APPENDIX A TO THE
ADMINISTRATION AGREEMENT
DEFINITIONS AND USAGE
Usage
The following rules of construction and usage shall be applicable to
any instrument that is governed by this Appendix:
(a) All terms defined in this Appendix shall have the defined meanings
when used in any instrument governed hereby and in any certificate or other
document made or delivered pursuant thereto unless otherwise defined therein.
(b) As used herein, in any instrument governed hereby and in any
certificate or other document made or delivered pursuant thereto, accounting
terms not defined in this Appendix or in any such instrument, certificate or
other document, and accounting terms partly defined in this Appendix or in any
such instrument, certificate or other document to the extent not defined, shall
have the respective meanings given to them under generally accepted accounting
principles as in effect on the date of such instrument. To the extent that the
definitions of accounting terms in this Appendix or in any such instrument,
certificate or other document are inconsistent with the meanings of such terms
under generally accepted accounting principles, the definitions contained in
this Appendix or in any such instrument, certificate or other document shall
control.
(c) The words "hereof", "herein", "hereunder" and words of similar
import when used in an instrument refer to such instrument as a whole and not to
any particular provision or subdivision thereof; references in an instrument to
"Article", "Section" or another subdivision or to an attachment are, unless the
context otherwise requires, to an article, section or subdivision of or an
attachment to such instrument; and the term "including" means "including without
limitation".
(d) The definitions contained in this Appendix are equally applicable
to both the singular and plural forms of such terms and to the masculine as well
as to the feminine and neuter genders of such terms.
(e) Any agreement, instrument or statute defined or referred to below
or in any agreement or instrument that is governed by this Appendix means such
agreement or instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and includes (in the case of agreements or instruments) references to
all attachments thereto and instruments incorporated therein. References to a
Person are also to its permitted successors and assigns.
Definitions
"Act" has the meaning specified in Section 11.03(a) of the Indenture.
"Additional Fundings" means any withdrawals from the Collateral
Reinvestment Account for any of the purposes set forth in Section 2(f) of the
Administration Agreement.
"Additional Guarantor" means a Federal Guarantor (other than an Initial
Guarantor) of a Financed Student Loan (other than an Initial Financed Student
Loan) which has entered into a guarantee agreement with the Eligible Lender
Trustee.
"Add-on Consolidation Loan" means a Student Loan, the principal balance
of which is added to an existing Consolidation Loan within 210 days from the
date that the existing Consolidation Loan was made, as required by the Higher
Education Act.
"Add-on Consolidation Loan Funding Date" means each day, prior to the
end of the Add-on Period, on which the principal balance of an Add-on
Consolidation Loan is added to the principal balance of a Consolidation Loan in
the Trust pursuant to Section 6.07 of the Trust Agreement.
"Add-on Period" means the period starting on the Closing Date and
ending on the date that is 210 days from the date that the last Consolidation
Loan was originated by the Trust during the Revolving Period.
"Adjusted Student Loan Rate" means, with respect to any Quarterly
Interest Period, the interest rate equal to the product of (a) the quotient
obtained by dividing (i) 365 (366 in the case of a leap year) by (ii) the actual
number of days elapsed in such Quarterly Interest Period and (b) the percentage
equivalent of a fraction, the numerator of which is equal to the sum of the
Expected Interest Collections and, if the Swap Agreement is still in effect, the
Net Trust Swap Receipt, if any, for the such Quarterly Interest Period, less the
sum of the Servicing Fee, the Administration Fee and, if the Swap Agreement is
still in effect, the Net Trust Swap Payment, if any, with respect to such
Quarterly Interest Period and (ii) the denominator of which is the aggregate
principal amount of the Notes as of the last day of such Quarterly Interest
Period.
"Administration Agreement" means the Administration Agreement dated as
of April 19, 1999, among the Issuer, the Administrator and the Indenture
Trustee.
"Administration Fee" means, with respect to each Monthly Payment Date,
an amount equal to one-twelfth of the product of (i) 0.05% and (ii) the Pool
Balance as of the close of business on the last day of the calendar month
immediately preceding such Monthly Payment Date.
"Administrator" means USA Group Secondary Market Services, Inc., a
Delaware corporation, in its capacity as administrator of the Issuer and the
Financed Student Loans.
"Administrator Default" shall have the meaning set forth in Section 12
of the Administration Agreement.
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"Administrator's Certificate" means an Officers' Certificate of the
Administrator delivered pursuant to Section 2(b)(ii) of the Administration
Agreement.
"Affiliate" means, with respect to any specified Person, any other
Person controlling or controlled by or under common control with such specified
Person. For the purposes of this definition, "control" when used with respect to
any specified Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Assignment" means a duly executed assignment delivered pursuant to
Section 3.02 of the Loan Sale Agreement in the form set forth in Exhibit F to
such Agreement.
"Authorized Officer" means (i) with respect to the Issuer, any officer
of the Eligible Lender Trustee who is authorized to act for the Eligible Lender
Trustee in matters relating to the Issuer pursuant to the Basic Documents and
who is identified on the list of Authorized Officers delivered by the Eligible
Lender Trustee to the Indenture Trustee on the Closing Date (as such list may be
modified or supplemented from time to time thereafter) and (ii) with respect to
the Seller, the Servicer and the Administrator, any officer or other authorized
representative of the Seller, the Servicer or the Administrator, respectively,
who is authorized to act for the Seller, the Servicer or the Administrator,
respectively, in matters relating to itself or to the Issuer and to be acted
upon by the Seller, the Servicer or the Administrator, respectively, pursuant to
the Basic Documents and who is identified on the list of Authorized Officers
delivered by the Seller, the Servicer and the Administrator, respectively, to
the Indenture Trustee on the Closing Date (as such list may be modified or
supplemented from time to time thereafter).
"Available Funds" means, with respect to a Quarterly Payment Date and
the related Collection Period, the sum of the amounts specified in clauses (i)
through (vi) of the definition of Monthly Available Funds for each of the three
Monthly Collection Periods included in such Collection Period plus any Trust
Swap Receipt Amount and the remainder of any Termination Payment received by the
Trust with respect to such Quarterly Payment Date; provided, however, that if
with respect to any Quarterly Payment Date there would not be sufficient funds,
after application of the Available Funds (as defined above) and amounts
available from the Reserve Account, to pay any of the items specified in clauses
(v)(A) through (v)(C) of Section 2(d) of the Administration Agreement, then the
Available Funds for such Quarterly Payment Date will include, in addition to the
Available Funds (as defined above), amounts on deposit in the Collection Account
on the Determination Date relating to such Quarterly Payment Date which would
have constituted the Available Funds for the Quarterly Payment Date succeeding
such Quarterly Payment Date up to the amount necessary to pay such items, and
the Available Funds for such succeeding Quarterly Payment Date will be adjusted
accordingly; and provided, further, that the Available Funds will exclude (A)
all payments and proceeds (including Liquidation Proceeds) of any Financed
Student Loans the Purchase Amounts of which were included in the Available Funds
for a prior Collection Period; (B) except as expressly included in clause (iv)
of the definition of Monthly Available Funds, amounts released from the
Collateral Reinvestment Account; (C) any Monthly Rebate Fees paid during the
related Collection Period by or on behalf of the Trust; (D) any collections in
respect of principal on the
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Financed Student Loans applied by the Eligible Lender Trustee on behalf of the
Trust prior to the end of the Revolving Period to make deposits to the
Collateral Reinvestment Account pursuant to Section 2(d)(i) of the
Administration Agreement and, after the end of the Revolving Period, any
expenditure of the Net Principal Cash Flow Amount used to fund the addition of
any Add-on Consolidation Loans, to purchase Serial Loans or to fund the
acquisition of Exchanged Serial Loans during the related Collection Period; and
(E) the Servicing Fee, all overdue Servicing Fees, the Administration Fee and
all overdue Administration Fees paid on each Monthly Payment Date that is not a
Quarterly Payment Date during the related Collection Period.
"Basic Documents" means the Trust Agreement, the Indenture, the Loan
Sale Agreement, the Servicing Agreement, the Administration Agreement, the
Depository Agreement, the Guarantee Agreements, the Swap Agreement and other
documents and certificates delivered in connection with any thereof.
"Billing Account" means those combined loans of a Borrower with the
same lender and branch, which loans are in the same status, and are the same
loan type, and are guaranteed by the same Guarantor and which require the same
processing and billing requirements. Xxxxxxxx Loans which are already in
repayment and being serviced by the Servicer will not be merged with new
Xxxxxxxx Loans for the same Borrower, and each such Xxxxxxxx Loan will be
treated as a separate Billing Account.
"Book-Entry Note" means a beneficial interest in the Senior Notes,
ownership and transfers of which shall be made through book entries by a
Clearing Agency as described in Section 2.10 of the Indenture.
"Borrower" means an individual who is the maker of a Borrower Note and
who obtains a Student Loan from an "eligible lender" in accordance with the
Higher Education Act and the policies and procedures of a Guarantor.
"Borrower Incentive Programs" means the incentive program of the
Administrator which provides that Borrowers of Federal Consolidation Loans whose
applications were received during the period from October 1, 1998 through
January 31, 1999 and make their first 48 payments on time may receive a 1% per
annum interest rate reduction for the remaining term of their Consolidation Loan
and if such Borrowers use the USA Group Loan Services AutoCheck (R) auto-debit
system to remit payments directly from their bank accounts, such Borrowers may
receive a 0.25% per annum interest rate reduction on their Student Loans, as
such program may be modified from time to time.
"Borrower Note" means a promissory note of a Borrower for a Student
Loan set forth on the appropriate form furnished by the Guarantor which Borrower
Note meets the criteria set forth by the Higher Education Act and the policies
and procedures of the Guarantor.
"Business Day" means any day other than (i) a Saturday or a Sunday, or
(ii) a day on which banking institutions or trust companies in the States of
Illinois, New York or Indiana or in the city in which the Corporate Trust Office
of the Indenture Trustee is located are authorized or obligated by law,
regulation or executive order to remain closed.
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"Business Trust Statute" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code ss. 3801 et seq., as the same may be amended from time to
time.
"Capitalized Interest Amount" means for any Monthly Collection Period
or other period of determination, the amount of interest that accrued on the
Financed Student Loans during such period but was not then payable and that has
been or will, pursuant to the terms of such Financed Student Loans, be
capitalized and added to the principal balances of such loans.
"Certificate of Trust" means the Certificate of Trust in the form of
Exhibit A to the Trust Agreement to be filed for the Trust pursuant to Section
3810(a) of the Business Trust Statute.
"Choice Rates(TM) Program" means the Incentive Program of the
Administrator which provides that Borrowers of Xxxxxxxx Loans whose loans were
disbursed on or after January 1, 1996 and who make their first 48 payments on
time receive a 2% per annum interest rate reduction for the remaining term of
their Student Loan, as such program may be modified from time to time.
