Other Senior
Obligations, as evidenced in writing to the Trustee by each such Other Senior
Beneficiary), and the Subordinate Percentage will not be less than
________________ percent (________%) (or such lower percentage specified in a
Corporation Certificate delivered to the Trustee which, if Unenhanced Class B
Notes are Outstanding, shall not result in the lowering or withdrawal of the
outstanding rating assigned by any Rating Agency to any of the Unenhanced Class
B Notes Outstanding, as evidenced in writing to the Trustee by each such Rating
Agency, or if no Unenhanced Class B Notes are Outstanding but Other Subordinate
Obligations are Outstanding, is acceptable to the Other Subordinate
Beneficiaries holding such
4-28
Other Subordinate Obligations, as evidenced in writing to the Trustee by each
such Other Subordinate Beneficiary); and (C) after taking into account any such
payments of principal of or premium, if any, on the Class C Notes, the Senior
Asset Requirement will be met. If the amounts in the Surplus Fund are to be used
to pay principal of, premium or interest on the Class C Notes in accordance with
this paragraph, payments shall be made first from any cash or Investment
Securities in the Surplus Account and the Special Redemption and Prepayment
Account, in that order of priority, then from the proceeds of any sale of
Student Loans in the Surplus Account not constituting Eligible Loans, and
thereafter from the proceeds of any sale of Eligible Loans in the Surplus
Account.
Subject to Section 10.2 hereof and to the last sentence of this
paragraph, balances in the Surplus Account may also be applied to any one or
more of the following purposes at any time as determined by the Corporation at
such time, provided the Trustee shall have first certified that no deficiencies
exist at such time in the Note Fund, the Rebate Fund, the Reserve Fund or the
Special Redemption and Prepayment Account:
(i) transfer to the Retirement Account for the redemption of Class A
Notes or Class B Notes; provided that, if the Redemption Price of any Note
to be so redeemed is to exceed the Principal Amount thereof, the Trustee
shall have received a Corporation Certificate certifying that any such
Balances to be so used are not reasonably expected to be needed to pay Debt
Service on the Outstanding Notes and Outstanding Other Obligations, Carry-
Over Amounts (including accrued interest thereon) with respect to
Outstanding Notes, Administrative Expenses or Note Fees or to make required
transfers to the Rebate Fund;
(ii) transfer to the Principal Account or the Retirement Account for
the purchase of Class A Notes or Class B Notes at a purchase price
(including any brokerage or other charge) not to exceed the greater of the
Principal Amount thereof or, if such purchase occurs during the period when
such Notes are subject to redemption at the option of the Corporation from
such funds, the Redemption Price set forth in the Supplemental Indenture
authorizing the issuance of such Notes that would be applicable to the
redemption of Notes pursuant thereto on the date of such purchase, in
either case plus accrued interest, in accordance with the provisions of
Section 10.7 hereof, provided that, if the purchase price of any Note to be
so purchased is to exceed the Principal Amount thereof plus accrued
interest thereon, the Trustee shall have first received a Corporation
Certificate certifying that, based on a Cash Flow Projection, any such
purchase of Notes will not materially adversely affect the Corporation's
ability to pay Debt Service on the Outstanding Notes and Outstanding Other
Obligations, Carry-Over Amounts (including accrued interest thereon) with
respect to Outstanding Notes, Administrative Expenses or Note Fees or to
make required deposits to the Rebate Fund; or
4-29
(iii) upon the receipt by the Trustee of a Corporation Certificate
that the Balance in the Administration Fund is at least equal to the
Budgeted Administrative Expenses and Note Fees for the next succeeding
ninety (90) days, and that, based on a Cash Flow Projection, any moneys to
be so used are not reasonably expected to be needed for the payment of Debt
Service on the Outstanding Notes and Outstanding Other Obligations, Carry-
Over Amounts (including accrued interest thereon) with respect to
Outstanding Notes, Administrative Expenses or Note Fees or for transfer to
the Rebate Fund: (a) the acquisition of Student Loans meeting the
requirements of clauses (A)(1) and (A)(2) or (B) of the definition of
"Eligible Loan" in Section 1.1 hereof, the moneys to be applied from the
Surplus Account for such purpose being no more than the Principal Balance
of such Student Loans, plus accrued noncapitalized interest thereon payable
by the Eligible Borrower, if any, to the date of purchase, reasonable
transfer, origination and assignment fees, if applicable, and a premium not
to exceed that assumed in the most recent Cash Flow Projection delivered in
conjunction with the issuance of a series of Notes [or such greater premium
the payment of which will not materially adversely affect the Corporation's
ability to pay Debt Service on the Outstanding Notes, Other Indenture
Obligations, Carry-Over Amounts (including accrued interest thereon) with
respect to Outstanding Notes, Administrative Expenses or Note Fees or to
make required transfers to the Rebate Fund, as shown in a subsequent Cash
Flow Projection received by the Trustee, and which will not result in the
lowering or withdrawal of the outstanding rating assigned by any Rating
Agency to any of the Unenhanced Senior or Subordinate Notes Outstanding, as
evidenced in writing to the Trustee by each such Rating Agency], and being
paid to the Lender upon the receipt by the Trustee of a Student Loan
Acquisition Certificate and all documents, opinions and certifications
required thereby; (b) to reimburse another fund, account or other source of
the Corporation for the previous payment of Costs of Issuance, to the
extent not previously reimbursed from the Surplus Account; and (c) for such
other purposes as the Corporation shall determine upon receipt by the
Trustee of an opinion of Counsel that such use will not violate any
covenants of the Corporation contained in Sections 5.14 or 5.16 hereof, is
authorized by the Corporation's Articles of Incorporation and Bylaws, and
will not violate the provisions of Section 150(d) of the Code; provided,
however, that Balances in the Surplus Account shall not be applied to any
of the purposes specified in the preceding clauses (iii)(b) or (c) or to
the purchase of Student Loans that are not Eligible Loans unless, after
taking into account any such application and excluding, for these purposes
only, from the calculation of Aggregate Value, any Financed Student Loans
which are not Eligible Loans and any moneys reasonably expected to be
needed for transfer to the Rebate Fund or to be used to pay Costs of
Issuance, Note Fees or Administrative Expenses, (1) the Senior Percentage
will not be less than one hundred ____________ percent (1_______%) (or such
lower percentage specified in a Corporation Certificate delivered to the
Trustee which, if Unenhanced Class A Notes are Outstanding, shall not
result in the lowering or withdrawal of
the outstanding rating assigned by any Rating Agency to any of the
Unenhanced Class A Notes Outstanding, as evidenced in writing to the
Trustee by each such Rating Agency, or if no Unenhanced Class A Notes are
Outstanding but Other Senior Obligations are Outstanding, is acceptable to
the Other Senior Beneficiaries holding such Outstanding Other Senior
Obligations, as evidenced in writing to the Trustee by each such Other
Senior Beneficiary), and (2) the Subordinate Percentage will not be less
than one hundred _________ percent (_____%) (or such lower percentage
specified in a Corporation Certificate delivered to the Trustee which, if
Unenhanced Class B Notes are Outstanding, shall not result in the lowering
or withdrawal of the outstanding rating assigned by any Rating Agency to
any of the Unenhanced Class B Notes Outstanding, as evidenced in writing to
the Trustee by each such Rating Agency, or if no Unenhanced Class B Notes
are Outstanding but Other Subordinate Obligations are Outstanding, is
acceptable to the Other Subordinate Beneficiaries holding such Outstanding
Other Subordinate Obligations, as evidenced in writing to the Trustee by
each such Other Subordinate Beneficiary); and provided, further, that
Balances in the Surplus Account may, to the extent provided in a
Supplemental Indenture, be applied to the purchase of Eligible Loans as
specified in the preceding clause (iii)(a) without satisfying any other
condition of this clause (iii).
Notwithstanding the foregoing (I) no amounts in the Surplus Fund shall be paid
out with respect to Costs of Issuance, Note Fees or Administrative Expenses, or
for any other use permitted by the preceding paragraph or clause (iii) above,
unless, after giving effect to such payment (taking into account, for this
purpose, all previous such payments from the Surplus Fund and all payments from
the Administration Fund with respect to Costs of Issuance, Note Fees and
Administrative Expenses), as to each series of Tax Exempt Notes, either (i) at
least ninety percent (90%) of the net proceeds of such series will, at the time
of such payment, have been used directly or indirectly to make or finance
student loans described in Section 144(b)(1)(A) of the Code, or (ii) at least
ninety-five percent (95%) of the net proceeds of such series will, at the time
of such payment, have been used directly or indirectly to make or finance
student loans described in Section 144(b)(1)(B) of the Code, as applicable, all
within the meaning of such Section 144(b) of the Code, and (II) any Student Loan
to be Financed from Balances in the Surplus Fund shall be described in Section
144(b)(1) (if Financed from the proceeds of Tax Exempt Notes) and Section 150(d)
(if Financed prior to the Section 150(d)(3) Transfer) of the Code.
The unpaid principal balance of Student Loans Financed with moneys in
the Surplus Account shall be included in the Balance of the Surplus Account
until such Financed Student Loans shall have been paid in full or sold as
hereinafter provided; provided that, to the extent provided in a Supplemental
Indenture, any such Student Loans so Financed and constituting Eligible Loans
shall, upon the financing thereof, be credited to, and included in the Balance
of, the Acquisition Fund and shall thereafter not be deemed to have been
Financed with
4-31
moneys in the Surplus Account. Interest and principal payments, including
Insurance and Guarantee payments and similar payments made by any other Person,
and Special Allowance Payments (excluding any federal interest subsidy payments
and Special Allowance Payments that accrued prior to the date on which such
Student Loans were Financed) received with respect to Student Loans Financed
with moneys in the Surplus Account shall be credited to the Revenue Fund as
provided in Section 4.6 hereof.
The Trustee shall use its best efforts to sell Student Loans included
in the Balance of the Surplus Account at the best price available to the extent
necessary to make any transfer or payment therefrom as provided in the second
paragraph of this Section 4.8. In addition, the Corporation may, at any time,
sell to any purchaser (A) one or more Eligible Loans Financed with moneys in the
Surplus Account at a price not less than one hundred percent (100%) of the
Principal Balance thereof plus accrued noncapitalized interest thereon payable
by the Eligible Borrower, or (B) one or more Student Loans Financed with moneys
in the Surplus Account that are not Eligible Loans at a price not less than the
lesser of one hundred percent (100%) of the Principal Balance thereof or the
percentage of the Principal Balance thereof paid to finance such Student Loan
plus, in either case, accrued noncapitalized interest thereon payable by the
Eligible Borrower; provided that no such sale shall cause the Corporation to
breach any of its representations or covenants contained in the Tax Matters
Certificate furnished by the Corporation in connection with the issuance of any
series of Tax Exempt Notes.
Student Loans from time to time held in the Surplus Account may also
be purchased at any time with the proceeds of the Corporation's bonds, notes or
other evidences of indebtedness, at a purchase price equal to one hundred
percent (100%) of the Principal Balance of the Student Loans so purchased plus
accrued noncapitalized interest thereon payable by the Eligible Borrower, if
any.
Any money received by the Corporation in connection with a sale of
Financed Student Loans pursuant to the preceding two (2) paragraphs shall be
deposited to the credit of the Surplus Account.
Pending transfers from the Surplus Fund, the moneys therein shall be
invested in Investment Securities as provided in Section 4.11 hereof, and any
earnings on or income from such investments shall be deposited in the Revenue
Fund as provided in Section 4.6 hereof.
Section 4.9. Termination. When no Notes remain Outstanding and no
Other Obligations are Outstanding, the Trustee and any Deposit Agents shall
transfer to the Corporation, or to the order of the Corporation, the Balances in
all Funds and Accounts if, and to the extent that, such Balances are in excess
of amounts needed to pay principal of, premium, if any, and interest on, and any
Carry-Over Amounts (and accrued interest thereon) due and payable with respect
to the Notes, to make all payments to the United States Treasury or otherwise
required
4-32
by Section 4.5 hereof, and to pay the fees, compensation and expenses of the
Trustee and any Authenticating Agent, Note Registrar, Remarketing Agents,
Depositaries, Auction Agents, Broker-Dealers, Deposit Agents and Paying Agents.
To the extent that such Balances are needed to pay such amounts or fees, the
Trustee shall retain such Balances hereunder and pay such amounts or fees to the
Persons to whom such amounts are due and payable as provided hereunder. In the
event that any portion or all of the Balances in the Funds and Accounts payable
to the Corporation pursuant to this Section consist of Investment Securities
which are payable solely to the Trustee and cannot be effectively transferred to
the Corporation, the Trustee shall continue to hold such Investment Securities
under this Indenture on behalf of the Corporation until such time as such
securities can be transferred to the Corporation or amounts payable thereunder
received, whether by acceleration at the option of the holder thereof, at
maturity or otherwise, all at the direction of an Authorized Officer of the
Corporation.
Section 4.10. Pledge. The Notes, including the principal thereof,
premium, if any, and interest thereon and any Carry-Over Amounts (and accrued
interest thereon) with respect thereto, and Other Obligations shall be limited
obligations of the Corporation specifically secured as provided in the Granting
Clauses hereof. Financed Student Loans purchased with the proceeds of the
Corporation's bonds, notes or other obligations as described in Section 4.8
hereof, or resold to a Lender pursuant to its repurchase obligation under a
Student Loan Purchase Agreement, or sold or exchanged for Eligible Loans in
accordance with the provisions of Section 4.2 or Section 4.8 hereof, shall,
contemporaneously with receipt by the Trustee of the purchase price thereof in
freely transferable funds, including any Eligible Loans to be received in
exchange therefor, no longer be pledged to nor serve as security for the
principal of, premium, if any, and interest on and any Carry-Over Amounts (and
accrued interest thereon) with respect to the Notes or any Other Obligations.
The Corporation pledges and agrees with the Beneficiaries that the
Corporation will not limit or alter its powers to fulfill the terms of any
agreements made in this Indenture or in any Notes or in any way impair the
rights and remedies of the Beneficiaries until the Notes, together with interest
thereon, including interest on any unpaid installments of interest, and all
costs and expenses in connection with any action or proceeding by or on behalf
of the Holders and all amounts owing to Other Beneficiaries, are fully met and
discharged.
The Notes, including the principal thereof, premium, if any, and
interest thereon and any Carry-Over Amounts (and accrued interest thereon) with
respect thereto, and any Other Obligations shall be secured hereunder by the
foregoing pledge of the Financed Student Loans, revenues, securities and other
moneys hereby made, and by a lien thereon, subject to the priorities expressly
provided in Section 3.12 or elsewhere herein. The pledge in the Granting Clauses
hereof shall constitute a prior and paramount lien and charge on such Financed
Student Loans, revenues, contract rights, securities and other moneys from time
to
4-33
time held hereunder (subject only to the valid exercise of the constitutional
powers of the United States of America, valid bankruptcy, insolvency,
reorganization, moratorium and other laws affecting creditors' rights, and to
the provisions of this Indenture permitting the application of such Financed
Student Loans, revenues, securities and other moneys for the purposes and on the
terms and conditions hereof), over and ahead of any claims (whether in tort,
contract or otherwise irrespective of whether the parties possessing such claims
have notice of the foregoing pledges or charges), encumbrances or obligations of
any nature hereafter arising or incurred, and over and ahead of all other
indebtedness payable from or secured by such revenues which may hereafter be
created or incurred. The pledge of such Financed Student Loans, revenues,
securities and other moneys made herein and hereby shall be valid and binding
from the time of the delivery of and payment for the first series of Notes
issued hereunder, and such Financed Student Loans, revenues, securities and
other moneys shall thereupon be immediately subject to the lien, pledge and
charge hereof upon receipt thereof by the Corporation or any Lender, Servicer,
Trustee, Paying Agent, Deposit Agent, Remarketing Agent, Depositary, Auction
Agent or Broker-Dealer, or any agent thereof, without any physical delivery or
segregation thereof or further act.
No Beneficiary shall be required to see that the moneys derived from
any Note are applied to the purpose or purposes for which the Note is issued.
The validity of the Notes shall neither be dependent upon nor affected by the
validity or regularity of any proceedings or contracts relating to the Program,
nor the use and application of the proceeds of such Notes.
The pledge of the Financed Student Loans, revenues, securities and
other moneys made hereby includes the pledge of any contract or any evidence of
indebtedness or other rights of the Corporation to receive any of the same,
whether now existing or hereafter coming into existence, and whether now or
hereafter acquired, and the proceeds thereof.
Section 4.11. Investments. Moneys held by the Trustee or any Deposit
Agent for the credit of any Fund or Account shall be invested by the Trustee or
such Deposit Agent, in accordance with the Sections hereof relating to such
Funds and Accounts, as directed by the Corporation, to the fullest extent
practicable and reasonable, in Investment Securities which shall mature or be
redeemable at the option of the holder prior to the respective dates when the
moneys held for the credit of such Fund or Account will be required for the
purposes intended.
Subject to the provisions of Section 5.14 hereof and to the right of
the Corporation to direct the investment of funds hereunder, moneys in any Fund
or Account or any combination of Funds and Accounts shall be continuously
invested and reinvested or deposited and redeposited by the Trustee or any
Deposit Agent in the highest yield Investment Securities reasonably known to the
Trustee or such Deposit Agent, with a view toward maximizing yield (with proper
preservation of principal) and minimizing the instances of uninvested funds. The
Investment
4-34
Securities purchased shall be held by the Trustee or any Deposit Agent and shall
be deemed at all times to be part of such Fund or Account or combination
thereof, and the Trustee or any Deposit Agent shall inform the Corporation of
the details of all such investments. The Trustee or any Deposit Agent shall sell
at the best price obtainable, or present for redemption, any Investment
Securities purchased by it as an investment whenever it shall be necessary to
provide moneys to meet any payment from such Fund or Account. The Trustee may
purchase from or sell to itself or an affiliate, as principal or agent, any
Investment Securities. The Trustee or any Deposit Agent shall advise the
Corporation in writing, on or before the fifth day of each calendar month, of
all investments held for the credit of each Fund or Account in its custody under
the provisions of this Indenture as of the end of the Code; and, to this end,
the Trustee and each Deposit Agent shall comply with all provisions with respect
to investment of moneys in the Funds and Accounts specified in the Tax Matters
Certificate furnished by the Corporation in connection with the issuance of each
series of Tax Exempt Notes.
If any Investment Securities include any "book-entry" securities, the
Trustee and any Deposit Agent shall have such Investment Securities held in the
name of the Trustee or such Deposit Agent at the appropriate Federal Reserve
Bank or other depository, and the Trustee or such Deposit Agent shall take such
other actions as are necessary to maintain a prior perfected security interest
in such "book-entry" Investment Securities in accordance with federal
regulations or applicable law regarding "book-entry" securities.
Section 4.12. Transfer of Investment Securities. Whenever any transfer
is required by this Indenture to be made from any Fund or Account to any other
Fund or Account, the Trustee may use Investment Securities, or allocable
portions thereof, included in the Balance of the former to the extent necessary
to make such transfer, but only to the extent such Investment Securities are
permissible investments for the Fund or Account to which they are to be
transferred. The amount of any such transfer of Investment Securities shall be
the Value of Investment Securities determined with respect thereto as of the
date of transfer.
4-35
ARTICLE FIVE
COVENANTS TO SECURE NOTES; REPRESENTATIONS AND WARRANTIES
Section 5.1. Trustee to Hold Financed Student Loans. The Corporation
shall cause all Financed Student Loans to be endorsed and otherwise conveyed to
the Trustee on behalf of the Corporation in accordance with the provisions of
the applicable Student Loan Purchase Agreement or, in the case of any
origination of Financed Student Loans, shall cause such Student Loans to be
originated in the name of the Trustee. The Trustee shall be the legal owner of
all Financed Student Loans for all purposes of the Higher Education Act and each
Guarantee Program. The Trustee shall so hold such Financed Student Loans in its
capacity as trustee of an express trust created pursuant to this Indenture and,
in such capacity, shall be acting on behalf of the Corporation, as the
beneficial owner of such Student Loans, as well as the Holders of the Notes and
all Other Beneficiaries, as their interests may appear.
Section 5.2. Credit Enhancement Facilities, Demand Purchase Agreements
and Swap Agreements. The Corporation may from time to time enter into or obtain
the benefit of any Credit Enhancement Facility, any Demand Purchase Agreement or
any Swap Agreement with respect to any Class A Notes or Class B Notes of any
series; provided that (i) a Supplemental Indenture is entered into in accordance
with the provisions of Section 8.01(i) hereof, and (ii) any such Credit
Enhancement Facility, Demand Purchase Agreement or Swap Agreement satisfies any
conditions specified in a prior Supplemental Indenture.
No Supplemental Indenture shall authorize the execution of a Swap
Agreement unless, as of the date the Corporation enters into such Swap
Agreement, either the Swap Counterparty or the Person executing a Swap
Counterparty Guarantee relating thereto has outstanding obligations rated by
each Rating Agency not lower than in its third highest Specific Rating Category
(or each Rating Agency has a comparable other rating with respect to such Swap
Counterparty Guarantee, such as a comparable rating of claims paying ability or
deposits) and no such Swap Agreement shall be designated as a Senior Swap
Agreement unless, as of the date the Corporation enters into such Swap
Agreement, the Senior Asset Requirement will be met and, if Unenhanced Notes are
Outstanding, the Trustee shall have received written confirmation from each
Rating Agency that the execution and delivery of the Swap Agreement will not
cause the reduction or withdrawal of any rating or ratings then applicable to
any Unenhanced Notes.
Notwithstanding anything in this Indenture to the contrary, (1) any
Supplemental Indenture authorizing the execution by the Corporation of a Senior
Swap Agreement, Subordinate Swap Agreement, Senior Credit Enhancement Facility,
Subordinate Credit Enhancement Facility, Senior Demand Purchase Agreement or
Subordinate Demand Purchase Agreement may include provisions with respect to the
application and use of all amounts to be paid thereunder, (2) no
5-1
amounts paid under any such Credit Enhancement Facility or Demand Purchase
Agreement shall be part of the Trust Estate except to the extent, if any,
specifically provided in such Supplemental Indenture and no Beneficiaries shall
have any rights with respect to any such amounts so paid except as may be
specifically provided in such Supplemental Indenture, (3) Notes of one or more
series or any portions thereof may be secured by a pledge of any or all amounts
payable pursuant to such Credit Enhancement Facility or Demand Purchase
Agreement, in the manner and to the extent provided in such Supplemental
Indenture, and such Notes may be either Class A Notes or Class B Notes for
purposes hereof, and (4) the Corporation's obligations under any such Credit
Enhancement Facility, Demand Purchase Agreement or Swap Agreement shall be
limited obligations, payable solely from the revenues and assets of the
Corporation pledged therefor under this Indenture.
Section 5.3. Enforcement and Amendment of Guarantee Agreements. So
long as any Notes or Other Obligations are Outstanding and Financed Eligible
Loans are Guaranteed by a Guarantee Agency, the Corporation (a) will, from and
after the date on which the Trustee on its behalf shall have either entered
into, or succeeded to the rights and interests of any Lender under, any
Guarantee Agreement covering Financed Eligible Loans, cause the Trustee to
maintain such Guarantee Agreement and diligently enforce the Trustee's rights
thereunder; (b) will cause the Trustee to enter into such other similar or
supplemental agreements as shall be required to maintain benefits for all
Financed Eligible Loans covered thereby, and (c) will not voluntarily consent to
or permit any rescission of or consent to any amendment to or otherwise take any
action under or in connection with any such Guarantee Agreement or any similar
or supplemental agreement which in any manner will materially adversely affect
the rights of the Holders from time to time of the Notes or Other Beneficiaries
hereunder.
Section 5.4. Enforcement and Amendment of Certificates of Insurance
and Contract of Insurance. So long as any Notes or Other Obligations are
Outstanding, the Corporation (a) will cause the Trustee to maintain all
Certificates of Insurance and the Contract of Insurance and diligently enforce
the Trustee's rights thereunder; (b) will cause the Trustee to enter into such
other similar or supplemental agreements as shall be required to maintain
benefits for all Financed Eligible Loans covered thereby, and (c) will not
voluntarily consent to or permit any rescission of or consent to any amendment
to or otherwise take any action under or in connection with any such
Certificates of Insurance or the Contract of Insurance or any similar or
supplemental agreement which in any manner will materially adversely affect the
rights of any Beneficiaries.
Section 5.5. Acquisition, Collection and Assignment of Student Loans.
The Corporation shall, except as provided in Section 4.8 with regard to the
Surplus Fund, cause the Trustee to originate or acquire only Eligible Loans with
moneys in any of the Funds and shall diligently cause to be collected all
principal and interest payments (subject to any adjustments described in Section
5.6 hereof) on all the
5-2
Financed Student Loans and, subject to the following proviso, all Non-Delivery
Fees and other sums to which the Corporation is entitled pursuant to any Student
Loan Purchase Agreement, and all grants, subsidies, donations, insurance
payments, Special Allowance Payments and all defaulted payments Guaranteed or
Insured by any Guarantee Agency or by the Secretary of Education which relate to
such Financed Student Loans; provided that the Corporation may, in its
discretion, waive its right to receive any portion or all of the Non-Delivery
Fees to which the Corporation is otherwise entitled under the Student Loan
Purchase Agreements, as evidenced by a Corporation Certificate to that effect.
The Corporation shall also make, or cause to be made by Lenders or Servicers,
every effort to perfect the Corporation's, the Trustee's or such Lender's or
Servicer's claims for payment from the Secretary of Education or a Guarantee
Agency, as soon as possible, of all payments related to such Financed Student
Loans. The Corporation will cause the Trustee to assign such Financed Student
Loans for payment of guarantee or insurance benefits within the time required
under applicable law and regulations. The Corporation shall cause all United
States and applicable State statutes, rules and regulations which apply to the
Program and to Financed Student Loans to be complied with.
Section 5.6. Enforcement of Financed Student Loans. The Corporation
shall cause to be diligently enforced, and shall cause to be taken all steps,
actions and proceedings reasonably necessary for the enforcement of, all terms,
covenants and conditions of all Financed Student Loans and agreements in
connection therewith, including the prompt payment of all principal and interest
payments (as such payments may be adjusted to take into account (i) any discount
the Corporation may cause to be made available to borrowers who make payments on
Financed Student Loans through automatic withdrawals, and (ii) any reduction in
the interest payable on Financed Student Loans provided for in any special
program under which such loans were originated) and all other amounts due the
Trustee thereunder. The Corporation shall not permit the release of the
obligations of any borrower under any Financed Student Loan and shall at all
times, to the extent permitted by law, cause to be defended, enforced, preserved
and protected the rights and privileges of the Corporation, the Trustee and the
Beneficiaries under or with respect to each Financed Student Loan and agreement
in connection therewith. The Corporation shall not consent or agree to or permit
any amendment or modification of any Financed Student Loan or agreement in
connection therewith which will in any manner materially adversely affect the
rights or security of the Beneficiaries. Nothing in this Section 5.6 or in
Sections 5.5 and 5.7 hereof shall be construed to prevent the Corporation from
settling a default or curing a delinquency on any Financed Student Loan on such
terms as shall be required by law. Notwithstanding the foregoing, (1) the
Corporation may cause the Trustee to forgive the indebtedness on all or a
portion of the Financed Student Loans or take such other action as may be
provided in the written opinion of Bond Counsel, as provided in Section 4.5(B)
hereof, to the extent necessary to prevent interest on any series of Tax Exempt
Notes from being includable in the gross income of the owners thereof for
federal income tax purposes, and may cause the Trustee to forgive the remaining
indebtedness on
5-3
any Financed Student Loan having a principal balance not in excess of $100 if,
in the reasonable judgment of the Corporation evidenced by a Corporation
Certificate delivered to the Trustee, the cost of collection of the remaining
indebtedness of such Financed Student Loan would exceed such remaining
indebtedness, and (2) the Corporation may amend the terms of a Financed Student
Loan to provide for a different rate of interest thereon to the extent required
by law or, if such Financed Student Loan is a Plus or SLS Loan, to effect a
reissuance of such Plus or SLS Loan at a variable rate.
Section 5.7. Servicing and Other Agreements. The Corporation may
contract with other Persons to assist it in performing its duties under this
Indenture, and any performance of such duties by a Person identified to the
Trustee in a Corporation Certificate shall be deemed to be action taken by the
Corporation. The Corporation may, and prior to or contemporaneously with the
Section 150(d)(3) Transfer shall, enter into a Servicing Agreement providing for
the servicing of the Financed Student Loans and performance of certain of its
other obligations under this Indenture, including, without limitation, those
obligations described in this Section and Sections 5.5, 5.6 and 5.8 hereof.
The Corporation shall cause to be diligently enforced and taken all
reasonable steps, actions and proceedings necessary for the enforcement of all
terms, covenants and conditions of all Servicing Agreements, including the
prompt payment of all principal and interest payments and all other amounts due
the Corporation or the Trustee thereunder, including all grants, subsidies,
donations, insurance payments, Special Allowance Payments and all defaulted
payments Guaranteed and/or Insured by any Guarantee Agency and/or by the
Secretary of Education which relate to any Financed Student Loans. The
Corporation shall not permit the release of the obligations of any Servicer
under any Servicing Agreement and shall at all times, to the extent permitted by
law, cause to be defended, enforced, preserved and protected the rights and
privileges of the Corporation, the Trustee and the Beneficiaries under or with
respect to each Servicing Agreement. The Corporation shall not consent or agree
to or permit any amendment or modification of any Servicing Agreement which will
in any manner materially adversely affect the rights or security of the
Beneficiaries.
Any Servicing Agreement shall require the Servicer to administer and
collect all Financed Student Loans in the manner provided in this Section 5.7
and Section 5.8 hereof, and shall require the Servicer to prepare and furnish to
the Trustee, no later than the twenty-fifth day (or, if such twenty-fifth day is
not a Business Day, the next succeeding Business Day) of each calendar month a
Monthly Servicing Report with respect to the previous calendar month.
Section 5.8. Administration and Collection of Financed Student Loans.
All Financed Student Loans shall be administered and collected either by the
Corporation or by a Servicer selected by the Corporation (and, after the Section
150(d)(3) Transfer, shall be so administered and collected by a Servicer) in a
5-4
competent, diligent and orderly fashion and in accordance with all requirements
of the Higher Education Act, the Secretary of Education, this Indenture, the
Contract of Insurance and each applicable Certificate of Insurance, the Federal
Reimbursement Contract, each Guarantee Program and each Guarantee Agreement.
Section 5.9. Books of Account; Annual Audit. The Corporation shall
cause to be kept and maintained proper books of account relating to the Program
in which full, true and correct entries will be made, in accordance with
generally accepted accounting principles, of all dealings or transactions of or
in relation to the business and affairs of the Corporation, and within one
hundred twenty (120) days after the end of each Fiscal Year shall cause such
books of account to be audited by an Accountant. A copy of each audit report,
annual balance sheet and income and expense statement showing in reasonable
detail the financial condition of the Corporation as at the close of each Fiscal
Year, and summarizing in reasonable detail the income and expenses for such
year, including the transactions relating to the Funds and Accounts, shall be
filed promptly with the Trustee and shall be available for inspection by any
Noteholder or Other Beneficiary.
Section 5.10. Punctual Payments. The Corporation shall duly and
punctually pay, or cause to be paid, the principal of, premium, if any, and
interest on and any Carry-Over Amount (and accrued interest thereon) due and
payable with respect to each and every Note and each Other Obligation from the
revenues and other assets pledged hereunder on the dates and at the places, and
in the manner provided, in the Notes and with respect to each Other Obligation
according to the true intent and meaning thereof, and the Corporation shall
faithfully do and perform and at all times fully observe and keep any and all of
its covenants, undertakings, stipulations and provisions contained in the Notes,
the Other Obligations and in this Indenture.
Section 5.11. Further Assurances. The Corporation shall at any and
all times, insofar as it may be authorized so to do, pass, make, do, execute,
acknowledge and deliver all and every such further resolutions, indentures,
acts, deeds, conveyances, assignments, transfers and assurances as may be
necessary or desirable for the better assuring, conveying, granting, assigning
and confirming any and all of the rights, revenues, securities and other moneys
hereby pledged or charged with or assigned to the payment of the Notes, any Swap
Agreement, Credit Enhancement Facility or Demand Purchase Agreement or intended
so to be, or which the Corporation may hereafter become bound to pledge or
charge or assign.
Section 5.12. Protection of Security; Power To Issue Notes and Pledge
Revenues and Other Funds. The Corporation is duly authorized under all
applicable law to create and issue the Notes, to enter into this Indenture, to
enter into Other Obligations and to pledge the revenues and other moneys,
Financed Student Loans, securities, properties, rights, interests and evidences
of indebtedness purported to be pledged by this Indenture in the manner and to
the extent provided in this Indenture. The revenues and other moneys,
securities, evidences of
5-5
indebtedness and properties so pledged are and will be free and clear of any
pledge, lien, charge or encumbrance thereon or with respect thereto prior to, or
of equal rank with, the pledge created by this Indenture, except as otherwise
expressly provided herein, and all action on the part of the Corporation to that
end has been duly and validly taken. The Notes and the provisions of this
Indenture, each Supplemental Indenture and each Other Obligation are and will be
valid and legally enforceable obligations of the Corporation in accordance with
their terms and the terms of this Indenture and each Supplemental Indenture. The
Corporation shall at all times, to the extent permitted by law, defend, preserve
and protect the pledge of the revenues and other moneys, Financed Student Loans,
securities, properties, rights, interests and evidences of indebtedness pledged
under this Indenture and each Supplemental Indenture and all the rights of the
Beneficiaries hereto against all claims and demands of all Persons whomsoever.
The pledge of the revenues and other moneys, Financed Student Loans,
securities, properties, rights, interests and evidences of indebtedness made
hereby includes the pledge of any contract or any evidence of indebtedness or
other rights of the Corporation to receive any of the same, whether now existing
or hereafter coming into existence, and whether now or hereafter acquired, and
the proceeds thereof.
In consideration of the purchase and acceptance of the Notes by those
who shall hold the same from time to time and the execution and delivery by
Other Beneficiaries of any Other Obligations, the provisions of this Indenture
shall be a part of the contract of the Corporation with the Beneficiaries and
shall be deemed to be and shall constitute a contract between the Corporation,
the Trustee and the Beneficiaries.
Section 5.13. No Encumbrances. The Corporation will not create, or
permit the creation of, any pledge, lien, charge or encumbrance upon the
Financed Student Loans or the revenues and other moneys, securities, properties,
rights, interests and evidences of indebtedness pledged under this Indenture,
except only as to a lien subordinate to the lien of this Indenture created by
any other indenture authorizing the issuance of bonds, notes or other evidences
of indebtedness of the Corporation the proceeds of which have been or will be
used to refund or otherwise retire all or a portion of the Outstanding Notes
(but only upon receipt by the Trustee of an opinion of Counsel that the creation
of such lien will not be prejudicial to the Trustee or the Holders of any
Outstanding Notes or any Other Beneficiary) or as otherwise provided in or
permitted by this Indenture. The Corporation will not issue any bonds or other
evidences of indebtedness, other than the Notes as permitted by this Indenture
and other than Swap Agreements, Credit Enhancement Facilities and Demand
Purchase Agreements relating to Notes as permitted by this Indenture, secured by
a pledge of the revenues and other moneys, securities, properties, rights,
interests
5-6
and evidences of indebtedness herein pledged or held aside by the Corporation or
by a fiduciary under this Indenture, creating a lien or charge on such revenues
and other moneys, securities, properties, rights, interests and evidences of
indebtedness equal or superior to the lien of this Indenture; provided that
nothing in this Indenture shall prevent the Corporation from issuing obligations
secured by assets and revenues of the Corporation other than the revenues and
other moneys, securities, properties, rights, interests and evidences of
indebtedness pledged in this Indenture.
Section 5.14. Tax Covenant. The Corporation recognizes that the
Holders of Tax Exempt Notes from time to time will have accepted them on, and
paid therefor a price which reflects, the understanding that interest on such
Notes is excludable from the gross income of the owner thereof for federal
income tax purposes under laws in force at the time such Notes shall have been
delivered. In this connection the Corporation covenants that (a) it will not
take or omit to take any action which may render the interest on any of the Tax
Exempt Notes includable in gross income for purposes of federal income taxation,
(b) it will use the proceeds of the Notes and any other funds of the Corporation
in such a manner that the use thereof would not cause the Tax Exempt Notes to be
"arbitrage bonds" under Section 148 of the Code and the Treasury Regulations
pertaining thereto, and (c) it will not permit at any time any proceeds of the
Notes or any other funds of the Corporation to be used, directly or indirectly,
in a manner which would result in the inclusion of the interest on any Tax
Exempt Note in gross income for purposes of federal income taxation otherwise
afforded by the Code (including, without limitation, by reason of the violation
of any limitation imposed by Sections 141 through 150 of the Code). In
particular, the Corporation shall not use, or permit the use of, any proceeds of
Tax Exempt Notes or any other moneys attributable to Tax Exempt Notes in the
Funds and Accounts unless, after giving effect to such use, as to each series of
Tax Exempt Notes, either (i) at least ninety percent (90%) of the net proceeds
of such series will, at the time of such use, have been used directly or
indirectly to make or finance student loans described in Section 144(b)(1)(A) of
the Code, or (ii) at least ninety-five percent (95%) of the net proceeds of such
series will, at the time of such payment, have been used directly or indirectly
to make or finance student loans described in Section 144(b)(1)(B) of the Code,
as applicable, all within the meaning of such Section 144(b) of the Code. The
foregoing covenants shall remain in full force and effect notwithstanding the
defeasance of the Tax Exempt Notes of any series pursuant to Article Eleven
hereof and notwithstanding any other provision hereof. The president, the
secretary and other officers and employees of the Corporation shall execute and
deliver from time to time, on behalf of the Corporation, such certificates,
instruments and documents as shall be deemed necessary or advisable to evidence
compliance by the Corporation with said Section 148 and the regulations
thereunder with respect to the use of the proceeds of such Notes. Such
certificates, instruments and documents may contain such stipulations as shall
be necessary or advisable in connection with the stated purpose of this Section
5.14 and the foregoing provisions hereof, and the Corporation and Trustee hereby
covenant and agree to comply with the provisions of any such stipulation
throughout the term of the Tax Exempt Notes of such series.
5-7
Section 5.15. Limitation on Administrative Expenses and Note Fees;
Reports. The Corporation covenants and agrees that the Administrative Expenses
and Note Fees will not, in any Fiscal Year, exceed those that are reasonable and
necessary in light of all circumstances then existing and will not, in any
event, be in such amounts as will materially adversely affect the ability of the
Corporation to pay or perform, as the case may be, all of its obligations under
this Indenture or the security of any Beneficiaries.
Section 5.16. Continuing Existence; Merger and Consolidation. The
Corporation will maintain its existence as a corporation and will not dispose of
all or substantially all of its assets (by sale, lease or otherwise), except as
otherwise specifically authorized under the last paragraph of this Section 5.16
or elsewhere in this Indenture or under comparable provisions of any future
indenture of the Corporation with respect to subsequent issues of bonds, notes
or other obligations of the Corporation, or consolidate with or merge into
another corporation or permit any other corporation to consolidate with or merge
into it unless:
A. the surviving, resulting or transferee corporation, as the case
may be, shall be organized under the laws of the United States or one of
the states thereof;
B. at least thirty (30) days before any merger, consolidation or
transfer of assets becomes effective, the Corporation shall give the
Trustee written notice of the proposed transaction;
C. immediately after giving effect to any merger, consolidation or
transfer of assets, no Event of Default shall have occurred and be
continuing;
D. the Rating Agency Condition shall have been satisfied with respect
to any merger, consolidation or transfer of assets;
E. prior to any merger, consolidation or transfer of assets, an
opinion of Bond Counsel shall be delivered to the Trustee stating that such
merger, consolidation or transfer of assets will not cause interest on any
series of Tax Exempt Notes to become includable in the gross income for
federal income tax purposes of recipients thereof; and
F. prior to or concurrently with any merger, consolidation or
transfer of assets, (1) any action as is necessary to maintain the lien and
security interest created in favor of the Trustee by this Indenture shall
have been taken, (2) the surviving, resulting or transferee corporation, as
the case may be, if other than the Corporation, shall deliver to the
Trustee an instrument assuming all of the obligations of the Corporation
under this Indenture, any Notes, any Swap Agreement, any Credit Enhancement
Facility, any Demand Purchase Agreement, any Remarketing Agreement, any
Depositary Agreement, any Auction Agent Agreement, the Student Loan
Purchase
5-8
Agreements and any Servicing Agreement, together with the consent of the
other parties, if any, to each such instrument to such assumption, and (3)
the Corporation shall have delivered to the Trustee and each Rating Agency
a Corporation Certificate and an opinion of Counsel (which shall describe
the actions taken as required by clause (1) of this paragraph or that no
such action need be taken) each stating that all conditions precedent
herein provided for relating to such merger, consolidation or transfer of
assets have been compiled with (including any filing required by the
Exchange Act).
Anything elsewhere in this Section 5.16 to the contrary
notwithstanding, the Corporation and the Trustee are authorized to take all such
action as is necessary to consummate the Section 150(d)(3) Transfer, which
Section 150(d)(3) Transfer is hereby expressly authorized. Upon completion of
the Section 150(d)(3) Transfer, the predecessor Corporation shall be released
from all liability under this Indenture, and the Trustee is authorized to
execute an instrument to that effect.
