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EXHIBIT 10.3
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INDENTURE
Dated as of August 5, 1999
between
EFG-III, LP,
as Issuer,
and
THE FIRST NATIONAL BANK OF CHICAGO,
as Indenture Trustee and Eligible Lender Trustee
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TABLE OF CONTENTS
Article I. THE CLASS A NOTES.................................................................2
SECTION 1.01. Form of Class A Notes....................................................2
SECTION 1.02. Execution, Authentication and Delivery...................................3
SECTION 1.03. Registration; Registration of Transfer and Exchange......................3
SECTION 1.04. Mutilated, Destroyed, Lost or Stolen Class A Notes.......................4
SECTION 1.05. Persons Deemed Owner.....................................................5
SECTION 1.06. Certain Issuance and Transfer Restrictions...............................5
SECTION 1.07. Legending of Class A Notes...............................................8
SECTION 1.08. Provision of Information to Prospective Purchasers of the
Class A Note; Rule 144A Matters.........................................10
SECTION 1.09. Cancellation............................................................11
SECTION 1.10. Grant of Security Interest..............................................11
SECTION 1.11. Interest on the Class A Notes...........................................11
SECTION 1.12. Principal on the Class A Notes..........................................12
SECTION 1.13. Payment of Principal and Interest.......................................13
Article II. ADVANCES AND THE COLLATERAL......................................................13
SECTION 2.01. Advances; Limits on Advances............................................13
SECTION 2.02. Advance Procedures......................................................14
SECTION 2.03. Collateral Deficiency...................................................14
SECTION 2.04. Addition, Substitution and Removal of Financed Student Loans;
Release of Collateral...................................................14
SECTION 2.05. Effect of Release.......................................................16
SECTION 2.06. Limited Recourse........................................................16
SECTION 2.07. Revolving Period........................................................16
Article III. SETTLEMENTS......................................................................17
SECTION 3.01. Accounts; Investments by Indenture Trustee..............................17
SECTION 3.02. Collection of Moneys....................................................18
SECTION 3.03. Collection Account......................................................19
SECTION 3.04. Reserve Account.........................................................28
SECTION 3.05. Net Cap Rate Reserve Account............................................29
SECTION 3.06. Payments and Computations, etc.; Monthly Advances.......................29
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SECTION 3.07. Claims on the Policy....................................................30
SECTION 3.08. Rights in Respect of Insolvency Proceedings.............................31
SECTION 3.09. Effect of Payments by the Insurer; Subrogation..........................32
Article IV. CONDITIONS OF ADVANCES...........................................................32
SECTION 4.01. Conditions Precedent to Initial Advance.................................32
SECTION 4.02. Conditions Precedent to All Advances....................................36
Article V. REPRESENTATIONS AND WARRANTIES...................................................37
SECTION 5.01. Representations and Warranties of the Issuer............................37
SECTION 5.02. Reassignment upon Breach................................................40
SECTION 5.03. Representations and Warranties of General Partner.......................41
SECTION 5.04. Representations and Warranties of Indenture Trustee.....................42
SECTION 5.05. Representations and Warranties of Eligible Lender Trustee...............42
Article VI. GENERAL COVENANTS OF THE ISSUER..................................................43
SECTION 6.01. Affirmative Covenants of the Issuer.....................................43
SECTION 6.02. Reporting Requirements of the Issuer....................................45
SECTION 6.03. Servicing Covenants.....................................................47
SECTION 6.04. Negative Covenants of the Issuer........................................48
Article VII. EARLY AMORTIZATION EVENTS; EVENTS OF DEFAULT.....................................49
SECTION 7.01. Early Amortization Events...............................................49
SECTION 7.02. Events of Default.......................................................51
SECTION 7.03. Remedies................................................................52
SECTION 7.04. Sale of Collateral......................................................53
Article VIII. INDENTURE TRUSTEE................................................................53
SECTION 8.01. Acceptance of the Trusts................................................53
SECTION 8.02. Fees, Charges and Expenses of Indenture Trustee.........................55
SECTION 8.03. Notice if Default Occurs................................................55
SECTION 8.04. Intervention by Indenture Trustee.......................................55
SECTION 8.05. Successors..............................................................55
SECTION 8.06. Resignation.............................................................56
SECTION 8.07. Removal.................................................................56
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SECTION 8.08. Appointment of Successor................................................56
SECTION 8.09. Concerning Any Successor................................................56
SECTION 8.10. Appointment of Co-Trustee...............................................57
SECTION 8.11. Successor Indenture Trustee as Trustee of Funds.........................57
SECTION 8.12. Indemnification.........................................................58
SECTION 8.13. Eligibility Requirements for Indenture Trustee..........................58
SECTION 8.14. Tax Information.........................................................58
Article IX. MISCELLANEOUS....................................................................59
SECTION 9.01. Amendments, Etc.........................................................59
SECTION 9.02. Notices, Etc............................................................59
SECTION 9.03. No Waiver; Remedies.....................................................59
SECTION 9.04. Binding Effect; Survival................................................59
SECTION 9.05. Costs, Expenses and Taxes...............................................60
SECTION 9.06. No Proceedings..........................................................60
SECTION 9.07. Captions and Cross References...........................................60
SECTION 9.08. Integration.............................................................60
SECTION 9.09. Governing Law...........................................................61
SECTION 9.10. Waiver of Jury Trial....................................................61
SECTION 9.11. Execution in Counterparts...............................................61
SECTION 9.12. Usury...................................................................61
SECTION 9.13. Certain Matters Regarding the Insurer and The Policy....................61
SECTION 9.14. Amendment to Liquidity Facility.........................................63
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INDENTURE
Dated as of August 5, 1999
This INDENTURE, among EFG-III, LP, a Delaware limited partnership,
("Issuer") and THE FIRST NATIONAL BANK OF CHICAGO, a national banking
association ("First Chicago"), as indenture trustee hereunder (in such capacity,
and together with any successor thereto in such capacity, the "Indenture
Trustee"), and THE FIRST NATIONAL BANK OF CHICAGO, a national banking
association, as eligible lender trustee (in such capacity, and together with any
successor thereto in such capacity, the "Eligible Lender Trustee"). Unless
otherwise indicated, capitalized terms used in this Indenture are defined in
Appendix A.
BACKGROUND
(a) The Issuer is a limited partnership with Educational Finance Group,
Inc., a Delaware corporation ("EFG") as its limited partner and EFG-II SPC-I,
Inc., a Delaware corporation, as its general partner (the "General Partner").
(b) Pursuant to the Purchase and Contribution Agreement, EFG has sold
and contributed as capital, and from time to time shall sell and contribute as
capital, Private Student Loans to the Issuer, and the Eligible Lender Trustee,
has purchased, and from time to time shall purchase, at the direction of and on
behalf of the Issuer, from First Chicago, in its capacity as eligible lender
trustee for EFG, Federal Student Loans. The legal title of the Private Student
Loans is held or shall be held by the Issuer and the legal title of the Federal
Student Loans is held or will be held by the Eligible Lender Trustee on behalf
of the Issuer.
(c) The Issuer intends to finance the purchase of the Student Loans by
issuing one Class A Note to the initial Class A Noteholder and requesting that
such holder make Advances to the Issuer from time to time during the term of the
Revolving Period under this Indenture, subject to the terms and conditions
contained in this Indenture. The principal of and interest on the Class A Notes
will be secured by the Financed Student Loans and other Collateral.
(d) First Chicago has been requested, and is willing, to act as the
Indenture Trustee.
(e) MBIA Insurance Corporation, a stock insurance company organized and
created under the laws of the State of New York, has been requested and will
issue for the benefit of the Class A Noteholder, its Insurance Policy with
respect to the Class A Note.
(f) The initial Class A Noteholder will be the CP Vehicle and will fund
Advances by issuing its Commercial Paper.
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NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I.
THE CLASS A NOTES
SECTION 1.01. Form of Class A Notes.
The Class A Notes, together with the Indenture Trustee's
certificate of authentication, shall be in substantially the form set forth in
Exhibit 1.01, with such appropriate insertions, omissions, substitutions and
other variations as are required or permitted by this Indenture and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
Authorized Officer of the Issuer executing such Class A Note on behalf of the
Issuer, as evidenced by such Authorized Officer's execution of such Class A
Note. A single Class A Note shall be issued on the Closing Date as a variable
funding note with a maximum principal amount equal to the Class A Maximum
Principal Amount of, and, until the occurrence of the Amortization Period
Commencement Date, only one Class A Note shall be issued and outstanding under
this Indenture which Class A Note will be held by the CP Vehicle and will not be
transferable prior to the Amortization Period Commencement Date. Following the
occurrence of the Amortization Period Commencement Date, for so long as no Event
of Default shall have occurred and be continuing, new Class A Notes may be
issued in connection with any transfer, exchange or replacement of any
previously issued Class A Note pursuant to Section 1.03(c) or 1.04(a) of this
Indenture, in minimum denominations of $100,000 and integral multiples of
$100,000 thereof, except that one Class A Note issued after the Amortization
Period Commencement Date may be in another amount that is less than $100,000.
The Indenture Trustee shall record in its records the date and amount of each
Advance made under the Class A Note, the interest rate with respect thereto,
each repayment thereof, and the other information provided for thereon. The
Class A Note Principal Amount so recorded shall be rebuttable presumptive
evidence of the Class A Note Principal Amount owing and unpaid on the Class A
Note. The failure so to record any such information or any error in so recording
any such information shall not, however, limit or otherwise affect the actual
obligations of the Issuer hereunder or under the Class A Note to repay the
principal amount of all Advances, together with all interest accruing thereon,
as set forth in this Indenture. The Class A Notes shall be typewritten, printed,
lithographed or engraved or produced by any combination of these methods (with
or without steel engraved borders), all as determined by the Authorized Officer
of the Issuer executing each such Class A Note on behalf of the Issuer, as
evidenced by such Authorized Officer's execution of such Class A Note. Each
Class A Note shall be dated the date of its authentication, and the terms of the
Class A Notes set forth in Exhibit 1.01 are part of the terms of this Indenture.
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SECTION 1.02. Execution, Authentication and Delivery.
(a) Execution of the Class A Notes. The Class A Notes shall be executed
on behalf of the Issuer by the Authorized Officer of the Issuer. The signature
of any such Authorized Officer on any Class A Note may be original or facsimile.
Any Class A Note bearing the original or facsimile signature of individuals who
has at any time been an Authorized Officer of the Issuer shall bind the Issuer,
notwithstanding that such individual has ceased to hold such office prior to the
authentication and delivery of such Class A Note or did not hold such office at
the date of such Class A Note.
(b) Authentication of the Class A Notes. The Indenture Trustee shall
upon receipt of the Issuer Order, authenticate and deliver Class A Notes for
original issue in an amount up to the Class A Maximum Principal Amount. Each of
the Class A Notes shall be dated its date of authentication. The Class A Notes
shall not be entitled to any benefit under this Indenture or be valid or
obligatory for any purpose, unless there appears attached to any such Class A
Note a certificate of authentication substantially in the form provided for
herein executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate attached to any such Class A Note
any shall be conclusive evidence, and the only evidence, that such Class A Note
has been duly authenticated and delivered hereunder.
SECTION 1.03. Registration; Registration of Transfer and Exchange.
(a) Class A Note Register; Class A Note Registrar. The Issuer shall
cause to be kept a register (the "Class A Note Register") in which, subject to
such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of the Class A Note and the registration of transfers of the
Class A Note. The Indenture Trustee is hereby appointed the "Class A Note
Registrar" for the purpose of registering Class A Notes and transfers of the
Class A Notes, as herein provided. Upon any resignation of any Class A Note
Registrar, the Issuer shall promptly appoint a successor or, if it elects not to
make such an appointment, assume the duties of Class A Note Registrar and comply
with Section 1.03(b) hereof.
(b) Appointment of Class A Note Registrar. If a Person other than the
Indenture Trustee is appointed by the Issuer as Class A Note Registrar, the
Issuer will give the Indenture Trustee prompt written notice of the appointment
of such Class A Note Registrar and of the location, and any change in the
location, of the Class A Note Register, and the Indenture Trustee shall have the
right to inspect the Class A Note Register at all reasonable times and to obtain
copies thereof. The Indenture Trustee shall have the right to rely upon a
certificate executed on behalf of the Class A Note Registrar by an Executive
Officer thereof as to the names and addresses of the Class A Noteholders and the
Class A Note Principal Amount and numbers of such Class A Notes.
(c) Transfer of the Class A Notes. Upon surrender for registration or
transfer of any Class A Note at the office or agency of the Issuer to be
maintained as provided in Section 1.03(e), the Issuer shall execute and cause
the Indenture Trustee to authenticate a
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new Class A Note, in any authorized denominations of like aggregate principal
amount, provided, however, that until the occurrence of the Amortization Period
Commencement Date, only one Class A Note shall be issued and outstanding at any
given time under this Indenture and such Class A Note shall be held by the CP
Vehicle. The Class A Note issued upon any registration of transfer thereof shall
be the valid obligation of the Issuer, evidencing the same debt, and entitled to
the same benefits under this Indenture, as the Class A Note surrendered upon
such registration of transfer. Every Class A Note presented or surrendered for
registration of transfer or exchange shall be duly endorsed by, or be
accompanied by a written instrument of transfer in form satisfactory to the
Class A Note Registrar duly executed by, the Class A Noteholder or the Class A
Noteholder's attorney duly authorized in writing, with such signature guaranteed
by an "eligible guarantor institution" meeting the requirements of the Class A
Note Registrar, which requirements include membership or participation in
Securities Transfer Agent's Medallion Program ("STAMP") or such other "signature
guarantee program" as may be determined by the Class A Note Registrar in
addition to, or in substitution for, STAMP.
(d) No Service Charge. No service charge shall be made to a Class A
Noteholder for any registration of transfer or exchange of a Class A Note, but
the Class A Note Registrar may require payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection with any
registration of transfer or exchange of a Class A Note.
(e) Maintenance of Office or Agency. The Issuer will maintain in New
York, New York, an office or agency where the Class A Notes may be surrendered
for registration of transfer thereof, and where notices and demands to or upon
the Issuer in respect of the Class A Notes and this Indenture may be served. The
Issuer hereby initially appoints the Class A Note Registrar to serve as its
agent for the foregoing purposes. The Issuer will give prompt written notice to
the Indenture Trustee of the location, and of any change in the location, of any
such office or agency. If at any time the Issuer shall fail to maintain any such
office or agency or shall fail to furnish the Indenture Trustee with the address
thereof, such surrenders, notices and demands may be made or served at the
Corporate Trust Office, and the Issuer hereby appoints the Indenture Trustee as
its agent to receive all such surrenders, notices and demands.
SECTION 1.04. Mutilated, Destroyed, Lost or Stolen Class A Notes.
(a) Replacement of Class A Notes. If (i) any mutilated Class A Note is
surrendered to the Indenture Trustee, or the Indenture Trustee receives evidence
to its satisfaction of the destruction, loss or theft of a Class A Note, and
(ii) there is delivered to the Indenture Trustee and the Issuer such security or
indemnity as may be required by them to hold the Issuer and the Indenture
Trustee harmless, then, in the absence of notice to the Issuer, the Class A Note
Registrar or the Indenture Trustee that such Class A Note has been acquired by a
bona fide purchaser the Issuer shall execute and upon its request the Indenture
Trustee shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen, a replacement Class A Note; provided,
however, that if any such destroyed, lost or stolen Class A Note, but not a
mutilated Class A Note, shall
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have become or within seven days shall be due and payable, the Issuer may,
instead of issuing a replacement Class A Note, direct the Indenture Trustee, in
writing, to pay such destroyed, lost or stolen Class A Note when so due or
payable without surrender thereof. If, after the delivery of a replacement Class
A Note or payment of a destroyed, lost or stolen Class A Note or pursuant to the
proviso to the preceding sentence, a bona fide purchaser of the original Class A
Note in lieu of which such replacement Class A Note was issued presents such
original Class A Note for payment, the Issuer and the Indenture Trustee shall be
entitled to recover such replacement Class A Note (or such payment) from the
Person to whom it was delivered or any Person taking such replacement Class A
Note from such Person to whom such replacement Class A Note was delivered or any
assignee of such Person, except a bona fide purchaser, and shall be entitled to
recover upon the security or indemnity provided therefor to the extent of any
loss, damage, cost or expense incurred by the Issuer or the Indenture Trustee in
connection therewith.
(b) Payment of Tax. Upon the issuance of any replacement Class A Note
under this Section 1.04, the Issuer or the Indenture Trustee may require the
payment by the related Class A Noteholder of a sum sufficient to cover any tax
or other governmental charge that may be imposed in relation thereto and any
other reasonable expenses (including the fees and expenses of the Indenture
Trustee or the Class A Note Registrar) connected therewith.
(c) Enforcement of Replacement Class A Notes. Every replacement Class A
Note issued pursuant to this Section 1.04 in replacement of any mutilated,
destroyed, lost or stolen Class A Note shall constitute an original additional
contractual obligation of the Issuer, whether or not the mutilated, destroyed,
lost or stolen Class A 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 Class A Notes duly issued hereunder.
(d) Exclusiveness of Section. The provisions of this Section are
exclusive and shall preclude (to the extent lawful) all other rights and
remedies with respect to the replacement or payment of mutilated, destroyed,
lost or stolen Class A Notes.
SECTION 1.05. Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Class A Note, the Issuer, the Indenture Trustee
and any agent of the Issuer and the Indenture Trustee may treat the Person in
whose name any such Class A Note is registered (as of the Record Date) as the
owner of such Class A Note for the purpose of receiving payments of principal of
and interest, if any on such Class A Note, and for all other purposes
whatsoever, whether or not such Class A Note be overdue, and none of the Issuer,
the Indenture Trustee nor any agent of the Issuer or the Indenture Trustee shall
be affected by notice to the contrary.
SECTION 1.06. Certain Issuance and Transfer Restrictions.
Issuance and Transfer of the Class A Notes. Except as provided
in the Security Agreement, the initial Class A Note may not be sold,
transferred, assigned, participated, pledged or otherwise disposed of prior to
the Amortization Period
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Commencement Date. On or subsequent to the Amortization Period Commencement
Date, the Class A Notes may not be sold, transferred, assigned, participated,
pledged or otherwise disposed of unless such sale or transfer is pursuant to an
exemption from the registration requirements of the Securities Act, and, in each
case, in compliance with any applicable state securities or "Blue Sky" laws. The
Class A Note Registrar shall not register any transfer of the Class A Note prior
to the delivery to the Class A Note Registrar of a transferee letter in which
the prospective holder or purchaser of such Class A Note shall have represented
and agreed in a certificate (made for the benefit of the Issuer and the
Indenture Trustee), substantially in the form of Exhibit 1.06, delivered to the
Issuer, the Indenture Trustee and the Class A Note Registrar as follows:
(A) It (x) is a qualified institutional buyer as defined in
Rule 144A promulgated under the Securities Act ("Rule 144A") and is
acquiring such Class A Note for its own institutional account or for
the account of a qualified institutional buyer or (y) an institutional
accredited investor as described in Rule 501(a)(1), (2), (3), or (7) of
Regulation D promulgated under the Securities Act (an "Institutional
Accredited Investor").
(B) It understands that the Issuer has not been registered
under the Investment Company Act and that such Class A Note is being
offered in a transaction not involving any public offering in the
United States within the meaning of the Securities Act, that such Class
A Note has not been registered under the Securities Act and that (1)
such Class A Note may be offered, resold, pledged or otherwise
transferred only (i) to a person who the seller reasonably believes is
a qualified institutional buyer in a transaction meeting the
requirements of Rule 144A under the Securities Act, (ii) to an
Institutional Accredited Investor, (iii) the Issuer or (iv) pursuant to
an effective registration statement, and in each case, in accordance
with any applicable laws of any State of the United States or any other
applicable jurisdiction, (2) no transfer of such Class A Note may be
made if such transfer would require registration of either or both of
the Issuer or the pool of Collateral as an "investment company" under
the Investment Company Act, and (3) the purchaser will, and each
subsequent holder is required to, notify any subsequent purchaser from
it of the resale restrictions set forth in (1) and (2) above.
(C) It understands that such Class A Note will bear a legend
substantially as set forth in Section 1.07.
(D) It is not acquiring such Class A Note with plan assets of
any "employee benefit plan" subject to Title I of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), or any
"plan" subject to Section 4975 of the Code.
(E) It acknowledges that it has had the opportunity to ask
questions and receive answers concerning the terms and conditions of
the transaction contemplated by the Indenture and to obtain additional
information necessary to
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verify the accuracy and completeness of any information furnished to it
or to which it has had access.
(F) It is a "United States person" within the meaning of
section 7701(a)(30) of the Code.
(G) It represents, warrants and covenants that it (i) is
properly classified as a corporation as described in Code section
7701(a)(3), and will not become, an S corporation as described in Code
section 1361 or (ii) if it is properly classified as a grantor trust, a
partnership or an S corporation for federal income tax purposes (a
"flow-through entity"), no more than 50% of the value of the interest
of any beneficial owner of such flow-through entity owned directly or
through another flow-through entity is or will be attributable to an
interest in the Issuer (including any interest in a Class A Note), or
(iii) is an S corporation, limited liability company or a grantor trust
with one beneficial owner that is described in clause (i) or (ii). In
the event of any breach of the foregoing representation, warranty and
covenant of a prospective holder, such holder shall notify the Issuer
promptly upon such holder's become aware of such breach, and thereupon
the Issuer and such holder hereby agree to use reasonable efforts to
procure a replacement investor reasonably acceptable to the Issuer. Any
purported transfer in violation of this covenant shall be void ab
initio and without effect.
(H) It will not sell, transfer, assign, participate, pledge,
or otherwise dispose of such Class A Note (or any interest in such
Class A Note) other than by unconditional sale of the entire right,
title and interest of the purchaser or transferee in and to a principal
amount of such Class A Note not less than minimum denominations to a
transferee that delivers a transferee letter to the Class A Note
Registrar substantially in the form of Exhibit 1.06 hereto.
(I) It has not acquired nor will it sell, transfer, assign,
participate, pledge, or otherwise dispose of such Class A Note (or any
interest in such Class A Note), or cause any Class A Note (or interest
in such Class A Note) to be marketed, on or through an "established
securities market" within the meaning of section 7704(b)(1) of the Code
or the U.S. Treasury regulations thereunder, including, without
limitation, an over-the-counter market or an interdealer quotation
system that regularly disseminates firm buy or sell quotations.
(J) It is acquiring such Class A Note for its own account, for
investment purposes only and not with a view to a distribution, and is
the sole beneficial owner of such Class A Note, recognizing that the
disposition of its property shall at all times be and remain within its
control.
(K) It acknowledges that the Indenture Trustee and the Issuer,
and their affiliates, and others will rely upon the truth and accuracy
of the foregoing acknowledgments, representations and agreements. If it
is acquiring such Class A
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Note for the account of a "qualified institutional buyer" as defined in
Rule 144A under the Securities Act, it represents that it is an
Institutional Accredited Investor and has sole investment discretion
with respect to each such account and that it has full power to make
the foregoing acknowledgments, representations and agreements on behalf
of each such account. In addition, such prospective purchaser shall be
responsible for providing additional information or certification, as
shall be reasonably requested by the Indenture Trustee or the Issuer,
to support the truth and accuracy of the foregoing acknowledgments,
representations and agreements, it being understood that such
additional information is not intended to create additional
restrictions on the transfer of such Class A Note. Neither the Issuer
nor the Indenture Trustee is obligated to register the Class A Note
under the Securities Act or any state securities laws.
In determining compliance with the transfer restrictions
contained in this Section 1.06, the Indenture Trustee may rely upon a written
opinion of counsel, the cost of obtaining which shall be an expense of the Class
A Noteholder transferring such Class A Note. If (i) any Class A Note is issued,
sold, transferred, assigned, participated, pledged or otherwise disposed of in
contravention of the provisions of this Section 1.06, (ii) at any time the
foregoing representations of such purchaser or transferee are not true, or (iii)
the purchaser or transferee breaches the foregoing agreements, then the purchase
or transfer of such Class A Note shall be void ab initio and of no effect.
SECTION 1.07. Legending of Class A Notes. The Class A Note shall bear a
legend in substantially the following form:
THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY
WAS ORIGINALLY ISSUED IN A TRANSACTION EXEMPT FROM
REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES
ACT OF 1933 (THE "SECURITIES ACT"), AND THE SECURITY EVIDENCED
HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE
SECURITY EVIDENCED HEREBY AGREES FOR THE BENEFIT OF THE ISSUER
THAT (A) SUCH SECURITY MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (1) INSIDE THE UNITED STATES TO A PERSON WHO
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A UNDER THE
SECURITIES ACT, (2) TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A INSTITUTIONAL
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ACCREDITED INVESTOR AS DESCRIBED IN RULE 501(A)(1), (2), (3),
OR (7) OF REGULATION D PROMULGATED UNDER THE SECURITIES ACT,
(3) TO THE ISSUER OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH ANY OTHER
APPLICABLE SECURITIES LAW OF ANY STATE OF THE UNITED STATES OR
ANY OTHER APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER
FROM IT OF THE SECURITY EVIDENCED HEREBY TO THE RESALE
RESTRICTIONS SET FORTH IN (A) ABOVE.
THE ISSUER HAS NOT BEEN REGISTERED UNDER THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED (THE "INVESTMENT
COMPANY ACT"). NO TRANSFER OF THIS CLASS A NOTE MAY BE MADE IF
SUCH TRANSFER WOULD REQUIRE REGISTRATION OF EITHER OR BOTH OF
THE ISSUER OR THE POOL OF COLLATERAL AS AN "INVESTMENT
COMPANY" UNDER THE INVESTMENT COMPANY ACT.
IN NO EVENT SHALL THIS SECURITY BE TRANSFERRED TO AN
EMPLOYEE BENEFIT PLAN, TRUST, ANNUITY OR ACCOUNT SUBJECT TO
ERISA OR A PLAN DESCRIBED IN SECTION 4975(E)(1) OF THE
INTERNAL REVENUE CODE OF 1986, AS AMENDED (ANY SUCH PLAN,
TRUST, ANNUITY OR ACCOUNT BEING REFERRED TO AS AN "EMPLOYEE
PLAN"), A TRUSTEE OF ANY EMPLOYEE PLAN, OR AN ENTITY, ACCOUNT
OR OTHER POOLED INVESTMENT FUND THE UNDERLYING ASSETS OF WHICH
INCLUDE OR ARE DEEMED TO INCLUDE EMPLOYEE PLAN ASSETS BY
REASON OF AN EMPLOYEE PLAN'S INVESTMENT IN THE ENTITY, ACCOUNT
OR OTHER POOLED INVESTMENT FUND.
THIS SECURITY MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
PARTICIPATED, PLEDGED, OR OTHERWISE DISPOSED OF PRIOR TO THE
DELIVERY TO THE CLASS A NOTE REGISTRAR OF A TRANSFEREE LETTER
FROM THE PROPOSED TRANSFEREE, AS REQUIRED BY THE INDENTURE.
THE HOLDER OF THIS SECURITY EVIDENCED HEREBY FURTHER
AGREES FOR THE BENEFIT OF THE ISSUER THAT (A) IT IS A "UNITED
STATES PERSON" WITHIN THE MEANING OF SECTION 7701(A)(30) OF
THE CODE, (B) IT (I) IS PROPERLY CLASSIFIED AS, AND WILL
REMAIN CLASSIFIED AS, A CORPORATION AS DESCRIBED IN CODE
SECTION 7701(A)(3) AND IS NOT, AND WILL NOT BECOME, AN S
CORPORATION UNDER CODE SECTION 1361, OR (II) IS PROPERLY
CLASSIFIED
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AS A GRANTOR TRUST, A PARTNERSHIP OR AN S CORPORATION FOR
FEDERAL INCOME TAX PURPOSES (A "FLOW-THROUGH ENTITY") AND NO
MORE THAN 50% OF THE VALUE OF THE INTEREST OF ANY BENEFICIAL
OWNER OF SUCH FLOW-THROUGH ENTITY OWNED DIRECTLY OR THROUGH
ANOTHER FLOW-THROUGH ENTITY IS OR WILL BE ATTRIBUTABLE TO AN
INTEREST IN THE ISSUER (INCLUDING ANY INTEREST IN A CLASS A
NOTE), OR (III) IS AN S CORPORATION, LIMITED LIABILITY COMPANY
OR A GRANTOR TRUST WITH ONE BENEFICIAL OWNER THAT IS DESCRIBED
IN CLAUSE (I) OR (II), AND (C) IT HAS NOT ACQUIRED NOR WILL IT
SELL, TRANSFER, ASSIGN, PARTICIPATE, PLEDGE, OR OTHERWISE
DISPOSE OF THIS SECURITY (OR ANY INTEREST IN), OR CAUSE THIS
SECURITY (OR INTEREST IN THIS SECURITY) TO BE MARKETED, ON OR
THROUGH AN "ESTABLISHED SECURITIES MARKET" WITHIN THE MEANING
OF SECTION 7704(B)(1) OF THE CODE OR THE U.S. TREASURY
REGULATIONS THEREUNDER, INCLUDING, WITHOUT LIMITATION, AN
OVER-THE-COUNTER MARKET OR AN INTERDEALER QUOTATION SYSTEM
THAT REGULARLY DISSEMINATES FIRM BUY OR SELL QUOTATIONS. ANY
PURPORTED TRANSFER IN VIOLATION OF THIS COVENANT SHALL BE VOID
AB INITIO AND WITHOUT EFFECT.
