EXHIBIT 4.2
Draft of 7/15/97
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FIRST SUPPLEMENTAL INDENTURE OF TRUST
between
EDUCATION LOANS INCORPORATED
AND
FIRST BANK NATIONAL ASSOCIATION
as Trustee
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DATED AS OF JULY 1, 1997
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TABLE OF CONTENTS
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Page
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PARTIES......................................................................................................... 1
RECITALS........................................................................................................ 1
Section 1. Definitions....................................................................................... 1
Section 2. Authorization and Terms of Series 1997-1 Notes.................................................... 19
Section 3. Interest Payable on Auction Rate Series 1997-1 Notes and
LIBOR Rate Series 1997-1 Notes................................................................. 23
Section 4. Determining the Auction Rate Series 1997-1 Note Interest Rate..................................... 30
Section 5. Determination of Payment Defaults and Payment of
Auction Agent and Broker-Dealer Fees........................................................... 41
Section 6. Calculation of Maximum Auction Rate, All Hold
Rate, Net Loan Rate, One-Month LIBOR, Three-Month
LIBOR, Non-Payment Rate, After-Tax Equivalent,
"AA" Composite Commercial Paper Rate, Index
and Applicable Percentage...................................................................... 41
Section 7. Notification of Rates, Amounts and Payment Dates.................................................. 42
Section 8. Auction Agent..................................................................................... 43
Section 9. Broker-Dealers.................................................................................... 44
Section 10. Changes in Auction Period or Periods and
Certain Percentages............................................................................ 45
Section 11. Changes in the Auction Date....................................................................... 47
Section 12. Additional Provisions Regarding the Auction Rate
Series 1997-1 Note Interest Rate............................................................... 48
Section 13. Qualifications of Market Agent.................................................................... 49
Section 14. Purposes of Issuance of Series 1997-1 Notes....................................................... 50
Section 15. Deposit of Series 1997-1 Note Proceeds............................................................ 50
Section 16. Redemption and Prepayment of Series 1997-1 Notes.................................................. 52
Section 17. Book-Entry Series 1997-1 Notes.................................................................... 58
Section 18. Series 1997-1 Accounts and Subaccounts............................................................ 60
Section 19. Deposits to Series 1997-1 Excess Earnings Subaccount.............................................. 63
Section 20. Obligors Not To Make Certain Purchases of Tax Exempt
Series 1997-1 Notes............................................................................ 64
Section 21. Arbitrage Provisions.............................................................................. 64
Section 22. Purchase of Eligible Loans From Series 1997-1 Tax Exempt
and Taxable Acquisition Accounts and Series 1997-1
Tax Exempt and Taxable Surplus Subaccounts..................................................... 65
Section 23. Limitation on Costs of Issuance, Administrative Expenses
and Note Fees.................................................................................. 66
Section 24. Proceeds of Sales of Certain Student Loans To Be
Deposited in the Acquisition Fund.............................................................. 66
Section 25. Limitation on Acquisition of Consolidation Loans and
Special Program Loans............................................................................. 66
Section 26. Certain Findings, Determinations and Designations................................................. ▇▇
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▇▇▇▇▇▇▇ ▇▇. Governing Law..................................................................................... 68
Section 28. Section Headings; Table of Contents............................................................... 68
Section 29. Severability...................................................................................... 68
Section 30. Counterparts...................................................................................... 68
Section 31. Effect of First Supplemental Indenture............................................................ 68
SIGNATURES...................................................................................................... 69
Exhibit A-1 -- Form of Tax Exempt Auction Rate
Series 1997-1 Notes......................................................................... A-1-1
Exhibit A-2 -- Form of Series 1997-1F Notes................................................................ ▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇ -- Form of Taxable Auction Rate Series 1997-1 Notes............................................ A-3-1
Exhibit A-4 -- Form of LIBOR Rate Series 1997-1 Senior Notes............................................... ▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇ -- Form of Series 1997-1K Notes................................................................ ▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇ -- Form of Series 1997-1L Notes................................................................ B-2-1
Exhibit C -- Form of Notice of A Payment Default......................................................... C-1
Exhibit D -- Form of Notice of Cure of Payment Default................................................... D-1
Exhibit E -- Form of Notice of Proposed Auction Period
Adjustment.................................................................................. E-1
Exhibit F -- Form of Notice Establishing Auction Period
Adjustment.................................................................................. F-1
Exhibit G -- Form of Notice of Change in Auction Date.................................................... G-1
Exhibit H-1 -- List of Student Loan Purchase Agreements relating to
Eligible Loans acquired from the Series 1979 Trustee........................................ ▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇ -- List of Student Loan Purchase Agreements relating to
Eligible Loans acquired from Series 1989 Trustee............................................ ▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇ -- List of Student Loan Purchase Agreements relating to
Eligible Loans acquired from Series 1994 Trustee
and financed from proceeds of Series 1996-1 Notes........................................... ▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇ -- List of Student Loan Purchase Agreements relating to
Eligible Loans to be financed from proceeds of Tax
Exempt Series 1997-1 Notes, Series 1989, 1991 and
1994 Bonds and Series 1996-1 Notes.......................................................... ▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇ -- List of Student Loan Purchase Agreements relating to
Eligible Loans acquired from Series 1994 Trustee and
financed from proceeds of Series 1994-1, 1995-1 and
1995-2 Notes................................................................................ ▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇ -- List of Student Loan Purchase Agreements relating to
Eligible Loans to be financed from proceeds of Taxable
Series 1997-1 Notes......................................................................... H-6-1
Exhibit I -- Form of Notice of Proposed Adjustment
to Certain Percentages...................................................................... I-1
Exhibit J -- Form of Notice Establishing Adjustment
to Certain Percentages...................................................................... J-1
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THIS FIRST SUPPLEMENTAL INDENTURE OF TRUST, dated as of July 1, 1997,
between EDUCATION LOANS INCORPORATED, a nonprofit corporation duly organized and
existing under the laws of the State of South Dakota (the "Corporation"), and
FIRST BANK NATIONAL ASSOCIATION, a national banking association duly
established, existing and authorized to accept and execute trusts of the
character herein set out under and by virtue of the laws of the United States
(the "Trustee");
W I T N E S S E T H:
WHEREAS, the Corporation and the Trustee, as trustee, have heretofore
executed and delivered an Indenture of Trust, dated as July 1, 1997 (the
"Original Indenture"); and
WHEREAS, the Original Indenture prescribes the terms and conditions
upon which the Corporation may from time to time authorize and issue series of
Notes (as defined in the Original Indenture); and
WHEREAS, the Corporation has, by proper action of its Board,
authorized and determined to issue twelve series of Notes in the respective
aggregate principal amounts of $___________________ (the "Series 1997-1A
Notes"), $___________________ (the "Series 1997-1B Notes"), $___________________
(the "Series 1997-1C Notes"), $___________________ (the "Series 1997-1D Notes"),
$___________________ (the "Series 1997-1E Notes"), $__________________ (the
"Series 1997-1F Notes"), $___________________ (the "Series 1997-1G Notes"),
$___________________ (the "Series 1997-1H Notes"), $___________________ (the
"Series 1997-1I Notes") and $___________________ (the "Series 1997-1J Notes"),
each of which will be a series of Class A Notes, and $___________________ (the
"Series 1997-1K Notes") and $___________________ (the "Series 1997-1L Notes,"
and, together with the Series 1997-1A Notes, the Series 1997-1B Notes, the
Series 1997-1C Notes, the Series 1997-1D Notes, the Series 1997-1E Notes, the
Series 1997-1F Notes, the Series 1997-1G Notes, the Series 1997-1H Notes, the
Series 1997-1I Notes, the Series 1997-1J Notes and the Series 1997-1K Notes, the
"Series 1997-1 Notes"), each of which will be a series of Class B Notes; and
WHEREAS, the Corporation desires by this First Supplemental Indenture
to prescribe the terms and provisions of the Series 1997-1 Notes, all as more
fully set forth herein; and
WHEREAS, the execution and delivery of this First Supplemental
Indenture and the issuance of the Series 1997-1 Notes have been in all respects
duly and validly authorized by the Corporation;
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
SECTION 1. DEFINITIONS. In this First Supplemental Indenture, the
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terms defined in the Original Indenture shall, except as otherwise provided in
this Section 1, have the same meaning when used herein unless the context or use
thereof indicates another or different meaning or intent. In addition, the
following terms shall have the following respective meanings unless the context
hereof clearly requires otherwise:
"'AA' Composite Commercial Paper Rate" shall mean, with respect to a
series of Tax Exempt Auction Rate Series 1997-1 Notes, (i) the interest
equivalent of the 30-day rate on commercial paper placed on behalf of issuers
whose corporate bonds are rated "AA" by S&P, or the equivalent of such rating by
S&P, as such 30-day rate is made available on a discount basis or otherwise by
the Federal Reserve Bank of New York for the Business Day immediately preceding
such date of determination, or (ii) if the Federal Reserve Bank of New York does
not make available any such rate, then the arithmetic average of the interest
equivalent of the 30-day rate on commercial paper placed on behalf of such
issuers, as quoted to the Auction Agent on a discount basis or otherwise by the
Commercial Paper Dealers, as of the close of business on the Business Day
immediately preceding the date of determination. If, at the time quotations are
required, any Commercial Paper Dealer does not quote a commercial paper rate
required to determine the "'AA' Composite Commercial Paper Rate," or if less
than three Commercial Paper Dealers are then serving as such for any reason, the
"'AA' Composite Commercial Paper Rate" shall be determined on the basis of such
quotation or quotations furnished by the Commercial Paper Dealer or Commercial
Paper Dealers then serving as such and providing a quotation. For purposes of
this definition, the "interest equivalent" of a rate stated on a discount basis
(a "discount rate") for commercial paper of a given day's maturity shall be
equal to the product of (a) 100, times (b) the quotient (rounded upward to the
next higher .00001) of (1) the discount rate (expressed in decimals) divided by
(2) the difference between (A) 1.00, and (B) a fraction, the numerator of which
shall be the product of the discount rate (expressed in decimals) times the
number of days from (and including) the date of determination to, but excluding,
the date on which such commercial paper matures, and the denominator of which
shall be 360.
"Administrative Cost and Note Fee Rate" shall mean a rate per annum
equal to the sum of (i) .______%, (ii) the Auction Agent Fee Rate and (iii) the
Broker-Dealer Fee Rate.
"After-Tax Equivalent" shall mean, with respect to a series of Tax
Exempt Auction Rate Series 1997-1 Notes, the interest rate per annum equal to
the product of (i) 1.00 minus the Statutory Corporate Tax Rate and (ii) the "AA"
Composite Commercial Paper Rate.
"All Hold Rate" shall mean (i) with respect to a series of Tax Exempt
Auction Rate Series 1997-1 Notes, the interest rate per annum equal to 85% (as
such percentage may be adjusted pursuant to Section 10 hereof) of the lesser of
(a) the After-Tax Equivalent and (b) the Index; provided that in no event shall
the All Hold Rate be greater than the Maximum Auction Rate, and (ii) with
respect to a series of Taxable Auction Rate Series 1997-1 Notes, One-Month LIBOR
less .20%.
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"Applicable Percentage" shall mean, with respect to a series of Tax
Exempt Auction Rate Series 1997-1 Notes, the percentage determined (as such
percentage may be adjusted pursuant to Section 10 hereof) based on the ratings
of ▇▇▇▇▇'▇ and Fitch of the Tax Exempt Auction Rate Series 1997-1 Notes as set
forth below:
▇▇▇▇▇ 's Fitch's
Credit Rating Credit Rating Applicable Percentage
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"Aaa" "AAA" 175%
"Aa" "AA" 175%
"A" "A" 175%
"Baa" "BBB" 200%
Below "Baa" Below "BBB" 265%
provided that if the Tax Exempt Auction Rate Series 1997-1 Notes are not then
rated by both ▇▇▇▇▇'▇ and Fitch, the "Applicable Percentage" shall be 265%. In
the event that one such Rating Agency has assigned a lower credit rating to the
Tax Exempt Auction Rate Series 1997-1 Notes than the other Rating Agency, the
"Applicable Percentage" shall be based upon such lower credit rating. All
ratings referred to above shall be without regard to the gradations within each
rating category. For purposes of the Auction Agent and the Auction Procedures,
the ratings referred to in this definition shall be the last ratings of which
the Auction Agent shall have been given notice pursuant to the Auction Agent
Agreement.
"Auction" shall mean the implementation of the Auction Procedures on
an Auction Date.
"Auction Agent" shall mean the Initial Auction Agent under the Initial
Auction Agent Agreement unless and until a Substitute Auction Agent Agreement
becomes effective, after which "Auction Agent" shall mean the Substitute Auction
Agent.
"Auction Agent Agreement" shall mean the applicable Initial Auction
Agent Agreement unless and until a Substitute Auction Agent Agreement is entered
into, after which "Auction Agent Agreement" shall mean such Substitute Auction
Agent Agreement.
"Auction Agent Fee" shall have the meaning ascribed to such term in
the Auction Agent Agreement.
"Auction Agent Fee Rate" shall have the meaning ascribed to such term
in the Auction Agent Agreement.
"Auction Date" shall mean, initially, with respect to the Series 1997-
1A Notes, ______________, 1997, with respect to the Series 1997-1B Notes,
______________, 1997, with
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respect to the Series 1997-1C Notes, ______________, 1997, with respect to the
Series 1997-1D Notes, ______________, 1997, with respect to the Series 1997-1E
Notes, ______________, 1997, with respect to the Series 1997-1G Notes,
______________, 1997, and with respect to the Series 1997-1H Notes,
______________, 1997, and, thereafter, with respect to each such series of
Auction Rate Series 1997-1 Notes, the Business Day immediately preceding the
first day of each Auction Period for such series, other than:
(A) an Auction Period commencing after the ownership of such series is no
longer maintained in Book-Entry Form by the Securities Depository;
(B) an Auction Period commencing after and during the continuance of a
Payment Default; or
(C) an Auction Period commencing less than two (2) Business Days after the
cure of a Payment Default.
Notwithstanding the foregoing, the Auction Date for one or more Auction Periods
may be changed pursuant to Section 11 of this First Supplemental Indenture.
"Auction Period" shall mean the Interest Period applicable to each
series of the Auction Rate Series 1997-1 Notes, which Auction Period (after the
Initial Interest Period for each such series) initially shall consist generally
of (i) in the case of the Tax Exempt Auction Rate Series 1997-1 Notes, thirty-
five (35) days, as the same may be adjusted pursuant to Section 3(A) or Section
10 hereof, and (ii) in the case of the Taxable Exempt Auction Rate Series 1997-1
Senior Notes, twenty-eight (28) days, as the same may be adjusted pursuant to
Section 3(A) or Section 10 hereof.
"Auction Period Adjustment" shall mean an adjustment to the Auction
Period as provided in Section 10 hereof.
"Auction Procedures" shall mean the procedures set forth in Sections 4
through 11 hereof by which the Auction Rate is determined.
"Auction Rate" shall mean the rate of interest per annum that results
from implementation of the Auction Procedures and is determined as described in
Section 4(c)(ii) hereof.
"Auction Rate Series 1997-1 Note Initial Interest Rate" shall mean
________% per annum for the Series 1997-1A Notes, ________% per annum for the
Series 1997-1B Notes, ________% per annum for the Series 1997-1C Notes,
________% per annum for the Series 1997-1D Notes, ________% per annum for the
Series 1997-1E Notes, ________% per annum for the Series 1997-1G Notes and
________% per annum for the Series 1997-1H Notes.
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"Auction Rate Series 1997-1 Note Interest Rate" shall mean the rate of
interest per annum borne from time to time by a series of the Auction Rate
Series 1997-1 Notes, which shall be (i) during the Initial Interest Period for
such series, the Auction Rate Series 1997-1 Note Initial Interest Rate, and (ii)
during each Interest Period thereafter, the rate of interest determined in
accordance with the provisions of Sections 4 through 12 hereof; provided,
however, that in the event of a Payment Default with respect to a series, the
Auction Rate Series 1997-1 Note Interest Rate for such series shall equal the
Non-Payment Rate; and provided, further, that such Auction Rate Series 1997-1
Note Interest Rate shall in no event exceed the Auction Rate Series 1997-1 Note
Interest Rate Limitation.
"Auction Rate Series 1997-1 Note Interest Rate Limitation" shall mean
(i) with respect to a series of Tax Exempt Auction Rate Series 1997-1 Notes, a
rate per annum equal to 14% or, if less than such rate, the highest rate the
Corporation may legally pay, from time to time, as interest on the Tax Exempt
Auction Rate Series 1997-1 Notes, and (ii) with respect to a series of Taxable
Auction Rate Series 1997-1 Notes, a rate per annum equal to 18% or, if less than
such rate, the highest rate the Corporation may legally pay, from time to time,
as interest on the Taxable Auction Rate Series 1997-1 Notes.
"Auction Rate Series 1997-1 Notes" shall mean the Tax Exempt Auction
Rate Series 1997-1 Notes and the Taxable Auction Rate Series 1997-1 Notes.
"Authorized Denominations" shall mean (i) with respect to the Auction
Rate Series 1997-1 Notes and the LIBOR Rate Series 1997-1 Notes, $100,000 in
original Principal Amount and any integral multiple thereof, and (ii) with
respect to the Series 1997-1F Notes and the Series 1997-1K Notes, $5,000 in
original Principal Amount and any integral multiple thereof.
"Available Auction Rate Series 1997-1 Notes" shall have the meaning
ascribed to such term in Section 4(c)(i)(A) hereof.
"Bid" shall have the meaning ascribed to such term in Section 4(a)(i)
hereof.
"Bid Auction Rate" shall have the meaning ascribed to such term in
Section 4(c)(i)(C) hereof.
"Bidder" shall have the meaning ascribed to such term in Section
4(a)(i) hereof.
"Book-Entry Form" or "Book-Entry System" shall mean a form or system
under which (i) the beneficial right to principal and interest may be
transferred only through a book entry, (ii) physical securities in registered
form are issued only to a Securities Depository or its nominee as registered
holder, with the securities "immobilized" to the custody of the Securities
Depository, and (iii) the
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book entry is the record that identifies the owners of beneficial interests in
that principal and interest.
"Broker-Dealer" shall mean ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. or any other broker or
dealer (each as defined in the Securities Exchange Act of 1934, as amended),
commercial bank or other entity permitted by law to perform the functions
required of a Broker-Dealer set forth in the Auction Procedures that (a) is a
Participant (or an affiliate of a Participant), (b) has been appointed as such
by the Corporation pursuant to Section 9 hereof and (c) has entered into a
Broker-Dealer Agreement that is in effect on the date of reference.
"Broker-Dealer Agreement" shall mean each agreement between the
Auction Agent and a Broker-Dealer, and approved by the Corporation, pursuant to
which the Broker-Dealer agrees to participate in Auctions as set forth in the
Auction Procedures, as from time to time amended or supplemented. Each Broker-
Dealer Agreement relating to the Tax Exempt Auction Rate Series 1997-1 Notes
shall be in substantially the form of the Broker-Dealer Agreement (Tax Exempt
Auction Rate Series 1997-1 Notes), dated as of July 1, 1997, between Bankers
Trust Company, as Auction Agent, and ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., as Broker-Dealer. Each
Broker-Dealer Agreement relating to the Taxable Auction Rate Series 1997-1 Notes
shall be in substantially the form of the Broker-Dealer Agreement (Taxable
Auction Rate Series 1997-1 Notes), dated as of July 1, 1997, between Bankers
Trust Company, as Auction Agent, and ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., as Broker-Dealer.
"Broker-Dealer Fee" shall have the meaning ascribed to such term in
the Auction Agent Agreement.
"Broker-Dealer Fee Rate" shall have the meaning ascribed to such term
in the Auction Agent Agreement.
"Business Day" shall mean a day of the year on which (i) banks located
in the city in which the Principal Office of the Trustee is located are not
required or authorized to remain closed, (ii) banks located in the city in which
the Principal Office of the Auction Agent, as set forth in and for purposes of
the Auction Agent Agreement, is located are not required or authorized to remain
closed, (iii) banks located in the city in which the Principal Office of each
Broker-Dealer, as set forth in and for purposes of the applicable Broker-Dealer
Agreement, is located are not required or authorized to remain closed and (iv)
The New York Stock Exchange is not closed. The Trustee shall provide to the
Auction Agent on the Closing Date, and on each July 1 thereafter, a list of all
legal holidays in the state in which the Principal Office of the Trustee is
located during the ensuing twelve-month period.
"Carry-Over Amount" shall mean (i) with respect to a Taxable Auction
Rate Series 1997-1 Note, the excess, if any, of (a) the amount of interest on
such Note that would have accrued with respect to the related Interest Period at
the Auction Rate over (b) the amount of interest on such Note actually accrued
with respect to
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such Interest Period based on the Net Loan Rate, together with the unpaid
portion of any such excess from prior Interest Periods, and (ii) with respect to
a LIBOR Rate Series 1997-1 Note, the excess, if any, of (a) the amount of
interest on such Note that would have accrued with respect to the related
Interest Period at the LIBOR Rate Series 1997-1 Note LIBOR-Based Rate over (b)
the amount of interest on such Note actually accrued with respect to such
Interest Period based on the Net Loan Rate, together with the unpaid portion of
any such excess from prior Interest Periods; provided that any reference to
"principal" or "interest" in this First Supplemental Indenture, in the
Indenture, in the Taxable Auction Rate Series 1997-1 Notes and in the LIBOR Rate
Series 1997-1 Notes shall not include, within the meanings of such words, any
Carry-Over Amount or any interest accrued on any Carry-Over Amount.
"Change of Tax Law" shall mean, with respect to the Tax Exempt Auction
Rate Series 1997-1 Notes, any amendment to the Code or other statute enacted by
the Congress of the United States, or any temporary, proposed or final
regulation promulgated by the United States Treasury, after the Closing Date,
which (i) changes or would change any deduction, credit or other allowance
allowable in computing liability for any federal tax with respect to, or (ii)
imposes or would impose or reduces or would reduce or increases or would
increase any federal tax (including, but not limited to, preference or excise
taxes) upon, any interest earned by the owner of a Tax Exempt Auction Rate
Series 1997-1 Note the interest on which is excludable from gross income for
federal income tax purposes under Section 103 of the Code.
"Closing Cash Flow Projection" shall mean the Cash Flow Projection
delivered in conjunction with the issuance of the Series 1997-1 Notes.
"Closing Date" shall mean, with respect to the Auction Rate Series
1997-1 Notes and the LIBOR Rate Series 1997-1 Notes, July ______, 1997, the date
of initial issuance and delivery of such Notes hereunder.
"Commercial Paper Dealer" shall mean ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., its successors
and assigns, and any other commercial paper dealer appointed as provided in
Section 6 hereof.
"Deposit Agent" shall mean, with respect to the Revenue Fund, Norwest
Bank South Dakota, N.A., Aberdeen, South Dakota, and its successor or successors
and any other bank or banking association having trust powers or trust company
at any time substituted in its place pursuant to the Indenture.
"Eligible Carry-Over Make-Up Amount" shall mean, (i) with respect to
each Interest Period relating to a series of Taxable Auction Rate Series 1997-1
Notes as to which, as of the first day of such Interest Period, there is any
unpaid Carry-Over Amount, an amount equal to the lesser of (a) interest computed
on the principal balance of such series in respect of such Interest Period at a
per annum rate equal to the excess, if any, of the Net Loan Rate over the
Auction Rate Series 1997-1 Note
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Interest Rate, and (b) the aggregate Carry-Over Amount remaining unpaid as of
the first day of such Interest Period together with interest accrued and unpaid
thereon through the end of such Interest Period, and (ii) with respect to each
Interest Period relating to a series of LIBOR Rate Series 1997-1 Notes as to
which, as of the first day of such Interest Period, there is any unpaid Carry-
Over Amount, an amount equal to the lesser of (a) interest computed on the
principal balance of such series in respect of such Interest Period at a per
annum rate equal to the excess, if any, of the Net Loan Rate over the LIBOR Rate
Series 1997-1 Note LIBOR-Based Rate, and (b) the aggregate Carry-Over Amount
remaining unpaid as of the first day of such Interest Period together with
interest accrued and unpaid thereon through the end of such Interest Period. The
Eligible Carry-Over Make-Up Amount shall be $0.00 for any Interest Period with
respect to which the Net Loan Rate equals or exceeds (1) the Taxable Auction
Rate Series 1997-1 Note Auction Rate, in the case of a series of Taxable Auction
Rate Series 1997-1 Notes, or (2) the LIBOR Rate Series 1997-1 Note Interest
Rate, in the case of a series of LIBOR Rate Series 1997-1 Notes.
"Existing Holder" shall mean (i) with respect to and for the purpose
of dealing with the Auction Agent in connection with an Auction, a Person who is
a Broker-Dealer listed in the Existing Holder Registry at the close of business
on the Business Day immediately preceding such Auction and (ii) with respect to
and for the purpose of dealing with the Broker-Dealer in connection with an
Auction, a Person who is a beneficial owner of Auction Rate Series 1997-1 Notes.
"Existing Holder Registry" shall mean the registry of Persons who are
owners of the Auction Rate Series 1997-1 Notes, maintained by the Auction Agent
as provided in the Auction Agent Agreement.
"First Supplemental Indenture" shall mean this First Supplemental
Indenture of Trust, as amended or supplemented in accordance with the terms
hereof and of the Indenture.
"Hold Order" shall have the meaning ascribed to such term in Section
4(a)(i) hereof.
"Index" shall mean, with respect to a series of Tax Exempt Auction
Rate Series 1997-1 Notes on any Interest Rate Determination Date, (i) for
Auction Periods of sixty (60) days or less, the PSA Index, or, if such rate is
not published by PSA, the Index so determined by the Market Agent, which shall
equal the prevailing rate for bonds rated in the highest short-term rating
category by Moody's and Fitch in respect of issuers most closely resembling the
"high grade" component issuers selected by PSA that are subject to tender by the
holders thereof for purchase on not more than seven (7) days' notice and the
interest on which is (a) variable on a weekly basis, (b) excludable from gross
income for federal income tax purposes, and (c) not subject to an "alternative
minimum tax" or similar tax under the Code, unless all tax exempt bonds are
subject to such tax, and (ii) for Auction Periods of more than sixty (60) days,
the Index so determined by the Market Agent, which shall
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equal the average yield on no less than three publicly offered securities
selected by the Market Agent which are offered at par, have substantially the
same underlying security, bear interest determined for approximately the same
period as the relevant Interest Period on the Tax Exempt Auction Rate Series
1997-1 Notes, bear interest not subject to the alternative minimum tax, and are
rated no lower than "Aa" by Moody's or "AA" by Fitch. If the Index cannot be
determined as provided above, a comparable substitute index selected by the
Market Agent with the approval of an Authorized Officer of the Corporation may
be used.
"Initial Auction Agent" shall mean (i) with respect to the Tax Exempt
Auction Rate Series 1997-1 Notes, Bankers Trust Company, a New York banking
corporation, its successors and assigns, in its capacity as auction agent under
the Initial Auction Agent Agreement relating to the Tax Exempt Auction Rate
Series 1997-1 Notes, and (ii) with respect to the Taxable Auction Rate Series
1997-1 Notes, Bankers Trust Company, a New York banking corporation, its
successors and assigns, in its capacity as auction agent under the Initial
Auction Agent Agreement relating to the Taxable Auction Rate Series 1997-1
Notes.
"Initial Auction Agent Agreement" shall mean (i) with respect to the
Tax Exempt Auction Rate Series 1997-1 Notes, the Auction Agent Agreement (Tax
Exempt Auction Rate Series 1997-1 Notes), dated as of July 1, 1997, by and among
the Corporation, the Trustee and the Initial Auction Agent, including any
amendment thereof or supplement thereto, and (ii) with respect to the Taxable
Auction Rate Series 1997-1 Notes, the Auction Agent Agreement (Taxable Auction
Rate Series 1997-1 Notes), dated as of July 1, 1997, by and among the
Corporation, the Trustee and the Initial Auction Agent, including any amendment
thereof or supplement thereto.
"Initial Interest Period" shall mean, as to a series of Auction Rate
Series 1997-1 Notes or LIBOR Rate Series 1997-1 Notes, the period commencing on
the Closing Date and continuing through the day immediately preceding the
Initial Interest Rate Adjustment Date for such series.
"Initial Interest Rate Adjustment Date" shall mean (i) with respect to
the Series 1997-1A Notes, ____________, 1997, (ii) with respect to the Series
1997-1B Notes, ____________, 1997, (iii) with respect to the Series 1997-1C
Notes, ____________, 1997, (iv) with respect to the Series 1997-1D
Notes,____________, 1997, (v) with respect to the Series 1997-1E Notes,
____________, 1997, (vi) with respect to the Series 1997-1G Notes, ____________,
1997, (vii) with respect to the Series 1997-1H Notes, ____________, 1997, (viii)
with respect to the Series 1997-1I Notes, ____________, 1997, (ix) with respect
to the Series 1997-1J Notes, ____________, 1997, and (x) with respect to the
Series 1997-1L Notes, ____________, 1997.
"Interest Payment Date" shall mean (i) each regularly scheduled
interest payment date on the Series 1997-1 Notes, which shall be (a) with
respect to a series of Taxable Auction Rate Series 1997-1 Notes, the Business
Day immediately following the expiration of the Initial Interest Period for such
series and each related
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Auction Period thereafter, (b) with respect to a series of LIBOR Rate Series
1997-1 Notes, the first day of each calendar month, commencing ________________,
(c) with respect to all other Series 1997-1 Notes, June 1 and December 1 of each
year, commencing December 1, 1997; or (ii) with respect to the payment of
interest upon redemption or acceleration of a Series 1997-1 Note or the payment
of Defaulted Interest, such date on which such interest is payable under the
Indenture.
"Interest Period" shall mean, with respect to a series of Auction Rate
Series 1997-1 Notes or LIBOR Rate Series 1997-1 Notes, the Initial Interest
Period and each period commencing on an Interest Rate Adjustment Date for such
series and ending on the last day before (i) the next Interest Rate Adjustment
Date for such series or (ii) the Stated Maturity of such series, as applicable.
"Interest Rate Adjustment Date" shall mean the date on which the
interest rate on a series of Auction Rate Series 1997-1 Notes or LIBOR Rate
Series 1997-1 Notes is effective, which shall be (i) with respect to a series of
Auction Rate Series 1997-1 Notes, the date of commencement of each Auction
Period, and (ii) with respect to a series of LIBOR Rate Series 1997-1 Notes,
each Interest Payment Date.
"Interest Rate Determination Date" shall mean (i) with respect to a
series of Auction Rate Series 1997-1 Notes, the Auction Date, or, if no Auction
Date is applicable to such series, the Business Day immediately preceding the
date of commencement of an Auction Period, and (ii) with respect to a series of
LIBOR Rate Series 1997-1 Notes, the second Business Day immediately preceding
the date of commencement of an Interest Period (other than the Initial Interest
Period).
"LIBOR Rate Series 1997-1 Note Initial Interest Rate" shall mean
________% per annum for the Series 1997-1I Notes, ________% per annum for the
Series 1997-1J Notes and ________% per annum for the Series 1997-1L Notes.
"LIBOR Rate Series 1997-1 Note Interest Rate" shall mean the rate of
interest per annum borne from time to time by a series of the LIBOR Rate Series
1997-1 Notes, which shall be (i) during the Initial Interest Period for such
series, the LIBOR Rate Series 1997-1 Note Initial Interest Rate, and (ii) during
each Interest Period thereafter, the rate of interest determined in accordance
with the provisions of Section 3(B) hereof.
"LIBOR Rate Series 1997-1 Note LIBOR-Based Rate" shall mean, with
respect to a series of LIBOR Rate Series 1997-1 Notes, the variable rate of
interest per annum determined with respect to such series on the basis of One-
Month LIBOR plus the LIBOR Rate Series 1997-1 Note Spread, as such rate of
interest is determined in accordance with the provisions of Section 3(B) hereof.
"LIBOR Rate Series 1997-1 Note Spread" shall mean (i) with respect to
a series of LIBOR Rate Series 1997-1I Notes, ________% per annum, (ii) with
respect to a
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series of LIBOR Rate Series 1997-1J Notes, ________% per annum, and (iii) with
respect to the Series 1997-1L Notes, ________% per annum,
"LIBOR Rate Series 1997-1 Notes" shall mean the LIBOR Rate Series
1997-1 Senior Notes and the Series 1997-1L Notes.
"LIBOR Rate Series 1997-1 Senior Notes" shall mean the Series 1997-1I
Notes and the Series 1997-1J Notes.
"Market Agent" shall mean ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., New York, New York, in
such capacity hereunder, or any successor to it in such capacity hereunder.
"Maximum Auction Rate" shall mean (i) with respect to a series of Tax
Exempt Auction Rate Series 1997-1 Notes, the interest rate per annum equal to
the lesser of (a) the product of the Applicable Percentage and the greater of
(1) the After-Tax Equivalent and (2) the Index, and (b) 14%, and (ii) with
respect to a series of Taxable Auction Rate Series 1997-1 Notes: (a) for Auction
Periods of thirty-five (35) days or less, either (1) One-Month LIBOR plus 1.50%
(if the ratings assigned by Moody's and Fitch to the Taxable Auction Rate Series
1997-1 Notes are at least "Aa3" and "AA-," respectively), (2) One-Month LIBOR
plus 2.50% (if any one of the ratings assigned by Moody's and Fitch to the
Taxable Auction Rate Series 1997-1 Notes is less than "Aa3" or "AA-,"
respectively, but is at least "A") or (c) One-Month LIBOR plus 3.50% (if any one
of the ratings assigned by Moody's and Fitch to the Taxable Auction Rate Series
1997-1 Notes is less than "A"); or (b) for Auction Periods of greater than
thirty-five (35) days, either (1) the greater of One-Month LIBOR or Three-Month
LIBOR, plus, in either case, 1.50% (if the ratings assigned by Moody's and Fitch
to the Taxable Auction Rate Series 1997-1 Notes are at least "Aa3" and "AA-,"
respectively), (2) the greater of One-Month LIBOR or Three-Month LIBOR, plus, in
either case, 2.50% (if any one of the ratings assigned by Moody's and Fitch to
the Taxable Auction Rate Series 1997-1 Notes is less than "Aa3" or "AA-,"
respectively, but is at least "A") or (3) the greater of One-Month LIBOR or
Three-Month LIBOR, plus, in either case, 3.50% (if any one of the ratings
assigned by Moody's and Fitch to the Taxable Auction Rate Series 1997-1 Notes is
less than "A"). For purposes of the Auction Agent and the Auction Procedures,
the ratings referred to in this definition shall be the last ratings of which
the Auction Agent shall have been given notice pursuant to the Auction Agent
Agreement.
"Net Loan Rate" shall mean, with respect to a series of Taxable
Auction Rate Series 1997-1 Notes or LIBOR Rate Series 1997-1 Notes, the rate of
interest per annum (rounded to the next highest .01%) equal to (i) the Ninety-
one Day United States Treasury ▇▇▇▇ Rate plus ______ [1.85%] less (ii) the
Administrative Cost and Note Fee Rate.
"Ninety-one Day United States Treasury ▇▇▇▇ Rate" shall mean, for
purposes of computing the Net Loan Rate with respect to a series of Taxable
Auction Rate Series 1997-1 Notes or LIBOR Rate Series 1997-1 Notes, that rate of
interest per
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annum equal to the average of the Bond Equivalent Yields--91-Day T-▇▇▇▇ on the
91-day United States Treasury Bills sold at auction thereof during the four
week-period that immediately preceded the Interest Rate Adjustment Date with
respect to which such Net Loan Rate is being computing.
"Non-Payment Rate" shall mean (i) with respect to a series of Tax
Exempt Auction Rate Series 1997-1 Notes, the interest rate per annum equal to
the lesser of (a) 265% (as such percentage may be adjusted pursuant to Section
10 hereof) of the Index and (b) 14%, and (ii) with respect to a series of
Taxable Auction Rate Series 1997-1 Notes, the interest rate per annum equal to
the lesser of (a) One-Month LIBOR plus ______ [1.50%] and (b) 18%.
"Note Registrar" shall mean, with respect to the Series 1997-1 Notes,
the Trustee.
"Note Year," when used with respect to the Series 1997-1 Notes, shall
mean the period beginning on July _____, 1997, and ending on the next succeeding
May 31, and each subsequent one-year period, commencing on June 1 and ending on
the next succeeding May 31, or shorter period ending on the date all Series
1997-1 Notes are paid or become payable; provided that the Corporation may,
prior to July _____, 2002, select a different one-year period as "Note Year"
that is consistent with the definition of "Note Year" in Section 1.148-1 of the
Arbitrage Regulations.
"Notice of Fee Rate Change" shall mean a notice of a change in the
Auction Agent Fee Rate or the Broker-Dealer Fee Rate substantially in the form
of Exhibit E to the Auction Agent Agreement.
"One-Month LIBOR" shall mean, with respect to a series of Taxable
Auction Rate Series 1997-1 Notes or LIBOR Rate Series 1997-1 Notes, the rate of
interest per annum equal to the rate per annum at which United States dollar
deposits having a maturity of one month are offered to prime banks in the London
interbank market which appear on the Reuters Screen LIBOR Page as of
approximately 11:00 a.m., London time, on the applicable Interest Rate
Determination Date. If at least two such quotations appear, One-Month LIBOR
will be the arithmetic mean (rounded upwards, if necessary, to the nearest .01%)
of such offered rates. If fewer than two such quotes appear, One-Month LIBOR
will be determined at approximately 11:00 a.m., London time, on the applicable
Interest Rate Determination Date on the basis of the rate at which deposits in
United States dollars having a maturity of one month are offered to prime banks
in the London interbank market by four major banks in the London interbank
market selected by (i) the Auction Agent after consultation with the Trustee or
(ii) the Trustee, as applicable, and in a principal amount of not less than U.S.
$1,000,000 and that is representative for a single transaction in such market at
such time. The Auction Agent or the Trustee, as applicable, will request the
principal London office of each such bank to provide a quotation of its rate.
If at least two quotations are provided, One-Month LIBOR will be the arithmetic
mean (rounded upwards, if necessary, to the nearest .01%) of such offered rates.
If fewer than two quotations are provided, One-Month LIBOR will be the
arithmetic mean (rounded upwards, if necessary, to
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the nearest .01%) of the rates quoted at approximately 11:00 a.m., New York City
time, on the applicable Interest Rate Determination Date by three major banks in
New York, New York, selected by (x) the Auction Agent after consultation with
the Trustee or (y) the Trustee, as applicable, for loans in United States
dollars to leading European banks having a maturity of one month and in a
principal amount equal to an amount of not less than U.S. $1,000,000 and that is
representative for a single transaction in such market at such time; provided,
however, that if the banks selected as aforesaid are not quoting as mentioned in
this sentence, One-Month LIBOR will be the One-Month LIBOR in effect for the
immediately preceding Interest Period.
"Order" shall have the meaning ascribed to such term in Section
4(a)(i) hereof.
"Original Indenture" shall mean the Indenture of Trust, dated as of
July 1, 1997, between the Corporation and the Trustee, as originally executed.
"Participant" shall mean a member of, or participant in, the
Securities Depository.
"Paying Agent" shall mean, with respect to the Series 1997-1 Notes,
the Trustee and its successor or successors or any other commercial bank
designated in accordance herewith as a place at which principal of, premium, if
any, or interest on the Series 1997-1 Notes is payable.
"Payment Default" shall mean, with respect to a series of Auction Rate
Series 1997-1 Notes, (i) a default in the due and punctual payment of any
installment of interest on such series, or (ii) a default in the due and
punctual payment of any interest on and principal of such series at Maturity.
"Potential Holder" shall mean any Person (including an Existing Holder
that is (i) a Broker-Dealer when dealing with the Auction Agent and (ii) a
potential beneficial owner when dealing with a Broker-Dealer) who may be
interested in acquiring Auction Rate Series 1997-1 Notes (or, in the case of an
Existing Holder thereof, an additional Principal Amount of Auction Rate Series
1997-1 Notes).
"PSA" shall mean the Public Securities Association, its successors and
assigns.
"PSA Index" shall mean, with respect to a series of the Tax Exempt
Auction Rate Series 1997-1 Notes, a rate determined on the basis of the seven-
day high grade market index of tax exempt variable rate demand obligations, as
produced by Municipal Market Data and published or made available by the PSA or
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any Person acting in cooperation with or under the sponsorship of PSA and
acceptable to the Market Agent.
"Refunded Obligations" shall mean the Series 1989 Bonds, the Series
1991-A Bonds, the Series 1994-A Bonds, the Series 1994-1 Notes, the Series 1995-
1 Notes, the Series 1995-2 Notes and the Series 1996-1 Notes.
"Regular Record Date" shall mean (i) with respect to any regularly
scheduled Interest Payment Date occurring with respect to a series of the
Auction Rate Series 1997-1 Notes or the LIBOR Rate Series 1997-1 Notes, the last
Business Day preceding such Interest Payment Date, and (ii) with respect to any
regularly scheduled Interest Payment Date occurring with respect to the Series
1997-1F Notes or the Series 1997-1K Notes, the fifteenth day (whether or not a
Business Day) of the calendar month immediately preceding such Interest Payment
Date.
"Reuters Screen LIBOR Page" shall mean the display designated as page
"LIBOR" on the Reuters Monitor Money Rates Service (or such other page as may
replace the LIBOR page for the purposes of displaying London interbank offered
rates of major banks).
"S&P" shall mean Standard & Poor's, a division of ▇▇▇▇▇▇-▇▇▇▇ Inc.,
its successors and assigns.
"Securities Depository" shall mean The Depository Trust Company, New
York, New York, and its successors and assigns, or, if (i) the then-existing
Securities Depository resigns from its functions as depository of the Series
1997-1 Notes or (ii) the Corporation discontinues use of the Securities
Depository pursuant to Section 17(c) hereof, then any other securities
depository which agrees to follow the procedures required to be followed by a
securities depository in connection with the Series 1997-1 Notes and which is
selected by the Corporation with the consent of the Trustee.
"Sell Order" shall have the meaning ascribed to such term in Section
4(a)(i) hereof.
"Series 1979 Trustee" shall mean First Bank National Association
(successor by merger to First Bank of South Dakota (National Association)), in
its capacity as trustee under the Series 1979 Indenture.
"Series 1979 Indenture" shall mean the Indenture of Trust, dated as of
August 1, 1979, between the Corporation and the Series 1979 Trustee, as amended
and supplemented.
"Series 1989 Bonds" shall mean the Student Loan Revenue Bonds, Series
1989-B and 1989-C, issued under the Series 1989 Indenture.
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"Series 1989 Trustee" shall mean First Bank National Association
(successor by merger to First Bank of South Dakota (National Association)), in
its capacity as trustee under the Series 1989 Indenture.
"Series 1989 Indenture" shall mean the Series 1989-B and C Student
Loan Revenue Bond Indenture of Trust, dated as of August 1, 1989, between the
Corporation and the Series 1989 Trustee, as amended and supplemented.
"Series 1991-A Bonds" shall mean the Student Loan Revenue Bonds,
Series 1991-A, issued under the Series 1979 Indenture.
"Series 1994-A Bonds" shall mean the Student Loan Revenue Bonds,
Series 1994-A, issued under the Series 1979 Indenture.
"Series 1994 Trustee" shall mean First Bank National Association
(successor by merger to First Bank of South Dakota (National Association)), in
its capacity as trustee under the Series 1994 Indenture.
"Series 1994 Indenture" shall mean the Indenture of Trust, dated as of
March 1, 1994, between the Corporation and the Series 1994 Trustee, as amended
and supplemented.
"Series 1995-1 Notes" shall mean the Student Loan Asset-Backed Notes,
Series 1995-1, issued under the Series 1994 Indenture.
"Series 1995-2 Notes" shall mean the Student Loan Asset-Backed Notes,
Series 1995-2, issued under the Series 1994 Indenture.
"Series 1996-1 Notes" shall mean the Tax Exempt Student Loan Asset-
Backed Notes, Series 1996-1, issued under the Series 1994 Indenture.
"Series 1997-1 Notes" shall mean the Series 1997-1 Senior Notes and
the Series 1997-1 Subordinate Notes.
"Series 1997-1 Senior Notes" shall mean the Auction Rate Series 1997-1
Notes, the LIBOR Rate Series 1997-1 Senior Notes and the Series 1997-1F Notes.
"Series 1997-1 Subordinate Notes" shall mean the Series 1997-1K Notes
and the Series 1997-1L Notes.
"Series 1997-1A Notes" shall mean the Notes created and to be issued
under this First Supplemental Indenture in the original Principal Amount of
$___________________________ and designated as the "Tax Exempt Auction Rate
Student Loan Asset-Backed Notes, Senior Series 1997-1A."
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"Series 1997-1B Notes" shall mean the Notes created and to be issued
under this First Supplemental Indenture in the original Principal Amount of
$___________________________ and designated as the "Tax Exempt Auction Rate
Student Loan Asset-Backed Notes, Senior Series 1997-1B."
"Series 1997-1C Notes" shall mean the Notes created and to be issued
under this First Supplemental Indenture in the original Principal Amount of
$___________________________ and designated as the "Tax Exempt Auction Rate
Student Loan Asset-Backed Notes, Senior Series 1997-1C."
"Series 1997-1D Notes" shall mean the Notes created and to be issued
under this First Supplemental Indenture in the original Principal Amount of
$___________________________ and designated as the "Tax Exempt Auction Rate
Student Loan Asset-Backed Notes, Senior Series 1997-1D."
"Series 1997-1E Notes" shall mean the Notes created and to be issued
under this First Supplemental Indenture in the original Principal Amount of
$___________________________ and designated as the "Tax Exempt Auction Rate
Student Loan Asset-Backed Notes, Senior Series 1997-1E."
"Series 1997-1F Notes" shall mean the Notes created and to be issued
under this First Supplemental Indenture in the original Principal Amount of
$___________________________ and designated as the "Tax Exempt Fixed Rate
Student Loan Asset-Backed Notes, Senior Series 1997-1F."
"Series 1997-1G Notes" shall mean the Notes created and to be issued
under this First Supplemental Indenture in the original Principal Amount of
$___________________________ and designated as the "Taxable Auction Rate Student
Loan Asset-Backed Notes, Senior Series 1997-1G."
"Series 1997-1H Notes" shall mean the Notes created and to be issued
under this First Supplemental Indenture in the original Principal Amount of
$___________________________ and designated as the "Taxable Auction Rate Student
Loan Asset-Backed Notes, Senior Series 1997-1H."
"Series 1997-1I Notes" shall mean the Notes created and to be issued
under this First Supplemental Indenture in the original Principal Amount of
$___________________________ and designated as the "Taxable LIBOR Rate Student
Loan Asset-Backed Notes, Senior Series 1997-1I."
"Series 1997-1J Notes" shall mean the Notes created and to be issued
under this First Supplemental Indenture in the original Principal Amount of
$___________________________ and designated as the "Taxable LIBOR Rate Student
Loan Asset-Backed Notes, Senior Series 1997-1J."
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"Series 1997-1K Notes" shall mean the Notes created and to be issued
under this First Supplemental Indenture in the original Principal Amount of
$___________________________ and designated as the "Tax Exempt Fixed Rate
Student Loan Asset-Backed Notes, Subordinate Series 1997-1K."
"Series 1997-1L Notes" shall mean the Notes created and to be issued
under this First Supplemental Indenture in the original Principal Amount of
$___________________________ and designated as the "Taxable LIBOR Rate Student
Loan Asset-Backed Notes, Subordinate Series 1997-1L."
"Special Prepayment Determination Date" shall mean, with respect to
the LIBOR Rate Series 1997-1 Notes, the _______________ day of each month (or,
if such _______________ day is not a Business Day, the next succeeding Business
Day).
"Special Redemption and Prepayment Account Requirement" shall mean,
(A) with respect to the LIBOR Rate Series 1997-1 Notes and any Special
Prepayment Determination Date, an amount, as of the last day of the preceding
month, equal to the excess, if any, of (i) the sum of (a) all payments received
as of such last day with respect to principal of Financed Student Loans credited
to the Series 1997-1 Taxable Acquisition Account, plus (b) the amount of any
Balances theretofore transferred from the Series 1997-1 Taxable Acquisition
Account to the Retirement Account to redeem Taxable Auction Rate Series 1997-1
Notes pursuant to Section 16(B) hereof, less (c) the principal component of the
repurchase price of Student Loans originally Financed from Balances in Series
1997-1 Taxable Acquisition Account which have been repurchased from a Guarantee
Agency upon rehabilitation of such Student Loans pursuant to the Higher
Education Act, over (ii) the sum of (a) the aggregate of the amounts previously
applied to the reduction of the Principal Amount of all LIBOR Rate Series 1997-1
Notes, plus (b) the aggregate Principal Amount of LIBOR Rate Series 1997-1 Notes
to be prepaid on the next regularly scheduled Interest Payment Date from
Balances then on hand in the Retirement Account. Payments described in clause
(i)(a) of the preceding sentence include, without limitation, any prepayments by
borrowers from the proceeds of a consolidation loan made or acquired by the
Trustee on behalf of the Corporation or from any other sources, but exclude, for
this purpose, proceeds of the sale or other disposition of Financed Student
Loans to any Person other than a Guarantee Agency, with respect to Guarantee
payments, or a Lender, with respect to the repurchase of Financed Student Loans
by such Lender pursuant to its repurchase obligation under a Student Loan
Purchase Agreement, and (B) with respect to all other series of Series 1997-1
Notes, $0.
"Statutory Corporate Tax Rate" shall mean, with respect to a series of
Tax Exempt Auction Rate Series 1997-1 Notes, the highest tax bracket (expressed
in decimals) applicable at the time of determination of the After-Tax Equivalent
on the income tax of any corporation, as set forth in Section 11 of the Code or
any successor section, without regard to any minimum additional tax provision.
The "Statutory Corporate Tax Rate," as of July 1, 1997, is .35.
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"Submission Deadline" shall mean 12:30 p.m., New York City time, on
any Auction Date or such other time on any Auction Date by which Broker-Dealers
are required to submit Orders to the Auction Agent as specified by the Auction
Agent from time to time.
"Submitted Bid" shall have the meaning ascribed to such term in
Section 4(c)(i) hereof.
"Submitted Hold Order" shall have the meaning ascribed to such term in
Section 4(c)(i) hereof.
"Submitted Order" shall have the meaning ascribed to such term in
Section 4(c)(i) hereof.
"Submitted Sell Order" shall have the meaning ascribed to such term in
Section 4(c)(i) hereof.
"Substitute Auction Agent" shall mean the Person with whom the Trustee
enters into a Substitute Auction Agent Agreement.
"Substitute Auction Agent Agreement" shall mean an auction agent
agreement containing terms substantially similar to the terms of the applicable
Initial Auction Agent Agreement, whereby a Person having the qualifications
required by Section 8 of this First Supplemental Indenture agrees with the
Trustee and the Corporation to perform the duties of the Auction Agent under
this First Supplemental Indenture.
"Sufficient Bids" shall have the meaning ascribed to such term in
Section 4(c)(i) hereof.
"Tax Exempt Auction Rate Series 1997-1 Notes" shall mean the Series
1997-1A Notes, the Series 1997-1B Notes, the Series 1997-1C Notes, the Series
1997-1D Notes and the Series 1997-1E Notes.
"Tax Exempt Series 1997-1 Notes" shall mean the Tax Exempt Auction
Rate Series 1997-1 Notes, the Series 1997-1F Notes and the Series 1997-1K Notes.
"Taxable Auction Rate Series 1997-1 Notes" shall mean the Series 1997-
1G Notes and the Series 1997-1H Notes.
"Taxable Series 1997-1 Notes" shall mean the Taxable Auction Rate
Series 1997-1 Notes and the LIBOR Rate Series 1997-1 Notes.
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SECTION 2. AUTHORIZATION AND TERMS OF SERIES 1997-1 NOTES.
----------------------------------------------
There is hereby created and there shall be (1) a series of Class A
Notes entitled "Tax Exempt Auction Rate Student Loan Asset-Backed Notes, Senior
Series 1997-1A," (2) a series of Class A Notes entitled "Tax Exempt Auction Rate
Student Loan Asset-Backed Notes, Senior Series 1997-1B," (3) a series of Class A
Notes entitled "Tax Exempt Auction Rate Student Loan Asset-Backed Notes, Senior
Series 1997-1C," (4) a series of Class A Notes entitled "Tax Exempt Auction Rate
Student Loan Asset-Backed Notes, Senior Series 1997-1D," (5) a series of Class A
Notes entitled "Tax Exempt Auction Rate Student Loan Asset-Backed Notes, Senior
Series 1997-1E," (6) a series of Class A Notes entitled "Tax Exempt Fixed Rate
Student Loan Asset-Backed Notes, Senior Series 1997-1F," (7) a series of Class A
Notes entitled "Taxable Auction Rate Student Loan Asset-Backed Notes, Senior
Series 1997-1G," (8) a series of Class A Notes entitled "Taxable Auction Rate
Student Loan Asset-Backed Notes, Senior Series 1997-1H," (9) a series of Class A
Notes entitled "Taxable LIBOR Rate Student Loan Asset-Backed Notes, Senior
Series 1997-1I," (10) a series of Class A Notes entitled "Taxable LIBOR Rate
Student Loan Asset-Backed Notes, Senior Series 1997-1J," (11) a series of Class
B Notes entitled "Tax Exempt Fixed Rate Student Loan Asset-Backed Notes,
Subordinate Series 1997-1K," and (12) a series of Class B Notes entitled
"Taxable LIBOR Rate Student Loan Asset-Backed Notes, Subordinate Series 1997-
1L." The aggregate Principal Amount of the Series 1997-1A Notes that may be
authenticated and delivered and Outstanding under the Indenture is limited to
and shall not exceed $_______________________. The aggregate Principal Amount
of the Series 1997-1B Notes that may be authenticated and delivered and
Outstanding under the Indenture is limited to and shall not exceed
$_______________________. The aggregate Principal Amount of the Series 1997-1C
Notes that may be authenticated and delivered and Outstanding under the
Indenture is limited to and shall not exceed $_______________________. The
aggregate Principal Amount of the Series 1997-1D Notes that may be authenticated
and delivered and Outstanding under the Indenture is limited to and shall not
exceed $_______________________. The aggregate Principal Amount of the Series
1997-1E Notes that may be authenticated and delivered and Outstanding under the
Indenture is limited to and shall not exceed $_______________________. The
aggregate Principal Amount of the Series 1997-1F Notes that may be authenticated
and delivered and Outstanding under the Indenture is limited to and shall not
exceed $_______________________. The aggregate Principal Amount of the Series
1997-1G Notes that may be authenticated and delivered and Outstanding under the
Indenture is limited to and shall not exceed $_______________________. The
aggregate Principal Amount of the Series 1997-1H Notes that may be authenticated
and delivered and Outstanding under the Indenture is limited to and shall not
exceed $_______________________. The aggregate Principal Amount of the Series
1997-1I Notes that may be authenticated and delivered and Outstanding under the
Indenture is limited to and shall not exceed $_______________________. The
aggregate Principal Amount of the Series 1997-1J Notes that may be authenticated
and delivered and Outstanding under the Indenture is limited to and shall not
exceed $_______________________. The aggregate Principal
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Amount of the Series 1997-1L Notes that may be authenticated and delivered and
Outstanding under the Indenture is limited to and shall not exceed $__________.
Each series of Series 1997-1 Notes (other than the Series 1997-1F
Notes) shall consist of Term Notes with a Stated Maturity on June 1, 2020.
The Series 1997-1F Notes shall consist of two Term Notes, $___________
Principal Amount of which with a Stated Maturity on June 1, 2010 and $__________
Principal Amount of which with a Stated Maturity on June 1, 2020.
Each series of Auction Rate Series 1997-1 Notes shall bear interest at
the applicable Auction Rate Series 1997-1 Note Interest Rate, and at the same
rate per annum (to the extent that the payment of such interest shall be legally
enforceable) on overdue installments of interest.
Each series of LIBOR Rate Series 1997-1 Notes shall bear interest at a
rate per annum equal to the LIBOR Rate Series 1997-1 Note Interest Rate, and at
the same rate per annum (to the extent that the payment of such interest shall
be legally enforceable) on overdue installments of interest.
The Series 1997-1F Notes shall bear interest at the rates of ______%
per annum (as to such Notes maturing on June 1, 2010) and ______% per annum (as
to such Notes maturing on June 1, 2020), respectively, and at the same
respective rate per annum (to the extent that the payment of such interest shall
be legally enforceable) on overdue installments of interest.
The Series 1997-1K Notes shall bear interest at the rate of ______%
per annum, and at the same rate per annum (to the extent that the payment of
such interest shall be legally enforceable) on overdue installments of interest.
The Series 1997-1 Notes shall be issued as fully registered Notes
without coupons in Authorized Denominations.
The Series 1997-1 Notes shall be dated as provided in Section 3.9 of
the Indenture and shall bear interest from their date of original issue until
payment of principal has been made or duly provided for. The date of original
issue of the Auction Rate Series 1997-1 Notes and the LIBOR Rate Series 1997-1
Notes shall be the Closing Date. The date of original issue of the Series 1997-
1F Notes and the Series 1997-1K Notes shall be July 1, 1997. The Series 1997-1
Notes of each series shall be numbered in such manner as the Note Registrar
shall determine.
Interest on each series of Auction Rate Series 1997-1 Notes and LIBOR
Rate Series 1997-1 Notes shall be computed on the basis of actual days elapsed
and accrue daily from the date thereof (on the basis of a 360-day year), and
shall be payable on each regularly scheduled Interest Payment Date with respect
to such
-20-
series prior to the Maturity thereof and at the Maturity thereof. The interest
payable on each Interest Payment Date for each series of Auction Rate Series
1997-1 Notes and LIBOR Rate Series 1997-1 Notes shall be [calculated on a per
unit basis, based on a unit of $100,000, and shall be] that interest which has
accrued through the last day preceding such Interest Payment Date or, in the
case of the Maturity of an Auction Rate Series 1997-1 Note or a LIBOR Rate
Series 1997-1 Note, the last day preceding the date of such Maturity. The
applicable Auction Rate Series 1997-1 Note Interest Rate or LIBOR Rate Series
1997-1 Note Interest Rate shall be effective as of and on the first day (whether
or not a Business Day) of the applicable Interest Period and be in effect
thereafter through the end of such Interest Period.
Interest on the Series 1997-1F Notes and the Series 1997-1K Notes
shall be computed on the assumption that each year contains 360 days and is
composed of twelve (12) thirty-day months, and shall be payable on each
regularly scheduled Interest Payment Date with respect to the Series 1997-1F
Notes and the Series 1997-1K Notes prior to the Maturity thereof and at the
Maturity thereof.
The principal of and premium, if any, on the Series 1997-1 Notes,
together with interest payable on the Series 1997-1 Notes at the Maturity
thereof if the date of such Maturity is not a regularly scheduled Interest
Payment Date, shall be payable in lawful money of the United States of America
upon, except as otherwise provided in Section 17 hereof, presentation and
surrender of such Series 1997-1 Notes at the Principal Office of the Trustee, as
Paying Agent with respect to the Series 1997-1 Notes, or a duly appointed
successor Paying Agent. Interest on the Series 1997-1 Notes shall be payable on
each regularly scheduled Interest Payment Date, except as otherwise provided in
Section 17 hereof, by check or draft drawn upon the Paying Agent and mailed to
the person who is the Holder thereof as of 5:00 p.m. in the city in which the
Principal Office of the Note Registrar is located on the Regular Record Date for
such Interest Payment Date at the address of such Holder as it appears on the
Note Register, or, in the case of any Series 1997-1 Note the Holder of which is
the Holder of Series 1997-1 Notes in the aggregate Principal Amount of
$1,000,000 or more (or, if less than $1,000,000 in Principal Amount of Series
1997-1 Notes is outstanding, the Holder of all outstanding Series 1997-1 Notes),
at the direction of such Holder received by the Paying Agent by 5:00 p.m. in the
city in which the Principal Office of the Paying Agent is located on the last
Business Day preceding the applicable Regular Record Date, by electronic
transfer by the Paying Agent in immediately available funds to an account
designated by such Holder. Any interest not so timely paid or duly provided for
(herein referred to as "Defaulted Interest") shall cease to be payable to the
person who is the Holder thereof at the close of business on the Regular Record
Date and shall be payable to the person who is the Holder thereof at the close
of business on a Special Record Date for the payment of any such Defaulted
Interest. Such Special Record Date shall be fixed by the Trustee whenever
moneys become available for payment of the Defaulted Interest, and notice of the
Special Record Date shall be given to the Holders of the Series 1997-1 Notes not
less than ten (10) days prior thereto by first-class mail to each such Holder as
shown on the Note Register on a date selected
-21-
by the Trustee, stating the date of the Special Record Date and the date fixed
for the payment of such Defaulted Interest. All payments of principal of,
premium, if any, and interest on the Series 1997-1 Notes shall be made in lawful
money of the United States of America.
The Series 1997-1 Notes are subject to redemption and prepayment prior
to their Stated Maturities upon the terms and conditions and, in the case of
redemption, at the Redemption Prices specified in Section 16 hereof.
Subject to the provisions of the Indenture, the Tax Exempt Auction
Rate Series 1997-1 Notes shall be in substantially the form set forth in Exhibit
A-1 hereto, with such variations, omissions and insertions as may be required by
the circumstances, be required or permitted by the Indenture, or be consistent
with the Indenture and necessary or appropriate to conform to the rules and
requirements of any governmental authority or any usage or requirement of law
with respect thereto.
Subject to the provisions of the Indenture, the Series 1997-1F Notes
shall be in substantially the form set forth in Exhibit A-2 hereto, with such
variations, omissions and insertions as may be required by the circumstances, be
required or permitted by the Indenture, or be consistent with the Indenture and
necessary or appropriate to conform to the rules and requirements of any
governmental authority or any usage or requirement of law with respect thereto.
Subject to the provisions of the Indenture, the Taxable Auction Rate
Series 1997-1 Notes shall be in substantially the form set forth in Exhibit A-3
hereto, with such variations, omissions and insertions as may be required by the
circumstances, be required or permitted by the Indenture, or be consistent with
the Indenture and necessary or appropriate to conform to the rules and
requirements of any governmental authority or any usage or requirement of law
with respect thereto.
Subject to the provisions of the Indenture, the LIBOR Rate Series
1997-1 Senior Notes shall be in substantially the form set forth in Exhibit A-4
hereto, with such variations, omissions and insertions as may be required by the
circumstances, be required or permitted by the Indenture, or be consistent with
the Indenture and necessary or appropriate to conform to the rules and
requirements of any governmental authority or any usage or requirement of law
with respect thereto.
Subject to the provisions of the Indenture, the Series 1997-1K Notes
shall be in substantially the form set forth in Exhibit B-1 hereto, with such
variations, omissions and insertions as may be required by the circumstances, be
required or permitted by the Indenture, or be consistent with the Indenture and
necessary or appropriate to conform to the rules and requirements of any
governmental authority or any usage or requirement of law with respect thereto.
Subject to the provisions of the Indenture, the Series 1997-1L Notes
shall be in substantially the form set forth in Exhibit B-2 hereto, with such
variations, omissions and insertions as may be required by the circumstances, be
required or permitted by the Indenture, or be consistent with the Indenture and
necessary or appropriate to conform to the rules and requirements of any
governmental authority or any usage or requirement of law with respect thereto.
-22-
Subject to the provisions of the Indenture, the Series 1997-1L Notes
shall be in substantially the form set forth in Exhibit B-2 hereto, with such
variations, omissions and insertions as may be required by the circumstances, be
required or permitted by the Indenture, or be consistent with the Indenture and
necessary or appropriate to conform to the rules and requirements of the law
with respect thereto.
SECTION 3. INTEREST PAYABLE ON AUCTION RATE SERIES 1997-1 NOTES AND
--------------------------------------------------------
LIBOR RATE SERIES 1997-1 NOTES. (A) The Initial Interest Rate Adjustment Dates
------------------------------
for the Series 1997-1A Notes, the Series 1997-1B Notes, the Series 1997-1C
Notes, the Series 1997-1D Notes, the Series 1997-1E Notes, the Series 1997-1G
Notes and the Series 1997-1H Notes shall be _____________, 1997, _____________,
1997, _____________, 1997, _____________, 1997, _____________, 1997,
_____________, 1997, and _____________, 1997, respectively.
During the Initial Interest Period, each series of Auction Rate Series
1997-1 Notes shall bear interest at the Auction Rate Series 1997-1 Note Initial
Interest Rate for such series. Thereafter, except with respect to an Auction
Period Adjustment, the Auction Rate Series 1997-1 Notes shall bear interest at
an Auction Rate Series 1997-1 Note Interest Rate based on a 35-day Auction
Period (in the case of Tax Exempt Auction Rate Series 1997-1 Notes) or a 28-day
Auction Period (in the case of Taxable Auction Rate Series 1997-1 Notes), as
determined pursuant to this Section 3(A) and Sections 4 through 12 hereof.
The Auction Rate Series 1997-1 Note Interest Rate to be borne by each
series of Auction Rate Series 1997-1 Notes after such Initial Interest Period
for each Auction Period until an Auction Period Adjustment, if any, shall be
determined as hereinbelow described. Each such Auction Period (1) with respect
to the Tax Exempt Auction Rate Series 1997-1 Notes, shall commence on and
include the Thursday following the expiration of the immediately preceding
Auction Period and terminate on and include the Wednesday immediately preceding
the Thursday of the fifth following week, and (2) with respect to the Taxable
Auction Rate Series 1997-1 Notes, shall commence on and include the first day
following the expiration of the immediately preceding Auction Period and
terminate on and include the day immediately preceding the first Business Day of
the fourth following week; provided, however, that in the case of the Auction
Period that immediately follows the Initial Interest Period for a series of
Auction Rate Series 1997-1 Notes, such Auction Period shall commence on the
Initial Interest Rate Adjustment Date for such series. The Auction Rate Series
1997-1 Note Interest Rate on each series of Auction Rate Series 1997-1 Notes for
each Auction Period shall be the Auction Rate in effect for such Auction Period
as determined in accordance with Section 4 hereof; provided that if, on any
Interest Rate Determination Date, an Auction is not held for any reason, then
the Auction Rate Series 1997-1 Note Interest Rate on such series for the next
succeeding Auction Period shall be the Maximum Auction Rate.
Notwithstanding the foregoing:
-23-
(a) if the ownership of a series of Auction Rate Series 1997-1 Notes
is no longer maintained in Book-Entry Form, the Auction Rate Series 1997-1
Note Interest Rate on such series for any Interest Period commencing after
the delivery of definitive notes representing such series pursuant to
Section 17 hereof shall equal the Maximum Auction Rate on the Business Day
immediately preceding the first day of such subsequent Interest Period; or
(b) if a Payment Default shall have occurred with respect to a series
of Auction Rate Series 1997-1 Notes, the Auction Rate Series 1997-1 Note
Interest Rate on such series for the Interest Period commencing on or
immediately after such Payment Default, and for each Interest Period
thereafter, to and including the Interest Period, if any, during which, or
commencing less than two (2) Business Days after, such Payment Default is
cured, shall equal the Non-Payment Rate on the first day of each such
Interest Period.
In accordance with Section 4(c)(ii) hereof, the Auction Agent shall
promptly give written notice to the Trustee and the Corporation of each Auction
Rate Series 1997-1 Note Interest Rate (unless the Auction Rate Series 1997-1
Note Interest Rate is the Non-Payment Rate or the ownership of such series is no
longer maintained in Book-Entry Form) applicable to each series of the Auction
Rate Series 1997-1 Notes. The Trustee shall notify the Holders of Auction Rate
Series 1997-1 Notes of the Auction Rate Series 1997-1 Note Interest Rate
applicable to each such series for each Auction Period on the second Business
Day of such Auction Period.
In the event that the last Business Day immediately preceding what
would otherwise be the commencement date of an Auction Period for a series of
Auction Rate Series 1997-1 Notes is more than five days prior to such date, the
Interest Rate Determination Date and commencement date for such Auction Period,
as well as the expiration date for the preceding Auction Period, may be adjusted
to fall on such dates as the Market Agent, with the consent of the Corporation,
may determine to be appropriate under such circumstances. The Market Agent
shall promptly notify the Trustee and the Auction Agent in writing of any such
determination. The Trustee, upon receipt of such notice, shall immediately give
written notification of such determination to the Holders of such series of
Auction Rate Series 1997-1 Notes.
In the event that the Auction Agent no longer determines, or fails to
determine, when required, the Auction Rate Series 1997-1 Note Interest Rate with
respect to a series of Auction Rate Series 1997-1 Notes, or, if for any reason,
such manner of determination shall be held to be invalid or unenforceable, the
Auction Rate Series 1997-1 Note Interest Rate for the next succeeding Interest
Period (which Interest Period shall be an Auction Period for such series of
Auction Rate Series 1997-1 Notes) shall be (1) with respect to the Tax Exempt
Auction Rate Series 1997-1 Notes, the Maximum Auction Rate, and (2) with respect
to the Taxable Auction Rate Series 1997-1 Notes, the Net Loan Rate, and if the
Auction Agent shall fail or refuse
-24-
to determine the Maximum Auction Rate or the Net Loan Rate, the Maximum Auction
Rate or the Net Loan Rate shall be determined by a securities dealer appointed
by the Corporation capable of making such a determination in accordance with the
provisions hereof and written notice of such determination shall be given by
such securities dealer to the Trustee.
If the Auction Rate for a series of Taxable Auction Rate Series 1997-1
Notes is greater than the Net Loan Rate, then the Auction Rate Series 1997-1
Note Interest Rate applicable to such series for the related Interest Period
will be the Net Loan Rate. If the Auction Rate Series 1997-1 Note Interest Rate
for a series of Taxable Auction Rate Series 1997-1 Notes for any Interest Period
is the Net Loan Rate, the Trustee shall determine the Carry-Over Amount, if any,
with respect to such series for such Interest Period. Such determination of the
Carry-Over Amount shall be made separately for each series of Taxable Auction
Rate Series 1997-1 Notes. Each Carry-Over Amount shall bear interest calculated
at a rate equal to One-Month LIBOR (as determined by the Auction Agent, provided
the Trustee has received notice of One-Month LIBOR from the Auction Agent, and,
if the Trustee shall not have received such notice from the Auction Agent, then
as determined by the Trustee) from the Interest Payment Date for the Interest
Period with respect to which such Carry-Over Amount was calculated, until paid.
Any payment in respect of Carry-Over Amount shall be applied, first, to any
accrued interest payable thereon and, thereafter, in reduction of such Carry-
Over Amount. For purposes of this First Supplemental Indenture, the Indenture
and the Taxable Auction Rate Series 1997-1 Notes, any reference to "principal"
or "interest" herein and therein shall not include, within the meaning of such
words, Carry-Over Amount or any interest accrued on any such Carry-Over Amount.
Such Carry-Over Amount shall be separately calculated for each Taxable Auction
Rate Series 1997-1 Note of such series by the Trustee during such Interest
Period in sufficient time for the Trustee to give notice to each Holder of such
Carry-Over Amount as required in the next succeeding sentence. On the Interest
Payment Date for an Interest Period with respect to which such Carry-Over Amount
has been calculated by the Trustee, the Trustee shall give written notice to
each Holder of the Carry-Over Amount applicable to such Holder's Taxable Auction
Rate Series 1997-1 Note, which written notice may accompany the payment of
interest by check made to each such Holder on such Interest Payment Date or
otherwise shall be mailed on such Interest Payment Date by first-class mail,
postage prepaid, to each such Holder at such Holder's address as it appears on
the registration books maintained by the Note Registrar. Such notice shall
state, in addition to such Carry-Over Amount, that, unless and until a Taxable
Auction Rate Series 1997-1 Note has been redeemed or has been deemed no longer
Outstanding under the Indenture (after which all accrued Carry-Over Amount with
respect to such Taxable Auction Rate Series 1997-1 Note (and all accrued
interest thereon) that remains unpaid shall be canceled and no Carry-Over Amount
(or interest accrued thereon) shall be paid with respect to such Taxable Auction
Rate Series 1997-1 Note), (i) the Carry-Over Amount (and interest accrued
thereon) shall be paid by the Trustee on such Taxable Auction Rate Series 1997-1
Note on the first occurring Interest Payment Date for a subsequent Interest
Period if and to the extent that (a)
-25-
the Eligible Carry-Over Make-Up Amount with respect to such Interest Period is
greater than zero, and (b) moneys are available pursuant to the terms of this
First Supplemental Indenture to pay such Carry-Over Amount (and interest accrued
thereon), and (ii) interest shall accrue on the Carry-Over Amount at a per annum
rate equal to One-Month LIBOR until such Carry-Over Amount is paid in full or is
canceled.
The Carry-Over Amount (and interest accrued thereon) for a series of
Taxable Auction Rate Series 1997-1 Notes shall be paid by the Trustee on
Outstanding Taxable Auction Rate Series 1997-1 Notes of such series on the first
occurring Interest Payment Date for a subsequent Interest Period if and to the
extent that (i) the Eligible Carry-Over Make-Up Amount with respect to such
Interest Period is greater than zero, and (ii) moneys in the Surplus Account are
available on such Interest Payment Date for transfer to the Interest Account for
such purpose in accordance with the second paragraph of Section 4.8 of the
Indenture, after taking into account all other amounts payable from the Surplus
Fund in accordance with such paragraph on such Interest Payment Date. Any
Carry-Over Amount (and any interest accrued thereon) with respect to any Taxable
Auction Rate Series 1997-1 Note which is unpaid as of an Interest Payment Date,
which Taxable Auction Rate Series 1997-1 Note is to be redeemed or deemed no
longer Outstanding under this First Supplemental Indenture on such Interest
Payment Date, shall be paid to the Holder thereof on such Interest Payment Date
to the extent that moneys are available therefor in accordance with the
provisions of the preceding clause (ii); provided, however, that any Carry-Over
Amount (and any interest accrued thereon) which is not so paid on such Interest
Payment Date shall be canceled with respect to such Taxable Auction Rate Series
1997-1 Note on such Interest Payment Date and shall not be paid on any
succeeding Interest Payment Date. To the extent that any portion of the Carry-
Over Amount (and any interest accrued thereon) remains unpaid after payment of a
portion thereof, such unpaid portion shall be paid in whole or in part as
required hereunder until fully paid by the Trustee on the next occurring
Interest Payment Date or Dates, as necessary, for a subsequent Interest Period
or Periods, if and to the extent that the conditions in the first sentence of
this paragraph are satisfied. On any Interest Payment Date on which the Trustee
pays less than all of the Carry-Over Amount (and any interest accrued thereon)
with respect to a Taxable Auction Rate Series 1997-1 Note, the Trustee shall
give written notice in the manner set forth in the immediately preceding
paragraph to the Holder of such Taxable Auction Rate Series 1997-1 Note of the
Carry-Over Amount remaining unpaid on such Taxable Auction Rate Series 1997-1
Note.
The Interest Payment Date on which any Carry-Over Amount (or any
interest accrued thereon) for a series of Taxable Auction Rate Series 1997-1
Notes shall be paid shall be determined by the Trustee in accordance with the
provisions of the immediately preceding paragraph, and the Trustee shall make
payment of the Carry-Over Amount (and any interest accrued thereon) in the same
manner as, and from the same Account from which, it pays interest on the Taxable
Auction Rate Series 1997-1 Notes on an Interest Payment Date.
-26-
(B) The Initial Interest Rate Adjustment Dates for the Series 1997-1I
Notes, the Series 1997-1J Notes and the Series 1997-1L Notes shall be
_____________, 1997, _____________, 1997, and _____________, 1997, respectively.
During the Initial Interest Period, each series of LIBOR Rate Series
1997-1 Notes shall bear interest at the LIBOR Rate Series 1997-1 Note Initial
Interest Rate for such series. The interest rate to be borne by each series of
LIBOR Rate Series 1997-1 Notes during each Interest Period thereafter shall be
determined on the related Interest Rate Determination Date and shall be equal to
the lesser of (i) the sum of One-Month LIBOR determined with respect to such
Interest Rate Determination Date plus the applicable LIBOR Rate Series 1997-1
Note Spread (which is herein referred to as the "LIBOR Rate Series 1997-1 Note
LIBOR-Based Rate"), and (ii) the Net Loan Rate determined with respect to such
Interest Rate Determination Date. The Trustee shall determine such interest
rate on each Interest Rate Determination Date and shall give the Corporation
written notice thereof prior to 2:00 p.m., New York City time, on such Interest
Rate Determination Date. The Net Loan Rate with respect to each Interest Rate
Determination Date shall be determined by or on behalf of the Corporation and
written notice thereof given to the Trustee prior to 10:00 a.m., New York City
time, on such Interest Rate Determination Date.
Notwithstanding any other provision of the LIBOR Rate Series 1997-1
Notes or this First Supplemental Indenture, interest payable on a series of
LIBOR Rate Series 1997-1 Notes for an Interest Period shall never exceed for
such Interest Period the amount of interest payable at the Net Loan Rate in
effect for such Interest Period.
If the LIBOR Rate Series 1997-1 Note LIBOR-Based Rate for a series of
LIBOR Rate Series 1997-1 Notes is greater than the Net Loan Rate, then the LIBOR
Rate Series 1997-1 Note Interest Rate applicable to such series for the related
Interest Period will be the Net Loan Rate. If the LIBOR Rate Series 1997-1 Note
Interest Rate for a series of LIBOR Rate Series 1997-1 Notes for any Interest
Period is the Net Loan Rate, the Trustee shall determine the Carry-Over Amount,
if any, with respect to such series for such Interest Period. Such
determination of the Carry-Over Amount shall be made separately for each series
of LIBOR Rate Series 1997-1 Notes. Each Carry-Over Amount shall bear interest
calculated at a rate equal to the LIBOR Rate Series 1997-1 Note LIBOR-Based Rate
(as determined by the Trustee) from the Interest Payment Date for the Interest
Period with respect to which such Carry-Over Amount was calculated, until paid.
Any payment in respect of Carry-Over Amount shall be applied, first, to any
accrued interest payable thereon and, thereafter, in reduction of such Carry-
Over Amount. For purposes of this First Supplemental Indenture, the Indenture
and the LIBOR Rate Series 1997-1 Notes, any reference to "principal" or
"interest" herein and therein shall not include, within the meaning of such
words, Carry-Over Amount or any interest accrued on any such Carry-Over Amount.
Such Carry-Over Amount shall be separately calculated for each LIBOR Rate Series
1997-1 Note of such series by the Trustee during such Interest Period in
-27-
sufficient time for the Trustee to give notice to each Holder of such Carry-Over
Amount as required in the next succeeding sentence. On the Interest Payment
Date for an Interest Period with respect to which such Carry-Over Amount has
been calculated by the Trustee, the Trustee shall give written notice to each
Holder of the Carry-Over Amount applicable to such Holder's LIBOR Rate Series
1997-1 Note, which written notice may accompany the payment of interest by check
made to each such Holder on such Interest Payment Date or otherwise shall be
mailed on such Interest Payment Date by first-class mail, postage prepaid, to
each such Holder at such Holder's address as it appears on the registration
books maintained by the Note Registrar. Such notice shall state, in addition to
such Carry-Over Amount, that, unless and until a LIBOR Rate Series 1997-1 Note
has been redeemed or has been deemed no longer Outstanding under the Indenture
(after which all accrued Carry-Over Amount with respect to such LIBOR Rate
Series 1997-1 Note (and all accrued interest thereon) that remains unpaid shall
be canceled and no Carry-Over Amount (or interest accrued thereon) shall be paid
with respect to such LIBOR Rate Series 1997-1 Note), (i) the Carry-Over Amount
(and interest accrued thereon) shall be paid by the Trustee on such LIBOR Rate
Series 1997-1 Note on the first occurring Interest Payment Date for a subsequent
Interest Period if and to the extent that (a) the Eligible Carry-Over Make-Up
Amount with respect to such Interest Period is greater than zero, and (b) moneys
are available pursuant to the terms of this First Supplemental Indenture to pay
such Carry-Over Amount (and interest accrued thereon), and (ii) interest shall
accrue on the Carry-Over Amount at a per annum rate equal to the LIBOR Rate
Series 1997-1 Note LIBOR-Based Rate until such Carry-Over Amount is paid in full
or is canceled.
The Carry-Over Amount (and interest accrued thereon) for a series of
LIBOR Rate Series 1997-1 Notes shall be paid by the Trustee on Outstanding LIBOR
Rate Series 1997-1 Notes of such series on the first occurring Interest Payment
Date for a subsequent Interest Period if and to the extent that (i) the Eligible
Carry-Over Make-Up Amount with respect to such Interest Period is greater than
zero, and (ii) moneys in the Surplus Account are available on such Interest
Payment Date for transfer to the Interest Account for such purpose in accordance
with the second paragraph of Section 4.8 of the Indenture, after taking into
account all other amounts payable from the Surplus Fund in accordance with such
paragraph on such Interest Payment Date. Any Carry-Over Amount (and any
interest accrued thereon) with respect to any LIBOR Rate Series 1997-1 Note
which is unpaid as of an Interest Payment Date, which LIBOR Rate Series 1997-1
Note is to be redeemed or deemed no longer Outstanding under this First
Supplemental Indenture on such Interest Payment Date, shall be paid to the
Holder thereof on such Interest Payment Date to the extent that moneys are
available therefor in accordance with the provisions of the preceding clause
(ii); provided, however, that any Carry-Over Amount (and any interest accrued
thereon) which is not so paid on such Interest Payment Date shall be canceled
with respect to such LIBOR Rate Series 1997-1 Note on such Interest Payment Date
and shall not be paid on any succeeding Interest Payment Date. To the extent
that any portion of the Carry-Over Amount (and any interest accrued thereon)
remains unpaid after payment of a portion thereof, such unpaid portion
-28-
shall be paid in whole or in part as required hereunder until fully paid by the
Trustee on the next occurring Interest Payment Date or Dates, as necessary, for
a subsequent Interest Period or Periods, if and to the extent that the
conditions in the first sentence of this paragraph are satisfied. On any
Interest Payment Date on which the Trustee pays less than all of the Carry-Over
Amount (and any interest accrued thereon) with respect to a LIBOR Rate Series
1997-1 Note, the Trustee shall give written notice in the manner set forth in
the immediately preceding paragraph to the Holder of such LIBOR Rate Series
1997-1 Note of the Carry-Over Amount remaining unpaid on such LIBOR Rate Series
1997-1 Note.
The Interest Payment Date on which any Carry-Over Amount (or any
interest accrued thereon) for a series of LIBOR Rate Series 1997-1 Notes shall
be paid shall be determined by the Trustee in accordance with the provisions of
the immediately preceding paragraph, and the Trustee shall make payment of the
Carry-Over Amount (and any interest accrued thereon) in the same manner as, and
from the same Account from which, it pays interest on the LIBOR Rate Series
1997-1 Notes on an Interest Payment Date.
In the event that the Trustee no longer determines, or fails to
determine, when required, the LIBOR Rate Series 1997-1 Note LIBOR-Based Rate
with respect to a series of LIBOR Rate Series 1997-1 Notes, or if, for any
reason, such manner of determination shall be held to be invalid or
unenforceable, the LIBOR Rate Series 1997-1 Note LIBOR-Based Rate for each
succeeding Interest Period shall be the Net Loan Rate as determined by or on
behalf of the Corporation with respect to the related Interest Rate
Determination Date, and if the Corporation shall fail or refuse to determine
such Net Loan Rate, the Net Loan Rate shall be determined by a securities dealer
appointed by the Trustee capable of making such a determination in accordance
with the provisions hereof and written notice of such determination shall be
given by such securities dealer to the Trustee.
The determination of a LIBOR Rate Series 1997-1 Note Interest Rate by
the Trustee or any other authorized Person pursuant to the provisions of this
Section 3(B) shall be conclusive and binding on the Holders of the LIBOR Rate
Series 1997-1 Notes to which such LIBOR Rate Series 1997-1 Note Interest Rate
applies, and the Corporation and the Trustee may rely thereon for all purposes.
In no event shall the cumulative amount of interest paid or payable on
a series of LIBOR Rate Series 1997-1 Notes (including interest calculated as
provided herein, plus any other amounts that constitute interest on the LIBOR
Rate Series 1997-1 Notes of such series under applicable law, which are
contracted for, charged, reserved, taken or received pursuant to the LIBOR Rate
Series 1997-1 Notes of such series or related documents) calculated from the
date of issuance of such series through any subsequent day during the term of
such series or otherwise prior to payment in full of the LIBOR Rate
-29-
Series 1997-1 Notes of such series exceed the amount permitted by applicable
law. If the applicable law is ever judicially interpreted so as to render
usurious any amount called for under the LIBOR Rate Series 1997-1 Notes of a
series or related documents or otherwise contracted for, charged, reserved,
taken or received in connection with the LIBOR Rate Series 1997-1 Notes of such
series, or if the redemption, prepayment or acceleration of the Maturity of the
LIBOR Rate Series 1997-1 Notes of a series results in payment to or receipt by
the Holder or any former Holder of the LIBOR Rate Series 1997-1 Notes of such
series of any interest in excess of that permitted by applicable law, then,
notwithstanding any provision of the LIBOR Rate Series 1997-1 Notes of such
series or related documents to the contrary, all excess amounts theretofore paid
or received with respect to the LIBOR Rate Series 1997-1 Notes of such series
shall be credited on the Principal Amount of the LIBOR Rate Series 1997-1 Notes
of such series (or, if the LIBOR Rate Series 1997-1 Notes of such series have
been paid or would thereby be paid in full, refunded by the recipient thereof),
and the provisions of the LIBOR Rate Series 1997-1 Notes of such series and
related documents shall automatically and immediately be deemed reformed and the
amounts thereafter collectible hereunder and thereunder reduced, without the
necessity of the execution of any new document, so as to comply with the
applicable law, but so as to permit the recovery of the fullest amount otherwise
called for under the LIBOR Rate Series 1997-1 Notes of such series and under the
related documents.