Section 5.17. Fidelity Bonds. The Corporation shall obtain and
maintain in force fidelity bonds upon all personnel insuring against any loss or
damage which the Trustee or the Corporation might suffer as a consequence of any
act of such personnel in an amount required by any supervising agency of the
federal or any State government, or, if not so required, in such reasonable
amount as may be determined from time to time by the Corporation.
Section 5.18. Amendment of Student Loan Purchase Agreements. The
Corporation shall notify the Trustee in writing of any proposed amendments to
the Student Loan Purchase Agreements. No such amendment shall become effective
unless and until the Trustee consents in writing thereto, which consent shall
not be given unless the Trustee receives an opinion of Counsel that such
amendment is required by the Higher Education Act or is not to the prejudice of
the Holders of the Notes or Other Beneficiaries.
Section 5.19. Enforcement and Amendment of Guarantee Agreements,
Certificates of Insurance and Contract of Insurance. So long as any Notes are
Outstanding or other obligations to Other Beneficiaries are Outstanding and
Financed Eligible Loans are Guaranteed by a Guarantee Agency, the Trustee (a)
will maintain the Guarantee Agreements and will diligently enforce its rights
thereunder; (b) will enter into such other similar or supplemental agreements as
shall be required to maintain the benefits thereof for all Financed Eligible
Loans; and (c) will not voluntarily consent to or permit any rescission of or
consent to any amendment to or otherwise take any action under or in connection
with the Guarantee Agreements or any similar or supplemental agreements which in
any manner will adversely affect the rights of the Holders from time to time of
the Notes or Other Beneficiaries.
5-9
So long as any Notes are Outstanding or Other Obligations are
Outstanding, the Trustee (a) will maintain all Certificates of Insurance and the
Contract of Insurance and diligently enforce its rights thereunder; (b) will
enter into such other similar or supplemental agreements as shall be required to
maintain the benefits thereof for all Financed Eligible Loans; (c) will not
voluntarily consent to or permit any rescission of or consent to any amendment
to or otherwise take any action under or in connection with any such
Certificates of Insurance or the Contract of Insurance or any similar or
supplemental agreement which in any manner will adversely affect the rights of
the Holders from time to time of the Notes; and (d) will maintain its status as
an "eligible lender" under the Higher Education Act.
Section 5.20. Amendment of Remarketing Agreements and Depositary
Agreements. The Corporation shall notify the Trustee and any related Credit
Facility Provider in writing of any proposed amendments to any Remarketing
Agreement or Depositary Agreement. No such amendment shall become effective
unless and until (1) the Trustee consents in writing thereto, which consent
shall not be given unless the Trustee receives an opinion of Counsel that such
amendment is required by a Credit Enhancement Facility, a Demand Purchase
Agreement or this Indenture or is not to the material prejudice of the Holders
of the Notes, and (2) any related Credit Facility Provider consents in writing
thereto, which consent shall not be unreasonably withheld, provided that no
consent of the Credit Facility Provider shall be required if the Credit Facility
Provider receives an opinion of Counsel that such amendment is required by this
Indenture.
Section 5.21. Additional Covenants of the Corporation After Section
150(d)(3) Transfer. The Corporation, after the Section 150(d)(3) Transfer,
agrees and covenants for the benefit of the Trustee, each Noteholder and each
Other Beneficiary, during the term of this Indenture, and to the fullest extent
permitted by applicable law, that:
(a) No Other Business. It shall not engage in any business other than
financing, originating, purchasing, owning, selling and managing Student
Loans in the manner contemplated by its certificate of incorporation and
this Indenture and activities incidental thereto.
(b) No Borrowing. It shall not issue, incur, assume, guarantee or
otherwise become liable, directly or indirectly, for any indebtedness
except for (i) the Notes and (ii) any Other Obligations or other
indebtedness arising under this Indenture or otherwise permitted by its
certificate of incorporation. The proceeds of the Notes shall be used
exclusively to fund the origination or purchase of Student Loans and for
such other purposes as are specified in this Indenture.
(c) Guarantees, Loans, Advances and Other Liabilities. Except as
contemplated by its certificate of incorporation and this Indenture, it
shall not
5-10
make any loan or advance or credit to, or guarantee (directly or
indirectly or by an instrument having the effect of assuming another's
payment or performance on any obligation or capability of so doing or
otherwise), endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations, stocks or dividends of, or
own, purchase, repurchase or acquire (or agree contingently to do so) any
stock, obligations, assets or securities of, any other interest in, or make
any capital contribution to, any other Person.
(d) Restricted Payments. Except as permitted by its certificate of
incorporation and this Indenture, it shall not, directly or indirectly,
(i) make any distribution (by reduction of capital or otherwise), whether
in cash, property, securities or a combination thereof, with respect to any
ownership or equity interest or security in or of the Corporation,
(ii) redeem, purchase, retire or otherwise acquire for value any such
ownership or equity interest or security or (iii) set aside or otherwise
segregate any amounts for any such purpose. The Corporation will not,
directly or indirectly, make payments to or distributions from any of the
Funds or Accounts except in accordance with this Indenture.
(e) Non-petition. It shall not, for any reason, institute proceedings
for itself to be adjudicated a bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against itself, or file
a petition seeking or consenting to reorganization or relief under any
applicable Federal or state law relating to the bankruptcy of itself, or
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of itself or a substantial part of
its assets or any part of the Trust Estate or cause or permit itself to
make any assignment for the benefit of creditors, or admit in writing its
inability to pay its debts generally as they become due, or declare or
effect a moratorium on its debt or take any action in furtherance of any
such action.
(f) Other Parties. It shall obtain from each counterparty to each
agreement entered into on or after the Section 150(d)(3) Transfer to which
it is a party, an agreement by each such counterparty that such
counterparty shall not institute against, or join any other Person in
instituting against, it, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other similar proceedings under
the laws of the United States or any state of the United States.
(g) Separate Business. It will:
(i) (A) maintain and prepare financial reports, financial
statements, books and records and bank accounts separate from those of
its Affiliates and any other person or entity and (B) not permit any
5-11
Affiliate or any other person or entity independent access to its
bank accounts;
(ii) not commingle its funds and other assets with those of any
Affiliate, any guarantor of any of the obligations of the Corporation
(each, a "Guarantor"), any Affiliate of any Guarantor or any other
person or entity (other than any such commingling which might result
from the performance of the Servicer's duties in accordance with any
Servicing Agreement);
(iii) conduct its own business in its own name and will hold all
of its assets in its own name;
(iv) remain solvent and pay its debts and liabilities (including
employment and overhead expenses) from its assets as the same become
due;
(v) do all things necessary to observe corporate formalities, and
preserve its existence as a single-purpose, bankruptcy-remote entity
in accordance with the standards of the Rating Agencies providing
ratings on the Notes, as such standards are in effect on the date of
issuance of the Notes;
(vi) enter into transactions with Affiliates only if each such
transaction is commercially reasonable and on substantially similar
terms as a transaction that would be entered into on an arm's length
basis with a person or entity other than an Affiliate of the
Corporation;
(vii) pay the salaries of its own employees from its own funds
and maintain a sufficient number of employees in light of its
contemplated business operations;
(viii) compensate each of its consultants and agents from its own
funds for services provided to it and pay from its own assets all
obligations of any kind incurred;
(ix) not (i) acquire obligations or securities of any Affiliate
or any of the stockholders of the Corporation or (ii) buy or hold any
evidence of indebtedness issued by any other person or entity, other
than cash, Investment Securities, investment-grade securities and
Student Loans;
(x) allocate fairly and reasonably and pay from its own funds the
cost of (i) any overhead expenses (including paying for any office
space) shared with any Affiliate of the Corporation and (ii) any
services
5-12
(such as asset management, legal and accounting) that are provided
jointly to the Corporation and one or more of its Affiliates;
(xi) maintain and utilize separate stationery, invoices and
checks bearing its own name and allocate separate office space (which
may be a separately identified area in office space shared with one or
more Affiliates of the Corporation) and maintain a separate sign in
the office directory of the building in which the Corporation
maintains its principal place of business;
(xii) not make any loans or advances to, or pledge its assets for
the benefit of, any other person or entity, including, without
limitation, any Affiliate or Guarantor or any Affiliate of any
Guarantor (except as contemplated by its certificate of incorporation
and this Indenture);
(xiii) be, and at all times will hold itself out to the public
as, a legal entity separate and distinct from any other person or
entity;
(xiv) in the event that any authorized officer knows of any
misunderstanding regarding the separate identity of the Corporation,
correct such misunderstanding;
(xv) not identify itself or any of its Affiliates as a division
or part of any other entity; and
(xvi) maintain adequate capital for the normal obligations
reasonably foreseeable in a business of its size and character and in
light of its contemplated business operations.
Section 5.22. Representations and Warranties of the Corporation. By
execution of this Agreement, the Corporation makes the following representations
and warranties:
(a) Organization and Good Standing. It has been duly organized and is
validly existing as a corporation in good standing under the laws of the
State of South Dakota, with power and authority to own its properties and
to conduct its business as such properties are currently owned and as such
business is currently conducted and is proposed to be conducted pursuant to
this Indenture.
(b) Due Qualification. It is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary
licenses and approvals, in all jurisdictions in which the ownership or
lease of its property, the conduct of its business and the performance of
its obligations under this Indenture, the Notes and each Other Obligation
requires such qualification.
5-13
(c) Power and Authority. It has the power and authority to execute
and deliver this Indenture and to perform its obligations pursuant thereto;
and the execution, delivery and performance of this Indenture, the Notes
and each Other Obligation have been duly authorized by all necessary
corporate action.
(d) No Consent Required. No consent, license, approval or
authorization of, or registration or declaration with, any Person or any
governmental authority, bureau or agency is required to be obtained by the
Corporation in connection with the execution, delivery or performance of
this Indenture, the Notes or any Other Obligation, except for such as have
been obtained, effected or made.
(e) No Violation. The consummation of the transactions contemplated
by this Indenture, the Notes and each Other Obligation and the fulfillment
of its obligations under this Indenture, the Notes and each Other
Obligation will not conflict with, result in any breach of any of the terms
and provisions of or constitute (with or without notice, lapse of time or
both) a default under, its articles or certificate of incorporation or by-
laws, or any indenture, agreement, mortgage, deed of trust or other
instrument to which it is a party or by which it is bound, or result in the
creation or imposition of any lien upon any of its properties pursuant to
the terms of any such indenture, agreement, mortgage, deed of trust or
other instrument, or violate any law, order, rule or regulation applicable
to it of any court or of any Federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over it or any of its properties.
(f) No Proceedings. There are no proceedings or investigations
pending or, to its knowledge, threatened against it before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over it or its properties (A) asserting
the invalidity of this Indenture, any Note or any Other Obligation,
(B) seeking to prevent the issuance of the Notes or the consummation of any
of the transactions contemplated by this Indenture, any Note or any Other
Obligation, (C) seeking any determination or ruling that might materially
and adversely affect its performance of its obligations under, or the
validity or enforceability of, this Indenture, any Note or any Other
Obligation, or (D) seeking to adversely affect the Federal income tax or
other Federal, state or local tax attributes of any Note.
(g) Place of Business. The principal executive offices of the
Corporation are in Aberdeen, South Dakota, and the offices where the
Corporation keeps its records concerning the Financed Student Loans and
related documents are in Aberdeen, South Dakota.
5-14
(h) Not an Investment Company. The Corporation is not an "investment
company" within the meaning of the Investment Company Act of 1940, as
amended, or is exempt from all provisions of such Act.
(i) Binding Obligations. This Indenture, the Notes and each Other
Obligation constitutes the legal, valid and binding obligation of the
Corporation, enforceable against the Corporation in accordance with its
terms, except (A) as such enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect, affecting the enforcement of creditors' rights
in general, and (B) as such enforceability may be limited by general
principles of equity (whether considered in a suit at law or in equity).
Section 5.23. Trustee to Furnish Monthly Servicing Report. The
Trustee shall distribute to each Noteholder (and to each Person requesting a
copy thereof that is the beneficial owner of a Note, as evidenced to the
satisfaction of the Trustee, at such address as such beneficial owner shall
specify in writing to the Trustee) a copy of each Monthly Servicing Report
within two (2) Business Days after receipt thereof.
Section 5.24. Use of Trustee Eligible Lender Number. The Trustee
covenants and agrees not to hold any other student loans under the federal
eligible lender number under which it holds any Financed Student Loans without
(1) the express written consent of the Corporation and SLFC, and (2) having
caused the beneficial owner of any such student loans (and any other appropriate
Persons) to have entered into an agreement with the Corporation and the Trustee,
whereby the Corporation and such other beneficial owner covenant to indemnify
each other in respect of federal interest subsidies, Special Allowance Payments,
Insurance payments, Guarantee payments or any other payments by the Secretary of
Education or a Guarantee Agency (a) received by the Trustee on their behalf, (b)
later determined by the Secretary of Education or a Guarantee Agency to have
been incorrectly or inappropriately paid to the Trustee, and (c) for which the
Secretary of Education or a Guarantee Agency reimburses itself, in whole or in
part, by withholding payments to the Trustee, or otherwise seeks reimbursement
from the Trustee, with respect to student loans held by the Trustee on behalf of
the other party.
5-15
ARTICLE SIX
DEFAULTS AND REMEDIES
Section 6.1. Events of Default. If any of the following events
occur, it is hereby defined as and declared to be and to constitute an Event of
Default, whatever the reason therefor and whether voluntary or involuntary or
effected by operation of law:
(A) default in the due and punctual payment of any interest on any
Class A Note; or
(B) default in the due and punctual payment of the principal of, or
premium, if any, on, any Class A Note, whether at the Stated Maturity
thereof, at the date fixed for redemption thereof (including, but not
limited to, Sinking Fund Payment Dates) or otherwise upon the maturity
thereof; or
(C) default by the Corporation in its obligation to purchase any
Class A Note on a Purchase Date or Mandatory Tender Date therefor; or
(D) default in the due and punctual payment of any amount owed by the
Corporation to any Other Senior Beneficiary under a Senior Swap Agreement,
Senior Credit Enhancement Facility or Senior Demand Purchase Agreement; or
(E) if no Senior Obligations are Outstanding, default in the due and
punctual payment of any interest on any Class B Note; or
(F) if no Senior Obligations are Outstanding, default in the due and
punctual payment of the principal of, or premium, if any, on, any Class B
Note, whether at the Stated Maturity thereof, at the date fixed for
redemption thereof (including, but not limited to, Sinking Fund Payment
Dates) or otherwise upon the maturity thereof; or
(G) if no Senior Obligations are Outstanding, default by the
Corporation in its obligation to purchase any Class B Note on a Purchase
Date or Mandatory Tender Date therefor; or
(H) if no Senior Obligations are Outstanding, default in the due and
punctual payment of any amount owed by the Corporation to any Other
Subordinate Beneficiary under a Subordinate Swap Agreement, Subordinate
Credit Enhancement Facility or Subordinate Demand Purchase Agreement; or
(I) if no Senior Obligations or Subordinate Obligations are
Outstanding, default in the due and punctual payment of any interest on any
Class C Note; or
6-1
(J) if no Senior Obligations or Subordinate Obligations are
Outstanding, default in the due and punctual payment of the principal of,
or premium, if any, on, any Class C Note, whether at the Stated Maturity
thereof, at the date fixed for redemption thereof (including, but not
limited to, Sinking Fund Payment Dates) or otherwise upon the maturity
thereof; or
(K) default in the performance of any of the Corporation's
obligations with respect to the transmittal of moneys to be credited to the
Revenue Fund, the Rebate Fund, the Acquisition Fund or the Note Fund under
the provisions hereof and such default shall have continued for a period of
thirty (30) days; or
(L) default in the performance or observance of any other of the
covenants, agreements or conditions on the part of the Corporation in this
Indenture or in the Notes contained, and such default shall have continued
for a period of thirty (30) days after written notice thereof, specifying
such default, shall have been given by the Trustee to the Corporation,
which may give such notice in its discretion and shall give such notice at
the written request of the Acting Beneficiaries Upon Default, or by the
Holders of not less than ten percent (10%) in aggregate Principal Amount of
the Outstanding Notes to the Corporation and the Trustee; provided that,
except with respect to the Corporation's covenants contained in Section
5.14 hereof, if the default is such that it can be corrected, but not
within such thirty (30) days, it shall not constitute an Event of Default
if corrective action is instituted by the Corporation within such thirty
(30) days and is diligently pursued until the default is corrected; or
(M) if the Corporation shall
(1) admit in writing its inability to pay its debts generally as
they become due; or
(2) consent to the appointment of a custodian (as that term is
defined in the federal Bankruptcy Code) for or assignment to a
custodian of the whole or any substantial part of the Corporation's
property, or fail to stay, set aside or vacate within ninety (90) days
from the date of entry thereof any order or decree entered by a court
of competent jurisdiction ordering such appointment or assignment; or
(3) commence any proceeding or file a petition under the
provisions of the federal Bankruptcy Code for liquidation,
reorganization or adjustment of debts, or under any insolvency law or
other statute or law providing for the modification or adjustment of
the rights of creditors or fail to stay, set aside or vacate within
ninety (90) days from the date of entry thereof any order or decree
entered by a court of competent jurisdiction pursuant to an
involuntary proceeding,
6-2
whether under federal or state law, providing for liquidation or
reorganization of the Corporation or modification or adjustment of the
rights of creditors.
Section 6.2. Acceleration. (A) (i) Whenever any Event of Default
described in subsection (A), (B), (C), (D), (E), (F), (G), (H), (I), (J), (K) or
(M) of Section 6.1 shall have occurred and be continuing, the Trustee may (and
upon the written request of the Acting Beneficiaries Upon Default, the Trustee
shall), by notice in writing delivered to the Corporation, declare the principal
of and interest accrued on all Notes then Outstanding due and payable. A copy
of such notice shall also be provided to any Depositary, any Remarketing Agent,
any Auction Agent and any Broker-Dealer.
(ii) Whenever any Event of Default described in subsection (L) of
Section 6.1 shall have occurred and be continuing, (1) the Trustee may, by
notice in writing delivered to the Corporation, declare the principal of and
interest accrued on all Notes then Outstanding due and payable; and (2) the
Trustee shall, upon the written request of the Acting Beneficiaries Upon
Default, by notice in writing delivered to the Corporation, declare the
principal of and accrued interest on all Notes then Outstanding due and payable.
A copy of such notice shall also be provided to any Depositary, any Remarketing
Agent, any Auction Agent and any Broker-Dealer.
(B) In the event that the Trustee shall declare the principal of and
interest accrued on all Notes then Outstanding due and payable in accordance
with subsection (A) of this Section 6.2, such principal and interest shall
become immediately due and payable on the date of declaration. At any time
after such a declaration of acceleration has been made, but before a judgment or
decree for payment of the money due has been obtained by the Trustee, the Acting
Beneficiaries Upon Default may, by written notice to the Corporation and the
Trustee, rescind and annul such declaration and its consequences if:
(1) There has been paid to or deposited with the Trustee by or for
the account of the Corporation, or provision satisfactory to the Trustee
has been made for the payment of, a sum sufficient to pay:
(a) if Senior Obligations are Outstanding:
(i) all overdue installments of interest on all Class A
Notes;
(ii) the principal of (and premium, if any, on) any Class
A Notes which have become due otherwise than by such declaration
of acceleration, together with interest thereon at the rate or
rates borne by such Class A Notes;
6-3
(iii) to the extent that payment of such interest is
lawful, interest upon overdue installments of interest on the
Class A Notes at the rate or rates borne by such Class A Notes;
(iv) all Other Senior Obligations which have become due
other than as a direct result of such declaration of
acceleration;
(v) all other sums required to be paid to satisfy the
Corporation's obligations with respect to the transmittal of
moneys to be credited to the Revenue Fund, the Rebate Fund, the
Acquisition Fund and the Interest Account under the provisions of
this Indenture; and
(vi) all sums paid or advanced by the Trustee under this
Indenture and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel
and any Paying Agents, Deposit Agents, Remarketing Agents,
Depositaries, Auction Agents and Broker-Dealers; or
(b) if no Senior Obligations are Outstanding but Subordinate
Obligations are Outstanding:
(i) all overdue installments of interest on all Class B
Notes;
(ii) the principal of (and premium, if any, on) any Class
B Notes which have become due other than by such declaration of
acceleration, together with interest thereon at the rate or rates
borne by such Class B Notes;
(iii) to the extent that payment of such interest is
lawful, interest upon overdue installments of interest on the
Class B Notes at the rate or rates borne by such Class B Notes;
(iv) all Other Subordinate Obligations which have become
due otherwise as a direct result of such declaration of
acceleration;
(v) all other sums required to be paid to satisfy the
Corporation's obligations with respect to the transmittal of
moneys to be credited to the Revenue Fund, the Rebate Fund, the
Acquisition Fund and the Interest Account under the provisions of
this Indenture; and
(vi) all sums paid or advanced by the Trustee under this
Indenture and the reasonable compensation, expenses,
6-4
disbursements and advances of the Trustee, its agents and counsel
and any Paying Agents, Deposit Agents, Remarketing Agents,
Depositaries, Auction Agents and Broker-Dealers; or
(c) if no Senior Obligations or Subordinate Obligations are
Outstanding:
(i) all overdue installments of interest on all Class C
Notes and all overdue sinking fund installments for the
retirement of Class C Term Notes;
(ii) the principal of (and premium, if any, on) any Class
C Notes which have become due otherwise than by such declaration
of acceleration and interest thereon at the rate or rates borne
by such Class C Notes;
(iii) to the extent that payment of such interest is
lawful, interest upon overdue installments of interest on the
Class C Notes at the rate or rates borne by such Class C Notes;
(iv) all other sums required to be paid to satisfy the
Corporation's obligations with respect to the transmittal of
moneys to be credited to the Revenue Fund, the Rebate Fund and
the Acquisition Fund under the provisions of this Indenture; and
(v) all sums paid or advanced by the Trustee under this
Indenture and the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel
and any Paying Agents, Deposit Agents, Remarketing Agents,
Depositaries, Auction Agents and Broker-Dealers.
(2) All Events of Default, other than the non-payment of the
principal of Notes or Other Obligations which have become due solely by, or
as a direct result of, such declaration of acceleration, have been cured or
waived as provided in Section 6.13 hereof.
No such rescission and annulment shall affect any subsequent default or impair
any right consequent thereon.
Section 6.3. Other Remedies; Rights of Beneficiaries. If an Event of
Default has occurred and is continuing, the Trustee may (a) institute judicial
proceedings in its own name and as or on behalf of a trustee of an express trust
for the collection of all amounts then payable on the Notes and any Other
Obligations or under this Indenture with respect thereto, whether by declaration
or otherwise, enforce any judgment obtained, and collect from the Corporation
and any other
6-5
obligor upon such Notes and Other Obligations moneys adjudged due, and (b)
pursue any other available remedy by suit at law or in equity to enforce the
covenants of the Corporation herein, including, without limitation, any remedy
of a secured party under the South Dakota Uniform Commercial Code, foreclosure
and mandamus, and may pursue such appropriate judicial proceedings as the
Trustee shall deem most effective to protect and enforce, or aid in the
protection and enforcement of, the covenants and agreements herein.
If an Event of Default shall have occurred and is continuing, and if
it shall have been requested so to do by the Holders of not less than twenty-
five percent (25%) in aggregate Principal Amount of all Notes then Outstanding
or any Other Beneficiary and shall have been indemnified as provided in Section
7.1 hereof, the Trustee shall be obliged to exercise such one or more of the
rights and powers conferred by this Section 6.3 as the Trustee, being advised by
its Counsel, shall deem most expedient in the interests of the Beneficiaries;
provided, however, that the Trustee shall have the right to decline to comply
with any such request if the Trustee shall be advised by Counsel that the action
so requested may not lawfully be taken or if the Trustee receives, before
exercising such right or power, contrary instructions from the Holders of not
less than a majority in aggregate Principal Amount of the Notes then Outstanding
or from any Other Beneficiary.
Notwithstanding any other provisions of this Article Six, if an "Event
of Default" (as defined therein) occurs under a Swap Agreement, a Credit
Enhancement Facility or a Demand Purchase Agreement and, as a result, the Other
Beneficiary that is a party thereto is entitled to exercise one or more remedies
thereunder, such Other Beneficiary may exercise such remedies, including,
without limitation, the termination of such agreement, as provided therein, in
its own discretion; provided that the exercise of any such remedy shall not
adversely affect the legal ability of the Trustee or Acting Beneficiaries Upon
Default to exercise any remedy available hereunder.
No remedy by the terms of this Indenture conferred upon or reserved to
the Trustee or to the Beneficiaries is intended to be exclusive of any other
remedy, but each and every such remedy shall be cumulative and shall be in
addition to any other remedy given to the Trustee or to the Beneficiaries
hereunder or now or hereafter existing at law or in equity or by statute. The
assertion or employment of any right or remedy hereunder shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
No delay or omission to exercise any right or power accruing upon any
Event of Default shall impair any such right or power or shall be construed to
be a waiver of any such Event of Default or acquiescence therein; and every such
right and power may be exercised from time to time and as often as may be deemed
expedient by the Trustee or the Acting Beneficiaries Upon Default, as the case
may be.
6-6
Section 6.4. Direction of Proceedings by Acting Beneficiaries Upon
Default. The Acting Beneficiaries Upon Default shall have the right, at any
time, by an instrument or instruments in writing executed and delivered to the
Trustee, to direct the method and place of conducting all proceedings to be
taken in connection with the enforcement of the terms and conditions of this
Indenture; provided that (a) such direction shall not be otherwise than in
accordance with the provisions of law and of this Indenture; (b) the Trustee
shall not determine that the action so directed would be unjustly prejudicial to
the Holders of Notes or Other Beneficiaries not taking part in such direction,
other than by effect of the subordination of any of their interests hereunder;
and (c) the Trustee may take any other action deemed proper by the Trustee which
is not inconsistent with such direction.
Section 6.5. Waiver of Stay or Extension Laws. To the extent that
such rights may lawfully be waived, neither the Corporation nor anyone claiming
through it or under it shall or will set up, claim, or seek to take advantage of
any stay or extension laws now or hereafter in force, which may affect the
covenants or agreements contained in this Indenture, or in the Notes, and the
Corporation, for itself and all who may claim through or under it, hereby
waives, to the extent that it lawfully may do so, the benefit of all such laws.
Section 6.6. Application of Moneys. All moneys received by the
Trustee pursuant to any right given or action taken under the provisions of this
Article Six shall, after, except as otherwise provided in a Supplemental
Indenture, payment of the cost and expenses of the proceedings resulting in the
collection of such moneys and of the expenses, liabilities and advances incurred
or made by the Trustee with respect thereto (provided that any moneys or
Investment Securities held pursuant to Section 11.1 hereof with respect to Notes
no longer deemed Outstanding hereunder shall not be available for, nor be
applied to, the payment of any such costs, expenses, liabilities or advances),
be applied as follows:
(A) Unless the principal of all the Outstanding Notes shall have
become or shall have been declared due and payable, all such moneys shall
be applied:
FIRST: To the payment to the Senior Beneficiaries of all installments
of principal and interest then due on the Class A Notes and all Other
Senior Obligations, and if the amount available shall not be sufficient to
pay all such amounts in full, then to the payment ratably, in proportion to
the amounts due, without regard to due date, to the Class A Noteholders and
to each Other Senior Beneficiary, without any discrimination or preference;
(the Trustee shall apply the amount so apportioned to the Class A
Noteholders, as follows:
first, to the payment of the Holders of the Class A Notes of all
installments of interest (other than interest
6-7
on overdue principal) then due and payable in the order in which such
installments became due and payable, and if the amount available shall
not be sufficient to pay in full any particular installment, then to
the payment, ratably, according to the amounts due on such installment
and other amounts, to the Persons entitled thereto, without any
discrimination or preference, and
second, to the payment to the Holders of the Class A Notes of the
unpaid principal of any of the Class A Notes which shall have become
due and payable (other than Class A Notes called for redemption for
the payment of which money is held pursuant to the provisions of this
Indenture) in the order of their stated payment dates, with interest
on the Principal Amount of such Notes at the respective rates
specified therein from the respective dates upon which such Class A
Notes became due and payable, and, if the amount available shall not
be sufficient to pay in full the principal of the Class A Notes by
their stated terms due and payable on any particular date, then to the
payment of such principal, ratably, according to the amount of such
principal then due on such date, to the Persons entitled thereto
without any discrimination or preference;)
SECOND: To the payment to the Subordinate Beneficiaries of all
installments of principal and interest then due on the Class B Notes and
all Other Subordinate Obligations, and if the amount available shall not be
sufficient to pay all such amounts in full, then to the payment ratably, in
proportion to the amounts due, without regard to due date, to the Class B
Noteholders and to each Other Subordinate Beneficiary, without any
discrimination or preference;
(the Trustee shall apply the amount so apportioned to the Class B
Noteholders, as follows:
first, to the payment of the Holders of the Class B Notes of all
installments of interest (other than interest on overdue principal)
then due and payable in the order in which such installments became
due and payable, and if the amount available shall not be sufficient
to pay in full any particular installment, then to the payment,
ratably, according to the amounts due on such installment and other
amounts, to the Persons entitled thereto, without any discrimination
or preference, and
6-8
second, to the payment to the Holders of the Class B Notes of the
unpaid principal of any of the Class B Notes which shall have become
due and payable (other than Class B Notes called for redemption for
the payment of which money is held pursuant to the provisions of this
Indenture) in the order of their stated payment dates, with interest
on the Principal Amount of such Notes at the respective rates
specified therein from the respective dates upon which such Class B
Notes became due and payable, and, if the amount available shall not
be sufficient to pay in full the principal of the Class B Notes by
their stated terms due and payable on any particular date, then to the
payment of such principal, ratably, according to the amount of such
principal then due on such date, to the Persons entitled thereto
without any discrimination or preference;)
THIRD, to the payment of the Holders of the Class C Notes of all
installments of interest (other than interest on overdue principal) then
due and payable in the order in which such installments became due and
payable, and if the amount available shall not be sufficient to pay in full
any particular installment, then to the payment, ratably, according to the
amounts due on such installment and other amounts, to the Persons entitled
thereto, without any discrimination or preference; and
FOURTH, to the payment to the Holders of the Class C Notes of the
unpaid principal of any of the Class C Notes which shall have become due
and payable (other than Class C Notes called for redemption for the payment
of which money is held pursuant to the provisions of this Indenture) in the
order of their stated payment dates, with interest on the Principal Amount
of such Class C Notes at the respective rates specified therein from the
respective dates upon which such Class C Notes became due and payable, and,
if the amount available shall not be sufficient to pay in full the
principal of the Class C Notes by their stated terms due and payable on any
particular date, then to the payment of such principal, ratably, according
to the amount of such principal then due on such date, to the Persons
entitled thereto without any discrimination or preference.
(B) If the principal of all Outstanding Notes shall have become due
or shall have been declared due and payable and such declaration has not
been annulled and rescinded under the provisions of this Article Six, all
such moneys shall be applied, as follows:
FIRST, to the payment to the Senior Beneficiaries of the principal and
interest then due and unpaid upon the Class A Notes and all Other Senior
Obligations, without preference or priority of principal over interest or
of
6-9
interest over principal, or of any installment of interest over any other
installment of interest, or of any Senior Beneficiary over any other Senior
Beneficiary, ratably, according to the amounts due, to the Persons entitled
thereto without any discrimination or preference; and
SECOND, to the payment to the Subordinate Beneficiaries of the
principal and interest then due and unpaid upon the Class B Notes and all
Other Subordinate Obligations, without preference or priority of principal
over interest or of interest over principal, or of any installment of
interest over any other installment of interest, or of any Subordinate
Beneficiary over any other Subordinate Beneficiary, ratably, according to
the amounts due, to the Persons entitled thereto without any discrimination
or preference, and
THIRD, to the payment of the principal and premium, if any, and
interest then due and unpaid upon the Class C Notes, without preference or
priority of principal over interest or of interest over principal, or of
any installment of interest over any other installment of interest, or of
any Class C Note over any other Class C Note, ratably, according to the
amounts due respectively for principal and interest, and other amounts
owing, to the Persons entitled thereto without any discrimination or
preference.
(C) If the principal of all the Outstanding Notes shall have been
declared due and payable and if such declaration shall thereafter have been
rescinded and annulled under the provisions of Section 6.2 hereof, then
(subject to the provisions of paragraph (B) of this Section 6.6, in the
event that the principal of all the Outstanding Notes shall later become or
be declared due and payable) the money held by the Trustee hereunder shall
be applied in accordance with the provisions of paragraph (A) of this
Section 6.6.
Whenever moneys are to be applied by the Trustee pursuant to the
provisions of this Section 6.6, such moneys shall be applied by it at such
times, and from time to time, as the Trustee shall determine, having due regard
to the amount of such moneys available for application and the likelihood of
additional moneys becoming available for such application in the future.
Whenever the Trustee shall apply such funds, it shall fix the date (which shall
be an Interest Payment Date unless it shall deem another date more suitable)
upon which such application is to be made and upon such date interest on the
amounts of principal to be paid shall cease to accrue. The Trustee shall give
such notice as it may deem appropriate of the deposits with it of any such
moneys and of the fixing of any such date, and shall not be required to make
payment to the Holder of any unpaid Note until such Note shall be presented to
the Trustee for appropriate endorsement or for cancellation if fully paid.
Whenever all Notes and interest thereon and all Other Obligations have
been fully paid under the provisions of this Section 6.6, and all expenses and
6-10
charges of the Trustee have been paid, the Corporation and the Trustee shall be
restored to their former positions hereunder.
Section 6.7. Remedies Vested in Trustee. All rights of action,
including the right to file proof of claims under this Indenture or under any of
the Notes may be enforced by the Trustee without the possession of any of the
Notes or the production thereof in any trial or other proceedings relating
thereto, and any such suit or proceeding instituted by the Trustee shall be
brought in its name as Trustee without the necessity of joining as plaintiffs or
defendants any Beneficiaries, and any recovery of judgment shall be for the
equal benefit of all Beneficiaries in respect of which such judgment has been
recovered.
Section 6.8. Limitation on Suits by Beneficiaries. Except as may be
permitted in a Supplemental Indenture with respect to an Other Beneficiary, no
Holder of any Note or Other Beneficiary shall have any right to institute any
suit, action or proceeding in equity or at law for the enforcement of this
Indenture or for the execution of any trust hereof or for the appointment of a
receiver or any other remedy hereunder unless (1) an Event of Default shall have
occurred and be continuing, (2) the Holders of not less than twenty-five percent
(25%) in aggregate Principal Amount of Notes then Outstanding or any Other
Beneficiary shall have made written request to the Trustee, (3) such Beneficiary
or Beneficiaries shall have offered to the Trustee indemnity, as provided in
Section 7.1 hereof, (4) the Trustee shall have thereafter failed for a period of
sixty (60) days after the receipt of the request and indemnification or refused
to exercise the powers hereinbefore granted or to institute such action, suit or
proceeding in its own name and (5) no direction inconsistent with such written
request shall have been given to the Trustee during such sixty (60)-day period
by the Holders of not less than a majority in aggregate Principal Amount of the
Notes then Outstanding or by any Other Beneficiary; it being understood and
intended that no one or more Holders of the Notes or any Other Beneficiary shall
have any right in any manner whatsoever to affect, disturb or prejudice the lien
of this Indenture by its, his, her or their action or to enforce any right
hereunder except in the manner herein provided, and that all proceedings at law
or in equity shall be instituted, had and maintained in the manner herein
provided and for the benefit of the Holders of all Outstanding Notes and Other
Beneficiaries hereunder as their interests may appear hereunder; provided,
however, that, notwithstanding the foregoing provisions of this Section 6.8, the
Acting Beneficiaries Upon Default may institute any such suit, action or
proceeding in their own names for the benefit of the Holders of all Outstanding
Notes and Other Beneficiaries hereunder.
Section 6.9. Unconditional Right of Noteholders To Enforce Payment.
Notwithstanding any other provision in this Indenture, the Holder of any Note
shall have the right, which is absolute and unconditional, to receive payment of
the principal of, premium, if any, and interest on such Note in accordance with
the terms thereof and hereof and, upon the occurrence of an Event of Default
with
6-11
respect thereto, to institute suit for the enforcement of any such payment, and
such right shall not be impaired without the consent of such Holder.
Section 6.10. Trustee May File Proofs of Claims. In case of the
pendency of any receivership, insolvency, liquidation, bankruptcy,
reorganization, arrangement, adjustment, composition or other judicial
proceeding relative to the Corporation or the property of the Corporation, the
Trustee (irrespective of whether the principal of the Notes shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand on the Corporation for the
payment of overdue principal or interest) shall be entitled and empowered, by
intervention in such proceeding or otherwise,
A. to file and prove a claim for the whole amount of principal,
premium, if any, and interest owing and unpaid in respect of the Notes then
Outstanding and to file such other papers or documents as may be necessary
or advisable in order to have the claims of the Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and Counsel and any Paying Agents,
Authenticating Agents, Note Registrar, Deposit Agents, Remarketing Agents,
Depositaries, Auction Agents and Broker-Dealers) and of the Beneficiaries
allowed in such judicial proceeding, and
B. to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any receiver, assignee, trustee, liquidator, sequestrator or other similar
official in any such judicial proceeding is hereby authorized by each Noteholder
to make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Noteholders, to pay to
the Trustee any amount due to it for the reasonable compensation, expenses and
disbursements of the Trustee, its agents and Counsel and any Paying Agents,
Authenticating Agents, Note Registrar, Deposit Agents, Remarketing Agents,
Depositaries, Auction Agents and Broker-Dealers.
Nothing herein shall affect the right of any Paying Agent,
Authenticating Agent, Note Registrar, Deposit Agent, Remarketing Agent,
Depositary, Auction Agent or Broker-Dealer or to file proofs of claim on their
own behalf in any such proceeding.
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Noteholder or Other
Beneficiary any plan of reorganization, arrangement, adjustment or composition
affecting the Notes or the rights of any Holder thereof or Other Beneficiary, or
to authorize the Trustee to vote in respect of the claim of any Noteholder in
any such proceeding.
6-12
Section 6.11. Undertaking for Costs. The Corporation and the Trustee
agree, and each Holder of any Note by his acceptance thereof shall be deemed to
have agreed, that any court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken or omitted by it as Trustee, the filing by any
party litigant in such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys fees, against any party litigant in such suit, having due
regard to the merits and good faith of the claims or defenses made by such party
litigant; but the provisions of this Section 6.11 shall not apply to (a) any
suit instituted by the Trustee, (b) any suit instituted by any Noteholder, or
group of Noteholders, in each case holding in the aggregate more than ten
percent (10%) of the Outstanding Principal Amount of the Notes or (c) any suit
instituted by any Noteholder for the enforcement of the payment of the principal
of, premium, if any, or interest on any Note in accordance with Section 6.9
hereof.
Section 6.12. Termination of Proceedings. In case the Trustee or any
Beneficiary shall have proceeded to enforce any right under this Indenture by
the appointment of a receiver, or otherwise, and such proceedings shall have
been discontinued or abandoned for any reason, or shall have been determined
adversely to the Trustee or such Beneficiary, then and in every such case the
Corporation and the Trustee or such Beneficiary shall, subject to any final
determination in such proceedings, be restored to their former positions and
rights hereunder with respect to this Indenture, and all rights, remedies and
powers of the Trustee and the Beneficiaries shall continue as if no such
proceedings had been taken.
Section 6.13. Waiver of Defaults and Events of Default. The Trustee
shall, unless the Trustee has declared the principal of and interest on all
Outstanding Notes immediately due and payable in accordance with Section 6.2
hereof and a judgment or decree for payment of the money due has been obtained
by the Trustee, waive any default or Event of Default hereunder and its
consequences but only upon written request of the Acting Beneficiaries Upon
Default; provided, however, that there shall not be waived (a) any Event of
Default arising from the acceleration of the maturity of the Notes, except upon
the rescission and annulment of such declaration as described in Section 6.2
hereof; (b) any Event of Default in the payment when due of any amount owed to
any Beneficiary (including payment of principal of or interest on any Note)
except with the consent of such Beneficiary or unless, prior to such waiver, the
Corporation has paid or deposited (or caused to be paid or deposited) with the
Trustee a sum sufficient to pay all amounts owed to such Beneficiary (including,
to the extent permitted by law, interest upon overdue installments of interest);
(c) any Event of Default arising from the failure of the Corporation to pay
unpaid expenses of the Trustee, its agents and counsel, and any Authenticating
Agent, Paying Agents, Note Registrar, Deposit Agents, Remarketing Agents,
Depositaries, Auction Agents and Broker-Dealers as required by this Indenture,
unless, prior to such waiver, the Corporation has paid or deposited (or caused
to be paid or deposited) with the Trustee sums required to
6-13
satisfy such obligations of the Corporation under the provisions of this
Indenture; or (d) any default in respect of a covenant or provision hereof
which, under Article Eight hereof, cannot be modified or amended without the
consent of the Holder of each Note affected thereby. No such waiver shall extend
to any subsequent or other default or Event of Default, or impair any right
consequent thereon.
Section 6.14. Inspection of Books and Records. The Corporation
covenants that if an Event of Default shall have happened and shall not have
been remedied, the books of record and account of the Corporation relating to
the Program shall at all times be subject to the inspection and use of the
Trustee and any Holder of at least twenty five percent (25%) of the Principal
Amount of any series of Notes any of which are then Outstanding and of their
respective agents and attorneys.
The Corporation covenants that if an Event of Default shall have
happened and shall not have been remedied, the Corporation will continue to
account, as a trustee of an express trust, for all other money, securities and
property pledged under this Indenture.
6-14
ARTICLE SEVEN
FIDUCIARIES
Section 7.1. Acceptance of the Trustee. The Trustee hereby accepts
the trusts imposed upon it by this Indenture, and agrees to perform said trusts,
but only upon and subject to the following terms and conditions:
(A) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture; but in the case of any such certificates or
opinions which by any provisions hereof are specifically required to
be furnished to the Trustee, the Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Indenture.
(B) In case an Event of Default has occurred and is continuing, the
Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in their exercise, as
a prudent man would exercise or use under the circumstances in the conduct
of his own affairs.
(C) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act, or its own willful misconduct, except that
(1) this subsection (C) shall not be construed to limit the
effect of subsection (A) of this Section;
(2) the Trustee shall not be liable for any error of judgment
made in good faith, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith in accordance with
the direction of the Acting Beneficiaries Upon Default relating to the
time, method and place of conducting any proceeding for any remedy
7-1
available to the Trustee, or exercising any trust or power conferred
upon the Trustee, under this Indenture; and
(4) no provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties hereunder, or in the
exercise of any of its rights or powers, if it shall have reasonable
grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to
it.
(D) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
this Section 7.1 and to the provisions of the TIA.
(E) The Trustee may execute any of the trusts or powers hereof and
perform any of its duties by or through attorneys, agents, receivers, or
employees but shall be answerable for the conduct of the same in accordance
with the standard specified in subsection (B) above, and shall be entitled
to advice of Counsel concerning all matters of trusts hereof and duties
hereunder, and may in all cases pay such reasonable compensation to any
attorney, agent, receiver or employee retained or employed by it in
connection herewith. The Trustee may act upon the opinion or advice of any
attorney or accountant selected by it in the exercise of reasonable care.
The Trustee shall not be responsible for any loss or damage resulting from
any action or nonaction based on its good faith reliance upon such opinion
or advice.
(F) The Trustee shall not be responsible for any recital herein or in
the Notes (except with respect to the certificate of the Trustee endorsed
on the Notes), or for the investment of moneys or for the filing or
refiling of this Indenture, or the filing of financing statements, or for
the validity of the execution by the Corporation of this Indenture, or of
any Supplemental Indenture or instrument of further assurance, or for the
sufficiency of the security for the Notes issued hereunder or intended to
be secured hereby.
(G) The Trustee shall not be accountable for the use or application
by the Corporation of any of the Notes or the proceeds thereof or for the
use or application of any money paid over by the Trustee in accordance with
the provisions of this Indenture or for the use and application of money
received by any Paying Agent. The Trustee may become the Holder of Notes
secured hereby with the same rights it would have if not Trustee.
(H) The Trustee shall be protected in acting upon any notice, order,
requisition, request, consent, certificate, order, opinion (including an
opinion of Counsel), affidavit, letter, telegram or other paper or document
in good
7-2
faith deemed by it to be genuine and correct and to have been signed or
sent by the proper person or persons. Any action taken by the Trustee
pursuant to this Indenture upon the request or authority or consent of any
person who at the time of making such request or giving such authority or
consent is the Holder of any Note shall be conclusive and binding upon all
future Holders of the same Note and Notes issued in exchange therefor or in
place thereof.
(I) As to the existence or nonexistence of any fact or as to the
sufficiency or authenticity of any instrument, paper or proceeding, the
Trustee shall be entitled to rely upon a Corporation Certificate as
sufficient evidence of the facts stated therein.
(J) At any and all reasonable times, the Trustee, and its duly
authorized agents, attorneys, experts, engineers, accountants and
representatives, shall have the right fully to inspect all books, papers
and records of the Corporation pertaining to the Program, and to take such
memoranda from and in regard thereto as may be desired.
(K) The Trustee shall not be required to give any bond or surety in
respect of the execution of the said trusts and powers or otherwise in
respect of the premises.
(L) Notwithstanding anything elsewhere in this Indenture contained,
the Trustee, in respect to the authentication of any Notes, the withdrawal
of any cash or any action whatsoever within the purview of this Indenture,
and any Authenticating Agent, in respect of the authentication of Notes,
shall have the right, but shall not be required, to demand any showings,
certificates, opinions (including opinions of Counsel), appraisals or other
information, or corporate action or evidence thereof, in addition to that
by the terms hereof required as a condition of such action by the Trustee
or the Authenticating Agent, as the case may be, deemed desirable for the
purpose of establishing the right of the Corporation to the authentication
of any Notes, the withdrawal of any cash, or the taking of any other action
by the Trustee or the Authenticating Agent, as the case may be.
(M) Before taking any action hereunder requested by Noteholders or by
any Other Beneficiary, the Trustee may require that it be furnished an
indemnity bond or other indemnity satisfactory to it for the reimbursement
of all expenses to which it may be put and to protect it against all
liability, except liability which results from the negligence or willful
misconduct of the Trustee, by reason of any action so taken by the Trustee.
(N) The Trustee shall periodically file Uniform Commercial Code
continuation statements and take such other actions described in Section
4.11 hereof as required to maintain and continue the perfection of any
security
7-3
interests granted by the Corporation as debtor to the Trustee as secured
party hereunder.
(O) So long as the Trustee shall act as holder of Financed Student
Loans, the Trustee (i) shall, upon receipt of a Corporation Order, take all
necessary actions to receive all benefits to which such Financed Student
Loans are entitled under the provisions of the Higher Education Act;
provided, however, that the Trustee shall not be required to take any
actions that may be performed by the Corporation or by a Servicer; (ii)
shall not consent to any amendment to the Contract of Insurance or any
Guarantee Agreement relating to any Financed Student Loans prior to
receiving a Corporation Consent to such amendment (unless such amendment is
required by the Higher Education Act); and (iii) shall, upon receipt of a
Corporation Order, take all reasonable steps, actions and proceedings
necessary or appropriate for the enforcement of the Contract of Insurance
and each Guarantee Agreement.
Section 7.2. Fees, Charges and Expenses of the Trustee, Paying
Agents, Note Registrar, Authenticating Agents, Deposit Agents, Remarketing
Agents, Depositaries, Auction Agents and Broker-Dealers. The Trustee and each
Paying Agent, Note Registrar, Authenticating Agent, Deposit Agent, Remarketing
Agent, Depositary, Auction Agent and Broker-Dealer shall be entitled to payment
and/or reimbursement for reasonable fees for services rendered hereunder and all
advances, legal fees and other expenses reasonably and necessarily made or
incurred by it in and about the execution of the trusts created by this
Indenture and in and about the exercise and performance of the powers and duties
of the Trustee and each Paying Agent, Note Registrar, Authenticating Agent,
Deposit Agent, Remarketing Agent, Depositary, Auction Agent and Broker-Dealer
hereunder and for the reasonable and necessary costs and expenses incurred in
defending any liability in the premises of any character whatsoever (unless such
liability is adjudicated to have resulted from the negligence or willful
misconduct of the Trustee, the Paying Agent, the Note Registrar, the
Authenticating Agent, the Deposit Agent, the Remarketing Agent, the Depositary,
the Auction Agent or the Broker-Dealer); provided that any moneys or Investment
Securities held pursuant to Section 11.1 hereof with respect to Notes no longer
deemed Outstanding hereunder, shall not be available for, nor be applied to, the
payment of any such fees, advances, costs or expenses.
Section 7.3. Notice to Beneficiaries if Default Occurs. The Trustee
shall give to all Beneficiaries, in the manner provided in Section 13.4 hereof,
notice of all Events of Default, and of all events which, with the passage of
time or the giving of notice, or both, would become an Event of Default, known
to the Trustee, within ninety (90) days after the occurrence of such Event of
Default or other event unless such Event of Default or other event shall have
been cured before the giving of such notice; provided that, except in the case
of Events of Default in the payment of the principal of, premium, if any, or
interest on any of the Notes, the Trustee shall be protected in withholding such
notice if and so long as a trust committee of the
7-4
Trustee in good faith determines that the withholding of such notice is in the
interest of the Beneficiaries.
Section 7.4. Intervention by Trustee. In any judicial proceeding to
which the Corporation is a party and which in the opinion of the Trustee and its
Counsel has a substantial bearing on the interest of the Beneficiaries, the
Trustee may intervene on behalf of Beneficiaries and shall do so if requested in
writing by the Holders of at least twenty-five percent (25%) of the aggregate
Principal Amount of the Outstanding Notes or any Other Beneficiary. The rights
and obligations of the Trustee under this Section 7.4 are subject to the
approval of a court of competent jurisdiction in the premises.
Section 7.5. Successor Trustee, Paying Agents, Authenticating Agents,
Deposit Agents and Depositaries. Any corporation, association or agency into
which the Trustee and any Paying Agent, any Authenticating Agent, any Deposit
Agent or any Depositary may be converted or merged, or with which it may be
consolidated, or to which it may sell or transfer its trust business and assets
as a whole or substantially as a whole, or any corporation or association
resulting from any such conversion, sale, merger, consolidation or transfer to
which it is a party, ipso facto, shall be and become successor trustee, paying
agent, note registrar, authenticating agent, deposit agent or depositary
hereunder and vested with all of the trusts, powers, discretions, immunities,
privileges and all other matters as was its predecessor, without the execution
or filing of any instrument or any further act, deed or conveyance on the part
of any of the parties hereto, anything herein to the contrary notwithstanding;
provided that no such merger, conversion or consolidation shall relieve the
Trustee of its obligation to comply with Section 7.13 hereof.
Section 7.6. Resignation by Trustee, Paying Agents, Authenticating
Agents, Deposit Agents and Depositaries. The Trustee, any Paying Agent, any
Authenticating Agent, any Deposit Agent and any Depositary may at any time
resign from the trusts and be discharged of the duties and obligations hereby
created by giving sixty (60) days' written notice to the Corporation and, in the
case of the Trustee, a Paying Agent, an Authenticating Agent or a Depositary, by
first-class mail to all Noteholders and Other Beneficiaries and such resignation
shall take effect upon the appointment of a successor trustee, paying agent,
authenticating agent or depositary. No such resignation of the Trustee shall
become effective until the acceptance of appointment by a successor trustee
under Section 7.8 hereof. Upon the appointment and acceptance of a successor
trustee, authenticating agent, paying agent, deposit agent or depositary, the
Trustee shall promptly cause written notice of such appointment to be given to
all Noteholders and Other Beneficiaries in the manner provided in Section 13.4
hereof, which notice shall include the address of the Principal Office of such
successor. If an instrument of acceptance by a successor trustee, paying agent,
authenticating agent, deposit agent or depositary shall not have been delivered
to the resigning Trustee, Paying Agent, Authenticating Agent, Deposit Agent or
Depositary within sixty (60) days after the giving of such notice of
7-5
resignation, the resigning Trustee, Paying Agent, Authenticating Agent, Deposit
Agent or Depositary may petition any court of competent jurisdiction for the
appointment of a successor and any attorneys' fees incurred in connection with
any such petition shall be payable by the Corporation.
Section 7.7. Removal of Trustee. The Trustee shall be removed by the
Corporation if at any time so requested by an instrument or concurrent
instruments in writing, filed with the Trustee and the Corporation, and signed
by the Holders of a majority in Principal Amount of the Notes then Outstanding
or their attorneys- in-fact duly authorized, excluding any Notes held by or for
the account of the Corporation. Notwithstanding the foregoing, the Trustee may
not be removed during the existence of an Event of Default. No such removal of
the Trustee shall become effective until the acceptance of appointment by a
successor trustee under Section 7.8 hereof.
Section 7.8. Appointment of Successor Trustee. In case the Trustee
shall be dissolved, fail to comply with Section 7.13 hereof or otherwise become
incapable of acting hereunder, or in case it shall be taken under the control of
any public officer or officers, or of a receiver appointed by a court, the
Corporation, by a Board Resolution, may remove the Trustee. If the Trustee
fails to comply with Section 7.13 hereof, any Noteholder may petition any court
of competent jurisdiction for the removal of the Trustee and the appointment of
a successor Trustee. No resignation or removal of the Trustee, and no
appointment of a successor trustee, pursuant to the provisions of this Article
Seven shall become effective until the acceptance of appointment by the
successor trustee under Section 7.9 hereof. If the Trustee shall resign, be
removed or become incapable of acting, or if a vacancy shall occur in the office
of Trustee for any cause, the Corporation, by a Board Resolution, shall promptly
appoint a successor trustee. If, within one (1) year of such resignation,
removal or incapability, or the occurrence of such vacancy, the Holders of a
majority in aggregate Principal Amount of the then Outstanding Notes, by an
instrument or concurrent instruments in writing signed by such Holders, or by
their attorney-in-fact duly authorized, appoint a successor, such successor
shall, upon its acceptance of such appointment, supersede the successor
appointed by the Corporation. If no successor trustee has been appointed and
accepted appointment as herein provided after sixty (60) days from the mailing
of notice of resignation by the Trustee under Section 7.6 hereof, or from the
date the Trustee is removed or otherwise incapable of acting hereunder, any
Beneficiary may petition a court of competent jurisdiction to appoint a
successor trustee. No appointment of a successor Trustee shall be effective
without the written consent of all Other Beneficiaries, which consent shall not
be unreasonably withheld.
The Corporation shall promptly notify any Paying Agent, Authenticating
Agent, Deposit Agent, Remarketing Agent and Depositary as to the appointment of
any successor trustee and shall promptly cause written notice of such
appointment to be given to all Noteholders and Other Beneficiaries in the
7-6
manner provided in Section 13.4 hereof, which notice shall include the address
of the Principal Office of the successor trustee.
Section 7.9. Concerning any Successor Trustee. Every successor
trustee appointed hereunder shall execute, acknowledge and deliver to its
predecessor, and to the Corporation, an instrument in writing accepting such
appointment hereunder, and thereupon such successor, without any further act,
assignment or conveyance, shall become fully vested with all the estates,
properties, rights, powers, trusts, duties and obligations of its predecessor as
trustee; but such predecessor shall, nevertheless, on the written request of the
Corporation, or of its successor trustee, execute and deliver an instrument
transferring to such successor trustee all the estates, properties, rights,
powers and trusts of such predecessor hereunder, and every predecessor trustee
shall deliver all securities and moneys and Balances held by it as trustee
hereunder to its successor together with an accounting of the Balances held by
it hereunder. Should any instrument in writing from the Corporation be required
by any successor trustee for more fully and certainly vesting in such successor
the estates, rights, powers and duties hereby vested or intended to be vested in
the predecessor trustee, any and all such instruments in writing shall, on
request, be executed, acknowledged and delivered by the Corporation. The
resignation of any trustee and the instrument or instruments removing any
trustee and appointing a successor hereunder, together with all other
instruments provided for in this Article shall be forthwith filed and/or
recorded by the successor trustee in each recording office where this Indenture
shall have been filed and/or recorded.
Section 7.10. Trustee Protected in Relying Upon Resolutions, Etc.
The resolutions, orders, requisitions, opinions, certificates and other
instruments conforming to the requirements of this Indenture may be accepted by
the Trustee as conclusive evidence of the facts and conclusions stated therein
and shall be full warrant, protection and authority to the Trustee for the
withdrawal of cash hereunder.
Section 7.11. Successor Trustee as Custodian of Funds. In the event
of a change in the office of trustee the predecessor trustee which has resigned
or been removed shall cease to be custodian of the Funds and Accounts, and the
successor trustee shall be and become such custodian.
Section 7.12. Co-Trustee. At any time or times, for the purpose of
(a) meeting any legal requirements of any state in which the Trustee determines
it necessary to take any action hereunder or (b) establishing the eligibility of
any Financed Student Loans for receipt of federal payments with respect thereto,
the Trustee shall have power to appoint, and, upon the request of the Trustee or
of the Holders of at least twenty-five percent (25%) in aggregate Principal
Amount of Notes Outstanding or of any Other Beneficiary, the Corporation shall
for such purpose join with the Trustee in the execution, delivery and
performance of all instruments and agreements necessary or proper to appoint one
or more Persons approved by the Trustee either to act as co-trustee or co-
trustees, jointly with the Trustee of all or any
7-7
part of the trust estate, or to act as separate trustee or separate trustees of
all or any part of the trust estate, and to vest in such person or persons, in
such capacity, such title to the trust estate or any part thereof, and such
rights, powers, duties, trusts or obligations as the Trustee may consider
necessary or desirable, subject to the remaining provisions of this Section
7.12. No co-trustee or separate trustee hereunder shall be required to meet the
terms of eligibility as a successor Trustee under Section 7.13 hereof and no
notice to Noteholders of the appointment of any co-trustee or separate trustee
shall be required under Section 7.8 hereof.
If the Corporation shall not have joined in such appointment within
fifteen (15) days after the receipt by it of a request so to do, or in case an
Event of Default shall have occurred and be continuing, the Trustee alone shall
have power to make such appointment.
The Corporation shall execute, acknowledge and deliver all such
instruments as may be required by any such co-trustee or separate trustee.
Every co-trustee or separate trustee shall, to the extent permitted by
law but to such extent only, be appointed subject to the following terms,
namely:
(A) The Notes shall be authenticated and delivered, and all rights,
powers, trusts, duties and obligations by this Indenture conferred upon the
Trustee in respect of the custody, control and management of moneys,
papers, securities and other personal property shall be exercised solely by
the Trustee.
(B) All rights, powers, trusts, duties and obligations conferred or
imposed upon the trustees shall be conferred or imposed upon and exercised
or performed by the Trustee, or by the Trustee and such co-trustee or co-
trustees or separate trustee or separate trustees jointly, as shall be
provided in the instrument appointing such co-trustee or co-trustees or
separate trustee or separate trustees, except to the extent that, under the
law of any jurisdiction in which any particular act or acts are to be
performed, the Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such act or acts shall be performed by such co-
trustee or co-trustees or separate trustee or separate trustees.
(C) Any request in writing by the Trustee to any co-trustee or
separate trustee to take or to refrain from taking any action hereunder
shall be sufficient warrant for the taking, or the refraining from taking,
of such action by such co-trustee or separate trustee.
(D) Any co-trustee or separate trustee may delegate to the Trustee
the exercise of any right, power, trust, duty or obligations, discretionary
or otherwise.
7-8
(E) The Trustee at any time, by any instrument in writing, may accept
the resignation of or remove any co-trustee or separate trustee appointed
under this Section 7.12. Upon the request of the Trustee, the Corporation
shall join with the Trustee in the execution, delivery and performance of
all instruments and agreements necessary or proper to effectuate such
resignation or removal.
(F) No trustee hereunder shall be personally liable by reason of any
act or omission of any other trustee hereunder.
(G) Any demand, request, direction, appointment, removal, notice,
consent, waiver or other action in writing delivered to the Trustee shall
be deemed to have been delivered to each such co-trustee or separate
trustee.
(H) Any moneys, papers, securities or other items of personal
property received by any such co-trustee or separate trustee hereunder
shall forthwith, so far as may be permitted by law, be turned over to the
Trustee.
Upon the acceptance in writing of such appointment by any such co-
trustee or separate trustee, it or he or she shall be vested with such title to
the trust estate or any part thereof, and with such rights, powers, duties or
obligations, as shall be specified in the instrument of appointment jointly with
the Trustee (except insofar as local law makes it necessary for any such co-
trustee or separate trustee to act alone) subject to all the terms of this
Indenture. Every such acceptance shall be filed with the Trustee. Any co-
trustee or separate trustee may, at any time by an instrument in writing,
constitute the Trustee, its or his attorney-in-fact and agent, with full power
and authority to do all acts and things and to exercise all discretion on its or
his behalf and in its or his name.
In case any co-trustee or separate trustee shall die, become incapable
of acting, resign or be removed, the title to the trust estate, and all rights,
powers, trusts, duties and obligations of said co-trustee or separate trustee
shall, so far as permitted by law, vest in and be exercised by the Trustee
unless and until a successor co-trustee or separate trustee shall be appointed
in the manner herein provided.
Section 7.13. Corporate Trustee Required; Eligibility;
Disqualification. There shall at all times be a Trustee hereunder which shall
be a corporation organized and doing business under the laws of the United
States of America or of any state, authorized under such laws to exercise
corporate trust powers, and shall be an "eligible lender" under the Higher
Education Act, having a combined capital stock, capital surplus and undivided
profits of at least $25,000,000, subject to supervision or examination by a
federal or state authority. If such corporation publishes reports of condition
at least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purposes of this Section 7.13,
the combined capital stock, capital surplus and undivided profits of such
corporation shall be deemed to be its combined capital
7-9
stock, capital surplus and undivided profits as set forth in its most recent
report of condition so published.
The Trustee shall at all times satisfy the requirements of TIA (S)
310(a). The Trustee shall comply with TIA (S) 310(b), including the optional
provision permitted by the second sentence of TIA (S) 310(b)(9); provided,
however, that there shall be excluded from the operation of TIA (S) 310(b)(1)
any indenture or indentures under which other securities of the Corporation are
outstanding if the requirements for such exclusion set forth in TIA (S)
310(b)(1) are met.
Section 7.14. Preferential Collection of Claims Against Corporation.
The Trustee shall comply with TIA (S) 311(a), excluding any creditor
relationship listed in TIA (S) 311(b). A Trustee who has resigned or been
removed shall be subject to TIA (S) 311(a) to the extent indicated.
Section 7.15. Statement by Trustee of Funds and Accounts and Other
Matters. Not more than thirty (30) days after the close of each Fiscal Year the
Trustee shall furnish the Corporation and any Noteholder or Other Beneficiary
filing with the Trustee a written request for a copy, a statement setting forth
(to the extent applicable) in respect to such Fiscal Year, (a) all transactions
relating to the receipt, disbursement and application of all moneys received by
the Trustee pursuant to all terms of this Indenture, (b) the Balances held by
the Trustee and any Deposit Agent at the end of such Fiscal Year to the credit
of each Fund and Account, (c) a brief description of all moneys, Student Loans
and Investment Securities held by the Trustee and any Deposit Agent as part of
the Balance of each Fund and Account as of the end of such Fiscal Year, (d) the
Principal Amount of Notes of each series purchased by the Trustee during such
Fiscal Year from moneys available therefor in any Fund pursuant to the
provisions of this Indenture and the respective purchase price of such Notes,
(e) the Principal Amount of Notes of each series retired, at their Stated
Maturity or by redemption, during such Fiscal Year and the Redemption Prices
thereof, if any, and (f) any other information which the Corporation may
reasonably request.
In addition, the Trustee shall furnish the Corporation on the fifth
day of each calendar month a brief description of all moneys, Student Loans and
Investment Securities to the credit of each Fund and Account as of the last
Monthly Payment Date prior thereto.
Section 7.16. Trustee, Authenticating Agent, Note Registrar, Paying
Agents, Deposit Agents, Remarketing Agents, Depositaries, Auction Agents and
Broker-Dealers May Buy, Hold, Sell or Deal in Notes. The Trustee, the
Authenticating Agent, any Note Registrar, any Paying Agent, any Deposit Agent,
any Remarketing Agent, any Depositary, any Auction Agent or any Broker-Dealer
and its directors, officers, employees or agents may, in good faith, buy, sell,
own, hold and deal in any of the Notes and may join in any action which any
Holder of a Note may be entitled to take, with like effect as if such Trustee,
Authenticating
7-10
Agent, Note Registrar, Paying Agent, Deposit Agent, Remarketing Agent,
Depositary, Auction Agent or Broker-Dealer were not the Trustee, the
Authenticating Agent, a Note Registrar, a Paying Agent, a Deposit Agent, a
Remarketing Agent, a Depositary, an Auction Agent or a Broker-Dealer, as the
case may be, under this Indenture. However, the Trustee is required to comply
with Sections 7.13 and 7.14.
Section 7.17. Authenticating Agent and Paying Agents; Paying Agents
To Hold Moneys in Trust. Any Paying Agent shall be appointed by or pursuant to
a Supplemental Indenture providing for the issuance of such series of Notes.
Each Paying Agent shall hold in trust for the benefit of the Holders of the
Notes and the Trustee any sums held by such Paying Agent for the payment of the
principal of, premium, if any, and interest on and any Carry-Over Amounts (and
accrued interest thereon) with respect to the Notes. Anything in this paragraph
to the contrary notwithstanding, the Corporation may, at any time, for the
purpose of obtaining a satisfaction and discharge of this Indenture, or for any
other reason, cause to be paid to the Trustee all sums held in trust by any
Paying Agent hereunder as required by this paragraph, such sums to be held by
the Trustee upon the trusts herein contained, and such Paying Agent shall
thereupon be released from all further liability with respect to such sums.
Any Authenticating Agent shall be appointed by or pursuant to a
Supplemental Indenture providing for the issuance of such series of Notes. The
Authenticating Agent shall have the power to act in the receipt, authentication
and delivery of Notes in connection with transfers, exchanges and registrations
hereunder.
Each Authenticating Agent and Paying Agent other than the Trustee
shall designate its Principal Office and signify its acceptance of the duties
and obligations imposed upon it by this Indenture by executing and delivering to
the Corporation a written acceptance thereof under which, in the case of the
Paying Agent, the Paying Agent will agree particularly:
(1) to hold all sums held by it pursuant to this Indenture in trust
for the benefit of the Holders of the Notes until such sums shall be paid
to such Holders or otherwise disposed of as herein provided;
(2) at any time during the continuance of any Event of Default, upon
the written request of the Trustee, to forthwith pay to the Trustee all
sums so held in trust by such Paying Agent; and
(3) in the event of the resignation or removal of such Paying Agent,
pay over, assign and deliver any moneys, records or securities held by it
as Paying Agent to its successor or, if there be no successor, to the
Trustee.
7-11
No Paying Agent shall be obligated to expend its own funds in paying
Debt Service on, or Carry-Over Amounts (including accrued interest thereon) with
respect to, the Notes.
Section 7.18. Removal of Authenticating Agent and Paying Agents;
Successors. Any Authenticating Agent and any Paying Agent may be removed at any
time by an instrument filed with such Authenticating Agent or Paying Agent, as
the case may be, and the Trustee and signed by the Corporation. Any successor
authenticating agent or paying agent shall be appointed by the Corporation and
shall be a bank having trust powers or trust company duly organized under the
laws of any state of the United States or a national banking association having
trust powers, having, in the case of a successor paying agent, a capital stock
and surplus aggregating at least $25,000,000, and, in the case of a successor
authenticating agent, its Principal Office for the performance of its functions
as Authenticating Agent under this Indenture in the City of New York, New York,
and willing and able to accept the office on reasonable and customary terms and
authorized by law to perform all the duties imposed upon it by this Indenture
and any Supplemental Indenture. Upon the appointment and acceptance of a
successor authenticating agent or paying agent, the Corporation shall promptly
give written notice of such appointment to the Trustee and the Trustee shall
promptly cause written notice thereof to be given to all Beneficiaries in the
manner provided in Section 13.4 hereof, which notice shall include the address
of the Principal Office of such successor.
In the event of the resignation or removal of any Authenticating Agent
or any Paying Agent, such Authenticating Agent or Paying Agent shall pay over,
assign and deliver any moneys, records or securities held by it as
Authenticating Agent (and Note Registrar, if appropriate) or Paying Agent, as
the case may be, to its successors or, if there be no successor, to the Trustee.
Section 7.19. Appointment and Qualifications of Deposit Agents. A.
The Corporation may, in a Supplemental Indenture, appoint one or more Deposit
Agents for any part or all of one or more of the following Funds: the Revenue
Fund, the Acquisition Fund or the Administration Fund. Each Deposit Agent shall
signify its acceptance of the duties imposed upon it hereunder by written
acceptance filed with the Corporation and the Trustee. Any Deposit Agent may be
removed at any time by the Corporation by Board Resolution and by instrument
signed by an Authorized Officer of the Corporation filed with such Deposit
Agent.
B. Each Deposit Agent appointed by the Corporation shall be an
incorporated bank having trust powers or trust company organized under the laws
of the State, or a national banking association having trust powers, having its
principal office in the State of South Dakota and having a combined capital and
surplus of at least $5,000,000.
7-12
C. The Corporation will cause each Deposit Agent to execute and
deliver to the Trustee an instrument in which such Deposit Agent shall agree
with the Trustee that such Deposit Agent will
(1) hold all sums held by it pursuant to this Indenture in trust for
the benefit of the Beneficiaries until such sums shall be paid to such
Beneficiaries or otherwise disposed of as herein provided;
(2) at any time during the continuance of any Event of Default, upon
the written request of the Trustee, forthwith pay to the Trustee all sums
so held in trust by such Deposit Agent; and
(3) in the event of the resignation or removal of such Deposit Agent,
pay over, assign and deliver any moneys or securities held by it as Deposit
Agent to its successor or, if there be no successor, to the Trustee.
D. The Corporation may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by
Corporation Order direct any Deposit Agent to pay to the Trustee all sums held
in trust by such Deposit Agent such sums to be held by the Trustee upon the same
trusts as those upon which such sums were held by such Deposit Agent, and, upon
such payment by any Deposit Agent to the Trustee, such Deposit Agent shall be
released from all further liability with respect to such sums.
Section 7.20. Appointment and Qualifications of Depositaries. The
Corporation may, in a Supplemental Indenture, appoint a Depositary with respect
to one or more series of Notes. The Depositary shall, by entering into a
Depositary Agreement, designate to the Trustee its Principal Offices for the
purposes of its functions as Depositary and, if applicable, Authenticating Agent
and Note Registrar hereunder and signify its acceptance of the duties and
obligations imposed upon it hereunder (including, if applicable, those of
Authenticating Agent and Note Registrar) and under the Depositary Agreement, and
under which the Depositary will agree, particularly:
(a) to hold all Notes delivered to it hereunder in trust for the
benefit of the respective Noteholders which shall have so delivered such
Notes until moneys representing the purchase price of such Notes shall have
been delivered to or for the account of or to the order of such
Noteholders;
(b) to hold all moneys delivered to it hereunder for the purchase of
Notes in trust for the benefit of the person or entity which shall have so
delivered such moneys until the Notes purchased with such moneys shall have
been delivered to or for the account of such person or entity; and
7-13
(c) to keep such books and records as shall be consistent with
prudent industry practice and to make such books and records available for
inspection by the Corporation and the Trustee at all reasonable times.
The Corporation shall cooperate with the Depositary and the Trustee to
cause the necessary arrangements to be made and to be thereafter continued
whereby funds from the sources specified herein will be made available for the
purchase of the Notes which are Deemed Tendered and whereby Notes, executed by
the Corporation and authenticated by the Trustee or the Authenticating Agent,
shall be made available to the Remarketing Agent, the Trustee or the Depositary
to the extent necessary for delivery pursuant the applicable provisions of the
related Supplemental Indenture.
The Depositary shall be a commercial bank or trust company duly
organized under the laws of the United States or any state or territory thereof,
having its Principal Office for the performance of its functions as Depositary
hereunder located in New York, New York, having a combined capital stock,
surplus and undivided profits of at least $100,000,000 and authorized by law to
perform all the duties imposed upon it by this Indenture (including, if
applicable, those of Authenticating Agent and Note Registrar) and the Depositary
Agreement. The Depositary may at any time resign and be discharged of the
duties and obligations created by this Indenture and the Depositary Agreement
(including such duties and obligations as Note Registrar and Authenticating
Agent hereunder) by giving at least sixty (60) days' notice to the Corporation,
the Trustee and any related Credit Facility Provider, provided that such
resignation shall not be effective until the appointment of a successor
depositary by the Corporation. The Depositary may be replaced at any time, at
the direction of the Corporation, by an instrument, signed by an Authorized
Officer of the Corporation, filed with the Remarketing Agent, the Depositary,
the Trustee and any related Credit Facility Provider at least sixty (60) days
prior to the effective date of such replacement, provided that such replacement
shall not be effective until the appointment of a successor depositary by the
Corporation. Upon the appointment and acceptance of a successor depositary, the
Corporation shall promptly give written notice of such appointment to the
Trustee and the Trustee shall promptly cause written notice thereof to be given
to all Noteholders in the manner provided in Section 13.4 hereof, which notice
shall include the address of the Principal Office of such successor.
In the event of the resignation or removal of the Depositary, the
Depositary shall pay over, assign and deliver any moneys, Notes and records held
by it in such capacity (including any such moneys, Notes and records held by it
as Authenticating Agent and Note Registrar) to its successor or, if there be no
successor, to the Trustee.
In the event that the Depositary shall be removed or be dissolved, or
if the property or affairs of the Depositary shall be taken under the control of
any state or federal court or administrative body because of bankruptcy or
insolvency, or for
7-14
any other reason, and the Corporation shall not have appointed its successor as
Depositary, the Trustee, notwithstanding the foregoing provisions of this
Section 7.20, shall ipso facto be deemed to be the Depositary for all purposes
of this Indenture until the appointment by the Corporation of the successor
depositary, and the Trustee shall be required to perform the functions of the
Depositary (and, if applicable, of Note Registrar and Authenticating Agent) as
set forth in this Indenture and the Depositary Agreement.
Section 7.21. Remarketing Agents. The Corporation may, in a
Supplemental Indenture, appoint a Remarketing Agent with respect to one or more
series of Notes. The Remarketing Agent shall designate its Principal Office and
signify its acceptance of the duties and obligations imposed upon it hereunder
by entering into a Remarketing Agreement under which the Remarketing Agent will
agree, particularly:
(a) to determine any variable interest rate in accordance with the
applicable provisions of the related Supplemental Indenture;
(b) to determine any fixed interest rate in accordance with the
applicable provisions of the related Supplemental Indenture;
(c) to hold all Notes delivered to it hereunder in trust for the
benefit of the respective Noteholders which shall have so delivered such
Notes until moneys representing the purchase price of such Notes shall have
been delivered to or for the account of or to the order of such
Noteholders;
(d) to hold all moneys delivered to it hereunder for the purchase of
Notes in trust for the benefit of the person or entity which shall have so
delivered such moneys until the Notes purchased with such moneys shall have
been delivered to or for the account of such person or entity; and
(e) to keep such books and records as shall be consistent with
prudent industry practice and to make such books and records available for
inspection by the Corporation and the Trustee at all reasonable times.
Section 7.22. Qualifications of Remarketing Agents. The Remarketing
Agent shall be a member of the National Association of Securities Dealers, Inc.,
have a capitalization of at least $50,000,000 and be authorized by law to
perform all the duties imposed upon it by this Indenture and the Remarketing
Agreement. The Remarketing Agent may at any time resign and be discharged of
the duties and obligations created by this Indenture and the Remarketing
Agreement (i) by giving at least sixty (60) days' notice to the Corporation, the
Trustee, the Depositary and any related Credit Facility Provider, provided that
such resignation shall not be effective until a successor Remarketing Agent has
been appointed by the Corporation and any related Credit Facility Provider has
consented in writing thereto, which consent shall not be unreasonably withheld,
or (ii) by giving notice to the Corporation, the
7-15
Trustee and the Depositary under the circumstances set forth in the Remarketing
Agreement. The Remarketing Agent may be replaced at any time, at the direction
of the Corporation, by an instrument signed by an Authorized Officer of the
Corporation, filed with the Remarketing Agent, the Trustee, the Depositary and
any related Credit Facility Provider, at least sixty (60) days prior to the
effective date of such replacement, provided that such replacement shall not be
effective until a successor Remarketing Agent has been appointed by the
Corporation and any related Credit Facility Provider has consented in writing
thereto, which consent shall not be unreasonably withheld.
In the event of the resignation or removal of the Remarketing Agent,
the Remarketing Agent shall pay over, assign and deliver any moneys and Notes
held by it in such capacity to its successor or, if there be no successor, to
the Trustee.
In the event that the Remarketing Agent shall resign, be removed or be
dissolved, or if the property or affairs of the Remarketing Agent shall be taken
under the control of any state or federal court or administrative body because
of bankruptcy or insolvency, or for any other reason, and the Corporation shall
not have appointed its successor as Remarketing Agent, the Trustee,
notwithstanding the provisions of the first paragraph of this Section 7.22,
shall ipso facto be deemed to be the Remarketing Agent for all purposes of this
Indenture until the appointment by the Corporation of the successor Remarketing
Agent; provided, however, that the Trustee, in its capacity as Remarketing
Agent, shall not be required to sell Notes or to determine the interest rate on
the Notes. Nothing in this Section shall be construed as conferring on the
Trustee additional duties other than as set forth herein.
7-16
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
Section 8.1. Supplemental Indentures Not Requiring Consent of
Beneficiaries. The Corporation and the Trustee may, from time to time and at
any time, without the consent of, or notice to, any of the Noteholders or any
Other Beneficiary (except to the extent, if any, required pursuant to a
Supplemental Indenture authorizing the issuance of a series of Notes), and when
so required by this Indenture shall, enter into an indenture or indentures
supplemental to this Indenture as shall not be inconsistent with the terms and
provisions hereof (which Supplemental Indenture or Indentures shall thereafter
form a part hereof), so as to thereby (a) cure any ambiguity or formal defect or
omission in this Indenture or in any Supplemental Indenture, (b) grant to or
confer upon the Trustee for the benefit of the Beneficiaries any additional
rights, remedies, powers, authority or security that may lawfully be granted to
or conferred upon the Beneficiaries or the Trustee, (c) describe or identify
more precisely any part of the Trust Estate or subject additional revenues,
properties or collateral to the lien and pledge of this Indenture, (d) evidence
the appointment of a separate trustee or a co-trustee or the succession of a new
Trustee hereunder, (e) authorize issuance of a series of Notes, subject to the
requirements of Article Three hereof, (f) modify, eliminate and/or add to the
provisions of this Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the Trust Indenture Act of 1939, as then
amended, or under any similar Federal statute enacted after July 1, 1997, and to
add to this Indenture such other provisions as may be expressly permitted by
said Trust Indenture Act of 1939, excluding, however, the provisions referred to
in Section 316(a)(2) of said Trust Indenture Act of 1939, (g) modify, eliminate
and/or add to the provisions of this Indenture to such extent as shall be
necessary or advisable in order to comply with the requirements of Section 148
or any other provision of the Code and the Treasury Regulations pertaining
thereto with respect to the exclusion of interest on any Tax Exempt Notes from
gross income for purposes of federal income taxation, (h) amend the assumptions
contained in the definition of "Cash Flow Projection" in Section 1.1 hereof
(upon receipt by the Trustee from each Rating Agency of written confirmation
that the outstanding ratings on any of the Unenhanced Outstanding Notes will not
be reduced or withdrawn as a result of such amendment or, if no Unenhanced Notes
are then Outstanding, but Other Obligations are Outstanding, the Other
Beneficiaries holding such Outstanding Other Obligations consent to the
amendment of such assumptions, as evidenced in writing to the Trustee by each
such Other Beneficiary), (i) modify this Indenture (including deletions of or
changes to provisions of this Indenture or additions to this Indenture or any
combination of deletions, changes and additions) as required by any Credit
Facility Provider or Swap Counterparty, or otherwise necessary to give effect to
any Credit Enhancement Facility, Demand Purchase Agreement, Swap Agreement or
Swap Counterparty Guarantee authorized to be issued under Section 5.2 hereof, at
the time of issuance of a series of Notes to which such agreements relate, if
the Trustee shall have received written confirmation from each Rating
8-1
Agency that such modifications will not cause the outstanding rating assigned by
such Rating Agency to any of the Notes to be lowered, withdrawn or otherwise
impaired; provided that no such modifications shall be effective (1) if the
consent of any Noteholders would be required therefor under the proviso
contained in Section 8.2 hereof and such consent has not been obtained, or (2)
the Trustee shall determine that such modifications are to the prejudice of any
Class C Noteholder or to any Other Beneficiary, or (j) make any other change in
this Indenture which, in the judgment of the Trustee, is not to the prejudice of
the Trustee or the Holders of any Notes or any Other Beneficiary.
Section 8.2. Supplemental Indentures Requiring Consent of
Beneficiaries. Exclusive of Supplemental Indentures covered by Section 8.1
hereof and subject to the terms and provisions contained in this Section 8.2,
and not otherwise, the Trustee (upon receipt of an instrument evidencing the
consent to the below-mentioned Supplemental Indenture by: (i) if they are
affected thereby, the Holders of not less than two-thirds of the aggregate
Principal Amount of the Outstanding Class A Notes not held by the Corporation or
a related person, (ii) if they are affected thereby, the Holders of not less
than two-thirds of the aggregate Principal Amount of the Outstanding Class B
Notes not held by the Corporation or a related person, and (iii) each other
Person which must consent to such Supplemental Indenture as provided in any then
outstanding Supplemental Indenture authorizing the issuance of a series of
Notes) shall join with the Corporation in the execution of such other indenture
or indentures supplemental hereto as shall be deemed necessary and desirable for
the purpose of modifying, altering, amending, adding to or rescinding, in any
particular, any of the terms or provisions contained in this Indenture;
provided, however, that nothing contained in this Article Eight shall permit or
be construed as permitting without the consent of the Holder of each Note and
each Other Beneficiary which would be affected thereby (a) an extension of the
maturity of the principal of or the interest on any Note, whether at the Stated
Maturity thereof, on a Sinking Fund Payment Date or otherwise, or (b) a
reduction in the Principal Amount, Redemption Price or purchase price of any
Note or the rate of interest thereon, or (c) a privilege or priority of any
Senior Obligation over any other Senior Obligation, (d) a privilege or priority
of any Subordinate Obligation over any other Subordinate Obligation, or (e) a
privilege or priority of any Class C Note or Class C Notes over any other Class
C Note or Class C Notes, or (f) a privilege of any Class A Notes over any Class
B Notes or Class C Notes, or of any Class B Notes over any Class C Notes, other
than as provided herein, or (g) the surrendering of a privilege or a priority
granted hereby if, in the judgment of the Trustee, to the detriment of another
Beneficiary hereunder, or (h) a reduction or an increase in the aggregate
Principal Amount of the Notes required for consent to such Supplemental
Indenture, or (i) the creation of any lien ranking prior to or on a parity with
the lien of this Indenture on the Trust Estate or any part thereof, except as
hereinbefore expressly permitted, or (j) any Beneficiary to be deprived of the
lien hereby created on the rights, title, interest, privileges, revenues, moneys
and securities pledged hereunder, or (k) the modification of any of the
provisions of this Section 8.2, or (l) the modification of any provision of a
8-2
Supplemental Indenture which states that it may not be modified without the
consent of the Holders of Notes issued pursuant thereto or any Notes of the same
class or any Beneficiary that has provided a Credit Enhancement Facility, Demand
Purchase Agreement or Swap Agreement of such class.
