Execution Copy
LOAN SALE AGREEMENT
among
SMS STUDENT LOAN TRUST 1999-B,
as Issuer,
USA GROUP SECONDARY MARKET SERVICES, INC.,
as Seller,
NBD BANK, N.A., AS TRUSTEE FOR
USA GROUP SECONDARY MARKET SERVICES, INC.,
and
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but solely
as Eligible Lender Trustee
Dated as of April 19, 1999
LOAN SALE AGREEMENT dated as of April 19, 1999, among SMS STUDENT LOAN
TRUST 1999-B, a Delaware trust (the "Issuer"), USA GROUP SECONDARY MARKET
SERVICES, INC, as seller (the "Seller"), NBD BANK, N.A., AS TRUSTEE FOR USA
GROUP SECONDARY MARKET SERVICES, INC. ("NBD"), and THE FIRST NATIONAL BANK OF
CHICAGO, a national banking association, solely as eligible lender trustee and
not in its individual capacity (the "Eligible Lender Trustee").
WHEREAS the Issuer desires to purchase from the Seller a portfolio of
federally reinsured student loans purchased in the ordinary course of business
by the Seller; and
WHEREAS in order to comply with the requirements of the Higher Education
Act, legal title to the Seller's student loan portfolio is vested in NBD, as
trustee on behalf of the Seller as the sole beneficiary; and
WHEREAS the Seller is willing to sell such student loans to the Eligible
Lender Trustee on behalf of the Issuer; and
WHEREAS the Eligible Lender Trustee is willing to hold legal title to, and
serve as eligible lender trustee with respect to, such student loans on behalf
of the Issuer.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions and Usage
Capitalized terms used but not defined herein are defined in Appendix A to
the Administration Agreement, dated as of April 19, 1999, among the Issuer, the
Seller, as Administrator, and HSBC Bank USA, as Indenture Trustee, which also
contains rules as to usage and construction that shall be applicable herein.
ARTICLE II
Conveyance of Financed Student Loans
SECTION 2.01. Conveyance of Initial Financed Student Loans. (a) In
consideration of the Issuer's delivery to or upon the order of the Seller on the
Closing Date of the net proceeds from the sale of the Notes and the other
amounts to be distributed from time to time to the Seller in accordance with the
terms of this Agreement, the Seller (and, with respect to legal title to the
Financed Student Loans, NBD as trustee on behalf of the Seller) does hereby, as
evidenced by a duly executed ▇▇▇▇ of Sale in the form of Exhibit A hereto, sell,
assign, and otherwise convey to the Issuer and, with respect to legal title to
the Initial Financed Student
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Loans, to the Eligible Lender Trustee on behalf of the Issuer) without recourse
except as may be provided herein, (i) all right, title and interest in and to
the Initial Financed Student Loans, and all obligations of the Obligors
thereunder, together with all documents, the related Student Loan Files and all
rights and privileges relating thereto, (ii) all payments on or collections
received thereunder on and after the Cutoff Date net of interest accrued
thereunder prior to the Cutoff Date that is not to be capitalized, including
without limitation, Liquidation Proceeds and Recoveries; (iii) all of its right,
title and interest in all funds on deposit from time to time in the Trust
Accounts, including the Reserve Account Initial Deposit and the Delayed Delivery
Loan Funding Account Closing Date Deposit, and in all investments and proceeds
thereof (including all income thereon); and (iv) all proceeds of any and all of
the foregoing.
(b) In connection with the sale and assignment of Financed Student Loans
to the Eligible Lender Trustee on behalf of the Trust, on the Closing Date, the
Seller shall deposit the Reserve Account Initial Deposit into the Reserve
Account, the Delayed Delivery Loan Funding Account Closing Date Deposit into the
Delayed Delivery Loan Funding Account and the Collection Account Closing Date
Deposit into the Collection Account.
(c) On the Closing Date, the Seller will deposit, or cause to be
deposited, into the Collection Account all amounts or collections received under
the Initial Financed Student Loans on and after the Cutoff Date net of interest
accrued thereunder prior to the Cutoff Date that is not to be capitalized.
SECTION 2.02. Conveyance of Delayed Delivery Loans, New Loans and Serial
Loans to the Eligible Lender Trustee on Behalf of the Trust. (a) Subject to the
conditions set forth in paragraph (d) below, in consideration of the Issuer's
delivery on the related Transfer Date to or upon the order of the Seller of the
Loan Purchase Amount for each such Delayed Delivery Loan, New Loan or Serial
Loan to be delivered to the Seller, the Seller does hereby sell, transfer,
assign, set over and otherwise convey to the Issuer and with respect to legal
title the Delayed Delivery Loan, New Loans and Serial Loans, to the Eligible
Lender Trustee on behalf of the Issuer, without recourse except as may be
provided herein, (i) all right, title and interest of the Seller in and to each
Delayed Delivery Loan, New Loan and Serial Loan and all obligations of the
Obligors thereunder, together with all documents, the related Student Loan Files
and all rights and privileges relating thereto, (ii) all payments on or
collections received thereunder on and after the related Subsequent Cutoff Date
and (iii) all proceeds of any and all of the foregoing.
(b) (i) On the Special Determination Date, upon the tender of Delayed
Delivery Loans by the Seller and the satisfaction of the conditions set forth in
subsection (d) of this Section 2.02, the Eligible Lender Trustee will so inform
the Administrator and the Indenture Trustee in writing, and the Loan Purchase
Amounts for such Delayed Delivery Loans will be withdrawn from the Delayed
Delivery Loan Funding Account, subject to the provisions of Section 2(j) of the
Administration Agreement, and will be remitted to or upon the order of the
Seller. The Seller covenants to transfer on the Special Determination Date to
the Eligible Lender Trustee on behalf of the Issuer pursuant to paragraph (a)
above Delayed Delivery Loans with an aggregate principal balance substantially
equal to the Delayed Delivery Loan Funding Account Closing Date Deposit.
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(ii) During the Revolving Period, upon the tender of New Loans or Serial
Loans by the Seller on the related Transfer Date and the satisfaction of the
conditions set forth in subsection (d) of this Section 2.02, the Eligible Lender
Trustee will so inform the Administrator and the Indenture Trustee, and the Loan
Purchase Amounts for such New Loans or Serial Loans will be withdrawn from the
Collateral Reinvestment Account, subject to the provisions of Section 2(f) of
the Administration Agreement, and will be remitted to or upon the order of the
Seller. The Seller covenants to transfer during the Revolving Period to the
Eligible Lender Trustee on behalf of the Issuer pursuant to paragraph (a) above
New Loans or Serial Loans with an aggregate principal balance substantially
equal to the amount on deposit in the Collateral Reinvestment Account; provided,
however, that the Seller shall have no liability for a breach of the foregoing
covenant as a result of the Seller not having originated or acquired, or having
caused to be originated or acquired, during the Revolving Period New Loans or
Serial Loans equal to the amount specified above. Such transfers shall be made
at such times during the Revolving Period as the Seller may determine in its
discretion, subject to the requirement that the Seller shall make such transfers
at least as frequently as is necessary to avoid the occurrence of an Early
Amortization Event.
(c) After the Revolving Period, upon the tender of Serial Loans by the
Seller on the related Transfer Date and the satisfaction of the conditions set
forth in subsection (d) of this Section 2.02, the Eligible Lender Trustee will
so inform the Administrator and the Indenture Trustee, and that component of the
Loan Purchase Amount for such Serial Loans represented by the Purchase
Collateral Balance thereof will be withdrawn from amounts on deposit in the
Collection Account, as provided in Section 2(d)of the Administration Agreement,
and will be remitted, as provided therein to or upon the order of the Seller or,
alternatively, at the sole discretion of the Seller, the Seller may determine
that the Purchase Collateral Balance due on the related Transfer Date for any
Serial Loans then to be transferred shall be paid by the Issuer's exchanging
with the Seller one or more Exchanged Student Loans held by the Issuer for such
Serial Loans; provided, however, that the component of the Loan Purchase Amount
represented by the Purchase Premium Amounts shall not be payable with respect to
Exchanged Serial Loans and, with respect to purchased Serial Loans, shall be
payable on a deferred basis pursuant to the final sentence of this paragraph. In
the event Exchanged Student Loans are to be so used (i) the decision by the
Issuer as to which of those Financed Student Loans then held by the Issuer that
meet the criteria for Exchanged Student Loans are to be selected for such
exchange shall be subject to the sole discretion of the Eligible Lender Trustee;
provided, however, that the Eligible Lender Trustee shall not select for such
purpose any Financed Student Loan that has the same Borrower as any other
Financed Student Loan unless all of the Financed Student Loans of such Borrower
are to be exchanged; (ii) with respect to any Serial Loan to be delivered on a
Transfer Date, only a Financed Student Loan that is an Exchanged Student Loan
with respect to such Serial Loan shall be counted toward the Purchase Collateral
Balance for such Serial Loan; and (iii) in the event that, with respect to any
Purchase Collateral Balance due on the related Transfer Date, the aggregate
principal balance (plus accrued borrower interest thereon if and to the extent
that such interest is not then payable and will, pursuant to the term of such
loan, be capitalized and added to the principal balance of such loan), as of the
related Subsequent Cutoff Date, of the Exchanged Student Loan or Loans being
remitted on such
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Transfer Date in satisfaction of such Purchase Collateral Balance is less than
such amount due, the Issuer shall remit funds to cover such difference from
amounts on deposit in the Collection Account as provided in Section 2(d) of the
Administration Agreement. Any Purchase Premium Amounts for Serial Loans conveyed
to the Trust after the Revolving Period will be payable on Quarterly Payment
Dates out of Reserve Account Excess pursuant to Section 2(e) of the
Administration Agreement and such Purchase Premium Amounts will accrue no
interest or yield but will be paid on each Quarterly Payment Date to the extent
such excess is available in the aggregate amount of such premiums incurred but
unpaid up to the end of the related Collection Period; provided, however, that
no Purchase Premium Amounts shall be payable on Exchanged Serial Loans.
