Exhibit 4.1
EXECUTION COPY
TRUST AGREEMENT
between
EMT CORP,
as Issuer
and
NBD Bank, N.A. as Trustee
Dated as of May 15, 1998
TABLE OF CONTENTS
PAGE
ARTICLE I
SHORT TITLE DEFINITIONS, AND INTERPRETATION
Section 1.1. Short Title 4
Section 1.2. Definitions 4
Section 1.3. Interpretation 12
Section 1.4. Incorporation by Reference of Trust 14
ARTICLE II
TERMS OF NOTES
Section 2.1. Authorized Amount of Notes 14
Section 2.2. Limited Obligation 15
Section 2.3. Authentication 15
Section 2.4. Form of Notes 15
Section 2.5. Conditions Precedent to Delivery of Notes 15
Section 2.6. Exchange Agreements 18
Section 2.7. Book-Entry Notes 18
Section 2.8. Notices to Clearing Agency 19
Section 2.9. Definitive Notes 19
Section 2.10. Restrictions on Transfer 19
ARTICLE III
GENERAL TERMS AND PROVISIONS OF NOTES
Section 3.1. Medium of Payment 20
Section 3.2. Legends 20
Section 3.3. Negotiability Transfer and Registry 20
Section 3.4. Transfer of Notes 21
Section 3.5. Regulations With Respect to Exchanges and
Transfers 21
Section 3.6. Notes Mutilated Destroyed Stolen or Lost 21
Section 3.7. Preparation of Definitive Notes,
Temporary Notes 22
Section 3.8. Cancellation and Destruction of Notes 22
Section 3.9. Execution and Authentication 22
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ARTICLE IV
APPLICATION OF NOTE PROCEEDS AND OTHER AMOUNTS
Section 4.1. Application of Note Proceeds, Accrued
Interest 23
ARTICLE V
PLEDGE OF TRUST AGREEMENT; ACCOUNTS
Section 5.1. Pledge 23
Section 5.2. Accounts 24
Section 5.3. Revenue Account 24
Section 5.4. Loan Account 26
Section 5.5. Reserve Account 28
Section 5.6. Investment of Certain Funds 28
Section 6.1. Payment of Notes 29
Section 6.2. Extension of Payment of Notes 29
Section 6.3. Offices for Servicing Notes 29
Section 6.4. Power to Issue Notes and Pledge Revenues
Funds and Other Property 30
Section 6.5. Further Assurance 30
Section 6.6. Accounts and Reports 30
Section 6.7. Loan Program 31
Section 6.8. Personnel and Servicing of Programs 32
Section 6.9. Issuance of Additional Obligations 32
Section 6.10. Compliance With Conditions Precedent 33
Section 6.11. General 33
Section 6.12. Waiver of Laws 33
Section 6.13. Reports to and Confirmations from the
Rating Agencies 33
Section 6.14. Existence 34
Section 6.15. Protection of Pledged Assets 34
Section 6.16. Opinions as to Pledged Assets 35
Section 6.17. Performance of Obligations Servicing of Loans 35
Section 6.18. Negative Covenants 37
Section 6.19. Annual Statement as to Compliance 37
Section 6.20. Issuer May Consolidate etc., Only on
Certain Terms 38
Section 6.21. Successor or Transferee 39
Section 6.22. No Other Business 39
Section 6.23. No Borrowing 39
Section 6.24. Obligations of Servicer and Administrator 40
Section 6.25. Guarantees, Loans, Advances and other
Liabilities 40
Section 6.26. Capital Expenditures 40
Section 6.27. Compliance with Articles of Incorporation 40
Section 6.28. Notice of Events of Default 40
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ARTICLE VII
SUPPLEMENTAL TRUST AGREEMENTS
Section 7.1. Supplemental Trust Agreements Effective
Without Consent of Note Owners 40
Section 7.2. Supplemental Trust Agreements Effective
Only Upon Consent of Note Owners 41
Section 7.3. General Provisions 42
ARTICLE VIII
AMENDMENTS
Section 8.1. Mailing of Notice of Amendment 42
Section 8.2. Powers of Amendment 42
Section 8.3. Consent of Note Owners 43
Section 8.4. Modifications by Unanimous Consent 43
Section 8.5. Exclusion of Notes 44
Section 8.6. Notation on Notes 44
ARTICLE IX
DEFAULTS, ACCELERATIONS AND REMEDIES
Section 9.1. Events of Default 44
Section 9.2. Acceleration 45
Section 9.3. Remedies 45
Section 9.4. Priority of Payments After Default 46
Section 9.5. Termination of Proceedings 48
Section 9.6. Direction of Proceedings 49
Section 9.7. Limitation on Rights of Note Owners 49
Section 9.8. Possession of Notes by Trustee Not Required 50
Section 9.9. Remedies Not Exclusive 50
Section 9.10. No Waiver of Default 50
Section 9.11. Notice of Event of Default 51
ARTICLE X
CONCERNING THE FIDUCIARIES
Section 10.1. Appointment and Acceptance of Duties of Trustee 51
Section 10.2. Responsibility of Fiduciaries 53
Section 10.3. Evidence on Which Fiduciaries May Act 53
Section 10.4. Compensation 54
Section 10.5. Permitted Acts and Functions 54
Section 10.6. Resignation of Trustee 55
Section 10.7. Removal of Trustee 55
Section 10.8. Appointment of Successor Trustee 55
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Section 10.9. Transfer of Rights and Property to
Successor Trustee 56
Section 10.10. Merger or Consolidation 56
Section 10.11. Adoption of Authentication 57
Section 10.12. Evidence of Signatures of Note Owners and
Ownership of Notes 57
Section 10.13. Preservation and Inspection of Documents 58
Section 10.14. Withholding 58
ARTICLE XI
DEFEASANCE; MISCELLANEOUS PROVISIONS
Section 11.1. Defeasance 58
Section 11.2. No Recourse Under Trust Agreement or on Notes 60
Section 11.3. Security Instrument 60
Section 11.4. Conflict 60
Section 11.5. Conflict with Trust Indenture Act 60
Section 11.6. Recording of Trust Agreement 61
Section 11.7. Effective Date 61
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STUDENT LOAN ASSET-BACKED NOTES
TRUST AGREEMENT
By and Between
EMT Corp., as Issuer
and
NBD Bank N.A.
as Trustee
This Trust Agreement dated, executed and delivered as of May
15, 1998 (hereinafter sometimes referred to as the "Trust Agreement") by and
between EMT Corp., a corporation, duly organized and existing under the laws of
the State of Indiana, with its principal office in the City of Indianapolis,
Indiana (hereinafter sometimes referred to as the "Issuer") and NBD Bank, N.A.,
as Truste, with its designated corporate trust office in Indianapolis, Indiana
(hereinafter sometimes referred to as the "Trustee"),
W I T N E S S E T H
WHEREAS, the Issuer is created and exists under the Business
Corporation Law of the State of Indiana; and
WHEREAS, the Issuer is empowered under its Articles of
Incorporation to finance Eligible Loans (as hereinafter defined) which are
either private student loans or Federal Family Education Program loans; and
WHEREAS, in order to provide funds for such purpose the Issuer
is duly authorized under its Articles of Incorporation to issue and sell notes
of the Issuer, which notes and the interest thereon may be secured by a pledge
of student loans financed by the proceeds thereof and the notes evidencing the
same as well as other revenues and assets of the Issuer; and
WHEREAS, the Issuer, by resolution adopted by its Board of
Directors on May 28, 1998 determined that a necessity existed to finance
Eligible Loans; and
WHEREAS, for the purpose of raising funds to finance such
Eligible Loans several series of Notes designated EMT Corp. Student Loan
Asset-Backed Notes Auction Rate Securities, Senior Series 1998 A-1 through A-4
and 1998 Senior Subordinate Series B (the "1998 Notes") are to be issued
pursuant to the terms of the First Terms Supplement (as defined herein) in the
principal amount of $350,000,000 and to be sold and delivered to provide
proceeds to finance the acquisition of Eligible Loans; and
WHEREAS, the execution and delivery of this Trust Agreement
and of the First Terms Supplement (which shall be the initial Supplemental Trust
Agreement hereunder) thereto and the
issuance of the 1998 Notes hereunder have been in all respects duly and validly
authorized by a resolution duly passed and approved by the Board of Directors of
the Issuer; and
WHEREAS, all acts, proceedings and things necessary and
required by law to make said 1998 Notes, when executed by the Issuer and
authenticated by the Trustee, the valid and binding legal obligations of the
Issuer and to constitute and make this Trust Agreement a valid and effective
Trust Agreement, have been done, taken and performed and the issuance, execution
and delivery of said 1998 Notes and the execution, acknowledgment and delivery
of this Trust Agreement have in all respects been duly authorized by the Issuer;
NOW THEREFORE, THIS TRUST AGREEMENT WITNESSETH THAT:
EMT Corp., in consideration of the premises and of the mutual
covenants herein contained, and of the purchase and acceptance of the 1998 Notes
by the owners thereof, and of the sum of One Dollar to be duly paid by the
Trustee at or before the sealing and delivery of these presents and for other
valuable consideration, the receipt whereof is hereby acknowledged, and for the
purpose of fixing and declaring the terms and conditions upon which the 1998
Notes and any Additional Notes (as defined herein) are to be and may be issued,
authenticated and delivered, secured and accepted by all persons who shall from
time to time be or become the owners thereof, and in order to secure equally and
ratably on a parity basis one with the other (except as hereinafter provided),
(1) the payment of the principal of and the interest on the Notes at any time
issued and outstanding under this Trust Agreement according to their tenor and
effect and payments, if any, required under any Exchange Agreement, and (2) the
performance and observance of all of the covenants and conditions in said Notes
and herein contained, has executed and delivered this Trust Agreement and does
hereby bargain, assign, pledge, and grant a security interest in the following
to the Trustee, and its successors in trust and assigns forever for the benefit
of the Note Owners and the provider of any Exchange Agreement as their interests
may appear, the following, which shall be hereinafter defined as the Pledged
Assets:
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GRANTING CLAUSES
DIVISION 1
The Loans (as hereinafter defined) and student loan notes
evidencing the same including any guarantee or insurance thereon;
DIVISION 2
All moneys and securities from time to time held by the
Trustee under the terms of this Trust Agreement and any and all other real or
personal property of every name and nature, from time to time hereafter by
delivery or by writing of any kind conveyed, mortgaged, pledged, assigned or
transferred as and for additional security hereunder by the Issuer or by anyone
in its behalf or with its written consent (including, but not limited to the
Custodial Property pledged under the Pledge Agreement, as defined hereinafter)
to the Trustee, which is hereby authorized to receive any and all such property
at any and all times and to hold and apply the same subject to the terms hereof;
DIVISION 3
All Revenues and Recoveries of Principal (as defined
hereinafter); and
DIVISION 4
All of the Issuer's interest in the Basic Documents and any
Exchange Agreement;
TO HAVE AND TO HOLD the same unto the Trustee and its
successor or successors and its or their assigns forever;
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ARTICLE I
SHORT TITLE DEFINITIONS, AND INTERPRETATION
Section 1.1. SHORT TITLE. This Trust Agreement may hereafter
be cited by the Issuer and is hereinafter sometimes referred to as the "Trust
Agreement".
Section 1.2. DEFINITIONS. In this Trust Agreement, the
following words and terms shall unless the context otherwise requires, have the
following meanings;
"Account" means any of the trust accounts created and
established by this Trust Agreement.
"Accountant" means such nationally reputable and experienced
independent certified public accountant or firm of independent certified public
accountants as may be selected by the Issuer and satisfactory to the Trustee and
may be the accountant or firm of accountants who regularly audit the books and
accounts of the Issuer.
"Additional Notes" means any Notes in addition to the 1998
Notes and any other Notes then Outstanding authorized and issued in accordance
with Section 2.1. hereof.
"Administrator" means EFS, Inc., an Indiana corporation acting
under the Administrative Agreement, or any successor thereto.
"Administrative Agreement" means the agreement so named by and
between EFS, Inc. and the Issuer.
"Advance" means an advance of funds by or on behalf of the
Issuer to the Trustee for deposit in any of the accounts established by the
Trust Agreement.
"Authorized Denomination" means with respect to the 1998 Notes
principal amounts of $50,000 and whole multiples thereof.
"Authorized Officer" means the President or Treasurer of the
Issuer or, in the case of any act to be performed or duty to be discharged, any
other officer or employee of the Issuer then authorized to perform such act or
discharge such duty.
"Bankruptcy Code" means Title 11 of the United States Code or
similar federal or state laws for the relief of debtors.
"Basic Documents" means the Servicing Agreement the
Administrative Agreement, the Custodian Agreement the Pledge Agreement, and each
Loan Purchase Agreement.
"Business Day" means a day of the year, except Saturday or
Sunday or days on which banks located in the city in which the
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Principal Office of the Trustee is located, are required or authorized to remain
closed or on which The New York Stock Exchange is closed.
"Certificate" means (i) a signed document either attesting to
or acknowledging the circumstances, representations or other matters therein
stated or set forth or setting forth matters to be determined pursuant to this
Trust Agreement or (ii) the report of an accountant as to audit or other
procedures called for by this Trust Agreement.
"Clearing Agency" means the entity so designated pursuant to
Section 2.7. hereof.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and the applicable Treasury regulations promulgated
thereunder.
"Counsel's Opinion" means an opinion signed by an attorney or
firm of attorneys of recognized standing in the field of law to which such
opinion relates, selected by the Issuer and satisfactory to the Trustee.
"Costs of Issuance" means all items of expense, directly or
indirectly payable or reimbursable by or to the Issuer and related to the
authorization sale and issuance of the Notes, including, but not limited to,
printing costs, costs of preparation and reproduction of document, filing and
recording fees, initial fees, and charges of any Fiduciary any liquidity
facility provider or insurer, legal fees and charges, fees and disbursements of
consultants and professionals costs of credit ratings costs of mathematical
verification of certain computations, fees and charges for preparation,
execution, transportation and safekeeping of Notes any insurance premiums and
financing charges, accrued interest with respect to the initial investment of
proceeds of Notes and any other cost, charge or fee in connection with the
original issuance of the Notes.
"Custodial Property" means the student loan notes evidencing
Loans, which are deposited with the Servicer pursuant to the Custodian Agreement
and constituting the Pledged Loans and related Pledged Documents as defined
therein.
"Custodian Agreement" means the custodian agreement among the
Issuer, the Eligible Lender Trustee, the Trustee and the Servicer, pursuant to
which the Servicer holds the Custodial Property for the benefit of the Trustee,
dated as of May 15, 1998 or any similar agreement.
"Depositary" means any bank, trust company, national banking
association or savings and loan association selected by the Issuer or the
Trustee as a depositary of moneys or securities held under the provisions of
this Trust Agreement and may include the Trustee or any Paying Agent.
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"Eligible Funds" means (i) the original proceeds of the Notes
remaining in any Account established hereunder, (ii) moneys on deposit in the
Revenue Account or the Loan Account and held in any one or more of such Accounts
for at least 123 days during which no Event of Bankruptcy shall have occurred,
(iii) any other moneys held by the Trustee under this Trust Agreement which, in
the opinion of nationally recognized counsel with expertise in bankruptcy
acceptable to the Trustee, will not, if used to pay the principal of or interest
on the Notes, constitute an avoidable preference under the Bankruptcy Code upon
an Event of Bankruptcy, and (iv) the proceeds of investment of any such moneys
which are retained in any such Account.
"Eligible Lender Trust Agreement" means that certain trust
agreement executed as of April 1, 1998, by and between EMT Corp. and KeyBank
Indiana, N.A., acting as eligible lender trustee.
"Eligible Lender Trustee" means KeyBank Indiana, N.A., or any
successor thereto as eligible lender trustee pursuant to the Eligible Lender
Trust Agreement.
"Eligible Loan" means any loan (1) made to a borrower to
finance post-secondary education, provided such borrower is a resident, or a
parent of a resident, of a state of the United States attending a post-secondary
school located within or without the United States, and (2) with respect to the
1998 Notes, guaranteed by a Guarantor or, subject to a Rating Confirmation any
private loan.
"Event of Bankruptcy" means the filing of a petition
commencing a case by or against the Issuer under the Bankruptcy Code unless such
petition shall have been dismissed and such dismissal shall be final and not
subject to appeal.
"Event of Default" means any of the events specified in
Section 9.1 hereof.
"Exchange Agreement" means any agreement by and among the
Issuer, the Trustee, and the counter-party thereto providing for the exchange of
payments as set forth in such agreement and shall include instruments such as
"collars", "caps", "floors" or "▇▇▇▇▇▇".
"Federal Family Education Loan Program" means the student loan
program authorized pursuant to Part B of Title IV of the Higher Education Act of
1965, comprised of ss.ss.20 U.S.C. 1071 ET SEQ., as the same may be amended from
time to time.
"Fiduciary" means the Trustee, the Eligible Lender Trustee, a
Depositary or any paying agent, or any or all of them as may be appropriate as
fiduciary for the benefit of the Note Owners.
"First Terms Supplement" means the First Terms Supplement
being the initial Supplemental Trust Agreement supplemental to this
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Trust Agreement dated as of May 15, 1998 by and between the Issuer and the
Trustee setting forth the terms of the 1998 Notes.
"Fiscal Year" means a twelve-month period commencing on the
first day of July of any year, or such other twelve-month period adopted by the
Issuer as its fiscal year for accounting purposes.
"Fitch" means Fitch IBCA Inc., a Delaware corporation, its
successors and assigns, and, if such corporation shall be dissolved or
liquidated or shall no longer perform the functions of a securities rating
agency, "Fitch" shall be deemed to refer to any other nationally recognized
securities rating agency designated by the Issuer.
"Guarantor" means (i) any guarantor of Federal Family
Education Loan Program loans and (ii) the United States Secretary of Education.
"Higher Education Act" means Title IV, Part B of the Higher
Education Act of 1965, as amended and the regulations thereunder.
"Interest Carryover" means any payment obligation so
characterized with respect to Notes in the related Supplemental Trust Agreement.
"Interest Payment Date" means any date upon which interest on
the Notes is due and payable in accordance with their terms.
"Investment Securities" means for all purposes:
(1) direct obligations (including obligations issued
or held in book entry form on the books of the United States
Department of Treasury) of the United States of America;
(2) obligations of any of the following federal
agencies which obligations represent full faith and credit of
the United States of America, including:
- Export - Import Bank
- Farmers Home Administration
- General Services Administration
- U.S. Maritime Administration
- Small Business Administration
- Government National Mortgage Association (GNMA)
- U.S. Department of Housing &, Urban Development
(PHA s)
- Federal Housing Administration;
(3) bonds notes or other evidences of indebtedness
rated "AAA" by S&P and "AA" by Fitch issued by the
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Federal National Mortgage Association or the Federal Home Loan
Mortgage Corporation with remaining maturities not exceeding
three years;
(4) U.S. dollar-denominated deposit accounts, federal
funds and banker's acceptances with domestic commercial banks
which have a rating on their short-term certificates of
deposit on the date of purchase of "A-1+" by S&P or "Fl+" by
Fitch and maturing no more than 360 days after the date of
purchase (Ratings on holding companies are not considered as
the rating of the bank);
(5) commercial paper which is rated at the time of
purchase in the single highest classification, "A-1" by S&P or
"[Fl+]" by Fitch and which matures not more than 270 days
after the date of purchase;
(6) repurchase agreements and reverse repurchase
agreements with banks (which may include the Trustee or any of
its affiliates) which are members of the Federal Deposit
Insurance Corporation, whose outstanding unsecured debt
securities are rated "AA" by Fitch and "AAA" by S&P;
(7) overnight repurchase agreements and reverse
repurchase agreements at least 101% collateralized by
securities described in subparagraph (1) of this definition;
(8) shares of a fund registered under the Investment
Company Act of 1940, as amended, whose shares are registered
under the Securities Act of 1933 as amended, which shares at
the time of purchase are rated "Aam-G" or "AAAm" by S&P or
(9) other forms of investments provided that prior to
the acquisition of such investment the Issuer shall give
reasonable written notice to the Rating Agencies of its
intention to so invest and shall deliver to the Trustee
evidence satisfactory to the Trustee that the making of such
investment would not adversely affect the existing rating on
any Outstanding Notes (provided however that no investment may
be made in any Investment Security rated "r" by S&P).
"Issuer" means EMT Corp. or any corporation, body, agency or
instrumentality which shall hereafter succeed to the powers, duties and
functions of the Issuer.
Junior Subordinate Obligations" means any obligations of the
Corporation authorized and issued in accordance with Section 2.1(e) hereof.
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"Loan" means any Eligible Loan acquired by the Issuer
pursuant to this Trust Agreement by the expenditure of amounts in the Loan
Account.
"Loan Account" means the Loan Account established pursuant to
Section 5.2. hereof.
"1998 Notes" means the Notes authorized in Section 2.1(b)
hereof.
"Note" means one of the notes authenticated and delivered
pursuant to Article II of this Trust Agreement.
"Note Owner" or words of similar import, when used with
reference to a Note, means any person who shall be the registered owner of any
Note.
"Outstanding", when used with reference to Notes shall mean
as of any date, all Notes theretofore or thereupon being authenticated and
delivered under this Trust Agreement except:
(1) any Note cancelled by the Trustee or
delivered to the Trustee for cancellation at or prior to
such date;
(2) any Note (or portion of a Note) for the payment
of which there have been separately set aside and held:
(a) moneys in an amount sufficient to effect payment
of the principal thereof, together with accrued interest on
such Note to the Payment Date or maturity; or
(b) Investment Securities as described in clause (1)
of the definition thereof, except that such Investment
Securities must also be non-callable, in such principal
amounts of such maturities, bearing such interest and
otherwise having such terms and qualifications as shall be
necessary to provide moneys in an amount sufficient to effect
payment of the principal of such Note together with accrued
interest on such Note, to the Payment Date or maturity; or
(c) any combination of (a) and (b) above;
(3) any Note in lieu of or in substitution for which
other Notes shall have been authenticated and delivered
pursuant to Sections 3.6 and 3.7 or Section 8.5 hereof; and
(4) any Note deemed to have been paid as provided in
subsection (B) of Section 11.1 hereof.
"Payment Date" means a date of redemption of the Notes prior
to the date of maturity of the Notes, upon election or requirement to redeem the
Notes on such date prior to maturity.
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"Pledge Agreement" means the agreement so named by and among
the Issuer, the Trustee and the Eligible Lender Trustee made as of the 15th day
of May, 1998.
"Pledged Assets" means all the rights and interests described
in Divisions 1 through 4 of the granting clauses of this Trust Agreement.
"Principal Office" means, with respect to the Trustee, the
office so designated by the Trustee.
"Program Expenses" means all of the Issuer's expenses in
carrying out and administering its loan purchase program under this Trust
Agreement and shall include without limiting the generality of the foregoing,
salaries, acquisition and loan servicing fees, supplies, utilities, mailing
labor, materials, office rent, maintenance furnishings, equipment, machinery and
apparatus, telephone insurance premiums, legal accounting, management,
consulting and banking services and expenses bond insurance and liquidity
facility fees and expenses, fees and expenses incurred in remarketing or
auctioning Notes, fees and expenses of the Fiduciaries, Costs of Issuance not
otherwise paid for or provided for from the proceeds of the Notes, travel,
payments for pension, thrift savings, retirement, health and hospitalization and
life and disability insurance benefits, all to the extent properly allocable to
the financing under this Trust Agreement; provided, however, that absent a prior
Rating Confirmation, the annual amount of Program Expenses payable from the
Pledged Assets shall not exceed 30% of the principal amount of the Outstanding
Notes.
"Rating Agency" or "Rating Agencies" means both of S&P and
Fitch (or either s successor) to the extent either such agency has been
requested by the Issuer to issue a rating on the Notes and such agency has
issued and continues to apply a rating on such Notes at the time in question.
"Rating Confirmation" means, with respect to any proposed
action that (i) the Rating Agency is given adequate prior written notice of such
proposed action and (ii) that prior to taking such action the Trustee has
received a letter or other evidence satisfactory to the Trustee, that the taking
of such action as proposed would not adversely affect any existing rating on the
outstanding Notes.
"Record Date" means (i) with respect to payments to be made on
an Interest Payment Date with respect to the 1998 Notes, the Business Day prior
to such Interest Payment Date (ii) or with respect to other Notes, such date as
shall be set in the applicable Supplemental Trust Agreement pursuant to which
such Notes are issued or (iii) with respect to payments to be made otherwise,
such date as the Trustee shall reasonably determine.
"Recoveries of Principal" means all amounts received by the
Issuer from or on account of any Loan as a recovery of the
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principal amount of any Loan including scheduled, delinquent and advance
payments, payouts or prepayments, proceeds from insurance or from the sale,
assignment or other disposition of a Loan and any payments representing such
principal from the guaranty or insurance of any Loan.
" Reserve Account" means the Reserve Account established
pursuant to Section 5.2 hereof.
"Reserve Account Requirement" means such amount as shall be
determined by the Issuer but in any event not less than the greater of (1)
$500,000 or (ii) two percent (2%) of the principal amount of the Outstanding
Notes.
"Revenue Account" means the Revenue Account established
pursuant to Section 5.2 hereof.
"Revenues" mean all payments, proceeds, charges, and other
cash income received by the Issuer from or on account of any Loan (including
scheduled, delinquent and advance payments of and any insurance proceeds with
respect to interest on any guarantee or Loan and any special allowance payment
received by the Issuer pursuant to the Higher Education Act with respect to any
Loan) all interest earned or gain realized from the investment of amounts in any
Account, and amounts received pursuant to any Exchange Agreement but excludes
Recoveries of Principal.
"S&P" means Standard & Poor's Rating Service, a division of
the ▇▇▇▇▇▇-▇▇▇▇ Companies, a New York corporation, its successors and assigns,
and if such corporation shall be dissolved or liquidated or shall no longer
perform the functions of a securities rating agency, "S&P" shall be deemed to
refer to any other nationally recognized securities rating agency designated by
the Corporation.
"Senior Obligations" means any obligations of the Issuer
authorized and issued in accordance with Section 2.1 (c) hereof which may be
either senior Notes or senior Exchange Agreements if so designated by the
Issuer.
"Senior Subordinate Obligations" means any obligations of the
Issuer authorized and issued in accordance with Section 2.1(d) hereof which may
be either senior subordinate Notes or senior subordinate Exchange Agreements if
so designated by the Issuer.
"Series Interest Rate" means the interest rate with respect to
a Series of Notes.
"Servicer" means, initially, EFS Services, Inc. an Indiana
corporation, and any successor or assigns or any other servicer sub3ect to a
Rating Confirmation.
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"Servicing Agreement" means the agreement so named by and
between the Issuer and EFS Services, Inc., dated as of May 15, 1998.
"State" means the State of Indiana.
"Supplemental Trust Agreement" means any trust agreement,
including any terms supplement supplemental to or amendatory of this Trust
Agreement, between the Issuer and the Trustee and effective in accordance with
Article VII.
"TIA" means the Trust Indenture Act of 1939 as in force on
the date hereof, unless otherwise specified.
"Trust Agreement" means this Trust Agreement and any
amendments or supplements made in accordance with its terms.
"Trust Estate" means the revenues, funds, property and assets
so identified in the Pledge Agreement.
"Trustee" means NBD Bank, N.A. and its successor and any
other person at any time substituted in its place pursuant to this Trust
Agreement.
"Value" means that the value of any investments shall be
calculated as follows:
(1) as to investment the bid and asked prices of which are
published on a regular basis in The Wall Street Journal (or if not
there, then in The New York Times): the average of the bid and asked
prices for such investments so published on or most recently prior to
such time of determination;
(2) as to investment the bid and asked prices of which are
not published on a regular basis in The Wall Street Journal or The New
York Times: the average bid price at such time of determination for
such investments by any two nationally recognized government securities
dealers (selected by the Trustee in its absolute discretion) at the
time making a market in such investments or the bid price published by
a nationally recognized pricing service;
(3) as to certificates of deposit and bankers acceptances:
the face amount thereof, plus accrued interest; and
(4) as to any investment not specified above; the value
thereof established by prior agreement between the Issuer, the Trustee
and the Rating Agencies.
Section 1.3. INTERPRETATION. (A) In this Trust Agreement,
unless the context otherwise requires:
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(1) the terms "hereby," "hereof," "hereto" "herein,"
"hereunder" and any similar terms, as used in this Trust
Agreement, refer to this Trust Agreement and the term
"heretofore" means before, and the term "hereafter" means
after the date of adoption of this Trust Agreement;
(2) words of the masculine gender mean and include
correlative words of the feminine and neuter genders and words
importing the singular number mean and include the plural
number and vice versa;
(3) words importing persons shall include firms,
association partnerships (including limited partnerships),
trusts, corporations and other legal entities, including
public bodies, as well as natural persons;
(4) any heading preceding the texts of the several
Articles and Sections of this Trust Agreement, and any table
of contents or marginal notes appended to copies hereof shall
be solely for convenience of reference and shall not
constitute a part of this Trust Agreement nor shall they
affect its meaning, construction or effect;
(5) this Trust Agreement shall be governed by and
construed in accordance with the applicable laws of the State;
(6) the verbs "finance" or "acquire" when used with
reference to a Loan, shall be construed to include (i) the
purchase or other acquisition of such Loan or (ii) the
participation by the Issuer, either with itself or with
others, in the making or purchase thereof; and
(7 any consent required hereunder shall unless
stated otherwise be in writing or confirmed in writing.
(B) Nothing in this Trust Agreement expressed or implied is
intended or shall be construed to confer upon, or to give to any person other
than the Issuer the Fiduciaries, the Note Owners or the counter party to any
Exchange Agreement, to the extent their interests may appear, any right, remedy,
or claim under or by reason of this Trust Agreement or any covenant, condition
or stipulation thereof. All the covenants, stipulations, promises, and
agreements herein contained by and on behalf of the Issuer shall be for the sole
and exclusive benefit of the Issuer, the Fiduciaries, the Note Owners, the
owners of any Junior Subordinate Obligations and the counter parties to any
Exchange Agreement, to the extent their interests may appear.
(C) If any one or more of the covenants or agreements
provided herein on the part of the Issuer or any Fiduciary to be performed
should be contrary to law, then such covenant or
13
covenants or agreement or agreements shall be deemed separable from the
remaining covenants and agreements hereof and shall in no way affect the
validity of the other provisions of this Trust Agreement, the Notes or any
Exchange Agreement.
Section 1.4. INCORPORATION BY REFERENCE OF TRUST INDENTURE
ACT. Whenever this Trust Agreement refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Trust
Agreement. The following TIA terms used in this Trust Agreement have the
following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Note Owner.
"indenture to be qualified" means, if requested in writing by
the Issuer, this Trust Agreement.
"indenture trustee" means the Trustee
"obligor" on the indenture securities means the Issuer.
All other TIA terms used in this Trust Agreement that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meanings assigned to them by such definitions.
ARTICLE II
TERMS OF NOTES
Section 2.1. AUTHORIZED AMOUNT OF NOTES
(a) No Notes may be issued under the provisions of this Trust
Agreement except in accordance with this Article.
(b) The 1998 Notes are authorized to be issued pursuant to
the terms of the First Terms Supplement in a total principal amount of three
hundred fifty million dollars ($350,000,000).
(c) Senior Obligations (other than a portion of the 1998
Notes) may be issued upon prior written notice to the Rating Agencies and
receipt by the Trustee of a Rating Confirmation.
(d) Senior Subordinate Obligations (other than a portion of
the 1998 Notes) may be issued upon prior written notice to the Rating Agencies
and receipt by the Trustee of a Rating Confirmation.
(e) Junior Subordinate Obligations may be issued upon prior
written notice to the Rating Agencies and receipt by the Trustee of a Rating
Confirmation.
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(f) Prior to the issuance of any Notes (other than the 1998
Notes) the Issuer shall deliver to the Trustee a Counsel's Opinion that the
issuance of such Notes would not adversely affect the tax opinion pertaining to
any prior issuance of Outstanding Notes.
Section 2.2. LIMITED OBLIGATION. The Issuer shall not be
obligated to pay the Notes (or any Exchange Agreement or Junior Subordinate
Obligation) or the interest thereon except from the property and income pledged
as aforesaid and no recourse shall be had for the payment of the principal
thereof or interest thereon against the Issuer, or against the property or funds
of the Issuer, except to the extent of the property and income pledged expressly
thereto.
Section 2.3. AUTHENTICATION. No Note shall be valid or
obligatory for any purpose or entitled to any security or benefit under this
Trust Agreement unless and until a certificate of authentication on any Note
shall be deemed to have been executed by an authorized representative of either
of the Trustee or a co-authenticating agent designated by the Issuer with the
approval of the Trustee, but it shall not be necessary that the same
representative of the Trustee or the co-authenticating agent sign the
certificate of authentication on all of the Notes issued hereunder.
Section 2.4. FORM OF NOTES. The form of the Notes, the
Trustee's Certificate of Authentication to be endorsed thereon and the form of
Assignment to be set forth thereon shall be substantially set forth in the
applicable Supplemental Trust Agreement.
Section 2.5. CONDITIONS PRECEDENT TO DELIVERY OF NOTES.
