Execution Copy
ADMINISTRATION AGREEMENT dated as of April 19, 1999, among
SMS STUDENT LOAN TRUST 1999-B, a Delaware trust (the "Issuer"), USA GROUP
SECONDARY MARKET SERVICES, INC., a Delaware corporation, as administrator (the
"Administrator"), and HSBC BANK USA, 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 19, 1999 (the "Trust Agreement") among the Seller, as
depositor, Secondary Market Company, Inc., a Delaware corporation (the
"Company"), and The First National Bank of Chicago, 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 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 19, 1999 (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 the Swap Counterparty 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 Delayed Delivery 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 the Swap Counterparty 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 the Swap Counterparty 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
the Swap Counterparty 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 the Swap Counterparty
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 the Swap Agreement, performing all
obligations of the Issuer under Part 5(b), 5(i) and Part 5(o) of the
Swap Agreement, and providing all notices and consents required by the
Issuer under the Swap Agreement.
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 for Delayed Delivery Loans or the Loan Purchase
Amount (or if the Parity Date has occurred, the Purchase Collateral
Balance) for Delayed Delivery Loans, New Loans or Serial Loans
purchased by the Eligible Lender Trustee on behalf of the Issuer on
such date and, on
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each Transfer Date after the end of the Revolving Period, the Purchase
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 LIBOR Rate, the Class A-2
Note LIBOR Rate, the Subordinate Note LIBOR Rate and the Adjusted Student Loan
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 the Swap Counterparty 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 the name of the Indenture Trustee an Eligible Deposit
Account (the "Collection Account"), bearing a designation clearly indicating
that the funds deposited therein are held for the benefit of the Indenture
Trustee, on behalf of the Noteholders and the Swap Counterparty. 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 HSBC Bank USA.
(ii) The Administrator shall establish and maintain in the
name of the Indenture Trustee an Eligible Deposit Account (the "Reserve
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Indenture Trustee, on behalf of the
Noteholders and the Swap Counterparty. 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 HSBC Bank USA.
(iii) The Administrator, for the benefit of the Noteholders
and the Swap Counterparty, shall establish and maintain in the name of the
Indenture Trustee an Eligible Deposit Account (the "Collateral Reinvestment
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 and the Swap Counterparty. 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 HSBC Bank USA.
(iv) The Administrator, for the benefit of the Noteholders and
the Swap Counterparty, if there are funds to be deposited in a delayed delivery
loan funding account, shall establish and maintain in the name of the Indenture
Trustee an Eligible Deposit Account (the "Delayed Delivery Loan Funding
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 and the Swap Counterparty. The Delayed Delivery Loan Funding Account
will initially be established as a segregated trust account in the name of the
Indenture Trustee with the corporate trust department of HSBC Bank USA.
(v) Funds on deposit in the Collection Account, the Reserve
Account, the Delayed Delivery Loan Funding 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
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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 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 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 the Swap Counterparty, 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 the Swap
Counterparty. 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 the Swap
Counterparty 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;
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(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
(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;
(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
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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 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;
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(B) to the Administrator, from the amount of the
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;
(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 Amount, if any, and the remainder of any
Termination Payment to the extent that the Trust is the
defaulting party (other than an Event of Default specified in
Section 5(a)(i) of the Swap Agreement), 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)(iv) 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, 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 2009 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) to pay to the Indenture
Trustee for distribution to Noteholders pursuant to Section 8.02(d) of the
Indenture, out of the remaining amount of such excess, an amount equal to the
aggregate unpaid Noteholders' Interest Basis Carryover; (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 the Swap Counterparty, all Termination Payments due
under the Swap Agreement to the extent that the Swap Counterparty is the
Defaulting Party (as such term is defined in the Swap Agreement), the Trust is
the defaulting party under Section 5(a)(i) of the Swap Agreement or a
Termination Event 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
Noteholders' Interest Basis Carryover, 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) 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) 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
Amount, if any, the remainder of any Termination Payment to the Swap
Counterparty to the extent that the Trust is the defaulting party
(other than an Event of Default specified in Section 5(a)(i) of the
Swap Agreement), the Subordinate Noteholders' Interest Distribution
Amount, the Senior 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 the Swap
Counterparty pursuant to Section 2(d)(v)(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, 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 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
15
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 the Swap Counterparty (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) the amount, if any, of such distribution
allocable to any Senior Noteholders' Interest Basis Carryover and any
Subordinate Noteholders' Interest Basis Carryover, together with any
remaining outstanding amount of each thereof;