(d) The Seller (and with respect to legal title to the Delayed Delivery
Loans, New Loans and Serial Loans, NBD as trustee on behalf of the Seller) shall
transfer to the Issuer the Delayed Delivery Loans, New Loans and Serial Loans
for a given Transfer Date and the other property and rights related thereto
described in paragraph (a) above only upon the satisfaction of each of the
following conditions on or prior to such Transfer Date:
(i) the Seller (and with respect to legal title to the Serial Loans,
NBD as trustee on behalf of the Seller) shall have delivered to the
Eligible Lender Trustee and the Indenture Trustee a duly executed transfer
agreement (including executed signature pages by the other parties
thereto) in substantially the form of Exhibit B hereto (each, a "Transfer
Agreement"), which shall include supplements to Schedule A hereto, listing
such Delayed Delivery Loans, New Loans and Serial Loans;
(ii) the Seller shall have delivered, at least two days prior to
such Transfer Date, notice of such transfer to the Eligible Lender
Trustee, the Indenture Trustee and the Rating Agencies, including a
listing of the designation and the aggregate principal balance of such
Delayed Delivery Loans, New Loans and Serial Loans;
(iii) the Seller shall have deposited in the Collection Account all
amounts on or collections received in respect of the Delayed Delivery
Loans, New Loans and Serial Loans on and after each applicable Subsequent
Cutoff Date;
(iv) as of the Transfer Date, the Seller was not insolvent nor will
it have been made insolvent by such transfer nor is it aware of any
pending insolvency;
(v) such addition will not result in a material adverse federal or
state tax consequence to the Issuer or the Noteholders;
(vi) the Seller shall have delivered to the Indenture Trustee and
the Eligible Lender Trustee an Officers' Certificate confirming the
satisfaction of each condition precedent specified in this paragraph (d);
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(vii) the Seller shall have delivered on each November 1 and May 1,
commencing November 1, 1999 (A) to the Rating Agencies an Opinion of
Counsel with respect to the transfer of the Delayed Delivery Loans, New
Loans and Serial Loans transferred to the Issuer since the later of the
Closing Date or the prior November 1 or May 1, substantially in the form
of the Opinion of Counsel delivered to the Rating Agencies on the Closing
Date, and (B) to the Eligible Lender Trustee and the Indenture Trustee the
Opinion of Counsel as required by Section 6.02(f)(1) hereof; provided,
however, that, notwithstanding the foregoing, no opinion shall be required
under subclause (B) and, if the Revolving Period has terminated, no
opinion shall be required under subclause (A), unless the Seller, the
Eligible Lender Trustee or the Indenture Trustee determines that, with
regard to the most recent opinion on the matters described in either such
subclause that was delivered with respect to the Financed Student Loans
(whether on the Closing Date or thereafter under this subsection or under
another provision of the Basic Documents), the conclusion of, or the
reasoning underlying, such opinion is no longer correct in all material
respects due to a change in law or regulations or the ruling of a court,
an administrative tribunal or a regulatory or other governmental
authority; upon making any such determination, whichever of the Seller,
the Eligible Lender Trustee and the Indenture Trustee makes such
determination shall notify the others and the Rating Agencies; and
provided, further, that neither the Eligible Lender Trustee nor the
Indenture Trustee shall have any obligation to monitor changes in laws or
regulations or the rulings of courts or other governmental agencies for
the purpose of making any determination described in the preceding
proviso;
(viii) with respect to any New Loan which is guaranteed by an
Additional Guarantor, such Additional Guarantor shall have entered into a
Guarantee Agreement with the Eligible Lender Trustee which guarantees such
New Loan in substantially the form of the Guarantee Agreements between the
Initial Guarantors and the Eligible Lender Trustee;
(ix) the Seller shall have taken any action required to maintain the
first perfected ownership interest of the Issuer in the Trust Estate and
the first perfected security interest of the Indenture Trustee in the
Collateral;
(x) no selection procedures believed by the Seller to be adverse to
the interests of the Noteholders shall have been utilized in selecting the
New Loans or the Serial Loans or in selecting Exchanged Student Loans or
the Exchanged Serial Loans;
(xi) no Default or Event of Default shall have occurred under the
Indenture, no Servicer Default shall have occurred under the Servicing
Agreement and no Administrator Default shall have occurred under the
Administration Agreement; and
(xii) for each Transfer Date occurring after the Revolving Period,
after giving effect to the conveyance of Serial Loans on such Transfer
Date, the amount of funds remitted for the purchase of Serial Loans on
such Transfer Date, and on each Transfer Date since the preceding
Quarterly Payment Date, shall not exceed the Net
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Principal Cash Flow Amount for such Transfer Date minus the sum of (i) all
amounts paid to prepay any Add-on Consolidation Loan not held by the
Issuer since the last Quarterly Payment Date pursuant to Section
2(d)(iii)(A) of the Administration Agreement and (ii) all amounts which
the Administrator reasonably estimates will be required to prepay Add-on
Consolidation Loans pursuant to Section 2(d)(iii)(A) of the Administration
Agreement during the remainder of the Collection Period;
provided, however, that the Seller shall not incur any liability as a result of
transferring Serial Loans on any Transfer Date at a time when the condition set
forth in clause (v) was not satisfied, if at the time of such transfer the
Authorized Officers of the Seller, after reasonable inquiry of counsel to the
Seller, were not aware of any fact that would reasonably suggest that such
condition would not be satisfied as of such date.
SECTION 2.03. Treatment as a Security Agreement The parties intend that
the conveyance of the Seller's (and, with respect to legal title to the loans,
NBD's) right, title and interest in and to the Initial Financed Student Loans
pursuant to this Agreement and any Delayed Delivery Loans, New Loans and Serial
Loans pursuant to a related Transfer Agreement shall constitute a valid purchase
and sale and not a loan. If such conveyance is deemed to be a loan and not a
sale, then the parties also intend and agree that the Seller (and, with respect
to legal title to loans, NBD) shall be deemed to have granted, and in such event
do hereby grant to the Issuer, a first priority security interest in all of the
Seller's and NBD's right, title and interest in, to and under the Initial
Financed Student Loans and any Delayed Delivery Loans, New Loans or Serial Loans
and the other items specified in Sections 2.01 and 2.02, and that this Agreement
(with respect to the Initial Financed Student Loans) and any applicable Transfer
Agreement (with respect to the Delayed Delivery Loans, New Loans or Serial Loans
conveyed thereby) shall each constitute a security agreement under applicable
law with respect to such loans. If such conveyance is deemed to be a loan and
not a sale, the Issuer may, to secure the Issuer's own borrowings under the
Indenture, repledge all or any portion of such loans and the other items
specified in Sections 2.01 and 2.02 hereof pledged to the Issuer and not
released from the security interest of this Agreement at the time of such
pledge. Such a repledge may be made by the Issuer with or without a repledge by
the Issuer of its rights under this Agreement, and without further notice to or
acknowledgement from the Seller or NBD. Each of the Seller and NBD waives, to
the extent permitted by applicable law, all claims, causes of action and
remedies whether legal or equitable (including any rights of set-off) against
the Issuer or any assignee of the Issuer relating to such action by the Issuer
in connection with the transactions contemplated by this Agreement, each
Transfer Agreement and the other Basic Documents.
SECTION 2.04. Endorsement. The Seller (and, with respect to legal title to
the Financed Student Loans, NBD as trustee on behalf of the Seller) hereby
appoint each of the Eligible Lender Trustee and the Indenture Trustee as the
Seller's (and NBD's) true and lawful attorney-in-fact with full power of
substitution to endorse the Seller's (and NBD's) name on any promissory note
evidencing the Initial Financed Student Loans and any Delayed Delivery Loans,
New Loans or Serial Loans transferred to the Eligible Lender Trustee on behalf
of the Trust pursuant to Sections 2.01 and 2.02. The Seller (and, with respect
to legal title to the Financed Student Loans, NBD as trustee on behalf of the
Seller) acknowledge and agree that this power of
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attorney shall be construed as a power coupled with an interest, shall be
irrevocable as long as the Trust Agreement remains in effect and shall continue
in effect until the Trust Agreement terminates.
ARTICLE III
The Financed Student Loans
SECTION 3.01. Representations and Warranties of Seller with Respect to the
Financed Student Loans. The Seller represents and warrants with respect to the
Financed Student Loans as set forth in Exhibit C hereto. Such representations
and warranties speak as of the execution and delivery of this Agreement and as
of the Closing Date, in the case of the Initial Financed Student Loans, as of
the applicable Transfer Date, in the case of the Delayed Delivery Loans, New
Loans and Serial Loans, as of the date of the relevant Assignment in the case of
any Qualified Substitute Student Loan, as of the date of origination in the case
of any Consolidation Loan added to the Trust during the Revolving Period and as
of the applicable Add-on Consolidation Loan Funding Date, in the case of any
Consolidation Loan the principal balance of which is increased by the principal
balance of any related Add-on Consolidation Loan, but shall survive the sale,
transfer and assignment of the Financed Student Loans to the Eligible Lender
Trustee on behalf of the Issuer (and both the origination of such Consolidation
Loans and the addition of the principal balance of any Add-on Consolidation
Loan) and the pledge thereof to the Indenture Trustee pursuant to the Indenture.
SECTION 3.02. Repurchase; Reimbursement. (a) Upon discovery by the Seller,
NBD, the Servicer, the Eligible Lender Trustee or the Indenture Trustee of any
breach of the Seller's representations and warranties made by the Seller
pursuant to Section 3.01 or Section 4.01, the party discovering the breach shall
give prompt written notice to the others. Unless any such breach shall have been
cured within sixty (60) days after the Seller becomes aware or receives written
notice (whichever is earlier) of such breach, the Seller shall be obligated to
either (i) repurchase any Financed Student Loan in which the interests of the
Noteholders are materially and adversely affected by any such breach as of the
first day succeeding the end of such 60-day period that is the last day of a
Monthly Collection Period or (ii) substitute a Qualified Substitute Student Loan
in the manner specified in this Section; provided, however, that it is
understood that any such breach that does not affect the Guarantor's obligation
to guarantee payment of such Financed Student Loan to the Eligible Lender
Trustee will not be considered to have a material adverse effect for this
purpose and it is further understood that any dispute as to whether the
Guarantor's obligation has been so affected will be resolved by the decision of
the Indenture Trustee for so long as Notes are Outstanding and thereafter by the
Eligible Lender Trustee. In addition, if any such breach by the Seller does not
trigger such a repurchase obligation but does result in the refusal by the
Guarantor to guarantee all or a portion of the accrued interest, or the loss
(including any obligation of the Issuer to repay the Department) of certain
Interest Subsidy Payments and Special Allowance Payments, then, unless such
breach, if curable, is cured within sixty (60) days, the Seller shall reimburse
the Issuer by remitting an amount equal to all such non-guaranteed interest
amounts and such forfeited Interest Payments and Special Allowance
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Payments in the manner specified in Section 3.03. Subject to the provisions of
Section 4.03, the sole remedy of the Issuer, the Eligible Lender Trustee, the
Indenture Trustee or the Noteholders with respect to a breach of representations
and warranties pursuant to Section 3.01, and the agreement contained in this
Section, shall be to require the Seller to repurchase or substitute for Financed
Student Loans or to reimburse the Issuer as provided above pursuant to this
Section, subject to the conditions contained herein.
(b) The Seller may, at its option, cause a Financed Student Loan to be
repurchased by a Person not affiliated with the Seller as of the last day of a
Monthly Collection Period if there is a dispute with the related Borrower during
such Monthly Collection Period which in the Servicer's reasonable judgment would
call into question whether such Financed Student Loan will be repaid by the
Borrower; provided, however, that the aggregate principal balance of the
Financed Student Loans purchased pursuant to this subsection (b) shall not
exceed, in aggregate, 1% of the Initial Pool Balance.
(c) In consideration of and simultaneously with the repurchase of a
Financed Student Loan, the Seller shall remit the Purchase Amount therefor, in
the manner specified in Section 3.03, and the Issuer shall execute such
assignments and other documents reasonably requested by the Seller in order to
effect such transfer. Upon any such transfer of a Financed Student Loan, legal
title to, and beneficial ownership and control of, the related Student Loan File
will thereafter belong to the Seller or in the case of legal title thereto an
eligible lender under the Higher Education Act designated by the Seller.
With respect to any Qualified Substitute Student Loan or Loans, the Seller
shall deliver to the Eligible Lender Trustee for the benefit of the Indenture
Trustee such documents and agreements together with a duly executed Assignment
in the form of Exhibit F hereto. Payments due with respect to Qualified
Substitute Student Loans shall be part of the Trust Estate on and after the date
of such Assignment. Upon such substitution, the Qualified Substitute Student
Loan or Loans shall be subject to the terms of this Agreement in all respects,
and the Seller shall be deemed to have made with respect to such Qualified
Substitute Student Loan or Loans, as of the date of substitution, the
representations and warranties made pursuant to Section 3.01 with respect to any
such Student Loan. In addition, any such substitution shall occur only upon
satisfaction of each of the following conditions on or prior to the date of the
related Assignment:
(i) the Seller shall have deposited in the Collection Account all
collections in respect of the Qualified Substitute Student Loans on and
after each applicable date of Assignment;
(ii) as of the date of the related Assignment, the Seller shall not
have been insolvent nor will it have been made insolvent by such transfer
nor is it aware of any pending insolvency;
(iii) such addition will not result in a material adverse Federal or
State tax consequence to the Issuer or the Noteholders;
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(iv) the Seller shall have delivered (A) to the Rating Agencies, an
Opinion of Counsel with respect to each transfer of Qualified Substitute
Student Loans, substantially in the form of the Opinion of Counsel
delivered to the Rating Agencies on the Closing Date, and (B) to the
Eligible Lender Trustee and the Indenture Trustee, the Opinion of Counsel
required by Section 6.02(f)(1) hereof; provided, however, that no opinion
shall be required under either subclause (A) or (B) unless the Seller, the
Eligible Lender Trustee or the Indenture Trustee determines that, with
regard to the most recent opinion on the matters described in either such
subclause that was delivered with respect to the Financed Student Loans
(whether on the Closing Date or thereafter under this subsection or under
another provision of the Basic Documents), the conclusion of, or the
reasoning underlying, such opinion is no longer correct in all material
respects due to a change in law or regulations or the ruling of a court,
an administrative tribunal or a regulatory or other governmental
authority; upon making any such determination, whichever of the Seller,
the Eligible Lender Trustee and the Indenture Trustee makes such
determination shall notify the others and the Rating Agencies; and
provided, further, that neither the Eligible Lender Trustee nor the
Indenture Trustee shall have any obligation to monitor changes in laws or
regulations or the rulings of courts or other governmental agencies for
the purpose of making any determination described in this clause (iv);
(v) the Seller shall have taken any action required to maintain the
first perfected ownership interest of the Issuer in the Trust Estate and
the first perfected security interest of the Indenture Trustee in the
Collateral;
(vi) no selection procedures believed by the Seller to be adverse to
the interests of the Noteholders shall have been utilized in selecting the
Qualified Substitute Student Loans; and
(vii) no Default or Event of Default shall have occurred under the
Indenture, no Servicer Default shall have occurred under the Servicing
Agreement and no Administrator Default shall have occurred under the
Administration Agreement.
Upon any such substitution and the deposit to the Collection Account of
the amount required to be deposited therein in connection with such substitution
as described in the following paragraph, the Eligible Lender Trustee shall
release any documentation held with respect to the Financed Student Loan being
substituted for (the "Deleted Student Loan") to the Seller and shall execute and
deliver at the Seller's direction such instruments of transfer or assignment
prepared by the Seller, in each case without recourse, as shall be necessary to
vest in the Seller, or (in the case of legal title thereto an eligible lender
under the Higher Education Act designated by the Seller), the Eligible Lender
Trustee's interest in any Deleted Student Loan substituted for pursuant to this
Section 3.02.
For any month in which the Seller substitutes one or more Qualified
Substitute Student Loans for one or more Deleted Student Loans, the Servicer
will determine the amount (if
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any) by which as of the date of the relevant Assignment the aggregate principal
balance of all such Qualified Substitute Student Loans is less than the
aggregate principal balance of all such Deleted Student Loans. The amount of
such shortage (the "Substitution Adjustment Amount") shall be deposited in the
Collection Account by the Seller on or before the date of the relevant
Assignment.
SECTION 3.03. Repurchase Deposits. 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 3.02 and Section 5.01 when such amounts are due.
ARTICLE IV
The Seller
SECTION 4.01. Representations of Seller and NBD. The Seller represents as
set forth in Exhibit D hereto and NBD represents as set forth in Exhibit E
hereto. Such representations speak as of the execution and delivery of this
Agreement and as of the Closing Date in the case of the Initial Financed Student
Loans, as of the applicable Transfer Date in the case of the Delayed Delivery
Loans, New Loans and the Serial Loans, as of the date of the relevant Assignment
in the case of any Qualified Substitute Student Loan, and, in the case of the
Seller, as of the date of origination in the case of any Consolidation Loan
added to the Trust during the Revolving Period and as of the applicable Add-on
Consolidation Loan Funding Date, in the case of a Consolidation Loan the
principal balance of which is increased by the principal balance of any related
Add-on Consolidation Loan, but shall survive the sale, transfer and assignment
of the Financed Student Loans to the Eligible Lender Trustee on behalf of the
Issuer (and both the origination of such Consolidation Loans and the addition of
the principal balance of any Add-on Consolidation Loan) and the pledge thereof
to the Indenture Trustee pursuant to the Indenture.
