ADMINISTRATION AGREEMENT
among
XXXXXX XXX SERVICING CORPORATION,
SLM FUNDING CORPORATION,
STUDENT LOAN MARKETING ASSOCIATION,
as Administrator
SLM STUDENT LOAN TRUST 1997-1,
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Eligible Lender Trustee
and
BANKERS TRUST COMPANY
not in its individual capacity
but solely as Indenture Trustee
Dated as of March 20, 1997
TABLE OF CONTENTS
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Page
ARTICLE I
Section 1.1 Definitions and Usage. . . . . . . . . . . . . 1
ARTICLE II
Section 2.1 Duties with Respect to the Indenture . . . . . 2
Section 2.2 Duties with Respect to the Issuer. . . . . . . 4
Section 2.3 Establishment of Trust Accounts. . . . . . . . 5
Section 2.4 Collections. . . . . . . . . . . . . . . . . . 7
Section 2.5 Application of Collections . . . . . . . . . . 8
Section 2.6 Additional Deposits. . . . . . . . . . . . . . 8
Section 2.7 Distributions. . . . . . . . . . . . . . . . . 9
Section 2.8 Reserve Account. . . . . . . . . . . . . . . . 12
Section 2.9 Statements to Certificateholders and
Noteholders . . . . . . . . . . . . . . . . . 14
Section 2.10 Non-Ministerial Matters. . . . . . . . . . . . 16
Section 2.11 Exceptions . . . . . . . . . . . . . . . . . . 16
Section 2.12 Compensation . . . . . . . . . . . . . . . . . 16
Section 2.13 Servicer and Administrator Expenses. . . . . . 16
ARTICLE III
Section 3.1 Administrator's Certificate; Servicer's Report 17
Section 3.2 Annual Statement as to Compliance; Notice
of Default; Financial Statement . . . . . . . 18
Section 3.3 Annual Independent Certified Public
Accountants' Reports. . . . . . . . . . . . . 19
ARTICLE IV
Section 4.1 Representations of Administrator . . . . . . . 20
Section 4.2 Liability of Administrator; Indemnities. . . . 21
Section 4.3 Merger or Consolidation of, or Assumption of
the Obligations of, Administrator . . . . . . 23
Section 4.4 Limitation on Liability of Seller,
Administrator and Others. . . . . . . . . . . 24
Section 4.5 Administrator May Own Certificates or Notes. . 25
Section 4.6 Student Loan Marketing Association Not to
Resign as Administrator . . . . . . . . . . . 25
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ARTICLE V
Section 5.1 Administrator Default. . . . . . . . . . . . . 25
Section 5.2 Appointment of Successor . . . . . . . . . . . 27
Section 5.3 Notification to Noteholders and
Certificateholders. . . . . . .. . . . . . . 28
Section 5.4 Waiver of Past Defaults. . . . . . . . . . . . 28
ARTICLE VI
Section 6.1 Termination. . . . . . . . . . . . . . . . . . 29
ARTICLE VII
Section 7.1 Protection of Interests in Trust . . . . . . . 31
ARTICLE VIII
Section 8.1 Independence of the Administrator. . . . . . . 33
Section 8.2 No Joint Venture . . . . . . . . . . . . . . . 33
Section 8.3 Other Activities of Administrator. . . . . . . 34
Section 8.4 Powers of Attorney . . . . . . . . . . . . . . 34
Section 8.5 Amendment. . . . . . . . . . . . . . . . . . . 34
Section 8.6 Assignment . . . . . . . . . . . . . . . . . . 35
Section 8.7 Limitations on Rights of Others. . . . . . . . 36
Section 8.8 Assignment to Indenture Trustee. . . . . . . . 36
Section 8.9 Nonpetition Covenants. . . . . . . . . . . . . 36
Section 8.10 Limitation of Liability of Eligible
Lender Trustee and Indenture Trustee. . . . . 37
Section 8.11 Governing Law. . . . . . . . . . . . . . . . . 37
Section 8.12 Headings . . . . . . . . . . . . . . . . . . . 37
Section 8.13 Counterparts . . . . . . . . . . . . . . . . . 37
Section 8.14 Severability . . . . . . . . . . . . . . . . . 37
Appendix A
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ADMINISTRATION AGREEMENT
SLM Student Loan Trust 1997-1, (the "Issuer"), the Student Loan
Marketing Association (the "Administrator"), Chase Manhattan Bank USA, National
Association, not in its individual capacity but solely as Trustee (the "Eligible
Lender Trustee"), Xxxxxx Xxx Servicing Corporation (the "Servicer"), SLM Funding
Corporation (the "Seller") and Bankers Trust Company, a New York banking
corporation, not in its individual capacity but solely as Indenture Trustee (the
"Indenture Trustee") agree as follows:
WHEREAS, the Issuer is issuing the Notes pursuant to the Indenture
dated as of March 1, 1997 (the "Indenture"), between the Issuer and the
Indenture Trustee and the Certificates pursuant to the Trust Agreement dated as
of March 1, 1997 between the Depositor and the Eligible Lender Trustee;
WHEREAS, the Issuer has entered into certain of the Basic Documents in
connection with the issuance of the Notes and the Certificates, including the
Sale Agreement and the Servicing Agreement;
WHEREAS, pursuant to the Basic Documents, the Issuer and the Eligible
Lender Trustee are required to perform certain duties in connection with (a) the
Notes and the Collateral therefor pledged pursuant to the Indenture and (b) the
Certificates;
WHEREAS, the Issuer, the Eligible Lender Trustee and the Indenture
Trustee desire to have the Administrator and the Servicer perform certain of the
duties of the Issuer and the Eligible Lender Trustee referred to in the
preceding clause, and to provide such additional services consistent with the
terms of this Agreement and the Basic Documents as the Issuer and the Eligible
Lender Trustee may from time to time request;
WHEREAS, the Administrator and the Servicer have the capacity to
provide the services required hereby and are willing to perform such services
for the Issuer and the Eligible Lender Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:
Article I
Section 1.1 Definitions and Usage. Except as otherwise specified herein or as
the context may otherwise require, capitalized terms used but not otherwise
defined herein are defined in Appendix A hereto, which also contains rules as to
usage that shall be applicable herein.
Article II
Section 2.1 Duties with Respect to the Indenture. The Administrator agrees to
consult with the Eligible Lender Trustee regarding the duties of the Issuer
under the Indenture and the Depository Agreements. The Administrator shall
monitor the performance of the Issuer and shall advise the Eligible Lender
Trustee when action is necessary to comply with the Issuer's duties under the
Indenture and the Depository Agreements. The Administrator shall prepare for
execution by the Issuer or shall cause the preparation by other appropriate
Persons of all such documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of the Issuer to prepare, file or deliver
pursuant to the Indenture and the Depository Agreements. In furtherance of the
foregoing, the Administrator shall take the actions with respect to the
following matters that it is the duty of the Issuer or the Indenture Trustee to
take pursuant to the Indenture (references being to Sections of the Indenture):
a. preparing or obtaining the documents and instruments required for
authentication of the Notes and delivering the same to the Indenture
Trustee (Section 2.2);
b. preparing, obtaining or filing the instruments, opinions and
certificates and other documents required for the release of collateral
(Section 2.9);
c. obtaining and preserving the Issuer's qualification to do business
in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of the Indenture,
the Notes, the Collateral and each other instrument and agreement
included in the Indenture Trust Estate (Section 3.4);
d. preparing all supplements, amendments, financing statements,
continuation statements, instruments of further assurance and other
instruments, in accordance with Section 3.5 of the Indenture, necessary
to protect the Indenture Trust Estate (Section 3.5);
e. the delivery by the Issuer of the Opinion of Counsel on the Closing
Date and the annual delivery of Opinions of Counsel, in accordance with
Section 3.6 of the Indenture, as to the Indenture Trust Estate, and the
annual delivery of the Officers' Certificate of the Issuer and certain
other statements, in accordance with Section 3.9 of the Indenture, as
to compliance with the Indenture (Sections 3.6 and 3.9);
f. in the event of a Servicer Default, the taking of all reasonable
steps available to enforce the Issuer's rights under the Basic
Documents in respect of such Servicer Default (Section 3.7(d));
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g. the preparation and obtaining of documents and instruments required
for the release of the Issuer from its obligations under the Indenture
(Section 3.10);
h. monitoring the Issuer's obligations as to the satisfaction and
discharge of the Indenture and preparation of an Officers' Certificate
of the Issuer and obtaining of the Opinion of Counsel and the
Independent Certificate relating thereto (Section 4.1);
i. sale of the Indenture Trust Estate in a commercially reasonable
manner if an Event of Default has occurred and is continuing (Section
5.4) or an Insolvency Event with respect to the Seller has occurred and
is continuing (Section 6.5(b));
j. preparing and, after execution by the Issuer, filing with the
Commission, any applicable State agencies and the Indenture Trustee of
documents required to be filed on a periodic basis with, and summaries
thereof as may be required by rules and regulations prescribed by, the
Commission and any applicable State agencies (Section 7.3);
k. the opening of one or more accounts in the Issuer's name, the
preparation of Issuer Orders, Officers' Certificates of the Issuer and
Opinions of Counsel and all other actions necessary with respect to
investment and reinvestment of funds in the Trust Accounts (Sections
8.2 and 8.3);
l. the preparation of an Issuer Request and Officers' Certificate of
the Issuer and the obtaining of an Opinion of Counsel and Independent
Certificates, if necessary, for the release of the Indenture Trust
Estate (Sections 8.4 and 8.5);
m. the preparation of Issuer Orders and the obtaining of Opinions of
Counsel with respect to the execution of supplemental indentures
(Sections 9.1, 9.2 and 9.3);
n. the preparation of or obtaining of the documents and instruments
required for the execution and authentication of new Notes conforming
to any supplemental indenture and the delivery of the same to the
Eligible Lender Trustee and the Indenture Trustee, respectively
(Section 9.6); o. the preparation of all Officers' Certificates of the
Issuer, Opinions of Counsel and Independent Certificates with respect
to any requests by the Issuer to the Indenture Trustee to take any
action under the Indenture (Section 11.1(a);
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p. the preparation and delivery of Officers' Certificates of the Issuer
and the obtaining of Independent Certificates, if necessary, for the
release of property from the lien of the Indenture (Section 11.1(b));
q. the preparation and delivery to Noteholders and the Indenture
Trustee of any agreements with respect to alternate payment and notice
provisions (Sections 11.6); and
r. the recording of the Indenture, if applicable (Section 11.15).
