<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 12, 1997
-----------------
SLM FUNDING CORPORATION
-----------------------
formerly known as SALLIE MAE FUNDING CORPORATION
(Exact name of registrant as specified in its charter)
(Originator of the Sallie Mae Student Loan Trust 1995-1,
the Sallie Mae Student Loan Trust 1996-1,
the SLM Student Loan Trust 1996-2,
the SLM Student Loan Trust 1996-3,
the SLM Student Loan Trust 1996-4,
the SLM Student Loan Trust 1997-1
the SLM Student Loan Trust 1997-2,
the SLM Student Loan Trust 1997-3,
and the SLM Student Loan Trust 1997-4)
Delaware 33-95474/333-2502/333-24949 23-2815650
- -------- --------------------------- ----------
(State or other (Commission File (I.R.S. employer
Jurisdiction of Numbers) Identification No.)
Incorporation)
777 Twin Creek Drive
Killeen, Texas 76543
----------------------------------------
(Address of principal executive offices)
Registrant's telephone number: (817) 554-4500
Page 1 of 6
Exhibit Index appears on Page 5
<PAGE> 2
Item 5. Other Events
On November 5, 1997, the following agreements were executed
and delivered by the respective parties thereto: (a) the Pricing Agreement
relating to the Student Loan-Backed Notes, dated November 5, 1997, by and among
SLM Funding Corporation ("SLM Funding"), the Student Loan Marketing Association
("Sallie Mae"), Goldman, Sachs & Co. and Morgan Stanley Dean Witter (the
"Underwriters"), on behalf of each of the underwriters named in Schedule 1
thereto; (b) the Pricing Agreement relating to the Student Loan-Backed
Certificates, dated November 5, 1997, by and among SLM Funding, Sallie Mae and
the Underwriters, on behalf of each of the underwriters named in Schedule 1
thereto: (c) the Underwriting Agreement relating to the Student Loan-Backed
Notes, dated November 5, 1997, by and among SLM Funding, Sallie Mae and the
Underwriters, on behalf of each of the underwriters named in Schedule 1
thereto; and (d) the Underwriting Agreement relating to the Student Loan-Backed
Certificates, dated November 5, 1997, by and among SLM Funding, Sallie Mae and
the Underwriters, on behalf of each of the underwriters named in Schedule 1
thereto.
On November 1 or November 12, 1997, the following agreements
were executed and delivered by the respective parties thereto: (a) the Purchase
Agreement, dated as of November 12, 1997, by and among SLM Funding, Chase
Manhattan Bank USA, National Association, not in its individual capacity but
solely as interim eligible lender trustee (the "Interim Eligible Lender
Trustee"), and Sallie Mae; (b) the Trust Agreement, dated as of November 1,
1997, by and between SLM Funding and Chase Manhattan Bank USA, National
Association, not in its individual capacity but solely as eligible lender
trustee (the "Eligible Lender Trustee"); (c) the Indenture, dated as of
November 1, 1997 (the "Indenture"), by and among the SLM Student Loan Trust
1997-4 (the "Trust"), the Eligible Lender Trustee, and Bankers Trust Company,
not in its individual capacity but solely as the trustee under the Indenture
(the "Indenture Trustee"); (d) the Sale Agreement, dated as of November 12,
1997, by and among the Trust, Sallie Mae, the Eligible Lender Trustee, Sallie
Mae Servicing Corporation (the "Servicer"), SLM Funding and the Indenture
Trustee; (e) the Administration Agreement Supplement, dated as of November 12,
1997, by and among the Trust, Sallie Mae, the Eligible Lender Trustee, the
Servicer, SLM Funding and the Indenture Trustee; (f) the Servicing Agreement,
dated as of November 12, 1997, by and among the Servicer, Sallie Mae, the
Trust, the Eligible Lender Trustee and the Indenture Trustee; and (g) the
Paying Agent Agreement, dated November 12, 1997, by and among the Eligible
Lender Trustee, Bankers Trust Company (the "Agent"), and Student Loan Marketing
Association (the "Administrator").
Page 2 of 6
Exhibit Index appears on Page 5
<PAGE> 3
Item 7. Financial Statements, Pro Forma Financial Statements and
Exhibits
(c) Exhibits
1.1 Pricing Agreement relating to the Student
Loan-Backed Notes, dated November 5, 1997, by
and among SLM Funding, Sallie Mae and the
Underwriters, on behalf of each of the
underwriters named in Schedule 1 thereto.
1.2 Pricing Agreement relating to the Student
Loan-Backed Certificates, dated November 5,
1997, by and among SLM Funding, Sallie Mae
and the Underwriters, on behalf of each of
the underwriters named in Schedule 1 thereto.
1.3 Underwriting Agreement relating to the
Student Loan-Backed Notes, dated November 5,
1997, by and among SLM Funding, Sallie Mae
and the Underwriters, on behalf of each of
the underwriters named in Schedule 1 thereto.
1.4 Underwriting Agreement relating to the
Student Loan-Backed Certificates, dated
November 5, 1997, by and among SLM Funding,
Sallie Mae and the Underwriters, on behalf of
each of the underwriters named in Schedule 1
thereto.
4.1 Trust Agreement, dated as of November 1, 1997
by and between SLM Funding and the Eligible
Lender Trustee.
4.2 Indenture, dated as of November 1, 1997, by
and among the Trust, the Eligible Lender
Trustee and the Indenture Trustee.
99.1 Purchase Agreement, dated as of November 12,
1997, by and among SLM Funding, the Interim
Eligible Lender Trustee and Sallie Mae.
99.2 Sale Agreement, dated as of November 12,
1997, by and among SLM Funding, the Interim
Eligible Lender Trustee, the Eligible Lender
Trustee and the Trust.
99.3 Administration Agreement Supplement, dated as
of November 12, 1997, by and among the Trust,
Sallie Mae, SLM Funding, the Eligible Lender
Trustee, the Servicer and the Indenture
Trustee.
99.4 Servicing Agreement, dated as of November 12,
1997, by and among the Servicer, Sallie Mae,
the Trust, the Eligible Lender Trustee and
the Indenture Trustee.
99.5 Paying Agent Agreement, dated November 12,
1997, by and among the Eligible Lender
Trustee, the Agent, and the Administrator.
Page 3 of 6
Exhibit Index appears on Page 5
<PAGE> 4
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, as amended, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
Dated: November 20, 1997
SLM FUNDING
CORPORATION
By: /s/ WILLIAM M. E. RACHAL, JR.
------------------------------------
Name: William M.E. Rachal, Jr.
Title: Treasurer and Controller
Page 4 of 6
Exhibit Index appears on Page 5
<PAGE> 5
INDEX TO EXHIBIT
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Exhibit Page
- ------ ------- ----
<S> <C>
1.1 Pricing Agreement relating to
Student-Loan Backed Notes,
dated November 5, 1997, by and
among SLM Funding, Sallie
Mae and the Underwriters, on
behalf of each of the underwriters
named on the Schedule 1 thereto.
1.2 Pricing Agreement relating to
Student-Loan Backed
Certificates, dated November 5, 1997,
by and among SLM Funding, Sallie Mae
and the Underwriters, on behalf
of each of the underwriters
named on Schedule 1 thereto.
1.3 Underwriting Agreement relating
to Student-Loan Backed Notes, dated
November 5, 1997, by and among SLM
Funding, Sallie Mae and the Underwriters,
on behalf of each of the underwriters
named on Schedule 1 thereto.
1.4 Underwriting Agreement relating
to Student-Loan Backed Certificates,
dated November 5, 1997, by and among
SLM Funding, Sallie Mae and the
Underwriters, on behalf of each of
the underwriters named on Schedule
1 thereto.
4.1 Trust Agreement, dated as of
November 1,1997, by and between
SLM Funding and the Eligible Lender
Trustee.
4.2 Indenture, dated as of November 1,
1997,by and among the Trust, the
Eligible Lender Trustee and the
Indenture Trustee.
</TABLE>
Page 5 of 6
Exhibit Index appears on Page 5
<PAGE> 6
INDEX TO EXHIBIT (cont.)
<TABLE>
<CAPTION>
Sequentially
Exhibit Numbered
Number Exhibit Page
- ------ ------- ----
<S> <C>
99.1 Purchase Agreement, dated as of
November 12, 1997, by and among
SLM Funding, the Interim Eligible
Lender Trustee and Sallie Mae.
99.2 Sale Agreement, dated as of November
12,1997, by and among SLM Funding,
the Interim Eligible Lender Trustee
and Sallie Mae.
99.3 Administration Agreement
Supplement, dated as of November
12, 1997, by and among the Trust,
Sallie Mae, the Eligible Lender
Trustee, the Servicer, SLM Funding
and the Indenture Trustee.
99.4 Servicing Agreement, dated as of
November 12, 1997, by and among
the Servicer, Sallie Mae, the Trust,
the Eligible Lender Trustee and the
Indenture Trustee.
99.5 Paying Agent Agreement, dated
November 12, 1997, by and among the
Eligible Lender Trustee, the Agent, and
the Administrator.
</TABLE>
Page 6 of 6
Exhibit Index appears on Page 5
<PAGE> 1
EXHIBIT 1.1
PRICING AGREEMENT
GOLDMAN, SACHS & CO.
85 BROAD STREET
NEW YORK, NEW YORK 10004
AND
MORGAN STANLEY & CO. INCORPORATED
1585 BROADWAY
NEW YORK, NEW YORK 10036
AS REPRESENTATIVES OF THE UNDERWRITERS
NAMED ON SCHEDULE I HERETO,
November 5, 1997
Ladies and Gentlemen:
SLM Funding Corporation, a Delaware corporation (the
"Company"), and the Student Loan Marketing Association, a corporation formed
under the laws of the United States ("Sallie Mae"), propose, subject to the
terms and conditions stated herein and in the Underwriting Agreement, dated
November 5, 1997 (the "Underwriting Agreement"), between the Company and Sallie
Mae, on the one hand, and Goldman Sachs & Co. and Morgan Stanley & Co.
Incorporated, on the other hand, that the Company will cause the trust (the
"Trust") formed pursuant to the Trust Agreement dated as of November 1, 1997
between the Company and Chase Manhattan Bank USA, National Association, as
trustee (the "Eligible Lender Trustee"), to issue and sell to the Underwriters
named in Schedule I hereto (the "Underwriters") the Student Loan-Backed Notes
(the "Notes") specified in Schedule II hereto (the "Designated Securities"). The
Notes will be issued and secured pursuant to the Indenture, dated as of November
1, 1997 (the "Indenture"), between the Trust and Bankers Trust Company, as
trustee (the "Indenture Trustee").
Except as modified pursuant to Schedule II hereto, each of the
provisions of the Underwriting Agreement is incorporated herein by reference in
its entirety, and shall be deemed to be a part of this Agreement to the same
extent as if such provisions had been set forth in full herein; and each of the
representations and warranties set forth therein shall be deemed to have been
made at and as of the date of this Pricing Agreement, except that each
representation and warranty which refers to the Prospectus in Section 2 of the
Underwriting Agreement shall be deemed to be a representation or warranty as of
the date of the Underwriting Agreement in relation to the Prospectus (as therein
defined), and also a representation and warranty as of the date of this Pricing
Agreement in relation to the
<PAGE> 2
Prospectus as amended or supplemented relating to the Designated Securities
which are the subject of this Pricing Agreement. Each reference to the
Representatives herein and in the provisions of the Underwriting Agreement so
incorporated by reference shall be deemed to refer to you. Unless otherwise
defined herein, terms defined in the Underwriting Agreement are used herein as
therein defined.
The Representatives designated to act on behalf of the
Representatives and on behalf of each of the Underwriters of the Designated
Securities pursuant to Section 12 of the Underwriting Agreement and the address
of the Representatives referred to in such Section 12 are set forth at the end
of Schedule II hereto.
An amendment to the Registration Statement, or a supplement to
the Prospectus, as the case may be, relating to the Designated Securities, in
the form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in
the Underwriting Agreement incorporated herein by reference, the Company agrees
to cause the Trust to issue and sell to each of the Underwriters, and each of
the Underwriters agrees, severally and not jointly, to purchase from the Trust,
at the time and place and at the purchase price to the Underwriters set forth in
Schedule II hereto, the principal amount of Designated Securities set forth
opposite the name of such Underwriter in Schedule I hereto, less the principal
amount of Designated Securities covered by Delayed Delivery Contracts, if any,
as may be specified in Schedule II.
During the period beginning from the date of this Pricing
Agreement for the Designated Securities and continuing to and including November
12, 1997, the Company agrees, and Sallie Mae agrees that it will cause the
Company, not to, and not to permit any affiliated entity to, offer, sell,
contract to sell or otherwise dispose of, any securities (other than the
Designated Securities) collateralized by, or any securities (other than the
related Certificates) evidencing an ownership in, Student Loans, without the
prior written consent of the Representatives.
Each Underwriter represents and agrees that (a) it has not
offered or sold and will not offer or sell any Notes or Certificates to persons
in the United Kingdom prior to the expiration of the period of six months from
the issue date of the Notes and the Certificates except to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995; (b) it has complied and will comply with
all applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Notes and the Certificates in, from or
otherwise involving the United Kingdom; and (c) it has only issued or passed on
and will only issue or pass on in the United Kingdom any document received by it
in
2
<PAGE> 3
connection with the issuance of the Notes and the Certificates to a person who
is of a kind described in article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1995 or is a person to whom such
document may otherwise lawfully be issued or passed on.
If the foregoing is in accordance with your understanding,
please sign and return to us 10 counterparts hereof, and upon acceptance hereof
by you, on behalf of each of the Underwriters, this letter and such acceptance
hereof, including the provisions of the Underwriting Agreement incorporated
herein by reference, shall constitute a binding agreement between each of the
Underwriters and the Company and Sallie Mae. It is understood that your
acceptance of this letter on behalf of each of the Underwriters is or will be
pursuant to the authority set forth in a form of Agreement among Underwriters,
the form of which shall be submitted to the Company and Sallie Mae for
examination upon request, but without warranty on the part of the
Representatives as to the authority of the signers thereof.
Very truly yours,
SLM FUNDING CORPORATION
By: /s/ ROBERT R. LEVINE
------------------------------
Name:
Title:
STUDENT LOAN MARKETING ASSOCIATION
By: /s/ J. LANCE FRANKE
------------------------------
Name:
Title:
3
<PAGE> 4
Accepted as of the date hereof:
GOLDMAN, SACHS & CO.
/s/ GOLDMAN, SACHS & CO.
- ---------------------------------------
(Goldman, Sachs & Co.)
MORGAN STANLEY & CO. INCORPORATED
By: /s/ CHARLES N. ATKINS
- ---------------------------------------
Name:
Title:
On behalf of the Underwriters named on Schedule I hereto
4
<PAGE> 5
SCHEDULE I
PRINCIPAL AMOUNT OF DESIGNATED SECURITIES TO BE PURCHASED
<TABLE>
<CAPTION>
UNDERWRITER CLASS A-1 CLASS A-2
<S> <C> <C>
Goldman Sachs & Co. $ 644,000,000 $394,500,000
Morgan Stanley & Co. Incorporated $ 644,000,000 $394,500,000
Education Securities, Inc. $ 200,000,000 $200,000,000
--------------- ------------
TOTAL $ 1,488,000,000 $989,000,000
=============== ============
</TABLE>
<PAGE> 6
SCHEDULE II
TITLE OF EACH CLASS OF DESIGNATED SECURITIES:
Floating Rate Class A-1 Student Loan-Backed Notes
(for purposes of this Schedule II, "Class A-1")
Floating Rate Class A-2 Student Loan-Backed Notes
(for purposes of this Schedule II, "Class A-2")
AGGREGATE PRINCIPAL AMOUNT OF EACH CLASS:
Class A-1: $1,488,000,000
Class A-2: $ 989,000,000
PRICE TO PUBLIC OF EACH CLASS: The Underwriters will offer the Class A-1 Notes
and Class A-2 Notes from time to time for sale in one or more negotiated
transactions, or otherwise, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices or at negotiated prices.
PURCHASE PRICE BY UNDERWRITERS OF EACH CLASS:
Class A-1: 99.79118%
Class A-2: 99.47724%
SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE: Same Day Funds
INDENTURE: Indenture, dated as of November 1, 1997, among Bankers Trust Company,
as Indenture Trustee, the SLM Student Loan Trust 1997-4, and Chase Manhattan
Bank USA, National Association, as Eligible Lender Trustee.
MATURITY:
Class A-1: July 2006 Distribution Date
Class A-2: October 2010 Distribution Date
INTEREST RATE:
Class A-1: T-Bill Rate plus 0.75%
Class A-2: T-Bill Rate plus 0.75%
FORM OF DESIGNATED SECURITIES: Book-Entry (DTC)
TIME OF DELIVERY: November 12, 1997
<PAGE> 7
CLOSING LOCATION FOR DELIVERY OF DESIGNATED SECURITIES:
Student Loan Marketing Association
11600 Sallie Mae Drive
Reston, VA 20193
NAMES AND ADDRESSES OF REPRESENTATIVES:
Designated Representative: Morgan Stanley & Co. Incorporated
Address for Notices, etc.: Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attn: Charles Atkins
Designated Representative: Goldman, Sachs & Co.
Address for Notices, etc.: Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attn: Thomas Lasersohn
MODIFICATIONS TO UNDERWRITING AGREEMENT:
1. The following paragraph is hereby added to Section 7 of the
Underwriting Agreement:
"(n) At the Time of Delivery, one or more purchasers shall be
prepared, to the reasonable satisfaction of the Underwriters, to
consummate the purchase of all of the Class A-1 Notes and Class A-2
Notes."
2. Notwithstanding the last sentence of Section 6 of the
Underwriting Agreement, the Company or Sallie Mae will pay or cause to be paid
the reasonable costs and expenses incurred by the Underwriters in connection
with the offering of the Designated Securities, including those referred to in
such sentence.
-2-
<PAGE> 1
EXHIBIT 1.2
PRICING AGREEMENT
GOLDMAN, SACHS & CO.
85 BROAD STREET
NEW YORK, NEW YORK 10004
AND
MORGAN STANLEY & CO. INCORPORATED
1585 BROADWAY
NEW YORK, NEW YORK 10036
November 5, 1997
Ladies and Gentlemen:
SLM Funding Corporation, a Delaware corporation (the
"Company"), and the Student Loan Marketing Association, a corporation formed
under the laws of the United States ("Sallie Mae"), propose, subject to the
terms and conditions stated herein and in the Underwriting Agreement, dated
November 5, 1997 (the "Underwriting Agreement"), between the Company and Sallie
Mae, on the one hand, and Goldman Sachs & Co. and Morgan Stanley & Co.
Incorporated, on the other hand, that the Company will cause the trust (the
"Trust") formed pursuant to the Trust Agreement dated as of November 1, 1997
between the Company and Chase Manhattan Bank USA, National Association, as
trustee (the "Eligible Lender Trustee"), to issue and sell to the Underwriters
named in Schedule I hereto (the "Underwriters") the Student Loan-Backed
Certificates (the "Certificates") specified in Schedule II hereto (the
"Designated Securities"). The Certificates will be issued pursuant to the
Trust Agreement.
Except as modified pursuant to Schedule II hereto, each of the
provisions of the Underwriting Agreement is incorporated herein by reference in
its entirety, and shall be deemed to be a part of this Agreement to the same
extent as if such provisions had been set forth in full herein; and each of the
representations and warranties set forth therein shall be deemed to have been
made at and as of the date of this Pricing Agreement, except that each
representation and warranty which refers to the Prospectus in Section 2 of the
Underwriting Agreement shall be deemed to be a representation or warranty as of
the date of the Underwriting Agreement in relation to the Prospectus (as
therein defined), and also a representation and warranty as of the date of this
Pricing Agreement in relation to the Prospectus as amended or supplemented
relating to the Designated Securities which are the subject of this Pricing
Agreement. Each reference to the Representatives herein and in the
<PAGE> 2
provisions of the Underwriting Agreement so incorporated by reference shall be
deemed to refer to you. Unless otherwise defined herein, terms defined in the
Underwriting Agreement are used herein as therein defined.
The Representatives designated to act on behalf of the
Representatives and on behalf of each of the Underwriters of the Designated
Securities pursuant to Section 12 of the Underwriting Agreement and the address
of the Representatives referred to in such Section 12 are set forth at the end
of Schedule II hereto.
An amendment to the Registration Statement, or a supplement to
the Prospectus, as the case may be, relating to the Designated Securities, in
the form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in
the Underwriting Agreement incorporated herein by reference, the Company agrees
to cause the Trust to issue and sell to each of the Underwriters, and each of
the Underwriters agrees, severally and not jointly, to purchase from the Trust,
at the time and place and at the purchase price to the Underwriters set forth
in Schedule II hereto, the amount of Designated Securities set forth opposite
the name of such Underwriter in Schedule I hereto, less the amount of
Designated Securities covered by Delayed Delivery Contracts, if any, as may be
specified in Schedule II.
During the period beginning from the date of this Pricing
Agreement for the Designated Securities and continuing to and including
November 12, 1997, the Company agrees, and Sallie Mae agrees that it will cause
the Company, not to, and not to permit any affiliated entity to, offer, sell,
contract to sell or otherwise dispose of, any securities (other than the
Designated Securities) evidencing an ownership in, or any securities (other
than the related Notes) collateralized by, Student Loans, without the prior
written consent of the Representatives.
Each Underwriter represents and agrees that (a) it has not
offered or sold and will not offer or sell any Notes or Certificates to persons
in the United Kingdom prior to the expiration of the period of six months from
the issue date of the Notes and the Certificates except to persons whose
ordinary activities involve them in acquiring, holding, managing or disposing
of investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995; (b) it has complied and will comply with
all applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Notes and the Certificates in, from or
otherwise involving the United Kingdom; and (c) it has only issued or passed on
and will only issue or pass on in the United Kingdom any document received by
it in connection with the issuance of the Notes and the Certificates to a
person who is of a kind described in article 11(3) of the Financial Services
Act 1986 (Investment Advertisements)
2
<PAGE> 3
(Exemptions) Order 1996 or is a person to whom such document may otherwise
lawfully be issued or passed on.
If the foregoing is in accordance with your understanding,
please sign and return to us 10 counterparts hereof, and upon acceptance hereof
by you, on behalf of each of the Underwriters, this letter and such acceptance
hereof, including the provisions of the Underwriting Agreement incorporated
herein by reference, shall constitute a binding agreement between each of the
Underwriters and the Company and Sallie Mae. It is understood that your
acceptance of this letter on behalf of each of the Underwriters is or will be
pursuant to the authority set forth in a form of Agreement among Underwriters,
the form of which shall be submitted to the Company and Sallie Mae for
examination upon request, but without warranty on the part of the
Representatives as to the authority of the signers thereof.
Very truly yours,
SLM FUNDING CORPORATION
By: /s/ ROBERT R. LEVINE
-----------------------------
Name:
Title:
STUDENT LOAN MARKETING ASSOCIATION
By: /s/ J. LANCE FRANKE
------------------------------
Name:
Title:
3
<PAGE> 4
Accepted as of the date hereof:
GOLDMAN, SACHS & CO.
/s/ GOLDMAN, SACHS & CO.
- -------------------------
(Goldman, Sachs & Co.)
MORGAN STANLEY & CO. INCORPORATED
By: /s/ CHARLES N. ATKINS
---------------------
Name:
Title:
4
<PAGE> 5
SCHEDULE I
AMOUNT OF DESIGNATED SECURITIES TO BE PURCHASED
<TABLE>
<CAPTION>
UNDERWRITER CERTIFICATES
<S> <C>
Goldman Sachs & Co. $44,950,000
Morgan Stanley & Co. Incorporated $44,950,000
-----------
TOTAL $89,900,000
===========
</TABLE>
<PAGE> 6
SCHEDULE II
TITLE OF EACH CLASS OF DESIGNATED SECURITIES:
Floating Rate Student Loan-Backed Certificates
AGGREGATE AMOUNT OF DESIGNATED SECURITIES: $89,900,000
PRICE TO PUBLIC PER CERTIFICATE: The Underwriters will offer the Certificates
from time to time for sale in one or more negotiated transactions, or
otherwise, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices or at negotiated prices.
PURCHASE PRICE BY UNDERWRITERS PER CERTIFICATE:
$89,900,000 of Floating Rate Student Loan-Backed Certificates:
99.15513%
SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE: Same Day Funds
TRUST AGREEMENT: Trust Agreement, dated November 1, 1997, among SLM
Funding Corporation, as Seller, and Chase Manhattan Bank USA, National
Association, as Eligible Lender Trustee
MATURITY: January 2013 Distribution Date
RETURN RATE: T-Bill Rate plus 1.05%
FORM OF DESIGNATED SECURITIES: Book-Entry (DTC)
TIME OF DELIVERY: November 12, 1997
<PAGE> 7
CLOSING LOCATION FOR DELIVERY OF DESIGNATED SECURITIES:
Student Loan Marketing Association
11600 Sallie Mae Drive
Reston, VA 20193
NAMES AND ADDRESSES OF REPRESENTATIVES:
Designated Representative: Morgan Stanley & Co. Incorporated
Address for Notices, etc.: Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Attn: Charles Atkins
Designated Representative: Goldman, Sachs & Co.
Address for Notices, etc.: Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Attn: Thomas Lasersohn
MODIFICATIONS TO UNDERWRITING AGREEMENT:
Notwithstanding the last sentence of Section 6 of the Underwriting
Agreement, the Company or Sallie Mae will pay or cause to be paid the
reasonable costs and expenses incurred by the Underwriters in connection with
the offering of the Designated Securities, including those referred to in such
sentence.
-2-
<PAGE> 1
EXHIBIT 1.3
SLM FUNDING CORPORATION
STUDENT LOAN-BACKED NOTES
--------------------
UNDERWRITING AGREEMENT
November 5, 1997
GOLDMAN, SACHS & CO.
85 BROAD STREET
NEW YORK, NEW YORK 10004
AND
MORGAN STANLEY & CO. INCORPORATED
1585 BROADWAY
NEW YORK, NEW YORK 10036
Ladies and Gentlemen:
From time to time the Student Loan Marketing Association ("Sallie
Mae"), a corporation formed under the laws of the United States, and SLM
Funding Corporation, a Delaware corporation and a wholly-owned subsidiary of
Sallie Mae (the "Company"), propose to enter into one or more Pricing
Agreements (each a "Pricing Agreement") in the form of Annex I hereto, with
such additions and deletions as the parties thereto may determine. Subject to
the terms and conditions stated herein and therein, the Company proposes to
cause the Trust specified in the applicable Pricing Agreement to issue and sell
to the firms named in Schedule I to the applicable Pricing Agreement (such
firms constituting the "Underwriters" with respect to such Pricing Agreement
and the securities specified therein) certain of such Trust's Student
Loan-Backed Notes (the "Notes") specified in Schedule II to such Pricing
Agreement (with respect to such Pricing Agreement, the "Designated
Securities"), less the principal amount of Designated Securities covered by
Delayed Delivery Contracts, if any, as provided in Section 3 hereof and as may
be specified in Schedule II to such Pricing Agreement (with respect to such
Pricing Agreement, any Designated Securities to be covered by Delayed Delivery
Contracts are herein sometimes referred to as "Contract Securities" and the
Designated Securities to be purchased by the Underwriters (after giving effect
to the deduction, if any, for Contract Securities) are herein sometimes
referred to as "Underwriters' Securities").
The Securities may be sold from time to time in one or more Series. Each
Series of Securities, which will include one or more classes of Notes and one
or more classes of Student Loan-Backed Certificates (the "Certificates," and,
together with the Notes, the "Securities") will be issued by a Trust to be
formed with respect to such Series (each, a "Trust"). Each Trust will be
formed pursuant to a trust agreement (a "Trust Agreement") to be entered into
<PAGE> 2
between the Company and the Eligible Lender Trustee specified in the related
Pricing Agreement (the "Eligible Lender Trustee"). The Notes of each Series
will be issued and secured pursuant to an indenture (an "Indenture") between
the Trust and the Indenture Trustee specified in the related Pricing Agreement
(the "Indenture Trustee"). The Certificates of a Series will be issued
pursuant to the related Trust Agreement and will represent fractional undivided
interests in the Trust created thereby. The property of each Trust will
include, among other things, educational student loans to students and/or
parents of dependent students ("Student Loans").
With respect to each Trust, (i) the Company will acquire the related
Student Loans from Sallie Mae pursuant to a Purchase Agreement and (ii) the
Company will sell the related Student Loans to such Trust pursuant to a Sale
Agreement, with the related Eligible Lender Trustee holding legal title
thereto. With respect to each Series, Sallie Mae Servicing Corporation, as
servicer (the "Servicer") will enter into a servicing agreement (a "Servicing
Agreement") with the Trust, the Administrator, the Eligible Lender Trustee and
the Indenture Trustee with respect to the related Student Loans. Sallie Mae,
as administrator (in such capacity, the "Administrator"), has entered into a
Master Administration Agreement with the Company dated as of May 1, 1997 and,
as contemplated by the terms of the Master Administration Agreement, will enter
into an Administration Agreement Supplement among the Company, the Trust, the
Eligible Lender Trustee, the Servicer and the Indenture Trustee with respect to
the Student Loans to be held by the Trust (the Master Administration Agreement,
as supplemented by the Administration Agreement Supplement, the "Administration
Agreement").
The terms and conditions of any particular issuance of Designated
Securities shall be as specified in the Pricing Agreement relating thereto and
in or pursuant to the related Indenture.
Capitalized terms used but not defined herein or in any Pricing Agreement
shall have the meanings ascribed thereto in the related Indenture.
1. Particular sales of Designated Securities may be made from time to
time to the Underwriters of such Securities, for whom the firms designated as
representatives of the Underwriters of such Securities in the Pricing Agreement
relating thereto will act as representatives (the "Representatives"). The term
"Representatives" also refers to a single firm acting as sole representative of
the Underwriters and to an Underwriter or Underwriters who act without any firm
being designated as its or their representatives. This Underwriting Agreement
shall not be construed as an obligation of the Company to sell any of the
Securities or as an obligation of any of the Underwriters to purchase the
Securities. The obligation of the Company to issue and sell any of the
Securities and the obligation of any of the Underwriters to purchase any of the
Securities shall be evidenced by the Pricing Agreement with respect to the
Designated Securities specified therein. Each Pricing Agreement shall specify
the aggregate principal amount of such Designated Securities, the initial
public offering price of such Designated Securities, the purchase price to the
Underwriters of such Designated Securities, the names of the Underwriters of
such Designated Securities, the names of the
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<PAGE> 3
Representatives of such Underwriters and the principal amount of such
Designated Securities to be purchased by each Underwriter and whether any of
such Designated Securities shall be covered by Delayed Delivery Contracts (as
defined in Section 3 hereof) and shall set forth the date, time and manner of
delivery of such Designated Securities and payment therefor. The Pricing
Agreement shall also specify (to the extent not set forth in the Indenture and
the registration statement and prospectus with respect thereto) the terms of
such Designated Securities. A Pricing Agreement shall be in the form of an
executed writing (which may be in counterparts), and may be evidenced by an
exchange of telegraphic communications or any other rapid transmission device
designed to produce a written record of communications transmitted. The
obligations of the Underwriters under this Agreement and each Pricing Agreement
shall be several and not joint.
2. The Company and Sallie Mae represent and warrant to, and agree
with, each of the Underwriters as follows (it being agreed and understood that
the statements set forth in clauses (d), (e), (g), (h), (j), (k), (m), (n) and
(o) of this Section 2 with respect to Sallie Mae or the Servicer constitute
representations, warranties and agreements of Sallie Mae only and not of the
Company) :
(a) A registration statement on Form S-3 (File No. 333-24949),
including a form of prospectus, in respect of the Securities has been
filed with the Securities and Exchange Commission (the "Commission"); such
registration statement and any post-effective amendment thereto, each in
the form heretofore delivered or to be delivered to the Representatives
and, excluding exhibits to such registration statement, but including all
documents incorporated by reference in the prospectus contained therein,
to the Representatives for each of the other Underwriters, have been
declared effective by the Commission in such form; no other document with
respect to such registration statement or document incorporated by
reference therein has heretofore been filed or transmitted for filing with
the Commission (other than prospectuses filed pursuant to Rule 424(b) of
the rules and regulations of the Commission under the Securities Act of
1933, as amended (the "Act"), each in the form heretofore delivered to the
Representatives); and no stop order suspending the effectiveness of such
registration statement has been issued and no proceeding for that purpose
has been initiated or, to the best of Sallie Mae's or the Company's
knowledge, threatened by the Commission (any preliminary prospectus
included in such registration statement or filed with the Commission
pursuant to Rule 424(a) under the Act, is hereinafter called a
"Preliminary Prospectus;" the various parts of such registration
statement, including all exhibits thereto and the documents incorporated
by reference in the prospectus contained in the registration statement at
the time such part of the registration statement became effective but
excluding Form T-1, each as amended at the time such part of the
registration statement became effective, are hereinafter collectively
called the "Registration Statement"; the prospectus relating to the
Securities, in the form in which it has most recently been filed, or
transmitted for filing, with the Commission on or prior to the date of
this Agreement, being hereinafter called the "Prospectus"; any
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<PAGE> 4
reference herein to any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include the documents incorporated by reference
therein pursuant to the applicable form under the Act, as of the date of
such Preliminary Prospectus or Prospectus, as the case may be; any
reference to any amendment or supplement to any Preliminary Prospectus or
the Prospectus shall be deemed to refer to and include any documents filed
after the date of such Preliminary Prospectus or Prospectus, as the case
may be, under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and incorporated by reference in such Preliminary
Prospectus or Prospectus, as the case may be; any reference to any
amendment to the Registration Statement shall be deemed to refer to and
include any annual report of the Company filed pursuant to Sections 13(a)
or 15(d) of the Exchange Act after the effective date of the Registration
Statement that is incorporated by reference in the Registration Statement;
and any reference to the Prospectus as amended or supplemented shall be
deemed to refer to the Prospectus as amended or supplemented in relation
to the applicable Designated Securities in the form in which it is filed
with the Commission pursuant to Rule 424(b) under the Act in accordance
with Section 5(a) hereof, including any documents incorporated by
reference therein as of the date of such filing);
(b) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act, the
Exchange Act and the Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act"), as applicable, and the rules and regulations of the
Commission thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and any further documents so filed and incorporated by
reference in the Prospectus or any further amendment or supplement
thereto, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to
the requirements of the Act, the Exchange Act and the Trust Indenture Act,
as applicable, and the rules and regulations of the Commission thereunder
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Company by an Underwriter of Designated Securities through
the Representatives expressly for use in the Prospectus as amended or
supplemented relating to such Designated Securities;
(c) The Registration Statement and the Prospectus conform, and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the Trust Indenture Act, as applicable, and the rules and
regulations of the Commission thereunder and do not and will not, as of
the applicable effective date as to the Registration Statement and
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<PAGE> 5
any amendment thereto and as of the applicable filing date as to the
Prospectus and any amendment or supplement thereto, contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by an
Underwriter of Designated Securities through the Representatives expressly
for use in the Prospectus as amended or supplemented relating to such
Designated Securities;
(d) Neither the Company nor Sallie Mae or any of its subsidiaries
has sustained since the date of the financial statements included in
Sallie Mae's most recently published Information Statement any material
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than
as set forth or contemplated in such Information Statement; and, since
such date, there has not been any material adverse change in the capital
stock or long-term debt of the Company or Sallie Mae or any of its
subsidiaries or any material adverse change, or any development involving
a prospective material adverse change, in or affecting the general
affairs, management, financial position, shareholders' equity or results
of operations of the Company or Sallie Mae or any of its subsidiaries or
the transactions contemplated hereby, otherwise than as set forth or
contemplated in such Information Statement;
(e) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the state of Delaware,
with power and authority (corporate and other) to own its properties and
conduct its business as described in the Prospectus and to consummate the
transactions contemplated therein and herein, and is a wholly-owned
subsidiary of Sallie Mae. Sallie Mae has been duly organized and is
validly existing under the laws of the United States, with power and
authority (corporate and otherwise) to own its properties and conduct its
business as described in the Prospectus and to consummate the transactions
contemplated therein and herein. The Servicer has been duly incorporated
and is validly existing as a corporation in good standing under the laws
of the State of Delaware, with power and authority (corporate and other)
to own its properties and conduct its business as described in the
Prospectus and to consummate the transactions contemplated therein and
herein, and is a wholly-owned subsidiary of Sallie Mae.
(f) All of the issued shares of capital stock of the Company have
been duly and validly authorized and issued and are fully paid and
non-assessable and are owned beneficially and of record by Sallie Mae;
(g) This Agreement has been, and each Pricing Agreement with respect
to the Designated Securities upon its execution and delivery by the
Company and Sallie Mae will have been, duly authorized, executed and
delivered by the Company and Sallie
5
<PAGE> 6
Mae. The Securities have been duly authorized, and, when Designated
Securities are issued and delivered pursuant to this Agreement and the
Pricing Agreement with respect to such Designated Securities, and, in the
case of any Contract Securities, pursuant to Delayed Delivery Contracts
with respect to such Contract Securities, such Designated Securities and
Contract Securities will have been duly executed, authenticated, issued
and delivered. The Designated Securities will constitute valid and
legally binding obligations of the related Trust entitled to the benefits
provided by the Indenture, which will be substantially in the form filed
as an exhibit to the Registration Statement. The Indenture has been duly
authorized and duly qualified under the Trust Indenture Act. The related
Certificates are intended to represent undivided ownership interests in
the Trust created by the Trust Agreement, which will be substantially in
the form filed as an exhibit to the Registration Statement, and will be
entitled to the benefits provided by the Trust Agreement. At the Time of
Delivery (as defined in Section 4 hereof) for the Designated Securities,
the Indenture and the Trust Agreement will each constitute a valid and
legally binding instrument, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization and
other laws of general applicability relating to or affecting creditors'
rights and to general equity principles. The Indenture and Trust
Agreement conform, and the Designated Securities and the related
Certificates will conform, to the descriptions thereof contained in the
Prospectus as amended or supplemented with respect to the Designated
Securities;
(h) The issue and sale of the Securities and the compliance by the
Company with all of the provisions of the Securities, the Indenture, the
Trust Agreement, each of the Delayed Delivery Contracts, this Agreement
and any Pricing Agreement, and the consummation of the transactions herein
and therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or Sallie Mae is a party or
by which the Company or Sallie Mae is bound or to which any of the
property or assets of the Company or Sallie Mae is subject, nor will such
action result in any violation of the provisions of the Company's
Certificate of Incorporation or By-laws, Sallie Mae's charter, enabling
legislation or By-laws, or any statute or any order, rule or regulation of
any court or governmental agency or body having jurisdiction over the
Company or Sallie Mae or any of their properties; and no consent,
approval, authorization, order, registration or qualification of or with
any such court or governmental agency or body is required for the issue
and sale of the Securities or the consummation by the Company or Sallie
Mae of the transactions contemplated by this Agreement or any Pricing
Agreement or the Indenture or any Delayed Delivery Contract, except such
as have been, or will have been prior to the Time of Delivery, obtained
under the Act and the Trust Indenture Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under
state securities or Blue Sky laws in connection with the purchase and
distribution of the Designated Securities by the Underwriters;
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<PAGE> 7
(i) The statements set forth in the Prospectus under the captions
"Description of the Notes" and "Description of the Certificates" and set
forth in the Prospectus Supplement under the caption "Description of the
Securities," insofar as they purport to constitute a summary of the terms
of the Notes and the Certificates, are accurate, complete and fair;
(j) Sallie Mae is not in violation of its charter as set forth in
its enabling legislation or By-laws, and the Company is not in violation
of its Certificate of Incorporation or By-laws, and neither Sallie Mae nor
the Company is in default in the performance or observance of any material
obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which it is a party or by which it or any of its properties
may be bound;
(k) Other than as set forth in the Prospectus or in Sallie Mae's
most recently published Information Statement, there are no legal or
governmental proceedings pending to which the Company or Sallie Mae or any
of its subsidiaries is a party or of which any property of the Company or
Sallie Mae or any of its subsidiaries is the subject which, if determined
adversely to the Company or Sallie Mae or any of its subsidiaries, would
individually or in the aggregate have a material adverse effect on the
current or future consolidated financial position, shareholders' equity or
results of operations of the Company or Sallie Mae or any of its
subsidiaries or on the consummation of the transactions contemplated
hereby; and, to the best of the Company's and Sallie Mae's knowledge, no
such proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(l) The Company is not and, after giving effect to the offering and
sale of the Securities, will not be an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment Company Act");
(m) Neither the Company, Sallie Mae nor any of their affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida Statutes;
(n) Ernst & Young LLP, who have certified certain financial
statements of Sallie Mae, are independent public accountants as required
by the Act and the rules and regulations of the Commission thereunder;
(o) At the Time of Delivery of the Designated Securities, Sallie
Mae's representations and warranties in the related Purchase Agreement and
the Administration Agreement, the Company's representations and warranties
in the related Sale Agreement and Trust Agreement and the Servicer's
representations and warranties in the Servicing Agreement will be true and
correct in all material respects; and
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<PAGE> 8
(p) In the event any of the Securities are purchased pursuant to
Delayed Delivery Contracts, each of such Delayed Delivery Contracts has
been duly authorized by the Company and Sallie Mae and, when executed and
delivered by the Company and the purchaser named therein, will constitute
a valid and legally binding agreement of the Company enforceable in
accordance with its terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principles; and any Delayed Delivery Contracts conform to the description
thereof in the Prospectus.
3. Upon the execution of the Pricing Agreement applicable to any
Designated Securities and authorization by the Representatives of the release
of the Underwriters' Securities, the several Underwriters propose to offer such
Underwriters' Securities for sale upon the terms and conditions set forth in
the Prospectus as amended or supplemented.
The Company may specify in Schedule II to the Pricing Agreement applicable
to any Designated Securities that the Underwriters are authorized to solicit
offers to purchase Designated Securities from the Company pursuant to delayed
delivery contracts (herein called "Delayed Delivery Contracts"), substantially
in the form of Annex III attached hereto but with such changes therein as the
Representatives and the Company may authorize or approve. If so specified, the
Underwriters will endeavor to make such arrangements, and as compensation
therefor the Company will pay to the Representatives, for the accounts of the
Underwriters, at the Time of Delivery, such commission, if any, as may be set
forth in such Pricing Agreement. Delayed Delivery Contracts, if any, are to be
with investors of the types described in the Prospectus and subject to other
conditions therein set forth. The Underwriters will not have any
responsibility with respect to the validity or performance of any Delayed
Delivery Contracts.
The principal amount of Contract Securities to be deducted from the
principal amount of Designated Securities to be purchased by each Underwriter
as set forth in Schedule I to the Pricing Agreement applicable to such
Designated Securities shall be, in each case, the principal amount of Contract
Securities which the Company has been advised by the Representatives have been
attributed to such Underwriter, provided that, if the Company has not been so
advised, the amount of Contract Securities to be so deducted shall be, in each
case, that proportion of Contract Securities which the principal amount of
Designated Securities to be purchased by such Underwriter under such Pricing
Agreement bears to the total principal amount of the Designated Securities
(rounded as the Representatives may determine). The total principal amount of
Underwriters' Securities to be purchased by all the Underwriters pursuant to
such Pricing Agreement shall be the total principal amount of Designated
Securities set forth in Schedule I to such Pricing Agreement less the principal
amount of the Contract Securities. The Company will deliver to the
Representatives not later than 3:30 p.m., New York City time, on the third
business day preceding the Time of Delivery specified in the applicable Pricing
Agreement (or such other time and date as the Representatives and the Company
may agree upon in writing), a written notice setting forth the principal amount
of Contract Securities.
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<PAGE> 9
4. Underwriters' Securities to be purchased by each Underwriter pursuant
to the Pricing Agreement relating thereto, in the form specified in such
Pricing Agreement, and in such authorized denominations and registered in such
names as the Representatives may request upon at least forty-eight hours' prior
notice to the Company, shall be delivered by or on behalf of the Company to the
Representatives for the account of such Underwriter, against payment by such
Underwriter or on its behalf of the purchase price therefor by wire transfer or
by certified or official bank check or checks, payable to the order of the
Company in the funds specified in such Pricing Agreement, all in the manner and
at the place and time and date specified in such Pricing Agreement or at such
other place and time and date as the Representatives and the Company may agree
upon in writing, such time and date being herein called the "Time of Delivery"
for such Securities.
Concurrently with the delivery of and payment for the Underwriters'
Securities, the Company will deliver to the Representatives for the accounts of
the Underwriters a check payable to the order of the party designated in the
Pricing Agreement relating to such Underwriters' Securities in the amount of
any compensation payable by the Company to the Underwriters in respect of any
Delayed Delivery Contracts as provided in Section 3 hereof and the Pricing
Agreement relating to such Securities.
5. The Company agrees with each of the Underwriters of any Designated
Securities, and Sallie Mae agrees with such Underwriters that it will cause the
Company:
(a) To prepare the Prospectus as amended or supplemented in relation
to the applicable Designated Securities in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under
the Act not later than the Commission's close of business on the second
business day following the execution and delivery of the Pricing Agreement
relating to the applicable Designated Securities or, if applicable, such
earlier time as may be required by Rule 424(b); to make no further
amendment or any supplement to the Registration Statement or Prospectus as
amended or supplemented after the date of the Pricing Agreement relating
to such Designated Securities and prior to the Time of Delivery for such
Designated Securities which shall be disapproved by the Representatives
for such Designated Securities promptly after reasonable notice thereof;
to advise the Representatives promptly of any such amendment or supplement
after such Time of Delivery and furnish the Representatives with copies
thereof; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act for so long as the delivery of a prospectus is required in connection
with the offering or sale of such Designated Securities, and during such
same period to advise the Representatives, promptly after it receives
notice thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to the
Prospectus or any amended Prospectus has been filed with the Commission,
of the issuance by the Commission of any stop order or of any order
preventing or suspending the use of any prospectus relating to the
Designated Securities, of the suspension of the qualification
9
<PAGE> 10
of such Designated Securities for offering or sale in any jurisdiction, of
the initiation or threatening of any proceeding for any such purpose, or
of any request by the Commission for the amending or supplementing of the
Registration Statement or Prospectus or for additional information; and,
in the event of the issuance of any such stop order or of any such order
preventing or suspending the use of any prospectus relating to the
Designated Securities or suspending any such qualification, to promptly
use its best efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Designated
Securities for offering and sale under the securities laws of such
jurisdictions as the Representatives may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution
of such Designated Securities, provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or to
file a general consent to service of process in any jurisdiction;
(c) To furnish the Underwriters with copies of the Prospectus as
amended or supplemented, in such quantities as the Representatives may
from time to time reasonably request, and, if the delivery of a Prospectus
is required at any time in connection with the offering or sale of the
Designated Securities and if at such time any event shall have occurred as
a result of which the Prospectus as then amended or supplemented would
include an untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if for any other reason it shall be
necessary during such same period to amend or supplement the Prospectus or
to file under the Exchange Act any document incorporated by reference in
the Prospectus in order to comply with the Act, the Exchange Act or the
Trust Indenture Act, to notify the Representatives and, upon their
request, to file such document and to prepare and furnish without charge
to each Underwriter and to any dealer in securities as many copies as the
Representatives may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus which will correct such
statement or omission or effect such compliance;
(d) To cause the Trust to make generally available to holders of
Designated Securities, as soon as practicable, but in any event not later
than eighteen months after the effective date of the Registration
Statement (as defined in Rule 158(c) under the Act), an earnings statement
of the Trust (which need not be audited) complying with Section 11(a) of
the Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158); and
(e) To apply the net proceeds of the offering and sale of the
Designated Securities and the related Certificates that it receives in the
manner set forth in the Prospectus.
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<PAGE> 11
6. The Company and Sallie Mae covenant and agree with the several
Underwriters that the Company or Sallie Mae will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of the Company's and Sallie
Mae's counsel and accountants in connection with the registration of the
Securities under the Act and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, any Preliminary
Prospectus and the Prospectus and amendments and supplements thereto and the
mailing and delivering of copies thereof to the Underwriters and dealers; (ii)
the cost of printing or producing any Agreement among Underwriters, this
Agreement, any Pricing Agreement, any Indenture, any Trust Agreement, any
Delayed Delivery Contracts, any Blue Sky and Legal Investment Memoranda,
closing documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the Designated
Securities; (iii) all expenses in connection with the qualification of the
Designated Securities for offering and sale under state securities laws as
provided in Section 5(b) hereof, including the fees and disbursements of
counsel for the Underwriters in connection with such qualification and in
connection with the Blue Sky and Legal Investment Surveys; (iv) any fees
charged by securities rating services for rating the Designated Securities; (v)
the cost of preparing the Designated Securities; (vi) the fees and expenses of
the Eligible Lender Trustee and the Indenture Trustee and any agent of the
Eligible Lender Trustee or the Indenture Trustee and the fees and disbursements
of counsel for the Eligible Lender Trustee and the Indenture Trustee in
connection with any Indenture and Trust Agreement and the Designated
Securities; and (vii) all other costs and expenses incident to the performance
of its obligations hereunder and under any Delayed Delivery Contracts which are
not otherwise specifically provided for in this Section. It is understood,
however, that, except as provided in this Section, and Sections 8 and 11
hereof, or in the Pricing Agreement, the Underwriters will pay all of their own
costs and expenses, including the fees of their counsel, transfer taxes on
resale of any of the Securities by them, and any advertising expenses connected
with any offers they may make.
7. The obligations of the Underwriters of any Designated Securities
under the Pricing Agreement relating to such Designated Securities shall be
subject, in the reasonable discretion of the Representatives, to the condition
that all representations and warranties and other statements of the Company and
Sallie Mae in or incorporated by reference in the Pricing Agreement relating to
such Designated Securities are, at and as of the Time of Delivery for such
Designated Securities, true and correct, the condition that the Company and
Sallie Mae shall have performed all of their obligations hereunder theretofore
to be performed, and the following additional conditions:
(a) The Prospectus as amended or supplemented in relation to the
applicable Designated Securities shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for
such filing by the rules and regulations under the Act and in accordance
with Section 5(a) hereof; no stop order suspending the effectiveness of
the Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or threatened
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<PAGE> 12
by the Commission; and all requests for additional information on the part
of the Commission shall have been complied with;
(b) Counsel for the Underwriters shall have furnished
Representatives such opinion or opinions, substantially in the form
attached hereto as Annex II(a), dated the Time of Delivery for such
Designated Securities, with respect to the Designated Securities and such
other related matters as the Representatives may reasonably request;
(c) Internal counsel for the Company, Sallie Mae and the Servicer,
satisfactory to the Representatives, shall have furnished to the
Representatives a written opinion or opinions, dated the Time of Delivery
for such Designated Securities, substantially in the form attached hereto
as Annex II(b) or as is otherwise satisfactory to the Representatives;
(d) Special counsel for the Company, Sallie Mae and the Servicer,
satisfactory to the Representatives, shall have furnished to the
Representatives a written opinion or opinions, dated the Time of Delivery
for such Designated Securities, substantially in the form attached hereto
as Annex II(a) or as is otherwise satisfactory to the Representatives;
(e) Counsel for the Eligible Lender Trustee, satisfactory to the
Representatives, shall have furnished to the Representatives a written
opinion or opinions, dated the Time of Delivery for such Designated
Securities, substantially in the form attached hereto as Annex II(d) or as
is otherwise satisfactory to the Representatives;
(f) Counsel for the Indenture Trustee, satisfactory to the
Representatives, shall have furnished to the Representatives a written
opinion or opinions, dated the Time of Delivery for such Designated
Securities, substantially in the form attached hereto as Annex II(e) or as
is otherwise satisfactory to the Representatives;
(g) At the time a Preliminary Prospectus, if any, relating to such
Designated Securities was distributed and on the date of the Pricing
Agreement for such Designated Securities, the independent public
accountants of the Company and Sallie Mae shall have furnished to the
Representatives a letter or letters with respect to the Company, Sallie
Mae, the statistical and financial information contained in the
Preliminary Prospectus, if any, and the Prospectus and certain agreed upon
procedures with respect to the issuance and offering of the Designated
Securities and the related Student Loans, in form and substance
satisfactory to the Representatives and in each case confirming that such
accountants are independent public accountants with the meaning of the Act
and the applicable rules and regulations thereunder;
(h) (i) Neither the Company nor Sallie Mae shall have sustained
since the date of the financial statements included in Sallie Mae's most
recently published Information Statement any material loss or interference
with its business from fire, explosion, flood or other calamity, whether
or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
12
<PAGE> 13
contemplated in such Information Statement, and (ii) since such date,
there shall not have been any material adverse change in the capital stock
or long-term debt of the Company or Sallie Mae or any such change, or any
development involving a prospective such change, in or affecting the
general affairs, management, financial position, shareholders' equity or
results of operations of the Company or Sallie Mae otherwise than as set
forth or contemplated in such Information Statement, the effect of which,
in any such case described in clause (i) or (ii), is in the judgment of
the Representatives so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Underwriters' Securities on the terms and in the manner contemplated in
the Prospectus as first amended or supplemented relating to the Designated
Securities;
(i) On or after the date of the Pricing Agreement relating to the
Designated Securities (i) no downgrading shall have occurred in the rating
accorded Sallie Mae's debt securities or preferred stock by any
"nationally recognized statistical rating organization", as that term is
defined by the Commission for purposes of Rule 436(g)(2) under the Act
("Rating Agency"), and (ii) no such Rating Agency shall have publicly
announced that it has under surveillance or review, with possible negative
implications, its rating of any of Sallie Mae's debt securities;
(j) On or after the date of the Pricing Agreement relating to the
Designated Securities there shall not have occurred any of the following:
(i) a suspension or material limitation in trading in securities generally
on the New York Stock Exchange or any setting of minimum prices for
trading on such exchange; (ii) a general moratorium on commercial banking
activities declared by either Federal or New York State authorities; or
(iii) the outbreak or escalation of hostilities involving the United
States or the declaration by the United States of a national emergency or
war, if the effect of any such event specified in this clause (iii) in the
reasonable judgment of the Representatives makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Underwriters' Securities on the terms and in the manner contemplated in
the Prospectus as theretofore amended or supplemented relating to the
Designated Securities;
(k) Each of the Company and Sallie Mae shall have furnished or
caused to be furnished to the Representatives at the Time of Delivery for
the Designated Securities a certificate or certificates of officers of the
Company or Sallie Mae, as the case may be, satisfactory to the
Representatives as to the accuracy of the representations and warranties
of the Company or Sallie Mae, as the case may be, herein at and as of such
Time of Delivery, as to the performance by the Company or Sallie Mae, as
the case may be, of all of their obligations hereunder to be performed at
or prior to such Time of Delivery, as to the matters set forth in
subsections (a), (h) and (i) of this Section and as to such other matters
as the Representatives may reasonably request;
13
<PAGE> 14
(l) At the Time of Delivery, the aggregate principal amount of the
Underwriters' Securities as specified in the related Pricing Agreement for
the Designated Securities shall have been sold by the Company to the
Underwriters, and the aggregate amount of the related Certificates as
specified in the related underwriting agreement for such Certificates
shall have been sold by the Company to the underwriters specified in such
underwriting agreement; and
(m) The Designated Securities shall be rated as set forth in the
related Prospectus by the Rating Agency (or Agencies) specified in such
Prospectus, and such Rating Agency or Agencies shall not have placed the
Designated Securities under surveillance or review with negative
implications.
8. (a) The Company and Sallie Mae, jointly and severally, will
indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, any preliminary prospectus supplement, the
Registration Statement, the Prospectus as amended or supplemented and any other
prospectus relating to the Designated Securities, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse
each Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that the Company and
Sallie Mae shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, any preliminary prospectus supplement, the
Registration Statement, the Prospectus as amended or supplemented and any other
prospectus relating to the Securities, or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company or Sallie Mae by any Underwriter of Designated Securities through the
Representatives expressly for use in the Prospectus as amended or supplemented
relating to such Securities.
(b) Each Underwriter will indemnify and hold harmless the Company and
Sallie Mae against any losses, claims, damages or liabilities to which they may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, any preliminary prospectus supplement,
the Registration Statement, the Prospectus as amended or supplemented and any
other prospectus relating to the Securities, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent, but
only to the extent, that such untrue statement or alleged untrue statement or
14
<PAGE> 15
omission or alleged omission was made in any Preliminary Prospectus, any
preliminary prospectus supplement, the Registration Statement, the Prospectus
as amended or supplemented and any other prospectus relating to the Designated
Securities, or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company or Sallie Mae by
such Underwriter through the Representatives expressly for use therein; and
will reimburse the Company for any legal or other expenses reasonably incurred
by the Company in connection with investigating or defending any such action or
claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified party,
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a)
or (b) above in respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each indemnifying party
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative benefits
received by the Company and Sallie Mae, on the one hand and the Underwriters of
the Designated Securities on the other from the offering of the Designated
Securities to which such loss, claim, damage or liability (or action in respect
thereof) relates. If, however, the allocation provided by the
15
<PAGE> 16
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c)
above, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company and Sallie Mae, on the one hand and the Underwriters of the Designated
Securities on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company and Sallie Mae, on the one hand, and such
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from such offering (before deducting expenses) received by
the Company and Sallie Mae bear to the total underwriting discounts and
commissions received by such Underwriters. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or Sallie
Mae, on the one hand, or such Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, Sallie Mae and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable
considerations referred to above in this subsection (d). The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
subsection (d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the applicable
Designated Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of the Underwriters of Designated
Securities in this subsection (d) to contribute are several in proportion to
their respective underwriting obligations with respect to such Securities and
not joint.
(e) The obligations of the Company and Sallie Mae under this Section 8
shall be in addition to any liability which the Company and Sallie Mae may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Underwriter within the meaning of the Act; and
the obligations of the Underwriters under this Section 8 shall be in addition
to any liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of the
Company or Sallie Mae and to each person, if any, who controls the Company or
Sallie Mae within the meaning of the Act.
16
<PAGE> 17
9. (a) If any Underwriter shall default in its obligation to purchase
the Underwriters' Securities which it has agreed to purchase under the Pricing
Agreement relating to such Underwriters' Securities, the Representatives may in
their discretion arrange for themselves or another party or other parties to
purchase such Underwriters' Securities on the terms contained herein and
therein. If within thirty-six hours after such default by any Underwriter the
Representatives do not arrange for the purchase of such Underwriters'
Securities, then the Company shall be entitled to a further period of
thirty-six hours within which to procure another party or other parties
satisfactory to the Representatives to purchase such Underwriters' Securities
on such terms. In the event that, within the respective prescribed period, the
Representatives notify the Company that they have so arranged for the purchase
of such Underwriters' Securities, or the Company notifies the Representatives
that it has so arranged for the purchase of such Underwriters' Securities, the
Representatives or the Company shall have the right to postpone the Time of
Delivery for such Underwriters' Securities for a period of not more than seven
days, in order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus as amended or supplemented, or in any
other documents or arrangements, and the Company agrees to file promptly any
amendments or supplements to the Registration Statement or the Prospectus which
in the opinion of the Representatives may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to the Pricing Agreement with respect to such Designated Securities.
(b) If, after giving effect to any arrangements for the purchase of the
Underwriters' Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate principal amount of such Underwriters' Securities which remains
unpurchased does not exceed one-eleventh of the aggregate principal amount of
the Designated Securities, then the Company shall have the right to require
each non-defaulting Underwriter to purchase the principal amount of
Underwriters' Securities which such Underwriter agreed to purchase under the
Pricing Agreement relating to such Designated Securities and, in addition, to
require each non-defaulting Underwriter to purchase its pro rata share (based
on the principal amount of Designated Securities which such Underwriter agreed
to purchase under such Pricing Agreement) of the Underwriters' Securities of
such defaulting Underwriter or Underwriters for which such arrangements have
not been made; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Underwriters' Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate principal amount of Underwriters' Securities which remains
unpurchased exceeds one-eleventh of the aggregate principal amount of the
Designated Securities, as referred to in subsection (b) above, or if the
Company shall not exercise the right described in subsection (b) above to
require non-defaulting Underwriters to purchase Underwriters' Securities of a
defaulting Underwriter or Underwriters, then the Pricing Agreement relating to
such Designated Securities shall thereupon terminate, without
17
<PAGE> 18
liability on the part of any non-defaulting Underwriter or the Company, except
for the expenses to be borne by the Company and the Underwriters as provided in
Section 6 hereof and the indemnity and contribution agreements in Section 8
hereof; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, Sallie Mae and the several Underwriters,
as set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall remain in full force and effect, regardless
of any investigation (or any statement as to the results thereof) made by or on
behalf of any Underwriter or any controlling person of any Underwriter, or the
Company or Sallie Mae or any officer or director or controlling person of the
Company or Sallie Mae, and shall survive delivery of and payment for the
Securities.
11. If any Pricing Agreement shall be terminated pursuant to Section 9
hereof, the Company and Sallie Mae shall not then be under any liability to any
Underwriter with respect to the Designated Securities covered by such Pricing
Agreement except as provided in Sections 6 and 8 hereof; but, if for any other
reason Underwriters' Securities are not delivered by or on behalf of the
Company as provided herein, except for any of the reasons specified in Section
7(j), the Company and Sallie Mae will reimburse the Underwriters through the
Representatives for all out-of-pocket expenses approved in writing by the
Representatives, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of such Designated Securities, but the Company and Sallie Mae shall
then be under no further liability to any Underwriter with respect to such
Designated Securities except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, the Representatives of the Underwriters of
Designated Securities shall act on behalf of each of such Underwriters, and the
parties hereto shall be entitled to act and rely upon any statement, request,
notice or agreement on behalf of any Underwriter made or given by such
Representatives jointly or by such of the Representatives, if any, as may be
designated for such purpose in the Pricing Agreement.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex
or facsimile transmission to the address of the Representatives as set forth in
the Pricing Agreement; and if to the Company or Sallie Mae shall be delivered
or sent by mail, telex or facsimile transmission to:
SLM Funding Corporation
777 Twin Creek Drive
Kileen, Texas 76543
Facsimile: (817) 554-4999
Attention: Phyllis A. Leeth
Vice President
18
<PAGE> 19
Student Loan Marketing Association
11600 Sallie Mae Drive
Reston, VA 20193
Facsimile: (703) 810-7655
Attention: Mark G. Overend
Vice President and Chief Financial Officer
provided, however, that any notice to an Underwriter pursuant to Section 8(c)
hereof shall be delivered or sent by mail, telex or facsimile transmission to
such Underwriter at its address set forth in its Underwriters' Questionnaire,
or telex constituting such Questionnaire, which address will be supplied to the
Company or Sallie Mae by the Representatives upon request. Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.
13. This Agreement and each Pricing Agreement shall be binding upon, and
inure solely to the benefit of, the Underwriters, the Company, Sallie Mae and,
to the extent provided in Sections 8 and 10 hereof, the officers and directors
of the Company and Sallie Mae and each person who controls the Company, Sallie
Mae or any Underwriter, and their respective heirs, executors, administrators,
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement or any such Pricing Agreement. No
purchaser of any of the Securities from any Underwriter shall be deemed a
successor or assign by reason merely of such purchase.
14. Time shall be of the essence of each Pricing Agreement. As used
herein, "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business and "New York Business Day" shall mean
any day when banking institutions are open for business in New York City, New
York.
15. THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement and each Pricing Agreement may be executed by any one
or more of the parties hereto and thereto in any number of counterparts, each
of which shall be deemed to be an original, but all such respective
counterparts shall together constitute one and the same instrument.
19
<PAGE> 20
IF THE FOREGOING IS IN ACCORDANCE WITH YOUR UNDERSTANDING, PLEASE SIGN AND
RETURN TO US ___ COUNTERPARTS HEREOF.
Very truly yours,
SLM FUNDING CORPORATION
By: /s/ ROBERT R. LEVINE
---------------------------
Name:
Title:
STUDENT LOAN MARKETING ASSOCIATION
By: /s/ J. LANCE FRANKE
---------------------------
Name:
Title:
Accepted as of the date hereof:
GOLDMAN, SACHS & CO.
/s/ GOLDMAN, SACHS & CO.
- -------------------------------
(Goldman, Sachs & Co.)
MORGAN STANLEY & CO. INCORPORATED
By: /s/ CHARLES N. ATKINS
---------------------------
Name:
Title:
20
<PAGE> 21
ANNEX I
PRICING AGREEMENT
- ----------------------
AS REPRESENTATIVES OF THE SEVERAL
UNDERWRITERS NAMED ON SCHEDULE I HERETO,
C/O
--------------------
- -----------------------
- -----------------------
, 199__
Ladies and Gentlemen:
SLM Funding Corporation, a Delaware corporation (the "Company"), and the
Student Loan Marketing Association, a corporation formed under the laws of the
United States ("Sallie Mae"), propose, subject to the terms and conditions
stated herein and in the Underwriting Agreement, dated __________, 199__ (the
"Underwriting Agreement"), between the Company and Sallie Mae, on the one hand,
and _____________ and _________________, on the other hand, that the Company
will cause the trust (the "Trust") formed pursuant to the Trust Agreement dated
as of _______, 199__ between the Company and _______, as trustee (the "Eligible
Lender Trustee"), to issue and sell to the Underwriters named in Schedule I
hereto (the "Underwriters") the Student Loan-Backed Notes (the "Notes")
specified in Schedule II hereto (the "Designated Securities"). The Notes will
be issued and secured pursuant to the Indenture, dated ___________ (the
"Indenture"), between the Trust and _________, as trustee (the "Indenture
Trustee").
Each of the provisions of the Underwriting Agreement is incorporated
herein by reference in its entirety, and shall be deemed to be a part of this
Agreement to the same extent as if such provisions had been set forth in full
herein; and each of the representations and warranties set forth therein shall
be deemed to have been made at and as of the date of this Pricing Agreement,
except that each representation and warranty which refers to the Prospectus in
Section 2 of the Underwriting Agreement shall be deemed to be a representation
or warranty as of the date of the Underwriting Agreement in relation to the
Prospectus (as therein defined), and also a representation and warranty as of
the date of this Pricing Agreement in relation to the Prospectus as amended or
supplemented relating to the Designated Securities which are the subject of
this Pricing Agreement. Each reference to the Representatives herein and in
the provisions of the Underwriting Agreement so incorporated by reference shall
be deemed to refer to you. Unless otherwise defined herein, terms defined in
the Underwriting Agreement are used herein as therein defined.
The Representatives designated to act on behalf of the Representatives and
on behalf of each of the Underwriters of the Designated Securities pursuant to
Section 12 of the Underwriting Agreement and the address of the Representatives
referred to in such Section 12 are set forth at the end of Schedule II hereto.
<PAGE> 22
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees to
cause the Trust to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Trust, at
the time and place and at the purchase price to the Underwriters set forth in
Schedule II hereto, the principal amount of Designated Securities set forth
opposite the name of such Underwriter in Schedule I hereto, less the principal
amount of Designated Securities covered by Delayed Delivery Contracts, if any,
as may be specified in Schedule II.
During the period beginning from the date of this Pricing Agreement for
the Designated Securities and continuing to and including November 12, 1997,
the Company agrees, and Sallie Mae agrees that it will cause the Company, not
to, and not to permit any affiliated entity to, offer, sell, contract to sell
or otherwise dispose of, any securities (other than the Designated Securities)
collateralized by, or any securities (other than the related Certificates)
evidencing an ownership in, Student Loans, without the prior written consent of
the Representatives.
Each Underwriter represents and agrees that (a) it has not offered or sold
and will not offer or sell any Notes or Certificates to persons in the United
Kingdom prior to the expiration of the period of six months from the issue date
of the Notes and the Certificates except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (b) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Notes and the Certificates in, from or
otherwise involving the United Kingdom; and (c) it has only issued or passed on
and will only issue or pass on in the United Kingdom any document received by
it in connection with the issuance of the Notes and the Certificates to a
person who is of a kind described in article 11(3) of the Financial Services
Act 1986 (Investment Advertisements) (Exemptions) Order 1995 or is a person to
whom such document may otherwise lawfully be issued or passed on.
If the foregoing is in accordance with your understanding, please sign and
return to us ______ counterparts hereof, and upon acceptance hereof by you, on
behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the
Underwriters and the Company and Sallie Mae. It is understood that your
acceptance of this letter on behalf of each of the Underwriters is or will be
pursuant to the authority set forth in a form of Agreement among Underwriters,
the form of which shall be submitted to the Company and Sallie Mae for
examination upon request, but without warranty on the part of the
Representatives as to the authority of the signers thereof.
2
<PAGE> 23
Very truly yours,
SLM FUNDING CORPORATION
By:
...................................
Name:
Title:
STUDENT LOAN MARKETING ASSOCIATION
By:
...................................
Name:
Title:
3
<PAGE> 24
Accepted as of the date hereof:
[__________________]
By: ........................................
[__________________]
By: ........................................
Name:
Title:
On behalf of each of the Underwriters
4
<PAGE> 25
SCHEDULE I
PRINCIPAL AMOUNT OF DESIGNATED SECURITIES TO BE PURCHASED
UNDERWRITER CLASS ___ CLASS ___ CLASS ___
<PAGE> 26
SCHEDULE II
TITLE OF EACH CLASS OF DESIGNATED SECURITIES:
AGGREGATE PRINCIPAL AMOUNT OF EACH CLASS:
PRICE TO PUBLIC OF EACH CLASS:
PURCHASE PRICE BY UNDERWRITERS OF EACH CLASS:
SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE:
INDENTURE:
MATURITY:
INTEREST RATE:
FORM OF DESIGNATED SECURITIES:
TIME OF DELIVERY:
CLOSING LOCATION FOR DELIVERY OF DESIGNATED SECURITIES:
NAMES AND ADDRESSES OF REPRESENTATIVES:
Designated Representatives:
Address for Notices, etc.:
<PAGE> 27
ANNEX II(a)
THE COMPANY, SALLIE MAE, THE SERVICER AND THE UNDERWRITERS: OUTSIDE COUNSEL
OPINION
[Opinions to be issued, which together will be substantially in the form
provided for SLM Student Loan Trust 1997-3]
<PAGE> 28
ANNEX II(b)
THE COMPANY, SALLIE MAE AND THE SERVICER: INTERNAL COUNSEL OPINION
[Opinion to be issued substantially in the form provided for
SLM Student Loan Trust 1997-3]
<PAGE> 29
ANNEX II(c)
ELIGIBLE LENDER TRUSTEE: COUNSEL OPINION
[Opinion to be issued substantially in the form provided for
SLM Student Loan Trust 1997-3]
<PAGE> 30
ANNEX II(d)
INDENTURE TRUSTEE: COUNSEL OPINION
[Opinion to be issued substantially in the form provided for
SLM Student Loan Trust 1997-3]
<PAGE> 31
ANNEX III
DELAYED DELIVERY CONTRACT
SLM FUNDING CORPORATION
C/O
------------------------
- ---------------------------
- ---------------------------
Attention:............................ ............. , 19__
Ladies and Gentlemen:
The undersigned hereby agrees to purchase from SLM Funding Corporation
(hereinafter called the "Company"), and the Company agrees to sell to the
undersigned,
$.........
principal amount of the Company's ________ (hereinafter called the "Designated
Securities"), offered by the Company's Prospectus, dated .............., 19..,
as amended or supplemented, receipt of a copy of which is hereby acknowledged,
at a purchase price of .....% of the principal amount thereof, plus accrued
interest from the date from which interest accrues as set forth below, and on
the further terms and conditions set forth below.
The undersigned will purchase the Designated Securities from the Company
on .............., 19.. (the "Delivery Date") and interest on the Designated
Securities so purchased will accrue from .............., 19...
[THE UNDERSIGNED WILL PURCHASE THE DESIGNATED SECURITIES FROM THE COMPANY
ON THE DELIVERY DATE OR DATES AND IN THE PRINCIPAL AMOUNT OR AMOUNTS SET FORTH
BELOW:
<TABLE>
<CAPTION>
PRINCIPAL DATE FROM WHICH
DELIVERY DATE AMOUNT INTEREST ACCRUES
------------- ------ ----------------
<S> <C> <C>
....................., 19.. $............. ....................., 19..
....................., 19.. $............. ....................., 19..
</TABLE>
EACH SUCH DATE ON WHICH DESIGNATED SECURITIES ARE TO BE PURCHASED
HEREUNDER IS HEREINAFTER REFERRED TO AS A "DELIVERY DATE."(4)]
Payment for the Designated Securities which the undersigned has agreed to
purchase on [THE] [EACH] Delivery Date shall be made to the Company or its
order by certified or official bank check in .......... Clearing House funds at
the office of .........., ........., .........., or by wire transfer to
<PAGE> 32
a bank account specified by the Company, on [THE] [SUCH] Delivery Date upon
delivery to the undersigned of the Designated Securities then to be purchased
by the undersigned in definitive fully registered form and in such
denominations and registered in such names as the undersigned may designate by
written, telex or facsimile communication addressed to the Company not less
than five full business days prior to [THE] [SUCH] Delivery Date.
The obligation of the undersigned to take delivery of and make payment for
Designated Securities on [THE] [EACH] Delivery Date shall be subject to the
condition that the purchase of Designated Securities to be made by the
undersigned shall not on [THE] [SUCH] Delivery Date be prohibited under the
laws of the jurisdiction to which the undersigned is subject. The obligation
of the undersigned to take delivery of and make payment for Designated
Securities shall not be affected by the failure of any purchaser to take
delivery of and make payment for Designated Securities pursuant to other
contracts similar to this contract.
[THE UNDERSIGNED UNDERSTANDS THAT UNDERWRITERS (THE "UNDERWRITERS") ARE
ALSO PURCHASING DESIGNATED SECURITIES FROM THE COMPANY, BUT THAT THE
OBLIGATIONS OF THE UNDERSIGNED HEREUNDER ARE NOT CONTINGENT ON SUCH PURCHASES].
Promptly after completion of the sale to the Underwriters the Company will mail
or deliver to the undersigned at its address set forth below notice to such
effect, accompanied by a copy of the Opinion of Counsel for the Company
delivered to the Underwriters in connection therewith.
The undersigned represents and warrants that, as of the date of this
contract, the undersigned is not prohibited from purchasing the Designated
Securities hereby agreed to be purchased by it under the laws of the
jurisdiction to which the undersigned is subject.
This contract will inure to the benefit of and be binding upon the parties
hereto and their respective successors, but will not be assignable by either
party hereto without the written consent of the other.
This contract may be executed by either of the parties hereto in any
number of counterparts, each of which shall be deemed to be an original, but
all such counterparts shall together constitute one and the same instrument.
F-2
<PAGE> 33
It is understood that the acceptance by the Company of any Delayed
Delivery Contract (including this contract) is in the Company's sole discretion
and that, without limiting the foregoing, acceptances of such contracts need
not be on a first-come, first-served basis. If this contract is acceptable to
the Company, it is requested that the Company sign the form of acceptance below
and mail or deliver one of the counterparts hereof to the undersigned at its
address set forth below. This will become a binding contract between the
Company and the undersigned when such counterpart is so mailed or delivered by
the Company.
Yours very truly,
......................................
By:...................................
(Authorized Signature)
Name:
Title:
......................................
(Address)
Accepted: .................... , 19..
SLM FUNDING CORPORATION
By: .................................
Name:
Title:
F-3
<PAGE> 1
EXHIBIT 1.4
SLM FUNDING CORPORATION
STUDENT LOAN-BACKED CERTIFICATES
---------------
UNDERWRITING AGREEMENT
November 5, 1997
GOLDMAN, SACHS & CO.
85 BROAD STREET
NEW YORK, NEW YORK 10004
AND
MORGAN STANLEY & CO. INCORPORATED
1585 BROADWAY
NEW YORK, NEW YORK 10036
Ladies and Gentlemen:
From time to time the Student Loan Marketing Association ("Sallie
Mae"), a corporation formed under the laws of the United States, and SLM Funding
Corporation, a Delaware corporation and a wholly-owned subsidiary of Sallie Mae
(the "Company"), propose to enter into one or more Pricing Agreements (each a
"Pricing Agreement") in the form of Annex I hereto, with such additions and
deletions as the parties thereto may determine. Subject to the terms and
conditions stated herein and therein, the Company proposes to cause the Trust
specified in the applicable Pricing Agreement to issue and sell to the firms
named in Schedule I to the applicable Pricing Agreement (such firms constituting
the "Underwriters" with respect to such Pricing Agreement and the securities
specified therein) certain of such Trust's Student Loan-Backed Certificates (the
"Certificates") specified in Schedule II to such Pricing Agreement (with respect
to such Pricing Agreement, the "Designated Securities"), less the amount of
Designated Securities covered by Delayed Delivery Contracts, if any, as provided
in Section 3 hereof and as may be specified in Schedule II to such Pricing
Agreement (with respect to such Pricing Agreement, any Designated Securities to
be covered by Delayed Delivery Contracts are herein sometimes referred to as
"Contract Securities" and the Designated Securities to be purchased by the
Underwriters (after giving effect to the deduction, if any, for Contract
Securities) are herein sometimes referred to as "Underwriters' Securities").
The Securities may be sold from time to time in one or more Series.
Each Series of Securities, which will include one or more classes of
Certificates and one or more classes of Student Loan-Backed Notes (the "Notes,"
and, together with the Certificates, the "Securities") will be issued by a Trust
to be formed with respect to such Series (each, a "Trust"). Each Trust will be
formed pursuant to a trust agreement (a "Trust Agreement") to be entered into
<PAGE> 2
between the Company and the Eligible Lender Trustee specified in the related
Pricing Agreement (the "Eligible Lender Trustee"). The Notes of each Series will
be issued and secured pursuant to an indenture (an "Indenture") between the
Trust and the Indenture Trustee specified in the related Pricing Agreement (the
"Indenture Trustee"). The Certificates of a Series will be issued pursuant to
the related Trust Agreement and will represent fractional undivided interests in
the Trust created thereby. The property of each Trust will include, among other
things, educational student loans to students and/or parents of dependent
students ("Student Loans").
With respect to each Trust, (i) the Company will acquire the related
Student Loans from Sallie Mae pursuant to a Purchase Agreement and (ii) the
Company will sell the related Student Loans to such Trust pursuant to a Sale
Agreement, with the related Eligible Lender Trustee holding legal title thereto.
With respect to each Series, Sallie Mae Servicing Corporation, as servicer (the
"Servicer") will enter into a servicing agreement (a "Servicing Agreement") with
the Trust, the Administrator, the Eligible Lender Trustee and the Indenture
Trustee with respect to the related Student Loans. Sallie Mae, as administrator
(in such capacity, the "Administrator"), has entered into a Master
Administration Agreement with the Company dated as of May 1, 1997 and, as
contemplated by the terms of the Master Administration Agreement, will enter
into an Administration Agreement Supplement among the Company, the Trust, the
Eligible Lender Trustee, the Servicer and the Indenture Trustee with respect to
the Student Loans to be held by the Trust (the Master Administration Agreement,
as supplemented by the Administration Agreement Supplement, the "Administration
Agreement").
The terms and conditions of any particular issuance of Designated
Securities shall be as specified in the Pricing Agreement relating thereto and
in or pursuant to the related Indenture.
Capitalized terms used but not defined herein or in any Pricing
Agreement shall have the meanings ascribed thereto in the related Indenture.
1. Particular sales of Designated Securities may be made from time
to time to the Underwriters of such Securities, for whom the firms designated as
representatives of the Underwriters of such Securities in the Pricing Agreement
relating thereto will act as representatives (the "Representatives"). The term
"Representatives" also refers to a single firm acting as sole representative of
the Underwriters and to an Underwriter or Underwriters who act without any firm
being designated as its or their representatives. This Underwriting Agreement
shall not be construed as an obligation of the Company to sell any of the
Securities or as an obligation of any of the Underwriters to purchase the
Securities. The obligation of the Company to issue and sell any of the
Securities and the obligation of any of the Underwriters to purchase any of the
Securities shall be evidenced by the Pricing Agreement with respect to the
Designated Securities specified therein. Each Pricing Agreement shall specify
the aggregate amount of such Designated Securities, the initial public offering
price of such Designated Securities, the purchase price to the Underwriters of
such Designated Securities, the names of the Underwriters of such Designated
Securities, the names of the Representatives
2
<PAGE> 3
of such Underwriters and the amount of such Designated Securities to be
purchased by each Underwriter and whether any of such Designated Securities
shall be covered by Delayed Delivery Contracts (as defined in Section 3 hereof)
and shall set forth the date, time and manner of delivery of such Designated
Securities and payment therefor. The Pricing Agreement shall also specify (to
the extent not set forth in the Indenture and the registration statement and
prospectus with respect thereto) the terms of such Designated Securities. A
Pricing Agreement shall be in the form of an executed writing (which may be in
counterparts), and may be evidenced by an exchange of telegraphic communications
or any other rapid transmission device designed to produce a written record of
communications transmitted. The obligations of the Underwriters under this
Agreement and each Pricing Agreement shall be several and not joint.
2. The Company and Sallie Mae represent and warrant to, and agree
with, each of the Underwriters as follows (it being agreed and understood that
the statements set forth in clauses (d), (e), (g), (h), (j), (k), (m), (n) and
(o) of this Section 2 with respect to Sallie Mae or the Servicer constitute
representations, warranties and agreements of Sallie Mae only and not of the
Company) :
(a) A registration statement on Form S-3 (File No. 333-24949),
including a form of prospectus, in respect of the Securities has been
filed with the Securities and Exchange Commission (the "Commission");
such registration statement and any post-effective amendment thereto,
each in the form heretofore delivered or to be delivered to the
Representatives and, excluding exhibits to such registration statement,
but including all documents incorporated by reference in the prospectus
contained therein, to the Representatives for each of the other
Underwriters, have been declared effective by the Commission in such
form; no other document with respect to such registration statement or
document incorporated by reference therein has heretofore been filed or
transmitted for filing with the Commission (other than prospectuses
filed pursuant to Rule 424(b) of the rules and regulations of the
Commission under the Securities Act of 1933, as amended (the "Act"),
each in the form heretofore delivered to the Representatives); and no
stop order suspending the effectiveness of such registration statement
has been issued and no proceeding for that purpose has been initiated
or, to the best of Sallie Mae's or the Company's knowledge, threatened
by the Commission (any preliminary prospectus included in such
registration statement or filed with the Commission pursuant to Rule
424(a) under the Act, is hereinafter called a "Preliminary Prospectus;"
the various parts of such registration statement, including all
exhibits thereto and the documents incorporated by reference in the
prospectus contained in the registration statement at the time such
part of the registration statement became effective but excluding Form
T-1, each as amended at the time such part of the registration
statement became effective, are hereinafter collectively called the
"Registration Statement"; the prospectus relating to the Securities, in
the form in which it has most recently been filed, or transmitted for
filing, with the Commission on or prior to the date of this Agreement,
being hereinafter called the "Prospectus"; any
3
<PAGE> 4
reference herein to any Preliminary Prospectus or the Prospectus shall
be deemed to refer to and include the documents incorporated by
reference therein pursuant to the applicable form under the Act, as of
the date of such Preliminary Prospectus or Prospectus, as the case may
be; any reference to any amendment or supplement to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include
any documents filed after the date of such Preliminary Prospectus or
Prospectus, as the case may be, under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and incorporated by reference in
such Preliminary Prospectus or Prospectus, as the case may be; any
reference to any amendment to the Registration Statement shall be
deemed to refer to and include any annual report of the Company filed
pursuant to Sections 13(a) or 15(d) of the Exchange Act after the
effective date of the Registration Statement that is incorporated by
reference in the Registration Statement; and any reference to the
Prospectus as amended or supplemented shall be deemed to refer to the
Prospectus as amended or supplemented in relation to the applicable
Designated Securities in the form in which it is filed with the
Commission pursuant to Rule 424(b) under the Act in accordance with
Section 5(a) hereof, including any documents incorporated by reference
therein as of the date of such filing);
(b) The documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the
case may be, conformed in all material respects to the requirements of
the Act, the Exchange Act and the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and any further documents so filed
and incorporated by reference in the Prospectus or any further
amendment or supplement thereto, when such documents become effective
or are filed with the Commission, as the case may be, will conform in
all material respects to the requirements of the Act, the Exchange Act
and the Trust Indenture Act, as applicable, and the rules and
regulations of the Commission thereunder and will not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company
by an Underwriter of Designated Securities through the Representatives
expressly for use in the Prospectus as amended or supplemented relating
to such Designated Securities;
(c) The Registration Statement and the Prospectus conform, and
any further amendments or supplements to the Registration Statement or
the Prospectus will conform, in all material respects to the
requirements of the Act and the Trust Indenture Act, as applicable, and
the rules and regulations of the Commission thereunder and do not and
will not, as of the applicable effective date as to the Registration
Statement and
4
<PAGE> 5
any amendment thereto and as of the applicable filing date as to the
Prospectus and any amendment or supplement thereto, contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company
by an Underwriter of Designated Securities through the Representatives
expressly for use in the Prospectus as amended or supplemented relating
to such Designated Securities;
(d) Neither the Company nor Sallie Mae or any of its
subsidiaries has sustained since the date of the financial statements
included in Sallie Mae's most recently published Information Statement
any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in such
Information Statement; and, since such date, there has not been any
material adverse change in the capital stock or long-term debt of the
Company or Sallie Mae or any of its subsidiaries or any material
adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of operations of
the Company or Sallie Mae or any of its subsidiaries or the
transactions contemplated hereby, otherwise than as set forth or
contemplated in such Information Statement;
(e) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the state
of Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus and
to consummate the transactions contemplated therein and herein, and is
a wholly-owned subsidiary of Sallie Mae. Sallie Mae has been duly
organized and is validly existing under the laws of the United States,
with power and authority (corporate and otherwise) to own its
properties and conduct its business as described in the Prospectus and
to consummate the transactions contemplated therein and herein. The
Servicer has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware,
with power and authority (corporate and other) to own its properties
and conduct its business as described in the Prospectus and to
consummate the transactions contemplated therein and herein, and is a
wholly-owned subsidiary of Sallie Mae.
(f) All of the issued shares of capital stock of the Company
have been duly and validly authorized and issued and are fully paid and
non-assessable and are owned beneficially and of record by Sallie Mae;
(g) This Agreement has been, and each Pricing Agreement with
respect to the Designated Securities upon its execution and delivery by
the Company and Sallie Mae will have been, duly authorized, executed
and delivered by the Company and Sallie
5
<PAGE> 6
Mae. The Securities have been duly authorized, and, when Designated
Securities are issued and delivered pursuant to this Agreement and
the Pricing Agreement with respect to such Designated Securities, and,
in the case of any Contract Securities, pursuant to Delayed Delivery
Contracts with respect to such Contract Securities, such Designated
Securities and Contract Securities will have been duly executed,
authenticated, issued and delivered. The related Notes will
constitute valid and legally binding obligations of the related Trust
entitled to the benefits provided by the Indenture, which will be
substantially in the form filed as an exhibit to the Registration
Statement. The Indenture has been duly authorized and duly qualified
under the Trust Indenture Act. The Designated Securities are intended
to represent undivided ownership interests in the Trust created by the
Trust Agreement, which will be substantially in the form filed as an
exhibit to the Registration Statement, and will be entitled to the
benefits provided by the Trust Agreement. At the Time of Delivery (as
defined in Section 4 hereof) for the Designated Securities, the
Indenture and the Trust Agreement will each constitute a valid and
legally binding instrument, enforceable in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles. The Indenture and
Trust Agreement conform, and the Designated Securities and the related
Notes will conform, to the descriptions thereof contained in the
Prospectus as amended or supplemented with respect to the Designated
Securities;
(h) The issue and sale of the Securities and the compliance by
the Company with all of the provisions of the Securities, the
Indenture, the Trust Agreement, each of the Delayed Delivery Contracts,
this Agreement and any Pricing Agreement, and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company or
Sallie Mae is a party or by which the Company or Sallie Mae is bound or
to which any of the property or assets of the Company or Sallie Mae is
subject, nor will such action result in any violation of the provisions
of the Company's Certificate of Incorporation or By-laws, Sallie Mae's
charter, enabling legislation or By-laws, or any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or Sallie Mae or any of their properties;
and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body
is required for the issue and sale of the Securities or the
consummation by the Company or Sallie Mae of the transactions
contemplated by this Agreement or any Pricing Agreement or the
Indenture or any Delayed Delivery Contract, except such as have been,
or will have been prior to the Time of Delivery, obtained under the Act
and the Trust Indenture Act and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the purchase
and distribution of the Designated Securities by the Underwriters;
6
<PAGE> 7
(i) The statements set forth in the Prospectus under the
captions "Description of the Notes" and "Description of the
Certificates" and set forth in the Prospectus Supplement under the
caption "Description of the Securities," insofar as they purport to
constitute a summary of the terms of the Notes and the Certificates,
are accurate, complete and fair;
(j) Sallie Mae is not in violation of its charter as set forth
in its enabling legislation or By-laws, and the Company is not in
violation of its Certificate of Incorporation or By-laws, and neither
Sallie Mae nor the Company is in default in the performance or
observance of any material obligation, agreement, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement,
lease or other agreement or instrument to which it is a party or by
which it or any of its properties may be bound;
(k) Other than as set forth in the Prospectus or in Sallie
Mae's most recently published Information Statement, there are no legal
or governmental proceedings pending to which the Company or Sallie Mae
or any of its subsidiaries is a party or of which any property of the
Company or Sallie Mae or any of its subsidiaries is the subject which,
if determined adversely to the Company or Sallie Mae or any of its
subsidiaries, would individually or in the aggregate have a material
adverse effect on the current or future consolidated financial
position, shareholders' equity or results of operations of the Company
or Sallie Mae or any of its subsidiaries or on the consummation of the
transactions contemplated hereby; and, to the best of the Company's and
Sallie Mae's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(l) The Company is not and, after giving effect to the
offering and sale of the Securities, will not be an "investment
company" or an entity "controlled" by an "investment company", as such
terms are defined in the Investment Company Act of 1940, as amended
(the "Investment Company Act");
(m) Neither the Company, Sallie Mae nor any of their
affiliates does business with the government of Cuba or with any person
or affiliate located in Cuba within the meaning of Section 517.075,
Florida Statutes;
(n) Ernst & Young LLP, who have certified certain financial
statements of Sallie Mae, are independent public accountants as
required by the Act and the rules and regulations of the Commission
thereunder;
(o) At the Time of Delivery of the Designated Securities,
Sallie Mae's representations and warranties in the related Purchase
Agreement and the Administration Agreement, the Company's
representations and warranties in the related Sale Agreement and Trust
Agreement and the Servicer's representations and warranties in the
Servicing Agreement will be true and correct in all material respects;
and
7
<PAGE> 8
(p) In the event any of the Securities are purchased pursuant
to Delayed Delivery Contracts, each of such Delayed Delivery Contracts
has been duly authorized by the Company and Sallie Mae and, when
executed and delivered by the Company and the purchaser named therein,
will constitute a valid and legally binding agreement of the Company
enforceable in accordance with its terms, subject, as to enforcement,
to bankruptcy, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
equity principles; and any Delayed Delivery Contracts conform to the
description thereof in the Prospectus.
3. Upon the execution of the Pricing Agreement applicable to any
Designated Securities and authorization by the Representatives of the release of
the Underwriters' Securities, the several Underwriters propose to offer such
Underwriters' Securities for sale upon the terms and conditions set forth in the
Prospectus as amended or supplemented.
The Company may specify in Schedule II to the Pricing Agreement
applicable to any Designated Securities that the Underwriters are authorized to
solicit offers to purchase Designated Securities from the Company pursuant to
delayed delivery contracts (herein called "Delayed Delivery Contracts"),
substantially in the form of Annex III attached hereto but with such changes
therein as the Representatives and the Company may authorize or approve. If so
specified, the Underwriters will endeavor to make such arrangements, and as
compensation therefor the Company will pay to the Representatives, for the
accounts of the Underwriters, at the Time of Delivery, such commission, if any,
as may be set forth in such Pricing Agreement. Delayed Delivery Contracts, if
any, are to be with investors of the types described in the Prospectus and
subject to other conditions therein set forth. The Underwriters will not have
any responsibility with respect to the validity or performance of any Delayed
Delivery Contracts.
The amount of Contract Securities to be deducted from the amount of
Designated Securities to be purchased by each Underwriter as set forth in
Schedule I to the Pricing Agreement applicable to such Designated Securities
shall be, in each case, the amount of Contract Securities which the Company has
been advised by the Representatives have been attributed to such Underwriter,
provided that, if the Company has not been so advised, the amount of Contract
Securities to be so deducted shall be, in each case, that proportion of Contract
Securities which the amount of Designated Securities to be purchased by such
Underwriter under such Pricing Agreement bears to the total amount of the
Designated Securities (rounded as the Representatives may determine). The total
amount of Underwriters' Securities to be purchased by all the Underwriters
pursuant to such Pricing Agreement shall be the total amount of Designated
Securities set forth in Schedule I to such Pricing Agreement less the amount of
the Contract Securities. The Company will deliver to the Representatives not
later than 3:30 p.m., New York City time, on the third business day preceding
the Time of Delivery specified in the applicable Pricing Agreement (or such
other time and date as the Representatives and the Company may agree upon in
writing), a written notice setting forth the amount of Contract Securities.
8
<PAGE> 9
4. Underwriters' Securities to be purchased by each Underwriter
pursuant to the Pricing Agreement relating thereto, in the form specified in
such Pricing Agreement, and in such authorized denominations and registered in
such names as the Representatives may request upon at least forty-eight hours'
prior notice to the Company, shall be delivered by or on behalf of the Company
to the Representatives for the account of such Underwriter, against payment by
such Underwriter or on its behalf of the purchase price therefor by wire
transfer or by certified or official bank check or checks, payable to the order
of the Company in the funds specified in such Pricing Agreement, all in the
manner and at the place and time and date specified in such Pricing Agreement or
at such other place and time and date as the Representatives and the Company may
agree upon in writing, such time and date being herein called the "Time of
Delivery" for such Securities.
Concurrently with the delivery of and payment for the Underwriters'
Securities, the Company will deliver to the Representatives for the accounts of
the Underwriters a check payable to the order of the party designated in the
Pricing Agreement relating to such Underwriters' Securities in the amount of any
compensation payable by the Company to the Underwriters in respect of any
Delayed Delivery Contracts as provided in Section 3 hereof and the Pricing
Agreement relating to such Securities.
5. The Company agrees with each of the Underwriters of any
Designated Securities, and Sallie Mae agrees with such Underwriters that it will
cause the Company:
(a) To prepare the Prospectus as amended or supplemented in
relation to the applicable Designated Securities in a form approved by
the Representatives and to file such Prospectus pursuant to Rule 424(b)
under the Act not later than the Commission's close of business on the
second business day following the execution and delivery of the Pricing
Agreement relating to the applicable Designated Securities or, if
applicable, such earlier time as may be required by Rule 424(b); to
make no further amendment or any supplement to the Registration
Statement or Prospectus as amended or supplemented after the date of
the Pricing Agreement relating to such Designated Securities and prior
to the Time of Delivery for such Designated Securities which shall be
disapproved by the Representatives for such Designated Securities
promptly after reasonable notice thereof; to advise the Representatives
promptly of any such amendment or supplement after such Time of
Delivery and furnish the Representatives with copies thereof; to file
promptly all reports and any definitive proxy or information statements
required to be filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act for so long as
the delivery of a prospectus is required in connection with the
offering or sale of such Designated Securities, and during such same
period to advise the Representatives, promptly after it receives notice
thereof, of the time when any amendment to the Registration Statement
has been filed or becomes effective or any supplement to the Prospectus
or any amended Prospectus has been filed with the Commission, of the
issuance by the Commission of any stop order or of any order preventing
or suspending the use of any prospectus relating to the Designated
Securities, of the suspension of the qualification
9
<PAGE> 10
of such Designated Securities for offering or sale in any jurisdiction,
of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for
additional information; and, in the event of the issuance of any such
stop order or of any such order preventing or suspending the use of any
prospectus relating to the Designated Securities or suspending any such
qualification, to promptly use its best efforts to obtain the
withdrawal of such order;
(b) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Designated
Securities for offering and sale under the securities laws of such
jurisdictions as the Representatives may request and to comply with
such laws so as to permit the continuance of sales and dealings therein
in such jurisdictions for as long as may be necessary to complete the
distribution of such Designated Securities, provided that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction;
(c) To furnish the Underwriters with copies of the Prospectus
as amended or supplemented, in such quantities as the Representatives
may from time to time reasonably request, and, if the delivery of a
Prospectus is required at any time in connection with the offering or
sale of the Designated Securities and if at such time any event shall
have occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading, or, if for
any other reason it shall be necessary during such same period to amend
or supplement the Prospectus or to file under the Exchange Act any
document incorporated by reference in the Prospectus in order to comply
with the Act, the Exchange Act or the Trust Indenture Act, to notify
the Representatives and, upon their request, to file such document and
to prepare and furnish without charge to each Underwriter and to any
dealer in securities as many copies as the Representatives may from
time to time reasonably request of an amended Prospectus or a
supplement to the Prospectus which will correct such statement or
omission or effect such compliance;
(d) To cause the Trust to make generally available to holders
of Designated Securities, as soon as practicable, but in any event not
later than eighteen months after the effective date of the Registration
Statement (as defined in Rule 158(c) under the Act), an earnings
statement of the Trust (which need not be audited) complying with
Section 11(a) of the Act and the rules and regulations of the
Commission thereunder (including, at the option of the Company, Rule
158); and
(e) To apply the net proceeds of the offering and sale of the
Designated Securities and the related Notes that it receives in the
manner set forth in the Prospectus.
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<PAGE> 11
6. The Company and Sallie Mae covenant and agree with the several
Underwriters that the Company or Sallie Mae will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of the Company's and Sallie
Mae's counsel and accountants in connection with the registration of the
Securities under the Act and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, any Preliminary
Prospectus and the Prospectus and amendments and supplements thereto and the
mailing and delivering of copies thereof to the Underwriters and dealers; (ii)
the cost of printing or producing any Agreement among Underwriters, this
Agreement, any Pricing Agreement, any Indenture, any Trust Agreement, any
Delayed Delivery Contracts, any Blue Sky and Legal Investment Memoranda, closing
documents (including any compilations thereof) and any other documents in
connection with the offering, purchase, sale and delivery of the Designated
Securities; (iii) all expenses in connection with the qualification of the
Designated Securities for offering and sale under state securities laws as
provided in Section 5(b) hereof, including the fees and disbursements of counsel
for the Underwriters in connection with such qualification and in connection
with the Blue Sky and Legal Investment Surveys; (iv) any fees charged by
securities rating services for rating the Designated Securities; (v) the cost of
preparing the Designated Securities; (vi) the fees and expenses of the Eligible
Lender Trustee and the Indenture Trustee and any agent of the Eligible Lender
Trustee or the Indenture Trustee and the fees and disbursements of counsel for
the Eligible Lender Trustee and the Indenture Trustee in connection with any
Indenture and Trust Agreement and the Designated Securities; and (vii) all other
costs and expenses incident to the performance of its obligations hereunder and
under any Delayed Delivery Contracts which are not otherwise specifically
provided for in this Section. It is understood, however, that, except as
provided in this Section, and Sections 8 and 11 hereof, or in the Pricing
Agreement, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel, transfer taxes on resale of any of the
Securities by them, and any advertising expenses connected with any offers they
may make.
7. The obligations of the Underwriters of any Designated Securities
under the Pricing Agreement relating to such Designated Securities shall be
subject, in the reasonable discretion of the Representatives, to the condition
that all representations and warranties and other statements of the Company and
Sallie Mae in or incorporated by reference in the Pricing Agreement relating to
such Designated Securities are, at and as of the Time of Delivery for such
Designated Securities, true and correct, the condition that the Company and
Sallie Mae shall have performed all of their obligations hereunder theretofore
to be performed, and the following additional conditions:
(a) The Prospectus as amended or supplemented in relation to
the applicable Designated Securities shall have been filed with the
Commission pursuant to Rule 424(b) within the applicable time period
prescribed for such filing by the rules and regulations under the Act
and in accordance with Section 5(a) hereof; no stop order suspending
the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have
been initiated or threatened
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<PAGE> 12
by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with;
(b) Counsel for the Underwriters shall have furnished
Representatives such opinion or opinions, substantially in the form
attached hereto as Annex II(a), dated the Time of Delivery for such
Designated Securities, with respect to the Designated Securities and
such other related matters as the Representatives may reasonably
request;
(c) Internal counsel for the Company, Sallie Mae and the
Servicer, satisfactory to the Representatives, shall have furnished to
the Representatives a written opinion or opinions, dated the Time of
Delivery for such Designated Securities, substantially in the form
attached hereto as Annex II(b) or as is otherwise satisfactory to the
Representatives;
(d) Special counsel for the Company, Sallie Mae and the
Servicer, satisfactory to the Representatives, shall have furnished to
the Representatives a written opinion or opinions, dated the Time of
Delivery for such Designated Securities, substantially in the form
attached hereto as Annex II(a) or as is otherwise satisfactory to the
Representatives;
(e) Counsel for the Eligible Lender Trustee, satisfactory to
the Representatives, shall have furnished to the Representatives a
written opinion or opinions, dated the Time of Delivery for such
Designated Securities, substantially in the form attached hereto as
Annex II(c) or as is otherwise satisfactory to the Representatives;
(f) Counsel for the Indenture Trustee, satisfactory to the
Representatives, shall have furnished to the Representatives a written
opinion or opinions, dated the Time of Delivery for such Designated
Securities, substantially in the form attached hereto as Annex II(d) or
as is otherwise satisfactory to the Representatives;
(g) At the time a Preliminary Prospectus, if any, relating to
such Designated Securities was distributed and on the date of the
Pricing Agreement for such Designated Securities, the independent
public accountants of the Company and Sallie Mae shall have furnished
to the Representatives a letter or letters with respect to the Company,
Sallie Mae, the statistical and financial information contained in the
Preliminary Prospectus, if any, and the Prospectus, as the case may be,
and certain agreed upon procedures with respect to the issuance and
offering of the Designated Securities and the related Student Loans, in
form and substance satisfactory to the Representatives and in each case
confirming that such accountants are independent public accountants
with the meaning of the Act and the applicable rules and regulations
thereunder;
(h) (i) Neither the Company nor Sallie Mae shall have
sustained since the date of the financial statements included in Sallie
Mae's most recently published Information Statement any material loss
or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or
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<PAGE> 13
contemplated in such Information Statement, and (ii) since such date,
there shall not have been any material adverse change in the capital
stock or long-term debt of the Company or Sallie Mae or any such
change, or any development involving a prospective such change, in or
affecting the general affairs, management, financial position,
shareholders' equity or results of operations of the Company or Sallie
Mae otherwise than as set forth or contemplated in such Information
Statement, the effect of which, in any such case described in clause
(i) or (ii), is in the judgment of the Representatives so material and
adverse as to make it impracticable or inadvisable to proceed with the
public offering or the delivery of the Underwriters' Securities on the
terms and in the manner contemplated in the Prospectus as first amended
or supplemented relating to the Designated Securities;
(i) On or after the date of the Pricing Agreement relating to
the Designated Securities (i) no downgrading shall have occurred in the
rating accorded Sallie Mae's debt securities or preferred stock by any
"nationally recognized statistical rating organization", as that term
is defined by the Commission for purposes of Rule 436(g)(2) under the
Act ("Rating Agency"), and (ii) no such Rating Agency shall have
publicly announced that it has under surveillance or review, with
possible negative implications, its rating of any of Sallie Mae's debt
securities;
(j) On or after the date of the Pricing Agreement relating to
the Designated Securities there shall not have occurred any of the
following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange or any setting of
minimum prices for trading on such exchange; (ii) a general moratorium
on commercial banking activities declared by either Federal or New York
State authorities; or (iii) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of
a national emergency or war, if the effect of any such event specified
in this clause (iii) in the reasonable judgment of the Representatives
makes it impracticable or inadvisable to proceed with the public
offering or the delivery of the Underwriters' Securities on the terms
and in the manner contemplated in the Prospectus as theretofore amended
or supplemented relating to the Designated Securities;
(k) Each of the Company and Sallie Mae shall have furnished or
caused to be furnished to the Representatives at the Time of Delivery
for the Designated Securities a certificate or certificates of officers
of the Company or Sallie Mae, as the case may be, satisfactory to the
Representatives as to the accuracy of the representations and
warranties of the Company or Sallie Mae, as the case may be, herein at
and as of such Time of Delivery, as to the performance by the Company
or Sallie Mae, as the case may be, of all of their obligations
hereunder to be performed at or prior to such Time of Delivery, as to
the matters set forth in subsections (a), (h) and (i) of this Section
and as to such other matters as the Representatives may reasonably
request;
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<PAGE> 14
(l) At the Time of Delivery, the aggregate amount of the
Underwriters' Securities as specified in the related Pricing Agreement
for the Designated Securities shall have been sold by the Company to
the Underwriters, and the aggregate principal amount of the related
Notes as specified in the related underwriting agreement for such Notes
shall have been sold by the Company to the underwriters specified in
such underwriting agreement; and
(m) The Designated Securities shall be rated as set forth in
the related Prospectus by the Rating Agency (or Agencies) specified in
such Prospectus, and such Rating Agency or Agencies shall not have
placed the Designated Securities under surveillance or review with
negative implications.
8. (a) The Company and Sallie Mae, jointly and severally, will
indemnify and hold harmless each Underwriter against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, any preliminary prospectus supplement, the Registration
Statement, the Prospectus as amended or supplemented and any other prospectus
relating to the Designated Securities, or any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Underwriter for any
legal or other expenses reasonably incurred by such Underwriter in connection
with investigating or defending any such action or claim as such expenses are
incurred; provided, however, that the Company and Sallie Mae shall not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any Preliminary Prospectus, any
preliminary prospectus supplement, the Registration Statement, the Prospectus as
amended or supplemented and any other prospectus relating to the Securities, or
any such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company or Sallie Mae by any Underwriter of
Designated Securities through the Representatives expressly for use in the
Prospectus as amended or supplemented relating to such Securities.
(b) Each Underwriter will indemnify and hold harmless the Company and
Sallie Mae against any losses, claims, damages or liabilities to which they may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, any preliminary prospectus supplement,
the Registration Statement, the Prospectus as amended or supplemented and any
other prospectus relating to the Securities, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement or
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<PAGE> 15
omission or alleged omission was made in any Preliminary Prospectus, any
preliminary prospectus supplement, the Registration Statement, the Prospectus as
amended or supplemented and any other prospectus relating to the Designated
Securities, or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company or Sallie Mae by
such Underwriter through the Representatives expressly for use therein; and will
reimburse the Company for any legal or other expenses reasonably incurred by the
Company in connection with investigating or defending any such action or claim
as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the indemnifying
party), and, after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party shall
not be liable to such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case subsequently
incurred by such indemnified party, in connection with the defense thereof other
than reasonable costs of investigation. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (i) includes an unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to act, by or
on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and Sallie Mae, on the one hand and
the Underwriters of the Designated Securities on the other from the offering of
the Designated Securities to which such loss, claim, damage or liability (or
action in respect thereof) relates. If, however, the allocation provided by the
15
<PAGE> 16
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (c) above,
then each indemnifying party shall contribute to such amount paid or payable by
such indemnified party in such proportion as is appropriate to reflect not only
such relative benefits but also the relative fault of the Company and Sallie
Mae, on the one hand and the Underwriters of the Designated Securities on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Company and Sallie Mae, on the one hand, and such Underwriters on the
other shall be deemed to be in the same proportion as the total net proceeds
from such offering (before deducting expenses) received by the Company and
Sallie Mae bear to the total underwriting discounts and commissions received by
such Underwriters. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or Sallie Mae, on the one hand, or such
Underwriters on the other and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, Sallie Mae and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this subsection (d) were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this subsection (d),
no Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the applicable Designated Securities
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
obligations of the Underwriters of Designated Securities in this subsection (d)
to contribute are several in proportion to their respective underwriting
obligations with respect to such Securities and not joint.
(e) The obligations of the Company and Sallie Mae under this Section
8 shall be in addition to any liability which the Company and Sallie Mae may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls any Underwriter within the meaning of the Act; and
the obligations of the Underwriters under this Section 8 shall be in addition to
any liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of the
Company or Sallie Mae and to each person, if any, who controls the Company or
Sallie Mae within the meaning of the Act.
16
<PAGE> 17
9. (a) If any Underwriter shall default in its obligation to
purchase the Underwriters' Securities which it has agreed to purchase under the
Pricing Agreement relating to such Underwriters' Securities, the Representatives
may in their discretion arrange for themselves or another party or other parties
to purchase such Underwriters' Securities on the terms contained herein and
therein. If within thirty-six hours after such default by any Underwriter the
Representatives do not arrange for the purchase of such Underwriters'
Securities, then the Company shall be entitled to a further period of thirty-six
hours within which to procure another party or other parties satisfactory to the
Representatives to purchase such Underwriters' Securities on such terms. In the
event that, within the respective prescribed period, the Representatives notify
the Company that they have so arranged for the purchase of such Underwriters'
Securities, or the Company notifies the Representatives that it has so arranged
for the purchase of such Underwriters' Securities, the Representatives or the
Company shall have the right to postpone the Time of Delivery for such
Underwriters' Securities for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus as amended or supplemented, or in any other
documents or arrangements, and the Company agrees to file promptly any
amendments or supplements to the Registration Statement or the Prospectus which
in the opinion of the Representatives may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to the Pricing Agreement with respect to such Designated Securities.
(b) If, after giving effect to any arrangements for the purchase of
the Underwriters' Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate amount of such Underwriters' Securities which remains unpurchased does
not exceed one-eleventh of the aggregate amount of the Designated Securities,
then the Company shall have the right to require each non-defaulting Underwriter
to purchase the amount of Underwriters' Securities which such Underwriter agreed
to purchase under the Pricing Agreement relating to such Designated Securities
and, in addition, to require each non-defaulting Underwriter to purchase its pro
rata share (based on the amount of Designated Securities which such Underwriter
agreed to purchase under such Pricing Agreement) of the Underwriters' Securities
of such defaulting Underwriter or Underwriters for which such arrangements have
not been made; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
(c) If, after giving effect to any arrangements for the purchase of
the Underwriters' Securities of a defaulting Underwriter or Underwriters by the
Representatives and the Company as provided in subsection (a) above, the
aggregate amount of Underwriters' Securities which remains unpurchased exceeds
one-eleventh of the aggregate amount of the Designated Securities, as referred
to in subsection (b) above, or if the Company shall not exercise the right
described in subsection (b) above to require non-defaulting Underwriters to
purchase Underwriters' Securities of a defaulting Underwriter or Underwriters,
then the Pricing Agreement relating to such Designated Securities shall
thereupon terminate, without
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<PAGE> 18
liability on the part of any non-defaulting Underwriter or the Company, except
for the expenses to be borne by the Company and the Underwriters as provided in
Section 6 hereof and the indemnity and contribution agreements in Section 8
hereof; but nothing herein shall relieve a defaulting Underwriter from liability
for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company, Sallie Mae and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company or Sallie Mae or any officer or director or
controlling person of the Company or Sallie Mae, and shall survive delivery of
and payment for the Securities.
11. If any Pricing Agreement shall be terminated pursuant to Section
9 hereof, the Company and Sallie Mae shall not then be under any liability to
any Underwriter with respect to the Designated Securities covered by such
Pricing Agreement except as provided in Sections 6 and 8 hereof; but, if for any
other reason Underwriters' Securities are not delivered by or on behalf of the
Company as provided herein, except for any of the reasons specified in Section
7(j), the Company and Sallie Mae will reimburse the Underwriters through the
Representatives for all out-of-pocket expenses approved in writing by the
Representatives, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of such Designated Securities, but the Company and Sallie Mae shall
then be under no further liability to any Underwriter with respect to such
Designated Securities except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, the Representatives of the
Underwriters of Designated Securities shall act on behalf of each of such
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by such Representatives jointly or by such of the Representatives, if any,
as may be designated for such purpose in the Pricing Agreement.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Representatives as set forth in the
Pricing Agreement; and if to the Company or Sallie Mae shall be delivered or
sent by mail, telex or facsimile transmission to:
SLM Funding Corporation
777 Twin Creek Drive
Kileen, Texas 76543
Facsimile: (817) 554-4999
Attention: Phyllis A. Leeth
Vice President
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<PAGE> 19
Student Loan Marketing Association
11600 Sallie Mae Drive
Reston, VA 20193
Facsimile: (703) 810-7655
Attention: Mark G. Overend
Vice President and Chief Financial Officer
provided, however, that any notice to an Underwriter pursuant to Section 8(c)
hereof shall be delivered or sent by mail, telex or facsimile transmission to
such Underwriter at its address set forth in its Underwriters' Questionnaire, or
telex constituting such Questionnaire, which address will be supplied to the
Company or Sallie Mae by the Representatives upon request. Any such statements,
requests, notices or agreements shall take effect upon receipt thereof.
13. This Agreement and each Pricing Agreement shall be binding upon,
and inure solely to the benefit of, the Underwriters, the Company, Sallie Mae
and, to the extent provided in Sections 8 and 10 hereof, the officers and
directors of the Company and Sallie Mae and each person who controls the
Company, Sallie Mae or any Underwriter, and their respective heirs, executors,
administrators, successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement or any such Pricing
Agreement. No purchaser of any of the Securities from any Underwriter shall be
deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of each Pricing Agreement. As used
herein, "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business and "New York Business Day" shall mean any
day when banking institutions are open for business in New York City, New York.
15. THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement and each Pricing Agreement may be executed by any
one or more of the parties hereto and thereto in any number of counterparts,
each of which shall be deemed to be an original, but all such respective
counterparts shall together constitute one and the same instrument.
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<PAGE> 20
IF THE FOREGOING IS IN ACCORDANCE WITH YOUR UNDERSTANDING, PLEASE SIGN
AND RETURN TO US ___ COUNTERPARTS HEREOF.
Very truly yours,
SLM FUNDING CORPORATION
By: /s/ ROBERT R. LEVINE
------------------------------
Name:
Title:
STUDENT LOAN MARKETING ASSOCIATION
By: /s/ J. LANCE FRANKE
------------------------------
Name:
Title:
Accepted as of the date hereof:
GOLDMAN, SACHS & CO.
/s/ GOLDMAN, SACHS & CO.
- -------------------------------------
(Goldman, Sachs & Co.)
MORGAN STANLEY & CO. INCORPORATED
By: /s/ CHARLES N. ATKINS
---------------------------------
Name:
Title:
20
<PAGE> 21
ANNEX I
PRICING AGREEMENT
- -------------------------
AS REPRESENTATIVES OF THE SEVERAL
UNDERWRITERS NAMED ON SCHEDULE I HERETO,
C/O
----------------------
- -------------------------
- -------------------------
, 1997
Ladies and Gentlemen:
SLM Funding Corporation, a Delaware corporation (the "Company"), and
the Student Loan Marketing Association, a corporation formed under the laws of
the United States ("Sallie Mae"), propose, subject to the terms and conditions
stated herein and in the Underwriting Agreement, dated __________, 199__ (the
"Underwriting Agreement"), between the Company and Sallie Mae, on the one hand,
and _______________ and ________________, on the other hand, that the Company
will cause the trust (the "Trust") formed pursuant to the Trust Agreement dated
_______, 199__ between the Company and _______, as trustee (the "Eligible Lender
Trustee"), to issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") the Student Loan-Backed Certificates (the "Certificates")
specified in Schedule II hereto (the "Designated Securities"). The Certificates
will be issued pursuant to the Trust Agreement.
Each of the provisions of the Underwriting Agreement is incorporated
herein by reference in its entirety, and shall be deemed to be a part of this
Agreement to the same extent as if such provisions had been set forth in full
herein; and each of the representations and warranties set forth therein shall
be deemed to have been made at and as of the date of this Pricing Agreement,
except that each representation and warranty which refers to the Prospectus in
Section 2 of the Underwriting Agreement shall be deemed to be a representation
or warranty as of the date of the Underwriting Agreement in relation to the
Prospectus (as therein defined), and also a representation and warranty as of
the date of this Pricing Agreement in relation to the Prospectus as amended or
supplemented relating to the Designated Securities which are the subject of this
Pricing Agreement. Each reference to the Representatives herein and in the
provisions of the Underwriting Agreement so incorporated by reference shall be
deemed to refer to you. Unless otherwise defined herein, terms defined in the
Underwriting Agreement are used herein as therein defined.
The Representatives designated to act on behalf of the Representatives
and on behalf of each of the Underwriters of the Designated Securities pursuant
to Section 12 of the Underwriting Agreement and the address of the
Representatives referred to in such Section 12 are set forth at the end of
Schedule II hereto.
<PAGE> 22
An amendment to the Registration Statement, or a supplement to the
Prospectus, as the case may be, relating to the Designated Securities, in the
form heretofore delivered to you is now proposed to be filed with the
Commission.
Subject to the terms and conditions set forth herein and in the
Underwriting Agreement incorporated herein by reference, the Company agrees to
cause the Trust to issue and sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Trust, at
the time and place and at the purchase price to the Underwriters set forth in
Schedule II hereto, the amount of Designated Securities set forth opposite the
name of such Underwriter in Schedule I hereto, less the amount of Designated
Securities covered by Delayed Delivery Contracts, if any, as may be specified in
Schedule II.
During the period beginning from the date of this Pricing Agreement for
the Designated Securities and continuing to and including the later of (i) [___
days after] the termination of trading restrictions for such Designated
Securities, as notified to the Company by the Representatives and (ii) [__ days
after] the Time of Delivery for such Designated Securities, the Company agrees,
and Sallie Mae agrees that it will cause the Company, not to, and not to permit
any affiliated entity to, offer, sell, contract to sell or otherwise dispose of,
any securities (other than the Designated Securities) evidencing an ownership
in, or any securities (other than the related Notes) collateralized by, Student
Loans, without the prior written consent of the Representatives.
Each Underwriter represents and agrees that (a) it has not offered or
sold and will not offer or sell any Notes or Certificates to persons in the
United Kingdom prior to the expiration of the period of six months from the
issue date of the Notes and the Certificates except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purposes of their businesses or
otherwise in circumstances which have not resulted and will not result in an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulations 1995; (b) it has complied and will comply with
all applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Notes and the Certificates in, from or
otherwise involving the United Kingdom; and (c) it has only issued or passed on
and will only issue or pass on in the United Kingdom any document received by it
in connection with the issuance of the Notes and the Certificates to a person
who is of a kind described in article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1995 or is a person to whom such
document may otherwise lawfully be issued or passed on.
If the foregoing is in accordance with your understanding, please sign
and return to us ______ counterparts hereof, and upon acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof,
including the provisions of the Underwriting Agreement incorporated herein by
reference, shall constitute a binding agreement between each of the Underwriters
and the Company and Sallie Mae. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is or will be pursuant to the
authority set forth in a form of Agreement among Underwriters, the form of
2
<PAGE> 23
which shall be submitted to the Company and Sallie Mae for examination upon
request, but without warranty on the part of the Representatives as to the
authority of the signers thereof.
Very truly yours,
SLM FUNDING CORPORATION
By: ..............................
Name:
Title:
STUDENT LOAN MARKETING ASSOCIATION
By: ..............................
Name:
Title:
3
<PAGE> 24
Accepted as of the date hereof:
[_________________________]
By: ..................................
[_________________________]
By: ..................................
Name:
Title:
On behalf of each of the Underwriters
4
<PAGE> 25
SCHEDULE I
AMOUNT OF DESIGNATED SECURITIES TO BE PURCHASED
UNDERWRITER CLASS ___ CLASS ___ CLASS ___
<PAGE> 26
SCHEDULE II
TITLE OF EACH CLASS OF DESIGNATED SECURITIES:
AGGREGATE AMOUNT OF EACH CLASS:
PRICE TO PUBLIC OF EACH CLASS:
PURCHASE PRICE BY UNDERWRITERS OF EACH CLASS:
SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE:
INDENTURE:
MATURITY:
RETURN RATE:
FORM OF DESIGNATED SECURITIES:
TIME OF DELIVERY:
CLOSING LOCATION FOR DELIVERY OF DESIGNATED SECURITIES:
NAMES AND ADDRESSES OF REPRESENTATIVES:
Designated Representatives:
Address for Notices, etc.:
<PAGE> 27
ANNEX II(a)
THE COMPANY, SALLIE MAE, THE SERVICER AND THE UNDERWRITERS:
OUTSIDE COUNSEL OPINION
[Opinions to be issued, which together will be substantially in the form
provided for SLM Student Loan Trust 1997-3]
<PAGE> 28
ANNEX II(b)
THE COMPANY, SALLIE MAE AND THE SERVICER: INTERNAL COUNSEL OPINION
[Opinion to be issued substantially in the form provided for
SLM Student Loan Trust 1997-3]
<PAGE> 29
ANNEX II(c)
ELIGIBLE LENDER TRUSTEE/INTERIM ELIGIBLE LENDER TRUSTEE: COUNSEL OPINION
[Opinion to be issued substantially in the form provided for
SLM Student Loan Trust 1997-3]
<PAGE> 30
ANNEX II(d)
INDENTURE TRUSTEE: COUNSEL OPINION
[Opinion to be issued substantially in the form provided for
SLM Student Loan Trust 1997-3]
<PAGE> 31
ANNEX III
DELAYED DELIVERY CONTRACT
SLM FUNDING CORPORATION
C/O
-------------------------
- ----------------------------
- ----------------------------
Attention:............................... ................, 19__
Ladies and Gentlemen:
The undersigned hereby agrees to purchase from SLM Funding Corporation
(hereinafter called the "Company"), and the Company agrees to sell to the
undersigned,
$.........
principal amount of the Company's ________ (hereinafter called the "Designated
Securities"), offered by the Company's Prospectus, dated .............., 19..,
as amended or supplemented, receipt of a copy of which is hereby acknowledged,
at a purchase price of .....% of the amount thereof, plus accrued interest from
the date from which interest accrues as set forth below, and on the further
terms and conditions set forth below.
The undersigned will purchase the Designated Securities from the
Company on .............., 19.. (the "Delivery Date") and interest on the
Designated Securities so purchased will accrue from .............., 19...
[THE UNDERSIGNED WILL PURCHASE THE DESIGNATED SECURITIES FROM THE
COMPANY ON THE DELIVERY DATE OR DATES AND IN THE AMOUNT OR AMOUNTS SET FORTH
BELOW:
<TABLE>
<CAPTION>
DATE FROM WHICH
DELIVERY DATE AMOUNT INTEREST ACCRUES
<S> <C> <C>
....................., 19.. $............. ....................., 19..
....................., 19.. $............. ....................., 19..
</TABLE>
EACH SUCH DATE ON WHICH DESIGNATED SECURITIES ARE TO BE PURCHASED HEREUNDER IS
HEREINAFTER REFERRED TO AS A "DELIVERY DATE."(4)]
Payment for the Designated Securities which the undersigned has agreed
to purchase on [THE] [EACH] Delivery Date shall be made to the Company or its
order by certified or official bank check in .......... Clearing House funds at
the office of .........., ........., .........., or by wire transfer to
<PAGE> 32
a bank account specified by the Company, on [THE] [SUCH] Delivery Date upon
delivery to the undersigned of the Designated Securities then to be purchased by
the undersigned in definitive fully registered form and in such denominations
and registered in such names as the undersigned may designate by written, telex
or facsimile communication addressed to the Company not less than five full
business days prior to [THE] [SUCH] Delivery Date.
The obligation of the undersigned to take delivery of and make payment
for Designated Securities on [THE] [EACH] Delivery Date shall be subject to the
condition that the purchase of Designated Securities to be made by the
undersigned shall not on [THE] [SUCH] Delivery Date be prohibited under the laws
of the jurisdiction to which the undersigned is subject. The obligation of the
undersigned to take delivery of and make payment for Designated Securities shall
not be affected by the failure of any purchaser to take delivery of and make
payment for Designated Securities pursuant to other contracts similar to this
contract.
[THE UNDERSIGNED UNDERSTANDS THAT UNDERWRITERS (THE "UNDERWRITERS") ARE
ALSO PURCHASING DESIGNATED SECURITIES FROM THE COMPANY, BUT THAT THE OBLIGATIONS
OF THE UNDERSIGNED HEREUNDER ARE NOT CONTINGENT ON SUCH PURCHASES]. Promptly
after completion of the sale to the Underwriters the Company will mail or
deliver to the undersigned at its address set forth below notice to such effect,
accompanied by a copy of the Opinion of Counsel for the Company delivered to the
Underwriters in connection therewith.
The undersigned represents and warrants that, as of the date of this
contract, the undersigned is not prohibited from purchasing the Designated
Securities hereby agreed to be purchased by it under the laws of the
jurisdiction to which the undersigned is subject.
This contract will inure to the benefit of and be binding upon the
parties hereto and their respective successors, but will not be assignable by
either party hereto without the written consent of the other.
This contract may be executed by either of the parties hereto in any
number of counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same instrument.
F-2
<PAGE> 33
It is understood that the acceptance by the Company of any Delayed
Delivery Contract (including this contract) is in the Company's sole discretion
and that, without limiting the foregoing, acceptances of such contracts need not
be on a first-come, first-served basis. If this contract is acceptable to the
Company, it is requested that the Company sign the form of acceptance below and
mail or deliver one of the counterparts hereof to the undersigned at its address
set forth below. This will become a binding contract between the Company and the
undersigned when such counterpart is so mailed or delivered by the Company.
Yours very truly,
..........................................
By: ......................................
(Authorized Signature)
Name:
Title:
..........................................
(Address)
Accepted: .............................., 19..
SLM FUNDING CORPORATION
By: .........................................
Name:
Title:
F-3
<PAGE> 1
EXHIBIT 4.1
================================================================================
TRUST AGREEMENT
between
SLM FUNDING CORPORATION,
as Depositor
and
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION
not in its individual capacity but solely
as Eligible Lender Trustee
Dated as of November 1, 1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
Section 1.1 Definitions and Usage............................................................................. 1
ARTICLE II
SECTION 2.1 Creation of Trust; Name........................................................................... 1
SECTION 2.2 Office............................................................................................ 1
SECTION 2.3 Purposes and Powers............................................................................... 1
SECTION 2.4 Appointment of Eligible Lender Trustee............................................................ 2
SECTION 2.5 Initial Capital Contribution of Trust Estate...................................................... 2
SECTION 2.6 Declaration of Trust.............................................................................. 2
SECTION 2.7 Liability of the Certificateholders............................................................... 3
SECTION 2.8 Title to Trust Property........................................................................... 3
SECTION 2.9 Representations and Warranties of the Depositor................................................... 4
SECTION 2.10 Application of Trust Funds........................................................................ 5
ARTICLE III
SECTION 3.1 Initial Beneficial Ownership...................................................................... 7
SECTION 3.2 The Trust Certificates............................................................................ 7
SECTION 3.3 Authentication of Trust Certificates.............................................................. 7
SECTION 3.4 Registration of Transfer and Exchange of Trust Certificates....................................... 8
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Trust Certificates........................................... 9
SECTION 3.6 Persons Deemed Owners............................................................................. 9
SECTION 3.7 Access to List of Certificate holders' Names and Addresses........................................ 10
SECTION 3.8 Maintenance of Office or Agency................................................................... 10
SECTION 3.9 Appointment of Certificate Paying Agent........................................................... 11
SECTION 3.10 Book-Entry Certificates........................................................................... 11
SECTION 3.11 Notices to Clearing Agency........................................................................ 13
SECTION 3.12 Definitive Certificates........................................................................... 13
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE IV
SECTION 4.1 Prior Notice to Certificateholders With Respect to Certain Matters................................ 14
SECTION 4.2 Action by Certificateholders with Respect to Certain Matters...................................... 15
SECTION 4.3 Action by Certificateholders with Respect to Bankruptcy........................................... 15
SECTION 4.4 Restrictions on Certificateholders' Power......................................................... 15
SECTION 4.5 Majority Control.................................................................................. 15
ARTICLE V
SECTION 5.1 Application of Trust Funds........................................................................ 15
SECTION 5.2 Method of Payment................................................................................. 16
SECTION 5.3 No Segregation of Moneys; No Interest............................................................. 17
SECTION 5.4 Accounting and Reports to the Noteholders, Certificateholders, the
Internal Revenue Service and Others............................................................... 17
SECTION 5.5 Signature on Returns; Tax Matters Partner......................................................... 18
SECTION 5.6 Capital Accounts.................................................................................. 18
ARTICLE VI
SECTION 6.1 General Authority................................................................................. 19
SECTION 6.2 General Duties.................................................................................... 19
SECTION 6.3 Action upon Instruction........................................................................... 20
SECTION 6.4 No Duties Except as Specified in this Agreement or in Instructions................................ 21
SECTION 6.5 No Action Except Under Specified Documents or Instructions........................................ 22
SECTION 6.6 Restrictions...................................................................................... 22
ARTICLE VII
SECTION 7.1 Acceptance of Trusts and Duties................................................................... 22
SECTION 7.2 Furnishing of Documents........................................................................... 24
SECTION 7.3 Representations and Warranties.................................................................... 24
SECTION 7.4 Reliance; Advice of Counsel....................................................................... 25
SECTION 7.5 Not Acting in Individual Capacity................................................................. 26
SECTION 7.6 Eligible Lender Trustee Not Liable for Trust Certificates or Trust Student Loans.................. 26
SECTION 7.7 Eligible Lender Trustee May Own Trust Certificates and Notes...................................... 27
</TABLE>
ii
<PAGE> 4
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE VIII
SECTION 8.1 Eligible Lender Trustee's Fees and Expenses....................................................... 27
SECTION 8.2 Payments to the Eligible Lender Trustee........................................................... 27
SECTION 8.3 Indemnity......................................................................................... 27
ARTICLE IX
SECTION 9.1 Termination of Trust Agreement.................................................................... 27
SECTION 9.2 Dissolution upon Insolvency of the Depositor...................................................... 29
ARTICLE X
SECTION 10.1 Eligibility Requirements for Eligible Lender Trustee.............................................. 29
SECTION 10.2 Resignation or Removal of Eligible Lender Trustee................................................. 30
SECTION 10.3 Successor Eligible Lender Trustee................................................................. 31
SECTION 10.4 Merger or Consolidation of Eligible Lender Trustee................................................ 32
SECTION 10.5 Appointment of Co-Eligible Lender Trustee or Separate Eligible Lender
Trustee........................................................................................... 32
ARTICLE XI
SECTION 11.1 Supplements and Amendments........................................................................ 34
SECTION 11.2 No Legal Title to Trust Estate in Certificateholders.............................................. 35
SECTION 11.3 Limitations on Rights of Others................................................................... 35
SECTION 11.4 Notices........................................................................................... 35
SECTION 11.5 Severability...................................................................................... 36
SECTION 11.6 Separate Counterparts............................................................................. 36
SECTION 11.7 Successors and Assigns............................................................................ 36
SECTION 11.8 No Petition....................................................................................... 36
SECTION 11.9 No Recourse....................................................................................... 37
SECTION 11.10 Headings.......................................................................................... 37
SECTION 11.11 Governing Law..................................................................................... 37
Exhibit A Form of Trust Certificate
Exhibit B Form of Certificate Depository Agreement
Annex 1 to Trust Agreement
</TABLE>
iii
<PAGE> 5
TRUST AGREEMENT dated as of November 1, 1997, between SLM FUNDING
CORPORATION, a Delaware corporation, as Depositor, and CHASE MANHATTAN BANK USA,
NATIONAL ASSOCIATION, a national banking association, not in its individual
capacity but solely as Eligible Lender Trustee.
The Depositor and the Eligible Lender Trustee hereby 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 are defined in Appendix A hereto, which also contains
rules as to usage that shall be applicable herein.
ARTICLE II
Organization
SECTION II.1 Creation of Trust; Name. There is hereby created a
Trust which shall be known as "SLM Student Loan Trust 1997-4", in which name the
Eligible Lender Trustee may conduct the business of the Trust, make and execute
contracts and other instruments on behalf of the Trust and sue and be sued. The
Trust shall constitute a business trust within the meaning of Section 3801(a) of
the Delaware Business Trust Act for which the Trustee has filed a certificate of
trust with the Secretary of State of the State of Delaware pursuant to Section
3810(a) of the Delaware Business Trust Act.
SECTION II.2 Office. The office of the Trust shall be in care of the
Eligible Lender Trustee at its Corporate Trust Office or at such other address
as the Eligible Lender Trustee may designate by written notice to the
Certificateholders and the Depositor.
SECTION II.3 Purposes and Powers. The purpose of the Trust is to
engage in the following activities:
(i) to issue the Notes pursuant to the Indenture and the
Trust Certificates pursuant to this Agreement and to sell the Notes
and the Trust Certificates in one or more transactions;
(ii) with the proceeds of the sale of the Notes and the
Trust Certificates, to fund the Reserve Account pursuant to Section
2.8 of the Administration Agreement and to purchase the Trust
Student Loans pursuant to the Sale Agreement;
<PAGE> 6
(iii) to Grant the Trust Estate to the Indenture Trustee
pursuant to the Indenture, and to hold, manage and distribute to the
Certificateholders pursuant to the terms of this Agreement any
portion of the Trust Estate released from the Lien of, and remitted
to the Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the
Basic Documents to which it is to be a party;
(v) to engage in those activities, including entering
into agreements, that are necessary, suitable or convenient to
accomplish the foregoing or are incidental thereto or connected
therewith; and
(vi) subject to compliance with the Basic Documents, to
engage in such other activities as may be required in connection
with conservation of the Trust Estate and the making of
distributions to the Certificateholders, the Noteholders and the
others specified in Section 2.7 of the Administration Agreement.
The Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this Agreement
or the other Basic Documents.
SECTION II.4 Appointment of Eligible Lender Trustee. The Depositor
hereby appoints the Eligible Lender Trustee as trustee of the Trust effective as
of the date hereof, to have all the rights, powers and duties set forth herein.
SECTION II.5 Initial Capital Contribution of Trust Estate. The
Depositor hereby sells, assigns, transfers, conveys and sets over to the
Eligible Lender Trustee, as of the date hereof, the sum of $1.00. The Eligible
Lender Trustee hereby acknowledges receipt in trust from the Depositor, as of
the date hereof, of the foregoing contribution, which shall constitute the
Initial Trust Estate and shall be deposited in the Collection Account. The
Depositor shall pay the organizational expenses of the Trust as they may arise
or shall, upon the request of the Eligible Lender Trustee, promptly reimburse
the Eligible Lender Trustee for any such expenses paid by the Eligible Lender
Trustee.
