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 April 1, 1997
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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. Liability of the Company........................ 3
SECTION 2.08. Title to Trust Property......................... 3
SECTION 2.09. Representations and Warranties of the
Depositor and the Company. ........ 3
SECTION 2.10. Tax Treatment................................... 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..................... 6
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 Moneys; No Interest........... 7
SECTION 5.02. Accounting and Reports to the
Noteholders, the Internal Revenue
Service and Others.................. 7
SECTION 5.03. Incentive Programs.............................. 8
SECTION 5.04. Check-The-Box Proposal.......................... 8
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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........... 12
SECTION 6.06. Restrictions.................................... 12
SECTION 6.07. Origination of Consolidation Loans
during the Revolving Period......... 12
ARTICLE VII
Concerning the Eligible Lender Trustee
SECTION 7.01. Acceptance of Trusts and Duties................. 14
SECTION 7.02. Furnishing of Documents......................... 16
SECTION 7.03. Representations and Warranties.................. 16
SECTION 7.04. Reliance; Advice of Counsel..................... 17
SECTION 7.05. Not Acting in Individual Capacity............... 17
SECTION 7.06. Eligible Lender Trustee Not Liable for
Notes or Student Loans.............. 18
SECTION 7.07. Eligible Lender Trustee May Own Notes........... 18
ARTICLE VIII
Compensation of Eligible Lender Trustee
SECTION 8.01. Eligible Lender Trustee's Fees and
Expenses............................ 19
SECTION 8.02. Payments to the Eligible Lender Trustee......... 19
ARTICLE IX
Termination of Trust Agreement
SECTION 9.01. Termination of Trust Agreement.................. 19
SECTION 9.02. Dissolution upon Bankruptcy of the
Company............................. 20
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ARTICLE X
Successor Eligible Lender Trustees and
Additional Eligible Lender Trustees
SECTION 10.01. Eligibility Requirements for Eligible
Lender Trustee...................... 21
SECTION 10.02. Resignation or Removal of Eligible
Lender Trustee...................... 21
SECTION 10.03. Successor Eligible Lender Trustee............... 22
SECTION 10.04. Merger or Consolidation of Eligible
Lender Trustee...................... 23
SECTION 10.05. Appointment of Co-Eligible Lender
Trustee or Separate Eligible Lender
Trustee............................. 23
ARTICLE XI
Miscellaneous
SECTION 11.01. Supplements and Amendments...................... 25
SECTION 11.02. No Legal Title to Trust Estate in
Company............................. 26
SECTION 11.03. Limitations on Rights of Others................. 27
SECTION 11.04. Notices......................................... 27
SECTION 11.05. Severability.................................... 28
SECTION 11.06. Separate Counterparts........................... 28
SECTION 11.07. Successors and Assigns.......................... 28
SECTION 11.08. No Petition..................................... 28
SECTION 11.09. No Recourse..................................... 28
SECTION 11.10. Headings........................................ 29
SECTION 11.11. Governing Law................................... 29
EXHIBIT A Certificate of Trust of SMS Student Loan Trust
1997-A
iii
TRUST AGREEMENT dated as of April 1, 1997, among USA GROUP
SECONDARY MARKET SERVICES, INC., a Delaware corporation, as Depositor, 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 Depositor, 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 April 1, 1997, among SMS
Student Loan Trust 1997-A, as Issuer, the Depositor, 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 1997-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
Depositor.
SECTION 2.03. PURPOSES AND POWERS. The purpose of the
Trust is to engage in the following activities:
to issue the Notes pursuant to the Indenture and to
sell the Notes in one or more transactions;
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, and to pay the organizational, start-up
and transactional expenses of the Trust and to pay the balance to the
Depositor pursuant to the Loan Sale Agreement;
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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 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;
to assign, grant, transfer, pledge, mortgage and
convey the Trust Estate pursuant to the Indenture;
to enter into and perform its obligations under the
Basic Documents to which it is to be a party;
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
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
Depositor 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 Depositor 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 Depositor, 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
Depositor 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. LIABILITY OF THE COMPANY. The Company shall be
liable directly to and will indemnify the injured party for all losses, claims,
damages, liabilities and expenses of the Trust (including Expenses, to the
extent not paid out of the Trust Estate) to the extent that the Company would be
liable if the Trust were a partnership under the Delaware Revised Uniform
Limited Partnership Act in which the Company were a general partner; PROVIDED,
HOWEVER, that the Company shall not be liable for any losses incurred by a
Noteholder or a Note Owner in the capacity of an investor in the Notes. In
addition, any third party creditors of the Trust (other than in connection with
the obligations described in the preceding sentence for which the Company shall
not be liable) shall be deemed third party beneficiaries of this paragraph.
SECTION 2.08. TITLE TO TRUST PROPERTY. 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 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
DEPOSITOR AND THE COMPANY. a. Each of the Company and the
Depositor hereby represents and warrants, as to itself, to the
Eligible Lender Trustee that:
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 presently conducted (subject with respect to the
Depositor
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and its Student Loans, to the vesting of legal title thereto in NBD or
another eligible lender, as trustee for the Depositor).
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.
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 has been duly authorized by
it by all necessary corporate action.
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.
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 articles 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.
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 Depositor 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
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obligations under, or the validity or enforceability of,
this Agreement.
SECTION 2.10. TAX TREATMENT. The Depositor 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 Depositor
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).
ARTICLE III.
OWNERSHIP
SECTION 3.01. BENEFICIAL OWNERSHIP. Upon the formation of the
Trust by the contribution by the Depositor pursuant to Section 2.05, the
Depositor shall be the sole beneficial owner of the Trust. Concurrently with the
transfer and sale of the Initial Financed Student Loans to the Trust pursuant to
the Loan Sale Agreement, the Depositor 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 and the Indenture
Trustee an Opinion of Counsel (with a copy to Xxxxx'x) 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 and the
Indenture Trustee 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
5
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, the Eligible Lender Trustee
shall not take action unless at least 30 days before the taking of such action,
the Eligible Lender Trustee shall have notified the Company and the Rating
Agencies in writing of the proposed action and the Company shall not have
notified the Eligible Lender Trustee in writing prior to the 30th day after such
notice is given that the Company has withheld consent or 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);
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 is required;
d. the amendment of the Indenture by a supplemental
indenture in circumstances where the consent of any
Noteholder 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.
SECTION 4.02. ACTION BY COMPANY WITH RESPECT TO
BANKRUPTCY. The Eligible Lender Trustee shall not have the power
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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 obligation of the
Trust or the Eligible Lender Trustee under 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.
ARTICLE V.
CERTAIN DUTIES
SECTION 5.01. NO SEGREGATION OF MONEYS; NO INTEREST. Moneys
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 Depositor 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
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the Eligible Lender Trustee, the Company or the Depositor, 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.
SECTION 5.04. CHECK-THE-BOX PROPOSAL. If applicable Indiana
tax statutes or regulations are amended such that the Trust would not be
classified as an association taxable as a corporation if the requirements of
Sections 2.07 and 9.02 hereof and Section 2.13 of the Indenture (collectively,
the "Partnership Qualification Provisions") were no longer applicable and the
Trust made any necessary elections to avoid classification as an association
taxable as a corporation required by such statutes or regulations (such an
amendment, a "Tax Characterization Amendment"), the Partnership Qualification
Provisions shall no longer be applicable or part of this Agreement or the
Indenture; provided, however, that the Partnership Qualification Provisions
shall no longer be applicable or part of this Agreement or the Indenture only if
the Eligible Lender Trustee first obtains an Opinion of Counsel stating that (i)
a Tax Characterization Amendment has been adopted and (ii) the deletion of the
Partnership Qualification Provisions will not cause the Trust to be subject to
an entity level tax for state or federal income tax purposes. If the Depositor
determines in its sole discretion that the Trust should make any filing or take
any other action as a result of a Tax Characterization Amendment, the Depositor
and the Eligible Lender Trustee, at the expense of the Depositor, shall take all
actions (including, but not limited to, obtaining the approval of one or both
classes of Noteholders) determined by the Depositor in its sole discretion as
necessary or advisable under such statutes and regulations for the Trust to be
treated as a partnership for Indiana state income tax purposes.
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
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contemplated by the Basic Documents to which the Trust is to be a party, in each
case, in such form as the Depositor 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 Senior Notes in the
aggregate principal amount of $525,387,000 and Subordinate Notes in the
aggregate principal amount of $19,056,000. 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 Depositor 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
9
direction may be exercised at any time by written instruction of
the Company pursuant to Article IV.
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 requesting instruction 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
10
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.
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 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.
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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 that, a Consolidation Loan will not be offered to a Borrower
if any Student Loan of such Borrower which is not owned by the Issuer and which
is proposed to be discharged by the making of such Consolidation Loan is more
than 30 days past due; and PROVIDED FURTHER that a Consolidation Loan will not
be offered to a borrower if the aggregate principal amount 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 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
12
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 Issuer 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 $69,000,000
(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 2028
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 2028 exceeds, or after giving effect to such
origination, would exceed $20,000,000; 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 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.
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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 moneys
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;
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 Depositor or for the form, character,
genuineness, sufficiency, value or validity of any part 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
14
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 Depositor, 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 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 Depositor and the Company, 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
15
by one of its officers who is duly authorized to execute and
deliver this Agreement on its behalf.
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 each
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
16
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.
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.
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 Depositor,
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
17
Basic Document) of any Financed Student Loan; the compliance by the Depositor 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 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 Depositor, 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.
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
Depositor and the Eligible Lender Trustee, and the Eligible Lender Trustee shall
be entitled to be reimbursed by the Depositor 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 moneys or other property or proceeds of the Trust
Estate in accordance with the terms of the Indenture and the Servicing
18
Agreement, (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, and (iii) the
time provided in Section 9.02.
b. Except as provided in Section 9.01(a), neither the
Depositor 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 mailed within
five Business 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. DISSOLUTION UPON BANKRUPTCY OF THE COMPANY. In
the event that an Insolvency Event shall occur with respect to the Company, this
Agreement shall be terminated in accordance with Section 9.01 90 days after the
date of such Insolvency Event unless, before the end of such 90-day period, the
Eligible Lender Trustee shall have received written instructions from (a)
Subordinate Noteholders (other than the Company) representing more than 50% of
the aggregate outstanding principal amount (not including the principal amount
of the Company Note) of the Subordinate Notes and (b) Senior Noteholders
representing more than 50% of the aggregate outstanding principal amount of the
Senior Notes, to the effect that each such party disapproves of the liquidation
of the Financed Student Loans and termination of the Trust, in which event the
Trust shall continue in accordance with the Basic Documents. Promptly after the
occurrence of any Insolvency Event with respect to the Company, (i) the Company
shall give the Indenture Trustee, the Eligible Lender Trustee and the Rating
Agencies written notice of such Insolvency Event, (ii) the Eligible Lender
Trustee shall, upon the receipt of such written notice from the Company, give
prompt written notice to the Indenture Trustee of the occurrence of such event
and (iii) the Indenture Trustee shall, upon receipt of written notice of such
Insolvency Event from the Eligible Lender Trustee or the Company, give prompt
written notice to the Noteholders of the occurrence of such event; PROVIDED,
HOWEVER, that any failure to give a notice required by this sentence shall not
prevent or delay, in any manner, a termination of the Trust pursuant to the
first sentence of this Section 9.02. Upon a termination pursuant to this
Section, the Eligible Lender Trustee
19
shall direct the Indenture Trustee promptly to sell the assets of the Trust
(other than the Trust Accounts) in a commercially reasonable manner and on
commercially reasonable terms. The proceeds of such a sale of the assets of the
Trust shall be treated as collections under the Servicing Agreement and the
Administration Agreement.
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 Guarantors 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. 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
20
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 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 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 and 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, moneys and properties held by
21
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 Trustee to the Company, the Indenture Trustee,
the Noteholders and the Rating Agencies. 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 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 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,
22
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 April 1, 1997 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:
(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
23
(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.
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 Depositor, the Company and the Eligible Lender Trustee, 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.
24
This Agreement may also be amended from time to time by the
Depositor, the Company and the Eligible Lender Trustee, 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 and each of the Rating Agencies.
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 with 10 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
otherwise, of any right, title, or interest of the Company to and
25
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 Seller'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 Depositor, the Company, the Administrator 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 Depositor, 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. Xxxxxxxxxxx (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. Xxxxxxxxxxx (telephone: 000-000-0000; facsimile:
317-951-5532); 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 is prohibited or unenforceable in any jurisdiction shall, as
to such jurisdiction, be ineffective to the extent of
26
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 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 Depositor, the Company, the Eligible Lender Trustee and their respective
successors and permitted assigns, all as herein provided.
SECTION 11.08. NO PETITION. a. The Depositor 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 Depositor, the Company or the Trust, or join in any
institution against the Depositor, 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 Depositor 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 Depositor, 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.
27
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.
28
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., Depositor,
by
----------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President and Chief
Executive Officer
SECONDARY MARKET COMPANY, INC.
by
----------------------------
Name:
Title:
29
EXHIBIT A
TO THE TRUST AGREEMENT
CERTIFICATE OF TRUST OF
SMS STUDENT LOAN TRUST 1997-A
THIS Certificate of Trust of SMS Student Loan Trust 1997-A (the
"Trust"), dated as of April 1, 1997, 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 1997-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., FCC National Bank, 000 Xxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxx 00000.
3. This Certificate of Trust will be effective May 5,
1997.
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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
---------------------------------
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