The Notes shall be authenticated by the Trustee and delivered to the Issuer or
upon its order, but only upon the receipt by the Trustee of:
(1) Counsels Opinion(s) to the effect that (i) this
Trust Agreement has been duly and lawfully authorized,
executed and delivered by the Issuer and is valid and binding
upon, and enforceable against the Issuer (except to the extent
that the enforceability thereof may be limited by the
operation of bankruptcy, insolvency, reorganization,
arrangement, fraudulent, conveyance, moratorium or other
similar laws affecting rights and remedies of creditors and by
the application of equitable principles and by the exercise of
3udicial discretion in appropriate cases); (ii) this Trust
Agreement creates the valid pledge which it purports to create
of the Revenues and Recoveries of Principal and of moneys and
securities on deposit in any of the Accounts established
hereunder, including the investments, if any, thereof, subject
to the application thereof to the purposes and on the
conditions permitted by this Trust
15
Agreement, (iii) upon the execution, authentication and
delivery thereof, such Notes constitute valid and binding
obligations of the Issuer; (iv) the Eligible Lender Trust
Agreement, the Eligible Lender Trust Agreement recognizes the
ability of the Issuer to execute and deliver the Supplemental
Trust Agreement relating to such Notes (and, in the case of
the first Series to be authenticated and delivered hereunder,
this Trust Agreement), and to issue such Notes, and the Issuer
has duly taken all necessary action under the Trust Agreement
and the Eligible Lender Trust Agreement for those purposes;
(v) the Issuer is an Indiana Corporation and the issuance of
the Notes then applied for is in conformity with the terms of
its charter, articles of incorporation and by-laws and have
been duly authorized by the Issuer, (vi) the Issuer has
granted to the Trustee a lien and first perfected security
interest in all of its right, title and interest in each such
Loan (vii) the Eligible Lender Trust Agreement authorizes the
Issuer to grant the Trust Estate to the Trustee as security
for the Notes of such Series and all previously issued and
Outstanding Series and the Issuer has taken all necessary
action under the Eligible Lender Trust Agreement and the
Pledge Agreement to grant the Trust Estate to the Trustee;
(viii) the Supplemental Trust Agreement delivered to the
Trustee with such Opinion of Counsel subjects the Loans
securing such Series and all previously issued and Outstanding
Series and all proceeds therefrom and the Pledged Assets for
such Series and all previously issued and outstanding Series
to the lien and security interest of this Trust Agreement;
(ix) such action has been taken with respect to delivery of
possession of the Pledged Assets and with respect to the
recording and filing of this Trust Agreement, the Supplemental
Trust Agreement for such Series, any other instruments
supplemental hereto and any other requisite documents and with
respect to the execution and filing of any financing
Statements as is necessary to perfect a first priority
security interest in the Pledged Assets for such Series and
all previously issued and Outstanding Series, with either the
details of such action being recited therein, or the absence
of any such action being necessary to make such lien and
security interest effective being stated therein; and, with
any recording, filing, re-recording and re-filing of this
Trust Agreement, the Supplemental Trust Agreement for such
Series, any other instruments supplemental hereto and any
other requisite documents and any execution and filing of any
financing Statements and continuation Statements that will in
the opinion of such counsel, be required to maintain the lien
and security interest created by this Trust Agreement and the
related Supplemental Trust Agreement in the Pledged Assets for
such Series and all previously issued and Outstanding Series
until the fifth anniversary date of the year
16
which the first Opinion of Counsel with respect to such Series
is required to be delivered; (x) this Trust Agreement and the
Supplemental Trust Agreement for such Series have been duly
qualified under the TIA, or that no qualification of such
Terms Supplement under the TIA is necessary, the execution of
the Supplemental Trust Agreement for such Series requires the
requalification of this Trust Agreement under the TIA, or that
no requalification of the Trust Agreement under the TIA is
necessary by virtue of the execution of such Supplemental
Trust Agreement; and (ix) no authorization, approval or
consent of any governmental body having jurisdiction over the
Issuer which has not been obtained by the Issuer is required
for the valid issuance and delivery of the Notes;
(2) a written order as to the delivery of such Notes
signed by an Authorized Officer; authorizing the execution,
authentication and delivery of such Notes by the Issuer and
specifying the Series, whether such Notes are to be Senior,
Senior Subordinate or Junior Subordinate Notes, the Final
Maturity Date of each Series, the principal amount and the
Series Interest Rate, or the method of determining such Series
Interest Rate of each Series of such Notes to be authenticated
and delivered;
(3) a Certificate of an Authorized Officer of the
Issuer stating that: (i) the Issuer is not in Default under
this Trust Agreement and the issuance of the Notes applied for
will not result in any breach of any of the terms, conditions
or provisions of, or constitute a default under, the Trust
Agreement, the Eligible Lender Trust Agreement, any indenture
mortgage, deed of trust or other agreement or instrument to
which the Issuer is a party or by which it is bound, or any
order of any court or administrative agency entered in any
proceeding to which the Issuer is a party or by which it may
be bound or to which it may be subject and that all conditions
precedent provided in this Trust Agreement relating to the
authentication and delivery of the Notes applied for have been
complied with; (ii) the Issuer is the owner or beneficial
owner of each Loan securing such Series and any previously
issued Series has not assigned any interest or participation
in any such Loan (or, if any such interest or participation
has been assigned it has been released) and has the right to
grant each such Loan to the Trustee (iii) the Issuer has
granted to the Trustee a lien and first perfected security
interest in all of its right title and interest in each such
Loan; and (iv) attached thereto are true and correct copies of
the Rating Confirmations;
17
(4) the amount of the proceeds of such Notes to be
deposited with the Trustee pursuant to Section 4.1;
(5) a certificate of an authorized official of or an
opinion of counsel to the Eligible Lender Trustee to the
effect that the Eligible Lender Trustee is an "eligible
lender" under the terms of the Higher Education Act and has
corporate power to execute and deliver the Eligible Lender
Trust Agreement;
(6) such further documents and moneys as are
required by the provisions of Article VII or any Supplemental
Trust Agreement entered into pursuant to Article VII; and
(7) if applicable, such further documents as are
required with regard to the issuance of Additional Notes.
Section 2.6. EXCHANGE AGREEMENTS. Any other provision of this
Trust Agreement notwithstanding, the Issuer and the Trustee may enter into an
agreement with a financial institution pursuant to which the Issuer and the
Trustee shall agree to make payments from amounts held under the Trust Agreement
in exchange for the financial institution agreeing to make payments to be
deposited under the Trust Agreement provided that prior to entering any such
agreement (i) the Issuer shall give adequate written notice to the Rating
Agencies of its intention to enter such agreement and (ii) the Issuer shall
deliver to the Trustee (a) the Rating Confirmations (b) a Counsel's opinion to
the effect that entering such Exchange Agreement would not adversely effect the
tax opinion pertaining to any Outstanding Notes and (c) a written direction to
enter into such agreement. Such notice to the Rating Agencies shall set forth
whether the particular Exchange Agreement shall be a Senior Obligation or a
Senior Subordinate Obligation.
Section 2.7. BOOK-ENTRY NOTES. Unless otherwise provided in
the related Supplemental Trust Agreement, the Notes, upon original issuance,
will be issued in the form of typewritten Notes representing the Book-Entry
Notes, to be delivered to The Depository Trust Company, the initial Clearing
Agency, by, or on behalf of, the Issuer. Such Notes shall initially be
registered on the Note Register in the name of Cede & Co., the nominee of the
initial Clearing Agency, and no Note Owner will receive a Definitive Note (as
defined below) representing such Note Owner's interest in such Note, except as
provided herein. Unless and until definitive, fully registered Notes (the
"Definitive Notes") have been issued to Note Owners pursuant to Section 2.9: (i)
the provisions of this Section shall be in full force and effect; (ii) the Note
Registrar and the Trustee may deal with the Clearing Agency for all purposes
(including the payment of principal of and interest and other amounts on the
Notes) as the authorized representative of the Note Owners; (iii) to the extent
that the provisions of this Section conflict with any other provisions of this
Trust Agreement the provisions of this Section shall control;
18
(iv) the rights of Note Owners shall be exercised only through the Clearing
Agency and shall be limited to those established by law and agreements between
such Note Owners and the Clearing Agency and/or the Clearing Agency Participants
pursuant to the Note Depository Agreements. Unless and until Definitive Notes
are issued pursuant to this Section, the initial Clearing Agency will make
book-entry transfers among the Clearing Agency Participants and receive and
transmit payments of principal of and interest and other amounts on the Notes to
such Clearing Agency Participants; and (v) whenever this Trust Agreement
requires or permits actions to be taken based upon instructions or directions of
Note Owners of Notes evidencing a specified percentage of the Outstanding Amount
of the Notes, the Clearing Agency shall be deemed to represent such percentage
only to the extent that it has received instructions to such effect from Note
Owners and/or Clearing Agency Participants owning or representing, respectively,
such required percentage of the beneficial interest in the Notes and has
delivered such instructions to the Trustee.
Section 2.8. NOTICES TO CLEARING AGENCY. Whenever a notice or
other communication to the Note Owners is required under this Trust Agreement,
unless and until Definitive Notes shall have been issued to Note Owners pursuant
to Section 2.9, the Trustee shall give all such notices and communications
specified herein to be given to Note Owners to the Clearing Agency.
Section 2.9. DEFINITIVE NOTES. Definitive Notes may be issued
as provided in Article III hereof.
Section 2.10. RESTRICTIONS ON TRANSFER. The Notes may not be
offered or sold, after their initial issuance, except to Qualified Institutional
Buyers in reliance on the exemption from the registration requirements of the
Securities Act provided by Rule 144A thereunder.
Each purchaser of any Series of Notes will be deemed to have
represented and agreed as follows: (i) It is either (1) a Qualified
Institutional Buyer as defined in Rule 144A promulgated under the Securities
Act, and is acquiring the Notes for its own institutional account or for the
account of a Qualified Institutional Buyer or (2) an institutional, "accredited
investor" as defined in Rule 501 (a)(1),(2),(3) or (7) of Regulation D
promulgated under the Securities Act; (ii) It understands that the Notes will be
offered in a transaction not involving any public offering within the meaning of
the Securities Act, and that if in the future it decides to resell, pledge or
otherwise transfer any Notes, such Notes may be resold, pledged or transferred
only (a) to a person who the seller reasonably believes is a Qualified
Institutional Buyer that purchases for its own account or for the account of a
Qualified Institutional Buyer to whom notice is given that the resale, pledge or
transfer is being made in reliance on Rule 144A or to an institutional
"accredited investor", and, who, in either such case, delivers to the Trustee,
the Issuer and the Market Agent an executed investment letter in acceptable form
or
19
(b) pursuant to an effective registration statement under the Securities Act;
and (iii) It understands that each Note will bear a legend substantially to the
following effect:
"UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER (AS
DEFINED BELOW) OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
AND ANY NOTE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO. HAS AN INTEREST HEREIN. THIS NOTE HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY STATE SECURITIES
LAWS THE HOLDER HEREOF BY PURCHASING THIS NOTE AGREES THAT THIS NOTE MAY BE
RESOLD PLEDGED OR OTHERWISE TRANSFERRED ONLY IN ACCORDANCE WITH ANY APPLICABLE
STATE SECURITIES LAWS AND (1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WHICH PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
RESALE PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A OR TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1),(2),(3), OR (7)
OF REGULATION D PROMULGATED UNDER THE SECURITIES ACT OR (2) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT. THIS NOTE IS NOT GUARANTEED OR
INSURED BY ANY GOVERNMENTAL AGENCY."
ARTICLE III
GENERAL TERMS AND PROVISIONS OF NOTES
Section 3.1. MEDIUM OF PAYMENT. The Notes shall be payable in
any coin or currency of the United States of America which at the time of
payment is legal tender for the payment of public and private debts.
Section 3.2. LEGENDS. The Notes may contain or have endorsed
thereon such provisions specifications and descriptive words not inconsistent
with the provisions of this Trust Agreement as may be necessary or desirable to
comply with custom, or otherwise.
Section 3.3. NEGOTIABILITY, TRANSFER AND REGISTER. All the
Notes issued under this Trust Agreement shall be negotiable, subject to the
provisions for registration, transfer and exchange contained in this Trust
Agreement and in the Notes. So long as any of the Notes shall remain Outstanding
or are otherwise not paid, The Issuer shall maintain and keep, at the corporate
trust operations office of the Trustee, books for the registration, transfer and
exchange of Notes. Upon presentation thereof for such purpose at said office,
the Issuer shall register or cause to be registered in such books, and permit to
be transferred thereon, any
20
Notes entitled to registration or transfer, under such reasonable regulations as
it or the Trustee may prescribe.
Notes may at the option of the owner thereof, and upon
payment by such owner of any charges which the Issuer or the Trustee may make as
provided in Sections 3.5 and 3.6 hereof, be exchanged for an equal aggregate
principal amount of Notes of any of the Authorized Denominations of the same
Series and maturity, upon surrender thereof at the designated corporate trust
operations office of the Trustee with a written instrument of transfer
satisfactory to the Trustee duly executed by the owner or such owner s duly
authorized attorney.
Section 3.4. TRANSFER OF NOTES. (A) Each Note shall be
transferable only upon the books of the Issuer, which shall be kept for such
purpose at the designated corporate trust operations office of the Trustee, in
person by the registered owner thereof or by such owner's attorney duly
authorized in writing, upon surrender thereof together with a written instrument
of transfer satisfactory to the Trustee duly executed by the registered owner or
such owner's duly authorized attorney. Upon the transfer of any such fully
registered Note, the Issuer shall issue in the name of the transferee a new
fully registered Note of the same Series and maturity.
(B) The Issuer and any Fiduciary may deem and treat the
person in whose name any fully registered Note shall be registered upon the
books of the Issuer as the absolute owner of such Note whether such Note shall
be overdue or not, for the purpose of receiving payment of, or on account of the
principal of and interest on such Note and for all other purposes and all such
payments so made to any such registered owner or upon such owner's order shall
be valid and effectual to satisfy and discharge the liability upon such Note to
the extent of the sum or sums so paid, and neither the Issuer nor any Fiduciary
shall be affected by any notice to the contrary.
Section 3.5. REGULATIONS WITH RESPECT TO EXCHANGES AND
TRANSFERS. In all cases in which the privilege of exchanging or transferring
Notes is exercised, the Issuer shall execute and the Trustee shall authenticate
and deliver Notes in accordance with the provisions of this Trust Agreement. For
every such exchange or transfer of Notes, whether temporary or definitive, the
Issuer or the Trustee may make a charge sufficient to reimburse it for any tax,
fee or other governmental charge required to be paid with respect to such
exchange or transfer, which charges shall be paid by the person requesting such
exchange or transfer as condition precedent to the exercise of the privilege of
making such exchange or transfer of Notes.
Section 3.6. NOTES MUTILATED, DESTROYED, STOLEN OR LOST. In
case any Note shall become mutilated or be destroyed, stolen
or lost, the Issuer shall execute and the Trustee shall
authenticate a new Note of like Series, interest rate,
maturity, principal
21
amount and other terms as the Note so mutilated, destroyed, stolen or lost. In
the case of a mutilated Note, such new Note shall be delivered only upon
surrender and cancellation of such mutilated Note In the case of Notes issued in
lieu of and substitution of a Note which have been destroyed, stolen or lost
such new Note shall be delivered only upon filing with the Trustee of evidence
satisfactory to establish to the Issuer and the Trustee that such Note has been
destroyed, stolen or lost and to prove the ownership thereof and upon furnishing
the Issuer and the Trustee with indemnity satisfactory to them. The person
requesting the authentication and delivery of a new Note pursuant to this
Section shall comply with such other reasonable regulations as the Issuer and
the Trustee may prescribe and pay such expenses as the Issuer and the Trustee
may incur in connection therewith. All Notes surrendered to the Trustee shall be
cancelled by it Evidence of such cancellation shall be given to the Issuer.
Section 3.7. PREPARATION OF DEFINITIVE NOTES; TEMPORARY NOTES.
(A) Definitive Notes shall be lithographed or printed on steel engraved borders;
and until definitive Notes are prepared the Issuer may execute and deliver, in
lieu of definitive Notes, but subject to the same provisions, limitations and
conditions as the definitive Notes, except as to the denominations thereof and
as to exchangeability, one or more temporary Notes, substantially of the tenor
of the definitive Notes in lieu of which such temporary Notes are issued, in
Authorized Denominations, and with such omissions, insertions and variations as
may be appropriate to temporary Notes. Upon surrender of such temporary Notes
for exchange and cancellation, the Issuer at its own expense shall prepare and
execute and, without charge to the owner thereof, deliver in exchange therefor,
at the corporate trust office of the Trustee, definitive Notes of the same
aggregate principal amount as the temporary Notes surrendered. Until so
exchanged, the temporary Notes shall in all respects be entitled to the same
benefits and security as definitive Notes issued pursuant to this Trust
Agreement.
(B) All temporary Notes surrendered in exchange for definitive
Notes shall be forthwith cancelled by the Trustee.
Section 3.8. CANCELLATION AND DESTRUCTION OF NOTES. All Notes
paid at maturity or redemption shall be delivered to the Trustee when such
payment is made, and such Notes, together with all Notes purchased by the
Trustee, shall thereupon be promptly cancelled. Notes so cancelled may at any
time be destroyed by the Trustee in accordance with its customary procedures.
Section 3.9. EXECUTION AND AUTHENTICATION. (A) After their
authorization, Notes may be executed by or on behalf of the Issuer and delivered
to the Trustee for authentication. The Notes shall be executed in the name and
on behalf of the Issuer by the manual or facsimile signature of an officer of
the Issuer. The corporate seal of the Issuer shall be thereunto affixed,
imprinted, engraved or otherwise reproduced thereon and attested by the
22
manual or facsimile signature of any other Authorized Officer, or in such other
manner as may be required by law. In case any one or more of the officers or
employees who shall have signed or sealed any of the Notes shall cease to be
such officer or employee before the Notes so signed and sealed shall have been
actually delivered, such Notes may, nevertheless, be delivered as herein
provided, and may be issued as if the person who signed or sealed such Notes had
not ceased to hold such office or be so employed. Any Note may be signed and
sealed on behalf of the Issuer by such persons as at the actual time of the
execution of such Note shall be duly authorized or hold the proper office in or
employment by the Issuer, although at the date of the Notes such persons may not
have been so authorized or have held such office or employment.
(B) The Notes shall bear thereon a certificate of
authentication executed manually by the Trustee or a co-authenticating agent. No
Note shall be entitled to any right or benefit under this Trust Agreement or
shall be valid or obligatory for any purpose until such certificate of
authentication shall have been duly executed by the Trustee or a
co-authenticating agent. Such certificate of the Trustee or a co-authenticating
agent upon any Note executed on behalf of the Issuer shall be conclusive
evidence that the Note was so authenticated and delivered under this Trust
Agreement and that the owner thereof is entitled to the benefits hereof.
ARTICLE IV
APPLICATION OF NOTE PROCEEDS AND OTHER AMOUNTS
Section 4.1. APPLICATION OF NOTE PROCEEDS, ACCRUED INTEREST.
(A) The proceeds of sale of any Additional Notes shall be applied as directed in
the Supplemental Trust Agreement pursuant to which such Notes are authorized.
(B) The proceeds of sale of the 1998 Notes shall as soon as
practicable upon the delivery of the 1998 Notes by the Trustee, be applied as
follows:
(1) the amount representing accrued interest, if
any shall be deposited to the Revenue Account; and
(2) the remainder shall be deposited as provided
in the First Terms Supplement hereto.
ARTICLE V
PLEDGE OF TRUST AGREEMENT; ACCOUNTS
Section 5.1. PLEDGE. To the fullest extent provided by
applicable laws, the Pledged Assets shall immediately be subject to the lien of
this Trust Agreement without any physical delivery thereof or further act, and
such lien shall be valid and binding against all parties having claims of any
kind in tort, contract or
23
otherwise, irrespective of whether such parties have notice hereof.
Additionally, the Custodial Property will be held by the Servicer for the
benefit of the Trustee, pursuant to the Custodian Agreement. A security interest
in the Pledged Assets, including Custodial Property, is hereby granted to the
Trustee for the benefit it of the Note Owners, the counter party or provider of
any Exchange Agreement and the owners of any Junior Subordinate Obligations, as
their interests may appear.
Section 5.2. ACCOUNTS. (A) The Issuer hereby establishes and
creates the following trust accounts:
(1) Revenue Account;
(2) Loan Account; and
(3) Reserve Account.
(B) All such Accounts shall be held and maintained by the
Trustee and shall be identified by the Issuer and the Trustee according to the
designations herein provided in such manner as to distinguish such Accounts from
the accounts established by the Issuer for any other of its obligations. All
moneys or securities held by the Trustee or any Depositary pursuant to this
Trust Agreement shall be held in trust for the benefit of the Note Owners (or
the counter-party or provider to any Exchange Agreement and the owners of any
Junior Subordinate Obligations, to the extent their interests may apply) and
applied only in accordance with the provisions of this Trust Agreement.
Section 5.3. REVENUE ACCOUNT. (A) The Issuer shall cause all
Revenues to be deposited promptly with the Trustee in the Revenue Account. There
shall be deposited in the Revenue Account any amount required to be deposited
therein pursuant to this Trust Agreement and any other amounts available
therefore and determined by the Issuer to be deposited therein from time to
time.
(B) The Trustee shall pay out of the Revenue Account at the
direction of the Issuer moneys then deposited therein, on each Interest Payment
Date, as follows and in the following order of priority (and pro rata between
separate categories of obligations within a priority in the event the available
amount is insufficient to pay all obligations within such priority):
FIRST: To the Servicer the amount, if any, then due, representing the
Loan servicing fees portion of Program Expenses as shall be set forth
in a certificate of an Authorized officer;
SECOND: Into a payment account to be used by the Trustee the amount, if
any, which when added to the amount already within such account and set
aside therefor will be sufficient to pay
24
interest on the Senior Notes due on such date, and any amount due on a
Senior Exchange Agreement on such date.
THIRD: Into a payment account to be used by the Trustee the amount, if
any, which when added to the amount already within such account and set
aside therefor will be sufficient to pay interest on the Senior
Subordinate Notes due on such date, and any amount due on a Senior
Subordinate Exchange Agreement;
FOURTH: Pay to the Issuer such administrative fees (not otherwise paid
or provided for) or other Program Expenses (other than servicing fees)
as shall have been incurred with respect to the Notes or the Loans.
FIFTH: Into a payment account to be used by the Trustee the amount, if
any, which when added to the amount already within such account and set
aside therefor will be sufficient to pay principal on the Senior Notes
due by reason of maturity or scheduled redemption on such date;
SIXTH: Into a payment account to be used by the Trustee the amount, if
any, which when added to the amount already within such account and set
aside therefor will be sufficient to pay principal on the Senior
Subordinate Notes due by reason of maturity or scheduled redemption on
such date;
SEVENTH: Provided that the Reserve Account Requirement is then not met,
to the Reserve Account such amount as then available to meet such
Reserve Account Requirement.
EIGHTH: Provided that the Value of the amount on deposit in the
Accounts as certified to the Trustee by an Authorized Officer, exceed
100% of the principal amount of the Outstanding Notes, then the amounts
above such 100% may be transferred into a payment account to be used by
the Trustee, in an amount, if any, which when added to the amount
already within such account and set aside therefor would be sufficient
to pay any Interest Carryover then due and unpaid with respect to, in
order of priority of payment Senior Notes and then Senior Subordinate
Notes.
NINTH: Into a payment account to be used by the Trustee the amount, if
any, to be used to pay principal on Senior Notes in accordance with the
priorities set forth in the applicable Supplemental Trust Agreements.
TENTH: Into a payment account to be used by the Trustee the amount, if
any, to be used to pay principal on Senior Subordinate Notes in
accordance with the priorities set forth in the applicable Supplemental
Trust Agreements.
ELEVENTH: Into a payment account to be used by the Trustee the amount,
if any, which when added to the amount already within such account
and set aside therefor will be sufficient to pay,
25
first interest on, and second, principal of any outstanding Junior
Subordinate Obligations to the extent then due.
TWELFTH: All remaining amounts, after giving effect to the above
transfers and after retaining an amount equal to not less than thirty
(30) days interest expected to be payable on all Notes as set forth in
the Certificate of an Authorized Officer to the Loan Account.
Section 5.4. LOAN ACCOUNT. (A) There shall be deposited in the
Loan Account all Recoveries of Principal and any amounts which are required to
be deposited therein pursuant to this Trust Agreement, and any other amounts
available therefor and determined by the Issuer to be deposited therein and not
inconsistent with this Trust Agreement. The Trustee shall pay out of the Loan
Account for deposit in the payment account of the Trustee on each Interest
Payment Date the amounts as shall be set forth in the Certificate of an
Authorized Officer as required for the payment of the amounts if any due in the
following order: (i) as interest on the Outstanding Senior Notes on such date
not provided for from the Revenue Account pursuant to Section 5.3. (B), SECOND
(ii) as interest on the Outstanding Senior Subordinate Notes on such date not
provided for from the Revenue Account pursuant to Section 5.3. (B), THIRD (iii)
as principal on the Outstanding Senior Notes on such date not provided for from
the Revenue Account pursuant to Section 5.3. (B) FIFTH and, to the extent
required by the applicable Supplemental Trust Agreement, NINTH hereof, (iv) as
principal on the Outstanding Senior Subordinate Notes on such date not provided
for from the Revenue Account pursuant to Section 5.3.(B), SIXTH, and to the
extent required by the applicable Supplemental Trust Agreement, TENTH hereof and
(v) on any Outstanding Junior Subordinate Obligations not provided for from the
Revenue Account pursuant to Section 5.3(B) ELEVENTH.
(B) Amounts in the Loan Account shall be expended only (i) to
finance Eligible Loans; (ii) to pay Costs of Issuance or Program Expenses not
otherwise provided for; or (iii) to pay the principal of and interest on any
Notes or Subordinate obligations, when due including at maturity or earlier
redemption. All Eligible Loans financed by application of amounts in the Loan
Account shall be held by the Servicer pursuant to the Custodian Agreement and
credited to the Loan Account. In addition to the ability of the Issuer to sell,
assign, transfer or otherwise dispose of Eligible Loans pursuant to Section 6.7
(C) hereof, the Issuer may transfer Eligible Loans in the Loan Account to any
other account of the Issuer, free and clear of the lien of the Trust Agreement,
provided that simultaneously with such transfer the Issuer shall cause there to
be delivered to the credit of the Loan Account free of all other liens and
encumbrances other than the lien of the Trust Agreement, either or both of cash
in an amount equal to the principal and accrued interest of the transferred Loan
or an Eligible Loan with substantially the same principal amount and, in the
reasonable determination of the Issuer, having substantially similar
26
characteristics as to amortization, guaranty, type of school, type of loan and
repayment.
(C) The Trustee shall pay out and permit the withdrawal of
amounts on deposit in the Loan Account for the purpose of making payments
pursuant to (B) (iii) of this Section at any time and further at any time for
the purpose of making payments pursuant to (B) (i) or (ii) of this Section but
only upon receipt of:
(1) a written requisition setting forth the amount to be paid
the person or persons to whom such payment is to be made (which may be
or include the Issuer) and in reasonable detail the purpose or purposes
of such withdrawal;
(2) a Certificate of an Authorized Officer identifying such
requisition and stating that the amount to be withdrawn from the Loan
Account pursuant to such requisition is a proper charge thereon; and
(3) if such requisition is to finance Eligible Loans, notice
from the Servicer with respect to such loans of delivery of the
promissory note with respect to such Eligible Loan so purchased.
(D) To the extent (and subject to the provisions of Section
6.7 hereof) any loan to be financed is not a loan authorized by the Higher
Education Act prior to the acquisition of such loan the Issuer shall (i) give
reasonable written notice to the Rating Agencies of its intention to finance the
particular category of such loans, (ii) execute and deliver to the Trustee a
Supplemental Trust Agreement including such category of loans within the defined
term of Eligible Loan and (iii) deliver to the Trustee a Rating Confirmation.
(E) Provided that the Reserve Account Requirement is then
met, to the extent the aggregate amount of Loans and the Value of the Investment
Securities on deposit in the Accounts as certified to the Trustee by an
Authorized Officer, (i) exceed 100% of the principal amount of the Outstanding
Notes and Junior Subordinate Obligations giving effect to the transfers
described in (A) above, then the amounts above such 100% may be transferred to
the Issuer, to repay Advances previously made (plus interest accrued thereon if
any at a rate determined to be reasonable by the Trustee at the time of receipt
of such Advance) or (ii) exceed 101%of the principal amount of the Outstanding
Notes and Junior Subordinate obligations after giving effect to the transfers
described in (A) above then the amounts above such 101% may be transferred to or
at the director of the Issuer free and clear of the lien or the pledge of the
Trust Agreement The foregoing notwithstanding for purposes of this provision
Loans shall be valued (i) at 100% of the outstanding principal amount plus
accrued interest thereon if not then in default and (ii) if in default, at such
percentage of the principal amount thereof plus accrued interest thereon as
shall be guaranteed under the applicable guarantee agreement.
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Section 5.5. RESERVE ACCOUNT. Amounts on deposit in the
Reserve Account shall be used by the Trustee to pay debt service on the Notes
when due to the extent amounts available therefor pursuant to Sections 5.3 (B)
SECOND and THIRD and FIFTH and SIXTH and 5.4(A) are insufficient.
Amounts on deposit in the Reserve Account in excess of the
Reserve Account Requirement, may, at the direction of an Authorized Officer, be
transferred to the Loan Account or the Revenue Account.
Section 5.6. INVESTMENT OF CERTAIN FUNDS. (A) Moneys in any
Account shall be continuously invested and reinvested or deposited and
redeposited by the Trustee in Investment Securities at the written direction of
the Issuer. The Issuer shall direct the Trustee to invest and reinvest the
moneys in any Account in Investment Securities so that the maturity date or date
of redemption at the option of the owner thereof shall coincide as nearly as
practicable with the times at which moneys are needed to be so expended In the
absence of direction from the Issuer the Trustee shall invest the moneys in the
Pegasus Treasury MMF Fund or a comparable AAA rated fund invested in Treasury
Securities backed by the full faith and credit of the United States government
and shall immediately notify the Issuer of such action The Investment Securities
purchased shall be held by the Trustee in trust for the benefit of the Note
Owners (or the counter-party or provider of any Exchange Agreement or the owners
of any Junior Subordinate Obligations to the extent their interests may appear)
and shall be deemed at all times to be part of such Account except as provided
in subsection (B) hereof, and the Trustee shall keep the Issuer advised as to
the details of all such investments. The Trustee may make any and all such
investments through its own investment department or that of its affiliates or
subsidiaries.
(B) Investment Securities purchased as an investment of
moneys in any Account held by the Trustee under the provisions of this Trust
Agreement shall be deemed at all times to be a part of such Account but the
income or interest earned and gains realized in excess of losses suffered by an
Account due to the investment thereof shall be deposited in the Revenue Account
or shall be credited as Revenues to the Revenue Account from time to time and
reinvested.
(C) The Trustee shall sell at the best price reasonably
obtainable, or present for redemption or exchange, any Investment Security
purchased by it pursuant to this Trust Agreement whenever it shall be necessary
in order to provide moneys to meet any payment. Any Investment Security may be
credited on a pro rata basis to more than one Account and need not be sold in
order to provide for the transfer of amounts from one Account to another. The
Trustee shall advise the Issuer in writing, on or before the tenth day of each
calendar month of all investments held for the credit of each Account in its
custody under the provisions of this Trust Agreement as of the end of the
preceding month.
28
(D) The Trustee shall have no responsibility with respect to
the compliance by the Issuer with respect to any covenant herein regarding
investments made in accordance with this Article, other than to use its best
reasonable efforts to comply with instructions from the Issuer regarding such
investments. Since the investments permitted by this Section have been included
at the request of the Issuer and the making of such investments will be subject
to the Issuer s direction the Trustee specifically disclaims any obligation to
the Issuer for any loss arising from, or tax consequences of investments
pursuant to the provisions of this section.
ARTICLE VI
PARTICULAR COVENANTS
The Issuer covenants and agrees with the Trustee and the
owners of the Notes as follows.
Section 6.1. PAYMENT OF NOTES. The Issuer shall duly and
punctually pay or cause to be paid, solely from Pledged Assets and as herein
provided, the principal of every Note and the interest thereon, at the dates and
places and in the manner stated in the Notes according to the true intent and
meaning thereof.
Section 6.2. EXTENSION OF PAYMENT OF NOTES. The Issuer shall
not directly or indirectly extend or consent to the extension of the maturity of
any of the Notes or claims for interest by the purchase or funding of such Notes
or claims for interest or by any other arrangement In the event that the
maturity of any of the Notes or the time for payment of any such claims for
interest shall be extended such Notes or claims for interest shall not be
entitled (i) to the benefits of this Trust Agreement or (ii) to any payment (a)
out of the Accounts established pursuant to this Trust Agreement including the
investments, if any, thereof or (b) out of any assets or revenues pledged
hereunder prior to the payment of the principal of all Notes the maturity of
which has not been extended and the payment of such portion of the accrued
interest on the Notes as shall not be represented by such extended claims for
interest Nothing herein shall be deemed to limit the right of the Issuer to
issue refunding obligations and such issuance shall not be deemed to constitute
an extension of the maturity of the Notes being refunded.
Section 6.3. OFFICES FOR SERVICING NOTES. The Issuer shall at
all times maintain an office or agency where Notes may be presented for
registration, transfer or exchange, and where notices, presentations and demands
upon the Issuer in respect of the Notes or of this Trust Agreement may be served
The Issuer hereby appoints the Trustee as its agent to maintain such office or
agency for the registration, transfer or exchange of Notes, and for the service
of such notices presentations and demands upon the Issuer.
29
Section 6.4. POWER TO ISSUE NOTES AND PLEDGE REVENUES, FUNDS
AND OTHER PROPERTY. The Issuer is duly authorized under all applicable laws to
authorize and issue the Notes and to enter into, execute and deliver this Trust
Agreement and to pledge the assets and revenues purported to be pledged hereby
in the manner and to the extent herein provided. The assets and revenues so
pledged are and will be free and clear of any pledge, lien charge or encumbrance
thereon except for the pledge created hereby, and all corporate or other action
on the part of the Issuer to that end has been and will be duly and validly
taken The Notes and the provisions of this Trust Agreement are and will be valid
and legally enforceable obligations of the Issuer in accordance with their terms
and the terms of this Trust Agreement The Issuer shall at all times to the
extent permitted by law, defend preserve and protect the pledge of the Pledged
Assets, including all Recoveries of Principal and Revenues and other assets and
revenues including rights pledged under this Trust Agreement, and all the rights
of the Note Owners, under this Trust Agreement against all claims and demands of
all persons whomsoever.
Section 6.5. FURTHER ASSURANCE. At any and all times the
Issuer shall so far as it may be authorized by law, pass, make, do, execute,
acknowledge and deliver, all and every such further resolutions, acts, deeds
conveyances, assignments transfers and assurances as may be necessary or
desirable for the better assuring conveying granting, pledging, assigning and
confirming all and singular the rights Revenues, Recoveries of Principal and
assets hereby pledged or assigned or intended so to be or which the Issuer may
become bound to pledge or assign.
Section 6.6. ACCOUNTS AND REPORTS. (A) The Issuer shall keep,
or cause to be kept, proper books of record and account in which complete and
accurate entries shall be made of all of its transactions relating to the Loans
and all Accounts established in this Trust Agreement which shall at all
reasonable times be subject to the inspection of the Trustee and the owners of
an aggregate of not less than 5% in principal amount of Notes then outstanding
or their representatives duly authorized in writing.
(B) The Issuer shall annually within 120 days after the close
of each Fiscal Year file with the Trustee and the Rating Agencies a copy of an
annual report as to the operations and activities of the Issuer during such
Fiscal Year and financial statements for such Fiscal Year setting forth in
reasonable detail:
(1) the balance sheet for the Issuer at the end of such Fiscal
Year;
(2) a statement of the Issuer's revenues and expenses during
such Fiscal Year; and
30
(3) a statement of cash f low, as of the end of such
Fiscal Year.
The financial statements shall be accompanied by an
Accountant's Certificate stating that the financial statements examined present
fairly the financial position of the Issuer at the end of the Fiscal Year, and
that the results of its operations and the changes in financial position for the
period examined, are in conformity with generally accepted accounting principles
Section 6.7. LOAN PROGRAM. (A) The Issuer shall from time to
time with all practical dispatch and in a sound and economical manner consistent
in all respects with the provisions of this Trust Agreement, including Section
5.4 (B), and sound banking practices and principles (i) use and apply proceeds
of the Notes and moneys in the Loan Account to the extent not reasonably or
otherwise required for other purposes of the loan program to finance Eligible
Loans pursuant to this Trust Agreement or to pay other obligations of the Issuer
required to be paid under this Trust Agreement (ii) do all such acts and things
as shall be necessary to receive and collect Revenues (including special
allowance payments) and Recoveries of Principal sufficient to pay the Notes and
the expenses of the Loan program and (iii) diligently enforce and take all steps
actions and proceedings reasonably necessary in the judgment of the Issuer to
protect its rights with respect to Loans, use its best efforts to maintain any
insurance on and to enforce all terms, covenants and conditions of Loans.
