EXHIBIT 4.2
Execution Copy
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TRUST AGREEMENT
among
USA GROUP SECONDARY MARKET SERVICES, INC.,
as depositor,
SECONDARY MARKET COMPANY, INC.
and
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but solely
as Eligible Lender Trustee
Dated as of February 1, 1999
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TABLE OF CONTENTS
Page
ARTICLE I
Definitions and Usage
ARTICLE II
Organization
SECTION 2.01. Name............................................................1
SECTION 2.02. Office..........................................................1
SECTION 2.03. Purposes and Powers.............................................1
SECTION 2.04. Appointment of Eligible Lender Trustee..........................2
SECTION 2.05. Initial Capital Contribution of Trust Estate....................2
SECTION 2.06. Declaration of Trust............................................3
SECTION 2.07. [Reserved.].....................................................3
SECTION 2.08. Title to Trust Property.........................................3
SECTION 2.09. Representations and Warranties of the Seller and the Company....3
SECTION 2.10. Tax Treatment...................................................4
SECTION 2.11. Liability of Noteholders........................................5
ARTICLE III
Ownership
SECTION 3.01. Beneficial Ownership............................................5
ARTICLE IV
Actions by Eligible Lender Trustee
SECTION 4.01. Prior Notice to Company with Respect to Certain Matters.........5
SECTION 4.02. Action by Company with Respect to Bankruptcy....................7
SECTION 4.03. Restrictions on Company's Power.................................7
ARTICLE V
Certain Duties
SECTION 5.01. No Segregation of Monies; No Interest...........................8
SECTION 5.02. Accounting and Reports to the Noteholders,
the Internal Revenue Service and Others.......................8
SECTION 5.03. Incentive Programs..............................................8
ARTICLE VI
Authority and Duties of Eligible Lender Trustee
SECTION 6.01. General Authority...............................................9
SECTION 6.02. General Duties..................................................9
SECTION 6.03. Action upon Instruction........................................10
SECTION 6.04. No Duties Except as Specified in this Agreement, the Loan Sale
Agreement, the Servicing Agreement, the Administration
Agreement or in Instructions.................................11
SECTION 6.05. No Action Except under Specified Documents or Instructions.....11
SECTION 6.06. Restrictions...................................................11
SECTION 6.07. Origination of Consolidation Loans during the Revolving Period.11
ARTICLE VII
Concerning the Eligible Lender Trustee
SECTION 7.01. Acceptance of Trusts and Duties................................13
SECTION 7.02. Furnishing of Documents........................................14
SECTION 7.03. Representations and Warranties.................................15
SECTION 7.04. Reliance; Advice of Counsel....................................15
SECTION 7.05. Not Acting in Individual Capacity..............................16
SECTION 7.06. Eligible Lender Trustee Not Liable for Notes or Student Loans..16
SECTION 7.07. Eligible Lender Trustee May Own Trust Notes....................17
SECTION 7.08. Licenses.......................................................17
ARTICLE VIII
Compensation of Eligible Lender Trustee
SECTION 8.01. Eligible Lender Trustee's Fees and Expenses....................17
SECTION 8.02. Payments to the Eligible Lender Trustee........................17
ARTICLE IX
Termination of Trust Agreement
SECTION 9.01. Termination of Trust Agreement.................................18
SECTION 9.02. [Reserved.]....................................................18
ARTICLE X
Successor Eligible Lender Trustees and
Additional Eligible Lender Trustees
SECTION 10.01. Eligibility Requirements for Eligible Lender Trustee..........18
SECTION 10.02. Resignation or Removal of Eligible Lender Trustee.............19
SECTION 10.03. Successor Eligible Lender Trustee.............................20
SECTION 10.04. Merger or Consolidation of Eligible Lender Trustee............20
SECTION 10.05. Appointment of Co-Eligible Lender Trustee or
Separate Eligible Lender Trustee............................20
ARTICLE XI
Miscellaneous
SECTION 11.01. Supplements and Amendments....................................22
SECTION 11.02. No Legal Title to Trust Estate in Company.....................23
SECTION 11.03. Limitations on Rights of Others...............................23
SECTION 11.04. Notices.......................................................24
SECTION 11.05. Severability..................................................24
SECTION 11.06. Separate Counterparts.........................................24
SECTION 11.07. Successors and Assigns........................................24
SECTION 11.08. No Petition...................................................24
SECTION 11.09. No Recourse...................................................25
SECTION 11.10. Headings......................................................25
SECTION 11.11. Governing Law.................................................25
SECTION 11.12. Responsibility to Secretary and Guarantors....................25
SECTION 11.13. Third-Party Beneficiaries.....................................25
SECTION 11.14. Consents......................................................26
EXHIBIT A Certificate of Trust of SMS Student Loan Trust 1999-A
TRUST AGREEMENT dated as of February 1, 1999, among USA GROUP SECONDARY
MARKET SERVICES, INC., a Delaware corporation, as depositor (the "Seller"),
SECONDARY MARKET COMPANY, INC., a Delaware corporation (the "Company"), and THE
FIRST NATIONAL BANK OF CHICAGO, a national banking association, not in its
individual capacity but solely as eligible lender trustee (the "Eligible Lender
Trustee").
The Seller, the Company and the Eligible Lender Trustee hereby agree as
follows:
ARTICLE I
Definitions and Usage
Capitalized terms used but not defined herein are defined in Appendix A to
the Administration Agreement, dated as of February 1, 1999, among the SMS
Student Loan Trust 1999-A, as Issuer, the Seller, as Administrator, and Bankers
Trust Company, as Indenture Trustee, which also contains rules as to
construction and usage that shall be applicable herein.
ARTICLE II
Organization
SECTION 2.01. Name. The Trust created hereby shall be known as "SMS
Student Loan Trust 1999-A", in which name the Eligible Lender Trustee may
conduct the business of the Trust, make and execute contracts and other
instruments on behalf of the Trust and xxx and be sued.
SECTION 2.02. Office. The office of the Trust shall be in care of the
Eligible Lender Trustee at its Corporate Trust Office or at such other address
as the Eligible Lender Trustee may designate by written notice to the Seller.
SECTION 2.03. Purposes and Powers. The purpose of the Trust is to engage
in the following activities:
(i) to issue the Notes pursuant to the Indenture and to sell the
Notes in one or more transactions;
(ii) with the proceeds of the sale of the Notes, to purchase the
Initial Financed Student Loans, to deposit the Reserve Account Initial
Deposit in the Reserve Account, to deposit the Delayed Delivery Loan
Funding Account Closing Date Deposit in the Delayed Delivery Loan Funding
Account, and to pay the organizational, start-up and transactional
expenses of the Trust and to pay the balance to the Seller pursuant to the
Loan Sale Agreement;
(iii) to enter into the Swap Agreement;
(iv) to originate Consolidation Loans during the Revolving Period
pursuant to Section 6.07 hereof, to increase the principal balance of
Consolidation Loans by adding the principal balances of any related Add-on
Consolidation Loans to the principal balances of such Consolidation Loans,
to acquire and hold the Delayed Delivery Loans to be conveyed to the Trust
pursuant to the Loan Sale Agreement, to acquire and hold any New Loans to
be conveyed to the Trust during the Revolving Period pursuant to the Loan
Sale Agreement and to acquire and hold any Serial Loans or other Student
Loans to be conveyed to the Trust subsequent to the Closing Date pursuant
to the Loan Sale Agreement;
(v) to assign, grant, transfer, pledge, mortgage and convey the
Trust Estate pursuant to the Indenture;
(vi) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
(vii) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish the
foregoing or are incidental thereto or connected therewith; and
(viii) subject to compliance with the Basic Documents, to engage in
such other activities as may be required in connection with conservation
of the Trust Estate and the making of distributions to the Noteholders and
the others specified in Section 2(d) of the Administration Agreement.
The Trust shall not engage in any activity other than in connection with the
foregoing or other than as required or authorized by the terms of this Agreement
or the other Basic Documents.
SECTION 2.04. Appointment of Eligible Lender Trustee. The Seller hereby
appoints the Eligible Lender Trustee as trustee of the Trust effective as of the
date hereof, to have all of the rights, powers and duties set forth herein.