"Choice Repay(TM) Program" means the Incentive Program of the
Administrator which provides for Borrowers of Xxxxxxxx Loans whose loans were
disbursed on or after January 1, 1996 and who use the USA Group Loan Services
AutoCheck(R) auto-debit system to remit payments directly from their bank
accounts to receive a 0.25% per annum interest rate reduction on their Student
Loans, as such program may be modified (with notice to the Rating Agencies)
after the Cutoff Date, other than as it may be modified to increase such
interest rate reduction.
"Class A-1 Note" means a Class A-1 Floating Rate Asset- Backed Senior
Note issued pursuant to the Indenture, substantially in the form of Exhibit A-1
thereto.
"Class A-1 Note LIBOR Rate" means, with respect to any Quarterly
Interest Period, Three-Month LIBOR for the related LIBOR Reset Period plus
0.12%; provided that for the October 1999 Quarterly Payment Date, the Class A-1
Note LIBOR Rate shall equal (i) the weighted average of (x) Three-Month LIBOR
for the LIBOR Reset Period commencing on the Closing Date and (y) Three-Month
LIBOR for the LIBOR Reset Period commencing on July 28, 1999 plus (ii) 0.12%.
"Class A-1 Note Final Maturity Date" means the October 2006 Quarterly
Payment Date.
"Class A-1 Note Pool Factor" as of the close of business on a Quarterly
Payment Date means a seven-digit decimal figure equal to the outstanding
principal amount of the Class A-1 Notes divided by the original outstanding
principal amount of the Class A-1 Notes. The Class A-1 Note Pool Factor will be
1.0000000 as of the Closing Date; thereafter, the Class A-1 Note Pool Factor
will decline to reflect reductions in the outstanding principal amount of the
Class A-1 Notes.
"Class A-1 Note Rate" means, with respect to any Quarterly Interest
Period, the interest rate per annum (computed on the basis of the actual number
of days in such Quarterly
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Interest Period over a year of 360 days) equal to the lesser of (i) the Class
A-1 Note LIBOR Rate for such Quarterly Interest Period and (ii) the Adjusted
Student Loan Rate for such Quarterly Interest Period; provided, however, that,
notwithstanding the foregoing, the Class A-1 Note Rate for the first Quarterly
Interest Period shall be equal to the Class A-1 Note LIBOR Rate for such
Quarterly Interest Period.
"Class A-1 Noteholder" means the Noteholder of a Class A-1 Note.
"Class A-1 Noteholders' Interest Basis Carryover" means, with respect
to any Quarterly Payment Date commencing in October 1999, the amount equal to
the excess, if any, of (a) the amount of interest on the Class A-1 Notes that
would have accrued in respect of the related Quarterly Interest Period had
interest been calculated based on the Class A-1 Note LIBOR Rate over (b) the
amount of interest on the Class A-1 Notes actually accrued in respect of such
Quarterly Interest Period based on the Adjusted Student Loan Rate for such
Quarterly Interest Period, together with the unpaid portion of any such excess
from prior Quarterly Payment Dates (and interest accrued thereon, to the extent
permitted by law, at the applicable Class A-1 Note LIBOR Rate); provided,
however, that, on the Class A-1 Note Final Maturity Date, the Class A-1
Noteholders' Interest Basis Carryover will be equal to the lesser of (i) the
Class A-1 Noteholders' Interest Basis Carryover on such date determined as
described above and (ii) the amount of funds, if any, required and available to
be distributed to the Class A-1 Noteholders on such date pursuant to Sections
2(e)(ii)(b)(iv) of the Administration Agreement and Section 8.02 of the
Indenture.
"Class A-1 Noteholders' Interest Carryover Shortfall" means, with
respect to any Quarterly Payment Date, the excess of (i) the Class A-1
Noteholders' Interest Distribution Amount on the preceding Quarterly Payment
Date over (ii) the amount of interest actually distributed to the Class A-1
Noteholders on such preceding Quarterly Payment Date, plus interest on the
amount of such excess, to the extent permitted by law, at the then current Class
A-1 Note Rate from such preceding Quarterly Payment Date to the current
Quarterly Payment Date.
"Class A-1 Noteholders' Interest Distribution Amount" means, with
respect to any Quarterly Payment Date, the sum of (i) the amount of interest
accrued at the Class A-1 Note Rate for the related Quarterly Interest Period on
the outstanding principal balance of the Class A-1 Notes on the immediately
preceding Quarterly Payment Date (after giving effect to all principal
distributions to holders of Class A-1 Notes on such date) or, in the case of
first Quarterly Payment Date, on the Closing Date and (ii) the Class A-1
Noteholders' Interest Carryover Shortfall for such Quarterly Payment Date;
provided, however, that the Class A-1 Noteholders' Interest Distribution Amount
will not include any Class A-1 Noteholders' Interest Basis Carryover.
"Class A-2 Note" means a Class A-2 Floating Rate Asset- Backed Senior
Note issued pursuant to the Indenture, substantially in the form of Exhibit A-2
thereto.
"Class A-2 Note Final Maturity Date" means the April 2029 Quarterly
Payment Date.
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"Class A-2 Note LIBOR Rate" means, with respect to any Quarterly
Interest Period, Three-Month LIBOR for the related LIBOR Reset Period plus
0.24%; provided that for the October 1999 Quarterly Payment Date, the Class A-2
Note LIBOR Rate shall equal (i) the weighted average of (x) Three-Month LIBOR
for the LIBOR Reset Period commencing on the Closing Date and (y) Three-Month
LIBOR for the LIBOR Reset Period commencing on July 28, 1999 plus (ii) 0.24%.
"Class A-2 Note Pool Factor" as of the close of business on a Quarterly
Payment Date means a seven-digit decimal figure equal to the outstanding
principal amount of the Class A-2 Notes divided by the original outstanding
principal amount of the Class A-2 Notes. The Class A-2 Note Pool Factor will be
1.0000000 as of the Closing Date; thereafter, the Class A-2 Note Pool Factor
will decline to reflect reductions in the outstanding principal balance of the
Class A-2 Notes.
"Class A-2 Note Rate" means, with respect to any Quarterly Payment Date
and the related Quarterly Interest Period, the interest rate per annum (computed
on the basis of the actual number of days in such Quarterly Interest Period over
a year of 360 days) equal to the lesser of (i) the Class A-2 Note LIBOR Rate for
such Quarterly Interest Period and (ii) the Adjusted Student Loan Rate for such
Quarterly Interest Period; provided, however, that, notwithstanding the
foregoing, the Class A-2 Note Rate for the first Quarterly Interest Period shall
be equal to the Class A-2 Note LIBOR Rate for such Quarterly Interest Period.
"Class A-2 Noteholder" means the Noteholder of a Class A-2 Note.
"Class A-2 Noteholders' Interest Basis Carryover" means, with respect
to any Quarterly Payment Date commencing in October 1999, the amount equal to
the excess, if any, of (a) the amount of interest on the Class A-2 Notes that
would have accrued in respect of the related Quarterly Interest Period had
interest been calculated based on the Class A-2 Note LIBOR Rate over (b) the
amount of interest on the Class A-2 Notes actually accrued in respect of such
Quarterly Interest Period based on the Adjusted Student Loan Rate for such
Quarterly Interest Period, together with the unpaid portion of any such excess
from prior Quarterly Payment Dates (and interest accrued thereon, to the extent
permitted by law, at the applicable the Class A-2 Note LIBOR Rate); provided,
however, that, on the Class A-2 Note Final Maturity Date, the Class A-2
Noteholders' Interest Basis Carryover will be equal to the lesser of (i) the
Class A-2 Noteholders' Interest Basis Carryover on such date determined as
described above and (ii) the amount of funds, if any, required and available to
be distributed to the Noteholders on such date pursuant to Sections
2(e)(ii)(b)(iv) of the Administration Agreement and Section 8.02 of the
Indenture.
"Class A-2 Noteholders' Interest Carryover Shortfall" means, with
respect to any Quarterly Payment Date, the excess of (i) the Class A-2
Noteholders' Interest Distribution Amount on the preceding Quarterly Payment
Date over (ii) the amount of interest actually distributed to the Class A-2
Noteholders on such preceding Quarterly Payment Date, plus interest on the
amount of such excess, to the extent permitted by law at the then current Class
A-2 Note Rate from such preceding Quarterly Payment Date to the current
Quarterly Payment Date.
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"Class A-2 Noteholders' Interest Distribution Amount" means, with
respect to any Quarterly Payment Date, the sum of (i) the amount of interest
accrued at the Class A-2 Note Rate for the related Quarterly Interest Period on
the aggregate principal amount of the Class A-2 Notes outstanding on the
immediately preceding Quarterly Payment Date (after giving effect to all
principal distributions to holders of Class A-2 Notes on such date) or, in the
case of the first Quarterly Payment Date, on the Closing Date and (ii) the Class
A-2 Noteholders' Interest Carryover Shortfall for such Quarterly Payment Date;
provided, however, that the Class A-2 Noteholders' Interest Distribution Amount
will not include any Class A-2 Noteholders' Interest Basis Carryover.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means May 21, 1999.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, and Treasury Regulations promulgated thereunder.
"Collateral" has the meaning specified in the Granting Clause of the
Indenture.
"Collateral Reinvestment Account" means the account designated as such,
established and maintained pursuant to Section 2(c) of the Administration
Agreement, which shall be an Eligible Deposit Account.
"Collection Account" means the account designated as such,
established and maintained pursuant to Section 2(c) of the Administration
Agreement, which shall be an Eligible Deposit Account.
"Collection Account Closing Date Deposit" means $13,251,936.27.
"Collection Period" means, with respect to the first Quarterly Payment
Date, the period beginning on the Cutoff Date and ending on September 30, 1999,
and with respect to each subsequent Quarterly Payment Date, the Collection
Period means the three calendar months immediately following the end of the
previous Collection Period.
"Commission" means the Securities and Exchange Commission.
"Company" means Secondary Market Company, Inc., a Delaware corporation.
"Consolidation Fee" means any Federal Origination Fee, Monthly Rebate
Fee or similar fee payable to the Department relating to the origination or
ownership of Consolidation Loans.
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"Consolidation Loan" means a Student Loan made pursuant to the Higher
Education Act to consolidate the Borrower's obligations under various federally
authorized student loan programs into a single loan, as supplemented by the
addition of any related Add-on Consolidation Loans.
"Corporate Trust Office" means (i) with respect to the Indenture
Trustee, the principal office of the Indenture Trustee at which at any
particular time its corporate trust business shall be administered, which office
at the Closing Date is located at 000 Xxxxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Corporate Trust Department (telephone: (000) 000-0000
facsimile: (000) 000-0000); or at such other address as the Indenture Trustee
may designate from time to time by notice to the Noteholders and the Seller, or
the principal corporate trust office of any successor Indenture Trustee (the
address of which the successor Indenture Trustee will notify the Noteholders and
the Seller) and (ii) with respect to the Eligible Lender Trustee, the principal
corporate trust office of the Eligible Lender Trustee located at Xxx Xxxxx
Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, Attention: Corporate Trust
Administration (telephone: (000) 000-0000; facsimile: (000) 000-0000); or at
such other address as the Eligible Lender Trustee may designate by notice to the
Seller or the principal corporate trust office of any successor Eligible Lender
Trustee (the address of which the successor Eligible Lender Trustee will notify
the Seller.
