EXHIBIT 4.1
Execution Copy
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SERVICING AGREEMENT
among
SMS STUDENT LOAN TRUST 1999-A
as Issuer,
USA GROUP LOAN SERVICES, INC.
as Servicer,
USA GROUP SECONDARY MARKET SERVICES, INC.
as Seller,
and
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but solely
as Eligible Lender Trustee
Dated as of February 1, 1999
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SERVICING AGREEMENT dated as of February 1, 1999, among SMS STUDENT LOAN
TRUST 1999-A, a Delaware trust (the "Issuer"), USA GROUP LOAN SERVICES, INC., as
servicer (the "Servicer"), USA GROUP SECONDARY MARKET SERVICES, INC., as Seller
(the "Seller"), and THE FIRST NATIONAL BANK OF CHICAGO, a national banking
association, solely as eligible lender trustee and not in its individual
capacity (the "Eligible Lender Trustee").
WHEREAS the Issuer desires to purchase from the Seller (and, with respect
to legal title to the student loans, NBD as trustee on behalf of the Seller) a
portfolio of federally reinsured student loans purchased in the ordinary course
of business by the Seller; and
WHEREAS the Eligible Lender Trustee is willing to hold legal title to, and
serve as eligible lender trustee with respect to, such student loans on behalf
of the Issuer; and
WHEREAS the Servicer is willing to service such student loans and
undertake certain administrative functions with respect thereto.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions and Usage
Capitalized terms used but not defined herein are defined in Appendix A to
the Administration Agreement, dated as of February 1, 1999, among the Issuer,
the Seller, as Administrator, and Bankers Trust Company, as Indenture Trustee,
which also contains rules as to usage and construction that shall be applicable
herein.
ARTICLE II
Custody of Financed Student Loans
SECTION 2.01. Custody of Student Loan Files. To assure uniform quality in
servicing the Financed 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 which are hereby
constructively delivered to the Indenture Trustee, as pledgee of the Issuer (or
will be constructively delivered to the Indenture Trustee, as pledgee of the
Issuer, in the case of Delayed Delivery Loans, New Loans and Serial Loans, as of
the applicable Transfer Date, in the case of Qualified Substitute Student Loans,
as of the date of the relevant Assignment to the Issuer, in the case of
Consolidation Loans originated during the Revolving Period by the Eligible
Lender Trustee on behalf of the Issuer, as of the applicable date of origination
or in the case of Consolidation Loans the principal balances of which are
increased by the principal balances of any related Add-on Consolidation Loans,
as of the applicable Add-on Consolidation Loan Funding Date) with respect to
each Financed Student Loan:
(a) the original fully executed copy of the note evidencing the
Financed Student Loan (including the original loan application fully
executed by the Borrower); 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 Financed Student Loan or any Obligor with respect
thereto.
SECTION 2.02. Duties of Servicer as Custodian. (a) Safekeeping. The
Servicer shall maintain custody of the Student Loan Files for the benefit of the
Issuer and the Indenture Trustee on behalf of the Noteholders and the Swap
Counterparty and maintain such accurate and complete accounts, records and
computer systems pertaining to each Student Loan File as shall enable the Issuer
to comply with the Basic Documents. 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 all comparable Student Loans that the Servicer services and shall
ensure that it complies with all applicable federal and state laws, including
the Higher Education Act, with respect thereto. The Servicer shall conduct, or
cause to be conducted, periodic audits of the Student Loan Files held by it
under this Agreement and of the related accounts, records and computer systems,
in such a manner as shall enable the Issuer, the Indenture Trustee or the Swap
Counterparty to verify the accuracy of the Servicer's record keeping. The
Servicer shall promptly report to the Issuer, the Indenture Trustee and the Swap
Counterparty any failure on its part to hold the 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 Student Loan Files.
(b) Maintenance of Records. The Servicer shall maintain each Student Loan
File at one of the locations specified in Schedule A to this Agreement or at
such other office as shall be specified by written notice to the Issuer, the
Indenture Trustee and the Swap Counterparty not later than 90 days after any
change in location. Upon reasonable prior notice of not less than three Business
Days, the Servicer shall make available to the Issuer, the Indenture Trustee and
the Swap Counterparty or their respective duly authorized representatives,
attorneys or auditors a list of locations of the Student Loan Files and the
related accounts, records and computer systems maintained by the Servicer.
(c) Release of Documents. Upon instruction from the Indenture Trustee, the
Servicer shall, as soon as practicable, release any 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 designate.
SECTION 2.03. Instructions; Authority To Act. The Servicer shall be deemed
to have received proper instructions with respect to the Student Loan Files upon
its receipt of written instructions signed by a Responsible Officer of the
Indenture Trustee.
SECTION 2.04. Custodian's Indemnification. The Servicer as Custodian shall
pay for any actual loss, liability or expense, including reasonable attorneys'
fees, that may be
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imposed on, incurred by or asserted against the Issuer, the Eligible Lender
Trustee or the Indenture Trustee or any of their officers, directors, employees
and agents as a result of any improper act or omission in any way relating to
the maintenance and custody by the Servicer as Custodian of the Student Loan
Files as required by this Agreement where the final determination that any such
improper act or omission by the Servicer resulted in such loss, liability or
expense is established by a court of law, by an arbitrator, or by way of
settlement agreed to by the Servicer; provided, however, that the amount of any
liability with respect to any Financed Student Loan shall not exceed the amount
that would have been paid if such Student Loan had been accepted and paid by the
related Guarantor as a claim, and provided, further, that the Servicer shall not
be liable to the Eligible Lender Trustee for any portion of any such amount
resulting from the willful misfeasance, bad faith or negligence of the Eligible
Lender Trustee and the Servicer shall not be liable to the Indenture Trustee for
any portion of any such amount resulting from the willful misfeasance, bad faith
or negligence of the Indenture Trustee. This provision shall not be construed to
limit the Servicer's or any other party's rights, obligations, liabilities,
claims or defenses which arise as a matter of law or pursuant to any other
provision of this Agreement.
