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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): September 11, 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,
and the SLM Student Loan Trust 1997-3)
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
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(Address of principal executive offices)
Registrant's telephone number: (817) 554-4500
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Page 1 of 7
Exhibit Index appears on Page 6
<PAGE>
Item 5. Other Events
On September 4, 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 September 4, by and among SLM Funding
Corporation ("SLM Funding"), the Student Loan Marketing Association ("Sallie
Mae") and J.P. Morgan & Co. (the "Underwriter"), on behalf of each of the
underwriters named in Schedule 1 thereto; (b) the Pricing Agreement relating to
the Student Loan-Backed Certificates, dated September 4, 1997, by and among SLM
Funding, Sallie Mae and the Underwriter, on behalf of each of the underwriters
named in Schedule 1 thereto: (c) the Underwriting Agreement relating to the
Student Loan-Backed Notes, dated September 4, 1997, by and among SLM Funding,
Sallie Mae and the Underwriter, 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 September 4, 1997, by and among SLM Funding,
Sallie Mae and the Underwriter, on behalf of each of the underwriters named in
Schedule 1 thereto.
On September 1 or September 11, 1997, the following agreements
were executed and delivered by the respective parties thereto: (a) the Purchase
Agreement, dated as of September 11, 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 September 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
September 1, 1997 (the "Indenture"), by and among the SLM Student Loan Trust
1997-3 (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 September 11,
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 September 11,
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 September 11, 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 as of September 11, 1997, by and among the Eligible
Lender Trustee, Bankers Trust Company (the "Agent"), and Student Loan Marketing
Association (the "Administrator").
The new agent for service is Marianne M. Keler, at 1050 Thomas
Jefferson Street, N.W., Washington, D.C., 20007-3871, (202) 333-8000, or 11600
Sallie Mae Drive, Reston, Virginia, 20193, (703) 810-3000.
Page 2 of 7
Exhibit Index appears on Page 6
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits
(c) Exhibits
1.1 Pricing Agreement relating to the Student
Loan-Backed Notes, dated September 4, 1997, by and
among SLM Funding, Sallie Mae and the Underwriter,
on behalf of each of the underwriters named in
Schedule 1 thereto.
1.2 Pricing Agreement relating to the Student
Loan-Backed Certificates, dated September 4, 1997,
by and among SLM Funding, Sallie Mae and the
Underwriter, on behalf of each of the underwriters
named in Schedule 1 thereto.
1.3 Underwriting Agreement relating to the Student
Loan-Backed Notes, dated September 4, 1997, by and
among SLM Funding, Sallie Mae and the Underwriter,
on behalf of each of the underwriters named in
Schedule 1 thereto.
1.4 Underwriting Agreement relating to the Student
Loan-Backed Certificates, dated September 4, 1997,
by and among SLM Funding, Sallie Mae and the
Underwriter, on behalf of each of the underwriters
named in Schedule 1 thereto.
4.1 Trust Agreement, dated as of September 1, 1997 by
and between SLM Funding and the Eligible Lender
Trustee.
4.2 Indenture, dated as of September 1, 1997, by and
among the Trust, the Eligible Lender Trustee and
the Indenture Trustee.
23.1 Consent of Marianne M. Keler, Esq., dated as of
September 25, 1997.
23.2 Consent of Cadwalader, Wickersham & Taft, dated as
of September 25, 1997.
23.3 Consent of Shearman & Sterling, dated as of
September 25, 1997.
99.1 Purchase Agreement, dated as of September 11,
1997, by and among SLM Funding, the Interim
Eligible Lender Trustee and Sallie Mae.
99.2 Sale Agreement, dated as of September 11, 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
September 11, 1997, by and among the Trust, Sallie
Mae, SLM Funding, the Eligible Lender Trustee, the
Servicer and the Indenture Trustee.
Page 3 of 7
Exhibit Index appears on Page 6
<PAGE>
99.4 Servicing Agreement, dated as of September 11,
1997, by and among the Servicer, Sallie Mae, the
Trust, the Eligible Lender Trustee and the
Indenture Trustee.
99.5 Paying Agent Agreement, dated as of September 11,
1997, by and among the Eligible Lender Trustee,
the Agent, and the Administrator.
Page 4 of 7
Exhibit Index appears on Page 6
<PAGE>
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: September 25, 1997
SLM FUNDING CORPORATION
By: /s/ ROBERT R. LEVINE
---------------------------
Name: Robert R. Levine
Title: Chief Financial Officer
Page 5 of 7
Exhibit Index appears on Page 6
<PAGE>
INDEX TO EXHIBIT
Sequentially
Exhibit Numbered
Number Exhibit Page
------ ------- ----
1.1 Pricing Agreement relating to
Student-Loan Backed Notes,
dated September 4, 1997, by and
among SLM Funding, Sallie
Mae and the Underwriter, on
behalf of each of the underwriters
named on the Schedule 1 thereto.
1.2 Pricing Agreement relating to
Student-Loan Backed
Certificates, dated September 4, 1997,
by and among SLM Funding, Sallie Mae
and the Underwriter, on behalf
of each of the underwriters
named on Schedule 1 thereto.
1.3 Underwriting Agreement relating
to Student-Loan Backed Notes, dated
September 4, 1997, by and among SLM
Funding, Sallie Mae and the Underwriter,
on behalf of each of the underwriters
named on Schedule 1 thereto.
1.4 Underwriting Agreement relating
to Student-Loan Backed Certificates,
dated September 4, 1997, by and among
SLM Funding, Sallie Mae and the
Underwriter, on behalf of each of
the underwriters named on Schedule
1 thereto.
4.1 Trust Agreement, dated as of
September 1, 1997, by and between SLM
Funding and the Eligible Lender Trustee.
4.2 Indenture, dated as of September 1, 1997,
by and among the Trust, the
Eligible Lender Trustee and the
Indenture Trustee.
Page 6 of 7
Exhibit Index appears on Page 6
<PAGE>
INDEX TO EXHIBIT (cont.)
Sequentially
Exhibit Numbered
Number Exhiit Page
------ ------ ----
23.1 Consent of Marianne M. Keler, Esq.,
dated as of September 25, 1997.
23.2 Consent of Cadwalader, Wickersham &
Taft, dated as of September 25, 1997.
23.3 Consent of Shearman & Sterling, dated
as of September 25, 1997.
99.1 Purchase Agreement, dated as of
September 11, 1997, by and among SLM
Funding, the Interim Eligible
Lender Trustee and Sallie Mae.
99.2 Sale Agreement, dated as of
September 11, 1997, by and among
SLM Funding, the Interim
Eligible Lender Trustee and
Sallie Mae.
99.3 Administration Agreement
Supplement, dated as of September 11,
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 September 11, 1997, by and
among the Servicer, Sallie Mae,
the Trust, the Eligible Lender
Trustee and the Indenture Trustee.
99.5 Paying Agent Agreement, dated as of
September 11, 1997, by and among the
Eligible Lender Trustee, the Agent, and
the Administrator.
Page 7 of 7
Exhibit Index appears on Page 6
Exhibit 1.1
Pricing Agreement
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J.P. Morgan Securities Inc.
As Representatives of the several
Underwriters named on Schedule I hereto,
c/o 60 Wall Street
New York, New York 10260
September 4, 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
September 4, 1997 (the "Underwriting Agreement"), between the Company and Sallie
Mae, on the one hand, and J.P. Morgan Securities Inc., on the other hand, that
the Company will cause the trust (the "Trust") formed pursuant to the Trust
Agreement dated as of September 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 September 1, 1997 (the
"Indenture"), between the Trust and Bankers Trust Company, 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
<PAGE>
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
September 11, 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 10 counterparts hereof, and upon acceptance hereof
by you, on behalf of each of
2
<PAGE>
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/ MARK G. OVEREND
-------------------------------
Name: Mark G. Overend
Title: Vice President and Chief
Financial Officer
Student Loan Marketing Association
By: /s/ SOMSAK CHIVAVIBUL
-------------------------------
Name: Somsak Chivavibul
Title: Treasurer
3
<PAGE>
Accepted as of the date hereof:
J.P. Morgan Securities Inc.
By: /s/ PEGGY WALLACE
---------------------
Name: Peggy Wallace
Title: Vice President
On behalf of each of the Underwriters
4
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount of Designated Securities to be Purchased
Underwriter Class A-1 Class A-2
----------- --------- ---------
<S> <C> <C>
J.P. Morgan Securities Inc. $242,850,000 $171,500,000
Deutsche Morgan Grenfell Inc. $242,700,000 $171,400,000
Education Securities, Inc $242,700,000 $171,400,000
Lehman Brothers Inc. $242,700,000 $171,400,000
Merrill Lynch, Pierce, Fenner & Smith $242,700,000 $171,400,000
Incorporated
Morgan Stanley & Co. Incorporated $242,700,000 $171,400,000
------------ ------------
Total $1,456,350,000 $1,028,500,000
============== ==============
</TABLE>
<PAGE>
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: $1,456,350,000
Class A-2: $1,028,500,000
Price to Public of each Class:
Class A-1: 100.00%
Class A-2: 100.00%
Purchase Price by Underwriters of each Class:
Class A-1: 99.775%
Class A-2: 99.725%
Specified funds for payment of purchase price: Same Day Funds
Indenture: Indenture, dated as of September 1, 1997, among Bankers Trust
Company, as Indenture Trustee, the SLM Student Loan Trust 1997-3, and Chase
Manhattan Bank USA, National Association, as Eligible Lender Trustee.
Maturity:
Class A-1: April 2006 Distribution Date
Class A-2: October 2010 Distribution Date
Interest Rate:
Class A-1: T-Bill Rate plus 0.60%
Class A-2: T-Bill Rate plus 0.64%
Form of Designated Securities: Book-Entry (DTC)
Time of Delivery: September 11, 1997
<PAGE>
Closing location for delivery of Designated Securities:
Student Loan Marketing Association
11600 Sallie Mae Drive
Reston, VA 20193
Names and addresses of Representatives:
Designated Representatives: J.P. Morgan Securities Inc.
Address for Notices, etc.: J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Attn: PeggyAnn Wallace
-2-
Exhibit 1.2
Pricing Agreement
J.P. Morgan Securities Inc.
As Representatives of the several
Underwriters named on Schedule I hereto,
c/o 60 Wall Street
New York, New York 10260
September 4, 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
September 4, 1997 (the "Underwriting Agreement"), between the Company and Sallie
Mae, on the one hand, and J.P. Morgan Securities Inc., on the other hand, that
the Company will cause the trust (the "Trust") formed pursuant to the Trust
Agreement dated as of September 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.
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.
<PAGE>
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
September 11, 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) (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
2
<PAGE>
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/ Mark G. Overend
-------------------------------
Name: Mark G. Overend
Title: Vice President and Chief
Financial Officer
Student Loan Marketing Association
By: /s/ Somsak Chivavibul
-------------------------------
Name: Somsak Chivavibul
Title: Treasurer
3
<PAGE>
Accepted as of the date hereof:
J.P. Morgan Securities Inc.
By: /s/ Peggy Wallace
---------------------
Name: Peggy Wallace
Title: Vice President
On behalf of each of the Underwriters
4
<PAGE>
SCHEDULE I
Amount of Designated Securities to be Purchased
Underwriter Certificates
----------- ------------
J.P. Morgan Securities Inc. $15,150,000
Deutsche Morgan Grenfell Inc. $15,000,000
Education Securities, Inc $15,000,000
Lehman Brothers Inc. $15,000,000
Merrill Lynch, Pierce, Fenner & $15,000,000
Smith Incorporated
Morgan Stanley & Co. Incorporated $15,000,000
-----------
Total $90,150,000
===========
<PAGE>
SCHEDULE II
Title of each Class of Designated Securities:
Floating Rate Student Loan-Backed Certificates
Aggregate amount of Designated Securities: $90,150,000
Price to Public per Certificate: 100.00%
Purchase Price by Underwriters per Certificate:
$90,150,000 of Floating Rate Student Loan-Backed Certificates: 99.6315%
Specified funds for payment of purchase price: Same Day Funds
Trust Agreement: Trust Agreement, dated September 1, 1997, among SLM Funding
Corporation, as Seller, and Chase Manhattan Bank USA, National Association, as
Eligible Lender Trustee
Maturity: October 2012 Distribution Date
Return Rate: T-Bill Rate plus 0.83%
Form of Designated Securities: Book-Entry (DTC)
Time of Delivery: September 11, 1997
<PAGE>
Closing location for delivery of Designated Securities:
Student Loan Marketing Association
11600 Sallie Mae Drive
Reston, VA 20193
Names and addresses of Representatives:
Designated Representatives: J.P. Morgan Securities Inc.
Address for Notices, etc.: J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
Attn: PeggyAnn Wallace
-2-
Exhibit 1.3
SLM Funding Corporation
Student Loan-Backed Notes
-------------------
Underwriting Agreement
September 4, 1997
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
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 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
<PAGE>
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 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
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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 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
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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 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
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<PAGE>
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 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,
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<PAGE>
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;
(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
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<PAGE>
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
(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
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<PAGE>
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.
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
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<PAGE>
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 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
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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.
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
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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,
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 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
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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 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 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 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
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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;
(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
13
<PAGE>
(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 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
14
<PAGE>
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
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
15
<PAGE>
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.
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
16
<PAGE>
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 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
17
<PAGE>
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
Student Loan Marketing Association
11600 Sallie Mae Drive
Reston, VA 20193
Facsimile: (703) 810-7655
Facsimile: (703) 810-7655
Attention: Mark G. Overend
Vice President and Chief Financial Officer
18
<PAGE>
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>
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/ MARK G. OVEREND
--------------------------------
Name: Mark G. Overend
Title: Vice President and Chief
Financial Officer
Student Loan Marketing Association
By: /s/ SOMSAK CHIVAVIBUL
--------------------------------
Name: Somsak Chivavibul
Title: Treasurer
Accepted as of the date hereof:
J.P. Morgan Securities Inc.
By: /s/ PEGGY WALLACE
----------------------
Name: Peggy Wallace
Title: Vice President
20
<PAGE>
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>
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 [Closing Date], 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.
Very truly yours,
2
<PAGE>
SLM Funding Corporation
By:
------------------------------
Name:
Title:
Student Loan Marketing Association
By:
------------------------------
Name:
Title:
3
<PAGE>
Accepted as of the date hereof:
[___________________]
By:
------------------------------
[___________________]
By:
------------------------------
Name:
Title:
On behalf of each of the Underwriters
4
<PAGE>
SCHEDULE I
Principal Amount of Designated Securities to be Purchased
Underwriter Class ___ Class ___ Class ___
<PAGE>
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>
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 1997-2]
<PAGE>
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 1997-2]
<PAGE>
ANNEX II(c)
Eligible Lender Trustee: Counsel Opinion
[Opinion to be issued substantially in the form provided for
SLM Student Loan Trust 1997-2]
<PAGE>
ANNEX II(d)
Indenture Trustee: Counsel Opinion
[Opinion to be issued substantially in the form provided for
SLM Student Loan Trust 1997-2]
<PAGE>
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:
Principal Date from Which
Delivery Date Amount Interest Accrues
------------- ------ ----------------
....................., 19.. $............. ....................., 19..
....................., 19.. $............. ....................., 19..
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 a bank
account specified by the Company, on [the] [such] Delivery Date upon delivery to
the
<PAGE>
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>
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
Exhibit 1.4
SLM Funding Corporation
Student Loan-Backed Certificates
------------------
Underwriting Agreement
September 4, 1997
J.P. Morgan Securities Inc.
60 Wall Street
New York, New York 10260
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
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
<PAGE>
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 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
2
<PAGE>
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 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
3
<PAGE>
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
4
<PAGE>
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 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 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,
5
<PAGE>
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;
(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
6
<PAGE>
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
(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
7
<PAGE>
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.
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
8
<PAGE>
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 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
9
<PAGE>
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.
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
10
<PAGE>
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,
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 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
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<PAGE>
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 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 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 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
12
<PAGE>
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;
(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
13
<PAGE>
(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 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
14
<PAGE>
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
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
15
<PAGE>
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.
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
16
<PAGE>
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 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
17
<PAGE>
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
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
18
<PAGE>
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>
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/ MARK G. OVEREND
-------------------------------
Name: Mark G. Overend
Title: Vice President and Chief
Financial Officer
Student Loan Marketing Association
By: /s/ SOMSAK CHIVAVIBUL
-------------------------------
Name: Somsak Chivavibul
Title: Treasurer
Accepted as of the date hereof:
J.P. Morgan Securities Inc.
By: /s/ PEGGY WALLACE
-----------------------
Name: Peggy Wallace
Title: Vice President
20
<PAGE>
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>
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>
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>
Accepted as of the date hereof:
[____________________]
By: ......................................
[____________________]
By: ......................................
Name:
Title:
On behalf of each of the Underwriters
4
<PAGE>
SCHEDULE I
Amount of Designated Securities to be Purchased
Underwriter Class ___ Class ___ Class ___
<PAGE>
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>
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 1997-2]
<PAGE>
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 1997-2]
<PAGE>
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 1997-2]
<PAGE>
ANNEX II(d)
Indenture Trustee: Counsel Opinion
[Opinion to be issued substantially in the form provided for
SLM Student Loan Trust 1997-2]
<PAGE>
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:
Date from Which
Delivery Date Amount Interest Accrues
------------- ------ ----------------
....................., 19.. $............. ....................., 19..
....................., 19.. $............. ....................., 19..
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 a bank
account specified by the Company, on [the] [such] Delivery Date upon delivery to
the
<PAGE>
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>
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
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 September 1, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
<S> <C> <C>
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
i
<PAGE>
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 Note-
holders, 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
ii
<PAGE>
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
</TABLE>
iii
<PAGE>
Annex 1 to Trust Agreement
Page
----
iv
<PAGE>
TRUST AGREEMENT dated as of September 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 1997-3", 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>
(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
2
<PAGE>
the intention of the parties hereto that the Trust constitute a business trust
under Delaware law and that this Agreement 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
3
<PAGE>
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.
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
4
<PAGE>
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 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
5
<PAGE>
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 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
6
<PAGE>
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.
(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.
7
<PAGE>
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 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
8
<PAGE>
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 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
9
<PAGE>
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.
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.
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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 give prompt written notice to the Depositor and to
the Certificateholders of any change in the
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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.
SECTION III.10 Book-Entry Certificates. The Trust Certificates, upon
original issuance, will be issued in the form
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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
BookEntry 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 Certificates and has delivered such
instructions to the Eligible Lender Trustee.
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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
Administration Agreement, the Indenture or this Agreement, as
applicable.
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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 amounts payable in respect of
Certificateholders'
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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.
SECTION V.2 Method of Payment. Subject to Section 9.1(c), distributions
required to be made to Certificateholders on any
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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 required or appropriate under any applicable state
or Federal statute or rule or regulation thereunder so as to maintain the
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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 share of Losses and
deductions (and any Liquidating Loss), including any special
allocation pursuant to Section 2.10(b).
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(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 $2,484,850,000. 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 Department with respect to
any Interest Subsidy Payments and Special Allowance Payments relating to the
Trust Student Loans.
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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 is contrary to the terms hereof or of any other
Basic Document or is otherwise contrary to law.
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(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 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.
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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 Estate or for or in respect of the validity or
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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 Trustee on the related Determination Date
pursuant to Section 2.9 of the Administration Agreement.
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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 to be signed by the proper party or
parties. The Eligible Lender Trustee may accept a certified
copy of
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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 and the Eligible Lender Trustee assumes no responsibility for the
correctness thereof. The Eligible Lender Trustee makes no
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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 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.
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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 Certificate Paying
Agent for payment of the final distribution and cancellation,
shall be given promptly
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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 Business Trust
Act, in the event that an Insolvency Event shall occur with respect to the
Depositor, (x) the Trust created
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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 Rating Agency that the
appointment of such corporation or association to serve as Eligible Lender
Trustee will not result
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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 Lender Trustee and such separate
trustee or co-trustee jointly (it being understood that such separate
trustee or
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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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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 execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Eligible Lender Trustee may prescribe.
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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 such other address as
shall be designated by such party in a written notice to each
other party.
37
<PAGE>
(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 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,
38
<PAGE>
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.
39
<PAGE>
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/ MICHAEL E. SHEEHAN
---------------------------
Name:
Title:
40
<PAGE>
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 $90,150,000
R-1 CUSIP NO. 78442 GAT 3
SLM STUDENT LOAN TRUST 1997-3
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 $90,150,000
dollars non-assessable, fully-paid, fractional undivided interest in the SLM
Student Loan Trust 1997-3 (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
September 1, 1997 (the "Trust Agreement"), between the Depositor
<PAGE>
and Chase Manhattan Bank USA, National 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 August 25, 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 September 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 January 26,
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 such Distribution Date pursuant to the Administration
Agreement.
2
<PAGE>
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 0.83% 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.
3
<PAGE>
Each Certificateholder or Certificate Owner, by its acceptance of a
Trust Certificate or, in the case of a 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>
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 1997-3
by CHASE MANHATTAN BANK USA,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as
Eligible Lender Trustee.
By:______________________________
Authorized Signatory
Date: September 11, 1997
5
<PAGE>
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: September 11, 1997
6
<PAGE>
[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>
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
account described in Section 408(a) of the Code or a
8
<PAGE>
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>
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>
EXHIBIT B
TO THE TRUST AGREEMENT
FORM OF CERTIFICATE DEPOSITORY AGREEMENT
<PAGE>
ANNEX 1
TO THE TRUST AGREEMENT
DATED AS OF SEPTEMBER 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>
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>
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 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.
3
<PAGE>
================================================================================
INTERIM TRUST AGREEMENT
between
SLM FUNDING CORPORATION,
as Seller
and
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION
not in its individual capacity but solely
as Interim Eligible Lender Trustee
Dated as of September 1, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
Definitions and Usage............................................. 1
ARTICLE II
Appointment of Interim Eligible Lender Trustee.................... 1
SECTION 2.1 Appointment of Interim Eligible
Lender Trustee....................................... 1
SECTION 2.2 Declaration of Trust................................. 2
SECTION 2.3 Title to Interim Trust Loans......................... 2
ARTICLE III
Representations and Warranties of the Seller...................... 2
ARTICLE IV
Authority and Duties of Interim Eligible Lender Trustee
SECTION 4.1 General Authority.................................... 3
SECTION 4.2 General Duties....................................... 3
SECTION 4.3 No Duties Except as Specified in this
Agreement............................................ 3
SECTION 4.4 No Action Except Under Specified
Documents............................................ 4
SECTION 4.5 Restrictions................................... ..... 4
ARTICLE V
Concerning the Interim Eligible Lender Trustee
SECTION 5.1 Acceptance of Trust and Duties...................... 4
SECTION 5.2 Representations and Warranties...................... 5
SECTION 5.3 Not Acting in Individual Capacity................... 6
SECTION 5.4 Interim Eligible Lender Trustee
Not Liable for the Interim
Trust Loans ........................................ 6
i
<PAGE>
ARTICLE VI
Compensation of Interim Eligible Lender Trustee................... 6
ARTICLE VII
Termination of Interim Trust Agreement............................ 6
ARTICLE VIII
Successor Interim Eligible Lender Trustees....................... 7
SECTION 8.1 Eligibility Requirements for Interim
Eligible Lender Trustee.............................. 7
SECTION 8.2 Resignation or Removal of Interim
Eligible Lender Trustee.............................. 7
SECTION 8.3 Successor Interim Eligible Lender
Trustee.............................................. 8
SECTION 8.4 Merger or Consolidation of Interim
Eligible Lender Trustee.............................. 8
ARTICLE IX
Miscellaneous
SECTION 9.1 Supplements and Amendments........................... 9
SECTION 9.2 Notices.............................................. 10
SECTION 9.3 Severability......................................... 10
SECTION 9.4 Separate Counterparts................................ 10
SECTION 9.5 Successors and Assigns............................... 10
SECTION 9.6 Headings............................................. 11
SECTION 9.7 Governing Law........................................ 11
ii
<PAGE>
INTERIM TRUST AGREEMENT dated as of September 1, 1997, between SLM
FUNDING CORPORATION, a Delaware corporation (the "Seller") and CHASE MANHATTAN
BANK USA, NATIONAL ASSOCIATION, a national banking association, not in its
individual capacity but solely as Interim Eligible Lender Trustee (the "Interim
Eligible Lender Trustee").
WHEREAS, the Seller is a special purpose corporation established for
the purpose of purchasing Loans from the Student Loan Marketing Association for
immediate resale to special purpose trusts established for the purpose of
financing the purchase of such Loans; and
WHEREAS, the Seller has entered into the Purchase Agreement with the
Student Loan Marketing Association and the Sale Agreement with SLM Student Loan
Trust 1997-3 for the purpose of effecting such a purchase and resale; and
WHEREAS, the Seller is not an "eligible lender" within the meaning of
Section 435(d) of the Higher Education Act for the purpose of holding legal
title to the Loans to be purchased under the Purchase Agreement and any Trust
Student Loans required to be repurchased from the Trust pursuant to the Sale
Agreement;
WHEREAS, the Interim Eligible Lender Trustee is an "eligible lender"
within the meaning of Section 435(d) of the Higher Education Act and is willing
to hold legal title to such Loans and any such Trust Student Loans
(collectively, the "Interim Trust Loans") on behalf and for the benefit of the
Seller;
NOW, THEREFORE, the Seller and the Interim Eligible Lender Trustee
hereby agree as follows:
ARTICLE I
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
Appointment of Interim Eligible Lender Trustee
SECTION 2.1 Appointment of Interim Eligible Lender Trustee. The Seller
hereby appoints the Interim Eligible Lender Trustee, effective as of the date
hereof, as trustee, to have all the rights, powers and duties set forth herein,
cluding, without limitation:
<PAGE>
a. to hold legal title to the Interim Trust Loans on behalf and
for the benefit of the Seller;
b. to enter into and perform its obligations as the Interim
Eligible Lender Trustee under the Purchase Agreement, the Sale
Agreement and this Agreement; and
c. 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.
SECTION 2.2 Declaration of Trust. The Interim Eligible Lender Trustee
hereby declares that it will hold the Interim Trust Loans in trust upon and
subject to the conditions set forth herein for the use and benefit of the
Seller, subject to the obligations of the Interim Eligible Lender Trustee under
the Purchase Agreement and the Sale Agreement. Effective as of the date hereof,
the Interim Eligible Lender Trustee shall have all rights, powers and duties set
forth herein with respect to accomplishing the purposes of this Agreement.
SECTION 2.3 Title to Interim Trust Loans. Legal title to all of the
Interim Trust Loans shall be vested at all times in the Interim Eligible Lender
Trustee on behalf of and for the benefit of the Seller.
ARTICLE III
Representations and Warranties of the Seller
The Seller hereby represents and warrants to the Interim Eligible
Lender Trustee that:
1. The Seller 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.
2. The Seller has the corporate power and authority to execute
and deliver this Agreement and to carry out its terms; and the
execution, delivery and performance of this Agreement has been
duly authorized by the Seller by all necessary corporate
action.
2
<PAGE>
3. This Agreement constitutes a legal, valid and binding
obligation of the Seller 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.
4. 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 certificate of
incorporation or by-laws of the Seller, or any indenture,
agreement or other instrument to which the Seller 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 other than as contemplated by the Basic
Documents); nor violate any law or any order, rule or
regulation applicable to the Seller of any court or of any
Federal or state regulatory body, administrative agency or
other governmental instrumentality having jurisdiction over
the Seller or its properties.
ARTICLE IV
Authority and Duties of Interim Eligible Lender Trustee
SECTION 4.1 General Authority. The Interim Eligible Lender Trustee is
authorized and directed to execute and deliver the Purchase Agreement, the Sale
Agreement and this Agreement and each certificate or other document attached as
an exhibit to or contemplated by such agreements, in each case, in such form as
the Seller shall approve as evidenced conclusively by the Interim Eligible
Lender Trustee's execution thereof. The Interim Eligible Lender Trustee is also
authorized and directed on behalf and for the benefit of the Seller to acquire
and hold legal title to the Interim Trust Loans and to take all actions required
of the Interim Eligible Lender Trustee pursuant to the Purchase Agreement, the
Sale Agreement and this Agreement.
SECTION 4.2 General Duties. It shall be the duty of the Interim
Eligible Lender Trustee to discharge (or cause to be discharged) all its
responsibilities as the Interim Eligible Lender Trustee pursuant to the terms of
the Purchase Agreement, the Sale Agreement and this Agreement.
<PAGE>
SECTION 4.3 No Duties Except as Specified in this Agreement. The
Interim 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 Interim Trust Loans, or to otherwise take or refrain
from taking any action under, or in connection with, any document contemplated
hereby to which the Interim Eligible Lender Trustee is a party, except as
expressly provided by the terms of the Purchase Agreement, the Sale Agreement or
this Agreement; and no implied duties or obligations shall be read into this
Agreement, the Purchase Agreement or the Sale Agreement against the Interim
Eligible Lender Trustee.
SECTION 4.4 No Action Except Under Specified Documents. The Interim
Eligible Lender Trustee shall not otherwise deal with the Interim Trust Loans
except in accordance with the powers granted to and the authority conferred upon
the Interim Eligible Lender Trustee pursuant to this Agreement, the Purchase
Agreement and the Sale Agreement.
SECTION 4.5 Restrictions. The Interim Eligible Lender Trustee shall not
take any action that is inconsistent with the purposes of the Trust set forth in
the Basic Documents.
ARTICLE V
Concerning the Interim Eligible Lender Trustee
SECTION 5.1 Acceptance of Trust and Duties. The Interim Eligible Lender
Trustee accepts the trust hereby created and agrees to perform its duties
hereunder with respect to such trust but only upon the terms of this Agreement.
The Interim Eligible Lender Trustee shall not be answerable or accountable
hereunder or under the Purchase Agreement or the Sale Agreement 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 5.2 expressly made by the Interim Eligible Lender Trustee. In
particular, but not by way of limitation (and subject to the exceptions set
forth in the preceding sentence):
1. the Interim Eligible Lender Trustee shall not be liable for
any error of judgment made by a responsible officer of the
Interim Eligible Lender Trustee;
2. no provision of this Agreement, the Purchase Agreement or the
Sale Agreement shall require the Interim 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 the Purchase Agreement or the Sale
Agreement, if the Interim 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; and
4
<PAGE>
3. the Interim 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 Seller or for
the form, character, genuineness, sufficiency, value or
validity of any of the Interim Trust Loans or for or in
respect of the validity or sufficiency of the Purchase
Agreement or the Sale Agreement.
SECTION 5.2 Representations and Warranties. The Interim Eligible Lender
Trustee hereby represents and warrants to the Seller that:
1. 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 the Purchase Agreement, the Sale
Agreement and this Agreement.
2. It has taken all corporate action necessary to authorize the
execution and delivery by it of the Purchase Agreement, the
Sale Agreement and this Agreement, and the Purchase Agreement,
the Sale Agreement and this Agreement have been executed and
delivered by one of its officers who is duly authorized to
execute and deliver the same on its behalf.
3. Neither the execution nor the delivery by it of the Purchase
Agreement, the Sale Agreement or this Agreement, nor the
consummation by it of the transactions contemplated thereby or
hereby nor compliance by it with any of the terms or
provisions thereof or 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.
5
<PAGE>
4. 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 Interim Trust
Loans as contemplated by this Agreement, the Purchase
Agreement and the Sale Agreement.
SECTION 5.3 Not Acting in Individual Capacity. Except as provided in
this Article V, in accepting the trust hereby created, Chase Manhattan Bank USA,
National Association, acts solely as Interim Eligible Lender Trustee hereunder
and not in its individual capacity.
SECTION 5.4 Interim Eligible Lender Trustee Not Liable for the Interim
Trust Loans. The Interim Eligible Lender Trustee makes no representations as to
the validity or sufficiency of this Agreement, the Purchase Agreement or the
Sale Agreement, or of any Interim Trust Loan or related documents. The Interim
Eligible Lender Trustee shall at no time have any responsibility for or with
respect to the sufficiency of the Interim Trust Loans; the validity or
completeness of the assignment to the Interim Eligible Lender Trustee of legal
title to any Interim Trust Loan on behalf and for the benefit of the Seller; the
performance or enforcement (except as expressly set forth in the Purchase
Agreement or the Sale Agreement) of any Interim Trust Loan; the compliance by
the Seller 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 Interim
Eligible Lender Trustee.
ARTICLE VI
Compensation of Interim Eligible Lender Trustee
The Interim 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 Seller and the Interim Eligible Lender Trustee, and the
Interim Eligible Lender Trustee shall be entitled to be reimbursed by the
Seller, to the extent provided in such separate agreement, for its other
reasonable expenses hereunder.
6
<PAGE>
ARTICLE VII
Termination of Interim Trust Agreement
This Agreement (other than Article VI) and the trust created hereby
shall terminate and be of no further force or effect upon the earlier of (i) the
termination of the Trust puruant to Section 9.1 of the Trust Agreement and (ii)
the expiration of 21 years from the death of the last survivor of the
descendants of Joseph P. Kennedy, the late Ambassador of the United States to
the Court of St. James, living on the date hereof.
ARTICLE VIII
Successor Interim Eligible Lender Trustees
SECTION 8.1 Eligibility Requirements for Interim Eligible Lender
Trustee. The Interim 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 Interim Trust Loans on behalf and for the benefit of the Seller, with a
valid lender identification number with respect to the Interim Trust Loans from
the Department; and (ii) being authorized to exercise corporate trust powers and
hold legal title to the Interim Trust Loans. In case at any time the Interim
Eligible Lender Trustee shall cease to be eligible in accordance with the
provisions of this Section, the Interim Eligible Lender Trustee shall resign
immediately in the manner and with the effect specified in Section 8.2.
SECTION 8.2 Resignation or Removal of Interim Eligible Lender Trustee.
The Interim Eligible Lender Trustee may at any time resign and be discharged
from the trust hereby created by giving written notice thereof to the Seller.
Upon receiving such notice of resignation, the Seller shall promptly appoint a
successor Interim Eligible Lender Trustee meeting the eligibility requirements
of Section 8.1 by written instrument, in duplicate, one copy of which instrument
shall be delivered to the resigning Interim Eligible Lender Trustee and one copy
to the successor Interim Eligible Lender Trustee. If no successor Interim
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 Interim Eligible Lender Trustee may petition any court of competent
jurisdiction for the appointment of a successor Interim 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 Interim Eligible
Lender Trustee from any obligations otherwise imposed on it under this
Agreement, the Purchase Agreement or the Sale Agreement until such successor has
in fact assumed such appointment.
7
<PAGE>
If at any time the Interim Eligible Lender Trustee shall cease to be or
shall be likely to cease to be eligible in accordance with the provisions of
Section 8.1 and shall fail to resign after written request therefor by the
Seller, then the Seller may remove the Interim Eligible Lender Trustee. If the
Seller shall remove the Interim Eligible Lender Trustee under the authority of
the immediately preceding sentence, the Seller shall promptly appoint a
successor Interim Eligible Lender Trustee by written instrument, in duplicate,
one copy of which instrument shall be delivered to the outgoing Interim Eligible
Lender Trustee so removed and one copy to the successor Interim Eligible Lender
Trustee together with payment of all fees owed to the outgoing Interim Eligible
Lender Trustee.
Any resignation or removal of the Interim Eligible Lender Trustee and
appointment of a successor Interim Eligible Lender Trustee pursuant to any of
the provisions of this Section shall not become effective until acceptance of
appointment by the successor Interim Eligible Lender Trustee pursuant to Section
8.3 and payment of all fees and expenses owed to the outgoing Interim Eligible
Lender Trustee.
SECTION 8.3 Successor Interim Eligible Lender Trustee. Any successor
Interim Eligible Lender Trustee appointed pursuant to Section 8.2 shall execute,
acknowledge and deliver to the Seller and to its predecessor Interim Eligible
Lender Trustee an instrument accepting such appointment under this Agreement,
and thereupon the resignation or removal of the predecessor Interim Eligible
Lender Trustee shall become effective and such successor Interim 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 Interim Eligible
Lender Trustee. The predecessor Interim Eligible Lender Trustee shall upon
payment of its fees and expenses deliver to the successor Interim Eligible
Lender Trustee all documents, statements, moneys and properties held by it under
this Agreement and shall assign, if permissible, to the successor Interim
Eligible Lender Trustee any lender identification number obtained from the
Department with respect to the Interim Trust Loans; and the Seller and the
predecessor Interim 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 Interim Eligible Lender
Trustee all such rights, powers, duties and obligations.
8
<PAGE>
No successor Interim 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
8.1.
SECTION 8.4 Merger or Consolidation of Interim Eligible Lender Trustee.
Any corporation into which the Interim 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 Interim Eligible
Lender Trustee shall be a party, or any corporation succeeding to all or
substantially all the corporate trust business of the Interim 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 Interim Eligible Lender Trustee
hereunder; provided that such corporation shall be eligible pursuant to Section
8.1.
ARTICLE IX
Miscellaneous
SECTION 9.1 Supplements and Amendments. This Agreement may be amended
by the Seller and the Interim 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 Seller and
the Interim 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.
9
<PAGE>
Promptly after the execution of any such amendment or consent, the
Interim 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 execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Interim Eligible Lender Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the Interim
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 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 9.2 Notices. 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 Interim
Eligible Lender Trustee shall be deemed given only upon actual receipt by the
Interim Eligible Lender Trustee), if to the Interim Eligible Lender Trustee,
addressed to its Corporate Trust Office; if to the Seller, addressed to SLM
Funding Corporation, 777 Twin Creek Drive, Killeen, Texas 76543, or, as to each
party, at such other address as shall be designated by such party in a written
notice to each other party.
SECTION 9.3 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.
10
<PAGE>
SECTION 9.4 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 9.5 Successors and Assigns. All covenants and agreements
contained herein shall be binding upon and to the benefit of, the Seller and its
successors and the Interim Eligible Lender Trustee and its successors, all as
herein provided.
SECTION 9.6 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 9.7 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.
11
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Interim 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 Interim
Eligible Lender Trustee,
By /s/ J.J. CASHIN
------------------------------
Name: J.J. Cashin
Title:
SLM FUNDING CORPORATION,
Seller,
By /s/ MICHAEL E. SHEEHAN
------------------------------
Name: Michael E. Sheehan
Title:
12
Exhibit 4.2
================================================================================
INDENTURE
among
SLM STUDENT LOAN TRUST 1997-3,
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 September 1, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
ARTICLE I
Definitions and Usage
<S> <C> <C>
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
i
<PAGE>
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
ii
<PAGE>
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..................................50
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
iii
<PAGE>
SECTION 7.2 Preservation of Information; Communications to
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..........................54
SECTION 8.4 Release of Indenture Trust Estate..............................55
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...............................60
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.....................................................61
SECTION 10.2 Form of Redemption Notice......................................61
SECTION 10.3 Notes Payable on Redemption Date...............................62
iv
<PAGE>
ARTICLE XI
Miscellaneous
SECTION 11.1 Compliance Certificates and Opinions, etc. ................... 62
SECTION 11.2 Form of Documents Delivered to Indenture Trustee...............64
SECTION 11.3 Acts of Noteholders..........................................66
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........................68
SECTION 11.7 Conflict with Trust Indenture Act..............................68
SECTION 11.8 Effect of Headings and Table of Contents.......................69
SECTION 11.9 Successors and Assigns.........................................69
SECTION 11.10 Separability...................................................69
SECTION 11.11 Benefits of Indenture..........................................69
SECTION 11.12 Legal Holidays.................................................69
SECTION 11.13 Governing Law..................................................69
SECTION 11.14 Counterparts...................................................70
SECTION 11.15 Recording of Indenture.........................................70
SECTION 11.16 Trust Obligations..............................................70
SECTION 11.17 No Petition....................................................70
SECTION 11.18 Inspection.....................................................71
v
<PAGE>
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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INDENTURE dated as of September 1, 1997, among SLM
STUDENT LOAN TRUST 1997-3, 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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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
$2,484,850,000. 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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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 promptly appoint a successor
or, if it elects not to make such an appointment, assume the duties of Note
Registrar.
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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 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.
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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 indemnity
provided therefor to the extent of any loss, damage, cost or expense incurred by
the Issuer or the Indenture Trustee in connection therewith.
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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, 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.
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(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 Carryover 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.
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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 ss.ss. 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 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:
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(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 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.
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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
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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 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 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.
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(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 Loans, the Issuer shall take
all reasonable steps available to it to enforce its rights under the Basic
Documents in respect of such failure.
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(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
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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. 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
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amendment, modification, supplement, termination, waiver or surrender of, the
terms 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 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.
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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 Commission (and any other appropriate Person) required by the Exchange
Act in connection with the Notes;
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(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 1997-3 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 1997-3 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, 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.
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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
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:
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(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
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fails to provide notice to the Seller in accordance with this Section 4.4. The
Indenture 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 when the same becomes due and payable, and such default shall
continue for a period of five days; or
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(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 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.
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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
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other applicable Federal or state bankruptcy, insolvency or other similar law,
or in case 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;
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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 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):
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(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 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
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distributable to the Certificateholders plus the proceeds of the sale or
liquidation of the 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;
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(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;
(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 and remedies of the Indenture
Trustee and the Noteholders shall continue as though no such Proceeding had been
instituted.
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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% of the Outstanding Amount of the Notes to sell or
liquidate the Indenture Trust Estate shall be of no force and effect; and
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(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
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the provisions of this Section shall not apply to (a) any suit instituted by the
Indenture 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,
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remedies, powers and privileges lawfully available to the Issuer under or in
connection with the Sale Agreement, 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.
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(b) Except during the continuance of an Event of Default:
(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.
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(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 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.
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(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; 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 ss.
313(a) if required by said section. The Indenture Trustee shall also comply with
TIA ss. 313(b). A copy of each such report required pursuant to TIA ss. 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
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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 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;
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(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.
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:
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(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 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.
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SECTION 6.11 Eligibility; Disqualification. The Indenture
Trustee shall at all times satisfy the requirements of TIA ss. 310(a) and the
requirements of an "eligible lender" under 20 USC ss.1085(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 Indenture Trustee shall comply with TIA ss.
310(b), including the optional provision permitted by the second sentence of TIA
ss. 310(b)(9); provided, however, that there shall be excluded from the
operation of TIA ss. 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 ss. 310(b)(1) are met.
SECTION 6.12 Preferential Collection of Claims Against Issuer.
The Indenture Trustee shall comply with TIA ss. 311(a), excluding any creditor
relationship listed in TIA ss. 311(b). An Indenture Trustee who has resigned or
been removed shall be subject to TIA ss. 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.
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(a) Noteholders may communicate pursuant to TIA ss. 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 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 ss. 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 ss. 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;
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(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
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA ss. 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.
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(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 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
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(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 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.
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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 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 ss.ss.
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.
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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 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;
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(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;
(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.
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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 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;
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(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
(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.
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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.
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.
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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.
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).
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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 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;
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(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.
(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.
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(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
provisions 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
April 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.
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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.
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.
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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.
(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
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(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 1997-3, 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 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.
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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 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 ss.ss. 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.
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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.
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 ss.5-1401 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.
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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, 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
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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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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 1997-3, by CHASE
MANHATTAN BANK USA, NATIONAL ASSOCIATION,
not in its individual capacity but solely as
Eligible Lender Trustee,
by /s/ J. LANCE FRANKE
--------------------------
Name: J. Lance Franke
Title:
CHASE MANHATTAN BANK USA, NATIONAL
ASSOCIATION not in its individual capacity
but solely as Eligible Lender Trustee,
by /s/ J.J. CASHIN
-------------------------
Name: J.J. Cashin
Title:
BANKERS TRUST COMPANY, not in its indi-
vidual capacity but solely as Indenture
Trustee,
by /s/ ALFIA MONASTRA
--------------------------
Name: Alfia Monastra
Title:
72
<PAGE>
APPENDIX A
TO THE INDENTURE
Definitions and Usage
73
<PAGE>
SCHEDULE A
TO THE INDENTURE
Schedule of Trust Student Loans
[See Schedule A to the Bill of Sale
(Attachment B to the Sale Agreement)]
74
<PAGE>
SCHEDULE B
TO THE INDENTURE
Location of Trust Student Loan Files
[See Attachment B to the Servicing Agreement]
75
<PAGE>
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 GAR 7
76
<PAGE>
SLM STUDENT LOAN TRUST 1997-3
FLOATING RATE CLASS A-1 STUDENT LOAN-BACKED NOTES
SLM Student Loan Trust 1997-3, 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
$1,456,350,000 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 September 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 April 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.
77
<PAGE>
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.
78
<PAGE>
[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 January 26,
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 0.60% per
79
<PAGE>
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 office of the Indenture
Trustee's agent appointed for such purposes located in the Borough of Manhattan,
The City of New York.
80
<PAGE>
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 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.
81
<PAGE>
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.
82
<PAGE>
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.
83
<PAGE>
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.
84
<PAGE>
[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 GAS 5
85
<PAGE>
SLM STUDENT LOAN TRUST 1997-3
FLOATING RATE CLASS A-2 STUDENT LOAN-BACKED NOTES
SLM Student Loan Trust 1997-3, 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
$1,028,500,000 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 September 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.
86
<PAGE>
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.
87
<PAGE>
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 1997-3
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: September 11, 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: September 11, 1997
88
<PAGE>
[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 January 26,
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
89
<PAGE>
weighted average of the T-Bill Rates within such Accrual Period plus 0.64% 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 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
90
<PAGE>
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 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
91
<PAGE>
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 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
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Trustee to amend or waive certain terms and conditions set forth in the
Indenture without the consent of holders of the Notes issued thereunder.
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
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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
-------------------------
96
Exhibit 23.1
September 25, 1997
SLM Funding Corporation
777 Twin Creek Drive
Killeen, Texas 76543
Re: SLM Funding Corporation Registration Statement No. 333-24949
Ladies and Gentlemen:
I hereby consent to the use of my name in the Prospectus relating to
the above-referenced Registration Statement filed with the Securities and
Exchange Commission (the "Commission") under the heading "Legal matters." In
giving this consent, I do not hereby admit that I am within the category of
persons whose consent is required under Section 7 of the Securities Act of 1933,
as amended, or rules and regulations of the Commission promulgated thereunder.
Sincerely,
/s/ MARIANNE KELER
---------------------
Marianne Keler
General Counsel
Exhibit 23.2
September 25, 1997
SLM Funding Corporation
777 Twin Creek Drive
Killeen, Texas 76543
Re: SLM Funding Corporation Registration Statement No. 333-24949
Ladies and Gentlemen:
We hereby consent to the use of our name in the Prospectus
relating to the above-referenced Registration Statement filed with the
Securities and Exchange Commission (the "Commission") under the heading "Legal
Matters." In giving this consent, we do not thereby admit that we are within the
category of persons whose consent is required under Section 7 of the Securities
Act of 1933, as amended, or the rules and regulations of the Commission
promulgated thereunder.
Very truly yours,
/s/ CADWALADER, WICKERSHAM & TAFT
---------------------------------
Cadwalader, Wickersham & Taft
Exhibit 23.3
September 25, 1997
SLM Funding Corporation
777 Twin Creek Drive
Killeen, Texas 76543
SLM Funding Corporation Registration Statement No. 333-24949
Ladies and Gentlemen:
We hereby consent to the use of our name in the prospectus
relating to the above-referenced Registration Statement filed with the
Securities and Exchange Commission (the "Commission") under the headings
"Summary Information - Tax Considerations," "Certain Federal Income Tax
Consequences," and "Legal Matters." In giving this consent, we do not thereby
admit that we are within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Commission promulgated thereunder.
Very Truly Yours,
/s/ SHEARMAN & STERLING
------------------------------
Shearman & Sterling
Exhibit 99.1
PURCHASE AGREEMENT MASTER SECURITIZATION TERMS NUMBER 1000
These Purchase Agreement Master Securitization Terms Number 1000
("Master Terms") dated as of September 11, 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 September 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:
<PAGE>
(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,
August 25, 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 _ 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;
(ii) is owned by Sallie Mae and is fully disbursed;
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(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
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(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,
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.
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(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 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.
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<PAGE>
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.
(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.
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(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 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
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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 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, in substantially the form of Attachment C.
(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)
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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.
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
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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;
(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
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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;
(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.
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(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 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.
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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.
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
13
<PAGE>
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 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
14
<PAGE>
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 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.
15
<PAGE>
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 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
16
<PAGE>
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.
17
<PAGE>
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.
18
<PAGE>
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, 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.
19
<PAGE>
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, 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
20
<PAGE>
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.
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
21
<PAGE>
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 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.
22
<PAGE>
STUDENT LOAN MARKETING ASSOCIATION SLM FUNDING CORPORATION
(Seller) (Purchaser)
By: /s/ J. LANCE FRANKE By: /s/ MICHAEL E. SHEEHAN
---------------------- ----------------------
Name: J. Lance Franke Name: Michael E. Sheehan
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: J.J. Cashin
Title:
23
<PAGE>
ATTACHMENT A
PURCHASE AGREEMENT
Dated as of September 11, 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 September 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 August 25, 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 $2,547,303,410.75 (equal to $2,568,562,634.75 (representing the
offering price of the Securities less underwriters' commissions) less
$6,259,224 (representing the Reserve Account Initial Deposit), less
$15,000,000 (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>
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 ASSOCIATION SLM FUNDING CORPORATION
(Seller) (Purchaser)
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>
PURCHASE AGREEMENT NUMBER 1
BLANKET ENDORSEMENT DATED SEPTEMBER 11, 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.
<PAGE>
SELLER
===================================
Student Loan Marketing Association
1050 Thomas Jefferson Street, N.W.
Washington, D.C. 20007
Lender Code: ----------------
By: ----------------------------
(Signature of Authorized
Officer of Seller)
Name:
-------------------------
Title:
------------------------
===================================
PURCHASER
===================================
Chase Manhattan Bank USA,
National Association,
not in its individual capacity
but solely as Interim Eligible
Lender Trustee for the benefit
of the SLM Funding Corporation
under the Interim Trust
Agreement dated Sept. 1, 1997
By: ---------------------------
(Signature of Authorized
Signatory for Purchaser)
Name:
-------------------------
Title:
------------------------
Date of Purchase: Sept. 11, 1997
===================================
<PAGE>
-----------------------------------------------------------------
NOTE: Boxed areas on this form are to be completed by Purchaser.
-----------------------------------------------------------------
1
<PAGE>
ATTACHMENT B
BILL OF SALE DATED SEPTEMBER 11, 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 September 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.
<TABLE>
<CAPTION>
LISTING OF LOANS
OFFERED BY ACCEPTED BY ELIGIBLE
SELLER LENDER TRUSTEE
Number of Principal Number of Principal
LOAN TYPE Loans* Balance** Loans* Balance**
- --------- ------ --------- ------ ---------
<S> <C> <C> <C> <C>
SUBSIDIZED STAFFORD
- -------------------
Interim 195,065 678,306,186 195,065 678,306,186
Repayment 301,571 902,007,340 301,571 902,007,340
------- ------------- ------- -------------
496,636 1,580,313,526 496,636 1,580,313,526
UNSUBSIDIZED STAFFORD
- ---------------------
Deferred 82,681 353,275,590 82,681 353,275,590
Repayment 71,739 243,346,273 71,739 243,346,273
------- ------------- ------- -------------
154,420 596,621,863 154,420 596,621,863
PLUS/SLS
- --------
Deferred 17,411 90,953,635 17,411 90,953,635
Non-Deferred 51,668 235,800,610 51,668 235,800,610
------- ------------- ------- -------------
69,079 326,754,245 69,079 326,754,245
CONSOLIDATION 0 0 0 0
- -------------
TOTAL 720,135 2,503,689,634 720,135 2,503,689,634
------- ------------- ------- -------------
</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.
<PAGE>
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
===================================
Student Loan Marketing Association
1050 Thomas Jefferson Street, N.W.
Washington, D.C. 20007
Lender Code: ______________
By: -------------------------------
(Signature of Authorized
Officer of Seller)
Name: ------------------------------
Title: -----------------------------
===================================
PURCHASER
===================================
Chase Manhattan Bank USA,
National Association,
not in its individual capacity
but solely as Interim Eligible
Lender Trustee for the benefit
of SLM Funding Corporation
By: -----------------------------
(Signature of Authorized
Signatory for Purchaser)
Name: --------------------------
Title: -------------------------
Date of Purchase: Sept. 11, 1997
===================================
<PAGE>
--------------------------------------------------
NOTE: Boxed areas are for completion by Purchaser
--------------------------------------------------
<PAGE>
OFFICER'S CERTIFICATE
I, ______________________________, of the Student Loan Marketing
Association (the "Sallie Mae"), hereby certify to SLM Funding Corporation that:
1. The person(s) named below are at the date hereof the duly elected,
qualified and acting officers of Sallie Mae holding the offices indicated and
the signature following each name is the genuine signature of the person named:
<TABLE>
<CAPTION>
Title Name Signature
<S> <C> <C>
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
</TABLE>
2. Any of the above-named person(s) is duly authorized to sign
agreements providing for the sale of student loans to SLM Funding Corporation.
WITNESS my hand this day ___ of _________________, 199__.
By: ____________________________________________
(Not an officer listed above)
Name: __________________________________________
Title: _________________________________________
2
Exhibit 99.2
SALE AGREEMENT MASTER SECURITIZATION TERMS NUMBER 1000
These Sale Agreement Master Securitization Terms Number 1000 ("Master
Sale Terms") dated as of September 11, 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 September 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 1997-3 (the "Eligible Lender Trustee"), and SLM Student Loan
Trust 1997-3 (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
<PAGE>
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 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,
August 25, 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).
2
<PAGE>
(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 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
<PAGE>
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 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.
4
<PAGE>
(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.
(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.
5
<PAGE>
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
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.
6
<PAGE>
(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 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.
7
<PAGE>
(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, in substantially the form of Attachment C.
(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 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
8
<PAGE>
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 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;
9
<PAGE>
(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;
10
<PAGE>
(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;
(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
11
<PAGE>
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 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.
12
<PAGE>
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 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
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<PAGE>
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:
(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.
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<PAGE>
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 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.
15
<PAGE>
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.
(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,
16
<PAGE>
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.
17
<PAGE>
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 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
18
<PAGE>
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
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.
19
<PAGE>
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.
20
<PAGE>
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.
21
<PAGE>
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.
22
<PAGE>
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.
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.
23
<PAGE>
SLM STUDENT LOAN TRUST 1997-3
(Purchaser)
by Chase Manhattan Bank USA,
National Association
not in its individual capacity
but solely as Eligible Lender
Trustee
By: /s/ J.J. CASHIN
______________
Name: J.J. Cashin
Title:
CHASE MANHATTAN BANK USA,
NATIONAL ASSOCIATION
(Not in its individual capacity
but solely Eligible Lender Trustee)
By: /s/ J.J. CASHIN
_______________
Name: J.J. Cashin
Title:
SLM FUNDING CORPORATION
(Seller)
By: /s/ MICHAEL E. SHEEHAN
______________________
Name: Michael E. Sheehan
Title:
CHASE MANHATTAN BANK USA,
NATIONAL ASSOCIATION
(Not in its individual
capacity as but solely as Interim Eligible
Lender Trustee)
By: /s/ J.J. CASHIN
_______________
Name: J.J. Cashin
Title:
24
<PAGE>
ATTACHMENT A
SALE AGREEMENT
Dated as of September 11, 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 1997-3 ("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 August 25, 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
$2,547,303,410.75 (equal to $2,568,562,634.75 (representing the offering
price of the Securities less underwriters' commissions) less $6,259,224
(representing the Reserve Account Initial Deposit) less $15,000,000
(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 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.
1
<PAGE>
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.
SLM FUNDING CORPORATION
(Seller)
By:___________________________
Name:_________________________
Title:________________________
CHASE MANHATTAN BANK USA,
NATIONAL ASSOCIATION
(not in its individual
capacity but solely as Interim
Eligible Lender Trustee)
By:___________________________
Name:_________________________
Title:________________________
SLM STUDENT LOAN TRUST 1997-3
(Purchaser)
by Chase Manhattan Bank USA,
National Association
not in its individual capacity but
solely as Eligible Lender Trustee
By: ____________________________
Name:___________________________
Title:__________________________
CHASE MANHATTAN BANK USA,
NATIONAL ASSOCIATION
(not in its individual capacity but
solely as Eligible Lender Trustee)
By:___________________________
Name:_________________________
Title:________________________
2
<PAGE>
SALE AGREEMENT NUMBER 1
BLANKET ENDORSEMENT DATED September 11, 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
1997-3 (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.
<PAGE>
SELLER
===================================
Chase Manhattan Bank USA, National Association not in its individual capacity
but solely in its individual capacity but solely as Interim Eligible Lender
Trustee for the Benefit of SLM Funding Corporation
Lender Code: 833 253
By: _____________________________
(Signature of Authorized
Officer)
Name: ___________________________
Title: __________________________
===================================
PURCHASER
===================================
Chase Manhattan Bank USA,
National Association
not in its individual capacity
but solely as Eligible Lender
Trustee on behalf of SLM
Student Loan Trust 1997-3
By: ---------------------------
(Signature of Authorized
Signatory for Purchaser)
Name: -------------------------
Title: ------------------------
Date of Purchase: Sept. 11, 1997
===================================
<PAGE>
---------------------------------------------------------------------
(3) NOTE: Boxed areas on this form are to be completed by Purchaser.
---------------------------------------------------------------------
1
<PAGE>
ATTACHMENT B
BILL OF SALE DATED SEPTEMBER 11, 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 September 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 1997-3 ("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.
<TABLE>
<CAPTION>
LISTING OF LOANS
OFFERED BY ACCEPTED BY ELIGIBLE
SELLER LENDER TRUSTEE
Number of Principal Number of Principal
LOAN TYPE Loans* Balance** Loans* Balance**
- --------- ------ --------- ------ ---------
<S> <C> <C> <C> <C>
SUBSIDIZED STAFFORD
- -------------------
Interim
Repayment
UNSUBSIDIZED STAFFORD
- ---------------------
Deferred
Repayment
PLUS/SLS
- --------
Deferred
Non-Deferred
CONSOLIDATION
- -------------
TOTAL
</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.
1
<PAGE>
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
===================================
Chase Manhattan Bank USA,
National Association
not in its individual capacity
but solely as Interim Eligible Lender
Trustee on behalf of SLM
Funding Corporation
Lender Code: _____________
By:______________________________
(Signature of Authorized Officer)
Name:____________________________
Title:___________________________
SLM FUNDING CORPORATION
By:______________________________
(Signature of Authorized Officer)
Name:____________________________
Title:___________________________
===================================
PURCHASER
===================================
Chase Manhattan Bank USA,
National Association,
not in its individual capacity
but solely as Eligible Lender
Trustee on behalf of SLM
Student Loan Trust 1997-3
By:__________________________
(Signature of Authorized
Signatory for Purchaser)
Name: _________________________
Title: ________________________
Date of Purchase: Sept. 11, 1997
===================================
<PAGE>
----------------------------------------------------
NOTE: Boxed areas are for completion by Purchaser
----------------------------------------------------
2
<PAGE>
OFFICER'S CERTIFICATE
I, ______________________________, of ________________________ (the
"Seller"), hereby certify to SLM Student Loan Trust 1997-3 that:
1. The person(s) named below are at the date hereof the duly elected,
qualified and acting officers of the Seller holding the offices indicated and
the signature following each name is the genuine signature of the person named:
<TABLE>
<S> <C> <C>
Title Name Signature
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
---------------------- ---------------------- ----------------------
</TABLE>
2. Any of the above-named person(s) is duly authorized to sign
agreements providing for the sale of student loans to the SLM Student Loan Trust
1997-2.
WITNESS my hand this day ___ of _________________, 199__.
By: ____________________________________________
(Not an officer listed above)
Name: __________________________________________
Title: _________________________________________
Exhibit 99.3
================================================================================
SLM STUDENT LOAN TRUST 1997-3
ADMINISTRATION AGREEMENT SUPPLEMENT
Dated as of September 11, 1997
to
MASTER ADMINISTRATION AGREEMENT
Dated as of May 1, 1997
Between
SLM FUNDING CORPORATION
and
STUDENT LOAN MARKETING ASSOCIATION
================================================================================
<PAGE>
SLM Student Loan Trust 1997-3 Administration Agreement Supplement dated
as of September 11, 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 1997-3 (the "Trust"). The provisions of
this Supplement shall be applicable only to SLM Student Loan Trust 1997-3.
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 1997-3
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: $15,000,000.
2. Attached hereto are (i) Appendix A (SLM Student Loan Trust 1997-3) 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>
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>
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/ MICHAEL E. SHEEHAN
----------------------------
Name: Michael E. Sheehan
Title:
SALLIE MAE SERVICING CORPORATION
By: /s/ THOMAS P. BRISSON
----------------------------
Name: Thomas P. Brisson
Title:
SLM STUDENT LOAN TRUST 1997-3
By Chase Manhattan Bank USA, National
Association, not in its individual
capacity but solely as Eligible
Lender Trustee
By: /s/ J.J. CASHIN
----------------------------
Name: J.J. Cashin
Title:
CHASE MANHATTAN BANK USA, NATIONAL
ASSOCIATION, not in its individual
capacity but solely as Eligible
Lender Trustee
By: /s/ J.J. CASHIN
----------------------------
Name: J.J. Cashin
Title:
3
<PAGE>
BANKERS TRUST COMPANY
not in its individual capacity but
solely as Indenture Trustee
By: /s/ ALFIA MONASTRA
-----------------------------
Name: Alfia Monastra
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: /s/ J. LANCE FRANKE
------------------------------
Name: J. Lance Franke
Title:
4
Exhibit 99.4
================================================================================
SERVICING AGREEMENT
among
SALLIE MAE SERVICING CORPORATION,
STUDENT LOAN MARKETING ASSOCIATION,
as Administrator
SLM STUDENT LOAN TRUST 1997-3,
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 September 11, 1997
================================================================================
<PAGE>
TABLE OF CONTENTS
Page
----
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 . . . . . 2
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. . . 10
Section 3.8 Servicer Expenses. . . . . . . . . . . . . . . 11
Section 3.9 Appointment of Subservicer . . . . . . . . . . 11
Section 3.10 Reports. . . . . . . . . . . . . . . . . . . . 11
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 . . . . . . . . . . . . . 13
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. . . . . . . . . . 14
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. . . . . . 17
Section 4.5 Sallie Mae Servicing Corporation Not to Resign
as Servicer . . . . . . . . . . . . . . . . . 18
i
<PAGE>
ARTICLE V
Section 5.1 Servicer Default . . . . . . . . . . . . . . . 18
Section 5.2 Appointment of Successor . . . . . . . . . . . 20
Section 5.3 Notification to Noteholders and
Certificateholders . . . . . . . . . . . . . . 21
Section 5.4 Waiver of Past Defaults. . . . . . . . . . . . 21
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. . . . . . . . . . . . . . . . . 24
Section 6.6 Relationship of Parties. . . . . . . . . . . . 24
Section 6.7 Captions . . . . . . . . . . . . . . . . . . . 24
Section 6.8 Nonliability of Directors, Officers and
Employees of Servicer, the Eligible Lender
Trustee, the Indenture Trustee and the
Administrator. . . . . . . . . . . . . . . . . 24
Section 6.9 Assignment . . . . . . . . . . . . . . . . . . 24
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
ii
<PAGE>
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 1997-3 (the "Issuer"), Chase Manhattan Bank USA, National Association, not
in its individual capacity but in its capacity as trustee under a trust
agreement dated September 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 September 1, 1997 between SLM Student Loan Trust 1997-3 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 September 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 September 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.
<PAGE>
Article II
Section 2.1 Custody of Trust Student Loan Files. To assure uniform quality in
servicing the Trust Student Loans and to 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.
2
<PAGE>
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.
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.
3
<PAGE>
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
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.
4
<PAGE>
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 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
5
<PAGE>
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 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.
6
<PAGE>
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.
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
7
<PAGE>
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.
8
<PAGE>
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 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
9
<PAGE>
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 (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),
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(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 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.
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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.
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
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Trustee, the Indenture Trustee, the 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.
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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, 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.
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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 RewardsSM, Great ReturnsSM 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
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
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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
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.
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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 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
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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 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.
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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 (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.
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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 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
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(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 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
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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) 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
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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.
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.
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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, 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.
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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 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 1997-3 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.
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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, 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
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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.
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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on their behalf by their duly authorized officers as of September
11, 1997.
SALLIE MAE SERVICING CORPORATION
By: /s/ THOMAS P. BRISSON
-----------------------------
Name: Thomas P. Brisson
Title:
STUDENT LOAN MARKETING ASSOCIATION, as Administrator
By: /s/ J. LANCE FRANKE
-----------------------------
Name: J. Lance Franke
Title:
SLM STUDENT LOAN TRUST 1997-3 by Chase Manhattan Bank USA, National Association
not in its individual capacity but solely as Eligible Lender Trustee
By: /s/ J.J. CASHIN
-----------------------------
Name: J.J. Cashin
Title:
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION not in its individual capacity
but solely as Trustee under a Trust Agreement dated September 1, 1997 between
SLM Funding Corporation and Chase Manhattan Bank USA, National Association
By: /s/ J.J. CASHIN
-----------------------------
Name: J.J. Cashin
Title:
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BANKERS TRUST COMPANY, not in its individual capacity but solely as Indenture
Trustee under an Indenture dated September 1, 1997 between SLM Student Loan
Trust 1997-3 and Bankers Trust Company.
By: /s/ ALFIA MONASTRA
---------------------------
Name: Alfia Monastra
Title:
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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 September 30, 1997) is an amount equal to 1/12th of 0.80%
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 0.80% 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 $4.07 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 October 27, 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 0.80% 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'
Distribution Amount, the Certificateholders' Distribution Amount, and the
amount, if any,
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necessary to be deposited in the Reserve Account to reinstate the balance
thereof to the Specified Reserve Account Balance. The Servicer shall receive a
pro rata portion of the Primary Servicing Fee and the Carryover Servicing Fee
for the period from the Closing Date to and including September 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.
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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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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 italized, Delinquency Detail and Claims extracts.
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APPENDIX A
DEFINITIONS AND USAGE
Usage
The following rules of construction and usage shall be
applicable to any instrument that is governed by this Appendix:
(a) All terms defined in this Appendix shall have the defined
meanings when used in any instrument governed hereby and in any certificate or
other document made or delivered pursuant thereto unless otherwise defined
therein.
(b) As used herein, in any instrument governed hereby and in
any certificate or other document made or delivered pursuant thereto, accounting
terms not defined in this Appendix or in any such instrument, certificate or
other document, and accounting terms partly defined in this Appendix or in any
such instrument, certificate or other document, to the extent not defined, shall
have the respective meanings given to them under generally accepted accounting
principles as in effect on the date of such instrument. To the extent that the
definitions of accounting terms in this Appendix or in any such instrument,
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Appendix or in any such instrument, certificate or other document shall
control.
(c) The words "hereof," "herein," "hereunder" and words of
similar import when used in an instrument refer to such instrument as a whole
and not to any particular provision or subdivision thereof; references
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in an instrument to "Article," "Section" or another subdivision or to an
attachment are, unless the context otherwise requires, to an article, section or
subdivision of or an attachment to such instrument; and the term "including"
means "including without limitation."
(d) The definitions contained in this Appendix are equally
applicable to both the singular and plural forms of such terms and to the
masculine as well as to the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred
to below or in any agreement or instrument that is governed by this Appendix
means such agreement or instrument or statute as from time to time amended,
modified or supplemented, including (in the case of agreements or instruments)
by waiver or consent and (in the case of statutes) by succession of comparable
successor statutes and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein.
References to a Person are also to its permitted successors and assigns.
Definitions
"Act" has the meaning specified in Section 11.3(a) of the
Indenture.
"Accrual Period" means, with respect to a Distribution Date,
the period from and including the immediately preceding Distribution Date, or in
the case of the initial such period the Closing Date, to but excluding such
current Distribution Date.
"Administration Agreement" means the Master Administration
Agreement dated as of May 1, 1997 between the Administrator and the Seller, as
supplemented by the Supplement and as such agreement may be amended or
supplemented from time to time.
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"Administration Fee" has the meaning specified in Section 2.12
of the Administration Agreement.
"Administrator" means the Student Loan Marketing Association,
in its capacity as administrator of the Trust and the Trust Student Loans in
accordance with the Administration Agreement.
"Administrator Default" has the meaning specified in Section
5.1 of the Administration Agreement.
"Administrator's Certificate" means an Officers' Certificate
of the Administrator delivered pursuant to Section 3.1C of the Administration
Agreement.
"Affiliate" means, with respect to any specified Person, any
other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used with
respect to any specified Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Authorized Officer" means (i) with respect to the Trust, any
officer of the Eligible Lender Trustee who is authorized to act for the Eligible
Lender Trustee in matters relating to the Trust pursuant to the Basic Documents
and who is identified on the list of Authorized Officers delivered by the
Eligible Lender Trustee to the Indenture Trustee on the Closing Date (as such
list may be modified or supplemented from time to time thereafter), (ii) with
respect to the Administrator, any officer of the Administrator or any of its
Affiliates who is authorized to act for the Administrator in matters relating to
itself or to the Trust and to be acted upon by the Administrator pursuant to the
Basic Documents and who is identified on the list of Authorized Officers
delivered by the Administrator to the Indenture Trustee on the Closing Date (as
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such list may be modified or supplemented from time to time thereafter), (iii)
with respect to the Seller, any officer of the Seller or any of its Affiliates
who is authorized to act for the Seller in matters relating to or to be acted
upon by the Seller pursuant to the Basic Documents and who is identified on the
list of Authorized Officers delivered by the Seller to the Indenture Trustee on
the Closing Date (as such list may be modified or supplemented from time to time
thereafter) and (iv) with respect to the Servicer, any officer of the Servicer
who is authorized to act for the Servicer in matters relating to or to be acted
upon by the Servicer pursuant to the Basic Documents and who is identified on
the list of Authorized Officers delivered by the Servicer to the Indenture
Trustee on the Closing Date (as such list may be modified or supplemented from
time to time thereafter).
"Available Funds" means, with respect to a Distribution Date
or any related Monthly Servicing Payment Date, the sum of the following amounts
received with respect to the related Collection Period (or, in the case of a
Monthly Servicing Payment Date, the applicable portion thereof) to the extent
not previously distributed: (i) all collections received by the Servicer on the
Trust Student Loans (including any Guarantee Payments received with respect to
the Trust Student Loans but net of (x) any collections in respect of principal
on the Trust Student Loans applied by the Trust to repurchase guaranteed loans
from the Guarantors
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in accordance with the Guarantee Agreements and (y) amounts required by the
Higher Education Act to be paid to the Department or to be repaid to borrowers
(whether or not in the form of a principal reduction of the applicable Trust
Student Loan), with respect to the Trust Student Loans for such Collection
Period); (ii) any Interest Subsidy Payments and Special Allowance Payments
received by the Eligible Lender Trustee during such Collection Period with
respect to Trust Student Loans; (iii) all Liquidation Proceeds from any Trust
Student Loans which became Liquidated Student Loans during such Collection
Period in accordance with the Servicer's customary servicing procedures, and all
Recoveries in respect of Liquidated Student Loans which were written off in
prior Collection Periods or during such current Collection Period; (iv) the
aggregate Purchase Amounts received during such Collection Period for Trust
Student Loans repurchased by the Seller or purchased by the Servicer or for
Serial Loans sold to another eligible lender pursuant to Section 3.11E of the
Servicing Agreement; (v) the aggregate amounts, if any, received from the Seller
or the Servicer, as the case may be, as reimbursement of non-guaranteed interest
amounts, or lost Interest Subsidy Payments and Special Allowance Payments, with
respect to the Trust Student Loans pursuant to Section 3C of the Sale Agreement
or Section 3.5 of the Servicing Agreement, respectively; (vi) amounts received
by the Servicer pursuant to Sections 3.1 and 3.12 of the Servicing Agreement
during such Collection Period; and (vii) Investment Earnings for such
Distribution Date and any interest remitted to the Collection Account by the
Administrator pursuant to Section 2.4 of the Administration Agreement; provided,
however, that if with respect to any Distribution Date there would not be
sufficient funds, after application of Available Funds and amounts available
from the Reserve Account, to pay any of the items specified in clauses 1 through
7 of Section 2.7C of the Administration Agreement, then Available Funds for such
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Distribution Date shall include amounts on deposit in the Collection Account (or
amounts held by the Administrator, or which the Administrator reasonably
estimates to be held by the Administrator, for deposit into the Collection
Account) on the related Determination Date which would have constituted
Available Funds for the Distribution Date succeeding such Distribution Date, up
to the amount necessary to pay such items, and the Available Funds for such
succeeding Distribution Date shall be adjusted accordingly.
"Basic Documents" means the Trust Agreement, the Indenture,
the Servicing Agreement, the Administration Agreement, the Sale Agreement, the
Purchase Agreement, the Guarantee Agreements, the Certificate Depository
Agreement, the Note Depository Agreement and other documents and certificates
delivered in connection with any thereof.
"Benefit Plan" has the meaning specified in Section 3.4 of the
Trust Agreement.
"Bill of Sale" has the meaning specified in the Purchase
Agreement or the Sale Agreement, as applicable.
"Book-Entry Certificate" means a beneficial interest in the
Certificates, ownership and transfers of which shall be made through book
entries by a Clearing Agency as described in Section 3.11 of the Trust
Agreement.
"Book-Entry Note" means a beneficial interest in the Notes,
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.10 of the Indenture.
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"Business Day" means any day other than a Saturday, a Sunday
or a day on which banking institutions or trust companies in New York, New York
or Wilmington, Delaware are authorized or obligated by law, regulation or
executive order to remain closed.
"Carryover Servicing Fee" has the meaning specified in
Attachment A to the Servicing Agreement.
"Certificate" means a certificate evidencing the undivided
beneficial interest of a Certificateholder in the Trust, substantially in the
form of Exhibit A to the Trust Agreement.
"Certificate Balance" equals $90,150,000 as of the Closing
Date and, thereafter, equals the Initial Certificate Balance reduced by all
previous distributions in respect of the Certificate Balance.
"Certificate Balance Distribution Amount" means, on each
Distribution Date, the excess of (i) the sum of (a) the Principal Distribution
Amount for such Distribution Date, (b) the Note Principal Shortfall as of the
close of the preceding Distribution Date and (c) the Certificate Balance
Shortfall as of the close of the preceding Distribution Date over (ii) the Note
Principal Distribution Amount for such Distribution Date; provided that the
Certificate Balance Distribution Amount will in no event exceed the Certificate
Balance. In addition, on the Final Distribution Date, the Certificate Balance to
be distributed to the Certificateholders will include the amount required to
reduce the outstanding Certificate Balance to zero.
"Certificate Balance Shortfall" means, as of the close of any
Distribution Date, the excess of (i) the Certificate Balance Distribution Amount
on such Distribution Date over (ii) the amount of distributions in respect of
the Certificate Balance on such Distribution Date.
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"Certificate Depository Agreement" means the Letter of
Representations, dated September 4, 1997 by the Trust, the Eligible Lender
Trustee and the Indenture Trustee in favor of the Depository Trust Company.
"Certificate Final Distribution Date" means the October 2012
Distribution Date.
"Certificateholder" means a Person in whose name a Certificate
is registered in the Certificate Register.
"Certificateholders' Distribution Amount" means, with respect
to any Distribution Date, the Certificateholders' Return Distribution Amount for
such Distribution Date plus the Certificate Balance Distribution Amount for such
Distribution Date.
"Certificateholders' Return Distribution Amount" means, with
respect to any Distribution Date, the sum of (i) return on the Certificates
accrued at the Certificate Rate for the related Accrual Period on the
outstanding Certificate Balance on the immediately preceding Distribution Date,
after giving effect to all distributions to Certificateholders in respect of the
Certificate Balance on such preceding Distribution Date (or, in the case of the
first Distribution Date, on the Closing Date) and (ii) the Certificate Return
Shortfall for such Distribution Date; provided, however, that the
Certificateholders' Return Distribution Amount will not include any Certificate
Return Carryover.
"Certificate Owner" means, with respect to a Book-Entry
Certificate, the Person who is the beneficial owner of such Book-Entry
Certificate, as reflected on the books of the Clearing Agency, or on the books
of a
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person maintaining an account with such Clearing Agency (directly as a
Clearing Agency Participant or as an indirect participant, in each case in
accordance with the rules of such Clearing Agency).
"Certificate Paying Agent" means any paying agent or co-paying
agent appointed pursuant to Section 3.9 of the Trust Agreement, which shall
initially be the Eligible Lender Trustee.
"Certificate Pool Factor" as of the close of business on a
Distribution Date means a seven-digit decimal figure equal to the Certificate
Balance divided by the Initial Certificate Balance. The Certificate Pool Factor
will be 1.0000000 as of the Closing Date; thereafter, the Certificate Pool
Factor will decline to reflect reductions in the Certificate Balance.
"Certificate Rate" means, with respect to any Accrual Period,
the lesser of (a) the daily weighted average of the T-Bill Rates within such
Accrual Period plus 0.83% based on the actual number of days in such Accrual
Period, and (b) the Student Loan Rate for such Accrual Period.
"Certificate Register" and "Certificate Registrar" mean the
register mentioned and the registrar appointed pursuant to Section 3.4 of the
Trust Agreement.
"Certificate Return Carryover" means, for any Distribution
Date on which the Certificate Rate is based on the Student Loan Rate, the excess
of (a) the amount of return on the Certificates that would have accrued in
respect of the related Accrual Period at the Certificate Rate without regard to
the Student Loan Rate, over (b) the amount of return on the Certificates
actually accrued in respect of such Accrual Period based on the
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Student Loan Rate, together with the unpaid portion of any such excess from
prior Distribution Dates and any return accrued thereon calculated at the
Certificate Rate without regard to the Student Loan Rate; provided, however,
that, on the Certificate Final Distribution Date, the Certificate Return
Carryover will be equal to the lesser of (i) the Certificate Return Carryover on
such date determined as described above and (ii) the amount of funds, if any,
required and available to be distributed to Certificateholders on such date or
any subsequent date pursuant to Sections 2.7C.11, 2.8C(E), 2.8D and 2.8E of the
Administration Agreement.
"Certificate Return Shortfall" means, with respect to any
Distribution Date, the excess of (i) the Certificateholders' Return Distribution
Amount on the preceding Distribution Date over (ii) the return on the
Certificates actually distributed to the Certificateholders on such preceding
Distribution Date, plus return on the amount of such excess, to the extent
permitted by law, at the Certificate Rate from such preceding Distribution Date
to the current Distribution Date.
"Class A-1 Maturity Date" means the April 2006 Distribution
Date.
"Class A-2 Maturity Date" means the October 2010 Distribution
Date.
"Class A-1 Notes" means the $1,456,350,000 Floating Rate Class
A-1 Student Loan-Backed Notes issued by the Trust pursuant to the Indenture,
substantially in the form of Exhibit A-1 thereto.
"Class A-2 Notes" means the $1,028,500,000 Floating Rate Class
A-2 Student Loan-Backed Notes issued by the Trust pursuant to the Indenture,
substantially in the form of Exhibit A-2 thereto.
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"Class A-1 Rate" means, for any Accrual Period, the lesser of
(a) the daily weighted average of the T-Bill Rates within such Accrual Period
plus 0.60% based on the actual number of days in such Accrual Period, and (b)
the Student Loan Rate for such Accrual Period.
"Class A-2 Rate" means, for any Accrual Period, the lesser of
(a) the daily weighted average of the T-Bill Rates within such Accrual Period
plus 0.64% based on the actual number of days in such Accrual Period, and (b)
the Student Loan Rate for such Accrual Period.
"Clearing Agency" means an organization registered as a
"clearing agency" pursuant to Section 17A of the Exchange Act. The initial
Clearing Agency shall be The Depository Trust Company and the initial nominee
for the Clearing Agency shall be Cede & Co.
"Clearing Agency Participant" means a broker, dealer, bank,
other financial institution or other Person for whom from time to time a
Clearing Agency effects book-entry transfers and pledges of securities deposited
with the Clearing Agency.
"Closing Date" means September 11, 1997.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting Clause
of the Indenture.
"Collection Account" means the account designated as such,
established and maintained pursuant to Section 2.3A.1 of the Administration
Agreement.
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"Collection Period" means, with respect to the first
Distribution Date, the period beginning on the Cutoff Date and ending on
December 31, 1997, and with respect to each subsequent Distribution Date the
Collection Period means the three calendar months immediately following the end
of the previous Collection Period.
"Commission" means the Securities and Exchange Commission.
"Consolidation Loans" means Student Loans made in accordance
with the Section 428C of the Higher Education Act.
"Corporate Trust Office" means (i) with respect to the
Indenture Trustee, the principal office of the Indenture Trustee at which at any
particular time its corporate trust business shall be administered, which office
at the Closing Date is located at Four Albany Street, 10th Floor, New York, New
York 10006, Attention: Corporate Trust and Agency Group, Structured Finance Team
(telephone: (212) 250-5326; facsimile: (212) 250-6439) or at such other address
as the Indenture Trustee may designate from time to time by notice to the
Noteholders and the Seller, or the principal corporate trust office of any
successor Indenture Trustee (the address of which the successor Indenture
Trustee will notify the Noteholders, the Administrator and the Seller) and (ii)
with respect to the Eligible Lender Trustee, the principal corporate trust
office of the Eligible Lender Trustee located at 802 Delaware Avenue,
Wilmington, Delaware 19899, Attention: Corporate Trust Department (telephone:
(302) 575-5099; facsimile: (302) 575-5467); or at such other address as the
Eligible Lender Trustee may designate by notice to the Certificateholders and
the Seller, or the principal corporate trust office of any successor Eligible
Lender Trustee (the address of which the successor Eligible Lender Trustee will
notify the Certificateholders, the Administrator and the Seller).
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"Cutoff Date" means August 25, 1997.
"Default" means any occurrence that is, or with notice or the
lapse of time or both would become, an Event of Default.
"Definitive Certificates" has the meaning specified in Section
3.10 of the Trust Agreement.
"Definitive Notes" has the meaning specified in Section 2.10
of the Indenture.
"Delaware Business Trust Act" means Chapter 38 of Title 12,
Part V of the Delaware Code, entitled "Treatment of Delaware Business Trusts".
"Delivery" when used with respect to Trust Account Property
means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9-105(1)(i) of the UCC and are
susceptible of physical delivery, transfer thereof to the Indenture Trustee or
its nominee or custodian by physical delivery to the Indenture Trustee or its
nominee or custodian endorsed to, or registered in the name of, the Indenture
Trustee or its nominee or custodian or endorsed in blank, and, with respect to a
certificated security (as defined in Section 8-102 of the UCC) transfer thereof
(i) by delivery of such certificated security endorsed to, or registered in the
name of, the Indenture Trustee or its nominee or custodian or endorsed in blank
to a financial intermediary (as defined in Section 8-313 of the UCC)
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and the making by such financial intermediary of entries on its books and
records identifying such certificated securities as belonging to the Indenture
Trustee or its nominee or custodian and the sending by such financial
intermediary of a confirmation of the purchase of such certificated security by
the Indenture Trustee or its nominee or custodian, or (ii) by delivery thereof
to a "clearing corporation" (as defined in Section 8-102(3) of the UCC) and the
making by such clearing corporation of appropriate entries on its books reducing
the appropriate securities account of the transferor and increasing the
appropriate securities account of a financial intermediary by the amount of such
certificated security, the identification by the clearing corporation of the
certificated securities for the sole and exclusive account of the financial
intermediary, the maintenance of such certificated securities by such clearing
corporation or a "custodian bank" (as defined in Section 8-102(4) of the UCC) or
the nominee of either subject to the clearing corporation's exclusive control,
the sending of a confirmation by the financial intermediary of the purchase by
the Indenture Trustee or its nominee or custodian of such securities and the
making by such financial intermediary of entries on its books and records
identifying such certificated securities as belonging to the Indenture Trustee
or its nominee or custodian (all of the foregoing, but not including Trust
Student Loans, "Physical Property"); and such additional or alternative
procedures as may hereafter become appropriate to effect the complete transfer
of ownership of any such Trust Account Property to the Indenture Trustee or its
nominee or custodian, consistent with changes in applicable law or regulations
or the interpretation thereof;
(b) with respect to any securities issued by the U.S.
Treasury, the Federal Home Loan Mortgage Corporation or by the Federal National
Mortgage Association that is a book-entry security held through
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the Federal Reserve System pursuant to Federal book-entry regulations, the
following procedures, all in accordance with applicable law, including
applicable Federal regulations and Articles 8 and 9 of the UCC: book-entry
registration of such Trust Account Property to an appropriate book-entry account
maintained with a Federal Reserve Bank by a financial intermediary which is also
a "depository" pursuant to applicable Federal regulations and issuance by such
financial intermediary of a deposit advice or other written confirmation of such
book-entry registration to the Indenture Trustee or its nominee or custodian of
the purchase by the Indenture Trustee or its nominee or custodian of such
book-entry securities; the making by such financial intermediary of entries in
its books and records identifying such book-entry security held through the
Federal Reserve System pursuant to Federal book-entry regulations as belonging
to the Indenture Trustee or its nominee or custodian and indicating that such
custodian holds such Trust Account Property solely as agent for the Indenture
Trustee or its nominee or custodian; and such additional or alternative
procedures as may hereafter become appropriate to effect complete transfer of
ownership of any such Trust Account Property to the Indenture Trustee or its
nominee or custodian, consistent with changes in applicable law or regulations
or the interpretation thereof; and
(c) with respect to any item of Trust Account Property that is
an uncertificated security under Article 8 of the UCC and that is not governed
by clause (b) above, registration on the books and records of the issuer thereof
in the name of the financial intermediary, the sending of a confirmation by the
financial intermediary of the purchase by the Indenture Trustee or its nominee
or custodian of such uncertificated security, the making by such financial
intermediary of entries on its books and records identifying such uncertificated
certificates as belonging to the Indenture Trustee or its nominee or custodian.
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"Department" means the United States Department of Education,
an agency of the Federal government.
"Depositor" means the Seller in its capacity as Depositor
under the Trust Agreement.
"Depository Agreements" means the Certificate Depository
Agreement and the Note Depository Agreement, collectively.
"Determination Date" means, with respect to any Distribution
Date, the third Business Day preceding such Distribution Date.
"Distribution Date" means, with respect to each Collection
Period, the 25th day of January, April, July or October, or, if such day is not
a Business Day, the immediately following Business Day, commencing on January
26, 1998.
"Eligible Deposit Account" means either (a) a segregated
account with an Eligible Institution or (b) a segregated trust account with the
corporate trust department of a depository institution organized under the laws
of the United States of America or any one of the States or the District of
Columbia (or any domestic branch of a foreign bank), having corporate trust
powers and acting as trustee for funds deposited in such account, so long as any
of the securities of such depository institution have a credit rating from
Moody's, Standard & Poor's, and, if such institution is rated by Fitch, Fitch,
in one of their generic rating categories which signifies investment grade.
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"Eligible Institution" means a depository institution
organized under the laws of the United States of America or any one of the
States or the District of Columbia (or any domestic branch of a foreign bank)
(i) which has (A) either a long-term senior unsecured debt rating of AAA or a
short-term senior unsecured debt or certificate of deposit rating of A-1+ or
better by Standard & Poor's and (B)(1) a long-term senior unsecured debt rating
of A1 or better and (2) a short-term senior unsecured debt rating of P-1 or
better by Moody's, and (C) if such institution is rated by Fitch, a long-term
senior unsecured debt rating of AA or a short-term senior unsecured debt rating
of F-1+, or any other long-term, short-term or certificate of deposit rating
with respect to which the Rating Agency Condition has been satisfied and (ii)
whose deposits are insured by the FDIC. If so qualified, the Eligible Lender
Trustee or the Indenture Trustee may be considered an Eligible Institution.
"Eligible Investments" means book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as
to timely payment by, the United States of America, the Federal Home Loan
Mortgage Corporation, the Federal National Mortgage Association, the Student
Loan Marketing Association, or any agency or instrumentality of the United
States of America the obligations of which are backed by the full faith and
credit of the United States of America; provided that obligations of, or
guaranteed by, the Federal Home Loan Mortgage Corporation, the Federal National
Mortgage Association or the Student Loan Marketing Association shall be Eligible
Investments only if, at the time of investment, they meet the criteria of each
of the Rating Agencies for collateral for securities having ratings equivalent
to the respective ratings of the Notes in effect at the Closing Date;
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(b) demand deposits, time deposits or certificates of deposit
of any depository institution or trust company incorporated under the laws of
the United States of America or any State (or any domestic branch of a foreign
bank) and subject to supervision and examination by Federal or state banking or
depository institution authorities (including depository receipts issued by any
such institution or trust company as custodian with respect to any obligation
referred to in clause (a) above or portion of such obligation for the benefit of
the holders of such depository receipts); provided that at the time of the
investment or contractual commitment to invest therein (which shall be deemed to
be made again each time funds are reinvested following each Distribution Date),
the commercial paper or other short-term senior unsecured debt obligations
(other than such obligations the rating of which is based on the credit of a
Person other than such depository institution or trust company) thereof shall
have a credit rating from each of the Rating Agencies in the highest investment
category granted thereby;
(c) commercial paper having, at the time of the investment, a
rating from each of the Rating Agencies in the highest investment category
granted thereby;
(d) investments in money market funds having a rating from
each of the Rating Agencies in the highest investment category granted thereby
(including funds for which the Indenture Trustee, the Administrator or the
Eligible Lender Trustee or any of their respective Affiliates is investment
manager or advisor);
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(e) bankers' acceptances issued by any depository institution
or trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that
is a direct obligation of, or fully guaranteed by, the United States of America
or any agency or instrumentality thereof the obligations of which are backed by
the full faith and credit of the United States of America, in either case
entered into with a depository institution or trust company (acting as
principal) described in clause (b) above; and
(g) any other investment which would not result in the
downgrading or withdrawal of any rating of the Securities by any of the Rating
Agencies as affirmed in writing delivered to the Indenture Trustee.
For purposes of the definition of "Eligible Investments" the phrase "highest
investment category" means (i) in the case of Fitch, "AAA" for long-term
investments (or the equivalent) and "F-1+" for short-term investments (or the
equivalent), (ii) in the case of Moody's, "Aaa" for long-term investments (or
the equivalent) and "P-1" for short-term investments (or the equivalent), and
(iii) in the case of Standard & Poor's, "AAA" for long-term investments (or the
equivalent) and "A-1+" for short-term investments (or the equivalent). A
proposed investment not rated by Fitch but rated in the highest investment
category by Moody's and Standard & Poor's shall be considered to be rated by
each of the Rating Agencies in the highest investment category granted thereby.
"Eligible Lender Trustee" means Chase Manhattan Bank USA,
National Association, a national banking association, (formerly known as The
Chase Manhattan Bank (USA), a Delaware banking corporation), not in its
individual capacity but solely as Eligible
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Lender Trustee under the Trust Agreement. "Eligible Lender Trustee" shall also
mean each successor Eligible Lender Trustee as of the qualification of such
successor as Eligible Lender Trustee under the Trust Agreement.
"Eligible Loans" has the meaning specified in the Purchase
Agreement or the Sale Agreement, as applicable.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Event of Default" has the meaning specified in Section 5.1 of
the Indenture.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Expected Interest Collections" means, with respect to any
Collection Period, the sum of (i) the amount of interest accrued, net of amounts
required to be paid to the Department or to be repaid to Guarantors or
borrowers, with respect to the Trust Student Loans for such Collection Period
(whether or not such interest is actually paid), (ii) all Interest Subsidy
Payments and Special Allowance Payments expected to be received by the Eligible
Lender Trustee for such Collection Period (whether or not actually received),
net of amounts required to be paid to the Department, with respect to the Trust
Student Loans, to the extent not included in (i) above, and (iii) Investment
Earnings for such Collection Period and interest on amounts to be remitted by
the Administrator to the Collection Account with respect to such Collection
Period prior to the related Distribution Date.
"Expenses" means any and all liabilities, obligations, losses,
damages, taxes, claims, actions and suits, and any and all reasonable costs,
expenses
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and disbursements (including reasonable legal fees and expenses) of any
kind and nature whatsoever which may at any time be imposed on, incurred by, or
asserted against the Eligible Lender Trustee or any of its officers, directors
or agents in any way relating to or arising out of the Trust Agreement, the
other Basic Documents, the Trust Estate, the administration of the Trust Estate
or the action or inaction of the Eligible Lender Trustee under the Trust
Agreement or the other Basic Documents.
"Executive Officer" means, with respect to any corporation,
the Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, any Executive Vice President, any Senior Vice President, any Vice
President, the Secretary or the Treasurer of such corporation; and with respect
to any partnership, any general partner thereof.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Funds Rate" for any day means the rate set forth for
such day opposite the caption "Federal Funds (effective)" in the weekly
statistical release designated H.15(519), or any successor publication,
published by the Board of Governors of the Federal Reserve System. If such rate
is not published in the relevant H.15(519) for any day, the rate for such day
shall be the arithmetic mean of the rates for the last transaction in overnight
Federal Funds arranged prior to 9:00 a.m. New York City time on that day by each
of four leading brokers in such transactions located in New York City selected
by the Administrator. The Federal Funds rate for each Saturday and Sunday and
for any other that is not a Business Day shall be the Federal Funds Rate for the
preceding Business Day as determined above.
"Fitch" means Fitch Investors Service, L.P.
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"Grant" means mortgage, pledge, bargain, sell, warrant,
alienate, remise, release, convey, assign, transfer, create and grant a lien
upon and a security interest in and right of set-off against, deposit, set over
and confirm pursuant to the Indenture. A Grant of the Collateral or of any other
agreement or instrument shall include all rights, powers and options (but none
of the obligations) of the Granting party thereunder, including the immediate
and continuing right to claim for, collect, receive and give receipt for
principal and interest payments in respect of the Collateral and all other
moneys payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring Proceedings in the name of the Granting party or otherwise and generally
to do and receive anything that the Granting party is or may be entitled to do
or receive thereunder or with respect thereto.
"Guarantee Agreement" means any agreement between any
Guarantor and the Eligible Lender Trustee providing for the payment by the
Guarantor of amounts authorized to be paid pursuant to the Higher Education Act
to holders of qualifying Student Loans guaranteed in accordance with the Higher
Education Act by such Guarantor.
"Guarantee Payment" means any payment made by a Guarantor
pursuant to a Guarantee Agreement in respect of a Trust Student Loan.
"Guarantors" means, collectively, those entities listed on
Attachment B to the Sale Agreement and the Purchase Agreement.
"Higher Education Act" means the Higher Education Act of 1965,
as amended, together with any rules, regulations and interpretations thereunder.
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"Indenture" means the Indenture dated as of September 1, 1997,
among the Eligible Lender Trustee on behalf of the Trust, the Trust and the
Indenture Trustee.
"Indenture Trust Estate" means all money, instruments, rights
and other property that are subject or intended to be subject to the lien and
security interest of the Indenture for the benefit of the Noteholders (including
all property and interests Granted to the Indenture Trustee), including all
proceeds thereof.
"Indenture Trustee" means Bankers Trust Company, a New York
banking corporation, not in its individual capacity but solely as trustee under
the Indenture.
"Independent" means, when used with respect to any specified
Person, that the Person (a) is in fact independent of the Trust, any other
obligor upon the Notes, the Seller and any Affiliate of any of the foregoing
Persons, (b) does not have any direct financial interest or any material
indirect financial interest in the Trust, any such other obligor, the Seller or
any Affiliate of any of the foregoing Persons and (c) is not connected with the
Trust, any such other obligor, the Seller or any Affiliate of any of the
foregoing Persons as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 11.1 of the
Indenture, made by an Independent appraiser or other expert appointed by an
Issuer Order and approved by the Indenture Trustee in the exercise of reasonable
care, and such opinion or certificate shall state that the signer has read the
definition of "Independent" in the Indenture and that the signer is Independent
within the meaning thereof.
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"Initial Certificate Balance" means $90,150,000.
"Initial Pool Balance" means the Pool Balance as of the Cutoff
Date, which is $2,503,689,634.
"Insolvency Event" means, with respect to a specified Person,
(a) the filing of a decree or order for relief by a court having jurisdiction in
the premises in respect of such Person or any substantial part of its property
in an involuntary case under any applicable Federal or state bankruptcy,
insolvency or other similar law now or hereafter in effect, or appointing a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official for such Person or for any substantial part of its property, or
ordering the winding-up or liquidation of such Person's affairs, which decree or
order remains unstayed and in effect for a period of 60 consecutive days; or (b)
the commencement by such Person of a voluntary case under any applicable Federal
or state bankruptcy, insolvency or other similar law now or hereafter in effect,
or the consent by such Person to the entry of an order for relief in an
involuntary case under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.
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"Insolvency Proceeds" has the meaning set forth in Section
6.1B of the Administration Agreement.
"Interest Subsidy Payments" means payments, designated as
such, consisting of interest subsidies by the Department in respect of the Trust
Student Loans to the Eligible Lender Trustee on behalf of the Trust in
accordance with the Higher Education Act.
"Interim Eligible Lender Trustee" means Chase Manhattan Bank
USA, National Association, a national banking association, (formerly known as
The Chase Manhattan Bank (USA), a Delaware banking corporation), not in its
individual capacity but solely as Interim Eligible Lender Trustee under the
Interim Trust Agreement. "Interim Eligible Lender Trustee" shall also mean each
successor Interim Eligible Lender Trustee as of the qualification of such
Interim Eligible Lender Trustee under the Interim Trust Agreement.
"Interim Trust Agreement" means the Interim Trust Agreement
dated as of September 1, 1997, between the Depositor and the Interim Eligible
Lender Trustee.
"Interim Trust Loans" has the meaning set forth in the Interim
Trust Agreement.
"Investment Earnings" means, with respect to any Distribution
Date, the investment earnings (net of losses and investment expenses) on amounts
on deposit in the Trust Accounts to be deposited into the Collection Account on
or prior to such Distribution Date pursuant to Section 2.3B of the
Administration Agreement.
"Issuer" means the Trust and, for purposes of any provision
contained in the Indenture and required by the TIA, each other obligor on the
Notes.
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"Issuer Order" and "Issuer Request" means a written order or
request signed in the name of the Issuer by any one of its Authorized Officers
and delivered to the Indenture Trustee.
"Lien" means a security interest, lien, charge, pledge, equity
or encumbrance of any kind, other than tax liens and any other liens, if any,
which attach to the respective Trust Student Loan by operation of law as a
result of any act or omission by the related Obligor.
"Liquidated Student Loan" means any defaulted Trust Student
Loan liquidated by the Servicer (which shall not include any Trust Student Loan
on which Guarantee Payments are received) or which the Servicer has, after using
all reasonable efforts to realize upon such Trust Student Loan, determined to
charge off.
"Liquidating Distribution" means, as the case may be, (i) the
portion of the proceeds of a sale of assets described in Section 9.2 of the
Trust Agreement distributed to Certificateholders and the Depositor pursuant to
Section 9.1(2) of the Administration Agreement or (ii) the amount of any
distribution to Certificateholders and the Depositor in connection with the
termination of the Trust under Section 9.1(a) of the Trust Agreement.
"Liquidating Profit or Loss" means the Profit or Loss
determined with respect to a sale of assets described in Section 9.2 of the
Trust Agreement or the transactions associated with a final distribution
described in Section 9.1(a) of the Trust Agreement.
"Liquidation Proceeds" means, with respect to any Liquidated
Student Loan which became a Liquidated Student Loan during the current
Collection Period in accordance with the Servicer's customary servicing
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procedures, the moneys collected in respect of the liquidation thereof from
whatever source, other than Recoveries, net of the sum of any amounts expended
by the Servicer in connection with such liquidation and any amounts required by
law to be remitted to the Obligor on such Liquidated Student Loan.
"Loan" has the meaning set forth in Section 2 of the Purchase
Agreement.
"Lock-In Period" means the period of days preceding any
Distribution Date during which the Note Rate or Certificate Rate, as applicable,
in effect on the first day of such period shall remain in effect until the end
of the Accrual Period related to such Distribution Date.
"Minimum Purchase Amount" means an amount that would be
sufficient to (i) reduce the Outstanding Amount of each class of Notes on such
Distribution Date to zero, (ii) pay to Noteholders the Noteholders' Interest
Distribution Amount payable on such Distribution Date, (iii) reduce the
Certificate Balance to zero and (iv) pay to the Certificateholders the
Certificate Return Distribution Amount payable on such Distribution Date;
provided that in the case of a purchase by the Seller of the Trust Student Loans
pursuant to Section 6.1 of the Administration Agreement "Minimum Purchase
Amount" shall also include an amount sufficient to (v) pay to Noteholders any
Note Interest Carryover payable on such Distribution Date and (vi) pay to the
Certificateholders any Certificate Return Carryover payable on such Distribution
Date.
"Monthly Servicing Payment Date" means the 25th day of each
calendar month.
"Moody's" means Moody's Investors Service, Inc.
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"91-Day Treasury Bills" means direct obligations of the United
States with a maturity of thirteen weeks.
"Note Depository Agreement" means the Letter of
Representations, dated September 4, 1997 by the Trust, the Eligible Lender
Trustee and the Indenture Trustee in favor of the Depository Trust Company.
"Note Final Maturity Date" for a class of Notes means the
Class A-1 Maturity Date or the Class A-2 Maturity Date, as applicable.
"Noteholder" means the Person in whose name a Note is
registered in the Note Register.
"Noteholders' Distribution Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Interest Distribution Amount and
the Noteholders' Principal Distribution Amount for such Distribution Date.
"Noteholders' Interest Distribution Amount" means, with
respect to any Distribution Date, the sum of (i) the amount of interest accrued
at the respective Note Rates for the related Accrual Period on the aggregate
outstanding principal balances of both classes of Notes on the immediately
preceding Distribution Date after giving effect to all principal distributions
to Noteholders on such date (or, in the case of the first Distribution Date, on
the Closing Date) and (ii) the Note Interest Shortfall for such Distribution
Date; provided, however, that the Noteholders' Interest Distribution Amount
shall not include any Note Interest Carryover.
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"Noteholders' Principal Distribution Amount" means, with
respect to any Distribution Date, the Principal Distribution Amount for such
Distribution Date plus the Note Principal Shortfall as of the close of the
preceding Distribution Date; provided, however, that the Noteholders' Principal
Distribution Amount shall not exceed the outstanding principal balance of the
Notes. In addition, on the Class A-1 Maturity Date or the Class A-2 Maturity
Date, as the case may be, the principal required to be distributed to the
Noteholders of the related class will include the amount required to reduce the
outstanding principal balance of the Notes of such class to zero.
"Note Interest Carryover" means, for any Distribution Date on
which the Class A-1 Rate or the Class A-2 Rate is based on the Student Loan
Rate, the excess of (a) the amount of interest on the Class A-1 Notes or the
Class A-2 Notes, as the case may be, that would have accrued in respect of the
related Accrual Period had interest been calculated without regard to the
Student Loan Rate over (b) the amount of interest on the Class A-1 Notes or
Class A-2 Notes, as the case may be, actually accrued in respect of such Accrual
Period based on the Student Loan Rate, together with the unpaid portion of any
such excess from prior Distribution Dates (and interest accrued thereon at the
applicable rate calculated at such Note Rate without regard the Student Loan
Rate); provided, however, that any amount of Note Interest Carryover with
respect to the Class A-1 Notes remaining after the earlier of the Distribution
Date on which the outstanding principal amount of the Class A-1 Notes has been
reduced to zero and the distribution of all Available Funds on the Class A-1
Maturity Date, and any amount of Note Interest Carryover with respect to the
Class A-2 Notes remaining after the earlier of the Distribution Date on which
the outstanding principal amount of the Class A-2 Notes has been reduced to zero
and the distribution of all Available Funds on the Class A-2 Maturity Date,
shall be equal to the lesser of (i) the Note Interest Carryover for such class
on such date determined as described above and (ii) the amount of funds, if any,
required and available to be distributed to Noteholders of such class on such
date or any subsequent date pursuant to Sections 2.7C.10, 2.8C(D), 2.8D and 2.8E
of the Administration Agreement.
29
<PAGE>
"Note Interest Shortfall" means, with respect to any
Distribution Date, the excess of (i) the Noteholders' Interest Distribution
Amount on the preceding Distribution Date over (ii) the amount of interest
actually distributed to the Noteholders on such preceding Distribution Date,
plus interest on the amount of such excess interest due to the Noteholders, to
the extent permitted by law, at the weighted average interest rate borne by the
Notes from such preceding Distribution Date to the current Distribution Date.
"Note Owner" means, with respect to a Book-Entry Note, the
Person who is the owner of such Book-Entry Note, as reflected on the books of
the Clearing Agency, or on the books of a Person maintaining an account with
such Clearing Agency (directly as a Clearing Agency Participant or as an
indirect participant, in each case in accordance with the rules of such Clearing
Agency).
"Note Pool Factor" as of the close of business on a
Distribution Date means a seven-digit decimal figure equal to the outstanding
principal balance of the Notes divided by the original outstanding principal
balance of the Notes. The Note Pool Factor will be 1.0000000 as of the Closing
Date; thereafter, the Note Pool Factor will decline to reflect reductions in the
outstanding principal balance of the Notes.
"Note Principal Shortfall" means, as of the close of any
Distribution Date, the excess of (i) the Noteholders' Principal Distribution
Amount on such Distribution Date over (ii) the amount of principal actually
distributed to the Noteholders on such Distribution Date.
30
<PAGE>
"Note Rates" means, with respect to any Accrual Period, the
Class A-1 Rate and the Class A-2 Rate for such Accrual Period, collectively.
"Note Register" and "Note Registrar" have the respective
meanings specified in Section 2.4 of the Indenture.
"Notes" means the Class A-1 Notes and the Class A-2 Notes,
collectively.
"Obligor" on a Trust Student Loan means the borrower or
co-borrowers of such Trust Student Loan and any other Person who owes payments
in respect of such Trust Student Loan, including the Guarantor thereof and, with
respect to any Interest Subsidy Payment or Special Allowance Payment, if any,
thereon, the Department.
"Officers' Certificate" means (i) in the case of the Trust, a
certificate signed by any two Authorized Officers of the Eligible Lender
Trustee, under the circumstances described in, and otherwise complying with, the
applicable requirements of Section 11.1 of the Indenture, and delivered to the
Indenture Trustee, and (ii) in the case of the Seller, the Administrator or the
Servicer, a certificate signed by any two Authorized Officers of the Seller, the
Administrator or the Servicer, as applicable.
"Origination Fee" means the origination fee payable to the
Department by the lender with respect to any Trust Student Loan (including any
Consolidation Loan) made on or after October 1, 1993, equal to 0.50% of the
initial principal balance of such loan.
31
<PAGE>
"Opinion of Counsel" means (i) with respect to the Trust, one
or more written opinions of counsel who may, except as otherwise expressly
provided in the Indenture, be employees of or counsel to the Eligible Lender
Trustee, the Trust, the Seller or an Affiliate of the Seller and who shall be
satisfactory to the Indenture Trustee, and which opinion or opinions shall be
addressed to the Indenture Trustee as Indenture Trustee, shall comply with any
applicable requirements of Section 11.1 of the Indenture and shall be in form
and substance satisfactory to the Indenture Trustee, and (ii) with respect to
the Seller, the Administrator or the Servicer, one or more written opinions of
counsel who may be an employee of or counsel to the Seller, the Administrator or
the Servicer, which counsel shall be acceptable to the Indenture Trustee and the
Eligible Lender Trustee.
"Outstanding" means, as of the date of determination, all
Notes theretofore authenticated and delivered under the Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the Indenture Trustee
or any Paying Agent in trust for the Noteholders thereof (provided, however,
that if such Notes are to be redeemed, notice of such redemption has been duly
given pursuant to the Indenture); and
(iii) Notes in exchange for or in lieu of other Notes which
have been authenticated and delivered pursuant to the Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes are held
by a bona fide purchaser;
32
<PAGE>
provided that in determining whether the Noteholders of the requisite
Outstanding Amount of the Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any other Basic
Document, Notes owned by the Trust, any other obligor upon the Notes, the Seller
or any Affiliate of any of the foregoing Persons shall be disregarded and deemed
not to be Outstanding, except that, in determining whether the Indenture Trustee
shall be protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Notes that a Responsible Officer of
the Indenture Trustee either actually knows to be so owned or has received
written notice thereof shall be so disregarded. Notes so owned that have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Indenture Trustee the pledgee's right so to act with
respect to such Notes and that the pledgee is not the Trust, any other obligor
upon the Notes, the Seller or any Affiliate of any of the foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of
all Notes Outstanding at the date of determination.
"Paying Agent" means the Indenture Trustee or any other Person
that meets the eligibility standards for the Indenture Trustee specified in
Section 6.11 of the Indenture and is authorized by the Eligible Lender Trustee
on behalf of the Trust to make the payments to and distributions from the
Collection Account and payments of principal of and interest and any other
amounts owing on the Notes on behalf of the Trust.
"Person" means any individual, corporation, estate,
partnership, joint venture, association, joint stock company, trust (including
any beneficiary thereof), unincorporated organization or government or any
agency or political subdivision thereof.
33
<PAGE>
"Physical Property" has the meaning assigned to such terms in
the definition of "Delivery" above.
"Pool Balance" means as of any date the aggregate principal
balance of the Trust Student Loans on such date (including accrued interest
thereon to the extent such interest is expected to be capitalized), after giving
effect to the following, without duplication: (i) all payments received by the
Trust through such date from or on behalf of Obligors, (ii) all Purchase Amounts
on Purchased Student Loans received by the Trust through such date from the
Seller or the Servicer, (iii) all Liquidation Proceeds and Realized Losses on
Trust Student Loans liquidated through such date, (iv) the aggregate amount of
adjustments to balances of Trust Student Loans permitted to be effected by the
Servicer under the Servicing Agreement, if any, recorded through such date, and
(v) the aggregate amount by which reimbursements by Guarantors of the unpaid
principal balance of defaulted Trust Student Loans through such date are reduced
from 100% to 98% as required by the risk sharing provisions of the Higher
Education Act.
"Predecessor Note" means, with respect to any particular Note,
every previous Note evidencing all or a portion of the same debt as that
evidenced by such particular Note; and, for the purpose of this definition, any
Note authenticated and delivered under Section 2.5 of the Indenture and in lieu
of a mutilated, lost, destroyed or stolen Note shall be deemed to evidence the
same debt as the mutilated, lost, destroyed or stolen Note.
34
<PAGE>
"Primary Servicing Fee" for any Monthly Servicing Payment Date
has the meaning specified in Attachment A to the Servicing Agreement, and shall
include any such fees from prior Monthly Servicing Payment Dates that remain
unpaid.
"Principal Distribution Amount" means, (i) with respect to the
initial Distribution Date, the amount by which the sum of the Outstanding Amount
of the Notes and the Certificate Balance exceeds the Pool Balance as of the last
day of the related Collection Period and (ii) with respect to each subsequent
Distribution Date, the Pool Balance as of the last day of the Collection Period
preceding the related Collection Period less the Pool Balance as of the last day
of the related Collection Period.
"Proceeding" means any suit in equity, action at law or other
judicial or administrative proceeding.
"Profits" and "Losses" mean, for each Accrual Period or other
period, an amount equal to the Trust's taxable income or loss for such period,
other than Liquidating Profit or Loss and without consideration of items
specially allocated pursuant to Section 2.10 of the Trust Agreement(including
allocations of gross income), determined in accordance with Code section 703(a)
(such taxable income or loss to include all items of income, gain, loss or
deduction required to be stated separately pursuant to Code section 703(a)(1)),
adjusted to reflect items of income exempt from Federal income tax and items of
expenditure described in Code section 705(a)(2)(B) (or treated as so described
pursuant to Treasury Regulations).
"Purchase Agreement" means the Purchase Agreement dated as of
September 11, 1997, among the Student Loan Marketing Association, the Interim
Eligible Lender Trustee and the Seller.
35
<PAGE>
"Purchase Amount" with respect to any Trust Student Loan means
the amount required to prepay in full such Trust Student Loan under the terms
thereof including all accrued interest thereon.
"Purchased Student Loan" means a Trust Student Loan which is,
as of the close of business on the last, day of a Collection Period, purchased
by the Servicer pursuant to Section 3.5 of the Servicing Agreement or
repurchased by the Seller pursuant to Section 6 of the Sale Agreement or sold to
another eligible lender holding one or more Serial Loans with respect to such
Trust Student Loan pursuant to Section 3.11E of the Servicing Agreement.
"Rating Agency" means Moody's, Standard & Poor's and Fitch. If
any such organization or successor thereto is no longer in existence, "Rating
Agency" with respect to such organization shall be a nationally recognized
statistical rating organization or other comparable Person designated by the
Administrator, notice of which designation shall be given to the Indenture
Trustee, the Eligible Lender Trustee and the Servicer.
"Rating Agency Condition" means, with respect to any action,
that each Rating Agency shall have been given 10 days' prior notice thereof and
that each of the Rating Agencies shall have notified the Administrator, the
Servicer, the Eligible Lender Trustee and the Indenture Trustee in writing that
such action will not result in and of itself in a reduction or withdrawal of the
then current rating of any of the Notes or the Certificates.
"Realized Loss" means the excess of the principal balance
(including any interest that had been or had been expected to be capitalized) of
any Liquidated Student Loan over Liquidation Proceeds with respect to such
Student Loan to the extent allocable to principal (including any interest that
had been or had been expected to be capitalized).
36
<PAGE>
"Record Date" means, with respect to a Distribution Date or
Redemption Date, the close of business on the day preceding such Distribution
Date or Redemption Date.
"Recoveries" means moneys collected from whatever source with
respect to any Liquidated Student Loan which was written off in prior Collection
Periods or during the current Collection Period, net of the sum of any amounts
expended by the Servicer for the account of any Obligor and any amounts required
by law to be remitted to any Obligor.
"Redemption Date" means in the case of a payment to
Noteholders pursuant to Section 10.1 of the Indenture, the Distribution Date
specified pursuant to Section 10.1 of the Indenture.
"Redemption Price" means an amount equal to the unpaid
principal amount of the Notes, plus accrued and unpaid interest thereon at the
applicable Note Rates to but excluding the Redemption Date and the amount of the
Note Interest Carryover with respect thereto.
"Reserve Account" means the account designated as such,
established and maintained pursuant to Section 2.3A.2 of the Administration
Agreement.
"Reserve Account Initial Deposit" means $6,259,224.
"Responsible Officer" means, with respect to the Indenture
Trustee, any officer within the Corporate Trust Office of the Indenture Trustee,
including any Vice President, Assistant Vice President, Assistant Treasurer,
Assistant Secretary, or any other officer of the Indenture Trustee customarily
performing functions similar to those performed by any of the above designated
officers, with direct responsibility for the administration of the Indenture and
the other Basic Documents on behalf of the Indenture Trustee and also, with
respect to a particular matter, any other officer to whom such matter is
referred because of such officer's knowledge of and familiarity with the
particular subject.
37
<PAGE>
"Sale Agreement" means the Sale Agreement dated as of
September 11, 1997, among the Eligible Lender Trustee on behalf of the Trust,
the Trust, the Interim Eligible Lender Trustee and the Seller.
"Sallie Mae" means the Student Loan Marketing Association.
"Schedule of Trust Student Loans" means the listing of the
Trust Student Loans set forth in Schedule A to the Indenture and the Bill of
Sale (which Schedule may be in the form of microfiche).
"Seller" means SLM Funding Corporation, a Delaware
corporation.
"Serial Loan" means an additional student loan, other than a
Consolidation Loan, which is made to a borrower who is also a borrower under at
least one Trust Student Loan.
"Servicer" means the Sallie Mae Servicing Corporation, in its
capacity as servicer of the Trust Student Loans, or any successor thereto in
such capacity in accordance with the Servicing Agreement.
"Servicer Default" means an event specified in Section 5.1 of
the Servicing Agreement.
38
<PAGE>
"Servicer's Report" means any report of the Servicer delivered
pursuant to Section 3.1A of the Administration Agreement, substantially in the
form acceptable to the Administrator.
"Servicing Agreement" means the Servicing Agreement dated as
of September 11, 1997, among the Trust, the Eligible Lender Trustee, the Seller,
the Servicer, the Administrator and the Indenture Trustee.
"Servicing Fee" has the meaning specified in Attachment A to
the Servicing Agreement.
"SLS Loan" means a Trust Student Loan designated as such that
is made under the Supplemental Loans for Students Program pursuant to the Higher
Education Act.
"Special Allowance Payments" means payments, designated as
such, consisting of effective interest subsidies by the Department in respect of
the Trust Student Loans to the Eligible Lender Trustee on behalf of the Trust in
accordance with the Higher Education Act.
"Specified Reserve Account Balance" with respect to any
Distribution Date means the greater of (a) 0.25% of the Pool Balance as of the
close of business on the last day of the related Collection Period and
(b)$2,503,690, provided that in no event will such balance exceed the sum of the
outstanding principal amount of the Notes and the Certificate Balance.
"Stafford Loan" means a Trust Student Loan designated as such
that is made under the Stafford Loan Program in accordance with the Higher
Education Act.
39
<PAGE>
"Standard & Poor's means Standard & Poor's Ratings Group, a
division of The McGraw-Hill Companies, Inc.
"State" means any one of the 50 States of the United States of
America or the District of Columbia.
"Student Loans" means education loans to students and parents
of students under the Federal Family Education Loan Program.
"Student Loan Rate" for any Accrual Period will be equal to
the product of (a) the quotient obtained by dividing (i) 365 (or 366 in the case
of a leap year) by (ii) the actual number of days elapsed in such Accrual Period
and (b) the percentage equivalent of a fraction, (i) the numerator of which is
equal to Expected Interest Collections for the Collection Period relating to
such Accrual Period less the Primary Servicing Fee and the Administration Fee
and any prior unpaid Administration Fees with respect to such Collection Period,
and (ii) the denominator of which is the Pool Balance as of the first day of
such Collection Period.
"Successor Administrator" has the meaning specified in Section
3.7(e) of the Indenture.
"Successor Servicer" has the meaning specified in Section
3.7(e) of the Indenture.
"Supplement" means the SLM Student Loan Trust 1997-3
Administration Agreement Supplement dated September 11, 1997, to Master
Administration Agreement dated as of May 1, 1997, among the Seller, the
Servicer, the Trust, the Eligible Lender Trustee, the Indenture Trustee and the
Administrator.
40
<PAGE>
"T-Bill Rate" means, on any day, the weighted average per
annum discount rate (expressed on a bond equivalent basis and applied on a daily
basis) for 91-day Treasury Bills sold at the most recent 91-day Treasury Bill
auction prior to such date as reported by the U.S. Treasury Department. In the
event that the results of the auctions of 91-day Treasury Bills cease to be
published or reported as provided above, or that no such auction is held in a
particular week, then the "T-Bill Rate" in effect as a result of the last such
publication or report shall remain in effect until such time, if any, as the
results of auctions of 91-day Treasury Bills shall again be so published or
reported or such an auction is held, as the case may be. The T-Bill Rate shall
be subject to a Lock-In Period of six Business Days.
"Transfer Date" has the meaning specified in Section 5.2A of
the Administration Agreement.
"Treasury Regulations" means regulations, including proposed
or temporary regulations, promulgated under the Code. References in any document
or instrument to specific provisions of proposed or temporary regulations shall
include analogous provisions of final Treasury Regulations or other successor
Treasury Regulations.
"Trust" means SLM Student Loan Trust 1997-3, a Delaware
business trust established pursuant to the Trust Agreement.
"Trust Account Property" means the Trust Accounts, all cash
and investments held from time to time in any Trust Account (whether in the form
of deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), including the Reserve Account Initial Deposit, and all
earnings on and proceeds of the foregoing.
41
<PAGE>
"Trust Accounts" has the meaning specified in Section 2.3 of
the Administration Agreement.
"Trust Agreement" means the Trust Agreement dated as of
September 1, 1997, between the Depositor and the Eligible Lender Trustee.
"Trust Auction Date" has the meaning specified in Section 4.4
of the Indenture.
"Trust Certificate" means a Certificate.
"Trust Estate" means all right, title and interest of the
Trust (or the Eligible Lender Trustee on behalf of the Trust) in and to the
property and rights sold, transferred and assigned to the Trust pursuant to the
Sale Agreement, all funds on deposit from time to time in the Trust Accounts and
all other property of the Trust from time to time, including any rights of the
Eligible Lender Trustee and the Trust pursuant to the Trust Agreement and the
Administration Agreement.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act
of 1939 as in force on the date hereof, unless otherwise specifically provided.
"Trust Student Loan" means any student loan that is listed on
the Schedule of Trust Student Loans on the Closing Date plus any student loan
that is substituted for a Trust Student Loan by the Seller pursuant to Section 6
of the Sale Agreement or by the Servicer pursuant to Section 3.5 of the
Servicing Agreement, but shall not include any Purchased Student Loan following
receipt by or on behalf of the Trust of the Purchase Amount with respect thereto
or any Liquidated Student Loan following receipt by or on behalf of the Trust of
Liquidation Proceeds with respect thereto or following such Liquidated Student
Loan having otherwise been written off by the Servicer.
"Trust Student Loan Files" means the documents specified in
Section 2.1 of the Servicing Agreement.
"UCC" means, unless the context otherwise requires, the
Uniform Commercial Code, as in effect in the relevant jurisdiction, as amended
from time to time.
42
Exhibit 99.5
PAYING AGENT AGREEMENT
This PAYING AGENT AGREEMENT, dated as of September 11, 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 September 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>
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: J. Lance Franke Name: J. J. Cashin
Title: Title:
BANKERS TRUST COMPANY
By: /s/ ALFIA MONASTRA
------------------------------
Name: Alfia Monastra
Title:
