TRUST AGREEMENT
among
USA GROUP SECONDARY MARKET SERVICES, INC.,
as depositor,
SECONDARY MARKET COMPANY, INC.
and
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but solely
as Eligible Lender Trustee
Dated as of May 1, 1998
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TABLE OF CONTENTS
ARTICLE I
Definitions and Usage
ARTICLE II
Organization
SECTION 2.01. Name........................................... 1
SECTION 2.02. Office......................................... 1
SECTION 2.03. Purposes and Powers............................ 1
SECTION 2.04. Appointment of Eligible Lender Trustee......... 2
SECTION 2.05. Initial Capital Contribution of Trust
Estate............................. 2
SECTION 2.06. Declaration of Trust........................... 3
SECTION 2.07. Reserved....................................... 3
SECTION 2.08. Title to Trust Property........................ 3
SECTION 2.09. Representations and Warranties of the
Seller and the Company. .......... 3
SECTION 2.10. Tax Treatment.................................. 5
SECTION 2.11. Liability of Noteholders....................... 5
ARTICLE III
Ownership
SECTION 3.01. Beneficial Ownership........................... 5
ARTICLE IV
Actions by Eligible Lender Trustee
SECTION 4.01. Prior Notice to Company with Respect to
Certain Matters.................... 6
SECTION 4.02. Action by Company with Respect to
Bankruptcy......................... 8
SECTION 4.03. Restrictions on Company's Power................ 9
ARTICLE V
Certain Duties
SECTION 5.01. No Segregation of Monies; No Interest.......... 9
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SECTION 5.02. Accounting and Reports to the
Noteholders, the Internal Revenue
Service and Others................. 9
SECTION 5.03. Incentive Programs............................. 10
ARTICLE VI
Authority and Duties of Eligible Lender Trustee
SECTION 6.01. General Authority.............................. 10
SECTION 6.02. General Duties................................. 10
SECTION 6.03. Action upon Instruction........................ 11
SECTION 6.04. No Duties Except as Specified in this
Agreement, the Loan Sale Agreement, the
Servicing Agreement, the Administration
Agreement or in Instructions....... 12
SECTION 6.05. No Action Except under Specified
Documents or Instructions.......... 13
SECTION 6.06. Restrictions................................... 13
SECTION 6.07. Origination of Consolidation Loans
during the Revolving Period........ 13
ARTICLE VII
Concerning the Eligible Lender Trustee
SECTION 7.01. Acceptance of Trusts and Duties................ 15
SECTION 7.02. Furnishing of Documents........................ 17
SECTION 7.03. Representations and Warranties................. 17
SECTION 7.04. Reliance; Advice of Counsel.................... 18
SECTION 7.05. Not Acting in Individual Capacity.............. 19
SECTION 7.06. Eligible Lender Trustee Not Liable for
Notes or Student Loans............. 19
SECTION 7.07. Eligible Lender Trustee May Own Trust
Notes.............................. 20
SECTION 7.08. Licenses....................................... 20
ARTICLE VIII
Compensation of Eligible Lender Trustee
SECTION 8.01. Eligible Lender Trustee's Fees and
Expenses........................... 20
SECTION 8.02. Payments to the Eligible Lender Trustee........ 20
ARTICLE IX
Termination of Trust Agreement
SECTION 9.01. Termination of Trust Agreement................. 20
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SECTION 9.02. Reserved....................................... 21
ARTICLE X
Successor Eligible Lender Trustees and
Additional Eligible Lender Trustees
SECTION 10.01. Eligibility Requirements for Eligible
Lender Trustee.................... 21
SECTION 10.02. Resignation or Removal of Eligible
Lender Trustee.................... 22
SECTION 10.03. Successor Eligible Lender Trustee............. 23
SECTION 10.04. Merger or Consolidation of Eligible
Lender Trustee.................... 24
SECTION 10.05. Appointment of Co-Eligible Lender
Trustee or Separate Eligible Lender
Trustee........................... 24
ARTICLE XI
Miscellaneous
SECTION 11.01. Supplements and Amendments.................... 26
SECTION 11.02. No Legal Title to Trust Estate in
Company........................... 27
SECTION 11.03. Limitations on Rights of Others............... 28
SECTION 11.04. Notices....................................... 28
SECTION 11.05. Severability.................................. 29
SECTION 11.06. Separate Counterparts......................... 29
SECTION 11.07. Successors and Assigns........................ 29
SECTION 11.08. No Petition................................... 29
SECTION 11.09. No Recourse................................... 30
SECTION 11.10. Headings...................................... 30
SECTION 11.11. Governing Law................................. 30
SECTION 11.12. Responsibility to Secretary and
Guarantors........................ 30
SECTION 11.13. Third-Party Beneficiaries.................. 30
SECTION 11.14. Consents....................................31
EXHIBIT A Certificate of Trust of SMS Student Loan Trust
1998-A
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TRUST AGREEMENT dated as of May 1, 1998, among USA GROUP
SECONDARY MARKET SERVICES, INC., a Delaware corporation, as depositor (the
"Seller"), SECONDARY MARKET COMPANY, INC., a Delaware corporation (the
"Company"), and THE FIRST NATIONAL BANK OF CHICAGO, a national banking
association, not in its individual capacity but solely as eligible lender
trustee (the "Eligible Lender Trustee").
The Seller, the Company and the Eligible Lender Trustee hereby
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 May 1, 1998, among the
SMS Student Loan Trust 1998-A, as Issuer, the Seller, as Administrator, and
Bankers Trust Company, as Indenture Trustee, which also contains rules as to
construction and usage that shall be applicable herein.
ARTICLE II
Organization
SECTION 2.01. Name. The Trust created hereby shall be known as
"SMS Student Loan Trust 1998-A", 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 xxx and be sued.