SECTION 2.05. Effective Period and Termination. The appointment of Loan
Services as Custodian shall become effective as of the Closing Date and shall
continue in full force and effect for so long as Loan Services shall remain the
Servicer hereunder. If all the rights and obligations of Loan Services shall
have been terminated under Section 6.01, the appointment of Loan Services as
Custodian shall be terminated simultaneously with the effectiveness of such
termination. As soon as practicable on or after any termination of such
appointment and in any event within ninety (90) days, Loan Services shall
deliver possession of the Student Loan Files to the Indenture Trustee or the
Indenture Trustee's agent at such place or places as the Indenture Trustee may
reasonably designate. Loan Services will continue to hold the Student Loan Files
as agent of the Indenture Trustee until the Student Loan Files are transferred.
ARTICLE III
Administration and Servicing of Student Loans
SECTION 3.01. Duties of Servicer. The Servicer, for the benefit of the
Issuer (to the extent provided herein), the Noteholders and the Swap
Counterparty, shall manage, service, administer and make collections on the
Financed Student Loans with reasonable care, using that degree of skill and
attention that the Servicer exercises with respect to all comparable Student
Loans that it services. 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 Financed Student Loans
(other than collection of any Interest Subsidy Payments and Special Allowance
Payments, which the Eligible Lender Trustee will perform on behalf of the Trust)
in accordance with, and otherwise comply with, all applicable federal and state
laws, including any applicable standards, guidelines and 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
Financed Student Loans for federal reinsurance or Interest Subsidy Payments,
Special Allowance Payments or Guarantee Payments or would have an adverse effect
on the
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Noteholders, the Swap Counterparty or the Company. The Servicer also hereby
acknowledges that its obligation to service the Financed Student Loans includes
all Consolidation Loans originated by the Issuer during the Revolving Period,
any Consolidation Loan supplemented from time to time during and after the
Revolving Period by the addition of the principal balance of any related Add-on
Consolidation Loan, any Qualified Substitute Student Loans conveyed to the
Issuer pursuant to Section 3.02 of the Loan Sale Agreement and those Delayed
Delivery Loans, New Loans and Serial Loans conveyed to the Eligible Lender
Trustee on behalf of the Trust pursuant to Section 2.02 of the Loan Sale
Agreement and the related Transfer Agreement, a copy of which shall be delivered
to the Servicer by the Seller promptly upon execution thereof; provided,
however, that any failure by the Seller to so deliver a Transfer Agreement shall
not affect the Servicer's obligations hereunder to service all the Financed
Student Loans.
The Servicer's duties shall include collection and posting of all
payments, responding to inquiries of borrowers on such Financed Student Loans,
monitoring borrowers' status, making required disclosures to borrowers,
investigating delinquencies, sending payment coupons to borrowers and otherwise
establishing repayment terms, reporting tax information to borrowers, if
applicable, accounting for collections and furnishing monthly and annual
statements with respect thereto to the Administrator. Subject to the provisions
of Section 3.02, the Servicer shall follow its customary standards, policies and
procedures in performing its duties as Servicer. Without limiting the generality
of the foregoing, the Servicer is authorized and empowered to execute and
deliver, on behalf of itself, the Issuer, the Eligible Lender Trustee, the
Indenture Trustee, the Company 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 Financed Student Loans;
provided, however, that the Servicer agrees that it will not (a) permit any
rescission or cancellation of a Financed 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
or (b) reschedule, revise, defer or otherwise compromise with respect to
payments due on any Financed Student Loan except pursuant to any applicable
Deferral or Forbearance periods or otherwise in accordance with all applicable
standards, guidelines and requirements with respect to the servicing of the
Financed Student Loans; and provided, further, that the Servicer shall not agree
to any decrease of the interest rate on, or the principal amount payable with
respect to, any Financed Student Loan.
The Servicer, for the benefit of the Issuer (to the extent provided
herein) and the Indenture Trustee on behalf of the Noteholders, shall promptly
and routinely furnish the Eligible Lender Trustee and the Indenture Trustee with
copies of all material reports, records, and other documents and data as
required by this Agreement or as may otherwise be required by the Higher
Education Act. All material correspondence received by the Servicer relating to
individual Student Loans shall be maintained in microcopy form or in summary
form in an automated history file established by the Servicer. The Servicer
shall furnish in good condition all forms and supplies as specified in this
Agreement and any Schedules hereto. The Eligible Lender Trustee and the
Indenture Trustee may transmit Financed Student Loan account data to the
Servicer on these forms or by any other mutually acceptable means. In performing
its duties hereunder, the Servicer will be guided by and comply with the Higher
Education Act and applicable requirements of the related Guarantor. The Servicer
agrees to produce a clear and
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precise audit trail for each Financed Student Loan and to comply with such other
reporting, servicing, and operating standards as are contained in this
Agreement.
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 Financed Student Loans, including
filing, pursuing and recovering claims against the Guarantors for Guarantee
Payments and taking any steps to enforce such Financed Student Loans such as
commencing a legal proceeding to enforce a Financed Student Loan in the name of
the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the Company or
the Noteholders. The Eligible Lender Trustee or the Indenture Trustee shall upon
the written request of the Servicer or the Administrator furnish the Servicer or
the Administrator with any other powers of attorney and other documents
reasonably necessary or appropriate to enable the Servicer or the Administrator
to carry out their servicing and administrative duties hereunder.
SECTION 3.02. Collection of 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 Financed Student Loans as and when the
same shall become due and shall follow such collection procedures as it follows
with respect to all comparable Student Loans that it services. The Servicer
shall allocate collections with respect to the Financed Student Loans between
principal and interest in accordance with the terms of each such loan. 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 Financed 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 Financed Student Loans as and when the
same shall become due and payable, shall comply with the Higher Education Act
and all other 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 all comparable guarantee agreements and student loans
that it services. In connection therewith, the Servicer is hereby authorized and
empowered to convey to the related Guarantor the note and the related Student
Loan File representing any Financed Student Loan in connection with submitting a
claim to the applicable Guarantor for a Guarantee Payment in accordance with the
terms of the applicable Guarantee Agreement.
(c) The Eligible Lender Trustee shall, with the assistance of the Servicer
as set forth below and 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 Financed 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 Student Loans serviced by it. All amounts so collected
by the Eligible Lender Trustee with respect to Financed Student Loans (net, for
the first Collection Period, of interest accrued prior to the Cutoff Date that
is not to be capitalized) shall constitute Monthly Available Funds for the
applicable Monthly Collection Period and Available Funds for the applicable
Collection Period, and shall be deposited into the Collection Account in
accordance with Section 4.01. In
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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.