Section 2.2 Duties with Respect to the Issuer.
A. In addition to the duties of the Administrator set forth above and
in the other Basic Documents, the Administrator shall perform such calculations
and shall prepare for execution by the Issuer or the Eligible Lender Trustee or
shall cause the preparation by other appropriate Persons of all such documents,
reports, filings, instruments, certificates and opinions as it shall be the duty
of the Issuer or the Eligible Lender Trustee to prepare, file or deliver
pursuant to the Basic Documents, and at the request of the Eligible Lender
Trustee shall take all appropriate action that it is the duty of the Issuer to
take pursuant to the Basic Documents. Subject to Section 8.1, and in accordance
with the directions of the Eligible Lender Trustee, the Administrator shall
administer, perform or supervise the performance of such other activities in
connection with the Collateral (including the Basic Documents) as are not
covered by any of the foregoing provisions and as are expressly requested by the
Eligible Lender Trustee and are reasonably within the capability of the
Administrator.
B. The Administrator shall be responsible for performance of the duties
of the Eligible Lender Trustee set forth in Section 5.4(a), (b), (c) and (d) of
the Trust Agreement with respect to, among other things, accounting and reports
to Certificateholders; provided, however, that the Eligible Lender Trustee shall
retain responsibility for the distribution of the Schedule K-1's necessary to
enable each Certificateholder to prepare its Federal and state income tax
returns.
C. The Administrator shall perform the duties of the Administrator
specified in Section 10.2 of the Trust Agreement required to be performed in
connection with the resignation or removal of the Eligible Lender Trustee, and
any other duties expressly required to be performed by the Administrator under
the Trust Agreement and the other Basic Documents.
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D. In carrying out the foregoing duties or any of its other obligations
under this Agreement, the Administrator may enter into transactions with or
otherwise deal with any of its Affiliates; provided, however, that the terms of
any such transactions or dealings shall be, in the Administrator's opinion, no
less favorable to the Issuer than would be available from unaffiliated parties.
Section 2.3 Establishment of Trust Accounts.
A.1. The Administrator, for the benefit of the Issuer, shall establish
and maintain in the name of the Indenture Trustee an Eligible Deposit Account
(the "Collection Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Issuer. The Collection
Account will initially be established as a segregated trust account in the name
of the Indenture Trustee with the corporate trust department of Bankers Trust
Company.
2. The Administrator, for the benefit of the Issuer, shall establish
and maintain in the name of the Indenture Trustee an Eligible Deposit Account
(the "Reserve Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Issuer. The Reserve Account
will initially be established as a segregated trust account in the name of the
Indenture Trustee with the corporate trust department of Bankers Trust Company.
B. Funds on deposit in the Collection Account and the Reserve Account
(collectively, the "Trust Accounts") shall be invested by the Indenture Trustee
(or any custodian or designated agent with respect to any amounts on deposit in
such accounts) in Eligible Investments pursuant to written instructions by the
Administrator; provided, however, it is understood and agreed that the Indenture
Trustee shall not be liable for the selection of, or any loss arising from such
investment in, Eligible Investments. All such Eligible Investments shall be held
by (or by any custodian on behalf of) the Indenture Trustee for the benefit of
the Issuer; provided that on the Business Day preceding each Distribution Date
all interest and other investment income (net of losses and investment expenses)
on funds on deposit therein shall be deposited into the Collection Account and
shall be deemed to constitute a portion of the Available Funds for such
Distribution Date. Other than as described in the following proviso or as
otherwise permitted by the Rating Agencies, funds on deposit in the Trust
Accounts shall be invested in Eligible Investments that will mature so that such
funds will be available at the close of business on the Business Day preceding
the following Monthly Servicing Payment Date (to the extent necessary to pay the
Primary Servicing Fee payable on such date) or Distribution Date; provided,
however, that funds on deposit in Trust Accounts may be invested in Eligible
Investments of the Indenture Trustee which may mature so that such funds will be
available on such Monthly Servicing Payment Date or
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Distribution Date. Funds deposited in a Trust Account on a Business Day which
immediately precedes a Monthly Servicing Payment Date or Distribution Date upon
the maturity of any Eligible Investments are not required to be invested
overnight.
C.1. The Seller and the Issuer have pledged to the Indenture Trustee
all of their respective right, title and interest in all funds on deposit from
time to time in the Trust Accounts and in all proceeds thereof (including all
income thereon) and all such funds, investments, proceeds and income shall be
part of the Trust Estate. Subject to the Administrator's power to instruct the
Indenture Trustee pursuant to paragraph B above and paragraph C.3 below, the
Trust Accounts shall be under the sole dominion and control of the Indenture
Trustee for the benefit of the Noteholders and the Issuer. If, at any time, any
of the Trust Accounts ceases to be an Eligible Deposit Account, the Indenture
Trustee (or the Administrator on its behalf) agrees, by its acceptance hereto,
that it shall within 10 Business Days (or such longer period, not to exceed 30
calendar days, as to which each Rating Agency may consent) establish a new Trust
Account as an Eligible Deposit Account and shall transfer any cash and/or any
investments to such new Trust Account. In connection with the foregoing, the
Administrator agrees that, in the event that any of the Trust Accounts are not
accounts with the Indenture Trustee, the Administrator shall notify the
Indenture Trustee in writing promptly upon any of such Trust Accounts ceasing to
be an Eligible Deposit Account.
2. With respect to the Trust Account Property, the Indenture Trustee
agrees, by its acceptance hereof, that:
(A) any Trust Account Property that is held in deposit accounts
shall be held solely in Eligible Deposit Accounts, subject to
the last sentence of Section 2.3C.1; and, subject to Section
2.3B, each such Eligible Deposit Account shall be subject to
the exclusive custody and control of the Indenture Trustee,
and the Indenture Trustee shall have sole signature authority
with respect thereto;
(B) any Trust Account Property that constitutes Physical Property
shall be Delivered to the Indenture Trustee in accordance with
paragraph (a) of the definition of "Delivery" and shall be
held, pending maturity or disposition, solely by the Indenture
Trustee or a financial intermediary (as such term is defined
in Section 8-313(4) of the UCC) acting solely for the
Indenture Trustee;
(C) any Trust Account Property that is a book-entry security held
through the Federal Reserve System pursuant to Federal
book-entry regulations shall be Delivered in accordance with
paragraph (b) of the definition of "Delivery" and shall be
maintained by the
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Indenture Trustee, pending maturity or disposition, through
continuous book-entry registration of such Trust Account
Property as described in such paragraph; and
(D) any Trust Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed
by clause (C) above shall be Delivered to the Indenture
Trustee in accordance with paragraph (c) of the definition of
"Delivery" and shall be maintained by the Indenture Trustee,
pending maturity or disposition, through continued
registration of the Indenture Trustee's (or its nominee's)
ownership of such security.
3. The Administrator shall have the power, revocable for cause or upon
the occurrence and during the continuance of an Administrator Default by the
Indenture Trustee or by the Eligible Lender Trustee with the consent of the
Indenture Trustee, to instruct the Indenture Trustee to make withdrawals and
payments from the Trust Accounts for the purpose of permitting the Servicer, the
Administrator or the Eligible Lender Trustee to carry out its respective duties
hereunder or permitting the Indenture Trustee to carry out its duties under the
Indenture.
Section 2.4 Collections. The Servicer shall remit within two Business Days of
receipt thereof to the Collection Account all payments by or on behalf of the
Obligors with respect to the Trust Student Loans (other than Purchased Student
Loans), and all Liquidation Proceeds, both as collected during the Collection
Period, and the Eligible Lender Trustee shall remit within two Business Days of
receipt thereof to the Collection Account any Interest Subsidy Payments and
Special Allowance Payments received by it with respect to the Trust Student
Loans during the Collection Period. Notwithstanding the foregoing, for so long
as (i) the senior unsecured obligations of the Administrator (or any affiliate
of the Administrator which guarantees the obligations of the Administrator
hereunder) shall have been assigned a long-term rating of not less than "AA-"
(or equivalent rating) or a short-term rating of not less than "A-1" (or
equivalent rating) by each of the Rating Agencies or the remitting by the
Servicer and the Eligible Lender Trustee of the amounts referred to in this
Section 2.4 to the Administrator will not result in a downgrading or withdrawal
of any of the then current ratings of any of the Securities by any of the Rating
Agencies and (ii) no Administrator Default shall have occurred and be
continuing, the Servicer and the Eligible Lender Trustee shall remit such
collections within two Business Days of receipt thereof to the Administrator,
and the Administrator need not deposit such collections into the Collection
Account until one Business Day immediately prior to the next following Monthly
Servicing Payment Date (in an amount up to the Servicing Fee then due) or
Distribution Date together with interest on such amounts (less Servicing Fees
paid during such period) calculated on a daily
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basis from the first day of the month following receipt thereof by the
Administrator through the last day of the related Collection Period at a rate
equal to the Federal Funds Rate less .20% ; provided, however, that, if the
Administrator (and each such Affiliate which guarantees the obligations of the
Administrator) is rated below AA- and A-1+ by Standard & Poor's, the
Administrator shall deposit all such collections into the Collection Account at
least as frequently as the next following Monthly Servicing Payment Date, unless
less frequent deposits will not result in a downgrading or withdrawal of
Standard & Poor's then current ratings on the Notes or the Certificates. In the
event that any of the foregoing conditions for ceasing daily remittances shall
no longer be satisfied, then the Administrator shall deposit all collections
held by it into the Collection Account within two Business Days thereof.
Section 2.5 Application of Collections.
A. With respect to each Trust Student Loan, all collections (including
all Guarantee Payments) with respect thereto for each Collection Period shall be
applied to interest and principal on such Trust Student Loan by the Servicer in
accordance with its customary practice.
B. All Liquidation Proceeds shall be applied to the related Trust
Student Loan.
Section 2.6 Additional Deposits.
A. The Servicer shall deposit or cause to be deposited in the
Collection Account the aggregate purchase price with respect to Purchased
Student Loans as determined pursuant to Section 3.5 of the Servicing Agreement
and all other amounts to be paid by the Servicer under Section 3.5 of the
Servicing Agreement when such amounts are due, and the Seller shall deposit or
cause to be deposited in the Collection Account the aggregate Purchase Amount
with respect to Purchased Student Loans and all other amounts to be paid by the
Seller under Section 6 of the Sale Agreement when such amounts are due.
B. Notwithstanding anything to the contrary set forth in paragraph (A)
above, if daily deposits to the Collection Account are not required pursuant to
Section 2.4, the Seller and the Servicer shall pay the amounts referred to in
paragraph (A) above that would otherwise be deposited into the Collection
Account to the Administrator. The Administrator shall not be required to deposit
such amounts into the Collection
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Account until the Business Day preceding each Distribution Date; provided,
however, that, on or before the Business Day preceding each Monthly Servicing
Payment Date that is not a Distribution Date, the Administrator shall deposit
into the Collection Account that portion of such amounts received by it that is
equal to the sum of the Servicing Fee payable on such date and provided, further
that the Administrator shall also deposit into the Collection Account on such
date interest on such amounts (less Servicing Fees paid during such period)
calculated on a daily basis from the first day of the month following receipt
thereof by the Administrator through the last day of the related Collection
Period at a rate equal to the Federal Funds Rate less .20%.
C. The Issuer shall make an initial deposit of $25,000 on the Closing
Date into the Collection Account from the proceeds of the sale of the Notes and
Certificates.
Section 2.7 Distributions.
A. On each Determination Date, the Administrator shall calculate all
amounts required to determine the amounts to be deposited in the Collection
Account from the Reserve Account and the amounts to be distributed therefrom on
the related Distribution Date. On the 5th Business Day preceding each Monthly
Servicing Payment Date that is not a Distribution Date, the Administrator shall
calculate all amounts required to determine the amounts to be deposited in the
Collection Account from the Reserve Account and the amounts to be distributed
therefrom on the related Monthly Servicing Payment Date.
B. The Administrator shall instruct the Indenture Trustee in writing no
later than the second business day preceding each Monthly Servicing Payment Date
that is not a Distribution Date (based on the information contained in the
Administrator's Certificate and the related Servicer's Report delivered pursuant
to Section 3.1 (A) and (B)) to distribute to the Servicer, by 1:00 p.m. (New
York time) on such Monthly Servicing Payment Date, from and to the extent of the
Available Funds on deposit in the Collection Account the Primary Servicing Fee
due with respect to the preceding calendar month, and the Indenture Trustee
shall comply with such instructions.
C. The Administrator shall instruct the Indenture Trustee in writing no
later than the second business day preceding each Distribution Date (based on
the information contained in the Administrator's Certificate and the related
Servicer's Report delivered pursuant to Section 3.1 (A) and (C)) to make the
following deposits and distributions to the Persons or to the account specified
below by 1:00 p.m. (New York time) on such Distribution Date, to the extent of
the amount of Available Funds in the Collection Account, in the following order
of priority, and the Indenture Trustee shall comply with such instructions:
1. to the Servicer, the Primary Servicing Fee due on such
Distribution Date;
2. to the Administrator, from the amount of Available Funds
remaining after the application of clause 1, the
Administration Fee due on such Distribution Date and all
unpaid Administration Fees from prior Collection Periods;
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3. to the Noteholders, from the amount of Available Funds
remaining after the application of clauses 1 and 2, the
Noteholders' Interest Distribution Amount, ratably, without
preference or priority of any kind, according to the amounts
payable on the Notes in respect of Noteholders' Interest
Distribution Amount;
4. to the Eligible Lender Trustee on behalf of the
Certificateholders, from the amount of Available Funds
remaining after the application of clauses 1 through 3, the
Certificateholders' Return Distribution Amount, for
distribution by the Eligible Lender Trustee pursuant to the
Trust Agreement, ratably, without preference or priority of
any kind, according to the amounts payable in respect of
Certificateholders' Return Distribution Amount;
5. to the Class A-1 Noteholders, from the amount of Available
Funds remaining after the application of clauses 1 through 4,
the Noteholders' Principal Distribution Amount, ratably,
without preference or priority of any kind, according to the
amounts payable on the Class A-1 Notes for principal;
6. on each Distribution Date on and after which the Class A-1
Notes have been paid in full, to the Class A-2 Noteholders,
from the amount of Available Funds remaining after the
application of clauses 1 through 5, the Noteholders' Principal
Distribution Amount, ratably, without preference or priority
of any kind, according to the amounts payable on the Class A-2
Notes for principal;
7. on each Distribution Date on and after the date on which the
Notes have been paid in full, to the Eligible Lender Trustee
on behalf of the Certificateholders, from the amount of
Available Funds remaining after the application of clauses 1
through 6, the Certificate Balance Distribution Amount for
distribution by the Eligible Lender Trustee pursuant to the
Trust Agreement, ratably, without preference or priority of
any kind, according to the amounts payable in respect of the
Certificate Balance;
8. to the Reserve Account, from the amount of Available Funds
remaining after the application of clauses 1 through 7, the
amount, if any, necessary to reinstate the balance of the
Reserve Account up to the Specified Reserve Account Balance;
9. to the Servicer, from the amount of Available Funds remaining
after the application of clauses 1
10
through 8, the aggregate unpaid amount of the Carryover
Servicing Fee, if any;
10. to the Noteholders, from the amount of Available Funds
remaining after the application of clauses 1 through 9, the
aggregate unpaid amount of Note Interest Carryover, if any,
ratably, without preference or priority of any kind, according
to the amounts due and payable on the Notes in respect of Note
Interest Carryover;
11. to the Eligible Lender Trustee on behalf of the
Certificateholders, from the amount of Available Funds
remaining after the application of clauses 1 through 10, the
aggregate unpaid amount of the Certificate Return Carryover,
if any, for distribution by the Eligible Lender Trustee
pursuant to the Trust Agreement, ratably, without preference
or priority of any kind, according to the amounts payable in
respect of Certificate Return Carryover; and
12. to the Reserve Account, the amount of Available Funds
remaining after the application of clauses 1 through 11.
Notwithstanding the foregoing, if on any Distribution Date following
all distributions to be made on such Distribution Date the Outstanding Amount of
the Notes would be in excess of the sum of the outstanding principal balance of
the Trust Student Loans and any accrued but unpaid interest on the Trust Student
Loans as of the last day of the related Collection Period plus the balance of
the Reserve Account on such Distribution Date following such distributions, or
if an Insolvency Event with respect to the Seller or an Event of Default has
occurred and is continuing, amounts on deposit in the Collection Account and the
Reserve Account shall be applied on such Distribution Date to the payment of the
Noteholders' Distribution Amount before any amounts are applied to the payment
of the Certificateholders' Distribution Amount.
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Section 2.8 Reserve Account.
A. On the Closing Date, the Issuer shall deposit the Reserve Account
Initial Deposit into the Reserve Account.
B.1. In the event that the Primary Servicing Fee for any Monthly
Servicing Payment Date or Distribution Date exceeds the amount
distributed to the Servicer pursuant to Sections 2.7B and 2.7C.1 on
such Monthly Servicing Payment Date or Distribution Date, the
Administrator shall instruct the Indenture Trustee in writing to
withdraw from the Reserve Account on such Monthly Servicing Payment
Date or Distribution Date an amount equal to such excess, to the
extent of funds available therein, and to distribute such amount to
the Servicer; provided, however, that, except as provided in
Sections 2.8C(C) and 2.8D, amounts on deposit in the Reserve Account
will not be available to cover any unpaid Carryover Servicing Fees
to the Servicer.
2. In the event that the Administration Fee for any Distribution
Date exceeds the amount distributed to the Administrator pursuant to
Section 2.7C.2 on such Distribution Date, the Administrator shall
instruct the Indenture Trustee in writing to withdraw from the
Reserve Account on each Distribution Date an amount equal to such
excess, to the extent of funds available therein after giving effect
to paragraph B.1 above, and to distribute such amount to the
Administrator.
3. In the event that the Noteholders' Interest Distribution Amount
and the Certificateholders' Return Distribution Amount for a
Distribution Date exceeds the amount distributed to Noteholders and
to the Certificateholders pursuant to Section 2.7C.3 and C.4 on such
Distribution Date, the Administrator shall instruct the Indenture
Trustee in writing to withdraw from the Reserve Account on such
Distribution Date an amount equal to such excess, to the extent of
funds available therein after giving effect to paragraphs B.1 and
B.2 above, and to distribute such amount to the Noteholders and to
the Certificateholders entitled thereto, in the same order and
priority as is set forth in Sections 2.7C.3 and C.4 subject to the
last paragraph of Section 2.7C.
4. In the event that the Noteholders' Principal Distribution Amount
on the Final Distribution Date with respect to each Class of Notes
exceeds the amount distributed to such Noteholders pursuant to
Section 2.7C.5 and 2.7C.6 on such Distribution Date, the
Administrator shall instruct the Indenture Trustee in writing to
withdraw from the Reserve Account on such final Distribution Date an
amount equal to such excess,
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to the extent of funds available therein after giving effect to
paragraphs B.1, B.2 and B.3 above, and to distribute such amount to
the Noteholders entitled thereto, in the same order and priority as
is set forth in Sections 2.7C.5 and 2.7C.6.
5. In the event that the Certificateholders' Balance Distribution
Amount on the final Distribution Date with respect to the
Certificates exceeds the amount distributed to the
Certificateholders pursuant to Section 2.7C.7 on such Distribution
Date, the Administrator shall instruct the Indenture Trustee in
writing to withdraw from the Reserve Account on such Distribution
Date an amount equal to such excess, to the extent of funds
available therein after giving effect to paragraphs B.1 through B.4
above, and to distribute such amount to the Eligible Lender Trustee
on behalf of the Certificateholders, for distribution to the
Certificateholders entitled thereto.
C. After giving effect to Section 2.8B, if the amount on deposit in the
Reserve Account on any Distribution Date (after giving effect to all deposits or
withdrawals therefrom on such Distribution Date other than pursuant to this
paragraph C) is greater than the Specified Reserve Account Balance for such
Distribution Date, the Administrator shall instruct the Indenture Trustee in
writing (A) to pay to the Noteholders out of such excess in the Reserve Account
an amount equal to the Note Principal Shortfall, if any; (B) to pay to the
Certificateholders out of such excess in the Reserve Account an amount equal to
the Certificate Balance Shortfall, if any; (C) to pay to the Servicer out of
such excess in the Reserve Account an amount equal to the amount described in
Section 2.7C.9 for such Distribution Date (to the extent not otherwise paid to
the Servicer on such Distribution Date); (D) to pay to the Noteholders out of
such excess an amount equal to the amount described in Section 2.7C.10 for such
Distribution Date (to the extent not otherwise paid to the Noteholders on such
Distribution Date); (E) to pay to the Certificateholders out of such excess an
amount equal to the amount described in Section 2.7C.11 for such Distribution
Date (to the extent not otherwise paid to the Certificateholders on such
Distribution Date); (F) in the event the Trust Student Loans are not sold
pursuant to Section 6.1A, to pay as an accelerated payment of principal balance
of the Notes or Certificate Balance, as the case may be, first to the
Noteholders in the same order and priority as is set forth in Sections 2.7C.5
and C.6 until the principal amount of the Notes is paid in full and then to the
13
Certificateholders until the Certificate Balance is reduced to zero, provided
that the amount of such distribution shall not exceed the outstanding principal
balance of the Notes or the Certificate Balance, as applicable, after giving
effect to all other payments in respect of principal of Notes and Certificate
Balance to be made on such date; and (G) to distribute the remaining amount of
such excess to the Seller. Amounts properly distributed to the Seller pursuant
to this paragraph C shall be deemed released from the Trust Estate and the
security interest therein granted to the Indenture Trustee, and the Seller shall
in no event thereafter be required to refund any such distributed amounts.
D. On the final Distribution Date upon termination of the Trust and
following the payment in full of the aggregate outstanding principal balance of
the Notes and the Certificate Balance and of all other amounts (other than
Carryover Servicing Fees, Note Interest Carryover and Certificate Return
Carryover) owing or to be distributed hereunder or under the Indenture or the
Trust Agreement to Noteholders, Certificateholders, the Servicer or the
Administrator, to the extent that Available Funds on such date are insufficient
to make the following payments, amounts remaining in the Reserve Account shall
be used first to pay any Carryover Servicing Fees, second to pay any Note
Interest Carryover and third to pay any Certificate Return Carryover. Any amount
remaining on deposit in the Reserve Account after such payments have been made
shall be distributed to the Seller. The Seller shall in no event be required to
refund any amounts properly distributed pursuant to this Section 2.8D.
E. Anything in this Section 2.8 to the contrary notwithstanding, if the
market value of securities and cash in the Reserve Account is on any
Distribution Date sufficient to pay the remaining principal amount of and
interest accrued on the Notes, to reduce the Certificate Balance to zero and to
pay any accrued return thereon and to pay any Carryover Servicing Fee, Note
Interest Carryover or Certificate Return Carryover, such amount will be so
applied on such Distribution Date and the Administrator shall instruct the
Eligible Lender Trustee and the Indenture Trustee to make such payments.
Section 2.9 Statements to Certificateholders and Noteholders. On each
Determination Date preceding a Distribution Date, the Administrator shall
provide to the Indenture Trustee and the Eligible Lender Trustee (with a copy to
the Rating Agencies) for the Indenture Trustee to forward on such succeeding
Distribution Date to each Noteholder of record and for the Eligible Lender
Trustee to forward on such succeeding Distribution Date to each
Certificateholder of record a statement, setting forth at least the following
information as to the Notes and the Certificates to the extent applicable:
a. the amount of such distribution allocable to principal of
each class of the Notes;
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b. the amount of the distribution allocable to interest on
each class of the Notes;
c. the amount of the distribution allocable to the Certificate
Balance;
d. the amount of the distribution allocable to return on the
Certificates;
e. the amount, if any, of the distribution allocable to any
Note Interest Carryover and any Certificate Return Carryover,
together with any remaining outstanding amount of each
thereof;
f. the Pool Balance as of the close of business on the last
day of the preceding Collection Period;
g. the aggregate outstanding principal balance of the Notes,
the Note Pool Factor, the Certificate Balance and the
Certificate Pool Factor as of such Distribution Date, after
giving effect to payments allocated to principal reported
under clauses (a) and (c) above;
h. the Note Rate for the next period for any class of Notes
and the Certificate Rate for any class of Certificates;
i. the amount of the Servicing Fee and any Carryover Servicing
Fee paid to the Servicer on such Distribution Date and on the
two preceding Monthly Servicing Payment Dates, and the amount,
if any, of the Carryover Servicing Fee remaining unpaid after
giving effect to any such payments;
j. the amount of the Administration Fee paid to the
Administrator on such Distribution Date;
k. the amount of the aggregate Realized Losses, if any, for
the related Collection Period and the balance of Trust Student
Loans that are delinquent in each delinquency period as of the
end of such Collection Period;
l. the amount of any Note Interest Shortfall, Note Principal
Shortfall, Certificate Return Shortfall and Certificate
Balance Shortfall, if any, in each case as applicable to each
class of Securities, and the change in such amounts from the
preceding statement;
m. the aggregate Purchase Amounts for Trust Student Loans, if
any, that were repurchased by the Seller or purchased by the
Servicer from the Issuer in such Collection Period; and
15
n. the balance of the Reserve Account on such Distribution
Date, after giving effect to changes therein on such
Distribution Date.
Each amount set forth pursuant to clauses (a), (b), (c), (d), (e), (i), (j) and
(l) above shall be expressed as a dollar amount per $1,000 of original principal
balance of a Certificate or Note, as applicable. A copy of the statements
referred to above may be obtained by any Certificate Owner or Note Owner by a
written request to the Eligible Lender Trustee or the Indenture Trustee,
respectively, addressed to the respective Corporate Trust Office.
Section 2.10 Non-Ministerial Matters. With respect to matters that in the
reasonable judgment of the Administrator are nonministerial, the Administrator
shall not take any action unless within a reasonable time before the taking of
such action, the Administrator shall have notified the Eligible Lender Trustee
of the proposed action and the Eligible Lender Trustee shall not have withheld
consent or provided an alternative direction. For the purpose of the preceding
sentence, "non-ministerial matters" shall include:
a. the amendment of or any supplement to the Indenture;
b. the initiation of any claim or lawsuit by the Issuer and
the compromise of any action, claim or lawsuit brought by or
against the Issuer (other than in connection with the
collection of the Trust Student Loans);
c. the amendment, change or modification of the Basic
Documents;
d. the appointment of successor Note Registrars, successor
Paying Agents and successor Indenture Trustees pursuant to the
Indenture or the appointment of Successor Administrators or
Successor Servicers, or the consent to the assignment by the
Note Registrar, Paying Agent or Indenture Trustee of its
obligations under the Indenture; and
e. the removal of the Indenture Trustee.
Section 2.11 Exceptions. Notwithstanding anything to the contrary in this
Agreement, except as expressly provided herein or in the other Basic Documents,
the Administrator shall not be obligated to, and shall not, (1) make any
payments to the Noteholders under the Basic Documents, (2) sell the Indenture
Trust Estate pursuant to Section 5.4 of the Indenture, (3) take any other action
that the Issuer directs the Administrator not to take on its behalf, (4) in
connection with its duties hereunder
16
assume any indemnification obligation of any other Person or (5) service the
Trust Student Loans.
Section 2.12 Compensation. As compensation for the performance of the
Administrator's obligations under this Agreement and as reimbursement for its
expenses related thereto, the Administrator shall be entitled to $20,000 for
each Collection Period payable on the related Distribution Date (the
"Administration Fees") payable in arrears which shall be solely an obligation of
the Issuer.
Section 2.13 Servicer and Administrator Expenses. Each of the Servicer and the
Administrator shall be severally required to pay all expenses incurred by it in
connection with its activities hereunder, including fees and disbursements of
independent accountants, taxes imposed on the Servicer or the Administrator, as
the case may be, and expenses incurred in connection with distributions and
reports to the Administrator or to the Certificateholders and the Noteholders,
as the case may be.
Article III
Section 3.1 Administrator's Certificate; Servicer's Report.
A. On or before the tenth day of each month (or, if any such day is not
a Business Day, on the next succeeding Business Day), the Servicer shall deliver
to the Administrator a Servicer's Report with respect to the preceding month
containing all information necessary for the Administrator to receive in
connection with the preparation of the Administrator's Officers' Certificate and
the Administrator's Certificate covering such calendar month referred to in
paragraph B below. On or before the tenth day (or, if any such day is not a
Business Day, on the next succeeding Business Day), preceding each Distribution
Date the Servicer shall deliver to the Administrator a Servicer's Report with
respect to the preceding Collection Period containing all information necessary
for the Administrator to receive in connection with the preparation of the
Administrator's Officers' Certificate and the Administrator's Certificate
covering such calendar month referred to in paragraph C below.
B. On the 2nd Business Day prior to each Monthly Servicing Payment Date
that is not a Distribution Date, the Administrator shall deliver to the Eligible
Lender Trustee and the Indenture Trustee, an Officer's Certificate of the
Administrator containing all information necessary to pay the Servicer the
Servicing Fee due on such Monthly Servicing Payment Date pursuant to Section
2.7B.
C. On each Determination Date prior to a Distribution Date, the
Administrator shall deliver to the Eligible Lender Trustee and the Indenture
Trustee, with a copy to the Rating Agencies, an Administrator's Certificate
containing all information necessary to make the distributions pursuant to
Sections 2.7 and 2.8, if
17
applicable, for the Collection Period preceding the date of such Administrator's
Certificate.
D. Prior to each Determination Date, the Administrator shall determine
the Note Rates and the Certificate Rate that will be applicable to the
Distribution Date following such Determination Date, in compliance with its
obligation to prepare and deliver an Administrator's Certificate on such
Determination Date pursuant to this Section 3.1. In connection therewith, the
Administrator shall calculate the T-Xxxx Rate in accordance with the definition
thereof and shall also determine the Student Loan Rate with respect to such
Distribution Date.
E. The Administrator shall furnish to the Issuer from time to time such
information regarding the Collateral as the Issuer shall reasonably request.
Section 3.2 Annual Statement as to Compliance; Notice of Default; Financial
Statements.