SECTION 4. DETERMINING THE AUCTION RATE SERIES 1997-1 NOTE INTEREST
--------------------------------------------------------
RATE. By purchasing Auction Rate Series 1997-1 Notes, whether in an Auction or
----
otherwise, each purchaser of the Auction Rate Series 1997-1 Notes, or its
Broker-Dealer, must agree and shall be deemed by such purchase to have agreed
(i) to participate in Auctions on the terms described herein, (ii) to have its
beneficial ownership of the Auction Rate Series 1997-1 Notes maintained at all
times in Book-Entry Form for the account of its Participant, which in turn will
maintain records of such beneficial ownership, and (iii) to authorize such
Participant to disclose to the Auction Agent such information with respect to
such beneficial ownership as the Auction Agent may request.
So long as the ownership of a series of Auction Rate Series 1997-1
Notes is maintained in Book-Entry Form by the Securities Depository, an Existing
Holder may sell, transfer or otherwise dispose of Auction Rate Series 1997-1
Notes of such series only pursuant to a Bid or Sell Order placed in an Auction
or otherwise sell, transfer or dispose of Auction Rate Series 1997-1 Notes
through a Broker-Dealer, provided that, in the case of all transfers other than
pursuant to Auctions, such Existing Holder, its Broker-Dealer or its Participant
advises the Auction Agent of such transfer. Auctions shall be conducted on each
Auction Date, if there is an Auction Agent on such Auction Date, in the
following manner (such procedures to be applicable separately to each series of
the Auction Rate Series 1997-1 Notes):
(a) (i) Prior to the Submission Deadline on each Auction Date;
(A) each Existing Holder of Auction Rate Series 1997-1 Notes may
submit to a Broker-Dealer by telephone or otherwise any information as
to:
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(1) the Principal Amount of Outstanding Auction Rate Series
1997-1 Notes, if any, owned by such Existing Holder which such
Existing Holder desires to continue to own without regard to the
Auction Rate Series 1997-1 Note Interest Rate for the next
succeeding Auction Period;
(2) the Principal Amount of Outstanding Auction Rate Series
1997-1 Notes, if any, which such Existing Holder offers to sell
if the Auction Rate Series 1997-1 Note Interest Rate for the next
succeeding Auction Period shall be less than the rate per annum
specified by such Existing Holder; and/or
(3) the Principal Amount of Outstanding Auction Rate Series
1997-1 Notes, if any, owned by such Existing Holder which such
Existing Holder offers to sell without regard to the Auction Rate
Series 1997-1 Note Interest Rate for the next succeeding Auction
Period; and
(B) one or more Broker-Dealers may contact Potential Holders to
determine the Principal Amount of Auction Rate Series 1997-1 Notes
which each Potential Holder offers to purchase, if the Auction Rate
Series 1997-1 Note Interest Rate for the next succeeding Auction
Period shall not be less than the rate per annum specified by such
Potential Holder.
The statement of an Existing Holder or a Potential Holder referred to
in (A) or (B) of this paragraph (i) is herein referred to as an "Order," and
each Existing Holder and each Potential Holder placing an Order is herein
referred to as a "Bidder"; an Order described in clause (A)(1) is herein
referred to as a "Hold Order"; an Order described in clauses (A)(2) and (B) is
herein referred to as a "Bid"; and an Order described in clause (A)(3) is herein
referred to as a "Sell Order."
(ii) (A) Subject to the provisions of Section 4(b) hereof, a Bid by an
Existing Holder shall constitute an irrevocable offer to sell:
(1) the Principal Amount of Outstanding Auction Rate Series
1997-1 Notes specified in such Bid if the Auction Rate Series
1997-1 Note Interest Rate determined as provided in this Section
4 shall be less than the rate specified therein; or
(2) such Principal Amount, or a lesser Principal Amount of
Outstanding Auction Rate Series 1997-1 Notes to be determined as
set forth in Section 4(d)(i)(D) hereof, if the Auction Rate
Series 1997-1 Note Interest Rate determined as
-31-
provided in this Section 4 shall be equal to the rate specified
therein; or
(3) such Principal Amount, or a lesser Principal Amount of
Outstanding Auction Rate Series 1997-1 Notes to be determined as set
forth in Section 4(d)(ii)(C) hereof, if the rate specified therein
shall be higher than the Auction Rate Series 1997-1 Note Interest Rate
and Sufficient Bids have not been made.
(B) Subject to the provisions of Section 4(b) hereof, a Sell Order by
an Existing Holder shall constitute an irrevocable offer to sell:
(l) the Principal Amount of Outstanding Auction Rate Series
1997-1 Notes specified in such Sell Order; or
(2) such Principal Amount, or a lesser Principal Amount, of
Outstanding Auction Rate Series 1997-1 Notes set forth in Section
4(d)(ii)(C) hereof, if Sufficient Bids have not been made.
(C) Subject to the provisions of Section 4(b) hereof, a Bid
by a Potential Holder shall constitute an irrevocable offer to
purchase:
(1) the Principal Amount of Outstanding Auction Rate Series
1997-1 Notes specified in such Bid if the Auction Rate Series 1997-1
Note Interest Rate determined as provided in this Section 4 shall be
higher than the rate specified in such Bid; or
(2) such Principal Amount, or a lesser Principal Amount of
Outstanding Auction Rate Series 1997-1 Notes set forth in Section
4(d)(i)(E) hereof, if the Auction Rate Series 1997-1 Note Interest
Rate determined as provided in this Section 4 shall be equal to the
rate specified in such Bid.
(b) (i) Each Broker-Dealer shall submit in writing to the Auction Agent prior
to the Submission Deadline on each Auction Date all Orders obtained by such
Broker-Dealer and shall specify with respect to each such Order:
(A) the name of the Bidder placing such Order;
(B) the aggregate Principal Amount of Auction Rate Series 1997-1 Notes
that are the subject of such Order;
(C) to the extent that such Bidder is an Existing Holder:
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(1) the Principal Amount of Auction Rate Series 1997-1 Notes, if
any, subject to any Hold Order placed by such Existing Holder;
(2) the Principal Amount of Auction Rate Series 1997-1 Notes, if
any, subject to any Bid placed by such Existing Holder and the rate
specified in such Bid; and
(3) the Principal Amount of Auction Rate Series 1997-1 Notes, if
any, subject to any Sell Order placed by such Existing Holder; and
(D) to the extent such Bidder is a Potential Holder, the rate
specified in such Potential Holder's Bid.
(ii) If any rate specified in any Bid contains more than three figures to
the right of the decimal point, the Auction Agent shall round such rate up to
the next higher .001%.
(iii) If an Order or Orders covering all Outstanding Auction Rate Series
1997-1 Notes owned by an Existing Holder is not submitted to the Auction Agent
prior to the Submission Deadline, the Auction Agent shall deem a Hold Order to
have been submitted on behalf of such Existing Holder covering the Principal
Amount of Outstanding Auction Rate Series 1997-1 Notes owned by such Existing
Holder and not subject to an Order submitted to the Auction Agent.
(iv) Neither the Corporation, the Trustee nor the Auction Agent shall be
responsible for any failure of a Broker-Dealer to submit an Order to the Auction
Agent on behalf of any Existing Holder or Potential Holder.
(v) If any Existing Holder submits through a Broker-Dealer to the Auction
Agent one or more Orders covering in the aggregate more than the Principal
Amount of Outstanding Auction Rate Series 1997-1 Notes owned by such Existing
Holder, such Orders shall be considered valid as follows and in the following
order of priority:
(A) All Hold Orders shall be considered valid, but only up to the
aggregate Principal Amount of Outstanding Auction Rate Series 1997-1 Notes
owned by such Existing Holder, and if the aggregate Principal Amount of
Auction Rate Series 1997-1 Notes subject to such Hold Orders exceeds the
aggregate Principal Amount of Auction Rate Series 1997-1 Notes owned by
such Existing Holder, the aggregate Principal Amount of Auction Rate Series
1997-1 Notes subject to each such Hold Order shall be reduced pro rata so
that the aggregate Principal Amount of Auction Rate Series 1997-1 Notes
subject to such Hold Order equals
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the aggregate Principal Amount of Outstanding Auction Rate Series 1997-1
Notes owned by such Existing Holder.
(B) (1) any Bid shall be considered valid up to an amount equal to the
excess of the Principal Amount of Outstanding Auction Rate Series
1997-1 Notes owned by such Existing Holder over the aggregate
Principal Amount of Auction Rate Series 1997-1 Notes subject to any
Hold Order referred to in clause (A) of this paragraph (v);
(2) subject to subclause (1) of this clause (B), if more than one
Bid with the same rate is submitted on behalf of such Existing Holder
and the aggregate Principal Amount of Outstanding Auction Rate Series
1997-1 Notes subject to such Bids is greater than such excess, such
Bids shall be considered valid up to an amount equal to such excess;
(3) subject to subclauses (1) and (2) of this clause (B), if more
than one Bid with different rates are submitted on behalf of such
Existing Holder, such Bids shall be considered valid first in the
ascending order of their respective rates until the highest rate is
reached at which such excess exists and then at such rate up to the
amount of such excess; and
(4) in any such event, the amount of Outstanding Auction Rate
Series 1997-1 Notes, if any, subject to Bids not valid under this
clause (B) shall be treated as the subject of a Bid by a Potential
Holder at the rate therein specified; and
(C) All Sell Orders shall be considered valid up to an amount equal to
the excess of the Principal Amount of Outstanding Auction Rate Series 1997-
1 Notes owned by such Existing Holder over the aggregate Principal Amount
of Auction Rate Series 1997-1 Notes subject to Hold Orders referred to in
clause (A) of this paragraph (v) and valid Bids referred to in clause (B)
of this paragraph (v).
(vi) If more than one Bid for Auction Rate Series 1997-1 Notes is
submitted on behalf of any Potential Holder, each Bid submitted shall be a
separate Bid with the rate and Principal Amount therein specified.
(vii) An Existing Holder that offers to purchase additional Auction Rate
Series 1997-1 Notes is, for purposes of such offer, treated as a Potential
Holder.
(viii) Any Bid or Sell Order submitted by an Existing Holder covering
an aggregate Principal Amount of Auction Rate Series 1997-1 Notes not equal
-34-
to an Authorized Denomination shall be rejected and shall be deemed a Hold
Order. Any Bid submitted by a Potential Holder covering an aggregate Principal
Amount of Auction Rate Series 1997-1 Notes not equal to an Authorized
Denomination shall be rejected.
(ix) Any Bid specifying a rate higher than the Maximum Auction Rate will
(a) be treated as a Sell Order if submitted by an Existing Holder and (b) not be
accepted if submitted by a Potential Holder.
(x) Any Order submitted in an Auction by a Broker-Dealer to the Auction
Agent prior to the Submission Deadline on any Auction Date shall be irrevocable.
(c) (i) Not earlier than the Submission Deadline on each Auction Date, the
Auction Agent shall assemble all valid Orders submitted or deemed submitted to
it by the Broker-Dealers (each such Order as submitted or deemed submitted by a
Broker-Dealer being herein referred to individually as a "Submitted Hold Order,"
a "Submitted Bid" or a "Submitted Sell Order," as the case may be, or as a
"Submitted Order," and collectively as "Submitted Hold Orders," "Submitted Bids"
or "Submitted Sell Orders," as the case may be, or as "Submitted Orders") and
shall determine:
(A) the excess of the total Principal Amount of Outstanding Auction
Rate Series 1997-1 Notes over the sum of the aggregate Principal Amount of
Outstanding Auction Rate Series 1997-1 Notes subject to Submitted Hold
Orders (such excess being herein referred to as the "Available Auction
Rate Series 1997-1 Notes"), and
(B) from the Submitted Orders whether:
(1) the aggregate Principal Amount of Outstanding Auction Rate
Series 1997-1 Notes subject to Submitted Bids by Potential Holders
specifying one or more rates equal to or lower than the Maximum
Auction Rate;
exceeds or is equal to the sum of:
(2) the aggregate Principal Amount of Outstanding Auction Rate
Series 1997-1 Notes subject to Submitted Bids by Existing Holders
specifying one or more rates higher than the Maximum Auction Rate; and
(3) the aggregate Principal Amount of Outstanding Auction Rate
Series 1997-1 Notes subject to Submitted Sell Orders;
-35-
(in the event such excess or such equality exists, other than because
all of the Outstanding Auction Rate Series 1997-1 Notes are subject to
Submitted Hold Orders, such Submitted Bids described in subclause (1)
above shall be referred to collectively as "Sufficient Bids"); and
(C) if Sufficient Bids exist, the Bid Auction Rate, which shall
be the lowest rate specified in such Submitted Bids such that if:
(l) (x) each such Submitted Bid from Existing Holders
specifying such lowest rate and (y) all other Submitted Bids from
Existing Holders specifying lower rates were rejected, thus
entitling such Existing Holders to continue to own the Principal
Amount of Auction Rate Series 1997-1 Notes subject to such
Submitted Bids; and
(2) (x) each such Submitted Bid from Potential Holders
specifying such lowest rate and (y) all other Submitted Bids from
Potential Holders specifying lower rates were accepted;
the result would be that such Existing Holders described in subclause
(1) above would continue to own an aggregate Principal Amount of
Outstanding Auction Rate Series 1997-1 Notes which, when added to the
aggregate Principal Amount of Outstanding Auction Rate Series 1997-1
Notes to be purchased by such Potential Holders described in subclause
(2) above, would equal not less than the Available Auction Rate Series
1997-1 Notes.
(ii) Promptly after the Auction Agent has made the determinations
pursuant to Section 4(c)(i) hereof, the Auction Agent shall advise the Trustee,
the Broker-Dealers and the Corporation of the Net Loan Rate (in the case of a
series of Taxable Auction Rate Series 1997-1 Notes), the Maximum Auction Rate
and the All Hold Rate and the components thereof on the Auction Date and, based
on such determinations, the Auction Rate for the next succeeding Interest Period
as follows:
(A) if Sufficient Bids exist, that the Auction Rate for the next
succeeding Interest Period shall be equal to the Bid Auction Rate so
determined;
(B) if Sufficient Bids do not exist (other than because all of
the Outstanding Auction Rate Series 1997-1 Notes are subject to
Submitted Hold Orders), that the Auction Rate for the next succeeding
Interest Period shall be equal to the Maximum Auction Rate; or
-36-
(C) if all Outstanding Auction Rate Series 1997-1 Notes are
subject to Submitted Hold Orders, that the Auction Rate for the next
succeeding Interest Period shall be equal to the All Hold Rate.
(iii) Promptly after the Auction Agent has determined the Auction
Rate, the Auction Agent shall determine and advise the Trustee of the
Auction Rate Series 1997-1 Note Interest Rate, which rate shall be (A) in
the case of a series of Tax Exempt Auction Rate Series 1997-1 Notes, the
Auction Rate, or (B) in the case of a series of Taxable Auction Rate Series
1997-1 Notes, the lesser of the Auction Rate and the Net Loan Rate;
provided, however, that in no event shall the Auction Rate Series 1997-1
Note Interest Rate exceed the Auction Rate Series 1997-1 Note Interest Rate
Limitation.
(d) Existing Holders shall continue to own the Principal Amount of Auction
Rate Series 1997-1 Notes that are subject to Submitted Hold Orders. If
Sufficient Bids have been received by the Auction Agent (and if, in the case of
a series of Taxable Auction Rate Series 1997-1 Notes, the Net Loan Rate is equal
to or greater than the Bid Auction Rate), the Bid Auction Rate will be the
Auction Rate Series 1997-1 Note Interest Rate, and Submitted Bids and Submitted
Sell Orders will be accepted or rejected and the Auction Agent will take such
other action as described below in subparagraph (i).
If, in the case of a series of Taxable Auction Rate Series 1997-1 Notes,
the Net Loan Rate is less than the Auction Rate, the Net Loan Rate will be the
Auction Rate Series 1997-1 Note Interest Rate for such series. If the Auction
Rate is greater than the Auction Rate Series 1997-1 Note Interest Rate
Limitation (in the case of a series of Tax Exempt Auction Rate Series 1997-1
Notes), or the Auction Rate and the Net Loan Rate are both greater than the
Auction Rate Series 1997-1 Note Interest Rate Limitation (in the case of a
series of Tax Exempt Auction Rate Series 1997-1 Notes), the Auction Rate Series
1997-1 Note Interest Rate for such series shall be equal to the Auction Rate
Series 1997-1 Note Interest Rate Limitation. If the Auction Agent has not
received Sufficient Bids (other than because all of the Outstanding Auction Rate
Series 1997-1 Notes are subject to Submitted Hold Orders), the Auction Rate
Series 1997-1 Note Interest Rate will be (1) in the case of a series of Tax
Exempt Auction Rate Series 1997-1 Notes, the Maximum Auction Rate, or (2) in the
case of a series of Taxable Auction Rate Series 1997-1 Notes, the lesser of the
Maximum Auction Rate and the Net Loan Rate. In any of the cases described
above, Submitted Orders will be accepted or rejected and the Auction Agent will
take such other action as described below in subparagraph (ii).
(i) if Sufficient Bids have been made (and if, in the case of a series
of Taxable Auction Rate Series 1997-1 Notes, the Net Loan Rate is equal to
or greater than the Bid Auction Rate), in which event the Auction Rate
Series 1997-1 Note Interest Rate shall be the Bid Auction Rate, all
Submitted Sell Orders shall be accepted and, subject to the provisions of
paragraphs (iv) and (v) of this Section 4(d), Submitted Bids shall be
accepted or rejected as follows
-37-
in the following order of priority, and all other Submitted Bids shall be
rejected:
(A) Existing Holders' Submitted Bids specifying any rate that is
higher than the Auction Rate Series 1997-1 Note Interest Rate shall be
accepted, thus requiring each such Existing Holder to sell the
aggregate Principal Amount of Auction Rate Series 1997-1 Notes subject
to such Submitted Bids;
(B) Existing Holders' Submitted Bids specifying any rate that is
lower than the Auction Rate Series 1997-1 Note Interest Rate shall be
rejected, thus entitling each such Existing Holder to continue to own
the aggregate Principal Amount of Auction Rate Series 1997-1 Notes
subject to such Submitted Bids;
(C) Potential Holders' Submitted Bids specifying any rate that is
lower than the Auction Rate Series 1997-1 Note Interest Rate shall be
accepted;
(D) Each Existing Holders' Submitted Bid specifying a rate that
is equal to the Auction Rate Series 1997-1 Note Interest Rate shall be
rejected, thus entitling such Existing Holder to continue to own the
aggregate Principal Amount of Auction Rate Series 1997-1 Notes subject
to such Submitted Bid, unless the aggregate Principal Amount of
Outstanding Auction Rate Series 1997-1 Notes subject to all such
Submitted Bids shall be greater than the Principal Amount of Auction
Rate Series 1997-1 Notes (the "Remaining Principal Amount") equal to
the excess of the Available Auction Rate Series 1997-1 Notes over the
aggregate Principal Amount of Auction Rate Series 1997-1 Notes subject
to Submitted Bids described in clauses (B) and (C) of this Section
4(d)(i), in which event such Submitted Bid of such Existing Holder
shall be rejected in part, and such Existing Holder shall be entitled
to continue to own the Principal Amount of Auction Rate Series 1997-1
Notes subject to such Submitted Bid, but only in an amount equal to
the aggregate Principal Amount of Auction Rate Series 1997-1 Notes
obtained by multiplying the Remaining Principal Amount by a fraction,
the numerator of which shall be the Principal Amount of Outstanding
Auction Rate Series 1997-1 Notes owned by such Existing Holder subject
to such Submitted Bid and the denominator of which shall be the sum of
the Principal Amount of Outstanding Auction Rate Series 1997-1 Notes
subject to such Submitted Bids made by all such Existing Holders that
specified a rate equal to the Auction Rate Series 1997-1 Note Interest
Rate; and
(E) Each Potential Holder's Submitted Bid specifying a rate that
is equal to the Auction Rate Series 1997-1 Note Interest Rate shall be
-38-
accepted, but only in an amount equal to the Principal Amount of
Auction Rate Series 1997-1 Notes obtained by multiplying the excess of
the aggregate Principal Amount of Available Auction Rate Series 1997-1
Notes over the aggregate Principal Amount of Auction Rate Series 1997-
1 Notes subject to Submitted Bids described in clauses (B), (C) and
(D) of this Section 4(d)(i) by a fraction the numerator of which shall
be the aggregate Principal Amount of Outstanding Auction Rate Series
1997-1 Notes subject to such Submitted Bid and the denominator of
which shall be the sum of the Principal Amount of Outstanding Auction
Rate Series 1997-1 Notes subject to Submitted Bids made by all such
Potential Holders that specified a rate equal to the Auction Rate
Series 1997-1 Note Interest Rate.
(ii) If Sufficient Bids have not been made (other than because all of
the Outstanding Auction Rate Series 1997-1 Notes are subject to Submitted
Hold Orders), if the Auction Rate Series 1997-1 Note Interest Rate
Limitation applies or if, in the case of a series of Taxable Auction Rate
Series 1997-1 Notes, the Net Loan Rate is less than the Bid Auction Rate
(in which event the Auction Rate Series 1997-1 Note Interest Rate for such
series shall be the Net Loan Rate), subject to the provisions of Section
4(d)(iv) hereof, Submitted Orders shall be accepted or rejected as follows
in the following order of priority and all other Submitted Bids shall be
rejected:
(A) Existing Holders' Submitted Bids specifying any rate that is
equal to or lower than the Auction Rate Series 1997-1 Note Interest
Rate shall be rejected, thus entitling such Existing Holders to
continue to own the aggregate Principal Amount of Auction Rate Series
1997-1 Notes subject to such Submitted Bids;
(B) Potential Holders' Submitted Bids specifying (1) any rate
that is equal to or lower than the Auction Rate Series 1997-1 Note
Interest Rate shall be accepted and (2) any rate that is higher than
the Auction Rate Series 1997-1 Note Interest Rate shall be rejected;
and
(C) each Existing Holder's Submitted Bid specifying any rate that
is higher than the Auction Rate Series 1997-1 Note Interest Rate and
the Submitted Sell Order of each Existing Holder shall be accepted,
thus entitling each Existing Holder that submitted any such Submitted
Bid or Submitted Sell Order to sell the Auction Rate Series 1997-1
Notes subject to such Submitted Bid or Submitted Sell Order, but in
both cases only in an amount equal to the aggregate Principal Amount
of Auction Rate Series 1997-1 Notes obtained by multiplying the
aggregate Principal Amount of Auction Rate Series 1997-1 Notes subject
to Submitted Bids described in clause (B) of this Section 4(d)(ii) by
a fraction the numerator of which shall be the aggregate Principal
Amount of Outstanding Auction Rate Series 1997-1 Notes owned by
-39-
such Existing Holder subject to such Submitted Bid or Submitted Sell
Order and the denominator of which shall be the aggregate Principal
Amount of Outstanding Auction Rate Series 1997-1 Notes subject to all
such Submitted Bids and Submitted Sell Orders.
(iii) If all Outstanding Auction Rate Series 1997-1 Notes are subject
to Submitted Hold Orders, all Submitted Bids shall be rejected.
(iv) If, as a result of the procedures described in paragraph (i) or
(ii) of this Section 4(d), any Existing Holder would be entitled or
required to sell, or any Potential Holder would be entitled or required to
purchase, a Principal Amount of Auction Rate Series 1997-1 Notes that is
not equal to an Authorized Denomination, the Auction Agent shall, in such
manner as in its sole discretion it shall determine, round up or down the
Principal Amount of Auction Rate Series 1997-1 Notes to be purchased or
sold by any Existing Holder or Potential Holder so that the Principal
Amount of Auction Rate Series 1997-1 Notes purchased or sold by each
Existing Holder or Potential Holder shall be equal to an Authorized
Denomination.
(v) If, as a result of the procedures described in paragraph (i) of
this Section 4(d), any Potential Holder would be entitled or required to
purchase less than an Authorized Denomination of Auction Rate Series 1997-1
Notes, the Auction Agent shall, in such manner as in its sole discretion it
shall determine, allocate Auction Rate Series 1997-1 Notes for purchase
among Potential Holders so that only Auction Rate Series 1997-1 Notes in
Authorized Denominations are purchased by any Potential Holder, even if
such allocation results in one or more of such Potential Holders not
purchasing any Auction Rate Series 1997-1 Notes.
(e) Based on the result of each Auction, the Auction Agent shall determine
the aggregate Principal Amount of Auction Rate Series 1997-1 Notes to be
purchased and the aggregate Principal Amount of Auction Rate Series 1997-1 Notes
to be sold by Potential Holders and Existing Holders on whose behalf each
Broker-Dealer submitted Bids or Sell Orders and, with respect to each Broker-
Dealer, to the extent that such aggregate Principal Amount of Auction Rate
Series 1997-1 Notes to be sold differs from such aggregate Principal Amount of
Auction Rate Series 1997-1 Notes to be purchased, determine to which other
Broker-Dealer or Broker-Dealers acting for one or more purchasers such Broker-
Dealer shall deliver, or from which other Broker-Dealer or Broker-Dealers acting
for one or more sellers such Broker-Dealer shall receive, as the case may be,
Auction Rate Series 1997-1 Notes.
(f) Any calculation by the Auction Agent or the Trustee, as applicable, of
the Auction Rate Series 1997-1 Note Interest Rate, One-Month LIBOR, Three-Month
LIBOR, Maximum Auction Rate, All Hold Rate, Net Loan Rate and Non-Payment Rate
shall, in the absence of manifest error, be binding on all other parties.
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(g) Notwithstanding anything in this First Supplemental Indenture to the
contrary notwithstanding, no Auction will be held on any Auction Date hereunder
during the continuance of a Payment Default.
SECTION 5. DETERMINATION OF PAYMENT DEFAULTS AND PAYMENT OF AUCTION
--------------------------------------------------------
AGENT AND BROKER-DEALER FEES.
----------------------------
(a) The Trustee shall determine, not later than 2:00 p.m., New York
City time, on the Business Day next succeeding each Interest Payment Date,
whether a Payment Default has occurred. If a Payment Default has occurred, the
Trustee shall, not later than 2:15 p.m., New York City time, on such Business
Day, send a notice thereof in substantially the form of Exhibit C attached
hereto to the Auction Agent by telecopy or similar means and, if such Payment
Default is cured, the Trustee shall immediately send a notice in substantially
the form of Exhibit D attached hereto to the Auction Agent by telecopy or
similar means.
(b) Not later than 12:00 noon, New York City time, on each Interest
Payment Date, the Corporation shall pay to the Auction Agent, in immediately
available funds out of amounts available therefor in the Administration Fund, an
amount equal to the Auction Agent Fee and the Broker-Dealer Fee as calculated in
accordance with the Auction Agent Agreement. The Corporation shall, from time
to time at the request of the Auction Agent, reimburse the Auction Agent for its
reasonable expenses as provided in the Auction Agent Agreement, such expenses to
be paid out of amounts available therefor in the Administration Fund.
SECTION 6. CALCULATION OF MAXIMUM AUCTION RATE, ALL HOLD RATE, NET
-------------------------------------------------------
LOAN RATE, ONE-MONTH LIBOR, THREE-MONTH LIBOR, NON-PAYMENT RATE, AFTER-TAX
--------------------------------------------------------------------------
EQUIVALENT, "AA" COMPOSITE COMMERCIAL PAPER RATE, INDEX AND APPLICABLE
----------------------------------------------------------------------
PERCENTAGE. The Auction Agent shall calculate the Maximum Auction Rate, the All
----------
Hold Rate, the After-Tax Equivalent, the "AA" Composite Commercial Paper Rate,
the Index (unless the Index is to be determined by the Market Agent), the
Applicable Percentage, the Net Loan Rate and One-Month LIBOR or Three-Month
LIBOR, as the case may be, on each Auction Date and shall notify the Trustee and
the Broker-Dealers of the Maximum Auction Rate, the All Hold Rate, the Net Loan
Rate and One-Month LIBOR or Three-Month LIBOR, as the case may be, all as
provided in the Auction Agent Agreement. The Market Agent shall calculate the
Index (if the Index is other than the PSA Index) on each Interest Rate
Determination Date and shall notify the Trustee and the Auction Agent of the
Index prior to 9:30 a.m., New York City time, on each Interest Rate
Determination Date. If the ownership of the Auction Rate Series 1997-1 Notes is
no longer maintained in Book-Entry Form by the Securities Depository, the
Trustee shall calculate the Maximum Auction Rate and the Net Loan Rate on the
Business Day immediately preceding each Interest Period after the delivery of
definitive Auction Rate Series 1997-1 Notes pursuant to Section 17 hereof. If a
Payment Default shall have occurred, the Trustee shall calculate the Non-Payment
Rate on the Interest Rate Determination Date for (i) each Interest Period
commencing after the occurrence and during the continuance of
-41-
such Payment Default and (ii) any Interest Period commencing less than two (2)
Business Days after the cure of any Payment Default. The Auction Agent shall
determine the After-Tax Equivalent, the "AA" Composite Commercial Paper Rate,
the Applicable Percentage and One-Month LIBOR or Three-Month LIBOR, as the case
may be, for each Interest Period other than the first Interest Period; provided
that if the ownership of the Auction Rate Series 1997-1 Notes is no longer
maintained in Book-Entry Form, or if a Payment Default has occurred, then the
Trustee shall determine the After-Tax Equivalent, the "AA" Composite Commercial
Paper Rate, the Applicable Percentage and One-Month LIBOR or Three-Month LIBOR,
as the case may be, for each such Interest Period. The determination by the
Trustee or the Auction Agent, as the case may be, of the After-Tax Equivalent,
the "AA" Composite Commercial Paper Rate, the Applicable Percentage and One-
Month LIBOR or Three-Month LIBOR, as the case may be, shall (in the absence of
manifest error) be final and binding upon all parties. If calculated or
determined by the Auction Agent, the Auction Agent shall promptly advise the
Trustee of the After-Tax Equivalent, the "AA" Composite Commercial Paper Rate,
the Applicable Percentage and One-Month LIBOR or Three-Month LIBOR, as the case
may be. The determination by the Market Agent of the Index shall (in the absence
of manifest error) be final and binding upon all parties.
If the Federal Reserve Bank of New York does not make available its
30-day commercial paper rate for purposes of determining the "AA" Composite
Commercial Paper Rate, the Auction Agent shall notify the Trustee of such fact
and the Trustee shall thereupon request that an Authorized Officer of the
Corporation promptly appoint at least two (2) Commercial Paper Dealers (in
addition to ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.) to provide commercial paper quotes for purposes
of determining the "AA" Composite Commercial Paper Rate. Pending appointment of
both such additional Commercial Paper Dealers, ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and any other
Commercial Paper Dealer appointed and serving as such shall provide the required
quotations and such quotations shall be used for purposes of this First
Supplemental Indenture. ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. is hereby appointed as a Commercial
Paper Dealer to provide commercial paper quotes for purposes of determining the
"AA" Composite Commercial Paper Rate as aforesaid.
SECTION 7. NOTIFICATION OF RATES, AMOUNTS AND PAYMENT DATES.
------------------------------------------------
(a) By 10:00 a.m., New York City time, on each Regular Record Date
with respect to the Auction Rate Series 1997-1 Notes, the Trustee shall
determine the aggregate amounts of interest distributable on the next succeeding
Interest Payment Date to the beneficial owners of each series thereof.
(b) As soon as practicable prior to each Interest Payment Date with
respect to the Auction Rate Series 1997-1 Notes, the Trustee shall:
(i) confirm with the Auction Agent, so long as no Payment Default has
occurred and is continuing and the ownership of the Auction Rate Series
-42-
1997-1 Notes is maintained in Book-Entry Form by the Securities Depository,
(1) the date of such next Interest Payment Date and (2) the amount payable
to the Auction Agent on such Interest Payment Date pursuant to Section 5(b)
hereof;
(ii) advise the Securities Depository, so long as the ownership of
the Auction Rate Series 1997-1 Notes is maintained in Book-Entry Form by
the Securities Depository, upon request, of the aggregate amount of
interest distributable on the next succeeding Interest Payment Date to the
beneficial owners of each series thereof; and
(iii) pursuant to Section 3(A) hereof, advise the Holders of each
series of Taxable Auction Rate Series 1997-1 Notes of any Carry-Over Amount
accruing on such series.
SECTION 8. AUCTION AGENT.
--------------
(a) Bankers Trust Company is hereby appointed as Initial Auction Agent
to serve as agent for the Corporation in connection with Auctions. The Trustee
and the Corporation will, and the Trustee is hereby directed to, enter into the
Initial Auction Agent Agreement with Bankers Trust Company, as the Initial
Auction Agent. Any Substitute Auction Agent shall be (i) a bank, national
banking association or trust company duly organized under the laws of the United
States of America or any state or territory thereof having its principal place
of business in the Borough of Manhattan, New York, or such other location as
approved by the Trustee in writing and having a combined capital stock or
surplus of at least $50,000,000, or (ii) a member of the National Association of
Securities Dealers, Inc., having a capitalization of at least $50,000,000, and,
in either case, authorized by law to perform all the duties imposed upon it
hereunder and under the Auction Agent Agreement. The Auction Agent may at any
time resign and be discharged of the duties and obligations created by this
First Supplemental Indenture by giving at least ninety (90) days' notice to the
Trustee, the Market Agent and the Corporation. The Auction Agent with respect
to the Tax Exempt Auction Rate Series 1997-1 Notes may be removed at any time by
the Trustee upon the written direction of an Authorized Officer of the
Corporation or the Holders of 66-2/3% of the aggregate Principal Amount of the
Tax Exempt Auction Rate Series 1997-1 Notes then Outstanding, and, if by such
Holders, by an instrument signed by such Holders or their attorneys and filed
with the Auction Agent, the Corporation and the Trustee upon at least ninety
(90) days' notice. The Auction Agent with respect to the Taxable Auction Rate
Series 1997-1 Notes may be removed at any time by the Trustee upon the written
direction of an Authorized Officer of the Corporation or the Holders of 66-2/3%
of the aggregate Principal Amount of the Taxable Auction Rate Series 1997-1
Notes then Outstanding, and, if by such Holders, by an instrument signed by such
Holders or their attorneys and filed with the Auction Agent, the Corporation and
the Trustee upon at least ninety (90) days' notice. Neither resignation nor
removal of the Auction Agent pursuant to the preceding two sentences shall be
effective
-43-
unless and until a Substitute Auction Agent has been appointed and has accepted
such appointment. However, if a successor Auction Agent shall not have been
appointed within sixty (60) days from the date of a notice of resignation, the
resigning Auction Agent may petition any court of competent jurisdiction for the
appointment of a successor Auction Agent. If required by the Corporation, a
Substitute Auction Agent Agreement shall be entered into with a Substitute
Auction Agent. Notwithstanding the foregoing, the Auction Agent may terminate
the Auction Agent Agreement if, within twenty-five (25) days after notifying the
Trustee, the Market Agent and the Corporation in writing that it has not
received payment of any Auction Agent Fee due it in accordance with the terms of
the Auction Agent Agreement, the Auction Agent does not receive such payment.
(b) If the Auction Agent shall resign or be removed or be dissolved,
or if the property or affairs of the Auction Agent shall be taken under the
control of any state or federal court or administrative body because of
bankruptcy or insolvency, or for any other reason, the Trustee at the direction
of an Authorized Officer of the Corporation, shall use its best efforts to
appoint a Substitute Auction Agent.
(c) The Auction Agent is acting as agent for the Corporation in
connection with Auctions. In the absence of bad faith, negligent failure to act
or negligence on its part, the Auction Agent shall not be liable for any action
taken, suffered or omitted or any error of judgment made by it in the
performance of its duties under the Auction Agent Agreement and shall not be
liable for any error of judgment made in good faith unless the Auction Agent
shall have been negligent in ascertaining (or failing to ascertain) the
pertinent facts.
(d) In the event of a change in the Auction Agent Fee Rate pursuant to
Section 6.4(b) of the Auction Agent Agreement, the Auction Agent shall give a
Notice of Fee Rate Change to the Trustee in accordance with the Auction Agent
Agreement.
SECTION 9. BROKER-DEALERS.
--------------
(a) The Auction Agent will enter into a Broker-Dealer Agreement with
▇▇▇▇▇ ▇▇▇▇▇▇ Inc., as the sole initial Broker-Dealer with respect to the Tax
Exempt Auction Rate Series 1997-1 Notes. The Auction Agent will also enter into
a Broker-Dealer Agreement with ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., as the sole initial Broker-
Dealer with respect to the Taxable Auction Rate Series 1997-1 Notes. An
Authorized Officer of the Corporation may, from time to time, approve one or
more additional persons to serve as Broker-Dealers under Broker-Dealer
Agreements and shall be responsible for providing such Broker-Dealer Agreements
to the Trustee and the Auction Agent; provided, however that while ▇▇▇▇▇ ▇▇▇▇▇▇
Inc. is serving as a Broker-Dealer, ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. shall have the right to
consent to the approval of any additional Broker-Dealers, which consent will not
be unreasonably withheld.
-44-
(b) Any Broker-Dealer may be removed at any time, at the request of an
Authorized Officer of the Corporation, but there shall, at all times, be at
least one Broker-Dealer with respect to each of the Tax Exempt Auction Rate
Series 1997-1 Notes and the Taxable Auction Rate Series 1997-1 Notes appointed
and acting as such.
SECTION 10. CHANGES IN AUCTION PERIOD OR PERIODS AND CERTAIN
------------------------------------------------
PERCENTAGES.
-----------
(a) While any of the Auction Rate Series 1997-1 Notes are Outstanding,
the Corporation may, from time to time, convert the length of one or more
Auction Periods (an "Auction Period Adjustment"), in order to conform with then
current market practice with respect to similar securities or to accommodate
economic and financial factors that may affect or be relevant to the length of
the Auction Period and the Auction Rate Series 1997-1 Note Interest Rate borne
by the Auction Rate Series 1997-1 Notes. The Corporation shall not initiate an
Auction Period Adjustment unless it shall have received, not less than three (3)
days nor more than twenty (20) days prior to the Auction Period Adjustment, (i)
in the case of an Auction Period Adjustment relating to Tax Exempt Auction Rate
Series 1997-1 Notes, a written opinion of Bond Counsel to the effect that such
Auction Period Adjustment will not adversely affect the exclusion of interest on
any of the Series 1997-1 Notes from income for federal income tax purposes, (ii)
the written consent of the Market Agent, which consent shall not be unreasonably
withheld, and (iii) written confirmation from each of the Rating Agencies then
rating the Series 1997-1 Notes that such Auction Period Adjustment will not
adversely affect its ratings then applicable to any of the Series 1997-1 Notes.
The Corporation shall initiate the Auction Period Adjustment by giving written
notice by Corporation Order to the Trustee, the Auction Agent, the Market Agent
and the Securities Depository in substantially the form of, or containing
substantially the information contained in, Exhibit E to this First Supplemental
Indenture at least ten (10) days prior to the Auction Date for such Auction
Period.
Any such adjusted Auction Period shall not be less than seven (7) days
nor more than ninety-one (91) days. If any such adjusted Auction Period will be
less than thirty-five (35) days (in the case of the Tax Exempt Auction Rate
Series 1997-1 Notes) or twenty-eight (28) days (in the case of the Taxable
Auction Rate Series 1997-1 Notes), the notice described above will be effective
only if it is accompanied by a written statement of the Trustee, the Auction
Agent and the Securities Depository to the effect that they are capable of
performing their duties, if any, under this First Supplemental Indenture, the
Auction Agent Agreement and any Broker-Dealer Agreement with respect to such
changed Auction Period.
An Auction Period Adjustment shall take effect only (A) if the Trustee
and the Auction Agent receive, by 11:00 a.m., New York City time, on the
Business Day before the Auction Date for the first such Auction Period, a
Corporation Certificate in substantially the form attached as, or containing
substantially the same
-45-
information contained in, Exhibit F to this First Supplemental Indenture,
authorizing the Auction Period Adjustment specified in such certificate along
with a copy of the opinion of Bond Counsel, the written consent of the Market
Agent and the Rating Agency confirmations described in the first paragraph of
this subsection (a) and, if applicable, the written statement of the Trustee,
the Auction Agent and the Securities Depository described in the second
paragraph of this subsection (a), and (B) Sufficient Bids exist as of the
Auction on the Auction Date for such first Auction Period. If the condition
referred to in (A) above is not met, the Auction Rate Series 1997-1 Note
Interest Rate for the next Auction Period shall be determined pursuant to the
provisions of Sections 4 through 9 hereof and the Auction Period shall be the
Auction Period determined without reference to the proposed change. If the
condition referred to in (A) is met but the condition referred to in (B) above
is not met, the Auction Rate Series 1997-1 Note Interest Rate for the next
Auction Period shall be (1) in the case of the Tax Exempt Auction Rate Series
1997-1 Notes, the Maximum Auction Rate, or (2) in the case of the Taxable
Auction Rate Series 1997-1 Notes, the lesser of the Maximum Auction Rate and the
Net Loan Rate, and in either case the Auction Period shall be the Auction Period
determined without reference to the proposed change.
In connection with any Auction Period Adjustment, the Auction Agent
shall provide such further notice to such parties as is specified in Section 2.5
of the Auction Agent Agreement.
(b) The Market Agent may adjust the percentage used in determining the
All Hold Rate, the Applicable Percentage used in determining the Maximum Auction
Rate and the percentage of the Index used in determining the Non-Payment Rate,
if any such adjustment is necessary, in the judgment of the Market Agent, to
reflect any Change of Tax Law such that a Tax Exempt Auction Rate Series 1997-1
Note bearing interest at the All Hold Rate, a Tax Exempt Auction Rate Series
1997-1 Note bearing interest at the Maximum Auction Rate and a Tax Exempt
Auction Rate Series 1997-1 Note bearing interest at the Non-Payment Rate shall
have substantially the same market values after such Change of Tax Law as before
such Change of Tax Law. In making any such adjustment, the Market Agent shall
take the following factors in existence both before and after such Change of Tax
Law into account:
(i) short-term taxable and tax exempt market rates and indices of
such short-term rates;
(ii) the market supply and demand for short-term tax exempt
securities;
(iii) yield curves for short-term and long-term tax exempt securities
or obligations having a credit rating that is comparable to the Tax Exempt
Auction Rate Series 1997-1 Notes;
(iv) general economic conditions; and
-46-
(v) economic and financial factors present in the securities industry
that may affect or that may be relevant to the Tax Exempt Auction Rate
Series 1997-1 Notes.