The Eligible Lender Trustee may permit trusts, other than the Trust,
established by the Seller to securitize student loans to use the Department
lender identification number applicable to the Trust. In such event, the
Eligible Lender Trustee may claim and collect Interest Subsidy Payments and
Special Allowance Payments with respect to Financed Student Loans in the Trust
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 (including, but not limited to, Consolidation
Fees) owing to the Department from the Trust 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 Trust and shall be deducted by
the Eligible Lender Trustee 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 Trust. If so specified in the servicing agreement
applicable to any such other trust, any amounts assessed against payments due
from the Department to the Trust 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 Eligible Lender Trustee 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 Trust.
SECTION 3.03. Realization upon Student Loans. For the benefit of the
Issuer, the Servicer shall use reasonable efforts consistent with its customary
servicing practices and procedures and including all efforts that may be
specified under the Higher Education Act or the applicable Guarantee Agreement
in its servicing of any delinquent Financed Student Loans.
SECTION 3.04. No Impairment. The Servicer shall not impair the rights of
the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the Company, the
Noteholders or the Swap Counterparty in the Financed Student Loans.
SECTION 3.05. Purchase of Student Loans; Reimbursement. (a) Upon the
discovery by the Servicer, the Eligible Lender Trustee, the Indenture Trustee or
the Seller of any breach pursuant to Sections 3.01, 3.02, 3.03 or 3.04 hereof,
the party discovering the breach shall give prompt written notice to the others.
If the breach is not cured within sixty (60) days after the Servicer becomes
aware or receives written notice (whichever is earlier) of such breach, the
Servicer shall purchase or arrange for the purchase of any Student Loan in which
the interests of
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the Noteholders, the Issuer, the Indenture Trustee, the Eligible Lender Trustee
or the Swap Counterparty are materially and adversely affected by such breach as
of the first day succeeding the end of such 60-day period that is the last day
of a Monthly Collection Period (it being understood that any such breach that
does not affect the related Guarantor's obligation to guarantee payment of such
Student Loan will not be considered to have a material adverse effect for this
purpose and it being further understood that any dispute as to whether such
Guarantor's obligation has been so affected so as to create such a material
adverse effect, shall be resolved, for so long as the Notes are Outstanding, by
the Indenture Trustee, whose determination shall be dispositive, and after the
Notes are no longer Outstanding, by the Eligible Lender Trustee, whose
determination shall then be dispositive); provided, however, that during each
12-month period following the Cutoff Date or an anniversary of the Cutoff Date
(each, a "Servicer Liability Period"), the Servicer will be obligated to
purchase Student Loans only to the extent its total liability incurred during
the then current Servicer Liability Period for such purchases and any other
liabilities under this Agreement exceeds an amount (the "Servicer Liability
Limit") equal to 0.15% of the principal balances of the Financed Student Loans
outstanding as of the Cutoff Date or, after the first anniversary of the Cutoff
Date, as of the preceding July 31.
(d) In consideration of the purchase of any such Student Loan pursuant to
this Section 3.05, the Servicer shall remit, in the manner specified in Section
4.01, the Purchase Amount and the Issuer shall execute such assignments and
other documents reasonably requested by the Servicer in order to effect the
transfer of such Student Loan to the Servicer or its designee; provided,
however, that the Servicer's total liability for losses for rejected claims by
the Guarantors for any Financed Student Loan based on any breach pursuant to
Sections 3.01, 3.02, 3.03 or 3.04 hereof will not exceed that amount which the
related Guarantor would have been obligated to pay with respect to such loan had
its obligation to guarantee payment thereof not been affected by the Servicer's
breach. Subject to Section 5.02, the exclusive remedy of the Noteholders, the
Issuer, the Indenture Trustee, and the Eligible Lender Trustee and the entire
liability of Servicer for such a breach shall be limited to requiring the
Servicer to purchase Financed Student Loans pursuant to this Section 3.05.
SECTION 3.06. Servicing Fee. The Servicing Fee for each calendar month
(the "Servicing Fee") shall be equal to the lesser of (a) one-twelfth of 0.60%
or such larger percentage approved by the Rating Agencies, not to exceed 1.00%
(or of 0.50% with respect to any calendar month beginning with April 2009) of
the aggregate principal balances of the Financed Student Loans outstanding as of
the last day of the preceding calendar month and (b) the sum of (i) one-twelfth
of the In-School Percentage of the principal balance of each Billing Account
relating to a Financed Student Loan as of the last day of the preceding calendar
month which was an In-School Loan on such date or, if the average principal
balance of Billing Accounts relating to In-School Loans as of such date was
$2,500 or less, $1.50 per Billing Account, (ii) one-twelfth of the GRDF
Percentage of the principal balance as of the last day of the preceding calendar
month of each Billing Account relating to a Financed Student Loan which was a
Grace, Repayment, Deferral or Forbearance Student Loan as of such date or, if
the average principal balance of such Billing Accounts as of such date was
$3,000 or less, $3.00 per Billing Account, (iii) a fee of $1.00 for each
notification sent by the Servicer during the preceding calendar month on behalf
of the Trust to a borrower providing information to such borrower with respect
to Federal Consolidation Loan programs, (iv) a one-time fee of $75.00 for each
Federal
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Consolidation Loan originated by the Eligible Lender Trustee on behalf of the
Trust during the preceding calendar month, (v) a fee of $25.00 for each Financed
Student Loan for which, during the preceding calendar month, claim documentation
was completed and provided to the Guarantor or for which the Servicer performed
bankruptcy or ineligible Billing Account processing (that, in the case of
ineligible Billing Account processing, resulted in a demand letter being sent to
the borrower), in each case as required by the claims processing requirements of
the Guarantor, (vi) a fee of $.05 per Financed Student Loan for storing and
warehousing the applicable loan documentation for each such loan during the
preceding calendar month, (vii) a one-time fee of $0.40 for each Billing Account
transferred by the Seller to the Trust during the preceding calendar month,
(viii) a fee equal to one-twelfth of the product of (A) the aggregate
outstanding principal balance of the Financed Student Loans as of the last day
of the preceding calendar month and (B) .05%, which fee will be payable so long
as 34 C.F.R. ss. 682.413 or any successor section remains in effect and (ix) a
fee of $70.00 per hour for system development requests made by the Eligible
Lender Trustee on behalf of the Trust and provided by the Servicer during the
preceding calendar month. For purposes of making the determinations set forth in
clauses (i) and (ii) of the preceding sentence, the "In-School Percentage" and
"GRDF Percentage" shall each be determined based on the average principal
balance of the Billing Accounts relating to the In-School Loans and the Billing
Accounts relating to the Grace, Repayment, Deferral and Forbearance Loans,
respectively, as of the last day of the preceding calendar month, as follows:
Average Principal In-School Average Principal GRDF
Balance Percentage Balance Percentage
----------------- ---------- ------------------ ----------
$2,501 - $3,000 0.625% $3,001 - $3,400 1.100%
$3,001 - $3,500 0.525% $3,401 - $3,900 0.950%
$3,501 - $4,000 0.450% $3,901 - $4,400 0.830%
$4,001 - $4,750 0.375% $4,401 - $4,800 0.740%
$4,751 - $5,500 0.310% $4,801 - $5,400 0.650%
$5,501 - $6,250 0.260% $5,401 - $6,000 0.575%
$6,251 and above 0.230% $6,001 - $6,600 0.510%
$6,601 - $7,200 0.475%
$7,201 - $10,000 0.450%
$10,001 - $13,000 0.350%
$13,001 and above 0.300%
The Servicing Fee (together with any portion of the Servicing Fee that
remains unpaid from prior Monthly Payment Dates) will be payable on each Monthly
Payment Date and will be paid solely out of Monthly Available Funds in the case
of each Monthly Payment Date that is not a Quarterly Payment Date (and out of
Available Funds in the case of each Quarterly Payment Date) and amounts on
deposit in the Reserve Account on such Monthly Payment Date (including each
Quarterly Payment Date) as provided in Sections 2(d)(iv)(A), 2(d)(v)(A) and
2(e)(iv)(A) of the Administration Agreement. To the extent that, for any Monthly
Payment Date, the Servicing Fee is the amount calculated as described in clause
(a) of the first sentence of the preceding paragraph, then an amount (the
"Servicing Fee Shortfall") equal to the excess of the amount described in clause
(b) of such sentence over the amount described in clause (a) of such sentence
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shall be payable on the next succeeding Quarterly Payment Date (or if such
Monthly Payment Date is also a Quarterly Payment Date, on such Quarterly Payment
Date) from any remaining Reserve Account Excess as provided in Section 2(e)(ii)
of the Administration Agreement. To the extent such remaining Available Funds
are insufficient to pay the Servicing Fee Shortfall on any Distribution Date,
the Seller shall be required to pay any unpaid Servicing Fee Shortfall directly
to the Servicer out of its own funds. The Servicer will be obligated to perform
its servicing obligations whether or not it receives any amounts in respect of
Servicing Fee Shortfalls.
SECTION 3.07. Servicer's Report. On or before the fifteenth day of each
month (or, if any such day is not a Business Day, on the next succeeding
Business Day), the Servicer shall deliver to the Administrator a servicer's
report with respect to the preceding calendar month containing all information
necessary for the Administrator to prepare the Administrator's Certificate,
referred to in Section 2(b)(ii) of the Administration Agreement, covering such
preceding calendar month.
SECTION 3.08. Annual Statement as to Compliance; Notice of Default. (a)
The Servicer shall deliver to the Eligible Lender Trustee, the Indenture Trustee
and the Swap Counterparty (with a copy to the Seller), on or before April 30 of
each year beginning April 30, 2000, an Officers' Certificate of the Servicer,
dated as of December 31 of the preceding year, stating that (i) a review of the
activities of the Servicer during the preceding 12-month period (or, in the case
of the first such certificate, during the period from the Closing Date to
December 31, 1999 or, as specified below, to September 30, 1999) and of its
performance has been made under such officers' supervision and (ii) to the best
of such officers' knowledge, based on such review, the Servicer has fulfilled
all its obligations under this Agreement in all material respects throughout
such year (or in the case of the first such Officers' Certificate, such shorter
period) or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officers and the nature
and status thereof; provided, however, that, at the option of the Servicer, the
Servicer may date the initial such Officers' Certificate as of September 30,
1999, and, in such case, shall deliver such Officer's Certificate on or before
December 31, 1999 and thereafter shall deliver such Officer's Certificate, dated
as of September 30 of each succeeding year, on or before December 31 of such
year. The Indenture Trustee shall send a copy of each such Officers' Certificate
and each report referred to in this Section 3.08 to the Rating Agencies. A copy
of each such Officers' Certificate and each report referred to in this Section
3.08 may be obtained by any Noteholder or Note Owner by a request in writing to
the Eligible Lender Trustee addressed to its Corporate Trust Office, together
with evidence satisfactory to the Eligible Lender Trustee that such Person is
one of the foregoing parties. Upon the telephone request of the Eligible Lender
Trustee, the Indenture Trustee will promptly furnish the Eligible Lender Trustee
a list of Noteholders as of the date specified by the Eligible Lender Trustee.
(b) The Servicer shall deliver to the Eligible Lender Trustee, the
Indenture Trustee, the Seller, the Swap Counterparty and the Rating Agencies,
promptly after having obtained knowledge thereof, but in no event later than
five Business Days thereafter, written notice in an Officers' Certificate of the
Servicer of any event which with the giving of notice or lapse of time, or both,
would become a Servicer Default under Section 6.01 or would cause the Servicer
to fail to meet any Rating Agency Condition.
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SECTION 3.09. Annual Independent Certified Public Accountants' Report. The
Servicer shall cause a firm of independent certified public accountants, which
may also render other services to the Servicer, the Seller or their Affiliates,
to deliver to the Eligible Lender Trustee, the Indenture Trustee and the Swap
Counterparty (with a copy to the Seller) within 180 days of the end of the
Servicer's regular fiscal-year ended September 30 or calendar-year audit period,
an audit report that encompasses the Servicer's portion of the annual Lender
Audit (as defined in the Higher Education Act), or any successor thereto, as
required of a lender under the Higher Education Act, for the preceding year (or,
in the case of the first such report, during the period from the Closing Date to
December 31, 1999 or, as the case may be, to September 30, 1999). The Indenture
Trustee shall send a copy of each such report to the Rating Agencies.
Such report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 3.10. Access to Certain Documentation and Information Regarding
Financed Student Loans. Upon at least three Business Days' prior notice, the
Servicer shall provide the Noteholders access to the Student Loan Files in such
cases where the Noteholders shall be required by applicable statutes or
regulations to review such documentation, as demonstrated by evidence
satisfactory to the Servicer in its reasonable judgment. Access shall be
afforded 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 3.11. 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 or the Noteholders, as the case may be.