For purposes of this Indenture, Notes are deemed "affected" by an
amendment if such amendment adversely affects or diminishes the rights of the
Holders thereof to be assured of the payment of principal of, premium, if any,
and interest on and any Carry-Over Amount (and accrued interest thereon) with
respect to such Notes, taking into account the priorities between classes of
Notes theretofore prescribed hereby. The Trustee may in its discretion
determine whether any Notes would be affected by any amendment and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered under this Indenture. The
Trustee shall not be liable for any such determination made in good faith.
If at any time the Corporation shall request the Trustee to enter into
any such Supplemental Indenture for any of the purposes of this Section, the
Trustee shall, upon being satisfactorily indemnified with respect to expenses,
cause notice of the proposed execution of such Supplemental Indenture to be
mailed to each Holder of an Outstanding Note in accordance with the provisions
of Section 13.4 hereof and to each Other Beneficiary. Such notice shall briefly
set forth the nature of the proposed Supplemental Indenture and shall state that
copies thereof are on file at the Principal Office of the Trustee for inspection
by all Beneficiaries. The Trustee shall not, however, be subject to any
liability to any Noteholder or any Other Beneficiary by reason of its failure to
mail such notice, and any such failure shall not affect the validity of such
Supplemental Indenture when consented to and approved as provided in this
Section 8.2. If, at the time of the execution of any such Supplemental
Indenture, the Holders of Notes and each other Beneficiary shall have consented
to and approved the execution thereof as herein provided, no Beneficiary shall
have any right to object to any of the terms and provisions contained therein,
or the operation thereof, or in any manner to question the propriety of the
execution thereof, or to enjoin or restrain the Trustee or the Corporation from
executing the same or from taking any action pursuant to the provisions thereof.
Upon the execution of any such Supplemental Indenture as in this Section 8.2
permitted and provided this Indenture shall be and be deemed to be modified and
amended in accordance therewith.
Section 8.3. Rights of Trustee. If, in the opinion of the Trustee,
any Supplemental Indenture provided for in this Article Eight adversely affects
the rights, duties or immunities of the Trustee under this Indenture or
otherwise, the Trustee may, in its discretion, decline to execute such
Supplemental Indenture, except to the extent that this may be required in the
case of a Supplemental Indenture entered into under Section 8.1 hereof. The
Trustee shall be entitled to receive, and shall be fully protected in relying
upon, an opinion of its Counsel as
8-3
conclusive evidence that any such Supplemental Indenture conforms to the
requirements of this Indenture.
Section 8.4. Opinion and Rating Agency Approval Required Prior to
Execution of Supplemental Indenture. No Supplemental Indenture shall be
executed unless, prior to the execution thereof: (1) if any Tax Exempt Notes
have previously been issued, the Corporation shall have provided to the Trustee
an opinion of Bond Counsel to the effect that the execution and delivery of such
Supplemental Indenture will not adversely affect the exclusion from the gross
income of the owners thereof for federal income tax purposes pursuant to Section
103 of the Code of interest on any of such Tax Exempt Notes; and (2) the Trustee
shall have received written evidence from each Rating Agency that execution and
delivery of such Supplemental Indenture will not adversely affect any rating or
ratings then applicable to any of the Outstanding Notes.
Section 8.5. Consent of Depositaries. So long as any Depositary
Agreement is in effect, (i) no Supplemental Indenture which materially adversely
affects the rights, duties or immunities of the Depositary created by this
Indenture or the Depositary Agreement (including, if applicable, such duties and
obligations as Note Registrar and Authenticating Agent hereunder) shall become
effective unless and until delivery to the Trustee of a written consent of the
Depositary to such Supplemental Indenture, and (ii) the Trustee shall promptly
furnish to the Depositary a copy of each Supplemental Indenture.
Section 8.6. Consent of Remarketing Agents. So long as any
Remarketing Agreement is in effect, (i) no Supplemental Indenture which
materially adversely affects the rights, duties or immunities of the Remarketing
Agent created by this Indenture or the Remarketing Agreement shall become
effective unless and until delivery to the Trustee of a written consent of the
Remarketing Agent to such Supplemental Indenture, and (ii) the Trustee shall
promptly furnish to the Remarketing Agent a copy of each Supplemental Indenture.
Section 8.7. Consent of Auction Agents. So long as any Auction Agent
Agreement is in effect, (i) no Supplemental Indenture which materially adversely
affects the rights, duties or immunities of the Auction Agent created by this
Indenture or the Auction Agent Agreement shall become effective unless and until
delivery to the Trustee of a written consent of the Auction Agent to such
Supplemental Indenture, and (ii) the Trustee shall promptly furnish to the
Auction Agent a copy of each Supplemental Indenture.
Section 8.8. Consent of Broker-Dealers. So long as any Broker-Dealer
Agreement is in effect, (i) no Supplemental Indenture which materially adversely
affects the rights, duties or immunities of the Broker-Dealer created by this
Indenture or the Broker-Dealer Agreement shall become effective unless and until
delivery to the Trustee of a written consent of the Broker-Dealer to such
8-4
Supplemental Indenture, and (ii) the Trustee shall promptly furnish to the
Broker-Dealer a copy of each Supplemental Indenture.
Section 8.9. Conformity With Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article VIII shall conform to the requirements of the Trust Indenture Act as
then in effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
8-5
PAGE>
ARTICLE NINE
NOTEHOLDERS' MEETINGS
Section 9.1. Purposes for Which Noteholders' Meetings May Be Called.
A meeting of Noteholders may be called at any time and from time to time
pursuant to this Article Nine for any of the following purposes:
A. to give any notice to the Trustee or the Corporation, or to give
any directions to the Trustee, or to consent to the waiving of any default
hereunder and its consequences, or to take any other action authorized to
be taken by Noteholders pursuant to Article Six hereof;
B. to remove the Trustee and appoint a successor trustee pursuant to
Article Seven hereof;
C. to consent to the execution of any Supplemental Indenture pursuant
to Article Eight hereof; or
D. to take any other action authorized to be taken by or on behalf of
the Holders of any specified aggregate Principal Amount of the Notes under
any other provision of this Indenture or under applicable law.
Section 9.2. Place of Meetings of Noteholders. Meetings of
Noteholders may be held at such place or places as the Trustee or, in case of
its failure to act, the Corporation or the Noteholders calling the meeting,
shall from time to time determine.
Section 9.3. Call and Notice of Noteholders' Meetings.
A. The Trustee may at any time call a meeting of Noteholders to be
held at such time and at such place as the Trustee shall determine. Notice of
every meeting of Noteholders, setting forth the time and the place of such
meeting and in general terms the action proposed to be taken at such meeting,
shall be mailed to each Noteholder in accordance with the provisions of Section
13.4 hereof and to each Other Beneficiary not less than twenty (20) nor more
than one hundred eighty (180) days prior to the date fixed for the meeting. Any
failure of the Trustee to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such meeting.
B. In case at any time the Corporation, pursuant to a Corporation
Request, the Holders of at least ten percent (10%) in aggregate Principal Amount
of the Notes then Outstanding or any Other Beneficiary, shall have requested the
Trustee to call a meeting of the Noteholders, by written request setting forth
in reasonable detail the action proposed to be taken at the meeting, and the
Trustee shall not have mailed the first notice of such meeting within twenty
days after
9-1
receipt of such request, then the Corporation, the Holders of Notes in the
amount above specified or such Other Beneficiary may determine the time, place
and location for such meeting and may call such meeting to take any action
authorized in Section 9.1 hereof by giving notice thereof as provided in
subsection A of this Section 9.3.
Section 9.4. Persons Entitled To Vote at Noteholders' Meetings. To be
entitled to vote at any meeting of Noteholders, a person shall be (i) a Holder
of one or more Notes, or (ii) a person appointed by an instrument in writing as
proxy for a Holder or Holders of Notes by such Holder or Holders. The only
persons who shall be entitled to be present or to speak at any meeting of
Noteholders shall be the persons entitled to vote at such meeting and their
counsel, any representatives of the Trustee and its counsel, any representatives
of any Other Beneficiary and their counsel and any representatives of the
Corporation and its counsel.
Section 9.5. Determination of Voting Rights; Conduct and Adjournment
of Meetings.
A. Notwithstanding any other provisions of this Indenture, the
Trustee may make such reasonable regulations as it may deem advisable for any
meeting of Noteholders in regard to proof of the ownership of Notes and of the
appointment of proxies and in regard to the appointment and duties of inspectors
of votes, the submission and examination of proxies, certificates and other
evidence of the right to vote, and such other matters concerning the conduct of
the meeting as it shall deem appropriate. Except as otherwise permitted or
required by any such regulations, the holding of Notes shall be proved in the
manner specified in Section 13.1 hereof and the appointment of any proxy shall
be proved in the manner specified in Section 13.1 hereof or by having the
signature of the person executing the proxy witnessed or guaranteed by any bank,
banker or trust company. Such regulations may provide that written instruments
appointing proxies, regular on their face, may be presumed valid and genuine
without the proof specified in Section 13.1 hereof or other proof.
B. The Trustee shall, by an instrument in writing, appoint a
temporary chairman of the meeting, unless the meeting shall have been called by
the Noteholders or the Corporation as provided in subsection B of Section 9.3
hereof, in which case the Noteholders calling the meeting or the Corporation
shall in like manner appoint a temporary chairman. A permanent chairman and a
permanent secretary of the meeting shall be elected by vote of the Holders of a
majority in aggregate Principal Amount of the Notes represented at the meeting
and entitled to vote.
C. At any meeting each Noteholder or proxy shall be entitled to one
vote for each $1.00 Principal Amount of Outstanding Notes held or represented by
him; provided, however, that no vote shall be cast or counted at any meeting in
respect of any Note challenged as not Outstanding and ruled by the chairman of
the
9-2
meeting to be not Outstanding. The chairman of the meeting shall have no right
to vote, except as a Noteholder or proxy.
D. At any meeting of Noteholders, the presence of persons holding or
representing Notes in an aggregate Principal Amount sufficient under the
appropriate provision of this Indenture to take action upon the business for the
transaction of which such meeting was called shall constitute a quorum. Any
meeting of Noteholders duly called pursuant to Section 9.3 hereof may be
adjourned from time to time by vote of the Holders (or proxies for the Holders)
of a majority in aggregate Principal Amount of the Notes represented at the
meeting and entitled to vote, whether or not a quorum shall be present; and the
meeting may be held as so adjourned without further notice.
Section 9.6. Counting Votes and Recording Action of Meetings. The
vote upon any resolution submitted to any meeting of Noteholders shall be by
written ballots on which shall be subscribed the signatures of the Holders of
Notes or of their representatives by proxy and the serial number or numbers of
the Notes held or represented by them. The permanent chairman of the meeting
shall appoint two inspectors of votes who shall count all votes cast at the
meeting for or against any resolution and who shall make and file with the
secretary of the meeting their verified written reports in duplicate of all
votes cast at the meeting. A record, at least in duplicate, of the proceedings
of each meeting of Noteholders shall be prepared by the secretary of the meeting
and there shall be attached to said record the original reports of the
inspectors of votes on any vote by ballot taken thereat and affidavits by one or
more persons having knowledge of the facts setting forth a copy of the notice of
the meeting and showing that said notice was published or mailed as provided in
Section 9.3 hereof. Each copy shall be signed and verified by the affidavits of
the permanent chairman and secretary of the meeting and one such copy shall be
delivered to the Corporation and another to the Trustee to be preserved by the
Trustee, the latter to have attached thereto the ballots voted at the meeting.
Any record so signed and verified shall be conclusive evidence of the matters
therein stated.
Section 9.7. Revocation by Noteholders. At any time prior to (but not
after) the evidencing to the Trustee, in the manner provided in Section 13.1
hereof, of the taking of any action by the Holders of the percentage in
aggregate Principal Amount of the Notes specified in this Indenture in
connection with such action, any Holder of a Note, the serial number of which is
included in the Note, the Holders of which have consented to such action may, by
filing written notice with the Trustee at its Principal Office and upon proof of
holding as provided in Section 13.1 hereof, revoke such consent so far as
concerns such Note. Except as aforesaid any such consent given by the Holder of
any Note shall be conclusive and binding upon such Holder and upon all future
Holders and owners of such Note and of any Note issued in exchange therefor or
in lieu thereof, irrespective of whether or not any notation in regard thereto
is made upon such Note. Any action taken by the Holders of the percentage in
aggregate Principal Amount of the Notes specified in
9-3
this Indenture in connection with such action shall be conclusively binding upon
the Corporation, the Trustee and the Holders of all the Notes.
9-4
ARTICLE TEN
REDEMPTION AND PREPAYMENT
Section 10.1. Right of Redemption and Prepayment. The Notes of any
series are subject to redemption and prepayment as provided in this Article Ten
and in the Supplemental Indenture creating such series.
Notes which are redeemable or may be prepaid before their Stated
Maturity shall be redeemed or prepaid in accordance with their terms, this
Indenture and (except as otherwise provided with respect to the Notes of any
particular series by the provisions of the Supplemental Indenture creating such
series) in accordance with this Article Ten.
Section 10.2. Election To Redeem, Prepay or Purchase; Notice to
Trustee; Senior Asset Requirement. The election of the Corporation to redeem or
prepay any Notes or cause any Notes then subject to redemption to be purchased
by the Trustee (other than on a Purchase Date or Mandatory Tender Date) shall be
evidenced by a Corporation Order, received by the Trustee no later than the
sixtieth (60th) day prior to the applicable Redemption Date, Prepayment Date or
such other date prior to the applicable Redemption Date or Prepayment Date
established with respect to a series of Notes in the Supplemental Indenture
authorizing the issuance of the Notes of such series, stating the Redemption
Date or Prepayment Date, as the case may be, the Principal Amount, the series of
Notes, and, if applicable, the Stated Maturity within a series, to be redeemed
or prepaid.
Notwithstanding any provision hereof to the contrary but apart from
the redemption of Notes which are no longer Outstanding by reason of Section
11.1 hereof or the redemption of Class A Notes on a Sinking Fund Payment Date,
no redemption, prepayment or purchase (other than on a Purchase Date or
Mandatory Tender Date) of Notes by the Trustee shall be effected hereunder
unless prior to the Trustee giving notice of redemption, transferring moneys to
the Retirement Account to make such prepayment or soliciting such purchase, the
Corporation furnishes the Trustee a Corporation Certificate to the effect that,
as of the date Notes are to be selected for redemption or purchase or such
determination to prepay is made, (1) if Class A Notes are to be redeemed,
prepaid or purchased, either (A) after giving effect to such redemption,
prepayment or purchase, the Senior Asset Requirement will be met, or (B) (i)
prior to such redemption, prepayment or purchase, the Senior Asset Requirement
was not being met, (ii) no Class B Notes or Class C Notes will be redeemed on
the Redemption Date, prepaid on the Prepayment Date or purchased on the purchase
date for the Class A Notes then proposed to be redeemed, prepaid or purchased,
and (iii) after giving effect to such redemption, prepayment or purchase, the
Senior Percentage will be greater than it would have been without such
redemption, prepayment or purchase; (2) if Class B Notes are to be redeemed,
prepaid or purchased, after giving effect to such redemption, prepayment or
purchase, the Senior Asset Requirement will be met;
10-1
and (3) if Class C Notes are to be redeemed, prepaid or purchased, after giving
effect to such redemption, prepayment or purchase, the Senior Asset Requirement
will be met and there shall be no deficiency then existing in the Note Fund, the
Reserve Fund or the Rebate Fund. Such Notes may be redeemed on the Redemption
Date, prepaid on the Prepayment Date or purchased on the purchase date therefor
if the foregoing conditions are met on the date such Notes are selected for
redemption or purchase or as of the date on which moneys are transferred to the
Retirement Account to make any prepayment, whether or not such conditions are
met on the Redemption Date, the Prepayment Date or the date of purchase. Any
election to redeem Notes of a series may also be conditioned upon such
additional requirements as may be set forth in the Supplemental Indenture
authorizing the issuance of such Notes.
Section 10.3. Selection by Trustee of Notes To Be Redeemed. Except as
may be otherwise specified in a Supplemental Indenture with respect to a series
of Notes thereby created, if less than all of the Outstanding Notes of any
series are to be redeemed, the particular Notes to be redeemed shall be selected
by the Trustee from the Outstanding Notes of that series not previously called
for redemption so that, to the maximum extent possible taking into account
redemption of Notes in $5,000 increments approximately equal percentages of each
Stated Maturity of Notes of such series will be redeemed.
If less than all Notes of a series and a Stated Maturity are to be
redeemed, the Trustee shall select by lot or in such other manner as the Trustee
shall deem fair and appropriate the particular Notes of such Stated Maturity and
series to be redeemed. The Trustee may provide for the selection for redemption
of portions of the principal of Notes in the denomination larger than $5,000 or
the smallest authorized denomination of the Notes of that series or an integral
multiple thereof.
The Trustee shall promptly notify the Corporation and any Paying Agent
in writing of the Notes selected for redemption and, in the case of any Note
selected for partial redemption, the Principal Amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Note redeemed or to be redeemed only in part, to the portion of
the principal of such Note which has been or is to be redeemed.
Section 10.4. Notice of Redemption. Except as otherwise provided with
respect to the Notes of any particular series by the provisions of the
Supplemental Indenture creating such series, notice of redemption shall be given
by first-class mail, postage prepaid, mailed not more than sixty (60) days nor
less than thirty (30) days prior to the Redemption Date to each Holder of Notes
to be redeemed at the address of such Holder appearing in the Note Register; but
neither failure to give such notice nor any defect in any notice so given shall
affect the
10-2
validity of the proceedings for redemption of any Note not affected by such
failure or defect.
In addition to the notice prescribed by the foregoing paragraph, the
Trustee shall also give notice of the redemption of any Note or Notes or
portions thereof at least thirty (30) days before the Redemption Date by
certified mail or telecopy to all registered securities depositories then in the
business of holding substantial amounts of obligations of the character of the
Notes (such depositories now being The Depository Trust Company, of New York,
New York; Midwest Securities Trust Company, of Chicago, Illinois; and
Philadelphia Depository Trust Company, of Philadelphia, Pennsylvania) and to two
(2) or more national information services that disseminate information regarding
municipal bond redemptions; provided that any defect in or any failure to give
any notice of redemption prescribed by this paragraph shall not affect the
validity of the proceedings for the redemption of any Note.
All notices of redemption shall state:
a. the Redemption Date,
b. the Redemption Price,
c. the name (including series designation), Stated Maturity and CUSIP
numbers of the Notes to be redeemed, the Principal Amount of Notes of each
series to be redeemed, and, if less than all outstanding Notes of a series
are to be redeemed, the identification (and, in the case of partial
redemption, the respective Principal Amounts) of the Notes of each series
to be redeemed,
d. that, on the Redemption Date, the Redemption Price of and accrued
interest on each such Note will become due and payable and that interest on
each such Note shall cease to accrue on and after such date,
e. the place or places where such Notes are to be surrendered for
payment of the Redemption Price thereof and accrued interest thereon, and
f. if it be the case, that such Notes are to be redeemed by the
application of certain specified trust moneys and for certain specified
reasons.
Within sixty (60) days after any Redemption Date, a second notice of
redemption shall be given, in the manner described above, to the Holder of any
Note that was not presented for redemption within thirty (30) days after the
Redemption Date.
Section 10.5. Notes Payable on Redemption Date and Sinking Fund
Payment Date. Notice of redemption having been given as aforesaid, the Notes so
to be redeemed shall, on the Redemption Date, become due and payable at the
10-3
Redemption Price specified plus accrued interest thereon to the Redemption Date
and on and after such date (unless the Corporation shall default in the payment
of the Redemption Price and accrued interest) such Notes shall cease to bear
interest. Upon surrender of any such Note for redemption in accordance with such
notice, such Note shall be paid at the Redemption Price thereof plus (unless the
Redemption Date is a regularly scheduled Interest Payment Date) accrued interest
to the Redemption Date. Installments of interest whose Stated Maturity is on or
prior to the Redemption Date shall continue to be payable to the applicable
Noteholder.
If any Note called for redemption shall not be so paid upon surrender
thereof for redemption, the Redemption Price and, to the extent lawful, interest
thereon shall, until paid, bear interest from the Redemption Date at the rate
borne by the Note.
Section 10.6. Notes Redeemed or Prepaid in Part. Any Note which is to
be redeemed only in part shall be surrendered to the Paying Agent (with, if the
Paying Agent so requires, due endorsement by, or a written instrument of
transfer in form satisfactory to the Paying Agent duly executed by, the Holder
thereof or his attorney duly authorized in writing) and the appropriate officers
of the Corporation shall execute and the Trustee or an Authenticating Agent
shall authenticate and deliver to the Holder of such Note, without service
charge, a new Note or Notes of the same series, of any authorized denomination
or denominations, having the same Stated Maturity and interest rate as requested
by such Holder, in aggregate Principal Amount equal to and in exchange for the
unredeemed portion of the principal of the Note so surrendered.
Any Note which is to be prepaid only in part shall remain Outstanding
in the then current Principal Amount. The Trustee shall retain a record of the
Principal Amount of each Note any portion of the principal of which has been
prepaid in part and shall give the Note Registrar (if other than the Trustee)
prompt written notice of the current Principal Amount of each such Note as of
the end of each calendar month.
Section 10.7. Purchase of Notes. The Corporation may at any time,
but subject to Section 10.2 hereof, authorize and direct the Trustee to purchase
Notes in the open market out of any funds available for such purpose, such
purchases to be made at a price not in excess of the amount specified in this
Indenture or, if no amount is specified, the Principal Amount thereof plus
accrued interest and any applicable redemption premium. In addition, the
Corporation may, from time to time, direct the Trustee to request the submission
of tenders following published notice requesting such submission prior to making
the purchases authorized pursuant to this Section 10.7. The Corporation may
specify the maximum and minimum period of time which shall transpire between the
date upon which such notice is to be given and the date upon which such tenders
are to be accepted or may authorize the Trustee to determine the same in its
discretion. No tenders shall be considered or accepted at any price exceeding
the maximum price specified by the
10-4
Corporation for the purchase of Notes. The Trustee shall accept bids with the
lowest price and, in the event the moneys available for purchase pursuant to
such tenders are not sufficient to permit acceptance of all tenders and if there
shall be tenders at an equal price above the amounts of moneys available for
purchase, then the Trustee shall, determine in its discretion, the Notes
tendered which shall be purchased. All Notes purchased by the Trustee pursuant
to this Section 10.7 shall be canceled and not reissued.
10-5
ARTICLE ELEVEN
DEFEASANCE; MONEYS HELD FOR
PAYMENT OF DEFEASED NOTES
Section 11.1. Discharge of Liens and Pledges; Notes No Longer
Outstanding and Deemed To Be Paid Hereunder. The obligations of the Corporation
under this Indenture, and the liens, pledges, charges, trusts, covenants and
agreements of the Corporation herein made or provided for, shall be fully
discharged and satisfied as to any Note and such Note shall no longer be deemed
to be Outstanding hereunder:
(i) when such Note shall have been canceled, or shall have been
purchased by the Trustee from moneys held by it under this Indenture; or
(ii) as to any Note not canceled or so purchased, when payment of the
principal of and the applicable redemption premium, if any, on such Note,
plus interest on such principal to the due date thereof (whether such due
date be by reason of Stated Maturity or upon redemption or prepayment, or
otherwise), either (a) shall have been made or caused to be made in
accordance with the terms hereof, or (b) shall have been provided for by
irrevocably depositing with the Trustee and irrevocably appropriating and
setting aside exclusively for such payment, (1) moneys sufficient to make
such payment or (2) Government Obligations maturing as to principal and
interest in such amount and at such times as will ensure the availability
of sufficient moneys to make such payment and, if payment of all then
Outstanding Notes of an issue (as defined in the Arbitrage Regulations) is
to be so provided for, all payments required to be made to the United
States Treasury or otherwise with respect to Rebate Amounts and Excess
Earnings under Section 4.5 hereof, and all necessary and proper fees,
compensation and expenses of the Trustee, any Deposit Agents, any
Remarketing Agents, any Depositaries, any Auction Agents, any Broker-
Dealers, any Authenticating Agents, the Note Registrar and any Paying
Agents pertaining to the Note with respect to which such deposit is made
shall have been paid or the payment thereof provided for to the
satisfaction of the Trustee, said Deposit Agents, said Remarketing Agents,
said Depositaries, said Auction Agents, said Broker-Dealers, said
Authenticating Agents, said Note Registrar and said Paying Agents.
Any deposit under the preceding clause (b) shall be accompanied by a Corporation
Certificate certifying that the moneys and Government Obligations so
appropriated and set aside are sufficient, and will mature as needed, to pay the
principal, premium, if any, and interest due on the Note with respect to which
such deposit has been made on the Stated Maturity or Redemption Date thereof and
on each Interest Payment Date on and prior to such Stated Maturity or Redemption
Date. At such time as a Note shall be deemed to be no longer Outstanding
hereunder, as aforesaid, such Note shall cease to draw interest from the due
date thereof (whether
11-1
such due date be by reason of maturity, or upon redemption or prepayment or by
declaration as aforesaid, or otherwise) and, except for the purposes of any such
payment from such moneys or Investment Securities, shall no longer be secured by
or entitled to the benefits of this Indenture.
Notwithstanding the foregoing, (A) in the case of Notes which by their
terms may be redeemed or otherwise prepaid prior to their Stated Maturities, no
deposit under clause (b) of subparagraph (ii) above shall constitute such
payment, discharge and satisfaction as aforesaid, as to all such Notes which are
to be redeemed prior to their respective Stated Maturities, until proper notice
of such redemption shall have been previously given in accordance with Section
10.4 hereof or provision satisfactory to the Trustee shall have been irrevocably
made for the giving of such notice, and (B) in the case of Notes which may be
required to be purchased on a Purchase Date, no deposit under clause (b)(2) of
subparagraph (ii) above shall constitute such payment, discharge and
satisfaction as aforesaid.
Any such moneys so deposited with the Trustee as provided in this
Section 11.1 may at the direction of the Corporation also be invested and
reinvested in Government Obligations maturing in the amounts and time as
hereinbefore set forth, and all income from all Government Obligations in the
hands of the Trustee pursuant to this Section 11.1 which is not required for the
payment of the Notes and interest and premium thereon with respect to which such
moneys shall have been so deposited shall be deposited in the Rebate Fund, to
the extent required by Section 4.5 hereof, and thereafter (A) if any Notes are
then Outstanding, be deposited in the Revenue Fund as and when realized and
collected, for use and application as are other moneys credited to such Fund,
and (B) if no Notes are then Outstanding and no amounts are owed to any Other
Beneficiaries hereunder, be paid to the Corporation.
Notwithstanding the satisfaction and discharge of this Indenture with
respect to any Note, the right to transfer and exchange such Note pursuant to
Section 3.7 shall survive.
Notwithstanding any provision of any other Section of this Indenture
which may be contrary to the provisions of this Section 11.1, all moneys or
Investment Securities set aside and held in trust pursuant to the provisions of
this Section 11.1 for the payment of the principal of, premium, if any, and
interest on Notes shall be applied to and used solely for the payment of the
principal of, premium, if any, and interest on the particular Note with respect
to which such moneys and Investment Securities have been so set aside in trust.
Anything in Article Eight hereof to the contrary notwithstanding, if
moneys or Government Obligations have been deposited or set aside with the
Trustee pursuant to this Section 11.1 for the payment of Notes and such Notes
shall be deemed to have been paid and to be no longer Outstanding hereunder as
provided in this Section 11.1, but such Notes shall not have in fact been
actually
11-2
paid in full, no amendment to the provisions of this Article Eleven shall be
made without the consent of the Holder of each Note affected thereby.
The Corporation may at any time cause to be canceled any Notes
previously executed and delivered, which the Corporation may have acquired in
any manner whatever, and such Notes upon such surrender for cancellation shall
be deemed to be paid and no longer Outstanding hereunder.
The obligations of the Corporation under this Indenture, and the
liens, pledges, charges, trusts, covenants and agreements of the Corporation
herein made or provided for, shall be fully discharged and satisfied as to any
Demand Purchase Agreement, Credit Enhancement Facility or Swap Agreement in the
manner and with the effect provided in the Supplemental Indenture providing for
such Demand Purchase Agreement, Credit Enhancement Facility or Swap Agreement.
Notwithstanding the foregoing provisions of this Section 11.1, no Note
shall be defeased hereunder if, after giving effect to the defeasance, the
requirements in Section 10.2 hereof are not met on the date such Note is to be
defeased, treating, for purposes of said Section 10.2, any Note that is to be
defeased as being redeemed on the date it is to be defeased at an assumed
redemption price equal to the Principal Amount thereof with interest accrued
thereon to the date of defeasance, plus, if the Note is to be redeemed under
this Section 11.1 at a Redemption Price greater than the Principal Amount
thereof, a premium equal to the amount by which the Redemption Price exceeds
such Principal Amount.
Section 11.2. Notes Not Presented for Payment When Due; Moneys Held
for the Notes after Due Date of Notes. Subject to the provisions of the next
sentence of this paragraph, if any Note shall not be presented for payment when
the principal thereof shall become due, whether at Stated Maturity, at the date
fixed for redemption or otherwise, and if moneys or Investment Securities
described in subdivision 1 of the definition thereof in Section 1.1 hereof shall
at such due date be held by the Trustee, or a Paying Agent therefor, in trust
for that purpose sufficient and available to pay the principal of and premium,
if any, on such Note, together with all interest due on such principal to the
due date thereof or to the date fixed for redemption thereof, all liability of
the Corporation for such payment shall forthwith cease, determine and be
completely discharged, and thereupon it shall be the duty of the Trustee, or
such Paying Agent, to hold said moneys or Investment Securities without
liability to the Holder of such Note for interest thereon, in trust for the
benefit of the Holder of such Note, who thereafter shall be restricted
exclusively to said moneys or Investment Securities for any claim of whatever
nature on his part on or with respect to said Note, including any claim for the
payment thereof. In the event any such moneys or Investment Securities, or any
other moneys or Investment Securities with respect to interest due and payable
on any Note prior to the Maturity thereof, held by the Trustee or any Paying
Agent for the Holders of such Notes remain unclaimed as of (a) fifty-five (55)
days after the principal of or interest on the respective Notes with respect to
which such moneys or Investment
11-3
Securities have been so set aside has become due and payable (whether at Stated
Maturity, upon call for redemption or otherwise), the Trustee shall, within five
(5) days thereafter, give notice thereof to the Holders of such Notes in the
same manner as a notice of redemption given in accordance with Section 10.4
hereof, and (b) two (2) years after the principal of or interest on such Notes
has become due and payable as aforesaid, the Trustee or such Paying Agent, as
the case may be, shall, without further request by the Corporation, pay such
moneys and Investment Securities, to the extent permitted by law, to the
Corporation against a written receipt therefor, and otherwise hold or dispose of
such moneys and Investment Securities as required by law; provided that, if
applicable law requires the Trustee or any Paying Agent to dispose of any such
moneys or Investment Securities prior to the end of the period described in the
preceding clause (b), disposition of such moneys and Investment Securities shall
be made at the time and otherwise in accordance with such law.
11-4
ARTICLE TWELVE
NOTEHOLDERS' LISTS AND REPORTS
Section 12.1. Note Registrar To Furnish Trustee Names and Addresses
to Noteholders. The Note Registrar will furnish or cause to be furnished to the
Trustee (a) not more than five (5) days after the earlier of (i) each Record
Date and (ii) three months after the last Record Date, a list, in such form as
the Trustee may reasonably require, of the names and addresses of the Holders of
Notes as of such Record Date, (b) at such other times as the Trustee may request
in writing, within thirty (30) days after receipt by the Note Registrar of any
such request, a list of similar form and content as of a date not more than ten
(10) days prior to the time such list is furnished; provided, however, that so
long as the Trustee is the Note Registrar, no such list shall be required to be
furnished.
Section 12.2. Preservation of Information; Communications to
Noteholders.
(a) The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of the Holders of Notes contained in the
most recent list furnished to the Trustee as provided in Section 12.1 and the
names and addresses of Holders of Notes received by the Trustee in its capacity
as Note Registrar. The Trustee may destroy any list furnished to it as provided
in such Section 12.1 upon receipt of a new list so furnished.
(b) Noteholders may communicate pursuant to TIA (S) 312(b) with other
Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Corporation, the Trustee and the Note Registrar shall have the
protection of TIA (S) 312(c).
Section 12.3. Reports by Corporation.
(a) The Corporation shall:
(i) file with the Trustee, within fifteen (15) days after the
Corporation is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may from
time to time by rules and regulations prescribe) which the Corporation may
be required to file with the Commission pursuant to Section 13 or 15(d) of
the Exchange Act;
(ii) file with the Trustee and the Commission in accordance with rules
and regulations prescribed from time to time by the Commission such
12-1
additional information, documents and reports with respect to compliance by
the Corporation with the conditions and covenants of this Indenture as may
be required from time to time by such rules and regulations; and
(iii) supply to the Trustee a sufficient number of copies (and the
Trustee shall transmit by mail to all Noteholders described in TIA (S)
313(c)) of such summaries of any information, documents and reports
required to be filed by the Corporation pursuant to clauses (i) and (ii) of
this paragraph as may be required by rules and regulations prescribed from
time to time by the Commission.
(b) Unless the Corporation otherwise determines, the Fiscal Year of
the Corporation shall end on June 30 of each year. In the event the Corporation
changes its Fiscal Year, it shall promptly notify the Trustee.
Section 12.4. Reports by Trustee. If required by TIA (S) 313(a),
within sixty (60) days after each June 30 beginning with June 30, 1998, the
Trustee shall mail to each Noteholder as required by TIA (S) 313(c) a brief
report dated as of such date that complies with TIA (S) 313(a). The Trustee also
shall comply with TIA (S) 313(b).
A copy of each report at the time of its mailing to Noteholders shall
be filed by the Trustee with the Commission and each other stock exchange, if
any, on which the Notes are listed. The Corporation shall notify the Trustee if
and when the Notes are listed on any stock exchange.
12-2
ARTICLE THIRTEEN
MISCELLANEOUS
Section 13.1. Consent, Etc., of Noteholders. Any consent, request,
direction, approval, objection or other instrument required by this Indenture to
be signed and executed by Noteholders may be in any number of writings of
similar tenor and may be signed or executed by such Noteholders in person or by
agent appointed in writing. Proof of the execution of any such consent, request,
direction, approval, objection or other instrument or of the writing appointing
any such agent and of the ownership of Notes, if made in the following manner,
shall be sufficient for any of the purposes of this Indenture, and shall be
conclusive in favor of the Corporation, any Paying Agent, any Deposit Agent, any
Remarketing Agent, any Depositary, any Auction Agent, any Broker-Dealer or the
Trustee with regard to any action taken by it under such consent, request,
direction, approval, objection or other instrument, namely:
(A) The fact and date of the execution by any person of any such
writing may be proved by the certificate of any officer in any jurisdiction
who by law has power to take acknowledgements within such jurisdiction that
the person signing such writing acknowledged before him the execution
thereof, or by an affidavit of any witness to such execution.
(B) The fact of ownership of Notes, the numbers and other
identification of such Notes, and the date of holding the same shall be
proved by the Note Register.
Section 13.2. Limitation of Rights. With the exception of rights
herein conferred, nothing expressed or mentioned in or to be implied from this
Indenture or the Notes is intended or shall be construed to give to any Person
other than the parties hereto, any Authenticating Agent, each Paying Agent, each
Deposit Agent, each Remarketing Agent, each Depositary, each Auction Agent, each
Broker-Dealer and the Beneficiaries, any legal or equitable right, remedy, or
claim under or in respect to this Indenture or any covenants, conditions and
provisions herein contained; this Indenture and all of the covenants, conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of the parties hereto, any Authenticating Agent, each Paying Agent, each
Deposit Agent, each Remarketing Agent, each Depositary, each Auction Agent, each
Broker-Dealer and the Beneficiaries as herein provided.
Section 13.3. Severability. If any provision of this Indenture shall
be held or deemed to be or shall, in fact, be inoperative or unenforceable as
applied in any particular case in any jurisdiction or jurisdictions or in all
jurisdictions or in all cases because it conflicts with any provisions of any
constitution or statute or rule of public policy, or for any other reason, such
circumstances shall not have the effect of rendering the provision in question
inoperative or unenforceable in any other case
13-1
or circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative, or unenforceable to any extent whatever.
The invalidity of any one or more phrases, sentences, clauses or
paragraphs in this Indenture contained shall not affect the remaining portions
of this Indenture or part thereof.
Section 13.4. Notices. A. All notices, certificates or other
communications hereunder shall be sufficiently given and shall be deemed given
when mailed by certified mail, postage prepaid, with proper address as indicated
below or, as to Other Beneficiaries, to a proper address specified in or
pursuant to a Supplemental Indenture. The Corporation, the Trustee and any
Rating Agency may, by written notice given by each to the others, designate any
other address or addresses to which notices, certificates or other
communications to them shall be sent when required as contemplated by this
Indenture. Until otherwise provided by the respective parties, all notices,
certificates and communications to each of them shall be addressed as follows:
To the Corporation: Education Loans Incorporated
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: President
To the Trustee: First Bank National Association
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Trust Department
To Fitch: Fitch Investors Service, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Asset-Backed Group
To Moody's: ▇▇▇▇▇'▇ Investors Service
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: Public Finance Department--
Structured Finance Group
B. Except as is otherwise provided in this Indenture, any provision
in this Indenture for the mailing of notice or other instrument to Holders of
Notes shall be fully complied with if it is mailed by first-class mail, postage
prepaid, to each Holder of Notes outstanding at the address appearing on the
Note Register. In addition, whenever notice is to be mailed under this Indenture
to the Holders of Notes, the Trustee shall also, upon request, mail a copy of
such notice to (1) any Holder of at least $1,000,000 in aggregate Principal
Amount of the Notes (or, in the
13-2
event less than $1,000,000 in aggregate Principal Amount of Notes is
outstanding, the Holder of all outstanding Notes), in addition to the copy
mailed to such Holder's address appearing on the Note Register, at such other
address as such Holder shall specify in writing to the Trustee, and (2) any
Person that is the beneficial owner of a Note, as evidenced to the satisfaction
of the Trustee, at such address as such beneficial owner shall specify in
writing to the Trustee; provided that any defect in or failure to mail any such
notice prescribed by this sentence shall not affect the validity of any
proceedings to be taken (including, without limitation, for the redemption of
Notes) pursuant to such notice.
Section 13.5. Counterparts. This Indenture may be simultaneously
executed in several counterparts, each of which shall be an original and all of
which shall constitute but one and the same instrument.
Section 13.6. Indenture Constitutes a Security Agreement. An
executed counterpart or certified copy of this Indenture delivered to and
accepted by the Trustee shall constitute a security agreement pursuant to and
for all purposes of the Uniform Commercial Code of the State of South Dakota and
of any other state or jurisdiction.
Section 13.7. Payments Due on Non-Business Days. Except as may be
otherwise provided in a Supplemental Indenture, in any case where the principal
of, premium, if any, or interest on the Notes or amounts due to any Beneficiary
shall be due on a day other than a Business Day, then payment of such principal,
premium and interest may be made on the next succeeding Business Day with the
same force and effect as if made on the date due and no interest shall accrue
for the intervening period.
Section 13.8. Notices to Rating Agencies. So long as any Outstanding
Notes are rated by a Rating Agency, the Trustee agrees to give the Rating Agency
prompt written notice of the appointment of any successor Trustee.
Section 13.9. Governing Law. This Indenture shall be governed by and
be construed in accordance with the laws of the State of South Dakota without
giving effect to the conflicts-of-laws principles thereof.
Section 13.10. Rights of Other Beneficiaries. All rights of any
Other Beneficiary under this Indenture to consent to or direct certain remedies,
waivers, actions and amendments hereunder shall cease for so long as such Other
Beneficiary is in default of any of its obligations or agreements under the Swap
Agreement, the Credit Enhancement Facility or the Demand Purchase Agreement by
reason of which such Person is an Other Beneficiary.
Section 13.11. Conflict with Trust Indenture Act. If any provision of
hereof limits, qualifies or conflicts with another provision hereof that is
required to
13-3
be included in this Indenture by any of the provisions of the Trust Indenture
Act, such required provision shall control.
