LOAN SALE AGREEMENT
among
SMS STUDENT LOAN TRUST 1997-A
as Issuer,
USA GROUP SECONDARY MARKET SERVICES, INC.,
as Seller,
NBD BANK, N.A., AS TRUSTEE FOR
USA GROUP SECONDARY MARKET SERVICES, INC.,
and
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but solely
as Eligible Lender Trustee
Dated as of April 1, 1997
1
LOAN SALE AGREEMENT dated as of April 1,
1997, among SMS STUDENT LOAN TRUST 1997-A, a Delaware
trust (the Issuer"), USA GROUP SECONDARY MARKET
SERVICES, INC, as Seller, NBD BANK, N.A., AS TRUSTEE
FOR USA GROUP SECONDARY MARKET SERVICES, INC.
("NBD"), 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 a
portfolio of federally reinsured student loans purchased in the ordinary course
of business by the Seller;
WHEREAS in order to comply with the requirements of the Higher
Education Act, legal title to the Seller's student loan portfolio is vested in
NBD, as trustee on behalf of the Seller as the sole beneficiary;
WHEREAS the Seller is willing to sell such student loans to
the Eligible Lender Trustee on behalf of the Issuer;
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.
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 April 1, 1997, 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.
1
ARTICLE II
CONVEYANCE OF FINANCED STUDENT LOANS
SECTION 2.01. CONVEYANCE OF INITIAL FINANCED STUDENT LOANS.
(a) In consideration of the Issuer's delivery to or upon the order of the Seller
on the Closing Date of the net proceeds from the sale of the Notes and the other
amounts to be distributed from time to time to the Seller in accordance with the
terms of this Agreement, the Seller (and, with respect to legal title to the
Financed Student Loans, NBD as trustee on behalf of the Seller) does hereby, as
evidenced by a duly executed Xxxx of Sale in the form of Exhibit A hereto, sell,
assign, and otherwise convey to the Issuer (or, in the case of the Initial
Financed Student Loans, to the Eligible Lender Trustee on behalf of the Issuer)
(i) all right, title and interest in and to the Initial Financed Student Loans,
and all obligations of the Obligors thereunder, together with all documents, the
related Student Loan Files and all rights and privileges relating thereto, (ii)
all payments on or collections received thereunder on and after the Cutoff Date;
(iii) all of its right, title and interest in all funds on deposit from time to
time in the Trust Accounts, including the Reserve Account Initial Deposit, and
in all investments and proceeds thereof (including all income thereon); and (iv)
all proceeds of any and all of the foregoing.
(b) In connection with the sale and assignment of
Financed Student Loans to the Eligible Lender Trustee on behalf of the Trust, on
the Closing Date, the Seller shall deposit the Reserve Account Initial Deposit
into the Reserve Account.
(c) On the Closing Date, the Seller will deposit, or
cause to be deposited, into the Collection Account all amounts or collections
received under the Initial Financed Student Loans on and after the Cutoff Date.
SECTION 2.02. CONVEYANCE OF NEW LOANS AND SERIAL LOANS TO THE
ELIGIBLE LENDER TRUSTEE ON BEHALF OF THE TRUST. (a) Subject to the conditions
set forth in paragraph (d) below, in consideration of the Issuer's delivery on
the related Transfer Date to or upon the order of the Seller of the Loan
Purchase Amount for each such New Loan or Serial Loan to be delivered to the
Seller, the Seller does hereby sell, transfer, assign, set over and otherwise
convey to the Issuer (or, in the case of the New Loans and Serial Loans, to the
Eligible Lender Trustee on behalf of the Issuer), (i) all right, title and
interest of the Seller in and to each New Loan and Serial Loan and all
obligations of the Obligors thereunder, together with all documents, the related
Student Loan Files and all rights and privileges relating thereto, (ii) all
payments on or collections
received thereunder on and after the related Subsequent Cutoff Date and (iii)
all proceeds of any and all of the foregoing.
(b) During the Revolving Period, upon the tender of
New Loans or Serial Loans by the Seller on the related Transfer Date and the
satisfaction of the conditions set forth in subsection (d) of this Section 2.02,
the Eligible Lender Trustee will so inform the Administrator and the Indenture
Trustee, and the Loan Purchase Amounts for such New Loans or Serial Loans will
be withdrawn from the Collateral Reinvestment Account, subject to the provisions
of Section 2(f) of the Administration Agreement, and will be remitted to or upon
the order of the Seller. The Seller covenants to transfer during the Revolving
Period to the Eligible Lender Trustee on behalf of the Issuer pursuant to
paragraph (a) above New Loans or Serial Loans with an aggregate principal
balance substantially equal to the amount on deposit in the Collateral
Reinvestment Account; PROVIDED, HOWEVER, that the Seller shall have no liability
for a breach of the foregoing covenant as a result of the Seller not having
originated or acquired, or having caused to be originated or acquired, during
the Revolving Period New Loans or Serial Loans equal to the amount specified
above. Such transfers shall be made at such times during the Revolving Period as
the Seller may determine in its discretion, subject to the requirement that the
Seller shall make such transfers at least as frequently as is necessary to avoid
the occurrence of an Early Amortization Event.
(c) After the Revolving Period, upon the tender of
Serial Loans by the Seller on the related Transfer Date and the satisfaction of
the conditions set forth in subsection (d) of this Section 2.02, the Eligible
Lender Trustee will so inform the Administrator and the Indenture Trustee, and
that component of the Loan Purchase Amount for such Serial Loans represented by
the Purchase Collateral Balance thereof will be withdrawn from amounts on
deposit in the Collection Account, as provided in Section 2(d)of the
Administration Agreement, and will be remitted, as provided therein to or upon
the order of the Seller or, alternatively, at the sole discretion of the Seller,
the Seller may determine that the Purchase Collateral Balance due on the related
Transfer Date for any Serial Loans then to be transferred shall be paid by the
Issuer's exchanging with the Seller one or more Exchanged Student Loans held by
the Issuer for such Serial Loans (with, in any event, the component of the Loan
Purchase Amount represented by the Purchase Premium Amounts being payable on a
deferred basis pursuant to the final sentence of this paragraph). In the event
Exchanged Student Loans are to be so used (i) the decision by the Issuer as to
which of those Financed Student Loans then held by the Issuer that meet the
criteria for Exchanged Student Loans are to be selected for such exchange shall
be subject to the sole discretion of the Eligible Lender Trustee, PROVIDED that
the Eligible Lender Trustee shall not select for such purpose any Financed
Student Loan that has
the same Borrower as any other Financed Student Loan unless all of the Financed
Student Loans of such Borrower are to be exchanged, (ii) with respect to any
Serial Loan to be delivered on a Transfer Date, only a Financed Student Loan
that is an Exchanged Student Loan with respect to such Serial Loan shall be
counted toward the Purchase Collateral Balance for such Serial Loan and (iii) in
the event that, with respect to any Purchase Collateral Balance due on the
related Transfer Date, the aggregate principal amount (plus accrued borrower
interest thereon if and to the extent that such interest is not then payable and
will, pursuant to the term of such loan, be capitalized and added to the
principal balance of such loan), as of the related Subsequent Cutoff Date, of
the Exchanged Student Loan or Loans being remitted on such Transfer Date in
satisfaction of such Purchase Collateral Balance is less than such amount due,
the Issuer shall remit funds to cover such difference from amounts on deposit in
the Collection Account as provided in Section 2(d) of the Administration
Agreement. Any Purchase Premium Amounts for Serial Loans conveyed to the Trust
after the Revolving Period will be payable on Quarterly Payment Dates out of
Reserve Account Excess pursuant to Section 2(e) of the Administration Agreement
and such Purchase Premium Amounts will accrue no interest or yield but will be
paid on each Quarterly Payment Date to the extent such excess is available in
the aggregate amount of such premiums incurred but unpaid up to the end of the
related Collection Period.
