-------------------------------------------------------------------------------
MASTER SERVICING AGREEMENT
among
FIRST UNION STUDENT LOAN TRUST 1997-1
as Issuer,
FIRST UNION NATIONAL BANK
as Master Servicer and Administrator,
AND
THE FIRST NATIONAL BANK OF CHICAGO
not in its individual capacity but solely
as Eligible Lender Trustee,
Dated as of June 1, 1997
--------------------------------------------------------------------------------
MASTER SERVICING AGREEMENT, dated as of June 1, 1997, among FIRST
UNION STUDENT LOAN TRUST 1997-1, a Delaware business trust (the "Issuer"), FIRST
UNION NATIONAL BANK ("First Union"), a national banking association with its
principal place of business in Charlotte, North Carolina, as master servicer and
administrator (in its respective capacities, the "Master Servicer" and the
"Administrator"), 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 Eligible Lender Trustee will acquire certain student
loans to be held in the Trust formed pursuant to a trust agreement (the "Trust
Agreement"), dated as of June 1, 1997, between First Union National Bank, a
separate national banking association with its principal place of business in
Avondale, Pennsylvania, as Seller, and the Eligible Lender Trustee;
WHEREAS, the Issuer will issue notes (the "Notes") pursuant to an
indenture (the "Indenture"), dated as of June 1, 1997, between the Issuer and
the Indenture Trustee and trust certificates (the "Certificates") pursuant to
the Trust Agreement, which Notes and Certificates are payable from the assets of
the Issuer;
WHEREAS, the Issuer, the Administrator and the Eligible Lender Trustee
desire the Master Servicer to service said student loans held by the Eligible
Lender Trustee on behalf of the Issuer, and the Master Servicer is willing to
service said student loans for the Issuer, the Administrator, the Eligible
Lender Trustee and the Indenture Trustee; and
WHEREAS, the Administrator is willing to undertake certain
administrative functions with respect to said student loans;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND USAGE
SECTION 1.01. Definitions and Usage. Capitalized terms used but not
defined herein are defined in Appendix A to the Indenture, which also contains
rules as to usage and construction that shall be applicable herein.
ARTICLE II
THE FINANCED STUDENT LOANS
SECTION 2.01. Custody of Financed Student Loan Files. The Issuer
hereby revocably appoints the Master Servicer, and the Master Servicer hereby
accepts such appointment, to act for the benefit of the Issuer and the Indenture
Trustee as custodian of the following documents or instruments (collectively,
the "Financed Student Loan Files") which are hereby constructively delivered to
the Indenture Trustee, as pledgee of the Issuer with respect to each Financed
Student Loan:
(a) the original fully executed copy of the note evidencing the
Financed Student Loan;
(b) the original loan application fully executed by the borrower; and
(c) any and all other documents and computerized records that any of
the Master Servicer, the Administrator or the Seller shall keep on file, in
accordance with its customary procedures, relating to such Financed Student Loan
or any Obligor with respect thereto.
SECTION 2.02. Duties of Master Servicer as Custodian. (a) Safekeeping. The
Master Servicer shall hold the Financed Student Loan Files for the benefit of
the Issuer and the Indenture Trustee and maintain such accurate and complete
accounts, records and computer systems pertaining to each Financed Student Loan
File as shall enable the Issuer to comply with this Agreement. In performing its
duties as custodian the Master Servicer shall act with reasonable care, using
that degree of skill and attention that the Master Servicer exercises with
respect to the student loan files relating to all comparable student loans that
the Master Servicer services and shall ensure that it complies fully and
completely with all applicable Federal and State laws, including the Higher
Education Act, with respect thereto. The Master Servicer shall take all actions
necessary with respect to the Financed Student Loan Files held by it under this
Agreement and of the related accounts, records and computer systems, in such a
manner as shall enable the Issuer, the Administrator or the Indenture Trustee to
verify the accuracy of the Master Servicer's record keeping with respect to the
Master Servicer's obligations as custodian hereunder. The Master Servicer shall
promptly report to the Issuer, the Administrator and the Indenture Trustee any
failure on its part to hold the Financed Student Loan Files and maintain its
accounts, records and computer systems as herein provided and promptly take
appropriate action to remedy any such failure. Nothing herein shall be deemed to
require an initial review or any periodic review by the Issuer, the Eligible
Lender Trustee or the Indenture Trustee of the Financed Student Loan Files.
(b) Maintenance of and Access to Records. The Master Servicer shall
maintain each Financed Student Loan File at one of its offices or the offices of
any subservicers appointed pursuant to Section 3.13 specified in Schedule B to
this Agreement or at such other office as shall be specified by written notice
to the Issuer and the Indenture Trustee not later than 90 days after any change
in location. Upon reasonable prior notice, the Master Servicer shall make
available to the Issuer and the Indenture Trustee or their respective duly
authorized representatives, attorneys or auditors a list of locations of the
Financed Student Loan Files and access to the related accounts, records and
computer systems maintained by the Master Servicer at such times during normal
business hours as the Issuer or the Indenture Trustee shall instruct.
(c) Release of Documents. Upon instruction from the Indenture Trustee,
the Master Servicer shall release any Financed Student Loan File to the
Indenture Trustee, the Indenture Trustee's agent, or the Indenture Trustee's
designee, as the case may be, at such place or places as the Indenture Trustee
may designate, as soon as practicable. The Indenture Trustee shall cooperate
with the Master Servicer to provide the Master Servicer with access to the
Financed Student Loan Files in order for the Master Servicer to continue to
service the Financed Student Loans after the release of the Financed Student
Loan Files. In the event the Master Servicer is not provided access to the
Financed Student Loan Files, the Master Servicer shall not be deemed to have
breached its obligations pursuant to Sections 2.01 or 2.02 if it is unable to
perform such obligations due to its inability to have access to the Financed
Student Loans Files. The Master Servicer shall not be liable for any losses with
respect to the servicing of such Financed Student Loan Files to the extent the
losses are attributable to the Master Servicer's inability to access the related
Financed Student Loan Files.
SECTION 2.03. Reserved.
SECTION 2.04. Effective Period and Termination. First Union's
appointment as custodian shall become effective as of the Closing Date and shall
continue in full force and effect for so long as First Union shall remain the
Master Servicer hereunder. If First Union or any successor Master Servicer shall
resign as Master Servicer in accordance with the provisions of this Agreement or
if all the rights and obligations of First Union or any such successor Master
Servicer shall have been terminated under Section 7.01, the appointment of First
Union or such successor Master Servicer as custodian shall be terminated
simultaneously with the effectiveness of such resignation or termination. On or
after the effective date of any resignation or any termination of such
appointment, the Master Servicer shall deliver the Financed Student Loan Files
in its possession to the successor Master Servicer, the Indenture Trustee or the
Indenture Trustee's agent, at the direction of the Indenture Trustee, at such
place or places as the Indenture Trustee may reasonably designate.
ARTICLE III
ADMINISTRATION AND SERVICING OF FINANCED STUDENT LOANS
SECTION 3.01. Duties of Master Servicer. The Master Servicer, for the
benefit of the Issuer (to the extent provided herein), shall manage, service,
administer and make collections on the Financed Student Loans with reasonable
care, using that degree of skill and attention that the Master Servicer
exercises with respect to all comparable student loans that it services. Without
limiting the generality of the foregoing or of any other provision set forth in
this Agreement and notwithstanding any other provision to the contrary set forth
herein, the Master Servicer shall manage, service, administer and make
collections with respect to the Financed Student Loans (including collection of
any Interest Subsidy Payments and Special Allowance Payments on behalf of the
Eligible Lender Trustee) in accordance with, and otherwise comply with, all
applicable Federal and state laws, including all applicable standards,
guidelines and requirements of the Higher Education Act and the applicable
Guarantee Agreement, the failure to comply with which would adversely affect the
eligibility of one or more of the Financed Student Loans for federal reinsurance
or Interest Subsidy Payments or Special Allowance Payments or for receipt of
Guarantee Payments.
The Master Servicer's duties shall include collection and posting of
all payments, responding to inquiries of borrowers on such Financed Student
Loans, monitoring borrowers' status, making required disclosures to borrowers,
investigating delinquencies, sending payment coupons to borrowers and otherwise
establishing repayment terms, reporting tax information to borrowers, if
applicable, accounting for collections and furnishing monthly and annual
statements with respect thereto to the Administrator. Subject to the provisions
of Section 3.02, the Master Servicer shall follow its customary standards,
policies and procedures in performing its duties as Master Servicer. Without
limiting the generality of the foregoing, the Master Servicer is authorized and
empowered to execute and deliver, on behalf of itself, the Issuer, the Eligible
Lender Trustee, the Indenture Trustee, the Certificateholders and the
Noteholders or any of them, instruments of satisfaction or cancellation, or
partial or full release or discharge, and all other comparable instruments, with
respect to such Financed Student Loans; provided, however, that the Master
Servicer agrees that it will not (a) permit any rescission or cancellation of a
Financed Student Loan except as ordered by a court of competent jurisdiction or
governmental authority or as otherwise consented to in writing by the Eligible
Lender Trustee and the Indenture Trustee, provided that the Master Servicer may
write off any delinquent Financed Student Loan if the remaining balance of the
borrower's account is less than $50, or (b) reschedule, revise, defer or
otherwise compromise with respect to payments due on any Financed Student Loan
except pursuant to any applicable interest only, deferral or forbearance periods
or otherwise in accordance with all applicable standards, guidelines and
requirements with respect to the servicing of the Financed Student Loans;
provided, further, that the Master Servicer shall not agree to any decrease of
the interest rate on, or the principal amount payable with respect to, any
Financed Student Loan except in accordance with the applicable standards,
guidelines and requirements of the Higher Education Act or the applicable
Guarantee Agreement. The Eligible Lender Trustee on behalf of the Issuer hereby
grants a power of attorney and all necessary authorization to the Master
Servicer to maintain any and all collection procedures with respect to the
Financed Student Loans, including filing, pursuing and recovering claims against
the Guarantors for Guarantee Payments and with the Department for Interest
Subsidy Payments and Special Allowance Payments and taking any steps to enforce
such Financed Student Loan such as commencing a legal proceeding to enforce a
Financed Student Loan in the name of the Issuer, the Eligible Lender Trustee,
the Indenture Trustee, the Certificateholders or the Noteholders. The Eligible
Lender Trustee or the Indenture Trustee shall upon the written request of the
Master Servicer or the Administrator execute and deliver to the Master Servicer
or the Administrator any other powers of attorney and other documents delivered
to each of them reasonably necessary or appropriate to enable the Master
Servicer or the Administrator to carry out their servicing and administrative
duties hereunder.
SECTION 3.02. Collection of Financed Student Loan Payments. (a) The
Master Servicer shall make reasonable efforts (including all efforts that may be
specified under the Higher Education Act or any Guarantee Agreement) to collect
all payments called for under the terms and provisions of the Financed Student
Loans as and when the same shall become due and shall follow such collection
procedures as it follows with respect to all comparable student loans that it
services. The Master Servicer shall allocate collections with respect to the
Financed Student Loans between principal and interest in accordance with Section
4.03. The Master Servicer may in its discretion waive any late payment charge or
any other fees that may be collected in the ordinary course of servicing a
Financed Student Loan.
(b) The Master Servicer shall make reasonable efforts to claim, pursue
and collect all Guarantee Payments from the Guarantors pursuant to the Guarantee
Agreements with respect to any of the Financed Student Loans as and when the
same shall become due and payable, shall comply with all applicable laws and
agreements with respect to claiming, pursuing and collecting such payments and
shall follow such practices and procedures as it follows with respect to all
comparable guarantee agreements and student loans that it services. In
connection therewith, the Master Servicer is hereby authorized and empowered to
convey to any Guarantor the note and the related Financed Student Loan File
representing any Financed Student Loan in connection with submitting a claim to
such Guarantor for a Guarantee Payment in accordance with the terms of the
applicable Guarantee Agreement. All amounts so collected by the Master Servicer
shall constitute Available Funds for the applicable Collection Period and shall
be deposited into the Collection Account. The Eligible Lender Trustee shall,
upon the written request of the Master Servicer, furnish the Master Servicer
with any power of attorney and other documents necessary or appropriate to
enable the Master Servicer to convey such documents to any Guarantor and to make
such claims.
(c) The Master Servicer, on behalf of the Eligible Lender Trustee,
shall make reasonable efforts to claim, pursue and collect all Interest Subsidy
Payments and Special Allowance Payments from the Department with respect to any
of the Financed Student Loans as and when the same shall become due and payable,
shall comply with all applicable laws and agreements with respect to claiming,
pursuing and collecting such payments and shall follow such practices and
procedures as the Master Servicer follows with respect to its own student loans.
