AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 6, 1997
REGISTRATION NO. 333-24949
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
POST-EFFECTIVE AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
SLM FUNDING CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C> <C>
DELAWARE 9999 23-2815650
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification Number)
</TABLE>
------------------------
11600 Sallie Mae Drive
Reston, Virginia 20193
(703) 810-7130
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
------------------------
TIMOTHY G. GREENE
1050 THOMAS JEFFERSON STREET, N.W.
WASHINGTON, D.C. 20007
(202) 333-8000
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
------------------------
Copy to:
C. THOMAS KUNZ
CHRISTOPHER J. KELL
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after this Registration Statement becomes effective as determined by market
conditions.
------------------------
If the only securities being registered on this form are being offered pursuant
to dividend or interest reinvestment plans, please check the following box. / /
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /x/
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check following box. / /
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses in connection with the offering of the Notes and the Certificates
being registered herein are estimated as follows:
SEC registration fee............................................ $2,901,509.09
Legal fees and expenses......................................... 290,000.00
Accounting fees and expenses.................................... 105,000.00
Blue Sky fees and expenses...................................... 20,000.00
Rating agency fees.............................................. 1,375,000.00
Eligible Lender Trustee fees and expenses....................... 85,000.00
Indenture Trustee fees and expenses............................. 85,000.00
Printing expenses............................................... 400,000.00
Miscellaneous................................................... 490.91
-------------
Total...................................................... $5,262,000.00
=============
INDEMNIFICATION OF DIRECTORS AND OFFICERS.
As authorized by Section 145 of the General Corporation Law of Delaware
(the 'Delaware Corporation Law'), each director and officer of SLM Funding
Corporation may be indemnified by SLM Funding Corporation against expenses
(including attorney's fees, judgments, fines and amounts paid in settlement)
actually or reasonably incurred in connection with the defense or settlement of
any threatened, pending or completed legal proceedings in which he is involved
by reason of the fact that he is or was a director or officer of SLM Funding
Corporation if he acted in good faith and in a manner that he reasonably
believed to be in or not opposed to the best interest of SLM Funding
Corporation, and, with respect to any criminal action or proceeding, if he had
no reasonable cause to believe that his conduct was unlawful. If the legal
proceeding, however, is by or in the right of SLM Funding Corporation, the
director or officer may not be indemnified in respect of any claim, issue or
matter as to which he shall have been adjudged to be liable for negligence or
misconduct in the performance of his duty to SLM Funding Corporation unless a
court determines otherwise.
The Certificate of Incorporation of SLM Funding Corporation (a copy of
which was filed as Exhibit 3.1 to SLM Funding Corporation's Registration
Statement on Form S-3 (File No. 333-2502) (the '1996 Registration Statement'))
provides that no director of SLM Funding Corporation shall be personally liable
to SLM Funding Corporation or its stockholders for monetary damages for any
breach of his fiduciary duty as a director, provided, however, that such clause
shall not apply to any liability of a director (1) for any breach of his duty of
loyalty to SLM Funding Corporation or its stockholders, (2) for acts or
omissions that are not in good faith or involved intentional misconduct or a
knowing violation of the law, (3) under Section 174 of the Delaware Corporation
Law or (4) for any transaction from which the director derived an improper
personal benefit. In addition, the Certificate of Incorporation and the By-laws
of SLM Funding Corporation (a copy of which is filed as Exhibit 3.2 hereto)
provide that SLM Funding Corporation shall indemnify each officer and director
to the fullest extent permitted by law.
There are directors' and officers' liability insurance policies outstanding
which insure directors and officers of the Student Loan Marketing Association
and certain of its subsidiaries, including SLM Funding Corporation. The policies
cover losses for which the Student Loan Marketing Association or any of those
subsidiaries shall be required or permitted by law to indemnify directors and
officers and which result from claims made against such directors or officers
based upon the commission of wrongful acts in the performance of their duties.
The policies also cover losses which the directors or officers must pay as the
result of claims brought against them based upon the commission of wrongful acts
in the performance of their duties and for which they are not indemnified by the
Student Loan Marketing
II-1
<PAGE>
Association or any of those subsidiaries. The losses covered by the policies are
subject to certain exclusions and do not include fines or penalties imposed by
law or other matters deemed uninsurable under the law. The policies contain
certain self-insured retention provisions.
ITEM 16. EXHIBITS.
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<C> <C> <S>
1.1 -- Form of Underwriting Agreement for Notes*
1.2 -- Form of Underwriting Agreement for Certificates*
3.1 -- Certificate of Incorporation of SLM Funding Corporation*
3.2 -- By-Laws of SLM Funding Corporation**
3.3 -- Form of Certificate of Trust for The SLM Student Loan Trusts*
4.1 -- Form of Indenture between the Trust and the Indenture Trustee (including as an exhibit thereto a
form of Note)*
4.2 -- Form of Trust Agreement between SLM Funding Corporation and the Eligible Lender Trustee (including
as an exhibit thereto a form of Certificate)*
4.3 -- Form of Interim Trust Agreement between SLM Funding Corporation and the Interim Eligible Lender
Trustee*
4.4 -- Form of Note (included as an exhibit to Exhibit 4.1)
4.5 -- Form of Certificate (included as an exhibit to Exhibit 4.2)
4.6 -- Form of Prospectus Supplement**
4.7 -- Form of Market-maker Prospectus Supplement**
5 -- Opinion of Timothy G. Greene. Esq. with respect to legality**
8.1 -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP with respect to tax matters**
8.2 -- Opinion of Delaware tax counsel with respect to certain Delaware tax matters**
23.1 -- Consent of Timothy G. Greene, Esq. (included as part of Exhibit 5)
23.2 -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included as part of Exhibit 8.1)
23.3 -- Consent of Delaware tax counsel (included as part of Exhibit 8.2)
25 -- Statement of Eligibility under the Trust Indenture Act of 1939 of the Indenture Trustee
99.1 -- Form of Sale Agreement among SLM Funding Corporation, the Trust and the Eligible Lender Trustee*
99.2 -- Form of Servicing Agreement among Sallie Mae Servicing Corporation, the Trust, the Administrator,
the Eligible Lender Trustee and the Indenture Trustee*
99.3 -- Form of Master Administration Agreement between the Seller and Sallie Mae, as Administrator,
including a Form of Supplement thereto among the Trust, the Eligible Lender Trustee, the Indenture
Trustee, the Seller, the Servicer, and Sallie Mae, as Administrator***
99.4 -- Form of Purchase Agreement between SLM Funding Corporation and Sallie Mae*
</TABLE>
- ---------------
* Incorporated by reference to the correspondingly numbered exhibit to the
1996 Registration Statement.
** Previously filed.
*** Filed herewith.
II-2
<PAGE>
ITEM 17. UNDERTAKINGS.
(a) As to Rule 415:
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made
of the securities registered hereby, a post-effective amendment to this
Registration Statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933, as amended;
(ii) to reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment hereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in this Registration Statement; and
(iii) to include any material information with respect to the plan
of distribution not previously disclosed in this Registration Statement
or any material change to such information in this Registration
Statement;
provided, however, that the undertakings set forth in clauses (i) and (ii) above
do not apply if the information required to be included in a post-effective
amendment by those clauses is contained in periodic reports filed by the
Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934, as amended, that are incorporated by reference in this Registration
Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended, each such post-effective amendment
shall be deemed to be a new registration statement relating to the
securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(b) As to documents subsequently filed that are incorporated by reference:
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, as amended, each
filing of the Registrant's annual report pursuant to Section 13(a) or Section
15(d) of the Securities Exchange Act of 1934, as amended, that is incorporated
by reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(c) The undersigned Registrant hereby undertakes to provide to the
Underwriter at the closing specified in the Underwriting Agreements Notes and
Certificates in such denominations and registered in such names as required by
the Underwriter to permit prompt delivery to each purchase.
(d) As to indemnification:
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions described under Item 15, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Act and is therefore unenforceable. In the event that a claim
for indemnification against such liabilities (other than payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of such Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, such Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
II-3
<PAGE>
(e) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act of
1933, as amended, the information omitted from the form of prospectus filed as
part of this Registration Statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4)
or 497(h) under the Act shall be deemed to be part of this Registration
Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act
of 1933, as amended, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new Registration Statement relating to the
securities offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(f) The Registrant hereby undertakes to file an application for the
purposes of determining the eligibility of the Indenture Trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance with the
rules and regulations prescribed by the Securities and Exchange Commission under
Section 305(b)(2) of the Securities Act of 1933, as amended.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, SLM Funding
Corporation certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-3 and has duly caused this
Post-Effective Amendment No. 1 to the Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Washington, D.C. on
June 6, 1997.
SLM FUNDING CORPORATION
By: /s/ *
----------------------------
Name: Denise B. McGlone
Title: President and Chairman
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment No. 1 to the Registration Statement has been signed
below on June 6, 1997 by the following persons in the capacities indicated.
SIGNATURE CAPACITY
--------- --------
/s/ * President, Chairman and Director
- ------------------------------------ (Principal Executive Officer)
(Denise B. McGlone)
/s/ * Treasurer and Controller
- ------------------------------------ (Principal Accounting Officer)
(Mark G. Overend)
/s/ * Chief Financial Officer and Director
- ------------------------------------ (Principal Financial Officer)
(Robert R. Levine)
By: /s/ LUCY C. WEYMOUTH
---------------------------------
Lucy C. Weymouth
Attorney-in-Fact
June 6, 1997
II-5
<PAGE>
EXHIBIT INDEX
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<C> <C> <S>
1.1 -- Form of Underwriting Agreement for Notes*
1.2 -- Form of Underwriting Agreement for Certificates*
3.1 -- Certificate of Incorporation of SLM Funding Corporation*
3.2 -- By-Laws of SLM Funding Corporation**
3.3 -- Form of Certificate of Trust for The SLM Student Loan Trusts*
4.1 -- Form of Indenture between the Trust and the Indenture Trustee (including as an exhibit thereto a
form of Note)*
4.2 -- Form of Trust Agreement between SLM Funding Corporation and the Eligible Lender Trustee (including
as an exhibit thereto a form of Certificate)*
4.3 -- Form of Interim Trust Agreement between SLM Funding Corporation and the Interim Eligible Lender
Trustee*
4.4 -- Form of Note (included as an exhibit to Exhibit 4.1)
4.5 -- Form of Certificate (included as an exhibit to Exhibit 4.2)
4.6 -- Form of Prospectus Supplement**
4.7 -- Form of Market-maker Prospectus Supplement**
5 -- Opinion of Timothy G. Greene. Esq. with respect to legality**
8.1 -- Opinion of Skadden, Arps, Slate, Meagher & Flom LLP with respect to tax matters**
8.2 -- Opinion of Delaware tax counsel with respect to certain Delaware tax matters**
23.1 -- Consent of Timothy G. Greene, Esq. (included as part of Exhibit 5)
23.2 -- Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included as part of Exhibit 8.1)
23.3 -- Consent of Delaware tax counsel (included as part of Exhibit 8.2)
25 -- Statement of Eligibility under the Trust Indenture Act of 1939 of the Indenture Trustee
99.1 -- Form of Sale Agreement among SLM Funding Corporation, the Trust and the Eligible Lender Trustee*
99.2 -- Form of Servicing Agreement among Sallie Mae Servicing Corporation, the Trust, the Administrator,
the Eligible Lender Trustee and the Indenture Trustee*
99.3 -- Form of Master Administration Agreement between the Seller and Sallie Mae, as Administrator,
including a Form of Supplement thereto among the Trust, the Eligible Lender Trustee, the Indenture
Trustee, the Seller, the Servicer, and Sallie Mae, as Administrator***
99.4 -- Form of Purchase Agreement between SLM Funding Corporation and Sallie Mae*
</TABLE>
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* Incorporated by reference to the correspondingly numbered exhibit to the
1996 Registration Statement.
** Previously filed.
*** Filed herewith.
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MASTER ADMINISTRATION AGREEMENT
between
SLM FUNDING CORPORATION,
and
STUDENT LOAN MARKETING ASSOCIATION,
as Administrator
Dated as of May 1, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
Article I
Section 1.1 Definitions and Usage 2
Section 1.2 Supplements to this Agreement 2
Article II
Section 2.1 Duties with Respect to the Indenture 4
Section 2.2 Duties with Respect to the Issuer 6
Section 2.3 Establishment of Trust Accounts 8
Section 2.4 Collections 10
Section 2.5 Application of Collections 12
Section 2.6 Additional Deposits 12
Section 2.7 Distributions 13
Section 2.8 Reserve Account 16
Section 2.9 Statements to Certificateholders and
Noteholders 19
Section 2.10 Non-Ministerial Matters 21
Section 2.11 Exceptions 22
Section 2.12 Compensation 22
Section 2.13 Servicer and Administrator Expenses 22
Article III
Section 3.1 Administrator's Certificate; Servicer's
Report 23
Section 3.2 Annual Statement as to Compliance; Notice of
Default; Financial Statements 24
Section 3.3 Annual Independent Certified Public
Accountants' Reports 25
Article IV
Section 4.1 Representations of Administrator 26
Section 4.2 Liability of Administrator: Indemnities 28
Section 4.3 Merger or Consolidation of, or Assumption of
the Obligations of, Administrator 30
Section 4.4 Limitation on Liability of Seller,
Administrator and Others 32
Section 4.5 Administrator May Own Certificates or
Notes 32
Section 4.6 Student Loan Marketing Association Not to
Resign as Administrator 32
<PAGE>
Article V
Section 5.1 Administrator Default 33
Section 5.2 Appointment of Successor 35
Section 5.3 Notification to Noteholders and Certificateholders 36
Section 5.4 Waiver of Past Defaults 37
Article VI
Section 6.1 Termination 37
Article VII
Section 7.1 Protection of Interests in Trust 39
Article VIII
Section 8.1 Independence of the Administrator 43
Section 8.2 No Joint Venture 43
Section 8.3 Other Activities of Administrator 43
Section 8.4 Powers of Attorney 43
Section 8.5 Amendment 44
Section 8.6 Assignment 45
Section 8.7 Limitations on Rights of
Others 45
Section 8.8 Assignment to Indenture Trustee 46
Section 8.9 Nonpetition Covenants 46
Section 8.10 Limitation of Liability of Eligible Lender Trustee
and Indenture Trustee 47
Section 8.11 Governing Law 47
Section 8.12 Headings 47
Section 8.13 Counterparts 47
Section 8.14 Severability 48
Appendix A
<PAGE>
MASTER ADMINISTRATION AGREEMENT
Master Administration Agreement, dated as of May 1, 1997, between the
Student Loan Marketing Association, a federally chartered corporation ("Sallie
Mae" or the "Administrator"), and SLM Funding Corporation, a Delaware
corporation ("SLM Funding" or the "Seller").
WHEREAS, SLM Funding intends from time to time to enter into Trust
Agreements each between SLM Funding, as Depositor, and an Eligible Lender
Trustee, providing for the establishment of a Trust, which Trust, as Issuer,
will issue Certificates pursuant to the related Trust Agreement and Notes
pursuant to an Indenture among such Trust, such Eligible Lender Trustee and an
Indenture Trustee; and
WHEREAS, with respect to each Trust, SLM Funding intends to enter into a
Purchase Agreement with Sallie Mae and an Interim Eligible Lender Trustee,
providing for the purchase of Eligible Loans from Sallie Mae; and
WHEREAS, with respect to each Trust, SLM Funding intends to enter into a
Sale Agreement with such Trust, the related Eligible Lender Trustee and the
related Interim Eligible Lender Trustee, providing for the sale of the related
Eligible Loans to such Trust; and
WHEREAS, with respect to each Trust, SLM Funding intends to enter into a
Servicing Agreement with such Trust, the related Eligible Lender Trustee, the
related Indenture Trustee, Sallie Mae and Sallie Mae Servicing Corporation, as
Servicer, providing for the servicing of the related Eligible Loans; and
WHEREAS, in the event that SLM Funding enters into the foregoing
agreements with respect to a Trust, SLM Funding desires to engage Sallie Mae to
act as Administrator pursuant to this Agreement in connection with such Trust,
to perform certain of the duties of such Trust and the related Eligible Lender
Trustee in connection with the related Notes, the related Collateral and the
related Certificates, and to provide such additional services consistent with
the terms of this Agreement, any Supplement and the related Supplement Basic
Documents (as defined below) as such Trust and such Eligible Lender Trustee may
from time to time request; and
<PAGE>
WHEREAS, Sallie Mae has the capacity to provide the services required
hereby as Administrator and, subject to the fulfillment by SLM Funding of the
conditions set forth in Section 1.2, is willing to perform such services 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 Administrator agrees to act in such capacity
with regard to each Trust as described herein, contingent upon SLM Funding
satisfying the conditions precedent set forth in Section 1.2 herein relating to
such Trust, and the parties hereby further agree as follows:
Article I
Section 1.1 Definitions and Usage. Except as otherwise specified herein or as
the context may otherwise require, capitalized terms used but not otherwise
defined herein shall be defined in Appendix A (Master) hereto, which also
contains rules as to usage that shall be applicable herein; provided, however
that upon delivery of a Supplement in accordance with Section 1.2 with respect
to a Trust, capitalized terms used herein in connection with such Trust and such
Supplement shall be as defined in Appendix A (Trust) attached to such
Supplement. References in this Agreement to articles or sections of any of the
Basic Documents shall, with respect to any Trust and the related Supplement, be
modified to the extent specified in such Supplement.
Section 1.2 Supplements to this Agreement.
(a) In connection with each Trust, Sallie Mae agrees to serve as
Administrator with respect to such Trust in accordance with this Agreement
subject to the satisfaction by SLM Funding of the following conditions
precedent:
1. SLM Funding shall have presented to the Administrator a
Supplement, substantially in the form attached hereto as Exhibit A,
designating the related Trust, the related Eligible Lender Trustee, the
related Interim Eligible Lender Trustee and the related Indenture
Trustee, and duly executed by SLM
<PAGE>
Funding, the Servicer, such Trust, such Eligible Lender Trustee and such
Indenture Trustee (with respect to each Supplement, the "Supplement
Parties");
2. Accompanying such Supplement shall be (i) an Appendix A
(Trust), substantially in the form of Appendix A (Master) hereto but
with such modifications as are necessary to reflect the identity of the
related Supplement Parties, the Basic Documents entered into with
respect to such Trust and such Supplement (with respect to each
Supplement, the "Supplement Basic Documents") and the terms thereof, and
containing those definitions which shall be applicable to this Agreement
in connection with such Trust; and (ii) a cross-reference table
indicating any necessary modifications to cross references in this
Agreement to articles and sections of the related Supplement Basic
Documents;
3. Each of the Supplement Basic Documents (other than this
Agreement) shall have been executed and delivered by each of the parties
thereto and shall be in substantially the respective forms attached
hereto as Exhibits B through I; and
4. Each of the Supplement Parties shall have agreed to be bound
by the terms of this Agreement in connection with such Trust, such
Supplement and the related Supplement Basic Documents to the extent
reference is made herein to such Supplement Party.