SECTION II.6 Declaration of Trust. The Eligible Lender Trustee
hereby declares that it will hold the Trust Estate in trust upon and subject to
the conditions set forth herein for the use and benefit of the
Certificateholders, subject to the obligations of the Trust under the other
Basic Documents. It is the intention of the parties hereto that the Trust
constitute a business trust under Delaware law and that this Agreement
2
<PAGE> 7
constitute the governing instrument of such trust. It is the intention of the
parties hereto that, solely for income tax purposes, the Trust shall be treated
as a partnership, with the assets of the partnership being the Trust Student
Loans and other assets held by the Trust, the partners of the partnership being
the Certificateholders (including the Depositor as recipient of distributions
from the Reserve Account), and the Notes being debt of the partnership. The
parties agree that, unless otherwise required by appropriate tax authorities,
the Trust will file or cause to be filed annual or other necessary returns,
reports and other forms consistent with the characterization of the Trust as a
partnership for such tax purposes. Effective as of the date hereof, the Eligible
Lender Trustee shall have all rights, powers and duties set forth herein with
respect to accomplishing the purposes of the Trust.
SECTION II.7 Liability of the Certificateholders.
(a) Notwithstanding the provisions of Section 3803 of the
Delaware Business Trust Act, the Depositor shall be
liable directly to and shall indemnify the injured party
for all losses, claims, damages, liabilities and
expenses of the Trust (including Expenses, to the extent
that the assets of the Trust that would remain if all of
the Notes were paid in full would not be sufficient to
pay any such liabilities, or if such liabilities in fact
are not paid out of the Trust Estate) to the extent that
the Depositor would be liable if the Trust were a
partnership under the Delaware Revised Uniform Limited
Partnership Act in which the Depositor were a general
partner; provided, however, that the Depositor shall not
be liable for any losses incurred by a beneficial owner
of a Note in its capacity as a holder of limited
recourse debt or to any Certificateholder. In addition,
any third party creditors of the Trust (other than in
connection with the obligations to Noteholders excepted
above) shall be third party beneficiaries of this
paragraph.
(b) No Certificateholder shall have any personal liability
for any liability or obligation of the Trust.
SECTION II.8 Title to Trust Property. Legal title to all of the
Trust Estate shall be vested at all times in the Trust as a separate legal
entity except where applicable law in any jurisdiction requires title to any
part of the Trust Estate to be vested in a trustee or trustees, in which case
title shall be deemed to be vested in the Eligible Lender Trustee, a co-trustee
and/or a separate trustee, as the case may be; provided that legal title to the
Trust Student Loans shall be vested at all times in the Eligible Lender Trustee
on behalf of the Trust.
3
<PAGE> 8
SECTION II.9 Representations, Warranties, and Covenants of the
Depositor. The Depositor hereby represents, warrants and covenants to the
Eligible Lender Trustee as follows:
(a) The Depositor is duly organized and validly existing as
a Delaware corporation in good standing under the laws
of the State of Delaware, with 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) The Depositor has the corporate power and authority to
execute and deliver this Agreement and to carry out its
terms; the Depositor has full corporate power and
authority to sell and assign the property to be sold and
assigned to and deposited with the Trust (or with the
Eligible Lender Trustee on behalf of the Trust) and the
Depositor has duly authorized such sale and assignment
and deposit to the Trust (or to the Eligible Lender
Trustee on behalf of the Trust) by all necessary
corporate action; and the execution, delivery and
performance of this Agreement has been duly authorized
by the Depositor by all necessary corporate action.
(c) This Agreement constitutes a legal, valid and binding
obligation of the Depositor 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) The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof
do not conflict with, result in any breach of any of the
terms and provisions of, or constitute (with or without
notice or lapse of time or both) a default under, the
certificates of incorporation or by-laws of the
Depositor, or any indenture, agreement or other
instrument to which the Depositor is a party or by which
it is 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 Depositor's knowledge,
any order, rule or regulation applicable to the
Depositor of any court or of any Federal or state
regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over
the Depositor or its properties.
(e) The Depositor agrees for the benefit of the Noteholders
and of the Certificate Holders that it will comply with
4
<PAGE> 9
each of the requirements set forth in Article IX, X, and
XII of its Certificate of Incorporation and with each of
the undertakings set forth in Annex I hereto.
SECTION II.10 Application of Trust Funds.
(a) Income and Loss Allocations. After giving effect to the
special allocations set forth in subparagraph (b) of
this Section 2.10 and for purposes of maintaining
Capital Accounts under Section 5.6, gross income items
of the Trust for any Accrual Period as determined for
Federal income tax purposes shall be allocated as
follows:
(1) first, among the Certificateholders as
of the close of business on the last day of
such Accrual Period, in proportion to the
Certificate Balance of the Certificates
owned by them on such date, an amount of
gross income up to the sum of (i) the
portion of the Certificateholders' Return
Distribution Amount and the Certificate
Return Carryover, if any, for the related
Distribution Date allocable to such Accrual
Period, (ii) return on the excess, if any,
of the Certificateholders' Return
Distribution Amount for the preceding
Distribution Date over the amount in respect
of return on the Certificates that is
actually distributed to Certificateholders
on such preceding Distribution Date, to the
extent permitted by law, at the Certificate
Rate for such Accrual Period and (iii) the
portion of the market discount on the Trust
Student Loans accrued during such Accrual
Period that is allocable to the excess, if
any, of the initial aggregate principal
amount of the Certificates over their
initial aggregate issue price; and
(2) the balance of Profits, if any, to the
Depositor.
If the items of gross income of the Trust for any month
are insufficient for the allocations described in clause
(1) above, subsequent items of gross income shall first
be allocated to make up such shortfall before Profits
are allocated as provided in clause (b). Loss of the
Trust for any Accrual Period shall be allocated to the
Depositor to the extent the Depositor is reasonably
expected to bear the economic burden of such Loss, and
any remaining Loss shall be allocated among the
Certificateholders as of the close of business on the
last day of such Accrual Period in proportion to the
Certificate Balance of Trust
5
<PAGE> 10
Certificates owned by them
on such date. If any items of loss or deduction are
allocated to Certificateholders and the Depositor
subsequently determines that the economic loss to
Certificateholders will be less than was expected at the
time such allocations were made, additional items of
gross income will be allocated to Certificateholders in
subsequent periods to offset the excess allocations of
losses and deductions to Certificateholders before any
Profits are allocated to the Depositor as provided in
clause (2) above.
(b) Special Allocations.
(1) In the event any Certificateholder
unexpectedly receives any adjustments,
allocations or distributions described in
Treasury Regulation Section
1.704-1(b)(2)(ii)(d)(4), (5) or (6), items
of Trust income and gain shall be specially
allocated to such Certificateholder in an
amount and manner sufficient to eliminate,
to the extent required by the Treasury
Regulations, the deficit, if any, in the
balance of the Capital Account of such
Certificateholder as quickly as possible.
This Section 2.10(b) is intended to comply
with the qualified income offset provision
in Section 1.704-1(b)(2)(ii)(d) of the
Treasury Regulations.
(2) In the event the initial issue price of
Certificates differs from their initial
Certificate Balance, there shall be
specially allocated to the
Certificateholders the portion, if any, of
the offset for premium (in the case the
issue price of the Certificates exceeds the
Certificate Balance) on the Trust Student
Loans accruing for a calendar month that is
attributable to such difference.
(c) Liquidating Profit or Loss. Liquidating Profit or Loss
shall be allocated, after all other adjustments are made
to the Capital Accounts (including adjustments to
reflect the Liquidating Distribution), as follows:
(1) First, among the Certificateholders in
proportion to their ownership of the
principal amount of Certificates, in an
amount that would cause their Capital
Account balances to equal zero (in the case
of the Depositor, taking into account the
Capital Account balance of the Depositor
only to the extent it relates to
Certificates owned by the Depositor); and
(2) Any balance, to the Depositor.
6
<PAGE> 11
(d) Tax Allocations. For Federal income tax purposes, each
item of income, gain, loss and deduction of the Trust
shall be allocated among the Certificateholders and the
Depositor in a manner consistent with the allocations
set forth in this Section 2.10, subject to the
provisions of Section 704(c) of the Code.
Notwithstanding anything to the contrary set forth in
this Agreement, the Depositor is authorized to modify
the allocations of this Section 2.10(d) and Sections
2.10(a), (b) and (c) if necessary or appropriate, in the
Depositor's sole discretion, for the allocations to
fairly reflect the economic gain, income or loss to the
Depositor or the Certificateholders, or as otherwise
required by the Code or the Treasury Regulations.
ARTICLE III
Trust Certificates and Transfer of Interests
SECTION III.1 Initial Beneficial Ownership. Upon the formation of
the Trust by the contribution by the Depositor pursuant to Section 2.5 and until
the issuance of the Trust Certificates, the Depositor shall be the sole
beneficial owner of the Trust.
SECTION III.2 The Trust Certificates. The Trust Certificates shall
be issued in denominations of $100,000 or in integral multiples of $1,000 in
excess thereof. The Trust Certificates shall be executed on behalf of the Trust
by manual or facsimile signature of an authorized officer of the Eligible Lender
Trustee. Trust Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures were affixed, authorized
to sign on behalf of the Trust, shall be valid and binding obligations of the
Trust, notwithstanding that such individuals or any of them shall have ceased to
be so authorized prior to the authentication and delivery of such Trust
Certificates or did not hold such offices at the date of authentication and
delivery of such Trust Certificates.
SECTION III.3 Authentication of Trust Certificates. Concurrently
with the sale of the Trust Student Loans to the Trust pursuant to the Purchase
Agreement, the Eligible Lender Trustee shall cause the Trust Certificates in an
aggregate principal amount equal to the Initial Certificate Balance to be
executed on behalf of the Trust, authenticated and delivered to or upon the
written order of the Depositor, signed by its chairman of the board, its
president or any vice president, without further action by the Depositor, in
authorized denominations. No Trust Certificate shall entitle its holder to
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any benefit under this Agreement, or shall be valid for any purpose, unless
there shall appear on such Trust Certificate a certificate of authentication
substantially in the form set forth in Exhibit A, executed by the Eligible
Lender Trustee or The Chase Manhattan Bank, as the Eligible Lender Trustee's
authenticating agent, by manual signature; such authentication shall constitute
conclusive evidence that such Trust Certificate shall have been duly
authenticated and delivered hereunder. All Trust Certificates shall be dated the
date of their authentication. No further Trust Certificates shall be issued
except pursuant to Section 3.4, 3.5 or 3.12 hereunder.
SECTION III.4 Registration of Transfer and Exchange of Trust
Certificates. The Certificate Registrar shall keep or cause to be kept, at the
office or agency maintained pursuant to Section 3.8, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Eligible
Lender Trustee shall provide for the registration of Trust Certificates and of
transfers and exchanges of Trust Certificates as herein provided.
The Chase Manhattan Bank shall be the initial Certificate Registrar.
Upon surrender for registration of transfer of any Trust Certificate
at the office or agency maintained pursuant to Section 3.8, the Eligible Lender
Trustee shall execute, authenticate and deliver (or shall cause The Chase
Manhattan Bank as its authenticating agent to authenticate and deliver), in the
name of the designated transferee or transferees, one or more new Trust
Certificates in authorized denominations of a like aggregate amount dated the
date of authentication by the Eligible Lender Trustee or any authenticating
agent. At the option of a Certificateholder, Trust Certificates may be exchanged
for other Trust Certificates of authorized denominations of a like aggregate
amount upon surrender of the Trust Certificates to be exchanged at the office or
agency maintained pursuant to Section 3.8.
Every Trust Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Eligible Lender Trustee and the Certificate Registrar
duly executed by the Certificateholder or his attorney duly authorized in
writing, with such signature guaranteed by a member firm of the New York Stock
Exchange or a commercial bank or trust company. Each Trust Certificate
surrendered for registration of transfer or exchange shall be cancelled and
subsequently disposed of by the Eligible Lender Trustee in accordance with its
customary practice.
No service charge shall be made for any registration of transfer or
exchange of Trust Certificates, but the Eligible Lender Trustee or the
Certificate Registrar may require payment
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of a sum sufficient to cover any tax or governmental charge that may be imposed
in connection with any transfer or exchange of Trust Certificates.
The preceding provisions of this Section notwithstanding, the
Eligible Lender Trustee shall not be required to make and the Certificate
Registrar need not register transfers or exchanges of Trust Certificates for a
period of 15 days preceding any Distribution Date with respect to the Trust
Certificates.
The Trust Certificates and any beneficial interest in such Trust
Certificates may not be acquired by (a) employee benefit plans (as defined in
section 3(3) of ERISA) that are subject to the provisions of Title I of ERISA,
(b) plans described in section 4975(e)(1) of the Code, including individual
retirement accounts described in Section 408(a) of the Code or Keogh plans, or
(c) entities whose underlying assets include plan assets by reason of a plan's
investment in such entities (each, a "Benefit Plan"). By accepting and holding a
Trust Certificate or an interest therein, the Certificateholder thereof or
Certificate Owner thereof shall be deemed to have represented and warranted that
it is not a Benefit Plan, is not purchasing Trust Certificates on behalf of a
Benefit Plan and is not using assets of a Plan to purchase any Certificates and
to have agreed that if the Trust Certificate is deemed to be a plan asset, the
Certificateholder will promptly dispose of the Trust Certificate.
SECTION III.5 Mutilated, Destroyed, Lost or Stolen Trust
Certificates. If (a) any mutilated Trust Certificate shall be surrendered to the
Certificate Registrar, or if the Certificate Registrar shall receive evidence to
its satisfaction of the destruction, loss or theft of any Trust Certificate, and
(b) there shall be delivered to the Certificate Registrar and the Eligible
Lender Trustee such security or indemnity as may be required by them to save
each of them and the Trust harmless, then in the absence of notice that such
Trust Certificate shall have been acquired by a bona fide purchaser, the
Eligible Lender Trustee on behalf of the Trust shall execute and the Eligible
Lender Trustee shall authenticate and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Trust Certificate, a new Trust
Certificate of like tenor and denomination. In connection with the issuance of
any new Trust Certificate under this Section, the Eligible Lender Trustee and
the Certificate Registrar may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in connection
therewith. Any duplicate Trust Certificate issued pursuant to this Section shall
constitute conclusive evidence of ownership in the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Trust Certificate shall be
found at any time.
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SECTION III.6 Persons Deemed Owners. Prior to due presentation of a
Trust Certificate for registration of transfer, the Eligible Lender Trustee and
the Certificate Registrar and any agent of either of them may treat the Person
in whose name any Trust Certificate shall be registered in the Certificate
Register as the owner of such Trust Certificate for the purpose of receiving
distributions pursuant to Section 5.1 and for all other purposes whatsoever, and
neither the Eligible Lender Trustee, the Certificate Registrar nor any agent
thereof shall be bound by any notice to the contrary.
SECTION III.7 Access to List of Certificateholders' Names and
Addresses. The Eligible Lender Trustee shall furnish or cause to be furnished to
the Depositor, within 15 days after receipt by the Eligible Lender Trustee of a
request therefor from the Depositor in writing, a list, in such form as the
Depositor may reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date. If three or more
Certificateholders or one or more Certificateholders evidencing not less than
25% of the Certificate Balance apply in writing to the Eligible Lender Trustee,
and such application states that the applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Trust Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Eligible Lender
Trustee shall, within five Business Days after the receipt of such application,
afford such applicants access during normal business hours to the current list
of Certificateholders. Upon receipt of any such application, the Eligible Lender
Trustee shall promptly notify the Depositor by providing a copy of such
application and a copy of the list of Certificateholders produced in response
thereto. Each Certificateholder, by receiving and holding a Trust Certificate,
shall be deemed to have agreed not to hold any of the Depositor, the Certificate
Registrar or the Eligible Lender Trustee accountable by reason of the disclosure
of its name and address, regardless of the source from which such information
was derived.
SECTION III.8 Maintenance of Office or Agency. The Eligible Lender
Trustee shall maintain in the Borough of Brooklyn, The City of New York, an
office or offices or agency or agencies where Trust Certificates may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Eligible Lender Trustee in respect of the Trust
Certificates and the other Basic Documents may be served. The Eligible Lender
Trustee initially designates 802 Delaware Avenue, Wilmington, Delaware, as its
principal Corporate Trust Office. The Eligible Lender Trustee's New York office
and its authenticating agent's office are located at 450 West 33rd Street, 15th
Floor, New York, New York 10001, Attention: Structured Finance Services. The
Eligible Lender Trustee shall
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give prompt written notice to the Depositor and to the Certificateholders of any
change in the location of the Certificate Register or any such office or agency.
SECTION III.9 Appointment of Certificate Paying Agent. The
Certificate Paying Agent shall make distributions to Certificateholders from the
amounts received from the Indenture Trustee out of the Trust Accounts pursuant
to Section 5.1 and shall report the amounts of such distributions to the
Eligible Lender Trustee. Any Certificate Paying Agent shall have the revocable
power to receive such funds from the Indenture Trustee for the purpose of making
the distributions referred to above. The Eligible Lender Trustee may revoke such
power and remove the Certificate Paying Agent if the Eligible Lender Trustee
determines in its sole discretion that the Certificate Paying Agent shall have
failed to perform its obligations under this Agreement in any material respect.
The Certificate Paying Agent shall initially be the Eligible Lender Trustee, and
any co-paying agent chosen by the Eligible Lender Trustee and consented to by
the Administrator (which consent shall not be unreasonably withheld). The
copaying agent shall initially be the Indenture Trustee. The Eligible Lender
Trustee shall be permitted to resign as Certificate Paying Agent upon 30 days'
written notice to the Eligible Lender Trustee. In the event that the Eligible
Lender Trustee shall no longer be the Certificate Paying Agent, the Eligible
Lender Trustee shall appoint a successor to act as Certificate Paying Agent
(which shall be a bank or trust company). The Eligible Lender Trustee shall give
notice to the Rating Agencies of the appointment of a successor Paying Agent.
The Eligible Lender Trustee shall cause such successor Certificate Paying Agent
or any additional Certificate Paying Agent appointed by the Eligible Lender
Trustee to execute and deliver to the Eligible Lender Trustee an instrument in
which such successor Certificate Paying Agent or additional Certificate Paying
Agent shall agree with the Eligible Lender Trustee that as Certificate Paying
Agent, such successor Certificate Paying Agent or additional Certificate Paying
Agent will hold all sums, if any, held by it for payment to the
Certificateholders in trust for the benefit of the Certificateholder entitled
thereto until such sums shall be paid to such Certificateholder. The Certificate
Paying Agent shall return all unclaimed funds to the Eligible Lender Trustee and
upon removal of a Certificate Paying Agent such Certificate Paying Agent shall
also return all funds in its possession to the Eligible Lender Trustee. The
provisions of Sections 7.1, 7.3, 7.4, 7.5 and 8.1 shall apply to the Eligible
Lender Trustee also in its role as Certificate Paying Agent, for so long as the
Eligible Lender Trustee shall act as Certificate Paying Agent and, to the extent
applicable, to any other paying agent appointed hereunder. Any reference in this
Agreement to the Certificate Paying Agent shall include any copaying agent
unless the context requires otherwise.
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SECTION III.10 Book-Entry Certificates. The Trust Certificates, upon
original issuance, will be issued in the form of a typewritten Trust Certificate
or Trust Certificates representing Book-Entry Certificates, to be delivered to
The Depository Trust Company, the initial Clearing Agency, by, or on behalf of,
the Trust. Such Book-Entry Certificate or Book-Entry Certificates shall
initially be registered on the Certificate Register in the name of Cede & Co.,
the nominee of the initial Clearing Agency, and no Certificate owner will
receive a Definitive Certificate representing such Certificate Owner's interest
in such Trust Certificate, except as provided in Section 3.12. Unless and until
definitive, fully registered Trust Certificates (the "Definitive Certificates")
have been issued to Certificate owners pursuant to Section 3.12:
(i) the provisions of this Section shall be in full
force and effect;
(ii) the Certificate Registrar and the Eligible Lender
Trustee shall be entitled to deal with the Clearing Agency for all
purposes of this Agreement (including the payment of principal of
and interest on the Trust Certificates and the giving of
instructions or directions hereunder) as the sole Certificateholder
and shall have no obligation to the Certificate owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Agreement, the provisions
of this Section shall control;
(iv) the rights of Certificate Owners shall be exercised
only through the Clearing Agency and shall be limited to those
established by law and agreements between such Certificate Owners
and the Clearing Agency and/or the Clearing Agency Participants.
Pursuant to the Certificate Depository Agreement, unless and until
Definitive Certificates are issued pursuant to Section 3.12, the
initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit distribution
in respect of the Certificate Balance and return on the Trust
Certificates to such Clearing Agency Participants; and
(v) whenever this Agreement requires or permits actions
to be taken based upon instructions or directions of
Certificateholders of Trust Certificates evidencing a specified
percentage of the Certificate Balance, the Clearing Agency shall be
deemed to represent such percentage only to the extent that it has
received instructions to such effect from Certificate Owners and/or
Clearing Agency Participants owning or representing, respectively,
such required percentage of the beneficial interest in the Trust
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Certificates and has delivered such instructions to the Eligible
Lender Trustee.
SECTION III.11 Notices to Clearing Agency. Whenever a notice or
other communication to the Certificateholders is required under this Agreement,
unless and until Definitive Certificates shall have been issued to Certificate
Owners pursuant to Section 3.12, the Eligible Lender Trustee shall give all such
notices and communications specified herein to be given to Certificateholders to
the Clearing Agency, and shall have no obligations to the Certificate Owners.
SECTION III.12 Definitive Certificates. If (i) the Administrator
advises the Eligible Lender Trustee in writing that the Clearing Agency is no
longer willing or able to discharge properly its responsibilities with respect
to the Trust Certificates, and the Administrator is unable to locate a qualified
successor, (ii) the Administrator at its option advises the Eligible Lender
Trustee in writing that it elects to terminate the book-entry system through the
Clearing Agency or (iii) after the occurrence of an Event of Default, a Servicer
Default or an Administrator Default, Certificate Owners representing beneficial
interests aggregating at least a majority of the Certificate Balance advise the
Clearing Agency (which shall then notify the Eligible Lender Trustee) in writing
that the continuation of a book-entry system through the Clearing Agency is no
longer in the best interest of the Certificate Owners, then the Eligible Lender
Trustee shall cause the Clearing Agency to notify all Certificate Owners of the
occurrence of any such event and of the availability of the Definitive
Certificates to Certificate Owners requesting the same. Upon surrender to the
Eligible Lender Trustee of the typewritten Trust Certificate or Trust
Certificates representing the Book-Entry Certificates by the Clearing Agency,
accompanied by registration instructions, the Eligible Lender Trustee shall
execute and authenticate the Definitive Certificates in accordance with the
instructions of the Clearing Agency. Neither the Certificate Registrar nor the
Eligible Lender Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Certificates, the Eligible
Lender Trustee shall recognize the registered holders of the Definitive
Certificates as Certificateholders. The Definitive Certificates shall, at the
expense of the Depositor, be printed, lithographed or engraved or may be
produced in any other manner as is reasonably acceptable to the Eligible Lender
Trustee, as evidenced by its execution thereof.
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ARTICLE IV
Actions by Eligible Lender Trustee
SECTION IV.1 Prior Notice to Certificateholders With Respect to
Certain Matters. With respect to the following matters, the Eligible Lender
Trustee shall not take action unless at least 30 days before the taking of such
action, the Eligible Lender Trustee shall have notified the Certificateholders
and each of the Rating Agencies in writing of the proposed action and the
Certificateholders shall not have notified the Eligible Lender Trustee in
writing prior to the 30th day after such notice is given that such
Certificateholders have withheld consent or provided alternative direction:
(a) the initiation of any material claim or lawsuit by the
Trust (except claims or lawsuits brought in connection
with the collection of the Trust Student Loans) and the
compromise of any material action, claim or lawsuit
brought by or against the Trust (except with respect to
the aforementioned claims or lawsuits for collection of
Trust Student Loans);
(b) the amendment of the Indenture by a supplemental
indenture in circumstances where the consent of any
Noteholder is required;
(c) the amendment of the Indenture by a supplemental
indenture in circumstances where the consent of any
Noteholder is not required and such amendment materially
adversely affects the interest of the
Certificateholders;
(d) the amendment, change or modification of the
Administration Agreement, except to cure any ambiguity
or to amend or supplement any provision in a manner or
add any provision that would not materially adversely
affect the interests of the Certificateholders; or
(e) the appointment pursuant to the Administration Agreement
of a successor Administrator, the appointment pursuant
to the Indenture of a successor Note Registrar, Paying
Agent or Indenture Trustee, or the appointment pursuant
to this Agreement of a successor Certificate Registrar
or successor Certificate Paying Agent, or the consent to
the assignment by the Administrator, the Note Registrar,
the Paying Agent, the Indenture Trustee, the Certificate
Registrar or the Certificate Paying Agent of its
obligations under the
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Administration Agreement, the Indenture or this
Agreement, as applicable.
SECTION IV.2 Action by Certificateholders with Respect to Certain
Matters. The Eligible Lender Trustee shall not have the power, except upon the
written direction of the Certificateholders and except as expressly provided in
the Basic Documents, to sell the Trust Student Loans after the termination of
the Indenture.
SECTION IV.3 Action by Certificateholders with Respect to
Bankruptcy. The Eligible Lender Trustee shall not have the power to commence a
voluntary proceeding in bankruptcy relating to the Trust without the unanimous
prior approval of all Certificateholders (other than the Depositor) and the
delivery to the Eligible Lender Trustee by each such Certificateholder of a
certificate certifying that such Certificateholder reasonably believes that the
Trust is insolvent.
SECTION IV.4 Restrictions on Certificateholders' Power. The
Certificateholders shall not direct the Eligible Lender Trustee to take or
refrain from taking any action if such action or inaction would be contrary to
any obligation of the Trust or the Eligible Lender Trustee under this Agreement
or any of the other Basic Documents or would be contrary to Section 2.3 nor
shall the Eligible Lender Trustee be permitted to follow any such direction, if
given.
SECTION IV.5 Majority Control. Except as expressly provided herein,
any action that may be taken by the Certificateholders under this Agreement may
be taken by the Certificateholders of Trust Certificates evidencing a majority
of the Certificate Balance. Except as expressly provided herein, any written
notice of the Certificateholders delivered pursuant to this Agreement shall be
effective if signed by Certificateholders of Trust Certificates evidencing not
less than a majority of the Certificate Balance at the time of the delivery of
such notice.
ARTICLE V
Application of Trust Funds; Certain Duties
SECTION V.1 Application of Trust Funds.
(a) On each Distribution Date, the Eligible Lender Trustee
shall distribute to Certificateholders (i) the
Certificateholders' Return Distribution Amount for such
Distribution Date on a pro rata basis according to
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amounts payable in respect of Certificateholders' Return
Distribution Amount, (ii) the Certificate Balance
Distribution Amount for such Distribution Date, if any,
on a pro rata basis according to amounts payable in
respect of the Certificate Balance, and (iii) the
Certificate Return Carryover for such Distribution Date,
if any, on a pro rata basis according to amounts payable
in respect of Certificate Return Carryover, as received
from the Indenture Trustee pursuant to Sections 2.7 and
2.8 of the Administration Agreement on such Distribution
Date.
(b) On each Distribution Date, the Eligible Lender Trustee
shall send to each Certificateholder the statement
provided to the Eligible Lender Trustee by the
Administrator pursuant to Section 2.9 of the
Administration Agreement on such Distribution Date.
(c) In the event that any withholding tax is imposed on the
Trust's payment (or allocations of income) to a
Certificateholder, such tax shall reduce the amount
otherwise distributable to the Certificateholder in
accordance with this Section. The Eligible Lender
Trustee is hereby authorized and directed to retain from
amounts otherwise distributable to the
Certificateholders sufficient funds for the payment of
any tax that is legally owed by the Trust (but such
authorization shall not prevent the Eligible Lender
Trustee from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if
permitted by law, pending the outcome of such
proceedings). The amount of any withholding tax imposed
with respect to a Certificateholder shall be treated as
cash distributed to such Certificateholder at the time
it is withheld by the Trust to be remitted to the
appropriate taxing authority. The Eligible Lender
Trustee shall withhold or cause to be withheld at the
maximum applicable rate provided in section 1441, 1442
or 1446 of the Code with respect to all distributions
made to persons that are not known to be U.S. Persons,
within the meaning of the Code, unless it is otherwise
determined in the opinion of counsel. In the event that
a Certificateholder wishes to apply for a refund of any
such withholding tax, the Eligible Lender Trustee shall
reasonably cooperate with such Certificateholder in
making such claim so long as such Certificateholder
agrees to reimburse the Eligible Lender Trustee for any
out-of-pocket expenses incurred.
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SECTION V.2 Method of Payment. Subject to Section 9.1(c),
distributions required to be made to Certificateholders on any Distribution Date
shall be made to each Certificateholder of record on the preceding Record Date
either by wire transfer, in immediately available funds, to the account of such
Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder shall have provided to the Certificate
Registrar appropriate written instructions signed by two authorized officers, if
any, at least five Business Days prior to such Distribution Date and such
Certificateholder's Trust Certificates in the aggregate evidence a denomination
of not less than $1,000,000, or, if not, by check mailed to such
Certificateholder at the address of such Certificateholder appearing in the
Certificate Register; provided, however, that, unless Definitive Certificates
have been issued pursuant to Section 3.12, with respect to Trust Certificates
registered on the Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be Cede & Co.), distributions will be made by wire
transfer in immediately available funds to the account designated by such
nominee. Notwithstanding the foregoing, the final distribution in respect of any
Trust Certificate (whether on the Certificate Final Maturity Date or otherwise)
shall be payable only upon presentation and surrender of such Trust Certificate
at the Corporate Trust Office of the Eligible Lender Trustee or such other
location specified in writing to the Certificateholder thereof.
SECTION V.3 No Segregation of Moneys; No Interest. Subject to
Section 5.1, moneys received by the Eligible Lender Trustee hereunder need not
be segregated in any manner except to the extent required by law or the
Administration Agreement and may be deposited under such general conditions as
may be prescribed by law, and the Eligible Lender Trustee shall not be liable
for any interest thereon.
SECTION V.4 Accounting and Reports to the Noteholders,
Certificateholders, the Internal Revenue Service and Others. The Eligible Lender
Trustee shall (a) maintain (or cause to be maintained) the books of the Trust on
a calendar year basis on the accrual method of accounting, (b) deliver (or cause
to be delivered) to each Certificateholder (and to each Person who was a
Certificateholder at any time during the applicable calendar year), as may be
required by the Code and applicable Treasury Regulations, such information as
may be required (including Schedule K-1) to enable each such Certificateholder
to prepare its Federal and state income tax returns, (c) file (or cause to be
filed) such tax returns relating to the Trust (including a partnership
information return, Internal Revenue Service Form 1065), and make such elections
as may from time to time be
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required or appropriate under any applicable state or Federal statute or rule or
regulation thereunder so as to maintain the Trust's characterization as a
partnership for Federal income tax purposes, (d) cause such tax returns to be
signed in the manner required by law and (e) collect (or cause to be collected)
any withholding tax as described in and in accordance with Section 5.1(c) with
respect to income or distributions to Certificateholders. The Eligible Lender
Trustee shall elect under Section 1278 of the Code to include in income
currently any market discount that accrues with respect to the Trust Student
Loans. The Eligible Lender Trustee shall not make the election provided under
Section 754 of the Code. The Eligible Lender Trustee shall be entitled to hire
an independent accounting firm to perform the functions described in this
Section 5.4 the reasonable fees and expenses of which shall be paid by the
Depositor.
SECTION V.5 Signature on Returns; Tax Matters Partner.
(a) The Eligible Lender Trustee shall sign on behalf of the
Trust the tax returns of the Trust, unless applicable
law requires a Certificateholder to sign such documents,
in which case such documents shall be signed by the
Depositor.
(b) The Depositor shall be designated the "tax matters
partner" of the Trust pursuant to Section 6231(a)(7)(A)
of the Code and applicable Treasury Regulations.
SECTION V.6 Capital Accounts. The Trust shall maintain accounts
("Capital Accounts") with respect to each Certificateholder (including the
Depositor) in accordance with the following provisions:
(a) Each Certificateholder's Capital Account shall be
increased by the Capital Contributions (as defined
below) of such Certificateholder, such
Certificateholder's distributive share of gross income
(and any Liquidating Profits) and any items in the
nature of income or gain which are specially allocated
to such Certificateholder pursuant to Section 2.10(b) of
this Agreement.
(b) Each Certificateholder's Capital Account shall be
reduced by any amount distributed to such
Certificateholder (including, in the case of the
Depositor, any amount released or otherwise distributed
to the Depositor from the Reserve Account under Sections
2.8C(G) and 2.8D of the Administration Agreement) and
such Certificateholder's distributive
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share of Losses and deductions (and any Liquidating
Loss), including any special allocation pursuant to
Section 2.10(b).
(c) In the event all or a portion of a Certificate is
transferred in accordance with the terms of this
Agreement, the transferee shall succeed to the Capital
Account of the transferor to the extent it related to
such Certificate or a portion thereof.
(d) Notwithstanding the above, the Capital Accounts shall be
adjusted in accordance with the provisions governing the
economic rights of the Certificateholders, as set forth
herein and in the Basic Documents.
"Capital Contribution" means the amount of any cash and the fair
market value of any property contributed to the Trust by a Certificateholder
(including any amounts deemed to be contributed in connection with the original
issuance of the Certificates), including, in the case of the Depositor, the fair
market value of the Trust Student Loans deemed to be contributed by the
Depositor to the Trust, taking into account the provisions of Section
707(a)(2)(B) of the Code and the Regulations thereunder. The foregoing
provisions and the other provisions of this Agreement relating to the
maintenance of Capital Accounts are intended to comply with section 1.704-1(b)
of the Treasury Regulations and shall be interpreted in a manner consistent
therewith.
ARTICLE VI
Authority and Duties of Eligible Lender Trustee
SECTION VI.1 General Authority. The Eligible Lender Trustee is
authorized and directed to execute and deliver the Basic Documents to which the
Trust is to be a party and each certificate or other document attached as an
exhibit to or contemplated by the Basic Documents to which the Trust is to be a
party, in each case, in such form as the Depositor shall approve as evidenced
conclusively by the Eligible Lender Trustee's execution thereof, and, on behalf
of the Trust, to direct the Indenture Trustee to authenticate and deliver Notes
in the aggregate principal amount of $2,477,000,000. The Eligible Lender Trustee
is also authorized and directed on behalf of the Trust (i) to acquire and hold
legal title to the Trust Student Loans from the Depositor and (ii) to take all
actions required pursuant to Section 3.2C of the Administration Agreement and
otherwise follow the direction of and cooperate with the Servicer in submitting,
pursuing and collecting any claims to and with the
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Department with respect to any Interest Subsidy Payments and Special Allowance
Payments relating to the Trust Student Loans.
In addition to the foregoing, the Eligible Lender Trustee is
authorized to take all actions required of the Trust pursuant to the Basic
Documents. The Eligible Lender Trustee is further authorized from time to time
to take such action as the Administrator directs or instructs with respect to
the Basic Documents and is directed to take such action to the extent that the
Administrator is expressly required pursuant to the Basic Documents to cause the
Eligible Lender Trustee to act.
SECTION VI.2 General Duties. It shall be the duty of the Eligible
Lender Trustee to discharge (or cause to be discharged) all its responsibilities
pursuant to the terms of this Agreement and the other Basic Documents to which
the Trust is a party and to administer the Trust in the interest of the
Certificateholders, subject to and in accordance with the provisions of this
Agreement and the other Basic Documents. Without limiting the foregoing, the
Eligible Lender Trustee shall on behalf of the Trust file and prove any claim or
claims that may exist on behalf of the Trust against the Depositor in connection
with any claims paying procedure as part of an insolvency or a receivership
proceeding involving the Depositor. Notwithstanding the foregoing, the Eligible
Lender Trustee shall be deemed to have discharged its duties and
responsibilities hereunder and under the other Basic Documents to the extent the
Administrator has agreed in the Administration Agreement to perform and act or
to discharge any duty of the Eligible Lender Trustee hereunder or under any
other Basic Document, and the Eligible Lender Trustee shall not be held liable
for the default or failure of the Administrator to carry out its obligations
under the Administration Agreement. Except as expressly provided in the Basic
Documents, the Eligible Lender Trustee shall have no obligation to administer,
service or collect the Trust Student Loans or to maintain, monitor or otherwise
supervise the administration, servicing or collection of the Trust Student
Loans.
SECTION VI.3 Action upon Instruction.
(a) [Reserved]
(b) The Eligible Lender Trustee shall not be required to
take any action hereunder or under any other Basic
Document if the Eligible Lender Trustee shall have
reasonably determined, or shall have been advised by
counsel, that such action is likely to result in
liability on the part of the Eligible Lender Trustee or
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is contrary to the terms hereof or of any other Basic
Document or is otherwise contrary to law.
(c) Whenever the Eligible Lender Trustee is unable to
determine the appropriate course of action between
alternative courses and actions permitted or required by
the terms of this Agreement or under any other Basic
Document, the Eligible Lender Trustee shall promptly
give notice (in such form as shall be appropriate under
the circumstances) to the Certificateholders requiring
instruction as to the course of action to be adopted,
and to the extent the Eligible Lender Trustee acts in
good faith in accordance with any written instruction of
the Certificateholders received, the Eligible Lender
Trustee shall not be liable on account of such action to
any Person. If the Eligible Lender Trustee shall not
have received appropriate instruction within 10 days of
such notice (or within such shorter period of time as
reasonably may be specified in such notice or may be
necessary under the circumstances) it may, but shall be
under no duty to, take or refrain from taking such
action, not inconsistent with this Agreement or the
other Basic Documents, as it shall deem to be in the
best interests of the Certificateholders, and shall have
no liability to any Person for such action or inaction.
(d) In the event that the Eligible Lender Trustee is unsure
as to the application of any provision of this Agreement
or any other Basic Document or any such provision is
ambiguous as to its application, or is, or appears to
be, in conflict with any other applicable provision, or
in the event that this Agreement permits any
determination by the Eligible Lender Trustee or is
silent or is incomplete as to the course of action that
the Eligible Lender Trustee is required to take with
respect to a particular set of facts, the Eligible
Lender Trustee may give notice (in such form as shall be
appropriate under the circumstances) to the
Certificateholders requesting instruction and, to the
extent that the Eligible Lender Trustee acts or refrains
from acting in good faith in accordance with any such
instruction received, the Eligible Lender Trustee shall
not be liable, on account of such action or inaction, to
any Person. If the Eligible Lender Trustee shall not
have received appropriate instruction within 10 days of
such notice (or within such shorter period of time as
reasonably may be specified in such notice or may be
necessary under the circumstances) it may, but shall be
under no duty to, take or refrain from taking such
action, not inconsistent with this
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Agreement or the other Basic Documents, as it shall deem
to be in the best interest of the Certificateholders,
and shall have no liability to any Person for such
action or inaction.
SECTION VI.4 No Duties Except as Specified in this Agreement or in
Instructions. The Eligible Lender Trustee shall not have any duty or obligation
to manage, make any payment with respect to, register, record, sell, service,
dispose of or otherwise deal with the Trust Estate, or to otherwise take or
refrain from taking any action under, or in connection with, any document
contemplated hereby to which the Eligible Lender Trustee is a party, except as
expressly provided by the terms of this Agreement or in any document or written
instruction received by the Eligible Lender Trustee pursuant to Section 6.3; and
no implied duties or obligations shall be read into this Agreement or any other
Basic Document against the Eligible Lender Trustee. The Eligible Lender Trustee
shall have no responsibility for filing any financing or continuation statement
in any public office at any time or to otherwise perfect or maintain the
perfection of any security interest or lien granted to it hereunder or to
prepare or file any Commission filing for the Trust or to record this Agreement
or any other Basic Document. The Eligible Lender Trustee nevertheless agrees
that it will, at its own cost and expense, promptly take all action as may be
necessary to discharge any Liens on any part of the Trust Estate that result
from actions by, or claims against, Chase Manhattan Bank USA, National
Association in its individual capacity or as the Eligible Lender Trustee that
are not related to the ownership or the administration of the Trust Estate.
SECTION VI.5 No Action Except Under Specified Documents or
Instructions. The Eligible Lender Trustee shall not otherwise deal with any part
of the Trust Estate except (i) in accordance with the powers granted to and the
authority conferred upon the Eligible Lender Trustee pursuant to this Agreement,
(ii) in accordance with the other Basic Documents to which it is a party and
(iii) in accordance with any document or instruction delivered to the Eligible
Lender Trustee pursuant to Section 6.3.
SECTION VI.6 Restrictions. The Eligible Lender Trustee shall not
take any action (a) that is inconsistent with the purposes of the Trust set
forth in Section 2.3 or (b) that, to the actual knowledge of the Eligible Lender
Trustee, would result in the Trust's becoming taxable as a corporation for
Federal income tax purposes. The Certificateholders shall not direct the
Eligible Lender Trustee to take action that would violate the provisions of this
Section.
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ARTICLE VII
Concerning the Eligible Lender Trustee
SECTION VII.1 Acceptance of Trusts and Duties. The Eligible Lender
Trustee accepts the trusts hereby created and agrees to perform its duties
hereunder with respect to such trusts but only upon the terms of this Agreement.
The Eligible Lender Trustee also agrees to disburse all moneys actually received
by it constituting part of the Trust Estate upon the terms of this Agreement and
the other Basic Documents. The Eligible Lender Trustee shall not be answerable
or accountable hereunder or under any other Basic Document under any
circumstances, except (i) for its own willful misconduct or negligence or (ii)
in the case of the inaccuracy of any representation or warranty contained in
Section 7.3 expressly made by the Eligible Lender Trustee. In particular, but
not by way of limitation (and subject to the exceptions set forth in the
preceding sentence):
(a) the Eligible Lender Trustee shall not be liable for any
error of judgment made by a responsible officer of the
Eligible Lender Trustee;
(b) the Eligible Lender Trustee shall not be liable with
respect to any action taken or omitted to be taken by it
in accordance with the direction or instructions of the
Administrator or any Certificateholder;
(c) no provision of this Agreement or any other Basic
Document shall require the Eligible Lender Trustee to
expend or risk funds or otherwise incur any financial
liability in the performance of any of its rights or
powers hereunder or under any other Basic Document, if
the Eligible Lender Trustee shall have reasonable
grounds for believing that repayment of such funds or
adequate indemnity against such risk or liability is not
reasonably assured or provided to it;
(d) under no circumstances shall the Eligible Lender Trustee
be liable for indebtedness evidenced by or arising under
any of the Basic Documents, including the principal of
and interest on the Notes;
(e) the Eligible Lender Trustee shall not be responsible for
or in respect of the validity or sufficiency of this
Agreement or for the due execution hereof by the
Depositor or for the form, character, genuineness,
sufficiency, value or validity of any of the Trust
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Estate or for or in respect of the validity or
sufficiency of the Basic Documents, other than the
certificate of authentication on the Trust Certificates,
and the Eligible Lender Trustee shall in no event assume
or incur any liability, duty, or obligation to any
Noteholder or to any Certificateholder, other than as
expressly provided for herein and in the other Basic
Documents;
(f) the Eligible Lender Trustee shall not be liable for the
action or inaction, default or misconduct of the
Administrator, the Depositor, the Indenture Trustee or
the Servicer under any of the other Basic Documents or
otherwise and the Eligible Lender Trustee shall have no
obligation or liability to perform the obligations of
the Trust under this Agreement or the other Basic
Documents that are required to be performed by the
Administrator under the Administration Agreement, the
Indenture Trustee under the Indenture or the Servicer
under the Servicing Agreement; and
(g) the Eligible Lender Trustee shall be under no obligation
to exercise any of the rights or powers vested in it by
this Agreement, or to institute, conduct or defend any
litigation under this Agreement or otherwise or in
relation to this Agreement or any other Basic Document,
at the request, order or direction of any of the
Certificateholders, unless such Certificateholders have
offered to the Eligible Lender Trustee security or
indemnity satisfactory to it against the costs, expenses
and liabilities that may be incurred by the Eligible
Lender Trustee therein or thereby. The right of the
Eligible Lender Trustee to perform any discretionary act
enumerated in this Agreement or in any other Basic
Document shall not be construed as a duty, and the
Eligible Lender Trustee shall not be answerable for
other than its negligence or willful misconduct in the
performance of any such act.
SECTION VII.2 Furnishing of Documents. The Eligible Lender Trustee
shall furnish to the Certificateholders promptly upon receipt of a written
request therefor, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and any other instruments furnished
to the Eligible Lender Trustee under the Basic Documents. On each Distribution
Date the Eligible Lender Trustee shall provide to each Certificateholder of
record as of the related Record Date the information provided by the
Administrator to the Eligible Lender
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Trustee on the related Determination Date pursuant to Section 2.9 of the
Administration Agreement.
SECTION VII.3 Representations and Warranties. The Eligible Lender
Trustee hereby represents and warrants to the Depositor, for the benefit of the
Certificateholders, that:
(a) It is duly organized and validly existing in good
standing under the laws of its governing jurisdiction
and has an office located within the State of Delaware.
It has all requisite corporate power and authority to
execute, deliver and perform its obligations under this
Agreement.
(b) It has taken all corporate action necessary to authorize
the execution and delivery by it of this Agreement, and
this Agreement will be executed and delivered by one of
its officers who is duly authorized to execute and
deliver this Agreement on its behalf.
(c) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the
transactions contemplated hereby nor compliance by it
with any of the terms or provisions hereof will
contravene any Federal or Delaware state law,
governmental rule or regulation governing the banking or
trust powers of the Eligible Lender Trustee or any
judgment or order binding on it, or constitute any
default under its charter documents or by-laws or any
indenture, mortgage, contract, agreement or instrument
to which it is a party or by which any of its properties
may be bound.
(d) It is and will maintain its status as an "eligible
lender" (as such term is defined in Section 435(d) of
the Higher Education Act) for purposes of holding legal
title to the Trust Student Loans as contemplated by this
Agreement and the other Basic Documents, it has a lender
identification number with respect to the Trust Student
Loans from the Department and has and will maintain in
effect a Guarantee Agreement with each of the Guarantors
with respect to the Trust Student Loans.
SECTION VII.4 Reliance; Advice of Counsel.
(a) The Eligible Lender Trustee shall incur no liability to
anyone in acting upon any signature, instrument,
direction, notice, resolution, request, consent, order,
certificate, report, opinion, bond or other document or
paper believed by it to be genuine and believed by it
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to be signed by the proper party or parties. The
Eligible Lender Trustee may accept a certified copy of a
resolution of the board of directors or other governing
body of any corporate party as conclusive evidence that
such resolution has been duly adopted by such body and
that the same is in full force and effect. As to any
fact or matter the method of the determination of which
is not specifically prescribed herein, the Eligible
Lender Trustee may for all purposes hereof rely on a
certificate, signed by the president or any vice
president or by the treasurer or other authorized
officers of the relevant party, as to such fact or
matter and such certificate shall constitute full
protection to the Eligible Lender Trustee for any action
taken or omitted to be taken by it in good faith in
reliance thereon.
(b) In the exercise or administration of the trusts
hereunder and in the performance of its duties and
obligations under this Agreement or the other Basic
Documents, the Eligible Lender Trustee (i) may act
directly or through its agents or attorneys pursuant to
agreements entered into with any of them and the
Eligible Lender Trustee shall not be liable for the
conduct or misconduct of such agents or attorneys if
such agents or attorneys shall have been selected by the
Eligible Lender Trustee with reasonable care, and (ii)
may consult with counsel and accountants to be selected
with reasonable care and employed by it. The Eligible
Lender Trustee shall not be liable for anything done,
suffered or omitted in good faith by it in accordance
with the written opinion or advice of any such counsel
or accountants and not contrary to this Agreement or any
other Basic Document.
SECTION VII.5 Not Acting in Individual Capacity. Except as provided
in this Article VII, in accepting the trusts hereby created Chase Manhattan Bank
USA, National Association acts solely as Eligible Lender Trustee hereunder and
not in its individual capacity and all Persons having any claim against the
Eligible Lender Trustee by reason of the transactions contemplated by this
Agreement or any other Basic Document shall look only to the Trust Estate for
payment or satisfaction thereof.
SECTION VII.6 Eligible Lender Trustee Not Liable for Trust
Certificates or Trust Student Loans. The recitals contained herein and in the
Trust Certificates (other than the signature of and authentication by the
Eligible Lender Trustee on the Trust Certificates) shall be taken as the
statements of the Depositor
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and the Eligible Lender Trustee assumes no responsibility for the correctness
thereof. The Eligible Lender Trustee makes no representations as to the validity
or sufficiency of this Agreement, the Trust Certificates or any other Basic
Document (other than the signature of and authentication by the Eligible Lender
Trustee on the Trust Certificates) or the Notes, or of any Trust Student Loan or
related documents. The Eligible Lender Trustee shall at no time have any
responsibility (or liability except for willfully or negligently terminating or
allowing to be terminated any of the Guarantee Agreements, in a case where the
Eligible Lender Trustee knows of any facts or circumstances which will or could
reasonably be expected to result in any such termination) for or with respect to
the legality, validity, enforceability and eligibility for Guarantee Payments,
federal reinsurance, Interest Subsidy Payments or Special Allowance Payments, as
applicable, in respect of any Trust Student Loan, or for or with respect to the
sufficiency of the Trust Estate or its ability to generate the payments to be
distributed to Certificateholders under this Agreement or the Noteholders under
the Indenture, including the existence and contents of any computer or other
record of any Trust Student Loan; the validity of the assignment of any Trust
Student Loan to the Eligible Lender Trustee on behalf of the Trust; the
completeness of any Trust Student Loan; the performance or enforcement (except
as expressly set forth in any Basic Document) of any Trust Student Loan; the
compliance by the Depositor or the Servicer with any warranty or representation
made under any Basic Document or in any related document or the accuracy of any
such warranty or representation or any action or inaction of the Administrator,
the Indenture Trustee or the Servicer or any subservicer taken in the name of
the Eligible Lender Trustee.
SECTION VII.7 Eligible Lender Trustee May Own Trust Certificates and
Notes. The Eligible Lender Trustee in its individual or any other capacity may
become the owner or pledgee of Trust Certificates or Notes and may deal with the
Depositor, the Administrator, the Indenture Trustee and the Servicer in banking
transactions with the same rights as it would have if it were not Eligible
Lender Trustee.
ARTICLE VIII
Compensation and Indemnity of Eligible Lender Trustee
SECTION VIII.1 Eligible Lender Trustee's Fees and Expenses. The
Eligible Lender Trustee shall receive as compensation for its services hereunder
such fees as have been separately agreed upon before the date hereof between the
Depositor and the Eligible Lender Trustee, and the Eligible Lender Trustee shall
be
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entitled to be reimbursed by the Depositor, to the extent provided in such
separate agreement, for its other reasonable expenses (including the reasonable
fees and expenses of counsel and independent accountants) hereunder.
SECTION VIII.2 Payments to the Eligible Lender Trustee. Any amounts
paid to the Eligible Lender Trustee pursuant to Section 8.1 hereof or pursuant
to Section 9 of the Sale Agreement, Section 4.2 of the Administration Agreement
or Section 4.2 of the Servicing Agreement shall be deemed not to be a part of
the Trust Estate immediately after such payment.
SECTION VIII.3 Indemnity. The Depositor shall cause the
Administrator to indemnify the Eligible Lender Trustee in its individual
capacity and any of its officer, directors, employees and agents as and to the
extent provided for in Section 4.2 of the Administration Agreement.
ARTICLE IX
Termination of Trust Agreement
SECTION IX.1 Termination of Trust Agreement.
(a) This Agreement (other than Article VIII) and the Trust
shall terminate and be of no further force or effect
upon the earlier of (i) the final distribution by the
Eligible Lender Trustee of all moneys or other property
or proceeds of the Trust Estate in accordance with the
terms of the Indenture, the Administration Agreement and
Article V, and (ii) the time provided in Section 9.2.
The bankruptcy, liquidation, dissolution, death or
incapacity of any Certificateholder, other than the
Depositor as described in Section 9.2, shall not (x)
operate to terminate this Agreement or the Trust, nor
(y) entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to
take any action or proceeding in any court for a
partition or winding up of all or any part of the Trust
or Trust Estate nor (z) otherwise affect the rights,
obligations and liabilities of the parties hereto.
(b) Except as provided in Section 9.1(a), neither the
Depositor nor any Certificateholder shall be entitled to
revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the
Distribution Date upon which the Certificateholders
shall surrender their Trust Certificates to the
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Certificate Paying Agent for payment of the final
distribution and cancellation, shall be given promptly
by the Eligible Lender Trustee by letter to
Certificateholders mailed within five Business Days of
receipt of notice of such termination from the
Administrator given pursuant to Section 6.1C of the
Administration Agreement, stating (i) the Distribution
Date upon which final payment of the Trust Certificates
shall be made upon presentation and surrender of the
Trust Certificates at the office of the Certificate
Paying Agent therein designated, (ii) the amount of any
such final payment and (iii) that the Record Date
otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation
and surrender of the Trust Certificates at the office of
the Certificate Paying Agent therein specified. The
Eligible Lender Trustee shall give such notice to the
Certificate Registrar (if other than the Eligible Lender
Trustee) and the Certificate Paying Agent at the time
such notice is given to Certificateholders. Upon
presentation and surrender of the Trust Certificates,
the Certificate Paying Agent shall cause to be
distributed to Certificateholders amounts distributable
on such Distribution Date pursuant to Section 5.1.
In the event that all the Certificateholders shall not surrender
their Trust Certificates for cancellation within six months after the date
specified in the above mentioned written notice, the Eligible Lender Trustee
shall give a second written notice to the remaining Certificateholders to
surrender their Trust Certificates for cancellation and receive the final
distribution with respect thereto. If within one year after the second notice
all the Trust Certificates shall not have been surrendered for cancellation, the
Eligible Lender Trustee may take appropriate steps, or may appoint an agent to
take appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Trust Certificates, and the cost thereof shall be paid out of
the funds and other assets that shall remain subject to this Agreement. Any
funds remaining in the Trust after exhaustion of such remedies and no later than
five years after the first such notice shall be distributed by the Eligible
Lender Trustee to the Depositor.
Upon final distribution of any funds remaining in the Trust, the
Eligible Lender Trustee shall file a certificate of cancellation of the Trust's
certificate of trust pursuant to Section 3810(c) of the Delaware Business Trust
Act.
SECTION IX.2 Dissolution upon Insolvency of the Depositor.
Notwithstanding the provisions of Section 3808 of the Delaware
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Business Trust Act, in the event that an Insolvency Event shall occur with
respect to the Depositor, (x) the Trust created hereunder shall dissolve and (y)
this Agreement shall be terminated in accordance with Section 9.1 90 days after
the date of such Insolvency Event. Promptly after the occurrence of any
Insolvency Event with respect to the Depositor, (i) the Depositor shall give the
Indenture Trustee, the Eligible Lender Trustee and each Rating Agency written
notice of such Insolvency Event, and (ii) the Eligible Lender Trustee shall,
upon the receipt of such written notice from the Depositor, give prompt written
notice to the Certificateholders and the Indenture Trustee, of the occurrence of
such event and of the effect of such event under this Section 9.2; provided,
however, that any failure to give a notice required by this sentence shall not
prevent or delay, in any manner, a termination of the Trust pursuant to the
first sentence of this Section 9.2. Upon a termination of the Trust pursuant to
this Section, the Eligible Lender Trustee shall direct the Indenture Trustee
promptly to sell the assets of the Trust (other than the Trust Accounts) in a
commercially reasonable manner and on commercially reasonable terms. The
proceeds of such a sale of the assets of the Trust shall be treated as
collections under the Administration Agreement.
ARTICLE X
Successor Eligible Lender Trustees and
Additional Eligible Lender Trustees
SECTION X.1 Eligibility Requirements for Eligible Lender Trustee.
The Eligible Lender Trustee shall at all times be a corporation or association
(i) qualifying as an "eligible lender" as such term is defined in Section 435(d)
of the Higher Education Act for purposes of holding legal title to the Trust
Student Loans on behalf of the Trust, with a valid lender identification number
with respect to the Trust Student Loans from the Department; (ii) being
authorized to exercise corporate trust powers and hold legal title to the Trust
Student Loans; (iii) having in effect Guarantee Agreements with each of the
Guarantors; (iv) having a combined capital and surplus of at least $50,000,000
and being subject to supervision or examination by Federal or state authorities;
(v) having its principal place of business in the State of Delaware and
otherwise complying with Section 3807 of the Delaware Business Trust Act; and
(vi) having (or having a parent which has) a rating in respect of its longterm
senior unsecured debt of at least BBB- (or the equivalent) by each of the Rating
Agencies (or which, if the long-term senior unsecured debt of such corporation
or association is not rated by any Rating Agency, shall have provided to the
Indenture Trustee written confirmation from such
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Rating Agency that the appointment of such corporation or association to serve
as Eligible Lender Trustee 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).
If the Eligible Lender Trustee shall publish reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid supervising or
examining authority, then for the purpose of this Section, the combined capital
and surplus of the Eligible Lender Trustee shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. In case at any time the Eligible Lender Trustee shall cease to be
eligible in accordance with the provisions of this Section, the Eligible Lender
Trustee shall resign immediately in the manner and with the effect specified in
Section 10.2.
SECTION X.2 Resignation or Removal of Eligible Lender Trustee. The
Eligible Lender Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Administrator. Upon
receiving such notice of resignation, the Administrator shall promptly appoint a
successor Eligible Lender Trustee meeting the eligibility requirements of
Section 10.1 by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Eligible Lender Trustee and one copy to the
successor Eligible Lender Trustee. If no successor Eligible Lender Trustee shall
have been so appointed and have accepted appointment within 30 days after the
giving of such notice of resignation, the resigning Eligible Lender Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Eligible Lender Trustee; provided, however, that such right to appoint or to
petition for the appointment of any such successor shall in no event relieve the
resigning Eligible Lender Trustee from any obligations otherwise imposed on it
under the Basic Documents until such successor has in fact assumed such
appointment.
If at any time the Eligible Lender Trustee shall cease to be or
shall be likely to cease to be eligible in accordance with the provisions of
Section 10.1 and shall fail to resign after written request therefor by the
Administrator, or if at any time an Insolvency Event with respect to the
Eligible Lender Trustee shall have occurred and be continuing, then the
Administrator may remove the Eligible Lender Trustee. If the Administrator shall
remove the Eligible Lender Trustee under the authority of the immediately
preceding sentence, the Administrator shall promptly appoint a successor
Eligible Lender Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the outgoing Eligible Lender Trustee so removed
and one copy to the successor Eligible Lender Trustee and payment of all fees
owed to the outgoing Eligible Lender Trustee.
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Any resignation or removal of the Eligible Lender Trustee and
appointment of a successor Eligible Lender Trustee pursuant to any of the
provisions of this Section shall not become effective until acceptance of
appointment by the successor Eligible Lender Trustee pursuant to Section 10.3,
payment of all fees and expenses owed to the outgoing Eligible Lender Trustee
and the filing of a certificate of amendment to the Trust's certificate of trust
pursuant to Section 3810(b) of the Delaware Business Trust Act. The
Administrator shall provide notice of such resignation or removal of the
Eligible Lender Trustee and to each of the Rating Agencies.
SECTION X.3 Successor Eligible Lender Trustee. Any successor
Eligible Lender Trustee appointed pursuant to Section 10.2 shall execute,
acknowledge and deliver to the Administrator and to its predecessor Eligible
Lender Trustee an instrument accepting such appointment under this Agreement,
and thereupon the resignation or removal of the predecessor Eligible Lender
Trustee shall become effective and such successor Eligible Lender Trustee,
without any further act, deed or conveyance, shall become fully vested with all
the rights, powers, duties and obligations of its predecessor under this
Agreement, with like effect as if originally named as Eligible Lender Trustee.
The predecessor Eligible Lender Trustee shall upon payment of its fees and
expenses deliver to the successor Eligible Lender Trustee all documents,
statements, moneys and properties held by it under this Agreement and shall
assign, if permissible, to the successor Eligible Lender Trustee the lender
identification number obtained from the Department on behalf of the Trust; and
the Administrator and the predecessor Eligible Lender Trustee shall execute and
deliver such instruments and do such other things as may reasonably be required
for fully and certainly vesting and confirming in the successor Eligible Lender
Trustee all such rights, powers, duties and obligations.
No successor Eligible Lender Trustee shall accept such appointment
as provided in this Section unless at the time of such acceptance such successor
Eligible Lender Trustee shall be eligible pursuant to Section 10.1.
Upon acceptance of appointment by a successor Eligible Lender
Trustee pursuant to this Section, the Administrator shall mail notice of the
successor of such Eligible Lender Trustee to all Certificateholders, the
Indenture Trustee, the Noteholders and the Rating Agencies. If the Administrator
shall fail to mail such notice within 10 days after acceptance of appointment by
the successor Eligible Lender Trustee, the successor Eligible Lender Trustee
shall cause such notice to be mailed at the expense of the Administrator.
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SECTION X.4 Merger or Consolidation of Eligible Lender Trustee. Any
corporation into which the Eligible Lender Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Eligible Lender Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of the Eligible Lender Trustee, shall, without the execution or
filing of any instrument or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding, be the successor of the
Eligible Lender Trustee hereunder; provided that such corporation shall be
eligible pursuant to Section 10.1; and provided further that the Eligible Lender
Trustee shall mail notice of such merger or consolidation to the Rating Agencies
not less than 15 days prior to the effective date thereof.
SECTION X.5 Appointment of Co-Eligible Lender Trustee or Separate
Eligible Lender Trustee. Notwithstanding any other provisions of this Agreement,
at any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust may at the time be located, the
Administrator and the Eligible Lender Trustee acting jointly shall have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Eligible Lender Trustee, meeting the eligibility
requirements of clauses (i) through (iii) of Section 10.1, to act as co-trustee,
jointly with the Eligible Lender Trustee, or separate trustee or separate
trustees, of all or any part of the Trust Estate, and to vest in such Person, in
such capacity, such title to the Trust Estate, or any part thereof, and, subject
to the other provisions of this Section, such powers, duties, obligations,
rights and trusts as the Administrator and the Eligible Lender Trustee may
consider necessary or desirable. If the Administrator shall not have joined in
such appointment within 15 days after the receipt by it of a request so to do,
the Eligible Lender Trustee alone shall have the power to make such appointment.
No co-trustee or separate trustee under this Agreement shall be required to meet
the terms of eligibility as a successor trustee pursuant to clauses (iv), (v)
and (vi) of Section 10.1 and no notice of the appointment of any co-trustee or
separate trustee shall be required pursuant to Section 10.3.
Each separate trustee and co-trustee shall, to the extent permitted
by law, be appointed and act subject to the following provisions and conditions:
(i) all rights, powers, duties, and obligations
conferred or imposed upon the Eligible Lender Trustee shall be
conferred upon and exercised or performed by the Eligible
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Lender Trustee and such separate trustee or co-trustee jointly (it
being understood that such separate trustee or co-trustee is not
authorized to act separately without the Eligible Lender Trustee
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be
performed, the Eligible Lender Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such rights,
powers, duties, and obligations (including the holding of title to
the Trust or any portion thereof in any such jurisdiction) shall be
exercised and performed singly by such separate trustee or
co-trustee, solely at the direction of the Eligible Lender Trustee;
(ii) no trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under
this Agreement; and
(iii) the Administrator and the Eligible Lender Trustee
acting jointly may at any time accept the resignation of or remove
any separate trustee or cotrustee.
Any notice, request or other writing given to the Eligible Lender
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Eligible
Lender Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Eligible Lender Trustee. Each such instrument shall be filed
with the Eligible Lender Trustee and a copy thereof given to the Administrator.
Any separate trustee or co-trustee may at any time appoint the
Eligible Lender Trustee as its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Agreement on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Eligible Lender Trustee, to the extent permitted by law,
without the appointment of a new or successor trustee.
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<PAGE> 39
ARTICLE XI
Miscellaneous
SECTION XI.1 Supplements and Amendments. This Agreement may be
amended by the Depositor and the Eligible Lender Trustee, with prior written
notice to the Rating Agencies, 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, adversely affect in any material respect the interests
of any Noteholder or Certificateholder.
This Agreement may also be amended from time to time by the
Depositor and the Eligible Lender Trustee, with prior written notice to the
Rating Agencies, with the consent of (i) the Noteholders of Notes evidencing not
less than a majority of the Outstanding Amount of the Notes and (ii) the
Certificateholders of Certificates evidencing not less than 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;
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 on 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 required to consent to any such amendment, without the
consent of all the outstanding Noteholders and Certificateholders.
Promptly after the execution of any such amendment or consent, the
Eligible Lender Trustee shall furnish written notification of the substance of
such amendment or consent to each Certificateholder, the Indenture Trustee and
each of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders, the
Noteholders or the Indenture Trustee 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. The manner of obtaining
such consents (and any other consents of Certificateholders provided for in this
Agreement or in any other Basic Document) and of evidencing the authorization of
the
35
<PAGE> 40
execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Eligible Lender Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the
Eligible Lender 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. The Eligible Lender Trustee may, but shall not be obligated
to, enter into any such amendment which affects the Eligible Lender Trustee's
own rights, duties or immunities under this Agreement or otherwise.
SECTION XI.2 No Legal Title to Trust Estate in Certificateholders.
The Certificateholders shall not have legal title to any part of the Trust
Estate. The Certificateholders shall be entitled to receive distributions with
respect to their undivided beneficial ownership interest therein only in
accordance with Articles V and IX. No transfer, by operation of law or
otherwise, of any right, title, or interest of the Certificateholders to and in
their beneficial ownership interest in the Trust Estate shall operate to
terminate this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Trust
Estate.
SECTION XI.3 Limitations on Rights of Others. Except for Section
2.7, the provisions of this Agreement are solely for the benefit of the Eligible
Lender Trustee, the Depositor, the Certificateholders, the Administrator and, to
the extent expressly provided herein, the Indenture Trustee and the Noteholders,
and nothing in this Agreement (other than Section 2.7), 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 XI.4 Notices.
(a) Unless otherwise expressly specified or permitted by the
terms hereof, all notices shall be in writing and shall
be deemed given upon receipt by the intended recipient
or three Business Days after mailing if mailed by
certified mail, postage prepaid (except that notice to
the Eligible Lender Trustee shall be deemed given only
upon actual receipt by the Eligible Lender Trustee), if
to the Eligible Lender Trustee, addressed to its
Corporate Trust Office; if to the Depositor, addressed
to SLM Funding Corporation, 777 Twin Creek Drive,
Killeen, Texas 76543, or, as to each party, at
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<PAGE> 41
such other address as shall be designated by such party
in a written notice to each other party.
(b) Any notice required or permitted to be given to a
Certificateholder shall be given by first-class mail,
postage prepaid, at the address of such
certificateholder as shown in the Certificate Register.
Any notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder
receives such notice.
SECTION XI.5 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION XI.6 Separate Counterparts. This Agreement may be executed
by the parties hereto in separate counterparts, each of which when so executed
and delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION XI.7 Successors and Assigns. All covenants and agreements
contained herein shall be binding upon to the benefit of, the Depositor and its
successors, the Eligible Lender Trustee and its successors, each
Certificateholder and its successors and permitted assigns, all as herein
provided. Any request, notice, direction, consent, waiver or other instrument or
action by a Certificateholder shall bind the successors and assigns of such
Certificateholder.
SECTION XI.8 No Petition.
(a) The Depositor will not at any time institute against the
Trust any bankruptcy proceedings under any United States
Federal or state bankruptcy or similar law in connection
with any obligations relating to the Trust Certificates,
the Notes, this Agreement or any of the other Basic
Documents.
(b) The Eligible Lender Trustee (not in its individual
capacity but solely as Eligible Lender Trustee), by
entering into this Agreement, each Certificateholder, by
accepting a Trust Certificate, and the Indenture Trustee
and each Noteholder by accepting the benefits of this
Agreement, hereby covenant and agree that they
37
<PAGE> 42
will not at any time institute against the Depositor or
the Trust, or join in any institution against the
Depositor or the Trust of, any bankruptcy,
reorganization, arrangement, insolvency, receivership or
liquidation proceedings, or other proceedings under any
United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Trust
Certificates, the Notes, this Agreement or any of the
other Basic Documents.
SECTION XI.9 No Recourse. Each Certificateholder by accepting a
Trust Certificate acknowledges that such Certificateholder's Trust Certificates
represent beneficial interests in the Trust only and do not represent interests
in or obligations of the Depositor, the Servicer, the Administrator, the
Eligible Lender Trustee, the Indenture Trustee or any Affiliate thereof or any
officer, director or employee of any thereof and no recourse may be had against
such parties or their assets, except as may be expressly set forth or
contemplated in this Agreement, the Trust Certificates or the other Basic
Documents.
SECTION XI.10 Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION XI.11 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware, without
reference to its conflict of law provisions, and the obligations, rights and
remedies of the parties hereunder shall be determined in accordance with such
laws.
38
<PAGE> 43
IN WITNESS WHEREOF, the parties hereto have caused this Trust
Agreement to be duly executed by their respective officers hereunto duly
authorized, as of the day and year first above written.
CHASE MANHATTAN BANK USA,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as
Eligible Lender Trustee,
By /s/ J.J. CASHIN
------------------------------
Name:
Title:
SLM FUNDING CORPORATION,
Depositor,
By /s/ WILLIAM M.E. RACHAL, JR.
------------------------------
Name:
Title:
39
<PAGE> 44
EXHIBIT A
TO THE TRUST AGREEMENT
[FORM OF TRUST CERTIFICATE]
[SEE REVERSE FOR CERTAIN DEFINITIONS]
Unless this Trust Certificate is presented by an authorized
representative of The Depository Trust Company, a New York Corporation ("DTC"),
to the Issuer (as defined below) or its agent for registration of transfer,
exchange or payment, and any certificate issued is registered in the name of
Cede & Co. or in such other name as is requested by an authorized representative
of DTC (and any payment is made to Cede & Co. or to such other entity as is
requested by an authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER
USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as
the registered owner hereof, Cede & Co., has an interest herein.
THIS TRUST CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF
A BENEFIT PLAN (AS DEFINED BELOW). THIS CERTIFICATE IS NOT GUARANTEED OR INSURED
BY ANY GOVERNMENTAL AGENCY.
NUMBER $89,900,000
R-1 CUSIP NO. 78442 GAW 6
SLM STUDENT LOAN TRUST 1997-4
FLOATING RATE STUDENT LOAN-BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined
below, the property of which includes a pool of student loans sold
to the Trust by SLM Funding Corporation.
(This Trust Certificate does not represent an interest in or
obligation of SLM Funding Corporation, the Servicer (as defined
below), the Eligible Lender Trustee (as defined below) or any of
their respective affiliates, except to the extent described below.)
THIS CERTIFIES THAT Cede & Co. is the registered owner of
$89,900,000 dollars non-assessable, fully-paid, fractional undivided interest in
the SLM Student Loan Trust 1997-4 (the "Trust"), a trust formed under the laws
of the State of Delaware by SLM Funding Corporation, a Delaware corporation (the
"Depositor"). The Trust was created pursuant to a Trust Agreement dated as of
November 1, 1997 (the "Trust Agreement"), between the Depositor and Chase
Manhattan Bank USA, National
<PAGE> 45
Association, a national banking association, not in its individual capacity but
solely as eligible lender trustee on behalf of the Trust (the "Eligible Lender
Trustee"), a summary of certain of the pertinent provisions of which is set
forth below. To the extent not otherwise defined herein, the capitalized terms
used herein have the meanings assigned to them in Appendix A to the Trust
Agreement.
This Certificate is one of the duly authorized Certificates
designated as "Floating Rate Student Loan-Backed Certificates" (herein called
the "Trust Certificates"). This Trust Certificate is issued under and is subject
to the terms, provisions and conditions of the Trust Agreement, to which Trust
Agreement the holder of this Trust Certificate by virtue of the acceptance
hereof assents and by which such holder is bound. The property of the Trust
includes a pool of student loans (the "Trust Student Loans"), all moneys paid
thereunder on or after October 27, 1997, certain bank accounts and the proceeds
thereof and certain other rights under the Trust Agreement, the Sale Agreement,
the Purchase Agreement, the Administration Agreement and the Servicing Agreement
and all proceeds of the foregoing. The rights of the holders of the Trust
Certificates to the assets of the Trust are subordinated to the rights of the
holders of the Notes issued under the Indenture dated as of November 1, 1997,
between the Trust and Bankers Trust Company, as Indenture Trustee, and
designated as "Floating Rate Student Loan-Backed Notes" (the "Notes"), as set
forth in the Trust Agreement, the Indenture and the Administration Agreement.
Under the Trust Agreement, to the extent of funds available
therefor, return on the Certificate Balance of this Trust Certificate at the
Certificate Rate (as defined below) will be distributed on the 25th day of each
January, April, July and October (or, if such 25th day is not a Business Day,
the next succeeding Business Day) (each a "Distribution Date"), commencing on
April 27, 1998, to the person in whose name this Trust Certificate is registered
as of the close of business on the day immediately preceding the Distribution
Date (such day the "Record Date"), in each case to the extent of such
certificateholder's pro rata interest in the amount or amounts to be distributed
to Certificateholders on
2
<PAGE> 46
such Distribution Date pursuant to the Administration Agreement.
The Certificate Rate for each Accrual Period shall be equal to the
lesser of (a) the daily weighted average of the T-Bill Rates within such Accrual
Period plus 1.05% per annum and (b) the Student Loan Rate for such Accrual
Period. The "Student Loan Rate" for any Accrual Period shall equal 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 related Collection Period less the Primary
Servicing Fee, 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.
Each holder of this Trust Certificate acknowledges and agrees that
its rights to receive distributions in respect of this Trust Certificate from
Available Funds and amounts on deposit in the Reserve Account are subordinated
to the rights of the Noteholders as described in the Trust Agreement, the
Indenture and the Administration Agreement.
It is the intent of the Depositor, the Certificateholders and the
Certificate Owners that, for purposes of Federal, state and local income and
franchise and any other income taxes, the Trust will be treated as a partnership
and the Certificateholders (including the Depositor in its capacity as
Certificateholder and as recipient of distributions from the Reserve Account)
will be treated as partners in that partnership. The Depositor and the other
Certificateholders by acceptance of a Trust Certificate (and the Certificate
Owners by acceptance of a beneficial interest in a Trust Certificate), agree to
treat, and to take no action inconsistent with the treatment of, the Trust
Certificates for such tax purposes as partnership interests in the Trust.
Each Certificateholder or Certificate Owner, by its acceptance of a
Trust Certificate or, in the case of a
3
<PAGE> 47
Certificate Owner, a beneficial interest in a Trust Certificate, covenants and
agrees that such Certificateholder or Certificate Owner, as the case may be,
will not at any time institute against the Depositor or the Trust, or join in
any institution against the Depositor or the Trust of, any bankruptcy,
reorganization, arrangement, insolvency, receivership or liquidation
proceedings, or other proceedings under any United States Federal or state
bankruptcy or similar law in connection with any obligations relating to the
Trust Certificates, the Notes, the Trust Agreement or any of the other Basic
Documents.
Distributions on this Trust Certificate will be made as provided in
the Trust Agreement by the Eligible Lender Trustee by wire transfer or by check
mailed to the Certificateholder of record in the Certificate Register without
the presentation or surrender of this Trust Certificate or the making of any
notation hereon, except that with respect to Trust Certificates registered on
the Record Date in the name of the nominee of the Clearing Agency, unless
Definitive Certificates have been issued (initially, such nominee to be Cede &
Co.), payments will be made by wire transfer in immediately available funds to
the account designated by such nominee. Except as otherwise provided in the
Trust Agreement and notwithstanding the above, the final distribution on this
Trust Certificate will be made after due notice by the Eligible Lender Trustee
of the pendency of such distribution and only upon presentation and surrender of
this Trust Certificate at the office or agency maintained for the purpose by the
Eligible Lender Trustee in the Borough of Manhattan, The City of New York.
Reference is hereby made to the further provisions of this Trust
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been
executed by an authorized officer of the Eligible Lender Trustee or its
authenticating agent, by manual signature, this Trust Certificate shall not
entitle the holder hereof to any benefit under the Trust Agreement or the
Administration Agreement or be valid for any purpose.
4
<PAGE> 48
IN WITNESS WHEREOF, the Eligible Lender Trustee on behalf of the
Trust and not in its individual capacity has caused this Trust Certificate to be
duly executed as of the date set forth below.
SLM STUDENT LOAN TRUST 1997-4
by CHASE MANHATTAN BANK USA,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as
Eligible Lender Trustee.
By:
------------------------------
Authorized Signatory
Date: November 12, 1997
5
<PAGE> 49
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates referred to in the within-mentioned Trust
Agreement.
CHASE MANHATTAN BANK USA,
NATIONAL ASSOCIATION, not in its individual
capacity but solely as Eligible
Lender Trustee,
By:
-----------------------------------
Authorized Signatory
OR
THE CHASE MANHATTAN BANK, solely in
its capacity as Authenticating Agent
for the Eligible Lender Trustee,
By:
-----------------------------------
Authenticating Agent
Date: November 12, 1997
6
<PAGE> 50
[REVERSE OF TRUST CERTIFICATE]
The Trust Certificates do not represent an obligation of, or an
interest in, the Depositor, Sallie Mae Servicing Corporation, as servicer (the
"Servicer"), Student Loan Marketing Association, as administrator (the
"Administrator"), the Eligible Lender Trustee or any affiliates of any of them,
and no recourse may be had against such parties or their assets, except as may
be expressly set forth or contemplated herein, in the Trust Agreement or in the
other Basic Documents. In addition, this Trust Certificate is not guaranteed by
any governmental agency or instrumentality and is limited in right of payment to
certain collections with respect to the Trust Student Loans, all as more
specifically set forth in the Trust Agreement. A copy of each of the Trust
Agreement, the Sale Agreement, the Purchase Agreement, the Administration
Agreement, Servicing Agreement and the Indenture may be examined during normal
business hours at the principal office of the Administrator, and at such other
places, if any, designated by the Administrator, by any Certificateholder upon
request.
The Trust Agreement permits, with certain options therein provided,
the amendment thereof and the certification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Trust Agreement at
any time by the Depositor and the Eligible Lender Trustee with the consent of
the holders of the Notes and the Trust Certificates each voting as a class
evidencing not less than a majority of the outstanding principal balance of the
Notes and the Certificate Balance. Any such consent by the holder of this Trust
Certificate shall be conclusive and binding on such holder and on all future
holders of this Certificate and of any Trust Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Trust Certificate. The Trust Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the holders of any of the Trust Certificates.
7
<PAGE> 51
As provided in the Trust Agreement and subject to certain
limitations therein set forth, the transfer of the Trust Certificates is
registerable in the Certificate Register upon surrender of this Certificate for
registration of transfer at the offices or agencies maintained by Chase
Manhattan Bank USA, National Association in its capacity as Certificate
Registrar, or by any successor Certificate Registrar, in the Borough of
Manhattan, The City of New York, accompanied by a written instrument of transfer
in form satisfactory to the Eligible Lender Trustee and the Certificate
Registrar duly executed by the holder hereof or such holder's attorney duly
authorized in writing, and thereupon one or more new Trust Certificates of
authorized denominations evidencing the same aggregate interest in the Trust
will be issued to the designated transferee.
The Trust Certificates are issuable only as registered Trust
Certificates without coupons in denominations of $100,000 or in integral
multiples of $1,000 in excess thereof. As provided in the Trust Agreement and
subject to certain limitations therein set forth, Trust Certificates are
exchangeable for new Trust Certificates of authorized denominations evidencing
the same aggregate denomination, as requested by the holder surrendering the
same. No service charge will be made for any such registration of transfer or
exchange, but the Eligible Lender Trustee or the Certificate Registrar may
require payment of a sum sufficient to cover any tax or governmental charge
payable in connection therewith.
The Eligible Lender Trustee, the Certificate Registrar and any agent
of the Eligible Lender Trustee or the Certificate Registrar may treat the person
in whose name this Trust Certificate is registered as the owner hereof for all
purposes, and none of the Eligible Lender Trustee or the Certificate Registrar
or any such agent shall be affected by any notice to the contrary.
The Trust Certificates (including any beneficial interests therein)
may not be acquired by or for the account of (i) an employee benefit plan (as
defined in Section 3(3) of ERISA) that is subject to the provisions of Title I
of ERISA, (ii) a plan described in section 4975(e)(1) of the Internal Revenue
Code of 1986, as amended (the "Code"), including an individual retirement
8
<PAGE> 52
account described in Section 408(a) of the Code or a Keogh plan or (iii) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (each, a "Benefit Plan"). By accepting and holding this
Trust Certificate, the Holder hereof shall be deemed to have represented and
warranted that it is not a Benefit Plan, it is not purchasing this Trust
Certificate on behalf of a Benefit Plan, is not using assets of a Benefit Plan
to purchase this Trust Certificate and to have agreed that if this Trust
Certificate is deemed to be a plan asset, the Holder will promptly dispose of
this Trust Certificate.
The obligations and responsibilities created by the Trust Agreement
and the Trust created thereby shall terminate upon the payment to
Certificateholders of all amounts required to be paid to them pursuant to the
Trust Agreement, the Administration Agreement and the Indenture and the
disposition of all property held as part of the Trust. The Depositor may at its
option purchase the corpus of the Trust at a price specified in the
Administration Agreement, and such purchase of the Trust Student Loans and other
property of the Trust will effect early retirement of the Trust Certificates;
however, such right of purchase is exercisable only on any Distribution Date on
or after the date on which the Pool Balance is less than or equal to 10% of the
Initial Pool Balance. Any Trust Student Loans remaining in the Trust as of the
end of the Collection Period immediately preceding the Trust Auction Date will
be offered for sale by the Indenture Trustee by auction in accordance with the
procedure described in the Indenture.
This Trust Certificate shall be construed in accordance with the
laws of the State of Delaware, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
9
<PAGE> 53
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and
transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
- --------------------------------------------------------------------------------
(Please print or type name and address, including postal zip code, of assignee)
- --------------------------------------------------------------------------------
the within Trust Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney
- ------------------------------------------------------------------------
to transfer said Trust Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated:
*
- ------------------------------
Signature Guaranteed:
*
- ------------------------------
* NOTICE: The signature to this assignment must correspond with the
name as it appears upon the face of the within Trust Certificate in
every particular, without alteration, enlargement or any change
whatever. Such signature must be guaranteed by a member firm of the
New York Stock Exchange or a commercial bank or trust company.
10
<PAGE> 54
EXHIBIT B
TO THE TRUST AGREEMENT
FORM OF CERTIFICATE DEPOSITORY AGREEMENT
<PAGE> 55
ANNEX 1
TO THE TRUST AGREEMENT
DATED AS OF NOVEMBER 1, 1997
BETWEEN SLM FUNDING CORPORATION,
AS DEPOSITOR, AND
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION,
AS ELIGIBLE LENDER TRUSTEE
All defined terms are used herein as defined in the Trust Agreement
referred to above.
Existence. The Depositor will maintain its corporate existence and
its good standing under the laws of the State of Delaware.
Procedures Observed. The Depositor will observe all corporate
procedures required by its Certificate of Incorporation, its by-laws and the
corporation law of the State of Delaware.
Management. The business and affairs of the Depositor will be
managed by or under the direction of the Depositor's Board of Directors. The
Depositor will at all times ensure that its Board of Directors duly authorizes
all corporate actions requiring Board authorization. When necessary, the
Depositor will obtain proper authorization from its stockholder for corporate
action. Its stockholder will not be actively involved in the day-to-day
management of the Depositor except as contemplated by an arm's length management
services contract.
Records. The Depositor will maintain separate corporate records and
books of account from those of its stockholder or any other affiliate of its
stockholder. The Depositor will keep correct and complete books and records of
account and minutes of the meetings and other proceedings of its stockholder and
Board of Directors. The resolutions, agreements and other instruments underlying
the transactions contemplated by the Trust Agreement will be continuously
maintained as official records by the Depositor.
Offices. The Depositor will have an address and telephone number
distinguishable from those of its stockholder. To the extent the Depositor's
office is located in the office of its stockholder or any affiliate of its
stockholder, the Depositor will pay fair market rent for any such office space
and a fair share of any material overhead costs.
1
<PAGE> 56
Identifiable Assets. Except in connection with the customary
operation of such cash management system as its stockholder may from time to
time in the ordinary course of business implement for itself and its
consolidated subsidiaries (which cash management system will be operated such
that all transfers of funds are properly documented and the respective assets
and liabilities of the Depositor and its stockholder are ascertainable at all
times), the Depositor's funds and other assets will be identifiable and will not
be commingled with those of its stockholder or any other entity. The Depositor
will maintain separate banking records and books of account from those of its
stockholder or any other affiliate of its stockholder.
Capitalization. The Depositor will not engage in any business for
which its capitalization would not be adequate.
Expenses. The Depositor will pay from its own funds and assets all
obligations and indebtedness incurred by it and will provide for its own
material operating expenses and liabilities from its own funds. General overhead
and administrative expenses of its stockholder will not be charged or otherwise
allocated to the Depositor (unless directly attributable to services provided to
or for the account of the Depositor) and such expenses of the Depositor which
are material will not be charged or otherwise allocated to its stockholder. Any
organizational expenses of the Depositor and expenses relating to the
preparation, negotiation, execution and delivery of the Transaction Documents
paid by its stockholder will be charged back to the Depositor. Such expenses
will be paid by the Depositor from amounts available to it as a result of the
capital contributions made by its stockholder, from the yield earned by it on
its Certificates, or from the retained portion of Deferred Payments made to it
under the Sale Agreement.
Conduct. The Depositor will conduct its business solely in its own
name so as not to mislead others as to the identity of the Depositor. Without
limiting the generality of the foregoing, all oral and written communications
related to the Depositor, including without limitation letters, invoices,
purchase orders, contracts, statements and applications, will be made solely in
the name of the Depositor except for items pursuant to the Facilities and
Services Agreement between the Depositor and its stockholder. The Depositor will
utilize its own separate stationery.
2
<PAGE> 57
Intercompany Claims. The Depositor will not enter into any
guarantees made by its stockholder with respect to obligations of the Depositor
and the Depositor will make no guarantees with respect to obligations of its
stockholder. There will be no intercompany debt or claims between the Depositor
and its stockholder other than (i) the obligation of the Depositor to pay to its
stockholder the Deferred Payment under the Purchase Agreement, (ii) the demand
note of its stockholder contributed to the Depositor as part of the Depositor's
capitalization, (iii) such intercompany claims as may arise in connection with
the management services contract referred to above, including a cash management
system for its stockholder and its consolidated subsidiaries as described above,
and (iv) such amounts as may temporarily be carried in intercompany accounts
relating to expenses incurred by its stockholder or its affiliates, to the
extent the Depositor is properly obligated to reimburse its stockholder or any
such affiliate for amounts allocable to the Depositor. The demand note referred
to above will be properly documented on the books and records of the Depositor.
Reliance by Others. The Depositor will act solely in its name and
through its duly authorized officers or agents in the conduct of its businesses.
The Depositor will not: (a) hold itself out as having agreed to pay or become
liable for the debts of its stockholder; (b) fail to correct any known
misrepresentation with respect to the foregoing; (c) operate or purport to
operate as an integrated, single economic unit with respect to its stockholder
or in its dealings with any other affiliated or unaffiliated entity; (d) seek or
obtain credit or incur any obligation to any third party based upon the assets
of its stockholder or any other affiliated or unaffiliated entity; or (e) induce
any such third party to reasonably rely on the creditworthiness of its
stockholder or any other affiliated or unaffiliated entity for the payment or
performance of the Depositor.
Arm's Length. The Depositor will maintain an arm's length
relationship between the Depositor and its stockholder and between the Depositor
and any affiliates of its stockholder.
Disclosure of the Transactions. The annual financial statements of
the Depositor will disclose the effects of the Transactions in accordance with
generally accepted accounting principles. The transfer of the Loans by its
stockholder to the Depositor pursuant to the
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Purchase Agreement will be treated as a purchase by the Depositor under
generally accepted accounting principles. In particular, the financial
statements of the Depositor will clearly indicate its existence separate from
its stockholder and will reflect its separate assets and liabilities. None of
such financial statements, nor any consolidated financial statements for its
stockholder, will suggest in any way that the assets of the Depositor are
available to pay the claims of creditors of its stockholder or any other entity.
Any consolidated financial statements of its stockholder and its subsidiaries
prepared for the benefit of third parties will disclose, through appropriate
footnotes or otherwise, the separate corporate existence of the Depositor.
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EXHIBIT 4.2
================================================================================
INDENTURE
among
SLM STUDENT LOAN TRUST 1997-4,
as Issuer,
CHASE MANHATTAN BANK USA,
NATIONAL ASSOCIATION,
not in its individual capacity but
solely as Eligible Lender Trustee
and
BANKERS TRUST COMPANY,
not in its individual capacity but
solely as Indenture Trustee
Dated as of November 1,1997
================================================================================
<PAGE> 2
TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Usage
SECTION 1.1 Definitions and Usage.........................................3
SECTION 1.2 Incorporation by Reference of Trust Indenture Act.............3
ARTICLE II
The Notes
SECTION 2.1 Form..........................................................4
SECTION 2.2 Execution, Authentication and Delivery........................4
SECTION 2.3 Temporary Notes...............................................5
SECTION 2.4 Registration; Registration of Transfer and Exchange...........5
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes ...................7
SECTION 2.6 Persons Deemed Owner..........................................8
SECTION 2.7 Payment of Principal and Interest; Note Interest
Shortfall; Note Interest Carryover............................8
SECTION 2.8 Cancellation.................................................10
SECTION 2.9 Release of Collateral........................................10
SECTION 2.10 Book-Entry Notes.............................................10
SECTION 2.11 Notices to Clearing Agency...................................11
SECTION 2.12 Definitive Notes.............................................12
ARTICLE III
Covenants
SECTION 3.1 Payment to Noteholders.......................................12
SECTION 3.2 Maintenance of Office or Agency..............................13
SECTION 3.3 Money for Payments To Be Held in Trust.......................13
SECTION 3.4 Existence....................................................15
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<PAGE> 3
SECTION 3.5 Protection of Indenture Trust Estate.........................15
SECTION 3.6 Opinions as to Indenture Trust Estate........................16
SECTION 3.7 Performance of Obligations; Servicing of Trust Student
Loans........................................................16
SECTION 3.8 Negative Covenants...........................................20
SECTION 3.9 Annual Statement as to Compliance............................21
SECTION 3.10 Issuer May Consolidate, etc., Only on Certain Terms..........21
SECTION 3.11 Successor or Transferee......................................23
SECTION 3.12 No Other Business............................................24
SECTION 3.13 No Borrowing.................................................24
SECTION 3.14 Obligations of Servicer and Administrator....................24
SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities............24
SECTION 3.16 Capital Expenditures.........................................24
SECTION 3.17 Restricted Payments..........................................24
SECTION 3.18 Notice of Events of Default..................................25
SECTION 3.19 Further Instruments and Acts.................................25
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1 Satisfaction and Discharge of Indenture......................25
SECTION 4.2 Application of Trust Money...................................27
SECTION 4.3 Repayment of Moneys Held by Paying Agent.....................27
SECTION 4.4 Auction of Trust Student Loans...............................27
ARTICLE IV
Remedies
SECTION 5.1 Events of Default............................................28
SECTION 5.2 Acceleration of Maturity; Rescission and Annulment...........30
SECTION 5.3 Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee.........................................31
SECTION 5.4 Remedies; Priorities.........................................33
SECTION 5.5 Optional Preservation of the Trust Student Loans.............36
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<PAGE> 4
SECTION 5.6 Limitation of Suits..........................................36
SECTION 5.7 Unconditional Rights of Noteholders To Receive
Principal and Interest.......................................37
SECTION 5.8 Restoration of Rights and Remedies...........................37
SECTION 5.9 Rights and Remedies Cumulative...............................38
SECTION 5.10 Delay or Omission Not a Waiver...............................38
SECTION 5.11 Control by Noteholders.......................................38
SECTION 5.12 Waiver of Past Defaults......................................39
SECTION 5.13 Undertaking for Costs........................................39
SECTION 5.14 Waiver of Stay or Extension Laws.............................40
SECTION 5.15 Action on Notes..............................................40
SECTION 5.16 Performance and Enforcement of Certain Obligations...........40
ARTICLE VI
The Indenture Trustee
SECTION 6.1 Duties of Indenture Trustee..................................41
SECTION 6.2 Rights of Indenture Trustee..................................43
SECTION 6.3 Individual Rights of Indenture Trustee.......................44
SECTION 6.4 Indenture Trustee's Disclaimer...............................44
SECTION 6.5 Notice of Defaults; Seller Insolvency........................44
SECTION 6.6 Reports by Indenture Trustee to Noteholders..................45
SECTION 6.7 Compensation and Indemnity...................................45
SECTION 6.8 Replacement of Indenture Trustee.............................46
SECTION 6.9 Successor Indenture Trustee by Merger........................47
SECTION 6.10 Appointment of Co-Trustee or Separate Trustee................48
SECTION 6.11 Eligibility; Disqualification................................49
SECTION 6.12 Preferential Collection of Claims Against Issuer.............50
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1 Issuer To Furnish Indenture Trustee Names and
Addresses of Noteholders.....................................50
SECTION 7.2 Preservation of Information; Communications to
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<PAGE> 5
Noteholders..................................................50
SECTION 7.3 Reports by Issuer............................................51
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.1 Collection of Money..........................................52
SECTION 8.2 Trust Accounts...............................................52
SECTION 8.3 General Provisions Regarding Accounts........................53
SECTION 8.4 Release of Indenture Trust Estate............................54
SECTION 8.5 Opinion of Counsel...........................................55
ARTICLE IX
Supplemental Indentures
SECTION 9.1 Supplemental Indentures Without Consent of
Noteholders..................................................56
SECTION 9.2 Supplemental Indentures with Consent of
Noteholders..................................................57
SECTION 9.3 Execution of Supplemental Indentures.........................59
SECTION 9.4 Effect of Supplemental Indenture.............................59
SECTION 9.5 Conformity with Trust Indenture Act..........................60
SECTION 9.6 Reference in Notes to Supplemental Indentures................60
ARTICLE X
Redemption of Notes
SECTION 10.1 Redemption...................................................60
SECTION 10.2 Form of Redemption Notice....................................61
SECTION 10.3 Notes Payable on Redemption Date.............................61
ARTICLE XI
Miscellaneous
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SECTION 11.1 Compliance Certificates and Opinions, etc. ..................61
SECTION 11.2 Form of Documents Delivered to Indenture Trustee.............64
SECTION 11.3 Acts of Noteholders........................................65
SECTION 11.4 Notices, etc., to Indenture Trustee, Issuer and Rating
Agencies.....................................................66
SECTION 11.5 Notices to Noteholders; Waiver...............................67
SECTION 11.6 Alternate Payment and Notice Provisions......................67
SECTION 11.7 Conflict with Trust Indenture Act............................68
SECTION 11.8 Effect of Headings and Table of Contents.....................68
SECTION 11.9 Successors and Assigns.......................................68
SECTION 11.10 Separability.................................................68
SECTION 11.11 Benefits of Indenture........................................68
SECTION 11.12 Legal Holidays...............................................69
SECTION 11.13 Governing Law................................................69
SECTION 11.14 Counterparts.................................................69
SECTION 11.15 Recording of Indenture.......................................69
SECTION 11.16 Trust Obligations............................................69
SECTION 11.17 No Petition..................................................70
SECTION 11.18 Inspection...................................................70
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<PAGE> 7
APPENDICES, SCHEDULES AND EXHIBITS
APPENDIX A Definitions and Usage
SCHEDULE A Schedule of Trust Student Loans
SCHEDULE B Location of Trust Student Loan Files
EXHIBIT A Form of Note
EXHIBIT B Form of Note Depository Agreement
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<PAGE> 8
INDENTURE dated as of November 1, 1997, among SLM STUDENT LOAN
TRUST 1997-4, a Delaware business trust (the "Issuer"), CHASE MANHATTAN BANK
USA, NATIONAL ASSOCIATION, a national banking association, not in its individual
capacity but solely as trustee on behalf of the Issuer (the "Eligible Lender
Trustee"), and BANKERS TRUST COMPANY, a New York banking corporation, as trustee
and not in its individual capacity (the "Indenture Trustee")
Each party agrees as follows for the benefit of the other
party and for the equal and ratable benefit of the holders of the Issuer's
Floating Rate Student Loan-Backed Notes (the "Notes"):
GRANTING CLAUSE
The Issuer and, with respect to the Trust Student Loans, the
Eligible Lender Trustee hereby Grant to the Indenture Trustee, as trustee for
the benefit of the Noteholders, effective as of the Closing Date all of their
right, title and interest in and to the following:
(a) the Trust Student Loans, and all obligations of the Obligors
thereunder including all moneys accrued and paid thereunder on or after the
Cutoff Date and all guaranties and other rights relating to the Trust Student
Loans;
(b) the Servicing Agreement, including the right of the Issuer to cause
the Servicer to purchase Trust Student Loans from the Issuer under circumstances
described therein;
(c) the Sale Agreement, including the right of the Issuer to cause the
Seller to repurchase Trust Student Loans from the Issuer under circumstances
described therein and including the rights of the Seller under the Purchase
Agreement;
(d) the Purchase Agreement, to the extent that the rights of the Seller
thereunder have been assigned to the Issuer pursuant to the Sale Agreement,
including the right of the Seller to cause the Student Loan Marketing
Association to repurchase Trust Student Loans from the Seller under
circumstances described therein;
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(e) the Administration Agreement;
(f) each Guarantee Agreement, including the right of the Issuer to
cause the related Guarantor to make Guarantee Payments in respect of the Trust
Student Loans;
(g) the Trust Accounts and all funds on deposit from time to time in
the Trust Accounts, including the Reserve Account Initial Deposit, and all
investments and proceeds thereof (including all income thereon); and
(h) all present and future claims, demands, causes and choses in action
in respect of any or all of the foregoing and all payments on or under and all
proceeds of every kind and nature whatsoever in respect of any or all of the
foregoing, including all proceeds of the conversion, voluntary or involuntary,
into cash or other liquid property, all cash proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts,
insurance proceeds, condemnation awards, rights to payment of any and every kind
and other forms of obligations and receivables, instruments and other property
which at any time constitute all or part of or are included in the proceeds of
any of the foregoing (collectively, the "Collateral").
The foregoing Grant is made in trust to secure the payment of
principal of and interest on, and any other amounts owing in respect of, the
Notes, equally and ratably without prejudice, priority or distinction, and to
secure compliance with the provisions of this Indenture, all as provided in this
Indenture.
The Indenture Trustee, as Indenture Trustee on behalf of the
Noteholders, acknowledges such Grant, accepts the trusts under this Indenture in
accordance with the provisions of this Indenture and agrees to perform its
duties required in this Indenture to the best of its ability to the end that the
interests of the Noteholders may be adequately and effectively protected.
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<PAGE> 10
ARTICLE I
Definitions and Usage
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 are defined in Appendix A hereto, which also
contains rules as to usage that shall be applicable herein.
SECTION 1.2 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"indenture securities" means the Notes.
"indenture security holder" means a Noteholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee" means the
Indenture Trustee.
"obligor" on the indenture securities means the Issuer and any
other obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by
the TIA, defined by TIA reference to another statute or defined by Commission
rule have the meaning assigned to them by such definitions.
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Article II
The Notes
SECTION 2.1 Form. The Notes, together with the Indenture
Trustee's certificate of authentication, shall be in substantially the form set
forth in Exhibit A, with such appropriate insertions, omissions, substitutions
and other variations as are required or permitted by this Indenture and may have
such letters, numbers or other marks of identification and such legends or
endorsements placed thereon as may, consistently herewith, be determined by the
officers executing the Notes, as evidenced by their execution of the Notes. Any
portion of the text of any Note may be set forth on the reverse thereof, with an
appropriate reference thereto on the face of the Note.
The Definitive Notes shall be typewritten, printed,
lithographed or engraved or produced by any combination of these methods (with
or without steel engraved borders), all as determined by the officers executing
such Notes, as evidenced by their execution of such Notes.
Each Note shall be dated the date of its authentication. The
terms of the Notes set forth in Exhibit A are part of the terms of this
Indenture.
SECTION 2.2 Execution, Authentication and Delivery. The Notes
shall be executed on behalf of the Issuer by any of its Authorized Officers. The
signature of any such Authorized Officer on the Notes may be manual or
facsimile.
Notes bearing the manual or facsimile signature of individuals
who were at any time Authorized Officers of the Issuer shall bind the Issuer,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.
The Indenture Trustee shall upon Issuer Order authenticate and
deliver Notes for original issue in an aggregate principal amount of
$2,477,000,000. The aggregate principal amount of Notes outstanding at any time
may not exceed such amount except as provided in Section 2.5.
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<PAGE> 12
Each Note shall be dated the date of its authentication. The
Notes shall be issuable as registered Notes in the minimum denomination of
$1,000 and in integral multiples of $1,000 in excess thereof.
No Note shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for herein
executed by the Indenture Trustee by the manual signature of one of its
authorized signatories, and such certificate upon any Note shall be conclusive
evidence, and the only evidence, that such Note has been duly authenticated and
delivered hereunder.
SECTION 2.3 Temporary Notes. Pending the preparation of
Definitive Notes, the Issuer may execute, and upon receipt of an Issuer Order
the Indenture Trustee shall authenticate and deliver, temporary Notes which are
printed, lithographed, typewritten, mimeographed or otherwise produced, of the
tenor of the Definitive Notes in lieu of which they are issued and with such
variations not inconsistent with the terms of this Indenture determined to be
appropriate by the Responsible Officer of the Issuer executing the temporary
Notes, as evidenced by his or her execution of such temporary Notes.
If temporary Notes are issued, the Issuer will cause
Definitive Notes to be prepared without unreasonable delay. After the
preparation of Definitive Notes, the temporary Notes shall be exchangeable for
Definitive Notes upon surrender of the temporary Notes at the office or agency
of the Issuer to be maintained as provided in Section 3.2, without charge to the
Noteholder. Upon surrender for cancellation of any one or more temporary Notes,
the Issuer shall execute and the Indenture Trustee shall authenticate and
deliver in exchange therefor a like principal amount of Definitive Notes of
authorized denominations. Until so exchanged, the temporary Notes shall in all
respects be entitled to the same benefits under this Indenture as Definitive
Notes.
SECTION 2.4 Registration; Registration of Transfer and
Exchange. The Issuer shall cause to be kept a register (the "Note Register") in
which, subject to such reasonable regulations as it may prescribe, the Issuer
shall provide for the registration of Notes and the registration of transfers of
Notes. The Indenture Trustee shall be "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. Upon any
resignation of any Note Registrar, the Issuer shall prompt-
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ly appoint a successor or, if it elects not to make such an appointment, assume
the duties of Note Registrar.
If a Person other than the Indenture Trustee is appointed by
the Issuer as Note Registrar, the Issuer shall give the Indenture Trustee prompt
written notice of the appointment of such Note Registrar and of the location,
and any change in the location, of the Note Register, and the Indenture Trustee
shall have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof, and the Indenture Trustee shall have the right to rely
upon a certificate executed on behalf of the Note Registrar by an Executive
Officer thereof as to the names and addresses of the Noteholders and the
principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the
office or agency of the Issuer to be maintained as provided in Section 3.2, if
the requirements of Section 8-401(1) of the UCC are met, the Issuer shall
execute, and the Indenture Trustee shall authenticate and the Noteholder shall
obtain from the Indenture Trustee, in the name of the designated transferee or
transferees, one or more new Notes in any authorized denominations and a like
aggregate principal amount.
At the option of the Noteholder, Notes may be exchanged for
other Notes in any authorized denominations and a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, the Issuer shall execute,
and the Indenture Trustee shall authenticate and the Noteholder shall obtain
from the Indenture Trustee, the Notes which the Noteholder making the exchange
is entitled to receive.
All Notes issued upon any registration of transfer or exchange
of Notes shall be the valid obligations of the Issuer, evidencing the same debt,
and entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of
transfer or exchange shall be duly endorsed by, or be accompanied by a written
instrument of transfer in form satisfactory to the Indenture Trustee duly
executed by the Noteholder thereof or such Noteholder's attorney duly authorized
in writing, with such signature guaranteed by an "eligible guarantor
institution" meeting the requirements of the Note Registrar, which requirements
include membership or participation in Securities
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Transfer Agent's Medallion Program ("STAMP") or such other "signature guarantee
program" as may be determined by the Note Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Exchange Act.
No service charge shall be made to a Noteholder for any
registration of transfer or exchange of Notes, but the Indenture Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 2.3 or 9.6 not
involving any transfer.
The preceding provisions of this Section notwithstanding, the
Issuer shall not be required to make and the Note Registrar need not register
transfers or exchanges of Notes selected for redemption or of any Note for a
period of 15 days preceding the due date for any payment with respect to the
Note.
SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes. If (i)
any mutilated Note is surrendered to the Indenture Trustee, or the Indenture
Trustee receives evidence to its satisfaction of the destruction, loss or theft
of any Note, and (ii) there is delivered to the Issuer and the Indenture Trustee
such security or indemnity as may be required by each of them to hold the Issuer
and the Indenture Trustee harmless, then, in the absence of notice to the
Issuer, the Note Registrar or the Indenture Trustee that such Note has been
acquired by a bona fide purchaser, and provided that the requirements of Section
8-405 of the UCC are met, the Issuer shall execute and upon its request the
Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Note, a replacement Note;
provided, however, that if any such destroyed, lost or stolen Note, but not a
mutilated Note, shall have become or within 15 days shall be due and payable, or
shall have been called for redemption, instead of issuing a replacement Note,
the Issuer may pay such destroyed, lost or stolen Note when so due or payable or
upon the Redemption Date without surrender thereof. If, after the delivery of
such replacement Note or payment of a destroyed, lost or stolen Note pursuant to
the proviso to the preceding sentence, a bona fide purchaser of the original
Note in lieu of which such replacement Note was issued presents for payment such
original Note, the Issuer and the Indenture Trustee shall be entitled to recover
such replacement Note (or such payment) from the Person to whom it was delivered
or any Person taking such replacement Note from such Person to whom such
replacement Note was delivered or any assignee of such Person, except a bona
fide purchaser, and shall be entitled to recover upon the security or
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<PAGE> 15
indemnity provided therefor to the extent of any loss, damage, cost or expense
incurred by the Issuer or the Indenture Trustee in connection therewith.
Upon the issuance of any replacement Note under this Section,
the Issuer may require the payment by the Noteholder thereof of a sum sufficient
to cover any tax or other governmental charge that may be imposed in relation
thereto and any other reasonable expenses (including the fees and expenses of
the Indenture Trustee) connected therewith.
Every replacement Note issued pursuant to this Section in
replacement of any mutilated, destroyed, lost or stolen Note shall constitute an
original additional contractual obligation of the Issuer, whether or not the
mutilated, destroyed, lost or stolen Note shall be at any time enforceable by
anyone, and shall be entitled to all the benefits of this Indenture equally and
proportionately with any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with respect to
the replacement or payment of mutilated, destroyed, lost or stolen Notes.
SECTION 2.6 Persons Deemed Owner. Prior to due presentment for
registration of transfer of any Note, the Issuer, the Indenture Trustee and any
agent of the Issuer or the Indenture Trustee may treat the Person in whose name
any Note is registered (as of the day of determination) as the owner of such
Note for the purpose of receiving payments of principal of, interest (and any
Note Interest Carryover), if any, on such Note and for all other purposes
whatsoever, whether or not such Note be overdue, and neither the Issuer, the
Indenture Trustee nor any agent of the Issuer or the Indenture Trustee shall be
affected by notice to the contrary.
SECTION 2.7 Payment of Principal and Interest; Note Interest
Shortfall; Note Interest Carryover. (a) The Notes shall accrue interest as
provided in the forms of Notes set forth in Exhibit A, and such interest shall
be payable on each Distribution Date as specified therein, subject to Section
3.1. Any installment of interest (and any Note Interest Carryover) or principal,
if any, payable on any Note which is punctually paid or duly provided for by the
Issuer on the applicable Distribution Date shall be paid to the Person in whose
name such Note (or one or more Predecessor Notes) is registered on the Record
Date by check mailed first-class,
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postage prepaid to such Person's address as it appears on the Note Register on
such Record Date, except that, unless Definitive Notes have been issued pursuant
to Section 2.12, with respect to Notes registered on the Record Date in the name
of the nominee of the Clearing Agency (initially, such nominee to be Cede &
Co.), payment shall be made by wire transfer in immediately available funds to
the account designated by such nominee and except for the final installment of
principal payable with respect to such Note on a Distribution Date or on the
Note Final Maturity Date for such Note which shall be payable as provided below.
The funds represented by any such checks returned undelivered shall be held in
accordance with Section 3.3.
(b) The principal of each Note shall be payable in installments on
each Distribution Date as provided in the forms of Note set forth in Exhibit A.
Notwithstanding the foregoing, the entire unpaid principal amount of each class
of the Notes shall be due and payable, if not previously paid, on the Note Final
Maturity Date for such class of Notes and on the date on which an Event of
Default shall have occurred and be continuing if the Indenture Trustee or the
Noteholders of the Notes representing not less than a majority of the
Outstanding Amount of the Notes have declared the Notes to be immediately due
and payable in the manner provided in Section 5.2. All principal payments on the
Notes shall be made pro rata to the Noteholders entitled thereto. The Indenture
Trustee shall notify the Person in whose name a Note is registered at the close
of business on the Record Date preceding the Distribution Date on which the
Issuer expects that the final installment of principal of and interest (and any
Note Interest Carryover) on such Note will be paid. Such notice shall be mailed
or transmitted by facsimile prior to such final Distribution Date and shall
specify that such final installment will be payable only upon presentation and
surrender of such Note and shall specify the place where such Note may be
presented and surrendered for payment of such Installment. Notices in connection
with redemptions of Notes shall be mailed to Noteholders as provided in Section
10.2.
(c) If the Issuer defaults in a payment of interest on the Notes,
the Issuer shall pay the resulting Note Interest Shortfall on the following
Distribution Date as provided in the Administration Agreement.
(d) The Note Interest Carryover for each Distribution Date shall
be payable on each Distribution Date solely to the extent of funds required and
available to be distributed to Noteholders by the Indenture Trustee pursuant to
Section 2.7C.10, 2.8C(D), 2.8D or 2.8E of the Administration Agreement. Any Note
Interest Carry-
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over payable on any Distribution Date shall be paid to the Person in whose name
such Note (or one or more Predecessor Notes) is registered on the applicable
Record Date by check mailed first-class postage prepaid to such Person's address
as it appears on the Note Register on such Record Date, except that, unless
Definitive Notes have been issued pursuant to Section 2.12, with respect to the
Notes registered on the Record Date in the name of the nominee of the Clearing
Agency (initially, such nominee to be Cede & Co.), payment shall be made by wire
transfer in immediately available funds to the account designated by such
nominee. The funds represented by any such checks returned undelivered shall be
held in accordance with Section 3.3.
SECTION 2.8 Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly cancelled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever and all Notes so delivered shall be promptly cancelled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes cancelled as provided in this Section, except as expressly permitted
by this Indenture. All canceled Notes may be held or disposed of by the
Indenture Trustee in accordance with its standard retention or disposal policy
as in effect at the time, unless the Issuer shall direct by an Issuer Order that
they be returned to it and so long as such Issuer Order is timely and the Notes
have not been previously disposed of by the Indenture Trustee.
SECTION 2.9 Release of Collateral. Subject to Section 11.1 and
the terms of the Basic Documents, the Indenture Trustee shall release property
from the lien of this Indenture only upon receipt of an Issuer Request
accompanied by an Officers' Certificate of the Issuer, an Opinion of Counsel and
Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(1) or
an Opinion of Counsel in lieu of such Independent Certificates to the effect
that the TIA does not require any such Independent Certificates.
SECTION 2.10 Book-Entry Notes. The Notes, upon original
issuance, will be issued in the form of typewritten Notes representing the
Book-Entry Notes, to be delivered to The Depository Trust Company, the initial
Clearing Agency, by, or on behalf of, the Issuer. Such Notes shall initially be
registered on the Note Register in the name of Cede & Co., the nominee of the
initial Clearing Agency, and
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no Note Owner shall receive a Definitive Note (as defined below) representing
such Note Owner's interest in such Note, except as provided in Section 2.12.
Unless and until definitive, fully registered Notes (the "Definitive Notes")
have been issued to Note Owners pursuant to Section 2.12:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar and the Indenture Trustee, and their
respective directors, officers, employees and agents, may deal with the Clearing
Agency for all purposes (including the payment of principal of and interest and
other amounts on the Notes) as the authorized representative of the Note Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions of this
Section shall control;
(iv) the rights of Note Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law and
agreements between such Note Owners and the Clearing Agency and/or the Clearing
Agency Participants pursuant to the Note Depository Agreement; and unless and
until Definitive Notes are issued pursuant to Section 2.12, the initial Clearing
Agency will make book-entry transfers among the Clearing Agency Participants and
receive and transmit payments of principal of and interest and other amounts on
the Notes to such Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Noteholders of Notes evidencing a
specified percentage of the Outstanding Amount of the Notes, the Clearing Agency
shall be deemed to represent such percentage only to the extent that it has
received instructions to such effect from Note Owners and/or Clearing Agency
Participants owning or representing, respectively, such required percentage of
the beneficial interest in the Notes and has delivered such instructions to the
Indenture Trustee.
SECTION 2.11 Notices to Clearing Agency. Whenever a notice or
other communication to the Noteholders is required under this Indenture, unless
and until Definitive Notes shall have been issued to Note Owners pursuant to
Section 2.12, the Indenture Trustee shall give all such notices and
communication specified herein to be given to Noteholders to the Clearing
Agency.
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SECTION 2.12 Definitive Notes. If (i) the Administrator
advises the Indenture Trustee in writing that the Clearing Agency is no longer
willing or able to discharge its responsibilities with respect to the Notes, and
the Administrator is unable to locate a successor, (ii) the Administrator at its
option advises the Indenture Trustee in writing that it elects to terminate the
book-entry system through the Clearing Agency or (iii) after the occurrence of
an Event of Default, a Servicer Default or an Administrator Default, Note Owners
representing beneficial interests aggregating at least a majority of the
Outstanding Amount of the Notes advise the Clearing Agency (which shall then
notify the Indenture Trustee) in writing that the continuation of a book-entry
system through the Clearing Agency is no longer in the best interests of the
Note Owners, then the Indenture Trustee shall cause the Clearing Agency to
notify all Note Owners, through the Clearing Agency, of the occurrence of any
such event and of the availability of Definitive Notes to Note Owners requesting
the same. Upon surrender to the Indenture Trustee of the typewritten Notes
representing the Book-Entry Notes by the Clearing Agency, accompanied by
registration instructions, the Issuer shall execute and the Indenture Trustee
shall authenticate the Definitive Notes in accordance with the instructions of
the Clearing Agency. None of the Issuer, the Note Registrar or the Indenture
Trustee shall be liable for any delay in delivery of such instructions and may
conclusively rely on, and shall be protected in relying on, such instructions.
Upon the issuance of Definitive Notes, the Indenture Trustee shall recognize the
holders of the Definitive Notes as Noteholders.
ARTICLE III
Covenants
SECTION 3.1 Payment to Noteholders. The Issuer shall duly and
punctually pay the principal of, interest, if any, on and any Note Interest
Carryover (but only to the extent provided in Sections 2.7(d) and 8.2(c)) with
respect to the Notes in accordance with the terms of the Notes and this
Indenture. Without limiting the foregoing, subject to Section 8.2(c), the Issuer
shall cause to be distributed to Noteholders in accordance with the
Administration Agreement that portion of the amounts on deposit in the Trust
Accounts on a Distribution Date (other than any Eligible Investments deposited
therein that will mature on the Business Day preceding a subsequent Distribution
Date) which the Noteholders are entitled to receive pursuant to the
Administration Agreement. Amounts properly withheld under the Code by any
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Person from a payment to any Noteholder of interest (including any Note Interest
Carryover) and/or principal shall be considered as having been paid by the
Issuer to such Noteholder for all purposes of this Indenture.
SECTION 3.2 Maintenance of Office or Agency. The Issuer shall
maintain in the Borough of Brooklyn, The City of New York, an office or agency
where Notes may be surrendered for registration of transfer or exchange, and
where notices and demands to or upon the Issuer in respect of the Notes and this
Indenture may be served. The Issuer hereby initially appoints the Indenture
Trustee to serve as its agent for the foregoing purposes. The Issuer shall give
prompt written notice to the Indenture Trustee of the location, and of any
change in the location, of any such office or agency. If at any time the Issuer
shall fail to maintain any such office or agency or shall fail to furnish the
Indenture Trustee with the address thereof, such surrenders, notices and demands
may be made or served at the Corporate Trust Office, and the Issuer hereby
appoints the Indenture Trustee as its agent to receive all such surrenders,
notices and demands.
SECTION 3.3 Money for Payments To Be Held in Trust. As
provided in Section 8.2(a) and (b), all payments of amounts due and payable with
respect to any Notes that are to be made from amounts distributed from the
Collection Account or any other Trust Account pursuant to Section 8.2(c) shall
be made on behalf of the Issuer by the Indenture Trustee or by another Paying
Agent, and no amounts so distributed from the Collection Account for payments of
Notes shall be paid over to the Issuer except as provided in this Section.
On or before the Business Day next preceding each Distribution
Date and Redemption Date, the Issuer shall distribute or cause to be distributed
to the Indenture Trustee (or any other Paying Agent) an aggregate sum sufficient
to pay the amounts then becoming due under the Notes, such sum to be held in
trust for the benefit of the Persons entitled thereto and (unless the Paying
Agent is the Indenture Trustee) shall promptly notify the Indenture Trustee of
its action or failure so to act.
The Issuer shall cause each Paying Agent other than the
Indenture Trustee to execute and deliver to the Indenture Trustee an instrument
in which such Paying Agent shall agree with the Indenture Trustee (and if the
Indenture Trustee acts as Paying Agent, it hereby so agrees), subject to the
provisions of this Section, that such Paying Agent will:
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(i) hold all sums held by it for the payment of amounts
due with respect to the Notes in trust for the benefit of the Persons entitled
thereto until such sums shall be paid to such Persons or otherwise disposed of
as herein provided and pay such sums to such Persons as herein provided;
(ii) give the Indenture Trustee notice of any default by
the Issuer of which it has actual knowledge (or any other obligor upon the
Notes) in the making of any payment required to be made with respect to the
Notes;
(iii) at any time during the continuance of any such
default, upon the written request of the Indenture Trustee, forthwith pay to
the Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as a Paying Agent and forthwith
pay to the Indenture Trustee all sums held by it in trust for the payment of
Notes if at any time it ceases to meet the standards required to be met by a
Paying Agent at the time of its appointment; and
(v) comply with all requirements of the Code with
respect to the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any applicable
reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds,
any money held by the Indenture Trustee or any Paying Agent in trust for the
payment of any amount due with respect to any Note and remaining unclaimed for
two years after such amount has become due and payable shall be discharged from
such trust and be paid to the Issuer on Issuer Request or if the Issuer has been
terminated to Seller; and
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the Noteholder thereof shall thereafter, as an unsecured general creditor, look
only to the Issuer for payment thereof (but only to the extent of the amounts so
paid to the Issuer), and all liability of the Indenture Trustee or such Paying
Agent with respect to such trust money shall thereupon cease; provided, however,
that the Indenture Trustee or such Paying Agent, before being required to make
any such repayment, shall at the expense and direction of the Issuer cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in The City of New
York, notice that such money remains unclaimed and that, after a date specified
therein, which shall not be less than 30 days from the date of such publication,
any unclaimed balance of such money then remaining will be repaid to the Issuer.
The Indenture Trustee shall also adopt and employ, at the expense of the Issuer,
any other reasonable means of notification of such repayment (including mailing
notice of such repayment to Noteholders whose Notes have been called but have
not been surrendered for redemption or whose right to or interest in moneys due
and payable but not claimed is determinable from the records of the Indenture
Trustee or of any Paying Agent, at the last address of record for each such
Noteholder).
SECTION 3.4 Existence. The Issuer shall keep in full effect
its existence, rights and franchises as a business trust under the laws of the
State of Delaware (unless it becomes, or any successor Issuer hereunder is or
becomes, organized under the laws of any other State or of the United States of
America, in which case the Issuer shall keep in full effect its existence,
rights and franchises under the laws of such other jurisdiction) and shall
obtain and preserve its qualification to do business in each jurisdiction in
which such qualification is or shall be necessary to protect the validity and
enforceability of this Indenture, the Notes, the Collateral and each other
instrument or agreement included in the Indenture Trust Estate.
SECTION 3.5 Protection of Indenture Trust Estate. The Issuer
will from time to time execute and deliver all such supplements and amendments
hereto and all such financing statements, continuation statements, will take
such other action necessary or advisable to:
(i) maintain or preserve the lien and security interest
(and the priority thereof) of this Indenture or carry out more effectively the
purposes hereof;
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(ii) perfect, publish notice of or protect the validity of
any grant made or to be made by this Indenture;
(iii) enforce any of the Collateral; or
(iv) preserve and defend title to the Indenture Trust
Estate and the rights of the Indenture Trustee and the Noteholders in such
Indenture Trust Estate against the claims of all persons and parties.
The Issuer hereby designates the Indenture Trustee its agent
and attorney-in-fact to execute any financing statement, continuation statement
or other instrument required to be executed pursuant to this Section.
SECTION 3.6 Opinions as to Indenture Trust Estate. (a) On the
Closing Date, the Issuer shall furnish to the Indenture Trustee an Opinion of
Counsel either stating that, in the opinion of such counsel, such action has
been taken with respect to the recording and filing of this Indenture as is
necessary to perfect and make effective the lien and security interest of this
Indenture and reciting the details of such action, or stating that, in the
opinion of such counsel, no such action is necessary to make such lien and
security interest effective.
(b) On or before December 31 in each calendar year, beginning in
1997, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel
either stating that, in the opinion of such counsel, such action has been taken
with respect to the recording, filing, re-recording and refiling of this
Indenture and any indentures supplemental hereto as is necessary to maintain the
lien and security interest created by this Indenture and relating the details of
such action or stating that in the opinion of such counsel no such action is
necessary to maintain such lien and security interest. Such Opinion of Counsel
shall also describe the recording, filing, recording and refiling of this
Indenture and any indentures supplemental hereto that will, in the opinion of
such counsel, be required to maintain the lien and security interest of this
Indenture until December 31 in the following calendar year.
SECTION 3.7 Performance of Obligations; Servicing of Trust
Student Loans. (a) The Issuer will not take any action and will use its best
efforts not to permit any action to be taken by others that would release any
Person from any of such Person's material covenants or obligations under any
instrument or agreement
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included in the Indenture Trust Estate or that would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any such instrument or agreement, except as
expressly provided in this Indenture, any other Basic Document or such other
instrument or agreement.
(b) The Issuer may contract with other Persons to assist it in
performing its duties under this Indenture, and any performance of such duties
by a Person identified to the Indenture Trustee in an Officers' Certificate of
the Issuer shall be deemed to be action taken by the Issuer; provided, however,
the Issuer shall not be liable for any acts of Persons with whom the Issuer has
contracted with reasonable care. Initially, the Issuer has contracted with the
Servicer and the Administrator to assist the Issuer in performing its duties
under this Indenture. The Issuer shall give written notice to the Indenture
Trustee and each Rating Agency of any such contract with any other Person.
(c) The Issuer shall punctually perform and observe all of its
obligations and agreements contained in this Indenture, the other Basic
Documents and the instruments and agreements included in the Indenture Trust
Estate, including filing or causing to be filed all UCC financing statements and
continuation statements prepared by the Issuer and required to be filed by the
terms of this Indenture and the Administration Agreement in accordance with and
within the time periods provided for herein and therein. Except as otherwise
expressly provided therein, the Issuer shall not waive, amend, modify,
supplement or terminate any Basic Document or any provision thereof without the
consent of the Indenture Trustee or the Noteholders of at least a majority of
the Outstanding Amount of the Notes. The Issuer shall give written notice to
each Rating Agency of any such waiver, amendment, modification, supplement or
termination.
(d) If a Responsible Officer of the Issuer shall have knowledge of
the occurrence of a Servicer Default or an Administrator Default under the
Servicing Agreement or the Administration Agreement, respectively, the Issuer
shall promptly notify the Indenture Trustee and the Rating Agencies thereof, and
shall specify in such notice the action, if any, the Issuer is taking with
respect to such default. If a Servicer Default shall arise from the failure of
the Servicer to perform any of its duties or obligations under the Servicing
Agreement, or an Administrator Default shall arise from the failure of the
Administrator to perform any of its duties or obligations under the
Administration Agreement, as the case may be, with respect to the Trust Student
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Loans, the Issuer shall take all reasonable steps available to it to enforce its
rights under the Basic Documents in respect of such failure.
(e) As promptly as possible after the giving of notice of
termination to the Servicer of the Servicer's rights and powers, pursuant to
Section 5.1 of the Servicing Agreement, or to the Administrator of the
Administrator's rights and powers, pursuant to Section 5.1 of the Administration
Agreement, the Issuer shall appoint a successor servicer (the "Successor
Servicer") or a successor administrator (the "Successor Administrator"),
respectively, and such Successor Servicer or Successor Administrator, as the
case may be, shall accept its appointment by a written assumption in a form
acceptable to the Indenture Trustee. In the event that a Successor Servicer or
Successor Administrator has not been appointed and accepted its appointment at
the time when the Servicer or Administrator, as the case may be, ceases to act
as Servicer or Administrator, respectively, the Indenture Trustee without
further action shall automatically be appointed the Successor Servicer or
Successor Administrator, as the case may be. The Indenture Trustee may resign as
the Servicer or the Administrator by giving written notice of resignation to the
Issuer and in such event will be released from such duties and obligations, such
release not to be effective until the date a new servicer or a new administrator
enters into an agreement with the Issuer as provided below; provided, however,
that nothing herein shall require or permit the Indenture Trustee to act as
Servicer, or otherwise service the Trust Student Loans, in violation of the
Higher Education Act. Upon delivery of any such notice to the Issuer, the Issuer
shall obtain a new servicer as the Successor Servicer under the Servicing
Agreement or a new administrator as the Successor Administrator under the
Administration Agreement, as the case may be. Any Successor Servicer or
Successor Administrator, other than the Indenture Trustee, shall (i) be an
established institution (A) that satisfies any requirements of the Higher
Education Act applicable to servicers and (B) whose regular business includes
the servicing or administration of student loans and (ii) enter into a servicing
agreement or an administration agreement, respectively, with the Issuer having
substantially the same provisions as the provisions of the Servicing Agreement
and the Administration Agreement, as applicable. If within 30 days after the
delivery of the notice referred to above, the Issuer shall not have obtained
such a new servicer or new administrator, as the case may be, the Indenture
Trustee may appoint, or may petition a court of competent jurisdiction to
appoint, a Successor Servicer or Successor Administrator; provided, however,
that such right to appoint or to petition for the appointment of any such
successor shall in no event relieve the Indenture Trustee from any obligations
otherwise imposed on it under the
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Basic Documents until such successor has in fact assumed such appointment. In
connection with any such appointment, the Indenture Trustee may make such
arrangements for the compensation of such successor as it and such successor
shall agree, subject to the limitations set forth below and in the Servicing
Agreement or Administration Agreement, as applicable, and in accordance with
Section 5.2 of the Servicing Agreement and Section 5.2 of the Administration
Agreement, the Issuer shall enter into an agreement with such successor for the
servicing or administration of the Trust Student Loans (such agreement to be in
form and substance satisfactory to the Indenture Trustee). If the Indenture
Trustee shall succeed as provided herein to the Servicer's duties as Servicer
with respect to the Trust Student Loans, or the Administrator's duties with
respect to the Issuer and the Trust Student Loans, as the case may be, it shall
do so in its individual capacity and not in its capacity as Indenture Trustee
and, accordingly, the provisions of Article VI hereof shall be inapplicable to
the Indenture Trustee in its duties as the successor to the Servicer or the
Administrator, as the case may be, and the servicing or administration of the
Trust Student Loans. In case the Indenture Trustee shall become successor to the
Servicer or the Administrator, the Indenture Trustee shall be entitled to
appoint as Servicer or as Administrator, as the case may be, any one of its
Affiliates, provided that such appointment shall not affect or alter in any way
the liability of the Indenture Trustee as Successor Servicer or Successor
Administrator, respectively, in accordance with the terms hereof.
(f) Upon any termination of the Servicer's rights and powers
pursuant to the Servicing Agreement, or any termination of the Administrator's
rights and powers pursuant to the Administration Agreement, as the case may be,
the Issuer shall promptly notify the Indenture Trustee and each Rating Agency.
As soon as a Successor Servicer or a Successor Administrator is appointed, the
Issuer shall notify the Indenture Trustee and each Rating Agency of such
appointment, specifying in such notice the name and address of such Successor
Servicer or such Successor Administrator.
(g) Without derogating from the absolute nature of the assignment
granted to the Indenture Trustee under this Indenture or the rights of the
Indenture Trustee hereunder, the Issuer agrees that it will not, without the
prior written consent of the Indenture Trustee or the Noteholders of at least a
majority in Outstanding Amount of the Notes, amend, modify, waive, supplement,
terminate or surrender, or agree to any amendment, modification, supplement,
termination, waiver or surrender of, the terms
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of any Collateral or the Basic Documents, except to the extent otherwise
provided in the Basic Documents, or waive timely performance or observance by
the Servicer, the Administrator, the Seller, the Student Loan Marketing
Association, the Issuer or the Eligible Lender Trustee under the Basic
Documents; provided, however, that no such amendment shall (i) increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
distributions that are required to be made for the benefit of the Noteholders,
or (ii) reduce the aforesaid percentage of the Notes which are required to
consent to any such amendment, without the consent of the Noteholders of all the
Outstanding Notes. If any such amendment, modification, supplement or waiver
shall be so consented to by the Indenture Trustee or such Noteholders, the
Issuer shall give written notice thereof to each Rating Agency and agrees,
promptly following a request by the Indenture Trustee to do so, to execute and
deliver, in its own name and at its own expense, such agreements, instruments,
consents and other documents as the Indenture Trustee may deem necessary or
appropriate in the circumstances.
SECTION 3.8 Negative Covenants. So long as any Notes are
Outstanding, the Issuer shall not:
(i) except as expressly permitted by this Indenture or any
other Basic Document, sell, transfer, exchange or otherwise dispose of any of
the properties or assets of the Issuer, including those included in the
Indenture Trust Estate, unless directed to do so by the Indenture Trustee;
(ii) claim any credit on, or make any deduction from the
principal or interest (including any Note Interest Carryover) payable in respect
of, the Notes (other than amounts properly withheld from such payments under the
Code or applicable state law) or assert any claim against any present or former
Noteholder by reason of the payment of the taxes levied or assessed upon any
part of the Indenture Trust Estate; or
(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien of this Indenture to be amended,
hypothecated, subordinated, terminated or discharged, or permit any Person to be
released from any covenants or obligations with respect to the Notes under this
Indenture except as may be expressly permitted hereby, (B) permit any lien,
charge, excise, claim, security interest, mortgage or other encumbrance (other
than the lien of this Indenture) to be created on or extend to or otherwise
arise upon or burden the Indenture Trust Estate or any
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part thereof or any interest therein or the proceeds thereof (other than tax
liens and other liens that arise by operation of law, and other than as
expressly permitted by the Basic Documents) or (C) permit the lien of this
Indenture not to constitute a valid first priority (other than with respect to
any such tax or other lien) security interest in the Indenture Trust Estate.
SECTION 3.9 Annual Statement as to Compliance. The Issuer will
deliver to the Indenture Trustee and each Rating Agency, within 120 days after
the end of each fiscal year of the Issuer (commencing with the fiscal year
1998), an Officers' Certificate of the Issuer stating that:
(i) a review of the activities of the Issuer during such
year and of performance under this Indenture has been made under such Authorized
Officers' supervision; and
(ii) to the best of such Authorized Officers' knowledge,
based on such review, the Issuer has complied with all conditions and covenants
under this Indenture throughout such year, or, if there has been a default in
the compliance of any such condition or covenant, specifying each such default
known to such Authorized Officers and the nature and status thereof.
SECTION 3.10 Issuer May Consolidate, etc., Only on Certain
Terms. (a) The Issuer shall not consolidate or merge with or into any
other Person, unless:
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized and existing
under the laws of the United States of America or any State and shall expressly
assume, by an indenture supplemental hereto, executed and delivered to the
Indenture Trustee, in form satisfactory to the Indenture Trustee, the due and
punctual payment of the principal of, interest on and any Note Interest
Carryover, if any, with respect to all Notes and the performance or observance
of every agreement and covenant of this Indenture on the part of the Issuer to
be performed or observed, all as provided herein;
(ii) immediately after giving effect to such transaction,
no Default shall have occurred and be continuing;
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(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Indenture Trustee) to the effect
that such transaction will not have any material adverse Federal or Delaware
state tax consequence to the Issuer, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture
Trustee an Officers' Certificate of the Issuer and an Opinion of Counsel each
stating that such consolidation or merger and such supplemental indenture comply
with this Article III and that all conditions precedent herein provided for
relating to such transaction have been complied with (including any filing
required by the Exchange Act).
(b) The Issuer shall not convey or transfer all or substantially
all its properties or assets, including those included in the Indenture Trust
Estate, to any Person, unless:
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer the conveyance or transfer of which is
hereby restricted shall (A) be a United States citizen or a Person organized and
existing under the laws of the United States of America or any State, (B)
expressly assume, by an indenture supplemental hereto, executed and delivered to
the Indenture Trustee, in form satisfactory to the Indenture Trustee, the due
and punctual payment of the principal of, interest on and Note Interest
Carryover, if any, with respect to all Notes and the performance or observance
of every agreement and covenant of this Indenture on the part of the Issuer to
be performed or observed, all as provided herein, (C) expressly agree by means
of such supplemental indenture that all right, title and interest so conveyed or
transferred shall be subject and subordinate to the rights of Noteholders, (D)
unless otherwise provided in such supplemental indenture, expressly agree to
indemnify, defend and hold harmless the Issuer against and from any loss,
liability or expense arising under or related to this Indenture and the Notes
and (E) expressly agree by means of such supplemental indenture that such Person
(or if a group of Persons, then one specified Person) shall make all filings
with the Com-
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mission (and any other appropriate Person) required by the Exchange Act in
connection with the Notes;
(ii) immediately after giving effect to such transaction,
no Default shall have occurred and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such transaction;
(iv) the Issuer shall have received an Opinion of Counsel
(and shall have delivered copies thereof to the Indenture Trustee) to the effect
that such transaction will not have any material adverse Federal or Delaware
state tax consequence to the Issuer, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken; and
(vi) the Issuer shall have delivered to the Indenture
Trustee an Officers' Certificate of the Issuer and an Opinion of Counsel each
stating that such conveyance or transfer and such supplemental indenture comply
with this Article III and that all conditions precedent herein provided for
relating to such transaction have been complied with (including any filing
required by the Exchange Act).
SECTION 3.11 Successor or Transferee. (a) Upon any
consolidation or merger of the Issuer in accordance with Section 3.10(a), the
Person formed by or surviving such consolidation or merger (if other than the
Issuer) shall succeed to, and be substituted for, and may exercise every right
and power of, the Issuer under this Indenture with the same effect as if such
Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all the assets and properties
of the Issuer pursuant to Section 3.10(b), SLM Student Loan Trust 1997-4 will be
released from every covenant and agreement of this Indenture to be observed or
performed on the part of the Issuer with respect to the Notes immediately upon
the delivery by the Issuer of written notice to the Indenture Trustee stating
that SLM Student Loan Trust 1997-4 is to be so released.
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SECTION 3.12 No Other Business. The Issuer shall not engage in
any business other than financing, purchasing, owning, selling and managing the
Trust Student Loans in the manner contemplated by this Indenture and the other
Basic Documents and activities incidental thereto.
SECTION 3.13 No Borrowing. The Issuer shall not issue, incur,
assume, guarantee or otherwise become liable, directly or indirectly, for any
indebtedness except for the Notes.
SECTION 3.14 Obligations of Servicer and Administrator. The
Issuer shall cause the Servicer to comply with Sections 3.1, 3.2 and 3.3 of the
Administration Agreement and Section 3.7 of the Servicing Agreement and the
Administrator to comply with Sections 2.9, 3.1, 3.2 and 3.3 of the
Administration Agreement.
SECTION 3.15 Guarantees, Loans, Advances and Other
Liabilities. Except as contemplated by this Indenture and the other Basic
Documents, the Issuer shall not make any loan or advance or credit to, or
guarantee (directly or indirectly or by an instrument having the effect of
assuring another's payment or performance on any obligation or capability of so
doing or otherwise), endorse or otherwise become contingently liable, directly
or indirectly, in connection with the obligations, stocks or dividends of, or
own, purchase, repurchase or acquire (or agree contingently to do so) any stock,
obligations, assets or securities of, or any other interest in, or make any
capital contribution to, any other Person.
SECTION 3.16 Capital Expenditures. The Issuer shall not make
any expenditure (by long-term or operating lease or otherwise) for capital
assets (either realty or personalty).
SECTION 3.17 Restricted Payments. The Issuer shall not,
directly or indirectly, (i) pay any dividend or make any distribution (by
reduction of capital or otherwise), whether in cash, property, securities or a
combination thereof, to the Eligible Lender Trustee or any owner of a beneficial
interest in the Issuer or otherwise with respect to any ownership or equity
interest or security in or of the Issuer or to the Servicer or the
Administrator, (ii) redeem, purchase, retire or otherwise acquire for value any
such ownership or equity interest or security or (iii) set aside or otherwise
segregate any amounts for any such purpose; provided, however, that the Issuer
may make, or cause to be made, distributions to the Servicer, the Eligible
Lender Trustee,
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the Indenture Trustee, the Certificateholders, the Noteholders, the
Administrator and the Seller as contemplated by, and to the extent funds are
available for such purpose under, this Indenture and the other Basic Documents.
The Issuer will not, directly or indirectly, make payments to or distributions
from the Collection Account except in accordance with this Indenture and the
other Basic Documents.
SECTION 3.18 Notice of Events of Default. The Issuer shall
give the Indenture Trustee and the Rating Agencies prompt written notice of each
Event of Default hereunder and each default on the part of the Seller of its
obligations under the Sale Agreement, the Student Loan Marketing Association of
its obligations under the Purchase Agreement, the Servicer of its obligations
under the Servicing Agreement, or the Administrator of its obligations under the
Administration Agreement. In addition, the Issuer shall deliver to the Indenture
Trustee and each Rating Agency, within five days after the occurrence thereof,
written notice in the form of an Officers' Certificate of the Issuer of any
event which with the giving of notice and the lapse of time would become an
Event of Default under Section 5.1(iii), its status and what action the Issuer
is taking or proposes to take with respect thereto.
SECTION 3.19 Further Instruments and Acts. Upon request of the
Indenture Trustee, the Issuer will execute and deliver such further instruments
and do such further acts as may be reasonably necessary or proper to carry out
more effectively the purpose of this Indenture.
ARTICLE IV
Satisfaction and Discharge
SECTION 4.1 Satisfaction and Discharge of Indenture. This
Indenture shall cease to be of further effect with respect to the Notes except
as to (i) rights of registration of transfer and exchange, (ii) substitution of
mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to
receive payments of principal thereof and interest (including any Note Interest
Carryover) thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8, 3.10, 3.12 and 3.13, (v)
the rights, obligations and immunities of the Indenture Trustee hereunder
(including, without limitation, the rights of the Indenture Trustee under
Section 6.7 and the obligations of the Indenture Trustee under Section 4.2) and
(vi) the rights of Noteholders as beneficiaries hereof with respect to the
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property so deposited with the Indenture Trustee payable to all or any of them,
and the Indenture Trustee, on demand of and at the expense of the Issuer, shall
execute proper instruments acknowledging satisfaction and discharge of this
Indenture with respect to the Notes, when:
(a) either
(1) all Notes theretofore authenticated and
delivered (other than (i) Notes that have been destroyed, lost or stolen and
that have been replaced or paid as provided in Section 2.5 and (ii) Notes for
whose payment money has theretofore been deposited in trust or segregated and
held in trust by the Issuer and thereafter repaid to the Issuer or discharged
from such trust, as provided in Section 3.3) have been delivered to the
Indenture Trustee for cancellation; or
(2) all Notes not theretofore delivered to the
Indenture Trustee for cancellation
(i) have become due and payable,
(ii) will become due and payable at their
respective Note Final Maturity Date, within one year, or
(iii) are to be called for redemption
within one year under arrangements satisfactory to the Indenture Trustee for the
giving of notice of redemption by the Indenture Trustee in the name, and at the
expense, of the Issuer,
and the Issuer, in the case of (i), (ii) or (iii) above, has
irrevocably deposited or caused to be irrevocably deposited with the Indenture
Trustee cash or direct obligations of or obligations guaranteed by the United
States of America (which will mature prior to the date such amounts are
payable), in trust for such purpose, in an amount sufficient to pay and
discharge the entire indebtedness on such Notes not theretofore delivered to the
Indenture Trustee for cancellation when due to the Note Final Maturity Date;
(b) the Issuer has paid or caused to be paid all other
sums payable hereunder by the Issuer; and
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(c) the Issuer has delivered to the Indenture Trustee an
Officers' Certificate of the Issuer, an Opinion of Counsel and (if required by
the TIA or the Indenture Trustee) an Independent Certificate from a firm of
certified public accountants, each meeting the applicable requirements of
Section 11.1(a) and, subject to Section 11.2, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge of this
Indenture have been complied with.
SECTION 4.2 Application of Trust Money. All moneys deposited
with the Indenture Trustee pursuant to Section 4.1 hereof shall be held in trust
and applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent, as the
Indenture Trustee may determine, to the Noteholders of the particular Notes for
the payment or redemption of which such moneys have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal and
interest (including any Note Interest Carryover); but such moneys need not be
segregated from other funds except to the extent required herein or in the
Administration Agreement or required by law.
SECTION 4.3 Repayment of Moneys Held by Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect to
the Notes, all moneys then held by any Paying Agent other than the Indenture
Trustee under the provisions of this Indenture with respect to such Notes shall,
upon demand of the Issuer, be paid to the Indenture Trustee to be held and
applied according to Section 3.3 and thereupon such Paying Agent shall be
released from all further liability with respect to such moneys.
SECTION 4.4 Auction of Trust Student Loans. Any Trust Student
Loans remaining in the Trust as of the end of the Collection Period immediately
preceding the earliest Distribution Date on which the Pool Balance is equal to
10% or less of the initial Pool Balance three business days prior to such
Distribution Date (the "Trust Auction Date") shall be offered for sale by the
Indenture Trustee unless the Seller has exercised its option to purchase the
Trust Estate as described in Section 6.1A of the Administration Agreement with
respect to such Distribution Date. The Seller will be deemed to have waived such
option if it fails to notify the Eligible Lender Trustee and the Indenture
Trustee of its exercise thereof in writing prior to the Indenture Trustee's
acceptance of a bid to purchase such Trust Student Loans; provided, however,
that there shall be no such offer for sale if the Indenture Trustee fails to
provide notice to the Seller in accordance with this Section 4.4. The Indenture
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Trustee shall provide written notice to the Seller of any such offer for sale at
least 5 business days in advance of the Trust Auction Date. The Indenture
Trustee shall permit the Seller or any of its Affiliates to offer bids only if
the Pool Balance as of the applicable Trust Auction Date is equal to 10% or less
of the Initial Pool Balance. If at least two bids are received, the Indenture
Trustee shall solicit and resolicit new bids from all participating bidders
until only one bid remains or the remaining bidders decline to resubmit bids.
The Indenture Trustee shall accept the highest of such remaining bids if it is
equal to or in excess of both the Minimum Purchase Amount and the fair market
value of such Trust Student Loans as of the end of the Collection Period
immediately preceding the Trust Auction Date. If at least two bids are not
received or the highest bid after the resolicitation process is completed is not
equal to or in excess of the higher of the Minimum Purchase Amount and the fair
market value of the Trust Student Loans, the Indenture Trustee shall not
consummate such sale. The Indenture Trustee may consult, and, at the direction
of the Seller, shall consult, with a financial advisor, including and
underwriter of the Notes or the Administrator, to determine if the fair market
value of the trust Student Loans has been offered. The proceeds of any such sale
will be applied in the order of priority set forth in Section 5.4 (b). If the
sale is not consummated in accordance with the foregoing, the Indenture Trustee
may, but shall not be under any obligation to, solicit bids for sale of the
Trust Student Loans with respect to future Distribution Dates upon terms similar
to those described above, including the Seller's waiver of its option to
purchase the Trust Estate in accordance with Section 6.1A of the Administration
Agreement with respect to each such future Distribution Date.
ARTICLE V
Remedies
SECTION 5.1 Events of Default. "Event of Default," wherever
used herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) default in the payment of any interest (including,
subject to the limitations of Sections 2.7(d) and 8.2(c), any Note Interest
Carryover) on any Note
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when the same becomes due and payable, and such default shall continue for a
period of five days; or
(ii) default in the payment of the principal of any Note
when the same becomes due and payable on the related Note Final Maturity Date;
or
(iii) default in the observance or performance of any
covenant or agreement of the Issuer made in this Indenture (other than a
covenant or agreement, a default in the observance or performance of which is
elsewhere in this Section specifically dealt with), or any representation or
warranty of the Issuer made in this Indenture or in any certificate or other
writing having been incorrect in any material respect as of the time when made,
such default or breach having a material adverse effect on the holders of the
Notes, and such default or breach shall continue or not be cured, or the
circumstance or condition in respect of which such misrepresentation or warranty
was incorrect shall not have been eliminated or otherwise cured, for a period of
30 days after there shall have been given, by registered or certified mail, to
the Issuer by the Indenture Trustee or to the Issuer and the Indenture Trustee
by the Noteholders of at least 25% of the Outstanding Amount of the Notes, a
written notice specifying such default or incorrect representation or warranty
and requiring it to be remedied and stating that such notice is a notice of
Default hereunder; or
(iv) the filing of a decree or order for relief by a court
having jurisdiction in the premises in respect of the Issuer or any substantial
part of the Indenture Trust Estate 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 of the Issuer or for any substantial part of
the Indenture Trust Estate, or ordering the winding-up or liquidation of the
Issuer's affairs, and such decree or order shall remain unstayed and in effect
for a period of 60 consecutive days; or
(v) the commencement by the Issuer 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 the Issuer to the entry of an
order for relief in an involuntary case under any such law, or the consent by
the Issuer to the appointment or taking possession by a receiver, liquidator,
assignee, custodian, trustee, sequestrator or similar official of the Issuer or
for any substantial part of the Indenture Trust Estate, or the making by the
Issuer of any general assignment for the benefit of creditors, or
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the failure by the Issuer generally to pay its debts as such debts become due,
or the taking of action by the Issuer in furtherance of any of the foregoing.
SECTION 5.2 Acceleration of Maturity; Rescission and
Annulment. If an Event of Default should occur and be continuing, then and in
every such case the Indenture Trustee or the Noteholders of Notes representing
not less than a majority of the Outstanding Amount of the Notes may declare all
the Notes to be immediately due and payable, by a notice in writing to the
Issuer (and to the Indenture Trustee if given by Noteholders), and upon any such
declaration the unpaid principal amount of such Notes, together with accrued and
unpaid interest thereon through the date of acceleration, shall become
immediately due and payable.
At any time after such declaration of acceleration of maturity
has been made and before a judgment or decree for payment of the money due has
been obtained by the Indenture Trustee as hereinafter in this Article V
provided, the Noteholders of Notes representing a majority of the Outstanding
Amount of the Notes, by written notice to the Issuer and the Indenture Trustee,
may rescind and annul such declaration and its consequences if:
(i) the Issuer has paid or deposited with the Indenture
Trustee a sum sufficient to pay:
(a) all payments of principal of and interest on all Notes and all
other amounts that would then be due hereunder or upon such Notes if the Event
of Default giving rise to such acceleration had not occurred; and
(b) all sums paid or advanced by the Indenture Trustee hereunder
and the reasonable compensation, expenses, disbursements and advances of the
Indenture Trustee and its agents and counsel; and
(ii) all Events of Default, other than the nonpayment of
the principal of the Notes that has become due solely by such acceleration, have
been cured or waived as provided in Section 5.12.
No such rescission shall affect any subsequent default or
impair any right consequent thereto.
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SECTION 5.3 Collection of Indebtedness and Suits for
Enforcement by Indenture Trustee. The Issuer covenants that if (i) default is
made in the payment of any interest (including, subject to the limitations of
Sections 2.7(d) and 8.2(c), any Note Interest Carryover) on any Note when the
same becomes due and payable, and such default continues for a period of five
days, or (ii) default is made in the payment of the principal of any Note when
the same becomes due and payable at the related Note Final Maturity Date, the
Issuer shall, upon demand of the Indenture Trustee, pay to it, for the benefit
of the Noteholders, the whole amount then due and payable on such Notes for
principal and interest (and any Note Interest Carryover), with interest upon the
overdue principal, and, to the extent payment at such rate of interest shall be
legally enforceable, upon overdue installments of interest (and any Note
Interest Carryover), at the rate specified in Section 2.7 and in addition
thereto such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Indenture Trustee and its agents and counsel.
(a) In case the Issuer shall fail forthwith to pay such amounts
upon such demand, the Indenture Trustee, in its own name and as trustee of an
express trust, may institute a Proceeding for the collection of the sums so due
and unpaid, and may prosecute such Proceeding to judgment or final decree, and
may enforce the same against the Issuer or other obligor upon such Notes and
collect in the manner provided by law out of the property of the Issuer or other
obligor upon such Notes, wherever situated, the moneys adjudged or decreed to be
payable.
(b) If an Event of Default occurs and is continuing, the Indenture
Trustee may, as more particularly provided in Section 5.4, in its discretion,
proceed to protect and enforce its rights and the rights of the Noteholders, by
such appropriate Proceedings as the Indenture Trustee shall deem most effective
to protect and enforce any such rights, whether for the specific enforcement of
any covenant or agreement in this Indenture or in aid of the exercise of any
power granted herein, or to enforce any other proper remedy or legal or
equitable right vested in the Indenture Trustee by this Indenture or by law.
(c) In case there shall be pending, relative to the Issuer or any
other obligor upon the Notes or any Person having or claiming an ownership
interest in the Indenture Trust Estate, Proceedings under Title 11 of the United
States Code or any other applicable Federal or state bankruptcy, insolvency or
other similar law, or in case
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a receiver, assignee or trustee in bankruptcy or reorganization, liquidator,
sequestrator or similar official shall have been appointed for or taken
possession of the Issuer or its property or such other obligor or Person, or in
case of any other, comparable judicial Proceedings relative to the Issuer or
other obligor upon the Notes, or to the creditors or property of the Issuer or
such other obligor, the Indenture Trustee, irrespective of whether the principal
of any Notes shall then be due and payable, as therein expressed or by
declaration or otherwise and irrespective of whether the Indenture Trustee shall
have made any demand pursuant to the provisions of this Section, shall be
entitled and empowered, by intervention in such proceedings or otherwise:
(i) to file and prove a claim or claims for the whole
amount of principal and interest (including any Note Interest Carryover) owing
and unpaid in respect of the Notes and to file such other papers or documents as
may be necessary or advisable in order to have the claims of the Indenture
Trustee (including any claim for reasonable compensation to the Indenture
Trustee and each predecessor Indenture Trustee, and their respective agents,
attorneys and counsel, and for reimbursement of all expenses and liabilities
incurred, and all advances made, by the Indenture Trustee and each predecessor
Indenture Trustee, except as a result of negligence or bad faith) and of the
Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations,
to vote on behalf of the Noteholders in any election of a trustee, a standby
trustee or Person performing similar functions in any such Proceedings;
(iii) to collect and receive any moneys or other property
payable or deliverable on any such claims and to distribute all amounts received
with respect to the claims of the Noteholders and of the Indenture Trustee on
their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Indenture Trustee or the Noteholders allowed in any judicial proceedings
relative to the Issuer, its creditors and its property;
and any trustee, receiver, liquidator, custodian or other
similar official in any such Proceeding is hereby authorized by each of such
Noteholders to make payments to the Indenture Trustee, and, in the event that
the Indenture Trustee shall consent to the making of payments directly to such
Noteholders, to pay to the
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Indenture Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Indenture Trustee, each predecessor Indenture Trustee and
their respective agents, attorneys and counsel, and all other expenses and
liabilities incurred, and all advances made, by the Indenture Trustee and each
predecessor Indenture Trustee except as a result of negligence or bad faith.
(d) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Noteholder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(e) All rights of action and of asserting claims under this
Indenture, or under any of the Notes, may be enforced by the Indenture Trustee
without the possession of any of the Notes or the production thereof in any
trial or other Proceedings relative thereto, and any such action or Proceedings
instituted by the Indenture Trustee shall be brought in its own name as trustee
of an express trust, and any recovery of judgment, subject to the payment of the
expenses, disbursements and compensation of the Indenture Trustee, each
predecessor Indenture Trustee and their respective agents and attorneys, shall
be for the ratable benefit of the Noteholders.
(f) In any Proceedings brought by the Indenture Trustee (and also
any Proceedings involving the interpretation of any provision of this Indenture
to which the Indenture Trustee shall be a party), the Indenture Trustee shall be
held to represent all the Noteholders, and it shall not be necessary to make any
Noteholder a party to any such Proceedings.
SECTION 5.4 Remedies; Priorities. If an Event of Default shall
have occurred and be continuing, the Indenture Trustee may do one or more of the
following (subject to Section 5.5):
(a) (i) institute Proceedings in its own name and as trustee
of an express trust for the collection of all amounts then payable on the Notes
or under this Indenture with respect thereto, whether by declaration or
otherwise, enforce any
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judgment obtained, and collect from the Issuer and any other obligor upon such
Notes moneys adjudged due;
(ii) institute Proceedings from time to time for the
complete or partial foreclosure of this Indenture, with respect to the Indenture
Trust Estate;
(iii) exercise any remedies of a secured party under the
UCC with respect to the Trust Estate and take any other appropriate action to
protect and enforce the rights and remedies of the Indenture Trustee and the
Noteholders;
(iv) sell the Indenture Trust Estate or any portion
thereof or rights or interest therein, at one or more public or private sales
called and conducted in any manner permitted by law; and/or
(v) elect to have the Eligible Lender Trustee maintain
ownership of the Trust Student Loans and continue to apply collections with
respect to the Trust Student Loans as if there had been no declaration of
acceleration.
provided, however, that the Indenture Trustee may not sell or otherwise
liquidate the Indenture Trust Estate following an Event of Default, other than
an Event of Default described in Section 5.1(i) or (ii), unless (A) the
Noteholders of 100% of the Outstanding Amount of the Notes consent thereto, (B)
the proceeds of such sale or liquidation distributable to the Noteholders are
sufficient to discharge in full all amounts then due and unpaid upon such Notes
for principal and interest or (C) the Indenture Trustee determines that the
Indenture Trust Estate will not continue to provide sufficient funds for the
payment of principal of and interest on the Notes as they would have become due
if the Notes had not been declared due and payable, and the Indenture Trustee
obtains the consent of Noteholders of 66-2/3% of the Outstanding Amount of the
Notes; provided, further, that the Indenture Trustee may not sell or otherwise
liquidate the Indenture Trust Estate following an Event of Default, other than
an Event of Default described in Section 5.1(i) or (ii), unless (D) the proceeds
of such sale or liquidation distributable to the Certificateholders plus the
proceeds of the sale or liquidation of the Trust Estate distributable to the
Certificateholders are sufficient to pay to the Certificateholders the
outstanding Certificate Balance plus accrued and unpaid return thereon or (E)
after receipt of notice from the Eligible Lender Trustee that the proceeds of
such sale or liquidation distributable to the Certificateholders plus the
proceeds of the sale or liquidation of the
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Trust Estate distributable to the Certificateholders would not be sufficient to
pay to the Certificateholders the outstanding Certificate Balance plus accrued
and unpaid return thereon, the Certificateholders of at least a majority of the
Certificate Balance consent thereto. In determining such sufficiency or
insufficiency with respect to clauses (B), (C), (D) and (E), the Indenture
Trustee may, but need not, obtain and rely upon an opinion of an Independent
investment banking or accounting firm of national reputation as to the
feasibility of such proposed action and as to the sufficiency of the Indenture
Trust Estate and/or Trust Estate, as applicable, for such purpose.
(b) If the Indenture Trustee collects any money or property
pursuant to this Article V, it shall pay out the money or property in the
following order:
FIRST: to the Indenture Trustee for amounts due under Section
6.7;
SECOND: to the Servicer for due and unpaid Primary Servicing
Fees;
THIRD: to Noteholders for amounts due and unpaid on the Notes
for interest other than any Note Interest Carryover, ratably, without preference
or priority of any kind, according to the amounts due and payable on the Notes
for such interest;
FOURTH: to Noteholders for amounts due and unpaid on the Notes
for principal, ratably, without preference or priority of any kind, according to
the amounts due and payable on the Notes for principal;
FIFTH: to the Issuer for distribution to the
Certificateholders in respect of any unpaid Certificate Balance and unpaid
return on the Certificates other than any Certificate Return Carryover;
SIXTH: to the Servicer, for any unpaid Carryover Servicing
Fees;
SEVENTH: to Noteholders for any unpaid Note Interest
Carryover, ratably, without preference or priority of any kind, according to the
amount of such Note Interest Carryover attributable to each Note;
EIGHTH: to the Issuer for distribution to the
Certificateholders of any unpaid Certificate Return Carryover; and
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NINTH: to the Issuer, for distribution in accordance with the
terms of the Administration Agreement and the Trust Agreement.
The Indenture Trustee may fix a record date and payment date
for any payment to Noteholders pursuant to this Section. At least 15 days before
such record date, the Indenture Trustee shall mail to each Noteholder and the
Issuer a notice that states the record date, the payment date and the amount to
be paid.
SECTION 5.5 Optional Preservation of the Trust Student Loans.
If the Notes have been declared to be due and payable under Section 5.2
following an Event of Default and such declaration and its consequences have not
been rescinded and annulled, the Indenture Trustee may, but need not, elect to
maintain possession of the Indenture Trust Estate. It is the desire of the
parties hereto and the Noteholders that there be at all times sufficient funds
for the payment of principal of and interest (including any Note Interest
Carryover) on the Notes, and the Indenture Trustee shall take such desire into
account when determining whether or not to maintain possession of the Indenture
Trust Estate. In determining whether to maintain possession of the Indenture
Trust Estate, the Indenture Trustee may, but need not, obtain and rely upon an
opinion of an Independent investment banking or accounting firm of national
reputation as to the feasibility of such proposed action and as to the
sufficiency of the Indenture Trust Estate for such purpose.
SECTION 5.6 Limitation of Suits. No Noteholder shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Noteholder has previously given written notice
to the Indenture Trustee of a continuing Event of Default;
(ii) the Noteholders of not less than 25% of the
Outstanding Amount of the Notes have made written request to the Indenture
Trustee to institute such Proceeding in respect of such Event of Default in its
own name as Indenture Trustee hereunder;
(iii) such Noteholder or Noteholders have offered to the
Indenture Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in complying with such request;
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(iv) the Indenture Trustee for 60 days after its receipt
of such notice, request and offer of indemnity has failed to institute such
Proceeding; and
(v) no direction inconsistent with such written request
has been given to the Indenture Trustee during such 60-day period by the
Noteholders of a majority of the Outstanding Amount of the Notes;
it being understood and intended that no one or more
Noteholders shall have any right in any manner whatever by virtue of, or by
availing of, any provision of this indenture to affect, disturb or prejudice the
rights of any other Noteholders or to obtain or to seek to obtain priority or
preference over any other Noteholders or to enforce any right under this
Indenture, except in the manner herein provided.
In the event the Indenture Trustee shall receive conflicting
or inconsistent requests and indemnity from two or more groups of Noteholders,
each representing less than a majority of the Outstanding Amount of the Notes,
the Indenture Trustee in its sole discretion may determine what action, if any,
shall be taken, notwithstanding any other provisions of this Indenture.
SECTION 5.7 Unconditional Rights of Noteholders To Receive
Principal and Interest. Notwithstanding any other provisions in this Indenture,
any Noteholder shall have the right, which is absolute and unconditional, to
receive payment of the principal of and interest on such Note on or after the
respective due dates thereof expressed in such Note or in this Indenture (or, in
the case of redemption, on or after the Redemption Date) and to institute suit
for the enforcement of any such payment, and such right shall not be impaired
without the consent of such Noteholder.
SECTION 5.8 Restoration of Rights and Remedies. If the
Indenture Trustee or any Noteholder has instituted any Proceeding to enforce any
right or remedy under this Indenture and such Proceeding has been discontinued
or abandoned for any reason or has been determined adversely to the Indenture
Trustee or to such Noteholder, then and in every such case the Issuer, the
Indenture Trustee and the Noteholders shall, subject to any determination in
such Proceeding, be restored severally and respectively to their former
positions hereunder, and thereafter all rights
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and remedies of the Indenture Trustee and the Noteholders shall continue as
though no such Proceeding had been instituted.
SECTION 5.9 Rights and Remedies Cumulative. No right or remedy
herein conferred upon or reserved to the Indenture Trustee or to the Noteholders
is intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 5.10 Delay or Omission Not a Waiver. No delay or
omission of the Indenture Trustee or any Noteholder to exercise any right or
remedy accruing upon any Default shall impair any such right or remedy or
constitute a waiver of any such Default or an acquiescence therein. Every right
and remedy given by this Article V or by law to the Indenture Trustee or to the
Noteholders may be exercised from time to time, and as often as may be deemed
expedient, by the Indenture Trustee or by the Noteholders, as the case may be.
SECTION 5.11 Control by Noteholders. The Noteholders of a
majority of the Outstanding Amount of the Notes shall have the right to direct
the time, method and place of conducting any Proceeding for any remedy available
to the Indenture Trustee with respect to the Notes or exercising any trust or
power conferred on the Indenture Trustee; provided that
(i) such direction shall not be in conflict with any rule
of law or with this Indenture;
(ii) subject to the express terms of Section 5.4, any
direction to the Indenture Trustee to sell or liquidate the Indenture Trust
Estate shall be by the Noteholders of not less than 100% of the Outstanding
Amount of the Notes;
(iii) if the conditions set forth in Section 5.5 have been
satisfied and the Indenture Trustee elects to retain the Indenture Trust Estate
pursuant to such Section, then any direction to the Indenture Trustee by
Noteholders of less than 100%
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of the Outstanding Amount of the Notes to sell or liquidate the Indenture Trust
Estate shall be of no force and effect; and
(iv) the Indenture Trustee may take any other action
deemed proper by the Indenture Trustee that is not inconsistent with such
direction;
provided, however, that, subject to Section 6.1, the Indenture Trustee need not
take any action that it determines might involve it in liability or might
materially adversely affect the rights of any Noteholders not consenting to such
action.
SECTION 5.12 Waiver of Past Defaults. Prior to the time a
judgment or decree for payment of money due has been obtained as described in
Section 5.2, the Noteholders of not less than a majority of the Outstanding
Amount of the Notes may waive any past Default and its consequences except a
Default (a) in payment when due of principal of or interest (including, subject
to the limitations of Sections 2.7(d) and 8.2(c), any Note Interest Carryover)
on any of the Notes or (b) in respect of a covenant or provision hereof which
cannot be modified or amended without the consent of each Noteholder. In the
case of any such waiver, the Issuer, the Indenture Trustee and the Noteholders
shall be restored to their former positions and rights hereunder, respectively;
but no such waiver shall extend to any subsequent or other Default or impair any
right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be
deemed to have been cured and not to have occurred for every purpose of this
Indenture; but no such waiver shall extend to any subsequent or other Default or
impair any right consequent thereto.
SECTION 5.13 Undertaking for Costs. All parties to this
Indenture agree, and each Noteholder by such Noteholder's acceptance of any Note
shall be deemed to have agreed, that any court may in its discretion require, in
any suit for the enforcement of any right or remedy under this Indenture, or in
any suit against the Indenture Trustee for any action taken, suffered or omitted
by it as Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (a) any suit instituted by the
Indenture
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Trustee, (b) any suit instituted by any Noteholder, or group of Noteholders, in
each case holding in the aggregate more than 10% of the Outstanding Amount of
the Notes or (c) any suit Instituted by any Noteholder for the enforcement of
the payment of principal of or interest (including any Note Interest Carryover)
on any Note on or after the respective due dates expressed in such Note and in
this Indenture (or, in the case of redemption, on or after the Redemption Date).
SECTION 5.14 Waiver of Stay or Extension Laws. The Issuer
covenants (to the extent that it may lawfully do so) that it will not at any
time insist upon, or plead or in any manner whatsoever, claim or take the
benefit or advantage of, any stay or extension law wherever enacted, now or at
any time hereafter in force, that may affect the covenants or the performance of
this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law, and covenants that it
will not hinder, delay or impede the execution of any power herein granted to
the Indenture Trustee, but will suffer and permit the execution of every such
power as though no such law had been enacted.
SECTION 5.15 Action on Notes. The Indenture Trustee's right to
seek and recover judgment on the Notes or under this Indenture shall not be
affected by the seeking, obtaining or application of any other relief under or
with respect to this Indenture. Neither the lien of this Indenture nor any
rights or remedies of the Indenture Trustee or the Noteholders shall be impaired
by the recovery of any judgment by the Indenture Trustee against the Issuer or
by the levy of any execution under such judgment upon any portion of the
Indenture Trust Estate or upon any of the assets of the Issuer. Any money or
property collected by the Indenture Trustee shall be applied in accordance with
Section 5.4(b).
SECTION 5.16 Performance and Enforcement of Certain
Obligations. (a) Promptly following a request from the Indenture Trustee to do
so and at the Administrator's expense, the Issuer shall take all such lawful
action as the Indenture Trustee may request to compel or secure the performance
and observance by the Seller, the Student Loan Marketing Association, the
Administrator and the Servicer, as applicable, of each of their obligations to
the Issuer, whether directly or by assignment, under or in connection with the
Sale Agreement, the Purchase Agreement, the Administration Agreement and the
Servicing Agreement, respectively, in accordance with the terms thereof, and to
exercise any and all rights, remedies, powers and privileges lawfully available
to the Issuer under or in connection with the Sale Agreement,
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the Purchase Agreement, the Administration Agreement and the Servicing
Agreement, as the case may be, to the extent and in the manner directed by the
Indenture Trustee, including the transmission of notices of default on the part
of the Seller, the Student Loan Marketing Association, the Administrator or the
Servicer thereunder and the institution of legal or administrative actions or
proceedings to compel or secure performance by the Seller, the Student Loan
Marketing Association, the Administrator or the Servicer of each of their
obligations under the Sale Agreement, the Purchase Agreement, the Administration
Agreement and the Servicing Agreement, respectively.
(b) If an Event of Default has occurred and is continuing, the
Indenture Trustee may, and at the written direction of the Noteholders of
66-2/3% of the Outstanding Amount of the Notes shall, exercise all rights,
remedies, powers, privileges and claims of the Issuer against the Seller, the
Student Loan Marketing Association, the Administrator or the Servicer under or
in connection with the Sale Agreement, the Purchase Agreement, the
Administration Agreement and the Servicing Agreement, respectively, including
the right or power to take any action to compel or secure performance or
observance by the Seller, the Student Loan Marketing Association, the
Administrator or the Servicer of each of their obligations to the Issuer
thereunder, whether directly or by assignment, and to give any consent, request,
notice, direction, approval, extension or waiver under the Sale Agreement, the
Purchase Agreement, the Administration Agreement and the Servicing Agreement,
respectively, and any right of the Issuer to take such action shall be
suspended.
ARTICLE VI
The Indenture Trustee
SECTION 6.1 Duties of Indenture Trustee. (a) If an Event of
Default has occurred and is continuing, the Indenture Trustee shall exercise the
rights and powers vested in it by this Indenture and use the same degree of care
and skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct such person's own affairs.
(b) Except during the continuance of an Event of Default:
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(i) the Indenture Trustee undertakes to perform such
duties and only such duties as are specifically set forth in this Indenture and
no implied covenants or obligations shall be read into this Indenture against
the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the
Indenture Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Indenture Trustee and conforming to the requirements of this
Indenture; provided, however, that the Indenture Trustee shall examine the
certificates and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Indenture Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act or its own willful
misconduct, except that:
(i) this paragraph does not limit the effect of paragraph
(b) of this Section;
(ii) the Indenture Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer unless it is
proved that the Indenture Trustee was negligent in ascertaining the pertinent
facts; and
(iii) the Indenture Trustee shall not be liable with
respect to any action it takes or omits to take in good faith in accordance with
a direction received by it pursuant to Section 5.11.
(d) The Indenture Trustee shall not be liable for interest on any
money received by it except as the Indenture Trustee may agree in writing with
the Issuer.
(e) Money held in trust by the Indenture Trustee need not be
segregated from other funds except to the extent required by law or the terms of
this Indenture or the other Basic Documents.
(f) No provision of this Indenture shall require the Indenture
Trustee to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or in the exercise of any of
its rights or powers, if it shall have reasonable grounds to believe that
repayments of such funds or adequate
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indemnity satisfactory to it against any loss, liability or expense is not
reasonably assured to it.
(g) Except as expressly provided in the Basic Documents, the
Indenture Trustee shall have no obligation to administer, service or collect the
Trust Student Loans or to maintain, monitor or otherwise supervise the
administration, servicing or collection of the Trust Student Loans.
(h) In the event that the Indenture Trustee is the Paying Agent or
the Note Registrar, the rights and protections afforded to the Indenture Trustee
pursuant to this Indenture shall also be afforded to the Indenture Trustee in
its capacity as Paying Agent or Note Registrar.
(i) Every provision of this Indenture relating to the
conduct or affecting the liability of or affording protection to the Indenture
Trustee shall be subject to the provisions of this Section and to the provisions
of the TIA.
SECTION 6.2 Rights of Indenture Trustee. The Indenture Trustee
may rely on any document believed by it to be genuine and to have been signed or
presented by the proper Person. The Indenture Trustee need not investigate any
fact or matter stated in such document.
(b) Before the Indenture Trustee acts or refrains from acting, it
may require and shall be entitled to receive an Officers' Certificate of the
Issuer and/or an Opinion of Counsel. The Indenture Trustee shall not be liable
for any action it takes or omits to take in good faith in reliance on such
Officers' Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee, and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of, or for the
supervision of, any such agent, attorney, custodian or nominee appointed with
due care by it hereunder.
(d) The Indenture Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers;
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provided, however, that the Indenture Trustee's conduct does not constitute
willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice
or opinion of counsel with respect to legal matters relating to this Indenture
and the Notes shall be full and complete authorization and protection from
liability in respect to any action taken, omitted or suffered by it hereunder in
good faith and in accordance with the advice or opinion of such counsel.
SECTION 6.3 Individual Rights of Indenture Trustee. The
Indenture Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with the Issuer or its Affiliates
with the same rights it would have if it were not Indenture Trustee. Any Paying
Agent, Note Registrar, co-registrar or co-paying agent may do the same with like
rights. However, the Indenture Trustee must comply with Sections 6.11 and 6.12.
SECTION 6.4 Indenture Trustee's Disclaimer. The Indenture
Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture or the Notes, it shall not be accountable
for the Issuer's use of the proceeds from the Notes, and it shall not be
responsible for any statement of the Issuer in the Indenture or in any document
issued in connection with the sale of the Notes or in the Notes other than the
Indenture Trustee's certificate of authentication.
SECTION 6.5 Notice of Defaults; Seller Insolvency. (a) If a
Default occurs and is continuing and if it is either actually known or written
notice of the existence thereof has been delivered to a Responsible Officer of
the Indenture Trustee, the Indenture Trustee shall mail notice of the Default to
each Noteholder within 90 days and to each Rating Agency as soon as practicable
within 30 days after it occurs. Except in the case of a Default in payment of
principal of or interest (including any Note Interest Carryover) on any Note
(including payments pursuant to the mandatory redemption provisions of such
Note), the Indenture Trustee may withhold the notice if and so long as a
committee of its Responsible Officers in good faith determines that withholding
the notice is in the interests of Noteholders. Except as provided in the first
sentence of this Section 6.5(a), in no event shall the Indenture Trustee be
deemed to have knowledge of a Default or an Event of Default.
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(b) If the Indenture Trustee receives notice from the Eligible
Lender Trustee of the occurrence of an Insolvency Event with respect to the
Seller pursuant to Section 9.2 of the Trust Agreement, the Indenture Trustee
shall give prompt written notice to the Noteholders of the occurrence of such
event and of the effect of such event under such Section 9.2. Upon termination
of the Trust pursuant to such Section 9.2, the Indenture Trustee shall, if so
directed by the Eligible Lender Trustee, sell the Trust Estate (other than the
Trust Accounts) in a commercially reasonable manner and on commercially
reasonable terms. The proceeds of any such sale shall be treated as collections
under the Administration Agreement.
SECTION 6.6 Reports by Indenture Trustee to Noteholders. The
Indenture Trustee shall deliver to each Noteholder (and to each Person who was a
Noteholder at any time during the applicable calendar year) such information as
may be required to enable such holder to prepare its Federal and state income
tax returns. Within 60 days after each December 31 beginning with the December
31 following the date of this Indenture, the Indenture Trustee shall mail to
each Noteholder a brief report as of such December 31 that complies with TIA
Section 313(a) if required by said section. The Indenture Trustee shall also
comply with TIA Section 313(b). A copy of each such report required pursuant to
TIA Section 313(a) or (b) shall, at the time of such transaction to Noteholders,
be filed by the Indenture Trustee with the Commission and with each securities
exchange, if any, upon which the Notes are listed, provided that the Issuer has
previously notified the Indenture Trustee of such listing.
SECTION 6.7 Compensation and Indemnity. The Issuer shall cause
the Seller to pay to the Indenture Trustee reasonable compensation for its
services in accordance with a separate agreement between the Seller and the
Indenture Trustee and shall cause the Seller to reimburse the Indenture Trustee
for all reasonable out-of-pocket expenses incurred or made by it as provided in
such separate agreement. The Indenture Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Issuer
shall cause the Administrator to indemnify the Indenture Trustee and its
directors, officers, employees and agents against any and all loss, liability or
expense (including attorneys' fees) incurred by it in connection with the
administration of this trust and the performance of its duties hereunder and
under 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
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Documents. The Issuer shall cause the Administrator to 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 acceptable to it in its
sole discretion the reasonable 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.
The Issuer's payment obligations to the Indenture Trustee
pursuant to this Section shall survive the discharge of this Indenture. When the
Indenture Trustee incurs expenses after the occurrence of a Default specified in
Section 5.1(iv) or (v) with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the United States Code
or any other applicable Federal or state bankruptcy, insolvency or similar law.
SECTION 6.8 Replacement of Indenture Trustee. No resignation
or removal of the Indenture Trustee and no appointment of a successor Indenture
Trustee shall become effective until the acceptance of appointment by the
successor Indenture Trustee pursuant to this Section 6.8. The Indenture Trustee
may resign at any time by so notifying the Issuer. The Noteholders of a majority
in Outstanding Amount of the Notes may remove the Indenture Trustee by so
notifying the Indenture Trustee and may appoint a successor Indenture Trustee.
The Issuer shall remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section
6.11;
(ii) an Insolvency Event occurs with respect to the
Indenture Trustee;
(iii) a receiver or other public officer takes charge of
the Indenture Trustee or its property; or
(iv) the Indenture Trustee otherwise becomes incapable of
acting.
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If the Indenture Trustee resigns or is removed or if a vacancy
exists in the office of Indenture Trustee for any reason (the Indenture Trustee
in such event being referred to herein as the retiring Indenture Trustee), the
Issuer shall promptly appoint a successor Indenture Trustee.
A successor Indenture Trustee shall deliver a written
acceptance of its appointment to the retiring Indenture Trustee and to the
Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee
shall become effective, and the successor Indenture Trustee shall have all the
rights, powers and duties of the Indenture Trustee under this Indenture. The
successor Indenture Trustee shall mail a notice of its succession to
Noteholders. The retiring Indenture Trustee shall promptly transfer all property
held by it as Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within
60 days after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Noteholders of a majority in Outstanding
Amount of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee. The successor Indenture Trustee
shall give notice of its appointment as successor Indenture Trustee to the
Rating Agencies.
If the Indenture Trustee fails to comply with Section 6.11,
any Noteholder may petition any court of competent jurisdiction for the removal
of the Indenture Trustee and the appointment of a successor Indenture Trustee.
Notwithstanding the replacement of the Indenture Trustee
pursuant to this Section, the Issuer's and the Administrator's obligations under
Section 6.7 shall continue for the benefit of the retiring Indenture Trustee.
SECTION 6.9 Successor Indenture Trustee by Merger. If the
Indenture Trustee consolidates with, merges or converts into, or transfers all
or substantially all its corporate trust business or assets to, another
corporation or banking association, the resulting, surviving or transferee
corporation without any further act shall be the successor Indenture Trustee,
provided that such corporation or banking association shall be otherwise
qualified and eligible under Section 6.11. The Indenture Trustee shall provide
the Rating Agencies prior written notice of any such transaction.
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In case at the time such successor or successors by merger,
conversion or consolidation to the Indenture Trustee shall succeed to the trusts
created by this Indenture any of the Notes shall have been authenticated but not
delivered, any such successor to the Indenture Trustee may adopt the certificate
of authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force which it is anywhere in the Notes or in this Indenture
provided that the certificate of the Indenture Trustee shall have.
SECTION 6.10 Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Indenture, at any time, for the
purpose of meeting any legal requirement of any jurisdiction in which any part
of the Indenture Trust Estate may at the time be located, the Indenture Trustee
shall have the power and may execute and deliver all instruments to appoint one
or more Persons to act as a co-trustee or co-trustees, or separate trustee or
separate trustees, of all or any part of the Indenture Trust Estate, and to vest
in such Person or Persons, in such capacity and for the benefit of the
Noteholders, such title to the Indenture Trust Estate, or any part hereof, and,
subject to the other provisions of this Section, such powers, duties,
obligations, rights and trusts as the Indenture Trustee may consider necessary
or desirable. No such appointment shall relieve the Indenture Trustee of its
obligations hereunder. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor trustee under Section
6.11 and no notice to Noteholders of the appointment of any co-trustee or
separate trustee shall be required under Section 6.8 hereof.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred
or imposed upon the Indenture Trustee shall be conferred or imposed upon and
exercised or performed by the Indenture Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Indenture Trustee joining in
such act), except to the extent that under any law of any jurisdiction in which
any particular act or acts are to be performed the Indenture Trustee shall be
incompetent or unqualified to perform such
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act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Indenture Trust Estate or any portion
thereof in any such jurisdiction) shall be exercised and performed singly by
such separate trustee or co-trustee, but solely at the direction of the
Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Indenture and
the conditions of this Article VI. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Indenture Trustee or separately, as may be provided therein, subject to all the
provisions of this Indenture, specifically including every provision of this
Indenture relating to the conduct of, affecting the liability of, or affording
protection to, the Indenture Trustee. Every such instrument shall be filed with
the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute
the Indenture Trustee, its agent or attorney-in-fact with full power and
authority, to the extent not prohibited by law, to do any lawful act under or in
respect of this Indenture on its behalf and in its name. If any separate trustee
or co-trustee shall die, become incapable of acting, resign or be removed, all
its estates, properties, rights, remedies and trusts shall vest in and be
exercised by the Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 6.11 Eligibility; Disqualification. The Indenture
Trustee shall at all times satisfy the requirements of TIA Section 310(a) and
the requirements of an "eligible lender" under 20 USC Section1085(d). The
Indenture Trustee shall have a combined capital and surplus of at least
$50,000,000 as set forth in its most recent published annual report of condition
and it shall have a long-term senior unsecured debt rating of not less than
investment grade by each of the Rating Agencies. The Inden-
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ture Trustee shall comply with TIA Section 310(b), including the optional
provision permitted by the second sentence of TIA Section 310(b)(9); provided,
however, that there shall be excluded from the operation of TIA Section
310(b)(1) any indenture or indentures under which other securities of the Issuer
are outstanding if the requirements for such exclusion set forth in TIA Section
310(b)(1) are met.
SECTION 6.12 Preferential Collection of Claims Against Issuer.
The Indenture Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). An Indenture Trustee who has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated.
ARTICLE VII
Noteholders' Lists and Reports
SECTION 7.1 Issuer To Furnish Indenture Trustee Names and
Addresses of Noteholders. The Issuer will furnish or cause to be furnished to
the Indenture Trustee (a) not more than five days after the earlier of (i) each
Record Date and (ii) three months after the last Record Date, a list, in such
form as the Indenture Trustee may reasonably require, of the names and addresses
of the Noteholders as of such Record Date, (b) at such other times as the
Indenture Trustee may request in writing, within 30 days after receipt by the
Issuer of any such request, a list of similar form and content as of a date not
more than 10 days prior to the time such list is furnished; provided, however,
that so long as the Indenture Trustee is the Note Registrar, no such list shall
be required to be furnished.
SECTION 7.2 Preservation of Information; Communications to
Noteholders. The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Noteholders contained in
the most recent list furnished to the Indenture Trustee as provided in Section
7.1 and the names and addresses of Noteholders received by the Indenture Trustee
in its capacity as Note Registrar. The Indenture Trustee may destroy any list
furnished to it as provided in such Section 7.1 upon receipt of a new list so
furnished.
(a) Noteholders may communicate pursuant to TIA Section 312(b)
with other Noteholders with respect to their rights under this Indenture or
under the Notes. Upon receipt by the Indenture Trustee of any request by three
or more Noteholders or
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by one or more holders of Notes evidencing not less than 25% of the Outstanding
Amount of the Notes to receive a copy of the current list of Noteholders
(whether or not made pursuant to TIA Section 312(b)), the Indenture Trustee
shall promptly notify the Administrator thereof by providing to the
Administrator a copy of such request and a copy of the list of Noteholders
produced in response thereto.
(b) The Issuer, the Indenture Trustee and the Note Registrar shall
have the protection of TIA Section 312(c).
(c) On each Distribution Date the Indenture Trustee shall provide
to each Noteholder of record as of the related Record Date the information
provided by the Administrator to the Indenture Trustee on the related
Determination Date pursuant to Section 2.9 of the Administration Agreement.
(d) The Indenture Trustee shall furnish to the Noteholders
promptly upon receipt of a written request therefor, duplicates or copies of all
reports, notices, requests, demands, certificates, financial statements and any
other instruments furnished to the Indenture Trustee under the Basic Documents.
The Indenture Trustee shall furnish to the Noteholders promptly upon receipt
thereof from the Eligible Lender Trustee notice of any amendment of the
Administration Agreement pursuant to Section 8.5 of the Administration
Agreement.
SECTION 7.3 Reports by Issuer. (a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after
the Issuer is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may from time to time by
rules and regulations prescribe) which the Issuer may be required to file with
the Commission pursuant to Section 13 or 15(d) of the Exchange Act;
(ii) file with the Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by the
Commission such additional information, documents and reports with respect to
compliance by the Issuer with the conditions and covenants of this Indenture as
may be required from time to time by such rules and regulations; and
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(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA Section
313(c)) such summaries of any information, documents and reports required to be
filed by the Issuer pursuant to clauses (i) and (ii) of this Section 7.3(a) as
may be required by rules and regulations prescribed from time to time by the
Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on December 31 of each year.
ARTICLE VIII
Accounts, Disbursements and Releases
SECTION 8.1 Collection of Money. Except as otherwise expressly
provided herein, the Indenture Trustee may demand payment or delivery of, and
shall receive and collect, directly and without intervention or assistance of
any fiscal agent or other intermediary, all money and other property payable to
or receivable by the Indenture Trustee pursuant to this Indenture. The Indenture
Trustee shall apply all such money received by it on behalf of Noteholders
pursuant to the Administration Agreement as provided in this Indenture. Except
as otherwise expressly provided in this Indenture, if any default occurs in the
making of any payment or performance under any agreement or instrument that is
part of the Indenture Trust Estate, the Indenture Trustee may take such action
as may be appropriate to enforce such payment or performance, including the
institution and prosecution of appropriate Proceedings. Any such action shall be
without prejudice to any right to claim a Default under this Indenture and any
right to proceed thereafter as provided in Article V.
SECTION 8.2 Trust Accounts. (a) On or prior to the Closing
Date, the Issuer shall cause the Administrator to establish and maintain, in the
name of the Indenture Trustee, for the benefit of the Noteholders and the
Certificateholders, the Trust Accounts as provided in Section 2.3 of the
Administration Agreement.
(b) On or before the Business Day preceding each Distribution
Date, all Available Funds with respect to the preceding Collection Period will
be deposited in the Collection Account as provided in Section 2.4 of the
Administration Agreement. On or before each Distribution Date, the Noteholders'
Distribution Amount and any Note Interest Carryover, if any, with respect to the
preceding Collection Period will be
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distributed from the Collection Account and any other Trust Account to the
Indenture Trustee (or any other Paying Agent) on behalf of the Noteholders as
provided in Sections 2.7 and 2.8 of the Administration Agreement.
(c) On each Distribution Date and Redemption Date, the Indenture
Trustee (or any other Paying Agent) shall distribute all amounts received by it
on behalf of Noteholders pursuant to paragraph (b) above to Noteholders in
respect of the Notes to the extent of amounts payable on the Notes for
principal, interest and any Note Interest Carryover in the following amounts and
in the following order of priority (except as otherwise provided in Section
5.4(b)):
(i) the Noteholders' Interest Distribution Amount, to the
Noteholders in an amount equal to the accrued and unpaid interest on the Notes
at the respective Note Rates; provided that if there are not sufficient funds
received to pay the entire amount of accrued and unpaid interest then due on the
Notes at the respective Note Rates, the amounts so received shall be applied to
the payment of such interest on the Notes on a pro rata basis;
(ii) the Noteholders' Principal Distribution Amount, to
the Noteholders of the Class A-1 Notes until the Outstanding Amount of the Class
A-1 Notes is reduced to zero; provided, that if there are not sufficient funds
received to pay the Outstanding Amount of the Class A-1 Notes, the amounts so
received shall be applied to the payment of principal on the Class A-1 Notes on
a pro rata basis;
(iii) the Noteholders' Principal Distribution Amount, to
the Noteholders of the Class A-2 Notes until the Outstanding Amount of the Class
A-2 Notes is reduced to zero; provided, that if there are not sufficient funds
received to pay the Outstanding Amount of the Class A-2 Notes, the amounts so
received shall be applied to the payment of principal on the Class A-2 Notes on
a pro rata basis; and
(iv) the Note Interest Carryover, if any, to the
Noteholders; provided that if insufficient funds are received to pay the entire
Note Interest Carryover, the amounts so received shall be applied to the payment
of such Note Interest Carryover on a pro rata basis.
SECTION 8.3 General Provisions Regarding Accounts. (a) So long
as no Default shall have occurred and be continuing, all or a portion of the
funds
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in the Trust Accounts shall be invested in Eligible Investments and reinvested
by the Indenture Trustee upon Issuer Order, subject to the provisions of Section
2.3B of the Administration Agreement. All income or other gain from investments
of moneys deposited in the Trust Accounts shall be deposited by the Indenture
Trustee in the Collection Account, and any loss resulting from such investments
shall be charged to such Trust Account. The Issuer will not direct the Indenture
Trustee to make any investment of any funds or to sell any investment held in
any of the Trust Accounts unless the security interest granted and perfected in
such account will continue to be perfected in such investment or the proceeds of
such sale, in either case without any further action by any Person, and, in
connection with any direction to the Indenture Trustee to make any such
investment or sale, if requested by the Indenture Trustee, the Issuer shall
deliver to the Indenture Trustee an Opinion of Counsel, acceptable to the
Indenture Trustee, to such effect.
(b) Subject to Section 6.1(c), the Indenture Trustee shall not in
any way be held liable for the selection of Eligible Investments or by reason of
any insufficiency in any of the Trust Accounts resulting from any loss on any
Eligible Investment included therein except for losses attributable to the
Indenture Trustee's failure to make payments on such Eligible Investments issued
by the Indenture Trustee, in its commercial capacity as principal obligor and
not as trustee, in accordance with their terms.
(c) If (i) the Issuer shall have failed to give investment
directions for any funds on deposit in the Trust Accounts to the Indenture
Trustee by 10:00 a.m. Eastern Time (or such other time as may be agreed by the
Issuer and Indenture Trustee) on any Business Day; or (ii) a Default shall have
occurred and be continuing with respect to the Notes but the Notes shall not
have been declared due and payable pursuant to Section 5.2, or, if such Notes
shall have been declared due and payable following an Event of Default, amounts
collected or receivable from the Indenture Trust Estate are being applied in
accordance with Section 5.5 as if there had not been such a declaration; then
the Indenture Trustee shall invest and reinvest funds in the Trust Accounts in
the Eligible Investments described in clause (d) of the definition thereof.
SECTION 8.4 Release of Indenture Trust Estate. (a) Subject to
the payment of its fees and expenses pursuant to Section 6.7, the Indenture
Trustee may, and when required by the provisions of this Indenture shall,
execute instruments to release property from the lien of this Indenture, or
convey the Indenture Trustee's interest in the same, in a manner and under
circumstances that are not inconsistent
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with the provisions of this Indenture. No party relying upon an instrument
executed by the Indenture Trustee as provided in this Article VIII shall be
bound to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
moneys.
(b) The Indenture Trustee shall, at such time as there are no
Notes Outstanding and all sums due the Indenture Trustee pursuant to Section 6.7
have been paid, release any remaining portion of the Indenture Trust Estate that
secured the Notes from the lien of this Indenture and release to the Issuer or
any other Person entitled thereto any funds then on deposit in the Trust
Accounts. The Indenture Trustee shall release property from the lien of this
Indenture pursuant to this Section 8.4(b) only upon receipt of an Issuer Request
accompanied by an Officers' Certificate of the Issuer, an Opinion of Counsel and
(if required by the TIA) Independent Certificates in accordance with TIA
Sections 314(c) and 314(d)(1) meeting the applicable requirements of Section
11.1.
(c) Each Noteholder, by the acceptance of a Note, acknowledges
that from time to time the Indenture Trustee shall release the lien of this
Indenture on any Trust Student Loan to be sold to (i) the Seller in accordance
with Section 6 of the Sale Agreement, (ii) to the Servicer in accordance with
Section 3.5 of the Servicing Agreement and (iii) to another eligible lender
holding one or more Serial Loans with respect to such Trust Student Loan, in
accordance with Section 3.11E of the Servicing Agreement, and each Noteholder,
by the acceptance of a Note, consents to any such release.
SECTION 8.5 Opinion of Counsel. The Indenture Trustee shall
receive at least seven days' notice when requested by the Issuer to take any
action pursuant to Section 8.4(a), accompanied by copies of any instruments
involved, and the Indenture Trustee shall also require, except in connection
with any action contemplated by Section 8.4(c), as a condition to such action,
an Opinion of Counsel, in form and substance satisfactory to the Indenture
Trustee, stating the legal effect of any such action, outlining the steps
required to complete the same, and concluding that all conditions precedent to
the taking of such action have been complied with and such action will not
materially and adversely impair the security for the Notes or the rights of the
Noteholders in contravention of the provisions of this Indenture; provided,
however, that such Opinion of Counsel shall not be required to express an
opinion as to the fair value of the Indenture Trust Estate. Counsel rendering
any such opinion may rely, without independent investigation, on the accuracy
and validity of any
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certificate or other instrument delivered to the Indenture Trustee in connection
with any such action.
ARTICLE IX
Supplemental Indentures
SECTION 9.1 Supplemental Indentures Without Consent of
Noteholders. Without the consent of any Noteholders but with prior notice to the
Rating Agencies, the Issuer and the Indenture Trustee, when authorized by an
Issuer Order, at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the
Trust Indenture Act as in force at the date of the execution thereof), in form
satisfactory to the Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property
at any time subject to the lien of this Indenture, or better to assure, convey
and confirm unto the Indenture Trustee any property subject or required to be
subjected to the lien of this Indenture, or to subject to the lien of this
Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein and in
the Notes contained;
(iii) to add to the covenants of the Issuer, for the
benefit of the Noteholders, or to surrender any right or power herein conferred
upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may be inconsistent with
any other provision herein or in any supplemental indenture or to make any other
provisions with respect to matters or questions arising under this Indenture or
in any supplemental indenture; provided that such action shall not materially
adversely affect the interests of the Noteholders;
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(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes and to
add to or change any of the provisions of this Indenture as shall be necessary
to facilitate the administration of the trusts hereunder by more than one
trustee, pursuant to the requirements of Article VI; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the qualification of
this Indenture under the TIA or under any similar Federal statute hereafter
enacted and to add to this Indenture such other provisions as may be expressly
required by the TIA.
The Indenture Trustee is hereby authorized to join in the
execution of any such supplemental indenture and to make any further appropriate
agreements and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an
Issuer Order, may, also without the consent of any of the Noteholders but with
prior notice to the Rating Agencies, enter into an indenture or indentures
supplemental hereto for the purpose of adding any provisions to, or changing in
any manner or eliminating any of the provisions of, this Indenture or of
modifying in any manner the rights of the Noteholders under this Indenture;
provided, however, that such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Noteholder.
SECTION 9.2 Supplemental Indentures with Consent of
Noteholders. The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, also may, with prior notice to the Rating Agencies and with the consent
of the Noteholders of not less than a majority of the Outstanding Amount of the
Notes, by Act of such Noteholders delivered to the Issuer and the Indenture
Trustee, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or of modifying in any manner the
rights of the Noteholders under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Noteholder of each
Outstanding Note affected thereby:
(i) change the date of payment of any installment of
principal of or interest (including any Note Interest Carryover) on any Note, or
reduce the principal
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amount thereof, the interest rate thereon or the Redemption Price with respect
thereto, change the provisions of this Indenture relating to the application of
collections on, or the proceeds of the sale of, the Indenture Trust Estate to
payment of principal of or interest (including any Note Interest Carryover) on
the Notes, or change any place of payment where, or the coin or currency in
which, any Note or the interest thereon is payable, or impair the right to
institute suit for the enforcement of the provisions of this Indenture requiring
the application of funds available therefor, as provided in Article V, to the
payment of any such amount due on the Notes on or after the respective due dates
thereof (or, in the case of redemption, on or after the Redemption Date);
(ii) reduce the percentage of the Outstanding Amount of
the Notes, the consent of the Noteholders of which is required for any such
supplemental indenture, or the consent of the Noteholders of which is required
for any waiver of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences provided for in this
Indenture;
(iii) modify or alter the provisions of the proviso to the
definition of the term "Outstanding";
(iv) reduce the percentage of the Outstanding Amount of
the Notes required to direct the Indenture Trustee to direct the Issuer to sell
or liquidate the Indenture Trust Estate pursuant to Section 5.4;
(v) modify any provision of this Section except to
increase any percentage specified herein or to provide that certain additional
provisions of this Indenture or the other Basic Documents cannot be modified or
waived without the consent of the Noteholder of each Outstanding Note affected
thereby;
(vi) modify any of the provisions of this Indenture in
such manner as to affect the calculation of the amount of any payment of
interest (including any Note Interest Carryover) or principal due on any Note on
any Distribution Date (including the calculation of any of the individual
components of such calculation) or to affect the rights of the Noteholders to
the benefit of any provisions for the mandatory redemption of the Notes
contained herein; or
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(vii) permit the creation of any lien ranking prior to or
on a parity with the lien of this Indenture with respect to any part of the
Indenture Trust Estate or, except as otherwise permitted or contemplated herein,
terminate the lien of this Indenture on any property at any time subject hereto
or deprive any Noteholder of any Note of the security provided by the lien of
this Indenture.
It shall not be necessary for any Act of Noteholders under
this Section to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
Promptly after the execution by the Issuer and the Indenture
Trustee of any supplemental indenture pursuant to this Section, the Indenture
Trustee shall mail to the Noteholders of the Notes to which such amendment or
supplemental indenture relates a notice setting forth in general terms the
substance of such supplemental indenture. Any failure of the Indenture Trustee
to mail such notice, or any defect therein, shall not, however, in any way
impair or affect the validity of any such supplemental indenture.
SECTION 9.3 Execution of Supplemental Indentures. In
executing, or permitting the additional trusts created by, any supplemental
indenture permitted by this Article IX or the modifications thereby of the
trusts created by this Indenture, the Indenture Trustee shall be entitled to
receive, and subject to Sections 6.1 and 6.2, shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
supplemental indenture is authorized or permitted by this Indenture. The
Indenture Trustee may, but shall not be obligated to, enter into any such
supplemental indenture that affects the Indenture Trustee's own rights, duties,
liabilities or immunities under this Indenture or otherwise.
SECTION 9.4 Effect of Supplemental Indenture. Upon the
execution of any supplemental indenture pursuant to the provisions hereof, this
Indenture shall be and be deemed to be modified and amended in accordance
therewith with respect to the Notes affected thereby, and the respective rights,
limitations of rights, obligations, duties, liabilities and immunities under
this Indenture of the Indenture Trustee, the Issuer and the Noteholders shall
thereafter be determined, exercised and enforced hereunder subject in all
respects to such modifications and amendments, and all the terms and conditions
of any such supplemental indenture shall be and be deemed to be part of the
terms and conditions of this Indenture for any and all purposes.
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SECTION 9.5 Conformity with Trust Indenture Act. Every
amendment of this Indenture and every supplemental indenture executed pursuant
to this Article IX shall conform to the requirements of the Trust Indenture Act
as then in effect so long as this Indenture shall then be qualified under the
Trust Indenture Act.
SECTION 9.6 Reference in Notes to Supplemental Indentures.
Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article IX may, and if required by the Indenture
Trustee shall, bear a notation in form approved by the Indenture Trustee as to
any matter provided for in such supplemental indenture. If the Issuer or the
Indenture Trustee shall so determine, new Notes so modified as to conform, in
the opinion of the Indenture Trustee and the Issuer, to any such supplemental
indenture may be prepared and executed by the Issuer and authenticated and
delivered by the Indenture Trustee in exchange for Outstanding Notes.
ARTICLE X
Redemption of Notes
SECTION 10.1 Redemption. The Indenture Trustee shall, upon
receipt of written notice from the Eligible Lender Trustee or the Depositor
pursuant to Section 9.2 of the Trust Agreement of an Insolvency Event with
respect to the Depositor, give prompt written notice to the Noteholders of the
occurrence of such event. In the event that the assets of the Trust are sold
pursuant to Section 9.2 of the Trust Agreement, that portion of the amounts on
deposit in the Trust Accounts to be distributed to the Noteholders shall be paid
to the Noteholders up to the Outstanding Amount of the Notes and all accrued and
unpaid interest thereon and any accrued Note Interest Carryover with respect
thereto (but only to the extent provided by Sections 2.7(d) and 8.2(c)). If
amounts are to be paid to Noteholders pursuant to this Section 10.1, the notice
of such event from the Indenture Trustee to the Noteholders shall include notice
of the redemption of Notes by application of such amounts on the next
Distribution Date which is not sooner than 15 days after the date of such notice
(the "Redemption Date"), whereupon all such amounts shall be payable on the
Redemption Date.
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SECTION 10.2 Form of Redemption Notice. Notice of redemption
under Section 10.1 shall be given by the Indenture Trustee by first-class mail,
postage prepaid, or by facsimile, mailed or transmitted on or prior to the
applicable Redemption Date to each Noteholder, as of the close of business on
the Record Date preceding the applicable Redemption Date, at such Noteholder's
address or facsimile number appearing in the Note Register.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place were such Notes are to be surrendered for
payment of the Redemption Price (which shall be the office or agency of the
Issuer to be maintained as provided in Section 3.2).
Notice of redemption of the Notes shall be given by the
Indenture Trustee in the name and at the expense of the Issuer. Failure to give
notice of redemption, or any defect therein, to any Noteholder of any Note shall
not impair or affect the validity of the redemption of any other Note.
SECTION 10.3 Notes Payable on Redemption Date. The Notes or
portions thereof to be redeemed shall on the Redemption Date become due and
payable at the Redemption Price and (unless the Issuer shall default in the
payment of the Redemption Price) no interest shall accrue on the Redemption
Price for any period after the date to which accrued interest is calculated for
purposes of calculating the Redemption Price.
ARTICLE XI
Miscellaneous
SECTION 11.1 Compliance Certificates and Opinions, etc. Upon
any application or request by the Issuer to the Indenture Trustee to take any
action under any provision of this Indenture, the Issuer shall furnish to the
Indenture Trustee
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and the Rating Agencies (i) an Officers' Certificate of the Issuer stating that
all conditions precedent, if any, provided for in this Indenture relating to the
proposed action have been complied with, (ii) an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with and (iii) (if required by the TIA) an Independent Certificate from
a firm of certified public accountants meeting the applicable requirements of
this Section, except that, in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture, no additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this indenture shall include:
(i) a statement that each signatory of such certificate
or opinion has read or has caused to be read such covenant or condition and the
definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained in
such certificate or opinion are based;
(iii) a statement that, in the opinion of each such
signatory, such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as to whether
or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each
such signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Collateral or other
property or securities with the Indenture Trustee that is to be made the basis
for the release of any property or securities subject to the lien of this
Indenture, the Issuer shall, in addition to any obligation imposed in Section
11.1(a) or elsewhere in this Indenture, furnish to the Indenture Trustee and the
Rating Agencies an Officers' Certificate of the Issuer certifying or stating the
opinion of each person signing such certificate as to the fair value (within 90
days of such deposit) to the Issuer of the Collateral or other property or
securities to be so deposited.
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(ii) Whenever the Issuer is required to furnish to the
Indenture Trustee and the Rating Agencies an Officers' Certificate of the Issuer
certifying or stating the opinion of any signer thereof as to the matters
described in clause (i) above, the Issuer shall also deliver to the Indenture
Trustee an Independent Certificate as to the same matters, if the fair value to
the Issuer of the securities to be so deposited and of all other such securities
made the basis of any such withdrawal or release since the commencement of the
then-current fiscal year of the Issuer, as set forth in the certificates
delivered pursuant to clause (i) above and this clause (ii), is 10% or more of
the Outstanding Amount of the Notes, but such a certificate need not be
furnished with respect to any securities so deposited, if the fair value thereof
to the Issuer as set forth in the related Officers' Certificate is less than
$25,000 or less than one percent of the Outstanding Amount of the Notes.
(iii) Other than any property released as contemplated by
clause (v) below, whenever any property or securities are to be released from
the lien of this Indenture, the Issuer shall also furnish to the Indenture
Trustee an Officers' Certificate of the Issuer certifying or stating the opinion
of each person signing such certificate as to the fair value (within 90 days of
such release) of the property or securities proposed to be released and stating
that in the opinion of such person the proposed release will not impair the
security under this Indenture in contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the
Indenture Trustee an Officers' Certificate of the Issuer certifying or stating
the opinion of any signer thereof as to the matters described in clause (iii)
above, the Issuer shall also furnish to the Indenture Trustee an Independent
Certificate as to the same matters if the fair value of the property or
securities and of all other property, other than property as contemplated by
clause (v) below, or securities released from the lien of this Indenture since
the commencement of the then-current calendar year, as set forth in the
certificates required by clause (iii) above and this clause (iv), equals 10% or
more of the Outstanding Amount of the Notes, but such certificate need not be
furnished in the case of any release of property or securities if the fair value
thereof as set forth in the related Officers' Certificate is less than $25,000
or less than one percent of the then Outstanding Amount of the Notes.
(v) Notwithstanding Section 2.9 or any other provision of
this Section, the Issuer may, without compliance with the requirements of the
other provi-
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sions of this Section, (A) collect, liquidate, sell or otherwise dispose of
Trust Student Loans as and to the extent permitted or required by the Basic
Documents, (B) make cash payments out of the Trust Accounts as and to the extent
permitted or required by the Basic Documents and (C) convey to the Seller, the
Servicer or another eligible lender those specified Trust Student Loans as and
to the extent permitted or required by and in accordance with Section 8.4(c)
hereof and Section 6 of the Sale Agreement, Section 3.5 of the Servicing
Agreement or Section 3.11E of the Servicing Agreement, respectively, so long as
the Issuer shall deliver to the Indenture Trustee every six months, commencing
July 27, 1998, an Officers' Certificate of the Issuer stating that all the
dispositions of Collateral described in clauses (A), (B) or (C) above that
occurred during the immediately preceding six calendar months were in the
ordinary course of the Issuer's business and that the proceeds thereof were
applied in accordance with the Basic Documents.
SECTION 11.2 Form of Documents Delivered to Indenture Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters, and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the
Issuer may be based, insofar as it relates to legal matters, upon a certificate
or opinion of, or representations by, counsel, unless such officer knows, or in
the exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer, the Seller, the Issuer or the Administrator, stating that the
information with respect to such factual matters is in the possession of the
Servicer, the Seller, the Issuer or the Administrator, unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.
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Where any Person is required to make, give or execute two or
more applications, requests, consents, certificates, statements, opinions or
other instruments under this indenture, they may, but need not, be consolidated
and form one instrument.
Whenever in this Indenture, in connection with any application
or certificate or report to the Indenture Trustee, it is provided that the
Issuer shall deliver any document as a condition of the granting of such
application, or as evidence of the Issuer's compliance with any term hereof, it
is intended that the truth and accuracy, at the time of the granting of such
application or at the effective date of such certificate or report (as the case
may be), of the facts and opinions stated in such document shall in such case be
conditions precedent to the right of the Issuer to have such application granted
or to the sufficiency of such certificate or report. The foregoing shall not,
however, be construed to affect the Indenture Trustee's right to rely upon the
truth and accuracy of any statement or opinion contained in any such document as
provided in Article VI.
SECTION 11.3 Acts of Noteholders. (a) Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Indenture to be given or taken by Noteholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Noteholders in person or by agents duly appointed in writing; and except as
herein otherwise expressly provided such action shall become effective when such
instrument or instruments are delivered to the Indenture Trustee, and, where it
is hereby expressly required, to the Issuer. Such instrument or instruments (and
the action embodied therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Noteholders signing such instrument or instruments. Proof
of execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Indenture and (subject to Section
6.1) conclusive in favor of the Indenture Trustee and the Issuer, if made in the
manner provided in this Section.
(b) The fact and date of the execution by any person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
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(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Noteholder of any Notes shall bind the
Noteholder of every Note issued upon registration of transfer thereof or in
exchange therefor or in lieu thereof, in respect of anything done, omitted or
suffered to be done by the Indenture Trustee or the Issuer in reliance thereon,
whether or not notation of such action is made upon such Note.
SECTION 11.4 Notices, etc., to Indenture Trustee, Issuer and Rating
Agencies. Any request, demand, authorization, direction, notice, consent, waiver
or Act of Noteholders or other documents provided or permitted by this Indenture
shall be in writing and if such request, demand, authorization, direction,
notice, consent, waiver or Act of Noteholders is to be made upon, given or
furnished to or filed with:
(a) The Indenture Trustee by any Noteholder, the Servicer, the
Administrator or by the Issuer shall be sufficient for every purpose hereunder
if made, given, furnished or filed in writing to or with the Indenture Trustee
at its Corporate Trust Office, or
(b) The Issuer by the Indenture Trustee or by any Noteholder shall
be sufficient for every purpose hereunder if in writing and mailed, first-class,
postage prepaid, to the Issuer addressed to: SLM Student Loan Trust 1997-4, in
care of Chase Manhattan Bank USA, National Association, 802 Delaware Avenue,
Wilmington, Delaware 19899, Attention: Corporate Trust Department; with copies
to The Chase Manhattan Bank, 450 West 33rd Street 15th Fl., New York, New York
10001, Attention: Structured Finance Services; 11600 Sallie Mae Drive, Reston,
VA 20193, Attention: Director, Corporate Finance Operations, or any other
address previously furnished in writing to the Indenture Trustee by the Issuer
or the Administrator. The Issuer shall promptly transmit any notice received by
it from the Noteholders to the Indenture Trustee.
Notices required to be given to the Rating Agencies by the
Issuer, the Indenture Trustee or the Eligible Lender Trustee shall be in
writing, personally delivered or mailed by certified mail, return receipt
requested, to (i) in the case of Moody's, at the following address: Moody's, ABS
Monitoring Department, 99 Church Street, New York, New York 10007, (ii) in the
case of Standard & Poor's, at the following address: Standard & Poor's, 25
Broadway (20th Floor), New York, New York 10004, Attention of Asset Backed
Surveillance Department, and (iii) in the case of Fitch, at
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<PAGE> 74
the following address: One State Street Plaza, New York, New York 10004,
Attention Municipal Structured Finance Group; or as to each of the foregoing, at
such other address as shall be designated by written notice to the other
parties.
SECTION 11.5 Notices to Noteholders; Waiver. Where this
Indenture provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such
notice may be waived in writing by any Person entitled to receive such notice,
either before or after the event, and such waiver shall be the equivalent of
such notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service
as a result of a strike, work stoppage or similar activity, it shall be
impractical to mail notice of any event to Noteholders when such notice is
required to be given pursuant to any provision of this Indenture, then any
manner of giving such notice as shall be satisfactory to the Indenture Trustee
shall be deemed to be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating
Agencies, failure to give such notice shall not affect any other rights or
obligations created hereunder, and shall not under any circumstance constitute a
Default.
SECTION 11.6 Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Noteholder providing
for a method of payment, or notice by the Indenture Trustee or any Paying Agent
to such Noteholder, that is
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<PAGE> 75
different from the methods provided for in this Indenture for such payments or
notices. The Issuer will furnish to the Indenture Trustee a copy of each such
agreement and the Indenture Trustee will cause payments to be made and notices
to be given in accordance with such agreements.
SECTION 11.7 Conflict with Trust Indenture Act. If any
provision hereof limits, qualifies or conflicts with another provision hereof
that is required to be included in this Indenture by any of the provisions of
the Trust Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose
duties on any Person (including the provisions automatically deemed included
herein unless expressly excluded by this Indenture) are a part of and govern
this Indenture, whether or not physically contained herein.
SECTION 11.8 Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
SECTION 11.9 Successors and Assigns. All covenants and
agreements in this Indenture and the Notes by the Issuer shall bind its
successor and assigns, whether so expressed or not. All agreements of the
Indenture Trustee in this Indenture shall bind the successors, co-trustees and
agents (excluding any legal representatives or accountants) of the Indenture
Trustee.
SECTION 11.10 Separability. In case any provision in this
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality, and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
SECTION 11.11 Benefits of Indenture. Nothing in this Indenture
or in the Notes, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, and the Noteholders, and any
other party secured hereunder, and any other Person with an ownership interest
in any part of the Indenture Trust Estate, any benefit or any legal or equitable
right, remedy or claim under this Indenture.
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<PAGE> 76
SECTION 11.12 Legal Holidays. In any case where the date on
which any payment is due shall not be a Business Day, then (notwithstanding any
other provision of the Notes or this Indenture) payment need not be made on such
date, but may be made on the next succeeding Business Day with the same force
and effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 11.13 Governing Law. This Indenture shall be construed
in accordance with the laws of the State of New York, without reference to its
conflict of law provisions (other than Section5-1401 of the New York General
Obligations Law), and the obligations, rights and remedies of the parties
hereunder shall be determined in accordance with such laws.
SECTION 11.14 Counterparts. This Indenture may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
SECTION 11.15 Recording of Indenture. If this Indenture is
subject to recording in any appropriate public recording offices, such recording
is to be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee) to the effect that such
recording is necessary either for the protection of the Noteholders or any other
Person secured hereunder or for the enforcement of any right or remedy granted
to the Indenture Trustee under this Indenture.
SECTION 11.16 Trust Obligations. No recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer, the
Seller, the Administrator, the Servicer, the Eligible Lender Trustee or the
Indenture Trustee on the Notes or under this Indenture or any certificate or
other writing delivered in connection herewith or therewith, against (i) the
Indenture Trustee or the Eligible Lender Trustee in its individual capacity,
(ii) any owner of a beneficial interest in the Issuer or (iii) any partner,
owner, beneficiary, agent, officer, director or employee of the Indenture
Trustee or the Eligible Lender Trustee in its individual capacity, any holder or
owner of a beneficial interest in the Issuer, the Eligible Lender Trustee or the
Indenture Trustee or of any successor or assign thereof in its individual
capacity,
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<PAGE> 77
except as any such Person may have expressly agreed (it being understood that
the Indenture Trustee and the Eligible Lender Trustee have no such obligations
in their individual capacity) and except that any such partner, owner or
beneficiary shall be fully liable, to the extent provided by applicable law, for
any unpaid consideration for stock, unpaid capital contribution or failure to
pay any installment or call owing to such entity. For all purposes of this
Indenture, in the performance of any duties or obligations of the Issuer
hereunder, the Eligible Lender Trustee shall be subject to, and entitled to the
benefits of, the terms and provisions of Article VI, VII and VIII of the Trust
Agreement.
SECTION 11.17 No Petition. The Indenture Trustee, by entering
into this Indenture, and each Noteholder, by accepting a Note, hereby covenant
and agree that they shall not at any time institute against the Seller or the
Issuer, or join in any institution against the Seller or the Issuer of, any
bankruptcy, reorganization, arrangement, insolvency, receivership or liquidation
proceedings, or other proceedings under any United States Federal or state
bankruptcy or similar law in connection with any obligations relating to the
Notes, this Indenture or any of the other Basic Documents. The foregoing shall
not limit the rights of the Indenture Trustee to file any claim in, or otherwise
take any action with respect to, any insolvency proceeding that was instituted
against the Issuer by any Person other than the Indenture Trustee.
SECTION 11.18 Inspection. The Issuer agrees that, on reasonable prior
notice, it shall permit any representative of the Indenture Trustee, during the
Issuer's normal business hours, to examine all the books of account, records,
reports, and other papers of the Issuer, to make copies and extracts therefrom,
to cause such books to be audited by Independent certified public accountants,
and to discuss the Issuer's affairs, finances and accounts with the Issuer's
officers, employees, and Independent certified public accountants, all at such
reasonable times and as often as may be reasonably requested. The Indenture
Trustee shall and shall cause its representatives to hold in confidence all such
information obtained from such examination or inspection except to the extent
disclosure may be required by law (and all reasonable applications for
confidential treatment are unavailing) and except to the extent that the
Indenture Trustee may reasonably determine that such disclosure is consistent
with its obligations hereunder.
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<PAGE> 78
IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have
caused this Indenture to be duly executed by their respective officers,
thereunto duly authorized and duly attested, all as of the day and year first
above written.
SLM STUDENT LOAN TRUST 1997-4,
by CHASE MANHATTAN BANK USA,
NATIONAL ASSOCIATION, not in its individual
capacity but solely as Eligible Lender Trustee,
By: /s/ J.J. CASHIN
-------------------------------------------
Name:
Title:
CHASE MANHATTAN BANK USA, NATIONAL
ASSOCIATION, not in its individual capacity but
solely as Eligible Lender Trustee,
By: /s/ J.J. CASHIN
-------------------------------------------
Name:
Title:
BANKERS TRUST COMPANY, not in its individual
capacity but solely as Indenture Trustee,
By: /s/ ALFIA MONASTRA
-------------------------------------------
Name: ALFIA MONASTRA
Title: ASSISTANT VICE PRESIDENT
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<PAGE> 79
APPENDIX A
TO THE INDENTURE
Definitions and Usage
72
<PAGE> 80
SCHEDULE A
TO THE INDENTURE
Schedule of Trust Student Loans
[See Schedule A to the Bill of Sale
(Attachment B to the Sale Agreement)]
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<PAGE> 81
SCHEDULE B
TO THE INDENTURE
Location of Trust Student Loan Files
[See Attachment B to the Servicing Agreement]
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<PAGE> 82
EXHIBIT A
TO THE INDENTURE
[FORM OF CLASS A-1 NOTE]
SEE REVERSE FOR CERTAIN DEFINITIONS
Unless this Note is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
(as defined below) or its agent for registration of transfer, exchange or
payment, and any Note issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THIS NOTE IS NOT
GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY.
NUMBER $200,000,000
R-1 CUSIP NO. 78442 GAU 0
75
<PAGE> 83
SLM STUDENT LOAN TRUST 1997-4
FLOATING RATE CLASS A-1 STUDENT LOAN-BACKED NOTES
SLM Student Loan Trust 1997-4, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of 200,000,000 DOLLARS payable on each
Distribution Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $200,000,000 and the denominator of which is
$1,488,000,000 by (ii) the aggregate amount, if any, payable to Class A-1
Noteholders on such Distribution Date in respect of principal of the Notes
pursuant to Section 3.1 of the Indenture dated as of November 1, 1997, among the
Issuer, Chase Manhattan Bank USA, National Association, a national banking
association, as Eligible Lender Trustee on behalf of the Issuer, and Bankers
Trust Company, a New York banking corporation, as Indenture Trustee (the
"Indenture Trustee") (capitalized terms used but not defined herein being
defined in Appendix A to the Indenture, which also contains rules as to usage
that shall be applicable herein); provided, however, that the entire unpaid
principal amount of this Note shall be due and payable on the July 2006
Distribution Date (the "Class A-1 Maturity Date").
The Issuer shall pay interest on this Note at the rate per
annum equal to the Class A-1 Rate (as defined on the reverse hereof), on each
Distribution Date until the principal of this Note is paid or made available for
payment, on the principal amount of this Note outstanding on the preceding
Distribution Date (after giving effect to all payments of principal made on the
preceding Distribution Date), subject to certain limitations contained in
Section 3.1 of the Indenture. Interest on this Note shall accrue from and
including the preceding Distribution Date (or, in the case of the first Accrual
Period, the Closing Date) to but excluding the following Distribution Date (each
an "Accrual Period"). Interest shall be calculated on the basis of the actual
number of days elapsed in each Accrual Period divided by 365 (or 366 in the case
of a leap year). Such principal of and interest on this Note shall be paid in
the manner specified on the reverse hereof.
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<PAGE> 84
The principal of and interest on this Note are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of this
Note.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Note.
Unless the certificate of authentication hereon has been
executed by the Indenture Trustee whose name appears below by manual signature,
this Note shall not be entitled to any benefit under the Indenture referred to
on the reverse hereof, or be valid or obligatory for any purpose.
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<PAGE> 85
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the
Issuer, designated as its Floating Rate Class A-1 Student Loan-Backed Notes (the
"Class A-1 Notes"), which, together with the Issuer's Floating Rate Class A-2
Student Loan-Backed Notes (the "Class A-2 Notes" and, together with the Class
A-1 Notes, the "Notes") are issued under and secured by the Indenture, to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights and obligations thereunder of the Issuer, the
Indenture Trustee and the Noteholders. The Notes are subject to all terms of the
Indenture.
The Class A-1 Notes are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture. The Class A-1 Notes are senior in right of payment to the Class A-2
Notes as and to the extent provided in the Indenture.
Principal of the Class A-1 Notes shall be payable on each
Distribution Date in an amount described on the face hereof. "Distribution Date"
means the 25th day of each January, April, July and October or, if any such date
is not a Business Day, the next succeeding Business Day, commencing April 27,
1998.
As described on the face hereof, the entire unpaid principal
amount of this Note shall be due and payable on the Class A-1 Maturity Date.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which (i) an Event of Default shall have
occurred and be continuing and (ii) the Indenture Trustee or the Noteholders
representing not less than a majority of the Outstanding Amount of the Notes
shall have declared the Notes to be immediately due and payable in the manner
provided in Section 5.2 of the Indenture. All principal payments on the Class
A-1 Notes shall be made pro rata to the Noteholders entitled thereto.
Interest on the Class A-1 Notes shall be payable on each
Distribution Date on the principal amount outstanding of the Class A-1 Notes
until the principal amount thereof is paid in full, at a rate per annum equal to
the Class A-1 Rate. The "Class A-1 Rate" for each Accrual Period shall be equal
to the lesser of (a) the daily weighted average of the T-Bill Rates within such
Accrual Period plus 0.75% per
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<PAGE> 86
annum and (b) the Student Loan Rate for such Accrual Period. The "Student Loan
Rate" for any Accrual Period shall equal 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 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.
Any Note Interest Carryover that may exist on any Distribution
Date attributable to the Notes shall be payable to the Noteholders on that
Distribution Date and any succeeding Distribution Dates, solely out of the funds
available and required to be applied thereto pursuant to the Administration
Agreement.
Payments of interest on this Note on each Distribution Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by check mailed to the Person whose name
appears as the Registered Holder of this Note (or one or more Predecessor Notes)
on the Note Register on the Record Date, except that with respect to Notes
registered on the Record Date in the name of the nominee of the Clearing Agency,
unless Definitive Notes have been issued (initially, such nominee to be Cede &
Co.), payments shall be made by wire transfer in immediately available funds to
the account designated by such nominee. Such checks shall be mailed to the
Person entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment, and the mailing of such check shall
constitute payment of the amount thereof regardless of whether such check is
returned undelivered. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) effected by any payments made on any Distribution
Date shall be binding upon all future Noteholders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Distribution Date, then the Indenture
Trustee, in the name of and on behalf of the Issuer, shall notify the Person who
was the Noteholder hereof as of the preceding Record Date by notice mailed no
later than five days prior to such Distribution Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Indenture Trustee's Corporate Trust Office or at the
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<PAGE> 87
office of the Indenture Trustee's agent appointed for such purposes located in
the Borough of Manhattan, The City of New York.
The Issuer shall pay interest on overdue installments of
interest on this Note at the Class A-1 Rate to the extent lawful.
As provided in the Indenture and subject to certain
limitations set forth therein, the transfer of this Note may be registered on
the Note Register upon surrender of this Note for registration of transfer at
the office or agency designated by the Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Noteholder hereof or
his attorney duly authorized in writing, with such signature guaranteed by an
"eligible guarantor institution" meeting the requirements of the Note Registrar,
which requirements include membership or participation in Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP (all in accordance with the Exchange Act), and such other documents
as the Indenture Trustee may require, and thereupon one or more new Notes of
authorized denominations and in the same aggregate principal amount shall be
issued to the designated transferee or transferees. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in the Note, covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer or the Indenture Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Indenture Trustee or the Eligible Lender Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Eligible Lender Trustee in its individual capacity,
any holder or owner of a beneficial interest in the Issuer, the Eligible Lender
Trustee or the Indenture Trustee or of any successor or assign thereof in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Eligible Lender Trustee have
no such obligations in their individual capacity) and except that any such
partner, owner or beneficiary shall
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<PAGE> 88
be fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in a Note, covenants and agrees
that by accepting the benefits of the Indenture such Noteholder or Note Owner
will not at any time institute against the Seller or the Issuer, or join in any
institution against the Seller or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency, receivership or liquidation proceedings or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, the Indenture or the
other Basic Documents.
Prior to the due presentment for registration of transfer of
this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes whether or not this Note be
overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Noteholders under the Indenture
at any time by the Issuer with the consent of the Noteholders representing a
majority of the Outstanding Amount of all Notes at the time outstanding. The
Indenture also contains provisions permitting the Noteholders representing
specified percentages of the Outstanding Amount of the Notes, on behalf of all
the Noteholders, to waive compliance by the Issuer with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the holder of this Note (or any one
of more Predecessor Notes) shall be conclusive and binding upon such holder and
upon all future holders of this Note and of any Note issued upon registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of holders of the Notes issued thereunder.
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<PAGE> 89
The term "Issuer" as used in this Note includes any successor
to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the Noteholders under the Indenture.
The Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.
This Note shall be construed in accordance with the laws of
the State of New York, without reference to its conflict of law provisions, and
the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the times, place, and rate, and in the coin or currency, herein
prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Basic Documents, neither Bankers Trust Company in its
individual capacity, Chase Manhattan Bank USA, National Association in its
individual capacity, any owner of a beneficial interest in the Issuer, nor any
of their respective partners, beneficiaries, agents, officers, directors,
employees or successors or assigns shall be personally liable for, nor shall
recourse be had to any of them for, the payment of principal of or interest on,
or performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in this Note or the Indenture; it being expressly
understood that said covenants, obligations and indemnifications have been made
by the Eligible Lender Trustee for the sole purposes of binding the interests of
the Eligible Lender Trustee in the assets of the Issuer. The Noteholder of this
Note by the acceptance hereof agrees that, except as expressly provided in the
Basic Documents, in the case of an Event of Default under the Indenture, the
Noteholder shall have no claim against any of the foregoing for any deficiency,
loss or claim therefrom; provided, however, that nothing contained herein shall
be taken to prevent recourse to, and enforcement against, the assets of the
Issuer for any and all liabilities, obligations and undertakings contained in
the Indenture or in this Note.
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<PAGE> 90
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
- --------------------------------------------------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _
- --------------------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ___________________________________________________________________
attorney, to transfer said Note on the books kept for registration thereof, with
full power of substitution in the premises.
Dated:
--------------------
*/
---------------------------------
Signature Guaranteed:
*/
---------------------------------
- ----------
*/ NOTICE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
83
<PAGE> 91
[FORM OF CLASS A-2 NOTE]
SEE REVERSE FOR CERTAIN DEFINITIONS
Unless this Note is presented by an authorized representative
of The Depository Trust Company, a New York corporation ("DTC"), to the Issuer
(as defined below) or its agent for registration of transfer, exchange or
payment, and any Note issued is registered in the name of Cede & Co. or in such
other name as is requested by an authorized representative of DTC (and any
payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET
FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY
TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THIS NOTE IS NOT
GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY.
NUMBER $200,000,000
R-1 CUSIP NO. 78442 GAV 8
84
<PAGE> 92
SLM STUDENT LOAN TRUST 1997-4
FLOATING RATE CLASS A-2 STUDENT LOAN-BACKED NOTES
SLM Student Loan Trust 1997-4, a business trust organized and
existing under the laws of the State of Delaware (herein referred to as the
"Issuer"), for value received, hereby promises to pay to CEDE & CO., or
registered assigns, the principal sum of 200,000,000 DOLLARS payable on each
Distribution Date in an amount equal to the result obtained by multiplying (i) a
fraction the numerator of which is $200,000,000 and the denominator of which is
$989,000,000 by (ii) the aggregate amount, if any, payable to Class A-2
Noteholders on such Distribution Date in respect of principal of the Notes
pursuant to Section 3.1 of the Indenture dated as of November 1, 1997, among the
Issuer, Chase Manhattan Bank USA, National Association, a national banking
association, as Eligible Lender Trustee on behalf of the Issuer, and Bankers
Trust Company, a New York banking corporation, as Indenture Trustee (the
"Indenture Trustee") (capitalized terms used but not defined herein being
defined in Appendix A to the Indenture, which also contains rules as to usage
that shall be applicable herein); provided, however, that the entire unpaid
principal amount of this Note shall be due and payable on the October 2010
Distribution Date (the "Class A-2 Maturity Date").
The Issuer shall pay interest on this Note at the rate per
annum equal to the Class A-2 Rate (as defined on the reverse hereof), on each
Distribution Date until the principal of this Note is paid or made available for
payment, on the principal amount of this Note outstanding on the preceding
Distribution Date (after giving effect to all payments of principal made on the
preceding Distribution Date), subject to certain limitations contained in
Section 3.1 of the Indenture. Interest on this Note shall accrue from and
including the preceding Distribution Date (or, in the case of the first Accrual
Period, the Closing Date) to but excluding the following Distribution Date (each
an "Accrual Period"). Interest shall be calculated on the basis of the actual
number of days elapsed in each Accrual Period divided by 365 (or 366 in the case
of a leap year). Such principal of and interest on this Note shall be paid in
the manner specified on the reverse hereof.
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<PAGE> 93
The principal of and interest on this Note are payable in such
coin or currency of the United States of America as at the time of payment is
legal tender for payment of public and private debts. All payments made by the
Issuer with respect to this Note shall be applied first to interest due and
payable on this Note as provided above and then to the unpaid principal of this
Note.
Reference is made to the further provisions of this Note set
forth on the reverse hereof, which shall have the same effect as though fully
set forth on the face of this Note.
Unless the certificate of authentication hereon has been
executed by the Indenture Trustee whose name appears below by manual signature,
this Note shall not be entitled to any benefit under the Indenture referred to
on the reverse hereof, or be valid or obligatory for any purpose.
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<PAGE> 94
IN WITNESS WHEREOF, the Issuer has caused this instrument to
be duly executed, manually or in facsimile, as of the date set forth below.
SLM STUDENT LOAN TRUST 1997-4
by CHASE MANHATTAN BANK USA, NATIONAL
ASSOCIATION, not in its individual capacity
but solely as Eligible Lender Trustee under
the Trust Agreement,
By:
---------------------------------
Authorized Signatory
Date: November 12, 1997
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Notes designated above and referred to in
the within-mentioned Indenture.
BANKERS TRUST COMPANY, not in its
individual capacity but solely as
Indenture Trustee,
By:
---------------------------------
Authorized Signatory
Date: November 12, 1997
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<PAGE> 95
[REVERSE OF NOTE]
This Note is one of a duly authorized issue of Notes of the
Issuer, designated as its Floating Rate Class A-2 Student Loan-Backed Notes (the
"Class A-2 Notes"), which, together with the Issuer's Floating Rate Class A-1
Student Loan-Backed Notes (the "Class A-1 Notes" and, together with the Class
A-2 Notes, the "Notes") are issued under and secured by the Indenture, to which
Indenture and all indentures supplemental thereto reference is hereby made for a
statement of the respective rights and obligations thereunder of the Issuer, the
Indenture Trustee and the Noteholders. The Notes are subject to all terms of the
Indenture.
The Class A-2 Notes are and will be equally and ratably
secured by the Collateral pledged as security therefor as provided in the
Indenture. The Class A-1 Notes are senior in right of payment to the Class A-2
Notes as and to the extent provided in the Indenture.
Principal of the Class A-2 Notes shall be payable on each
Distribution Date in an amount described on the face hereof. "Distribution Date"
means the 25th day of each January, April, July and October or, if any such date
is not a Business Day, the next succeeding Business Day, commencing April 27,
1998.
As described on the face hereof, the entire unpaid principal
amount of this Note shall be due and payable on the Class A-2 Maturity Date.
Notwithstanding the foregoing, the entire unpaid principal amount of the Notes
shall be due and payable on the date on which (i) an Event of Default shall have
occurred and be continuing and (ii) the Indenture Trustee or the Noteholders
representing not less than a majority of the Outstanding Amount of the Notes
shall have declared the Notes to be immediately due and payable in the manner
provided in Section 5.2 of the Indenture. All principal payments on the Class
A-2 Notes shall be made pro rata to the Noteholders entitled thereto.
Interest on the Class A-2 Notes shall be payable on each
Distribution Date on the principal amount outstanding of the Class A-2 Notes
until the principal amount thereof is paid in full, at a rate per annum equal to
the Class A-2 Rate. The "Class A-2 Rate" for each Accrual Period shall be equal
to the lesser of (a) the daily weighted average of the T-Bill Rates within such
Accrual Period plus 0.75% per
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annum and (b) the Student Loan Rate for such Accrual Period. The "Student Loan
Rate" for any Accrual Period shall equal 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 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.
Any Note Interest Carryover that may exist on any Distribution
Date attributable to the Notes shall be payable to the Noteholders on that
Distribution Date and any succeeding Distribution Dates, solely out of the funds
available and required to be applied thereto pursuant to the Administration
Agreement.
Payments of interest on this Note on each Distribution Date,
together with the installment of principal, if any, to the extent not in full
payment of this Note, shall be made by check mailed to the Person whose name
appears as the Registered Holder of this Note (or one or more Predecessor Notes)
on the Note Register on the Record Date, except that with respect to Notes
registered on the Record Date in the name of the nominee of the Clearing Agency,
unless Definitive Notes have been issued (initially, such nominee to be Cede &
Co.), payments shall be made by wire transfer in immediately available funds to
the account designated by such nominee. Such checks shall be mailed to the
Person entitled thereto at the address of such Person as it appears on the Note
Register as of the applicable Record Date without requiring that this Note be
submitted for notation of payment, and the mailing of such check shall
constitute payment of the amount thereof regardless of whether such check is
returned undelivered. Any reduction in the principal amount of this Note (or any
one or more Predecessor Notes) effected by any payments made on any Distribution
Date shall be binding upon all future Noteholders of this Note and of any Note
issued upon the registration of transfer hereof or in exchange hereof or in lieu
hereof, whether or not noted hereon. If funds are expected to be available, as
provided in the Indenture, for payment in full of the then remaining unpaid
principal amount of this Note on a Distribution Date, then the Indenture
Trustee, in the name of and on behalf of the Issuer, shall notify the Person who
was the Noteholder hereof as of the preceding Record Date by notice mailed no
later than five days prior to such Distribution Date and the amount then due and
payable shall be payable only upon presentation and surrender of this Note at
the Indenture Trustee's Corporate Trust Office or at the
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<PAGE> 97
office of the Indenture Trustee's agent appointed for such purposes located in
the Borough of Manhattan, The City of New York.
The Issuer shall pay interest on overdue installments of
interest on this Note at the Class A-2 Rate to the extent lawful.
As provided in the Indenture and subject to certain
limitations set forth therein, the transfer of this Note may be registered on
the Note Register upon surrender of this Note for registration of transfer at
the office or agency designated by the Issuer pursuant to the Indenture, duly
endorsed by, or accompanied by a written instrument of transfer in form
satisfactory to the Indenture Trustee duly executed by, the Noteholder hereof or
his attorney duly authorized in writing, with such signature guaranteed by an
"eligible guarantor institution" meeting the requirements of the Note Registrar,
which requirements include membership or participation in Securities Transfer
Agent's Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Note Registrar in addition to, or in substitution
for, STAMP (all in accordance with the Exchange Act), and such other documents
as the Indenture Trustee may require, and thereupon one or more new Notes of
authorized denominations and in the same aggregate principal amount shall be
issued to the designated transferee or transferees. No service charge will be
charged for any registration of transfer or exchange of this Note, but the
transferor may be required to pay a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any such registration
of transfer or exchange.
Each Noteholder or Note Owner, by acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in the Note, covenants and
agrees that no recourse may be taken, directly or indirectly, with respect to
the obligations of the Issuer or the Indenture Trustee on the Notes or under the
Indenture or any certificate or other writing delivered in connection therewith,
against (i) the Indenture Trustee or the Eligible Lender Trustee in its
individual capacity, (ii) any owner of a beneficial interest in the Issuer or
(iii) any partner, owner, beneficiary, agent, officer, director or employee of
the Indenture Trustee or the Eligible Lender Trustee in its individual capacity,
any holder or owner of a beneficial interest in the Issuer, the Eligible Lender
Trustee or the Indenture Trustee or of any successor or assign thereof in its
individual capacity, except as any such Person may have expressly agreed (it
being understood that the Indenture Trustee and the Eligible Lender Trustee have
no such obligations in their individual capacity) and except that any such
partner, owner or beneficiary shall
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<PAGE> 98
be fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity.
Each Noteholder or Note Owner, by acceptance of a Note or, in
the case of a Note Owner, a beneficial interest in a Note, covenants and agrees
that by accepting the benefits of the Indenture such Noteholder or Note Owner
will not at any time institute against the Seller or the Issuer, or join in any
institution against the Seller or the Issuer of, any bankruptcy, reorganization,
arrangement, insolvency, receivership or liquidation proceedings or other
proceedings under any United States Federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, the Indenture or the
other Basic Documents.
Prior to the due presentment for registration of transfer of
this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the
Indenture Trustee may treat the Person in whose name this Note (as of the day of
determination or as of such other date as may be specified in the Indenture) is
registered as the owner hereof for all purposes whether or not this Note be
overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall
be affected by notice to the contrary.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Issuer and the rights of the Noteholders under the Indenture
at any time by the Issuer with the consent of the Noteholders representing a
majority of the Outstanding Amount of all Notes at the time outstanding. The
Indenture also contains provisions permitting the Noteholders representing
specified percentages of the Outstanding Amount of the Notes, on behalf of all
the Noteholders, to waive compliance by the Issuer with certain provisions of
the Indenture and certain past defaults under the Indenture and their
consequences. Any such consent or waiver by the holder of this Note (or any one
of more Predecessor Notes) shall be conclusive and binding upon such holder and
upon all future holders of this Note and of any Note issued upon registration of
transfer hereof or in exchange hereof or in lieu hereof whether or not notation
of such consent or waiver is made upon this Note. The Indenture also permits the
Indenture Trustee to amend or waive certain terms and conditions set forth in
the Indenture without the consent of holders of the Notes issued thereunder.
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<PAGE> 99
The term "Issuer" as used in this Note includes any successor
to the Issuer under the Indenture.
The Issuer is permitted by the Indenture, under certain
circumstances, to merge or consolidate, subject to the rights of the Indenture
Trustee and the Noteholders under the Indenture.
The Notes are issuable only in registered form in
denominations as provided in the Indenture, subject to certain limitations
therein set forth.
This Note shall be construed in accordance with the laws of
the State of New York, without reference to its conflict of law provisions, and
the obligations, rights and remedies of the parties hereunder and thereunder
shall be determined in accordance with such laws.
No reference herein to the Indenture and no provision of this
Note or of the Indenture shall alter or impair the obligation of the Issuer,
which is absolute and unconditional, to pay the principal of and interest on
this Note at the times, place, and rate, and in the coin or currency, herein
prescribed.
Anything herein to the contrary notwithstanding, except as
expressly provided in the Basic Documents, neither Bankers Trust Company in its
individual capacity, Chase Manhattan Bank USA, National Association in its
individual capacity, any owner of a beneficial interest in the Issuer, nor any
of their respective partners, beneficiaries, agents, officers, directors,
employees or successors or assigns shall be personally liable for, nor shall
recourse be had to any of them for, the payment of principal of or interest on,
or performance of, or omission to perform, any of the covenants, obligations or
indemnifications contained in this Note or the Indenture; it being expressly
understood that said covenants, obligations and indemnifications have been made
by the Eligible Lender Trustee for the sole purposes of binding the interests of
the Eligible Lender Trustee in the assets of the Issuer. The Noteholder of this
Note by the acceptance hereof agrees that, except as expressly provided in the
Basic Documents, in the case of an Event of Default under the Indenture, the
Noteholder shall have no claim against any of the foregoing for any deficiency,
loss or claim therefrom; provided, however, that nothing contained herein shall
be taken to prevent recourse to, and enforcement against, the assets of the
Issuer for any and all liabilities, obligations and undertakings contained in
the Indenture or in this Note.
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ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee
- --------------------------------------------------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto _
- --------------------------------------------------------------------------------
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints ___________________________________________________________________
attorney, to transfer said Note on the books kept for registration thereof, with
full power of substitution in the premises.
Dated:
---------------------
*/
----------------------------
Signature Guaranteed:
*/
----------------------------
- ---------------
*/ NOTICE: The signature to this assignment must correspond with the name of
the registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
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EXHIBIT B
TO THE INDENTURE
Note Depository Agreement
94
<PAGE> 1
EXHIBIT 99.1
PURCHASE AGREEMENT MASTER SECURITIZATION TERMS NUMBER 1000
These Purchase Agreement Master Securitization Terms Number 1000
("Master Terms") dated as of November 12, 1997 among SLM Funding Corporation
("Funding"), Chase Manhattan Bank USA, National Association, not in its
individual capacity but solely as Interim Eligible Lender Trustee (the "Interim
Eligible Lender Trustee") for the benefit of Funding under the Interim Trust
Agreement dated as of November 1, 1997 between Funding and the Interim Eligible
Lender Trustee, and Student Loan Marketing Association ("Sallie Mae"), shall be
effective upon execution by the parties hereto. References to Funding herein
mean the Interim Eligible Lender Trustee for all purposes involving the holding
or transferring of legal title to the Eligible Loans.
WHEREAS, Sallie Mae is the owner of certain student loans
guaranteed under the Higher Education Act;
WHEREAS, Sallie Mae may desire to sell its interest in such loans
from time to time and Funding may desire to purchase such loans from Sallie
Mae;
WHEREAS, the Interim Eligible Lender Trustee is willing to hold
legal title to, and serve as eligible lender trustee with respect to, such
loans on behalf of Funding;
NOW, THEREFORE, in connection with the mutual promises contained
herein, the parties hereto agree as follows:
SECTION 1. TERMS
These Master Terms establish the terms under which Sallie Mae may
sell and Funding (and with respect to legal title, the Interim Eligible Lender
Trustee on behalf of Funding) may purchase the Loans (and all obligations of
the Borrowers thereunder) specified on each Purchase Agreement as the parties
may execute from time to time pursuant to these Master Terms. Each such
Purchase Agreement shall be substantially in the form of Attachment A hereto,
incorporating by reference the terms of these Master Terms, and shall be a
separate agreement among Sallie Mae, Funding, and the Interim Eligible Lender
Trustee on behalf of Funding with respect to the Loans covered by the terms of
such Purchase Agreement. If the terms of a Purchase Agreement conflict with the
terms of these Master Terms, the terms of such Purchase Agreement shall
supersede and govern.
SECTION 2. DEFINITIONS
Capitalized terms used but not otherwise defined herein shall have
the definitions set forth in Appendix A hereto.
For purposes hereof:
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<PAGE> 2
(A) "Account" means all of the Eligible Loans hereunder of one (1)
Borrower that are of the same Loan type made under the identical
subsection of the Higher Education Act and in the same status.
(B) "Bill of Sale" means that document executed by an authorized
officer of Sallie Mae which shall set forth the Loans offered by
Sallie Mae and accepted for purchase by the Interim Eligible Lender
Trustee for the benefit of Funding and which shall sell, assign and
convey to the Interim Eligible Lender Trustee for the benefit of
Funding and its assignees all rights, title and interest of Sallie
Mae in the Loans listed on the Bill of Sale and will certify that
the representations and warranties made by Sallie Mae pursuant to
Section 5(A) of these Master Terms are true and correct.
(C) "Borrower" means the obligor on a Loan.
(D) "Consolidation Loan" means a Loan made pursuant to and in full
compliance with Section 428C of the Higher Education Act.
(E) "Cutoff Date" means with respect to the first sale hereunder,
October 27, 1997, and, with respect to subsequent sales hereunder,
a date agreed to by Sallie Mae and Funding to use in determining
the Principal Balance and accrued interest to be capitalized for
purposes of completing the Loan Transmittal Summary Form.
(F) "Deferred Payment" means an amount equal to 66 2/3% of the
amount distributed to Funding pursuant to Section 2.8 C(G) of the
Administration Agreement (exclusive of the amount of any such
distribution attributable to the reduction from time to time of the
Specified Reserve Account Balance).
(G) "Delinquent" means the period any payment of principal or
interest due on the Loan is overdue.
(H) "Eligible Loan" means a Loan offered for sale by Sallie Mae
under the Purchase Agreement which as of the Cutoff Date is current
or no more Delinquent than permitted under the Purchase Agreement
in payment of principal or interest and which meets the following
criteria as of the effective date of the Bill of Sale:
(i) is a Stafford Loan, a Consolidation Loan, a PLUS
Loan or SLS Loan;
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<PAGE> 3
(ii) is owned by Sallie Mae and is fully disbursed;
(iii) is guaranteed as to principal and interest by the
applicable Guarantor to the maximum extent permitted by
the Higher Education Act for such Loan;
(iv) bears interest at a stated rate of not less than
the maximum rate permitted under the Higher Education
Act for such Loan;
(v) is eligible for the payment of the quarterly
special allowance at the full and undiminished rate
established under the formula set forth in the Higher
Education Act for such Loan;
(vi) if not yet in repayment status, is eligible for
the payment of interest benefits by the Secretary or,
if not so eligible, is a Loan for which interest either
is billed quarterly to Borrower or deferred until
commencement of the repayment period, in which case
such accrued interest is subject to capitalization to
the full extent permitted by the applicable Guarantor;
(vii) is supported by the following documentation:
(a) for each Loan:
1. loan application, and any
supplement thereto,
2. original promissory note and any
addendum thereto or a certified
copy thereof if more than one loan
is represented by a single
promissory note and all loans so
represented are not being sold at
the same time,
3. evidence of guarantee,
4. any other document and/or record
which Funding may be required to
retain pursuant to Regulations; and
(b) for each Loan only if applicable:
1. payment history (or similar
document) including (i) an
indication of the Principal Balance
and the date through which interest
has been paid, each as of the
Cutoff Date and (ii) an accounting
of the allocation of all payments
by Borrower or on Borrower's behalf
to principal and interest on the
Loan,
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2. documentation which supports
periods of current or past
deferment or past forbearance,
3. a collection history, if the Loan
was ever in a delinquent status,
including detailed summaries of
contacts and including the
addresses or telephone numbers used
in contacting or attempting to
contact Borrower and any endorser
and, if required by the Guarantor,
copies of all letters and other
correspondence relating to due
diligence processing,
4. evidence of all requests for
skip-tracing assistance and current
address of Borrower, if located,
5. evidence of requests for pre-claims
assistance, and evidence that the
Borrower's school(s) have been
notified,
6. a record of any event resulting in
a change to or confirmation of any
data in the Loan file.
(I) "Initial Payment" means the dollar amount specified in the
applicable Purchase Agreement.
(J) "Loan" means the Note or Notes offered for sale pursuant to the
Purchase Agreement and related documentation together with any
guaranties and other rights relating thereto including, without
limitation, Interest Subsidy Payments and Special Allowance
Payments.
(K) "Loan Transmittal Summary Forms" means the forms provided to
Sallie Mae by Funding and completed by Sallie Mae which list, by
Borrower, the Loans subject to the Bill of Sale and the outstanding
Principal Balance and accrued interest thereof as of the Cutoff
Date.
(L) "Note" means the promissory note of the Borrower and any
amendment thereto evidencing the Borrower's obligation with regard
to a student loan guaranteed under the Higher Education Act.
(M) "PLUS Loan" means a Loan which was made pursuant to the PLUS
Program established under Section 428B of the Higher Education Act
(or predecessor provisions).
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<PAGE> 5
(N) "Principal Balance" means the outstanding principal amount of
the Loan, plus interest expected to be capitalized (if any), less
amounts which may not be insured (such as late charges).
(O) "Purchase Agreement" means a Purchase Agreement (including any
attachments thereto), substantially in the form of Attachment A
hereto, of which these Master Terms form a part by reference.
(P) "Purchase Price" means the sum of the Initial Payment and
Deferred Payment.
(Q) "Sale Agreement" means the Sale Agreement Master Securitization
Terms Number 1000 among SLM Funding Corporation as seller, Chase
Manhattan Bank USA, National Association as Interim Eligible Lender
Trustee and Eligible Lender Trustee.
(R) "Secretary" means the United States Secretary of Education or
any successor.
(S) "SLS Loan" means a Loan which was made pursuant to the
Supplemental Loans for Students Program established under Section
428A of the Higher Education Act (or predecessor provisions),
including Loans referred to as ALAS Loans or Student PLUS Loans.
(T) "Stafford Loans" mean Subsidized Stafford Loans and
Unsubsidized Stafford Loans.
(U) "Subsidized Stafford Loan" means a Loan for which the interest
rate is governed by Section 427A(a) or 427A(d) of the Higher
Education Act.
(V) "Unsubsidized Stafford Loan" means a Loan made pursuant to
Section 428H of the Higher Education Act.
SECTION 3. SALE/PURCHASE
(A) Consummation of Sale and Purchase
The sale and purchase of Eligible Loans pursuant to a
Purchase Agreement shall be consummated upon Funding's receipt from
Sallie Mae of the Bill of Sale and the payment by Funding to Sallie
Mae of the Initial Payment, and when consummated such sale and
purchase shall be effective as of the date of the Bill of Sale.
Sallie Mae and Funding shall use their best efforts to perform
promptly their respective obligations pursuant to such Purchase
Agreement.
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<PAGE> 6
(B) Settlement of the Initial Payment
Funding on the date of the Bill of Sale shall pay
Sallie Mae the Initial Payment by wire transfer of immediately
available funds to the account specified by Sallie Mae.
(C) Interest Subsidy and Special Allowance Payments
On the date of the Bill of Sale, Sallie Mae shall be
entitled to all Interest Subsidy Payments and Special Allowance
Payments on the Loans subject to each Bill of Sale accruing up to
but not including the date of the Bill of Sale. The Interim
Eligible Lender Trustee on behalf of Funding shall be entitled to
all Special Allowance Payments and Interest Subsidy Payments
accruing from the date of the Bill of Sale.
(D) Special Programs
In consideration of the sale of the Eligible Loans
under these Master Terms and each Purchase Agreement, Funding
agrees to cause the Servicer to offer borrowers of Trust Student
Loans all special programs, whether or not in existence as of the
date of any Purchase Agreement, generally offered to the obligors
of comparable loans owned by Sallie Mae subject to terms and
conditions of Section 3.12 of the Servicing Agreement.
(E) Deferred Payment
Funding shall pay the Deferred Payment to Sallie Mae
when and as the same is received by Funding. If the Trust Student
Loans are purchased by Funding pursuant to Section 6.1 of the
Administration Agreement, Funding shall pay to Sallie Mae as part
of the Deferred Payment 66 2/3% of the present value of the excess
of the projected future yield on the Trust Student Loans after the
date of such purchase over the projected cost to Funding of
carrying the Trust Student Loans as reasonably estimated by Funding
assuming (1) that interest rates applicable to the Trust Student
Loans in effect on the date of such purchase remain in effect, (2)
that the cost to Funding of carrying the Trust Student Loans is
equal to the blended rate on the Notes and Certificates on the date
of such purchase, (3) that the servicing costs and loss experience
applicable to the Trust Student Loans during the one year period
preceding such purchase continue during the remaining life of the
Trust Student Loans and (4) a discount rate equal to the blended
rate on the Notes and Certificates on the date of such purchase. If
the Trust Student Loans are sold pursuant to
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<PAGE> 7
the auction provision in Section 4.4 of the Indenture, Funding shall
pay to Sallie Mae as part of the Deferred Payment 66 2/3% of the
amount, if any, by which the sale price exceeds the Minimum Purchase
Amount and any costs of terminating the Trust. Funding shall also be
obligated to pay Sallie Mae as part of the Deferred Payment, in the
event that the provisions of Section 2.8C(F) of the Administration
Agreement are operative, upon payment in full of the Notes and
Certificates to the extent of amounts then distributable by the
Trust to Funding, 66 2/3% of the aggregate amount that would have
been distributed to Funding pursuant to Section 2.8C(G) of the
Administration Agreement (exclusive of the amount of any such
distribution attributable to the reduction from time to time of the
Specified Reserve Account Balance) but for the operation of Section
2.8C(F) of the Administration Agreement.
SECTION 4. CONDITIONS PRECEDENT TO PURCHASE
(A) Activities Prior to the Purchase Date
Sallie Mae shall provide any assistance requested by
Funding in determining that all required documentation on the Loans
is present and correct.
(B) Continued Servicing
Following the execution of each Purchase Agreement,
Sallie Mae shall service, or cause to be serviced, all Loans
subject to such Purchase Agreement as required under the Higher
Education Act until the date of the Bill of Sale.
(C) Bill of Sale/Loan Transmittal Summary Form
Sallie Mae shall deliver to Funding:
(i) a Bill of Sale executed by an authorized officer of
Sallie Mae, covering Loans offered by Sallie Mae and
accepted by Funding as set forth thereon, selling,
assigning and conveying to the Interim Eligible Lender
Trustee on behalf of Funding and its assignees all
right, title and interest of Sallie Mae, including the
insurance interest of Sallie Mae, in each of the Loans,
and stating that the representations and warranties
made by Sallie Mae in Section 5 of these Master Terms
are true and correct on and as of the date of the Bill
of Sale; and
(ii) the Loan Transmittal Summary Form, attached to the
Bill of Sale, identifying each of the Eligible Loans
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<PAGE> 8
which is the subject of the Bill of Sale and setting
forth the unpaid Principal Balance of each such Loan.
(D) Endorsement
Sallie Mae shall provide a blanket endorsement
transferring the entire interest of Sallie Mae in the Loans to the
Interim Eligible Lender Trustee on behalf of Funding with the form
of endorsement provided for in the Purchase Agreement.
At the direction of and in such form as Funding may
designate, Sallie Mae also agrees to individually endorse any
Eligible Loan as Funding may request from time to time.
(E) Officer's Certificate
Sallie Mae shall furnish to Funding, with each Bill of
Sale provided in connection with each purchase of Loans pursuant to
these Master Terms, an Officer's Certificate, dated as of the date
of such Bill of Sale.
(F) Loan Transfer Statement
Upon Funding's request, Sallie Mae shall deliver to
Funding one (1) or more Loan Transfer Statements (Department of
Education Form OE 1074 or its equivalent) provided by Funding,
executed by Sallie Mae and dated the date of the Bill of Sale.
Sallie Mae agrees that Funding and the Interim Eligible Lender
Trustee may use the Bill of Sale, including the Loan Transmittal
Summary Form attached to the Bill of Sale, in lieu of OE Form 1074,
as official notification to the Guarantor of the assignment by
Sallie Mae to the Interim Eligible Lender Trustee on behalf of
Funding of the Loans listed on the Bill of Sale.
(G) Power of Attorney
Sallie Mae hereby grants to Funding and the Interim
Eligible Lender Trustee for the benefit of Funding an irrevocable
power of attorney, which power of attorney is coupled with an
interest, to individually endorse or cause to be individually
endorsed in the name of Sallie Mae any Eligible Loan to evidence
the transfer of such Eligible Loan to Funding and the Interim
Eligible Lender Trustee for the benefit of Funding and to cause to
be transferred physical possession of any Note from Sallie Mae or
the Servicer to Funding or the Interim Eligible Lender Trustee or
any custodian on their behalf.
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SECTION 5. REPRESENTATIONS AND WARRANTIES OF SALLIE MAE AND
INTERIM ELIGIBLE LENDER TRUSTEE
(A) General
Sallie Mae represents and warrants to Funding that with respect to a
portfolio of Loans, as of the date of each Purchase Agreement and Bill of Sale:
(i) Sallie Mae is an eligible lender or other qualified
holder of loans originated pursuant to the Federal
Family Education Loan Program established under the
Higher Education Act;
(ii) Sallie Mae is duly organized and existing under
the laws of the applicable jurisdiction;
(iii) Sallie Mae has all requisite power and authority
to enter into and to perform the terms of the Purchase
Agreement; and
(iv) Sallie Mae will not, with respect to any Loan
purchased under Purchase Agreements executed pursuant
to these Master Terms, agree to release any Guarantor
from any of its contractual obligations as an insurer
of such Loan or agree otherwise to alter, amend or
renegotiate any material term or condition under which
such Loan is insured, except as required by law or
rules and regulations issued pursuant to law, without
the express prior written consent of Funding.
(B) Particular
Sallie Mae represents and warrants to Funding as to the
Loans purchased by Funding under each Purchase Agreement and each
Bill of Sale executed pursuant these Master Terms that:
(i) Sallie Mae has good title to, and is the sole owner
of, the Loans, free and clear of all security
interests, liens, charges, claims, offsets, defenses,
counterclaims or encumbrances of any nature and no
right of rescission, offsets, defenses or counterclaims
have been asserted or threatened with respect to the
Loans;
(ii) The Loans are Eligible Loans and the description
of the Loans set forth in the Purchase Agreement is true
and correct;
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(iii) Sallie Mae is authorized to sell, assign,
transfer and repurchase the Loans; and the sale,
assignment and transfer of such Loans is or, in the
case of a Loan repurchase by Sallie Mae, will be made
pursuant to and consistent with the laws and
regulations under which Sallie Mae operates, and will
not violate any decree, judgment or order of any court
or agency, or conflict with or result in a breach of
any of the terms, conditions or provisions of any
agreement or instrument to which Sallie Mae is a party
or by which Sallie Mae or its property is bound, or
constitute a default (or an event which could
constitute a default with the passage of time or notice
or both) thereunder;
(iv) The Loans are each in full force and effect in
accordance with their terms and are legal, valid and
binding obligations of the respective Borrowers
thereunder subject to no defenses (except the defense
of infancy);
(v) Each Loan has been duly made and serviced in
accordance with the provisions of the Federal Family
Education Loan Program established under the Higher
Education Act, and has been duly insured by a
Guarantor; such guarantee is in full force and effect
and is freely transferable to the Interim Eligible
Lender Trustee on behalf of Funding as an incident to
the purchase of each Loan; and all premiums due and
payable to such Guarantor shall have been paid in full
as of the date of the Bill of Sale;
(vi) Any payments on the Loans received by Sallie Mae
which have been allocated to reduction of principal and
interest on such Loans have been allocated on a simple
interest basis; the information with respect to the
Loans as of the Cutoff Date as stated on the Loan
Transmittal Summary Form is true and correct;
(vii) Due diligence and reasonable care have been
exercised in the making, administering, servicing and
collecting the Loans and, with respect to any Loan for
which repayment terms have been established, all
disclosures of information required to be made pursuant
to the Higher Education Act have been made;
(viii) All origination fees authorized to be collected
pursuant to Section 438 of the Higher Education Act
have been paid to the Secretary;
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(ix) Each Loan has been duly made and serviced in
accordance with the provisions of all applicable federal
and state laws;
(x) No Loan is more than one hundred and twenty (120)
days delinquent as of the Cutoff Date and no default,
breach, violation or event permitting acceleration
under the terms of any Loan has arisen; and neither
Sallie Mae nor any predecessor holder of any Loan has
waived any of the foregoing other than as permitted by
the Basic Documents;
(xi) It is the intention of Sallie Mae, the Interim
Eligible Lender Trustee and Funding, and Sallie Mae
hereby warrants that, the transfer and assignment
herein contemplated constitute a valid sale of the
Loans from Sallie Mae to the Interim Eligible Lender
Trustee on behalf of Funding and that the beneficial
interest in and title to such Loans not be part of
Sallie Mae's estate in the event of the bankruptcy of
Sallie Mae or the appointment of a receiver with
respect to Sallie Mae;
(xii) There is only one original executed copy of the
promissory note evidencing each Loan; and
(xiii) No Borrower of any Loan as of the Cutoff Date is
noted in the related Loan File as being currently
involved in a bankruptcy proceeding.
(C) The Interim Eligible Lender Trustee represents and
warrants that as of the date of each Purchase Agreement and each
Bill of Sale:
(i) The Interim Eligible Lender Trustee is duly
organized and validly existing in good standing under the laws of
its governing jurisdiction and has an office located within the
State of Delaware. It has all requisite corporate power and
authority to execute, deliver and perform its obligations under
this Purchase Agreement;
(ii) The Interim Eligible Lender Trustee has taken all
corporate action necessary to authorize the execution and delivery
by it of the Purchase Agreement, and the Purchase Agreement will be
executed and delivered by one of its officers who is duly
authorized to execute and deliver the Purchase Agreement on its
behalf;
(iii) Neither the execution nor the delivery by it of
the Purchase Agreement, nor the consummation by it of the
transactions contemplated hereby nor compliance by it with
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any of the terms or provisions hereof will contravene any Federal or
Delaware state law, governmental rule or regulation governing the
banking or trust powers of the Interim Eligible Lender Trustee or
any judgment or order binding on it, or constitute any default
under its charter documents or by-laws or any indenture, mortgage,
contract, agreement or instrument to which it is a party or by
which any of its properties may be bound; and
(iv) The Interim Eligible Lender Trustee is an
"eligible lender" as such term is defined in Section 435(d) of the
Higher Education Act, for purposes of holding legal title to the
Trust Student Loans as contemplated by the Purchase Agreement and
the other Basic Documents, it has a lender identification number
with respect to the Trust Student Loans from the Department and has
in effect a Guarantee Agreement with each of the Guarantors with
respect to the Trust Student Loans.
SECTION 6. PURCHASE OF TRUST STUDENT LOANS; REIMBURSEMENT
Each party to this Agreement shall give notice to the other parties
promptly, in writing, upon the discovery of any breach of Sallie Mae's
representations and warranties made pursuant to Section 5 hereof which has a
materially adverse effect on the interest of Funding in any Trust Student Loan.
In the event of such a material breach which is not curable by reinstatement of
the Guarantor's guarantee of such Trust Student Loan, Sallie Mae shall
repurchase any affected Trust Student Loan not later than 120 days following
the earlier of the date of discovery of such material breach and the date of
receipt of the Guarantor reject transmittal form with respect to such Trust
Student Loan. In the event of such a material breach which is curable by
reinstatement of the Guarantor's guarantee of such Trust Student Loan, unless
the material breach shall have been cured within 360 days following the earlier
of the date of discovery of such material breach and the date of receipt of the
Guarantor reject transmittal form with respect to such Trust Student Loan,
Sallie Mae shall purchase such Trust Student Loan not later than the sixtieth
day following the end of such 360-day period. Sallie Mae shall also remit as
provided in Section 2.6 of the Administration Agreement on the date of purchase
of any Trust Student Loan pursuant to this Section 6 an amount equal to all
nonguaranteed interest amounts and forfeited Interest Subsidy Payments and
Special Allowance Payments with respect to such Trust Student Loan. In
consideration of the purchase of any such Trust Student Loan pursuant to this
Section 6, Sallie Mae shall remit the Purchase Amount in the manner specified
in Section 2.6 of the Administration Agreement.
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In addition, if any breach of Section 5 hereof by Sallie Mae does
not trigger such purchase obligation but does result in the refusal by a
Guarantor to guarantee all or a portion of the accrued interest (or any
obligation of Funding to repay such interest to a Guarantor), or the loss
(including any obligation of Funding to repay the Department) of Interest
Subsidy Payments and Special Allowance Payments, with respect to any Trust
Student Loan affected by such breach, then Sallie Mae shall reimburse Funding
by remitting an amount equal to the sum of all such nonguaranteed interest
amounts and such forfeited Interest Subsidy Payments or Special Allowance
Payments in the manner specified in Section 2.6 of the Administration Agreement
not later than (i) the last day of the next Collection Period ending not less
than 60 days from the date of the Guarantor's refusal to guarantee all or a
portion of accrued interest or loss of Interest Subsidy Payments or Special
Allowance Payments, or (ii) in the case where Sallie Mae reasonably believes
such losses are likely to be collected, not later than the last day of the next
Collection Period ending not less than 360 days from the date of the
Guarantor's refusal to guarantee all or a portion of accrued interest or loss
of Interest Subsidy Payments or Special Allowance Payments. At the time such
payment is made, Sallie Mae shall not be required to reimburse Funding for
interest that is then capitalized, however, such amounts shall be reimbursed if
the borrower subsequently defaults and such capitalized interest is not paid by
the Guarantor.
Anything in this Section 6 to the contrary notwithstanding, if as
of the last Business Day of any month the aggregate outstanding principal
amount of Trust Student Loans with respect to which claims have been filed with
and rejected by a Guarantor or with respect to which the Servicer determines
that claims cannot be filed pursuant to the Higher Education Act as a result of
a breach by Sallie Mae or the Servicer, exceeds 1% of the Pool Balance, Sallie
Mae (and the Servicer as provided in the Servicing Agreement) shall purchase,
within 30 days of a written request of the Eligible Lender Trustee or the
Indenture Trustee, such affected Trust Student Loans in an aggregate principal
amount such that after such purchase the aggregate principal amount of such
affected Trust student Loans is less than 1% of the Pool Balance. The Trust
Student Loans to be purchased by Sallie Mae and the Servicer pursuant to the
preceding sentence shall be based on the date of claim rejection (or the date
of notice referred to in the first sentence of this Section 6) with Trust
Student Loans with the earliest such date to be purchased first.
In lieu of repurchasing Trust Student Loans pursuant to this
Section 6, Sallie Mae may, at its option, substitute Eligible Loans or arrange
for the substitution of Eligible Loans which are substantially similar on an
aggregate basis as of the date of
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substitution to the Trust Student Loans for which they are being substituted
with respect to the following characteristics:
(1) status (i.e., in-school, grace, deferment,
forbearance or repayment),
(2) program type (i.e., Unsubsidized Stafford,
Subsidized Stafford, PLUS or SLS),
(3) school type,
(4) total return,
(5) principal balance, and
(6) remaining term to maturity.
In addition, each substituted Eligible Loan will comply, as of the
date of substitution, with all of the representations and warranties made
hereunder. In choosing Eligible Loans to be substituted pursuant to this
Section 6, Sallie Mae shall make a reasonable determination that the Eligible
Loans to be substituted will not have a material adverse effect on the
Noteholders and the Certificateholders.
In the event that Sallie Mae elects to substitute Eligible Loans
pursuant to this Section 6, Sallie Mae will remit to the Administrator the
amount of any shortfall between the Purchase Amount of the substituted Eligible
Loans and the Purchase Amount of the Trust Student Loans for which they are
being substituted. Sallie Mae shall also remit to the Administrator an amount
equal to all nonguaranteed interest amounts and forfeited Interest Subsidy
Payments and Special Allowance Payments with respect to the Trust Student Loans
in the manner provided in Section 2.6 of the Administration Agreement. The sole
remedy of Funding, the Eligible Lender Trustee, the Certificateholders and the
Noteholders with respect to a breach by Sallie Mae pursuant to Section 5 hereof
shall be to require Sallie Mae to purchase Trust Student Loans, to reimburse
Funding as provided above or to substitute Student Loans pursuant to this
Section. The Eligible Lender Trustee shall have no duty to conduct any
affirmative investigation as to the occurrence of any condition requiring the
purchase of any Trust Student Loan or the reimbursement for any interest
penalty pursuant to this Section 6.
SECTION 7. OBLIGATION TO REMIT SUBSEQUENT PAYMENTS
AND FORWARD COMMUNICATIONS
(A) Any payment received by Sallie Mae with respect to amounts
accrued after the Date of the Bill of Sale for any Loan sold to
Funding, which payment is not reflected in the
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Loan Transmittal Summary Form, shall be received by Sallie Mae in
trust for the account of Funding and Sallie Mae hereby disclaims any
title to or interest in any such amounts. Within two (2) business
days following the date of receipt, Sallie Mae shall remit to
Funding an amount equal to any such payments on a list provided by
Funding identifying the Loans with respect to which such payments
were made, the amount of each such payment and the date each such
payment was received.
(B) Any written communication received at any time by Sallie Mae
with respect to any Loan subject to this Purchase Agreement shall be
transmitted by Sallie Mae to Servicer within two (2) business days
of receipt. Such communications shall include, but not be limited
to, letters, notices of death or disability, notices of bankruptcy,
forms requesting deferment of repayment or loan cancellation, and
like documents.
SECTION 8. CONTINUING OBLIGATION OF SALLIE MAE
Sallie Mae shall provide all reasonable assistance necessary for
Funding to resolve account problems raised by any Borrower, the Guarantor or
the Secretary provided such account problems are attributable to or are alleged
to be attributable to (a) an event occurring during the period Sallie Mae owned
the Loan, or (b) a payment made or alleged to have been made to Sallie Mae.
Further, Sallie Mae agrees to execute any financing statements at the request
of Funding in order to reflect Funding's interest in the Loans.
SECTION 9. LIABILITY OF SALLIE MAE; INDEMNITIES
Sallie Mae shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by Sallie Mae under this Purchase
Agreement.
(i) Sallie Mae shall indemnify, defend and hold harmless Funding and
the Interim Eligible Lender Trustee in its individual capacity and
their officers, directors, employees and agents from and against any
taxes that may at any time be asserted against any such Person with
respect to the transactions contemplated herein and in the other
Basic Documents (except any such income taxes arising out of fees
paid to the Interim Eligible Lender Trustee), including any sales,
gross receipts, general corporation, tangible personal property,
privilege or license taxes (but, in the case of Funding, not
including any taxes asserted with respect to, and as of the date of,
the sale of the Loans to the Interim Eligible Lender Trustee on
behalf of Funding, or
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asserted with respect to ownership of the Trust Student Loans) and
costs and expenses in defending against the same.
(ii) Sallie Mae shall indemnify, defend and hold harmless Funding
and the Interim Eligible Lender Trustee in its individual capacity,
and the officers, directors, employees and agents of Funding, and
the Interim Eligible Lender Trustee from and against any and all
costs, expenses, losses, claims, damages and liabilities arising out
of, or imposed upon such Person through, Sallie Mae's willful
misfeasance, bad faith or gross negligence in the performance of its
duties under the Purchase Agreement, or by reason of reckless
disregard of its obligations and duties under the Purchase
Agreement.
(iii) Sallie Mae shall be liable as primary obligor for, and shall
indemnify, defend and hold harmless the Interim Eligible Lender
Trustee in its individual capacity and its officers, directors,
employees and agents from and against, all costs, expenses, losses,
claims, damages, obligations and liabilities arising out of,
incurred in connection with or relating to the Purchase Agreement,
the other Basic Documents, the acceptance or performance of the
trusts and duties set forth herein and in the Sale Agreement or the
action or the inaction of the Interim Eligible Lender Trustee
hereunder, except to the extent that such cost, expense, loss,
claim, damage, obligation or liability: (a) shall be due to the
willful misfeasance, bad faith or negligence (except for errors in
judgment) of the Interim Eligible Lender Trustee, (b) shall arise
from any breach by the Interim Eligible Lender Trustee of its
covenants made under any of the Basic Documents; or (c) shall arise
from the breach by the Interim Eligible Lender Trustee of any of its
representations or warranties made in its individual capacity set
forth in these Master Terms or any Purchase Agreement. In the event
of any claim, action or proceeding for which indemnity will be
sought pursuant to this paragraph, the Interim Eligible Lender
Trustee's choice of legal counsel shall be subject to the approval
of Sallie Mae, which approval shall not be unreasonably withheld.
Indemnification under this Section shall survive the resignation or
removal of the Interim Eligible Lender Trustee and the termination of these
Master Terms, and shall include reasonable fees and expenses of counsel and
expenses of litigation. If Sallie Mae shall have made any indemnity payments
pursuant to this Section and the Person to or on behalf of whom such payments
are made thereafter shall collect any of such amounts from others, such Person
shall promptly repay such amounts to Sallie Mae, without interest.
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SECTION 10. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF SALLIE MAE
Any Person (a) into which Sallie Mae may be merged or consolidated,
(b) which may result from any merger or consolidation to which Sallie Mae shall
be a party or (c) which may succeed to the properties and assets of Sallie Mae
substantially as a whole, shall be the successor to Sallie Mae without the
execution or filing of any document or any further act by any of the parties to
this Purchase Agreement; provided, however, that Sallie Mae hereby covenants
that it will not consummate any of the foregoing transactions except upon
satisfaction of the following: (i) the surviving Person, if other than Sallie
Mae, executes an agreement of assumption to perform every obligation of Sallie
Mae under the Purchase Agreement, (ii) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Section 5 shall
have been breached, (iii) the surviving Person, if other than Sallie Mae, shall
have delivered to the Interim Eligible Lender 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 Purchase 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) if Sallie Mae is not the surviving entity, Sallie Mae shall have delivered
to the Interim Eligible Lender 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 Funding and the Interim
Eligible Lender Trustee in the Loans and reciting the details of such filings,
or (B) stating that, in the opinion of such counsel, no such action shall be
necessary to preserve and protect such interests.
SECTION 11. LIMITATION ON LIABILITY OF SALLIE MAE AND OTHERS
Sallie Mae and any director or officer or employee or agent thereof
may rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any
matters arising hereunder (provided that such reliance shall not limit in any
way Sallie Mae's obligations under Section 6.) Sallie Mae shall not be under
any obligation to appear in, prosecute or defend any legal action that shall
not be incidental to its obligations under these Master Terms or any Purchase
Agreement, and that in its opinion may involve it in any expense or liability.
Except as provided herein, the repurchase (or substitution) and reimbursement
obligations of Sallie Mae will constitute the sole remedy available to Funding
for uncured breaches; provided, however,
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that the information with respect to the Loans listed on the Bill of Sale may
be adjusted in the ordinary course of business subsequent to the date of the
Bill of Sale and to the extent that the aggregate Principal Balance of the
Loans listed on the Bill of Sale is less than the aggregate Principal Balance
stated on the Bill of Sale, Sallie Mae shall remit such amount to the Interim
Eligible Lender Trustee on behalf of Funding. Such reconciliation payment shall
be made from time to time but no less frequently than semi-annually.
SECTION 12. LIMITATION OF LIABILITY OF INTERIM ELIGIBLE LENDER TRUSTEE
Notwithstanding anything contained herein to the contrary, these
Master Terms and any Purchase Agreement have been signed by Chase Manhattan
Bank USA, National Association not in its individual capacity but solely in its
capacity as Interim Eligible Lender Trustee for Funding 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 Funding, under these Master Terms or any Purchase
Agreement 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 Funding.
SECTION 13. EXPENSES
Except as otherwise provided herein, each party to these Master
Terms or any Purchase Agreement shall pay its own expense incurred in
connection with the preparation, execution and delivery of these Master Terms
and any Purchase Agreement and the transactions contemplated herein or therein.
SECTION 14. SURVIVAL OF COVENANTS/SUPERSESSION
All covenants, agreements, representations and warranties made herein and in or
pursuant to any Purchase Agreements executed pursuant to these Master Terms
shall survive the consummation of the purchase of the Loans provided for in
each Purchase Agreement. All covenants, agreements, representations and
warranties made or furnished pursuant hereto by or on behalf of Sallie Mae
shall bind and inure to the benefit of any successors or assigns of Funding and
shall survive with respect to each Loan. Each Purchase Agreement supersedes all
previous agreements and understandings between Funding and Sallie Mae with
respect to the subject matter thereof. These Master Terms and any Purchase
Agreement may be changed, modified or discharged, and any rights or obligations
hereunder may be waived, only by a written instrument signed by a duly
authorized officer of the party against whom enforcement of any such waiver,
change, modification or discharge is sought. The waiver by Funding of any
covenant,
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agreement, representation or warranty required to be made or furnished by
Sallie Mae or the waiver by Funding of any provision herein contained or
contained in any Purchase Agreement shall not be deemed to be a waiver of any
breach of any other covenant, agreement, representation, warranty or provision
herein contained, nor shall any waiver or any custom or practice which may
evolve between the parties in the administration of the terms hereof or of any
Purchase Agreement, be construed to lessen the right of Funding to insist upon
the performance by Sallie Mae in strict accordance with said terms.
SECTION 15. COMMUNICATION AND NOTICE REQUIREMENTS
All communications, notices and approvals provided for hereunder
shall be in writing and mailed or delivered to Sallie Mae or Funding, as the
case may be, addressed as set forth in the Purchase Agreement or at such other
address as either party may hereafter designate by notice to the other party.
Notice given in any such communication, mailed to Sallie Mae or Funding by
appropriately addressed registered mail, shall be deemed to have been given on
the day following the date of such mailing.
SECTION 16. FORM OF INSTRUMENTS
All instruments and documents delivered in connection with these
Master Terms and any Purchase Agreement, and all proceedings to be taken in
connection with these Master Terms and any Purchase Agreement and the
transactions contemplated herein and therein, shall be in a form as set forth
in the attachments hereto, and Funding shall have received copies of such
documents as it or its counsel shall reasonably request in connection
therewith. Any instrument or document which is substantially in the same form
as an Attachment hereto or a recital herein will be deemed to be satisfactory
as to form.
SECTION 17. AMENDMENT
These Master Terms and any Purchase Agreement may be amended by the
parties thereto without the consent of the related Noteholders or
Certificateholders for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of such Master Terms and
Purchase Agreements or of modifying in any manner the rights of such
Noteholders or Certificateholders; provided that such action will not, in the
opinion of counsel satisfactory to the related Indenture Trustee and Eligible
Lender Trustees, materially and adversely affect the interest of any such
Noteholder or Certificateholder.
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In addition, these Master Terms and any Purchase Agreement may also
be amended from time to time by Sallie Mae, the Interim Eligible Lender Trustee
and Funding, 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 these Master Terms or any Purchase
Agreements or of modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, however, that no such amendment shall (a)
increase or reduce in any manner the amount of, or accelerate or delay the time
of, collections of payments with respect to 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 of Certificates, 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 consent (or,
in the case of the Rating Agencies, five Business Days prior thereto), the
Interim Eligible Lender Trustee shall furnish written notification of the
substance of such amendment or consent to the Indenture Trustee, each
Certificateholder, 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 these Master Terms, the
Interim Eligible Lender Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that execution of such amendment is authorized or
permitted by this Agreement and the Opinion of Counsel referred to in Section
7.1 I((i) of the Administration Agreement. The Interim Eligible Lender Trustee
may, but shall not be obligated to, enter into any such amendment which affects
the Interim Eligible Lender Trustee's own rights, duties or immunities under
this Agreement or otherwise.
SECTION 18. NONPETITION COVENANTS
Notwithstanding any prior termination of these Master Terms Sallie
Mae and the Interim Eligible Lender Trustee shall not acquiesce, petition or
otherwise invoke or cause Funding to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
Funding under any Federal or state bankruptcy, insolvency or similar law or
appointing a
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receiver, liquidator, assignees, trustee, custodian, sequestrator or other
similar official of Funding or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Funding.
SECTION 19. GOVERNING LAW
These Master Terms and any Purchase Agreement shall be government
by and construed in accordance with the laws of the State of New York without
reference to its conflict of law provisions, and the obligations, rights and
remedies of the parties, hereunder shall be determined in accordance with such
laws.
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STUDENT LOAN MARKETING SLM FUNDING CORPORATION
ASSOCIATION (Seller) (Purchaser)
By Sallie Mae, Inc., Authorized
Agent for the Student Loan
Marketing Association
By:/s/ J. LANCE FRANKE By: /s/ WILLIAM M.E. RACHAL, JR.
--------------------------- -----------------------------
Name: Name:
------------------------- ---------------------------
Title: Title:
------------------------ --------------------------
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION
- ----------------------------------------------
Not in its individual capacity but
solely as Interim Eligible Lender Trustee
By: /s/ J.J. CASHIN
---------------------------
Name:
-------------------------
Title:
------------------------
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ATTACHMENT A
PURCHASE AGREEMENT
Dated as of November 12, 1997
PURCHASE AGREEMENT NUMBER 1
Sallie Mae hereby offers for sale to Chase Manhattan Bank USA,
National Association as Interim Eligible Lender Trustee for the benefit of
SLM Funding Corporation ("Funding") under the Interim Trust Agreement
dated as of November 1, 1997 between Funding and the Interim Eligible
Lender Trustee, the entire right, title and interest of Sallie Mae in the
Loans described in the Bill of Sale and Loan Transmittal Summary Form
incorporated herein and, to the extent indicated below, the Interim
Eligible Lender Trustee for the benefit of Funding accepts Sallie Mae's
offer. In order to qualify as Eligible Loans, no payment of principal or
interest shall be more than one hundred and twenty (120) days Delinquent
as of the Cutoff Date which date shall be October 27, 1997.
TERMS, CONDITIONS AND COVENANTS
In consideration of the Purchase Price, Sallie Mae hereby sells to
the Interim Eligible Lender Trustee for the benefit of Funding the entire
right, title and interest of Sallie Mae in the Loans accepted for
purchase, subject to all the terms and conditions of the Purchase
Agreement Master Securitization Terms Number 1000 ("Master Terms") and any
amendments thereto, incorporated herein by reference, among Sallie Mae,
Funding, and the Interim Eligible Lender Trustee. The Initial Payment of
the Loans shall equal $2,551,581,521 (equal to $2,557,863,120
(representing the offering price of the Securities less underwriters'
commissions) less $6,256,599 (representing the Reserve Account Initial
Deposit), less $25,000 (representing the initial deposit into the
Collection Account).
This document shall constitute a Purchase Agreement as referred to
in the Master Terms and, except as modified herein, each term used herein
shall have the same meaning as in the Master Terms. All references in the
Master Terms to Loans or Eligible Loans shall be deemed to refer to the
Loans governed by this Purchase Agreement. Sallie Mae hereby makes, as of
the date hereof, all the representations and warranties contained in the
Master Terms and makes such representations and warranties with respect to
the Loans governed by this Purchase Agreement.
Sallie Mae authorizes the Interim Eligible Lender Trustee for the
benefit of Funding to use a copy of the Bill of Sale, including the Loan
Transmittal Summary Form attached to the Bill of Sale (in lieu of OE Form
1074), as official notification to the Guarantor of assignment to the
Interim Eligible Lender Trustee on behalf of Funding of the Loans on the
date of purchase.
1
<PAGE> 24
The parties hereto intend that the transfer of Loans described in
the Bill of Sale and Loan Transmittal Summary Form be, and be construed
as, a valid sale of such Loans from Sallie Mae to the Interim Eligible
Lender Trustee for the benefit of Funding. However, in the event that
notwithstanding the intention of the parties, such transfer is deemed to
be a transfer for security, then Sallie Mae hereby grants to the Interim
Eligible Lender Trustee for the benefit of Funding a first priority
security interest in and to all Loans described in the Bill of Sale and
Loan Transmittal Summary Form to secure a loan in an amount equal to the
Purchase Price of such loans.
STUDENT LOAN MARKETING SLM FUNDING CORPORATION
ASSOCIATION (Seller) (Purchaser)
By Sallie Mae, Inc., Authorized
Agent for the Student Loan
Marketing Association
By: By:
--------------------------- -----------------------------
Name: Name:
------------------------- ---------------------------
Title: Title:
------------------------ --------------------------
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION
- ----------------------------------------------
Not in its individual capacity but
solely as Interim Eligible Lender Trustee
By:
---------------------------
Name:
-------------------------
Title:
------------------------
2
<PAGE> 25
PURCHASE AGREEMENT NUMBER 1
BLANKET ENDORSEMENT DATED NOVEMBER 12, 1997
Student Loan Marketing Association ("Sallie Mae"), by execution of
this instrument, hereby endorses the attached promissory note which is one (1)
of the promissory notes ("the Notes") described in the Bill of Sale executed by
Sallie Mae in favor of Chase Manhattan Bank USA, National Association as the
Interim Eligible Lender Trustee for the benefit of SLM Funding Corporation
("Funding"). This endorsement is in blank, unrestricted form and without
recourse except as provided in Section 6 of the Master Terms referred to in the
Purchase Agreement among Sallie Mae, Funding, and the Interim Eligible Lender
Trustee which covers this promissory note.
This endorsement may be effected by attaching either this
instrument or a facsimile hereof to each or any of the Notes.
Notwithstanding the foregoing, Sallie Mae agrees to individually
endorse each Note in the form provided by Funding as Funding may from time to
time require or if such individual endorsement is required by the Guarantor of
the Note.
THE SALE AND PURCHASE OF THE LOANS SHALL BE SUBJECT TO THE TERMS, CONDITIONS
AND COVENANTS, INCLUDING THE BLANKET ENDORSEMENT, AS SET FORTH IN THE PURCHASE
AGREEMENT. BY EXECUTION HEREOF, SALLIE MAE ACKNOWLEDGES THAT SALLIE MAE HAS
READ, UNDERSTANDS AND AGREES TO BE BOUND BY ALL TERMS, CONDITIONS AND COVENANTS
OF THE PURCHASE AGREEMENT. THE SALE AND PURCHASE SHALL BE CONSUMMATED UPON
FUNDING'S PAYMENT TO SALLIE MAE OF THE INITIAL PAYMENT (AS DEFINED IN THE
MASTER TERMS) AND, UNLESS OTHERWISE AGREED BY SALLIE MAE AND FUNDING, SHALL BE
EFFECTIVE AS OF THE DATE OF THE BILL OF SALE.
SELLER PURCHASER
--------------------------------- -----------------------------------
Student Loan Marketing Association Chase Manhattan Bank USA,
11600 Sallie Mae Drive National Association, not in its
Reston, Virginia 20190 individual capacity but solely as
Interim Eligible Lender Trustee for
Lender Code: the benefit of the SLM Funding
-------------- Corporation under the Interim Trust
By: Agreement dated Nov. 1, 1997
-----------------------------
(Signature of Authorized
Officer of Sallie Mae, Inc. By:
--------------------------------
as Authorized Agent for (Signature of Authorized
Seller) Signatory for Purchaser)
Name: Name:
--------------------------- ------------------------------
Title: Title:
-------------------------- -----------------------------
Date of Purchase: Nov. 12, 1997
1
<PAGE> 26
ATTACHMENT B
BILL OF SALE DATED NOVEMBER 12, 1997
The undersigned ("Sallie Mae"), for value received and pursuant to
the terms and conditions of Purchase Agreement Number 1 ("Purchase Agreement")
among SLM Funding Corporation ("Funding"), and Chase Manhattan Bank USA,
National Association as Interim Eligible Lender Trustee for the benefit of
Funding under the Interim Trust Agreement dated as of November 1, 1997 between
Funding and the Interim Eligible Lender Trustee, does hereby sell, assign and
convey to the Interim Eligible Lender Trustee for the benefit of Funding and
its assignees all right, title and interest of Sallie Mae, including the
insurance interest of Sallie Mae under the Federal Family Education Loan
Program (20 U.S.C. 1071 et seq.), in the Loans identified herein which the
Interim Eligible Lender Trustee for the benefit of Funding has accepted for
purchase. The portfolio accepted for purchase by the Interim Eligible Lender
Trustee for the benefit of Funding and the effective date of sale and purchase
are described below and the individual Accounts are listed on the Schedule A
attached hereto.
Sallie Mae hereby makes the representations and warranties set
forth in Section 5 of the Purchase Agreement Master Securitization Terms Number
1000 incorporated by reference in the Purchase Agreement. Sallie Mae authorizes
the Interim Eligible Lender Trustee on behalf of Funding to use a copy of this
document (in lieu of OE Form 1074) as official notification to the Guarantor(s)
of assignment to the Interim Eligible Lender Trustee for the benefit of Funding
of the Loans on the date of purchase.
LISTING OF LOANS
<TABLE>
<CAPTION>
OFFERED BY ACCEPTED BY ELIGIBLE
SELLER LENDER TRUSTEE
NUMBER OF PRINCIPAL NUMBER OF PRINCIPAL
LOAN TYPE LOANS* BALANCE** LOANS* BALANCE**
- --------------------------------------------------------------------------------------------------------------
SUBSIDIZED STAFFORD
- -------------------
<S> <C> <C> <C> <C>
Interim 246,456 831,888,241 246,456 831,888,241
Repayment 295,381 814,458,214 295,381 814,458,214
------- ----------- ------- -----------
541,837 1,646,346,455 541,837 1,646,346,455
UNSUBSIDIZED STAFFORD
- ---------------------
Deferred 115,183 444,572,120 115,183 444,572,120
Repayment 57,489 168,802,236 57,489 168,802,236
------ ----------- ------ -----------
172,672 613,374,356 172,672 613,374,356
PLUS/SLS
- --------
Deferred 13,034 64,468,389 13,034 64,468,389
Non-Deferred 43,998 178,450,387 43,998 178,450,387
------- ----------- ------ -----------
57,032 242,918,776 57,032 242,918,776
CONSOLIDATION 0 0 0 0
- ------------- - - -
TOTAL 771,541 $2,502,639.587 771,541 $2,502,639.587
------- -------------- ------- --------------
</TABLE>
ADDITIONAL LOAN CRITERIA
Not in claims status, not previously rejected
Not in litigation
Last disbursement is greater than 120 days from cutoff date
Loan is not swap-pending
*Based upon Sallie Mae's estimated calculations, which may be adjusted upward
or downward based upon Funding's reconciliation.
**Includes interest to be capitalized.
2
<PAGE> 27
Guarantor(s):
American Student Assistance Guarantor
California Student Aid Commission
Connecticut Student Loan Foundation
Educational Credit Management Corporation
Florida Department of Education Office of Student Financial Assistance Great
Lakes Higher Education Corporation Illinois Student Assistance Commission Iowa
College Student Aid Commission Kentucky Higher Education Assistance Authority
Louisiana Student Financial Assistance Commission Michigan Higher Education
Assistance Authority Missouri Coordinating Board for Higher Education New
Jersey Higher Education Assistance Authority N.Y State Higher Education
Services Corporation Northstar Guarantee Inc. Northwest Education Loan
Association Oklahoma State Regents for Higher Education Oregon State
Scholarship Commission Pennsylvania Higher Education Assistance Agency Student
Loan Guarantee Foundation of Arkansas, Inc. Tennessee Student Assistance
Corporation Texas Guaranteed Student Loan Corporation United Student Aid Funds,
Inc.
SELLER PURCHASER
- ---------------------------------- ---------------------------------
Student Loan Marketing Association
1050 Thomas Jefferson Street, N.W. Chase Manhattan Bank USA,
Washington, D.C. 20007 National Association,
not in its individual capacity
Lender Code: but solely as Interim Eligible
-------------- Lender Trustee for the benefit
By: of SLM Funding Corporation
-----------------------------
(Signature of Authorized By:
Officer of Sallie Mae, Inc. ----------------------------
as Authorized Agent for (Signature of Authorized
Seller) Signatory for Purchaser)
Name: Name:
--------------------------- --------------------------
Title: Title:
--------------------------- -------------------------
Date of Purchase: Nov 12, 1997
NOTE: Boxed areas are for completion by Purchaser
<PAGE> 1
EXHIBIT 99.2
SALE AGREEMENT MASTER SECURITIZATION TERMS NUMBER 1000
These Sale Agreement Master Securitization Terms Number 1000 ("Master
Sale Terms") dated as of November 12, 1997 among SLM Funding Corporation
("Seller"), Chase Manhattan Bank USA, National Association, not in its
individual capacity but solely as Interim Eligible Lender Trustee (the "Interim
Eligible Lender Trustee") for the benefit of the Seller under the Interim Trust
Agreement dated as of November 1, 1997 between Seller and the Interim Eligible
Lender Trustee, Chase Manhattan Bank USA, National Association, not in its
individual capacity but solely as Eligible Lender Trustee on behalf of SLM
Student Loan Trust 1997-4 (the "Eligible Lender Trustee"), and SLM Student Loan
Trust 1997-4 (the "Purchaser"), shall be effective upon execution by the
parties hereto. References to the Seller herein mean the Interim Eligible
Lender Trustee, and references to the Purchaser mean the Eligible Lender
Trustee, for all purposes involving the holding or transferring of legal title
to the Trust Student Loans.
WHEREAS, the Seller is the owner of certain student loans guaranteed
under the Higher Education Act;
WHEREAS, legal title to such loans is vested in the Interim Eligible
Lender Trustee, as trustee for the benefit of the Seller as the sole
beneficiary;
WHEREAS, Seller may desire to sell its interest in such loans from
time to time and Purchaser may desire to purchase such loans from Seller;
WHEREAS, the Eligible Lender Trustee is willing to hold legal title
to, and serve as eligible lender trustee with respect to, such loans for the
benefit of the Purchaser;
NOW, THEREFORE, in connection with the mutual promises contained
herein, the parties hereto agree as follows:
SECTION 1. TERMS
These Master Sale Terms establish the terms under which Seller (and
with respect to legal title, the Interim Eligible Lender Trustee for the
benefit of Seller) may sell and Purchaser (and with respect to legal title, the
Eligible Lender Trustee on behalf of the Purchaser) may purchase the Loans (and
all obligations of the Borrowers thereunder) specified on each Sale Agreement
("Sale Agreement") as the parties may execute from time to time pursuant to
these Master Sale Terms. Each such Sale Agreement shall be substantially in
the form of Attachment A hereto, incorporating by reference the terms of these
Master Sale Terms, and shall be a separate agreement among Seller, Purchaser,
Eligible Lender Trustee on behalf of Purchaser, and the Interim Eligible Lender
Trustee for the benefit of Seller with respect to the Loans covered by the
terms of such Sale Agreement for all purposes. If the terms of a
<PAGE> 2
Sale Agreement conflict with the terms of these Master Sale Terms, the terms of
such Sale Agreement shall supersede and govern.
SECTION 2. DEFINITIONS
Capitalized terms used but not otherwise defined herein shall have the
definitions set forth in Appendix A hereto.
For purposes hereof:
(A) "Account" means all of the Eligible Loans hereunder of one (1)
Borrower that are of the same Loan type made under the identical
subsection of the Higher Education Act and in the same status.
(B) "Bill of Sale" means that document executed by an authorized
officer of the Seller and the Interim Eligible Lender Trustee for the
benefit of Seller which shall set forth the Loans offered by the
Seller and the Interim Eligible Lender Trustee for the benefit of the
Seller and accepted for purchase by the Eligible Lender Trustee on
behalf of the Purchaser and which shall sell, assign and convey to the
Eligible Lender Trustee on behalf of the Purchaser and its assignees
all right, title and interest of the Seller and of the Interim
Eligible Lender Trustee for the benefit of the Seller in the Loans
listed on the Bill of Sale and will certify that the representations
and warranties made by the Seller pursuant to Section 5(A) of these
Master Sale Terms are true and correct.
(C) "Borrower" means the obligor on a Loan.
(D) "Consolidation Loan" means a Loan made pursuant to and in full
compliance with Section 428C of the Higher Education Act.
(E) "Cutoff Date" means with respect to the first sale hereunder,
October 27, 1997, and, with respect to subsequent sales hereunder, a
date agreed to by Seller and Purchaser to use in determining the
Principal Balance and accrued interest to be capitalized for purposes
of completing the Loan Transmittal Summary Form.
(F) "Deferred Payment" means all amounts equal to amounts distributed
to the Seller pursuant to Section 2.8C(G) of the Administration
Agreement (exclusive of the amount of any such distribution
attributable to the reduction from time to time of the Specified
Reserve Account Balance).
(G) "Delinquent" means the period any payment of principal or
interest due on the Loan is overdue.
(H) "Eligible Loan" means a Loan offered for sale by Seller under
the Sale Agreement which as of the Cutoff Date is current or no more
Delinquent than permitted under the Sale
2
<PAGE> 3
Agreement in payment of principal or interest and which meets the
following criteria as of the effective date of the Bill of Sale:
(i) is a Stafford Loan, a Consolidation Loan, a PLUS Loan or
SLS Loan;
(ii) is owned by Seller and is fully disbursed;
(iii) is guaranteed as to principal and interest by the
applicable Guarantor to the maximum extent permitted by the
Higher Education Act for such Loan;
(iv) bears interest at a stated rate of not less than the
maximum rate permitted under the Higher Education Act for such
Loan;
(v) is eligible for the payment of the quarterly special
allowance at the full and undiminished rate established under
the formula set forth in the Higher Education Act for such
Loan;
(vi) if not yet in repayment status, is eligible for the
payment of interest benefits by the Secretary or, if not so
eligible, is a Loan for which interest either is billed
quarterly to Borrower or deferred until commencement of the
repayment period, in which case such accrued interest is
subject to capitalization to the full extent permitted by the
applicable Guarantor;
(vii) is supported by the following documentation:
(a) for each Loan:
1. loan application, and any supplement
thereto,
2. original promissory note and any
addendum thereto or a certified copy
thereof if more than one loan is
represented by a single promissory
note and all loans so represented
are not being sold at the same time,
3. evidence of guarantee,
4. any other document and/or record
which Purchaser may be required to
retain pursuant to the Higher
Education Act; and
(b) for each Loan only if applicable:
1. payment history (or similar
document) including (i) an
indication of the
3
<PAGE> 4
Principal Balance and the date through
which interest has been paid, each
as of the Cutoff Date and (ii) an
accounting of the allocation of all
payments by Borrower or on
Borrower's behalf to principal and
interest on the Loan,
2. documentation which supports periods
of current or past deferment or
past forbearance,
3. a collection history, if the Loan
was ever in a delinquent status,
including detailed summaries of
contacts and including the addresses
or telephone numbers used in
contacting or attempting to contact
Borrower and any endorser and, if
required by the Guarantor, copies of
all letters and other correspondence
relating to due diligence
processing,
4. evidence of all requests for
skip-tracing assistance and current
address of Borrower, if located,
5. evidence of requests for pre-claims
assistance, and evidence that the
Borrower's school(s) have been
notified,
6. a record of any event resulting in a
change to or confirmation of any
data in the Loan file.
(I) "Initial Payment" means the dollar amount specified in the
applicable Sale Agreement.
(J) "Loan" means the Note or Notes offered for sale pursuant to the
Sale Agreement and related documentation together with any guaranties
and other rights relating thereto including, without limitation,
Interest Subsidy Payments and Special Allowance Payments.
(K) "Loan Transmittal Summary Forms" means the forms provided to
Seller by Purchaser and completed by Seller which list, by Borrower,
the Loans subject to the Bill of Sale and the outstanding Principal
Balance and accrued interest thereof as of the Cutoff Date.
(L) "Note" means the promissory note of the Borrower and any
amendment thereto evidencing the Borrower's obligation with regard to
a student loan guaranteed under the Higher Education Act.
4
<PAGE> 5
(M) "PLUS Loan" means a Loan which was made pursuant to the
PLUS Program established under Section 428B of the Higher Education
Act(or predecessor provisions).
(N) "Principal Balance" means the outstanding principal amount of
the Loan, plus interest expected to be capitalized (if any), less
amounts which may not be insured (such as late charges).
(O) "Purchase Price" means the sum of the Initial Payment and
Deferred Payment.
(P) "Secretary" means the United States Secretary of Education or any
successor.
(Q) "SLS Loan" means a Loan which was made pursuant to the
Supplemental Loans for Students Program established under Section 428A
of the Higher Education Act(or predecessor provisions), including
Loans referred to as ALAS Loans or Student PLUS Loans.
(R) "Stafford Loans" means Subsidized Stafford Loans and Unsubsidized
Stafford Loans.
(S) "Subsidized Stafford Loan" means a Loan for which the interest
rate is governed by Section 427A(a) or 427A(d) of the Higher Education
Act.
(T) "Unsubsidized Stafford Loan" means a Loan made pursuant to
Section 428H of the Higher Education Act.
SECTION 3. SALE/PURCHASE
(A) Consummation of Sale and Purchase
The sale and purchase of Eligible Loans pursuant to a Sale
Agreement shall be consummated upon Purchaser's receipt from the
Seller and the Interim Eligible Lender Trustee for the benefit of the
Seller of the Bill of Sale and the payment by Purchaser to Seller of
the Initial Payment, and when consummated such sale and purchase shall
be effective as of the date of the Bill of Sale. Seller and Purchaser
shall use their best efforts to perform promptly their respective
obligations pursuant to such Sale Agreement.
(B) Settlement of the Initial Payment
Purchaser on the date of the Bill of Sale shall pay Seller the
Initial Payment by wire transfer in immediately available funds to the
account specified by Seller.
(C) Interest Subsidy And Special Allowance Payments
5
<PAGE> 6
On the date of the Bill of Sale, Seller shall be entitled to
all Interest Subsidy Payments and Special Allowance Payments on the
Loans subject to each Bill of Sale accruing up to but not including
the date of the Bill of Sale. The Purchaser and the Eligible Lender
Trustee for the benefit of Purchaser shall be entitled to all Special
Allowance Payments and Interest Subsidy Payments accruing from the
date of the Bill of Sale.
(D) Special Programs
In consideration of the sale of the Eligible Loans under these
Master Sale Terms and each Sale Agreement, Purchaser agrees to cause the
Servicer to offer borrowers of Trust Student Loans all special programs whether
or not in existence as of the date of any Sale Agreement generally offered to
the obligors of comparable loans owned by Sallie Mae subject to the terms and
conditions of Section 3.12 of the Servicing Agreement.
(E) Deferred Payment
Receipt by the Seller of amounts distributed to the Seller
pursuant to Section 2.8C(G) of the Administration Agreement (exclusive
of the amount of any such distribution attributable to the reduction
from time to time of the Specified Reserve Account Balance) shall
constitute payment to the Seller of the Deferred Payment portion of
the Purchase Price.
SECTION 4. CONDITIONS PRECEDENT TO SALE AND PURCHASE
(A) Activities Prior to the Sale
Following the execution of a Sale Agreement, Seller shall
provide any assistance requested by Purchaser in determining that all
required documentation on the Loans is present and correct.
(B) Continued Servicing
Seller shall service, or cause to be serviced, all Loans as
required under the Higher Education Act until the date of the Bill of
Sale.
(C) Bill of Sale/Loan Transmittal Summary Form
Seller shall deliver to Purchaser:
(i) a Bill of Sale executed by an authorized officer of the
Seller and the Interim Eligible Lender Trustee for the benefit
of the Seller, covering Loans offered by the Seller and
accepted by Purchaser as set forth thereon, selling, assigning
and conveying to the Eligible Lender Trustee for the benefit
of the Purchaser and its
6
<PAGE> 7
assignees all right, title and interest of the Seller and the
Interim Eligible Lender Trustee for the benefit of the Seller,
including the insurance interest of the Interim Eligible
Lender Trustee for the benefit of the Seller, in each of the
Loans, and stating that the representations and warranties
made by Seller in Section 5 of these Master Sale Terms are
true and correct on and as of the date of the Bill of Sale;
and
(ii) the Loan Transmittal Summary Form, attached to the Bill
of Sale, identifying each of the Eligible Loans which is the
subject of the Bill of Sale and setting forth the unpaid
Principal Balance of each such Loan.
(D) Endorsement
The Seller shall provide a blanket endorsement transferring
the entire interest of the Seller and the Interim Eligible Lender
Trustee for the benefit of Seller in the Loans to the Eligible Lender
Trustee for the benefit of the Purchaser with the form of endorsement
provided for in the Sale Agreement.
At the direction of and in such form as Purchaser may
designate, the Seller also agrees to individually endorse any Eligible
Loan as Purchaser may request from time to time.
(E) Officer's Certificate
Seller shall furnish to Purchaser, with each Bill of Sale
provided in connection with each sale of Loans pursuant to these
Master Sale Terms, an Officer's Certificate, dated as of the date of
such Bill of Sale.
(F) Loan Transfer Statement
Upon Purchaser's request, Seller shall deliver to Purchaser
one (1) or more Loan Transfer Statements (Department Form OE 1074 or
its equivalent) provided by Purchaser, executed by the Interim
Eligible Lender Trustee for the benefit of the Seller and dated the
date of the Bill of Sale. Seller agrees that Purchaser and the
Eligible Lender Trustee may use the Bill of Sale, including the Loan
Transmittal Summary Form attached to the Bill of Sale, in lieu of OE
Form 1074, as official notification to the Guarantor of the assignment
by the Interim Eligible Lender Trustee for the benefit of the Seller
to the Eligible Lender Trustee for the benefit of the Purchaser of the
Loans listed on the Bill of Sale.
(G) Power of Attorney
Seller and the Interim Eligible Lender Trustee hereby grant to
the Eligible Lender Trustee on behalf of the
7
<PAGE> 8
Purchaser an irrevocable power of attorney, which power of
attorney is coupled with an interest, to individually endorse
or cause to be individually endorsed in the name of the Seller
and the Interim Eligible Lender Trustee for the benefit of the
Seller any Eligible Loan to evidence the transfer of such
Eligible Loan to the Eligible Lender Trustee on behalf of the
Purchaser and to transfer or to cause to be transferred
physical possession of any Note from Sallie Mae or the
Servicer to the Eligible Lender Trustee or the Indenture
Trustee or any other custodian on behalf of either of them.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF SELLER AND
ELIGIBLE LENDER TRUSTEE
(A) General
Seller represents and warrants to Purchaser that with respect to a
portfolio of Loans as of the date of each Sale Agreement and Bill of Sale;
(i) The Interim Eligible Lender Trustee is an eligible
lender or other qualified holder of loans originated pursuant
to the Federal Family Education Loan Program established under
the Higher Education Act;
(ii) The Interim Eligible Lender Trustee and the Seller are
duly organized and existing under the laws of the applicable
jurisdiction;
(iii) The Interim Eligible Lender Trustee and the Seller have
all requisite power and authority to enter into and to perform
the terms of these Master Sale Terms and each Sale Agreement;
and
(iv) The Interim Eligible Lender Trustee and the Seller will
not, with respect to any Loan purchased under Sale Agreements
executed pursuant to these Master Sale Terms, agree to release
any Guarantor from any of its contractual obligations as an
insurer of such Loan or agree otherwise to alter, amend or
renegotiate any material term or condition under which such
Loan is insured, except as required by law or rules and
regulations issued pursuant to law, without the express prior
written consent of Purchaser.
(B) Particular
Seller represents and warrants to Purchaser as to the Loans
purchased by Purchaser under each Sale Agreement and each Bill of Sale
executed pursuant to these Master Sale Terms:
(i) The Interim Eligible Lender Trustee for the benefit of
the Seller has good title to, and is the sole owner
8
<PAGE> 9
of, the Loans, free and clear of all security interests,
liens, charges, claims, offsets, defenses, counterclaims or
encumbrances of any nature and no right of rescission,
offsets, defenses, or counterclaims have been asserted or
threatened with respect to the Loans;
(ii) The Loans are Eligible Loans and the description of the
Loans set forth in the Sale Agreement and the Loan Transmittal
Summary Form is true and correct;
(iii) The Interim Eligible Lender Trustee and the Seller are
authorized to sell, assign, transfer and repurchased the
Loans; and the sale, assignment and transfer of such Loans is
or, in the case of a Loan repurchased by the Seller and or the
Interim Eligible Lender Trustee, will be made pursuant to and
consistent with the laws and regulations under which the
Seller and the Interim Eligible Lender Trustee operate, and
will not violate any decree, judgment or order of any court or
agency, or conflict with or result in a breach of any of the
terms, conditions or provisions of any agreement or instrument
to which the Interim Eligible Lender Trustee or the Seller is
a party or by which the Interim Eligible Lender Trustee or
Seller or its property is bound, or constitute a default (or
an event which could constitute a default with the passage of
time or notice or both) thereunder;
(iv) The Loans are each in full force and effect in
accordance with their terms and are legal, valid and binding
obligations of the respective Borrowers thereunder subject to
no defenses (except the defense of infancy);
(v) Each Loan has been duly made and serviced in accordance
with the provisions of the Federal Family Education Loan
Program established under the Higher Education Act, and has
been duly insured by a Guarantor; such guarantee is in full
force and effect and is freely transferable to the Eligible
Lender Trustee for the benefit of the Purchaser as an incident
to the purchase of each Loan; and all premiums due and payable
to such Guarantor shall have been paid in full as of the date
of the Bill of Sale;
(vi) Any payments on the Loans received by the Interim
Eligible Lender Trustee for the benefit of the Seller which
have been allocated to reduction of principal and interest on
such Loans have been allocated on a simple interest basis; the
information with respect to the Loans as of the Cutoff Date as
stated on the Loan Transmittal Summary Form is true and
correct;
(vii) Due diligence and reasonable care have been exercised in
the making, administering, servicing and
9
<PAGE> 10
collecting the Loans and, with respect to any Loan for which
repayment terms have been established, all disclosures of
information required to be made pursuant to the Higher
Education Act have been made;
(viii) All origination fees authorized to be collected
pursuant to Section 438 of the Higher Education Act have been
paid to the Secretary;
(ix) Each Loan has been duly made and serviced in accordance
with the provisions of all applicable federal and state laws;
(x) No Loan is more than one hundred and twenty (120) days
Delinquent as of the Cutoff Date and no default, breach,
violation or event permitting acceleration under the terms of
any Loan has arisen; and neither the Seller nor any
predecessor holder of any Loan has waived any of the foregoing
other than as permitted by the Basic Documents;
(xi) It is the intention of Seller, the Interim Eligible
Lender Trustee, the Eligible Lender Trustee, and the
Purchaser, and the Seller hereby warrants, that the transfer
and assignment herein contemplated constitute a valid sale of
the Loans from Seller and the Interim Eligible Lender Trustee
to the Eligible Lender Trustee for the benefit of Purchaser
and that the beneficial interest in and title to such Loans
not be part of the Seller's estate in the event of the
bankruptcy of the Seller or the appointment of a receiver with
respect to Seller;
(xii) There is only one original executed copy of the
promissory note evidencing each Loan; and
(xiii) No Borrower of any Loan as of the Cutoff Date is noted
in the related Loan File as being currently involved in a
bankruptcy proceeding.
(C) The Eligible Lender Trustee and the Purchaser represent and warrant that
as of the date of each Sale Agreement and each Bill of Sale:
(i) The Eligible Lender Trustee is duly organized and validly
existing in good standing under the laws of its governing jurisdiction
and has an office located within the State of Delaware. It has all
requisite corporate power and authority to execute, deliver and
perform its obligations under this Sale Agreement;
(ii) The Eligible Lender Trustee has taken all corporate
action necessary to authorize the execution and delivery by it of
these Master Sale Terms and each Sale Agreement, and these
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<PAGE> 11
Master Sale Terms and each Sale Agreement have been and will be
executed and delivered by one of its officers who is duly authorized
to execute and deliver the Sale Agreement on its behalf;
(iii) Neither the execution nor the delivery by it of these Master
Sale Terms and each Sale Agreement, nor the consummation by it of the
transactions contemplated hereby or thereby nor compliance by it with
any of the terms or provisions hereof or thereof will contravene any
Federal or Delaware state law, governmental rule or regulation
governing the banking or trust powers of the Eligible Lender Trustee
or any judgment or order binding on it, or constitute any default
under its charter documents or by-laws or any indenture, mortgage,
contract, agreement or instrument to which it is a party or by which
any of its properties may be bound; and
(iv) The Eligible Lender Trustee is an "eligible lender" as such
term is defined in Section 435(d) of the Higher Education Act, for
purposes of holding legal title to the Trust Student Loans as
contemplated by these Master Sale Terms and each Sale Agreement and the
other Basic Documents, it has a lender identification number with
respect to the Trust Student Loans from the Department and has in
effect a Guarantee Agreement with each of the Guarantors with respect
to the Trust Student Loans.
SECTION 6. PURCHASE OF TRUST STUDENT LOANS; REIMBURSEMENT
Each party to this Agreement shall give notice to the other such
parties and to the Servicer, the Administrator and Sallie Mae promptly, in
writing, upon the discovery of any breach of Seller's representations and
warranties made pursuant to Section 5 hereof which has a materially adverse
effect on the interest of the Purchaser in any Trust Student Loan. In the
event of such a material breach which is not curable by reinstatement of the
applicable Guarantor's guarantee of such Trust Student Loan, Seller shall
repurchase any affected Trust Student Loan not later than 120 days following
the earlier of the date of discovery of such material breach and the date of
receipt of the Guarantor reject transmittal form with respect to such Trust
Student Loan. In the event of such a material breach which is curable by
reinstatement of the applicable Guarantor's guarantee of such Trust Student
Loan, unless the material breach shall have been cured within 360 days
following the earlier of the date of discovery of such material breach and the
date of receipt of the Guarantor reject transmittal form with respect to such
Trust Student Loan, the Seller shall purchase such Trust Student Loan not later
than the sixtieth day following the end of such 360-day period. The Seller
shall also remit as provided in Section 2.6 of the Administration Agreement on
the date of purchase of any Trust Student Loan pursuant to this Section 6 an
amount equal to all nonguaranteed interest amounts and forfeited Interest
Subsidy Payments and Special Allowance Payments with respect to such Trust
Student Loan. In consideration of the
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<PAGE> 12
purchase of any such Trust Student Loan pursuant to this Section 6, the Seller
shall remit the Purchase Amount in the manner specified in Section 2.6 of the
Administration Agreement.
In addition, if any breach of Section 5 hereof by the Seller does not
trigger such purchase obligation but does result in the refusal by a Guarantor
to guarantee all or a portion of the accrued interest (or any obligation of the
Purchaser to repay such interest to a Guarantor), or the loss (including any
obligation of the Purchaser to repay the Department) of Interest Subsidy
Payments and Special Allowance Payments, with respect to any Trust Student Loan
affected by such breach, then the Seller shall reimburse the Purchaser by
remitting an amount equal to the sum of all such nonguaranteed interest amounts
and such forfeited Interest Subsidy Payments or Special Allowance Payments in
the manner specified in Section 2.6 of the Administration Agreement not later
than (i) the last day of the next Collection Period ending not less than 60
days from the date of the Guarantor's refusal to guarantee all or a portion of
accrued interest or loss of Interest Subsidy Payments or Special Allowance
Payments, or (ii) in the case where the Seller reasonably believes such losses
are likely to be collected, not later than the last day of the next Collection
Period ending not less than 360 days from the date of the Guarantor's refusal
to guarantee all or a portion of accrued interest or loss of Interest Subsidy
Payments or Special Allowance Payments. At the time such payment is made, the
Seller shall not be required to reimburse the Purchaser for interest that is
then capitalized, however, such amounts shall be reimbursed if the borrower
subsequently defaults and such capitalized interest is not paid by the
Guarantor.
Anything in this Section 6 to the contrary notwithstanding, if as of
the last Business Day of any month the aggregate outstanding principal amount
of Trust Student Loans with respect to which claims have been filed with and
rejected by a Guarantor or with respect to which the Servicer determines that
claims cannot be filed pursuant to the Higher Education Act as a result of a
breach by the Seller or the Servicer, exceeds 1% of the Pool Balance, the
Seller or the Servicer shall purchase, within 30 days of a written request of
the Eligible Lender Trustee or the Indenture Trustee, such affected Trust
Student Loans in an aggregate principal amount such that after such purchase
the aggregate principal amount of such affected Trust Student Loans is less
than 1% of the Pool Balance. The Trust Student Loans to be purchased by the
Seller or the Servicer pursuant to the preceding sentence shall be based on the
date of claim rejection (or the date of notice referred to in the first
sentence of this Section 6), with Trust Student Loans with the earliest such
date to be purchased first.
In lieu of repurchasing Trust Student Loans pursuant to this Section
6, the Seller may, at its option, substitute Eligible Loans or arrange for the
substitution of Eligible Loans which are substantially similar on an aggregate
basis as of the date of substitution to the Trust Student Loans for which they
are being substituted with respect to the following characteristics:
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<PAGE> 13
(1) status (i.e., in-school, grace, deferment,
forbearance or repayment),
(2) program type (i.e., Unsubsidized Stafford, Subsidized
Stafford, PLUS or SLS),
(3) school type,
(4) total return,
(5) principal balance, and
(6) remaining term to maturity.
In addition, each substituted Eligible Loan will comply, as of the
date of substitution, with all of the representations and warranties made
hereunder. In choosing Eligible Loans to be substituted pursuant to this
Section 6, the Seller shall make a reasonable determination that the Eligible
Loans to be substituted will not have a material adverse effect on the
Noteholders and the Certificateholders.
In the event that Seller elects to substitute Eligible Loans pursuant
to this Section 6, the Seller will remit to the Administrator the amount of any
shortfall between the Purchase Amount of the substituted Eligible Loans and the
Purchase Amount of the Trust Student Loans for which they are being
substituted. The Seller shall also remit to the Administrator an amount equal
to all nonguaranteed interest amounts and forfeited Interest Subsidy Payments
and Special Allowance Payments with respect to the Trust Student Loans in the
manner provided in Section 2.6 of the Administration Agreement. The sole
remedy of the Purchaser, the Eligible Lender Trustee, the Certificateholders
and the Noteholders with respect to a breach by the Seller pursuant to Section
5 hereof shall be to require the Seller to purchase Trust Student Loans, to
reimburse the Purchaser as provided above or to substitute Student Loans
pursuant to this Section. The Eligible Lender Trustee shall have no duty to
conduct any affirmative investigation as to the occurrence of any condition
requiring the purchase of any Trust Student Loan or the reimbursement for any
interest penalty pursuant to this Section 6.
SECTION 7. OBLIGATION TO REMIT SUBSEQUENT PAYMENTS
AND FORWARD COMMUNICATIONS
(A) Any payment received by Seller with respect to amounts accrued
after the Date of the Bill of Sale for any Loan sold to Purchaser,
which payment is not reflected in the Loan Transmittal Summary Form,
shall be received by Seller in trust for the account of Purchaser and
the Seller hereby disclaims any title to or interest in any such
amounts. Within two (2) business days following the date of receipt,
Seller shall remit to Purchaser an amount equal to any such payments
along
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<PAGE> 14
with a listing on a form provided by Purchaser identifying the Loans
with respect to which such payments were made, the amount of each such
payment and the date each such payment was received.
(B) Any written communication received at any time by Seller with
respect to any Loan subject to any Sale Agreement shall be transmitted
by Seller to Servicer within two (2) business days of receipt. Such
communications shall include, but not be limited to, letters, notices
of death or disability, notices of bankruptcy, forms requesting
deferment of repayment or loan cancellation, and like documents.
SECTION 8. CONTINUING OBLIGATION OF SELLER
Seller shall provide all reasonable assistance necessary for Purchaser
to resolve account problems raised by any Borrower, the Guarantor or the
Secretary provided such account problems are attributable to or are alleged to
be attributable to (a) an event occurring during the period Seller owned the
Loan, or (b) a payment made or alleged to have been made to Seller. Further,
the Seller agrees to execute any financing statements at the request of the
Purchaser in order to reflect the Purchaser's interest in the Loans.
SECTION 9. LIABILITY OF SELLER; INDEMNITIES
The Seller shall be liable in accordance herewith only to the extent of
the obligations specifically undertaken by the Seller under this Sale
Agreement.
(i) The Seller shall indemnify, defend and hold harmless the Purchaser
and the Eligible Lender Trustee in its individual capacity and their
officers, directors, employees and agents from and against any taxes
that may at any time be asserted against any such Person with respect
to the transactions contemplated herein and in the other Basic
Documents (except any such income taxes arising out of fees paid to
the Eligible Lender Trustee), including any sales, gross receipts,
general corporation, tangible and
intangible personal property, privilege or license taxes and costs and
expenses in defending against the same.
(ii) The Seller shall indemnify, defend and hold harmless the
Purchaser and the Eligible Lender Trustee in its individual capacity
and their officers, directors, employees and agents of the Purchaser
and the Eligible Lender Trustee from and against any and all costs,
expenses, losses, claims, damages and liabilities arising out of, or
imposed upon such Person through, the Seller's willful misfeasance,
bad faith or gross negligence in the performance of its duties under
the Sale Agreement, or by reason of reckless disregard of its
obligations and duties under the Sale Agreement.
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<PAGE> 15
(iii) The Seller shall be liable as primary obligor for, and shall
indemnify, defend and hold harmless the Eligible Lender Trustee in its
individual capacity and its officers, directors, employees and agents
from and against, all costs, expenses, losses, claims, damages,
obligations and liabilities arising out of, incurred in connection
with or relating to the Sale Agreement, the other Basic Documents, the
acceptance or performance of the trusts and duties set forth herein
and in the Sale Agreement or the action or the inaction of the
Eligible Lender Trustee hereunder, except to the extent that such
cost, expense, loss, claim, damage, obligation or liability: (a)
shall be due to the willful misfeasance, bad faith or negligence
(except for errors in judgment) of the Eligible Lender Trustee, (b)
shall arise from any breach by the Eligible Lender Trustee of its
covenants in its individual capacity under any of the Basic Documents;
or (c) shall arise from the breach by the Eligible Lender Trustee of
any of its representations or warranties in its individual capacity
set forth in these Master Sale Terms or any Sale Agreement. In the
event of any claim, action or proceeding for which indemnity will be
sought pursuant to this paragraph, the Eligible Lender Trustee's
choice of legal counsel shall be subject to the approval of the
Seller, which approval shall not be unreasonably withheld.
Indemnification under this Section shall survive the resignation or
removal of the Eligible Lender Trustee and the termination of these Master Sale
Terms and shall include reasonable fees and expenses of counsel and expenses
of litigation. If the Seller shall have made any indemnity payments pursuant to
this Section and the Person to or for the benefit of whom such payments are
made thereafter shall collect any of such amounts from others, such Person
shall promptly repay such amounts to the Seller, without interest.
SECTION 10. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF SELLER
Any Person (a) into which the Seller may be merged or consolidated,
(b) which may result from any merger or consolidation to which the Seller shall
be a party or (c) which may succeed to the properties and assets of the Seller
substantially as a whole, shall be the successor to the Seller without the
execution or filing of any document or any further act by any of the parties to
these Master Sale Terms; provided, however, that the Seller hereby covenants
that it will not consummate any of the foregoing transactions except upon
satisfaction of the following: (i) the surviving Person, if other than the
Seller, executes an agreement of assumption to perform every obligation of the
Seller under these Master Sale Terms, (ii) immediately after giving effect to
such transaction, no representation or warranty made pursuant to Section 5
herein shall have been breached, (iii) the surviving Person, if other than the
Seller, shall have delivered to the Eligible Lender
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<PAGE> 16
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 these Master Sale Terms relating to such transaction have been complied
with, and that the Rating Agency Condition shall have been satisfied with
respect to such transaction, (iv) if the Seller is not the surviving entity,
such transaction will not result in a material adverse Federal or state tax
consequence to the Purchaser, the Noteholders or the Certificateholders and (v)
if the Seller is not the surviving entity, the Seller shall have delivered to
the Eligible Lender 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 Purchaser and the
Eligible Lender Trustee, respectively, in the Loans and reciting the details of
such filings, or (B) stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interests.
SECTION 11. LIMITATION ON LIABILITY OF SELLER AND OTHERS
The Seller and any director or officer or employee or agent thereof
may rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any
matters arising hereunder (provided that such reliance shall not limit in any
way the Seller's obligations under Section 5 herein). The Seller shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its obligations under these Master Sale Terms or any
Sale Agreement, and that in its opinion may involve it in any expense or
liability. Except as provided herein, the repurchase (or substitution) and
reimbursement obligations of Seller will constitute the sole remedy available
to Purchaser for uncured breaches; provided, however, that the information with
respect to the Loans listed on the Bill of Sale may be adjusted in the ordinary
course of business subsequent to the date of the Bill of Sale and to the extent
that the aggregate Principal Balance listed on the Bill of Sale is less than
the aggregate Principal Balance stated on the Bill of Sale, Seller shall remit
such amount to the Eligible Lender Trustee for the benefit of the Purchaser.
Such reconciliation payment shall be made from time to time but no less
frequently than semi-annually.
SECTION 12. LIMITATION OF LIABILITY OF ELIGIBLE LENDER
TRUSTEE
Notwithstanding anything contained herein to the contrary, these
Master Sale Terms and any Sale Agreement have been signed by Chase Manhattan
Bank USA, National Association not in its individual capacity but solely in its
capacity as Eligible Lender Trustee for the Purchaser and the Interim Eligible
Lender Trustee for the Seller, as the case may be, and in no event shall Chase
Manhattan Bank USA, National Association in its individual capacity, have any
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<PAGE> 17
liability for the representations, warranties, covenants, agreements or other
obligations of the Eligible Lender Trustee, the Interim Eligible Lender
Trustee, the Purchaser or of the Seller, respectively, under these Master Sale
Terms or any Sale Agreement 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 Purchaser or the Seller, as the case may be.
SECTION 13. EXPENSES
Except as otherwise provided herein, each party to these Master Sale
Terms or any Sale Agreement shall pay its own expense incurred in connection
with the preparation, execution and delivery of these Master Sale Terms or any
Sale Agreement and the transactions contemplated herein or therein.
SECTION 14. SURVIVAL OF COVENANTS/SUPERSESSION
All covenants, agreements, representations and warranties made herein
and in or pursuant to any Sale Agreements executed pursuant to these Master
Sale Terms shall survive the consummation of the purchase of the Loans provided
for in each Sale Agreement. All covenants, agreements, representations and
warranties made or furnished pursuant hereto by or for the benefit of Seller
shall bind and inure to the benefit of any successors or assigns of Purchaser
and shall survive with respect to each Loan. Each Sale Agreement supersedes
all previous agreements and understandings between Purchaser and Seller with
respect to the subject matter thereof. A Sale Agreement may be changed,
modified or discharged, and any rights or obligations hereunder may be waived,
only by a written instrument signed by a duly authorized officer of the party
against whom enforcement of any such waiver, change, modification or discharge
is sought. The waiver by Purchaser of any covenant, agreement, representation
or warranty required to be made or furnished by Seller or the waiver by
Purchaser of any provision herein contained or contained in any Sale Agreement
shall not be deemed to be a waiver of any breach of any other covenant,
agreement, representation, warranty or provision herein contained or contained
in any Sale Agreement, nor shall any waiver or any custom or practice which may
evolve between the parties in the administration of the terms hereof or of any
Sale Agreement, be construed to lessen the right of Purchaser to insist upon
the performance by Seller in strict accordance with said terms.
SECTION 15. COMMUNICATION AND NOTICE REQUIREMENTS
All communications, notices and approvals provided for hereunder shall
be in writing and mailed or delivered to Seller or Purchaser, as the case may
be, addressed as set forth in the Sale Agreement or at such other address as
either party may hereafter designate by notice to the other party. Notice
given in any such communication, mailed to Seller or Purchaser by appropriately
addressed registered mail, shall be deemed to have been given on the day
following the date of such mailing.
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SECTION 16. FORM OF INSTRUMENTS
All instruments and documents delivered in connection with these
Master Sale Terms and any Sale Agreement, and all proceedings to be taken in
connection with these Master Sale Terms and any Sale Agreement and the
transactions contemplated herein and therein, shall be in a form as set forth
in the attachments hereto, and Purchaser shall have received copies of such
documents as it or its counsel shall reasonably request in connection
therewith. Any instrument or document which is substantially in the same form
as an Attachment hereto or a recital herein will be deemed to be satisfactory
as to form.
SECTION 17. AMENDMENT
These Master Sale Terms and any Sale Agreement may be amended by the
parties thereto without the consent of the related Noteholders or
Certificateholders for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of such Master Sale Terms and
Sale Agreements or of modifying in any manner the rights of such Noteholders or
Certificateholders; provided that such action will not, in the opinion of
counsel satisfactory to the related Eligible Lender Trustees, materially and
adversely affect the interest of any such Noteholder or Certificateholder.
In addition, these Master Sale Terms and any Sale Agreement may also
be amended from time to time by the Seller, the Interim Eligible Lender
Trustee, the Eligible Lender Trustee and the Purchaser, 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 these
Master Sale Terms or any Sale Agreement or of modifying in any manner the
rights of the Noteholders or the Certificateholders; provided, however, that no
such amendment shall (a) increase or reduce in any manner the amount of, or
accelerate or delay the time of, collections of payments with respect to 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 of
Certificates, 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 consent (or, in
the case of the Rating Agencies, five Business Days prior thereto), the
Eligible Lender Trustee shall furnish written notification of the substance of
such amendment or consent to the Indenture Trustee, each Certificateholder, and
each of the Rating Agencies.
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<PAGE> 19
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 these Master Sale Terms,
the Eligible Lender Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that execution of such amendment is authorized or
permitted by this Sale Agreement and the Opinion of Counsel referred to in
Section 7.1 I((i) of the Administration Agreement. The Eligible Lender Trustee
may, but shall not be obligated to, enter into any such amendment which affects
the Eligible Lender Trustee's own rights, duties or immunities under this
Agreement or otherwise.
SECTION 18. NONPETITION COVENANTS
Notwithstanding any prior termination of these Master Sale Terms,
Seller and the Interim Eligible Lender Trustee shall not acquiesce, petition or
otherwise invoke or cause Purchaser to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
Purchaser under any Federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator
or other similar official of Purchaser or any substantial part of its property,
or ordering the winding up or liquidation of the affairs of the Purchaser.
Notwithstanding any prior termination of these Master Sale Terms, the
Eligible Lender Trustee and the Purchaser shall not acquiesce, petition or
otherwise invoke or cause Seller to invoke the process of commencing or
sustaining a case against the Seller under any federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of Seller or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Purchaser.
SECTION 19. ASSIGNMENT
Seller and the Interim Eligible Lender Trustee each hereby assigns its
entire right, title and interest as purchaser and as the Interim Eligible
Lender Trustee under the Purchase Agreement Master Securitization Terms Number
1000 and any Purchase Agreement thereunder to Purchaser as of the date hereof
and acknowledges that the Purchaser and the Eligible Lender Trustee on behalf
of the Purchaser will assign the same, together with the right, title and
interest of the Purchaser and the Eligible Lender Trustee hereunder, to the
Indenture Trustee under the Indenture.
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<PAGE> 20
SECTION 20. GOVERNING LAW
These Master Sale Terms and any Sale Agreements shall be governed by
and construed in accordance with the laws of the State of New York without
reference to its conflict of law provisions, and the obligations, rights and
remedies of the parties, hereunder shall be determined in accordance with such
laws.
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<PAGE> 21
SLM STUDENT LOAN TRUST 1997-4 SLM FUNDING CORPORATION
(Purchaser) (Seller)
by Chase Manhattan Bank USA,
National Association
not in its individual capacity
but solely as Eligible Lender By: /s/ WILLIAM M.E. RACHAL, JR.
Trustee -----------------------------
Name:
---------------------------
By:/s/ J.J. CASHIN Title:
--------------------------- --------------------------
Name:
-------------------------
Title:
------------------------
CHASE MANHATTAN BANK USA, CHASE MANHATTAN BANK USA,
NATIONAL ASSOCIATION NATIONAL ASSOCIATION
(Not in its individual (Not in its individual capacity
capacity but solely as but solely as Interim Eligible
Eligible Lender Trustee) Lender Trustee)
By: /s/ J.J. CASHIN By: /s/ J.J. CASHIN
--------------------------- ---------------------------
Name: Name:
------------------------- -------------------------
Title: Title:
------------------------ ------------------------
21
<PAGE> 22
ATTACHMENT A
SALE AGREEMENT
DATED AS OF NOVEMBER 12, 1997
SALE AGREEMENT NUMBER 1
Each of the Chase Manhattan Bank USA, National Association as Interim
Eligible Lender Trustee (the "Interim Eligible Lender Trustee") for the
benefit of SLM Funding Corporation (the "Seller") and the Seller hereby
offer for sale to the Eligible Lender Trustee on behalf of SLM Student Loan
Trust 1997-4 ("Purchaser") the entire right, title and interest of the
Seller and the Interim Eligible Lender Trustee in the Loans described in
the Bill of Sale and Loan Transmittal Summary Form incorporated herein and,
to the extent indicated below, the Eligible Lender Trustee on behalf of the
Purchaser accepts the Seller's and the Interim Eligible Lender Trustee's
offer. In order to qualify as Eligible Loans, no payment of principal or
interest shall be more than one hundred and twenty (120) days Delinquent as
of the Cutoff Date which date shall be October 27, 1997.
TERMS, CONDITIONS AND COVENANTS
In consideration of the Purchase Price, each of the Seller and the
Interim Eligible Lender Trustee for the benefit of the Seller hereby sells
to the Eligible Lender Trustee for the benefit of the Purchaser the entire
right, title and interest of the Seller and the Interim Eligible Lender
Trustee in the Loans accepted for purchase, subject to all the terms and
conditions of the Sale Agreement Master Securitization Terms Number 1000
("Master Sale Terms") and amendments, each incorporated herein by reference,
among Seller, Interim Eligible Lender Trustee, Purchaser, and the Eligible
Lender Trustee. The Initial Payment of the Loans shall equal $2,551,581,521
(equal to $2,557,863,120 (representing the offering price of the Securities
less underwriters' commissions and reimbursements to the underwriters) less
$6,256,599 (representing the Reserve Account Initial Deposit) less $25,000
(representing the initial deposit into the Collection Account).
This document shall constitute a Sale Agreement as referred to in the
Master Sale Terms and, except as modified herein, each term used herein
shall have the same meaning as in the Master Sale Terms. All references in
the Master Sale Terms to Loans or Eligible Loans shall be deemed to refer to
the Loans governed by this Sale Agreement. Seller hereby makes, as of the
date hereof, all the representations and warranties contained in the Master
Sale Terms and makes such representations and warranties with respect to the
Loans governed by this Sale Agreement.
Each of the Seller and the Interim Eligible Lender Trustee for the
benefit of the Seller authorizes the Eligible Lender Trustee for the benefit
of the Purchaser to use a copy of the Bill of Sale, including the Loan
Transmittal Summary Form attached to the
<PAGE> 23
Bill of Sale (in lieu of OE Form 1074) as official notification to the
applicable Guarantors of assignment to the Eligible Lender Trustee for the
benefit of the Purchaser of the Loans on the date of purchase.
The parties hereto intend that the transfer of Loans described in the
Bill of Sale and Loan Transmittal Summary Form be, and be construed as, a
valid sale of such Loans. However, in the event that notwithstanding the
intentions of the parties, such transfer is deemed to be a transfer for
security, then each of the Interim Eligible lender Trustee and the Seller
hereby grants to the Eligible Lender Trustee on behalf of the Purchaser a
first priority security interest in and to all Loans described in the Bill
of Sale and Loan Transmittal Summary Form to secure a loan in an amount
equal to the Purchase Price of such Loans.
2
<PAGE> 24
SLM FUNDING CORPORATION SLM STUDENT LOAN TRUST 1997-4
- ----------------------- -----------------------------
(Seller) (Purchaser)
by Chase Manhattan Bank USA,
National Association
not in its individual capacity but
By: solely as Eligible Lender Trustee
---------------------------
Name:
-------------------------
Title: By:
------------------------ ----------------------------
Name:
---------------------------
Title:
--------------------------
CHASE MANHATTAN BANK USA, CHASE MANHATTAN BANK USA,
- ------------------------ ------------------------
NATIONAL ASSOCIATION NATIONAL ASSOCIATION
- -------------------- -------------------
(not in its individual (not in its individual
capacity but solely as Interim capacity but solely as Eligible
Eligible Lender Trustee) Lender Trustee)
By: By:
--------------------------- ---------------------------
Name: Name:
------------------------- -------------------------
Title: Title:
------------------------ ------------------------
3
<PAGE> 25
SALE AGREEMENT NUMBER 1
BLANKET ENDORSEMENT DATED NOVEMBER 12, 1997
SLM Funding Corporation ("Seller") and Chase Manhattan Bank USA,
National Association as Interim Eligible Lender Trustee for the benefit of the
Seller, by execution of this instrument, hereby endorses the attached
promissory note which is one (1) of the promissory notes ("the Notes")
described in the Bill of Sale executed by the Seller and the Interim Eligible
Lender Trustee for the benefit of the Seller in favor of Chase Manhattan Bank
USA, National Association as Eligible Lender Trustee on behalf of SLM Student
Loan Trust 1997-4 (the "Purchaser"). This endorsement is in blank,
unrestricted form and without recourse except as provided in Section 6 of the
Master Sale Terms referred to in the Sale Agreement among Seller, Purchaser,
Interim Eligible Lender Trustee, and the Eligible Lender Trustee which covers
this promissory note.
This endorsement may be effected by attaching either this instrument
or a facsimile hereof to each or any of the Notes.
Notwithstanding the foregoing, the Interim Eligible Lender Trustee for
the benefit of the Seller agrees to individually endorse each Note in the form
provided by Purchaser as Purchaser may from time to time require or if such
individual endorsement is required by the Guarantor of the Note.
THE SALE AND PURCHASE OF THE LOANS SHALL BE SUBJECT TO THE TERMS, CONDITIONS
AND COVENANTS, INCLUDING THE BLANKET ENDORSEMENT, AS SET FORTH IN THE SALE
AGREEMENT MASTER LOAN SECURITIZATION TERMS 1000. BY EXECUTION HEREOF, THE
SELLER ACKNOWLEDGES THAT THE SELLER HAS READ, UNDERSTANDS AND AGREES TO BE
BOUND BY ALL TERMS, CONDITIONS AND COVENANTS OF THE SALE AGREEMENT (" SALE
AGREEMENT"). THE SALE AND PURCHASE SHALL BE CONSUMMATED UPON PURCHASER'S
PAYMENT TO SELLER OF THE INITIAL PAYMENT AS DEFINED IN THE MASTER SALE TERMS
AND, UNLESS OTHERWISE AGREED BY SELLER AND PURCHASER, SHALL BE EFFECTIVE AS OF
THE DATE OF THE BILL OF SALE.
SELLER PURCHASER
- -------------------------------- ---------------------------------
Chase Manhattan Bank USA,
Chase Manhattan Bank USA, National
Association not in its individual National Association
capacity but solely in its individual not in its individual capacity
capacity but solely as Interim Eligible but solely as Eligible Lender
Lender Trustee for the Benefit of SLM Trustee on behalf of SLM
Funding Corporation Student Loan Trust 1997-4
Lender Code: 833 253
By:
---------------------------
By: (Signature of Authorized
----------------------------- Signatory for Purchaser)
(Signature of Authorized
Officer)
Name:
Name: -------------------------
---------------------------
Title:
------------------------
Title:
--------------------------
Date of Purchase: Nov. 12, 1997
NOTE: Boxed areas on this form are to be completed by Purchaser.
<PAGE> 26
ATTACHMENT B
BILL OF SALE DATED NOVEMBER 12, 1997
The undersigned SLM Funding Corporation ("Seller") and Chase Manhattan
Bank USA, National Association as Interim Eligible Lender Trustee for the
benefit of the Seller under the Interim Trust Agreement dated as of November 1,
1997 ("Interim Eligible Lender Trustee"), for value received and pursuant to
the terms and conditions of Sale Agreement Number 1 ("Sale Agreement") among
Seller, the Interim Eligible Lender Trustee, SLM Student Loan Trust 1997-4
("Purchaser") and Chase Manhattan Bank USA, National Association as the
Eligible Lender Trustee, do hereby sell, assign and convey to the Eligible
Lender Trustee on behalf of Purchaser and its assignees all right, title and
interest of Seller and the Interim Eligible Lender Trustee, including the
insurance interest of Seller and the Interim Eligible Lender Trustee under the
Federal Family Education Loan Program (20 U.S.C. 1071 et seq.), in the Loans
identified herein which the Eligible Lender Trustee on behalf of Purchaser has
accepted for purchase. The portfolio accepted for purchase by the Eligible
Lender Trustee on behalf of Purchaser and the effective date of sale and
purchase are described below and the individual Accounts are listed on the
Schedule A attached hereto.
Seller hereby makes the representations and warranties set forth in
Section 5 of the Sale Agreement Master Securitization Terms Number 1000
incorporated by reference in the Sale Agreement. Seller and the Interim
Eligible Lender Trustee authorize the Eligible Lender Trustee on behalf of
Purchaser to use a copy of this document (in lieu of OE Form 1074) as official
notification to the Guarantor(s) of assignment to the Eligible Lender Trustee
on behalf of Purchaser of the Loans on the date of purchase.
LISTING OF LOANS
<TABLE>
<CAPTION>
OFFERED BY ACCEPTED BY ELIGIBLE
SELLER LENDER TRUSTEE
NUMBER OF PRINCIPAL NUMBER OF PRINCIPAL
LOAN TYPE LOANS* BALANCE** LOANS* BALANCE**
- ----------------------------------------------------------------------------------
SUBSIDIZED STAFFORD
- ---------- --------
<S> <C> <C> <C> <C>
Interim 246,456 831,888,241 246,456 831,888,241
Repayment 295,381 814,458,214 295,381 814,458,214
------- ----------- ------- -----------
541,837 1,646,346,455 541,837 1,646,346,455
UNSUBSIDIZED STAFFORD
- ---------------------
Deferred 115,183 444,572,120 115,183 444,572,120
Repayment 57,489 168,802,236 57,489 168,802,236
------ ----------- ------ -----------
172,672 613,374,356 172,672 613,374,356
PLUS/SLS
- --------
Deferred 13,034 64,468,389 13,034 64,468,389
Non-Deferred 43,998 178,450,387 43,998 178,450,387
------ ----------- ------ -----------
57,032 242,918,776 57,032 242,918,776
CONSOLI-
- --------
DATION 0 0 0 0
- ------ - - - -
TOTAL 771,541 $2,502,639,587 771,541 $2,502,639,587
------- -------------- ------- --------------
</TABLE>
ADDITIONAL LOAN CRITERIA
Not in claims status, not previously rejected
Not in litigation
Last disbursement is greater than 120 days from cutoff date
Loan is not swap-pending
*Based upon Seller's estimated calculations, which may be adjusted upward or
downward based upon Purchaser's reconciliation.
**Includes interest to be capitalized.
<PAGE> 27
Guarantor(s):
American Student Assistance Guarantor
California Student Aid Commission
Connecticut Student Loan Foundation
Educational Credit Management Corporation
Florida Department of Education Office of Student Financial Assistance
Great Lakes Higher Education Corporation
Illinois Student Assistance Commission
Iowa College Student Aid Commission
Kentucky Higher Education Assistance Authority
Louisiana Student Financial Assistance Commission
Michigan Higher Education Assistance Authority
Missouri Coordinating Board for Higher Education
New Jersey Higher Education Assistance Authority
N.Y. State Higher Education Services Corporation
Northstar Guarantee Inc.
Northwest Education Loan Association
Oklahoma State Regents for Higher Education
Oregon State Scholarship Commission
Pennsylvania Higher Education Assistance Agency
Student Loan Guarantee Foundation of Arkansas, Inc.
Tennessee Student Assistance Corporation
Texas Guaranteed Student Loan Corporation
United Student Aid Funds, Inc.
SELLER PURCHASER
- ----------------------------------
Chase Manhattan Bank USA, National
Association not in its Chase Manhattan Bank USA,
individual capacity but solely as National Association,
Interim Eligible Lender Trustee on not in its individual capacity
behalf of SLM Funding Corporation but solely as Eligible Lender
Trustee on behalf of SLM
Lender Code: Student Loan Trust 1997-4
-------------
By: By:
------------------------------ --------------------------
(Signature of Authorized Officer) (Signature of Authorized
Signatory for Purchaser)
Name:
----------------------------
Name:
-------------------------
Title:
---------------------------
Title:
------------------------
SLM FUNDING CORPORATION
Date of Purchase: Nov. 12, 1997
By:
------------------------------
(Signature of Authorized Officer)
Name:
----------------------------
Title:
---------------------------
NOTE: Boxed areas are for completion by Purchaser
<PAGE> 1
EXHIBIT 99.3
================================================================================
SLM STUDENT LOAN TRUST 1997-4
ADMINISTRATION AGREEMENT SUPPLEMENT
Dated as of November 12, 1997
to
MASTER ADMINISTRATION AGREEMENT
Dated as of May 1, 1997
Between
SLM FUNDING CORPORATION
and
STUDENT LOAN MARKETING ASSOCIATION
================================================================================
<PAGE> 2
SLM Student Loan Trust 1997-4 Administration Agreement Supplement
dated as of November 12, 1997 (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 1997-4 (the "Trust"). The
provisions of this Supplement shall be applicable only to SLM Student Loan
Trust 1997-4.
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 1997-4
The Eligible Lender Trustee: Chase Manhattan Bank USA,
National Association
The Interim Eligible Lender Trustee: Chase Manhattan Bank
USA, National Association
The Indenture Trustee: Bankers Trust Company
The initial deposit into the Collection Account on the Closing Date in
accordance with Section 2.6.C of the Agreement shall be: $25,000.
2. Attached hereto are (i) Appendix A (SLM Student Loan Trust 1997-4)
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. Notwithstanding anything to the contrary set forth in Section 2.3.C.2 of
the Master Administration Agreement, the Indenture Trustee shall have no
liability or obligation in respect of any failed Delivery, as contemplated
therein, other than with respect to a Delivery which fails as a result of any
action or inaction on behalf of the Indenture Trustee.
5. 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
<PAGE> 3
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.
2
<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Supplement to
be duly executed and delivered as of the date first above written.
SLM FUNDING CORPORATION
By: /s/ WILLIAM M. E. RACHAL, JR.
----------------------------------
Name:
---------------------------------
Title:
--------------------------------
SALLIE MAE SERVICING CORPORATION
By: /s/ THOMAS P. BRISSON
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
SLM STUDENT LOAN TRUST 1997-4
By Chase Manhattan Bank USA,
National Association, not in its
individual capacity but solely as
Eligible Lender Trustee
By: /s/ J.J. CASHIN
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
CHASE MANHATTAN BANK USA, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Eligible
Lender Trustee
By: /s/ J.J. CASHIN
------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
3
<PAGE> 5
BANKERS TRUST COMPANY
not in its individual capacity but
solely as Indenture Trustee
By: /s/ ALFIA MONASTRA
------------------------------------
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 Sallie Mae, Inc., Authorized
Agent for the Student Loan
Marketing Association
By: /s/ J. LANCE FRANKE
-------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
4
<PAGE> 1
EXHIBIT 99.4
SERVICING AGREEMENT
Sallie Mae Servicing Corporation ("Servicer"), a corporation organized
under the laws of the State of Delaware, hereby agrees with SLM Student Loan
Trust 1997-4 (the "Issuer"), Chase Manhattan Bank USA, National Association,
not in its individual capacity but in its capacity as trustee under a trust
agreement dated November 1, 1997 between SLM Funding Corporation and Chase
Manhattan Bank USA, National Association ("Eligible Lender Trustee"), the
Student Loan Marketing Association, a federally chartered corporation
("Administrator") and Bankers Trust Company, a New York banking corporation,
not in its individual capacity but in its capacity as Indenture Trustee under
an Indenture dated November 1, 1997 between SLM Student Loan Trust 1997-4 and
Bankers Trust Company (the "Indenture Trustee"), as follows:
WHEREAS, Eligible Lender Trustee will acquire certain education loans
to be held in the Trust formed pursuant to a trust agreement (the "Trust
Agreement"), dated as of November 1, 1997, between SLM Funding Corporation and
Eligible Lender Trustee;
WHEREAS, the Issuer will issue notes (the "Notes") pursuant to an
indenture (the "Indenture"), dated as of November 1, 1997, between the Issuer
and the Indenture Trustee and trust certificates (the "Certificates") pursuant
to the Trust Agreement, which Notes and Certificates are payable from the
assets of the Issuer;
WHEREAS, the Issuer, the Administrator and the Eligible Lender Trustee
desire Servicer to service said education loans held by the Eligible Lender
Trustee on behalf of the Issuer, and Servicer is willing to service said
education loans for the Issuer, the Administrator, the Eligible Lender Trustee
and the Indenture Trustee;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto 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 are defined in Appendix A hereto, which also contains rules as
to usage that shall be applicable herein.
ARTICLE II
SECTION 2.1 Custody of Trust Student Loan Files. To assure uniform quality in
servicing the Trust Student Loans and to
<PAGE> 2
reduce administrative costs, the Issuer hereby revocably appoints the Servicer,
and the Servicer hereby accepts such appointment, to act for the benefit of the
Issuer and the Indenture Trustee as custodian of the following documents or
instruments (collectively the "Trust Student Loan Files") which are hereby
constructively delivered to the Indenture Trustee, as pledgee of the Issuer
with respect to each Trust Student Loan:
(a) the original fully executed copy of the note evidencing the
Trust Student Loan; and
(b) any and all other documents and computerized records that the
Servicer shall keep on file, in accordance with its customary
procedures, relating to such Trust Student Loan or any obligor
with respect thereto.
SECTION 2.2 Duties of Servicer as Custodian. The Servicer shall hold the
Trust Student Loan Files for the benefit of the Issuer and the Indenture
Trustee and maintain such accurate and complete accounts, records and computer
systems pertaining to each Trust Student Loan File as shall enable the Issuer
to comply with this Agreement. In performing its duties as custodian the
Servicer shall act with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to the student loan files
relating to comparable student loans that the Servicer services on behalf of
the Student Loan Marketing Association and shall ensure that it fully complies
with all applicable Federal and state laws, including the Higher Education Act,
with respect thereto. The Servicer shall take all actions necessary with
respect to the Trust Student Loan Files held by it under this Agreement and of
the related accounts, records and computer systems, in order to enable the
Issuer or the Indenture Trustee to verify the accuracy of the Servicer's record
keeping with respect to the Servicer's obligations as custodian hereunder. The
Servicer shall promptly report to the Issuer, the Administrator and the
Indenture Trustee any material failure on its part to hold the Trust Student
Loan Files and maintain its accounts, records and computer systems as herein
provided and promptly take appropriate action to remedy any such failure.
Nothing herein shall be deemed to require an initial review or any periodic
review by the Issuer, the Eligible Lender Trustee or the Indenture Trustee of
the Trust Student Loan Files. If in the reasonable judgment of the Eligible
Lender Trustee it is necessary to preserve the interests of the Noteholders,
Certificateholders and the Trust in the Trust Student Loans or at the request
of the Administrator, the Servicer shall transfer physical possession of the
notes evidencing the Trust Student Loans to the Eligible Lender Trustee, the
Indenture Trustee or any other custodian for either of them designated by the
Eligible Lender Trustee.
2
<PAGE> 3
SECTION 2.3 Maintenance of and Access to Records. The Servicer shall maintain
each Trust Student Loan File at one of its offices specified in Attachment B to
this Agreement or at such other office as shall be consented to by the Issuer
and the Indenture Trustee upon written notice to the Issuer and the Indenture
Trustee. Upon reasonable prior notice, the Servicer shall make available to
the Issuer and the Indenture Trustee or their respective duly authorized
representatives, attorneys or auditors a list of locations of the Trust Student
Loan Files and the related accounts, records and computer systems maintained by
the Servicer at such times during normal business hours as the Issuer or the
Indenture Trustee shall instruct.
SECTION 2.4 Release of Documents. Upon written instruction from the Indenture
Trustee, the Servicer shall release any Trust Student Loan File to the
Indenture Trustee, the Indenture Trustee's agent, or the Indenture Trustee's
designee, as the case may be, at such place or places as the Indenture Trustee
may reasonably designate, as soon as practicable. The Indenture Trustee shall
cooperate with the Servicer to provide the Servicer with access to the Trust
Student Loan Files in order for the Servicer to continue to service the Trust
Student Loans after the release of the Trust Student Loan Files. In the event
the Servicer is not provided access to the Trust Student Loan Files, the
Servicer shall not be deemed to have breached its obligations pursuant to
Section 3.1, 3.2, 3.3 or 3.4 if it is unable to perform such obligations due to
its inability to have access to the Trust Student Loans Files. The Servicer
shall not be liable for any losses with respect to the servicing of such Trust
Student Loans arising after the release of the related Trust Student Loan Files
to the extent the losses are attributable to the Servicer's inability to have
access to the related Trust Student Loan Files.
SECTION 2.5 Instructions; Authority To Act. The Servicer shall be deemed to
have received proper instructions with respect to the Trust Student Loan Files
upon its receipt of written instructions signed by a Responsible Officer of the
Indenture Trustee.
SECTION 2.6 [RESERVED].
SECTION 2.7 Effective Period and Termination. Sallie Mae Servicing
Corporation's appointment as custodian shall become effective as of the Closing
Date and shall continue in full force and effect for so long as Sallie Mae
Servicing Corporation shall remain the Servicer hereunder. If Sallie Mae
Servicing
3
<PAGE> 4
Corporation or any successor Servicer shall resign as Servicer in accordance
with the provisions of this Agreement or if all the rights and obligations of
Sallie Mae Servicing Corporation or any such successor Servicer shall have been
terminated under Section 5.1, the appointment of Sallie Mae Servicing
Corporation or such successor Servicer as custodian shall be terminated
simultaneously with the effectiveness of such resignation or termination. On
or prior to the effective date of any resignation or termination of such
appointment, the Servicer shall deliver the Trust Student Loan Files to the
successor Servicer, the Indenture Trustee or the Indenture Trustee's agent, at
the direction of the Indenture Trustee, at such place or places as the
Indenture Trustee may reasonably designate. In establishing an effective date
for the termination of the Servicer as custodian of the Trust Student Loan
Files, the parties shall provide for a reasonable period for the Servicer to
deliver the Trust Student Loan Files to its designated successor.
ARTICLE III
SECTION 3.1 Duties of Servicer. The Servicer, for the benefit of the Issuer
(to the extent provided herein), shall manage, service, administer and make
collections on the Trust Student Loans with reasonable care, using that degree
of skill and attention that the Servicer exercises with respect to comparable
student loans that it services on behalf of the Student Loan Marketing
Association from the Closing Date (or with respect to Trust Student Loans which
are sold to the Issuer following the Closing Date, such later date as the Trust
Student Loans are delivered to Servicer for servicing hereunder) until the
Trust Student Loans are paid in full. At any time that substantially all
remaining Trust Student Loans are repurchased by SLM Funding Corporation from
the Issuer pursuant to Section 6.1 of the Administration Agreement, the
Servicer agrees to execute, at the request of SLM Funding Corporation, a new
servicing agreement which agreement shall include terms and conditions
substantially the same as the terms and conditions of this Agreement; provided,
however, the Servicer shall not be required to so execute a new servicing
agreement until it has received all Servicing Fees then due and payable
hereunder. Without limiting the generality of the foregoing or of any other
provision set forth in this Agreement and notwithstanding any other provision
to the contrary set forth herein, the Servicer shall manage, service,
administer and make collections with respect to the Trust Student Loans
(including collection of any Interest Subsidy Payments and Special Allowance
Payments on behalf of the Eligible Lender Trustee) in accordance with, and
otherwise comply with, all applicable Federal and state laws, including all
applicable rules, regulations and other requirements of the Higher Education
Act and the applicable Guarantee Agreement, the failure to comply
4
<PAGE> 5
with which would adversely affect the eligibility of one or more of the Trust
Student Loans for Federal reinsurance or Interest Subsidy Payments or Special
Allowance Payments or one or more of the Trust Student Loans for receipt of
Guarantee Payments.
The Servicer's duties shall include, but shall not be limited to,
collection and posting of all payments, responding to inquiries of borrowers on
such Trust Student Loans, monitoring borrowers' status, making required
disclosures to borrowers, performing due diligence with respect to borrower
delinquencies, sending payment coupons to borrowers and otherwise establishing
repayment terms, reporting tax information to borrowers, if applicable,
accounting for collections and furnishing monthly statements with respect
thereto to the Administrator. The Servicer shall follow its customary
standards, policies and procedures in performing its duties as Servicer.
Without limiting the generality of the foregoing, the Servicer is authorized
and empowered to execute and deliver, on behalf of itself, the Issuer, the
Eligible Lender Trustee, the Indenture Trustee, the Certificateholders and the
Noteholders or any of them, instruments of satisfaction or cancellation, or
partial or full release or discharge, and all other comparable instruments,
with respect to such Trust Student Loans; provided, however, that the Servicer
agrees that it will not (a) permit any rescission or cancellation of a Trust
Student Loan except as ordered by a court of competent jurisdiction or
governmental authority or as otherwise consented to in writing by the Eligible
Lender Trustee and the Indenture Trustee provided, however, that the Servicer
may write off any delinquent Trust Student Loan if the remaining balance of the
borrower's account is less than $50 or (b) reschedule, revise, defer or
otherwise compromise with respect to payments due on any Trust Student Loan
except pursuant to any applicable interest only, deferral or forbearance
periods or otherwise in accordance with all applicable standards, guidelines
and requirements with respect to the servicing of Student Loans; provided
further, however, that the Servicer shall not agree to any reduction of yield
with respect to any Trust Student Loan (either by reducing borrower payments or
reducing principal balance) except as permitted in accordance with Section 3.12
or otherwise if, and to the extent, the Servicer or the Administrator
reimburses the Issuer in an amount sufficient to offset any such effective
yield reduction made by the Servicer consistent with such customary servicing
procedures as it follows with respect to comparable Student Loans which it
services on behalf of the Student Loan Marketing Association. The Eligible
Lender Trustee on behalf of the Issuer hereby grants a power of attorney and
all necessary authorization to the Servicer to maintain any and all collection
procedures with respect to the Trust Student Loans, including filing, pursuing
and recovering claims with the Guarantors for Guarantee Payments and with the
Department for Interest Benefit Payments and Special Allowance
5
<PAGE> 6
Payments and taking any steps to enforce such Trust Student Loans such as
commencing a legal proceeding to enforce a Trust Student Loan in the names of
the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Certificateholders and the Noteholders. The Eligible Lender Trustee shall upon
the written request of the Servicer furnish the Servicer with any other powers
of attorney and other documents reasonably necessary or appropriate to enable
the Servicer to carry out its servicing and administrative duties hereunder.
SECTION 3.2 Collection of Trust Student Loan Payments.
A. The Servicer shall make reasonable efforts (including all efforts
that may be specified under the Higher Education Act or any Guarantee
Agreement) to collect all payments called for under the terms and provisions of
the Trust Student Loans as and when the same shall become due and shall follow
such collection procedures as it follows with respect to comparable student
loans that it services on behalf of the Student Loan Marketing Association.
The Servicer shall allocate collections with respect to the Trust Student Loans
between principal and interest in accordance with Section 2.5 of the
Administration Agreement. The Servicer may in its discretion waive any late
payment charge or any other fees that may be collected in the ordinary course
of servicing a Trust Student Loan.
B. The Servicer shall make reasonable efforts to claim, pursue and
collect all Guarantee Payments from the Guarantors pursuant to the Guarantee
Agreements with respect to any of the Trust Student Loans as and when the same
shall become due and payable, shall comply with all applicable laws and
agreements with respect to claiming, pursuing and collecting such payments and
shall follow such practices and procedures as it follows with respect to
comparable guarantee agreements and student loans that it services on behalf of
the Student Loan Marketing Association. In connection therewith, the Servicer
is hereby authorized and empowered to convey to any Guarantor the note and the
related Trust Student Loan File representing any Trust Student Loan in
connection with submitting a claim to such Guarantor for a Guarantee Payment in
accordance with the terms of the applicable Guarantee Agreement. All amounts
so collected by the Servicer shall constitute Available Funds for the
applicable Collection Period and shall be deposited into the Collection Account
or transferred to the Administrator in accordance with Section 2.4 of the
Administration Agreement. The Eligible Lender Trustee shall, upon the written
request of the Servicer, furnish the Servicer with any power of attorney and
other documents necessary or appropriate to enable the Servicer to convey such
documents to any Guarantor and to make such claims.
6
<PAGE> 7
C. The Servicer on behalf of the Eligible Lender Trustee shall, on
behalf of the Issuer, make reasonable efforts to claim, pursue and collect all
Interest Subsidy Payments and Special Allowance Payments from the Department
with respect to any of the Trust Student Loans as and when the same shall
become due and payable, shall comply with all applicable laws and agreements
with respect to claiming, pursuing and collecting such payments and shall
follow such practices and procedures as the Servicer follows with respect to
comparable student loans that it services on behalf of the Student Loan
Marketing Association. All amounts so collected by the Servicer shall
constitute Available Funds for the applicable Collection Period and shall be
deposited into the Collection Account or transferred to the Administrator in
accordance with Section 2.4 of the Administration Agreement. In connection
therewith, the Servicer shall prepare and file with the Department on a timely
basis all claims forms and other documents and filings necessary or appropriate
in connection with the claiming of Interest Subsidy Payments and Special
Allowance Payments on behalf of the Eligible Lender Trustee and shall otherwise
assist the Eligible Lender Trustee in pursuing and collecting such Interest
Subsidy Payments and Special Allowance Payments from the Department. The
Eligible Lender Trustee shall upon the written request of the Servicer furnish
the Servicer with any power of attorney and other documents reasonably
necessary or appropriate to enable the Servicer to prepare and file such claims
forms and other documents and filings.
SECTION 3.3 Realization upon Trust Student Loans. For the benefit of the
Issuer, the Servicer shall use reasonable efforts consistent with its servicing
practices and procedures that it utilizes with respect to comparable student
loans that it services on behalf of the Student Loan Marketing Association and
including all efforts that may be specified under the Higher Education Act or
any Guarantee Agreement in its servicing of any delinquent Trust Student Loans.
SECTION 3.4 No Impairment. The Servicer shall not impair the rights of the
Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Certificateholders or Noteholders in such Trust Student Loans.
SECTION 3.5 Purchase of Trust Student Loans; Reimbursement.
A. The Servicer, the Administrator, the Eligible Lender Trustee and
the Indenture Trustee shall give notice to the other parties promptly, in
writing, upon the discovery of any breach of the provisions of Section 3.1,
3.2, 3.3 or 3.4 which has a materially adverse effect on the interest of the
Issuer. In the event of such a material breach which is not curable by
reinstatement of the Guarantor's guarantee of such Trust Student
7
<PAGE> 8
Loan, the Servicer shall purchase the affected Trust Student Loan not later
than 120 days following the earlier of the date of discovery of such material
breach and the date of receipt of the Guarantor reject transmittal form with
respect to such Trust Student Loan. In the event of a material breach with
respect to such Trust Student Loan which is curable by reinstatement of the
Guarantor's guarantee of such Trust Student Loan, unless the material breach
shall have been cured within 360 days following the earlier of the date of
discovery of such material breach and the date of receipt of the Guarantor
reject transmittal form with respect to such Trust Student Loan, the Servicer
shall purchase such Trust Student Loan not later than the sixtieth day
following the end of such 360-day period. The purchase price hereunder will be
the unpaid principal amount of such Trust Student Loan plus accrued interest
(calculated using the applicable percentage that would have been insured
pursuant to Section 428(b)(1)(G) of the Higher Education Act) plus an amount
equal to all forfeited Interest Subsidy Payments and Special Allowance Payments
with respect to such Trust Student Loan. The Servicer shall remit the purchase
price to the Administrator as provided in Section 2.6 of the Administration
Agreement on the date of purchase of any Trust Student Loan pursuant to this
Section 3.5. In consideration of the purchase of any such Trust Student Loan
pursuant to this Section 3.5, the Servicer shall remit the Purchase Amount in
the manner specified in Section 2.6 of the Administration Agreement. Any breach
that relates to compliance with the requirements of the Higher Education Act or
of the applicable Guarantor but that does not affect such Guarantor's
obligation to guarantee payments of a Trust Student Loan will not be considered
to have a material adverse effect for purposes of this Section 3.5A.
B. In addition, if any breach of Section 3.1, 3.2, 3.3 or 3.4 by the
Servicer does not trigger such purchase obligation but does result in the
refusal by a Guarantor to guarantee all or a portion of the accrued interest
(or any obligation of the Issuer to repay such interest to a Guarantor), or the
loss (including any obligation of the Issuer to repay to the Department) of
Interest Subsidy Payments and Special Allowance Payments, with respect to any
Trust Student Loan affected by such breach, then the Servicer shall reimburse
the Issuer in an amount equal to the sum of all such nonguaranteed interest
amounts that would have been owed to the Issuer by the Guarantor but for such
breach by the Servicer and such forfeited Interest Subsidy Payments or Special
Allowance Payments by netting such sum against the Servicing Fee payable to the
Servicer for such period and remitting any additional amounts owed in the
manner specified in Section 2.6 of the Administration Agreement not later than
(i) the last day of the next Collection Period ending not less than 60 days
from the date of the Guarantor's refusal to guarantee all or a portion of
accrued interest or loss of Interest Subsidy Payments or Special Allowance
Payments, or
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(ii) in the case where the Servicer reasonably believes such amounts are likely
to be collected, not later than the last day of the next Collection Period
ending not less than 360 days from the date of the Guarantor's refusal to
guarantee all or a portion of accrued interest or loss of Interest Subsidy
Payments or Special Allowance Payments. At the time such payment is made, the
Servicer shall not be required to reimburse the Issuer for interest that is
then capitalized, however, such amounts shall be reimbursed if the borrower
subsequently defaults and such capitalized interest is not paid by the
Guarantor.
C. Anything in this Section 3.5 to the contrary notwithstanding, if
as of the last Business Day of any month the aggregate outstanding principal
amount of Trust Student Loans with respect to which claims have been filed with
and rejected by a Guarantor or with respect to which the Servicer determines
that claims cannot be filed pursuant to the Higher Education Act as a result of
a breach by the Servicer or the Seller, exceeds 1% of the Pool Balance, the
Servicer or the Seller, as appropriate, shall purchase, within 30 days of a
written request of the Eligible Lender Trustee or Indenture Trustee, such
affected Trust Student Loans in an aggregate principal amount such that after
such purchase the aggregate principal amount of such affected Trust Student
Loans is less than 1% of the Pool Balance. The Trust Student Loans to be
purchased by the Servicer or the Seller pursuant to the preceding sentence
shall be based on the date of claim rejection (or date of notice referred to in
the first sentence of this Section 3.5) with the Trust Student Loans with the
earliest such date to be purchased first.
D. In lieu of repurchasing Trust Student Loans pursuant to this
Section 3.5, the Servicer may, at its option, with the prior consent of the
Administrator, substitute Student Loans or arrange for the substitution of
Student Loans which are substantially similar as of the date of substitution on
an aggregate basis to the Trust Student Loans for which they are being
substituted with respect to the following characteristics:
(1) status (i.e., in-school, grace, deferment, forbearance or
repayment),
(2) program type (i.e., unsubsidized Stafford, subsidized
Stafford, PLUS or SLS),
(3) school type,
(4) total return,
(5) principal balance, and
(6) remaining term to maturity.
In addition, each substituted Student Loan shall comply, as of the date of
substitution, with the representations and warranties\ made by the Seller in
the Sale Agreement. In choosing Student Loans to be substituted pursuant to
this subsection D, the
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Servicer shall make a reasonable determination that the Student Loans to be
substituted will not have a material adverse effect on the Noteholders and the
Certificateholders.
In the event the Servicer elects to substitute Student Loans pursuant
to this Section 3.5 and the Administrator consents to such substitution, the
Servicer will remit to the Administrator the amount of any shortfall between
the Purchase Amount of the substituted Student Loans and the Purchase Amount of
the Trust Student Loans for which they are being substituted. The Servicer
shall also remit to the Administrator an amount equal to all nonguaranteed
interest amounts that would have been owed to the Issuer by the Guarantor but
for the breach of the Servicer and forfeited Interest Subsidy Payments and
Special Allowance Payments with respect to the Trust Student Loans in the
manner provided in Section 2.6 of the Administration Agreement.
E. The sole remedy of the Issuer, the Eligible Lender Trustee, the
Indenture Trustee, the Certificateholders and the Noteholders with respect to a
breach pursuant to Section 3.1, 3.2, 3.3 or 3.4 shall be to require the
Servicer to purchase Trust Student Loans, to reimburse the Issuer as provided
above or to substitute Student Loans pursuant to this Section.
F. The Eligible Lender Trustee shall have no duty to conduct any
affirmative investigation as to the occurrence of any condition requiring the
purchase of any Trust Student Loan or the reimbursement for any interest
penalty pursuant to this Section 3.5.
G. The Servicer shall not be deemed to have breached its obligations
pursuant to Section 3.1, 3.2, 3.3 or 3.4 if it is rendered unable to perform
such obligations, in whole or in part, by a force outside the control of the
parties hereto (including acts of God, acts of war, fires, earthquakes,
hurricanes, floods and other disasters). The Servicer shall diligently perform
its duties under this Agreement as soon as practicable following the
termination of such interruption of business.
SECTION 3.6 Primary Servicing Fee; Carryover Servicing Fee. The Primary
Servicing Fee for each calendar month and any Carryover Servicing Fees payable
on any Distribution Date in arrears by the Issuer shall be equal to the amounts
determined by reference to the schedule of fees attached hereto as Attachment
A. Notwithstanding anything to the contrary contained herein or in any other
Basic Document, the Servicer shall be entitled to receive any Carryover
Servicing Fee on any Distribution Date only if and to the extent that
sufficient funds are available pursuant to Section 2.7.C of the Administration
Agreement.
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SECTION 3.7 Access to Certain Documentation and Information Regarding Trust
Student Loans. Upon reasonable prior notice, the Servicer shall provide to the
Administrator and its agents access to the Trust Student Loan Files and shall
permit the Administrator to examine and make copies of, and abstracts from, the
records and books of account of the Servicer relating to the Trust Student
Loans and shall permit the Administrator to undertake periodic site reviews of
the Servicer's operations relating to the servicing of the Trust Student Loans
(including on the premises of any agent of the Servicer). Reasonable access
shall be afforded to the Administrator without charge, but only upon reasonable
request and during the normal business hours at the respective offices of the
Servicer. Nothing in this Section shall affect the obligation of the Servicer
to observe any applicable law prohibiting disclosure of information regarding
the Obligors and the failure of the Servicer to provide access to information
as a result of such obligation shall not constitute a breach of this Section.
SECTION 3.8 Servicer Expenses. The Servicer shall be required to pay all
expenses incurred by it in connection with its activities hereunder, including
fees and disbursements of independent accountants, taxes imposed on the
Servicer and expenses incurred in connection with distributions and reports to
the Administrator provided, however, the Carryover Servicing Fee will be
subject to increase agreed to by the Administrator, the Eligible Lender Trustee
and the Servicer to the extent that a demonstrable and significant increase
occurs in the costs incurred by the Servicer in providing the services to be
provided hereunder, whether due to changes in applicable governmental
regulations, Guarantor program requirements or regulations or postal rates.
SECTION 3.9 Appointment of Subservicer. The Servicer may at any time, upon
the written consent of the Administrator, appoint a subservicer to perform all
or any portion of its obligations as Servicer hereunder; provided, however,
that any applicable Rating Agency Condition shall have been satisfied in
connection therewith; provided further that the Servicer shall remain obligated
and be liable to the Issuer, the Eligible Lender Trustee, the Indenture
Trustee, the
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Certificateholders and the Noteholders for the servicing and administering of
the Trust Student Loans in accordance with the provisions hereof without
diminution of such obligation and liability by virtue of the appointment of
such subservicer and to the same extent and under the same terms and conditions
as if the Servicer alone were servicing and administering the Trust Student
Loans. The fees and expenses of the subservicer shall be as agreed between the
Servicer and its subservicer from time to time and none of the Issuer, the
Eligible Lender Trustee, the Indenture Trustee, the Certificateholders or the
Noteholders shall have any responsibility therefor. With respect to satisfying
the Rating Agency Condition referred to above, the term "subservicer" shall be
deemed not to include systems providers, systems developers or systems
maintenance contractors, collection agencies, credit bureaus, lock box
providers, mail service providers and other similar types of service providers.
SECTION 3.10 Reports. With respect to Trust Student Loans, Servicer shall
prepare reports and data and furnish the following information to the Issuer,
the Administrator, the Eligible Lender Trustee and the Indenture Trustee,
unless otherwise noted, at the specified times:
(a) The reports and data listed in Attachment C, at the times
indicated in the attachment;
(b) Within 30 days following the end of each calendar quarter, to
the Department, owner's request for interest and Special
Allowance Payments (ED 799);
(c) To credit bureaus selected by Servicer, credit bureau
reporting in accordance with the Higher Education Act;
(d) At any time the Eligible Lender Trustee or the Indenture
Trustee, as the case may be, shall have reasonable grounds to
believe that such request would be necessary in connection
with its performance of its duties under related documents,
and within five (5) business days of receipt of a request
therefor, the Servicer shall furnish to the Eligible Lender
Trustee or to the Indenture Trustee a list of all Trust
Student Loans (by borrower social security number, type and
outstanding principal balance) and any additional information
requested relating to the Trust Student Loans; and
(e) From time to time as may be reasonably requested, reports and
data providing additional information on the Trust Student
Loans.
SECTION 3.11 Covenants and Agreements of the Issuer, Administrator, Eligible
Lender Trustee and Servicer. The Issuer, the Administrator, the Servicer and
the Eligible Lender Trustee each agree that:
A. Any payment and any communications received at any time by the
Issuer, Administrator and the Eligible Lender Trustee with respect to a Trust
Student Loan shall be immediately transmitted to the Servicer. Such
communications shall include,
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but not be limited to, requests or notices of loan cancellation, notices of
borrower disqualification, letters, changes in address or status, notices of
death or disability, notices of bankruptcy and forms requesting deferment of
repayment or forbearance.
B. The Servicer may change any part or all of its equipment, data
processing programs and any procedures and forms in connection with the
services performed hereunder so long as Servicer continues to service the Trust
Student Loans in conformance with the requirements herein. The Servicer shall
not make any material change in its servicing system and operations with
respect to the Trust Student Loans without the prior written consent of the
Administrator which consent will not be unreasonably withheld. Each written
request for consent by the Servicer shall be acted upon promptly by the
Administrator. Anything in this paragraph B. to the contrary notwithstanding,
the Servicer will not be required to request the consent of the Administrator
with respect to any changes in the Servicer's servicing system and operations
which the Servicer reasonably determines are required due to changes in the
Higher Education Act or Guarantor program requirements.
C. The Eligible Lender Trustee will furnish Servicer with a copy of
any and all Guarantee Agreements relating to the Trust Student Loans serviced
hereunder.
D. The Servicer may and, at the direction of the Administrator, shall
include marketing or informational material generally provided to borrowers of
loans owned by the Student Loan Marketing Association with communications sent
to a borrower.
E. The Servicer may, in its discretion, if requested by a borrower of
a Trust Student Loan, arrange for the sale of such Trust Student Loan to
another lender which holds another student loan of such borrower at a price not
less than the Purchase Amount.
F. The Servicer shall arrange for the sale of a Trust Student Loan to
the Student Loan Marketing Association upon receipt of notice from the Student
Loan Marketing Association that it has received an executed consolidation loan
application from the borrower of such Trust Student Loan. The sale price for
such Trust Student Loan shall equal the Purchase Amount.
SECTION 3.12 Special Programs. The Servicer shall offer borrowers of the
Trust Student Loans all special programs (e.g., Great Rewards(sm), Great
Returns(sm) and Direct Repay), whether or not in existence as of the date of
this Agreement, generally offered to the obligors of comparable loans owned by
the Student Loan
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Marketing Association and serviced by the Servicer; provided, however, to the
extent any such program is not required by the Higher Education Act and
effectively reduces borrower interest rate or principal balances on the Trust
Student Loans, such special program shall be applied to the Trust Student Loans
only if and to the extent the Issuer receives payment from the Student Loan
Marketing Association (and the Servicer receives notice of such payment) in an
amount sufficient to offset such effective yield reductions. The Student Loan
Marketing Association shall be deemed to be a third party beneficiary of this
Section 3.12 and shall make appropriate arrangements to compensate the Servicer
for increased costs associated with material changes to existing special
programs or the implementation and support of any new special programs.
SECTION 3.13 Financial Statements. The Servicer shall provide to the
Administrator at any time that the Servicer is not an Affiliate of the
Administrator (a) as soon as possible and in no event more than 120 days after
the end of each fiscal year of the Servicer audited financials as at the end of
and for such year and (b) as soon as possible and in no event more than 30 days
after the end of each quarterly accounting period of the Servicer unaudited
financials as at the end of and for such period.
SECTION 3.14 Insurance. The Servicer shall maintain or cause to be maintained
insurance with respect to its property and business against such casualties and
contingencies and of such types and in such amounts as is customary in the case
of institutions of the same type and size.
SECTION 3.15 Administration Agreement. The Servicer agrees to perform all
duties required of the Servicer under the Administration Agreement using that
degree of skill and attention that the Servicer exercises with respect to its
comparable business activities.
SECTION 3.16 Lender Identification Number. The Eligible Lender Trustee may
permit trusts, other than the Issuer, established by the Seller to securitize
student loans, to use the Department lender identification number applicable to
the Issuer if the servicing agreements with respect to such other trusts
include provisions substantially similar to this paragraph. In such event, the
Servicer may claim and collect Interest Subsidy Payments and Special Allowance
Payments with respect to Trust Student Loans and student loans in such other
trusts using such common lender identification number. Notwithstanding
anything herein or in the Basic Documents to the contrary, any amounts assessed
against payments (including, but not limited to, Interest Subsidy Payments and
Special Allowance Payments) due from the Department to any such other trust
using such common
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lender identification number as a result of amounts owing to the Department
from the Issuer will be deemed for all purposes hereof and of the Basic
Documents (including for purposes of determining amounts paid by the Department
with respect to the student loans in the Trust and such other trust) to have
been assessed against the Issuer and shall be deducted by the Administrator or
the Servicer and paid to such other trust from any collections made by them
which would otherwise have been payable to the Collection Account for the
Issuer. Any amounts assessed against payments due from the Department to the
Issuer as a result of amounts owing to the Department from such other trust
using such common lender identification number will be deemed to have been
assessed against such other trust and will be deducted by the Administrator or
the Servicer from any collections made by them which would otherwise be payable
to the collection account for such other trust and paid to the Issuer.
ARTICLE IV
SECTION 4.1 Representations of Servicer. The Servicer makes the following
representations on which the Issuer is deemed to have relied in acquiring
(through the Eligible Lender Trustee) the Trust Student Loans and appointing
the Servicer as servicer hereunder. The representations speak as of the
execution and delivery of this Agreement and as of the Closing Date, but shall
survive the sale, transfer and assignment 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 Servicer is duly organized
and validly existing as a corporation chartered under the laws of the State of
Delaware and in good standing under the laws of the State of Delaware, with the
power and authority to own its properties and to conduct its business as such
properties are currently owned and such business is presently conducted, and
had at all relevant times, and has, the power, authority and legal right to
service the Trust Student Loans and to hold the Trust Student Loan Files as
custodian.
B. Due Qualification. The Servicer is duly qualified to do business
and has obtained all necessary licenses and approvals in all jurisdictions in
which the ownership or lease of property or the conduct of its business
(including the servicing of the Trust Student Loans as required by this
Agreement) shall require such qualifications.
C. Power and Authority. The Servicer has the power and authority to
execute and deliver this Agreement and to carry out its terms; and the
execution, delivery and performance of this
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Agreement have been duly authorized by the Servicer by all necessary action.
No registration with or approval of any governmental agency is required for the
due execution and delivery by, and enforceability against, the Servicer of this
Agreement.
D. Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of the Servicer enforceable in accordance with its terms
subject to bankruptcy, insolvency and other similar laws affecting creditors
rights generally and subject to equitable principles.
E. No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof will 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 Servicer, or any indenture, agreement or other
instrument to which the Servicer 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 this Agreement and the other Basic Documents); nor violate any law
or, to the best of the Servicer's knowledge, any order, rule or regulation
applicable to the Servicer of any court or of any Federal or state regulatory
body, administrative agency or other governmental instrumentality having
jurisdiction over the Servicer or its properties.
F. No Proceedings. There are no proceedings or investigations
pending, or, to the Servicer's best knowledge, threatened, before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Servicer or its properties: (i) asserting the
invalidity of this Agreement or any of the other Basic Documents to which the
Servicer is a party, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any of the other Basic Documents
to which the Servicer is a party, (iii) seeking any determination or ruling
that could reasonably be expected to have a material and adverse effect on the
performance by the Servicer of its obligations under, or the validity or
enforceability of, this Agreement or any of the other Basic Documents to which
the Servicer is a party, or (iv) relating to the Servicer and which might
adversely affect the Federal or state income tax attributes of the Notes or the
Certificates.
SECTION 4.2 Indemnities of Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the
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obligations specifically undertaken by the Servicer under this Agreement.
The Servicer shall pay for any loss, liability or expense, including
reasonable attorneys' fees, that may be imposed on, incurred by or asserted
against the Issuer or the Eligible Lender Trustee by the Department pursuant to
the Higher Education Act, to the extent that such loss, liability or expense
arose out of, or was imposed upon the Issuer through, the negligence, willful
misfeasance or bad faith of the Servicer in the performance of its obligations
and duties under this Agreement or by reason of the reckless disregard of its
obligations and duties under this Agreement, where the final determination that
any such loss, liability or expense arose out of, or was imposed upon the
Issuer or the Eligible Lender Trustee through, any such negligence, willful
misfeasance, bad faith or recklessness on the part of the Servicer is
established by a court of law, by an arbitrator or by way of settlement agreed
to by the Servicer. Notwithstanding the foregoing, if the Servicer is rendered
unable, in whole or in part, by a force outside the control of the parties
hereto (including acts of God, acts of war, fires, earthquakes, hurricanes,
floods and other disasters) to satisfy its obligations under this Agreement,
the Servicer shall not be deemed to have breached any such obligation upon
delivery of written notice of such event to the other parties hereto, for so
long as the Servicer remains unable to perform such obligation as a result of
such event.
For purposes of this Section, in the event of the termination of the
rights and obligations of Sallie Mae Servicing Corporation (or any successor
thereto pursuant to Section 4.3) as Servicer pursuant to Section 5.1, or a
resignation by such Servicer pursuant to this Agreement, such Servicer shall be
deemed to be the Servicer pending appointment of a successor Servicer pursuant
to Section 5.2.
Liability of the Servicer under this Section shall survive the
resignation or removal of the Eligible Lender Trustee or the Indenture Trustee
or the termination of this Agreement. If the Servicer shall have made any
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 Servicer, without interest.
SECTION 4.3 Merger or Consolidation of, or Assumption of the Obligations of,
Servicer. The Servicer hereby agrees that, upon (a) any merger or
consolidation of the Servicer into another Person, (b) any merger or
consolidation to which the Servicer shall be a party resulting in the creation
of another Person or
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(c) any Person succeeding to the properties and assets of the Servicer
substantially as a whole, the Servicer shall (i) cause such Person (if other
than the Servicer) to execute an agreement of assumption to perform every
obligation of the Servicer hereunder, (ii) deliver to the Eligible Lender
Trustee and 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 provided for in this Agreement relating to such transaction have been
complied with, (iii) cause the Rating Agency Condition to have been satisfied
with respect to such transaction and (iv) cure any existing Servicer Default or
any continuing event which, after notice or lapse of time or both, would become
a Servicer Default. Upon compliance with the foregoing requirements, such
Person shall be the successor to the Servicer under this Agreement without
further act on the part of any of the parties to this Agreement.
SECTION 4.4 Limitation on Liability of Servicer. The Servicer shall not be
under any liability to the Issuer, the Noteholders, the Certificateholders, the
Administrator, the Eligible Lender Trustee or the Indenture Trustee except as
provided under this Agreement, for any action taken or for refraining from the
taking of any action pursuant to this Agreement, for errors in judgment, for
any incorrect or incomplete information provided by schools, borrowers,
Guarantors and the Department, for the failure of any party to this Servicing
Agreement or any other Basic Document to comply with its respective obligations
hereunder or under any other Basic Document or for any losses attributable to
the insolvency of any Guarantor; provided, however, that this provision shall
not protect the Servicer against its obligation to purchase Student Loans from
the Trust pursuant to Section 3.5 hereof or to pay to the Trust amounts
required pursuant to Section 3.5 hereof or 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 Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any person
respecting any matters arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not be under
any obligation to appear in, prosecute or defend any legal action where it is
not named as a party; provided, however, that the Servicer 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 and the Noteholders. To the extent that the Servicer is
required to appear in or is made a defendant in
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any legal action or other proceeding relating to the servicing of the Trust
Student Loans, the Issuer shall indemnify and hold the Servicer harmless from
all cost, liability or expense of the Servicer not arising out of or relating
to the failure of the Servicer to comply with the terms of this Agreement.
SECTION 4.5 Sallie Mae Servicing Corporation Not To Resign as Servicer.
Subject to the provisions of Section 4.3, Sallie Mae Servicing Corporation
shall not resign from the obligations and duties hereby imposed on it as
Servicer under this Agreement except upon determination that the performance of
its duties under this Agreement are no longer permissible under applicable law.
Notice of any such determination permitting the resignation of Sallie Mae
Servicing Corporation 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
Servicer shall have assumed the responsibilities and obligations of Sallie Mae
Servicing Corporation in accordance with Section 5.2.
ARTICLE V
SECTION 5.1 Servicer Default. If any one of the following events (a "Servicer
Default") shall occur and be continuing:
(1) any failure by the Servicer (i) to deliver to the Indenture
Trustee for deposit in the Trust Accounts any payment required
by the Basic Documents to which the Servicer is a signatory or
(ii) in the event that daily deposits into the Collection
Account are not required, to deliver to the Administrator any
payment required by the Basic Documents, 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 Servicer from the Eligible Lender Trustee, the
Indenture Trustee or the Administrator or five Business Days
after discovery of such failure by an officer of the Servicer;
or
(2) any failure by the Servicer duly to observe or to perform in
any material respect any other covenant or agreement of the
Servicer set forth in this Agreement or any other Basic
Document to which the Servicer is a signatory, which failure
shall (i) materially and adversely affect the rights of
Noteholders or
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Certificateholders and (ii) continues 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 Servicer by the Indenture Trustee, the
Eligible Lender Trustee or the Administrator or (B) to the
Servicer, and to 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 not less than 25% of the outstanding
Certificate Balance provided, however any breach of Sections
3.1, 3.2, 3.3 or 3.4 shall not be deemed a Servicer Default so
long as the Servicer is in compliance with its repurchase and
reimbursement obligations under Section 3.5; or
(3) an Insolvency Event occurs with respect to the Servicer; or
(4) any failure by the Servicer to comply with any requirements
under the Higher Education Act resulting in a loss of its
eligibility as a third-party servicer;
then, and in each and every case, so long as the Servicer Default shall not
have been remedied, either the Indenture Trustee, or the Noteholders of Notes
evidencing not less than 25% of the Outstanding Amount of the Notes, by notice
then given in writing to the Servicer (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 3.5 and
Section 4.2) of the Servicer under this Agreement. As of the effective date of
termination of the Servicer, all authority and power of the Servicer under this
Agreement, whether with respect to the Notes, the Certificates or the Trust
Student Loans or otherwise, shall, without further action, pass to and be
vested in the Indenture Trustee or such successor Servicer as may be appointed
under Section 5.2. The predecessor Servicer shall cooperate with the successor
Servicer, the Indenture Trustee and the Eligible Lender Trustee in effecting
the termination of the responsibilities and rights of the predecessor Servicer
under this Agreement, including the transfer to the successor Servicer for
administration by it of all cash amounts that shall at the time be held by the
predecessor Servicer for deposit, or shall thereafter be received by it with
respect to a Trust Student Loan. All reasonable costs and expenses (including
attorneys' fees) incurred in connection with transferring the Trust Student
Loan Files to the successor Servicer and amending this Agreement and any other
Basic Documents to reflect such succession as Servicer pursuant to this Section
shall be paid by the predecessor Servicer (other than the Indenture Trustee
acting as the Servicer under this Section 5.1)
20
<PAGE> 21
upon presentation of reasonable documentation of such costs and expenses. Upon
receipt of notice of the occurrence of a Servicer Default, the Eligible Lender
Trustee shall give notice thereof to the Rating Agencies.
SECTION 5.2 Appointment of Successor.
A. Upon receipt by the Servicer of notice of termination pursuant to
Section 5.1, or the resignation by the Servicer in accordance with the terms of
this Agreement, the predecessor Servicer shall continue to perform its
functions as Servicer 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 Indenture Trustee or a successor Servicer shall
have assumed the responsibilities and duties of Sallie Mae Servicing
Corporation. In the event of the termination hereunder of the Servicer, the
Issuer shall appoint a successor Servicer acceptable to the Indenture Trustee,
and the successor Servicer shall accept its appointment by a written assumption
in form acceptable to the Indenture Trustee. In the event that a successor
Servicer has not been appointed at the time when the predecessor Servicer has
ceased to act as Servicer in accordance with this Section, the Indenture
Trustee without further action shall automatically be appointed the successor
Servicer and the Indenture Trustee shall be entitled to the Servicing Fee and
any Carryover Servicing Fees. 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 Servicer under this Agreement; provided,
however, that such right to appoint or to petition for the appointment of any
such successor Servicer shall in no event relieve the Indenture Trustee from
any obligations otherwise imposed on it under the Basic Documents until such
successor has in fact assumed such appointment.
B. Upon appointment, the successor Servicer (including the Indenture
Trustee acting as successor Servicer) shall be the successor in all respects to
the predecessor Servicer and shall be subject to all the responsibilities,
duties and liabilities placed on the predecessor Servicer that arise thereafter
or are related thereto and shall be entitled to an amount agreed to by such
successor Servicer (which shall not exceed the Servicing Fee unless the Rating
Agency Condition is satisfied with respect to such compensation arrangements)
and all the rights granted to the predecessor Servicer by the terms and
provisions of this Agreement.
21
<PAGE> 22
C. The Servicer 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 Servicer
pursuant hereto and thereto, shall be entitled to resign to the extent a
qualified successor Servicer has been appointed and has assumed all the
obligations of the Servicer 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 Servicer 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).
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 not less than 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 Servicer 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 Servicer Default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement and the Administration Agreement.
No such waiver shall extend to any subsequent or other default or impair any
right consequent thereto.
ARTICLE VI
SECTION 6.1 Amendment.
A. This Agreement may be amended by the Servicer, the Issuer, the
Administrator, the Eligible Lender Trustee and the Indenture Trustee, without
the consent of any of the Noteholders or the Certificateholders, to comply with
any change in any applicable federal or state law, 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; provided,
22
<PAGE> 23
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.
B. This Agreement may also be amended from time to time by the
Servicer, the Issuer, the Administrator, the Eligible Lender Trustee 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 (including any Certificates owned by the
Seller) 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; 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.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to paragraph B. to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof.
Promptly after the execution of any amendment to this Agreement (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.
Prior to the execution of any amendment to this Agreement, 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. The Indenture Trustee
may, but shall not be obligated to, execute and deliver such amendment which
affects its rights, powers, duties or immunities hereunder.
SECTION 6.2 Notices. All notices hereunder shall be given by United States
certified or registered mail, by telegram or by other telecommunication device
capable of creating written record
23
<PAGE> 24
of such notice and its receipt. Notices hereunder shall be effective when
received and shall be addressed to the respective parties hereto at the
addresses set forth below, or at such other address as shall be designated by
any party hereto in a written notice to each other party pursuant to this
section.
If to Servicer, to: Sallie Mae Servicing Corporation
11600 Sallie Mae Drive, Reston, Virginia 20193
Director of ABS Administration
If to Issuer, to: SLM Student Loan Trust 1997-4
c/o Chase Manhattan Bank USA, National Association, 802
Delaware Avenue, Wilmington, Delaware 19801, Attn:
Corporate Trust Dept.
with a copy to: The Chase Manhattan Bank,
450 West 33rd Street, 15th Floor, New York, New York 10001,
Attn: Structured Finance Services
If to the Administrator, to: Student Loan Marketing
Association, 11600 Sallie Mae Drive, Reston, Virginia 20193,
Attn: Director, Corporate Finance Operations
If to the Eligible Lender Trustee, to: Chase Manhattan Bank
USA, National Association, 802 Delaware Avenue, Wilmington,
Delaware 19801, Attn: Corporate Trust Dept.
with a copy to: The Chase Manhattan Bank, 450 West 33rd
Street, 15th Floor, New York, New York 10001, Attn:
Structured Finance Services.
If to the Indenture Trustee, to: Bankers Trust Company,
Four Albany Street, 10th Floor, New York, New York 10006,
Attn: Corporate Trust and Agency Group, Facsimile No.:
(212) 250-6439
SECTION 6.3 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed to be an original, and such counterparts shall
constitute one (1) and the same instrument.
SECTION 6.4 Entire Agreement; Severability. This Agreement constitutes the
entire agreement between the Issuer, the Administrator, the Eligible Lender
Trustee, the Indenture Trustee and Servicer. All prior representations,
statements,
24
<PAGE> 25
negotiations and undertakings with regard to the subject matter hereof are
superseded hereby.
If any term or provision of this Agreement or the application thereof
to any person or circumstance shall, to any extent, be invalid or
unenforceable, the remaining terms and provisions of this Agreement, or the
application of such terms or provisions to persons or circumstances other than
those as to which it is held invalid or unenforceable, shall not be affected
thereby, and each term and provision of this Agreement shall be valid and
enforced to the fullest extent permitted by law.
SECTION 6.5 Governing Law. The terms of this Agreement shall be subject to
all applicable provisions of the Higher Education Act and shall be construed in
accordance with and governed by the laws of the State of New York without
reference to its conflict of law provisions, and the obligations, rights and
remedies of the parties, hereunder shall be determined in accordance with such
laws.
SECTION 6.6 Relationship of Parties. Servicer is an independent contractor
and, except for the services which it agrees to perform hereunder, the Servicer
does not hold itself out as an agent of any other party hereto. Nothing herein
contained shall create or imply an agency relationship among Servicer and any
other party hereto, nor shall this Agreement be deemed to constitute a joint
venture or partnership between the parties.
SECTION 6.7 Captions. The captions used herein are for the convenience of
reference only and not part of this Agreement, and shall in no way be deemed to
define, limit, describe or modify the meanings of any provision of this
Agreement.
SECTION 6.8 Nonliability of Directors, Officers and Employees of Servicer, the
Eligible Lender Trustee, the Indenture Trustee and the Administrator. No
member of the board of directors or any officer, employee or agent of Servicer,
the Administrator, the Eligible Lender Trustee or the Indenture Trustee (or any
Affiliate of any such party) shall be personally liable for any obligation
incurred under this Agreement.
SECTION 6.9 Assignment. This Agreement may not be assigned by the Servicer
except as permitted under Sections 4.3, 4.5 and 5.2 hereof. This Agreement may
not be assigned by the Administrator except as permitted under Sections 4.3 and
4.6 of the Administration Agreement.
SECTION 6.10 Limitation of Liability of Eligible Lender Trustee and Indenture
Trustee.
25
<PAGE> 26
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 or, except as expressly provided in the
Trust Agreement, as Eligible Lender Trustee 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 signed 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.
26
<PAGE> 27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed on their behalf by their duly authorized officers as of
November 12, 1997.
SALLIE MAE SERVICING CORPORATION
By: /s/ THOMAS P. BRISSON
------------------------------
Name:
----------------------------
Title:
---------------------------
STUDENT LOAN MARKETING ASSOCIATION, as Administrator
By Sallie Mae, Inc., Authorized Agent for the Student Loan
Marketing Association
By: /s/ J. LANCE FRANKE
------------------------------
Name:
----------------------------
Title:
---------------------------
SLM STUDENT LOAN TRUST 1997-4 by Chase Manhattan Bank USA,
National Association not in its individual capacity but solely as
Eligible Lender Trustee
By: /s/ J.J. CASHIN
------------------------------
Name:
----------------------------
Title:
---------------------------
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION not in its
individual capacity but solely as Trustee under a Trust Agreement
dated November 1, 1997 between SLM Funding Corporation and Chase
Manhattan Bank USA, National Association
By: /s/ J.J. CASHIN
------------------------------
Name:
----------------------------
Title:
---------------------------
27
<PAGE> 28
BANKERS TRUST COMPANY, not in its individual capacity but solely as Indenture
Trustee under an Indenture dated November 1, 1997 between SLM Student Loan
Trust 1997-4 and Bankers Trust Company.
By: /s/ ALFIA MONASTRA
------------------------------
Name:
----------------------------
Title:
---------------------------
28
<PAGE> 29
ATTACHMENT A
SCHEDULE OF FEES
The Servicer will receive a Primary Servicing Fee and a Carryover
Servicing Fee (together, the "Servicing Fee"). The "Primary Servicing Fee" for
any month to and including October 2001 (except for the period from the Closing
Date to and including November 30, 1997) is an amount equal to 1/12th of 0.85%
of the outstanding principal amount of the Trust Student Loans as of the last
day of the preceding calendar month, plus any such amounts from prior Monthly
Servicing Payment Dates that remain unpaid. The "Primary Servicing Fee" for
any month after October 2001 is an amount equal to the lesser of (i) the Unit
Amount and (ii) 1/12th of 0.85% of the outstanding principal amount of the
Trust Student Loans, in each case as of the last day of the preceding calendar
month, plus any such amounts from prior Monthly Servicing Payment Dates that
remain unpaid. The "Unit Amount" for any month is equal to $4.06 times the
number of accounts in the Trust during such month. The Primary Servicing Fee
will be payable out of Available Funds and amounts on deposit in the Reserve
Account on the 25th day of each month (or, if any such date is not a business
day, on the next succeeding business day), commencing December 26, 1997 (each,
a "Monthly Servicing Payment Date"). The "Carryover Servicing Fee" is the sum
of (a) the amount, if any, as of any Monthly Servicing Payment Date after the
October 2001 Monthly Servicing Payment Date by which (i) 1/12th of 0.85% of the
outstanding principal amount of the Trust Student Loans exceeds (ii) the Unit
Amount, in each case as of the last day of the preceding calendar month, (b)
the amount of increases in the costs incurred by the Servicer which are agreed
to pursuant to Section 3.8 of the Servicing Agreement, (c) any Conversion Fees,
Transfer Fees and Removal Fees (as defined below) incurred since the last
Distribution Date and (d) any amounts described in (a), (b) and (c) above that
remain unpaid from prior Distribution Dates plus interest on such amounts for
the period from the Distribution Date on which such amounts become due to the
date such amounts are paid in full at a rate per annum for each Interest Period
(as defined below) equal to the sum of (a) the average accepted auction price
(expressed on a bond equivalent basis) for 91-day Treasury Bills sold at the
most recent 91-day Treasury Bill auction prior to the Interest Period as
reported by the U.S. Treasury Department and (b) 2.00%.
Interest Period" shall mean the period from each Distribution Date
through the day before the next Distribution Date. The Carryover Servicing Fee
will be payable to the Servicer on each succeeding Distribution Date out of
Available Funds after payment on such Distribution Date of the Primary
Servicing Fee, the Administration Fee, the Noteholders'
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<PAGE> 30
Distribution Amount, the Certificateholders' Distribution Amount, and the
amount, if any, necessary to be deposited in the Reserve Account to reinstate
the balance thereof to the Specified Reserve Account Balance. On the December
26, 1997 Monthly Servicing Payment Date, the Servicer shall receive a pro rata
portion of the Primary Servicing Fee for the period from the Closing Date to
and including November 30, 1997.
Servicer will be paid a fee ("Conversion Fee") for any Student Loan
added to the Trust Estate which Student Loan is not serviced on the Servicer's
system unless such Student Loan is being substituted into the Trust Estate by
the Servicer pursuant to Section 3.5 of this Agreement. The Conversion Fee is
equal to the greater of $17.00 per account or the Servicer's verifiable costs
plus 15%.
Servicer will be paid a fee ("Transfer Fee") for any Student Loan
transferred in or out of the Trust Estate which is at the time of transfer
being serviced on the Servicer's system (regardless of the owner) unless such
Student Loans are being removed or added to the Trust in order to comply with
the Servicer's purchase/substitution obligation under Section 3.5 of this
Agreement. The Transfer Fee is equal to $4.00 per account transaction.
Servicer will be paid a fee ("Removal Fee") for performing all
activities required to remove a Trust Student Loan from the Servicer's system
to another servicer unless such Trust Student Loan is being removed due to the
termination of the Servicer pursuant to Section 5.1 of this Agreement. The
Removal Fee is equal to $10.00 per account plus any verifiable direct expenses
incurred for shipping such Trust Student Loan to the new servicer.
2
<PAGE> 31
ATTACHMENT B
Loan Servicing Center/Florida
P.O. Box 2975
Panama City, Florida 32402-2975
(904) 271-9207
Loan Servicing Center/Kansas
P.O. Box 309
Lawrence, Kansas 66044
(913) 841-0234
Loan Servicing Center/New England
135 Beaver Street
Waltham, Massachusetts 02154
(617) 893-9522
Loan Servicing Center/Pennsylvania
220 Lasley Avenue
Hanover Industrial Estates
Wilkes-Barre, Pennsylvania 18706
(717) 821-3600
Loan Servicing Center/Texas
777 Twin Creek Drive
Killeen, Texas 76543
(817) 554-4500
Loan Servicing Center/Washington
107 South Harvard Street
Spokane, Washington 99204
(509) 455-9224
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<PAGE> 32
ATTACHMENT C
REPORTS
1. CLASS Report 800 - Monthly activity summary report
2. CLASS Report 801 - Monthly average/ending balance report
3. CLASS Report 802 - Monthly activity detail
4. CLASS Report 803 - Monthly conversion/removal summary
5. CLASS Report 807 - Monthly delinquency aging report
6. CLASS Report 810 - Monthly characteristics summary
7. CLASS Report 866 - Monthly average/ending balance offset fee report
8. CLASS Report 882 - Great Rewards/Direct Repay Report
9. Monthly Cash Reconciliation Report
10. Quarterly ED799 billing (prepared from CLASS Reports 824, 825, 827,
828 and 829; supporting detail CLASS Reports 865, 868, 870 and 871;
and the OE799 SAS library)
11. Portfolio Characteristics, Financial Activity, Quarterly calculation
of Accrued Interest to be capitalized, Delinquency Detail and Claims
extracts.
1
<PAGE> 33
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I
Section 1.1 Definitions and Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II
Section 2.1 Custody of Trust Student Loan Files . . . . . . . . . . . . . . . . . . . . 1
Section 2.2 Duties of Servicer as Custodian . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2.3 Maintenance of and Access to Records . . . . . . . . . . . . . . . . . . . . 3
Section 2.4 Release of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.5 Instructions; Authority To Act . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.6 [RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 2.7 Effective Period and Termination . . . . . . . . . . . . . . . . . . . . . . 3
ARTICLE III
Section 3.1 Duties of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Section 3.2 Collection of Trust Student Loan Payments . . . . . . . . . . . . . . . . . . 6
Section 3.3 Realization upon Trust Student Loans . . . . . . . . . . . . . . . . . . . . 7
Section 3.4 No Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 3.5 Purchase of Trust Student Loans; Reimbursement . . . . . . . . . . . . . . . 7
Section 3.6 Primary Servicing Fee; Carryover Servicing Fee . . . . . . . . . . . . . . . 10
Section 3.7 Access to Certain Documentation and
Information Regarding Trust Student Loans . . . . . . . . . . . . . . . . 11
Section 3.8 Servicer Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.9 Appointment of Subservicer . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.10 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.11 Covenants and Agreements of the Issuer, Administrator, Eligible Lender
Trustee and Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 3.12 Special Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 3.13 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.14 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.15 Administration Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 3.16 Lender Identification Number . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE IV
Section 4.1 Representations of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.2 Indemnities of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 4.3 Merger or Consolidation of, or Assumption of the Obligations of, Servicer . 17
Section 4.4 Limitation on Liability of Servicer . . . . . . . . . . . . . . . . . . . . . 18
Section 4.5 Sallie Mae Servicing Corporation Not to Resign as Servicer . . . . . . . . 19
</TABLE>
i
<PAGE> 34
<TABLE>
<S> <C> <C>
ARTICLE V
Section 5.1 Servicer Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 5.2 Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 5.3 Notification to Noteholders and Certificateholders . . . . . . . . . . . . . 22
Section 5.4 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE VI
Section 6.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 6.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 6.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.4 Entire Agreement; Severability . . . . . . . . . . . . . . . . . . . . . . . 24
Section 6.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.6 Relationship of Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.7 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.8 Nonliability of Directors, Officers and Employees of Servicer, the Eligible
Lender Trustee, the Indenture Trustee and the Administrator . . . . . . . 25
Section 6.9 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 6.10 Limitation of Liability of Eligible Lender Trustee and Indenture Trustee . . 25
Attachment A Schedule of Fees
Attachment B Servicer Locations
Attachment C Reports
Appendix A
</TABLE>
ii
<PAGE> 35
================================================================================
SERVICING AGREEMENT
among
SALLIE MAE SERVICING CORPORATION,
STUDENT LOAN MARKETING ASSOCIATION,
as Administrator
SLM STUDENT LOAN TRUST 1997-4,
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION
not in its individual capacity
but solely as Eligible Lender Trustee
and
BANKERS TRUST COMPANY
not in its individual capacity
but solely as Indenture Trustee
Dated as of November 12, 1997
================================================================================
<PAGE> 1
EXHIBIT 99.5
PAYING AGENT AGREEMENT
This PAYING AGENT AGREEMENT, dated as of November 12, 1997 (this
"Agreement") is entered into by and among (i) CHASE MANHATTAN BANK USA,
NATIONAL ASSOCIATION, a national banking association acting not in its
individual capacity but solely as Eligible Lender Trustee under the trust
agreement referred to below (the "Trustee"), (ii) BANKERS TRUST COMPANY, a New
York banking corporation (the "Agent") and (iii) STUDENT LOAN MARKETING
ASSOCIATION, a federally chartered corporation (the "Administrator").
W I T N E S S E T H;
WHEREAS, the Trustee and the Administrator desire to appoint the Agent
as the co-paying agent under the Trust Agreement, dated as of November 1, 1997
(the "Trust Agreement"), between the Trustee and SLM Funding Corporation;
WHEREAS, the Agent desires to accept such appointment.
NOW THEREFORE, the Trustee, the Administrator and the Agent agree as
follow:
1. Pursuant to Section 3.9 of the Trust Agreement, the Trustee
hereby appoints the Agent as the co-paying agent to perform the duties of the
Certificate Paying Agent as set forth in the Trust Agreement and the Agent
hereby accepts such appointment and the duties relating thereto as if the
Agent had been a party to the Trust Agreement. The Administrator hereby
consents to such appointment.
2. The Agent shall be subject to the same standard of care as,
and shall be entitled to the same rights, protections and immunities afforded
to, the Trustee under the Trust Agreement.
<PAGE> 2
3. The Administrator covenants to indemnify the Agent for, and to
hold it harmless against, any loss, liability or expense incurred without
willful misconduct, negligence or bad faith on the part of the Agent arising
our of or in connection with the acceptance or administration of this Agreement
and the duties hereunder, including the reasonable costs and expenses of
defending itself against any claim of liability in the premises.
4. This Agreement may be modified by agreement of the parties
hereto and may be terminated by any party upon sixty (60) days prior written
notice to the other parties.
5. Initially capitalized terms which are used herein and which
are not defined herein have the meanings set forth in the Trust Agreement.
6. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which shall constitute
one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
STUDENT LOAN MARKETING CHASE MANHATTAN BANK USA,
ASSOCIATION NATIONAL ASSOCIATION
By: /s/ J. LANCE FRANKE By: /s/ J.J. CASHIN
---------------------------- -----------------------
Name: Name:
Title: Title:
BANKERS TRUST COMPANY
By: /s/ ALFIA MONASTRA
-----------------------
Name:
Title:
2