SECTION 2.05. Initial Capital Contribution of Trust Estate. The Seller
hereby sells, assigns, transfers, conveys and sets over to the Eligible Lender
Trustee, as of the date hereof, the sum of $1.00. The Eligible Lender Trustee
hereby acknowledges receipt in trust from the Seller, as of the date hereof, of
the foregoing contribution, which shall constitute the initial Trust Estate and
shall be deposited in the Collection Account. The Seller shall pay the
organizational expenses of the Trust as they may arise or shall, upon the
request of the Eligible Lender Trustee, promptly reimburse the Eligible Lender
Trustee for any such expenses paid by the Eligible Lender Trustee.
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SECTION 2.06. Declaration of Trust. The Eligible Lender Trustee hereby
declares that it will hold the Trust Estate in trust upon and subject to the
conditions set forth herein for the use and benefit of the Company, subject to
the obligations of the Trust under the other Basic Documents. It is the
intention of the parties hereto that the Trust constitute a trust under the
Business Trust Statute and that this Agreement constitute the governing
instrument of such trust. Effective as of the date hereof, the Eligible Lender
Trustee shall have all rights, powers and duties set forth herein and in the
Business Trust Statute with respect to accomplishing the purposes of the Trust.
The Eligible Lender Trustee and the Delaware Trustee shall file the Certificate
of Trust with the Secretary of State of the State of Delaware pursuant to ss.
3801 of the Business Trust Statute on or before the Closing Date.
SECTION 2.07. [Reserved.]
SECTION 2.08. Title to Trust Property. Subject to the Indenture, legal
title to the Trust Estate shall be vested at all times in the Trust as a
separate legal entity except where applicable law in any jurisdiction requires
title to any part of the Trust Estate to be vested in a trustee or trustees, in
which case title shall be deemed to be vested in the Eligible Lender Trustee, a
co-trustee and/or a separate trustee, as the case may be; provided, however,
that legal title to the Financed Student Loans shall be vested at all times in
the Eligible Lender Trustee on behalf of the Trust.
SECTION 2.09. Representations and Warranties of the Seller and the
Company. (a) Each of the Company and the Seller hereby represents and warrants,
as to itself, to the Eligible Lender Trustee and the Swap Counterparty that:
(i) It is duly organized and validly existing as a corporation in
good standing under the laws of the jurisdiction of its incorporation,
with corporate power and authority to own its properties and to conduct
its business as such properties are currently owned and such business is
currently conducted (subject, with respect to the Seller and its Student
Loans, to the vesting of legal title thereto in NBD or another eligible
lender, as trustee for the Seller).
(ii) It is duly qualified to do business as a foreign corporation in
good standing, and has obtained all necessary licenses and approvals in
all jurisdictions in which the ownership or lease of property or the
conduct of its business shall require such qualifications except where
failure to do so (both singly and in the aggregate) will not have a
material adverse effect on the conduct of its business, operations or
financial condition.
(iii) It has the corporate power and authority to execute and
deliver this Agreement and to carry out its terms; and the execution,
delivery and performance of this Agreement have been duly authorized by it
by all necessary corporate action; the Seller has full power and authority
to transfer and assign the property to be transferred and assigned to, and
to be deposited with, the Trustee; and the Seller has duly authorized such
transfer and assignment to the Trust by all necessary corporate action.
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(iv) This Agreement constitutes its legal, valid and binding
obligation enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization and similar laws relating to
creditors' rights generally and subject to general principles of equity.
(v) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof do not conflict with,
result in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time or both) a default under, its
certificate of incorporation or by-laws, or any indenture, agreement or
other instrument to which it is a party or by which it is bound; nor
result in the creation or imposition of any Lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument (other than pursuant to the Basic Documents); nor violate any
law or, to the best of its knowledge, any order, rule or regulation
applicable to it of any court or of any Federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over it or its properties.
(vi) There are no proceedings or investigations pending or, to its
best knowledge, threatened before any court, regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Seller or its properties: (A) asserting the
invalidity of this Agreement, (B) seeking to prevent the consummation of
any of the transactions contemplated by this Agreement or (C) seeking any
determination or ruling that might materially and adversely affect the
performance by it of its obligations under, or the validity or
enforceability of, this Agreement.
SECTION 2.10. Tax Treatment. The Seller and the Company have entered into
this Agreement, and the Notes will be issued to and acquired by the Noteholders,
with the intention that, for federal, state, foreign and local income and
franchise tax and usury law purposes, the Notes will be indebtedness of the
Company secured by the Trust Estate. Each of the Seller and the Company, by
entering into this Agreement, and each Noteholder, by the acceptance of its
Note, agrees to treat the Notes for purposes of federal, state and local income
and franchise taxes and for any other tax imposed on or measured by income and
usury law purposes as indebtedness of the Company secured by the Trust Estate.
In accordance with the foregoing, the Eligible Lender Trustee hereby agrees to
treat the Trust as a security device only, and shall not file tax returns or
obtain an employer identification number on behalf of the Trust (except as may
be required as a result of changes in law or as may otherwise be required in the
Opinion of Counsel for the Company).
SECTION 2.11. Liability of Noteholders. No Noteholder shall have any
personal liability or obligation to or for the Trust and the Certificate of
Trust shall be fully paid and nonassessable.
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ARTICLE III
Ownership
SECTION 3.01. Beneficial Ownership. Upon the formation of the Trust by the
contribution by the Seller pursuant to Section 2.05, the Seller shall be the
sole beneficial owner of the Trust. Concurrently with the transfer of the
Initial Financed Student Loans to the Eligible Lender Trustee on behalf of the
Trust pursuant to the Loan Sale Agreement, the Seller does hereby irrevocably
assign to the Company all of its right, title and interest in and to the Trust,
and thereupon (subject to the Company's right to transfer pursuant to the next
succeeding sentence) the Company shall be the sole beneficial owner of the
Trust. For so long as any Notes remain Outstanding, the Company shall not
Transfer its ownership interest in the Trust, in whole or in part, unless (i)
either (A) the Company shall have delivered to the Eligible Lender Trustee, the
Indenture Trustee and the Swap Counterparty an Opinion of Counsel (with a copy
to the Rating Agencies) that neither the Trust nor the Company would be
consolidated with the purchaser of such ownership interest in the event of an
Insolvency Event with respect to such purchaser or (B) the Rating Agency
Condition is satisfied with respect to such Transfer, (ii) the Company shall
have delivered to the Eligible Lender Trustee, the Indenture Trustee and the
Swap Counterparty an Opinion of Counsel that such transaction will not result in
a material adverse federal or Indiana or Delaware state tax consequence to the
Issuer or the Noteholders, and (iii) there is delivered to the Eligible Lender
Trustee and the Indenture Trustee an Opinion of Counsel, in form and substance
satisfactory to them, that such Transfer may be made pursuant to an exemption,
describing the applicable exemption and the basis therefor, from the Securities
Act and under applicable state securities laws.
ARTICLE IV
Actions by Eligible Lender Trustee
SECTION 4.01. Prior Notice to Company with Respect to Certain Matters.
With respect to the following matters, neither the Eligible Lender Trustee nor
the Delaware Trustee shall take any action unless at least 30 days before the
taking of such action, the Eligible Lender Trustee or the Delaware Trustee shall
have notified the Company, the Rating Agencies and the Swap Counterparty in
writing of the proposed action and neither the Company nor the Swap Counterparty
shall have notified the Eligible Lender Trustee in writing prior to the 30th day
after such notice is given that the Company or the Swap Counterparty has
withheld consent or the Company has provided alternative direction:
(a) the initiation of any material claim or lawsuit by the Trust
(except claims or lawsuits brought in connection with the collection of
the Financed Student Loans) and the compromise of any material action,
claim or lawsuit brought by or against the Trust (except with respect to
the aforementioned claims or lawsuits for collection of Financed Student
Loans);
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(b) the election by the Trust to file an amendment to the
Certificate of Trust;
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder or the Swap Counterparty
is required;
(d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder or the Swap Counterparty
is not required and such amendment materially adversely affects the
interests of the Company;
(e) the amendment, change or modification of the Administration
Agreement, except to cure any ambiguity or to amend or supplement any
provision in a manner or add any provision that would not materially
adversely affect the interests of the Company; or
(f) the appointment pursuant to the Indenture of a successor Note
Registrar or Indenture Trustee, or the consent to the assignment by the
Note Registrar or Indenture Trustee of its obligations under the
Indenture.