SECTION 3.12. Appointment of Subservicer. The Servicer may at any time
appoint a subservicer to perform all or any portion of its obligations as
Servicer hereunder; provided, however, that the Rating Agency Condition shall
have been satisfied in connection therewith; and provided, further, that the
Servicer shall remain obligated and be liable to the Issuer, the Eligible Lender
Trustee, the Indenture Trustee and the Noteholders for the servicing and
administering of the Financed 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
Financed 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 or the
Noteholders shall have any responsibility therefor.
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ARTICLE IV
Deposits into the Collection Account
SECTION 4.01. Deposits into the Collection Account. (a) The Servicer shall
deposit into the Collection Account (in the case of clauses (i) and (ii) within
two Business Days of receipt of freely available funds therefor):
(i) all identifiable payments received by the Servicer by or on
behalf of Obligors on the Financed Student Loans, including any Guarantee
Payments with respect to the Financed Student Loans;
(ii) all Liquidation Proceeds on the Financed Student Loans;
(iii) with respect to Purchased Student Loans, the aggregate
Purchase Amounts, when such amounts are due, as provided in Section 3.05
hereof; and
(iv) all other amounts required to be deposited into the Collection
Account by the Servicer pursuant to the terms hereof.
(v) The Eligible Lender Trustee shall deposit into the Collection
Account within two Business Days of the receipt thereof, the aggregate
amount of Interest Subsidy Payments and Special Allowance Payments
received by it with respect to the Financed Student Loans.
(vi) The Seller shall deposit into the Collection Account, the
aggregate Purchase Amount with respect to Purchased Student Loans and all
other amounts to be paid by the Seller under Section 3.02 and 5.01 of the
Loan Sale Agreement when such amounts are due, as provided in Section 3.03
of the Loan Sale Agreement.
(vii) The Indenture Trustee, at the written direction of the
Administrator, shall withdraw from the Collateral Reinvestment Account and
deposit into the Collection Account on each Determination Date during the
Revolving Period, an amount equal to the Capitalized Interest Amount for
the preceding Collection Period, as provided in Section 2(f) of the
Administration Agreement.
(viii) The Indenture Trustee, at the written direction of the
Administrator, shall withdraw from the Collateral Reinvestment Account and
deposit into the Collection Account on any date during the Revolving
Period specified by the Administrator, such amounts as the Administrator
may determine are needed to make required distributions from Monthly
Available Funds or Available Funds, as the case may be, on Monthly Payment
Dates.
ARTICLE V
The Servicer
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SECTION 5.01. 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 Financed 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 in the
case of the Initial Financed Student Loans, and will be deemed to speak as of
the applicable Transfer Date, in the case of Delayed Delivery Loans, New Loans
and Serial Loans, as of the date of the relevant Assignment in the case of any
Qualified Substitute Student Loan, as of the date of origination in the case of
any Consolidation Loan added to the Trust during the Revolving Period and as of
the applicable Add-on Consolidation Loan Funding Date in the case of any
Consolidation Loan the principal balance of which has been increased by the
principal balance of a related Add-on Consolidation Loan, but shall survive the
sale, transfer and assignment of the Financed Student Loans to the Eligible
Lender Trustee on behalf of the Issuer (and the origination of such
Consolidation Loans) 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 in good standing under the laws of
the State of Delaware, with the power and authority to own its properties
and to conduct its business as such properties are currently owned and
such business is currently conducted, and has the legal right to service
the Financed Student Loans.
(b) Power and Authority of the Servicer. The Servicer has the
corporate power and authority to execute and deliver this Agreement and to
carry out its terms, and the execution, delivery and performance of this
Agreement have been duly authorized by the Servicer by all necessary
corporate action.
(c) Binding Obligation. This Agreement constitutes a legal, valid
and binding obligation of the Servicer, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization and
similar laws relating to creditors' rights generally and subject to
general principles of equity.
(d) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof or thereof do
not conflict with, result in any breach of any of the terms and provisions
of, or constitute (with or without notice or lapse of time or both) a
default under, the certificate of incorporation 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; or 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; or violate
any law or, to the knowledge of the Servicer, 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.
Performance by the Servicer of its servicing duties with respect to the
Financed Student Loans, and compliance by the Servicer with the terms of
this Agreement, will not result in the loss of any Guarantee Payments by
the Trust or any reinsurance payments with respect to any Financed Student
Loan by the applicable Guarantor.
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(e) No Proceedings. There are no proceedings or investigations
pending against the Servicer or, to its best knowledge, threatened against
the Servicer, 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 issuance of the Notes or the consummation of any of
the transactions contemplated by this Agreement, or any of the other Basic
Documents, (iii) seeking any determination or ruling that could reasonably
be expected to have a material and adverse effect on the performance by
the Servicer of its obligations under, or the validity or enforceability
of, this Agreement, any of the other Basic Documents or the Notes or (iv)
seeking to affect adversely the federal or state income tax attributes of
the Issuer or the Notes.
(f) All Consents. All authorizations, consents, licenses, orders or
approvals of or registrations or declarations with any court, regulatory
body, administrative agency or other government instrumentality required
to be obtained, effected or given by the Servicer in connection with the
execution and delivery by the Servicer of this Agreement and the
performance by the Servicer of its duties contemplated by this Agreement
have in each case been duly obtained, effected or given and are in full
force and effect.
SECTION 5.02. Indemnities of Servicer. (a) 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, the Eligible Lender Trustee, the Indenture Trustee, the
Seller, the Administrator or the Noteholders or any of the officers, directors,
employees and agents of the Issuer, the Eligible Lender Trustee, the Indenture
Trustee, the Administrator or the Seller to the extent that such loss, liability
or expense arose out of, or was imposed upon any such Person 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 any such Person 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;
provided, however, that the Servicer's obligation arising under this Section
5.02 shall apply only to the extent that the sum of such obligation and any
other liabilities of the Servicer under this Agreement exceeds the Servicer
Liability Limit for any Servicer Liability Period (as such terms are defined in
Section 3.05). 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 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.
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For purposes of this Section, in the event of the termination of the
rights and obligations of Loan Services as Servicer pursuant to Section 6.01, 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 6.02.