The provisions of TIA (S)(S) 310 through 317 that impose duties on any
Person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
Section 13.12. Opinions as to Trust Estate.
(a) On the date of issuance and delivery of the Initial Notes, the
Corporation shall furnish to the Trustee an opinion of Counsel either stating
that, in the opinion of such Counsel, such action has been taken with respect to
the recording and filing of this Indenture, any indentures supplemental hereto,
and any other requisite documents, and with respect to the execution and filing
of any financing statements and continuation statements, as are necessary to
perfect and make effective the security interest in favor of the Trustee, for
the benefit of the Trustee, created by this Indenture and reciting the details
of such action, or stating that, in the opinion of such Counsel, no such action
is necessary to make such lien and security interest effective.
(b) On or before June 30 in each calendar year, beginning in 1998,
the Corporation shall furnish to the Trustee an opinion of Counsel with respect
to each jurisdiction in which the Financed Student Loans are located or a
Uniform Commercial Code financing statement has been filed by the Corporation
either stating that, in the opinion of such Counsel, such action has been taken
with respect to the recording, filing, re-recording and refiling of this
Indenture, any indentures supplemental hereto and any other requisite documents
and with respect to the execution and filing of any financing statements and
continuation statements as is necessary to maintain the security interest
created by this Indenture and reciting the details of such action or stating
that in the opinion of such Counsel no such action is necessary to maintain such
lien and security interest. Such opinion of Counsel shall also describe the
recording, filing, re-recording and refiling of this Indenture, any indentures
supplemental hereto and any other requisite documents and the execution and
filing of any financing statements and continuation statements that will, in the
opinion of such counsel, be required to maintain the lien and security interest
of this Indenture until June 30 in the following calendar year.
Section 13.13. Recording of Indenture. If this Indenture is subject
to recording in any appropriate public recording offices, such recording is to
be effected by the Corporation and at its expense accompanied by an opinion of
Counsel (which may be counsel to the Trustee or any other Counsel reasonably
acceptable to the Trustee) to the effect that such recording is necessary either
for the protection of the Noteholders or any other Person secured hereunder or
for the enforcement of any right or remedy granted to the Trustee under this
Indenture.
13-4
Section 13.14. No Petition. The Trustee, by entering into this
Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree
that they will not at any time institute against the Corporation or join in any
institution against the Corporation of, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings, or other proceedings under
any United States Federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, this Indenture or the Servicing
Agreement.
Section 13.15. Income Tax Characterization. The Corporation has
structured this Indenture and the Notes with the intention that the Notes will
qualify under applicable federal, state, local and foreign tax law as
indebtedness of the Corporation secured by the Trust Estate. The Corporation,
the Trustee, the Servicer and each Noteholder agree to treat and to take no
action inconsistent with the treatment of the Notes as such indebtedness for
purposes of federal, state, local and foreign income or franchise taxes and any
other tax imposed on or measured by income. Each Noteholder, by acceptance of
its Note, agrees to be bound by the provisions of this Section. Each Noteholder
agrees that it will cause any Person acquiring an interest in a Note through it
to comply with this Indenture as to treatment as indebtedness under applicable
tax law, as described in this Section.
13-5
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed, and their respective corporate seals to be hereunto affixed
and attested, all as of the day and year first above written.
EDUCATION LOANS INCORPORATED
(SEAL)
By -----------------------------
President
Attest:
-----------------------------
Secretary
FIRST BANK NATIONAL ASSOCIATION,
as Trustee
(SEAL)
By
--------------------------------
Its
-----------------------------
Attest:
-----------------------------
Its -------------------------
13-6
EXHIBIT A
---------
Addressed to Trustee
ELIGIBLE LOAN ACQUISITION CERTIFICATE
-------------------------------------
This Eligible Loan Acquisition Certificate is submitted pursuant to
the provisions of Section 4.2 of the Indenture of Trust, dated as of July 1,
1997 (as amended and supplemented from time to time in accordance with its
terms, the "Indenture"), between the Education Loans Incorporated (the
"Corporation") and First Bank National Association, Minneapolis, Minnesota, as
Trustee. All capitalized terms used in this Certificate and not otherwise
defined herein shall have the respective meanings given to such terms in the
Indenture. In your capacity as Trustee, you are hereby authorized and requested
to disburse to the Lenders identified in the schedule attached hereto the
amounts specified in such schedule from the Series ________ Acquisition Account
(or, in the case of an exchange pursuant to Section 4.2 of the Indenture, the
Student Loans listed in Annex 1 hereto) for the acquisition of Eligible Loans.
With respect to the Eligible Loans so to be acquired, the Corporation hereby
certifies as follows:
1. The Eligible Loans to be acquired (the "Acquired Eligible Loans")
will be further described in an updating certificate as required by Section 4.2
of the Indenture.
2. The amount to be disbursed pursuant to this Certificate does not
exceed the purchase price of the Acquired Eligible Loans specified in the
applicable Supplemental Indenture (or, if a Financed Student Loan is being sold
in exchange for an Acquired Eligible Loan under the provisions of Section 4.2 of
the Indenture, the aggregate Principal Balance of, and accrued noncapitalized
borrower interest on, such Financed Student Loan does not exceed the aggregate
Principal Balance of, and accrued noncapitalized borrower interest on, such
Acquired Eligible Loan plus any moneys deposited with the Trustee under the
Indenture as part of the sale price of such Financed Student Loan).
3. Each Acquired Eligible Loan is an Eligible Loan authorized so to
be acquired by the Indenture.
4. You have been previously, or are herewith, provided with the
following items:
(a) with respect to each Acquired Eligible Loan, a copy of the
Student Loan Purchase Agreement between the Corporation and the Lender
relating thereto;
(b) with respect to each Insured Loan included among the Acquired
Eligible Loans, the Certificate of Insurance relating thereto;
A-1
(c) with respect to each Guaranteed Loan included among the Acquired
Eligible Loans, a certified copy of the Guarantee Agreement relating
thereto;
(d) a copy of the opinion of counsel for the Lender referred to in
paragraph 6E of the related Student Loan Purchase Agreement;
(e) an opinion of Counsel to the Corporation specifying each action
necessary to perfect a security interest in all Eligible Loans to be
acquired by the Corporation pursuant to the Student Loan Purchase
Agreements in favor of the Trustee in the manner provided for by the
provisions of 20 U.S.C. (S) 1087-2(d)(3);
(f) evidence that the promissory notes evidencing each Acquired
Eligible Loan have had stamped thereon or affixed thereto a notice
specifying that they have been assigned to the Trustee and that Uniform
Commercial Code Financing Statements with respect thereto have been filed
in such place or places specified by the opinion of the counsel for the
Corporation pursuant to paragraph 4(e) hereof;
(g) evidence in form satisfactory to the Trustee that each action
necessary to perfect a first security interest in each of the Acquired
Eligible Loans in favor of the Trustee has been accomplished; and
(h) instruments duly assigning the Acquired Eligible Loans to the
Trustee.
5. The Corporation is not, on the date hereof, in default under the
Indenture or any Student Loan Purchase Agreement relating to the Acquired
Eligible Loans, and, to the best knowledge of the Corporation, no Lender is in
default under any Student Loan Purchase Agreement relating to the Acquired
Eligible Loans. The Corporation is not aware of any default existing on the date
hereof under any of the other documents referred to in paragraph 4 hereof, nor
of any circumstances which would reasonably prevent reliance upon the opinions
of counsel referred to in paragraphs 4(d) and 4(e) hereof.
6. All of the conditions specified in the Student Loan Purchase
Agreements relating to the Acquired Eligible Loans and the Indenture for the
acquisition of the Acquired Eligible Loans and the disbursement hereby
authorized and requested have been satisfied.
7. The undersigned is authorized to sign and submit this Certificate
on behalf of the Corporation.
A-2
WITNESS my hand this _________ day of ______________________, _____.
EDUCATION LOANS INCORPORATED
By _______________________
Its ___________________
A-3
EXHIBIT B
---------
Addressed to Trustee
ELIGIBLE LOAN ORIGINATION CERTIFICATE
-------------------------------------
This Eligible Loan Origination Certificate is submitted pursuant to
the provisions of Section 4.2 of the Indenture of Trust, dated as of July 1,
1997 (as amended and supplemented from time to time in accordance with its
terms, the "Indenture"), between the Education Loans Incorporated (the
"Corporation") and First Bank National Association, Minneapolis, Minnesota, as
Trustee. All capitalized terms used in this Certificate and not otherwise
defined herein shall have the respective meanings given to such terms in the
Indenture. In your capacity as Trustee, you are hereby authorized and requested
to disburse to __________________ the sums set forth in the schedule attached
hereto (the "Eligible Loan Origination Schedule") from the Series _________
Acquisition Account for the origination of Eligible Loans. With respect to the
Eligible Loans so to be originated, the Corporation hereby certifies as follows:
1. The Eligible Loans to be originated are those specified in the
Eligible Loan Origination Schedule (the "Originated Eligible Loans"). The
original principal amount of each Originated Eligible Loan is as shown on the
Eligible Loan Origination Schedule.
2. The amount to be disbursed pursuant to this Certificate does not
exceed the aggregate Principal Balance of, and accrued noncapitalized borrower
interest on, the Originated Eligible Loans.
3. Each Originated Eligible Loan is an Eligible Loan authorized so to
be originated by the Indenture.
4. You have been previously, or are herewith, provided with the
following items:
(a) with respect to each Insured Loan included among the Originated
Eligible Loans, the Certificate of Insurance relating thereto;
(b) with respect to each Guaranteed Loan included among the
Originated Eligible Loans, a certified copy of the Guarantee Agreement
relating thereto;
(c) an opinion of Counsel to the Corporation specifying each action
necessary to perfect a security interest in all Eligible Loans to be
originated by the Corporation in favor of the Trustee in the manner
provided for by the provisions of 20 U.S.C. (S) 1087-2(d)(3);
B-1
(d) evidence that the promissory notes evidencing each Originated
Eligible Loan have had stamped thereon or affixed thereto a notice
specifying that they have been assigned to the Trustee and that Uniform
Commercial Code Financing Statements with respect thereto have been filed
in such place or places specified by the opinion of the counsel for the
Corporation pursuant to paragraph 4(c) hereof;
(e) evidence in form satisfactory to the Trustee that each action
necessary to perfect a first security interest in each of the Originated
Eligible Loans in favor of the Trustee has been accomplished; and
(f) instruments duly assigning the Originated Eligible Loans to the
Trustee.
5. The Corporation is not, on the date hereof, in default under the
Indenture. The Corporation is not aware of any default existing on the date
hereof under any of the other documents referred to in paragraph 4 hereof, nor
of any circumstances which would reasonably prevent reliance upon the opinions
of counsel referred to in paragraph 4(c) hereof.
6. All of the conditions specified in the Indenture for the
origination of the Originated Eligible Loans and the disbursement hereby
authorized and requested have been satisfied.
7. The undersigned is authorized to sign and submit this Certificate
on behalf of the Corporation.
WITNESS my hand this _________ day of ______________________, _____.
EDUCATION LOANS INCORPORATED
By ___________________
Its ___________________
B-2
EXHIBIT C
Addressed to Trustee
STUDENT LOAN ACQUISITION CERTIFICATE
This Student Loan Acquisition Certificate is submitted pursuant to the
provisions of Section 4.8 of the Indenture of Trust, dated as of July 1, 1997
(as amended or supplemented from time to time in accordance with its terms, the
"Indenture"), between the Education Loans Incorporated (the "Corporation") and
First Bank National Association, Minneapolis, Minnesota, as Trustee. All
capitalized terms used in this Certificate and not otherwise defined herein
shall have the respective meanings given to such terms in the Indenture. In your
capacity as Trustee, you are hereby authorized and requested to disburse to the
Lenders identified in the schedule attached hereto (the "Student Loan
Acquisition Schedule") the amounts specified in such Schedule from the Series
________ Surplus Account for the acquisition of Student Loans meeting the
requirements of clauses (A)(1) and (2) or (B) of the definition of "Eligible
Loans" in Section 1.1 of the Indenture. With respect to the Student Loans so to
be acquired, the Corporation hereby certifies as follows:
1. The Student Loans to be acquired are those specified in the
Student Loan Acquisition Schedule (the "Acquired Student Loans").
2. The amount to be disbursed pursuant to this Certificate does not
exceed the aggregate of the remaining Principal Balance of the Acquired Student
Loans plus accrued noncapitalized interest thereon payable by the Eligible
Borrower.
3. Each Acquired Student Loan is a Student Loan (and, except as
permitted by the provisions of Section 4.8 of the Indenture, is an Eligible
Loan) authorized so to be acquired by the Indenture.
4. You have been previously, or are herewith, provided with the
following items:
(a) with respect to each Acquired Student Loan, a copy of the Student
Loan Purchase Agreement between the Corporation and the Lender relating
thereto;
(b) with respect to each Insured Loan included among the Acquired
Student Loans, the Certificate of Insurance relating thereto;
(c) with respect to each Guaranteed Loan included among the Acquired
Student Loans, a certified copy of the Guarantee Agreement relating
thereto;
C-1
(d) a copy of the opinion of counsel for the Lender referred to in
paragraph 6E of the related Student Loan Purchase Agreement;
(e) an opinion of Counsel to the Corporation specifying each action
necessary to perfect a security interest in all Student Loans to be
acquired by the Corporation pursuant to the Student Loan Purchase
Agreements in favor of the Trustee in the manner provided for by the
provisions of 20 U.S.C. (S) 1087-2(d)(3);
(f) evidence that the promissory notes evidencing each Acquired
Student Loan have had stamped thereon or affixed thereto a notice
specifying that they have been assigned to the Trustee and that Uniform
Commercial Code Financing Statements with respect thereto have been filed
in such place or places specified by the opinion of the counsel for the
Corporation pursuant to paragraph 4(e) hereof;
(g) evidence in form satisfactory to the Trustee that each action
necessary to perfect a first security interest in each of the Acquired
Student Loans in favor of the Trustee has been accomplished;
(h) instruments duly assigning the Acquired Student Loans to the
Trustee; and
(i) the certifications required by Section 4.8 of the Indenture.
5. The Corporation is not, on the date hereof, in default under the
Indenture or any Student Loan Purchase Agreement relating to the Acquired
Student Loans, and, to the best knowledge of the Corporation, no Lender is in
default under any Student Loan Purchase Agreement relating to the Acquired
Student Loans. The Corporation is not aware of any default existing on the date
hereof under any of the other documents referred to in paragraph 4 hereof, nor
of any circumstances which would reasonably prevent reliance upon the opinions
of counsel referred to in paragraphs 4(d) and 4(e) hereof.
6. All of the conditions specified in the Student Loan Purchase
Agreements relating to the Acquired Student Loans and the Indenture for the
acquisition of the Acquired Student Loans and the disbursement hereby authorized
and requested have been satisfied.
7. The undersigned is authorized to sign and submit this Certificate
on behalf of the Corporation.
C-2
WITNESS my hand this ________ day of ________________________, ______.
EDUCATION LOANS INCORPORATED
By ______________________________
Its __________________________
C-3
EXHIBIT D
Addressed to Trustee
UPDATING ELIGIBLE LOAN ACQUISITION CERTIFICATE
This Updating Eligible Loan Acquisition Certificate is submitted
pursuant to the provisions of Section 4.2 of the Indenture of Trust, dated as of
July 1, 1997 (as amended and supplemented from time to time in accordance with
its terms, the "Indenture"), between the Education Loans Incorporated (the
"Corporation") and First Bank National Association, Minneapolis, Minnesota, as
Trustee. All capitalized terms used in this Certificate and not otherwise
defined herein shall have the respective meanings given to such terms in the
Indenture. In your capacity as Trustee, you have, pursuant to an Eligible Loan
Acquisition Certificate, dated _________________, been previously authorized and
requested to disburse to ____________________ the sum of $______________ from
the Series ________ Acquisition Account (or, in the case of an exchange pursuant
to Section 4.2 of the Indenture, the Student Loans listed in Annex 1 hereto) for
the acquisition of Eligible Loans. With respect to the Eligible Loans so
acquired, the Corporation hereby certifies as follows:
1. The Eligible Loans acquired with such moneys or upon such
exchange are those specified in Schedule A attached hereto (the "Acquired
Eligible Loans").
2. The remaining Principal Balance of each Acquired Eligible Loan is
as shown on such Schedule A.
3. The undersigned is authorized to sign and submit this Certificate
on behalf of the Corporation.
WITNESS my hand this ________ day of ________________________, ______.
EDUCATION LOANS INCORPORATED
By _________________________________
Its ________________________________
D-1
EXHIBIT C
---------
NOTICE OF A PAYMENT DEFAULT
---------------------------
EDUCATION LOANS INCORPORATED
TAX EXEMPT [TAXABLE] AUCTION RATE STUDENT LOAN
ASSET-BACKED CALLABLE NOTES
SENIOR SERIES 1997-1
NOTICE IS HEREBY GIVEN that a Payment Default has occurred and not
been cured with respect to the Series 1997-1_____ Notes. Determination of the
Auction Rate Series 1997-1 Note Interest Rate on the Tax Exempt [Taxable]
Auction Rate Series 1997-1 Notes pursuant to the Auction Procedures will be
suspended. The Auction Rate Series 1997-1 Note Interest Rate on each series of
the Tax Exempt [Taxable] Auction Rate Series 1997-1 Notes for each Auction
Period commencing after the date of Payment Default will equal the Non-Payment
Rate (as to each such series with respect to which a Payment Default exists) or
the Maximum Auction Rate [Net Loan Rate] (as to all other series), as the case
may be, as it is determined by the Trustee on the first day of such Auction
Period.
Terms used herein have the meanings set forth in the First
Supplemental Indenture of Trust relating to the above-referenced Notes.
Dated: FIRST BANK NATIONAL
------------- ASSOCIATION, as Trustee
By:
----------------------
C-1
EXHIBIT D
---------
NOTICE OF CURE OF PAYMENT DEFAULT
---------------------------------
EDUCATION LOANS INCORPORATED
TAX EXEMPT [TAXABLE] AUCTION RATE STUDENT LOAN
ASSET-BACKED CALLABLE NOTES
SENIOR SERIES 1997-1
NOTICE IS HEREBY GIVEN that a Payment Default with respect to the
Auction Rate Series 1997-1 Notes has been waived or cured. The next Auction Date
is ________________________ with respect to the Series 1997-1A Notes,
________________________ with respect to the Series 1997-1B Notes,
________________________ with respect to the Series 1997-1C Notes,
________________________ with respect to the Series 1997-1D Notes, and
________________________ with respect to the Series 1997-1E Notes
[________________________ with respect to the Series 1997-1G Notes, and
________________________ with respect to the Series 1997-1H Notes].
Terms used herein have the meanings set forth in the First
Supplemental Indenture of Trust relating to the above-referenced Notes.
Dated: FIRST BANK NATIONAL
----------------- ASSOCIATION, as Trustee
By:
--------------------------------
D-1
EXHIBIT E
---------
NOTICE OF PROPOSED AUCTION PERIOD ADJUSTMENT
--------------------------------------------
EDUCATION LOANS INCORPORATED
TAX EXEMPT [TAXABLE] AUCTION RATE STUDENT LOAN
ASSET-BACKED CALLABLE NOTES
SENIOR SERIES 1997-1___
Notice is hereby given that Education Loans Incorporated proposes to
change the length of one or more Auction Periods with respect to the Notes
identified above, pursuant to the First Supplemental Indenture of Trust relating
to such Notes (the "First Supplemental Indenture"), as follows:
1. The change will take effect on the Interest Rate Adjustment Date
for the next Auction Period (the "Effective Date").
2. For Auction Periods occurring after the Auction Period commencing
on the Effective Date, the Interest Rate Adjustment Dates will be
[_______________________].
3. The Auction Period Adjustment in Paragraph 2 shall take place only
if (A) the Trustee and the Auction Agent receive, by 11:00 a.m., New York City
time, on the Business Day before the Auction Date for the Auction Period
commencing on the Effective Date, a Corporation Certificate authorizing the
Auction Period Adjustment, along with [a copy of the opinion of Bond Counsel,]
the written consent of the Market Agent and the Rating Agency confirmations and,
if applicable, the written statement of the Trustee, the Auction Agent and the
Securities Depository, all as required by the First Supplemental Indenture, and
(B) Sufficient Bids exist on the Auction Date for the Auction Period commencing
on the Effective Date.
4. If the condition referred to in (A) above is not met, the Auction
Rate for the Auction Period commencing on the Effective Date will be determined
pursuant to the Auction Procedures 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 Auction Rate for the Auction Period commencing on the Effective Date shall
be the Maximum Auction Rate [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.
5. It is hereby represented, upon advice of the Auction Agent for the
Notes described herein, that there were Sufficient Bids for such Notes at the
Auction immediately preceding the date of this Notice.
E-1
Terms used herein have the meanings set forth in the First
Supplemental Indenture.
Dated: EDUCATION LOANS INCORPORATED
---------------
By:
-------------------------
E-2
EXHIBIT F
---------
NOTICE ESTABLISHING AUCTION PERIOD ADJUSTMENT
---------------------------------------------
EDUCATION LOANS INCORPORATED
TAX EXEMPT [TAXABLE] AUCTION RATE STUDENT LOAN
ASSET-BACKED CALLABLE NOTES
SENIOR SERIES 1997-1___
Notice is hereby given that Education Loans Incorporated hereby
establishes new lengths for one or more Auction Periods with respect to the
Notes identified above pursuant to the First Supplemental Indenture of Trust
relating to such Notes (the "First Supplemental Indenture"):
1. The change shall take effect on_______________________, the
Interest Rate Adjustment Date for the next Auction Period (the "Effective
Date").
2. For Auction Periods occurring after the Auction Period commencing
on the Effective Date, the Interest Rate Adjustment Dates shall be
[______________________________ ]; provided, however, that the length of
subsequent Auction Periods shall be subject to further change hereafter as
provided in Sections 3 and 10 of the First Supplemental Indenture.
3. The changes described in Paragraph 2 shall take place only upon
delivery of this Notice and the satisfaction of other conditions set forth in
the First Supplemental Indenture and our prior notice dated
___________________________________ regarding the proposed change.
Terms used herein have the meanings set forth in the First
Supplemental Indenture.
Dated: EDUCATION LOANS INCORPORATED
-------------------
By:
---------------------------
F-1
EXHIBIT G
---------
NOTICE OF CHANGE IN AUCTION DATE
--------------------------------
EDUCATION LOANS INCORPORATED
TAX EXEMPT [TAXABLE] AUCTION RATE STUDENT LOAN
ASSET-BACKED CALLABLE NOTES
SENIOR SERIES 1997-1___
Notice is hereby given by ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., as Market Agent for the
Notes identified above, that, with respect to such Notes, the Auction Date is
hereby changed as follows:
1. With respect to such Notes, the definition of "Auction Date" shall
be deemed amended by substituting "___________________________________ (number)
Business Day" in the seventh line thereof and by substituting
"___________________________________ (number) Business Days" for "two (2)
Business Days" in subsection (C) 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 such Notes shall be subject to further change
hereafter as provided in the First Supplemental Indenture of Trust relating to
such Notes (the "First Supplemental Indenture").
Terms used herein have the meanings set forth in the First
Supplemental Indenture.
▇▇▇▇▇ ▇▇▇▇▇▇ INC., as
Dated: Market Agent
-----------------
By:
---------------------------
G-1
EXHIBIT H-1
-----------
[List of Student Loan Purchase Agreements relating to
Eligible Loans acquired from the Series 1979 Trustee]
H-1-1
EXHIBIT H-2
-----------
[List of Student Loan Purchase Agreements relating to
Eligible Loans acquired from Series 1989 Trustee]
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
-----------
[List of Student Loan Purchase Agreements relating to
Eligible Loans acquired from Series 1994 Trustee
and financed from proceeds of Series 1996-1 Notes]
H-3-1
EXHIBIT H-4
-----------
[List of Student Loan Purchase Agreements relating to
Eligible Loans to be financed from proceeds of Tax
Exempt Series 1997-1 Notes, Series 1989, 1991-A, 1994-A and
1997-A Bonds and Series 1996-1 Notes]
H-4-1
EXHIBIT H-5
-----------
[List of Student Loan Purchase Agreements relating to
Eligible Loans acquired from Series 1994 Trustee and
financed from proceeds of Series 1994-1, 1995-1 and 1995-2 Notes]
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
-----------
[List of Student Loan Purchase Agreements relating to
Eligible Loans to be financed from proceeds of Taxable
Series 1997-1 Notes]
H-6-1
EXHIBIT I
---------
NOTICE OF PROPOSED ADJUSTMENT TO PERCENTAGE USED IN
DETERMINING [MAXIMUM AUCTION RATE]
[ALL HOLD RATE] [NON-PAYMENT RATE]
-----------------------------------
EDUCATION LOANS INCORPORATED
TAX EXEMPT AUCTION RATE STUDENT LOAN
ASSET-BACKED CALLABLE NOTES
SENIOR SERIES 1997-1____
Notice is hereby given that ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., as Market Agent for the
Notes identified above, proposes to change the percentage used in determining
the [Maximum Auction Rate] [All Hold Rate] [Non-Payment Rate] with respect to
such Notes, pursuant to the First Supplemental Indenture of Trust relating to
such Notes (the "First Supplemental Indenture"), as follows:
1. The change shall take effect on the date of commencement of the
next Auction Period (the "Effective Date").
2. For the Auction Period commencing on the Effective Date, and each
Auction Period thereafter, it is proposed that the percentage used in
determining the [Maximum Auction Rate] [All Hold Rate] [Non-Payment Rate] shall
be ____________________.
3. The adjustment to the percentage used in determining the [Maximum
Auction Rate] [All Hold Rate] [Non-Payment Rate] in Paragraph 2 shall take place
only if (A) the Trustee, the Auction Agent and the Corporation receive, by 11:00
a.m., New York City time, on the Business Day immediately preceding the
Effective Date, a Corporation Certificate authorizing the adjustment of such
percentage as specified in such certificate, together with a copy of the
Corporation Consent thereto and the opinion of Bond Counsel as required by the
First Supplemental Indenture; and (B) the Trustee and the Corporation have
received written confirmation from each of the Rating Agencies then rating the
Series 1997-1 Notes that such proposed adjustment will not adversely affect its
ratings then applicable to any of the Series 1997-1 Notes.
4. If any of the conditions referred to in Paragraph 3(A) and (B)
above are not met, the existing percentage used to determine the [Maximum
Auction Rate] [All Hold Rate] [Non-Payment Rate] shall remain in effect, and the
rate of interest on the above Notes for the next succeeding Interest Period
shall be determined in accordance with the Auction Procedures.
Terms used herein have the meanings set forth in the First
Supplemental Indenture.
I-1
Dated:__________________________ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
By: __________________________
I-2
EXHIBIT J
---------
NOTICE ESTABLISHING NEW PERCENTAGE USED IN DETERMINING
[MAXIMUM AUCTION RATE] [ALL HOLD RATE] [NON-PAYMENT RATE]
---------------------------------------------------------
EDUCATION LOANS INCORPORATED
TAX EXEMPT AUCTION RATE STUDENT LOAN
ASSET-BACKED CALLABLE NOTES
SENIOR SERIES 1997-1____
Notice is hereby given that ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., as Market Agent for the
Notes identified above, hereby establishes a new percentage to be used in
determining the [Maximum Auction Rate] [All Hold Rate] [Non-Payment Rate] with
respect to such Notes pursuant to the First Supplemental Indenture of Trust
relating to such Notes (the "First Supplemental Indenture"):
1. The change shall take effect on _______________, the commencement
of the next Auction Period (the "Effective Date").
2. For the Auction Period commencing on the Effective Date, and each
Auction Period thereafter, the percentage used in determining the [Maximum
Auction Rate] [All Hold Rate] [Non-Payment Rate] shall be __________________.
3. The change described in Paragraph 2 above shall take place only
upon delivery of this Notice and the satisfaction of other conditions set forth
in the First Supplemental Indenture and our prior notice dated _______________
regarding the proposed change.
Terms used herein have the meanings set forth in the First
Supplemental Indenture.
Dated:__________________________ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
By:_______________________________
J-1
EXHIBIT A-1
-----------
FORM OF TAX EXEMPT AUCTION RATE SERIES 1997-1 NOTES
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
EDUCATION LOANS INCORPORATED
TAX EXEMPT AUCTION RATE STUDENT LOAN
ASSET-BACKED CALLABLE NOTE
SENIOR SERIES 1997-1A [B][C][D][E]
CLASS A
No. R______ $________________
Stated Date of Original Interest
Maturity Date Issue Rate CUSIP
------------- ----------------- -------- -----
June 1, 2020 November __, 1997 Variable ____
REGISTERED HOLDER: CEDE & CO.
PRINCIPAL AMOUNT:
FOR VALUE RECEIVED, EDUCATION LOANS INCORPORATED, a nonprofit
corporation organized under the laws of the State of South Dakota (the
"Corporation," which term includes any successor corporation under the Indenture
hereinafter referred to, including, upon completion of the Section 150(d)(3)
Transfer, EdLinc), acknowledges itself indebted and hereby promises to pay to
the registered holder specified above, or registered assigns (the "Registered
Holder"), but solely from the revenues and receipts hereinafter specified and
not otherwise, the Principal Amount specified above on the Stated Maturity Date
specified above (subject to the right of prior redemption hereinafter
mentioned), upon presentation and surrender of this Note at the Principal Office
of the Trustee (as hereinafter defined), as Paying Agent for the Series 1997-1
Notes (as hereinafter defined), or a
A-1-1
duly appointed successor Paying Agent, and to pay interest on said Principal
Amount, but solely from the revenues and receipts hereinafter specified and not
otherwise, to the Registered Holder hereof from the date hereof until the
payment of said Principal Amount has been made or duly provided for, payable
semiannually on the first day of June and December in each year, commencing
December 1, 1997, at the Auction Rate Series 1997-1 Note Interest Rate (as
hereinafter described), and at the same rate per annum (to the extent that the
payment of such interest shall be legally enforceable) on overdue installments
of interest. Payment of interest on this Note on each regularly scheduled
Interest Payment Date shall be made by check or draft drawn upon the Paying
Agent and mailed to the Person who is the Registered Holder hereof as of
5:00 p.m. in the city in which the Principal Office of the Note Registrar is
located on the applicable Regular Record Date at the address of such Registered
Holder as it appears on the Note Register maintained by the Note Registrar, or,
if the Registered Holder of this Note is the Registered Holder of Series 1997-1
Notes in the aggregate Principal Amount of $1,000,000 or more (or, if less than
$1,000,000 in Principal Amount of Series 1997-1 Notes is outstanding, the
Registered Holder of all outstanding Series 1997-1 Notes), at the direction of
such Registered Holder received by the Paying Agent by 5:00 p.m. in the city in
which the Principal Office of the Paying Agent is located on the last Business
Day preceding the applicable Regular Record Date, by electronic transfer by the
Paying Agent in immediately available funds to an account designated by such
Registered Holder. In addition, interest on this Note is payable at the Maturity
hereof in the same manner as the principal hereof, unless the date of such
Maturity is a regularly scheduled Interest Payment Date, in which event interest
is payable in the manner set forth in the preceding sentence. Any interest not
so timely paid or duly provided for shall cease to be payable to the Person who
is the Registered Holder hereof at the close of business on the Regular Record
Date and shall be payable to the Person who is the Registered Holder hereof at
the close of business on a special record date for the payment of any such
defaulted interest. Such special record date shall be fixed by the Trustee
whenever moneys become available for payment of the defaulted interest, and
notice of the special record date shall be given to the Registered Holder hereof
not less than ten days prior thereto by first-class mail to such Registered
Holder as shown on the Note Register on a date selected by the Trustee, stating
the date of the special record date and the date fixed for the payment of such
defaulted interest. The principal of and interest on this Note are payable in
lawful money of the United States of America.
This Note is one of an authorized issue of Notes (the "Notes"), issued
and to be issued by the Corporation in one or more series pursuant to an
Indenture of Trust, dated as of July 1, 1997 (as supplemented and amended, the
"Indenture"), as supplemented by a First Supplemental Indenture of Trust, dated
as of July 1, 1997 (the "First Supplemental Indenture"), each between the
Corporation and First Bank National Association, Minneapolis, Minnesota, as
Trustee (the "Trustee," which term includes any successor trustee under the
Indenture). As provided in the Indenture, the Notes are issuable in series which
may vary as in the Indenture provided or permitted. This Note is one of a series
issued in an aggregate Principal
A-1-2
Amount of $_________________(the "Series 1997-1A [B][C][D][E] Notes"). The
Series 1997-1A [B][C][D][E] Notes are issued simultaneously with nine other
series of Class A Notes issued in the aggregate Principal Amount of
$_______________ (together with the Series 1997-1A [B][C][D][E] Notes,
collectively referred to herein as the "Series 1997-1 Senior Notes"), and two
series of Class B Notes issued in the aggregate Principal Amount of
$_____________________ (the "Series 1997-1 Subordinate Notes" and, together with
the Series 1997-1 Senior Notes, collectively referred to herein as the "Series
1997-1 Notes"). The proceeds of the Series 1997-1 Notes will be used by the
Corporation to (a) acquire student loan notes incurred under the Higher
Education Act and (b) fund the Reserve Fund.
Reference is hereby made to the Indenture, copies of which are on file
in the principal corporate trust office of the Trustee, and to all of the
provisions of which any Registered Holder of this Note by his acceptance hereof
hereby assents, for definitions of terms; the description of and the nature and
extent of the security for the various classes of Notes and Other Obligations
secured thereunder; the student loan acquisition program being financed by the
issuance of the Notes; the revenues and other moneys pledged to the payment of
the principal of, premium, if any, and interest on the Notes and the Other
Obligations; the nature and extent and manner of enforcement of the pledge; the
conditions upon which Notes may be issued or Other Obligations may be incurred
by the Corporation thereunder, payable from such revenues and other moneys
thereunder as Senior Obligations, Subordinate Obligations or Class C Notes; the
conditions upon which the Indenture may be amended or supplemented with or
without the consent of the Holders of the Notes; the rights and remedies of the
Registered Holder hereof with respect hereto and thereto, including the
limitations upon the right of a Registered Holder hereof to institute any suit,
action or proceeding in equity or at law with respect hereto and thereto; the
rights, duties and obligations of the Corporation and the Trustee thereunder;
the terms and provisions upon which the liens, pledges, charges, trusts and
covenants made therein may be discharged at or prior to the Maturity or
redemption of this Note, and this Note thereafter no longer be secured by the
Indenture, or be deemed to be Outstanding thereunder; and for the other terms
and provisions thereof. Terms used with initial capital letters but not defined
in this Note have the respective meanings given such terms in the Indenture. The
Series 1997-1A [B][C][D][E] Notes are being issued as, and will constitute, Tax
Exempt Class A Notes under the Indenture. Four other series of the Series 1997-1
Senior Notes also are Tax Exempt Class A Notes which, like the Series 1997-1A
[B][C][D][E] Notes, bear interest at an Auction Rate Series 1997-1 Note Interest
Rate, and, together with the Series 1997-1A [B][C][D][E] Notes, are collectively
referred to herein as the "Tax Exempt Auction Rate Series 1997-1 Notes."
The Notes and Other Obligations are limited obligations of the
Corporation, payable solely from the revenues and assets of the Corporation
pledged therefor under the Indenture, including certain notes evidencing Student
Loans and the proceeds of the Corporation's bonds, notes or other evidences of
indebtedness, if any, issued with respect to the Notes.
A-1-3
Each Noteholder, by acceptance of a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder will
not at any time institute against the Corporation, or join in any institution
against the Corporation, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings under any United States Federal or state bankruptcy
or similar law in connection with any obligations relating to the Notes, the
Indenture or the Servicing Agreement.
The Corporation has structured the Indenture and the Notes with the
intention that the Notes will qualify under applicable federal, state, local and
foreign tax law as indebtedness of the Corporation secured by the Trust Estate.
The Corporation, the Trustee, the Servicer and each Noteholder agree to treat
and to take no action inconsistent with the treatment of the Notes as such
indebtedness for purposes of federal, state, local and foreign income or
franchise taxes and any other tax imposed on or measured by income. Each
Noteholder, by acceptance of its Note, agrees to be bound by the provisions of
this paragraph. Each Noteholder agrees that it will cause any Person acquiring
an interest in a Note through it to comply with the Indenture as to treatment as
indebtedness under applicable tax law, as described in this paragraph.
Interest payable on this Note shall be computed on the basis of actual
days elapsed and accrue daily from the date hereof (on the basis of a 360-day
year), and is payable on each regularly scheduled Interest Payment Date prior to
the Maturity of this Note and at the Maturity of this Note. The interest payable
on each Interest Payment Date for this Note shall be [calculated on a per unit
basis, based on a unit of $100,000, and shall be] that interest which has
accrued through the last day preceding such Interest Payment Date or, in the
case of the Maturity of this Note, the last day preceding the date of such
Maturity. The Auction Rate Series 1997-1 Note Interest Rate shall be effective
as of and on the first day (whether or not a Business Day) of the applicable
Interest Period and be in effect thereafter through the end of such Interest
Period.
The unpaid Principal Amount hereof from time to time outstanding shall
bear interest at an Auction Rate Series 1997-1 Note Interest Rate, as described
below, payable on each Interest Payment Date and at the Maturity hereof, such
interest to accrue from the later of the date hereof or the date through which
interest has been paid or duly provided for.
During the Initial Interest Period, this Note shall bear interest at
the Auction Rate Series 1997-1 Note Initial Interest Rate for the Series 1997-1A
[B][C][D][E] Notes. Thereafter, until an Auction Period Adjustment, if any, this
Note shall bear interest at an Auction Rate Series 1997-1 Note Interest Rate
based on an Auction Period that shall generally consist of 35 days, all as
determined in accordance with the applicable provisions of the First
Supplemental Indenture.
A-1-4
In no event shall the Auction Rate Series 1997-1 Note Interest Rate on
this Note exceed 14% per annum (the "Auction Rate Series 1997-1 Note Interest
Rate Limitation").
The Auction Period (which shall be the Interest Period), the
applicable Auction Rate Series 1997-1 Note Interest Rate, the method of
determining the applicable Auction Rate Series 1997-1 Note Interest Rate on each
of the Series 1997-1A [B][C][D][E] Notes and the Auction Procedures related
thereto, including, without limitation, required notices thereof and any changes
therein to the Holders or Existing Holders of the Auction Rate Series 1997-1
Notes, will be determined in accordance with the terms, conditions and
provisions of the First Supplemental Indenture and the Auction Agent Agreement
(Tax Exempt Auction Rate Series 1997-1 Notes), dated as of July 1, 1997 (which,
together with any substitute therefor, is herein referred to as the "Auction
Agent Agreement"), between the Trustee and Bankers Trust Company (which,
together with any substitute therefor, is herein referred to as the "Auction
Agent"), to which terms, conditions and provisions specific reference is hereby
made, and all of which terms, conditions and provisions are hereby specifically
incorporated herein by reference.
By purchasing Series 1997-1A [B][C][D][E] Notes, whether in an Auction
or otherwise, each purchaser of the Series 1997-1A [B][C][D][E] Notes, 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 in the First Supplemental
Indenture, (ii) to have its beneficial ownership of the Series 1997-1A
[B][C][D][E] Notes 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 Series 1997-1A [B][C][D][E] Notes
is maintained in Book-Entry Form by the Securities Depository, an Existing
Holder may sell, transfer or otherwise dispose of Series 1997-1A [B][C][D][E]
Notes only pursuant to a Bid or Sell Order placed in an Auction or otherwise
sell, transfer or dispose of Series 1997-1A [B][C][D][E] Notes through a Broker-
Dealer, provided that, in the case of all transfers other than pursuant to
Auctions, such Existing Holder, its Broker-Dealer or its Participant advises the
Auction Agent of such transfer.
The determination of an Auction Rate Series 1997-1 Note Interest Rate
by the Auction Agent or any other authorized Person pursuant to the provisions
of the First Supplemental Indenture shall be conclusive and binding on the
Holders of the Series 1997-1A [B][C][D][E] Notes to which such Auction Rate
Series 1997-1 Note Interest Rate applies, and the Corporation and the Trustee
may rely thereon for all purposes.