The Market Agent shall communicate its determination to adjust the
percentage used in determining the All Hold Rate, the Applicable Percentage used
in determining the Maximum Auction Rate and the percentage of the Index used in
determining the Non-Payment Rate pursuant to the first paragraph of this
subsection (b) by means of a written notice delivered at least ten (10) days
prior to the Interest Rate Determination Date on which the Market Agent desires
to effect the change, to the Corporation, the Trustee and the Auction Agent in
substantially the form attached hereto as, or containing substantially the
information contained in, Exhibit I to this First Supplemental Indenture. Such
notice shall not be given unless the Market Agent has received a Corporation
Consent thereto and a written opinion of Bond Counsel to the effect that such
adjustment will not adversely affect the exclusion of interest on any of the
Series 1997-1 Notes from income for federal income tax purposes.
Any such adjustment in the percentages used to determine the All Hold
Rate, the Maximum Auction Rate and the Non-Payment Rate shall take effect on an
Interest Rate Determination Date only if (A) the Trustee, the Auction Agent and
the Corporation receive, by 11:00 a.m., New York City time, on the Business Day
immediately preceding such Interest Rate Determination Date, a certificate of an
authorized officer of the Market Agent in substantially the form attached hereto
as, or containing substantially the information contained in, Exhibit J to this
First Supplemental Indenture, authorizing the adjustment of such percentage as
specified in such certificate, together with a copy of the Corporation Consent
thereto and the opinion of Bond Counsel described in the second paragraph of
this subsection (b); and (B) the Trustee and the Corporation have received
written confirmation from each of the Rating Agencies then rating the Series
1997-1 Notes that such proposed adjustment will not adversely affect its ratings
then applicable to any of the Series 1997-1 Notes. If any of the conditions
referred to in (A) and (B) above are not met, the existing percentage used to
determine the All Hold Rate, Applicable Percentage used to determine the Maximum
Auction Rate and percentage of the Index used to determine the Non-Payment Rate
shall remain in effect, and the rate of interest on Tax Exempt Auction Rate
Series 1997-1 Notes for the next succeeding Interest Period shall be determined
in accordance with the Auction Procedures.
In connection with any such adjustment in the percentages used to
determine the All Hold Rate, the Maximum Auction Rate and the Non-Payment Rate,
the Auction Agent shall provide such further notice to such parties as is
specified in Section 2.5 of the Auction Agent Agreement.
SECTION 11. CHANGES IN THE AUCTION DATE. The Market Agent, with the
---------------------------
written consent of an Authorized Officer of the Corporation and upon receipt of
the opinion of Bond Counsel as hereinafter required, may specify an earlier
Auction
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Date (but in no event more than five (5) Business Days earlier) than the Auction
Date that would otherwise be determined in accordance with the definition of
"Auction Date" in Section 1 of this First Supplemental Indenture with respect to
one or more specified Auction Periods in order to conform with then current
market practice with respect to similar securities or to accommodate economic
and financial factors that may affect or be relevant to the day of the week
constituting an Auction Date and the Auction Rate Series 1997-1 Note Interest
Rate borne by the Auction Rate Series 1997-1 Notes. No such change in the
Auction Date shall be effective unless the Corporation and the Trustee, prior to
the proposed effective date of such change, have received a written opinion of
Bond Counsel to the effect that such change will not adversely affect the
exclusion of interest on any of the Series 1997-1 Notes from income for federal
income tax purposes. The Market Agent shall deliver a written request for
consent to such change in the Auction Date to the Corporation not less than
three days nor more than twenty (20) days prior to the effective date of such
change. The Market Agent shall provide notice of its determination to specify an
earlier Auction Date for one or more Auction Periods by means of a written
notice delivered at least ten (10) days prior to the proposed changed Auction
Date to the Trustee, the Auction Agent, the Corporation and the Securities
Depository. Such notice shall be substantially in the form of, or contain
substantially the information contained in, Exhibit G to this First Supplemental
Indenture.
In connection with any change described in this Section 11, the
Auction Agent shall provide such further notice to such parties as is specified
in Section 2.5 of the Auction Agent Agreement.
SECTION 12. ADDITIONAL PROVISIONS REGARDING THE AUCTION RATE SERIES
-------------------------------------------------------
1997-1 NOTE INTEREST RATE. The determination of an Auction Rate Series 1997-1
-------------------------
Note Interest Rate by the Auction Agent or any other Person pursuant to the
provisions of the applicable Section of this First Supplemental Indenture shall
be conclusive and binding on the Holders of the series of Auction Rate Series
1997-1 Notes to which such Auction Rate Series 1997-1 Note Interest Rate
applies, and the Corporation and the Trustee may rely thereon for all purposes.
In no event shall the cumulative amount of interest paid or payable on
a series of Auction Rate Series 1997-1 Notes (including interest calculated as
provided herein, plus any other amounts that constitute interest on the Auction
Rate Series 1997-1 Notes of such series under applicable law, which are
contracted for, charged, reserved, taken or received pursuant to the Auction
Rate Series 1997-1 Notes of such series or related documents) calculated from
the date of issuance of such series through any subsequent day during the term
of such series or otherwise prior to payment in full of the Auction Rate Series
1997-1 Notes of such series exceed the amount permitted by applicable law. If
the applicable law is ever judicially interpreted so as to render usurious any
amount called for under the Auction Rate Series 1997-1 Notes of a series or
related documents or otherwise contracted for, charged, reserved, taken or
received in connection with the Auction
-48-
Rate Series 1997-1 Notes of such series, or if the redemption, prepayment or
acceleration of the maturity of the Auction Rate Series 1997-1 Notes of such
series results in payment to or receipt by the Holder or any former Holder of
the Auction Rate Series 1997-1 Notes of such series of any interest in excess of
that permitted by applicable law, then, notwithstanding any provision of the
Auction Rate Series 1997-1 Notes of such series or related documents to the
contrary, all excess amounts theretofore paid or received with respect to the
Auction Rate Series 1997-1 Notes of such series shall be credited on the
Principal Amount of the Auction Rate Series 1997-1 Notes of such series (or, if
the Auction Rate Series 1997-1 Notes of such series have been paid or would
thereby be paid in full, refunded by the recipient thereof), and the provisions
of the Auction Rate Series 1997-1 Notes of such series and related documents
shall automatically and immediately be deemed reformed and the amounts
thereafter collectible hereunder and thereunder reduced, without the necessity
of the execution of any new document, so as to comply with the applicable law,
but so as to permit the recovery of the fullest amount otherwise called for
under the Auction Rate Series 1997-1 Notes of such series and under the related
documents.
SECTION 13. QUALIFICATIONS OF MARKET AGENT. The Market Agent shall
------------------------------
be a member of the National Association of Securities Dealers, Inc., have a
capitalization of at least $50,000,000 and be authorized by law to perform all
the duties imposed upon it by this First Supplemental Indenture. The Market
Agent may resign and be discharged of the duties and obligations created by this
First Supplemental Indenture by giving at least thirty (30) days notice to the
Corporation and the Trustee, provided that such resignation shall not be
effective until the appointment of a successor market agent by the Corporation
and the acceptance of such appointment by such successor market agent. The
Market Agent may be replaced at the direction of the Corporation, by an
instrument signed by an Authorized Officer of the Corporation filed with the
Market Agent and the Trustee at least thirty (30) days before the effective date
of such replacement, provided that such replacement shall not be effective until
the appointment of a successor market agent by the Corporation and the
acceptance of such appointment by such successor market agent.
In the event that the Market Agent shall be removed or be dissolved,
or if the property or affairs of the Market Agent shall be taken under the
control of any state or federal court or administrative body because of
bankruptcy or insolvency, or for any other reason, and there is no Market Agent,
and the Corporation shall not have appointed its successor as Market Agent, the
Trustee, notwithstanding the provisions of the first paragraph of this Section
13, shall be deemed to be the Market Agent for all purposes of this First
Supplemental Indenture until the appointment by the Corporation of the successor
Market Agent. Nothing in this Section 13 shall be construed as conferring on
the Trustee additional duties other than as set forth herein.
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SECTION 14. PURPOSES OF ISSUANCE OF SERIES 1997-1 NOTES. The Series
-------------------------------------------
1997-1 Notes are being issued to provide funds to be used to (a) refund the
Refunded Obligations and, in so doing, acquire student loan notes incurred under
the Higher Education Act financed with the proceeds thereof, as well as other
available moneys under the applicable indentures, which will be applied to the
purposes described in the following clauses (b) and (c), (b) acquire additional
student loan notes incurred under the Higher Education Act, and (c) fund the
Reserve Fund.
SECTION 15. DEPOSIT OF SERIES 1997-1 NOTE PROCEEDS. From the
--------------------------------------
proceeds derived from the sale of the Series 1997-1 Notes, including the accrued
interest paid as part of the purchase price thereof, there shall be deposited
with the Trustee:
(1) for credit to the Series 1997-1 Interest Subaccount, an amount
equal to any accrued interest on the Series 1997-1 Notes paid as part of
the purchase price thereof;
(2) for credit to the Series 1997-1 Tax Exempt Reserve Account, an
amount from the proceeds of the Tax Exempt Series 1997-1 Notes equal to
$____________________, from which sum (A) $____________________ shall be
immediately transferred to the Series 1979 Trustee contemporaneously with
receipt by the Trustee from the Series 1979 Trustee of a like amount of
cash transferred from the reserve fund under the Series 1979 Indenture for
credit to the Series 1997-1 Tax Exempt Reserve Account, (B)
$____________________ shall be immediately transferred to the Series 1989
Trustee contemporaneously with receipt by the Trustee from the Series 1989
Trustee of a like amount of cash transferred from the reserve fund under
the Series 1989 Indenture for credit to the Series 1997-1 Tax Exempt
Reserve Account, and (C) $____________________ shall be immediately
transferred to the Series 1994 Trustee contemporaneously with receipt by
the Trustee from the Series 1994 Trustee of a like amount of cash
(consisting of proceeds of the Series 1996-1 Notes) transferred from the
reserve fund under the Series 1994 Indenture for credit to the Series 1997-
1 Tax Exempt Reserve Account;
(3) for credit to the Series 1997-1 Taxable Reserve Account, an
amount from the proceeds of the Taxable Series 1997-1 Notes equal to
$____________________;
(4) an amount from the proceeds of the Tax Exempt Series 1997-1 Notes
equal to $____________________, from which sum (A) $____________________
shall be immediately transferred to the Series 1979 Trustee
contemporaneously with receipt by the Trustee from the Series 1979 Trustee
of a like amount of cash transferred from the surplus fund [and the
acquisition fund] under the Series ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ for credit to the Series
1997-1 Tax Exempt Acquisition Account, (B) $____________________ shall be
immediately transferred to the Series 1989 Trustee contemporaneously with
receipt by the Trustee from the Series 1989 Trustee of a like amount of
cash transferred from the surplus fund under the Series 1989 Indenture for
credit to the Series 1997-1 Tax Exempt Acquisition
-50-
Account, and (C) $____________________ shall be immediately transferred to
the Series 1994 Trustee contemporaneously with receipt by the Trustee from
the Series 1994 Trustee of a like amount of cash (consisting of proceeds of
the Series 1996-1 Notes) transferred from the acquisition fund under the
Series 1994 Indenture for credit to the Series 1997-1 Tax Exempt
Acquisition Account, all of such amounts to remain in such Account until
applied for the acquisition or origination of Eligible Loans, including the
acquisition of Eligible Loans pursuant to the Student Loan Purchase
Agreements identified in Exhibit H-4 hereto (as such Exhibit H-4 may be
amended or supplemented from time to time);
(5) for credit to the Series 1997-1 Tax Exempt Acquisition Account,
the remainder of the proceeds of the Tax Exempt Series 1997-1 Notes, to
remain in such Account until applied for (A) the acquisition of Eligible
Loans from:
(i) the Series 1979 Trustee, which Eligible Loans were
previously acquired by the Corporation, or by the Series 1979 Trustee
on behalf of the Corporation, pursuant to the Student Loan Purchase
Agreements identified in Exhibit H-1 hereto;
(ii) the Series 1989 Trustee, which Eligible Loans were
previously acquired by the Corporation, or by the Series 1989 Trustee
on behalf of the Corporation, pursuant to the Student Loan Purchase
Agreements identified in Exhibit H-2 hereto; and
(iii) the Series 1994 Trustee, which Eligible Loans were
previously acquired by the Corporation, or by the Series 1994 Trustee
on behalf of the Corporation, pursuant to the Student Loan Purchase
Agreements identified in Exhibit H-3 hereto with proceeds of the
Series 1996-1 Notes; or
(B) the acquisition or origination of other Eligible Loans, including the
acquisition of Eligible Loans pursuant to the Student Loan Purchase
Agreements identified in Exhibit H-4 hereto (as such Exhibit H-4 may be
amended or supplemented from time to time); and
(6) for credit to the Series 1997-1 Taxable Acquisition Account, the
remainder of the proceeds of the Taxable Series 1997-1 Notes, to remain in
such Account until applied for (A) the acquisition of Eligible Loans from
the Series 1994 Trustee, which Eligible Loans were previously acquired by
the Corporation, or by the Series 1994 Trustee on behalf of the
Corporation, pursuant to the Student Loan Purchase Agreements identified in
Exhibit H-5 hereto with proceeds of the Series 1994-1 Notes, the Series
1995-1 Notes and the Series 1995-2 Notes, or (B) the acquisition or
origination of other Eligible Loans, including the acquisition of Eligible
Loans pursuant to the Student
-51-
Loan Purchase Agreements identified in Exhibit H-6 hereto (as such Exhibit
H-6 may be amended or supplemented from time to time).
All amounts deposited in the Series 1997-1 Tax Exempt Reserve Account, the
Series 1997-1 Taxable Reserve Account and the Series 1997-1 Tax Exempt
Acquisition Account pursuant to clauses (2), (3) and (4) above shall be deemed
to be proceeds of the Series 1997-1 Notes for purposes of this First
Supplemental Indenture. With respect to the Eligible Loans Financed as
described in clauses (5)(A) and (6)(A), there shall be credited to the Revenue
Fund any federal interest subsidy payments and Special Allowance Payments that
accrued on such Eligible Loans prior to the date on which they were Financed.
SECTION 16. REDEMPTION AND PREPAYMENT OF SERIES 1997-1 NOTES. The
------------------------------------------------
Series 1997-1 Notes are subject to redemption and prepayment as provided in this
Section 16.
(A) Redemption From Unexpended Tax Exempt Series 1997-1 Note
--------------------------------------------------------
Proceeds. Subject to compliance with Section 10.2 of the Indenture, Outstanding
Tax Exempt Auction Rate Series 1997-1 Notes of any series or (to the extent no
Tax Exempt Auction Rate Series 1997-1 Notes are Outstanding) Series 1997-F Notes
or Series 1997-K Notes may, at the option of the Corporation, and, under the
circumstances described in the next succeeding sentence, shall be redeemed, in
whole or in part, on any Interest Rate Adjustment Date for such series or any
regularly scheduled Interest Payment Date (in the case of a series of Tax Exempt
Auction Rate Series 1997-1 Notes) or on any date (in the case of Series 1997-1F
Notes or Series 1997-1K Notes), at a Redemption Price equal to 100% of the
Principal Amount of Tax Exempt Series 1997-1 Notes so redeemed plus accrued
interest thereon to the Redemption Date, from proceeds of the Tax Exempt Series
1997-1 Notes constituting a portion of the Balance of the Series 1997-1 Tax
Exempt Acquisition Account that have not been used to acquire Eligible Loans and
from that portion of the Series 1997-1 Tax Exempt Reserve Account which, if left
in the Reserve Fund upon such redemption, would cause the Balance in the Reserve
Fund to exceed the Reserve Fund Requirement, calculated after giving effect to
such redemption. Such redemption shall be required on June 1, 2001 (to the
extent the proceeds in the Series 1997-1 Tax Exempt Acquisition Account not so
used as of April 15, 2001, exceed $________________) and on June 1, 2002 (from
such proceeds not so used as of April 15, 2002), in each case unless the
Corporation delivers to the Trustee: (i) an opinion of Bond Counsel stating in
effect that such redemption is not required pursuant to the Code and that
failure to so redeem Tax Exempt Series 1997-1 Notes will not adversely affect
the tax exempt status of interest on any Tax Exempt Series 1997-1 Notes for
federal income tax purposes, (ii) a Corporation Certificate certifying that,
based on a Cash Flow Projection, the failure to redeem such Tax Exempt Series
1997-1 Notes will not materially adversely affect the Corporation's ability to
pay Debt Service on the Outstanding Notes and the Outstanding Other Obligations,
Carry-Over Amounts (including accrued interest thereon) with respect to
Outstanding Notes, Administrative Expenses or Note Fees or to make required
-52-
deposits to the Rebate Fund, and (iii) written confirmation from each of the
Rating Agencies then rating the Series 1997-1 Notes to the effect that the
failure to redeem such Tax Exempt Series 1997-1 Notes will not result in a
reduction or withdrawal of the rating of the Series 1997-1 Notes. The Trustee
shall transfer any such moneys to the credit of the Series 1997-1 Tax Exempt
Retirement Subaccount for such purpose without any further authorization or
direction.
(B) Redemption From Unexpended Taxable Series 1997-1 Note Proceeds.
--------------------------------------------------------------
Subject to compliance with Section 10.2 of the Indenture, Outstanding Taxable
Auction Rate Series 1997-1 Notes of any series may, at the option of the
Corporation, and, under the circumstances described in the next succeeding
sentence, shall be redeemed, in whole or in part, on any regularly scheduled
Interest Payment Date for such series, at a Redemption Price equal to 100% of
the Principal Amount of Taxable Auction Rate Series 1997-1 Notes so redeemed
plus accrued interest thereon to the Redemption Date, from proceeds of the
Taxable Series 1997-1 Notes constituting a portion of the Balance of the Series
1997-1 Taxable Acquisition Account that have not been used to acquire Eligible
Loans and from that portion of the Series 1997-1 Taxable Reserve Account which,
if left in the Reserve Fund upon such redemption, would cause the Balance in the
Reserve Fund to exceed the Reserve Fund Requirement, calculated after giving
effect to such redemption. Such redemption shall be required on the regularly
scheduled Interest Payment Date occuring in September, 1998 (from such proceeds
not so used as of August 1, 1998), unless the Corporation delivers to the
Trustee: (i) a Corporation Certificate certifying that, based on a Cash Flow
Projection, the failure to redeem such Taxable Auction Rate Series 1997-1 Notes
will not materially adversely affect the Corporation's ability to pay Debt
Service on the Outstanding Notes and the Outstanding Other Obligations, Carry-
Over Amounts (including accrued interest thereon) with respect to Outstanding
Notes, Administrative Expenses or Note Fees or to make required deposits to the
Rebate Fund, and (ii) written confirmation from each of the Rating Agencies then
rating the Series 1997-1 Notes to the effect that the failure to redeem such
Taxable Auction Rate Series 1997-1 Notes will not result in a reduction or
withdrawal of the rating of the Series 1997-1 Notes. The Trustee shall transfer
any such moneys to the credit of the Series 1997-1 Taxable Retirement Subaccount
for such purpose without any further authorization or direction.
(C) Redemption from Series 1997-1 Tax Exempt Surplus Subaccount.
-----------------------------------------------------------
Subject to compliance with Section 10.2 of the Indenture, Outstanding Tax Exempt
Auction Rate Series 1997-1 Notes of any series may, at the option of the
Corporation, be redeemed on any Interest Rate Adjustment Date for such series or
any regularly scheduled Interest Payment Date occurring on or after
____________________, in whole or in part, from amounts available therefor as
hereinafter described. Subject to compliance with Section 10.2 of the
Indenture, Outstanding Series 1997-1F Notes and Series 1997-1K Notes may, at the
option of the Corporation, be redeemed on ____________________, and on any date
thereafter, in whole or in part, from amounts available therefor as hereinafter
described. Any such redemption of Tax Exempt Auction Rate Series 1997-1 Notes,
Series 1997-1F Notes or Series 1997-1K Notes shall be at a
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Redemption Price equal to 100% of the Principal Amount thereof to be redeemed
plus accrued interest thereon to the Redemption Date, and shall be made from
amounts credited to the Series 1997-1 Tax Exempt Retirement Subaccount from the
Series 1997-1 Tax Exempt Surplus Subaccount for such purpose in accordance with
Section 4.8 of the Indenture and from that portion of the Series 1997-1 Tax
Exempt Reserve Account which exceeds the Reserve Fund Requirement (calculated
after giving effect to such redemption) in accordance with Section 4.4 of the
Indenture. If the Trustee shall have first certified that no deficiencies exist
in any of the Rebate Fund, the Note Fund, the Reserve Fund or the Special
Redemption and Prepayment Account, the Trustee shall, upon Corporation Order,
transfer to the Series 1997-1 Tax Exempt Retirement Account any Balances in the
Series 1997-1 Tax Exempt Surplus Subaccount (other than those consisting of
Student Loans) which a Corporation Certificate states are not reasonably
expected to be needed for the payment of scheduled Debt Service on the
Outstanding Notes and Outstanding Other Obligations, Carry-Over Amounts
(including accrued interest thereon) with respect to Outstanding Notes,
Administrative Expenses or Note Fees, or for transfer to the Rebate Fund.
(D) Redemption from Series 1997-1 Taxable Surplus Subaccount.
--------------------------------------------------------
Subject to compliance with Section 10.2 of the Indenture, Outstanding Taxable
Auction Rate Series 1997-1 Notes of any series may, at the option of the
Corporation, be redeemed on any Interest Rate Adjustment Date for such series or
any regularly scheduled Interest Payment Date for such series occurring on or
after ____________________, in whole or in part, from amounts available therefor
as hereinafter described. Any such redemption of Taxable Auction Rate Series
1997-1 Notes shall be at a Redemption Price equal to 100% of the Principal
Amount thereof to be redeemed plus accrued interest thereon to the Redemption
Date, and shall be made from amounts credited to the Series 1997-1 Taxable
Retirement Subaccount from the Series 1997-1 Taxable Surplus Subaccount for such
purpose in accordance with Section 4.8 of the Indenture and from that portion of
the Series 1997-1 Taxable Reserve Account which exceeds the Reserve Fund
Requirement (calculated after giving effect to such redemption) in accordance
with Section 4.4 of the Indenture. If the Trustee shall have first certified
that no deficiencies exist in any of the Rebate Fund, the Note Fund, the Reserve
Fund or the Special Redemption and Prepayment Account, the Trustee shall, upon
Corporation Order, transfer to the Series 1997-1 Taxable Retirement Account any
Balances in the Series 1997-1 Taxable Surplus Subaccount (other than those
consisting of Student Loans) which a Corporation Certificate states are not
reasonably expected to be needed for the payment of scheduled Debt Service on
the Outstanding Notes and Outstanding Other Obligations, Carry-Over Amounts
(including accrued interest thereon) with respect to Outstanding Notes,
Administrative Expenses or Note Fees, or for transfer to the Rebate Fund.
(E) Optional Redemption. Subject to compliance with Section 10.2 of
-------------------
the Indenture, Outstanding Auction Rate Series 1997-1 Notes of any series may,
at the option of the Corporation and from amounts credited to the Retirement
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Account for such purpose, be redeemed on any Interest Rate Adjustment Date for
such series or any regularly scheduled Interest Payment Date for such series, in
whole or in part, at a Redemption Price equal to 100% of the Principal Amount of
Auction Rate Series 1997-1 Notes to be so redeemed plus accrued interest thereon
to the Redemption Date. Subject to compliance with Section 10.2 of the
Indenture, Outstanding Series 1997-1F Notes and Series 1997-1K Notes may, at the
option of the Corporation and from amounts credited to the Retirement Account
for such purpose, be redeemed on ____________________, and on any date
thereafter, in whole or in part, at the Redemption Prices (expressed as a
percentage of Principal Amount) set forth below plus accrued interest to the
Redemption Date:
Redemption
Redemption Period Price
----------------- -----
December 1, 2007, through November 30, 2008 102%
December 1, 2008, through November 30, 2009 101%
December 1, 209, and thereafter 100%
Notwithstanding the foregoing, no Series 1997-1 Notes shall be
redeemed pursuant to this subsection (E) unless the Trustee receives, at least
forty-five (45) days prior to the proposed Redemption Date (unless a shorter
notice is satisfactory to the Trustee), a Corporation Certificate certifying
that, based on a Cash Flow Projection, such redemption of such Series 1997-1
Notes will not materially adversely affect the Corporation's ability to pay Debt
Service on the Outstanding Notes and Outstanding Other Obligations, Carry-Over
Amounts (including accrued interest thereon) with respect to Outstanding Notes,
Administrative Expenses or Note Fees or to make required deposits to the Rebate
Fund.
(F) Prepayment of Taxable LIBOR Rate Series 1997-1 Notes. Subject to
----------------------------------------------------
compliance with Section 10.2 of the Indenture, Outstanding LIBOR Rate Series
1997-1 Notes shall receive prepayments of principal on any Interest Payment Date
from moneys credited to the Series 1997-1 Taxable Special Redemption and
Prepayment Subaccount as hereinafter described.
On each Special Prepayment Determination Date, the Corporation shall
determine to what extent the Balance in the Series 1997-1 Taxable Special
Redemption and Prepayment Subaccount exceeds the amount reasonably expected to
otherwise be required to be transferred to the Note Fund, the Rebate Fund or the
Reserve Fund prior to the next succeeding regularly scheduled Interest Payment
Date (the "Special Prepayment Excess"). If the Corporation determines that
there is any Special Prepayment Excess, it shall, within two (2) Business Days
after the Special Prepayment Determination Date, deliver to the Trustee a
Corporation Certificate to that effect, and the Trustee shall, provided no
deficiencies exist at the time in the Note Fund, the Rebate Fund or the Reserve
Fund, immediately and without further authorization or direction transfer to the
credit of the Series 1997-1 Taxable Retirement Subaccount that portion of the
Balance of the Series 1997-1
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Taxable Special Redemption and Prepayment Subaccount equal to the Special
Prepayment Excess so certified.
All prepayments of principal in accordance with this subsection (F)
shall, subject to Section 10.2 of the Indenture, be allocated between the LIBOR
Rate Series 1997-1 Senior Notes and the Series 1997-1L Notes pro rata based upon
their respective aggregate Principal Amounts. All such prepayments of principal
allocated to the LIBOR Rate Series 1997-1 Senior Notes shall be applied to the
Series 1997-1I Notes so long as any such Notes remain Outstanding, and
thereafter to the Series 1997-1J Notes. All such prepayments of principal
applied to a given series of LIBOR Rate Series 1997-1 Notes shall be allocated
pro rata, based upon their respective Principal Amounts, to the reduction of the
Principal Amount of all Notes of such series.
(G) Redemption Upon Reduction of Student Loan Balance. Subject to
-------------------------------------------------
compliance with Section 10.2 of the Indenture, the Outstanding Series 1997-1
Notes may, at the option of the Corporation, be redeemed, in whole but not in
part, at a Redemption Price equal to 100% of the Principal Amount of Series
1997-1 Notes to be so redeemed plus accrued interest thereon to the Redemption
Date, on any date after the remaining aggregate Principal Balance of Student
Loans Financed with proceeds of the Series 1997-1 Notes is less than 10% of the
aggregate amount of proceeds described in subsections (4), (5) and (6) of
Section 15 hereof.
(H) Selection of Series 1997-1 Notes for Redemption. If less than
-----------------------------------------------
all Outstanding Series 1997-1 Notes subject to redemption are to be redeemed
pursuant to subsections (C) or (E) of this Section 16, the Principal Amounts of
each series of Series 1997-1 Notes to be redeemed shall be selected as follows:
to the extent that the provisions of Section 10.2 of the Indenture will not be
violated thereby, either (i) to the extent Series 1997-1 Subordinate Notes are
subject to such redemption, that Principal Amount thereof shall be redeemed
which bears, as nearly as practicable, the same (but no greater) proportion to
the aggregate Principal Amount of all Outstanding Series 1997-1 Notes to be
redeemed as the aggregate Principal Amount of Outstanding Series 1997-1
Subordinate Notes bears to the aggregate Principal Amount of all Outstanding
Series 1997-1 Notes or (ii) if the Trustee receives, at least forty-five (45)
days prior to the Redemption Date (unless a shorter notice is satisfactory to
the Trustee), a Corporation Certificate certifying that, based on a Cash Flow
Projection, a different proportion of Series 1997-1 Subordinate Notes to be
redeemed will not materially adversely affect the Corporation's ability to pay
Debt Service on the Outstanding Notes and on Outstanding Other Obligations,
Carry-Over Amounts (including accrued interest thereon) with respect to
Outstanding Notes, Administrative Expenses or Note Fees or to make required
deposits to the Rebate Fund, Series 1997-1 Subordinate Notes shall be redeemed
in such Principal Amount as is designated by the Corporation in such
certificate. The remaining Series 1997-1 Notes to be redeemed pursuant to
subsections (C) or (E) of this Section 16 shall be selected from the Series
1997-1 Senior Notes subject to such redemption,
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and, if more than one series of Series 1997-1 Senior Notes is so subject, from
each such series in the manner described in the following paragraph.
If less than all Outstanding Series 1997-1 Senior Notes subject to
redemption are to be redeemed pursuant to subsections (A), (C) or (E) of this
Section 16, and more than one series of Series 1997-1 Senior Notes is so
subject, the Principal Amounts of each series of Series 1997-1 Notes to be
redeemed shall be selected from each such series in such Principal Amounts as
the Corporation may designate in a Corporation Certificate delivered to the
Trustee at least forty-five (45) days prior to the Redemption Date (unless a
shorter notice is satisfactory to the Trustee), or, in the absence of such
designation, from each such series in, as nearly as practicable, the same
proportion to the aggregate Principal Amount of all Outstanding Series 1997-1
Senior Notes to be redeemed as the aggregate Principal Amount of Outstanding
Series 1997-1 Senior Notes of such series bears to the aggregate Principal
Amount of all Outstanding Series 1997-1 Senior Notes subject to such redemption.
Notwithstanding the foregoing provisions of this Section 16, to the
extent Series 1997-1 Subordinate Notes cannot be redeemed due to the application
of Section 10.2 of the Indenture, but Series 1997-1 Senior Notes may be redeemed
without violating the provisions of said Section 10.2, the particular Series
1997-1 Notes to be redeemed shall be selected from the Series 1997-1 Senior
Notes as described above.
If less than all of the Outstanding Series 1997-1 Notes of a given
series are to be redeemed pursuant to this Section 16, the particular Series
1997-1 Notes to be redeemed shall be selected by the Trustee by lot in such
manner as the Trustee shall deem fair and appropriate and which may provide for
the selection for redemption of portions of the principal of Series 1997-1 Notes
in an Authorized Denomination.
The Trustee shall promptly notify the Note Registrar and any Paying
Agent for the Series 1997-1 Notes (in each case, if other than the Trustee) in
writing of the Series 1997-1 Notes selected for redemption and, in the case of
any Series 1997-1 Note selected for partial redemption, the Principal Amount
thereof to be redeemed.
For all purposes of the Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Series 1997-1 Notes shall
relate, in the case of any Series 1997-1 Note redeemed or to be redeemed only in
part, to the portion of the principal of such Series 1997-1 Note which has been
or is to be redeemed.
(I) Notice of Redemption. Notice of redemption of Series 1997-1
--------------------
Notes pursuant to this Section 16 shall be given not less than fifteen (15) days
(in the case of Auction Rate Series 1997-1 Notes) or thirty (30) days (in the
case of LIBOR Rate Series 1997-1 Notes, Series 1997-1F Notes and Series 1997-1K
Notes), as the case may
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be, prior to the Redemption Date in accordance with the provisions of Section
10.4 of the Indenture.
SECTION 17. BOOK-ENTRY SERIES 1997-1 NOTES. (a) Subject to
------------------------------
subsection (c) below, the registered Holder of all Series 1997-1 Notes shall be
the Securities Depository and the Series 1997-1 Notes shall be registered in the
name of the nominee for the Securities Depository. The "Series 1997-1 Notes"
referred to in this subsection (a) shall refer to the Series 1997-1 Notes
registered in the name of the Securities Depository.
(b) The Series 1997-1 Notes shall be initially issued in the form of
one or more separate, authenticated fully-registered Series 1997-1 Notes for
each series thereof in the aggregate Principal Amount of such series. Upon
initial issuance, the ownership of each such Series 1997-1 Note shall be
registered in the registration books kept by the Note Registrar in the name of
the nominee of the Securities Depository. The Trustee and the Corporation may
treat the Securities Depository (or its nominee) as the sole and exclusive owner
of the Series 1997-1 Notes registered in its name for the purposes of (1)
payment of the principal or Redemption Price of and interest on the Series 1997-
1 Notes, (2) selecting the Series 1997-1 Notes or portions thereof to be
redeemed, (3) giving any notice permitted or required to be given to Holders
under the Indenture, (4) registering the transfer of Series 1997-1 Notes, and
(5) obtaining any consent or other action to be taken by Holders and for all
other purposes whatsoever, and neither the Trustee nor the Corporation shall be
affected by any notice to the contrary (except as provided in subsection (c)
below). Neither the Trustee nor the Corporation shall have any responsibility
or obligation to any Participant, any Beneficial Owner or any other Person
claiming a beneficial ownership interest in the Series 1997-1 Notes under or
through the Securities Depository or any Participant, or any other Person which
is not shown on the registration books of the Note Registrar as being a Holder,
with respect to the accuracy of any records maintained by the Securities
Depository or any Participant, the payment to the Securities Depository of any
amount in respect of the principal or Redemption Price of or interest on the
Series 1997-1 Notes; any notice which is permitted or required to be given to
Holders under the Indenture; the selection by the Securities Depository or any
Participant of any Person to receive payment in the event of a partial
redemption of the Series 1997-1 Notes; or any consent given or other action
taken by the Securities Depository as Holder. The Trustee shall pay all
principal and Redemption Price of and interest on the Series 1997-1 Notes only
"to or upon the order of" the Securities Depository (as that phrase is used in
the Uniform Commercial Code as adopted in the State of South Dakota), and all
such payments shall be valid and effective to fully satisfy and discharge the
Corporation's obligations with respect to the principal, purchase price or
Redemption Price of and interest on the Series 1997-1 Notes to the extent of the
sum or sums so paid. Except as provided in subsection (c) below, no Person
other than the Securities Depository shall receive an authenticated Series 1997-
1 Note evidencing the obligation of the Corporation to make payments of
principal or Redemption Price and interest pursuant to this Indenture. Upon
delivery by the Securities Depository to the
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Trustee of written notice to the effect that the Securities Depository has
determined to substitute a new nominee in place of the preceding nominee, the
Series 1997-1 Notes will be transferable to such new nominee in accordance with
subsection (f) below.
(c) Except with respect to any Auction Rate Series 1997-1 Notes
during such time as they bear interest at the Auction Rate, in the event the
Corporation determines that it is in the best interest of the Corporation not to
continue the Book-Entry System of transfer or that the interest of the Holders
might be adversely affected if the Book-Entry System of transfer is continued,
the Corporation may so notify the Securities Depository and the Trustee,
whereupon the Securities Depository will notify the Participants of the
availability through the Securities Depository of definitive Series 1997-1
Notes. In such event, the Trustee shall authenticate, transfer and exchange
definitive Series 1997-1 Notes as requested by the Securities Depository in
appropriate amounts in accordance with subsection (f) below. The Securities
Depository may determine to discontinue providing its services with respect to
the Series 1997-1 Notes at any time by giving notice to the Corporation and the
Trustee and discharging its responsibilities with respect thereto under
applicable law, or the Corporation may determine that the Securities Depository
is incapable of discharging its responsibilities and may so advise the
Securities Depository. In either such event, the Corporation shall either
establish its own Book-Entry System or use reasonable efforts to locate another
securities depository. Under such circumstances (if there is no successor
Securities Depository), the Corporation and the Trustee shall be obligated to
deliver definitive Series 1997-1 Notes as described in this Indenture and in
accordance with subsection (f) below. In the event definitive Series 1997-1
Notes are issued, the provisions of this Indenture shall apply to such
definitive Series 1997-1 Notes in all respects, including, among other things,
the transfer and exchange of such Series 1997-1 Notes and the method of payment
of principal or Redemption Price of and interest on such Series 1997-1 Notes.
Whenever the Securities Depository requests the Corporation and the Trustee to
do so, the Trustee and the Corporation will cooperate with the Securities
Depository in taking appropriate action after reasonable notice (A) to make
available one or more separate definitive Series 1997-1 Notes to any Participant
having Series 1997-1 Notes credited to its account with the Securities
Depository or (B) to arrange for another securities depository to maintain
custody of definitive Series 1997-1 Notes.
(d) Notwithstanding any other provision of the Indenture to the
contrary, so long as any Series 1997-1 Note is registered in the name of the
nominee of the Securities Depository, all payments with respect to the principal
or Redemption Price of and interest on such Series 1997-1 Note and all notices
with respect to such Series 1997-1 Note shall be made and given, respectively,
to the Securities Depository as provided in its letter of representations.
(e) In connection with any notice or other communication to be
provided to Holders pursuant to the Indenture by the Corporation or the Trustee
or
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with respect to any consent or other action to be taken by Holders, the
Corporation or the Trustee, as the case may be, shall establish a record date
for such consent or other action and give the Securities Depository notice of
such record date not less than fifteen (15) calendar days in advance of such
record date to the extent possible. Such notice to the Securities Depository
shall be given only when the Securities Depository is the sole Holder.
(f) In the event that any transfer or exchange of Series 1997-1 Notes
is permitted under subsection (b) or (c) of this Section 17, such transfer or
exchange shall be accomplished upon receipt by the Trustee from the registered
Holder thereof of the Series 1997-1 Notes to be transferred or exchanged and
appropriate instruments of transfer to the permitted transferee, all in
accordance with the applicable provisions of the Indenture. In the event
definitive Series 1997-1 Notes are issued to Holders other than the nominee of
the Securities Depository, or another securities depository as Holder of all the
Series 1997-1 Notes, the provisions of the Indenture shall also apply to, among
other things, the printing of such definitive Series 1997-1 Notes and the
methods of payment of principal or Redemption Price of and interest on such
Series 1997-1 Notes.
(g) Notwithstanding any provision of Article Ten of the Indenture to
the contrary, in connection with any redemption of Series 1997-1 Notes while The
Depository Trust Company, New York, New York ("DTC"), is the sole Holder, the
Corporation shall give notice of such redemption to the Trustee at least thirty
(30) days prior to the date fixed for redemption with respect to Auction Rate
Series 1997-1 Notes or LIBOR Rate Series 1997-1 Notes or at least forty-five
(45) days prior to the date fixed for redemption with respect to Series 1997-1F
Notes or Series 1997-1K Notes, and the Trustee shall give notice of redemption
to DTC as Holder of such Series 1997-1 Notes pursuant to Section 10.4 of the
Indenture at least fifteen (15) days and not more than thirty (30) days prior to
the date fixed for redemption of Auction Rate Series 1997-1 Notes or LIBOR Rate
Series 1997-1 Notes or at least thirty (30) days and not more than sixty (60)
days prior to the date fixed for redemption of Series 1997-1F Notes or Series
1997-1K Notes.
SECTION 18. SERIES 1997-1 ACCOUNTS AND SUBACCOUNTS. So long as any
--------------------------------------
Series 1997-1 Notes are Outstanding, the following Accounts and Subaccounts (the
"Series 1997-1 Accounts" and "Series 1997-1 Subaccounts," respectively), which
are hereby established, shall be maintained by the Trustee or the Deposit Agent,
as the case may be:
(A) With respect to the Tax Exempt Series 1997-1 Notes and the
proceeds thereof, in the Acquisition Fund, an Account to be known as the
"Series 1997-1 Tax Exempt Acquisition Account"; in the Administration Fund,
an Account to be known as the "Series 1997-1 Tax Exempt Administration
Account"; in the Reserve Fund, an Account to be known as the "Series 1997-1
Tax Exempt Reserve Account"; in the Rebate Account, a Subaccount to be
known as the "Series 1997-1 Rebate Subaccount"; in the
-60-
Excess Earnings Account, a Subaccount to be known as the "Series 1997-1
Excess Earnings Subaccount"; in the Interest Account, a Subaccount to be
known as the "Series 1997-1 Tax Exempt Interest Subaccount"; in the
Principal Account, a Subaccount to be known as the "Series 1997-1 Tax
Exempt Principal Subaccount"; in the Retirement Account, a Subaccount to be
known as the "Series 1997-1 Tax Exempt Retirement Subaccount"; and in the
Surplus Account, a Subaccount to be known as the "Series 1997-1 Tax Exempt
Surplus Subaccount" (each a "Series 1997-1 Tax Exempt Account" or a "Series
1997-1 Tax Exempt Subaccount," as appropriate).
All amounts transferred to the Acquisition Fund, the Administration
Fund, the Reserve Fund, the Rebate Account, the Excess Earnings Account,
the Interest Account, the Principal Account, the Retirement Account and the
Surplus Account from any other Fund or Account pursuant to the requirements
of the Indenture with respect to the Tax Exempt Series 1997-1 Notes or the
Student Loans Financed with the proceeds thereof shall be deposited to the
credit of the Series 1997-1 Tax Exempt Acquisition Account, the Series 1991
Tax Exempt Administration Account, the Series 1997-1 Tax Exempt Reserve
Account, the Series 1997-1 Rebate Subaccount, the Series 1997-1 Excess
Earnings Subaccount, the Series 1997-1 Tax Exempt Interest Subaccount, the
Series 1997-1 Tax Exempt Principal Subaccount, the Series 1997-1 Tax Exempt
Retirement Subaccount or the Series 1997-1 Tax Exempt Surplus Subaccount,
respectively, and as appropriate.
(B) With respect to the Taxable Series 1997-1 Notes and the proceeds
thereof, in the Acquisition Fund, an Account to be known as the "Series
1997-1 Taxable Acquisition Account"; in the Administration Fund, an Account
to be known as the "Series 1997-1 Taxable Administration Account"; in the
Reserve Fund, an Account to be known as the "Series 1997-1 Taxable Reserve
Account"; in the Interest Account, a Subaccount to be known as the "Series
1997-1 Taxable Interest Subaccount"; in the Principal Account, a Subaccount
to be known as the "Series 1997-1 Taxable Principal Subaccount"; in the
Retirement Account, a Subaccount to be known as the "Series 1997-1 Taxable
Retirement Subaccount"; in the Special Redemption and Prepayment Account, a
Subaccount to be known as the "Series 1997-1 Taxable Special Redemption and
Prepayment Subaccount"; and in the Surplus Account, a Subaccount to be
known as the "Series 1997-1 Taxable Surplus Subaccount."
All amounts transferred to the Acquisition Fund, the Administration
Fund, the Reserve Fund, the Interest Account, the Principal Account, the
Retirement Account and the Surplus Account from any other Fund or Account
pursuant to the requirements of the Indenture with respect to the Taxable
Series 1997-1 Notes or the Student Loans Financed with the proceeds thereof
shall be deposited to the credit of the Series 1997-1 Taxable Acquisition
Account, the Series 1997-1 Taxable Administration Account, the Series 1997-
1 Taxable Reserve Account, the Series 1997-1 Taxable Interest Subaccount,
the
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Series 1997-1 Taxable Principal Subaccount, the Series 1997-1 Taxable
Retirement Subaccount, the Series 1997-1 Taxable Special Redemption and
Prepayment Subaccount or the Series 1997-1 Taxable Surplus Subaccount,
respectively, and as appropriate.