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 and shall include reasonable fees and expenses of
counsel and expenses of litigation. If the Servicer shall have made any
indemnity payments pursuant to this Agreement and the Person to or on behalf of
whom such payments are made thereafter collects any of such amounts from others,
such Person shall promptly repay such amounts to the Servicer, without interest.
(b) Except with respect to liabilities relating to rejected claims by the
Guarantors, the Seller agrees to indemnify and hold harmless the Servicer from
any liability incurred by the Servicer under subsection (a) above as a result of
the Servicer's ordinary negligence.
SECTION 5.03. 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, the Indenture Trustee and the Swap Counterparty an Officers'
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this Section
and that all conditions precedent 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. Notwithstanding anything herein to the contrary, compliance with
clauses (i), (ii), (iii) and (iv) above shall be conditions to the consummation
of any of the transactions referred to in clause (a), (b) or (c) above.
SECTION 5.04. Limitation on Liability of Servicer and Others. Neither the
Servicer nor any of the directors, officers, employees or agents of the Servicer
shall be under any liability to the Issuer or the Noteholders, except as
provided under this Agreement, for any action taken or for refraining from the
taking of any action pursuant to this Agreement or for errors in judgment;
provided, however, that this provision shall not protect the Servicer or any
such Person against any liability that would otherwise be imposed by reason of
willful misfeasance, bad faith or negligence in the performance of duties or by
reason of reckless disregard of obligations and duties under this Agreement. The
Servicer and any director, officer, employee or agent of 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 that shall not be
incidental to its duties to service the Student Loans in accordance with this
Agreement and that in its opinion may involve it in any expense or liability;
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 Noteholders under the Indenture.
SECTION 5.05. Loan Services Not to Resign as Servicer. Subject to the
provisions of Section 5.03, Loan Services 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 shall no
longer be permissible under applicable law. Notice of any such determination
permitting the resignation of Loan Services shall be communicated to the
Eligible Lender Trustee, the Indenture Trustee, the Rating Agencies and the Swap
Counterparty at the earliest practicable time (and, if such communication is not
in writing, shall be confirmed in writing at the earliest practicable time) and
any such determination shall be evidenced by an Opinion of Counsel to such
effect delivered to the Eligible Lender Trustee, the Indenture Trustee and the
Swap Counterparty concurrently with or promptly after such notice. No such
resignation shall become effective until the Indenture Trustee or a Successor
Servicer shall have assumed the responsibilities and obligations of Loan
Services in accordance with Section 6.02.
ARTICLE VI
Default
SECTION 6.01. Servicer Default. If any one of the following events (each,
a "Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to deliver to the Indenture Trustee
for deposit in any of the Trust Accounts any payment required by the Basic
Documents, which failure continues unremedied for three 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
after discovery of such failure by an officer of the Servicer; or
(b) any failure by the Servicer duly to observe or to perform in any
material respect any other covenants or agreements of the Servicer set
forth in this Agreement or any other Basic Document, which failure shall
(i) materially and adversely affect the rights of Noteholders or the Swap
Counterparty and (ii) continue unremedied for a period of thirty (30) days
after the date of discovery of such failure by an officer of the Servicer
or 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 (B) to the Servicer, the Indenture
Trustee, the Administrator and the Eligible Lender Trustee by Noteholders
representing not less than 25% of the Outstanding Amount of the Notes; or
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(c) any limitation, suspension or termination by the Department of
the Servicer's eligibility to service Student Loans which materially and
adversely affects its ability to service the Financed Student Loans; or
(d) an Insolvency Event occurs with respect to the 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 75% 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 5.02) of
the Servicer under this Agreement. On or after the receipt by the Servicer of
such written notice, all authority and power of the Servicer under this
Agreement, whether with respect to the Notes, the Financed 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 6.02; and,
without limitation, the Indenture Trustee and the Eligible Lender Trustee are
hereby authorized and empowered to execute and deliver, for the benefit of the
predecessor Servicer, as attorney-in-fact or otherwise, any and all documents
and other instruments, and to do or accomplish all other acts or things
necessary or appropriate to effect the purposes of such notice of termination,
whether to complete the transfer and endorsement of the Financed Student Loans
and related documents, or otherwise. The predecessor Servicer shall cooperate
with the successor Servicer, the Indenture Trustee and the Eligible Lender
Trustee in effecting the termination of the responsibilities and rights of the
predecessor Servicer under this Agreement, including the transfer to the
successor Servicer for administration by it of all cash amounts that shall at
the time be held by the predecessor Servicer for deposit, or shall thereafter be
received by it with respect to a Financed Student Loan. All reasonable costs and
expenses (including attorneys' fees) incurred in connection with transferring
the 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 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 6.02. Appointment of Successor. (a) Upon receipt by the Servicer
of notice of termination pursuant to Section 6.01, 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 later of
(x) the date 120 days from the delivery to the Eligible Lender Trustee, and the
Indenture Trustee of written notice of such resignation (or written confirmation
of such notice) in accordance with the terms of this Agreement and (y) the date
upon which the predecessor Servicer shall become unable to act as Servicer as
specified in the notice of resignation and accompanying Opinion of Counsel. 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 and the Administrator. In the event that a successor
Servicer has not been appointed at the time when the predecessor Servicer has
ceased
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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.
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 the regular business of
which shall include the servicing of student loans, as the successor to the
Servicer under this Agreement; provided, however, that such right to appoint or
to petition for the appointment of any such successor Servicer shall in no event
relieve the Indenture Trustee from any obligations otherwise imposed on it under
the Basic Documents until such successor has in fact assumed such appointment.
(b) Upon appointment, the successor Servicer (including the Indenture
Trustee acting as successor Servicer) shall be the successor in all respects to
the predecessor Servicer and shall be subject to all the responsibilities,
duties and liabilities placed on the predecessor Servicer that arise thereafter
or are related thereto and shall be entitled to an amount agreed to by such
successor Servicer (which shall not exceed the Servicing Fee, unless such
compensation arrangements will not result in a downgrading of the Class A-1
Notes, the Class A-2 Notes or the Subordinate Notes by any Rating Agency) and
all the rights granted to the predecessor 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, 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 6.03. Notification to Noteholders and the Company. Upon any
termination of, or appointment of a successor to, the Servicer pursuant to this
Article VI, the Indenture Trustee shall give prompt written notice thereof to
Noteholders, the Administrator, the Company, the Eligible Lender Trustee 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 6.04. Waiver of Past Defaults. The Noteholders of Notes evidencing
not less than a majority of the Outstanding Amount of the Notes may, on behalf
of all Noteholders, waive in writing any default by the 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 to the extent provided in such waiver. 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. No such waiver shall extend to any subsequent or other default or
impair any right consequent thereto.
ARTICLEVII
Miscellaneous
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SECTION 7.01. Amendment. This Agreement may be amended by the Servicer and
the Eligible Lender Trustee, with the prior written consent of the Indenture
Trustee, but without the consent of any of the Noteholders, 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; 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.
This Agreement may also be amended from time to time by the Servicer and
the Eligible Lender Trustee, with the prior written consent of the Indenture
Trustee, the Noteholders of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes and the Swap Counterparty, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Noteholders; provided, however, that 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 Financed Student Loans or distributions
that shall be required to be made for the benefit of the Noteholders or (b)
reduce the aforesaid percentage of the Outstanding Amount of the Notes, the
Noteholders of which are required to consent to any such amendment, without the
consent of all outstanding Noteholders; provided further, that the prior written
consent of the Swap Counterparty shall not be required if an Opinion of Counsel
is delivered to the Swap Counterparty stating that the proposed amendment to
this Agreement will not adversely affect in any material respect the interests
of the Noteholders or the Swap Counterparty.
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 and each of the Rating Agencies.
It shall not be necessary for the consent of Noteholders pursuant to this
Section to approve the particular form of any proposed amendment or consent, but
it shall be sufficient if such consent shall approve the substance thereof.
Prior to the execution of any amendment to this Agreement, the Eligible
Lender Trustee, the Indenture Trustee and the Swap Counterparty shall be
entitled to receive and rely upon an Opinion of Counsel stating that the
execution of such amendment is authorized or permitted by this Agreement and the
Opinion of Counsel referred to in Section 6.02(f) of the Loan Sale Agreement.
The Eligible Lender Trustee and the Indenture Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Eligible Lender
Trustee's or the Indenture Trustee's, as applicable, own rights, duties or
immunities under this Agreement or otherwise.
SECTION 7.02. Protection of Interests in Trust. (a) The Servicer shall not
change its name, identity or corporate structure in any manner that would, could
or might make any financing statement or continuation statement filed in
accordance with Section 6.02(a) of the
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Loan Sale Agreement seriously misleading within the meaning of ss. 9-402(7) of
the UCC, unless it shall have given the Eligible Lender Trustee, the Indenture
Trustee, the Swap Counterparty and the Rating Agencies at least five days' prior
written notice thereof and shall have promptly filed appropriate amendments to
all previously filed financing statements or continuation statements.
(b) The Servicer shall have an obligation to give the Eligible Lender
Trustee, the Indenture Trustee and the Swap Counterparty at least sixty (60)
days' prior written notice of any relocation of its principal executive office
if, as a result of such relocation, the applicable provisions of the UCC would
require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement and shall promptly file
any such amendment. The Servicer shall at all times maintain each office from
which it shall service Financed Student Loans, and its principal executive
office, within the United States of America.
(c) The Servicer shall maintain accounts and records of each Student Loan
accurately and in sufficient detail to permit (i) the reader thereof to know at
any time the status of such Financed Student Loan, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Financed Student Loan and the amounts from time to time deposited in the
Collection Account in respect of such Financed Student Loan.
(d) The Servicer shall, by use of a distinct identification code, maintain
its computer systems so that, from and after the time of sale under this
Agreement of the Financed Student Loans, the Servicer's master computer records
(including any backup archives) that refer to a Student Loan shall indicate
clearly the interest of the Issuer, the Eligible Lender Trustee and the
Indenture Trustee in such Student Loan and that such Student Loan is owned by
the Eligible Lender Trustee on behalf of the Issuer and has been pledged to the
Indenture Trustee. Indication of the Issuer's, the Eligible Lender Trustee's and
the Indenture Trustee's interest in a Student Loan shall be deleted from or
modified on the Servicer's computer systems when, and only when, the related
Financed Student Loan shall have been paid in full or repurchased.
(e) If at any time the Servicer shall propose to sell, grant a security
interest in, or otherwise transfer any interest in student loans to any
prospective purchaser, lender or other transferee, the Servicer shall give to
such prospective purchaser, lender or other transferee computer tapes, records
or printouts (including any restored from backup archives) that, if they shall
refer in any manner whatsoever to any Financed Student Loan, shall indicate
clearly that such Financed Student Loan has been sold and is owned by the
Eligible Lender Trustee on behalf of the Issuer and has been pledged to the
Indenture Trustee.
(f) The Servicer shall permit the Indenture Trustee and the Swap
Counterparty and their respective agents at any time during normal business
hours to inspect, audit and make copies of and abstracts from the Servicer's
records regarding any Financed Student Loan; provided, however, that the
Servicer is given reasonable prior notice of at least three (3) Business Days.
(g) Upon request, at any time the Eligible Lender Trustee or the Indenture
Trustee shall have reasonable grounds to believe that such request would be
necessary in
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connection with its performance of its duties under the Basic Documents, the
Servicer shall furnish to the Eligible Lender Trustee or the Indenture Trustee
(in each case, with a copy to the Administrator), within five (5) Business Days,
a list of all Financed Student Loans (by borrower social security number, type
of loan and date of issuance) then held as part of the Trust, and shall cause
the Administrator to furnish to the Eligible Lender Trustee or to the Indenture
Trustee, within 20 Business Days thereafter, a comparison of such list to the
list of Initial Financed Student Loans set forth in Schedule A to the Loan Sale
Agreement as of the Closing Date, and, for each Financed Student Loan that has
been added to or removed from the pool of loans held by the Eligible Lender
Trustee on behalf of the Issuer, information as to the date as of which and
circumstances under which each such Financed Student Loan was so added or
removed.
SECTION 7.03. Notices. Unless otherwise agreed by the recipient, all
demands, notices and communications upon or to the Seller, NBD, the Servicer,
the Eligible Lender Trustee, the Indenture Trustee, the Administrator, the
Rating Agencies or the Swap Counterparty under this Agreement shall be in
writing, personally delivered or mailed by certified mail, return receipt
requested (or in the form of telex or facsimile notice, followed by written
notice delivered as aforesaid or postage prepaid, first class mail), and shall
be deemed to have been duly given upon receipt;
(a) in the case of the Seller, to
USA Group Secondary Market Services, Inc.
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: President and Chief Executive Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Office of the General Counsel
USA Group, Inc.
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000;
(b) in the case of NBD, to
NBD Bank, N.A., as
trustee for USA Group
Secondary Market Services, Inc.
One Indiana Square
Suite 7072
Mail Code INI-7081
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxxx
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Telephone: (000) 000-0000
Telecopy: (000) 000-0000;
(c) in the case of the Servicer, to
USA Group Loan Services, Inc.
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to
Office of the Deputy General Counsel
USA Group, Inc.
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000;
(d) in the case of the Issuer, to
Student Loan Trust 1999-A
c/o First Chicago Delaware, Inc.
FCC National Bank
000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000,
with a copy to the Eligible Lender Trustee
at the Corporate Trust Office of the
Eligible Lender Trustee;
(e) in the case of the Eligible Lender Trustee, at the Corporate Trust
Office of the Eligible Lender Trustee;
(f) in the case of the Indenture Trustee, at its Corporate Trust Office;
(g) in the case of the Administrator, to
USA Group Secondary Market Services, Inc.
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: President and Chief Executive Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Office of the General Counsel
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USA Group, Inc.
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000;
(h) in the case of Moody's, to
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: ABS Monitoring Department
Telephone: (000) 000-0000
Facsimile: (000) 000-0000;
(i) in the case of Fitch, to
Fitch IBCA, Inc.
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Asset Backed Monitoring Unit
Telephone: (000) 000-0000
Facsimile: (000) 000-0000; and
(j) in the case of the Swap Counterparty, to
General Re Financial Products Corporation
Rockefeller Center
000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Head of Operations
Facsimile: (000) 000-0000
Telephone confirmation: (000) 000-0000;
or, as to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.
SECTION 7.04. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in the succeeding sentence, as provided in
Section 5.03 and as provided in the provisions of this Agreement concerning the
resignation of the Servicer, this Agreement may not be assigned by the Servicer.
This Agreement may only be assigned by the Eligible Lender Trustee to its
permitted successor pursuant to the Trust Agreement.
SECTION 7.05. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Servicer, the Issuer and the
Eligible Lender Trustee and for the benefit of the Administrator, the Indenture
Trustee and the Noteholders, as third party beneficiaries, and nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Trust Estate or
under
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or in respect of this Agreement or any covenants, conditions or provisions
contained herein. The Indenture Trustee and the Swap Counterparty are express
third-party beneficiaries and may enforce the provisions of this Agreement as if
they were parties hereto; provided, however, that in the case of the Swap
Counterparty, such right to enforcement and the right to provide consents or
waivers pursuant to the provisions hereof or to take other actions as provided
herein are conditioned upon its not being in default under the Swap Agreement.
SECTION 7.06. 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 7.07. 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 7.08. 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 7.09. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Indiana, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 7.10. Non-Petition Covenants. Notwithstanding any prior
termination of this Agreement, the Servicer shall not, prior to the date which
is one year and one day after the termination of this Agreement with respect to
the Issuer or the Company, acquiesce, petition or otherwise invoke or cause the
Issuer or the Company to invoke the process of any court or government authority
for the purpose of commencing or sustaining a case against the Issuer or the
Company under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Issuer or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Issuer.
SECTION 7.11. Limitation of Liability of Eligible Lender Trustee and
Indenture Trustee. (a) Notwithstanding anything contained herein to the contrary
(other than pursuant to subsection (d)), this Agreement has been signed by The
First National Bank of Chicago not in its individual capacity but solely in its
capacity as Eligible Lender Trustee of the Issuer and in no event shall The
First National Bank of Chicago in its individual capacity or, except as
expressly provided in the Trust Agreement, as beneficial owner of the Issuer
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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(b) Notwithstanding anything contained herein to the contrary (other than
pursuant to subsection (d)), this Agreement has been signed by The First
National Bank of Chicago not in its individual capacity but solely in its
capacity as Eligible Lender Trustee of the Issuer and in no event shall The
First National Bank of Chicago in its individual capacity or, except as
expressly provided in the Trust Agreement, as beneficial owner of the Issuer
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 or which recourse shall be had
solely to the assets of the Issuer.
(c) Notwithstanding anything contained herein to the contrary (other than
pursuant to subsection (d)), this Agreement has been accepted by Bankers Trust
Company not in its individual capacity but solely as Indenture Trustee and in no
event shall Bankers Trust Company have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder
or in any of the certificates, notices or agreements delivered pursuant hereto,
as to all of which recourse shall be had solely to the assets of the Issuer.
(d) Notwithstanding any other provision in this Agreement or the other
Basic Documents, nothing in this Agreement or the other Basic Documents shall be
construed to limit the legal responsibility of the Eligible Lender Trustee or
the Indenture Trustee, to the U.S. Secretary of Education or a Guarantor for any
violations of statutory or regulatory requirements that may occur with respect
to loans held by the Eligible Lender Trustee or the Indenture Trustee pursuant
to, or to otherwise comply with their obligations under, the Higher Education
Act or implementing regulations.
[Signatures Follow on Next Page]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
SMS STUDENT LOAN TRUST 1999-A,
By: THE FIRST NATIONAL BANK OF CHICAGO, not in its
individual capacity but solely as Eligible Lender
Trustee on behalf of the Trust
By: _______________________________
Name:
Title:
USA GROUP LOAN SERVICES, INC.
By: _______________________________
Name:
Title:
USA GROUP SECONDARY MARKET SERVICES, INC.
By: _______________________________
Name:
Title:
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THE FIRST NATIONAL BANK OF CHICAGO, not in its individual
capacity but solely as Eligible Lender Trustee
By: __________________________
Name:
Title:
Acknowledged and accepted
as of the day and year first
above written:
BANKERS TRUST COMPANY, not in
its individual capacity but
solely as Indenture Trustee
By: ________________________
Name:
Title:
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SCHEDULE A
The Servicer shall maintain each Student Loan File at one of the locations
listed below:
(a) USA Group Loan Services, Inc.
00000 XXX Xxxxxxx
Xxxxxxx, XX 00000
(b) USA Group Loan Services, Inc.
Brombles DVS, Inc. d/b/a Indianapolis Vault Company
0000 Xxxx 00xx Xxxxxx
Xxxxxxxxxxxx, XX 00000