A. Each of the Servicer and the Administrator shall deliver to the
Eligible Lender Trustee and the Indenture Trustee on or before 120 days after
the end of the fiscal year of the Servicer and the Administrator, an Officer's
Certificate of the Servicer or the Administrator, as the case may be, dated as
of December 31 of the preceding year, stating that (i) a review of the
activities of the Servicer or the Administrator, as the case may be, during the
preceding 12-month period (or, in the case of the first such certificate, during
the period from the Closing Date to December 31, 1997) and of its performance
under this Agreement has been made under such officers' supervision and (ii) to
the best of such officers' knowledge, based on such review, the Servicer or the
Administrator, as the case may be, has fulfilled its obligations in all material
respects under this Agreement and, with respect to the Servicer, the Servicing
Agreement throughout such year or, if there has been a material default in the
fulfillment of any such obligation, specifying each such material default known
to such officers and the nature and status thereof. The Indenture Trustee shall
send a copy of each such Officers' Certificate and each report referred to in
Section 3.1 to the Rating Agencies. A copy of each such Officers' Certificate
and each report referred to in Section 3.1 may be obtained by any
Certificateholder, Certificate Owner, Noteholder or Note Owner by a request in
writing to the Eligible Lender Trustee addressed to its Corporate Trust Office,
together with evidence satisfactory to the Eligible Lender Trustee that such
Person is one of the foregoing parties. Upon the telephone request of the
Eligible Lender Trustee, the Indenture Trustee will promptly furnish the
Eligible Lender Trustee a list of Noteholders as of the date specified by the
Eligible Lender Trustee.
B. The Servicer shall deliver to the Eligible Lender Trustee, the
Indenture Trustee and the Rating Agencies, promptly
18
after having obtained knowledge thereof, but in no event later than five
Business Days thereafter, written notice in an Officers' Certificate of the
Servicer of any event which with the giving of notice or lapse of time, or both,
would become a Servicer Default under Section 5.1 of the Servicing Agreement.
C. The Administrator shall deliver to the Eligible Lender Trustee, the
Indenture Trustee and the Rating Agencies, promptly after having obtained
knowledge thereof, but in no event later than five Business Days thereafter,
written notice in an Officers' Certificate of the Administrator of any event
which with the giving of notice or lapse of time, or both, would become an
Administrator Default under Sections 5.1A or B or would cause the Student Loan
Marketing Association to fail to meet the requirement of clause (i) of Section
2.4.
D. The Administrator shall provide to the Eligible Lender Trustee, the
Indenture Trustee and the Rating Agencies (a) as soon as possible and in no
event more than 120 days after the end of each fiscal year of the Administrator
audited financials as at the end of and for such year and (b) as soon as
possible and in no event more than 45 days after the end of each quarterly
accounting period of the Administrator unaudited financials as at the end of and
for such period.
Section 3.3 Annual Independent Certified Public Accountants' Reports. Each of
the Servicer and the Administrator shall cause a firm of independent certified
public accountants, which may also render other services to the Servicer or the
Administrator, as the case may be, to deliver to the Eligible Lender Trustee,
the Indenture Trustee and the Rating Agencies on or before March 31 of each
year, a report addressed to the Servicer or the Administrator, as the case may
be, the Eligible Lender Trustee and the Indenture Trustee, to the effect that
such firm has examined certain documents and records relating to the servicing
of the Trust Student Loans, or the administration of the Trust Student Loans and
of the Trust, as the case may be, during the preceding calendar year (or, in the
case of the first such report, during the period from the Closing Date to
December 31, 1997) and that, on the basis of the accounting and auditing
procedures considered appropriate under the circumstances, such firm is of the
opinion that such servicing or administration, respectively, was conducted in
compliance with those terms of this Agreement and in the case of the Servicer,
the Servicing Agreement, including any applicable statutory provisions
incorporated therein and such additional terms and statutes as may be specified
from time to time by the Administrator, except for (i) such exceptions as such
firm shall believe to be immaterial and (ii) such other exceptions as shall be
set forth in such report.
Such report will also indicate that the firm is independent of the
Servicer or the Administrator, as the case may be, within
19
the meaning of the Code of Professional Ethics of the American Institute of
Certified Public Accountants.
Article IV
Section 4.1 Representations of Administrator. The Student Loan Marketing
Association, as Administrator, makes the following representations on which the
Issuer is deemed to have relied in acquiring the Trust Student Loans. The
representations speak as of the execution and delivery of this Agreement and as
of the Closing Date and shall survive the sale of the Trust Student Loans to the
Eligible Lender Trustee on behalf of the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture.
A. Organization and Good Standing. The Administrator is duly organized
and validly existing under the laws of the United States of America, with the
power and authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted.
B. Power and Authority. The Administrator has the corporate power and
authority to execute and deliver this Agreement and to carry out its terms, and
the execution, delivery and performance of this Agreement have been duly
authorized by the Administrator by all necessary corporate action.
C. Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of the Administrator enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization and similar
laws relating to creditors' rights generally and subject to general principles
of equity.
D. No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof or thereof do not
conflict with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time or both) a default under,
the charter or by-laws of the Administrator, or any indenture, agreement or
other instrument to which the Administrator is a party or by which it shall be
bound; nor result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than pursuant to the Basic Documents); nor violate any law or,
to the knowledge of the Administrator, any order, rule or regulation applicable
to the Administrator of any court or of any Federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Administrator or its properties.
E. No Proceedings. There are no proceedings or investigations pending
against the Administrator or, to its best knowledge, threatened against the
Administrator, before any
20
court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Administrator or its properties:
(i) asserting the invalidity of this Agreement or any of the other Basic
Documents, the Notes or the Certificates, (ii) seeking to prevent the issuance
of the Notes or the Certificates or the consummation of any of the transactions
contemplated by this Agreement or any of the other Basic Documents, (iii)
seeking any determination or ruling that could reasonably be expected to have a
material and adverse effect on the performance by the Administrator of its
obligations under, or the validity or enforceability of, this Agreement, any of
the other Basic Documents, the Notes or the Certificates or (iv) seeking to
affect adversely the Federal or state income tax attributes of the Issuer, the
Notes or the Certificates.
F. All Consents. All authorizations, consents, orders or approvals of
or registrations or declarations with any court, regulatory body, administrative
agency or other government instrumentality required to be obtained, effected or
given by the Administrator in connection with the execution and delivery by the
Administrator of this Agreement and the performance by the Administrator of the
transactions contemplated by this Agreement have been duly obtained, effected or
given and are in full force and effect.
Section 4.2 Liability of Administrator; Indemnities. The Administrator shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Administrator under this Agreement.
The Administrator shall indemnify, defend and hold harmless the Issuer,
the Certificateholders and the Noteholders and any of the officers, directors,
employees and agents of the Issuer from and against any and all costs, expenses,
losses, claims, damages and liabilities to the extent that such cost, expense,
loss, claim, damage or liability arose out of, or was imposed upon any such
Person through, the gross negligence, willful misfeasance or bad faith of the
Administrator in the performance of its duties under this Agreement or by reason
of reckless disregard of its obligations and duties hereunder or thereunder.
The Administrator shall indemnify the Indenture Trustee in its
individual capacity and any of its officers, directors, employees and agents
against any and all loss, liability or expense (including attorneys' fees)
incurred by it in connection with the performance of its duties under the
Indenture and the other Basic Documents. The Indenture Trustee shall notify the
Issuer and the Administrator promptly of any claim for which it may seek
indemnity. Failure by the Indenture Trustee to so notify the Issuer and the
Administrator shall not relieve the Issuer or the Administrator of its
obligations hereunder and under the other Basic Documents. The Administrator
shall defend the claim and the Administrator shall not be liable for the legal
fees and expenses of the Indenture Trustee after it has assumed
21
such defense; provided, however, that, in the event that there may be a conflict
between the positions of the Indenture Trustee and the Administrator in
conducting the defense of such claim, the Indenture Trustee shall be entitled to
separate counsel the fees and expenses of which shall be paid by the
Administrator on behalf of the Issuer. Neither the Issuer nor the Administrator
need reimburse any expense or indemnify against any loss, liability or expense
incurred by the Indenture Trustee through the Indenture Trustee's own willful
misconduct, negligence or bad faith.
The Administrator shall indemnify each of the Eligible Lender Trustee
and the Interim Eligible Lender Trustee in its individual capacity and any of
its officers, directors, employees and agents against any and all loss,
liability, claims, damages, costs, penalties, taxes (excluding taxes payable by
it on any compensation received by it for its services as trustee) or expense
(including attorneys' fees) incurred by it in connection with the performance of
its duties under the Interim Trust Agreement, the Trust Agreement and the other
Basic Documents.
Without limiting the generality of the foregoing, the Administrator
shall indemnify the Eligible Lender Trustee in its individual capacity and any
of its officers, directors, employees and agents against any and all liability
relating to or resulting from any of the following:
(i) any claim that the Trust Student Loans (or any guarantee with
respect thereto) are delinquent, uncollectable, uninsured, illegal,
invalid or unenforceable;
(ii) any claim that the Trust Student Loans have not been made,
administered, serviced or collected in accordance with applicable
federal and state laws or the requirements of any Guarantor; or
(iii) any claim that any original note or other document evidencing or
relating to the Trust Student Loans has been lost, misplaced or
destroyed.
The Eligible Lender Trustee shall notify the Administrator promptly of
any claim for which it may seek indemnity. Failure by the Eligible Lender
Trustee to so notify the Administrator shall not relieve the Administrator of
its obligations hereunder and under the other Basic Documents. The Administrator
shall defend the claim and the Administrator shall not be liable for the legal
fees and expenses of the Eligible Lender Trustee after it has assumed
such defense; provided, however, that, in the event that there may be a conflict
between the positions of the Eligible Lender Trustee and the Administrator in
conducting the defense of such claim, the Eligible Lender Trustee shall be
entitled to separate counsel the fees and expenses of which shall be paid by the
Administrator on behalf of the Issuer. Neither the Issuer nor the Administrator
need reimburse any expense or indemnify against any loss, liability or expense
incurred by the
22
Eligible Lender Trustee through the Eligible Lender Trustee's own willful
misconduct, negligence or bad faith.
The Seller shall pay reasonable compensation to the Indenture Trustee
and the Eligible Lender Trustee and shall reimburse the Indenture Trustee and
the Eligible Lender Trustee for all reasonable expenses, disbursements and
advances.
