EXHIBIT 4.1
TRUST AGREEMENT dated as of March 1, 1998, between SLM FUNDING CORPORATION,
a Delaware corporation, as Depositor, and CHASE MANHATTAN BANK USA, NATIONAL
ASSOCIATION, a national banking association, not in its individual capacity but
solely as Eligible Lender Trustee.
The Depositor and the Eligible Lender Trustee hereby agree as follows:
ARTICLE I
SECTION 1.1 Definitions and Usage. Except as otherwise specified herein
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or as the context may otherwise require, capitalized terms used but not
otherwise defined herein are defined in Appendix A hereto, which also contains
rules as to usage that shall be applicable herein.
ARTICLE II
Organization
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SECTION II.1 Creation of Trust; Name. There is hereby created a Trust
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which shall be known as "SLM Student Loan Trust 1998-1", 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. The
Trust shall constitute a business trust within the meaning of Section 3801(a) of
the Delaware Business Trust Act for which the Trustee has filed a certificate of
trust with the Secretary of State of the State of Delaware pursuant to Section
3810(a) of the Delaware Business Trust Act.
SECTION II.2 Office. The office of the Trust shall be in care of the
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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
Certificateholders and the Depositor.
SECTION II.3 Purposes and Powers. The purpose of the Trust is to engage
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in the following activities:
(i) to issue the Notes pursuant to the Indenture and the Trust
Certificates pursuant to this Agreement and to sell the Notes and the Trust
Certificates in one or more transactions;
(ii) with the proceeds of the sale of the Notes and the Trust
Certificates, to fund the Reserve Account pursuant to Section 2.8 of the
Administration Agreement and to purchase the Trust Student Loans pursuant
to the Sale Agreement;
(iii) to Grant the Trust Estate to the Indenture Trustee pursuant to
the Indenture, and to hold, manage and distribute to the Certificateholders
pursuant to the terms of this Agreement any portion of the Trust Estate
released from the Lien of, and remitted to the Trust pursuant to, the
Indenture;
(iv) to enter into and perform its obligations under the Basic
Documents to which it is to be a party;
(v) 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
(vi) 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 Certificateholders,
the Noteholders and the others specified in Section 2.7 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 II.4 Appointment of Eligible Lender Trustee. The Depositor hereby
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appoints the Eligible Lender Trustee as trustee of the Trust effective as of
the date hereof, to have all the rights, powers and duties set forth herein.
SECTION II.5 Initial Capital Contribution of Trust Estate. The Depositor
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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.
SECTION II.6 Declaration of Trust. The Eligible Lender Trustee hereby
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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 Certificateholders,
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 business trust
under Delaware law and that this Agreement
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constitute the governing instrument of such trust. It is the intention of the
parties hereto that, solely for income tax purposes, the Trust shall be treated
as a partnership, with the assets of the partnership being the Trust Student
Loans and other assets held by the Trust, the partners of the partnership being
the Certificateholders (including the Depositor as recipient of distributions
from the Reserve Account), and the Notes being debt of the partnership. The
parties agree that, unless otherwise required by appropriate tax authorities,
the Trust will file or cause to be filed annual or other necessary returns,
reports and other forms consistent with the characterization of the Trust as a
partnership for such tax purposes. Effective as of the date hereof, the
Eligible Lender Trustee shall have all rights, powers and duties set forth
herein with respect to accomplishing the purposes of the Trust.
SECTION II.7 Liability of the Certificateholders.
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(a) Notwithstanding the provisions of Section 3803 of the Delaware
Business Trust Act, the Depositor shall be liable directly to and
shall indemnify the injured party for all losses, claims, damages,
liabilities and expenses of the Trust (including Expenses, to the
extent that the assets of the Trust that would remain if all of the
Notes were paid in full would not be sufficient to pay any such
liabilities, or if such liabilities in fact are not paid out of the
Trust Estate) to the extent that the Depositor would be liable if the
Trust were a partnership under the Delaware Revised Uniform Limited
Partnership Act in which the Depositor were a general partner;
provided, however, that the Depositor shall not be liable for any
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losses incurred by a beneficial owner of a Note in its capacity as a
holder of limited recourse debt or to any Certificateholder. In
addition, any third party creditors of the Trust (other than in
connection with the obligations to Noteholders excepted above) shall
be third party beneficiaries of this paragraph.
(b) No Certificateholder shall have any personal liability for any
liability or obligation of the Trust.
SECTION II.8 Title to Trust Property. Legal title to all of the Trust
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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 Trust
Student Loans shall be vested at all times in the Eligible Lender Trustee on
behalf of the Trust.
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SECTION II.9 Representations, Warranties, and Covenants of the Depositor.
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The Depositor hereby represents, warrants and covenants to the Eligible Lender
Trustee as follows:
(a) The Depositor is duly organized and validly existing as a Delaware
corporation in good standing under the laws of the State of Delaware,
with power and authority to own its properties and to conduct its
business as such properties are currently owned and such business is
presently conducted.
(b) The Depositor has the corporate power and authority to execute and
deliver this Agreement and to carry out its terms; the Depositor has
full corporate power and authority to sell and assign the property to
be sold and assigned to and deposited with the Trust (or with the
Eligible Lender Trustee on behalf of the Trust) and the Depositor has
duly authorized such sale and assignment and deposit to the Trust (or
to the Eligible Lender Trustee on behalf of the Trust) by all
necessary corporate action; and the execution, delivery and
performance of this Agreement has been duly authorized by the
Depositor by all necessary corporate action.
(c) This Agreement constitutes a legal, valid and binding obligation of
the Depositor enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency, reorganization and similar laws
relating to creditors' rights generally and subject to general
principles of equity.
(d) 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, the
certificates of incorporation or by-laws of the Depositor, or any
indenture, agreement or other instrument to which the Depositor 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
Depositor's knowledge, any order, rule or regulation applicable to the
Depositor of any court or of any Federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Depositor or its properties.
(e) The Depositor agrees for the benefit of the Noteholders and of the
Certificate Holders that it will comply with
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each of the requirements set forth in Article IX, X, and XII of its
Certificate of Incorporation and with each of the undertakings set
forth in Annex I hereto.
SECTION II.10 Application of Trust Funds.
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(a) Income and Loss Allocations. After giving effect to the special
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allocations set forth in subparagraph (b) of this Section 2.10 and for
purposes of maintaining Capital Accounts under Section 5.6, gross
income items of the Trust for any Accrual Period as determined for
Federal income tax purposes shall be allocated as follows:
(1) first, among the Certificateholders as of the close of
business on the last day of such Accrual Period, in proportion to
the Certificate Balance of the Certificates owned by them on such
date, an amount of gross income up to the sum of (i) the portion
of the Certificateholders' Return Distribution Amount and the
Certificate Return Carryover, if any, for the related
Distribution Date allocable to such Accrual Period, (ii) return
on the excess, if any, of the Certificateholders' Return
Distribution Amount for the preceding Distribution Date over the
amount in respect of return on the Certificates that is actually
distributed to Certificateholders on such preceding Distribution
Date, to the extent permitted by law, at the Certificate Rate for
such Accrual Period and (iii) the portion of the market discount
on the Trust Student Loans accrued during such Accrual Period
that is allocable to the excess, if any, of the initial aggregate
principal amount of the Certificates over their initial aggregate
issue price; and
(2) the balance of Profits, if any, to the Depositor.
If the items of gross income of the Trust for any month are
insufficient for the allocations described in clause (1) above,
subsequent items of gross income shall first be allocated to make up
such shortfall before Profits are allocated as provided in clause (b).
Loss of the Trust for any Accrual Period shall be allocated to the
Depositor to the extent the Depositor is reasonably expected to bear
the economic burden of such Loss, and any remaining Loss shall be
allocated among the Certificateholders as of the close of business on
the last day of such Accrual Period in proportion to the Certificate
Balance of Trust
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Certificates owned by them on such date. If any items of loss or
deduction are allocated to Certificateholders and the Depositor
subsequently determines that the economic loss to Certificateholders
will be less than was expected at the time such allocations were made,
additional items of gross income will be allocated to
Certificateholders in subsequent periods to offset the excess
allocations of losses and deductions to Certificateholders before any
Profits are allocated to the Depositor as provided in clause (2)
above.
(b) Special Allocations.
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(1) In the event any Certificateholder unexpectedly receives any
adjustments, allocations or distributions described in Treasury
Regulation Section 1.704-1(b)(2)(ii)(d)(4), (5) or (6), items of
Trust income and gain shall be specially allocated to such
Certificateholder in an amount and manner sufficient to
eliminate, to the extent required by the Treasury Regulations,
the deficit, if any, in the balance of the Capital Account of
such Certificateholder as quickly as possible. This Section
2.10(b) is intended to comply with the qualified income offset
provision in Section 1.704-1(b)(2)(ii)(d) of the Treasury
Regulations.
(2) In the event the initial issue price of Certificates differs
from their initial Certificate Balance, there shall be specially
allocated to the Certificateholders the portion, if any, of the
offset for premium (in the case the issue price of the
Certificates exceeds the Certificate Balance) on the Trust
Student Loans accruing for a calendar month that is attributable
to such difference.
(c) Liquidating Profit or Loss. Liquidating Profit or Loss shall be
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allocated, after all other adjustments are made to the Capital
Accounts (including adjustments to reflect the Liquidating
Distribution), as follows:
(1) First, among the Certificateholders in proportion to their
ownership of the principal amount of Certificates, in an amount
that would cause their Capital Account balances to equal zero (in
the case of the Depositor, taking into account the Capital
Account balance of the Depositor only to the extent it relates to
Certificates owned by the Depositor); and
(2) Any balance, to the Depositor.
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(d) Tax Allocations. For Federal income tax purposes, each item of
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income, gain, loss and deduction of the Trust shall be allocated among
the Certificateholders and the Depositor in a manner consistent with
the allocations set forth in this Section 2.10, subject to the
provisions of Section 704(c) of the Code. Notwithstanding anything to
the contrary set forth in this Agreement, the Depositor is authorized
to modify the allocations of this Section 2.10(d) and Sections
2.10(a), (b) and (c) if necessary or appropriate, in the Depositor's
sole discretion, for the allocations to fairly reflect the economic
gain, income or loss to the Depositor or the Certificateholders, or as
otherwise required by the Code or the Treasury Regulations.
ARTICLE III
Trust Certificates and Transfer of Interests
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SECTION III.1 Initial Beneficial Ownership. Upon the formation of the
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Trust by the contribution by the Depositor pursuant to Section 2.5 and until the
issuance of the Trust Certificates, the Depositor shall be the sole beneficial
owner of the Trust.
SECTION III.2 The Trust Certificates. The Trust Certificates shall be
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issued in denominations of $100,000 or in integral multiples of $1,000 in excess
thereof. The Trust Certificates shall be executed on behalf of the Trust by
manual or facsimile signature of an authorized officer of the Eligible Lender
Trustee. Trust Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures were affixed, authorized
to sign on behalf of the Trust, shall be valid and binding obligations of the
Trust, notwithstanding that such individuals or any of them shall have ceased to
be so authorized prior to the authentication and delivery of such Trust
Certificates or did not hold such offices at the date of authentication and
delivery of such Trust Certificates.
SECTION III.3 Authentication of Trust Certificates. Concurrently with the
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sale of the Trust Student Loans to the Trust pursuant to the Purchase Agreement,
the Eligible Lender Trustee shall cause the Trust Certificates in an aggregate
principal amount equal to the Initial Certificate Balance to be executed on
behalf of the Trust, authenticated and delivered to or upon the written order of
the Depositor, signed by its chairman of the board, its president or any vice
president, without further action by the Depositor, in authorized denominations.
No Trust Certificate shall entitle its holder to
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any benefit under this Agreement, or shall be valid for any purpose, unless
there shall appear on such Trust Certificate a certificate of authentication
substantially in the form set forth in Exhibit A, executed by the Eligible
Lender Trustee or The Chase Manhattan Bank, as the Eligible Lender Trustee's
authenticating agent, by manual signature; such authentication shall constitute
conclusive evidence that such Trust Certificate shall have been duly
authenticated and delivered hereunder. All Trust Certificates shall be dated the
date of their authentication. No further Trust Certificates shall be issued
except pursuant to Section 3.4, 3.5 or 3.12 hereunder.
SECTION III.4 Registration of Transfer and Exchange of Trust Certificates.
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The Certificate Registrar shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 3.8, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Eligible Lender
Trustee shall provide for the registration of Trust Certificates and of
transfers and exchanges of Trust Certificates as herein provided. The Chase
Manhattan Bank shall be the initial Certificate Registrar.
Upon surrender for registration of transfer of any Trust Certificate at the
office or agency maintained pursuant to Section 3.8, the Eligible Lender Trustee
shall execute, authenticate and deliver (or shall cause The Chase Manhattan Bank
as its authenticating agent to authenticate and deliver), in the name of the
designated transferee or transferees, one or more new Trust Certificates in
authorized denominations of a like aggregate amount dated the date of
authentication by the Eligible Lender Trustee or any authenticating agent. At
the option of a Certificateholder, Trust Certificates may be exchanged for other
Trust Certificates of authorized denominations of a like aggregate amount upon
surrender of the Trust Certificates to be exchanged at the office or agency
maintained pursuant to Section 3.8.
Every Trust Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Eligible Lender Trustee and the Certificate Registrar
duly executed by the Certificateholder or his attorney duly authorized in
writing, with such signature guaranteed by a member firm of the New York Stock
Exchange or a commercial bank or trust company. Each Trust Certificate
surrendered for registration of transfer or exchange shall be cancelled and
subsequently disposed of by the Eligible Lender Trustee in accordance with its
customary practice.
No service charge shall be made for any registration of transfer or
exchange of Trust Certificates, but the Eligible Lender Trustee or the
Certificate Registrar may require payment
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of a sum sufficient to cover any tax or governmental charge that may be imposed
in connection with any transfer or exchange of Trust Certificates.
The preceding provisions of this Section notwithstanding, the Eligible
Lender Trustee shall not be required to make and the Certificate Registrar need
not register transfers or exchanges of Trust Certificates for a period of 15
days preceding any Distribution Date with respect to the Trust Certificates.
The Trust Certificates and any beneficial interest in such Trust
Certificates may not be acquired by (a) employee benefit plans (as defined in
section 3(3) of ERISA) that are subject to the provisions of Title I of ERISA,
(b) plans described in section 4975(e)(1) of the Code, including individual
retirement accounts described in Section 408(a) of the Code or Xxxxx plans, or
(c) entities whose underlying assets include plan assets by reason of a plan's
investment in such entities (each, a "Benefit Plan"). By accepting and holding a
Trust Certificate or an interest therein, the Certificateholder thereof or
Certificate Owner thereof shall be deemed to have represented and warranted that
it is not a Benefit Plan, is not purchasing Trust Certificates on behalf of a
Benefit Plan and is not using assets of a Plan to purchase any Certificates and
to have agreed that if the Trust Certificate is deemed to be a plan asset, the
Certificateholder will promptly dispose of the Trust Certificate.
SECTION III.5 Mutilated, Destroyed, Lost or Stolen Trust Certificates. If
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(a) any mutilated Trust Certificate shall be surrendered to the Certificate
Registrar, or if the Certificate Registrar shall receive evidence to its
satisfaction of the destruction, loss or theft of any Trust Certificate, and (b)
there shall be delivered to the Certificate Registrar and the Eligible Lender
Trustee such security or indemnity as may be required by them to save each of
them and the Trust harmless, then in the absence of notice that such Trust
Certificate shall have been acquired by a bona fide purchaser, the Eligible
Lender Trustee on behalf of the Trust shall execute and the Eligible Lender
Trustee shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Trust Certificate, a new Trust Certificate
of like tenor and denomination. In connection with the issuance of any new
Trust Certificate under this Section, the Eligible Lender Trustee and the
Certificate Registrar may require the payment of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection therewith.
Any duplicate Trust Certificate issued pursuant to this Section shall constitute
conclusive evidence of ownership in the Trust, as if originally issued, whether
or not the lost, stolen or destroyed Trust Certificate shall be found at any
time.
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SECTION III.6 Persons Deemed Owners. Prior to due presentation of a Trust
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Certificate for registration of transfer, the Eligible Lender Trustee and the
Certificate Registrar and any agent of either of them may treat the Person in
whose name any Trust Certificate shall be registered in the Certificate Register
as the owner of such Trust Certificate for the purpose of receiving
distributions pursuant to Section 5.1 and for all other purposes whatsoever, and
neither the Eligible Lender Trustee, the Certificate Registrar nor any agent
thereof shall be bound by any notice to the contrary.
SECTION III.7 Access to List of Certificateholders' Names and Addresses.
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The Eligible Lender Trustee shall furnish or cause to be furnished to the
Depositor, within 15 days after receipt by the Eligible Lender Trustee of a
request therefor from the Depositor in writing, a list, in such form as the
Depositor may reasonably require, of the names and addresses of the
Certificateholders as of the most recent Record Date. If three or more
Certificateholders or one or more Certificateholders evidencing not less than
25% of the Certificate Balance apply in writing to the Eligible Lender Trustee,
and such application states that the applicants desire to communicate with other
Certificateholders with respect to their rights under this Agreement or under
the Trust Certificates and such application is accompanied by a copy of the
communication that such applicants propose to transmit, then the Eligible Lender
Trustee shall, within five Business Days after the receipt of such application,
afford such applicants access during normal business hours to the current list
of Certificateholders. Upon receipt of any such application, the Eligible Lender
Trustee shall promptly notify the Depositor by providing a copy of such
application and a copy of the list of Certificateholders produced in response
thereto. Each Certificateholder, by receiving and holding a Trust Certificate,
shall be deemed to have agreed not to hold any of the Depositor, the Certificate
Registrar or the Eligible Lender Trustee accountable by reason of the disclosure
of its name and address, regardless of the source from which such information
was derived.
SECTION III.8 Maintenance of Office or Agency. The Eligible Lender
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Trustee shall maintain in the Borough of Brooklyn, The City of New York, an
office or offices or agency or agencies where Trust Certificates may be
surrendered for registration of transfer or exchange and where notices and
demands to or upon the Eligible Lender Trustee in respect of the Trust
Certificates and the other Basic Documents may be served. The Eligible Lender
Trustee initially designates 000 Xxxxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxx, as its
principal Corporate Trust Office. The Eligible Lender Trustee's New York office
and its authenticating agent's office are located at 000 Xxxx 00xx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Structured Finance Services. The
Eligible Lender Trustee shall
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give prompt written notice to the Depositor and to the Certificateholders of any
change in the location of the Certificate Register or any such office or agency.
SECTION III.9 Appointment of Certificate Paying Agent. The Certificate
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Paying Agent shall make distributions to Certificateholders from the amounts
received from the Indenture Trustee out of the Trust Accounts pursuant to
Section 5.1 and shall report the amounts of such distributions to the Eligible
Lender Trustee. Any Certificate Paying Agent shall have the revocable power to
receive such funds from the Indenture Trustee for the purpose of making the
distributions referred to above. The Eligible Lender Trustee may revoke such
power and remove the Certificate Paying Agent if the Eligible Lender Trustee
determines in its sole discretion that the Certificate Paying Agent shall have
failed to perform its obligations under this Agreement in any material respect.
