EXHIBIT 99.2
EXECUTION COPY
ADMINISTRATION AGREEMENT dated as
of February 1, 1999, among SMS STUDENT LOAN
TRUST 1999-A, a Delaware trust (the
"Issuer"), USA GROUP SECONDARY MARKET
SERVICES, INC., a Delaware corporation, as
administrator (the "Administrator"), and
BANKERS TRUST COMPANY, a New York banking
corporation, not in its individual capacity
but solely as Indenture Trustee (the
"Indenture Trustee").
W I T N E S S E T H
WHEREAS the Issuer was formed pursuant to the Trust Agreement dated as of
February 1, 1999 (the "Trust Agreement") among the Seller, as depositor,
Secondary Market Company, Inc., a Delaware corporation (the "Company"), and The
First National Bank of Chicago, as Eligible Lender Trustee (the "Eligible Lender
Trustee") and is issuing the Class A-1 Floating Rate Asset-Backed Senior Notes
(the "Class A-1 Notes"), the Class A-2 Floating Rate Asset-Backed Senior Notes
(the "Class A-2 Notes" and together with the Class A-1 Notes, the "Senior
Notes") and the Floating Rate Asset-Backed Subordinate Notes (the "Subordinate
Notes" and, together with the Senior Notes, the "Notes") pursuant to the
Indenture dated as of February 1, 1999 (the "Indenture"), between the Issuer and
the Indenture Trustee, (capitalized terms used herein and not defined herein
shall have the meanings assigned to such terms in Appendix A hereto, which also
contains rules of usage and construction that shall be applicable herein); and
WHEREAS the Issuer has entered into certain agreements in connection with
the issuance of the Notes, including the Basic Documents; and
WHEREAS, pursuant to the Basic Documents, the Issuer and the Eligible
Lender Trustee are required to perform certain duties in connection with the
Notes and the Collateral therefor pledged pursuant to the Indenture; and
WHEREAS the Issuer and the Eligible Lender Trustee desire to have the
Administrator perform certain of the duties of the Issuer and the Eligible
Lender Trustee referred to in the preceding clause, and to provide such
additional services consistent with the terms of this Agreement and the Basic
Documents as the Issuer and the Eligible Lender Trustee may from time to time
request; and
WHEREAS the Administrator has the capacity to provide the services
required hereby and is willing to perform such services for the Issuer and the
Eligible Lender Trustee on the terms set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants contained herein,
and other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties agree as follows:
1. Representations of the Administrator. The Administrator makes the
following representations on which the Issuer, the Eligible Lender Trustee and
the Swap Counterparty are deemed to have relied. The representations speak as of
the execution and delivery of this Agreement and as of the Closing Date in the
case of the Initial Financed Student Loans, as of the applicable Transfer Date
in the case of the Delayed Delivery Loans, Serial Loans and the New Loans, as of
the relevant date of assignment in the case of any Qualified Substitute Student
Loan, as of the date of origination in the case of any Consolidation Loan
originated by the Trust during the Revolving Period, and as of the applicable
Add-on Consolidation Loan Funding Date in the case of any Consolidation Loan the
principal balance of which is increased by the principal balance of any related
Add-on Consolidation Loan, but shall survive the sale 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 corporation in good standing under the
laws of the State of Delaware, with the power and authority to own its
properties and to conduct its business as such properties are currently
owned and such business is currently conducted.
(b) Power and Authority of the Administrator. The Administrator has
the corporate power and authority to execute and deliver this Agreement
and to carry out its terms, and the execution, delivery and performance of
this Agreement have been duly authorized by the Administrator by all
necessary corporate action.
(c) Binding Obligation. This Agreement constitutes a legal, valid
and binding obligation of the Administrator, enforceable in accordance
with its terms, subject to applicable bankruptcy, insolvency,
reorganization and similar laws relating to creditors' rights generally
and subject to general principles of equity.
(d) No Violation. The consummation of the transactions contemplated
by this Agreement and the fulfillment of the terms hereof or thereof do
not conflict with, result in any breach of any of the terms and provisions
of, nor constitute (with or without notice or lapse of time or both) a
default under, the certificate of incorporation 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; nor
violate any law or, to the knowledge of the Administrator, any order, rule
or regulation applicable to the Administrator of any court
-2-
or of any Federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Administrator or
its properties. The consummation by the Administrator of the transactions
contemplated by this Agreement will not result in the loss of any
Guarantee Payments by the Trust or any reinsurance payments with respect
to any Financed Student Loan.
(e) No Proceedings. There are no proceedings or investigations
pending against the Administrator or, to its best knowledge, threatened
against the Administrator, 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, the Indenture or any of the other Basic
Documents or the Notes, (ii) seeking to prevent the issuance of the Notes
or the consummation of any of the transactions contemplated by this
Agreement, the Indenture or any of the other Basic Documents, (iii)
seeking any determination or ruling that could reasonably be expected to
have a material and adverse effect on the performance by the Administrator
of its obligations under, or the validity or enforceability of, this
Agreement, the Indenture, any of the other Basic Documents or the Notes or
(iv) seeking to affect adversely the federal or state income tax
attributes of the Issuer or the Notes.
(f) All Consents. All authorizations, consents, licenses, orders or
approvals of or registrations or declarations with any court, regulatory
body, administrative agency or other government instrumentality required
to be obtained, effected or given by the Administrator in connection with
the execution and delivery by the Administrator of this Agreement and the
performance by the Administrator of the transactions contemplated by this
Agreement have in each case been duly obtained, effected or given and are
in full force and effect.
2. Duties of the Administrator.
(a) Duties with Respect to the Basic Documents. The Administrator shall
perform all its duties as Administrator and the duties of the Issuer under the
Basic Documents. In addition, the Administrator shall consult with the Eligible
Lender Trustee as the Administrator deems appropriate regarding the duties of
the Issuer under the Basic Documents. The Administrator shall monitor the
performance of the Issuer and shall advise the Eligible Lender Trustee when
action is necessary to comply with the Issuer's duties under the Basic
Documents. The Administrator shall prepare for execution by the Issuer or shall
cause the preparation by other appropriate Persons of all such documents,
reports, filings, instruments, certificates and opinions as it shall be the duty
of the Issuer to prepare, file or deliver pursuant to the Basic Documents. In
furtherance of the foregoing, the Administrator shall take all appropriate
action that is the duty of the Issuer to take pursuant to the Indenture,
including such of the foregoing as are required with respect to the following
matters (references below in this subsection (a) being to sections of the
Indenture):
-3-
(A) the duty to cause the Note Registrar to keep the Note Register
and to give the Indenture Trustee prompt notice of any appointment of a
new Note Registrar and the location, or change in location, of the Note
Register (Section 2.04);
(B) the fixing or causing to be fixed of any specified record date
and the timely notification of the Indenture Trustee and Noteholders with
respect to special payment dates, if any (Section 2.07(c));
(C) the preparation of or obtaining of the documents and instruments
required for authentication of the Notes and delivery of the same to the
Indenture Trustee (Section 2.02);
(D) the preparation, obtaining or filing of the instruments,
opinions and certificates and other documents required for the release of
collateral (Section 2.09);
(E) the preparation, obtaining or filing of the instruments,
opinions and certificates and other documents required for a transfer of
the Subordinate Notes (Section 2.04);
(F) the duty to cause the Note Registrar to maintain on behalf of
the Issuer an office in the Borough of Manhattan, The City of New York,
for registration of transfer or exchange of the Notes (Section 3.02);
(G) the duty to cause newly appointed Paying Agents, if any, to
deliver to the Indenture Trustee the instrument specified in the Indenture
regarding funds held in trust (Section 3.03);
(H) the direction to the Paying Agents to deposit moneys with the
Indenture Trustee (Section 3.03);
(I) the obtaining and preservation of the Issuer's qualification to
do business in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of the Indenture,
the Notes, the Collateral and each other instrument and agreement included
in the Indenture Trust Estate (Section 3.04);
(J) the preparation of all supplements, amendments, financing
statements, continuation statements, instruments of further assurance and
other instruments, in accordance with Section 3.05 of the Indenture,
necessary to protect the Indenture Trust Estate (Section 3.05);
(K) the delivery by the Issuer of the Opinion of Counsel on the
Closing Date and the annual delivery of Opinions of Counsel, in accordance
with Section 3.06 of the Indenture, as to the Indenture Trust Estate, and
the annual delivery of the Officers' Certificate of the Issuer and certain
other statements, in accordance with Section 3.09 of the Indenture, as to
compliance with the Indenture (Sections 3.06 and 3.09);
-4-
(L) the identification to the Indenture Trustee in an Officers'
Certificate of the Issuer of a Person with whom the Issuer has contracted
to perform its duties under the Indenture (Section 3.07(b));
(M) the notification of the Indenture Trustee, the Rating Agencies
and the Swap Counterparty of any Servicer Default pursuant to the
Servicing Agreement and, if such Servicer Default arises from the failure
of the Servicer to perform any of its duties under the Servicing
Agreement, the taking of all reasonable steps available to remedy such
failure (Section 3.07(d));
(N) the preparation and obtaining of documents and instruments
required for the release of the Issuer from its obligations under the
Indenture (Section 3.10);
(O) the prompt delivery of notice to the Indenture Trustee, the
Rating Agencies and the Swap Counterparty of each Event of Default, any
Default under Section 5.01(iii) of the Indenture and each default by the
Servicer under the Servicing Agreement or by the Seller under the Loan
Sale Agreement (Section 3.18);
(P) the monitoring of the Issuer's obligations as to the
satisfaction and discharge of the Indenture and the preparation of an
Officers' Certificate of the Issuer and the obtaining of the Opinion of
Counsel and the Independent Certificate relating thereto (Section 4.01);
(Q) the compliance with any written directive of the Indenture
Trustee with respect to the sale of the Indenture Trust Estate in a
commercially reasonable manner if an Event of Default shall have occurred
and be continuing (Section 5.04);
(R) the preparation of any written instruments required to confirm
more fully the authority of any co-trustee or separate trustee and any
written instruments necessary in connection with the resignation or
removal of any co-trustee or separate trustee (Sections 6.08 and 6.10);
(S) the furnishing of the Indenture Trustee with the names and
addresses of Noteholders during any period when the Indenture Trustee is
not the Note Registrar (Section 7.01);
(T) the preparation and, after execution by the Issuer, the filing
with the Commission, any applicable State agencies and the Indenture
Trustee of documents required to be filed on a periodic basis with, and
summaries thereof as may be required by rules and regulations prescribed
by, the Commission and any applicable State agencies and the transmission
of such summaries to the Noteholders (Section 7.03);
(U) the opening of one or more accounts in the Issuer's name, the
preparation of Issuer Orders, Officers' Certificates of the Issuer and
Opinions of Counsel and all other
-5-
actions necessary with respect to investment and reinvestment of funds in
the Trust Accounts (Sections 8.02 and 8.03);
(V) the preparation of an Issuer Request and Officers' Certificate
of the Issuer and the obtaining of an Opinion of Counsel and Independent
Certificates, if necessary, for the release of the Indenture Trust Estate
(Sections 8.04 and 8.05);
(W) the preparation of Issuer Orders and the obtaining of Opinions
of Counsel with respect to the execution of supplemental indentures and
the mailing to the Noteholders, each Rating Agency and the Swap
Counterparty of notices with respect to such supplemental indentures
(Sections 9.01, 9.02 and 9.03);
(X) the preparation of or obtaining of the documents and instruments
required for the execution and authentication of new Notes conforming to
any supplemental indenture and the delivery of the same to the Eligible
Lender Trustee and the Indenture Trustee, respectively (Section 9.06);
(Y) the notification of Noteholders and the Swap Counterparty of
redemption of the Notes or the duty to cause the Indenture Trustee to
provide such notification (Section 10.02);
(Z) the preparation of all Officers' Certificates of the Issuer,
Opinions of Counsel and Independent Certificates with respect to any
requests by the Issuer to the Indenture Trustee to take any action under
the Indenture (Section 11.01(a));
(AA) the preparation and delivery of Officers' Certificates of the
Issuer and the obtaining of Independent Certificates, if necessary, for
the release of property from the lien of the Indenture (Section 11.01(b));
(AB) the preparation and timely delivery to Noteholders and the
Indenture Trustee of any agreements with respect to alternate payment and
notice provisions (Section 11.06);
(AC) the recording of the Indenture, if applicable (Section 11.15);
(AD) the duty to obtain a new servicer as Successor Servicer and to
enter into an agreement with such Successor Servicer (Section 3.07(e));
(AE) the notification of the termination of the Servicer and the
appointment of a Successor Servicer (Section 3.07(f));
(AF) the duty to cause the Servicer to comply with the Servicing
Agreement (Section 3.14); and
-6-
(AG) the delivery of all documents and opinions to be provided by
the Issuer under Part 3 of the Swap Agreement, performing all obligations
of the Issuer under Part 5(b), 5(i) and Part 5(o) of the Swap Agreement,
and providing all notices and consents required by the Issuer under the
Swap Agreement.
The Administrator shall provide to the Eligible Lender Trustee (i) a list
of jurisdictions in which the Issuer is required to be licensed and (ii) any
other information necessary for the Eligible Lender Trustee to fulfill its
obligations under Section 7.08 of the Trust Agreement.
(b) Duties with Respect to the Issuer. (i) In addition to the duties of
the Administrator set forth above and in the other Basic Documents, the
Administrator shall perform such calculations and shall prepare for execution by
the Issuer or the Eligible Lender Trustee or shall cause the preparation by
other appropriate Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Issuer or the Eligible
Lender Trustee to prepare, file or deliver pursuant to the Basic Documents, and
at the request of the Eligible Lender Trustee shall take all appropriate action
that it is the duty of the Issuer to take pursuant to the Basic Documents. In
furtherance thereof, the Eligible Lender Trustee shall, on behalf of itself and
of the Issuer, execute and deliver to the Administrator and to each successor
Administrator appointed pursuant to the terms hereof, one or more powers of
attorney substantially in the form of Exhibit A hereto, appointing the
Administrator the attorney-in-fact of the Eligible Lender Trustee and the Issuer
for the purpose of executing on behalf of the Eligible Lender Trustee and the
Issuer all such documents, reports, filings, instruments, certificates and
opinions. Subject to Section 9 of this Agreement, and in accordance with the
directions of the Eligible Lender Trustee, the Administrator shall administer,
perform or supervise the performance of such other activities in connection with
the Collateral (including the Basic Documents) as are not covered by any of the
foregoing provisions and as are expressly requested by the Eligible Lender
Trustee and are reasonably within the capability of the Administrator.
(ii) Notwithstanding anything in this Agreement or the Basic Documents to
the contrary, the Administrator shall deliver to the Eligible Lender Trustee,
the Indenture Trustee, the Rating Agencies and (if the Seller is not the
Administrator) the Seller, an Officers' Certificate of the Administrator
containing all the information necessary:
(A) to pay the Department any Consolidation Fees due and payable to
the Department, to the extent such Consolidation Fees are not being
deducted by the Department out of Special Allowance Payments or Interest
Subsidy Payments, which Officers' Certificate shall be delivered on the
date that is three Business Days prior to the date such fees are to be
remitted to the Department;
(B) during the Revolving Period to pay the Seller, pursuant to
Section 2.02 of the Loan Sale Agreement, on each Transfer Date, the Loan
Purchase Amount for Delayed Delivery Loans or the Loan Purchase Amount (or
if the Parity Date has occurred, the Purchase Collateral Balance) for
Delayed Delivery Loans, New Loans or Serial Loans purchased by the
Eligible Lender Trustee on behalf of the Issuer on such date and, on
-7-
each Transfer Date after the end of the Revolving Period, the Purchase
Collateral Balance for Serial Loans so purchased on such date (but, only
to the extent the Purchase Collateral Balance has not been satisfied by
the exchange of Serial Loans for Exchanged Student Loans), which Officers'
Certificate, in each case, shall be delivered on the Business Day
preceding such Transfer Date;
(C) to pay the Servicer the Servicing Fee due on each Monthly
Payment Date pursuant to Section 2(d)(iv)(A), 2(d)(v)(A) and 2(e)(iv)(A)
and any Servicing Fee Shortfall due on each Quarterly Payment Date
pursuant to Section 2(e)(ii)(b)(v), which Officers' Certificate shall be
delivered on the each Determination Date;
(D) to make all the distributions required by Sections 2(d), 2(e),
2(f) and 2(j), for the Monthly Collection Period or Collection Period, as
the case may be, preceding the date of such Officers' Certificate, which
Officers' Certificate shall be delivered on each Determination Date.
In addition, prior to each Determination Date immediately preceding a
Quarterly Payment Date, the Administrator shall determine, in compliance with
its obligation to prepare an Officers' Certificate on such Determination Date
pursuant to this Section, the Class A-1 Note Rate, the Class A-2 Note Rate and
the Subordinate Note Rate that will be applicable to the Quarterly Payment Date
following such Determination Date. In connection therewith, the Administrator
shall calculate Three-Month LIBOR, the Class A-1 Note LIBOR Rate, the Class A-2
Note LIBOR Rate, the Subordinate Note LIBOR Rate and the Adjusted Student Loan
Rate in accordance with the respective definitions thereof.
(iii) [Reserved.]
(iv) Notwithstanding anything in this Agreement or the Basic
Documents to the contrary, the Administrator shall be responsible for
performance of the duties of the Eligible Lender Trustee set forth in
Section 5.02 of the Trust Agreement with respect to, among other things,
any tax information or accounting report required to be distributed to
Note Owners.
(v) [Reserved.]
(vi) The Administrator shall perform the duties of the Administrator
specified in Sections 10.02 and 10.03 of the Trust Agreement required to
be performed in connection with the resignation or removal of the Eligible
Lender Trustee and the appointment of a successor Eligible Lender Trustee,
and any other duties expressly required to be performed by the
Administrator under the Trust Agreement and the other Basic Documents,
including those under Sections 6.07 and 6.08 of the Indenture and those
under Section 6.07 of the Trust Agreement.