SECTION 4.02. Existence. During the term of this Agreement, the Seller
will keep in full force and effect its existence, rights and franchises as a
corporation under the laws of the jurisdiction of its incorporation and will
obtain and preserve its qualification to do business in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Agreement, the other Basic Documents and each other
instrument or agreement necessary or appropriate to the proper administration of
this Agreement and the transactions contemplated hereby. In addition, all
transactions between the Seller and its Affiliates will be conducted on an
arm's-length basis. For so long, during the term of this Agreement, as the
Seller shall not be an eligible lender under the Higher Education Act with
respect to federal Student Loans, the Seller agrees to keep in full force and
effect an agreement with NBD or another eligible lender under the Higher
Education Act providing for such eligible lender meeting the requirements set
forth in the following sentence to hold title to the Seller's Student Loans in
trust for and on behalf of the Seller. The Seller shall not convey any Delayed
Delivery Loans, New Loan, Serial Loan or Qualified Substitute Student Loan if
the eligible lender holding legal title to such loan is other than NBD unless,
prior to such conveyance, such other eligible
11
lender shall agree in writing to be bound, in the conveyance of each such loan
for which it acts as eligible lender, by the provisions of this Agreement that
are applicable to NBD, to the same extent as if it were named separately from
NBD in each of such provisions.
SECTION 4.03. Liability of Seller; Indemnities. The Seller shall be liable
in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement.
(a) The Seller shall indemnify, defend and hold harmless the Issuer,
the Eligible Lender Trustee and the Indenture Trustee and their officers,
directors, employees and agents from and against any taxes that may at any
time be asserted against any such Person with respect to the transactions
contemplated herein and in the other Basic Documents (except any such
income taxes arising out of fees paid to the Eligible Lender Trustee or
the Indenture Trustee), including any sales, gross receipts, general
corporation, tangible personal property, privilege or license taxes (but,
in the case of the Issuer, not including taxes in connection with the
issuance and original sale of the Notes or asserted with respect to
ownership of the Financed Student Loans or federal or other income taxes
arising out of payments on the Notes) and costs and expenses in defending
against the same.
(b) The Seller shall indemnify, defend and hold harmless the Issuer,
the Eligible Lender Trustee, the Indenture Trustee and the Noteholders and
the officers, directors, employees and agents of the Issuer, the Eligible
Lender Trustee and the Indenture Trustee from and against any and all
costs, expenses, losses, claims, damages and liabilities arising out of,
or imposed upon such Person through, (i) the Seller's willful misfeasance,
bad faith or negligence in the performance of its duties under this
Agreement, or by reason of reckless disregard of its obligations and
duties under this Agreement and (ii) the Seller's or the Issuer's
violation of Federal or state securities laws in connection with the
offering and sale of the Notes.
(c) The Seller shall be liable as primary obligor for, and shall
indemnify, defend and hold harmless the Eligible Lender Trustee and its
officers, directors, employees and agents from and against, all costs,
expenses, losses, claims, damages, obligations and liabilities arising out
of, incurred in connection with or relating to the Trust Agreement, the
other Basic Documents, the Trust Estate, the acceptance or performance of
the trusts and duties set forth herein and in the Trust Agreement or the
action or the inaction of the Eligible Lender Trustee hereunder and under
the Trust Agreement, except to the extent that such cost, expense, loss,
claim damage, obligation or liability: (i) shall be due to the willful
misfeasance, bad faith or negligence (except for errors in judgment) of
the Eligible Lender Trustee , (ii) shall arise from any breach by the
Eligible Lender Trustee of its covenants under any of the Basic Documents;
or (iii) shall arise from the breach by the Eligible Lender Trustee of any
of its representations or warranties set forth in Section 7.03 of the
Trust Agreement. In the event of any claim, action or proceeding for which
indemnity will be sought pursuant to this paragraph, the
12
Eligible Lender Trustee's choice of legal counsel shall be subject to the
approval of the Seller, which approval shall not be unreasonably withheld.
(d) The Seller shall pay any and all taxes levied or assessed upon
all or any part of the Trust Estate (other than those taxes expressly
excluded from the Seller's responsibilities pursuant to the parentheticals
in paragraph (a) above).
Indemnification under this Section shall survive the resignation or
removal of the Eligible Lender Trustee or the Indenture Trustee and the
termination of this Agreement or the Indenture or the Trust Agreement, as
applicable, and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Seller shall have made any indemnity payments
pursuant to this Section and the Person to or on behalf of whom such payments
are made thereafter shall collect any of such amounts from others, such Person
shall promptly repay such amounts to the Seller, without interest.
SECTION 4.04. Merger or Consolidation of, or Assumption of the Obligations
of, Seller or NBD. Any person (a) into which the Seller or NBD may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Seller or NBD shall be a party or (c) which may succeed to the properties and
assets of the Seller or NBD substantially as a whole, shall be the successor to
the Seller or NBD, respectively, without the execution or filing of any document
or any further act by any of the parties to this Agreement; provided, however,
that the Seller hereby covenants that it will not consummate any of the
foregoing transactions except upon satisfaction of the following: (i) the
surviving Seller, if other than SMS, executes an agreement of assumption to
perform every obligation of the Seller under this Agreement, (ii) immediately
after giving effect to such transaction, no representation or warranty made
pursuant to Section 3.01 or 4.01 shall have been breached and no Servicer
Default, Event of Default or Administrator Default and no event that, after
notice or lapse of time, or both, would become a Servicer Default, Event of
Default or Administrative Default shall have occurred and be continuing, (iii)
the Seller 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) the surviving Seller shall have a consolidated net worth at
least equal to that of the predecessor Seller, (v) such transaction will not
result in a material adverse federal or state tax consequence to the Issuer or
the Noteholders and (vi) unless SMS is the surviving entity, the Seller 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 Financed 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; and provided, further, that NBD hereby
covenants that, unless NBD is the surviving entity, it will not consummate any
of the foregoing transactions unless NBD shall have delivered to the Eligible
Lender Trustee and the Indenture Trustee an Opinion of
13
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 Financed
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.
SECTION 4.05. Limitation on Liabilities of Seller, NBD and Others. The
Seller, NBD and any director or officer or employee or agent of the Seller or
NBD 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 (provided, however, that such reliance shall not limit
in any way the Seller's obligations under Section 3.02). Neither the Seller nor
NBD shall be under any obligation to appear in, prosecute or defend any legal
action that shall not be incidental to its respective obligations under this
Agreement, and that in its opinion may involve it in any expense or liability.
SECTION 4.06. Seller and NBD May Own Notes. The Seller, NBD and any
Affiliate of either may in its individual or any other capacity become the owner
or pledgee of Notes with the same rights as it would have if it were not the
Seller or NBD, as the case may be or an Affiliate of either, except as expressly
provided herein or in any other Basic Document.
ARTICLE V
Termination
SECTION 5.01. Termination. (a) Optional Purchase of All Financed Student
Loans. As of the last day of any Collection Period immediately preceding a
Quarterly Payment Date as of which the then outstanding Pool Balance is 20% or
less of the initial aggregate principal balance of the Notes, the Company or its
designee shall have the option to purchase the Trust Estate, other than the
Trust Accounts. To exercise such option, the Company or its designee shall
deposit in the Collection Account an amount equal to the Minimum Purchase Price;
provided, however, that the Company or its designee may not effect such purchase
if the aggregate Purchase Amount to be so deposited in the Collection Account
does not equal or exceed an amount equal to the Minimum Purchase Price.
ARTICLE VI
Miscellaneous
SECTION 6.01. Amendment. This Agreement may be amended by the Seller, NBD
and the Eligible Lender Trustee, with the consent of the Indenture Trustee, but
without the consent of any of the Noteholders, 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
14
eliminating any of the provisions in this Agreement or of modifying in any
manner the rights of the Noteholders; 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.
This Agreement may also be amended from time to time by the Seller and the
Eligible Lender Trustee, with the consent of NBD, the Indenture Trustee and the
Noteholders of Notes evidencing not less than a majority of the Outstanding
Amount of the Notes, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders; 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
Financed Student Loans or distributions that shall be required to be made for
the benefit of the Noteholders or the Swap Counterparty or (b) reduce the
aforesaid percentage of the Outstanding Amount of the Notes, the Noteholders of
which are required to consent to any such amendment, without the consent of all
outstanding Noteholders and the Swap Counterparty.
Promptly after the execution of any such amendment or consent (or, in the
case of the Rating Agencies, five Business Days prior thereto), the Eligible
Lender Trustee shall furnish written notification of the substance of such
amendment or consent to NBD, the Seller, the Administrator, each Noteholder, the
Indenture Trustee, the Servicer and each of the Rating Agencies.
It shall not be necessary for the consent of 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 receive upon request 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 6.02(f). 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 6.02. Protection of Interests in Trust. (a) Each of the Seller and
NBD 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
Financed Student Loans and in the proceeds thereof. Each of the Seller and NBD
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.
15
(b) Neither the Seller nor NBD 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 (5) 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 NBD shall have an obligation to give the
Eligible Lender Trustee, the Indenture Trustee and the Rating Agencies at least
sixty (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.
(d) If at any time the Seller or NBD 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 Seller or NBD, as the
case may be, shall give to such prospective purchaser, lender or other
transferee computer tapes, records or printouts (including any restored from
backup archives) that, if they shall refer in any manner whatsoever to any
Financed Student Loan, shall indicate clearly that such Financed Student Loan
has been sold and is owned by the Issuer and has been pledged to the Indenture
Trustee.
(e) The Seller shall, to the extent required by applicable law, cause 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.