The Certificate Paying Agent shall initially be the Eligible Lender Trustee, and
any co-paying agent chosen by the Eligible Lender Trustee and consented to by
the Administrator (which consent shall not be unreasonably withheld). The
copaying agent shall initially be the Indenture Trustee. The Eligible Lender
Trustee shall be permitted to resign as Certificate Paying Agent upon 30 days'
written notice to the Eligible Lender Trustee. In the event that the Eligible
Lender Trustee shall no longer be the Certificate Paying Agent, the Eligible
Lender Trustee shall appoint a successor to act as Certificate Paying Agent
(which shall be a bank or trust company). The Eligible Lender Trustee shall
give notice to the Rating Agencies of the appointment of a successor Paying
Agent. The Eligible Lender Trustee shall cause such successor Certificate Paying
Agent or any additional Certificate Paying Agent appointed by the Eligible
Lender Trustee to execute and deliver to the Eligible Lender Trustee an
instrument in which such successor Certificate Paying Agent or additional
Certificate Paying Agent shall agree with the Eligible Lender Trustee that as
Certificate Paying Agent, such successor Certificate Paying Agent or additional
Certificate Paying Agent will hold all sums, if any, held by it for payment to
the Certificateholders in trust for the benefit of the Certificateholder
entitled thereto until such sums shall be paid to such Certificateholder. The
Certificate Paying Agent shall return all unclaimed funds to the Eligible Lender
Trustee and upon removal of a Certificate Paying Agent such Certificate Paying
Agent shall also return all funds in its possession to the Eligible Lender
Trustee. The provisions of Sections 7.1, 7.3, 7.4, 7.5 and 8.1 shall apply to
the Eligible Lender Trustee also in its role as Certificate Paying Agent, for so
long as the Eligible Lender Trustee shall act as Certificate Paying Agent and,
to the extent applicable, to any other paying agent appointed hereunder. Any
reference in this Agreement to the Certificate Paying Agent shall include any
copaying agent unless the context requires otherwise.
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SECTION III.10 Book-Entry Certificates. The Trust Certificates, upon
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original issuance, will be issued in the form of a typewritten Trust
Certificate or Trust Certificates representing Book-Entry Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Trust. Such Book-Entry Certificate or Book-Entry Certificates
shall initially be registered on the Certificate Register in the name of Cede &
Co., the nominee of the initial Clearing Agency, and no Certificate owner will
receive a Definitive Certificate representing such Certificate Owner's interest
in such Trust Certificate, except as provided in Section 3.12. Unless and until
definitive, fully registered Trust Certificates (the "Definitive Certificates")
have been issued to Certificate owners pursuant to Section 3.12:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Certificate Registrar and the Eligible Lender Trustee shall
be entitled to deal with the Clearing Agency for all purposes of this
Agreement (including the payment of principal of and interest on the Trust
Certificates and the giving of instructions or directions hereunder) as the
sole Certificateholder and shall have no obligation to the Certificate
owners;
(iii) to the extent that the provisions of this Section conflict with
any other provisions of this Agreement, the provisions of this Section
shall control;
(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency and shall be limited to those established by
law and agreements between such Certificate Owners and the Clearing Agency
and/or the Clearing Agency Participants. Pursuant to the Certificate
Depository Agreement, unless and until Definitive Certificates are issued
pursuant to Section 3.12, the initial Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and transmit
distribution in respect of the Certificate Balance and return on the Trust
Certificates to such Clearing Agency Participants; and
(v) whenever this Agreement requires or permits actions to be taken
based upon instructions or directions of Certificateholders of Trust
Certificates evidencing a specified percentage of the Certificate Balance,
the Clearing Agency shall be deemed to represent such percentage only to
the extent that it has received instructions to such effect from
Certificate Owners and/or Clearing Agency Participants owning or
representing, respectively, such required percentage of the beneficial
interest in the Trust
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Certificates and has delivered such instructions to the Eligible Lender
Trustee.
SECTION III.11 Notices to Clearing Agency. Whenever a notice or other
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communication to the Certificateholders is required under this Agreement, unless
and until Definitive Certificates shall have been issued to Certificate Owners
pursuant to Section 3.12, the Eligible Lender Trustee shall give all such
notices and communications specified herein to be given to Certificateholders to
the Clearing Agency, and shall have no obligations to the Certificate Owners.
SECTION III.12 Definitive Certificates. If (i) the Administrator
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advises the Eligible Lender Trustee in writing that the Clearing Agency is no
longer willing or able to discharge properly its responsibilities with respect
to the Trust Certificates, and the Administrator is unable to locate a qualified
successor, (ii) the Administrator at its option advises the Eligible Lender
Trustee in writing that it elects to terminate the book-entry system through the
Clearing Agency or (iii) after the occurrence of an Event of Default, a Servicer
Default or an Administrator Default, Certificate Owners representing beneficial
interests aggregating at least a majority of the Certificate Balance advise the
Clearing Agency (which shall then notify the Eligible Lender Trustee) in writing
that the continuation of a book-entry system through the Clearing Agency is no
longer in the best interest of the Certificate Owners, then the Eligible Lender
Trustee shall cause the Clearing Agency to notify all Certificate Owners of the
occurrence of any such event and of the availability of the Definitive
Certificates to Certificate Owners requesting the same. Upon surrender to the
Eligible Lender Trustee of the typewritten Trust Certificate or Trust
Certificates representing the Book-Entry Certificates by the Clearing Agency,
accompanied by registration instructions, the Eligible Lender Trustee shall
execute and authenticate the Definitive Certificates in accordance with the
instructions of the Clearing Agency. Neither the Certificate Registrar nor the
Eligible Lender Trustee shall be liable for any delay in delivery of such
instructions and may conclusively rely on, and shall be protected in relying on,
such instructions. Upon the issuance of Definitive Certificates, the Eligible
Lender Trustee shall recognize the registered holders of the Definitive
Certificates as Certificateholders. The Definitive Certificates shall, at the
expense of the Depositor, be printed, lithographed or engraved or may be
produced in any other manner as is reasonably acceptable to the Eligible Lender
Trustee, as evidenced by its execution thereof.
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ARTICLE IV
Actions by Eligible Lender Trustee
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SECTION IV.1 Prior Notice to Certificateholders With Respect to Certain
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Matters. With respect to the following matters, the Eligible Lender Trustee
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shall not take action unless at least 30 days before the taking of such action,
the Eligible Lender Trustee shall have notified the Certificateholders and each
of the Rating Agencies in writing of the proposed action and the
Certificateholders shall not have notified the Eligible Lender Trustee in
writing prior to the 30th day after such notice is given that such
Certificateholders have 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
Trust 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 Trust Student
Loans);
(b) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(c) 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 interest of the
Certificateholders;
(d) 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 Certificateholders; or
(e) the appointment pursuant to the Administration Agreement of a
successor Administrator, the appointment pursuant to the Indenture of
a successor Note Registrar, Paying Agent or Indenture Trustee, or the
appointment pursuant to this Agreement of a successor Certificate
Registrar or successor Certificate Paying Agent, or the consent to the
assignment by the Administrator, the Note Registrar, the Paying Agent,
the Indenture Trustee, the Certificate Registrar or the Certificate
Paying Agent of its obligations under the
14
Administration Agreement, the Indenture or this Agreement, as
applicable.
SECTION IV.2 Action by Certificateholders with Respect to Certain Matters.
------------------------------------------------------------
The Eligible Lender Trustee shall not have the power, except upon the written
direction of the Certificateholders and except as expressly provided in the
Basic Documents, to sell the Trust Student Loans after the termination of the
Indenture.
SECTION IV.3 Action by Certificateholders 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 unanimous prior
approval of all Certificateholders (other than the Depositor) and the delivery
to the Eligible Lender Trustee by each such Certificateholder of a certificate
certifying that such Certificateholder reasonably believes that the Trust is
insolvent.
SECTION IV.4 Restrictions on Certificateholders' Power. The
-----------------------------------------
Certificateholders 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 2.3 nor
shall the Eligible Lender Trustee be permitted to follow any such direction, if
given.
SECTION IV.5 Majority Control. Except as expressly provided herein, any
----------------
action that may be taken by the Certificateholders under this Agreement may be
taken by the Certificateholders of Trust Certificates evidencing a majority of
the Certificate Balance. Except as expressly provided herein, any written
notice of the Certificateholders delivered pursuant to this Agreement shall be
effective if signed by Certificateholders of Trust Certificates evidencing not
less than a majority of the Certificate Balance at the time of the delivery of
such notice.
ARTICLE V
Application of Trust Funds; Certain Duties
------------------------------------------
SECTION V.1 Application of Trust Funds.
--------------------------
(a) On each Distribution Date, the Eligible Lender Trustee shall
distribute to Certificateholders (i) the Certificateholders' Return
Distribution Amount for such Distribution Date on a pro rata basis
according to
15
amounts payable in respect of Certificateholders' Return Distribution
Amount, (ii) the Certificate Balance Distribution Amount for such
Distribution Date, if any, on a pro rata basis according to amounts
payable in respect of the Certificate Balance, and (iii) the
Certificate Return Carryover for such Distribution Date, if any, on a
pro rata basis according to amounts payable in respect of Certificate
Return Carryover, as received from the Indenture Trustee pursuant to
Sections 2.7 and 2.8 of the Administration Agreement on such
Distribution Date.
(b) On each Distribution Date, the Eligible Lender Trustee shall send to
each Certificateholder the statement provided to the Eligible Lender
Trustee by the Administrator pursuant to Section 2.9 of the
Administration Agreement on such Distribution Date.
(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to a Certificateholder, such tax
shall reduce the amount otherwise distributable to the
Certificateholder in accordance with this Section. The Eligible
Lender Trustee is hereby authorized and directed to retain from
amounts otherwise distributable to the Certificateholders sufficient
funds for the payment of any tax that is legally owed by the Trust
(but such authorization shall not prevent the Eligible Lender Trustee
from contesting any such tax in appropriate proceedings, and
withholding payment of such tax, if permitted by law, pending the
outcome of such proceedings). The amount of any withholding tax
imposed with respect to a Certificateholder shall be treated as cash
distributed to such Certificateholder at the time it is withheld by
the Trust to be remitted to the appropriate taxing authority. The
Eligible Lender Trustee shall withhold or cause to be withheld at the
maximum applicable rate provided in section 1441, 1442 or 1446 of the
Code with respect to all distributions made to persons that are not
known to be U.S. Persons, within the meaning of the Code, unless it is
otherwise determined in the opinion of counsel. In the event that a
Certificateholder wishes to apply for a refund of any such withholding
tax, the Eligible Lender Trustee shall reasonably cooperate with such
Certificateholder in making such claim so long as such
Certificateholder agrees to reimburse the Eligible Lender Trustee for
any out-of-pocket expenses incurred.
16
SECTION V.2 Method of Payment. Subject to Section 9.1(c), distributions
-----------------
required to be made to Certificateholders on any Distribution Date shall be made
to each Certificateholder of record on the preceding Record Date either by wire
transfer, in immediately available funds, to the account of such
Certificateholder at a bank or other entity having appropriate facilities
therefor, if such Certificateholder shall have provided to the Certificate
Registrar appropriate written instructions signed by two authorized officers, if
any, at least five Business Days prior to such Distribution Date and such
Certificateholder's Trust Certificates in the aggregate evidence a denomination
of not less than $1,000,000, or, if not, by check mailed to such
Certificateholder at the address of such Certificateholder appearing in the
Certificate Register; provided, however, that, unless Definitive Certificates
-------- -------
have been issued pursuant to Section 3.12, with respect to Trust Certificates
registered on the Record Date in the name of the nominee of the Clearing Agency
(initially, such nominee to be Cede & Co.), distributions will be made by wire
transfer in immediately available funds to the account designated by such
nominee. Notwithstanding the foregoing, the final distribution in respect of
any Trust Certificate (whether on the Certificate Final Maturity Date or
otherwise) shall be payable only upon presentation and surrender of such Trust
Certificate at the Corporate Trust Office of the Eligible Lender Trustee or such
other location specified in writing to the Certificateholder thereof.
SECTION V.3 No Segregation of Moneys; No Interest. Subject to Section
-------------------------------------
5.1, moneys received by the Eligible Lender Trustee hereunder need not be
segregated in any manner except to the extent required by law or the
Administration Agreement 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 V.4 Accounting and Reports to the Noteholders, Certificateholders,
--------------------------------------------------------------
the Internal Revenue Service and Others. The Eligible Lender Trustee shall (a)
---------------------------------------
maintain (or cause to be maintained) the books of the Trust on a calendar year
basis on the accrual method of accounting, (b) deliver (or cause to be
delivered) to each Certificateholder (and to each Person who was a
Certificateholder at any time during the applicable calendar year), as may be
required by the Code and applicable Treasury Regulations, such information as
may be required (including Schedule K-1) to enable each such Certificateholder
to prepare its Federal and state income tax returns, (c) file (or cause to be
filed) such tax returns relating to the Trust (including a partnership
information return, Internal Revenue Service Form 1065), and make such elections
as may from time to time be
17
required or appropriate under any applicable state or Federal statute or rule or
regulation thereunder so as to maintain the Trust's characterization as a
partnership for Federal income tax purposes, (d) cause such tax returns to be
signed in the manner required by law and (e) collect (or cause to be collected)
any withholding tax as described in and in accordance with Section 5.1(c) with
respect to income or distributions to Certificateholders. The Eligible Lender
Trustee shall elect under Section 1278 of the Code to include in income
currently any market discount that accrues with respect to the Trust Student
Loans. The Eligible Lender Trustee shall not make the election provided under
Section 754 of the Code. The Eligible Lender Trustee shall be entitled to hire
an independent accounting firm to perform the functions described in this
Section 5.4 the reasonable fees and expenses of which shall be paid by the
Depositor.
SECTION V.5 Signature on Returns; Tax Matters Partner.
--------------------------------- -------
(a) The Eligible Lender Trustee shall sign on behalf of the Trust the tax
returns of the Trust, unless applicable law requires a
Certificateholder to sign such documents, in which case such documents
shall be signed by the Depositor.
(b) The Depositor shall be designated the "tax matters partner" of the
Trust pursuant to Section 6231(a)(7)(A) of the Code and applicable
Treasury Regulations.
SECTION V.6 Capital Accounts. The Trust shall maintain accounts ("Capital
----------------
Accounts") with respect to each Certificateholder (including the Depositor) in
accordance with the following provisions:
(a) Each Certificateholder's Capital Account shall be increased by the
Capital Contributions (as defined below) of such Certificateholder,
such Certificateholder's distributive share of gross income (and any
Liquidating Profits) and any items in the nature of income or gain
which are specially allocated to such Certificateholder pursuant to
Section 2.10(b) of this Agreement.
(b) Each Certificateholder's Capital Account shall be reduced by any
amount distributed to such Certificateholder (including, in the case
of the Depositor, any amount released or otherwise distributed to the
Depositor from the Reserve Account under Sections 2.8C(G) and 2.8D of
the Administration Agreement) and such Certificateholder's
distributive
18
share of Losses and deductions (and any Liquidating Loss), including
any special allocation pursuant to Section 2.10(b).
(c) In the event all or a portion of a Certificate is transferred in
accordance with the terms of this Agreement, the transferee shall
succeed to the Capital Account of the transferor to the extent it
related to such Certificate or a portion thereof.
(d) Notwithstanding the above, the Capital Accounts shall be adjusted in
accordance with the provisions governing the economic rights of the
Certificateholders, as set forth herein and in the Basic Documents.
"Capital Contribution" means the amount of any cash and the fair market
value of any property contributed to the Trust by a Certificateholder (including
any amounts deemed to be contributed in connection with the original issuance of
the Certificates), including, in the case of the Depositor, the fair market
value of the Trust Student Loans deemed to be contributed by the Depositor to
the Trust, taking into account the provisions of Section 707(a)(2)(B) of the
Code and the Regulations thereunder. The foregoing provisions and the other
provisions of this Agreement relating to the maintenance of Capital Accounts are
intended to comply with section 1.704-1(b) of the Treasury Regulations and shall
be interpreted in a manner consistent therewith.
ARTICLE VI
Authority and Duties of Eligible Lender Trustee
-----------------------------------------------
SECTION VI.1 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 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 Notes in the aggregate
principal amount of $2,937,600,000. The Eligible Lender Trustee is also
authorized and directed on behalf of the Trust (i) to acquire and hold legal
title to the Trust Student Loans from the Depositor and (ii) to take all actions
required pursuant to Section 3.2C of the Administration Agreement and otherwise
follow the direction of and cooperate with the Servicer in submitting, pursuing
and collecting any claims to and with the
19
Department with respect to any Interest Subsidy Payments and Special Allowance
Payments relating to the Trust Student Loans.
In addition to the foregoing, the Eligible Lender Trustee is authorized 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 VI.2 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 in the interest of the
Certificateholders, subject to and in accordance with the provisions of this
Agreement and the other Basic Documents. Without limiting the foregoing, the
Eligible Lender Trustee shall on behalf of the Trust file and prove any claim or
claims that may exist on behalf of the Trust against the Depositor in connection
with any claims paying procedure as part of an insolvency or a receivership
proceeding involving the Depositor. 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 and 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 Trust Student Loans or to maintain, monitor or otherwise
supervise the administration, servicing or collection of the Trust Student
Loans.
SECTION VI.3 Action upon Instruction.
-----------------------
(a) [Reserved]
(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
20
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 and actions
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 Certificateholders requiring 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
Certificateholders 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 Certificateholders, 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 Certificateholders 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
21
Agreement or the other Basic Documents, as it shall deem to be in the
best interest of the Certificateholders, and shall have no liability
to any Person for such action or inaction.
SECTION VI.4 No Duties Except as Specified in this 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 or in any document or written
instruction received by the Eligible Lender Trustee pursuant to Section 6.3; 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, Chase Manhattan Bank USA, National
Association 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 VI.5 No Action Except Under Specified Documents or Instructions.
----------------------------------------------------------
The Eligible Lender Trustee shall not 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 6.3.
SECTION VI.6 Restrictions. The Eligible Lender Trustee shall not take
------------
any action (a) that is inconsistent with the purposes of the Trust set forth in
Section 2.3 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 Certificateholders shall not direct the Eligible Lender
Trustee to take action that would violate the provisions of this Section.
22
ARTICLE VII
Concerning the Eligible Lender Trustee
--------------------------------------
SECTION VII.1 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 7.3 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 any
Certificateholder;
(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 of the Trust
23
Estate or for or in respect of the validity or sufficiency of the
Basic Documents, other than the certificate of authentication on the
Trust Certificates, and the Eligible Lender Trustee shall in no event
assume or incur any liability, duty, or obligation to any Noteholder
or to any Certificateholder, 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 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 any of the
Certificateholders, unless such Certificateholders have 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 VII.2 Furnishing of Documents. The Eligible Lender Trustee shall
-----------------------
furnish to the Certificateholders 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. On each Distribution Date
the Eligible Lender Trustee shall provide to each Certificateholder of record as
of the related Record Date the information provided by the Administrator to the
Eligible Lender
24
Trustee on the related Determination Date pursuant to Section 2.9 of the
Administration Agreement.
SECTION VII.3 Representations and Warranties. The Eligible Lender Trustee
------------------------------
hereby represents and warrants to the Depositor, for the benefit of the
Certificateholders, that:
(a) It is duly organized and validly existing in good standing under the
laws of its governing jurisdiction and has an office located within
the State of Delaware. 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.