Notwithstanding any other provision of the Indenture or this First
Supplemental Indenture to the contrary, in no event shall (i) any portion of the
Balances in the Administration Fund or the Surplus Fund (including, without
limitation, the Series 1997-1 Tax Exempt Administration Account and the Series
1997-1 Tax Exempt Surplus Subaccount) be paid out for, or applied to the
reimbursement of, Costs of Issuance, Note Fees, Administrative Expenses or other
uses otherwise permitted under the Indenture if, and to the extent, as a result
of such payment, reimbursement or use, less than 90% of the net proceeds of the
Tax Exempt Series 1997-1 Notes will, at the time of such payment, have been used
directly or indirectly to make or finance student loans described in Section
144(b)(1)(A) of the Code, all within the meaning of such Section 144(b) of the
Code, or (ii) any portion of the Balances in any Series 1997-1 Tax Exempt
Account or Series 1997-1 Tax Exempt Subaccount be applied to (a) the payment of
any amounts payable from the Fund or Account in which such Account or Subaccount
is established in respect of any series of Notes other than the Tax Exempt
Series 1997-1 Notes until all amounts available therefor in the Account or
Subaccount, as the case may be, relating to such series, as well as in all other
Accounts or Subaccounts comprising such Fund or Account (other than those
Accounts or Subaccounts relating to other series of Tax Exempt Notes), have been
exhausted, or (b) in any event, to the redemption at the option of the
Corporation of Notes of any series other than the Tax Exempt Series 1997-1
Notes, unless, prior to any such application pursuant to this clause (ii), the
Corporation has delivered to the Trustee an opinion of Bond Counsel to the
effect that such application will not adversely affect the tax exempt status of
interest on any Series Tax Exempt 1997-1 Notes for federal income tax purposes.
Except as heretofore provided in this Section 18, nothing herein shall
be deemed to prohibit (1) the Trustee from using Balances of any Series 1997-1
Account or Series 1997-1 Subaccount to remedy deficiencies for which Balances of
the Fund or Account in which such Account or Subaccount is established are
subject to use under the Indenture, or (2) the application of Balances of any
Series 1997-1 Account or Series 1997-1 Subaccount for any purpose for which
Balances of the Fund or Account in which such Account or Subaccount is
established are authorized to be applied by the Indenture.
When there shall be no Tax Exempt Series 1997-1 Notes Outstanding, the
Series 1997-1 Tax Exempt Acquisition Account shall terminate and any Balance
thereof at such time shall be used as other Balances of the Acquisition Fund.
At such time as all Tax Exempt Series 1997-1 Notes have been retired and all
requirements of Section 148 of the Code with respect to the Tax Exempt Series
1997-1 Notes have been satisfied, including without limitation the payment to
the United
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States or otherwise of all Excess Earnings (including such Excess Earnings
computed in respect of the Refunded Obligations and the Eligible Loans financed
with the proceeds thereof, as provided in Section 19 hereof) and Rebate Amounts
required by such section, the Series 1997-1 Excess Earnings Subaccount and the
Series 1997-1 Rebate Subaccount shall each terminate and any Balance thereof
shall be used as other Balances of the Excess Earnings Account or the Rebate
Account, as applicable. When there shall be no Tax Exempt Series 1997-1 Notes
Outstanding, the Series 1997-1 Tax Exempt Interest Account shall terminate and
any Balance thereof at such time shall be used as other Balances of the Interest
Account, the Series 1997-1 Tax Exempt Principal Account shall terminate and any
Balance thereof at such time shall be used as other Balances of the Principal
Account, the Series 1997-1 Tax Exempt Retirement Account shall terminate and any
Balance thereof at such time shall be used as other Balances of the Retirement
Account, the Series 1997-1 Tax Exempt Reserve Account shall terminate and any
Balance thereof at such time shall be used as other Balances of the Reserve
Fund, the Series 1997-1 Tax Exempt Administration Account shall terminate and
any Balance thereof at such time shall be used as other Balances of the
Administration Fund and the Series 1997-1 Tax Exempt Surplus Subaccount shall
terminate and any Balance thereof at such time shall be used as other Balances
of the Surplus Account.
When there shall be no Taxable Series 1997-1 Notes Outstanding, the
Series 1997-1 Taxable Acquisition Account shall terminate and any Balance
thereof at such time shall be used as other Balances of the Acquisition Fund.
When there shall be no Taxable Series 1997-1 Notes Outstanding, the Series 1997-
1 Taxable Interest Account shall terminate and any Balance thereof at such time
shall be used as other Balances of the Interest Account, the Series 1997-1
Taxable Principal Account shall terminate and any Balance thereof at such time
shall be used as other Balances of the Principal Account, the Series 1997-1
Taxable Retirement Account shall terminate and any Balance thereof at such time
shall be used as other Balances of the Retirement Account, the Series 1997-1
Taxable Reserve Account shall terminate and any Balance thereof at such time
shall be used as other Balances of the Reserve Fund, the Series 1997-1 Taxable
Administration Account shall terminate and any Balance thereof at such time
shall be used as other Balances of the Administration Fund, the Series 1997-1
Taxable Special Redemption and Prepayment Subaccount shall terminate and any
Balance thereof at such time shall be used as other Balances of the Special
Redemption and Prepayment Account and the Series 1997-1 Taxable Surplus
Subaccount shall terminate and any Balance thereof at such time shall be used as
other Balances of the Surplus Account.
SECTION 19. DEPOSITS TO SERIES 1997-1 EXCESS EARNINGS SUBACCOUNT. On
----------------------------------------------------
or prior to the second Monthly Payment Date following the end of each Note Year
with respect to the Tax Exempt Series 1997-1 Notes, and within forty-five (45)
days following the final Maturity of the Tax Exempt Series 1997-1 Notes (each an
"Excess Earnings Computation Date"), the Trustee and the Corporation shall
determine whether, as of the end of such Note Year or final Maturity, as the
case may be, any Excess Earnings have resulted with respect to the Tax Exempt
Series 1997-1 Notes. In
-63-
the event any Excess Earnings with respect to the Tax Exempt Series 1997-1 Notes
have resulted as of the end of such Note Year or final Maturity, the Trustee
shall, on or prior to the related Excess Earnings Computation Date, transfer to
the Series 1997-1 Excess Earnings Subaccount the amount, if any, which is
necessary to increase the Balance in such Subaccount to an amount equal to such
Excess Earnings. Any such transfer shall be made from the Funds and Accounts as
specified in Section 4.5(B) of the Indenture. In the event, as of the end of any
Note Year or final Maturity, the Balance of the Series 1997-1 Excess Earnings
Subaccount exceeds the amount of Excess Earnings computed with respect to such
date, such excess shall be transferred or applied in accordance with the
provisions of Section 4.5(B) of the Indenture.
Notwithstanding any provision of the Indenture or this First
Supplemental Indenture to the contrary, (i) Excess Earnings on Eligible Loans
Financed with proceeds of the Tax Exempt Series 1997-1 Notes as described in
clauses (4) and (5)(A) of Section 15 hereof shall be the "Excess Earnings"
computed with respect to the related series of Refunded Obligations in
accordance with the requirements of the indenture relating to such series, (ii)
all deposits to the Series 1997-1 Excess Earnings Subaccount in respect of
Excess Earnings for each such series of Refunded Obligations shall be applied to
reduce the yield on the applicable Eligible Loans in accordance with the
requirements of the related indenture, and (iii) amounts described in the
preceding clause (i) shall be deposited in, and amounts described in the
preceding clause (ii) shall be applied from, the Series 1997-1 Excess Earnings
Subaccount prior to any other deposits in, or applications from, the Excess
Earnings Account. The foregoing provisions shall apply to each series of
Refunded Obligations until such series has been retired, after which time Excess
Earnings on the applicable Eligible Loans will be computed with respect to the
Tax Exempt Series 1997-1 Notes.
SECTION 20. OBLIGORS NOT TO MAKE CERTAIN PURCHASES OF TAX EXEMPT
----------------------------------------------------
SERIES 1997-1 NOTES. No obligor on a Student Loan financed, in whole or in
-------------------
part, with proceeds of the Tax Exempt Series 1997-1 Notes, or any related party
to such obligor, shall purchase any Tax Exempt Series 1997-1 Notes in an amount
related to the amount of such Student Loan.
SECTION 21. ARBITRAGE PROVISIONS. The Corporation covenants with the
--------------------
Holders of Series 1997-1 Notes that it will use the proceeds of the Tax Exempt
Series 1997-1 Notes and any other funds of the Corporation in such a manner that
the use thereof, as reasonably expected by the Corporation at the time of
issuance thereof, would not cause any of the Tax Exempt Series 1997-1 Notes to
be "arbitrage bonds" under Section 148 of the Code and the Regulations. The
president, the secretary and other officers and employees of the Corporation
shall execute and deliver from time to time, on behalf of the Corporation, such
certificates, instruments and documents as shall be deemed necessary or
advisable to evidence compliance by the Corporation with said Section 148 and
the Regulations with respect to the use of the proceeds of the Tax Exempt Series
1997-1 Notes and any other funds of the Corporation. Such certificates,
instruments and documents may contain such
-64-
stipulations as shall be necessary or advisable in connection with the stated
purpose of this Section and the foregoing provisions hereof, and the Corporation
and Trustee hereby covenant and agree to comply with the provisions of any such
stipulation throughout the term of the Tax Exempt Series 1997-1 Notes.
SECTION 22. PURCHASE OF ELIGIBLE LOANS FROM SERIES 1997-1 TAX EXEMPT
--------------------------------------------------------
AND TAXABLE ACQUISITION ACCOUNTS AND SERIES 1997-1 TAX EXEMPT AND TAXABLE
-------------------------------------------------------------------------
SURPLUS SUBACCOUNTS. Each Student Loan Financed from Balances in the Series
-------------------
1997-1 Tax Exempt Acquisition Account or the Series 1997-1 Tax Exempt Surplus
Subaccount shall have been made to an Eligible Borrower for the post-secondary
education of (a) a resident of the State attending a post-secondary school
located within or without the State, or (b) a resident of a state other than the
State attending a post-secondary school located within the State.
The price paid to purchase an Eligible Loan from the Balance in the
Series 1997-1 Tax Exempt Acquisition Account shall not exceed 100% of the
remaining unpaid principal amount of such Eligible Loan, plus accrued Special
Allowance Payments and noncapitalized borrower interest thereon, if any, to the
date of purchase, reasonable transfer, origination and assignment fees, if
applicable, and a premium not to exceed the lesser of (i) 1% (or such greater
percentage as shall be permitted under the Higher Education Act), and (ii) that
assumed in the Closing Cash Flow Projection (or such greater premium the payment
of which will not materially adversely affect the Corporation's ability to pay
Debt Service on the Outstanding Notes, Other Indenture Obligations, Carry-Over
Amounts (including accrued interest thereon) with respect to Outstanding Notes,
Administrative Expenses or Note Fees or to make required transfers to the Rebate
Fund, as shown in a subsequent Cash Flow Projection received by the Trustee, and
which will not result in the lowering or withdrawal of the outstanding rating
assigned by any Rating Agency to any of the Unenhanced Senior or Subordinate
Notes Outstanding, as evidenced in writing to the Trustee by each such Rating
Agency), and as otherwise authorized by Section 4.2 of the Indenture.
The price paid to purchase an Eligible Loan from the Balance in the
Series 1997-1 Taxable Acquisition Account shall not exceed 100% of the remaining
unpaid principal amount of such Eligible Loan, plus accrued Special Allowance
Payments and noncapitalized borrower interest thereon, if any, to the date of
purchase, reasonable transfer, origination and assignment fees, if applicable,
and a premium not to exceed that assumed in the Closing Cash Flow Projection (or
such greater premium the payment of which will not materially adversely affect
the Corporation's ability to pay Debt Service on the Outstanding Notes, Other
Indenture Obligations, Carry-Over Amounts (including accrued interest thereon)
with respect to Outstanding Notes, Administrative Expenses or Note Fees or to
make required transfers to the Rebate Fund, as shown in a subsequent Cash Flow
Projection received by the Trustee, and which will not result in the lowering or
withdrawal of the outstanding rating assigned by any Rating Agency to any of the
Unenhanced Senior or Subordinate Notes Outstanding, as evidenced in writing to
the Trustee by
-65-
each such Rating Agency), and as otherwise authorized by Section 4.2 of the
Indenture.
Any Student Loans Financed from Balances in the Series 1997-1 Tax
Exempt Surplus Subaccount or the Series 1997-1 Taxable Surplus Subaccount prior
to __________________________, and constituting Eligible Loans shall, upon the
financing thereof, be credited to, and included in the Balance of, the Series
1997-1 Tax Exempt Acquisition Account or the Series 1997-1 Taxable Acquisition
Account, as appropriate, and shall thereafter not be deemed to have been
Financed with moneys in the Surplus Account but to have been Financed with
moneys in the Acquisition Fund.
SECTION 23. LIMITATION ON COSTS OF ISSUANCE, ADMINISTRATIVE EXPENSES
---------------------------------------------------------
AND NOTE FEES. The Corporation covenants and agrees that the Costs of Issuance,
-------------
Administrative Expenses and Note Fees to be paid, or reimbursed to the
Corporation, from the Administration Fund shall not exceed the aggregate amount
thereof specified in the Closing Cash Flow Projection, unless the Corporation
delivers to the Trustee (i) a Corporation Certificate certifying that, based on
a Cash Flow Projection, the payment or reimbursement of a greater amount of
Costs of Issuance, Administrative Expenses and Note Fees from the Administration
Fund will not materially adversely affect the Corporation's ability to pay Debt
Service on the Outstanding Notes and on Outstanding Other Obligations, to pay
Carry-Over Amounts (including accrued interest thereon) with respect to
Outstanding Notes or to make required deposits to the Rebate Fund and (ii)
written confirmation from each of the Rating Agencies then rating the Series
1997-1 Notes to the effect that payment or reimbursement of such additional
Costs of Issuance, Administrative Expenses or Note Fees will not result in a
reduction or withdrawal of the rating of the Series 1997-1 Notes.
SECTION 24. PROCEEDS OF SALES OF CERTAIN STUDENT LOANS TO BE
-------------------------------------------------
DEPOSITED IN THE ACQUISITION FUND. The Trustee shall deposit in the Acquisition
---------------------------------
Fund the proceeds of the resale to a Lender of any Student Loans Financed with
proceeds of the Series 1997-1 Notes pursuant to such Lender's repurchase
obligation under the applicable Student Loan Purchase Agreement upon receipt
thereof from the Corporation, to the extent directed in a Corporation Order and
received by the Trustee prior to __________________________. Any such proceeds
received by the Trustee after such date shall be deposited in the Revenue Fund.
SECTION 25. LIMITATION ON ACQUISITION OF CONSOLIDATION LOANS AND
----------------------------------------------------
SPECIAL PROGRAM LOANS. The Corporation shall not acquire or originate any
---------------------
Consolidation Loan from Balances in the Series 1997-1 Taxable Acquisition
Account, the Series 1997-1 Taxable Acquisition Account, the Series 1997-1
Taxable Surplus Subaccount or the Series 1997-1 Taxable Surplus Subaccount if,
as a result of such acquisition or origination, either: (i) the aggregate of
the amounts applied from such Balances to the acquisition or origination of
Consolidation Loans would exceed the greater of (a) $______________________, or
(b) 15% of the aggregate of the amounts applied
-66-
from such Balances to the acquisition or origination of all Student Loans; or
(ii) at such time as the aggregate of the amounts applied from such Balances to
the acquisition or origination of Consolidation Loans equals or exceeds
$________________________ and thereafter, the weighted average final maturity of
all Consolidation Loans Financed from such Account and Subaccount would exceed
______years, unless the Corporation delivers to the Trustee a Corporation
Certificate certifying that, based on a Cash Flow Projection, the acquisition or
origination of such Consolidation Loan will not materially adversely affect the
Corporation's ability to pay Debt Service on the Outstanding Notes and on
Outstanding Other Obligations, to pay Carry-Over Amounts (including accrued
interest thereon) with respect to Outstanding Notes or to make required deposits
to the Rebate Fund.
[INSERT LIMITATIONS ON SPECIAL PROGRAM LOANS (INCLUDING LOANS FOR
WHICH THE BORROWER RECEIVES A REDUCTION IN PAYMENTS FOR USING ACH)]
SECTION 26. CERTAIN FINDINGS, DETERMINATIONS AND DESIGNATIONS. The
-------------------------------------------------
Corporation hereby finds and determines as follows:
(A) The Original Indenture has not been amended, supplemented or
repealed since the execution thereof. This First Supplemental Indenture
amends and supplements the Indenture, constitutes and is a "Supplemental
Indenture" within the meaning of such term as defined and used in the
Indenture and is executed under and pursuant to the Indenture.
(B) No Notes have heretofore been issued under the Indenture. The
Series 1997-1 Senior Notes constitute, and are hereby designated as, "Class
A Notes" within the meaning of the term as defined and used in the
Indenture, and the Series 1997-1 Subordinate Notes constitute, and are
hereby designated as, "Class B Notes" within the meaning of the term as
defined and used in the Indenture.
(C) Upon receipt of the proceeds of the sale of the Series 1997-1
Notes: (1) the revenues and other moneys and property pledged under the
Indenture will not be encumbered by any lien or charge thereon or pledge
thereof, other than the lien and charge thereon and pledge thereof created
by the Indenture for the payment and security of the Notes; and (2) there
will not be outstanding any bonds, notes or other evidences of indebtedness
payable from and secured by a lien on or pledge or charge upon the revenues
and other moneys and property pledged under the Indenture.
(D) There does not exist an "Event of Default," within the meaning of
such term as defined in the Indenture, which is continuing, nor does there
exist any condition which, after the passage of time, would constitute such
an "Event of Default."
-67-
SECTION 27. GOVERNING LAW. This First Supplemental Indenture shall be
-------------
governed by and be construed in accordance with the laws of the State without
giving effect to the conflicts-of-laws principles thereof; provided that those
provisions of this First Supplemental Indenture relating to the rights and
duties of the Auction Agent shall be governed by and be construed in accordance
with the laws of the State of New York.
SECTION 28. SECTION HEADINGS; TABLE OF CONTENTS. The headings or
-----------------------------------
titles of the several sections hereof shall be solely for convenience of
reference and shall not affect the meaning or construction, interpretation or
effect of this First Supplemental Indenture.
SECTION 29. SEVERABILITY. If any provision of this First
------------
Supplemental Indenture shall be held or deemed to be or shall, in fact, be
inoperative or unenforceable as applied in any particular case in any
jurisdiction or jurisdictions or in all jurisdictions or in all cases because it
conflicts with any provisions of any constitution or statute or rule of public
policy, or for any other reason, such circumstances shall not have the effect of
rendering the provision in question inoperative or unenforceable in any other
case or circumstance, or of rendering any other provision or provisions herein
contained invalid, inoperative or unenforceable to any extent whatever.
The invalidity of any one or more phrases, sentences, clauses or
paragraphs in this First Supplemental Indenture contained shall not affect the
remaining portions of this First Supplemental Indenture or part thereof.
SECTION 30. COUNTERPARTS. This First Supplemental Indenture may be
------------
simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
SECTION 31. EFFECT OF FIRST SUPPLEMENTAL INDENTURE. Upon the
--------------------------------------
execution and delivery of this First Supplemental Indenture, the Indenture shall
be supplemented in accordance herewith, and this First Supplemental Indenture
shall form a part of the Indenture for all purposes and every Holder of Notes
hereafter authenticated and delivered and Other Beneficiary under the Indenture
shall be bound hereby.
-68-
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate seals
to be hereunto affixed and attested, all as of the day and year first above
written.
EDUCATION LOANS INCORPORATED
(SEAL)
By ___________________
President
Attest:
_____________________________________
Secretary
FIRST BANK NATIONAL ASSOCIATION,
as Trustee
(SEAL)
By ___________________________
Vice President
Attest:
__________________________
Trust Officer
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EXHIBIT A-1
-----------
FORM OF TAX EXEMPT AUCTION RATE SERIES 1997-1 NOTES
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
EDUCATION LOANS INCORPORATED
TAX EXEMPT AUCTION RATE STUDENT LOAN ASSET-BACKED NOTE
SENIOR SERIES 1997-1A [B][C][D][E]
CLASS A
No. R______ $_________
Stated Date of Original Interest
Maturity Date Issue Rate CUSIP
------------- ---------------- -------- -----
June 1, 2020 July ___, 1997 Variable 83756E ___
REGISTERED HOLDER: CEDE & CO.
PRINCIPAL AMOUNT:
FOR VALUE RECEIVED, EDUCATION LOANS INCORPORATED, a nonprofit
corporation organized under the laws of the State of South Dakota (the
"Corporation," which term includes any successor corporation under the Indenture
hereinafter referred to, including, upon completion of the Section 150(d)(3)
Transfer, EdLinc), acknowledges itself indebted and hereby promises to pay to
the registered holder specified above, or registered assigns (the "Registered
Holder"), but solely from the revenues and receipts hereinafter specified and
not otherwise, the Principal Amount specified above on the Stated Maturity Date
specified above (subject to the right of prior redemption hereinafter
mentioned), upon presentation and surrender of this Note at the Principal Office
of the Trustee (as hereinafter defined), as Paying Agent for the Series 1997-1
Notes (as hereinafter defined), or a duly appointed successor Paying Agent, and
to pay interest on said Principal
A-1-1
Amount, but solely from the revenues and receipts hereinafter specified and not
otherwise, to the Registered Holder hereof from the date hereof until the
payment of said Principal Amount has been made or duly provided for, payable
semiannually on the first day of June and December in each year, commencing
December1, 1997, at the Auction Rate Series 1997-1 Note Interest Rate (as
hereinafter described), and at the same rate per annum (to the extent that the
payment of such interest shall be legally enforceable) on overdue installments
of interest. Payment of interest on this Note on each regularly scheduled
Interest Payment Date shall be made by check or draft drawn upon the Paying
Agent and mailed to the Person who is the Registered Holder hereof as of 5:00
p.m. in the city in which the Principal Office of the Note Registrar is located
on the applicable Regular Record Date at the address of such Registered Holder
as it appears on the Note Register maintained by the Note Registrar, or, if the
Registered Holder of this Note is the Registered Holder of Series 1997-1 Notes
in the aggregate Principal Amount of $1,000,000 or more (or, if less than
$1,000,000 in Principal Amount of Series 1997-1 Notes is outstanding, the
Registered Holder of all outstanding Series 1997-1 Notes), at the direction of
such Registered Holder received by the Paying Agent by 5:00 p.m. in the city in
which the Principal Office of the Paying Agent is located on the last Business
Day preceding the applicable Regular Record Date, by electronic transfer by the
Paying Agent in immediately available funds to an account designated by such
Registered Holder. In addition, interest on this Note is payable at the Maturity
hereof in the same manner as the principal hereof, unless the date of such
Maturity is a regularly scheduled Interest Payment Date, in which event interest
is payable in the manner set forth in the preceding sentence. Any interest not
so timely paid or duly provided for shall cease to be payable to the Person who
is the Registered Holder hereof at the close of business on the Regular Record
Date and shall be payable to the Person who is the Registered Holder hereof at
the close of business on a special record date for the payment of any such
defaulted interest. Such special record date shall be fixed by the Trustee
whenever moneys become available for payment of the defaulted interest, and
notice of the special record date shall be given to the Registered Holder hereof
not less than ten days prior thereto by first-class mail to such Registered
Holder as shown on the Note Register on a date selected by the Trustee, stating
the date of the special record date and the date fixed for the payment of such
defaulted interest. The principal of and interest on this Note are payable in
lawful money of the United States of America.
This Note is one of an authorized issue of Notes (the "Notes"), issued
and to be issued by the Corporation in one or more series pursuant to an
Indenture of Trust, dated as of July 1, 1997 (as supplemented and amended, the
"Indenture"), as supplemented by a First Supplemental Indenture of Trust, dated
as of July 1, 1997 (the "First Supplemental Indenture"), each between the
Corporation and First Bank National Association, Minneapolis, Minnesota, as
Trustee (the "Trustee," which term includes any successor trustee under the
Indenture). As provided in the Indenture, the Notes are issuable in series
which may vary as in the Indenture provided or permitted. This Note is one of a
series issued in an aggregate Principal Amount of $_________________(the
"Series 1997-1A [B][C][D][E] Notes"). The Series 1997-1A
A-1-2
[B][C][D][E] Notes are issued simultaneously with nine other series of Class A
Notes issued in the aggregate Principal Amount of $_______________(together with
the Series 1997-1A [B][C][D][E] Notes, collectively referred to herein as the
"Series 1997-1 Senior Notes"), and two series of Class B Notes issued in the
aggregate Principal Amount of $_____________________(the "Series 1997-1
Subordinate Notes" and, together with the Series 1997-1 Senior Notes,
collectively referred to herein as the "Series 1997-1 Notes"). The proceeds of
the Series 1997-1 Notes will be used by the Corporation to (a) acquire student
loan notes incurred under the Higher Education Act and (b) fund the Reserve
Fund.
Reference is hereby made to the Indenture, copies of which are on file
in the principal corporate trust office of the Trustee, and to all of the
provisions of which any Registered Holder of this Note by his acceptance hereof
hereby assents, for definitions of terms; the description of and the nature and
extent of the security for the various classes of Notes and Other Obligations
secured thereunder; the student loan acquisition program being financed by the
issuance of the Notes; the revenues and other moneys pledged to the payment of
the principal of, premium, if any, and interest on the Notes and the Other
Obligations; the nature and extent and manner of enforcement of the pledge; the
conditions upon which Notes may be issued or Other Obligations may be incurred
by the Corporation thereunder, payable from such revenues and other moneys
thereunder as Senior Obligations, Subordinate Obligations or Class C Notes; the
conditions upon which the Indenture may be amended or supplemented with or
without the consent of the Holders of the Notes; the rights and remedies of the
Registered Holder hereof with respect hereto and thereto, including the
limitations upon the right of a Registered Holder hereof to institute any suit,
action or proceeding in equity or at law with respect hereto and thereto; the
rights, duties and obligations of the Corporation and the Trustee thereunder;
the terms and provisions upon which the liens, pledges, charges, trusts and
covenants made therein may be discharged at or prior to the Maturity or
redemption of this Note, and this Note thereafter no longer be secured by the
Indenture, or be deemed to be Outstanding thereunder; and for the other terms
and provisions thereof. Terms used with initial capital letters but not defined
in this Note have the respective meanings given such terms in the Indenture.
The Series 1997-1A [B][C][D][E] Notes are being issued as, and will constitute,
Tax Exempt Class A Notes under the Indenture. Four other series of the Series
1997-1 Senior Notes also are Tax Exempt Class A Notes which, like the Series
1997-1A [B][C][D][E] Notes, bear interest at an Auction Rate Series 1997-1 Note
Interest Rate, and, together with the Series 1997-1A [B][C][D][E] Notes, are
collectively referred to herein as the "Tax Exempt Auction Rate Series 1997-1
Notes."
The Notes and Other Obligations are limited obligations of the
Corporation, payable solely from the revenues and assets of the Corporation
pledged therefor under the Indenture, including certain notes evidencing Student
Loans and the proceeds of the Corporation's bonds, notes or other evidences of
indebtedness, if any, issued with respect to the Notes.
A-1-3
Each Noteholder, by acceptance of a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder will
not at any time institute against the Corporation, or join in any institution
against the Corporation, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings under any United States Federal or state bankruptcy
or similar law in connection with any obligations relating to the Notes, the
Indenture or the Servicing Agreement.
The Corporation has structured the Indenture and the Notes with the
intention that the Notes will qualify under applicable federal, state, local and
foreign tax law as indebtedness of the Corporation secured by the Trust Estate.
The Corporation, the Trustee, the Servicer and each Noteholder agree to treat
and to take no action inconsistent with the treatment of the Notes as such
indebtedness for purposes of federal, state, local and foreign income or
franchise taxes and any other tax imposed on or measured by income. Each
Noteholder, by acceptance of its Note, agrees to be bound by the provisions of
this paragraph. Each Noteholder agrees that it will cause any Person acquiring
an interest in a Note through it to comply with the Indenture as to treatment as
indebtedness under applicable tax law, as described in this paragraph.
Interest payable on this Note shall be computed on the basis of actual
days elapsed and accrue daily from the date hereof (on the basis of a 360-day
year), and is payable on each regularly scheduled Interest Payment Date prior to
the Maturity of this Note and at the Maturity of this Note. The interest
payable on each Interest Payment Date for this Note shall be [calculated on a
per unit basis, based on a unit of $100,000, and shall be] that interest which
has accrued through the last day preceding such Interest Payment Date or, in the
case of the Maturity of this Note, the last day preceding the date of such
Maturity. The Auction Rate Series 1997-1 Note Interest Rate shall be effective
as of and on the first day (whether or not a Business Day) of the applicable
Interest Period and be in effect thereafter through the end of such Interest
Period.
The unpaid Principal Amount hereof from time to time outstanding shall
bear interest at an Auction Rate Series 1997-1 Note Interest Rate, as described
below, payable on each Interest Payment Date and at the Maturity hereof, such
interest to accrue from the later of the date hereof or the date through which
interest has been paid or duly provided for.
During the Initial Interest Period, this Note shall bear interest at
the Auction Rate Series 1997-1 Note Initial Interest Rate for the Series 1997-1A
[B][C][D][E] Notes. Thereafter, until an Auction Period Adjustment, if any,
this Note shall bear interest at an Auction Rate Series 1997-1 Note Interest
Rate based on an Auction Period that shall generally consist of 35 days, all as
determined in accordance with the applicable provisions of the First
Supplemental Indenture.
A-1-4
In no event shall the Auction Rate Series 1997-1 Note Interest Rate on
this Note exceed 14% per annum (the "Auction Rate Series 1997-1 Note Interest
Rate Limitation").
The Auction Period (which shall be the Interest Period), the
applicable Auction Rate Series 1997-1 Note Interest Rate, the method of
determining the applicable Auction Rate Series 1997-1 Note Interest Rate on each
of the Series 1997-1A [B][C][D][E] Notes and the Auction Procedures related
thereto, including, without limitation, required notices thereof and any changes
therein to the Holders or Existing Holders of the Auction Rate Series 1997-1
Notes, will be determined in accordance with the terms, conditions and
provisions of the First Supplemental Indenture and the Auction Agent Agreement
(Tax Exempt Auction Rate Series 1997-1 Notes), dated as of July 1, 1997 (which,
together with any substitute therefor, is herein referred to as the "Auction
Agent Agreement"), between the Trustee and Bankers Trust Company (which,
together with any substitute therefor, is herein referred to as the "Auction
Agent"), to which terms, conditions and provisions specific reference is hereby
made, and all of which terms, conditions and provisions are hereby specifically
incorporated herein by reference.
By purchasing Series 1997-1A [B][C][D][E] Notes, whether in an Auction
or otherwise, each purchaser of the Series 1997-1A [B][C][D][E] Notes, or its
Broker-Dealer, must agree and shall be deemed by such purchase to have agreed
(i) to participate in Auctions on the terms described in the First Supplemental
Indenture, (ii) to have its beneficial ownership of the Series 1997-1A
[B][C][D][E] Notes maintained at all times in Book-Entry Form for the account of
its Participant, which in turn will maintain records of such beneficial
ownership, and (iii) to authorize such Participant to disclose to the Auction
Agent such information with respect to such beneficial ownership as the Auction
Agent may request. So long as the ownership of Series 1997-1A [B][C][D][E]
Notes is maintained in Book-Entry Form by the Securities Depository, an Existing
Holder may sell, transfer or otherwise dispose of Series 1997-1A [B][C][D][E]
Notes only pursuant to a Bid or Sell Order placed in an Auction or otherwise
sell, transfer or dispose of Series 1997-1A [B][C][D][E] Notes through a Broker-
Dealer, provided that, in the case of all transfers other than pursuant to
Auctions, such Existing Holder, its Broker-Dealer or its Participant advises the
Auction Agent of such transfer.
The determination of an Auction Rate Series 1997-1 Note Interest Rate
by the Auction Agent or any other authorized Person pursuant to the provisions
of the First Supplemental Indenture shall be conclusive and binding on the
Holders of the Series 1997-1A [B][C][D][E] Notes to which such Auction Rate
Series 1997-1 Note Interest Rate applies, and the Corporation and the Trustee
may rely thereon for all purposes.
Notwithstanding any provision of this Note to the contrary, in no
event shall the cumulative amount of interest paid or payable on this Note
(including interest calculated as provided herein, plus any other amounts that
A-1-5
constitute interest on this Note under applicable law, which are contracted for,
charged, reserved, taken or received pursuant to this Note or related documents)
calculated from the date of issuance of this Note through any subsequent day
during the term of this Note or otherwise prior to payment in full of this Note
exceed the amount permitted by applicable law. If the applicable law is ever
judicially interpreted so as to render usurious any amount called for under this
Note or related documents or otherwise contracted for, charged, reserved, taken
or received in connection with this Note, or if the redemption or acceleration
of the Maturity of this Note results in payment to or receipt by the Registered
Holder or any former Registered Holder hereof of any interest in excess of that
permitted by applicable law, then notwithstanding any provision of this Note or
related documents to the contrary all excess amounts theretofore paid or
received with respect to this Note shall be credited on the Principal Amount of
this Note (or, if this Note has been paid or would thereby be paid in full,
refunded by the recipient thereof), and the provisions of this Note and related
documents shall immediately be deemed reformed and the amounts thereafter
collectible hereunder and thereunder reduced, without the necessity of the
execution of any new document, so as to comply with the applicable law, but so
as to permit the recovery of the fullest amount otherwise called for under this
Note and under the related documents.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Series 1997-1 Notes may, at the option of the
Corporation, be redeemed, in whole but not in part, at a Redemption Price equal
to 100% of the Principal Amount of Series 1997-1 Notes to be so redeemed plus
accrued interest thereon to the Redemption Date, on any date after the remaining
aggregate Principal Balance of Student Loans Financed with proceeds of the
Series 1997-1 Notes is less than 10% of the amounts initially deposited to the
credit of the Acquisition Fund.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Outstanding Tax Exempt Auction Rate Series 1997-1
Notes of any series may be redeemed, in whole or in part, on any Interest Rate
Adjustment Date for such series or any regularly scheduled Interest Payment
Date, at a Redemption Price equal to 100% of the Principal Amount thereof so
redeemed, from proceeds of the Tax Exempt Series 1997-1 Notes constituting a
portion of the Balance of the Series 1997-1 Tax Exempt Acquisition Account that
have not been used to acquire Eligible Loans and from that portion of the Series
1997-1 Tax Exempt Reserve Account would cause the Balance in the Reserve Fund to
exceed the Reserve Fund Requirement, calculated giving effect to such
redemption. Such redemption shall be required on June 1, 2001 (to the extent
the proceeds in the Series 1997-1 Tax Exempt Acquisition Account not so used as
of April 15, 2001, exceed $________________) and on June 1, 2002 (from such
proceeds not so used as of April 15, 2002), unless the Corporation delivers to
the Trustee: (i) an opinion of Bond Counsel stating in effect that such
redemption is not required pursuant to the Code and that failure to so redeem
Tax Exempt Series 1997-1 Notes will not adversely affect the tax exempt status
of interest on any Tax Exempt Series 1997-1 Notes for federal income
A-1-6
tax purposes, (ii) a Corporation Certificate certifying that, based on a Cash
Flow Projection, the failure to so redeem Tax Exempt Series 1997-1 Notes will
not materially adversely affect the Corporation's ability to pay Debt Service on
the Outstanding Notes and the Outstanding Other Obligations, Carry-Over Amounts
(including accrued interest thereon) with respect to Outstanding Notes,
Administrative Expenses or Note Fees or to make required deposits to the Rebate
Fund, and (iii) written confirmation from each of the Rating Agencies then
rating the Series 1997-1 Notes to the effect that the failure to so redeem Tax
Exempt Series 1997-1 Notes will not result in a reduction or withdrawal of the
rating of the Series 1997-1 Notes.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Outstanding Tax Exempt Auction Rate Series 1997-1
Notes of any series may, at the option of the Corporation, be redeemed on any
Interest Rate Adjustment Date for such series or any regularly scheduled
Interest Payment Date occurring on or after __________________, in whole or in
part, at a Redemption Price equal to 100% of the Principal Amount thereof to be
redeemed, from amounts credited to the Series 1997-1 Tax Exempt Retirement
Subaccount from the Series 1997-1 Tax Exempt Surplus Subaccount for such purpose
in accordance with the Indenture and from that portion of the Series 1997-1 Tax
Exempt Reserve Account which exceeds the Reserve Fund Requirement (calculated
after giving effect to such redemption). If the Trustee shall have first
certified that no deficiencies exist in any of the Rebate Fund, the Note Fund,
the Reserve Fund or the Special Redemption and Prepayment Account, the Trustee
shall, upon Corporation Order, transfer to the Series 1997-1 Tax Exempt
Retirement Account any Balances in the Series 1997-1 Tax Exempt Surplus
Subaccount (other than those consisting of Student Loans) which a Corporation
Certificate states are not reasonably expected to be needed for the payment of
scheduled Debt Service on the Outstanding Notes and Outstanding Other
Obligations, Carry-Over Amounts (including accrued interest thereon) with
respect to Outstanding Notes, Administrative Expenses or Note Fees, or for
transfer to the Rebate Fund.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements and certain other requirements, Outstanding Tax
Exempt Auction Rate Series 1997-1 Notes of any series may, at the option of the
Corporation, be redeemed on any Interest Rate Adjustment Date for such series or
any regularly scheduled Interest Payment Date, in whole or in part, at a
Redemption Price equal to 100% of the Principal Amount thereof to be redeemed,
from amounts credited to the Retirement Account for such purpose.
If not all Series 1997-1 Notes subject to redemption are to be
redeemed, the particular Series 1997-1 Notes to be redeemed are to be selected
as provided in the Indenture.
Notice of redemption shall be given by first-class mail mailed at
least 15 days before the Redemption Date to each Holder of Series 1997-1A
[B][C][D][E] Notes
A-1-7
to be redeemed at his last address appearing on the Note Register; but no defect
in or failure to give such notice of redemption shall affect the validity of
proceedings for redemption of any Series 1997-1A [B][C][D][E] Notes not affected
by such defect or failure. All Series 1997-1A [B][C][D][E] Notes so called for
redemption will cease to bear interest on such Redemption Date, provided funds
for their redemption have been duly deposited, and, except for the purpose of
payment, shall no longer be protected by the Indenture and shall not be deemed
Outstanding thereunder.
It is provided in the Indenture that Series 1997-1A [B][C][D][E] Notes
of a denomination larger than $100,000 may be redeemed in part ($100,000 or an
integral multiple thereof) and that upon any partial redemption of any such
Series 1997-1A [B][C][D][E] Note the same shall be surrendered in exchange for
one or more new Notes of the same series in authorized form for the unredeemed
portion of principal.
If provision is made for the payment of principal of and interest on
this Note in accordance with the Indenture, this Note shall no longer be deemed
Outstanding under the Indenture, shall cease to be entitled to the benefits of
the Indenture and shall thereafter be payable solely from the funds provided for
such payment.
If an Event of Default shall occur, the principal of all the
Outstanding Notes may and, under certain circumstances, shall be declared due
and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Corporation and the rights of the Holders of the Notes and Other Beneficiaries
under the Indenture at any time by the Corporation with, among other things, the
consent of the Holders of two-thirds of the aggregate Principal Amount of Class
A Notes at the time Outstanding, if affected thereby, and the consent of the
Holders of two-thirds of the aggregate Principal Amount of Class B Notes at the
time Outstanding, if affected thereby. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate Principal Amount of
the Class A Notes at the time Outstanding or Other Senior Beneficiaries or, if
no Senior Obligations are Outstanding, the Holders of specified percentages in
aggregate Principal Amount of the Class B Notes at the time Outstanding or Other
Subordinate Beneficiaries, on behalf of the Holders of all the Notes, to waive
certain past defaults under the Indenture and their consequences. Any such
consent or waiver shall be conclusive and binding upon the Registered Holder of
this Note and upon all future Registered Holders hereof and of any Note issued
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Note.
This Note is transferable by the Registered Holder hereof upon
surrender of this Note for transfer at the Principal Office of the Note
Registrar
A-1-8
(which shall be the Trustee unless and until an Authenticating Agent becomes the
Note Registrar under the Indenture) or at the Principal Office of a duly
appointed Authenticating Agent (the "Authenticating Agent," which term includes
any successor Authenticating Agent under the Indenture), duly endorsed or
accompanied by a written instrument of transfer in form satisfactory to the Note
Registrar or such Authenticating Agent, as the case may be, and executed by the
Registered Holder hereof or his attorney duly authorized in writing, with
signature guarantees satisfactory to the Note Registrar or such Authenticating
Agent, as the case may be. This Note may also be exchanged for one or more other
Notes of the same series upon surrender hereof at the Principal Office of the
Note Registrar or the Principal Office of an Authenticating Agent. Thereupon the
Corporation shall execute and the Trustee or the Authenticating Agent, as the
case may be, shall authenticate and deliver, in exchange for this Note, one or
more new fully registered Notes in the name of the transferee, of an authorized
denomination, in aggregate Principal Amount equal to the Principal Amount of
this Note, of the same series and bearing interest at the same rate. No
Authenticating Agent will be initially appointed with respect to the Series
1997-1A [B][C][D][E] Notes. Notwithstanding the foregoing provisions of this
paragraph, no Series 1997-1A [B][C][D][E] Note shall be required to be
transferred, (i) during a period beginning at the opening of business fifteen
days before any selection of Series 1997-1A [B][C][D][E] Notes for redemption
and ending at the close of business on the day of such selection, or (ii) if
such Series 1997-1A [B][C][D][E] Note has been selected for redemption in whole
or in part.
The Corporation may require payment by the Registered Holder hereof of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of this Note, other than
certain exchanges specifically exempted under the Indenture and not involving
any transfer.
The Corporation, the Trustee, each Paying Agent, any Authenticating
Agent, the Note Registrar and any other agent of the Corporation may treat the
Person in whose name this Note is registered on the Note Register as the
absolute owner hereof for all purposes, whether or not this Note is overdue, and
neither the Corporation, the Trustee, any Paying Agent, any Authenticating
Agent, the Note Registrar nor any other such agent shall be affected by notice
to the contrary.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND DECLARED that all
acts, conditions and things required to have happened, to exist and to have been
performed precedent to and in the issuance of this Note have happened, do exist,
and have been performed in regular and due time, form and manner as so required.
This Note shall not be valid or become obligatory for any purpose or
be entitled to any security or benefit under the Indenture until the Certificate
of Authentication hereon shall have been signed by the Trustee or by the
A-1-9
Authenticating Agent by the manual signature of one of its authorized
representatives.