For purposes of this Section, in the event of the termination of the
rights and obligations of the Administrator (or any successor thereto pursuant
to Section 4.3) as Administrator pursuant to Section 5.1, or a resignation by
such Administrator pursuant to this Agreement, such Administrator shall be
deemed to be the Administrator pending appointment of a successor Administrator
pursuant to Section 5.2.
Indemnification under this Section shall survive the resignation or
removal of the Eligible Lender Trustee or the Indenture Trustee or the
termination of this Agreement and shall include reasonable fees and expenses of
counsel and expenses of litigation. If the Administrator shall have made any
indemnity payments pursuant to this Section and the Person to or on behalf of
whom such payments are made thereafter collects any of such amounts from others,
such Person shall promptly repay such amounts to the Administrator, without
interest.
Section 4.3 Merger or Consolidation of, or Assumption of the Obligations of,
Administrator. Any Person (a) into which the Administrator may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Administrator shall be a party or (c) which may succeed to the properties and
assets of the Administrator substantially as a whole, shall be the successor to
the Administrator without the execution or filing of any document or any further
act by any of the parties to this Agreement; provided, however, that the
Administrator hereby covenants that it will not consummate any of the foregoing
transactions except upon satisfaction of the following: (i) the surviving
Administrator, if other than the Student Loan Marketing Association, executes an
agreement of assumption to perform every obligation of the Administrator under
this Agreement, (ii) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Section 4.1 shall have been breached
and no Administrator Default, and no event that, after notice or lapse of time,
or both, would become an Administrator Default shall have occurred and be
continuing, (iii) the surviving Administrator, if other than the Student Loan
Marketing Association, shall have delivered to the Eligible Lender Trustee and
the Indenture Trustee an Officers' Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section and that all conditions precedent, if any,
provided for in this Agreement relating to such transaction have been complied
with, and that the Rating Agency Condition shall have been satisfied with
respect to such transaction, (iv) unless the
23
Student Loan Marketing Association is the surviving entity, such transaction
will not result in a material adverse Federal or state tax consequence to the
Issuer, the Noteholders or the Certificateholders and (v) unless the Student
Loan Marketing Association is the surviving entity, the Administrator shall have
delivered to the Eligible Lender Trustee and the Indenture Trustee an Opinion of
Counsel either (A) stating that, in the opinion of such counsel, all financing
statements and continuation statements and amendments thereto have been executed
and filed that are necessary fully to preserve and protect the interest of the
Eligible Lender Trustee and Indenture Trustee, respectively, in the Trust
Student Loans and reciting the details of such filings, or (B) stating that, in
the opinion of such counsel, no such action shall be necessary to preserve and
protect such interests. Anything in this Section 4.3 to the contrary
notwithstanding, the Administrator may at any time assign its rights,
obligations and duties under this Agreement to an Affiliate provided that the
Rating Agencies confirm that such assignment will not result in a downgrading or
a withdrawal of the ratings then applicable to the Notes and the Certificates.
Section 4.4 Limitation on Liability of Seller, Administrator and Others. Neither
the Administrator nor any of its directors, officers, employees or agents shall
be under any liability to the Issuer, the Noteholders or the Certificateholders,
or to the Indenture Trustee or the Eligible Lender Trustee except as provided
under this Agreement for any action taken or for refraining from the taking of
any action pursuant to this Agreement or for errors in judgment; provided,
however, that these provisions shall not protect the Administrator or any such
person against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations and duties under this Agreement. The
Administrator and any of its directors, officers, employees or agents may rely
in good faith on the advice of counsel or on any document of any kind, prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder.
Except as provided in this Agreement, the Administrator shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to administer the Trust Student Loans and
the Trust in accordance with this Agreement and that in its opinion may involve
it in any expense or liability; provided, however, that the Administrator may
undertake any reasonable action that it may deem necessary or desirable in
respect of this Agreement and the other Basic Documents and the rights and
duties of the parties to this Agreement and the other Basic Documents and the
interests of the Certificateholders under this Agreement and the Noteholders
under the Indenture and under this Agreement.
Section 4.5 Administrator May Own Certificates or Notes. The Administrator and
any Affiliate thereof may in its individual or
24
any other capacity become the owner or pledgee of Certificates or Notes with the
same rights as it would have if it were not the Administrator or an Affiliate
thereof, except as expressly provided herein or in any other Basic Document.
Section 4.6 Student Loan Marketing Association Not to Resign as Administrator.
Subject to the provisions of Section 4.3, the Student Loan Marketing Association
shall not resign from the obligations and duties imposed on it as Administrator
under this Agreement except upon determination that the performance of its
duties under this Agreement shall no longer be permissible under applicable law
or shall violate any final order of a court or administrative agency with
jurisdiction over the Student Loan Marketing Association or its properties.
Notice of any such determination permitting or requiring the resignation of the
Student Loan Marketing Association shall be communicated to the Eligible Lender
Trustee and the Indenture Trustee at the earliest practicable time (and, if such
communication is not in writing, shall be confirmed in writing at the earliest
practicable time) and any such determination shall be evidenced by an Opinion of
Counsel to such effect delivered to the Eligible Lender Trustee and the
Indenture Trustee concurrently with or promptly after such notice. No such
resignation shall become effective until the Indenture Trustee or a successor
Administrator shall have assumed the responsibilities and obligations of the
Student Loan Marketing Association in accordance with Section 5.2. Anything in
this Section 4.7 to the contrary notwithstanding, the Administrator may resign
at any time subsequent to the assignment of its duties and obligations hereunder
pursuant to Section 4.3.
Article V
Section 5.1 Administrator Default. If any one of the following events (an
"Administrator Default") shall occur and be continuing:
A. (i) in the event that daily deposits into the Collection
Account are not required, any failure by the Administrator to
deliver to the Indenture Trustee for deposit in the Trust
Accounts any Available Funds required to be paid on or before
the Business Day immediately preceding any Monthly Servicing
Payment Date or Distribution Date, as applicable, or (ii) any
failure by the Administrator to direct the Indenture Trustee
to make any required distributions from either of the Trust
Accounts, which failure in case of either clause (i) or (ii)
continues unremedied for five Business Days after written
notice of such failure is received by the Administrator from
the Indenture Trustee or the Eligible Lender Trustee or after
discovery of such failure by an officer of the Administrator;
or
25
B. any failure by the Administrator duly to observe or to
perform in any material respect any other term, covenant or
agreement of the Administrator set forth in this Agreement or
any other Basic Document, which failure shall (i) materially
and adversely affect the rights of Noteholders or
Certificateholders and (ii) continue unremedied for a period
of 60 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been
given (A) to the Administrator by the Indenture Trustee or the
Eligible Lender Trustee or (B) to the Administrator, the
Indenture Trustee and the Eligible Lender Trustee by the
Noteholders or Certificateholders, as applicable, representing
not less than 25% of the Outstanding Amount of the Notes or
25% of the outstanding Certificate Balance (including any
Certificates owned by the Seller); or
C. an Insolvency Event occurs with respect to the
Administrator;
then, and in each and every case, so long as the Administrator Default shall not
have been remedied, either the Indenture Trustee or the Noteholders evidencing
not less than 25% of the Outstanding Amount of the Notes, by notice then given
in writing to the Administrator (and to the Indenture Trustee and the Eligible
Lender Trustee if given by the Noteholders) may terminate all the rights and
obligations (other than the obligations set forth in Section 4.2) of the
Administrator under this Agreement. On or after the receipt by the Administrator
of such written notice, all authority and power of the Administrator under this
Agreement, whether with respect to the Notes, the Certificates, the Trust
Student Loans or otherwise, shall, without further action, pass to and be vested
in the Indenture Trustee or such successor Administrator as may be appointed
under Section 5.2; and, without limitation, the Indenture Trustee and the
Eligible Lender Trustee are hereby authorized and empowered to execute and
deliver, for the benefit of the predecessor Administrator, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination. The predecessor Administrator shall
cooperate with the successor Administrator, the Indenture Trustee and the
Eligible Lender Trustee in effecting the termination of the responsibilities and
rights of the predecessor Administrator under this Agreement. All reasonable
costs and expenses (including attorneys' fees) incurred in connection with
amending this Agreement to reflect such succession as Administrator pursuant to
this Section shall be paid by the predecessor Administrator (other than the
Indenture Trustee acting as the Administrator under this Section 5.1) upon
presentation of reasonable documentation of such costs and expenses. Upon
receipt of notice of the occurrence of an
26
Administrator Default, the Eligible Lender Trustee shall give notice thereof to
the Rating Agencies.
Section 5.2 Appointment of Successor.
A. Upon receipt by the Administrator of notice of termination pursuant
to Section 5.1, or the resignation by the Administrator in accordance with the
terms of this Agreement, the predecessor Administrator shall continue to perform
its functions as Administrator under this Agreement in the case of termination,
only until the date specified in such termination notice or, if no such date is
specified in a notice of termination, until receipt of such notice and, in the
case of resignation, until the later of (x) the date 120 days from the delivery
to the Eligible Lender Trustee and the Indenture Trustee of written notice of
such resignation (or written confirmation of such notice) in accordance with the
terms of this Agreement and (y) the date upon which the predecessor
Administrator shall become unable to act as Administrator as specified in the
notice of resignation and accompanying Opinion of Counsel (the "Transfer Date").
In the event of the termination hereunder of the Administrator the Issuer shall
appoint a successor Administrator acceptable to the Indenture Trustee, and the
successor Administrator shall accept its appointment by a written assumption in
form acceptable to the Indenture Trustee. In the event that a successor
Administrator has not been appointed at the time when the predecessor
Administrator has ceased to act as Administrator in accordance with this
Section, the Indenture Trustee without further action shall automatically be
appointed the successor Administrator and the Indenture Trustee shall be
entitled to the Administration Fee. Notwithstanding the above, the Indenture
Trustee shall, if it shall be unwilling or legally unable so to act, appoint or
petition a court of competent jurisdiction to appoint any established
institution whose regular business shall include the servicing of student loans,
as the successor to the Administrator under this Agreement.