(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 Delaware 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 and will maintain its status 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 Trust Student Loans as
contemplated by this Agreement and the other Basic Documents, it has a
lender identification number with respect to the Trust Student Loans
from the Department and has and will maintain in effect a Guarantee
Agreement with each of the Guarantors with respect to the Trust
Student Loans.
SECTION VII.4 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
25
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 and accountants 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 or accountants
and not contrary to this Agreement or any other Basic Document.
SECTION VII.5 Not Acting in Individual Capacity. Except as provided in
---------------------------------
this Article VII, in accepting the trusts hereby created Chase Manhattan Bank
USA, National Association 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 VII.6 Eligible Lender Trustee Not Liable for Trust Certificates or
------------------------------------------------------------
Trust Student Loans. The recitals contained herein and in the Trust
-------------------
Certificates (other than the signature of and authentication by the Eligible
Lender Trustee on the Trust Certificates) shall be taken as the statements of
the Depositor
26
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, the Trust Certificates or any other
Basic Document (other than the signature of and authentication by the Eligible
Lender Trustee on the Trust Certificates) or the Notes, or of any Trust 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 any 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, federal reinsurance, Interest Subsidy Payments or Special Allowance
Payments, as applicable, in respect of any Trust 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 Certificateholders under this Agreement or the
Noteholders under the Indenture, including the existence and contents of any
computer or other record of any Trust Student Loan; the validity of the
assignment of any Trust Student Loan to the Eligible Lender Trustee on behalf of
the Trust; the completeness of any Trust Student Loan; the performance or
enforcement (except as expressly set forth in any Basic Document) of any Trust
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 VII.7 Eligible Lender Trustee May Own Trust Certificates and
------------------------------- ----------------------
Notes. The Eligible Lender Trustee in its individual or any other capacity may
-----
become the owner or pledgee of Trust Certificates or 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 Eligible
Lender Trustee.
ARTICLE VIII
Compensation and Indemnity of Eligible Lender Trustee
----------------------------------------------------
SECTION VIII.1 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
27
entitled to be reimbursed by the Depositor, to the extent provided in such
separate agreement, for its other reasonable expenses (including the reasonable
fees and expenses of counsel and independent accountants) hereunder.
SECTION VIII.2 Payments to the Eligible Lender Trustee. Any amounts paid
------------------------------- -------
to the Eligible Lender Trustee pursuant to Section 8.1 hereof or pursuant to
Section 9 of the Sale Agreement, Section 4.2 of the Administration Agreement or
Section 4.2 of the Servicing Agreement shall be deemed not to be a part of the
Trust Estate immediately after such payment.
SECTION VIII.3 Indemnity. The Depositor shall cause the Administrator to
---------
indemnify the Eligible Lender Trustee in its individual capacity and any of its
officer, directors, employees and agents as and to the extent provided for in
Section 4.2 of the Administration Agreement.
ARTICLE IX
Termination of Trust Agreement
------------------------------
SECTION IX.1 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, the Administration Agreement and Article V, and (ii)
the time provided in Section 9.2. The bankruptcy, liquidation,
dissolution, death or incapacity of any Certificateholder, other than
the Depositor as described in Section 9.2, shall not (x) operate to
terminate this Agreement or the Trust, nor (y) entitle such
Certificateholder's legal representatives or heirs to claim an
accounting or to take any action or proceeding in any court for a
partition or winding up of all or any part of the Trust or Trust
Estate nor (z) otherwise affect the rights, obligations and
liabilities of the parties hereto.
(b) Except as provided in Section 9.1(a), neither the Depositor nor any
Certificateholder shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the Distribution
Date upon which the Certificateholders shall surrender their Trust
Certificates to the
28
Certificate Paying Agent for payment of the final distribution and
cancellation, shall be given promptly by the Eligible Lender Trustee
by letter to Certificateholders mailed within five Business Days of
receipt of notice of such termination from the Administrator given
pursuant to Section 6.1C of the Administration Agreement, stating (i)
the Distribution Date upon which final payment of the Trust
Certificates shall be made upon presentation and surrender of the
Trust Certificates at the office of the Certificate Paying Agent
therein designated, (ii) the amount of any such final payment and
(iii) that the Record Date otherwise applicable to such Distribution
Date is not applicable, payments being made only upon presentation and
surrender of the Trust Certificates at the office of the Certificate
Paying Agent therein specified. The Eligible Lender Trustee shall
give such notice to the Certificate Registrar (if other than the
Eligible Lender Trustee) and the Certificate Paying Agent at the time
such notice is given to Certificateholders. Upon presentation and
surrender of the Trust Certificates, the Certificate Paying Agent
shall cause to be distributed to Certificateholders amounts
distributable on such Distribution Date pursuant to Section 5.1.
In the event that all the Certificateholders shall not surrender their
Trust Certificates for cancellation within six months after the date specified
in the above mentioned written notice, the Eligible Lender Trustee shall give a
second written notice to the remaining Certificateholders to surrender their
Trust Certificates for cancellation and receive the final distribution with
respect thereto. If within one year after the second notice all the Trust
Certificates shall not have been surrendered for cancellation, the Eligible
Lender Trustee may take appropriate steps, or may appoint an agent to take
appropriate steps, to contact the remaining Certificateholders concerning
surrender of their Trust Certificates, and the cost thereof shall be paid out of
the funds and other assets that shall remain subject to this Agreement. Any
funds remaining in the Trust after exhaustion of such remedies and no later than
five years after the first such notice shall be distributed by the Eligible
Lender Trustee to the Depositor.
Upon final distribution of any funds remaining in the Trust, the Eligible
Lender Trustee shall file a certificate of cancellation of the Trust's
certificate of trust pursuant to Section 3810(c) of the Delaware Business Trust
Act.
SECTION IX.2 Dissolution upon Insolvency of the Depositor. Notwithstanding
--------------------------------------------
the provisions of Section 3808 of the Delaware
29
Business Trust Act, in the event that an Insolvency Event shall occur with
respect to the Depositor, (x) the Trust created hereunder shall dissolve and (y)
this Agreement shall be terminated in accordance with Section 9.1 90 days after
the date of such Insolvency Event. Promptly after the occurrence of any
Insolvency Event with respect to the Depositor, (i) the Depositor shall give the
Indenture Trustee, the Eligible Lender Trustee and each Rating Agency written
notice of such Insolvency Event, and (ii) the Eligible Lender Trustee shall,
upon the receipt of such written notice from the Depositor, give prompt written
notice to the Certificateholders and the Indenture Trustee, of the occurrence of
such event and of the effect of such event under this Section 9.2; 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 9.2. Upon a termination of the Trust pursuant to
this Section, the Eligible Lender Trustee 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 Administration Agreement.
ARTICLE X
Successor Eligible Lender Trustees and
--------------------------------------
Additional Eligible Lender Trustees
-----------------------------------
SECTION X.1 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 Trust
Student Loans on behalf of the Trust, with a valid lender identification number
with respect to the Trust Student Loans from the Department; (ii) being
authorized to exercise corporate trust powers and hold legal title to the Trust
Student Loans; (iii) having in effect Guarantee Agreements with each of the
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;
(v) having its principal place of business in the State of Delaware and
otherwise complying with Section 3807 of the Delaware Business Trust Act; and
(vi) having (or having a parent which has) a rating in respect of its longterm
senior unsecured debt of at least BBB- (or the equivalent) by each of the Rating
Agencies (or which, if the long-term senior unsecured debt of such corporation
or association is not rated by any Rating Agency, shall have provided to the
Indenture Trustee written confirmation from such
30
Rating Agency that the appointment of such corporation or association to serve
as Eligible Lender Trustee will not result in and of itself in a reduction or
withdrawal of the then current rating of any of the Notes or the Certificates).
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 10.2.
SECTION X.2 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 10.1 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 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 or shall be
likely to cease to be eligible in accordance with the provisions of Section 10.1
and shall fail to resign after written request therefor by the Administrator, or
if at any time 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.
31
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 10.3, payment of all fees
and expenses owed to the outgoing Eligible Lender Trustee and the filing of a
certificate of amendment to the Trust's certificate of trust pursuant to Section
3810(b) of the Delaware Business Trust Act. The Administrator shall provide
notice of such resignation or removal of the Eligible Lender Trustee and to each
of the Rating Agencies.
SECTION X.3 Successor Eligible Lender Trustee. Any successor Eligible
---------------------------------
Lender Trustee appointed pursuant to Section 10.2 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 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 such appointment as
provided in this Section unless at the time of such acceptance such successor
Eligible Lender Trustee shall be eligible pursuant to Section 10.1.
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 all Certificateholders, 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.
32
SECTION X.4 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 10.1; and provided further that the Eligible Lender
-------- -------
Trustee shall mail notice of such merger or consolidation to the Rating Agencies
not less than 15 days prior to the effective date thereof.
SECTION X.5 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, meeting the eligibility requirements of clauses (i)
through (iii) of Section 10.1, 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. 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), (v) and
(vi) of Section 10.1 and no notice of the appointment of any co-trustee or
separate trustee shall be required pursuant to Section 10.3.
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
33
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 cotrustee.
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.
34
ARTICLE XI
Miscellaneous
-------------
SECTION XI.1 Supplements and Amendments. This Agreement may be amended by
--------------------------
the Depositor and the Eligible Lender Trustee, with prior written notice to the
Rating Agencies, without the consent of any of the Noteholders or the
Certificateholders, 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 or the
Certificateholders; 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 or Certificateholder.
This Agreement may also be amended from time to time by the Depositor and
the Eligible Lender Trustee, with prior written notice to the Rating Agencies,
with the consent of (i) the Noteholders of Notes evidencing not less than a
majority of the Outstanding Amount of the Notes and (ii) the Certificateholders
of Certificates evidencing not less than a majority of the Certificate Balance,
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 or the Certificateholders; 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
Trust Student Loans or distributions that shall be required to be made for the
benefit of the Noteholders or the Certificateholders or (b) reduce the aforesaid
percentage of the Outstanding Amount of the Notes and the Certificate Balance
required to consent to any such amendment, without the consent of all the
outstanding Noteholders and Certificateholders.