(b) Each of the representations of the Administrator contained in
Article V hereof shall be true and correct as of the date of each Supplement.
Upon presentation of a Supplement to the Administrator in compliance with this
Section 1.2, the Administrator shall acknowledge receipt of such Supplement and
provide written confirmation to the Seller and the other Supplement Parties that
such representations are true and correct as of the date of such Supplement.
(c) The rights and obligations of the Supplement Parties under this
Agreement shall apply separately to each Trust designated in the related
Supplement.
<PAGE>
Article II
Section 2.1 Duties with Respect to the Indenture. The Administrator agrees to
consult with the Eligible Lender Trustee regarding the duties of the Issuer
under the Indenture and the Depository Agreements. The Administrator shall
monitor the performance of the Issuer and shall advise the Eligible Lender
Trustee when action is necessary to comply with the Issuer's duties under the
Indenture and the Depository Agreements. The Administrator shall prepare for
execution by the Issuer or shall cause the preparation by other appropriate
Persons of all such documents, reports, filings, instruments, certificates and
opinions as it shall be the duty of the Issuer to prepare, file or deliver
pursuant to the Indenture and the Depository Agreements. In furtherance of the
foregoing, the Administrator shall take the actions with respect to the
following matters that it is the duty of the Issuer or the Indenture Trustee to
take pursuant to the Indenture (references being to Sections of the Indenture):
a. preparing or obtaining the documents and instruments required for
authentication of the Notes and delivering the same to the Indenture
Trustee (Section 2.2);
b. preparing, obtaining or filing the instruments, opinions and
certificates and other documents required for the release of
collateral (Section 2.9);
c. obtaining and preserving the Issuer's qualification to do
business in each jurisdiction in which such qualification is or
shall be necessary to protect the validity and enforceability of the
Indenture, the Notes, the Collateral and each other instrument and
agreement included in the Indenture Trust Estate (Section 3.4);
d. preparing all supplements, amendments, financing statements,
continuation statements, instruments of further assurance and other
instruments, in accordance with Section 3.5 of the Indenture,
necessary to protect the Indenture Trust Estate (Section 3.5);
e. the delivery by the Issuer of the opinion of Counsel on the
Closing Date and the annual delivery of Opinions of Counsel, in
accordance with Section 3.6 of the Indenture, as to the Indenture
Trust Estate, and the annual delivery of the Officers' Certificate
of the Issuer and certain other statements, in accordance with
Section 3.9 of the Indenture, as to compliance with the Indenture
(Sections 3.6 and 3.9);
<PAGE>
f. in the event of a Servicer Default, the taking of all reasonable
steps available to enforce the Issuer's rights under the Basic
Documents in respect of such Servicer Default (Section 3.7(d));
g. the preparation and obtaining of documents and instruments
required for the release of the Issuer from its obligations under
the Indenture (Section 3.10);
h. monitoring the Issuer's obligations as to the satisfaction and
discharge of the Indenture and preparation of an Officers'
Certificate of the Issuer and obtaining of the Opinion of Counsel
and the Independent Certificate relating thereto (Section 4.1);
i. sale of the Indenture Trust Estate in a commercially reasonable
manner if an Event of Default has occurred and is continuing
(Section 5.4) or an Insolvency Event with respect to the Seller has
occurred and is continuing (Section 6.5(b));
j. preparing and, after execution by the Issuer, filing with the
Commission, any applicable State agencies and the Indenture Trustee
of documents required to be filed on a periodic basis with, and
summaries thereof as may be required by rules and regulations
prescribed by, the Commission and any applicable State agencies
(Section 7.3);
k. the opening of one or more accounts in the Issuer's name, the
preparation of Issuer Orders, Officers' Certificates of the Issuer
and Opinions of Counsel and all other actions necessary with respect
to investment and reinvestment of funds in the Trust Accounts
(Sections 8.2 and 8.3);
<PAGE>
l. the preparation of an Issuer Request and Officers' Certificate of
the Issuer and the obtaining of an Opinion of Counsel and
Independent Certificates, if necessary, for the release of the
Indenture Trust Estate (Sections 8.4 and 8.5);
m. the preparation of Issuer Orders and the obtaining of Opinions of
Counsel with respect to the execution of supplemental indentures
(Sections 9.1, 9.2 and 9.3);
n. the preparation of or obtaining of the documents and instruments
required for the execution and authentication of new Notes
conforming to any supplemental indenture and the delivery of the
same to the Eligible Lender Trustee and the Indenture Trustee,
respectively (Section 9.6);
o. the preparation of all Officers' Certificates of the Issuer,
Opinions of Counsel and Independent Certificates with respect to any
requests by the Issuer to the Indenture Trustee to take any action
under the Indenture (Section 11.1(a));
p. the preparation and delivery of Officers' Certificates of the
Issuer and the obtaining of Independent Certificates, if necessary,
for the release of property from the lien of the Indenture (Section
11.1(b));
q. the preparation and delivery to Noteholders and the Indenture
Trustee of any agreements with respect to alternate payment and
notice provisions (Section 11.6); and
r. the recording of the Indenture, if applicable (Section 11.15).
<PAGE>
Section 2.2 Duties with Respect to the Issuer.
A. In addition to the duties of the Administrator set forth above and in
the other Basic Documents, the Administrator shall perform such calculations and
shall prepare for execution by the Issuer or the Eligible Lender Trustee or
shall cause the preparation by other appropriate Persons of all such documents,
reports, filings, instruments, certificates and opinions as it shall be the duty
of the Issuer or the Eligible Lender Trustee to prepare, file or deliver
pursuant to the Basic Documents, and at the request of the Eligible Lender
Trustee shall take all appropriate action that it is the duty of the Issuer to
take pursuant to the Basic Documents. Subject to Section 8.1, and in accordance
with the directions of the Eligible Lender Trustee, the Administrator shall
administer, perform or supervise the performance of such other activities in
connection with the Collateral (including the Basic Documents) as are not
covered by any of the foregoing provisions and as are expressly requested by the
Eligible Lender Trustee and are reasonably within the capability of the
Administrator.
B. The Administrator shall be responsible for performance of the duties
of the Eligible Lender Trustee set forth in Sections 5.4(a), (b), (c) and (d) of
the Trust Agreement with respect to, among other things, accounting and reports
to Certificateholders; provided, however, that the Eligible Lender Trustee shall
retain responsibility for the distribution of the Schedule K-1's necessary to
enable each Certificateholder to prepare its Federal and state income tax
returns.
C. The Administrator shall perform the duties of the Administrator
specified in Section 10.2 of the Trust Agreement required to be performed in
connection with the resignation or removal of the Eligible Lender Trustee, and
any other duties expressly required to be performed by the Administrator under
the Trust Agreement and the other Basic Documents.
D. In carrying out the foregoing duties or any of its other obligations
under this Agreement, the Administrator may enter into transactions with or
otherwise deal with any of its Affiliates; provided, however, that the terms of
any such transactions or dealings shall be, in the Administrator's opinion, no
less favorable to the Issuer than would be available from unaffiliated parties.
<PAGE>
Section 2.3 Establishment of Trust Accounts.
A.1. The Administrator, for the benefit of the Issuer, shall establish
and maintain in the name of the Indenture Trustee an Eligible Deposit Account
(the "Collection Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Issuer. The Collection
Account will initially be established as a segregated trust account in the name
of the Indenture Trustee with the corporate trust department of Bankers Trust
Company.
2. The Administrator, for the benefit of the Issuer, shall establish and
maintain in the name of the Indenture Trustee an Eligible Deposit Account (the
"Reserve Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Issuer. The Reserve Account
will initially be established as a segregated trust account in the name of the
Indenture Trustee with the corporate trust department of Bankers Trust Company.
B. Funds on deposit in the Collection Account and the Reserve Account
(collectively, the "Trust Accounts") shall be invested by the Indenture Trustee
(or any custodian or designated agent with respect to any amounts on deposit in
such accounts) in Eligible Investments pursuant to written instructions by the
Administrator; provided, however, it is understood and agreed that the Indenture
Trustee shall not be liable for the selection of, or any loss arising from such
investment in, Eligible Investments. All such Eligible Investments shall be held
by (or by any custodian on behalf of) the Indenture Trustee for the benefit of
the Issuer; provided that on the Business Day preceding each Distribution Date
all interest and other investment income (net of losses and investment expenses)
on funds on deposit therein shall be deposited into the Collection Account and
shall be deemed to constitute a portion of the Available Funds for such
Distribution Date. Other than as described in the following proviso or as
otherwise permitted by the Rating Agencies, funds on deposit in the Trust
Accounts shall be invested in Eligible Investments that will mature so that such
funds will be available at the close of business on the Business Day preceding
the following Monthly Servicing Payment Date (to the extent necessary to pay the
Primary Servicing Fee payable on such date) or Distribution Date; provided,
however, that funds on deposit in Trust Accounts may be invested in Eligible
Investments of the Indenture Trustee which may mature so that such funds will be
available on such Monthly Servicing Payment Date or Distribution Date. Funds
deposited in a Trust Account on a Business Day which immediately precedes a
Monthly Servicing Payment Date or Distribution Date upon the maturity of any
Eligible Investments are not required to be invested overnight.
<PAGE>
C.1. The Seller and the Issuer will pledge to the Indenture Trustee all
of their respective right, title and interest in all funds on deposit from time
to time in the Trust Accounts and in all proceeds thereof (including all income
thereon) and all such funds, investments, proceeds and income shall be part of
the Trust Estate. Subject to the Administrator's power to instruct the Indenture
Trustee pursuant to paragraph B above and paragraph C.3 below, the Trust
Accounts shall be under the sole dominion and control of the Indenture Trustee
for the benefit of the Noteholders and the Issuer. If, at any time, any of the
Trust Accounts ceases to be an Eligible Deposit Account, the Indenture Trustee
(or the Administrator on its behalf) agrees, by its acceptance hereto, that it
shall within 10 Business Days (or such longer period, not to exceed 30 calendar
days, as to which each Rating Agency may consent) establish a new Trust Account
as an Eligible Deposit Account and shall transfer any cash and/or any
investments to such new Trust Account. In connection with the foregoing, the
Administrator agrees that, in the event that any of the Trust Accounts are not
accounts with the Indenture Trustee, the Administrator shall notify the
Indenture Trustee in writing promptly upon any of such Trust Accounts ceasing to
be an Eligible Deposit Account.
2. With respect to the Trust Account Property, the Indenture Trustee
agrees, by its acceptance hereof, that:
(A) any Trust Account Property that is held in deposit accounts shall
be held solely in Eligible Deposit Accounts, subject to the last
sentence of Section 2.3C.1; and, subject to Section 2.3B, each
such Eligible Deposit Account shall be subject to the exclusive
custody and control of the Indenture Trustee, and the Indenture
Trustee shall have sole signature authority with respect thereto;
<PAGE>
(B) any Trust Account Property that constitutes Physical Property
shall be Delivered to the Indenture Trustee in accordance with
paragraph (a) of the definition of "Delivery" and shall be held,
pending maturity or disposition, solely by the Indenture Trustee
or a financial intermediary (as such term is defined in Section
8-313(4) of the UCC) acting solely for the Indenture Trustee;
(C) any Trust Account Property that is a book-entry security held
through the Federal Reserve System pursuant to Federal book-entry
regulations shall be Delivered in accordance with paragraph (b)
of the definition of "Delivery" and shall be maintained by the
Indenture Trustee, pending maturity or disposition, through
continuous book-entry registration of such Trust Account Property
as described in such paragraph; and
(D) any Trust Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by
clause (C) above shall be Delivered to the Indenture Trustee in
accordance with paragraph (c) of the definition of "Delivery" and
shall be maintained by the Indenture Trustee, pending maturity or
disposition, through continued registration of the Indenture
Trustee's (or its nominees) ownership of such security.
3. The Administrator shall have the power, revocable for cause or upon
the occurrence and during the continuance of an Administrator Default by the
Indenture Trustee or by the Eligible Lender Trustee with the consent of the
Indenture Trustee, to instruct the Indenture Trustee to make withdrawals and
payments from the Trust Accounts for the purpose of permitting the Servicer, the
Administrator or the Eligible Lender Trustee to carry out its respective duties
hereunder or permitting the Indenture Trustee to carry out its duties under the
Indenture.
<PAGE>
Section 2.4 Collections. The Servicer shall remit within two Business Days of
receipt thereof to the Collection Account all payments by or on behalf of the
Obligors with respect to the Trust Student Loans (other than Purchased Student
Loans), and all Liquidation Proceeds, both as collected during the Collection
Period, and the Eligible Lender Trustee shall remit within two Business Days of
receipt thereof to the Collection Account any Interest Subsidy Payments and
Special Allowance Payments received by it with respect to the Trust Student
Loans during the Collection Period. Notwithstanding the foregoing, for so long
as (i) the senior unsecured obligations of the Administrator (or any affiliate
of the Administrator which guarantees the obligations of the Administrator
hereunder) shall have been assigned a longterm rating of not less than "AA-" (or
equivalent rating) or a short-term rating of not less than "A-1" (or equivalent
rating) by each of the Rating Agencies or the remitting by the Servicer and the
Eligible Lender Trustee of the amounts referred to in this Section 2.4 to the
Administrator will not result in a downgrading or withdrawal of any of the then
current ratings of any of the Securities by any of the Rating Agencies and (ii)
no Administrator Default shall have occurred and be continuing, the Servicer and
the Eligible Lender Trustee shall remit such collections within two Business
Days of receipt thereof to the Administrator, and the Administrator need not
deposit such collections into the Collection Account until one Business Day
immediately prior to the next following Monthly Servicing Payment Date (in an
amount up to the Servicing Fee then due) or Distribution Date together with
interest on such amounts (less Servicing Fees paid during such period)
calculated on a daily basis from the first day of the month following receipt
thereof by the Administrator through the last day of the related Collection
Period at a rate equal to the Federal Funds Rate less .20%; provided, however,
that, if the Administrator (and each such Affiliate which guarantees the
obligations of the Administrator) is rated below AA- and A-1+ by Standard &
Poor's, the Administrator shall deposit all such collections into the Collection
Account at least as frequently as the next following Monthly Servicing Payment
Date, unless less frequent deposits will not result in a downgrading or
withdrawal of Standard & Poor's then current ratings on the Notes or the
Certificates. In the event that any of the foregoing conditions for ceasing
daily remittances shall no longer be satisfied, then the Administrator shall
deposit all collections held by it into the Collection Account within two
Business Days thereof.
<PAGE>
Section 2.5 Application of Collections.
A. With respect to each Trust Student Loan, all collections (including
all Guarantee Payments) with respect thereto for each Collection Period shall be
applied to interest and principal on such Trust Student Loan by the Servicer in
accordance with its customary practice.
B. All Liquidation Proceeds shall be applied to the related Trust
Student Loan.
Section 2.6 Additional Deposits.
A. The Servicer shall deposit or cause to be deposited in the Collection
Account the aggregate purchase price with respect to Purchased Student Loans as
determined pursuant to Section 3.5 of the Servicing Agreement and all other
amounts to be paid by the Servicer under Section 3.5 of the Servicing Agreement
when such amounts are due, and the Seller shall deposit or cause to be deposited
in the Collection Account the aggregate Purchase Amount with respect to
Purchased Student Loans and all other amounts to be paid by the Seller under
Section 6 of the Sale Agreement when such amounts are due.
B. Notwithstanding anything to the contrary set forth in paragraph (A)
above, if daily deposits to the Collection Account are not required pursuant to
Section 2.4, the Seller and the Servicer shall pay the amounts referred to in
paragraph (A) above that would otherwise be deposited into the Collection
Account to the Administrator. The Administrator shall not be required to deposit
such amounts into the Collection Account until the Business Day preceding each
Distribution Date; provided, however, that, on or before the Business Day
preceding each Monthly Servicing Payment Date that is not a Distribution Date,
the Administrator shall deposit into the Collection Account that portion of such
amounts received by it that is equal to the sum of the Servicing Fee payable on
such date and provided, further that the Administrator shall also deposit into
the Collection Account on such date interest on such amounts (less Servicing
Fees paid during such period) calculated on a daily basis from the first day of
the month following receipt thereof by the Administrator through the last day of
the related Collection Period at a rate equal to the Federal Funds Rate less
.20%.
<PAGE>
C. With respect to each Trust, the Issuer shall make an initial deposit
on the Closing Date into the Collection Account in the amount specified in the
related Supplement from the proceeds of the sale of the Notes and Certificates.
Section 2.7 Distributions.
A. On each Determination Date, the Administrator shall calculate all
amounts required to determine the amounts to be deposited in the Collection
Account from the Reserve Account and the amounts to be distributed therefrom on
the related Distribution Date. On the 5th Business Day preceding each Monthly
Servicing Payment Date that is not a Distribution Date, the Administrator shall
calculate all amounts required to determine the amounts to be deposited in the
Collection Account from the Reserve Account and the amounts to be distributed
therefrom on the related Monthly Servicing Payment Date.
B. The Administrator shall instruct the Indenture Trustee in writing no
later than the second business day preceding each Monthly Servicing Payment Date
that is not a Distribution Date (based on the information contained in the
Administrator's Certificate and the related Servicer's Report delivered pursuant
to Section 3.1 (A) and (B)) to distribute to the Servicer, by 1:00 p.m. (New
York time) on such Monthly Servicing Payment Date, from and to the extent of the
Available Funds on deposit in the Collection Account the Primary Servicing Fee
due with respect to the preceding calendar month, and the Indenture Trustee
shall comply with such instructions.