(B) No amount in the Loan Account shall be expended or
applied for the purpose of financing an Eligible Loan, and no Eligible Loan
shall be financed, unless (except to the extent that a variance from such
requirements is required by an agency or instrumentality of the United States of
America insuring or guaranteeing the payment of an Eligible Loan) the Issuer has
determined that:
(1) the payment of the principal of and interest on the
Eligible Loan (which is a loan under the Federal Family Education Loan
Program) is guaranteed by the Guarantor and reinsured by the United
States Secretary of Education as required at the time of the financing,
by the Higher Education Act to reimburse the Guarantor to the extent
permitted by law for any amount expended by the Guarantor in discharge
of its insurance obligation on such Eligible Loan;
(2) the interest borne by the Eligible Loan and payable on
such Eligible Loan at the time of acquisition is not less than the
maximum rate permitted under the Higher Education Act at the time the
particular loan was made (the foregoing notwithstanding, the Issuer may
institute borrower incentive programs with respect to Loans pursuant to
which the Issuer may agree to collect less than the interest rate borne
by such Loan provided that prior thereto the Issuer has given
31
adequate written notice to the Rating Agencies and has delivered to the
Trustee a Rating Confirmation);
(3) the Eligible Loan, if originated by a party other than the
Issuer is sub3ect to being repurchased by the seller if such Eligible
Loan does not comply with the provisions of the program at the time of
purchase, and
(4) absent a Rating Confirmation contemplating such
financing, no Eligible Loan is to be financed which (i) was originated
after July 1, 1998, (ii) was originated by a lender of last resort
acting in such capacity, (iii) which is guaranteed as to less than 98%
of the principal amount thereof and interest thereon or (iv) which is a
rehabilitated consolidation loan which consolidated one or more
defaulted loans.
(C) The Issuer may at any time sell, assign, transfer or
otherwise dispose of Loans, at an aggregate price at least equal to the
principal amount thereof (plus accrued interest and special allowance payments)
(a) when the amounts on deposit in the Accounts at least equal the principal
amount of Outstanding Notes (b) to pay current debt service on the Notes or (c)
to the seller from which it was purchased in accordance with the Issuer's loan
purchase agreements.
(D) The Issuer will use its best efforts to evaluate the
reinvestment of principal and interest receipts to ensure that it will continue
to be able to fulfill its debt service requirements hereunder.
Section 6.8. PERSONNEL AND SERVICING OF PROGRAMS. (A) The
Issuer shall at all times appoint, retain and employ competent personnel for the
purpose of carrying out the Loan purchase program and shall establish and
enforce reasonable rules regulations tests and standards governing the
employment of such personnel at reasonable compensation, salaries, fees and
charges All persons employed by the Issuer shall be qualified for their
respective positions.
(B) The Issuer shall duly and properly service all Loans and
enforce the payment and collection of all payments of principal and interest or
shall cause such servicing to be done by a servicer evidencing in the judgment
of the Issuer, the capability and experience necessary to adequately service
Loans.
Section 6.9 ISSUANCE OF ADDITIONAL OBLIGATIONS. The Issuer
shall not hereafter create or permit the creation of or issue any other
obligations or create any additional indebtedness which will be secured by a
superior or equal charge and lien on the Pledged Assets except that Senior
Obligations Senior Subordinate Obligations and Subordinate Obligations may be
issued as provided herein.
32
Section 6.10 COMPLIANCE WITH CONDITIONS PRECEDENT.
Upon the date of issuance of any of the Notes, all conditions acts and things
required by law or by this Trust Agreement to exist, to have happened or to have
been performed precedent to or in the issuance of such Notes shall exist, have
happened and have been performed, or will have happened or been performed, and
such Notes, together with all other indebtedness of the Issuer, shall be within
every debt and other limit prescribed by law.
Section 6.11 GENERAL. The Issuer shall do and perform or cause
to be done and performed all acts and things required to be done or performed by
or on behalf of the Issuer under the provisions of this Trust Agreement in
accordance with the terms of such provisions.
Section 6.12 WAIVER OF LAWS. The Issuer shall not at any time
insist upon or plead in any manner whatsoever, or claim or take the benefit or
advantage of any stay or extension of law now or at any time hereafter in force
which may affect the covenants and agreements contained in this Trust Agreement
or in the Notes and all benefits or advantage of any such law or laws is hereby
expressly waived by the Issuer.
Section 6.13 REPORTS TO AND CONFIRMATIONS FROM THE RATING
AGENCIES. (A) The Trustee shall give written notice to Fitch IBCA, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: [ ] ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ and S&P at Standard & Poor's Corporation, ▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Structured Finance Group upon the occurrence of
any of the following:
(a) a successor trustee is named;
(b) Notes are called for redemption or otherwise paid
prior to maturity;
(c) an event of default; or
(d) the defeasance of Notes.
(B) The Issuer shall give adequate prior written notice to
Fitch and S&P, at the above addresses upon the occurrence, or if applicable
proposal of any of the following:
(i) any investment to be made pursuant to 7
or 8 of Investment Securities;
(ii) any proposed amendment or supplement to
the Trust Agreement;
(iii) any proposed issuance of Additional
Notes;
33
(IV) any proposed Exchange Agreement;
(v) any proposed appointment of a successor
Administrator successor Eligible Lender
Trustee or successor Servicer;
(vi) any proposed redemption of Notes; or
(vii) any failed auction;
(C) The Issuer shall deliver to the Trustee a Rating
Confirmation to the effect that the commencement of any of the following
practices or programs would not adversely effect the existing rating on any
Outstanding Notes:
(i) amendment of any Basic Document;
(ii) any amendment or supplement to the Trust
Agreement;
(iii) any issuance of Additional Notes;
(iv) the Execution of an Exchange Agreement;
or
(v) any proposed redemption of Subordinate Notes
Section 6.14 EXISTENCE. The Issuer will keep in full effect
its existence and rights as a corporation under the laws of the State of Indiana
(unless it becomes or any successor Corporation hereunder is, or becomes,
organized under the laws of any other State or of the United States of America
in which case the Issuer will keep in full effect its existence and rights under
the laws of such other jurisdiction) and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be, necessary to protect the validity and enforceability of this Trust
Agreement the Notes and each other instrument or agreement included in the
Pledged Assets.
Section 6.15 PROTECTION OF PLEDGED ASSETS. The Issuer will
from time to time execute and deliver all such supplements and amendments hereto
and all such financing statements continuation statements instruments of further
assurance and other instruments and will take such other action necessary or
advisable to maintain or preserve the lien and security interests (and the
priority thereof) of this Trust Agreement or carry out more effectively the
purposes hereof; perfect, publish notice of or protect the validity of any grant
made or to be made by this Trust Agreement; or any Supplemental Trust Agreement
enforce any of the Loans or Basic Documents or preserve and defend title to the
Trust Agreement the Pledged Assets and the rights of the Trustee and the Note
Owners in such Pledged Assets against the claims of all persons and parties. The
Issuer hereby designates the Trustee its
34
agent and attorney-in-fact to execute any financing statement continuation
statement or other instrument required to be executed pursuant to this Section.
Section 6.16 OPINIONS AS TO PLEDGED ASSETS. On or before each
calendar year beginning with the first calendar year commencing more than three
months after the Closing Date for a Series, the Issuer shall furnish to the
Trustee an Opinion of Counsel either stating that, in the opinion of such
counsel, such action has been taken with respect to the recording, filing,
rerecording and refiling of this Trust Agreement, any instruments supplemental
hereto and any other requisite documents and with respect to the execution and
filing of any financing statements and continuation statements as is necessary
to maintain the lien and security interest created by this Trust Agreement and
reciting the details of such action or stating that in the opinion of such
counsel no such action is necessary to maintain such lien and security interest
Such Opinion of Counsel shall also describe the recording filing re-recording
and refiling of this Trust Agreement any instruments supplemental hereto and any
other requisite documents and the execution and filing of any financing
statements and continuation Statements that will, in the opinion of such counsel
be required to maintain the lien and security interest of this Trust Agreement.
Section 6.17 PERFORMANCE OF OBLIGATIONS, SERVICING OF LOANS.
The Issuer will not take any action and will use its best efforts not to permit
any action to be taken by others that would release any Person from any of such
Person s material covenants or obligations under an instrument or agreement
included in the Pledged Assets or that would result in the amendment
hypothecation subordination termination or discharge of, or impair the validity
or effectiveness of, any such instrument or agreement except as expressly
provided in this Trust Agreement or the related Supplemental Trust Agreement The
Issuer may contract with other Persons to assist it in performing its duties
under this Trust Agreement, and any performance of such duties by a Person
identified to the Trustee in an Officer's Certificate of the Issuer shall be
deemed to be action taken by the Issuer Initially, the Issuer has contracted
with the Servicer and the Eligible Lender Trustee to assist the Issuer in
performing its duties under this Trust Agreement The Issuer will punctually
perform and observe all its obligations and agreements contained in this Trust
Agreement, the other Basic Documents and in the instruments and agreements
included in the Pledged Assets including filing or causing to be filed all UCC
financing Statements and continuation statements required to be filed by the
terms of this Trust Agreement and the related Supplemental Trust Agreement in
accordance with and within the time periods provided for herein and therein.
Except as otherwise expressly provided therein the Issuer shall not waive amend
modify supplement or terminate any Basic Document or any provision thereof
without the consent of either the Trustee or the Note Owners of at least a
majority of the Outstanding Amount of the Notes Outstanding (including at least
a
35
majority in outstanding principal amount of the Senior Notes). If the Issuer
shall have knowledge of the occurrence of a Servicer default or an Administrator
default, the Issuer shall promptly notify in writing the Trustee and the Rating
Agencies thereof, and shall specify in such notice the action, if any, the
Issuer is taking with respect to such default If a Servicer default shall arise
from the failure of the Servicer to perform any of its duties or obligations
under the Servicing Agreement or an Administrator Default shall arise from the
failure of the Administrator to perform any of its duties or obligations under
the Administration Agreement with respect to the Loans the Issuer shall take all
reasonable steps available to it to enforce its rights under the respective
Agreement in respect of such failure As promptly as possible after the giving
notice of termination to the Servicer or to the Administrator the Issuer shall
appoint a successor servicer (the "Successor Servicer") or a successor
administrator (the "Successor Administrator"), and such Successor Servicer or
Successor Administrator, as the case may be, shall accept its appointment by a
written assumption in a form acceptable to the Trustee In the event that a
Successor Servicer or Successor Administrator has not been appointed and
accepted its appointment at the time when the Servicer or Administrator, as the
case may be ceases to act as Servicer or Administrator as the case may be the
Trustee may appoint or may petition a court of competent jurisdiction to appoint
a Successor Servicer or Successor Administrator provided that the Trustee shall
have no duty to act as Servicer under any circumstances and, provided further
that the Trustee shall not be held accountable for the actions or the failure to
act of any successor Servicer appointed by the Trustee in the exercise of
reasonable judgment. In connection with any such appointment, the Trustee may
make such arrangements for the compensation of such successor as it and such
successor shall agree Any Successor Servicer shall (i) be an established
institution whose regular business includes the servicing of student loans and
(ii) enter into a servicing agreement with the Issuer having substantially the
same provisions as the provisions of the Servicing Agreement applicable to the
Servicer The Issuer shall enter into an agreement with such successor for the
servicing of the Loans (such Agreement to be in form and substance satisfactory
to the Trustee) Upon any termination of the Servicer s rights and powers
pursuant to the related Servicing Agreement or any termination of the
Administrators rights and powers pursuant to the related Administration
Agreement, as the case may be, the Issuer shall promptly notify the Trustee As
soon as a Successor Servicer or a Successor Administrator is appointed, the
Issuer shall notify the Trustee of such appointment, specifying in such notice
the name and address of such Successor Servicer or such Successor Administrator
Without derogating from the absolute nature of the assignment granted to the
Trustee under any Supplemental Trust Agreement or the rights of the Trustee
hereunder the Issuer agrees that it will not without the prior written consent
of either the Trustee or the Note Owners of at least a majority in Outstanding
Amount of the Notes then outstanding (including at least a majority in
Outstanding principal
36
amount of the Senior Notes), amend modify, waive, supplement, terminate, or
surrender, or agree to any amendment modification, supplement termination waiver
or surrender of, the terms of (i) any portion of the Pledged Assets or, as
applicable, (ii) the Basic Documents, or waive timely performance or observance
by the Servicer the Administrator the Issuer or the Eligible Lender Trustee
under the related Agreements provided, however, that no such amendment shall
(i)increase or reduce in any manner the amount of, or accelerate or delay the
timing of, distributions that are required to be made for the benefit of the
Note Owners, or (ii) reduce the aforesaid percentage of the Notes which are
required to consent to any such amendment, without the consent of the Note
owners of all the outstanding Notes. If any such amendment modification
supplement or waiver should be so consented to by the Trustee or such Note
Owners the Issuer agrees or following a request by the Trustee to do so to
execute and deliver in its own name and at its own expense such agreements,
instruments consents and other documents as the Trustee may deem necessary or
appropriate in the circumstances.
Section 6.18 NEGATIVE COVENANTS. So long as any Notes are
Outstanding, the Issuer shall not except as expressly permitted by this Trust
Agreement or any other Basic Documents sell, transfer, exchange or otherwise
dispose of any of the properties or assets of the Issuer including those
included in the Pledged Assets unless directed to do so by the Trustee claim any
credit on or make any deduction from the principal of or interest on (including
any Note Owners Interest Carryover) any of the Notes (other than amounts
properly withheld from such payments under the Code or applicable state law) or
assert any claim against any present or former Note Owner by reason of the
payment of the taxes levied or assessed upon any part of the Pledged Assets
except as contemplated by the Basic Documents, dissolve or liquidate in whole or
in part or (A) permit the validity or effectiveness of this Trust Agreement or
any Terms Supplement to be impaired, or permit the lien of this Trust Agreement
and any Terms Supplement to be amended hypothecated subordinated terminated or
discharged or permit any Person to be released from any covenants or obligations
with respect to the Notes under this Trust Agreement except as may be expressly
permitted hereby, (B) permit any lien, charge excise claim security interest
mortgage or other encumbrance (other than the lien of this Trust Agreement and
any Terms Supplement) to be created on or extend to, or otherwise arise upon, or
burden the Pledged Assets or any part thereof or any interest therein or the
proceeds thereof (other than tax liens and other liens that arise by operation
of law in each case arising solely as a result of an action or omission of the
related obligor and other than as expressly permitted by the Basic Documents) or
(C) permit the lien of this Trust Agreement and any Terms Supplement not to
constitute a valid first priority (other than with respect to any such tax or
other lien) security interest in the Trust Estate.
Section 6.19 ANNUAL STATEMENT AS TO COMPLIANCE. The Issuer,
will deliver to the Trustee within 120 days after the first
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fiscal year of the Issuer that ends more than three months after the Closing
Date for a Series, and each fiscal year thereafter an Officer's Certificate of
the Issuer stating that (i) a review of the activities of the Issuer during such
year and of performance under this Trust Agreement has been made under such
Authorized officers supervision and (ii) to the best of such Authorized Officers
knowledge, based on such review, the Issuer has complied with all conditions and
covenants under this Trust Agreement throughout such year, or, if there has been
a default in the compliance of any such condition or covenant, specifying each
such default known to such Authorized Officer and the nature and status thereof.
Section 6.20 ISSUER MAY CONSOLIDATE, ETC, ONLY ON CERTAIN
TERMS. (a) The Issuer shall not consolidate or merge with or into any other
Person, unless (i) the Person (if other than the Issuer) formed by or surviving
such consolidation or merger shall be a Person organized and existing under the
laws of the United States of America or any state thereof and shall expressly
assume by an instrument supplemental hereto executed and delivered to the
Trustee in form satisfactory to the Trustee the due and punctual payment of the
principal of, and interest on, and any Note Owners Interest Carryover if any,
with respect to all Notes and the performance or observance of every agreement
and covenant of this Trust Agreement and any Terms Supplement on the part of the
Issuer to be performed or observed all as provided herein or therein, (ii)
immediately after giving effect to such transaction no Default shall have
occurred and be continuing, (iii) the Rating Confirmation shall have been
received by the Trustee (iv) the Issuer shall have received a Counsels Opinion
(and shall have delivered copies thereof to the Trustee) to the effect that such
transaction will not have any material adverse Federal or Indiana State tax
consequence to the Issuer or a Note Owner; (v) any action as is necessary to
maintain the lien and security interest created by this Trust Agreement shall
have been taken and (vi) the Issuer shall have delivered to the Trustee a
Certificate of an Authorized officer of the Issuer and a Counsel's Opinion
stating that such consolidation or merger and such supplemental instrument
comply with this Trust Agreement and that all conditions precedent herein
provided for or relating to such transaction have been complied with.
(b) The Issuer shall not convey or transfer all or
substantially all its properties or assets, including those included in the
Pledged Assets to any Person unless (i) the Person that acquires by conveyance
or transfer the properties and assets of the Issuer, the conveyance or transfer
of which is hereby restricted shall (A) be a United States citizen or a Person
organized and existing under the laws of the United States of America or any
state thereof (B) expressly assume, by an instrument supplemental hereto
executed and delivered to the Trustee in form satisfactory to the Trustee the
due and punctual payment of the principal of and interest on and Note Owners
Interest Carryover, if any with respect to all Notes and the
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performance or observance of every agreement and covenant of this Trust
Agreement on the part of the Issuer to be performed and observed all as provided
herein, (C) expressly agree by means of such supplemental instrument that all
right, title and interest so conveyed or transferred shall be subject and
subordinate to the rights of Note Owners, (D) unless otherwise provided in such
supplemental instrument, expressly agree to indemnify defend and hold harmless
the Issuer against, and from any loss liability or expense arising under or
related to this Trust Agreement and the Notes and (E) expressly agree by means
of such supplemental instrument that such Person (or if a group of Persons then
one specified Person) shall make all filings with the Commission (and any other
appropriate Person) required by the Exchange Act in connection with the
conveyance or transfer, (ii) immediately after giving effect to such
transaction, no Event of Default shall have occurred and be continuing (iii) the
Rating Agency Condition shall have been satisfied with respect to such
transaction, (iv) the Issuer shall have received a Counsel's Opinion (and shall
have delivered copies thereof to the Trustee) to the effect that such
transaction will not have any material adverse Federal or Indiana State tax
consequence to the Issuer or any Note Owner (v) any action as is necessary to
maintain the lien and security interest created by this Trust Agreement shall
have been taken and (vi) the Issuer shall have delivered to the Trustee a
Certificate of an Authorized Officer of the Issuer and a Counsels Opinion each
stating that such conveyance or transfer and such supplemental instrument comply
with this Trust Agreement and that all conditions precedent herein provided for
relating to such transaction, have been complied with (including any filing
required by the Exchange Act).