Promptly after the execution of any such amendment or consent, the Eligible
Lender Trustee shall furnish written notification of the substance of such
amendment or consent to each Certificateholder, the Indenture Trustee and each
of the Rating Agencies.
It shall not be necessary for the consent of Certificateholders, 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 (and any other consents of Certificateholders provided for in this
Agreement or in any other Basic Document) and of evidencing the authorization of
the
35
execution thereof by Certificateholders shall be subject to such reasonable
requirements as the Eligible Lender Trustee may prescribe.
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 XI.2 No Legal Title to Trust Estate in Certificateholders. The
----------------------------------------------------
Certificateholders shall not have legal title to any part of the Trust Estate.
The Certificateholders shall be entitled to receive distributions with respect
to their undivided beneficial ownership interest therein only in accordance with
Articles V and IX. No transfer, by operation of law or otherwise, of any right,
title, or interest of the Certificateholders to and in their 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.
SECTION XI.3 Limitations on Rights of Others. Except for Section 2.7, the
-------------------------------
provisions of this Agreement are solely for the benefit of the Eligible Lender
Trustee, the Depositor, the Certificateholders, the Administrator and, to the
extent expressly provided herein, the Indenture Trustee and the Noteholders, and
nothing in this Agreement (other than Section 2.7), 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 XI.4 Notices.
-------
(a) Unless otherwise expressly specified or permitted by the terms hereof,
all notices shall be in writing and shall be deemed given upon receipt
by the intended recipient or three Business Days after mailing if
mailed by certified mail, postage prepaid (except that notice to the
Eligible Lender Trustee shall be deemed given only upon actual receipt
by the Eligible Lender Trustee), if to the Eligible Lender Trustee,
addressed to its Corporate Trust Office; if to the Depositor,
addressed to SLM Funding Corporation, 000 Xxxx Xxxxx Xxxxx, Xxxxxxx,
Xxxxx 00000, or, as to each party, at
36
such other address as shall be designated by such party in a written
notice to each other party.
(b) Any notice required or permitted to be given to a Certificateholder
shall be given by first-class mail, postage prepaid, at the address of
such certificateholder as shown in the Certificate Register. Any
notice so mailed within the time prescribed in this Agreement shall be
conclusively presumed to have been duly given, whether or not the
Certificateholder receives such notice.
SECTION XI.5 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 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 XI.6 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 XI.7 Successors and Assigns. All covenants and agreements
----------------------
contained herein shall be binding upon to the benefit of, the Depositor and its
successors, the Eligible Lender Trustee and its successors, each
Certificateholder and its successors and permitted assigns, all as herein
provided. Any request, notice, direction, consent, waiver or other instrument
or action by a Certificateholder shall bind the successors and assigns of such
Certificateholder.
SECTION XI.8 No Petition.
-----------
(a) The Depositor will not at any time institute against the Trust any
bankruptcy proceedings under any United States Federal or state
bankruptcy or similar law in connection with any obligations relating
to the Trust Certificates, the Notes, this Agreement or any of the
other Basic Documents.
(b) The Eligible Lender Trustee (not in its individual capacity but solely
as Eligible Lender Trustee), by entering into this Agreement, each
Certificateholder, by accepting a Trust Certificate, and the Indenture
Trustee and each Noteholder by accepting the benefits of this
Agreement, hereby covenant and agree that they
37
will not at any time institute against the Depositor or the Trust, or
join in any institution against the Depositor 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 Trust Certificates, the Notes, this
Agreement or any of the other Basic Documents.
SECTION XI.9 No Recourse. Each Certificateholder by accepting a Trust
-----------
Certificate acknowledges that such Certificateholder's Trust Certificates
represent beneficial interests in the Trust only and do not represent interests
in or obligations of the Depositor, the Servicer, 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, the Trust Certificates or the other Basic
Documents.
SECTION XI.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 XI.11 Governing Law. This Agreement shall be governed by and
-------------
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.
38
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.
CHASE MANHATTAN BANK USA,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as
Eligible Lender Trustee,
By /s/ XXXX X. XXXXXX
------------------------------------
Name: Xxxx X. Xxxxxx
Title:
SLM FUNDING CORPORATION,
Depositor,
By /s/ XXXXXXX M.E. XXXXXX, JR.
------------------------------------
Name: Xxxxxxx M.E. Xxxxxx, Jr.
Title: Treasurer and Controller
39
EXHIBIT A
TO THE TRUST AGREEMENT
[FORM OF TRUST CERTIFICATE]
[SEE REVERSE FOR CERTAIN DEFINITIONS]
Unless this Trust Certificate is presented by an authorized representative
of The Depository Trust Company, a New York Corporation ("DTC"), to the Issuer
(as defined below) or its agent for registration of transfer, exchange or
payment, and any certificate issued is registered in the name of Cede & Co. or
in such other name as is requested by an authorized representative of DTC (and
any payment is made to Cede & Co. or to such other entity as is requested by an
authorized representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered
owner hereof, Cede & Co., has an interest herein.
THIS TRUST CERTIFICATE MAY NOT BE ACQUIRED BY OR FOR THE ACCOUNT OF A
BENEFIT PLAN (AS DEFINED BELOW). THIS CERTIFICATE IS NOT GUARANTEED OR INSURED
BY ANY GOVERNMENTAL AGENCY.
NUMBER $106,550,000
R-1 CUSIP NO. 78442 GAZ 9
SLM STUDENT LOAN TRUST 1998-1
FLOATING RATE STUDENT LOAN-BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as
defined below, the property of which includes a pool of student
loans sold to the Trust by SLM Funding Corporation.
(This Trust Certificate does not represent an interest in or
obligation of SLM Funding Corporation, the Servicer (as defined
below), the Eligible Lender Trustee (as defined below) or any of
their respective affiliates, except to the extent described
below.)
THIS CERTIFIES THAT Cede & Co. is the registered owner of $106,550,000
dollars non-assessable, fully-paid, fractional undivided interest in the SLM
Student Loan Trust 1998-1 (the "Trust"), a trust formed under the laws of the
State of Delaware by SLM Funding Corporation, a Delaware corporation (the
"Depositor"). The Trust was created pursuant to a Trust Agreement dated as of
March 1, 1998 (the "Trust Agreement"), between the Depositor and Chase Manhattan
Bank USA, National Association, a
national banking association, not in its individual capacity but solely as
eligible lender trustee on behalf of the Trust (the "Eligible Lender Trustee"),
a summary of certain of the pertinent provisions of which is set forth below. To
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in Appendix A to the Trust Agreement.
This Certificate is one of the duly authorized Certificates designated as
"Floating Rate Student Loan- Backed Certificates" (herein called the "Trust
Certificates"). This Trust Certificate is issued under and is subject to the
terms, provisions and conditions of the Trust Agreement, to which Trust
Agreement the holder of this Trust Certificate by virtue of the acceptance
hereof assents and by which such holder is bound. The property of the Trust
includes a pool of student loans (the "Trust Student Loans"), all moneys paid
thereunder on or after February 9, 1998, certain bank accounts and the proceeds
thereof and certain other rights under the Trust Agreement, the Sale Agreement,
the Purchase Agreement, the Administration Agreement and the Servicing Agreement
and all proceeds of the foregoing. The rights of the holders of the Trust
Certificates to the assets of the Trust are subordinated to the rights of the
holders of the Notes issued under the Indenture dated as of March 1, 1998,
between the Trust and Bankers Trust Company, as Indenture Trustee, and
designated as "Floating Rate Student Loan-Backed Notes" (the "Notes"), as set
forth in the Trust Agreement, the Indenture and the Administration Agreement.
Under the Trust Agreement, to the extent of funds available therefor,
return on the Certificate Balance of this Trust Certificate at the Certificate
Rate (as defined below) will be distributed on the 25th day of each January,
April, July and October (or, if such 25th day is not a Business Day, the next
succeeding Business Day) (each a "Distribution Date"), commencing on July 27,
1998, to the person in whose name this Trust Certificate is registered as of the
close of business on the day immediately preceding the Distribution Date (such
day the "Record Date"), in each case to the extent of such certificateholder's
pro rata interest in the amount or amounts to be distributed to
Certificateholders on such
2
Distribution Date pursuant to the Administration Agreement.
The Certificate Rate for each Accrual Period shall be equal to the lesser
of (a) the daily weighted average of the T-Xxxx Rates within such Accrual Period
plus 0.97% per annum and (b) the Student Loan Rate for such Accrual Period. The
"Student Loan Rate" for any Accrual Period shall equal the product of (a) the
quotient obtained by dividing (i) 365 (or 366 in the case of a leap year) by
(ii) the actual number of days elapsed in such Accrual Period and (b) the
percentage equivalent of a fraction, (i) the numerator of which is equal to
Expected Interest Collections for the related Collection Period less the Primary
Servicing Fee, the Administration Fee and any prior unpaid Administration Fees
with respect to such Collection Period and (ii) the denominator of which is the
Pool Balance as of the first day of such Collection Period.
Each holder of this Trust Certificate acknowledges and agrees that its
rights to receive distributions in respect of this Trust Certificate from
Available Funds and amounts on deposit in the Reserve Account are subordinated
to the rights of the Noteholders as described in the Trust Agreement, the
Indenture and the Administration Agreement.
It is the intent of the Depositor, the Certificateholders and the
Certificate Owners that, for purposes of Federal, state and local income and
franchise and any other income taxes, the Trust will be treated as a partnership
and the Certificateholders (including the Depositor in its capacity as
Certificateholder and as recipient of distributions from the Reserve Account)
will be treated as partners in that partnership. The Depositor and the other
Certificateholders by acceptance of a Trust Certificate (and the Certificate
Owners by acceptance of a beneficial interest in a Trust Certificate), agree to
treat, and to take no action inconsistent with the treatment of, the Trust
Certificates for such tax purposes as partnership interests in the Trust.
Each Certificateholder or Certificate Owner, by its acceptance of a Trust
Certificate or, in the case of a
3
Certificate Owner, a beneficial interest in a Trust Certificate, covenants and
agrees that such Certificateholder or Certificate Owner, as the case may be,
will not at any time institute against the Depositor or the Trust, or join in
any institution against the Depositor 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
Trust Certificates, the Notes, the Trust Agreement or any of the other Basic
Documents.
Distributions on this Trust Certificate will be made as provided in the
Trust Agreement by the Eligible Lender Trustee by wire transfer or by check
mailed to the Certificateholder of record in the Certificate Register without
the presentation or surrender of this Trust Certificate or the making of any
notation hereon, except that with respect to Trust Certificates registered on
the Record Date in the name of the nominee of the Clearing Agency, unless
Definitive Certificates have been issued (initially, such nominee to be Cede &
Co.), payments will be made by wire transfer in immediately available funds to
the account designated by such nominee. Except as otherwise provided in the
Trust Agreement and notwithstanding the above, the final distribution on this
Trust Certificate will be made after due notice by the Eligible Lender Trustee
of the pendency of such distribution and only upon presentation and surrender of
this Trust Certificate at the office or agency maintained for the purpose by the
Eligible Lender Trustee in the Borough of Manhattan, The City of New York.
Reference is hereby made to the further provisions of this Trust
Certificate set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon shall have been executed by
an authorized officer of the Eligible Lender Trustee or its authenticating
agent, by manual signature, this Trust Certificate shall not entitle the holder
hereof to any benefit under the Trust Agreement or the Administration Agreement
or be valid for any purpose.
4
IN WITNESS WHEREOF, the Eligible Lender Trustee on behalf of the Trust and
not in its individual capacity has caused this Trust Certificate to be duly
executed as of the date set forth below.
SLM STUDENT LOAN TRUST 1998-1
by CHASE MANHATTAN BANK USA, NATIONAL
ASSOCIATION, not in its individual capacity
but solely as Eligible Lender Trustee.
By:______________________________
Authorized Signatory
Date: March 19, 1998
5
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Trust Certificates referred to in the within-mentioned Trust
Agreement.
CHASE MANHATTAN BANK USA, NATIONAL
ASSOCIATION, not in its individual capacity
but solely as Eligible Lender Trustee,
By:__________________________
Authorized Signatory
OR
THE CHASE MANHATTAN BANK, solely in its
capacity as Authenticating Agent for the
Eligible Lender Trustee,
By:__________________________
Authenticating Agent
Date: March 19, 1998
6
[REVERSE OF TRUST CERTIFICATE]
The Trust Certificates do not represent an obligation of, or an interest
in, the Depositor, Xxxxxx Xxx Servicing Corporation, as servicer (the
"Servicer"), Student Loan Marketing Association, as administrator (the
"Administrator"), the Eligible Lender Trustee or any affiliates of any of them,
and no recourse may be had against such parties or their assets, except as may
be expressly set forth or contemplated herein, in the Trust Agreement or in the
other Basic Documents. In addition, this Trust Certificate is not guaranteed by
any governmental agency or instrumentality and is limited in right of payment to
certain collections with respect to the Trust Student Loans, all as more
specifically set forth in the Trust Agreement. A copy of each of the Trust
Agreement, the Sale Agreement, the Purchase Agreement, the Administration
Agreement, Servicing Agreement and the Indenture may be examined during normal
business hours at the principal office of the Administrator, and at such other
places, if any, designated by the Administrator, by any Certificateholder upon
request.
The Trust Agreement permits, with certain options therein provided, the
amendment thereof and the certification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Trust Agreement at
any time by the Depositor and the Eligible Lender Trustee with the consent of
the holders of the Notes and the Trust Certificates each voting as a class
evidencing not less than a majority of the outstanding principal balance of the
Notes and the Certificate Balance. Any such consent by the holder of this Trust
Certificate shall be conclusive and binding on such holder and on all future
holders of this Certificate and of any Trust Certificate issued upon the
transfer hereof or in exchange herefor or in lieu hereof whether or not notation
of such consent is made upon this Trust Certificate. The Trust Agreement also
permits the amendment thereof, in certain limited circumstances, without the
consent of the holders of any of the Trust Certificates.
7
As provided in the Trust Agreement and subject to certain limitations
therein set forth, the transfer of the Trust Certificates is registerable in the
Certificate Register upon surrender of this Certificate for registration of
transfer at the offices or agencies maintained by Chase Manhattan Bank USA,
National Association in its capacity as Certificate Registrar, or by any
successor Certificate Registrar, in the Borough of Manhattan, The City of New
York, accompanied by a written instrument of transfer in form satisfactory to
the Eligible Lender Trustee and the Certificate Registrar duly executed by the
holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Trust Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee.
The Trust Certificates are issuable only as registered Trust Certificates
without coupons in denominations of $100,000 or in integral multiples of $1,000
in excess thereof. As provided in the Trust Agreement and subject to certain
limitations therein set forth, Trust Certificates are exchangeable for new Trust
Certificates of authorized denominations evidencing the same aggregate
denomination, as requested by the holder surrendering the same. No service
charge will be made for any such registration of transfer or exchange, but the
Eligible Lender Trustee or the Certificate Registrar may require payment of a
sum sufficient to cover any tax or governmental charge payable in connection
therewith.
The Eligible Lender Trustee, the Certificate Registrar and any agent of the
Eligible Lender Trustee or the Certificate Registrar may treat the person in
whose name this Trust Certificate is registered as the owner hereof for all
purposes, and none of the Eligible Lender Trustee or the Certificate Registrar
or any such agent shall be affected by any notice to the contrary.
The Trust Certificates (including any beneficial interests therein) may not
be acquired by or for the account of (i) an employee benefit plan (as defined in
Section 3(3) of ERISA) that is subject to the provisions of Title I of ERISA,
(ii) a plan described in section 4975(e)(1) of the Internal Revenue Code of
1986, as amended (the "Code"), including an individual retirement
8
account described in Section 408(a) of the Code or a Xxxxx plan or (iii) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity (each, a "Benefit Plan"). By accepting and holding this
Trust Certificate, the Holder hereof shall be deemed to have represented and
warranted that it is not a Benefit Plan, it is not purchasing this Trust
Certificate on behalf of a Benefit Plan, is not using assets of a Benefit Plan
to purchase this Trust Certificate and to have agreed that if this Trust
Certificate is deemed to be a plan asset, the Holder will promptly dispose of
this Trust Certificate.
The obligations and responsibilities created by the Trust Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts required to be paid to them pursuant to the Trust Agreement, the
Administration Agreement and the Indenture and the disposition of all property
held as part of the Trust. The Depositor may at its option purchase the corpus
of the Trust at a price specified in the Administration Agreement, and such
purchase of the Trust Student Loans and other property of the Trust will effect
early retirement of the Trust Certificates; however, such right of purchase is
exercisable only on any Distribution Date on or after the date on which the Pool
Balance is less than or equal to 10% of the Initial Pool Balance. Any Trust
Student Loans remaining in the Trust as of the end of the Collection Period
immediately preceding the Trust Auction Date will be offered for sale by the
Indenture Trustee by auction in accordance with the procedure described in the
Indenture.
This Trust Certificate 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.
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
________________________________________________________________________________
(Please print or type name and address, including postal zip code, of assignee)
________________________________________________________________________________
the within Trust Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
________________________________________________________________________Attorney
to transfer said Trust Certificate on the books of the Certificate Registrar,
with full power of substitution in the premises.
Dated:
______________________________*
Signature Guaranteed:
______________________________*
* NOTICE: The signature to this assignment must correspond with the name as
it appears upon the face of the within Trust Certificate in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by a member firm of the New York Stock
Exchange or a commercial bank or trust company.
10
EXHIBIT B
TO THE TRUST AGREEMENT
FORM OF CERTIFICATE DEPOSITORY AGREEMENT
----------------------------------------
ANNEX 1
TO THE TRUST AGREEMENT
DATED AS OF MARCH 1, 1998
BETWEEN SLM FUNDING CORPORATION,
AS DEPOSITOR, AND
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION,
AS ELIGIBLE LENDER TRUSTEE
All defined terms are used herein as defined in the Trust Agreement
referred to above.
Existence. The Depositor will maintain its corporate existence and its
---------
good standing under the laws of the State of Delaware.
Procedures Observed. The Depositor will observe all corporate procedures
-------------------
required by its Certificate of Incorporation, its by-laws and the corporation
law of the State of Delaware.
Management. The business and affairs of the Depositor will be managed by
----------
or under the direction of the Depositor's Board of Directors. The Depositor will
at all times ensure that its Board of Directors duly authorizes all corporate
actions requiring Board authorization. When necessary, the Depositor will obtain
proper authorization from its stockholder for corporate action. Its stockholder
will not be actively involved in the day-to-day management of the Depositor
except as contemplated by an arm's length management services contract.
Records. The Depositor will maintain separate corporate records and books
-------
of account from those of its stockholder or any other affiliate of its
stockholder. The Depositor will keep correct and complete books and records of
account and minutes of the meetings and other proceedings of its stockholder and
Board of Directors. The resolutions, agreements and other instruments underlying
the transactions contemplated by the Trust Agreement will be continuously
maintained as official records by the Depositor.
Offices. The Depositor will have an address and telephone number
-------
distinguishable from those of its stockholder. To the extent the Depositor's
office is located in the office of its stockholder or any affiliate of its
stockholder, the Depositor will pay fair market rent for any such office space
and a fair share of any material overhead costs.