(f) 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, on each Transfer Date as set forth in Section
2.02 and on the date of each Assignment as set forth in Section 3.02, 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
Financed 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; 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
16
the interest of the Eligible Lender Trustee and the Indenture Trustee in
the Financed 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, however, that a
single Opinion of Counsel may be delivered in satisfaction of the
foregoing requirement and that of Section 3.06(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.
SECTION 6.03. Notices. Unless otherwise agreed by the recipient, all
demands, notices and communications upon or to the Seller, NBD, the Servicer,
the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Administrator or the Rating Agencies under this Agreement shall be in writing,
personally delivered or mailed by certified mail, return receipt requested (or
in the form of telex or facsimile notice, followed by written notice delivered
as aforesaid or postage prepaid, first class mail), and shall be deemed to have
been duly given upon receipt;
(a) in the case of the Seller, to
USA Group Secondary Market Services, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President and Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇;
with a copy to
Office of the General Counsel
USA Group, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇;
(b) in the case of NBD, to
NBD Bank, N.A., as
trustee for USA Group Secondary
Market Services, Inc.
One Indiana Square
Mail Code ▇▇▇-▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
17
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇;
(c) in the case of the Servicer, to
USA Group Loan Services, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to
Office of the Deputy General Counsel
USA Group, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇;
(d) in the case of the Issuer, to
Student Loan Trust 1999-B
c/o First Chicago Delaware, Inc.
FCC National Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
with a copy to the Eligible Lender Trustee
at the Corporate Trust Office of the
Eligible Lender Trustee;
(e) in the case of the Issuer or the Eligible
Lender Trustee, at the Corporate Trust
Office of the Eligible Lender Trustee;
(f) in the case of the Indenture Trustee, at its
Corporate Trust Office;
(g) in the case of the Administrator, to
USA Group Secondary Market Services, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: President and Chief Executive Officer
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇;
with a copy to
Office of the General Counsel
USA Group, Inc.
18
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇;
(g) in the case of Fitch, to
Fitch IBCA, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Asset Backed Monitoring Unit
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇; and
(h) ▇▇▇▇▇'▇ Investors Service, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ABS Monitoring Department
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇.
or, as to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.
SECTION 6.04. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Section 4.04, this Agreement may not be
assigned by the Seller or NBD. This Agreement may be assigned by the Eligible
Lender Trustee only to its permitted successor pursuant to the Trust Agreement
or otherwise in accordance with Section 6.10.
SECTION 6.05. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Seller, NBD, the Issuer, and the
Eligible Lender Trustee and for the benefit of the Indenture Trustee, the
Noteholders, the Swap Counterparty (with respect to Section 5.01) and the
Company or its designee, 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.
SECTION 6.06. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
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.
19
SECTION 6.07. Separate Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 6.08. Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 6.09. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Indiana, 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 6.10. Assignment to Indenture Trustee. The Seller hereby
acknowledges and consents to any mortgage, pledge, assignment and 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 Financed Student Loans or the assignment of any or
all of the Issuer's rights and obligations hereunder to the Indenture Trustee.
SECTION 6.11. Non-Petition Covenants. Notwithstanding any prior
termination of this Agreement, neither the Seller nor NBD shall, prior to the
date which is one year and one day after the termination of this Agreement with
respect to the Issuer or the Company, 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 or the Company.
SECTION 6.12. Limitation of Liability of NBD, Eligible Lender Trustee and
Indenture Trustee. (a) Notwithstanding anything contained herein to the contrary
(other than as provided in subsection (d)), this Agreement has been signed by
NBD not in its individual capacity but solely in its capacity as trustee for the
Seller and in no event shall NBD in its individual capacity or, except as
expressly provided herein or in the trust agreement between Seller and NBD dated
February 24, 1993, as legal owner of the Financed Student Loans, have any
liability for representations, warranties, covenants, agreements or other
obligations of the Seller hereunder or in any of the certificates, notices or
agreements delivered by the Seller pursuant hereto as to all of which recourse
shall be had solely against the Seller.
(b) Notwithstanding anything contained herein to the contrary (other than
as provided in subsection (d)), this Agreement has been signed by The First
National Bank of Chicago not in its individual capacity but solely in its
capacity as Eligible Lender Trustee of the Issuer and in no event shall The
First National Bank of Chicago in its individual capacity or, except as
expressly provided in the Trust Agreement, as beneficial owner of the Issuer
have any liability for the representations, warranties, covenants, agreements or
other obligations of the
20
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.
(c) Notwithstanding anything contained herein to the contrary (other than
as provided in subsection (d)), this Agreement has been accepted by HSBC Bank
USA not in its individual capacity but solely as Indenture Trustee and in no
event shall HSBC Bank USA 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.
(d) Notwithstanding any other provision in this Agreement or the other
Basic Documents, nothing in this Agreement or the other Basic Documents shall be
construed to limit the legal responsibility of the Eligible Lender Trustee or
the Indenture Trustee, to the U.S. Secretary of Education or a Guarantor for any
violations of statutory or regulatory requirements that may occur with respect
to loans held by the Eligible Lender Trustee or the Indenture Trustee pursuant
to, or to otherwise comply with their obligations under, the Higher Education
Act or implementing regulations.
SECTION 6.13. Agreement of Seller and NBD. Each of the Seller and NBD
agrees to execute and deliver such instruments and to take such actions as the
Eligible Lender Trustee, the Issuer or the Indenture Trustee may reasonably
request in order to effectuate the terms and carry out the purposes of the
Agreement. Each of the Seller and NBD agrees to execute and deliver such
instruments and to take such actions as the Eligible Lender Trustee, the Issuer
or the Indenture Trustee may reasonably request in order to effectuate the terms
and carry out the purposes of the Agreement.
[Signatures Follow on Next Page]
21
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
SMS STUDENT LOAN TRUST 1999-B
By: The First National Bank of Chicago, not in its
individual capacity but solely as Eligible Lender
Trustee on behalf of the Trust
By:___________________________________________
Name:
Title:
USA GROUP SECONDARY MARKET SERVICES, INC.
By:___________________________________________
Name:
Title:
NBD BANK, N.A., AS TRUSTEE FOR USA
GROUP SECONDARY MARKET SERVICES, INC.
By:___________________________________________
Name:
Title:
THE FIRST NATIONAL BANK OF CHICAGO, not in its
individual capacity but solely as Eligible Lender
Trustee
By:___________________________________________
Name:
Title:
22
Acknowledged and accepted
as of the day and year first
above written:
HSBC BANK USA, not in
its individual capacity but
solely as Indenture Trustee
By: _______________________________________
Name:
Title:
23
EXHIBIT A
TO THE LOAN SALE AGREEMENT
▇▇▇▇ OF SALE
For $ received, in accordance with the Loan Sale Agreement (the "Loan
Sale Agreement") dated as of April 19, 1999, among USA Group Secondary Market
Services, Inc., as seller (the "Seller"), SMS Student Loan Trust 1999-B (the
"Trust"), NBD Bank, N.A., as trustee for the Seller ("NBD") and The First
National Bank of Chicago, not in its individual capacity but solely as Eligible
Lender Trustee (the "Eligible Lender Trustee") the Seller (and, with respect to
legal title to the Initial Financed Student Loans, NBD as trustee on behalf of
the Seller) does hereby sell, assign, transfer and otherwise convey unto the
Issuer and, with respect to legal title, unto the Eligible Lender Trustee on
behalf of the Trust, without recourse (subject to the obligations set forth in
the Loan Sale Agreement), all right, title and interest in and to (i) the
Initial Financed Student Loans and all obligations of the Obligors thereunder,
together with all documents, the related Student Loan Files and all rights and
privileges related thereto, (ii) all payments and/or collections received
thereunder on and after the Cutoff Date net of interest accrued prior to the
Cutoff Date that is not to be capitalized, (iii) all funds on deposit from time
to time in the Trust Accounts, including the Reserve Account Initial Deposit,
the Collection Account Closing Date Deposit and the Delayed Delivery Loan
Funding Account Closing Date Deposit, and in all investments and proceeds
thereof (including all income thereon) and (iv) all proceeds of any and all of
the foregoing (including but not limited to proceeds derived from the voluntary
or involuntary conversion of any of the Initial Financed Student Loans into cash
or other liquidated property, such as proceeds from the applicable Guarantee
Agreement). The foregoing sale does not constitute and is not intended to result
in any assumption by the Eligible Lender Trustee or the Trust of any obligation
of the Seller or NBD to the borrowers of Initial Financed Student Loans or any
other Person in connection with the Initial Financed Student Loans or any
agreement or instrument relating to any of them.
In addition, the undersigned, by execution of this instrument, hereby
endorses the promissory notes evidencing each Initial Financed Student Loan
described in Schedule A to the Loan Sale Agreement in favor of the Eligible
Lender Trustee on behalf of the Trust, without recourse (subject to the
obligations set forth in the Loan Sale Agreement) against the undersigned. This
endorsement may be effected by attaching a facsimile hereof to each or any of
such promissory notes.
This ▇▇▇▇ of Sale is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the Loan
Sale Agreement and is to be governed by the Loan Sale Agreement.
Capitalized terms used but not defined herein shall have the meaning
assigned to them in Appendix A to the Administration Agreement, dated as of
April 19, 1999, among SMS Student Loan Trust 1999-B, as Issuer, USA Group
Secondary Market Services, Inc., as
24
Administrator, and HSBC Bank USA, as Indenture Trustee, which also contains
rules as to usage that shall be applicable herein.