IN THE EVENT OF ANY BREACH OF THE FOREGOING
REPRESENTATION, WARRANTY AND COVENANT OF A PROSPECTIVE HOLDER,
SUCH HOLDER SHALL NOTIFY THE ISSUER PROMPTLY UPON SUCH HOLDER
BECOMING AWARE OF SUCH BREACH, AND THEREUPON THE ISSUER AND
SUCH HOLDER HEREBY AGREE TO USE REASONABLE EFFORTS TO PROCURE
A REPLACEMENT INVESTOR REASONABLY ACCEPTABLE TO THE ISSUER.
ANY PURPORTED TRANSFER IN VIOLATION OF THIS COVENANT SHALL BE
VOID AB INITIO AND WITHOUT EFFECT.
THIS SECURITY MAY NOT BE SOLD, TRANSFERRED, ASSIGNED,
PARTICIPATED, PLEDGED, OR OTHERWISE DISPOSED OF PRIOR TO THE
AMORTIZATION PERIOD COMMENCEMENT DATE.
SECTION 1.08. Provision of Information to Prospective Purchasers of the
Class A Note; Rule 144A Matters. For so long as any of the Class A Notes remain
outstanding and are a "restricted security" within the meaning of Rule 144(a)(3)
under the Securities Act, any Class A Noteholder may request that the Indenture
Trustee forward to the Issuer a request that the Issuer provide the information
specified in, and meeting the requirements of, Rule 144A(d)(4) under the
Securities Act. Upon receipt of such request,
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the Indenture Trustee shall forward such request promptly to the Issuer. The
Issuer shall provide such requested information promptly to the Indenture
Trustee, who shall forward such requested information promptly to the requesting
Class A Noteholder.
SECTION 1.09. Cancellation. All Class A Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly canceled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture Trustee for cancellation any Class A Notes
previously authenticated and delivered hereunder which the Issuer may have
acquired in any manner whatsoever, and all Class A Notes so delivered shall be
promptly canceled by the Indenture Trustee. No Class A Notes shall be
authenticated in lieu of or in exchange for any Class A Notes canceled as
provided in this Section, except as expressly permitted by this Indenture. All
canceled Class A Notes may be held or disposed of by the Indenture Trustee in
accordance with its standard retention or disposal policy as in effect at the
time unless the Issuer shall direct by an Issuer Order that they be destroyed or
returned to it; provided that such Issuer Order is timely and the Class A Notes
have not been previously disposed of by the Indenture Trustee.
SECTION 1.10. Grant of Security Interest. The Issuer (and the Eligible
Lender Trustee, in its capacity as legal title holder to the Federal Student
Loans on behalf of the Issuer that are a part of the Collateral) hereby grant to
the Indenture Trustee, for the benefit of the Class A Noteholders and the
Insurer, as their respective interests appear under this Indenture, a first
priority, continuing lien and security interest in all right, title and interest
of the Issuer (and the Eligible Lender Trustee) in, to and under the Collateral,
whether now owned or hereafter acquired or existing. Such lien and security
interest shall secure all of the Issuer's obligations (monetary or otherwise)
hereunder. The Indenture Trustee hereby accepts the foregoing grant of a
security interest in the Collateral, and agrees to hold such security interest
in trust for the benefit of the Class A Noteholders and the Insurer pursuant to
the terms of this Indenture. The Indenture shall constitute a security agreement
for all purposes.
SECTION 1.11. Interest on the Class A Notes.
(a) Each Class A Note shall accrue interest on its then outstanding
Class A Note Principal Amount in the following manner. No later than 4:00 p.m.
on each Business Day during each Collection Period, the Administrator shall
report to the Issuer and the Indenture Trustee the Class A Note Rate in effect
for such day, which report shall describe the computation of such Class A Note
Rate. No later than 11:00 a.m., New York City time on the Determination Date,
the Indenture Trustee shall determine the Class A Note Interest for the related
Payment Date and shall inform the Issuer and the Insurer of such amount. If the
Administrator fails to report the Class A Note Rate (a "Class A Note Rate
Reporting Failure"), the Class A Note Rate for such day will be deemed to be a
rate equal to the Class A Note Rate for the immediately preceding day.
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At such time as the Administrator delivers to the Indenture
Trustee and the Issuer the actual Class A Note Rate for any day in respect of
which a Class A Note Rate Reporting Failure has occurred, the Indenture Trustee
will recalculate Class A Note Interest for the related Collection Period. If
such recalculation results in an amount owing to the Class A Noteholder, the
Indenture Trustee shall allocate such amount to the Class A Base Interest
Payment Amount and/or Class A Additional Interest Payment Amount, as applicable
and such amounts shall be paid in accordance with the priorities set forth in
Section 3.03(b). If such recalculation results in an overpayment to the Class A
Noteholder for the related Collection Period, such amount will be deducted from
the Class A Base Interest Payment Amount and/or the Class A Additional Interest
Amount, as applicable, due with respect to the Payment Date relating to the
following Collection Period.
(b) Interest accrued on the Class A Notes shall be paid, without
limitation but subject to the priorities set forth in Section 3.03(b):
(i) on each Payment Date; and
(ii) on the date of any prepayment, in whole or in part, of
the outstanding principal of such Class A Notes pursuant to Section
1.12 to the extent of the amount being prepaid.
(c) Method of Computation. All computations of interest payable by the
Issuer to the Class A Noteholders in connection with Advances hereunder shall be
calculated as required by Section 3.06(b).
SECTION 1.12. Principal on the Class A Notes.
(a) Class A Note Principal Due on and after Amortization Period
Commencement Date. On and after the Amortization Period Commencement Date, the
Issuer shall repay the unpaid Class A Note Principal Amount on each Payment Date
pursuant to the priority set forth in Section 3.03(b)(ii); provided, however,
that the Issuer shall pay in full all of the unpaid Class A Note Principal
Amount on or before the Final Scheduled Payment Date; provided further, however,
that from and after an Event of Default that remains uncured or that has not
been waived in writing, all unpaid Class A Note Principal Amount shall be
declared immediately due and payable by the Indenture Trustee or the Class A
Noteholder with the prior consent of the Insurer or at the direction of the
Insurer, in the manner provided in Section 7.03 hereof; provided further,
however that during the existence and continuation of an Insurer Default, the
Indenture Trustee shall not require the prior consent or direction of the
Insurer.
(b) Prepayments. Prior to the occurrence of an Event of Default that
remains uncured and that has not been waived in writing and prior to the Final
Scheduled Payment Date, the Issuer may, or pursuant to Section 3.03(b) shall,
from time to time on any Payment Date, make a prepayment, in whole or in part,
of the outstanding Class A Note Principal Amount; provided, however, that all
such voluntary prepayments shall
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require at least five days' prior written notice to the Indenture Trustee and
the Insurer. At any time prior to such fifth day following the delivery of a
notice of prepayment as set forth in the preceding sentence, the Issuer may
withdraw such notice without penalty. The prepayment price for any such
voluntary prepayment shall equal the sum of (a) the principal amount of the
Class A Note to be prepaid on such Payment Date plus (b) (i) with respect to the
portion of such principal amount of the Class A Notes that was funded with
Commercial Paper, all accrued and unpaid discount on such Commercial Paper from
the issuance date(s) thereof to the date of prepayment and the aggregate
discount to accrue on such Commercial Paper from the date of prepayment to the
maturity date of such Commercial Paper, or (ii) with respect to the portion of
such principal amount of the Class A Notes that was funded other than with
Commercial Paper, the sum of (x) all accrued and unpaid interest on such
principal amount through the date of purchase and (y) the breakage costs, if
any, to be incurred under the Liquidity Facility in respect of such prepayment,
plus (z) any other amounts then due and payable to the Class A Noteholder
pursuant hereto in connection with such prepayment.
SECTION 1.13. Payment of Principal and Interest. Any installment of
interest or principal, if any, payable on the Class A Notes pursuant to Sections
1.11 and 1.12 on any Payment Date shall be paid to the Person in whose name such
Class A Note, is registered on the Record Date, by check mailed first-class,
postage prepaid, to such Person's address as it appears on the Class A Note
Register on such Record Date, or by wire transfer of immediately available funds
to the account specified by such Person on the Class A Note Register.
Notwithstanding the foregoing, the final payment of principal and interest in
respect of the Class A Notes (whether on the Final Scheduled Payment Date or
otherwise) shall be payable only upon presentation and surrender of the Class A
Notes at the office or agency maintained for that purpose by the Issuer or its
agent pursuant to Section 1.03(e) hereof. Upon written notice from the Issuer,
the Indenture Trustee shall notify the Persons in whose names the Class A Notes
are registered at the close of business on the 15th day preceding the Payment
Date on which the Issuer expects that the final installment of principal of and
interest on the Class A Notes will be paid. Such notice shall be mailed or
transmitted by facsimile prior to such final Payment Date and shall specify that
such final installment will be payable only upon presentation and surrender of
the Class A Notes, and shall specify the place where the Class A Notes may be
presented and surrendered for payment of such installment.
ARTICLE II.
ADVANCES AND THE COLLATERAL
SECTION 2.01. Advances; Limits on Advances. Upon the terms and subject
to the conditions of this Indenture and the Note Purchase Agreement, from time
to time prior to the Amortization Period Commencement Date, the Issuer may
request that the Class A Noteholder make advances of funds to the Issuer under
the Class A Note secured by the Collateral (each such funding, an "Advance"). No
Advance shall be made by the Class A Noteholder if, after giving effect thereto,
any of the following shall occur: (i) the
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Class A Note Principal Amount shall exceed the Facility Limit, or (ii) a
Collateral Deficiency shall occur as a result thereof. The amount of any such
Advance shall not exceed the Permitted Advance Amount on the related Advance
Date.
SECTION 2.02. Advance Procedures.
(a) Notice of Advances. The Issuer may request that an Advance be made
by delivering its irrevocable written notice, substantially in the form of
Exhibit 2.02 (an "Advance Notice"), to (i) the Class A Noteholder at the address
for each applicable Class A Noteholder set forth in the Class A Note Register,
and (ii) the Indenture Trustee, in each case, in accordance with Section 10.02.
Such notice must be received by the Class A Noteholder prior to 11:00 a.m., New
York City time not less than one Business Day prior to the requested Advance
Date, which notice shall specify (A) the amount requested to be borrowed by the
Issuer from the Class A Noteholder (which amount shall be at least $500,000) and
(B) the date of such Advance (which shall be a Business Day).
(b) Funding of Advances. Upon receipt of an Advance Notice, and upon
satisfaction of the applicable conditions set forth in Article IV, the Class A
Noteholder shall make an Advance (as set forth in the related Advance Notice)
available to the Issuer in same day funds by depositing such funds as directed
on the Advance Notice on or before 5:00 p.m., New York City time on the Advance
Date.
SECTION 2.03. Collateral Deficiency. If on any Business Day, the
Collateral Amount on such Business Day is less than the Class A Note Principal
Amount, then a "Collateral Deficiency" shall be deemed to exist on such Business
Day. The Issuer shall cure such Collateral Deficiency by completing one or some
combination of both of the following within 10 Business Days of obtaining actual
knowledge of such Collateral Deficiency: (a) delivering or substituting
additional Eligible Financed Student Loans to the Indenture Trustee for
inclusion in the Collateral pursuant to Section 2.04(a) or delivering other
collateral acceptable to the Class A Noteholder and the Insurer to the Indenture
Trustee for the benefit of the Class A Noteholders, and/or (b) paying to the
Indenture Trustee cash for deposit into the Collection Account for prepayment of
the Class A Note Principal Amount on the next Payment Date in an amount
sufficient to reduce the Collateral Deficiency to zero.
SECTION 2.04. Addition, Substitution and Removal of Financed Student
Loans; Release of Collateral.
(a) Release, Addition and Substitution. The Issuer may from time to
time remove Financed Student Loans from the Collateral in connection with a
prepayment of the Class A Notes pursuant to Section 1.12, for the purpose of
securitizing such Financed Student Loans, removing a Defaulted Financed Student
Loan from the Collateral or otherwise, in each case upon delivery of the
Purchase Price therefor to the Indenture Trustee; provided that such removal
will not result in the occurrence of a Collateral Deficiency. The Issuer shall
notify the Indenture Trustee of its intention to effect any such release by
delivering to the Indenture Trustee both a notice (a "Notice of Release"),
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substantially in the form of Exhibit 2.04(a)-1 of such release and a new Student
Loan Schedule and Computer Tape giving effect to such release five days prior to
the Business Day on which it shall desire such release to occur. The Indenture
Trustee shall forward promptly such Notice of Release to the Insurer. The Issuer
may also add, or in the case of Federal Student Loans, cause the Eligible Lender
Trustee to add, Financed Student Loans to the Collateral or substitute Eligible
Student Loans for Financed Student Loans then included in the Collateral,
including (i) as part of any reinvestment in additional Financed Student Loans
permitted by Sections 3.03(b)(i)sixth, 3.03(b)(i)tenth and 4.02 on any Payment
Date, (ii) for the purpose of removing any Defaulted Financed Student Loan from
the Collateral, (iii) in connection with any securitization of Financed Student
Loans, or (iv) cure any Collateral Deficiency, provided that in the case of any
such substitution a Collateral Deficiency shall not result therefrom. The Issuer
shall notify the Indenture Trustee of its intention to effect any such addition
or substitution by delivering to the Indenture Trustee a notice (a "Notice of
Addition or Substitution"), substantially in the form of Exhibit 2.04(a)-2 or
2.04(a)-3, as the case may be, and a new Student Loan Schedule and Computer Tape
giving effect to such addition and/or substitution five days prior to the
Business Day on which it shall desire such addition or substitution to occur.
The Indenture Trustee shall forward promptly such Notice of Addition or
Substitution to the Insurer. The aggregate Principal Balance of all Eligible
Student Loans being substituted for any Financed Student Loans included in the
Collateral shall equal or exceed the aggregate unpaid Principal Balance of the
Financed Student Loans being removed from the Collateral as a result of such
substitution. No substitution of an Eligible Student Loan for any Financed
Student Loan shall be permitted if, as a result of such substitution, any Early
Amortization Event or Event of Default shall occur, or any such substitution
shall cause any Financed Student Loan included in the Collateral to cease to be
an Eligible Student Loan. Any release of a Financed Student Loan from the
Collateral hereunder shall occur pursuant to Section 2.04(b). In connection with
the addition or substitution of any Financed Student Loans hereunder that are
Private Student Loans, the Issuer shall deliver or cause to be delivered to the
applicable bailee under the applicable Subservicing Agreement, if not already in
the possession of such bailee, or to such other third party bailee as provided
in the Master Servicing Agreement, the original Student Loan Notes for the new
Financed Student Loans to be included in the Collateral.
(b) Release. Any release of any Financed Student Loan from the
Collateral shall be subject to the following conditions precedent:
(i) before and after giving effect to such release,
(A) there shall not exist any Early Amortization Event, Event
of Default or Unmatured Event of Default, provided that an Early
Amortization Event or Unmatured Event of Default may exist prior to any
such release if such release is intended to effect a cure thereof;
(B) no Collateral Deficiency shall exist, provided that a
Collateral Deficiency may exist prior to any such release if such
release is intended to effect a cure thereof;
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(C) the Class A Noteholders and the Insurer are not materially
and adversely affected by the selection made by the Issuer of the
Financed Student Loans to be released; and
(D) after giving effect to such release, each Financed Student
Loan remaining a part of the Collateral shall continue to be an
Eligible Student Loan.
(ii) on or prior to such release, the Issuer shall certify in
the related Notice of Release that the foregoing conditions described
in clause (i) above shall have been satisfied in connection therewith,
and shall also deliver a new Student Loan Schedule and Computer Tape
giving effect to such release. The Indenture Trustee shall forward a
copy of such certificate to the Class A Noteholder upon request.
SECTION 2.05. Effect of Release. Upon the satisfaction of the foregoing
conditions in accordance with Section 2.04, all right, title and interest of the
Indenture Trustee in, to and under the Financed Student Loans released from the
Collateral pursuant thereto shall terminate and revert to the Issuer or Eligible
Lender Trustee, as the case may be, their respective successors and assigns, and
the right, title and interest of the Indenture Trustee in such Financed Student
Loans shall thereupon cease, terminate and become void; and, upon the request of
the Issuer, its successors or assigns, and at the cost and expense of the
Issuer, the Indenture Trustee shall execute such UCC-3 financing statements and
releases as are necessary or reasonably requested by the Issuer or Eligible
Lender Trustee to terminate and remove of record any documents constituting
public notice of the security interest in such Financed Student Loans granted
hereunder being released. The Class A Noteholders and the Indenture Trustee
agree and acknowledge that no releases of financing statements or other recorded
evidence of the right, title and interest of the Indenture Trustee shall be
necessary to effect the release thereof. Any Person who purchases any of such
Financed Student Loans following the release thereof shall be entitled to rely
on this provision.
SECTION 2.06. Limited Recourse. Notwithstanding any other provision of
this Indenture to the contrary, the obligations of the Issuer incurred under
this Indenture and the Class A Notes are limited obligations of the Issuer
payable solely from the Collateral and are secured by a pledge and security
interest in the Collateral in favor of the Indenture Trustee, and neither the
Issuer (except as otherwise provided in this Section 2.06) nor any of its
officers, directors, employees, partners or Affiliates shall be individually or
personally liable under this Indenture for such obligations.
SECTION 2.07. Revolving Period. On the Amortization Period Commencement
Date, the Revolving Period shall terminate and the Amortization Period shall
commence. On or after the Amortization Period Commencement Date no further
Advances or reinvestments in Eligible Student Loans shall be permitted under the
Indenture and all further payments on the Class A Notes hereunder shall occur
pursuant to Sections 3.03(b)(ii) or 3.03(b)(iii), as applicable.
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ARTICLE III.
SETTLEMENTS
SECTION 3.01. Accounts; Investments by Indenture Trustee.
(a) Accounts. On or before the first Advance Date, the Indenture
Trustee shall establish, for the benefit of the Class A Noteholders, to the
extent of their interests therein as provided herein, the Collection Account,
the Reserve Account and the Net Cap Rate Reserve Account. All accounts shall be
maintained as Eligible Deposit Accounts. Subject to the further provisions of
this Section 3.01, the Indenture Trustee shall, upon receipt deposit into such
Accounts all amounts received by it which are required to be deposited therein
in accordance with the provisions hereof. All such amounts and all investments
made with such amounts, including all income and other gain from such
investments, shall be held by the Indenture Trustee in such Accounts as part of
the Collateral as herein provided, subject to withdrawal by the Indenture
Trustee in accordance with, and for the purposes specified in the provisions of,
this Indenture.
(b) Administration of Payments. The Indenture Trustee shall assume that
any amount remitted to it by the Master Servicer, any Sub-Servicer or the Issuer
is to be deposited into the Collection Account pursuant to Section 3.03. The
Indenture Trustee may establish from time to time such deadline or deadlines as
it shall determine are reasonable or necessary in the administration hereof
after which all amounts received or collected by the Indenture Trustee on any
day shall not be deemed to have been received or collected until the next
succeeding Business Day.
(c) No Set-Off. None of the Eligible Lender Trustee or the Indenture
Trustee shall have any right of set-off against Collections, Accounts, or any
investment therein, whether or not commingled to satisfy any other obligations,
and each of the Eligible Lender Trustee and the Indenture Trustee hereby
irrevocably waives any and all such rights.
(d) Investments. Amounts in the Reserve Account, the Net Cap Reserve
Account and the Collection Account shall be invested and reinvested by the
Indenture Trustee in Eligible Investments. Subject to the restrictions on the
maturity of investments set forth in Section 3.01(f), an Issuer Order may
authorize the Indenture Trustee to make the specific Eligible Investments set
forth therein, to make Eligible Investments from time to time consistent with
the general instructions set forth therein, or to make specific Eligible
Investments pursuant to instructions received in writing or by facsimile
transmission from the employees or agents of the Issuer identified therein, in
each case in such amounts as such Issuer Order shall specify. The Issuer agrees
to report as income for financial reporting and tax purposes (to the extent
reportable) all investment earnings on amounts in the Accounts.
(e) Investments in the Absence of an Issuer Order; Notice of Uninvested
Cash. In the event that either (i) the Issuer shall have failed to give
investment directions
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to the Indenture Trustee by 11:00 a.m., New York City time, on any Business Day
on which there may be uninvested cash deposited in the Accounts or (ii) an Event
of Default or Unmatured Event of Default shall have occurred and be continuing,
then the Indenture Trustee shall invest such funds in Eligible Investments set
forth in subparagraph (iv) of the definition thereof. All Eligible Investments
made by the Indenture Trustee shall mature no later than the maturity date
therefor permitted by Section 3.01(f).
(f) Maturity of Eligible Investments. All Eligible Investments shall
mature (or, with respect to mutual fund investments shall be redeemable without
premium or penalty) no later than the Business Day prior to each Payment Date.
All income or other gains from the investment of moneys deposited in the
Accounts shall be deposited by the Indenture Trustee in the Collection Account
upon receipt and shall be deemed to constitute a portion of the Available Funds
for the related Payment Date.
(g) Form of Investment. Any investment of any funds in the Accounts
shall be made under the following terms and conditions:
(i) each such investment shall be made in the name of the
Indenture Trustee, for the benefit of the Issuer and the Class A
Noteholders (to the extent of their respective interests therein), or
in the name of a nominee of the Indenture Trustee; and
(ii) any certificate or other instrument evidencing such
investment shall be delivered directly to the Indenture Trustee, and
the Indenture Trustee shall have sole possession of such instrument,
and all income on such investment.
(h) Indenture Trustee Not Liable. The Indenture Trustee shall not in
any way be held liable by reason of any insufficiency in the Accounts resulting
from losses on investments made in accordance with the provisions of this
Section 3.01 (but the institution serving as Indenture Trustee shall at all
times remain liable for its own debt obligations, if any, constituting part of
such investments) except for gross negligence or intentional misconduct. The
Indenture Trustee shall not be liable for any investment made by it in
accordance with this Section 3.01 on the grounds that it could have made a more
favorable investment.
SECTION 3.02. Collection of Moneys. If at any time the Issuer shall
receive any Collections on or in respect of any Financed Student Loan (including
any Student Loan Guaranty Payment or Subsidy Payment), it shall hold such
Collections for the benefit of the Indenture Trustee (for the benefit of the
Class A Noteholders and the Insurer), shall segregate such payment from the
other property of the Issuer immediately and shall deliver such payment in the
form received (endorsed as necessary for transfer) to the Indenture Trustee for
deposit in the Collection Account in accordance with Section 3.03.
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SECTION 3.03. Collection Account.
(a) Deposits. The Issuer shall remit all Collections to the Collection
Account no later than the close of business on the second Business Day after
receipt thereof, and the Master Servicer and any Subservicer shall be instructed
to remit all Collections received by it within two Business Days in accordance
with the Master Servicing Agreement and any Subservicing Agreement to the
Collection Account for deposit therein. The Issuer may, in its sole discretion,
deposit into the Collection Account the amount of any Monthly Advances
determined to be made by the Issuer pursuant to Section 3.06(c) no later than
the related Transfer Date. In addition, the Issuer shall deposit to the
Collection Account no later than the close of business on each Transfer Date the
aggregate Purchase Amount payable by the Issuer pursuant to Section 5.02. The
Indenture Trustee shall deposit into the Collection Account on the date of
receipt thereof any amounts delivered to it to reduce a Collateral Deficiency
pursuant to Section 2.04, to effect a prepayment of the Class A Notes pursuant
to Section 1.12, or to effect the removal of a Financed Student Loan from the
Collateral pursuant to Section 2.04(a). If the Issuer shall receive any written
statement from the Master Servicer stating that any amount previously paid by
the Master Servicer to the Indenture Trustee or Issuer and deposited into the
Collection Account was so paid and deposited into the Collection Account in
error, the Issuer, if it shall concur as to the truth of such statement, shall
forward to the Indenture Trustee in writing, together with such security or
indemnity as may be required by it to hold the Indenture Trustee harmless, a
copy of such written statement from the Master Servicer, along with an
instruction to the Indenture Trustee to withdraw such amount from the Collection
Account and pay such amount to the Master Servicer. Following receipt from the
Issuer of the Master Servicer's statement and the written instructions set forth
in the preceding sentence, so long as no Event of Default shall have occurred
and be continuing, the Indenture Trustee shall withdraw such amount from the
Collection Account and pay such amount to such Master Servicer.
(b) Payment Date Procedures. Amounts on deposit on any Payment Date in
the Collection Account representing Collections and other Available Funds
received during or with respect to the related Collection Period (net of any
amounts reimbursable to the Issuer in respect of Monthly Advance Amounts
pursuant to Section 3.06(c), which shall be paid to the Issuer) and, as
applicable, amounts on deposit in the Reserve Account and the Net Cap Rate
Reserve Account, shall be withdrawn from the Collection Account and, as
applicable, the Reserve Account and the Net Cap Rate Reserve Account, on such
Payment Date no later than 11:00 a.m. (New York City time), in the amounts
required, and applied in the following order of priority set forth below, in
each case to the extent of Available Funds remaining after application of each
clause representing a higher priority and, as applicable, amounts withdrawn from
the Reserve Account and the Net Cap Rate Reserve Account, in accordance with
Section 3.04 and Section 3.05, respectively.
(i) Payment Dates Prior to the Amortization Period
Commencement Date. On each Payment Date that shall occur prior to the
Amortization Period Commencement Date, Available Funds in the
Collection Account and, if
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applicable, amounts on deposit in the Reserve Account and the Net Cap
Rate Reserve Account, shall be paid as follows:
first, an amount equal to the Policy Premium then
due, if any, pursuant to the Insurance Agreement together with
any overdue Policy Premiums, if any, shall be set aside in the
Collection Account and paid to the Insurer on such Payment
Date; provided, that amounts payable pursuant to this clause
first on any Payment Date shall be paid first from Interest
Collections, and second to the extent such Interest
Collections on deposit in the Collection Account are
insufficient to make such payments, from Principal
Collections;
second, an amount equal to the lesser of (x) the
Available Funds remaining on deposit in the Collection Account
for the related Collection Period and (y) the sum of (i) the
Servicing Fee Amount due with respect to the related
Collection Period, plus any overdue Servicing Fee Amounts,
(ii) the Eligible Lender Trustee Fee with respect to the
related Collection Period, plus any overdue Eligible Lender
Trustee Fees, (iii) the Indenture Trustee's Fees with respect
to such Collection Period plus any overdue Indenture Trustee's
Fees, (iv) the Liquidity Commitment Fee with respect to such
Collection Period plus any overdue Liquidity Commitment Fee,
and (v) the Capped CP Program Payment Amount, which amounts
set forth in clauses (i) through (v) above shall in each case
be set aside in the Collection Account and paid to the Master
Servicer (in the case of the Servicing Fee Amount), the
Eligible Lender Trustee (in the case of the Eligible Lender
Trustee Fee), the Indenture Trustee (in the case of the
Indenture Trustee's Fee), the Liquidity Agent (in the case of
the Liquidity Commitment Fee) and the Collateral Agent (in the
case of the Capped CP Program Payment Amount), pari passu, on
such Payment Date; provided, however, that amounts payable
pursuant to this clause second on any Payment Date shall be
paid first from Interest Collections and second, to the extent
such Interest Collections are insufficient to make such
payments, from Principal Collections;
third, an amount equal to the Class A Base Interest
Payment Amount payable with respect to the Class A Notes for
such Collection Period, shall be set aside in the Collection
Account and paid to the Class A Noteholder on such Payment
Date pursuant to Section 1.13; provided, however, that amounts
payable pursuant to this clause third on any Payment Date
shall be paid first from Interest Collections remaining on
deposit in the Collection Account, second, to the extent such
Interest Collections are insufficient to make such payments,
from Principal Collections remaining on deposit therein and,
third to the extent that Interest Collections and Principal
Collections are insufficient to make such payments, from
amounts withdrawn from the Reserve Account.