1
Identifiable Assets. Except in connection with the customary operation of
-------------------
such cash management system as its stockholder may from time to time in the
ordinary course of business implement for itself and its consolidated
subsidiaries (which cash management system will be operated such that all
transfers of funds are properly documented and the respective assets and
liabilities of the Depositor and its stockholder are ascertainable at all
times), the Depositor's funds and other assets will be identifiable and will not
be commingled with those of its stockholder or any other entity. The Depositor
will maintain separate banking records and books of account from those of its
stockholder or any other affiliate of its stockholder.
Capitalization. The Depositor will not engage in any business for which
--------------
its capitalization would not be adequate.
Expenses. The Depositor will pay from its own funds and assets all
--------
obligations and indebtedness incurred by it and will provide for its own
material operating expenses and liabilities from its own funds. General
overhead and administrative expenses of its stockholder will not be charged or
otherwise allocated to the Depositor (unless directly attributable to services
provided to or for the account of the Depositor) and such expenses of the
Depositor which are material will not be charged or otherwise allocated to its
stockholder. Any organizational expenses of the Depositor and expenses relating
to the preparation, negotiation, execution and delivery of the Transaction
Documents paid by its stockholder will be charged back to the Depositor. Such
expenses will be paid by the Depositor from amounts available to it as a result
of the capital contributions made by its stockholder, from the yield earned by
it on its Certificates, or from the retained portion of Deferred Payments made
to it under the Sale Agreement.
Conduct. The Depositor will conduct its business solely in its own name
-------
so as not to mislead others as to the identity of the Depositor. Without
limiting the generality of the foregoing, all oral and written communications
related to the Depositor, including without limitation letters, invoices,
purchase orders, contracts, statements and applications, will be made solely in
the name of the Depositor except for items pursuant to the Facilities and
Services Agreement between the Depositor and its stockholder. The Depositor will
utilize its own separate stationery.
2
Intercompany Claims. The Depositor will not enter into any guarantees
-------------------
made by its stockholder with respect to obligations of the Depositor and the
Depositor will make no guarantees with respect to obligations of its
stockholder. There will be no intercompany debt or claims between the Depositor
and its stockholder other than (i) the obligation of the Depositor to pay to its
stockholder the Deferred Payment under the Purchase Agreement, (ii) the demand
note of its stockholder contributed to the Depositor as part of the Depositor's
capitalization, (iii) such intercompany claims as may arise in connection with
the management services contract referred to above, including a cash management
system for its stockholder and its consolidated subsidiaries as described above,
and (iv) such amounts as may temporarily be carried in intercompany accounts
relating to expenses incurred by its stockholder or its affiliates, to the
extent the Depositor is properly obligated to reimburse its stockholder or any
such affiliate for amounts allocable to the Depositor. The demand note referred
to above will be properly documented on the books and records of the Depositor.
Reliance by Others. The Depositor will act solely in its name and through
------------------
its duly authorized officers or agents in the conduct of its businesses. The
Depositor will not: (a) hold itself out as having agreed to pay or become
liable for the debts of its stockholder; (b) fail to correct any known
misrepresentation with respect to the foregoing; (c) operate or purport to
operate as an integrated, single economic unit with respect to its stockholder
or in its dealings with any other affiliated or unaffiliated entity; (d) seek or
obtain credit or incur any obligation to any third party based upon the assets
of its stockholder or any other affiliated or unaffiliated entity; or (e) induce
any such third party to reasonably rely on the creditworthiness of its
stockholder or any other affiliated or unaffiliated entity for the payment or
performance of the Depositor.
Arm's Length. The Depositor will maintain an arm's length relationship
------------
between the Depositor and its stockholder and between the Depositor and any
affiliates of its stockholder.
Disclosure of the Transactions. The annual financial statements of the
------------------------------
Depositor will disclose the effects of the Transactions in accordance with
generally accepted accounting principles. The transfer of the Loans by its
stockholder to the Depositor pursuant to the
3
Purchase Agreement will be treated as a purchase by the Depositor under
generally accepted accounting principles. In particular, the financial
statements of the Depositor will clearly indicate its existence separate from
its stockholder and will reflect its separate assets and liabilities. None of
such financial statements, nor any consolidated financial statements for its
stockholder, will suggest in any way that the assets of the Depositor are
available to pay the claims of creditors of its stockholder or any other entity.
Any consolidated financial statements of its stockholder and its subsidiaries
prepared for the benefit of third parties will disclose, through appropriate
footnotes or otherwise, the separate corporate existence of the Depositor.
4
--------------------------------------------------------------------------------
TRUST AGREEMENT
between
SLM FUNDING CORPORATION,
as Depositor
and
CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION
not in its individual capacity but solely
as Eligible Lender Trustee
Dated as of March 1, 1998
--------------------------------------------------------------------------------
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I
Section 1.1 Definitions and Usage............................................. 1
ARTICLE II
SECTION 2.1 Creation of Trust; Name........................................... 1
SECTION 2.2 Office............................................................ 1
SECTION 2.3 Purposes and Powers............................................... 1
SECTION 2.4 Appointment of Eligible Lender Trustee............................ 2
SECTION 2.5 Initial Capital Contribution of Trust Estate...................... 2
SECTION 2.6 Declaration of Trust.............................................. 2
SECTION 2.7 Liability of the Certificateholders............................... 3
SECTION 2.8 Title to Trust Property........................................... 3
SECTION 2.9 Representations and Warranties of the Depositor................... 4
SECTION 2.10 Application of Trust Funds........................................ 5
ARTICLE III
SECTION 3.1 Initial Beneficial Ownership...................................... 7
SECTION 3.2 The Trust Certificates............................................ 7
SECTION 3.3 Authentication of Trust Certificates.............................. 7
SECTION 3.4 Registration of Transfer and Exchange of Trust Certificates....... 8
SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Trust Certificates........... 9
SECTION 3.6 Persons Deemed Owners............................................. 10
SECTION 3.7 Access to List of Certificate holders' Names and Addresses........ 10
SECTION 3.8 Maintenance of Office or Agency................................... 10
SECTION 3.9 Appointment of Certificate Paying Agent........................... 11
SECTION 3.10 Book-Entry Certificates........................................... 12
SECTION 3.11 Notices to Clearing Agency........................................ 13
SECTION 3.12 Definitive Certificates........................................... 13
i
Page
----
ARTICLE IV
SECTION 4.1 Prior Notice to Certificateholders With Respect to
Certain Matters.................................................. 14
SECTION 4.2 Action by Certificateholders with Respect to Certain Matters..... 15
SECTION 4.3 Action by Certificateholders with Respect to Bankruptcy.......... 15
SECTION 4.4 Restrictions on Certificateholders' Power........................ 15
SECTION 4.5 Majority Control.................................................. 15
ARTICLE V
SECTION 5.1 Application of Trust Funds........................................ 15
SECTION 5.2 Method of Payment................................................. 17
SECTION 5.3 No Segregation of Moneys; No Interest............................. 17
SECTION 5.4 Accounting and Reports to the Note-holders, Certificateholders,
the Internal Revenue Service and Others........................... 17
SECTION 5.5 Signature on Returns; Tax Matters Partner......................... 18
SECTION 5.6 Capital Accounts.................................................. 18
ARTICLE VI
SECTION 6.1 General Authority................................................. 19
SECTION 6.2 General Duties.................................................... 20
SECTION 6.3 Action upon Instruction........................................... 20
SECTION 6.4 No Duties Except as Specified in this Agreement or in
Instructions...................................................... 22
SECTION 6.5 No Action Except Under Specified Documents or Instructions........ 22
SECTION 6.6 Restrictions...................................................... 22
ARTICLE VII
SECTION 7.1 Acceptance of Trusts and Duties................................... 23
SECTION 7.2 Furnishing of Documents........................................... 24
SECTION 7.3 Representations and Warranties.................................... 25
SECTION 7.4 Reliance; Advice of Counsel....................................... 25
SECTION 7.5 Not Acting in Individual Capacity................................. 26
SECTION 7.6 Eligible Lender Trustee Not Liable for Trust Certificates or
Trust Student Loans............................................... 26
SECTION 7.7 Eligible Lender Trustee May Own Trust Certificates and Notes...... 27
ii
Page
----
ARTICLE VIII
SECTION 8.1 Eligible Lender Trustee's Fees and Expenses....................... 27
SECTION 8.2 Payments to the Eligible Lender Trustee........................... 28
SECTION 8.3 Indemnity......................................................... 28
ARTICLE IX
SECTION 9.1 Termination of Trust Agreement.................................... 28
SECTION 9.2 Dissolution upon Insolvency of the Depositor...................... 29
ARTICLE X
SECTION 10.1 Eligibility Requirements for Eligible Lender Trustee.............. 30
SECTION 10.2 Resignation or Removal of Eligible Lender Trustee................. 31
SECTION 10.3 Successor Eligible Lender Trustee................................. 32
SECTION 10.4 Merger or Consolidation of Eligible Lender Trustee................ 33
SECTION 10.5 Appointment of Co-Eligible Lender Trustee or Separate Eligible
Lender Trustee.................................................... 33
ARTICLE XI
SECTION 11.1 Supplements and Amendments........................................ 35
SECTION 11.2 No Legal Title to Trust Estate in Certificateholders.............. 36
SECTION 11.3 Limitations on Rights of Others................................... 36
SECTION 11.4 Notices........................................................... 36
SECTION 11.5 Severability...................................................... 37
SECTION 11.6 Separate Counterparts............................................. 37
SECTION 11.7 Successors and Assigns............................................ 37
SECTION 11.8 No Petition....................................................... 37
SECTION 11.9 No Recourse....................................................... 38
SECTION 11.10 Headings.......................................................... 38
SECTION 11.11 Governing Law..................................................... 38
Exhibit A Form of Trust Certificate
Exhibit B Form of Certificate Depository Agreement
Annex 1 to Trust Agreement
iii