IN WITNESS WHEREOF, the undersigned has caused this ▇▇▇▇ of Sale to be
duly executed as of April 19, 1999.
USA GROUP SECONDARY MARKET
SERVICES, INC., as Seller
By:___________________________________
Name:
Title:
NBD BANK, N.A., as trustee
for USA Group Secondary
Market Services, Inc.
By:___________________________________
Name:
Title:
25
EXHIBIT B
TO THE
LOAN SALE AGREEMENT
TRANSFER AGREEMENT
TRANSFER No. _____ Of [DELAYED DELIVERY] [NEW] [SERIAL] LOANS
dated as of ______________, _____, among SMS STUDENT LOAN TRUST 1999-B, a
Delaware trust (the "Issuer"), USA GROUP SECONDARY MARKET SERVICES, INC., as
seller (the "Seller"), NBD BANK, N.A.* ("NBD"), as trustee for USA Group
Secondary Market Services, Inc., and THE FIRST NATIONAL BANK OF CHICAGO, a
national banking association, as seller, not in its individual capacity but
solely as Eligible Lender Trustee of the Issuer (the "Eligible Lender Trustee").
W I T N E S S E T H:
WHEREAS the Issuer, the Seller, NBD and the Eligible Lender
Trustee are parties to the Loan Sale Agreement dated as of April 19, 1999 (as
amended or supplemented, the "Loan Sale Agreement"); and
WHEREAS the Seller, as depositor, and the Eligible Lender Trustee are
parties to the Trust Agreement dated as of April 19, 1999 (as amended or
supplemented, the "Trust Agreement"); and
WHEREAS pursuant to the Loan Sale Agreement, the Seller wishes to
convey the [Delayed Delivery] [New] [Serial] Loans referred to in Section 2 (the
"Additional Student Loans") to the Eligible Lender Trustee on behalf of the
Issuer; and
WHEREAS in order to comply with the requirements of the Higher
Education Act, legal title to the Seller's student loan portfolio is vested in
NBD, as trustee on behalf of the Seller as the sole beneficiary; and
WHEREAS, the Eligible Lender Trustee and the Issuer are willing to
accept such conveyance subject to the terms and conditions hereof.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Definitions and Usage. Unless otherwise defined herein, capitalized
terms used herein shall have the meanings ascribed to them in Appendix A to the
Administration Agreement, dated as of April 19, 1999, among the Issuer, the
Seller, as Administrator, and HSBC
---------------
* NBD shall be replaced as a party to any Transfer Agreement by any other
eligible lender under the Higher Education Act that is acting as trustee for the
Seller with respect to the loans being conveyed pursuant to such Transfer
Agreement.
26
Bank USA, as Indenture Trustee, which also contains rules of construction and
usage that shall be applicable herein.
In addition, the following terms have the following meanings:
"Subsequent Cutoff Date" means, with respect to each
Additional Student Loan, the date specified as such on Schedule A
hereto.
"Transfer Date" means, with respect to the Additional Student
Loans, ________________, _______.
2. Schedule of Financed Student Loans. Attached hereto as Schedule A is
a supplement to Schedule A to the Loan Sale Agreement listing the Additional
Student Loans to be conveyed on the Transfer Date to the Eligible Lender Trustee
on behalf of the Issuer pursuant to this Agreement.
3. Conveyance of Additional Student Loans. In consideration of Issuer's
delivery to or upon the order of the Seller of $__________ (for the Delayed
Delivery Loans, such amount being the Loan Purchase Amounts of the Delayed
Delivery Loans and such amount to be paid from amounts on deposit in the Delayed
Delivery Loan Funding Account subject to the provisions of Section 2.02(b) of
the Loan Sale Agreement and Section 2(j) of the Administration Agreement, for
other Additional Student Loans during the Revolving Period, such amount being
the Loan Purchase Amounts of the Additional Student Loans and such amount to be
paid from amounts on deposit in the Collateral Reinvestment Account subject to
the provisions of Section 2.02(b) of the Loan Sale Agreement and Section 2(f) of
the Administration Agreement and after the Revolving Period such amount being
the sum of (i) the Purchase Collateral Balance ($[ ]) to be paid from any
combination of amounts on deposit in the Collection Account and of Exchange
Student Loans as shall be designated by the Seller subject to Section 2.02(c) of
the Loan Sale Agreement and Section 2(d) of the Administration Agreement) and
(ii), except with respect to the exchange of Student Loans, the Purchase Premium
Amount ($[ ]) to be paid on the immediately subsequent Quarterly Payment Date
from amounts on deposit in the Reserve Fund in excess of the Specified Reserve
Account Balance subject to Section 2.02(c) of the Loan Sale Agreement and
Section 2(e) of the Administration Agreement), the Seller (and, with respect to
legal title to the Additional Student Loans, NBD as trustee on behalf of the
Seller) does hereby sell, assign and otherwise convey, without recourse (except
as expressly provided in the Loan Sale Agreement), to the Eligible Lender
Trustee on behalf of the Issuer:
(a) All right, title and interest in and to the Additional
Student Loans and all obligations of the Obligors thereunder, together
with all documents, the related Student Loan Files and all rights and
privileges relating thereto;
(b) all payments on or collections received thereunder, on and
after the related Subsequent Cutoff Date;
(c) all proceeds of any and all of the foregoing.
27
4. Conditions Precedent. The obligation of the Issuer to acquire the
Additional Student Loans hereunder is subject to the satisfaction, on or prior
to the Transfer Date, of the following conditions precedent:
(a) Representations and Warranties. Each of the
representations and warranties made by the Seller in Sections 3.01 and
4.01 of the Loan Sale Agreement and by NBD in Section 4.01 of the Loan
Sale Agreement shall be true and correct as of the Transfer Date.
(b) Loan Sale Agreement Conditions. Each of the conditions set
forth in Section 2.02(d) (and, if Exchange Student Loans are to be
applied to the Purchase Collateral Balance of the Additional Student
Loans, Section 2.02(c) and, if the trustee for the Seller with respect
to the Additional Student Loans is other than NBD, in Section 4.02) of
the Loan Sale Agreement shall have been satisfied.
(c) Delivery of ▇▇▇▇ of Sale. The Seller and NBD shall have
delivered a ▇▇▇▇ of Sale substantially in the form of Annex A hereto.
(d) Additional Information. The Seller and NBD shall have
delivered to the Issuer such information as was reasonably requested by
the Issuer (such reasonableness to be determined solely by the Seller)
to satisfy itself as to (i) the accuracy of the representations and
warranties set forth in Sections 3.01 and 4.01 of the Loan Sale
Agreement and (ii) the satisfaction of the conditions set forth in this
Section 4.
(e) Delivery of Assignment with respect to Exchange Student
Loans. With respect to any Exchange Student Loans that are to be
applied to the Purchase Amount of the Additional Student Loans, the
Eligible Lender Trustee shall have delivered an Assignment
substantially in the form of Annex B hereto.
5. Ratification of Agreement. As supplemented by this Agreement, the
Loan Sale Agreement is in all respects ratified and confirmed and the Loan Sale
Agreement as so supplemented by this Agreement shall be read, taken and
construed as one and the same instrument.
6. Third-Party Beneficiaries. The Indenture Trustee is an express
third-party beneficiary and may enforce the provisions of this Agreement as if
it were a party hereto.
7. Counterparts. This Agreement may be executed in separate
counterparts, each of which when so executed and delivered shall be an original,
but all of which together shall constitute but one and the same instrument.
8. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Indiana, without reference to its conflict of law
provisions, and the
28
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
9. 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.
29
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their respective duly authorized
officers as of the day and the year first above written.
SMS STUDENT LOAN TRUST 1999-B
By: THE FIRST NATIONAL BANK OF CHICAGO, not in its
individual capacity but solely as Eligible Lender
Trustee on behalf of the Trust
By: _________________________________________________
Name:
Title:
THE FIRST NATIONAL BANK OF
CHICAGO,
not in its individual capacity but
solely as Eligible Lender
Trustee
By:___________________________________________________
Name:
Title:
USA GROUP SECONDARY MARKET SERVICES, INC., Seller
By:___________________________________________________
Name:
Title:
NBD BANK, N.A., as trustee
for USA Group Secondary
Market Services, Inc.