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fourth, if after application to the amounts described
in clauses first through third above, the amount on deposit in
the Reserve Account is less than the Specified Reserve Account
Balance, the lesser of (i) the amount of such deficiency and
(ii) the Available Funds remaining on deposit in the
Collection Account for the related Collection Period after
giving effect to the payments set forth in clauses first
through third above, shall be deposited into the Reserve
Account; provided, however, that amounts payable pursuant to
this clause fourth on any Payment Date shall be paid first
from Interest Collections remaining on deposit in the
Collection Account and second, to the extent such Interest
Collections are insufficient to make such payments, from
Principal Collections remaining on deposit therein;
fifth, an amount equal to the lesser of (i) the
Revolving Period Principal Payment Amount and (ii) the
Available Funds remaining on deposit in the Collection Account
for the related Collection Period after giving effect to the
payments set forth in clauses first through fourth above,
shall be paid to the Class A Noteholder to the prepayment of
the Class A Notes to cure any Collateral Deficiency in
accordance with Section 1.12 and 1.13; provided, however, that
amounts payable pursuant to this clause fifth on any Payment
Date shall be paid first from Interest Collections remaining
on deposit in the Collection Account, and second, to the
extent such Interest Collections are insufficient to make such
payments, from Principal Collections remaining on deposit
therein.
sixth, the Available Funds remaining on deposit in
the Collection Account after application to the amounts
described in clauses first through fifth above shall be
applied to one or more of the following until any Note Balance
Equalization Amount has been reduced to zero: (a) to the Class
A Noteholder to the prepayment of the Class A Notes in
accordance with Section 1.12; and (b) subject to Sections
2.04(a) and 4.02, to the Issuer to purchase and otherwise
provide additional Financed Student Loans as Collateral;
provided, however, that amounts payable pursuant to this
clause sixth on any Payment Date shall be paid first from
Interest Collections remaining on deposit in the Collection
Account and second, to the extent such Interest Collections
are insufficient to make such payments, from Principal
Collections remaining on deposit therein;
seventh, an amount equal to the lesser of (i) the
Available Funds remaining on deposit in the Collection Account
for the related Collection Period after giving effect to the
payments set forth in clauses first through sixth above and
(ii) all due and unpaid Insurer Reimbursement Amounts, to the
Insurer for all due and unpaid Insurer Reimbursement Amounts;
provided, however, that amounts payable pursuant to this
clause seventh on any Payment Date shall be paid first from
Interest Collections remaining on deposit in the Collection
Account, and second, to the extent
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that such Interest Collections are insufficient to make such
payments, from Principal Collections remaining on deposit
therein;
eighth, an amount equal to the lesser of (i) the
Available Funds remaining on deposit in the Collection Account
for the related Collection Period after giving effect to the
payments set forth in clauses first through seventh above and
amounts, if any, withdrawn from the Net Cap Rate Reserve
Account pursuant to Section 3.05(b), and (ii) the Class A
Additional Interest Payment Amount payable with respect to the
Class A Notes for such Collection Period, shall be set aside
in the Collection Account and paid to the Class A Noteholder
on such Payment Date pursuant to Section 1.13; provided,
however, that amounts payable pursuant to this clause eighth
on any Payment Date shall be paid first from Interest
Collections remaining on deposit in the Collection Account,
second, to the extent such Interest Collections are
insufficient to make such payment, from Principal Collections
remaining on deposit therein; and third to the extent that
Interest Collections and Principal Collections are
insufficient to make such payments, from amounts withdrawn
from the Net Cap Rate Reserve Account.
ninth, an amount equal to the lesser of (i) the
Available Funds remaining on deposit in the Collection Account
after giving effect to the payments set forth in clauses first
through eighth above and (ii) fees and expenses payable
pursuant to Section 5.03(iv) of the Security Agreement in
excess of the Capped CP Program Payment Amount shall be set
aside in the Collection Account and paid to the Collateral
Agent on such Payment Date; provided, however, that amounts
payable pursuant to this clause ninth on any Payment Date
shall be paid first from Interest Collections remaining on
deposit in the Collection Account, and second, to the extent
such Interest Collections are insufficient to make such
payments, from Principal Collections remaining on deposit
therein.
tenth, if a Net Cap Rate Reserve Account Funding
Event shall have occurred as of such Payment Date, the lesser
of (i) amount necessary to increase the amount on deposit in
the Net Cap Rate Reserve Account to the Net Cap Rate Reserve
Account Maximum Requirement with respect to such Payment Date
and (ii) Available Funds remaining on deposit in the
Collection Account for the related Collection Period after
giving effect to the payments set forth in clauses first
through ninth above, shall be deposited in the Net Cap Rate
Reserve Account;
eleventh, the Available Funds remaining on deposit in
the Collection Account after application to the amounts
described in clauses first through tenth above shall be
applied, subject to Sections 2.04(a) and 4.02, at the option
of the Issuer to add additional Financed Student Loans as
Collateral; and
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twelfth, after giving effect to the application of
the amounts described in clauses first through eleventh, any
remaining Available Funds on deposit in the Collection Account
shall be transferred to the Issuer on such Payment Date.
(ii) Payment Dates On or After Amortization Period
Commencement Date. On the Amortization Period Commencement Date and on
each Payment Date that shall occur during the Amortization Period and
prior to the occurrence of the Final Scheduled Payment Date, Available
Funds in the Collection Account and, if applicable, amounts on deposit
in the Reserve Account and the Net Cap Rate Reserve Account shall be
withdrawn from the Collection Account and, as applicable, the Reserve
Account and the Net Cap Rate Reserve Account, on such Payment Date no
later than 11:00 a.m. (New York City time), in the amount required, and
applied in the following order of priority set forth below, in each
case to the extent of Available Funds remaining after application of
each clause representing a higher priority and, as applicable, amounts
withdrawn from the Reserve Account and Net Cap Rate Reserve Account, in
accordance with Section 3.04 and Section 3.05, respectively:
first, an amount equal to the Policy Premium then due
if any, pursuant to the Insurance Agreement together with any
overdue Policy Premiums, if any, shall be set aside in the
Collection Account and paid to the Insurer on such Payment
Date; provided, however, that amounts payable pursuant to this
clause first on any Payment Date shall be paid first from
Interest Collections and second, to the extent that Interest
Collections on deposit in the Collection Account are
insufficient to make such payments, from Principal
Collections;
second, an amount equal to the lesser of (x) the
Available Funds remaining on deposit in the Collection Account
for the related Collection Period and (y) the sum of (i) the
Servicing Fee Amount with respect to the related Collection
Period, plus any overdue Servicing Fee Amounts, (ii) the
Eligible Lender Trustee Fee with respect to the related
Collection Period, plus any overdue Eligible Lender Trustee
Fees, (iii) the Indenture Trustee's Fees with respect to the
related Collection Period, plus any overdue Indenture
Trustee's Fees, (iv) the Liquidity Commitment Fee with respect
to the related Collection Period plus any overdue Liquidity
Commitment Fees and (v) the Capped CP Program Payment Amount,
which amounts set forth in clauses (i) through (v) above shall
in each case be set aside in the Collection Account and paid
to the Master Servicer (in the case of the Servicing Fee
Amount), the Eligible Lender Trustee (in the case of the
Eligible Lender Trustee Fee), the Indenture Trustee (in the
case of the Indenture Trustee's Fee) the Liquidity Agent (in
the case of the Liquidity Commitment Fee) and the Collateral
Agent (in the case of the Capped CP Program Payment Amount),
pari passu on such Payment Date; provided, however, that
amounts payable pursuant to this clause
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second on any Payment Date shall be paid first from Interest
Collections and second, to the extent that Interest
Collections on deposit in the Collection Account are
insufficient to make such payments, from Principal Collections
remaining on deposit therein;
third, an amount equal to the Class A Base Interest
Payment Amount payable with respect to the Class A Notes for
such Collection Period shall be set aside in the Collection
Account and paid to the Class A Noteholder on such Payment
Date pursuant to Section 1.13; provided, however, that amounts
payable pursuant to this clause third on any Payment Date
shall be paid first from Interest Collections remaining on
deposit in the Collection Account, second, to the extent such
Interest Collections are insufficient to make such payments,
from Principal Collections remaining on deposit therein; and
third to the extent that Interest Collections and Principal
Collections are insufficient to make such payments, from
amounts withdrawn from the Reserve Account.
fourth, if after application to the amounts described
in clauses first through third above, the amount on deposit in
the Reserve Account is less than the Specified Reserve Account
Balance, the lesser of (i) the amount of such deficiency and
(ii) the Available Funds remaining on deposit in the
Collection Account after giving effect to the payments set
forth in clauses first through third above, shall be deposited
into the Reserve Account; provided, however, that amounts
payable pursuant to this clause fourth on any Payment Date
shall be paid first from Interest Collections and second, to
the extent that Interest Collections on deposit in the
Collection Account are insufficient to make such payments,
from Principal Collections remaining on deposit therein;
fifth, an amount equal to the least of the amount of
(a) Available Funds remaining in the Collection Account after
giving effect to the payments set forth in clauses first
through fourth above , (b) the Amortization Period Principal
Payment Amount and (c) the Class A Note Principal Amount
outstanding, shall be set aside in the Collection Account and
paid to the Class A Noteholder on such Payment Date pursuant
to Section 1.13 until the Class A Note Principal Amount shall
be reduced to zero; provided, however, that amounts payable
pursuant to this clause fifth on any Payment Date shall be
paid first from Principal Collections remaining on deposit in
the Collection Account, and second, to the extent such
Principal Collections are insufficient to make such payments,
from Interest Collections remaining on deposit therein.
sixth, the Available Funds remaining on deposit in
the Collection Account after application to the amounts
described in clauses first through fifth above shall be paid
to the Class A Noteholders for the prepayment of the Class A
Notes until the Note Balance Equalization Amount has been
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reduced to zero; provided, however, that amounts payable
pursuant to this clause sixth on any Payment Date shall be
paid first from Interest Collections, and second, to the
extent such Interest Collections are insufficient to make such
payments, from Principal Collections;
seventh, an amount equal to the lesser of (i) the
amount of Available Funds remaining on deposit in the
Collection Account after giving effect to the payments set
forth in clauses first through sixth above and (ii) all due
and unpaid Insurer Reimbursement Amounts, to the Insurer for
all due and unpaid Insurer Reimbursement Amounts; provided,
however, that amounts payable pursuant to this clause seventh
on any Payment Date shall be paid first from Interest
Collections remaining on deposit in the Collection Account,
and second, to the extent that such Interest Collections are
insufficient to make such payments, from Principal Collections
remaining on deposit therein;
eighth, an amount equal to the lesser of (i) the
amount of Available Funds remaining on deposit in the
Collection Account after giving effect to the payments set
forth in clauses first through seventh above and amounts, if
any, withdrawn from the Net Cap Rate Reserve Account pursuant
to Section 3.05(b) and (ii) the Class A Additional Interest
Payment Amount payable with respect to the Class A Notes for
such Collection Period, shall be set aside in the Collection
Account and paid to the Class A Noteholder on such Payment
Date pursuant to Section 1.13; provided, however, that amounts
payable pursuant to this clause eighth on any Payment Date
shall be paid first from Interest Collections remaining on
deposit in the Collection Account, second, to the extent such
Interest Collections are insufficient to make such payments,
from Principal Collections remaining on deposit therein; and
third to the extent that Interest Collections and Principal
Collections are insufficient to make such payments, from
amounts withdrawn from the Net Cap Rate Reserve Account.
ninth, an amount equal to the lesser of (i) the
Available Funds remaining on deposit in the Collection Account
after giving effect to the payments set forth in clauses first
through eighth above and (ii) fees and expenses payable
pursuant to Section 5.03(iv) of the Security Agreement in
excess of the Capped CP Program Payment Amount shall be set
aside in the Collection Account and paid to the Collateral
Agent on such Payment Date; provided, however, that amounts
payable pursuant to this clause ninth on any Payment Date
shall be paid first from Interest Collections remaining on
deposit in the Collection Account, and second, to the extent
such Interest Collections are insufficient to make such
payments, from Principal Collections remaining on deposit
therein.
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tenth, if a Net Cap Rate Reserve Account Funding
Event shall have occurred as of such Payment Date, the lesser
of (i) amount necessary to increase the amount on deposit in
the Net Cap Rate Reserve Account to the Net Cap Rate Reserve
Account Maximum Requirement with respect to such Payment Date
and (ii) Available Funds remaining on deposit in the
Collection Account for the related Collection Period after
giving effect to the payments set forth in clause first
through ninth above, shall be deposited in the Net Cap Rate
Reserve Account; and
eleventh, after giving effect to the application of
the amounts described in clauses first through tenth, any
remaining Available Funds on deposit in the Collection Account
shall be transferred to the Issuer on such Payment Date.
(iii) Payment Dates On or After the Final Scheduled Payment
Date; Following Event of Default. On each Payment Date that shall occur
on or after the Final Scheduled Payment Date, or if an Event of Default
shall have occurred and (i) the Class A Notes have been accelerated
pursuant to Section 7.03(a) or (ii) the Collateral shall have been sold
pursuant to Section 7.04, Available Funds in the Collection Account
and, as applicable, amounts on deposit in the Reserve Account and the
Net Cap Rate Reserve Account shall be withdrawn from the Collection
Account and, as applicable, the Reserve Account and the Net Cap Rate
Reserve Account on such Payment Date no later than 11:00 a.m. (New York
City time), in the amount required, and applied in the following order
of priority set forth below, in each case to the extent of Available
Funds remaining after application of each clause representing a higher
priority and, as applicable, amounts withdrawn from the Reserve Account
and the Net Cap Rate Reserve Account, in accordance with Section 3.04
and Section 3.05, respectively:
first, an amount equal to the Policy Premium then
due; pursuant to the Insurance Agreement, together with any
overdue Policy Premiums, if any, shall be set aside in the
Collection Account and paid to the Insurer on such Payment
Date;
second, an amount equal to (i) the Servicing Fee
Amount due with respect to the related Collection Period, plus
any overdue Servicing Fee Amounts, (ii) the Eligible Lender
Trustee Fees with respect to the related Collection Period,
plus any overdue Eligible Lender Trustee Fees, (iii) the
Indenture Trustee's Fees with respect to the related
Collection Period, plus any overdue Indenture Trustee's Fees
not paid, (iv) the Liquidity Commitment Fee with respect to
the related Collection Period plus any overdue Liquidity
Commitment Fees and (v) the Capped CP Program Payment Amount,
which amounts set forth in clauses (i) through (v) above shall
in each case be set aside in the Collection Account and paid
to the Master Servicer (in the case of the Servicing Fee
Amount), the Eligible Lender Trustee (in the case of the
Eligible Lender Trustee Fee), the
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Indenture Trustee (in the case of the Indenture Trustee's Fee)
the Liquidity Agent (in the case of the Liquidity Commitment
Fee and the Collateral Agent (in the case of the Capped CP
Program Payment Amount), pari passu, on such Payment Date;
third, an amount equal to the Class A Base Interest
Payment Amount payable with respect to the Class A Notes for
such Collection Period, shall be set aside in the Collection
Account and paid to the Class A Noteholder on such Payment
Date pursuant to Section 1.13; first from the amount of
Available Funds remaining in the Collection Account after
giving effect to the payments in clauses first and second
above, and second from amounts on deposit in the Reserve Fund;
fourth, an amount equal to the lesser of (i) the
amount of Available Funds remaining in the Collection Account
after giving effect to the payments set forth in clauses first
through third above and amounts, if any, withdrawn from the
Reserve Account and (ii) the Class A Note Principal Amount
outstanding, shall be set aside in the Collection Account and
paid to the Class A Noteholder on such Payment Date pursuant
to Section 1.13 until the Class A Note Principal Amount is
reduced to zero;
fifth, an amount equal to the lesser of (i) the
amount of Available Funds remaining in the Collection Account
after giving effect to the payments set forth in clauses first
through fourth above and amounts, if any, withdrawn from the
Reserve Account and (ii) all due and unpaid Insurer
Reimbursement Amounts, shall be set aside in the Collection
Account and paid to the Insurer for all due and unpaid Insurer
Reimbursement Amounts;
sixth, an amount equal to the lesser of (i) the
amount of Available Funds remaining in the Collection Account
after giving effect to the payments set forth in clauses first
through fifth above and amounts, if any, withdrawn from the
Net Cap Rate Reserve Account pursuant to Section 3.05(b), and
(ii)the Class A Additional Interest Payment Amount payable
with respect to the Class A Notes for such Collection Period,
shall be set aside in the Collection Account and paid to the
Class A Noteholder pursuant to Section 1.13.
seventh, an amount equal to the lesser of (i) the
Available Funds remaining on deposit in the Collection Account
after giving effect to the payments set forth in clauses first
through sixth above and (ii) fees and expenses payable
pursuant to Section 5.03(iv) of the Security Agreement in
excess of the Capped CP Program Payment Amount, shall be set
aside in the Collection Account and paid to the Collateral
Agent on such Payment Date; provided, however, that amounts
payable pursuant to this clause seventh shall be paid first
from Interest Collections remaining on
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deposit in the Collection Account, and second, to the extent
such Interest Collections are insufficient to make such
payments, from Principal Collections remaining on deposit
therein.
eighth, after giving effect to the application of the
amounts described in clauses first through seventh, any
remaining Available Funds on deposit in the Collection Account
shall be transferred to the Issuer.
SECTION 3.04. Reserve Account.
(a) On or prior to the initial Advance Date, the Issuer shall deposit
an amount equal to the Initial Specified Reserve Account Balance into the
Reserve Account. On or prior to any subsequent Advance Date, the Issuer shall
deposit into the Reserve Account any amount required to be deposited therein in
order to satisfy the condition precedent to such Advance set forth in Section
4.02(i).
(b) If on any Payment Date during the Revolving Period (after giving
effect to all deposits or withdrawals required to be made from the Collection
Account and the Reserve Account on such Payment Date) the balance on deposit in
the Reserve Account is greater than the Specified Reserve Account Balance on
such Payment Date, the Issuer shall instruct the Indenture Trustee to withdraw
from the Reserve Account an amount equal to the difference between amount on
deposit in the Reserve Account and the Specified Reserve Account Balance and pay
such amount first, to the Insurer to pay any Insurer Reimbursement Amounts,
second, to the Class A Noteholder, until any Class A Additional Interest Payment
Amount remaining unpaid has been reduced to zero, and third, to the Issuer.
(c) In the event that on any Payment Date there are not sufficient
Available Funds on deposit in the Collection Account for application to the
payment of amounts described in clause third of Section 3.03(b)(i), (ii), or
(iii) as applicable (in each case such insufficiency is to be calculated without
giving effect to any withdrawals from the Reserve Account pursuant to this
Section 3.04(c)) the Indenture Trustee shall withdraw from the Reserve Account
the lesser of such deficiency and the amount on deposit in the Reserve Account
and shall apply such withdrawn amount to the payment of amounts described in
such clause third of Section 3.03(b)(i), (ii) or (iii), as applicable, in the
order of priority set forth therein.
(d) In the event that on any Payment Date on or after the Amortization
Period Commencement Date and prior to the Final Scheduled Payment Date, after
giving effect to the withdrawals from the Reserve Account required by Section
3.04(c), the amount on deposit in the Reserve Account exceeds the Class A Note
Principal Amount (after giving effect to principal payments with respect to the
Class A Notes to be made on such Payment Date), the Indenture Trustee shall
withdraw from the Reserve Account the amount on deposit in the Reserve Account
and shall pay such amount as principal on the Class A Notes, until the Class A
Note Principal Amount is reduced to zero and then to the Insurer for all amounts
that remain owing to the Insurer under the Insurance Agreement.
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(e) On or after the Final Scheduled Payment Date, in the event that,
after giving effect to the payments required by clauses first through third of
Section 3.03(b)(iii) and after giving effect to the withdrawals from the Reserve
Account required by Section 3.04(c), in the event that any Class A Note
Principal Amount remains outstanding, the Indenture Trustee shall withdraw all
such amounts remaining on deposit in the Reserve Account and shall pay such
amount to the Class A Noteholders, until the Class A Note Principal Amount is
reduced to zero and then to the Insurer for all amounts that remain owing to the
Insurer under the Insurance Agreement.
(f) Final Payout Date. Any funds remaining in the Collection Account,
the Reserve Account and the Net Cap Rate Reserve Account after the Final Payout
Date shall be paid to the Issuer.
SECTION 3.05. Net Cap Rate Reserve Account.
(a) On or prior to each Determination Date, the Indenture Trustee shall
calculate the Excess Spread Amount with respect to the Collection Period
preceding the Collection Period during which such Determination Date occurs.
(b) In the event that on any Payment Date there are insufficient
Available Funds on deposit in the Collection Account for application to the
payment of amounts described in clause eighth of Section 3.03(b)(i), clause
eighth of Section 3.03(b)(ii) or clause sixth of Section 3.03(b)(iii), as
applicable (in each case such insufficiency is to be calculated without giving
effect to any withdrawals from the Net Cap Rate Reserve Account pursuant to this
Section 3.05(b)), the Indenture Trustee shall withdraw from the Net Cap Rate
Reserve Account the lesser of any such insufficiency and the amount on deposit
in the Net Cap Rate Reserve Account and shall apply such withdrawals to the
payment of amounts described in clause eighth of Section 3.03(b)(i), clause
eighth of Section 3.03 (b) (ii) or clause sixth of Section 3.03(b)(iii), as
applicable.
(c) If on any Payment Date (after giving effect to all deposits or
withdrawals required to be made from the Collection Account, the Reserve Account
and the Net Cap Rate Reserve Account on such Payment Date) the balance on
deposit in the Net Cap Rate Reserve Account is greater than the Net Cap Rate
Reserve Account Maximum Requirement on such Payment Date, the Issuer shall
instruct the Indenture Trustee to withdraw from the Net Cap Rate Reserve Account
an amount equal to the difference between the amount on deposit in the Net Cap
Rate Reserve Account and the Net Cap Rate Reserve Account Maximum Requirement
and pay such amount to the Issuer.
SECTION 3.06. Payments and Computations, etc.; Monthly Advances.
(a) Payments. All amounts to be paid or deposited by the Indenture
Trustee or the Issuer to the Class A Noteholders, or any other Person hereunder
shall be paid or deposited in accordance with the terms hereof no later than
11:00 a.m. (New York City time) on the day when due in lawful money of the
United States of America in same day
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funds, in the case of amounts to be paid or deposited in respect of accrued and
unpaid interest on, or in reduction of principal of, the Class A Notes.
(b) Method of Computation. All computations of interest and any other
fees payable by the Issuer to the Class A Noteholders in connection with
Advances hereunder shall be calculated by the Indenture Trustee on the basis of
a year of 360 days for actual days elapsed.
(c) Monthly Advances. If the Issuer or the Eligible Lender Trustee (or
the Master Servicer or applicable Sub-Servicer on its behalf) has applied for a
Student Loan Guaranty Payment from a Student Loan Guarantor or a Subsidy Payment
from the DOE, and the Issuer, the Eligible Lender Trustee, the Master Servicer
or the applicable Sub-Servicer, as the case may be, has not received the related
payment prior to the end of the Collection Period immediately preceding the
current Payment Date, the Issuer may, no later than the related Transfer Date,
in its sole discretion, deposit into the Collection Account an amount up to the
amount of such payments applied but not received (such deposits by the Issuer
are referred to therein as "Monthly Advances"). The Issuer shall have no
obligation, legal or otherwise, to make any Monthly Advance, and the making of
or decision to make a particular Monthly Advance shall not create any obligation
on the Issuer, legal or otherwise, to make any future Monthly Advances. If after
making a Monthly Advance, the Issuer (or the Eligible Lender Trustee, the Master
Servicer or the applicable Sub-Servicer on its behalf) receives the Student Loan
Guaranty Payment or Subsidy Payment for which such Monthly Advance was made,
then notwithstanding the order set forth in Section 3.03(b) hereof, the Issuer
shall be reimbursed immediately from such Student Loan Guaranty Payment or
Subsidy Payment, as the case may be, on deposit in the Collection Account up to
the amount of the related Monthly Advance.
SECTION 3.07. Claims on the Policy.
(a) If an Insured Payment is necessary for any Collection Period, then
the Indenture Trustee shall give notice to the Insurer and the Fiscal Agent (as
defined in the Insurance Policy), if any, by telephone or telecopy of the amount
of the required Insured Payment. Such notice shall be confirmed in writing by
the Indenture Trustee in the form set forth as Exhibit A to the Insurance
Policy, to the Insurer and the Fiscal Agent, if any, so that such notice is
received by the Insurer and the Fiscal Agent no later than 12:00 noon, New York
City time, on the Deficiency Claim Date (as defined in the Insurance Policy).
Following receipt by the Insurer of such notice in such form, the Insurer or the
Fiscal Agent shall pay the Indenture Trustee any amount payable under the
Insurance Policy, on the later to occur (i) 12:00 noon, New York City, time, on
the third Business Day following such receipt, and (ii) 12:00 noon, New York
City time, on the Payment Date to which such deficiency relates, as provided in
the Insurance Policy.
(b) The Indenture Trustee shall deposit any Insured Payment made under
the Insurance Policy in the Collection Account and distribute such amount only
to pay the Class A Noteholder in accordance with the terms of the Insurance
Policy, and such amount may not be applied in any other manner. Amounts paid
under the Policy shall
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remain uninvested and shall be disbursed by the Indenture Trustee to the Class A
Noteholder in accordance with Section 3.03(b) hereof, the Insurance Policy and
this Indenture. However, the amount of any payment of principal of or interest
on the Class A Notes to be paid from amounts in the Collection Account in
respect of payments on the Insurance Policy shall be noted as provided in
paragraph (c) below in the Class A Note Register, and in the Monthly Report.
(c) The Indenture Trustee shall keep a complete and accurate record of
the amount of interest and principal paid in respect of the Class A Notes from
moneys received under the Insurance Policy. The Insurer shall have the right to
inspect such records at reasonable times during normal business hours upon three
Business Days' prior notice to the Indenture Trustee at the expense of the
Insurer.
SECTION 3.08. Rights in Respect of Insolvency Proceedings.
(a) In the event that the Indenture Trustee has received a certified
copy of a final, nonappealable order of the appropriate court that any
distribution to any Class A Noteholder has been voided in whole or in part as a
preference payment under applicable bankruptcy or insolvency law, the Indenture
Trustee shall comply with the terms of the Insurance Policy relating to
Preference Amounts (as defined in the Insurance Policy).
(b) The Indenture Trustee shall promptly notify the Insurer of either
of the following as to which an applicable Responsible Officer of the Indenture
Trustee has actual knowledge: (i) the commencement of any proceeding by or
against the Issuer commenced under the United States Bankruptcy Code or any
other applicable United States federal or state bankruptcy, insolvency,
receivership, rehabilitation, or similar law (an "Insolvency Proceeding") or
(ii) the making of any claim in connection with any Insolvency Proceeding
seeking the avoidance as a preferential transfer (a "Preference Claim") of any
payment of principal of or interest on the Class A Notes. Each Class A
Noteholder, by its purchase of the Class A Notes, and the Indenture Trustee
hereby agree that, so long as an Insurer Default shall not have occurred and be
continuing, the Insurer may at any time during the continuation of an Insolvency
Proceeding direct all matters relating to such Insolvency Proceeding, including
(i) all matters relating to any Preference Claim, (ii) the direction of any
appeal of any order relating to any Preference Claim and (iii) the posting of
any surety, supersedes or performance bond pending any such appeal. In addition,
and without limitation of the foregoing, as set forth in Section 3.09, the
Insurer shall be subrogated to, and each of the Class A Noteholders and the
Indenture Trustee hereby delegate and assign, to the fullest extent permitted by
law, the rights of the Indenture Trustee and such Class A Noteholder in the
conduct of any Insolvency Proceeding, including all rights of any part to any
adversary proceeding action with respect to any court order issued in connection
with any such Insolvency Proceeding.
(c) Upon the occurrence of any of the events described in (a) or (b)
above, the Indenture Trustee shall furnish to the Insurer its records evidencing
the distributions of principal of and interest on the Class A Notes that have
been made and subsequently
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recovered from the Class A Noteholders and the dates on which such payments were
made.
SECTION 3.09. Effect of Payments by the Insurer; Subrogation.
(a) Anything herein to the contrary notwithstanding, any distribution
of principal of or interest on the Class A Notes that is made with moneys
received pursuant to the terms of the Insurance Policy shall not be considered
payment of the Class A Notes by the Issuer and shall not discharge the Issuer in
respect of such distribution. The Indenture Trustee acknowledges that, without
the need for any further action on the part of the Insurer, the Indenture
Trustee or the Class A Note Registrar, (i) to the extent the Insurer makes
payments, directly or indirectly, on account of principal of or interest on the
Class A Note to the Class A Noteholder thereof, the Insurer will be fully
subrogated to the rights of such Class A Noteholder to receive such principal
and interest from distributions of the assets of the Issuer and will be deemed
to the extent of the payments so made to be a Class A Noteholder and (ii) the
Insurer shall be paid principal and interest in its capacity as a Class A
Noteholder until all such payments by the Insurer have been fully reimbursed,
but only from the sources and in the manner provided herein for the distribution
of such principal and interest and in each case only after the Class A
Noteholder have received all payments of principal and interest due to them
under this Indenture on the related Payment Date.
(b) Without limiting the rights or interests of the Class A Noteholders
as otherwise set forth herein, so long as no Insurer Default exists or is not
continuing, the Indenture Trustee shall cooperate in all respects with any
reasonable request by the Insurer for action to preserve or enforce the
Insurer's rights or interests under this Indenture, including, upon the
occurrence of an Event of Default, a request to take any one or more of the
following actions:
(i) institute proceedings for the collection of all amounts
then payable on the Class A Notes or under this Indenture, enforce any
judgment obtained and collect moneys adjudged due; and
(ii) exercise any remedies of a secured party under the UCC
and take any other appropriate action to protect and enforce the rights
and remedies of the Insurer hereunder.
ARTICLE IV.
CONDITIONS OF ADVANCES
SECTION 4.01. Conditions Precedent to Initial Advance. The initial
Advance is subject to the condition precedent that the Indenture Trustee shall
have received, on or before the date of such Advance the following, each (unless
otherwise indicated) dated such date and in form and substance satisfactory to
such Indenture Trustee and the Insurer:
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(a) A certificate of the Secretary or Assistant Secretary of General
Partner (i) certifying that the limited partnership agreement of the Issuer
attached thereto is the current version of such document then in full force and
effect, (ii) attaching the certificate of limited partnership of the Issuer,
certified by the Delaware Secretary of State, (iii) certifying that the
resolutions of the board of directors of the General Partner of the Issuer
authorizing the transactions contemplated by the Transaction Documents remain in
full force and effect, and (iv) certifying as to the names and true signatures
of the officers of the General Partner authorized on the Issuer's behalf to sign
the Transaction Documents to be delivered by it (on which certificate the
Indenture Trustee may conclusively rely until such time as the Indenture Trustee
shall receive from General Partner of the Issuer a revised certificate meeting
the requirements of this subsection (a));
(b) A certificate of the Secretary or Assistant Secretary of the
General Partner of the Issuer (i) attaching the certificate of incorporation of
the General Partner, certified by the Delaware Secretary of State, (ii)
certifying that the by-laws of the General Partner attached thereto is the
current version of such document then in full force and effect, (iii) certifying
that the resolutions of the board of directors of the General Partner attached
thereto authorizing the transactions contemplated by the Transaction Documents
remain in full force and effect, and (iv) certifying as to the names and true
signatures of the officers authorized on its behalf to sign the Transaction
Documents to be delivered by it (on which certificate the Indenture Trustee may
conclusively rely until such time as the Indenture Trustee shall receive from
General Partner a revised certificate meeting the requirements of this
subsection (b));
(c) A certificate of the Secretary or Assistant Secretary of EFG (i)
attaching the certificate of incorporation of EFG, certified by the Delaware
Secretary of State, (ii) certifying that the by-laws of EFG attached thereto is
the current version of such document then in full force and effect, (iii)
certifying that the resolutions of the board of directors of EFG attached
thereto authorizing the transactions contemplated by the Transaction Documents
remain in full force and effect, and (iv) certifying as to the names and true
signatures of the officers authorized on its behalf to sign the Transaction
Documents to be delivered by it (on which certificate the Indenture Trustee may
conclusively rely until such time as the Indenture Trustee shall receive from
EFG a revised certificate meeting the requirements of this subsection (c));
(d) A certificate of the Secretary or Assistant Secretary of the Master
Servicer (i) attaching the certificate of incorporation of the Master Servicer,
certified by the Delaware Secretary of State, (ii) certifying that the by-laws
of the Master Servicer attached thereto is the current version of such document
then in full force and effect, (iii) certifying that the resolutions of the
board of directors of the Master Servicer attached thereto authorizing the
transactions contemplated by the Transaction Documents remain in full force and
effect, and (iv) certifying as to the names and true signatures of the officers
authorized on its behalf to sign the Transaction Documents to be delivered by it
(on which certificate the Indenture Trustee may conclusively rely until such
time as the Indenture Trustee shall receive from the Master Servicer a revised
certificate meeting the requirements of this subsection (d));
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(e) Executed financing statements on Form UCC-1 naming (i) the Issuer
as the debtor, and the Indenture Trustee, for the benefit of the Class A
Noteholders and the Insurer, as the secured party, with respect to the Private
Student Loans in proper form for filing in the offices of the Secretary of State
of Massachusetts, and (ii) the Eligible Lender Trustee as the debtor, and the
Indenture Trustee, for the benefit of the Class A Noteholders and the Insurer,
as the secured party, with respect to the Federal Student Loans in proper form
for filing in the offices of the Secretary of State of Illinois, and in each
case such other offices, if any, in which filings are necessary under the UCC or
any comparable law of all appropriate jurisdictions to perfect the Indenture
Trustee's security interest in the Collateral, for the benefit of the Class A
Noteholders and the Insurer;
(f) A search report as of a recent date acceptable to the Indenture
Trustee and the Insurer provided in writing to the Initial Class A Noteholder
and the Insurer by the Issuer, in a form acceptable to the Initial Class A
Noteholder and the Insurer, listing all effective financing statements that name
the Issuer, General Partner or EFG as debtor and that are filed in the
jurisdictions in which filings were made pursuant to subsection (e) above and in
such other jurisdictions that the Indenture Trustee and the Insurer shall
reasonably request, together with copies of such financing statements (none of
which shall cover any Collateral or if so covered, the Indenture Trustee and the
Insurer shall have received duly executed termination statements with respect
thereto);
(g) Executed copies of the following opinions of Weil, Gotshal &
Manges, LLP special New York counsel to the Issuer, Potter Anderson & Corroon
LLP, special Delaware counsel to the Issuer, and Burns & Levinson, LLP, special
Massachusetts counsel to the Issuer, severally as to the following in aggregate
(which shall be in form and substance satisfactory to the Insurer)
(i) due formation, organization and qualification of the
Issuer, EFG, and the General Partner, and authorization, execution,
delivery and enforceability of Transaction Documents and other general
corporate or organizational matters related thereto;
(ii) validity/perfection/priority of security interest of
Indenture Trustee in the Federal Student Loans included in the Financed
Student Loans;
(iii) validity/perfection of security interest of Indenture
Trustee in the Private Student Loans included in the Financed Student
Loans; and
(iv) the opinion under federal securities law that the Class A
Notes do not need to be registered under the Securities Act;
(h) Executed copies of the following opinions of Weil, Gotshal &
Manges, LLP as follows (which shall be in form and substance satisfactory to the
Insurer):
(i) treatment of the Class A Notes as debt for federal income
tax purposes;
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(ii) true conveyance opinion regarding conveyance of Student
Loans by EFG and First Chicago, in its capacity as eligible lender
trustee for EFG, to the Issuer and the Eligible Lender Trustee under
the Purchase and Contribution Agreement; and
(iii) substantive consolidation opinion to the effect that
neither the Issuer nor the General Partner would be consolidated with
EFG upon a bankruptcy of EFG.
(i) Opinion of Dean, Blakey & Moskowitz as to compliance of transaction
with requirements of Higher Education Act;
(j) Opinion of Dean, Blakey & Moskowitz as to whether First Chicago is
an eligible lender trustee under the requirements of Higher Education Act;
(k) Letters from each of the Rating Agencies stating that the
Commercial Paper shall be rated at least "A-1" by S&P and "P-1" by Moody's, and
that the Class A Note shall be rated "AAA" by S&P and "Aaa" by Moody's;
(l) The Class A Note duly executed by the Issuer;
(m) The Insurance Policy, duly executed by the Insurer and in full
force and effect;
(n) Copies of the Master Servicing Agreement and each Subservicing
Agreement (including all amendments thereto), duly executed by the Master
Servicer or the applicable Sub-Servicer and the Issuer and certified by the
Issuer as being a true and correct copy thereof;
(o) Copies of the Custodial Services Agreements, duly executed by the
Seller, the Purchaser, the Master Servicer, each applicable Sub-Servicer, and
Indenture Trustee;
(p) Copies of each Student Loan Guaranty Agreement with respect to the
Federal Student Loans (including all amendments thereto), duly executed by the
applicable Student Loan Guarantor and First Chicago, together with the
applicable Letter to Guarantor, if any, from EFG, certified by the Issuer as
being a true and correct copy thereof;
(q) Copies of each Student Loan Guaranty Agreement with respect to the
Private Student Loans (including all amendments thereto), duly executed by the
applicable Student Loan Guarantor and the Issuer together with the applicable
Letter to Guarantor, if any, from EFG, certified by the Issuer as being a true
and correct copy thereof;
(r) A copy of the Trust Agreement, duly executed by EFG-I, LP and First
Chicago and amended by the First Amendment, and a copy of the written notice
provided thereunder to First Chicago;
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(s) A copy of the Purchase and Contribution Agreement, duly executed by
EFG and the Issuer;
(t) A copy of the Computer Tape and Monthly Report showing the initial
pool of Student Loans securing the initial Advances of the Class A Noteholder
hereunder;
(u) Copy of the Insurance Agreement, duly executed by the Insurer, the
Issuer, the General Partner, EFG, the Master Servicer, the Indenture Trustee and
the Eligible Lender Trustee;
(v) Copy of the Guaranty Agreement duly executed by the Seller;
(w) Copy of the Bank One Custody Agreement, duly executed by the
Seller, the Issuer, the Master Servicer, the Indenture Trustee and Bank One
Trust Company, NA, as custodian.
(x) such other opinions, documents and certificates reasonably required
by the Rating Agencies and the Insurer.
SECTION 4.02. Conditions Precedent to All Advances. Each Advance
(including the initial Advance) and each withdrawal from the Collection Account
pursuant to clause sixth (b) and tenth of Section 3.03(b)(i) to fund the
inclusion of additional Financed Student Loans in the Collateral shall be
subject to the further conditions precedent that on the date of such Advance or
withdrawal the following statements shall be true:
(a) the representations and warranties contained in Section 5.01 are
correct in all material respects on and as of such day as though made on and as
of such day and shall be deemed to have been made (and to be correct in all
material respects) on such day (and the Issuer by accepting the amount of such
Advances or withdrawal shall be deemed to have certified to such effect);
(b) no event has occurred and is continuing, or would result from such
Advance or withdrawal that constitutes an Event of Default or Unmatured Event of
Default (and the Issuer by accepting the amount of such Advance or withdrawal
shall be deemed to have certified to such effect);
(c) the Indenture Trustee shall have received an updated Student Loan
Schedule and Computer Tape reflecting the addition to the Collateral of the
Student Loans to be included as Financed Student Loans in connection with such
Advance or withdrawal, and such Advance or withdrawal shall not result in a
Collateral Deficiency;
(d) the Amortization Period Commencement Date shall not have occurred
(and the Issuer by accepting the amount of such Advance or withdrawal shall be
deemed to have certified to such effect);
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(e) the applicable bailee under the applicable Subservicing Agreement,
Custodial Services Agreement or Bank One Custody Agreement, or, if applicable,
pursuant to the Master Servicing Agreement, for the Indenture Trustee for the
benefit of the Class A Noteholders and the Insurer, shall have received the
original Student Loan Notes with respect to the Private Student Loans that will
be acquired or otherwise financed with the proceeds of such Advance or
withdrawal;
(f) all conditions precedent to the Issuer's acquisition of the Student
Loans to be acquired or otherwise funded with the proceeds of such Advance or
withdrawal (other than the payment of the Purchase Price therefor) shall have
been satisfied;
(g) the Indenture Trustee shall have received releases or termination
statements on Form UCC-3 and any other documents necessary to evidence or
release any security interest (other than that of the Indenture Trustee) in the
Student Loans to be acquired or otherwise funded with the proceeds of such
Advance or withdrawal, to the extent required for any such prior security
interest to be terminated; and if such Advance or withdrawal, will result in the
inclusion of any additional Financed Student Loans in the Collateral that are
not included in the Form UCC-1 financing statements filed pursuant to Section
4.01(e), executed financing statements on Form UCC-1 meeting the requirements of
Section 4.01(e) shall have been filed in respect of such additional Financed
Student Loans;
(h) the applicable Student Loan Guaranty Agreements shall be in full
force and effect with respect to all Student Loans to be financed as Eligible
Student Loans as part of such Advance;
(i) the amount on deposit in the Reserve Account equals the Initial
Specified Reserve Account Balance (in the case of the initial Advance) or the
Specified Reserve Account Balance (in the case of any other Advance) after
giving effect to such Advance;
(j) the Insurance Policy shall be in full force and effect and the
Insurer shall not be in default of any of its obligations thereunder; and
(k) the Class A Notes shall be rated at least AA, by S&P, Aa2 by
Moody's and AA by Fitch.
ARTICLE V.
REPRESENTATIONS AND WARRANTIES
SECTION 5.01. Representations and Warranties of the Issuer. The Issuer
represents and warrants as follows:
(a) Organization, Powers. The Issuer is a limited partnership duly
organized, validly existing and in good standing under the laws of the State of
Delaware, has all necessary power as a limited partnership to carry on its
present business, is duly licensed
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or qualified in all jurisdictions where the nature of its activities require
such licensing or qualifying and where its failure to be so licensed or
qualified would not have a Material Adverse Effect on the Issuer; and has full
power, right and authority to enter into this Indenture, the other Transaction
Documents to which it is, or will be, a party and the transactions contemplated
hereby and thereby, to issue the Class A Notes and to perform each and all of
the matters and things herein and therein provided for. The Issuer has not been
known by any name other than "EFG-III, LP" and has not had any office other than
its office at 495 Station Avenue, South Yarmouth, Massachusetts 02664, and that
office is its chief executive office and principal place of business.
(b) Issuer Authority, etc. The execution, delivery and performance by
the Issuer of this Indenture, the Class A Notes and the other Transaction
Documents to which it is, or will be, a party and the transactions contemplated
hereby and thereby have been duly authorized by all necessary limited
partnership action and this Indenture, the Class A Notes, and such Transaction
Documents constitute the legal, valid and binding obligations of the Issuer
enforceable against the Issuer in accordance with their terms, except to the
extent that enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally and general
principles of equity, regardless of whether such enforceability is considered in
a proceeding in equity or law.
(c) Compliance with Laws and Contracts. The execution, delivery and
performance by the Issuer of this Indenture, the Class A Notes, and the other
Transaction Documents to which the Issuer is a party do not and will not (i)
violate, in any material respect, any provision of any law, rule, regulation,
order, writ, judgment, injunction, decree, determination or award to which the
Issuer or its property is subject, or of the limited partnership agreement and
certificate of limited partnership of the Issuer; (ii) result in a material
breach of or constitute a material default under the provisions of any
indenture, loan or credit agreement or any other material agreement, lease or
instrument to which the Issuer may be or is subject or by which it, or its
property, is bound; or (iii) result in, or require, the creation or imposition
of any Lien on or with respect of any of the material properties of the Issuer
other than the Lien in favor of the Indenture Trustee provided herein; and the
Issuer is not in violation of, or in default under, any such law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award or
any such indenture, agreement, lease or instrument except for violations or
defaults that singly or in the aggregate have not had nor would not have a
Material Adverse Effect on the Issuer.
(d) Governmental Approvals. The Issuer has obtained all authorizations,
consents, approvals, exemptions of or filings or registrations with all
governmental commissions, regulatory bodies, boards, bureaus, agencies and
instrumentalities, domestic or foreign, necessary to the conduct of its business
and with respect to which the failure to obtain would not have a Material
Adverse Effect on the Issuer, or necessary to the valid execution, delivery and
performance by the Issuer of this Indenture, the Class A Notes, and the other
Transaction Documents to which the Issuer is, or will be, a party (the
"Approvals"), and such Approvals remain in full force and effect.
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(e) Litigation. There is no action, suit, proceeding, inquiry or
investigation at law or in equity or before or by any court, public board or
body pending or, to the knowledge of the Issuer, overtly threatened in writing
against or affecting the Issuer wherein an unfavorable decision, ruling or
finding would have a Material Adverse Effect on the Issuer or which affects, or
purports to affect, the validity or enforceability against the Issuer of any
Transaction Document.
(f) Employee Benefit Plans. All "employee benefit plans" (as such term
is defined in ERISA) of the Issuer and each of its ERISA Affiliates (as defined
in ERISA) (individually, a "Plan" and collectively the "Plans") are in
compliance in all material respects with any applicable provisions of ERISA and
the regulations and published interpretations thereunder, except for compliance
amendments which may be required due to changes in such laws and regulations and
which were not addressed by the latest determination letters and for which the
retroactive amendment period has not expired. No Plan is insolvent or in
reorganization. No proceedings have been instituted to terminate any Plan, and
no conditions exist which would permit the institution of proceedings to
terminate any such Plan.
(g) Perfected Interest. Each Financed Student Loan, including the
related Student Loan Note, is owned by the Issuer or by the Eligible Lender
Trustee, on behalf of the Issuer, free and clear of any Lien other than the Lien
created hereby. Except for the filing of the financing statements referred to in
Section 4.01 and Section 4.02 and the execution and delivery of the Subservicing
Agreements, and, in the case of Financed Student Loans as to which there is no
Subservicer, the establishment of a custodial arrangement with a third party
bailee pursuant to the Master Servicing Agreement, no further action, including
any filing or recording of any document, is necessary in order to establish,
protect and perfect the first priority security interest of the Indenture
Trustee, for the benefit of the Class A Noteholders and the Insurer, in the
Collateral as against any third party in any applicable jurisdiction, including,
without limitation, any purchaser from, or creditor of, the Issuer. No financing
statement or other instrument similar in effect covering any of the Collateral
or any interest therein is on file in any recording office except such as may be
filed (i) in connection with any Lien arising solely as the result of any action
taken by the Indenture Trustee, (ii) in favor of the Indenture Trustee or (iii)
for which UCC termination statements have been filed or with respect to Liens
which by their terms do not require that a release be filed for the security
interest of the Indenture Trustee to be of first priority.
(h) Accuracy of Information. All information (including each Monthly
Report, Student Loan Schedule and Computer Tape) supplied by, or on behalf of,
the Issuer in writing to the Indenture Trustee in connection with this Indenture
or the transactions contemplated hereby is true and accurate in all material
respects as of the date thereof stated or certified.
(i) Defaults. No Event of Default or Unmatured Event of Default exists.
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(j) Margin Regulations. The use of all funds obtained by the Issuer
under this Indenture will not conflict with or contravene any of Regulations G,
T, U and X promulgated by the Board of Governors of the Federal Reserve System
from time to time.
(k) Offices. The chief place of business and chief executive office of
the Issuer are located at the address of the Issuer referred to in Section 9.02,
and the offices where the Issuer keeps all its books, records and documents
evidencing the Financed Student Loans are located at the addresses specified in
Schedule 5.01(k) (or at such other locations, notified to the Indenture Trustee
in accordance with Section 6.01(e), in jurisdictions where all action necessary
to maintain the Indenture Trustee's first priority perfected interest, for the
benefit of the Class A Noteholders and the Insurer, in the Collateral has been
taken and completed).
(l) Eligible Student Loans. Each Student Loan, as of the date of its
inclusion in the Collateral, is an Eligible Student Loan.
(m) The Issuer Not an Investment Company. The Issuer is not required to
register as an "investment company" within the meaning of the Investment Company
Act.
SECTION 5.02. Reassignment upon Breach. The Issuer or the Indenture
Trustee, as the case may be, shall inform the other parties to this Indenture,
the Class A Noteholders and the Insurer promptly, in writing, upon the discovery
of any breach in any material respects of the representations and warranties
made by the Issuer pursuant to Sections 5.01(g) or (l) or any breach in any
material respects of the covenants of the Issuer made pursuant to Section 6.03;
provided that a material breach of such representations, warranties and
covenants shall be deemed to have occurred only if the related Student Loan
Guaranty Agreements (or, in the case of TuitionGard, the TuitionGard Policies)
are affected. Unless any such breach shall have been cured within 30 days (or in
the sole discretion of the Insurer, 60 days) following the discovery thereof by
the Issuer or receipt by the Issuer of written notice from the Indenture Trustee
of such breach, the Financed Student Loan as to which such representation and
warranty or covenant relates shall be released from the Collateral and
reassigned to the Eligible Lender Trustee (a "Reassignment"), as of the first
Transfer Date succeeding the end of such 30-day or 60-day period, respectively.
In consideration of and simultaneously with the reassignment of such Financed
Student Loan, the Issuer shall deposit to the Collection Account on such
Transfer Date immediately available funds equal to the Purchase Amount.
Notwithstanding the foregoing, so long as no Event of Default shall have
occurred and be continuing, during the Revolving Period, the Issuer may, at its
option in lieu of depositing such Purchase Amount to the Collection Account on
such date, may pledge, or in the case of Federal Student Loans, cause the
Eligible Lender Trustee to pledge, to the Indenture Trustee on such date for
inclusion in the Collateral a new Eligible Student Loan in substitution for such
Financed Student Loan having a Principal Balance plus accrued and unpaid
interest at least equal to the Substitution Amount of the Financed Student Loan
being substituted, by delivering an updated Student Loan
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Schedule to the Indenture Trustee reflecting such substitution (a
"Substitution") and, if such new Eligible Student Loan is a Private Student
Loan, by delivering to the applicable bailee for the Indenture Trustee under the
applicable Subservicing Agreement and the related Custodial Services Agreement
or the Bank One Custody Agreement, as applicable, or, if applicable, pursuant to
the Master Servicing Agreement if not already in its possession, the original
Student Loan Note for the such new Eligible Student Loan. The Indenture Trustee
shall execute such documents reasonably requested by the Issuer or the Insurer
in order to effect such reassignment and to release the Indenture Trustee's Lien
thereunder. The sole remedy of the Indenture Trustee, the Insurer or the Class A
Noteholders with respect to a breach of representations and warranties pursuant
to Sections 5.01(g) and (l) and the covenants contained in Section 6.03 shall be
to require the Issuer to deposit the Purchase Amount or substitute Financed
Student Loans as provided above.
SECTION 5.03. Representations and Warranties of General Partner. The
General Partner hereby represents and warrants as follows:
(a) Organization, Corporate Powers. The General Partner is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware, has all necessary corporate power to carry on its
present business, is duly licensed or qualified in all jurisdictions where the
nature of its activities require such licensing or qualifying and where its
failure to be so licensed or qualified would not have a Material Adverse Effect
on the Issuer.
(b) Issuer Authority, etc. The execution, delivery and performance by
the General Partner of the limited partnership agreement of the Issuer and the
transactions contemplated thereby have been duly authorized by all necessary
corporate action and the limited partnership agreement constitutes the legal,
valid and binding obligation of the General Partner enforceable against the
General Partner in accordance with its terms.
(c) Compliance with Laws and Contracts. The execution, delivery and
performance by the General Partner of its duties under the limited partnership
agreement of the Issuer will not (i) violate, in any material respect, any
provision of any law, rule, regulation, order, writ, judgment, injunction,
decree, determination or award to which the General Partner or its property is
subject, or of the certificate of incorporation or bylaws of the General
Partner; (ii) result in a material breach of or constitute a material default
under the provisions of any indenture, loan or credit agreement or any other
material agreement, lease or instrument to which the General Partner may be or
is subject or by which it, or its property, is bound; or (iii) result in, or
require, the creation or imposition of any Lien on or with respect of any of the
material properties of the General Partner, which in any case would have a
Material Adverse Effect on the General Partner ,and the General Partner is not
in violation of, or in default under, any such law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award or any such
indenture, agreement, lease or instrument except for violations or defaults that
singly or in the aggregate have not had nor would not have a Material Adverse
Effect on the General Partner.
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(d) Governmental Approvals. The General Partner has obtained all
authorizations, consents, approvals, exemptions of or filings or registrations
with all governmental commissions, regulatory bodies, boards, bureaus, agencies
and instrumentalities, domestic or foreign, necessary to the conduct of its
business and with respect to which the failure to obtain would not have a
Material Adverse Effect on the General Partner.
(e) Litigation. There is no action, suit, proceeding, inquiry or
investigation at law or in equity or before or by any court, public board or
body pending or, to the knowledge of the General Partner, overtly threatened in
writing against or affecting the General Partner wherein an unfavorable
decision, ruling or finding would have a Material Adverse Effect on the General
Partner or which affects, or purports to affect, the validity or enforceability
against the General Partner of the limited partnership agreement of the Issuer.
SECTION 5.04. Representations and Warranties of Indenture Trustee. The
Indenture Trustee hereby represents and warrants as follows:
(a) Due Organization. It is a national banking association duly
organized and validly existing in good standing under the laws of the United
States. It has all requisite corporate power and authority to execute, deliver
and perform its obligations under this Indenture.
(b) Authorization. It has taken all corporate action necessary to
authorize the execution and delivery by it of this Indenture, and this Indenture
will be executed and delivered by one of its officers who is duly authorized to
execute and deliver this Indenture on its behalf.
(c) Eligible Lender. It is an "eligible lender" as such term is defined
in Section 435(d) of the Higher Education Act, for purposes of being pledgee of
the Financed Student Loans as contemplated by this Indenture.
(d) Binding Obligation. This Indenture constitutes, and each other
Transaction Document to be executed by the Indenture Trustee when duly executed
and delivered, will constitute, a legal, valid and binding obligation of the
Indenture Trustee, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization, or
other similar laws affecting the enforcement of creditors' rights generally and
by general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
SECTION 5.05. Representations and Warranties of Eligible Lender
Trustee. The Eligible Lender Trustee hereby represents and warrants as follows:
(a) Due Organization. It is a national banking association duly
organized and validly existing in good standing under the laws of the United
States. It has all requisite corporate power and authority to execute and
deliver this Indenture.
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(b) Authorization. It has taken all corporate action necessary to
authorize the execution and delivery by it of this Indenture, and this Indenture
will be executed and delivered by one of its officers who is duly authorized to
execute and deliver this Indenture on its behalf.
(c) Eligible Lender. It is an "eligible lender" as such term is defined
in Section 435(d) of the Higher Education Act.
(d) Binding Obligation. This Indenture constitutes, and each other
Transaction Document to be executed by the Eligible Lender Trustee when duly
executed and delivered, will constitute, a legal, valid and binding obligation
of the Eligible Lender Trustee, enforceable in accordance with its terms, except
as enforceability may be limited by bankruptcy, insolvency, reorganization, or
other similar laws affecting the enforcement of creditors' rights generally and
by general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
ARTICLE VI.
GENERAL COVENANTS OF THE ISSUER
SECTION 6.01. Affirmative Covenants of the Issuer. From the date hereof
until the Final Payout Date, the Issuer shall:
(a) Compliance with Laws, Etc. Comply in all material respects with all
applicable laws, rules, regulations and orders, including those with respect to
the Financed Student Loans, except to the extent that failure to comply with
such laws, rules, regulations and orders would not have a Material Adverse
Effect on the Issuer.
(b) Preservation of Existence. Preserve and maintain its existence as a
limited partnership, and its rights, franchises and privileges in the
jurisdiction of its formation, and qualify and remain qualified in good standing
as a foreign limited partnership company in each jurisdiction where the failure
to preserve and maintain such existence, rights, franchises, privileges and
qualification would not have a Material Adverse Effect on the Issuer. The Issuer
will maintain its status as a pass-through entity for federal income tax
purposes.
(c) Keeping of Records and Books of Account. Maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records identifying and evidencing the Financed Student
Loans and each Sub-Servicer servicing each Financed Student Loan in the event of
the destruction of the originals thereof), and keep and maintain, or cause to be
kept and maintained, all documents, books, records and other information
reasonably necessary or advisable for the collection of all the Financed Student
Loans (including, without limitation, records adequate to permit the daily
identification of each new Financed Student Loan included in the Collateral from
time to time and all Collections of and adjustments to each existing Financed
Student Loan).
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(d) Performance and Compliance with Student Loans. At its expense,
timely and fully perform and comply, and cause the Eligible Lender Trustee to
perform and comply, with all material provisions, covenants and other promises
required to be observed by each of them under the Higher Education Act, Student
Loan Notes, the Student Loan Guaranty Agreements (or in the case of TuitionGard,
the TuitionGard Policies), the Master Servicing Agreement, the Subservicing
Agreements, and other agreements to which the Issuer is a party related to the
Collateral.
(e) Location of Records. Keep its chief place of business and chief
executive office, and the offices where it keeps its records concerning the
Financed Student Loans and all agreements related to such Collateral (and all
original documents relating thereto, unless such documents have been delivered
to the Master Servicer, related Sub-Servicer or a bailee thereof), at the
address(es) of the Issuer referred to in Schedule 5.01(k) or, upon 30 days'
prior written notice to the Indenture Trustee, at such other locations in
jurisdictions where all action required to maintain the Indenture Trustee's
first priority perfected interest, for the benefit of the Class A Noteholders
and the Insurer, in the Financed Student Loans shall have been taken and
completed.