(F) the Pool Balance as of the close of business on
the last day of the preceding Collection Period, 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;
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(H) the Note Rate applicable with respect to each
distribution referred to in clauses (B), (C) and (D) above, indicating
whether such interest rate was calculated based on the Adjusted Student
Loan Rate or based on the Class A-1 Note LIBOR Rate, Class A-2 Note
LIBOR Rate or Subordinate Note LIBOR Rate and specifying what each such
Note Rate would have been using the alternate basis for such
calculation;
(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 the Swap
Counterparty on such Quarterly Payment Date, the amount of any Net
Trust Swap Payment Carryover Shortfall for such Quarterly Payment Date,
the Trust Swap Receipt Amount 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 the October 1999 Quarterly Payment Date, the
principal balance and number of Delayed Delivery Loans, if any,
conveyed to the Issuer during the related Collection Period, the
aggregate Loan Purchase Amounts thereof and the portion thereof
attributable to Purchase Premium Amounts;
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(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;
(Q) for the Quarterly Payment Date on or immediately
following the end of the Revolving Period, the amount remaining on
deposit in the Collateral Reinvestment Account that has not been used
to make Additional Fundings;
(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 the Swap Counterparty 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:
18
(i) the amendment of or any supplement to the Indenture;
(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) Delayed Delivery Loan Funding Account. (i) On the Special
Determination Date, the Administrator shall instruct the Indenture Trustee in
writing to withdraw from the Delayed Delivery Loan Funding Account, to the
extent of the funds on deposit therein, an amount equal to the Loan Purchase
Amount for the Delayed Delivery 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.
(ii) On the Quarterly Payment Date occurring after the Special
Determination Date, the Administrator shall instruct the Indenture Trustee in
writing to withdraw from the
19
Delayed Delivery Loan Funding 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(g) of the Indenture.
3. Annual Statement as to Compliance. (a) The Administrator
shall deliver to the Seller, the Eligible Lender Trustee, the Indenture Trustee
and the Swap Counterparty, on or before December 31 of each year beginning
December 31, 1999, 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, 1999)
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 the Swap
Counterparty, 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
the Swap Counterparty on or before December 31 of each year beginning December
31, 1999, a report addressed to the Administrator and to the Seller, the
Eligible Lender Trustee, the Indenture Trustee and the Swap Counterparty (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, 1999) and that, on the basis of the accounting and
auditing procedures considered appropriate under the circumstances, such firm is
of the opinion that the 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.
20
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 the Swap Counterparty.
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 the Swap Counterparty from time to time such
additional information regarding the Collateral as the Issuer or the Swap
Counterparty shall reasonably request. Following the time, if any, that the Swap
Counterparty's counterparty ratings fall below "Aa3" or its 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 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
21
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 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
22
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
the Swap Counterparty.
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 the Swap Counterparty ) 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 Counterparty gives its 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.
(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
23
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,
the Swap Counterparty 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 1999-B
c/o First Chicago Delaware Inc.
FCC National Bank
000 Xxxx 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
The First National Bank of Chicago
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Administration
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
24
(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
HSBC Bank USA
000 Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Corporate Trust Department
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(e) if to the Swap Counterparty, to
Xxxxxxx Xxxxx Derivative Products AG
Xxxxxxxxxxxxxxxxxx 0, 0xx Xxxxx
0000 Xxxxxx
Xxxxxxxxxxx
Attention: Manager
Telephone: 000 000 000 0000
Facsimile: 011 000 000 0000
25
with a copy to
Xxxxxxx Xxxxx & Co.
Office of General Counsel
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000;
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.
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 the Swap Counterparty, 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, the Swap
Counterparty 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.
26
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.
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,
the Swap Counterparty 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.
27
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 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 the Swap Counterparty 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 the Swap Counterparty, 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 the Swap Counterparty, 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
28
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.
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 the Swap
Counterparty 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 the
Swap Counterparty 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 The First National Bank of Chicago not in its individual
capacity but solely in its capacity as Eligible Lender Trustee of the Issuer and
in no event shall The First National Bank of Chicago in its individual capacity
or 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 HSBC Bank USA not in its individual capacity but solely as
Indenture Trustee and in no event shall HSBC Bank USA have any liability for the
representations, warranties, covenants, agreements or other obligations of the
29
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 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
the Swap Counterparty 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
the Swap Counterparty, 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 the Swap
Agreement.