Notwithstanding any provision of this Note to the contrary, in no
event shall the cumulative amount of interest paid or payable on this Note
(including interest calculated as provided herein, plus any other amounts that
A-1-5
constitute interest on this Note under applicable law, which are contracted for,
charged, reserved, taken or received pursuant to this Note or related documents)
calculated from the date of issuance of this Note through any subsequent day
during the term of this Note or otherwise prior to payment in full of this Note
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 this
Note or related documents or otherwise contracted for, charged, reserved, taken
or received in connection with this Note, or if the redemption or acceleration
of the Maturity of this Note results in payment to or receipt by the Registered
Holder or any former Registered Holder hereof of any interest in excess of that
permitted by applicable law, then notwithstanding any provision of this Note or
related documents to the contrary all excess amounts theretofore paid or
received with respect to this Note shall be credited on the Principal Amount of
this Note (or, if this Note has been paid or would thereby be paid in full,
refunded by the recipient thereof), and the provisions of this Note and related
documents shall 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 this
Note and under the related documents.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Series 1997-1 Notes may, at the option of the
Corporation, be redeemed, in whole but not in part, at a Redemption Price equal
to 100% of the Principal Amount of Series 1997-1 Notes to be so redeemed plus
accrued interest thereon to the Redemption Date, on any date after the remaining
aggregate Principal Balance of Student Loans Financed with proceeds of the
Series 1997-1 Notes is less than 10% of the amounts initially deposited to the
credit of the Acquisition Fund.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Outstanding Tax Exempt Auction Rate Series 1997-1
Notes of any series may be redeemed, in whole or in part, on any Interest Rate
Adjustment Date or regularly scheduled Interest Payment Date for such series, at
a Redemption Price equal to 100% of the Principal Amount thereof so redeemed,
from proceeds of the Tax Exempt Series 1997-1 Notes constituting a portion of
the Balance of the Series 1997-1 Tax Exempt Acquisition Account that have not
been used to acquire Eligible Loans and from that portion of the Series 1997-1
Tax Exempt Reserve Account would cause the Balance in the Reserve Fund to exceed
the Reserve Fund Requirement, calculated giving effect to such redemption. Such
redemption shall be required on June 1, 2001 (to the extent the proceeds in the
Series 1997-1 Tax Exempt Acquisition Account not so used as of April 15, 2001,
exceed $59,725,000) and on June 1, 2002 (from such proceeds not so used as of
April 15, 2002), unless the Corporation delivers to the Trustee: (i) an opinion
of Bond Counsel stating in effect that such redemption is not required pursuant
to the Code and that failure to so redeem Tax Exempt Series 1997-1 Notes will
not adversely affect the tax exempt status of interest on any Tax Exempt Series
1997-1 Notes for federal income
A-1-6
tax purposes, (ii) a Corporation Certificate certifying that, based on a Cash
Flow Projection, the failure to so redeem Tax Exempt Series 1997-1 Notes will
not materially adversely affect the Corporation's ability to pay Debt Service on
the Outstanding Notes and the Outstanding Other Obligations, Carry-Over Amounts
(including accrued interest thereon) with respect to Outstanding Notes,
Administrative Expenses or Note Fees or to make required deposits to the Rebate
Fund, and (iii) written confirmation from each of the Rating Agencies then
rating the Series 1997-1 Notes to the effect that the failure to so redeem Tax
Exempt Series 1997-1 Notes will not result in a reduction or withdrawal of the
rating of the Series 1997-1 Notes.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Outstanding Tax Exempt Auction Rate Series 1997-1
Notes of any series may, at the option of the Corporation, be redeemed on any
Interest Rate Adjustment Date or regularly scheduled Interest Payment Date for
such series occurring on or after December 1, 1998, in whole or in part, at a
Redemption Price equal to 100% of the Principal Amount thereof to be redeemed,
from amounts credited to the Series 1997-1 Tax Exempt Retirement Subaccount from
the Series 1997-1 Tax Exempt Surplus Subaccount for such purpose in accordance
with the Indenture and from that portion of the Series 1997-1 Tax Exempt Reserve
Account which exceeds the Reserve Fund Requirement (calculated after giving
effect to such redemption). If the Trustee shall have first certified that no
deficiencies exist in any of the Rebate Fund, the Note Fund, the Reserve Fund or
the Special Redemption and Prepayment Account, the Trustee shall, upon
Corporation Order, transfer to the Series 1997-1 Tax Exempt Retirement Account
any Balances in the Series 1997-1 Tax Exempt Surplus Subaccount (other than
those consisting of Student Loans) which a Corporation Certificate states are
not reasonably expected to be needed for the payment of scheduled Debt Service
on the Outstanding Notes and Outstanding Other Obligations, Carry-Over Amounts
(including accrued interest thereon) with respect to Outstanding Notes,
Administrative Expenses or Note Fees, or for transfer to the Rebate Fund.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements and certain other requirements, Outstanding Tax
Exempt Auction Rate Series 1997-1 Notes of any series may, at the option of the
Corporation, be redeemed on any Interest Rate Adjustment Date or regularly
scheduled Interest Payment Date for such series, in whole or in part, at a
Redemption Price equal to 100% of the Principal Amount thereof to be redeemed,
from amounts credited to the Retirement Account for such purpose.
If not all Series 1997-1 Notes subject to redemption are to be
redeemed, the particular Series 1997-1 Notes to be redeemed are to be selected
as provided in the Indenture.
Notice of redemption shall be given by first-class mail mailed at
least 15 days before the Redemption Date to each Holder of Series 1997-1A
[B][C][D][E] Notes
A-1-7
to be redeemed at his last address appearing on the Note Register; but no defect
in or failure to give such notice of redemption shall affect the validity of
proceedings for redemption of any Series 1997-1A [B][C][D][E] Notes not affected
by such defect or failure. All Series 1997-1A [B][C][D][E] Notes so called for
redemption will cease to bear interest on such Redemption Date, provided funds
for their redemption have been duly deposited, and, except for the purpose of
payment, shall no longer be protected by the Indenture and shall not be deemed
Outstanding thereunder.
It is provided in the Indenture that Series 1997-1A [B][C][D][E] Notes
of a denomination larger than $100,000 may be redeemed in part ($100,000 or an
integral multiple thereof) and that upon any partial redemption of any such
Series 1997-1A [B][C][D][E] Note the same shall be surrendered in exchange for
one or more new Notes of the same series in authorized form for the unredeemed
portion of principal.
If provision is made for the payment of principal of and interest on
this Note in accordance with the Indenture, this Note shall no longer be deemed
Outstanding under the Indenture, shall cease to be entitled to the benefits of
the Indenture and shall thereafter be payable solely from the funds provided for
such payment.
If an Event of Default shall occur, the principal of all the
Outstanding Notes may and, under certain circumstances, shall be declared due
and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Corporation and the rights of the Holders of the Notes and Other Beneficiaries
under the Indenture at any time by the Corporation with, among other things, the
consent of the Holders of two-thirds of the aggregate Principal Amount of Class
A Notes at the time Outstanding, if affected thereby, and the consent of the
Holders of two-thirds of the aggregate Principal Amount of Class B Notes at the
time Outstanding, if affected thereby. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate Principal Amount of
the Class A Notes at the time Outstanding or Other Senior Beneficiaries or, if
no Senior Obligations are Outstanding, the Holders of specified percentages in
aggregate Principal Amount of the Class B Notes at the time Outstanding or Other
Subordinate Beneficiaries, on behalf of the Holders of all the Notes, to waive
certain past defaults under the Indenture and their consequences. Any such
consent or waiver shall be conclusive and binding upon the Registered Holder of
this Note and upon all future Registered Holders hereof and of any Note issued
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Note.
This Note is transferable by the Registered Holder hereof upon
surrender of this Note for transfer at the Principal Office of the Note
Registrar
A-1-8
(which shall be the Trustee unless and until an Authenticating Agent becomes the
Note Registrar under the Indenture) or at the Principal Office of a duly
appointed Authenticating Agent (the "Authenticating Agent," which term includes
any successor Authenticating Agent under the Indenture), duly endorsed or
accompanied by a written instrument of transfer in form satisfactory to the Note
Registrar or such Authenticating Agent, as the case may be, and executed by the
Registered Holder hereof or his attorney duly authorized in writing, with
signature guarantees satisfactory to the Note Registrar or such Authenticating
Agent, as the case may be. This Note may also be exchanged for one or more other
Notes of the same series upon surrender hereof at the Principal Office of the
Note Registrar or the Principal Office of an Authenticating Agent. Thereupon the
Corporation shall execute and the Trustee or the Authenticating Agent, as the
case may be, shall authenticate and deliver, in exchange for this Note, one or
more new fully registered Notes in the name of the transferee, of an authorized
denomination, in aggregate Principal Amount equal to the Principal Amount of
this Note, of the same series and bearing interest at the same rate. No
Authenticating Agent will be initially appointed with respect to the Series
1997-1A [B][C][D][E] Notes. Notwithstanding the foregoing provisions of this
paragraph, no Series 1997-1A [B][C][D][E] Note shall be required to be
transferred, (i) during a period beginning at the opening of business fifteen
days before any selection of Series 1997-1A [B][C][D][E] Notes for redemption
and ending at the close of business on the day of such selection, or (ii) if
such Series 1997-1A [B][C][D][E] Note has been selected for redemption in whole
or in part.
The Corporation may require payment by the Registered Holder hereof of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of this Note, other than
certain exchanges specifically exempted under the Indenture and not involving
any transfer.
The Corporation, the Trustee, each Paying Agent, any Authenticating
Agent, the Note Registrar and any other agent of the Corporation may treat the
Person in whose name this Note is registered on the Note Register as the
absolute owner hereof for all purposes, whether or not this Note is overdue, and
neither the Corporation, the Trustee, any Paying Agent, any Authenticating
Agent, the Note Registrar nor any other such agent shall be affected by notice
to the contrary.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND DECLARED that all
acts, conditions and things required to have happened, to exist and to have been
performed precedent to and in the issuance of this Note have happened, do exist,
and have been performed in regular and due time, form and manner as so required.
This Note shall not be valid or become obligatory for any purpose or
be entitled to any security or benefit under the Indenture until the Certificate
of Authentication hereon shall have been signed by the Trustee or by the
A-1-9
Authenticating Agent by the manual signature of one of its authorized
representatives.
IN WITNESS WHEREOF, the Corporation has caused this Note to be
executed in its name by the manual signatures of its President and Secretary,
and its corporate seal to be impressed hereon.
Dated: _________________ EDUCATION LOANS INCORPORATED
__________________________
President
(SEAL)
__________________________
Secretary
_____________________________
CERTIFICATE OF AUTHENTICATION
This Note is one of the Notes of the series designated therein and
issued under the provisions of the within-mentioned Indenture.
FIRST BANK NATIONAL
ASSOCIATION, as Trustee
By_____________________________
Authorized Representative
A-1-10
--------------------------------
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto ________________________ the within Note and irrevocably appoints
____________________________, attorney-in-fact, to transfer the within Note on
the books kept for registration thereof, with full power of substitution in the
premises.
Dated
------------------------
PLEASE INSERT SOCIAL SECURITY -------------------------------------------
OR OTHER IDENTIFYING NUMBER NOTICE: The signature to this assignment
OF ASSIGNEE must correspond with the name as it appears
upon the face of the within Note in every
------------------------------- particular, without any alteration
whatsoever.
SIGNATURE GUARANTEED:
-------------------------------
▇-▇-▇▇
▇▇▇▇▇▇▇ ▇-▇
-----------
FORM OF SERIES 1997-1F NOTES
-----------------------------
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
EDUCATION LOANS INCORPORATED
TAX EXEMPT FIXED RATE STUDENT LOAN
ASSET-BACKED CALLABLE NOTE
SENIOR SERIES 1997-1F
CLASS A
No. R________ $_________________
Stated Date of Original Interest
Maturity Date Issue Rate CUSIP
------------- ----------------- ------------ -----
October 15, 1997 ______
REGISTERED HOLDER: CEDE & CO.
PRINCIPAL AMOUNT:
FOR VALUE RECEIVED, EDUCATION LOANS INCORPORATED, a nonprofit
corporation organized under the laws of the State of South Dakota (the
"Corporation," which term includes any successor corporation under the Indenture
hereinafter referred to, including, upon completion of the Section 150(d)(3)
Transfer, EdLinc), acknowledges itself indebted and hereby promises to pay to
the registered holder specified above, or registered assigns (the "Registered
Holder"), but solely from the revenues and receipts hereinafter specified and
not otherwise, the Principal Amount specified above on the Stated Maturity Date
specified above (subject to the right of prior redemption hereinafter
mentioned), upon presentation and surrender of this Note at the Principal Office
of the Trustee (as hereinafter defined), as Paying Agent for the Series 1997-1
Notes (as hereinafter defined), or a
A-2-1
duly appointed successor Paying Agent, and to pay interest on said Principal
Amount, but solely from the revenues and receipts hereinafter specified and not
otherwise, to the Registered Holder hereof from the date hereof until the
payment of said Principal Amount has been made or duly provided for, at the rate
per annum specified above, payable semiannually on the first day of June and
December in each year, commencing December 1, 1997, and at the same rate per
annum (to the extent that the payment of such interest shall be legally
enforceable) on overdue installments of interest. Payment of interest on this
Note on each regularly scheduled Interest Payment Date shall be made by check or
draft drawn upon the Paying Agent and mailed to the Person who is the Registered
Holder hereof as of 5:00 p.m. in the city in which the Principal Office of the
Note Registrar is located on the applicable Regular Record Date at the address
of such Registered Holder as it appears on the Note Register maintained by the
Note Registrar, or, if the Registered Holder of this Note is the Registered
Holder of Series 1997-1 Notes in the aggregate Principal Amount of $1,000,000 or
more (or, if less than $1,000,000 in Principal Amount of Series 1997-1 Notes is
outstanding, the Registered Holder of all outstanding Series 1997-1 Notes), at
the direction of such Registered Holder received by the Paying Agent by 5:00
p.m. in the city in which the Principal Office of the Paying Agent is located on
the last Business Day preceding the applicable Regular Record Date, by
electronic transfer by the Paying Agent in immediately available funds to an
account designated by such Registered Holder. In addition, premium, if any, and
interest on this Note are payable at the Maturity hereof in the same manner as
the principal hereof, unless the date of such Maturity is a regularly scheduled
Interest Payment Date, in which event interest is payable in the manner set
forth in the preceding sentence. Any interest not so timely paid or duly
provided for shall cease to be payable to the Person who is the Registered
Holder hereof at the close of business on the Regular Record Date and shall be
payable to the Person who is the Registered Holder hereof at the close of
business on a special record date for the payment of any such defaulted
interest. Such special record date shall be fixed by the Trustee whenever moneys
become available for payment of the defaulted interest, and notice of the
special record date shall be given to the Registered Holder hereof not less than
ten days prior thereto by first-class mail to such Registered Holder as shown on
the Note Register on a date selected by the Trustee, stating the date of the
special record date and the date fixed for the payment of such defaulted
interest. The principal of, premium, if any, and interest on this Note are
payable in lawful money of the United States of America.
This Note is one of an authorized issue of Notes (the "Notes"), issued
and to be issued by the Corporation in one or more series pursuant to an
Indenture of Trust, dated as of July 1, 1997 (as supplemented and amended, the
"Indenture"), as supplemented by a First Supplemental Indenture of Trust, dated
as of July 1, 1997 (the "First Supplemental Indenture"), each between the
Corporation and First Bank National Association, Minneapolis, Minnesota, as
Trustee (the "Trustee," which term includes any successor trustee under the
Indenture). As provided in the Indenture, the Notes are issuable in series which
may vary as in the Indenture provided or permitted. This Note is one of a series
of Class A Notes issued in an
A-2-2
aggregate Principal Amount of $______________________ (the "Series 1997-1F
Notes"). The Series 1997-1F Notes are issued simultaneously with nine other
series of Class A Notes issued in the aggregate Principal Amount of
$_______________ (together with the Series 1997-1F Notes, collectively referred
to herein as the "Series 1997-1 Senior Notes"), and two series of Class B Notes
issued in the aggregate Principal Amount of $_____________________ (the "Series
1997-1 Subordinate Notes" and, together with the Series 1997-1 Senior Notes,
collectively referred to herein as the "Series 1997-1 Notes"). The proceeds of
the Series 1997-1 Notes will be used by the Corporation to (a) acquire student
loan notes incurred under the Higher Education Act and (b) fund the Reserve
Fund.
Reference is hereby made to the Indenture, copies of which are on file
in the principal corporate trust office of the Trustee, and to all of the
provisions of which any Registered Holder of this Note by his acceptance hereof
hereby assents, for definitions of terms; the description of and the nature and
extent of the security for the various classes of Notes and Other Obligations
secured thereunder; the student loan acquisition program being financed by the
issuance of the Notes; the revenues and other moneys pledged to the payment of
the principal of, premium, if any, and interest on the Notes and the Other
Obligations; the nature and extent and manner of enforcement of the pledge; the
conditions upon which Notes may be issued or Other Obligations may be incurred
by the Corporation thereunder, payable from such revenues and other moneys
thereunder as Senior Obligations, Subordinate Obligations or Class C Notes; the
conditions upon which the Indenture may be amended or supplemented with or
without the consent of the Holders of the Notes; the rights and remedies of the
Registered Holder hereof with respect hereto and thereto, including the
limitations upon the right of a Registered Holder hereof to institute any suit,
action or proceeding in equity or at law with respect hereto and thereto; the
rights, duties and obligations of the Corporation and the Trustee thereunder;
the terms and provisions upon which the liens, pledges, charges, trusts and
covenants made therein may be discharged at or prior to the Maturity or
redemption of this Note, and this Note thereafter no longer be secured by the
Indenture, or be deemed to be Outstanding thereunder; and for the other terms
and provisions thereof. Terms used with initial capital letters but not defined
in this Note have the respective meanings given such terms in the Indenture. The
Series 1997-1F Notes are being issued as, and will constitute, Tax Exempt Class
A Notes under the Indenture.
The Notes and Other Obligations are limited obligations of the
Corporation, payable solely from the revenues and assets of the Corporation
pledged therefor under the Indenture, including certain notes evidencing Student
Loans and the proceeds of the Corporation's bonds, notes or other evidences of
indebtedness, if any, issued with respect to the Notes.
Each Noteholder, by acceptance of a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder will
not at any time institute against the Corporation, or join in any institution
against the
A-2-3
Corporation, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the Servicing Agreement.
The Corporation has structured the Indenture and the Notes with the
intention that the Notes will qualify under applicable federal, state, local and
foreign tax law as indebtedness of the Corporation secured by the Trust Estate.
The Corporation, the Trustee, the Servicer and each Noteholder agree to treat
and to take no action inconsistent with the treatment of the Notes as such
indebtedness for purposes of federal, state, local and foreign income or
franchise taxes and any other tax imposed on or measured by income. Each
Noteholder, by acceptance of its Note, agrees to be bound by the provisions of
this paragraph. Each Noteholder agrees that it will cause any Person acquiring
an interest in a Note through it to comply with the Indenture as to treatment as
indebtedness under applicable tax law, as described in this paragraph.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Outstanding Series 1997-1F Notes may, at the option
of the Corporation (and at such time as no Tax Exempt Auction Rate Series 1997-1
Notes are Outstanding), be redeemed, in whole or in part, on any date, at a
Redemption Price equal to 100% of the Principal Amount thereof so redeemed, from
proceeds of the Tax Exempt Series 1997-1 Notes constituting a portion of the
Balance of the Series 1997-1 Tax Exempt Acquisition Account that have not been
used to acquire Eligible Loans and from that portion of the Series 1997-1 Tax
Exempt Reserve Account which, if left in the Reserve Fund upon such redemption,
would cause the Balance in the Reserve Fund to exceed the Reserve Fund
Requirement, calculated giving effect to such redemption. Such redemption shall
be required on June 1, 2001 (to the extent the proceeds in the Series 1997-1 Tax
Exempt Acquisition Account not so used as of April 15, 2001, exceed $59,725,000)
and on June 1, 2002 (from such proceeds not so used as of April 15, 2002),
unless the Corporation delivers to the Trustee: (i) an opinion of Bond Counsel
stating in effect that such redemption is not required pursuant to the Code and
that failure to so redeem Tax Exempt Series 1997-1 Notes will not adversely
affect the tax exempt status of interest on any Tax Exempt Series 1997-1 Notes
for federal income tax purposes, (ii) a Corporation Certificate certifying that,
based on a Cash Flow Projection, the failure to so redeem Tax Exempt Series
1997-1 Notes will not materially adversely affect the Corporation's ability to
pay Debt Service on the Outstanding Notes and the Outstanding Other Obligations,
Carry-Over Amounts (including accrued interest thereon) with respect to
Outstanding Notes, Administrative Expenses or Note Fees or to make required
deposits to the Rebate Fund, and (iii) written confirmation from each of the
Rating Agencies then rating the Series 1997-1 Notes to the effect that the
failure to so redeem Tax Exempt Series 1997-1 Notes will not result in a
reduction or withdrawal of the rating of the Series 1997-1 Notes.
A-2-4
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Outstanding Series 1997-1F Notes may, at the option
of the Corporation, be redeemed on December 1, 1998, and on any date thereafter,
in whole or in part, at a Redemption Price equal to 100% of the Principal Amount
thereof to be redeemed, from amounts credited to the Series 1997-1 Tax Exempt
Retirement Subaccount from the Series 1997-1 Tax Exempt Surplus Subaccount for
such purpose in accordance with the Indenture and from that portion of the
Series 1997-1 Tax Exempt Reserve Account which exceeds the Reserve Fund
Requirement (calculated after giving effect to such redemption). If the Trustee
shall have first certified that no deficiencies exist in any of the Rebate Fund,
the Note Fund, the Reserve Fund or the Special Redemption and Prepayment
Account, the Trustee shall, upon Corporation Order, transfer to the Series 1997-
1 Tax Exempt Retirement Account any Balances in the Series 1997-1 Tax Exempt
Surplus Subaccount (other than those consisting of Student Loans) which a
Corporation Certificate states are not reasonably expected to be needed for the
payment of scheduled Debt Service on the Outstanding Notes and Outstanding Other
Obligations, Carry-Over Amounts (including accrued interest thereon) with
respect to Outstanding Notes, Administrative Expenses or Note Fees, or for
transfer to the Rebate Fund.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements and certain other requirements, Outstanding Series
1997-1F Notes may, at the option of the Corporation and from amounts credited to
the Retirement Account for such purpose, be redeemed on June 1, 2007, and on any
date thereafter, in whole or in part, at the Redemption Prices (expressed as a
percentage of Principal Amount) set forth below plus accrued interest to the
Redemption Date:
Redemption
Redemption Period Price
----------------- ------
December 1, 2007, through November 30, 2008 102%
December 1, 2008, through November 30, 2009 101%
December 1, 2009, and thereafter 100%
Series 1997-1 Notes may, at the option of the Corporation, be
redeemed, in whole but not in part, at a Redemption Price equal to 100% of the
Principal Amount of Series 1997-1 Notes to be so redeemed plus accrued interest
thereon to the Redemption Date, on any date after the remaining aggregate
Principal Balance of Student Loans Financed with proceeds of the Series 1997-1
Notes is less than 10% of the amounts initially deposited to the credit of the
Acquisition Fund.
If not all Series 1997-1 Notes subject to redemption are to be
redeemed, the particular Series 1997-1 Notes to be redeemed are to be selected
as provided in the Indenture.
Notice of redemption shall be given by first-class mail mailed at
least 30 days before the Redemption Date to each Holder of Series 1997-1F Notes
to be
A-2-5
redeemed at his last address appearing on the Note Register; but no defect in or
failure to give such notice of redemption shall affect the validity of
proceedings for redemption of any Note not affected by such defect or failure.
All Series 1997-1F Notes so called for redemption will cease to bear interest on
such Redemption Date, provided funds for their redemption have been duly
deposited, and, except for the purpose of payment, shall no longer be protected
by the Indenture and shall not be deemed Outstanding thereunder.
It is provided in the Indenture that Series 1997-1F Notes of a
denomination larger than $5,000 may be redeemed in part ($5,000 or an integral
multiple thereof) and that upon any partial redemption of any such Series 1997-
1F Note the same shall be surrendered in exchange for one or more new Notes of
the same series in authorized form for the unredeemed portion of principal.
If provision is made for the payment of principal of, premium, if any,
and interest on this Note in accordance with the Indenture, this Note shall no
longer be deemed Outstanding under the Indenture, shall cease to be entitled to
the benefits of the Indenture and shall thereafter be payable solely from the
funds provided for such payment.
If an Event of Default shall occur, the principal of all the
Outstanding Notes may and, under certain circumstances, shall be declared due
and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Corporation and the rights of the Holders of the Notes and Other Beneficiaries
under the Indenture at any time by the Corporation with, among other things, the
consent of the Holders of two-thirds of the aggregate Principal Amount of Class
A Notes at the time Outstanding, if affected thereby, and with the consent of
the Holders of two-thirds of the aggregate Principal Amount of Class B Notes at
the time Outstanding, if affected thereby. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
Principal Amount of the Class A Notes at the time Outstanding or Other Senior
Beneficiaries or, if no Senior Obligations are Outstanding, the Holders of
specified percentages in aggregate Principal Amount of the Class B Notes at the
time Outstanding or Other Subordinate Beneficiaries, on behalf of the Holders of
all the Notes, to waive certain past defaults under the Indenture and their
consequences. Any such consent or waiver shall be conclusive and binding upon
the Registered Holder of this Note and upon all future Registered Holders hereof
and of any Note issued in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Note.
This Note is transferable by the Registered Holder hereof upon
surrender of this Note for transfer at the Principal Office of the Note
Registrar (which shall be the Trustee unless and until an Authenticating Agent
becomes the
A-2-6
Note Registrar under the Indenture) or at the Principal Office of a duly
appointed Authenticating Agent (the "Authenticating Agent," which term includes
any successor Authenticating Agent under the Indenture), duly endorsed or
accompanied by a written instrument of transfer in form satisfactory to the Note
Registrar or the Authenticating Agent, as the case may be, and executed by the
Registered Holder hereof or his attorney duly authorized in writing, with
signature guarantees satisfactory to the Note Registrar or the Authenticating
Agent, as the case may be. This Note may also be exchanged for one or more other
Notes of the same series upon surrender hereof at the Principal Office of the
Note Registrar or the Principal Office of an Authenticating Agent. Thereupon the
Corporation shall execute and the Trustee or the Authenticating Agent, as the
case may be, shall authenticate and deliver, in exchange for this Note, one or
more new fully registered Notes in the name of the transferee, of an authorized
denomination, in aggregate Principal Amount equal to the Principal Amount of
this Note, of the same series and bearing interest at the same rate. Thereupon
the Corporation shall execute and the Trustee or the Authenticating Agent, as
the case may be, shall authenticate and deliver, in exchange for this Note, one
or more new fully registered Notes in the name of the transferee, of an
authorized denomination, in aggregate Principal Amount equal to the Principal
Amount of this Note, of the same series and bearing interest at the same rate.
No Authenticating Agent will be initially appointed with respect to the Series
1997-1F Notes. Notwithstanding the foregoing provisions of this paragraph, no
Series 1997-1F Note shall be required to be transferred, (i) during a period
beginning at the opening of business fifteen days before any selection of Series
1997-1F Notes for redemption and ending at the close of business on the day of
such selection, or (ii) if such Series 1997-1F Note has been selected for
redemption in whole or in part.
The Corporation may require payment by the Registered Holder hereof of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of this Note, other than
certain exchanges specifically exempted under the Indenture and not involving
any transfer.
The Corporation, the Trustee, each Paying Agent, any Authenticating
Agent, the Note Registrar and any other agent of the Corporation may treat the
Person in whose name this Note is registered on the Note Register as the
absolute owner hereof for all purposes, whether or not this Note is overdue, and
neither the Corporation, the Trustee, any Paying Agent, any Authenticating
Agent, the Note Registrar nor any other such agent shall be affected by notice
to the contrary.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND DECLARED that all
acts, conditions and things required to have happened, to exist and to have been
performed precedent to and in the issuance of this Note have happened, do exist,
and have been performed in regular and due time, form and manner as so required.
A-2-7
This Note shall not be valid or become obligatory for any purpose or
be entitled to any security or benefit under the Indenture until the Certificate
of Authentication hereon shall have been signed by the Trustee or by the
Authenticating Agent by the manual signature of one of its authorized
representatives.
IN WITNESS WHEREOF, the Corporation has caused this Note to be
executed in its name by the manual signatures of its President and Secretary,
and its corporate seal to be impressed hereon.
Dated: EDUCATION LOANS INCORPORATED
------------------
---------------------------
President
(SEAL)
---------------------------
Secretary
-------------------------------
CERTIFICATE OF AUTHENTICATION
This Note is one of the Notes of the series designated therein and
issued under the provisions of the within-mentioned Indenture.
FIRST BANK NATIONAL
ASSOCIATION, as Trustee
By
-------------------------
Authorized Representative
A-2-8
--------------------------------
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto ________________________ the within Note and irrevocably appoints
____________________________, attorney-in-fact, to transfer the within Note on
the books kept for registration thereof, with full power of substitution in the
premises.
Dated
------------------------
PLEASE INSERT SOCIAL SECURITY --------------------------------------------
OR OTHER IDENTIFYING NUMBER NOTICE: The signature to this assignment
OF ASSIGNEE must correspond with the name as it appears
upon the face of the within Note in every
------------------------------- particular, without any alteration
whatsoever.
SIGNATURE GUARANTEED:
-------------------------------
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
-----------
FORM OF TAXABLE AUCTION RATE SERIES 1997-1 NOTES
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
EDUCATION LOANS INCORPORATED
TAXABLE AUCTION RATE STUDENT LOAN
ASSET-BACKED CALLABLE NOTE
SENIOR SERIES 1997-G [H]
CLASS A
No. R______ $________________
Stated Date of Original Interest
Maturity Date Issue Rate CUSIP
------------- ------------------- -------- -----
June 1, 2020 November _____, 1997 Variable ____
REGISTERED HOLDER: CEDE & CO.
PRINCIPAL AMOUNT:
FOR VALUE RECEIVED, EDUCATION LOANS INCORPORATED, a nonprofit
corporation organized under the laws of the State of South Dakota (the
"Corporation," which term includes any successor corporation under the Indenture
hereinafter referred to, including, upon completion of the Section 150(d)(3)
Transfer, EdLinc), acknowledges itself indebted and hereby promises to pay to
the registered holder specified above, or registered assigns (the "Registered
Holder"), but solely from the revenues and receipts hereinafter specified and
not otherwise, the Principal Amount specified above on the Stated Maturity Date
specified above (subject to the right of prior redemption hereinafter
mentioned), upon presentation and surrender of this Note at the Principal Office
of the Trustee (as hereinafter defined), as Paying Agent for the Series 1997-1
Notes (as hereinafter defined), or a
A-3-1
duly appointed successor Paying Agent, and to pay interest on said Principal
Amount, but solely from the revenues and receipts hereinafter specified and not
otherwise, to the Registered Holder hereof from the date hereof until the
payment of said Principal Amount has been made or duly provided for, payable on
each Interest Payment Date, commencing December 1, 1997, at the Auction Rate
Series 1997-1 Note Interest Rate (as hereinafter described), and at the same
rate per annum (to the extent that the payment of such interest shall be legally
enforceable) on overdue installments of interest. Payment of interest on this
Note on each regularly scheduled Interest Payment Date shall be made by check or
draft drawn upon the Paying Agent and mailed to the Person who is the Registered
Holder hereof as of 5:00 p.m. in the city in which the Principal Office of the
Note Registrar is located on the applicable Regular Record Date at the address
of such Registered Holder as it appears on the Note Register maintained by the
Note Registrar, or, if the Registered Holder of this Note is the Registered
Holder of Series 1997-1 Notes in the aggregate Principal Amount of $1,000,000 or
more (or, if less than $1,000,000 in Principal Amount of Series 1997-1 Notes is
outstanding, the Registered Holder of all outstanding Series 1997-1 Notes), at
the direction of such Registered Holder received by the Paying Agent by 5:00
p.m. in the city in which the Principal Office of the Paying Agent is located on
the last Business Day preceding the applicable Regular Record Date, by
electronic transfer by the Paying Agent in immediately available funds to an
account designated by such Registered Holder. In addition, interest on this Note
is payable at the Maturity hereof in the same manner as the principal hereof,
unless the date of such Maturity is a regularly scheduled Interest Payment Date,
in which event interest is payable in the manner set forth in the preceding
sentence. Any interest not so timely paid or duly provided for shall cease to be
payable to the Person who is the Registered Holder hereof at the close of
business on the Regular Record Date and shall be payable to the Person who is
the Registered Holder hereof at the close of business on a special record date
for the payment of any such defaulted interest. Such special record date shall
be fixed by the Trustee whenever moneys become available for payment of the
defaulted interest, and notice of the special record date shall be given to the
Registered Holder hereof not less than ten days prior thereto by first-class
mail to such Registered Holder as shown on the Note Register on a date selected
by the Trustee, stating the date of the special record date and the date fixed
for the payment of such defaulted interest. The principal of and interest on
this Note are payable in lawful money of the United States of America.
INTEREST ON THIS NOTE IS SUBJECT TO FEDERAL INCOME TAXATION PURSUANT
TO AN ELECTION MADE BY THE CORPORATION UNDER SECTION 625(c) OF THE TAX REFORM
ACT OF 1984 AND 26 CFR (S)301.9100-6T(d).
This Note is one of an authorized issue of Notes (the "Notes"), issued
and to be issued by the Corporation in one or more series pursuant to an
Indenture of Trust, dated as of July 1, 1997 (as supplemented and amended, the
"Indenture"), as supplemented by a First Supplemental Indenture of Trust, dated
as of July 1, 1997
A-3-2
(the "First Supplemental Indenture"), each between the Corporation and First
Bank National Association, Minneapolis, Minnesota, as Trustee (the "Trustee,"
which term includes any successor trustee under the Indenture). As provided in
the Indenture, the Notes are issuable in series which may vary as in the
Indenture provided or permitted. This Note is one of a series issued in an
aggregate Principal Amount of $_________________ (the "Series 1997-G [H]
Notes"). The Series 1997-G [H] Notes are issued simultaneously with nine other
series of Class A Notes issued in the aggregate Principal Amount of
$_______________ (together with the Series 1997-G [H] Notes, collectively
referred to herein as the "Series 1997-1 Senior Notes"), and two series of Class
B Notes issued in the aggregate Principal Amount of $_____________________ (the
"Series 1997-1 Subordinate Notes" and, together with the Series 1997-1 Senior
Notes, collectively referred to herein as the "Series 1997-1 Notes"). The
proceeds of the Series 1997-1 Notes will be used by the Corporation to (a)
acquire student loan notes incurred under the Higher Education Act and (b) fund
the Reserve Fund.
Reference is hereby made to the Indenture, copies of which are on file
in the principal corporate trust office of the Trustee, and to all of the
provisions of which any Registered Holder of this Note by his acceptance hereof
hereby assents, for definitions of terms; the description of and the nature and
extent of the security for the various classes of Notes and Other Obligations
secured thereunder; the student loan acquisition program being financed by the
issuance of the Notes; the revenues and other moneys pledged to the payment of
the principal of, premium, if any, and interest on the Notes and the Other
Obligations; the nature and extent and manner of enforcement of the pledge; the
conditions upon which Notes may be issued or Other Obligations may be incurred
by the Corporation thereunder, payable from such revenues and other moneys
thereunder as Senior Obligations, Subordinate Obligations or Class C Notes; the
conditions upon which the Indenture may be amended or supplemented with or
without the consent of the Holders of the Notes; the rights and remedies of the
Registered Holder hereof with respect hereto and thereto, including the
limitations upon the right of a Registered Holder hereof to institute any suit,
action or proceeding in equity or at law with respect hereto and thereto; the
rights, duties and obligations of the Corporation and the Trustee thereunder;
the terms and provisions upon which the liens, pledges, charges, trusts and
covenants made therein may be discharged at or prior to the Maturity or
redemption of this Note, and this Note thereafter no longer be secured by the
Indenture, or be deemed to be Outstanding thereunder; and for the other terms
and provisions thereof. Terms used with initial capital letters but not defined
in this Note have the respective meanings given such terms in the Indenture.
The Series 1997-G [H] Notes are being issued as, and will constitute, taxable
Class A Notes under the Indenture. One other series of the Series 1997-1 Senior
Notes also is a series of taxable Class A Notes which, like the Series 1997-G
[H] Notes, bears interest at an Auction Rate Series 1997-1 Note Interest Rate,
and, together with the Series 1997-G [H] Notes, are collectively referred to
herein as the "Taxable Auction Rate Series 1997-1 Notes."
A-3-3
The Notes and Other Obligations are limited obligations of the
Corporation, payable solely from the revenues and assets of the Corporation
pledged therefor under the Indenture, including certain notes evidencing Student
Loans and the proceeds of the Corporation's bonds, notes or other evidences of
indebtedness, if any, issued with respect to the Notes.
Each Noteholder, by acceptance of a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder will
not at any time institute against the Corporation, or join in any institution
against the Corporation, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings under any United States Federal or state bankruptcy
or similar law in connection with any obligations relating to the Notes, the
Indenture or the Servicing Agreement.
The Corporation has structured the Indenture and the Notes with the
intention that the Notes will qualify under applicable federal, state, local and
foreign tax law as indebtedness of the Corporation secured by the Trust Estate.
The Corporation, the Trustee, the Servicer and each Noteholder agree to treat
and to take no action inconsistent with the treatment of the Notes as such
indebtedness for purposes of federal, state, local and foreign income or
franchise taxes and any other tax imposed on or measured by income. Each
Noteholder, by acceptance of its Note, agrees to be bound by the provisions of
this paragraph. Each Noteholder agrees that it will cause any Person acquiring
an interest in a Note through it to comply with the Indenture as to treatment as
indebtedness under applicable tax law, as described in this paragraph.
Interest payable on this Note shall be computed on the basis of actual
days elapsed and accrue daily from the date hereof (on the basis of a 360-day
year), and is payable on each regularly scheduled Interest Payment Date prior to
the Maturity of this Note and at the Maturity of this Note. The interest payable
on each Interest Payment Date for this Note shall be [calculated on a per unit
basis, based on a unit of $100,000, and shall be] that interest which has
accrued through the last day preceding such Interest Payment Date or, in the
case of the Maturity of this Note, the last day preceding the date of such
Maturity. The Auction Rate Series 1997-1 Note Interest Rate shall be effective
as of and on the first day (whether or not a Business Day) of the applicable
Interest Period and be in effect thereafter through the end of such Interest
Period.
The unpaid Principal Amount hereof from time to time outstanding shall
bear interest at an Auction Rate Series 1997-1 Note Interest Rate, as described
below, payable on each Interest Payment Date and at the Maturity hereof, such
interest to accrue from the later of the date hereof or the date through which
interest has been paid or duly provided for.
During the Initial Interest Period, this Note shall bear interest at
the Auction Rate Series 1997-1 Note Initial Interest Rate for the Series 1997-G
[H] Notes.
A-3-4
Thereafter, until an Auction Period Adjustment, if any, this Note shall bear
interest at an Auction Rate Series 1997-1 Note Interest Rate based on an Auction
Period that shall generally consist of 28 days, all as determined in accordance
with the applicable provisions of the First Supplemental Indenture.
In no event shall the Auction Rate Series 1997-1 Note Interest Rate on
this Note exceed 18% per annum (the "Auction Rate Series 1997-1 Note Interest
Rate Limitation").
The Auction Period (which shall be the Interest Period), the
applicable Auction Rate Series 1997-1 Note Interest Rate, the method of
determining the applicable Auction Rate Series 1997-1 Note Interest Rate on each
of the Series 1997-G [H] Notes and the Auction Procedures related thereto,
including, without limitation, required notices thereof and any changes therein
to the Holders or Existing Holders of the Auction Rate Series 1997-1 Notes, will
be determined in accordance with the terms, conditions and provisions of the
First Supplemental Indenture and the Auction Agent Agreement (Taxable Auction
Rate Series 1997-1 Notes), dated as of July 1, 1997 (which, together with any
substitute therefor, is herein referred to as the "Auction Agent Agreement"),
between the Trustee and Bankers Trust Company (which, together with any
substitute therefor, is herein referred to as the "Auction Agent"), to which
terms, conditions and provisions specific reference is hereby made, and all of
which terms, conditions and provisions are hereby specifically incorporated
herein by reference.
If the Auction Rate for the Series 1997-1G [H] Notes is greater than
the Net Loan Rate, then the Auction Rate Series 1997-1 Note Interest Rate
applicable to the Taxable Auction Rate Series 1997-1 Notes for that Interest
Period will be the Net Loan Rate. If the Auction Rate Series 1997-1 Note
Interest Rate applicable to the Series 1997-1G [H] Notes for any Interest Period
is the Net Loan Rate, the Trustee shall determine the Carry-Over Amount, if any,
with respect to the Series 1997-1G [H] Notes for such Interest Period. Such
Carryover Amount shall bear interest calculated at a rate equal to One-Month
LIBOR from the Interest Payment Date for the Interest Period with respect to
which such Carry-Over Amount was calculated until paid. For purposes of this
Note, any reference to "principal" or "interest" herein shall not include within
the meaning of such words Carry-Over Amount or any interest accrued on any such
Carry-Over Amount. Such Carry-Over Amount shall be separately calculated for
each Series 1997-1G [H] Note by the Trustee during such Interest Period in
sufficient time for the Trustee to give notice to each Holder of such Carry-Over
Amount as required in the next succeeding sentence. On the Interest Payment Date
for an Interest Period with respect to which such Carry-Over Amount has been
calculated by the Trustee, the Trustee shall give written notice to each Holder
of the Carry-Over Amount applicable to each Holder's Series 1997-1G [H] Note,
which written notice may accompany the payment of interest by check made to each
such Holder on such Interest Payment Date or otherwise shall be mailed on such
Interest Payment Date by first class mail, postage prepaid, to each such Holder
at such Holder's address as it appears on the registration books
A-3-5
maintained by the Note Registrar. Such notice shall state, in addition to such
Carry-Over Amount, that, unless and until a Series 1997-1G [H] Note has been
redeemed or has been deemed no longer Outstanding under the First Supplemental
Indenture (after which no Carry-Over Amount shall be paid with respect to a
Series 1997-1G [H] Note), (i) the Carry-Over Amount (and interest accrued
thereon) shall be paid by the Trustee on such Series 1997-1G [H] Note on the
first occurring Interest Payment Date for a subsequent Interest Period if and to
the extent that (l) the Eligible Carry-Over Make-Up Amount with respect to such
Interest Period is greater than zero, and (2) moneys are available pursuant to
the terms of the First Supplemental Indenture to pay such Carry-Over Amount (and
interest accrued thereon), and (ii) interest shall accrue on the Carry-Over
Amount at a per annum rate equal to One-Month LIBOR until such Carry-Over Amount
is paid in full or is canceled.