(f) Administration of the Program. Administer, operate and maintain, or
cause the Eligible Lender Trustee to administer, operate and maintain, its
student loan program in such manner as to ensure that such program and the
Financed Student Loans will benefit, to the extent applicable and in all
material respects, from (i) the Student Loan Guaranty Agreements (or in the case
of TuitionGard, the TuitionGard Policies) and (ii) if such Student Loan is a
Federal Student Loan, the Federal Family Education Loan Program authorized under
the Higher Education Act and the federal program of reimbursement for Federal
Student Loans pursuant to the Higher Education Act, or from any other federal
statute providing for such Federal Family Education Loan Program.
(g) Student Loan Guaranty Agreements and Servicing Agreements;
Enforcement. (i) Maintain, and cause the Eligible Lender Trustee, as applicable,
to maintain, in effect all Student Loan Guaranty Agreements (or in the case of
TuitionGard, the TuitionGard Policies), the Master Servicing Agreements, the
Subservicing Agreements, and the Custodial Services Agreement, diligently and
promptly enforce its rights thereunder and take, or use commercially reasonable
steps to cause the Master Servicer to take, all reasonable steps, actions and
proceedings necessary or appropriate for the enforcement of all material terms,
covenants and conditions of each Financed Student Loan, including the prompt
payment of all principal and interest payments and all other amounts due with
respect to such Financed Student Loan, including all Subsidy Payments if such
Financed Student Loan is a Federal Student Loan, and all Student Loan Guaranty
Payments under the applicable Student Loan Guaranty Agreement (or, in the case
of TuitionGard, under the TuitionGard Policies), except for such deferments and
forbearance permitted with respect to Federal Student Loans under the Higher
Education Act, and (ii) enter, and cause the Eligible Lender Trustee to enter,
into Student Loan Guaranty Agreements and the Master Servicing Agreement and the
Subservicing Agreements so that all Financed Student Loans are covered thereby.
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(h) Uniform Commercial Code Continuation Statements. The Issuer shall
file Uniform Commercial Code continuation statements to the Uniform Commercial
Code financing statements in favor of the Indenture Trustee originally filed at
the delivery of this Indenture or as contemplated in Section 4.02(g) prior to
every fifth year following the filing of such original financing statements or
continuation statements, as the case may be.
(i) Protection of Collateral. The Issuer shall from time to time
execute and deliver all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance
and other instruments, and shall take such other action as may be necessary or
advisable to secure the rights and remedies of the Indenture Trustee, the
Insurer and the Class A Noteholders hereunder, including, but not limited to,
actions to:
(A) maintain or preserve the lien and security interest of
this Indenture or carry out more effectively the purposes hereof;
(B) perfect, publish notice of or protect the validity of any
grant made or to be made by this Indenture;
(C) collect payments due on the Financed Student Loans; or
(D) preserve and defend title to the Collateral and the rights
of the Indenture Trustee, the Insurer and the Class A Noteholders in
such Collateral against the claims of all persons and parties. It shall
be the responsibility of the Issuer to prepare such instruments.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute any financing statement, continuation statement or
other instrument required to be executed pursuant to this Section 6.01.
SECTION 6.02. Reporting Requirements of the Issuer. From the date
hereof until the Final Payout Date, the Issuer shall furnish to the Eligible
Lender Trustee, the Indenture Trustee, the CP Vehicle, the Liquidity Agent and
the Insurer:
(a) Quarterly Financial Statements. As soon as available and in any
event within 60 days after the end of each of the first three quarters of each
fiscal year of the Issuer, the Issuer's consolidated statement of income and
statement of changes in cash flow for such quarter and balance sheet as of the
end of such quarter presented fairly in accordance with generally accepted
accounting principles;
(b) Annual Financial Statements. As soon as available and in any event
within 120 days after the end of each fiscal year of the Issuer, the Issuer's
statement of income and statement of changes in cash flow for such year and
balance sheet as of the end of such year in each case presented fairly in
accordance with generally accepted accounting principles;
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(c) Quarterly Officer's Certificate. Within 30 days after the last day
of each calendar quarter, an officer's certificate executed by the chief
financial officer or treasurer of the General Partner, certifying that, as of
such calendar month, (i) the Issuer is in compliance with all of the terms,
conditions and requirements of the Transaction Documents, and (ii) no Event of
Default or Unmatured Event of Default under this Indenture or other event of
default as described in any other Transaction Documents exists;
(d) Monthly Report. No later than the tenth Business Day of each month,
a Monthly Report for the immediately preceding calendar month, substantially in
the form of Exhibit 6.02(d), and a Student Loan Schedule and Computer Tape as of
the final day of the preceding calendar month;
(e) DOE Audit Materials. Within 30 days after the last day of each
calendar month, notice of all DOE audits of or any other actions of a material
nature by the DOE with respect to, the Issuer or any Affiliate thereof, to the
extent that it has knowledge thereof, of the Master Servicer, or any
Sub-Servicer or any Student Loan Guarantor under any Student Loan Guaranty
Agreement, and, in each case, notice of the results thereof (including, with
respect to the Student Loan Guarantors of the Financed Student Loans that are
Federal Student Loans, but not limited to, the rate of reimbursement by the DOE
for the Student Loan Guarantors under the related Student Loan Guaranty
Agreements, to the extent that such rate is below the maximum permitted under
the Higher Education Act (i.e., 95% for Student Loans disbursed on or after
October 1, 1998, 98% with respect to Student Loans disbursed on or after
October 1, 1993, and 100% for Student Loans disbursed prior thereto);
(f) Reports of Independent Accountants. As promptly as practicable,
copies of any reports or written comments (including, without limitation, audit
reports, management letters and any other reports or communications with respect
to the internal control structure) relating to the Issuer submitted by its
independent accountants;
(g) Event of Defaults. Immediately upon becoming aware of the existence
of any Event of Default or Unmatured Event of Default, a written statement of an
Authorized Officer of the Issuer setting forth details of such event and the
action that the Issuer proposes to take with respect thereto; and immediately
upon becoming aware of any Servicer Event of Default, written notice thereof;
(h) Underwriting Guidelines. Promptly after the occurrence thereof,
written notice of material changes in the Underwriting Guidelines;
In addition, the Issuer shall promptly furnish a copy of each
Monthly Report upon delivery thereof to the Indenture Trustee and the Eligible
Lender Trustee, to (i) S&P at Standard & Poor's Ratings Group, 55 Water Street,
New York, New York 10041, Attention: ABS Surveillance Department, (ii) Moody's
at Moody's Investors Service, Inc., 99 Church Street, New York, New York 10007,
Attention: ABS Monitoring Department Telephone, (212) 553-0300, Telecopy,
(212) 553-4600, and (iii) Fitch at
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Fitch IBCA, Inc, One State Street Plaza, 29th Floor, New York, New York 10004,
Attention: Asset-Backed Surveillance Group, Telephone (212) 908-0598, Telecopy
(212) 635-0476.
SECTION 6.03. Servicing Covenants. From the date hereof until the Final
Payout Date, the Issuer shall comply with the following covenants.
(a) Servicing. The Issuer shall cause the Master Servicer and
Subservicers to service, administer and make collections with respect to the
Financed Student Loans in accordance with the Master Servicing Agreement and
Subservicing Agreements and in all material respects with all applicable Federal
and State laws, including all applicable standards, guidelines and requirements
of the Higher Education Act and any Student Loan Guaranty Agreement (or, in the
case of TuitionGard, under the TuitionGard Policies), the failure to comply with
which would adversely affect the eligibility of one or more of the Financed
Student Loans for Subsidy Payments or Student Loan Guaranty Payments, as
applicable, or would have a Material Adverse Effect on the Issuer.
(b) Collection of Financed Student Loan Payments. The Issuer shall
cause the Master Servicer and Subservicers to make reasonable efforts (including
all efforts that may be specified under the Higher Education Act with respect to
Federal Student Loans or any Student Loan Guaranty Agreement (or, in the case of
TuitionGard, under the TuitionGard Policies)), in each case in accordance with
the terms of the Master Servicing Agreement and Subservicing Agreements, to
collect all payments called for under the terms and provisions of the Financed
Student Loans as and when the same shall become due.
(c) Collection of Student Loan Guaranty Payments. The Issuer shall (or
shall cause the Master Servicer and Subservicers to) make reasonable efforts to
claim, pursue and collect all Student Loan Guaranty Payments from the Student
Loan Guarantors pursuant to the Student Loan Guaranty Agreements (or, in the
case of TuitionGard, pursuant to the TuitionGard Policies) with respect to any
of the Financed Student Loans as and when the same shall become due and payable,
and shall comply, and shall cause the Master Servicer and Subservicers to
comply, in all material respects with all applicable laws and agreements with
respect to claiming, pursuing and collecting such payments, in each case in
accordance with the terms of the Master Servicing Agreement and Subservicing
Agreements. In connection therewith, the Master Servicer is hereby authorized
and empowered to convey to any Student Loan Guarantor the Student Loan Note and
the related Financed Student Loan file representing any Financed Student Loan in
connection with submitting a claim to such Student Loan Guarantor for a Student
Loan Guaranty Payment in accordance with the terms of the applicable Student
Loan Guaranty Agreement (or, in the case of TuitionGard, the applicable
TuitionGard Policy) whereupon the Lien of the Indenture Trustee relating to such
Financed Student Loan shall be released without any further action of any kind.
(d) Collection of Subsidy Payments. The Issuer shall make or cause to
be made reasonable efforts to claim, pursue and collect all Subsidy Payments
from the DOE
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with respect to any of the Financed Student Loans that are Federal Student Loans
as and when the same shall become due and payable, shall comply or undertake
commercially reasonable efforts to cause compliance with in all material
respects with all applicable laws and agreements with respect to claiming,
pursuing and collecting such payments. All amounts so collected by the Issuer or
otherwise shall constitute Collections for the applicable Collection Period and
shall be deposited into the Collection Account in accordance with Section 3.03
(a). In connection therewith, the Issuer, shall prepare and file or cause there
to be prepared with the DOE on a timely basis all claims, forms and other
documents and filings necessary or appropriate in connection with the claiming
of Subsidy Payments and otherwise pursuing and collecting such Subsidy Payments
from the DOE.
(e) Realization upon Financed Student Loans. The Issuer shall cause the
Master Servicer and Subservicers to use reasonable efforts consistent with
customary servicing practices and procedures and subject to the Master Servicing
Agreement and the Subservicing Agreements, including all efforts that may be
specified under any applicable Student Loan Guaranty Agreement (or, in the case
of TuitionGard, the TuitionGard Policy) and, with respect to Federal Student
Loans, the Higher Education Act, in its servicing of any delinquent Financed
Student Loans.
SECTION 6.04. Negative Covenants of the Issuer. From the date hereof
until the Final Payout Date, the Issuer shall not:
(a) Sales, Liens, Etc. Except as otherwise provided herein or in any
other Transaction Document and except for properties and assets released from
the Collateral in accordance with the terms hereof, sell, assign (by operation
of law or otherwise) or otherwise dispose of, or create or suffer to exist (or
permit the Eligible Lender Trustee to create or suffer to exist) any Lien upon
or with respect to, any Financed Student Loan or other Collateral, or any
interest therein, or any account to which any Collections of any Financed
Student Loans or other Collateral are sent, or any right to receive income or
proceeds from or in respect of any of the foregoing, unless directed to do so by
the Indenture Trustee (which direction the Indenture Trustee shall not give
without the prior written consent of the Insurer), provided that the Issuer may
(i) transfer a Financed Student Loan to a Student Loan Guarantor in order to
realize the benefits of a Student Loan Guaranty Agreement or TuitionGard Policy,
as applicable and (ii) transfer any Financed Student Loan for securitization or
consolidation purposes so long as the Issuer shall have deposited to the
Collection Account an amount equal to the product of the Premium Percentage and
the Principal Balance thereof, plus accrued and unpaid interest thereon.
(b) Extension or Amendment. Extend, terminate, waive, amend or
otherwise modify the terms of any Financed Student Loan, Student Loan Guaranty
Agreement TuitionGard Policy or Subservicing Agreement or the Master Servicing
Agreement in any manner that would have a Material Adverse Effect on the Issuer.
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(c) Change in Business. Enter into any financing arrangement with any
other Person, or make any change in the character of its business, which change
would impair the collectibility of any Financed Student Loan or otherwise
materially adversely affect the interests or remedies of the Class A Noteholder
or the Indenture Trustee under this Indenture or any other Transaction Document.
(d) Consolidation, Mergers, etc. Merge into, or consolidate with, one
or more corporations or other entities where the Issuer is not the surviving
entity, or be a party to any transaction involving the transfer of any
substantial portion of its assets, revenues or properties to or with any
corporation or other Person, except in connection with any securitization or
similar type of financing completed by EFG or any Affiliate thereof that does
not result in a Collateral Deficiency.
(e) Use of Proceeds. Use the proceeds of any Advance for any purpose
other than acquiring Student Loans and paying fees and expenses incurred in
connection with the transactions contemplated by this Indenture.
(f) Underwriting Policy. Alter, amend, modify or change in any material
way its Underwriting Guidelines with respect to the Financed Student Loans
(including the addition of, or change to, any incentive program offered to
borrowers under student loans) without (i) the consent of the Insurer, and (ii)
receiving written confirmation from the Rating Agencies that such alteration,
amendment, modification or change will not result in the reduction or withdrawal
of the ratings of the Class A Notes.
ARTICLE VII.
EARLY AMORTIZATION EVENTS; EVENTS OF DEFAULT
SECTION 7.01. Early Amortization Events. The following events shall be
"Early Amortization Events" hereunder:
(a) The Issuer shall fail to make (i) any payment or deposit to be made
by it hereunder when due (other than a payment of the Class A Note Principal
Amount or Class A Additional Interest Amount) and such failure shall continue
unremedied for three Business Days after the Issuer has knowledge or has
received notice thereof, or (ii) any payment of any Class A Additional Interest
Payment Amount, shall not be paid for three (3) consecutive Payment Dates
thereafter, in each case without giving effect to any payments made by the
Insurer under the Insurance Policy; or
(b) Any representation or warranty (other than a representation and
warranty made pursuant to Section 5.01(g) or (l) with respect to a Financed
Student Loan as to which the Issuer has complied with Section 5.02) made or
deemed to be made by the Issuer under or in connection with this Indenture shall
prove to have been false or incorrect in a material adverse respect when made
and shall not have been corrected within forty-five (45) days after notice
thereof is given to the Issuer by the Indenture Trustee; provided, however, that
if the Issuer demonstrates that it is making a good-faith
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attempt to cure such breach, such forty-five (45) day period may be extended by
the Indenture Trustee (with the prior consent of the Insurer) to ninety (90)
days; or
(c) EFG shall fail to perform or observe any other term, covenant or
agreement contained in this Indenture or any of the other Transaction Documents
on its part to be performed or observed and any such failure shall remain
unremedied for forty-five (45) days after notice thereof is given to the Issuer
by the Indenture Trustee; provided, however, that if the Issuer demonstrates
that it is making a good-faith attempt to cure such breach, such forty-five (45)
day period may be extended by the Indenture Trustee (with the prior consent of
the Insurer) to ninety (90) days; or
(d) A final judgment by any competent court in the United States of
America for the payment of money in any amount is rendered against the Issuer or
the General Partner, and the same remains undischarged or unpaid for a period of
sixty (60) days during which execution of judgment is not effectively stayed; or
(e) The Internal Revenue Service shall file notice of a lien pursuant
to Section 6323 of the Internal Revenue Code with regard to any of the assets of
the Issuer and such lien shall not have been released within twenty (20)
Business Days, or the Pension Benefit Guarantee Corporation shall, or shall
indicate its intention to, file notice of a lien pursuant to Section 4068 of the
ERISA with regard to any of the assets of the Issuer or any of its Affiliates
and such lien shall not have been released within twenty (20) Business Days
unless the imposition of any such liens would not have a Material Adverse Effect
on the Issuer; or
(f) A Servicer Event of Default shall have occurred, the Master
Servicing Agreement shall not be in full force and effect for any reason, or the
Indenture Trustee shall have received written notice from the Insurer, or a
Rating Agency that material difficulties have arisen with respect to the Master
Servicer or its performance under the Master Servicing Agreement and, in such
case, the Master Servicer or the Master Servicing Agreement, as the case may be,
shall not be replaced by a successor Master Servicer or a successor Master
Servicing Agreement, as the case may be, (i) acceptable to each of the Indenture
Trustee and the Insurer, within forty-five (45) days of such Servicer Event of
Default or other such event and (ii) with respect to which each of the Rating
Agencies has indicated in writing that the inclusion thereof will not result in
the reduction or withdrawal of the ratings on any of the Class A Notes;
provided, however, the foregoing event shall not be an "Early Amortization
Event" hereunder if such Servicer Event of Default or other such event arises
under the Master Servicing Agreement and relates to a Sub-Servicer that is not
an Affiliate of the Issuer and a replacement Sub-Servicer is not installed as
aforesaid but within forty-five (45) days of the occurrence of such Servicer
Event of Default, the Issuer notifies the Indenture Trustee and the Insurer that
all Financed Student Loans then serviced by such Subservicer will be released
from the Collateral within 15 days of delivery of such notice in accordance with
the conditions set forth in Section 2.04(b) and the Issuer makes an addition of
other Eligible Student Loans or payments in connection therewith in accordance
with Section 2.04(a); or
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(g) A Collateral Deficiency shall have occurred and shall not have been
cured within ten (10) Business Days as required by Section 2.03; or
(h) The Issuer or EFG shall admit its inability to, or its intention
not to, perform any of its obligations under the Indenture or any other
Transaction Document; or
(i) Any Governmental Authority takes any action to remove, limit,
restrict, suspend or terminate the rights, privileges, or operations of the
Issuer, which action has a Material Adverse Effect on the Issuer or the General
Partner, as the case may be, and which continues for more than thirty (30)
Business Days; or
(j) The Issuer or General Partner dissolves, merges or consolidates
with another entity unless it is the surviving party and such entity expressly
assumes the obligations, as applicable, of (1) the Issuer under the Indenture,
(2) the Issuer under the Purchase and Contribution Agreement, and (3) the
General Partner under the limited partnership agreement of the Issuer, as at the
time of such merger, or sells, transfers or otherwise disposes of a material
portion of its business or assets, provided that a sale of assets in connection
with any securitization or similar type of financing completed by EFG or any
Affiliate thereof or in connection with a prepayment of the Class A Notes or in
connection within any other action permitted hereunder that does not result in a
Collateral Deficiency shall not constitute an Early Amortization Event
hereunder; or
(k) An "Event of Default" shall occur and be continuing under the
Liquidity Facility, or the Liquidity Facility shall no longer be in full force
and effect in an amount at least equal to CP Program Amount; or
(l) The amount on deposit in the Reserve Account shall be less than the
Specified Reserve Account Balance for three consecutive Payment Dates; or
(m) An Insurer Default shall have occurred and be continuing.
Upon the occurrence of any such Early Amortization Event, the Amortization
Period Commencement Date shall occur, the Revolving Period shall cease, and on
all Payment Dates thereafter until after the Final Scheduled Payment Date,
amounts due under this Indenture on any Payment Date shall be paid in accordance
with Section 3.03(b)(ii).
SECTION 7.02. Events of Default. The following events shall be "Events
of Default" hereunder:
(a) The Issuer shall fail to make any payment on any Payment Date of
the Class A Base Interest Payment Amount due on such Payment Date and such
failure shall continue unremedied for two Business Days, without giving effect
to any payments made by the Insurer under the Insurance Policy; or
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(b) A default for five days or more in the payment of any installment
of the principal of any Class A Note when the same becomes due and payable and
when Available Funds are sufficient to make such payment; or
(c) The Issuer or the General Partner shall fail to perform or observe
any other term, covenant or agreement (other than a breach of representation or
warranty or any other term, covenant or agreement the breach of which
constitutes an Early Amortization Event) contained in this Indenture and such
failure materially and adversely affects the Class A Noteholder, and any such
failure shall remain unremedied for forty-five (45) days after (i) notice
thereof is given to the Issuer by the Indenture Trustee or (ii) any of the
Issuer or the General Partner has actual knowledge thereof; provided, however,
that if the Issuer demonstrates that it is making a good-faith attempt to cure
such breach, such forty-five (45) day period may be extended by the Indenture
Trustee (with the prior consent of the Insurer) to ninety (90) days; or
(d) An Event of Bankruptcy shall have occurred with respect to the
Issuer or the General Partner; or
(e) The Indenture Trustee shall fail to have a valid, perfected first
priority Lien on the Collateral, for the benefit of the Class A Noteholders and
the Insurer.
SECTION 7.03. Remedies.
(a) Optional Acceleration. Upon the occurrence of an Event of Default,
the Indenture Trustee may (with the prior written consent of the Insurer), or
shall, at the direction of the Insurer, declare that the unpaid Class A Note
Principal Amount to be due and payable immediately; provided, however, that
during the existence and continuation of an Insurer Default the right of consent
or direction shall instead be exercised by the Class A Noteholder, by a notice
in writing to the Issuer, and upon any such declaration, the Amortization Period
Commencement Date shall occur and such Class A Note Principal Amount shall be
immediately due and payable, together with all accrued and unpaid interest
thereon, without presentment, demand, protest or other notice of any kind, all
of which are hereby waived by the Issuer.
(b) Automatic Commencement of Amortization Period Commencement Date.
Upon the occurrence of an Event of Default described in subsections (a), (b) or
(d) of Section 7.02, the Amortization Period Commencement Date shall occur
automatically.
(c) Additional Remedies. Upon any acceleration of the Class A Notes
pursuant to this Section 7.03, no Advances thereafter shall be made, and the
Class A Noteholders and the Indenture Trustee shall have, subject to the
Insurer's right to direct and control all remedies unless an Insurer Default has
occurred and is continuing, in addition to all other rights and remedies under
this Indenture or otherwise, all other rights and remedies provided under the
UCC of each applicable jurisdiction and other applicable laws to a secured
party, which rights shall be cumulative, including, without limitation, the
right to foreclose upon the Collateral and sell all or any portion thereof at
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public or private sale pursuant to Section 7.04 (and the Issuer agrees that, to
the extent that notice of such sale is required, notice 10 days prior to such
sale shall be adequate and reasonable notice for all purposes).
SECTION 7.04. Sale of Collateral. Upon the occurrence of an Event of
Default or from and after the Final Scheduled Payment Date, if any amounts
remain outstanding with respect to the Class A Notes, the Class A Noteholder
(with the prior consent of the Insurer) shall have the right to cause the Issuer
to sell the Collateral or any portion thereof, or rights or interests therein,
at one or more public or private sales called and conducted in any matter
permitted by law, in which the Class A Noteholder and the Insurer shall have the
right to participate. Proceeds from such sale of the Collateral shall be paid by
the Issuer to the Indenture Trustee, which shall deposit such proceeds into the
Collection Account for distribution in accordance with Section 3.03(b)(iii).
ARTICLE VIII.
INDENTURE TRUSTEE
SECTION 8.01. Acceptance of the Trusts. The Indenture Trustee accepts
and agrees to execute the trusts granted to it by this Indenture, but only upon
the terms and conditions set forth herein. The Indenture Trustee, prior to the
occurrence of an Event of Default and after the curing or waiving of all Events
of Default which may have occurred, undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture and no implied
covenants or obligations shall be read into this Indenture against the Indenture
Trustee.
In case an Event of Default has occurred of which the
Indenture Trustee has, or is deemed to have, notice in accordance with this
Indenture and has not been cured, the Indenture Trustee agrees to act in
accordance with the instructions and orders of the Class A Noteholders, but in
any such event, only upon and subject to the following expressed terms and
conditions:
(a) The Indenture Trustee may execute any of the trusts or powers
hereof and perform any of its duties by or through attorneys, agents, receivers,
employees or co-trustees and shall not be answerable for the conduct of the same
if appointed in accordance with the standard specified above, and shall be
entitled to advice of counsel concerning all matters of trusts hereof and the
duties hereunder, and may in all cases pay such reasonable compensation to all
such attorneys, agents, receivers, and employees as may reasonably be employed
in connection with the trusts hereof. The Indenture Trustee may act upon the
opinion or advice of an attorney or accountant by it in the exercise of
reasonable care. The Indenture Trustee shall not be responsible for any loss or
damage resulting from any action or nonaction of such Person which is in good
faith and in reliance upon such opinion or advice. The Indenture Trustee shall
not be responsible for any action or inaction of any Master Servicer or any
party hereto except as provided herein or under applicable laws, rules and
regulations.
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(b) The Indenture Trustee shall not be responsible for any recital
herein, or in any Class A Notes, or for the validity of the execution by the
Issuer of this Indenture, or of any supplemental indentures or instruments of
further assurance, or for the sufficiency of the security for the Class A Notes
issued hereunder or intended to be secured hereby, or for the value or title of
the property herein conveyed or otherwise as to the maintenance of the security
hereof.
(c) The Indenture Trustee shall not be accountable for the use or
application by the Issuer of the Class A Notes or the proceeds thereof or for
the use or application of any money paid over by the Indenture Trustee in
accordance with the provisions of this Indenture or for the use and application
of other money received by the Indenture Trustee.
(d) The Indenture Trustee shall be protected in acting upon any notice,
requisition, request, consent, certificate, order, opinion, affidavit, letter,
telegram or other paper or document reasonably believed to be genuine and
correct and to have been signed or sent by the proper Person or Persons. Any
action taken by the Indenture Trustee pursuant to this Indenture upon the
request or authority or consent of any Person who at the time of making such
request or giving such authority or consent is the owner of a Class A Note shall
be conclusive and binding upon all future owners of the Class A Note and upon
any Class A Note issued in exchange therefor or in place thereof.
(e) Except as otherwise expressly provided in this Indenture, as to the
existence or nonexistence of any fact or as to the sufficiency or validity of
any instrument, paper or proceeding, the Indenture Trustee shall be entitled to
rely upon a certificate of an officer of any Class A Noteholder as sufficient
evidence of facts therein contained, and prior to the occurrence of a default of
which the Indenture Trustee has been notified as provided in subsection (g) of
this Section, or of which by said subsection it is deemed to have notice, shall
also be at liberty to accept a dealing, transaction or action as necessary or
expedient, but may at its discretion secure such further evidence deemed
necessary or advisable, but shall in no case be bound to secure the same.
(f) The permissive right of the Indenture Trustee to do things
enumerated in this Indenture shall not be construed as a duty and the Indenture
Trustee shall not be answerable for other than its negligence or willful
misconduct; provided, however, that the Indenture Trustee shall not be liable
for any error of judgment made in good faith, unless it shall be proved that
such Person was negligent in ascertaining the pertinent facts.
(g) The Indenture Trustee shall not be required to take notice or be
deemed to have notice of any default hereunder except failure by the Issuer to
cause to be made any of the payments to it for the account of the Class A
Noteholder required to be made by Section 3.03, or defaults under clause (a) of
Section 7.01, unless the Indenture Trustee shall be specifically notified in
writing of such default by the Issuer, the Class A Noteholder.
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(h) The Indenture Trustee shall not be required to give any bond or
surety in respect of the execution of the said trusts and powers or otherwise in
respect of the premises.
(i) No provision of this Indenture shall require the Indenture Trustee
to expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.
(j) All moneys received by the Indenture Trustee shall, until used or
applied or invested as herein provided, be held in trust for the purposes for
which they were received in the Collection Account or the Reserve Account,
except for proceeds from the Policy which shall be held uninvested.
(k) Whether or not herein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Indenture Trustee shall be subject to the provisions
of this Section.
(l) NOTWITHSTANDING ANY OTHER PROVISION OF THIS INDENTURE OR THE OTHER
TRANSACTION DOCUMENTS, NOTHING IN THIS INDENTURE OR THE OTHER TRANSACTION
DOCUMENTS SHALL BE CONSTRUED TO LIMIT THE LEGAL RESPONSIBILITY OF THE INDENTURE
TRUSTEE TO THE SECRETARY OF EDUCATION OR A FEDERAL GUARANTOR FOR ANY VIOLATIONS
OF STATUTORY OR REGULATORY REQUIREMENTS THAT MAY OCCUR WITH RESPECT TO FEDERAL
STUDENT LOANS HELD BY THE INDENTURE TRUSTEE PURSUANT TO, OR TO OTHERWISE COMPLY
WITH ITS OBLIGATIONS UNDER, THE HIGHER EDUCATION ACT OR IMPLEMENTING
REGULATIONS.
