Exhibit 99.2
ADMINISTRATION AGREEMENT dated as of April 1, 2000, among SMS
STUDENT LOAN TRUST 2000-B, a Delaware trust (the "Issuer"), USA
GROUP SECONDARY MARKET SERVICES, INC., a Delaware corporation, as
administrator (the "Administrator"), and BANKERS TRUST COMPANY, a
New York banking corporation, not in its individual capacity but
solely as Indenture Trustee (the "Indenture Trustee").
W I T N E S S E T H
WHEREAS the Issuer was formed pursuant to the Trust Agreement dated
as of April 1, 2000 (the "Trust Agreement") among the Seller, as depositor,
Secondary Market Company, Inc., a Delaware corporation (the "Company"), and Bank
One, National Association, as Eligible Lender Trustee (the "Eligible Lender
Trustee") and is issuing the Class A-1 Floating Rate Asset-Backed Senior Notes
(the "Class A-1 Notes"), the Class A-2 Floating Rate Asset-Backed Senior Notes
(the "Class A-2 Notes" and together with the Class A-1 Notes, the "Senior
Notes") and the Class B Floating Rate Asset-Backed Subordinate Notes (the
"Subordinate Notes" and, together with the Senior Notes, the "Notes") pursuant
to the Indenture dated as of April 1, 2000 (the "Indenture"), between the Issuer
and the Indenture Trustee, (capitalized terms used herein and not defined herein
shall have the meanings assigned to such terms in Appendix A hereto, which also
contains rules of usage and construction that shall be applicable herein); and
WHEREAS the Issuer has entered into certain agreements in connection
with the issuance of the Notes, including the Basic Documents; and
WHEREAS, pursuant to the Basic Documents, the Issuer and the
Eligible Lender Trustee are required to perform certain duties in connection
with the Notes and the Collateral therefor pledged pursuant to the Indenture;
and
WHEREAS the Issuer and the Eligible Lender Trustee desire to have
the Administrator perform certain of the duties of the Issuer and the Eligible
Lender Trustee referred to in the preceding clause, and to provide such
additional services consistent with the terms of this Agreement and the Basic
Documents as the Issuer and the Eligible Lender Trustee may from time to time
request; and
WHEREAS the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and the
Eligible Lender Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:
1. Representations of the Administrator. The Administrator makes the
following representations on which the Issuer, the Eligible Lender Trustee and
any Swap Counterparties are deemed to have relied. The 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 Prefunded Loans, Serial Loans and the New Loans, as of
the relevant date of assignment in the case of any Qualified Substitute Student
Loan, as of the date of origination in the case of any Consolidation Loan
originated by 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 of the Financed Student
Loans to the Eligible Lender Trustee on behalf of the Issuer and the pledge
thereof to the Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Administrator is duly
organized and validly existing as a corporation in good standing under the
laws of the State of Delaware, with the power and authority to own its
properties and to conduct its business as such properties are currently
owned and such business is currently conducted.
(b) Power and Authority of the Administrator. The Administrator has
the corporate power and authority to execute and deliver this Agreement
and to carry out its terms, and the execution, delivery and performance of
this Agreement have been duly authorized by the Administrator by all
necessary corporate action.
(c) Binding Obligation. This Agreement constitutes a legal, valid
and binding obligation of the Administrator, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency,
reorganization and similar laws relating to creditors' rights generally
and subject to general principles of equity.
(d) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof or thereof do
not conflict with, result in any breach of any of the terms and provisions
of, nor constitute (with or without notice or lapse of time or both) a
default under, the certificate of incorporation or by-laws of the
Administrator, or any indenture, agreement or other instrument to which
the Administrator is a party or by which it shall be bound; nor result in
the creation or imposition of any Lien upon any of its properties pursuant
to the terms of any such indenture, agreement or other instrument; nor
violate any law or, to the knowledge of the Administrator, any order, rule
or regulation applicable to the Administrator of any court
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or of any Federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Administrator or
its properties. The consummation by the Administrator of the transactions
contemplated by this Agreement will not result in the loss of any
Guarantee Payments by the Trust or any reinsurance payments with respect
to any Financed Student Loan.
(e) No Proceedings. There are no proceedings or investigations
pending against the Administrator or, to its best knowledge, threatened
against the Administrator, before any court, regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Administrator or its properties: (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 of the 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 Administrator
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.
(f) All Consents. All authorizations, consents, licenses, orders or
approvals of or registrations or declarations with any court, regulatory
body, administrative agency or other government instrumentality required
to be obtained, effected or given by the Administrator in connection with
the execution and delivery by the Administrator of this Agreement and the
performance by the Administrator of the transactions contemplated by this
Agreement have in each case been duly obtained, effected or given and are
in full force and effect.
2. Duties of the Administrator.
(a) Duties with Respect to the Basic Documents. The Administrator
shall perform all its duties as Administrator and the duties of the Issuer under
the Basic Documents. In addition, the Administrator shall consult with the
Eligible Lender Trustee as the Administrator deems appropriate regarding the
duties of the Issuer under the Basic Documents. The Administrator shall monitor
the performance of the Issuer and shall advise the Eligible Lender Trustee when
action is necessary to comply with the Issuer's duties under the Basic
Documents. The Administrator shall prepare for execution by the Issuer or shall
cause the preparation by other appropriate Persons of all such documents,
reports, filings, instruments, certificates and opinions as it shall be the duty
of the Issuer to prepare, file or deliver pursuant to the Basic Documents. In
furtherance of the foregoing, the Administrator shall take all appropriate
action that is the duty of the Issuer to take pursuant to the Indenture,
including such of the foregoing as are required with respect to the following
matters (references below in this subsection (a) being to sections of the
Indenture):
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(A) the duty to cause the Note Registrar to keep the Note Register
and to give the Indenture Trustee prompt notice of any appointment of a
new Note Registrar and the location, or change in location, of the Note
Register (Section 2.04);
(B) the fixing or causing to be fixed of any specified record date
and the timely notification of the Indenture Trustee and Noteholders with
respect to special payment dates, if any (Section 2.07(c));
(C) the preparation of or obtaining of the documents and instruments
required for authentication of the Notes and delivery of the same to the
Indenture Trustee (Section 2.02);
(D) the preparation, obtaining or filing of the instruments,
opinions and certificates and other documents required for the release of
collateral (Section 2.09);
(E) the preparation, obtaining or filing of the instruments,
opinions and certificates and other documents required for a transfer of
the Subordinate Notes (Section 2.04);
(F) the duty to cause the Note Registrar to maintain on behalf of
the Issuer an office in the Borough of Manhattan, The City of New York,
for registration of transfer or exchange of the Notes (Section 3.02);
(G) the duty to cause newly appointed Paying Agents, if any, to
deliver to the Indenture Trustee the instrument specified in the Indenture
regarding funds held in trust (Section 3.03);
(H) the direction to the Paying Agents to deposit moneys with the
Indenture Trustee (Section 3.03);
(I) the obtaining and preservation of the Issuer's qualification to
do business in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of the Indenture,
the Notes, the Collateral and each other instrument and agreement included
in the Indenture Trust Estate (Section 3.04);
(J) the preparation of all supplements, amendments, financing
statements, continuation statements, instruments of further assurance and
other instruments, in accordance with Section 3.05 of the Indenture,
necessary to protect the Indenture Trust Estate (Section 3.05);
(K) the delivery by the Issuer of the Opinion of Counsel on the
Closing Date and the annual delivery of Opinions of Counsel, in accordance
with Section 3.06 of the Indenture, as to the Indenture Trust Estate, and
the annual delivery of the Officers' Certificate of the Issuer and certain
other statements, in accordance with Section 3.09 of the Indenture, as to
compliance with the Indenture (Sections 3.06 and 3.09);
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(L) the identification to the Indenture Trustee in an Officers'
Certificate of the Issuer of a Person with whom the Issuer has contracted
to perform its duties under the Indenture (Section 3.07(b));
(M) the notification of the Indenture Trustee, the Rating Agencies
and each Swap Counterparty, if any, of any Servicer Default pursuant to
the Servicing Agreement and, if such Servicer Default arises from the
failure of the Servicer to perform any of its duties under the Servicing
Agreement, the taking of all reasonable steps available to remedy such
failure (Section 3.07(d));
(N) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its obligations under the
Indenture (Section 3.10);
(O) the prompt delivery of notice to the Indenture Trustee, the
Rating Agencies and any Swap Counterparties of each Event of Default, any
Default under Section 5.01(iii) of the Indenture and each default by the
Servicer under the Servicing Agreement or by the Seller under the Loan
Sale Agreement (Section 3.18);
(P) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation of an
Officers' Certificate of the Issuer and the obtaining of the Opinion of
Counsel and the Independent Certificate relating thereto (Section 4.01);
(Q) the compliance with any written directive of the Indenture
Trustee with respect to the sale of the Indenture Trust Estate in a
commercially reasonable manner if an Event of Default shall have occurred
and be continuing (Section 5.04);
(R) the preparation of any written instruments required to confirm
more fully the authority of any co-trustee or separate trustee and any
written instruments necessary in connection with the resignation or
removal of any co-trustee or separate trustee (Sections 6.08 and 6.10);
(S) the furnishing of the Indenture Trustee with the names and
addresses of Noteholders during any period when the Indenture Trustee is
not the Note Registrar (Section 7.01);
(T) the preparation and, after execution by the Issuer, the filing
with the Commission, any applicable State agencies and the Indenture
Trustee of documents required to be filed on a periodic basis with, and
summaries thereof as may be required by rules and regulations prescribed
by, the Commission and any applicable State agencies and the transmission
of such summaries to the Noteholders (Section 7.03);
(U) the opening of one or more accounts in the Issuer's name, the
preparation of Issuer Orders, Officers' Certificates of the Issuer and
Opinions of Counsel and all other
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actions necessary with respect to investment and reinvestment of funds in
the Trust Accounts (Sections 8.02 and 8.03);
(V) the preparation of an Issuer Request and Officers' Certificate
of the Issuer and the obtaining of an Opinion of Counsel and Independent
Certificates, if necessary, for the release of the Indenture Trust Estate
(Sections 8.04 and 8.05);
(W) the preparation of Issuer Orders and the obtaining of Opinions
of Counsel with respect to the execution of supplemental indentures and
the mailing to the Noteholders, each Rating Agency and any Swap
Counterparties of notices with respect to such supplemental indentures
(Sections 9.01, 9.02 and 9.03);
(X) the preparation of or obtaining of the documents and instruments
required for the execution and authentication of new Notes conforming to
any supplemental indenture and the delivery of the same to the Eligible
Lender Trustee and the Indenture Trustee, respectively (Section 9.06);
(Y) the notification of Noteholders and any Swap Counterparties of
redemption of the Notes or the duty to cause the Indenture Trustee to
provide such notification (Section 10.02);
(Z) the preparation of all Officers' Certificates of the Issuer,
Opinions of Counsel and Independent Certificates with respect to any
requests by the Issuer to the Indenture Trustee to take any action under
the Indenture (Section 11.01(a));
(AA) the preparation and delivery of Officers' Certificates of the
Issuer and the obtaining of Independent Certificates, if necessary, for
the release of property from the lien of the Indenture (Section 11.01(b));
(AB) the preparation and timely delivery to Noteholders and the
Indenture Trustee of any agreements with respect to alternate payment and
notice provisions (Section 11.06);
(AC) the recording of the Indenture, if applicable (Section 11.15);
(AD) the duty to obtain a new servicer as Successor Servicer and to
enter into an agreement with such Successor Servicer (Section 3.07(e));
(AE) the notification of the termination of the Servicer and the
appointment of a Successor Servicer (Section 3.07(f));
(AF) the duty to cause the Servicer to comply with the Servicing
Agreement (Section 3.14); and
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(AG) the delivery of all documents and opinions to be provided by
the Issuer under Part 3 of any Swap Agreements, performing all obligations
of the Issuer under Part 5(b), 5(i) and Part 5(o) of any Swap Agreements,
and providing all notices and consents required by the Issuer under any
Swap Agreements.
The Administrator shall provide to the Eligible Lender Trustee (i) a
list of jurisdictions in which the Issuer is required to be licensed and (ii)
any other information necessary for the Eligible Lender Trustee to fulfill its
obligations under Section 7.08 of the Trust Agreement.
(b) Duties with Respect to the Issuer. (i) In addition to the duties
of the Administrator set forth above and in the other Basic Documents, the
Administrator shall perform such calculations and shall prepare for execution by
the Issuer or the Eligible Lender Trustee or shall cause the preparation by
other appropriate Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Issuer or the Eligible
Lender Trustee to prepare, file or deliver pursuant to the Basic Documents, and
at the request of the Eligible Lender Trustee shall take all appropriate action
that it is the duty of the Issuer to take pursuant to the Basic Documents. In
furtherance thereof, the Eligible Lender Trustee shall, on behalf of itself and
of the Issuer, execute and deliver to the Administrator and to each successor
Administrator appointed pursuant to the terms hereof, one or more powers of
attorney substantially in the form of Exhibit A hereto, appointing the
Administrator the attorney-in-fact of the Eligible Lender Trustee and the Issuer
for the purpose of executing on behalf of the Eligible Lender Trustee and the
Issuer all such documents, reports, filings, instruments, certificates and
opinions. Subject to Section 9 of this Agreement, and in accordance with the
directions of the Eligible Lender Trustee, the Administrator shall administer,
perform or supervise the performance of such other activities in connection with
the Collateral (including the Basic Documents) as are not covered by any of the
foregoing provisions and as are expressly requested by the Eligible Lender
Trustee and are reasonably within the capability of the Administrator.
(ii) Notwithstanding anything in this Agreement or the Basic
Documents to the contrary, the Administrator shall deliver to the Eligible
Lender Trustee, the Indenture Trustee, the Rating Agencies and (if the Seller is
not the Administrator) the Seller, an Officers' Certificate of the Administrator
containing all the information necessary:
(A) to pay the Department any Consolidation Fees due and payable to
the Department, to the extent such Consolidation Fees are not being
deducted by the Department out of Special Allowance Payments or Interest
Subsidy Payments, which Officers' Certificate shall be delivered on the
date that is three Business Days prior to the date such fees are to be
remitted to the Department;
(B) during the Revolving Period to pay the Seller, pursuant to
Section 2.02 of the Loan Sale Agreement, on each Transfer Date, the Loan
Purchase Amount (or if the Parity Date has occurred, the Purchase
Collateral Balance) for Prefunded Loans, New Loans or Serial Loans
purchased by the Eligible Lender Trustee on behalf of the Issuer on such
date and, on each Transfer Date after the end of the Revolving Period, the
Purchase
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Collateral Balance for Serial Loans so purchased on such date (but, only
to the extent the Purchase Collateral Balance has not been satisfied by
the exchange of Serial Loans for Exchanged Student Loans), which Officers'
Certificate, in each case, shall be delivered on the Business Day
preceding such Transfer Date;
(C) to pay the Servicer the Servicing Fee due on each Monthly
Payment Date pursuant to Section 2(d)(iv)(A), 2(d)(v)(A) and 2(e)(iv)(A)
and any Servicing Fee Shortfall due on each Quarterly Payment Date
pursuant to Section 2(e)(ii)(b)(v), which Officers' Certificate shall be
delivered on the each Determination Date;
(D) to make all the distributions required by Sections 2(d), 2(e),
2(f) and 2(j), for the Monthly Collection Period or Collection Period, as
the case may be, preceding the date of such Officers' Certificate, which
Officers' Certificate shall be delivered on each Determination Date.