Section 6.21 SUCCESSOR OR TRANSFEREE. Upon any consolidation
or merger of the Issuer in accordance with Section 6.20 the Person formed by or
surviving such consolidation or merger (if other than the Issuer) shall succeed
to and be substituted for and may exercise every right and power of the Issuer
under this Trust Agreement and any Terms Supplement with the same effect as if
such Person had been named as the Issuer Upon a conveyance or transfer of all
the assets and properties of the Issuer pursuant to Section 6.20 (b), EMT Corp.
will be released from every covenant and agreement of this Trust Agreement to be
observed or performed on the part of the Issuer with respect to the Notes
immediately upon the delivery by the Issuer of written notice to the Trustee
stating that is to be so released
Section 6.22 NO OTHER BUSINESS. The Issuer shall not engage in
any business other than financing, purchasing, owning, selling servicing and
managing student loans and making additional fundings in the manner contemplated
by this Trust Agreement and the other Basic Documents and activities incidental
thereto.
Section 6.23 NO BORROWING. The Issuer shall not issue, incur
assume guarantee or otherwise become liable directly or indirectly for any
indebtedness except for the Notes, any Junior
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Subordinate Obligations or Exchange Agreement and such other obligations as are
authorized under the Basic Documents.
Section 6.24 OBLIGATIONS OF SERVICER AND ADMINISTRATOR.
The Issuer shall cause the Servicer to comply with the Servicing Agreement and
the Custodian Agreement and the Administrator to comply with the Administrative
Agreement.
Section 6.25 GUARANTEES, LOANS, ADVANCES AND OTHER
LIABILITIES. The Issuer shall not make any loan or advance or credit to, or
guarantee (directly or indirectly or by an instrument having the effect of
assuring another s payment or performance on any obligation or capability of so
doing or otherwise) endorse or otherwise become contingently liable, directly or
indirectly, in connection with the obligations stocks or dividends of, or own,
purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person except as permitted by the Basic
Documents.
Section 6.26 CAPITAL EXPENDITURES. The Issuer shall not make
any expenditure (by long-term or operating lease or otherwise) for capital
assets (either realty or personalty).
Section 6.27 COMPLIANCE WITH ARTICLES OF INCORPORATION.
The Issuer shall comply in all material respects with its articles of
incorporation as the same may be amended from time to time No amendment to such
articles shall be permitted for so long as any Notes shall be outstanding unless
prior to such amendment, a Rating Agency Confirmation is obtained.
Section 6.28 NOTICE OF EVENTS OF DEFAULT. The Issuer shall
give the Trustee and the Rating Agencies prompt written notice of each Event of
Default hereunder and each default on the part of the Servicer of its
obligations under the Servicing Agreement or the Administrator of its
obligations under the Administration Agreement.
ARTICLE VII
SUPPLEMENTAL TRUST AGREEMENTS
Section 7.1 SUPPLEMENTAL TRUST AGREEMENTS EFFECTIVE WITHOUT
CONSENT OF NOTE OWNERS. The Issuer and the Trustee may without the consent of or
notice to any of the Note Owners enter into an agreement or agreements
supplemental to this Trust Agreement as shall not be inconsistent with the terms
and provisions hereof for any one or more of the following purposes:
(1) provide limitations and restrictions in addition to the
limitations and restrictions contained in this Trust Agreement on the
authentication and delivery of Notes Junior Subordinate Obligations or
the issuance of Exchange Agreements;
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(2) to add to the covenants and agreements of the Issuer in
this Trust Agreement other covenants and agreements to be observed by
the Issuer which are not contrary to or inconsistent with this Trust
Agreement as theretofore in effect;
(3) to add to the limitations and restrictions in this Trust
Agreement other limitations and restrictions to be observed by the
Issuer which are not contrary to or inconsistent with this Trust
Agreement as thereupon in effect;
(4) to surrender any right, power or privilege reserved to or
conferred upon the Issuer by the terms of this Trust Agreement, but
only if the surrender of such right power or privilege is not contrary
to or inconsistent with the covenants and agreements of the Issuer
contained in this Trust Agreement;
(5) to confirm as further assurance any pledge under and the
sub3ection to any lien or pledge created or to be created by this Trust
Agreement, the pledge of the Pledged Assets, including Revenues
Recoveries of Principal or of any other revenues or assets;
(6) to cure any ambiguity, supply any omission or cure or
correct any defect or inconsistent provision in this Trust Agreement;
(7) to insert such provisions clarifying matters or questions
arising under this Trust Agreement as are necessary or desirable and
are not contrary to or inconsistent with this Trust Agreement as
theretofore in effect;
(8) to redefine Eligible Loans to include student loans made
other than under the Federal Family Education Loan Program (subject in
any event to the Rating Agency Condition being fulfilled);
(9) to provide for additional duties of the Trustee in
connection with the Loans or for a successor Trustee; or
(10) to provide for the issuance of Additional Notes Junior
Subordinate Obligations or Exchange Agreements.
Section 7.2 SUPPLEMENTAL TRUST AGREEMENTS EFFECTIVE ONLY UPON
CONSENT OF NOTE OWNERS. At any time or from time to time a Supplemental Trust
Agreement may be entered into by the Issuer and the Trustee subject to consent
by Note Owners in accordance with and subject to the provisions of Article VIII.
Any such Supplemental Trust Agreement shall become fully effective in accordance
with its terms only upon the execution thereof and upon compliance with the
provisions of Article VIII.
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Section 7.3 GENERAL PROVISIONS. (A) This Trust Agreement
shall not be modified or amended in any respect except as provided in and in
accordance with and subject to the provisions of this Article and Article VIII
Nothing contained in this Article or Article VIII shall affect or limit the
right or obligation to adopt, make, do, execute acknowledge or deliver any
resolution, act or other instrument pursuant to the provisions of Section 6.5 or
the right or obligation of the Issuer to execute and deliver to any Fiduciary
any instrument which is to be delivered to said Fiduciary pursuant to this Trust
Agreement.
(B) Any Supplemental Trust Agreement permitted or authorized
by Section 7.1 may be entered into by the Issuer and the Trustee without the
consent of any of the Note Owners but shall become effective only on the
conditions to the extent and at the time provided in said Section The execution
of every Supplemental Trust Agreement filed with the Trustee shall have as a
precondition a Counsel's Opinion stating that such Supplemental Trust Agreement
has been duly and lawfully entered into in accordance with the provisions of
this Trust Agreement, is authorized or permitted by this Trust Agreement and is
valid and binding upon the Issuer and the Trustee.
(C) No Supplemental Trust Agreement shall change or modify
any of the rights or obligations of any Fiduciary without its written assent
thereto.
ARTICLE VIII
AMENDMENTS
Section 8.1 MAILING OF NOTICE OF AMENDMENT. Any provision in
this Article for the mailing of a notice or other paper to Note Owners shall be
fully complied with if it is mailed postage prepaid (i) to each owner of Notes
then outstanding at such owner's address if any appearing upon the registry
books of the Trustee and (ii) to the Trustee.
Section 8.2 POWERS OF AMENDMENT. Any modification of or
amendment to this Trust Agreement and of the right and obligations of the Issuer
and of the Owners of the Notes hereunder in any particular may be made by a
Supplemental Trust Agreement but only in the event such Supplemental Trust
Agreement shall be entered into other than pursuant to Section 7.1 with the
written consent of the owners of at least two-thirds in principal amount of the
Notes Outstanding (and in no event less than a majority in principal amount
outstanding of all Senior Notes) at the time such consent is given. If any such
modification or amendment will not take effect so long as any particular Notes
remain Outstanding, however, the consent of the owners of such Notes shall not
be required and such Notes shall not be deemed to be outstanding for the purpose
of any calculation of Outstanding Notes under this Section No such modification
or amendment shall permit a change in the terms of maturity of the principal of
any Outstanding Note
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or of any installment of interest thereon or a reduction in the principal amount
thereof or in the rate of interest thereon without the consent of the owner of
such Notes, the consent of the owner of which is required to effect any such
modification or amendment, or shall change or modify any of the rights or
obligations of any Fiduciary without its written assent thereto The Trustee may
in its sole discretion determine whether or not in accordance with the foregoing
powers of amendment Notes would be affected by any modification or amendment
hereof and any such determination shall be binding and conclusive on the Issuer
and all owners of Notes.
Section 8.3 CONSENT OF NOTE OWNERS. (A) A copy of any
Supplemental Trust Agreement making a modification or amendment which is not
permitted by the provisions of Section 7.1 (or brief summary thereof or
reference thereto in form approved by the Trustee), together with a request to
Note Owners for their consent thereto in form satisfactory to the Trustee shall
be mailed by the Issuer to the owner of any Note, provided, however, that
failure to mail such copy and request shall not affect the validity of the
Supplemental Trust Agreement when consented to as in this Section provided Such
Supplemental Trust Agreement shall not be effective unless and until there shall
have been filed with the Trustee (a) the written consents of the owners of the
percentages of Outstanding Notes specified in Section 8.2, (b) a Counsel's
Opinion stating that such Supplemental Trust Agreement has been duly and
lawfully adopted by the Issuer in accordance with the provisions of this Trust
Agreement is authorized or permitted hereby and is valid and binding upon the
Issuer.
(B) The consent of a Note Owner to any modification or
amendment shall be effective only if accompanied by proof of the holding at the
date of such consent of the Notes with respect to which such consent is given,
which proof shall be such as is permitted by Section 10.12 A, Certificate by the
Trustee filed with the Trustee that it has examined such proof and that such
proof is sufficient in accordance with such Section 10.12 shall be conclusive
that the consents have been given by the owners of the Notes giving such consent
and shall be binding upon any subsequent owner of such Notes and of any Notes
issued in exchange therefor (whether or not such subsequent owner thereof has
notice thereof) unless such consent is revoked in writing by the owner of such
Notes giving such consent or a subsequent owner thereof by filing with the
Trustee such revocation prior to the time when the requisite consents have been
received by the Trustee The fact that a consent has not been revoked may
likewise be proved by a Certificate of the Trustee filed with the Trustee to the
effect that no revocation thereof is on file with the Trustee.
Section 8.4 MODIFICATIONS BY UNANIMOUS CONSENT. The terms and
provisions of this Trust Agreement and the rights and obligations of the Issuer
and of the owners of the Notes hereunder may be modified or amended in any
respect upon the entry by the Issuer and the Trustee into a Supplemental Trust
Agreement and the consent of the owners of all the Notes then Outstanding, such
43
consent to be given as provided in Section 8.3, but no such modification or
amendment shall change or modify any of the rights or obligations of any
Fiduciary without the filing with the Trustee of the written assent thereto of
such Fiduciary in addition to the consent of the Note Owners No notice of any
such modification or amendment to Note owners either by mailing or publication
shall be required.
Section 8.5 EXCLUSION OF NOTES. owned or held by or for the
account of the Issuer shall not be deemed Outstanding for the purpose of consent
or other action or any calculation of Outstanding Notes provided for in this
Article, and the Issuer shall not be entitled with respect to such Notes to give
any consent or take any other action provided for in this Article At the time of
any consent or other action taken under this Article the Issuer shall furnish
the Trustee with a Certificate of an Authorized Officer upon which the Trustee
may rely, describing all Notes so to be excluded.
Section 8.6 NOTATION ON NOTES. authenticated and delivered
after the effective date of any action taken as provided in Article VII or this
Article may and, if the Trustee so determines shall bear a notation by
endorsement or otherwise in form approved by the Issuer and the Trustee as to
such action and in that case upon demand of the owner of any Outstanding Note at
such effective date and presentation of such owner s Note for the purpose at the
designated trust office of the Trustee or upon any transfer or exchange of any
Note Outstanding at such effective date suitable notation shall be made on such
Note or upon any Note issued upon any such transfer or exchange by the Trustee
as to any such action If the Issuer or the Trustee shall so determine, new Notes
modified to conform to such action in the opinion of the Trustee and the Issuer
shall be prepared executed, authenticated and delivered and upon demand of the
owner of any Note then Outstanding shall be exchanged without cost to such Note
Owner, upon surrender of such Outstanding Note.
ARTICLE IX
DEFAULTS ACCELERATIONS AND REMEDIES
Section 9.1 EVENTS OF DEFAULT. Each of the following
events is hereby declared an "Event of Default":
(1) payment of the principal of or any installment of interest
on any Note or the purchase price thereof when and as the same shall
become due whether at maturity or otherwise shall not be made when and
as the same shall become due provided however that for so long as any
Senior Notes shall be Outstanding failure to pay principal of or
interest on any Senior Subordinate Note or Junior Subordinate
Obligation shall not give rise to an Event of Default if principal of
and interest due on all Senior Notes has been paid;
44
(2) the Issuer shall fail or refuse to comply with the
provisions of this Trust Agreement, or shall default in the performance
or observance of any of the covenants, agreements or conditions on its
part contained herein or in any Supplemental Trust Agreement or the
Notes, and such failure, refusal or default shall continue for a period
of forty-five days after written notice thereof by the Trustee or the
owners of not less than 25% in principal amount of the Outstanding
Notes.
Section 9.2 ACCELERATION. Upon the happening of any Event of
Default the Trustee may and shall at the direction of the owners of two-thirds
(2/3) of the principal amount of the Outstanding Notes (and in no event less
than two-thirds (2/3) in principal amount of the Outstanding Senior Notes) by
notice in writing delivered to the Trustee, declare the entire principal amount
of the Notes then outstanding hereunder and the interest accrued thereon due and
payable whereupon they shall, without further action, become and be immediately
due and payable anything in this Trust Agreement or the Notes notwithstanding.
Section 9.3 REMEDIES. (A) Subject to the provisions of Section
2.2 hereof, if any Event of Default as specified in paragraph (1) of Section 9.1
shall have occurred the Trustee shall proceed, or if any Event of Default
specified in paragraph (2) of Section 9 1 shall have occurred the Trustee may
proceed (and, upon the written request of the owners of not less than
twenty-five percent (25%) in principal amount of the Outstanding Notes (and in
no event less than twenty-five percent (25%) in principal amount of Outstanding
Senior Notes) shall proceed) in its own name, to protect and enforce the rights
of the Note Owners by such of the following remedies, as the Trustee being
advised by counsel, shall deem most effectual to protect and enforce such
rights:
(1) by mandamus or other suit, action or proceeding at law or
in equity to enforce all rights of the Note Owners including the right
to require the Issuer to receive and collect Revenues adequate to
carry out the covenants and agreements as to Loans and to assign the
Loans to the Trustee, and to require the Issuer to carry out any other
covenants or agreements with Note Owners and to perform its duties as
prescribed by law;
(2) by bringing suit upon the Notes;
(3) by action or suit in equity to require the Issuer to
account as if it were the trustee of an express trust for the Owners
of the Notes;
(4) by action or suit in equity to enjoin any acts or things
which may be unlawful or in violation of the rights of the Owners of
the Notes;
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(5) by selling or otherwise disposing of Loans (provided
however, prior to selling Loans the Trustee shall receive evidence
satisfactory to it of the written consent to such sale of the owners of
a majority in principal amount of all Senior Notes and a majority in
principal amount of all Senior Subordinate Notes) and Investment
Securities; or
(6) by any other remedy deemed by the Trustee to be legal and
appropriate.
(B) Subject to the provisions of Section 2.2 hereof, in the
enforcement of any rights and remedies under this Trust Agreement, the Trustee
shall be entitled to and shall ▇▇▇ for enforce payment of and receive any and
all amounts then or during any default becoming and at any time remaining, due
and unpaid from the Issuer for principal interest or otherwise, under any
provisions of this Trust Agreement or a Supplemental Trust Agreement or of the
Notes with interest on overdue payments at the rate of interest specified in
such Notes together with any and all costs and expenses of collection and of all
proceedings thereunder and under such Notes, without prejudice to any other
right or remedy of the Trustee or of the Note Owners, and to recover and enforce
a judgment or decree against the Issuer for any portion of such amounts
remaining unpaid, with interest costs and expenses (including without limitation
pre-trial, trial and appellate attorney fees) and to collect from any moneys
available for such purpose in any manner provided by law the moneys adjudged or
decreed to be payable.
(C) Upon the occurrence of an Event of Default, and upon the
filing of a suit or other commencement of judicial proceedings to enforce the
rights of the Note Owners under this Trust Agreement, the Trustee shall be
entitled to receive payment of the Revenues and Recoveries of Principal directly
from the Servicer and to enforce any such agreement with the Servicer.
(D) Except upon the occurrence and during the continuance of
an Event of Default hereunder the Issuer hereby expressly reserves and retains
the privilege to receive and subject to the terms and provisions of this Trust
Agreement, to keep or dispose of claim, bring suit upon or otherwise exercise
enforce or realize upon its rights and interest in and to the Loans and the
proceeds and collections therefrom and neither the Trustee nor any Note Owner
shall in any manner be or be deemed to be an indispensable party to the exercise
of any such privilege, claim or suit.