SECTION 8.02. Fees, Charges and Expenses of Indenture Trustee. The
Indenture Trustee shall be entitled (i) to payment of the Indenture Trustee's
Fees for its services rendered hereunder pursuant to the priorities set forth in
Section 3.03(b)(i) and (ii), and (ii) to payment of, or reimbursement for, all
advances, reasonable counsel fees and expenses and other out-of-pocket expenses
reasonably and necessarily made or incurred by the Indenture Trustee, in
connection with such services, which shall be paid to it.
SECTION 8.03. Notice if Default Occurs. If a default occurs of which
the Indenture Trustee is by Section 8.01(g) required to take notice or if notice
of default be given as provided in said Section 8.01(g), then the Indenture
Trustee shall give written notice thereof by registered or certified mail to the
Issuer and the Class A Noteholders.
SECTION 8.04. Intervention by Indenture Trustee. In any judicial
proceeding to which the Issuer is a party, the Indenture Trustee shall intervene
if directed to do so in writing by the Class A Noteholders with the consent of
the Insurer or the Insurer.
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SECTION 8.05. Successors. Any corporation or association into which the
Indenture Trustee may be converted or merged, or with which it may be
consolidated, or to which it may sell or transfer its corporate trust business
and assets as a whole or substantially as a whole, or any corporation or
association resulting from any such conversion, sale, merger, consolidation or
transfer to which it is a party, ipso facto, shall be and become successor
Indenture Trustee hereunder and vested with all of the title to the whole
property or trust estate and all the trusts, powers, discretions, immunities,
privileges and all other matters as was its predecessor, without the execution
or filing of any instrument or any further act, deed or conveyance on the part
of any of the parties hereto, anything herein to the contrary notwithstanding.
SECTION 8.06. Resignation. The Indenture Trustee may at any time resign
from the trusts hereby created by giving 90 days' written notice to the Issuer,
the Class A Noteholders, the Insurer and each of the Rating Agencies and such
resignation shall take effect at the end of such 90 days, or upon the earlier
appointment and acceptance of a successor Indenture Trustee, as provided in
Section 8.08 hereof, or removal as provided in Section 8.07 hereof.
Notwithstanding the foregoing, resignation of the Indenture Trustee shall not be
effective until a successor or temporary Indenture Trustee is appointed and has
accepted such appointment; provided, however, if an instrument of acceptance
shall not have been delivered within 120 days after giving such notice of
resignation, the resigning Indenture Trustee may petition a court of competent
jurisdiction for the appointment of a successor, and any attorneys' fees and
expenses incurred in connection with such petition shall be payable by the
Issuer.
SECTION 8.07. Removal. The Indenture Trustee may be removed by the
Insurer or the Class A Noteholder at any time with consent of the Insurer, by an
instrument in writing delivered to the Indenture Trustee. Notwithstanding the
foregoing, removal of the Indenture Trustee shall not be effective until a
successor is appointed and has accepted such appointment.
SECTION 8.08. Appointment of Successor. In case the Indenture Trustee
shall resign or be removed, or be dissolved, or shall be in course of
dissolution or liquidation, or otherwise become incapable of acting hereunder,
or in case it shall be taken under the control of any public officer or
officers, or of a receiver appointed by a court, a successor acceptable to the
Insurer and meeting the eligibility requirements of Section 8.13 may be
appointed by the Issuer by an instrument in writing signed by the Issuer. The
Issuer shall also inform the Rating Agencies promptly of any such resignation or
removal of the Indenture Trustee. If no appointment of a successor Indenture
Trustee shall have been made pursuant to the foregoing provisions of this
Section within 120 days after the Indenture Trustee shall have given written
notice as provided in Section 8.06 hereof, the Indenture Trustee, the Issuer or
the Class A Noteholder may apply to a court of competent jurisdiction to appoint
a successor Indenture Trustee. Each such successor Indenture Trustee shall agree
in writing to be bound by the provisions of Section 10.06.
SECTION 8.09. Concerning Any Successor. Every successor Indenture
Trustee appointed hereunder shall execute, acknowledge and deliver to its
predecessor and also to
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the Issuer an instrument in writing accepting such appointment hereunder, and
thereupon such successor, without any further act, deed or conveyance, shall
become fully vested with all the estates, properties, rights, powers, trusts,
duties and obligations of its predecessor; but such predecessor shall,
nevertheless, upon receipt of a request from the Issuer execute and deliver an
instrument transferring to such successor all the estates, properties, rights,
powers and trusts of such predecessor hereunder; and every predecessor shall
deliver all securities and moneys held by it as Indenture Trustee hereunder to
its successor.
SECTION 8.10. Appointment of Co-Trustee. It is the purpose of this
Indenture that there shall be no violation of any law of any jurisdiction
denying or restricting the right of banking corporations or associations to
transact business as the Indenture Trustee in such jurisdiction. It is
recognized that in case of litigation under this Indenture or any other
Transaction Document or any Student Loan or related agreement, and in particular
in case of the enforcement thereof on default, or in case of a conflict of
interest, or in case the Indenture Trustee deems that by reason of any present
or future law of any jurisdiction it may not exercise any of the powers, rights
or remedies herein granted to the Indenture Trustee or hold title to the
properties, in trust, as herein granted, or take any other action which may be
desirable or necessary in connection therewith, it may be necessary that the
Indenture Trustee appoint an additional institution, which must be a commercial
bank with trust powers acceptable to the Insurer, as a separate or co-Trustee.
The following provisions of this Section are intended to accomplish these ends.
In the event that the Indenture Trustee appoints an additional
individual or institution as a separate or co-Trustee, each and every remedy,
power, right, claim, demand, cause of action, immunity, estate, title, interest
and lien expressed or intended by this Indenture to be exercised by or vested in
or conveyed to the Indenture Trustee with respect thereto shall be exercisable
by and vest in such separate or co-Trustee but only to the extent necessary to
enable such separate or co-Trustee to exercise such powers, rights and remedies,
and every covenant and obligation necessary to the exercise thereof by such
separate or co-Trustee shall run to and be enforceable by either of them.
Should any instrument in writing from the Issuer be required
by the separate or co-Trustee so appointed by the Indenture Trustee for more
fully and certainly vesting in and confirming to him, her or it such properties,
rights, powers, trusts, duties and obligations, any and all such instruments in
writing shall, on request, be executed, acknowledged and delivered by the
Issuer. In case any separate or co-Trustee, or a successor to either, shall die,
become incapable of acting, resign or be removed, all the estates, properties,
rights, powers, trusts, duties and obligations of such separate or co-Trustee,
so far as permitted by law, shall vest in and be exercised by the Indenture
Trustee until the appointment of a new Indenture Trustee or a successor to such
separate or co-Trustee.
SECTION 8.11. Successor Indenture Trustee as Trustee of Funds. In the
event of a change of the Indenture Trustee the predecessor which has resigned or
been removed
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shall cease to be trustee of any funds then held by it hereunder and the
successor Indenture Trustee shall become such trustee.
SECTION 8.12. Indemnification.
(a) The Indenture Trustee shall not be under any obligation or duty to
perform any act at the request of the Class A Noteholders or the Issuer or to
institute or defend any suit in respect hereof or to exercise any remedy
hereunder unless properly indemnified to its satisfaction subject to Section
8.01(i) hereof, except making payment of principal and interest, making a draw
on the Insurance Policy, or accelerating the Class A Notes as provided for
herein. The Indenture Trustee shall not be required to take notice, or be deemed
to have knowledge, of any default of the Issuer, except as provided in Section
8.01(g).
(b) The Issuer agrees to indemnify the Indenture Trustee for, and to
hold it harmless against, any loss, liability or expense, including reasonable
attorneys' fees and expenses, incurred without negligence or bad faith or
willful misconduct on its part, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder, including the
costs and expenses of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder except as a result of negligence, bad faith or willful misconduct on
its part and except any liability to the DOE on account of the Indenture
Trustee's status as such.
SECTION 8.13. Eligibility Requirements for Indenture Trustee. The
Indenture Trustee and any successor Indenture Trustee shall at all times be (i)
an institution insured by the Federal Deposit Insurance Corporation, (ii) a
corporation or national bank or national banking association organized and doing
business under the laws of the United States of America or any state thereof,
authorized under such laws to exercise corporate trust powers, having a combined
capital and surplus of not less than $50,000,000 and subject to supervision or
examination by federal and state authority, (iii) an institution whose long-term
senior unsecured debt is rated at least "BBB-", in the case of S&P or "Ba2", in
the case of Moody's, or in the case of each Rating Agency, such lower rating as
is confirmed by such Rating Agency in writing would not adversely affect any of
the ratings then assigned to the Class A Notes, and (iv) unaffiliated with the
Issuer or EFG. If such corporation, national bank or national banking
association publishes reports of condition at least annually, pursuant to law or
to the requirements of the aforesaid supervising or examining authority, then,
for the purposes of this Section, the combined capital and surplus of such
corporation, national bank or national banking association shall be deemed to be
its combined capital and surplus as set forth in its most recent report or
condition so published. If at any time the Indenture Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Indenture
Trustee shall resign immediately in the manner and with the effect specified in
Section 8.06. No person shall become a successor trustee hereunder if the
succession of such Person would result in the qualification, downgrading and
withdrawal of any of the ratings then assigned by the Ratings Agencies to the
Class A Notes.
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SECTION 8.14. Tax Information. The Indenture Trustee shall deliver to
each Class A Noteholder such information as may be required to enable such
holder to prepare its federal and state income tax returns, provided that such
information shall consist only of Form 1099's or any successor forms required to
be given to Class A Noteholders pursuant to the Code.
ARTICLE IX.
MISCELLANEOUS
SECTION 9.01. Amendments, Etc. No amendment or waiver of any provision
of this Indenture nor consent to any departure by the Issuer therefrom shall in
any event be effective unless the same shall be in writing and signed by the
Issuer and the Indenture Trustee, and shall have been consented to by both the
Class A Noteholder, the Insurer and the Rating Agencies shall have confirmed in
writing that such amendment or waiver shall not result in the reduction or
withdrawal of the ratings of the Class A Notes, provided, however, that if the
terms of such amendment consist solely of a pro rata increase in the Class A
Maximum Principal Amount, such confirmation from the Rating Agencies shall not
be required. Such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 9.02. Notices, Etc. All notices and other communications
provided for hereunder shall, unless otherwise stated herein, be in writing
(including facsimile communication) and shall be personally delivered or sent by
express mail or courier or by certified mail, postage prepaid, or by facsimile,
to the intended party at the address or facsimile number of such party set forth
under its name on the signature pages hereof or at such other address or
facsimile number as shall be designated by such party in a written notice to the
other parties hereto. All such notices and communications shall be effective,
(a) if personally delivered or sent by express mail or courier or if sent by
certified mail, when received, and (b) if transmitted by facsimile, when sent,
receipt confirmed by telephone or electronic means.
SECTION 9.03. No Waiver; Remedies. No failure on the part of the
Issuer, the Indenture Trustee, or any Class A Noteholder to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof
(unless waived in writing); nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
SECTION 9.04. Binding Effect; Survival. This Indenture shall be binding
upon and inure to the benefit of the Issuer, the Indenture Trustee, the Insurer,
the Class A Noteholder, and their respective successors and assigns. This
Indenture shall create and constitute the continuing obligations of the parties
hereto in accordance with its terms, and shall remain in full force and effect
until the Final Payout Date. The rights and remedies with respect to any breach
of any representation and warranty made by the
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Issuer pursuant to Article V and the indemnification and payment provisions of
Article VIII and Section 9.05 shall be continuing and shall survive any
termination of this Indenture.
SECTION 9.05. Costs, Expenses and Taxes. The Issuer agrees to pay
within three Business Days of demand:
(a) all reasonable costs and expenses incurred by the Indenture Trustee
and its Affiliates in connection with the negotiation, preparation, execution
and delivery, the administration (including periodic auditing and monitoring
fees of the Ratings Agencies), the amendment to, or waiver of, or the
enforcement of, or any actual or claimed breach of, this Indenture and the other
Transaction Documents, including, without limitation (i) the reasonable fees and
expenses of counsel to any of such Persons incurred in connection with any of
the foregoing or in advising such Persons as to their respective rights and
remedies under any of the Transaction Documents, and (ii) all reasonable
out-of-pocket expenses (including reasonable fees and expenses of independent
accountants), incurred in connection with any review of the Issuer's, the Master
Servicer's or a Sub-Servicer's books and records either prior to the execution
and delivery hereof or pursuant to this Indenture, the Master Servicing
Agreement or a Subservicing Agreement; and
(b) all stamp and other taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of this
Indenture or the other Transaction Documents, and agrees to indemnify the
Indenture Trustee against any liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes and fees.
SECTION 9.06. No Proceedings. Notwithstanding any provision hereof to
the contrary, the Indenture Trustee, by entering into this Indenture, and each
Class A Noteholder by accepting a Class A Note, hereby covenant and agree that
they will not at any time institute against the Issuer or the General Partner,
or join in any institution against the Issuer or the General Partner 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 Class A Notes,
this Indenture or any of the Transaction Documents. The provisions of this
Section 9.06 shall survive the termination of this Indenture.
SECTION 9.07. Captions and Cross References. The various captions
(including, without limitation, the table of contents) in this Indenture are
provided solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Indenture. Unless otherwise indicated,
references in this Indenture to any Section, Appendix, Schedule or Exhibit are
to such Section of or Appendix, Schedule or Exhibit to this Indenture, as the
case may be, and references in any Section, subsection, or clause to any
subsection, clause or subclause are to such subsection, clause or subclause of
such Section, subsection or clause.
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SECTION 9.08. Integration. This Indenture and the other Transaction
Documents, contain a final and complete integration of all prior expressions by
the parties hereto with respect to the subject matter hereof and shall
constitute the entire understanding among the parties hereto with respect to the
subject matter hereof, superseding all prior oral or written understandings.
SECTION 9.09. GOVERNING LAW. THIS INDENTURE, INCLUDING THE RIGHTS AND
DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT THAT THE
PERFECTION OF THE INTERESTS OF CLASS A NOTEHOLDERS IN THE COLLATERAL IS GOVERNED
BY THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 9.10. WAIVER OF JURY TRIAL. THE ISSUER HEREBY EXPRESSLY WAIVES
ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND
ANY RIGHTS UNDER THIS INDENTURE, ANY OTHER TRANSACTION DOCUMENT OR UNDER ANY
AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY BE IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING OR OTHER
RELATIONSHIP EXISTING IN CONNECTION WITH THIS INDENTURE OR ANY OTHER TRANSACTION
DOCUMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A
COURT AND NOT A JURY TRIAL.
SECTION 9.11. Execution in Counterparts. This Indenture may be executed
in any number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement.
SECTION 9.12. Usury. The amount of interest payable or paid on the
Class A Notes under the terms of this Indenture shall be limited to an amount
that shall not exceed the maximum nonusurious rate of interest allowed by the
applicable laws of the State of New York or any applicable law of the United
States of America permitting a higher maximum nonusurious rate that preempts
such applicable New York laws, which could lawfully be contracted for, charged
or received (the "Highest Lawful Rate"). In the event any payment of interest on
the Class A Notes exceeds the Highest Lawful Rate, the Issuer stipulates that
such excess amount will be deemed to have been paid to the applicable Class A
Noteholder as a result of an error and the Class A Noteholder receiving such
excess payment shall promptly, upon discovery of such error or upon notice
thereof from the Indenture Trustee on behalf of the Issuer, refund the amount of
such excess or, at the option of such Class A Noteholder, apply the excess to
the payment of principal of such Class A Note, if any, remaining unpaid. In
addition, all sums paid or agreed to be paid to the Indenture Trustee for the
benefit of the Class A Noteholder for the use, forbearance or detention of money
shall, to the extent permitted by applicable law, be amortized, prorated,
allocated and spread throughout the full term of such Class A Notes.
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SECTION 9.13. Certain Matters Regarding the Insurer and The Policy.
(a) Rights of the Insurer to Exercise Certain Rights of the Class A
Noteholders. By accepting its Class A Note, each Class A Noteholder agrees that
unless an Insurer Default exists, the Insurer, notwithstanding any other
provision contained herein shall have the right to exercise the rights of the
Class A Noteholders with respect to all matters, including without limitation
the following matters without consent of the Class A Noteholders, to the extent
such rights are provided for herein:
(i) the right to direct the Indenture Trustee in writing to
terminate the rights and obligations of the Master Servicer under the
Master Servicing Agreement in the event of a Servicer Event of Default;
(ii) the right to consent to or direct any waivers of defaults
by the Master Servicer;
(iii) the right to remove the Indenture Trustee pursuant to
this Indenture;
(iv) the right to control actions of the Master Servicer with
respect to modifications or waivers with respect to the Collateral; and
(v) the right to exercise all rights of consent, election,
waiver, rescission, annulment, instruction, direction or control
provided to the Class A Noteholders under this the Indenture, including
but not limited to any declaration of acceleration with respect to the
Class A Notes.
In addition, unless an Insurer Default exists, the Insurer's
consent will be required prior to, among other things, (i) the appointment of
any successor Indenture Trustee or Master Servicer or (ii) any amendment to the
Indenture or the other Transaction Documents; provided, however, in any case
that the Insurer shall not unreasonably withhold, condition or delay its
consent. The Class A Noteholders agree that, unless an Insurer Default exists,
the rights specifically set forth above may be exercised by the Class A
Noteholders only with the prior written consent of the Insurer.
(b) Issuer to Act Solely with Consent of the Insurer. Unless an Insurer
Default exists, the Issuer shall not exercise the right to appoint a co-trustee
pursuant to Section 8.10 of this Indenture or successor Indenture Trustee
pursuant to Section 8.08 of this Indenture without the prior written consent of
the Insurer which consent shall not be unreasonably withheld.
Unless an Insurer Default exists and is continuing, the Issuer
and the Indenture Trustee shall not undertake any litigation with respect to the
Collateral without the prior consent of or at the written direction of the
Insurer.
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(c) Indenture Trustee to Act Solely with Consent of the Insurer. Unless
an Insurer Default exists and is continuing, the Indenture Trustee
shall not exercise the right to:
(i) undertake any litigation pursuant to the Indenture or
incur any expenses reimbursable pursuant to 9.05 of this Indenture;
(ii) make any of the elections or exercise any of the remedies
provided under this Indenture; and
(iii) agree to any amendment to, or grant any waiver of its
rights under the Master Servicing Agreement;
in each case, without the prior written consent of the Insurer, which shall not
be unreasonably withheld, but shall do so at the direction of the Insurer;
provided, however, during the existence and continuation of an Insurer Default
the Indenture Trustee shall not require the prior written consent of the Insurer
to exercise any of the rights enumerated above.
(d) Collateral and Accounts Held for Benefit of the Insurer and the
Class A Noteholder. The Indenture Trustee shall hold the Collateral for the
benefit of the Class A Noteholders and, unless an Insurer Default exists, the
Insurer, and all references in this Indenture and in the Class A Notes to the
benefit of the Class A Noteholder shall, unless an Insurer Default exists, be
deemed to include the Insurer.
(e) Indenture Trustee to Cooperate. Unless an Insurer Default exists,
the Indenture Trustee shall cooperate in all respects with any reasonable
written request by the Insurer for action to preserve or enforce the Insurer's
rights or interests hereunder without limiting the rights or affecting the
interests of the Class A Noteholders as otherwise set forth herein. The
Indenture Trustee shall be fully protected in acting at the direction of the
Insurer as provided hereunder.
(f) Surrender and Cancellation. The Indenture Trustee shall surrender
the Policy to the Insurer for cancellation upon the expiration of the term of
the Policy as provided in the Insurance Policy.
(g) Reports to the Insurer. All notices, statements, reports,
certificates or opinions required by this Indenture to be sent to any other
party hereto or to the Class A Noteholders shall also be sent to the Insurer at
the following address: MBIA Insurance Corporation, 113 King Street, Armonk, New
York 10504, Attention: Insured Portfolio Management - Structured Finance
(IPM-SF), Telephone (914) 273-4545, Telecopy: (914) 765-3810. The Issuer and the
Indenture Trustee shall make available to the Insurer their books and records
during regular business hours for the purpose of copying at the Insurer's
expense and inspection of any information about the Class A Notes or the Class A
Noteholders.
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(h) Third Party Beneficiary. The parties hereto agree that it is
specifically intended that the Insurer shall be a third party beneficiary of
this Indenture and, so long as no Insurer Default shall have occurred and be
continuing, shall have full right, power and authority to enforce the
obligations of the Indenture Trustee under this Indenture.
SECTION 9.14. Amendment to Liquidity Facility. By acceptance of its
Class A Note, the Class A Noteholder agrees that it shall not consent to any
amendment of Sections 3.10, 3.11, 3.12, 10.03 or 12.03 of the Liquidity Facility
without the prior written consent of the Issuer.
SECTION 9.15. Rating Agency Notification. The Issuer shall notify each
of the Rating Agencies of the occurrence of any of the following events: (i) the
resignation or removal of the Indenture Trustee, the Eligible Lender Trustee or
the Master Servicer or assignment by any such party of its duties and
obligations, (ii) any changes to the definition of Eligible Student Loan
relating to interest rates or guarantees thereon resulting from amendments to
the Higher Education Act, (iii) any extension, expiration or other termination
of the Liquidity Facility, (iv) any amendments to or termination of the
Insurance Policy, (v) any acceleration of the Class A Notes, (vi) any material
changes to the fees and expenses of the Master Servicer, the Indenture Trustee,
the Eligible Lender Trustee, the Liquidity Banks and the Insurer, (vii) any
agreement of the Insurer pursuant to clause (e) of the definition of Eligible
Student Loan and (viii) any other matter, notice of which is required to be
given to the Insurer or Indenture Trustee hereunder.
[SIGNATURES BEGIN ON FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties have caused this Indenture to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
EFG-III, LP
By: EFG-II SPC-I, Inc.,
as General Partner
By:
--------------------------------
Name: Steven J. Galvin
Title: President
Address: 495 Station Avenue
South Yarmouth, MA 02664
Attention: Mr. Stephen J. Galvin
Telephone No.: (508) 760-2900
Facsimile No.: (508) 394-7006
THE FIRST NATIONAL BANK OF CHICAGO,
as Indenture Trustee and Eligible
Lender Trustee
By:
--------------------------------
Name: Mary Fonti
Title: Assistant Vice President
Address: One First National Plaza
Suite 0126
Chicago, Illinois 60670-0126
Attention: Corporate Trust Services
Division
Telephone No.: (212) 373-1105
Facsimile No.: (212) 373-1383
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APPENDIX A
DEFINITIONS
This is Appendix A to the Indenture, dated as of August 5,
1999, between EFG-III, LP, and The First National Bank of Chicago, as Indenture
Trustee and Eligible Lender Trustee (as amended, supplemented or otherwise
modified from time to time, the "Indenture"). Each reference in this Appendix A
to any Section, the Preamble, Appendix or Exhibit, unless otherwise stated,
refers to such Section of or Appendix, Preamble or Exhibit to the Indenture.
A. Defined Terms. As used in the Indenture, unless the context requires a
different meaning, the following terms have the meanings indicated below
(such definitions to be applicable to both the singular and plural forms of
such terms):
"Accounts" means the Collection Account, the Reserve Account
and the Net Cap Rate Reserve Account.
"Administration Agreement" means the Administration Agreement,
dated as of August 5, 1999,among the CP Vehicle, the Issuer and the
Administrator.
"Administrator" means Lord Securities Corporation and its
successors and permitted assigns.
"Advance" has the meaning set forth in Section 2.01.
"Advance Date" means each date on which an Advance by the
Class A Noteholder is consummated, which date shall be a Business Day.
"Advance Notice" has the meaning set forth in Section 2.02(a).
"Advance Rate" means 108.35%.
"Affiliate" when used with respect to a Person means any other
Person controlling, controlled by, or under common control with, such Person.
For 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 Student Loan Amount" means with respect to the
Financed Student Loans on any day shall equal the aggregate unpaid Principal
Balance of and all accrued and unpaid interest due from the U.S. government and
all related borrowers with respect to, Student Loans that are Eligible Student
Loans on such day; provided, that with respect to the calculation of the
Aggregate Student Loan Amount, the unpaid Principal Balance of (i) any Federal
Student Loan that would otherwise qualify as an Eligible Student Loan but is
more than 120 days delinquent, or (ii) any Private Student Loan that
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would otherwise qualify as an Eligible Student Loan but is more than 90 days
delinquent, shall in each case be included in the definition of "Aggregate
Student Loan Amount" but shall be deemed to be equal to the portion of the
unpaid Principal Balance of such Student Loan guaranteed by DOE, TERI or
TuitionGard, as applicable; provided, further that, with respect to the
calculation of the Aggregate Student Loan Amount, the unpaid Principal Balance
of any Student Loan with respect to which there is an uncured material breach of
any representation, warranty or covenant made by the Issuer under the Indenture,
or any Student Loan that otherwise is no longer an Eligible Student Loan, shall
in each case be deemed to be zero.
"Amortization Period" means the period beginning from and
after the Amortization Period Commencement Date.
"Amortization Period Commencement Date" means the earlier of
(i) the Scheduled Amortization Period Commencement Date or (ii) the date
determined pursuant to Sections 7.01 or 7.03.
"Amortization Period Principal Payment Amount" means with
respect to any Payment Date during the Amortization Period, an amount equal to
the sum of (x) the difference between (1) the aggregate unpaid Principal Balance
of all Financed Student Loans that were included in the Collateral as of the
opening of business on the first day of the related Collection Period and (2)
the aggregate unpaid Principal Balance of such Financed Student Loans as of the
close of business on the last Business Day of such Collection Period, and (y)
any Amortization Period Principal Payment Amount due on a previous Payment Date
that remains unpaid.
"Authorized Officer" means (i) with respect to the Issuer, any
officer or agent of the General Partner, acting on behalf of the General Partner
for and on behalf of the Issuer and (ii) with respect to the Seller and the
Master Servicer, any officer of the Seller or the Master Servicer, respectively,
who is authorized to act for and on behalf of the Seller or the Master Servicer,
respectively.
"Available Funds" means (i) all Collections, (ii) all Monthly
Advance Amounts, (iii) all Purchase Amounts, (iv) all Investment Earnings, (v)
all amounts delivered by the Issuer to the Indenture Trustee to effect a
prepayment of the Class A Note pursuant to Section 1.12, (vi) all amounts
delivered by the Issuer to the Indenture Trustee to effect the removal of a
Financed Student Loan from the Collateral pursuant to Section 2.04(a) and (vii)
all amounts delivered by the Issuer to the Indenture Trustee to reduce a
Collateral Deficiency pursuant to Section 2.03.
"Bank One Custody Agreement" means the Bank One Custody
Agreement, dated as of August 5, 1999, and among the Issuer, the Master
Servicer, the Indenture Trustee and the Bank One Trust Company, NA, as
Custodian.
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"Bank Rate" means, for any day, an interest rate per annum
equal to the weighted average interest rate in effect with respect to advances
outstanding under the Liquidity Facility on such day.
"Bankruptcy Code" means Title 11 of the United States Code.
"Business Day" means a day other than (i) a Saturday or
Sunday, or (ii) a day on which the Indenture Trustee, the New York Stock
Exchange or banks located in Chicago, Illinois, New York, New York or the
Commonwealth of Massachusetts are all authorized or obligated by law or
executive order to be closed for business.
"Capped CP Program Payment Amount" means, for any Payment
Date, the fees and expenses payable pursuant to Section 5.03(iv) of the Security
Agreement, which payments in the aggregate shall not exceed $250,000 during each
calendar year.
"Class A Additional Interest Payment Amount" means on any
Payment Date, the amount equal to the sum of (a) the excess of (i) the amount of
interest accrued on the Class A Notes during the related Collection Period at
the rate determined pursuant to Section 1.11 of the Indenture over (ii) the
Class A Base Interest Payment Amount for such Payment Date, (b) any increased
costs payable as of such Payment Date pursuant to Sections 3.10, 3.11, 3.12,
10.03 and 12.03 of the Liquidity Facility to the extent not included in clause
(a)(i) above and (c) all Class A Additional Interest Payment Amounts that have
accrued on any previous Payment Dates and have remained unpaid, and to the
extent permitted by law, interest thereon.
"Class A Base Interest Payment Amount" means on any Payment
Date, the sum of (i) the lesser of (a) the amount of interest accrued on the
Class A Notes during the related Collection Period at the Net Cap Rate, and (b)
the amount of interest accrued on the Class A Note during the related Collection
Period at the interest rate or rates determined for such Collection Period
pursuant to Section 1.11 of the Indenture and (ii) all Class A Base Interest
Payment Amounts that have accrued on any previous Payment Dates and have
remained unpaid.
"Class A Maximum Principal Amount" means $650,000,000.