All amounts so collected by the Eligible Lender Trustee shall constitute
Available Funds for the applicable Collection Period and shall be deposited into
the Collection Account in accordance with Section 4.02. In connection therewith,
the Master Servicer shall prepare and file with the Department on a timely basis
all claims forms and other documents and filings necessary or appropriate in
connection with the claiming of Interest Subsidy Payments and Special Allowance
Payments on behalf of the Eligible Lender Trustee and shall otherwise assist the
Eligible Lender Trustee in pursuing and collecting such Interest Subsidy
Payments and Special Allowance Payments from the Department. The Eligible Lender
Trustee shall, upon the written request of the Master Servicer, furnish the
Master Servicer with any power of attorney and other documents reasonably
necessary or appropriate to enable the Master Servicer to prepare and file such
claims forms and other documents and filings.
The Eligible Lender Trustee may permit trusts established by the
Seller, other than the Trust, to securitize student loans to use the Department
lender identification number applicable to the Trust. In such event, the
Eligible Lender Trustee may claim and collect Interest Subsidy Payments and
Special Allowance Payments with respect to Financed Student Loans in the Trust
and student loans in such other trusts using such common lender identification
number. Notwithstanding anything herein or in the Basic Documents to the
contrary, any amounts assessed against payments (including, but not limited to,
Interest Subsidy Payments and Special Allowance Payments) due from the
Department or any Guarantor to any such other trust using such common lender
identification number as a result of amounts (including, but not limited to,
consolidation fees) owing to the Department or any Guarantor from the Trust will
be deemed for all purposes hereof and of the Basic Documents (including for
purposes of determining amounts paid by the Department or any Guarantor with
respect to the student loans in the Trust and such other trust) to have been
assessed against the Trust and shall be deducted by the Eligible Lender Trustee
or the Master Servicer and paid to such other trust from any collections made by
them which would otherwise have been payable to the Collection Account for the
Trust. If so specified in the servicing agreement applicable to any such other
trust, any amounts assessed against payments due from the Department or any
Guarantor to the Trust as a result of amounts owing to the Department or any
Guarantor from such other trust using such common lender identification number
will be deemed to have been assessed against such other trust and will be
deducted by the Eligible Lender Trustee or the Master Servicer from any
collections made by them which would otherwise be payable to the collection
account for such other trust and paid to the Trust.
SECTION 3.03. Realization Upon Financed Student Loans. For the benefit
of the Issuer, the Master Servicer shall use reasonable efforts consistent with
its customary servicing practices and procedures and including all efforts that
may be specified under the Higher Education Act or any Guarantee Agreement in
its servicing of any delinquent Financed Student Loans.
SECTION 3.04. Computation of Note Interest Rate and Certificate Rate.
Prior to each Determination Date, the Administrator shall determine the Note
Interest Rate and the Certificate Rate that will be applicable to the
Distribution Date following such Determination Date, in compliance with its
obligation to prepare and deliver an Administrator's Certificate on such
Determination Date pursuant to Section 3.08. In connection therewith, the
Administrator shall calculate the T-Xxxx Rate in accordance with the definition
thereof and shall also determine the Student Loan Rate with respect to such
Distribution Date.
SECTION 3.05. No Impairment. The Master Servicer shall not impair the
rights of the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Certificateholders or Noteholders in such Financed Student Loans.
SECTION 3.06. Purchase Of Financed Student Loans; Reimbursement. The
Master Servicer or the Eligible Lender Trustee shall inform the other party as
well as the Indenture Trustee and the Seller promptly, in writing, upon the
discovery of any breach pursuant to Section 3.01, 3.02, 3.03 or 3.05. Unless the
breach shall have been cured within 120 days following such discovery (or, at
the Master Servicer's election, the last day of the first month following such
discovery), the Master Servicer shall purchase any Financed Student Loan in
which the interests of the Noteholders or the Certificateholders are materially
and adversely affected by such breach as of the first day succeeding the end of
such 120-day period that is the last day of a Collection Period (it being
understood that any such breach that does not affect any Guarantor's obligation
to guarantee payment of such Financed Student Loan will not be considered to
have a material adverse effect for this purpose). If the Master Servicer takes
any action or fails to take any action during any Collection Period pursuant to
the sections referred to above that impairs the rights of the Issuer, the
Indenture Trustee, the Eligible Lender Trustee, the Certificateholders or the
Noteholders in any Financed Student Loan or otherwise than as provided in such
sections, the Master Servicer shall purchase such Financed Student Loan as of
the last day of such Collection Period. In consideration of the purchase of any
such Financed Student Loan pursuant to either of the two preceding sentences,
the Master Servicer shall remit the Purchase Amount in the manner specified in
Section 4.04. In addition, if any such breach by the Master Servicer does not
trigger such a purchase obligation but does result in the refusal by a Guarantor
to guarantee all or a portion of the accrued interest, or the loss (including
any obligation of the Issuer to repay to the Department) of certain Interest
Subsidy Payments and Special Allowance Payments, with respect to a Financed
Student Loan, then, unless such breach, if curable, is cured within 120 days,
the Master Servicer shall reimburse the Issuer by remitting an amount equal to
the sum of all such non-guaranteed interest amounts and such forfeited Interest
Subsidy Payments and Special Allowance Payments in the manner specified in
Section 4.04. The sole remedy of the Issuer, the Eligible Lender Trustee, the
Indenture Trustee, the Certificateholders and the Noteholders with respect to a
breach pursuant to Section 3.01, 3.02, 3.03 or 3.05 shall be to require the
Master Servicer to purchase Financed Student Loans or to reimburse the Issuer as
provided above pursuant to this Section 3.06. The Eligible Lender Trustee shall
have no duty to conduct any affirmative investigation as to the occurrence of
any condition requiring the repurchase of any Financed Student Loan or the
reimbursement for any interest penalty pursuant to this Section 3.06. The Master
Servicer shall not be deemed to have breached its obligations pursuant to
Section 3.01, 3.02, 3.03 or 3.05 if it is rendered unable to perform such
obligations, in whole or in part, by a force outside the control of the parties
hereto (including acts of God, acts of war, fires, earthquakes, hurricanes,
floods and other disasters). The Master Servicer shall diligently perform its
duties under this Agreement as soon as practicable following the termination of
such interruption of business.
SECTION 3.07. Servicing Fee, Excess Servicing Fee. The Servicing Fee
for each calendar month and any Distribution Date and any Excess Servicing Fees
payable on any Distribution Date shall be equal to the amounts determined by
reference to the schedule of fees attached hereto as Schedule C. Notwithstanding
anything to the contrary contained herein or in any other Basic Document, the
Master Servicer shall only be entitled to receive any Excess Servicing Fee on
any Distribution Date if and to the extent that sufficient funds are available
pursuant to Section 4.05(c)(ix) or 4.06(e)(A).
SECTION 3.08. Administrator's Certificate; Master Servicer's Report.
(a) On or before the fifteenth day of each month (or, if any such day is not a
Business Day, on the next succeeding Business Day), the Master Servicer shall
deliver to the Administrator a Master Servicer's Report with respect to the
preceding calendar month containing all information necessary for the
Administrator to receive in connection with the preparation of the
Administrator's Certificate covering such calendar month referred to in
paragraphs (b) and (c) below.
(b) On each Determination Date prior to a Monthly Servicing Payment
Date that is not a Distribution Date, the Administrator shall deliver to the
Eligible Lender Trustee, the Indenture Trustee and (if the Seller is not the
Administrator) the Seller, an Administrator's Certificate containing all
information necessary to pay the Master Servicer the Servicing Fee due on such
Monthly Servicing Payment Date pursuant to Sections 4.05(b) and 4.06.
(c) On each Determination Date prior to a Distribution Date, the
Administrator shall deliver to the Eligible Lender Trustee, the Indenture
Trustee and (if the Seller is not the Administrator) the Seller, with a copy to
the Rating Agencies, an Administrator's Certificate containing all information
necessary to make the distributions pursuant to Sections 4.05 and 4.06 for the
Collection Period preceding the date of such Administrator's Certificate.
Financed Student Loans to be repurchased by the Seller, purchased by the Master
Servicer or acquired by any Guarantor shall be identified by the Administrator
by type of loan and borrower social security number with respect to such
Financed Student Loan (as specified in Schedule A).
SECTION 3.09. Annual Statement as to Compliance; Notice of Default.
(a) Each of the Master Servicer and the Administrator shall deliver to the
Seller, the Eligible Lender Trustee and the Indenture Trustee, on or before
April 30 of each year beginning April 30, 1998, an Officer's Certificate of the
Master Servicer or the Administrator, as the case may be, dated as of December
31 of the preceding year, stating that (i) a review of the activities of the
Master Servicer or the Administrator, as the case may be, during the preceding
12-month period (or, in the case of the first such certificate, during the
period from the Closing Date to December 31, 1997) and of its performance under
this Agreement has been made under such officer's supervision and (ii) to the
best of such officer's knowledge, based on such review, the Master Servicer or
the Administrator, as the case may be, has fulfilled all its obligations under
this Agreement, or under this Agreement and the Administration Agreement,
respectively, throughout such year or, if there has been a default in the
fulfillment of any such obligation, specifying each such default known to such
officers and the nature and status thereof. The Indenture Trustee shall send a
copy of each such Officer's Certificate and each report referred to in Section
3.10 to the Rating Agencies. A copy of each such Officer's Certificate and each
report referred to in Section 3.10 may be obtained by any Certificateholder,
Certificate Owner, Noteholder or Note Owner by a request in writing to the
Eligible Lender Trustee addressed to its Corporate Trust Office, together with
evidence satisfactory to the Eligible Lender Trustee that such Person is one of
the foregoing parties. Upon the telephone request of the Eligible Lender
Trustee, the Indenture Trustee will promptly furnish the Eligible Lender Trustee
a list of Noteholders as of the date specified by the Eligible Lender Trustee.
(b) The Master Servicer shall deliver to the Eligible Lender Trustee,
the Indenture Trustee, the Seller and the Rating Agencies, promptly after having
obtained knowledge thereof, but in no event later than five Business Days
thereafter, written notice in an Officer's Certificate of the Master Servicer of
any event which with the giving of notice or lapse of time, or both, would
become a Master Servicer Default under Section 7.01(a)(1) or (2).
(c) The Administrator shall deliver to the Eligible Lender Trustee,
the Indenture Trustee, the Master Servicer and the Rating Agencies, promptly
after having obtained knowledge thereof, but in no event later than five
Business Days thereafter, written notice in an Officer's Certificate of the
Administrator of any event which with the giving of notice or lapse of time, or
both, would become an Administrator Default under Section 7.01(b)(1) or (2) or
would cause First Union to fail to meet any Rating Agency Condition pursuant to
Section 4.02(iii).
SECTION 3.10. Annual Independent Certified Public Accountant's Report.
Each of the Master Servicer and the Administrator shall cause a firm of
independent certified public accountants, which may also render other services
to the Master Servicer or the Administrator, as the case may be, to deliver to
the Seller, the Eligible Lender Trustee and the Indenture Trustee on or before
April 30 of each year beginning April 30, 1998, a report addressed to the Master
Servicer or the Administrator, as the case may be, and to the Seller, the
Eligible Lender Trustee and the Indenture Trustee, to the effect that such firm
has examined certain documents and records relating to the servicing of the
Financed Student Loans, or the administration of the Financed Student Loans and
of the Trust, as the case may be, during the preceding calendar year (or, in the
case of the first such report, during the period from the Closing Date to
December 31, 1997) and that, on the basis of the accounting and auditing
procedures considered appropriate under the circumstances, such firm is of the
opinion that such servicing or administration was conducted in compliance with
the terms of this Agreement and the Administration Agreement, as the case may
be, including any applicable statutory provisions incorporated therein, and such
additional terms and statutes as may be specified from time to time by the
Administrator, except for (i) such exceptions as such firm shall believe to be
immaterial and (ii) such other exceptions as shall be set forth in such report.
Such report will also indicate that the firm is independent of the
Master Servicer or the Administrator, as the case may be, within the meaning of
the Code of Professional Ethics of the American Institute of Certified Public
Accountants.
SECTION 3.11. Access to Certain Documentation and Information
Regarding Financed Student Loans. Upon reasonable prior notice, the Master
Servicer shall provide to the Certificateholders and the Noteholders access to
the Financed Student Loan Files in such cases where the Certificateholders or
the Noteholders shall be required by applicable statutes or regulations to
review such documentation, as demonstrated by evidence satisfactory to the
Master Servicer in its reasonable judgment. Access shall be afforded without
charge, but only upon reasonable request and during the normal business hours at
the respective offices of the Master Servicer. Nothing in this Section shall
affect the obligation of the Master Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors and the failure of
the Master Servicer to provide access to information as a result of such
obligation shall not constitute a breach of this Section.