Section 9.4 PRIORITY OF PAYMENTS AFTER DEFAULT. (A) In the
event that upon the happening and continuance of any Event of Default the funds
held by the Trustee and Paying Agents shall be insufficient for the payment of
principal and interest then due on the Notes (other than funds held for the
payment of particular Notes which have theretofore become due at maturity) and
any other amounts received or collected by the Trustee acting pursuant to
46
this Article, after making provision for the payment of any expenses necessary
in the opinion of the Trustee to protect the interest of the owners of the Notes
and for the payment of the charges expenses and liabilities incurred and
advances made by the Trustee or any paying agents in the performance of their
respective duties under this Trust Agreement, shall be applied as follows;
(1) Unless the principal of all of the Notes shall have
become or have been declared due and payable:
FIRST: To the payment to the persons entitled thereto of all
installments of interest then due on Senior Notes and Senior Exchange Agreements
in the order of the maturity of such installments and if the amount available
shall not be sufficient to pay in full any installment, then to the payment
thereof ratably, according to the amounts due on such installment to the persons
entitled thereto, without any discrimination or preference; and
SECOND: To the payment to the persons entitled thereto of the
unpaid principal of any Senior Notes which shall have become due and if the
amounts available shall not be sufficient to pay in full all the Notes due then
to the payment thereof ratably, according to the amounts of principal due on
such date, to the persons entitled thereto, without any discrimination or
preference.
THIRD: To the payment to the persons entitled thereto of all
installments of interest then due on Senior Subordinate Notes and Subordinate
Exchange Agreements in the order of the maturity of such installments and if the
amount available shall not be sufficient to pay in full any installment then to
the payment thereof ratably according to the amounts due on such installment, to
the persons entitled thereto without any discrimination or preference; and
FOURTH: To the payment to the persons entitled thereto of the
unpaid principal of any Senior Subordinate Notes which shall have become due and
if the amounts available shall not be sufficient to pay in full all the Notes
due, then to the payment thereof ratably according to the amounts of principal
due on such date to the persons entitled thereto, without any discrimination or
preference.
FIFTH: To the payment to the persons entitled thereto of all
installments of Interest Carryover then due first on Senior Notes and second on
Senior Subordinate Notes in the order of maturity of such installments and if
the amount available shall not be sufficient to pay in full any installment then
to the payment thereof ratably, according to the amounts due on such installment
to the persons entitled thereto without any discrimination or preference.
(2) If the principal of all of the Notes shall have
become or have been declared immediately due and payable, to
47
the payment of the principal and interest then due and unpaid upon the
Notes without preference or priority of principal over interest or of
interest over principal, or of any installment of interest over any
other installment of interest or of any Note over any other Note,
ratably according to the amounts due respectively for principal and
interest to the persons entitled thereto without any discrimination or
preference except as to any difference in the respective rates of
interest specified in the Notes PROVIDED however, in all events the
principal of and interest due on Senior Notes are to be paid prior to
payment of the principal of and interest due on Senior Subordinate
Notes and installments of Interest Carryover, then due are to be paid
only to the extent the payments of principal of and interest due on the
Senior Notes and Senior Subordinate Notes have been made in full and
such Interest Carryover is to be paid first on Senior Notes and second
on Senior Subordinate Notes.
(B) Whenever moneys are to be applied by the Trustee pursuant
to the provisions of this Section, such moneys shall be applied by the Trustee
at such times and from time to time as the Trustee in its sole discretion shall
determine, having due regard to the amount of such moneys available for
application and the likelihood of additional money becoming available for such
application in the future The deposit of such moneys with the paying agents or
otherwise setting aside such moneys in trust for the proper purpose, shall
constitute proper application by the Trustee and the Trustee shall incur no
liability whatsoever to the Issuer to any Note Owner or to any other person for
any delay in applying any such moneys, so long as the Trustee acts with
reasonable diligence having due regard for the circumstances and ultimately
applies the same in accordance with such provisions of this Trust Agreement as
may be applicable at the time of application by the Trustee Whenever the Trustee
shall exercise such discretion in applying such moneys, it shall fix the date
(which shall be an Interest Payment Date unless the Trustee shall deem another
date more suitable) upon which such application is to be made and upon such date
interest on the amounts of principal to be paid on such date shall cease to
accrue The Trustee shall give such notice as it may deem appropriate for the
fixing of any such date The Trustee shall not be required to make payment to the
owner of any Note unless such Note shall be presented to the Trustee for
appropriate endorsement or for cancellation if fully paid.
Section 9.5 TERMINATION OF PROCEEDINGS. In case any
proceedings taken by the Trustee on account of any Event of Default shall have
been discontinued or abandoned for any reason and there has not been an
acceleration pursuant to Section 9.2 then in every such case the Issuer the
Trustee and the Note Owners shall be restored to their former positions and
rights hereunder respectively and all rights, remedies, powers and duties of the
Trustee shall continue as though no such proceeding has been taken.
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Section 9.6 DIRECTION OF PROCEEDINGS. Anything in this Trust
Agreement to the contrary notwithstanding, upon the occurrence and continuance
of an Event of Default, the owners of the majority in principal amount of the
Notes then Outstanding (including not less than a majority in principal amount
of Senior Notes then Outstanding) shall have the right by an instrument or
concurrent instruments in writing executed and delivered to the Trustee to
direct the method of conducting all remedial proceedings to be taken by the
Trustee hereunder, provided that such direction shall not be otherwise than in
accordance with law or the provisions of this Trust Agreement, and that the
Trustee shall have the right to decline to follow such direction which in the
opinion of the Trustee would be unjustly prejudicial to Note Owners not parties
to such direction.
Section 9.7 LIMITATION ON RIGHTS OF NOTE OWNERS. (A) No owner
of any Note shall have any right to institute any suit action, mandamus or other
proceeding in equity or at law hereunder or for the protection or enforcement of
any right under this Trust Agreement unless such owner shall have given to the
Trustee written notice of the Event of Default or breach of duty on account of
which such suit, action or proceeding is to be taken and unless the owners of
not less than twenty-five percent (25%) in principal amount of the Notes then
Outstanding (including not less than twenty-five percent (25%) in principal
amount of Senior Notes then Outstanding) shall have made written request of the
Trustee after the right to exercise such powers or rights of action, as the case
may be, shall have accrued and shall have afforded the Trustee a reasonable
opportunity either to proceed to exercise the powers herein granted or granted
under the law or to institute such action suit or proceeding in its name and
unless also, there shall have been offered to the Trustee reasonable security
and indemnity against the costs expenses and liabilities to be incurred thereby,
and the Trustee shall have refused or neglected to comply with such request
within a reasonable time and such notification request and offer of indemnity
are hereby declared in every such case, at the option of the Trustee to be
conditions precedent to the execution of the powers under this Trust Agreement
or for any other remedy hereunder or by law. It is understood, and intended that
no one or more owners of the Notes hereby secured shall have any right in any
manner whatever by such owner's or their action to affect disturb or prejudice
the security of this Trust Agreement, or to enforce any right hereunder or under
law with respect to the Notes or this Trust Agreement except in the manner
herein provided, and that all proceedings at law or in equity shall be
instituted had and maintained in the manner hereunto provided, and for the
benefit of all owners of the Outstanding Notes. Nothing contained in this
Article shall affect or impair the right of any Note Owner to enforce the
payment of the principal of and interest on such owner s Notes or the obligation
of the Issuer (subject to the provisions of Section 2.2 hereof), to pay the
principal of and interest on each Note issued hereunder to the owner thereof at
the time and place in said Note expressed.
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(B) Anything to the contrary notwithstanding contained in
this Section or any other provision of this Trust Agreement each owner of any
Note by such owner's acceptance thereof shall be deemed to have agreed that any
court in its discretion may require in any suit for the enforcement of any right
or remedy under this Trust Agreement or any Supplemental Trust Agreement, or in
any suit against the Trustee for any action taken or omitted by it as Trustee,
the filing by any party litigant in such suit of an undertaking to pay the
reasonable costs of such suit, and that such court may in its discretion assess
reasonable costs of such suit including reasonable pre-trial trial and appellate
attorneys fees against any party litigant in any such suit, having due regard to
the merits and good faith of the claims or defenses made by such party litigant
but the provisions of this paragraph shall not apply to any suit instituted by
the Trustee, to any suit instituted by any Note Owner or group of Note Owners
holding at least twenty-five percent (25%) in principal amount of the Notes
outstanding (including not less than twenty-five percent (25%) in principal
amount of Senior Notes then Outstanding) or to any suit instituted by any Note
Owner for the enforcement of the payment of any Note on or after the respective
due date thereof expressed in such Note.
Section 9.8 POSSESSION OF NOTES BY TRUSTEE NOT REQUIRED. All
rights of action under this Trust Agreement or under any of the Notes
enforceable by the Trustee may be enforced by it without the possession of any
of the Notes or the production thereof at the trial or other proceeding relative
thereto, and any such suit action or proceeding instituted by the Trustee shall
be brought in its name for the benefit of all the owners of such Notes subject
to the provisions of this Trust Agreement.
Section 9.9 REMEDIES NOT EXCLUSIVE. No remedy herein
conferred upon or reserved to the Trustee or to the owners of the Notes is
intended to be exclusive of any other remedy or remedies and each and every such
remedy shall be cumulative and shall be in addition to any other remedy given
hereunder or now or hereafter existing at law or in equity or by statute.
Section 9.10 NO WAIVER OF DEFAULT. No delay or omission of the
Trustee or of any Owner of the Notes to exercise any right or power accruing
upon any default shall impair any such right or power or shall be construed to
be a waiver of any such default or an acquiescence therein and every power and
remedy given by this Trust Agreement to the Trustee and the owners of the Notes
respectively may be exercised from time to time and as often as may be deemed
expedient Not withstanding the foregoing an Event of Default may be waived
either by the Trustee if the Trustee believes such waiver is in the best
interest of the Note Owners or by Note Owners holding more than fifty percent
(50%) in principal amount of the Notes Outstanding (including not less than
fifty (50%) in principal amount of Senior Notes Outstanding).
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Section 9.11 NOTICE OF EVENT OF DEFAULT. The Trustee shall
give to the Note Owners notice of each Event of Default hereunder known to the
Trustee after actual knowledge of the occurrence thereof unless such Event of
Default shall have been remedied or cured before the giving of such notice,
provided that except in the case of default in the payment of the principal of
or interest on any of the Notes, the Trustee shall be protected in withholding
such notice if and so long as the board of directors or responsible officers of
the Trustee in good faith determines that the withholding of such notice is in
the interest of the Note Owners Each such notice of Event of Default shall be
given by the Trustee by mailing written notice thereof (i) to all owners of
Notes as the names and addresses of such owners appear upon the books for
registration and transfer of Notes as kept by the Trustee and (ii) to such
persons if any, as is required by law.
ARTICLE X
CONCERNING THE FIDUCIARIES
Section 10.1 APPOINTMENT AND ACCEPTANCE OF DUTIES OF TRUSTEE.
NBD Bank, N.A. is hereby appointed as Trustee and registrar The Trustee shall
signify its acceptance of the duties and obligations of Trustee as a fiduciary
for the Note Owners.
The Trustee accepts and agrees to execute the trusts imposed
upon it by this Trust Agreement but only upon the terms and conditions set forth
herein The Trustee prior to the occurrence of an event of default and after the
curing 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 Trust
Agreement, and no implied covenants or obligations should be read into this
Trust Agreement against the Trustee if any event of default under this Trust
Agreement shall have occurred and be continuing the Trustee shall exercise such
of the rights and powers vested in it by this Trust Agreement and shall use the
same degree of care as a prudent person would exercise or use in the
circumstances in the conduct of such prudent person s own affairs The Trustee
agrees to perform such trusts only upon and subject to the following expressed
terms and conditions.
(a) The Trustee may execute any of the trusts or powers
hereof and perform any of its duties by or through attorneys agents receivers or
employees and shall not be answerable for the conduct of the same if appointed
with due care hereunder and shall be entitled to advice of counsel concerning
all matters of trusts hereof and duties hereunder and may in all cases pay such
reasonable compensation to any attorney agent receiver or employee retained or
employed by it in connection herewith The Trustee may act upon the opinion, or
advice of any attorney surveyor engineer or accountant selected by it in the
exercise of reasonable care or if selected or retained by the Issuer approved by
the Trustee in the exercise of such care The Trustee shall not be responsible
for any loss or damage resulting from any action or
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non-action based on its good faith reliance upon such opinion or advice.
(b) The Trustee shall not be responsible for any recital
herein, or in the Notes (except with respect to the certificate of the Trustee
endorsed on the Notes), or for the investment of moneys as herein permitted and
except that no investment shall be made except in compliance with Section 5.6
hereof or for the recording or re-recording filing or re-filing of this Trust
Agreement, or any supplement or amendment thereto or the filing of financing
statements or for the validity of the execution by the Issuer of this Trust
Agreement or of any supplemental indentures or instruments of further assurance
or for the sufficiency of the security for the 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 The Trustee
may (but shall be under no duty to) require of the Issuer full information and
advice as to the performance of the covenants conditions and agreements in this
Trust Agreement of any impending default known to the Trustee The Trustee shall
have no obligation to perform any of the duties of the Issuer under this Trust
Agreement.
(c) Any action taken by the Trustee pursuant to this Trust
Agreement 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 any
Notes shall be conclusive and binding upon all future owners of the same Note
and upon Notes issued in exchange therefor or in place thereof.
(d) As to the existence or non-existence of any fact or as to
the sufficiency or validity of any instrument paper or proceeding the Trustee
shall be entitled to rely upon a certificate signed on behalf of the Issuer by
an Authorized Officer as sufficient evidence of the facts therein contained and
prior to the occurrence of a default of which the Trustee has actual knowledge
may accept a similar certificate to the effect that any particular dealing
transaction or action is 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 The Trustee may accept a certificate of an Authorized
Officer to the effect that a resolution in the form therein set forth has been
adopted by the Issuer as conclusive evidence that such resolution has been duly
adopted and is in full force and effect.
(e) The permissive right of the Trustee to do things
enumerated in this Trust Agreement shall not be construed as a duty and the
Trustee shall not be answerable for other than its negligence or willful
default.
(f) At any and all reasonable times, the Trustee, and its duly
authorized agents, attorneys, experts, engineers, accountants and
representatives shall have the right fully to
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inspect any and all books, papers and records of the Issuer pertaining to the
Notes, and to take such memoranda from and in regard thereto as may be desired.
(g) The Trustee shall not be required to give any bond or
surety in respect of the execution of the said trusts and powers or otherwise in
respect of the premises.
(h) Notwithstanding anything elsewhere in this Trust
Agreement contained, the Trustee shall have the right, but shall not be
required, to demand in respect of the authentication of any Notes, the
withdrawal of any cash the release of any property, or any action whatsoever
within the purview of this Trust Agreement, any showings certificates, opinions,
appraisals or other information or corporate action or evidence thereof in
addition to that by the terms hereof required as a condition of such action by
the Trustee deemed reasonably necessary f or the purpose of establishing the
right of the Issuer to the authentication of any Notes the withdrawal of any
cash the release of any property to the taking of any other action by the
Trustee.
(i) Before taking any action under this Trust Agreement
relating to an event of default or in connection with its duties under this
Trust Agreement other than making payments of principal and interest on the
Bonds as they become due or causing an acceleration of the Notes whenever
required by the Trust Agreement, the Trustee may require that a satisfactory
indemnity bond be furnished for the reimbursement of all expenses to which it
may be put and to protect it against all liability.
Section 10.2 RESPONSIBILITY OF FIDUCIARIES. The recitals of
fact herein and in the Notes contained shall be taken as the statements of the
Issuer and no Fiduciary assumes any responsibility for the correctness of the
same No Fiduciary makes any representations as to the validity or sufficiency of
this Trust Agreement or of any Notes issued hereunder or in respect of the
security afforded by this Trust Agreement, and no Fiduciary shall incur any
responsibility or duty with respect to the issuance of the Notes or the
application of the proceeds thereof or the application of any moneys paid to the
other Fiduciary No Fiduciary shall be under any obligation or duty to perform
any act which would involve it in expense or liability or to institute or defend
any suit in respect hereof, or to advance any of its own moneys, unless properly
indemnified No Fiduciary shall be liable in connection with the performance of
its duties hereunder except for its own negligence or default Neither the
Trustee nor any paying agent shall be under any responsibility or duty with
respect to the application of any moneys paid to any one of the others.
Section 10.3 EVIDENCE ON WHICH FIDUCIARIES MAY ACT.
Each Fiduciary shall be protected in acting upon any notice, resolution request
consent order certificate, report, opinion, bond or other paper or document
believed by it to be genuine, and to have been signed or presented by the proper
party or parties.
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Each Fiduciary may consult with counsel, who may be of counsel to the Issuer and
the opinion of such counsel shall be full and complete authorization and
protection in respect of any action taken or suffered by it hereunder in good
faith and in accordance therewith Whenever any Fiduciary shall deem it necessary
or desirable that a matter be proved or established prior to taking or suffering
any action hereunder including payment of moneys out of an Account, such matter
(unless other evidence of respect thereof be herein specifically prescribed) may
be deemed to be conclusively proved and established by a Certificate signed by
an Authorized Officer and such Certificate shall be full warrant for any action
taken or suffered in good faith under the provisions of this Trust Agreement
upon the faith thereof but in its sole discretion the Fiduciary may in lieu
thereof accept other evidence of such fact or matter or may require such further
or additional evidence as it may deem reasonable Neither the Trustee nor
Fiduciary nor any successor Trustee or Fiduciary shall be liable to the Issuer
the owners of any of the Notes or any other person f or any act or omission done
or omitted to be done by such Trustee or Fiduciary in reliance upon any
instruction, direction or certification received by the Trustee or Fiduciary
pursuant to this Trust Agreement or for any act or omission done or omitted in
good faith and without willful or reckless misconduct Except as otherwise
expressly provided herein any request order notice or other direction required
or permitted to be furnished pursuant to any provision hereof by the Issuer to
any Fiduciary shall be sufficiently executed if executed in the name of the
Issuer by an Authorized Officer.