C. The Administrator shall instruct the Indenture Trustee in writing no
later than the second business day preceding each Distribution Date (based on
the information contained in the Administrator's Certificate and the related
Servicer's Report delivered pursuant to Section 3.1 (A) and (C)) to make the
following deposits and distributions to the Persons or to the account specified
below by 1:00 p.m. (New York time) on such Distribution Date, to the extent of
the amount of Available Funds in the Collection Account, in the following order
of priority, and the Indenture Trustee shall comply with such instructions:
<PAGE>
1. to the Servicer, the Primary Servicing Fee due on such Distribution
Date;
2. to the Administrator, from the amount of Available Funds remaining
after the application of clause 1, the Administration Fee due on
such Distribution Date and all unpaid Administration Fees from
prior Collection Periods;
3. to the Noteholders, from the amount of Available Funds remaining
after the application of clauses 1 and 2, the Noteholders' Interest
Distribution Amount, ratably, without preference or priority of any
kind, according to the amounts payable on the Notes in respect of
Noteholders' Interest Distribution Amount;
4. to the Eligible Lender Trustee on behalf of the Certificateholders,
from the amount of Available Funds remaining after the application
of clauses 1 through 3, the Certificateholders' Return Distribution
Amount, for distribution by the Eligible Lender Trustee pursuant to
the Trust Agreement, ratably, without preference or priority of any
kind, according to the amounts payable in respect of
Certificateholders' Return Distribution Amount;
5. to the Class A-1 Noteholders, from the amount of Available Funds
remaining after the application of clauses 1 through 4, the
Noteholders' Principal Distribution Amount, ratably, without
preference or priority of any kind, according to the amounts
payable on the Class A-1 Notes for principal;
6. on each Distribution Date on and after which the Class A-1 Notes
have been paid in full, to the Class A-2 Noteholders, from the
amount of Available Funds remaining after the application of
clauses 1 through 5, the Noteholders' Principal Distribution
Amount, ratably, without preference or priority of any kind,
according to the amounts payable on the Class A-2 Notes for
principal;
7. on each Distribution Date on and after the date on which the Notes
have been paid in full, to the Eligible Lender Trustee on behalf of
the Certificateholders, from the amount of Available Funds
remaining after the application of clauses 1 through 6, the
Certificate Balance Distribution Amount for distribution by the
Eligible Lender Trustee pursuant to the Trust Agreement, ratably,
without preference or priority of any kind, according to the
amounts payable in respect of the Certificate Balance;
<PAGE>
8. to the Reserve Account, from the amount of Available Funds
remaining after the application of clauses 1 through 7, the amount,
if any, necessary to reinstate the balance of the Reserve Account
up to the Specified Reserve Account Balance;
9. to the Servicer, from the amount of Available Funds remaining after
the application of clauses 1 through 8, the aggregate unpaid amount
of the Carryover Servicing Fee, if any;
10. to the Noteholders, from the amount of Available Funds remaining
after the application of clauses 1 through 9, the aggregate unpaid
amount of Note Interest Carryover, if any, ratably, without
preference or priority of any kind, according to the amounts due
and payable on the Notes in respect of Note Interest Carryover;
11. to the Eligible Lender Trustee on behalf of the Certificateholders,
from the amount of Available Funds remaining after the application
of clauses 1 through 10, the aggregate unpaid amount of the
Certificate Return Carryover, if any, for distribution by the
Eligible Lender Trustee pursuant to the Trust Agreement, ratably,
without preference or priority of any kind, according to the
amounts payable in respect of Certificate Return Carryover; and
12. to the Reserve Account, the amount of Available Funds remaining
after the application of clauses 1 through 11.
<PAGE>
Notwithstanding the foregoing, if on any Distribution Date following all
distributions to be made on such Distribution Date the Outstanding Amount of the
Notes would be in excess of the sum of the outstanding principal balance of the
Trust Student Loans and any accrued but unpaid interest on the Trust Student
Loans as of the last day of the related Collection Period plus the balance of
the Reserve Account on such Distribution Date following such distributions, or
if an Insolvency Event with respect to the Seller or an Event of Default has
occurred and is continuing, amounts on deposit in the Collection Account and the
Reserve Account shall be applied on such Distribution Date to the payment of the
Noteholders' Distribution Amount before any amounts are applied to the payment
of the Certificateholders' Distribution Amount.
Section 2.8 Reserve Account.
A. On the Closing Date, the Issuer shall deposit the Reserve Account
Initial Deposit into the Reserve Account.
B.1. In the event that the Primary Servicing Fee for any Monthly
Servicing Payment Date or Distribution Date exceeds the amount
distributed to the Servicer pursuant to Sections 2.7B and 2.7C.1 on
such Monthly Servicing Payment Date or Distribution Date, the
Administrator shall instruct the Indenture Trustee in writing to
withdraw from the Reserve Account on such Monthly Servicing Payment
Date or Distribution Date an amount equal to such excess, to the
extent of funds available therein, and to distribute such amount to
the Servicer; provided, however, that, except as provided in
Sections 2.8C(C) and 2.8D, amounts on deposit in the Reserve
Account will not be available to cover any unpaid carryover
Servicing Fees to the Servicer.
2. In the event that the Administration Fee for any Distribution Date
exceeds the amount distributed to the Administrator pursuant to
Section 2.7C.2 on such Distribution Date, the Administrator shall
instruct the Indenture Trustee in writing to withdraw from the
Reserve Account on each Distribution Date an amount equal to such
excess, to the extent of funds available therein after giving
effect to paragraph B.1 above, and to distribute such amount to the
Administrator.
<PAGE>
3. In the event that the Noteholders' Interest Distribution Amount and
the Certificateholders' Return Distribution Amount for a
Distribution Date exceeds the amount distributed to Noteholders and
to the Certificateholders pursuant to Sections 2.7C.3 and C.4 on
such Distribution Date, the Administrator shall instruct the
Indenture Trustee in writing to withdraw from the Reserve Account
on such Distribution Date an amount equal to such excess, to the
extent of funds available therein after giving effect to paragraphs
B.1 and B.2 above, and to distribute such amount to the Noteholders
and to the Certificateholders entitled thereto, in the same order
and priority as is set forth in Sections 2.7C.3 and C.4 subject to
the last paragraph of Section 2.7C.
4. In the event that the Noteholders' Principal Distribution Amount on
the Final Distribution Date with respect to each Class of Notes
exceeds the amount distributed to such Noteholders pursuant to
Section 2.7C.5 and 2.7C.6 on such Distribution Date, the
Administrator shall instruct the Indenture Trustee in writing to
withdraw from the Reserve Account on such final Distribution Date
an amount equal to such excess, to the extent of funds available
therein after giving effect to paragraphs B.1, B.2 and B.3 above,
and to distribute such amount to the Noteholders entitled thereto,
in the same order and priority as is set forth in Sections 2.7C.5
and 2.7C.6.
5. In the event that the Certificateholders' Balance Distribution
Amount on the final Distribution Date with respect to the
Certificates exceeds the amount distributed to the
Certificateholders pursuant to Section 2.7C.7 on such Distribution
Date, the Administrator shall instruct the Indenture Trustee in
writing to withdraw from the Reserve Account on such Distribution
Date an amount equal to such excess, to the extent of funds
available therein after giving effect to paragraphs B.1 through B.4
above, and to distribute such amount to the Eligible Lender Trustee
on behalf of the Certificateholders, for distribution to the
Certificateholders entitled thereto.
<PAGE>
C. After giving effect to Section 2.8B, if the amount on deposit in the
Reserve Account on any Distribution Date (after giving effect to all deposits or
withdrawals therefrom on such Distribution Date other than pursuant to this
paragraph C) is greater than the Specified Reserve Account Balance for such
Distribution Date, the Administrator shall instruct the Indenture Trustee in
writing (A) to pay to the Noteholders out of such excess in the Reserve Account
an amount equal to the Note Principal Shortfall, if any; (B) to pay to the
Certificateholders out of such excess in the Reserve Account an amount equal to
the Certificate Balance Shortfall, if any; (C) to pay to the Servicer out of
such excess in the Reserve Account an amount equal to the amount described in
Section 2.7C.9 for such Distribution Date (to the extent not otherwise paid to
the Servicer on such Distribution Date); (D) to pay to the Noteholders out of
such excess an amount equal to the amount described in Section 2.7C.10 for such
Distribution Date (to the extent not otherwise paid to the Noteholders on such
Distribution Date); (E) to pay to the Certificateholders out of such excess an
amount equal to the amount described in Section 2.7C.11 for such Distribution
Date (to the extent not otherwise paid to the Certificateholders on such
Distribution Date); (F) in the event the Trust Student Loans are not sold
pursuant to Section 6.1A, to pay as an accelerated payment of principal balance
of the Notes or Certificate Balance, as the case may be, first to the
Noteholders in the same order and priority as is set forth in Sections 2.7C.5
and C.6 until the principal amount of the Notes is paid in full and then to the
Certificateholders until the Certificate Balance is reduced to zero, provided
that the amount of such distribution shall not exceed the outstanding principal
balance of the Notes or the Certificate Balance, as applicable, after giving
effect to all other payments in respect of principal of Notes and Certificate
Balance to be made on such date; and (G) to distribute the remaining amount of
<PAGE>
such excess to the Seller. Amounts properly distributed to the Seller pursuant
to this paragraph C shall be deemed released from the Trust Estate and the
security interest therein granted to the Indenture Trustee, and the Seller shall
in no event thereafter be required to refund any such distributed amounts.
D. On the final Distribution Date upon termination of the Trust and
following the payment in full of the aggregate outstanding principal balance of
the Notes and the Certificate Balance and of all other amounts (other than
Carryover Servicing Fees, Note Interest Carryover and Certificate Return
Carryover) owing or to be distributed hereunder or under the Indenture or the
Trust Agreement to Noteholders, Certificateholders, the Servicer or the
Administrator, to the extent that Available Funds on such date are insufficient
to make the following payments, amounts remaining in the Reserve Account shall
be used first to pay any Carryover Servicing Fees, second to pay any Note
Interest Carryover and third to pay any Certificate Return Carryover. Any amount
remaining on deposit in the Reserve Account after such payments have been made
shall be distributed to the Seller. The Seller shall in no event be required to
refund any amounts properly distributed pursuant to this Section 2.8D.
E. Anything in this Section 2.8 to the contrary notwithstanding, if the
market value of securities and cash in the Reserve Account is on any
Distribution Date sufficient to pay the remaining principal amount of and
interest accrued on the Notes, to reduce the Certificate Balance to zero and to
pay any accrued return thereon and to pay any Carryover Servicing Fee, Note
Interest Carryover or Certificate Return Carryover, such amount will be so
applied on such Distribution Date and the Administrator shall instruct the
Eligible Lender Trustee and the Indenture Trustee to make such payments.
Section 2.9 Statements to Certificateholders and Noteholders. On each
Determination Date preceding a Distribution Date, the Administrator shall
provide to the Indenture Trustee and the Eligible Lender Trustee (with a copy to
the Rating Agencies) for the Indenture Trustee to forward on such succeeding
Distribution Date to each Noteholder of record and for the Eligible Lender
Trustee to forward on such succeeding Distribution Date to each
Certificateholder of record a statement, setting forth at least the following
information as to the Notes and the Certificates to the extent applicable:
a. the amount of such distribution allocable to principal of each class
of the Notes;
b. the amount of the distribution allocable to interest on each class
of the Notes;
c. the amount of the distribution allocable to the Certificate Balance;
d. the amount of the distribution allocable to return on the
Certificates;
e. the amount, if any, of the distribution allocable to any Note
Interest Carryover and any Certificate Return Carryover, together
with any remaining outstanding amount of each thereof;
f. the Pool Balance as of the close of business on the last day of the
preceding Collection Period;
g. the aggregate outstanding principal balance of the Notes, the Note
Pool Factor, the Certificate Balance and the Certificate Pool Factor
as of such Distribution Date, after giving effect to payments
allocated to principal reported under clauses (a) and (c) above;
h. the Note Rate for the next period for any class of Notes and the
Certificate Rate for any class of Certificates;
i. the amount of the Servicing Fee and any Carryover Servicing Fee paid
to the Servicer on such Distribution Date and on the two preceding
Monthly Servicing Payment Dates, and the amount, if any, of the
Carryover Servicing Fee remaining unpaid after giving effect to any
such payments;
j. the amount of the Administration Fee paid to the Administrator on
such Distribution Date;
k. the amount of the aggregate Realized Losses, if any, for the related
Collection Period and the balance of Trust Student Loans that are
delinquent in each delinquency period as of the end of such
Collection Period;
<PAGE>
l. the amount of any Note Interest Shortfall, Note Principal Shortfall,
Certificate Return Shortfall and Certificate Balance Shortfall, if
any, in each case as applicable to each class of Securities, and the
change in such amounts from the preceding statement;
m. the aggregate Purchase Amounts for Trust Student Loans, if any, that
were repurchased by the Seller or purchased by the Servicer from the
Issuer in such Collection Period; and
n. the balance of the Reserve Account on such Distribution Date, after
giving effect to changes therein on such Distribution Date.
Each amount set forth pursuant to clauses (a), (b), (c), (d), (e), (i), (j) and
(1) above shall be expressed as a dollar amount per $1,000 of original principal
balance of a Certificate or Note, as applicable. A copy of the statements
referred to above may be obtained by any Certificate Owner or Note Owner by a
written request to the Eligible Lender Trustee or the Indenture Trustee,
respectively, addressed to the respective Corporate Trust Office.
Section 2.10 Non-Ministerial Matters. With respect to matters that in the
reasonable judgment of the Administrator are 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
of the proposed action and the Eligible Lender Trustee shall not have withheld
consent or provided an alternative direction. For the purpose of the preceding
sentence, "non-ministerial matters" shall include:
a. the amendment of or any supplement to the Indenture;
b. the initiation of any claim or lawsuit by the Issuer and the
compromise of any action, claim
<PAGE>
or lawsuit brought by or against the Issuer (other than in
connection with the collection of the Trust Student Loans);
c. the amendment, change or modification of the Basic Documents;
d. the appointment of successor Note Registrars, successor Paying
Agents and successor Indenture Trustees pursuant to the Indenture or
the appointment of Successor Administrators or Successor Servicers,
or the consent to the assignment by the Note Registrar, Paying Agent
or Indenture Trustee of its obligations under the Indenture; and
e. the removal of the Indenture Trustee.
Section 2.11 Exceptions. Notwithstanding anything to the contrary in this
Agreement, except as expressly provided herein or in the other Basic Documents,
the Administrator shall not be obligated to, and shall not, (1) make any
payments to the Noteholders under the Basic Documents, (2) sell the Indenture
Trust Estate pursuant to Section 5.4 of the Indenture, (3) take any other action
that the Issuer directs the Administrator not to take on its behalf, (4) in
connection with its duties hereunder assume any indemnification obligation of
any other Person or (5) service the Trust Student Loans.
Section 2.12 Compensation. As compensation for the performance of the
Administrator's obligations under this Agreement and as reimbursement for its
expenses related thereto, the Administrator shall be entitled to, with respect
to each Trust, $20,000 for each Collection Period payable on the related
Distribution Date (the "Administration Fees") payable in arrears which shall be
solely an obligation of the Issuer.
Section 2.13 Servicer and Administrator Expenses. Each of the Servicer and the
Administrator shall be severally required to pay all expenses incurred by it in
connection with its activities hereunder, including fees and disbursements of
independent accountants, taxes imposed on the Servicer or the Administrator, as
the case may be, and expenses incurred in connection with distributions and
reports to the Administrator or to the Certificateholders and the Noteholders,
as the case may be.
<PAGE>
Article III
Section 3.1 Administrator's Certificate; Servicer's Report.
A. On or before the tenth day of each month (or, if any such day is not
a Business Day, on the next succeeding Business Day), the Servicer shall deliver
to the Administrator a Servicer's Report with respect to the preceding month
containing all information necessary for the Administrator to receive in
connection with the preparation of the Administrator's Officers' Certificate and
the Administrator's Certificate covering such calendar month referred to in
paragraph B below. On or before the tenth day (or, if any such day is not a
Business Day, on the next succeeding Business Day), preceding each Distribution
Date the Servicer shall deliver to the Administrator a Servicer's Report with
respect to the preceding Collection Period containing all information necessary
for the Administrator to receive in connection with the preparation of the
Administrator's Officers' Certificate and the Administrator's Certificate
covering such calendar month referred to in paragraph C below.
B. On the 2nd Business Day prior to each Monthly Servicing Payment Date
that is not a Distribution Date, the Administrator shall deliver to the Eligible
Lender Trustee and the Indenture Trustee, an Officer's Certificate of the
Administrator containing all information necessary to pay the Servicer the
Servicing Fee due on such Monthly Servicing Payment Date pursuant to Section
2.7B.
C. On each Determination Date prior to a Distribution Date, the
Administrator shall deliver to the Eligible Lender Trustee and the Indenture
Trustee, with a copy to the Rating Agencies, an Administrator's Certificate
containing all information necessary to make the distributions pursuant to
Sections 2.7 and 2.8, if applicable, for the Collection Period preceding the
date of such Administrator's Certificate.
D. Prior to each Determination Date, the Administrator shall determine
the Note Rates and the Certificate Rate that will be applicable to the
Distribution Date following such Determination Date, in compliance with its
<PAGE>
obligation to prepare and deliver an Administrator's Certificate on such
Determination Date pursuant to this Section 3.1. In connection therewith, the
Administrator shall calculate the T-Bill Rate in accordance with the definition
thereof and shall also determine the Student Loan Rate with respect to such
Distribution Date.
E. The Administrator shall furnish to the Issuer from time to time such
information regarding the Collateral as the Issuer shall reasonably request.
Section 3.2 Annual Statements as to Compliance; Notice of Default; Financial
Statements.
A. Each of the Servicer and the Administrator shall deliver to the
Eligible Lender Trustee and the Indenture Trustee on or before 120 days after
the end of the fiscal year of the Servicer and the Administrator, an Officer's
Certificate of the Servicer or the Administrator, as the case may be, dated as
of December 31 of the preceding year, stating that (i) a review of the
activities of the Servicer or the Administrator, as the case may be, during the
preceding 12-month period (or, in the case of the first such certificate, during
the period from the Closing Date to December 31, 1997) and of its performance
under this Agreement has been made under such officers' supervision and (ii) to
the best of such officers' knowledge, based on such review, the Servicer or the
Administrator, as the case may be, has fulfilled its obligations in all material
respects under this Agreement and, with respect to the Servicer, the Servicing
Agreement throughout such year or, if there has been a material default in the
fulfillment of any such obligation, specifying each such material default known
to such officers and the nature and status thereof. The Indenture Trustee shall
send a copy of each such Officers' Certificate and each report referred to in
Section 3.1 to the Rating Agencies. A copy of each such Officers' Certificate
and each report referred to in Section 3.1 may be obtained by any
Certificateholder, Certificate Owner, Noteholder or Note Owner by a request in
writing to the Eligible Lender Trustee addressed to its Corporate Trust Office,
together with evidence satisfactory to the Eligible Lender Trustee that such
Person is one of the foregoing parties. Upon the telephone request of the
Eligible Lender Trustee, the Indenture Trustee will promptly furnish the
Eligible Lender Trustee a list of Noteholders as of the date specified by the
Eligible Lender Trustee.
<PAGE>
B. The Servicer shall deliver to the Eligible Lender Trustee, the
Indenture Trustee and the Rating Agencies, promptly after having obtained
knowledge thereof, but in no event later than five Business Days thereafter,
written notice in an Officers' Certificate of the Servicer of any event which
with the giving of notice or lapse of time, or both, would become a Servicer
Default under Section 5.1 of the Servicing Agreement.
C. The Administrator shall deliver to the Eligible Lender Trustee, the
Indenture Trustee and the Rating Agencies, promptly after having obtained
knowledge thereof, but in no event later than five Business Days thereafter,
written notice in an Officers' Certificate of the Administrator of any event
which with the giving of notice or lapse of time, or both, would become an
Administrator Default under Sections 5.1A or B or would cause the Student Loan
Marketing Association to fail to meet the requirement of clause (i) of Section
2.4.
D. The Administrator shall provide to the Eligible Lender Trustee, the
Indenture Trustee and the Rating Agencies (a) as soon as possible and in no
event more than 120 days after the end of each fiscal year of the Administrator
audited financials as at the end of and for such year and (b) as soon as
possible and in no event more than 45 days after the end of each quarterly
accounting period of the Administrator unaudited financials as at the end of and
for such period.