SECTION 2.02. 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
Seller.
SECTION 2.03. 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
to sell the Notes in one or more transactions;
(ii) with the proceeds of the sale of the Notes, to purchase
the Initial Financed Student Loans, to deposit the Reserve Account
Initial Deposit in the Reserve Account, and to pay the organizational,
start-up and transactional
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expenses of the Trust and to pay the balance to the Seller
pursuant to the Loan Sale Agreement;
(iii) to enter into the Swap Agreement;
(iv) to obtain the Subordinate Note Insurance Policy;
(v) to originate Consolidation Loans during the Revolving
Period pursuant to Section 6.07 hereof, to increase the principal
balance of Consolidation Loans by adding the principal balances of any
related Add-on Consolidation Loans to the principal balances of such
Consolidation Loans, to acquire and hold any New Loans to be conveyed
to the Trust during the Revolving Period pursuant to the Loan Sale
Agreement and to acquire and hold any Serial Loans or other Student
Loans to be conveyed to the Trust subsequent to the Closing Date
pursuant to the Loan Sale Agreement;
(vi) to assign, grant, transfer, pledge, mortgage and convey
the Trust Estate pursuant to the Indenture;
(vii) to enter into and perform its obligations under the
Basic Documents to which it is to be a party;
(viii) 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
(ix) 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
Noteholders and the others specified in Section 2(d) 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 2.04. Appointment of Eligible Lender Trustee. The
Seller hereby appoints the Eligible Lender Trustee as trustee of the Trust
effective as of the date hereof, to have all of the rights, powers and duties
set forth herein.
SECTION 2.05. Initial Capital Contribution of Trust
Estate. The Seller 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
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acknowledges receipt in trust from the Seller, 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 Seller 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 2.06. 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
Company, subject to the obligations of the Trust under the other Basic
Documents. It is the intention of the parties hereto that the Trust constitute a
trust under the Business Trust Statute and that this Agreement constitute the
governing instrument of such trust. Effective as of the date hereof, the
Eligible Lender Trustee shall have all rights, powers and duties set forth
herein and in the Business Trust Statute with respect to accomplishing the
purposes of the Trust. The Eligible Lender Trustee and the Delaware Trustee
shall file the Certificate of Trust with the Secretary of State of the State of
Delaware pursuant to ss. 3801 of the Business Trust Statute on or before the
Closing Date.
SECTION 2.07. [Reserved.]
SECTION 2.08. Title to Trust Property. Subject to the
Indenture, legal title to the Trust Estate shall be vested at all times in the
Trust as a separate legal entity except where applicable law in any jurisdiction
requires title to any part of the Trust Estate to be vested in a trustee or
trustees, in which case title shall be deemed to be vested in the Eligible
Lender Trustee, a co-trustee and/or a separate trustee, as the case may be;
provided, however, that legal title to the Financed Student Loans shall be
vested at all times in the Eligible Lender Trustee on behalf of the Trust.
SECTION 2.09. Representations and Warranties of the
Seller and the Company. (a) Each of the Company and the Seller
hereby represents and warrants, as to itself, to the Eligible
Lender Trustee, the Subordinate Note Insurer and the Swap
Counterparty that:
(i) It is duly organized and validly existing as a corporation
in good standing under the laws of the jurisdiction of its
incorporation, with corporate power and authority to own its properties
and to conduct its business as such properties are currently owned and
such business is currently conducted (subject, with respect to the
Seller and
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its Student Loans, to the vesting of legal title thereto in NBD or
another eligible lender, as trustee for the Seller).
(ii) It is duly qualified to do business as a foreign
corporation in good standing, 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 shall require such
qualifications except where failure to do so (both singly and in the
aggregate) will not have a material adverse effect on the conduct of
its business, operations or financial condition.
(iii) It 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
it by all necessary corporate action; the Seller has full power and
authority to transfer and assign the property to be transferred and
assigned to, and to be deposited with, the Trustee; and the Seller has
duly authorized such transfer and assignment to the Trust by all
necessary corporate action.
(iv) This Agreement constitutes its legal, valid and binding
obligation 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.
(v) 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, its certificate of incorporation or by-laws, or any indenture,
agreement or other instrument to which it 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 best of its knowledge, any order, rule or
regulation applicable to it of any court or of any Federal or state
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over it or its properties.
(vi) There are no proceedings or investigations pending or, to
its best knowledge, threatened before any court, regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Seller or its properties: (A) asserting the
invalidity of
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this Agreement, (B) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or (C) seeking any
determination or ruling that might materially and adversely affect the
performance by it of its obligations under, or the validity or
enforceability of, this Agreement.
SECTION 2.10. Tax Treatment. The Seller and the Company have
entered into this Agreement, and the Notes will be issued to and acquired by the
Noteholders, with the intention that, for federal, state, foreign and local
income and franchise tax and usury law purposes, the Notes will be indebtedness
of the Company secured by the Trust Estate. Each of the Seller and the Company,
by entering into this Agreement, and each Noteholder, by the acceptance of its
Note, agrees to treat the Notes for purposes of federal, state and local income
and franchise taxes and for any other tax imposed on or measured by income and
usury law purposes as indebtedness of the Company secured by the Trust Estate.
In accordance with the foregoing, the Eligible Lender Trustee hereby agrees to
treat the Trust as a security device only, and shall not file tax returns or
obtain an employer identification number on behalf of the Trust (except as may
be required as a result of changes in law or as may otherwise be required in the
Opinion of Counsel for the Company).
SECTION 2.11. Liability of Noteholders. No Noteholder
shall have any personal liability or obligation to or for the
Trust and the Certificate of Trust shall be fully paid and
nonassessable.