(vii) 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, the Indenture Trustee and the Swap Counterparty
as soon as practicable after the Administrator has received notice
thereof.
-8-
(viii) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Administrator may enter into
transactions with or otherwise deal with any of its Affiliates; provided,
however, that the terms of any such transactions or dealings shall be in
accordance with any directions received from the Issuer and shall be, in
the Administrator's opinion, no less favorable to the Issuer or the
Noteholders than would be available from unaffiliated parties.
(c) Establishment and Maintenance of Trust Accounts.
(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 Indenture Trustee, on behalf of the Noteholders and the Swap
Counterparty. 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 Bankers Trust Company.
(ii) The Administrator 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 Indenture Trustee, on behalf of the
Noteholders and the Swap Counterparty. 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 Bankers Trust Company.
(iii) The Administrator, for the benefit of the Noteholders and the
Swap Counterparty, shall establish and maintain in the name of the
Indenture Trustee an Eligible Deposit Account (the "Collateral
Reinvestment Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Indenture Trustee,
on behalf of the Noteholders and the Swap Counterparty. The Collateral
Reinvestment Account will initially be established as a segregated trust
account in the name of the Indenture Trustee with the corporate trust
department of Bankers Trust Company.
(iv) The Administrator, for the benefit of the Noteholders and the
Swap Counterparty, shall establish and maintain in the name of the
Indenture Trustee an Eligible Deposit Account (the "Delayed Delivery Loan
Funding Account"), bearing a designation clearly indicating that the funds
deposited therein are held for the benefit of the Indenture Trustee, on
behalf of the Noteholders and the Swap Counterparty. The Delayed Delivery
Loan Funding Account will initially be established as a segregated trust
account in the name of the Indenture Trustee with the corporate trust
department of Bankers Trust Company.
(v) Funds on deposit in the Collection Account, the Reserve Account,
the Delayed Delivery Loan Funding Account and the Collateral Reinvestment
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
-9-
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, however, that on the Business Day
preceding each Monthly Payment 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 Monthly Available Funds for each Monthly
Payment Date that is not a Quarterly Payment Date, and a portion of the
Available Funds for each Quarterly Payment Date. Other than as permitted
in writing by the Rating Agencies, funds on deposit in the Trust Accounts
shall be invested in Eligible Investments that will mature so that funds
sufficient to pay the Servicing Fee and the Administration Fee (and all
other amounts payable on a Quarterly Payment Date) will be available in
the Collection Account on the Business Day preceding each Monthly Payment
Date that is not a Quarterly Payment Date, so that funds on deposit in the
Collateral Reinvestment Account that are required, in the judgment and at
the discretion of the Administrator, to make Additional Fundings during
the Revolving Period will be available for such purpose and so that the
remaining such funds will be available at the close of business on the
Business Day preceding each Quarterly Payment Date.
(vi) (A) The Indenture Trustee, on behalf of the Noteholders and the
Swap Counterparty, 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. The
Trust Accounts shall be under the sole dominion and control of the
Indenture Trustee for the benefit of the Noteholders and the Swap
Counterparty. 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 and the Swap Counterparty in writing promptly
upon any of such Trust Accounts ceasing to be an Eligible Deposit Account.
(B) With respect to the Trust Account Property, the Indenture
Trustee agrees, by its acceptance hereof, that:
(1) any Trust Account Property that is held in deposit
accounts shall be held solely in Eligible Deposit Accounts, subject
to the next to the last sentence of clause (vi)(A) above; and 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;
(2) 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";
-10-
(3) 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
(4) any Trust Account Property that is an "uncertificated
security" under Article VIII of the UCC and that is not governed by
clause (3) above shall be Delivered to the Indenture Trustee in
accordance with paragraph (c) of the definition of "Delivery".
(C) 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 Servicer or the Eligible Lender Trustee to carry out their
respective duties under the Servicing Agreement and the Trust Agreement,
permitting the Indenture Trustee to carry out its duties under the
Indenture and withdrawing any amounts deposited in error into such
accounts.
(vii) On each Determination Date, the Administrator shall calculate all
amounts required to determine the amounts to be deposited in the Collection
Account and the other Trust Accounts and the amounts to be distributed therefrom
on the related Monthly Payment Date, Quarterly Payment Date or other dates from
which amounts therein are to be distributed.
(d) Withdrawals from the Collection Account. The Administrator shall
instruct the Indenture Trustee in writing (based, in the case of clauses (iv)
and (v) below, on the information contained in the servicer's report delivered
with respect to the applicable Determination Date pursuant to Section 3.07 of
the Servicing Agreement) to make withdrawals from amounts deposited in the
Collection Account at the following times and for the following purposes, and
the Indenture Trustee shall comply with such instructions:
(i) from time to time during the Revolving Period, insofar as the
Administrator may so instruct on any Business Day therein, to deposit into
the Collateral Reinvestment Account all collections in respect of
principal of the Financed Student Loans;
(ii) from time to time during each Collection Period to pay the
Department any Consolidation Fees due and payable to the Department, to
the extent such Consolidation Fees are not being deducted by the
Department out of Special Allowance Payments or Interest Subsidy Payments;
(iii) (A) on each Add-on Consolidation Loan Funding Date after the
Revolving Period, to prepay in full any Add-on Consolidation Loan pursuant
to Section 6.07 of the Trust Agreement; provided, however, that the amount
paid to prepay any Add-on Consolidation Loan on any date since the
preceding Quarterly Payment Date shall not exceed the Net Principal Cash
Flow Amount for such date minus the aggregate Purchase Collateral Balance
remitted for the purchase of Serial Loans on each Transfer Date since
-11-
the preceding Quarterly Payment Date after the Revolving Period pursuant
to Section 2(d)(iii)(B); and
(B) on each Transfer Date after the Revolving Period to pay to
the Seller, pursuant to Section 2.02 of the Loan Sale Agreement, the
aggregate Purchase Collateral Balance for Serial Loans purchased by
the Eligible Lender Trustee on behalf of the Issuer on such date
(but only to the extent such aggregate Purchase Collateral Balance
has not been satisfied by the exchange of Serial Loans for Exchanged
Student Loans); provided that the amount paid to the Seller for the
purchase of Serial Loans on such Transfer Date plus the amount of
funds remitted for the purchase of Serial Loans on each Transfer
Date since the preceding Quarterly Payment Date on any Transfer Date
after the Revolving Period shall not exceed the Net Principal Cash
Flow Amount for such Transfer Date minus the sum of (i) all amounts
paid since the last Quarterly Payment Date pursuant to Section
2(d)(iii)(A) to prepay any Add-on Consolidation Loan not held by the
Issuer and (ii) all amounts which the Administrator reasonably
estimates will be required to prepay Add-on Consolidation Loans
pursuant to Section 2(d)(iii)(A) during the remainder of the
Collection Period; and provided, further, that any Purchase Premium
Amounts for Serial Loans purchased after the Revolving Period shall
be paid only out of Reserve Account Excess as set forth in Section
2(e)(ii);
(iv) on each Monthly Payment Date that is not a Quarterly Payment
Date, to make the following deposits and distributions to the Persons
specified below by 11:00 a.m. (New York time), to the extent of Monthly
Available Funds for such Monthly Payment Date in the Collection Account,
in the following order of priority:
(A) to the Servicer, the Servicing Fee with respect to the
preceding calendar month and all unpaid Servicing Fees from prior
months; and
(B) to the Administrator, from the amount of the Monthly
Available Funds remaining after the application of clause (A), the
Administration Fee with respect to the preceding calendar month and
all unpaid Administration Fees from prior months;
(v) on each Quarterly Payment Date, to make the following deposits
and distributions to the Persons or the account specified below by 11:00
a.m. (New York time), to the extent of Available Funds for such Quarterly
Payment Date in the Collection Account, in the following order of
priority:
(A) to the Servicer, the Servicing Fee with respect to the
preceding calendar month and all unpaid Servicing Fees from prior
months;
(B) to the Administrator, from the amount of the Available
Funds remaining after the application of clause (A), the
Administration Fee with respect to the preceding calendar month and
all unpaid Administration Fees from prior months;
-12-
(C) to the Indenture Trustee for distribution pursuant to
Section 8.02(c) of the Indenture, in the following order of
priority, from the amount of the Available Funds remaining after the
application of clauses (A) and (B): (i) the Class A-1 Noteholders'
Interest Distribution Amount, the Class A-2 Noteholders' Interest
Distribution Amount, the Trust Swap Payment Amount, if any, and the
remainder of any Termination Payment to the extent that the Trust is
the defaulting party (other than an Event of Default specified in
Section 5(a)(i) of the Swap Agreement), pro rata, based on the ratio
of each such amount to the total of such amounts; (ii) the
Subordinate Noteholders' Interest Distribution Amount; (iii) if the
Revolving Period has terminated, the Senior Noteholders' Principal
Distribution Amount; and (iv) if the Revolving Period has
terminated, the Subordinate Noteholders' Principal Distribution
Amount, each with respect to such Quarterly Payment Date; and
(D) to the Reserve Account, the amount of Available Funds
remaining after the application of clauses (A) through (C).
Except in the case of amounts deposited into the Reserve Account
pursuant to clause (d)(v)(D) of this Section 2, amounts properly
calculated, reported and withdrawn from the Collection Account and
properly distributed pursuant to this Section 2(d) in accordance with the
terms hereof shall be deemed released from the Trust Estate and the
security interest therein granted to the Indenture Trustee, and the
Persons to whom such amounts are distributed shall in no event be required
to refund any such distributed amounts.
(e) Reserve Account. (i) The Seller shall deposit the Reserve Account
Initial Deposit into the Reserve Account as required by Section 2.01(b) of the
Loan Sale Agreement. The Administrator may, but is not obligated to, deposit
amounts from time to time into the Reserve Account.
(ii) With respect to any amount in the Reserve Account on any Quarterly
Payment Date (after giving effect to all deposits thereto on such Quarterly
Payment Date and to all withdrawals therefrom necessary to make the
distributions required to be made from the Available Funds on such Quarterly
Payment Date) in excess of the Specified Reserve Account Balance for such
Quarterly Payment Date (the "Reserve Account Excess"), the Administrator shall
instruct the Indenture Trustee to apply such Reserve Account Excess as follows:
(a) during the Revolving Period, for deposit to the Collateral Reinvestment
Account; provided, however, that if such date is on or after the Parity Date, to
the extent that such funds represent payments of interest or Trust Swap Receipt
Amounts with respect to the Financed Student Loans, such funds shall be applied
in the amounts and the order of priority set forth in clauses (b)(iv) through
(vii) below, and (b) at and after the termination of the Revolving Period, to
the following (in the priority indicated): (i) to pay to the Seller any unpaid
Purchase Premium Amounts for any Serial Loans purchased by the Issuer after the
end of the Revolving Period but prior to the end of the related Collection
Period; (ii) if such Quarterly Payment Date is on or prior to the Parity Date,
to pay to the Indenture Trustee for distribution to Noteholders pursuant to
Section 8.02(d) of the Indenture an amount equal to the lesser of (x) the
remaining amount of such excess and (y) the amount by which the aggregate
principal amount of the Notes, after giving effect to all other distributions in
respect of principal of the Notes on such Quarterly Payment Date, exceeds the
Pool Balance as of the close of business on the last day of the related
Collection Period; (iii) if such Quarterly Payment Date is after the April 2009
Quarterly Payment Date, to pay the Indenture Trustee for distribution to
Noteholders pursuant to Section 8.02(d) of the Indenture the remaining amount of
such excess until the aggregate principal amount of the Notes has been reduced
to zero; (iv) to pay to the Indenture Trustee for distribution to Noteholders
pursuant to Section 8.02(d) of the
-13-
Indenture, out of the remaining amount of such excess, an amount equal to the
aggregate unpaid Noteholders' Interest Basis Carryover; (v) to pay to the
Servicer, out of the remaining amount of such excess, the Servicing Fee
Shortfall and all prior unpaid Servicing Fee Shortfalls, if any; (vi) to pay to
the Seller, out of the remaining amount of such excess, any unpaid Purchase
Premium Amounts for any Serial Loans or New Loans purchased during the Revolving
Period but after the Parity Date (or at any time during the Collection Period
during which the Parity Date occurs) and prior to the end of the related
Collection Period; (vii) to the Swap Counterparty, all Termination Payments due
under the Swap Agreement to the extent that the Swap Counterparty is the
Defaulting Party (as such term is defined in the Swap Agreement), the Trust is
the defaulting party under Section 5(a)(i) of the Swap Agreement or a
Termination Event shall have occurred; and (viii) any remaining amount of such
excess, after application of clauses (i) through (vii) above will be released to
the Seller; provided, however, that if and to the extent that (A) the amount of
the Servicer's unpaid repurchase obligation pursuant to Section 3.05 of the
Servicing Agreement exceeds $500,000 as of the last day of the preceding
Collection Period (and such Servicer has not been replaced by a Successor
Servicer), or (B) the Department fails by the last day of such preceding
Collection Period to satisfy its obligations to reimburse or replace a Federal
Guarantor pursuant to the Higher Education Act, then any Reserve Fund Excess
remaining on such Quarterly Payment Date for distribution to the Company
pursuant to the clause (vi) above shall not be so distributed and shall be
retained in the Reserve Account for application in accordance with this
Agreement. Amounts properly calculated, reported and distributed pursuant to
this Section 2(e)(ii) shall be deemed released from the Trust Estate and the
security interest therein granted to the Indenture Trustee, and the Seller and
the Company shall in no event thereafter be required to refund any such
distributed amounts.
(iii) Following the payment in full of the aggregate outstanding principal
amount of the Notes and of all other amounts owing or to be distributed
hereunder or under the Indenture to Noteholders, the Seller, the Servicer or the
Administrator and the termination of the Trust (including any Noteholders'
Interest Basis Carryover, any Servicing Fee Shortfall and any unpaid Servicing
Fee Shortfalls and unpaid Purchase Premium Amounts), any amount remaining on
deposit in the Reserve Account shall be distributed to the Company. The Company
shall in no event be required to refund any amounts properly calculated,
reported and distributed pursuant to this Section 2(e)(iii).
(iv) (A) In the event that the Servicing Fee for any Monthly Payment
Date exceeds the amount distributed to the Servicer pursuant to Sections
2(d)(iv)(A) or 2(d)(v)(A) on such Monthly Payment Date, the Administrator
shall instruct the Indenture
-14-
Trustee to withdraw from the Reserve Account on each Monthly Payment Date
an amount equal to such excess and to distribute such amount to the
Servicer.
(B) In the event that the Administration Fee for any Monthly
Payment Date exceeds the amount distributed to the Administrator
pursuant to Sections 2(d)(iv)(B) or 2(d)(v)(B) on such Monthly
Payment Date, the Administrator shall instruct the Indenture Trustee
to withdraw from the Reserve Account on such Monthly Payment Date an
amount equal to such excess, to the extent of funds available
therein after giving effect to paragraph (iv)(A) above, and to
distribute such amount to the Administrator.
(C) For any Quarterly Payment Date, in the event that the
Class A-1 Noteholders' Interest Distribution Amount, the Class A-2
Noteholders' Interest Distribution Amount, the Trust Swap Payment
Amount, if any, the remainder of any Termination Payment to the Swap
Counterparty to the extent that the Trust is the defaulting party
(other than an Event of Default specified in Section 5(a)(i) of the
Swap Agreement), the Subordinate Noteholders' Interest Distribution
Amount, the Senior Noteholders' Principal Distribution Amount and
the Subordinate Noteholders' Principal Distribution Amount, each for
such Quarterly Payment Date, exceed the sum of the amount
distributed to the Indenture Trustee for distribution to the
Noteholders and the Swap Counterparty pursuant to Section 2(d)(v)(C)
on such Quarterly Payment Date, the Administrator shall instruct the
Indenture Trustee to withdraw from the Reserve Account on such
Quarterly Payment Date an amount equal to such excess, to the extent
of funds available therein after giving effect to paragraphs (iv)(A)
and (iv)(B) above, and to distribute such amount as required by
Section 2(d)(v)(C) on such Quarterly Payment Date.
(f) Collateral Reinvestment Account. (i) During the Revolving
Period, the Administrator shall instruct the Indenture Trustee in writing
to withdraw from the Collateral Reinvestment Account, in each case to the
extent of the funds on deposit therein (A) on each Transfer Date, an
amount equal to the Loan Purchase Amount for the Serial Loans and New
Loans transferred to the Eligible Lender Trustee on behalf of the Issuer
on such Transfer Date and to distribute such amount to or upon the order
of the Seller upon satisfaction of the conditions set forth in Section
2.02 of the Loan Sale Agreement with respect to such transfer, (B) when
and as requested by the Eligible Lender Trustee, in order to facilitate
its origination of Consolidation Loans, to transfer to the order of the
Eligible Lender Trustee an amount, sufficient to prepay in full any
Student Loan that is to be consolidated through such origination with one
or more Financed Student Loans, (C) when and as requested by the Eligible
Lender Trustee, in order to facilitate its funding of the addition of the
principal balance of any Add-on Consolidation Loan to the principal
balance of a Consolidation Loan, an amount sufficient to prepay in full
such Add-on Consolidation Loan, (D) on each Determination Date, to deposit
into the Collection Account an amount equal to the Capitalized Interest
Amount for the Student Loan Rate Accrual Period with respect to the
related Monthly Payment Date and (E) on any Determination Date and in such
amounts as the Administrator may direct, for deposit to the Collection
Account for the purposes of increasing the Monthly Available Funds or the
Available Funds, as the case may be.
-15-
(ii) On the Quarterly Payment Date on or next occurring after the
termination of the Revolving Period, the Administrator shall instruct the
Indenture Trustee to withdraw from the Collateral Reinvestment Account on such
Quarterly Payment Date an amount equal to the entire remaining amount on deposit
in such account and to distribute such amount pursuant to Section 8.02(e) of the
Indenture.
(g) Statements to Noteholders. (i) On each Determination Date preceding a
Quarterly Payment Date, the Administrator shall provide to the Indenture Trustee
and the Swap Counterparty (with a copy to the Rating Agencies) for the Indenture
Trustee to forward on such succeeding Quarterly Payment Date to each Noteholder
of record a statement substantially in the form of Exhibit B setting forth at
least the following information as to the Notes:
(A) the amount of such distribution allocable to principal of the
Notes, the amount thereof distributable as principal of the Class A-1
Notes, the Class A-2 Notes and the Subordinate Notes, and the amount
thereof attributable to the Principal Distribution Amount and the amount
thereof attributable to Reserve Account Excess;
(B) the amount of the distribution allocable on such Quarterly
Payment Date to interest on the Class A-1 Notes;
(C) the amount of the distribution allocable on such Quarterly
Payment Date to interest on the Class A-2 Notes;
(D) the amount of the distribution allocable on such Quarterly
Payment Date to interest on the Subordinate Notes;
(E) the amount, if any, of such distribution allocable to any Senior
Noteholders' Interest Basis Carryover and any Subordinate Noteholders'
Interest Basis Carryover, together with any remaining outstanding amount
of each thereof;
(F) 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 clause (A) above;
(G) the aggregate outstanding principal amount of the Class A-1
Notes, the Class A-2 Notes, the Subordinate Notes, the Class A-1 Note Pool
Factor, the Class A-2 Note Pool Factor and the Subordinate Note Pool
Factor as of such Quarterly Payment Date, after giving effect to payments
allocated to principal reported under clause (A) above;
(H) the Note Rate applicable with respect to each distribution
referred to in clauses (B), (C) and (D) above, indicating whether such
interest rate was calculated based on the Adjusted Student Loan Rate or
based on the Class A-1 Note LIBOR Rate,
-16-
Class A-2 Note LIBOR Rate or Subordinate Note LIBOR Rate and specifying
what each such Note Rate would have been using the alternate basis for
such calculation;
(I) the amount of the Servicing Fee paid to the Servicer on such
Quarterly Payment Date and on each Monthly Payment Date following the
immediately preceding Quarterly Payment Date including a breakdown of the
components of the Servicing Fee attributable to each of the items
specified in clauses II(i) through (ix) of Section 3.06 of the Servicing
Agreement and the amount of any Servicing Fee Shortfall for such Quarterly
Payment Date and for each Monthly Payment Date following the immediately
preceding Quarterly Payment Date;
(J) the amount of the Administration Fee paid to the Administrator
on such Quarterly Payment Date and on each Monthly Payment Date following
the immediately preceding Quarterly Payment Date;
(K) the Trust Swap Payment Amount paid to the Swap Counterparty on
such Quarterly Payment Date, the amount of any Net Trust Swap Payment
Carryover Shortfall for such Quarterly Payment Date, the Trust Swap
Receipt Amount paid to the Trust on such Quarterly Payment Date and the
amount of any Net Trust Swap Receipt Carryover Shortfall for such
Quarterly Payment Date;
(L) Reserved;
(M) 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;
(N) the balance of the Reserve Account on such Quarterly Payment
Date, after giving effect to changes therein on such Quarterly Payment
Date and indicating whether on such Quarterly Payment Date or any Monthly
Payment Date since the preceding Quarterly Payment Date any withdrawal was
made therefrom pursuant to Section 2(e)(iv), the amount of each such
withdrawal and the purpose(s) pursuant to Section 2(e)(iv) for each such
withdrawal;
(O) for the July 1999 Quarterly Payment Date, the principal balance
and number of Delayed Delivery Loans conveyed to the Issuer during the
related Collection Period, the aggregate Loan Purchase Amounts thereof and
the portion thereof attributable to Purchase Premium Amounts;
(P) for Quarterly Payment Dates during the Revolving Period, the
amount deposited into the Collateral Reinvestment Account during the
related Collection Period and on the immediately preceding Quarterly
Payment Date, and the amount on deposit therein after giving effect to
changes therein on such Quarterly Payment Date;
-17-
(Q) for the Quarterly Payment Date on or immediately following the
end of the Revolving Period, the amount remaining on deposit in the
Collateral Reinvestment Account that has not been used to make Additional
Fundings;
(R) (i) the principal balance and number of Consolidation Loans
originated on behalf of the Issuer during the related Collection Period,
(ii) the principal balance and number of Add-on Consolidation Loans the
principal balances of which have been added to the Trust during the
related Collection Period and (iii) the amount withdrawn from the
Collateral Reinvestment Account to prepay Student Loans not held by the
Issuer that were consolidated through such origination (or addition, in
the case of Add-on Consolidation Loans) with one or more Financed Student
Loans during such Collection Period;
(S) the principal balance and number of Serial Loans conveyed to the
Issuer during the related Collection Period, the aggregate Loan Purchase
Amounts thereof and the portion thereof attributable to Purchase Premium
Amounts;
(T) for Quarterly Payment Dates during the Revolving Period, the
principal balance and number of New Loans conveyed to the Issuer during
the related Collection Period, the aggregate Loan Purchase Amounts thereof
and the portion thereof attributable to Purchase Premium Amounts; and
(U) the number and principal balance of Financed Student Loans, as
of the end of the related Collection Period, that are In-School, Grace,
Repayment, Deferral, Forbearance or Consolidation Loans as of the end of
the related Collection Period, and a breakdown by number and principal
balance of Financed Student Loans, by school type, interest rate and loan
program.
Each amount set forth pursuant to clauses (A), (B), (C), (D) and (E) above shall
be expressed as a dollar amount per $1,000 of original principal amount of a
Note. A copy of the statements referred to above may be obtained by any Note
Owner by a written request to the Indenture Trustee addressed to the Corporate
Trust Office.
(h) Non-Ministerial Matters. With respect to matters that in the
reasonable judgment of the Administrator are non-ministerial, the Administrator
shall not take any action unless within a reasonable time before the taking of
such action, the Administrator shall have notified the Eligible Lender Trustee
and the Swap Counterparty of the proposed action and the Eligible Lender Trustee
shall have consented to it. For the purpose of the preceding sentence,
"non-ministerial matters" shall include, without limitation:
(i) the amendment of or any supplement to the Indenture;
-18-
(ii) the initiation of any claim or lawsuit by the Issuer and the
compromise of any action, claim or lawsuit brought by or against the
Issuer (other than in connection with the collection of the Financed
Student Loans);
(iii) the amendment, change or modification of the Basic Documents;
(iv) the appointment of successor Note Registrars, successor Paying
Agents and successor Indenture Trustees pursuant to the Indenture or the
appointment of successor Administrators or Successor Servicers, or the
consent to the assignment by the Note Registrar, Paying Agent or Indenture
Trustee of its obligations under the Indenture; and
(v) the removal of the Indenture Trustee.
(i) Incentive Loans and Incentive Interest Deposits. The Administrator may
terminate or change the terms of any Incentive Program with respect to a
Financed Student Loan in accordance with the terms of such program, provided
such termination or change is not prohibited by the Higher Education Act, upon
notice to the Eligible Lender Trustee and the Indenture Trustee. Until the
effective date of any termination, the Administrator shall be required to
deposit into the Collection Account the Incentive Interest Deposit with respect
to such Incentive Financed Student Loan as provided below. In the event that the
Administrator fails to make such deposit, the terms of such Incentive Program
shall be such that the Borrower shall be obligated to make such payment and such
Incentive Program shall terminate as to the related loan.
The Administrator shall deposit or cause to be deposited into the
Collection Account no later than the Determination Date succeeding each Monthly
Collection Period and Collection Period the aggregate Incentive Interest
Deposits with respect to Incentive Financed Student Loans in the Trust as of the
last day of such Monthly Collection Period and Collection Period. Such deposits
shall be considered deposits in respect of interest on such Incentive Financed
Student Loans for all purposes of the Basic Documents and shall be deemed to
have been deposited into the Collection Account for all such purposes as of such
last date of such Monthly Collection Period.
(j) Delayed Delivery Loan Funding Account. (i) On the Special
Determination Date, the Administrator shall instruct the Indenture Trustee in
writing to withdraw from the Delayed Delivery Loan Funding Account, to the
extent of the funds on deposit therein, an amount equal to the Loan Purchase
Amount for the Delayed Delivery Loans transferred to the Eligible Lender Trustee
on behalf of the Issuer on such Transfer Date and to distribute such amount to
or upon the order of the Seller upon satisfaction of the conditions set forth in
Section 2.02 of the Loan Sale Agreement with respect to such transfer.
(ii) On the Quarterly Payment Date occurring after the Special
Determination Date, the Administrator shall instruct the Indenture Trustee in
writing to withdraw from the Delayed Delivery Loan Funding Account on such
Quarterly Payment Date an amount equal to
-19-
the entire remaining amount on deposit in such account and to distribute such
amount pursuant to Section 8.02(g) of the Indenture.
3. Annual Statement as to Compliance. (a) The Administrator shall deliver
to the Seller, the Eligible Lender Trustee, the Indenture Trustee and the Swap
Counterparty, on or before December 31 of each year beginning December 31, 1999,
an Officers' Certificate of the Administrator dated as of September 30 of such
year, stating that (i) a review of the activities of the Administrator during
the preceding 12-month period (or, in the case of the first such certificate,
during the period from the Closing Date to September 30, 1999) and of its
performance under this Agreement has been made under such officers' supervision
and (ii) to the best of such officers' knowledge, based on such review, the
Administrator has fulfilled all its obligations under this Agreement 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 4 to the Rating
Agencies. A copy of such Officers' Certificate and each report referred to in
Section 4 may be obtained by any Noteholder or Note Owner by a request in
writing to the Indenture Trustee addressed to its Corporate Trust Office,
together with evidence satisfactory to the Indenture Trustee that such Person is
one of the foregoing parties.
(b) The Administrator shall deliver to the Eligible Lender Trustee, the
Indenture Trustee, the Servicer, the Rating Agencies and the Swap Counterparty,
promptly after having obtained knowledge thereof, but in no event later than two
Business Days thereafter, written notice in an Officers' 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 12.
4. Annual Independent Certified Public Accountants' Report. The
Administrator shall cause a firm of independent certified public accountants,
which may also render other services to the Administrator, to deliver to the
Seller, the Eligible Lender Trustee, the Indenture Trustee and the Swap
Counterparty on or before December 31 of each year beginning December 31, 1999,
a report addressed to the Administrator and to the Seller, the Eligible Lender
Trustee, the Indenture Trustee and the Swap Counterparty (which report may be
combined with other reports required to be delivered by such accountants to the
Administrator, the Eligible Lender Trustee and the Indenture Trustee under the
Basic Documents), to the effect that such firm has examined certain documents
and records relating to the administration of the Financed Student Loans and of
the Trust during the preceding fiscal year ended September 30 (or, in the case
of the first such report, during the period from the Closing Date to September
30, 1999) and that, on the basis of the accounting and auditing procedures
considered appropriate under the circumstances, such firm is of the opinion that
the administration of the Trust was conducted in compliance with the terms of
this Agreement, 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.
The Indenture Trustee shall send a copy of each such report to the Rating
Agencies.
-20-
Such report will also indicate that the firm is independent of the
Administrator within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants.
5. Administrator Expenses. The Administrator shall be required to pay all
expenses incurred by it in connection with its activities hereunder, including
fees and disbursements of independent accountants, taxes imposed on the
Administrator and expenses incurred in connection with distributions and reports
to the Noteholders and the Swap Counterparty.
6. Records. The Administrator shall maintain appropriate books of account
and records relating to services performed hereunder, which books of account and
records shall be accessible for inspection by the Issuer at any time during
normal business hours.
7. Compensation. As compensation for the performance of the
Administrator's obligations under this Agreement and as reimbursement for its
expenses related thereto, the Administrator shall be entitled to the
Administration Fee payable monthly in arrears on each Monthly Payment Date which
shall be solely an obligation of the Issuer and payable solely as provided
herein.
8. Additional Information to Be Furnished to the Issuer. The Administrator
shall furnish to the Issuer and the Swap Counterparty from time to time such
additional information regarding the Collateral as the Issuer or the Swap
Counterparty shall reasonably request.
9. Independence of the Administrator. For all purposes of this Agreement,
the Administrator shall be an independent contractor and shall not be subject to
the supervision of the Issuer or the Eligible Lender Trustee with respect to the
manner in which it accomplishes the performance of its obligations hereunder.
Unless expressly authorized by the Issuer, the Administrator shall have no
authority to act for or represent the Issuer or the Eligible Lender Trustee in
any way and shall not otherwise be deemed an agent of the Issuer or the Eligible
Lender Trustee.
10. No Joint Venture. Nothing contained in this Agreement (i) shall
constitute the Administrator and either the Issuer or the Eligible Lender
Trustee as members of any partnership, joint venture, association, syndicate,
unincorporated business or other separate entity, (ii) shall be construed to
impose any liability as such on any of them or (iii) shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of the others.
11. Other Activities of Administrator. Nothing herein shall prevent the
Administrator or its Affiliates from engaging in other businesses or, in its
sole discretion, from acting in a similar capacity as an administrator for any
other Person even though such Person may engage in business activities similar
to those of the Issuer, the Eligible Lender Trustee or the Indenture Trustee.
-21-
12. Administrator Default. If any one of the following events (an
"Administrator Default") shall occur and be continuing:
(a) any failure by the Administrator to direct the Indenture Trustee
to make any required distributions from any of the Trust Accounts, which
failure continues unremedied for three 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
(b) 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 or any Basic Documents, which
failure shall (i) materially and adversely affect the rights of
Noteholders and (ii) continues unremedied for a period of 30 days after
the date of discovery of such failure by an officer of the Administrator
or 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,
representing not less than 25% of the Outstanding Amount of the Notes; or
(c) an Insolvency Event occurs with respect to the Administrator; or
(d) any representation or warranty made by the Administrator
hereunder or under any Basic Document, or in any certificate furnished
hereunder or under any Basic Document, shall prove to be untrue or
incomplete in any material respect;
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 75% of the Outstanding Amount of the Notes, by notice then given
in writing to the Administrator (and to the Indenture Trustee, the Eligible
Lender Trustee and the Swap Counterparty if given by the Noteholders), may
terminate all the rights and obligations (other than the obligations set forth
in Section 24 hereof) of the Administrator under this Agreement. On or after the
receipt by the Administrator of such written notice, all authority and power of
the Administrator under this Agreement, whether with respect to the Notes 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 13; 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. All reasonable
costs and expenses (including attorneys' fees and expenses) incurred in
connection with such transfer of responsibilities and amending
-22-
this 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 and the Swap Counterparty.
13. Appointment of Successor. (a) Upon receipt by the Administrator of
notice of termination pursuant to Section 12, or the resignation by the
Administrator in accordance with the terms of this Agreement, the predecessor
Administrator shall continue to perform its functions as Administrator, 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 a successor
Administrator has accepted and assumed the responsibilities of the Administrator
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 Administrator shall become legally unable to act as Administrator as
specified in the notice of resignation and accompanying Opinion of Counsel. In
the event of termination hereunder of the Administrator, the Issuer shall
appoint a successor Administrator acceptable to the Indenture Trustee and the
successor Administrator shall accept its appointment by a written assumption in
form acceptable to the Indenture Trustee. In the event that a successor
Administrator has not been appointed at the time when the predecessor
Administrator has ceased to act as Administrator in accordance with this
Section, the Indenture Trustee without further action shall automatically be
appointed the successor Administrator and the Indenture Trustee shall be
entitled to the Administration Fee. Notwithstanding the above, the Indenture
Trustee (with prior written notice to the Swap Counterparty ) shall, if it shall
be unwilling or legally unable so to act, appoint or petition a court of
competent jurisdiction to appoint, as the successor to the Administrator under
this Agreement and the Administration Agreement, any established institution the
regular business of which shall include the servicing of student loans.
(b) Upon appointment, the successor Administrator (including the Indenture
Trustee acting as successor Administrator) shall be the successor in all
respects to the predecessor Administrator and shall be subject to all the
responsibilities, duties and liabilities placed on the predecessor Administrator
that arise thereafter or are related thereto and shall be entitled to an amount
agreed to by such successor Administrator (which shall not exceed the
Administration Fee unless the Swap Counterparty gives its prior written consent
and such compensation arrangements will not result in a downgrading of the Class
A-1 Notes, the Class A-2 Notes or the Subordinate Notes by any Rating Agency,
and all the rights granted to the predecessor Administrator by the terms and
provisions of this Agreement.
(c) The Administrator may not resign unless it is prohibited from serving
as such by law as evidenced by an Opinion of Counsel to such effect delivered to
the Indenture Trustee and the Eligible Lender Trustee. Notwithstanding the
foregoing or anything to the contrary herein or in the Basic Documents, the
Indenture Trustee, to the extent it is acting as successor Administrator
pursuant hereto, shall be entitled to resign to the extent a qualified successor
Administrator has been appointed and has assumed all the obligations of the
Administrator in accordance with the terms of this Agreement and the Basic
Documents.
-23-
14. Notification to Noteholders. Upon any termination of, or appointment
of a successor to, the Administrator pursuant to Section 12 or 13, the Indenture
Trustee shall give prompt written notice thereof to Noteholders, the Swap
Counterparty 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).
15. Waiver of Past Defaults. The Noteholders of Notes evidencing not less
than a majority of the Outstanding Amount of the Notes may, on behalf of all
Noteholders, waive in writing any default by the Administrator in the
performance of its obligations hereunder and any consequences thereof, except a
default in making any required deposits to or payments from any of the Trust
Accounts (or giving instructions regarding the same) in accordance with this
Agreement. Upon any such waiver of a past default, such default shall cease to
exist, and any Administrator Default arising therefrom shall be deemed to have
been remedied for every purpose of this Agreement to the extent provided in such
waiver. No such waiver shall extend to any subsequent or other default or impair
any right consequent thereto.
16. Notices. Any notice, report or other communication given hereunder
shall be in writing (or in the form of facsimile notice, followed by written
notice) and addressed as follows:
(a) if to the Issuer, to
SMS Student Loan Trust 1999-A
c/o First Chicago Delaware Inc.
FCC National Bank
000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000,
with a copy to the Eligible Lender Trustee
at the Corporate Trust Office of the
Eligible Lender Trustee
(b) if to the Eligible Lender Trustee, to
The First National Bank of Chicago
000 Xxxx 00xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Administration
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(c) if to the Administrator, to
USA Group Secondary Market Services, Inc.
-24-
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: President and Chief Executive Officer
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to
Office of the General Counsel
USA Group, Inc.
00 Xxxxx Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
(d) if to the Indenture Trustee, to
Bankers Trust Company
Four Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust and Agency Group,
Structured Finance Team
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(e) if to the Swap Counterparty, to:
General Re Financial Products Corporation
Rockefeller Center
000 Xxxxx Xxxxxx, Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Attention: Head of Operations
Telecopy: (000) 000-0000
Telephone confirmation: (000) 000-0000;
or to such other address as any party shall have provided to the other parties
in writing. Any notice required to be in writing hereunder shall be deemed given
if such notice is mailed by certified mail, postage prepaid, or hand-delivered
to the address of such party as provided above.
17. Amendments. This Agreement may be amended from time to time by a
written amendment duly executed and delivered by the Issuer, the Administrator
and the Indenture Trustee, with the prior written consent of the Eligible Lender
Trustee and the Swap Counterparty, but without the consent of the Noteholders,
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement or of modifying in any
manner the rights of the Noteholders; provided, however, that such
-25-
amendment will not, in an Opinion of Counsel obtained on behalf of the Issuer
and satisfactory to the Indenture Trustee and the Eligible Lender Trustee,
materially and adversely affect the interest of any Noteholder. This Agreement
may also be amended by the Issuer, the Administrator and the Indenture Trustee
with the prior written consent of the Eligible Lender Trustee, the Swap
Counterparty and the Noteholders of at least a majority in the Outstanding
Amount of the Notes for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of Noteholders; provided, however, that no
such amendment may (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments with respect to the
Financed Student Loans or distributions that are required to be made for the
benefit of the Noteholders or (ii) reduce the aforesaid percentage of the
Noteholders which are required to consent to any such amendment, without the
consent of all Outstanding Noteholders. Prior to the execution of any such
amendment, the Administrator shall furnish written notification of the substance
of such amendment to each of the Rating Agencies.
18. Assignment. Notwithstanding anything to the contrary contained herein,
except as provided in Section 13 or 25 of this Agreement concerning the
resignation of the Administrator, this Agreement may not be assigned by the
Administrator.
19. Governing Law. This Agreement shall be construed in accordance with
the laws of the State of Indiana, without reference to its conflict of law
provisions, and the obligations, rights and remedies of the parties hereunder
shall be determined in accordance with such laws.
20. Headings. The section headings hereof have been inserted for
convenience of reference only and shall not be construed to affect the meaning,
construction or effect of this Agreement.
21. Counterparts. This Agreement may be executed in counterparts, each of
which when so executed shall together constitute but one and the same agreement.
22. Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall 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.
23. Not Applicable to USA Group Secondary Market Services, Inc. in Other
Capacities. Nothing in this Agreement shall affect any obligation USA Group
Secondary Market Services, Inc. may have in any other capacity under the Basic
Documents.
24. 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.
-26-
The Administrator shall indemnify, defend and hold harmless the Issuer,
the Eligible Lender Trustee, the Indenture Trustee, the Servicer, the Swap
Counterparty and the Noteholders and any of the officers, directors, employees
and agents of the Issuer, the Eligible Lender Trustee, the Indenture Trustee and
the 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 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 25) as Administrator pursuant to Section 12 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 13.
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 shall include reasonable fees and expenses of
counsel and expenses of litigation. If the Administrator shall have made any
indemnity payments pursuant to this Agreement and the Person to or on behalf of
whom such payments are made thereafter collects any of such amounts from others,
such Person shall promptly repay such amounts to the Administrator, without
interest.
25. 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; 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 USA Group Secondary Market Services, Inc., executes
an agreement of assumption to perform every obligation of the Administrator
under this Agreement, (ii) immediately after giving effect to such transaction,
no representation or warranty made pursuant to Section 1 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 Administrator shall have delivered to the Eligible
Lender Trustee, the Indenture Trustee and the Swap Counterparty an Officers'
Certificate and an Opinion of Counsel each stating that such
-27-
consolidation, merger or succession and such agreement of assumption comply with
this Section and that all conditions precedent, if any, provided for in this
Agreement relating to such transaction have been complied with, and that the
Rating Agency Condition shall have been satisfied with respect to such
transaction, (iv) the surviving Administrator shall have a consolidated net
worth at least equal to that of the predecessor Administrator, (v) such
transaction will not result in a material adverse federal or state tax
consequence to the Issuer or the Noteholders and (vi) unless USA Group Secondary
Market Services, Inc. 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 interests of the
Eligible Lender Trustee, the Indenture Trustee and the Swap Counterparty,
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.
26. Limitation on Liability of 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, the Indenture Trustee, the
Eligible Lender Trustee or the Swap Counterparty, 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 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 its duties or by reason of
reckless disregard of obligations and its duties under this 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.
Except as provided in this 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 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 Basic Documents and the
interests of the Noteholders under the Indenture.
27. USA Group Secondary Market Services, Inc. Not to Resign as
Administrator. Subject to the provisions of Section 25, USA Group Secondary
Market Services, Inc. shall not resign from the obligations and duties imposed
on it as Administrator under this Agreement except upon determination that the
performance of its duties under this Agreement shall no longer be permissible
under applicable law or shall violate any final order of a court or
administrative agency with jurisdiction over USA Group Secondary Market
Services, Inc. or its properties. Notice of any such determination permitting
the resignation of USA Group Secondary Market Services, Inc. shall be
communicated to the Eligible Lender Trustee, the Indenture Trustee and the Swap
Counterparty at the earliest practicable time (and, if such
-28-
communication is not in writing, shall be confirmed in writing at the earliest
practicable time) and any such determination shall be evidenced by an Opinion of
Counsel to such effect delivered to the Eligible Lender Trustee, the Indenture
Trustee and the Swap Counterparty concurrently with or promptly after such
notice. No such resignation shall become effective until the Indenture Trustee
or a successor Administrator shall have assumed the responsibilities and
obligations of USA Group Secondary Market Services, Inc. in accordance with
Section 13.
28. Limitation of Liability of Eligible Lender Trustee and Indenture
Trustee. (a) Notwithstanding anything contained herein to the contrary, except
as provided in subsection (c) hereof, this instrument has been countersigned 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 any Owner of the
Issuer have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder, as to all of which
recourse shall be had solely to the assets of the Issuer. For all purposes of
this Agreement, in the performance of any duties or obligations of the Issuer
thereunder, the Eligible Lender Trustee shall be subject to, and entitled to the
benefits of, the terms and provisions of Articles VI, VII and VIII of the Trust
Agreement.
(b) Notwithstanding anything contained herein to the contrary, except as
provided in subsection (c) hereof, this Agreement has been countersigned 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.
(c) Notwithstanding any other provision in this Agreement or the other
Basic Documents, nothing in this Agreement or the other Basic Documents shall be
construed to limit the legal responsibility of the Eligible Lender Trustee or
the Indenture Trustee, to the U.S. Secretary of Education or a Guarantor for any
violations of statutory or regulatory requirements that may occur with respect
to loans held by the Eligible Lender Trustee or the Indenture Trustee pursuant
to, or to otherwise comply with their obligations under, the Higher Education
Act or implementing regulations.
29. Notice of Termination of Trust. 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.
30. Third-Party Beneficiaries. The Eligible Lender Trustee and the Swap
Counterparty are third-party beneficiaries to this Agreement and are entitled to
the rights and benefits hereunder and may enforce the provisions hereof as if
they were parties hereto; provided, however, that in the case of the Swap
Counterparty, such right to enforcement and the right to provide consents or
waivers pursuant to the provisions hereof or to take other actions as provided
herein are conditioned upon its not being in default under the Swap Agreement.
-29-
31. Consents. With respect to any action to be taken hereunder that
requires the consent of a party hereto or of the Eligible Lender Trustee or the
Swap Counterparty, such consent shall not be unreasonably withheld, delayed or
conditioned.
[Signatures Follow on Next Page]
-30-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
SMS STUDENT LOAN TRUST 1999-A
By: THE FIRST NATIONAL BANK OF
CHICAGO, not in its individual
capacity but solely as
Eligible Lender Trustee
By:______________________________________
Name:
Title:
BANKERS TRUST COMPANY, not in its individual
capacity but solely as Indenture Trustee
By:______________________________________
Name:
Title:
USA GROUP SECONDARY MARKET SERVICES, INC., as
Administrator
By:______________________________________
Name:
Title:
-31-
EXHIBIT A TO THE
ADMINISTRATION AGREEMENT
POWER OF ATTORNEY
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
KNOW ALL MEN BY THESE PRESENTS, that THE FIRST NATIONAL BANK OF CHICAGO, a
national bank, not in its individual capacity but solely as eligible lender
trustee ("Eligible Lender Trustee") for the SMS Student Loan Trust 1999-A (the
"Trust"), does hereby make, constitute and appoint USA Group Secondary Market
Services, Inc., as Administrator under the Administration Agreement (as defined
below), and its agents and attorneys, as Agents and Attorneys-in-Fact to execute
on behalf of Eligible Lender Trustee or the Trust all such documents, reports,
filings, instruments, certificates and opinions as it should be the duty of
Eligible Lender Trustee or the Trust to prepare, file or deliver pursuant to the
Related Documents (as defined in the Administration Agreement) or pursuant to
Section 5.02 of the Trust Agreement (as defined in the Administration
Agreement), including without limitation, to appear for and represent Eligible
Lender Trustee and the Trust in connection with the preparation, filing and
audit of any federal, state and local tax returns pertaining to the Trust, and
with full power to perform any and all acts associated with such returns and
audits that the Eligible Lender Trustee could perform, including without
limitation, the right to distribute and receive confidential information, defend
and assert positions in response to audits, initiate and defend litigation, and
to execute waivers of restriction on assessments of deficiencies, consents to
the extension of any statutory or regulatory time limit, and settlements. For
the purpose of this Power of Attorney, the term "Administration Agreement" means
the Administration Agreement dated as of February 1, 1999, among the Trust, USA
Group Secondary Market Services, Inc., as Administrator, and Bankers Trust
Company, as Indenture Trustee, as such may be amended from time to time.
All powers of attorney for this purpose heretofore filed or executed by
Eligible Lender Trustee are hereby revoked.
A-1
EXECUTED as of the first day of February 1999.
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but
solely as Eligible Lender Trustee
By:______________________________________
Name:
Title:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
Before me, the undersigned authority, on this day personally appeared [ ]
known to me to be the person whose name is subscribed to the foregoing
instrument, and acknowledged to me that such person signed the same for the
purposes and considerations therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this [ ] day of March 1999.
_________________________________________
Notary Public in and for the
State of New York
_________________________________________
Printed Name of Notary Public
_________________________________________
Commission Expires
A-2
EXHIBIT B
TO THE
ADMINISTRATION AGREEMENT
Form of Noteholders' Statement pursuant to Section 2(g) of Administration
Agreement. Capitalized terms used herein are defined in Appendix A thereto. It
should be noted, however, that while all the information listed below shall be
included in each Noteholders' Statement, the presentation thereof may vary from
that given below.
Quarterly Payment Date:
(i) Amount of principal being paid or distributed:
Class A-1 __________*
($__________
* per $1,000
original
principal amount of Notes)
Class A-2 __________*
($__________
* per $1,000
original principal
amount of Notes)
Subordinate __________*
($__________
* per $1,000
original principal
amount of Notes)
---------
* Portion of each such amount attributable to Reserve Account Excess:___________
(ii) Amount of interest being paid or distributed:
Class A-1 __________ ($_______ per
$1,000 original
principal amount of Notes)
B-1
Class A-2 __________ ($_______ per
$1,000 original
principal amount of Notes)
Subordinate __________ ($_______ per
$1,000 original
principal amount of Notes)
(iii) Amount of Senior Noteholders' Interest Basis Carryover being paid or
distributed (if any) and amount remaining (if any):
(a) Distributed:__________ ($_______ per
$1,000 original principal
amount of Senior Notes)
(b) Balance:______________ ($_______ per
$1,000 original) principal
amount of Senior Notes)
(iv) Amount of Subordinate Noteholders' Interest Basis Carryover being
paid or distributed (if any) and amount remaining (if any):
(a) Distributed:__________ ($_______ per
$1,000 original principal
amount of Notes)
(b) Balance:______________ ($_______ per
$1,000 original principal
amount of Notes)
(v) Pool Balance at end of related Collection Period:
(vi) After giving effect to distributions on this Quarterly Payment Date:
(a) (1) outstanding principal amount of Class A-1 Notes:__________
(2) Class A-1 Note Pool Factor:__________
(b) (1) outstanding principal amount of Class A-2 Notes:__________
(2) Class A-2 Note Pool Factor:__________
B-2
(c) (1) outstanding principal amount of Subordinate Notes:__________
(2) Subordinate Note Pool Factor:__________
(vii) Applicable Interest Rate:
In general:
(1) Three-Month LIBOR for the LIBOR Reset Period since the
previous Quarterly Payment Date was _____%; and
(2) the Adjusted Student Loan Rate for such Quarterly Interest
Period was _____%.
Class A-1 Note Rate: _____% (based on
[Note LIBOR Rate]
[Adjusted Student Loan Rate])
Class A-2 Note Rate: _____% (based on
[Note LIBOR Rate]
[Adjusted Student Loan Rate])
Subordinate Note Rate: _____% (based on
[Note LIBOR Rate]
[Adjusted Student Loan Rate])
(viii) Amount of Servicing Fee for related Collection Period including a
breakdown of the components of the Servicing Fee attributable to
each of the items specified in clauses II(i) through (ix) of
Section 3.06 of the Servicing Agreement and the amount of any
Servicing Fee Shortfall for such Quarterly Payment Date and for
each Monthly Payment Date following the immediately preceding
Quarterly Payment Date:
(ix) Amount of Administration Fee for related Collection
Period:__________ ($_______ per $1,000 original principal amount
of Notes)
(x) the Trust Swap Payment Amount paid to the Swap Counterparty on
such Quarterly Payment Date: ______; the amount of any Net Trust
Swap Payment Carryover Shortfall for such Quarterly Payment Date:
____; the Trust Swap Receipt Amount paid to the Trust on such
Quarterly Payment Date: ____; the Net Trust Swap Receipt Carryover
Shortfall for such Quarterly Payment Date:______
B-3
(xi) Reserved
(xii) Aggregate amount of Realized Losses (if any) for the related
Collection Period:__________
(xiii) Financed Student Loans delinquent at end of related Collection
Period: __________; number of delinquent loans: ________;
aggregate unpaid principal balance of delinquent loans:
(xiv) Withdrawal from Reserve Account on related Quarterly Payment Date
(other than Reserve Account Excess) and on any Monthly Payment
Date since the preceding Quarterly Payment Date (list each
withdrawal separately): _______________ [purpose of each
withdrawal]
Reserve Account Excess on related Quarterly Payment Date ________
Principal balance of Notes to be paid to reach Parity Date:
___________
(xv) Reserved
(xvi) Deposits to Collateral Reinvestment Account during related
Collection Period: __________; amount to be deposited on related
Quarterly Payment Date: __________
Withdrawal from Collateral Reinvestment Account during related
Collection Period: __________
(xvii) Amount in the Reserve Account (after giving effect to
(xiv)):__________
(xviii) Amount in the Collateral Reinvestment Account (after giving
effect to (xvi)):__________
(xix) Consolidation Loans: ___________ loans with aggregate principal
balances of ________ were originated during related Collection
Period; withdrawal from Collateral Reinvestment Account to fund
origination of Consolidation Loans during related Collection
Period: _______
(xx) Add-on Consolidation Loans: ______ loans with aggregate principal
balances of ________ were added to the principal balance of a
Consolidation Loan; withdrawal from Collateral Reinvestment
Account to fund the addition of the principal balances of Add-on
Consolidation Loans during the related Collection Period: _____
B-4
(xxi) Serial Loans: _______ loans with aggregate principal balances of
_______ (portion represented by Purchase Premium Amounts ) were
purchased during the related Collection Period.
(xxii) New Loans: _______ loans with aggregate principal balances of
_______ (portion represented by Purchase Premium Amounts ) were
purchased during the related Collection Period.
(xxiii) Withdrawal from the Delayed Delivery Loan Funding Account during
the related Collection Period: .
(xxiv) Amount in the Delayed Delivery Loan Funding Account (after giving
effect to (xxiii)): .
B-5
(xxv) Financed Student Loans in the following categories as of the end
of the related Collection Period:
Weighted
Average Number of Principal
Interest Rate Loans Balance
Status Type:
In-School
Grace
Repayment
Forbearance
Deferment
Delinquencies
Claims Filed
Awaiting Payment
Delinquencies:
30-60 Days
61-90 Days
91-120 Days
More than 120
Days Delinquent
Claims Filed
Awaiting Payment
Loan Type:
Xxxxxxxx Loans
SLS Loans
PLUS Loans
Consolidation Loans
School Type:
Traditional
Vocational/Proprietary
B-6
