SCHEDULE
to the Master Agreement
dated as of May 21, 1999
between
Xxxxxxx Xxxxx Derivative Products AG
("Party A"),
a corporation organized under the laws
of Switzerland
and
SMS Student Loan Trust 1999-B,
("Party B")
a Delaware business trust.
Part 1. Termination Provisions
In this Agreement:-
(a) "Specified Entity" means in relation to Party A for the purpose of:-
Section 5(a)(v) Not Applicable.
Section 5(a)(vi) Not Applicable.
Section 5(a)(vii) Not Applicable.
Section 5(b)(iv) Not Applicable.
and in relation to Party B for the purpose of:-
Section 5(a)(v) Not Applicable.
Section 5(a)(vi) Not Applicable.
Section 5(a)(vii) Not Applicable.
Section 5(b)(iv) Not Applicable.
(b) "Specified Transaction" will have the meaning specified in Section 14 of
this Agreement.
(c) "Additional Termination Event" will not apply to Party A and will apply,
with respect to Redemption Event only, to Party B. The occurrence of a
Redemption Event will constitute an Additional Termination Event in
respect of which Party B will be the sole Affected Party.
(d) The provisions of Section 5(a) and Section 5(b) will apply to Party A and
to Party B as follows:-
The designation below of an Event of Default as being "Applicable" to a
specific party means that upon the occurrence and continuation of such an
Event of Default with respect to such party, the other party shall have
the right of a Non-defaulting Party to
designate an Early Termination Date for the Sole Transaction (as defined
below) under Section 6 of this Agreement, and conversely, the designation
of an Event of Default as being "Not Applicable" to a party means that
upon the occurrence and continuation of such an Event of Default with
respect to such party, the other party shall not have the right to
designate an Early Termination Date for the Sole Transaction with respect
to such event under Section 6 of this Agreement.
Section 5(a) Party A Party B
(i) "Failure to Pay or Deliver" Applicable.
"Failure to Pay or Deliver" is Applicable to Party B; provided
that Party B has funds available to make payments in
accordance with the terms of the Indenture and the Trustee has
failed to make any such payments in violation of the terms of
the Indenture.
(ii) "Breach of Agreement" Applicable. Not Applicable.
(iii) "Credit Support Default" Applicable. Not Applicable.
(iv) "Misrepresentation" Applicable. Not Applicable.
(v) "Default under Specified
Transaction" Not Applicable. Not Applicable.
(vi) "Cross Default" Not Applicable. Not Applicable.
(vii) "Bankruptcy" Applicable. Applicable.
(viii) "Merger Without Assumption" Applicable. Not Applicable.
(ix) "Additional Event of Default" Not Applicable. Applicable
specified 1(h) (Acceleration
of Notes) in Part Not Applicable.
Section 5(b)
Neither party shall be entitled to designate an Early Termination Date as
a result of the occurrence and continuation of an event described in
Section 5(b)(iii) (Tax Event Upon Merger).
(e) Payments on Early Termination. For the purpose of Section 6(e):-
(i) Except as provided in Appendix I (Redemption of Notes) Market
Quotation will apply.
(ii) The Second Method will apply.
(f) "Termination Currency" means United States Dollars ("USD").
(g) The "Automatic Early Termination" provisions of Section 6(a) will not
apply to Party A or Party B.
(h) Additional Event of Default. Section 5(a) of the Agreement is hereby
amended by: (i) deleting the word "or" at the end
2
of Section 5(a)(vii), (ii) deleting the period at the end of Section
5(a)(viii) and adding "; or" at the end thereof and (iii) adding the
following language at the end of Section 5(a):
"(ix) Additional Event of Default. The principal of any class of Notes
shall have been declared or become immediately due and payable in
accordance with the terms of the Indenture (an "Acceleration of
Notes") following an "event of default" thereunder (it being
understood that such event will constitute an Event of Default
solely with respect to SMS Student Loan Trust 1999-B)."
Part 2. Tax Representations.