"Class A Note" means (i) during the Revolving Period, the
"Class A Variable Funding Note", and (ii) during the Amortization Period, such
"Class A Variable Funding Note" and any other Class A Note, in each case issued
pursuant to Section 1.01 of the Indenture, substantially in the form of Exhibit
1.01.
"Class A Noteholder" means the Person in whose name a Class A
Note is registered in the Note Register.
"Class A Note Daily Interest Amount" means, for any day during
a Collection Period, an amount equal to (a) the product of (i) the Class A Note
Rate on
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such day and (ii) the Class A Note Principal Amount outstanding on such day
(after giving effect to any Advances made on such day).
"Class A Note Interest" means, with respect to any Payment
Date, the sum of the Class A Note Daily Interest Amount for each day in the
related Collection Period.
"Class A Note Principal Amount" means the sum of all Advances
funded by the Class A Noteholder during the Revolving Period under the Class A
Note, less payments in reduction of principal on the Class A Note actually
received by the Class A Noteholder pursuant to Section 1.13.
"Class A Note Rate" means, with respect to any day (after
taking into account any Advance made on such day), (a) on which Commercial Paper
is outstanding and no amounts are outstanding under the Liquidity Facility, the
CP Rate with respect to the CP Vehicle on such day, (b) on which Commercial
Paper is outstanding and amounts are outstanding under the Liquidity Facility,
the weighted average of (i) the CP Rate with respect to the CP Vehicle on such
day and (ii) the Bank Rate on such day and (c) on which no Commercial Paper is
outstanding and amounts are outstanding under the Liquidity Facility, the Bank
Rate on such day, in each case, divided by 360; provided that if the Class A
Note is no longer held by the CP Vehicle, the Class A Note Rate shall be a rate
that shall be set forth in a supplemental indenture signed by the parties
hereto, with the consent of the Class A Noteholders and the Insurer (so long as
no Insurer Default has occurred and is continuing and such consent of the
Insurer shall not be unreasonably withheld); and provided further, that if for
any reason such supplemental indenture has not been adopted at such time as the
Class A Note is no longer held by the CP Vehicle, the Class A Note Rate for each
day during the related Collection Period until such date that such supplemental
indenture becomes effective shall be a per annum rate equal to LIBOR plus 0.75%,
which rate shall be determined by the Indenture Trustee.
"Class A Note Rate Reporting Failure" has the meaning set
forth in Section 1.11(a).
"Class A Note Registrar" has the meaning set forth in
Section 1.03(a).
"Closing Date" means August 5, 1999.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means (i) the Financed Student Loans; (ii) all of
Issuer's (and the Eligible Lender Trustee's) right, title and interest under the
Student Loan Guaranty Agreements (or, in the case of TuitionGard, the
TuitionGard Policies); (iii) all of the Issuer's (and the Eligible Lender
Trustee's) right, title and interest in all Subsidy Payments with respect to any
Financed Student Loan that is a Federal Student Loan; (iv) the Collection
Account, the Reserve Account, the Net Cap Rate Reserve Account and any other
account established in the name of the Indenture Trustee for the benefit of the
Class A Noteholders, and all investments therein and the proceeds thereof; (v)
all funds (other
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than amounts received from the Insurer under the Insurance Policy) on deposit in
the accounts described in clause (iv), together with all certificates and
instruments, if any, from time to time evidencing such accounts, and funds on
deposit and all investments made with such funds, all claims thereunder or in
connection therewith, and interest, dividends, moneys, instruments, securities
and other property from time to time received, receivable or otherwise
distributed in respect of any or all of the foregoing; (vi) all of Issuer's (and
the Eligible Lender Trustee's) right, title and interest under the Purchase and
Contribution Agreement and the Master Servicing Agreement; (vii) all Related
Securities; (viii) all books, files and records (including computer tapes and
disks) related to the foregoing; and (ix) all Collections and other proceeds of
any and all of the foregoing.
"Collateral Agent" means The First National Bank of Chicago,
in its capacity as collateral agent under the Security Agreement, and its
permitted successors and assigns.
"Collateral Amount" means at any time the sum of (a) the
product of (1) the Advance Rate and (2) the Aggregate Student Loan Amount at
such time of the Financed Student Loans, and (b) all cash and Eligible
Investments on deposit at such time in the Collection Account relating to
Principal Collections on the Financed Student Loans (or payments made in
satisfaction of Section 2.03 of the Indenture).
"Collateral Deficiency" has the meaning set forth in
Section 2.03.
"Collection Account" means an Eligible Deposit Account, in the
name of the Indenture Trustee, for the benefit of Class A Noteholders, which
account has been designated as the Collection Account, and any other account
designated as the Collection Account by the Indenture Trustee.
"Collection Period" means with respect to each Payment Date,
the immediately preceding calendar month; provided, however, that with respect
to the first Collection Period under the Indenture, the Collection Period shall
begin on August 5, 1999, and shall end on August 31, 1999.
"Collections" means (i) all funds which are received by
Issuer, the Master Servicer, any Subservicer or the Indenture Trustee from or on
behalf of the related Obligors in payment of any amounts owed (including,
without limitation, all Subsidy Payments, Student Loan Guaranty Payments,
Reimbursement Payments, finance charges, interest and all other charges) in
respect of the Financed Student Loans, or applied to such amounts owed by such
Obligors, net of accrued Consolidated Rebate Amounts and other amounts required
by the Higher Education Act to be paid to the DOE, with respect to the Financed
Student Loans for the related Collection Period, (ii) all funds received
pursuant to the Master Servicing Agreement or the Subservicing Agreements,
including all payments representing the Purchase Price of any repurchased
Financed Student Loan, and (iii) all funds, including any Purchase Amounts
received for Financed Student Loans repurchased by the Seller, received by the
Issuer, the Indenture Trustee or the Master
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Servicer pursuant to the Purchase and Contribution Agreement or from any other
source in respect of the Financed Student Loans.
"Commercial Paper" means the short-term promissory notes
issued from time to time by the CP Vehicle pursuant to the Depositary Agreement.
"Computer Tape" means, with respect to any addition,
substitution or release of any financed Student Loans to or from the Collateral,
or delivery of any Monthly Report, a list of the Financed Student Loans included
in the Collateral, containing the following information: with respect to each
Financed Student Loan in the facility: (i) the loan number, (ii) the obligor's
name, (iii) the obligor address, (iv) the current interest rate, (v) the
original balance, (vi) the current balance as of the last day of the immediately
preceding month, (vii) the principal paid to date, (viii) loan payment status
(i.e. repayment, in-school, grace, deferment, forbearance), (ix) federal
interest subsidy (Yes/No), (x) spread, (xi) the first payment date, (xii) the
maturity date, (xiii) the principal and interest payment, (xiv) index, (xv) the
Subservicer with respect to such Student Loan and (xvi) the breakdown by medical
discipline for Financed Student Loans in the medical portfolio.
"Confidential Information" means information provided by the
Master Servicer or the Seller to the Eligible Lender Trustee or the Indenture
Trustee related to the transactions effected under the Transaction Documents and
any computer software provided to the Eligible Lender Trustee or the Indenture
Trustee in connection with the transactions affected under the Transaction
Documents, in each case whether in the form of documents, reports, lists, tapes,
discs or any other form.
"Consolidated Rebate Amount" means with respect to any
Collection Period, the aggregate amount of all rebate fees payable to the DOE in
respect of any Federal Consolidation Loans that are then included in the
Collateral.
"Corporate Trust Office" means the principal office of the
Indenture Trustee at which at any particular time its corporate trust business
shall be administered, which on the Closing Date shall be the address indicated
beneath the signature of the Indenture Trustee in the Indenture, or any other
address indicated by the Indenture Trustee in a written notice furnished by the
Indenture Trustee to the Issuer.
"CP Documents" means the Liquidity Facility, the Security
Agreement, the Note Purchase Agreement, the Administration Agreement, the
Depositary Agreement, the Management Agreement and the Private Placement
Agreement.
"CP Program Amount" means $650,000,000.
"CP Rate" shall mean, with respect to the CP Vehicle and any
day, the per annum rate equivalent to the "weighted average cost" (as defined
below) related to the issuance of Commercial Paper by the CP Vehicle that is
allocated, in whole or in part, to maintain the CP Vehicle's investment in the
Class A Note; provided, however, that if any
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component of such rate is a discount rate, in calculating the CP Rate, the rate
used to calculate such component shall be a rate resulting from converting such
discount rate to an interest-bearing equivalent rate per annum. As used in this
definition, the "weighted average cost" shall consist of the actual interest
rate paid to purchasers of the Commercial Paper issued by the CP Vehicle (which
rate shall reflect and give effect to (i) the commissions of placement agents
and dealers in respect of such Commercial Paper, to the extent such commissions
are allocated, in whole or in part, to such Commercial Paper by the CP Vehicle
and (ii) any fees and expenses payable by the CP Vehicle pursuant to and in
accordance with the CP Documents).
"Concentration Percentage" means, with respect to any State,
the percentage equivalent of a fraction, the numerator of which is the aggregate
outstanding Principal Balance of Financed Student Loans to borrowers resident in
such State and the denominator of which is the aggregate outstanding Principal
Balance of all Financed Student Loans.
"Concentration State" means each State that qualifies as
having one of the five highest Concentration Percentages.
"CP Vehicle" means EFG Funding LLC, a Delaware limited
liability company.
"Custodial Services Agreements" means, collectively, (i) the
Custodial Services Agreement, by and among EFG, the Issuer, AFSA Data
Corporation and the Master Servicer, and (ii) the Custodial Services Agreement,
by among EFG, the Issuer, USA Group Loan Services, Inc. and the Master Servicer.
"Defaulted Financed Student Loan" means any Financed Student
Loan that is a Defaulted Student Loan.
"Defaulted Student Loan" means any Student Loan (i) as to
which any payment, or portion thereof, is more than 180 days past due from the
original due date therefor, unless (with respect to a Federal Student Loan) such
Student Loan is in Deferment Status or Forbearance Status, (ii) the borrower of
which is the subject of an Event of Bankruptcy or is deceased or disabled or
(iii) as to which a continuing condition that with notice or the lapse of time
or both would constitute a default, breach, violation or event permitting
acceleration under the terms of such Student Loan (other than payment defaults
continuing for a period of not more than 180 days).
"Deferment Status" means a status with respect to any Federal
Student Loan permitted by the Higher Education Act and the policies of the
applicable Student Loan Guarantor during which the related Obligor may postpone
or reduce the amount of the Obligor's scheduled payment of principal and
interest.
"Delinquent Student Loan" means any student loan as to which
any portion of a scheduled payment remains outstanding for greater than 30 days.
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"Depositary" means The First National Bank of Chicago, in its
capacity as Depositary, and its successors and permitted assigns.
"Depositary Agreement" means the Depositary Agreement, dated
as of August 5, 1999, between the Depositary and the CP Vehicle.
"Determination Date" means the fifth Business Day preceding
the Payment Date.
"DOE" means the U.S. Department of Education, and any
successor thereto.
"Dollars" means dollars in lawful money of the United States
of America.
"Early Amortization Event" has the meaning set forth in
Section 7.01.
"EFG" means Educational Finance Group, Inc.
"Eligible Borrower" means, with respect to any Federal Student
Loan, an individual who is eligible under the Higher Education Act to be the
Obligor of a Student Loan for financing a program of education at an Eligible
Institution or for consolidating two or more such Student Loans, including an
individual who is eligible under the Higher Education Act to be an Obligor of a
loan made pursuant to Section 428A, 428B, 428C or 428H of the Higher Education
Act (20 U.S.C. Sections 1078-1, 1078-2, 1078-3, or 1078-8).
"Eligible Deposit Account" means either (i) a segregated
account with a Qualified Institution or (ii) a segregated trust account with a
Qualified Institution.
"Eligible Financed Student Loan" means a Financed Student Loan
that is an Eligible Student Loan as of the date it became a Financed Student
Loan.
"Eligible Institution" means an institution that is (a) an
institution of higher education, (ii) a vocational school or (iii) any other
institution that, in all of the above cases, is an "eligible institution" as
defined in the Higher Education Act.
"Eligible Investments" means any one or more of the following
obligations or securities:
(i) direct obligations of or obligations insured or guaranteed
by the United States of America;
(ii) obligations issued or guaranteed by any instrumentality
or agency of the United States of America, whether now existing or
hereafter organized, which bear the full faith and credit of the United
States of America;
(iii) certificates of deposit of not more than $100,000 issued
by a financial institution with its principal place of business in the
United States of
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America, but only if such certificates of deposit are fully insured as
to principal by the Federal Deposit Insurance Corporation or the
Federal Savings and Loan Insurance Corporation;
(iv) shares in mutual funds investing solely in short term
securities of the United States government where the mutual fund
custodian has taken delivery of the collateralizing securities,
provided that (i) such fund shall have the highest short-term credit
rating available from Moody's and S&P and (ii) such shares shall be
freely redeemable by the holder on a daily basis; and
(v) The First National Bank of Chicago Short Term Investment
Fund, or a successor common trust fund, provided that such fund is
rated in the highest rating category available from Moody's and S&P;
provided that any such instrument that is rated by S&P shall not have a "r"
highlighter to its rating and shall have a predetermined fixed dollar amount due
at maturity.
"Eligible Lender Trustee" has the meaning set forth in the
preamble to the Indenture.
"Eligible Lender Trustee Fee" means the fee paid to the
Eligible Lender Trustee pursuant to Section 10 of the Trust Agreement; provided,
however, that under no circumstance shall such fee (exclusive of the acceptance
fee) exceed an annual amount equal to $12,000, payable in twelve equal monthly
installments pursuant to Section 3.03(b)(i) second, 3.03(b)(ii) second, and
3.03(b)(iii) second of the Indenture, as applicable.
"Eligible Student Loan" means a Student Loan:
(b) which was originated in the United States of America, its
territories, its possessions or other areas subject to its jurisdiction
and which was made to an eligible borrower under applicable law and
agreements and was fully and properly executed by the parties thereto;
(c) was originated or acquired by EFG (or by the Eligible
Lender Trustee on its behalf) and acquired by the Issuer (or by the
Eligible Lender Trustee on its behalf) in the ordinary course of its
business;
(d) provides for payments on a periodic basis that fully
amortize the Principal Balance of such Student Loan by its maturity, as
such maturity may be modified in accordance with any applicable
deferral or forbearance periods granted in accordance with applicable
laws and restrictions or any related Student Loan Guaranty Agreement
(or, in the case of TuitionGard, the related TuitionGard Policy), and
yield interest at the rates applicable thereto;
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(e) with respect to any Federal Student Loan, was originated
by an "eligible lender" under the Higher Education Act in the ordinary
course of its business and is guaranteed by a Student Loan Guarantor
that is an eligible guarantor under the Higher Education Act, qualifies
the holder thereof to receive Subsidy Payments from the DOE and Student
Loan Guaranty Payments from the related Student Loan Guarantor,
qualifies the related Student Loan Guarantor to receive reinsurance
payments thereon from the DOE, and such Federal Student Loan qualifies
for a rate of reimbursement to the related lender equal to at least
98%;
(f) complied at the time of origination and, except as may
otherwise be agreed to by the Insurer complies, at the time of its
inclusion in the Collateral, in all material respects with all
applicable requirements of local, state, and federal laws, rules and
regulations which govern the making and servicing of such Student Loan
including the requirements of the applicable Student Loan Guaranty
Agreement and including, in the case of any Private Student Loan, the
requirements of the programs governing the TERI Loans and the
TuitionGard Loans, as applicable;
(g) all signatures with respect to which are genuine and the
Student Loan Note evidencing such Student Loan has been duly executed
and delivered and constitutes the legal, valid and binding obligation
of the related Obligors enforceable in accordance with its terms;
(h) with respect to which no right of rescission, setoff,
counterclaim, or defense has been asserted or threatened or exists with
respect to such Student Loan;
(i) if such Student Loan is a Federal Student Loan, no payment
with respect to which is more than 120 days delinquent, and if such
Student Loan is a Private Student Loan, no payment with respect to
which is more than 90 days delinquent; except as permitted in this
clause (h), no default, breach, violation or event permitting
acceleration under the terms of such Student Loan has occurred, and
except for payment defaults continuing for a period of not more than
120 days, if such Student Loan is a Federal Student Loan, or payment
defaults continuing for a period of not more than 90 days, if such
Student Loan is a Private Student Loan, no continuing condition that
with notice or the lapse of time or both that would constitute a
default, breach, violation or event permitting acceleration under terms
of such Student Loan has arisen; and with respect to such Student Loan,
none of the forgoing events has occurred and been waived by any Person;
(j) with respect to which, to the best of the Issuer's
knowledge, an Event of Bankruptcy has not occurred with respect to the
related borrower;
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(k) that has not been originated in, and is not subject to the
laws of, any jurisdiction under which the origination, sale, transfer
and assignment of such Student Loan or beneficial ownership therein, is
unlawful, void or voidable;
(l) with respect to which there is only one original executed
copy of the Student Loan Note;
(m) that constitutes, in the case of a Private Student Loan,
an "instrument" as defined in the UCC;
(n) with regard to which the warranty of the Issuer in Section
5.01(g) of the Indenture is true and correct;
(o) the sale or assignment of such Student Loan to the Issuer
pursuant to the Purchase and Contribution Agreement, if applicable, and
the granting of a security interest to the Indenture Trustee pursuant
to the Indenture does not contravene or conflict with any law or
regulation, or require the consent or approval of, or notice to, any
Person;
(p) that is the subject of a valid Subservicing Agreement and
as to which a Subservicer Event of Default has not occurred;
(q) if such Student Loan is not a Federal Student Loan, it is
a Private Student Loan that was originated in all material respects in
accordance with the Underwriting Guidelines;
(r) if such Student Loan is a Private Student Loan, if the
outstanding Principal Balance thereof is added to the aggregate
outstanding Principal Balance of all other Private Student Loans that
are Financed Student Loans, the aggregate outstanding balance of all
Private Student Loans that are Financed Student Loans shall not exceed
7.5% of the aggregate outstanding Principal Balance of all Financed
Student Loans;
(s) if such Student Loan is a TERI Loan, if the outstanding
Principal Balance thereof is added to the aggregate outstanding
Principal Balance of all other TERI Loans that are Financed Student
Loans, the aggregate outstanding balance of all TERI Loans that are
Financed Student Loans shall not exceed 5% of the aggregate outstanding
Principal Balance of all Financed Student Loans;
(t) if such Student Loan is a TuitionGard Loan, it is entitled
to reimbursement at a rate of at least 95% under the applicable
TuitionGard Guaranty Policy, the Indenture Trustee is the insured under
such policy entitled to make claims thereunder, and, if the outstanding
Principal Balance thereof is added to the aggregate outstanding
Principal Balance of all TuitionGard Loans that are Financed Student
Loans, the aggregate outstanding balance of all TuitionGard
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Loans that are Financed Student Loans shall not exceed 7.5% of the
aggregate outstanding Principal Balance of all Financed Student Loans;
(u) if such Student Loan is an Unsubsidized Loan to an
Eligible Borrower attending a non-proprietary institution with a
matriculation period less than four years, if the outstanding Principal
Balance thereof is added to the aggregate outstanding Principal Balance
of all Unsubsidized Loans to Eligible Borrowers attending
non-proprietary institutions with matriculation periods less than four
years that are Financed Student Loans, the aggregate outstanding
balance of all Unsubsidized Loans to Eligible Borrowers attending
non-proprietary institutions with matriculation periods less than four
years that are Financed Student Loans shall not exceed 2.5% of the
aggregate outstanding Principal Balance of all Financed Student Loans;
(v) if such Student Loan is an Unsubsidized Loan to an
Eligible Borrower attending a proprietary institution, if the
outstanding Principal Balance thereof is added to the aggregate
outstanding Principal Balance of all Unsubsidized Loans to Eligible
Borrowers attending proprietary institutions that are Financed Student
Loans, the aggregate outstanding balance of all Unsubsidized Loans to
Eligible Borrowers attending proprietary institutions that are Financed
Student Loans shall not exceed 1% of the aggregate outstanding
Principal Balance of all Financed Student Loans;
(w) if such Student Loan is a subsidized Stafford Loan to an
Eligible Borrower attending a non-proprietary institution with a
matriculation period less than four years, if the outstanding Principal
Balance thereof is added to the aggregate outstanding Principal Balance
of all subsidized Stafford Loans to Eligible Borrowers attending
non-proprietary institutions with matriculation periods less than four
years that are Financed Student Loans, the aggregate outstanding
balance of all subsidized Stafford Loans to Eligible Borrowers
attending non-proprietary institutions with matriculation periods less
than four years that are Financed Student Loans shall not exceed 2.5%
of the aggregate outstanding Principal Balance of all Financed Student
Loans;
(x) if such Student Loan is a subsidized Stafford Loan to an
Eligible Borrower attending a proprietary institution, if the
outstanding Principal Balance thereof is added to the aggregate
outstanding Principal Balance of all subsidized Stafford Loans to
Eligible Borrowers attending proprietary institutions that are Financed
Student Loans, the aggregate outstanding balance of all subsidized
Stafford Loans to Eligible Borrowers attending proprietary institutions
that are Financed Student Loans shall not exceed 2% of the aggregate
outstanding Principal Balance of all Financed Student Loans;
(y) if such Student Loan is a PLUS Loan to an Eligible
Borrower attending a non-proprietary institution with a matriculation
period less than four years, if the outstanding Principal Balance
thereof is added to the aggregate
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outstanding Principal Balance of all PLUS Loans to Eligible Borrowers
attending non-proprietary institutions with matriculation periods less
than four years that are Financed Student Loans, the aggregate
outstanding balance of all PLUS Loans to Eligible Borrowers attending
non-proprietary institutions with matriculation periods less than four
years that are Financed Student Loans shall not exceed 2.5% of the
aggregate outstanding Principal Balance of all Financed Student Loans;
(z) if such Student Loan is a PLUS Loan to an Eligible
Borrower attending a proprietary institution, if the outstanding
Principal Balance thereof is added to the aggregate outstanding
Principal Balance of all PLUS Loans to Eligible Borrowers attending
proprietary institutions that are Financed Student Loans, the aggregate
outstanding balance of all PLUS Loans to Eligible Borrowers attending
proprietary institutions that are Financed Student Loans shall not
exceed 1% of the aggregate outstanding Principal Balance of all
Financed Student Loans;
(aa) if such Student Loan is a Federal Consolidation Loan to
an Eligible Borrower attending a non-proprietary institution with a
matriculation period less than four years, if the aggregate outstanding
Principal Balance thereof is added to the outstanding Principal Balance
of all Federal Consolidation Loans to Eligible Borrowers attending
non-proprietary institutions with matriculation periods less than four
years that are Financed Student Loans, the aggregate outstanding
balance of all Federal Consolidation Loans to Eligible Borrowers
attending a non-proprietary institutions with matriculation periods
less than four years that are Financed Student Loans shall not exceed
0.5% of the aggregate outstanding Principal Balance of all Financed
Student Loans;
(bb) if such Student Loan is a Federal Consolidation Loan to
an Eligible Borrower attending a proprietary institution, if the
outstanding Principal Balance thereof is added to the aggregate
outstanding Principal Balance of all Federal Consolidation Loans to
Eligible Borrowers attending proprietary institutions that are Financed
Student Loans, the aggregate outstanding balance of all Federal
Consolidation Loans to Eligible Borrowers attending proprietary
institutions that are Financed Student Loans shall not exceed 1% of the
aggregate outstanding Principal Balance of all Financed Student Loans;
(cc) if such Student Loan is a Federal Consolidation Loan to
an Eligible Borrower, if the outstanding Principal Balance thereof is
added to the aggregate outstanding Principal Balance of all Federal
Consolidation Loans to Eligible Borrowers that are Financed Student
Loans, the aggregate outstanding balance of all Federal Consolidation
Loans to Eligible Borrowers that are Financed Student Loans shall not
exceed 15% of the aggregate outstanding Principal Balance of all
Financed Student Loans;
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(dd) if the outstanding Principal Balance of such Student Loan
is added to the aggregate outstanding Principal Balance of all Financed
Student Loans to borrowers that are residents of the state in which the
related borrower resides, the aggregate outstanding Principal Balance
of all Financed Student Loans the borrowers with respect to which
reside in such state shall not exceed 30% of the aggregate outstanding
Principal Balance of all Financed Student Loans;
(ee) if the outstanding Principal Balance of such Student Loan
is added to the aggregate outstanding Principal Balance of all Financed
Student Loans, the aggregate outstanding Principal Balance of all
Financed Student Loans to borrowers that are residents of Concentration
States will not exceed 60% of the aggregate outstanding Principal
Balance of all Financed Student Loans;
(ff) if the interest rate with respect to such Student Loan is
indexed off a Prime Rate determined as set forth in the related loan
documentation, if the outstanding Principal Balance of such Student
Loan is added to the aggregate outstanding Principal Balance of all
Financed Student Loans the indices with respect to which are indexed
off the Prime Rate, the aggregate outstanding balance of all Financed
Student Loans the indices with respect to which are indexed off the
Prime Rate shall not exceed 7.5% of the aggregate outstanding Principal
Balance of all Financed Student Loans;
(gg) if such Student Loan is a Delinquent Student Loan that is
in repayment status, if the outstanding Principal Balance thereof is
added to the aggregate outstanding Principal Balance of all Financed
Student Loans that are in repayment status and that are Delinquent
Student Loans, the aggregate outstanding balance of all Financed
Student Loans that are in repayment status and that are Delinquent
Student Loans shall not exceed 8% of the aggregate outstanding
Principal Balance of all Financed Student Loans;
(hh) if such Student Loan is a Student Loan in which the
related borrower is in a Deferment Status, if the outstanding Principal
Balance thereof is added to the aggregate outstanding Principal Balance
of all Financed Student Loans the borrowers with respect to which are
in Deferment Status, the aggregate outstanding balance of all Financed
Student Loans that the borrowers with respect to which are in Deferment
Status shall not exceed 10% of the aggregate outstanding Principal
Balance of all Financed Student Loans;
(ii) if such Student Loan is a Student Loan in which the
related borrower has an In School Status or is in a Grace Period, if
the outstanding Principal Balance thereof is added to the aggregate
outstanding Principal Balance of all Financed Student Loans the
borrowers with respect to which have In School Status or are in a Grace
Period, the aggregate outstanding balance of all Financed Student Loans
the borrowers with respect to which have In School Status or are in a
Grace Period shall not exceed 80% of the aggregate outstanding
Principal Balance of all Financed Student Loans;
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(jj) if the borrower with respect to such Student Loan has an
In School Status or is in a Grace Period, if the outstanding Principal
Balance of such Student Loan is added to the aggregate outstanding
Principal Balance of all Financed Student Loans the borrowers with
respect to which have In School Status or are in a Grace Period, the
weighted average of the expected months until such Student Loans enter
repayment status (such weighted average being based on the Principal
Balance of such Student Loans) is no more than 19 months;
(kk) if such Student Loan is a Student Loan which is in
Forbearance Status, if the outstanding Principal Balance thereof is
added to the aggregate outstanding Principal Balance of all Financed
Student Loans the are in Forbearance Status, the aggregate outstanding
balance of all Financed Student Loans that are in Forbearance Status
shall not exceed 10% of the aggregate outstanding Principal Balance of
all Financed Student Loans;
(ll) if such Student Loan is an Unsubsidized Loan in which the
related Eligible Borrower is in an In School Status, if the outstanding
Principal Balance thereof is added to the aggregate outstanding
Principal Balance of all Unsubsidized Loans in which the related
Eligible Borrowers are in In School Status, the aggregate outstanding
balance of all Unsubsidized Loans in which the related Eligible
Borrowers are in In School Status that are Financed Student Loans shall
not exceed 30% of the aggregate outstanding Principal Balance of all
Financed Student Loans;
(mm) the maturity date with respect to such Student Loan does
not occur after the date which is one year prior to the Final Scheduled
Payment Date;
(nn) if such Student Loan is a Federal Student Loan, such
Student Loan is not an SLS Loan; and
(oo) if such Student Loan is a Private Student Loan guaranteed
by TERI, TERI is rated at least BBB- by S&P and Baa3 by Moody's.
"ERISA" means the U.S. Employee Retirement Income Security Act
of 1974, as amended from time to time.
"Event of Bankruptcy" shall be deemed to have occurred with
respect to a Person if either:
(a) a case or other proceeding shall be commenced, without the
application or consent of such Person, in any court, seeking the
liquidation, reorganization, debt arrangement, dissolution, winding up,
or composition or readjustment of debts of such Person, the appointment
of a trustee, receiver, custodian, liquidator, assignee, sequestrator
or the like for such Person or all or substantially all of its assets,
or any similar action with respect to such Person under any law
relating to bankruptcy, insolvency, reorganization, winding up or
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composition or adjustment of debts, and such case or proceeding shall
continue undismissed, or unstayed and in effect, for a period of 60
consecutive days; or an order for relief in respect of such Person
shall be entered in an involuntary case under the federal bankruptcy
laws or other similar laws now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other
proceeding under any applicable bankruptcy, insolvency, reorganization,
debt arrangement, dissolution or other similar law now or hereafter in
effect, or shall consent to the appointment of or taking possession by
a receiver, liquidator, assignee, trustee, custodian, sequestrator (or
other similar official) for, such Person or for any substantial part of
its property, or shall make any general assignment for the benefit of
creditors, or shall fail to, or admit in writing its inability to, pay
its debts generally as they become due, or, if a corporation or similar
entity, its board of directors shall vote to implement any of the
foregoing.
"Event of Default" has the meaning set forth in Section 7.02
of the Indenture.
"Excess Spread Amount" means, with respect to any Payment
Date, an amount equal to the excess of Expected Interest Collections with
respect to the related Collection Period over (a) during the Revolving Period,
amounts due on such Payment Date pursuant to clauses first through fifth and
clauses seventh and eighth of Section 3.03(b)(i) or (b) on and after the
Amortization Period Commencement Date, amounts due pursuant to clauses first
through fourth and clauses seventh and eighth of Section 3.03(b)(ii); provided,
that amounts due to be paid pursuant to clause seventh of Section 3.03(b)(i) and
clause seventh of Section 3.03(b)(ii) that represent payments made by the
Insurer under the Insurance Policy in respect of principal on the Class A Note
shall not be included in clause (a) or clause (b) hereof, as applicable, in
determining the Excess Spread Amount.
"Excess Spread Deficiency" means, with respect to any
Collection Period, the extent, if any, to which (a) the Excess Spread Amount
with respect to the related Payment Date is less than (b) the product of (i)
0.50% and (ii) (A) the weighted average of the Class A Note Principal Amount
outstanding during such Collection Period, multiplied by (B) the actual number
of days in such Collection Period, divided by (C) 360.
"Executive Officer" means, with respect to any corporation,
the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary or the
Treasurer of such corporation.
"Expected Interest Collections" means, with respect to any
Collection Period, the sum of (i) the amount of interest accrued, net of any
amounts required by the Higher Education Act to be paid to DOE, with respect to
the Financed Student Loans during such Collection Period, whether or not such
interest is actually paid, (ii) all
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Subsidy Payments estimated to have accrued for such Collection Period whether or
not actually received and (iii) Investment Earnings since the preceding Payment
Date.
"Extension Notice" means written notice of the Issuer's intent
to extend the Scheduled Amortization Period Commencement Date.
"Facility Limit" shall mean $650,000,000.
"Federal Consolidation Loan" means a loan made to an Eligible
Borrower pursuant to which the Eligible Borrower consolidates two or more of its
PLUS Loans, SLS Loans or Stafford Loans in accordance with the Higher Education
Act.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System, or any successor thereto or to the functions thereof.
"Federal Student Loan" means a student loan originated in
compliance with the Federal Student Loan Program and which is guaranteed as to
principal and interest by a Student Loan Guarantor pursuant to a Student Loan
Guaranty Agreement.
"Federal Student Loan Program" means the Federal Family
Education Loan Program authorized under the Higher Education Act.
"Final Payout Date" means the date following the Amortization
Period Commencement Date on which the principal and interest of the Class A Note
shall have been paid in full and all other amounts payable by Issuer under the
Transaction Documents shall have been paid in full.
"Final Scheduled Payment Date" means November 15, 2033.
"Financed Student Loan" means each Student Loan identified
from time to time on the Student Loan Schedule and, without duplication but by
way of inclusion and emphasis, all Student Loans acquired or funded, or
purported to be acquired or funded, with the proceeds of Advances and all
Student Loans, whether or not acquired or funded, with proceeds of Advances,
that are subject to the Lien of the Indenture.
"First Chicago" has the meaning set forth in the preamble.
"Fitch" means Fitch IBCA, Inc.
"Forbearance Status" means, with respect to any Student Loan,
the temporary period of time where the Obligor's required interest and principal
payments are postponed or reduced due to financial hardship. A forbearance must
be approved by the Master Servicer in accordance with guidelines provided by the
Issuer and in accordance with the Higher Education Act and the policies of the
applicable Student Loan Guarantor.
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"General Partner" means EFG-II SPC-I, Inc., a Delaware
corporation, in its capacity as the general partner of the Issuer under the
Issuer's limited partnership agreement.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any body or entity exercising
executive, legislative, judicial, regulatory or administrative functions or
pertaining to government, including without limitation any court, and any Person
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"Grace Period" means the period of time from when the student
borrower leaves school or drops below half-time status and when the student
borrower's repayment period begins.
"Guaranty Agreement" means the Guaranty and Warranty
Agreement, dated as of the Closing Date, made by EFG in favor of the Indenture
Trustee.
"Guaranty National" means Guaranty National Insurance
Corporation, a 100% owned indirect subsidiary of Orion Capital Corporation, a
Delaware corporation.
"Higher Education Act" means the Higher Education Act of 1965,
as amended, together with any rules, regulations and interpretations thereunder
of DOE or the applicable guaranty agent.
"Indenture Trustee" has the meaning set forth in the preamble
to the Indenture.
"Indenture Trustee's Fees" means an amount equal to $10,000
per annum, payable in twelve equal monthly installments pursuant to Section
3.03(b)(i) second, Section 3.03(b)(ii) second and Section 3.03(b)(iii) second of
the Indenture, as applicable.
"Indenture Trustee's Office" means The First National Bank of
Chicago, One First National Plaza, Suite 0126, Chicago, Illinois 60670-0126,
Attention: Corporate Trust Services Division.
"Initial Class A Noteholder" means the CP Vehicle, as initial
holder of the Class A Note on the Closing Date.
"Initial Specified Reserve Account Balance" means an amount
equal to the product of (i) the initial Class A Note Principal Amount and (ii)
7.70%.
"In School Status" means with respect to any Student Loan the
period during which (i) the student borrower is attending school at least
half-time and maintaining satisfactory academic progress and (ii) the student
borrower is eligible for additional student loans and in-school deferment of
payment of interest and principal.
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"Institutional Accredited Investor" has the meaning set forth
in Section 1.06(A).
"Insurance Agreement" means the Insurance Agreement, dated as
of August 5, 1999, among the Insurer, the Issuer, the General Partner, the
Master Servicer, the Indenture Trustee, the Eligible Lender Trustee and EFG, as
the same may be amended, supplemented or otherwise modified from time to time in
accordance with its terms.
"Insurance Policy" means the Class A Note Insurance Policy
dated August 5, 1999, and all endorsements thereto, if any, issued by the
Insurer for the benefit of the Class A Noteholders.
"Insurer" means MBIA Insurance Corporation, a stock insurance
company organized and created under the laws of the State of New York and any
successors thereto.
"Insurer Default" means (i) the occurrence of an Event of
Bankruptcy with respect to the Insurer or (ii) the occurrence of a failure by
the Insurer to make an Insured Payment in accordance with the Insurance Policy.
"Insured Payment" has the meaning specified in the Insurance
Policy.
"Insurer Reimbursement Amount" means, as of any Payment Date,
the sum of (i) all amounts previously paid by the Insurer under the Insurance
Policy which have not previously been reimbursed and (ii) all other amounts due
to the Insurer under the Insurance Agreement, other than the Policy Premiums.
"Interest Collections" means, with respect to any Collection
Period, that portion of any Collections received during such Collection Period
attributable to interest payments on the Financed Student Loans, including, but
not limited to all Subsidy Payments and that portion of any Purchase Amounts,
Reimbursement Payments and Student Loan Guaranty Payments attributable to
interest accrued on the Financed Student Loans, plus all Investment Earnings.
"Investment Company Act" means the Investment Company Act of
1940, as amended.
"Investment Earnings" means, with respect to each Payment
Date, all investment earnings (net of losses and investment expenses) on amounts
on deposit in the Accounts realized since the preceding Payment Date.
"Issuer" has the meaning set forth in the preamble.
"Issuer Order" means a written order or request signed in the
name of the Issuer by any one of its Authorized Officers and delivered to the
Indenture Trustee.
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"LIBOR" means, with respect to any Collection Period, (i) the
rate for one-month eurodollar deposits which appears on Telerate Page 3750 as it
relates to U.S. Dollars (as defined in the International Swaps and Derivatives
Association, Inc. 1991 Interest Rate and Currency Exchange Definitions) two
LIBOR Business Days before the first day of each Collection Period or such other
pages as may replace Telerate Page 3750, as of 11:00 a.m. (London time) on such
date or (ii) if, on such date, such rate does not appear on Telerate Page 3750
as of 11:00 a.m. (London time), "LIBOR" shall mean the average (rounded upwards,
if necessary, to the next higher 1/16 of 1%) of the respective rates per annum
at which deposits in U.S. dollars are offered to each of the LIBOR Reference
Banks in the London interbank market at approximately 11:15 a.m. (London time)
on such date in an amount approximately equal to the principal amount of the
Class A Note Principal Amount for a period of one month.
"LIBOR Business Day" means any Business Day on which
commercial banks are open for international business (including dealing in U.S.
Dollar Deposits) in London, England.
"LIBOR Reference Banks" means the principal London offices of
the Bank of America, N.A. and any other two banks approved by the Issuer and the
Class A Noteholders.
"Lien" means any interest in property securing an obligation
owed to, or a claim by, a Person other than the owner of the property, whether
such interest is based on the common law, statute or contract, and including but
not limited to the security interest lien arising from a mortgage, encumbrance,
pledge, conditional sale or trust receipt for a lease, consignment or bailment
for security purposes. The term "Lien" shall include reservations, exceptions,
encroachments, easements, rights-of-way, covenants, conditions, restrictions,
leases and other title exceptions and encumbrances affecting property.
"Liquidity Agent" means Bank of America, N.A.
"Liquidity Commitment Fee" means, with respect to any
Collection Period, the "Commitment Fees" (as such term is defined in the
Liquidity Agreement) due to the Liquidity Banks under the Liquidity Facility on
the related Payment Date.
"Liquidity Banks" means the banks that are parties to the
Liquidity Facility.
"Liquidity Facility" means that certain Liquidity Agreement,
dated as of August 5, 1999 among the CP Vehicle, the Liquidity Agent and the
banks listed therein, as the same may be amended, supplemented or otherwise
modified from time to time in accordance with its terms.
"Management Agreement" means the Management Agreement, dated
as August 5, 1999, among EFG, the Administrator, the Issuer and the CP Vehicle.
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"Master Servicer" means EFG Technologies, Inc. and any
successors and permitted assigns thereto with the consent of the Insurer so long
as no Insurer Default exists.
"Master Servicing Agreement" means the Master Servicing
Agreement, dated as of August 5, 1999, among the Issuer, the Master Servicer and
the Eligible Lender Trustee, as amended, modified or supplemented from time to
time in accordance with the terms thereof.
"Material Adverse Effect" with respect to any event or
circumstance and any Person, means a material adverse effect on:
(i) the business, assets, financial condition or operations of
such Person;
(ii) with respect to the Issuer or the General Partner, the
ability of such Person to perform its respective obligations under the
Indenture or any other Transaction Document;
(iii) with respect to the Issuer, the validity, enforceability
or collectibility of the Indenture, any other Transaction Document, a
material amount of the Financed Student Loans or a material amount of
the Student Loan Notes, or the Master Servicing Agreement, the
Subservicing Agreements or the Student Loan Guaranty Agreements; or
(iv) with respect to the Issuer, the status, existence,
perfection, priority or enforceability of the Indenture Trustee's
security interest in the Collateral.
"Monthly Advance" has the meaning set forth in
Section 3.06(c).
"Monthly Advance Amount" means the amount of any Monthly
Advance made pursuant to Section 3.06(c).
"Monthly Report" means a report, in substantially the form of
Exhibit 6.02(d) to the Indenture furnished by the Issuer to the Administrator,
the Eligible Lender Trustee, the Indenture Trustee and the Insurer.
"Moody's" means Moody's Investors Service, Inc.
"Net Cap Rate" means, with respect to any Collection Period,
the interest rate equivalent of the product of (a) the quotient obtained by
dividing (i) 360 by (ii) the actual number of days elapsed in such Collection
Period and (b) the percentage equivalent of a fraction, (i) the numerator of
which is equal to the Expected Interest Collections with respect to such
Collection Period less the sum of the Servicing Fee Amount, the Indenture
Trustee's Fees, the Eligible Lender Trustees Fee, the Liquidity Commitment Fee,
the Policy Premium and the Capped CP Program Payment Amount, in each case,
payable on the related Payment Date with respect to such Collection Period
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and (ii) the denominator of which is the weighted average of the Class A Note
Principal Amount outstanding during such Collection Period.
"Net Cap Rate Reserve Account" means an Eligible Deposit
Account, in the name of the Indenture Trustee, for the benefit of the Class A
Noteholders, which account has been designated the Net Cap Rate Reserve Account,
and any other account designated as the Net Cap Rate Reserve Account by the
Indenture Trustee.
"Net Cap Rate Reserve Account Funding Event" means, with
respect to any Payment Date, the occurrence of an Excess Spread Deficiency with
respect to the related Collection Period or any prior Collection Period;
provided, that any such Net Cap Rate Reserve Account Funding Event shall be
deemed not to have occurred if subsequent to the occurrence thereof (a) three
consecutive Collection Periods have occurred with respect to which no Excess
Spread Deficiency existed for any of such Collection Periods or (b) the amount
on deposit in the Net Cap Rate Reserve Account on such Payment Date (after
giving effect to any withdrawals therefrom) is equal to or greater than the Net
Cap Rate Reserve Account Maximum Requirement with respect to such Payment Date.
"Net Cap Rate Reserve Account Maximum Requirement" means, with
respect to any Payment Date, an amount equal to the product of (a) Class A Note
Principal Amount as of such Payment Date (after giving effect to any payments of
principal made on such Payment Date) and (b) 0.15%; provided, that if no Excess
Spread Deficiency shall have existed with respect to the three Collection
Periods immediately preceding the Collection Period during which such Payment
Date occurs, the Net Cap Rate Reserve Account Maximum Requirement shall be $0.
"Note Balance Equalization Amount" means with respect to any
Payment Date the excess of (a) the Class A Note Principal Amount on such Payment
Date (after giving effect to all payments of principal to the Class A
Noteholders pursuant to clause fifth of Section 3.03(b)(i) and 3.03(b)(ii)) over
(b) the Aggregate Student Loan Amount on such Payment Date.
"Note Purchase Agreement" means the Note Purchase Agreement,
dated as of August 5, 1999, between the Issuer and the CP Vehicle.
"Notice of Release" has the meaning set forth in
Section 2.04(a) of the Indenture.
"Notice of Addition or Substitution" has the meaning set forth
in Section 2.04(a).
"Obligor" means a Person obligated to make payments with
respect to a Student Loan, including the students, the Student Loan Guarantors
and the DOE.
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"Orion Specialty" means Orion Specialty, a Connecticut
domiciled insurance company and wholly-owned subsidiary of Orion Capital
Corporation, a Delaware corporation.
"Payment Date" means for any Collection Period the fifteenth
day of the following calendar month.
"Permitted Advance Amount" means, at the time of any Advance,
the product of (i) 108.35% and (ii) the portion of the Aggregate Student Loan
Amount allocable to such Advance.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, limited liability company,
trust, unincorporated association, joint venture, government or any agency or
political subdivision thereof or any other entity.
"PLUS Loan" means a Parent Loan for Undergraduate Students,
made in accordance with the Higher Education Act.
"Policy Premium" means the premium payable in accordance with
Section 3.02 of the Insurance Agreement.
"Premium Percentage" means at any time, the greater of (i)
100% and (ii) the percentage equivalent of a fraction, the numerator of which is
the Class A Note Principal Amount, and the denominator of which is equal to the
Aggregate Student Loan Amount; provided, however, that at no time shall the
Premium Percentage or any portion thereof exceed 108.35%.
"Prime Rate" means the interest rate that banks charge to
their most creditworthy customers.
"Principal Balance" with respect to any Student Loan means the
original principal amount of such Student Loan, plus capitalized interest
thereon, if any, less payments of principal by or on behalf of the Obligor of
such Student Loan.
"Principal Collections" means all Collections other than
Interest Collections.
"Private Placement Agreement" means the Private Placement
Agreement, dated as of August 5, 1999, among EFG, the CP Vehicle, Lehman
Brothers Inc. and Banc of America Securities LLC.
"Private Student Loan" means a TERI Loan or a TuitionGard
Loan, as the case may be.
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
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"Purchase and Contribution Agreement" means the Purchase and
Contribution Agreement, dated as of August 5, 1999, among EFG, the Eligible
Lender Trustee, First Chicago, as eligible lender trustee for EFG, and the
Issuer, as the same may be amended, supplemented, or otherwise modified from
time to time.
"Purchase Amount" means, with respect to the purchase of any
Financed Student Loans and with respect to any reassignment of any Financed
Student Loan pursuant to Section 5.02 of the Indenture, Section 4.2 of the
Purchase and Contribution Agreement or Section 3.05 of the Master Servicing
Agreement, an amount equal to the sum of (i) the Principal Balance of such
Financed Student Loans multiplied by the Premium Percentage and (ii) all accrued
and unpaid interest thereon.
"Purchase Price" means with respect to any Student Loan, the
sum of (i) the product of (a) the Premium Percentage and (b) the unpaid
Principal Balance of such Student Loan, plus (ii) all accrued and unpaid
interest thereon.
"Qualified Institution" means a depository institution
organized under the laws of the United States of America or any one of the
states thereof or the District of Columbia (or any domestic branch of a foreign
bank), (i) which has either (A) a long-term unsecured debt rating acceptable to
the Insurer, Moody's and S&P or (B) a short-term unsecured debt rating or
certificate of deposit rating acceptable to the Insurer, Moody's and S&P and
(ii) whose deposits are insured by the Federal Deposit Insurance Corporation.
"Rating Agencies" means Fitch, Moody's and S&P.
"Record Date" means with respect to any Payment Date, the
related Transfer Date.
"Reimbursement Contract" means the agreements between the
Student Loan Guarantors and the DOE providing for the payment by the Secretary
of amounts authorized to be paid pursuant to the Higher Education Act,
including, without limitation, reimbursement of amounts paid or payable upon
Defaulted Student Loans that are Federal Student Loans and Subsidy Payments to
holders of Student Loans that are Federal Student Loans.
"Reimbursement Payment" means any payment by the Secretary
pursuant to a Reimbursement Contract in respect of a Student Loan that is a
Federal Student Loan.
"Related Security" means, with respect to any Financed Student
Loan: (a) all of the right, title and interest of the Issuer and the Eligible
Lender Trustee in and to the Student Loan Note(s) and all other agreements that
relate to such Financed Student Loan; (b) any security interests or liens and
property subject thereto from time to time purporting to secure payment of such
Financed Student Loan, whether pursuant to the Student Loan Note related to such
Financed Student Loan or otherwise; (c) all UCC financing statements covering
any collateral securing payment of such Financed Student
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Loan and (d) all other guarantees and other agreements or arrangements of
whatever character from time to time supporting or securing payment of such
Financed Student Loan.
"Reserve Account" means an Eligible Deposit Account, in the
name of the Indenture Trustee, for the benefit of Class A Noteholders, which
account has been designated as the Reserve Account, and any other account
designated as the Reserve Account by the Indenture Trustee.
"Responsible Officer" means with respect to the Indenture
Trustee, any officer within the Corporate Trust Office of the Indenture Trustee,
including any vice president, assistant vice president, assistant treasurer,
assistant secretary, or any other similar officer of the Indenture Trustee
customarily performing functions similar to those performed by any of the above
designated officers, with direct responsibility for the administration of the
Indenture and the other Transaction Documents on behalf of the Indenture Trustee
and also, with respect to a particular matter, any other officer to whom such
matter is referred because of such officer's knowledge of an familiarity with
the subject.
"Revolving Period" means the period commencing on the date
hereof and ending on the Amortization Period Commencement Date.
"Revolving Period Principal Payment Amount" means on any
Payment Date during the Revolving Period, the amount necessary to cure any
Collateral Deficiency.
"Rule 144A" has the meaning set forth in Section 1.06(A) of
the Indenture.
"Scheduled Amortization Period Commencement Date" means August
5, 2002; provided, that subject to the conditions precedent that no Early
Amortization Event or Event of Default shall have occurred and be continuing and
the Liquidity Facility shall remain in full force and effect, the Scheduled
Amortization Period Commencement Date may be extended by the Issuer to a date
that is no later than the one year anniversary of the current Scheduled
Amortization Period Commencement Date upon 60 days prior delivery by the Issuer
of an Extension Notice to the Class A Noteholder, the Indenture Trustee, the CP
Vehicle, the Liquidity Agent and the Insurer; provided further that such
extension will not become effective without (i) the prior consent of the
Insurer, which consent, if given, shall be delivered within 45 days of delivery
by the Issuer of the Extension Notice and (ii) confirmation by each of the
Rating Agencies that such extension will not result in a downgrade, withdrawal
or qualification of the rating assigned to the Class A Note, by each such Rating
Agency.
"Secretary" means the Secretary of the DOE or an official or
employee of the DOE acting for the Secretary under a delegation of authority.
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"Security Agreement" means the Security Agreement, dated as of
August 5, 1999, among the Liquidity Agent, the CP Vehicle and the Collateral
Agent.
"Securities Act" means the Securities Act of 1933, as amended.
"Servicer Event of Default" has the meaning assigned thereto
in Section 6.01 of the Master Servicing Agreement.
"Servicing Fee Amount" means, with respect to a Collection
Period, an amount equal to the product of (i) one-twelfth of 0.75% and (ii) the
aggregate unpaid Principal Balance of the Financed Student Loans as of the close
of business on the last day of the second preceding calendar month.
"SLS Loan" means a loan that is made under the Supplemental
Loans for Students Program in accordance with the Higher Education Act.
"Specified Reserve Account Balance" means (a) prior to the
Amortization Period Commencement Date, the product of (i) 7.70% and (ii) the
Class A Note Principal Amount and (b) on and after the Amortization Period
Commencement Date, the greater of (A) the product of (i) 7.70% and (ii) the
Class A Note Principal Amount and (B) the product of (i) 1.50% and (ii) the
Aggregate Student Loan Amount as of the Amortization Period Commencement Date.
"S&P" means Standard & Poor's, a division of The McGraw Hill
Companies, Inc.
"Stafford Loan" means a loan made to an Eligible Borrower
designated as such that is made under the Robert T. Stafford Student Loan
Program in accordance with the Higher Education Act, including subsidized loans
and Unsubsidized Loans.
"State" means any state within the United States and any
territory, possession of the United States or other area subject to its
jurisdiction.
"Student Loan" means a Federal Student Loan or a Private
Student Loan.
"Student Loan Guaranty Agreement" means any of, and "Student
Loan Guaranty Agreements" means all of, the agreements pursuant to which the
Student Loan Guarantors guarantee Financed Student Loans listed on Schedule A to
the Indenture, as such Schedule A and such Student Loan Guaranty Agreement may
be amended, supplemented or otherwise modified from time to time, in each case,
other than the TuitionGard Agreement, with the consent of the Insurer.
"Student Loan Guaranty Payment" means any payment by a Student
Loan Guarantor pursuant to a Student Loan Guaranty Agreement or, in the case of
TuitionGard, pursuant to a TuitionGard Policy, in respect of a Financed Student
Loan.
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"Student Loan Guarantors" means (i) any guaranty agency under
the Higher Education Act providing guarantees with respect to Financed Student
Loans that are originated in compliance with the Federal Student Loan Program,
(ii) TERI, in its capacity as guarantor under the TERI Guaranty Agreement, and
(iii) Orion Specialty or Guaranty National, as applicable, in their capacity as
insurer under a TuitionGard Policy.
"Student Loan Notes" means the promissory notes or other
writings evidencing the Student Loans.
"Student Loan Schedule" means Appendix B to the Indenture
constituting a listing of Student Loans legally or beneficially owned by the
Issuer (including all Federal Student Loans subject to the Lien of the
Indenture) delivered to and held by the Indenture Trustee pursuant to Section
6.02(e) of the Indenture (which Schedule may be in the form of microfiche or
computer file or other medium acceptable to the Indenture Trustee), as from time
to time amended, supplemented, or modified.
"Subservicer" means any of, and "Subservicers" means all of,
the Subservicer(s) which have been approved by the Insurer servicing the
Financed Student Loans, identified as such on the Student Loan Schedule, which
is Appendix B to the Indenture and on Schedule C of the Master Servicing
Agreement.
"Subservicer Event of Default" means for any Subservicing
Agreement, an event as defined therein pursuant to which the Subservicer's right
to service Financed Student Loans thereunder is subject to termination or
removal.
"Subservicing Agreement" means any of, and "Subservicing
Agreements" means all of, the agreements entered into between the Master
Servicer and any Subservicer which has been approved by the Insurer pursuant to
which such Subservicer agrees to service Financed Student Loans, in each case,
as the same may be amended, supplemented or otherwise modified from time to
time, with the Insurer's consent.
"Subsidiary" means a corporation of which the relevant Person
and/or its other Subsidiaries own, directly or indirectly, such number of
outstanding shares as have more than 50% of the ordinary voting power for the
election of directors.
"Subsidy Payment" means interest subsidy payments, special
allowance payments and other payments of a similar nature made to the Issuer
pursuant to the terms of the Higher Education Act.
"Substitution" shall have the meaning set forth in Section
5.02 of the Indenture.
"Substitution Amount" means with respect to the Substitution
of any Financed Student Loan pursuant to Section 5.02 of the Indenture, Section
4.2 of the Purchase and Contribution Agreement or Section 3.05 of the Master
Servicing
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Agreement, an amount equal to the sum of the Principal Balance of such Financed
Student Loan and all accrued and unpaid interest thereon.
"TERI" means The Educational Resources Institute, Inc., a
Massachusetts non-profit corporation, and its successors.
"TERI Guaranty Agreement" means the agreement among TERI, the
Issuer and the Eligible Lender Trustee pursuant to which the TERI Loans are
fully guaranteed against non-payment of principal and interest by TERI approved
by the Insurer, as the same may be amended, supplemented or otherwise modified
from time to time in accordance with its terms with the consent of the Insurer.
"TERI Loan" means an education loan made to a student or
parent of a dependent student that is fully guaranteed as to non-payment of
principal and interest by TERI.
"Transaction Documents" means the Indenture, the Class A Note,
the Note Purchase Agreement, the Master Servicing Agreement, the Subservicing
Agreements, the Insurance Agreement, the Student Loan Guaranty Agreements, the
Purchase and Contribution Agreement, the Custodial Services Agreements, the Bank
One Custody Agreement, the Insurance Policy, the Trust Agreement, the CP
Documents and the other documents to be executed and delivered in connection
herewith.
"Transfer Date" means with respect to any Payment Date, the
Business Day preceding such Payment Date.
"Trust Agreement" means the Trust Agreement dated December 9,
1998, between EFG-I, LP and First Chicago, as trustee as amended by the First
Amendment to the Trust Agreement, dated as of June 1, 1999 by and among EFG-I,
LP and First Chicago.
"Trustees Fees" means the sum of the Eligible Lender Trustee
Fee and the Indenture Trustee's Fee.
"TuitionGard" means TuitionGard, Ltd.
"TuitionGard Agreement" means the Program Marketing,
Administration and Insurer Agreement, dated as of April 18, 1997, by and between
EFG and TuitionGard.
"TuitionGard Policy" means the insurance policies of Orion
Specialty or Guaranty National issued pursuant to the TuitionGard Agreement,
pursuant to which the TuitionGard Loans are insured up to 95% against
non-payment of principal and interest by Orion Specialty or Guaranty National.
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"TuitionGard Loan" means an education loan made to a student
or parent of a dependent student that is guaranteed up to 95% as to non-payment
of principal and interest under a TuitionGard Policy.
"UCC" means the Uniform Commercial Code as from time to time
in effect in the applicable jurisdiction or jurisdictions.
"Underwriting Guidelines" means the policies and procedures of
EFG with respect to the origination of Student Loans.
"Unmatured Event of Default" means any event which, with the
giving of notice or lapse of time, or both, would become an Event of Default.
"Unsubsidized Loan" means Stafford Loans that are not
subsidized by the DOE as set forth in Section 428H of the Higher Education Act
(20 U.S.C. Section 1078-8).
B. Other Terms. All accounting terms not specifically defined herein shall
be construed in accordance with generally accepted accounting principles. All
terms used in Article 9 of the UCC in the State of New York, and not
specifically defined herein, are used herein as defined in such Article 9.
C. Computation of Time Periods. Unless otherwise stated in the Indenture,
in the computation of a period of time from a specified date to a later
specified date, the word "from" means "from and including" and the words "to"
and "until" each means "to but excluding".
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