In addition, prior to each Determination Date immediately preceding a
Quarterly Payment Date, the Administrator shall determine, in compliance with
its obligation to prepare an Officers' Certificate on such Determination Date
pursuant to this Section, the Class A-1 Note Rate, the Class A-2 Note Rate and
the Subordinate Note Rate that will be applicable to the Quarterly Payment Date
following such Determination Date. In connection therewith, the Administrator
shall calculate Three-Month LIBOR, the Class A-1 Note Rate, the Class A-2 Note
Rate and the Subordinate Note Rate in accordance with the respective definitions
thereof.
(iii) [Reserved.]
(iv) Notwithstanding anything in this Agreement or the Basic
Documents to the contrary, the Administrator shall be responsible for
performance of the duties of the Eligible Lender Trustee set forth in Section
5.02 of the Trust Agreement with respect to, among other things, any tax
information or accounting report required to be distributed to Note Owners.
(v) [Reserved.]
(vi) The Administrator shall perform the duties of the Administrator
specified in Sections 10.02 and 10.03 of the Trust Agreement required to be
performed in connection with the resignation or removal of the Eligible Lender
Trustee and the appointment of a successor Eligible Lender Trustee, and any
other duties expressly required to be performed by the Administrator under the
Trust Agreement and the other Basic Documents, including those under Sections
6.07 and 6.08 of the Indenture and those under Section 6.07 of the Trust
Agreement.
(vii) As described in Article IX of the Trust Agreement, notice of
any termination of the Trust shall be given by the Administrator to the Eligible
Lender Trustee, the Indenture Trustee and any Swap Counterparties as soon as
practicable after the Administrator has received notice thereof.
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(viii) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Administrator may enter into transactions
with or otherwise deal with any of its Affiliates; provided, however, that the
terms of any such transactions or dealings shall be in accordance with any
directions received from the Issuer and shall be, in the Administrator's
opinion, no less favorable to the Issuer or the Noteholders than would be
available from unaffiliated parties.
(c) Establishment and Maintenance of Trust Accounts.
(i) The Administrator, for the benefit of the Issuer, shall
establish and maintain in at the Indenture Trustee an Eligible Deposit Account
in the name of the Trust (the "Collection Account"). The Collection Account will
initially be established as a segregated trust account in the name of the
Indenture Trustee with the corporate trust department of Bankers Trust Company.
(ii) The Administrator shall establish and maintain at the Indenture
Trustee an Eligible Deposit Account in the name of the Trust (the "Reserve
Account"). The Reserve Account will initially be established as a segregated
trust account in the name of the Indenture Trustee with the corporate trust
department of Bankers Trust Company.
(iii) The Administrator, for the benefit of the Noteholders and any
Swap Counterparties, shall establish and maintain at the Indenture Trustee an
Eligible Deposit Account in the name of the Trust (the "Collateral Reinvestment
Account"). The Collateral Reinvestment Account will initially be established as
a segregated trust account in the name of the Indenture Trustee with the
corporate trust department of Bankers Trust Company.
(iv) The Administrator, for the benefit of the Noteholders, if there
are funds to be deposited in a prefunding account, shall establish and maintain
at the Indenture Trustee an Eligible Deposit Account in the name of the Trust
(the "Prefunding Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Indenture Trustee, on
behalf of the Noteholders. The Prefunding Account will initially be established
as a segregated trust account in the name of the Indenture Trustee with Bankers
Trust Company.
(v) Funds on deposit in the Collection Account, the Reserve Account,
the Prefunding Account and the Collateral Reinvestment Account (collectively,
the "Trust Accounts") shall be invested by the Indenture Trustee (or any
custodian or designated agent with respect to any amounts on deposit in such
accounts) in Eligible Investments pursuant to written instructions by the
Administrator; provided, however, it is understood and agreed that the Indenture
Trustee shall not be liable for any loss arising from such investment in
Eligible Investments. All such Eligible Investments shall be held by (or by any
custodian on behalf of) the Indenture Trustee for the benefit of the Issuer;
provided, however, that on the Business Day preceding each Monthly Payment Date
all interest and other investment income (net of losses and investment expenses)
on funds on deposit therein shall be deposited into the Collection Account and
shall be deemed to constitute a portion of the Monthly Available Funds for each
Monthly
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Payment Date that is not a Quarterly Payment Date, and a portion of the
Available Funds for each Quarterly Payment Date. Other than as permitted in
writing by the Rating Agencies, funds on deposit in the Trust Accounts shall be
invested in Eligible Investments that will mature so that funds sufficient to
pay the Servicing Fee and the Administration Fee (and all other amounts payable
on a Quarterly Payment Date) will be available in the Collection Account on the
Business Day preceding each Monthly Payment Date that is not a Quarterly Payment
Date, so that funds on deposit in the Prefunding Account or Collateral
Reinvestment Account that are required, in the judgment and at the discretion of
the Administrator, to make Additional Fundings during the Revolving Period will
be available for such purpose and so that the remaining such funds will be
available at the close of business on the Business Day preceding each Quarterly
Payment Date.
(vi) (A) The Indenture Trustee, on behalf of the Noteholders and any
Swap Counterparties, shall possess all right, title and interest in all
funds on deposit from time to time in the Trust Accounts and in all
proceeds thereof (including all income thereon) and all such funds,
investments, proceeds and income shall be part of the Trust Estate. The
Trust Accounts shall be under the sole dominion and control of the
Indenture Trustee for the benefit of the Noteholders and any Swap
Counterparties. If, at any time, any of the Trust Accounts ceases to be an
Eligible Deposit Account, the Indenture Trustee (or the Administrator on
its behalf) agrees, by its acceptance hereto, that it shall within 10
Business Days (or such longer period, not to exceed 30 calendar days, as
to which each Rating Agency may consent) establish a new Trust Account as
an Eligible Deposit Account and shall transfer any cash and/or any
investments to such new Trust Account. In connection with the foregoing,
the Administrator agrees that, in the event that any of the Trust Accounts
are not accounts with the Indenture Trustee, the Administrator shall
notify the Indenture Trustee and any Swap Counterparties in writing
promptly upon any of such Trust Accounts ceasing to be an Eligible Deposit
Account.
(B) With respect to the Trust Account Property, the Indenture
Trustee agrees, by its acceptance hereof, that:
(1) any Trust Account Property that is held in deposit accounts
shall be held solely in Eligible Deposit Accounts, subject to the next to
the last sentence of clause (vi)(A) above; and each such Eligible Deposit
Account shall be subject to the exclusive custody and control of the
Indenture Trustee, and the Indenture Trustee shall have sole signature
authority with respect thereto;
(2) any Trust Account Property that constitutes Physical Property
shall be Delivered to the Indenture Trustee in accordance with paragraph
(a) of the definition of "Delivery";
(3) any Trust Account Property that is a book-entry security held
through the Federal Reserve System pursuant to Federal book-entry
regulations shall be Delivered in accordance with paragraph (b) of the
definition of "Delivery"; and
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(4) any Trust Account Property that is an "uncertificated security"
under Article VIII of the UCC and that is not governed by clause (3) above
shall be Delivered to the Indenture Trustee in accordance with paragraph
(c) of the definition of "Delivery".
(C) The Administrator shall have the power, revocable for
cause or upon the occurrence and during the continuance of an
Administrator Default by the Indenture Trustee or by the Eligible Lender
Trustee with the consent of the Indenture Trustee, to instruct the
Indenture Trustee to make withdrawals and payments from the Trust Accounts
for the purpose of permitting the Servicer or the Eligible Lender Trustee
to carry out their respective duties under the Servicing Agreement and the
Trust Agreement, permitting the Indenture Trustee to carry out its duties
under the Indenture and withdrawing any amounts deposited in error into
such accounts.
(vii) On each Determination Date, the Administrator shall calculate
all amounts required to determine the amounts to be deposited in the Collection
Account and the other Trust Accounts and the amounts to be distributed therefrom
on the related Monthly Payment Date, Quarterly Payment Date or other dates from
which amounts therein are to be distributed.
(d) Withdrawals from the Collection Account. The Administrator shall
instruct the Indenture Trustee in writing (based, in the case of clauses (iv)
and (v) below, on the information contained in the servicer's report delivered
with respect to the applicable Determination Date pursuant to Section 3.07 of
the Servicing Agreement) to make withdrawals from amounts deposited in the
Collection Account at the following times and for the following purposes, and
the Indenture Trustee shall comply with such instructions:
(i) from time to time during the Revolving Period, insofar as the
Administrator may so instruct on any Business Day therein, to deposit into
the Collateral Reinvestment Account all collections in respect of
principal of the Financed Student Loans; provided that if the Collateral
Reinvestment Account Trigger is triggered with respect to any Monthly
Collection Period, the Administrator may only instruct the Indenture
Trustee to deposit amounts in the Collateral Reinvestment Account in
excess of the amount necessary to pay the Noteholders' Interest
Distribution Amount for the next Quarterly Payment Date provided, further,
that such amounts shall remain on deposit in the Collection Account until
such next succeeding Quarterly Payment Date;
(ii) from time to time during each Collection Period to pay the
Department any Consolidation Fees due and payable to the Department, to
the extent such Consolidation Fees are not being deducted by the
Department out of Special Allowance Payments or Interest Subsidy Payments;
(iii) (A) on each Add-on Consolidation Loan Funding Date after the
Revolving Period, to prepay in full any Add-on Consolidation Loan pursuant
to Section 6.07 of the Trust Agreement; provided, however, that the amount
paid to prepay any Add-on Consolidation Loan on any date since the
preceding Quarterly Payment Date shall not exceed the Net Principal Cash
Flow Amount for such date minus the aggregate Purchase
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Collateral Balance remitted for the purchase of Serial Loans on each
Transfer Date since the preceding Quarterly Payment Date after the
Revolving Period pursuant to Section 2(d)(iii)(B); and
(B) on each Transfer Date after the Revolving Period to pay to
the Seller, pursuant to Section 2.02 of the Loan Sale Agreement, the
aggregate Purchase Collateral Balance for Serial Loans purchased by the
Eligible Lender Trustee on behalf of the Issuer on such date (but only to
the extent such aggregate Purchase Collateral Balance has not been
satisfied by the exchange of Serial Loans for Exchanged Student Loans);
provided that the amount paid to the Seller for the purchase of Serial
Loans on such Transfer Date plus the amount of funds remitted for the
purchase of Serial Loans on each Transfer Date since the preceding
Quarterly Payment Date on any Transfer Date after the Revolving Period
shall not exceed the Net Principal Cash Flow Amount for such Transfer Date
minus the sum of (i) all amounts paid since the last Quarterly Payment
Date pursuant to Section 2(d)(iii)(A) to prepay any Add-on Consolidation
Loan not held by the Issuer 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) during the remainder of the Collection
Period; and provided, further, that any Purchase Premium Amounts for
Serial Loans purchased after the Revolving Period shall be paid only out
of Reserve Account Excess as set forth in Section 2(e)(ii);
(iv) on each Monthly Payment Date that is not a Quarterly Payment
Date, to make the following deposits and distributions to the Persons
specified below by 11:00 a.m. (New York time), to the extent of Monthly
Available Funds for such Monthly Payment Date in the Collection Account,
in the following order of priority:
(A) to the Servicer, the Servicing Fee with respect to the
preceding calendar month and all unpaid Servicing Fees from prior
months; and
(B) to the Administrator, from the amount of the Monthly
Available Funds remaining after the application of clause (A), the
Administration Fee with respect to the preceding calendar month and
all unpaid Administration Fees from prior months;
(v) on each Quarterly Payment Date, to make the following deposits
and distributions to the Persons or the account specified below by 11:00
a.m. (New York time), to the extent of Available Funds for such Quarterly
Payment Date in the Collection Account, in the following order of
priority:
(A) to the Servicer, the Servicing Fee with respect to the
preceding calendar month and all unpaid Servicing Fees from prior
months;
(B) to the Administrator, from the amount of the Available
Funds remaining after the application of clause (A), the
Administration Fee with respect
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to the preceding calendar month and all unpaid Administration Fees
from prior months;
(C) to the Indenture Trustee for distribution pursuant to
Section 8.02(c) of the Indenture, in the following order of
priority, from the amount of the Available Funds remaining after the
application of clauses (A) and (B): (i) the Class A-1 Noteholders'
Interest Distribution Amount, the Class A-2 Noteholders' Interest
Distribution Amount, the Trust Swap Payment Amounts, if any, and the
remainder of any Termination Payment to the extent that the
remainder of such Termination Payment is owed to any Swap
Counterparties following a Redemption Event (as defined in any
related Swap Agreement) or the Trust is the defaulting party (other
than an Event of Default specified in Section 5(a)(i) of any Swap
Agreements), pro rata, based on the ratio of each such amount to the
total of such amounts; (ii) the Subordinate Noteholders' Interest
Distribution Amount; (iii) if the Revolving Period has terminated,
the Senior Noteholders' Principal Distribution Amount; and (iv) if
the Revolving Period has terminated, the Subordinate Noteholders'
Principal Distribution Amount, each with respect to such Quarterly
Payment Date; and
(D) to the Reserve Account, the amount of Available Funds
remaining after the application of clauses (A) through (C).
Except in the case of amounts deposited into the Reserve Account
pursuant to clause (d)(v)(D) of this Section 2, amounts properly calculated,
reported and withdrawn from the Collection Account and properly distributed
pursuant to this Section 2(d) in accordance with the terms hereof shall be
deemed released from the Trust Estate and the security interest therein granted
to the Indenture Trustee, and the Persons to whom such amounts are distributed
shall in no event be required to refund any such distributed amounts.
(e) Reserve Account. (i) The Seller shall deposit the Reserve
Account Initial Deposit into the Reserve Account as required by Section 2.01(b)
of the Loan Sale Agreement. The Administrator may, but is not obligated to,
deposit amounts from time to time into the Reserve Account.