ARTICLE III
Ownership
SECTION 3.01. Beneficial Ownership. Upon the formation of the
Trust by the contribution by the Seller pursuant to Section 2.05, the Seller
shall be the sole beneficial owner of the Trust. Concurrently with the transfer
of the Initial Financed Student Loans to the Trust pursuant to the Loan Sale
Agreement, the Seller does hereby irrevocably assign to the Company all of its
right, title and interest in and to the Trust, and thereupon (subject to the
Company's right to transfer pursuant to the next succeeding sentence) the
Company shall be the sole beneficial owner of the Trust. For so long as any
Notes remain Outstanding, the Company shall not Transfer its ownership interest
in the Trust, in whole or in part, unless (i) either (A) the Company shall have
delivered to the Eligible Lender Trustee, the Indenture Trustee, the Subordinate
Note Insurer and the Swap Counterparty an Opinion of Counsel (with a copy to the
Rating
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Agencies) that neither the Trust nor the Company would be consolidated with the
purchaser of such ownership interest in the event of an Insolvency Event with
respect to such purchaser or (B) the Rating Agency Condition is satisfied with
respect to such Transfer and the Subordinate Note Insurer gives its prior
written consent, (ii) the Company shall have delivered to the Eligible Lender
Trustee, the Indenture Trustee, the Subordinate Note Insurer and the Swap
Counterparty an Opinion of Counsel that such transaction will not result in a
material adverse federal or Indiana or Delaware state tax consequence to the
Issuer or the Noteholders, and (iii) there is delivered to the Eligible Lender
Trustee and the Indenture Trustee an Opinion of Counsel, in form and substance
satisfactory to them, that such Transfer may be made pursuant to an exemption,
describing the applicable exemption and the basis therefor, from the Securities
Act and under applicable state securities laws.
ARTICLE IV
Actions by Eligible Lender Trustee
SECTION 4.01. Prior Notice to Company with Respect to Certain
Matters. With respect to the following matters, neither the Eligible Lender
Trustee nor the Delaware Trustee shall take any action unless at least 30 days
before the taking of such action, the Eligible Lender Trustee or the Delaware
Trustee shall have notified the Company, the Rating Agencies, the Subordinate
Note Insurer and the Swap Counterparty in writing of the proposed action and
none of the Company, the Subordinate Note Insurer or the Swap Counterparty shall
have notified the Eligible Lender Trustee in writing prior to the 30th day after
such notice is given that the Company, the Subordinate Insurer or the Swap
Counterparty has withheld consent or the Company has provided alternative
direction (and such alternative direction has been consented to in writing by
the Subordinate Note Insurer):
(a) the initiation of any material claim or lawsuit by the
Trust (except claims or lawsuits brought in connection with the
collection of the Financed 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 Financed Student Loans);
(b) the election by the Trust to file an amendment to the
Certificate of Trust;
(c) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any
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Noteholder, the Subordinate Note Insurer or the Swap
Counterparty is required;
(d) the amendment of the Indenture by a supplemental indenture
in circumstances where the consent of any Noteholder, the Subordinate
Note Insurer or the Swap Counterparty is not required and such
amendment materially adversely affects the interests of the Company;
(e) 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 Company; or
(f) the appointment pursuant to the Indenture of a successor
Note Registrar or Indenture Trustee, or the consent to the assignment
by the Note Registrar or Indenture Trustee of its obligations under the
Indenture.
(g) the consent to the calling or waiver of any
default under any Basic Document;
(h) the consent to the assignment by the Indenture Trustee or
the Servicer of their respective obligations under any Basic Document;
(i) except as provided in Article IX hereof, dissolve,
terminate or liquidate the Trust in whole or in part;
(j) merge or consolidate the Trust with or into any other
entity, or convey or transfer all or substantially all of the Trust's
assets to any other entity;
(k) cause the Trust to incur, assume or guaranty any
indebtedness other than as set forth in this Agreement or the other
Basic Documents;
(l) do any act that conflicts with any other Basic
Document;
(m) do any act which would make it impossible to carry
on the ordinary business of the Trust as described in
Section 2.03 hereof;
(n) confess a judgment against the Trust;
(o) possess Trust assets, or assign the Trust's right to
property, for other than a Trust purpose;
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(p) cause the Trust to lend any funds to any entity;
or
(q) change the Trust's purpose and powers from those set forth
in this Agreement.
In addition the Trust shall not commingle its assets with those of any
other entity. The Trust shall maintain its financial and accounting books and
records separate from those of any other entity. Except as expressly set forth
herein, the Trust shall pay its indebtedness, operating expenses and liabilities
from its own funds, and the Trust shall not pay the indebtedness, operating
expenses and liabilities of any other entity. The Trust shall maintain
appropriate minutes or other records of all appropriate actions and shall
maintain its office separate from the offices of the Seller, the Company and
Loan Services.
Neither the Eligible Lender Trustee nor the Delaware Trustee shall have
the power, except upon the direction of the Company with the consent of the
Subordinate Note Insurer and the Swap Counterparty, and to the extent otherwise
consistent with the Basic Documents, to (i) remove or replace the Servicer or
the Indenture Trustee, (ii) institute proceedings to have the Trust declared or
adjudicated a bankrupt or insolvent, (iii) consent to the institution of
bankruptcy or insolvency proceedings against the Trust, (iv) file a petition or
consent to a petition seeking reorganization or relief on behalf of the Trust
under any applicable federal or state law relating to bankruptcy, (v) consent to
the appointment of a receiver, liquidator, assignee, trustee, sequestrator (or
any similar official) of the Trust or a substantial portion of the property of
the Trust, (vi) make any assignment for the benefit of the Trust's creditors,
(vii) cause the Trust to admit in writing its inability to pay its debts
generally as they become due, (viii) take any action, or cause the Trust to take
any action, in furtherance of any of the foregoing (any of he above, a
"Bankruptcy Action"). So long as the Indenture and the Insurance Agreement
remain in effect and no Subordinate Note Insurer Default exists, the Company
shall not have the power to take, and shall not take, any Bankruptcy Action with
respect to the Trust or direct the Eligible Lender Trustee to take any
Bankruptcy Action with respect to the Trust.
SECTION 4.02. Action by Company 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 prior approval of the
Company and the delivery to the Eligible Lender Trustee by the Company of a
certificate certifying that it reasonably believes that the Trust is insolvent.
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SECTION 4.03. Restrictions on Company's Power. The
-------------------------------
Company 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 2.03 nor shall the
Eligible Lender Trustee be permitted to follow any such direction, if given.
ARTICLE V
Certain Duties
SECTION 5.01. No Segregation of Monies; No Interest. Monies
received by the Eligible Lender Trustee hereunder need not be segregated in any
manner except to the extent required by law or the Basic Documents 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 5.02. Accounting and Reports to the Noteholders, the
Internal Revenue Service and Others. No federal income tax return shall be filed
on behalf of the Trust unless either (i) the Eligible Lender Trustee and the
Subordinate Note Insurer shall receive an Opinion of Counsel that, based on a
change in applicable law occurring after the date hereof, or as a result of a
transfer by the Company permitted by Section 3.01, the Code requires such a
filing or (ii) the Internal Revenue Service shall determine that the Trust is
required to file such a return. In the event that the Trust is required to file
tax returns, the Eligible Lender Trustee shall prepare or shall cause to be
prepared any tax returns required to be filed by the Trust and shall remit such
returns to the Company at least five (5) days before such returns are due to be
filed. The Company shall promptly sign such returns and deliver such returns
after signature to the Eligible Lender Trustee and such returns shall be filed
by the Eligible Lender Trustee with the appropriate tax authorities. In no event
shall the Eligible Lender Trustee, the Company, the Seller or the Subordinate
Note Insurer be liable for any liabilities, costs or expenses of the Trust or
the Noteholders arising out of the application of any tax law, including
federal, state, foreign or local income or excise taxes or any other tax imposed
on or measured by income (or any interest, penalty or addition with respect
thereto or arising from a failure to comply therewith) except for any such
liability, cost or expense attributable to any act or omission by the Eligible
Lender Trustee, the Company or the Seller, as the case may be, in breach of its
obligations under this Agreement.
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SECTION 5.03. Incentive Programs. Subject to compliance by the
Administrator with Section 2(i) of the Administration Agreement, the Trust shall
offer each Incentive Program to all qualified Borrowers except any Incentive
Program which the Administrator terminates pursuant to Section 2(i) of the
Administration Agreement. Upon the effective date specified in the notice of
termination required by Section 2(i) of the Administration Agreement, the Trust
shall cease offering the terminated Incentive Program to Borrowers affected by
the termination.
ARTICLE VI
Authority and Duties of Eligible Lender Trustee
SECTION 6.01. 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 Seller 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 Class
A-1 Notes in the aggregate principal amount of $150,000,000, Class A-2 Notes in
the aggregate principal amount of $433,650,000 and Subordinate Notes in the
aggregate principal amount of $21,350,000. The Eligible Lender Trustee is also
authorized and directed on behalf of the Trust (i) to acquire and hold legal
title to the Financed Student Loans from the Seller and (ii) to take all actions
required pursuant to Section 3.02(c) of the Servicing 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
Financed Student Loans.
In addition to the foregoing, the Eligible Lender Trustee is
authorized, but shall not be obligated, 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 6.02. General Duties. It shall be the duty of
the Eligible Lender Trustee to discharge (or cause to be
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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, subject to and in accordance with the provisions of this Agreement and
the other Basic Documents. 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 any 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 Financed Student Loans or to maintain, monitor or otherwise
supervise the administration, servicing or collection of the Financed Student
Loans.
SECTION 6.03. Action upon Instruction. (a) Subject to Article
IV, Section 7.01 and in accordance with the terms of the Basic Documents, the
Company may by written instruction direct the Eligible Lender Trustee in the
management of the Trust. Such direction may be exercised at any time by written
instruction of the Company pursuant to Article IV.
(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.
(c) Whenever the Eligible Lender Trustee is unable to
determine the appropriate course of action between alternative courses of action
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 Company and the
Subordinate Note Insurer requesting 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 Company received (and consented
to in writing by the Subordinate Note Insurer), 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
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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 Company, 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 Company, the Subordinate Note Insurer and the
Swap Counterparty requesting instruction from the Company and, to the extent
that the Eligible Lender Trustee acts or refrains from acting in good faith in
accordance with any such instruction received and consented to in writing by the
Subordinate Note Insurer, 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
interests of the Company and shall have no liability to any Person for such
action or inaction.
SECTION 6.04. No Duties Except as Specified in this Agreement,
the Loan Sale Agreement, the Servicing Agreement, the Administration 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, the Loan Sale
Agreement, the Servicing Agreement, the Administration Agreement, the Insurance
Agreement or in any document or written instruction received by the Eligible
Lender Trustee pursuant to Section 6.03; 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
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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, The First
National Bank of Chicago 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 6.05. No Action Except under Specified Documents or
Instructions. The Eligible Lender Trustee shall not manage, control, use, sell,
service, dispose of or 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 6.03.
SECTION 6.06. Restrictions. The Eligible Lender Trustee shall
not take any action (a) that is inconsistent with the purposes of the Trust set
forth in Section 2.03 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 Company shall not direct the Eligible
Lender Trustee to take action that would violate the provisions of this Section.
SECTION 6.07. Origination of Consolidation Loans during the
Revolving Period. (a) From time to time during the Revolving Period the Servicer
will identify those Financed Student Loans as to which a Borrower qualifies to
receive a Consolidation Loan under the Federal Consolidation Loan Program from
the Eligible Lender Trustee and will inform the Administrator of the identity of
such loans. The Administrator will determine, in accordance with customary
industry standards, whether a Consolidation Loan should be offered to such
Borrower; provided, however, that a Consolidation Loan will not be offered to a
Borrower if any Student Loan of such Borrower which is not owned by the Issuer
and which is proposed to be discharged by the making of such Consolidation Loan
is past due more than 30 days; and provided, further, that a Consolidation Loan
will not be offered to a Borrower if the aggregate principal balances of all
Consolidation Loans originated pursuant to this Section would thereby exceed the
limitations set forth in Section 6.07(d).
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(b) If the Administrator determines that it is appropriate to
offer a Consolidation Loan to a Borrower in accordance with this Section, it
will so inform the Servicer who will send the necessary documentation to such
Borrower and will process such documentation on behalf of the Eligible Lender
Trustee, all in accordance with industry standards, the Higher Education Act and
the related Guarantee Agreement. The Servicer will inform the Eligible Lender
Trustee of the completion of the loan underwriting process and the necessary
documentation, whereupon the Eligible Lender Trustee, on behalf of the Trust and
upon the direction of the Administrator, will execute any documents required to
be executed by it to complete the origination of such loan and to subject such
loan to the related Guarantee Agreement. The Servicer will not permit any
Consolidation Loan to be originated which would violate the representations and
warranties of Section 3.01 of the Loan Sale Agreement. Any Consolidation Loan
which is determined to violate any of such representations and warranties will
be subject to repurchase by the Seller as provided in Section 3.02 of the Loan
Sale Agreement.
(c) Each Consolidation Loan originated pursuant to this
Section 6.07 shall be owned by the Issuer and be part of the Trust Estate and
the Collateral from and after the time of such origination. Upon origination of
such loan and such loan becoming part of the Trust Estate and the Collateral,
the Administrator will instruct the Indenture Trustee, pursuant to Section 2(f)
of the Administration Agreement, to authorize the transfer from the Collateral
Reinvestment Account of an amount sufficient to prepay in full any Student Loan
that is to be consolidated through such origination, including any Add-on
Consolidation Loan that is prepaid in full as a result of the principal balance
of such Add-on Consolidation Loan being added to the principal balance of a
related Consolidation Loan held as part of the Trust Estate. The Administrator
will cause to be taken all actions, and the Eligible Lender Trustee will
cooperate with the Administrator in the execution of any instruments or
documents, required to establish and maintain the ownership interest of the
Issuer and the first perfected security interest of the Indenture Trustee in
each Consolidation Loan originated pursuant to this Section.
(d) In no event shall the Issuer or the Eligible Lender
Trustee on behalf of the Issuer originate Consolidation Loans in excess of
$35,000,000 (including the addition of the principal balances of any Add-on
Consolidation Loans) in the aggregate during the Revolving Period; additionally,
no Consolidation Loan may be originated by the Issuer or the Eligible Lender
Trustee on behalf of the Issuer having a scheduled maturity after October 28,
2029 if at the time of such
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origination the aggregate principal balance of all Consolidation Loans held as
part of the Trust Estate that have a scheduled maturity date after October 28,
2029 exceeds, or after giving effect to such origination, would exceed
$15,000,000; provided, however, that the Eligible Lender Trustee will be
permitted to fund the addition of the principal balance of any Add-on
Consolidation Loan in excess of such amounts, if the Eligible Lender Trustee is
required to do so by the Higher Education Act. In addition, in no event shall
the Issuer or the Eligible Lender Trustee on behalf of the Issuer make
Consolidation Loans after the Revolving Period; provided, however, that the
Eligible Lender Trustee may increase the principal balance of any Consolidation
Loan by the principal balance of any related Add-on Consolidation Loan during
the Add-on Period if the Eligible Lender Trustee is required to do so by the
Higher Education Act. After the Revolving Period, upon the addition of the
principal balance of such Add-on Consolidation Loan, and such amounts becoming
part of the Trust Estate and the Collateral, the Administrator will instruct the
Indenture Trustee, pursuant to Section 2(d)(iii)(A) of the Administration
Agreement, to authorize the transfer from the Collection Account of an amount
sufficient to prepay in full such Add-on Consolidation Loan.
(e) All Consolidation Fees payable with respect to
Consolidation Loans originated and the principal balances of any Add-on
Consolidation Loans added to the Trust pursuant to this Section will be payable
by the Issuer as provided in Section 2(d)(ii) of the Administration Agreement.
All other costs or fees incurred in originating Consolidation Loans (or in
adding the principal balances of any Add-on Consolidation Loans) shall be
payable by the Administrator.
ARTICLE VII
Concerning the Eligible Lender Trustee
SECTION 7.01. 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 monies
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 7.03 expressly made by the Eligible Lender Trustee. In
particular, but not by
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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 the Company;
(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 Seller 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 sufficiency of the Basic
Documents, and the Eligible Lender Trustee shall in no event assume or
incur any liability, duty, or obligation to any Noteholder or to the
Company, 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
Seller, 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
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(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 the Company, unless the
Company has 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 7.02. Furnishing of Documents. The Eligible Lender
Trustee shall furnish to the Company, the Subordinate Note Insurer and the Swap
Counterparty 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.
SECTION 7.03. Representations and Warranties. The Eligible
Lender Trustee hereby represents and warrants to each of the Seller, the
Company, the Subordinate Note Insurer and the Swap Counterparty, that:
(a) It is a national banking association duly organized and
validly existing in good standing under the laws of the United States.
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 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
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instrument to which it is a party or by which any of its
properties may be bound.
(d) It 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 Financed Student Loans and originating Consolidation
Loans as contemplated by this Agreement and the other Basic Documents,
has obtained a lender identification number with respect to the Trust
from the Department, has in effect a Guarantee Agreement with the
Initial Guarantor with respect to the Initial Financed Student Loans
and will have the requisite power and authority to enter into Guarantee
Agreements with Additional Guarantors, if any.
(e) In originating each Consolidation Loan on behalf of the
Trust, as provided in Section 6.07, it shall comply with all applicable
provisions of the Higher Education Act, and it will not create or cause
to be created any lien, charge or encumbrance on any such Consolidation
Loan or in any way cause the Trust to not have good title thereto.
SECTION 7.04. 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 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
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Trustee with reasonable care, and (ii) may consult with counsel, accountants and
other skilled persons 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, accountants or other such persons and not contrary to this
Agreement or any other Basic Document.
SECTION 7.05. Not Acting in Individual Capacity. Except as
provided in this Article VII, in accepting the trusts hereby created, The First
National Bank of Chicago 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 7.06. Eligible Lender Trustee Not Liable for Notes or
Student Loans. The recitals contained herein (other than the representations and
warranties in Section 7.03) shall be taken as the statements of the Seller, and
the Eligible Lender Trustee assumes no responsibility for the correctness
thereof. The Eligible Lender Trustee makes no representations as to the validity
or sufficiency of this Agreement or any other Basic Document or the Notes, or of
any Financed 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 either 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, Interest Subsidy Payments or Special
Allowance Payments, as applicable, of any Financed 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 the Noteholders under the Indenture, including:
the existence and contents of any computer or other record of any Financed
Student Loan; the validity of the assignment of any Financed Student Loan to the
Trust; the completeness of any Financed Student Loan; the performance or
enforcement (except as expressly set forth in any Basic Document) of any
Financed Student 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 Eligible Lender Trustee.
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SECTION 7.07. Eligible Lender Trustee May Own Trust Notes. The
Eligible Lender Trustee in its individual or any other capacity may become the
owner or pledgee of Notes and may deal with the Seller, the Administrator, the
Indenture Trustee and the Servicer in banking transactions with the same rights
as it would have if it were not the Eligible Lender Trustee.
SECTION 7.08. Licenses. The Eligible Lender Trustee shall
cause the Trust to use its best efforts to obtain and maintain the effectiveness
of any licenses required in connection with this Agreement and the other Basic
Documents and the transactions contemplated hereby and thereby until such time
as the Trust shall terminate in accordance with the terms hereof. The Eligible
Lender Trustee shall receive from the Administrator the information necessary to
comply with this Section.
ARTICLE VIII
Compensation of Eligible Lender Trustee
SECTION 8.01. 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
Seller and the Eligible Lender Trustee, and the Eligible Lender Trustee shall be
entitled to be reimbursed by the Seller for its other reasonable expenses
hereunder, including the reasonable compensation, expenses and disbursements of
such agents, representatives, experts and counsel as the Eligible Lender Trustee
may employ in connection with the exercise and performance of its rights and
duties hereunder. The Eligible Lender Trustee shall have no recourse to the
Issuer for its fees and expenses hereunder.
SECTION 8.02. Payments to the Eligible Lender Trustee. Any
amounts paid to the Eligible Lender Trustee pursuant to Section 8.01 hereof or
pursuant to Section 4.03 of the Loan Sale Agreement or pursuant to Section 24 of
the Administration Agreement shall be deemed not to be a part of the Trust
Estate immediately after such payment.
ARTICLE IX
Termination of Trust Agreement
SECTION 9.01. 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
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of (i) the final distribution by the Eligible Lender Trustee of all monies or
other property or proceeds of the Trust Estate in accordance with the terms of
the Indenture and the Servicing Agreement and the termination of the Indenture
and (ii) the expiration of 21 years from the death of the last survivor of the
descendants of Xxxxxx X. Xxxxxxx, the late Ambassador of the United States to
the Court of St. James's, living on the date hereof.
(b) Neither the Seller nor the Company shall be entitled to
revoke or terminate the Trust.
(c) Notice of any termination of the Trust, shall be given
promptly by the Eligible Lender Trustee by letter to the Company and the Swap
Counterparty mailed within five Business Days of receipt of notice of such
termination from the Administrator given pursuant to Section 2(b)(vii) of the
Administration Agreement.
(d) Upon the winding up of the Trust and its termination, the
Eligible Lender Trustee shall cause the Certificate of Trust to be canceled by
filing a certificate of cancellation with the Secretary of State of the State of
Delaware in accordance with the provisions of Section 3810 of the Business Trust
Statute.
SECTION 9.02. [Reserved.]
ARTICLE X
Successor Eligible Lender Trustees and
Additional Eligible Lender Trustees
SECTION 10.01. 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 Financed
Student Loans and originating Consolidation Loans on behalf of
the Trust, with a valid lender identification number with respect
to the Trust from the Department; (ii) being authorized to
exercise corporate trust powers and hold legal title to the
Financed Student Loans; (iii) having in effect Guarantee
Agreements with the Initial Guarantor and any Additional
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; and (v) having (or having a
parent which has) a rating of at least "Baa3" by Xxxxx'x, "BBB"
by Standard & Poor's and "BBB" by Fitch, if rated by Fitch. If
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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 10.02. In addition, at all times the Trustee or a co-trustee shall be a
Person that satisfies the requirements of Section 3807(a) of the Business Trust
Statute (the "Delaware Trustee").
SECTION 10.02. 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, the Subordinate Note Insurer and the Swap Counterparty. Upon
receiving such notice of resignation, the Administrator shall promptly appoint a
successor Eligible Lender Trustee (acceptable to the Subordinate Note Insurer)
meeting the eligibility requirements of Section 10.01 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 or the Subordinate Note
Insurer 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
eligible in accordance with the provisions of Section 10.01 and shall fail to
resign after written request therefor by the Administrator, or if at any time
the Eligible Lender Trustee shall be legally unable to act, or an Insolvency
Event with respect to the Eligible Lender Trustee shall have occurred and be
continuing, then the Administrator or the Subordinate Note Insurer may remove
the Eligible Lender Trustee. If the Administrator or the Subordinate Note
Insurer shall remove the Eligible Lender Trustee under the authority of the
immediately preceding sentence, the Administrator (with the written consent of
the Subordinate Note Insurer) or the Subordinate Note Insurer
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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.
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 (whose appointment has been
approved in writing by the Subordinate Note Insurer) pursuant to Section 10.03
and payment of all fees and expenses owed to the outgoing Eligible Lender
Trustee. The Administrator shall provide notice of such resignation or removal
of the Eligible Lender Trustee to the Subordinate Note Insurer, the Swap
Counterparty and to each of the Rating Agencies.
SECTION 10.03. Successor Eligible Lender Trustee. Any
successor Eligible Lender Trustee appointed pursuant to Section 10.02 shall
execute, acknowledge and deliver to the Administrator, to its predecessor
Eligible Lender Trustee and the Subordinate Note Insurer 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, monies 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 appointment
as provided in this Section unless at the time of such acceptance such successor
Eligible Lender Trustee shall be eligible pursuant to Section 10.01.
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
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the Company, the Indenture Trustee, the Noteholders, the Rating Agencies, the
Subordinate Note Insurer and the Swap Counterparty. 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.
SECTION 10.04. 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 10.01; provided further that
the Eligible Lender Trustee shall mail notice of such merger or consolidation to
the Rating Agencies, the Subordinate Note Insurer and the Swap Counterparty not
less than 10 Business Days prior to the closing date of such merger or
consolidation.
SECTION 10.05. 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 (and with the
written consent of the Subordinate Note Insurer and written notice to the Swap
Counterparty) shall have the power and shall execute and deliver all instruments
to appoint one or more Persons approved by the Eligible Lender Trustee, which,
except in the case of any Delaware Trustee, shall meet the eligibility
requirements of clauses (i) through (iii) of Section 10.01, 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. Pursuant to the Co-Trustee Agreement, dated as of May 1, 1998
between The First National Bank of Chicago and First Chicago Delaware Inc., the
Eligible Lender Trustee shall appoint
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First Chicago Delaware Inc. as a co-trustee hereunder for the purpose of its
acting as Delaware Trustee and such agreement is hereby incorporated herein by
reference. If the Delaware Trustee shall become incapable of acting, resign or
be removed, unless the Trustee is qualified to act as Delaware Trustee, a
successor co-trustee shall promptly be appointed in the manner specified in this
Section 10.05 to act as Delaware Trustee. 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) and (v) of Section 10.01 and no
notice of the appointment of any co-trustee or separate trustee shall be
required pursuant to Section 10.03.
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 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 co-trustee.
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
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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, the
Subordinate Note Insurer and the Swap Counterparty.
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, except as otherwise
provided in this Section 10.05 in regard to the Delaware Trustee.
ARTICLE XI
Miscellaneous
SECTION 11.01. Supplements and Amendments. This Agreement may
be amended by the Seller, the Company and the Eligible Lender Trustee, with the
prior written consent of the Subordinate Note Insurer and the Swap Counterparty
and with prior written notice to the Rating Agencies, 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, adversely
affect in any material respect the interests of any Noteholder.
This Agreement may also be amended from time to time by the
Seller, the Company and the Eligible Lender Trustee, with prior written consent
of the Subordinate Note Insurer and the Swap Counterparty and with prior written
notice to the Rating Agencies, with the consent of the Noteholders of Notes
evidencing not less than a majority of the Outstanding Amount of the Notes, for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement or
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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 on 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 and required to consent to any such amendment, without the
consent of all the outstanding Noteholders.
The Eligible Lender Trustee shall furnish 10 Business Days'
prior written notification of the substance of any such amendment or consent to
the Indenture Trustee, each of the Rating Agencies, the Subordinate Note Insurer
and the Swap Counterparty.
It shall not be necessary for the consent of 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 shall
be subject to such reasonable requirements as the Eligible Lender Trustee may
prescribe.
Promptly after the execution of any amendment to the
Certificate of Trust, the Eligible Lender Trustee shall cause the filing of such
amendment with the Secretary of State of the State of Delaware. The Eligible
Lender Trustee shall furnish the Rating Agencies, the Subordinate Note Insurer
and the Swap Counterparty with ten Business Days' prior written notice of any
amendment to the Certificate of Trust.
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 11.02. No Legal Title to Trust Estate in Company. The
Company shall not have legal title to any part of the Trust Estate. The Company
shall be entitled to receive distributions with respect to its ownership
interest therein only in accordance with the Indenture, the Administration
Agreement and the Servicing Agreement. No transfer, by operation of law or
otherwise, of any right, title, or interest of the Company to and in its
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
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of legal title to any part of the Trust Estate. If, contrary to this Section,
the Company is deemed to have legal title to any part of the Trust Estate, the
Company shall be deemed to have granted, and in such event does hereby grant to
the Issuer, a first priority security interest in all of the Company's right,
title and interest in the Trust Estate, other than in the distributions referred
to in the second sentence of this Section 11.02, and this Agreement shall be
deemed to constitute a security agreement under applicable law with respect to
the Trust Estate.
SECTION 11.03. Limitations on Rights of Others. Except for
Section 2.07, the provisions of this Agreement are solely for the benefit of the
Eligible Lender Trustee, the Seller, the Company, the Administrator, the
Subordinate Note Insurer, the Swap Counterparty and, to the extent expressly
provided herein, the Indenture Trustee and the Noteholders, and nothing in this
Agreement (other than Section 2.07), 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 11.04. Notices. Unless otherwise expressly
specified or permitted by the terms hereof, all notices shall be
in writing (or in the form of facsimile notice, followed by
written notice) and shall be deemed given upon receipt by the
intended recipient, if to the Eligible Lender Trustee, addressed
to its Corporate Trust Office; if to the Seller, addressed 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; facsimile: 317-951-
5764), 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; facsimile:
317-951-5532); if to the Company, addressed to Secondary Market
Company, Inc., 00 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx
00000-0000, Attention: President (telephone: 000-000-0000;
facsimile: 317-951-5764), with a copy to USA Group Secondary
Market Services, Inc., 00 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx,
Xxxxxxx 00000-0000, and 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;
facsimile: 317-951-5532); if to the Subordinate Note Insurer, to
MBIA Insurance Corporation, 000 Xxxx Xxxxxx, Xxxxxx, Xxx Xxxx
00000, Attention: Insured Portfolio Management - Structured
Finance (IPM-SF) SMS Student Loan Trust 1998-A, $21,350,000
Floating Rate Asset-Backed Subordinate Notes (facsimile: 914-
000-0000; telephone confirmation: 000-000-0000); and if to the
Swap Counterparty, to General Re Financial Products Corporation,
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Rockefeller Center, 000 Xxxxx Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Head of Operations (telephone: 212-307-
2370; facsimile: 212-307-2288); 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 11.05. Severability. Any provision of this Agreement
that as 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 11.06. 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 11.07. Successors and Assigns. All covenants and
agreements contained herein shall be binding upon, and inure to the benefit of,
the Seller, the Company, the Eligible Lender Trustee and their respective
successors and permitted assigns, all as herein provided.
SECTION 11.08. No Petition. (a) The Seller will not at any
time institute against the Trust or the Company any bankruptcy proceedings under
any United States federal or state bankruptcy or similar law in connection with
any obligations relating to the Notes, this Agreement or any of the other Basic
Documents.
(b) The Eligible Lender Trustee, by entering into this
Agreement, and the Indenture Trustee, the Subordinate Note Insurer and each
Noteholder by accepting the benefits of this Agreement, hereby covenant and
agree that they will not at any time institute against the Seller, the Company
or the Trust, or join in any institution against the Seller, the Company 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 Notes, this Agreement or any of the other Basic Documents.
(c) The Company will not at any time institute against the
Trust or the Seller any bankruptcy proceedings under any United States Federal
or state bankruptcy or similar law in connection with any obligations relating
to the Notes, the Agreement or any of the other Basic Documents.
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SECTION 11.09. No Recourse. The Company acknowledges that its
ownership interest in the Trust represents a beneficial interest in the Trust
only and does not represent an interest in or obligation of the Seller, the
Servicer, the Seller, 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 or the
other Basic Documents.
SECTION 11.10. 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 11.11. Governing Law. This Agreement 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.
SECTION 11.12. Responsibility to Secretary and Guarantors.
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 in
its capacity as Eligible Lender 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 in the Trust, pursuant to 34 CFR 682.203(b) or
any successor provision thereto.
SECTION 11.13. Third-Party Beneficiaries. The parties hereto
acknowledge that the Subordinate Note Insurer and the Swap Counterparty are
express third-party beneficiaries hereof entitled to enforce the provisions
hereof as if they were actual parties hereto; provided, however, that in the
case of the Subordinate Note Insurer, such right to enforcement and the right to
provide consents or waivers pursuant to the provisions of this Agreement or to
take other actions as provided herein are conditioned upon there not having
occurred and being continuing an Insurer Default and, 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 11.14. Consents. With respect to any action to
be taken hereunder that requires the consent of a party hereto or
of the Indenture Trustee, Subordinate Note Insurer or the Swap
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Counterparty, such consent shall not be unreasonably withheld, delayed or
conditioned.
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.
THE FIRST NATIONAL BANK OF
CHICAGO, not in its
individual capacity but
solely as Eligible
Lender Trustee
By: ___________________________
Name:
Title:
USA GROUP SECONDARY MARKET
SERVICES, INC., as depositor
By: ____________________________
Name: Xxxxxxx X. Xxxxxxx
Title: President and CEO
SECONDARY MARKET COMPANY, INC.
By: ____________________________
Name:
Title:
EXHIBIT A
TO THE TRUST AGREEMENT
CERTIFICATE OF TRUST OF
SMS STUDENT LOAN TRUST 1998-A
THIS Certificate of Trust of SMS Student Loan Trust 1998-A (the
"Trust"), dated as of May 1, 1998, is being duly executed and filed by The First
National Bank of Chicago, a national banking association, and First Chicago
Delaware Inc., a Delaware banking corporation, as trustees, to form a business
trust under the Delaware Business Trust Act (12 Del. Code, ss. 3801 et seq.).
1. Name. The name of the business trust formed hereby is
SMS Student Loan Trust 1998-A.
2. Delaware Trustee. The name and business address of the trustee of
the Trust resident in the State of Delaware is First Chicago Delaware Inc., c/o
FCC National Bank, 000 Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
3. This Certificate of Trust will be effective May __, 1998.
IN WITNESS WHEREOF, the undersigned, being the sole trustees of the
Trust, have executed this Certificate of Trust as of the date first above
written.
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity
but solely as trustee of the Trust
By: ______________________________
Name:
Title:
FIRST CHICAGO DELAWARE INC.,
not in its individual capacity
but solely as trustee
By: ______________________________
Name:
Title:
A-2