(g) the consent to the calling or waiver of any default under any
Basic Document;
(h) the consent to the assignment by the Indenture Trustee or the
Servicer of their respective obligations under any Basic Document;
(i) except as provided in Article IX hereof, dissolve, terminate or
liquidate the Trust in whole or in part;
(j) merge or consolidate the Trust with or into any other entity, or
convey or transfer all or substantially all of the Trust's assets to any
other entity;
(k) cause the Trust to incur, assume or guaranty any indebtedness
other than as set forth in this Agreement or the other Basic Documents;
(l) do any act that conflicts with any other Basic Document;
(m) do any act which would make it impossible to carry on the
ordinary business of the Trust as described in Section 2.03 hereof;
(n) confess a judgment against the Trust;
(o) possess Trust assets, or assign the Trust's right to property,
for other than a Trust purpose;
(p) cause the Trust to lend any funds to any entity; or
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(q) change the Trust's purpose and powers from those set forth in
this Agreement.
In addition the Trust shall not commingle its assets with those of any
other entity. The Trust shall maintain its financial and accounting books and
records separate from those of any other entity. Except as expressly set forth
herein, the Trust shall pay its indebtedness, operating expenses and liabilities
from its own funds, and the Trust shall not pay the indebtedness, operating
expenses and liabilities of any other entity. The Trust shall maintain
appropriate minutes or other records of all appropriate actions and shall
maintain its office separate from the offices of the Seller, the Company and
Loan Services.
Neither the Eligible Lender Trustee nor the Delaware Trustee shall have
the power, except upon the direction of the Company with the consent of the Swap
Counterparty, and to the extent otherwise consistent with the Basic Documents,
to (i) remove or replace the Servicer or the Indenture Trustee, (ii) institute
proceedings to have the Trust declared or adjudicated a bankrupt or insolvent,
(iii) consent to the institution of bankruptcy or insolvency proceedings against
the Trust, (iv) file a petition or consent to a petition seeking reorganization
or relief on behalf of the Trust under any applicable federal or state law
relating to bankruptcy, (v) consent to the appointment of a receiver,
liquidator, assignee, trustee, sequestrator (or any similar official) of the
Trust or a substantial portion of the property of the Trust, (vi) make any
assignment for the benefit of the Trust's creditors, (vii) cause the Trust to
admit in writing its inability to pay its debts generally as they become due,
(viii) take any action, or cause the Trust to take any action, in furtherance of
any of the foregoing (any of the above, a "Bankruptcy Action"). So long as the
Indenture and the Insurance Agreement remain in effect, the Company shall not
have the power to take, and shall not take, any Bankruptcy Action with respect
to the Trust or direct the Eligible Lender Trustee to take any Bankruptcy Action
with respect to the Trust.
SECTION 4.02. Action by Company with Respect to Bankruptcy. The Eligible
Lender Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to the Trust without the prior approval of the Company and
the delivery to the Eligible Lender Trustee by the Company of a certificate
certifying that it reasonably believes that the Trust is insolvent.
SECTION 4.03. Restrictions on Company's Power. The Company shall not
direct the Eligible Lender Trustee to take or refrain from taking any action if
such action or inaction would be contrary to any obligations of the Trust or the
Eligible Lender Trustee under the Higher Education Act, this Agreement or any of
the other Basic Documents or would be contrary to Section 2.03 nor shall the
Eligible Lender Trustee be permitted to follow any such direction, if given.
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ARTICLE V
Certain Duties
SECTION 5.01. No Segregation of Monies; No Interest. Monies received by
the Eligible Lender Trustee hereunder need not be segregated in any manner
except to the extent required by law or the Basic Documents and may be deposited
under such general conditions as may be prescribed by law, and the Eligible
Lender Trustee shall not be liable for any interest thereon.
SECTION 5.02. Accounting and Reports to the Noteholders, the Internal
Revenue Service and Others. No federal income tax return shall be filed on
behalf of the Trust unless either (i) the Eligible Lender Trustee shall receive
an Opinion of Counsel that, based on a change in applicable law occurring after
the date hereof, or as a result of a transfer by the Company permitted by
Section 3.01, the Code requires such a filing or (ii) the Internal Revenue
Service shall determine that the Trust is required to file such a return. In the
event that the Trust is required to file tax returns, the Eligible Lender
Trustee shall prepare or shall cause to be prepared any tax returns required to
be filed by the Trust and shall remit such returns to the Company at least five
(5) days before such returns are due to be filed. The Company shall promptly
sign such returns and deliver such returns after signature to the Eligible
Lender Trustee and such returns shall be filed by the Eligible Lender Trustee
with the appropriate tax authorities. In no event shall the Eligible Lender
Trustee, the Company or the Seller be liable for any liabilities, costs or
expenses of the Trust or the Noteholders arising out of the application of any
tax law, including federal, state, foreign or local income or excise taxes or
any other tax imposed on or measured by income (or any interest, penalty or
addition with respect thereto or arising from a failure to comply therewith)
except for any such liability, cost or expense attributable to any act or
omission by the Eligible Lender Trustee, the Company or the Seller, as the case
may be, in breach of its obligations under this Agreement.
SECTION 5.03. Incentive Programs. Subject to compliance by the
Administrator with Section 2(i) of the Administration Agreement, the Trust shall
offer each Incentive Program to all qualified Borrowers except any Incentive
Program which the Administrator terminates pursuant to Section 2(i) of the
Administration Agreement. Upon the effective date specified in the notice of
termination required by Section 2(i) of the Administration Agreement, the Trust
shall cease offering the terminated Incentive Program to Borrowers affected by
the termination.
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ARTICLE VI
Authority and Duties of Eligible Lender Trustee
SECTION 6.01. General Authority. The Eligible Lender Trustee is authorized
and directed to execute and deliver the Basic Documents to which the Trust is to
be a party and each certificate or other document attached as an exhibit to or
contemplated by the Basic Documents to which the Trust is to be a party, in each
case, in such form as the Seller shall approve as evidenced conclusively by the
Eligible Lender Trustee's execution thereof, and, on behalf of the Trust, to
direct the Indenture Trustee to authenticate and deliver Class A-1 Notes in the
aggregate principal amount of $130,000,000, Class A-2 Notes in the aggregate
principal amount of $506,900,000 and Subordinate Notes in the aggregate
principal amount of $23,100,000. The Eligible Lender Trustee is also authorized
and directed on behalf of the Trust (i) to acquire and hold legal title to the
Financed Student Loans from the Seller and (ii) to take all actions required
pursuant to Section 3.02(c) of the Servicing Agreement, and otherwise follow the
direction of and cooperate with the Servicer in submitting, pursuing and
collecting any claims to and with the Department with respect to any Interest
Subsidy Payments and Special Allowance Payments relating to the Financed Student
Loans.
In addition to the foregoing, the Eligible Lender Trustee is authorized,
but shall not be obligated, to take all actions required of the Trust pursuant
to the Basic Documents. The Eligible Lender Trustee is further authorized from
time to time to take such action as the Administrator directs or instructs with
respect to the Basic Documents and is directed to take such action to the extent
that the Administrator is expressly required pursuant to the Basic Documents to
cause the Eligible Lender Trustee to act.
SECTION 6.02. General Duties. It shall be the duty of the Eligible Lender
Trustee to discharge (or cause to be discharged) all its responsibilities
pursuant to the terms of this Agreement and the other Basic Documents to which
the Trust is a party and to administer the Trust, subject to and in accordance
with the provisions of this Agreement and the other Basic Documents.
Notwithstanding the foregoing, the Eligible Lender Trustee shall be deemed to
have discharged its duties and responsibilities hereunder and under the other
Basic Documents to the extent the Administrator has agreed in the Administration
Agreement to perform any act or to discharge any duty of the Eligible Lender
Trustee hereunder or under any other Basic Document, and the Eligible Lender
Trustee shall not be held liable for the default or failure of the Administrator
to carry out its obligations under the Administration Agreement. Except as
expressly provided in the Basic Documents, the Eligible Lender Trustee shall
have no obligation to administer, service or collect the Financed Student Loans
or to maintain, monitor or otherwise supervise the administration, servicing or
collection of the Financed Student Loans.
SECTION 6.03. Action upon Instruction. (a) Subject to Article IV, Section
7.01 and in accordance with the terms of the Basic Documents, the Company may by
written instruction direct the Eligible Lender Trustee in the management of the
Trust. Such direction may be exercised at any time by written instruction of the
Company pursuant to Article IV.
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(b) The Eligible Lender Trustee shall not be required to take any action
hereunder or under any other Basic Document if the Eligible Lender Trustee shall
have reasonably determined, or shall have been advised by counsel, that such
action is likely to result in liability on the part of the Eligible Lender
Trustee or is contrary to the terms hereof or of any other Basic Document or is
otherwise contrary to law.
(c) Whenever the Eligible Lender Trustee is unable to determine the
appropriate course of action between alternative courses of action permitted or
required by the terms of this Agreement or under any other Basic Document, the
Eligible Lender Trustee shall promptly give notice (in such form as shall be
appropriate under the circumstances) to the Company requesting instruction as to
the course of action to be adopted, and to the extent the Eligible Lender
Trustee acts in good faith in accordance with any written instruction of the
Company received, the Eligible Lender Trustee shall not be liable on account of
such action to any Person. If the Eligible Lender Trustee shall not have
received appropriate instruction within 10 days of such notice (or within such
shorter period of time as reasonably may be specified in such notice or may be
necessary under the circumstances) it may, but shall be under no duty to, take
or refrain from taking such action, not inconsistent with this Agreement or the
other Basic Documents, as it shall deem to be in the best interests of the
Company, and shall have no liability to any Person for such action or inaction.
(d) In the event that the Eligible Lender Trustee is unsure as to the
application of any provision of this Agreement or any other Basic Document or
any such provision is ambiguous as to its application, or is, or appears to be,
in conflict with any other applicable provision, or in the event that this
Agreement permits any determination by the Eligible Lender Trustee or is silent
or is incomplete as to the course of action that the Eligible Lender Trustee is
required to take with respect to a particular set of facts, the Eligible Lender
Trustee may give notice (in such form as shall be appropriate under the
circumstances) to the Company and the Swap Counterparty requesting instruction
from the Company and, to the extent that the Eligible Lender Trustee acts or
refrains from acting in good faith in accordance with any such instruction
received, the Eligible Lender Trustee shall not be liable, on account of such
action or inaction, to any Person. If the Eligible Lender Trustee shall not have
received appropriate instruction within 10 days of such notice (or within such
shorter period of time as reasonably may be specified in such notice or may be
necessary under the circumstances) it may, but shall be under no duty to, take
or refrain from taking such action, not inconsistent with this Agreement or the
other Basic Documents, as it shall deem to be in the best interests of the
Company and shall have no liability to any Person for such action or inaction.
(e) Upon satisfaction of the Rating Agency Condition, if the Administrator
directs, the Eligible Lender Trustee shall enter into an amendment to the Swap
Agreement with the Swap Counterparty. The sole amendment, other than to cure any
ambiguity, to the Swap Agreement may be to change the notional amount of the
Swap Agreement from instead of the scheduled notional amount attached to the
Swap Agreement to the outstanding principal balance of the Notes.
SECTION 6.04. No Duties Except as Specified in this Agreement, the Loan
Sale Agreement, the Servicing Agreement, the Administration Agreement or in
Instructions. The
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Eligible Lender Trustee shall not have any duty or obligation to manage, make
any payment with respect to, register, record, sell, service, dispose of or
otherwise deal with the Trust Estate, or to otherwise take or refrain from
taking any action under, or in connection with, any document contemplated hereby
to which the Eligible Lender Trustee is a party, except as expressly provided by
the terms of this Agreement, the Loan Sale Agreement, the Servicing Agreement,
the Administration Agreement or in any document or written instruction received
by the Eligible Lender Trustee pursuant to Section 6.03; and no implied duties
or obligations shall be read into this Agreement or any other Basic Document
against the Eligible Lender Trustee. The Eligible Lender Trustee shall have no
responsibility for filing any financing or continuation statement in any public
office at any time or to otherwise perfect or maintain the perfection of any
security interest or lien granted to it hereunder or to prepare or file any
Commission filing for the Trust or to record this Agreement or any other Basic
Document. The Eligible Lender Trustee nevertheless agrees that it will, at its
own cost and expense, promptly take all action as may be necessary to discharge
any liens on any part of the Trust Estate that result from actions by, or claims
against, The First National Bank of Chicago in its individual capacity or as the
Eligible Lender Trustee that are not related to the ownership or the
administration of the Trust Estate.
SECTION 6.05. No Action Except under Specified Documents or Instructions.
The Eligible Lender Trustee shall not manage, control, use, sell, service,
dispose of or otherwise deal with any part of the Trust Estate except (i) in
accordance with the powers granted to and the authority conferred upon the
Eligible Lender Trustee pursuant to this Agreement, (ii) in accordance with the
other Basic Documents to which it is a party and (iii) in accordance with any
document or instruction delivered to the Eligible Lender Trustee pursuant to
Section 6.03.
SECTION 6.06. Restrictions. The Eligible Lender Trustee shall not take any
action (a) that is inconsistent with the purposes of the Trust set forth in
Section 2.03 or (b) that, to the actual knowledge of the Eligible Lender
Trustee, would result in the Trust's becoming taxable as a corporation for
Federal income tax purposes. The Company shall not direct the Eligible Lender
Trustee to take action that would violate the provisions of this Section.
SECTION 6.07. Origination of Consolidation Loans during the Revolving
Period. (a) From time to time during the Revolving Period the Servicer will
identify those Financed Student Loans as to which a Borrower qualifies to
receive a Consolidation Loan under the Federal Consolidation Loan Program from
the Eligible Lender Trustee and will inform the Administrator of the identity of
such loans. The Administrator will determine, in accordance with customary
industry standards, whether a Consolidation Loan should be offered to such
Borrower; provided, however, that a Consolidation Loan will not be offered to a
Borrower if any Student Loan of such Borrower which is not beneficially owned by
the Issuer and which is proposed to be discharged by the making of such
Consolidation Loan is past due more than 30 days; and provided, further, that a
Consolidation Loan will not be offered to a Borrower if the aggregate principal
balances of all Consolidation Loans originated pursuant to this Section would
thereby exceed the limitations set forth in Section 6.07(d).
(b) If the Administrator determines that it is appropriate to offer a
Consolidation Loan to a Borrower in accordance with this Section, it will so
inform the Servicer who will send
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the necessary documentation to such Borrower and will process such documentation
on behalf of the Eligible Lender Trustee, all in accordance with industry
standards, the Higher Education Act and the related Guarantee Agreement. The
Servicer will inform the Eligible Lender Trustee of the completion of the loan
underwriting process and the necessary documentation, whereupon the Eligible
Lender Trustee, on behalf of the Trust and upon the direction of the
Administrator, will execute any documents required to be executed by it to
complete the origination of such loan and to subject such loan to the related
Guarantee Agreement. The Servicer will not permit any Consolidation Loan to be
originated which would violate the representations and warranties of Section
3.01 of the Loan Sale Agreement. Any Consolidation Loan which is determined to
violate any of such representations and warranties will be subject to repurchase
by the Seller as provided in Section 3.02 of the Loan Sale Agreement.
(c) Each Consolidation Loan originated pursuant to this Section 6.07 shall
be owned by the Issuer and be part of the Trust Estate and the Collateral from
and after the time of such origination. Upon origination of such loan and such
loan becoming part of the Trust Estate and the Collateral, the Administrator
will instruct the Indenture Trustee, pursuant to Section 2(f) of the
Administration Agreement, to authorize the transfer from the Collateral
Reinvestment Account of an amount sufficient to prepay in full any Student Loan
that is to be consolidated through such origination, including any Add-on
Consolidation Loan that is prepaid in full as a result of the principal balance
of such Add-on Consolidation Loan being added to the principal balance of a
related Consolidation Loan held as part of the Trust Estate. The Administrator
will cause to be taken all actions, and the Eligible Lender Trustee will
cooperate with the Administrator in the execution of any instruments or
documents, required to establish and maintain the ownership interest of the
Trust and the first perfected security interest of the Indenture Trustee in each
Consolidation Loan originated pursuant to this Section.
(d) In no event shall the Issuer or the Eligible Lender Trustee on behalf
of the Issuer originate Consolidation Loans in excess of $35,000,000 (including
the addition of the principal balances of any Add-on Consolidation Loans) in the
aggregate during the Revolving Period; additionally, no Consolidation Loan may
be originated by the Issuer or the Eligible Lender Trustee on behalf of the
Issuer having a scheduled maturity after October 28, 2030 if at the time of such
origination the aggregate principal balance of all Consolidation Loans held as
part of the Trust Estate that have a scheduled maturity date after October 28,
2030 exceeds, or after giving effect to such origination, would exceed
$15,000,000; provided, however, that the Eligible Lender Trustee will be
permitted to fund the addition of the principal balance of any Add-on
Consolidation Loan in excess of such amounts, if the Eligible Lender Trustee is
required to do so by the Higher Education Act. In addition, in no event shall
the Issuer or the Eligible Lender Trustee on behalf of the Issuer make
Consolidation Loans after the Revolving Period; provided, however, that the
Eligible Lender Trustee may increase the principal balance of any Consolidation
Loan by the principal balance of any related Add-on Consolidation Loan during
the Add-on Period if the Eligible Lender Trustee is required to do so by the
Higher Education Act. After the Revolving Period, upon the addition of the
principal balance of such Add-on Consolidation Loan, and such amounts becoming
part of the Trust Estate and the Collateral, the Administrator will instruct the
Indenture Trustee, pursuant to Section 2(d)(iii)(A) of the
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Administration Agreement, to authorize the transfer from the Collection Account
of an amount sufficient to prepay in full such Add-on Consolidation Loan.
(e) All Consolidation Fees payable with respect to Consolidation Loans
originated and the principal balances of any Add-on Consolidation Loans added to
the Trust pursuant to this Section will be payable by the Issuer as provided in
Section 2(d)(ii) of the Administration Agreement. All other costs or fees
incurred in originating Consolidation Loans (or in adding the principal balances
of any Add-on Consolidation Loans) shall be payable by the Administrator.
ARTICLE VII
Concerning the Eligible Lender Trustee
SECTION 7.01. Acceptance of Trusts and Duties. The Eligible Lender Trustee
accepts the trusts hereby created and agrees to perform its duties hereunder
with respect to such trusts but only upon the terms of this Agreement. The
Eligible Lender Trustee also agrees to disburse all monies actually received by
it constituting part of the Trust Estate upon the terms of this Agreement and
the other Basic Documents. The Eligible Lender Trustee shall not be answerable
or accountable hereunder or under any other Basic Document under any
circumstances, except (i) for its own willful misconduct or negligence or (ii)
in the case of the inaccuracy of any representation or warranty contained in
Section 7.03 expressly made by the Eligible Lender Trustee. In particular, but
not by way of limitation (and subject to the exceptions set forth in the
preceding sentence):
(a) the Eligible Lender Trustee shall not be liable for any error of
judgment made by a responsible officer of the Eligible Lender Trustee;
(b) the Eligible Lender Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in accordance with the
direction or instructions of the Administrator or the Company;
(c) no provision of this Agreement or any other Basic Document shall
require the Eligible Lender Trustee to expend or risk funds or otherwise
incur any financial liability in the performance of any of its rights or
powers hereunder or under any other Basic Document, if the Eligible Lender
Trustee shall have reasonable grounds for believing that repayment of such
funds or adequate indemnity against such risk or liability is not
reasonably assured or provided to it;
(d) under no circumstances shall the Eligible Lender Trustee be
liable for indebtedness evidenced by or arising under any of the Basic
Documents, including the principal of and interest on the Notes;
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(e) the Eligible Lender Trustee shall not be responsible for or in
respect of the validity or sufficiency of this Agreement or for the due
execution hereof by the Seller or for the form, character, genuineness,
sufficiency, value or validity of any of the Trust Estate or for or in
respect of the validity or sufficiency of the Basic Documents, and the
Eligible Lender Trustee shall in no event assume or incur any liability,
duty, or obligation to any Noteholder or to the Company, other than as
expressly provided for herein and in the other Basic Documents;
(f) the Eligible Lender Trustee shall not be liable for the action
or inaction, default or misconduct of the Administrator, the Seller, the
Indenture Trustee or the Servicer under any of the other Basic Documents
or otherwise and the Eligible Lender Trustee shall have no obligation or
liability to perform the obligations of the Trust under this Agreement or
the other Basic Documents that are required to be performed by the
Administrator under the Administration Agreement, the Indenture Trustee
under the Indenture or the Servicer under the Servicing Agreement; and
(g) the Eligible Lender Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement, or to
institute, conduct or defend any litigation under this Agreement or
otherwise or in relation to this Agreement or any other Basic Document, at
the request, order or direction of the Company, unless the Company has
offered to the Eligible Lender Trustee security or indemnity satisfactory
to it against the costs, expenses and liabilities that may be incurred by
the Eligible Lender Trustee therein or thereby. The right of the Eligible
Lender Trustee to perform any discretionary act enumerated in this
Agreement or in any other Basic Document shall not be construed as a duty,
and the Eligible Lender Trustee shall not be answerable for other than its
negligence or willful misconduct in the performance of any such act.
SECTION 7.02. Furnishing of Documents. The Eligible Lender Trustee shall
furnish to the Company and the Swap Counterparty promptly upon receipt of a
written request therefor, duplicates or copies of all reports, notices,
requests, demands, certificates, financial statements and any other instruments
furnished to the Eligible Lender Trustee under the Basic Documents.
SECTION 7.03. Representations and Warranties. The Eligible Lender Trustee
hereby represents and warrants to each of the Seller, the Company and the Swap
Counterparty, that:
(a) It is a national banking association duly organized and validly
existing in good standing under the laws of the United States. It has all
requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement.
(b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to
execute and deliver this Agreement on its behalf.
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(c) Neither the execution nor the delivery by it of this Agreement,
nor the consummation by it of the transactions contemplated hereby nor
compliance by it with any of the terms or provisions hereof will
contravene any federal or state law, governmental rule or regulation
governing the banking or trust powers of the Eligible Lender Trustee or
any judgment or order binding on it, or constitute any default under its
charter documents or by-laws or any indenture, mortgage, contract,
agreement or instrument to which it is a party or by which any of its
properties may be bound.
(d) It is an "eligible lender" as such term is defined in Section
435(d) of the Higher Education Act, for purposes of holding legal title to
the Financed Student Loans and originating Consolidation Loans as
contemplated by this Agreement and the other Basic Documents, has obtained
a lender identification number with respect to the Trust from the
Department, has in effect a Guarantee Agreement with the Initial Guarantor
with respect to the Initial Financed Student Loans and will have the
requisite power and authority to enter into Guarantee Agreements with
Additional Guarantors, if any.
(e) In originating each Consolidation Loan on behalf of the Trust,
as provided in Section 6.07, it shall comply with all applicable
provisions of the Higher Education Act, and it will not create or cause to
be created any lien, charge or encumbrance on any such Consolidation Loan
or in any way cause the Trust to not have good title thereto.
SECTION 7.04. Reliance; Advice of Counsel. (a) The Eligible Lender Trustee
shall incur no liability to anyone in acting upon any signature, instrument,
direction, notice, resolution, request, consent, order, certificate, report,
opinion, bond, or other document or paper believed by it to be genuine and
believed by it to be signed by the proper party or parties. The Eligible Lender
Trustee may accept a certified copy of a resolution of the board of directors or
other governing body of any corporate party as conclusive evidence that such
resolution has been duly adopted by such body and that the same is in full force
and effect. As to any fact or matter the method of the determination of which is
not specifically prescribed herein, the Eligible Lender Trustee may for all
purposes hereof rely on a certificate, signed by the president or any vice
president or by the treasurer or other authorized officers of the relevant
party, as to such fact or matter and such certificate shall constitute full
protection to the Eligible Lender Trustee for any action taken or omitted to be
taken by it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under this Agreement or the other
Basic Documents, the Eligible Lender Trustee (i) may act directly or through its
agents or attorneys pursuant to agreements entered into with any of them, and
the Eligible Lender Trustee shall not be liable for the conduct or misconduct of
such agents or attorneys if such agents or attorneys shall have been selected by
the Eligible Lender Trustee with reasonable care, and (ii) may consult with
counsel, accountants and other skilled persons to be selected with reasonable
care and employed by it. The Eligible Lender Trustee shall not be liable for
anything done, suffered or omitted in good faith by it in accordance with the
written opinion or advice of any such counsel, accountants or other such persons
and not contrary to this Agreement or any other Basic Document.
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SECTION 7.05. Not Acting in Individual Capacity. Except as provided in
this Article VII, in accepting the trusts hereby created, The First National
Bank of Chicago acts solely as Eligible Lender Trustee hereunder and not in its
individual capacity and all Persons having any claim against the Eligible Lender
Trustee by reason of the transactions contemplated by this Agreement or any
other Basic Document shall look only to the Trust Estate for payment or
satisfaction thereof.
Notwithstanding any other provision in this Agreement or the other Basic
Documents, nothing in this Agreement or the other Basic Documents shall be
construed to limit the legal responsibility of the Eligible Lender Trustee or
the Indenture Trustee, to the U.S. Secretary of Education or a Guarantor for any
violations of statutory or regulatory requirements that may occur with respect
to loans held by the Eligible Lender Trustee or the Indenture Trustee pursuant
to, or to otherwise comply with their obligations under, the Higher Education
Act or implementing regulations.
SECTION 7.06. Eligible Lender Trustee Not Liable for Notes or Student
Loans. The recitals contained herein (other than the representations and
warranties in Section 7.03) shall be taken as the statements of the Seller, and
the Eligible Lender Trustee assumes no responsibility for the correctness
thereof. The Eligible Lender Trustee makes no representations as to the validity
or sufficiency of this Agreement or any other Basic Document or the Notes, or of
any Financed Student Loan or related documents. The Eligible Lender Trustee
shall at no time have any responsibility (or liability except for willfully or
negligently terminating or allowing to be terminated either of the Guarantee
Agreements, in a case where the Eligible Lender Trustee knows of any facts or
circumstances which will or could reasonably be expected to result in any such
termination) for or with respect to the legality, validity, enforceability and
eligibility for Guarantee Payments, Interest Subsidy Payments or Special
Allowance Payments, as applicable, of any Financed Student Loan, or for or with
respect to the sufficiency of the Trust Estate or its ability to generate the
payments to be distributed to the Noteholders under the Indenture, including:
the existence and contents of any computer or other record of any Financed
Student Loan; the validity of the assignment of any Financed Student Loan to the
Trust; the completeness of any Financed Student Loan; the performance or
enforcement (except as expressly set forth in any Basic Document) of any
Financed Student Loan; the compliance by the Seller or the Servicer with any
warranty or representation made under any Basic Document or in any related
document or the accuracy of any such warranty or representation or any action or
inaction of the Administrator, the Indenture Trustee or the Servicer or any
subservicer taken in the name of the Eligible Lender Trustee.
SECTION 7.07. Eligible Lender Trustee May Own Trust Notes. The Eligible
Lender Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may deal with the Seller, the Administrator, the Indenture
Trustee and the Servicer in banking transactions with the same rights as it
would have if it were not the Eligible Lender Trustee.
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SECTION 7.08. Licenses. The Eligible Lender Trustee shall
cause the Trust to use its best efforts to obtain and maintain the effectiveness
of any licenses required in connection with this Agreement and the other Basic
Documents and the transactions contemplated hereby and thereby until such time
as the Trust shall terminate in accordance with the terms hereof. The Eligible
Lender Trustee shall receive from the Administrator the information necessary to
comply with this Section.
ARTICLE VIII
Compensation of Eligible Lender Trustee
SECTION 8.01. Eligible Lender Trustee's Fees and Expenses. The Eligible
Lender Trustee shall receive as compensation for its services hereunder such
fees as have been separately agreed upon before the date hereof between the
Seller and the Eligible Lender Trustee, and the Eligible Lender Trustee shall be
entitled to be reimbursed by the Seller for its other reasonable expenses
hereunder, including the reasonable compensation, expenses and disbursements of
such agents, representatives, experts and counsel as the Eligible Lender Trustee
may employ in connection with the exercise and performance of its rights and
duties hereunder. The Eligible Lender Trustee shall have no recourse to the
Issuer for its fees and expenses hereunder.
SECTION 8.02. Payments to the Eligible Lender Trustee. Any amounts paid to
the Eligible Lender Trustee pursuant to Section 8.01 hereof or pursuant to
Section 4.03 of the Loan Sale Agreement or pursuant to Section 24 of the
Administration Agreement shall be deemed not to be a part of the Trust Estate
immediately after such payment.
ARTICLE IX
Termination of Trust Agreement
SECTION 9.01. Termination of Trust Agreement. (a) This Agreement (other
than Article VIII) and the Trust shall terminate and be of no further force or
effect upon the earlier of (i) the final distribution by the Eligible Lender
Trustee of all monies or other property or proceeds of the Trust Estate in
accordance with the terms of the Indenture and the Servicing Agreement and the
termination of the Indenture and (ii) the expiration of 21 years from the death
of the last survivor of the descendants of Xxxxxx X. Xxxxxxx, the late
Ambassador of the United States to the Court of St. James's, living on the date
hereof.
(b) Neither the Seller nor the Company shall be entitled to revoke or
terminate the Trust.
(c) Notice of any termination of the Trust, shall be given promptly by the
Eligible Lender Trustee by letter to the Company and the Swap Counterparty
mailed within five Business
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Days of receipt of notice of such termination from the Administrator given
pursuant to Section 2(b)(vii) of the Administration Agreement.
(d) Upon the winding up of the Trust and its termination, the Eligible
Lender Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State of the State of Delaware
in accordance with the provisions of Section 3810 of the Business Trust Statute.
SECTION 9.02. [Reserved.]
ARTICLE X
Successor Eligible Lender Trustees and
Additional Eligible Lender Trustees
SECTION 10.01. Eligibility Requirements for Eligible Lender Trustee. The
Eligible Lender Trustee shall at all times be a corporation or association (i)
qualifying as an "eligible lender" as such term is defined in Section 435(d) of
the Higher Education Act for purposes of holding legal title to the Financed
Student Loans and originating Consolidation Loans on behalf of the Trust, with a
valid lender identification number with respect to the Trust from the
Department; (ii) being authorized to exercise corporate trust powers and hold
legal title to the Financed Student Loans; (iii) having in effect Guarantee
Agreements with the Initial Guarantor and any Additional Guarantors; (iv) having
a combined capital and surplus of at least $50,000,000 and being subject to
supervision or examination by Federal or state authorities; and (v) having (or
having a parent which has) a rating of at least "Baa3" by Xxxxx'x and "BBB" by
Fitch, if rated by Fitch. If the Eligible Lender Trustee shall publish reports
of condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purpose of this
Section, the combined capital and surplus of the Eligible Lender Trustee shall
be deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Eligible Lender
Trustee shall cease to be eligible in accordance with the provisions of this
Section, the Eligible Lender Trustee shall resign immediately in the manner and
with the effect specified in Section 10.02. In addition, at all times the
Trustee or a co-trustee shall be a Person that satisfies the requirements of
Section 3807(a) of the Business Trust Statute (the "Delaware Trustee").
SECTION 10.02. Resignation or Removal of Eligible Lender Trustee. The
Eligible Lender Trustee may at any time resign and be discharged from the trusts
hereby created by giving written notice thereof to the Administrator and the
Swap Counterparty. Upon receiving such notice of resignation, the Administrator
shall promptly appoint a successor Eligible Lender Trustee meeting the
eligibility requirements of Section 10.01 by written instrument, in duplicate,
one copy of which instrument shall be delivered to the resigning Eligible Lender
Trustee and one copy to the successor Eligible Lender Trustee. If no successor
Eligible Lender Trustee shall have been so appointed and have accepted
appointment within 30 days after the giving of such notice of resignation, the
resigning Eligible Lender Trustee may petition any court of competent
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jurisdiction for the appointment of a successor Eligible Lender Trustee;
provided, however, that such right to appoint or to petition for the appointment
of any such successor shall in no event relieve the resigning Eligible Lender
Trustee from any obligations otherwise imposed on it under the Basic Documents
until such successor has in fact assumed such appointment.
If at any time the Eligible Lender Trustee shall cease to be eligible in
accordance with the provisions of Section 10.01 and shall fail to resign after
written request therefor by the Administrator, or if at any time the Eligible
Lender Trustee shall be legally unable to act, or an Insolvency Event with
respect to the Eligible Lender Trustee shall have occurred and be continuing,
then the Administrator may remove the Eligible Lender Trustee. If the
Administrator shall remove the Eligible Lender Trustee under the authority of
the immediately preceding sentence, the Administrator shall promptly appoint a
successor Eligible Lender Trustee by written instrument, in duplicate, one copy
of which instrument shall be delivered to the outgoing Eligible Lender Trustee
so removed and one copy to the successor Eligible Lender Trustee and payment of
all fees owed to the outgoing Eligible Lender Trustee.
Any resignation or removal of the Eligible Lender Trustee and appointment
of a successor Eligible Lender Trustee pursuant to any of the provisions of this
Section shall not become effective until acceptance of appointment by the
successor Eligible Lender Trustee pursuant to Section 10.03 and payment of all
fees and expenses owed to the outgoing Eligible Lender Trustee. The
Administrator shall provide notice of such resignation or removal of the
Eligible Lender Trustee to the Swap Counterparty and to each of the Rating
Agencies.
SECTION 10.03. Successor Eligible Lender Trustee. Any successor Eligible
Lender Trustee appointed pursuant to Section 10.02 shall execute, acknowledge
and deliver to the Administrator, to its predecessor Eligible Lender Trustee an
instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Eligible Lender Trustee shall become
effective and such successor Eligible Lender Trustee, without any further act,
deed or conveyance, shall become fully vested with all the rights, powers,
duties and obligations of its predecessor under this Agreement, with like effect
as if originally named as Eligible Lender Trustee. The predecessor Eligible
Lender Trustee shall upon payment of its fees and expenses deliver to the
successor Eligible Lender Trustee all documents, statements, monies and
properties held by it under this Agreement and shall assign, if permissible, to
the successor Eligible Lender Trustee the lender identification number obtained
from the Department on behalf of the Trust; and the Administrator and the
predecessor Eligible Lender Trustee shall execute and deliver such instruments
and do such other things as may reasonably be required for fully and certainly
vesting and confirming in the successor Eligible Lender Trustee all such rights,
powers, duties and obligations.
No successor Eligible Lender Trustee shall accept appointment as provided
in this Section unless at the time of such acceptance such successor Eligible
Lender Trustee shall be eligible pursuant to Section 10.01.
Upon acceptance of appointment by a successor Eligible Lender Trustee
pursuant to this Section, the Administrator shall mail notice of the successor
of such Eligible Lender
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Trustee to the Company, the Indenture Trustee, the Noteholders, the Rating
Agencies and the Swap Counterparty. If the Administrator shall fail to mail such
notice within 10 days after acceptance of appointment by the successor Eligible
Lender Trustee, the successor Eligible Lender Trustee shall cause such notice to
be mailed at the expense of the Administrator.
SECTION 10.04. Merger or Consolidation of Eligible Lender Trustee. Any
corporation into which the Eligible Lender Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Eligible Lender Trustee shall be a
party, or any corporation succeeding to all or substantially all the corporate
trust business of the Eligible Lender Trustee, shall, without the execution or
filing of any instrument or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding, be the successor of the
Eligible Lender Trustee hereunder; provided that such corporation shall be
eligible pursuant to Section 10.01; provided further that the Eligible Lender
Trustee shall mail notice of such merger or consolidation to the Rating Agencies
and the Swap Counterparty not less than 10 Business Days prior to the closing
date of such merger or consolidation.
SECTION 10.05. Appointment of Co-Eligible Lender Trustee or Separate
Eligible Lender Trustee. Notwithstanding any other provisions of this Agreement,
at any time, for the purpose of meeting any legal requirements of any
jurisdiction in which any part of the Trust may at the time be located, the
Administrator and the Eligible Lender Trustee acting jointly (and with written
notice to the Swap Counterparty) shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Eligible
Lender Trustee, which, except in the case of any Delaware Trustee, shall meet
the eligibility requirements of clauses (i) through (iii) of Section 10.01, to
act as co-trustee, jointly with the Eligible Lender Trustee, or separate trustee
or separate trustees, of all or any part of the Trust Estate, and to vest in
such Person, in such capacity, such title to the Trust Estate, or any part
thereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Administrator and the Eligible
Lender Trustee may consider necessary or desirable. If the Administrator shall
not have joined in such appointment within 15 days after the receipt by it of a
request so to do, the Eligible Lender Trustee alone shall have the power to make
such appointment. Pursuant to the Co-Trustee Agreement, dated as of February 1,
1999 between The First National Bank of Chicago and First Chicago Delaware Inc.,
the Eligible Lender Trustee shall appoint First Chicago Delaware Inc. as a
co-trustee hereunder for the purpose of its acting as Delaware Trustee and such
agreement is hereby incorporated herein by reference. If the Delaware Trustee
shall become incapable of acting, resign or be removed, unless the Trustee is
qualified to act as Delaware Trustee, a successor co-trustee shall promptly be
appointed in the manner specified in this Section 10.05 to act as Delaware
Trustee. No co-trustee or separate trustee under this Agreement shall be
required to meet the terms of eligibility as a successor trustee pursuant to
clauses (iv) and (v) of Section 10.01 and no notice of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 10.03.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
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(i) all rights, powers, duties, and obligations conferred or imposed
upon the Eligible Lender Trustee shall be conferred upon and exercised or
performed by the Eligible Lender Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Eligible Lender
Trustee joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be performed,
the Eligible Lender Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties, and
obligations (including the holding of title to the Trust or any portion
thereof in any such jurisdiction) shall be exercised and performed singly
by such separate trustee or co-trustee, solely at the direction of the
Eligible Lender Trustee;
(ii) no trustee under this Agreement shall be personally liable by
reason of any act or omission of any other trustee under this Agreement;
and
(iii) the Administrator and the Eligible Lender Trustee acting
jointly may at any time accept the resignation of or remove any separate
trustee or co-trustee.
Any notice, request or other writing given to the Eligible Lender Trustee
shall be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Eligible
Lender Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Eligible Lender Trustee. Each such instrument shall be filed
with the Eligible Lender Trustee and a copy thereof given to the Administrator
and the Swap Counterparty.
Any separate trustee or co-trustee may at any time appoint the Eligible
Lender Trustee as its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Agreement on its behalf and in its name. If any separate trustee or
co-trustee shall die, become incapable of acting, resign or be removed, all its
estates, properties, rights, remedies and trusts shall vest in and be exercised
by the Eligible Lender Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee, except as otherwise provided in this
Section 10.05 in regard to the Delaware Trustee.
ARTICLE XI
Miscellaneous
SECTION 11.01. Supplements and Amendments. This Agreement may be amended
by the Seller, the Company and the Eligible Lender Trustee, with the prior
written
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consent of the Swap Counterparty and with prior written notice to the Rating
Agencies, without the consent of any of the Noteholders, to cure any ambiguity,
to correct or supplement any provisions in this Agreement or for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions in this Agreement or of modifying in any manner the rights of the
Noteholders; provided, however, that such action shall not, as evidenced by an
Opinion of Counsel, adversely affect in any material respect the interests of
any Noteholder.
This Agreement may also be amended from time to time by the Seller, the
Company and the Eligible Lender Trustee, with prior written consent of the Swap
Counterparty and with prior written notice to the Rating Agencies, with the
consent of the Noteholders of Notes evidencing not less than a majority of the
Outstanding Amount of the Notes, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
of modifying in any manner the rights of the Noteholders; provided, however,
that no such amendment shall (a) increase or reduce in any manner the amount of,
or accelerate or delay the timing of, collections of payments on Financed
Student Loans or distributions that shall be required to be made for the benefit
of the Noteholders or (b) reduce the aforesaid percentage of the Outstanding
Amount of the Notes and required to consent to any such amendment, without the
consent of all the outstanding Noteholders.
The Eligible Lender Trustee shall furnish 10 Business Days' prior written
notification of the substance of any such amendment or consent to the Indenture
Trustee, each of the Rating Agencies and the Swap Counterparty.
It shall not be necessary for the consent of the Noteholders or the
Indenture Trustee pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents shall be
subject to such reasonable requirements as the Eligible Lender Trustee may
prescribe.
Promptly after the execution of any amendment to the Certificate of Trust,
the Eligible Lender Trustee shall cause the filing of such amendment with the
Secretary of State of the State of Delaware. The Eligible Lender Trustee shall
furnish the Rating Agencies and the Swap Counterparty with ten Business Days'
prior written notice of any amendment to the Certificate of Trust.
Prior to the execution of any amendment to this Agreement, the Eligible
Lender Trustee shall be entitled to receive and rely upon an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by this
Agreement. The Eligible Lender Trustee may, but shall not be obligated to, enter
into any such amendment which affects the Eligible Lender Trustee's own rights,
duties or immunities under this Agreement or otherwise.
SECTION 11.02. No Legal Title to Trust Estate in Company. The Company
shall not have legal title to any part of the Trust Estate. The Company shall be
entitled to receive distributions with respect to its ownership interest therein
only in accordance with the Indenture, the Administration Agreement and the
Servicing Agreement. No transfer, by operation of law or
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otherwise, of any right, title, or interest of the Company to and in its
beneficial ownership interest in the Trust Estate shall operate to terminate
this Agreement or the trusts hereunder or entitle any transferee to an
accounting or to the transfer to it of legal title to any part of the Trust
Estate. If, contrary to this Section, the Company is deemed to have legal title
to any part of the Trust Estate, the Company shall be deemed to have granted,
and in such event does hereby grant to the Issuer, a first priority security
interest in all of the Company's right, title and interest in the Trust Estate,
other than in the distributions referred to in the second sentence of this
Section 11.02, and this Agreement shall be deemed to constitute a security
agreement under applicable law with respect to the Trust Estate.
SECTION 11.03. Limitations on Rights of Others. Except for Section 2.07,
the provisions of this Agreement are solely for the benefit of the Eligible
Lender Trustee, the Seller, the Company, the Administrator, the Swap
Counterparty and, to the extent expressly provided herein, the Indenture Trustee
and the Noteholders, and nothing in this Agreement (other than Section 2.07),
whether express or implied, shall be construed to give to any other Person any
legal or equitable right, remedy or claim in the Trust Estate or under or in
respect of this Agreement or any covenants, conditions or provisions contained
herein.
SECTION 11.04. Notices. Unless otherwise expressly specified or permitted
by the terms hereof, all notices shall be in writing (or in the form of
facsimile notice, followed by written notice) and shall be deemed given upon
receipt by the intended recipient, if to the Eligible Lender Trustee, addressed
to its Corporate Trust Office; if to the Seller, addressed to USA Group
Secondary Market Services, Inc., 00 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx
00000-0000, Attention: President and Chief Executive Officer (telephone:
000-000-0000; facsimile: 317-951-5764), with a copy to Office of the General
Counsel, USA Group, Inc., 00 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx
00000-0000, Attention: Xxxxx X. Xxxxx (telephone: 000-000-0000; facsimile:
317-951-5532); if to the Company, addressed to Secondary Market Company, Inc.,
00 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000-0000, Attention: President
(telephone: 000-000-0000; facsimile: 317-951-5764), with a copy to USA Group
Secondary Market Services, Inc., 00 Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx
00000-0000, and a copy to Office of the General Counsel, USA Group, Inc., 00
Xxxxx Xxxxxxxx Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000-0000, Attention: Xxxxx X.
Xxxxx (telephone: 000-000-0000; facsimile: 317-951-5532); and if to the Swap
Counterparty, to General Re Financial Products Corporation, Rockefeller Center,
000 Xxxxx Xxxxxx, Xxxxx 000, Xxx Xxxx, Xxx Xxxx 00000, Attention: Head of
Operations (telephone: 000-000-0000; facsimile: 212-307-2288); or, as to each
party, at such other address as shall be designated by such party in a written
notice to each other party.
SECTION 11.05. Severability. Any provision of this Agreement that as
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.06. Separate Counterparts. This Agreement may be executed by
the parties hereto in separate counterparts, each of which when so executed and
delivered shall
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be an original, but all such counterparts shall together constitute but one and
the same instrument.
SECTION 11.07. Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, the Seller,
the Company, the Eligible Lender Trustee and their respective successors and
permitted assigns, all as herein provided.
SECTION 11.08. No Petition. (a) The Seller will not at any time institute
against the Trust or the Company any bankruptcy proceedings under any United
States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, this Agreement or any of the other Basic
Documents.
(b) The Eligible Lender Trustee, by entering into this Agreement, and the
Indenture Trustee and each Noteholder by accepting the benefits of this
Agreement, hereby covenant and agree that they will not at any time institute
against the Seller, the Company or the Trust, or join in any institution against
the Seller, the Company or the Trust of, any bankruptcy, reorganization,
arrangement, insolvency, receivership or liquidation proceedings, or other
proceedings under any United States federal or state bankruptcy or similar law
in connection with any obligations relating to the Notes, this Agreement or any
of the other Basic Documents.
(c) The Company will not at any time institute against the Trust or the
Seller any bankruptcy proceedings under any United States Federal or state
bankruptcy or similar law in connection with any obligations relating to the
Notes, the Agreement or any of the other Basic Documents.
SECTION 11.09. No Recourse. The Company acknowledges that its ownership
interest in the Trust represents a beneficial interest in the Trust only and
does not represent an interest in or obligation of the Seller, the Servicer, the
Seller, the Administrator, the Eligible Lender Trustee, the Indenture Trustee or
any Affiliate thereof or any officer, director or employee of any thereof and no
recourse may be had against such parties or their assets, except as may be
expressly set forth or contemplated in this Agreement or the other Basic
Documents.
SECTION 11.10. Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 11.11. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Delaware, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 11.12. Responsibility to Secretary and Guarantors. Notwithstanding
any other provision in this Agreement or the other Basic Documents, nothing in
this Agreement or the other Basic Documents shall be construed to limit the
legal responsibility of the Eligible
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Lender Trustee in its capacity as Eligible Lender Trustee to the U.S. Secretary
of Education or a Guarantor for any violations of statutory or regulatory
requirements that may occur with respect to loans held in the Trust, pursuant to
34 CFR 682.203(b) or any successor provision thereto.
SECTION 11.13. Third-Party Beneficiaries. The parties hereto acknowledge
that the Swap Counterparty is an express third-party beneficiary hereof entitled
to enforce the provisions hereof as if it were an actual party hereto; provided,
however, that in the case of the Swap Counterparty, such right to enforcement
and the right to provide consents or waivers pursuant to the provisions hereof
or to take other actions as provided herein are conditioned upon its not being
in default under the Swap Agreement.
SECTION 11.14. Consents. With respect to any action to be taken hereunder
that requires the consent of a party hereto or of the Indenture Trustee or the
Swap Counterparty, such consent shall not be unreasonably withheld, delayed or
conditioned.
[Signatures Follow on Next Page]
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IN WITNESS WHEREOF, the parties hereto have caused this Trust Agreement to
be duly executed by their respective officers hereunto duly authorized, as of
the day and year first above written.
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity but
solely as Eligible Lender Trustee
By:_____________________________________
Name:
Title:
USA GROUP SECONDARY MARKET
SERVICES, INC., as depositor
By:_____________________________________
Name:
Title:
SECONDARY MARKET COMPANY, INC.
By:_____________________________________
Name:
Title:
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EXHIBIT A
TO THE TRUST AGREEMENT
CERTIFICATE OF TRUST OF
SMS STUDENT LOAN TRUST 1999-A
THIS Certificate of Trust of SMS Student Loan Trust 1999-A (the "Trust"),
dated as of February 1, 1999, is being duly executed and filed by The First
National Bank of Chicago, a national banking association, and First Chicago
Delaware Inc., a Delaware banking corporation, as trustees, to form a business
trust under the Delaware Business Trust Act (12 Del. Code, ss. 3801 et seq.).
1. Name. The name of the business trust formed hereby is SMS Student Loan
Trust 1999-A.
2. Delaware Trustee. The name and business address of the trustee of the
Trust resident in the State of Delaware is First Chicago Delaware Inc., c/o FCC
National Bank, 000 Xxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000.
3. This Certificate of Trust will be effective March __, 1999.
A-1
IN WITNESS WHEREOF, the undersigned, being the sole trustees of the Trust,
have executed this Certificate of Trust as of the date first above written.
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity
but solely as trustee of the Trust
By: ______________________________
Name:
Title:
FIRST CHICAGO DELAWARE INC.,
not in its individual capacity
but solely as trustee of the Trust
By: ______________________________
Name:
Title:
A-2