B. Upon appointment, the successor Administrator (including the
Indenture Trustee acting as successor Administrator), shall be the successor in
all respects to the predecessor Administrator and shall be subject to all the
responsibilities, duties and liabilities placed on the predecessor Administrator
that arise thereafter or are related thereto and shall be entitled to an amount
agreed to by such successor Administrator (which shall not exceed the
Administration Fee unless such compensation arrangements will not result in a
downgrading or withdrawal of any rating on the Notes or the Certificates by any
Rating Agency) and all the rights granted to the predecessor Administrator by
the terms and provisions of this Agreement.
C. The Administrator may not resign unless it is prohibited from
serving as such by law as evidenced by an Opinion of Counsel to such effect
delivered to the Indenture Trustee and the Eligible Lender Trustee.
Notwithstanding the foregoing or
27
anything to the contrary herein or in the other Basic Documents, the Indenture
Trustee, to the extent it is acting as successor Administrator pursuant hereto
and thereto, shall be entitled to resign to the extent a qualified successor
Administrator has been appointed and has assumed all the obligations of the
Administrator in accordance with the terms of this Agreement and the other Basic
Documents.
Section 5.3 Notification to Noteholders and Certificateholders. Upon any
termination of, or appointment of a successor to, the Administrator pursuant to
this Article V, the Eligible Lender Trustee shall give prompt written notice
thereof to Certificateholders and the Indenture Trustee shall give prompt
written notice thereof to Noteholders and the Rating Agencies (which, in the
case of any such appointment of a successor, shall consist of prior written
notice thereof to the Rating Agencies).
Section 5.4 Waiver of Past Defaults. The Noteholders of Notes evidencing a
majority of the Outstanding Amount of the Notes (or the Certificateholders of
Certificates evidencing a majority of the outstanding Certificate Balance, in
the case of any default which does not adversely affect the Indenture Trustee or
the Noteholders) may, on behalf of all Noteholders and Certificateholders, waive
in writing any default by the Administrator in the performance of its
obligations hereunder and any consequences thereof, except a default in making
any required deposits to or payments from any of the Trust Accounts (or giving
instructions regarding the same) in accordance with this Agreement. Upon any
such waiver of a past default, such default shall cease to exist, and any
Administrator Default arising therefrom shall be deemed to have been remedied
for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto.
28
Article VI
Section 6.1 Termination.
A. Optional Purchase of All Trust Student Loans. The Administrator
shall notify the Seller and the Indenture Trustee in writing, within 15 days
after the last day of any Collection Period as of which the then outstanding
Pool Balance is 12% or less of the Initial Pool Balance, of the percentage that
the then outstanding Pool Balance bears to the Initial Pool Balance. As of the
last day of any Collection Period immediately preceding a Distribution Date as
of which the then outstanding Pool Balance is 10% or less of the Initial Pool
Balance, the Eligible Lender Trustee on behalf and at the direction of the
Seller, or any other "eligible lender" (within the meaning of the Higher
Education Act) designated by the Seller in writing to the Eligible Lender
Trustee and the Indenture Trustee, shall have the option to purchase the Trust
Estate, other than the Trust Accounts. To exercise such option, the Seller shall
deposit pursuant to Section 2.6 in the Collection Account an amount equal to the
aggregate Purchase Amount for the Trust Student Loans and the related rights
with respect thereto, plus the appraised value of any such other property held
by the Trust other than the Trust Accounts, such value to be determined by an
appraiser mutually agreed upon by the Seller, the Eligible Lender Trustee and
the Indenture Trustee, and shall succeed to all interests in and to the Trust;
provided, however, that the Seller may not effect such purchase if such
aggregate Purchase Amounts do not equal or exceed the Minimum Purchase Amount
plus any Note Interest Carryover, Certificate Return Carryover and Carryover
Servicing Fees. In the event the Seller fails to notify the Eligible Lender
Trustee and the Indenture Trustee in writing prior to the acceptance by the
Indenture Trustee of a bid to purchase the Trust Estate pursuant to Section 4.4
of the Indenture that the Seller intends to exercise its option to purchase the
Trust Estate, the Seller shall be deemed to have waived its option to purchase
the Trust Estate as long as the Seller has received 5 business days' notice from
the Indenture Trustee as provided in Section 4.4 of the Indenture.
B. Insolvency of the Seller. Upon any sale of the assets of the Trust
pursuant to Section 9.2 of the Trust Agreement, the Administrator shall instruct
the Indenture Trustee in writing to deposit the net proceeds from such sale
after all payments and reserves therefrom (including the expenses of such sale)
have been made (the "Insolvency Proceeds") in the Collection Account. On the
first Distribution Date following the date on which the Insolvency Proceeds are
deposited in the Collection Account, the Administrator shall instruct the
Indenture Trustee to make the following distributions (after the application on
such Distribution Date of the amount of Available Funds and amounts on deposit
in the Reserve Account pursuant to Sections 2.7 and 2.8) from the Insolvency
Proceeds and any funds remaining on deposit
29
in the Reserve Account (including the proceeds of any sale of investments
therein as described in the following sentence):
a. to the Noteholders, any unpaid Noteholders' Interest
Distribution Amount for such Distribution Date as set forth in
Sections 2.7C.3;
b. to the Noteholders, the outstanding principal balance of
the Notes in the same order and priority as is set forth in
Sections 2.7C.5 and C.6;
c. to the Certificateholders, any unpaid Certificate Return
Distribution Amount for such Distribution Date;
d. to the Certificateholders, the Certificate Balance;
e. to the Servicer, any unpaid Carryover Servicing Fees;
f. to the Noteholders, any unpaid Note Interest Carryover; and
g. to the Certificateholders, any unpaid Certificate Return
Carryover.
Any investments on deposit in the Reserve Account which will not mature on or
before such Distribution Date shall be sold by the Indenture Trustee at such
time as will result in the Indenture Trustee receiving the proceeds from such
sale not later than the Business Day preceding such Distribution Date. Any
Insolvency Proceeds remaining after the deposits described above shall be paid
to the Seller.
C. Notice. Notice of any termination of the Trust shall be given by the
Administrator to the Eligible Lender Trustee and the Indenture Trustee as soon
as practicable after the Administrator has received notice thereof.
D. Succession. Following the satisfaction and discharge of the
Indenture and the payment in full of the principal of and interest on the Notes,
the Certificateholders shall succeed to the rights of the Noteholders hereunder
and the Eligible Lender Trustee shall succeed to the rights of, and assume the
obligations of, the Indenture Trustee pursuant to this Agreement and any other
Basic Documents.
30
Article VII
Section 7.1 Protection of Interests in Trust.
A. The Seller shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such manner
and in such places as may be required by law fully to preserve, maintain, and
protect the interest of the Issuer, the Eligible Lender Trustee and the
Indenture Trustee in the Trust Student Loans and in the proceeds thereof. The
Seller shall deliver (or cause to be delivered) to the Eligible Lender Trustee
and the Indenture Trustee file-stamped copies of, or filing receipts for, any
document filed as provided above, as soon as available following such filing.
B. Neither the Seller nor the Servicer shall change its name, identity
or corporate structure in any manner that would, could or might make any
financing statement or continuation statement filed in accordance with paragraph
A above seriously misleading within the meaning of ss. 9-402(7) of the UCC,
unless it shall have given the Eligible Lender Trustee and the Indenture Trustee
at least five days' prior written notice thereof and shall have promptly filed
appropriate amendments to all previously filed financing statements or
continuation statements.
C. Each of the Seller and the Servicer shall have an obligation to give
the Eligible Lender Trustee and the Indenture Trustee at least 60 days' prior
written notice of any relocation of its principal executive office if, as a
result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall promptly file any such
amendment. The Servicer shall at all times maintain each office from which it
shall service Trust Student Loans, and its principal executive office, within
the United States of America.
D. The Servicer shall maintain accounts and records as to each Trust
Student Loan accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Trust Student Loan, including
payments and recoveries made and payments owing (and the nature of each) and
(ii) reconciliation between payments or recoveries on (or with respect to) each
Trust Student Loan and the amounts from time to time deposited by the Servicer
in the Collection Account in respect of such Trust Student Loan.
E. The Servicer shall maintain its computer systems so that, from and
after the time of sale of the Trust Student Loans to the Eligible Lender Trustee
on behalf of the Issuer, the Servicer's master computer records (including any
backup archives) that refer to a Trust Student Loan shall indicate clearly the
interest of the Issuer, the Eligible Lender Trustee and the Indenture Trustee in
such Trust Student Loan and that
31
such Trust Student Loan is owned by the Eligible Lender Trustee on behalf of the
Issuer and has been pledged to the Indenture Trustee. Indication of the
Issuer's, the Eligible Lender Trustee's and the Indenture Trustee's interest in
a Trust Student Loan shall be deleted from or modified on the Servicer's
computer systems when, and only when, the related Trust Student Loan shall have
been paid in full or repurchased.
F. If at any time the Seller or the Administrator shall propose to
sell, grant a security interest in, or otherwise transfer any interest in
student loans to any prospective purchaser, lender or other transferee, the
Servicer shall give to such prospective purchaser, lender or other transferee
computer tapes, records or printouts (including any restored from backup
archives) that, if they refer in any manner whatsoever to any Trust Student
Loan, indicate clearly that such Trust Student Loan has been sold and is owned
by the Eligible Lender Trustee on behalf of the Issuer and has been pledged to
the Indenture Trustee.
G. Upon reasonable notice, the Servicer shall permit the Indenture
Trustee and its agents at any time during normal business hours to inspect,
audit and make copies of and abstracts from the Servicer's records regarding any
Trust Student Loan.
H. Upon request, at any time the Eligible Lender Trustee or the
Indenture Trustee have reasonable grounds to believe that such request would be
necessary in connection with its performance of its duties under the Basic
Documents, the Servicer shall furnish to the Eligible Lender Trustee or to the
Indenture Trustee (in each case, with a copy to the Administrator), within five
Business Days, a list of all Trust Student Loans (by borrower social security
number, type of loan and date of issuance) then held as part of the Trust, and
the Administrator shall furnish to the Eligible Lender Trustee or to the
Indenture Trustee, within 20 Business Days thereafter, a comparison of such list
to the list of Initial Trust Student Loans set forth in Schedule A to the
Indenture as of the Closing Date, and, for each Trust Student Loan that has been
removed from the pool of loans held by the Eligible Lender Trustee on behalf of
the Issuer, information as to the date as of which and circumstances under which
each such Trust Student Loan was so removed.
I. The Seller shall deliver to the Eligible Lender Trustee and the
Indenture Trustee:
(1) promptly after the execution and delivery of this Agreement and of
each amendment thereto and on each Transfer Date, an Opinion of Counsel
either (A) stating that, in the opinion of such counsel, all financing
statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the
Eligible Lender Trustee and the Indenture Trustee in the Trust Student
Loans, and reciting the details of such
32
filings or referring to prior Opinions of Counsel in which such details
are given, or (B) stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest; and
(2) within 120 days after the beginning of each calendar year beginning
with the first calendar year beginning more than three months after the
Cutoff Date, an Opinion of Counsel, dated as of a date during such
120-day period, either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
interest of the Eligible Lender Trustee and the Indenture Trustee in
the Trust Student Loans, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given,
or (B) stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interest; provided that
a single Opinion of Counsel may be delivered in satisfaction of the
foregoing requirement and that of Section 3.6(b) of the Indenture.
Each Opinion of Counsel referred to in clause (1) or (2) above shall
specify (as of the date of such opinion and given all applicable laws as in
effect on such date) any action necessary to be taken in the following year to
preserve and protect such interest.
J. The Seller shall, to the extent required by applicable law, cause
the Certificates and the Notes to be registered with the Commission pursuant to
Section 12(b) or Section 12(g) of the Exchange Act within the time periods
specified in such sections.
Article VIII
Section 8.1 Independence of the Administrator. For all purposes of this
Agreement, the Administrator shall be an independent contractor and shall not be
subject to the supervision of the Issuer or the Eligible Lender Trustee with
respect to the manner in which it accomplishes the performance of its
obligations hereunder. Unless expressly authorized by the Issuer, the
Administrator shall have no authority to act for or represent the Issuer or the
Eligible Lender Trustee in any way and shall not otherwise be deemed an agent of
the Issuer or the Eligible Lender Trustee.
Section 8.2 No Joint Venture. Nothing contained in this Agreement (i) shall
constitute the Administrator and either of the Issuer or the Eligible Lender
Trustee as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or
33
apparent authority to incur any obligation or liability on behalf of the others.
Section 8.3 Other Activities of Administrator. Nothing herein shall prevent the
Administrator or its Affiliates from engaging in other businesses or, in its
sole discretion, from acting in a similar capacity as an administrator for any
other person or entity even though such person or entity may engage in business
activities similar to those of the Issuer, the Eligible Lender Trustee or the
Indenture Trustee.
Section 8.4 Powers of Attorney. The Eligible Lender Trustee and the Indenture
Trustee shall upon the written request of the Administrator furnish the
Administrator with any powers of attorney and other documents reasonably
necessary or appropriate to enable the Administrator to carry out its
administrative duties hereunder.
Section 8.5 Amendment. This Agreement (other than Sections 2.1 and 2.2) may be
amended by the Seller, the Servicer, the Administrator, the Eligible Lender
Trustee and the Indenture Trustee, without the consent of any of the Noteholders
or the Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions in this Agreement or
of modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, however, that such action shall not, as evidenced
by an Opinion of Counsel delivered to the Eligible Lender Trustee and the
Indenture Trustee, adversely affect in any material respect the interests of any
Noteholder or Certificateholder.
Sections 2.1 and 2.2 may be amended from time to time by a written
amendment duly executed and delivered by the Eligible Lender Trustee, the
Indenture Trustee and the Administrator, without the consent of the Noteholders
and the Certificateholders, for the purpose of adding any provision to or
changing in any manner or eliminating any of the provisions of such Article;
provided that such amendment will not, in an Opinion of Counsel obtained on
behalf of the Issuer and satisfactory to the Indenture Trustee and the Eligible
Lender Trustee, materially and adversely affect the interest of any Noteholder
or Certificateholder.
This Agreement (other than Sections 2.1 and 2.2) may also be amended
from time to time by the Seller, the Servicer, the Administrator, the Indenture
Trustee and the Eligible Lender Trustee, and Sections 2.1 and 2.2 may also be
amended by the Eligible Lender Trustee, the Administrator and the Indenture
Trustee, with the consent of the Noteholders of Notes evidencing a majority of
the Outstanding Amount of the Notes and the consent of the Certificateholders of
Certificates evidencing a majority of the Certificate Balance, for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
34
provisions of this Agreement or of modifying in any manner the rights of the
Noteholders or the Certificateholders; provided, however, that no such amendment
shall (a) increase or reduce in any manner the amount of, or accelerate or delay
the timing of, collections of payments with respect to Trust Student Loans or
distributions that shall be required to be made for the benefit of the
Noteholders or the Certificateholders or (b) reduce the aforesaid percentage of
the Outstanding Amount of the Notes and the Certificate Balance, the Noteholders
or the Certificateholders of which are required to consent to any such
amendment, without the consent of all outstanding Noteholders and
Certificateholders.
Promptly after the execution of any such amendment (or, in the case of
the Rating Agencies, fifteen days prior thereto), the Eligible Lender Trustee
shall furnish written notification of the substance of such amendment to each
Certificateholder, the Indenture Trustee and each of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof.
Prior to the execution of any amendment to this Agreement, the Eligible
Lender Trustee and the Indenture Trustee shall be entitled to receive and rely
upon an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and the Opinion of Counsel referred to
in Section 7.1I(1). The Eligible Lender Trustee and the Indenture Trustee may,
but shall not be obligated to, enter into any such amendment which affects the
Eligible Lender Trustee's or the Indenture Trustee's, as applicable, own rights,
duties or immunities under this Agreement or otherwise.
Section 8.6 Assignment. Notwithstanding anything to the contrary contained
herein, except as provided in Section 4.3 of the Servicing Agreement and Section
4.3 of this Agreement, this Agreement may not be assigned by the Seller, the
Administrator or the Servicer. This Agreement may be assigned by the Eligible
Lender Trustee only to its permitted successor pursuant to the Trust Agreement.
Section 8.7 Limitations on Rights of Others. The provisions of this Agreement
are solely for the benefit of the Seller, the Servicer, the Issuer, the
Indenture Trustee and the Eligible Lender Trustee and for the benefit of the
Certificateholders and the Noteholders, as third party beneficiaries, and
nothing in this Agreement, whether express or implied, shall be construed to
give to any other Person any legal or equitable right, remedy or claim in the
Trust Estate or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
35
Section 8.8 Assignment to Indenture Trustee. The Seller hereby acknowledges and
consents to any Grant by the Issuer to the Indenture Trustee pursuant to the
Indenture for the benefit of the Noteholders of a security interest in all
right, title and interest of the Issuer in, to and under the Trust Student Loans
and the assignment of any or all of the Issuer's rights and obligations under
this Agreement and the Sale Agreement and the Seller's rights under the Purchase
Agreement to the Indenture Trustee. The Servicer hereby acknowledges and
consents to the assignment by the Issuer to the Indenture Trustee pursuant to
the Indenture for the benefit of the Noteholders of any and all of the Issuer's
rights and obligations under this Agreement and under the Servicing Agreement.
Section 8.9 Nonpetition Covenants.
A. Notwithstanding any prior termination of this Agreement, the
Servicer, the Administrator, the Interim Eligible Lender Trustee and the Seller
shall not, prior to the date which is one year and one day after the termination
of this Agreement, acquiesce, petition or otherwise invoke or cause the Issuer
to invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Issuer under any Federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Issuer or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Issuer.
B. Notwithstanding any prior termination of this Agreement, the
Servicer, the Administrator, the Issuer and the Eligible Lender Trustee shall
not, prior to the date which is one year and one day after the termination of
this Agreement, acquiesce, petition or otherwise invoke or cause the Seller to
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Seller under any insolvency or
similar law or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Seller or any substantial part of
its property, or ordering the winding up or liquidation of the affairs of the
Seller.
36
Section 8.10 Limitation of Liability of Eligible Lender Trustee and Indenture
Trustee.
A. Notwithstanding anything contained herein to the contrary, this
Agreement has been signed by Chase Manhattan Bank USA, National Association not
in its individual capacity but solely in its capacity as Eligible Lender Trustee
of the Issuer and in no event shall Chase Manhattan Bank USA, National
Association in its individual capacity have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer or the Eligible Lender Trustee hereunder or in any of the certificates,
notices or agreements delivered pursuant hereto as to all of which recourse
shall be had solely to the assets of the Issuer.
B. Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by Bankers Trust Company not in its individual
capacity but solely as Indenture Trustee and in no event shall Bankers Trust
Company have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
Section 8.11 Governing Law. This Agreement shall be construed in accordance with
the laws of the State of New York, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
Section 8.12 Headings. The section headings hereof have been inserted for
convenience of reference only and shall not be construed to affect the meaning,
construction or effect of this Agreement.
Section 8.13 Counterparts. This Agreement may be executed in counterparts, each
of which when so executed shall together constitute but one and the same
agreement.
Section 8.14 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
37
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
SLM STUDENT LOAN TRUST 1997-1,
by Chase Manhattan Bank USA,
National Association, not in its
individual capacity but solely as
Eligible Lender Trustee,
By: /s/ Xxxx Xxxxxx
---------------
Name:
-----------------------------
Title:
----------------------------
STUDENT LOAN MARKETING ASSOCIATION
By: /s/ Xxx Xxxxx Xxxxxxx
---------------------
Name: Xxx Xxxxx Xxxxxxx
-----------------------------
Title: V.P., Associate General Counsel
and Corporate Secretary
-------------------------------
SLM FUNDING CORPORATION
By: /s/ Xxxx X. Xxxxxxx
--------------------
Name:_____________________________
Title:____________________________
XXXXXX XXX SERVICING CORPORATION
By: /s/ Xxxxxxxx X. Xxxxx
---------------------
Name:_____________________________
Title:____________________________
38
CHASE MANHATTAN BANK USA,
NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Eligible Lender Trustee
By: /s/ Xxxx Xxxxxx
---------------
Name:_____________________________
Title:____________________________
BANKERS TRUST COMPANY, not in its
individual capacity but solely as
Indenture Trustee
By: /s/ Xxxxxx X. Xxxxxx
----------------------
Name: Xxxxxx X. Xxxxxx
---------------------
Title: Assistant Treasurer
--------------------
39