A-1-10
IN WITNESS WHEREOF, the Corporation has caused this Note to be
executed in its name by the manual signatures of its President and Secretary,
and its corporate seal to be impressed hereon.
Dated:__________________ EDUCATION LOANS INCORPORATED
__________________________
President
(SEAL)
__________________________
Secretary
_____________________________
CERTIFICATE OF AUTHENTICATION
This Note is one of the Notes of the series designated therein and
issued under the provisions of the within-mentioned Indenture.
FIRST BANK NATIONAL
ASSOCIATION, as Trustee
By___________________________
Authorized Representative
A-1-11
______________________________
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto ________________________ the within Note and irrevocably appoints
____________________________, attorney-in-fact, to transfer the within Note on
the books kept for registration thereof, with full power of substitution in the
premises.
Dated _______________________
PLEASE INSERT SOCIAL SECURITY ___________________________
OR OTHER IDENTIFYING NUMBER NOTICE: The signature to this
OF ASSIGNEE assignment must correspond with the
name as it appears upon the face of the
within Note in every particular,
______________________________ without any alteration whatsoever.
SIGNATURE GUARANTEED:
______________________________
▇-▇-▇▇
▇▇▇▇▇▇▇ ▇-▇
-----------
FORM OF SERIES 1997-1F NOTES
-----------------------------
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
EDUCATION LOANS INCORPORATED
TAX EXEMPT FIXED RATE STUDENT LOAN ASSET-BACKED NOTE
SENIOR SERIES 1997-1F
CLASS A
No. R____ $___________
Stated Date of Original Interest
Maturity Date Issue Rate CUSIP
------------- ---------------- -------- -----
July 1, 1997 83756E __
REGISTERED HOLDER: CEDE & CO.
PRINCIPAL AMOUNT:
FOR VALUE RECEIVED, EDUCATION LOANS INCORPORATED, a nonprofit
corporation organized under the laws of the State of South Dakota (the
"Corporation," which term includes any successor corporation under the Indenture
hereinafter referred to, including, upon completion of the Section 150(d)(3)
Transfer, EdLinc), acknowledges itself indebted and hereby promises to pay to
the registered holder specified above, or registered assigns (the "Registered
Holder"), but solely from the revenues and receipts hereinafter specified and
not otherwise, the Principal Amount specified above on the Stated Maturity Date
specified above (subject to the right of prior redemption hereinafter
mentioned), upon presentation and surrender of this Note at the Principal Office
of the Trustee (as hereinafter defined), as Paying Agent for the Series 1997-1
Notes (as hereinafter defined), or a duly appointed successor Paying Agent, and
to pay interest on said Principal
A-2-1
Amount, but solely from the revenues and receipts hereinafter specified and not
otherwise, to the Registered Holder hereof from the date hereof until the
payment of said Principal Amount has been made or duly provided for, at the rate
per annum specified above, payable semiannually on the first day of June and
December in each year, commencing December 1, 1997, and at the same rate per
annum (to the extent that the payment of such interest shall be legally
enforceable) on overdue installments of interest. Payment of interest on this
Note on each regularly scheduled Interest Payment Date shall be made by check or
draft drawn upon the Paying Agent and mailed to the Person who is the Registered
Holder hereof as of 5:00 p.m. in the city in which the Principal Office of the
Note Registrar is located on the applicable Regular Record Date at the address
of such Registered Holder as it appears on the Note Register maintained by the
Note Registrar, or, if the Registered Holder of this Note is the Registered
Holder of Series 1997-1 Notes in the aggregate Principal Amount of $1,000,000 or
more (or, if less than $1,000,000 in Principal Amount of Series 1997-1 Notes is
outstanding, the Registered Holder of all outstanding Series 1997-1 Notes), at
the direction of such Registered Holder received by the Paying Agent by 5:00
p.m. in the city in which the Principal Office of the Paying Agent is located on
the last Business Day preceding the applicable Regular Record Date, by
electronic transfer by the Paying Agent in immediately available funds to an
account designated by such Registered Holder. In addition, premium, if any, and
interest on this Note are payable at the Maturity hereof in the same manner as
the principal hereof, unless the date of such Maturity is a regularly scheduled
Interest Payment Date, in which event interest is payable in the manner set
forth in the preceding sentence. Any interest not so timely paid or duly
provided for shall cease to be payable to the Person who is the Registered
Holder hereof at the close of business on the Regular Record Date and shall be
payable to the Person who is the Registered Holder hereof at the close of
business on a special record date for the payment of any such defaulted
interest. Such special record date shall be fixed by the Trustee whenever moneys
become available for payment of the defaulted interest, and notice of the
special record date shall be given to the Registered Holder hereof not less than
ten days prior thereto by first-class mail to such Registered Holder as shown on
the Note Register on a date selected by the Trustee, stating the date of the
special record date and the date fixed for the payment of such defaulted
interest. The principal of, premium, if any, and interest on this Note are
payable in lawful money of the United States of America.
This Note is one of an authorized issue of Notes (the "Notes"), issued
and to be issued by the Corporation in one or more series pursuant to an
Indenture of Trust, dated as of July 1, 1997 (as supplemented and amended, the
"Indenture"), as supplemented by a First Supplemental Indenture of Trust, dated
as of July 1, 1997 (the "First Supplemental Indenture"), each between the
Corporation and First Bank National Association, Minneapolis, Minnesota, as
Trustee (the "Trustee," which term includes any successor trustee under the
Indenture). As provided in the Indenture, the Notes are issuable in series
which may vary as in the Indenture provided or permitted. This Note is one of a
series of Class A Notes issued in an aggregate Principal Amount of $___________
(the "Series 1997-1F Notes"). The
A-2-2
Series 1997-1F Notes are issued simultaneously with nine other series of Class A
Notes issued in the aggregate Principal Amount of $_______________ (together
with the Series 1997-1F Notes, collectively referred to herein as the "Series
1997-1 Senior Notes"), and two series of Class B Notes issued in the aggregate
Principal Amount of $______________ (the "Series 1997-1 Subordinate Notes" and,
together with the Series 1997-1 Senior Notes, collectively referred to herein as
the "Series 1997-1 Notes"). The proceeds of the Series 1997-1 Notes will be used
by the Corporation to (a) acquire student loan notes incurred under the Higher
Education Act and (b) fund the Reserve Fund.
Reference is hereby made to the Indenture, copies of which are on file
in the principal corporate trust office of the Trustee, and to all of the
provisions of which any Registered Holder of this Note by his acceptance hereof
hereby assents, for definitions of terms; the description of and the nature and
extent of the security for the various classes of Notes and Other Obligations
secured thereunder; the student loan acquisition program being financed by the
issuance of the Notes; the revenues and other moneys pledged to the payment of
the principal of, premium, if any, and interest on the Notes and the Other
Obligations; the nature and extent and manner of enforcement of the pledge; the
conditions upon which Notes may be issued or Other Obligations may be incurred
by the Corporation thereunder, payable from such revenues and other moneys
thereunder as Senior Obligations, Subordinate Obligations or Class C Notes; the
conditions upon which the Indenture may be amended or supplemented with or
without the consent of the Holders of the Notes; the rights and remedies of the
Registered Holder hereof with respect hereto and thereto, including the
limitations upon the right of a Registered Holder hereof to institute any suit,
action or proceeding in equity or at law with respect hereto and thereto; the
rights, duties and obligations of the Corporation and the Trustee thereunder;
the terms and provisions upon which the liens, pledges, charges, trusts and
covenants made therein may be discharged at or prior to the Maturity or
redemption of this Note, and this Note thereafter no longer be secured by the
Indenture, or be deemed to be Outstanding thereunder; and for the other terms
and provisions thereof. Terms used with initial capital letters but not defined
in this Note have the respective meanings given such terms in the Indenture.
The Series 1997-1F Notes are being issued as, and will constitute, Tax Exempt
Class A Notes under the Indenture.
The Notes and Other Obligations are limited obligations of the
Corporation, payable solely from the revenues and assets of the Corporation
pledged therefor under the Indenture, including certain notes evidencing Student
Loans and the proceeds of the Corporation's bonds, notes or other evidences of
indebtedness, if any, issued with respect to the Notes.
Each Noteholder, by acceptance of a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder will
not at any time institute against the Corporation, or join in any institution
against the Corporation, any bankruptcy, reorganization, arrangement, insolvency
or
A-2-3
liquidation proceedings under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the Servicing Agreement.
The Corporation has structured the Indenture and the Notes with the
intention that the Notes will qualify under applicable federal, state, local and
foreign tax law as indebtedness of the Corporation secured by the Trust Estate.
The Corporation, the Trustee, the Servicer and each Noteholder agree to treat
and to take no action inconsistent with the treatment of the Notes as such
indebtedness for purposes of federal, state, local and foreign income or
franchise taxes and any other tax imposed on or measured by income. Each
Noteholder, by acceptance of its Note, agrees to be bound by the provisions of
this paragraph. Each Noteholder agrees that it will cause any Person acquiring
an interest in a Note through it to comply with the Indenture as to treatment as
indebtedness under applicable tax law, as described in this paragraph.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Outstanding Series 1997-1F Notes may, at the option
of the Corporation (and at such time as no Tax Exempt Auction Rate Series 1997-1
Notes are Outstanding), be redeemed, in whole or in part, on any date, at a
Redemption Price equal to 100% of the Principal Amount thereof so redeemed, from
proceeds of the Tax Exempt Series 1997-1 Notes constituting a portion of the
Balance of the Series 1997-1 Tax Exempt Acquisition Account that have not been
used to acquire Eligible Loans and from that portion of the Series 1997-1 Tax
Exempt Reserve Account which, if left in the Reserve Fund upon such redemption,
would cause the Balance in the Reserve Fund to exceed the Reserve Fund
Requirement, calculated giving effect to such redemption. Such redemption shall
be required on on June 1, 2001 (to the extent the proceeds in the Series 1997-1
Tax Exempt Acquisition Account not so used as of April 15, 2001, exceed
$__________) and on June 1, 2002 (from such proceeds not so used as of April 15,
2002), unless the Corporation delivers to the Trustee: (i) an opinion of Bond
Counsel stating in effect that such redemption is not required pursuant to the
Code and that failure to so redeem Tax Exempt Series 1997-1 Notes will not
adversely affect the tax exempt status of interest on any Tax Exempt Series
1997-1 Notes for federal income tax purposes, (ii) a Corporation Certificate
certifying that, based on a Cash Flow Projection, the failure to so redeem Tax
Exempt Series 1997-1 Notes will not materially adversely affect the
Corporation's ability to pay Debt Service on the Outstanding Notes and the
Outstanding Other Obligations, Carry-Over Amounts (including accrued interest
thereon) with respect to Outstanding Notes, Administrative Expenses or Note Fees
or to make required deposits to the Rebate Fund, and (iii) written confirmation
from each of the Rating Agencies then rating the Series 1997-1 Notes to the
effect that the failure to so redeem Tax Exempt Series 1997-1 Notes will not
result in a reduction or withdrawal of the rating of the Series 1997-1 Notes.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Outstanding Series 1997-1F Notes may, at the option
of
A-2-4
the Corporation, be redeemed on ________________, and on any date thereafter, in
whole or in part, at a Redemption Price equal to 100% of the Principal Amount
thereof to be redeemed, from amounts credited to the Series 1997-1 Tax Exempt
Retirement Subaccount from the Series 1997-1 Tax Exempt Surplus Subaccount for
such purpose in accordance with the Indenture and from that portion of the
Series 1997-1 Tax Exempt Reserve Account which exceeds the Reserve Fund
Requirement (calculated after giving effect to such redemption). If the Trustee
shall have first certified that no deficiencies exist in any of the Rebate Fund,
the Note Fund, the Reserve Fund or the Special Redemption and Prepayment
Account, the Trustee shall, upon Corporation Order, transfer to the Series 1997-
1 Tax Exempt Retirement Account any Balances in the Series 1997-1 Tax Exempt
Surplus Subaccount (other than those consisting of Student Loans) which a
Corporation Certificate states are not reasonably expected to be needed for the
payment of scheduled Debt Service on the Outstanding Notes and Outstanding Other
Obligations, Carry-Over Amounts (including accrued interest thereon) with
respect to Outstanding Notes, Administrative Expenses or Note Fees, or for
transfer to the Rebate Fund.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements and certain other requirements, Outstanding Series
1997-1F Notes may, at the option of the Corporation and from amounts credited to
the Retirement Account for such purpose, be redeemed on June 1, ______, and on
any date thereafter, in whole or in part, at the Redemption Prices (expressed as
a percentage of Principal Amount) set forth below plus accrued interest to the
Redemption Date:
Redemption
Redemption Period Price
----------------- ------
December 1, 2007, through November 30, 2008 102%
December 1, 2008, through November 30, 2009 101%
December 1, 209, and thereafter 100%
Series 1997-1 Notes may, at the option of the Corporation, be
redeemed, in whole but not in part, at a Redemption Price equal to 100% of the
Principal Amount of Series 1997-1 Notes to be so redeemed plus accrued interest
thereon to the Redemption Date, on any date after the remaining aggregate
Principal Balance of Student Loans Financed with proceeds of the Series 1997-1
Notes is less than 10% of the amounts initially deposited to the credit of the
Acquisition Fund.
If not all Series 1997-1 Notes subject to redemption are to be
redeemed, the particular Series 1997-1 Notes to be redeemed are to be selected
as provided in the Indenture.
Notice of redemption shall be given by first-class mail mailed at
least 30 days before the Redemption Date to each Holder of Series 1997-1F Notes
to be redeemed at his last address appearing on the Note Register; but no defect
in or failure to give such notice of redemption shall affect the validity of
proceedings for
A-2-5
redemption of any Note not affected by such defect or failure. All Series 1997-
1F Notes so called for redemption will cease to bear interest on such Redemption
Date, provided funds for their redemption have been duly deposited, and, except
for the purpose of payment, shall no longer be protected by the Indenture and
shall not be deemed Outstanding thereunder.
It is provided in the Indenture that Series 1997-1F Notes of a
denomination larger than $5,000 may be redeemed in part ($5,000 or an integral
multiple thereof) and that upon any partial redemption of any such Series 1997-
1F Note the same shall be surrendered in exchange for one or more new Notes of
the same series in authorized form for the unredeemed portion of principal.
If provision is made for the payment of principal of, premium, if any,
and interest on this Note in accordance with the Indenture, this Note shall no
longer be deemed Outstanding under the Indenture, shall cease to be entitled to
the benefits of the Indenture and shall thereafter be payable solely from the
funds provided for such payment.
If an Event of Default shall occur, the principal of all the
Outstanding Notes may and, under certain circumstances, shall be declared due
and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Corporation and the rights of the Holders of the Notes and Other Beneficiaries
under the Indenture at any time by the Corporation with, among other things, the
consent of the Holders of two-thirds of the aggregate Principal Amount of Class
A Notes at the time Outstanding, if affected thereby, and with the consent of
the Holders of two-thirds of the aggregate Principal Amount of Class B Notes at
the time Outstanding, if affected thereby. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
Principal Amount of the Class A Notes at the time Outstanding or Other Senior
Beneficiaries or, if no Senior Obligations are Outstanding, the Holders of
specified percentages in aggregate Principal Amount of the Class B Notes at the
time Outstanding or Other Subordinate Beneficiaries, on behalf of the Holders of
all the Notes, to waive certain past defaults under the Indenture and their
consequences. Any such consent or waiver shall be conclusive and binding upon
the Registered Holder of this Note and upon all future Registered Holders hereof
and of any Note issued in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Note.
This Note is transferable by the Registered Holder hereof upon
surrender of this Note for transfer at the Principal Office of the Note
Registrar (which shall be the Trustee unless and until an Authenticating Agent
becomes the Note Registrar under the Indenture) or at the Principal Office of a
duly appointed Authenticating Agent (the "Authenticating Agent," which term
includes any
A-2-6
successor Authenticating Agent under the Indenture), duly endorsed or
accompanied by a written instrument of transfer in form satisfactory to the Note
Registrar or the Authenticating Agent, as the case may be, and executed by the
Registered Holder hereof or his attorney duly authorized in writing, with
signature guarantees satisfactory to the Note Registrar or the Authenticating
Agent, as the case may be. This Note may also be exchanged for one or more other
Notes of the same series upon surrender hereof at the Principal Office of the
Note Registrar or the Principal Office of an Authenticating Agent. Thereupon the
Corporation shall execute and the Trustee or the Authenticating Agent, as the
case may be, shall authenticate and deliver, in exchange for this Note, one or
more new fully registered Notes in the name of the transferee, of an authorized
denomination, in aggregate Principal Amount equal to the Principal Amount of
this Note, of the same series and bearing interest at the same rate. Thereupon
the Corporation shall execute and the Trustee or the Authenticating Agent, as
the case may be, shall authenticate and deliver, in exchange for this Note, one
or more new fully registered Notes in the name of the transferee, of an
authorized denomination, in aggregate Principal Amount equal to the Principal
Amount of this Note, of the same series and bearing interest at the same rate.
No Authenticating Agent will be initially appointed with respect to the Series
1997-1F Notes. Notwithstanding the foregoing provisions of this paragraph, no
Series 1997-1F Note shall be required to be transferred, (i) during a period
beginning at the opening of business fifteen days before any selection of Series
1997-1F Notes for redemption and ending at the close of business on the day of
such selection, or (ii) if such Series 1997-1F Note has been selected for
redemption in whole or in part.
The Corporation may require payment by the Registered Holder hereof of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of this Note, other than
certain exchanges specifically exempted under the Indenture and not involving
any transfer.
The Corporation, the Trustee, each Paying Agent, any Authenticating
Agent, the Note Registrar and any other agent of the Corporation may treat the
Person in whose name this Note is registered on the Note Register as the
absolute owner hereof for all purposes, whether or not this Note is overdue, and
neither the Corporation, the Trustee, any Paying Agent, any Authenticating
Agent, the Note Registrar nor any other such agent shall be affected by notice
to the contrary.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND DECLARED that all
acts, conditions and things required to have happened, to exist and to have been
performed precedent to and in the issuance of this Note have happened, do exist,
and have been performed in regular and due time, form and manner as so required.
This Note shall not be valid or become obligatory for any purpose or
be entitled to any security or benefit under the Indenture until the Certificate
of
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Authentication hereon shall have been signed by the Trustee or by the
Authenticating Agent by the manual signature of one of its authorized
representatives.
IN WITNESS WHEREOF, the Corporation has caused this Note to be
executed in its name by the manual signatures of its President and Secretary,
and its corporate seal to be impressed hereon.
Dated: _______________ EDUCATION LOANS INCORPORATED
__________________________
President
(SEAL)
__________________________
Secretary
_____________________________
CERTIFICATE OF AUTHENTICATION
This Note is one of the Notes of the series designated therein and
issued under the provisions of the within-mentioned Indenture.
FIRST BANK NATIONAL
ASSOCIATION, as Trustee
By_____________________________
Authorized Representative
A-2-8
__________________________
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto ________________________ the within Note and irrevocably appoints
____________________________, attorney-in-fact, to transfer the within Note on
the books kept for registration thereof, with full power of substitution in the
premises.
Dated _______________________
PLEASE INSERT SOCIAL SECURITY
__________________________________________
OR OTHER IDENTIFYING NUMBER NOTICE: The signature to this assignment
OF ASSIGNEE must correspond with the name as it appears
upon the face of the within Note in every
______________________________
particular, without any alteration
whatsoever.
SIGNATURE GUARANTEED:
______________________________
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
-----------
FORM OF TAXABLE AUCTION RATE SERIES 1997-1 NOTES
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
EDUCATION LOANS INCORPORATED
TAXABLE AUCTION RATE STUDENT LOAN ASSET-BACKED NOTE
SENIOR SERIES 1997-G [H]
CLASS A
No. R___ $________
Stated Date of Original Interest
Maturity Date Issue Rate CUSIP
------------- ---------------- -------- -----
June 1, 2020 July ___, 1997 Variable 83756E ___
REGISTERED HOLDER: CEDE & CO.
PRINCIPAL AMOUNT:
FOR VALUE RECEIVED, EDUCATION LOANS INCORPORATED, a nonprofit
corporation organized under the laws of the State of South Dakota (the
"Corporation," which term includes any successor corporation under the Indenture
hereinafter referred to, including, upon completion of the Section 150(d)(3)
Transfer, EdLinc), acknowledges itself indebted and hereby promises to pay to
the registered holder specified above, or registered assigns (the "Registered
Holder"), but solely from the revenues and receipts hereinafter specified and
not otherwise, the Principal Amount specified above on the Stated Maturity Date
specified above (subject to the right of prior redemption hereinafter
mentioned), upon presentation and surrender of this Note at the Principal Office
of the Trustee (as hereinafter defined), as Paying Agent for the Series 1997-1
Notes (as hereinafter defined), or a duly appointed successor Paying Agent, and
to pay interest on said Principal
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Amount, but solely from the revenues and receipts hereinafter specified and not
otherwise, to the Registered Holder hereof from the date hereof until the
payment of said Principal Amount has been made or duly provided for, payable on
each Interest Payment Date, commencing _______, 1997, at the Auction Rate Series
1997-1 Note Interest Rate (as hereinafter described), and at the same rate per
annum (to the extent that the payment of such interest shall be legally
enforceable) on overdue installments of interest. Payment of interest on this
Note on each regularly scheduled Interest Payment Date shall be made by check or
draft drawn upon the Paying Agent and mailed to the Person who is the Registered
Holder hereof as of 5:00 p.m. in the city in which the Principal Office of the
Note Registrar is located on the applicable Regular Record Date at the address
of such Registered Holder as it appears on the Note Register maintained by the
Note Registrar, or, if the Registered Holder of this Note is the Registered
Holder of Series 1997-1 Notes in the aggregate Principal Amount of $1,000,000 or
more (or, if less than $1,000,000 in Principal Amount of Series 1997-1 Notes is
outstanding, the Registered Holder of all outstanding Series 1997-1 Notes), at
the direction of such Registered Holder received by the Paying Agent by 5:00
p.m. in the city in which the Principal Office of the Paying Agent is located on
the last Business Day preceding the applicable Regular Record Date, by
electronic transfer by the Paying Agent in immediately available funds to an
account designated by such Registered Holder. In addition, interest on this Note
is payable at the Maturity hereof in the same manner as the principal hereof,
unless the date of such Maturity is a regularly scheduled Interest Payment Date,
in which event interest is payable in the manner set forth in the preceding
sentence. Any interest not so timely paid or duly provided for shall cease to be
payable to the Person who is the Registered Holder hereof at the close of
business on the Regular Record Date and shall be payable to the Person who is
the Registered Holder hereof at the close of business on a special record date
for the payment of any such defaulted interest. Such special record date shall
be fixed by the Trustee whenever moneys become available for payment of the
defaulted interest, and notice of the special record date shall be given to the
Registered Holder hereof not less than ten days prior thereto by first-class
mail to such Registered Holder as shown on the Note Register on a date selected
by the Trustee, stating the date of the special record date and the date fixed
for the payment of such defaulted interest. The principal of and interest on
this Note are payable in lawful money of the United States of America.
INTEREST ON THIS NOTE IS SUBJECT TO FEDERAL INCOME TAXATION PURSUANT
TO AN ELECTION MADE BY THE CORPORATION UNDER SECTION 625(c) OF THE TAX REFORM
ACT OF 1984 AND 26 CFR (S)301.9100-6T(d).
This Note is one of an authorized issue of Notes (the "Notes"), issued
and to be issued by the Corporation in one or more series pursuant to an
Indenture of Trust, dated as of July 1, 1997 (as supplemented and amended, the
"Indenture"), as supplemented by a First Supplemental Indenture of Trust, dated
as of July 1, 1997 (the "First Supplemental Indenture"), each between the
Corporation and First Bank
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National Association, Minneapolis, Minnesota, as Trustee (the "Trustee," which
term includes any successor trustee under the Indenture). As provided in the
Indenture, the Notes are issuable in series which may vary as in the Indenture
provided or permitted. This Note is one of a series issued in an aggregate
Principal Amount of $__________ (the "Series 1997-G [H] Notes"). The Series
1997-G [H] Notes are issued simultaneously with nine other series of Class A
Notes issued in the aggregate Principal Amount of $__________ (together with the
Series 1997-G [H] Notes, collectively referred to herein as the "Series 1997-1
Senior Notes"), and two series of Class B Notes issued in the aggregate
Principal Amount of $__________ (the "Series 1997-1 Subordinate Notes" and,
together with the Series 1997-1 Senior Notes, collectively referred to herein as
the "Series 1997-1 Notes"). The proceeds of the Series 1997-1 Notes will be used
by the Corporation to (a) acquire student loan notes incurred under the Higher
Education Act and (b) fund the Reserve Fund.
Reference is hereby made to the Indenture, copies of which are on file
in the principal corporate trust office of the Trustee, and to all of the
provisions of which any Registered Holder of this Note by his acceptance hereof
hereby assents, for definitions of terms; the description of and the nature and
extent of the security for the various classes of Notes and Other Obligations
secured thereunder; the student loan acquisition program being financed by the
issuance of the Notes; the revenues and other moneys pledged to the payment of
the principal of, premium, if any, and interest on the Notes and the Other
Obligations; the nature and extent and manner of enforcement of the pledge; the
conditions upon which Notes may be issued or Other Obligations may be incurred
by the Corporation thereunder, payable from such revenues and other moneys
thereunder as Senior Obligations, Subordinate Obligations or Class C Notes; the
conditions upon which the Indenture may be amended or supplemented with or
without the consent of the Holders of the Notes; the rights and remedies of the
Registered Holder hereof with respect hereto and thereto, including the
limitations upon the right of a Registered Holder hereof to institute any suit,
action or proceeding in equity or at law with respect hereto and thereto; the
rights, duties and obligations of the Corporation and the Trustee thereunder;
the terms and provisions upon which the liens, pledges, charges, trusts and
covenants made therein may be discharged at or prior to the Maturity or
redemption of this Note, and this Note thereafter no longer be secured by the
Indenture, or be deemed to be Outstanding thereunder; and for the other terms
and provisions thereof. Terms used with initial capital letters but not defined
in this Note have the respective meanings given such terms in the Indenture.
The Series 1997-G [H] Notes are being issued as, and will constitute, taxable
Class A Notes under the Indenture. One other series of the Series 1997-1 Senior
Notes also is a series of taxable Class A Notes which, like the Series 1997-G
[H] Notes, bears interest at an Auction Rate Series 1997-1 Note Interest Rate,
and, together with the Series 1997-G [H] Notes, are collectively referred to
herein as the "Taxable Auction Rate Series 1997-1 Notes."
The Notes and Other Obligations are limited obligations of the
Corporation, payable solely from the revenues and assets of the Corporation
pledged
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therefor under the Indenture, including certain notes evidencing Student Loans
and the proceeds of the Corporation's bonds, notes or other evidences of
indebtedness, if any, issued with respect to the Notes.
Each Noteholder, by acceptance of a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder will
not at any time institute against the Corporation, or join in any institution
against the Corporation, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings under any United States Federal or state bankruptcy
or similar law in connection with any obligations relating to the Notes, the
Indenture or the Servicing Agreement.
The Corporation has structured the Indenture and the Notes with the
intention that the Notes will qualify under applicable federal, state, local and
foreign tax law as indebtedness of the Corporation secured by the Trust Estate.
The Corporation, the Trustee, the Servicer and each Noteholder agree to treat
and to take no action inconsistent with the treatment of the Notes as such
indebtedness for purposes of federal, state, local and foreign income or
franchise taxes and any other tax imposed on or measured by income. Each
Noteholder, by acceptance of its Note, agrees to be bound by the provisions of
this paragraph. Each Noteholder agrees that it will cause any Person acquiring
an interest in a Note through it to comply with the Indenture as to treatment as
indebtedness under applicable tax law, as described in this paragraph.
Interest payable on this Note shall be computed on the basis of actual
days elapsed and accrue daily from the date hereof (on the basis of a 360-day
year), and is payable on each regularly scheduled Interest Payment Date prior to
the Maturity of this Note and at the Maturity of this Note. The interest
payable on each Interest Payment Date for this Note shall be [calculated on a
per unit basis, based on a unit of $100,000, and shall be] that interest which
has accrued through the last day preceding such Interest Payment Date or, in the
case of the Maturity of this Note, the last day preceding the date of such
Maturity. The Auction Rate Series 1997-1 Note Interest Rate shall be effective
as of and on the first day (whether or not a Business Day) of the applicable
Interest Period and be in effect thereafter through the end of such Interest
Period.
The unpaid Principal Amount hereof from time to time outstanding shall
bear interest at an Auction Rate Series 1997-1 Note Interest Rate, as described
below, payable on each Interest Payment Date and at the Maturity hereof, such
interest to accrue from the later of the date hereof or the date through which
interest has been paid or duly provided for.
During the Initial Interest Period, this Note shall bear interest at
the Auction Rate Series 1997-1 Note Initial Interest Rate for the Series 1997-G
[H] Notes. Thereafter, until an Auction Period Adjustment, if any, this Note
shall bear interest at an Auction Rate Series 1997-1 Note Interest Rate based on
an Auction Period that
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shall generally consist of 28 days, all as determined in accordance with the
applicable provisions of the First Supplemental Indenture.
In no event shall the Auction Rate Series 1997-1 Note Interest Rate on
this Note exceed 18% per annum (the "Auction Rate Series 1997-1 Note Interest
Rate Limitation").
The Auction Period (which shall be the Interest Period), the
applicable Auction Rate Series 1997-1 Note Interest Rate, the method of
determining the applicable Auction Rate Series 1997-1 Note Interest Rate on each
of the Series 1997-G [H] Notes and the Auction Procedures related thereto,
including, without limitation, required notices thereof and any changes therein
to the Holders or Existing Holders of the Auction Rate Series 1997-1 Notes, will
be determined in accordance with the terms, conditions and provisions of the
First Supplemental Indenture and the Auction Agent Agreement (Taxable Auction
Rate Series 1997-1 Notes), dated as of July 1, 1997 (which, together with any
substitute therefor, is herein referred to as the "Auction Agent Agreement"),
between the Trustee and Bankers Trust Company (which, together with any
substitute therefor, is herein referred to as the "Auction Agent"), to which
terms, conditions and provisions specific reference is hereby made, and all of
which terms, conditions and provisions are hereby specifically incorporated
herein by reference.
If the Auction Rate for the Series 1997-1G [H] Notes is greater than
the Net Loan Rate, then the Auction Rate Series 1997-1 Note Interest Rate
applicable to the Taxable Auction Rate Series 1997-1 Notes for that Interest
Period will be the Net Loan Rate. If the Auction Rate Series 1997-1 Note
Interest Rate applicable to the Series 1997-1G [H] Notes for any Interest Period
is the Net Loan Rate, the Trustee shall determine the Carry-Over Amount, if any,
with respect to the Series 1997-1G [H] Notes for such Interest Period. Such
Carryover Amount shall bear interest calculated at a rate equal to One-Month
LIBOR from the Interest Payment Date for the Interest Period with respect to
which such Carry-Over Amount was calculated until paid. For purposes of this
Note, any reference to "principal" or "interest" herein shall not include within
the meaning of such words Carry-Over Amount or any interest accrued on any such
Carry-Over Amount. Such Carry-Over Amount shall be separately calculated for
each Series 1997-1G [H] Note by the Trustee during such Interest Period in
sufficient time for the Trustee to give notice to each Holder of such Carry-Over
Amount as required in the next succeeding sentence. On the Interest Payment
Date for an Interest Period with respect to which such Carry-Over Amount has
been calculated by the Trustee, the Trustee shall give written notice to each
Holder of the Carry-Over Amount applicable to each Holder's Series 1997-1G [H]
Note, which written notice may accompany the payment of interest by check made
to each such Holder on such Interest Payment Date or otherwise shall be mailed
on such Interest Payment Date by first class mail, postage prepaid, to each such
Holder at such Holder's address as it appears on the registration books
maintained by the Note Registrar. Such notice shall state, in addition to such
Carry-Over Amount, that, unless and until a Series 1997-1G [H] Note has been
redeemed
A-3-5
or has been deemed no longer Outstanding under the First Supplemental Indenture
(after which no Carry-Over Amount shall be paid with respect to a Series 1997-1G
[H] Note), (i) the Carry-Over Amount (and interest accrued thereon) shall be
paid by the Trustee on such Series 1997-1G [H] Note on the first occurring
Interest Payment Date for a subsequent Interest Period if and to the extent that
(l) the Eligible Carry-Over Make-Up Amount with respect to such Interest Period
is greater than zero, and (2) moneys are available pursuant to the terms of the
First Supplemental Indenture to pay such Carry-Over Amount (and interest accrued
thereon), and (ii) interest shall accrue on the Carry-Over Amount at a per annum
rate equal to One-Month LIBOR until such Carry-Over Amount is paid in full or is
canceled.
The Carry-Over Amount for the Series 1997-1G [H] Notes shall be paid
by the Trustee on Outstanding Series 1997-1G [H] Notes on the first occurring
Interest Payment Date for a subsequent Interest Period if and to the extent that
(i) the Eligible Carry-Over Make-Up Amount with respect to such Interest Period
is greater than zero, and (ii) moneys in the Surplus Account are available on
such Interest Payment Date for transfer to the Interest Account for such purpose
in accordance with the applicable provisions of the Indenture, after taking into
account all other amounts payable from the Surplus Fund on such Interest Payment
Date. Any Carry-Over Amount (and any interest accrued thereon) which is unpaid
as of an Interest Payment Date with respect to any Series 1997-1G [H] Note,
which Series 1997-1G [H] Note is to be redeemed or deemed no longer Outstanding
under the First Supplemental Indenture on such Interest Payment Date, shall be
paid to the Holder thereof on such Interest Payment Date to the extent that
moneys are available therefor in accordance with the provisions of the preceding
clause (b); provided, however, that any Carry-Over Amount (and any interest
accrued thereon) which is not so paid on such Interest Payment Date shall be
canceled with respect to such Series 1997-1G [H] Note on such Interest Payment
Date and shall not be paid on any succeeding Interest Payment Date. To the
extent that any portion of the Carry-Over Amount (and any interest accrued
thereon) remains unpaid after payment of a portion thereof, such unpaid portion
shall be paid in whole or in part as required hereunder until fully paid by the
Trustee on the next occurring Interest Payment Date or Dates, as necessary, for
a subsequent Interest Period or Periods, if and to the extent that the
conditions in the first sentence of this paragraph are satisfied. On any
Interest Payment Date on which the Trustee pays less than all of the Carry-Over
Amount (and any interest accrued thereon) with respect to a Series 1997-1G [H]
Note, the Trustee shall give written notice in the manner set forth in the
immediately preceding paragraph to the Holder of such Series 1997-1G [H] Note of
the Carry-Over Amount remaining unpaid on such Series 1997-1G [H] Note.
The Interest Payment Date in such subsequent Interest Period on which
such Carry-Over Amount for the Series 1997-1G [H] Notes shall be paid shall be
determined by the Trustee in accordance with the provisions of the immediately
preceding paragraph, and the Trustee shall make payment of the Carry-Over Amount
in the same manner as, and from the same Account from which, it pays interest on
the Series 1997-1G [H] Notes on an Interest Payment Date.
A-3-6
By purchasing Series 1997-G [H] Notes, whether in an Auction or
otherwise, each purchaser of the Series 1997-G [H] Notes, or its Broker-Dealer,
must agree and shall be deemed by such purchase to have agreed (i) to
participate in Auctions on the terms described in the First Supplemental
Indenture, (ii) to have its beneficial ownership of the Series 1997-G [H] Notes
maintained at all times in Book-Entry Form for the account of its Participant,
which in turn will maintain records of such beneficial ownership, and (iii) to
authorize such Participant to disclose to the Auction Agent such information
with respect to such beneficial ownership as the Auction Agent may request. So
long as the ownership of Series 1997-G [H] Notes is maintained in Book-Entry
Form by the Securities Depository, an Existing Holder may sell, transfer or
otherwise dispose of Series 1997-G [H] Notes only pursuant to a Bid or Sell
Order placed in an Auction or otherwise sell, transfer or dispose of Series
1997-G [H] Notes through a Broker-Dealer, provided that, in the case of all
transfers other than pursuant to Auctions, such Existing Holder, its Broker-
Dealer or its Participant advises the Auction Agent of such transfer.
The determination of an Auction Rate Series 1997-1 Note Interest Rate
by the Auction Agent or any other authorized Person pursuant to the provisions
of the First Supplemental Indenture shall be conclusive and binding on the
Holders of the Series 1997-G [H] Notes to which such Auction Rate Series 1997-1
Note Interest Rate applies, and the Corporation and the Trustee may rely thereon
for all purposes.
Notwithstanding any provision of this Note to the contrary, in no
event shall the cumulative amount of interest paid or payable on this Note
(including interest calculated as provided herein, plus any other amounts that
constitute interest on this Note under applicable law, which are contracted for,
charged, reserved, taken or received pursuant to this Note or related documents)
calculated from the date of issuance of this Note through any subsequent day
during the term of this Note or otherwise prior to payment in full of this Note
exceed the amount permitted by applicable law. If the applicable law is ever
judicially interpreted so as to render usurious any amount called for under this
Note or related documents or otherwise contracted for, charged, reserved, taken
or received in connection with this Note, or if the redemption or acceleration
of the Maturity of this Note results in payment to or receipt by the Registered
Holder or any former Registered Holder hereof of any interest in excess of that
permitted by applicable law, then notwithstanding any provision of this Note or
related documents to the contrary all excess amounts theretofore paid or
received with respect to this Note shall be credited on the Principal Amount of
this Note (or, if this Note has been paid or would thereby be paid in full,
refunded by the recipient thereof), and the provisions of this Note and related
documents shall immediately be deemed reformed and the amounts thereafter
collectible hereunder and thereunder reduced, without the necessity of the
execution of any new document, so as to comply with the applicable law, but so
as to permit the recovery of the fullest amount otherwise called for under this
Note and under the related documents.
A-3-7
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Series 1997-1 Notes may, at the option of the
Corporation, be redeemed, in whole but not in part, at a Redemption Price equal
to 100% of the Principal Amount of Series 1997-1 Notes to be so redeemed plus
accrued interest thereon to the Redemption Date, on any date after the remaining
aggregate Principal Balance of Student Loans Financed with proceeds of the
Series 1997-1 Notes is less than 10% of the amounts initially deposited to the
credit of the Acquisition Fund.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Outstanding Taxable Auction Rate Series 1997-1 Notes
of any series may be redeemed, in whole or in part, on any any regularly
scheduled Interest Payment Date, at a Redemption Price equal to 100% of the
Principal Amount thereof so redeemed, from proceeds of the Taxable Series 1997-1
Notes constituting a portion of the Balance of the Series 1997-1 Taxable
Acquisition Account that have not been used to acquire Eligible Loans and from
that portion of the Series 1997-1 Taxable Reserve Account which, if left in the
Reserve Fund upon such redemption, would cause the Balance in the Reserve Fund
to exceed the Reserve Fund Requirement, calculated giving effect to such
redemption. Such redemption shall be required on the regularly scheduled
Interest Payment Date occuring in September, 1998 (from such proceeds not so
used as of August 1, 1998), unless the Corporation delivers to the Trustee: (i)
a Corporation Certificate certifying that, based on a Cash Flow Projection, the
failure to redeem such Taxable Auction Rate Series 1997-1 Notes will not
materially adversely affect the Corporation's ability to pay Debt Service on the
Outstanding Notes and the Outstanding Other Obligations, Carry-Over Amounts
(including accrued interest thereon) with respect to Outstanding Notes,
Administrative Expenses or Note Fees or to make required deposits to the Rebate
Fund, and (ii) written confirmation from each of the Rating Agencies then rating
the Series 1997-1 Notes to the effect that the failure to redeem such Taxable
Auction Rate Series 1997-1 Notes will not result in a reduction or withdrawal of
the rating of the Series 1997-1 Notes.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Outstanding Taxable Auction Rate Series 1997-1 Notes
of any series may, at the option of the Corporation, be redeemed on any Interest
Rate Adjustment Date for such series or any regularly scheduled Interest Payment
Date occurring on or after ___________, in whole or in part, at a Redemption
Price equal to 100% of the Principal Amount thereof to be redeemed, from amounts
credited to the Series 1997-1 Taxable Retirement Subaccount from the Series
1997-1 Taxable Surplus Subaccount for such purpose in accordance with the
Indenture and from that portion of the Series 1997-1 Taxable Reserve Account
which exceeds the Reserve Fund Requirement (calculated after giving effect to
such redemption). If the Trustee shall have first certified that no deficiencies
exist in any of the Rebate Fund, the Note Fund, the Reserve Fund or the Special
Redemption and Prepayment Account, the Trustee shall, upon Corporation Order,
transfer to the Series 1997-1 Taxable Retirement Account any Balances in the
Series 1997-1 Taxable Surplus Subaccount
A-3-8
(other than those consisting of Student Loans) which a Corporation Certificate
states are not reasonably expected to be needed for the payment of scheduled
Debt Service on the Outstanding Notes and Outstanding Other Obligations, Carry-
Over Amounts (including accrued interest thereon) with respect to Outstanding
Notes, Administrative Expenses or Note Fees, or for transfer to the Rebate Fund.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements and certain other requirements, Outstanding Taxable
Auction Rate Series 1997-1 Notes of any series may, at the option of the
Corporation, be redeemed on any Interest Rate Adjustment Date for such series or
any regularly scheduled Interest Payment Date, in whole or in part, at a
Redemption Price equal to 100% of the Principal Amount thereof to be redeemed,
from amounts credited to the Retirement Account for such purpose.
If not all Series 1997-1 Notes subject to redemption are to be
redeemed, the particular Series 1997-1 Notes to be redeemed are to be selected
as provided in the Indenture.
Notice of redemption shall be given by first-class mail mailed at
least 15 days before the Redemption Date to each Holder of Series 1997-G [H]
Notes to be redeemed at his last address appearing on the Note Register; but no
defect in or failure to give such notice of redemption shall affect the validity
of proceedings for redemption of any Series 1997-G [H] Notes not affected by
such defect or failure. All Series 1997-G [H] Notes so called for redemption
will cease to bear interest on such Redemption Date, provided funds for their
redemption have been duly deposited, and, except for the purpose of payment,
shall no longer be protected by the Indenture and shall not be deemed
Outstanding thereunder.
It is provided in the Indenture that Series 1997-G [H] Notes of a
denomination larger than $100,000 may be redeemed in part ($100,000 or an
integral multiple thereof) and that upon any partial redemption of any such
Series 1997-G [H] Note the same shall be surrendered in exchange for one or more
new Notes of the same series in authorized form for the unredeemed portion of
principal.
If provision is made for the payment of principal of and interest on
this Note in accordance with the Indenture, this Note shall no longer be deemed
Outstanding under the Indenture, shall cease to be entitled to the benefits of
the Indenture and shall thereafter be payable solely from the funds provided for
such payment.