(ii) With respect to any amount in the Reserve Account on any
Quarterly Payment Date (after giving effect to all deposits thereto on such
Quarterly Payment Date and to all withdrawals therefrom necessary to make the
distributions required to be made from the Available Funds on such Quarterly
Payment Date) in excess of the Specified Reserve Account Balance for such
Quarterly Payment Date (the "Reserve Account Excess"), the Administrator shall
instruct the Indenture Trustee to apply such Reserve Account Excess as follows:
(a) during the Revolving Period, for deposit to the Collateral Reinvestment
Account; provided, however, that if such date is on or after the Parity Date, to
the extent that such funds represent payments of interest or Trust Swap Receipt
Amounts with respect to the Financed Student Loans, such funds shall be applied
in the amounts and the order of priority set forth in clauses (b)(v) through
(vii) below, and (b) at and after the termination of the Revolving Period, to
the following (in the
13
priority indicated): (i) to pay to the Seller any unpaid Purchase Premium
Amounts for any Serial Loans purchased by the Issuer after the end of the
Revolving Period but prior to the end of the related Collection Period; (ii) if
such Quarterly Payment Date is on or prior to the Parity Date (after application
of all other amounts paid to the Noteholders on such Quarterly Payment Date,
including the application of funds in the Collateral Reinvestment Account), to
pay to the Indenture Trustee for distribution to Noteholders pursuant to Section
8.02(d) of the Indenture an amount equal to the lesser of (x) the remaining
amount of such excess and (y) the amount by which the aggregate principal amount
of the Notes, after giving effect to all other distributions in respect of
principal of the Notes on such Quarterly Payment Date, exceeds the Pool Balance
as of the close of business on the last day of the related Collection Period;
(iii) if such Quarterly Payment Date is after the July 2010 Quarterly Payment
Date, to pay the Indenture Trustee for distribution to Noteholders pursuant to
Section 8.02(d) of the Indenture the remaining amount of such excess until the
aggregate principal amount of the Notes has been reduced to zero; (iv) Reserved
(v) to pay to the Servicer, out of the remaining amount of such excess, the
Servicing Fee Shortfall and all prior unpaid Servicing Fee Shortfalls, if any;
(vi) to pay to the Seller, out of the remaining amount of such excess, any
unpaid Purchase Premium Amounts for any Serial Loans or New Loans purchased
during the Revolving Period but after the Parity Date (or at any time during the
Collection Period during which the Parity Date occurs) and prior to the end of
the related Collection Period; (vii) to any Swap Counterparties, all Termination
Payments due under any Swap Agreements to the extent that any related Swap
Counterparty is the Defaulting Party (as such term is defined in any related
Swap Agreement), the Trust is the defaulting party under Section 5(a)(i) of any
related Swap Agreement or a Termination Event (other than an Additional
Termination Event (as defined in any Swap Agreements) in respect of a Redemption
Event (as defined in any Swap Agreements)) shall have occurred; and (viii) any
remaining amount of such excess, after application of clauses (i) through (vii)
above will be released to the Seller; provided, however, that if and to the
extent that (A) the amount of the Servicer's unpaid repurchase obligation
pursuant to Section 3.05 of the Servicing Agreement exceeds $500,000 as of the
last day of the preceding Collection Period (and such Servicer has not been
replaced by a Successor Servicer), or (B) the Department fails by the last day
of such preceding Collection Period to satisfy its obligations to reimburse or
replace a Federal Guarantor pursuant to the Higher Education Act, then any
Reserve Fund Excess remaining on such Quarterly Payment Date for distribution to
the Company pursuant to the clause (vi) above shall not be so distributed and
shall be retained in the Reserve Account for application in accordance with this
Agreement. Amounts properly calculated, reported and distributed pursuant to
this Section 2(e)(ii) shall be deemed released from the Trust Estate and the
security interest therein granted to the Indenture Trustee, and the Seller and
the Company shall in no event thereafter be required to refund any such
distributed amounts.
(iii) Following the payment in full of the aggregate outstanding
principal amount of the Notes and of all other amounts owing or to be
distributed hereunder or under the Indenture to Noteholders, the Seller, the
Servicer or the Administrator and the termination of the Trust (including any
Servicing Fee Shortfall and any unpaid Servicing Fee Shortfalls and unpaid
Purchase Premium Amounts), any amount remaining on deposit in the Reserve
Account shall be distributed to the Company. The Company shall in no event be
required to refund any amounts properly calculated, reported and distributed
pursuant to this Section 2(e)(iii).
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(iv) (A) In the event that the Servicing Fee for any Monthly Payment
Date exceeds the amount distributed to the Servicer pursuant to Sections
2(d)(iv)(A) or 2(d)(v)(A) and Section 2(k)(ii)(A) on such Monthly Payment
Date, the Administrator shall instruct the Indenture Trustee to withdraw
from the Reserve Account on each Monthly Payment Date an amount equal to
such excess and to distribute such amount to the Servicer.
(B) In the event that the Administration Fee for any Monthly
Payment Date exceeds the amount distributed to the Administrator pursuant
to Sections 2(d)(iv)(B) or 2(d)(v)(B) and Section 2(k)(ii)(B) on such
Monthly Payment Date, the Administrator shall instruct the Indenture
Trustee to withdraw from the Reserve Account on such Monthly Payment Date
an amount equal to such excess, to the extent of funds available therein
after giving effect to paragraph (iv)(A) above, and to distribute such
amount to the Administrator.
(C) For any Quarterly Payment Date, in the event that the
Class A-1 Noteholders' Interest Distribution Amount, the Class A-2
Noteholders' Interest Distribution Amount, the Trust Swap Payment Amounts,
if any, the remainder of any Termination Payment to any Swap
Counterparties to the extent that the Trust is the defaulting party (other
than an Event of Default specified in Section 5(a)(i) of any related Swap
Agreement), the Subordinate Noteholders' Interest Distribution Amount, the
Class A Noteholders' Principal Distribution Amount and the Subordinate
Noteholders' Principal Distribution Amount, each for such Quarterly
Payment Date, exceed the sum of the amount distributed to the Indenture
Trustee for distribution to the Noteholders and any related Swap
Counterparty pursuant to Section 2(d)(v)(C) and Section 2(k)(ii)(C) on
such Quarterly Payment Date, the Administrator shall instruct the
Indenture Trustee to withdraw from the Reserve Account on such Quarterly
Payment Date an amount equal to such excess, to the extent of funds
available therein after giving effect to paragraphs (iv)(A) and (iv)(B)
above, and to distribute such amount as required by Section 2(d)(v)(C) on
such Quarterly Payment Date.
(f) Collateral Reinvestment Account. (i) During the Revolving
Period, to the extent no funds remain on deposit in the Prefunding Account, the
Administrator shall instruct the Indenture Trustee in writing to withdraw from
the Collateral Reinvestment Account, in each case to the extent of the funds on
deposit therein (A) on each Transfer Date, an amount equal to the Loan Purchase
Amount for the Serial Loans and New Loans transferred to the Eligible Lender
Trustee on behalf of the Issuer on such Transfer Date and to distribute such
amount to or upon the order of the Seller upon satisfaction of the conditions
set forth in Section 2.02 of the Loan Sale Agreement with respect to such
transfer, (B) when and as requested by the Eligible Lender Trustee, in order to
facilitate its origination of Consolidation Loans, to transfer to the order of
the Eligible Lender Trustee an amount, sufficient to prepay in full any Student
Loan that is to be consolidated through such origination with one or more
Financed Student Loans, (C) when and as requested by the Eligible Lender
Trustee, in order to facilitate its funding of the addition of the principal
balance of any Add-on Consolidation Loan to the principal balance of a
Consolidation
15
Loan, an amount sufficient to prepay in full such Add-on Consolidation Loan, (D)
on each Determination Date, to deposit into the Collection Account an amount
equal to the Capitalized Interest Amount for the Student Loan Rate Accrual
Period with respect to the related Monthly Payment Date and (E) on any
Determination Date and in such amounts as the Administrator may direct, for
deposit to the Collection Account for the purposes of increasing the Monthly
Available Funds or the Available Funds, as the case may be.
(ii) On the Quarterly Payment Date on or next occurring after the
termination of the Revolving Period, the Administrator shall instruct the
Indenture Trustee to withdraw from the Collateral Reinvestment Account on such
Quarterly Payment Date an amount equal to the entire remaining amount on deposit
in such account and to distribute such amount pursuant to Section 8.02(e) of the
Indenture.
(g) Statements to Noteholders. (i) On each Determination Date
preceding a Quarterly Payment Date, the Administrator shall provide to the
Indenture Trustee and any Swap Counterparties (with a copy to the Rating
Agencies) for the Indenture Trustee to forward on such succeeding Quarterly
Payment Date to each Noteholder of record a statement substantially in the form
of Exhibit B setting forth at least the following information as to the Notes:
(A) the amount of such distribution allocable to principal of
the Notes, the amount thereof distributable as principal of the Class A-1
Notes, the Class A-2 Notes and the Subordinate Notes, and the amount
thereof attributable to the Principal Distribution Amount and the amount
thereof attributable to Reserve Account Excess;
(B) the amount of the distribution allocable on such Quarterly
Payment Date to interest on the Class A-1 Notes;
(C) the amount of the distribution allocable on such Quarterly
Payment Date to interest on the Class A-2 Notes;
(D) the amount of the distribution allocable on such Quarterly
Payment Date to interest on the Subordinate Notes;
(E) Reserved
(F) the Pool Balance as of the close of business on the last
day of the preceding Collection Period, after giving effect to payments
allocated to principal reported under clause (A) above;
(G) the aggregate outstanding principal amount of the Class
A-1 Notes, the Class A-2 Notes, the Subordinate Notes, the Class A-1 Note
Pool Factor, the Class A-2 Note Pool Factor and the Subordinate Note Pool
Factor as of such Quarterly Payment Date, after giving effect to payments
allocated to principal reported under clause (A) above;
16
(H) the Note Rate applicable with respect to each distribution
referred to in clauses (B), (C) and (D) above;
(I) the amount of the Servicing Fee paid to the Servicer on
such Quarterly Payment Date and on each Monthly Payment Date following the
immediately preceding Quarterly Payment Date including a breakdown of the
components of the Servicing Fee attributable to each of the items
specified in clauses II(i) through (ix) of Section 3.06 of the Servicing
Agreement and the amount of any Servicing Fee Shortfall for such Quarterly
Payment Date and for each Monthly Payment Date following the immediately
preceding Quarterly Payment Date;
(J) the amount of the Administration Fee paid to the
Administrator on such Quarterly Payment Date and on each Monthly Payment
Date following the immediately preceding Quarterly Payment Date;
(K) the Trust Swap Payment Amount paid to any Swap
Counterparties on such Quarterly Payment Date, the amount of any Net Trust
Swap Payment Carryover Shortfall for such Quarterly Payment Date, the
Trust Swap Receipt Amounts, if any paid to the Trust on such Quarterly
Payment Date and the amount of any Net Trust Swap Receipt Carryover
Shortfall for such Quarterly Payment Date;
(L) Reserved;
(M) the amount of the aggregate Realized Losses, if any, for
such Collection Period and the balance of Financed Student Loans that are
delinquent in each delinquency period as of the end of such Collection
Period;
(N) the balance of the Reserve Account on such Quarterly
Payment Date, after giving effect to changes therein on such Quarterly
Payment Date and indicating whether on such Quarterly Payment Date or any
Monthly Payment Date since the preceding Quarterly Payment Date any
withdrawal was made therefrom pursuant to Section 2(e)(iv), the amount of
each such withdrawal and the purpose(s) pursuant to Section 2(e)(iv) for
each such withdrawal;
(O) For Quarterly Payment Dates during the Revolving Period,
the amount on deposit in the Prefunding Account and indicating whether on
such Quarterly Payment Date or any Monthly Payment Date since the
preceding Quarterly Payment Date any withdrawal was made therefrom
pursuant to Section 2(k)(ii), the amount of each such withdrawal and the
purposes pursuant to Section 2(k)(ii) for each such withdrawal;
(P) for Quarterly Payment Dates during the Revolving Period,
the amount deposited into the Collateral Reinvestment Account during the
related Collection Period and on the immediately preceding Quarterly
Payment Date, and the amount on deposit therein after giving effect to
changes therein on such Quarterly Payment Date;
17
(Q) for the Quarterly Payment Date on or immediately following
the end of the Revolving Period, (1) the amount remaining on deposit in
the Collateral Reinvestment Account that has not been used to make
Additional Fundings and (2) the amount remaining in the Prefunding
Account;
(R) (i) the principal balance and number of Consolidation
Loans originated on behalf of the Issuer during the related Collection
Period, (ii) the principal balance and number of Add-on Consolidation
Loans the principal balances of which have been added to the Trust during
the related Collection Period and (iii) the amount withdrawn from the
Collateral Reinvestment Account to prepay Student Loans not held by the
Issuer that were consolidated through such origination (or addition, in
the case of Add-on Consolidation Loans) with one or more Financed Student
Loans during such Collection Period;
(S) the principal balance and number of Serial Loans conveyed
to the Issuer during the related Collection Period, the aggregate Loan
Purchase Amounts thereof and the portion thereof attributable to Purchase
Premium Amounts;
(T) for Quarterly Payment Dates during the Revolving Period,
the principal balance and number of New Loans conveyed to the Issuer
during the related Collection Period, the aggregate Loan Purchase Amounts
thereof and the portion thereof attributable to Purchase Premium Amounts;
and
(U) the number and principal balance of Financed Student
Loans, as of the end of the related Collection Period, that are In-School,
Grace, Repayment, Deferral, Forbearance or Consolidation Loans as of the
end of the related Collection Period, and a breakdown by number and
principal balance of Financed Student Loans, by school type, interest rate
and loan program.
Each amount set forth pursuant to clauses (A), (B), (C), (D) and (E) above shall
be expressed as a dollar amount per $1,000 of original principal amount of a
Note. A copy of the statements referred to above may be obtained by any Note
Owner by a written request to the Indenture Trustee addressed to the Corporate
Trust Office.
(h) Non-Ministerial Matters. With respect to matters that in the
reasonable judgment of the Administrator are non-ministerial, the Administrator
shall not take any action unless within a reasonable time before the taking of
such action, the Administrator shall have notified the Eligible Lender Trustee
and any Swap Counterparties of the proposed action and the Eligible Lender
Trustee shall have consented to it. For the purpose of the preceding sentence,
"non-ministerial matters" shall include, without limitation:
(i) the amendment of or any supplement to the Indenture;
18
(ii) the initiation of any claim or lawsuit by the Issuer and the
compromise of any action, claim or lawsuit brought by or against the
Issuer (other than in connection with the collection of the Financed
Student Loans);
(iii) the amendment, change or modification of the Basic Documents;
(iv) the appointment of successor Note Registrars, successor Paying
Agents and successor Indenture Trustees pursuant to the Indenture or the
appointment of successor Administrators or Successor Servicers, or the
consent to the assignment by the Note Registrar, Paying Agent or Indenture
Trustee of its obligations under the Indenture; and
(v) the removal of the Indenture Trustee.
(i) Incentive Loans and Incentive Interest Deposits. The
Administrator may terminate or change the terms of any Incentive Program with
respect to a Financed Student Loan in accordance with the terms of such program,
provided such termination or change is not prohibited by the Higher Education
Act, upon notice to the Eligible Lender Trustee and the Indenture Trustee. Until
the effective date of any termination, the Administrator shall be required to
deposit into the Collection Account the Incentive Interest Deposit with respect
to such Incentive Financed Student Loan as provided below. In the event that the
Administrator fails to make such deposit, the terms of such Incentive Program
shall be such that the Borrower shall be obligated to make such payment and such
Incentive Program shall terminate as to the related loan.
The Administrator shall deposit or cause to be deposited into the
Collection Account no later than the Determination Date succeeding each Monthly
Collection Period and Collection Period the aggregate Incentive Interest
Deposits with respect to Incentive Financed Student Loans in the Trust as of the
last day of such Monthly Collection Period and Collection Period. Such deposits
shall be considered deposits in respect of interest on such Incentive Financed
Student Loans for all purposes of the Basic Documents and shall be deemed to
have been deposited into the Collection Account for all such purposes as of such
last date of such Monthly Collection Period.
(j) The Administrator may, from time to time, direct the Trust to
enter into Swap Agreements or amendments to Swap Agreements substantially in the
form of Exhibit C provided that (1) the Rating Agency Swap Condition is
satisfied with respect to such Swap Agreement and (2) after entering into such
Swap Agreement or amendment to such Swap Agreement, the notional amount of all
of Swap Agreements to which the Trust is a party is less than or equal to the
outstanding principal balance of the Notes.
(k) Prefunding Account.