By:___________________________________________________
Name:
Title:
30
Acknowledged and accepted as
of the date first above written:
HSBC BANK USA,
not in its individual
capacity but solely as
Indenture Trustee
By:______________________________
Name:
Title:
31
SCHEDULE A
TO THE
TRANSFER AGREEMENT NO. ___
[List of Additional Student Loans
and their related Subsequent Cutoff Dates]
32
ANNEX A
TO THE TRANSFER AGREEMENT
▇▇▇▇ OF SALE
For value received, in accordance with the Loan Sale Agreement (the
"Loan Sale Agreement") dated as of April 19, 1999, among USA Group Secondary
Market Services, Inc., as seller (the "Seller"), NBD Bank, N.A., as trustee for
the Seller ("NBD"), SMS Student Loan Trust 1999-B (the "Trust") and The First
National Bank of Chicago, not in its individual capacity but solely as Eligible
Lender Trustee (the "Eligible Lender Trustee") [and as ratified by [name of
eligible lender if other than NBD with respect to the Additional Student Loans]
pursuant to Section 4.02 of the Loan Sale Agreement] and the Transfer Agreement
No. ____ dated as of ______, ______ (the "Transfer Agreement") among the Seller,
NBD, the Trust and the Eligible Lender Trustee, the Seller (and, with respect to
legal title to the Additional Student Loans, NBD as trustee on behalf of the
Seller) does hereby sell, assign, transfer and otherwise convey unto the Issuer
and, with respect to legal title, unto the Eligible Lender Trustee on behalf of
the Trust, without recourse (subject to the obligations set forth in the Loan
Sale Agreement), all right, title and interest in and to (i) the Additional
Student Loans and all obligations of the Obligors thereunder, together with all
documents, the related Student Loan Files and all rights and privileges related
thereto, (ii) all payments and collections received thereunder, on and after the
Subsequent Cutoff Date and (iii) all proceeds of any and all of the foregoing
(including but not limited to proceeds derived from the voluntary or involuntary
conversion of any of the Additional Student Loans into cash or other liquidated
property, such as proceeds from the applicable Guarantee Agreement). The
foregoing sale does not constitute and is not intended to result in any
assumption by the Eligible Lender Trustee or the Trust of any obligation of the
Seller or NBD to the borrowers of the Additional Student Loans or any other
person in connection with the Additional Student Loans or any agreement or
instrument relating to any of them.
In addition, the undersigned, by execution of this instrument, hereby
endorses the promissory notes evidencing each Additional Student Loan described
in Schedule A to the Transfer Agreement in favor of the Eligible Lender Trustee
on behalf of the Trust, without recourse (subject to the obligations set forth
in the Loan Sale Agreement) against the undersigned. This endorsement may be
effected by attaching a facsimile hereof to each or any of such promissory
notes.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the Loan
Sale Agreement and the Transfer Agreement and is to be governed by the Loan Sale
Agreement and the Transfer Agreement.
Capitalized terms used but not defined herein shall have the meanings
assigned to them in the Transfer Agreement.
33
IN WITNESS WHEREOF, the undersigned has caused this ▇▇▇▇ of Sale to be
duly executed as of ___________, ______.
USA GROUP SECONDARY MARKET
SERVICES, INC., as Seller
By:_______________________________________
Name:
Title:
NBD BANK, N.A., as trustee
for USA Group Secondary
Market Services, Inc.
By:_______________________________________
Name:
Title:
34
EXHIBIT C
TO THE LOAN SALE AGREEMENT
1. Characteristics of Financed Student Loans. Each Financed Student
Loan (A) was originated in the United States of America, its territories, its
possessions or other areas subject to its jurisdiction by an "eligible lender"
under the Higher Education Act in the ordinary course of its business to an
eligible borrower under applicable law and agreements and was fully and properly
executed by the parties thereto, (B) was acquired or originated by the Seller in
the ordinary course of its business, (C) provides or, when the payment schedule
with respect thereto is determined, will provide for payments on a periodic
basis that fully amortizes the principal amount of such Financed Student Loan by
its maturity, as such maturity may be modified in accordance with any applicable
deferral or forbearance periods granted in accordance with applicable laws and
restrictions, including those of the Higher Education Act or the applicable
Guarantee Agreement, and yield interest at the rate applicable thereto, and (D)
provides that the rights with respect thereto are assignable by the lender
thereunder and its assignees without the consent of or notice to any person
other than as may be required by the Higher Education Act and such notice has
been or will be given. Each Financed Student Loan is guaranteed by an eligible
guarantor under the Higher Education Act and qualifies the holder thereof to
receive Interest Subsidy Payments (other than SLS Loans, unsubsidized ▇▇▇▇▇▇▇▇
Loans, and those Consolidation Loans for which the related loan application was
submitted prior to January 1, 1993) and Special Allowance Payments from the
Department and Guarantee Payments from the Guarantor and qualifies the Guarantor
to receive reinsurance payments thereon from the Department. If such Financed
Student Loan is a Delayed Delivery Loan, New Loan or a Qualified Substitute Loan
and is, in either case, guaranteed by an Additional Guarantor, the aggregate
principal balance of all Financed Student Loans guaranteed by such Additional
Guarantor (measured as of the Subsequent Cutoff Date for such Financed Student
Loan) following the addition of such Financed Student Loan to the Trust, did not
exceed 5% of the principal balance of all Financed Student Loans as of such
date, and the aggregate principal balance of all Financed Student Loans
guaranteed by all Additional Guarantors measured as of such date, following such
addition, did not exceed 20% of the principal balance of all Financed Student
Loans as of such date. The principal balance of each Financed Student Loan is
not subject to change by reason of adjustments to the related Borrower's account
after the Cutoff Date relating to matters or events occurring prior to the
Cutoff Date.
2. Schedule of Financed Student Loans. The information set forth in
Schedule A to this Agreement is true and correct in all material respects as of
the opening of business on the Cutoff Date. With respect to any Consolidation
Loan originated by the Issuer or any Delayed Delivery Loan, New Loan, Serial
Loan or Qualified Substitute Student Loan conveyed to the Issuer after the
Closing Date, information for each category set forth in Schedule A has been
provided with respect to such loan and such information is true and correct in
all material respects, as of the date of origination, in the case of such
Consolidation Loan, and as of the opening of business on the applicable
Subsequent
35
Cutoff Date in the case of a Delayed Delivery Loan, New Loan, Serial Loan or
Qualified Substitute Student Loan. With respect to any Consolidation Loan, the
principal balance of which has been increased by the principal balance of any
related Add-on Consolidation Loan, information for each category set forth in
Schedule A has been provided with respect to such Add-on Consolidation Loan and
such information is true and correct in all material respects as of the related
Add-on Consolidation Loan Funding Date. No selection procedures believed to be
adverse to the Noteholders were utilized in selecting any Financed Student Loan.
The computer tape regarding the Initial Financed Student Loans made available to
the Issuer and its assigns is true and correct in all respects as of the Cutoff
Date, and, after the Closing Date, any computer tape regarding any Consolidation
Loan, Delayed Delivery Loan, New Loan, Serial Loan or Qualified Substitute
Student Loan made available to the Issuer and its assigns is true and correct in
all respects as of the date of origination, in the case of a Consolidation Loan
originated by the Trust, as of the applicable Add-on Consolidation Loan Funding
Date, in the case of a Consolidation Loan the principal balance of which is
increased by the principal balance of any related Add-on Consolidation Loan, and
as of the applicable Subsequent Cutoff Date, in the case of a Delayed Delivery
Loan, New Loan, Serial Loan or a Qualified Substitute Student Loan.
3. Compliance with Law. Each Financed Student Loan complied at the time
of origination and at the time of the execution of this Agreement or the
applicable Transfer Agreement or Assignment, as the case may be, at the time of
origination in the case of a Consolidation Loan originated by the Issuer and as
of the applicable Add-on Consolidation Loan Funding Date in the case of a
Consolidation Loan the principal balance of which is increased by the principal
balance of any Add-on Consolidation Loan, in all material respects with all
applicable requirements of local, state, and federal laws, rules and regulations
which govern the making of such Financed Student Loan including the requirements
of the applicable Guarantee Agreement.
4. Binding Obligation. The terms and conditions of each Financed
Student Loan are consistent with the application of the Borrower, all signatures
for the Financed Student Loans are genuine and the Borrower Note evidencing each
Financed Student Loan has been duly executed and delivered and constitutes the
legal, valid, and binding obligation of the Borrower enforceable in accordance
with its terms.
5. No Defenses. No right of rescission, setoff, counterclaim, or
defense has been asserted or threatened or exists with respect to any Financed
Student Loan.
6. No Default. No Financed Student Loan has a payment that is more than
270 days overdue as of the Cutoff Date or more than 180 days overdue as of the
applicable Subsequent Cutoff Date, as the case may be, and, except as permitted
in this paragraph, no default, breach, violation or event permitting
acceleration under the terms of any Financed Student Loan has occurred; and,
except for payment defaults continuing for a period of not more than 270 days or
180 days, as applicable, no continuing condition that with notice or the lapse
of time or both would constitute a default, breach, violation
36
or event permitting acceleration under the terms of any Financed Student Loan
has arisen; the Seller has not waived and shall not waive any of the foregoing
other than as permitted by the Basic Documents; and not more than 20% of the
Financed Student Loans shall be more than 30 days overdue.
7. Title. It is the intention of the Seller that the transfer and
assignment herein contemplated constitute a sale of the Financed Student Loans
from the Seller to the Eligible Lender Trustee on behalf of the Issuer and that
the beneficial interest in and title to such Financed Student Loans not be part
of the estate of the Seller in the event of the appointment of a receiver with
respect to the Seller. Except in the case of Consolidation Loans originated by
the Issuer, immediately prior to the transfer and sale of each Financed Student
Loan to the Trust, each Borrower Note is owned by the Seller and the Seller has
good title to each Financed Student Loan, free and clear of any lien, charge,
encumbrance, or other interest therein and immediately upon the transfer and
sale of such Financed Student Loan to the Trust, the Eligible Lender Trustee on
behalf of the Issuer will have good title to such Financed Student Loan free and
clear of any lien, charge, encumbrance, or other interest therein except as
contemplated by the Basic Documents.
8. All Filings Made. All filings (including UCC filings) necessary in
any jurisdiction to give the Eligible Lender Trustee on behalf of the Issuer a
first perfected ownership interest in the Financed Student Loans, and to give
the Indenture Trustee a first perfected security interest therein, have been
made.