Section 10.4 COMPENSATION. The Issuer shall pay to each
Fiduciary from time to time reasonable compensation as agreed to by the Issuer
and the respective Fiduciary for all services rendered under this Trust
Agreement, and also all reasonable expenses, charges counsel fees and other
disbursements including those of their attorneys agents and employees incurred
in and about the performance of their powers and duties under this Trust
Agreement and each Fiduciary shall have a lien therefor on any and all funds at
any time held by it under this Trust Agreement.
The Issuer hereby agrees to indemnify the Trustee and each of
its directors officers employees agents and/or representatives for and to hold
each of them harmless against any loss liability or expense incurred without
negligence or bad faith on each of their parts, arising out of or in connection
with the acceptance or administration of the trust or trusts hereunder including
the costs and expenses of defending themselves against any claim or liability in
connection with the exercise or performance of any of the Trustee's powers or
duties hereunder.
Section 10.5 PERMITTED ACTS AND FUNCTIONS. Any Fiduciary may
become the owner of any Notes with the same rights it would have if it were not
a Fiduciary Any Fiduciary may act as Depositary for and permit any of its
officers or directors to act as a member of, or in any other capacity with
respect to, any
54
committee formed to protect the rights of Note Owners or to affect or aid in any
reorganization growing out of the enforcement of the Notes or this Trust
Agreement whether or not any such committee shall represent the owners of a
majority in principal amount of the Notes then Outstanding Any Fiduciary may
sell Eligible Loans to the Issuer Any Fiduciary may be an underwriter in
connection with the sale of the Notes or of any other securities offered or
issued by the Issuer.
Section 10.6 RESIGNATION OF TRUSTEE. The Trustee may at any
time resign and be discharged of the duties and obligations created by this
Trust Agreement by giving not less than sixty days' written notice to the Issuer
and to the Note Owners specifying the date when such resignation shall take
effect, and such resignation shall take effect upon any day specified in such
notice unless (i) previously a successor shall have been appointed as provided
in Section 10.9, in which event such resignation shall take effect immediately
on the acceptance of such successor or (ii) no such successor shall have been
appointed in which event such resignation shall take effect immediately upon but
not until, the acceptance of such successor.
Section 10.7 REMOVAL OF TRUSTEE. The Trustee shall be removed
by the Issuer if at any time so requested by an instrument or concurrent
instruments in writing filed with the Trustee and the Issuer and signed by the
owners (or their attorney-in-fact duly authorized) of a majority in principal
amount of Notes Outstanding (but in no event less than a majority in principal
amount of Senior Notes) The Issuer in its discretion may remove the Trustee at
any time except during the existence of an Event of Default by filing with the
Trustee an instrument of appointment signed by an Authorized Officer and the
acceptance by a successor Trustee.
Section 10.8 APPOINTMENT OF SUCCESSOR TRUSTEE. (A) In case at
any time the Trustee shall resign or shall be removed or shall become incapable
of acting or shall be adjudged a bankrupt or insolvent or if a receiver
liquidator or conservator of the Trustee or of its property shall be appointed,
or if any public officer shall take charge or control of the Trustee or of its
property or affairs the Issuer covenants and agrees that it will thereupon
appoint a successor Trustee.
(B) If in a proper case no appointment of a successor Trustee
shall be made pursuant to the foregoing provisions of this Section within
forty-five days after the Trustee shall have given to the Issuer written notice,
as provided in Section 10 6 or after a vacancy in the office of the Trustee
shall have occurred by reason of its inability to act, the Trustee or the owner
of any Note may apply to any court of competent jurisdiction to appoint a
successor Trustee Said court may thereupon after such notice if any as such
court may deem proper and prescribe, appoint a successor Trustee.
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(C) Any Trustee appointed under the provisions of this
Section in succession to the Trustee shall be a trust company or bank having the
powers of a trust company within or outside the State, having a capital, surplus
and undivided profits aggregating at least $75,000,000 if there be such a trust
company or bank willing and able to accept the office on reasonable and
customary terms and authorized by law to perform all the duties imposed upon it
by this Trust Agreement.
Section 10.9 TRANSFER OF RIGHTS AND PROPERTY TO SUCCESSOR
TRUSTEE. Any successor Trustee appointed under this Trust Agreement shall
execute, acknowledge and deliver to its predecessor Trustee and also to the
Issuer, an instrument accepting such appointment, as a fiduciary for the Note
Owners, and thereupon such successor Trustee, without any further act, deed or
conveyance shall become fully vested with all moneys, estates properties rights,
powers, duties and obligations of such predecessor Trustee, with like effect as
if originally named as Trustee but the Trustee ceasing to act shall nevertheless
on the request of the Issuer, or of its successor Trustee execute acknowledge
and deliver such instruments of conveyance and further assurance and do such
other things as may reasonably be required for more fully and certainly vesting
and confirming in such successor Trustee all the right title and interest of the
predecessor Trustee in and to any property held by it under this Trust Agreement
and shall pay over assign and deliver to the successor Trustee any money or
other property subject to the trusts and conditions herein set forth Should any
deed, conveyance or instrument in writing from the Issuer be required by such
successor Trustee for more fully and certainly vesting in and confirming to such
successor Trustee any such estates, rights, powers and duties any and all such
deeds conveyances and instruments in writing shall on request and so far as may
be authorized by law be executed acknowledged and delivered by the Issuer Any
such successor Trustee shall promptly notify the paying agents of its
appointment as Trustee Upon the effectiveness of the resignation or removal of
the Trustee, such Trustee's authority to act pursuant to this Trust Agreement
shall terminate and such Trustee shall have no further responsibility or
liability whatsoever as Trustee for performance of this Trust Agreement.
Section 10.10 MERGER OR CONSOLIDATION. Any company into which
any Fiduciary may be merged or converted or with which it may be consolidated or
any company resulting from any merger conversion or consolidation to which it
shall be a party or any company to which any Fiduciary may sell or transfer all
or substantially all of its corporate trust business provided such company shall
be a trust company or bank which is qualified to be a successor to such
Fiduciary under Section 10.8 and shall be authorized by law to perform all the
duties imposed upon it by this Trust Agreement shall be the successor to such
Fiduciary without the execution or filing of any paper or the performance of any
further act anything herein to the contrary notwithstanding.
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Section 10.11 ADOPTION OF AUTHENTICATION. In case any of the
Notes contemplated to be issued under this Trust Agreement shall have been
authenticated but not delivered any successor Trustee may adopt the certificate
of authentication of any predecessor Trustee so authenticating such Notes and
deliver such Notes so authenticated, and in case any of the said Notes shall not
have been authenticated, any successor Trustee may authenticate such Notes in
the name of the predecessor Trustee or in the name of the successor Trustee, and
in all such cases such certificate shall have the full force provided anywhere
in said Notes or in this Trust Agreement.
Section 10.12 EVIDENCE OF SIGNATURES OF NOTE OWNERS AND
OWNERSHIP OF NOTES. (A) Any request, consent or other instrument which this
Trust Agreement may require or permit to be signed and executed by the Note
Owners may be in one or more instruments of similar tenor and shall be signed or
executed by such Note Owners in person or by their attorneys appointed in
writing Proof of (i) the execution of any such instrument or of an instrument
appointing any such attorney, or (ii) the holding by any person of the Notes
shall be sufficient for any purpose of this Trust Agreement (except as otherwise
herein expressly provided) if made in the following manner but the Trustee may
nevertheless in its sole discretion require further or other proof in cases
where it deems the same desirable.
The fact and date of the execution by any Note Owner or such
owner s attorney of such instrument may be proved by the Certificate which need
not be acknowledged or verified, of an officer of a bank or trust company,
financial institution or other member of the National Association of Securities
Dealers Inc., satisfactory to the Trustee or of any notary public or other
officer authorized to take acknowledgments of deeds to be recorded in the state
in which such person purports to act that the person signing such request or
other instrument acknowledged at the time of the execution thereof or by an
affidavit of a witness of such execution duly sworn to before such notary public
or other officer The authority of the person or persons executing any such
instrument on behalf of a corporate Note Owner may be established without
further proof if such instrument is signed by a person purporting to be the
president or vice president of such corporation with a corporate seal affixed
and attested by a person purporting to be its secretary or an assistant
secretary; and
(B) The ownership of Notes and the amount numbers and other
identification, and date of holding the same shall be proved by the registry
books.
(C) Any request consent or vote of the owner of any Note
shall bind all future owners of such Note in respect of anything done or
suffered to be done by the Issuer or any Fiduciary in accordance therewith.
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Section 10.13 PRESERVATION AND INSPECTION OF DOCUMENTS.
All documents received by any Fiduciary under the provisions of this Trust
Agreement or any Supplemental Trust Agreement (or microfilm, microcard or
similar photographic reproduction thereof) shall be retained in its possession
and shall be subject at all reasonable times to the inspection of the Issuer and
any other Fiduciary and any Note Owner and their agents and their
representatives, any of whom may make copies thereof.
Section 10.14 WITHHOLDING. If any withholding tax is imposed
on the Issuer's payment under the Notes to any Note Owner such tax shall reduce
the amount otherwise distributable to such Note Owner The Trustee is hereby
authorized and directed to retain from amounts otherwise distributable to any
Note Owner sufficient funds for the payment of any tax that is legally owed by
the Issuer (but such authorization shall not prevent the Trustee from
contesting any such tax in appropriate proceedings and withholding payment of
such tax, if permitted by law, pending the outcome of such proceedings) The
amount of any withholding tax imposed with respect to any Note Owner shall be
treated as cash distributed to such Note Owner at the time it is withheld by
the Trustee and remitted to the appropriate taxing authority If there is a
possibility that withholding tax is payable with respect to a distribution the
Trustee may in its sole discretion withhold such amounts in accordance with
this Section 6.14 If any Note Owner wishes to apply for a refund of any such
withholding tax, the Trustee shall reasonably cooperate with such Note Owner in
making such claim so long as such Note Owner agrees to reimburse the Trustee
for any out-of-pocket expenses incurred The Trustee shall use reasonable
efforts to give on behalf of the Issuer notice to each Note Owner of any such
withholding requirement at least 10 days prior to the date of the payment from
which amounts are required to be withheld.
ARTICLE XI
DEFEASANCE MISCELLANEOUS PROVISIONS
Section 11.1 DEFEASANCE. (A) Subject to the provisions of
Article IX if the Issuer shall pay or cause to be paid to the owners of the
Notes the principal and interest, including deferred interest whether or not
then due to become due thereon and at the times and in the manner stipulated
therein and in this Trust Agreement the pledge of the Pledged Assets, including
any Revenues Recoveries of Principal and other moneys securities funds and
property hereby pledged and all other rights granted hereby in favor of the Note
Owners shall be discharged and satisfied In such event the Trustee shall upon
the request of the Issuer execute and deliver to the Issuer all such instruments
as may be desirable to evidence such discharge and satisfaction and the
Fiduciaries shall pay over or deliver to the Issuer all moneys or securities
held by them pursuant to this Trust Agreement which are not required for the
payment of Notes not theretofore
58
surrendered for such payment. If the Issuer shall pay or cause to be paid, or
there shall otherwise be paid, to the owners of all Outstanding Notes the
principal and interest due or to become due thereon at the times and in the
manner stipulated therein and in this Trust Agreement, such Notes shall cease to
be entitled to any lien benefit or security hereunder and all covenants,
agreements and obligations of the Issuer to the owners of such Notes shall
thereupon cease, terminate and become void and be discharged and satisfied.
(B) Notes for the payment of which Eligible Funds shall have
been set aside and shall be held in trust by the Fiduciaries (through deposit by
the Issuer of funds for such payment or otherwise) shall, at the maturity
thereof, be deemed to have been paid within the meaning and with the effect
expressed in subsection (A) of this Section All Notes shall, prior to the
maturity thereof be deemed to have been paid within the meaning and with the
effect expressed in subsection (A) of this Section if (i) there shall have been
deposited with the Trustee, funds consisting of moneys or non-callable direct
obligations of or guaranteed by the United States of America the principal of
and the interest on which when due, will provide moneys which shall be
sufficient to pay when due the principal and redemption price if applicable of
and interest due and to become due on said Notes on the maturity date thereof or
earlier redemption date and (ii) the Issuer shall have given the Trustee in form
satisfactory to it irrevocable instructions to give notice by mail as soon as
practicable to the owners of such Notes that the deposit required by (i) above
has been made with the Trustee and that said Notes are deemed to have been paid
in accordance with this Section and stating such maturity upon which moneys are
to be available for the payment of the principal on said Notes Neither (i)
non-callable direct obligations of the United States of America or moneys
deposited with the Trustee pursuant to this Section nor (ii) principal or
interest payments on any such Investment Securities shall be withdrawn or used
for any purpose other than, and shall be held in trust for the payment of the
principal of and interest on said Notes but any cash received from such
principal or interest payments on such Investment Securities deposited with the
Trustee if not then needed for such purpose shall, to the extent practicable and
permitted by Section 6.6 hereof, be reinvested in Investment Securities maturing
at times and in amounts sufficient to pay when due the principal and interest to
become due on said Notes on and prior to such maturity date thereof, as the case
may be and interest earned from such reinvestments not needed to redeem Notes
shall be paid over to the Issuer as received by the Trustee free and clear of
any trust lien or pledge For the purposes of this Section Investment Securities
means and includes only such non-callable obligations as are described in clause
(1) of the definition of Investment Securities herein.
(C) The deposit required by subsection (B) hereof may be made
with respect to Notes within any particular maturity in which case such maturity
of Notes shall no longer be deemed to be
59
Outstanding under the terms of this Trust Agreement, and the Owners of such
defeased Notes shall be secured only by such trust funds and not by any other
part of the Pledged Assets, and this Trust Agreement shall remain in full force
and effect to protect the interests of the Owners of Notes remaining Outstanding
thereafter.
(D) Anything in this Trust Agreement to the contrary
notwithstanding, subject to the applicable provision of the law of the State,
any moneys held by a Fiduciary in trust for the payment and discharge of any of
the Notes which remain unclaimed for six years after the date when all of the
Notes have become due and payable if such moneys were held by the Fiduciary at
such date, or for six years after the date of deposit of such moneys if
deposited with the Fiduciary after the said date when all of the Notes became
due and payable shall at the written request of the Issuer be repaid by the
Fiduciary to the Issuer, as the Issuer's absolute property and free from trust
and the Fiduciary shall thereupon be released and discharged except that before
being required to make any such payment the Fiduciary shall, at the expense of
the Issuer cause to be published at least twice at an interval of not less than
seven days between publications in a newspaper of general circulation selected
by the Issuer, notice that said moneys remain unclaimed and that after a date
named in said notice which date shall be not less than ten nor more than twenty
days after the date of the first publication of such notice, the balance of such
moneys then unclaimed will be paid as provided herein.
Section 11.2 NO RECOURSE UNDER TRUST AGREEMENT OR ON NOTES.
All covenants stipulations promises, agreements and obligations of the Issuer
contained in this Trust Agreement shall be deemed to be the covenants
stipulations promises agreements and obligations of the Issuer and not of any
officer director or employee of the Issuer in such person's individual capacity
and no recourse shall be had for the payment of the principal of or interest on
the Notes or for any claim based thereon or on this Trust Agreement against any
officer director or employee of the Issuer or against any natural person
executing the Notes
Section 11.3 SECURITY INSTRUMENT. This Trust Agreement when
delivered to and accepted by the Trustee shall constitute a security agreement
pursuant to and for all purposes of the Uniform Commercial Code of the State of
Indiana
Section 11.4 CONFLICT. All resolutions or parts of Trust
Agreements or other proceedings of the Issuer in conflict herewith be and the
same are repealed insofar as such conflict exists.
Section 11.5 CONFLICT WITH TRUST INDENTURE ACT. If any
provision hereof limits, qualifies or conflicts with another provision hereof
that is required to be included in this Trust Agreement by any of the provisions
of the Trust Indenture Act such required provision shall control. The provisions
of TIA Sections 310 through 317 that impose duties on any Person (including the
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provisions automatically deemed included herein unless expressly excluded by
this Trust Agreement) are a part of and govern this Trust Agreement whether or
not physically contained herein
Section 11.6 RECORDING OF TRUST AGREEMENT. If this Trust
Agreement is subject to recording in any appropriate public recording offices,
such recording is to be effected by the Issuer and at its expense accompanied by
an Opinion of Counsel (which may be counsel to the Issuer or any other counsel
reasonably acceptable to the Trustee) to the effect that such recording is
necessary either for the protection of the Note Owners or any other Person
secured hereunder or for the enforcement of any right or remedy granted to the
Trustee under this Trust Agreement.
Section 11.7 EFFECTIVE DATE. This Trust Agreement shall take
effect immediately.
IN WITNESS WHEREOF, EMT Corp. has caused these presents to be
signed in its name and behalf by its Executive Vice President and its corporate
seal to be hereunto affixed and attested by its Secretary, and to evidence its
acceptance of the trusts hereby created NBD Bank, N.A. as Trustee has caused
these presents to be signed in its name and behalf by, its official seal to be
hereunto affixed and the same to be attested by its duly authorized officers,
all as of the day and year first above written.
EMT CO.
By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Treasurer
Attest:
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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SEAL
61
NBD Bank N.A.
as Trustee
By /s/ ▇▇▇▇▇ ▇▇▇▇▇
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Title: Vice President
Attest:
/s/ (illegible)
----------------------------------------
Title: Assistant Vice President
SEAL