"Custodian" means Loan Services, in its capacity as custodian of the
Borrower Notes or any permitted successor Custodian.
"Cutoff Date" means April 19, 1999.
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Deferral" means the period defined by the Higher Education Act and the
policies of the related Guarantor during which a Borrower (in Repayment) is
entitled to postpone making payments upon the submission of appropriate
documentation.
"Deferral Loan" means a Student Loan during a period of Deferral.
"Definitive Notes" has the meaning specified in Section 2.10 of the
Indenture.
"Delaware Trust" has the meaning specified in Section 10.01 of the
Trust Agreement.
"Delayed Delivery Loan Funding Account" means the account designated as
such, established and maintained pursuant to Section 2(c) of the Administration
Agreement, which shall be an Eligible Deposit Account.
"Delayed Delivery Loan Funding Account Closing Date Deposit" means $0.
"Delayed Delivery Loans" None.
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"Delaware Trustee" has the meaning set forth in Section 10.01 of the
Trust Agreement.
"Deleted Student Loan" has the meaning specified in Section 3.02 of the
Loan Sale Agreement.
"Delinquency Percentage" means, as of any date of determination, the
percentage equivalent of a fraction the numerator of which is the aggregate
principal balances of the Financed Student Loans which are Repayment Loans and
which either (a) are over 210 days delinquent or (b) have had claims filed with
the Department for which payment is still awaited, and the denominator of which
is the aggregate principal balance of the Financed Student Loans which are
Repayment Loans.
"Delivery" when used with respect to Trust Account Property means:
(a) with respect to bankers' acceptances, commercial paper, negotiable
certificates of deposit and other obligations that constitute instruments and
are susceptible of physical delivery ("Physical Property"):
(i) transfer of possession thereof to the Indenture Trustee,
endorsed to, or registered in the name of, the Indenture Trustee or its
nominee or endorsed in blank;
(b) with respect to a certificated security:
(i) delivery thereof in bearer form to the Indenture Trustee;
or
(ii) delivery thereof in registered form to the Indenture
Trustee and
(A) the certificate is endorsed to the Indenture
Trustee or in blank by effective endorsement; or
(B) the certificate is registered in the name of the
Indenture Trustee, upon original issue or registration of
transfer by the issuer;
(c) with respect to an uncertificated security:
(i) the delivery of the uncertificated security to the
Indenture Trustee; or
(ii) the issuer has agreed that it will comply with
instructions originated by the Indenture Trustee without further
consent by the registered owner;
(d) with respect to any security issued by the U.S. Treasury, the
Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to Federal book-entry regulations:
(i) a Federal Reserve Bank by book entry credits the
book-entry security to
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the securities account (as defined in 31 CFR Part 357) of a participant
(as defined in 31 CFR Part 357) which is also a securities
intermediary; and
(ii) the participant indicates by book entry that the
book-entry security has been credited to the Indenture Trustee's
securities account;
(e) with respect to a security entitlement:
(i) the Indenture Trustee becomes the entitlement holder; or
(ii) the securities intermediary has agreed that it will
comply with entitlement orders originated by the Indenture Trustee
(f) without further consent by the entitlement holder; for the purpose
of clauses (b) and (c) hereof "delivery" means:
(i) with respect to a certificated security:
(A) the Indenture Trustee acquires possession
thereof;
(B) another person (other than a securities
intermediary) either acquires possession thereof on behalf of
the Indenture Trustee or, having previously acquired
possession thereof, acknowledges that it holds for the
Indenture Trustee; or
(C) a securities intermediary acting on behalf of the
Indenture Trustee acquires possession of thereof, only if the
certificate is in registered form and has been specially
endorsed to the Indenture Trustee by an effective endorsement;
(ii) with respect to an uncertificated security:
(A) the issuer registers the Indenture Trustee as the
registered owner, upon original issue or registration of
transfer; or
(B) another person (other than a securities
intermediary) either becomes the registered owner thereof on
behalf of the Indenture Trustee or, having previously become
the registered owner, acknowledges that it holds for the
Indenture Trustee;
(g) for purposes of this definition, except as otherwise indicated, the
following terms shall have the meaning assigned to each such term in the UCC:
(i) "certificated security"
(ii) "effective endorsement"
(iii) "entitlement holder"
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(iv) "instrument"
(v) "securities account"
(vi) "securities entitlement"
(vii) "securities intermediary"
(viii) "uncertificated security"
(h) in each case of Delivery contemplated herein, the Indenture Trustee
shall make appropriate notations on its records, and shall cause same to be made
of the records of its nominees, indicating that securities are held in trust
pursuant to and as provided in this Agreement.
"Department" means the United States Department of Education, an agency
of the Federal government.
"Depositor" means the Seller in its capacity as Depositor under the
Trust Agreement.
"Depository Agreement" means, the agreement with respect to the Senior
Notes attached to the Indenture as Exhibit B.
"Determination Date" means, with respect to any Monthly Payment Date,
the third Business Day preceding such Monthly Payment Date.
"Early Amortization Event" means any of the following events:
(i) an Event of Default occurring under the Indenture, a
Servicer Default occurring under the Servicing Agreement or an
Administrator Default occurring under the Administration Agreement;
(ii) an Insolvency Event occurring with respect to the Seller;
(iii) the Issuer becoming subject to registration as an
investment company under the Investment Company Act of 1940, as
amended;
(iv) as of the end of any Collection Period, the percentage
(by principal balance) of Financed Student Loans the Borrowers of which
use such loans to attend schools identified by the related Guarantor as
proprietary or vocational exceeds 30.00% of the Pool Balance;
12
(v) as of the end of any Collection Period, the percentage (by
principal balance) of Financed Student Loans which are not in repayment
and are not eligible for Interest Subsidy Payments exceed 50.00% of the
Pool Balance; or
(vi) the Excess Spread, with respect to each of any two
successive Quarterly Payment Dates, commencing with the Quarterly
Payment Date in January 2000, is less than 0.50%; or
(vii) the arithmetic average of the Delinquency Percentage as
of the end of each of two successive Collection Periods commencing with
the Quarterly Payment Date in January 2000 exceeds 20.00%.
"Educational Institution" means any institution of higher education
that participates in the guaranteed loan programs authorized by Title IV of the
Higher Education Act and which is deemed eligible by a Guarantor to participate
in such Guarantor's program.
"Eligible Deposit Account" means either (a) a segregated account with
an Eligible Institution or (b) a segregated trust account with the corporate
trust department of a depository institution organized under the laws of the
United States of America or any one of the States (or any domestic branch of a
foreign bank), having corporate trust powers and acting as trustee for funds
deposited in such account, so long as any of the securities of such depository
institution have a credit rating from each Rating Agency in one of its generic
rating categories which signifies investment grade.
"Eligible Institution" means a depository institution organized under
the laws of the United States of America or any one of the States (or any
domestic branch of a foreign bank), which (i) has (A) either a long-term senior
unsecured debt rating of "AAA" by Fitch or Standard & Poor's or a short-term
senior unsecured debt or certificate of deposit rating of "F-1+" by Fitch or
"A-1+" by Standard & Poor's and (B)(1) a long-term senior unsecured debt rating
of "A1" or better and (2) a short-term senior unsecured debt rating of "P-1" by
Xxxxx'x, or any other long-term, short-term or certificate of deposit rating
acceptable to the Rating Agencies and (ii) whose deposits are insured by the
FDIC. If so qualified, the Eligible Lender Trustee or the Indenture Trustee may
be considered an Eligible Institution.
"Eligible Investments" means book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct obligations of, and obligations fully guaranteed as
to timely payment by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit
of any depository institution or trust company incorporated under the
laws of the United States of America or any State (or any domestic
branch of a foreign bank) and subject to supervision and examination by
Federal or state banking or depository institution authorities
(including depository receipts issued by any such institution or trust
company as custodian with respect to any obligation referred to in
clause (a) above or portion of such obligation for
13
the benefit of the holders of such depository receipts); provided,
however, that at the time of the investment or contractual commitment
to invest therein (which shall be deemed to be made again each time
funds are reinvested following each Quarterly Payment Date), the
commercial paper or other short-term senior unsecured debt obligations
(other than such obligations the rating of which is based on the credit
of a Person other than such depository institution or trust company)
thereof shall have a credit rating from each of the Rating Agencies in
the highest investment category granted thereby;
(c) commercial paper having, at the time of the investment or
contractual commitment to invest therein, a rating from each of the
Rating Agencies in the highest investment category granted thereby;
(d) investments in money market funds having a rating from
each of the Rating Agencies in the highest investment category granted
thereby (including funds for which the Indenture Trustee, the Servicer
or the Eligible Lender Trustee or any of their respective Affiliates is
investment manager or advisor);
(e) bankers' acceptances issued by any depository institution
or trust company referred to in clause (b) above;
(f) repurchase obligations with respect to any security that
is a direct obligation of, or fully guaranteed by, the United States of
America or any agency or instrumentality thereof the obligations of
which are backed by the full faith and credit of the United States of
America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (b) above;
(g) any other investment permitted by each of the Rating
Agencies as set forth in a writing delivered to the Indenture Trustee.
Fitch shall be considered to be a "Rating Agency" for the purpose of
assessing the eligibility hereunder of any investment pursuant to clause (b),
(c), (d), (e), and (f) only if Fitch is providing a rating which can be used,
pursuant to the terms of the applicable clause, to assess such investment.
"Eligible Lender Trustee" means The First National Bank of Chicago, a
national banking association, not in its individual capacity but solely as
Eligible Lender Trustee under the Trust Agreement.
"Event of Default" has the meaning specified in Section 5.01 of the
Indenture.
"Excess Spread" means, with respect to any Quarterly Payment Date, the
percentage equivalent of a fraction the numerator of which is the product of (a)
four and (b) the difference between (x) the sum of (i) the Expected Interest
Collections for such Quarterly Payment Date and (ii) the Trust Swap Receipt
Amount, if any, for such Quarterly Payment Date and (y) the sum of (i) the
Servicing Fee for such Quarterly Payment Date and all prior unpaid Servicing
Fees, (ii) the Administration Fee for such Quarterly Payment Date and all prior
unpaid Administration Fees, (iii) the Senior Noteholders' Interest Distribution
Amount for such
14
Quarterly Payment Date and the Trust Swap Payment Amount, if any, for such
Quarterly Payment Date, and (iv) the Subordinate Noteholders' Interest
Distribution Amount for such Quarterly Payment Date, and the denominator of
which is the average of the amount of the Pool Balance calculated as of the
first and the last day of the related Collection Period.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Exchanged Serial Loan" means a Serial Loan owned by the Seller to be
exchanged into the Trust for an Exchanged Student Loan.
"Exchanged Student Loan" means a Financed Student Loan that (i) was
originated under the same loan program and is guaranteed by a Guarantor and
entitles the holder thereof to receive interest based on the same interest rate
index as the Serial Loan for which it is to be exchanged (an "Exchanged Serial
Loan") and (ii) will not, at any level of such interest rate index, have an
interest rate that is greater than that of the Exchanged Serial Loan.
"Executive Officer" means, with respect to any corporation, the Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President,
any Executive Vice President, any Senior Vice President, any Vice President, the
Secretary or the Treasurer of such corporation; and with respect to any
partnership, any general partner xxxxxxx.
"Expected Interest Collections" means, with respect to any Quarterly
Interest Period, the sum of (i) the amount of interest accrued, net of accrued
Monthly Rebate Fees and other amounts required by the Higher Education Act to be
paid to the Department, with respect to the Financed Student Loans for the
related Student Loan Rate Accrual Period (whether or not such interest is
actually paid), (ii) all Interest Subsidy Payments and Special Allowance
Payments estimated to have accrued for such Student Loan Rate Accrual Period
whether or not actually received (taking into account any expected deduction
therefrom of Federal Origination Fees) and (iii) Investment Earnings for such
Student Loan Rate Accrual Period.
"Expenses" means any and all liabilities, obligations, losses, damages,
taxes, claims, actions and suits, and any and all reasonable costs, expenses and
disbursements (including reasonable legal fees and expenses) of any kind and
nature whatsoever which may at any time be imposed on, incurred by, or asserted
against the Eligible Lender Trustee or any of its officers, directors or agents
in any way relating to or arising out of the Trust Agreement, the other Basic
Documents, the Trust Estate, the administration of the Trust Estate or the
action or inaction of the Eligible Lender Trustee under the Trust Agreement or
the other Basic Documents.
"FDIC" means the Federal Deposit Insurance Corporation.
"Federal Guarantor" means a state or private non-profit guarantor that
guarantees the payment of principal of and interest on any of the Financed
Student Loans, which agency is reinsured by the Department under the Higher
Education Act for between (x) 80% and 100% of the amount of default claims paid
by such Federal Guarantor for a given federal fiscal year for loans disbursed
prior to October 1, 1993, for 78% to 98% of default claims paid for loans
disbursed on or after October 1, 1993 but prior to October 1, 1998 any (y) 75%
to 95% of the
15
amount of default claims paid to by such Federal Guarantor for a given federal
fiscal year for loans disbursed on or after October 1, 1998 and for 100% of
death, disability, bankruptcy, closed school and false certification claims
paid.
"Federal Origination Fee" means, with respect to each Consolidation
Loan that is originated by the Eligible Lender Trustee on behalf of the Issuer
and each Add-on Consolidation Loan that is added to the principal balance of a
Consolidation Loan, the origination fee payable to the Department equal to 0.5%
of the initial principal balance of such Consolidation Loan or Add-on
Consolidation Loan.
"Financed Student Loans" means those Student Loans that, as of any date
of determination, have been conveyed to the Issuer, consisting of the Initial
Financed Student Loans as of the Closing Date and, thereafter, any Delayed
Delivery Loans, Serial Loans or New Loans conveyed to the Issuer from the
Seller, any Consolidation Loans originated by the Trust as provided in Section
6.07 of the Trust Agreement, any Consolidation Loans the principal balance of
which is increased by the principal balance of any related Add-on Consolidation
Loan as provided in Section 6.07 of the Trust Agreement and any Qualified
Substitute Student Loans conveyed to the Issuer as provided in Section 3.02 of
the Loan Sale Agreement.
"Fitch" means Fitch IBCA, Inc. or any successor thereto.
"Forbearance Loan" means a Student Loan during a period of forbearance
of loan collections pursuant to the Higher Education Act.
"Grace" means the initial period following reduction by the student
Borrower to less than the minimum course load required by the Higher Education
Act, during which the student Borrower is not required to make payments on the
principal amount of the Borrower Note(s).
"Grace Loan" means a Student Loan during a period of Grace.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create, and xxxxx x xxxx upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to the Indenture. A Grant of the Collateral or of any other agreement
or instrument shall include all rights, powers and options (but none of the
obligations) of the Granting party thereunder, including the immediate and
continuing right to claim for, collect, receive and give receipt for principal
and interest payments in respect of the Collateral and all other moneys payable
thereunder, to give and receive notices and other communications, to make
waivers or other agreements, to exercise all rights and options, to bring
Proceedings in the name of the Granting party or otherwise and generally to do
and receive anything that the Granting party is or may be entitled to do or
receive thereunder or with respect thereto.
"Guarantee Agreement" means each agreement to guarantee Student Loans
entered into by the Eligible Lender Trustee on behalf of the Trust with a
Guarantor.
16
"Guarantee Payment" means any payment made by a Guarantor pursuant to a
Guarantee Agreement in respect of a Student Loan.
"Guarantor" means the Initial Guarantors and any Additional Guarantors.
"Higher Education Act" means the Higher Education Act of 1965, as
amended, together with any rules, regulations and interpretations thereunder.
"Incentive Financed Student Loan" means a Financed Student Loan which
is subject to an Incentive Program other than the Seller's Choice Repay(TM)
Program.
"Incentive Interest Deposit" means, with respect to each Monthly
Collection Period and Collection Period and each Incentive Financed Student
Loan, the difference, if any, between the amount of interest or other amounts
which would have been payable with respect to such Incentive Financed Student
Loan during such Monthly Collection Period or Collection Period, as applicable,
had no Incentive Program been in effect with respect to such Incentive Financed
Student Loan and the amount of interest and other amounts which were payable
with respect to such Incentive Financed Student Loan during such Monthly
Collection Period or Collection Period, as applicable, after giving effect to
such Incentive Program.
"Incentive Program" means any program terminable at will by the
Administrator pursuant to which the Administrator may choose to reduce the
interest rate or offer any other benefit on a Student Loan, and shall initially
include the Seller's Choice Rates(TM) and Choice Repay(TM) Programs and the
Borrower Incentive Program, as such program may be modified from time to time.
"Indenture" means the Indenture dated as of April 19, 1999, between the
Issuer and the Indenture Trustee.
"Indenture Trust Estate" means all money, instruments, rights and other
property that are subject or intended to be subject to the lien and security
interest of the Indenture for the benefit of the Noteholders (including all
property and interests Granted to the Indenture Trustee), including all proceeds
thereof.
"Indenture Trustee" means HSBC Bank USA, a New York banking
corporation, not in its individual capacity but solely as Indenture Trustee
under the Indenture.
"Independent" means, when used with respect to any specified Person,
that the Person (a) is in fact independent of the Issuer, any other obligor upon
the Notes, the Seller and any Affiliate of any of the foregoing Persons, (b)
does not have any direct financial interest or any material indirect financial
interest in the Issuer, any such other obligor, the Seller or any Affiliate of
any of the foregoing Persons and (c) is not connected with the Issuer, any such
other obligor, the Seller or any Affiliate of any of the foregoing Persons as an
officer, employee, promoter, underwriter, trustee, partner, director or person
performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the
17
applicable requirements of Section 11.01 of the Indenture, made by an
Independent appraiser or other expert appointed by an Issuer Order and approved
by the Indenture Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of "Independent"
in the Indenture and that the signer is Independent within the meaning thereof.
"Initial Financed Student Loans" means those Financed Student Loans
conveyed to the Issuer on the Closing Date and listed on the Schedule of Student
Loans on such date.
"Initial Guarantors" means United Student Aid Funds, Inc., a Delaware
non-profit corporation, and its successors and certain other Federal Guarantors.
"Initial Pool Balance" means $731,889,541.31.
"In-School Loan" means a Student Loan during the period, excluding
periods of in-school Deferral, during which a student Borrower is enrolled at an
Educational Institution for at least the minimum course load required to
maintain such student Xxxxxxxx's eligibility to borrow under the education loan
programs administered by the Guarantor.
"Insolvency Event" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar official for
such Person or for any substantial part of its property, or ordering the
winding-up or liquidation of such Person's affairs, and such decree or order
shall remain unstayed and in effect for a period of sixty consecutive days; or
(b) the commencement by such Person of a voluntary case under any applicable
Federal or state bankruptcy, insolvency or other similar law now or hereafter in
effect, or the consent by such Person to the entry of an order for relief in an
involuntary case under any such law, or the consent by such Person to the
appointment of or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official for such Person or for any
substantial part of its property, or the making by such Person of any general
assignment for the benefit of creditors, or the failure by such Person generally
to pay its debts as such debts become due, or the taking of action by such
Person in furtherance of any of the foregoing.
"Interest Subsidy Payments" means payments, designated as such,
consisting of interest subsidies by the Department in respect of the Financed
Student Loans to the Eligible Lender Trustee on behalf of the Trust in
accordance with the Higher Education Act.
"Investment Earnings" means, with respect to any Monthly Payment Date,
the investment earnings (net of losses and investment expenses) on amounts on
deposit in the Trust Accounts to be deposited into the Collection Account on or
prior to such Monthly Payment Date or Quarterly Payment Date, as applicable,
pursuant to Section 2(c)(v) of the Administration Agreement.
18
"Issuer" means SMS Student Loan Trust 1999-B until a successor replaces
it and, thereafter, means the successor and, for purposes of any provision
contained in the Indenture and required by the TIA, each other obligor on the
Notes.
"Issuer Order" and "Issuer Request" means a written order or request
signed in the name of the Issuer by any one of its Authorized Officers and
delivered to the Indenture Trustee.
"LIBOR Determination Date" means, (a) with respect to any Quarterly
Interest Period other than the initial Quarterly Interest Period, the day that
is the second business day prior to the commencement of the LIBOR Reset Period
within such Quarterly Interest Period (or, in the case of the initial LIBOR
Reset Period, on the second business day prior to the Closing Date) and (b) with
respect to the initial Quarterly Interest Period, as determined pursuant to
clause (a) for the period from the Closing Date to but excluding July 28, 1999
and as determined on the second business day prior to July 28, 1999 for the
period from July 28, 1999 to but excluding October 28, 1999. For purposes of
this definition, a business day is any day in which banks in the City of London
and The City of New York are open for the transaction of international business.
"LIBOR Reset Period" means the three-month period commencing on the
twenty-eighth day (or, if any such day is not a Business Day, on the next
succeeding Business Day) of each January, April, July and October and ending on
the day immediately preceding the following LIBOR Reset Period; provided,
however, that the initial LIBOR Reset Period will commence on the Closing Date.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens and any other liens, if any, which
attach to the respective Student Loan by operation of law as a result of any act
or omission by the related Obligor.
"Liquidated Student Loan" means any defaulted Financed Student Loan
liquidated by the Servicer or which the Servicer has, after using all reasonable
efforts to realize upon the such Student Loan, determined to charge off.
"Liquidation Proceeds" means, with respect to any Liquidated Student
Loan, the moneys collected in respect thereof from whatever source, other than
Recoveries, net of the sum of any reasonable out-of-pocket expenses incurred by
the Servicer in connection with such liquidation and any amounts required by law
to be remitted to the Borrower on such Liquidated Student Loan.
"Loan Purchase Amount" means with respect to a Delayed Delivery Loan, a
New Loan or a Serial Loan to be purchased from the Seller by the Issuer, an
amount equal to the sum of (i) the Purchase Collateral Balance and (ii) the
Purchase Premium Amount; provided, however, that after the Revolving Period, the
Purchase Premium Amount payable in respect of the purchase of a Serial Loan will
be payable on the next succeeding Quarterly Payment Date from Reserve Account
Excess, if any, for such Quarterly Payment Date in accordance with Section
2.02(c) of the Loan Sale Agreement; and provided, further, that if the Parity
Date occurs before the end of the Revolving
19
Period, then, from the Parity Date to the end of the Revolving Period, the
Purchase Premium Amount payable in respect of the purchase of a Serial Loan or a
New Loan will be payable on the next succeeding Quarterly Payment Date from
Reserve Account Excess, if any, for such Quarterly Payment Date that is
available after all distributions from such excess having a higher priority than
payment of such Purchase Premium Amounts have been made in accordance with
Section 2(e) of the Administration Agreement; provided, however, that the Loan
Purchase Amount for any Exchanged Serial Loan shall not include any Purchase
Premium Amount.
"Loan Sale Agreement" means the Loan Sale Agreement dated as of April
19, 1999, among the Issuer, NBD, the Seller, and the Eligible Lender Trustee.
"Loan Services" means USA Group Loan Services, Inc., a Delaware
non-profit corporation.
"Minimum Purchase Price" means, as to any Quarterly Payment Date, an
amount equal to the greater of (i) the aggregate Purchase Amounts of the
Financed Student Loans as of the end of the Collection Period immediately
preceding such Quarterly Payment Date and (ii) an amount that would be
sufficient to (A) reduce the outstanding principal amount of the Notes then
outstanding on such Quarterly Payment Date to zero, (B) pay to the Noteholders
the Noteholders' Interest Distribution Amount payable on such Quarterly Payment
Date plus any Class A-1 Noteholders' Interest Basis Carryover, Class A-2
Noteholders' Interest Basis Carryover and any Subordinate Noteholders' Interest
Basis Carryover, (C) pay to the Swap Counterparty all amounts owed by the Trust
to the Swap Counterparty under the Swap Agreement, and (D) pay to the Servicer
and the Administrator all amounts owed to such entities under any of the Basic
Documents.
"Monthly Available Funds" means, with respect to each Monthly Payment
Date that is not a Quarterly Payment Date, the sum of the following amounts with
respect to the related Monthly Collection Period: (i) all collections received
by the Servicer on the Financed Student Loans during such Collection Period
(net, for the first Collection Period, of interest accrued prior to the Cutoff
Date that is not to be capitalized) and remitted to the Indenture Trustee
(including any Guarantee Payments received with respect to the Financed Student
Loans); (ii) any Interest Subsidy Payments and Special Allowance Payments
received by the Eligible Lender Trustee during such Monthly Collection Period
with respect to the Financed Student Loans; (iii) all Liquidation Proceeds from
any Financed Student Loans which became Liquidated Student Loans during such
Monthly Collection Period in accordance with the Servicer's customary servicing
procedures, and all Recoveries in respect of Liquidated Student Loans which were
written off in prior Monthly Collection Periods, in each case which have been
received by the Servicer and remitted to the Indenture Trustee; (iv) that
portion of the amounts released from the Collateral Reinvestment Account with
respect to Additional Fundings relating to those interest costs on the Financed
Student Loans which are or will be capitalized and any amounts transferred on a
Determination Date from the Collateral Reinvestment Account to the Collection
Account pursuant to Section 2(f)(i)(E) of the Administration Agreement; (v) the
aggregate Purchase Amounts received by the Indenture Trustee for those Financed
Student Loans repurchased by the Seller or purchased by the Servicer under an
obligation which arose during the related Monthly Collection Period; (vi)
Investment Earnings for such Monthly Payment Date;
20
and (vii) with respect to each Monthly Payment Date other than a Quarterly
Payment Date and other than an Monthly Payment Date immediately succeeding a
Quarterly Payment Date, the Monthly Available Funds remaining from the Monthly
Collection Period relating to the preceding Monthly Payment Date after giving
effect to the application of such Monthly Available Funds on such preceding
Monthly Payment Date; provided, however, that if with respect to any Monthly
Payment Date there would not be sufficient funds, after application of the
Monthly Available Funds (as defined above) and amounts available from the
Reserve Account, to pay any of the items specified in Section 2(d)(iv) of the
Administration Agreement, then the Monthly Available Funds for such Monthly
Payment Date will include, in addition to the Monthly Available Funds (as
defined above), amounts on deposit in the Collection Account on the
Determination Date relating to such Monthly Payment Date which would have
constituted Monthly Available Funds for the Monthly Payment Date succeeding such
Monthly Payment Date up to the amount necessary to pay such items, and the
Monthly Available Funds for such succeeding Monthly Payment Date will be
adjusted accordingly; and provided, further, that the Monthly Available Funds
will exclude (A) all payments and proceeds (including Liquidation Proceeds) of
any Financed Student Loan the Purchase Amount of which has been included in the
Monthly Available Funds for a prior Monthly Collection Period, (B) except as
expressly included in clause (iv) above, amounts released from the Collateral
Reinvestment Account, (C) any Monthly Rebate Fees paid during the related
Monthly Collection Period by or on behalf of the Trust and (D) any collections
in respect of principal on the Financed Student Loans applied during the related
Monthly Collection Period by the Eligible Lender Trustee on behalf of the Trust
prior to the end of the Revolving Period to make deposits to the Collateral
Reinvestment Account pursuant to Section 2(d)(i) of the Administration Agreement
and, after the end of the Revolving Period, any expenditure of the Net Principal
Cash Flow Amount used to fund the addition of any Add-on Consolidation Loans, to
purchase Serial Loans or to fund the acquisition of Exchanged Serial Loans
during such Monthly Collection Period.
"Monthly Collection Period" means, with respect to any Monthly Payment
Date that is not a Quarterly Payment Date, the calendar month immediately
preceding the month of such Monthly Payment Date.
"Monthly Payment Date" means the twenty-eighth day of each month (or,
if any such date is not a Business Day, on the next succeeding Business Day)
commencing May 1999.
"Monthly Rebate Fee" means, for each calendar month and with respect to
each Consolidation Loan that was originated on or after October 1, 1993 (except
for Consolidation Loans referred to in clause (B) below), the fee payable to the
Department equal to the product of (x) one-twelfth, (y) (A) with respect to all
of the Consolidation Loans (other than those, the applications of which have
been received during the period from October 1, 1998 through January 31, 1999),
1.05% or (B) with respect to Consolidation Loans, the applications of which have
been received during the period from October 1, 1998 through January 31, 1999,
0.62% and (z) the outstanding principal balance of such Consolidation Loan
(including any increases in the principal balance of a Consolidation Loan due to
the addition of the principal balance of a related Add-on Consolidation Loan)
plus accrued interest on such Consolidation Loan as of the last day of such
month.
21
"Moody's" means Xxxxx'x Investors Service, Inc.
"NBD" means NBD Bank, N.A., or any successor thereto and shall also be
deemed to include any eligible lender under the Higher Education Act that agrees
to be bound by the provisions of the Loan Sale Agreement pursuant to Section
4.02 thereof.
"Net Principal Cash Flow Amount" means, as of any date, the Principal
Cash Flow Amount (calculated for the Collection Period ending in the preceding
calendar month or, if no Collection Period ended in the preceding calendar
month, calculated for each preceding calendar month during the current
Collection Period) minus, after the Revolving Period, the Capitalized Interest
Amount for such Collection Period or for each such preceding calendar month, as
the case may be.
"Net Trust Swap Payment" means, with respect to any Quarterly Payment
Date, the difference, if negative, between the regularly scheduled amount
(without regard to any carryover amounts or Termination Payments) owed by the
Swap Counterparty to the Trust on a Quarterly Payment Date and the regularly
scheduled amount (without regard to any carryover amounts or Termination
Payments) owed by the Trust to the Swap Counterparty on such Quarterly Payment
Date pursuant to Section 2 of the Swap Agreement.
"Net Trust Swap Payment Carryover Shortfall" means, with respect to any
Quarterly Payment Date with respect to which amounts are still owing to the Swap
Counterparty in respect of the Swap Agreement, the excess of (i) the Trust Swap
Payment Amount on the preceding Quarterly Payment Date over (ii) the amount
actually received by the Swap Counterparty out of the Available Funds or the
Reserve Account on such preceding Quarterly Payment Date plus interest on such
excess from such preceding Quarterly Payment Date to the current Quarterly
Payment Date at the rate of Three-Month LIBOR for the related Quarterly Interest
Period.
"Net Trust Swap Receipt" means, with respect to any Quarterly Payment
Date, the difference, if positive, between the regularly scheduled amount
(without regard to any carryover amounts or Termination Payments) owed by the
Swap Counterparty to the Trust on a Quarterly Payment Date and the regularly
scheduled amount (without regard to any carryover amounts or Termination
Payments) owed by the Trust to the Swap Counterparty on such Quarterly Payment
Date pursuant to Section 2 of the Swap Agreement.
"Net Trust Swap Receipt Carryover Shortfall" means, with respect to any
Quarterly Payment Date with respect to which amounts are still owing to the
Trust in respect of the Swap Agreement, the excess of (i) the Trust Swap Receipt
Amount on the preceding Quarterly Payment Date over (ii) the amount actually
paid by the Swap Counterparty to the Trust on such preceding Quarterly Payment
Date plus interest on such excess from such preceding Quarterly Payment Date to
the current Quarterly Payment Date at the rate of Three-Month LIBOR for the
related Quarterly Interest Period.
"New Loan" means a Financed Student Loan which (i) is made by an
eligible lender under the Higher Education Act to a Borrower who is not a
Borrower under any Initial
22
Financed Student Loan, (ii) is made under a loan program which existed as of the
Closing Date, and (iii) is guaranteed by a Guarantor.
"91-Day Treasury Bills" means direct obligations of the United States
with a maturity of thirteen weeks.
"Note LIBOR Rate" means the Class A-1 Note LIBOR Rate, the Class A-2
Note LIBOR Rate or the Subordinate Note LIBOR Rate, as applicable.
"Note Owner" means, with respect to a Book-Entry Note, the Person who
is the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency Participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency).
"Note Rate" means any one of the Class A-1 Note Rate, the Class A-2
Note Rate or the Subordinate Note Rate, as the case may be.
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.04 of the Indenture.
"Noteholder" means the Person in whose name a Note is registered in the
Note Register.
"Noteholders' Interest Basis Carryover" means the Class A-1
Noteholders' Interest Basis Carryover, the Class A-2 Noteholders' Interest Basis
Carryover and the Subordinate Noteholders' Interest Basis Carryover.
"Noteholders' Interest Distribution Amount" means, with respect to any
Quarterly Payment Date, the sum of the Class A-1 Noteholders' Interest
Distribution Amount, the Class A-2 Noteholders' Interest Distribution Amount and
the Subordinate Noteholders' Interest Distribution Amount.
"Obligor" on a Student Loan means the borrower or co-borrowers of such
Student Loan and any other Person who owes payments in respect of such Student
Loan, including the Guarantor thereof and, with respect to any Interest Subsidy
Payment or Special Allowance Payment, if any, thereon, the Department.
"Officers' Certificate" means (i) in the case of the Issuer, a
certificate signed by any two Authorized Officers of the Issuer, under the
circumstances described in, and otherwise complying with, the applicable
requirements of Section 11.01 of the Indenture, and delivered to the Indenture
Trustee and (ii) in the case of the Seller, the Servicer or the Administrator, a
certificate signed by any two Authorized Officers of the Seller, the Servicer or
the Administrator, as appropriate.
"Opinion of Counsel" means (i) with respect to the Issuer, one or more
written opinions of counsel who may, except as otherwise expressly provided in
the Indenture, be
23
employees of or counsel to the Issuer and who shall be satisfactory to the
Indenture Trustee, and which opinion or opinions shall be addressed to the
Indenture Trustee as Indenture Trustee, shall comply with any applicable
requirements of Section 11.01 of the Indenture, and shall be in form and
substance satisfactory to the Indenture Trustee and (ii) with respect to the
Seller, the Administrator, the Servicer or a Federal Guarantor, one or more
written opinions of counsel who may be an employee of or counsel to the Seller,
the Administrator, the Servicer or such Federal Guarantor, which counsel shall
be acceptable to the Indenture Trustee, the Eligible Lender Trustee or the
Rating Agencies, as applicable.
"Outstanding" means, as of the date of determination, all Notes
theretofore authenticated and delivered under this Indenture except:
(i) Notes theretofore cancelled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the Indenture
Trustee or any Paying Agent in trust for the Noteholders thereof
(provided, however, that if such Notes are to be redeemed, notice of
such redemption has been duly given pursuant to the Indenture); and
(iii) Notes in exchange for or in lieu of other Notes which
have been authenticated and delivered pursuant to the Indenture unless
proof satisfactory to the Indenture Trustee is presented that any such
Notes are held by a bona fide purchaser;
provided, however, that in determining whether the Noteholders of the requisite
Outstanding amount of the Notes have given any request, demand, authorization,
direction, notice, consent or waiver hereunder or under any other Basic
Document, Notes owned by the Issuer, any other obligor upon the Notes, the
Seller or any Affiliate of any of the foregoing Persons shall be disregarded and
deemed not to be Outstanding, except that, in determining whether the Indenture
Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Notes that a
Responsible Officer of the Indenture Trustee either actually knows to be so
owned or has received written notice thereof shall be so disregarded. Notes so
owned that have been pledged in good faith may be regarded as Outstanding if the
pledgee establishes to the satisfaction of the Indenture Trustee the pledgee's
right so to act with respect to such Notes and that the pledgee is not the
Issuer, any other obligor upon the Notes, the Seller or any Affiliate of any of
the foregoing Persons.
"Outstanding Amount" means the aggregate principal amount of all Notes
Outstanding at the date of determination.
"Parity Date" means the first Quarterly Payment Date on which the
aggregate principal amount of the Notes, after giving effect to all
distributions on such date, is no longer in excess of the Pool Balance as of the
last day of the related Collection Period.
24
"Paying Agent" means the Indenture Trustee or any other Person that
meets the eligibility standards for the Indenture Trustee specified in Section
6.11 of the Indenture and is authorized by the Issuer to make the payments to
and distributions from the Collection Account and payments of principal of and
interest and any other amounts owing on the Notes on behalf of the Issuer.
"Person" means any individual, corporation, estate, partnership, joint
venture, limited liability company, limited liability partnership, association,
joint stock company, trust (including any beneficiary thereof), unincorporated
organization or government or any agency or political subdivision thereof.
"Physical Property" has the meaning assigned to such term as the
definition of "Delivery" above.
"PLUS Loan" means a Student Loan designated as such that is made under
the Parent Loans to Undergraduate Students Program pursuant to the Higher
Education Act.
"Pool Balance" means, as of the close of business on the last day of
any Collection Period, the aggregate principal balances of the Financed Student
Loans as of such day (including accrued interest thereon for the immediately
preceding Collection Period to the extent such interest will be capitalized upon
commencement of repayment, excluding any Purchased Student Loans and Liquidated
Student Loans).
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.05 of the Indenture and in lieu of a
mutilated, lost, destroyed or stolen Note shall be deemed to evidence the same
debt is the mutilated, lost, destroyed or stolen Note.
"Principal Cash Flow Amount" means, with respect to any Quarterly
Payment Date, the sum of the following amounts with respect to the related
Collection Period, or with respect to any other date of determination, the sum
of the following amounts with respect to the period specified: (i) that portion
of all collections received by the Servicer and remitted to the Indenture
Trustee on the Financed Student Loans that is allocable to principal (including
the portion of any Guarantee Payments received that is allocable to principal of
the Financed Student Loans); (ii) all Liquidation Proceeds attributable to the
principal amount of Financed Student Loans which became Liquidated Student Loans
during such Collection Period, or such other specified period, in accordance
with the Servicer's customary servicing procedures and have been received by the
Servicer during such Collection Period and remitted to the Indenture Trustee,
together with all Realized Losses on such Financed Student Loans; (iii) to the
extent attributable to principal, the Purchase Amount received by the Indenture
Trustee with respect to each Financed Student Loan repurchased by the Seller or
purchased by the Servicer as a result of a breach of a representation, warranty
or covenant which arose during the related Collection Period or such other
specified period; and (iv) the Principal Distribution Adjustment; provided,
however, that the Principal Distribution Amount will exclude all payments and
proceeds (including Liquidation Proceeds) of any Financed Student Loans the
Purchase Amount of which
25
has been included in Available Funds for a prior Collection Period and during
the Revolving Period will exclude the amount of collections in respect of
principal on the Financed Student Loans during such Collection Period that were
deposited in the Collateral Reinvestment Account during such Collection Period.
"Principal Distribution Adjustment" means, with respect to any
Quarterly Payment Date, the amount of the Available Funds on such Quarterly
Payment Date to be used to make additional principal distributions to
Noteholders to account for (i) the amount of any insignificant balance remaining
outstanding as of such Quarterly Payment Date on a Financed Student Loan after
receipt of a final payment from a Borrower or a Guarantor, when such
insignificant balances are waived in the ordinary course of business by the
Servicer at the direction of the Administrator in accordance with the Servicing
Agreement or (ii) the amount of principal collections erroneously treated as
interest collections including, without limitation, by reason of the failure by
a Borrower to capitalize interest that had been expected to be capitalized;
provided, however, that the Principal Distribution Adjustment for any Quarterly
Payment Date shall not exceed the lesser of (x) $100,000 and (y) the amount of
any Reserve Account Excess after giving effect to all distributions to be made
therefrom on such Quarterly Payment Date other than distributions to the Company
out of such excess.
"Principal Distribution Amount" means, with respect to any Quarterly
Payment Date occurring after the Revolving Period, the Net Principal Cash Flow
Amount for such Quarterly Payment Date minus the sum of (i) any funds remitted
to the Seller during the preceding Collection Period for the Purchase Collateral
Balance of Serial Loans and (ii) any funds which are applied during the
preceding Collection Period to fund the addition of the principal balance of any
Add-on Consolidation Loan to the principal balance of a related Consolidation
Loan.
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
"Purchase Amount" means, with respect to a Financed Student Loan other
than a Serial Loan to be purchased from the Issuer, the amount required, as of
the close of business on the last day of a Monthly Interest Period or Quarterly
Interest Period, as applicable, to prepay in full the respective Student Loan
under the terms thereof including all accrued borrower interest thereon;
provided, however, that the Purchase Amount for a Financed Student Loan, which
is being repurchased by the Seller as a result of a breach of the representation
and warranty provided for in the last sentence of the first paragraph of Exhibit
C to the Loan Sale Agreement will be calculated without regard to any amount
which the Seller has advanced with respect to such loan and which was not
reflected by the principal balance of such loan as of the Cutoff Date (or the
applicable Subsequent Cutoff Date, as the case may be) after the loan was sold
into the Trust.
"Purchase Collateral Balance" means with respect to a Delayed Delivery
Loan, a New Loan or a Serial Loan to be purchased by the Issuer, an amount
equal, as of the related Subsequent Cut-off Date, to the principal balance of
such loan plus accrued borrower interest
26
thereon if and to the extent that such interest is not then payable and will,
pursuant to the terms of such loan, be capitalized and added to the principal
balance of such loan.
"Purchase Premium Amount" means with respect to a Delayed Delivery
Loan, a New Loan or a Serial Loan (other than an Exchanged Serial Loan) to be
purchased by the Issuer, an additional amount to the Purchase Collateral Balance
equal to the sum of (i) an amount not to exceed 1.5% of the related Purchase
Collateral Balance and (ii) accrued borrower interest on the principal balance
owed by the applicable Borrower thereon to the extent that such interest will
not be capitalized.
"Purchased Student Loan" means a Financed Student Loan purchased as of
the close of business on the last day of a Monthly Collection Period or
Collection Period, as applicable, by the Servicer pursuant to Section 3.05 of
the Servicing Agreement or repurchased by the Seller pursuant to Section 3.02 of
the Loan Sale Agreement.
"Qualified Substitute Student Loan" means a Student Loan that (i) was
originated under the same loan program and is guaranteed by a Guarantor and
entitles the holder thereof to receive interest based on the same interest rate
index as the related Deleted Student Loan for which it is to be substituted, and
(ii) will not, at any level of such interest rate index, have an interest rate
that is less than that of such Deleted Student Loan.
"Quarterly Payment Date" means the Monthly Payment Date occurring in
each January, April, July and October, commencing with the Monthly Payment Date
occurring in July 1999.
"Quarterly Interest Period" means, with respect to a Quarterly Payment
Date, the period from and including the Quarterly Payment Date immediately
preceding such Quarterly Payment Date (or in the case of the first Quarterly
Payment Date, the Closing Date) to but excluding the such Quarterly Payment
Date. In the case of the initial Quarterly Interest Period, interest will accrue
for the period from the Closing Date to but excluding July 28, 1999 (computed on
the basis of the actual number of days elapsed in such Quarterly Interest Period
over a year of 360 days) based on Three-Month LIBOR as determined on the initial
LIBOR Determination Date and interest will accrue for the period from July 28,
1999 to but excluding October 28, 1999 (computed on the basis of the actual
number of days elapsed in such Quarterly Interest Period over a year of 360
days) based on Three-Month LIBOR as determined on the LIBOR Determination Date
in July 1999.
"Rating Agency" means Xxxxx'x and Fitch. If no such organization or
successor is any longer in existence, "Rating Agency" shall be a nationally
recognized statistical rating organization or other comparable Person designated
by the Seller, notice of which designation shall be given to the Indenture
Trustee, the Eligible Lender Trustee and the Servicer.
"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given ten days' prior notice thereof and that each
of the Rating Agencies shall have notified the Seller, the Servicer, the
Eligible Lender Trustee and the Indenture Trustee
27
in writing that such action will not result in and of itself in a reduction or
withdrawal of the then current rating of the Class A-1 Notes, the Class A-2
Notes or the Subordinate Notes.
"Realized Losses" means the excess of the aggregate principal balance
of any Liquidated Student Loan plus accrued but unpaid interest thereon over
Liquidation Proceeds to the extent allocable to principal.
"Record Date" means, with respect to a Quarterly Payment Date or a
Redemption Date, the close of business on the twenty-seventh day of the calendar
month in which such Quarterly Payment Date or Redemption Date occurs (whether or
not such date is a Business Day).
"Recoveries" means, with respect to any Liquidated Student Loan, all
monies in respect thereof, from whatever source, that have been received by the
Servicer and remitted to the Indenture Trustee during any Monthly Collection
Period or Collection Period, as applicable, following the Monthly Collection
Period or Collection Period, as applicable, in which such Financed Student Loan
became a Liquidated Student Loan, net of the sum of all reasonable amounts
expended by the Servicer for the account of any Obligor to the extent not
previously reimbursed from Liquidation Proceeds or otherwise and any amounts
required by law to be remitted to the Obligor.
"Redemption Date" means in the case of a payment to the Noteholders
pursuant to Section 10.01 of the Indenture, the Quarterly Payment Date specified
by the Administrator or the Issuer pursuant to Section 10.01 (b) or (c) of the
Indenture.
"Redemption Price" means, in the case of a payment made to the
Noteholders pursuant to Section 10.01 (b) or (c) of the Indenture, the
Outstanding Amount of the Notes and all accrued and unpaid interest thereon
including any Noteholders' Interest Basis Carryover.
"Reference Banks" means four major banks in the London interbank market
selected by the Administrator.
"Repayment" means the period of time during which a Borrower is
required to make installment payments to repay the aggregate principal amount
plus accrued interest of all amounts borrowed by virtue of the Borrower Note(s)
executed by such Xxxxxxxx.
"Repayment Loan" means a Student Loan during a period of Repayment.
"Reserve Account" means the account designated as such, established and
maintained pursuant to Section 2(c) of the Administration Agreement, which shall
be an Eligible Deposit Account.
"Reserve Account Excess" has the meaning specified in Section 2(e)(ii)
of the Administration Agreement.
"Reserve Account Initial Deposit" means $1,912,500.
28
"Responsible Officer" means, with respect to the Indenture Trustee, any
officer within the Corporate Trust Office of the Indenture Trustee, including
any vice president, assistant vice president, assistant treasurer, assistant
secretary, or any other officer of the Indenture Trustee customarily performing
functions similar to those performed by any of the above designated officers,
with direct responsibility for the administration of the Indenture and the other
Basic Documents on behalf of the Indenture Trustee and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
"Revolving Period" means the period from the Closing Date until the
first to occur of (i) an Early Amortization Event or (ii) the last day of the
Collection Period preceding the April 2001 Quarterly Payment Date.
"Schedule of Student Loans" means the listing of the Financed Student
Loans set forth in Schedule A to the Loan Sale Agreement and to the Indenture
(which Schedule may be in the form of microfiche) as the same may be amended
from time to time.
"Secretary" means the Secretary of the Department, or any predecessor
or successor to the functions thereof under the Higher Education Act.
"Securities Act" means the federal Securities Act of 1933, as amended.
"Seller" means SMS, in its capacity as seller of the Financed Student
Loans.
"Senior Noteholder" means the Noteholder of a Senior Note.
"Senior Notes" means, collectively, the Class A-1 Notes and the Class
A-2 Notes.
"Senior Noteholders' Distribution Amount" means, with respect to any
Quarterly Payment Date, the sum of the Class A-1 Noteholders' Interest
Distribution Amount, the Class A-2 Noteholders' Interest Distribution Amount and
the Senior Noteholders' Principal Distribution Amount for such Quarterly Payment
Date.
"Senior Noteholders' Interest Basis Carryover" means, with respect to
each Quarterly Payment Date, the Class A-1 Noteholders' Interest Basis Carryover
and the Class A-2 Noteholders' Interest Basis Carryover for such Quarterly
Payment Date.
"Senior Noteholders' Interest Distribution Amount" means, with respect
to any Quarterly Payment Date, the sum of (i) the Class A-1 Noteholders'
Interest Distribution Amount and (ii) the Class A-2 Noteholders' Interest
Distribution Amount, each for such Quarterly Payment Date; provided, however,
that the Senior Noteholders' Interest Distribution Amount will not include any
Senior Noteholders' Interest Basis Carryover.
"Senior Noteholders' Principal Carryover Shortfall" means, as of the
close of any Quarterly Payment Date, the excess of (i) the Senior Noteholders'
Principal Distribution Amount on such Quarterly Payment Date over (ii) the
amount of principal actually distributed to the Senior Noteholders on such
Quarterly Payment Date.
29
"Senior Noteholders' Principal Distribution Amount" means, with respect
to any Quarterly Payment Date (if the Revolving Period has terminated on or
prior to the end of the related Collection Period with respect to such Quarterly
Payment Date), the Principal Distribution Amount for such Quarterly Payment Date
plus the Senior Noteholders' Principal Carryover Shortfall as of the close of
the preceding Quarterly Payment Date; provided, however, that the Senior
Noteholders' Principal Distribution Amount will not exceed the outstanding
aggregate principal balance of the Senior Notes. In addition, (i) on the Class
A-1 Note Final Maturity Date, the principal required to be distributed to Class
A-1 Noteholders will include the amount required to reduce the outstanding
principal balance of the Class A-1 Notes to zero and (ii) on the Class A-2 Note
Final Maturity Date, the principal required to be distributed to Class A-2
Noteholders will include the amount required to reduce the outstanding principal
balance of the Class A-2 Notes to zero.
"Serial Loan" means a Financed Student Loan which (i) is made by an
eligible lender under the Higher Education Act to a Borrower who is also a
Borrower under at least one outstanding Financed Student Loan and is acquired by
the Seller, (ii) is made under the same federal loan program as such Financed
Student Loan and (iii) has the same Guarantor as such Financed Student Loan.
"Servicer" means Loan Services, in its capacity as servicer of the
Financed Student Loans or any permitted Successor Servicer.
"Servicer Default" means an event specified in Section 6.01 of the
Servicing Agreement.
"Servicer Liability Limit" has the meaning specified in Section 3.05(a)
of the Servicing Agreement.
"Servicer Liability Period" has the meaning specified in Section
3.05(a) of the Servicing Agreement.
"Servicing Agreement" means the Servicing Agreement dated as of April
19, 1999, among the Issuer, the Servicer, the Seller and the Eligible Lender
Trustee.
"Servicing Fee" has the meaning specified in Section 3.06 of the
Servicing Agreement.
"Servicing Fee Shortfall" has the meaning specified in Section 3.06 of
the Servicing Agreement.
"SLS Loan" means a Student Loan designated as such that is made under
the Supplemental Loans for Students Program pursuant to the Higher Education
Act.
"SMS" means USA Group Secondary Market Services, Inc., a Delaware
corporation.
30
"Special Allowance Payments" means payments, designated as such,
consisting of effective interest subsidies by the Department in respect of the
Financed Student Loans to the Eligible Lender Trustee on behalf of the Trust in
accordance with the Higher Education Act.
"Special Determination Date" None.
"Specified Reserve Account Balance" with respect to any Quarterly
Payment Date means the greater of: (a) 0.25% of the principal balance of the
Notes after taking into account the effect of distributions on such Quarterly
Payment Date and (b) $956,250; provided, however, that in no event shall the
Specified Reserve Account Balance exceed the sum of the outstanding principal
balance of the Notes.
"Xxxxxxxx Loan" means a Student Loan designated as such that is made
under the Xxxxxx X. Xxxxxxxx Student Loan Program in accordance with the Higher
Education Act.
"State" means any one of the 50 States of the United States of America,
the trust territories of the United States, or the District of Columbia.
"Student Loan" means an agreement to repay a disbursement of money to
or on behalf of an eligible student, evidenced by a Borrower Note and guaranteed
in accordance with the policies and procedures of the Guarantor.
"Student Loan Files" means the documents relating to the Financed
Student Loans specified in Section 2.01 of the Servicing Agreement.
"Student Loan Rate Accrual Period" means, with respect to any Quarterly
Interest Date, the Collection Period preceding such Quarterly Payment Date.
"Subordinate Note" means a Subordinate Floating Rate Asset-Backed Note
issued pursuant to the Indenture, substantially in the form of Exhibit A-4
thereto.
"Subordinate Note Final Maturity Date" means the October 2036 Quarterly
Payment Date.
"Subordinate Note LIBOR Rate" means, with respect to any Quarterly
Interest Period, Three-Month LIBOR for the related LIBOR Reset Period plus
0.48%; provided that for the October 1999 Quarterly Payment Date, the
Subordinate Note LIBOR Rate shall equal (i) the weighted average of (x)
Three-Month LIBOR for the LIBOR Reset Period commencing on the Closing Date and
(y) Three-Month LIBOR for the LIBOR Reset Period commencing on July 28, 1999
plus (ii) 0.48%.
"Subordinate Note Pool Factor" as of the close of business on a
Quarterly Payment Date means a seven-digit decimal figure equal to the
outstanding principal balance of the Subordinate Notes divided by the original
outstanding principal balance of the Subordinate Notes. The Subordinate Note
Pool Factor will be 1.0000000 as of the Closing Date; thereafter, the
Subordinate Note Pool Factor will decline to reflect reductions in the
outstanding principal balance of the Subordinate Notes.
31
"Subordinate Note Rate" means, with respect to any Quarterly Payment
Date and the related Quarterly Interest Period, the interest rate per annum
(computed on the basis of the actual number of days in such Quarterly Interest
Period over a year of 360 days) equal to the lesser of (i) the Subordinate Note
LIBOR Rate for such Quarterly Interest Period and (ii) the Adjusted Student Loan
Rate for such Quarterly Interest Period; provided, however, that,
notwithstanding the foregoing, the Subordinate Note Rate for the first Quarterly
Interest Period shall be equal to the Subordinate Note LIBOR Rate for such
Quarterly Interest Period.
"Subordinate Noteholder" means the Noteholder of a Subordinate Note.
"Subordinate Noteholders' Distribution Amount" means, with respect to
any Quarterly Payment Date, the Subordinate Noteholders' Interest Distribution
Amount for such Quarterly Payment Date plus, with respect to any Quarterly
Payment Date on and after which the Senior Notes have been paid in full, the
Subordinate Noteholders' Principal Distribution Amount for such Quarterly
Payment Date.
"Subordinate Noteholders' Interest Basis Carryover" means, with respect
to each Quarterly Payment Date commencing in October 1999, the amount equal to
the excess, if any, of (a) the amount of interest on the Subordinate Notes that
would have accrued in respect of the related Quarterly Interest Period had
interest been calculated based on the Subordinate Note LIBOR Rate over (b) the
amount of interest on the Subordinate Notes actually accrued in respect of such
Quarterly Interest Period based on the Adjusted Student Loan Rate for such
Quarterly Interest Period, together with the unpaid portion of any such excess
from prior Quarterly Payment Dates (and interest accrued thereon, to the extent
permitted by law, calculated based on the Subordinate Note LIBOR Rate);
provided, however, that, on the Subordinate Note Final Maturity Date, the
Subordinate Noteholders' Interest Basis Carryover will be equal to the lesser of
(i) the Subordinate Noteholders' Interest Basis Carryover on such date
determined as described above and (ii) the amount of funds, if any, required and
available to be distributed to Subordinate Noteholders on such date pursuant to
Sections 2(e)(ii)(b)(iv) of the Administration Agreement and Section 8.02 the
Indenture.
"Subordinate Noteholders' Interest Carryover Shortfall" means, with
respect to any Quarterly Payment Date, the excess of (i) the Subordinate
Noteholders' Interest Distribution Amount on the preceding Quarterly Payment
Date over (ii) the amount of interest actually distributed to the Subordinate
Noteholders on such preceding Quarterly Payment Date, plus interest on the
amount of such excess, to the extent permitted by law, at the then current
Subordinate Note Rate from such preceding Quarterly Payment Date to the current
Quarterly Payment Date.
"Subordinate Noteholders' Interest Distribution Amount" means, with
respect to any Quarterly Payment Date, the sum of (i) the amount of interest
accrued at the Subordinate Note Rate for the related Quarterly Interest Period
on the aggregate principal amount of the Subordinate Notes outstanding on the
immediately preceding Quarterly Payment Date (after giving effect to all
principal distributions to Subordinate Noteholders on such Quarterly Payment
Date) or, in the case of the first Quarterly Payment Date, on the Closing Date,
and (ii) the Subordinate Noteholders' Interest Carryover Shortfall for such
Quarterly Payment Date;
32
provided, however, that the Subordinate Noteholders' Interest Distribution
Amount will not include any Subordinate Noteholders' Interest Basis Carryover.
"Subordinate Noteholders' Principal Carryover Shortfall" means, as of
the close of any Quarterly Payment Date on or after which the Senior Notes have
been paid in full, the excess of (i) the Subordinate Noteholders' Principal
Distribution Amount on such Quarterly Payment Date over (ii) the amount of
principal actually distributed to the Subordinate Noteholders on such Quarterly
Payment Date.
"Subordinate Noteholders' Principal Distribution Amount" means, with
respect to each Quarterly Payment Date on and after which the aggregate
principal amount of the Senior Notes has been paid in full, the sum of (a) the
Principal Distribution Amount for such Quarterly Payment Date (or, in the case
of the Quarterly Payment Date on which the aggregate principal balance of the
Senior Notes is paid in full, any remaining Principal Distribution Amount not
otherwise distributed to the Senior Noteholders on such Quarterly Payment Date)
and (b) the Subordinate Noteholders' Principal Carryover Shortfall as of the
close of the preceding Quarterly Payment Date; provided, however, that the
Subordinate Noteholders' Principal Distribution Amount will in no event exceed
the aggregate principal amount of the Subordinate Notes outstanding on such
date. In addition, on the Subordinate Note Final Maturity Date, the principal
required to be distributed to the Subordinate Noteholders will include the
amount required to reduce the outstanding principal amount of the Subordinate
Notes to zero.
"Subsequent Cutoff Date" means (i) for the Delayed Delivery Loans, none
and (ii) for New Loans or Serial Loans, the date as of which any New Loan or
Serial Loan is transferred to the Issuer and the date on and after which all
distributions on such loan are property of the Issuer or the date of the related
Assignment in the case of any Qualified Substitute Student Loan.
"Substitution Adjustment Amount" has the meaning specified in Section
3.02 of the Loan Sale Agreement.
"Successor Servicer" has the meaning specified in Section 3.07(e) of
the Indenture.
"Swap Agreement" means the interest rate swap agreement, dated as of
May 12, 1999 (Swap Transaction Ref. No. 99 DP0018), entered into by the Trust
with the Swap Counterparty documented according to a 1992 ISDA Master Agreement
(Multicurrency-Cross Border) and any replacement Swap Agreement.
"Swap Counterparty" means Xxxxxxx Xxxxx Derivative Products AG, a
subsidiary of Xxxxxxx Xxxxx & Co., and any replacement swap counterparty
appointed in accordance with the terms of the Swap Agreement.
"Tax Characterization Amendment" has the meaning specified in Section
5.04 of the Trust Agreement.
"T-Bill Rate" means, on any day, the weighted average per annum
discount rate (expressed on a bond equivalent basis and applied on a daily
basis) for 91-day Treasury Bills sold
33
at the most recent 91-day Treasury Bill auction prior to such date as reported
by the U.S. Treasury Department. In the event that the results of the auctions
of 91-day Treasury Bills cease to be published or reported as provided above, or
that no such auction is held in a particular week, then the "T-Bill Rate" in
effect as a result of the last such publication or report shall remain in effect
until such time, if any, as the results of auctions of 91-day Treasury shall
again be so published or reported or such auction is held, as the case may be.
The T-Bill Rate shall be subject to a Lock-In Period (as defined in the Swap
Agreement) of six Business Days.
"Telerate Page 3750" means the display page so designated on the Dow
Xxxxx Telerate Service (or such other page as may replace that page on any
service for the purpose of displaying comparable rates or prices).
"Termination Event" has the meaning specified in the Swap Agreement.
"Termination Payment" has the meaning specified in the Swap Agreement.
"Three-Month LIBOR" means, with respect to any LIBOR Reset Period, the
London interbank offered rate for deposits in U.S. dollars having a maturity of
three months commencing on the related LIBOR Determination Date (the "Index
Maturity") which appears on Telerate Page 3750 as of 11:00 a.m. London time, on
such LIBOR Determination Date. If such rate does not appear on Telerate Page
3750, the rate for that day will be determined on the basis of the rates at
which deposits in U.S. dollars, having the Index Maturity and in a principal
amount of not less than U.S. $1,000,000, are offered at approximately 11:00
a.m., London time, on such LIBOR Determination Date to prime banks in the London
interbank market by the Reference Banks. The Administrator will request the
principal London office of each of such Reference Banks to provide a quotation
of its rate. If at least two such quotations are provided, the rate for that day
will be the arithmetic mean of the quotations. If fewer than two quotations are
provided, the rate for that day will be the arithmetic mean of the rates quoted
by major banks in The City of New York, selected by the Administrator, at
approximately 11:00 a.m., New York time, on such LIBOR Determination Date, for
loans in U.S. dollars to leading European banks having the Index Maturity and in
a principal amount equal to an amount of not less than U.S. $1,000,000;
provided, however, that if the banks selected as aforesaid are not quoting as
mentioned in this sentence, Three-Month LIBOR in effect for the applicable LIBOR
Reset Period will be the Three-Month LIBOR in effect for the previous LIBOR
Reset Period.
"Transfer" means any direct or indirect transfer, sale, pledge,
hypothecation or other form of assignment of any ownership interest in a Note
or, with respect Section 3.01 of the Trust Agreement, in the Trust.
"Transfer Agreement" has the meaning provided in Section 2.03 of the
Loan Sale Agreement.
"Transfer Date" means the day fixed for the transfer of any New Loans,
Serial Loans or Delayed Delivery Loans by the Seller to the Issuer pursuant to
Section 2.02(a) of the Loan Sale Agreement.
34
"Treasury Regulations" means regulations, including proposed or
temporary regulations, promulgated under the Code. References in any document or
instrument to specific provisions of proposed or temporary regulations shall
include analogous provisions of final Treasury Regulations or other successor
Treasury Regulations.
"Trust" means the Issuer, established pursuant to the Trust Agreement.
"Trust Account Property" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), including the Reserve Account Initial Deposit, the
Delayed Delivery Loan Funding Account Closing Date Deposit and the Collection
Account Closing Date Deposit and all proceeds of the foregoing.
"Trust Accounts" has the meaning specified in Section 2(c) of the
Administration Agreement.
"Trust Agreement" means the Trust Agreement dated as of April 19, 1999,
among the Depositor, the Company and the Eligible Lender Trustee.
"Trust Estate" means all right, title and interest of the Trust (or the
Eligible Lender Trustee on behalf of the Trust) in and to the property and
rights assigned to the Trust pursuant to Article II of the Loan Sale Agreement
all funds on deposit from time to time in the Trust Accounts and all other
property of the Trust from time to time, including any rights of the Eligible
Lender Trustee and the Trust pursuant to the Loan Sale Agreement, the Servicing
Agreement and the Administration Agreement.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939 as
in force on the date hereof, unless otherwise specifically provided.
"Trust Swap Payment Amount" means, with respect to any Quarterly
Payment Date, the sum of (i) if the Swap Agreement is still in effect, the Net
Trust Swap Payment for such Quarterly Payment Date and (ii) the Net Trust Swap
Payment Carryover Shortfall for such Quarterly Payment Date; provided, however,
that Termination Payments (other than in respect of clauses (i) and (ii) above)
shall not be deemed to be part of the Trust Swap Payment Amount.
"Trust Swap Receipt Amount" means, with respect to any Quarterly
Payment Date, the sum of (i) if the Swap Agreement is still in effect, the Net
Trust Swap Receipt for such Quarterly Payment Date and (ii) the Net Trust Swap
Receipt Carryover Shortfall for such Quarterly Payment Date.
"UCC" means, unless the context otherwise requires, the Uniform
Commercial Code, as in effect in the relevant jurisdiction, as amended from time
to time.
"United States Person" means a citizen or resident of the United
States, a corporation, partnership or other entity created or organized in, or
under the laws of, the United States or any political subdivision thereof, or an
estate whose income is subject to United States federal income tax regardless of
its source, or a trust if a court within the United States is able to
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exercise primary supervision over the administration of the trust and one or
more United States fiduciaries have the authority to control all substantial
decisions of the trust.
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