(a) Payer Tax Representations. For the purpose of Section 3(e) of this
Agreement, Party A and Party B will each make the following representation:
It is not required by any applicable law, as modified by the practice of
any relevant governmental revenue authority, of any Relevant Jurisdiction
to make any deduction or withholding for or on account of any Tax from any
payment (other than interest under Section 2(e), 6(d)(ii) or 6(e) of this
Agreement) to be made by it to the other party under this Agreement. In
making this representation, it may rely on (i) the accuracy of any
representations made by the other party pursuant to Section 3(f) of this
Agreement, (ii) the satisfaction of the agreement contained in Section
4(a)(i) or 4(a)(iii) of this Agreement, and the accuracy and effectiveness
of any document provided by the other party pursuant to Section 4(a)(i) or
4(a)(iii) of this Agreement and (iii) the satisfaction of the agreement of
the other party contained in Section 4(d) of this Agreement, provided that
it shall not be a breach of this representation where reliance is placed
on clause (ii) and the other party does not deliver a form or document
under Section 4(a)(iii) by reason of material prejudice to its legal or
commercial position.
(b) Payee Tax Representations. For the purpose of Section 3(f) of this
Agreement, Party A and Party B make the following representation:-
(i) The following representation will apply to Party A:-
Each payment received or to be received by it in connection with this
Agreement will be effectively connected with its conduct of a trade or
business in the Specified Jurisdiction.
"Specified Jurisdiction" means the United States of America.
(ii) The following representation will apply to Party B:-
It is a business trust organized under the laws of the State of Delaware.
3
Part 3. Agreement to Deliver Documents.
For the purpose of Section 4(a)(i) and Section 4(a)(ii) of this Agreement, Party
A and Party B each agree to deliver the following documents, as applicable:-
(a) Tax forms, documents or certificates to be delivered are:
Party required to Form, Document Date by which
deliver document or Certificate to be Delivered
---------------- -------------- ---------------
Party A An executed U.S. Internal (i) Before the first Payment
Revenue Service 4224 Date under Form this
(or any successor thereto) Agreement, (ii) promptly upon
reasonable demand by Party B,
and (iii) promptly upon
learning that any such Form
previously provided by Party A
has become obsolete or
incorrect.
Party B An executed U.S. Internal (i) Before the first Payment
Revenue Service Form W-9 Date under this Agreement,
(or any successor thereto), (ii) promptly upon demand by
including appropriate Party A, and (iii) reasonable
attachments promptly upon learning that
any such form previously
provided by Party B has become
obsolete or incorrect.
(b) Other documents to be delivered are:
Party required to Form, Document Date by which Covered by
deliver document or Certificate to be Delivered Section 3(d)
---------------- -------------- --------------- ------------
Party A An opinion of counsel to Party A Upon execution of this No
substantially in the form of Exhibit A Agreement.
to this Schedule.
Party A An incumbency certificate with respect Upon execution of this Yes
to the signatory of this Agreement. Agreement.
Party B Opinions of counsel rendered in Upon execution of this No
connection with the issuance of the Agreement.
Notes reasonably satisfactory in form
and substance to Party A.
4
Party required to Form, Document Date by which Covered by
deliver document or Certificate to be Delivered Section 3(d)
---------------- -------------- --------------- ------------
Party B An incumbency certificate with respect Upon execution of this Yes
to the signatory of this Agreement. Agreement.
Party B Executed copies of all Basic Documents Upon execution of this Yes, with respect to
and all opinions required by the Agreement. certificates and other
Senior Note Underwriting Agreement or factual statements;
the Subordinate Note Purchase No, with respect to opinions
Agreement (and, to the extent not and agreements.
otherwise covered, an ERISA Opinion
and a Tax Opinion) each such opinion
and agreement reasonably satisfactory
in form and substance to Party A and
each opinion naming Party A as
addressee or, in the case of the
Underwriter's Opinion, a reliance
party with respect to all opinions
therein except the 10b-5 opinion.
Party B An executed original of the Officer's Upon execution of this Yes.
Certificate of SMS, substantially in Agreement.
the form of Exhibit C and reasonably
satisfactory in form and substance to
Party A.
Part 4. Miscellaneous.