(d) The Seller (and with respect to legal title to the
New Loans and Serial Loans, NBD as trustee on behalf of the Seller) shall
transfer to the Issuer the New Loans and Serial Loans for a given Transfer Date
and the other property and rights related thereto described in paragraph (a)
above only upon the satisfaction of each of the following conditions on or prior
to such Transfer Date:
(i) the Seller (and with respect to legal title to the
Serial Loans, NBD as trustee on behalf of the Seller) shall have
delivered to the Eligible Lender Trustee and the Indenture Trustee a
duly executed written assignment (including an acceptance by the
Eligible Lender Trustee and the Indenture Trustee) in substantially the
form of Exhibit B hereto (each, a "Transfer Agreement"), which shall
include supplements to Schedule A hereto, listing such New Loans and
Serial Loans;
(ii) the Seller shall have delivered, at least two days
prior to such Transfer Date, notice of such transfer to the Eligible
Lender Trustee, the Indenture Trustee and the Rating Agencies,
including a listing of the designation and the aggregate principal
balance of such New Loans and Serial
Loans;
(iii) the Seller shall have deposited in the Collection
Account all amounts on or collections received in respect of the New
Loans and Serial Loans on and after each applicable Subsequent Cutoff
Date;
(iv) as of the Transfer Date, the Seller was not insolvent
nor will it have been made insolvent by such transfer nor is it aware
of any pending insolvency;
(v) such addition will not result in a material
adverse Federal or State tax consequence to the Issuer or
the Noteholders;
(vi) the Seller shall have delivered to the Indenture
Trustee and the Eligible Lender Trustee an Officers' Certificate
confirming the satisfaction of each condition precedent specified in
this paragraph (d);
(vii) the Seller shall have delivered (A) on each preceding
November 1 and May 1, commencing November 1, 1997, to the Rating
Agencies an Opinion of Counsel with respect to the transfer of the New
Loans and Serial Loans transferred to the Issuer on such Transfer Date,
substantially in the form of the Opinion of Counsel delivered to the
Rating Agencies on the Closing Date, and (B) to the Eligible Lender
Trustee and the Indenture Trustee the Opinion of Counsel as required by
Section 6.02(f)(1) hereof; PROVIDED that, notwithstanding the
foregoing, no opinion shall be required under Subclause (B) and, if the
Revolving Period has terminated, no opinion shall be required under
subclause (A) unless the Seller, the Eligible Lender Trustee or the
Indenture Trustee determines that, with regard to the most recent
opinion on the matters described in either such subclause that was
delivered with respect to the Financed Student Loans (whether on the
Closing Date or thereafter under this subsection or under another
provision of the Basic Documents), the conclusion of, or the reasoning
underlying, such opinion is no longer correct in all material respects
due to a change in law or regulations or the ruling of a court, an
administrative tribunal or a regulatory or other governmental
authority; upon making any such determination, whichever of the Seller,
the Eligible Lender Trustee and the Indenture Trustee makes such
determination shall notify the others and the Rating Agencies; and
PROVIDED, FURTHER, that neither the Eligible Lender Trustee nor the
Indenture Trustee shall have any obligation to monitor changes in laws
or regulations or the rulings of courts or other governmental agencies
for the purpose of making any determination described in the preceding
proviso;
(viii) with respect to any New Loan which is guaranteed by an
Additional Guarantor, such Additional Guarantor shall have entered into
a Guarantee Agreement with the Eligible Lender Trustee which guarantees
such New Loan in substantially the form of the Guarantee Agreements
between the Initial Guarantors and the Eligible Lender Trustee;
(ix) the Seller shall have taken any action required to
maintain the first perfected ownership interest of the Issuer in the
Trust Estate and the first perfected security interest of the Indenture
Trustee in the Collateral;
(x) no selection procedures believed by the Seller to be
adverse to the interests of the Noteholders shall have been utilized in
selecting the New Loans or the Serial Loans;
(xi) no Event of Default shall have occurred under the
Indenture, no Servicer Default shall have occurred under the Servicing
Agreement and no Administrator Default shall have occurred under the
Administration Agreement; and
(xii) for each Transfer Date occurring after the Revolving
Period, after giving effect to the conveyance of Serial Loans on such
Transfer Date, the amount of funds remitted for the purchase of Serial
Loans on such Transfer Date, and on each Transfer Date since the
preceding Quarterly Payment Date, shall not exceed the Net Principal
Cash Flow Amount for such Transfer Date minus the sum of (i) all
amounts paid to prepay any Add-on Consolidation Loan not held by the
Issuer since the last Quarterly Payment Date pursuant to Section
2(d)(iii)(A) of the Administration Agreement and (ii) all amounts which
the Administrator reasonably estimates will be required to prepay
Add-on Consolidation Loans pursuant to Section 2(d)(iii)(A) of the
Administration Agreement during the remainder of the Collection Period.
PROVIDED, HOWEVER, that the Seller shall not incur any liability as a result of
transferring Serial Loans on any Transfer Date at a time when the condition set
forth in clause (v) was not satisfied, if at the time of such transfer the
Authorized Officers of the Seller, after reasonable inquiry of counsel to the
Seller, were not aware of any fact that would reasonably suggest that such
condition would not be satisfied as of such date.
SECTION 2.03. TREATMENT AS A SECURITY AGREEMENT. The parties
intend that the conveyance of the Seller's (and, with respect to legal title to
the loans, NBD's) right, title and interest in and to the Initial Financed
Student Loans pursuant to this Agreement and any New Loans and Serial Loans
pursuant to a
related Transfer Agreement shall constitute a valid purchase and sale and not a
loan. If such conveyance is deemed to be a loan and not a sale, then the parties
also intend and agree that the Seller (and, with respect to legal title to
loans, NBD) shall be deemed to have granted, and in such event do hereby grant
to the Issuer, a first priority security interest in all of the Seller's and
NBD's right, title and interest in, to and under the Initial Financed Student
Loans and any New Loans or Serial Loans and the other items specified in
Sections 2.01 and 2.02, and that this Agreement (with respect to the Initial
Financed Student Loans) and any applicable Transfer Agreement (with respect to
the New Loans or Serial Loans conveyed thereby) shall each constitute a security
agreement under applicable law with respect to such loans. If such conveyance is
deemed to be a loan and not a sale, the Issuer may, to secure the Issuer's own
borrowings under the Indenture, repledge all or any portion of such loans and
the other items specified in Sections 2.01 and 2.02 hereof pledged to the Issuer
and not released from the security interest of this Agreement at the time of
such pledge. Such a repledge may be made by the Issuer with or without a
repledge by the Issuer of its rights under this Agreement, and without further
notice to or acknowledgement from the Seller or NBD. Each of the Seller and NBD
waives, to the extent permitted by applicable law, all claims, causes of action
and remedies whether legal or equitable (including any rights of set-off)
against the Issuer or any assignee of the Issuer relating to such action by the
Issuer in connection with the transactions contemplated by this Agreement, each
Transfer Agreement, the Trust Agreement and the Indenture.
SECTION 2.04. ENDORSEMENT. The Seller (and, with respect to
legal title to the Financed Student Loans, NBD as trustee on behalf of the
Seller) hereby appoint each of the Eligible Lender Trustee and the Indenture
Trustee as the Seller's (and NBD's) true and lawful attorney-in-fact with full
power of substitution to endorse the Seller's (and NBD's) name on any promissory
note evidencing the Initial Financed Student Loans and any New Loans or Serial
Loans transferred to the Eligible Lender Trustee on behalf of the Trust pursuant
to Sections 2.01 and 2.02. The Seller (and, with respect to legal title to the
Financed Student Loans, NBD as trustee on behalf of the Seller) acknowledge and
agree that this power of attorney shall be construed as a power coupled with an
interest, shall be irrevocable as long as the Trust Agreement remains in effect
and shall continue in effect until the Trust Agreement terminates.
ARTICLE III
THE FINANCED STUDENT LOANS
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF SELLER WITH
RESPECT TO THE FINANCED STUDENT LOANS. The Seller represents and warrants with
respect to the Financed Student Loans as set forth in Exhibit C hereto. Such
representations and warranties 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, as of the applicable Transfer Date, in the case of the 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 is increased by the principal
balance of any 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 both the origination of such Consolidation
Loans and the addition of the principal balance of any Add-on Consolidation
Loan) and the pledge thereof to the Indenture Trustee pursuant to the Indenture.
SECTION 3.02. REPURCHASE; REIMBURSEMENT. (a) Upon discovery by
the Seller, NBD, the Servicer, the Eligible Lender or the Indenture Trustee of
any breach of the Seller's representations and warranties made by the Seller
pursuant to Section 3.01 or Section 4.01, the party discovering the breach shall
give prompt written notice to the others. Unless any such breach shall have been
cured within sixty (60) days after the Seller becomes aware or receives written
notice (whichever is earlier) of such breach, the Seller shall be obligated to
either (i) repurchase any Financed Student Loan in which the interests of the
Noteholders are materially and adversely affected by any 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 or (ii) substitute a Qualified Substitute Student Loan
in the manner specified in this Section; PROVIDED that it is understood that any
such breach that does not affect the Guarantor's obligation to guarantee payment
of such Financed Student Loan to the Eligible Lender Trustee will not be
considered to have a material adverse effect for this purpose and it is further
understood that any dispute as to whether the Guarantor's obligation has been so
affected will be resolved by the decision of the Indenture Trustee for so long
as Notes are Outstanding and thereafter by the Eligible Lender Trustee. In
addition, if any such breach by the Seller does not trigger such a repurchase
obligation but does result in the refusal by the Guarantor to guarantee all or a
portion of the accrued interest, or the loss (including any obligation of the
Issuer to repay the Department) of certain
Interest Subsidy Payments and Special Allowance Payments, then, unless such
breach, if curable, is cured within sixty (60) days, the Seller shall reimburse
the Issuer by remitting an amount equal to all such non-guaranteed interest
amounts and such forfeited Interest Payments and Special Allowance Payments in
the manner specified in Section 3.03. Subject to the provisions of Section 4.03,
the sole remedy of the Issuer, the Eligible Lender Trustee, the Indenture
Trustee or the Noteholders with respect to a breach of representations and
warranties pursuant to Section 3.01, and the agreement contained in this
Section, shall be to require the Seller to repurchase or substitute for Financed
Student Loans or to reimburse the Issuer as provided above pursuant to this
Section, subject to the conditions contained herein.