SECTION 3.12. Master Servicer and Administrator Expenses. Each of the
Master Servicer and the Administrator shall be severally required to pay all
expenses incurred by it in connection with its activities hereunder, including
fees and disbursements of independent accountants, taxes imposed on the Master
Servicer or the Administrator, as the case may be, and expenses incurred in
connection with distributions and reports to the Administrator or to the
Certificateholders and the Noteholders, as the case may be; [provided, however,
the Excess Servicing Fee will be subject to increase agreed to by the
Administrator, the Eligible Lender Trustee and the Master Servicer to the extent
that a demonstrable and significant increase occurs in the costs incurred by the
Master Servicer in providing the services to be provided hereunder, whether due
to changes in applicable governmental regulations, Guarantor program
requirements or regulations or postal rates].
SECTION 3.13. Appointment of Subservicers. (a) The Master Servicer may
at any time enter into subservicing agreements to provide for the performance by
third parties of all or any portion of its obligations as Master Servicer
hereunder; provided, however, that any applicable Rating Agency Condition shall
have been satisfied in connection therewith; and provided, further, that the
Master Servicer shall remain obligated and be liable to the Issuer, the Eligible
Lender Trustee, the Indenture Trustee, the Certificateholders and the
Noteholders for the servicing and administering of the Financed Student Loans in
accordance with the provisions hereof without diminution of such obligation and
liability by virtue of the appointment of such subservicers and to the same
extent and under the same terms and conditions as if the Master Servicer alone
were servicing and administering the Financed Student Loans. The fees and
expenses of the subservicers shall be as agreed between the Master Servicer and
its subservicers from time to time and none of the Issuer, the Eligible Lender
Trustee, the Indenture Trustee, the Certificateholders or the Noteholders shall
have any responsibility therefor. In no event shall the Trust Estate bear any
termination fee required to be paid to any subservicer as a result of such
subservicer's termination under any subservicing agreement. With respect to
satisfying the Rating Agency Condition referred to above, the term "subservicer"
shall be deemed not to include systems providers, systems developers or systems
maintenance contractors, collection agencies, credit bureaus, lock box
providers, mail service providers and other similar types of service providers.
References in this Agreement to actions taken or to be taken by the Master
Servicer include actions taken or to be taken by a subservicer on behalf of the
Master Servicer.
[(b) In addition, the Master Servicer may at any time enter into
subservicing agreements to provide for the performance by third parties of all
or any portion of its obligations as Master Servicer hereunder; provided that,
in each case, the subservicing agreement: (i) is consistent with this Agreement
in all material respects; (ii) provides that if the Master Servicer shall for
any reason no longer act in such capacity hereunder (including, without
limitation, by reason of a Master Servicer Default), the Indenture Trustee or
its designee may thereupon assume all of the rights and, except to the extent
they arose prior to the date of assumption, obligations of the Master Servicer
under such agreement, or, alternatively, may act in accordance with Section 7.02
hereof under the circumstances described therein; (iii) provides that the
Indenture Trustee for the benefit of the Noteholders and the Certificateholders
shall be a third party beneficiary under such agreement, but that (except to the
extent the Indenture Trustee or its designee assumes the obligations of the
Master Servicer thereunder as contemplated by the immediately preceding clause
(ii)) none of the Trust, the Indenture Trustee, any successor Master Servicer,
any Noteholder or any Certificateholder shall have any duties under such
agreement or any liabilities arising therefrom; (iv) permits any purchaser of a
Financed Student Loan pursuant to this Agreement to terminate such agreement
with respect to such purchased Financed Student Loan at its option and without
penalty; (v) does not permit the subservicer to enter into or consent to any
modification, waiver or amendment or otherwise take any action on behalf of the
Master Servicer contemplated by Section 3.01 or Section 3.02 without the consent
of such Master Servicer; and (vi) does not permit the subservicer any direct
rights of indemnification that may be satisfied out of the Trust Estate. The
Master Servicer shall deliver to the Indenture Trustee copies of all
subservicing agreements, and any amendments thereto and modifications thereof,
entered into by it promptly upon its execution and delivery of such documents.
For purposes of this Agreement, the Master Servicer shall be deemed to have
received any payment when a subservicer retained by it receives such payment.
The Master Servicer shall notify the Indenture Trustee and the Seller in writing
promptly of the appointment by it of any subservicer.
(c) As part of its servicing activities hereunder, the Master
Servicer, for the benefit of the Indenture Trustee, the Noteholders and the
Certificateholders, shall (at no expense to the Indenture Trustee, the
Noteholders, the Certificateholders or the Trust) monitor the performance and
enforce the obligations of each subservicer under the related subservicing
agreement. Such enforcement, including, without limitation, the legal
prosecution of claims, termination of subservicing agreements in accordance with
their respective terms and the pursuit of other appropriate remedies, shall be
in such form and carried out to such an extent and at such time as the Master
Servicer would require were it the owner of the Financed Student Loans. The
Master Servicer shall have the right to remove a subservicer retained by it in
accordance with the terms of the related subservicing agreement.
(d) In the event the Indenture Trustee or its designee assumes the
rights and obligations of the Master Servicer under any subservicing agreement,
the Master Servicer at its expense shall, upon request of the Indenture Trustee,
deliver to the assuming party all documents and records relating to such
subservicing agreement and the Financed Student Loans then being serviced
thereunder and an accounting of amounts collected and held on behalf of it
thereunder, and otherwise use reasonable efforts to effect the orderly and
efficient transfer of the subservicing agreement to the assuming party.
(e) The Indenture Trustee shall furnish to any subservicer any powers
of attorney and other documents necessary or appropriate to enable such
subservicer to carry out its servicing and administrative duties under any
subservicing agreement; provided, however, that the Indenture Trustee shall not
be held liable for any negligence with respect to, or misuse of, any such power
of attorney by a subservicer.]
SECTION 3.14. Covenants and Agreements of the Issuer, Administrator,
Eligible Lender Trustee and Master Service. The Issuer, the Administrator, the
Master Servicer and the Eligible Lender Trustee each agree that:
(a) Any payment and any communications received at any time by the
Issuer, the Administrator and the Eligible Lender Trustee (to the extent it can
be determined from the contents of such notice that the student loan referenced
is a Financed Student Loan) with respect to a Financed Student Loan shall be
immediately transmitted to the Master Servicer. Such communications shall
include, but not be limited to, requests or notices of loan cancellation,
notices of borrower disqualification, letters, changes in address or status,
notices of death or disability, notices of bankruptcy and forms requesting
deferment of repayment or forbearance.
(b) The Master Servicer may, in its discretion, if requested by a
borrower of a Financed Student Loan, arrange for the sale of such Financed
Student Loan to another lender which holds another student loan of such borrower
at a price not less than the Purchase Amount.
ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS TO
CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 4.01. Establishment Of Trust Accounts. (a) (i) The
Administrator, for the benefit of the Issuer, shall establish and maintain in
the name of the Indenture Trustee an Eligible Deposit Account (the "Collection
Account"), bearing a designation clearly indicating that the funds deposited
therein are held for the benefit of the Issuer. The Collection Account will
initially be established as a segregated trust account in the name of the
Indenture Trustee with the corporate trust department of the Indenture Trustee.
(ii) The Administrator, for the benefit of the Issuer, shall establish
and maintain in the name of the Indenture Trustee an Eligible Deposit Account
(the "Reserve Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Issuer. The Reserve Account
will initially be established as a segregated trust account in the name of the
Indenture Trustee with the corporate trust department of the Indenture Trustee.
(b) Funds on deposit in the Collection Account and the Reserve Account
(collectively, the "Trust Accounts") shall be invested by the Indenture Trustee
(or any custodian or designated agent with respect to any amounts on deposit in
such accounts) in Eligible Investments pursuant to written instructions by the
Administrator; provided, however, it is understood and agreed that the Indenture
Trustee shall not be liable for any loss arising from such investment in
Eligible Investments. All such Eligible Investments shall be held by (or by any
custodian on behalf of) the Indenture Trustee for the benefit of the Issuer;
provided that on the Business Day preceding each Distribution Date or the next
Monthly Servicing Payment Date (to the extent of the Servicing Fee due on such
date) all interest and other investment income (net of losses and investment
expenses) on funds on deposit therein shall be deposited into the Collection
Account and shall be deemed to constitute a portion of the Available Funds for
such Distribution Date or the next Monthly Servicing Payment Date, as
applicable. Other than as described in the following proviso or as otherwise
permitted by the Rating Agencies, funds on deposit in the Trust Accounts shall
be invested in Eligible Investments that will mature so that such funds will be
available at the close of business on the Business Day preceding the following
Distribution Date or the next Monthly Servicing Payment Date (to the extent of
the Servicing Fee due on such date); provided, however, that funds on deposit in
Trust Accounts may be invested in Eligible Investments of the Indenture Trustee
which may mature so that such funds will be available on such Distribution Date.
Funds deposited in a Trust Account on a Business Day which immediately precedes
a Distribution Date or the next Monthly Servicing Payment Date (to the extent of
the Servicing Fee due on such date) upon the maturity of any Eligible
Investments are not required to be invested overnight.
(c) (i) The Indenture Trustee shall possess all right, title and
interest in all funds on deposit from time to time in the Trust Accounts and in
all proceeds thereof (including all income thereon) and all such funds,
investments, proceeds and income shall be part of the Trust Estate. Subject to
the Administrator's power to instruct the Indenture Trustee pursuant to
paragraph (b) above and paragraph (c)(iii) below, the Trust Accounts shall be
under the sole dominion and control of the Indenture Trustee for the benefit of
the Issuer. If, at any time, any of the Trust Accounts ceases to be an Eligible
Deposit Account, the Indenture Trustee (or the Administrator on its behalf)
agrees, by its acceptance hereto, that it shall within 10 Business Days (or such
longer period, not to exceed 30 calendar days, as to which each Rating Agency
may consent) establish a new Trust Account as an Eligible Deposit Account and
shall transfer any cash and/or any investments to such new Trust Account. In
connection with the foregoing, the Administrator agrees that, in the event that
any of the Trust Accounts are not accounts with the Indenture Trustee, the
Administrator shall notify the Indenture Trustee in writing promptly upon any of
such Trust Accounts ceasing to be an Eligible Deposit Account.
(ii) With respect to the Trust Account Property, the Indenture Trustee
agrees, by its acceptance hereof, that:
(A) any Trust Account Property that is held in deposit accounts
shall be held solely in Eligible Deposit Accounts, subject to the last
sentence of Section 4.01(c)(i); and, subject to Section 4.01(b), each such
Eligible Deposit Account shall be subject to the exclusive custody and
control of the Indenture Trustee, and the Indenture Trustee shall have sole
signature authority with respect thereto;
(B) any Trust Account Property that constitutes Physical Property
shall be Delivered to the Indenture Trustee in accordance with paragraph
(a) of the definition of "Delivery" and shall be held, pending maturity or
disposition, solely by the Indenture Trustee or a financial intermediary
(as such term is defined in Section 8-313(4) of the UCC) acting solely for
the Indenture Trustee;
(C) any Trust Account Property that is a book-entry security held
through the Federal Reserve System pursuant to Federal book-entry
regulations shall be Delivered in accordance with paragraph (b) of the
definition of "Delivery" and shall be maintained by the Indenture Trustee,
pending maturity or disposition, through continued book-entry registration
of such Trust Account Property as described in such paragraph; and
(D) any Trust Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by clause (C)
above shall be Delivered to the Indenture Trustee in accordance with
paragraph (c) of the definition of "Delivery" and shall be maintained by
the Indenture Trustee, pending maturity or disposition, through continued
registration of the Indenture Trustee's (or its nominee's) ownership of
such security.
(iii) The Administrator shall have the power, revocable for cause or
upon the occurrence and during the continuance of an Administrator Default
by the Indenture Trustee or by the Eligible Lender Trustee with the consent
of the Indenture Trustee, to instruct the Indenture Trustee to make
withdrawals and payments from the Trust Accounts for the purpose of
permitting the Master Servicer, the Administrator or the Eligible Lender
Trustee to carry out its respective duties hereunder or permitting the
Indenture Trustee to carry out its duties under the Indenture.