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
the Swap Counterparty, such consent shall not be unreasonably withheld, delayed
or conditioned.
[Signatures Follow on Next Page]
30
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 1999-B
By: THE FIRST NATIONAL BANK OF
CHICAGO, not in its individual
capacity but solely as
Eligible Lender Trustee
By:___________________________
Name:
Title:
HSBC BANK USA, not in its individual
capacity but solely as Indenture
Trustee
By:___________________________
Name:
Title:
USA GROUP SECONDARY MARKET SERVICES,
INC., as Administrator
By:___________________________
Name:
Title:
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 THE FIRST NATIONAL BANK OF
CHICAGO, a national bank, not in its individual capacity but solely as eligible
lender trustee ("Eligible Lender Trustee") for the SMS Student Loan Trust 1999-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 19, 1999, among the Trust, USA Group Secondary Market
Services, Inc., as Administrator, and HSBC Bank USA, 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 19th day of April 1999.
THE FIRST NATIONAL BANK OF
CHICAGO, 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 [ ] day of May
1999.
________________________________________
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 term s 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
$1,000 original
principal amount of Notes)
B-1
Class A-2 __________ ($_______ per
$1,000 original
principal amount
of Notes)
Subordinate __________ ($_______ per
$1,000 original
principal amount of Notes)
(iii) Amount of Senior Noteholders' Interest Basis Carryover
being paid or distributed (if any) and amount remaining
(if any):
(a) Distributed:__________ ($_______ per
$1,000 original principal
amount of Senior Notes)
(b) Balance:______________ ($_______ per
$1,000 original) principal
amount of Senior Notes)
(iv) Amount of Subordinate Noteholders' Interest Basis Carryover being paid
or distributed (if any) and amount remaining (if any):
(a) Distributed:__________ ($_______ per
$1,000 original principal amount
of Notes)
(b) Balance:______________ ($_______ per
$1,000 original) principal amount
of Notes)
(v) Pool Balance at end of related Collection Period: _____________
(vi) After giving effect to distributions on this Quarterly Payment Date:
___________________
(a) (1) outstanding principal amount of Class A-1 Notes:__________
(2) Class A-1 Note Pool Factor:__________
(b) (1) outstanding principal amount of Class A-2 Notes:__________
(2) Class A-2 Note Pool Factor:__________
B-2
(c) (1) outstanding principal amount of Subordinate Notes:__________
(2) Subordinate Note Pool Factor:__________
(vii) Applicable Interest Rate:
In general:
(1) Three-Month LIBOR for the LIBOR Reset Period
since the previous Quarterly Payment Date was _____%;
and
(2) the Adjusted Student Loan Rate for such Quarterly
Interest Period was _____%.
Class A-1 Note Rate: _____% (based on
[Note LIBOR Rate]
[Adjusted Student Loan Rate])
Class A-2 Note Rate: _____% (based on
[Note LIBOR Rate]
[Adjusted Student Loan Rate])
Subordinate Note Rate: _____% (based on
[Note LIBOR Rate]
[Adjusted Student Loan Rate])
(viii) Amount of Servicing Fee for related Collection Period including a
breakdown of the components of the Servicing Fee attributable to each
of the items specified in clauses II(i) through (ix) Of section 3.06 Of
the servicing agreement and the amount of any Servicing Fee Shortfall
for such Quarterly Payment Date and for each Monthly Payment Date
following the immediately preceding Quarterly Payment Date:
(ix) Amount of Administration Fee for related Collection Period:__________
($_______ per $1,000 original principal amount of Notes)
(x) the Trust Swap Payment Amount paid to the Swap Counterparty on such
Quarterly Payment Date: ______; the amount of any Net Trust Swap
Payment Carryover Shortfall for such Quarterly Payment Date: ____; the
Trust Swap Receipt Amount paid to the Trust on such Quarterly Payment
Date: ____; the Net Trust Swap Receipt Carryover Shortfall for such
Quarterly Payment Date:______
B-3
(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]
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: _____
B-4
(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 Delayed Delivery Loan Funding Account during the
related Collection Period: ________________.
(xxiv) Amount in the Delayed Delivery Loan Funding Account (after giving
effect to (xxiii)): _______________.
B-5
(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