(b) The Seller may, at its option, cause a Financed Student Loan to be
repurchased by a Person not affiliated with the Seller as of the last day of a
Monthly Collection Period if there is a dispute with the related Borrower during
such Monthly Collection Period which in the Servicer's reasonable judgment would
call into question whether such Financed Student Loan will be repaid by the
Borrower.
(c) In consideration of and simultaneously with the repurchase of a
Financed Student Loan, the Seller shall remit the Purchase Amount therefor, in
the manner specified in Section 3.03, and the Issuer shall execute such
assignments and other documents reasonably requested by the Seller in order to
effect such transfer. Upon any such transfer of a Financed Student Loan, legal
title to, and beneficial ownership and control of, the related Student Loan File
will thereafter belong to the Seller or in the case of legal title thereto an
eligible lender under the Higher Education Act designated by the Seller.
With respect to any Qualified Substitute Student Loan or
Loans, the Seller shall deliver to the Eligible Lender Trustee for the benefit
of the Noteholders such documents and agreements together with a duly executed
Assignment in the form of Exhibit F hereto. No substitution is permitted to be
made during the period beginning on the day after each Determination Date and
ending on the last day of the calendar month of such Determination Date.
Payments due with respect to Qualified Substitute Student Loans shall be part of
the Trust Estate on and after the date of such Assignment. Upon such
substitution, the Qualified Substitute Student Loan or Loans shall be subject to
the terms of this Agreement in all respects, and the Seller shall be deemed to
have made with respect to such Qualified Substitute Student Loan or Loans, as of
the date of substitution, the representations and warranties made pursuant to
Section 3.01 with respect to any such Student Loan. In addition, any such
substitution shall occur only upon satisfaction of each of the
following conditions on or prior to the date of the related
Assignment:
(i) the Seller shall have deposited in the Collection
Account all collections in respect of the Qualified Substitute Student
Loans on and after each applicable date of Assignment;
(ii) as of the date of the related Assignment, the Seller
shall not have been insolvent nor will it have been made insolvent by
such transfer nor is it aware of any pending insolvency;
(iii) such addition will not result in a material
adverse Federal or State tax consequence to the Issuer or
the Noteholders;
(iv) the Seller shall have delivered (A) to the Rating
Agencies, an Opinion of Counsel with respect to each transfer of
Qualified Substitute Student Loans, substantially in the form of the
Opinion of Counsel delivered to the Rating Agencies on the Closing
Date, and (B) to the Eligible Lender Trustee and the Indenture Trustee,
the Opinion of Counsel required by Section 6.02(f)(1) hereof; PROVIDED
that no opinion shall be required under either subclause (A) or (B)
unless the Seller, the Eligible Lender Trustee or the Indenture Trustee
determines that, with regard to the most recent opinion on the matters
described in either such subclause that was delivered with respect to
the Financed Student Loans (whether on the Closing Date or thereafter
under this subsection or under another provision of the Basic
Documents), the conclusion of, or the reasoning underlying, such
opinion is no longer correct in all material respects due to a change
in law or regulations or the ruling of a court, an administrative
tribunal or a regulatory or other governmental authority; upon making
any such determination, whichever of the Seller, the Eligible Lender
Trustee and the Indenture Trustee makes such determination shall notify
the others and the Rating Agencies; and PROVIDED, FURTHER, that none of
the Eligible Lender Trustee or the Indenture Trustee shall have any
obligation to monitor changes in laws or regulations or the rulings of
courts or other governmental agencies for the purpose of making any
determination described in this clause (iv);
(v) the Seller shall have taken any action required to
maintain the first perfected ownership interest of the Issuer in the
Trust Estate and the first perfected security interest of the Indenture
Trustee in the Collateral;
(vi) no selection procedures believed by the Seller to be
adverse to the interests of the Noteholders shall have been utilized in
selecting the Qualified Substitute Student Loans; and
(vii) no Event of Default shall have occurred under the
Indenture, no Servicer Default shall have occurred under the Servicing
Agreement and no Administrator Default shall have occurred under the
Administration Agreement.
Upon any such substitution and the deposit to the Collection
Account of the amount required to be deposited therein in connection with such
substitution as described in the following paragraph, the Eligible Lender
Trustee shall release any documentation held with respect to the Financed
Student Loan being substituted for (the "Deleted Student Loan") to the Seller
and shall execute and deliver at the Seller's direction such instruments of
transfer or assignment prepared by the Seller, in each case without recourse, as
shall be necessary to vest in the Seller, or (in the case of legal title thereto
an eligible lender under the Higher Education Act designated by the Seller), the
Eligible Lender Trustee's interest in any Deleted Student Loan substituted for
pursuant to this Section 3.02.
For any month in which the Seller substitutes one or more
Qualified Substitute Student Loans for one or more Deleted Student Loans, the
Servicer will determine the amount (if any) by which as of the date of the
relevant Assignment the aggregate principal balance of all such Qualified
Substitute Student Loans is less than the aggregate principal balance of all
such Deleted Student Loans. The amount of such shortage (the "Substitution
Adjustment Amount") shall be deposited in the Collection Account by the Seller
on or before the date of the relevant Assignment.
SECTION 3.03. REPURCHASE DEPOSITS. The Seller shall deposit or
cause to be deposited in the Collection Account the aggregate Purchase Amount
with respect to Purchased Student Loans and all other amounts to be paid by the
Seller under Section 3.02 and Section 5.01 when such amounts are due.
ARTICLE IV
THE SELLER
SECTION 4.01. REPRESENTATIONS OF SELLER AND NBD. The Seller
represents as set forth in Exhibit D hereto and NBD represents as set forth in
Exhibit E hereto. Such 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, as of the applicable Transfer Date in the case of the New Loans
and the Serial Loans, as of the date of the
relevant Assignment in the case of any Qualified Substitute Student Loan, and,
in the case of the Seller, 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 a
Consolidation Loan the principal balance of which is increased by the principal
balance of any 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 both the origination of such Consolidation
Loans and the addition of the principal balance of any Add-on Consolidation
Loan) and the pledge thereof to the Indenture Trustee pursuant to the Indenture.
SECTION 4.02. EXISTENCE. During the term of this Agreement,
the Seller will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the other Basic
Documents and each other instrument or agreement necessary or appropriate to the
proper administration of this Agreement and the transactions contemplated
hereby. In addition, all transactions between the Seller and its Affiliates will
be conducted on an arm's-length basis. For so long, during the term of this
Agreement, as the Seller shall not be an eligible lender under the Higher
Education Act with respect to federal Student Loans, the Seller agrees to keep
in full force and effect an agreement with NBD or another eligible lender under
the Higher Education Act providing for such eligible lender meeting the
requirements set forth in the following sentence to hold title to the Seller's
Student Loans in trust for and on behalf of the Seller. The Seller shall not
convey any New Loan, Serial Loan or Qualified Substitute Student Loan if the
eligible lender holding legal title to such loan is other than NBD unless, prior
to such conveyance, such other eligible lender shall agree in writing to be
bound, in the conveyance of each such loan for which it acts as eligible lender,
by the provisions of this Agreement that are applicable to NBD, to the same
extent as if it were named separately from NBD in each of such provisions.
SECTION 4.03. LIABILITY OF SELLER; INDEMNITIES. The Seller
shall be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Seller under this Agreement.
(a) The Seller shall indemnify, defend and hold harmless
the Issuer, the Eligible Lender Trustee and the Indenture Trustee and
their officers, directors, employees and agents from and against any
taxes that may at any time be asserted against any such Person with
respect to the
transactions contemplated herein and in the other Basic Documents
(except any such income taxes arising out of fees paid to the Eligible
Lender Trustee or the Indenture Trustee), including any sales, gross
receipts, general corporation, tangible personal property, privilege or
license taxes (but, in the case of the Issuer, not including the
issuance and original sale of the Notes, or asserted with respect to
ownership of the Financed Student Loans or Federal or other income
taxes arising out of payments on the Notes) and costs and expenses in
defending against the same.
(b) The Seller shall indemnify, defend and hold harmless
the Issuer, the Eligible Lender Trustee , the Indenture Trustee and the
Noteholders and the officers, directors, employees and agents of the
Issuer, the Eligible Lender Trustee and the Indenture Trustee from and
against any and all costs, expenses, losses, claims, damages and
liabilities arising out of, or imposed upon such Person through, (i)
the Seller's willful misfeasance, bad faith or negligence in the
performance of its duties under this Agreement, or by reason of
reckless disregard of its obligations and duties under this Agreement
and (ii) the Seller's or the Issuer's violation of Federal or state
securities laws in connection with the offering and sale of the Notes.