SECTION 4.02. Collections. The Master Servicer shall remit within two
Business Days of receipt thereof to the Collection Account all payments by or on
behalf of the Obligors with respect to the Financed Student Loans (other than
Purchased Student Loans), and all Liquidation Proceeds, both as collected during
the Collection Period. Notwithstanding the foregoing, for so long as (i) First
Union remains the Administrator, (ii) no Administrator Default shall have
occurred and be continuing and (iii) prior to ceasing daily remittances to the
Collection Account, the Rating Agency Condition shall have been satisfied (and
any conditions or limitations imposed by the Rating Agencies in connection
therewith are complied with), the Master Servicer shall remit such collections
within two Business Days of receipt thereof to the Administrator, and the
Administrator need not deposit such collections into the Collection Account
until one Business Day immediately prior to the next following Distribution
Date; provided, however, that, notwithstanding the foregoing, on or before the
Business Day preceding each Monthly Servicing Payment Date that is not a
Distribution Date, the Administrator shall deposit into the Collection Account
that portion of such amounts received by it that is equal to the Servicing Fee
payable on such date. In the event that any of the foregoing conditions for
ceasing daily remittances shall no longer be satisfied, then the Administrator
shall deposit all collections held by it into the Collection Account within five
Business Days thereof. For purposes of this Article IV, the phrase "payments by
or on behalf of Obligors" shall mean payments made with respect to the Financed
Student Loans by or on behalf of borrowers thereof and the Guarantors (but
excluding the Department).
SECTION 4.03. Application of Collections. (a) With respect to each
Financed Student Loan, all collections (including all Guarantee Payments) with
respect thereto for the Collection Period shall be applied to interest and
principal on such Financed Student Loan by the Master Servicer in accordance
with its customary practice by allocating to interest (i) any late payment
charge or any similar fee received with respect to such Financed Student Loan
and (ii) the portion of such collection equal to the product of (A) the
applicable interest rate on such Financed Student Loan, (B) the unpaid principal
balance of such Financed Student Loan and (C) the period of time elapsed since
the preceding payment of interest on such Financed Student Loan was made (over
the actual number of days in a year) ("Interest Collections") and by allocating
the remainder of such collection to principal.
(b) All Liquidation Proceeds not received in connection with a sale or
other transfer of a Financed Student Loan shall be applied to the related
Financed Student Loan.
SECTION 4.04. Additional Deposits. (a) Within two Business Days after
receipt thereof, the Eligible Lender Trustee shall deposit in the Collection
Account the aggregate amount of Interest Subsidy Payments and Special Allowance
Payments received by it with respect to the Financed Student Loans. The Master
Servicer 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 Master Servicer under Section 3.06 when such amounts
are due, and the Seller shall deposit or cause to be deposited therein the
aggregate Purchase Amount with respect to Purchased Student Loans and all other
amounts to be paid by the Seller under the Sale Agreement when such amounts are
due.
(b) Notwithstanding anything to the contrary set forth in paragraph
(a) above, if daily deposits to the Collection Account are not required pursuant
to Section 4.02, the Eligible Lender Trustee, the Seller and the Master Servicer
shall pay the amounts referred to in paragraph (a) above that would otherwise be
deposited into the Collection Account to the Administrator. The Administrator
shall not be required to deposit such amounts into the Collection Account until
the Business Day preceding each Distribution Date; provided, however, that, on
or before the Business Day preceding each Monthly Servicing Payment Date that is
not a Distribution Date, the Administrator shall deposit into the Collection
Account that portion of such amounts received by it that is equal to the
Servicing Fee payable on such date.
SECTION 4.05. Distributions. (a) On each Determination Date, the
Administrator shall calculate all amounts required to determine the amounts to
be deposited in the Collection Account from the Reserve Account and the amounts
to be distributed therefrom on the related Monthly Servicing Payment Date or
Distribution Date.
(b) On each Monthly Servicing Payment Date that is not a Distribution
Date, the Administrator shall instruct the Indenture Trustee (based on the
information contained in the Administrator's Certificate and the related Master
Servicer's Report delivered pursuant to Section 3.08(a) and (b)) to distribute
to the Master Servicer by 11:00 a.m. (New York time), from and to the extent of
the Available Funds on deposit in the Collection Account, the Servicing Fee due
with respect to the preceding calendar month and all unpaid Servicing Fees from
prior months and the Indenture Trustee shall comply with such instructions.
(c) On each Distribution Date, the Administrator shall
instruct the Indenture Trustee (based on the information contained in the
Administrator's Certificate and the related Master Servicer's Report delivered
pursuant to Section 3.08(a) and (c)) to make the following deposits and
distributions to the Persons or to the account specified below by 11:00 a.m.
(New York time), to the extent of the amount of Available Funds in the
Collection Account, in the following order of priority, and the Indenture
Trustee shall comply with such instructions:
(i) to the Master Servicer, the Servicing Fee due with
respect to the preceding calendar month and all unpaid Servicing Fees
from prior months;
(ii) to the Administrator, from the amount of Available
Funds remaining after the application of clause (i), the
Administration Fee and all unpaid Administration Fees from prior
Collection Periods;
(iii) to the Noteholders, from the amount of Available Funds
remaining after the application of clauses (i) through (iv), the
Noteholders' Interest Distribution Amount ratably, without preference
or priority of any kind, according to the amounts payable on the Notes
in respect of Noteholders' Interest Distribution Amount;
(iv) to the Eligible Lender Trustee on behalf of the
Certificateholders, from the amount of Available Funds remaining after
the application of clauses (i) through (v), the Certificateholders'
Interest Distribution Amount, for distribution by the Eligible Lender
Trustee pursuant to the Trust Agreement, ratably, without preference
or priority of any kind, according to the amounts payable in respect
of Certificateholders' Interest Distribution Amount;
(v) to the Class A-1 Noteholders, from the amount of
Available Funds remaining after the application of clauses (i) through
(vi), the Noteholders' Principal Distribution Amount, ratably, without
preference or priority of any kind, according to the amounts payable
on the Class A-1 Notes for principal;
(vi) on each Distribution Date on and after which the Class
A-1 Notes have been paid in full, to the Class A-2 Noteholders, from
the amount of Available Funds remaining after the application of
clauses (i) through (vii), the Noteholders' Principal Distribution
Amount, ratably, without preference or priority of any kind, according
to the amounts payable on the Class A-2 Notes for principal;
(vii) for each Distribution Date on and after the date on
which the Notes have been paid in full, to the Eligible Lender Trustee
on behalf of the Certificateholders, from the amount of Available
Funds remaining after the application of clauses (i) through (viii),
the Certificateholders' Principal Distribution Amount, for
distribution by the Eligible Lender Trustee pursuant to the Trust
Agreement, ratably, without preference or priority of any kind,
according to the amounts payable in respect of the Certificate
Balance;
(viii) to the Reserve Account, from the amount of Available
Funds remaining after the application of clauses (i) through (ix), the
amount, if any, necessary to reinstate the balance of the Reserve
Account up to the Specified Reserve Account Balance;
[(ix) to the Master Servicer, from the amount of Available
Funds remaining after the application of clauses (i) through (x), the
aggregate unpaid amount of Excess Servicing Fees, if any;]
(x) to the Noteholders, from the amount of Available Funds
remaining after the application of clauses (i) through (xi), the
aggregate unpaid amount of Noteholders' Interest Index Carryover, if
any, ratably, without preference or priority of any kind, according to
the amounts due and payable on the Notes in respect of Noteholders'
Interest Index Carryover;
(xi) to the Eligible Lender Trustee on behalf of the
Certificateholders, from the amount of Available Funds remaining after
the application of clauses (i) through (xii), the aggregate unpaid
amount of Certificateholders' Interest Index Carryover, if any, for
distribution by the Eligible Lender trustee pursuant to the Trust
Agreement ratably, without preference or priority of any kind,
according to the amounts payable in respect of Certificateholders'
Interest Index Carryover; and
(xii) to the Reserve Account, the amount of Available Funds
remaining after the application of clauses (i) through (xiii).
SECTION 4.06. Reserve Account. (a) On the Closing Date, the Trust shall
deposit the Reserve Account Initial Deposit into the Reserve Account. On each
Determination Date, the Administrator shall calculate all amounts required to
determine the amounts to be withdrawn from the Reserve Account and the amounts
to be distributed therefrom on the related Monthly Servicing Payment Date or
Distribution Date.
(b) In the event that the Servicing Fee for any Monthly Servicing
Payment Date or Distribution Date exceeds the amount distributed to the Master
Servicer pursuant to Sections 4.05(b) and 4.05(c)(i) on such Monthly Servicing
Payment Date or Distribution Date, the Administrator shall instruct the
Indenture Trustee to withdraw from the Reserve Account on such Monthly Servicing
Payment Date or Distribution Date an amount equal to such excess, to the extent
of funds available therein, and shall instruct the Indenture Trustee (based on
the information contained in the Administrator's Certificate and the related
Master Servicer's Report delivered pursuant to Section 3.08(a) and (b)) to
distribute such amount to the Master Servicer; provided, however, that, except
as provided in Sections 4.06(d)(A) and 4.06(e), amounts on deposit in the
Reserve Account will not be available to cover any unpaid Excess Servicing Fees
to the Master Servicer.
(c) On each Distribution Date, the Administrator shall instruct the
Indenture Trustee (based on the information contained in the Administrator's
Certificate and the related Master Servicer's Report delivered pursuant to
Section 3.08(a) and (c)) to make the following deposits and distributions to the
Persons or to the account specified below by 11:00 a.m. (New York time), to the
extent of the amount of funds available in the Reserve Account, in the following
order of priority, and the Indenture Trustee shall comply with such
instructions:
(i) to the Administrator, in the event that the Administration
Fee for any Distribution Date exceeds the amount distributed to the
Administrator pursuant to Section 4.05(c)(ii) on such Distribution
Date, the Administrator shall instruct the Indenture Trustee to
withdraw from the Reserve Account on each Distribution Date an amount
equal to such excess, to the extent of funds available therein after
giving effect to paragraph (b) above;
(ii) to the Noteholders entitled thereto, in the event that
the Noteholders' Interest Distribution Amount for a Distribution Date
exceeds the amount distributed to Noteholders pursuant to Section
4.05(c)(iii) on such Distribution Date, the Administrator shall
instruct the Indenture Trustee to withdraw from the Reserve Account on
such Distribution Date an amount equal to such excess, to the extent of
funds available therein after giving effect to paragraphs (b) and
(c)(i) above, in the same order and priority as is set forth in Section
4.05(c)(iii); and
(iii) to the Eligible Lender Trustee for distribution to the
Certificateholders entitled thereto, in the event that the
Certificateholders' Interest Distribution Amount for a Distribution
Date exceeds the amount distributed to Certificateholders pursuant to
Section 4.05(c)(iv) on such Distribution Date, the Administrator shall
instruct the Indenture Trustee on such Distribution Date to withdraw
from the Reserve Account on such Distribution Date an amount equal to
such excess, to the extent of funds available therein after giving
effect to paragraphs (b) and (c)(i) through (ii) above, in the same
order and priority as is set forth in Section 4.05(c)(iv).
(d) (i) On the Class A-1 Final Maturity Date, the Class A-2 Final
Maturity Date and the Certificate Final Payment Date with respect to the Class
A-1 Notes, Class A-2 Notes and Certificates, respectively, the Administrator
shall instruct the Indenture Trustee (based on the information contained in the
Administrator's Certificate and the related Master Servicer's Report delivered
pursuant to Section 3.08(a) and (c)) to distribute the amount on deposit in the
Reserve Account (after taking into account any deposits therein pursuant to
Section 4.05(c)(viii) and (c)(xii) and any withdrawals therefrom pursuant to
Section 4.06(b) and (c)) (up to the amount of cash or cash equivalents in the
Reserve Account) as a payment of principal, on their respective maturity dates,
first to the Noteholders until the principal amount of the Notes is paid in full
and then to the Eligible Lender Trustee for distribution to the
Certificateholders until the Certificate Balance is paid in full; provided,
however, that the amount of such distribution shall not exceed the outstanding
principal balance of the Notes or the Certificates, as applicable, after giving
effect to all other payments of principal to be made on such date.
(ii) In the event the Financed Student Loans are not sold
pursuant to Section 8.01(b), with respect to any Distribution Date
occurring on or after the Auction Distribution Date, if the amount on
deposit in the Reserve Account (after taking into account any deposits
therein pursuant to Section 4.05(c)(viii) and (c)(xii) and any
withdrawals therefrom pursuant to Section 4.06(b) and (c)) is greater
than the Specified Reserve Account Balance for such Distribution Date,
then the Administrator shall instruct the Indenture Trustee (based on
the information contained in the Administrator's Certificate and the
related Master Servicer's Report delivered pursuant to Section 3.08(a)
and (c)) to distribute such excess (up to the amount of cash or cash
equivalents in the Reserve Account) as an accelerated payment of
principal first to the Noteholders until the principal amount of the
Notes is paid in full and then to the Eligible Lender Trustee for
distribution to the Certificateholders until the Certificate Balance
is paid in full; provided, however, that the amount of such
distribution shall not exceed the outstanding principal balance of the
Notes or the Certificates, as applicable, after giving effect to all
other payments of principal to be made on such date.
(e) After giving effect to Section 4.06(b), (c) and (d) above, if the
amount on deposit in the Reserve Account on any Distribution Date (after giving
effect to all deposits or withdrawals therefrom on such Distribution Date other
than pursuant to this clause (e)) is greater than the Specified Reserve Account
Balance for such Distribution Date, the Administrator shall instruct the
Indenture Trustee (based on the information contained in the Administrator's
Certificate and the related Master Servicer's Report delivered pursuant to
Section 3.08(a) and (c)) (A) to pay to the Master Servicer out of such excess in
the Reserve Account an amount equal to the amount described in Section
4.05(c)(ix) for such Distribution Date (to the extent not otherwise paid to the
Master Servicer on such Distribution Date), (B) to pay to the Noteholders out of
such excess an amount equal to the amount described in Section 4.05(c)(x) for
such Distribution Date (to the extent not otherwise paid to the Noteholders on
such Distribution Date), (C) to pay to the Eligible Lender Trustee for
distribution to the Certificateholders out of such excess an amount equal to the
amount described in Section 4.05(c)(xi) for such Distribution Date (to the
extent not otherwise paid to the Eligible Lender Trustee for distribution to the
Certificateholders on such Distribution Date) and (D) to distribute the
remaining amount of such excess to the Seller. Amounts properly distributed to
the Seller pursuant to this paragraph (e) shall be deemed released from the
Trust Estate and the security interest therein granted to the Indenture Trustee,
and the Seller shall in no event thereafter be required to refund any such
distributed amounts.
(f) On any Distribution Date on which the market value of the
securities and cash in the Reserve Account is sufficient to pay the remaining
principal amount of and accrued interest on the Notes and Certificates, and to
pay any Excess Servicing Fee, Noteholders' Interest Index Carryover and
Certificateholders' Interest Index Carryover, such securities in the Reserve
Account shall be promptly liquidated by the Administrator and the proceeds
thereof, together with any cash in the Reserve Account, shall be applied to pay
such amounts on such Distribution Date.
(g) Following the payment in full of the aggregate outstanding
principal balance of the Notes and the Certificate Balance and of all other
amounts owing or to be distributed hereunder or under the Indenture or the Trust
Agreement to Noteholders, Certificateholders, the Master Servicer, the
Administrator, the Indenture Trustee or the Eligible Lender Trustee and the
termination of the Trust (including any Excess Servicing Fees, Noteholders'
Interest Index Carryover and Certificateholders' Interest Index Carryover), any
amount remaining on deposit in the Reserve Account shall be distributed to the
Seller. The Seller shall in no event be required to refund any amounts properly
distributed pursuant to this Section 4.06(g).
SECTION 4.07. Statements to Certificateholders and Noteholders. On
each Determination Date preceding a Distribution Date, the Administrator shall
provide to the Indenture Trustee (with a copy to the Rating Agencies) for the
Indenture Trustee to forward on such succeeding Distribution Date to each
Noteholder of record and to the Eligible Lender Trustee for the Eligible Lender
Trustee to forward on such succeeding Distribution Date to each
Certificateholder of record a statement substantially in the form of Exhibits A
and B, respectively, setting forth at least the following information as to the
Notes and the Certificates to the extent applicable:
(i) the amount of such distribution allocable to principal
of the Notes;
(ii) the amount of the distribution allocable to interest on
the Notes;
(iii) the amount of the distribution allocable to principal
of the Certificates;
(iv) the amount of the distribution allocable to interest on
the Certificates;
(v) the amount, if any, of the distribution allocable to any
Noteholders' Interest Index Carryover and any Certificateholders'
Interest Index Carryover, together with any remaining outstanding
amount of each thereof;
(vi) the Pool Balance as of the close of business on the
last day of the preceding Collection Period, after giving effect to
payments allocated to principal reported under clauses (i) and (iii)
above;
(vii) the aggregate outstanding principal balance of the
Notes, the Note Pool Factor, the Certificate Balance and the
Certificate Pool Factor as of such Distribution Date, after giving
effect to payments allocated to principal reported under clauses (i)
and (iii) above;
(viii) the Note Interest Rate and the Certificate Rate
applicable with respect to each distribution referred to in clauses
(ii) and (iv) above, indicating whether such interest rate is
calculated based on the Student Loan Rate or based on the T-Xxxx Rate
and specifying what each such interest rate would have been using the
alternate basis for such calculation; provided, however, that no such
calculation of the Student Loan Rate will be required to be made
unless the T-Xxxx Rate for such Interest Period is [100] basis points
greater than the T-Xxxx Rate of the preceding Determination Date or
the 52 Week Treasury Xxxx Rate is [100] basis points less than the
T-Xxxx Rate as of such Determination Date;
(ix) the amount of the Servicing Fee and any Excess
Servicing Fee paid to the Master Servicer with respect to the three
calendar months contained in the related Collection Period, and the
amount, if any, of the Excess Servicing Fee remaining unpaid after
giving effect to any such payment;
(x) the amount of the Administration Fee paid to the
Administrator in respect of the preceding Collection Period;
(xi) the amount of fees paid to the Indenture Trustee and
the fees paid to the Eligible Lender Trustee, respectively, with
respect to such Collection Period;
(xii) the amount of the aggregate Realized Losses, if any,
for such Collection Period and the balance of Financed Student Loans
that are delinquent in each delinquency period as of the end of such
Collection Period; and
(xiii) the balance of the Reserve Account on such
Distribution Date, after giving effect to changes therein on such
Distribution Date.
Each amount set forth pursuant to clauses (i), (ii), (iii), (iv), (v),
(ix) and (x) above shall be expressed as a dollar amount per $1,000 of original
principal balance of a Certificate or Note, as applicable. A copy of the
statements referred to above may be obtained by any Certificate Owner or Note
Owner by a written request to the Eligible Lender Trustee or the Indenture
Trustee, respectively, addressed to the respective Corporate Trust Office.
ARTICLE V
THE ADMINISTRATOR
SECTION 5.01. Representations of Administrator. The Administrator
makes the following representations on which the Issuer is deemed to have relied
in acquiring the Financed Student Loans. The representations speak as of the
execution and delivery of this Agreement and the Administration Agreement and as
of the Closing Date, but shall survive the sale of the Financed Student Loans to
the Eligible Lender Trustee on behalf of the Issuer and the pledge thereof to
the Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Administrator is duly
organized and validly existing as a national banking association in good
standing under the laws of the United States, with the power and authority to
own its properties and to conduct its business as such properties are currently
owned and such business is presently conducted.
(b) Power and Authority. The Administrator has the power and authority
to execute and deliver this Agreement and the Administration Agreement and to
carry out their terms; and the execution, delivery and performance of this
Agreement and the Administration Agreement have been duly authorized by the
Administrator by all necessary action.
(c) Binding Obligation. Each of this Agreement and the Administration
Agreement constitutes a legal, valid and binding obligation of the
Administrator, in each case enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization and similar laws relating to
creditors' rights generally or the rights of creditors of banks the deposit
accounts of which are insured by the FDIC and subject to general principles of
equity.
(d) 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 articles of association or by-laws of the
Administrator, or any indenture, agreement or other instrument to which the
Administrator is a party or by which it shall be bound; nor result in the
creation or imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement or other instrument (other than this
Agreement and the other Basic Documents); nor violate any law or, to the
knowledge of the Administrator, any order, rule or regulation applicable to the
Administrator of any court or of any Federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Administrator or its properties.
(e) No Proceedings. There are no proceedings or investigations pending
against the Administrator or, to its knowledge, threatened before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Administrator or its properties: (i) asserting the
invalidity of this Agreement or any of the other Basic Documents to which the
Administrator is a party, (ii) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement or any of the other Basic Documents
to which the Administrator a party, (iii) seeking any determination or ruling
that could reasonably be expected to have a material and adverse effect on the
performance by the Administrator of its obligations under, or the validity or
enforceability of, this Agreement or any of the other Basic Documents to which
the Administrator a party, the Notes or the Certificates or (iv) relating to the
Administrator and which might adversely affect the Federal or state income tax
attributes of the Issuer, the Notes or the Certificates.
SECTION 5.02. Existence. During the term of this Agreement, the
Administrator will keep in full force and effect its existence, rights and
franchises as a national banking association under the laws of the jurisdiction
of its organization.
SECTION 5.03. Liability of Administrator; Indemnities. The
Administrator shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Administrator under this Agreement or
the Administration Agreement.
The Administrator shall indemnify, defend and hold harmless the
Issuer, the Eligible Lender Trustee, the Indenture Trustee, the Master Servicer,
the Certificateholders and the Noteholders and any of the officers, directors,
employees and agents of the Issuer, the Eligible Lender Trustee, the Indenture
Trustee and the Master Servicer from and against any and all costs, expenses,
losses, claims, damages and liabilities to the extent that such cost, expense,
loss, claim, damage or liability arose out of, or was imposed upon any such
Person through, the negligence, willful misfeasance or bad faith of the
Administrator in the performance of its duties under this Agreement or the
Administration Agreement or by reason of reckless disregard of its obligations
and duties hereunder or thereunder.
The Administrator shall pay reasonable compensation to the Indenture
Trustee and shall reimburse the Indenture Trustee for all reasonable expenses,
disbursements and advances, and indemnify, defend and hold harmless the
Indenture Trustee and its officers, directors, employees and agents from and
against all costs, expenses, losses, claims, damages and liabilities, to the
extent and in the manner provided in, and subject to the limitations of, Section
6.07 of the Indenture.
For purposes of this Section, in the event of the termination of the
rights and obligations of the Administrator (or any successor thereto pursuant
to Section 5.04) as Administrator pursuant to Section 7.01(b), or a resignation
by such Administrator pursuant to this Agreement, such Administrator shall be
deemed to be the Administrator pending appointment of a successor Administrator
pursuant to Section 7.02.
Indemnification under this Section shall survive the resignation or
removal of the Eligible Lender Trustee or the Indenture Trustee or the
termination of this Agreement and the Administration Agreement and shall include
reasonable fees and expenses of counsel and expenses of litigation. If the
Administrator shall have made any indemnity payments pursuant to this Section
and the Person to or on behalf of whom such payments are made thereafter
collects any of such amounts from others, such Person shall promptly repay such
amounts to the Administrator, without interest.
SECTION 5.04. Merger or Consolidation of, or Assumption of the
Obligations of, Administrator. Any Person (a) into which the Administrator may
be merged or consolidated, (b) which may result from any merger or consolidation
to which the Administrator shall be a party or (c) which may succeed to the
properties and assets of the Administrator substantially as a whole, shall be
the successor to the Administrator without the execution or filing of any
document or any further act by any of the parties to this Agreement or to the
Administration Agreement; provided, however, that the Administrator hereby
covenants that it will not consummate any of the foregoing transactions except
upon satisfaction of the following: (i) the surviving Administrator, if other
than First Union or an Affiliate thereof, executes an agreement of assumption to
perform every obligation of the Administrator under this Agreement and the
Administration Agreement, (ii) immediately after giving effect to such
transaction, no representation or warranty made pursuant to Section 5.01 shall
have been breached and no Administrator Default, and no event that, after notice
or lapse of time, or both, would become an Administrator Default shall have
occurred and be continuing, (iii) the surviving Administrator, if other than
First Union or an Affiliate thereof, shall have delivered to the Eligible Lender
Trustee and the Indenture Trustee an Officer's 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) unless First Union or an
Affiliate thereof is the surviving entity, such transaction will not result in a
material adverse Federal or state tax consequence to the Issuer, the Noteholders
or the Certificateholders and (v) unless First Union or an Affiliate thereof is
the surviving entity, the Administrator 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 5.05. Limitation on Liability of Seller, Administrator and
Others. Neither the Administrator nor any of its directors, officers, employees
or agents shall be under any liability to the Issuer, the Noteholders or the
Certificateholders, the Indenture Trustee or the Eligible Lender Trustee except
as provided under this Agreement or the Administration Agreement, for any action
taken or for refraining from the taking of any action pursuant to this Agreement
or the Administration Agreement or for errors in judgment; provided, however,
that this provision shall not protect the Administrator or any such person
against any liability that would otherwise be imposed by reason of willful
misfeasance, bad faith or negligence in the performance of duties or by reason
of reckless disregard of obligations and duties under this Agreement or under
the Administration Agreement. The Administrator and any of its directors,
officers, employees or agents 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 or under the Administration
Agreement.
Except as provided in this Agreement or the Administration Agreement,
the Administrator shall not be under any obligation to appear in, prosecute or
defend any legal action that shall not be incidental to its duties to administer
the Financed Student Loans and the Trust in accordance with this Agreement and
the Administration Agreement, and that in its opinion may involve it in any
expense or liability; provided, however, that the Administrator may undertake
any reasonable action that it may deem necessary or desirable in respect of this
Agreement and the other Basic Documents and the rights and duties of the parties
to this Agreement and the other Basic Documents and the interests of the
Certificateholders under this Agreement and the Noteholders under the Indenture.
SECTION 5.06. First Union Not to Resign as Administrator. Subject to
the provisions of Section 5.04, First Union shall not resign from the
obligations and duties imposed on it as Administrator under this Agreement and
under the Administration Agreement except upon determination that the
performance of its duties under this Agreement and under the Administration
Agreement shall no longer be permissible under applicable law or shall violate
any final order of a court or administrative agency with jurisdiction over First
Union or its properties. Notice of any such determination permitting the
resignation of First Union shall be communicated to the Eligible Lender Trustee
and the Indenture Trustee at the earliest practicable time (and, if such
communication is not in writing, shall be confirmed in writing at the earliest
practicable time) and any such determination shall be evidenced by an Opinion of
Counsel to such effect delivered to the Eligible Lender Trustee and the
Indenture Trustee concurrently with or promptly after such notice. No such
resignation shall become effective until the Indenture Trustee or a successor
Administrator shall have assumed the responsibilities and obligations of First
Union in accordance with Section 7.02.
ARTICLE VI
THE MASTER SERVICER
SECTION 6.01. Representations of Master Servicer. The Master Servicer
makes the following representations on which the Issuer is deemed to have relied
in acquiring (through the Eligible Lender Trustee) the Financed Student Loans
and appointing the Master Servicer as Master Servicer hereunder. The
representations speak as of the execution and delivery of this Agreement and as
of the Closing Date, but shall survive the sale, transfer and assignment of the
Financed Student Loans to the Eligible Lender Trustee on behalf of the Issuer
and the pledge thereof to the Indenture Trustee pursuant to the Indenture.
(a) Organization and Good Standing. The Master Servicer is duly
organized and validly existing as a national banking association in good
standing under the laws of the United States, with the power and authority to
own its properties and to conduct its business as such properties are currently
owned and such business is presently conducted, and had at all relevant times,
and has, the power, authority and legal right to service the Financed Student
Loans and to hold the Financed Student Loan Files as custodian.
(b) Due Qualification. The Master Servicer is duly qualified to do
business and has obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the conduct of its
business (including the servicing of the Financed Student Loans as required by
this Agreement) shall require such qualifications.
(c) Power and Authority. The Master Servicer has the power and
authority to execute and deliver this Agreement and to carry out its terms; and
the execution, delivery and performance of this Agreement have been duly
authorized by the Master Servicer by all necessary action. No registration with
or approval of any governmental agency is required for the due execution and
delivery by, and enforceability against, the Master Servicer of this Agreement.
(d) Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of the Master Servicer enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization and other
similar laws relating to creditors' rights generally or the rights of creditors
of banks the deposit accounts of which are insured by FDIC and subject to
general principles of equity.
(e) No Violation. The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, nor constitute (with
or without notice or lapse of time or both) a default under, the articles of
association or by-laws of the Master Servicer, or any indenture, agreement or
other instrument to which the Master Servicer is a party or by which it shall be
bound; nor result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than this Agreement and the other Basic Documents); nor
violate any law or, to the knowledge of the Master Servicer, any order, rule or
regulation applicable to the Master Servicer of any court or of any Federal or
state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Master Servicer or its properties.
(f) No Proceedings. There are no proceedings or investigations pending
against the Master Servicer, or, to its knowledge, threatened before any court,
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Master Servicer or its properties: (i) asserting
the invalidity of this Agreement or any of the other Basic Documents to which
the Master Servicer is a party, (ii) seeking to prevent the consummation of any
of the transactions contemplated by this Agreement or any of the other Basic
Documents to which the Master Servicer is a party, (iii) seeking any
determination or ruling that could reasonably be expected to have a material and
adverse effect on the performance by the Master Servicer of its obligations
under, or the validity or enforceability of, this Agreement or any of the other
Basic Documents to which the Master Servicer is a party, or (iv) relating to the
Master Servicer and which might adversely affect the Federal or state income tax
attributes of the Notes or the Certificates.
SECTION 6.02. Indemnities of Master Servicer. The Master Servicer
shall be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Master Servicer under this Agreement.
The Master Servicer shall pay for any loss, liability or expense,
including reasonable attorney's fees, that may be imposed on, incurred by or
asserted against the Issuer, the Eligible Lender Trustee, the Indenture Trustee,
the Seller, the Administrator, the Certificateholders or the Noteholders or any
of the officers, directors, employees and agents of the Issuer, the Eligible
Lender Trustee, the Indenture Trustee, the Administrator or the Seller to the
extent that such loss, liability or expense arose out of, or was imposed upon
any such Person through, the negligence, willful misfeasance or bad faith of the
Master Servicer in the performance of its obligations and duties under this
Agreement or by reason of the reckless disregard of its obligations and duties
under this Agreement where the final determination that any such loss, liability
or expense arose out of, or was imposed upon any such Person through, any such
negligence, willful misfeasance, bad faith or recklessness on the part of the
Master Servicer is established by a court of law, by an arbitrator or by way of
settlement agreed to by the Master Servicer. Notwithstanding the foregoing, if
the Master Servicer is rendered unable, in whole or in part, by a force outside
the control of the parties hereto (including acts of God, acts of war, fires,
earthquakes and other disasters) to satisfy its obligations under this
Agreement, the Master Servicer shall not be deemed to have breached any such
obligation upon delivery of written notice of such event to the other parties
hereto, for so long as the Master Servicer remains unable to perform such
obligation as a result of such event. This provision shall not be construed to
limit the Master Servicer's or any other party's rights, obligations,
liabilities, claims or defenses which arise as a matter of law or pursuant to
any other provision of this Agreement.
For purposes of this Section, in the event of the termination of the
rights and obligations of the Master Servicer (or any successor thereto pursuant
to Section 6.03) as Master Servicer pursuant to Section 7.01(a), or a
resignation by such Master Servicer pursuant to this Agreement, such Master
Servicer shall be deemed to be the Master Servicer pending appointment of a
successor Master Servicer pursuant to Section 7.02.
Liability of the Master Servicer under this Section shall survive the
resignation or removal of the Eligible Lender Trustee or the Indenture Trustee
or the termination of this Agreement. If the Master Servicer shall have made any
payments pursuant to this Section and the Person to or on behalf of whom such
payments are made thereafter collects any of such amounts from others, such
Person shall promptly repay such amounts to the Master Servicer, without
interest.
SECTION 6.03. Merger or Consolidation of, or Assumption of the
Obligations of, Master Servicer. Any Person (a) into which the Master Servicer
may be merged or consolidated, (b) which may result from any merger or
consolidation to which the Master Servicer shall be a party or (c) which may
succeed to the properties and assets of the Master Servicer substantially as a
whole, shall be the successor to the Master Servicer without the execution or
filing of any document or any further act by any of the parties to this
Agreement; provided, however, that the Master Servicer hereby covenants that it
will not consummate any of the foregoing transactions except upon satisfaction
of the following: (i) the surviving Master Servicer, if other than First Union
or an Affiliate thereof, executes an agreement of assumption to perform every
obligation of the Master Servicer under this Agreement, (ii) immediately after
giving effect to such transaction, no representation or warranty made pursuant
to Section 6.01 shall have been breached and no Master Servicer Default, and no
event that, after notice or lapse of time, or both, would become an Master
Servicer Default shall have occurred and be continuing, (iii) the surviving
Master Servicer, if other than First Union or an Affiliate thereof, shall have
delivered to the Eligible Lender Trustee and the Indenture Trustee an Officer's
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)
unless First Union or an Affiliate thereof is the surviving entity, such
transaction will not result in a material adverse Federal or state tax
consequence to the Issuer, the Noteholders or the Certificateholders and (v)
unless First Union or an Affiliate thereof is the surviving entity, the Master
Servicer 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 6.04. Limitation on Liability of Master Servicer and Others.
Neither the Master Servicer nor any of the directors, officers, employees or
agents of the Master Servicer shall be under any liability to the Issuer, the
Noteholders or the Certificateholders, except as provided under this Agreement,
for any action taken or for refraining from the taking of any action pursuant to
this Agreement or for errors in judgment; provided, however, that this provision
shall not protect the Master Servicer or any such person against any liability
that would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement. The Master Servicer and any
director, officer, employee or agent of the Master Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any person respecting any matters arising under this Agreement.
Except as provided in this Agreement, the Master Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the Financed Student Loans in
accordance with this Agreement, and that in its opinion may involve it in any
expense or liability; provided, however, that the Master Servicer may undertake
any reasonable action that it may deem necessary or desirable in respect of this
Agreement and the other Basic Documents and the rights and duties of the parties
to this Agreement and the other Basic Documents and the interests of the
Certificateholders under the Trust Agreement and the Noteholders under the
Indenture.
SECTION 6.05. First Union Not to Resign as Master Servicer. Subject to
the provisions of Section 6.03, First Union shall not resign from the
obligations and duties hereby imposed on it as Master Servicer under this
Agreement except upon determination that the performance of its duties under
this Agreement shall no longer be permissible under applicable law. Notice of
any such determination permitting the resignation of First Union shall be
communicated to the Eligible Lender Trustee and the Indenture Trustee at the
earliest practicable time (and, if such communication is not in writing, shall
be confirmed in writing at the earliest practicable time) and any such
determination shall be evidenced by an Opinion of Counsel to such effect
delivered to the Eligible Lender Trustee and the Indenture Trustee concurrently
with or promptly after such notice. No such resignation shall become effective
until the Indenture Trustee or a Successor Master Servicer shall have assumed
the responsibilities and obligations of First Union in accordance with Section
7.02.
ARTICLE VII
DEFAULT
SECTION 7.01. Master Servicer Default; Administrator Default. (a)
Master Servicer Default. If any one of the following events (a "Master Servicer
Default") shall occur and be continuing:
(1) any failure by the Master Servicer (i) to deliver to the
Indenture Trustee for deposit in any of the Trust Accounts any payment
required by the Basic Documents or (ii) in the event that daily
deposits into the Collection Account are not required, to deliver to
the Administrator any payment required by the Basic Documents, which
failure in case of either clause (i) or (ii) continues unremedied for
five Business Days after written notice of such failure is received by
the Master Servicer from the Eligible Lender Trustee, the Indenture
Trustee or the Administrator or after discovery of such failure by an
officer of the Master Servicer; or
(2) any failure by the Master Servicer duly to observe or to
perform in any material respect any other covenants or agreements of
the Master Servicer set forth in this Agreement or and other Basic
Document to which the Master Servicer is a signatory, which failure
shall (i) materially and adversely affect the rights of Noteholders or
Certificateholders and (ii) continues unremedied for a period of 60
days after the date on which written notice of such failure, requiring
the same to be remedied, shall have been given (A) to the Master
Servicer by the Indenture Trustee, the Eligible Lender Trustee or the
Administrator or (B) to the Master Servicer, and to the Indenture
Trustee and the Eligible Lender Trustee by the Noteholders or
Certificateholders, as applicable, representing not less than 25% of
the Outstanding Amount of the Notes or 25% of the outstanding
Certificate Balance; provided, however, any breach of Sections 3.01,
3.02, 3.03 or 3.05 shall not be deemed a Master Servicer Default so
long as the Servicer is in compliance with its repurchase and
reimbursement obligations under Section 3.06;
(3) an Insolvency Event occurs with respect to the Master
Servicer; or
(4) any failure by the Master Servicer to comply with any
requirements under the Higher Education Act resulting in a loss of its
eligibility as a third-party servicer;
then, and in each and every case, so long as the Master Servicer Default shall
not have been remedied, either the Indenture Trustee, or the Noteholders of
Notes evidencing not less than 25% of the Outstanding Amount of the Notes, by
notice then given in writing to the Master Servicer (and to the Indenture
Trustee and the Eligible Lender Trustee if given by the Noteholders) may
terminate all the rights and obligations (other than the obligations set forth
in Section 6.02 hereof) of the Master Servicer under this Agreement. On or after
the receipt by the Master Servicer of such written notice, all authority and
power of the Master Servicer under this Agreement, whether with respect to the
Notes, the Certificates or the Financed Student Loans or otherwise, shall,
without further action, pass to and be vested in the Indenture Trustee or such
successor Master Servicer as may be appointed under Section 7.02; and, without
limitation, the Indenture Trustee and the Eligible Lender Trustee are hereby
authorized and empowered to execute and deliver, for the benefit of the
predecessor Master Servicer, as attorney-in-fact or otherwise, any and all
documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement of the Financed
Student Loans and related documents, or otherwise. The predecessor Master
Servicer shall cooperate with the successor Master Servicer, the Indenture
Trustee and the Eligible Lender Trustee in effecting the termination of the
responsibilities and rights of the predecessor Master Servicer under this
Agreement including the transfer to the successor Master Servicer for
administration by it of all cash amounts that shall at the time be held by the
predecessor Master Servicer for deposit, or shall thereafter be received by it
with respect to a Financed Student Loan. All reasonable costs and expenses
(including attorneys' fees) incurred in connection with transferring the
Financed Student Loan Files to the successor Master Servicer and amending this
Agreement and any other Basic Documents to reflect such succession as Master
Servicer pursuant to this Section shall be paid by the predecessor Master
Servicer upon presentation of reasonable documentation of such costs and
expenses. Upon receipt of notice of the occurrence of a Master Servicer Default,
the Eligible Lender Trustee shall give notice thereof to the Rating Agencies.
(b) Administrator Default. If any one of the following events (an
"Administrator Default") shall occur and be continuing:
(1) (i) in the event that daily deposits into the Collection
Account are not required, any failure by the Administrator to deliver
to the Indenture Trustee for deposit in any of the Trust Accounts any
Available Funds required to be paid on or before the Business Day
immediately preceding any Monthly Servicing Payment Date or
Distribution Date, as applicable, or (ii) any failure by the
Administrator to direct the Indenture Trustee to make any required
distributions from any of the Trust Accounts, which failure in case of
either clause (i) or (ii) continues unremedied for five Business Days
after written notice of such failure is received by the Administrator
from the Indenture Trustee or the Eligible Lender Trustee or after
discovery of such failure by an officer of the Administrator; or
(2) any failure by the Administrator duly to observe or to
perform in any material respect any other covenants or agreements of
the Administrator set forth in this Agreement, the Administration
Agreement or any other Basic Document to which the Administrator is a
signatory, which failure shall (i) materially and adversely affect the
rights of Noteholders or Certificateholders and (ii) continues
unremedied for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have
been given (A) to the Administrator by the Indenture Trustee or the
Eligible Lender Trustee or (B) to the Administrator and to the
Indenture Trustee and the Eligible Lender Trustee by the Noteholders
or Certificateholders, as applicable, representing not less than 25%
of the Outstanding Amount of the Notes or 25% of the outstanding
Certificate Balance; or
(3) an Insolvency Event occurs with respect to the
Administrator;
then, and in each and every case, so long as the Administrator Default shall not
have been remedied, either the Indenture Trustee, or the Noteholders evidencing
not less than 25% of the Outstanding Amount of the Notes, by notice then given
in writing to the Administrator (and to the Indenture Trustee and the Eligible
Lender Trustee if given by the Noteholders) may terminate all the rights and
obligations (other than the obligations set forth in Section 5.03 hereof) of the
Administrator under this Agreement and the Administration Agreement. On or after
the receipt by the Administrator of such written notice, all authority and power
of the Administrator under this Agreement and the Administration Agreement,
whether with respect to the Notes, the Certificates or the Financed Student
Loans or otherwise, shall, without further action, pass to and be vested in the
Indenture Trustee or such successor Administrator as may be appointed under
Section 7.02; and, without limitation, the Indenture Trustee and the Eligible
Lender Trustee are hereby authorized and empowered to execute and deliver, for
the benefit of the predecessor Administrator, as attorney-in-fact or otherwise,
any and all documents and other instruments, and to do or accomplish all other
acts or things necessary or appropriate to effect the purposes of such notice of
termination. The predecessor Administrator shall cooperate with the successor
Administrator, the Indenture Trustee and the Eligible Lender Trustee in
effecting the termination of the responsibilities and rights of the predecessor
Administrator under this Agreement and the Administration Agreement. All
reasonable costs and expenses (including attorneys' fees) incurred in connection
with amending this Agreement and the Administration Agreement to reflect such
succession as Administrator pursuant to this Section shall be paid by the
predecessor Administrator upon presentation of reasonable documentation of such
costs and expenses. Upon receipt of notice of the occurrence of an Administrator
Default, the Eligible Lender Trustee shall give notice thereof to the Rating
Agencies.
SECTION 7.02. Appointment of Successor. (a) Upon receipt by the Master
Servicer or the Administrator, as the case may be, of notice of termination
pursuant to Section 7.01, or the resignation by the Master Servicer or the
Administrator, as the case may be, in accordance with the terms of this
Agreement, the predecessor Master Servicer or Administrator, as the case may be,
shall continue to perform its functions as Master Servicer or Administrator, as
the case may be, under this Agreement or under this Agreement and the
Administration Agreement, as the case may be, in the case of termination, only
until the date specified in such termination notice or, if no such date is
specified in a notice of termination, until receipt of such notice and, in the
case of resignation, until the later of (x) the date [120] days from the
delivery to the Eligible Lender Trustee and the Indenture Trustee of written
notice of such resignation (or written confirmation of such notice) in
accordance with the terms of this Agreement and (y) the date upon which the
predecessor Master Servicer or Administrator, as the case may be, shall become
unable to act as Master Servicer or Administrator, as the case may be, as
specified in the notice of resignation and accompanying Opinion of Counsel. In
the event of the termination hereunder of the Master Servicer or the
Administrator, as the case may be, the Issuer shall appoint a successor Master
Servicer or Administrator, as the case may be, acceptable to the Indenture
Trustee, and the successor Master Servicer or Administrator, as the case may be,
shall accept its appointment by a written assumption in form acceptable to the
Indenture Trustee. In the event that a successor Master Servicer or
Administrator, as the case may be, has not been appointed at the time when the
predecessor Master Servicer or Administrator, as the case may be, has ceased to
act as Master Servicer or Administrator in accordance with this Section, the
Indenture Trustee without further action shall automatically be appointed the
successor Master Servicer or Administrator, as the case may be, and the
Indenture Trustee shall be entitled to the Servicing Fee and any Excess
Servicing Fees, or the Administration Fee, as the case may be. Notwithstanding
the above, the Indenture Trustee shall, if it shall be unwilling or legally
unable so to act, appoint or petition a court of competent jurisdiction to
appoint, any established institution whose regular business shall include the
servicing of student loans, as the successor to the Master Servicer under this
Agreement or to the Administrator under this Agreement and the Administration
Agreement; provided, however, that such right to appoint or to petition for the
appointment of any such successor Master Servicer shall in no event relieve the
Indenture Trustee from any obligations otherwise imposed on it under the Basic
Documents until such successor has in fact assumed such appointment.
(b) Upon appointment, the successor Master Servicer or Administrator,
as the case may be (including the Indenture Trustee acting as successor Master
Servicer or Administrator, as the case may be), shall be the successor in all
respects to the predecessor Master Servicer or Administrator, as the case may
be, and shall be subject to all the responsibilities, duties and liabilities
placed on the predecessor Master Servicer or Administrator, as the case may be,
that arise thereafter or are related thereto and shall be entitled to an amount
agreed to by such successor Master Servicer or Administrator (which shall not
exceed the Servicing Fee and any Excess Servicing Fees, or the Administration
Fee, as the case may be, unless such compensation arrangements will not result
in a downgrading of the Notes or the Certificates by any Rating Agency) and all
the rights granted to the predecessor Master Servicer or Administrator, as the
case may be, by the terms and provisions of this Agreement.
(c) Neither the Master Servicer nor the Administrator may resign unless it
is prohibited from serving as such by law as evidenced by an Opinion of Counsel
to such effect delivered to the Indenture Trustee and the Eligible Lender
Trustee. Notwithstanding the foregoing or anything to the contrary herein or in
the other Basic Documents, the Indenture Trustee, to the extent it is acting as
successor Master Servicer or Administrator pursuant hereto and thereto, shall be
entitled to resign to the extent a qualified successor Master Servicer or
Administrator has been appointed and has assumed all the obligations of the
Master Servicer or the Administrator, as the case may be, in accordance with the
terms of this Agreement and the other Basic Documents.
SECTION 7.03. Notification to Noteholders and Certificateholders. Upon
any termination of, or appointment of a successor to, the Master Servicer or the
Administrator, as the case may be, pursuant to this Article VII, the Eligible
Lender Trustee shall give prompt written notice thereof to Certificateholders
and the Indenture Trustee shall give prompt written notice thereof to
Noteholders and the Rating Agencies (which, in the case of any such appointment
of a successor, shall consist of prior written notice thereof to the Rating
Agencies).
SECTION 7.04. Waiver of Past Defaults. The Noteholders of Notes evidencing
not less than a majority of the Outstanding Amount of the Notes (or the
Certificateholders of Certificates evidencing not less than a majority of the
outstanding Certificate Balance, in the case of any default which does not
adversely affect the Indenture Trustee or the Noteholders) may, on behalf of all
Noteholders and Certificateholders, waive in writing any default by the Master
Servicer in the performance of its obligations hereunder, and any default by the
Administrator in the performance of its obligations hereunder and under the
Administration Agreement, and any consequences thereof, except a default in
making any required deposits to or payments from any of the Trust Accounts (or
giving instructions regarding the same) in accordance with this Agreement. Upon
any such waiver of a past default, such default shall cease to exist, and any
Master Servicer Default or Administrator Default arising therefrom shall be
deemed to have been remedied for every purpose of this Agreement and the
Administration Agreement. No such waiver shall extend to any subsequent or other
default or impair any right consequent thereto.
ARTICLE VIII
TERMINATION
SECTION 8.01. Termination. (a) Optional Purchase of all Financed
Student Loans. As of the last day of any Collection Period immediately preceding
a Distribution Date as of which the then outstanding Pool Balance is 5% or less
of the Initial Pool Balance, the Seller shall have the option to purchase the
Trust Estate, other than the Trust Accounts.
To exercise such option, the Seller shall deposit pursuant to Section
4.04 in the Collection Account an amount equal to the aggregate Purchase Amount
for the Financed Student Loans remaining in the Trust Estate as of last day of
such Collection Period 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 Seller and the Eligible Lender Trustee, and shall succeed to all
interests in and to the Trust; provided, however, that the Seller 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 sum of the
unpaid outstanding principal amount of the Notes and Certificate Balance, plus
accrued and unpaid interest thereon at the Certificate Rate to the date of
exercise.
(b) Auction of Financed Student Loans. Any Financed Student Loans
remaining in the Trust as of the end of the Collection Period immediately
following the Distribution Date on which the Pool Balance is less than or equal
to 10% of the Initial Pool Balance will be offered for sale by the Administrator
(pursuant to the Administration Agreement) on behalf of the Indenture Trustee in
accordance with Section 4.04 of the Indenture.
(c) Notice. As described in Article IX of the Trust Agreement, notice
of any termination of the Trust shall be given by the Administrator to the
Eligible Lender Trustee and the Indenture Trustee as soon as practicable after
the Administrator has received notice thereof.
(d) Succession. Following the satisfaction and discharge of the
Indenture and the payment in full of the principal of and interest on the Notes,
the Certificateholders will succeed to the rights of the Noteholders hereunder
other than Section 4.06(b) and the Eligible Lender Trustee will succeed to the
rights of, and assume the obligations of, the Indenture Trustee pursuant to this
Agreement and any other Basic Documents.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendment. This Agreement may be amended by the Seller,
the Master Servicer, the Administrator and the Eligible Lender Trustee, with the
consent of the Indenture Trustee (which consent shall not be unreasonably
withheld), but without the consent of any of the Noteholders or the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions in this Agreement or
of modifying in any manner the rights of the Noteholders or the
Certificateholders; provided, however, that such action shall not, as evidenced
by an Opinion of Counsel delivered to the Eligible Lender Trustee and the
Indenture Trustee, adversely affect in any material respect the interests of any
Noteholder or Certificateholder.
This Agreement may also be amended from time to time by the Seller,
the Master Servicer, the Administrator and the Eligible Lender Trustee, with the
consent of the Indenture Trustee (which consent shall not be unreasonably
withheld), the consent of the Noteholders of Notes evidencing not less than a
majority of the Outstanding Amount of the Notes and the consent of the
Certificateholders of Certificates evidencing not less than a majority of the
Certificate Balance, for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or the Certificateholders;
provided, however, that no such amendment shall (a) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments with respect to Financed Student Loans or distributions that shall be
required to be made for the benefit of the Noteholders or the Certificateholders
or (b) reduce the aforesaid percentage of the Outstanding Amount of the Notes
and the Certificate Balance, the Noteholders or the Certificateholders of which
are required to consent to any such amendment, without the consent of all
outstanding Noteholders and Certificateholders.
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 each Certificateholder, the Indenture Trustee and each
of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders or
Noteholders pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof.
Prior to the execution of any amendment to this Agreement, the
Eligible Lender Trustee and the Indenture Trustee shall be entitled to receive
and rely upon an Opinion of Counsel stating that the execution of such amendment
is authorized or permitted by this Agreement. The 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 9.02. Notices. All demands, notices and communications upon or
to the Seller, the Administrator, the Master Servicer, the Eligible Lender
Trustee, the Indenture Trustee 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) and shall be deemed to have been duly given upon
receipt (a) in the case of the Seller, to First Union National Bank, 000
Xxxxxxxxxxxx Xxxxxx, Xxxxxxxx, XX 00000, Attention: ___________ (telephone:
(___) __________; facsimile: (___) __________, (b) in the case of the Master
Servicer and the Administrator, to First Union National Bank, 000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxxxxxx, XX 28288-_____, Attention: __________, (telephone: (___)
__________; facsimile: (___) __________, (c) in the case of the Issuer or the
Eligible Lender Trustee, at the Corporate Trust Office of the Eligible Lender
Trustee, (d) in the case of the Indenture Trustee, at its Corporate Trust
Office, (e) in the case of Fitch, to Fitch Investors Service, L.P., Xxx Xxxxx
Xxxxxx Xxxxx, Xxx Xxxx, XX 00000, Attention: Asset Backed Surveillance
(telephone: 212-___-____; facsimile: 212-___-____), and (e) in the case of
Moody's, to Xxxxx'x Investors Service, Inc. 00 Xxxxxx Xxxxxx, Xxx Xxxx, XX
00000, Attention: ABS Monitoring Department, (telephone: 000-000-0000;
facsimile: 212-553-4600), or, as to each of the foregoing, at such other address
as shall be designated by written notice to the other parties.
SECTION 9.03. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 5.04 and 6.03 and as provided
in the provisions of this Agreement concerning the resignation of the Master
Servicer or the Administrator, this Agreement may not be assigned by the
Administrator or the Master Servicer. This Agreement may only be assigned by the
Eligible Lender Trustee to its permitted successor pursuant to the Trust
Agreement.
SECTION 9.04. Limitations on Rights of Others. The provisions of this
Agreement are solely for the benefit of the Seller, the Master Servicer, the
Issuer and the Eligible Lender Trustee and for the benefit of the
Certificateholders, the Indenture Trustee and the Noteholders, as third party
beneficiaries, and nothing in this Agreement, whether express or implied, shall
be construed to give to any other Person any legal or equitable right, remedy or
claim in the Trust Estate or under or in respect of this Agreement or any
covenants, conditions or provisions contained herein.
SECTION 9.05. 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 9.06. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 9.07. Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 9.08. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 9.09. Nonpetition Covenants. (a) Notwithstanding any prior
termination of this Agreement, the Master Servicer and the Administrator shall
not, 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.
(b) Notwithstanding any prior termination of this Agreement, the
Master Servicer and the Administrator shall not, prior to the date which is one
year and one day after the termination of this Agreement with respect to the
Seller, acquiesce, petition or otherwise invoke or cause the Seller to invoke
the process of any court or government authority for the purpose of commencing
or sustaining a case against the Seller under any insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official of the Seller or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Seller.
SECTION 9.10. Limitation of Liability of Eligible Lender Trustee and
Indenture Trustee. (a) Notwithstanding anything contained herein to the
contrary, this Agreement has been signed by 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.
(b) 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.
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.
FIRST UNION STUDENT LOAN TRUST 1997-1,
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: __________________________
FIRST UNION NATIONAL BANK, as Master Servicer
and Administrator
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: _________________________
SCHEDULE A
Schedule of Financed Student Loans
SCHEDULE B
Location of Financed Student Loan Files
Documents relating to the Financed Student Loans (including original
notes) are stored at:
1) AFSA Data Corporation
0000 X. 000xx Xxxxxx
Xxxx Xxxxx, XX 00000-0000
and
000 Xxxxxxxx Xxxxxx
Xxxxx, XX 00000-0000
2) Pennsylvania Higher Education Assistance Agency
000 Xxxx Xxxxxx
Xxxxxxxxxx, XX 00000-0000
3) Connecticut Student Loan Foundation
000 Xxxxx Xxxxxx
Xxxxx Xxxx, XX 00000
SCHEDULE C
Servicing Fee Schedules
EXHIBIT A
Form of Noteholders' Statement pursuant to Section 4.07(b) of Master Servicing
Agreement
Distribution Date: ___________________
(i) Amount of principal being paid or distributed in respect of the Notes:
___________ ($_______ per $1,000 original principal amount of Notes)
(ii) Amount of interest being paid or distributed in respect of the Notes:
___________ ($_______ per $1,000 original principal amount of Notes)
(iii)Amount of Noteholders' Interest Index Carryover being paid or distributed
(if any) and amount remaining (if any):
(1) Distributed: ___________ ($_______ per $1,000 original principal
amount of Notes)
(2) Balance: __________ ($_______ per $1,000 original principal amount of
Notes)
(iv) Pool Balance at end of related Collection Period: ________
(v) After giving effect to distributions on this Distribution Date:
(a) (1) outstanding principal amount of Notes: ____________
(2) Note Pool Factor: ____________
(b) (1) Certificate Balance: _______________
(2) Certificate Pool Factor: ___________
(vi) Note Interest Rate:
(a) In general: 1/(1) T-Xxxx Rate for the period from the previous
Distribution Date to this Distribution Date was _____%; and (2) the
Student Loan Rate was _____%.
(b) Note Interest Rate: ______% (based on [T-Xxxx Rate] [Student Loan
Rate])
(vii)(a) Amount of Servicing Fee for related Collection Period: ____________
($_______ per $1,000 original principal amount of Notes)
(b) Amount of Excess Servicing Fee being distributed and remaining balance
(if any):
(1) Distributed: __________ ($_______ per $1,000 original principal
amount of Notes)
(2) Balance: ____________ ($_______ per $1,000 original principal
amount of Notes)
(viii) Amount of Administration Fee for related Collection Period: ____________
($_______ per $1,000 original principal amount of Notes)
(ix) (a) Aggregate amount of Realized Losses (if any) for the related Collection
Period: ____________
[1/ This calculation not required unless the excess of the T-Xxxx Rate over
_________, expressed as a percentage, is greater than 100 basis points as of the
preceding Determination Date.]
(b) Balance of Financed Student Loans that are delinquent in each
delinquency period as of the end of the related Collection Period:
____________
(x) Amount in the Reserve Account: ____________
EXHIBIT B
Form of Certificateholders' Statement pursuant to Section 4.07(b) of Master
Servicing Agreement )
Distribution Date: ___________________
(i) Amount of principal being paid or distributed in respect of the
Certificates: ___________ ($_______ per $1,000 original principal amount of
the Certificates)4/
(ii) Amount of interest being paid or distributed in respect of the
Certificates: ______________ ($_______ per $1,000 original principal amount
of Certificates)
(iii)Amount of Certificateholders' Interest Index Carryover being paid or
distributed (if any) and amount remaining (if any):
(1) Distributed: ______________ ($_______ per $1,000 original principal
amount of Certificates)
(2) Balance: ______________ ($_______ per $1,000 original principal amount
of Certificates)
(iv) Pool Balance at end of related Collection Period: _______
4/Only after the Notes have been paid in full.
(v) After giving effect to distributions on this Distribution Date:
(a) (1) outstanding principal amount of Class X- 0 Notes: ____________
(2) Note Pool Factor: ____________
(b) (1) Certificate Balance: ________________
(2) Certificate Pool Factor: ____________
(vi) Applicable Interest Rate:
(a) In general:
(1) T-Xxxx Rate for the period from the previous Distribution Date to this
Distribution Date was _____%; and
(2) the Student Loan Rate was _____%. (b) Certificate Rate: ______% (based
on [T-Xxxx Rate] [Student Loan Rate])
(vii)(a) Amount of Servicing Fee for related Collection Period: ____________
($_______ per $1,000 original principal amount of Certificates)
(b) Amount of Excess Servicing Fee being distributed and remaining balance
(if any):
(1) Distributed: ______________ ($_______ per $1,000 original
principal amount of Certificates)
(2) Balance: ______________ ($_______ per $1,000 of original
principal amount Certificates)
(viii) Amount of Administration Fee for related Collection Period: ____________
($_______ per $1,000 original principal amount of Certificates)
(ix) (a) Aggregate amount of Realized Losses (if any) for the related Collection
Period: ____________
(b) Balance of Financed Student Loans that are delinquent in each
delinquency period as of the end of the related Collection Period:
____________
(x) Amount in the Reserve Account: ____________
EXHIBIT C
FORM OF ADMINISTRATOR'S CERTIFICATE
[To be provided]
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND USAGE
SECTION 1.01. Definitions and Usage........................................
ARTICLE II
THE FINANCED STUDENT LOANS
SECTION 2.01. Custody of Financed Student Loan Files......................
SECTION 2.02. Duties of Master Servicer as Custodian......................
SECTION 2.03. Reserved....................................................
SECTION 2.04. Effective Period and Termination............................
ARTICLE III
ADMINISTRATION AND SERVICING OF FINANCED STUDENT LOANS
SECTION 3.01. Duties of Master Servicer...................................
SECTION 3.02. Collection of Financed Student Loan Payments................
SECTION 3.03. Realization Upon Financed Student Loans.....................
SECTION 3.04. Computation of Note Interest Rate and Certificate Rate......
SECTION 3.05. No Impairment...............................................
SECTION 3.06. Purchase Of Financed Student Loans; Reimbursement...........
SECTION 3.07. Servicing Fee, Excess Servicing Fee.........................
SECTION 3.08. Administrator's Certificate; Master Servicer's Report.......
SECTION 3.09. Annual Statement as to Compliance; Notice of Default........
SECTION 3.10. Annual Independent Certified Public Accountant's Report.....
SECTION 3.11. Access to Certain Documentation and Information
Regarding Financed Student Loans............................
SECTION 3.12. Master Servicer and Administrator Expenses..................
SECTION 3.13. Appointment of Subservicers.................................
SECTION 3.14. Covenants and Agreements of the Issuer, Administrator,
Eligible Lender Trustee and Master Servicer.................
ARTICLE IV
DISTRIBUTIONS; RESERVE ACCOUNT; STATEMENTS TO
CERTIFICATEHOLDERS AND NOTEHOLDERS
SECTION 4.01. Establishment Of Trust Accounts.............................
SECTION 4.02. Collections.................................................
SECTION 4.03. Application of Collections..................................
SECTION 4.04. Additional Deposits.........................................
SECTION 4.05. Distributions...............................................
SECTION 4.06. Reserve Account.............................................
SECTION 4.07. Statements to Certificateholders and Noteholders............
ARTICLE V
THE ADMINISTRATOR
SECTION 5.01. Representations of Administrator............................
SECTION 5.02. Existence...................................................
SECTION 5.03. Liability of Administrator; Indemnities.....................
SECTION 5.04. Merger or Consolidation of, or Assumption of the
Obligations of, Administrator...............................
SECTION 5.05. Limitation on Liability of Seller,
Administrator and Others....................................
SECTION 5.06. First Union Not to Resign as Administrator..................
ARTICLE VI
THE MASTER SERVICER
SECTION 6.01. Representations of Master Servicer..........................
SECTION 6.02. Indemnities of Master Servicer..............................
SECTION 6.03. Merger or Consolidation of, or Assumption
of the Obligations of, Master Servicer......................
SECTION 6.04. Limitation on Liability of Master Servicer and Others.......
SECTION 6.05. First Union Not to Resign as Master Servicer................
ARTICLE VII
DEFAULT
SECTION 7.01. Master Servicer Default; Administrator Default..............
SECTION 7.02. Appointment of Successor....................................
SECTION 7.03. Notification to Noteholders and Certificateholders..........
SECTION 7.04. Waiver of Past Defaults.....................................
ARTICLE VIII
TERMINATION
SECTION 8.01. Termination.................................................
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. Amendment...................................................
SECTION 9.02. Notices.....................................................
SECTION 9.03. Assignment..................................................
SECTION 9.04. Limitations on Rights of Others.............................
SECTION 9.05. Severability................................................
SECTION 9.06. Separate Counterparts.......................................
SECTION 9.07. Headings....................................................
SECTION 9.08. Governing Law...............................................
SECTION 9.09. Nonpetition Covenants.......................................
SECTION 9.10. Limitation of Liability of Eligible Lender
Trustee and Indenture Trustee...............................
Schedule A - Schedule of Financed Students Loans
Schedule B - Location of Financed Student Loans
Schedule C - Servicing Fee Schedules
Exhibit A - Form of Noteholders' Statement
Exhibit B - Form of Certificateholders' Statement
Exhibit C - Form of Administrators' Certificate