If an Event of Default shall occur, the principal of all the
Outstanding Notes may and, under certain circumstances, shall be declared due
and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
A-3-9
Corporation and the rights of the Holders of the Notes and Other Beneficiaries
under the Indenture at any time by the Corporation with, among other things, the
consent of the Holders of two-thirds of the aggregate Principal Amount of Class
A Notes at the time Outstanding, if affected thereby, and the consent of the
Holders of two-thirds of the aggregate Principal Amount of Class B Notes at the
time Outstanding, if affected thereby. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate Principal Amount of
the Class A Notes at the time Outstanding or Other Senior Beneficiaries or, if
no Senior Obligations are Outstanding, the Holders of specified percentages in
aggregate Principal Amount of the Class B Notes at the time Outstanding or Other
Subordinate Beneficiaries, on behalf of the Holders of all the Notes, to waive
certain past defaults under the Indenture and their consequences. Any such
consent or waiver shall be conclusive and binding upon the Registered Holder of
this Note and upon all future Registered Holders hereof and of any Note issued
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Note.
This Note is transferable by the Registered Holder hereof upon
surrender of this Note for transfer at the Principal Office of the Note
Registrar (which shall be the Trustee unless and until an Authenticating Agent
becomes the Note Registrar under the Indenture) or at the Principal Office of a
duly appointed Authenticating Agent (the "Authenticating Agent," which term
includes any successor Authenticating Agent under the Indenture), duly endorsed
or accompanied by a written instrument of transfer in form satisfactory to the
Note Registrar or such Authenticating Agent, as the case may be, and executed by
the Registered Holder hereof or his attorney duly authorized in writing, with
signature guarantees satisfactory to the Note Registrar or such Authenticating
Agent, as the case may be. This Note may also be exchanged for one or more
other Notes of the same series upon surrender hereof at the Principal Office of
the Note Registrar or the Principal Office of an Authenticating Agent.
Thereupon the Corporation shall execute and the Trustee or the Authenticating
Agent, as the case may be, shall authenticate and deliver, in exchange for this
Note, one or more new fully registered Notes in the name of the transferee, of
an authorized denomination, in aggregate Principal Amount equal to the Principal
Amount of this Note, of the same series and bearing interest at the same rate.
No Authenticating Agent will be initially appointed with respect to the Series
1997-G [H] Notes. Notwithstanding the foregoing provisions of this paragraph,
no Series 1997-G [H] Note shall be required to be transferred, (i) during a
period beginning at the opening of business fifteen days before any selection of
Series 1997-G [H] Notes for redemption and ending at the close of business on
the day of such selection, or (ii) if such Series 1997-G [H] Note has been
selected for redemption in whole or in part.
The Corporation may require payment by the Registered Holder hereof of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of this Note, other than
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certain exchanges specifically exempted under the Indenture and not involving
any transfer.
The Corporation, the Trustee, each Paying Agent, any Authenticating
Agent, the Note Registrar and any other agent of the Corporation may treat the
Person in whose name this Note is registered on the Note Register as the
absolute owner hereof for all purposes, whether or not this Note is overdue, and
neither the Corporation, the Trustee, any Paying Agent, any Authenticating
Agent, the Note Registrar nor any other such agent shall be affected by notice
to the contrary.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND DECLARED that all
acts, conditions and things required to have happened, to exist and to have been
performed precedent to and in the issuance of this Note have happened, do exist,
and have been performed in regular and due time, form and manner as so required.
This Note shall not be valid or become obligatory for any purpose or
be entitled to any security or benefit under the Indenture until the Certificate
of Authentication hereon shall have been signed by the Trustee or by the
Authenticating Agent by the manual signature of one of its authorized
representatives.
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IN WITNESS WHEREOF, the Corporation has caused this Note to be
executed in its name by the manual signatures of its President and Secretary,
and its corporate seal to be impressed hereon.
Dated: _______________ EDUCATION LOANS INCORPORATED
__________________________
President
(SEAL)
__________________________
Secretary
_____________________________
CERTIFICATE OF AUTHENTICATION
This Note is one of the Notes of the series designated therein and
issued under the provisions of the within-mentioned Indenture.
FIRST BANK NATIONAL
ASSOCIATION, as Trustee
By____________________________
Authorized Representative
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________________________________
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto ________________________ the within Note and irrevocably appoints
____________________________, attorney-in-fact, to transfer the within Note on
the books kept for registration thereof, with full power of substitution in the
premises.
Dated _______________________
PLEASE INSERT SOCIAL SECURITY
___________________________________________
OR OTHER IDENTIFYING NUMBER NOTICE: The signature to this assignment
OF ASSIGNEE must correspond with the name as it appears
upon the face of the within Note in every
particular, without any alteration
______________________________
whatsoever.
SIGNATURE GUARANTEED:
______________________________
▇-▇-▇▇
▇▇▇▇▇▇▇ ▇-▇
-----------
FORM OF LIBOR RATE SERIES 1997-1 SENIOR NOTES
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
EDUCATION LOANS INCORPORATED
TAXABLE LIBOR RATE STUDENT LOAN ASSET-BACKED NOTE
SENIOR SERIES 1997-I [J]
CLASS A
No. R______ $________________
Stated Date of Original Interest
Maturity Date Issue Rate CUSIP
------------- ---------------- -------- -----
June 1, 2020 July ___, 1997 Variable 83756E ___
REGISTERED HOLDER: CEDE & CO.
PRINCIPAL AMOUNT:
FOR VALUE RECEIVED, EDUCATION LOANS INCORPORATED, a nonprofit
corporation organized under the laws of the State of South Dakota (the
"Corporation," which term includes any successor corporation under the Indenture
hereinafter referred to, including, upon completion of the Section 150(d)(3)
Transfer, EdLinc), acknowledges itself indebted and hereby promises to pay to
the registered holder specified above, or registered assigns (the "Registered
Holder"), but solely from the revenues and receipts hereinafter specified and
not otherwise, the Principal Amount specified above on the Stated Maturity Date
specified above (subject to the right of prior redemption hereinafter
mentioned), upon presentation and surrender of this Note at the Principal Office
of the Trustee (as hereinafter defined), as Paying Agent for the Series 1997-1
Notes (as hereinafter defined), or a duly appointed successor Paying Agent, and
to pay interest on said Principal
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Amount, but solely from the revenues and receipts hereinafter specified and not
otherwise, to the Registered Holder hereof from the date hereof until the
payment of said Principal Amount has been made or duly provided for, payable on
each Interest Payment Date, commencing ___________, 1997, at the LIBOR Rate
Series 1997-1 Note Interest Rate (as hereinafter described), and at the same
rate per annum (to the extent that the payment of such interest shall be legally
enforceable) on overdue installments of interest. Payment of interest on this
Note on each regularly scheduled Interest Payment Date shall be made by check or
draft drawn upon the Paying Agent and mailed to the Person who is the Registered
Holder hereof as of 5:00 p.m. in the city in which the Principal Office of the
Note Registrar is located on the applicable Regular Record Date at the address
of such Registered Holder as it appears on the Note Register maintained by the
Note Registrar, or, if the Registered Holder of this Note is the Registered
Holder of Series 1997-1 Notes in the aggregate Principal Amount of $1,000,000 or
more (or, if less than $1,000,000 in Principal Amount of Series 1997-1 Notes is
outstanding, the Registered Holder of all outstanding Series 1997-1 Notes), at
the direction of such Registered Holder received by the Paying Agent by 5:00
p.m. in the city in which the Principal Office of the Paying Agent is located on
the last Business Day preceding the applicable Regular Record Date, by
electronic transfer by the Paying Agent in immediately available funds to an
account designated by such Registered Holder. In addition, interest on this Note
is payable at the Maturity hereof in the same manner as the principal hereof,
unless the date of such Maturity is a regularly scheduled Interest Payment Date,
in which event interest is payable in the manner set forth in the preceding
sentence. Any interest not so timely paid or duly provided for shall cease to be
payable to the Person who is the Registered Holder hereof at the close of
business on the Regular Record Date and shall be payable to the Person who is
the Registered Holder hereof at the close of business on a special record date
for the payment of any such defaulted interest. Such special record date shall
be fixed by the Trustee whenever moneys become available for payment of the
defaulted interest, and notice of the special record date shall be given to the
Registered Holder hereof not less than ten days prior thereto by first-class
mail to such Registered Holder as shown on the Note Register on a date selected
by the Trustee, stating the date of the special record date and the date fixed
for the payment of such defaulted interest. The principal of and interest on
this Note are payable in lawful money of the United States of America.
INTEREST ON THIS NOTE IS SUBJECT TO FEDERAL INCOME TAXATION PURSUANT
TO AN ELECTION MADE BY THE CORPORATION UNDER SECTION 625(c) OF THE TAX REFORM
ACT OF 1984 AND 26 CFR (S)301.9100-6T(d).
This Note is one of an authorized issue of Notes (the "Notes"), issued
and to be issued by the Corporation in one or more series pursuant to an
Indenture of Trust, dated as of July 1, 1997 (as supplemented and amended, the
"Indenture"), as supplemented by a First Supplemental Indenture of Trust, dated
as of July 1, 1997 (the "First Supplemental Indenture"), each between the
Corporation and First Bank
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National Association, Minneapolis, Minnesota, as Trustee (the "Trustee," which
term includes any successor trustee under the Indenture). As provided in the
Indenture, the Notes are issuable in series which may vary as in the Indenture
provided or permitted. This Note is one of a series issued in an aggregate
Principal Amount of $_________________(the "Series 1997-I [J] Notes"). The
Series 1997-I [J] Notes are issued simultaneously with nine other series of
Class A Notes issued in the aggregate Principal Amount of $_______________
(together with the Series 1997-I [J] Notes, collectively referred to herein as
the "Series 1997-1 Senior Notes"), and two series of Class B Notes issued in the
aggregate Principal Amount of $_____________________(the "Series 1997-1
Subordinate Notes" and, together with the Series 1997-1 Senior Notes,
collectively referred to herein as the "Series 1997-1 Notes"). The proceeds of
the Series 1997-1 Notes will be used by the Corporation to (a) acquire student
loan notes incurred under the Higher Education Act and (b) fund the Reserve
Fund.
Reference is hereby made to the Indenture, copies of which are on file
in the principal corporate trust office of the Trustee, and to all of the
provisions of which any Registered Holder of this Note by his acceptance hereof
hereby assents, for definitions of terms; the description of and the nature and
extent of the security for the various classes of Notes and Other Obligations
secured thereunder; the student loan acquisition program being financed by the
issuance of the Notes; the revenues and other moneys pledged to the payment of
the principal of, premium, if any, and interest on the Notes and the Other
Obligations; the nature and extent and manner of enforcement of the pledge; the
conditions upon which Notes may be issued or Other Obligations may be incurred
by the Corporation thereunder, payable from such revenues and other moneys
thereunder as Senior Obligations, Subordinate Obligations or Class C Notes; the
conditions upon which the Indenture may be amended or supplemented with or
without the consent of the Holders of the Notes; the rights and remedies of the
Registered Holder hereof with respect hereto and thereto, including the
limitations upon the right of a Registered Holder hereof to institute any suit,
action or proceeding in equity or at law with respect hereto and thereto; the
rights, duties and obligations of the Corporation and the Trustee thereunder;
the terms and provisions upon which the liens, pledges, charges, trusts and
covenants made therein may be discharged at or prior to the Maturity or
redemption of this Note, and this Note thereafter no longer be secured by the
Indenture, or be deemed to be Outstanding thereunder; and for the other terms
and provisions thereof. Terms used with initial capital letters but not defined
in this Note have the respective meanings given such terms in the Indenture.
The Series 1997-I [J] Notes are being issued as, and will constitute, taxable
Class A Notes under the Indenture. One other series of the Series 1997-1 Senior
Notes also is a series of taxable Class A Notes which, like the Series 1997-I
[J] Notes, bears interest at a LIBOR Rate Series 1997-1 Note Interest Rate, and,
together with the Series 1997-I [J] Notes, are collectively referred to herein
as the "LIBOR Rate Series 1997-1 Senior Notes."
The Notes and Other Obligations are limited obligations of the
Corporation, payable solely from the revenues and assets of the Corporation
pledged therefor under the Indenture, including certain notes evidencing Student
Loans and
A-4-3
the proceeds of the Corporation's bonds, notes or other evidences of
indebtedness, if any, issued with respect to the Notes.
Each Noteholder, by acceptance of a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder will
not at any time institute against the Corporation, or join in any institution
against the Corporation, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings under any United States Federal or state bankruptcy
or similar law in connection with any obligations relating to the Notes, the
Indenture or the Servicing Agreement.
The Corporation has structured the Indenture and the Notes with the
intention that the Notes will qualify under applicable federal, state, local and
foreign tax law as indebtedness of the Corporation secured by the Trust Estate.
The Corporation, the Trustee, the Servicer and each Noteholder agree to treat
and to take no action inconsistent with the treatment of the Notes as such
indebtedness for purposes of federal, state, local and foreign income or
franchise taxes and any other tax imposed on or measured by income. Each
Noteholder, by acceptance of its Note, agrees to be bound by the provisions of
this paragraph. Each Noteholder agrees that it will cause any Person acquiring
an interest in a Note through it to comply with the Indenture as to treatment as
indebtedness under applicable tax law, as described in this paragraph.
Interest payable on this Note shall be computed on the basis of actual
days elapsed and accrue daily from the date hereof (on the basis of a 360-day
year), and is payable on each regularly scheduled Interest Payment Date prior to
the Maturity of this Note and at the Maturity of this Note. The interest
payable on each Interest Payment Date for this Note shall be [calculated on a
per unit basis, based on a unit of $100,000, and shall be] that interest which
has accrued through the last day preceding such Interest Payment Date or, in the
case of the Maturity of this Note, the last day preceding the date of such
Maturity. The LIBOR Rate Series 1997-1 Note Interest Rate shall be effective as
of and on the first day (whether or not a Business Day) of the applicable
Interest Period and be in effect thereafter through the end of such Interest
Period.
The unpaid Principal Amount hereof from time to time outstanding shall
bear interest at a LIBOR Rate Series 1997-1 Note Interest Rate, as described
below, payable on each Interest Payment Date and at the Maturity hereof, such
interest to accrue from the later of the date hereof or the date through which
interest has been paid or duly provided for.
During the Initial Interest Period, this Note shall bear interest at
the LIBOR Rate Series 1997-1 Note Initial Interest Rate for the Series 1997-I
[J] Notes. The interest rate to be borne by this Note during each Interest
Period thereafter shall be determined on the related Interest Rate Determination
Date and shall be equal to the lesser of (i) the sum of One-Month LIBOR
determined with respect to such
A-4-4
Interest Rate Determination Date plus _____% (which is herein referred to as the
"LIBOR Rate Series 1997-1 Note LIBOR-Based Rate"), and (ii) the Net Loan Rate
determined with respect to such Interest Rate Determination Date. The Trustee
shall determine such interest rate on each Interest Rate Determination Date.
Notwithstanding any other provision of this Note or the First
Supplemental Indenture, interest payable on this Note for an Interest Period
shall never exceed for such Interest Period the amount of interest payable at
the Net Loan Rate in effect for such Interest Period.
If the LIBOR Rate Series 1997-1 Note LIBOR-Based Rate for the Series
1997-1I [J] Notes is greater than the Net Loan Rate, then the LIBOR Rate Series
1997-1 Note Interest Rate applicable to the Series 1997-1I [J] Notes for that
Interest Period will be the Net Loan Rate. If the LIBOR Rate Series 1997-1 Note
Interest Rate applicable to the Series 1997-1I [J] Notes for any Interest Period
is the Net Loan Rate, the Trustee shall determine the Carry-Over Amount, if any,
with respect to the Series 1997-1I [J] Notes for such Interest Period. Such
Carryover Amount shall bear interest calculated at a rate equal to the LIBOR
Rate Series 1997-1 Note LIBOR-Based Rate (as determined by the Trustee) from the
Interest Payment Date for the Interest Period with respect to which such Carry-
Over Amount was calculated until paid. For purposes of this Note, any reference
to "principal" or "interest" herein shall not include within the meaning of such
words Carry-Over Amount or any interest accrued on any such Carry-Over Amount.
Such Carry-Over Amount shall be separately calculated for each Series 1997-1I
[J] Note by the Trustee during such Interest Period in sufficient time for the
Trustee to give notice to each Holder of such Carry-Over Amount as required in
the next succeeding sentence. On the Interest Payment Date for an Interest
Period with respect to which such Carry-Over Amount has been calculated by the
Trustee, the Trustee shall give written notice to each Holder of the Carry-Over
Amount applicable to each Holder's Series 1997-1I [J] Note, which written notice
may accompany the payment of interest by check made to each such Holder on such
Interest Payment Date or otherwise shall be mailed on such Interest Payment Date
by first class mail, postage prepaid, to each such Holder at such Holder's
address as it appears on the registration books maintained by the Note
Registrar. Such notice shall state, in addition to such Carry-Over Amount,
that, unless and until a Series 1997-1I [J] Note has been redeemed or has been
deemed no longer Outstanding under the First Supplemental Indenture (after which
no Carry-Over Amount shall be paid with respect to a Series 1997-1I [J] Note),
(i) the Carry-Over Amount (and interest accrued thereon) shall be paid by the
Trustee on such Series 1997-1I [J] Note on the first occurring Interest Payment
Date for a subsequent Interest Period if and to the extent that (l) the Eligible
Carry-Over Make-Up Amount with respect to such Interest Period is greater than
zero, and (2) moneys are available pursuant to the terms of the First
Supplemental Indenture to pay such Carry-Over Amount (and interest accrued
thereon), and (ii) interest shall accrue on the Carry-Over Amount at a per annum
rate equal to the LIBOR Rate Series 1997-1 Note LIBOR-Based Rate until such
Carry-Over Amount is paid in full or is canceled.
A-4-5
The Carry-Over Amount for the Series 1997-1I [J] Notes shall be paid
by the Trustee on Outstanding Series 1997-1I [J] Notes on the first occurring
Interest Payment Date for a subsequent Interest Period if and to the extent that
(i) the Eligible Carry-Over Make-Up Amount with respect to such Interest Period
is greater than zero, and (ii) moneys in the Surplus Account are available on
such Interest Payment Date for transfer to the Interest Account for such purpose
in accordance with the applicable provisions of the Indenture, after taking into
account all other amounts payable from the Surplus Fund on such Interest Payment
Date. Any Carry-Over Amount (and any interest accrued thereon) which is unpaid
as of an Interest Payment Date with respect to any Series 1997-1I [J] Note,
which Series 1997-1I [J] Note is to be redeemed or deemed no longer Outstanding
under the First Supplemental Indenture on such Interest Payment Date, shall be
paid to the Holder thereof on such Interest Payment Date to the extent that
moneys are available therefor in accordance with the provisions of the preceding
clause (b); provided, however, that any Carry-Over Amount (and any interest
accrued thereon) which is not so paid on such Interest Payment Date shall be
canceled with respect to such Series 1997-1I [J] Note on such Interest Payment
Date and shall not be paid on any succeeding Interest Payment Date. To the
extent that any portion of the Carry-Over Amount (and any interest accrued
thereon) remains unpaid after payment of a portion thereof, such unpaid portion
shall be paid in whole or in part as required hereunder until fully paid by the
Trustee on the next occurring Interest Payment Date or Dates, as necessary, for
a subsequent Interest Period or Periods, if and to the extent that the
conditions in the first sentence of this paragraph are satisfied. On any
Interest Payment Date on which the Trustee pays less than all of the Carry-Over
Amount (and any interest accrued thereon) with respect to a Series 1997-1I [J]
Note, the Trustee shall give written notice in the manner set forth in the
immediately preceding paragraph to the Holder of such Series 1997-1I [J] Note of
the Carry-Over Amount remaining unpaid on such Series 1997-1I [J] Note.
The Interest Payment Date in such subsequent Interest Period on which
such Carry-Over Amount for the Series 1997-1I [J] Notes shall be paid shall be
determined by the Trustee in accordance with the provisions of the immediately
preceding paragraph, and the Trustee shall make payment of the Carry-Over Amount
in the same manner as, and from the same Account from which, it pays interest on
the Series 1997-1I [J] Notes on an Interest Payment Date.
In the event that the Trustee no longer determines, or fails to
determine, when required, the LIBOR Rate Series 1997-1 Note LIBOR-Based Rate
with respect to the Series 1997-1I [J] Notes, or if, for any reason, such manner
of determination shall be held to be invalid or unenforceable, the LIBOR Rate
Series 1997-1 Note LIBOR-Based Rate for each succeeding Interest Period shall be
the Net Loan Rate as determined by or on behalf of the Corporation with respect
to the related Interest Rate Determination Date, and if the Corporation shall
fail or refuse to determine such Net Loan Rate, the Net Loan Rate shall be
determined by a securities dealer appointed by the Trustee capable of making
such a determination
A-4-6
in accordance with the provisions hereof and written notice of such
determination shall be given by such securities dealer to the Trustee.
The determination of a LIBOR Rate Series 1997-1 Note Interest Rate by
the Trustee or any other authorized Person pursuant to the provisions of the
First Supplemental Indenture shall be conclusive and binding on the Holders of
the Series 1997-I [J] Notes to which such LIBOR Rate Series 1997-1 Note Interest
Rate applies, and the Corporation and the Trustee may rely thereon for all
purposes.
Notwithstanding any provision of this Note to the contrary, in no
event shall the cumulative amount of interest paid or payable on this Note
(including interest calculated as provided herein, plus any other amounts that
constitute interest on this Note under applicable law, which are contracted for,
charged, reserved, taken or received pursuant to this Note or related documents)
calculated from the date of issuance of this Note through any subsequent day
during the term of this Note or otherwise prior to payment in full of this Note
exceed the amount permitted by applicable law. If the applicable law is ever
judicially interpreted so as to render usurious any amount called for under this
Note or related documents or otherwise contracted for, charged, reserved, taken
or received in connection with this Note, or if the redemption or acceleration
of the Maturity of this Note results in payment to or receipt by the Registered
Holder or any former Registered Holder hereof of any interest in excess of that
permitted by applicable law, then notwithstanding any provision of this Note or
related documents to the contrary all excess amounts theretofore paid or
received with respect to this Note shall be credited on the Principal Amount of
this Note (or, if this Note has been paid or would thereby be paid in full,
refunded by the recipient thereof), and the provisions of this Note and related
documents shall immediately be deemed reformed and the amounts thereafter
collectible hereunder and thereunder reduced, without the necessity of the
execution of any new document, so as to comply with the applicable law, but so
as to permit the recovery of the fullest amount otherwise called for under this
Note and under the related documents.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Outstanding LIBOR Rate Series 1997-1 Notes shall
receive prepayments of principal on any Interest Payment Date from moneys
available therefor in the Series 1997-1 Taxable Special Redemption and
Prepayment Subaccount in accordance with the provisions of the First
Supplemental Indenture. All prepayments of principal in accordance with the
preceding sentence shall, subject to satisfying the asset requirements of the
Indenture, be allocated between the LIBOR Rate Series 1997-1 Senior Notes and
the Series 1997-1L Notes pro rata based upon their respective aggregate
Principal Amounts. All such prepayments of principal allocated to the LIBOR
Rate Series 1997-1 Senior Notes shall be applied to the Series 1997-1I Notes so
long as any such Notes remain Outstanding, and thereafter to the Series 1997-1J
Notes. All such prepayments of principal applied to the Series 1997-I [J] Notes
shall be allocated pro rata, based upon their respective
A-4-7
Principal Amounts, to the reduction of the Principal Amount of all Series 1997-I
[J] Notes.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Series 1997-1 Notesmay, at the option of the
Corporation, be redeemed, in whole but not in part, at a Redemption Price equal
to 100% of the Principal Amount of Series 1997-1 Notes to be so redeemed plus
accrued interest thereon to the Redemption Date, on any date after the remaining
aggregate Principal Balance of Student Loans Financed with proceeds of the
Series 1997-1 Notes is less than 10% of the amounts initially deposited to the
credit of the Acquisition Fund.
Notice of redemption shall be given by first-class mail mailed at
least 30 days before the Redemption Date to each Holder of Series 1997-I [J]
Notes to be redeemed at his last address appearing on the Note Register; but no
defect in or failure to give such notice of redemption shall affect the validity
of proceedings for redemption of any Series 1997-I [J] Notes not affected by
such defect or failure. All Series 1997-I [J] Notes so called for redemption
will cease to bear interest on such Redemption Date, provided funds for their
redemption have been duly deposited, and, except for the purpose of payment,
shall no longer be protected by the Indenture and shall not be deemed
Outstanding thereunder.
It is provided in the Indenture that Series 1997-I [J] Notes of an
Authorized Denomination larger than $100,000 may be redeemed in part ($100,000
in original Principal Amount or an integral multiple thereof) and that upon any
partial redemption of any such Series 1997-I [J] Note the same shall be
surrendered in exchange for one or more new Notes of the same series in
authorized form for the unredeemed portion of principal.
If provision is made for the payment of principal of and interest on
this Note in accordance with the Indenture, this Note shall no longer be deemed
Outstanding under the Indenture, shall cease to be entitled to the benefits of
the Indenture and shall thereafter be payable solely from the funds provided for
such payment.
If an Event of Default shall occur, the principal of all the
Outstanding Notes may and, under certain circumstances, shall be declared due
and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Corporation and the rights of the Holders of the Notes and Other Beneficiaries
under the Indenture at any time by the Corporation with, among other things, the
consent of the Holders of two-thirds of the aggregate Principal Amount of Class
A Notes at the time Outstanding, if affected thereby, and the consent of the
Holders of two-thirds of the aggregate Principal Amount of Class B Notes at the
time
A-4-8
Outstanding, if affected thereby. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate Principal Amount of
the Class A Notes at the time Outstanding or Other Senior Beneficiaries or, if
no Senior Obligations are Outstanding, the Holders of specified percentages in
aggregate Principal Amount of the Class B Notes at the time Outstanding or Other
Subordinate Beneficiaries, on behalf of the Holders of all the Notes, to waive
certain past defaults under the Indenture and their consequences. Any such
consent or waiver shall be conclusive and binding upon the Registered Holder of
this Note and upon all future Registered Holders hereof and of any Note issued
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Note.
This Note is transferable by the Registered Holder hereof upon
surrender of this Note for transfer at the Principal Office of the Note
Registrar (which shall be the Trustee unless and until an Authenticating Agent
becomes the Note Registrar under the Indenture) or at the Principal Office of a
duly appointed Authenticating Agent (the "Authenticating Agent," which term
includes any successor Authenticating Agent under the Indenture), duly endorsed
or accompanied by a written instrument of transfer in form satisfactory to the
Note Registrar or such Authenticating Agent, as the case may be, and executed by
the Registered Holder hereof or his attorney duly authorized in writing, with
signature guarantees satisfactory to the Note Registrar or such Authenticating
Agent, as the case may be. This Note may also be exchanged for one or more
other Notes of the same series upon surrender hereof at the Principal Office of
the Note Registrar or the Principal Office of an Authenticating Agent.
Thereupon the Corporation shall execute and the Trustee or the Authenticating
Agent, as the case may be, shall authenticate and deliver, in exchange for this
Note, one or more new fully registered Notes in the name of the transferee, of
an authorized denomination, in aggregate Principal Amount equal to the Principal
Amount of this Note, of the same series and bearing interest at the same rate.
No Authenticating Agent will be initially appointed with respect to the Series
1997-I [J] Notes. Notwithstanding the foregoing provisions of this paragraph,
no Series 1997-I [J] Note shall be required to be transferred, (i) during a
period beginning at the opening of business fifteen days before any selection of
Series 1997-I [J] Notes for redemption and ending at the close of business on
the day of such selection, or (ii) if such Series 1997-I [J] Note has been
selected for redemption in whole or in part.
The Corporation may require payment by the Registered Holder hereof of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of this Note, other than
certain exchanges specifically exempted under the Indenture and not involving
any transfer.
The Corporation, the Trustee, each Paying Agent, any Authenticating
Agent, the Note Registrar and any other agent of the Corporation may treat the
Person in whose name this Note is registered on the Note Register as the
absolute
A-4-9
owner hereof for all purposes, whether or not this Note is overdue, and neither
the Corporation, the Trustee, any Paying Agent, any Authenticating Agent, the
Note Registrar nor any other such agent shall be affected by notice to the
contrary.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND DECLARED that all
acts, conditions and things required to have happened, to exist and to have been
performed precedent to and in the issuance of this Note have happened, do exist,
and have been performed in regular and due time, form and manner as so required.
This Note shall not be valid or become obligatory for any purpose or
be entitled to any security or benefit under the Indenture until the Certificate
of Authentication hereon shall have been signed by the Trustee or by the
Authenticating Agent by the manual signature of one of its authorized
representatives.
IN WITNESS WHEREOF, the Corporation has caused this Note to be
executed in its name by the manual signatures of its President and Secretary,
and its corporate seal to be impressed hereon.
Dated: ___________________ EDUCATION LOANS INCORPORATED
____________________________
President
(SEAL)
____________________________
Secretary
_____________________________
CERTIFICATE OF AUTHENTICATION
This Note is one of the Notes of the series designated therein and
issued under the provisions of the within-mentioned Indenture.
FIRST BANK NATIONAL
ASSOCIATION, as Trustee
By____________________________
Authorized Representative
A-4-10
_____________________________
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto ________________________ the within Note and irrevocably appoints
____________________________, attorney-in-fact, to transfer the within Note on
the books kept for registration thereof, with full power of substitution in the
premises.
Dated _______________________
PLEASE INSERT SOCIAL SECURITY ______________________________________
OR OTHER IDENTIFYING NUMBER NOTICE: The signature to this
OF ASSIGNEE assignment must correspond with the
name as it appears upon the face of
______________________________ the within Note in every particular,
without any alteration whatsoever.
SIGNATURE GUARANTEED:
_____________________________
A-4-11
EXHIBIT B-1
-----------
FORM OF SERIES 1997-1K NOTES
-----------------------------
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
EDUCATION LOANS INCORPORATED
TAX EXEMPT FIXED RATE STUDENT LOAN ASSET-BACKED NOTE
SUBORDINATE SERIES 1997-1K
CLASS B
No. R_____ $__________
Stated Date of Original Interest
Maturity Date Issue Rate CUSIP
------------- ---------------- --------- -----
June 1, 2020 July 1, 1997 83756E___
REGISTERED HOLDER: CEDE & CO.
PRINCIPAL AMOUNT:
FOR VALUE RECEIVED, EDUCATION LOANS INCORPORATED, a nonprofit
corporation organized under the laws of the State of South Dakota (the
"Corporation," which term includes any successor corporation under the Indenture
hereinafter referred to, including, upon completion of the Section 150(d)(3)
Transfer, EdLinc), acknowledges itself indebted and hereby promises to pay to
the registered holder specified above, or registered assigns (the "Registered
Holder"), but solely from the revenues and receipts hereinafter specified and
not otherwise, the Principal Amount specified above on the Stated Maturity Date
specified above (subject to the right of prior redemption hereinafter
mentioned), upon presentation and surrender of this Note at the Principal Office
of the Trustee (as hereinafter defined), as Paying Agent for the Series 1997-1
Notes (as hereinafter defined), or a duly appointed successor Paying Agent, and
to pay interest on said Principal
B-1-1
Amount, but solely from the revenues and receipts hereinafter specified and not
otherwise, to the Registered Holder hereof from the date hereof until the
payment of said Principal Amount has been made or duly provided for, at the rate
per annum specified above, payable semiannually on the first day of June and
December in each year, commencing December 1, 1997, and at the same rate per
annum (to the extent that the payment of such interest shall be legally
enforceable) on overdue installments of interest. Payment of interest on this
Note on each regularly scheduled Interest Payment Date shall be made by check or
draft drawn upon the Paying Agent and mailed to the Person who is the Registered
Holder hereof as of 5:00 p.m. in the city in which the Principal Office of the
Note Registrar is located on the applicable Regular Record Date at the address
of such Registered Holder as it appears on the Note Register maintained by the
Note Registrar, or, if the Registered Holder of this Note is the Registered
Holder of Series 1997-1 Notes in the aggregate Principal Amount of $1,000,000 or
more (or, if less than $1,000,000 in Principal Amount of Series 1997-1 Notes is
outstanding, the Registered Holder of all outstanding Series 1997-1 Notes), at
the direction of such Registered Holder received by the Paying Agent by 5:00
p.m. in the city in which the Principal Office of the Paying Agent is located on
the last Business Day preceding the applicable Regular Record Date, by
electronic transfer by the Paying Agent in immediately available funds to an
account designated by such Registered Holder. In addition, premium, if any, and
interest on this Note are payable at the Maturity hereof in the same manner as
the principal hereof, unless the date of such Maturity is a regularly scheduled
Interest Payment Date, in which event interest is payable in the manner set
forth in the preceding sentence. Any interest not so timely paid or duly
provided for shall cease to be payable to the Person who is the Registered
Holder hereof at the close of business on the Regular Record Date and shall be
payable to the Person who is the Registered Holder hereof at the close of
business on a special record date for the payment of any such defaulted
interest. Such special record date shall be fixed by the Trustee whenever moneys
become available for payment of the defaulted interest, and notice of the
special record date shall be given to the Registered Holder hereof not less than
ten days prior thereto by first-class mail to such Registered Holder as shown on
the Note Register on a date selected by the Trustee, stating the date of the
special record date and the date fixed for the payment of such defaulted
interest. The principal of, premium, if any, and interest on this Note are
payable in lawful money of the United States of America.
This Note is one of an authorized issue of Notes (the "Notes"), issued
and to be issued by the Corporation in one or more series pursuant to an
Indenture of Trust, dated as of July 1, 1997 (as supplemented and amended, the
"Indenture"), as supplemented by a First Supplemental Indenture of Trust, dated
as of July 1, 1997 (the "First Supplemental Indenture"), each between the
Corporation and First Bank National Association, Minneapolis, Minnesota, as
Trustee (the "Trustee," which term includes any successor trustee under the
Indenture). As provided in the Indenture, the Notes are issuable in series
which may vary as in the Indenture provided or permitted. This Note is one of a
series of Class B Notes issued in an aggregate Principal Amount of
$_______________ (the "Series 1997-1K Notes"). The
B-1-2
Series 1997-1K Notes are issued simultaneously with one other series of Class B
Notes issued in the aggregate Principal Amount of $_______________ (together
with the Series 1997-1K Notes, collectively referred to herein as the "Series
1997-1 Subordinate Notes") and ten series of Class A Notes issued in the
aggregate Principal Amount of $_______________ (the "Series 1997-1 Senior Notes"
and, together with the Series 1997-1 Subordinate Notes, collectively referred to
herein as the "Series 1997-1 Notes"). The proceeds of the Series 1997-1 Notes
will be used by the Corporation to (a) acquire student loan notes incurred under
the Higher Education Act and (b) fund the Reserve Fund.
Reference is hereby made to the Indenture, copies of which are on file
in the principal corporate trust office of the Trustee, and to all of the
provisions of which any Registered Holder of this Note by his acceptance hereof
hereby assents, for definitions of terms; the description of and the nature and
extent of the security for the various classes of Notes and Other Obligations
secured thereunder; the student loan acquisition program being financed by the
issuance of the Notes; the revenues and other moneys pledged to the payment of
the principal of, premium, if any, and interest on the Notes and the Other
Obligations; the nature and extent and manner of enforcement of the pledge; the
conditions upon which Notes may be issued or Other Obligations may be incurred
by the Corporation thereunder, payable from such revenues and other moneys
thereunder as Senior Obligations, Subordinate Obligations or Class C Notes; the
conditions upon which the Indenture may be amended or supplemented with or
without the consent of the Holders of the Notes; the rights and remedies of the
Registered Holder hereof with respect hereto and thereto, including the
limitations upon the right of a Registered Holder hereof to institute any suit,
action or proceeding in equity or at law with respect hereto and thereto; the
rights, duties and obligations of the Corporation and the Trustee thereunder;
the terms and provisions upon which the liens, pledges, charges, trusts and
covenants made therein may be discharged at or prior to the Maturity or
redemption of this Note, and this Note thereafter no longer be secured by the
Indenture, or be deemed to be Outstanding thereunder; and for the other terms
and provisions thereof. Terms used with initial capital letters but not defined
in this Note have the respective meanings given such terms in the Indenture.
The Series 1997-1K Notes are being issued as, and will constitute, Tax Exempt
Class B Notes under the Indenture.
The Notes and Other Obligations are limited obligations of the
Corporation, payable solely from the revenues and assets of the Corporation
pledged therefor under the Indenture, including certain notes evidencing Student
Loans and the proceeds of the Corporation's bonds, notes or other evidences of
indebtedness, if any, issued with respect to the Notes.
Each Noteholder, by acceptance of a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder will
not at any time institute against the Corporation, or join in any institution
against the Corporation, any bankruptcy, reorganization, arrangement, insolvency
or
B-1-3
liquidation proceedings under any United States Federal or state bankruptcy or
similar law in connection with any obligations relating to the Notes, the
Indenture or the Servicing Agreement.
The Corporation has structured the Indenture and the Notes with the
intention that the Notes will qualify under applicable federal, state, local and
foreign tax law as indebtedness of the Corporation secured by the Trust Estate.
The Corporation, the Trustee, the Servicer and each Noteholder agree to treat
and to take no action inconsistent with the treatment of the Notes as such
indebtedness for purposes of federal, state, local and foreign income or
franchise taxes and any other tax imposed on or measured by income. Each
Noteholder, by acceptance of its Note, agrees to be bound by the provisions of
this paragraph. Each Noteholder agrees that it will cause any Person acquiring
an interest in a Note through it to comply with the Indenture as to treatment as
indebtedness under applicable tax law, as described in this paragraph.
The Series 1997-1K Notes constitute Class B Notes under the Indenture
which are subordinated in right of payment, the direction of remedies and
certain other matters in accordance with the terms of the Indenture to the
rights of the Holders of Class A Notes issued from time to time under the
Indenture (including, without limitation the Series 1997-1 Senior Notes) and
Other Senior Beneficiaries thereunder. A failure to pay principal of, premium,
if any, or interest on this Class B Note will not constitute an Event of Default
under the Indenture if any Senior Obligation is Outstanding.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Outstanding Series 1997-1K Notes may, at the option
of the Corporation (and at such time as no Tax Exempt Auction Rate Series 1997-1
Notes are Outstanding), be redeemed, in whole or in part, on any date, at a
Redemption Price equal to 100% of the Principal Amount thereof so redeemed, from
proceeds of the Tax Exempt Series 1997-1 Notes constituting a portion of the
Balance of the Series 1997-1 Tax Exempt Acquisition Account that have not been
used to acquire Eligible Loans and from that portion of the Series 1997-1 Tax
Exempt Reserve Account which, if left in the Reserve Fund upon such redemption,
would cause the Balance in the Reserve Fund to exceed the Reserve Fund
Requirement, calculated giving effect to such redemption. Such redemption shall
be required on June 1, 2001 (to the extent the proceeds in the Series 1997-1
Tax Exempt Acquisition Account not so used as of April 15, 2001, exceed
$________________) and on June 1, 2002 (from such proceeds not so used as of
April 15, 2002), unless the Corporation delivers to the Trustee: (i) an opinion
of Bond Counsel stating in effect that such redemption is not required pursuant
to the Code and that failure to so redeem Tax Exempt Series 1997-1 Notes will
not adversely affect the tax exempt status of interest on any Tax Exempt Series
1997-1 Notes for federal income tax purposes, (ii) a Corporation Certificate
certifying that, based on a Cash Flow Projection, the failure to so redeem Tax
Exempt Series 1997-1 Notes will not materially adversely affect the
Corporation's ability to pay Debt Service on the Outstanding Notes and the
B-1-4
Outstanding Other Obligations, Carry-Over Amounts (including accrued interest
thereon) with respect to Outstanding Notes, Administrative Expenses or Note Fees
or to make required deposits to the Rebate Fund, and (iii) written confirmation
from each of the Rating Agencies then rating the Series 1997-1 Notes to the
effect that the failure to so redeem Tax Exempt Series 1997-1 Notes will not
result in a reduction or withdrawal of the rating of the Series 1997-1 Notes.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Outstanding Series 1997-1K Notes may, at the option
of the Corporation, be redeemed on ________________, and on any date thereafter,
in whole or in part, at a Redemption Price equal to 100% of the Principal Amount
thereof to be redeemed, from amounts credited to the Series 1997-1 Tax Exempt
Retirement Subaccount from the Series 1997-1 Tax Exempt Surplus Subaccount for
such purpose in accordance with the Indenture and from that portion of the
Series 1997-1 Tax Exempt Reserve Account which exceeds the Reserve Fund
Requirement (calculated after giving effect to such redemption). If the Trustee
shall have first certified that no deficiencies exist in any of the Rebate Fund,
the Note Fund, the Reserve Fund or the Special Redemption and Prepayment
Account, the Trustee shall, upon Corporation Order, transfer to the Series 1997-
1 Tax Exempt Retirement Account any Balances in the Series 1997-1 Tax Exempt
Surplus Subaccount (other than those consisting of Student Loans) which a
Corporation Certificate states are not reasonably expected to be needed for the
payment of scheduled Debt Service on the Outstanding Notes and Outstanding Other
Obligations, Carry-Over Amounts (including accrued interest thereon) with
respect to Outstanding Notes, Administrative Expenses or Note Fees, or for
transfer to the Rebate Fund.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements and certain other requirements, Outstanding Series
1997-1K Notes may, at the option of the Corporation and from amounts credited to
the Retirement Account for such purpose, be redeemed on June 1, ______, and on
any date thereafter, in whole or in part, at the Redemption Prices (expressed as
a percentage of Principal Amount) set forth below plus accrued interest to the
Redemption Date:
Redemption
Redemption Period Price
----------------- -----
December 1, 2007, through November 30, 2008 102%
December 1, 2008, through November 30, 2009 101%
December 1, 209, and thereafter 100%
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Series 1997-1 Notes may, at the option of the
Corporation, be redeemed, in whole but not in part, at a Redemption Price equal
to 100% of the Principal Amount of Series 1997-1 Notes to be so redeemed plus
accrued interest thereon to the Redemption Date, on any date after the remaining
aggregate Principal Balance of Student Loans Financed with proceeds of the
Series 1997-1
B-1-5
Notes is less than 10% of the amounts initially deposited to the credit of the
Acquisition Fund.
If not all Series 1997-1 Notes subject to redemption are to be
redeemed, the particular Series 1997-1 Notes to be redeemed are to be selected
as provided in the Indenture.
Notice of redemption shall be given by first-class mail mailed at
least 30 days before the Redemption Date to each Holder of Series 1997-1K Notes
to be redeemed at his last address appearing on the Note Register; but no defect
in or failure to give such notice of redemption shall affect the validity of
proceedings for redemption of any Note not affected by such defect or failure.
All Series 1997-1K Notes so called for redemption will cease to bear interest on
such Redemption Date, provided funds for their redemption have been duly
deposited, and, except for the purpose of payment, shall no longer be protected
by the Indenture and shall not be deemed Outstanding thereunder.