The Carry-Over Amount for the Series 1997-1G [H] Notes shall be paid
by the Trustee on Outstanding Series 1997-1G [H] Notes on the first occurring
Interest Payment Date for a subsequent Interest Period if and to the extent that
(i) the Eligible Carry-Over Make-Up Amount with respect to such Interest Period
is greater than zero, and (ii) moneys in the Surplus Account are available on
such Interest Payment Date for transfer to the Interest Account for such purpose
in accordance with the applicable provisions of the Indenture, after taking into
account all other amounts payable from the Surplus Fund on such Interest Payment
Date. Any Carry-Over Amount (and any interest accrued thereon) which is unpaid
as of an Interest Payment Date with respect to any Series 1997-1G [H] Note,
which Series 1997-1G [H] Note is to be redeemed or deemed no longer Outstanding
under the First Supplemental Indenture on such Interest Payment Date, shall be
paid to the Holder thereof on such Interest Payment Date to the extent that
moneys are available therefor in accordance with the provisions of the preceding
clause (b); provided, however, that any Carry-Over Amount (and any interest
accrued thereon) which is not so paid on such Interest Payment Date shall be
canceled with respect to such Series 1997-1G [H] Note on such Interest Payment
Date and shall not be paid on any succeeding Interest Payment Date. To the
extent that any portion of the Carry-Over Amount (and any interest accrued
thereon) remains unpaid after payment of a portion thereof, such unpaid portion
shall be paid in whole or in part as required hereunder until fully paid by the
Trustee on the next occurring Interest Payment Date or Dates, as necessary, for
a subsequent Interest Period or Periods, if and to the extent that the
conditions in the first sentence of this paragraph are satisfied. On any
Interest Payment Date on which the Trustee pays less than all of the Carry-Over
Amount (and any interest accrued thereon) with respect to a Series 1997-1G [H]
Note, the Trustee shall give written notice in the manner set forth in the
immediately preceding paragraph to the Holder of such Series 1997-1G [H] Note of
the Carry-Over Amount remaining unpaid on such Series 1997-1G [H] Note.
The Interest Payment Date in such subsequent Interest Period on which
such Carry-Over Amount for the Series 1997-1G [H] Notes shall be paid shall be
determined by the Trustee in accordance with the provisions of the immediately
preceding paragraph, and the Trustee shall make payment of the Carry-Over
A-3-6
Amount in the same manner as, and from the same Account from which, it pays
interest on the Series 1997-1G [H] Notes on an Interest Payment Date.
By purchasing Series 1997-G [H] Notes, whether in an Auction or
otherwise, each purchaser of the Series 1997-G [H] Notes, 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 in the First Supplemental
Indenture, (ii) to have its beneficial ownership of the Series 1997-G [H] Notes
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 Series 1997-G [H] Notes is maintained in Book-Entry
Form by the Securities Depository, an Existing Holder may sell, transfer or
otherwise dispose of Series 1997-G [H] Notes only pursuant to a Bid or Sell
Order placed in an Auction or otherwise sell, transfer or dispose of Series
1997-G [H] Notes through a Broker-Dealer, provided that, in the case of all
transfers other than pursuant to Auctions, such Existing Holder, its Broker-
Dealer or its Participant advises the Auction Agent of such transfer.
The determination of an Auction Rate Series 1997-1 Note Interest Rate
by the Auction Agent or any other authorized Person pursuant to the provisions
of the First Supplemental Indenture shall be conclusive and binding on the
Holders of the Series 1997-G [H] Notes to which such Auction Rate Series 1997-1
Note Interest Rate applies, and the Corporation and the Trustee may rely thereon
for all purposes.
Notwithstanding any provision of this Note to the contrary, in no
event shall the cumulative amount of interest paid or payable on this Note
(including interest calculated as provided herein, plus any other amounts that
constitute interest on this Note under applicable law, which are contracted for,
charged, reserved, taken or received pursuant to this Note or related documents)
calculated from the date of issuance of this Note through any subsequent day
during the term of this Note or otherwise prior to payment in full of this Note
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 this
Note or related documents or otherwise contracted for, charged, reserved, taken
or received in connection with this Note, or if the redemption or acceleration
of the Maturity of this Note results in payment to or receipt by the Registered
Holder or any former Registered Holder hereof of any interest in excess of that
permitted by applicable law, then notwithstanding any provision of this Note or
related documents to the contrary all excess amounts theretofore paid or
received with respect to this Note shall be credited on the Principal Amount of
this Note (or, if this Note has been paid or would thereby be paid in full,
refunded by the recipient thereof), and the provisions of this Note and related
documents shall 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
A-3-7
the applicable law, but so as to permit the recovery of the fullest amount
otherwise called for under this Note and under the related documents.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Series 1997-1 Notes may, at the option of the
Corporation, be redeemed, in whole but not in part, at a Redemption Price equal
to 100% of the Principal Amount of Series 1997-1 Notes to be so redeemed plus
accrued interest thereon to the Redemption Date, on any date after the remaining
aggregate Principal Balance of Student Loans Financed with proceeds of the
Series 1997-1 Notes is less than 10% of the amounts initially deposited to the
credit of the Acquisition Fund.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Outstanding Taxable Auction Rate Series 1997-1 Notes
of any series may be redeemed, in whole or in part, on any any regularly
scheduled Interest Payment Date, at a Redemption Price equal to 100% of the
Principal Amount thereof so redeemed, from proceeds of the Taxable Series 1997-1
Notes constituting a portion of the Balance of the Series 1997-1 Taxable
Acquisition Account that have not been used to acquire Eligible Loans and from
that portion of the Series 1997-1 Taxable Reserve Account which, if left in the
Reserve Fund upon such redemption, would cause the Balance in the Reserve Fund
to exceed the Reserve Fund Requirement, calculated giving effect to such
redemption. Such redemption shall be required on the regularly scheduled
Interest Payment Date occurring in December, 1998 (from such proceeds not so
used as of November 1, 1998), unless the Corporation delivers to the Trustee:
(i) a Corporation Certificate certifying that, based on a Cash Flow Projection,
the failure to redeem such Taxable Auction Rate Series 1997-1 Notes will not
materially adversely affect the Corporation's ability to pay Debt Service on the
Outstanding Notes and the Outstanding Other Obligations, Carry-Over Amounts
(including accrued interest thereon) with respect to Outstanding Notes,
Administrative Expenses or Note Fees or to make required deposits to the Rebate
Fund, and (ii) written confirmation from each of the Rating Agencies then rating
the Series 1997-1 Notes to the effect that the failure to redeem such Taxable
Auction Rate Series 1997-1 Notes will not result in a reduction or withdrawal of
the rating of the Series 1997-1 Notes.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Outstanding Taxable Auction Rate Series 1997-1 Notes
of any series may, at the option of the Corporation, be redeemed on any
regularly scheduled Interest Payment Date for such series occurring on or after
December 1, 1998, in whole or in part, at a Redemption Price equal to 100% of
the Principal Amount thereof to be redeemed, from amounts credited to the Series
1997-1 Taxable Retirement Subaccount from the Series 1997-1 Taxable Surplus
Subaccount for such purpose in accordance with the Indenture and from that
portion of the Series 1997-1 Taxable Reserve Account which exceeds the Reserve
Fund Requirement (calculated after giving effect to such redemption). If the
Trustee shall have first certified that no deficiencies exist in any of the
Rebate Fund, the Note Fund, the Reserve Fund or
A-3-8
the Special Redemption and Prepayment Account, the Trustee shall, upon
Corporation Order, transfer to the Series 1997-1 Taxable Retirement Account any
Balances in the Series 1997-1 Taxable Surplus Subaccount (other than those
consisting of Student Loans) which a Corporation Certificate states are not
reasonably expected to be needed for the payment of scheduled Debt Service on
the Outstanding Notes and Outstanding Other Obligations, Carry-Over Amounts
(including accrued interest thereon) with respect to Outstanding Notes,
Administrative Expenses or Note Fees, or for transfer to the Rebate Fund.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements and certain other requirements, Outstanding Taxable
Auction Rate Series 1997-1 Notes of any series may, at the option of the
Corporation, be redeemed on any regularly scheduled Interest Payment Date for
such series, in whole or in part, at a Redemption Price equal to 100% of the
Principal Amount thereof to be redeemed, from amounts credited to the Retirement
Account for such purpose.
If not all Series 1997-1 Notes subject to redemption are to be
redeemed, the particular Series 1997-1 Notes to be redeemed are to be selected
as provided in the Indenture.
Notice of redemption shall be given by first-class mail mailed at
least 15 days before the Redemption Date to each Holder of Series 1997-G [H]
Notes to be redeemed at his last address appearing on the Note Register; but no
defect in or failure to give such notice of redemption shall affect the validity
of proceedings for redemption of any Series 1997-G [H] Notes not affected by
such defect or failure. All Series 1997-G [H] Notes so called for redemption
will cease to bear interest on such Redemption Date, provided funds for their
redemption have been duly deposited, and, except for the purpose of payment,
shall no longer be protected by the Indenture and shall not be deemed
Outstanding thereunder.
It is provided in the Indenture that Series 1997-G [H] Notes of a
denomination larger than $100,000 may be redeemed in part ($100,000 or an
integral multiple thereof) and that upon any partial redemption of any such
Series 1997-G [H] Note the same shall be surrendered in exchange for one or more
new Notes of the same series in authorized form for the unredeemed portion of
principal.
If provision is made for the payment of principal of and interest on
this Note in accordance with the Indenture, this Note shall no longer be deemed
Outstanding under the Indenture, shall cease to be entitled to the benefits of
the Indenture and shall thereafter be payable solely from the funds provided for
such payment.
If an Event of Default shall occur, the principal of all the
Outstanding Notes may and, under certain circumstances, shall be declared due
and payable in the manner and with the effect provided in the Indenture.
A-3-9
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Corporation and the rights of the Holders of the Notes and Other Beneficiaries
under the Indenture at any time by the Corporation with, among other things, the
consent of the Holders of two-thirds of the aggregate Principal Amount of Class
A Notes at the time Outstanding, if affected thereby, and the consent of the
Holders of two-thirds of the aggregate Principal Amount of Class B Notes at the
time Outstanding, if affected thereby. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate Principal Amount of
the Class A Notes at the time Outstanding or Other Senior Beneficiaries or, if
no Senior Obligations are Outstanding, the Holders of specified percentages in
aggregate Principal Amount of the Class B Notes at the time Outstanding or Other
Subordinate Beneficiaries, on behalf of the Holders of all the Notes, to waive
certain past defaults under the Indenture and their consequences. Any such
consent or waiver shall be conclusive and binding upon the Registered Holder of
this Note and upon all future Registered Holders hereof and of any Note issued
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Note.
This Note is transferable by the Registered Holder hereof upon
surrender of this Note for transfer at the Principal Office of the Note
Registrar (which shall be the Trustee unless and until an Authenticating Agent
becomes the Note Registrar under the Indenture) or at the Principal Office of a
duly appointed Authenticating Agent (the "Authenticating Agent," which term
includes any successor Authenticating Agent under the Indenture), duly endorsed
or accompanied by a written instrument of transfer in form satisfactory to the
Note Registrar or such Authenticating Agent, as the case may be, and executed by
the Registered Holder hereof or his attorney duly authorized in writing, with
signature guarantees satisfactory to the Note Registrar or such Authenticating
Agent, as the case may be. This Note may also be exchanged for one or more other
Notes of the same series upon surrender hereof at the Principal Office of the
Note Registrar or the Principal Office of an Authenticating Agent. Thereupon the
Corporation shall execute and the Trustee or the Authenticating Agent, as the
case may be, shall authenticate and deliver, in exchange for this Note, one or
more new fully registered Notes in the name of the transferee, of an authorized
denomination, in aggregate Principal Amount equal to the Principal Amount of
this Note, of the same series and bearing interest at the same rate. No
Authenticating Agent will be initially appointed with respect to the Series
1997-G [H] Notes. Notwithstanding the foregoing provisions of this paragraph, no
Series 1997-G [H] Note shall be required to be transferred, (i) during a period
beginning at the opening of business fifteen days before any selection of Series
1997-G [H] Notes for redemption and ending at the close of business on the day
of such selection, or (ii) if such Series 1997-G [H] Note has been selected for
redemption in whole or in part.
The Corporation may require payment by the Registered Holder hereof of
a sum sufficient to cover any tax or other governmental charge that may be
A-3-10
imposed in connection with any transfer or exchange of this Note, other than
certain exchanges specifically exempted under the Indenture and not involving
any transfer.
The Corporation, the Trustee, each Paying Agent, any Authenticating
Agent, the Note Registrar and any other agent of the Corporation may treat the
Person in whose name this Note is registered on the Note Register as the
absolute owner hereof for all purposes, whether or not this Note is overdue, and
neither the Corporation, the Trustee, any Paying Agent, any Authenticating
Agent, the Note Registrar nor any other such agent shall be affected by notice
to the contrary.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND DECLARED that all
acts, conditions and things required to have happened, to exist and to have been
performed precedent to and in the issuance of this Note have happened, do exist,
and have been performed in regular and due time, form and manner as so required.
This Note shall not be valid or become obligatory for any purpose or
be entitled to any security or benefit under the Indenture until the Certificate
of Authentication hereon shall have been signed by the Trustee or by the
Authenticating Agent by the manual signature of one of its authorized
representatives.
A-3-11
IN WITNESS WHEREOF, the Corporation has caused this Note to be
executed in its name by the manual signatures of its President and Secretary,
and its corporate seal to be impressed hereon.
Dated: ______________________ EDUCATION LOANS INCORPORATED
____________________________
President
(SEAL)
____________________________
Secretary
-----------------------------
CERTIFICATE OF AUTHENTICATION
This Note is one of the Notes of the series designated therein and
issued under the provisions of the within-mentioned Indenture.
FIRST BANK NATIONAL
ASSOCIATION, as Trustee
By__________________________________
Authorized Representative
A-3-12
____________________
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto ________________________ the within Note and irrevocably appoints
____________________________, attorney-in-fact, to transfer the within Note on
the books kept for registration thereof, with full power of substitution in the
premises.
Dated _______________________
PLEASE INSERT SOCIAL SECURITY ___________________________
OR OTHER IDENTIFYING NUMBER NOTICE: The signature to this assignment
OF ASSIGNEE must correspond with the name as it appears
upon the face of the within Note in every
______________________________ particular, without any alteration
whatsoever.
SIGNATURE GUARANTEED:
------------------------------
▇-▇-▇▇
▇▇▇▇▇▇▇ ▇-▇
-----------
FORM OF LIBOR RATE SERIES 1997-1 SENIOR NOTES
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
EDUCATION LOANS INCORPORATED
TAXABLE LIBOR RATE STUDENT LOAN
ASSET-BACKED CALLABLE NOTE
SENIOR SERIES 1997-I [J]
CLASS A
No. R______ $_________
Stated Date of Original Interest
Maturity Date Issue Rate CUSIP
------------- ---------------- -------- -----
June 1, __________ November _____, 1997 Variable _____
REGISTERED HOLDER: CEDE & CO.
PRINCIPAL AMOUNT:
FOR VALUE RECEIVED, EDUCATION LOANS INCORPORATED, a nonprofit
corporation organized under the laws of the State of South Dakota (the
"Corporation," which term includes any successor corporation under the Indenture
hereinafter referred to, including, upon completion of the Section 150(d)(3)
Transfer, EdLinc), acknowledges itself indebted and hereby promises to pay to
the registered holder specified above, or registered assigns (the "Registered
Holder"), but solely from the revenues and receipts hereinafter specified and
not otherwise, the Principal Amount specified above on the Stated Maturity Date
specified above (subject to the right of prior redemption hereinafter
mentioned), upon presentation and surrender of this Note at the Principal Office
of the Trustee (as hereinafter defined), as Paying Agent for the Series 1997-1
Notes (as hereinafter defined), or a
A-4-1
duly appointed successor Paying Agent, and to pay interest on said Principal
Amount, but solely from the revenues and receipts hereinafter specified and not
otherwise, to the Registered Holder hereof from the date hereof until the
payment of said Principal Amount has been made or duly provided for, payable on
each Interest Payment Date, commencing December 1, 1997, at the LIBOR Rate
Series 1997-1 Note Interest Rate (as hereinafter described), and at the same
rate per annum (to the extent that the payment of such interest shall be legally
enforceable) on overdue installments of interest. Payment of interest on this
Note on each regularly scheduled Interest Payment Date shall be made by check or
draft drawn upon the Paying Agent and mailed to the Person who is the Registered
Holder hereof as of 5:00 p.m. in the city in which the Principal Office of the
Note Registrar is located on the applicable Regular Record Date at the address
of such Registered Holder as it appears on the Note Register maintained by the
Note Registrar, or, if the Registered Holder of this Note is the Registered
Holder of Series 1997-1 Notes in the aggregate Principal Amount of $1,000,000 or
more (or, if less than $1,000,000 in Principal Amount of Series 1997-1 Notes is
outstanding, the Registered Holder of all outstanding Series 1997-1 Notes), at
the direction of such Registered Holder received by the Paying Agent by 5:00
p.m. in the city in which the Principal Office of the Paying Agent is located on
the last Business Day preceding the applicable Regular Record Date, by
electronic transfer by the Paying Agent in immediately available funds to an
account designated by such Registered Holder. In addition, interest on this Note
is payable at the Maturity hereof in the same manner as the principal hereof,
unless the date of such Maturity is a regularly scheduled Interest Payment Date,
in which event interest is payable in the manner set forth in the preceding
sentence. Any interest not so timely paid or duly provided for shall cease to be
payable to the Person who is the Registered Holder hereof at the close of
business on the Regular Record Date and shall be payable to the Person who is
the Registered Holder hereof at the close of business on a special record date
for the payment of any such defaulted interest. Such special record date shall
be fixed by the Trustee whenever moneys become available for payment of the
defaulted interest, and notice of the special record date shall be given to the
Registered Holder hereof not less than ten days prior thereto by first-class
mail to such Registered Holder as shown on the Note Register on a date selected
by the Trustee, stating the date of the special record date and the date fixed
for the payment of such defaulted interest. The principal of and interest on
this Note are payable in lawful money of the United States of America.
INTEREST ON THIS NOTE IS SUBJECT TO FEDERAL INCOME TAXATION PURSUANT
TO AN ELECTION MADE BY THE CORPORATION UNDER SECTION 625(c) OF THE TAX REFORM
ACT OF 1984 AND 26 CFR (S)301.9100-6T(d).
This Note is one of an authorized issue of Notes (the "Notes"), issued
and to be issued by the Corporation in one or more series pursuant to an
Indenture of Trust, dated as of July 1, 1997 (as supplemented and amended, the
"Indenture"), as supplemented by a First Supplemental Indenture of Trust, dated
as of July 1, 1997
A-4-2
(the "First Supplemental Indenture"), each between the Corporation and First
Bank National Association, Minneapolis, Minnesota, as Trustee (the "Trustee,"
which term includes any successor trustee under the Indenture). As provided in
the Indenture, the Notes are issuable in series which may vary as in the
Indenture provided or permitted. This Note is one of a series issued in an
aggregate Principal Amount of $_________________ (the "Series 1997-I [J]
Notes"). The Series 1997-I [J] Notes are issued simultaneously with nine other
series of Class A Notes issued in the aggregate Principal Amount of
$_______________ (together with the Series 1997-I [J] Notes, collectively
referred to herein as the "Series 1997-1 Senior Notes"), and two series of Class
B Notes issued in the aggregate Principal Amount of $_____________________ (the
"Series 1997-1 Subordinate Notes" and, together with the Series 1997-1 Senior
Notes, collectively referred to herein as the "Series 1997-1 Notes"). The
proceeds of the Series 1997-1 Notes will be used by the Corporation to (a)
acquire student loan notes incurred under the Higher Education Act and (b) fund
the Reserve Fund.
Reference is hereby made to the Indenture, copies of which are on file
in the principal corporate trust office of the Trustee, and to all of the
provisions of which any Registered Holder of this Note by his acceptance hereof
hereby assents, for definitions of terms; the description of and the nature and
extent of the security for the various classes of Notes and Other Obligations
secured thereunder; the student loan acquisition program being financed by the
issuance of the Notes; the revenues and other moneys pledged to the payment of
the principal of, premium, if any, and interest on the Notes and the Other
Obligations; the nature and extent and manner of enforcement of the pledge; the
conditions upon which Notes may be issued or Other Obligations may be incurred
by the Corporation thereunder, payable from such revenues and other moneys
thereunder as Senior Obligations, Subordinate Obligations or Class C Notes; the
conditions upon which the Indenture may be amended or supplemented with or
without the consent of the Holders of the Notes; the rights and remedies of the
Registered Holder hereof with respect hereto and thereto, including the
limitations upon the right of a Registered Holder hereof to institute any suit,
action or proceeding in equity or at law with respect hereto and thereto; the
rights, duties and obligations of the Corporation and the Trustee thereunder;
the terms and provisions upon which the liens, pledges, charges, trusts and
covenants made therein may be discharged at or prior to the Maturity or
redemption of this Note, and this Note thereafter no longer be secured by the
Indenture, or be deemed to be Outstanding thereunder; and for the other terms
and provisions thereof. Terms used with initial capital letters but not defined
in this Note have the respective meanings given such terms in the Indenture. The
Series 1997-I [J] Notes are being issued as, and will constitute, taxable Class
A Notes under the Indenture. One other series of the Series 1997-1 Senior Notes
also is a series of taxable Class A Notes which, like the Series 1997-I [J]
Notes, bears interest at a LIBOR Rate Series 1997-1 Note Interest Rate, and,
together with the Series 1997-I [J] Notes, are collectively referred to herein
as the "LIBOR Rate Series 1997-1 Senior Notes."
The Notes and Other Obligations are limited obligations of the
Corporation, payable solely from the revenues and assets of the Corporation
pledged
A-4-3
therefor under the Indenture, including certain notes evidencing Student Loans
and the proceeds of the Corporation's bonds, notes or other evidences of
indebtedness, if any, issued with respect to the Notes.
Each Noteholder, by acceptance of a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder will
not at any time institute against the Corporation, or join in any institution
against the Corporation, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings under any United States Federal or state bankruptcy
or similar law in connection with any obligations relating to the Notes, the
Indenture or the Servicing Agreement.
The Corporation has structured the Indenture and the Notes with the
intention that the Notes will qualify under applicable federal, state, local and
foreign tax law as indebtedness of the Corporation secured by the Trust Estate.
The Corporation, the Trustee, the Servicer and each Noteholder agree to treat
and to take no action inconsistent with the treatment of the Notes as such
indebtedness for purposes of federal, state, local and foreign income or
franchise taxes and any other tax imposed on or measured by income. Each
Noteholder, by acceptance of its Note, agrees to be bound by the provisions of
this paragraph. Each Noteholder agrees that it will cause any Person acquiring
an interest in a Note through it to comply with the Indenture as to treatment as
indebtedness under applicable tax law, as described in this paragraph.
Interest payable on this Note shall be computed on the basis of actual
days elapsed and accrue daily from the date hereof (on the basis of a 360-day
year), and is payable on each regularly scheduled Interest Payment Date prior to
the Maturity of this Note and at the Maturity of this Note. The interest payable
on each Interest Payment Date for this Note shall be [calculated on a per unit
basis, based on a unit of $100,000, and shall be] that interest which has
accrued through the last day preceding such Interest Payment Date or, in the
case of the Maturity of this Note, the last day preceding the date of such
Maturity. The LIBOR Rate Series 1997-1 Note Interest Rate shall be effective as
of and on the first day (whether or not a Business Day) of the applicable
Interest Period and be in effect thereafter through the end of such Interest
Period.
The unpaid Principal Amount hereof from time to time outstanding shall
bear interest at a LIBOR Rate Series 1997-1 Note Interest Rate, as described
below, payable on each Interest Payment Date and at the Maturity hereof, such
interest to accrue from the later of the date hereof or the date through which
interest has been paid or duly provided for.
During the Initial Interest Period, this Note shall bear interest at
the LIBOR Rate Series 1997-1 Note Initial Interest Rate for the Series 1997-I
[J] Notes. The interest rate to be borne by this Note during each Interest
Period thereafter shall be determined on the related Interest Rate Determination
Date and shall be equal to
A-4-4
the lesser of (i) the sum of One-Month LIBOR determined with respect to such
Interest Rate Determination Date plus _____% (which is herein referred to as the
"LIBOR Rate Series 1997-1 Note LIBOR-Based Rate"), and (ii) the Net Loan Rate
determined with respect to such Interest Rate Determination Date. The Trustee
shall determine such interest rate on each Interest Rate Determination Date.
Notwithstanding any other provision of this Note or the First
Supplemental Indenture, interest payable on this Note for an Interest Period
shall never exceed for such Interest Period the amount of interest payable at
the Net Loan Rate in effect for such Interest Period.
If the LIBOR Rate Series 1997-1 Note LIBOR-Based Rate for the Series
1997-1I [J] Notes is greater than the Net Loan Rate, then the LIBOR Rate Series
1997-1 Note Interest Rate applicable to the Series 1997-1I [J] Notes for that
Interest Period will be the Net Loan Rate. If the LIBOR Rate Series 1997-1 Note
Interest Rate applicable to the Series 1997-1I [J] Notes for any Interest Period
is the Net Loan Rate, the Trustee shall determine the Carry-Over Amount, if any,
with respect to the Series 1997-1I [J] Notes for such Interest Period. Such
Carryover Amount shall bear interest calculated at a rate equal to the LIBOR
Rate Series 1997-1 Note LIBOR-Based Rate (as determined by the Trustee) from the
Interest Payment Date for the Interest Period with respect to which such Carry-
Over Amount was calculated until paid. For purposes of this Note, any reference
to "principal" or "interest" herein shall not include within the meaning of such
words Carry-Over Amount or any interest accrued on any such Carry-Over Amount.
Such Carry-Over Amount shall be separately calculated for each Series 1997-1I
[J] Note by the Trustee during such Interest Period in sufficient time for the
Trustee to give notice to each Holder of such Carry-Over Amount as required in
the next succeeding sentence. On the Interest Payment Date for an Interest
Period with respect to which such Carry-Over Amount has been calculated by the
Trustee, the Trustee shall give written notice to each Holder of the Carry-Over
Amount applicable to each Holder's Series 1997-1I [J] Note, which written notice
may accompany the payment of interest by check made to each such Holder on such
Interest Payment Date or otherwise shall be mailed on such Interest Payment Date
by first class mail, postage prepaid, to each such Holder at such Holder's
address as it appears on the registration books maintained by the Note
Registrar. Such notice shall state, in addition to such Carry-Over Amount, that,
unless and until a Series 1997-1I [J] Note has been redeemed or has been deemed
no longer Outstanding under the First Supplemental Indenture (after which no
Carry-Over Amount shall be paid with respect to a Series 1997-1I [J] Note), (i)
the Carry-Over Amount (and interest accrued thereon) shall be paid by the
Trustee on such Series 1997-1I [J] Note on the first occurring Interest Payment
Date for a subsequent Interest Period if and to the extent that (l) the Eligible
Carry-Over Make-Up Amount with respect to such Interest Period is greater than
zero, and (2) moneys are available pursuant to the terms of the First
Supplemental Indenture to pay such Carry-Over Amount (and interest accrued
thereon), and (ii) interest shall accrue on the Carry-Over Amount at a per annum
rate equal to the LIBOR Rate
A-4-5
Series 1997-1 Note LIBOR-Based Rate until such Carry-Over Amount is paid in full
or is canceled.
The Carry-Over Amount for the Series 1997-1I [J] Notes shall be paid
by the Trustee on Outstanding Series 1997-1I [J] Notes on the first occurring
Interest Payment Date for a subsequent Interest Period if and to the extent that
(i) the Eligible Carry-Over Make-Up Amount with respect to such Interest Period
is greater than zero, and (ii) moneys in the Surplus Account are available on
such Interest Payment Date for transfer to the Interest Account for such purpose
in accordance with the applicable provisions of the Indenture, after taking into
account all other amounts payable from the Surplus Fund on such Interest Payment
Date. Any Carry-Over Amount (and any interest accrued thereon) which is unpaid
as of an Interest Payment Date with respect to any Series 1997-1I [J] Note,
which Series 1997-1I [J] Note is to be redeemed or deemed no longer Outstanding
under the First Supplemental Indenture on such Interest Payment Date, shall be
paid to the Holder thereof on such Interest Payment Date to the extent that
moneys are available therefor in accordance with the provisions of the preceding
clause (b); provided, however, that any Carry-Over Amount (and any interest
accrued thereon) which is not so paid on such Interest Payment Date shall be
canceled with respect to such Series 1997-1I [J] Note on such Interest Payment
Date and shall not be paid on any succeeding Interest Payment Date. To the
extent that any portion of the Carry-Over Amount (and any interest accrued
thereon) remains unpaid after payment of a portion thereof, such unpaid portion
shall be paid in whole or in part as required hereunder until fully paid by the
Trustee on the next occurring Interest Payment Date or Dates, as necessary, for
a subsequent Interest Period or Periods, if and to the extent that the
conditions in the first sentence of this paragraph are satisfied. On any
Interest Payment Date on which the Trustee pays less than all of the Carry-Over
Amount (and any interest accrued thereon) with respect to a Series 1997-1I [J]
Note, the Trustee shall give written notice in the manner set forth in the
immediately preceding paragraph to the Holder of such Series 1997-1I [J] Note of
the Carry-Over Amount remaining unpaid on such Series 1997-1I [J] Note.
The Interest Payment Date in such subsequent Interest Period on which
such Carry-Over Amount for the Series 1997-1I [J] Notes shall be paid shall be
determined by the Trustee in accordance with the provisions of the immediately
preceding paragraph, and the Trustee shall make payment of the Carry-Over Amount
in the same manner as, and from the same Account from which, it pays interest on
the Series 1997-1I [J] Notes on an Interest Payment Date.
In the event that the Trustee no longer determines, or fails to
determine, when required, the LIBOR Rate Series 1997-1 Note LIBOR-Based Rate
with respect to the Series 1997-1I [J] Notes, or if, for any reason, such manner
of determination shall be held to be invalid or unenforceable, the LIBOR Rate
Series 1997-1 Note LIBOR-Based Rate for each succeeding Interest Period shall be
the Net Loan Rate as determined by or on behalf of the Corporation with respect
to the related Interest Rate Determination Date, and if the Corporation shall
fail or refuse
A-4-6
to determine such Net Loan Rate, the Net Loan Rate shall be determined by a
securities dealer appointed by the Trustee capable of making such a
determination in accordance with the provisions hereof and written notice of
such determination shall be given by such securities dealer to the Trustee.
The determination of a LIBOR Rate Series 1997-1 Note Interest Rate by
the Trustee or any other authorized Person pursuant to the provisions of the
First Supplemental Indenture shall be conclusive and binding on the Holders of
the Series 1997-I [J] Notes to which such LIBOR Rate Series 1997-1 Note Interest
Rate applies, and the Corporation and the Trustee may rely thereon for all
purposes.
Notwithstanding any provision of this Note to the contrary, in no
event shall the cumulative amount of interest paid or payable on this Note
(including interest calculated as provided herein, plus any other amounts that
constitute interest on this Note under applicable law, which are contracted for,
charged, reserved, taken or received pursuant to this Note or related documents)
calculated from the date of issuance of this Note through any subsequent day
during the term of this Note or otherwise prior to payment in full of this Note
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 this
Note or related documents or otherwise contracted for, charged, reserved, taken
or received in connection with this Note, or if the redemption or acceleration
of the Maturity of this Note results in payment to or receipt by the Registered
Holder or any former Registered Holder hereof of any interest in excess of that
permitted by applicable law, then notwithstanding any provision of this Note or
related documents to the contrary all excess amounts theretofore paid or
received with respect to this Note shall be credited on the Principal Amount of
this Note (or, if this Note has been paid or would thereby be paid in full,
refunded by the recipient thereof), and the provisions of this Note and related
documents shall 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 this
Note and under the related documents.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Outstanding LIBOR Rate Series 1997-1 Notes shall
receive prepayments of principal on any Interest Payment Date from moneys
available therefor in the Series 1997-1 Taxable Special Redemption and
Prepayment Subaccount in accordance with the provisions of the First
Supplemental Indenture. All prepayments of principal in accordance with the
preceding sentence shall, subject to satisfying the asset requirements of the
Indenture, be allocated between the LIBOR Rate Series 1997-1 Senior Notes and
the Series 1997-1L Notes pro rata based upon their respective aggregate
Principal Amounts. All such prepayments of principal allocated to the LIBOR
Rate Series 1997-1 Senior Notes shall be applied to the Series 1997-1I Notes so
long as any such Notes remain Outstanding, and thereafter to the Series 1997-1J
Notes. All such prepayments of principal applied to
A-4-7
the Series 1997-I [J] Notes shall be allocated pro rata, based upon their
respective Principal Amounts, to the reduction of the Principal Amount of all
Series 1997-I [J] Notes.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Series 1997-1 Notes may, at the option of the
Corporation, be redeemed, in whole but not in part, at a Redemption Price equal
to 100% of the Principal Amount of Series 1997-1 Notes to be so redeemed plus
accrued interest thereon to the Redemption Date, on any date after the remaining
aggregate Principal Balance of Student Loans Financed with proceeds of the
Series 1997-1 Notes is less than 10% of the amounts initially deposited to the
credit of the Acquisition Fund.
Notice of redemption shall be given by first-class mail mailed at
least 30 days before the Redemption Date to each Holder of Series 1997-I [J]
Notes to be redeemed at his last address appearing on the Note Register; but no
defect in or failure to give such notice of redemption shall affect the validity
of proceedings for redemption of any Series 1997-I [J] Notes not affected by
such defect or failure. All Series 1997-I [J] Notes so called for redemption
will cease to bear interest on such Redemption Date, provided funds for their
redemption have been duly deposited, and, except for the purpose of payment,
shall no longer be protected by the Indenture and shall not be deemed
Outstanding thereunder.
It is provided in the Indenture that Series 1997-I [J] Notes of an
Authorized Denomination larger than $100,000 may be redeemed in part ($100,000
in original Principal Amount or an integral multiple thereof) and that upon any
partial redemption of any such Series 1997-I [J] Note the same shall be
surrendered in exchange for one or more new Notes of the same series in
authorized form for the unredeemed portion of principal.
If provision is made for the payment of principal of and interest on
this Note in accordance with the Indenture, this Note shall no longer be deemed
Outstanding under the Indenture, shall cease to be entitled to the benefits of
the Indenture and shall thereafter be payable solely from the funds provided for
such payment.
If an Event of Default shall occur, the principal of all the
Outstanding Notes may and, under certain circumstances, shall be declared due
and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Corporation and the rights of the Holders of the Notes and Other Beneficiaries
under the Indenture at any time by the Corporation with, among other things, the
consent of the Holders of two-thirds of the aggregate Principal Amount of Class
A Notes at the time Outstanding, if affected thereby, and the consent of the
Holders of
A-4-8
two-thirds of the aggregate Principal Amount of Class B Notes at the time
Outstanding, if affected thereby. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate Principal Amount of
the Class A Notes at the time Outstanding or Other Senior Beneficiaries or, if
no Senior Obligations are Outstanding, the Holders of specified percentages in
aggregate Principal Amount of the Class B Notes at the time Outstanding or Other
Subordinate Beneficiaries, on behalf of the Holders of all the Notes, to waive
certain past defaults under the Indenture and their consequences. Any such
consent or waiver shall be conclusive and binding upon the Registered Holder of
this Note and upon all future Registered Holders hereof and of any Note issued
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Note.
This Note is transferable by the Registered Holder hereof upon
surrender of this Note for transfer at the Principal Office of the Note
Registrar (which shall be the Trustee unless and until an Authenticating Agent
becomes the Note Registrar under the Indenture) or at the Principal Office of a
duly appointed Authenticating Agent (the "Authenticating Agent," which term
includes any successor Authenticating Agent under the Indenture), duly endorsed
or accompanied by a written instrument of transfer in form satisfactory to the
Note Registrar or such Authenticating Agent, as the case may be, and executed by
the Registered Holder hereof or his attorney duly authorized in writing, with
signature guarantees satisfactory to the Note Registrar or such Authenticating
Agent, as the case may be. This Note may also be exchanged for one or more
other Notes of the same series upon surrender hereof at the Principal Office of
the Note Registrar or the Principal Office of an Authenticating Agent.
Thereupon the Corporation shall execute and the Trustee or the Authenticating
Agent, as the case may be, shall authenticate and deliver, in exchange for this
Note, one or more new fully registered Notes in the name of the transferee, of
an authorized denomination, in aggregate Principal Amount equal to the Principal
Amount of this Note, of the same series and bearing interest at the same rate.
No Authenticating Agent will be initially appointed with respect to the Series
1997-I [J] Notes. Notwithstanding the foregoing provisions of this paragraph,
no Series 1997-I [J] Note shall be required to be transferred, (i) during a
period beginning at the opening of business fifteen days before any selection of
Series 1997-I [J] Notes for redemption and ending at the close of business on
the day of such selection, or (ii) if such Series 1997-I [J] Note has been
selected for redemption in whole or in part.
The Corporation may require payment by the Registered Holder hereof of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of this Note, other than
certain exchanges specifically exempted under the Indenture and not involving
any transfer.
The Corporation, the Trustee, each Paying Agent, any Authenticating
Agent, the Note Registrar and any other agent of the Corporation may treat the
A-4-9
Person in whose name this Note is registered on the Note Register as the
absolute owner hereof for all purposes, whether or not this Note is overdue, and
neither the Corporation, the Trustee, any Paying Agent, any Authenticating
Agent, the Note Registrar nor any other such agent shall be affected by notice
to the contrary.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND DECLARED that all
acts, conditions and things required to have happened, to exist and to have been
performed precedent to and in the issuance of this Note have happened, do exist,
and have been performed in regular and due time, form and manner as so required.
This Note shall not be valid or become obligatory for any purpose or
be entitled to any security or benefit under the Indenture until the Certificate
of Authentication hereon shall have been signed by the Trustee or by the
Authenticating Agent by the manual signature of one of its authorized
representatives.
IN WITNESS WHEREOF, the Corporation has caused this Note to be
executed in its name by the manual signatures of its President and Secretary,
and its corporate seal to be impressed hereon.
Dated: __________________ EDUCATION LOANS INCORPORATED
__________________________
President
(SEAL)
__________________________
Secretary
-----------------------------
CERTIFICATE OF AUTHENTICATION
This Note is one of the Notes of the series designated therein and
issued under the provisions of the within-mentioned Indenture.
FIRST BANK NATIONAL
ASSOCIATION, as Trustee
By_____________________________
Authorized Representative
A-4-10
-----------------------------
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto ________________________ the within Note and irrevocably appoints
____________________________, attorney-in-fact, to transfer the within Note on
the books kept for registration thereof, with full power of substitution in the
premises.
Dated _______________________
PLEASE INSERT SOCIAL SECURITY ____________________________________
OR OTHER IDENTIFYING NUMBER NOTICE: The signature to this
OF ASSIGNEE assignment must correspond with the
name as it appears upon the face of
____________________________ the within Note in every particular,
without any alteration whatsoever.
SIGNATURE GUARANTEED:
____________________________
A-4-11
EXHIBIT B-1
FORM OF SERIES 1997-1K NOTES
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
EDUCATION LOANS INCORPORATED
TAX EXEMPT FIXED RATE STUDENT LOAN
ASSET-BACKED CALLABLE NOTE
SUBORDINATE SERIES 1997-1K
CLASS B
No. R________ $________
Stated Date of Original Interest
Maturity Date Issue Rate CUSIP
------------- ---------------- -------- -----
June 1, 2020 October 15, 1997 _____
REGISTERED HOLDER: CEDE & CO.
PRINCIPAL AMOUNT:
FOR VALUE RECEIVED, EDUCATION LOANS INCORPORATED, a nonprofit
corporation organized under the laws of the State of South Dakota (the
"Corporation," which term includes any successor corporation under the Indenture
hereinafter referred to, including, upon completion of the Section 150(d)(3)
Transfer, EdLinc), acknowledges itself indebted and hereby promises to pay to
the registered holder specified above, or registered assigns (the "Registered
Holder"), but solely from the revenues and receipts hereinafter specified and
not otherwise, the Principal Amount specified above on the Stated Maturity Date
specified above (subject to the right of prior redemption hereinafter
mentioned), upon presentation and surrender of this Note at the Principal Office
of the Trustee (as hereinafter defined), as Paying Agent for the Series 1997-1
Notes (as hereinafter defined), or a
B-1-1
duly appointed successor Paying Agent, and to pay interest on said Principal
Amount, but solely from the revenues and receipts hereinafter specified and not
otherwise, to the Registered Holder hereof from the date hereof until the
payment of said Principal Amount has been made or duly provided for, at the rate
per annum specified above, payable semiannually on the first day of June and
December in each year, commencing December 1, 1997, and at the same rate per
annum (to the extent that the payment of such interest shall be legally
enforceable) on overdue installments of interest. Payment of interest on this
Note on each regularly scheduled Interest Payment Date shall be made by check or
draft drawn upon the Paying Agent and mailed to the Person who is the Registered
Holder hereof as of 5:00 p.m. in the city in which the Principal Office of the
Note Registrar is located on the applicable Regular Record Date at the address
of such Registered Holder as it appears on the Note Register maintained by the
Note Registrar, or, if the Registered Holder of this Note is the Registered
Holder of Series 1997-1 Notes in the aggregate Principal Amount of $1,000,000 or
more (or, if less than $1,000,000 in Principal Amount of Series 1997-1 Notes is
outstanding, the Registered Holder of all outstanding Series 1997-1 Notes), at
the direction of such Registered Holder received by the Paying Agent by 5:00
p.m. in the city in which the Principal Office of the Paying Agent is located on
the last Business Day preceding the applicable Regular Record Date, by
electronic transfer by the Paying Agent in immediately available funds to an
account designated by such Registered Holder. In addition, premium, if any, and
interest on this Note are payable at the Maturity hereof in the same manner as
the principal hereof, unless the date of such Maturity is a regularly scheduled
Interest Payment Date, in which event interest is payable in the manner set
forth in the preceding sentence. Any interest not so timely paid or duly
provided for shall cease to be payable to the Person who is the Registered
Holder hereof at the close of business on the Regular Record Date and shall be
payable to the Person who is the Registered Holder hereof at the close of
business on a special record date for the payment of any such defaulted
interest. Such special record date shall be fixed by the Trustee whenever moneys
become available for payment of the defaulted interest, and notice of the
special record date shall be given to the Registered Holder hereof not less than
ten days prior thereto by first-class mail to such Registered Holder as shown on
the Note Register on a date selected by the Trustee, stating the date of the
special record date and the date fixed for the payment of such defaulted
interest. The principal of, premium, if any, and interest on this Note are
payable in lawful money of the United States of America.
This Note is one of an authorized issue of Notes (the "Notes"), issued
and to be issued by the Corporation in one or more series pursuant to an
Indenture of Trust, dated as of July 1, 1997 (as supplemented and amended, the
"Indenture"), as supplemented by a First Supplemental Indenture of Trust, dated
as of July 1, 1997 (the "First Supplemental Indenture"), each between the
Corporation and First Bank National Association, Minneapolis, Minnesota, as
Trustee (the "Trustee," which term includes any successor trustee under the
Indenture). As provided in the Indenture, the Notes are issuable in series which
may vary as in the Indenture provided or permitted. This Note is one of a series
of Class B Notes issued in an
B-1-2
aggregate Principal Amount of $____________ (the "Series 1997-1K Notes"). The
Series 1997-1K Notes are issued simultaneously with one other series of Class B
Notes issued in the aggregate Principal Amount of $_________ (together with the
Series 1997-1K Notes, collectively referred to herein as the "Series 1997-1
Subordinate Notes") and ten series of Class A Notes issued in the aggregate
Principal Amount of $_________ (the "Series 1997-1 Senior Notes" and, together
with the Series 1997-1 Subordinate Notes, collectively referred to herein as the
"Series 1997-1 Notes"). The proceeds of the Series 1997-1 Notes will be used by
the Corporation to (a) acquire student loan notes incurred under the Higher
Education Act and (b) fund the Reserve Fund.
Reference is hereby made to the Indenture, copies of which are on file
in the principal corporate trust office of the Trustee, and to all of the
provisions of which any Registered Holder of this Note by his acceptance hereof
hereby assents, for definitions of terms; the description of and the nature and
extent of the security for the various classes of Notes and Other Obligations
secured thereunder; the student loan acquisition program being financed by the
issuance of the Notes; the revenues and other moneys pledged to the payment of
the principal of, premium, if any, and interest on the Notes and the Other
Obligations; the nature and extent and manner of enforcement of the pledge; the
conditions upon which Notes may be issued or Other Obligations may be incurred
by the Corporation thereunder, payable from such revenues and other moneys
thereunder as Senior Obligations, Subordinate Obligations or Class C Notes; the
conditions upon which the Indenture may be amended or supplemented with or
without the consent of the Holders of the Notes; the rights and remedies of the
Registered Holder hereof with respect hereto and thereto, including the
limitations upon the right of a Registered Holder hereof to institute any suit,
action or proceeding in equity or at law with respect hereto and thereto; the
rights, duties and obligations of the Corporation and the Trustee thereunder;
the terms and provisions upon which the liens, pledges, charges, trusts and
covenants made therein may be discharged at or prior to the Maturity or
redemption of this Note, and this Note thereafter no longer be secured by the
Indenture, or be deemed to be Outstanding thereunder; and for the other terms
and provisions thereof. Terms used with initial capital letters but not defined
in this Note have the respective meanings given such terms in the Indenture. The
Series 1997-1K Notes are being issued as, and will constitute, Tax Exempt Class
B Notes under the Indenture.
The Notes and Other Obligations are limited obligations of the
Corporation, payable solely from the revenues and assets of the Corporation
pledged therefor under the Indenture, including certain notes evidencing Student
Loans and the proceeds of the Corporation's bonds, notes or other evidences of
indebtedness, if any, issued with respect to the Notes.
Each Noteholder, by acceptance of a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder will
not at any time institute against the Corporation, or join in any institution
against the
B-1-3
Corporation, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the Servicing Agreement.
The Corporation has structured the Indenture and the Notes with the
intention that the Notes will qualify under applicable federal, state, local and
foreign tax law as indebtedness of the Corporation secured by the Trust Estate.
The Corporation, the Trustee, the Servicer and each Noteholder agree to treat
and to take no action inconsistent with the treatment of the Notes as such
indebtedness for purposes of federal, state, local and foreign income or
franchise taxes and any other tax imposed on or measured by income. Each
Noteholder, by acceptance of its Note, agrees to be bound by the provisions of
this paragraph. Each Noteholder agrees that it will cause any Person acquiring
an interest in a Note through it to comply with the Indenture as to treatment as
indebtedness under applicable tax law, as described in this paragraph.
The Series 1997-1K Notes constitute Class B Notes under the Indenture
which are subordinated in right of payment, the direction of remedies and
certain other matters in accordance with the terms of the Indenture to the
rights of the Holders of Class A Notes issued from time to time under the
Indenture (including, without limitation the Series 1997-1 Senior Notes) and
Other Senior Beneficiaries thereunder. A failure to pay principal of, premium,
if any, or interest on this Class B Note will not constitute an Event of Default
under the Indenture if any Senior Obligation is Outstanding.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Outstanding Series 1997-1K Notes may, at the option
of the Corporation (and at such time as no Tax Exempt Auction Rate Series 1997-1
Notes are Outstanding), be redeemed, in whole or in part, on any date, at a
Redemption Price equal to 100% of the Principal Amount thereof so redeemed, from
proceeds of the Tax Exempt Series 1997-1 Notes constituting a portion of the
Balance of the Series 1997-1 Tax Exempt Acquisition Account that have not been
used to acquire Eligible Loans and from that portion of the Series 1997-1 Tax
Exempt Reserve Account which, if left in the Reserve Fund upon such redemption,
would cause the Balance in the Reserve Fund to exceed the Reserve Fund
Requirement, calculated giving effect to such redemption. Such redemption shall
be required on June 1, 2001 (to the extent the proceeds in the Series 1997-1 Tax
Exempt Acquisition Account not so used as of April 15, 2001, exceed
$________________) and on June 1, 2002 (from such proceeds not so used as of
April 15, 2002), unless the Corporation delivers to the Trustee: (i) an opinion
of Bond Counsel stating in effect that such redemption is not required pursuant
to the Code and that failure to so redeem Tax Exempt Series 1997-1 Notes will
not adversely affect the tax exempt status of interest on any Tax Exempt Series
1997-1 Notes for federal income tax purposes, (ii) a Corporation Certificate
certifying that, based on a Cash Flow Projection, the failure to so redeem Tax
Exempt Series 1997-1 Notes will not materially adversely affect the
B-1-4
Corporation's ability to pay Debt Service on the Outstanding Notes and the
Outstanding Other Obligations, Carry-Over Amounts (including accrued interest
thereon) with respect to Outstanding Notes, Administrative Expenses or Note Fees
or to make required deposits to the Rebate Fund, and (iii) written confirmation
from each of the Rating Agencies then rating the Series 1997-1 Notes to the
effect that the failure to so redeem Tax Exempt Series 1997-1 Notes will not
result in a reduction or withdrawal of the rating of the Series 1997-1 Notes.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Outstanding Series 1997-1K Notes may, at the option
of the Corporation, be redeemed on December 1, 1998, and on any date thereafter,
in whole or in part, at a Redemption Price equal to 100% of the Principal Amount
thereof to be redeemed, from amounts credited to the Series 1997-1 Tax Exempt
Retirement Subaccount from the Series 1997-1 Tax Exempt Surplus Subaccount for
such purpose in accordance with the Indenture and from that portion of the
Series 1997-1 Tax Exempt Reserve Account which exceeds the Reserve Fund
Requirement (calculated after giving effect to such redemption). If the Trustee
shall have first certified that no deficiencies exist in any of the Rebate Fund,
the Note Fund, the Reserve Fund or the Special Redemption and Prepayment
Account, the Trustee shall, upon Corporation Order, transfer to the Series 1997-
1 Tax Exempt Retirement Account any Balances in the Series 1997-1 Tax Exempt
Surplus Subaccount (other than those consisting of Student Loans) which a
Corporation Certificate states are not reasonably expected to be needed for the
payment of scheduled Debt Service on the Outstanding Notes and Outstanding Other
Obligations, Carry-Over Amounts (including accrued interest thereon) with
respect to Outstanding Notes, Administrative Expenses or Note Fees, or for
transfer to the Rebate Fund.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements and certain other requirements, Outstanding Series
1997-1K Notes may, at the option of the Corporation and from amounts credited to
the Retirement Account for such purpose, be redeemed on June 1, 2007, and on any
date thereafter, in whole or in part, at the Redemption Prices (expressed as a
percentage of Principal Amount) set forth below plus accrued interest to the
Redemption Date:
Redemption
Redemption Period Price
----------------- -----
December 1, 2007, through November 30, 2008 102%
December 1, 2008, through November 30, 2009 101%
December 1, 2009, and thereafter 100%
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Series 1997-1 Notes may, at the option of the
Corporation, be redeemed, in whole but not in part, at a Redemption Price equal
to 100% of the Principal Amount of Series 1997-1 Notes to be so redeemed plus
accrued interest thereon to the Redemption Date, on any date after the remaining
aggregate
B-1-5
Principal Balance of Student Loans Financed with proceeds of the Series 1997-1
Notes is less than 10% of the amounts initially deposited to the credit of the
Acquisition Fund.
If not all Series 1997-1 Notes subject to redemption are to be
redeemed, the particular Series 1997-1 Notes to be redeemed are to be selected
as provided in the Indenture.
Notice of redemption shall be given by first-class mail mailed at
least 30 days before the Redemption Date to each Holder of Series 1997-1K Notes
to be redeemed at his last address appearing on the Note Register; but no defect
in or failure to give such notice of redemption shall affect the validity of
proceedings for redemption of any Note not affected by such defect or failure.
All Series 1997-1K Notes so called for redemption will cease to bear interest on
such Redemption Date, provided funds for their redemption have been duly
deposited, and, except for the purpose of payment, shall no longer be protected
by the Indenture and shall not be deemed Outstanding thereunder.
It is provided in the Indenture that Series 1997-1K Notes of a
denomination larger than $5,000 may be redeemed in part ($5,000 or an integral
multiple thereof) and that upon any partial redemption of any such Series 1997-
1K Note the same shall be surrendered in exchange for one or more new Notes of
the same series in authorized form for the unredeemed portion of principal.
If provision is made for the payment of principal of, premium, if any,
and interest on this Note in accordance with the Indenture, this Note shall no
longer be deemed Outstanding under the Indenture, shall cease to be entitled to
the benefits of the Indenture and shall thereafter be payable solely from the
funds provided for such payment.
If an Event of Default shall occur, the principal of all the
Outstanding Notes may and, under certain circumstances, shall be declared due
and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Corporation and the rights of the Holders of the Notes and Other Beneficiaries
under the Indenture at any time by the Corporation with, among other things, the
consent of the Holders of two-thirds of the aggregate Principal Amount of Class
A Notes at the time Outstanding, if affected thereby, and with the consent of
the Holders of two-thirds of the aggregate Principal Amount of Class B Notes at
the time Outstanding, if affected thereby. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
Principal Amount of the Class A Notes at the time Outstanding or Other Senior
Beneficiaries or, if no Senior Obligations are Outstanding, the Holders of
specified percentages in aggregate Principal Amount of the Class B Notes at the
time Outstanding or Other
B-1-6
Subordinate Beneficiaries, on behalf of the Holders of all the Notes, to waive
certain past defaults under the Indenture and their consequences. Any such
consent or waiver shall be conclusive and binding upon the Registered Holder of
this Note and upon all future Registered Holders hereof and of any Note issued
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Note.
This Note is transferable by the Registered Holder hereof upon
surrender of this Note for transfer at the Principal Office of the Note
Registrar (which shall be the Trustee unless and until an Authenticating Agent
becomes the Note Registrar under the Indenture) or at the Principal Office of a
duly appointed Authenticating Agent (the "Authenticating Agent," which term
includes any successor Authenticating Agent under the Indenture), duly endorsed
or accompanied by a written instrument of transfer in form satisfactory to the
Note Registrar or the Authenticating Agent, as the case may be, and executed by
the Registered Holder hereof or his attorney duly authorized in writing, with
signature guarantees satisfactory to the Note Registrar or the Authenticating
Agent, as the case may be. This Note may also be exchanged for one or more other
Notes of the same series upon surrender hereof at the Principal Office of the
Note Registrar or the Principal Office of an Authenticating Agent. Thereupon the
Corporation shall execute and the Trustee or the Authenticating Agent, as the
case may be, shall authenticate and deliver, in exchange for this Note, one or
more new fully registered Notes in the name of the transferee, of an authorized
denomination, in aggregate Principal Amount equal to the Principal Amount of
this Note, of the same series and bearing interest at the same rate. Thereupon
the Corporation shall execute and the Trustee or the Authenticating Agent, as
the case may be, shall authenticate and deliver, in exchange for this Note, one
or more new fully registered Notes in the name of the transferee, of an
authorized denomination, in aggregate Principal Amount equal to the Principal
Amount of this Note, of the same series and bearing interest at the same rate.
No Authenticating Agent will be initially appointed with respect to the Series
1997-1K Notes. Notwithstanding the foregoing provisions of this paragraph, no
Series 1997-1K Note shall be required to be transferred, (i) during a period
beginning at the opening of business fifteen days before any selection of Series
1997-1K Notes for redemption and ending at the close of business on the day of
such selection, or (ii) if such Series 1997-1K Note has been selected for
redemption in whole or in part.
The Corporation may require payment by the Registered Holder hereof of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of this Note, other than
certain exchanges specifically exempted under the Indenture and not involving
any transfer.
The Corporation, the Trustee, each Paying Agent, any Authenticating
Agent, the Note Registrar and any other agent of the Corporation may treat the
Person in whose name this Note is registered on the Note Register as the
absolute
B-1-7
owner hereof for all purposes, whether or not this Note is overdue, and neither
the Corporation, the Trustee, any Paying Agent, any Authenticating Agent, the
Note Registrar nor any other such agent shall be affected by notice to the
contrary.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND DECLARED that all
acts, conditions and things required to have happened, to exist and to have been
performed precedent to and in the issuance of this Note have happened, do exist,
and have been performed in regular and due time, form and manner as so required.
This Note shall not be valid or become obligatory for any purpose or
be entitled to any security or benefit under the Indenture until the Certificate
of Authentication hereon shall have been signed by the Trustee or by the
Authenticating Agent by the manual signature of one of its authorized
representatives.
IN WITNESS WHEREOF, the Corporation has caused this Note to be
executed in its name by the manual signatures of its President and Secretary,
and its corporate seal to be impressed hereon.
Dated: _____________ EDUCATION LOANS INCORPORATED
----------------------------
President
(SEAL)
----------------------------
Secretary
-----------------------------
CERTIFICATE OF AUTHENTICATION
This Note is one of the Notes of the series designated therein and
issued under the provisions of the within-mentioned Indenture.
FIRST BANK NATIONAL
ASSOCIATION, as Trustee
By
-----------------------------
Authorized Representative
B-1-8
---------------------
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto __________________ the within Note and irrevocably appoints _____________,
attorney-in-fact, to transfer the within Note on the books kept for registration
thereof, with full power of substitution in the premises.
Dated _______________________
PLEASE INSERT SOCIAL SECURITY _______________________________________
OR OTHER IDENTIFYING NUMBER NOTICE: The signature to this
OF ASSIGNEE assignment must correspond with the
name as it appears upon the face of the
______________________________ within Note in every particular,
without any alteration whatsoever.
SIGNATURE GUARANTEED:
-----------------------------
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
-----------
FORM OF SERIES 1997-1L NOTES
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
EDUCATION LOANS INCORPORATED
TAXABLE LIBOR RATE STUDENT LOAN
ASSET-BACKED CALLABLE NOTE
SUBORDINATE SERIES 1997-L
CLASS B
No. R______ $_____
Stated Date of Original Interest
Maturity Date Issue Rate CUSIP
------------- ---------------- -------- -----
June 1, 2020 November _____, 1997 Variable _____
REGISTERED HOLDER: CEDE & CO.
PRINCIPAL AMOUNT:
FOR VALUE RECEIVED, EDUCATION LOANS INCORPORATED, a nonprofit
corporation organized under the laws of the State of South Dakota (the
"Corporation," which term includes any successor corporation under the Indenture
hereinafter referred to, including, upon completion of the Section 150(d)(3)
Transfer, EdLinc), acknowledges itself indebted and hereby promises to pay to
the registered holder specified above, or registered assigns (the "Registered
Holder"), but solely from the revenues and receipts hereinafter specified and
not otherwise, the Principal Amount specified above on the Stated Maturity Date
specified above (subject to the right of prior redemption hereinafter
mentioned), upon presentation and surrender of this Note at the Principal Office
of the Trustee (as hereinafter defined), as Paying Agent for the Series 1997-1
Notes (as hereinafter defined), or a
B-2-1
duly appointed successor Paying Agent, and to pay interest on said Principal
Amount, but solely from the revenues and receipts hereinafter specified and not
otherwise, to the Registered Holder hereof from the date hereof until the
payment of said Principal Amount has been made or duly provided for, payable on
each Interest Payment Date, commencing December 1, 1997, at the LIBOR Rate
Series 1997-1 Note Interest Rate (as hereinafter described), and at the same
rate per annum (to the extent that the payment of such interest shall be legally
enforceable) on overdue installments of interest. Payment of interest on this
Note on each regularly scheduled Interest Payment Date shall be made by check or
draft drawn upon the Paying Agent and mailed to the Person who is the Registered
Holder hereof as of 5:00 p.m. in the city in which the Principal Office of the
Note Registrar is located on the applicable Regular Record Date at the address
of such Registered Holder as it appears on the Note Register maintained by the
Note Registrar, or, if the Registered Holder of this Note is the Registered
Holder of Series 1997-1 Notes in the aggregate Principal Amount of $1,000,000 or
more (or, if less than $1,000,000 in Principal Amount of Series 1997-1 Notes is
outstanding, the Registered Holder of all outstanding Series 1997-1 Notes), at
the direction of such Registered Holder received by the Paying Agent by 5:00
p.m. in the city in which the Principal Office of the Paying Agent is located on
the last Business Day preceding the applicable Regular Record Date, by
electronic transfer by the Paying Agent in immediately available funds to an
account designated by such Registered Holder. In addition, interest on this Note
is payable at the Maturity hereof in the same manner as the principal hereof,
unless the date of such Maturity is a regularly scheduled Interest Payment Date,
in which event interest is payable in the manner set forth in the preceding
sentence. Any interest not so timely paid or duly provided for shall cease to be
payable to the Person who is the Registered Holder hereof at the close of
business on the Regular Record Date and shall be payable to the Person who is
the Registered Holder hereof at the close of business on a special record date
for the payment of any such defaulted interest. Such special record date shall
be fixed by the Trustee whenever moneys become available for payment of the
defaulted interest, and notice of the special record date shall be given to the
Registered Holder hereof not less than ten days prior thereto by first-class
mail to such Registered Holder as shown on the Note Register on a date selected
by the Trustee, stating the date of the special record date and the date fixed
for the payment of such defaulted interest. The principal of and interest on
this Note are payable in lawful money of the United States of America.
INTEREST ON THIS NOTE IS SUBJECT TO FEDERAL INCOME TAXATION PURSUANT
TO AN ELECTION MADE BY THE CORPORATION UNDER SECTION 625(c) OF THE TAX REFORM
ACT OF 1984 AND 26 CFR (S)301.9100-6T(d).
This Note is one of an authorized issue of Notes (the "Notes"), issued
and to be issued by the Corporation in one or more series pursuant to an
Indenture of Trust, dated as of July 1, 1997 (as supplemented and amended, the
"Indenture"), as supplemented by a First Supplemental Indenture of Trust, dated
as of July 1, 1997
B-2-2
(the "First Supplemental Indenture"), each between the Corporation and First
Bank National Association, Minneapolis, Minnesota, as Trustee (the "Trustee,"
which term includes any successor trustee under the Indenture). As provided in
the Indenture, the Notes are issuable in series which may vary as in the
Indenture provided or permitted. This Note is one of a series of Class B Notes
issued in an aggregate Principal Amount of $_________________ (the "Series 1997-
1L Notes"). The Series 1997-1L Notes are issued simultaneously with one other
series of Class B Notes issued in the aggregate Principal Amount of
$__________________ (together with the Series 1997-1L Notes, collectively
referred to herein as the "Series 1997-1 Subordinate Notes") and ten series of
Class A Notes issued in the aggregate Principal Amount of $__________________
(the "Series 1997-1 Senior Notes" and, together with the Series 1997-1
Subordinate Notes, collectively referred to herein as the "Series 1997-1
Notes"). The proceeds of the Series 1997-1 Notes will be used by the Corporation
to (a) acquire student loan notes incurred under the Higher Education Act and
(b) fund the Reserve Fund.
Reference is hereby made to the Indenture, copies of which are on file
in the principal corporate trust office of the Trustee, and to all of the
provisions of which any Registered Holder of this Note by his acceptance hereof
hereby assents, for definitions of terms; the description of and the nature and
extent of the security for the various classes of Notes and Other Obligations
secured thereunder; the student loan acquisition program being financed by the
issuance of the Notes; the revenues and other moneys pledged to the payment of
the principal of, premium, if any, and interest on the Notes and the Other
Obligations; the nature and extent and manner of enforcement of the pledge; the
conditions upon which Notes may be issued or Other Obligations may be incurred
by the Corporation thereunder, payable from such revenues and other moneys
thereunder as Senior Obligations, Subordinate Obligations or Class C Notes; the
conditions upon which the Indenture may be amended or supplemented with or
without the consent of the Holders of the Notes; the rights and remedies of the
Registered Holder hereof with respect hereto and thereto, including the
limitations upon the right of a Registered Holder hereof to institute any suit,
action or proceeding in equity or at law with respect hereto and thereto; the
rights, duties and obligations of the Corporation and the Trustee thereunder;
the terms and provisions upon which the liens, pledges, charges, trusts and
covenants made therein may be discharged at or prior to the Maturity or
redemption of this Note, and this Note thereafter no longer be secured by the
Indenture, or be deemed to be Outstanding thereunder; and for the other terms
and provisions thereof. Terms used with initial capital letters but not defined
in this Note have the respective meanings given such terms in the Indenture. The
Series 1997-L Notes are being issued as, and will constitute, taxable Class B
Notes under the Indenture.
The Notes and Other Obligations are limited obligations of the
Corporation, payable solely from the revenues and assets of the Corporation
pledged therefor under the Indenture, including certain notes evidencing Student
Loans and
B-2-3
the proceeds of the Corporation's bonds, notes or other evidences of
indebtedness, if any, issued with respect to the Notes.
Each Noteholder, by acceptance of a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder will
not at any time institute against the Corporation, or join in any institution
against the Corporation, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings under any United States Federal or state bankruptcy
or similar law in connection with any obligations relating to the Notes, the
Indenture or the Servicing Agreement.
The Corporation has structured the Indenture and the Notes with the
intention that the Notes will qualify under applicable federal, state, local and
foreign tax law as indebtedness of the Corporation secured by the Trust Estate.
The Corporation, the Trustee, the Servicer and each Noteholder agree to treat
and to take no action inconsistent with the treatment of the Notes as such
indebtedness for purposes of federal, state, local and foreign income or
franchise taxes and any other tax imposed on or measured by income. Each
Noteholder, by acceptance of its Note, agrees to be bound by the provisions of
this paragraph. Each Noteholder agrees that it will cause any Person acquiring
an interest in a Note through it to comply with the Indenture as to treatment as
indebtedness under applicable tax law, as described in this paragraph.
The Series 1997-1L Notes constitute Class B Notes under the Indenture
which are subordinated in right of payment, the direction of remedies and
certain other matters in accordance with the terms of the Indenture to the
rights of the Holders of Class A Notes issued from time to time under the
Indenture (including, without limitation the Series 1997-1 Senior Notes) and
Other Senior Beneficiaries thereunder. A failure to pay principal of, premium,
if any, or interest on this Class B Note will not constitute an Event of Default
under the Indenture if any Senior Obligation is Outstanding.
Interest payable on this Note shall be computed on the basis of actual
days elapsed and accrue daily from the date hereof (on the basis of a 360-day
year), and is payable on each regularly scheduled Interest Payment Date prior to
the Maturity of this Note and at the Maturity of this Note. The interest payable
on each Interest Payment Date for this Note shall be [calculated on a per unit
basis, based on a unit of $100,000, and shall be] that interest which has
accrued through the last day preceding such Interest Payment Date or, in the
case of the Maturity of this Note, the last day preceding the date of such
Maturity. The LIBOR Rate Series 1997-1 Note Interest Rate shall be effective as
of and on the first day (whether or not a Business Day) of the applicable
Interest Period and be in effect thereafter through the end of such Interest
Period.
The unpaid Principal Amount hereof from time to time outstanding shall
bear interest at a LIBOR Rate Series 1997-1 Note Interest Rate, as described
B-2-4
below, payable on each Interest Payment Date and at the Maturity hereof, such
interest to accrue from the later of the date hereof or the date through which
interest has been paid or duly provided for.
During the Initial Interest Period, this Note shall bear interest at
the LIBOR Rate Series 1997-1 Note Initial Interest Rate for the Series 1997-L
Notes. The interest rate to be borne by this Note during each Interest Period
thereafter shall be determined on the related Interest Rate Determination Date
and shall be equal to the lesser of (i) the sum of One-Month LIBOR determined
with respect to such Interest Rate Determination Date plus _____% (which is
herein referred to as the "LIBOR Rate Series 1997-1 Note LIBOR-Based Rate"), and
(ii) the Net Loan Rate determined with respect to such Interest Rate
Determination Date. The Trustee shall determine such interest rate on each
Interest Rate Determination Date.
Notwithstanding any other provision of this Note or the First
Supplemental Indenture, interest payable on this Note for an Interest Period
shall never exceed for such Interest Period the amount of interest payable at
the Net Loan Rate in effect for such Interest Period.
If the LIBOR Rate Series 1997-1 Note LIBOR-Based Rate for the Series
1997-1L Notes is greater than the Net Loan Rate, then the LIBOR Rate Series
1997-1 Note Interest Rate applicable to the Series 1997-1L Notes for that
Interest Period will be the Net Loan Rate. If the LIBOR Rate Series 1997-1 Note
Interest Rate applicable to the Series 1997-1L Notes for any Interest Period is
the Net Loan Rate, the Trustee shall determine the Carry-Over Amount, if any,
with respect to the Series 1997-1L Notes for such Interest Period. Such
Carryover Amount shall bear interest calculated at a rate equal to the LIBOR
Rate Series 1997-1 Note LIBOR-Based Rate (as determined by the Trustee) from the
Interest Payment Date for the Interest Period with respect to which such Carry-
Over Amount was calculated until paid. For purposes of this Note, any reference
to "principal" or "interest" herein shall not include within the meaning of such
words Carry-Over Amount or any interest accrued on any such Carry-Over Amount.
Such Carry-Over Amount shall be separately calculated for each Series 1997-1L
Note by the Trustee during such Interest Period in sufficient time for the
Trustee to give notice to each Holder of such Carry-Over Amount as required in
the next succeeding sentence. On the Interest Payment Date for an Interest
Period with respect to which such Carry-Over Amount has been calculated by the
Trustee, the Trustee shall give written notice to each Holder of the Carry-Over
Amount applicable to each Holder's Series 1997-1L Note, which written notice may
accompany the payment of interest by check made to each such Holder on such
Interest Payment Date or otherwise shall be mailed on such Interest Payment Date
by first class mail, postage prepaid, to each such Holder at such Holder's
address as it appears on the registration books maintained by the Note
Registrar. Such notice shall state, in addition to such Carry-Over Amount, that,
unless and until a Series 1997-1L Note has been redeemed or has been deemed no
longer Outstanding under the First Supplemental Indenture (after which no Carry-
Over Amount shall be paid with respect to a Series 1997-1L Note), (i) the Carry-
Over
B-2-5
Amount (and interest accrued thereon) shall be paid by the Trustee on such
Series 1997-1L Note on the first occurring Interest Payment Date for a
subsequent Interest Period if and to the extent that (l) the Eligible Carry-Over
Make-Up Amount with respect to such Interest Period is greater than zero, and
(2) moneys are available pursuant to the terms of the First Supplemental
Indenture to pay such Carry-Over Amount (and interest accrued thereon), and (ii)
interest shall accrue on the Carry-Over Amount at a per annum rate equal to the
LIBOR Rate Series 1997-1 Note LIBOR-Based Rate until such Carry-Over Amount is
paid in full or is canceled.
The Carry-Over Amount for the Series 1997-1L Notes shall be paid by
the Trustee on Outstanding Series 1997-1L Notes on the first occurring Interest
Payment Date for a subsequent Interest Period if and to the extent that (i) the
Eligible Carry-Over Make-Up Amount with respect to such Interest Period is
greater than zero, and (ii) moneys in the Surplus Account are available on such
Interest Payment Date for transfer to the Interest Account for such purpose in
accordance with the applicable provisions of the Indenture, after taking into
account all other amounts payable from the Surplus Fund on such Interest Payment
Date. Any Carry-Over Amount (and any interest accrued thereon) which is unpaid
as of an Interest Payment Date with respect to any Series 1997-1L Note, which
Series 1997-1L Note is to be redeemed or deemed no longer Outstanding under the
First Supplemental Indenture on such Interest Payment Date, shall be paid to the
Holder thereof on such Interest Payment Date to the extent that moneys are
available therefor in accordance with the provisions of the preceding clause
(b); provided, however, that any Carry-Over Amount (and any interest accrued
thereon) which is not so paid on such Interest Payment Date shall be canceled
with respect to such Series 1997-1L Note on such Interest Payment Date and shall
not be paid on any succeeding Interest Payment Date. To the extent that any
portion of the Carry-Over Amount (and any interest accrued thereon) remains
unpaid after payment of a portion thereof, such unpaid portion shall be paid in
whole or in part as required hereunder until fully paid by the Trustee on the
next occurring Interest Payment Date or Dates, as necessary, for a subsequent
Interest Period or Periods, if and to the extent that the conditions in the
first sentence of this paragraph are satisfied. On any Interest Payment Date on
which the Trustee pays less than all of the Carry-Over Amount (and any interest
accrued thereon) with respect to a Series 1997-1L Note, the Trustee shall give
written notice in the manner set forth in the immediately preceding paragraph to
the Holder of such Series 1997-1L Note of the Carry-Over Amount remaining unpaid
on such Series 1997-1L Note.
The Interest Payment Date in such subsequent Interest Period on which
such Carry-Over Amount for the Series 1997-1L Notes shall be paid shall be
determined by the Trustee in accordance with the provisions of the immediately
preceding paragraph, and the Trustee shall make payment of the Carry-Over Amount
in the same manner as, and from the same Account from which, it pays interest on
the Series 1997-1L Notes on an Interest Payment Date.
B-2-6
In the event that the Trustee no longer determines, or fails to
determine, when required, the LIBOR Rate Series 1997-1 Note LIBOR-Based Rate
with respect to the Series 1997-1L Notes, or if, for any reason, such manner of
determination shall be held to be invalid or unenforceable, the LIBOR Rate
Series 1997-1 Note LIBOR-Based Rate for each succeeding Interest Period shall be
the Net Loan Rate as determined by or on behalf of the Corporation with respect
to the related Interest Rate Determination Date, and if the Corporation shall
fail or refuse to determine such Net Loan Rate, the Net Loan Rate shall be
determined by a securities dealer appointed by the Trustee capable of making
such a determination in accordance with the provisions hereof and written notice
of such determination shall be given by such securities dealer to the Trustee.
The determination of a LIBOR Rate Series 1997-1 Note Interest Rate by
the Trustee or any other authorized Person pursuant to the provisions of the
First Supplemental Indenture shall be conclusive and binding on the Holders of
the Series 1997-L Notes to which such LIBOR Rate Series 1997-1 Note Interest
Rate applies, and the Corporation and the Trustee may rely thereon for all
purposes.
Notwithstanding any provision of this Note to the contrary, in no
event shall the cumulative amount of interest paid or payable on this Note
(including interest calculated as provided herein, plus any other amounts that
constitute interest on this Note under applicable law, which are contracted for,
charged, reserved, taken or received pursuant to this Note or related documents)
calculated from the date of issuance of this Note through any subsequent day
during the term of this Note or otherwise prior to payment in full of this Note
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 this
Note or related documents or otherwise contracted for, charged, reserved, taken
or received in connection with this Note, or if the redemption or acceleration
of the Maturity of this Note results in payment to or receipt by the Registered
Holder or any former Registered Holder hereof of any interest in excess of that
permitted by applicable law, then notwithstanding any provision of this Note or
related documents to the contrary all excess amounts theretofore paid or
received with respect to this Note shall be credited on the Principal Amount of
this Note (or, if this Note has been paid or would thereby be paid in full,
refunded by the recipient thereof), and the provisions of this Note and related
documents shall 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 this
Note and under the related documents.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Outstanding LIBOR Rate Series 1997-1 Notes shall
receive prepayments of principal on any Interest Payment Date from moneys
available therefor in the Series 1997-1 Taxable Special Redemption and
Prepayment Subaccount in accordance with the provisions of the First
Supplemental Indenture.
B-2-7
All prepayments of principal in accordance with the preceding sentence shall,
subject to satisfying the asset requirements of the Indenture, be allocated
between the LIBOR Rate Series 1997-1 Senior Notes and the Series 1997-1L Notes
pro rata based upon their respective aggregate Principal Amounts. All such
prepayments of principal applied to the Series 1997-L Notes shall be allocated
pro rata, based upon their respective Principal Amounts, to the reduction of the
Principal Amount of all Series 1997-L Notes.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Series 1997-1 Notes may, at the option of the
Corporation, be redeemed, in whole but not in part, at a Redemption Price equal
to 100% of the Principal Amount of Series 1997-1 Notes to be so redeemed plus
accrued interest thereon to the Redemption Date, on any date after the remaining
aggregate Principal Balance of Student Loans Financed with proceeds of the
Series 1997-1 Notes is less than 10% of the amounts initially deposited to the
credit of the Acquisition Fund.
Notice of redemption shall be given by first-class mail mailed at
least 30 days before the Redemption Date to each Holder of Series 1997-L Notes
to be redeemed at his last address appearing on the Note Register; but no defect
in or failure to give such notice of redemption shall affect the validity of
proceedings for redemption of any Series 1997-L Notes not affected by such
defect or failure. All Series 1997-L Notes so called for redemption will cease
to bear interest on such Redemption Date, provided funds for their redemption
have been duly deposited, and, except for the purpose of payment, shall no
longer be protected by the Indenture and shall not be deemed Outstanding
thereunder.
It is provided in the Indenture that Series 1997-L Notes of an
Authorized Denomination larger than $100,000 may be redeemed in part ($100,000
in original Principal Amount or an integral multiple thereof) and that upon any
partial redemption of any such Series 1997-L Note the same shall be surrendered
in exchange for one or more new Notes of the same series in authorized form for
the unredeemed portion of principal.
If provision is made for the payment of principal of and interest on
this Note in accordance with the Indenture, this Note shall no longer be deemed
Outstanding under the Indenture, shall cease to be entitled to the benefits of
the Indenture and shall thereafter be payable solely from the funds provided for
such payment.
If an Event of Default shall occur, the principal of all the
Outstanding Notes may and, under certain circumstances, shall be declared due
and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
B-2-8
Corporation and the rights of the Holders of the Notes and Other Beneficiaries
under the Indenture at any time by the Corporation with, among other things, the
consent of the Holders of two-thirds of the aggregate Principal Amount of Class
A Notes at the time Outstanding, if affected thereby, and the consent of the
Holders of two-thirds of the aggregate Principal Amount of Class B Notes at the
time Outstanding, if affected thereby. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate Principal Amount of
the Class A Notes at the time Outstanding or Other Senior Beneficiaries or, if
no Senior Obligations are Outstanding, the Holders of specified percentages in
aggregate Principal Amount of the Class B Notes at the time Outstanding or Other
Subordinate Beneficiaries, on behalf of the Holders of all the Notes, to waive
certain past defaults under the Indenture and their consequences. Any such
consent or waiver shall be conclusive and binding upon the Registered Holder of
this Note and upon all future Registered Holders hereof and of any Note issued
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Note.
This Note is transferable by the Registered Holder hereof upon
surrender of this Note for transfer at the Principal Office of the Note
Registrar (which shall be the Trustee unless and until an Authenticating Agent
becomes the Note Registrar under the Indenture) or at the Principal Office of a
duly appointed Authenticating Agent (the "Authenticating Agent," which term
includes any successor Authenticating Agent under the Indenture), duly endorsed
or accompanied by a written instrument of transfer in form satisfactory to the
Note Registrar or such Authenticating Agent, as the case may be, and executed by
the Registered Holder hereof or his attorney duly authorized in writing, with
signature guarantees satisfactory to the Note Registrar or such Authenticating
Agent, as the case may be. This Note may also be exchanged for one or more other
Notes of the same series upon surrender hereof at the Principal Office of the
Note Registrar or the Principal Office of an Authenticating Agent. Thereupon the
Corporation shall execute and the Trustee or the Authenticating Agent, as the
case may be, shall authenticate and deliver, in exchange for this Note, one or
more new fully registered Notes in the name of the transferee, of an authorized
denomination, in aggregate Principal Amount equal to the Principal Amount of
this Note, of the same series and bearing interest at the same rate. No
Authenticating Agent will be initially appointed with respect to the Series
1997-L Notes. Notwithstanding the foregoing provisions of this paragraph, no
Series 1997-L Note shall be required to be transferred, (i) during a period
beginning at the opening of business fifteen days before any selection of Series
1997-L Notes for redemption and ending at the close of business on the day of
such selection, or (ii) if such Series 1997-L Note has been selected for
redemption in whole or in part.
The Corporation may require payment by the Registered Holder hereof of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of this Note, other than
B-2-9
certain exchanges specifically exempted under the Indenture and not involving
any transfer.
The Corporation, the Trustee, each Paying Agent, any Authenticating
Agent, the Note Registrar and any other agent of the Corporation may treat the
Person in whose name this Note is registered on the Note Register as the
absolute owner hereof for all purposes, whether or not this Note is overdue, and
neither the Corporation, the Trustee, any Paying Agent, any Authenticating
Agent, the Note Registrar nor any other such agent shall be affected by notice
to the contrary.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND DECLARED that all
acts, conditions and things required to have happened, to exist and to have been
performed precedent to and in the issuance of this Note have happened, do exist,
and have been performed in regular and due time, form and manner as so required.
This Note shall not be valid or become obligatory for any purpose or
be entitled to any security or benefit under the Indenture until the Certificate
of Authentication hereon shall have been signed by the Trustee or by the
Authenticating Agent by the manual signature of one of its authorized
representatives.
B-2-10
IN WITNESS WHEREOF, the Corporation has caused this Note to be
executed in its name by the manual signatures of its President and Secretary,
and its corporate seal to be impressed hereon.
Dated: EDUCATION LOANS INCORPORATED
-----------
----------------------------
President
(SEAL)
----------------------------
Secretary
-------------------------------
CERTIFICATE OF AUTHENTICATION
This Note is one of the Notes of the series designated therein and
issued under the provisions of the within-mentioned Indenture.
FIRST BANK NATIONAL
ASSOCIATION, as Trustee
By
-------------------------------
Authorized Representative
B-2-11
_____________________________________
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto ________________________ the within Note and irrevocably appoints
____________________________, attorney-in-fact, to transfer the within Note on
the books kept for registration thereof, with full power of substitution in the
premises.
Dated
----------------------------
PLEASE INSERT SOCIAL SECURITY _______________________________________
OR OTHER IDENTIFYING NUMBER NOTICE: The signature to this
OF ASSIGNEE assignment must correspond with the
name as it appears upon the face of the
within Note in every particular,
----------------------------------- without any alteration whatsoever.
SIGNATURE GUARANTEED:
-----------------------------------
B-2-12