(c) The Seller shall be liable as primary obligor for, and
shall indemnify, defend and hold harmless the Eligible Lender Trustee
and its officers, directors, employees and agents from and against, all
costs, expenses, losses, claims, damages, obligations and liabilities
arising out of, incurred in connection with or relating to the Trust
Agreement, the other Basic Documents, the Trust Estate, the acceptance
or performance of the trusts and duties set forth herein and in the
Trust Agreement or the action or the inaction of the Eligible Lender
Trustee hereunder and under the Trust Agreement, except to the extent
that such cost, expense, loss, claim damage, obligation or liability:
(i) shall be due to the willful misfeasance, bad faith or negligence
(except for errors in judgment) of the Eligible Lender Trustee, (ii)
shall arise from any breach by the Eligible Lender Trustee of its
covenants under any of the Basic Documents; or (iii) shall arise from
the breach by the Eligible Lender Trustee of any of its representations
or warranties set forth in Section 7.03 of the Trust Agreement. In the
event of any claim, action or proceeding for which indemnity will be
sought pursuant to this paragraph, the Eligible Lender Trustee's choice
of legal counsel shall be subject to the approval of the Seller, which
approval shall not be unreasonably withheld.
(d) The Seller shall pay any and all taxes levied or
assessed upon all or any part of the Trust Estate (other than those
taxes expressly excluded from the Seller's responsibilities pursuant to
the parentheticals in paragraph (a) above).
Indemnification under this Section shall survive the
resignation or removal of the Eligible Lender Trustee or the Indenture Trustee
and the termination of this Agreement or the Indenture or the Trust Agreement,
as applicable, and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Seller shall have made any indemnity payments
pursuant to this Section and the Person to or on behalf of whom such payments
are made thereafter shall collect any of such amounts from others, such Person
shall promptly repay such amounts to the Seller, without interest.
SECTION 4.04. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SELLER OR NBD. Any person (a) into which the Seller or NBD may
be merged or consolidated, (b) which may result from any merger or consolidation
to which the Seller or NBD shall be a party or (c) which may succeed to the
properties and assets of the Seller or NBD substantially as a whole, shall be
the successor to the Seller or NBD, respectively, without the execution or
filing of any document or any further act by any of the parties to this
Agreement; PROVIDED, HOWEVER, that the Seller hereby covenants that it will not
consummate any of the foregoing transactions except upon satisfaction of the
following: (i) the surviving Seller, if other than SMS, executes an agreement of
assumption to perform every obligation of the Seller under this Agreement, (ii)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 3.01 or 4.01 shall have been breached and no
Servicer Default, Event of Default or Administrator Default and no event that,
after notice or lapse of time, or both, would become a Servicer Default, Event
of Default or Administrative Default shall have occurred and be continuing,
(iii) the Seller shall have delivered to the Eligible Lender Trustee and the
Indenture Trustee an Officers' Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section and that all conditions precedent, if any,
provided for in this Agreement relating to such transaction have been complied
with, and that the Rating Agency Condition shall have been satisfied with
respect to such transaction, (iv) the surviving Seller shall have a consolidated
net worth at least equal to that of the predecessor Seller, (v) such transaction
will not result in a material adverse Federal or state tax consequence to the
Issuer or the Noteholders and (vi) unless SMS is the surviving entity, the
Seller shall have delivered to the Eligible Lender Trustee and the Indenture
Trustee an Opinion of Counsel either (A) stating that, in the opinion of such
counsel, all financing
statements and continuation statements and amendments thereto have been executed
and filed that are necessary fully to preserve and protect the interest of the
Eligible Lender Trustee and Indenture Trustee, respectively, in the Financed
Student Loans and reciting the details of such filings, or (B) stating that, in
the opinion of such counsel, no such action shall be necessary to preserve and
protect such interests; PROVIDED, FURTHER, that NBD hereby covenants that,
unless NBD is the surviving entity, it will not consummate any of the foregoing
transactions unless NBD shall have delivered to the Eligible Lender Trustee and
the Indenture Trustee an Opinion of Counsel either (A) stating that, in the
opinion of such counsel, all financing statements and continuation statements
and amendments thereto have been executed and filed that are necessary fully to
preserve and protect the interest of the Eligible Lender Trustee and Indenture
Trustee, respectively, in the Financed Student Loans and reciting the details of
such filings, or (B) stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interests.
SECTION 4.05. LIMITATION ON LIABILITIES OF SELLER, NBD AND
OTHERS. The Seller, NBD and any director or officer or employee or agent of the
Seller or NBD may rely in good faith on the advice of counsel or on any document
of any kind, prima facie properly executed and submitted by any Person
respecting any matters arising hereunder (PROVIDED that such reliance shall not
limit in any way the Seller's obligations under Section 3.02). Neither the
Seller nor NBD shall be under any obligation to appear in, prosecute or defend
any legal action that shall not be incidental to its respective obligations
under this Agreement, and that in its opinion may involve it in any expense or
liability.
SECTION 4.06. SELLER AND NBD MAY OWN NOTES. The Seller, NBD
and any Affiliate of either may in its individual or any other capacity become
the owner or pledgee of Notes with the same rights as it would have if it were
not the Seller or NBD, as the case may be or an Affiliate of either, except as
expressly provided herein or in any other Basic Document.
ARTICLE V
TERMINATION
SECTION 5.01. TERMINATION. (a) OPTIONAL PURCHASE OF ALL
FINANCED STUDENT LOANS. As of the last day of any Collection Period immediately
preceding a Quarterly Payment Date as of which the then outstanding Pool Balance
is 20% or less of the initial aggregate principal balance of the Notes, the
Company or its designee shall have the option to purchase the Trust Estate,
other than the Trust Accounts. To exercise such option, the
Company or its designee shall deposit in the Collection Account an amount equal
to the aggregate Purchase Amount for the Financed Student Loans and the related
rights with respect thereto, plus the appraised value of any such other property
held by the Trust other than the Trust Accounts, such value to be determined by
an appraiser mutually agreed upon by the Servicer, the Eligible Lender Trustee
and the Indenture Trustee, and shall succeed to all interests in and to the
Trust; PROVIDED, HOWEVER, that the Company or its designee may not effect such
purchase if the aggregate Purchase Amount to be so deposited in the Collection
Account does not equal or exceed an amount equal to the unpaid principal balance
of the Notes, plus accrued and unpaid interest thereon at the applicable Note
Rate to the date of exercise, and the amount of unpaid Senior Noteholders'
Interest T-Xxxx Carryover and Subordinate Noteholders' Interest T-Xxxx
Carryover.
(b) INSOLVENCY OF COMPANY. Upon any sale of the
assets of the Trust pursuant to Section 9.02 of the Trust Agreement, the Seller
shall cooperate with and assist the Administrator consistent with the provisions
of the Administration Agreement with respect to a Company insolvency.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. AMENDMENT. This Agreement may be amended by the
Seller, NBD and the Eligible Lender Trustee, with the 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
Seller and the Eligible Lender Trustee, with the consent of NBD, the Indenture
Trustee and 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
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.
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 NBD, the Seller, the Administrator, each
Noteholder, the Indenture Trustee, the Servicer 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 and the Indenture Trustee shall receive upon request 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). 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 6.02. PROTECTION OF INTERESTS IN TRUST. (a)
Each of the Seller and NBD shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such manner
and in such places as may be required by law fully to preserve, maintain, and
protect the interest of the Issuer, the Eligible Lender Trustee and the
Indenture Trustee in the Financed Student Loans and in the proceeds thereof.
Each of the Seller and NBD shall deliver (or cause to be delivered) to the
Eligible Lender Trustee and the Indenture Trustee file-stamped copies of, or
filing receipts for, any document filed as provided above, as soon as available
following such filing.
(b) Neither the Seller nor NBD shall change its name,
identity or corporate structure in any manner that would, could, or might make
any financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of ss.9-402(7) of
the UCC, unless it shall have given the Eligible Lender Trustee and the
Indenture Trustee at least five (5) days' prior written notice thereof and shall
have promptly filed appropriate amendments to all previously filed financing
statements or continuation statements.
(c) Each of the Seller and NBD shall have an
obligation to give the Eligible Lender Trustee, the Indenture Trustee and the
Rating Agencies 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.
(d) If at any time the Seller or NBD 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
Seller or NBD, as the case may be, 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 Issuer and has been
pledged to the Indenture Trustee.
(e) The Seller shall, to the extent required by
applicable law, cause the Notes to be registered with the Commission pursuant to
Section 12(b) or Section 12(g) of the Exchange Act within the time periods
specified in such sections.
(f) The Seller shall deliver to the Eligible Lender
Trustee and the Indenture Trustee:
(1) promptly after the execution and delivery of this
Agreement and of each amendment thereto, on each Transfer Date as set
forth in Section 2.02 and on the date of each Assignment as set forth
in Section 3.02, an Opinion of Counsel either (A) stating that, in the
opinion of such counsel, all financing statements and continuation
statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Eligible Lender Trustee and
the Indenture Trustee in the Financed Student Loans, and reciting the
details of such filings or referring to prior Opinions of Counsel in
which such details are given, or (B) stating that, in the opinion of
such counsel, no such action shall be necessary to preserve and protect
such interest; and
(2) within 120 days after the beginning of each calendar
year beginning with the first calendar year beginning more than three
months after the Cutoff Date, an Opinion of Counsel, dated as of a date
during such 120-day period, either (A) stating that, in the opinion of
such counsel, all financing statements and continuation statements have
been executed and filed that are necessary fully to preserve and
protect the interest of the Eligible
Lender Trustee and the Indenture Trustee in the Financed Student Loans,
and reciting the details of such filings or referring to prior Opinions
of Counsel in which such details are given, or (B) stating that, in the
opinion of such counsel, no such action shall be necessary to preserve
and protect such interest; PROVIDED that a single Opinion of Counsel
may be delivered in satisfaction of the foregoing requirement and that
of Section 3.06(b) of the Indenture.
Each Opinion of Counsel referred to in clause (1) or (2) above
shall specify (as of the date of such opinion and given all applicable laws as
in effect on such date) any action necessary to be taken in the following year
to preserve and protect such interest.
SECTION 6.03. NOTICES. Unless otherwise agreed by the
recipient, all demands, notices and communications upon or to the Seller, NBD,
the Servicer, the Issuer, the Eligible Lender Trustee, the Indenture Trustee,
the Administrator or the Rating Agencies 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. Xxxxxxxxxxx
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.
Xxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxx X. Xxxxxxx
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
Attention: President
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: Xxxxxxx X. Xxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000;
(d) in the case of the Issuer, to
Student Loan Trust 1997-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 Issuer or 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
USA Group, Inc.
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxxxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000;
(h) in the case of Fitch, to
Fitch Investors Service, L.P.
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Asset Backed Monitoring Unit
Telephone: (000) 000-0000
Facsimile: (000) 000-0000; and
(i) 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;
or, as to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.
SECTION 6.04. ASSIGNMENT. Notwithstanding anything to the
contrary contained herein, except as provided in Section 4.04, this Agreement
may not be assigned by the Seller or NBD. This Agreement may be assigned by the
Eligible Lender Trustee only to its permitted successor pursuant to the Trust
Agreement.
SECTION 6.05. LIMITATIONS ON RIGHTS OF OTHERS. The
provisions of this Agreement are solely for the benefit of the Seller, NBD, the
Issuer, and the Eligible Lender Trustee and for the benefit of the Indenture
Trustee, the Noteholders and (with respect to Section 5.01), the Company or its
designee, as third party beneficiaries, and nothing in this Agreement, whether
express or implied, shall be construed to give to any other Person any legal or
equitable right, remedy or claim in the Trust Estate or under or in respect of
this Agreement or any covenants, conditions or provisions contained herein.
SECTION 6.06. 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 6.07. 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 6.08. 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 6.09. 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 6.10. ASSIGNMENT TO INDENTURE TRUSTEE. The
Seller hereby acknowledges and consents to any mortgage, pledge, assignment and
grant by the Issuer to the Indenture Trustee pursuant to the Indenture for the
benefit of the Noteholders of a security interest in all right, title and
interest of the Issuer in, to and under the Financed Student Loans or the
assignment of any or all of the Issuer's rights and obligations hereunder to the
Indenture Trustee.
SECTION 6.11. NON-PETITION COVENANTS. Notwithstanding any
prior termination of this Agreement, neither the Seller nor NBD shall, prior to
the date which is one year and one day after the termination of this Agreement
with respect to the Issuer, acquiesce, petition or otherwise invoke or cause the
Issuer to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Issuer under any Federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Issuer.
SECTION 6.12. LIMITATION OF LIABILITY OF NBD, ELIGIBLE LENDER
TRUSTEE AND INDENTURE TRUSTEE. (a) Notwithstanding anything contained herein to
the contrary, this Agreement has been signed by NBD not in its individual
capacity but solely in its capacity as trustee for the Seller and in no event
shall NBD in its individual capacity or, except as expressly provided herein or
in the trust agreement between Seller and NBD dated February 24, 1993, as legal
owner of the Financed Student Loans, have any liability for representations,
warranties, covenants, agreements or other obligations of the Seller hereunder
or in any of the certificates, notices or agreements delivered by the Seller
pursuant hereto as to all of which recourse shall be had solely against the
Seller.
(b) Notwithstanding anything contained herein to the
contrary, 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.
(c) Notwithstanding anything contained herein to the
contrary, this Agreement has been accepted by Bankers Trust Company not in its
individual capacity but solely as Indenture Trustee and in no event shall
Bankers Trust Company have any liability for the representations, warranties,
covenants, agreements or other obligations of the Issuer hereunder or in any of
the certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
SECTION 6.13. AGREEMENT OF SELLER AND NBD. Each of the Seller
and NBD agrees to execute and deliver such instruments and to take such actions
as the Eligible Lender Trustee, the Issuer, or the Indenture Trustee may
reasonably request in order to effectuate the terms and carry out the purposes
of the Agreement.
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 1997-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 SECONDARY MARKET
SERVICES, INC.
by
Name: Xxxxxxx X. Xxxxxxx
Title: President and
Chief Executive Officer
NBD BANK, N.A., AS TRUSTEE
FOR USA GROUP SECONDARY
MARKET
SERVICES, INC.
by
Name:
Title:
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:
EXHIBIT A
TO THE LOAN SALE AGREEMENT
XXXX OF SALE
For value received, in accordance with the Loan Sale Agreement
(the "Loan Sale Agreement") dated as of April 1, 1997, among USA Group Secondary
Market Services, Inc., as seller (the "Seller"), SMS Student Loan Trust 1997-A
(the "Trust"), NBD Bank, N.A., as trustee for the Seller ("NBD") and The First
National Bank of Chicago, not in its individual capacity but solely as Eligible
Lender Trustee (the "Eligible Lender Trustee"), the Seller (and, with respect to
legal title to the Initial Financed Student Loans, NBD as trustee on behalf of
the Seller) does hereby sell, assign, transfer and otherwise convey unto the
Eligible Lender Trustee on behalf of the Trust, without recourse (subject to the
obligations set forth in the Loan Sale Agreement), all right, title and interest
in and to (i) the Initial Financed Student Loans and all obligations of the
Obligors thereunder, together with all documents, the related Student Loan Files
and all rights and privileges related thereto, (ii) all payments and/or
collections received thereunder on and after the Cutoff Date, (iii) all funds on
deposit from time to time in the Trust Accounts, including the Reserve Account
Initial Deposit, and in all investments and proceeds thereof (including all
income thereon) and (iv) all proceeds of any and all of the foregoing (including
but not limited to proceeds derived from the voluntary or involuntary conversion
of any of the Initial Financed Student Loans into cash or other liquidated
property, such as proceeds from the applicable Guarantee Agreement). The
foregoing sale does not constitute and is not intended to result in any
assumption by the Eligible Lender Trustee or the Trust of any obligation of the
Seller or NBD to the borrowers of Initial Financed Student Loans or any other
Person in connection with the Initial Financed Student Loans or any agreement or
instrument relating to any of them.
In addition, the undersigned, by execution of this instrument,
hereby endorses the promissory notes evidencing each Initial Financed Student
Loan described in Schedule A to the Loan Sale Agreement in favor of the Eligible
Lender Trustee on behalf of the Trust, without recourse (subject to the
obligations set forth in the Loan Sale Agreement) against the undersigned. This
endorsement may be effected by attaching a facsimile hereof to each or any of
such promissory notes.
This Xxxx of Sale is made pursuant to and upon the
representations, warranties and agreements on the part of the undersigned
contained in the Loan Sale Agreement and is to be governed by the Loan Sale
Agreement.
A-1
Capitalized terms used but not defined herein shall have the
meaning assigned to them in Appendix A to the Administration Agreement, dated as
of April 1, 1997, among SMS Student Loan Trust 1997-A, as Issuer, USA Group
Secondary Market Services, Inc., as Administrator, and Bankers Trust Company, as
Indenture Trustee, which also contains rules as to usage that shall be
applicable herein.
IN WITNESS WHEREOF, the undersigned has caused this Xxxx of
Sale to be duly executed as of April 1, 1997.
USA GROUP SECONDARY MARKET
SERVICES, INC.,
as Seller
by
Name:
Title:
NBD BANK, N.A., as trustee
for USA Group Secondary
Market Services, Inc.
by
Name:
Title:
A-2
EXHIBIT B
TO THE
LOAN SALE AGREEMENT
TRANSFER AGREEMENT
TRANSFER No. _____ Of [NEW] [SERIAL] LOANS dated as of
______________, _____, among SMS STUDENT LOAN TRUST 1997-A, a Delaware trust
(the "Issuer"), USA GROUP SECONDARY MARKET SERVICES, INC., as seller (the
"Seller"), NBD BANK, N.A.*, as trustee for USA Group Secondary Market Services,
Inc. and THE FIRST NATIONAL BANK OF CHICAGO, a national banking association, as
seller, not in its individual capacity but solely as Eligible Lender Trustee of
the Issuer (the "Eligible Lender Trustee").
W I T N E S S E T H:
WHEREAS the Issuer, the Seller, NBD and the Eligible Lender
Trustee are parties to the Loan Sale Agreement dated as of April 1, 1997 (as
amended or supplemented, the "Loan Sale Agreement");
WHEREAS the Seller, as depositor, and the Eligible Lender
Trustee are parties to the Trust Agreement dated as of April 1, 1997 (as amended
or supplemented, the "Trust Agreement");
WHEREAS pursuant to the Loan Sale Agreement, the Seller wishes
to convey the [New] [Serial] Loans referred to in Section 2 (the "Additional
Student Loans") to the Eligible Lender Trustee
on behalf of the Issuer;
WHEREAS in order to comply with the requirements of the Higher
Education Act, legal title to the Seller's student loan portfolio is vested in
NBD, as trustee on behalf of the Seller as the sole beneficiary; and
WHEREAS, the Eligible Lender Trustee and the Issuer are
willing to accept such conveyance subject to the terms and conditions hereof.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. DEFINITIONS AND USAGE. Unless otherwise defined
herein, capitalized terms used herein shall have the meanings
ascribed to them in Appendix A to the Administration Agreement,
dated as of April 1, 1997, among the Issuer, the Seller, as
--------
* NBD shall be replaced as a party to any Transfer Agreement by any other
eligible lender under the Higher Education Act that is acting as trustee for the
Seller with respect to the loans being conveyed pursuant to such Transfer
Agreement.
B-1
Administrator, and Bankers Trust Company, as Indenture Trustee, which also
contains rules of construction and usage that shall be applicable herein.
In addition, the following terms have the following meanings:
"SUBSEQUENT CUTOFF DATE" means, with respect to each
Additional Student Loan, the date specified as such on Schedule A
hereto.
"TRANSFER DATE" means, with respect to the Additional Student
Loans, ________________, _______.
2. SCHEDULE OF FINANCED STUDENT LOANS. Attached hereto as
Schedule A is a supplement to Schedule A to the Loan Sale Agreement listing the
Additional Student Loans to be conveyed on the Transfer Date to the Eligible
Lender Trustee on behalf of the Issuer pursuant to this Agreement.
3. CONVEYANCE OF ADDITIONAL STUDENT LOANS. In
consideration of Issuer's delivery to or upon the order of the Seller of
$___________ (during the Revolving Period, such amount being the Loan Purchase
Amounts of the Additional Student Loans and such amount to be paid from amounts
on deposit in the Collateral Reinvestment Account subject to the provisions of
Section 2.02(b) of the Loan Sale Agreement and Section 2(f) of the
Administration Agreement and after the Revolving Period such amount being the
sum of (i) the Purchase Collateral Balance ($[ ]) to be paid from any
combination of amounts on deposit in the Collection Account and of Exchange
Student Loans as shall be designated by the Seller subject to Section 2.02(c) of
the Loan Sale Agreement and Section 2(d) of the Administration Agreement) and
(ii) the Purchase Premium Amount ($[ ]) to be paid on the immediately subsequent
Quarterly Payment Date from amounts on deposit in the Reserve Fund in excess of
the Specified Reserve Account Balance subject to Section 2.02(c) of the Loan
Sale Agreement and Section 2(e) of the Administration Agreement, the Seller
(and, with respect to legal title to the Additional Student Loans, NBD as
trustee on behalf of the Seller) does hereby sell, assign and otherwise convey,
without recourse (except as expressly provided in the Loan Sale Agreement), to
the Eligible Lender Trustee on behalf of the Issuer:
(a) All right, title and interest in and to the Additional
Student Loans and all obligations of the Obligors thereunder, together
with all documents, the related Student Loan Files and all rights and
privileges relating thereto;
(b) all payments on or collections received
thereunder, on and after the related Subsequent Cutoff Date;
B-2
(c) all proceeds of any and all of the foregoing.
4. CONDITIONS PRECEDENT. The obligation of the
Issuer to acquire the Additional Student Loans hereunder is
subject to the satisfaction, on or prior to the Transfer Date, of
the following conditions precedent:
(a) REPRESENTATIONS AND WARRANTIES. Each of the
representations and warranties made by the Seller in Sections 3.01 and
4.01 of the Loan Sale Agreement and by NBD in Section 4.01 of the Loan
Sale Agreement shall be true and correct as of the Transfer Date.
(b) LOAN SALE AGREEMENT CONDITIONS. Each of the conditions
set forth in Section 2.02(d) (and, if Exchange Student Loans are to be
applied to the Purchase Collateral Balance of the Additional Student
Loans, Section 2.02(c) and, if the trustee for the Seller with respect
to the Additional Student Loans is other than NBD, in Section 4.02) of
the Loan Sale Agreement shall have been satisfied.
(c) DELIVERY OF XXXX OF SALE. The Seller and NBD shall have
delivered a Xxxx of Sale substantially in the form of Annex A hereto.
(d) ADDITIONAL INFORMATION. The Seller and NBD shall have
delivered to the Issuer such information as was reasonably requested by
the Issuer to satisfy itself as to (i) the accuracy of the
representations and warranties set forth in Sections 3.01 and 4.01 of
the Loan Sale Agreement and (ii) the satisfaction of the conditions set
forth in this Section 4.
(e) DELIVERY OF ASSIGNMENT WITH RESPECT TO EXCHANGE STUDENT
LOANS. With respect to any Exchange Student Loans that are to be
applied to the Purchase Amount of the Additional Student Loans, the
Eligible Lender Trustee shall have delivered an Assignment
substantially in the form of
Annex B hereto.
5. RATIFICATION OF AGREEMENT. As supplemented by
this Agreement, the Loan Sale Agreement is in all respects
ratified and confirmed and the Loan Sale Agreement as so
supplemented by this Agreement shall be read, taken and construed
as one and the same instrument.
6. COUNTERPARTS. This Agreement may be executed in
separate counterparts, each of which when so executed and
delivered shall be an original, but all of which together shall
constitute but one and the same instrument.
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7. 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.
8. HEADINGS. The section headings hereof have been
inserted for convenience of reference only and shall not be
construed to affect the meaning, construction or effect of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their respective duly authorized
officers as of the day and the year first above written.
SMS STUDENT LOAN TRUST 1997-A,
by THE FIRST NATIONAL BANK OF
CHICAGO, not in its individual
capacity but solely as
Eligible Lender Trustee,
by
Name:
Title:
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., Seller
by
Name:
Title:
B-4
NBD BANK, N.A., as trustee for USA Group Secondary Market Services, Inc.
by
Name:
Title:
Acknowledged and accepted as of the date first above written:
BANKERS TRUST COMPANY,
not in its individual
capacity but solely as
Indenture Trustee,
by
Name:
Title:
B-5
SCHEDULE A
TO THE
TRANSFER AGREEMENT NO. ___
[List of Additional Student Loans
and their related Subsequent Cutoff Dates]
B-6
ANNEX A
TO THE TRANSFER AGREEMENT
XXXX OF SALE
For value received, in accordance with the Loan Sale Agreement
(the "Loan Sale Agreement") dated as of April 1, 1997, among USA Group Secondary
Market Services, Inc., as seller (the "Seller"), NBD Bank, N.A., as trustee for
the Seller ("NBD"), SMS Student Loan Trust 1997-A (the "Trust") and The First
National Bank of Chicago, not in its individual capacity but solely as Eligible
Lender Trustee (the "Eligible Lender Trustee") [and as ratified by [name of
eligible lender if other than NBD with respect to the Additional Student Loans]
pursuant to Section 4.02 of the Loan Sale Agreement] and the Transfer Agreement
No. ____ dated as of ______, ______ (the "Transfer Agreement") among the Seller,
NBD, the Trust and the Eligible Lender Trustee, the Seller (and, with respect to
legal title to the Additional Student Loans, NBD as trustee on behalf of the
Seller) does hereby sell, assign, transfer and otherwise convey unto the
Eligible Lender Trustee on behalf of the Trust, without recourse (subject to the
obligations set forth in the Loan Sale Agreement), all right, title and interest
in and to (i) the Additional Student Loans and all obligations of the Obligors
thereunder, together with all documents, the related Student Loan Files and all
rights and privileges related thereto, (ii) all payments and collections
received thereunder, on and after the Subsequent Cutoff Date and (iii) all
proceeds of any and all of the foregoing (including but not limited to proceeds
derived from the voluntary or involuntary conversion of any of the Additional
Student Loans into cash or other liquidated property, such as proceeds from the
applicable Guarantee Agreement). The foregoing sale does not constitute and is
not intended to result in any assumption by the Eligible Lender Trustee or the
Trust of any obligation of the Seller or NBD to the borrowers of the Additional
Student Loans or any other person in connection with the Additional Student
Loans or any agreement or instrument relating to any of them.
In addition, the undersigned, by execution of this instrument,
hereby endorses the promissory notes evidencing each Additional Student Loan
described in Schedule A to the Transfer Agreement in favor of the Eligible
Lender Trustee on behalf of the Trust, without recourse (subject to the
obligations set forth in the Loan Sale Agreement) against the undersigned. This
endorsement may be effected by attaching a facsimile hereof to each or any of
such promissory notes.
This Assignment is made pursuant to and upon the
representations, warranties and agreements on the part of the undersigned
contained in the Loan Sale Agreement and the Transfer
B-7
Agreement and is to be governed by the Loan Sale Agreement and the Transfer
Agreement.
Capitalized terms used but not defined herein shall have the
meanings assigned to them in the Transfer Agreement.
IN WITNESS WHEREOF, the undersigned has caused this Xxxx of
Sale to be duly executed as of May 5, 1997.
USA GROUP SECONDARY MARKET
SERVICES, INC.,
as Seller
by
Name:
Title:
NBD BANK, N.A., as trustee
for USA Group Secondary
Market Services, Inc.
by
Name:
Title:
B-8
EXHIBIT C
TO THE LOAN SALE AGREEMENT
1. CHARACTERISTICS OF FINANCED STUDENT LOANS. Each Financed
Student Loan (A) was originated in the United States of America, its
territories, its possessions or other areas subject to its jurisdiction
by an "eligible lender" under the Higher Education Act in the ordinary
course of its business to an eligible borrower under applicable law and
agreements and was fully and properly executed by the parties thereto,
(B) was acquired or originated by the Seller in the ordinary course of
its business, and (C) provides or, when the payment schedule with
respect thereto is determined, will provide for payments on a periodic
basis that fully amortizes the principal amount of such Financed
Student Loan by its maturity, as such maturity may be modified in
accordance with any applicable deferral or forbearance periods granted
in accordance with applicable laws and restrictions, including those of
the Higher Education Act or the applicable Guarantee Agreement, and
yield interest at the rate applicable thereto. Each Financed Student
Loan is guaranteed by an eligible guarantor under the Higher Education
Act and qualifies the holder thereof to receive Interest Subsidy
Payments (other than SLS Loans, unsubsidized Xxxxxxxx Loans, and those
Consolidation Loans for which the related loan application was
submitted prior to January 1, 1993) and Special Allowance Payments from
the Department and Guarantee Payments from the Guarantor and qualifies
the Guarantor to receive reinsurance payments thereon from the
Department. If such Financed Student Loan is a New Loan or a Qualified
Substitute Loan and is, in either case, guaranteed by an Additional
Guarantor, the aggregate principal balance of all Financed Student
Loans guaranteed by such Additional Guarantor (measured as of the
Subsequent Cutoff Date for such Financed Student Loan) following the
addition of such Financed Student Loan to the Trust, did not exceed 5%
of the principal balance of all Financed Student Loans as of such date,
and the aggregate principal balance of all Financed Student Loans
guaranteed by all Additional Guarantors measured as of such date,
following such addition, did not exceed 20% of the principal balance of
all Financed Student Loans as of such date. The principal balance of
each Financed Student Loan is not subject to change by reason of
adjustments to the related Borrower's account after the Cutoff Date
relating to matters or events occurring prior to the Cutoff Date.
2. SCHEDULE OF FINANCED STUDENT LOANS. The
information set forth in Schedule A to this Agreement is
true and correct in all material respects as of the opening
of business on the Cutoff Date. With respect to any
Consolidation Loan originated by the Issuer or any New Loan,
C-1
Serial Loan or Qualified Substitute Student Loan conveyed to the Issuer
after the Closing Date, information for each category set forth in
Schedule A has been provided with respect to such loan and such
information is true and correct in all material respects, as of the
date of origination, in the case of such Consolidation Loan, and as of
the opening of business on the applicable Subsequent Cutoff Date in the
case of a New Loan, Serial Loan or Qualified Substitute Student Loan.
With respect to any Consolidation Loan, the principal balance of which
has been increased by the principal balance of any related Add-on
Consolidation Loan, information for each category set forth in Schedule
A has been provided with respect to such Add-on Consolidation Loan and
such information is true and correct in all material respects as of the
related Add-on Consolidation Loan Funding Date. No selection procedures
believed to be adverse to the Noteholders were utilized in selecting
any Financed Student Loan. The computer tape regarding the Initial
Financed Student Loans made available to the Issuer and its assigns is
true and correct in all respects as of the Cutoff Date, and, after the
Closing Date, any computer tape regarding any Consolidation Loan, New
Loan, Serial Loan or Qualified Substitute Student Loan made available
to the Issuer and its assigns is true and correct in all respects as of
the date of origination, in the case of a Consolidation Loan originated
by the Trust, as of the applicable Add-on Consolidation Loan Funding
Date, in the case of a Consolidation Loan the principal balance of
which is increased by the principal balance of any related Add-on
Consolidation Loan, and as of the applicable Subsequent Cutoff Date, in
the case of a New Loan, Serial Loan or a Qualified Substitute Student
Loan.
3. COMPLIANCE WITH LAW. Each Financed Student Loan complied at
the time of origination and at the time of the execution of this
Agreement or the applicable Transfer Agreement or Assignment, as the
case may be, at the time of origination in the case of a Consolidation
Loan originated by the Issuer and as of the applicable Add-on
Consolidation Loan Funding Date in the case of a Consolidation Loan the
principal balance of which is increased by the principal balance of any
Add-on Consolidation Loan, in all material respects with all applicable
requirements of local, state, and federal laws, rules and regulations
which govern the making of such Financed Student Loan including the
requirements of the applicable Guarantee Agreement.
4. BINDING OBLIGATION. The terms and conditions of
each Financed Student Loan are consistent with the
application of the Borrower, all signatures for the Financed
Student Loans are genuine and the Borrower Note evidencing
each Financed Student Loan has been duly executed and
delivered and constitutes the legal, valid, and binding
C-2
obligation of the Borrower enforceable in accordance with
its terms.
5. NO DEFENSES. No right of rescission, setoff,
counterclaim, or defense has been asserted or threatened or
exists with respect to any Financed Student Loan.
6. NO DEFAULT. No Financed Student Loan has a payment that is
more than 180 days overdue as of the Cutoff Date or more than 90 days
overdue as of the applicable Subsequent Cutoff Date, as the case may
be, and, except as permitted in this paragraph, no default, breach,
violation or event permitting acceleration under the terms of any
Financed Student Loan has occurred; and, except for payment defaults
continuing for a period of not more than 180 days or 90 days, as
applicable, no continuing condition that with notice or the lapse of
time or both would constitute a default, breach, violation or event
permitting acceleration under the terms of any Financed Student Loan
has arisen; and the Seller has not waived and shall not waive any of
the foregoing other than as permitted by the Basic Documents.
7. TITLE. It is the intention of the Seller that the transfer
and assignment herein contemplated constitute a sale of the Financed
Student Loans from the Seller to the Eligible Lender Trustee on behalf
of the Issuer and that the beneficial interest in and title to such
Financed Student Loans not be part of the estate of the Seller in the
event of the appointment of a receiver with respect to the Seller.
Except in the case of Consolidation Loans originated by the Issuer,
immediately prior to the transfer and sale of each Financed Student
Loan to the Trust, each Borrower Note is owned by the Seller and the
Seller has good title to each Financed Student Loan, free and clear of
any lien, charge, encumbrance, or other interest therein and
immediately upon the transfer and sale of such Financed Student Loan to
the Trust, the Eligible Lender Trustee on behalf of the Issuer will
have good title to such Financed Student Loan free and clear of any
lien, charge, encumbrance, or other interest therein except as
contemplated by the Basic Documents.
8. ALL FILINGS MADE. All filings (including UCC filings)
necessary in any jurisdiction to give the Eligible Lender Trustee on
behalf of the Issuer a first perfected ownership interest in the
Financed Student Loans, and to give the Indenture Trustee a first
perfected security interest therein, have been made.
9. NO BANKRUPTCIES. No Borrower of any Financed
Student Loan as of the Cutoff Date or the applicable
Subsequent Cutoff Date (in the case of Qualified Substitute
Student Loans, New Loans or Serial Loans), as of the date of
origination (in the case of a Consolidation Loan originated
by the Issuer) or as of the applicable Add-on Consolidation
C-3
Loan Funding Date (in the case of a Consolidation Loan the principal
balance of which is increased by the principal balance of any related
Add-on Consolidation Loan) was noted in the related Student Loan File
as being currently involved in a bankruptcy proceeding.
10. LAWFUL ASSIGNMENT. No Financed Student Loan has been
originated in, or is subject to the laws of, any jurisdiction under
which the origination, sale, transfer and assignment of such Financed
Student Loan or any Financed Student Loan under this Agreement, each
Transfer Agreement or the Indenture is unlawful, void or voidable.
11. ONE ORIGINAL. There is only one original executed
copy of the promissory note evidencing each Financed Student
Loan.
12. U.S. OBLIGORS. Less than 1% of the Financed
Student Loans are due from Persons not having a mailing
address in the United States of America.
13. ACCOUNTS. Each Financed Student Loan may be
pledged or transferred as an "account" as defined in the
UCC.
14. INTEREST ACCRUING. Each Financed Student Loan is accruing
interest (whether or not such interest is being paid currently, by the
Borrower or by the Department, or is being capitalized) at the maximum
interest rate permitted by the Higher Education Act and qualifies for
Special Allowance Payments, except as expressly permitted by the Basic
Documents.
15. SELLER'S REPRESENTATIONS. The representations and
warranties of the Seller contained in Section 4.01 are true
and correct.
C-4
EXHIBIT D
TO THE LOAN SALE AGREEMENT
1. ORGANIZATION AND GOOD STANDING. The Seller has been
organized and is existing under the General Corporation Law of the
State of Delaware and is authorized to do business in every state in
which it is doing business (except where any failure to be so
authorized shall not have a material adverse effect on either the
Seller or its obligations hereunder) as well as the state in which it
is organized and incorporated.
2. POWER AND AUTHORITY OF THE SELLER. The Seller has the
corporate power and authority to execute and deliver this Agreement and
to carry out its terms; the Seller has full corporate power and
authority to sell (with NBD conveying legal title as trustee on behalf
of the Seller) and assign the property to be sold and assigned to and
deposited with the Issuer (or with the Eligible Lender Trustee on
behalf of the Issuer) and the Seller has duly authorized such sale and
assignment to the Issuer (or to the Eligible Lender Trustee on behalf
of the Issuer) by all necessary corporate action; and the execution,
delivery and performance of this Agreement have been duly authorized by
the Seller by all necessary corporate action.
3. BINDING OBLIGATION. This Agreement has been executed and
delivered by the Seller and, assuming authorization, execution, and
delivery by the other parties thereto, this Agreement constitutes a
valid obligation of the Seller enforceable against it in accordance
with the express terms of this Agreement, except as enforcement thereof
may be limited by the bankruptcy, insolvency, reorganization,
moratorium, liquidation, readjustment of debt, or other federal or
state laws or equitable principles relating to or affecting the
enforcement of creditor's rights.
4. NO VIOLATION. The consummation of the transactions
contemplated by this Agreement or the Administration Agreement and the
fulfillment of the terms hereof or thereof do not conflict with, result
in any breach of any of the terms and provisions of, nor constitute
(with or without notice or lapse of time or both) a default under, the
certificate of incorporation or by-laws of the Seller, or any
indenture, agreement or other instrument to which the Seller is a party
or by which it shall be bound; nor result in the creation or imposition
of any Lien upon any of its properties pursuant to the terms of any
such indenture, agreement or other instrument (other than pursuant to
the Basic Documents); nor violate any law or, to the knowledge of the
Seller, any order, rule or regulation applicable to the Seller of any
court or of any Federal or state
D-1
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Seller or its properties.
The consummation of the transactions contemplated by this Agreement or
by the Administration Agreement and the fulfillment of the terms hereof
and thereof will not result in the loss of any Guarantee Payments by
the Trust or any reinsurance payments with respect to any Financed
Student Loans by the Guarantor.
5. NO PROCEEDINGS. There is no action, suit, claim,
investigation, or proceeding, in any such case whether pending or to
the knowledge of the Seller, threatened against the Seller before any
court, governmental agency, or arbitrator (i) asserting the invalidity
of this Agreement, the Indenture or any of the other Basic Documents or
the Notes, (ii) seeking to prevent the issuance of the Notes or the
consummation of any transactions contemplated by this Agreement, the
Indenture 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 Seller of its
obligations under, or the validity or enforceability of, this
Agreement, the Indenture, 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.
6. ALL CONSENTS. No action, including, without limitation, the
granting or issuing of any consent, permit, license, approval, or
authorization which is required to be made on or prior to the date of
this Agreement in connection with the sale of Financed Student Loans
under this Agreement (with the possible exception of routine filings
which, if not made, will not render the Seller liable to any material
penalties or will not result in the transactions contemplated by this
Agreement being subject to challenge) is required.
D-2
EXHIBIT E
TO THE LOAN SALE AGREEMENT
1. ORGANIZATION AND GOOD STANDING. NBD is a national
banking association duly organized, validly existing and in
good standing under the laws of the United States and is an
"eligible lender" for purposes of the Higher Education Act.
2. POWER AND AUTHORITY OF THE NBD. NBD has authorized the
execution and delivery of this Agreement and has full legal power and
authority to consummate all transactions contemplated by this Agreement
and any and all other agreements relating hereto.
3. BINDING OBLIGATION. This Agreement has been executed and
delivered by NBD and, assuming authorization, execution, and delivery
by the other parties thereto, this Agreement constitutes a valid
obligation of NBD enforceable against it in accordance with the express
terms of this Agreement, except as enforcement thereof may be limited
by the bankruptcy, insolvency, reorganization, moratorium, liquidation,
readjustment of debt, or other federal or state laws or equitable
principles relating to or affecting the enforcement of creditor's
rights.
4. NO VIOLATION. Compliance by NBD with this Agreement does
not in any material respect violate any law or regulation by which NBD
or its assets are bound, or any writ, order, judgment, or decree of any
court or government instrumentality or arbitrator in which NBD is
named, or the charter or by-laws of NBD or any indenture, contract, or
agreement to which NBD is a party or by which it is or its properties
are bound or affected.
5. NO PROCEEDINGS. There is no action, suit, claim,
investigation, or proceeding, in any case pending or, to the knowledge
of NBD, threatened against NBD before any court, governmental agency,
or arbitrator which, if decided adversely to NBD, is likely to have a
material adverse effect upon the validity or enforceability of this
Agreement.
6. ALL CONSENTS. No action, including, without limitation, the
granting or issuing of any consent, permit, license, approval, or
authorization which is required to be made on or prior to the date of
this Agreement in connection with the sale of Financed Student Loans
under this Agreement (with the possible exception of routine filings
which, if not made, will not render NBD liable to any material
penalties or will not result in the transactions contemplated by this
Agreement being subject to challenge) is required.
E-1
EXHIBIT F
TO THE LOAN SALE AGREEMENT
ASSIGNMENT
For value received, in accordance with the Loan Sale Agreement
(the "Loan Sale Agreement") dated as of April 1, 1997, among USA Group Secondary
Market Services, Inc., as seller (the "Seller"), SMS Student Loan Trust 1997-A
(the "Trust"), NBD Bank, N.A., as trustee for the Seller ("NBD") and The First
National Bank of Chicago, not in its individual capacity but solely as Eligible
Lender Trustee (the "Eligible Lender Trustee"), the Seller (and, with respect to
legal title to the Initial Financed Student Loans, NBD as trustee on behalf of
the Seller) does hereby sell, assign, transfer and otherwise convey unto the
Eligible Lender Trustee on behalf of the Trust, without recourse (subject to the
obligations set forth in the Loan Sale Agreement), all right, title and interest
in and to (i) the Qualified Substitute Student Loan(s) indicated in Schedule A
hereto (the "Additional Student Loans") and all obligations of the Obligors
thereunder, together with all documents, the related Student Loan Files and all
rights and privileges related thereto, (ii) all payments and/or collections
received thereunder on and after the date hereof and (iii) all proceeds of any
and all of the foregoing (including but not limited to proceeds derived from the
voluntary or involuntary conversion of any of the Additional Student Loans into
cash or other liquidated property, such as proceeds from the applicable
Guarantee Agreement). The foregoing sale does not constitute and is not intended
to result in any assumption by the Eligible Lender Trustee or the Trust of any
obligation of the Seller or NBD to the borrowers of Additional Student Loans or
any other Person in connection with the Additional Student Loans or any
agreement or instrument relating to any of them.
In addition, the undersigned, by execution of this instrument,
hereby endorse the promissory notes evidencing each Additional Student Loan in
favor of the Eligible Lender Trustee on behalf of the Trust, without recourse
(subject to the obligations set forth in the Loan Sale Agreement) against the
undersigned. This endorsement may be effected by attaching a facsimile hereof to
each or any of such promissory notes.
This Assignment is made pursuant to and upon the
representations, warranties and agreements on the part of the undersigned
contained in the Loan Sale Agreement and is to be governed by the Loan Sale
Agreement.
Capitalized terms used but not defined herein shall have the
meaning assigned to them in Appendix A to the Administration Agreement, dated as
of April 1, 1997, among the Trust, as Issuer, the Seller, as Administrator, and
Bankers Trust Company, as Indenture Trustee, which also contains rules as to
usage that shall be applicable herein.
F-1
IN WITNESS WHEREOF, the undersigned has caused this Assignment
to be duly executed as of ___________.
USA GROUP SECONDARY MARKET
SERVICES, INC.,
as Seller
by
Name:
Title:
NBD BANK, N.A., as trustee
for USA Group Secondary
Market Services, Inc.
by
Name:
Title:
F-2