(a) Addresses for Notices. For the purpose of Section 12(a):
Address for notices or communications to Party A:
Address: Xxxxxxx Xxxxx Derivative Products AG
Xxxxxxxxxxxxxxxxxx 0, 0xx Xxxxx
0000 Xxxxxx
Xxxxxxxxxxx
Attention: Manager
Telephone: 000 000 000 0000
5
Facsimile: 011 000 000 0000
With a copy to:
Address: Xxxxxxx Xxxxx & Co.
Office of General Counsel
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxx
Address for notices or communications to Party B:-
Address: SMS Student Loan Trust 1999-B
c/o First Chicago Delaware, Inc., as Trustee
FCC National Bank
000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Administration
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with copies to:
Address: SMS Student Loan Trust 1999-B
c/o The First National Bank of Chicago, as Trustee
Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Administration
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Address: USA Group Secondary Market Services, Inc.
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx
XX 00000-0000
Address for notices or communications to Moody's:
Address: Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: ABS Monitoring Department
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Address for notices or communications to Fitch:-
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Address: Fitch IBCA, Inc.
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Asset Backed Monitoring Unit
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Notices under this Agreement and the Transaction shall be sent to
Moody's and S&P only to the extent specifically required in the
transaction confirmation.
(b) Process Agent. For the purpose of Section 13(c):
Party A appoints as its Process Agent:
Xxxxxxx Xxxxx & Co., Inc.
Office of General Counsel
World Financial Center
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxx
Party B appoints as its Process Agent:
The First National Bank of Chicago
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Corporate Trust Services Division
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(c) Offices. The provisions of Section 10(a) will not apply to Party A and
will not apply to Party B.
(d) Multibranch Party. For the purpose of Section 10(c) of this Agreement:--
Party A is not a Multibranch Party.
Party B is not a Multibranch Party.
(e) Calculation Agent. The Calculation Agent shall be Party A. In the case of
a dispute involving any calculation made by the Calculation Agent under
this Agreement (each, a "Disputed Calculation"), Party A and Party B will
appoint a mutually acceptable Reference Bank or Reference Dealer, as
applicable, who will (i) with respect to any calculation relating to a
Terminated Transaction, determine the Disputed Calculation by reference to
the methodology set forth in the definition of Market Quotation and (ii)
with respect to any other calculation, determine the Disputed Calculation
by reference to a mutually acceptable methodology. If such Reference Bank
or Reference Dealer
7
determines that no quotations are available for a particular Disputed
Calculation, then the Calculation Agent's original calculations will be
used for that Disputed Calculation. All calculations made by the
Calculation Agent in accordance with this Part 4(e) shall be binding
absent manifest error.
(f) Credit Support Document. Details of any Credit Support Document:-
In the case of Party A: Not Applicable.
In the case of Party B: Not Applicable.
(g) Credit Support Provider.
Credit Support Provider means in relation to Party A: Not Applicable.
Credit Support Provider means in relation to Party B: Not Applicable.
(h) "Affiliate" will have the meaning specified in Section 14 of this
Agreement.
(i) GOVERNING LAW. THIS AGREEMENT WILL BE GOVERNED BY, CONSTRUED AND ENFORCED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK (WITHOUT REGARD TO
CHOICE OF LAW DOCTRINE).
(j) Netting of Payments. Section 2(c)(ii) will not apply.
(k) Account Detail:
Payments to Party A: The Account described in the related Confirmation
Payments to Party B: The Account described in the related Confirmation
Part 5. Other Provisions.
(a) Confirmation. Each Confirmation supplements, forms part of, and will be
read and construed as one with this Agreement. The parties hereby agree
and acknowledge that only one Transaction (the "Sole Transaction") will be
governed by this Agreement, the Confirmation of the Sole Transaction is
dated May 12, 1999 and bears reference number 99 DP0018, and the parties
will not enter into any additional Transactions governed by this Agreement
or otherwise.
(b) Early Termination.
(1) Section 6(b)(ii) is hereby amended by adding at the end of the first
paragraph the following:
", provided that the party seeking to make the transfer to avoid a
Termination Event shall deliver to Party B (in the case of transfers
by Party A) or to Party A (in the case of transfers by Party B)
written confirmation from each Rating
8
Agency then rating any class of Notes that such transfer will not
result in its then-current rating of each class of Notes being
withdrawn or lowered."