Section 3.3 Annual Independent Certified Public Accountants' Report. Each of the
Servicer and the Administrator shall cause a firm of independent certified
public accountants, which may also render other services to the Servicer or the
Administrator, as the case may be, to deliver to the Eligible Lender Trustee,
the Indenture Trustee and the Rating Agencies on or before March 31 of each
year, a report addressed to the Servicer or the Administrator, as the case may
be, the Eligible Lender Trustee and the Indenture Trustee, to the effect that
such firm has examined certain documents and records relating to the servicing
of the Trust Student Loans, or the administration of the Trust Student Loans and
of the Trust, as the case may be, during the preceding calendar year (or, in the
case of the first such report, during
<PAGE>
the period from the Closing Date to December 31, 1997) and that, on the basis of
the accounting and auditing procedures considered appropriate under the
circumstances, such firm is of the opinion that such servicing or
administration, respectively, was conducted in compliance with those terms of
this Agreement and in the case of the Servicer, the Servicing Agreement,
including any applicable statutory provisions incorporated therein and such
additional terms and statutes as may be specified from time to time by the
Administrator, except for (i) such exceptions as such firm shall believe to be
immaterial and (ii) such other exceptions as shall be set forth in such report.
Such report will also indicate that the firm is independent of the
Servicer or the Administrator, as the case may be, within the meaning of the
Code of Professional Ethics of the American Institute of Certified Public
Accountants.
Article IV
Section 4.1 Representations of Administrator. The Student Loan Marketing
Association, as Administrator, makes the following representations on which the
Issuer is deemed to have relied in acquiring the Trust Student Loans. The
representations speak as of the execution and delivery of this Agreement and as
of the Closing Date and shall survive the sale of the Trust Student Loans to the
Eligible Lender Trustee on behalf of the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture.
A. Organization and Good Standing. The Administrator is duly organized
and validly existing under the laws of the United States of America, with the
power and authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted.
B. Power and Authority. The Administrator has the corporate power and
authority to execute and deliver this Agreement and to carry out its terms, and
the execution, delivery and performance of this Agreement have been duly
authorized by the Administrator by all necessary corporate action.
<PAGE>
C. Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of the Administrator enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization and similar
laws relating to creditors' rights generally and subject to general principles
of equity.
D. No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof or thereof do not
conflict with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time or both) a default under,
the charter or by-laws of the Administrator, or any indenture, agreement or
other instrument to which the Administrator is a party or by which it shall be
bound; nor result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than pursuant to the Basic Documents); nor violate any law or,
to the knowledge of the Administrator, any order, rule or regulation applicable
to the Administrator of any court or of any Federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Administrator or its properties.
E. No Proceedings. There are no proceedings or investigations pending
against the Administrator or, to its best knowledge, threatened against the
Administrator, before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Administrator or its
properties: (i) asserting the invalidity of this Agreement or any of the other
Basic Documents, the Notes or the Certificates, (ii) seeking to prevent the
issuance of the Notes or the Certificates or the consummation of any of the
transactions contemplated by this Agreement or any of the other Basic Documents,
(iii) seeking any determination or ruling that could reasonably be expected to
have a material and adverse effect on the performance by the Administrator of
its obligations under, or the validity or enforceability of, this Agreement, any
of the other Basic Documents, the Notes or the Certificates or (iv) seeking to
affect adversely the Federal or state income tax attributes of the Issuer, the
Notes or the Certificates.
F. All Consents. All authorizations, consents, orders or approvals of or
registrations or declarations with any court, regulatory body, administrative
agency or other government instrumentality required to be obtained, effected or
given by the Administrator in connection with the execution and delivery by the
Administrator of this Agreement and the performance by the Administrator of the
transactions contemplated by this Agreement have been duly obtained, effected or
given and are in full force and effect.
<PAGE>
Section 4.2 Liability of Administrator: Indemnities. The Administrator shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Administrator under this Agreement.
The Administrator shall indemnify, defend and hold harmless the Issuer,
the Certificateholders and the Noteholders and any of the officers, directors,
employees and agents of the Issuer from and against any and all costs, expenses,
losses, claims, damages and liabilities to the extent that such cost, expense,
loss, claim, damage or liability arose out of, or was imposed upon any such
Person through, the gross negligence, willful misfeasance or bad faith of the
Administrator in the performance of its duties under this Agreement or by reason
of reckless disregard of its obligations and duties hereunder or thereunder.
The Administrator shall indemnify the Indenture Trustee in its
individual capacity and any of its officers, directors, employees and agents
against any and all loss, liability or expense (including attorneys' fees)
incurred by it in connection with the performance of its duties under the
Indenture and the other Basic Documents. The Indenture Trustee shall notify the
Issuer and the Administrator promptly of any claim for which it may seek
indemnity. Failure by the Indenture Trustee to so notify the Issuer and the
Administrator shall not relieve the Issuer or the Administrator of its
obligations hereunder and under the other Basic Documents. The Administrator
shall defend the claim and the Administrator shall not be liable for the legal
fees and expenses of the Indenture Trustee after it has assumed such defense;
provided, however, that, in the event that there may be a conflict between the
positions of the Indenture Trustee and the Administrator in conducting the
defense of such claim, the Indenture Trustee shall be entitled to separate
counsel the fees and expenses of which shall be paid by the Administrator on
behalf of the Issuer. Neither the Issuer nor the Administrator need reimburse
any expense or indemnify against any loss, liability or expense incurred by the
Indenture Trustee through the Indenture Trustee's own willful misconduct,
negligence or bad faith.
<PAGE>
The Administrator shall indemnify each of the Eligible Lender Trustee
and the Interim Eligible Lender Trustee in its individual capacity and any of
its officers, directors, employees and agents against any and all loss,
liability, claims, damages, costs, penalties, taxes (excluding taxes payable by
it on any compensation received by it for its services as trustee) or expense
(including attorneys' fees) incurred by it in connection with the performance of
its duties under the Interim Trust Agreement, the Trust Agreement and the other
Basic Documents.
Without limiting the generality of the foregoing, the Administrator
shall indemnify the Eligible Lender Trustee in its individual capacity and any
of its officers, directors, employees and agents against any and all liability
relating to or resulting from any of the following:
(i) any claim that the Trust Student Loans (or any guarantee with
respect thereto) are delinquent, uncollectable, uninsured, illegal,
invalid or unenforceable;
(ii) any claim that the Trust Student Loans have not been made,
administered, serviced or collected in accordance with applicable
federal and state laws or the requirements of any Guarantor; or
(iii) any claim that any original note or other document evidencing or
relating to the Trust Student Loans has been lost, misplaced or
destroyed.
The Eligible Lender Trustee shall notify the Administrator promptly of
any claim for which it may seek indemnity. Failure by the Eligible Lender
Trustee to so notify the Administrator shall not relieve the Administrator of
its obligations hereunder and under the other Basic Documents. The Administrator
shall defend the claim and the Administrator shall not be liable for the legal
fees and expenses of the Eligible Lender Trustee after it has assumed such
defense; provided, however, that, in the event that there may be a conflict
between the positions of the Eligible Lender Trustee and the Administrator in
conducting the defense of such claim, the Eligible Lender Trustee shall be
entitled to separate counsel the fees and expenses of which shall be paid by the
Administrator on behalf of the Issuer. Neither the Issuer nor the Administrator
need reimburse any expense or indemnify against any loss, liability or expense
incurred by the Eligible Lender Trustee through the Eligible Lender Trustee's
own willful misconduct, negligence or bad faith.
<PAGE>
The Seller shall pay reasonable compensation to the Indenture Trustee
and the Eligible Lender Trustee and shall reimburse the Indenture Trustee and
the Eligible Lender Trustee for all reasonable expenses, disbursements and
advances.
For purposes of this Section, in the event of the termination of the
rights and obligations of the Administrator (or any successor thereto pursuant
to Section 4.3) as Administrator pursuant to Section 5.1, or a resignation by
such Administrator pursuant to this Agreement, such Administrator shall be
deemed to be the Administrator pending appointment of a successor Administrator
pursuant to Section 5.2.
Indemnification under this Section shall survive the resignation or
removal of the Eligible Lender Trustee or the Indenture Trustee or the
termination of this Agreement and shall include reasonable fees and expenses of
counsel and expenses of litigation. If the Administrator shall have made any
indemnity payments pursuant to this Section and the Person to or on behalf of
whom such payments are made thereafter collects any of such amounts from others,
such Person shall promptly repay such amounts to the Administrator, without
interest.
Section 4.3 Merger or Consolidation of, or Assumption of the Obligations of,
Administrator. Any Person (a) into which the Administrator may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Administrator shall be a party or (c) which may succeed to the properties and
assets of the Administrator substantially as a whole, shall be the successor to
the Administrator without the execution or filing of any document or any further
act by any of the parties to this Agreement; provided, however, that the
Administrator hereby covenants that it will not consummate any of the foregoing
transactions except upon satisfaction of the following: (i) the surviving
Administrator, if other than the Student Loan Marketing Association, executes an
agreement of assumption to perform every obligation of the Administrator under
this Agreement, (ii) immediately after giving effect to such transaction, no
representation or warranty made pursuant to Section 4.1 shall have been breached
and no Administrator Default, and no event that, after notice or lapse of time,
or both, would become an Administrator Default shall have occurred and be
continuing, (iii) the surviving Administrator, if other than the Student Loan
Marketing Association, shall have delivered to the Eligible Lender Trustee and
the Indenture Trustee an Officers' Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section and that all conditions precedent, if any,
provided for in this Agreement relating to such transaction have been complied
with, and that the Rating Agency Condition shall have been satisfied with
respect to such transaction, (iv) unless the Student Loan Marketing Association
is the surviving entity, such transaction will not result in a material adverse
Federal or state tax consequence to the Issuer, the Noteholders or the
Certificateholders and (v) unless the Student Loan Marketing Association is the
surviving entity, the Administrator shall have delivered to the Eligible Lender
Trustee and the Indenture Trustee an opinion of Counsel either (A) stating that,
in the opinion of such counsel, all financing statements and continuation
statements and amendments thereto have been executed and filed that are
necessary fully to preserve and protect the interest of the Eligible Lender
Trustee and Indenture Trustee, respectively, in the Trust Student Loans and
reciting the details of such filings, or (B) stating that, in the opinion of
such counsel, no such action shall be necessary to preserve and protect such
interests. Anything in this Section 4.3 to the contrary notwithstanding, the
Administrator may at any time assign its rights, obligations and duties under
this Agreement to an Affiliate provided that the Rating Agencies confirm that
such assignment will not result in a downgrading or a withdrawal of the ratings
then applicable to the Notes and the Certificates.
<PAGE>
Section 4.4 Limitation on Liability of Seller, Adminstrator and Others. Neither
the Administrator nor any of its directors, officers, employees or agents shall
be under any liability to the Issuer, the Noteholders or the Certificateholders,
or to the Indenture Trustee or the Eligible Lender Trustee except as provided
under this Agreement for any action taken or for refraining from the taking of
any action pursuant to this Agreement or for errors in judgment; provided,
however, that these provisions shall not protect the Administrator or any such
person against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations and duties under this Agreement. The
Administrator and any of its directors, officers, employees or agents may rely
in good faith on the advice of counsel or on any document of any kind, prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder.
Except as provided in this Agreement, the Administrator shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to administer the Trust Student Loans and
the Trust in accordance with this Agreement and that in its opinion may involve
it in any expense or liability; provided, however, that the Administrator may
undertake any reasonable action that it may deem necessary or desirable in
respect of this Agreement and the other Basic Documents and the rights and
duties of the parties to this Agreement and the other Basic Documents and the
interests of the Certificateholders under this Agreement and the Noteholders
under the Indenture and under this Agreement.
Section 4.5 Administrator May Own Certificates or Notes. The Administrator and
any Affiliate thereof may in its individual or any other capacity become the
owner or pledgee of Certificates or Notes with the same rights as it would have
if it were not the Administrator or an Affiliate thereof, except as expressly
provided herein or in any other Basic Document.
Section 4.6 Student Loan Marketing Association Not to Resign as Administrator.
Subject to the provisions of Section 4.3, the Student Loan Marketing Association
shall not resign from the obligations and duties imposed on it as Administrator
under this Agreement except upon determination that the performance of its
duties under this Agreement shall no longer be permissible under applicable law
or shall violate any final order of a court or administrative agency with
jurisdiction over the Student Loan Marketing Association or its properties.
Notice of any such determination permitting or requiring the resignation of the
Student Loan Marketing Association shall be communicated to the Eligible Lender
Trustee and the Indenture Trustee at the earliest practicable time (and, if such
communication is not in writing, shall be confirmed in writing at the earliest
practicable time) and any such determination shall be evidenced by an Opinion of
Counsel to such effect delivered to the Eligible Lender Trustee and the
Indenture Trustee concurrently with or promptly after such notice. No such
resignation shall become effective until the Indenture Trustee or a successor
Administrator shall have assumed the responsibilities and obligations of the
Student Loan Marketing Association in accordance with Section 5.2. Anything in
this Section 4.7 to the contrary notwithstanding, the Administrator may resign
at any time subsequent to the assignment of its duties and obligations hereunder
pursuant to Section 4.3.
Article V
Section 5.1 Administrator Default. If any one of the following events (an
"Administrator Default") shall occur and be continuing:
A. (i) in the event that daily deposits into the Collection Account
are not required, any failure by the Administrator to deliver to
the Indenture Trustee for deposit in the Trust Accounts any
Available Funds required to be paid on or before the Business Day
immediately preceding any Monthly Servicing Payment Date or
Distribution Date, as applicable, or (ii) any failure by the
Administrator to direct the Indenture Trustee to make any
required distributions from either of the Trust Accounts, which
failure in case of either clause (i) or (ii) continues unremedied
for five Business Days after written notice of such failure is
received by the Administrator from the Indenture Trustee or the
Eligible Lender Trustee or after discovery of such failure by an
officer of the Administrator; or
<PAGE>
B. any failure by the Administrator duly to observe or to perform in
any material respect any other term, covenant or agreement of the
Administrator set forth in this Agreement or any other Basic
Document, which failure shall (i) materially and adversely affect
the rights of Noteholders or Certificateholders and (ii) continue
unremedied for a period of 60 days after the date on which
written notice of such failure, requiring the same to be
remedied, shall have been given (A) to the Administrator by the
Indenture Trustee or the Eligible Lender Trustee or (B) to the
Administrator, the Indenture Trustee and the Eligible Lender
Trustee by the Noteholders or Certificateholders, as applicable,
representing not less than 25% of the Outstanding Amount of the
Notes or 25% of the outstanding Certificate Balance (including
any Certificates owned by the Seller); or
C. an Insolvency Event occurs with respect to the Administrator;
then, and in each and every case, so long as the Administrator Default shall not
have been remedied, either the Indenture Trustee or the Noteholders evidencing
not less than 25% of the Outstanding Amount of the Notes, by notice then given
in writing to the Administrator (and to the Indenture Trustee and the Eligible
Lender Trustee if given by the Noteholders) may terminate all the rights and
obligations (other than the obligations set forth in Section 4.2) of the
Administrator under this Agreement. On or after the receipt by the Administrator
of such written notice, all authority and power of the Administrator under this
Agreement, whether with respect to the Notes, the Certificates, the Trust
Student Loans or otherwise, shall, without further action, pass to and be vested
in the Indenture Trustee or such successor Administrator as may be appointed
under Section 5.2; and, without limitation, the Indenture Trustee and the
Eligible Lender Trustee are hereby authorized and empowered to
<PAGE>
execute and deliver, for the benefit of the predecessor Administrator, as
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination. The predecessor Administrator shall
cooperate with the successor Administrator, the Indenture Trustee and the
Eligible Lender Trustee in effecting the termination of the responsibilities and
rights of the predecessor Administrator under this Agreement. All reasonable
costs and expenses (including attorneys' fees) incurred in connection with
amending this Agreement to reflect such succession as Administrator pursuant to
this Section shall be paid by the predecessor Administrator (other than the
Indenture Trustee acting as the Administrator under this Section 5.1) upon
presentation of reasonable documentation of such costs and expenses. Upon
receipt of notice of the occurrence of an Administrator Default, the Eligible
Lender Trustee shall give notice thereof to the Rating Agencies.
Section 5.2 Appointment of Successor.
A. Upon receipt by the Administrator of notice of termination pursuant
to Section 5.1, or the resignation by the Administrator in accordance with the
terms of this Agreement, the predecessor Administrator shall continue to perform
its functions as Administrator under this Agreement in the case of termination,
only until the date specified in such termination notice or, if no such date is
specified in a notice of termination, until receipt of such notice and, in the
case of resignation, until the later of (x) the date 120 days from the delivery
to the Eligible Lender Trustee and the Indenture Trustee of written notice of
such resignation (or written confirmation of such notice) in accordance with the
terms of this Agreement and (y) the date upon which the predecessor
Administrator shall become unable to act as Administrator as specified in the
notice of resignation and accompanying Opinion of Counsel (the "Transfer Date").
In the event of the termination hereunder of the Administrator the Issuer shall
appoint a successor Administrator acceptable to the Indenture Trustee, and the
successor Administrator shall accept its appointment by a written assumption in
form acceptable to the Indenture Trustee. In the event that a successor
Administrator has not been appointed at the time when the predecessor
Administrator has ceased to act as Administrator in accordance with this
Section, the Indenture Trustee without further action shall automatically be
appointed the successor Administrator and the Indenture Trustee shall be
entitled to the Administration Fee. Notwithstanding the above, the Indenture
Trustee shall, if it shall be unwilling or legally unable so to act, appoint or
petition a court of competent jurisdiction to appoint any established
institution whose regular business shall include the servicing of student loans,
as the successor to the Administrator under this Agreement.
<PAGE>
B. Upon appointment, the successor Administrator (including the
Indenture Trustee acting as successor Administrator), shall be the successor in
all respects to the predecessor Administrator and shall be subject to all the
responsibilities, duties and liabilities placed on the predecessor Administrator
that arise thereafter or are related thereto and shall be entitled to an amount
agreed to by such successor Administrator (which shall not exceed the
Administration Fee unless such compensation arrangements will not result in a
downgrading or withdrawal of any rating on the Notes or the Certificates by any
Rating Agency) and all the rights granted to the predecessor Administrator by
the terms and provisions of this Agreement.
C. The Administrator may not resign unless it is prohibited from serving
as such by law as evidenced by an Opinion of Counsel to such effect delivered to
the Indenture Trustee and the Eligible Lender Trustee. Notwithstanding the
foregoing or anything to the contrary herein or in the other Basic Documents,
the Indenture Trustee, to the extent it is acting as successor Administrator
pursuant hereto and thereto, shall be entitled to resign to the extent a
qualified successor Administrator has been appointed and has assumed all the
obligations of the Administrator in accordance with the terms of this Agreement
and the other Basic Documents.
Section 5.3 Notification to Noteholders and Certificateholders. Upon any
termination of, or appointment of a successor to, the Administrator pursuant to
this Article V, the Eligible Lender Trustee shall give prompt written notice
thereof to Certificateholders and the Indenture Trustee shall give prompt
written notice thereof to Noteholders and the Rating Agencies (which, in the
case of any such appointment of a successor, shall consist of prior written
notice thereof to the Rating Agencies).