(i) On the Closing Date, the Seller shall deposit the Prefunding
Account Closing Date Deposit into the Prefunding Account as required by Section
2.01(b) of the Loan Sale Agreement.
19
(ii) (A) In the event that the Servicing Fee for any Monthly Payment
Date exceeds the amount distributed to the Servicer pursuant to Sections
2(d)(iv)(A) or 2(d)(v)(A) on such Monthly Payment Date, the Administrator
shall instruct the Indenture Trustee in writing to withdraw from the
Prefunding Account on each Monthly Payment Date an amount equal to such
excess and to distribute such amount to the Servicer.
(B) In the event that the Administration Fee for any Monthly
Payment Date exceeds the amount distributed to the Administrator pursuant
to Sections 2(d)(iv)(B) or 2(d)(v)(B) on such Monthly Payment Date, the
Administrator shall instruct the Indenture Trustee in writing to withdraw
from the Prefunding Account on such Monthly Payment Date an amount equal
to such excess, to the extent of funds available therein after giving
effect to paragraph (iv)(A) above, and to distribute such amount to the
Administrator.
(C) For any Quarterly Payment Date, in the event that the
Class A-1 Noteholders' Interest Distribution Amount, the Class A-2
Noteholders' Interest Distribution Amount, the Trust Swap Payment Amounts,
if any, the remainder of any Termination Payment to any Swap
Counterparties to the extent that the remainder of such Termination
Payment is owed to any Swap Counterparties following a Redemption Event
(as defined in any related Swap Agreement) or the Trust is the defaulting
party (other than an Event of Default specified in Section 5(a)(i) of any
related Swap Agreement) and the Subordinate Noteholders' Interest
Distribution Amount, each for such Quarterly Payment Date, exceed the sum
of the amount distributed to the Indenture Trustee for distribution to the
Noteholders and any related Swap Counterparty pursuant to Section
2(d)(v)(C) on such Quarterly Payment Date, the Administrator shall
instruct the Indenture Trustee in writing to withdraw from the Prefunding
Account on such Quarterly Payment Date an amount equal to such excess, to
the extent of funds available therein after giving effect to paragraphs
(A) and (B) above, and to distribute such amount as required by Section
2(d)(v)(C) on such Quarterly Payment Date.
(iii) During the Revolving Period, the Administrator shall instruct
the Indenture Trustee in writing to withdraw from the Prefunding Account, in
each case to the extent of the funds on deposit therein (A) on each Transfer
Date, an amount equal to the Loan Purchase Amount for the Serial Loans and New
Loans transferred to the Eligible Lender Trustee on behalf of the Issuer on such
Transfer Date and to distribute such amount to or upon the order of the Seller
upon satisfaction of the conditions set forth in Section 2.02 of the Loan Sale
Agreement with respect to such transfer, (B) when and as requested by the
Eligible Lender Trustee, in order to facilitate its origination of Consolidation
Loans, to transfer to the order of the Eligible Lender Trustee an amount,
sufficient to prepay in full any Student Loan that is to be consolidated through
such origination with one or more Financed Student Loans, (C) when and as
requested by the Eligible Lender Trustee, in order to facilitate its funding of
the addition of the principal balance of any Add-on Consolidation Loan to the
principal balance of a Consolidation Loan, an amount sufficient to prepay in
full such Add-on Consolidation Loan and (D) on each Determination Date, to
deposit into the Collection Account an amount equal to the Capitalized
20
Interest Amount for the Student Loan Rate Accrual Period with respect to the
related Monthly Payment Date.
(iv) On the Determination Date relating to the Quarterly Payment
Date on or next occurring after the termination of the Revolving Period, the
Administrator shall instruct the Indenture Trustee to withdraw from the
Prefunding Account on such Determination Date an amount equal to the entire
remaining amount on deposit in such account and to deposit such amount in the
Collection Account.
3. Annual Statement as to Compliance. (a) The Administrator shall
deliver to the Seller, the Eligible Lender Trustee, the Indenture Trustee and
any Swap Counterparties, on or before December 31 of each year beginning
December 31, 2000, an Officers' Certificate of the Administrator dated as of
September 30 of such year, stating that (i) a review of the activities of the
Administrator during the preceding 12-month period (or, in the case of the first
such certificate, during the period from the Closing Date to September 30, 2000)
and of its performance under this Agreement has been made under such officers'
supervision and (ii) to the best of such officers' knowledge, based on such
review, the Administrator has fulfilled all its obligations under this Agreement
throughout such year or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officers and the
nature and status thereof. The Indenture Trustee shall send a copy of each such
Officer's Certificate and each report referred to in Section 4 to the Rating
Agencies. A copy of such Officers' Certificate and each report referred to in
Section 4 may be obtained by any Noteholder or Note Owner by a request in
writing to the Indenture Trustee addressed to its Corporate Trust Office,
together with evidence satisfactory to the Indenture Trustee that such Person is
one of the foregoing parties.
(b) The Administrator shall deliver to the Eligible Lender Trustee,
the Indenture Trustee, the Servicer, the Rating Agencies and any Swap
Counterparties, promptly after having obtained knowledge thereof, but in no
event later than two Business Days thereafter, written notice in an Officers'
Certificate of the Administrator of any event which with the giving of notice or
lapse of time, or both, would become an Administrator Default under Section 12.
4. Annual Independent Certified Public Accountants' Report. The
Administrator shall cause a firm of independent certified public accountants,
which may also render other services to the Administrator, to deliver to the
Seller, the Eligible Lender Trustee, the Indenture Trustee and any Swap
Counterparties on or before December 31 of each year beginning December 31,
2000, a report addressed to the Administrator and to the Seller, the Eligible
Lender Trustee, the Indenture Trustee and any Swap Counterparties (which report
may be combined with other reports required to be delivered by such accountants
to the Administrator, the Eligible Lender Trustee and the Indenture Trustee
under the Basic Documents), to the effect that such firm has examined certain
documents and records relating to the administration of the Financed Student
Loans and of the Trust during the preceding fiscal year ended September 30 (or,
in the case of the first such report, during the period from the Closing Date to
September 30, 2000) and that, on the basis of the accounting and auditing
procedures considered appropriate under the circumstances, such firm is of the
opinion that the
21
administration of the Trust was conducted in compliance with the terms of this
Agreement, except for (i) such exceptions as such firm shall believe to be
immaterial and (ii) such other exceptions as shall be set forth in such report.
The Indenture Trustee shall send a copy of each such report to the Rating
Agencies.
Such report will also indicate that the firm is independent of the
Administrator within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants.
5. Administrator Expenses. The Administrator shall be required to
pay all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of independent accountants, taxes imposed on
the Administrator and expenses incurred in connection with distributions and
reports to the Noteholders and any Swap Counterparties.
6. Records. The Administrator shall maintain appropriate books of
account and records relating to services performed hereunder, which books of
account and records shall be accessible for inspection by the Issuer at any time
during normal business hours.
7. Compensation. As compensation for the performance of the
Administrator's obligations under this Agreement and as reimbursement for its
expenses related thereto, the Administrator shall be entitled to the
Administration Fee payable monthly in arrears on each Monthly Payment Date which
shall be solely an obligation of the Issuer and payable solely as provided
herein.
8. Additional Information to Be Furnished. The Administrator shall
furnish to the Issuer and any Swap Counterparties from time to time such
additional information regarding the Collateral as the Issuer or any Swap
Counterparties shall reasonably request. Following the time, if any, that any
Swap Counterparties' counterparty ratings fall below "A3" , "A-"or their
equivalent, upon request of a Rating Agency, the Administrator shall furnish to
such Rating Agency, cashflow projections for the Trust.
9. Independence of the Administrator. For all purposes of this
Agreement, the Administrator shall be an independent contractor and shall not be
subject to the supervision of the Issuer or the Eligible Lender Trustee with
respect to the manner in which it accomplishes the performance of its
obligations hereunder. Unless expressly authorized by the Issuer, the
Administrator shall have no authority to act for or represent the Issuer or the
Eligible Lender Trustee in any way and shall not otherwise be deemed an agent of
the Issuer or the Eligible Lender Trustee.
10. No Joint Venture. Nothing contained in this Agreement (i) shall
constitute the Administrator and either the Issuer or the Eligible Lender
Trustee as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be
22
deemed to confer on any of them any express, implied or apparent authority to
incur any obligation or liability on behalf of the others.
11. Other Activities of Administrator. Nothing herein shall prevent
the Administrator or its Affiliates from engaging in other businesses or, in its
sole discretion, from acting in a similar capacity as an administrator for any
other Person even though such Person may engage in business activities similar
to those of the Issuer, the Eligible Lender Trustee or the Indenture Trustee.
12. Administrator Default. If any one of the following events (an
"Administrator Default") shall occur and be continuing:
(a) any failure by the Administrator to direct the Indenture
Trustee to make any required distributions from any of the Trust Accounts,
which failure continues unremedied for three Business Days after written
notice of such failure is received by the Administrator from the Indenture
Trustee or the Eligible Lender Trustee or after discovery of such failure
by an officer of the Administrator; or
(b) any failure by the Administrator duly to observe or to
perform in any material respect any other covenants or agreements of the
Administrator set forth in this Agreement or any Basic Documents, which
failure shall (i) materially and adversely affect the rights of
Noteholders and (ii) continues unremedied for a period of 30 days after
the date of discovery of such failure by an officer of the Administrator
or on which written notice of such failure, requiring the same to be
remedied, shall have been given (A) to the Administrator by the Indenture
Trustee or the Eligible Lender Trustee or (B) to the Administrator and to
the Indenture Trustee and the Eligible Lender Trustee by the Noteholders,
representing not less than 25% of the Outstanding Amount of the Notes; or
(c) an Insolvency Event occurs with respect to the
Administrator; or
(d) any representation or warranty made by the Administrator
hereunder or under any Basic Document, or in any certificate furnished
hereunder or under any Basic Document, shall prove to be untrue or
incomplete in any material respect;
then, and in each and every case, so long as the Administrator Default shall not
have been remedied, either the Indenture Trustee, or the Noteholders evidencing
not less than 75% of the Outstanding Amount of the Notes, by notice then given
in writing to the Administrator (and to the Indenture Trustee, the Eligible
Lender Trustee and the Swap Counterparty if given by the Noteholders), may
terminate all the rights and obligations (other than the obligations set forth
in Section 24 hereof) of the Administrator under this Agreement. On or after the
receipt by the Administrator of such written notice, all authority and power of
the Administrator under this Agreement, whether with respect to the Notes or the
Financed Student Loans or otherwise, shall, without further action, pass to and
be vested in the Indenture Trustee or such successor Administrator as may be
appointed under Section 13; and, without limitation, the Indenture
23
Trustee and the Eligible Lender Trustee are hereby authorized and empowered to
execute and deliver, for the benefit of the predecessor Administrator, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination. The predecessor Administrator shall
cooperate with the successor Administrator, the Indenture Trustee and the
Eligible Lender Trustee in effecting the termination of the responsibilities and
rights of the predecessor Administrator under this Agreement. All reasonable
costs and expenses (including attorneys' fees and expenses) incurred in
connection with such transfer of responsibilities and amending this Agreement to
reflect such succession as Administrator pursuant to this Section shall be paid
by the predecessor Administrator upon presentation of reasonable documentation
of such costs and expenses. Upon receipt of notice of the occurrence of an
Administrator Default, the Eligible Lender Trustee shall give notice thereof to
the Rating Agencies and any Swap Counterparties.
13. Appointment of Successor. (a) Upon receipt by the Administrator
of notice of termination pursuant to Section 12, or the resignation by the
Administrator in accordance with the terms of this Agreement, the predecessor
Administrator shall continue to perform its functions as Administrator, in the
case of termination, only until the date specified in such termination notice
or, if no such date is specified in a notice of termination, until a successor
Administrator has accepted and assumed the responsibilities of the Administrator
and, in the case of resignation, until the later of (x) the date 120 days from
the delivery to the Eligible Lender Trustee and the Indenture Trustee of written
notice of such resignation (or written confirmation of such notice) in
accordance with the terms of this Agreement and (y) the date upon which the
predecessor Administrator shall become legally unable to act as Administrator as
specified in the notice of resignation and accompanying Opinion of Counsel. In
the event of termination hereunder of the Administrator, the Issuer shall
appoint a successor Administrator acceptable to the Indenture Trustee and the
successor Administrator shall accept its appointment by a written assumption in
form acceptable to the Indenture Trustee. In the event that a successor
Administrator has not been appointed at the time when the predecessor
Administrator has ceased to act as Administrator in accordance with this
Section, the Indenture Trustee without further action shall automatically be
appointed the successor Administrator and the Indenture Trustee shall be
entitled to the Administration Fee. Notwithstanding the above, the Indenture
Trustee (with prior written notice to any Swap Counterparties ) shall, if it
shall be unwilling or legally unable so to act, appoint or petition a court of
competent jurisdiction to appoint, as the successor to the Administrator under
this Agreement and the Administration Agreement, any established institution the
regular business of which shall include the servicing of student loans.
(b) Upon appointment, the successor Administrator (including the
Indenture Trustee acting as successor Administrator) shall be the successor in
all respects to the predecessor Administrator and shall be subject to all the
responsibilities, duties and liabilities placed on the predecessor Administrator
that arise thereafter or are related thereto and shall be entitled to an amount
agreed to by such successor Administrator (which shall not exceed the
Administration Fee unless the Swap Counterparties, if any, give their prior
written consent and such compensation arrangements will not result in a
downgrading of the Class A-1 Notes, the Class A-2 Notes or the Subordinate Notes
by any Rating Agency, and all the rights granted to the predecessor
Administrator by the terms and provisions of this Agreement.
24
(c) The Administrator may not resign unless it is prohibited from
serving as such by law as evidenced by an Opinion of Counsel to such effect
delivered to the Indenture Trustee and the Eligible Lender Trustee.
Notwithstanding the foregoing or anything to the contrary herein or in the Basic
Documents, the Indenture Trustee, to the extent it is acting as successor
Administrator pursuant hereto, shall be entitled to resign to the extent a
qualified successor Administrator has been appointed and has assumed all the
obligations of the Administrator in accordance with the terms of this Agreement
and the Basic Documents.
14. Notification to Noteholders. Upon any termination of, or
appointment of a successor to, the Administrator pursuant to Section 12 or 13,
the Indenture Trustee shall give prompt written notice thereof to Noteholders,
any Swap Counterparties and the Rating Agencies (which, in the case of any such
appointment of a successor, shall consist of prior written notice thereof to the
Rating Agencies).
15. Waiver of Past Defaults. The Noteholders of Notes evidencing not
less than a majority of the Outstanding Amount of the Notes may, on behalf of
all Noteholders, waive in writing any default by the Administrator in the
performance of its obligations hereunder and any consequences thereof, except a
default in making any required deposits to or payments from any of the Trust
Accounts (or giving instructions regarding the same) in accordance with this
Agreement. Upon any such waiver of a past default, such default shall cease to
exist, and any Administrator Default arising therefrom shall be deemed to have
been remedied for every purpose of this Agreement to the extent provided in such
waiver. No such waiver shall extend to any subsequent or other default or impair
any right consequent thereto.
16. Notices. Any notice, report or other communication given
hereunder shall be in writing (or in the form of facsimile notice, followed by
written notice) and addressed as follows:
(a) if to the Issuer, to
SMS Student Loan Trust 2000-B
c/o Bank One Delaware, Inc.
3 Xxxxxxxxx Centre
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000,
with a copy to the Eligible Lender Trustee
at the Corporate Trust Office of the
Eligible Lender Trustee
(b) if to the Eligible Lender Trustee, to
Bank One, National Association
1 Bank Xxx Xxxxx
00
Xxxxx XX0-0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Global Corporate Trust Services Division,
Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(c) if to the Administrator, to
USA Group Secondary Market Services, Inc.
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: President and Chief Executive Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to
Office of the General Counsel
USA Group, Inc.
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(d) if to the Indenture Trustee, to
Bankers Trust Company
Four Xxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Corporate Trust and Agency Group,
Structured Finance Team
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(e) if to any Swap Counterparties, to the address specified in any
Swap Agreements
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed given
if such notice is mailed by certified mail, postage prepaid, or hand-delivered
to the address of such party as provided above.
26
17. Amendments. This Agreement may be amended from time to time by a
written amendment duly executed and delivered by the Issuer, the Administrator
and the Indenture Trustee, with the prior written consent of the Eligible Lender
Trustee and any Swap Counterparties, but without the consent of the Noteholders,
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 such amendment
will not, in an Opinion of Counsel obtained on behalf of the Issuer and
satisfactory to the Indenture Trustee and the Eligible Lender Trustee,
materially and adversely affect the interest of any Noteholder. This Agreement
may also be amended by the Issuer, the Administrator and the Indenture Trustee
with the prior written consent of the Eligible Lender Trustee, any Swap
Counterparties and the Noteholders of at least a majority in 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 Noteholders; provided, however, that no
such amendment may (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments with respect to the
Financed Student Loans or distributions that are required to be made for the
benefit of the Noteholders or (ii) reduce the aforesaid percentage of the
Noteholders which are required to consent to any such amendment, without the
consent of all Outstanding Noteholders. Prior to the execution of any such
amendment, the Administrator shall furnish written notification of the substance
of such amendment to each of the Rating Agencies.
18. Assignment. Notwithstanding anything to the contrary contained
herein, except as provided in Section 13 or 25 of this Agreement concerning the
resignation of the Administrator, this Agreement may not be assigned by the
Administrator.
19. 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.
20. 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.
21. Counterparts. This Agreement may be executed in counterparts,
each of which when so executed shall together constitute but one and the same
agreement.
22. Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
27
23. Not Applicable to USA Group Secondary Market Services, Inc. in
Other Capacities. Nothing in this Agreement shall affect any obligation USA
Group Secondary Market Services, Inc. may have in any other capacity under the
Basic Documents.
24. Liability of Administrator; Indemnities. The Administrator shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Administrator under this Agreement.
The Administrator shall indemnify, defend and hold harmless the
Issuer, the Eligible Lender Trustee, the Indenture Trustee, the Servicer, any
Swap Counterparties and the Noteholders and any of the officers, directors,
employees and agents of the Issuer, the Eligible Lender Trustee, the Indenture
Trustee and the Servicer from and against any and all costs, expenses, losses,
claims, damages and liabilities to the extent that such cost, expense, loss,
claim, damage or liability arose out of, or was imposed upon any such Person
through, the negligence, willful misfeasance or bad faith of the Administrator
in the performance of its duties under this Agreement or by reason of reckless
disregard of its obligations and duties hereunder or thereunder.
The Administrator shall pay reasonable compensation to the Indenture
Trustee and shall reimburse the Indenture Trustee for all reasonable expenses,
disbursements and advances, and indemnify, defend and hold harmless the
Indenture Trustee and its officers, directors, employees and agents from and
against all costs, expenses, losses, claims, damages and liabilities, to the
extent and in the manner provided in, and subject to the limitations of, Section
6.07 of the Indenture.
For purposes of this Section, in the event of the termination of the
rights and obligations of the Administrator (or any successor thereto pursuant
to Section 25) as Administrator pursuant to Section 12 or a resignation by such
Administrator pursuant to this Agreement, such Administrator shall be deemed to
be the Administrator pending appointment of a successor Administrator pursuant
to Section 13.
Indemnification under this Section shall survive the resignation or
removal of the Eligible Lender Trustee or the Indenture Trustee or the
termination of this Agreement and shall include reasonable fees and expenses of
counsel and expenses of litigation. If the Administrator shall have made any
indemnity payments pursuant to this Agreement and the Person to or on behalf of
whom such payments are made thereafter collects any of such amounts from others,
such Person shall promptly repay such amounts to the Administrator, without
interest.
25. Merger or Consolidation of, or Assumption of the Obligations of,
Administrator. Any Person (a) into which the Administrator may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Administrator shall be a party or (c) which may succeed to the properties and
assets of the Administrator substantially as a whole, shall be the successor to
the Administrator without the execution or filing of any document or any further
act by any of the parties to this Agreement; provided, however, that the
Administrator hereby covenants that it will not consummate any of the foregoing
transactions except upon
28
satisfaction of the following: (i) the surviving Administrator, if other than
USA Group Secondary Market Services, Inc., executes an agreement of assumption
to perform every obligation of the Administrator under this Agreement, (ii)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 1 shall have been breached and no
Administrator Default, and no event that, after notice or lapse of time or both
would become an Administrator Default, shall have occurred and be continuing,
(iii) the Administrator shall have delivered to the Eligible Lender Trustee, the
Indenture Trustee and any Swap Counterparties 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
Administrator shall have a consolidated net worth at least equal to that of the
predecessor Administrator, (v) such transaction will not result in a material
adverse federal or state tax consequence to the Issuer or the Noteholders and
(vi) unless USA Group Secondary Market Services, Inc. is the surviving entity,
the Administrator shall have delivered to the Eligible Lender Trustee and the
Indenture Trustee an Opinion of Counsel either (A) stating that, in the opinion
of such counsel, all financing statements and continuation statements and
amendments thereto have been executed and filed that are necessary fully to
preserve and protect the interests of the Eligible Lender Trustee, the Indenture
Trustee and any Swap Counterparties, 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.
26. Limitation on Liability of Administrator and Others. Neither the
Administrator nor any of its directors, officers, employees or agents shall be
under any liability to the Issuer, the Noteholders, the Indenture Trustee, the
Eligible Lender Trustee or any Swap Counterparties, except as provided under
this Agreement, for any action taken or for refraining from the taking of any
action pursuant to this Agreement or for errors in judgment; provided, however,
that this provision shall not protect the Administrator or any such person
against any liability that would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of its duties or by
reason of reckless disregard of obligations and its duties under this Agreement.
The Administrator and any of its directors, officers, employees or agents may
rely in good faith on the advice of counsel or on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder.
Except as provided in this Agreement, the Administrator shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to administer the Financed Student Loans
and the Trust in accordance with this Agreement, and that in its opinion may
involve it in any expense or liability; provided, however, that the
Administrator may undertake any reasonable action that it may deem necessary or
desirable in respect of this Agreement and the other Basic Documents and the
rights and duties of the parties to this Agreement and the Basic Documents and
the interests of the Noteholders under the Indenture.
29
27. USA Group Secondary Market Services, Inc. Not to Resign as
Administrator. Subject to the provisions of Section 25, USA Group Secondary
Market Services, Inc. shall not resign from the obligations and duties imposed
on it as Administrator under this Agreement except upon determination that the
performance of its duties under this Agreement shall no longer be permissible
under applicable law or shall violate any final order of a court or
administrative agency with jurisdiction over USA Group Secondary Market
Services, Inc. or its properties. Notice of any such determination permitting
the resignation of USA Group Secondary Market Services, Inc. shall be
communicated to the Eligible Lender Trustee, the Indenture Trustee and any Swap
Counterparties at the earliest practicable time (and, if such communication is
not in writing, shall be confirmed in writing at the earliest practicable time)
and any such determination shall be evidenced by an Opinion of Counsel to such
effect delivered to the Eligible Lender Trustee, the Indenture Trustee and any
Swap Counterparties concurrently with or promptly after such notice. No such
resignation shall become effective until the Indenture Trustee or a successor
Administrator shall have assumed the responsibilities and obligations of USA
Group Secondary Market Services, Inc. in accordance with Section 13.
28. Limitation of Liability of Eligible Lender Trustee and Indenture
Trustee. (a) Notwithstanding anything contained herein to the contrary, except
as provided in subsection (c) hereof, this instrument has been countersigned by
Bank One, National Association not in its individual capacity but solely in its
capacity as Eligible Lender Trustee of the Issuer and in no event shall Bank
One, National Association in its individual capacity or any Owner of the Issuer
have any liability for the representations, warranties, covenants, agreements or
other obligations of the Issuer hereunder, as to all of which recourse shall be
had solely to the assets of the Issuer. For all purposes of this Agreement, in
the performance of any duties or obligations of the Issuer thereunder, the
Eligible Lender Trustee shall be subject to, and entitled to the benefits of,
the terms and provisions of Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary,
except as provided in subsection (c) hereof, this Agreement has been
countersigned by Bankers Trust Company not in its individual capacity but solely
as Indenture Trustee and in no event shall Bankers Trust Company have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer.
(c) 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.
29. Notice of Termination of Trust. As described in Article IX of
the Trust Agreement, notice of any termination of the Trust shall be given by
the Administrator to the
30
Eligible Lender Trustee and the Indenture Trustee as soon as practicable after
the Administrator has received notice thereof.
30. Third-Party Beneficiaries. The Eligible Lender Trustee and any
Swap Counterparties are third-party beneficiaries to this Agreement and are
entitled to the rights and benefits hereunder and may enforce the provisions
hereof as if they were parties hereto; provided, however, that in the case of
any Swap Counterparties, such right to enforcement and the right to provide
consents or waivers pursuant to the provisions hereof or to take other actions
as provided herein are conditioned upon its not being in default under any Swap
Agreements.
31. Consents. With respect to any action to be taken hereunder that
requires the consent of a party hereto or of the Eligible Lender Trustee or any
Swap Counterparties, such consent shall not be unreasonably withheld, delayed or
conditioned.
[Signatures Follow on Next Page]
31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
SMS STUDENT LOAN TRUST 2000-B
By: BANK ONE, NATIONAL ASSOCIATION, not in its
individual capacity but solely as Eligible
Lender Trustee
By: /s/ Xxxxx X. Xxxxxxxx
---------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Assistant Vice president
BANKERS TRUST COMPANY, not in its individual
capacity but solely as Indenture Trustee
By: /s/ Xxxxx Xxxxxxx
---------------------------
Name: Xxxxx Xxxxxxx
Title: Vice President
USA GROUP SECONDARY MARKET SERVICES,
INC., as Administrator
By: /s/ Xxxxxx X. Xxxxxx
---------------------------
Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President and
Chief Financial Officer
32
EXHIBIT A TO THE
ADMINISTRATION AGREEMENT
POWER OF ATTORNEY
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS, that BANK ONE, NATIONAL ASSOCIATION, a
national bank, not in its individual capacity but solely as eligible lender
trustee ("Eligible Lender Trustee") for the SMS Student Loan Trust 2000-B (the
"Trust"), does hereby make, constitute and appoint USA Group Secondary Market
Services, Inc., as Administrator under the Administration Agreement (as defined
below), and its agents and attorneys, as Agents and Attorneys-in-Fact to execute
on behalf of Eligible Lender Trustee or the Trust all such documents, reports,
filings, instruments, certificates and opinions as it should be the duty of
Eligible Lender Trustee or the Trust to prepare, file or deliver pursuant to the
Related Documents (as defined in the Administration Agreement) or pursuant to
Section 5.02 of the Trust Agreement (as defined in the Administration
Agreement), including without limitation, to appear for and represent Eligible
Lender Trustee and the Trust in connection with the preparation, filing and
audit of any federal, state and local tax returns pertaining to the Trust, and
with full power to perform any and all acts associated with such returns and
audits that the Eligible Lender Trustee could perform, including without
limitation, the right to distribute and receive confidential information, defend
and assert positions in response to audits, initiate and defend litigation, and
to execute waivers of restriction on assessments of deficiencies, consents to
the extension of any statutory or regulatory time limit, and settlements. For
the purpose of this Power of Attorney, the term "Administration Agreement" means
the Administration Agreement dated as of April 1, 2000, among the Trust, USA
Group Secondary Market Services, Inc., as Administrator, and Bankers Trust
Company, as Indenture Trustee, as such may be amended from time to time.
All powers of attorney for this purpose heretofore filed or executed by
Eligible Lender Trustee are hereby revoked.
A-1
EXECUTED as of the 1st day of April 2000.
BANK ONE, NATIONAL ASSOCIATION,
not in its individual capacity
but solely as Eligible Lender Trustee
By:____________________________________
Name:
Title:
X-0
XXXXX XX XXX XXXX )
) ss.:
COUNTY OF NEW YORK )
Before me, the undersigned authority, on this day personally
appeared [ ] known to me to be the person whose name is subscribed to
the foregoing instrument, and acknowledged to me that such person signed the
same for the purposes and considerations therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this 19th day of May 2000.
_______________________________________
Notary Public in and for the
State of New York
_______________________________________
Printed Name of Notary Public
Commission Expires____________
A-3
EXHIBIT B
TO THE
ADMINISTRATION AGREEMENT
Form of Noteholders' Statement pursuant to Section 2(g) of Administration
Agreement. Capitalized terms used herein are defined in Appendix A thereto. It
should be noted, however, that while all the information listed below shall be
included in each Noteholders' Statement, the presentation thereof may vary from
that given below.
Quarterly Payment Date:
(i) Amount of principal being paid or distributed:
Class A-1 __________*
($_______
* per $1,000
original principal
amount of Notes)
Class A-2 __________*
($_______
* per $1,000
original principal
amount of Notes)
Subordinate __________*
($_______
* per $1,000
original principal
amount of Notes)
----------
* Portion of each such amount attributable to Reserve Account
Excess:___________________
(ii) Amount of interest being paid or distributed:
Class A-1 __________ ($_______ per
B-1
$1,000 original
principal amount of Notes)
Class A-2 __________ ($_______ per
$1,000 original
principal amount of Notes)
Subordinate __________ ($_______ per
$1,000 original
principal amount of Notes)
(iii) Reserved
(iv) Reserved
(v) Pool Balance at end of related Collection Period:
_______________
(vi) After giving effect to distributions on this Quarterly Payment
Date:
(a) (1) outstanding principal amount of Class A-1 Notes:_______
(2) Class A-1 Note Pool Factor:__________
(b) (1) outstanding principal amount of Class A-2 Notes:_______
(2) Class A-2 Note Pool Factor:__________
(c) (1) outstanding principal amount of Subordinate
Notes:__________
(2) Subordinate Note Pool Factor:__________
(vii) Applicable Interest Rate:
In general:
(1) Three-Month LIBOR for the LIBOR Reset Period since the
previous Quarterly Payment Date was _____%;
B-2
Class A-1 Note Rate: _____%
Class A-2 Note Rate: _____%
Subordinate Note Rate: _____%
(viii) Amount of Servicing Fee for related Collection Period including a
breakdown of the components of the Servicing Fee attributable to
each of the items specified in clauses II(i) through (ix) of
Section 3.06 of the Servicing Agreement and the amount of any
Servicing Fee Shortfall for such Quarterly Payment Date and for
each Monthly Payment Date following the immediately preceding
Quarterly Payment Date:
(ix) Amount of Administration Fee for related Collection
Period:__________ ($_______ per $1,000 original principal amount
of Notes)
(x) the Trust Swap Payment Amount paid to each Swap Counterparty, if
any on such Quarterly Payment Date: ______; the amount of any Net
Trust Swap Payment Carryover Shortfall with respect to each Swap
Agreement, if any for such Quarterly Payment Date: ____; the
Trust Swap Receipt Amount with respect to each Swap Agreement, if
any paid to the Trust on such Quarterly Payment Date: ____; the
Net Trust Swap Receipt Carryover Shortfall with respect to each
Swap Agreement, if any for such Quarterly Payment Date:______
(xi) Reserved
(xii) Aggregate amount of Realized Losses (if any) for the related
Collection Period:__________
(xiii) Financed Student Loans delinquent at end of related Collection
Period: __________; number of delinquent loans: ________;
aggregate unpaid principal balance of delinquent loans:
___________________
(xiv) Withdrawal from Reserve Account on related Quarterly Payment Date
(other than Reserve Account Excess) and on any Monthly Payment
Date since the preceding Quarterly Payment Date (list each
withdrawal separately): _______________ (purpose of each
withdrawal).