(2) Notwithstanding anything to the contrary in this Agreement, if the
Early Termination Date of the Sole Transaction occurs or is
effectively designated, Party A and Party B agree as follows:
(i) The Calculation Agent shall calculate an amount that would be
payable to or by Party B under this Agreement in respect of such
Early Termination Date (such amount, including any Trust Swap
Payment Amount or Trust Swap Receipt Amount constituting any portion
thereof, the "Termination Payment").
(ii) To the extent that Party A is required to pay the Termination
Payment to Party B, Party A shall pay such amount in accordance with
the terms of this Agreement.
(iii) To the extent that Party B is required to pay the Termination
Payment to Party A where:
(A) Party B is the Defaulting Party (provided, however, that
to the extent that Party B is the Defaulting Party with respect to
an Event of Default specified in Section 5(a)(i) of the Agreement
(Failure to Pay or Deliver) this priority shall apply only with
respect to the Trust Swap Payment Amount (and not the remainder of
the Termination Payment)), Party B shall pay such amount in
accordance with Section 8.02(c)(i), Section 8.02(e)(i) (to the
extent of any Net Trust Swap Payment Carryover Shortfalls included
in such Termination Payment), Section 10.01 or Section 5.04(b),
priority "SECOND," of the Indenture or Section 2(e)(iv)(C) of the
Administration Agreement, as applicable.
(B) Party A is the Defaulting Party, the Early Termination
Date arises from a Termination Event (other than an Additional
Termination Event) or Party B is the Defaulting Party with respect
to an Event of Default specified in Section 5(a)(i) (exclusive of
any Trust Swap Payment Amount paid pursuant to Clause (A)), Party B
shall pay such Termination Payment in accordance with Section
8.02(d)(viii), Section 8.02(e)(i) (to the extent of any Net Trust
Swap Payment Carryover Shortfalls included in such Termination
Payment), Section 10.01 or Section 5.04(b), priority "ELEVENTH," of
the Indenture.
(C) Party B replaces Party A with a successor to Party A,
Party B and Party A agree to cause the successor to Party A to pay
the Termination Payment (or such lesser amount actually paid by such
successor) to Party A. Any amounts actually received by Party A
under this clause (C) shall reduce the amounts payable pursuant to
clauses (A) and (B); Party A shall pay to Party B any excess of
amounts actually received by Party A under this clause (C) over the
Termination Payment.
9
(c) No Bankruptcy Petition. Prior to the date that is one year and one day
after the date upon which the final payment is made in respect of the
Notes in accordance with the terms thereof, Party A shall not institute
against, or join any other person in instituting against, Party B, any
bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings, or other proceedings under any federal or state bankruptcy or
similar law.
(d) Transfer. Section 7 is hereby amended by:
(1) (i) adding the words "(and notice of the transferee to)" after the
word "of" on the third line thereof, and (ii) adding the words
"(subject to providing three Business Days prior written notice of
the transferee to the other party and to each Rating Agency)" after
the word "transfer" on the fourth and seventh line thereof.
(2) adding at the end thereof:
"Any party making any such transfer shall deliver to the other party
written confirmation from each Rating Agency then rating any class
of Notes that such transfer will not result in its then-current
rating of each class of Notes being withdrawn or lowered."
(e) Swap Exemption.
(1) The parties agree that this Agreement and the Sole Transaction are
intended to constitute a "swap agreement" within the meaning of
Commodity Futures Trading Commission ("CFTC") Regulations Section
35.1(b)(1) and Section 101(53)(B) of the U.S. Bankruptcy Code;
(2) Each party represents to the other that it is an "eligible swap
participant" within the meaning of CFTC Regulations Section
35.1(b)(2);
(3) The parties agree that neither this Agreement nor the Sole
Transaction is one of a fungible class of agreements that are
standardized as to their material economic terms, within the meaning
of CFTC Regulations Section 35.2(b); and
(4) Each party represents to the other that the creditworthiness of the
other party was or will be a material consideration in entering into
or determining the terms of this Agreement and the Sole Transaction,
including pricing, cost or credit enhancement terms of this
Agreement or the Sole Transaction, within the meaning of CFTC
Regulations Section 35.2(c).
(f) WAIVER OF RIGHT TO TRIAL BY JURY. EACH OF THE PARTIES HEREBY IRREVOCABLY
WAIVES ANY AND ALL RIGHT TO A TRIAL BY JURY WITH RESPECT TO ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY
TRANSACTION.
10
(g) Amendments. Section 9(b) of this Agreement is hereby amended by adding the
following after the word "system" in the last line thereof:
", provided however, that all such amendments, modifications or waivers
shall require the written affirmation of each Rating Agency then rating
any class of Notes that such amendment, modification or waiver shall not
adversely affect its then-current rating of each class of Notes."
(h) ISDA Definitions. Reference is hereby made to the 1991 ISDA Definitions
(the "Definitions"), published by the International Swaps and Derivatives
Association, Inc., which is hereby incorporated by reference herein
without regard to any revision or subsequent edition thereof or as
otherwise provided in any Confirmation.
(i) Rating Agency Downgrade. Anything to the contrary in Section 7
notwithstanding, no later than the 30th day following a Rating Agency
Downgrade, Party A shall, at its expense:
(1) transfer Party A's rights and duties hereunder to (or otherwise
procure a replacement transaction with terms substantially similar to this
Sole Transaction with) a successor to Party A having, or guaranteed by a
Credit Support Provider having, a long-term unsecured and unguaranteed
debt rating of at least "A3" or its equivalent by each Swap Rating Agency;
(2) enter into arrangements, including collateral arrangements,
guarantees, letters of credit or other Credit Support Documents which
will, after review by each Swap Rating Agency, reverse the effect of any
reduction or withdrawal of ratings in connection with such Rating Agency
Downgrade on the Noteholders and the Subordinate Note Insurer; or
(3) pledge Eligible Collateral pursuant to an ISDA Credit Support Annex
equal to the Replacement Cost of the Sole Transaction contemplated by this
Agreement (or otherwise receive written confirmation from each Rating
Agency that each class of Notes will continue to be rated at least the
ratings of such class of Notes prior to such Rating Agency Downgrade) such
that the rating of each class of Notes by each Rating Agency will not be
withdrawn or reduced below the ratings of each such class of Notes prior
to the Rating Agency Downgrade.
Party B shall cooperate with Party to effect the purposes of the
foregoing.
Eligible Collateral. The following items will qualify as "Eligible
Collateral" for the purpose of Part 5(i)(3) of this Agreement:
11
Eligible Collateral Valuation Percentage
------------------- --------------------
(A) Cash 100%
(B) negotiable debt obligations issued by the 100%
U.S. Treasury Department
Replacement Cost. For the purpose of Part 5(i)(3) of this Agreement,
"Replacement Cost" means, with respect to the close of business (the
"Valuation Time") on the date of any Rating Agency Downgrade, and weekly
thereafter, the amount, if any, that would be payable to Party B by Party
A (expressed as a positive number) pursuant to Section 6(e)(ii)(2)(A) of
this Agreement as if all Transactions (or Swap Transactions) were being
terminated as of the relevant Valuation Time; provided that Market
Quotation will be determined by the Calculation Agent using its estimates
at mid-market of the amounts that would be paid for Replacement
Transactions (as that term is defined in the definition of "Market
Quotation").
(j) Additional Representations. Section 3 is hereby amended by adding the
following subsections (g), (h) and (i) at the end of such Section:
(g) Non-Reliance. In connection with the negotiation of, the
entering into, and the confirming of the execution of, this
Agreement, any Credit Support Document, the Sole Transaction and any
other documentation relating to this Agreement to which it is a
party or that it is required by this Agreement to deliver: (1) the
other party hereto or thereto is not acting as a fiduciary or
financial or investment advisor for it; (2) it is not relying (for
purposes of making any investment decision or otherwise) upon any
advice, counsel or representations (whether written or oral) of the
other party hereto or thereto other than the representations
expressly set forth in this Agreement, in such Credit Support
Document and in any Confirmation; (3) the other party hereto or
thereto has not given to it (directly or indirectly through any
other person) any assurance, guaranty or representation whatsoever
as to the expected or projected success, profitability, return,
performance, result, effect, consequence, or benefit (either legal,
regulatory, tax, financial, accounting or otherwise) of this
Agreement, such Credit Support Document, such Sole Transaction or
such other documentation; (4) it has consulted with its own legal,
regulatory, tax, business, investment, financial and accounting
advisors to the extent it has deemed necessary, and it has made its
own investment, hedging and trading decisions (including decisions
regarding the suitability of any Transaction pursuant to this
Agreement) based upon its own judgment and upon any advice from such
advisors as it has deemed necessary and not upon any view expressed
by the other party hereto or thereto; (5) it has determined that the
rates, prices or amounts and other terms of the Sole Transaction and
the indicative quotations (if any) provided by the other party
hereto or thereto reflect those in the relevant market for similar
transactions, and all trading decisions have been the result of
12
arm's length negotiations between the parties; (6) it is entering
into this Agreement with a full understanding of all the terms,
conditions and risks hereof and thereof (economic and otherwise) and
it is capable of assuming and willing to assume (financially and
otherwise) those risks; and (7) it is a sophisticated institutional
investor.
(h) Line of Business. It has entered into this Agreement (including
the Sole Transaction evidenced hereby) in conjunction with its line
of business (including financial intermediation services) or the
financing of its business.
(i) No Agency. It is entering into this Agreement, any Credit
Support Document to which it is a party, the Sole Transaction and
any other documentation relating to this Agreement or the Sole
Transaction as principal (and not as agent or in any other capacity,
fiduciary or otherwise).
(k) Notices to Party A. Party B agrees that it shall cause to be delivered to
Party A any notices generated or received by Party B in connection with
the Basic Documents.
(l) Limited Recourse to Party B. Notwithstanding anything to the contrary
contained herein, all obligations of Party B shall be payable by Party B
only on each Quarterly Payment Date, first, to the extent funds are
available therefor, under Section 8.02 of the Indenture, second, to the
extent funds are available therefor, under Section 2(e)(iv)(C) of the
Administration Agreement, third, to the extent funds are available
therefor, under Section 10.01 of the Indenture, fourth, to the extent of
funds available therefor, under Section 5.04 of the Indenture and, to the
extent such funds are not available or are insufficient for the payment
thereof, shall not constitute a claim against the Trust to the extent of
such unavailability or insufficiency until such time as the Trust has
assets sufficient to pay such prior deficiency. This paragraph shall
survive the termination of this Agreement but in all cases shall expire
concurrently with the restriction specified in Part 5(c).
(m) No Suspension of Payments. Notwithstanding Section 2(a)(iii) of this
Agreement, Party A shall not suspend any payments due under Section
2(a)(iii) unless:
(1) the principal of any class of Notes shall have been accelerated in
accordance with the terms of the Indenture following an Event of Default
thereunder; or
(2) an Early Termination Date for the Sole Transaction has occurred or
effectively been designated.
(n) Default Interest. Section 2(e) of this Agreement is hereby deleted in its
entirety.
(o) Redemption Event.
(i) A "Redemption Event" will occur upon the delivery by Party B (or its
designee) to Party A of a "Party B Response" (as defined in Appendix I)
accepting Party A's
13
offer to terminate the Sole Transaction as provided in Appendix I hereto.
Such Party B Response shall be delivered on or before the related
Redemption Date (as defined in the Indenture) and shall certify that the
Minimum Purchase Price (as defined in the Indenture) has been deposited
into the appropriate Trust Account (as defined in the Indenture). The
parties hereto acknowledge and agree that the Indenture Trustee (as
defined in the Indenture) may deliver such Party B Response on behalf of
Party B. Party A hereby agrees that upon receipt of such Party B Response
from the Indenture Trustee certifying that the Minimum Purchase Price has
been deposited in the Collection Account, Party A shall immediately
designate the Redemption Date as an Early Termination Date.
Notwithstanding Section 6(d)(ii), the Payment Date in respect of a
Redemption Event shall be the Early Termination Date so designated. For
avoidance of doubt, no Redemption Event shall occur and no Early
Termination Date shall be effectively designated in respect thereof unless
the Minimum Purchase Price shall have been deposited into the applicable
Trust Account(s) pursuant to Article X of the Indenture.
(ii) The parties hereto acknowledge and agree that USA Group Secondary
Market Services, Inc., as Administrator under the Administration
Agreement, may deliver on behalf of Party B any "Party B Notices" required
or permitted by Appendix I hereto; provided, that in no event shall a
Redemption Event occur upon delivery of any such Party B Notice from the
Administrator.
(p) Statement to Noteholders. Party B will provide to Party A statements
required by Section 2(g) of the Administration Agreement dated as of April
19, 1999 (the "Administration Agreement") among Party B, USA Group
Secondary Market Services, Inc. ("SMS"), as administrator (the
"Administrator"), and HSBC Bank USA, as indenture trustee (the "Indenture
Trustee").
(q) Additional Definitions. Capitalized terms used in this Schedule shall have
the meaning set forth in the Confirmation, the Indenture or, if not
therein, Appendix A to the Administration Agreement, without regard to any
amendment or supplement thereto with respect to which Party A has not
given its written consent.
"ERISA Opinion" means an opinion of counsel to SMS to the effect that the
statements contained under the heading "ERISA Considerations" in each of
the Prospectus dated May 11, 1999, the Prospectus Supplement dated May 17,
1999 and the Private Placement Memorandum dated May 17, 1999, each
relating to the issuance of certain of the Notes, to the extent that such
statements describe legal matters, present fair summaries of such legal
matters.
"Indenture" means the Indenture dated as of April 19, 1999 between Party B
and HSBC Bank USA, as indenture trustee, without regard to any amendment
or supplement thereto with respect to which Party A has not given its
written consent.
"Net Trust Swap Payment Carryover Shortfall" means, with respect to any
Quarterly Payment Date with respect to which Party B owes any amounts to
Party A in respect of
14
this Agreement, the excess of (i) the Trust Swap Payment Amount on the
preceding Quarterly Payment Date over (ii) the amount actually received by
Party A out of Available Funds on such preceding Quarterly Payment Date
plus interest on such excess from such preceding Quarterly Payment Date to
the current Quarterly Payment Date at the rate of Three-Month LIBOR for
the related Quarterly Interest Period.
"Rating Agency Downgrade" means that, prior to the earlier of the
Termination Date or the Early Termination Date of the Sole Transaction,
the rating of Party A or any successor thereto is withdrawn or reduced
below "A3" or its equivalent by any Swap Rating Agency then rating Party
A.
"Senior Note Underwriting Agreement" means the Senior Note Underwriting
Agreement dated as of May 17, 1999 between SMS, as seller, and Credit
Suisse First Boston Corporation, as representative of the several
underwriters of the Senior Notes.
"Subordinate Note Purchase Agreement" means the Subordinate Note Purchase
Agreement dated as of May 17, 1999 between SMS, as seller, and Credit
Suisse First Boston Corporation, as representative of the several
purchasers of the Subordinate Notes.
"Swap Rating Agency" means Xxxxx'x Investors Service, Inc. and Standard &
Poor's Ratings Service, a division of the XxXxxx-Xxxx Companies, Inc.
"Tax Opinion" means an opinion of counsel to SMS to the effect that the
Senior Notes and the Subordinate Notes will be treated as indebtedness for
federal income tax purposes.
"Underwriter's Opinion" means the opinion (or, collectively, the opinions)
of Stroock & Stroock & Xxxxx LLP dated May 21, 1999 addressed to Credit
Suisse First Boston Corporation, as representative of the several
underwriters of the Notes.
15
The parties executing this Schedule have executed the Master Agreement and
have agreed as to the contents of this Schedule.
XXXXXXX XXXXX DERIVATIVE PRODUCTS AG
By: ____________________________
Name:
Title:
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:
16
Appendix I
Redemption of Notes.
1. As promptly as practicable, but in any event not later than two
Business Days after delivery by Party B (or Party B's designee) to Party A of a
notice of proposed redemption (the "Redemption") and request for a quotation of
Termination Payment (the "Party B Notice"), Party A will give notice by
telephone to Party B (which notice will be promptly confirmed in writing to
Party B with a copy of such notice to SMS) (the "Party A Response"):--
(i) offering to terminate the Sole Transaction upon such Redemption; and
(ii) stating in good faith and in reasonable detail the Termination
Payment (the "Redemption Payment") that will be payable by Party B to Party A or
by Party A to Party B on the proposed Redemption Date (as defined in the
Indenture) if the offer is accepted at the time of such offer (or through such
later time, if any, as may be expressed in the offer in the discretion of Party
A) and the Redemption is effected on the Redemption Date; provided, however,
that, if such offer is not accepted at such time, Party A will, promptly after
requests therefor by Party B, make new offers to effect the termination of the
Sole Transaction and will make such new offers in accordance with reasonable
market practice until 11:00 a.m. New York City time on the Business Day two
Business Days prior to the Redemption Date (the "Deadline"). Any such new offer
will contain the statements required by the preceding clauses (i) and (ii) and
will also be a Party A Response, except that:--
(x) only the Party A Response will determine the period during which new
offers are required to be accepted; and
(y) in the case of the Final Offer (as defined below), "Market Quotation"
will be substituted for "Loss" for purposes of determining the Redemption
Payment.
The last such new offer is referred to herein as the "Final Offer." The
Final Offer will be identified as such in the relevant Party A Response. The
Final Offer will not be delivered earlier than the Business Day on which the
Deadline occurs. The Final Offer will be communicated by telephone to Party B
(which Final Offer will be promptly confirmed in writing to Party B with a copy
of such Final Offer to SMS).
2. Each Party A Response will describe the Redemption Payment, even if the
Redemption Payment remains the same and, except as described above with respect
to the Final Offer, each Redemption Payment will be determined using "Loss" and
"Second Method" and based on Party B as the sole Affected Party.
3. As promptly as practicable, but in any event not later than the end of
the period during which an offer may be accepted pursuant to the relevant Party
A Response, Party B, acting in good faith and in accordance with reasonable
derivatives market practice,
17
will accept the offer expressed therein by notice (the "Party B Response") to
Party A. Such notice will be by telephone, will be promptly confirmed in writing
and will thereupon be effective, all in accordance with usual derivatives
markets transactions. A copy of each such Party B Response will be delivered by
Party B to SMS. If the offer is accepted as aforesaid, the Redemption will be
effective on the Redemption Date on the terms expressed in the last relevant
Party A Response as accepted by the Party B Response (subject to the conditions
set forth in Part 5(o) of this Agreement). The Redemption Payment will be the
amount described in the Party A Response accepted by Party B.
4. Party B (or its designee) will have the right to make reasonable
request of Party A for indications of Redemption Payments based on proposed
Redemptions as contemplated by Paragraphs 1 through 3 above, and Party A will
supply such indications promptly and in good faith following any such request.
Except as provided in Paragraphs 1 through 3 above and Part 5(o) of the
Agreement, neither Party B nor its designee will be obligated to effect any such
Redemption.
18
Confirmation
Ref. No. 99 DP0018
Exhibit A Form of Opinion of Party A
Exhibit B Certificates of Incumbency
Exhibit C
SMS Student Loan Trust 1999-B
Officer's Certificate
__________________, ______________________ of USA Group Secondary Market
Services, Inc., a Delaware corporation (the "Corporation") and
__________________, ______________________ of the Corporation, each hereby
certify that, to the best of his or her knowledge, after reasonable
investigation:
(i) the representations and warranties of the Seller or the Servicer, as
the case may be, contained in the Trust Agreement, the Loan Sale Agreement, the
Administration Agreement, the Servicing Agreement and the Swap Agreement, as
applicable, are true and correct in all material respects, that each of the
Seller and the Servicer has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied under such agreements at or
prior to the Closing Date, and
(ii) since [December 31, 1998], except as may be disclosed in the
Prospectus or the Private Placement Memorandum, no material adverse change, or
any development involving a prospective material adverse change, in or affecting
particularly the business or properties of the Trust, the Company, the Seller or
the Servicer, as applicable, has occurred.
Capitalized terms used but not defined herein have the meanings specified
in Appendix A to the Administration Agreement dated as of April 19, 1999 among
SMS Student Loan Trust 1999-B, the Corporation and HSBC Bank USA, as indenture
trustee.
IN WITNESS WHEREOF, each of the above-named authorized officers hereunto
signed his or her name.
Dated: May __, 1999
By: ____________________________
Name:
Title:
By: ____________________________
Name:
Title:
C-2