It is provided in the Indenture that Series 1997-1K Notes of a
denomination larger than $5,000 may be redeemed in part ($5,000 or an integral
multiple thereof) and that upon any partial redemption of any such Series 1997-
1K Note the same shall be surrendered in exchange for one or more new Notes of
the same series in authorized form for the unredeemed portion of principal.
If provision is made for the payment of principal of, premium, if any,
and interest on this Note in accordance with the Indenture, this Note shall no
longer be deemed Outstanding under the Indenture, shall cease to be entitled to
the benefits of the Indenture and shall thereafter be payable solely from the
funds provided for such payment.
If an Event of Default shall occur, the principal of all the
Outstanding Notes may and, under certain circumstances, shall be declared due
and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Corporation and the rights of the Holders of the Notes and Other Beneficiaries
under the Indenture at any time by the Corporation with, among other things, the
consent of the Holders of two-thirds of the aggregate Principal Amount of Class
A Notes at the time Outstanding, if affected thereby, and with the consent of
the Holders of two-thirds of the aggregate Principal Amount of Class B Notes at
the time Outstanding, if affected thereby. The Indenture also contains
provisions permitting the Holders of specified percentages in aggregate
Principal Amount of the Class A Notes at the time Outstanding or Other Senior
Beneficiaries or, if no Senior Obligations are Outstanding, the Holders of
specified percentages in aggregate Principal Amount of the Class B Notes at the
time Outstanding or Other Subordinate Beneficiaries, on behalf of the Holders of
all the Notes, to waive certain
B-1-6
past defaults under the Indenture and their consequences. Any such consent or
waiver shall be conclusive and binding upon the Registered Holder of this Note
and upon all future Registered Holders hereof and of any Note issued in exchange
herefor or in lieu hereof, whether or not notation of such consent or waiver is
made upon this Note.
This Note is transferable by the Registered Holder hereof upon
surrender of this Note for transfer at the Principal Office of the Note
Registrar (which shall be the Trustee unless and until an Authenticating Agent
becomes the Note Registrar under the Indenture) or at the Principal Office of a
duly appointed Authenticating Agent (the "Authenticating Agent," which term
includes any successor Authenticating Agent under the Indenture), duly endorsed
or accompanied by a written instrument of transfer in form satisfactory to the
Note Registrar or the Authenticating Agent, as the case may be, and executed by
the Registered Holder hereof or his attorney duly authorized in writing, with
signature guarantees satisfactory to the Note Registrar or the Authenticating
Agent, as the case may be. This Note may also be exchanged for one or more other
Notes of the same series upon surrender hereof at the Principal Office of the
Note Registrar or the Principal Office of an Authenticating Agent. Thereupon the
Corporation shall execute and the Trustee or the Authenticating Agent, as the
case may be, shall authenticate and deliver, in exchange for this Note, one or
more new fully registered Notes in the name of the transferee, of an authorized
denomination, in aggregate Principal Amount equal to the Principal Amount of
this Note, of the same series and bearing interest at the same rate. Thereupon
the Corporation shall execute and the Trustee or the Authenticating Agent, as
the case may be, shall authenticate and deliver, in exchange for this Note, one
or more new fully registered Notes in the name of the transferee, of an
authorized denomination, in aggregate Principal Amount equal to the Principal
Amount of this Note, of the same series and bearing interest at the same rate.
No Authenticating Agent will be initially appointed with respect to the Series
1997-1K Notes. Notwithstanding the foregoing provisions of this paragraph, no
Series 1997-1K Note shall be required to be transferred, (i) during a period
beginning at the opening of business fifteen days before any selection of Series
1997-1K Notes for redemption and ending at the close of business on the day of
such selection, or (ii) if such Series 1997-1K Note has been selected for
redemption in whole or in part.
The Corporation may require payment by the Registered Holder hereof of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of this Note, other than
certain exchanges specifically exempted under the Indenture and not involving
any transfer.
The Corporation, the Trustee, each Paying Agent, any Authenticating
Agent, the Note Registrar and any other agent of the Corporation may treat the
Person in whose name this Note is registered on the Note Register as the
absolute owner hereof for all purposes, whether or not this Note is overdue, and
neither the
B-1-7
Corporation, the Trustee, any Paying Agent, any Authenticating Agent, the Note
Registrar nor any other such agent shall be affected by notice to the contrary.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND DECLARED that all
acts, conditions and things required to have happened, to exist and to have been
performed precedent to and in the issuance of this Note have happened, do exist,
and have been performed in regular and due time, form and manner as so required.
This Note shall not be valid or become obligatory for any purpose or
be entitled to any security or benefit under the Indenture until the Certificate
of Authentication hereon shall have been signed by the Trustee or by the
Authenticating Agent by the manual signature of one of its authorized
representatives.
IN WITNESS WHEREOF, the Corporation has caused this Note to be
executed in its name by the manual signatures of its President and Secretary,
and its corporate seal to be impressed hereon.
Dated: _____________ EDUCATION LOANS INCORPORATED
__________________________
President
(SEAL)
__________________________
Secretary
_____________________________
CERTIFICATE OF AUTHENTICATION
This Note is one of the Notes of the series designated therein and
issued under the provisions of the within-mentioned Indenture.
FIRST BANK NATIONAL
ASSOCIATION, as Trustee
By____________________________
Authorized Representative
B-1-8
___________________________________
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto ________________________ the within Note and irrevocably appoints
____________________________, attorney-in-fact, to transfer the within Note on
the books kept for registration thereof, with full power of substitution in the
premises.
Dated _______________________
PLEASE INSERT SOCIAL SECURITY ___________________________
OR OTHER IDENTIFYING NUMBER NOTICE: The signature to this
OF ASSIGNEE assignment must correspond with the
name as it appears upon the face of
______________________________ the within Note in every particular,
without any alteration whatsoever.
SIGNATURE GUARANTEED:
______________________________
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
-----------
FORM OF SERIES 1997-1L NOTES
UNLESS THIS NOTE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO THE ISSUER OR ITS AGENT FOR
REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY NOTE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO
SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY
TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON
IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
EDUCATION LOANS INCORPORATED
TAXABLE LIBOR RATE STUDENT LOAN ASSET-BACKED NOTE
SUBORDINATE SERIES 1997-L
CLASS B
No. R_____ $__________
Stated Date of Original Interest
Maturity Date Issue Rate CUSIP
------------- ---------------- -------- -----
June 1, 2020 July___, 1997 Variable 83756E ___
REGISTERED HOLDER: CEDE & CO.
PRINCIPAL AMOUNT:
FOR VALUE RECEIVED, EDUCATION LOANS INCORPORATED, a nonprofit
corporation organized under the laws of the State of South Dakota (the
"Corporation," which term includes any successor corporation under the Indenture
hereinafter referred to, including, upon completion of the Section 150(d)(3)
Transfer, EdLinc), acknowledges itself indebted and hereby promises to pay to
the registered holder specified above, or registered assigns (the "Registered
Holder"), but solely from the revenues and receipts hereinafter specified and
not otherwise, the Principal Amount specified above on the Stated Maturity Date
specified above (subject to the right of prior redemption hereinafter
mentioned), upon presentation and surrender of this Note at the Principal Office
of the Trustee (as hereinafter defined), as Paying Agent for the Series 1997-1
Notes (as hereinafter defined), or a duly appointed successor Paying Agent, and
to pay interest on said Principal
B-2-1
Amount, but solely from the revenues and receipts hereinafter specified and not
otherwise, to the Registered Holder hereof from the date hereof until the
payment of said Principal Amount has been made or duly provided for, payable on
each Interest Payment Date, commencing ____________, 1997, at the LIBOR Rate
Series 1997-1 Note Interest Rate (as hereinafter described), and at the same
rate per annum (to the extent that the payment of such interest shall be legally
enforceable) on overdue installments of interest. Payment of interest on this
Note on each regularly scheduled Interest Payment Date shall be made by check or
draft drawn upon the Paying Agent and mailed to the Person who is the Registered
Holder hereof as of 5:00 p.m. in the city in which the Principal Office of the
Note Registrar is located on the applicable Regular Record Date at the address
of such Registered Holder as it appears on the Note Register maintained by the
Note Registrar, or, if the Registered Holder of this Note is the Registered
Holder of Series 1997-1 Notes in the aggregate Principal Amount of $1,000,000 or
more (or, if less than $1,000,000 in Principal Amount of Series 1997-1 Notes is
outstanding, the Registered Holder of all outstanding Series 1997-1 Notes), at
the direction of such Registered Holder received by the Paying Agent by 5:00
p.m. in the city in which the Principal Office of the Paying Agent is located on
the last Business Day preceding the applicable Regular Record Date, by
electronic transfer by the Paying Agent in immediately available funds to an
account designated by such Registered Holder. In addition, interest on this Note
is payable at the Maturity hereof in the same manner as the principal hereof,
unless the date of such Maturity is a regularly scheduled Interest Payment Date,
in which event interest is payable in the manner set forth in the preceding
sentence. Any interest not so timely paid or duly provided for shall cease to be
payable to the Person who is the Registered Holder hereof at the close of
business on the Regular Record Date and shall be payable to the Person who is
the Registered Holder hereof at the close of business on a special record date
for the payment of any such defaulted interest. Such special record date shall
be fixed by the Trustee whenever moneys become available for payment of the
defaulted interest, and notice of the special record date shall be given to the
Registered Holder hereof not less than ten days prior thereto by first-class
mail to such Registered Holder as shown on the Note Register on a date selected
by the Trustee, stating the date of the special record date and the date fixed
for the payment of such defaulted interest. The principal of and interest on
this Note are payable in lawful money of the United States of America.
INTEREST ON THIS NOTE IS SUBJECT TO FEDERAL INCOME TAXATION PURSUANT
TO AN ELECTION MADE BY THE CORPORATION UNDER SECTION 625(c) OF THE TAX REFORM
ACT OF 1984 AND 26 CFR (S)301.9100-6T(d).
This Note is one of an authorized issue of Notes (the "Notes"), issued
and to be issued by the Corporation in one or more series pursuant to an
Indenture of Trust, dated as of July 1, 1997 (as supplemented and amended, the
"Indenture"), as supplemented by a First Supplemental Indenture of Trust, dated
as of July 1, 1997 (the "First Supplemental Indenture"), each between the
Corporation and First Bank
B-2-2
National Association, Minneapolis, Minnesota, as Trustee (the "Trustee," which
term includes any successor trustee under the Indenture). As provided in the
Indenture, the Notes are issuable in series which may vary as in the Indenture
provided or permitted. This Note is one of a series of Class B Notes issued in
an aggregate Principal Amount of $_________________ (the "Series 1997-1L
Notes"). The Series 1997-1L Notes are issued simultaneously with one other
series of Class B Notes issued in the aggregate Principal Amount of
$_________________ (together with the Series 1997-1L Notes, collectively
referred to herein as the "Series 1997-1 Subordinate Notes") and ten series of
Class A Notes issued in the aggregate Principal Amount of $_________________(the
"Series 1997-1 Senior Notes" and, together with the Series 1997-1 Subordinate
Notes, collectively referred to herein as the "Series 1997-1 Notes"). The
proceeds of the Series 1997-1 Notes will be used by the Corporation to (a)
acquire student loan notes incurred under the Higher Education Act and (b) fund
the Reserve Fund.
Reference is hereby made to the Indenture, copies of which are on file
in the principal corporate trust office of the Trustee, and to all of the
provisions of which any Registered Holder of this Note by his acceptance hereof
hereby assents, for definitions of terms; the description of and the nature and
extent of the security for the various classes of Notes and Other Obligations
secured thereunder; the student loan acquisition program being financed by the
issuance of the Notes; the revenues and other moneys pledged to the payment of
the principal of, premium, if any, and interest on the Notes and the Other
Obligations; the nature and extent and manner of enforcement of the pledge; the
conditions upon which Notes may be issued or Other Obligations may be incurred
by the Corporation thereunder, payable from such revenues and other moneys
thereunder as Senior Obligations, Subordinate Obligations or Class C Notes; the
conditions upon which the Indenture may be amended or supplemented with or
without the consent of the Holders of the Notes; the rights and remedies of the
Registered Holder hereof with respect hereto and thereto, including the
limitations upon the right of a Registered Holder hereof to institute any suit,
action or proceeding in equity or at law with respect hereto and thereto; the
rights, duties and obligations of the Corporation and the Trustee thereunder;
the terms and provisions upon which the liens, pledges, charges, trusts and
covenants made therein may be discharged at or prior to the Maturity or
redemption of this Note, and this Note thereafter no longer be secured by the
Indenture, or be deemed to be Outstanding thereunder; and for the other terms
and provisions thereof. Terms used with initial capital letters but not defined
in this Note have the respective meanings given such terms in the Indenture.
The Series 1997-L Notes are being issued as, and will constitute, taxable Class
B Notes under the Indenture.
The Notes and Other Obligations are limited obligations of the
Corporation, payable solely from the revenues and assets of the Corporation
pledged therefor under the Indenture, including certain notes evidencing Student
Loans and the proceeds of the Corporation's bonds, notes or other evidences of
indebtedness, if any, issued with respect to the Notes.
B-2-3
Each Noteholder, by acceptance of a Note, covenants and agrees that by
accepting the benefits of the Indenture and such Note that such Noteholder will
not at any time institute against the Corporation, or join in any institution
against the Corporation, any bankruptcy, reorganization, arrangement, insolvency
or liquidation proceedings under any United States Federal or state bankruptcy
or similar law in connection with any obligations relating to the Notes, the
Indenture or the Servicing Agreement.
The Corporation has structured the Indenture and the Notes with the
intention that the Notes will qualify under applicable federal, state, local and
foreign tax law as indebtedness of the Corporation secured by the Trust Estate.
The Corporation, the Trustee, the Servicer and each Noteholder agree to treat
and to take no action inconsistent with the treatment of the Notes as such
indebtedness for purposes of federal, state, local and foreign income or
franchise taxes and any other tax imposed on or measured by income. Each
Noteholder, by acceptance of its Note, agrees to be bound by the provisions of
this paragraph. Each Noteholder agrees that it will cause any Person acquiring
an interest in a Note through it to comply with the Indenture as to treatment as
indebtedness under applicable tax law, as described in this paragraph.
The Series 1997-1L Notes constitute Class B Notes under the Indenture
which are subordinated in right of payment, the direction of remedies and
certain other matters in accordance with the terms of the Indenture to the
rights of the Holders of Class A Notes issued from time to time under the
Indenture (including, without limitation the Series 1997-1 Senior Notes) and
Other Senior Beneficiaries thereunder. A failure to pay principal of, premium,
if any, or interest on this Class B Note will not constitute an Event of Default
under the Indenture if any Senior Obligation is Outstanding.
Interest payable on this Note shall be computed on the basis of actual
days elapsed and accrue daily from the date hereof (on the basis of a 360-day
year), and is payable on each regularly scheduled Interest Payment Date prior to
the Maturity of this Note and at the Maturity of this Note. The interest
payable on each Interest Payment Date for this Note shall be [calculated on a
per unit basis, based on a unit of $100,000, and shall be] that interest which
has accrued through the last day preceding such Interest Payment Date or, in the
case of the Maturity of this Note, the last day preceding the date of such
Maturity. The LIBOR Rate Series 1997-1 Note Interest Rate shall be effective as
of and on the first day (whether or not a Business Day) of the applicable
Interest Period and be in effect thereafter through the end of such Interest
Period.
The unpaid Principal Amount hereof from time to time outstanding shall
bear interest at a LIBOR Rate Series 1997-1 Note Interest Rate, as described
below, payable on each Interest Payment Date and at the Maturity hereof, such
interest to accrue from the later of the date hereof or the date through which
interest has been paid or duly provided for.
B-2-4
During the Initial Interest Period, this Note shall bear interest at
the LIBOR Rate Series 1997-1 Note Initial Interest Rate for the Series 1997-L
Notes. The interest rate to be borne by this Note during each Interest Period
thereafter shall be determined on the related Interest Rate Determination Date
and shall be equal to the lesser of (i) the sum of One-Month LIBOR determined
with respect to such Interest Rate Determination Date plus _____% (which is
herein referred to as the "LIBOR Rate Series 1997-1 Note LIBOR-Based Rate"), and
(ii) the Net Loan Rate determined with respect to such Interest Rate
Determination Date. The Trustee shall determine such interest rate on each
Interest Rate Determination Date.
Notwithstanding any other provision of this Note or the First
Supplemental Indenture, interest payable on this Note for an Interest Period
shall never exceed for such Interest Period the amount of interest payable at
the Net Loan Rate in effect for such Interest Period.
If the LIBOR Rate Series 1997-1 Note LIBOR-Based Rate for the Series
1997-1L Notes is greater than the Net Loan Rate, then the LIBOR Rate Series
1997-1 Note Interest Rate applicable to the Series 1997-1L Notes for that
Interest Period will be the Net Loan Rate. If the LIBOR Rate Series 1997-1 Note
Interest Rate applicable to the Series 1997-1L Notes for any Interest Period is
the Net Loan Rate, the Trustee shall determine the Carry-Over Amount, if any,
with respect to the Series 1997-1L Notes for such Interest Period. Such
Carryover Amount shall bear interest calculated at a rate equal to the LIBOR
Rate Series 1997-1 Note LIBOR-Based Rate (as determined by the Trustee) from the
Interest Payment Date for the Interest Period with respect to which such Carry-
Over Amount was calculated until paid. For purposes of this Note, any reference
to "principal" or "interest" herein shall not include within the meaning of such
words Carry-Over Amount or any interest accrued on any such Carry-Over Amount.
Such Carry-Over Amount shall be separately calculated for each Series 1997-1L
Note by the Trustee during such Interest Period in sufficient time for the
Trustee to give notice to each Holder of such Carry-Over Amount as required in
the next succeeding sentence. On the Interest Payment Date for an Interest
Period with respect to which such Carry-Over Amount has been calculated by the
Trustee, the Trustee shall give written notice to each Holder of the Carry-Over
Amount applicable to each Holder's Series 1997-1L Note, which written notice may
accompany the payment of interest by check made to each such Holder on such
Interest Payment Date or otherwise shall be mailed on such Interest Payment Date
by first class mail, postage prepaid, to each such Holder at such Holder's
address as it appears on the registration books maintained by the Note
Registrar. Such notice shall state, in addition to such Carry-Over Amount,
that, unless and until a Series 1997-1L Note has been redeemed or has been
deemed no longer Outstanding under the First Supplemental Indenture (after which
no Carry-Over Amount shall be paid with respect to a Series 1997-1L Note), (i)
the Carry-Over Amount (and interest accrued thereon) shall be paid by the
Trustee on such Series 1997-1L Note on the first occurring Interest Payment Date
for a subsequent Interest Period if and to the extent that (l) the Eligible
Carry-Over Make-Up Amount with respect to such Interest Period is greater than
zero, and (2) moneys are available
B-2-5
pursuant to the terms of the First Supplemental Indenture to pay such Carry-Over
Amount (and interest accrued thereon), and (ii) interest shall accrue on the
Carry-Over Amount at a per annum rate equal to the LIBOR Rate Series 1997-1 Note
LIBOR-Based Rate until such Carry-Over Amount is paid in full or is canceled.
The Carry-Over Amount for the Series 1997-1L Notes shall be paid by
the Trustee on Outstanding Series 1997-1L Notes on the first occurring Interest
Payment Date for a subsequent Interest Period if and to the extent that (i) the
Eligible Carry-Over Make-Up Amount with respect to such Interest Period is
greater than zero, and (ii) moneys in the Surplus Account are available on such
Interest Payment Date for transfer to the Interest Account for such purpose in
accordance with the applicable provisions of the Indenture, after taking into
account all other amounts payable from the Surplus Fund on such Interest Payment
Date. Any Carry-Over Amount (and any interest accrued thereon) which is unpaid
as of an Interest Payment Date with respect to any Series 1997-1L Note, which
Series 1997-1L Note is to be redeemed or deemed no longer Outstanding under the
First Supplemental Indenture on such Interest Payment Date, shall be paid to the
Holder thereof on such Interest Payment Date to the extent that moneys are
available therefor in accordance with the provisions of the preceding clause
(b); provided, however, that any Carry-Over Amount (and any interest accrued
thereon) which is not so paid on such Interest Payment Date shall be canceled
with respect to such Series 1997-1L Note on such Interest Payment Date and shall
not be paid on any succeeding Interest Payment Date. To the extent that any
portion of the Carry-Over Amount (and any interest accrued thereon) remains
unpaid after payment of a portion thereof, such unpaid portion shall be paid in
whole or in part as required hereunder until fully paid by the Trustee on the
next occurring Interest Payment Date or Dates, as necessary, for a subsequent
Interest Period or Periods, if and to the extent that the conditions in the
first sentence of this paragraph are satisfied. On any Interest Payment Date on
which the Trustee pays less than all of the Carry-Over Amount (and any interest
accrued thereon) with respect to a Series 1997-1L Note, the Trustee shall give
written notice in the manner set forth in the immediately preceding paragraph to
the Holder of such Series 1997-1L Note of the Carry-Over Amount remaining unpaid
on such Series 1997-1L Note.
The Interest Payment Date in such subsequent Interest Period on which
such Carry-Over Amount for the Series 1997-1L Notes shall be paid shall be
determined by the Trustee in accordance with the provisions of the immediately
preceding paragraph, and the Trustee shall make payment of the Carry-Over Amount
in the same manner as, and from the same Account from which, it pays interest on
the Series 1997-1L Notes on an Interest Payment Date.
In the event that the Trustee no longer determines, or fails to
determine, when required, the LIBOR Rate Series 1997-1 Note LIBOR-Based Rate
with respect to the Series 1997-1L Notes, or if, for any reason, such manner of
determination shall be held to be invalid or unenforceable, the LIBOR Rate
Series 1997-1 Note LIBOR-Based Rate for each succeeding Interest Period shall be
the Net
B-2-6
Loan Rate as determined by or on behalf of the Corporation with respect to the
related Interest Rate Determination Date, and if the Corporation shall fail or
refuse to determine such Net Loan Rate, the Net Loan Rate shall be determined by
a securities dealer appointed by the Trustee capable of making such a
determination in accordance with the provisions hereof and written notice of
such determination shall be given by such securities dealer to the Trustee.
The determination of a LIBOR Rate Series 1997-1 Note Interest Rate by
the Trustee or any other authorized Person pursuant to the provisions of the
First Supplemental Indenture shall be conclusive and binding on the Holders of
the Series 1997-L Notes to which such LIBOR Rate Series 1997-1 Note Interest
Rate applies, and the Corporation and the Trustee may rely thereon for all
purposes.
Notwithstanding any provision of this Note to the contrary, in no
event shall the cumulative amount of interest paid or payable on this Note
(including interest calculated as provided herein, plus any other amounts that
constitute interest on this Note under applicable law, which are contracted for,
charged, reserved, taken or received pursuant to this Note or related documents)
calculated from the date of issuance of this Note through any subsequent day
during the term of this Note or otherwise prior to payment in full of this Note
exceed the amount permitted by applicable law. If the applicable law is ever
judicially interpreted so as to render usurious any amount called for under this
Note or related documents or otherwise contracted for, charged, reserved, taken
or received in connection with this Note, or if the redemption or acceleration
of the Maturity of this Note results in payment to or receipt by the Registered
Holder or any former Registered Holder hereof of any interest in excess of that
permitted by applicable law, then notwithstanding any provision of this Note or
related documents to the contrary all excess amounts theretofore paid or
received with respect to this Note shall be credited on the Principal Amount of
this Note (or, if this Note has been paid or would thereby be paid in full,
refunded by the recipient thereof), and the provisions of this Note and related
documents shall immediately be deemed reformed and the amounts thereafter
collectible hereunder and thereunder reduced, without the necessity of the
execution of any new document, so as to comply with the applicable law, but so
as to permit the recovery of the fullest amount otherwise called for under this
Note and under the related documents.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Outstanding LIBOR Rate Series 1997-1 Notes shall
receive prepayments of principal on any Interest Payment Date from moneys
available therefor in the Series 1997-1 Taxable Special Redemption and
Prepayment Subaccount in accordance with the provisions of the First
Supplemental Indenture. All prepayments of principal in accordance with the
preceding sentence shall, subject to satisfying the asset requirements of the
Indenture, be allocated between the LIBOR Rate Series 1997-1 Senior Notes and
the Series 1997-1L Notes pro rata, based upon
B-2-7
their respective aggregate Principal Amounts. All such prepayments of principal
applied to the Series 1997-L Notes shall be allocated pro rata, based upon their
respective Principal Amounts, to the reduction of the Principal Amount of all
Series 1997-L Notes.
Subject to compliance with the provisions of the Indenture relating to
certain asset requirements, Series 1997-1 Notes may, at the option of the
Corporation, be redeemed, in whole but not in part, at a Redemption Price equal
to 100% of the Principal Amount of Series 1997-1 Notes to be so redeemed plus
accrued interest thereon to the Redemption Date, on any date after the remaining
aggregate Principal Balance of Student Loans Financed with proceeds of the
Series 1997-1 Notes is less than 10% of the amounts initially deposited to the
credit of the Acquisition Fund.
Notice of redemption shall be given by first-class mail mailed at
least 30 days before the Redemption Date to each Holder of Series 1997-L Notes
to be redeemed at his last address appearing on the Note Register; but no defect
in or failure to give such notice of redemption shall affect the validity of
proceedings for redemption of any Series 1997-L Notes not affected by such
defect or failure. All Series 1997-L Notes so called for redemption will cease
to bear interest on such Redemption Date, provided funds for their redemption
have been duly deposited, and, except for the purpose of payment, shall no
longer be protected by the Indenture and shall not be deemed Outstanding
thereunder.
It is provided in the Indenture that Series 1997-L Notes of an
Authorized Denomination larger than $100,000 may be redeemed in part ($100,000
in original Principal Amount or an integral multiple thereof) and that upon any
partial redemption of any such Series 1997-L Note the same shall be surrendered
in exchange for one or more new Notes of the same series in authorized form for
the unredeemed portion of principal.
If provision is made for the payment of principal of and interest on
this Note in accordance with the Indenture, this Note shall no longer be deemed
Outstanding under the Indenture, shall cease to be entitled to the benefits of
the Indenture and shall thereafter be payable solely from the funds provided for
such payment.
If an Event of Default shall occur, the principal of all the
Outstanding Notes may and, under certain circumstances, shall be declared due
and payable in the manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as therein provided,
the amendment thereof and the modification of the rights and obligations of the
Corporation and the rights of the Holders of the Notes and Other Beneficiaries
under the Indenture at any time by the Corporation with, among other things, the
consent of the Holders of two-thirds of the aggregate Principal Amount of Class
A Notes at the time Outstanding, if affected thereby, and the consent of the
Holders of two-thirds of the aggregate Principal Amount of Class B Notes at the
time
B-2-8
Outstanding, if affected thereby. The Indenture also contains provisions
permitting the Holders of specified percentages in aggregate Principal Amount of
the Class A Notes at the time Outstanding or Other Senior Beneficiaries or, if
no Senior Obligations are Outstanding, the Holders of specified percentages in
aggregate Principal Amount of the Class B Notes at the time Outstanding or Other
Subordinate Beneficiaries, on behalf of the Holders of all the Notes, to waive
certain past defaults under the Indenture and their consequences. Any such
consent or waiver shall be conclusive and binding upon the Registered Holder of
this Note and upon all future Registered Holders hereof and of any Note issued
in exchange herefor or in lieu hereof, whether or not notation of such consent
or waiver is made upon this Note.
This Note is transferable by the Registered Holder hereof upon
surrender of this Note for transfer at the Principal Office of the Note
Registrar (which shall be the Trustee unless and until an Authenticating Agent
becomes the Note Registrar under the Indenture) or at the Principal Office of a
duly appointed Authenticating Agent (the "Authenticating Agent," which term
includes any successor Authenticating Agent under the Indenture), duly endorsed
or accompanied by a written instrument of transfer in form satisfactory to the
Note Registrar or such Authenticating Agent, as the case may be, and executed by
the Registered Holder hereof or his attorney duly authorized in writing, with
signature guarantees satisfactory to the Note Registrar or such Authenticating
Agent, as the case may be. This Note may also be exchanged for one or more
other Notes of the same series upon surrender hereof at the Principal Office of
the Note Registrar or the Principal Office of an Authenticating Agent.
Thereupon the Corporation shall execute and the Trustee or the Authenticating
Agent, as the case may be, shall authenticate and deliver, in exchange for this
Note, one or more new fully registered Notes in the name of the transferee, of
an authorized denomination, in aggregate Principal Amount equal to the Principal
Amount of this Note, of the same series and bearing interest at the same rate.
No Authenticating Agent will be initially appointed with respect to the Series
1997-L Notes. Notwithstanding the foregoing provisions of this paragraph, no
Series 1997-L Note shall be required to be transferred, (i) during a period
beginning at the opening of business fifteen days before any selection of Series
1997-L Notes for redemption and ending at the close of business on the day of
such selection, or (ii) if such Series 1997-L Note has been selected for
redemption in whole or in part.
The Corporation may require payment by the Registered Holder hereof of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection with any transfer or exchange of this Note, other than
certain exchanges specifically exempted under the Indenture and not involving
any transfer.
The Corporation, the Trustee, each Paying Agent, any Authenticating
Agent, the Note Registrar and any other agent of the Corporation may treat the
Person in whose name this Note is registered on the Note Register as the
absolute
B-2-9
owner hereof for all purposes, whether or not this Note is overdue, and neither
the Corporation, the Trustee, any Paying Agent, any Authenticating Agent, the
Note Registrar nor any other such agent shall be affected by notice to the
contrary.
IT IS HEREBY CERTIFIED, RECITED, COVENANTED AND DECLARED that all
acts, conditions and things required to have happened, to exist and to have been
performed precedent to and in the issuance of this Note have happened, do exist,
and have been performed in regular and due time, form and manner as so required.
This Note shall not be valid or become obligatory for any purpose or
be entitled to any security or benefit under the Indenture until the Certificate
of Authentication hereon shall have been signed by the Trustee or by the
Authenticating Agent by the manual signature of one of its authorized
representatives.
B-2-10
IN WITNESS WHEREOF, the Corporation has caused this Note to be
executed in its name by the manual signatures of its President and Secretary,
and its corporate seal to be impressed hereon.
Dated: ____________ EDUCATION LOANS INCORPORATED
__________________________
President
(SEAL)
__________________________
Secretary
_______________________________
CERTIFICATE OF AUTHENTICATION
This Note is one of the Notes of the series designated therein and
issued under the provisions of the within-mentioned Indenture.
FIRST BANK NATIONAL
ASSOCIATION, as Trustee
By_____________________________
Authorized Representative
B-2-11
_____________________________
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto _____________________ the within Note and irrevocably appoints
_________________________, attorney-in-fact, to transfer the within Note on the
books kept for registration thereof, with full power of substitution in the
premises.
Dated ________________________
PLEASE INSERT SOCIAL SECURITY __________________________________
OR OTHER IDENTIFYING NUMBER NOTICE: The signature to this
OF ASSIGNEE assignment must correspond with the
name as it appears upon the face of
_______________________________ the within Note in every particular,
without any alteration whatsoever.
SIGNATURE GUARANTEED:
_______________________________
B-2-12
EXHIBIT C
---------
NOTICE OF A PAYMENT DEFAULT
---------------------------
EDUCATION LOANS INCORPORATED
TAX EXEMPT [TAXABLE] AUCTION RATE STUDENT LOAN ASSET-BACKED NOTES
SENIOR SERIES 1997-1
NOTICE IS HEREBY GIVEN that a Payment Default has occurred and not
been cured with respect to the Series 1997-1_____ Notes. Determination of the
Auction Rate Series 1997-1 Note Interest Rate on the Tax Exempt [Taxable]
Auction Rate Series 1997-1 Notes pursuant to the Auction Procedures will be
suspended. The Auction Rate Series 1997-1 Note Interest Rate on each series of
the Tax Exempt [Taxable] Auction Rate Series 1997-1 Notes for each Auction
Period commencing after the date of Payment Default will equal the Non-Payment
Rate (as to each such series with respect to which a Payment Default exists) or
the Maximum Auction Rate [Net Loan Rate] (as to all other series), as the case
may be, as it is determined by the Trustee on the first day of such Auction
Period.
Terms used herein have the meanings set forth in the First
Supplemental Indenture of Trust relating to the above-referenced Notes.
Dated:______________________ FIRST BANK NATIONAL
ASSOCIATION, as Trustee
By:______________________
C-1
EXHIBIT D
---------
NOTICE OF CURE OF PAYMENT DEFAULT
---------------------------------
EDUCATION LOANS INCORPORATED
TAX EXEMPT [TAXABLE] AUCTION RATE STUDENT LOAN ASSET-BACKED NOTES
SENIOR SERIES 1997-1
NOTICE IS HEREBY GIVEN that a Payment Default with respect to the
Auction Rate Series 1997-1 Notes has been waived or cured. The next Auction Date
is ______________ with respect to the Series 1997-1A Notes, ______________ with
respect to the Series 1997-1B Notes, ______________ with respect to the Series
1997-1C Notes, ______________ with respect to the Series 1997-1D Notes, and
______________ with respect to the Series 1997-1E Notes [_____________ with
respect to the Series 1997-1G Notes, and ______________ with respect to the
Series 1997-1H Notes].
Terms used herein have the meanings set forth in the First
Supplemental Indenture of Trust relating to the above-referenced Notes.
Dated:___________________ FIRST BANK NATIONAL
ASSOCIATION, as Trustee
By:__________________________
D-1
EXHIBIT E
---------
NOTICE OF PROPOSED AUCTION PERIOD ADJUSTMENT
---------------------------------------------
EDUCATION LOANS INCORPORATED
TAX EXEMPT [TAXABLE] AUCTION RATE STUDENT LOAN ASSET-BACKED NOTES
SENIOR SERIES 1997-1_____
Notice is hereby given that Education Loans Incorporated proposes to
change the length of one or more Auction Periods with respect to the Notes
identified above, pursuant to the First Supplemental Indenture of Trust relating
to such Notes (the "First Supplemental Indenture"), as follows:
1. The change will take effect on the Interest Rate Adjustment Date
for the next Auction Period (the "Effective Date").
2. For Auction Periods occurring after the Auction Period commencing
on the Effective Date, the Interest Rate Adjustment Dates will be
[______________].
3. The Auction Period Adjustment in Paragraph 2 shall take place only
if (A) the Trustee and the Auction Agent receive, by 11:00 a.m., New York City
time, on the Business Day before the Auction Date for the Auction Period
commencing on the Effective Date, a Corporation Certificate authorizing the
Auction Period Adjustment, along with [a copy of the opinion of Bond Counsel,]
the written consent of the Market Agent and the Rating Agency confirmations and,
if applicable, the written statement of the Trustee, the Auction Agent and the
Securities Depository, all as required by the First Supplemental Indenture, and
(B) Sufficient Bids exist on the Auction Date for the Auction Period commencing
on the Effective Date.
4. If the condition referred to in (A) above is not met, the Auction
Rate for the Auction Period commencing on the Effective Date will be determined
pursuant to the Auction Procedures and the Auction Period shall be the Auction
Period determined without reference to the proposed change. If the condition
referred to in (A) is met but the condition referred to in (B) above is not met,
the Auction Rate for the Auction Period commencing on the Effective Date shall
be the Maximum Auction Rate [lesser of the Maximum Auction Rate and the Net Loan
Rate] and the Auction Period shall be the Auction Period determined without
reference to the proposed change.
5. It is hereby represented, upon advice of the Auction Agent for the
Notes described herein, that there were Sufficient Bids for such Notes at the
Auction immediately preceding the date of this Notice.
E-1
Terms used herein have the meanings set forth in the First
Supplemental Indenture.
Dated:___________________________ EDUCATION LOANS INCORPORATED
By:_____________________________
E-2
EXHIBIT F
---------
NOTICE ESTABLISHING AUCTION PERIOD ADJUSTMENT
---------------------------------------------
EDUCATION LOANS INCORPORATED
TAX EXEMPT [TAXABLE] AUCTION RATE STUDENT LOAN ASSET-BACKED NOTES
SENIOR SERIES 1997-1____
Notice is hereby given that Education Loans Incorporated hereby
establishes new lengths for one or more Auction Periods with respect to the
Notes identified above pursuant to the First Supplemental Indenture of Trust
relating to such Notes (the "First Supplemental Indenture"):
1. The change shall take effect on _______________ , the Interest
Rate Adjustment Date for the next Auction Period (the "Effective Date").
2. For Auction Periods occurring after the Auction Period commencing
on the Effective Date, the Interest Rate Adjustment Dates shall be [___________]
provided, however, that the length of subsequent Auction Periods shall be
subject to further change hereafter as provided in Sections 3 and 10 of the
First Supplemental Indenture.
3. The changes described in Paragraph 2 shall take place only upon
delivery of this Notice and the satisfaction of other conditions set forth in
the First Supplemental Indenture and our prior notice dated
___________ regarding the proposed change.
Terms used herein have the meanings set forth in the First
Supplemental Indenture.
Dated:_____________________________ EDUCATION LOANS INCORPORATED
By:______________________________
F-1
EXHIBIT G
---------
NOTICE OF CHANGE IN AUCTION DATE
--------------------------------
EDUCATION LOANS INCORPORATED
TAX EXEMPT [TAXABLE] AUCTION RATE STUDENT LOAN ASSET-BACKED NOTES
SENIOR SERIES 1997-1____
Notice is hereby given by ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., as Market Agent for the
Notes identified above, that, with respect to such Notes, the Auction Date is
hereby changed as follows:
1. With respect to such Notes, the definition of "Auction Date" shall
be deemed amended by substituting "______________ (number) Business Day" in the
seventh line thereof and by substituting "________________ (number) Business
Days" for "two (2) Business Days" in subsection (C) thereof.
2. This change shall take effect on ___________ which shall be the
Auction Date for the Auction Period commencing on ________________.
3. The Auction Date for such Notes shall be subject to further change
hereafter as provided in the First Supplemental Indenture of Trust relating to
such Notes (the "First Supplemental Indenture").
Terms used herein have the meanings set forth in the First
Supplemental Indenture.
Dated:_____________________________ ▇▇▇▇▇ ▇▇▇▇▇▇ INC., as
Market Agent
By:___________________________
G-1
EXHIBIT H-1
-----------
[List of Student Loan Purchase Agreements relating to
Eligible Loans acquired from the Series 1979 Trustee]
H-1-1
EXHIBIT H-2
-----------
[List of Student Loan Purchase Agreements relating to
Eligible Loans acquired from Series 1989 Trustee]
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
-----------
[List of Student Loan Purchase Agreements relating to
Eligible Loans acquired from Series 1994 Trustee
and financed from proceeds of Series 1996-1 Notes]
H-3-1
EXHIBIT H-4
-----------
[List of Student Loan Purchase Agreements relating to
Eligible Loans to be financed from proceeds of Tax
Exempt Series 1997-1 Notes, Series 1989, 1991 and
1994 Bonds and Series 1996-1 Notes]
H-4-1
EXHIBIT H-5
-----------
[List of Student Loan Purchase Agreements relating to
Eligible Loans acquired from Series 1994 Trustee and
financed from proceeds of Series 1994-1, 1995-1 and 1995-2 Notes]
▇-▇-▇
▇▇▇▇▇▇▇ ▇-▇
-----------
[List of Student Loan Purchase Agreements relating to
Eligible Loans to be financed from proceeds of Taxable
Series 1997-1 Notes]
H-6-1
EXHIBIT I
---------
NOTICE OF PROPOSED ADJUSTMENT TO PERCENTAGE USED IN
DETERMINING [MAXIMUM AUCTION RATE]
[ALL HOLD RATE] [NON-PAYMENT RATE]
-----------------------------------
EDUCATION LOANS INCORPORATED
TAX EXEMPT AUCTION RATE STUDENT LOAN ASSET-BACKED NOTES
SENIOR SERIES 1997-1____
Notice is hereby given that ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., as Market Agent for the
Notes identified above, proposes to change the percentage used in determining
the [Maximum Auction Rate] [All Hold Rate] [Non-Payment Rate] with respect to
such Notes, pursuant to the First Supplemental Indenture of Trust relating to
such Notes (the "First Supplemental Indenture"), as follows:
1. The change shall take effect on the date of commencement of the
next Auction Period (the "Effective Date").
2. For the Auction Period commencing on the Effective Date, and each
Auction Period thereafter, it is proposed that the percentage used in
determining the [Maximum Auction Rate] [All Hold Rate] [Non-Payment Rate] shall
be _____________.
3. The adjustment to the percentage used in determining the [Maximum
Auction Rate] [All Hold Rate] [Non-Payment Rate] in Paragraph 2 shall take place
only if (A) the Trustee, the Auction Agent and the Corporation receive, by 11:00
a.m., New York City time, on the Business Day immediately preceding the
Effective Date, a Corporation Certificate authorizing the adjustment of such
percentage as specified in such certificate, together with a copy of the
Corporation Consent thereto and the opinion of Bond Counsel as required by the
First Supplemental Indenture; and (B) the Trustee and the Corporation have
received written confirmation from each of the Rating Agencies then rating the
Series 1997-1 Notes that such proposed adjustment will not adversely affect its
ratings then applicable to any of the Series 1997-1 Notes.
4. If any of the conditions referred to in Paragraph 3(A) and (B)
above are not met, the existing percentage used to determine the [Maximum
Auction Rate] [All Hold Rate] [Non-Payment Rate] shall remain in effect, and the
rate of interest on the above Notes for the next succeeding Interest Period
shall be determined in accordance with the Auction Procedures.
Terms used herein have the meanings set forth in the First
Supplemental Indenture.
Dated:____________________________ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
By:______________________________
I-1
EXHIBIT J
---------
NOTICE ESTABLISHING NEW PERCENTAGE USED IN DETERMINING
[MAXIMUM AUCTION RATE] [ALL HOLD RATE] [NON-PAYMENT RATE]
-------------------------------------------------------
EDUCATION LOANS INCORPORATED
TAX EXEMPT AUCTION RATE STUDENT LOAN ASSET-BACKED NOTES
SENIOR SERIES 1997-1____
Notice is hereby given that ▇▇▇▇▇ ▇▇▇▇▇▇ Inc., as Market Agent for the
Notes identified above, hereby establishes a new percentage to be used in
determining the [Maximum Auction Rate] [All Hold Rate] [Non-Payment Rate] with
respect to such Notes pursuant to the First Supplemental Indenture of Trust
relating to such Notes (the "First Supplemental Indenture"):
1. The change shall take effect on __________________ the
commencement of the next Auction Period (the "Effective Date").
2. For the Auction Period commencing on the Effective Date, and each
Auction Period thereafter, the percentage used in determining the [Maximum
Auction Rate] [All Hold Rate] [Non-Payment Rate] shall be _____________.
3. The change described in Paragraph 2 above shall take place only
upon delivery of this Notice and the satisfaction of other conditions set forth
in the First Supplemental Indenture and our prior notice dated
___________ regarding the proposed change.
Terms used herein have the meanings set forth in the First
Supplemental Indenture.
Dated:_________________________ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
By:_____________________________
J-1