B-3
Reserve Account Excess on related Quarterly Payment Date ________
Principal balance of Notes to be paid to reach Parity Date:_________
(xv) Reserved
(xvi) Deposits to Collateral Reinvestment Account during related
Collection Period: __________; amount to be deposited on related
Quarterly Payment Date: __________
Withdrawal from Collateral Reinvestment Account during related
Collection Period: __________
(xvii) Amount in the Reserve Account (after giving effect to
(xiv)):__________
(xviii) Amount in the Collateral Reinvestment Account (after giving
effect to (xvi)):__________
(xix) Consolidation Loans: ___________ loans with aggregate principal
balances of ________ were originated during related Collection
Period; withdrawal from Collateral Reinvestment Account to fund
origination of Consolidation Loans during related Collection
Period: _______
(xx) Add-on Consolidation Loans: ______ loans with aggregate principal
balances of ________ were added to the principal balance of a
Consolidation Loan; withdrawal from Collateral Reinvestment
Account to fund the addition of the principal balances of Add-on
Consolidation Loans during the related Collection Period: _____
(xxi) Serial Loans: _______ loans with aggregate principal balances of
_______ (portion represented by Purchase Premium Amounts ) were
purchased ------- during the related Collection Period.
(xxii) New Loans: _______ loans with aggregate principal balances of
_______ (portion represented by Purchase Premium Amounts _______)
were purchased during the related Collection Period.
(xxiii) Withdrawal from the Prefunding Account during the related
Collection Period (list each withdrawal pursuant to Section
2(k)(ii) separately): ____________. (purpose of each withdrawal)
(xxiv) Amount in the Prefunding Account (after giving effect (xxiii)).
B-4
(xxv) Financed Student Loans in the following categories as of the end
of the related Collection Period:
Weighted Average Number of Principal
Interest Rate Loans Balance
Status Type:
-----------
In-School
Grace
Repayment
Forbearance
Deferment
Delinquencies
Claims Filed Awaiting Payment
Delinquencies:
-------------
30-60 Days
61-90 Days
91-120 Days
More than 120 Days Delinquent
Claims Filed Awaiting Payment
Loan Type:
---------
Xxxxxxxx Loans
SLS Loans
PLUS Loans
Consolidation Loans
School Type:
-----------
Traditional
Vocational/Proprietary
B-5
EXHIBIT C
TO THE
ADMINISTRATION AGREEMENT
Form of Swap Agreement pursuant to Section 2(j) of the Administration Agreement.
FORM OF SCHEDULE
to the Master Agreement
dated as of ______ __, ____
between
___________________________
("Party A"),
a corporation organized under the laws
of _________
and
SMS Student Loan Trust 2000-B,
("Party B")
a Delaware business trust.
Part 1. Termination Provisions
In this Agreement:-
(a) "Specified Entity" means in relation to Party A for the purpose of:-
Section 5(a)(v) Not Applicable.
Section 5(a)(vi) Not Applicable.
Section 5(a)(vii) Not Applicable.
Section 5(b)(iv) Not Applicable.
and in relation to Party B for the purpose of:-
Section 5(a)(v) Not Applicable.
Section 5(a)(vi) Not Applicable.
Section 5(a)(vii) Not Applicable.
Section 5(b)(iv) Not Applicable.
(b) "Specified Transaction" will have the meaning specified in Section 14 of
this Agreement.
(c) "Additional Termination Event" will not apply to Party A and will apply,
with respect to Redemption Event only, to Party B. The occurrence of a
Redemption Event will constitute an Additional Termination Event in
respect of which Party B will be the sole Affected Party.
(d) The provisions of Section 5(a) and Section 5(b) will apply to Party A and
to Party B as follows:-
The designation below of an Event of Default as being "Applicable" to a
specific party means that upon the occurrence and continuation of such an
Event of Default with respect to such party, the other party shall have
the right of a Non-defaulting Party to designate an Early Termination Date
for the Sole Transaction (as defined below) under Section 6 of this
Agreement, and conversely, the designation of an Event of Default as being
"Not Applicable" to a party means that upon the occurrence and
continuation of such an Event of Default with respect to such party, the
other party shall not have the right to designate an Early Termination
Date for the Sole Transaction with respect to such event under Section 6
of this Agreement.
Section 5(a) Party A Party B
(i) "Failure to Pay or Deliver" Applicable.
"Failure to Pay or Deliver" is Applicable to Party B; provided that
Party B has funds available to make payments in accordance with the
terms of the Indenture and the Trustee has failed to make any such
payments in violation of the terms of the Indenture.
(ii) "Breach of Agreement" Applicable. Not Applicable.
(iii) "Credit Support Default" Applicable. Not Applicable.
(iv) "Misrepresentation" Applicable. Not Applicable.
(v) "Default under Specified
Transaction" Not Applicable. Not Applicable.
(vi) "Cross Default" Not Applicable. Not Applicable.
(vii) "Bankruptcy" Applicable. Applicable.
(viii) "Merger Without Assumption" Applicable. Not Applicable.
(ix) "Additional Event of Default" Not Applicable. Applicable
specified in Part 1(h)
(Acceleration of Notes)
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Section 5(b)
Neither party shall be entitled to designate an Early Termination Date as
a result of the occurrence and continuation of an event described in
Section 5(b)(iii) (Tax Event Upon Merger).
(e) Payments on Early Termination. For the purpose of Section 6(e):-
(i) Except as provided in Appendix I (Redemption of Notes) Market
Quotation will apply.
(ii) The Second Method will apply.
(f) "Termination Currency" means United States Dollars ("USD").
(g) The "Automatic Early Termination" provisions of Section 6(a) will not
apply to Party A or Party B.
(h) Additional Event of Default. Section 5(a) of the Agreement is hereby
amended by: (i) deleting the word "or" at the end of Section 5(a)(vii),
(ii) deleting the period at the end of Section 5(a)(viii) and adding ";
or" at the end thereof and (iii) adding the following language at the end
of Section 5(a):
"(ix) Additional Event of Default. The principal of any class of Notes
shall have been declared or become immediately due and payable in
accordance with the terms of the Indenture (an "Acceleration of Notes")
following an "event of default" thereunder (it being understood that such
event will constitute an Event of Default solely with respect to SMS
Student Loan Trust 2000-B."
Part 2. Tax Representations.
(a) Payer Tax Representations. For the purpose of Section 3(e) of this
Agreement, Party A and Party B will each make the following representation:
It is not required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, of any Relevant Jurisdiction
to make any deduction or withholding for or on account of any Tax from any
payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of this
Agreement) to be made by it to the other party under this Agreement. In
making this representation, it may rely on (i) the accuracy of any
representations made by the other party pursuant to Section 3(f) of this
Agreement, (ii)
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the satisfaction of the agreement contained in Section 4(a)(i) or
4(a)(iii) of this Agreement, and the accuracy and effectiveness of any
document provided by the other party pursuant to Section 4(a)(i) or
4(a)(iii) of this Agreement and (iii) the satisfaction of the agreement of
the other party contained in Section 4(d) of this Agreement, provided that
it shall not be a breach of this representation where reliance is placed
on clause (ii) and the other party does not deliver a form or document
under Section 4(a)(iii) by reason of material prejudice to its legal or
commercial position.
(b) Payee Tax Representations. For the purpose of Section 3(f) of this
Agreement, Party A and Party B make the following representation:-
(i) The following representation will apply to Party A:-
Each payment received or to be received by it in connection with this
Agreement will be effectively connected with its conduct of a trade or
business in the Specified Jurisdiction.
"Specified Jurisdiction" means the United States of America.
(ii) The following representation will apply to Party B:-
It is a business trust organized under the laws of the State of Delaware.
Part 3. Agreement to Deliver Documents.
For the purpose of Section 4(a)(i) and Section 4(a)(ii) of this Agreement, Party
A and Party B each agree to deliver the following documents, as applicable:-
(a) Tax forms, documents or certificates to be delivered are:
Party required to Form, Document Date by which
deliver document or Certificate to be Delivered
---------------- -------------- ---------------
Party A An executed U.S. Internal (i) Before the first
Revenue Service 4224 Form Payment Date under this
(or any successor thereto) Agreement, (ii) promptly
upon reasonable demand by
Party B, and (iii)
promptly upon learning
that any such Form
previously provided by
Party A has become
obsolete or incorrect.
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Party B An executed U.S. Internal (i) Before the first
Revenue Service Form W-9 Payment Date under this
(or any successor thereto), Agreement, (ii) promptly
including appropriate upon reasonable demand
attachments. by Party A, and (iii)
promptly upon learning
that any such form
previously provided by
Party B has become
obsolete or incorrect
(b) Other documents to be delivered are:
Party required to Form, Document or Date by which Covered by
deliver document Certificate to be Delivered Section 3(d)
---------------- ----------- --------------- ------------
Party A An opinion of counsel Upon execution of No
to Party A this Agreement.
substantially in the
form of Exhibit A to
this Schedule.
Party A An incumbency Upon execution of Yes
certificate with this Agreement.
respect to the
signatory of this
Agreement.
Party B Executed copies of Upon execution of Yes, with respect
all Basic Documents this Agreement. to certificates
and all opinions and other factual
required by the statements; No,
Underwriting with respect to
Agreement opinions and
agreements.
Party B An executed original Upon execution of Yes.
of the Officer's this Agreement.
Certificate of SMS,
substantially in the
form of Exhibit C and
reasonably
satisfactory in form
and substance to
Party A.
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Part 4. Miscellaneous.
(a) Addresses for Notices. For the purpose of Section 12(a):
Address for notices or communications to Party A:
Address: ___________________________
___________________
___________________
Attention: _________
Telephone: _________
Facsimile: ___________
Address for notices or communications to Party B:-
Address: SMS Student Loan Trust 2000-B
c/o Bank One Delaware, Inc.
3 Xxxxxxxxx Centre
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Administration
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with copies to:
Address: SMS Student Loan Trust 2000-B
c/o Bank One, National Association, as Trustee
Xxx Xxxx Xxx Xxxxx
Xxxxx XX0-0000
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Global Corporate Trust Services Division
Xxxxx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Address: USA Group Secondary Market Services, Inc.
00 Xxxxx Xxxxxxxx Xxxxxx
0
Xxxxxxxxxxxx
XX 00000-0000
Address for notices or communications to Moody's:
Address: Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: ABS Monitoring Department
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Address for notices or communications to Fitch:-
Address: Fitch IBCA, Inc.
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Asset Backed Monitoring Unit
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Address for notices or communications to S&P:-
Address: Standard & Poor's, a division of The
XxXxxx-Xxxx Companies, Inc.
00 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Notices under this Agreement and the Transaction shall be sent to Xxxxx'x,
Fitch and S&P only to the extent specifically required in the transaction
confirmation.
(b) Process Agent. For the purpose of Section 13(c):
Party A appoints as its Process Agent:
_____________
_____________
_____________
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Party B appoints as its Process Agent:
Bank One, National Association
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone:____________________
Facsimile:____________________
(c) Offices. The provisions of Section 10(a) will not apply to Party A and
will not apply to Party B.
(d) Multibranch Party. For the purpose of Section 10(c) of this Agreement:--
Party A is not a Multibranch Party.
Party B is not a Multibranch Party.
(e) Calculation Agent. The Calculation Agent shall be Party A. In the case of
a dispute involving any calculation made by the Calculation Agent under
this Agreement (each, a "Disputed Calculation"), Party A and Party B will
appoint a mutually acceptable Reference Bank or Reference Dealer, as
applicable, who will (i) with respect to any calculation relating to a
Terminated Transaction, determine the Disputed Calculation by reference to
the methodology set forth in the definition of Market Quotation and (ii)
with respect to any other calculation, determine the Disputed Calculation
by reference to a mutually acceptable methodology. If such Reference Bank
or Reference Dealer determines that no quotations are available for a
particular Disputed Calculation, then the Calculation Agent's original
calculations will be used for that Disputed Calculation. All calculations
made by the Calculation Agent in accordance with this Part 4(e) shall be
binding absent manifest error.
(f) Credit Support Document. Details of any Credit Support Document:-
In the case of Party A: Not Applicable.
In the case of Party B: Not Applicable.
(g) Credit Support Provider.
Credit Support Provider means in relation to Party A: Not Applicable.
Credit Support Provider means in relation to Party B: Not Applicable.
(h) "Affiliate" will have the meaning specified in Section 14 of this
Agreement.
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(i) GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO
CHOICE OF LAW DOCTRINE).
(j) Netting of Payments. Section 2(c)(ii) will not apply.
(k) Account Detail:
Payments to Party A: The Account described in the related Confirmation
Payments to Party B: The Account described in the related Confirmation
Part 5. Other Provisions.
(a) Confirmation. Each Confirmation supplements, forms part of, and will be
read and construed as one with this Agreement. The parties hereby agree
and acknowledge that only one Transaction (the "Sole Transaction") will be
governed by this Agreement, the Confirmation of the Sole Transaction is
dated _______ __, _____ and bears reference number _______, and the
parties will not enter into any additional Transactions governed by this
Agreement or otherwise.
(b) Early Termination.
(1) Section 6(b)(ii) is hereby amended by adding at the end of the first
paragraph the following:
", provided that the party seeking to make the transfer to avoid a
Termination Event shall deliver to Party B (in the case of transfers
by Party A) or to Party A (in the case of transfers by Party B)
written confirmation from each Rating Agency then rating any class
of Notes that such transfer will not result in its then-current
rating of each class of Notes being withdrawn or lowered."
(2) Notwithstanding anything to the contrary in this Agreement, if the
Early Termination Date of the Sole Transaction occurs or is
effectively designated, Party A and Party B agree as follows:
(i) The Calculation Agent shall calculate an amount that would be
payable to or by Party B under this Agreement in respect of such
Early Termination Date (such amount, including any Trust Swap
Payment Amount or Trust Swap Receipt Amount constituting any portion
thereof, the "Termination Payment").
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(ii) To the extent that Party A is required to pay the Termination
Payment to Party B, Party A shall pay such amount in accordance with
the terms of this Agreement.
(iii) To the extent that Party B is required to pay the Termination
Payment to Party A where:
(A) Party B is the Defaulting Party (provided, however, that
to the extent that Party B is the Defaulting Party with respect to
an Event of Default specified in Section 5(a)(i) of the Agreement
(Failure to Pay or Deliver) this priority shall apply only with
respect to the Trust Swap Payment Amount (and not the remainder of
the Termination Payment)), Party B shall pay such amount in
accordance with Section 8.02(c)(i), Section 8.02(e)(i) (to the
extent of any Net Trust Swap Payment Carryover Shortfalls included
in such Termination Payment), Section 10.01 or Section 5.04(b),
priority "SECOND," of the Indenture or Section 2(e)(iv)(C) of the
Administration Agreement, as applicable.
(B) Party A is the Defaulting Party, the Early Termination
Date arises from a Termination Event (other than an Additional
Termination Event) or Party B is the Defaulting Party with respect
to an Event of Default specified in Section 5(a)(i) (exclusive of
any Trust Swap Payment Amount paid pursuant to Clause (A)), Party B
shall pay such Termination Payment in accordance with Section
8.02(d)(viii), Section 8.02(e)(i) (to the extent of any Net Trust
Swap Payment Carryover Shortfalls included in such Termination
Payment), Section 10.01 or Section 5.04(b), priority "ELEVENTH," of
the Indenture.
(C) Party B replaces Party A with a successor to Party A,
Party B and Party A agree to cause the successor to Party A to pay
the Termination Payment (or such lesser amount actually paid by such
successor) to Party A. Any amounts actually received by Party A
under this clause (C) shall reduce the amounts payable pursuant to
clauses (A) and (B); Party A shall pay to Party B any excess of
amounts actually received by Party A under this clause (C) over the
Termination Payment.
(c) No Bankruptcy Petition. Prior to the date that is one year and one day
after the date upon which the final payment is made in respect of the
Notes in accordance with the terms thereof, Party A shall not institute
against, or join any other person in instituting against, Party B, any
bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any federal or state bankruptcy or
similar law.
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(d) Transfer. Section 7 is hereby amended by:
(1) (i) adding the words "(and notice of the transferee to)" after the
word "of" on the third line thereof, and (ii) adding the words
"(subject to providing three Business Days prior written notice of
the transferee to the other party and to each Rating Agency)" after
the word "transfer" on the fourth and seventh line thereof.
(2) adding at the end thereof:
"Any party making any such transfer shall deliver to the other party
written confirmation from each Rating Agency then rating any class
of Notes that such transfer will not result in its then-current
rating of each class of Notes being withdrawn or lowered."
(e) Swap Exemption.
(1) The parties agree that this Agreement and the Sole Transaction are
intended to constitute a "swap agreement" within the meaning of
Commodity Futures Trading Commission ("CFTC") Regulations Section
35.1(b)(1) and Section 101(53)(B) of the U.S. Bankruptcy Code;
(2) Each party represents to the other that it is an "eligible swap
participant" within the meaning of CFTC Regulations Section
35.1(b)(2);
(3) The parties agree that neither this Agreement nor the Sole
Transaction is one of a fungible class of agreements that are
standardized as to their material economic terms, within the meaning
of CFTC Regulations Section 35.2(b); and
(4) Each party represents to the other that the creditworthiness of the
other party was or will be a material consideration in entering into
or determining the terms of this Agreement and the Sole Transaction,
including pricing, cost or credit enhancement terms of this
Agreement or the Sole Transaction, within the meaning of CFTC
Regulations Section 35.2(c).
(f) WAIVER OF RIGHT TO TRIAL BY JURY. EACH OF THE PARTIES HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO A TRIAL BY JURY WITH RESPECT TO ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
TRANSACTION.
(g) Amendments. Section 9(b) of this Agreement is hereby amended by adding the
following after the word "system" in the last line thereof:
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", provided however, that all such amendments, modifications or waivers
shall require the written affirmation of each Rating Agency then rating
any class of Notes that such amendment, modification or waiver shall not
adversely affect its then-current rating of each class of Notes."
(h) ISDA Definitions. Reference is hereby made to the 1991 ISDA Definitions
(the "Definitions"), published by the International Swaps and Derivatives
Association, Inc., which is hereby incorporated by reference herein
without regard to any revision or subsequent edition thereof or as
otherwise provided in any Confirmation.
(i) Rating Agency Downgrade. Anything to the contrary in Section 7
notwithstanding, no later than the 30th day following a Rating Agency
Downgrade, Party A shall, at its expense:
(1) transfer Party A's rights and duties hereunder to (or otherwise
procure a replacement transaction with terms substantially similar to this
Sole Transaction with) a successor to Party A having, or guaranteed by a
Credit Support Provider having, a long-term unsecured and unguaranteed
debt rating of at least "A3" or its equivalent by each Swap Rating Agency;
(2) enter into arrangements, including collateral arrangements,
guarantees, letters of credit or other Credit Support Documents which
will, after review by each Swap Rating Agency, reverse the effect of any
reduction or withdrawal of ratings in connection with such Rating Agency
Downgrade on the Noteholders and the Subordinate Note Insurer; or
(3) pledge Eligible Collateral pursuant to an ISDA Credit Support Annex
equal to the Replacement Cost of the Sole Transaction contemplated by this
Agreement (or otherwise receive written confirmation from each Rating
Agency that each class of Notes will continue to be rated at least the
ratings of such class of Notes prior to such Rating Agency Downgrade) such
that the rating of each class of Notes by each Rating Agency will not be
withdrawn or reduced below the ratings of each such class of Notes prior
to the Rating Agency Downgrade.
Party B shall cooperate with Party to effect the purposes of the
foregoing.
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Eligible Collateral. The following items will qualify as "Eligible
Collateral" for the purpose of Part 5(i)(3) of this Agreement:
Eligible Collateral Valuation Percentage
------------------- --------------------
(A) Cash 100%
(B) negotiable debt obligations issued
by the U.S. Treasury Department 100%
Replacement Cost. For the purpose of Part 5(i)(3) of this Agreement,
"Replacement Cost" means, with respect to the close of business (the
"Valuation Time") on the date of any Rating Agency Downgrade, and weekly
thereafter, the amount, if any, that would be payable to Party B by Party
A (expressed as a positive number) pursuant to Section 6(e)(ii)(2)(A) of
this Agreement as if all Transactions (or Swap Transactions) were being
terminated as of the relevant Valuation Time; provided that Market
Quotation will be determined by the Calculation Agent using its estimates
at mid-market of the amounts that would be paid for Replacement
Transactions (as that term is defined in the definition of "Market
Quotation").
(j) Additional Representations. Section 3 is hereby amended by adding the
following subsections (g), (h) and (i) at the end of such Section:
(g) Non-Reliance. In connection with the negotiation of, the
entering into, and the confirming of the execution of, this
Agreement, any Credit Support Document, the Sole Transaction and any
other documentation relating to this Agreement to which it is a
party or that it is required by this Agreement to deliver: (1) the
other party hereto or thereto is not acting as a fiduciary or
financial or investment advisor for it; (2) it is not relying (for
purposes of making any investment decision or otherwise) upon any
advice, counsel or representations (whether written or oral) of the
other party hereto or thereto other than the representations
expressly set forth in this Agreement, in such Credit Support
Document and in any Confirmation; (3) the other party hereto or
thereto has not given to it (directly or indirectly through any
other person) any assurance, guaranty or representation whatsoever
as to the expected or projected success, profitability, return,
performance, result, effect, consequence, or benefit (either legal,
regulatory, tax, financial, accounting or otherwise) of this
Agreement, such Credit Support Document, such Sole Transaction or
such other documentation; (4) it has consulted with its own legal,
regulatory, tax, business, investment, financial and accounting
advisors to the extent it has deemed necessary, and it has made its
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own investment, hedging and trading decisions (including decisions
regarding the suitability of any Transaction pursuant to this
Agreement) based upon its own judgment and upon any advice from such
advisors as it has deemed necessary and not upon any view expressed
by the other party hereto or thereto; (5) it has determined that the
rates, prices or amounts and other terms of the Sole Transaction and
the indicative quotations (if any) provided by the other party
hereto or thereto reflect those in the relevant market for similar
transactions, and all trading decisions have been the result of
arm's length negotiations between the parties; (6) it is entering
into this Agreement with a full understanding of all the terms,
conditions and risks hereof and thereof (economic and otherwise) and
it is capable of assuming and willing to assume (financially and
otherwise) those risks; and (7) it is a sophisticated institutional
investor.
(h) Line of Business. It has entered into this Agreement (including
the Sole Transaction evidenced hereby) in conjunction with its line
of business (including financial intermediation services) or the
financing of its business.
(i) No Agency. It is entering into this Agreement, any Credit
Support Document to which it is a party, the Sole Transaction and
any other documentation relating to this Agreement or the Sole
Transaction as principal (and not as agent or in any other capacity,
fiduciary or otherwise).
(k) Notices to Party A. Party B agrees that it shall cause to be delivered to
Party A any notices generated or received by Party B in connection with
the Basic Documents.
(l) Limited Recourse to Party B. Notwithstanding anything to the contrary
contained herein, all obligations of Party B shall be payable by Party B
only on each Quarterly Payment Date, first, to the extent funds are
available therefor, under Section 8.02 of the Indenture, second, to the
extent funds are available therefor, under Section 2(e)(iv)(C) of the
Administration Agreement, third, to the extent funds are available
therefor, under Section 10.01 of the Indenture, fourth, to the extent of
funds available therefor, under Section 5.04 of the Indenture and, to the
extent such funds are not available or are insufficient for the payment
thereof, shall not constitute a claim against the Trust to the extent of
such unavailability or insufficiency until such time as the Trust has
assets sufficient to pay such prior deficiency. This paragraph shall
survive the termination of this Agreement but in all cases shall expire
concurrently with the restriction specified in Part 5(c).
(m) No Suspension of Payments. Notwithstanding Section 2(a)(iii) of this
Agreement, Party A shall not suspend any payments due under Section
2(a)(iii) unless:
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(1) the principal of any class of Notes shall have been accelerated in
accordance with the terms of the Indenture following an Event of Default
thereunder; or
(2) an Early Termination Date for the Sole Transaction has occurred or
effectively been designated.
(n) Default Interest. Section 2(e) of this Agreement is hereby deleted in its
entirety.
(o) Redemption Event.
(i) A "Redemption Event" will occur upon the delivery by Party B (or its
designee) to Party A of a "Party B Response" (as defined in Appendix I)
accepting Party A's offer to terminate the Sole Transaction as provided in
Appendix I hereto. Such Party B Response shall be delivered on or before
the related Redemption Date (as defined in the Indenture) and shall
certify that the Minimum Purchase Price (as defined in the Indenture) has
been deposited into the appropriate Trust Account (as defined in the
Indenture). The parties hereto acknowledge and agree that the Indenture
Trustee (as defined in the Indenture) may deliver such Party B Response on
behalf of Party B. Party A hereby agrees that upon receipt of such Party B
Response from the Indenture Trustee certifying that the Minimum Purchase
Price has been deposited in the Collection Account, Party A shall
immediately designate the Redemption Date as an Early Termination Date.
Notwithstanding Section 6(d)(ii), the Payment Date in respect of a
Redemption Event shall be the Early Termination Date so designated. For
avoidance of doubt, no Redemption Event shall occur and no Early
Termination Date shall be effectively designated in respect thereof unless
the Minimum Purchase Price shall have been deposited into the applicable
Trust Account(s) pursuant to Article X of the Indenture.
(ii) The parties hereto acknowledge and agree that USA Group Secondary
Market Services, Inc., as Administrator under the Administration
Agreement, may deliver on behalf of Party B any "Party B Notices" required
or permitted by Appendix I hereto; provided, that in no event shall a
Redemption Event occur upon delivery of any such Party B Notice from the
Administrator.
(p) Statement to Noteholders. Party B will provide to Party A statements
required by Section 2(g) of the Administration Agreement dated as of April
1, 2000 (the "Administration Agreement") among Party B, USA Group
Secondary Market Services, Inc. ("SMS"), as administrator (the
"Administrator"), and Bankers Trust Company, as indenture trustee (the
"Indenture Trustee").
(q) Additional Definitions. Capitalized terms used in this Schedule shall have
the meaning set forth in the Confirmation, the Indenture or, if not
therein, Appendix A to the
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Administration Agreement, without regard to any amendment or supplement
thereto with respect to which Party A has not given its written consent.
"Indenture" means the Indenture dated as of April 1, 2000 between Party B
and Bankers Trust Company, as indenture trustee, without regard to any
amendment or supplement thereto with respect to which Party A has not
given its written consent.
"Net Trust Swap Payment Carryover Shortfall" means, with respect to any
Quarterly Payment Date with respect to which Party B owes any amounts to
Party A in respect of this Agreement, the excess of (i) the Trust Swap
Payment Amount with respect to this Agreement on the preceding Quarterly
Payment Date over (ii) the amount actually received by Party A out of
Available Funds with respect to this Agreement on such preceding Quarterly
Payment Date plus interest on such excess from such preceding Quarterly
Payment Date to the current Quarterly Payment Date at the rate of
Three-Month LIBOR for the related Quarterly Interest Period.
"Rating Agency Downgrade" means that, prior to the earlier of the
Termination Date or the Early Termination Date of the Sole Transaction,
the rating of Party A or any successor thereto is withdrawn or reduced
below "A3" or its equivalent by any Swap Rating Agency then rating Party
A.
"Underwriting Agreement" means the Underwriting Agreement dated as of May
15, 2000 between SMS, as seller, and Deutsche Bank Securities Inc., as
representative of the several underwriters of the Notes.
"Swap Rating Agency" means Xxxxx'x Investors Service, Inc. or Standard &
Poor's Ratings Service, a division of the XxXxxx-Xxxx Companies, Inc.
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The parties executing this Schedule have executed the Master Agreement and have
agreed as to the contents of this Schedule.
___________________________
By: ____________________________
Name:
Title:
SMS STUDENT LOAN TRUST 2000-B
By: Bank One, National Association, not in
its individual capacity but solely as Eligible
Lender Trustee
By: _____________________________________
Name:
Title:
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Appendix I
Redemption of Notes.
1. As promptly as practicable, but in any event not later than two
Business Days after delivery by Party B (or Party B's designee) to Party A of a
notice of proposed redemption (the "Redemption") and request for a quotation of
Termination Payment (the "Party B Notice"), Party A will give notice by
telephone to Party B (which notice will be promptly confirmed in writing to
Party B with a copy of such notice to SMS) (the "Party A Response"):--
(i) offering to terminate the Sole Transaction upon such Redemption; and
(ii) stating in good faith and in reasonable detail the Termination
Payment (the "Redemption Payment") that will be payable by Party B to Party A or
by Party A to Party B on the proposed Redemption Date (as defined in the
Indenture) if the offer is accepted at the time of such offer (or through such
later time, if any, as may be expressed in the offer in the discretion of Party
A) and the Redemption is effected on the Redemption Date; provided, however,
that, if such offer is not accepted at such time, Party A will, promptly after
requests therefor by Party B, make new offers to effect the termination of the
Sole Transaction and will make such new offers in accordance with reasonable
market practice until 11:00 a.m. New York City time on the Business Day two
Business Days prior to the Redemption Date (the "Deadline"). Any such new offer
will contain the statements required by the preceding clauses (i) and (ii) and
will also be a Party A Response, except that:--
(x) only the Party A Response will determine the period during which new
offers are required to be accepted; and
(y) in the case of the Final Offer (as defined below), "Market Quotation"
will be substituted for "Loss" for purposes of determining the Redemption
Payment.
The last such new offer is referred to herein as the "Final Offer." The
Final Offer will be identified as such in the relevant Party A Response. The
Final Offer will not be delivered earlier than the Business Day on which the
Deadline occurs. The Final Offer will be communicated by telephone to Party B
(which Final Offer will be promptly confirmed in writing to Party B with a copy
of such Final Offer to SMS).
2. Each Party A Response will describe the Redemption Payment, even if the
Redemption Payment remains the same and, except as described above with respect
to the Final Offer, each Redemption Payment will be determined using "Loss" and
"Second Method" and based on Party B as the sole Affected Party.
18
3. As promptly as practicable, but in any event not later than the end of
the period during which an offer may be accepted pursuant to the relevant Party
A Response, Party B, acting in good faith and in accordance with reasonable
derivatives market practice, will accept the offer expressed therein by notice
(the "Party B Response") to Party A. Such notice will be by telephone, will be
promptly confirmed in writing and will thereupon be effective, all in accordance
with usual derivatives markets transactions. A copy of each such Party B
Response will be delivered by Party B to SMS. If the offer is accepted as
aforesaid, the Redemption will be effective on the Redemption Date on the terms
expressed in the last relevant Party A Response as accepted by the Party B
Response (subject to the conditions set forth in Part 5(o) of this Agreement).
The Redemption Payment will be the amount described in the Party A Response
accepted by Party B.
4. Party B (or its designee) will have the right to make reasonable
request of Party A for indications of Redemption Payments based on proposed
Redemptions as contemplated by Paragraphs 1 through 3 above, and Party A will
supply such indications promptly and in good faith following any such request.
Except as provided in Paragraphs 1 through 3 above and Part 5(o) of the
Agreement, neither Party B nor its designee will be obligated to effect any such
Redemption.
19
Confirmation
Ref. No. _________
20
Exhibit A Form of Opinion of Party A
__________ __, 2000
SMS Student Loan Trust 2000-B
c/o Bank One, National Association
Xxx Xxxx Xxx Xxxxx
Xxxxx XX0-0000
Xxxxxxx, Xxxxxxxx 00000-0000
XXX Group Secondary Market Services, Inc.
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Secondary Market Company, Inc.
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Xxxxx'x Investors Services, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fitch IBCA, Inc.
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Standard & Poor's Rating Agency
a division of the XxXxxx-Xxxx Companies
00 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
This opinion is furnished to you pursuant to a Master Agreement dated as
of _________, ____ (the "Agreement"), between SMS Student Loan Trust 2000-B and
__________________ (the "Swap Counterparty"). Terms defined in the Agreement are
used herein as defined in the Agreement.
21
I am counsel to the Swap Counterparty and in that capacity have examined
such documents and have conducted such investigations of fact and law as I have
deemed necessary or advisable for the opinions expressed herein. The opinions
expressed herein are limited to questions arising under the laws of the State of
New York, the United States of America [and foreign jurisdiction].
Upon the basis of the foregoing, I am of the opinion that:
1. The Swap Counterparty is a corporation duly organized and validly
existing under the laws of __________.
2. The execution, delivery and performance of the Agreement by the Swap
Counterparty are within the Swap Counterparty's corporate power, have been duly
authorized by all necessary corporate action and do not conflict with, or
constitute a default under, any provisions of the Swap Counterparty's articles
of incorporation or by-laws or any applicable law or regulation or of any
agreement, decree, order, judgment, injunction or other instrument known to me
and binding on or affecting the Swap Counterparty's property or assets.
3. The Agreement has been duly authorized, executed and delivered by the
Swap Counterparty.
4. (i) The governing law clause, subjecting the Agreement to New York law,
is valid under [foreign country] law.
(ii) Under [foreign country] law, New York law will be applied to
the Agreement, except to the extent that any terms of the Agreement or any
provisions of New York law applicable to the Agreement result in the outcome of
their application in a violation of [foreign country] public policy or violate
the purpose of a [foreign country's] statute reflecting such public policy.
(iii) None of the terms of the Agreement result in the outcome of
their application in a violation of [foreign country] public policy or violate
the purpose of a [foreign country] statute reflecting such public policy.
(iv) Assuming that the Agreement is legal, valid, binding and
enforceable under New York law, the Agreement is legal, valid, binding and
enforceable against the Swap Counterparty in accordance with its terms, the
[foreign country] civil procedural rules and, subject to the opinions set forth
in subclauses (i) through (iii) above, the applicable provisions of the chosen
law of New York, except that the enforceability of the Agreement may be limited
by bankruptcy, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally.
22
5. No consent, authorization, license or approval of, or registration,
filing, or declaration with, any governmental authority of [jurisdiction] is
required in connection with the execution, delivery and performance of the
Agreement by the Swap Counterparty.
6. The Agreement will constitute a valid and binding obligation of the
Swap Counterparty enforceable against the Swap Counterparty in accordance with
its terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium, or other laws affecting the enforcement
of creditors' rights generally or by general equity principles; provided that I
do not express any opinion as to the binding affect of any provision of the
Agreement that purports to make any determination conclusive or conclusive
absent manifest error unless such determination is made reasonably and in good
faith.
This opinion is solely for your benefit in connection with the Agreement
referenced above, and may not be relied on, nor copies hereof delivered to any
other person or entity without my prior written consent.
Sincerely yours,
23
Exhibit B Certificates of Incumbency
24
Exhibit C
SMS Student Loan Trust 2000-B
Officer's Certificate
__________________, ______________________ of USA Group Secondary Market
Services, Inc., a Delaware corporation (the "Corporation") and
__________________, ______________________ of the Corporation, each hereby
certify that, to the best of his or her knowledge, after reasonable
investigation:
(i) the representations and warranties of the Seller or the Servicer, as
the case may be, contained in the Trust Agreement, the Loan Sale Agreement, the
Administration Agreement, the Servicing Agreement and the Swap Agreement, as
applicable, are true and correct in all material respects, that each of the
Seller and the Servicer has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied under such agreements at or
prior to the Closing Date, and
(ii) since _________, except as may be disclosed in the Prospectus or the
Private Placement Memorandum, no material adverse change, or any development
involving a prospective material adverse change, in or affecting particularly
the business or properties of the Trust, the Company, the Seller or the
Servicer, as applicable, has occurred.
Capitalized terms used but not defined herein have the meanings specified
in Appendix A to the Administration Agreement dated as of April 1, 2000 among
SMS Student Loan Trust 2000-B, the Corporation and Bankers Trust Company, as
indenture trustee.
IN WITNESS WHEREOF, each of the above-named authorized officers hereunto
signed his or her name.
Dated: _____ __, _____
By: ____________________________
Name:
Title:
25
FORM OF CONFIRMATION
________ __, _____
SMS STUDENT LOAN TRUST 2000-B
c/o Bank One, National Association
1 Bank Xxx Xxxxx
Xxxxx 0XX-0000
Xxxxxxx, Xxx, 00000
Fax: (000) 000-0000
cc: (000) 000-0000
Attention: Corporate Trust Services
From: ___________________________
Attention: _________
Phone: __________
Swap Transaction Ref. No. __________
The purpose of this communication is to set forth the terms and conditions
of the Swap Transaction or the Transaction (Swap Transaction and Transaction are
collectively referred to herein as "Transaction"), entered into between
__________________________ ("Party A") and SMS STUDENT LOAN TRUST 2000-B ("Party
B") on the Trade Date specified below. This communication will constitute, as
applicable, a "Confirmation" as referred to in either the ISDA Master Agreement
or the master agreement entered into by the parties hereto prior to or on the
date hereof (the "Agreement").
The definitions and provisions contained in the 1991 ISDA Definitions, as
supplemented by the 1998 Supplement, (the "Definitions") as published by the
International Swaps and Derivatives Association, Inc. ("ISDA") are incorporated
herein. In the event that Party A and Party B have entered into an Agreement
effective on or prior to the date hereof, this Confirmation supplements, forms
part of and is subject to such Agreement. In the event that Party A and Party B
have not entered into an Agreement, this Transaction and all other Transactions
between the parties hereto are subject to the 1992 Master Agreement
(Multicurrency--Cross Border) as published by ISDA (the "ISDA Master Agreement")
and the parties hereto agree to negotiate in good faith and enter into an
agreement in the form of the ISDA Master Agreement with such modifications as
set forth below and as the parties shall in good faith agree. Upon execution and
delivery of such an Agreement or an Interest Rate and
C-1
Currency Exchange Agreement (the "Exchange Agreement") (the Exchange Agreement
and the Agreement are collectively referred to as the "ISDA Executed Master
Agreement") the terms and conditions of the ISDA Master Agreement will be
superseded thereby and this Confirmation will supplement, form a part of and be
subject to the terms and conditions of the ISDA Executed Master Agreement.
All provisions contained in either the ISDA Master Agreement or the
Agreement or the ISDA Executed Master Agreement (as the case may be), will
govern this Confirmation except as expressly modified below. In the event of any
inconsistency among or between the ISDA Master Agreement, the Agreement or the
ISDA Executed Master Agreement (as the case may be), the Definitions and this
Confirmation, this Confirmation will govern.
1. The terms of the particular Transaction to which this Confirmation relates
are as follows:
Notional Amount: USD __________ with respect to the Initial
Calculation Period and, for each Calculation
Period thereafter, the lesser of (i) the
Outstanding Principal Amount for such
Calculation Period and (ii) the Notional Amount
specified for the first day of such Calculation
Period in Exhibit A.
Where "Outstanding Principal Amount"
for any Calculation Period means the
aggregate principal amount of the
Notes as of the Payment Date on which
such Calculation Period commences
(after giving effect to the
distribution on such date).
Trade Date: __-____-____.
Effective Date: __-____-____.
Termination Date: The earlier of (i) the date on which the
outstanding principal amount of the Notes is
reduced to zero (other than in connection
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with a Redemption Event) and (ii) __-____-____
subject to adjustment in accordance with the
Following Business Day Convention.
Floating Rate Amounts I:
Floating Rate Payer I: Party B.
Floating Rate Payer I
Payment Dates: Each __-__, __-__, __-__, and __-__,
commencing __-__-____, to and including the
Termination Date, subject to adjustment in
accordance with the Following Business Day
Convention.
Floating Rate Payer I
Initial Calculation
Period: From and including __-__-__ to but excluding
________.
Floating Rate Payer I
Floating Rate for
Initial Calculation
Period: To Be Determined.
Floating Rate Payer I
Floating Rate Option: USD -TBILL - H.15; provided that the
Definitions shall be amended (a) by
substituting Telerate Page 56 for all
references to H.15(519) and (b) by striking the
words "U.S. Government Securities/Treasury
Bills/Auction Average (Investment)" and
substituting therefor the words "US Treasury
3MO T-Xxxx Auction Results/Average Investment
Yield".
Floating Rate Payer I
Day Count Fraction: Actual/365.
C-3
Floating Rate Payer I
Designated Maturity: 3 Months.
Floating Rate Payer I
Spread: Plus [no more than 0.80]%.
Floating Rate Payer I
Compounding: Not applicable.
Method of Averaging: Weighted Average.
Rate Cut-Off Days: 6 New York Banking Days prior to the Floating
Rate Payer I Payment Date.
Floating Rate Payer I
Reset Dates: Each New York Business Day.
Business Days: New York.
Floating Rate Payer I
Additional Floating
Amount: The Net Trust Swap Payment Carryover Shortfall
Amount, if any, on the related Payment Date.
Floating Rate Amounts II:
Floating Rate Payer II: Party A.
Floating Rate Payer II
Payment Dates: Each __-___, __-___, __-___, and __-___,
commencing __-___-____, to and including the
Termination Date, subject to adjustment in
accordance with the Following Business Day
Convention.
On the __-___-____ Floating Rate Payer
II Payment Date, the Party A Payment
Amount shall be an amount equal to the
sum of the Floating Rate Amounts II
for (i) the Floating Rate Payer II
Initial Calculation Period and
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(ii) the Floating Rate Payer II Calculation
Period ending on __-___-____.
Floating Rate Payer II
Initial Calculation
Period: From and including __-___-____ to but excluding
___________.
Floating Rate Payer II
Floating Rate for
Initial Calculation
Period: ___%.
Period End Dates: __-___-____ and each Floating Rate Payer II
Payment Date.
Floating Rate Payer II
Floating Rate Option: USD - LIBOR - BBA; provided
that the Floating Rate shall be
determined on the day that is two New
York and London Banking Days prior to
each Reset Date.
Floating Rate Payer II
Day Count Fraction: Actual/360.
Floating Rate Payer II
Designated Maturity: 3 Months.
Floating Rate Payer II
Spread: None.
Floating Rate Payer II
Compounding: Not Applicable.
Floating Rate Payer II
Reset Dates: The first day of each Calculation Period.
Business Days: New York.
Floating Rate Payer II
Additional
C-5
Floating Amount: The Net Trust Swap Receipt Carryover Shortfall
Amount, if any, on the related Payment Date.
2. Account Details:
Payments to Party A:
_____________
_____________
_____________
ABA: _________
FAO: ___________________________
Account No.: ________
Payments to Party B:
Bank One, National Association
_____________
_____________
ABA: _________
Clearing Account: _________
Credit Trust #: _________
Attn: _________, ref: SMS Student Loan Trust 2000-B
3. Other Terms:
(a) Each capitalized term used in this Confirmation and not defined in
this Confirmation or the Definitions shall have the meaning assigned
in the Agreement.
(b) In the event this Transaction terminates prior to the payment of the
entire Net Trust Swap Payment Carryover Shortfall or Net Trust Swap
Receipt Carryover Shortfall, such amount will remain due and payable
and shall be paid in accordance with the terms of the Indenture.
C-6
(c) Each party acknowledges and agrees that, except as provided herein,
the scheduled Notional Amount may not be adjusted without the prior
written consent of the other party. Party B represents, warrants and
covenants that so long as no Early Termination Date has occurred or
been effectively designated or any amounts remain due and payable to
Party A in respect of this Transaction, Party B will not enter into
any swap transaction (other than this Transaction) without the prior
written consent of Party A.
(d) If either party proposes to amend this Transaction pursuant to
Section 6.03(e) of the Trust Agreement among USA Group Secondary
Market Services, Inc., as depositor, Secondary Market Company, Inc.
and Bank One, National Association, as eligible lender trustee, then
the parties will negotiate in good faith and reasonably regarding
the terms, conditions and documentation relating to an appropriate
amendment to this Transaction and an appropriate amendment payment
relating thereto. The effectiveness of such amendment will be
subject to the conditions that (i) the amendment payment, if any, is
made by or to Party B on the proposed effective date of such
amendment and (ii) no Event of Default or Termination Event has
occurred and is continuing on such proposed effective date. For
avoidance of doubt, the parties acknowledge and agree that the
amendment payment, if any, will be a payment pursuant to Section 2
of this Transaction for purposes of determining Net Trust Swap
Payment or Net Trust Swap Receipt, as applicable.
C-7
Please promptly confirm that the preceding correctly sets forth the terms of our
agreement by executing the copy of this Confirmation enclosed for that purpose
and returning it to us.
Yours sincerely,
_______________________
By:____________________________
Name:
Title:
Confirmed as of the date first written:
SMS STUDENT LOAN TRUST 2000-B
By: Bank One, National Association,
not in its individual capacity but solely
as Eligible Lender Trustee
By: ________________________________
Name:
Title:
C-8
Exhibit A
Calculation Period
Commencement Date Notional Amount
----------------- ---------------
C-9