<PAGE>
Section 5.4 Waiver of Past Defaults. The Noteholders of Notes evidencing a
majority of the Outstanding Amount of the Notes (or the Certificateholders of
Certificates evidencing a majority of the outstanding Certificate Balance, in
the case of any default which does not adversely affect the Indenture Trustee or
the Noteholders) may, on behalf of all Noteholders and Certificateholders, waive
in writing any default by the Administrator in the performance of its
obligations hereunder and any consequences thereof, except a default in making
any required deposits to or payments from any of the Trust Accounts (or giving
instructions regarding the same) in accordance with this Agreement. Upon any
such waiver of a past default, such default shall cease to exist, and any
Administrator Default arising therefrom shall be deemed to have been remedied
for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereto.
Article VI
Section 6.1 Termination.
A. Optional Purchase of All Trust Student Loans. The Administrator shall
notify the Seller and the Indenture Trustee in writing, within 15 days after the
last day of any Collection Period as of which the then outstanding Pool Balance
is 12% or less of the Initial Pool Balance, of the percentage that the then
outstanding Pool Balance bears to the Initial Pool Balance. As of the last day
of any Collection Period immediately preceding a Distribution Date as of which
the then outstanding Pool Balance is 10% or less of the Initial Pool Balance,
the Eligible Lender Trustee on behalf and at the direction of the Seller, or any
other "eligible lender" (within the meaning of the Higher Education Act)
designated by the Seller in writing to the Eligible Lender Trustee and the
Indenture Trustee, shall have the option to purchase the Trust Estate, other
than the Trust Accounts. To exercise such option, the Seller shall deposit
pursuant to Section 2.6 in the Collection Account an amount equal to the
aggregate Purchase Amount for the Trust Student Loans and the related rights
with respect thereto, plus the appraised value of any such other property held
by the
<PAGE>
Trust other than the Trust Accounts, such value to be determined by an
appraiser mutually agreed upon by the Seller, the Eligible Lender Trustee and
the Indenture Trustee, and shall succeed to all interests in and to the Trust;
provided, however, that the Seller may not effect such purchase if such
aggregate Purchase Amounts do not equal or exceed the Minimum Purchase Amount
plus any Note Interest Carryover, Certificate Return carryover and carryover
servicing Fees. In the event the Seller fails to notify the Eligible Lender
Trustee and the Indenture Trustee in writing prior to the acceptance by the
Indenture Trustee of a bid to purchase the Trust Estate pursuant to Section 4.4
of the Indenture that the Seller intends to exercise its option to purchase the
Trust Estate, the Seller shall be deemed to have waived its option to purchase
the Trust Estate as long as the Seller has received 5 business days' notice from
the Indenture Trustee as provided in Section 4.4 of the Indenture.
B. Insolvency of the Seller. Upon any sale of the assets of the Trust
pursuant to Section 9.2 of the Trust Agreement, the Administrator shall instruct
the Indenture Trustee in writing to deposit the net proceeds from such sale
after all payments and reserves therefrom (including the expenses of such sale)
have been made (the "Insolvency Proceeds") in the Collection Account. On the
first Distribution Date following the date on which the Insolvency Proceeds are
deposited in the Collection Account, the Administrator shall instruct the
Indenture Trustee to make the following distributions (after the application on
such Distribution Date of the amount of Available Funds and amounts on deposit
in the Reserve Account pursuant to Sections 2.7 and 2.8) from the Insolvency
Proceeds and any funds remaining on deposit in the Reserve Account (including
the proceeds of any sale of investments therein as described in the following
sentence):
a. to the Noteholders, any unpaid Noteholders' Interest Distribution
Amount for such Distribution Date as set forth in Sections 2.7C.3;
b. to the Noteholders, the outstanding principal balance of the Notes
in the same order and priority as is set forth in Sections 2.7C.5
and C.6;
<PAGE>
c. to the Certificateholders, any unpaid Certificate Return
Distribution Amount for such Distribution Date;
d. to the Certificateholders, the Certificate Balance;
e. to the Servicer, any unpaid Carryover Servicing Fees;
f. to the Noteholders, any unpaid Note Interest Carryover; and
g. to the Certificateholders, any unpaid Certificate Return Carryover.
Any investments on deposit in the Reserve Account which will not mature on or
before such Distribution Date shall be sold by the Indenture Trustee at such
time as will result in the Indenture Trustee receiving the proceeds from such
sale not later than the Business Day preceding such Distribution Date. Any
Insolvency Proceeds remaining after the deposits described above shall be paid
to the Seller.
C. Notice. Notice of any termination of the Trust shall be given by the
Administrator to the Eligible Lender Trustee and the Indenture Trustee as soon
as practicable after the Administrator has received notice thereof.
D. Succession. Following the satisfaction and discharge of the Indenture
and the payment in full of the principal of and interest on the Notes, the
Certificateholders shall succeed to the rights of the Noteholders hereunder and
the Eligible Lender Trustee shall succeed to the rights of, and assume the
obligations of, the Indenture Trustee pursuant to this Agreement and any other
Basic Documents.
Article VII
Section 7.1 Protecton of Interests in Trust.
A. The Seller shall execute and file such financing statements and cause
to be executed and filed such continuation statements, all in such manner and in
such places as may be required by law fully to preserve, maintain, and protect
the interest of the Issuer, the Eligible Lender Trustee and the Indenture
Trustee in the Trust Student Loans and in the proceeds thereof. The Seller shall
deliver (or cause to be delivered) to the Eligible Lender Trustee and the
Indenture Trustee filestamped copies of, or filing receipts for, any document
filed as provided above, as soon as available following such filing.
B. Neither the Seller nor the Servicer shall change its name, identity
or corporate structure in any manner that would, could or might make any
financing statement or continuation statement filed in accordance with paragraph
A above seriously misleading within the meaning of ss. 9-402(7) of the UCC,
unless it shall have given the Eligible Lender Trustee and the Indenture Trustee
at least five days' prior written notice thereof and shall have promptly filed
appropriate amendments to all previously filed financing statements or
continuation statements.
C. Each of the Seller and the Servicer shall have an obligation to give
the Eligible Lender Trustee and the Indenture Trustee at least 60 days' prior
written notice of any relocation of its principal executive office if, as a
result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall promptly file any such
amendment. The Servicer shall at all times maintain each office from which it
shall service Trust Student Loans, and its principal executive office, within
the United States of America.
D. The Servicer shall maintain accounts and records as to each Trust
Student Loan accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Trust Student Loan, including
payments and recoveries made and payments owing (and the nature of each) and
(ii) reconciliation between payments or recoveries on (or with respect to) each
Trust Student Loan and the amounts from time to time deposited by the Servicer
in the Collection Account in respect of such Trust Student Loan.
E. The Servicer shall maintain its computer systems so that, from and
after the time of sale of the Trust Student Loans to the Eligible Lender Trustee
on behalf of the Issuer, the Servicer's master computer records (including any
backup archives) that refer to a Trust Student Loan shall indicate clearly the
interest of the Issuer, the Eligible Lender Trustee and the Indenture Trustee in
such Trust Student Loan and that such Trust Student Loan is owned by the
Eligible Lender Trustee on behalf of the Issuer and has been pledged to the
Indenture Trustee. Indication of the Issuer's, the Eligible Lender Trustee's and
the Indenture Trustee's interest in a Trust Student Loan shall be deleted from
or modified on the Servicer's computer systems when, and only when, the related
Trust Student Loan shall have been paid in full or repurchased.
<PAGE>
F. If at any time the Seller or the Administrator shall propose to sell,
grant a security interest in, or otherwise transfer any interest in student
loans to any prospective purchaser, lender or other transferee, the Servicer
shall give to such prospective purchaser, lender or other transferee computer
tapes, records or printouts (including any restored from backup archives) that,
if they refer in any manner whatsoever to any Trust Student Loan, indicate
clearly that such Trust Student Loan has been sold and is owned by the Eligible
Lender Trustee on behalf of the Issuer and has been pledged to the Indenture
Trustee.
G. Upon reasonable notice, the Servicer shall permit the Indenture
Trustee and its agents at any time during normal business hours to inspect,
audit and make copies of and abstracts from the Servicer's records regarding any
Trust Student Loan.
H. Upon request, at any time the Eligible Lender Trustee or the
Indenture Trustee have reasonable grounds to believe that such request would be
necessary in connection with its performance of its duties under the Basic
Documents, the Servicer shall furnish to the Eligible Lender Trustee or to the
Indenture Trustee (in each case, with a copy to the Administrator), within five
Business Days, a list of all Trust Student Loans (by borrower social security
number, type of loan and date of issuance) then held as part of the Trust, and
the Administrator shall furnish to the Eligible Lender Trustee or to the
Indenture Trustee, within 20 Business Days thereafter, a comparison of such list
to the list of Initial Trust Student Loans set forth in Schedule A to the
Indenture as of the Closing Date, and, for each Trust Student Loan that has been
removed from the pool of loans held by the Eligible Lender Trustee on behalf of
the Issuer, information as to the date as of which and circumstances under which
each such Trust Student Loan was so removed.
<PAGE>
I. The Seller shall deliver to the Eligible Lender Trustee and the
Indenture Trustee:
(1) promptly after the execution and delivery of this Agreement and of
each amendment thereto and on each Transfer Date, an opinion of Counsel
either (A) stating that, in the opinion of such counsel, all financing
statements and continuation statements have been executed and filed that
are necessary fully to preserve and protect the interest of the Eligible
Lender Trustee and the Indenture Trustee in the Trust Student Loans, and
reciting the details of such filings or referring to prior opinions of
counsel in which such details are given, or (B) stating that, in the
opinion of such counsel, no such action shall be necessary to preserve
and protect such interest; and
(2) within 120 days after the beginning of each calendar year beginning
with the first calendar year beginning more than three months after the
Cutoff Date, an Opinion of Counsel, dated as of a date during such
120-day period, either (A) stating that, in the opinion of such counsel,
all financing statements and continuation statements have been executed
and filed that are necessary fully to preserve and protect the interest
of the Eligible Lender Trustee and the Indenture Trustee in the Trust
Student Loans, and reciting the details of such filings or referring to
prior opinions of Counsel in which such details are given, or (B)
stating that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interest; provided that a single
Opinion of Counsel may be delivered in satisfaction of the foregoing
requirement and that of Section 3.6(b) of the Indenture.
Each Opinion of Counsel referred to in clause (1) or (2) above shall
specify (as of the date of such opinion
<PAGE>
and given all applicable laws as in effect on such date) any action
necessary to be taken in the following year to preserve and protect such
interest.
J. The Seller shall, to the extent required by applicable law, cause the
Certificates and the Notes to be registered with the Commission pursuant to
Section 12(b) or Section 12(g) of the Exchange Act within the time periods
specified in such sections.
<PAGE>
Article VIII
Section 8.1 Independence of the Administrator. For all purposes of this
Agreement, the Administrator shall be an independent contractor and shall not be
subject to the supervision of the Issuer or the Eligible Lender Trustee with
respect to the manner in which it accomplishes the performance of its
obligations hereunder. Unless expressly authorized by the Issuer, the
Administrator shall have no authority to act for or represent the Issuer or the
Eligible Lender Trustee in any way and shall not otherwise be deemed an agent of
the Issuer or the Eligible Lender Trustee.
Section 8.2 No Joint Venture. Nothing contained in this Agreement (i) shall
constitute the Administrator and either of the Issuer or the Eligible Lender
Trustee as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
Section 8.3 Other Activities of Administrator. Nothing herein shall prevent the
Administrator or its Affiliates from engaging in other businesses or, in its
sole discretion, from acting in a similar capacity as an administrator for any
other person or entity even though such person or entity may engage in business
activities similar to those of the Issuer, the Eligible Lender Trustee or the
Indenture Trustee.
Section 8.4 Powers of Attorney. The Eligible Lender Trustee and the Indenture
Trustee shall upon the written request of the Administrator furnish the
Administrator with any powers of attorney and other documents reasonably
necessary or appropriate to enable the Administrator to carry out its
administrative duties hereunder.
<PAGE>
Section 8.5 Amendment. This Agreement (other than Sections 2.1 and 2.2) and any
Supplement may be amended by the Seller, the Servicer, the Administrator, the
Eligible Lender Trustee and the Indenture Trustee, without the consent of any of
the Noteholders or the Certificateholders, to cure any ambiguity, to correct or
supplement any provisions in this Agreement or for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions in
this Agreement or of modifying in any manner the rights of the Noteholders or
the Certificateholders; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel delivered to the Eligible Lender Trustee and
the Indenture Trustee, adversely affect in any material respect the interests of
any Noteholder or Certificateholder.
Sections 2.1 and 2.2 may be amended from time to time by a written
amendment duly executed and delivered by the Eligible Lender Trustee, the
Indenture Trustee and the Administrator, without the consent of the Noteholders
and the Certificateholders, for the purpose of adding any provision to or
changing in any manner or eliminating any of the provisions of such Article;
provided that such amendment will not, in an Opinion of Counsel obtained on
behalf of the Issuer and satisfactory to the Indenture Trustee and the Eligible
Lender Trustee, materially and adversely affect the interest of any Noteholder
or Certificateholder.
This Agreement (other than Sections 2.1 and 2.2) and any Supplement may
also be amended from time to time by the Seller, the Servicer, the
Administrator, the Indenture Trustee and the Eligible Lender Trustee, and
Sections 2.1 and 2.2 may also be amended by the Eligible Lender Trustee, the
Administrator and the Indenture Trustee, with the consent of the Noteholders of
Notes evidencing a majority of the Outstanding Amount of the Notes and the
consent of the Certificateholders of Certificates evidencing a majority of the
Certificate Balance, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or the Certificateholders;
<PAGE>
provided, however, that no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments with respect to Trust Student Loans or distributions that shall be
required to be made for the benefit of the Noteholders or the Certificateholders
or (b) reduce the aforesaid percentage of the Outstanding Amount of the Notes
and the Certificate Balance, the Noteholders or the Certificateholders of which
are required to consent to any such amendment, without the consent of all
outstanding Noteholders and Certificateholders.
Promptly after the execution of any such amendment (or, in the case of
the Rating Agencies, fifteen days prior thereto), the Eligible Lender Trustee
shall furnish written notification of the substance of such amendment to each
Certificateholder, the Indenture Trustee and each of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof.
Prior to the execution of any amendment to this Agreement or any
Supplement, the Eligible Lender Trustee and the Indenture Trustee shall be
entitled to receive and rely upon an Opinion of Counsel stating that the
execution of such amendment is authorized or permitted by this Agreement and the
Opinion of Counsel referred to in Section 7.1I(1). The Eligible Lender Trustee
and the Indenture Trustee may, but shall not be obligated to, enter into any
such amendment which affects the Eligible Lender Trustee's or the Indenture
Trustee's, as applicable, own rights, duties or immunities under this Agreement
or otherwise.
Section 8.6 Assignment. Notwithstanding anything to the contrary contained
herein, except as provided in Section 4.3 of the Servicing Agreement and Section
4.3 of this Agreement, this Agreement may not be assigned by the Seller, the
Administrator or the Servicer. This Agreement may be assigned by the Eligible
Lender Trustee only to its permitted successor pursuant to the Trust Agreement.
<PAGE>
Section 8.7 Limitations on Rights of Others. The provisions of this Agreement
are solely for the benefit of the Seller, the Servicer, the Issuer, the
Indenture Trustee and the Eligible Lender Trustee and for the benefit of the
Certificateholders and the Noteholders, as third party beneficiaries, and
nothing in this Agreement, whether express or implied, shall be construed to
give to any other Person any legal or equitable right, remedy or claim in the
Trust Estate or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein.
Section 8.8 Assignment to Indenture Trustee. The Seller hereby acknowledges and
consents to any Grant by the Issuer to the Indenture Trustee pursuant to the
Indenture for the benefit of the Noteholders of a security interest in all
right, title and interest of the Issuer in, to and under the Trust Student Loans
and the assignment of any or all of the Issuer's rights and obligations under
this Agreement and the Sale Agreement and the Seller's rights under the Purchase
Agreement to the Indenture Trustee. The Servicer hereby acknowledges and
consents to the assignment by the Issuer to the Indenture Trustee pursuant to
the Indenture for the benefit of the Noteholders of any and all of the Issuer's
rights and obligations under this Agreement and under the Servicing Agreement.
Section 8.9 Nonpetition Covenants.
A. Notwithstanding any prior termination of this Agreement, the
Servicer, the Administrator, the Interim Eligible Lender Trustee and the Seller
shall not, prior to the date which is one year and one day after the termination
of this Agreement, acquiesce, petition or otherwise invoke or cause the Issuer
to invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Issuer under any Federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Issuer or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Issuer.
B. Notwithstanding any prior termination of this Agreement, the
Servicer, the Administrator, the Issuer and the Eligible Lender Trustee shall
not, prior to the
<PAGE>
date which is one year and one day after the termination of this Agreement,
acquiesce, petition or otherwise invoke or cause the Seller to invoke the
process of any court or government authority for the purpose of commencing or
sustaining a case against the Seller under any insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Seller or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Seller.
Section 8.10 Limitation of Liability of Eligible Lender Trustee and Indenture
Trustee.
A. Notwithstanding anything contained herein to the contrary, this
Agreement has been signed by Chase Manhattan Bank USA, National Association not
in its individual capacity but solely in its capacity as Eligible Lender Trustee
of the Issuer and in no event shall Chase Manhattan Bank USA, National
Association in its individual capacity have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer or the Eligible Lender Trustee hereunder or in any of the certificates,
notices or agreements delivered pursuant hereto as to all of which recourse
shall be had solely to the assets of the Issuer.
B. Notwithstanding anything contained herein to the contrary, this
Agreement has been accepted by Bankers Trust Company not in its individual
capacity but solely as Indenture Trustee and in no event shall Bankers Trust
Company have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
Section 8.11 Governing Law. This Agreement shall be construed in accordance with
the laws of the State of New York, without reference to the conflict of law
provisions thereof, and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
Section 8.12 Headings. The section headings hereof have been inserted for
convenience of reference only and shall not be construed to affect the meaning,
construction or effect of this Agreement.
<PAGE>
Section 8.13 Counterparts. This Agreement may be executed in counterparts, each
of which when so executed shall together constitute but one and the same
agreement.
Section 8.14 Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions
hereof and any such prohibition or unenforceability in any jurisdiction shall
not invalidate or render unenforceable such provision in any other jurisdiction.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the date first above written.
STUDENT LOAN MARKETING
ASSOCIATION
By:_____________________
Name:___________________
Title:__________________
SLM FUNDING CORPORATION
By:_____________________
Name:___________________
Title:__________________
<PAGE>
APPENDIX A (MASTER)
DEFINITIONS AND USAGE
Usage
The following rules of construction and usage shall be applicable to any
instrument that is governed by this Appendix:
(a) All terms defined in this Appendix shall have the defined meanings when
used in any instrument governed hereby and in any certificate or other document
made or delivered pursuant thereto unless otherwise defined therein.
(b) As used herein, in any instrument governed hereby and in any
certificate or other document made or delivered pursuant thereto, accounting
terms not defined in this Appendix or in any such instrument, certificate or
other document, and accounting terms partly defined in this Appendix or in any
such instrument, certificate or other document, to the extent not defined, shall
have the respective meanings given to them under generally accepted accounting
principles as in effect on the date of such instrument. To the extent that the
definitions of accounting terms in this Appendix or in any such instrument,
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Appendix or in any such instrument, certificate or other document shall
control.
(c) The words "hereof," "herein," "hereunder" and words of similar import
when used in an instrument refer to such instrument as a whole and not to any
particular provision or subdivision thereof; references in an instrument to
"Article," "Section" or another subdivision or to an attachment are, unless the
context otherwise requires, to an article, section or subdivision of or an
attachment to such instrument; and the term "including" means "including without
limitation."
(d) The definitions contained in this Appendix are equally applicable to
both the singular and plural forms of such terms and to the masculine as well as
to the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to below or in
any agreement or instrument that is governed by this Appendix means such
agreement or instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and includes (in the case of agreements or instruments) references to
all attachments thereto and instruments incorporated therein. References to a
Person are also to its permitted successors and assigns.
Definitions
"Act" has the meaning specified in Section 11.3(a) of the Indenture.
"Accrual Period" means, with respect to a Distribution Date, the period
from and including the immediately preceding Distribution Date, or in the case
of the initial such period the Closing Date, to but excluding such current
Distribution Date.
"Administration Agreement" means the Master Administration Agreement dated
as of May 1, 1997 between the Administrator and the Seller, as such agreement
may be amended or supplemented from time to time.
"Administration Fee" has the meaning specified in Section 2.12 of the
Administration Agreement.
"Administrator" means the Student Loan Marketing Association, in its
capacity as administrator of the Trust and the Trust Student Loans in accordance
with the Administration Agreement.
"Administrator Default" has the meaning specified in Section 5.1 of the
Administration Agreement.
"Administrator's Certificate" means an Officers' Certificate of the
Administrator delivered pursuant to Section 3.1C of the Administration
Agreement.
"Affiliate" means, with respect to any specified Person, any other Person
controlling or controlled by or under common control with such specified Person.
For the purposes of this definition, "control" when used with respect to any
specified Person means the power to direct the management and policies of such
Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Authorized Officer" means (i) with respect to the Trust, any officer of
the Eligible Lender Trustee who is authorized to act for the Eligible Lender
Trustee in matters relating to the Trust pursuant to the Basic Documents and who
is identified on the list of Authorized Officers delivered by the Eligible
Lender Trustee to the Indenture Trustee on the Closing Date (as such list may be
modified or supplemented from time to time thereafter), (ii) with respect to the
Administrator, any officer of the Administrator or any of its Affiliates who is
authorized to act for the Administrator in matters relating to itself or to the
Trust and to be acted upon by the Administrator pursuant to the Basic Documents
and who is identified on the list of Authorized Officers delivered by the
Administrator to the Indenture Trustee on the Closing Date (as such list may be
modified or supplemented from time to time thereafter), (iii) with respect to
the Seller, any officer of the Seller or any of its Affiliates who is authorized
to act for the Seller in matters relating to or to be acted upon by the Seller
pursuant to the Basic Documents and who is identified on the list of Authorized
Officers delivered by the Seller to the Indenture Trustee on the Closing Date
(as such list may be modified or supplemented from time to time thereafter) and
(iv) with respect to the Servicer, any officer of the Servicer who is authorized
to act for the Servicer in matters relating to or to be acted upon by the
Servicer pursuant to the Basic Documents and who is identified on the list of
Authorized Officers delivered by the Servicer to the Indenture Trustee on the
Closing Date (as such list may be modified or supplemented from time to time
thereafter).
"Available Funds" means, with respect to a Distribution Date or any related
Monthly Servicing Payment Date, the sum of the following amounts received with
respect to the related Collection Period (or, in the case of a Monthly Servicing
Payment Date, the applicable portion thereof) to the extent not previously
distributed: (i) all collections received by the Servicer on the Trust Student
Loans (including any Guarantee Payments received with respect to the Trust
Student Loans but net of (x) any collections in respect of principal on the
Trust Student Loans applied by the Trust to repurchase guaranteed loans from the
Guarantors in accordance with the Guarantee Agreements and (y) amounts required
by the Higher Education Act to be paid to the Department or to be repaid to
borrowers (whether or not in the form of a principal reduction of the applicable
Trust Student Loan), with respect to the Trust Student Loans for such Collection
Period); (ii) any Interest Subsidy Payments and Special Allowance Payments
received by the Eligible Lender Trustee during such Collection Period with
respect to Trust Student Loans; (iii) all Liquidation Proceeds from any Trust
Student Loans which became Liquidated Student Loans during such Collection
Period in accordance with the Servicer's customary servicing procedures, and all
Recoveries in respect of Liquidated Student Loans which were written off in
prior Collection Periods or during such current Collection Period; (iv) the
aggregate Purchase Amounts received during such Collection Period for Trust
Student Loans repurchased by the Seller or purchased by the Servicer or for
Serial Loans sold to another eligible lender pursuant to Section 3.11E of the
Servicing Agreement; (v) the aggregate amounts, if any, received from the Seller
or the Servicer, as the case may be, as reimbursement of non-guaranteed interest
amounts, or lost Interest Subsidy Payments and Special Allowance Payments, with
respect to the Trust Student Loans pursuant to Section 3C of the Sale Agreement
or Section 3.5 of the Servicing Agreement, respectively; (vi) amounts received
by the Servicer pursuant to Sections 3.1 and 3.12 of the Servicing Agreement
during such Collection Period; and (vii) Investment Earnings for such
Distribution Date and any interest remitted to the Collection Account by the
Administrator pursuant to Section 2.4 of the Administration Agreement; provided,
however, that if with respect to any Distribution Date there would not be
sufficient funds, after application of Available Funds and amounts available
from the Reserve Account, to pay any of the items specified in clauses 1 through
7 of Section 2.7C of the Administration Agreement, then Available Funds for such
Distribution Date shall include amounts on deposit in the Collection Account (or
amounts held by the Administrator, or which the Administrator reasonably
estimates to be held by the Administrator, for deposit into the Collection
Account) on the related Determination Date which would have constituted
Available Funds for the Distribution Date succeeding such Distribution Date, up
to the amount necessary to pay such items, and the Available Funds for such
succeeding Distribution Date shall be adjusted accordingly.
"Basic Documents" means, with respect to a Trust, the related Trust
Agreement, Indenture, Servicing Agreement, Sale Agreement, Purchase Agreement,
Guarantee Agreements, Certificate Depository Agreement, Note Depository
Agreement and Supplement and the Administration Agreement as supplemented by
such Supplement, and other documents and certificates delivered in connection
with any thereof.
"Benefit Plan" has the meaning specified in Section 3.4 of the Trust
Agreement.
"Bill of Sale" has the meaning specified in the Purchase Agreement or the
Sale Agreement, as applicable.
"Book-Entry Certificate" means a beneficial interest in the Certificates,
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 3.11 of the Trust Agreement.
"Book-Entry Note" means a beneficial interest in the Notes, ownership and
transfers of which shall be made through book entries by a Clearing Agency as
described in Section 2.10 of the Indenture.
"Business Day" means any day other than a Saturday, a Sunday or a day on
which banking institutions or trust companies in New York, New York or
Wilmington, Delaware are authorized or obligated by law, regulation or executive
order to remain closed.
"Carryover Servicing Fee" has the meaning specified in Attachment A to the
Servicing Agreement.
"Certificate" means a certificate evidencing the undivided beneficial
interest of a Certificateholder in the Trust, substantially in the form of
Exhibit A to the Trust Agreement.
"Certificate Balance" with respect to a Trust has the meaning specified in
Appendix A (Trust) to the related Supplement.
"Certificate Balance Distribution Amount" means, on each Distribution Date,
the excess of (i) the sum of (a) the Principal Distribution Amount for such
Distribution Date, (b) the Note Principal Shortfall as of the close of the
preceding Distribution Date and (c) the Certificate Balance Shortfall as of the
close of the preceding Distribution Date over (ii) the Note Principal
Distribution Amount for such Distribution Date; provided that the Certificate
Balance Distribution Amount will in no event exceed the Certificate Balance. In
addition, on the Final Distribution Date, the Certificate Balance to be
distributed to the Certificateholders will include the amount required to reduce
the outstanding Certificate Balance to zero.
"Certificate Balance Shortfall" means, as of the close of any Distribution
Date, the excess of (i) the Certificate Balance Distribution Amount on such
Distribution Date over (ii) the amount of distributions in respect of the
Certificate Balance on such Distribution Date.
"Certificate Depository Agreement" with respect to a Trust means a Letter
of Representations in substantially the form of Exhibit [] to the Administration
Agreement, by such Trust, the related Eligible Lender Trustee and the related
Indenture Trustee in favor of the Depository Trust Company.
"Certificate Final Distribution Date" with respect to a Trust has the
meaning specified in Appendix A (Trust) to the related Supplement.
"Certificateholder" means a Person in whose name a Certificate is
registered in the Certificate Register.
"Certificateholders' Distribution Amount" means, with respect to any
Distribution Date, the Certificateholders' Return Distribution Amount for such
Distribution Date plus the Certificate Balance Distribution Amount for such
Distribution Date.
"Certificateholders' Return Distribution Amount" means, with respect to any
Distribution Date, the sum of (i) return on the Certificates accrued at the
Certificate Rate for the related Accrual Period on the outstanding Certificate
Balance on the immediately preceding Distribution Date, after giving effect to
all distributions to Certificateholders in respect of the Certificate Balance on
such preceding Distribution Date (or, in the case of the first Distribution
Date, on the Closing Date) and (ii) the Certificate Return Shortfall for such
Distribution Date; provided, however, that the Certificateholders' Return
Distribution Amount will not include any Certificate Return Carryover.
"Certificate Owner" means, with respect to a Book-Entry Certificate, the
Person who is the beneficial owner of such Book-Entry Certificate, as reflected
on the books of the Clearing Agency, or on the books of a person maintaining an
account with such Clearing Agency (directly as a Clearing Agency Participant or
as an indirect participant, in each case in accordance with the rules of such
Clearing Agency).
"Certificate Paying Agent" means any paying agent or co-paying agent
appointed pursuant to Section 3.9 of the Trust Agreement, which shall initially
be the Eligible Lender Trustee.
"Certificate Pool Factor" as of the close of business on a Distribution
Date means a seven-digit decimal figure equal to the Certificate Balance divided
by the Initial Certificate Balance. The Certificate Pool Factor will be
1.0000000 as of the Closing Date; thereafter, the Certificate Pool Factor will
decline to reflect reductions in the Certificate Balance.
"Certificate Rate" with respect to a Trust has the meaning specified in
Appendix A (Trust) to the related Supplement.
"Certificate Register" and "Certificate Registrar" mean the register
mentioned and the registrar appointed pursuant to Section 3.4 of the Trust
Agreement.
"Certificate Return Carryover" means, for any Distribution Date on which
the Certificate Rate is based on the Student Loan Rate, the excess of (a) the
amount of return on the Certificates that would have accrued in respect of the
related Accrual Period at the Certificate Rate without regard to the Student
Loan Rate, over (b) the amount of return on the Certificates actually accrued in
respect of such Accrual Period based on the Student Loan Rate, together with the
unpaid portion of any such excess from prior Distribution Dates and any return
accrued thereon calculated at the Certificate Rate without regard to the Student
Loan Rate; provided, however, that, on the Certificate Final Distribution Date,
the Certificate Return Carryover will be equal to the lesser of (i) the
Certificate Return Carryover on such date determined as described above and (ii)
the amount of funds, if any, required and available to be distributed to
Certificateholders on such date or any subsequent date pursuant to Sections
2.7C.11, 2.8C(E), 2.8D and 2.8E of the Administration Agreement.
"Certificate Return Shortfall" means, with respect to any Distribution
Date, the excess of (i) the Certificateholders' Return Distribution Amount on
the preceding Distribution Date over (ii) the return on the Certificates
actually distributed to the Certificateholders on such preceding Distribution
Date, plus return on the amount of such excess, to the extent permitted by law,
at the Certificate Rate from such preceding Distribution Date to the current
Distribution Date.
"Class A-1 Maturity Date" with respect to a Trust has the meaning specified
in Appendix A (Trust) to the related Supplement.
"Class A-2 Maturity Date" with respect to a Trust has the meaning specified
in Appendix A (Trust) to the related Supplement.
"Class A-1 Notes" with respect to a Trust means the amount of Floating Rate
Class A-1 Student Loan-Backed Notes specified in Appendix A (Trust) to the
related Supplement and issued by such Trust pursuant to the related Indenture,
substantially in the form of Exhibit A-1 thereto.
"Class A-2 Notes" with respect to a Trust means the amount of Floating Rate
Class A-2 Student Loan-Backed Notes specified in Appendix A (Trust) to the
related Supplement and issued by such Trust pursuant to the related Indenture,
substantially in the form of Exhibit A-2 thereto.
"Class A-1 Rate" with respect to a Trust has the meaning specified in
Appendix A (Trust) to the related Supplement.
"Class A-2 Rate" with respect to a Trust has the meaning specified in
Appendix A (Trust) to the related Supplement.
"Clearing Agency" means an organization registered as a "clearing agency"
pursuant to Section 17A of the Exchange Act. The initial Clearing Agency shall
be The Depository Trust Company and the initial nominee for the Clearing Agency
shall be Cede & Co.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency effects
book-entry transfers and pledges of securities deposited with the Clearing
Agency.
"Closing Date" with respect to a Trust has the meaning specified in
Appendix A (Trust) to the related Supplement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting Clause of the
Indenture.
"Collection Account" means the account designated as such, established and
maintained pursuant to Section 2.3A.1 of the Administration Agreement.
"Collection Period" with respect to a Trust has the meaning specified in
Appendix A (Trust) to the related Supplement.
"Commission" means the Securities and Exchange Commission.
"Consolidation Loans" means Student Loans made in accordance with the
Section 428C of the Higher Education Act.
"Corporate Trust Office" means (i) with respect to the Indenture Trustee,
the principal office of the Indenture Trustee at which at any particular time
its corporate trust business shall be administered, which office at the Closing
Date is located at Four Albany Street, 10th Floor, New York, New York 10006,
Attention: Corporate Trust and Agency Group, Structured Finance Team (telephone:
(212) 250-5326; facsimile: (212) 250-6439) or at such other address as the
Indenture Trustee may designate from time to time by notice to the Noteholders
and the Seller, or the principal corporate trust office of any successor
Indenture Trustee (the address of which the successor Indenture Trustee will
notify the Noteholders, the Administrator and the Seller) and (ii) with respect
to the Eligible Lender Trustee, the principal corporate trust office of the
Eligible Lender Trustee located at 802 Delaware Avenue, Wilmington, Delaware
19899, Attention: Corporate Trust Department (telephone: (302) 575- 5099;
facsimile: (302) 575-5467); or at such other address as the Eligible Lender
Trustee may designate by notice to the Certificateholders and the Seller, or the
principal corporate trust office of any successor Eligible Lender Trustee (the
address of which the successor Eligible Lender Trustee will notify the
Certificateholders, the Administrator and the Seller).
"Cutoff Date" with respect to a Trust has the meaning specified in Appendix
A (Trust) to the related Supplement.
"Default" means any occurrence that is, or with notice or the lapse of time
or both would become, an Event of Default.
"Definitive Certificates" has the meaning specified in Section 3.11 of the
Trust Agreement.
"Definitive Notes" has the meaning specified in Section 2.10 of the
Indenture.
"Delaware Business Trust Act" means Chapter 38 of Title 12, Part V of the
Delaware Code, entitled "Treatment of Delaware Business Trusts".
"Delivery" when used with respect to Trust Account Property means:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute "instruments"
within the meaning of Section 9-105(l)(i) of the UCC and are susceptible of
physical delivery, transfer thereof to the Indenture Trustee or its nominee or
custodian by physical delivery to the Indenture Trustee or its nominee or
custodian endorsed to, or registered in the name of, the Indenture Trustee or
its nominee or custodian or endorsed in blank, and, with respect to a
certificated security (as defined in Section 8-102 of the UCC) transfer thereof
(i) by delivery of such certificated security endorsed to, or registered in the
name of, the Indenture Trustee or its nominee or custodian or endorsed in blank
to a financial intermediary (as defined in Section 8-313 of the UCC) and the
making by such financial intermediary of entries on its books and records
identifying such certificated securities as belonging to the Indenture Trustee
or its nominee or custodian and the sending by such financial intermediary of a
confirmation of the purchase of such certificated security by the Indenture
Trustee or its nominee or custodian, or (ii) by delivery thereof to a "clearing
corporation" (as defined in Section 8-102(3) of the UCC) and the making by such
clearing corporation of appropriate entries on its books reducing the
appropriate securities account of the transferor and increasing the appropriate
securities account of a financial intermediary by the amount of such
certificated security, the identification by the clearing corporation of the
certificated securities for the sole and exclusive account of the financial
intermediary, the maintenance of such certificated securities by such clearing
corporation or a "custodian bank" (as defined in Section 8-102(4) of the UCC) or
the nominee of either subject to the clearing corporation's exclusive control,
the sending of a confirmation by the financial intermediary of the purchase by
the Indenture Trustee or its nominee or custodian of such securities and the
making by such financial intermediary of entries on its books and records
identifying such certificated securities as belonging to the Indenture Trustee
or its nominee or custodian (all of the foregoing, but not including Trust
Student Loans, "Physical Property"); and such additional or alternative
procedures as may hereafter become appropriate to effect the complete transfer
of ownership of any such Trust Account Property to the Indenture Trustee or its
nominee or custodian, consistent with changes in applicable law or regulations
or the interpretation thereof;
(b) with respect to any securities issued by the U.S. Treasury, the Federal
Home Loan Mortgage Corporation or by the Federal National Mortgage Association
that is a book-entry security held through the Federal Reserve System pursuant
to Federal book-entry regulations, the following procedures, all in accordance
with applicable law, including applicable Federal regulations and Articles 8 and
9 of the UCC: book-entry registration of such Trust Account Property to an
appropriate book-entry account maintained with a Federal Reserve Bank by a
financial intermediary which is also a "depository" pursuant to applicable
Federal regulations and issuance by such financial intermediary of a deposit
advice or other written confirmation of such book-entry registration to the
Indenture Trustee or its nominee or custodian of the purchase by the Indenture
Trustee or its nominee or custodian of such book-entry securities; the making by
such financial intermediary of entries in its books and records identifying such
book-entry security held through the Federal Reserve System pursuant to Federal
book-entry regulations as belonging to the Indenture Trustee or its nominee or
custodian and indicating that such custodian holds such Trust Account Property
solely as agent for the Indenture Trustee or its nominee or custodian; and such
additional or alternative procedures as may hereafter become appropriate to
effect complete transfer of ownership of any such Trust Account Property to the
Indenture Trustee or its nominee or custodian, consistent with changes in
applicable law or regulations or the interpretation thereof; and
(c) with respect to any item of Trust Account Property that is an
uncertificated security under Article 8 of the UCC and that is not governed by
clause (b) above, registration on the books and records of the issuer thereof in
the name of the financial intermediary, the sending of a confirmation by the
financial intermediary of the purchase by the Indenture Trustee or its nominee
or custodian of such uncertificated security, the making by such financial
intermediary of entries on its books and records identifying such uncertificated
certificates as belonging to the Indenture Trustee or its nominee or custodian.
"Department" means the United States Department of Education, an agency of
the Federal government.
"Depositor" means the Seller in its capacity as Depositor under the Trust
Agreement.
"Depository Agreements" means the Certificate Depository Agreement and the
Note Depository Agreement, collectively.
"Determination Date" means, with respect to any Distribution Date, the
third Business Day preceding such Distribution Date.
"Distribution Date" with respect to a Trust has the meaning specified in
Appendix A (Trust) to the related Supplement.
"Eligible Deposit Account" means either (a) a segregated account with an
Eligible Institution or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any one of the States or the District of Columbia (or any
domestic branch of a foreign bank), having corporate trust powers and acting as
trustee for funds deposited in such account, so long as any of the securities of
such depository institution have a credit rating from Moody's, Standard &
Poor's, and, if such institution is rated by Fitch, Fitch, in one of their
generic rating categories which signifies investment grade.
"Eligible Institution" means a depository institution organized under the
laws of the United States of America or any one of the States or the District of
Columbia (or any domestic branch of a foreign bank) (i) which has (A) either a
long-term senior unsecured debt rating of AAA or a short-term senior unsecured
debt or certificate of deposit rating of A-1+ or better by Standard & Poor's and
(B)(1) a long-term senior unsecured debt rating of Al or better and (2) a
short-term senior unsecured debt rating of P-1 or better by Moody's, and (C) if
such institution is rated by Fitch, a long-term senior unsecured debt rating of
AA or a short-term senior unsecured debt rating of F1+, or any other long-term,
short-term or certificate of deposit rating with respect to which the Rating
Agency Condition has been satisfied and (ii) whose deposits are insured by the
FDIC. If so qualified, the Eligible Lender Trustee or the Indenture Trustee may
be considered an Eligible Institution.
"Eligible Investments" means book-entry securities, negotiable instruments
or securities represented by instruments in bearer or registered form which
evidence:
(a) direct obligations of, and obligations fully guaranteed as to timely
payment by, the United States of America, the Federal Home Loan Mortgage
Corporation, the Federal National Mortgage Association, the Student Loan
Marketing Association, or any agency or instrumentality of the United States of
America the obligations of which are backed by the full faith and credit of the
United States of America; provided that obligations of, or guaranteed by, the
Federal Home Loan Mortgage Corporation, the Federal National Mortgage
Association or the Student Loan Marketing Association shall be Eligible
Investments only if, at the time of investment, they meet the criteria of each
of the Rating Agencies for collateral for securities having ratings equivalent
to the respective ratings of the Notes in effect at the Closing Date;
(b) demand deposits, time deposits or certificates of deposit of any
depository institution or trust company incorporated under the laws of the
United States of America or any State (or any domestic branch of a foreign bank)
and subject to supervision and examination by Federal or state banking or
depository institution authorities (including depository receipts issued by any
such institution or trust company as custodian with respect to any obligation
referred to in clause (a) above or portion of such obligation for the benefit of
the holders of such depository receipts); provided that at the time of the
investment or contractual commitment to invest therein (which shall be deemed to
be made again each time funds are reinvested following each Distribution Date),
the commercial paper or other short-term senior unsecured debt obligations
(other than such obligations the rating of which is based on the credit of a
Person other than such depository institution or trust company) thereof shall
have a credit rating from each of the Rating Agencies in the highest investment
category granted thereby;
(c) commercial paper having, at the time of the investment, a rating from
each of the Rating Agencies in the highest investment category granted thereby;
(d) investments in money market funds having a rating from each of the
Rating Agencies in the highest investment category granted thereby (including
funds for which the Indenture Trustee, the Administrator or the Eligible Lender
Trustee or any of their respective Affiliates is investment manager or advisor);
(e) bankers' acceptances issued by any depository institution or trust
company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that is a direct
obligation of, or fully guaranteed by, the United States of America or any
agency or instrumentality thereof the obligations of which are backed by the
full faith and credit of the United States of America, in either case entered
into with a depository institution or trust company (acting as principal)
described in clause (b) above; and
(g) any other investment which would not result in the downgrading or
withdrawal of any rating of the Securities by any of the Rating Agencies as
affirmed in writing delivered to the Indenture Trustee.
For purposes of the definition of "Eligible Investments" the phrase "highest
investment category" means (i) in the case of Fitch, "AAA" for long-term
investments (or the equivalent) and "F-l+" for short-term investments (or the
equivalent), (ii) in the case of Moody's, "Aaa" for long-term investments (or
the equivalent) and "P-1" for short-term investments (or the equivalent), and
(iii) in the case of Standard & Poor's, "AAA" for long-term investments (or the
equivalent) and "A-1+" for short-term investments (or the equivalent). A
proposed investment not rated by Fitch but rated in the highest investment
category by Moody's and Standard & Poor's shall be considered to be rated by
each of the Rating Agencies in the highest investment category granted thereby.
"Eligible Lender Trustee" with respect to a Trust has the meaning specified
in the related Supplement.
"Eligible Loans" has the meaning specified in the Purchase Agreement or the
Sale Agreement, as applicable.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" has the meaning specified in Section 5.1 of the
Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expected Interest Collections" means, with respect to any Collection
Period, the sum of (i) the amount of interest accrued, net of amounts required
to be paid to the Department or to be repaid to Guarantors or borrowers, with
respect to the Trust Student Loans for such Collection Period (whether or not
such interest is actually paid), (ii) all Interest Subsidy Payments and Special
Allowance Payments expected to be received by the Eligible Lender Trustee for
such Collection Period (whether or not actually received), net of amounts
required to be paid to the Department, with respect to the Trust Student Loans,
to the extent not included in (i) above, and (iii) Investment Earnings for such
Collection Period and interest on amounts to be remitted by the Administrator to
the Collection Account with respect to such Collection Period prior to the
related Distribution Date.
"Expenses" means any and all liabilities, obligations, losses, damages,
taxes, claims, actions and suits, and any and all reasonable costs, expenses and
disbursements (including reasonable legal fees and expenses) of any kind and
nature whatsoever which may at any time be imposed on, incurred by, or asserted
against the Eligible Lender Trustee or any of its officers, directors or agents
in any way relating to or arising out of the Trust Agreement, the other Basic
Documents, the Trust Estate, the administration of the Trust Estate or the
action or inaction of the Eligible Lender Trustee under the Trust Agreement or
the other Basic Documents.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
any Executive Vice President, any Senior Vice President, any Vice President, the
Secretary or the Treasurer of such corporation; and with respect to any
partnership, any general partner thereof.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Funds Rate" for any day means the rate set forth for such day
opposite the caption "Federal Funds (effective)" in the weekly statistical
release designated H.15(519), or any successor publication, published by the
Board of Governors of the Federal Reserve System. If such rate is not published
in the relevant H.15(519) for any day, the rate for such day shall be the
arithmetic mean of the rates for the last transaction in overnight Federal Funds
arranged prior to 9:00 a.m. New York City time on that day by each of four
leading brokers in such transactions located in New York City selected by the
Administrator. The Federal Funds rate for each Saturday and Sunday and for any
other that is not a Business Day shall be the Federal Funds Rate for the
preceding Business Day as determined above.
"Fitch" means Fitch Investors Service, L.P.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate, remise,
release, convey, assign, transfer, create and grant a lien upon and a security
interest in and right of set-off against, deposit, set over and confirm pursuant
to the Indenture. A Grant of the Collateral or of any other agreement or
instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the Granting party or otherwise and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Guarantee Agreement" means any agreement between any Guarantor and the
Eligible Lender Trustee providing for the payment by the Guarantor of amounts
authorized to be paid pursuant to the Higher Education Act to holders of
qualifying Student Loans guaranteed in accordance with the Higher Education Act
by such Guarantor.
"Guarantee Payment" means any payment made by a Guarantor pursuant to a
Guarantee Agreement in respect of a Trust Student Loan.
"Guarantors" means, collectively, those entities listed on Attachment B to
the Sale Agreement and the Purchase Agreement.
"Higher Education Act" means the Higher Education Act of 1965, as amended,
together with any rules, regulations and interpretations thereunder.
"Indenture" with respect to a Trust means an Indenture in substantially the
form of Exhibit [] to the Administration Agreement, among the related Eligible
Lender Trustee on behalf of such Trust, such Trust and the related Indenture
Trustee.
"Indenture Trust Estate" means all money, instruments, rights and other
property that are subject or intended to be subject to the lien and security
interest of the Indenture for the benefit of the Noteholders (including all
property and interests Granted to the Indenture Trustee), including all proceeds
thereof.
"Indenture Trustee" with respect to a Trust has the meaning specified in
the related Supplement.
"Independent" means, when used with respect to any specified Person, that
the Person (a) is in fact independent of the Trust, any other obligor upon the
Notes, the Seller and any Affiliate of any of the foregoing Persons, (b) does
not have any direct financial interest or any material indirect financial
interest in the Trust, any such other obligor, the Seller or any Affiliate of
any of the foregoing Persons and (c) is not connected with the Trust, any such
other obligor, the Seller or any Affiliate of any of the foregoing Persons as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
"Independent Certificate" means a certificate or opinion to be delivered to
the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.1 of the Indenture,
made by an Independent appraiser or other expert appointed by an Issuer Order
and approved by the Indenture Trustee in the exercise of reasonable care, and
such opinion or certificate shall state that the signer has read the definition
of "Independent" in the Indenture and that the signer is Independent within the
meaning thereof.
"Initial Certificate Balance" with respect to a Trust has the meaning
specified in Appendix A (Trust) to the related Supplement.
"Initial Pool Balance" with respect to a Trust has the meaning specified in
Appendix A (Trust) to the related Supplement.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or ordering the
winding-up or liquidation of such Person's affairs, which decree or order
remains unstayed and in effect for a period of 60 consecutive days; or (b) the
commencement by such Person of a voluntary case under any applicable Federal or
state bankruptcy, insolvency or other similar law now or hereafter in effect, or
the consent by such Person to the entry of an order for relief in an involuntary
case under any such law, or the consent by such Person to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official for such Person or for any substantial part of
its property, or the making by such Person of any general assignment for the
benefit of creditors, or the failure by such Person generally to pay its debts
as such debts become due, or the taking of action by such Person in furtherance
of any of the foregoing.
"Insolvency Proceeds" has the meaning set forth in Section 6.lB of the
Administration Agreement.
"Interest Subsidy Payments" means payments, designated as such, consisting
of interest subsidies by the Department in respect of the Trust Student Loans to
the Eligible Lender Trustee on behalf of the Trust in accordance with the Higher
Education Act.
"Interim Eligible Lender Trustee" with respect to a Trust has the meaning
specified in the related Supplement.
"Interim Trust Agreement" with respect to a Trust means an Interim Trust
Agreement in substantially the form of Exhibit [] to the Administration
Agreement, between the Depositor and the related Interim Eligible Lender
Trustee.
"Interim Trust Loans" has the meaning set forth in the Interim Trust
Agreement.
"Investment Earnings" means, with respect to any Distribution Date, the
investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts to be deposited into the Collection Account on or
prior to such Distribution Date pursuant to Section 2.3B of the Administration
Agreement.
"Issuer" means the Trust and, for purposes of any provision contained in
the Indenture and required by the TIA, each other obligor on the Notes.
"Issuer Order" and "Issuer Request" means a written order or request signed
in the name of the Issuer by any one of its Authorized Officers and delivered to
the Indenture Trustee.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens and any other liens, if any, which
attach to the respective Trust Student Loan by operation of law as a result of
any act or omission by the related Obligor.
"Liquidated Student Loan" means any defaulted Trust Student Loan liquidated
by the Servicer (which shall not include any Trust Student Loan on which
Guarantee Payments are received) or which the Servicer has, after using all
reasonable efforts to realize upon such Trust Student Loan, determined to charge
off.
"Liquidating Distribution" means, as the case may be, (i) the portion of
the proceeds of a sale of assets described in Section 9.2 of the Trust Agreement
distributed to Certificateholders and the Depositor pursuant to Section 9.1(2)
of the Administration Agreement or (ii) the amount of any distribution to
Certificateholders and the Depositor in connection with the termination of the
Trust under Section 9.1(a) of the Trust Agreement.
"Liquidating Profit or Loss" means the Profit or Loss determined with
respect to a sale of assets described in Section 9.2 of the Trust Agreement or
the transactions associated with a final distribution described in Section
9.1(a) of the Trust Agreement.
"Liquidation Proceeds" means, with respect to any Liquidated Student Loan
which became a Liquidated Student Loan during the current Collection Period in
accordance with the Servicer's customary servicing procedures, the moneys
collected in respect of the liquidation thereof from whatever source, other than
Recoveries, net of the sum of any amounts expended by the Servicer in connection
with such liquidation and any amounts required by law to be remitted to the
Obligor on such Liquidated Student Loan.
"Loan" has the meaning set forth in Section 2 of the Purchase Agreement.
"Lock-In Period" means the period of days preceding any Distribution Date
during which the Note Rate or Certificate Rate, as applicable, in effect on the
first day of such period shall remain in effect until the end of the Accrual
Period related to such Distribution Date.
"Minimum Purchase Amount" means an amount that would be sufficient to (i)
reduce the Outstanding Amount of each class of Notes on such Distribution Date
to zero, (ii) pay to Noteholders the Noteholders' Interest Distribution Amount
payable on such Distribution Date, (iii) reduce the Certificate Balance to zero
and (iv) pay to the Certificateholders the Certificate Return Distribution
Amount payable on such Distribution Date; provided that in the case of a
purchase by the Seller of the Trust Student Loans pursuant to Section 6.1 of the
Administration Agreement "Minimum Purchase Amount" shall also include an amount
sufficient to (v) pay to Noteholders any Note Interest Carryover payable on such
Distribution Date and (vi) pay to the Certificateholders any Certificate Return
Carryover payable on such Distribution Date.
"Monthly Servicing Payment Date" with respect to a Trust has the meaning
specified in Appendix A (Trust) to the related Supplement.
"Moody's" means Moody's Investors Service, Inc.
"91-Day Treasury Bills" means direct obligations of the United States with
a maturity of thirteen weeks.
"Note Depository Agreement" with respect to a Trust means a Letter of
Representations in substantially the form of Exhibit [] to the Administration
Agreement, by such Trust, the related Eligible Lender Trustee and the related
Indenture Trustee in favor of the Depository Trust Company.
"Note Final Maturity Date" for a class of Notes means the Class A-1
Maturity Date or the Class A-2 Maturity Date, as applicable.
"Noteholder" means the Person in whose name a Note is registered in the
Note Register.
"Noteholders' Distribution Amount" means, with respect to any Distribution
Date, the sum of the Noteholders' Interest Distribution Amount and the
Noteholders' Principal Distribution Amount for such Distribution Date.
"Noteholders' Interest Distribution Amount" means, with respect to any
Distribution Date, the sum of (i) the amount of interest accrued at the
respective Note Rates for the related Accrual Period on the aggregate
outstanding principal balances of both classes of Notes on the immediately
preceding Distribution Date after giving effect to all principal distributions
to Noteholders on such date (or, in the case of the first Distribution Date, on
the Closing Date) and (ii) the Note Interest Shortfall for such Distribution
Date; provided, however, that the Noteholders' Interest Distribution Amount
shall not include any Note Interest Carryover.
"Noteholders' Principal Distribution Amount" means, with respect to any
Distribution Date, the Principal Distribution Amount for such Distribution Date
plus the Note Principal Shortfall as of the close of the preceding Distribution
Date; provided, however, that the Noteholders' Principal Distribution Amount
shall not exceed the outstanding principal balance of the Notes. In addition, on
the Class A-1 Maturity Date or the Class A-2 Maturity Date, as the case may be,
the principal required to be distributed to the Noteholders of the related class
will include the amount required to reduce the outstanding principal balance of
the Notes of such class to zero.
"Note Interest Carryover" means, for any Distribution Date on which the
Class A-1 Rate or the Class A-2 Rate is based on the Student Loan Rate, the
excess of (a) the amount of interest on the Class A-1 Notes or the Class A-2
Notes, as the case may be, that would have accrued in respect of the related
Accrual Period had interest been calculated without regard to the Student Loan
Rate over (b) the amount of interest on the Class A- 1 Notes or Class A-2 Notes,
as the case may be, actually accrued in respect of such Accrual Period based on
the Student Loan Rate, together with the unpaid portion of any such excess from
prior Distribution Dates (and interest accrued thereon at the applicable rate
calculated at such Note Rate without regard to the Student Loan Rate); provided,
however, that any amount of Note Interest Carryover with respect to the Class
A-1 Notes remaining after the earlier of the Distribution Date on which the
outstanding principal amount of the Class A-1 Notes has been reduced to zero and
the distribution of all Available Funds on the Class A-1 Maturity Date, and any
amount of Note Interest Carryover with respect to the Class A-2 Notes remaining
after the earlier of the Distribution Date on which the outstanding principal
amount of the Class A-2 Notes has been reduced to zero and the distribution of
all Available Funds on the Class A-2 Maturity Date, shall be equal to the lesser
of (i) the Note Interest Carryover for such class on such date determined as
described above and (ii) the amount of funds, if any, required and available to
be distributed to Noteholders of such class on such date or any subsequent date
pursuant to Sections 2.7C.10, 2.8C(D), 2.8D and 2.8E of the Administration
Agreement.
"Note Interest Shortfall" means, with respect to any Distribution Date, the
excess of (i) the Noteholders' Interest Distribution Amount on the preceding
Distribution Date over (ii) the amount of interest actually distributed to the
Noteholders on such preceding Distribution Date, plus interest on the amount of
such excess interest due to the Noteholders, to the extent permitted by law, at
the weighted average interest rate borne by the Notes from such preceding
Distribution Date to the current Distribution Date.
"Note Owner" means, with respect to a Book-Entry Note, the Person who is
the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency Participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency).
"Note Pool Factor" as of the close of business on a Distribution Date means
a seven-digit decimal figure equal to the outstanding principal balance of the
Notes divided by the original outstanding principal balance of the Notes. The
Note Pool Factor will be 1.0000000 as of the Closing Date; thereafter, the Note
Pool Factor will decline to reflect reductions in the outstanding principal
balance of the Notes.
"Note Principal Shortfall" means, as of the close of any Distribution Date,
the excess of (i) the Noteholders' Principal Distribution Amount on such
Distribution Date over (ii) the amount of principal actually distributed to the
Noteholders on such Distribution Date.
"Note Rates" means, with respect to any Accrual Period, the Class A-1 Rate
and the Class A-2 Rate for such Accrual Period, collectively.
"Note Register" and "Note Registrar" have the respective meanings specified
in Section 2.4 of the Indenture.
"Notes" means the Class A-1 Notes and the Class A-2 Notes, collectively.
"Obligor" on a Trust Student Loan means the borrower or co-borrowers of
such Trust Student Loan and any other Person who owes payments in respect of
such Trust Student Loan, including the Guarantor thereof and, with respect to
any Interest Subsidy Payment or Special Allowance Payment, if any, thereon, the
Department.
"Officers' Certificate" means (i) in the case of the Trust, a certificate
signed by any two Authorized Officers of the Eligible Lender Trustee, under the
circumstances described in, and otherwise complying with, the applicable
requirements of Section 11.1 of the Indenture, and delivered to the Indenture
Trustee, and (ii) in the case of the Seller, the Administrator or the Servicer,
a certificate signed by any two Authorized Officers of the Seller, the
Administrator or the Servicer, as applicable.
"Origination Fee" means the origination fee payable to the Department by
the lender with respect to any Trust Student Loan (including any Consolidation
Loan) made on or after October 1, 1993, equal to 0.50% of the initial principal
balance of such loan.
"Opinion of Counsel" means (i) with respect to the Trust, one or more
written opinions of counsel who may, except as otherwise expressly provided in
the Indenture, be employees of or counsel to the Eligible Lender Trustee, the
Trust, the Seller or an Affiliate of the Seller and who shall be satisfactory to
the Indenture Trustee, and which opinion or opinions shall be addressed to the
Indenture Trustee as Indenture Trustee, shall comply with any applicable
requirements of Section 11.1 of the Indenture and shall be in form and substance
satisfactory to the Indenture Trustee, and (ii) with respect to the Seller, the
Administrator or the Servicer, one or more written opinions of counsel who may
be an employee of or counsel to the Seller, the Administrator or the Servicer,
which counsel shall be acceptable to the Indenture Trustee and the Eligible
Lender Trustee.
"Outstanding" means, as of the date of determination, all Notes theretofore
authenticated and delivered under the Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or delivered to the
Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in the necessary
amount has been theretofore deposited with the Indenture Trustee or any Paying
Agent in trust for the Noteholders thereof (provided, however, that if such
Notes are to be redeemed, notice of such redemption has been duly given pursuant
to the Indenture); and
(iii) Notes in exchange for or in lieu of other Notes which have been
authenticated and delivered pursuant to the Indenture unless proof satisfactory
to the Indenture Trustee is presented that any such Notes are held by a bona
fide purchaser;
provided that in determining whether the Noteholders of the requisite
Outstanding Amount of the Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any other Basic
Document, Notes owned by the Trust, any other obligor upon the Notes, the Seller
or any Affiliate of any of the foregoing Persons shall be disregarded and deemed
not to be Outstanding, except that, in determining whether the Indenture Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Notes that a Responsible Officer of
the Indenture Trustee either actually knows to be so owned or has received
written notice thereof shall be so disregarded. Notes so owned that have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Indenture Trustee the pledgee's right so to act with
respect to such Notes and that the pledgee is not the Trust, any other obligor
upon the Notes, the Seller or any Affiliate of any of the foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of all Notes
Outstanding at the date of determination.
"Paying Agent" means the Indenture Trustee or any other Person that meets
the eligibility standards for the Indenture Trustee specified in Section 6.11 of
the Indenture and is authorized by the Eligible Lender Trustee on behalf of the
Trust to make the payments to and distributions from the Collection Account and
payments of principal of and interest and any other amounts owing on the Notes
on behalf of the Trust.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or political
subdivision thereof.
"Physical Property" has the meaning assigned to such terms in the
definition of "Delivery" above.
"Pool Balance" means as of any date the aggregate principal balance of the
Trust Student Loans on such date (including accrued interest thereon to the
extent such interest is expected to be capitalized), after giving effect to the
following, without duplication: (i) all payments received by the Trust through
such date from or on behalf of Obligors, (ii) all Purchase Amounts on Purchased
Student Loans received by the Trust through such date from the Seller or the
Servicer, (iii) all Liquidation Proceeds and Realized Losses on Trust Student
Loans liquidated through such date, (iv) the aggregate amount of adjustments to
balances of Trust Student Loans permitted to be effected by the Servicer under
the Servicing Agreement, if any, recorded through such date, and (v) the
aggregate amount by which reimbursements by Guarantors of the unpaid principal
balance of defaulted Trust Student Loans through such date are reduced from 100%
to 98% as required by the risk sharing provisions of the Higher Education Act.
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.5 of the Indenture and in lieu of a
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same
debt as the mutilated, lost, destroyed or stolen Note.
"Primary Servicing Fee" for any Monthly Servicing Payment Date has the
meaning specified in Attachment A to the Servicing Agreement, and shall include
any such fees from prior Monthly Servicing Payment Dates that remain unpaid.
"Principal Distribution Amount" means, (i) with respect to the initial
Distribution Date, the amount by which the sum of the Outstanding Amount of the
Notes and the Certificate Balance exceeds the Pool Balance as of the last day of
the related Collection Period and (ii) with respect to each subsequent
Distribution Date, the Pool Balance as of the last day of the Collection Period
preceding the related Collection Period less the Pool Balance as of the last day
of the related Collection Period.
"Proceeding" means any suit in equity, action at law or other judicial or
administrative proceeding.
"Profits" and "Losses" mean, for each Accrual Period or other period, an
amount equal to the Trust's taxable income or loss for such period, other than
Liquidating Profit or Loss and without consideration of items specially
allocated pursuant to Section 2.10 of the Trust Agreement(including allocations
of gross income), determined in accordance with Code section 703(a) (such
taxable income or loss to include all items of income, gain, loss or deduction
required to be stated separately pursuant to Code section 703(a)(1)), adjusted
to reflect items of income exempt from Federal income tax and items of
expenditure described in Code section 705(a)(2)(B) (or treated as so described
pursuant to Treasury Regulations).
"Purchase Agreement" with respect to a Trust means a Purchase Agreement in
substantially the form of Exhibit [] to the Administration Agreement, among the
Student Loan Marketing Association, the related Interim Eligible Lender Trustee
and the Seller.
"Purchase Amount" with respect to any Trust Student Loan means the amount
required to prepay in full such Trust Student Loan under the terms thereof
including all accrued interest thereon.
"Purchased Student Loan" means a Trust Student Loan which is, as of the
close of business on the last day of a Collection Period, purchased by the
Servicer pursuant to Section 3.5 of the Servicing Agreement or repurchased by
the Seller pursuant to Section 6 of the Sale Agreement or sold to another
eligible lender holding one or more Serial Loans with respect to such Trust
Student Loan pursuant to Section 3.11E of the Servicing Agreement.
"Rating Agency" means Moody's, Standard & Poor's and Fitch. If any such
organization or successor thereto is no longer in existence, "Rating Agency"
with respect to such organization shall be a nationally recognized statistical
rating organization or other comparable Person designated by the Administrator,
notice of which designation shall be given to the Indenture Trustee, the
Eligible Lender Trustee and the Servicer.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days' prior notice thereof and that each
of the Rating Agencies shall have notified the Administrator, the Servicer, the
Eligible Lender Trustee and the Indenture Trustee in writing that such action
will not result in and of itself in a reduction or withdrawal of the then
current rating of any of the Notes or the Certificates.
"Realized Loss" means the excess of the principal balance (including any
interest that had been or had been expected to be capitalized) of any Liquidated
Student Loan over Liquidation Proceeds with respect to such Student Loan to the
extent allocable to principal (including any interest that had been or had been
expected to be capitalized).
"Record Date" means, with respect to a Distribution Date or Redemption
Date, the close of business on the day preceding such Distribution Date or
Redemption Date.
"Recoveries" means moneys collected from whatever source with respect to
any Liquidated Student Loan which was written off in prior Collection Periods or
during the current Collection Period, net of the sum of any amounts expended by
the Servicer for the account of any Obligor and any amounts required by law to
be remitted to any Obligor.
"Redemption Date" means in the case of a payment to Noteholders pursuant to
Section 10.1 of the Indenture, the Distribution Date specified pursuant to
Section 10.1 of the Indenture.
"Redemption Price" means an amount equal to the unpaid principal amount of
the Notes, plus accrued and unpaid interest thereon at the applicable Note Rates
to but excluding the Redemption Date and the amount of the Note Interest
Carryover with respect thereto.
"Reserve Account" means the account designated as such, established and
maintained pursuant to Section 2.3A.2 of the Administration Agreement.
"Reserve Account Initial Deposit" with respect to a Trust has the meaning
specified in Appendix A (Trust) to the related Supplement.
"Responsible Officer" means, with respect to the Indenture Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee, including
any Vice President, Assistant Vice President, Assistant Treasurer, Assistant
Secretary, or any other officer of the Indenture Trustee customarily performing
functions similar to those performed by any of the above designated officers,
with direct responsibility for the administration of the Indenture and the other
Basic Documents on behalf of the Indenture Trustee and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
"Sale Agreement" with respect to a Trust means a Sale Agreement in
substantially the form of Exhibit [] to the Administration Agreement, among the
related Eligible Lender Trustee on behalf of such Trust, such Trust, the related
Interim Eligible Lender Trustee and the Seller.
"Sallie Mae" means the Student Loan Marketing Association.
"Schedule of Trust Student Loans" means the listing of the Trust Student
Loans set forth in Schedule A to the Indenture and the Bill of Sale (which
Schedule may be in the form of microfiche).
"Seller" means SLM Funding Corporation, a Delaware corporation.
"Serial Loan" means an additional student loan, other than a Consolidation
Loan, which is made to a borrower who is also a borrower under at least one
Trust Student Loan.
"Servicer" means the Sallie Mae Servicing Corporation, in its capacity as
servicer of the Trust Student Loans, or any successor thereto in such capacity
in accordance with the Servicing Agreement.
"Servicer Default" means an event specified in Section 5.1 of the Servicing
Agreement.
"Servicer's Report" means any report of the Servicer delivered pursuant to
Section 3.lA of the Administration Agreement, substantially in the form
acceptable to the Administrator.
"Servicing Agreement" with respect to a Trust means a Servicing Agreement
in substantially the form of Exhibit [] to the Administration Agreement, among
such Trust, the related Eligible Lender Trustee, the Seller, the Servicer, the
Administrator and the related Indenture Trustee.
"Servicing Fee" has the meaning specified in Attachment A to the Servicing
Agreement.
"SLS Loan" means a Trust Student Loan designated as such that is made under
the Supplemental Loans for Students Program pursuant to the Higher Education
Act.
"Special Allowance Payments" means payments, designated as such, consisting
of effective interest subsidies by the Department in respect of the Trust
Student Loans to the Eligible Lender Trustee on behalf of the Trust in
accordance with the Higher Education Act.
"Specified Reserve Account Balance" with respect to a Trust has the meaning
specified in Appendix A (Trust) to the related Supplement.
"Stafford Loan" means a Trust Student Loan designated as such that is made
under the Stafford Loan Program in accordance with the Higher Education Act.
"Standard & Poor's" means Standard & Poor's Ratings Group, a division of
The McGraw-Hill Companies, Inc.
"State" means any one of the 50 States of the United States of America or
the District of Columbia.
"Student Loans" means education loans to students and parents of students
under the Federal Family Education Loan Program.
"Student Loan Rate" for any Accrual Period will be equal to the product of
(a) the quotient obtained by dividing (i) 365 (or 366 in the case of a leap
year) by (ii) the actual number of days elapsed in such Accrual Period and (b)
the percentage equivalent of a fraction, (i) the numerator of which is equal to
Expected Interest Collections for the Collection Period relating to such Accrual
Period less the Primary Servicing Fee and the Administration Fee and any prior
unpaid Administration Fees with respect to such Collection Period, and (ii) the
denominator of which is the Pool Balance as of the first day of such Collection
Period.
"Successor Administrator" has the meaning specified in Section 3.7(e) of
the Indenture.
"Successor Servicer" has the meaning specified in Section 3.7(e) of the
Indenture.
"Supplement" means with respect to a Trust, a supplement to the
Administration Agreement in substantially the form of Exhibit A to the
Administration Agreement, executed by such Trust, the related Eligible Lender
Trustee, the Servicer, the Seller and the related Indenture Trustee, and
acknowledged by the Administrator.
"T-Bill Rate" means, on any day, the weighted average per annum discount
rate (expressed on a bond equivalent basis and applied on a daily basis) for
91-day Treasury Bills sold at the most recent 91-day Treasury Bill auction prior
to such date as reported by the U.S. Treasury Department. In the event that the
results of the auctions of 91-day Treasury Bills cease to be published or
reported as provided above, or that no such auction is held in a particular
week, then the "T-Bill Rate" in effect as a result of the last such publication
or report shall remain in effect until such time, if any, as the results of
auctions of 91-day Treasury Bills shall again be so published or reported or
such an auction is held, as the case may be. The T-Bill Rate shall be subject to
a Lock-In Period of six Business Days.
"Transfer Date" has the meaning specified in Section 5.2A of the
Administration Agreement.
"Treasury Regulations" means regulations, including proposed or temporary
regulations, promulgated under the Code. References in any document or
instrument to specific provisions of proposed or temporary regulations shall
include analogous provisions of final Treasury Regulations or other successor
Treasury Regulations.
"Trust" means a Delaware Business Trust designated in a Supplement and
established pursuant to a Trust Agreement between the Depositor and the Eligible
Lender Trustee designated in such Supplement.
"Trust Account Property" means the Trust Accounts, all cash and investments
held from time to time in any Trust Account (whether in the form of deposit
accounts, Physical Property, book-entry securities, uncertificated securities or
otherwise), including the Reserve Account Initial Deposit, and all earnings on
and proceeds of the foregoing.
"Trust Accounts" has the meaning specified in Section 2.3 of the
Administration Agreement.
"Trust Agreement" with respect to a Trust means a Trust Agreement in
substantially the form of Exhibit [] to the Administration Agreement, between
the Depositor and the related Eligible Lender Trustee.
"Trust Auction Date" has the meaning specified in Section 4.4 of the
Indenture.
"Trust Certificate" means a Certificate.
"Trust Estate" means all right, title and interest of the Trust (or the
Eligible Lender Trustee on behalf of the Trust) in and to the property and
rights sold, transferred and assigned to the Trust pursuant to the Sale
Agreement, all funds on deposit from time to time in the Trust Accounts and all
other property of the Trust from time to time, including any rights of the
Eligible Lender Trustee and the Trust pursuant to the Trust Agreement and the
Administration Agreement.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as in
force on the date hereof, unless otherwise specifically provided.
"Trust Student Loan" means any student loan that is listed on the Schedule
of Trust Student Loans on the Closing Date plus any student loan that is
substituted for a Trust Student Loan by the Seller pursuant to Section 6 of the
Sale Agreement or by the Servicer pursuant to Section 3.5 of the Servicing
Agreement, but shall not include any Purchased Student Loan following receipt by
or on behalf of the Trust of the Purchase Amount with respect thereto or any
Liquidated Student Loan following receipt by or on behalf of the Trust of
Liquidation Proceeds with respect thereto or following such Liquidated Student
Loan having otherwise been written off by the Servicer.
"Trust Student Loan Files" means the documents specified in Section 2.1 of
the Servicing Agreement.
"UCC" means, unless the context otherwise requires, the Uniform Commercial
Code, as in effect in the relevant jurisdiction, as amended from time to time.
<PAGE>
EXHIBIT A
SLM STUDENT LOAN TRUST [] SUPPLEMENT
Dated as of []
to
MASTER ADMINISTRATION AGREEMENT
Dated as of May 1, 1997
Between
SLM FUNDING CORPORATION,
and
STUDENT LOAN MARKETING ASSOCIATION
<PAGE>
SLM Student Loan Trust [] Supplement dated as of [] (the "Supplement") to the
Master Administration Agreement dated as of May 1, 1997 (the "Agreement")
between SLM Funding Corporation (the "Seller") and Student Loan Marketing
Association (the "Administrator").
This Supplement is being delivered to the Administrator pursuant to and in
satisfaction of the conditions set forth in Section 1.2(a) of the Agreement with
respect to SLM Student Loan Trust [] (the "Trust"). The provisions of this
Supplement shall be applicable only to SLM Student Loan Trust [].
1. The following entities are hereby designated in accordance with clause 1 of
Section 1.2(a) of the Agreement:
The Trust: SLM Student Loan Trust []
The Eligible Lender Trustee: []
The Interim Eligible Lender Trustee: []
The Indenture Trustee:[]
The initial deposit into the Collection Account on the Closing Date in
accordance with Section 2.6.C. of the Agreement shall be:[]
2. Attached hereto are (i) Appendix A (Trust []) containing those definitions
which shall be applicable to this Supplement and to the Agreement in connection
with the Trust and this Supplement in place of the definitions contained in
Appendix A (Master) attached to the Agreement; and (ii) a cross-reference table
indicating modifications to the articles and sections of the Basic Documents
referred to in the Agreement.
3. Each of the Basic Documents (other than the Agreement) has been executed
and delivered by each of the parties thereto, are being delivered to the
Administrator together with this Supplement and are in substantially the
respective forms attached to the Agreement as Exhibits B through I;
4. Each of the parties named on the signature pages to this Supplement by
execution of this Supplement agrees, for the benefit of the Administrator and
the other signatories hereto, to be bound by the terms of the Agreement in
connection with the Trust, this Supplement and the other Basic Documents to the
extent reference is made in the Agreement to such party. The rights and
obligations of such parties under the Agreement resulting from the execution of
this Supplement (other than the Seller) shall be applicable only with respect to
the Trust, this Supplement and the other Basic Documents.
This Supplement shall be construed in accordance with the laws of the State of
New York, without reference to the conflict of law provisions thereof, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
This Supplement may be executed in counterparts, each of which when so executed
shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Supplement to be
duly executed and delivered as of the date first above written.
<PAGE>
SLM FUNDING CORPORATION
By:____________________
Name:__________________
Title:_________________
SALLIE MAE SERVICING CORPORATION
By:____________________
Name:__________________
Title:_________________
SLM STUDENT LOAN TRUST []
by______________________
not in its individual capacity but
solely as Eligible Lender Trustee
By:_____________________
Name:___________________
Title:__________________
_______________________
not in its individual capacity but
solely as Eligible Lender Trustee
By:____________________
Name:__________________
Title:_________________
_______________________
not in its individual capacity but
solely as Indenture Trustee
By:____________________
Name:__________________
Title:_________________
The Administrator hereby acknowledges receipt of the foregoing Supplement and
hereby confirms to the Seller and the other signatories to the foregoing
Supplement that the representations of the Administrator contained in Article V
of the Agreement are true and correct as of the date of such Supplement.
STUDENT LOAN MARKETING ASSOCIATION
By:____________________
Name:__________________
Title:_________________