9. No Bankruptcies. No Borrower of any Financed Student Loan as of the
Cutoff Date or the applicable Subsequent Cutoff Date (in the case of Qualified
Substitute Student Loans, Delayed Delivery Loans, New Loans or Serial Loans), as
of the date of origination (in the case of a Consolidation Loan originated by
the Issuer) or as of the applicable Add-on Consolidation Loan Funding Date (in
the case of a Consolidation Loan the principal balance of which is increased by
the principal balance of any related Add-on Consolidation Loan) was noted in the
related Student Loan File as being currently involved in a bankruptcy
proceeding.
10. Lawful Assignment. No Financed Student Loan has been originated in,
or is subject to the laws of, any jurisdiction under which the origination,
sale, transfer and assignment of such Financed Student Loan or any Financed
Student Loan under this Agreement, each Transfer Agreement or the Indenture is
unlawful, void or voidable.
11. One Original. There is only one original executed copy of the
promissory note evidencing each Financed Student Loan.
12. U.S. Obligors. Less than 5% of the Financed Student Loans are due
from Persons not having a mailing address in the United States of America.
13. Accounts. Each Financed Student Loan may be pledged or transferred
as an "account" as defined in the ▇▇▇.
▇▇
▇▇. Interest Accruing. Each Financed Student Loan is accruing interest
(whether or not such interest is being paid currently, by the Borrower or by the
Department, or is being capitalized) at the maximum interest rate permitted by
the Higher Education Act and qualifies for Special Allowance Payments, except as
expressly permitted by the Basic Documents.
15. Seller's Representations. The representations and warranties of the
Seller contained in Section 4.01 are true and correct.
38
EXHIBIT D
TO THE LOAN SALE AGREEMENT
1. Organization and Good Standing. The Seller has been organized and is
existing under the General Corporation Law of the State of Delaware and is
authorized to do business in every state in which it is doing business (except
where any failure to be so authorized shall not have a material adverse effect
on either the Seller or its obligations hereunder) as well as the state in which
it is organized and incorporated.
2. Power and Authority of the Seller. The Seller has the corporate
power and authority to execute and deliver this Agreement and to carry out its
terms; the Seller has full corporate power and authority to sell (with NBD
conveying legal title as trustee on behalf of the Seller) and assign the
property to be sold and assigned to and deposited with the Issuer (or with the
Eligible Lender Trustee on behalf of the Issuer) and the Seller has duly
authorized such sale and assignment to the Issuer (or to the Eligible Lender
Trustee on behalf of the Issuer) by all necessary corporate action; and the
execution, delivery and performance of this Agreement have been duly authorized
by the Seller by all necessary corporate action.
3. Binding Obligation. This Agreement has been executed and delivered
by the Seller and, assuming authorization, execution, and delivery by the other
parties thereto, this Agreement constitutes a valid obligation of the Seller
enforceable against it in accordance with the express terms of this Agreement,
except as enforcement thereof may be limited by the bankruptcy, insolvency,
reorganization, moratorium, liquidation, readjustment of debt, or other federal
or state laws or equitable principles relating to or affecting the enforcement
of creditor's rights.
4. No Violation. The consummation of the transactions contemplated by
this Agreement or the Administration 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 certificate of incorporation or by-laws of the
Seller, or any indenture, agreement or other instrument to which the Seller 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 Seller, any order, rule or
regulation applicable to the Seller of any court or of any Federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Seller or its properties. The consummation of the
transactions contemplated by this Agreement or by the Administration Agreement
and the fulfillment of the terms hereof and thereof will not result in the loss
of any Guarantee Payments by the Trust or any reinsurance payments with respect
to any Financed Student Loans by the Guarantor.
39
5. No Proceedings. There is no action, suit, claim, investigation, or
proceeding, in any such case whether pending or to the knowledge of the Seller,
threatened against the Seller before any court, governmental agency, or
arbitrator (i) asserting the invalidity of this Agreement, the Indenture or any
of the other Basic Documents or the Notes, (ii) seeking to prevent the issuance
of the Notes or the consummation of any transactions contemplated by this
Agreement, the Indenture 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 Seller of its obligations under, or the
validity or enforceability of, this Agreement, the Indenture, any of the other
Basic Documents or the Notes or (iv) seeking to affect adversely the Federal or
state income tax attributes of the Issuer or the Notes.
6. All Consents. No action, including, without limitation, the granting
or issuing of any consent, permit, license, approval, or authorization which is
required to be made on or prior to the date of this Agreement in connection with
the sale of Financed Student Loans under this Agreement (with the possible
exception of routine filings which, if not made, will not render the Seller
liable to any material penalties or will not result in the transactions
contemplated by this Agreement being subject to challenge) is required.
40
EXHIBIT E
TO THE LOAN SALE AGREEMENT
1. Organization and Good Standing. NBD is a national banking
association duly organized, validly existing and in good standing under the laws
of the United States and is an "eligible lender" for purposes of the Higher
Education Act.
2. Power and Authority of the NBD. NBD has authorized the execution and
delivery of this Agreement and has full legal power and authority to consummate
all transactions contemplated by this Agreement and any and all other agreements
relating hereto.
3. Binding Obligation. This Agreement has been executed and delivered
by NBD and, assuming authorization, execution, and delivery by the other parties
thereto, this Agreement constitutes a valid obligation of NBD enforceable
against it in accordance with the express terms of this Agreement, except as
enforcement thereof may be limited by the bankruptcy, insolvency,
reorganization, moratorium, liquidation, readjustment of debt, or other federal
or state laws or equitable principles relating to or affecting the enforcement
of creditor's rights.
4. No Violation. Compliance by NBD with this Agreement does not in any
material respect violate any law or regulation by which NBD or its assets are
bound, or any writ, order, judgment, or decree of any court or government
instrumentality or arbitrator in which NBD is named, or the charter or by-laws
of NBD or any indenture, contract, or agreement to which NBD is a party or by
which it is or its properties are bound or affected.
5. No Proceedings. There is no action, suit, claim, investigation, or
proceeding, in any case pending or, to the knowledge of NBD, threatened against
NBD before any court, governmental agency, or arbitrator which, if decided
adversely to NBD, is likely to have a material adverse effect upon the validity
or enforceability of this Agreement.
6. All Consents. No action, including, without limitation, the granting
or issuing of any consent, permit, license, approval, or authorization which is
required to be made on or prior to the date of this Agreement in connection with
the sale of Financed Student Loans under this Agreement (with the possible
exception of routine filings which, if not made, will not render NBD liable to
any material penalties or will not result in the transactions contemplated by
this Agreement being subject to challenge) is required.
41
EXHIBIT F
TO THE LOAN SALE AGREEMENT
ASSIGNMENT
For value received, in accordance with the Loan Sale Agreement (the
"Loan Sale Agreement") dated as of April 19, 1999, among USA Group Secondary
Market Services, Inc., as seller (the "Seller"), SMS Student Loan Trust 1999-B
(the "Trust"), NBD Bank, N.A., as trustee for the Seller ("NBD"), and The First
National Bank of Chicago, not in its individual capacity but solely as Eligible
Lender Trustee (the "Eligible Lender Trustee"), the Seller (and, with respect to
legal title to the Initial Financed Student Loans, NBD as trustee on behalf of
the Seller) does hereby sell, assign, transfer and otherwise convey unto the
Eligible Lender Trustee on behalf of the Trust, without recourse (subject to the
obligations set forth in the Loan Sale Agreement), all right, title and interest
in and to (i) the Qualified Substitute Student Loan(s) indicated in Schedule A
hereto (the "Additional Student Loans") and all obligations of the Obligors
thereunder, together with all documents, the related Student Loan Files and all
rights and privileges related thereto, (ii) all payments and/or collections
received thereunder on and after the date hereof and (iii) all proceeds of any
and all of the foregoing (including but not limited to proceeds derived from the
voluntary or involuntary conversion of any of the Additional Student Loans into
cash or other liquidated property, such as proceeds from the applicable
Guarantee Agreement). The foregoing sale does not constitute and is not intended
to result in any assumption by the Eligible Lender Trustee or the Trust of any
obligation of the Seller or NBD to the borrowers of Additional Student Loans or
any other Person in connection with the Additional Student Loans or any
agreement or instrument relating to any of them.
In addition, the undersigned, by execution of this instrument, hereby
endorse the promissory notes evidencing each Additional Student Loan in favor of
the Eligible Lender Trustee on behalf of the Trust, without recourse (subject to
the obligations set forth in the Loan Sale Agreement) against the undersigned.
This endorsement may be effected by attaching a facsimile hereof to each or any
of such promissory notes.
This Assignment is made pursuant to and upon the representations,
warranties and agreements on the part of the undersigned contained in the Loan
Sale Agreement and is to be governed by the Loan Sale Agreement.
Capitalized terms used but not defined herein shall have the meaning
assigned to them in Appendix A to the Administration Agreement, dated as of
April 19, 1999, among the Trust, as Issuer, the Seller, as Administrator, and
HSBC Bank USA, as Indenture Trustee, which also contains rules as to usage that
shall be applicable herein.
42
IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
duly executed as of ___________.
USA GROUP SECONDARY MARKET
SERVICES, INC., as Seller
By:________________________________________
Name:
Title:
NBD BANK, N.A., as trustee
for USA Group Secondary
Market Services, Inc.
By:________________________________________
Name:
Title:
