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 April 19, 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.......................................4
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........................................9
SECTION 6.04. No Duties Except as Specified in this Agreement,
the Loan Sale Agreement, the Servicing Agreement,
the Administration Agreement or in Instructions.............10
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.................................14
SECTION 7.04. Reliance; Advice of Counsel....................................15
SECTION 7.05. Not Acting in Individual Capacity; Responsibility
to Secretary and Guarantors.................................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................... 16
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.................................17
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.............18
SECTION 10.03. Successor Eligible Lender Trustee.............................19
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....................................21
SECTION 11.02. No Legal Title to Trust Estate in Company.....................22
SECTION 11.03. Limitations on Rights of Others...............................23
SECTION 11.04. Notices.......................................................23
SECTION 11.05. Severability..................................................23
SECTION 11.06. Separate Counterparts.........................................24
SECTION 11.07. Successors and Assigns........................................24
SECTION 11.08. No Petition...................................................24
SECTION 11.09. No Recourse...................................................24
SECTION 11.10. Headings......................................................24
SECTION 11.11. Governing Law.................................................24
SECTION 11.12. [Reserved]....................................................24
SECTION 11.13. Third-Party Beneficiaries.....................................25
SECTION 11.14. Consents......................................................25
EXHIBIT A Certificate of Trust of SMS Student Loan Trust 1999-B
TRUST AGREEMENT dated as of April 19, 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 April 19, 1999, among
the SMS Student Loan Trust 1999-B, as Issuer, the Seller, as Administrator, and
HSBC Bank USA, 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-B", 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 . 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.
SECTIONS 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 $150,000,000, Class A-2 Notes in
the aggregate principal amount of $588,225,000 and Subordinate Notes in the
aggregate principal amount of $26,775,000. 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 Institution. (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 6.05. 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;
Responsibility to Secretary. 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 jurisdiction for the appointment of a successor Eligible Lender
Trustee; provided, however, that
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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 Trustee to the Company, the Indenture Trustee,
the Noteholders, the Rating Agencies and the
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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. Notwithstanding any other provisions of this Agreement, at any time,
for the purpose of meeting any legal ee 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 April 19, 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, addressed to Xxxxxxx Xxxxx Derivative Products XX,
Xxxxxxxxxxxxxxxxxx 0, 0xx Xxxxx, 0000 Xxxxxx, Xxxxxxxxxxx, Attention: Manager
(telephone: 000 0000 000 0000; facsimile: 011 000 000 0000), with a copy to
Xxxxxxx Xxxxx & Co., Office of General Counsel, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: Xxxxxxxx X. Xxxxxx (telephone: 000-000-0000; facsimile:
212-449-6993); 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.
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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 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. Hearings. 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. Reserved.
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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-B
THIS Certificate of Trust of SMS Student Loan Trust 1999-B (the
"Trust"), dated as of April 19, 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-B.
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 May __, 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:
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