-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NAL9GFZy8FuSwWzq7xQPaToauCDuVZ0NAT3eGtPCI4L7q3UMBrrctJNk9hRE4dMk mUABy6J4p8sbAhIdpadG8Q== 0000950133-96-002309.txt : 19961030 0000950133-96-002309.hdr.sgml : 19961030 ACCESSION NUMBER: 0000950133-96-002309 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19961025 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19961029 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: SLM FUNDING CORP CENTRAL INDEX KEY: 0000949114 STANDARD INDUSTRIAL CLASSIFICATION: ASSET-BACKED SECURITIES [6189] IRS NUMBER: 232815650 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 033-95474 FILM NUMBER: 96649160 BUSINESS ADDRESS: STREET 1: 777 TWIN CREEK DR CITY: KILLEEN STATE: TX ZIP: 76543 BUSINESS PHONE: 2023338000 MAIL ADDRESS: STREET 1: 1050 THOMAS JEFFERSON ST NW CITY: WASHINGTON STATE: DC ZIP: 20007 FORMER COMPANY: FORMER CONFORMED NAME: SALLIE MAE FUNDING CORP DATE OF NAME CHANGE: 19950808 8-K 1 FORM 8-K DATED 10/25/96 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934 Date of Report (Date of earliest event reported): October 25, 1996 ---------------- SLM FUNDING CORPORATION ----------------------- formerly known as SALLIE MAE FUNDING CORPORATION (Exact name of registrant as specified in its charter) (Originator of the Sallie Mae Student Loan Trust 1995-1, the Sallie Mae Student Loan Trust 1996-1, the SLM Student Loan Trust 1996-2, the SLM Student Loan Trust 1996-3, and the SLM Student Loan Trust 1996-4) Delaware 33-95474/333-2502 23-2815650 - -------- ----------------- ---------- (State or other (Commission File (I.R.S. employer Jurisdiction of Numbers) Identification No.) Incorporation)
777 Twin Creek Drive Killeen, Texas 76543 ---------------------------------------- (Address of principal executive offices) Registrant's telephone number, including area code: (817) 554-4500 Page 1 of 6 Exhibit Index appears on Page 5 2 Item 5. Other Events On September 16 or September 17, 1996, the following agreements were executed and delivered by the respective parties thereto: (a) the Pricing Agreement relating to the Student Loan-Backed Notes, dated September 17, 1996, by and among SLM Funding Corporation ("SLM Funding"), the Student Loan Marketing Association ("Sallie Mae") and J.P. Morgan Securities Inc. (the "Underwriter"), on behalf of each of the underwriters named in Schedule 1 thereto; (b) the Pricing Agreement relating to the Student Loan-Backed Certificates, dated September 17, 1996, by and among SLM Funding, Sallie Mae and the Underwriter, on behalf of each of the underwriters named in Schedule 1 thereto; (c) the Underwriting Agreement relating to the Student Loan-Backed Notes, dated September 16, 1996, by and among SLM Funding, Sallie Mae and the Underwriter, on behalf of each of the underwriters named in Schedule 1 thereto; and (d) the Underwriting Agreement relating to the Student Loan-Backed Certificates, dated September 16, 1996, by and among SLM Funding, Sallie Mae and the Underwriter, on behalf of each of the underwriters named in Schedule 1 thereto. On October 1 or October 3, 1996, the following agreements were executed and delivered by the respective parties thereto: (a) the Purchase Agreement, dated as of October 3, 1996, by and among SLM Funding, Chase Manhattan Bank USA, National Association, not in its individual capacity but solely as interim eligible lender trustee (the "Interim Eligible Lender Trustee"), and Sallie Mae; (b) the Trust Agreement, dated as of October 1, 1996, by and between Sallie Mae Funding and Chase Manhattan Bank USA, National Association, not in its individual capacity but solely as eligible lender trustee (the "Eligible Lender Trustee"); (c) the Indenture, dated as of October 1, 1996 (the "Indenture"), by and among the Sallie Mae Student Loan Trust 1996-4 (the "Trust"), the Eligible Lender Trustee, and Bankers Trust Company, not in its individual capacity but solely as trustee under the Indenture (the "Indenture Trustee"); (d) the Sale Agreement, dated as of October 3, 1996, by and among SLM Funding, the Interim Eligible Lender Trustee, and the Eligible Lender Trustee and the Trust; (e) the Administration Agreement, dated as of October 3, 1996, by and among the Trust, Sallie Mae, the Eligible Lender Trustee, Sallie Mae Servicing Corporation (the "Servicer"), SLM Funding and the Indenture Trustee; and (f) the Servicing Agreement, dated as of October 3, 1996 by and among the Servicer, Sallie Mae, the Trust, the Eligible Lender Trustee and the Indenture Trustee. On October 25, 1996, the Sallie Mae Student Loan Trust 1995-1 made its fourth, the Sallie Mae Student Loan Trust 1996-1 made its third, the SLM Student Loan Trust 1996-2 made its second, and the SLM Student Loan Trust 1996-3 made its first, regular quarterly distribution of funds to holders of their respective Floating Rate Student Loan-Backed Notes and distributed their respective Quarterly Servicing Reports, filed herewith as an Exhibit to this Form 8-K, to Certificateholders and Noteholders of record. The Registrant is hereby filing the Quarterly Servicing Reports reflecting each Trust's activities as of October 25, 1996. Page 2 of 6 Exhibit Index appears on Page 5 3 Item 7. Financial Statements, Pro Forma Financial Statements and Exhibits (c) Exhibits 1.1 Pricing Agreement relating to the Student Loan-Backed Notes, dated September 17, 1996, by and among SLM Funding, Sallie Mae and the Underwriter, on behalf of each of the underwriters named in Schedule 1 thereto. 1.2 Pricing Agreement relating to the Student Loan-Backed Certificates, dated September 17, 1996, by and among SLM Funding, Sallie Mae and the Underwriter, on behalf of each of the underwriters named in Schedule 1 thereto. 1.3 Underwriting Agreement relating to the Student Loan-Backed Notes, dated September 16, 1996, by and among SLM Funding, Sallie Mae and the Underwriter, on behalf of each of the underwriters named in Schedule 1 thereto. 1.4 Underwriting Agreement relating to the Student Loan-Backed Certificates, dated September 16, 1996, by and among SLM Funding, Sallie Mae and the Underwriter, on behalf of each of the underwriters named in Schedule 1 thereto. 4.1 Trust Agreement, dated as of October 1, 1996, by and between SLM Funding and the Eligible Lender Trustee. 4.2 Indenture, dated as of October 1, 1996, by and among the Trust, the Eligible Lender Trustee and the Indenture Trustee. 19.1 Quarterly Servicing Reports 99.1 Purchase Agreement, dated as of October 3, 1996, by and among SLM Funding, the Interim Eligible Lender Trustee and Sallie Mae. 99.2 Sale Agreement, dated as of October 3, 1996, by and among SLM Funding, the Interim Eligible Lender Trustee, the Eligible Lender Trustee and the Trust. 99.3 Administration Agreement, dated as of October 3, 1996, by and among the Trust, Sallie Mae, the Eligible Lender Trustee, the Servicer, SLM Funding and the Indenture Trustee. 99.4 Servicing Agreement, dated as of October 3, 1996, by and among the Servicer, Sallie Mae, the Trust, the Eligible Lender Trustee and the Indenture Trustee. Page 3 of 6 Exhibit Index appears on Page 5 4 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: October 25, 1996 SLM FUNDING CORPORATION By: /s/ Robert R. Levine --------------------------------- Name: Robert R. Levine Title: Chief Financial Officer and Director Page 4 of 6 Exhibit Index appears on Page 5 5 INDEX TO EXHIBIT
Sequentially Exhibit Numbered Number Exhibit Page ------ ------- ---- 1.1 Pricing Agreement relating to Student-Loan Backed Notes, dated September 17, 1996, by and among SLM Funding, Sallie Mae and the Underwriter, on behalf of each of the underwriters named on Schedule 1 thereto. 1.2 Pricing Agreement relating to Student-Loan Backed Certificates, dated September 17, 1996, by and among SLM Funding, Sallie Mae and the Underwriter, on behalf of each of the underwriters named on Schedule 1 thereto. 1.3 Underwriting Agreement relating to Student-Loan Backed Notes, dated September 16, 1996, by and among SLM Funding, Sallie Mae and the Underwriter, on behalf of each of the underwriters named on Schedule 1 thereto. 1.4 Underwriting Agreement relating to Student-Loan Backed Certificates, dated September 16, 1996, by and among SLM Funding, Sallie Mae and the Underwriter, on behalf of each of the underwriters named on Schedule 1 thereto. 4.1 Trust Agreement, dated as of October 1, 1996, by and between SLM Funding and the Eligible Lender Trustee. 4.2 Indenture, dated as of October 1, 1996, by and among the Trust, the Eligible Lender Trustee and the Indenture Trustee.
Page 5 of 6 Exhibit Index appears on Page 5 6 19.1 Quarterly Servicing Reports. 99.1 Purchase Agreement, dated as of October 3, 1996, by and among SLM Funding, the Interim Eligible Lender Trustee and Sallie Mae. 99.2 Sale Agreement, dated as of October 3, 1996, by and among SLM Funding, the Interim Eligible Lender Trustee, the Eligible Lender Trustee and the Trust. 99.3 Administration Agreement, dated as of October 3, 1996, by and among the Trust, Sallie Mae, the Eligible Lender Trustee, the Servicer, SLM Funding and the Indenture Trustee. 99.4 Servicing Agreement, dated as of October 3, 1996, by and among the Servicer, Sallie Mae, the Trust, the Eligible Lender Trustee and the Indenture Trustee.
Page 6 of 6 Exhibit Index appears on Page 5 EX-1.1 2 PRICING AGREEMENT--STUDENT-LOAN BACKED NOTES 1 EXHIBIT 1.1 PRICING AGREEMENT J.P. MORGAN SECURITIES INC. 60 WALL STREET NEW YORK, NEW YORK 10260 September 17, 1996 Ladies and Gentlemen: SLM Funding Corporation, a Delaware corporation (the "Company"), and the Student Loan Marketing Association, a corporation formed under the laws of the United States ("Sallie Mae"), propose, subject to the terms and conditions stated herein and in the Underwriting Agreement, dated September 17, 1996 (the "Underwriting Agreement"), between the Company and Sallie Mae, on the one hand, and J.P. Morgan Securities Inc., on the other hand, that the Company will cause the trust (the "Trust") formed pursuant to the Trust Agreement dated as of October 1, 1996 between the Company and The Chase Manhattan Bank (USA), as trustee (the "Eligible Lender Trustee"), to issue and sell to the Underwriters named in Schedule I hereto (the "Underwriters") the Student Loan-Backed Notes (the "Notes") specified in Schedule II hereto (the "Designated Securities"). The Notes will be issued and secured pursuant to the Indenture, dated as of October 1, 1996 (the "Indenture"), between the Trust and Bankers Trust Company, as trustee (the "Indenture Trustee"). Each of the provisions of the Underwriting Agreement is incorporated herein by reference in its entirety, and shall be deemed to be a part of this Agreement to the same extent as if such provisions had been set forth in full herein; and each of the representations and warranties set forth therein shall be deemed to have been made at and as of the date of this Pricing Agreement, except that each representation and warranty which refers to the Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a representation or warranty as of the date of the Underwriting Agreement in relation to the Prospectus (as therein defined), and also a representation and warranty as of the date of this Pricing Agreement in relation to the Prospectus as amended or supplemented relating to the Designated Securities which are the subject of this Pricing Agreement. Each reference to the Representatives herein and in the provisions of the Underwriting Agreement so incorporated by reference shall be deemed to refer to you. Unless otherwise defined herein, terms defined in the Underwriting Agreement are used herein as therein defined. The Representatives designated to act on behalf of the Representatives and on behalf of each of the Underwriters of the Designated Securities pursuant to Section 12 of the Underwriting Agreement and the address of the Representatives referred to in such Section 12 are set forth at the end of Schedule II hereto. 2 An amendment to the Registration Statement, or a supplement to the Prospectus, as the case may be, relating to the Designated Securities, in the form heretofore delivered to you is now proposed to be filed with the Commission. Subject to the terms and conditions set forth herein and in the Underwriting Agreement incorporated herein by reference, the Company agrees to cause the Trust to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Trust, at the time and place and at the purchase price to the Underwriters set forth in Schedule II hereto, the principal amount of Designated Securities set forth opposite the name of such Underwriter in Schedule I hereto, less the principal amount of Designated Securities covered by Delayed Delivery Contracts, if any, as may be specified in Schedule II. During the period beginning from the date of this Pricing Agreement for the Designated Securities and continuing to and including October 3, 1996, the Company agrees, and Sallie Mae agrees that it will cause the Company, not to, and not to permit any affiliated entity to, offer, sell, contract to sell or otherwise dispose of, any securities (other than the Designated Securities) collateralized by, or any securities (other than the related Certificates) evidencing an ownership in, Student Loans, without the prior written consent of the Representatives. Each Underwriter represents and agrees that (a) it has not offered or sold and will not offer or sell any Notes or Certificates to persons in the United Kingdom prior to the expiration of the period of six months from the issue date of the Notes and the Certificates except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (b) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the Notes and the Certificates in, from or otherwise involving the United Kingdom; and (c) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issuance of the Notes and the Certificates to a person who is of a kind described in article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to whom such document may otherwise lawfully be issued or passed on. If the foregoing is in accordance with your understanding, please sign and return to us 10 counterparts hereof, and upon acceptance hereof by you, on behalf of each of 2 3 the Underwriters, this letter and such acceptance hereof, including the provisions of the Underwriting Agreement incorporated herein by reference, shall constitute a binding agreement between each of the Underwriters and the Company and Sallie Mae. It is understood that your acceptance of this letter on behalf of each of the Underwriters is or will be pursuant to the authority set forth in a form of Agreement among Underwriters, the form of which shall be submitted to the Company and Sallie Mae for examination upon request, but without warranty on the part of the Representatives as to the authority of the signers thereof. Very truly yours, SLM FUNDING CORPORATION By: /s/ Mark G. Overend -------------------- Name: Mark G. Overend Title: Treasurer and Controller STUDENT LOAN MARKETING ASSOCIATION By: /s/ Denise B. McGlone ---------------------- Name: Denise B. McGlone Title: Executive Vice President and Chief Financial Officer 3 4 Accepted as of the date hereof: J.P. MORGAN SECURITIES INC. By: /s/ Peggyann Wallace .............................. Name: Peggyann Wallace Title: Vice President On behalf of each of the Underwriters 4 5 SCHEDULE I PRINCIPAL AMOUNT OF DESIGNATED SECURITIES TO BE PURCHASED
UNDERWRITER CLASS A-1 CLASS A-2 J.P. Morgan Securities Inc. $159,550,000 $82,500,000 Bear, Stearns & Co. Inc. $159,550,000 $82,500,000 Deutsche Morgan Grenfell/C.J. Lawrence Inc. $159,550,000 $82,500,000 Goldman, Sachs & Co. $159,550,000 $82,500,000 Lehman Brothers Inc. $159,550,000 $82,500,000 Merrill Lynch, Pierce, Fenner & Smith $159,550,000 $82,500,000 Incorporated TOTAL $957,300,000 $495,000,000
6 SCHEDULE II TITLE OF EACH CLASS OF DESIGNATED SECURITIES: Floating Rate Class A-1 Student Loan-Backed Notes (for purposes of this Schedule II, "Class A-1") Floating Rate Class A-2 Student Loan-Backed Notes (for purposes of this Schedule II, "Class A-2") AGGREGATE PRINCIPAL AMOUNT OF EACH CLASS: Class A-1: $957,300,000 Class A-2: $495,000,000 PRICE TO PUBLIC OF EACH CLASS: Class A-1: 100.00% Class A-2: 100.00% PURCHASE PRICE BY UNDERWRITERS OF EACH CLASS: Class A-1: 99.775% Class A-2: 99.725% SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE: Same Day Funds INDENTURE: Indenture, dated as of October 1, 1996, among Bankers Trust Company, as Indenture Trustee, the SLM Student Loan Trust 1996-4, and The Chase Manhattan Bank (USA), as Eligible Lender Trustee. MATURITY: Class A-1: July 2004 Distribution Date Class A-2: July 2009 Distribution Date INTEREST RATE: Class A-1: T-Bill Rate plus 0.48% Class A-2: T-Bill Rate plus 0.64% FORM OF DESIGNATED SECURITIES: Book-Entry (DTC) TIME OF DELIVERY: October 3, 1996 7 CLOSING LOCATION FOR DELIVERY OF DESIGNATED SECURITIES: Student Loan Marketing Association 11600 Sallie Mae Drive Reston, VA 20193 NAMES AND ADDRESSES OF REPRESENTATIVES: Designated Representatives: J.P. Morgan Securities Inc. Address for Notices, etc.: J.P. Morgan Securities Inc. 60 Wall Street New York, New York 10260 Attn: Peggyann Wallace -3- EX-1.2 3 PRICING AGREEMENT--STUDENT-LOAN BACKED CERTS. 1 EXHIBIT 1.2 PRICING AGREEMENT J.P. MORGAN SECURITIES INC. 60 WALL STREET NEW YORK, NEW YORK 10260 September 17, 1996 Ladies and Gentlemen: SLM Funding Corporation, a Delaware corporation (the "Company"), and the Student Loan Marketing Association, a corporation formed under the laws of the United States ("Sallie Mae"), propose, subject to the terms and conditions stated herein and in the Underwriting Agreement, dated September 17, 1996 (the "Underwriting Agreement"), between the Company and Sallie Mae, on the one hand, and J.P. Morgan Securities Inc., on the other hand, that the Company will cause the trust (the "Trust") formed pursuant to the Trust Agreement dated as of October 1, 1996 between the Company and The Chase Manhattan Bank (USA), as trustee (the "Eligible Lender Trustee"), to issue and sell to the Underwriters named in Schedule I hereto (the "Underwriters") the Student Loan-Backed Certificates (the "Certificates") specified in Schedule II hereto (the "Designated Securities"). The Certificates will be issued pursuant to the Trust Agreement. Each of the provisions of the Underwriting Agreement is incorporated herein by reference in its entirety, and shall be deemed to be a part of this Agreement to the same extent as if such provisions had been set forth in full herein; and each of the representations and warranties set forth therein shall be deemed to have been made at and as of the date of this Pricing Agreement, except that each representation and warranty which refers to the Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a representation or warranty as of the date of the Underwriting Agreement in relation to the Prospectus (as therein defined), and also a representation and warranty as of the date of this Pricing Agreement in relation to the Prospectus as amended or supplemented relating to the Designated Securities which are the subject of this Pricing Agreement. Each reference to the Representatives herein and in the provisions of the Underwriting Agreement so incorporated by reference shall be deemed to refer to you. Unless otherwise defined herein, terms defined in the Underwriting Agreement are used herein as therein defined. The Representatives designated to act on behalf of the Representatives and on behalf of each of the Underwriters of the Designated Securities pursuant to Section 12 of the Underwriting Agreement and the address of the Representatives referred to in such Section 12 are set forth at the end of Schedule II hereto. 2 An amendment to the Registration Statement, or a supplement to the Prospectus, as the case may be, relating to the Designated Securities, in the form heretofore delivered to you is now proposed to be filed with the Commission. Subject to the terms and conditions set forth herein and in the Underwriting Agreement incorporated herein by reference, the Company agrees to cause the Trust to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Trust, at the time and place and at the purchase price to the Underwriters set forth in Schedule II hereto, the amount of Designated Securities set forth opposite the name of such Underwriter in Schedule I hereto, less the amount of Designated Securities covered by Delayed Delivery Contracts, if any, as may be specified in Schedule II. During the period beginning from the date of this Pricing Agreement for the Designated Securities and continuing to and including October 3, 1996, the Company agrees, and Sallie Mae agrees that it will cause the Company, not to, and not to permit any affiliated entity to, offer, sell, contract to sell or otherwise dispose of, any securities (other than the Designated Securities) evidencing an ownership in, or any securities (other than the related Notes) collateralized by, Student Loans, without the prior written consent of the Representatives. Each Underwriter represents and agrees that (a) it has not offered or sold and will not offer or sell any Notes or Certificates to persons in the United Kingdom prior to the expiration of the period of six months from the issue date of the Notes and the Certificates except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (b) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the Notes and the Certificates in, from or otherwise involving the United Kingdom; and (c) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issuance of the Notes and the Certificates to a person who is of a kind described in article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to whom such document may otherwise lawfully be issued or passed on. If the foregoing is in accordance with your understanding, please sign and return to us 10 counterparts hereof, and upon acceptance hereof by you, on behalf of each of 2 3 the Underwriters, this letter and such acceptance hereof, including the provisions of the Underwriting Agreement incorporated herein by reference, shall constitute a binding agreement between each of the Underwriters and the Company and Sallie Mae. It is understood that your acceptance of this letter on behalf of each of the Underwriters is or will be pursuant to the authority set forth in a form of Agreement among Underwriters, the form of which shall be submitted to the Company and Sallie Mae for examination upon request, but without warranty on the part of the Representatives as to the authority of the signers thereof. Very truly yours, SLM FUNDING CORPORATION By: /s/ Mark G. Overend ---------------------------------- Name: Mark G. Overend Title: Treasurer and Controller STUDENT LOAN MARKETING ASSOCIATION By: /s/ Denise B. McGlone ---------------------- Name: Denise B. McGlone Title: Executive Vice President and Chief Financial Officer 3 4 Accepted as of the date hereof: J.P. MORGAN SECURITIES INC. By: /s/ Peggyann Wallace --------------------------------- Name: Peggyann Wallace Title: Vice President On behalf of each of the Underwriters 4 5 SCHEDULE I AMOUNT OF DESIGNATED SECURITIES TO BE PURCHASED
UNDERWRITER CERTIFICATES J.P. Morgan Securities Inc. $8,800,000 Bear, Stearns & Co. Inc. $8,780,000 Deutsche Morgan Grenfell/C.J. Lawrence $8,780,000 Inc. Goldman, Sachs & Co. $8,780,000 Lehman Brothers Inc. $8,780,000 Merrill Lynch, Pierce, Fenner & Smith $8,780,000 Incorporated TOTAL $52,700,000
6 SCHEDULE II TITLE OF EACH CLASS OF DESIGNATED SECURITIES: Floating Rate Student Loan-Backed Certificates AGGREGATE AMOUNT OF DESIGNATED SECURITIES: $52,700,000 PRICE TO PUBLIC PER CERTIFICATE: 100.00% PURCHASE PRICE BY UNDERWRITERS PER CERTIFICATE: $527,000 of Floating Rate Student Loan-Backed Certificates: 100.00% $52,173,000 of Floating Rate Student Loan-Backed Certificates: 99.528% SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE: Same Day Funds TRUST AGREEMENT: Trust Agreement, dated October 1, 1996, among SLM Funding Corporation, as Seller, and The Chase Manhattan Bank (USA), as Eligible Lender Trustee MATURITY: July 2011 Distribution Date RETURN RATE: T-Bill Rate plus 0.93% FORM OF DESIGNATED SECURITIES: $527,000 of Floating Rate Student Loan-Backed Certificates: Definitive Certificate $52,173,000 of Floating Rate Student Loan-Backed Certificates: Book-Entry (DTC) TIME OF DELIVERY: October 3, 1996 7 CLOSING LOCATION FOR DELIVERY OF DESIGNATED SECURITIES: Student Loan Marketing Association 11600 Sallie Mae Drive Reston, VA 20193 NAMES AND ADDRESSES OF REPRESENTATIVES: Designated Representatives: J.P. Morgan Securities Inc. Address for Notices, etc.: J.P. Morgan Securities Inc. 60 Wall Street New York, New York 10260 Attn: Peggyann Wallace -2- EX-1.3 4 UNDERWRITING AGREEMENT--STUDENT LOAN BACKED NOTES 1 EXHIBIT 1.3 SLM FUNDING CORPORATION STUDENT LOAN-BACKED NOTES --------------------- UNDERWRITING AGREEMENT September 16, 1996 J.P. MORGAN SECURITIES INC. 60 WALL STREET NEW YORK, NEW YORK 10260 Ladies and Gentlemen: From time to time the Student Loan Marketing Association ("Sallie Mae"), a corporation formed under the laws of the United States, and SLM Funding Corporation, a Delaware corporation and a wholly-owned subsidiary of Sallie Mae (the "Company"), propose to enter into one or more Pricing Agreements (each a "Pricing Agreement") in the form of Annex I hereto, with such additions and deletions as the parties thereto may determine. Subject to the terms and conditions stated herein and therein, the Company proposes to cause the Trust specified in the applicable Pricing Agreement to issue and sell to the firms named in Schedule I to the applicable Pricing Agreement (such firms constituting the "Underwriters" with respect to such Pricing Agreement and the securities specified therein) certain of such Trust's Student Loan-Backed Notes (the "Notes") specified in Schedule II to such Pricing Agreement (with respect to such Pricing Agreement, the "Designated Securities"), less the principal amount of Designated Securities covered by Delayed Delivery Contracts, if any, as provided in Section 3 hereof and as may be specified in Schedule II to such Pricing Agreement (with respect to such Pricing Agreement, any Designated Securities to be covered by Delayed Delivery Contracts are herein sometimes referred to as "Contract Securities" and the Designated Securities to be purchased by the Underwriters (after giving effect to the deduction, if any, for Contract Securities) are herein sometimes referred to as "Underwriters' Securities"). The Securities may be sold from time to time in one or more Series. Each Series of Securities, which will include one or more classes of Notes and one or more classes of Student Loan-Backed Certificates (the "Certificates," and, together with the Notes, the "Securities") will be issued by a Trust to be formed with respect to such Series (each, a "Trust"). Each Trust will be formed pursuant to a trust agreement (a "Trust Agreement") to be entered into between the Company and the Eligible Lender Trustee specified in the related Pricing Agreement (the "Eligible Lender Trustee"). The Notes of each Series will be issued and secured pursuant to an indenture (an "Indenture") between the Trust and the Indenture Trustee specified in the related Pricing Agreement (the "Indenture Trustee"). The Certificates of a Series will be issued pursuant to the related Trust Agreement and will represent fractional undivided interests in the Trust created thereby. The property of each Trust will include, 2 among other things, educational student loans to students and/or parents of dependent students ("Student Loans"). With respect to each Trust, (i) the Company will acquire the related Student Loans from Sallie Mae pursuant to a Purchase Agreement and (ii) the Company will sell the related Student Loans to such Trust pursuant to a Sale Agreement, with the related Eligible Lender Trustee holding legal title thereto. With respect to each Series, Sallie Mae Servicing Corporation, as servicer (the "Servicer") will enter into a servicing agreement (a "Servicing Agreement") with the Trust, the Administrator, the Eligible Lender Trustee and the Indenture Trustee with respect to the related Student Loans. Sallie Mae, as administrator (in such capacity, the "Administrator"), will enter into an Administration Agreement with the Eligible Lender Trustee, the Servicer, the Company, the Trust and the Indenture Trustee with respect to the related Student Loans. The terms and conditions of any particular issuance of Designated Securities shall be as specified in the Pricing Agreement relating thereto and in or pursuant to the related Indenture. Capitalized terms used but not defined herein or in any Pricing Agreement shall have the meanings ascribed thereto in the related Indenture. 1. Particular sales of Designated Securities may be made from time to time to the Underwriters of such Securities, for whom the firms designated as representatives of the Underwriters of such Securities in the Pricing Agreement relating thereto will act as representatives (the "Representatives"). The term "Representatives" also refers to a single firm acting as sole representative of the Underwriters and to an Underwriter or Underwriters who act without any firm being designated as its or their representatives. This Underwriting Agreement shall not be construed as an obligation of the Company to sell any of the Securities or as an obligation of any of the Underwriters to purchase the Securities. The obligation of the Company to issue and sell any of the Securities and the obligation of any of the Underwriters to purchase any of the Securities shall be evidenced by the Pricing Agreement with respect to the Designated Securities specified therein. Each Pricing Agreement shall specify the aggregate principal amount of such Designated Securities, the initial public offering price of such Designated Securities, the purchase price to the Underwriters of such Designated Securities, the names of the Underwriters of such Designated Securities, the names of the Representatives of such Underwriters and the principal amount of such Designated Securities to be purchased by each Underwriter and whether any of such Designated Securities shall be covered by Delayed Delivery Contracts (as defined in Section 3 hereof) and shall set forth the date, time and manner of delivery of such Designated Securities and payment therefor. The Pricing Agreement shall also specify (to the extent not set forth in the Indenture and the registration statement and prospectus with respect thereto) the terms of such Designated Securities. A Pricing Agreement shall be in the form of an executed writing (which may be in counterparts), and may be evidenced by an exchange of telegraphic communications or any other rapid transmission device designed to produce a written record of communications 2 3 transmitted. The obligations of the Underwriters under this Agreement and each Pricing Agreement shall be several and not joint. 2. The Company and Sallie Mae represent and warrant to, and agree with, each of the Underwriters as follows (it being agreed and understood that the statements set forth in clauses (d), (e), (g), (h), (j), (k), (m), (n) and (o) of this Section 2 with respect to Sallie Mae or the Servicer constitute representations, warranties and agreements of Sallie Mae only and not of the Company) : (a) A registration statement on Form S-3 (File No. 333-2502), including a form of prospectus, in respect of the Securities has been filed with the Securities and Exchange Commission (the "Commission"); such registration statement and any post-effective amendment thereto, each in the form heretofore delivered or to be delivered to the Representatives and, excluding exhibits to such registration statement, but including all documents incorporated by reference in the prospectus contained therein, to the Representatives for each of the other Underwriters, have been declared effective by the Commission in such form; no other document with respect to such registration statement or document incorporated by reference therein has heretofore been filed or transmitted for filing with the Commission (other than prospectuses filed pursuant to Rule 424(b) of the rules and regulations of the Commission under the Securities Act of 1933, as amended (the "Act"), each in the form heretofore delivered to the Representatives); and no stop order suspending the effectiveness of such registration statement has been issued and no proceeding for that purpose has been initiated or, to the best of Sallie Mae's or the Company's knowledge, threatened by the Commission (any preliminary prospectus included in such registration statement or filed with the Commission pursuant to Rule 424(a) under the Act, is hereinafter called a "Preliminary Prospectus;" the various parts of such registration statement, including all exhibits thereto and the documents incorporated by reference in the prospectus contained in the registration statement at the time such part of the registration statement became effective but excluding Form T-1, each as amended at the time such part of the registration statement became effective, are hereinafter collectively called the "Registration Statement"; the prospectus relating to the Securities, in the form in which it has most recently been filed, or transmitted for filing, with the Commission on or prior to the date of this Agreement, being hereinafter called the "Prospectus"; any reference herein to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to the applicable form under the Act, as of the date of such Preliminary Prospectus or Prospectus, as the case may be; any reference to any amendment or supplement to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include any documents filed after the date of such Preliminary Prospectus or Prospectus, as the case may be, under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and incorporated by reference in such Preliminary Prospectus or Prospectus, as the case may be; any reference to any amendment to the Registration Statement shall be 3 4 deemed to refer to and include any annual report of the Company filed pursuant to Sections 13(a) or 15(d) of the Exchange Act after the effective date of the Registration Statement that is incorporated by reference in the Registration Statement; and any reference to the Prospectus as amended or supplemented shall be deemed to refer to the Prospectus as amended or supplemented in relation to the applicable Designated Securities in the form in which it is filed with the Commission pursuant to Rule 424(b) under the Act in accordance with Section 5(a) hereof, including any documents incorporated by reference therein as of the date of such filing); (b) The documents incorporated by reference in the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Act, the Exchange Act and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), as applicable, and the rules and regulations of the Commission thereunder, and none of such documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and any further documents so filed and incorporated by reference in the Prospectus or any further amendment or supplement thereto, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Act, the Exchange Act and the Trust Indenture Act, as applicable, and the rules and regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter of Designated Securities through the Representatives expressly for use in the Prospectus as amended or supplemented relating to such Designated Securities; (c) The Registration Statement and the Prospectus conform, and any further amendments or supplements to the Registration Statement or the Prospectus will conform, in all material respects to the requirements of the Act and the Trust Indenture Act, as applicable, and the rules and regulations of the Commission thereunder and do not and will not, as of the applicable effective date as to the Registration Statement and any amendment thereto and as of the applicable filing date as to the Prospectus and any amendment or supplement thereto, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter of Designated Securities through the Representatives expressly for use in the Prospectus as amended or supplemented relating to such Designated Securities; 4 5 (d) Neither the Company nor Sallie Mae or any of its subsidiaries has sustained since the date of the financial statements included in Sallie Mae's most recently published Information Statement any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in such Information Statement; and, since such date, there has not been any material adverse change in the capital stock or long-term debt of the Company or Sallie Mae or any of its subsidiaries or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, shareholders' equity or results of operations of the Company or Sallie Mae or any of its subsidiaries or the transactions contemplated hereby, otherwise than as set forth or contemplated in such Information Statement; (e) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the state of Delaware, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus and to consummate the transactions contemplated therein and herein, and is a wholly-owned subsidiary of Sallie Mae. Sallie Mae has been duly organized and is validly existing under the laws of the United States, with power and authority (corporate and otherwise) to own its properties and conduct its business as described in the Prospectus and to consummate the transactions contemplated therein and herein. The Servicer has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus and to consummate the transactions contemplated therein and herein, and is a wholly-owned subsidiary of Sallie Mae. (f) All of the issued shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable and are owned beneficially and of record by Sallie Mae; (g) This Agreement has been, and each Pricing Agreement with respect to the Designated Securities upon its execution and delivery by the Company and Sallie Mae will have been, duly authorized, executed and delivered by the Company and Sallie Mae. The Securities have been duly authorized, and, when Designated Securities are issued and delivered pursuant to this Agreement and the Pricing Agreement with respect to such Designated Securities, and, in the case of any Contract Securities, pursuant to Delayed Delivery Contracts with respect to such Contract Securities, such Designated Securities and Contract Securities will have been duly executed, authenticated, issued and delivered. The Designated Securities will constitute valid and legally binding obligations of the related Trust entitled to the benefits provided by the Indenture, which will be substantially in the form filed as an exhibit to the Registration Statement. The Indenture has been duly authorized and duly qualified under the Trust 5 6 Indenture Act. The related Certificates are intended to represent undivided ownership interests in the Trust created by the Trust Agreement, which will be substantially in the form filed as an exhibit to the Registration Statement, and will be entitled to the benefits provided by the Trust Agreement. At the Time of Delivery (as defined in Section 4 hereof) for the Designated Securities, the Indenture and the Trust Agreement will each constitute a valid and legally binding instrument, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles. The Indenture and Trust Agreement conform, and the Designated Securities and the related Certificates will conform, to the descriptions thereof contained in the Prospectus as amended or supplemented with respect to the Designated Securities; (h) The issue and sale of the Securities and the compliance by the Company with all of the provisions of the Securities, the Indenture, the Trust Agreement, each of the Delayed Delivery Contracts, this Agreement and any Pricing Agreement, and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or Sallie Mae is a party or by which the Company or Sallie Mae is bound or to which any of the property or assets of the Company or Sallie Mae is subject, nor will such action result in any violation of the provisions of the Company's Certificate of Incorporation or By-laws, Sallie Mae's charter, enabling legislation or By-laws, or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or Sallie Mae or any of their properties; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Securities or the consummation by the Company or Sallie Mae of the transactions contemplated by this Agreement or any Pricing Agreement or the Indenture or any Delayed Delivery Contract, except such as have been, or will have been prior to the Time of Delivery, obtained under the Act and the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Designated Securities by the Underwriters; (i) The statements set forth in the Prospectus under the captions "Description of the Notes" and "Description of the Certificates" and set forth in the Prospectus Supplement under the caption "Description of the Securities," insofar as they purport to constitute a summary of the terms of the Notes and the Certificates, are accurate, complete and fair; (j) Sallie Mae is not in violation of its charter as set forth in its enabling legislation or By-laws, and the Company is not in violation of its Certificate of Incorporation or By-laws, and neither Sallie Mae nor the Company is in default in the 6 7 performance or observance of any material obligation, agreement, covenant or condition contained in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound; (k) Other than as set forth in the Prospectus or in Sallie Mae's most recently published Information Statement, there are no legal or governmental proceedings pending to which the Company or Sallie Mae or any of its subsidiaries is a party or of which any property of the Company or Sallie Mae or any of its subsidiaries is the subject which, if determined adversely to the Company or Sallie Mae or any of its subsidiaries, would individually or in the aggregate have a material adverse effect on the current or future consolidated financial position, shareholders' equity or results of operations of the Company or Sallie Mae or any of its subsidiaries or on the consummation of the transactions contemplated hereby; and, to the best of the Company's and Sallie Mae's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; (l) The Company is not and, after giving effect to the offering and sale of the Securities, will not be an "investment company" or an entity "controlled" by an "investment company", as such terms are defined in the Investment Company Act of 1940, as amended (the "Investment Company Act"); (m) Neither the Company, Sallie Mae nor any of their affiliates does business with the government of Cuba or with any person or affiliate located in Cuba within the meaning of Section 517.075, Florida Statutes; (n) Ernst & Young LLP, who have certified certain financial statements of Sallie Mae, are independent public accountants as required by the Act and the rules and regulations of the Commission thereunder; (o) At the Time of Delivery of the Designated Securities, Sallie Mae's representations and warranties in the related Purchase Agreement and Administration Agreement, the Company's representations and warranties in the related Sale Agreement and Trust Agreement and the Servicer's representations and warranties in the Servicing Agreement will be true and correct in all material respects; and (p) In the event any of the Securities are purchased pursuant to Delayed Delivery Contracts, each of such Delayed Delivery Contracts has been duly authorized by the Company and Sallie Mae and, when executed and delivered by the Company and the purchaser named therein, will constitute a valid and legally binding agreement of the Company enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; and any Delayed Delivery Contracts conform to the description thereof in the Prospectus. 7 8 3. Upon the execution of the Pricing Agreement applicable to any Designated Securities and authorization by the Representatives of the release of the Underwriters' Securities, the several Underwriters propose to offer such Underwriters' Securities for sale upon the terms and conditions set forth in the Prospectus as amended or supplemented. The Company may specify in Schedule II to the Pricing Agreement applicable to any Designated Securities that the Underwriters are authorized to solicit offers to purchase Designated Securities from the Company pursuant to delayed delivery contracts (herein called "Delayed Delivery Contracts"), substantially in the form of Annex III attached hereto but with such changes therein as the Representatives and the Company may authorize or approve. If so specified, the Underwriters will endeavor to make such arrangements, and as compensation therefor the Company will pay to the Representatives, for the accounts of the Underwriters, at the Time of Delivery, such commission, if any, as may be set forth in such Pricing Agreement. Delayed Delivery Contracts, if any, are to be with investors of the types described in the Prospectus and subject to other conditions therein set forth. The Underwriters will not have any responsibility with respect to the validity or performance of any Delayed Delivery Contracts. The principal amount of Contract Securities to be deducted from the principal amount of Designated Securities to be purchased by each Underwriter as set forth in Schedule I to the Pricing Agreement applicable to such Designated Securities shall be, in each case, the principal amount of Contract Securities which the Company has been advised by the Representatives have been attributed to such Underwriter, provided that, if the Company has not been so advised, the amount of Contract Securities to be so deducted shall be, in each case, that proportion of Contract Securities which the principal amount of Designated Securities to be purchased by such Underwriter under such Pricing Agreement bears to the total principal amount of the Designated Securities (rounded as the Representatives may determine). The total principal amount of Underwriters' Securities to be purchased by all the Underwriters pursuant to such Pricing Agreement shall be the total principal amount of Designated Securities set forth in Schedule I to such Pricing Agreement less the principal amount of the Contract Securities. The Company will deliver to the Representatives not later than 3:30 p.m., New York City time, on the third business day preceding the Time of Delivery specified in the applicable Pricing Agreement (or such other time and date as the Representatives and the Company may agree upon in writing), a written notice setting forth the principal amount of Contract Securities. 4. Underwriters' Securities to be purchased by each Underwriter pursuant to the Pricing Agreement relating thereto, in the form specified in such Pricing Agreement, and in such authorized denominations and registered in such names as the Representatives may request upon at least forty-eight hours' prior notice to the Company, shall be delivered by or on behalf of the Company to the Representatives for the account of such Underwriter, against payment by such Underwriter or on its behalf of the purchase price therefor by wire transfer or by certified or official bank check or checks, payable to the order of the Company in the funds specified in such Pricing Agreement, all in the manner and at the place and time and 8 9 date specified in such Pricing Agreement or at such other place and time and date as the Representatives and the Company may agree upon in writing, such time and date being herein called the "Time of Delivery" for such Securities. Concurrently with the delivery of and payment for the Underwriters' Securities, the Company will deliver to the Representatives for the accounts of the Underwriters a check payable to the order of the party designated in the Pricing Agreement relating to such Underwriters' Securities in the amount of any compensation payable by the Company to the Underwriters in respect of any Delayed Delivery Contracts as provided in Section 3 hereof and the Pricing Agreement relating to such Securities. 5. The Company agrees with each of the Underwriters of any Designated Securities, and Sallie Mae agrees with such Underwriters that it will cause the Company: (a) To prepare the Prospectus as amended or supplemented in relation to the applicable Designated Securities in a form approved by the Representatives and to file such Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's close of business on the second business day following the execution and delivery of the Pricing Agreement relating to the applicable Designated Securities or, if applicable, such earlier time as may be required by Rule 424(b); to make no further amendment or any supplement to the Registration Statement or Prospectus as amended or supplemented after the date of the Pricing Agreement relating to such Designated Securities and prior to the Time of Delivery for such Designated Securities which shall be disapproved by the Representatives for such Designated Securities promptly after reasonable notice thereof; to advise the Representatives promptly of any such amendment or supplement after such Time of Delivery and furnish the Representatives with copies thereof; to file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act for so long as the delivery of a prospectus is required in connection with the offering or sale of such Designated Securities, and during such same period to advise the Representatives, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed with the Commission, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any prospectus relating to the Designated Securities, of the suspension of the qualification of such Designated Securities for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or Prospectus or for additional information; and, in the event of the issuance of any such stop order or of any such order preventing or suspending the use of any prospectus relating to the Designated Securities or suspending any such qualification, to promptly use its best efforts to obtain the withdrawal of such order; 9 10 (b) Promptly from time to time to take such action as the Representatives may reasonably request to qualify the Designated Securities for offering and sale under the securities laws of such jurisdictions as the Representatives may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of such Designated Securities, provided that in connection therewith the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction; (c) To furnish the Underwriters with copies of the Prospectus as amended or supplemented, in such quantities as the Representatives may from time to time reasonably request, and, if the delivery of a Prospectus is required at any time in connection with the offering or sale of the Designated Securities and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Act, the Exchange Act or the Trust Indenture Act, to notify the Representatives and, upon their request, to file such document and to prepare and furnish without charge to each Underwriter and to any dealer in securities as many copies as the Representatives may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance; (d) To cause the Trust to make generally available to holders of Designated Securities, as soon as practicable, but in any event not later than eighteen months after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act), an earnings statement of the Trust (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158); and (e) To apply the net proceeds of the offering and sale of the Designated Securities and the related Certificates that it receives in the manner set forth in the Prospectus. 6. The Company and Sallie Mae covenant and agree with the several Underwriters that the Company or Sallie Mae will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Company's and Sallie Mae's counsel and accountants in connection with the registration of the Securities under the Act and all other expenses in connection with the preparation, printing and filing of the Registration Statement, any Preliminary Prospectus and the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the Underwriters and dealers; (ii) the cost of 10 11 printing or producing any Agreement among Underwriters, this Agreement, any Pricing Agreement, any Indenture, any Trust Agreement, any Delayed Delivery Contracts, any Blue Sky and Legal Investment Memoranda, closing documents (including any compilations thereof) and any other documents in connection with the offering, purchase, sale and delivery of the Designated Securities; (iii) all expenses in connection with the qualification of the Designated Securities for offering and sale under state securities laws as provided in Section 5(b) hereof, including the fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky and Legal Investment Surveys; (iv) any fees charged by securities rating services for rating the Designated Securities; (v) the cost of preparing the Designated Securities; (vi) the fees and expenses of the Eligible Lender Trustee and the Indenture Trustee and any agent of the Eligible Lender Trustee or the Indenture Trustee and the fees and disbursements of counsel for the Eligible Lender Trustee and the Indenture Trustee in connection with any Indenture and Trust Agreement and the Designated Securities; and (vii) all other costs and expenses incident to the performance of its obligations hereunder and under any Delayed Delivery Contracts which are not otherwise specifically provided for in this Section. It is understood, however, that, except as provided in this Section, and Sections 8 and 11 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, transfer taxes on resale of any of the Securities by them, and any advertising expenses connected with any offers they may make. 7. The obligations of the Underwriters of any Designated Securities under the Pricing Agreement relating to such Designated Securities shall be subject, in the reasonable discretion of the Representatives, to the condition that all representations and warranties and other statements of the Company and Sallie Mae in or incorporated by reference in the Pricing Agreement relating to such Designated Securities are, at and as of the Time of Delivery for such Designated Securities, true and correct, the condition that the Company and Sallie Mae shall have performed all of their obligations hereunder theretofore to be performed, and the following additional conditions: (a) The Prospectus as amended or supplemented in relation to the applicable Designated Securities shall have been filed with the Commission pursuant to Rule 424(b) within the applicable time period prescribed for such filing by the rules and regulations under the Act and in accordance with Section 5(a) hereof; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and all requests for additional information on the part of the Commission shall have been complied with; (b) Counsel for the Underwriters shall have furnished to the Representatives such opinion or opinions, substantially in the form attached hereto as Annex II(a), dated the Time of Delivery for such Designated Securities, with respect to the Designated Securities and such other related matters as the Representatives may reasonably request, and the Company and Sallie Mae shall have furnished or caused to 11 12 be furnished to such counsel such documents and information as they may reasonably request to pass upon such matters; (c) Internal counsel for the Company, Sallie Mae and the Servicer, satisfactory to the Representatives, shall have furnished to the Representatives a written opinion or opinions, dated the Time of Delivery for such Designated Securities, substantially in the form attached hereto as Annex II(b) or as is otherwise satisfactory to the Representatives; (d) Special counsel for the Company, Sallie Mae and the Servicer, satisfactory to the Representatives, shall have furnished to the Representatives a written opinion or opinions, dated the Time of Delivery for such Designated Securities, substantially in the form attached hereto as Annex II(c) or as is otherwise satisfactory to the Representatives; (e) Counsel for the Eligible Lender Trustee, satisfactory to the Representatives, shall have furnished to the Representatives a written opinion or opinions, dated the Time of Delivery for such Designated Securities, substantially in the form attached hereto as Annex II(d) or as is otherwise satisfactory to the Representatives; (f) Counsel for the Indenture Trustee, satisfactory to the Representatives, shall have furnished to the Representatives a written opinion or opinions, dated the Time of Delivery for such Designated Securities, substantially in the form attached hereto as Annex II(e) or as is otherwise satisfactory to the Representatives; (g) At the time a Preliminary Prospectus relating to such Designated Securities was distributed and on the date of the Pricing Agreement for such Designated Securities, the independent public accountants of the Company and Sallie Mae shall have furnished to the Representatives a letter or letters with respect to the Company, Sallie Mae, the statistical and financial information contained in the Preliminary Prospectus and the Prospectus and certain agreed upon procedures with respect to the issuance and offering of the Designated Securities and the related Student Loans, in form and substance satisfactory to the Representatives and in each case confirming that such accountants are independent public accountants with the meaning of the Act and the applicable rules and regulations thereunder; (h) (i) Neither the Company nor Sallie Mae shall have sustained since the date of the financial statements included in Sallie Mae's most recently published Information Statement any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in such Information Statement, and (ii) since such date, there shall not have been any material adverse change in the capital stock or long-term debt of the Company or Sallie Mae or any such change, or any development involving a prospective such change, in or affecting the general affairs, management, financial position, shareholders' equity or results of operations of the Company or Sallie Mae 12 13 otherwise than as set forth or contemplated in such Information Statement, the effect of which, in any such case described in clause (i) or (ii), is in the judgment of the Representatives so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Underwriters' Securities on the terms and in the manner contemplated in the Prospectus as first amended or supplemented relating to the Designated Securities; (i) On or after the date of the Pricing Agreement relating to the Designated Securities (i) no downgrading shall have occurred in the rating accorded Sallie Mae's debt securities or preferred stock by any "nationally recognized statistical rating organization", as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Act ("Rating Agency"), and (ii) no such Rating Agency shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of Sallie Mae's debt securities; (j) On or after the date of the Pricing Agreement relating to the Designated Securities there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the New York Stock Exchange or any setting of minimum prices for trading on such exchange; (ii) a general moratorium on commercial banking activities declared by either Federal or New York State authorities; or (iii) the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war, if the effect of any such event specified in this clause (iii) in the reasonable judgment of the Representatives makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Underwriters' Securities on the terms and in the manner contemplated in the Prospectus as theretofore amended or supplemented relating to the Designated Securities; (k) Each of the Company and Sallie Mae shall have furnished or caused to be furnished to the Representatives at the Time of Delivery for the Designated Securities a certificate or certificates of officers of the Company or Sallie Mae, as the case may be, satisfactory to the Representatives as to the accuracy of the representations and warranties of the Company or Sallie Mae, as the case may be, herein at and as of such Time of Delivery, as to the performance by the Company or Sallie Mae, as the case may be, of all of their obligations hereunder to be performed at or prior to such Time of Delivery, as to the matters set forth in subsections (a), (h) and (i) of this Section and as to such other matters as the Representatives may reasonably request; (l) At the Time of Delivery, the aggregate principal amount of the Underwriters' Securities as specified in the related Pricing Agreement for the Designated Securities shall have been sold by the Company to the Underwriters, and the aggregate amount of the related Certificates as specified in the related underwriting agreement for such Certificates shall have been sold by the Company to the underwriters specified in such underwriting agreement; and 13 14 (m) The Designated Securities shall be rated as set forth in the related Prospectus by the Rating Agency (or Agencies) specified in such Prospectus, and such Rating Agency or Agencies shall not have placed the Designated Securities under surveillance or review with negative implications. 8. (a) The Company and Sallie Mae, jointly and severally, will indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, any preliminary prospectus supplement, the Registration Statement, the Prospectus as amended or supplemented and any other prospectus relating to the Designated Securities, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company and Sallie Mae shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, any preliminary prospectus supplement, the Registration Statement, the Prospectus as amended or supplemented and any other prospectus relating to the Securities, or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company or Sallie Mae by any Underwriter of Designated Securities through the Representatives expressly for use in the Prospectus as amended or supplemented relating to such Securities. (b) Each Underwriter will indemnify and hold harmless the Company and Sallie Mae against any losses, claims, damages or liabilities to which they may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, any preliminary prospectus supplement, the Registration Statement, the Prospectus as amended or supplemented and any other prospectus relating to the Securities, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Preliminary Prospectus, any preliminary prospectus supplement, the Registration Statement, the Prospectus as amended or supplemented and any other prospectus relating to the Designated Securities, or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company or Sallie Mae by such Underwriter through the Representatives expressly for use therein; and will reimburse the Company for any legal or other expenses 14 15 reasonably incurred by the Company in connection with investigating or defending any such action or claim as such expenses are incurred. (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under such subsection. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party. (d) If the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company and Sallie Mae, on the one hand and the Underwriters of the Designated Securities on the other from the offering of the Designated Securities to which such loss, claim, damage or liability (or action in respect thereof) relates. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (c) above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and Sallie Mae, on the one hand and the Underwriters of the Designated Securities on the other in connection with the statements or omissions which resulted in such losses, 15 16 claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company and Sallie Mae, on the one hand, and such Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from such offering (before deducting expenses) received by the Company and Sallie Mae bear to the total underwriting discounts and commissions received by such Underwriters. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or Sallie Mae, on the one hand, or such Underwriters on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, Sallie Mae and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the applicable Designated Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligations of the Underwriters of Designated Securities in this subsection (d) to contribute are several in proportion to their respective underwriting obligations with respect to such Securities and not joint. (e) The obligations of the Company and Sallie Mae under this Section 8 shall be in addition to any liability which the Company and Sallie Mae may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Act; and the obligations of the Underwriters under this Section 8 shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company or Sallie Mae and to each person, if any, who controls the Company or Sallie Mae within the meaning of the Act. 9. (a) If any Underwriter shall default in its obligation to purchase the Underwriters' Securities which it has agreed to purchase under the Pricing Agreement relating to such Underwriters' Securities, the Representatives may in their discretion arrange for themselves or another party or other parties to purchase such Underwriters' Securities on the terms contained herein and therein. If within thirty-six hours after such default by any 16 17 Underwriter the Representatives do not arrange for the purchase of such Underwriters' Securities, then the Company shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to the Representatives to purchase such Underwriters' Securities on such terms. In the event that, within the respective prescribed period, the Representatives notify the Company that they have so arranged for the purchase of such Underwriters' Securities, or the Company notifies the Representatives that it has so arranged for the purchase of such Underwriters' Securities, the Representatives or the Company shall have the right to postpone the Time of Delivery for such Underwriters' Securities for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus as amended or supplemented, or in any other documents or arrangements, and the Company agrees to file promptly any amendments or supplements to the Registration Statement or the Prospectus which in the opinion of the Representatives may thereby be made necessary. The term "Underwriter" as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to the Pricing Agreement with respect to such Designated Securities. (b) If, after giving effect to any arrangements for the purchase of the Underwriters' Securities of a defaulting Underwriter or Underwriters by the Representatives and the Company as provided in subsection (a) above, the aggregate principal amount of such Underwriters' Securities which remains unpurchased does not exceed one-eleventh of the aggregate principal amount of the Designated Securities, then the Company shall have the right to require each non-defaulting Underwriter to purchase the principal amount of Underwriters' Securities which such Underwriter agreed to purchase under the Pricing Agreement relating to such Designated Securities and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the principal amount of Designated Securities which such Underwriter agreed to purchase under such Pricing Agreement) of the Underwriters' Securities of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default. (c) If, after giving effect to any arrangements for the purchase of the Underwriters' Securities of a defaulting Underwriter or Underwriters by the Representatives and the Company as provided in subsection (a) above, the aggregate principal amount of Underwriters' Securities which remains unpurchased exceeds one-eleventh of the aggregate principal amount of the Designated Securities, as referred to in subsection (b) above, or if the Company shall not exercise the right described in subsection (b) above to require non-defaulting Underwriters to purchase Underwriters' Securities of a defaulting Underwriter or Underwriters, then the Pricing Agreement relating to such Designated Securities shall thereupon terminate, without liability on the part of any non-defaulting Underwriter or the Company, except for the expenses to be borne by the Company and the Underwriters as provided in Section 6 hereof and the indemnity and contribution agreements in Section 8 hereof; but nothing herein shall relieve a defaulting Underwriter from liability for its default. 17 18 10. The respective indemnities, agreements, representations, warranties and other statements of the Company, Sallie Mae and the several Underwriters, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or any controlling person of any Underwriter, or the Company or Sallie Mae or any officer or director or controlling person of the Company or Sallie Mae, and shall survive delivery of and payment for the Securities. 11. If any Pricing Agreement shall be terminated pursuant to Section 9 hereof, the Company and Sallie Mae shall not then be under any liability to any Underwriter with respect to the Designated Securities covered by such Pricing Agreement except as provided in Sections 6 and 8 hereof; but, if for any other reason Underwriters' Securities are not delivered by or on behalf of the Company as provided herein, except for any of the reasons specified in Section 7(j), the Company and Sallie Mae will reimburse the Underwriters through the Representatives for all out-of-pocket expenses approved in writing by the Representatives, including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of such Designated Securities, but the Company and Sallie Mae shall then be under no further liability to any Underwriter with respect to such Designated Securities except as provided in Sections 6 and 8 hereof. 12. In all dealings hereunder, the Representatives of the Underwriters of Designated Securities shall act on behalf of each of such Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by such Representatives jointly or by such of the Representatives, if any, as may be designated for such purpose in the Pricing Agreement. All statements, requests, notices and agreements hereunder shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to the address of the Representatives as set forth in the Pricing Agreement; and if to the Company or Sallie Mae shall be delivered or sent by mail, telex or facsimile transmission to: SLM Funding Corporation 777 Twin Creek Drive Killeen, Texas 76543 Facsimile: (817) 554-4999 Attention: Phyllis A. Leeth Vice President Student Loan Marketing Association 11600 Sallie Mae Drive Reston, VA 20193 Facsimile: (703) 810-7655 18 19 Attention: Robert R. Levine Vice President and Treasurer provided, however, that any notice to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter at its address set forth in its Underwriters' Questionnaire, or telex constituting such Questionnaire, which address will be supplied to the Company or Sallie Mae by the Representatives upon request. Any such statements, requests, notices or agreements shall take effect upon receipt thereof. 13. This Agreement and each Pricing Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company, Sallie Mae and, to the extent provided in Sections 8 and 10 hereof, the officers and directors of the Company and Sallie Mae and each person who controls the Company, Sallie Mae or any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement or any such Pricing Agreement. No purchaser of any of the Securities from any Underwriter shall be deemed a successor or assign by reason merely of such purchase. 14. Time shall be of the essence of each Pricing Agreement. As used herein, "business day" shall mean any day when the Commission's office in Washington, D.C. is open for business and "New York Business Day" shall mean any day when banking institutions are open for business in New York City, New York. 15. THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 16. This Agreement and each Pricing Agreement may be executed by any one or more of the parties hereto and thereto in any number of counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. 19 20 IF THE FOREGOING IS IN ACCORDANCE WITH YOUR UNDERSTANDING, PLEASE SIGN AND RETURN TO US ___ COUNTERPARTS HEREOF. Very truly yours, SLM FUNDING CORPORATION By: /s/ Mark G. Overend ----------------------------------- Name: Mark G. Overend Title: Treasurer and Controller STUDENT LOAN MARKETING ASSOCIATION By: /s/ Denise B. McGlone ----------------------------------- Name: Denise B. McGlone Title: Executive Vice President and Chief Financial Officer Accepted as of the date hereof: J.P. MORGAN SECURITIES INC. By: /s/ Peggyann Wallace --------------------------------- Name: Peggyann Wallace Title: Vice President 20 21 ANNEX I PRICING AGREEMENT - ----------------------- AS REPRESENTATIVES OF THE SEVERAL UNDERWRITERS NAMED ON SCHEDULE I HERETO, C/O ------------------- - ----------------------- - ----------------------- , 199 -- Ladies and Gentlemen: SLM Funding Corporation, a Delaware corporation (the "Company"), and the Student Loan Marketing Association, a corporation formed under the laws of the United States ("Sallie Mae"), propose, subject to the terms and conditions stated herein and in the Underwriting Agreement, dated __________, 199__ (the "Underwriting Agreement"), between the Company and Sallie Mae, on the one hand, and _____________ and _________________, on the other hand, that the Company will cause the trust (the "Trust") formed pursuant to the Trust Agreement dated as of _______, 199__ between the Company and _______, as trustee (the "Eligible Lender Trustee"), to issue and sell to the Underwriters named in Schedule I hereto (the "Underwriters") the Student Loan-Backed Notes (the "Notes") specified in Schedule II hereto (the "Designated Securities"). The Notes will be issued and secured pursuant to the Indenture, dated ___________ (the "Indenture"), between the Trust and _________, as trustee (the "Indenture Trustee"). Each of the provisions of the Underwriting Agreement is incorporated herein by reference in its entirety, and shall be deemed to be a part of this Agreement to the same extent as if such provisions had been set forth in full herein; and each of the representations and warranties set forth therein shall be deemed to have been made at and as of the date of this Pricing Agreement, except that each representation and warranty which refers to the Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a representation or warranty as of the date of the Underwriting Agreement in relation to the Prospectus (as therein defined), and also a representation and warranty as of the date of this Pricing Agreement in relation to the Prospectus as amended or supplemented relating to the Designated Securities which are the subject of this Pricing Agreement. Each reference to the Representatives herein and in the provisions of the Underwriting Agreement so incorporated by reference shall be deemed to refer to you. Unless otherwise defined herein, terms defined in the Underwriting Agreement are used herein as therein defined. The Representatives designated to act on behalf of the Representatives and on behalf of each of the Underwriters of the Designated Securities pursuant to Section 12 of the Underwriting Agreement and the address of the Representatives referred to in such Section 12 are set forth at the end of Schedule II hereto. 22 An amendment to the Registration Statement, or a supplement to the Prospectus, as the case may be, relating to the Designated Securities, in the form heretofore delivered to you is now proposed to be filed with the Commission. Subject to the terms and conditions set forth herein and in the Underwriting Agreement incorporated herein by reference, the Company agrees to cause the Trust to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Trust, at the time and place and at the purchase price to the Underwriters set forth in Schedule II hereto, the principal amount of Designated Securities set forth opposite the name of such Underwriter in Schedule I hereto, less the principal amount of Designated Securities covered by Delayed Delivery Contracts, if any, as may be specified in Schedule II. During the period beginning from the date of this Pricing Agreement for the Designated Securities and continuing to and including the later of (i) [___ days after] the termination of trading restrictions for such Designated Securities, as notified to the Company by the Representatives and (ii) [__ days after] the Time of Delivery for such Designated Securities, the Company agrees, and Sallie Mae agrees that it will cause the Company, not to, and not to permit any affiliated entity to, offer, sell, contract to sell or otherwise dispose of, any securities (other than the Designated Securities) collateralized by, or any securities (other than the related Certificates) evidencing an ownership in, Student Loans, without the prior written consent of the Representatives. Each Underwriter represents and agrees that (a) it has not offered or sold and will not offer or sell any Notes or Certificates to persons in the United Kingdom prior to the expiration of the period of six months from the issue date of the Notes and the Certificates except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (b) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the Notes and the Certificates in, from or otherwise involving the United Kingdom; and (c) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issuance of the Notes and the Certificates to a person who is of a kind described in article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995 or is a person to whom such document may otherwise lawfully be issued or passed on. If the foregoing is in accordance with your understanding, please sign and return to us ______ counterparts hereof, and upon acceptance hereof by you, on behalf of each of the Underwriters, this letter and such acceptance hereof, including the provisions of the Underwriting Agreement incorporated herein by reference, shall constitute a binding agreement between each of the Underwriters and the Company and Sallie Mae. It is understood that your acceptance of this letter on behalf of each of the Underwriters is or will be pursuant to the authority set forth in a form of Agreement among Underwriters, the form of 2 23 which shall be submitted to the Company and Sallie Mae for examination upon request, but without warranty on the part of the Representatives as to the authority of the signers thereof. Very truly yours, SLM FUNDING CORPORATION By: ------------------------------------ Name: Title: STUDENT LOAN MARKETING ASSOCIATION By: ------------------------------------ Name: Title: 3 24 Accepted as of the date hereof: [__________________] By: ---------------------------------------- [__________________] By: ---------------------------------------- Name: Title: On behalf of each of the Underwriters 4 25 SCHEDULE I PRINCIPAL AMOUNT OF DESIGNATED SECURITIES TO BE PURCHASED UNDERWRITER CLASS CLASS CLASS --- --- --- 26 SCHEDULE II TITLE OF EACH CLASS OF DESIGNATED SECURITIES: AGGREGATE PRINCIPAL AMOUNT OF EACH CLASS: PRICE TO PUBLIC OF EACH CLASS: PURCHASE PRICE BY UNDERWRITERS OF EACH CLASS: SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE: INDENTURE: MATURITY: INTEREST RATE: FORM OF DESIGNATED SECURITIES: TIME OF DELIVERY: CLOSING LOCATION FOR DELIVERY OF DESIGNATED SECURITIES: NAMES AND ADDRESSES OF REPRESENTATIVES: Designated Representatives: Address for Notices, etc.: 27 ANNEX II(a) UNDERWRITER: COUNSEL OPINION 28 ANNEX II(b) THE COMPANY, SALLIE MAE AND THE SERVICER: INTERNAL COUNSEL OPINION 29 ANNEX II(c) THE COMPANY, SALLIE MAE AND THE SERVICER: OUTSIDE COUNSEL OPINION 30 ANNEX II(d) ELIGIBLE LENDER TRUSTEE: COUNSEL OPINION 31 ANNEX II(e) INDENTURE TRUSTEE: COUNSEL OPINION 32 ANNEX III DELAYED DELIVERY CONTRACT SLM FUNDING CORPORATION C/O ---------------------- - -------------------------- - -------------------------- Attention: .............................. ..........., 19 -- Ladies and Gentlemen: The undersigned hereby agrees to purchase from SLM Funding Corporation (hereinafter called the "Company"), and the Company agrees to sell to the undersigned, $......... principal amount of the Company's ________ (hereinafter called the "Designated Securities"), offered by the Company's Prospectus, dated .............., 19.., as amended or supplemented, receipt of a copy of which is hereby acknowledged, at a purchase price of .....% of the principal amount thereof, plus accrued interest from the date from which interest accrues as set forth below, and on the further terms and conditions set forth below. The undersigned will purchase the Designated Securities from the Company on .............., 19.. (the "Delivery Date") and interest on the Designated Securities so purchased will accrue from .............., 19... [THE UNDERSIGNED WILL PURCHASE THE DESIGNATED SECURITIES FROM THE COMPANY ON THE DELIVERY DATE OR DATES AND IN THE PRINCIPAL AMOUNT OR AMOUNTS SET FORTH BELOW:
PRINCIPAL DATE FROM WHICH DELIVERY DATE AMOUNT INTEREST ACCRUES ------------- ------ ---------------- ....................., 19.. $............. ....................., 19.. ....................., 19.. $............. ....................., 19..
EACH SUCH DATE ON WHICH DESIGNATED SECURITIES ARE TO BE PURCHASED HEREUNDER IS HEREINAFTER REFERRED TO AS A "DELIVERY DATE."(4)] Payment for the Designated Securities which the undersigned has agreed to purchase on [THE] [EACH] Delivery Date shall be made to the Company or its order by certified or official bank check in .......... Clearing House funds at the office of .........., ........., .........., or by wire transfer to a bank account specified by the Company, on [THE] [SUCH] Delivery Date upon delivery to the 33 undersigned of the Designated Securities then to be purchased by the undersigned in definitive fully registered form and in such denominations and registered in such names as the undersigned may designate by written, telex or facsimile communication addressed to the Company not less than five full business days prior to [THE] [SUCH] Delivery Date. The obligation of the undersigned to take delivery of and make payment for Designated Securities on [THE] [EACH] Delivery Date shall be subject to the condition that the purchase of Designated Securities to be made by the undersigned shall not on [THE] [SUCH] Delivery Date be prohibited under the laws of the jurisdiction to which the undersigned is subject. The obligation of the undersigned to take delivery of and make payment for Designated Securities shall not be affected by the failure of any purchaser to take delivery of and make payment for Designated Securities pursuant to other contracts similar to this contract. [THE UNDERSIGNED UNDERSTANDS THAT UNDERWRITERS (THE "UNDERWRITERS") ARE ALSO PURCHASING DESIGNATED SECURITIES FROM THE COMPANY, BUT THAT THE OBLIGATIONS OF THE UNDERSIGNED HEREUNDER ARE NOT CONTINGENT ON SUCH PURCHASES]. Promptly after completion of the sale to the Underwriters the Company will mail or deliver to the undersigned at its address set forth below notice to such effect, accompanied by a copy of the Opinion of Counsel for the Company delivered to the Underwriters in connection therewith. The undersigned represents and warrants that, as of the date of this contract, the undersigned is not prohibited from purchasing the Designated Securities hereby agreed to be purchased by it under the laws of the jurisdiction to which the undersigned is subject. This contract will inure to the benefit of and be binding upon the parties hereto and their respective successors, but will not be assignable by either party hereto without the written consent of the other. This contract may be executed by either of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. F-2 34 It is understood that the acceptance by the Company of any Delayed Delivery Contract (including this contract) is in the Company's sole discretion and that, without limiting the foregoing, acceptances of such contracts need not be on a first-come, first-served basis. If this contract is acceptable to the Company, it is requested that the Company sign the form of acceptance below and mail or deliver one of the counterparts hereof to the undersigned at its address set forth below. This will become a binding contract between the Company and the undersigned when such counterpart is so mailed or delivered by the Company. Yours very truly, ---------------------------------------- By: ------------------------------------- (Authorized Signature) Name: Title: ---------------------------------------- (Address) Accepted: ............., 19.. SLM FUNDING CORPORATION By: ------------------------- Name: Title: F-3 EX-1.4 5 UNDERWRITING AGREEMENT--STUDENT LOAN BACKED CERTS. 1 EXHIBIT 1.4 SLM FUNDING CORPORATION STUDENT LOAN-BACKED CERTIFICATES ------------------ UNDERWRITING AGREEMENT September 16, 1996 J.P. MORGAN SECURITIES INC. 60 WALL STREET NEW YORK, NEW YORK 10260 Ladies and Gentlemen: From time to time the Student Loan Marketing Association ("Sallie Mae"), a corporation formed under the laws of the United States, and SLM Funding Corporation, a Delaware corporation and a wholly-owned subsidiary of Sallie Mae (the "Company"), propose to enter into one or more Pricing Agreements (each a "Pricing Agreement") in the form of Annex I hereto, with such additions and deletions as the parties thereto may determine. Subject to the terms and conditions stated herein and therein, the Company proposes to cause the Trust specified in the applicable Pricing Agreement to issue and sell to the firms named in Schedule I to the applicable Pricing Agreement (such firms constituting the "Underwriters" with respect to such Pricing Agreement and the securities specified therein) certain of such Trust's Student Loan-Backed Certificates (the "Certificates") specified in Schedule II to such Pricing Agreement (with respect to such Pricing Agreement, the "Designated Securities"), less the amount of Designated Securities covered by Delayed Delivery Contracts, if any, as provided in Section 3 hereof and as may be specified in Schedule II to such Pricing Agreement (with respect to such Pricing Agreement, any Designated Securities to be covered by Delayed Delivery Contracts are herein sometimes referred to as "Contract Securities" and the Designated Securities to be purchased by the Underwriters (after giving effect to the deduction, if any, for Contract Securities) are herein sometimes referred to as "Underwriters' Securities"). The Securities may be sold from time to time in one or more Series. Each Series of Securities, which will include one or more classes of Certificates and one or more classes of Student Loan-Backed Notes (the "Notes," and, together with the Certificates, the "Securities") will be issued by a Trust to be formed with respect to such Series (each, a "Trust"). Each Trust will be formed pursuant to a trust agreement (a "Trust Agreement") to be entered into between the Company and the Eligible Lender Trustee specified in the related Pricing Agreement (the "Eligible Lender Trustee"). The Notes of each Series will be issued and secured pursuant to an indenture (an "Indenture") between the Trust and the Indenture Trustee specified in the related Pricing Agreement (the "Indenture Trustee"). The Certificates of a Series will be issued pursuant to the related Trust Agreement and will represent fractional 2 undivided interests in the Trust created thereby. The property of each Trust will include, among other things, educational student loans to students and/or parents of dependent students ("Student Loans"). With respect to each Trust, (i) the Company will acquire the related Student Loans from Sallie Mae pursuant to a Purchase Agreement and (ii) the Company will sell the related Student Loans to such Trust pursuant to a Sale Agreement, with the related Eligible Lender Trustee holding legal title thereto. With respect to each Series, Sallie Mae Servicing Corporation, as servicer (the "Servicer") will enter into a servicing agreement (a "Servicing Agreement") with the Trust, the Administrator, the Eligible Lender Trustee and the Indenture Trustee with respect to the related Student Loans. Sallie Mae, as administrator (in such capacity, the "Administrator"), will enter into an Administration Agreement with the Eligible Lender Trustee, the Servicer, the Company, the Trust and the Indenture Trustee with respect to the related Student Loans. The terms and conditions of any particular issuance of Designated Securities shall be as specified in the Pricing Agreement relating thereto and in or pursuant to the related Indenture. Capitalized terms used but not defined herein or in any Pricing Agreement shall have the meanings ascribed thereto in the related Indenture. 1. Particular sales of Designated Securities may be made from time to time to the Underwriters of such Securities, for whom the firms designated as representatives of the Underwriters of such Securities in the Pricing Agreement relating thereto will act as representatives (the "Representatives"). The term "Representatives" also refers to a single firm acting as sole representative of the Underwriters and to an Underwriter or Underwriters who act without any firm being designated as its or their representatives. This Underwriting Agreement shall not be construed as an obligation of the Company to sell any of the Securities or as an obligation of any of the Underwriters to purchase the Securities. The obligation of the Company to issue and sell any of the Securities and the obligation of any of the Underwriters to purchase any of the Securities shall be evidenced by the Pricing Agreement with respect to the Designated Securities specified therein. Each Pricing Agreement shall specify the aggregate amount of such Designated Securities, the initial public offering price of such Designated Securities, the purchase price to the Underwriters of such Designated Securities, the names of the Underwriters of such Designated Securities, the names of the Representatives of such Underwriters and the amount of such Designated Securities to be purchased by each Underwriter and whether any of such Designated Securities shall be covered by Delayed Delivery Contracts (as defined in Section 3 hereof) and shall set forth the date, time and manner of delivery of such Designated Securities and payment therefor. The Pricing Agreement shall also specify (to the extent not set forth in the Indenture and the registration statement and prospectus with respect thereto) the terms of such Designated Securities. A Pricing Agreement shall be in the form of an executed writing (which may be in counterparts), and may be evidenced by an exchange of telegraphic communications or any other rapid transmission device designed to produce a written record of communications 2 3 transmitted. The obligations of the Underwriters under this Agreement and each Pricing Agreement shall be several and not joint. 2.The Company and Sallie Mae represent and warrant to, and agree with, each of the Underwriters as follows (it being agreed and understood that the statements set forth in clauses (d), (e), (g), (h), (j), (k), (m), (n) and (o) of this Section 2 with respect to Sallie Mae or the Servicer constitute representations, warranties and agreements of Sallie Mae only and not of the Company) : (a) A registration statement on Form S-3 (File No. 333-2502), including a form of prospectus, in respect of the Securities has been filed with the Securities and Exchange Commission (the "Commission"); such registration statement and any post-effective amendment thereto, each in the form heretofore delivered or to be delivered to the Representatives and, excluding exhibits to such registration statement, but including all documents incorporated by reference in the prospectus contained therein, to the Representatives for each of the other Underwriters, have been declared effective by the Commission in such form; no other document with respect to such registration statement or document incorporated by reference therein has heretofore been filed or transmitted for filing with the Commission (other than prospectuses filed pursuant to Rule 424(b) of the rules and regulations of the Commission under the Securities Act of 1933, as amended (the "Act"), each in the form heretofore delivered to the Representatives); and no stop order suspending the effectiveness of such registration statement has been issued and no proceeding for that purpose has been initiated or, to the best of Sallie Mae's or the Company's knowledge, threatened by the Commission (any preliminary prospectus included in such registration statement or filed with the Commission pursuant to Rule 424(a) under the Act, is hereinafter called a "Preliminary Prospectus;" the various parts of such registration statement, including all exhibits thereto and the documents incorporated by reference in the prospectus contained in the registration statement at the time such part of the registration statement became effective but excluding Form T-1, each as amended at the time such part of the registration statement became effective, are hereinafter collectively called the "Registration Statement"; the prospectus relating to the Securities, in the form in which it has most recently been filed, or transmitted for filing, with the Commission on or prior to the date of this Agreement, being hereinafter called the "Prospectus"; any reference herein to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to the applicable form under the Act, as of the date of such Preliminary Prospectus or Prospectus, as the case may be; any reference to any amendment or supplement to any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include any documents filed after the date of such Preliminary Prospectus or Prospectus, as the case may be, under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and incorporated by reference in such Preliminary Prospectus or Prospectus, as the case may be; any reference to any amendment to the Registration Statement shall be 3 4 deemed to refer to and include any annual report of the Company filed pursuant to Sections 13(a) or 15(d) of the Exchange Act after the effective date of the Registration Statement that is incorporated by reference in the Registration Statement; and any reference to the Prospectus as amended or supplemented shall be deemed to refer to the Prospectus as amended or supplemented in relation to the applicable Designated Securities in the form in which it is filed with the Commission pursuant to Rule 424(b) under the Act in accordance with Section 5(a) hereof, including any documents incorporated by reference therein as of the date of such filing); (b) The documents incorporated by reference in the Prospectus, when they became effective or were filed with the Commission, as the case may be, conformed in all material respects to the requirements of the Act, the Exchange Act and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), as applicable, and the rules and regulations of the Commission thereunder, and none of such documents contained an untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein not misleading; and any further documents so filed and incorporated by reference in the Prospectus or any further amendment or supplement thereto, when such documents become effective or are filed with the Commission, as the case may be, will conform in all material respects to the requirements of the Act, the Exchange Act and the Trust Indenture Act, as applicable, and the rules and regulations of the Commission thereunder and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter of Designated Securities through the Representatives expressly for use in the Prospectus as amended or supplemented relating to such Designated Securities; (c) The Registration Statement and the Prospectus conform, and any further amendments or supplements to the Registration Statement or the Prospectus will conform, in all material respects to the requirements of the Act and the Trust Indenture Act, as applicable, and the rules and regulations of the Commission thereunder and do not and will not, as of the applicable effective date as to the Registration Statement and any amendment thereto and as of the applicable filing date as to the Prospectus and any amendment or supplement thereto, contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading; provided, however, that this representation and warranty shall not apply to any statements or omissions made in reliance upon and in conformity with information furnished in writing to the Company by an Underwriter of Designated Securities through the Representatives expressly for use in the Prospectus as amended or supplemented relating to such Designated Securities; 4 5 (d) Neither the Company nor Sallie Mae or any of its subsidiaries has sustained since the date of the financial statements included in Sallie Mae's most recently published Information Statement any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in such Information Statement; and, since such date, there has not been any material adverse change in the capital stock or long-term debt of the Company or Sallie Mae or any of its subsidiaries or any material adverse change, or any development involving a prospective material adverse change, in or affecting the general affairs, management, financial position, shareholders' equity or results of operations of the Company or Sallie Mae or any of its subsidiaries or the transactions contemplated hereby, otherwise than as set forth or contemplated in such Information Statement; (e) The Company has been duly incorporated and is validly existing as a corporation in good standing under the laws of the state of Delaware, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus and to consummate the transactions contemplated therein and herein, and is a wholly-owned subsidiary of Sallie Mae. Sallie Mae has been duly organized and is validly existing under the laws of the United States, with power and authority (corporate and otherwise) to own its properties and conduct its business as described in the Prospectus and to consummate the transactions contemplated therein and herein. The Servicer has been duly incorporated and is validly existing as a corporation in good standing under the laws of the State of Delaware, with power and authority (corporate and other) to own its properties and conduct its business as described in the Prospectus and to consummate the transactions contemplated therein and herein, and is a wholly-owned subsidiary of Sallie Mae. (f) All of the issued shares of capital stock of the Company have been duly and validly authorized and issued and are fully paid and non-assessable and are owned beneficially and of record by Sallie Mae; (g) This Agreement has been, and each Pricing Agreement with respect to the Designated Securities upon its execution and delivery by the Company and Sallie Mae will have been, duly authorized, executed and delivered by the Company and Sallie Mae. The Securities have been duly authorized, and, when Designated Securities are issued and delivered pursuant to this Agreement and the Pricing Agreement with respect to such Designated Securities, and, in the case of any Contract Securities, pursuant to Delayed Delivery Contracts with respect to such Contract Securities, such Designated Securities and Contract Securities will have been duly executed, authenticated, issued and delivered. The related Notes will constitute valid and legally binding obligations of the related Trust entitled to the benefits provided by the Indenture, which will be substantially in the form filed as an exhibit to the Registration Statement. The Indenture has been duly authorized and duly qualified under the Trust 5 6 Indenture Act. The Designated Securities are intended to represent undivided ownership interests in the Trust created by the Trust Agreement, which will be substantially in the form filed as an exhibit to the Registration Statement, and will be entitled to the benefits provided by the Trust Agreement. At the Time of Delivery (as defined in Section 4hereof) for the Designated Securities, the Indenture and the Trust Agreement will each constitute a valid and legally binding instrument, enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles. The Indenture and Trust Agreement conform, and the Designated Securities and the related Notes will conform, to the descriptions thereof contained in the Prospectus as amended or supplemented with respect to the Designated Securities; (h) The issue and sale of the Securities and the compliance by the Company with all of the provisions of the Securities, the Indenture, the Trust Agreement, each of the Delayed Delivery Contracts, this Agreement and any Pricing Agreement, and the consummation of the transactions herein and therein contemplated will not conflict with or result in a breach or violation of any of the terms or provisions of, or constitute a default under, any indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or Sallie Mae is a party or by which the Company or Sallie Mae is bound or to which any of the property or assets of the Company or Sallie Mae is subject, nor will such action result in any violation of the provisions of the Company's Certificate of Incorporation or By-laws, Sallie Mae's charter, enabling legislation or By-laws, or any statute or any order, rule or regulation of any court or governmental agency or body having jurisdiction over the Company or Sallie Mae or any of their properties; and no consent, approval, authorization, order, registration or qualification of or with any such court or governmental agency or body is required for the issue and sale of the Securities or the consummation by the Company or Sallie Mae of the transactions contemplated by this Agreement or any Pricing Agreement or the Indenture or any Delayed Delivery Contract, except such as have been, or will have been prior to the Time of Delivery, obtained under the Act and the Trust Indenture Act and such consents, approvals, authorizations, registrations or qualifications as may be required under state securities or Blue Sky laws in connection with the purchase and distribution of the Designated Securities by the Underwriters; (i) The statements set forth in the Prospectus under the captions "Description of the Notes" and "Description of the Certificates" and set forth in the Prospectus Supplement under the caption "Description of the Securities," insofar as they purport to constitute a summary of the terms of the Notes and the Certificates, are accurate, complete and fair; (j) Sallie Mae is not in violation of its charter as set forth in its enabling legislation or By-laws, and the Company is not in violation of its Certificate of Incorporation or By-laws, and neither Sallie Mae nor the Company is in default in the 6 7 performance or observance of any material obligation, agreement, covenant or condition contained in any indenture,mortgage, deed of trust, loan agreement, lease or other agreement or instrument to which it is a party or by which it or any of its properties may be bound; (k) Other than as set forth in the Prospectus or in Sallie Mae's most recently published Information Statement, there are no legal or governmental proceedings pending to which the Company or Sallie Mae or any of its subsidiaries is a party or of which any property of the Company or Sallie Mae or any of its subsidiaries is the subject which, if determined adversely to the Company or Sallie Mae or any of its subsidiaries, would individually or in the aggregate have a material adverse effect on the current or future consolidated financial position, shareholders' equity or results of operations of the Company or Sallie Mae or any of its subsidiaries or on the consummation of the transactions contemplated hereby; and, to the best of the Company's and Sallie Mae's knowledge, no such proceedings are threatened or contemplated by governmental authorities or threatened by others; (l) The Company is not and, after giving effect to the offering and sale of the Securities, will not be an "investment company" or an entity "controlled" by an "investment company", as such terms are defined in the Investment Company Act of 1940, as amended (the "Investment Company Act"); (m) Neither the Company, Sallie Mae nor any of their affiliates does business with the government of Cuba or with any person or affiliate located in Cuba within the meaning of Section 517.075, Florida Statutes; (n) Ernst & Young LLP, who have certified certain financial statements of Sallie Mae, are independent public accountants as required by the Act and the rules and regulations of the Commission thereunder; (o) At the Time of Delivery of the Designated Securities, Sallie Mae's representations and warranties in the related Purchase Agreement and Administration Agreement, the Company's representations and warranties in the related Sale Agreement and Trust Agreement and the Servicer's representations and warranties in the Servicing Agreement will be true and correct in all material respects; and (p) In the event any of the Securities are purchased pursuant to Delayed Delivery Contracts, each of such Delayed Delivery Contracts has been duly authorized by the Company and Sallie Mae and, when executed and delivered by the Company and the purchaser named therein, will constitute a valid and legally binding agreement of the Company enforceable in accordance with its terms, subject, as to enforcement, to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors' rights and to general equity principles; and any Delayed Delivery Contracts conform to the description thereof in the Prospectus. 7 8 3. Upon the execution of the Pricing Agreement applicable to any Designated Securities and authorization by the Representatives of the release of the Underwriters' Securities, the several Underwriters propose to offer such Underwriters' Securities for sale upon the terms and conditions set forth in the Prospectus as amended or supplemented. The Company may specify in Schedule II to the Pricing Agreement applicable to any Designated Securities that the Underwriters are authorized to solicit offers to purchase Designated Securities from the Company pursuant to delayed delivery contracts (herein called "Delayed Delivery Contracts"), substantially in the form of Annex III attached hereto but with such changes therein as the Representatives and the Company may authorize or approve. If so specified, the Underwriters will endeavor to make such arrangements, and as compensation therefor the Company will pay to the Representatives, for the accounts of the Underwriters, at the Time of Delivery, such commission, if any, as may be set forth in such Pricing Agreement. Delayed Delivery Contracts, if any, are to be with investors of the types described in the Prospectus and subject to other conditions therein set forth. The Underwriters will not have any responsibility with respect to the validity or performance of any Delayed Delivery Contracts. The amount of Contract Securities to be deducted from the amount of Designated Securities to be purchased by each Underwriter as set forth in Schedule I to the Pricing Agreement applicable to such Designated Securities shall be, in each case, the amount of Contract Securities which the Company has been advised by the Representatives have been attributed to such Underwriter, provided that, if the Company has not been so advised, the amount of Contract Securities to be so deducted shall be, in each case, that proportion of Contract Securities which the amount of Designated Securities to be purchased by such Underwriter under such Pricing Agreement bears to the total amount of the Designated Securities (rounded as the Representatives may determine). The total amount of Underwriters' Securities to be purchased by all the Underwriters pursuant to such Pricing Agreement shall be the total amount of Designated Securities set forth in Schedule I to such Pricing Agreement less the amount of the Contract Securities. The Company will deliver to the Representatives not later than 3:30 p.m., New York City time, on the third business day preceding the Time of Delivery specified in the applicable Pricing Agreement (or such other time and date as the Representatives and the Company may agree upon in writing), a written notice setting forth the amount of Contract Securities. 4. Underwriters' Securities to be purchased by each Underwriter pursuant to the Pricing Agreement relating thereto, in the form specified in such Pricing Agreement, and in such authorized denominations and registered in such names as the Representatives may request upon at least forty-eight hours' prior notice to the Company, shall be delivered by or on behalf of the Company to the Representatives for the account of such Underwriter, against payment by such Underwriter or on its behalf of the purchase price therefor by wire transfer or by certified or official bank check or checks, payable to the order of the Company in the funds specified in such Pricing Agreement, all in the manner and at the place and time and date specified in such Pricing Agreement or at such other place and time and date as the 8 9 Representatives and the Company may agree upon in writing, such time and date being herein called the "Time of Delivery" for such Securities. Concurrently with the delivery of and payment for the Underwriters' Securities, the Company will deliver to the Representatives for the accounts of the Underwriters a check payable to the order of the party designated in the Pricing Agreement relating to such Underwriters' Securities in the amount of any compensation payable by the Company to the Underwriters in respect of any Delayed Delivery Contracts as provided in Section 3 hereof and the Pricing Agreement relating to such Securities. 5. The Company agrees with each of the Underwriters of any Designated Securities, and Sallie Mae agrees with such Underwriters that it will cause the Company: (a) To prepare the Prospectus as amended or supplemented in relation to the applicable Designated Securities in a form approved by the Representatives and to file such Prospectus pursuant to Rule 424(b) under the Act not later than the Commission's close of business on the second business day following the execution and delivery of the Pricing Agreement relating to the applicable Designated Securities or, if applicable, such earlier time as may be required by Rule 424(b); to make no further amendment or any supplement to the Registration Statement or Prospectus as amended or supplemented after the date of the Pricing Agreement relating to such Designated Securities and prior to the Time of Delivery for such Designated Securities which shall be disapproved by the Representatives for such Designated Securities promptly after reasonable notice thereof; to advise the Representatives promptly of any such amendment or supplement after such Time of Delivery and furnish the Representatives with copies thereof; to file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act for so long as the delivery of a prospectus is required in connection with the offering or sale of such Designated Securities, and during such same period to advise the Representatives, promptly after it receives notice thereof, of the time when any amendment to the Registration Statement has been filed or becomes effective or any supplement to the Prospectus or any amended Prospectus has been filed with the Commission, of the issuance by the Commission of any stop order or of any order preventing or suspending the use of any prospectus relating to the Designated Securities, of the suspension of the qualification of such Designated Securities for offering or sale in any jurisdiction, of the initiation or threatening of any proceeding for any such purpose, or of any request by the Commission for the amending or supplementing of the Registration Statement or Prospectus or for additional information; and, in the event of the issuance of any such stop order or of any such order preventing or suspending the use of any prospectus relating to the Designated Securities or suspending any such qualification, to promptly use its best efforts to obtain the withdrawal of such order; 9 10 (b) Promptly from time to time to take such action as the Representatives may reasonably request to qualify the Designated Securities for offering and sale under the securities laws of such jurisdictions as the Representatives may request and to comply with such laws so as to permit the continuance of sales and dealings therein in such jurisdictions for as long as may be necessary to complete the distribution of such Designated Securities, provided that in connection therewith the Company shall not be required to qualify as a foreign corporation or to file a general consent to service of process in any jurisdiction; (c) To furnish the Underwriters with copies of the Prospectus as amended or supplemented, in such quantities as the Representatives may from time to time reasonably request, and, if the delivery of a Prospectus is required at any time in connection with the offering or sale of the Designated Securities and if at such time any event shall have occurred as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made when such Prospectus is delivered, not misleading, or, if for any other reason it shall be necessary during such same period to amend or supplement the Prospectus or to file under the Exchange Act any document incorporated by reference in the Prospectus in order to comply with the Act, the Exchange Act or the Trust Indenture Act, to notify the Representatives and, upon their request, to file such document and to prepare and furnish without charge to each Underwriter and to any dealer in securities as many copies as the Representatives may from time to time reasonably request of an amended Prospectus or a supplement to the Prospectus which will correct such statement or omission or effect such compliance; (d) To cause the Trust to make generally available to holders of Designated Securities, as soon as practicable, but in any event not later than eighteen months after the effective date of the Registration Statement (as defined in Rule 158(c) under the Act), an earnings statement of the Trust (which need not be audited) complying with Section 11(a) of the Act and the rules and regulations of the Commission thereunder (including, at the option of the Company, Rule 158); and (e) To apply the net proceeds of the offering and sale of the Designated Securities and the related Notes that it receives in the manner set forth in the Prospectus. 6. The Company and Sallie Mae covenant and agree with the several Underwriters that the Company or Sallie Mae will pay or cause to be paid the following: (i) the fees, disbursements and expenses of the Company's and Sallie Mae's counsel and accountants in connection with the registration of the Securities under the Act and all other expenses in connection with the preparation, printing and filing of the Registration Statement, any Preliminary Prospectus and the Prospectus and amendments and supplements thereto and the mailing and delivering of copies thereof to the Underwriters and dealers; (ii) the cost of 10 11 printing or producing any Agreement among Underwriters, this Agreement, any Pricing Agreement, any Indenture, any Trust Agreement, any Delayed Delivery Contracts, any Blue Sky and Legal Investment Memoranda, closing documents (including any compilations thereof) and any other documents in connection with the offering, purchase, sale and delivery of the Designated Securities; (iii) all expenses in connection with the qualification of the Designated Securities for offering and sale understate securities laws as provided in Section 5(b) hereof, including the fees and disbursements of counsel for the Underwriters in connection with such qualification and in connection with the Blue Sky and Legal Investment Surveys; (iv) any fees charged by securities rating services for rating the Designated Securities; (v) the cost of preparing the Designated Securities; (vi) the fees and expenses of the Eligible Lender Trustee and the Indenture Trustee and any agent of the Eligible Lender Trustee or the Indenture Trustee and the fees and disbursements of counsel for the Eligible Lender Trustee and the Indenture Trustee in connection with any Indenture and Trust Agreement and the Designated Securities; and (vii) all other costs and expenses incident to the performance of its obligations hereunder and under any Delayed Delivery Contracts which are not otherwise specifically provided for in this Section. It is understood, however, that, except as provided in this Section, and Sections 8 and 11 hereof, the Underwriters will pay all of their own costs and expenses, including the fees of their counsel, transfer taxes on resale of any of the Securities by them, and any advertising expenses connected with any offers they may make. 7. The obligations of the Underwriters of any Designated Securities under the Pricing Agreement relating to such Designated Securities shall be subject, in the reasonable discretion of the Representatives, to the condition that all representations and warranties and other statements of the Company and Sallie Mae in or incorporated by reference in the Pricing Agreement relating to such Designated Securities are, at and as of the Time of Delivery for such Designated Securities, true and correct, the condition that the Company and Sallie Mae shall have performed all of their obligations hereunder theretofore to be performed, and the following additional conditions: (a) The Prospectus as amended or supplemented in relation to the applicable Designated Securities shall have been filed with the Commission pursuant to Rule 424(b) within the applicable time period prescribed for such filing by the rules and regulations under the Act and in accordance with Section 5(a) hereof; no stop order suspending the effectiveness of the Registration Statement or any part thereof shall have been issued and no proceeding for that purpose shall have been initiated or threatened by the Commission; and all requests for additional information on the part of the Commission shall have been complied with; (b) Counsel for the Underwriters shall have furnished to the Representatives such opinion or opinions, substantially in the form attached hereto as Annex II(a), dated the Time of Delivery for such Designated Securities, with respect to the Designated Securities and such other related matters as the Representatives may reasonably request, and the Company and Sallie Mae shall have furnished or caused to 11 12 be furnished to such counsel such documents and information as they may reasonably request to pass upon such matters; (c) Internal counsel for the Company, Sallie Mae and the Servicer, satisfactory to the Representatives,shall have furnished to the Representatives a written opinion or opinions, dated the Time of Delivery for such Designated Securities, substantially in the form attached hereto as Annex II(b) or as is otherwise satisfactory to the Representatives; (d) Special counsel for the Company, Sallie Mae and the Servicer, satisfactory to the Representatives, shall have furnished to the Representatives a written opinion or opinions, dated the Time of Delivery for such Designated Securities, substantially in the form attached hereto as Annex II(c) or as is otherwise satisfactory to the Representatives; (e) Counsel for the Eligible Lender Trustee, satisfactory to the Representatives, shall have furnished to the Representatives a written opinion or opinions, dated the Time of Delivery for such Designated Securities, substantially in the form attached hereto as Annex II(d) or as is otherwise satisfactory to the Representatives; (f) Counsel for the Indenture Trustee, satisfactory to the Representatives, shall have furnished to the Representatives a written opinion or opinions, dated the Time of Delivery for such Designated Securities, substantially in the form attached hereto as Annex II(e) or as is otherwise satisfactory to the Representatives; (g) At the time a Preliminary Prospectus relating to such Designated Securities was distributed and on the date of the Pricing Agreement for such Designated Securities, the independent public accountants of the Company and Sallie Mae shall have furnished to the Representatives a letter or letters with respect to the Company, Sallie Mae, the statistical and financial information contained in the Preliminary Prospectus and the Prospectus, as the case may be, and certain agreed upon procedures with respect to the issuance and offering of the Designated Securities and the related Student Loans, in form and substance satisfactory to the Representatives and in each case confirming that such accountants are independent public accountants with the meaning of the Act and the applicable rules and regulations thereunder; (h) (i) Neither the Company nor Sallie Mae shall have sustained since the date of the financial statements included in Sallie Mae's most recently published Information Statement any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in such Information Statement, and (ii) since such date, there shall not have been any material adverse change in the capital stock or long-term debt of the Company or Sallie Mae or any such change, or any development involving a prospective such change, in or affecting the general affairs, management, financial position, shareholders' equity or results of operations of the Company or Sallie Mae 12 13 otherwise than as set forth or contemplated in such Information Statement, the effect of which, in any such case described in clause (i) or (ii), is in the judgment of the Representatives so material and adverse as to make it impracticable or inadvisable to proceed with the public offering or the delivery of the Underwriters' Securities on the terms and in the manner contemplated in the Prospectus as first amended or supplemented relating to the Designated Securities; (i) On or after the date of the Pricing Agreement relating to the Designated Securities (i) no downgrading shall have occurred in the rating accorded Sallie Mae's debt securities or preferred stock by any "nationally recognized statistical rating organization", as that term is defined by the Commission for purposes of Rule 436(g)(2) under the Act ("Rating Agency"), and (ii) no such Rating Agency shall have publicly announced that it has under surveillance or review, with possible negative implications, its rating of any of Sallie Mae's debt securities; (j) On or after the date of the Pricing Agreement relating to the Designated Securities there shall not have occurred any of the following: (i) a suspension or material limitation in trading in securities generally on the New York Stock Exchange or any setting of minimum prices for trading on such exchange; (ii) a general moratorium on commercial banking activities declared by either Federal or New York State authorities; or (iii) the outbreak or escalation of hostilities involving the United States or the declaration by the United States of a national emergency or war, if the effect of any such event specified in this clause (iii) in the reasonable judgment of the Representatives makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Underwriters' Securities on the terms and in the manner contemplated in the Prospectus as theretofore amended or supplemented relating to the Designated Securities; (k) Each of the Company and Sallie Mae shall have furnished or caused to be furnished to the Representatives at the Time of Delivery for the Designated Securities a certificate or certificates of officers of the Company or Sallie Mae, as the case may be, satisfactory to the Representatives as to the accuracy of the representations and warranties of the Company or Sallie Mae, as the case may be, herein at and as of such Time of Delivery, as to the performance by the Company or Sallie Mae, as the case may be, of all of their obligations hereunder to be performed at or prior to such Time of Delivery, as to the matters set forth in subsections (a), (h) and (i) of this Section and as to such other matters as the Representatives may reasonably request; (l) At the Time of Delivery, the aggregate amount of the Underwriters' Securities as specified in the related Pricing Agreement for the Designated Securities shall have been sold by the Company to the Underwriters, and the aggregate principal amount of the related Notes as specified in the related underwriting agreement for such Notes shall have been sold by the Company to the underwriters specified in such underwriting agreement; and 13 14 (m) The Designated Securities shall be rated as set forth in the related Prospectus by the Rating Agency(or Agencies) specified in such Prospectus, and such Rating Agency or Agencies shall not have placed the Designated Securities under surveillance or review with negative implications. 8. (a) The Company and Sallie Mae, jointly and severally, will indemnify and hold harmless each Underwriter against any losses, claims, damages or liabilities, joint or several, to which such Underwriter may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, any preliminary prospectus supplement, the Registration Statement, the Prospectus as amended or supplemented and any other prospectus relating to the Designated Securities, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse each Underwriter for any legal or other expenses reasonably incurred by such Underwriter in connection with investigating or defending any such action or claim as such expenses are incurred; provided, however, that the Company and Sallie Mae shall not be liable in any such case to the extent that any such loss, claim, damage or liability arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in any Preliminary Prospectus, any preliminary prospectus supplement, the Registration Statement, the Prospectus as amended or supplemented and any other prospectus relating to the Securities, or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company or Sallie Mae by any Underwriter of Designated Securities through the Representatives expressly for use in the Prospectus as amended or supplemented relating to such Securities. (b) Each Underwriter will indemnify and hold harmless the Company and Sallie Mae against any losses, claims, damages or liabilities to which they may become subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon an untrue statement or alleged untrue statement of a material fact contained in any Preliminary Prospectus, any preliminary prospectus supplement, the Registration Statement, the Prospectus as amended or supplemented and any other prospectus relating to the Securities, or any amendment or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, in each case to the extent, but only to the extent, that such untrue statement or alleged untrue statement or omission or alleged omission was made in any Preliminary Prospectus, any preliminary prospectus supplement, the Registration Statement, the Prospectus as amended or supplemented and any other prospectus relating to the Designated Securities, or any such amendment or supplement in reliance upon and in conformity with written information furnished to the Company or Sallie Mae by such Underwriter through the Representatives expressly for use therein; and will reimburse the Company for any legal or other expenses 14 15 reasonably incurred by the Company in connection with investigating or defending any such action or claim as such expenses are incurred. (c) Promptly after receipt by an indemnified party under subsection (a) or (b) above of notice of the commencement of any action, such indemnified party shall, if a claim in respect thereof is to be made against the indemnifying party under such subsection, notify the indemnifying party in writing of the commencement thereof; but the omission so to notify the indemnifying party shall not relieve it from any liability which it may have to any indemnified party otherwise than under such subsection. In case any such action shall be brought against any indemnified party and it shall notify the indemnifying party of the commencement thereof, the indemnifying party shall be entitled to participate therein and, to the extent that it shall wish, jointly with any other indemnifying party similarly notified, to assume the defense thereof, with counsel satisfactory to such indemnified party (who shall not, except with the consent of the indemnified party, be counsel to the indemnifying party), and, after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party under such subsection for any legal expenses of other counsel or any other expenses, in each case subsequently incurred by such indemnified party, in connection with the defense thereof other than reasonable costs of investigation. No indemnifying party shall, without the written consent of the indemnified party, effect the settlement or compromise of, or consent to the entry of any judgment with respect to, any pending or threatened action or claim in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified party is an actual or potential party to such action or claim) unless such settlement, compromise or judgment (i) includes an unconditional release of the indemnified party from all liability arising out of such action or claim and (ii) does not include a statement as to or an admission of fault, culpability or a failure to act, by or on behalf of any indemnified party. (d) If the indemnification provided for in this Section 8 is unavailable to or insufficient to hold harmless an indemnified party under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions in respect thereof) referred to therein, then each indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative benefits received by the Company and Sallie Mae, on the one hand and the Underwriters of the Designated Securities on the other from the offering of the Designated Securities to which such loss, claim, damage or liability (or action in respect thereof) relates. If, however, the allocation provided by the immediately preceding sentence is not permitted by applicable law or if the indemnified party failed to give the notice required under subsection (c) above, then each indemnifying party shall contribute to such amount paid or payable by such indemnified party in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company and Sallie Mae, on the one hand and the Underwriters of the Designated Securities on the other in connection with the statements or omissions which resulted in such losses, 15 16 claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative benefits received by the Company and Sallie Mae, on the one hand, and such Underwriters on the other shall be deemed to be in the same proportion as the total net proceeds from such offering (before deducting expenses) received by the Company and Sallie Mae bear to the total underwriting discounts and commissions received by such Underwriters. The relative fault shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or Sallie Mae, on the one hand, or such Underwriters on the other and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company, Sallie Mae and the Underwriters agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Underwriters were treated as one entity for such purpose) or by any other method of allocation which does not take account of the equitable considerations referred to above in this subsection (d). The amount paid or payable by an indemnified party as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), no Underwriter shall be required to contribute any amount in excess of the amount by which the total price at which the applicable Designated Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages which such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The obligations of the Underwriters of Designated Securities in this subsection (d) to contribute are several in proportion to their respective underwriting obligations with respect to such Securities and not joint. (e) The obligations of the Company and Sallie Mae under this Section 8 shall be in addition to any liability which the Company and Sallie Mae may otherwise have and shall extend, upon the same terms and conditions, to each person, if any, who controls any Underwriter within the meaning of the Act; and the obligations of the Underwriters under this Section 8 shall be in addition to any liability which the respective Underwriters may otherwise have and shall extend, upon the same terms and conditions, to each officer and director of the Company or Sallie Mae and to each person, if any, who controls the Company or Sallie Mae within the meaning of the Act. 9. (a) If any Underwriter shall default in its obligation to purchase the Underwriters' Securities which it has agreed to purchase under the Pricing Agreement relating to such Underwriters' Securities, the Representatives may in their discretion arrange for themselves or another party or other parties to purchase such Underwriters' Securities on the terms contained herein and therein. If within thirty-six hours after such default by any 16 17 Underwriter the Representatives do not arrange for the purchase of such Underwriters' Securities, then the Company shall be entitled to a further period of thirty-six hours within which to procure another party or other parties satisfactory to the Representatives to purchase such Underwriters' Securities on such terms. In the event that, within the respective prescribed period, the Representatives notify the Company that they have so arranged for the purchase of such Underwriters' Securities, or the Company notifies the Representatives that it has so arranged for the purchase of such Underwriters' Securities, the Representatives or the Company shall have the right to postpone the Time of Delivery for such Underwriters' Securities for a period of not more than seven days, in order to effect whatever changes may thereby be made necessary in the Registration Statement or the Prospectus as amended or supplemented, or in any other documents or arrangements, and the Company agrees to file promptly any amendments or supplements to the Registration Statement or the Prospectus which in the opinion of the Representatives may thereby be made necessary. The term "Underwriter" as used in this Agreement shall include any person substituted under this Section with like effect as if such person had originally been a party to the Pricing Agreement with respect to such Designated Securities. (b) If, after giving effect to any arrangements for the purchase of the Underwriters' Securities of a defaulting Underwriter or Underwriters by the Representatives and the Company as provided in subsection (a) above, the aggregate amount of such Underwriters' Securities which remains unpurchased does not exceed one-eleventh of the aggregate amount of the Designated Securities, then the Company shall have the right to require each non-defaulting Underwriter to purchase the amount of Underwriters' Securities which such Underwriter agreed to purchase under the Pricing Agreement relating to such Designated Securities and, in addition, to require each non-defaulting Underwriter to purchase its pro rata share (based on the amount of Designated Securities which such Underwriter agreed to purchase under such Pricing Agreement) of the Underwriters' Securities of such defaulting Underwriter or Underwriters for which such arrangements have not been made; but nothing herein shall relieve a defaulting Underwriter from liability for its default. (c) If, after giving effect to any arrangements for the purchase of the Underwriters' Securities of a defaulting Underwriter or Underwriters by the Representatives and the Company as provided in subsection (a) above, the aggregate amount of Underwriters' Securities which remains unpurchased exceeds one-eleventh of the aggregate amount of the Designated Securities, as referred to in subsection (b) above, or if the Company shall not exercise the right described in subsection (b) above to require non-defaulting Underwriters to purchase Underwriters' Securities of a defaulting Underwriter or Underwriters, then the Pricing Agreement relating to such Designated Securities shall thereupon terminate, without liability on the part of any non-defaulting Underwriter or the Company, except for the expenses to be borne by the Company and the Underwriters as provided in Section 6 hereof and the indemnity and contribution agreements in Section 8 hereof; but nothing herein shall relieve a defaulting Underwriter from liability for its default. 17 18 10. The respective indemnities, agreements, representations, warranties and other statements of the Company,Sallie Mae and the several Underwriters, as set forth in this Agreement or made by or on behalf of them, respectively, pursuant to this Agreement, shall remain in full force and effect, regardless of any investigation (or any statement as to the results thereof) made by or on behalf of any Underwriter or any controlling person of any Underwriter, or the Company or Sallie Mae or any officer or director or controlling person of the Company or Sallie Mae, and shall survive delivery of and payment for the Securities. 11. If any Pricing Agreement shall be terminated pursuant to Section 9 hereof, the Company and Sallie Mae shall not then be under any liability to any Underwriter with respect to the Designated Securities covered by such Pricing Agreement except as provided in Sections 6 and 8 hereof; but, if for any other reason Underwriters' Securities are not delivered by or on behalf of the Company as provided herein, except for any of the reasons specified in Section 7(j), the Company and Sallie Mae will reimburse the Underwriters through the Representatives for all out-of-pocket expenses approved in writing by the Representatives, including fees and disbursements of counsel, reasonably incurred by the Underwriters in making preparations for the purchase, sale and delivery of such Designated Securities, but the Company and Sallie Mae shall then be under no further liability to any Underwriter with respect to such Designated Securities except as provided in Sections 6 and 8 hereof. 12. In all dealings hereunder, the Representatives of the Underwriters of Designated Securities shall act on behalf of each of such Underwriters, and the parties hereto shall be entitled to act and rely upon any statement, request, notice or agreement on behalf of any Underwriter made or given by such Representatives jointly or by such of the Representatives, if any, as may be designated for such purpose in the Pricing Agreement. All statements, requests, notices and agreements hereunder shall be in writing, and if to the Underwriters shall be delivered or sent by mail, telex or facsimile transmission to the address of the Representatives as set forth in the Pricing Agreement; and if to the Company or Sallie Mae shall be delivered or sent by mail, telex or facsimile transmission to: SLM Funding Corporation 777 Twin Creek Drive Kileen, Texas 76543 Facsimile: (817) 554-4999 Attention: Phyllis A. Leeth Vice President Student Loan Marketing Association 11600 Sallie Mae Drive Reston, VA 20193 Facsimile: (703) 810-7655 18 19 Attention: Robert R. Levine Vice President and Treasurer provided, however, that any notice to an Underwriter pursuant to Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile transmission to such Underwriter at its address set forth in its Underwriters' Questionnaire, or telex constituting such Questionnaire, which address will be supplied to the Company or Sallie Mae by the Representatives upon request. Any such statements, requests, notices or agreements shall take effect upon receipt thereof. 13. This Agreement and each Pricing Agreement shall be binding upon, and inure solely to the benefit of, the Underwriters, the Company, Sallie Mae and, to the extent provided in Sections 8 and 10 hereof, the officers and directors of the Company and Sallie Mae and each person who controls the Company, Sallie Mae or any Underwriter, and their respective heirs, executors, administrators, successors and assigns, and no other person shall acquire or have any right under or by virtue of this Agreement or any such Pricing Agreement. No purchaser of any of the Securities from any Underwriter shall be deemed a successor or assign by reason merely of such purchase. 14. Time shall be of the essence of each Pricing Agreement. As used herein, "business day" shall mean any day when the Commission's office in Washington, D.C. is open for business and "New York Business Day" shall mean any day when banking institutions are open for business in New York City, New York. 15. THIS AGREEMENT AND EACH PRICING AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. 16. This Agreement and each Pricing Agreement may be executed by any one or more of the parties hereto and thereto in any number of counterparts, each of which shall be deemed to be an original, but all such respective counterparts shall together constitute one and the same instrument. 19 20 IF THE FOREGOING IS IN ACCORDANCE WITH YOUR UNDERSTANDING, PLEASE SIGN AND RETURN TO US ___ COUNTERPARTS HEREOF. Very truly yours, SLM FUNDING CORPORATION By: /s/ Mark G. Overend .................................. Name: Mark G. Overend Title: Treasurer and Controller STUDENT LOAN MARKETING ASSOCIATION By: /s/ Denise B. McGlone .................................. Name: Denise B. McGlone Title: Executive Vice President and Chief Financial Officer Accepted as of the date hereof: J.P. MORGAN SECURITIES INC. By: /s/ Peggyann Wallace .................................. Name: Peggyann Wallace Title: Vice President 20 21 ANNEX I PRICING AGREEMENT - ------------------------- AS REPRESENTATIVES OF THE SEVERAL UNDERWRITERS NAMED ON SCHEDULE I HERETO, C/O ---------------------- - -------------------------- - -------------------------- , 1995 Ladies and Gentlemen: SLM Funding Corporation, a Delaware corporation (the "Company"), and the Student Loan Marketing Association, a corporation formed under the laws of the United States ("Sallie Mae"), propose, subject to the terms and conditions stated herein and in the Underwriting Agreement, dated __________, 199__ (the "Underwriting Agreement"), between the Company and Sallie Mae, on the one hand, and _______________ and ________________, on the other hand, that the Company will cause the trust (the "Trust") formed pursuant to the Trust Agreement dated _______, 199__ between the Company and _______, as trustee (the "Eligible Lender Trustee"), to issue and sell to the Underwriters named in Schedule I hereto (the "Underwriters") the Student Loan-Backed Certificates (the "Certificates") specified in Schedule II hereto (the "Designated Securities"). The Certificates will be issued pursuant to the Trust Agreement. Each of the provisions of the Underwriting Agreement is incorporated herein by reference in its entirety, and shall be deemed to be a part of this Agreement to the same extent as if such provisions had been set forth in full herein; and each of the representations and warranties set forth therein shall be deemed to have been made at and as of the date of this Pricing Agreement, except that each representation and warranty which refers to the Prospectus in Section 2 of the Underwriting Agreement shall be deemed to be a representation or warranty as of the date of the Underwriting Agreement in relation to the Prospectus (as therein defined), and also a representation and warranty as of the date of this Pricing Agreement in relation to the Prospectus as amended or supplemented relating to the Designated Securities which are the subject of this Pricing Agreement. Each reference to the Representatives herein and in the provisions of the Underwriting Agreement so incorporated by reference shall be deemed to refer to you. Unless otherwise defined herein, terms defined in the Underwriting Agreement are used herein as therein defined. The Representatives designated to act on behalf of the Representatives and on behalf of each of the Underwriters of the Designated Securities pursuant to Section 12 of the Underwriting Agreement and the address of the Representatives referred to in such Section 12 are set forth at the end of Schedule II hereto. 22 An amendment to the Registration Statement, or a supplement to the Prospectus, as the case may be, relating to the Designated Securities, in the form heretofore delivered to you is now proposed to be filed with the Commission. Subject to the terms and conditions set forth herein and in the Underwriting Agreement incorporated herein by reference, the Company agrees to cause the Trust to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Trust, at the time and place and at the purchase price to the Underwriters set forth in Schedule II hereto, the amount of Designated Securities set forth opposite the name of such Underwriter in Schedule I hereto, less the amount of Designated Securities covered by Delayed Delivery Contracts, if any, as may be specified in Schedule II. During the period beginning from the date of this Pricing Agreement for the Designated Securities and continuing to and including the later of (i) [___ days after] the termination of trading restrictions for such Designated Securities, as notified to the Company by the Representatives and (ii) [__ days after] the Time of Delivery for such Designated Securities, the Company agrees, and Sallie Mae agrees that it will cause the Company, not to, and not to permit any affiliated entity to, offer, sell, contract to sell or otherwise dispose of, any securities (other than the Designated Securities) evidencing an ownership in, or any securities (other than the related Notes) collateralized by, Student Loans, without the prior written consent of the Representatives. Each Underwriter represents and agrees that (a) it has not offered or sold and will not offer or sell any Notes or Certificates to persons in the United Kingdom prior to the expiration of the period of six months from the issue date of the Notes and the Certificates except to persons whose ordinary activities involve them in acquiring, holding, managing or disposing of investments (as principal or agent) for the purposes of their businesses or otherwise in circumstances which have not resulted and will not result in an offer to the public in the United Kingdom within the meaning of the Public Offers of Securities Regulations 1995; (b) it has complied and will comply with all applicable provisions of the Financial Services Act 1986 with respect to anything done by it in relation to the Notes and the Certificates in, from or otherwise involving the United Kingdom; and (c) it has only issued or passed on and will only issue or pass on in the United Kingdom any document received by it in connection with the issuance of the Notes and the Certificates to a person who is of a kind described in article 11(3) of the Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1995 or is a person to whom such document may otherwise lawfully be issued or passed on. If the foregoing is in accordance with your understanding, please sign and return to us ______ counterparts hereof, and upon acceptance hereof by you, on behalf of each of the Underwriters, this letter and such acceptance hereof, including the provisions of the Underwriting Agreement incorporated herein by reference, shall constitute a binding agreement between each of the Underwriters and the Company and Sallie Mae. It is understood that your acceptance of this letter on behalf of each of the Underwriters is or will be pursuant to the authority set forth in a form of Agreement among Underwriters, the form of 2 23 which shall be submitted to the Company and Sallie Mae for examination upon request, but without warranty on the part of the Representatives as to the authority of the signers thereof. Very truly yours, SLM FUNDING CORPORATION By: ................................. Name: Title: STUDENT LOAN MARKETING ASSOCIATION By: ................................. Name: Title: 3 24 Accepted as of the date hereof: [______________________] By: ................................. [______________________] By: ................................. Name: Title: On behalf of each of the Underwriters 4 25 SCHEDULE I AMOUNT OF DESIGNATED SECURITIES TO BE PURCHASED UNDERWRITER CLASS CLASS CLASS --- --- --- 26 SCHEDULE II TITLE OF EACH CLASS OF DESIGNATED SECURITIES: AGGREGATE AMOUNT OF EACH CLASS: PRICE TO PUBLIC OF EACH CLASS: PURCHASE PRICE BY UNDERWRITERS OF EACH CLASS: SPECIFIED FUNDS FOR PAYMENT OF PURCHASE PRICE: INDENTURE: MATURITY: RETURN RATE: FORM OF DESIGNATED SECURITIES: TIME OF DELIVERY: CLOSING LOCATION FOR DELIVERY OF DESIGNATED SECURITIES: NAMES AND ADDRESSES OF REPRESENTATIVES: Designated Representatives: Address for Notices, etc.: 27 ANNEX II(a) UNDERWRITER: COUNSEL OPINION 28 ANNEX II(b) THE COMPANY, SALLIE MAE AND THE SERVICER: INTERNAL COUNSEL OPINION 29 ANNEX II(c) THE COMPANY, SALLIE MAE AND THE SERVICER: OUTSIDE COUNSEL OPINION 30 ANNEX II(d) ELIGIBLE LENDER TRUSTEE/INTERIM ELIGIBLE LENDER TRUSTEE: COUNSEL OPINION 31 ANNEX II(e) INDENTURE TRUSTEE: COUNSEL OPINION 32 ANNEX III DELAYED DELIVERY CONTRACT SLM FUNDING CORPORATION C/O -------------------------- - ----------------------------- - ----------------------------- Attention:..................... ........................, 19__ Ladies and Gentlemen: The undersigned hereby agrees to purchase from SLM Funding Corporation (hereinafter called the "Company"), and the Company agrees to sell to the undersigned, $......... principal amount of the Company's ________ (hereinafter called the "Designated Securities"), offered by the Company's Prospectus, dated .............., 19.., as amended or supplemented, receipt of a copy of which is hereby acknowledged, at a purchase price of .....% of the amount thereof, plus accrued interest from the date from which interest accrues as set forth below, and on the further terms and conditions set forth below. The undersigned will purchase the Designated Securities from the Company on .............., 19.. (the "Delivery Date") and interest on the Designated Securities so purchased will accrue from .............., 19... [THE UNDERSIGNED WILL PURCHASE THE DESIGNATED SECURITIES FROM THE COMPANY ON THE DELIVERY DATE OR DATES AND IN THE AMOUNT OR AMOUNTS SET FORTH BELOW:
DATE FROM WHICH DELIVERY DATE AMOUNT INTEREST ACCRUES ------------- ------ ---------------- ....................., 19.. $............. ....................., 19.. ....................., 19.. $............. ....................., 19..
EACH SUCH DATE ON WHICH DESIGNATED SECURITIES ARE TO BE PURCHASED HEREUNDER IS HEREINAFTER REFERRED TO AS A "DELIVERY DATE."(4)] Payment for the Designated Securities which the undersigned has agreed to purchase on [THE] [EACH] Delivery Date shall be made to the Company or its order by certified or official bank check in .......... Clearing House funds at the office of .........., ........., .........., or by wire transfer to a bank account specified by the Company, on [THE] [SUCH] Delivery Date upon delivery to the 33 undersigned of the Designated Securities then to be purchased by the undersigned in definitive fully registered form and in such denominations and registered in such names as the undersigned may designate by written, telex or facsimile communication addressed to the Company not less than five full business days prior to [THE] [SUCH] Delivery Date. The obligation of the undersigned to take delivery of and make payment for Designated Securities on [THE] [EACH] Delivery Date shall be subject to the condition that the purchase of Designated Securities to be made by the undersigned shall not on [THE] [SUCH] Delivery Date be prohibited under the laws of the jurisdiction to which the undersigned is subject. The obligation of the undersigned to take delivery of and make payment for Designated Securities shall not be affected by the failure of any purchaser to take delivery of and make payment for Designated Securities pursuant to other contracts similar to this contract. [THE UNDERSIGNED UNDERSTANDS THAT UNDERWRITERS (THE "UNDERWRITERS") ARE ALSO PURCHASING DESIGNATED SECURITIES FROM THE COMPANY, BUT THAT THE OBLIGATIONS OF THE UNDERSIGNED HEREUNDER ARE NOT CONTINGENT ON SUCH PURCHASES]. Promptly after completion of the sale to the Underwriters the Company will mail or deliver to the undersigned at its address set forth below notice to such effect, accompanied by a copy of the Opinion of Counsel for the Company delivered to the Underwriters in connection therewith. The undersigned represents and warrants that, as of the date of this contract, the undersigned is not prohibited from purchasing the Designated Securities hereby agreed to be purchased by it under the laws of the jurisdiction to which the undersigned is subject. This contract will inure to the benefit of and be binding upon the parties hereto and their respective successors, but will not be assignable by either party hereto without the written consent of the other. This contract may be executed by either of the parties hereto in any number of counterparts, each of which shall be deemed to be an original, but all such counterparts shall together constitute one and the same instrument. F-2 34 It is understood that the acceptance by the Company of any Delayed Delivery Contract (including this contract) is in the Company's sole discretion and that, without limiting the foregoing, acceptances of such contracts need not be on a first-come, first-served basis. If this contract is acceptable to the Company, it is requested that the Company sign the form of acceptance below and mail or deliver one of the counterparts hereof to the undersigned at its address set forth below. This will become a binding contract between the Company and the undersigned when such counterpart is so mailed or delivered by the Company. Yours very truly, ............................... By:............................ (Authorized Signature) Name: Title: ................................ (Address) Accepted: .................., 19.. SLM FUNDING CORPORATION By: .............................. Name: Title: F-3 EX-4.1 6 TRUST AGREEMENT 1 EXHIBIT 4.1 ================================================================================ 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 October 1, 1996 ================================================================================ 2 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 . . . . . . . . . . . . . . . . . . . . . 4 SECTION 2.9 Representations and Warranties of the Depositor . . . . . . . . . 4 SECTION 2.10 Application of Trust Funds . . . . . . . . . . . . . . . . . . . 5 SECTION 2.11 Required Net Worth . . . . . . . . . . . . . . . . . . . . . . . 7 ARTICLE III SECTION 3.1 Initial Beneficial Ownership . . . . . . . . . . . . . . . . . . 7 SECTION 3.2 The Trust Certificates . . . . . . . . . . . . . . . . . . . . . 7 SECTION 3.3 Authentication of Trust Certificates . . . . . . . . . . . . . . 8 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 . . . . . . . . . . . . . . . . . 11 SECTION 3.9 Appointment of Certificate Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 SECTION 3.10 Disposition by Depositor . . . . . . . . . . . . . . . . . . . . 12 SECTION 3.11 Book-Entry Certificates . . . . . . . . . . . . . . . . . . . . . 12 SECTION 3.12 Notices to Clearing Agency . . . . . . . . . . . . . . . . . . . 13 SECTION 3.13 Definitive Certificates . . . . . . . . . . . . . . . . . . . . . 13
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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 . . . . . . . . . . . . . . . . . . . . . . . . 16 ARTICLE V SECTION 5.1 Application of Trust Funds . . . . . . . . . . . . . . . . . . . 16 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 . . . . . . . . . . . . . . . 18 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 . . . . . . . . . . . . . . . . . . . . . 21 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
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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 . . . . . . . . . . . . . . . . . . . . . . . . . 32 SECTION 10.5 Appointment of Co-Eligible Lender Trustee or Separate Eligible Lender Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 ARTICLE XI SECTION 11.1 Supplements and Amendments . . . . . . . . . . . . . . . . . . . 34 SECTION 11.2 No Legal Title to Trust Estate in Certificateholders . . . . . . . . . . . . . . . . . . . . . . . 35 SECTION 11.3 Limitations on Rights of Others . . . . . . . . . . . . . . . . . 36 SECTION 11.4 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 11.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 11.6 Separate Counterparts . . . . . . . . . . . . . . . . . . . . . . 37 SECTION 11.7 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . 37 SECTION 11.8 No Petition. . . . . . . . . . . . . . 37 SECTION 11.9 No Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 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 5 TRUST AGREEMENT dated as of October 1, 1996, 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 Definitions and Usage Except as otherwise specified herein 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 SECTION 2.1 Creation of Trust; Name. There is hereby created a Trust which shall be known as "SLM Student Loan Trust 1996-4", 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 sue 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 2.2 Office. The office of the Trust shall be in care of the Eligible Lender Trustee at its Corporate Trust Office or at such other address as the Eligible Lender Trustee may designate by written notice to the Certificateholders and the Depositor. SECTION 2.3 Purposes and Powers. The purpose of the Trust is to engage in the following activities: (i) to issue the Notes pursuant to the Indenture and 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 6 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 2.4 Appointment of Eligible Lender Trustee. The Depositor hereby appoints the Eligible Lender Trustee as trustee of the Trust effective as of the date hereof, to have all the rights, powers and duties set forth herein. SECTION 2.5 Initial Capital Contribution of Trust Estate. The Depositor hereby sells, assigns, transfers, conveys and sets over to the Eligible Lender Trustee, as of the date hereof, the sum of $1.00. The Eligible Lender Trustee hereby acknowledges receipt in trust from the Depositor, as of the date hereof, of the foregoing contribution, which shall constitute the Initial Trust Estate and shall be deposited in the Collection Account. The Depositor shall pay the organizational expenses of the Trust as they may arise or shall, upon the request of the Eligible Lender Trustee, promptly reimburse the Eligible Lender Trustee for any such expenses paid by the Eligible Lender Trustee. SECTION 2.6 Declaration of Trust. The Eligible Lender Trustee hereby declares that it will hold the Trust Estate in trust upon and subject to the conditions set forth herein for the use and benefit of the Certificateholders, subject to the obligations of the Trust under the other Basic Documents. It is 2 7 the intention of the parties hereto that the Trust constitute a business trust under Delaware law and that this Agreement 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 in its capacity as Certificateholder and 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 2.7 Liability of the Certificateholders. (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 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. The obligations of the Depositor under this paragraph shall be evidenced by the Trust Certificates described in Section 3.10, which shall be deemed to be a separate class of Trust Certificates from all other Trust Certificates issued by the Trust; provided that the rights and obligations evidenced by all Trust Certificates, regardless of class, except as provided in Section 3.10 and this Section, shall be identical. (b) No Certificateholder, other than to the extent set forth in paragraph (a), shall have any personal liability for any liability or obligation of the Trust. 3 8 SECTION 2.8 Title to Trust Property. Legal title to all of the Trust Estate shall be vested at all times in the Trust as a separate legal entity except where applicable law in any jurisdiction requires title to any part of the Trust Estate to be vested in a trustee or trustees, in which case title shall be deemed to be vested in the Eligible Lender Trustee, a co-trustee and/or a separate trustee, as the case may be; provided that legal title to the Trust Student Loans shall be vested at all times in the Eligible Lender Trustee on behalf of the Trust. SECTION 2.9 Representations, Warranties, and Covenants of the Depositor. 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 4 9 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 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 2.10 Application of Trust Funds. (a) Income and Loss Allocations. After giving effect to the special 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 5 10 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 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. (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 allocated, after all other adjustments are made to the Capital Accounts (including adjustments to reflect the Liquidating Distribution), as follows: 6 11 (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. (d) Tax Allocations. For Federal income tax purposes, each item of 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. SECTION 2.11 Required Net Worth. For so long as any Notes or Certificates shall remain outstanding, the Depositor shall take all actions necessary to maintain its net worth (exclusive of its interest in the Trust) equal to $2,635,000 or such other amount as satisfies the then existing Internal Revenue Service guidelines concerning the net worth requirements for general partners of partnerships, as set forth in Revenue Procedure 92-88 or successor pronouncements. ARTICLE III Trust Certificates and Transfer of Interests SECTION 3.1 Initial Beneficial Ownership. Upon the formation of the 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 3.2 The Trust Certificates. The Trust Certificates shall be 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 7 12 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 3.3 Authentication of Trust Certificates. Concurrently with the 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 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 3.13 hereunder. SECTION 3.4 Registration of Transfer and Exchange of Trust Certificates. 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 8 13 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 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 Keogh 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. SECTION 3.5 Mutilated, Destroyed, Lost or Stolen Trust Certificates. If (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, 9 14 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. SECTION 3.6 Persons Deemed Owners. Prior to due presentation of a Trust 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 3.7 Access to List of Certificateholders' Names and Addresses. 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 10 15 address, regardless of the source from which such information was derived. SECTION 3.8 Maintenance of Office or Agency. The Eligible Lender 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 802 Delaware Avenue, Wilmington, Delaware, as its principal Corporate Trust Office. The Eligible Lender Trustee's New York office and its authenticating agent's office are located at 450 West 33rd Street, 15th Floor, New York, New York 10001, Attention: Structured Finance Services. The Eligible Lender Trustee shall 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 3.9 Appointment of Certificate Paying Agent. The Certificate 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 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 11 16 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. SECTION 3.10 Disposition by Depositor. On and after the Closing Date, the Depositor shall retain beneficial and record ownership of Trust Certificates representing at least 1% of the Certificate Balance. Any attempted transfer of any Trust Certificate that would reduce such interest of the Depositor below 1% of the Certificate Balance shall be void. The Eligible Lender Trustee shall cause any Trust Certificate issued to the Depositor on the Closing Date (and any Trust Certificate issued in exchange therefor) to contain a legend stating "THIS CERTIFICATE IS NONTRANSFERABLE". The right of the Depositor to receive the amounts payable to it in accordance with Sections 2.8D(D) and 2.8E of the Administration Agreement shall not be transferable or assignable by the Depositor. SECTION 3.11 Book-Entry Certificates. The Trust Certificates, upon 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; provided, however, that one Definitive Certificate (as defined below) may be issued to the Depositor pursuant to Section 3.10. Such Book-Entry Certificate or BookEntry 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 (other than the Depositor) will receive a Definitive Certificate representing such Certificate Owner's interest in such Trust Certificate, except as provided in Section 3.13. Unless and until definitive, fully registered Trust Certificates (the "Definitive Certificates") have been issued to Certificate owners pursuant to Section 3.13: (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 12 17 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 3.13, 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 Certificates and has delivered such instructions to the Eligible Lender Trustee. SECTION 3.12 Notices to Clearing Agency. Whenever a notice or other communication to the Certificateholders is required under this Agreement, unless and until Definitive Certificates shall have been issued to Certificate Owners pursuant to Section 3.13, 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 3.13 Definitive Certificates. If (i) the Administrator 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 13 18 (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. ARTICLE IV Actions by Eligible Lender Trustee SECTION 4.1 Prior Notice to Certificateholders With Respect to Certain Matters. With respect to the following matters, the Eligible Lender Trustee shall not take action unless at least 30 days before the taking of such action, the Eligible Lender Trustee shall have notified the 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); 14 19 (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 Administration Agreement, the Indenture or this Agreement, as applicable. SECTION 4.2 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 4.3 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 4.4 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 15 20 Eligible Lender Trustee be permitted to follow any such direction, if given. SECTION 4.5 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 5.1 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 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 16 21 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. SECTION 5.2 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 3.13, 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 5.3 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 17 22 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 5.4 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 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 5.5 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 5.6 Capital Accounts. The Trust shall maintain accounts ("Capital Accounts") with respect to each Certificateholder (including the Depositor) in accordance with the following provisions: 18 23 (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 2.8D(D) and 2.8E of the Administration Agreement) and such Certificateholder's distributive 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 6.1 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 19 24 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 $1,452,300,000. 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 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 6.2 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. 20 25 SECTION 6.3 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 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 21 26 refrains from acting in good faith in accordance with any such instruction received, the Eligible Lender Trustee shall not be liable, on account of such action or inaction, to any Person. If the Eligible Lender Trustee shall not have received appropriate instruction within 10 days of such notice (or within such shorter period of time as reasonably may be specified in such notice or may be necessary under the circumstances) it may, but shall be under no duty to, take or refrain from taking such action, not inconsistent with this Agreement or the other Basic Documents, as it shall deem to be in the best interest of the Certificateholders, and shall have no liability to any Person for such action or inaction. SECTION 6.4 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 6.5 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 6.6 Restrictions. The Eligible Lender Trustee shall not take any action (a) that is inconsistent with the 22 27 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. ARTICLE VII Concerning the Eligible Lender Trustee SECTION 7.1 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; 23 28 (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 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 7.2 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 24 29 Certificateholder of record as of the related Record Date the information provided by the Administrator to the Eligible Lender Trustee on the related Determination Date pursuant to Section 2.9 of the Administration Agreement. SECTION 7.3 Representations and Warranties. The Eligible Lender Trustee hereby represents and warrants to the Depositor, for the benefit of the Certificateholders, that: (a) It is a national banking association duly organized and validly existing in good standing under the laws of the United States and having 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 7.4 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 30 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 7.5 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 7.6 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 and the Eligible Lender Trustee assumes no responsibility for the correctness thereof. The Eligible Lender Trustee makes no 26 31 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 7.7 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 8.1 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 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. 27 32 SECTION 8.2 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 8.3 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 9.1 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 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 28 33 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 9.2 Dissolution upon Insolvency of the Depositor. Notwithstanding the provisions of Section 3808 of the Delaware 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 29 34 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 10.1 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 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 30 35 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 10.2 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. 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. 31 36 SECTION 10.3 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. SECTION 10.4 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 32 37 or consolidation to the Rating Agencies not less than 15 days prior to the effective date thereof. SECTION 10.5 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 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; 33 38 (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. ARTICLE XI Miscellaneous SECTION 11.1 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. 34 39 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 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 11.2 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 35 40 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 11.3 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 11.4 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, 777 Twin Creek Drive, Killeen, Texas 76543, or, as to each party, at 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 11.5 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. 36 41 SECTION 11.6 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 11.7 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 11.8 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 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 11.9 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. 37 42 SECTION 11.10 Headings. The headings of the various Articles and Sections herein are for convenience of reference only and shall not define or limit any of the terms or provisions hereof. SECTION 11.11 Governing Law. This Agreement shall be 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 43 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/ John W. Mack --------------------------------- Name: John W. Mack Title: Second Vice President SLM FUNDING CORPORATION, Depositor, By /s/ Mark G. Overend --------------------------------- Name: Mark G. Overend Title: Treasurer and Controller 39 44 EXHIBIT A TO THE TRUST AGREEMENT [FORM OF TRUST CERTIFICATE] 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 $52,173,000 R-1 CUSIP NO. 78442GAJ5 SLM STUDENT LOAN TRUST 1996-4 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 $52,173,000 dollars non-assessable, fully-paid, fractional undivided interest in the SLM Student Loan Trust 1996-4 (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 October 1, 1996 (the "Trust Agreement"), between the Depositor and Chase Manhattan Bank USA, National 45 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 September 2, 1996, 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 October 1, 1996, 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 January 27, 1997, 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 2 46 such Distribution Date pursuant to the Administration Agreement. The Certificate Rate for each Accrual Period shall be equal to the lesser of (a) the weighted average of the T-Bill Rates within such Accrual Period plus 0.93% 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 and the Administration Fee 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 Certificate Owner, a beneficial interest in a Trust Certificate, covenants and agrees that such Certificateholder or Certificate Owner, as the case may 3 47 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 48 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 1996-4 by CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION, not in its individual capacity but solely as Eligible Lender Trustee. by --------------------------------- Authorized Signatory Date: October 3, 1996 5 49 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 CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION, not in its individual capacity but solely as Eligible Lender Trustee, by -------------------------------- as Authenticating Agent, Date: October 3, 1996 6 50 [REVERSE OF TRUST CERTIFICATE] The Trust Certificates do not represent an obligation of, or an interest in, the Depositor, Sallie Mae 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. As provided in the Trust Agreement and subject to certain limitations therein set forth, the transfer of 7 51 the Trust Certificates are 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 account described in Section 408(a) of the Code or a Keogh plan or (iii) any entity whose underlying assets include plan assets by reason of a plan's investment in 8 52 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. 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. 9 53 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 54 EXHIBIT B TO THE TRUST AGREEMENT FORM OF CERTIFICATE DEPOSITORY AGREEMENT 55 ANNEX 1 TO THE TRUST AGREEMENT DATED AS OF OCTOBER 1, 1996 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 United States. 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. Identifiable Assets. Except in connection with the customary operation of such cash management system as its 56 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. 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 2 57 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 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 3 58 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 59 INTERIM TRUST AGREEMENT between SLM FUNDING CORPORATION, as Seller and CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION not in its individual capacity but solely as Interim Eligible Lender Trustee Dated as of October 1, 1996 60 TABLE OF CONTENTS
Page ---- ARTICLE I Definitions and Usage . . . . . . . . . . . . . . . . . . . 1 --------------------- ARTICLE II Appointment of Interim Eligible Lender Trustee . . . . . . . . . . . . . 1 ---------------------------------------------- SECTION 2.1 Appointment of Interim Eligible ------------------------------- Lender Trustee . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 -------------- SECTION 2.2 Declaration of Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 -------------------- SECTION 2.3 Title to Interim Trust Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 ---------------------------- ARTICLE III Representations and Warranties of the Seller . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 - -------------------------------------------- ARTICLE IV Authority and Duties of Interim Eligible Lender Trustee ------------------------------------------------------- SECTION 4.1 General Authority . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 ----------------- SECTION 4.2 General Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 -------------- SECTION 4.3 No Duties Except as Specified in this ------------------------------------- Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 --------- SECTION 4.4 No Action Except Under Specified -------------------------------- Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 --------- SECTION 4.5 Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 ------------ ARTICLE V Concerning the Interim Eligible Lender Trustee ---------------------------------------------- SECTION 5.1 Acceptance of Trust and Duties . . . . . . . . . . . . . . . . . . . . . . . . . . 4 ------------------------------ SECTION 5.2 Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . 5 ------------------------------ SECTION 5.3 Not Acting in Individual Capacity . . . . . . . . . . . . . . . . . . . . . . . . . 6 --------------------------------- SECTION 5.4 Interim Eligible Lender Trustee ------------------------------- Not Liable for the Interim Trust Loans . . . . . . . . . . . . . . . . . . . . . . 6 --------------------------------------
i 61 ARTICLE VI Compensation of Interim Eligible Lender Trustee . . . . . . . . . . . . . 6 ----------------------------------------------- ARTICLE VII Termination of Interim Trust Agreement . . . . . . . . . . . . . . . 6 -------------------------------------- ARTICLE VIII Successor Interim Eligible Lender Trustees . . . . . . . . . . . . . . 7 ------------------------------------------ SECTION 8.1 Eligibility Requirements for Interim ------------------------------------ Eligible Lender Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 ----------------------- SECTION 8.2 Resignation or Removal of Interim --------------------------------- Eligible Lender Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 ----------------------- SECTION 8.3 Successor Interim Eligible Lender --------------------------------- Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 ------- SECTION 8.4 Merger or Consolidation of Interim ---------------------------------- Eligible Lender Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 ----------------------- ARTICLE IX Miscellaneous ------------- SECTION 9.1 Supplements and Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 -------------------------- SECTION 9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 ------- SECTION 9.3 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 ------------ SECTION 9.4 Separate Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 --------------------- SECTION 9.5 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10 ---------------------- SECTION 9.6 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 -------- SECTION 9.7 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 -------------
ii 62 INTERIM TRUST AGREEMENT dated as of October 1, 1996, between SLM FUNDING CORPORATION, a Delaware corporation (the "Seller") and CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity but solely as Interim Eligible Lender Trustee (the "Interim Eligible Lender Trustee"). WHEREAS, the Seller is a special purpose corporation established for the purpose of purchasing Loans from the Student Loan Marketing Association for immediate resale to special purpose trusts established for the purpose of financing the purchase of such Loans; and WHEREAS, the Seller has entered into the Purchase Agreement with the Student Loan Marketing Association and the Sale Agreement with SLM Student Loan Trust 1996-4 for the purpose of effecting such a purchase and resale; and WHEREAS, the Seller is not an "eligible lender" within the meaning of Section 435(d) of the Higher Education Act for the purpose of holding legal title to the Loans to be purchased under the Purchase Agreement and any Trust Student Loans required to be repurchased from the Trust pursuant to the Sale Agreement; WHEREAS, the Interim Eligible Lender Trustee is an "eligible lender" within the meaning of Section 435(d) of the Higher Education Act and is willing to hold legal title to such Loans and any such Trust Student Loans (collectively, the "Interim Trust Loans") on behalf and for the benefit of the Seller; NOW, THEREFORE, the Seller and the Interim Eligible Lender Trustee hereby agree as follows: ARTICLE I Definitions and Usage Except as otherwise specified herein 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 Appointment of Interim Eligible Lender Trustee SECTION 2.1 Appointment of Interim Eligible Lender Trustee. The Seller hereby appoints the Interim Eligible Lender Trustee, effective as of the date hereof, as trustee, to have all the 63 rights, powers and duties set forth herein, cluding, without limitation: a. to hold legal title to the Interim Trust Loans on behalf and for the benefit of the Seller; b. to enter into and perform its obligations as the Interim Eligible Lender Trustee under the Purchase Agreement, the Sale Agreement and this Agreement; and c. 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. SECTION 2.2 Declaration of Trust. The Interim Eligible Lender Trustee hereby declares that it will hold the Interim Trust Loans in trust upon and subject to the conditions set forth herein for the use and benefit of the Seller, subject to the obligations of the Interim Eligible Lender Trustee under the Purchase Agreement and the Sale Agreement. Effective as of the date hereof, the Interim Eligible Lender Trustee shall have all rights, powers and duties set forth herein with respect to accomplishing the purposes of this Agreement. SECTION 2.3 Title to Interim Trust Loans. Legal title to all of the Interim Trust Loans shall be vested at all times in the Interim Eligible Lender Trustee on behalf and for the benefit of the Seller. ARTICLE III Representations and Warranties of the Seller The Seller hereby represents and warrants to the Interim Eligible Lender Trustee that: 1. The Seller 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. 2. The Seller has the corporate power and authority to execute and deliver this Agreement and to carry out its terms; and the execution, delivery and performance of this Agreement has been duly authorized by the Seller by all necessary corporate action. 2 64 3. This Agreement constitutes a legal, valid and binding obligation of the Seller 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. 4. 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 certificate of incorporation or by-laws of the Seller, or any indenture, agreement or other instrument to which the Seller 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 other than as contemplated by the Basic Documents); nor violate any law or any order, rule or regulation applicable to the Seller of any court or of any Federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Seller or its properties. ARTICLE IV Authority and Duties of Interim Eligible Lender Trustee SECTION 4.1 General Authority. The Interim Eligible Lender Trustee is authorized and directed to execute and deliver the Purchase Agreement, the Sale Agreement and this Agreement and each certificate or other document attached as an exhibit to or contemplated by such agreements, in each case, in such form as the Seller shall approve as evidenced conclusively by the Interim Eligible Lender Trustee's execution thereof. The Interim Eligible Lender Trustee is also authorized and directed on behalf and for the benefit of the Seller to acquire and hold legal title to the Interim Trust Loans and to take all actions required of the Interim Eligible Lender Trustee pursuant to the Purchase Agreement, the Sale Agreement and this Agreement. SECTION 4.2 General Duties. It shall be the duty of the Interim Eligible Lender Trustee to discharge (or cause to be discharged) all its responsibilities as the Interim Eligible Lender Trustee pursuant to the terms of the Purchase Agreement, the Sale Agreement and this Agreement. SECTION 4.3 No Duties Except as Specified in this Agreement. The Interim Eligible Lender Trustee shall not have 3 65 any duty or obligation to manage, make any payment with respect to, register, record, sell, service, dispose of or otherwise deal with the Interim Trust Loans, or to otherwise take or refrain from taking any action under, or in connection with, any document contemplated hereby to which the Interim Eligible Lender Trustee is a party, except as expressly provided by the terms of the Purchase Agreement, the Sale Agreement or this Agreement; and no implied duties or obligations shall be read into this Agreement, the Purchase Agreement or the Sale Agreement against the Interim Eligible Lender Trustee. SECTION 4.4 No Action Except Under Specified Documents. The Interim Eligible Lender Trustee shall not otherwise deal with the Interim Trust Loans except in accordance with the powers granted to and the authority conferred upon the Interim Eligible Lender Trustee pursuant to this Agreement, the Purchase Agreement and the Sale Agreement. SECTION 4.5 Restrictions. The Interim Eligible Lender Trustee shall not take any action that is inconsistent with the purposes of the Trust set forth in the Basic Documents. ARTICLE V Concerning the Interim Eligible Lender Trustee SECTION 5.1 Acceptance of Trust and Duties. The Interim Eligible Lender Trustee accepts the trust hereby created and agrees to perform its duties hereunder with respect to such trust but only upon the terms of this Agreement. The Interim Eligible Lender Trustee shall not be answerable or accountable hereunder or under the Purchase Agreement or the Sale Agreement 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 5.2 expressly made by the Interim Eligible Lender Trustee. In particular, but not by way of limitation (and subject to the exceptions set forth in the preceding sentence): 1. the Interim Eligible Lender Trustee shall not be liable for any error of judgment made by a responsible officer of the Interim Eligible Lender Trustee; 2. no provision of this Agreement, the Purchase Agreement or the Sale Agreement shall require the Interim 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 the Purchase Agreement or the Sale Agreement, if the Interim Eligible Lender Trustee shall have reasonable grounds for believing that repayment of such 4 66 funds or adequate indemnity against such risk or liability is not reasonably assured or provided to it; and 3. the Interim Eligible Lender Trustee shall not be responsible for or in respect of the validity or sufficiency of this Agreement or for the due execution hereof by the Seller or for the form, character, genuineness, sufficiency, value or validity of any of the Interim Trust Loans or for or in respect of the validity or sufficiency of the Purchase Agreement or the Sale Agreement. SECTION 5.2 Representations and Warranties. The Interim Eligible Lender Trustee hereby represents and warrants to the Seller that: 1. It is a national banking association duly organized and validly existing in good standing under the laws of the United States and having an office located within the State of Delaware. It has all requisite corporate power and authority to execute, deliver and perform its obligations under the Purchase Agreement, the Sale Agreement and this Agreement. 2. It has taken all corporate action necessary to authorize the execution and delivery by it of the Purchase Agreement, the Sale Agreement and this Agreement, and the Purchase Agreement, the Sale Agreement and this Agreement have been executed and delivered by one of its officers who is duly authorized to execute and deliver the same on its behalf. 3. Neither the execution nor the delivery by it of the Purchase Agreement, the Sale Agreement or this Agreement, nor the consummation by it of the transactions contemplated thereby or hereby nor compliance by it with any of the terms or provisions thereof or hereof will contravene any Federal or Delaware state law, governmental rule or regulation governing the banking or trust powers of the Interim 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. 4. 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 Interim Trust Loans as contemplated by 5 67 this Agreement, the Purchase Agreement and the Sale Agreement. SECTION 5.3 Not Acting in Individual Capacity. Except as provided in this Article V, in accepting the trust hereby created, Chase Manhattan Bank USA, National Association, acts solely as Interim Eligible Lender Trustee hereunder and not in its individual capacity. SECTION 5.4 Interim Eligible Lender Trustee Not Liable for the Interim Trust Loans. The Interim Eligible Lender Trustee makes no representations as to the validity or sufficiency of this Agreement, the Purchase Agreement or the Sale Agreement, or of any Interim Trust Loan or related documents. The Interim Eligible Lender Trustee shall at no time have any responsibility for or with respect to the sufficiency of the Interim Trust Loans; the validity or completeness of the assignment to the Interim Eligible Lender Trustee of legal title to any Interim Trust Loan on behalf and for the benefit of the Seller; the performance or enforcement (except as expressly set forth in the Purchase Agreement or the Sale Agreement) of any Interim Trust Loan; the compliance by the Seller or the Servicer with any warranty or representation made under any Basic Document or in any related document or the accuracy of any such warranty or representation or any action or inaction of the Administrator, the Indenture Trustee or the Servicer or any subservicer taken in the name of the Interim Eligible Lender Trustee. ARTICLE VI Compensation of Interim Eligible Lender Trustee The Interim Eligible Lender Trustee shall receive as compensation for its services hereunder such fees as have been separately agreed upon before the date hereof between the Seller and the Interim Eligible Lender Trustee, and the Interim Eligible Lender Trustee shall be entitled to be reimbursed by the Seller, to the extent provided in such separate agreement, for its other reasonable expenses hereunder. ARTICLE VII Termination of Interim Trust Agreement This Agreement (other than Article VI) and the trust created hereby shall terminate and be of no further force or effect upon the earlier of (i) the termination of the Trust puruant to Section 9.1 of the Trust Agreement and (ii) the expiration of 21 years from the death of the last survivor of the descendants of 6 68 Joseph P. Kennedy, the late Ambassador of the United States to the Court of St. James, living on the date hereof. ARTICLE VIII Successor Interim Eligible Lender Trustees SECTION 8.1 Eligibility Requirements for Interim Eligible Lender Trustee. The Interim 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 Interim Trust Loans on behalf and for the benefit of the Seller, with a valid lender identification number with respect to the Interim Trust Loans from the Department; and (ii) being authorized to exercise corporate trust powers and hold legal title to the Interim Trust Loans. In case at any time the Interim Eligible Lender Trustee shall cease to be eligible in accordance with the provisions of this Section, the Interim Eligible Lender Trustee shall resign immediately in the manner and with the effect specified in Section 8.2. SECTION 8.2 Resignation or Removal of Interim Eligible Lender Trustee. The Interim Eligible Lender Trustee may at any time resign and be discharged from the trust hereby created by giving written notice thereof to the Seller. Upon receiving such notice of resignation, the Seller shall promptly appoint a successor Interim Eligible Lender Trustee meeting the eligibility requirements of Section 8.1 by written instrument, in duplicate, one copy of which instrument shall be delivered to the resigning Interim Eligible Lender Trustee and one copy to the successor Interim Eligible Lender Trustee. If no successor Interim 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 Interim Eligible Lender Trustee may petition any court of competent jurisdiction for the appointment of a successor Interim 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 Interim Eligible Lender Trustee from any obligations otherwise imposed on it under this Agreement, the Purchase Agreement or the Sale Agreement until such successor has in fact assumed such appointment. If at any time the Interim Eligible Lender Trustee shall cease to be or shall be likely to cease to be eligible in accordance with the provisions of Section 8.1 and shall fail toresign after written request therefor by the Seller, then the Seller may remove the Interim Eligible Lender Trustee. If the Seller shall remove the Interim Eligible Lender Trustee under the authority of the immediately preceding sentence, the Seller shall 7 69 promptly appoint a successor Interim Eligible Lender Trustee by written instrument, in duplicate, one copy of which instrument shall be delivered to the outgoing Interim Eligible Lender Trustee so removed and one copy to the successor Interim Eligible Lender Trustee together with payment of all fees owed to the outgoing Interim Eligible Lender Trustee. Any resignation or removal of the Interim Eligible Lender Trustee and appointment of a successor Interim Eligible Lender Trustee pursuant to any of the provisions of this Section shall not become effective until acceptance of appointment by the successor Interim Eligible Lender Trustee pursuant to Section 8.3 and payment of all fees and expenses owed to the outgoing Interim Eligible Lender Trustee. SECTION 8.3 Successor Interim Eligible Lender Trustee. Any successor Interim Eligible Lender Trustee appointed pursuant to Section 8.2 shall execute, acknowledge and deliver to the Seller and to its predecessor Interim Eligible Lender Trustee an instrument accepting such appointment under this Agreement, and thereupon the resignation or removal of the predecessor Interim Eligible Lender Trustee shall become effective and such successor Interim 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 Interim Eligible Lender Trustee. The predecessor Interim Eligible Lender Trustee shall upon payment of its fees and expenses deliver to the successor Interim Eligible Lender Trustee all documents, statements, moneys and properties held by it under this Agreement and shall assign, if permissible, to the successor Interim Eligible Lender Trustee any lender identification number obtained from the Department with respect to the Interim Trust Loans; and the Seller and the predecessor Interim 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 Interim Eligible Lender Trustee all such rights, powers, duties and obligations. No successor Interim 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 8.1. SECTION 8.4 Merger or Consolidation of Interim Eligible Lender Trustee. Any corporation into which the Interim 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 Interim Eligible Lender Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Interim Eligible Lender Trustee, shall, without the execution or filing 8 70 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 Interim Eligible Lender Trustee hereunder; provided that such corporation shall be eligible pursuant to Section 8.1. ARTICLE IX Miscellaneous SECTION 9.1 Supplements and Amendments. This Agreement may be amended by the Seller and the Interim 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 Seller and the Interim 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 Interim 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 9 71 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 execution thereof by Certificateholders shall be subject to such reasonable requirements as the Interim Eligible Lender Trustee may prescribe. Prior to the execution of any amendment to this Agreement, the Interim 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 Interim Eligible Lender Trustee may, but shall not be obligated to, enter into any such amendment which affects the Interim Eligible Lender Trustee's own rights, duties or immunities under this Agreement or otherwise. SECTION 9.2 Notices. 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 Interim Eligible Lender Trustee shall be deemed given only upon actual receipt by the Interim Eligible Lender Trustee), if to the Interim Eligible Lender Trustee, addressed to its Corporate Trust Office; if to the Seller, addressed to SLM Funding Corporation, 777 Twin Creek Drive, Killeen, Texas 76543, or, as to each party, at such other address as shall be designated by such party in a written notice to each other party. SECTION 9.3 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 9.4 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 9.5 Successors and Assigns. All covenants and agreements contained herein shall be binding upon and to the benefit of, the Seller and its successors and the Interim Eligible Lender Trustee and its successors, all as herein provided. 10 72 SECTION 9.6 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 9.7 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. 11 73 IN WITNESS WHEREOF, the parties hereto have caused this Interim 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 Interim Eligible Lender Trustee, By /s/ John W. Mack ----------------------------------- Name: John W. Mack Title: Second Vice President SLM FUNDING CORPORATION, Seller, By /s/ Mark G. Overend ----------------------------------- Name: Mark G. Overend Title: Treasurer and Controller 12 EX-4.2 7 INDENTURE 1 EXHIBIT 4.2 ================================================================================ INDENTURE among SLM STUDENT LOAN TRUST 1996-4, as Issuer, CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION, not in its individual capacity but solely as Eligible Lender Trustee and BANKERS TRUST COMPANY, not in its individual capacity but solely as Indenture Trustee Dated as of October 1, 1996 ================================================================================ 2 TABLE OF CONTENTS
Page ARTICLE I Definitions and Usage SECTION 1.1 Definitions and Usage . . . . . . . . . . . . . . . . . . . . . 3 SECTION 1.2 Incorporation by Reference of Trust Indenture Act . . . . . . . 3 ARTICLE II The Notes SECTION 2.1 Form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 SECTION 2.2 Execution, Authentication and Delivery . . . . . . . . . . . . 4 SECTION 2.3 Temporary Notes . . . . . . . . . . . . . . . . . . . . . . . . 5 SECTION 2.4 Registration; Registration of Transfer and Exchange . . . . . . 5 SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes . . . . . . . . . . 7 SECTION 2.6 Persons Deemed Owner . . . . . . . . . . . . . . . . . . . . . 8 SECTION 2.7 Payment of Principal and Interest; Note Interest Shortfall; Note Interest Carryover . . . . . . . . . . . . . . 8 SECTION 2.8 Cancellation . . . . . . . . . . . . . . . . . . . . . . . . . 10 SECTION 2.9 Release of Collateral . . . . . . . . . . . . . . . . . . . . . 10 SECTION 2.10 Book-Entry Notes . . . . . . . . . . . . . . . . . . . . . . . 10 SECTION 2.11 Notices to Clearing Agency . . . . . . . . . . . . . . . . . . 11 SECTION 2.12 Definitive Notes . . . . . . . . . . . . . . . . . . . . . . . 12 ARTICLE III Covenants SECTION 3.1 Payment to Noteholders . . . . . . . . . . . . . . . . . . . . 12 SECTION 3.2 Maintenance of Office or Agency . . . . . . . . . . . . . . . . 13
3 SECTION 3.3 Money for Payments To Be Held in Trust . . . . . . . . . . . . 13 SECTION 3.4 Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 SECTION 3.5 Protection of Indenture Trust Estate . . . . . . . . . . . . 15 SECTION 3.6 Opinions as to Indenture Trust Estate . . . . . . . . . . . . . 16 SECTION 3.7 Performance of Obligations; Servicing of Trust Student Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 SECTION 3.8 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . 20 SECTION 3.9 Annual Statement as to Compliance . . . . . . . . . . . . . . . 21 SECTION 3.10 Issuer May Consolidate, etc., Only on Certain Terms . . . . . . 21 SECTION 3.11 Successor or Transferee . . . . . . . . . . . . . . . . . . . . 23 SECTION 3.12 No Other Business . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 3.13 No Borrowing . . . . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 3.14 Obligations of Servicer and Administrator . . . . . . . . . . . 24 SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities . . . . . . . 24 SECTION 3.16 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . 24 SECTION 3.17 Restricted Payments . . . . . . . . . . . . . . . . . . . . . . 24 SECTION 3.18 Notice of Events of Default . . . . . . . . . . . . . . . . . . 25 SECTION 3.19 Further Instruments and Acts . . . . . . . . . . . . . . . . . 25 ARTICLE IV Satisfaction and Discharge SECTION 4.1 Satisfaction and Discharge of Indenture . . . . . . . . . . . . 25 SECTION 4.2 Application of Trust Money . . . . . . . . . . . . . . . . . . 27 SECTION 4.3 Repayment of Moneys Held by Paying Agent . . . . . . . . . . . 27 SECTION 4.4 Auction of Trust Student Loans . . . . . . . . . . . . . . . . 27 ARTICLE IV Remedies SECTION 5.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . 28 SECTION 5.2 Acceleration of Maturity; Rescission and Annulment . . . . . . 30 SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Indenture Trustee . . . . . . . . . . . . . . . . . . . . 31 SECTION 5.4 Remedies; Priorities . . . . . . . . . . . . . . . . . . . . . 33
ii 4 SECTION 5.5 Optional Preservation of the Trust Student Loans . . . . . . . 35 SECTION 5.6 Limitation of Suits . . . . . . . . . . . . . . . . . . . . . . 36 SECTION 5.7 Unconditional Rights of Noteholders To Receive Principal and Interest . . . . . . . . . . . . . . . . . . . . 37 SECTION 5.8 Restoration of Rights and Remedies . . . . . . . . . . . . . . 37 SECTION 5.9 Rights and Remedies Cumulative . . . . . . . . . . . . . . . . 37 SECTION 5.10 Delay or Omission Not a Waiver . . . . . . . . . . . . . . . . 38 SECTION 5.11 Control by Noteholders . . . . . . . . . . . . . . . . . . . . 38 SECTION 5.12 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . 38 SECTION 5.13 Undertaking for Costs . . . . . . . . . . . . . . . . . . . . . 39 SECTION 5.14 Waiver of Stay or Extension Laws . . . . . . . . . . . . . . . 39 SECTION 5.15 Action on Notes . . . . . . . . . . . . . . . . . . . . . . . . 40 SECTION 5.16 Performance and Enforcement of Certain Obligations . . . . . . 40 ARTICLE VI The Indenture Trustee SECTION 6.1 Duties of Indenture Trustee . . . . . . . . . . . . . . . . . . 41 SECTION 6.2 Rights of Indenture Trustee . . . . . . . . . . . . . . . . . . 43 SECTION 6.3 Individual Rights of Indenture Trustee . . . . . . . . . . . . 43 SECTION 6.4 Indenture Trustee's Disclaimer . . . . . . . . . . . . . . . . 44 SECTION 6.5 Notice of Defaults; Seller Insolvency . . . . . . . . . . . . . 44 SECTION 6.6 Reports by Indenture Trustee to Noteholders . . . . . . . . . . 44 SECTION 6.7 Compensation and Indemnity . . . . . . . . . . . . . . . . . . 45 SECTION 6.8 Replacement of Indenture Trustee . . . . . . . . . . . . . . . 46 SECTION 6.9 Successor Indenture Trustee by Merger . . . . . . . . . . . . . 47 SECTION 6.10 Appointment of Co-Trustee or Separate Trustee . . . . . . . . . 47 SECTION 6.11 Eligibility; Disqualification . . . . . . . . . . . . . . . . . 49 SECTION 6.12 Preferential Collection of Claims Against Issuer . . . . . . . 49 ARTICLE VII Noteholders' Lists and Reports SECTION 7.1 Issuer To Furnish Indenture Trustee Names and Addresses of Noteholders . . . . . . . . . . . . . . . . . . . 50
iii 5 SECTION 7.2 Preservation of Information; Communications to Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . 50 SECTION 7.3 Reports by Issuer . . . . . . . . . . . . . . . . . . . . . . . 51 ARTICLE VIII Accounts, Disbursements and Releases SECTION 8.1 Collection of Money . . . . . . . . . . . . . . . . . . . . . . 52 SECTION 8.2 Trust Accounts . . . . . . . . . . . . . . . . . . . . . . . . 52 SECTION 8.3 General Provisions Regarding Accounts . . . . . . . . . . . . . 53 SECTION 8.4 Release of Indenture Trust Estate . . . . . . . . . . . . . . . 54 SECTION 8.5 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . 55 ARTICLE IX Supplemental Indentures SECTION 9.1 Supplemental Indentures Without Consent of Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . 56 SECTION 9.2 Supplemental Indentures with Consent of Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . 57 SECTION 9.3 Execution of Supplemental Indentures . . . . . . . . . . . . . 59 SECTION 9.4 Effect of Supplemental Indenture . . . . . . . . . . . . . . . 59 SECTION 9.5 Conformity with Trust Indenture Act . . . . . . . . . . . . . . 59 SECTION 9.6 Reference in Notes to Supplemental Indentures . . . . . . . . . 60 ARTICLE X Redemption of Notes SECTION 10.1 Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . 60 SECTION 10.2 Form of Redemption Notice . . . . . . . . . . . . . . . . . . . 60 SECTION 10.3 Notes Payable on Redemption Date . . . . . . . . . . . . . . . 61
iv 6 ARTICLE XI Miscellaneous SECTION 11.1 Compliance Certificates and Opinions, etc. . . . . . . . . . . 61 SECTION 11.2 Form of Documents Delivered to Indenture Trustee . . . . . . . 64 SECTION 11.3 Acts of Noteholders . . . . . . . . . . . . . . . . . . . . . 65 SECTION 11.4 Notices, etc., to Indenture Trustee, Issuer and Rating Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . 66 SECTION 11.5 Notices to Noteholders; Waiver . . . . . . . . . . . . . . . . 67 SECTION 11.6 Alternate Payment and Notice Provisions . . . . . . . . . . . . 67 SECTION 11.7 Conflict with Trust Indenture Act . . . . . . . . . . . . . . . 68 SECTION 11.8 Effect of Headings and Table of Contents . . . . . . . . . . . 68 SECTION 11.9 Successors and Assigns . . . . . . . . . . . . . . . . . . . . 68 SECTION 11.10 Separability . . . . . . . . . . . . . . . . . . . . . . . . . 68 SECTION 11.11 Benefits of Indenture . . . . . . . . . . . . . . . . . . . . . 68 SECTION 11.12 Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . . 68 SECTION 11.13 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . 69 SECTION 11.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 69 SECTION 11.15 Recording of Indenture . . . . . . . . . . . . . . . . . . . . 69 SECTION 11.16 Trust Obligations . . . . . . . . . . . . . . . . . . . . . . . 69 SECTION 11.17 No Petition . . . . . . . . . . . . . . . . . . . . . . . . . . 70 SECTION 11.18 Inspection . . . . . . . . . . . . . . . . . . . . . . . . . . 70
v 7 APPENDIX A Definitions and Usage SCHEDULE A Schedule of Trust Student Loans SCHEDULE B Location of Trust Student Loan Files EXHIBIT A Form of Note EXHIBIT B Form of Note Depository Agreement vi 8 INDENTURE dated as of October 1, 1996, among SLM STUDENT LOAN TRUST 1996-4, a Delaware business trust (the "Issuer"), CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION, a national banking association, not in its individual capacity but solely as trustee on behalf of the Issuer (the "Eligible Lender Trustee"), and BANKERS TRUST COMPANY, a New York banking corporation, as trustee and not in its individual capacity (the "Indenture Trustee") Each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the holders of the Issuer's Floating Rate Student Loan-Backed Notes (the "Notes"): GRANTING CLAUSE The Issuer and, with respect to the Trust Student Loans, the Eligible Lender Trustee hereby Grant to the Indenture Trustee, as trustee for the benefit of the Noteholders, effective as of the Closing Date all of their right, title and interest in and to the following: (a) the Trust Student Loans, and all obligations of the Obligors thereunder including all moneys accrued and paid thereunder on or after the Cutoff Date and all guaranties and other rights relating to the Trust Student Loans; (b) the Servicing Agreement, including the right of the Issuer to cause the Servicer to purchase Trust Student Loans from the Issuer under circumstances described therein; (c) the Sale Agreement, including the right of the Issuer to cause the Seller to repurchase Trust Student Loans from the Issuer under circumstances described therein and including the rights of the Seller under the Purchase Agreement; (d) the Purchase Agreement, to the extent that the rights of the Seller thereunder have been assigned to the Issuer pursuant to the Sale Agreement, including the right of the Seller to cause the Student Loan Marketing Association to repurchase Trust Student Loans from the Seller under circumstances described therein; 1 9 (e) the Administration Agreement; (f) each Guarantee Agreement, including the right of the Issuer to cause the related Guarantor to make Guarantee Payments in respect of the Trust Student Loans; (g) the Trust Accounts and all funds on deposit from time to time in the Trust Accounts, including the Reserve Account Initial Deposit, and all investments and proceeds thereof (including all income thereon); and (h) all present and future claims, demands, causes and choses in action in respect of any or all of the foregoing and all payments on or under and all proceeds of every kind and nature whatsoever in respect of any or all of the foregoing, including all proceeds of the conversion, voluntary or involuntary, into cash or other liquid property, all cash proceeds, accounts, accounts receivable, notes, drafts, acceptances, chattel paper, checks, deposit accounts, insurance proceeds, condemnation awards, rights to payment of any and every kind and other forms of obligations and receivables, instruments and other property which at any time constitute all or part of or are included in the proceeds of any of the foregoing (collectively, the "Collateral"). The foregoing Grant is made in trust to secure the payment of principal of and interest on, and any other amounts owing in respect of, the Notes, equally and ratably without prejudice, priority or distinction, and to secure compliance with the provisions of this Indenture, all as provided in this Indenture. The Indenture Trustee, as Indenture Trustee on behalf of the Noteholders, acknowledges such Grant, accepts the trusts under this Indenture in accordance with the provisions of this Indenture and agrees to perform its duties required in this Indenture to the best of its ability to the end that the interests of the Noteholders may be adequately and effectively protected. 2 10 ARTICLE I Definitions and Usage SECTION 1.1 Definitions and Usage. Except as otherwise specified herein 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. SECTION 1.2 Incorporation by Reference of Trust Indenture Act. Whenever this Indenture refers to a provision of the TIA, the provision is incorporated by reference in and made a part of this Indenture. The following TIA terms used in this Indenture have the following meanings: "Commission" means the Securities and Exchange Commission. "indenture securities" means the Notes. "indenture security holder" means a Noteholder. "indenture to be qualified" means this Indenture. "indenture trustee" or "institutional trustee" means the Indenture Trustee. "obligor" on the indenture securities means the Issuer and any other obligor on the indenture securities. All other TIA terms used in this Indenture that are defined by the TIA, defined by TIA reference to another statute or defined by Commission rule have the meaning assigned to them by such definitions. 3 11 Article II The Notes SECTION 2.1 Form. The Notes, together with the Indenture Trustee's certificate of authentication, shall be in substantially the form set forth in Exhibit A, with such appropriate insertions, omissions, substitutions and other variations as are required or permitted by this Indenture and may have such letters, numbers or other marks of identification and such legends or endorsements placed thereon as may, consistently herewith, be determined by the officers executing the Notes, as evidenced by their execution of the Notes. Any portion of the text of any Note may be set forth on the reverse thereof, with an appropriate reference thereto on the face of the Note. The Definitive Notes shall be typewritten, printed, lithographed or engraved or produced by any combination of these methods (with or without steel engraved borders), all as determined by the officers executing such Notes, as evidenced by their execution of such Notes. Each Note shall be dated the date of its authentication. The terms of the Notes set forth in Exhibit A are part of the terms of this Indenture. SECTION 2.2 Execution, Authentication and Delivery. The Notes shall be executed on behalf of the Issuer by any of its Authorized Officers. The signature of any such Authorized Officer on the Notes may be manual or facsimile. Notes bearing the manual or facsimile signature of individuals who were at any time Authorized Officers of the Issuer shall bind the Issuer, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Notes or did not hold such offices at the date of such Notes. The Indenture Trustee shall upon Issuer Order authenticate and deliver Notes for original issue in an aggregate principal amount of $1,452,300,000. The aggregate principal amount of Notes outstanding at any time may not exceed such amount except as provided in Section 2.5. 4 12 Each Note shall be dated the date of its authentication. The Notes shall be issuable as registered Notes in the minimum denomination of $1,000 and in integral multiples of $1,000 in excess thereof. No Note shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose, unless there appears on such Note a certificate of authentication substantially in the form provided for herein executed by the Indenture Trustee by the manual signature of one of its authorized signatories, and such certificate upon any Note shall be conclusive evidence, and the only evidence, that such Note has been duly authenticated and delivered hereunder. SECTION 2.3 Temporary Notes. Pending the preparation of Definitive Notes, the Issuer may execute, and upon receipt of an Issuer Order the Indenture Trustee shall authenticate and deliver, temporary Notes which are printed, lithographed, typewritten, mimeographed or otherwise produced, of the tenor of the Definitive Notes in lieu of which they are issued and with such variations not inconsistent with the terms of this Indenture determined to be appropriate by the Responsible Officer of the Issuer executing the temporary Notes, as evidenced by his or her execution of such temporary Notes. If temporary Notes are issued, the Issuer will cause Definitive Notes to be prepared without unreasonable delay. After the preparation of Definitive Notes, the temporary Notes shall be exchangeable for Definitive Notes upon surrender of the temporary Notes at the office or agency of the Issuer to be maintained as provided in Section 3.2, without charge to the Noteholder. Upon surrender for cancellation of any one or more temporary Notes, the Issuer shall execute and the Indenture Trustee shall authenticate and deliver in exchange therefor a like principal amount of Definitive Notes of authorized denominations. Until so exchanged, the temporary Notes shall in all respects be entitled to the same benefits under this Indenture as Definitive Notes. SECTION 2.4 Registration; Registration of Transfer and Exchange. The Issuer shall cause to be kept a register (the "Note Register") in which, subject to such reasonable regulations as it may prescribe, the Issuer shall provide for the registration of Notes and the registration of transfers of Notes. The Indenture Trustee shall be "Note Registrar" for the purpose of registering Notes and transfers of Notes as herein provided. Upon any resignation of any Note Registrar, the Issuer shall prompt- 5 13 ly appoint a successor or, if it elects not to make such an appointment, assume the duties of Note Registrar. If a Person other than the Indenture Trustee is appointed by the Issuer as Note Registrar, the Issuer shall give the Indenture Trustee prompt written notice of the appointment of such Note Registrar and of the location, and any change in the location, of the Note Register, and the Indenture Trustee shall have the right to inspect the Note Register at all reasonable times and to obtain copies thereof, and the Indenture Trustee shall have the right to rely upon a certificate executed on behalf of the Note Registrar by an Executive Officer thereof as to the names and addresses of the Noteholders and the principal amounts and number of such Notes. Upon surrender for registration of transfer of any Note at the office or agency of the Issuer to be maintained as provided in Section 3.2, if the requirements of Section 8-401(1) of the UCC are met, the Issuer shall execute, and the Indenture Trustee shall authenticate and the Noteholder shall obtain from the Indenture Trustee, in the name of the designated transferee or transferees, one or more new Notes in any authorized denominations and a like aggregate principal amount. At the option of the Noteholder, Notes may be exchanged for other Notes in any authorized denominations and a like aggregate principal amount, upon surrender of the Notes to be exchanged at such office or agency. Whenever any Notes are so surrendered for exchange, the Issuer shall execute, and the Indenture Trustee shall authenticate and the Noteholder shall obtain from the Indenture Trustee, the Notes which the Noteholder making the exchange is entitled to receive. All Notes issued upon any registration of transfer or exchange of Notes shall be the valid obligations of the Issuer, evidencing the same debt, and entitled to the same benefits under this Indenture, as the Notes surrendered upon such registration of transfer or exchange. Every Note presented or surrendered for registration of transfer or exchange shall be duly endorsed by, or be accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by the Noteholder thereof or such Noteholder's attorney duly authorized in writing, with such signature guaranteed by an "eligible guarantor institution" meeting the requirements of the Note Registrar, which requirements include membership or participation in Securities 6 14 Transfer Agent's Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Exchange Act. No service charge shall be made to a Noteholder for any registration of transfer or exchange of Notes, but the Indenture Trustee may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer or exchange of Notes, other than exchanges pursuant to Section 2.3 or 9.6 not involving any transfer. The preceding provisions of this Section notwithstanding, the Issuer shall not be required to make and the Note Registrar need not register transfers or exchanges of Notes selected for redemption or of any Note for a period of 15 days preceding the due date for any payment with respect to the Note. SECTION 2.5 Mutilated, Destroyed, Lost or Stolen Notes. If (i) any mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee receives evidence to its satisfaction of the destruction, loss or theft of any Note, and (ii) there is delivered to the Issuer and the Indenture Trustee such security or indemnity as may be required by each of them to hold the Issuer and the Indenture Trustee harmless, then, in the absence of notice to the Issuer, the Note Registrar or the Indenture Trustee that such Note has been acquired by a bona fide purchaser, and provided that the requirements of Section 8-405 of the UCC are met, the Issuer shall execute and upon its request the Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Note, a replacement Note; provided, however, that if any such destroyed, lost or stolen Note, but not a mutilated Note, shall have become or within 15 days shall be due and payable, or shall have been called for redemption, instead of issuing a replacement Note, the Issuer may pay such destroyed, lost or stolen Note when so due or payable or upon the Redemption Date without surrender thereof. If, after the delivery of such replacement Note or payment of a destroyed, lost or stolen Note pursuant to the proviso to the preceding sentence, a bona fide purchaser of the original Note in lieu of which such replacement Note was issued presents for payment such original Note, the Issuer and the Indenture Trustee shall be entitled to recover such replacement Note (or such payment) from the Person to whom it was delivered or any Person taking such replacement Note from such Person to whom such replacement Note was delivered or any assignee of such Person, except a bona fide purchaser, and shall be entitled to recover upon the security or 7 15 indemnity provided therefor to the extent of any loss, damage, cost or expense incurred by the Issuer or the Indenture Trustee in connection therewith. Upon the issuance of any replacement Note under this Section, the Issuer may require the payment by the Noteholder thereof of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other reasonable expenses (including the fees and expenses of the Indenture Trustee) connected therewith. Every replacement Note issued pursuant to this Section in replacement of any mutilated, destroyed, lost or stolen Note shall constitute an original additional contractual obligation of the Issuer, whether or not the mutilated, destroyed, lost or stolen Note shall be at any time enforceable by anyone, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Notes duly issued hereunder. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Notes. SECTION 2.6 Persons Deemed Owner. Prior to due presentment for registration of transfer of any Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name any Note is registered (as of the day of determination) as the owner of such Note for the purpose of receiving payments of principal of, interest (and any Note Interest Carryover), if any, on such Note and for all other purposes whatsoever, whether or not such Note be overdue, and neither the Issuer, the Indenture Trustee nor any agent of the Issuer or the Indenture Trustee shall be affected by notice to the contrary. SECTION 2.7 Payment of Principal and Interest; Note Interest Shortfall; Note Interest Carryover. (a) The Notes shall accrue interest as provided in the forms of Notes set forth in Exhibit A, and such interest shall be payable on each Distribution Date as specified therein, subject to Section 3.1. Any installment of interest (and any Note Interest Carryover) or principal, if any, payable on any Note which is punctually paid or duly provided for by the Issuer on the applicable Distribution Date shall be paid to the Person in whose name such Note (or one or more Predecessor Notes) is registered 8 16 on the Record Date by check mailed first-class, postage prepaid to such Person's address as it appears on the Note Register on such Record Date, except that, unless Definitive Notes have been issued pursuant to Section 2.12, with respect to Notes registered on the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payment shall be made by wire transfer in immediately available funds to the account designated by such nominee and except for the final installment of principal payable with respect to such Note on a Distribution Date or on the Note Final Maturity Date for such Note which shall be payable as provided below. The funds represented by any such checks returned undelivered shall be held in accordance with Section 3.3. (b) The principal of each Note shall be payable in installments on each Distribution Date as provided in the forms of Note set forth in Exhibit A. Notwithstanding the foregoing, the entire unpaid principal amount of each class of the Notes shall be due and payable, if not previously paid, on the Note Final Maturity Date for such class of Notes and on the date on which an Event of Default shall have occurred and be continuing if the Indenture Trustee or the Noteholders of the Notes representing not less than a majority of the Outstanding Amount of the Notes have declared the Notes to be immediately due and payable in the manner provided in Section 5.2. All principal payments on the Notes shall be made pro rata to the Noteholders entitled thereto. The Indenture Trustee shall notify the Person in whose name a Note is registered at the close of business on the Record Date preceding the Distribution Date on which the Issuer expects that the final installment of principal of and interest (and any Note Interest Carryover) on such Note will be paid. Such notice shall be mailed or transmitted by facsimile prior to such final Distribution Date and shall specify that such final installment will be payable only upon presentation and surrender of such Note and shall specify the place where such Note may be presented and surrendered for payment of such Installment. Notices in connection with redemptions of Notes shall be mailed to Noteholders as provided in Section 10.2. (c) If the Issuer defaults in a payment of interest on the Notes, the Issuer shall pay the resulting Note Interest Shortfall on the following Distribution Date as provided in the Administration Agreement. (d) The Note Interest Carryover for each Distribution Date shall be payable on each Distribution Date solely to the extent of funds required and available to be distributed to Noteholders by the Indenture Trustee pursuant to Section 2.7C.10, 9 17 2.8D(B) or 2.8E of the Administration Agreement. Any Note Interest Carryover payable on any Distribution Date shall be paid to the Person in whose name such Note (or one or more Predecessor Notes) is registered on the applicable Record Date by check mailed first-class postage prepaid to such Person's address as it appears on the Note Register on such Record Date, except that, unless Definitive Notes have been issued pursuant to Section 2.12, with respect to the Notes registered on the Record Date in the name of the nominee of the Clearing Agency (initially, such nominee to be Cede & Co.), payment shall be made by wire transfer in immediately available funds to the account designated by such nominee. The funds represented by any such checks returned undelivered shall be held in accordance with Section 3.3. SECTION 2.8 Cancellation. All Notes surrendered for payment, registration of transfer, exchange or redemption shall, if surrendered to any Person other than the Indenture Trustee, be delivered to the Indenture Trustee and shall be promptly cancelled by the Indenture Trustee. The Issuer may at any time deliver to the Indenture Trustee for cancellation any Notes previously authenticated and delivered hereunder which the Issuer may have acquired in any manner whatsoever and all Notes so delivered shall be promptly cancelled by the Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for any Notes cancelled as provided in this Section, except as expressly permitted by this Indenture. All canceled Notes may be held or disposed of by the Indenture Trustee in accordance with its standard retention or disposal policy as in effect at the time, unless the Issuer shall direct by an Issuer Order that they be returned to it and so long as such Issuer Order is timely and the Notes have not been previously disposed of by the Indenture Trustee. SECTION 2.9 Release of Collateral. Subject to Section 11.1 and the terms of the Basic Documents, the Indenture Trustee shall release property from the lien of this Indenture only upon receipt of an Issuer Request accompanied by an Officers' Certificate of the Issuer, an Opinion of Counsel and Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(1) or an Opinion of Counsel in lieu of such Independent Certificates to the effect that the TIA does not require any such Independent Certificates. SECTION 2.10 Book-Entry Notes. The Notes, upon original issuance, will be issued in the form of typewritten Notes representing the Book-Entry Notes, to be delivered to The Depository Trust Company, the initial Clearing Agency, by, or on behalf of, the Issuer. Such Notes shall initially be registered on the Note 10 18 Register in the name of Cede & Co., the nominee of the initial Clearing Agency, and no Note Owner shall receive a Definitive Note (as defined below) representing such Note Owner's interest in such Note, except as provided in Section 2.12. Unless and until definitive, fully registered Notes (the "Definitive Notes") have been issued to Note Owners pursuant to Section 2.12: (i) the provisions of this Section shall be in full force and effect; (ii) the Note Registrar and the Indenture Trustee, and their respective directors, officers, employees and agents, may deal with the Clearing Agency for all purposes (including the payment of principal of and interest and other amounts on the Notes) as the authorized representative of the Note Owners; (iii) to the extent that the provisions of this Section conflict with any other provisions of this Indenture, the provisions of this Section shall control; (iv) the rights of Note Owners shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Note Owners and the Clearing Agency and/or the Clearing Agency Participants pursuant to the Note Depository Agreement; and unless and until Definitive Notes are issued pursuant to Section 2.12, the initial Clearing Agency will make book-entry transfers among the Clearing Agency Participants and receive and transmit payments of principal of and interest and other amounts on the Notes to such Clearing Agency Participants; and (v) whenever this Indenture requires or permits actions to be taken based upon instructions or directions of Noteholders of Notes evidencing a specified percentage of the Outstanding Amount of the Notes, the Clearing Agency shall be deemed to represent such percentage only to the extent that it has received instructions to such effect from Note Owners and/or Clearing Agency Participants owning or representing, respectively, such required percentage of the beneficial interest in the Notes and has delivered such instructions to the Indenture Trustee. SECTION 2.11 Notices to Clearing Agency. Whenever a notice or other communication to the Noteholders is required under this Indenture, unless and until Definitive Notes shall have been issued to Note Owners pursuant to Section 2.12, 11 19 the Indenture Trustee shall give all such notices and communication specified herein to be given to Noteholders to the Clearing Agency. SECTION 2.12 Definitive Notes. If (i) the Administrator advises the Indenture Trustee in writing that the Clearing Agency is no longer willing or able to discharge its responsibilities with respect to the Notes, and the Administrator is unable to locate a successor, (ii) the Administrator at its option advises the Indenture 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, Note Owners representing beneficial interests aggregating at least a majority of the Outstanding Amount of the Notes advise the Clearing Agency (which shall then notify the Indenture Trustee) in writing that the continuation of a book-entry system through the Clearing Agency is no longer in the best interests of the Note Owners, then the Indenture Trustee shall cause the Clearing Agency to notify all Note Owners, through the Clearing Agency, of the occurrence of any such event and of the availability of Definitive Notes to Note Owners requesting the same. Upon surrender to the Indenture Trustee of the typewritten Notes representing the Book-Entry Notes by the Clearing Agency, accompanied by registration instructions, the Issuer shall execute and the Indenture Trustee shall authenticate the Definitive Notes in accordance with the instructions of the Clearing Agency. None of the Issuer, the Note Registrar or the Indenture 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 Notes, the Indenture Trustee shall recognize the holders of the Definitive Notes as Noteholders. ARTICLE III Covenants SECTION 3.1 Payment to Noteholders. The Issuer shall duly and punctually pay the principal of, interest, if any, on and any Note Interest Carryover (but only to the extent provided in Sections 2.7(d) and 8.2(c)) with respect to the Notes in accordance with the terms of the Notes and this Indenture. Without limiting the foregoing, subject to Section 8.2(c), the Issuer shall cause to be distributed to Noteholders in accordance with the Administration Agreement that portion of the amounts on deposit in the Trust Accounts on a Distribution Date (other than any Eligible Investments deposited therein that will mature on the Business Day preceding 12 20 a subsequent Distribution Date) which the Noteholders are entitled to receive pursuant to the Administration Agreement. Amounts properly withheld under the Code by any Person from a payment to any Noteholder of interest (including any Note Interest Carryover) and/or principal shall be considered as having been paid by the Issuer to such Noteholder for all purposes of this Indenture. SECTION 3.2 Maintenance of Office or Agency. The Issuer shall maintain in the Borough of Brooklyn, The City of New York, an office or agency where Notes may be surrendered for registration of transfer or exchange, and where notices and demands to or upon the Issuer in respect of the Notes and this Indenture may be served. The Issuer hereby initially appoints the Indenture Trustee to serve as its agent for the foregoing purposes. The Issuer shall give prompt written notice to the Indenture Trustee of the location, and of any change in the location, of any such office or agency. If at any time the Issuer shall fail to maintain any such office or agency or shall fail to furnish the Indenture Trustee with the address thereof, such surrenders, notices and demands may be made or served at the Corporate Trust Office, and the Issuer hereby appoints the Indenture Trustee as its agent to receive all such surrenders, notices and demands. SECTION 3.3 Money for Payments To Be Held in Trust. As provided in Section 8.2(a) and (b), all payments of amounts due and payable with respect to any Notes that are to be made from amounts distributed from the Collection Account or any other Trust Account pursuant to Section 8.2(c) shall be made on behalf of the Issuer by the Indenture Trustee or by another Paying Agent, and no amounts so distributed from the Collection Account for payments of Notes shall be paid over to the Issuer except as provided in this Section. On or before the Business Day next preceding each Distribution Date and Redemption Date, the Issuer shall distribute or cause to be distributed to the Indenture Trustee (or any other Paying Agent) an aggregate sum sufficient to pay the amounts then becoming due under the Notes, such sum to be held in trust for the benefit of the Persons entitled thereto and (unless the Paying Agent is the Indenture Trustee) shall promptly notify the Indenture Trustee of its action or failure so to act. The Issuer shall cause each Paying Agent other than the Indenture Trustee to execute and deliver to the Indenture Trustee an instrument in which such Paying Agent shall agree with the Indenture Trustee (and if the Indenture Trustee acts 13 21 as Paying Agent, it hereby so agrees), subject to the provisions of this Section, that such Paying Agent will: (i) hold all sums held by it for the payment of amounts due with respect to the Notes in trust for the benefit of the Persons entitled thereto until such sums shall be paid to such Persons or otherwise disposed of as herein provided and pay such sums to such Persons as herein provided; (ii) give the Indenture Trustee notice of any default by the Issuer of which it has actual knowledge (or any other obligor upon the Notes) in the making of any payment required to be made with respect to the Notes; (iii) at any time during the continuance of any such default, upon the written request of the Indenture Trustee, forthwith pay to the Indenture Trustee all sums so held in trust by such Paying Agent; (iv) immediately resign as a Paying Agent and forthwith pay to the Indenture Trustee all sums held by it in trust for the payment of Notes if at any time it ceases to meet the standards required to be met by a Paying Agent at the time of its appointment; and (v) comply with all requirements of the Code with respect to the withholding from any payments made by it on any Notes of any applicable withholding taxes imposed thereon and with respect to any applicable reporting requirements in connection therewith. The Issuer may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, by Issuer Order direct any Paying Agent to pay to the Indenture Trustee all sums held in trust by such Paying Agent, such sums to be held by the Indenture Trustee upon the same trusts as those upon which the sums were held by such Paying Agent; and upon such payment by any Paying Agent to the Indenture Trustee, such Paying Agent shall be released from all further liability with respect to such money. Subject to applicable laws with respect to escheat of funds, any money held by the Indenture Trustee or any Paying Agent in trust for the payment of any amount due with respect to any Note and remaining unclaimed for two years after 14 22 such amount has become due and payable shall be discharged from such trust and be paid to the Issuer on Issuer Request or if the Issuer has been terminated to Seller; and the Noteholder thereof shall thereafter, as an unsecured general creditor, look only to the Issuer for payment thereof (but only to the extent of the amounts so paid to the Issuer), and all liability of the Indenture Trustee or such Paying Agent with respect to such trust money shall thereupon cease; provided, however, that the Indenture Trustee or such Paying Agent, before being required to make any such repayment, shall at the expense and direction of the Issuer cause to be published once, in a newspaper published in the English language, customarily published on each Business Day and of general circulation in The City of New York, notice that such money remains unclaimed and that, after a date specified therein, which shall not be less than 30 days from the date of such publication, any unclaimed balance of such money then remaining will be repaid to the Issuer. The Indenture Trustee shall also adopt and employ, at the expense of the Issuer, any other reasonable means of notification of such repayment (including mailing notice of such repayment to Noteholders whose Notes have been called but have not been surrendered for redemption or whose right to or interest in moneys due and payable but not claimed is determinable from the records of the Indenture Trustee or of any Paying Agent, at the last address of record for each such Noteholder). SECTION 3.4 Existence. The Issuer shall keep in full effect its existence, rights and franchises as a business trust under the laws of the State of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes, organized under the laws of any other State or of the United States of America, in which case the Issuer shall keep in full effect its existence, rights and franchises under the laws of such other jurisdiction) and shall obtain and preserve its qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of this Indenture, the Notes, the Collateral and each other instrument or agreement included in the Indenture Trust Estate. SECTION 3.5 Protection of Indenture Trust Estate. The Issuer will from time to time execute and deliver all such supplements and amendments hereto and all such financing statements, continuation statements, will take such other action necessary or advisable to: (i) maintain or preserve the lien and security interest (and the priority thereof) of this Indenture or carry out more effectively the purposes hereof; 15 23 (ii) perfect, publish notice of or protect the validity of any grant made or to be made by this Indenture; (iii) enforce any of the Collateral; or (iv) preserve and defend title to the Indenture Trust Estate and the rights of the Indenture Trustee and the Noteholders in such Indenture Trust Estate against the claims of all persons and parties. The Issuer hereby designates the Indenture Trustee its agent and attorney-in-fact to execute any financing statement, continuation statement or other instrument required to be executed pursuant to this Section. SECTION 3.6 Opinions as to Indenture Trust Estate. (a) On the Closing Date, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either stating that, in the opinion of such counsel, such action has been taken with respect to the recording and filing of this Indenture as is necessary to perfect and make effective the lien and security interest of this Indenture and reciting the details of such action, or stating that, in the opinion of such counsel, no such action is necessary to make such lien and security interest effective. (b) On or before December 31 in each calendar year, beginning in 1996, the Issuer shall furnish to the Indenture Trustee an Opinion of Counsel either stating that, in the opinion of such counsel, such action has been taken with respect to the recording, filing, re-recording and refiling of this Indenture and any indentures supplemental hereto as is necessary to maintain the lien and security interest created by this Indenture and relating the details of such action or stating that in the opinion of such counsel no such action is necessary to maintain such lien and security interest. Such Opinion of Counsel shall also describe the recording, filing, recording and refiling of this Indenture and any indentures supplemental hereto that will, in the opinion of such counsel, be required to maintain the lien and security interest of this Indenture until December 31 in the following calendar year. SECTION 3.7 Performance of Obligations; Servicing of Trust Student Loans. (a) The Issuer will not take any action and will use its best efforts not to permit any action to be taken by others that would release any Person from any of 16 24 such Person's material covenants or obligations under any instrument or agreement included in the Indenture Trust Estate or that would result in the amendment, hypothecation, subordination, termination or discharge of, or impair the validity or effectiveness of, any such instrument or agreement, except as expressly provided in this Indenture, any other Basic Document or such other instrument or agreement. (b) The Issuer may contract with other Persons to assist it in performing its duties under this Indenture, and any performance of such duties by a Person identified to the Indenture Trustee in an Officers' Certificate of the Issuer shall be deemed to be action taken by the Issuer; provided, however, the Issuer shall not be liable for any acts of Persons with whom the Issuer has contracted with reasonable care. Initially, the Issuer has contracted with the Servicer and the Administrator to assist the Issuer in performing its duties under this Indenture. The Issuer shall give written notice to the Indenture Trustee and each Rating Agency of any such contract with any other Person. (c) The Issuer shall punctually perform and observe all of its obligations and agreements contained in this Indenture, the other Basic Documents and the instruments and agreements included in the Indenture Trust Estate, including filing or causing to be filed all UCC financing statements and continuation statements prepared by the Issuer and required to be filed by the terms of this Indenture and the Administration Agreement in accordance with and within the time periods provided for herein and therein. Except as otherwise expressly provided therein, the Issuer shall not waive, amend, modify, supplement or terminate any Basic Document or any provision thereof without the consent of the Indenture Trustee or the Noteholders of at least a majority of the Outstanding Amount of the Notes. The Issuer shall give written notice to each Rating Agency of any such waiver, amendment, modification, supplement or termination. (d) If a Responsible Officer of the Issuer shall have knowledge of the occurrence of a Servicer Default or an Administrator Default under the Servicing Agreement or the Administration Agreement, respectively, the Issuer shall promptly notify the Indenture Trustee and the Rating Agencies thereof, and shall specify in such notice the action, if any, the Issuer is taking with respect to such default. If a Servicer Default shall arise from the failure of the Servicer to perform any of its duties or obligations under the Servicing Agreement, or an Administrator Default shall arise from the failure of the Administrator to perform any of its duties or obligations under the Administration Agreement, as the case may be, with respect to the Trust Student 17 25 Loans, the Issuer shall take all reasonable steps available to it to enforce its rights under the Basic Documents in respect of such failure. (e) As promptly as possible after the giving of notice of termination to the Servicer of the Servicer's rights and powers, pursuant to Section 5.1 of the Servicing Agreement, or to the Administrator of the Administrator's rights and powers, pursuant to Section 5.1 of the Administration Agreement, the Issuer shall appoint a successor servicer (the "Successor Servicer") or a successor administrator (the "Successor Administrator"), respectively, and such Successor Servicer or Successor Administrator, as the case may be, shall accept its appointment by a written assumption in a form acceptable to the Indenture Trustee. In the event that a Successor Servicer or Successor Administrator has not been appointed and accepted its appointment at the time when the Servicer or Administrator, as the case may be, ceases to act as Servicer or Administrator, respectively, the Indenture Trustee without further action shall automatically be appointed the Successor Servicer or Successor Administrator, as the case may be. The Indenture Trustee may resign as the Servicer or the Administrator by giving written notice of resignation to the Issuer and in such event will be released from such duties and obligations, such release not to be effective until the date a new servicer or a new administrator enters into an agreement with the Issuer as provided below; provided, however, that nothing herein shall require or permit the Indenture Trustee to act as Servicer, or otherwise service the Trust Student Loans, in violation of the Higher Education Act. Upon delivery of any such notice to the Issuer, the Issuer shall obtain a new servicer as the Successor Servicer under the Servicing Agreement or a new administrator as the Successor Administrator under the Administration Agreement, as the case may be. Any Successor Servicer or Successor Administrator, other than the Indenture Trustee, shall (i) be an established institution (A) that satisfies any requirements of the Higher Education Act applicable to servicers and (B) whose regular business includes the servicing or administration of student loans and (ii) enter into a servicing agreement or an administration agreement, respectively, with the Issuer having substantially the same provisions as the provisions of the Servicing Agreement and the Administration Agreement, as applicable. If within 30 days after the delivery of the notice referred to above, the Issuer shall not have obtained such a new servicer or new administrator, as the case may be, the Indenture Trustee may appoint, or may petition a court of competent jurisdiction to appoint, a Successor Servicer or Successor Administrator; provided, however, that such right to appoint or to petition for the appointment of any such successor shall in no event relieve the Indenture Trustee from any obligations otherwise imposed on it under the 18 26 Basic Documents until such successor has in fact assumed such appointment. In connection with any such appointment, the Indenture Trustee may make such arrangements for the compensation of such successor as it and such successor shall agree, subject to the limitations set forth below and in the Servicing Agreement or Administration Agreement, as applicable, and in accordance with Section 5.2 of the Servicing Agreement and Section 5.2 of the Administration Agreement, the Issuer shall enter into an agreement with such successor for the servicing or administration of the Trust Student Loans (such agreement to be in form and substance satisfactory to the Indenture Trustee). If the Indenture Trustee shall succeed as provided herein to the Servicer's duties as Servicer with respect to the Trust Student Loans, or the Administrator's duties with respect to the Issuer and the Trust Student Loans, as the case may be, it shall do so in its individual capacity and not in its capacity as Indenture Trustee and, accordingly, the provisions of Article VI hereof shall be inapplicable to the Indenture Trustee in its duties as the successor to the Servicer or the Administrator, as the case may be, and the servicing or administration of the Trust Student Loans. In case the Indenture Trustee shall become successor to the Servicer or the Administrator, the Indenture Trustee shall be entitled to appoint as Servicer or as Administrator, as the case may be, any one of its Affiliates, provided that such appointment shall not affect or alter in any way the liability of the Indenture Trustee as Successor Servicer or Successor Administrator, respectively, in accordance with the terms hereof. (f) Upon any termination of the Servicer's rights and powers pursuant to the Servicing Agreement, or any termination of the Administrator's rights and powers pursuant to the Administration Agreement, as the case may be, the Issuer shall promptly notify the Indenture Trustee and each Rating Agency. As soon as a Successor Servicer or a Successor Administrator is appointed, the Issuer shall notify the Indenture Trustee and each Rating Agency of such appointment, specifying in such notice the name and address of such Successor Servicer or such Successor Administrator. (g) Without derogating from the absolute nature of the assignment granted to the Indenture Trustee under this Indenture or the rights of the Indenture Trustee hereunder, the Issuer agrees that it will not, without the prior written consent of the Indenture Trustee or the Noteholders of at least a majority in Outstanding Amount of the Notes, amend, modify, waive, supplement, terminate or surrender, or agree to any amendment, modification, supplement, termination, waiver or surrender of, the terms 19 27 of any Collateral or the Basic Documents, except to the extent otherwise provided in the Basic Documents, or waive timely performance or observance by the Servicer, the Administrator, the Seller, the Student Loan Marketing Association, the Issuer or the Eligible Lender Trustee under the Basic Documents; provided, however, that no such amendment shall (i) increase or reduce in any manner the amount of, or accelerate or delay the timing of, distributions that are required to be made for the benefit of the Noteholders, or (ii) reduce the aforesaid percentage of the Notes which are required to consent to any such amendment, without the consent of the Noteholders of all the Outstanding Notes. If any such amendment, modification, supplement or waiver shall be so consented to by the Indenture Trustee or such Noteholders, the Issuer shall give written notice thereof to each Rating Agency and agrees, promptly following a request by the Indenture Trustee to do so, to execute and deliver, in its own name and at its own expense, such agreements, instruments, consents and other documents as the Indenture Trustee may deem necessary or appropriate in the circumstances. SECTION 3.8 Negative Covenants. So long as any Notes are Outstanding, the Issuer shall not: (i) except as expressly permitted by this Indenture or any other Basic Document, sell, transfer, exchange or otherwise dispose of any of the properties or assets of the Issuer, including those included in the Indenture Trust Estate, unless directed to do so by the Indenture Trustee; (ii) claim any credit on, or make any deduction from the principal or interest (including any Note Interest Carryover) payable in respect of, the Notes (other than amounts properly withheld from such payments under the Code or applicable state law) or assert any claim against any present or former Noteholder by reason of the payment of the taxes levied or assessed upon any part of the Indenture Trust Estate; or (iii) permit the validity or effectiveness of this Indenture to be impaired, or permit the lien of this Indenture to be amended, hypothecated, subordinated, terminated or discharged, or permit any Person to be released from any covenants or obligations with respect to the Notes under this Indenture except as may be expressly permitted hereby, (B) permit any lien, charge, excise, claim, security interest, mortgage or other encumbrance (other than the lien of this Indenture) to be created on or extend to or otherwise arise upon or burden the Indenture Trust Estate 20 28 or any part thereof or any interest therein or the proceeds thereof (other than tax liens and other liens that arise by operation of law, and other than as expressly permitted by the Basic Documents) or (C) permit the lien of this Indenture not to constitute a valid first priority (other than with respect to any such tax or other lien) security interest in the Indenture Trust Estate. SECTION 3.9 Annual Statement as to Compliance. The Issuer will deliver to the Indenture Trustee and each Rating Agency, within 120 days after the end of each fiscal year of the Issuer (commencing with the fiscal year 1997), an Officers' Certificate of the Issuer stating that: (i) a review of the activities of the Issuer during such year and of performance under this Indenture has been made under such Authorized Officers' supervision; and (ii) to the best of such Authorized Officers' knowledge, based on such review, the Issuer has complied with all conditions and covenants under this Indenture throughout such year, or, if there has been a default in the compliance of any such condition or covenant, specifying each such default known to such Authorized Officers and the nature and status thereof. SECTION 3.10 Issuer May Consolidate, etc., Only on Certain Terms. (a) The Issuer shall not consolidate or merge with or into any other Person, unless: (i) the Person (if other than the Issuer) formed by or surviving such consolidation or merger shall be a Person organized and existing under the laws of the United States of America or any State and shall expressly assume, by an indenture supplemental hereto, executed and delivered to the Indenture Trustee, in form satisfactory to the Indenture Trustee, the due and punctual payment of the principal of, interest on and any Note Interest Carryover, if any, with respect to all Notes and the performance or observance of every agreement and covenant of this Indenture on the part of the Issuer to be performed or observed, all as provided herein; (ii) immediately after giving effect to such transaction, no Default shall have occurred and be continuing; 21 29 (iii) the Rating Agency Condition shall have been satisfied with respect to such transaction; (iv) the Issuer shall have received an Opinion of Counsel (and shall have delivered copies thereof to the Indenture Trustee) to the effect that such transaction will not have any material adverse Federal or Delaware state tax consequence to the Issuer, any Noteholder or any Certificateholder; (v) any action as is necessary to maintain the lien and security interest created by this Indenture shall have been taken; and (vi) the Issuer shall have delivered to the Indenture Trustee an Officers' Certificate of the Issuer and an Opinion of Counsel each stating that such consolidation or merger and such supplemental indenture comply with this Article III and that all conditions precedent herein provided for relating to such transaction have been complied with (including any filing required by the Exchange Act). (b) The Issuer shall not convey or transfer all or substantially all its properties or assets, including those included in the Indenture Trust Estate, to any Person, unless: (i) the Person that acquires by conveyance or transfer the properties and assets of the Issuer the conveyance or transfer of which is hereby restricted shall (A) be a United States citizen or a Person organized and existing under the laws of the United States of America or any State, (B) expressly assume, by an indenture supplemental hereto, executed and delivered to the Indenture Trustee, in form satisfactory to the Indenture Trustee, the due and punctual payment of the principal of, interest on and Note Interest Carryover, if any, with respect to all Notes and the performance or observance of every agreement and covenant of this Indenture on the part of the Issuer to be performed or observed, all as provided herein, (C) expressly agree by means of such supplemental indenture that all right, title and interest so conveyed or transferred shall be subject and subordinate to the rights of Noteholders, (D) unless otherwise provided in such supplemental indenture, expressly agree to indemnify, defend and hold harmless the Issuer against and from any loss, liability or expense arising under or related to this Indenture and the Notes and (E) expressly agree by means of such supplemental indenture that such Person (or if a group of Persons, then one specified Person) shall make all filings with the Com- 22 30 mission (and any other appropriate Person) required by the Exchange Act in connection with the Notes; (ii) immediately after giving effect to such transaction, no Default shall have occurred and be continuing; (iii) the Rating Agency Condition shall have been satisfied with respect to such transaction; (iv) the Issuer shall have received an Opinion of Counsel (and shall have delivered copies thereof to the Indenture Trustee) to the effect that such transaction will not have any material adverse Federal or Delaware state tax consequence to the Issuer, any Noteholder or any Certificateholder; (v) any action as is necessary to maintain the lien and security interest created by this Indenture shall have been taken; and (vi) the Issuer shall have delivered to the Indenture Trustee an Officers' Certificate of the Issuer and an Opinion of Counsel each stating that such conveyance or transfer and such supplemental indenture comply with this Article III and that all conditions precedent herein provided for relating to such transaction have been complied with (including any filing required by the Exchange Act). SECTION 3.11 Successor or Transferee. Upon any consolidation or merger of the Issuer in accordance with Section 3.10(a), the Person formed by or surviving such consolidation or merger (if other than the Issuer) shall succeed to, and be substituted for, and may exercise every right and power of, the Issuer under this Indenture with the same effect as if such Person had been named as the Issuer herein. (b) Upon a conveyance or transfer of all the assets and properties of the Issuer pursuant to Section 3.10(b), SLM Student Loan Trust 1996-4 will be released from every covenant and agreement of this Indenture to be observed or performed on the part of the Issuer with respect to the Notes immediately upon the delivery by the Issuer of written notice to the Indenture Trustee stating that SLM Student Loan Trust 1996-4 is to be so released. 23 31 SECTION 3.12 No Other Business. The Issuer shall not engage in any business other than financing, purchasing, owning, selling and managing the Trust Student Loans in the manner contemplated by this Indenture and the other Basic Documents and activities incidental thereto. SECTION 3.13 No Borrowing. The Issuer shall not issue, incur, assume, guarantee or otherwise become liable, directly or indirectly, for any indebtedness except for the Notes. SECTION 3.14 Obligations of Servicer and Administrator. The Issuer shall cause the Servicer to comply with Sections 3.1, 3.2 and 3.3 of the Administration Agreement and Section 3.7 of the Servicing Agreement and the Administrator to comply with Sections 2.9, 3.1, 3.2 and 3.3 of the Administration Agreement. SECTION 3.15 Guarantees, Loans, Advances and Other Liabilities. Except as contemplated by this Indenture and the other Basic Documents, the Issuer shall not make any loan or advance or credit to, or guarantee (directly or indirectly or by an instrument having the effect of assuring another's payment or performance on any obligation or capability of so doing or otherwise), endorse or otherwise become contingently liable, directly or indirectly, in connection with the obligations, stocks or dividends of, or own, purchase, repurchase or acquire (or agree contingently to do so) any stock, obligations, assets or securities of, or any other interest in, or make any capital contribution to, any other Person. SECTION 3.16 Capital Expenditures. The Issuer shall not make any expenditure (by long-term or operating lease or otherwise) for capital assets (either realty or personalty). SECTION 3.17 Restricted Payments. The Issuer shall not, directly or indirectly, (i) pay any dividend or make any distribution (by reduction of capital or otherwise), whether in cash, property, securities or a combination thereof, to the Eligible Lender Trustee or any owner of a beneficial interest in the Issuer or otherwise with respect to any ownership or equity interest or security in or of the Issuer or to the Servicer or the Administrator, (ii) redeem, purchase, retire or otherwise acquire for value any such ownership or equity interest or security or (iii) set aside or otherwise segregate any amounts for any such purpose; provided, however, that the Issuer may make, or cause to be made, distributions to the Servicer, the Eligible Lender Trustee, 24 32 the Indenture Trustee, the Certificateholders, the Noteholders, the Administrator and the Seller as contemplated by, and to the extent funds are available for such purpose under, this Indenture and the other Basic Documents. The Issuer will not, directly or indirectly, make payments to or distributions from the Collection Account except in accordance with this Indenture and the other Basic Documents. SECTION 3.18 Notice of Events of Default. The Issuer shall give the Indenture Trustee and the Rating Agencies prompt written notice of each Event of Default hereunder and each default on the part of the Seller of its obligations under the Sale Agreement, the Student Loan Marketing Association of its obligations under the Purchase Agreement, the Servicer of its obligations under the Servicing Agreement, or the Administrator of its obligations under the Administration Agreement. In addition, the Issuer shall deliver to the Indenture Trustee and each Rating Agency, within five days after the occurrence thereof, written notice in the form of an Officers' Certificate of the Issuer of any event which with the giving of notice and the lapse of time would become an Event of Default under Section 5.1(iii), its status and what action the Issuer is taking or proposes to take with respect thereto. SECTION 3.19 Further Instruments and Acts. Upon request of the Indenture Trustee, the Issuer will execute and deliver such further instruments and do such further acts as may be reasonably necessary or proper to carry out more effectively the purpose of this Indenture. ARTICLE IV Satisfaction and Discharge SECTION 4.1 Satisfaction and Discharge of Indenture. This Indenture shall cease to be of further effect with respect to the Notes except as to (i) rights of registration of transfer and exchange, (ii) substitution of mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments of principal thereof and interest (including any Note Interest Carryover) thereon, (iv) Sections 3.3, 3.4, 3.5, 3.8, 3.10, 3.12 and 3.13, (v) the rights, obligations and immunities of the Indenture Trustee hereunder (including, without limitation, the rights of the Indenture Trustee under Section 6.7 and the obligations of the Indenture Trustee under Section 4.2) and (vi) the rights of Noteholders as beneficiaries hereof with respect to the 25 33 property so deposited with the Indenture Trustee payable to all or any of them, and the Indenture Trustee, on demand of and at the expense of the Issuer, shall execute proper instruments acknowledging satisfaction and discharge of this Indenture with respect to the Notes, when: (a) either (1) all Notes theretofore authenticated and delivered (other than (i) Notes that have been destroyed, lost or stolen and that have been replaced or paid as provided in Section 2.5 and (ii) Notes for whose payment money has theretofore been deposited in trust or segregated and held in trust by the Issuer and thereafter repaid to the Issuer or discharged from such trust, as provided in Section 3.3) have been delivered to the Indenture Trustee for cancellation; or (2) all Notes not theretofore delivered to the Indenture Trustee for cancellation (i) have become due and payable, (ii) will become due and payable at their respective Note Final Maturity Date, within one year, or (iii) are to be called for redemption within one year under arrangements satisfactory to the Indenture Trustee for the giving of notice of redemption by the Indenture Trustee in the name, and at the expense, of the Issuer, and the Issuer, in the case of (i), (ii) or (iii) above, has irrevocably deposited or caused to be irrevocably deposited with the Indenture Trustee cash or direct obligations of or obligations guaranteed by the United States of America (which will mature prior to the date such amounts are payable), in trust for such purpose, in an amount sufficient to pay and discharge the entire indebtedness on such Notes not theretofore delivered to the Indenture Trustee for cancellation when due to the Note Final Maturity Date; (b) the Issuer has paid or caused to be paid all other sums payable hereunder by the Issuer; and 26 34 (c) the Issuer has delivered to the Indenture Trustee an Officers' Certificate of the Issuer, an Opinion of Counsel and (if required by the TIA or the Indenture Trustee) an Independent Certificate from a firm of certified public accountants, each meeting the applicable requirements of Section 11.1(a) and, subject to Section 11.2, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with. SECTION 4.2 Application of Trust Money. All moneys deposited with the Indenture Trustee pursuant to Section 4.1 hereof shall be held in trust and applied by it, in accordance with the provisions of the Notes and this Indenture, to the payment, either directly or through any Paying Agent, as the Indenture Trustee may determine, to the Noteholders of the particular Notes for the payment or redemption of which such moneys have been deposited with the Indenture Trustee, of all sums due and to become due thereon for principal and interest (including any Note Interest Carryover); but such moneys need not be segregated from other funds except to the extent required herein or in the Administration Agreement or required by law. SECTION 4.3 Repayment of Moneys Held by Paying Agent. In connection with the satisfaction and discharge of this Indenture with respect to the Notes, all moneys then held by any Paying Agent other than the Indenture Trustee under the provisions of this Indenture with respect to such Notes shall, upon demand of the Issuer, be paid to the Indenture Trustee to be held and applied according to Section 3.3 and thereupon such Paying Agent shall be released from all further liability with respect to such moneys. SECTION 4.4 Auction of Trust Student Loans. Any Trust Student Loans remaining in the Trust as of the end of the Collection Period immediately preceding the earliest Distribution Date on which the Pool Balance is equal to 10% or less of the initial Pool Balance three business days prior to such Distribution Date (the "Trust Auction Date") shall be offered for sale by the Indenture Trustee unless the Seller has exercised its option to purchase the Trust Estate as described in Section 6.1A of the Administration Agreement with respect to such Distribution Date. The Seller will be deemed to have waived such option if it fails to notify the Eligible Lender Trustee and the Indenture Trustee of its exercise thereof in writing prior to the Indenture Trustee's acceptance of a bid to purchase such Trust Student Loans; provided, however, that there shall be no such offer for sale if the Indenture Trustee fails to provide notice to the Seller in accordance with this Section 4.4. The Indenture 27 35 Trustee shall provide written notice to the Seller of any such offer for sale at least 5 business days in advance of the Trust Auction Date. The Indenture Trustee shall permit the Seller or any of its Affiliates to offer bids only if the Pool Balance as of the applicable Trust Auction Date is equal to 10% or less of the Initial Pool Balance. If at least two bids are received, the Indenture Trustee shall solicit and resolicit new bids from all participating bidders until only one bid remains or the remaining bidders decline to resubmit bids. The Indenture Trustee shall accept the highest of such remaining bids if it is equal to or in excess of both the Minimum Purchase Amount and the fair market value of such Trust Student Loans as of the end of the Collection Period immediately preceding the Trust Auction Date. If at least two bids are not received or the highest bid after the resolicitation process is completed is not equal to or in excess of the higher of the Minimum Purchase Amount and the fair market value of the Trust Student Loans, the Indenture Trustee shall not consummate such sale. The Indenture Trustee nay consult, and, at the direction of the Seller, shall consult, with a financial advisor, including and underwriter of the Notes or the Administrator, to determine if the fair market value of the trust Student Loans has been offered. The proceeds of any such sale will be applied in the order of priority set forth in Section 5.4 (b). If the sale is not consummated in accordance with the foregoing, the Indenture Trustee may, but shall not be under any obligation to, solicit bids for sale of the Trust Student Loans with respect to future Distribution Dates upon terms similar to those described above, including the Seller's waiver of its option to purchase the Trust Estate in accordance with Section 6.1A of the Administration Agreement with respect to each such future Distribution Date. ARTICLE V Remedies SECTION 5.1 Events of Default. "Event of Default," wherever used herein, means any one of the following events (whatever the reason for such Event of Default and whether it shall be voluntary or involuntary or be effected by operation of law or pursuant to any judgment, decree or order of any court or any order, rule or regulation of any administrative or governmental body): (i) default in the payment of any interest (including, subject to the limitations of Sections 2.7(d) and 8.2(c), any Note Interest Carryover) on any Note 28 36 when the same becomes due and payable, and such default shall continue for a period of five days; or (ii) default in the payment of the principal of any Note when the same becomes due and payable on the related Note Final Maturity Date; or (iii) default in the observance or performance of any covenant or agreement of the Issuer made in this Indenture (other than a covenant or agreement, a default in the observance or performance of which is elsewhere in this Section specifically dealt with), or any representation or warranty of the Issuer made in this Indenture or in any certificate or other writing having been incorrect in any material respect as of the time when made, such default or breach having a material adverse effect on the holders of the Notes, and such default or breach shall continue or not be cured, or the circumstance or condition in respect of which such misrepresentation or warranty was incorrect shall not have been eliminated or otherwise cured, for a period of 30 days after there shall have been given, by registered or certified mail, to the Issuer by the Indenture Trustee or to the Issuer and the Indenture Trustee by the Noteholders of at least 25% of the Outstanding Amount of the Notes, a written notice specifying such default or incorrect representation or warranty and requiring it to be remedied and stating that such notice is a notice of Default hereunder; or (iv) the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of the Issuer or any substantial part of the Indenture Trust Estate in an involuntary case under any applicable Federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Issuer or for any substantial part of the Indenture Trust Estate, or ordering the winding-up or liquidation of the Issuer's affairs, and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (v) the commencement by the Issuer of a voluntary case under any applicable Federal or state bankruptcy, insolvency or other similar law now or hereafter in effect, or the consent by the Issuer to the entry of an order for relief in an involuntary case under any such law, or the consent by the Issuer to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official of the Issuer or for any substantial part of the Indenture Trust Estate, or the making by the Issuer of any general assignment for the benefit of creditors, or 29 37 the failure by the Issuer generally to pay its debts as such debts become due, or the taking of action by the Issuer in furtherance of any of the foregoing. SECTION 5.2 Acceleration of Maturity; Rescission and Annulment. If an Event of Default should occur and be continuing, then and in every such case the Indenture Trustee or the Noteholders of Notes representing not less than a majority of the Outstanding Amount of the Notes may declare all the Notes to be immediately due and payable, by a notice in writing to the Issuer (and to the Indenture Trustee if given by Noteholders), and upon any such declaration the unpaid principal amount of such Notes, together with accrued and unpaid interest thereon through the date of acceleration, shall become immediately due and payable. At any time after such declaration of acceleration of maturity has been made and before a judgment or decree for payment of the money due has been obtained by the Indenture Trustee as hereinafter in this Article V provided, the Noteholders of Notes representing a majority of the Outstanding Amount of the Notes, by written notice to the Issuer and the Indenture Trustee, may rescind and annul such declaration and its consequences if: (i) the Issuer has paid or deposited with the Indenture Trustee a sum sufficient to pay: (a) all payments of principal of and interest on all Notes and all other amounts that would then be due hereunder or upon such Notes if the Event of Default giving rise to such acceleration had not occurred; and (b) all sums paid or advanced by the Indenture Trustee hereunder and the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel; and (ii) all Events of Default, other than the nonpayment of the principal of the Notes that has become due solely by such acceleration, have been cured or waived as provided in Section 5.12. No such rescission shall affect any subsequent default or impair any right consequent thereto. 30 38 SECTION 5.3 Collection of Indebtedness and Suits for Enforcement by Indenture Trustee. The Issuer covenants that if (i) default is made in the payment of any interest (including, subject to the limitations of Sections 2.7(d) and 8.2(c), any Note Interest Carryover) on any Note when the same becomes due andpayable, and such default continues for a period of five days, or (ii) default is made in the payment of the principal of any Note when the same becomes due and payable at the related Note Final Maturity Date, the Issuer shall, upon demand of the Indenture Trustee, pay to it, for the benefit of the Noteholders, the whole amount then due and payable on such Notes for principal and interest (and any Note Interest Carryover), with interest upon the overdue principal, and, to the extent payment at such rate of interest shall be legally enforceable, upon overdue installments of interest (and any Note Interest Carryover), at the rate specified in Section 2.7 and in addition thereto such further amount as shall be sufficient to cover the costs and expenses of collection, including the reasonable compensation, expenses, disbursements and advances of the Indenture Trustee and its agents and counsel. (a) In case the Issuer shall fail forthwith to pay such amounts upon such demand, the Indenture Trustee, in its own name and as trustee of an express trust, may institute a Proceeding for the collection of the sums so due and unpaid, and may prosecute such Proceeding to judgment or final decree, and may enforce the same against the Issuer or other obligor upon such Notes and collect in the manner provided by law out of the property of the Issuer or other obligor upon such Notes, wherever situated, the moneys adjudged or decreed to be payable. (b) If an Event of Default occurs and is continuing, the Indenture Trustee may, as more particularly provided in Section 5.4, in its discretion, proceed to protect and enforce its rights and the rights of the Noteholders, by such appropriate Proceedings as the Indenture Trustee shall deem most effective to protect and enforce any such rights, whether for the specific enforcement of any covenant or agreement in this Indenture or in aid of the exercise of any power granted herein, or to enforce any other proper remedy or legal or equitable right vested in the Indenture Trustee by this Indenture or by law. (c) In case there shall be pending, relative to the Issuer or any other obligor upon the Notes or any Person having or claiming an ownership interest in the Indenture Trust Estate, Proceedings under Title 11 of the United States Code or any other applicable Federal or state bankruptcy, insolvency or other similar law, or in case 31 39 a receiver, assignee or trustee in bankruptcy or reorganization, liquidator, sequestrator or similar official shall have been appointed for or taken possession of the Issuer or its property or such other obligor or Person, or in case of any other, comparable judicial Proceedings relative to the Issuer or other obligor upon the Notes, or to the creditors or property of the Issuer or such other obligor, the Indenture Trustee, irrespective of whether the principal of any Notes shall then be due and payable, as therein expressed or by declaration or otherwise and irrespective of whether the Indenture Trustee shall have made any demand pursuant to the provisions of this Section, shall be entitled and empowered, by intervention in such proceedings or otherwise: (i) to file and prove a claim or claims for the whole amount of principal and interest (including any Note Interest Carryover) owing and unpaid in respect of the Notes and to file such other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee (including any claim for reasonable compensation to the Indenture Trustee and each predecessor Indenture Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee, except as a result of negligence or bad faith) and of the Noteholders allowed in such Proceedings; (ii) unless prohibited by applicable law and regulations, to vote on behalf of the Noteholders in any election of a trustee, a standby trustee or Person performing similar functions in any such Proceedings; (iii) to collect and receive any moneys or other property payable or deliverable on any such claims and to distribute all amounts received with respect to the claims of the Noteholders and of the Indenture Trustee on their behalf; and (iv) to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Indenture Trustee or the Noteholders allowed in any judicial proceedings relative to the Issuer, its creditors and its property; and any trustee, receiver, liquidator, custodian or other similar official in any such Proceeding is hereby authorized by each of such Noteholders to make payments to the Indenture Trustee, and, in the event that the Indenture Trustee shall consent to the making of payments directly to such Noteholders, to pay to the 32 40 Indenture Trustee such amounts as shall be sufficient to cover reasonable compensation to the Indenture Trustee, each predecessor Indenture Trustee and their respective agents, attorneys and counsel, and all other expenses and liabilities incurred, and all advances made, by the Indenture Trustee and each predecessor Indenture Trustee except as a result of negligence or bad faith. (d) Nothing herein contained shall be deemed to authorize the Indenture Trustee to authorize or consent to or vote for or accept or adopt on behalf of any Noteholder any plan of reorganization, arrangement, adjustment or composition affecting the Notes or the rights of any Noteholder thereof or to authorize the Indenture Trustee to vote in respect of the claim of any Noteholder in any such proceeding except, as aforesaid, to vote for the election of a trustee in bankruptcy or similar Person. (e) All rights of action and of asserting claims under this Indenture, or under any of the Notes, may be enforced by the Indenture Trustee without the possession of any of the Notes or the production thereof in any trial or other Proceedings relative thereto, and any such action or Proceedings instituted by the Indenture Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment, subject to the payment of the expenses, disbursements and compensation of the Indenture Trustee, each predecessor Indenture Trustee and their respective agents and attorneys, shall be for the ratable benefit of the Noteholders. (f) In any Proceedings brought by the Indenture Trustee (and also any Proceedings involving the interpretation of any provision of this Indenture to which the Indenture Trustee shall be a party), the Indenture Trustee shall be held to represent all the Noteholders, and it shall not be necessary to make any Noteholder a party to any such Proceedings. SECTION 5.4 Remedies; Priorities. If an Event of Default shall have occurred and be continuing, the Indenture Trustee may do one or more of the following (subject to Section 5.5): (a) (i) institute Proceedings in its own name and as trustee of an express trust for the collection of all amounts then payable on the Notes or under this Indenture with respect thereto, whether by declaration or otherwise, enforce any 33 41 judgment obtained, and collect from the Issuer and any other obligor upon such Notes moneys adjudged due; (ii) institute Proceedings from time to time for the complete or partial foreclosure of this Indenture, with respect to the Indenture Trust Estate; (iii) exercise any remedies of a secured party under the UCC with respect to the Trust Estate and take any other appropriate action to protect and enforce the rights and remedies of the Indenture Trustee and the Noteholders; (iv) sell the Indenture Trust Estate or any portion thereof or rights or interest therein, at one or more public or private sales called and conducted in any manner permitted by law; and/or (v) elect to have the Eligible Lender Trustee maintain ownership of the Trust Student Loans and continue to apply collections with respect to the Trust Student Loans as if there had been no declaration of acceleration. provided, however, that the Indenture Trustee may not sell or otherwise liquidate the Indenture Trust Estate following an Event of Default, other than an Event of Default described in Section 5.1(i) or (ii), unless (A) the Noteholders of 100% of the Outstanding Amount of the Notes consent thereto, (B) the proceeds of such sale or liquidation distributable to the Noteholders are sufficient to discharge in full all amounts then due and unpaid upon such Notes for principal and interest or (C) the Indenture Trustee determines that the Indenture Trust Estate will not continue to provide sufficient funds for the payment of principal of and interest on the Notes as they would have become due if the Notes had not been declared due and payable, and the Indenture Trustee obtains the consent of Noteholders of 66-2/3% of the Outstanding Amount of the Notes. In determining such sufficiency or insufficiency with respect to clause (B) and (C), the Indenture Trustee may, but need not, obtain and rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the Indenture Trust Estate for such purpose. (b) If the Indenture Trustee collects any money or property pursuant to this Article V, it shall pay out the money or property in the following order: 34 42 FIRST: to the Indenture Trustee for amounts due under Section 6.7; SECOND: to the Servicer for due and unpaid Primary Servicing Fees; THIRD: to Noteholders for amounts due and unpaid on the Notes for interest other than any Note Interest Carryover, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for such interest; FOURTH: to Noteholders for amounts due and unpaid on the Notes for principal, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes for principal; FIFTH: to the Issuer for distribution to the Certificateholders in respect of any unpaid Certificate Balance and unpaid return on the Certificates other than any Certificate Return Carryover; SIXTH: to the Servicer, for any unpaid Carryover Servicing Fees; SEVENTH: to Noteholders for any unpaid Note Interest Carryover, ratably, without preference or priority of any kind, according to the amount of such Note Interest Carryover attributable to each Note; EIGHTH: to the Issuer for distribution to the Certificateholders of any unpaid Certificate Return Carryover; and NINTH: to the Issuer, for distribution in accordance with the terms of the Administration Agreement and the Trust Agreement. The Indenture Trustee may fix a record date and payment date for any payment to Noteholders pursuant to this Section. At least 15 days before such record date, the Indenture Trustee shall mail to each Noteholder and the Issuer a notice that states the record date, the payment date and the amount to be paid. SECTION 5.5 Optional Preservation of the Trust Student Loans. If the Notes have been declared to be due and payable under Section 5.2 following an Event of Default and such declaration and its consequences have not been rescinded and annulled, the Indenture Trustee may, but need not, elect to maintain possession of 35 43 the Indenture Trust Estate. It is the desire of the parties hereto and the Noteholders that there be at all times sufficient funds for the payment of principal of and interest (including any Note Interest Carryover) on the Notes, and the Indenture Trustee shall take such desire into account when determining whether or not to maintain possession of the Indenture Trust Estate. In determining whether to maintain possession of the Indenture Trust Estate, the Indenture Trustee may, but need not, obtain and rely upon an opinion of an Independent investment banking or accounting firm of national reputation as to the feasibility of such proposed action and as to the sufficiency of the Indenture Trust Estate for such purpose. SECTION 5.6 Limitation of Suits. No Noteholder shall have any right to institute any Proceeding, judicial or otherwise, with respect to this Indenture, or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless: (i) such Noteholder has previously given written notice to the Indenture Trustee of a continuing Event of Default; (ii) the Noteholders of not less than 25% of the Outstanding Amount of the Notes have made written request to the Indenture Trustee to institute such Proceeding in respect of such Event of Default in its own name as Indenture Trustee hereunder; (iii) such Noteholder or Noteholders have offered to the Indenture Trustee reasonable indemnity against the costs, expenses and liabilities to be incurred in complying with such request; (iv) the Indenture Trustee for 60 days after its receipt of such notice, request and offer of indemnity has failed to institute such Proceeding; and (v) no direction inconsistent with such written request has been given to the Indenture Trustee during such 60-day period by the Noteholders of a majority of the Outstanding Amount of the Notes; it being understood and intended that no one or more Noteholders shall have any right in any manner whatever by virtue of, or by availing of, any provision of this indenture to affect, disturb or prejudice the rights of any other Noteholders or to obtain or to 36 44 seek to obtain priority or preference over any other Noteholders or to enforce any right under this Indenture, except in the manner herein provided. In the event the Indenture Trustee shall receive conflicting or inconsistent requests and indemnity from two or more groups of Noteholders, each representing less than a majority of the Outstanding Amount of the Notes, the Indenture Trustee in its sole discretion may determine what action, if any, shall be taken, notwithstanding any other provisions of this Indenture. SECTION 5.7 Unconditional Rights of Noteholders To Receive Principal and Interest. Notwithstanding any other provisions in this Indenture, any Noteholder shall have the right, which is absolute and unconditional, to receive payment of the principal of and interest on such Note on or after the respective due dates thereof expressed in such Note or in this Indenture (or, in the case of redemption, on or after the Redemption Date) and to institute suit for the enforcement of any such payment, and such right shall not be impaired without the consent of such Noteholder. SECTION 5.8 Restoration of Rights and Remedies. If the Indenture Trustee or any Noteholder has instituted any Proceeding to enforce any right or remedy under this Indenture and such Proceeding has been discontinued or abandoned for any reason or has been determined adversely to the Indenture Trustee or to such Noteholder, then and in every such case the Issuer, the Indenture Trustee and the Noteholders shall, subject to any determination in such Proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Indenture Trustee and the Noteholders shall continue as though no such Proceeding had been instituted. SECTION 5.9 Rights and Remedies Cumulative. No right or remedy herein conferred upon or reserved to the Indenture Trustee or to the Noteholders is intended to be exclusive of any other right or remedy, and every right and remedy shall, to the extent permitted by law, be cumulative and in addition to every other right and remedy given hereunder or now or hereafter existing at law or in equity or otherwise. The assertion or employment of any right or remedy hereunder, or otherwise, shall not prevent the concurrent assertion or employment of any other appropriate right or remedy. 37 45 SECTION 5.10 Delay or Omission Not a Waiver. No delay or omission of the Indenture Trustee or any Noteholder to exercise any right or remedy accruing upon any Default shall impair any such right or remedy or constitute a waiver of any such Default or an acquiescence therein. Every right and remedy given by this Article V or by law to the Indenture Trustee or to the Noteholders may be exercised from time to time, and as often as may be deemed expedient, by the Indenture Trustee or by the Noteholders, as the case may be. SECTION 5.11 Control by Noteholders. The Noteholders of a majority of the Outstanding Amount of the Notes shall have the right to direct the time, method and place of conducting any Proceeding for any remedy available to the Indenture Trustee with respect to the Notes or exercising any trust or power conferred on the Indenture Trustee; provided that (i) such direction shall not be in conflict with any rule of law or with this Indenture; (ii) subject to the express terms of Section 5.4, any direction to the Indenture Trustee to sell or liquidate the Indenture Trust Estate shall be by the Noteholders of not less than 100% of the Outstanding Amount of the Notes; (iii) if the conditions set forth in Section 5.5 have been satisfied and the Indenture Trustee elects to retain the Indenture Trust Estate pursuant to such Section, then any direction to the Indenture Trustee by Noteholders of less than 100% of the Outstanding Amount of the Notes to sell or liquidate the Indenture Trust Estate shall be of no force and effect; and (iv) the Indenture Trustee may take any other action deemed proper by the Indenture Trustee that is not inconsistent with such direction; provided, however, that, subject to Section 6.1, the Indenture Trustee need not take any action that it determines might involve it in liability or might materially adversely affect the rights of any Noteholders not consenting to such action. SECTION 5.12 Waiver of Past Defaults. Prior to the time a judgment or decree for payment of money due has been obtained as described in Section 5.2, the Noteholders of not less than a majority of the Outstanding Amount of the Notes may 38 46 waive any past Default and its consequences except a Default (a) in payment when due of principal of or interest (including, subject to the limitations of Sections 2.7(d) and 8.2(c), any Note Interest Carryover) on any of the Notes or (b) in respect of a covenant or provision hereof which cannot be modified or amended without the consent of each Noteholder. In the case of any such waiver, the Issuer, the Indenture Trustee and the Noteholders shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereto. Upon any such waiver, such Default shall cease to exist and be deemed to have been cured and not to have occurred for every purpose of this Indenture; but no such waiver shall extend to any subsequent or other Default or impair any right consequent thereto. SECTION 5.13 Undertaking for Costs. All parties to this Indenture agree, and each Noteholder by such Noteholder's acceptance of any Note shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Indenture Trustee for any action taken, suffered or omitted by it as Indenture Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to (a) any suit instituted by the Indenture Trustee, (b) any suit instituted by any Noteholder, or group of Noteholders, in each case holding in the aggregate more than 10% of the Outstanding Amount of the Notes or (c) any suit Instituted by any Noteholder for the enforcement of the payment of principal of or interest (including any Note Interest Carryover) on any Note on or after the respective due dates expressed in such Note and in this Indenture (or, in the case of redemption, on or after the Redemption Date). SECTION 5.14 Waiver of Stay or Extension Laws. The Issuer covenants (to the extent that it may lawfully do so) that it will not at any time insist upon, or plead or in any manner whatsoever, claim or take the benefit or advantage of, any stay or extension law wherever enacted, now or at any time hereafter in force, that may affect the covenants or the performance of this Indenture; and the Issuer (to the extent that it may lawfully do so) hereby expressly waives all benefit or advantage of 39 47 any such law, and covenants that it will not hinder, delay or impede the execution of any power herein granted to the Indenture Trustee, but will suffer and permit the execution of every such power as though no such law had been enacted. SECTION 5.15 Action on Notes. The Indenture Trustee's right to seek and recover judgment on the Notes or under this Indenture shall not be affected by the seeking, obtaining or application of any other relief under or with respect to this Indenture. Neither the lien of this Indenture nor any rights or remedies of the Indenture Trustee or the Noteholders shall be impaired by the recovery of any judgment by the Indenture Trustee against the Issuer or by the levy of any execution under such judgment upon any portion of the Indenture Trust Estate or upon any of the assets of the Issuer. Any money or property collected by the Indenture Trustee shall be applied in accordance with Section 5.4(b). SECTION 5.16 Performance and Enforcement of Certain Obligations. (a) Promptly following a request from the Indenture Trustee to do so and at the Administrator's expense, the Issuer shall take all such lawful action as the Indenture Trustee may request to compel or secure the performance and observance by the Seller, the Student Loan Marketing Association, the Administrator and the Servicer, as applicable, of each of their obligations to the Issuer, whether directly or by assignment, under or in connection with the Sale Agreement, the Purchase Agreement, the Administration Agreement and the Servicing Agreement, respectively, in accordance with the terms thereof, and to exercise any and all rights, remedies, powers and privileges lawfully available to the Issuer under or in connection with the Sale Agreement, the Purchase Agreement, the Administration Agreement and the Servicing Agreement, as the case may be, to the extent and in the manner directed by the Indenture Trustee, including the transmission of notices of default on the part of the Seller, the Student Loan Marketing Association, the Administrator or the Servicer thereunder and the institution of legal or administrative actions or proceedings to compel or secure performance by the Seller, the Student Loan Marketing Association, the Administrator or the Servicer of each of their obligations under the Sale Agreement, the Purchase Agreement, the Administration Agreement and the Servicing Agreement, respectively. (b) If an Event of Default has occurred and is continuing, the Indenture Trustee may, and at the written direction of the Noteholders of 66-2/3% of the Outstanding Amount of the Notes shall, exercise all rights, remedies, powers, privileges and claims of the Issuer against the Seller, the Student Loan Marketing 40 48 Association, the Administrator or the Servicer under or in connection with the Sale Agreement, the Purchase Agreement, the Administration Agreement and the Servicing Agreement, respectively, including the right or power to take any action to compel or secure performance or observance by the Seller, the Student Loan Marketing Association, the Administrator or the Servicer of each of their obligations to the Issuer thereunder, whether directly or by assignment, and to give any consent, request, notice, direction, approval, extension or waiver under the Sale Agreement, the Purchase Agreement, the Administration Agreement and the Servicing Agreement, respectively, and any right of the Issuer to take such action shall be suspended. ARTICLE VI The Indenture Trustee SECTION 6.1 Duties of Indenture Trustee. (a) If an Event of Default has occurred and is continuing, the Indenture Trustee shall exercise the rights and powers vested in it by this Indenture and use the same degree of care and skill in their exercise as a prudent person would exercise or use under the circumstances in the conduct such person's own affairs. (b) Except during the continuance of an Event of Default: (i) the Indenture Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Indenture and no implied covenants or obligations shall be read into this Indenture against the Indenture Trustee; and (ii) in the absence of bad faith on its part, the Indenture Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon certificates or opinions furnished to the Indenture Trustee and conforming to the requirements of this Indenture; provided, however, that the Indenture Trustee shall examine the certificates and opinions to determine whether or not they conform to the requirements of this Indenture. (c) The Indenture Trustee may not be relieved from liability for its own negligent action, its own negligent failure to act or its own willful misconduct, except that: 41 49 (i) this paragraph does not limit the effect of paragraph (b) of this Section; (ii) the Indenture Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer unless it is proved that the Indenture Trustee was negligent in ascertaining the pertinent facts; and (iii) the Indenture Trustee shall not be liable with respect to any action it takes or omits to take in good faith in accordance with a direction received by it pursuant to Section 5.11. (d) The Indenture Trustee shall not be liable for interest on any money received by it except as the Indenture Trustee may agree in writing with the Issuer. (e) Money held in trust by the Indenture Trustee need not be segregated from other funds except to the extent required by law or the terms of this Indenture or the other Basic Documents. (f) No provision of this Indenture shall require the Indenture Trustee to expend or risk its own funds or otherwise incur financial liability in the performance of any of its duties hereunder or in the exercise of any of its rights or powers, if it shall have reasonable grounds to believe that repayments of such funds or adequate indemnity satisfactory to it against any loss, liability or expense is not reasonably assured to it. (g) Except as expressly provided in the Basic Documents, the Indenture 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. (h) In the event that the Indenture Trustee is the Paying Agent or the Note Registrar, the rights and protections afforded to the Indenture Trustee pursuant to this Indenture shall also be afforded to the Indenture Trustee in its capacity as Paying Agent or Note Registrar. 42 50 (i) Every provision of this Indenture relating to the conduct or affecting the liability of or affording protection to the Indenture Trustee shall be subject to the provisions of this Section and to the provisions of the TIA. SECTION 6.2 Rights of Indenture Trustee. The Indenture Trustee may rely on any document believed by it to be genuine and to have been signed or presented by the proper Person. The Indenture Trustee need not investigate any fact or matter stated in such document. (b) Before the Indenture Trustee acts or refrains from acting, it may require and shall be entitled to receive an Officers' Certificate of the Issuer and/or an Opinion of Counsel. The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith in reliance on such Officers' Certificate or Opinion of Counsel. (c) The Indenture Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys or a custodian or nominee, and the Indenture Trustee shall not be responsible for any misconduct or negligence on the part of, or for the supervision of, any such agent, attorney, custodian or nominee appointed with due care by it hereunder. (d) The Indenture Trustee shall not be liable for any action it takes or omits to take in good faith which it believes to be authorized or within its rights or powers; provided, however, that the Indenture Trustee's conduct does not constitute willful misconduct, negligence or bad faith. (e) The Indenture Trustee may consult with counsel, and the advice or opinion of counsel with respect to legal matters relating to this Indenture and the Notes shall be full and complete authorization and protection from liability in respect to any action taken, omitted or suffered by it hereunder in good faith and in accordance with the advice or opinion of such counsel. SECTION 6.3 Individual Rights of Indenture Trustee. The Indenture Trustee in its individual or any other capacity may become the owner or pledgee of Notes and may otherwise deal with the Issuer or its Affiliates with the same rights it would have if it were not Indenture Trustee. Any Paying Agent, Note Registrar, co- 43 51 registrar or co-paying agent may do the same with like rights. However, the Indenture Trustee must comply with Sections 6.11 and 6.12. SECTION 6.4 Indenture Trustee's Disclaimer. The Indenture Trustee shall not be responsible for and makes no representation as to the validity or adequacy of this Indenture or the Notes, it shall not be accountable for the Issuer's use of the proceeds from the Notes, and it shall not be responsible for any statement of the Issuer in the Indenture or in any document issued in connection with the sale of the Notes or in the Notes other than the Indenture Trustee's certificate of authentication. SECTION 6.5 Notice of Defaults; Seller Insolvency. (a) If a Default occurs and is continuing and if it is either actually known or written notice of the existence thereof has been delivered to a Responsible Officer of the Indenture Trustee, the Indenture Trustee shall mail notice of the Default to each Noteholder within 90 days and to each Rating Agency as soon as practicable within 30 days after it occurs. Except in the case of a Default in payment of principal of or interest (including any Note Interest Carryover) on any Note (including payments pursuant to the mandatory redemption provisions of such Note), the Indenture Trustee may withhold the notice if and so long as a committee of its Responsible Officers in good faith determines that withholding the notice is in the interests of Noteholders. Except as provided in the first sentence of this Section 6.5(a), in no event shall the Indenture Trustee be deemed to have knowledge of a Default or an Event of Default. (b) If the Indenture Trustee receives notice from the Eligible Lender Trustee of the occurrence of an Insolvency Event with respect to the Seller pursuant to Section 9.2 of the Trust Agreement, the Indenture Trustee shall give prompt written notice to the Noteholders of the occurrence of such event and of the effect of such event under such Section 9.2. Upon termination of the Trust pursuant to such Section 9.2, the Indenture Trustee shall, if so directed by the Eligible Lender Trustee, sell the Trust Estate (other than the Trust Accounts) in a commercially reasonable manner and on commercially reasonable terms. The proceeds of any such sale shall be treated as collections under the Administration Agreement. SECTION 6.6 Reports by Indenture Trustee to Noteholders. The Indenture Trustee shall deliver to each Noteholder (and to each Person who was a Noteholder at any time during the applicable calendar year) such information as may be required to enable such holder to prepare its Federal and state income tax returns. 44 52 Within 60 days after each December 31 beginning with the December 31 following the date of this Indenture, the Indenture Trustee shall mail to each Noteholder a brief report as of such December 31 that complies with TIA Section 313(a) if required by said section. The Indenture Trustee shall also comply with TIA Section 313(b). A copy of each such report required pursuant to TIA Section 313(a) or (b) shall, at the time of such transaction to Noteholders, be filed by the Indenture Trustee with the Commission and with each securities exchange, if any, upon which the Notes are listed, provided that the Issuer has previously notified the Indenture Trustee of such listing. SECTION 6.7 Compensation and Indemnity. The Issuer shall cause the Seller to pay to the Indenture Trustee reasonable compensation for its services in accordance with a separate agreement between the Seller and the Indenture Trustee and shall cause the Seller to reimburse the Indenture Trustee for all reasonable out-of-pocket expenses incurred or made by it as provided in such separate agreement. The Indenture Trustee's compensation shall not be limited by any law on compensation of a trustee of an express trust. The Issuer shall cause the Administrator to indemnify the Indenture Trustee and its directors, officers, employees and agents against any and all loss, liability or expense (including attorneys' fees) incurred by it in connection with the administration of this trust and the performance of its duties hereunder and under the other Basic Documents. The Indenture Trustee shall notify the Issuer and the Administrator promptly of any claim for which it may seek indemnity. Failure by the Indenture Trustee to so notify the Issuer and the Administrator shall not relieve the Issuer or the Administrator of its obligations hereunder and under the other Basic Documents. The Issuer shall cause the Administrator to defend the claim and the Administrator shall not be liable for the legal fees and expenses of the Indenture Trustee after it has assumed such defense; provided, however, that, in the event that there may be a conflict between the positions of the Indenture Trustee and the Administrator in conducting the defense of such claim, the Indenture Trustee shall be entitled to separate counsel acceptable to it in its sole discretion the reasonable fees and expenses of which shall be paid by the Administrator on behalf of the Issuer. Neither the Issuer nor the Administrator need reimburse any expense or indemnify against any loss, liability or expense incurred by the Indenture Trustee through the Indenture Trustee's own willful misconduct, negligence or bad faith. The Issuer's payment obligations to the Indenture Trustee pursuant to this Section shall survive the discharge of this Indenture. When the Indenture Trustee 45 53 incurs expenses after the occurrence of a Default specified in Section 5.1(iv) or (v) with respect to the Issuer, the expenses are intended to constitute expenses of administration under Title 11 of the United States Code or any other applicable Federal or state bankruptcy, insolvency or similar law. SECTION 6.8 Replacement of Indenture Trustee. No resignation or removal of the Indenture Trustee and no appointment of a successor Indenture Trustee shall become effective until the acceptance of appointment by the successor Indenture Trustee pursuant to this Section 6.8. The Indenture Trustee may resign at any time by so notifying the Issuer. The Noteholders of a majority in Outstanding Amount of the Notes may remove the Indenture Trustee by so notifying the Indenture Trustee and may appoint a successor Indenture Trustee. The Issuer shall remove the Indenture Trustee if: (i) the Indenture Trustee fails to comply with Section 6.11; (ii) an Insolvency Event occurs with respect to the Indenture Trustee; (iii) a receiver or other public officer takes charge of the Indenture Trustee or its property; or (iv) the Indenture Trustee otherwise becomes incapable of acting. If the Indenture Trustee resigns or is removed or if a vacancy exists in the office of Indenture Trustee for any reason (the Indenture Trustee in such event being referred to herein as the retiring Indenture Trustee), the Issuer shall promptly appoint a successor Indenture Trustee. A successor Indenture Trustee shall deliver a written acceptance of its appointment to the retiring Indenture Trustee and to the Issuer. Thereupon the resignation or removal of the retiring Indenture Trustee shall become effective, and the successor Indenture Trustee shall have all the rights, powers and duties of the Indenture Trustee under this Indenture. The successor Indenture Trustee shall mail a notice of its succession to Noteholders. The retiring Indenture Trustee shall promptly transfer all property held by it as Indenture Trustee to the successor Indenture Trustee. 46 54 If a successor Indenture Trustee does not take office within 60 days after the retiring Indenture Trustee resigns or is removed, the retiring Indenture Trustee, the Issuer or the Noteholders of a majority in Outstanding Amount of the Notes may petition any court of competent jurisdiction for the appointment of a successor Indenture Trustee. The successor Indenture Trustee shall give notice of its appointment as successor Indenture Trustee to the Rating Agencies. If the Indenture Trustee fails to comply with Section 6.11, any Noteholder may petition any court of competent jurisdiction for the removal of the Indenture Trustee and the appointment of a successor Indenture Trustee. Notwithstanding the replacement of the Indenture Trustee pursuant to this Section, the Issuer's and the Administrator's obligations under Section 6.7 shall continue for the benefit of the retiring Indenture Trustee. SECTION 6.9 Successor Indenture Trustee by Merger. If the Indenture Trustee consolidates with, merges or converts into, or transfers all or substantially all its corporate trust business or assets to, another corporation or banking association, the resulting, surviving or transferee corporation without any further act shall be the successor Indenture Trustee, provided that such corporation or banking association shall be otherwise qualified and eligible under Section 6.11. The Indenture Trustee shall provide the Rating Agencies prior written notice of any such transaction. In case at the time such successor or successors by merger, conversion or consolidation to the Indenture Trustee shall succeed to the trusts created by this Indenture any of the Notes shall have been authenticated but not delivered, any such successor to the Indenture Trustee may adopt the certificate of authentication of any predecessor trustee, and deliver such Notes so authenticated; and in case at that time any of the Notes shall not have been authenticated, any successor to the Indenture Trustee may authenticate such Notes either in the name of any predecessor hereunder or in the name of the successor to the Indenture Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Notes or in this Indenture provided that the certificate of the Indenture Trustee shall have. SECTION 6.10 Appointment of Co-Trustee or Separate Trustee. (a) Notwithstanding any other provisions of this Indenture, at any time, for the purpose of meeting any legal requirement of any jurisdiction in which any part of the 47 55 Indenture Trust Estate may at the time be located, the Indenture Trustee shall have the power and may execute and deliver all instruments to appoint one or more Persons to act as a co-trustee or co-trustees, or separate trustee or separate trustees, of all or any part of the Indenture Trust Estate, and to vest in such Person or Persons, in such capacity and for the benefit of the Noteholders, such title to the Indenture Trust Estate, or any part hereof, and, subject to the other provisions of this Section, such powers, duties, obligations, rights and trusts as the Indenture Trustee may consider necessary or desirable. No such appointment shall relieve the Indenture Trustee of its obligations hereunder. No co-trustee or separate trustee hereunder shall be required to meet the terms of eligibility as a successor trustee under Section 6.11 and no notice to Noteholders of the appointment of any co-trustee or separate trustee shall be required under Section 6.8 hereof. (b) Every 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 Indenture Trustee shall be conferred or imposed upon and exercised or performed by the Indenture 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 Indenture 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 Indenture 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 Indenture Trust Estate or any portion thereof in any such jurisdiction) shall be exercised and performed singly by such separate trustee or co-trustee, but solely at the direction of the Indenture Trustee; (ii) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder; and (iii) the Indenture Trustee may at any time accept the resignation of or remove any separate trustee or co-trustee. (c) Any notice, request or other writing given to the Indenture 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 48 56 separate trustee or co-trustee shall refer to this Indenture and the conditions of this Article VI. 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 Indenture Trustee or separately, as may be provided therein, subject to all the provisions of this Indenture, specifically including every provision of this Indenture relating to the conduct of, affecting the liability of, or affording protection to, the Indenture Trustee. Every such instrument shall be filed with the Indenture Trustee. (d) Any separate trustee or co-trustee may at any time constitute the Indenture Trustee, 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 Indenture 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 Indenture Trustee, to the extent permitted by law, without the appointment of a new or successor trustee. SECTION 6.11 Eligibility; Disqualification. The Indenture Trustee shall at all times satisfy the requirements of TIA Section 310(a) and the requirements of an "eligible lender" under 20 USC Section 1085(d). The Indenture Trustee shall have a combined capital and surplus of at least $50,000,000 as set forth in its most recent published annual report of condition and it shall have a long-term senior unsecured debt rating of not less than investment grade by each of the Rating Agencies. The Indenture Trustee shall comply with TIA Section 310(b), including the optional provision permitted by the second sentence of TIA Section 310(b)(9); provided, however, that there shall be excluded from the operation of TIA Section 310(b)(1) any indenture or indentures under which other securities of the Issuer are outstanding if the requirements for such exclusion set forth in TIA Section 310(b)(1) are met. SECTION 6.12 Preferential Collection of Claims Against Issuer. The Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor relationship listed in TIA Section 311(b). An Indenture Trustee who has resigned or been removed shall be subject to TIA Section 311(a) to the extent indicated. 49 57 ARTICLE VII Noteholders' Lists and Reports SECTION 7.1 Issuer To Furnish Indenture Trustee Names and Addresses of Noteholders. The Issuer will furnish or cause to be furnished to the Indenture Trustee (a) not more than five days after the earlier of (i) each Record Date and (ii) three months after the last Record Date, a list, in such form as the Indenture Trustee may reasonably require, of the names and addresses of the Noteholders as of such Record Date, (b) at such other times as the Indenture Trustee may request in writing, within 30 days after receipt by the Issuer of any such request, a list of similar form and content as of a date not more than 10 days prior to the time such list is furnished; provided, however, that so long as the Indenture Trustee is the Note Registrar, no such list shall be required to be furnished. SECTION 7.2 Preservation of Information; Communications to Noteholders. The Indenture Trustee shall preserve, in as current a form as is reasonably practicable, the names and addresses of the Noteholders contained in the most recent list furnished to the Indenture Trustee as provided in Section 7.1 and the names and addresses of Noteholders received by the Indenture Trustee in its capacity as Note Registrar. The Indenture Trustee may destroy any list furnished to it as provided in such Section 7.1 upon receipt of a new list so furnished. (a) Noteholders may communicate pursuant to TIA Section 312(b) with other Noteholders with respect to their rights under this Indenture or under the Notes. Upon receipt by the Indenture Trustee of any request by three or more Noteholders or by one or more holders of Notes evidencing not less than 25% of the Outstanding Amount of the Notes to receive a copy of the current list of Noteholders (whether or not made pursuant to TIA Section 312(b)), the Indenture Trustee shall promptly notify the Administrator thereof by providing to the Administrator a copy of such request and a copy of the list of Noteholders produced in response thereto. (b) The Issuer, the Indenture Trustee and the Note Registrar shall have the protection of TIA Section 312(c). 50 58 (c) On each Distribution Date the Indenture Trustee shall provide to each Noteholder of record as of the related Record Date the information provided by the Administrator to the Indenture Trustee on the related Determination Date pursuant to Section 2.9 of the Administration Agreement. (d) The Indenture Trustee shall furnish to the Noteholders 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 Indenture Trustee under the Basic Documents. The Indenture Trustee shall furnish to the Noteholders promptly upon receipt thereof from the Eligible Lender Trustee notice of any amendment of the Administration Agreement pursuant to Section 8.5 of the Administration Agreement. SECTION 7.3 Reports by Issuer. (a) The Issuer shall: (i) file with the Indenture Trustee, within 15 days after the Issuer is required to file the same with the Commission, copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) which the Issuer may be required to file with the Commission pursuant to Section 13 or 15(d) of the Exchange Act; (ii) file with the Indenture Trustee and the Commission in accordance with rules and regulations prescribed from time to time by the Commission such additional information, documents and reports with respect to compliance by the Issuer with the conditions and covenants of this Indenture as may be required from time to time by such rules and regulations; and (iii) supply to the Indenture Trustee (and the Indenture Trustee shall transmit by mail to all Noteholders described in TIA Section 313(c)) such summaries of any information, documents and reports required to be filed by the Issuer pursuant to clauses (i) and (ii) of this Section 7.3(a) as may be required by rules and regulations prescribed from time to time by the Commission. (b) Unless the Issuer otherwise determines, the fiscal year of the Issuer shall end on December 31 of each year. 51 59 ARTICLE VIII Accounts, Disbursements and Releases SECTION 8.1 Collection of Money. Except as otherwise expressly provided herein, the Indenture Trustee may demand payment or delivery of, and shall receive and collect, directly and without intervention or assistance of any fiscal agent or other intermediary, all money and other property payable to or receivable by the Indenture Trustee pursuant to this Indenture. The Indenture Trustee shall apply all such money received by it on behalf of Noteholders pursuant to the Administration Agreement as provided in this Indenture. Except as otherwise expressly provided in this Indenture, if any default occurs in the making of any payment or performance under any agreement or instrument that is part of the Indenture Trust Estate, the Indenture Trustee may take such action as may be appropriate to enforce such payment or performance, including the institution and prosecution of appropriate Proceedings. Any such action shall be without prejudice to any right to claim a Default under this Indenture and any right to proceed thereafter as provided in Article V. SECTION 8.2 Trust Accounts. (a) On or prior to the Closing Date, the Issuer shall cause the Administrator to establish and maintain, in the name of the Indenture Trustee, for the benefit of the Noteholders and the Certificateholders, the Trust Accounts as provided in Section 2.3 of the Administration Agreement. (b) On or before the Business Day preceding each Distribution Date, all Available Funds with respect to the preceding Collection Period will be deposited in the Collection Account as provided in Section 2.4 of the Administration Agreement. On or before each Distribution Date, the Noteholders' Distribution Amount and any Note Interest Carryover, if any, with respect to the preceding Collection Period will be distributed from the Collection Account and any other Trust Account to the Indenture Trustee (or any other Paying Agent) on behalf of the Noteholders as provided in Sections 2.7 and 2.8 of the Administration Agreement. (c) On each Distribution Date and Redemption Date, the Indenture Trustee (or any other Paying Agent) shall distribute all amounts received by it on behalf of Noteholders pursuant to paragraph (b) above to Noteholders in respect of the Notes to the extent of amounts payable on the Notes for principal, interest and any Note 52 60 Interest Carryover in the following amounts and in the following order of priority (except as otherwise provided in Section 5.4(b)): (i) the Noteholders' Interest Distribution Amount, to the Noteholders in an amount equal to the accrued and unpaid interest on the Notes at the respective Note Rates; provided that if there are not sufficient funds received to pay the entire amount of accrued and unpaid interest then due on the Notes at the respective Note Rates, the amounts so received shall be applied to the payment of such interest on the Notes on a pro rata basis; (ii) the Noteholders' Principal Distribution Amount, to the Noteholders of the Class A-1 Notes until the Outstanding Amount of the Class A-1 Notes is reduced to zero; provided, that if there are not sufficient funds received to pay the Outstanding Amount of the Class A-1 Notes, the amounts so received shall be applied to the payment of principal on the Class A-1 Notes on a pro rata basis; (iii) the Noteholders' Principal Distribution Amount, to the Noteholders of the Class A-2 Notes until the Outstanding Amount of the Class A-2 Notes is reduced to zero; provided, that if there are not sufficient funds received to pay the Outstanding Amount of the Class A-2 Notes, the amounts so received shall be applied to the payment of principal on the Class A-2 Notes on a pro rata basis; and (iv) the Note Interest Carryover, if any, to the Noteholders; provided that if insufficient funds are received to pay the entire Note Interest Carryover, the amounts so received shall be applied to the payment of such Note Interest Carryover on a pro rata basis. SECTION 8.3 General Provisions Regarding Accounts. (a) So long as no Default shall have occurred and be continuing, all or a portion of the funds in the Trust Accounts shall be invested in Eligible Investments and reinvested by the Indenture Trustee upon Issuer Order, subject to the provisions of Section 2.3B of the Administration Agreement. All income or other gain from investments of moneys deposited in the Trust Accounts shall be deposited by the Indenture Trustee in the Collection Account, and any loss resulting from such investments shall be charged to such Trust Account. The Issuer will not direct the Indenture Trustee to make any investment of any funds or to sell any investment held in any of the Trust Accounts unless the security interest granted and perfected in such account will continue to be 53 61 perfected in such investment or the proceeds of such sale, in either case without any further action by any Person, and, in connection with any direction to the Indenture Trustee to make any such investment or sale, if requested by the Indenture Trustee, the Issuer shall deliver to the Indenture Trustee an Opinion of Counsel, acceptable to the Indenture Trustee, to such effect. (b) Subject to Section 6.1(c), the Indenture Trustee shall not in any way be held liable for the selection of Eligible Investments or by reason of any insufficiency in any of the Trust Accounts resulting from any loss on any Eligible Investment included therein except for losses attributable to the Indenture Trustee's failure to make payments on such Eligible Investments issued by the Indenture Trustee, in its commercial capacity as principal obligor and not as trustee, in accordance with their terms. (c) If (i) the Issuer shall have failed to give investment directions for any funds on deposit in the Trust Accounts to the Indenture Trustee by 10:00 a.m. Eastern Time (or such other time as may be agreed by the Issuer and Indenture Trustee) on any Business Day; or (ii) a Default shall have occurred and be continuing with respect to the Notes but the Notes shall not have been declared due and payable pursuant to Section 5.2, or, if such Notes shall have been declared due and payable following an Event of Default, amounts collected or receivable from the Indenture Trust Estate are being applied in accordance with Section 5.5 as if there had not been such a declaration; then the Indenture Trustee shall invest and reinvest funds in the Trust Accounts in the Eligible Investments described in clause (d) of the definition thereof. SECTION 8.4 Release of Indenture Trust Estate. (a) Subject to the payment of its fees and expenses pursuant to Section 6.7, the Indenture Trustee may, and when required by the provisions of this Indenture shall, execute instruments to release property from the lien of this Indenture, or convey the Indenture Trustee's interest in the same, in a manner and under circumstances that are not inconsistent with the provisions of this Indenture. No party relying upon an instrument executed by the Indenture Trustee as provided in this Article VIII shall be bound to ascertain the Indenture Trustee's authority, inquire into the satisfaction of any conditions precedent or see to the application of any moneys. (b) The Indenture Trustee shall, at such time as there are no Notes Outstanding and all sums due the Indenture Trustee pursuant to Section 6.7 have been paid, release any remaining portion of the Indenture Trust Estate that secured the 54 62 Notes from the lien of this Indenture and release to the Issuer or any other Person entitled thereto any funds then on deposit in the Trust Accounts. The Indenture Trustee shall release property from the lien of this Indenture pursuant to this Section 8.4(b) only upon receipt of an Issuer Request accompanied by an Officers' Certificate of the Issuer, an Opinion of Counsel and (if required by the TIA) Independent Certificates in accordance with TIA Sections 314(c) and 314(d)(1) meeting the applicable requirements of Section 11.1. (c) Each Noteholder, by the acceptance of a Note, acknowledges that from time to time the Indenture Trustee shall release the lien of this Indenture on any Trust Student Loan to be sold to (i) the Seller in accordance with Section 6 of the Sale Agreement, (ii) to the Servicer in accordance with Section 3.5 of the Servicing Agreement and (iii) to another eligible lender holding one or more Serial Loans with respect to such Trust Student Loan, in accordance with Section 3.11E of the Servicing Agreement, and each Noteholder, by the acceptance of a Note, consents to any such release. SECTION 8.5 Opinion of Counsel. The Indenture Trustee shall receive at least seven days' notice when requested by the Issuer to take any action pursuant to Section 8.4(a), accompanied by copies of any instruments involved, and the Indenture Trustee shall also require, except in connection with any action contemplated by Section 8.4(c), as a condition to such action, an Opinion of Counsel, in form and substance satisfactory to the Indenture Trustee, stating the legal effect of any such action, outlining the steps required to complete the same, and concluding that all conditions precedent to the taking of such action have been complied with and such action will not materially and adversely impair the security for the Notes or the rights of the Noteholders in contravention of the provisions of this Indenture; provided, however, that such Opinion of Counsel shall not be required to express an opinion as to the fair value of the Indenture Trust Estate. Counsel rendering any such opinion may rely, without independent investigation, on the accuracy and validity of any certificate or other instrument delivered to the Indenture Trustee in connection with any such action. 55 63 ARTICLE IX Supplemental Indentures SECTION 9.1 Supplemental Indentures Without Consent of Noteholders. Without the consent of any Noteholders but with prior notice to the Rating Agencies, the Issuer and the Indenture Trustee, when authorized by an Issuer Order, at any time and from time to time, may enter into one or more indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as in force at the date of the execution thereof), in form satisfactory to the Indenture Trustee, for any of the following purposes: (i) to correct or amplify the description of any property at any time subject to the lien of this Indenture, or better to assure, convey and confirm unto the Indenture Trustee any property subject or required to be subjected to the lien of this Indenture, or to subject to the lien of this Indenture additional property; (ii) to evidence the succession, in compliance with the applicable provisions hereof, of another person to the Issuer, and the assumption by any such successor of the covenants of the Issuer herein and in the Notes contained; (iii) to add to the covenants of the Issuer, for the benefit of the Noteholders, or to surrender any right or power herein conferred upon the Issuer; (iv) to convey, transfer, assign, mortgage or pledge any property to the Indenture Trustee; (v) to cure any ambiguity, to correct or supplement any provision herein or in any supplemental indenture which may be inconsistent with any other provision herein or in any supplemental indenture or to make any other provisions with respect to matters or questions arising under this Indenture or in any supplemental indenture; provided that such action shall not materially adversely affect the interests of the Noteholders; (vi) to evidence and provide for the acceptance of the appointment hereunder by a successor trustee with respect to the Notes and to add to or change 56 64 any of the provisions of this Indenture as shall be necessary to facilitate the administration of the trusts hereunder by more than one trustee, pursuant to the requirements of Article VI; or (vii) to modify, eliminate or add to the provisions of this Indenture to such extent as shall be necessary to effect the qualification of this Indenture under the TIA or under any similar Federal statute hereafter enacted and to add to this Indenture such other provisions as may be expressly required by the TIA. The Indenture Trustee is hereby authorized to join in the execution of any such supplemental indenture and to make any further appropriate agreements and stipulations that may be therein contained. (b) The Issuer and the Indenture Trustee, when authorized by an Issuer Order, may, also without the consent of any of the Noteholders but with prior notice to the Rating Agencies, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Noteholders under this Indenture; 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. SECTION 9.2 Supplemental Indentures with Consent of Noteholders. The Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may, with prior notice to the Rating Agencies and with the consent of the Noteholders of not less than a majority of the Outstanding Amount of the Notes, by Act of such Noteholders delivered to the Issuer and the Indenture Trustee, enter into an indenture or indentures supplemental hereto for the purpose of adding any provisions to, or changing in any manner or eliminating any of the provisions of, this Indenture or of modifying in any manner the rights of the Noteholders under this Indenture; provided, however, that no such supplemental indenture shall, without the consent of the Noteholder of each Outstanding Note affected thereby: (i) change the date of payment of any installment of principal of or interest (including any Note Interest Carryover) on any Note, or reduce the principal amount thereof, the interest rate thereon or the Redemption Price with respect thereto, change the provisions of this Indenture relating to the application of collections on, or 57 65 the proceeds of the sale of, the Indenture Trust Estate to payment of principal of or interest (including any Note Interest Carryover) on the Notes, or change any place of payment where, or the coin or currency in which, any Note or the interest thereon is payable, or impair the right to institute suit for the enforcement of the provisions of this Indenture requiring the application of funds available therefor, as provided in Article V, to the payment of any such amount due on the Notes on or after the respective due dates thereof (or, in the case of redemption, on or after the Redemption Date); (ii) reduce the percentage of the Outstanding Amount of the Notes, the consent of the Noteholders of which is required for any such supplemental indenture, or the consent of the Noteholders of which is required for any waiver of compliance with certain provisions of this Indenture or certain defaults hereunder and their consequences provided for in this Indenture; (iii) modify or alter the provisions of the proviso to the definition of the term "Outstanding"; (iv) reduce the percentage of the Outstanding Amount of the Notes required to direct the Indenture Trustee to direct the Issuer to sell or liquidate the Indenture Trust Estate pursuant to Section 5.4; (v) modify any provision of this Section except to increase any percentage specified herein or to provide that certain additional provisions of this Indenture or the other Basic Documents cannot be modified or waived without the consent of the Noteholder of each Outstanding Note affected thereby; (vi) modify any of the provisions of this Indenture in such manner as to affect the calculation of the amount of any payment of interest (including any Note Interest Carryover) or principal due on any Note on any Distribution Date (including the calculation of any of the individual components of such calculation) or to affect the rights of the Noteholders to the benefit of any provisions for the mandatory redemption of the Notes contained herein; or (vii) permit the creation of any lien ranking prior to or on a parity with the lien of this Indenture with respect to any part of the Indenture Trust Estate or, except as otherwise permitted or contemplated herein, terminate the lien of this 58 66 Indenture on any property at any time subject hereto or deprive any Noteholder of any Note of the security provided by the lien of this Indenture. It shall not be necessary for any Act of Noteholders under this Section to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such Act shall approve the substance thereof. Promptly after the execution by the Issuer and the Indenture Trustee of any supplemental indenture pursuant to this Section, the Indenture Trustee shall mail to the Noteholders of the Notes to which such amendment or supplemental indenture relates a notice setting forth in general terms the substance of such supplemental indenture. Any failure of the Indenture Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. SECTION 9.3 Execution of Supplemental Indentures. In executing, or permitting the additional trusts created by, any supplemental indenture permitted by this Article IX or the modifications thereby of the trusts created by this Indenture, the Indenture Trustee shall be entitled to receive, and subject to Sections 6.1 and 6.2, shall be fully protected in relying upon, an Opinion of Counsel stating that the execution of such supplemental indenture is authorized or permitted by this Indenture. The Indenture Trustee may, but shall not be obligated to, enter into any such supplemental indenture that affects the Indenture Trustee's own rights, duties, liabilities or immunities under this Indenture or otherwise. SECTION 9.4 Effect of Supplemental Indenture. Upon the execution of any supplemental indenture pursuant to the provisions hereof, this Indenture shall be and be deemed to be modified and amended in accordance therewith with respect to the Notes affected thereby, and the respective rights, limitations of rights, obligations, duties, liabilities and immunities under this Indenture of the Indenture Trustee, the Issuer and the Noteholders shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments, and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes. SECTION 9.5 Conformity with Trust Indenture Act. Every amendment of this Indenture and every supplemental indenture executed pursuant to this 59 67 Article IX shall conform to the requirements of the Trust Indenture Act as then in effect so long as this Indenture shall then be qualified under the Trust Indenture Act. SECTION 9.6 Reference in Notes to Supplemental Indentures. Notes authenticated and delivered after the execution of any supplemental indenture pursuant to this Article IX may, and if required by the Indenture Trustee shall, bear a notation in form approved by the Indenture Trustee as to any matter provided for in such supplemental indenture. If the Issuer or the Indenture Trustee shall so determine, new Notes so modified as to conform, in the opinion of the Indenture Trustee and the Issuer, to any such supplemental indenture may be prepared and executed by the Issuer and authenticated and delivered by the Indenture Trustee in exchange for Outstanding Notes. ARTICLE X Redemption of Notes SECTION 10.1 Redemption. The Indenture Trustee shall, upon receipt of written notice from the Eligible Lender Trustee or the Depositor pursuant to Section 9.2 of the Trust Agreement of an Insolvency Event with respect to the Depositor, give prompt written notice to the Noteholders of the occurrence of such event. In the event that the assets of the Trust are sold pursuant to Section 9.2 of the Trust Agreement, that portion of the amounts on deposit in the Trust Accounts to be distributed to the Noteholders shall be paid to the Noteholders up to the Outstanding Amount of the Notes and all accrued and unpaid interest thereon and any accrued Note Interest Carryover with respect thereto (but only to the extent provided by Sections 2.7(d) and 8.2(c)). If amounts are to be paid to Noteholders pursuant to this Section 10.1, the notice of such event from the Indenture Trustee to the Noteholders shall include notice of the redemption of Notes by application of such amounts on the next Distribution Date which is not sooner than 15 days after the date of such notice (the "Redemption Date"), whereupon all such amounts shall be payable on the Redemption Date. SECTION 10.2 Form of Redemption Notice. Notice of redemption under Section 10.1 shall be given by the Indenture Trustee by first-class mail, postage prepaid, or by facsimile, mailed or transmitted on or prior to the applicable Redemption Date to each Noteholder, as of the close of business on the Record Date 60 68 preceding the applicable Redemption Date, at such Noteholder's address or facsimile number appearing in the Note Register. All notices of redemption shall state: (i) the Redemption Date; (ii) the Redemption Price; and (iii) the place were such Notes are to be surrendered for payment of the Redemption Price (which shall be the office or agency of the Issuer to be maintained as provided in Section 3.2). Notice of redemption of the Notes shall be given by the Indenture Trustee in the name and at the expense of the Issuer. Failure to give notice of redemption, or any defect therein, to any Noteholder of any Note shall not impair or affect the validity of the redemption of any other Note. SECTION 10.3 Notes Payable on Redemption Date. The Notes or portions thereof to be redeemed shall on the Redemption Date become due and payable at the Redemption Price and (unless the Issuer shall default in the payment of the Redemption Price) no interest shall accrue on the Redemption Price for any period after the date to which accrued interest is calculated for purposes of calculating the Redemption Price. ARTICLE XI Miscellaneous SECTION 11.1 Compliance Certificates and Opinions, etc. Upon any application or request by the Issuer to the Indenture Trustee to take any action under any provision of this Indenture, the Issuer shall furnish to the Indenture Trustee and the Rating Agencies (i) an Officers' Certificate of the Issuer stating that all conditions precedent, if any, provided for in this Indenture relating to the proposed action have been complied with, (ii) an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent, if any, have been complied with and (iii) (if 61 69 required by the TIA) an Independent Certificate from a firm of certified public accountants meeting the applicable requirements of this Section, except that, in the case of any such application or request as to which the furnishing of such documents is specifically required by any provision of this Indenture, no additional certificate or opinion need be furnished. Every certificate or opinion with respect to compliance with a condition or covenant provided for in this indenture shall include: (i) a statement that each signatory of such certificate or opinion has read or has caused to be read such covenant or condition and the definitions herein relating thereto; (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (iii) a statement that, in the opinion of each such signatory, such signatory has made such examination or investigation as is necessary to enable such signatory to express an informed opinion as to whether or not such covenant or condition has been complied with; and (iv) a statement as to whether, in the opinion of each such signatory, such condition or covenant has been complied with. (b) (i) Prior to the deposit of any Collateral or other property or securities with the Indenture Trustee that is to be made the basis for the release of any property or securities subject to the lien of this Indenture, the Issuer shall, in addition to any obligation imposed in Section 11.1(a) or elsewhere in this Indenture, furnish to the Indenture Trustee and the Rating Agencies an Officers' Certificate of the Issuer certifying or stating the opinion of each person signing such certificate as to the fair value (within 90 days of such deposit) to the Issuer of the Collateral or other property or securities to be so deposited. (ii) Whenever the Issuer is required to furnish to the Indenture Trustee and the Rating Agencies an Officers' Certificate of the Issuer certifying or stating the opinion of any signer thereof as to the matters described in clause (i) above, 62 70 the Issuer shall also deliver to the Indenture Trustee an Independent Certificate as to the same matters, if the fair value to the Issuer of the securities to be so deposited and of all other such securities made the basis of any such withdrawal or release since the commencement of the then-current fiscal year of the Issuer, as set forth in the certificates delivered pursuant to clause (i) above and this clause (ii), is 10% or more of the Outstanding Amount of the Notes, but such a certificate need not be furnished with respect to any securities so deposited, if the fair value thereof to the Issuer as set forth in the related Officers' Certificate is less than $25,000 or less than one percent of the Outstanding Amount of the Notes. (iii) Other than any property released as contemplated by clause (v) below, whenever any property or securities are to be released from the lien of this Indenture, the Issuer shall also furnish to the Indenture Trustee an Officers' Certificate of the Issuer certifying or stating the opinion of each person signing such certificate as to the fair value (within 90 days of such release) of the property or securities proposed to be released and stating that in the opinion of such person the proposed release will not impair the security under this Indenture in contravention of the provisions hereof. (iv) Whenever the Issuer is required to furnish to the Indenture Trustee an Officers' Certificate of the Issuer certifying or stating the opinion of any signer thereof as to the matters described in clause (iii) above, the Issuer shall also furnish to the Indenture Trustee an Independent Certificate as to the same matters if the fair value of the property or securities and of all other property, other than property as contemplated by clause (v) below, or securities released from the lien of this Indenture since the commencement of the then-current calendar year, as set forth in the certificates required by clause (iii) above and this clause (iv), equals 10% or more of the Outstanding Amount of the Notes, but such certificate need not be furnished in the case of any release of property or securities if the fair value thereof as set forth in the related Officers' Certificate is less than $25,000 or less than one percent of the then Outstanding Amount of the Notes. (v) Notwithstanding Section 2.9 or any other provision of this Section, the Issuer may, without compliance with the requirements of the other provisions of this Section, (A) collect, liquidate, sell or otherwise dispose of Trust Student Loans as and to the extent permitted or required by the Basic Documents, (B) make cash payments out of the Trust Accounts as and to the extent permitted or required by the Basic Documents and (C) convey to the Seller, the Servicer or another eligible 63 71 lender those specified Trust Student Loans as and to the extent permitted or required by and in accordance with Section 8.4(c) hereof and Section 6 of the Sale Agreement, Section 3.5 of the Servicing Agreement or Section 3.11E of the Servicing Agreement, respectively, so long as the Issuer shall deliver to the Indenture Trustee every six months, commencing April 26, 1997, an Officers' Certificate of the Issuer stating that all the dispositions of Collateral described in clauses (A), (B) or (C) above that occurred during the immediately preceding six calendar months were in the ordinary course of the Issuer's business and that the proceeds thereof were applied in accordance with the Basic Documents. SECTION 11.2 Form of Documents Delivered to Indenture Trustee. In any case where several matters are required to be certified by, or covered by an opinion of, any specified Person, it is not necessary that all such matters be certified by, or covered by the opinion of, only one such Person, or that they be so certified or covered by only one document, but one such Person may certify or give an opinion with respect to some matters, and one or more other such Persons as to other matters, and any such Person may certify or give an opinion as to such matters in one or several documents. Any certificate or opinion of an Authorized Officer of the Issuer may be based, insofar as it relates to legal matters, upon a certificate or opinion of, or representations by, counsel, unless such officer knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to the matters upon which his certificate or opinion is based are erroneous. Any such certificate of an Authorized Officer or Opinion of Counsel may be based, insofar as it relates to factual matters, upon a certificate or opinion of, or representations by, an officer or officers of the Servicer, the Seller, the Issuer or the Administrator, stating that the information with respect to such factual matters is in the possession of the Servicer, the Seller, the Issuer or the Administrator, unless such counsel knows, or in the exercise of reasonable care should know, that the certificate or opinion or representations with respect to such matters are erroneous. Where any Person is required to make, give or execute two or more applications, requests, consents, certificates, statements, opinions or other instruments under this indenture, they may, but need not, be consolidated and form one instrument. 64 72 Whenever in this Indenture, in connection with any application or certificate or report to the Indenture Trustee, it is provided that the Issuer shall deliver any document as a condition of the granting of such application, or as evidence of the Issuer's compliance with any term hereof, it is intended that the truth and accuracy, at the time of the granting of such application or at the effective date of such certificate or report (as the case may be), of the facts and opinions stated in such document shall in such case be conditions precedent to the right of the Issuer to have such application granted or to the sufficiency of such certificate or report. The foregoing shall not, however, be construed to affect the Indenture Trustee's right to rely upon the truth and accuracy of any statement or opinion contained in any such document as provided in Article VI. SECTION 11.3 Acts of Noteholders. (a) Any request, demand, authorization, direction, notice, consent, waiver or other action provided by this Indenture to be given or taken by Noteholders may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Noteholders in person or by agents duly appointed in writing; and except as herein otherwise expressly provided such action shall become effective when such instrument or instruments are delivered to the Indenture Trustee, and, where it is hereby expressly required, to the Issuer. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Noteholders signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Indenture and (subject to Section 6.1) conclusive in favor of the Indenture Trustee and the Issuer, if made in the manner provided in this Section. (b) The fact and date of the execution by any person of any such instrument or writing may be proved in any manner that the Indenture Trustee deems sufficient. (c) The ownership of Notes shall be proved by the Note Register. (d) Any request, demand, authorization, direction, notice, consent, waiver or other action by the Noteholder of any Notes shall bind the Noteholder of every Note issued upon registration of transfer thereof or in exchange therefor or in lieu thereof, in respect of anything done, omitted or suffered to be done by the Indenture 65 73 Trustee or the Issuer in reliance thereon, whether or not notation of such action is made upon such Note. SECTION 11.4 Notices, etc., to Indenture Trustee, Issuer and Rating Agencies. Any request, demand, authorization, direction, notice, consent, waiver or Act of Noteholders or other documents provided or permitted by this Indenture shall be in writing and if such request, demand, authorization, direction, notice, consent, waiver or Act of Noteholders is to be made upon, given or furnished to or filed with: (a) The Indenture Trustee by any Noteholder, the Servicer, the Administrator or by the Issuer shall be sufficient for every purpose hereunder if made, given, furnished or filed in writing to or with the Indenture Trustee at its Corporate Trust Office, or (b) The Issuer by the Indenture Trustee or by any Noteholder shall be sufficient for every purpose hereunder if in writing and mailed, first-class, postage prepaid, to the Issuer addressed to: SLM Student Loan Trust 1996-4, in care of Chase Manhattan Bank USA, National Association, 802 Delaware Avenue, Wilmington, Delaware 19899, Attention: Corporate Trust Department; with copies to The Chase Manhattan Bank, 450 West 33rd Street 15th Fl., New York, New York 10001, Attention: Structured Finance Services; 11600 Sallie Mae Drive, Reston, VA 20193, Attention: Director, Corporate Finance Operations, or any other address previously furnished in writing to the Indenture Trustee by the Issuer or the Administrator. The Issuer shall promptly transmit any notice received by it from the Noteholders to the Indenture Trustee. Notices required to be given to the Rating Agencies by the Issuer, the Indenture Trustee or the Eligible Lender Trustee shall be in writing, personally delivered or mailed by certified mail, return receipt requested, to (i) in the case of Moody's, at the following address: Moody's, ABS Monitoring Department, 99 Church Street, New York, New York 10007, (ii) in the case of Standard & Poor's, at the following address: Standard & Poor's, 25 Broadway (20th Floor), New York, New York 10004, Attention of Asset Backed Surveillance Department, and (iii) in the case of Fitch, at the following address: One State Street Plaza, New York, New York 10004, Attention Municipal Structured Finance Group; or as to each of the foregoing, at such other address as shall be designated by written notice to the other parties. 66 74 SECTION 11.5 Notices to Noteholders; Waiver. Where this Indenture provides for notice to Noteholders of any event, such notice shall be sufficiently given (unless otherwise herein expressly provided) if in writing and mailed, first-class, postage prepaid to each Noteholder affected by such event, at his address as it appears on the Note Register, not later than the latest date, and not earlier than the earliest date, prescribed for the giving of such notice. In any case where notice to Noteholders is given by mail, neither the failure to mail such notice nor any defect in any notice so mailed to any particular Noteholder shall affect the sufficiency of such notice with respect to other Noteholders, and any notice that is mailed in the manner herein provided shall conclusively be presumed to have been duly given. Where this Indenture provides for notice in any manner, such notice may be waived in writing by any Person entitled to receive such notice, either before or after the event, and such waiver shall be the equivalent of such notice. Waivers of notice by Noteholders shall be filed with the Indenture Trustee but such filing shall not be a condition precedent to the validity of any action taken in reliance upon such a waiver. In case, by reason of the suspension of regular mail service as a result of a strike, work stoppage or similar activity, it shall be impractical to mail notice of any event to Noteholders when such notice is required to be given pursuant to any provision of this Indenture, then any manner of giving such notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a sufficient giving of such notice. Where this Indenture provides for notice to the Rating Agencies, failure to give such notice shall not affect any other rights or obligations created hereunder, and shall not under any circumstance constitute a Default. SECTION 11.6 Alternate Payment and Notice Provisions. Notwithstanding any provision of this Indenture or any of the Notes to the contrary, the Issuer may enter into any agreement with any Noteholder providing for a method of payment, or notice by the Indenture Trustee or any Paying Agent to such Noteholder, that is different from the methods provided for in this Indenture for such payments or notices. The Issuer will furnish to the Indenture Trustee a copy of each such agreement and the Indenture Trustee will cause payments to be made and notices to be given in accordance with such agreements. 67 75 SECTION 11.7 Conflict with Trust Indenture Act. If any provision hereof limits, qualifies or conflicts with another provision hereof that is required to be included in this Indenture by any of the provisions of the Trust Indenture Act, such required provision shall control. The provisions of TIA Sections 310 through 317 that impose duties on any Person (including the provisions automatically deemed included herein unless expressly excluded by this Indenture) are a part of and govern this Indenture, whether or not physically contained herein. SECTION 11.8 Effect of Headings and Table of Contents. The Article and Section headings herein and the Table of Contents are for convenience only and shall not affect the construction hereof. SECTION 11.9 Successors and Assigns. All covenants and agreements in this Indenture and the Notes by the Issuer shall bind its successor and assigns, whether so expressed or not. All agreements of the Indenture Trustee in this Indenture shall bind the successors, co-trustees and agents (excluding any legal representatives or accountants) of the Indenture Trustee. SECTION 11.10 Separability. In case any provision in this Indenture or in the Notes shall be invalid, illegal or unenforceable, the validity, legality, and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 11.11 Benefits of Indenture. Nothing in this Indenture or in the Notes, express or implied, shall give to any Person, other than the parties hereto and their successors hereunder, and the Noteholders, and any other party secured hereunder, and any other Person with an ownership interest in any part of the Indenture Trust Estate, any benefit or any legal or equitable right, remedy or claim under this Indenture. SECTION 11.12 Legal Holidays. In any case where the date on which any payment is due shall not be a Business Day, then (notwithstanding any other provision of the Notes or this Indenture) payment need not be made on such date, but may be made on the next succeeding Business Day with the same force and effect as if 68 76 made on the date on which nominally due, and no interest shall accrue for the period from and after any such nominal date. SECTION 11.13 Governing Law. This Indenture shall be construed in accordance with the laws of the State of New York, without reference to its conflict of law provisions (other than Section 5-1401 of the New York General Obligations Law), and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. SECTION 11.14 Counterparts. This Indenture may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. SECTION 11.15 Recording of Indenture. If this Indenture is subject to recording in any appropriate public recording offices, such recording is to be effected by the Issuer and at its expense accompanied by an Opinion of Counsel (which may be counsel to the Indenture Trustee or any other counsel reasonably acceptable to the Indenture Trustee) to the effect that such recording is necessary either for the protection of the Noteholders or any other Person secured hereunder or for the enforcement of any right or remedy granted to the Indenture Trustee under this Indenture. SECTION 11.16 Trust Obligations. No recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer, the Seller, the Administrator, the Servicer, the Eligible Lender Trustee or the Indenture Trustee on the Notes or under this Indenture or any certificate or other writing delivered in connection herewith or therewith, against (i) the Indenture Trustee or the Eligible Lender Trustee in its individual capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Indenture Trustee or the Eligible Lender Trustee in its individual capacity, any holder or owner of a beneficial interest in the Issuer, the Eligible Lender Trustee or the Indenture Trustee or of any successor or assign thereof in its individual capacity, except as any such Person may have expressly agreed (it being understood that the Indenture Trustee and the Eligible Lender Trustee have no such obligations in their individual capacity) and except that any such partner, owner or beneficiary shall be fully liable, to the extent provided by applicable law, for any unpaid consideration for 69 77 stock, unpaid capital contribution or failure to pay any installment or call owing to such entity. For all purposes of this Indenture, in the performance of any duties or obligations of the Issuer hereunder, the Eligible Lender Trustee shall be subject to, and entitled to the benefits of, the terms and provisions of Article VI, VII and VIII of the Trust Agreement. SECTION 11.17 No Petition. The Indenture Trustee, by entering into this Indenture, and each Noteholder, by accepting a Note, hereby covenant and agree that they shall not at any time institute against the Seller or the Issuer, or join in any institution against the Seller or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency, receivership or liquidation proceedings, or other proceedings under any United States Federal or state bankruptcy or similar law in connection with any obligations relating to the Notes, this Indenture or any of the other Basic Documents. The foregoing shall not limit the rights of the Indenture Trustee to file any claim in, or otherwise take any action with respect to, any insolvency proceeding that was instituted against the Issuer by any Person other than the Indenture Trustee. SECTION 11.18 Inspection. The Issuer agrees that, on reasonable prior notice, it shall permit any representative of the Indenture Trustee, during the Issuer's normal business hours, to examine all the books of account, records, reports, and other papers of the Issuer, to make copies and extracts therefrom, to cause such books to be audited by Independent certified public accountants, and to discuss the Issuer's affairs, finances and accounts with the Issuer's officers, employees, and Independent certified public accountants, all at such reasonable times and as often as may be reasonably requested. The Indenture Trustee shall and shall cause its representatives to hold in confidence all such information obtained from such examination or inspection except to the extent disclosure may be required by law (and all reasonable applications for confidential treatment are unavailing) and except to the extent that the Indenture Trustee may reasonably determine that such disclosure is consistent with its obligations hereunder. 70 78 IN WITNESS WHEREOF, the Issuer and the Indenture Trustee have caused this Indenture to be duly executed by their respective officers, thereunto duly authorized and duly attested, all as of the day and year first above written. SLM STUDENT LOAN TRUST 1996-4, by CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION, not in its individual ca- pacity but solely as Eligible Lender Trustee, by /s/ John W. Mack ------------------ Name: John W. Mack Title: Second Vice President CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION not in its individual capacity but solely as Eligible Lender Trustee, by /s/ John W. Mack ------------------ Name: John W. Mack Title: Second Vice President BANKERS TRUST COMPANY, not in its indi- vidual capacity but solely as Indenture Trustee, by /s/ Lara Graff ---------------- Name: Lara Graff Title: Assistant Vice President 71 79 APPENDIX A TO THE INDENTURE Definitions and Usage 72 80 SCHEDULE A TO THE INDENTURE Schedule of Trust Student Loans [See Schedule A to the Bill of Sale (Attachment B to the Sale Agreement)] 73 81 SCHEDULE B TO THE INDENTURE Location of Trust Student Loan Files [See Attachment B to the Servicing Agreement] 74 82 EXHIBIT A TO THE INDENTURE [FORM OF CLASS A-1 NOTE] SEE REVERSE FOR CERTAIN DEFINITIONS Unless this Note 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 Note 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. THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THIS NOTE IS NOT GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY. NUMBER $150,000,000 R-1 CUSIP NO. 78442 GAG 1 75 83 SLM STUDENT LOAN TRUST 1996-4 FLOATING RATE CLASS A-1 STUDENT LOAN-BACKED NOTES SLM Student Loan Trust 1996-4, a business trust organized and existing under the laws of the State of Delaware (herein referred to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of 150,000,000 DOLLARS payable on each Distribution Date in an amount equal to the result obtained by multiplying (i) a fraction the numerator of which is $150,000,000 and the denominator of which is $957,300,000 by (ii) the aggregate amount, if any, payable to Class A-1 Noteholders on such Distribution Date in respect of principal of the Notes pursuant to Section 3.1 of the Indenture dated as of October 1, 1996, among the Issuer, Chase Manhattan Bank USA, National Association, a national banking association, as Eligible Lender Trustee on behalf of the Issuer, and Bankers Trust Company, a New York banking corporation, as Indenture Trustee (the "Indenture Trustee") (capitalized terms used but not defined herein being defined in Appendix A to the Indenture, which also contains rules as to usage that shall be applicable herein); provided, however, that the entire unpaid principal amount of this Note shall be due and payable on the July 2004 Distribution Date (the "Class A-1 Maturity Date"). The Issuer shall pay interest on this Note at the rate per annum equal to the Class A-1 Rate (as defined on the reverse hereof), on each Distribution Date until the principal of this Note is paid or made available for payment, on the principal amount of this Note outstanding on the preceding Distribution Date (after giving effect to all payments of principal made on the preceding Distribution Date), subject to certain limitations contained in Section 3.1 of the Indenture. Interest on this Note shall accrue from and including the preceding Distribution Date (or, in the case of the first Accrual Period, the Closing Date) to but excluding the following Distribution Date (each an "Accrual Period"). Interest shall be calculated on the basis of the actual number of days elapsed in each Accrual Period divided by 365 (or 366 in the case of a leap year). Such principal of and interest on this Note shall be paid in the manner specified on the reverse hereof. 76 84 The principal of and interest on this Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. All payments made by the Issuer with respect to this Note shall be applied first to interest due and payable on this Note as provided above and then to the unpaid principal of this Note. Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Note. Unless the certificate of authentication hereon has been executed by the Indenture Trustee whose name appears below by manual signature, this Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose. 77 85 [REVERSE OF NOTE] This Note is one of a duly authorized issue of Notes of the Issuer, designated as its Floating Rate Class A-1 Student Loan-Backed Notes (the "Class A-1 Notes"), which, together with the Issuer's Floating Rate Class A-2 Student Loan-Backed Notes (the "Class A-2 Notes" and, together with the Class A-1 Notes, the "Notes") are issued under and secured by the Indenture, to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Indenture Trustee and the Noteholders. The Notes are subject to all terms of the Indenture. The Class A-1 Notes are and will be equally and ratably secured by the Collateral pledged as security therefor as provided in the Indenture. The Class A-1 Notes are senior in right of payment to the Class A-2 Notes as and to the extent provided in the Indenture. Principal of the Class A-1 Notes shall be payable on each Distribution Date in an amount described on the face hereof. "Distribution Date" means the 25th day of each January, April, July and October or, if any such date is not a Business Day, the next succeeding Business Day, commencing January 27, 1997. As described on the face hereof, the entire unpaid principal amount of this Note shall be due and payable on the Class A-1 Maturity Date. Notwithstanding the foregoing, the entire unpaid principal amount of the Notes shall be due and payable on the date on which (i) an Event of Default shall have occurred and be continuing and (ii) the Indenture Trustee or the Noteholders representing not less than a majority of the Outstanding Amount of the Notes shall have declared the Notes to be immediately due and payable in the manner provided in Section 5.2 of the Indenture. All principal payments on the Class A-1 Notes shall be made pro rata to the Noteholders entitled thereto. Interest on the Class A-1 Notes shall be payable on each Distribution Date on the principal amount outstanding of the Class A-1 Notes until the principal amount thereof is paid in full, at a rate per annum equal to the Class A-1 Rate. The "Class A-1 Rate" for each Accrual Period shall be equal to the lesser of (a) the weighted average of the T-Bill Rates within such Accrual Period plus 0.48% per 78 86 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 Collection Period relating to such Accrual Period less the Primary Servicing Fee and the Administration Fee 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. Any Note Interest Carryover that may exist on any Distribution Date attributable to the Notes shall be payable to the Noteholders on that Distribution Date and any succeeding Distribution Dates, solely out of the funds available and required to be applied thereto pursuant to the Administration Agreement. Payments of interest on this Note on each Distribution Date, together with the installment of principal, if any, to the extent not in full payment of this Note, shall be made by check mailed to the Person whose name appears as the Registered Holder of this Note (or one or more Predecessor Notes) on the Note Register on the Record Date, except that with respect to Notes registered on the Record Date in the name of the nominee of the Clearing Agency, unless Definitive Notes have been issued (initially, such nominee to be Cede & Co.), payments shall be made by wire transfer in immediately available funds to the account designated by such nominee. Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Note Register as of the applicable Record Date without requiring that this Note be submitted for notation of payment, and the mailing of such check shall constitute payment of the amount thereof regardless of whether such check is returned undelivered. Any reduction in the principal amount of this Note (or any one or more Predecessor Notes) effected by any payments made on any Distribution Date shall be binding upon all future Noteholders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are expected to be available, as provided in the Indenture, for payment in full of the then remaining unpaid principal amount of this Note on a Distribution Date, then the Indenture Trustee, in the name of and on behalf of the Issuer, shall notify the Person who was the Noteholder hereof as of the preceding Record Date by notice mailed no later than five days prior to such Distribution Date and the amount then due and payable shall be payable only upon presentation and surrender of this Note at the Indenture Trustee's Corporate Trust Office or at the 79 87 office of the Indenture Trustee's agent appointed for such purposes located in the Borough of Manhattan, The City of New York. The Issuer shall pay interest on overdue installments of interest on this Note at the Class A-1 Rate to the extent lawful. As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Note may be registered on the Note Register upon surrender of this Note for registration of transfer at the office or agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by, the Noteholder hereof or his attorney duly authorized in writing, with such signature guaranteed by an "eligible guarantor institution" meeting the requirements of the Note Registrar, which requirements include membership or participation in Securities Transfer Agent's Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Note Registrar in addition to, or in substitution for, STAMP (all in accordance with the Exchange Act), and such other documents as the Indenture Trustee may require, and thereupon one or more new Notes of authorized denominations and in the same aggregate principal amount shall be issued to the designated transferee or transferees. No service charge will be charged for any registration of transfer or exchange of this Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange. Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in the Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Indenture Trustee or the Eligible Lender Trustee in its individual capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Indenture Trustee or the Eligible Lender Trustee in its individual capacity, any holder or owner of a beneficial interest in the Issuer, the Eligible Lender Trustee or the Indenture Trustee or of any successor or assign thereof in its individual capacity, except as any such Person may have expressly agreed (it being understood that the Indenture Trustee and the Eligible Lender Trustee have no such obligations in their individual capacity) and except that any such partner, owner or beneficiary shall 80 88 be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity. Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, covenants and agrees that by accepting the benefits of the Indenture such Noteholder or Note Owner will not at any time institute against the Seller or the Issuer, or join in any institution against the Seller or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency, receivership or liquidation proceedings or other proceedings under any United States Federal or state bankruptcy or similar law in connection with any obligations relating to the Notes, the Indenture or the other Basic Documents. Prior to the due presentment for registration of transfer of this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Note (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes whether or not this Note be overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall be affected by notice to the contrary. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Noteholders under the Indenture at any time by the Issuer with the consent of the Noteholders representing a majority of the Outstanding Amount of all Notes at the time outstanding. The Indenture also contains provisions permitting the Noteholders representing specified percentages of the Outstanding Amount of the Notes, on behalf of all the Noteholders, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the holder of this Note (or any one of more Predecessor Notes) shall be conclusive and binding upon such holder and upon all future holders of this Note and of any Note issued upon registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Note. The Indenture also permits the Indenture Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of holders of the Notes issued thereunder. 81 89 The term "Issuer" as used in this Note includes any successor to the Issuer under the Indenture. The Issuer is permitted by the Indenture, under certain circumstances, to merge or consolidate, subject to the rights of the Indenture Trustee and the Noteholders under the Indenture. The Notes are issuable only in registered form in denominations as provided in the Indenture, subject to certain limitations therein set forth. This Note shall be construed in accordance with the laws of the State of New York, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such laws. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place, and rate, and in the coin or currency, herein prescribed. Anything herein to the contrary notwithstanding, except as expressly provided in the Basic Documents, neither Bankers Trust Company in its individual capacity, Chase Manhattan Bank USA, National Association in its individual capacity, any owner of a beneficial interest in the Issuer, nor any of their respective partners, beneficiaries, agents, officers, directors, employees or successors or assigns shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on, or performance of, or omission to perform, any of the covenants, obligations or indemnifications contained in this Note or the Indenture; it being expressly understood that said covenants, obligations and indemnifications have been made by the Eligible Lender Trustee for the sole purposes of binding the interests of the Eligible Lender Trustee in the assets of the Issuer. The Noteholder of this Note by the acceptance hereof agrees that, except as expressly provided in the Basic Documents, in the case of an Event of Default under the Indenture, the Noteholder shall have no claim against any of the foregoing for any deficiency, loss or claim therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Issuer for any and all liabilities, obligations and undertakings contained in the Indenture or in this Note. 82 90 ASSIGNMENT Social Security or taxpayer I.D. or other identifying number of assignee - -------------------------------------------------------------------------------- FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto - -------------------------------------------------------------------------------- (name and address of assignee) the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints _________________________________________________________________ attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises. Dated: ------------------------- */ --------------------------------------- Signature Guaranteed: */ --------------------------------------- - --------------------- */ NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Note Registrar, which requirements include membership or participation in STAMP or such other "signature guarantee program" as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. 83 91 [FORM OF CLASS A-2 NOTE] SEE REVERSE FOR CERTAIN DEFINITIONS Unless this Note 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 Note 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. THE PRINCIPAL OF THIS NOTE IS PAYABLE IN INSTALLMENTS AS SET FORTH HEREIN. ACCORDINGLY, THE OUTSTANDING PRINCIPAL AMOUNT OF THIS NOTE AT ANY TIME MAY BE LESS THAN THE AMOUNT SHOWN ON THE FACE HEREOF. THIS NOTE IS NOT GUARANTEED OR INSURED BY ANY GOVERNMENTAL AGENCY. NUMBER $150,000,000 R-1 CUSIP NO. 78442 GAH 9 84 92 SLM STUDENT LOAN TRUST 1996-4 FLOATING RATE CLASS A-2 STUDENT LOAN-BACKED NOTES SLM Student Loan Trust 1996-4, a business trust organized and existing under the laws of the State of Delaware (herein referred to as the "Issuer"), for value received, hereby promises to pay to CEDE & CO., or registered assigns, the principal sum of 150,000,000 DOLLARS payable on each Distribution Date in an amount equal to the result obtained by multiplying (i) a fraction the numerator of which is $150,000,000 and the denominator of which is $495,000,000 by (ii) the aggregate amount, if any, payable to Class A-2 Noteholders on such Distribution Date in respect of principal of the Notes pursuant to Section 3.1 of the Indenture dated as of October 1, 1996, among the Issuer, Chase Manhattan Bank USA, National Association, a national banking association, as Eligible Lender Trustee on behalf of the Issuer, and Bankers Trust Company, a New York banking corporation, as Indenture Trustee (the "Indenture Trustee") (capitalized terms used but not defined herein being defined in Appendix A to the Indenture, which also contains rules as to usage that shall be applicable herein); provided, however, that the entire unpaid principal amount of this Note shall be due and payable on the July 2009 Distribution Date (the "Class A-2 Maturity Date"). The Issuer shall pay interest on this Note at the rate per annum equal to the Class A-2 Rate (as defined on the reverse hereof), on each Distribution Date until the principal of this Note is paid or made available for payment, on the principal amount of this Note outstanding on the preceding Distribution Date (after giving effect to all payments of principal made on the preceding Distribution Date), subject to certain limitations contained in Section 3.1 of the Indenture. Interest on this Note shall accrue from and including the preceding Distribution Date (or, in the case of the first Accrual Period, the Closing Date) to but excluding the following Distribution Date (each an "Accrual Period"). Interest shall be calculated on the basis of the actual number of days elapsed in each Accrual Period divided by 365 (or 366 in the case of a leap year). Such principal of and interest on this Note shall be paid in the manner specified on the reverse hereof. 85 93 The principal of and interest on this Note are payable in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts. All payments made by the Issuer with respect to this Note shall be applied first to interest due and payable on this Note as provided above and then to the unpaid principal of this Note. Reference is made to the further provisions of this Note set forth on the reverse hereof, which shall have the same effect as though fully set forth on the face of this Note. Unless the certificate of authentication hereon has been executed by the Indenture Trustee whose name appears below by manual signature, this Note shall not be entitled to any benefit under the Indenture referred to on the reverse hereof, or be valid or obligatory for any purpose. 86 94 IN WITNESS WHEREOF, the Issuer has caused this instrument to be duly executed, manually or in facsimile, as of the date set forth below. SLM STUDENT LOAN TRUST 1996-4 by CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION, not in its individual capacity but solely as Eligible Lender Trustee under the Trust Agreement, by --------------------- Authorized Signatory Date: October 3, 1996 TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Notes designated above and referred to in the within-mentioned Indenture. BANKERS TRUST COMPANY, not in its individual capacity but solely as Indenture Trustee, by --------------------- Authorized Signatory Date: October 3, 1996 87 95 [REVERSE OF NOTE] This Note is one of a duly authorized issue of Notes of the Issuer, designated as its Floating Rate Class A-2 Student Loan-Backed Notes (the "Class A-2 Notes"), which, together with the Issuer's Floating Rate Class A-1 Student Loan-Backed Notes (the "Class A-1 Notes" and, together with the Class A-2 Notes, the "Notes") are issued under and secured by the Indenture, to which Indenture and all indentures supplemental thereto reference is hereby made for a statement of the respective rights and obligations thereunder of the Issuer, the Indenture Trustee and the Noteholders. The Notes are subject to all terms of the Indenture. The Class A-2 Notes are and will be equally and ratably secured by the Collateral pledged as security therefor as provided in the Indenture. The Class A-1 Notes are senior in right of payment to the Class A-2 Notes as and to the extent provided in the Indenture. Principal of the Class A-2 Notes shall be payable on each Distribution Date in an amount described on the face hereof. "Distribution Date" means the 25th day of each January, April, July and October or, if any such date is not a Business Day, the next succeeding Business Day, commencing January 27, 1997. As described on the face hereof, the entire unpaid principal amount of this Note shall be due and payable on the Class A-2 Maturity Date. Notwithstanding the foregoing, the entire unpaid principal amount of the Notes shall be due and payable on the date on which (i) an Event of Default shall have occurred and be continuing and (ii) the Indenture Trustee or the Noteholders representing not less than a majority of the Outstanding Amount of the Notes shall have declared the Notes to be immediately due and payable in the manner provided in Section 5.2 of the Indenture. All principal payments on the Class A-2 Notes shall be made pro rata to the Noteholders entitled thereto. Interest on the Class A-2 Notes shall be payable on each Distribution Date on the principal amount outstanding of the Class A-2 Notes until the principal amount thereof is paid in full, at a rate per annum equal to the Class A-2 Rate. The "Class A-2 Rate" for each Accrual Period shall be equal to the lesser of (a) the weighted average of the T-Bill Rates within such Accrual Period plus 0.64% per 88 96 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 Collection Period relating to such Accrual Period less the Primary Servicing Fee and the Administration Fee 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. Any Note Interest Carryover that may exist on any Distribution Date attributable to the Notes shall be payable to the Noteholders on that Distribution Date and any succeeding Distribution Dates, solely out of the funds available and required to be applied thereto pursuant to the Administration Agreement. Payments of interest on this Note on each Distribution Date, together with the installment of principal, if any, to the extent not in full payment of this Note, shall be made by check mailed to the Person whose name appears as the Registered Holder of this Note (or one or more Predecessor Notes) on the Note Register on the Record Date, except that with respect to Notes registered on the Record Date in the name of the nominee of the Clearing Agency, unless Definitive Notes have been issued (initially, such nominee to be Cede & Co.), payments shall be made by wire transfer in immediately available funds to the account designated by such nominee. Such checks shall be mailed to the Person entitled thereto at the address of such Person as it appears on the Note Register as of the applicable Record Date without requiring that this Note be submitted for notation of payment, and the mailing of such check shall constitute payment of the amount thereof regardless of whether such check is returned undelivered. Any reduction in the principal amount of this Note (or any one or more Predecessor Notes) effected by any payments made on any Distribution Date shall be binding upon all future Noteholders of this Note and of any Note issued upon the registration of transfer hereof or in exchange hereof or in lieu hereof, whether or not noted hereon. If funds are expected to be available, as provided in the Indenture, for payment in full of the then remaining unpaid principal amount of this Note on a Distribution Date, then the Indenture Trustee, in the name of and on behalf of the Issuer, shall notify the Person who was the Noteholder hereof as of the preceding Record Date by notice mailed no later than five days prior to such Distribution Date and the amount then due and payable shall be payable only upon presentation and surrender of this Note at the Indenture Trustee's Corporate Trust Office or at the 89 97 office of the Indenture Trustee's agent appointed for such purposes located in the Borough of Manhattan, The City of New York. The Issuer shall pay interest on overdue installments of interest on this Note at the Class A-2 Rate to the extent lawful. As provided in the Indenture and subject to certain limitations set forth therein, the transfer of this Note may be registered on the Note Register upon surrender of this Note for registration of transfer at the office or agency designated by the Issuer pursuant to the Indenture, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Indenture Trustee duly executed by, the Noteholder hereof or his attorney duly authorized in writing, with such signature guaranteed by an "eligible guarantor institution" meeting the requirements of the Note Registrar, which requirements include membership or participation in Securities Transfer Agent's Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Note Registrar in addition to, or in substitution for, STAMP (all in accordance with the Exchange Act), and such other documents as the Indenture Trustee may require, and thereupon one or more new Notes of authorized denominations and in the same aggregate principal amount shall be issued to the designated transferee or transferees. No service charge will be charged for any registration of transfer or exchange of this Note, but the transferor may be required to pay a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any such registration of transfer or exchange. Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in the Note, covenants and agrees that no recourse may be taken, directly or indirectly, with respect to the obligations of the Issuer or the Indenture Trustee on the Notes or under the Indenture or any certificate or other writing delivered in connection therewith, against (i) the Indenture Trustee or the Eligible Lender Trustee in its individual capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any partner, owner, beneficiary, agent, officer, director or employee of the Indenture Trustee or the Eligible Lender Trustee in its individual capacity, any holder or owner of a beneficial interest in the Issuer, the Eligible Lender Trustee or the Indenture Trustee or of any successor or assign thereof in its individual capacity, except as any such Person may have expressly agreed (it being understood that the Indenture Trustee and the Eligible Lender Trustee have no such obligations in their individual capacity) and except that any such partner, owner or beneficiary shall 90 98 be fully liable, to the extent provided by applicable law, for any unpaid consideration for stock, unpaid capital contribution or failure to pay any installment or call owing to such entity. Each Noteholder or Note Owner, by acceptance of a Note or, in the case of a Note Owner, a beneficial interest in a Note, covenants and agrees that by accepting the benefits of the Indenture such Noteholder or Note Owner will not at any time institute against the Seller or the Issuer, or join in any institution against the Seller or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency, receivership or liquidation proceedings or other proceedings under any United States Federal or state bankruptcy or similar law in connection with any obligations relating to the Notes, the Indenture or the other Basic Documents. Prior to the due presentment for registration of transfer of this Note, the Issuer, the Indenture Trustee and any agent of the Issuer or the Indenture Trustee may treat the Person in whose name this Note (as of the day of determination or as of such other date as may be specified in the Indenture) is registered as the owner hereof for all purposes whether or not this Note be overdue, and neither the Issuer, the Indenture Trustee nor any such agent shall be affected by notice to the contrary. The Indenture permits, with certain exceptions as therein provided, the amendment thereof and the modification of the rights and obligations of the Issuer and the rights of the Noteholders under the Indenture at any time by the Issuer with the consent of the Noteholders representing a majority of the Outstanding Amount of all Notes at the time outstanding. The Indenture also contains provisions permitting the Noteholders representing specified percentages of the Outstanding Amount of the Notes, on behalf of all the Noteholders, to waive compliance by the Issuer with certain provisions of the Indenture and certain past defaults under the Indenture and their consequences. Any such consent or waiver by the holder of this Note (or any one of more Predecessor Notes) shall be conclusive and binding upon such holder and upon all future holders of this Note and of any Note issued upon registration of transfer hereof or in exchange hereof or in lieu hereof whether or not notation of such consent or waiver is made upon this Note. The Indenture also permits the Indenture Trustee to amend or waive certain terms and conditions set forth in the Indenture without the consent of holders of the Notes issued thereunder. 91 99 The term "Issuer" as used in this Note includes any successor to the Issuer under the Indenture. The Issuer is permitted by the Indenture, under certain circumstances, to merge or consolidate, subject to the rights of the Indenture Trustee and the Noteholders under the Indenture. The Notes are issuable only in registered form in denominations as provided in the Indenture, subject to certain limitations therein set forth. This Note shall be construed in accordance with the laws of the State of New York, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder and thereunder shall be determined in accordance with such laws. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Issuer, which is absolute and unconditional, to pay the principal of and interest on this Note at the times, place, and rate, and in the coin or currency, herein prescribed. Anything herein to the contrary notwithstanding, except as expressly provided in the Basic Documents, neither Bankers Trust Company in its individual capacity, Chase Manhattan Bank USA, National Association in its individual capacity, any owner of a beneficial interest in the Issuer, nor any of their respective partners, beneficiaries, agents, officers, directors, employees or successors or assigns shall be personally liable for, nor shall recourse be had to any of them for, the payment of principal of or interest on, or performance of, or omission to perform, any of the covenants, obligations or indemnifications contained in this Note or the Indenture; it being expressly understood that said covenants, obligations and indemnifications have been made by the Eligible Lender Trustee for the sole purposes of binding the interests of the Eligible Lender Trustee in the assets of the Issuer. The Noteholder of this Note by the acceptance hereof agrees that, except as expressly provided in the Basic Documents, in the case of an Event of Default under the Indenture, the Noteholder shall have no claim against any of the foregoing for any deficiency, loss or claim therefrom; provided, however, that nothing contained herein shall be taken to prevent recourse to, and enforcement against, the assets of the Issuer for any and all liabilities, obligations and undertakings contained in the Indenture or in this Note. 92 100 ASSIGNMENT Social Security or taxpayer I.D. or other identifying number of assignee - -------------------------------------------------------------------------------- FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto - -------------------------------------------------------------------------------- (name and address of assignee) the within Note and all rights thereunder, and hereby irrevocably constitutes and appoints __________________________________________________ attorney, to transfer said Note on the books kept for registration thereof, with full power of substitution in the premises. Dated: ------------------------ */ ------------------------------ Signature Guaranteed: */ ------------------------------ - ------------------- */ NOTICE: The signature to this assignment must correspond with the name of the registered owner as it appears on the face of the within Note in every particular, without alteration, enlargement or any change whatever. Such signature must be guaranteed by an "eligible guarantor institution" meeting the requirements of the Note Registrar, which requirements include membership or participation in STAMP or such other "signature guarantee program" as may be determined by the Note Registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended. 93 101 EXHIBIT B TO THE INDENTURE Note Depository Agreement 94 EX-19.1 8 QUARTERLY SERVICING REPORTS 1 EXHIBIT 19.1 SALLIE MAE STUDENT LOAN TRUST 1995-1 QUARTERLY SERVICING REPORT REPORT DATE: 9/30/96 REPORTING PERIOD: 7/01/96-9/30/96 - -------------------------------------------------------------------------------- I. DEAL PARAMETERS - --------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------- A STUDENT LOAN PORTFOLIO CHARACTERISTICS 6/30/96 ACTIVITY 9/30/96 -------------------------------------------------------------------------------------------------------- i Portfolio Balance $853,757,457.19 ($50,814,946.31) $802,942,510.88 ii Interest to be Capitalized $677,908.07 $652,786.04 --------------- --------------- iii TOTAL POOL $854,435,365.26 $803,595,296.92 =============== =============== B i Weighted Average Coupon (WAC) 8.3443% 8.1816% ii Weighted Average Remaining Term 84.75 83.39 iii Number of Loans 480,738 459,572 iv Number of Borrowers 207,681 198,283 --------------------------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------------------------------------------- C NOTES AND CERTIFICATES SPREAD BALANCE 7/25/96 % OF POOL BALANCE 10/25/96 % OF POOL --------------------------------------------------------------------------------------------------------------------------- i A-1 Notes 795452AA9 0.575% $604,435,365.26 70.741% $553,595,296.92 68.890% ii A-2 Notes 795452AB7 0.750% $215,000,000.00 25.163% $215,000,000.00 26.755% iii Certificates 795452AC5 1.000% $ 35,000,000.00 4.096% $ 35,000,000.00 4.355% --------------------------------------------------------------------------------------------------------------------------- iv TOTAL NOTES AND CERTIFICATES $854,435,365.26 100.000% $803,595,296.92 100.000% =========================================================================================================================== --------------------------------------------------------------------------------------------------------------------------- D RESERVE ACCOUNT 7/25/96 10/25/96 --------------------------------------------------------------------------------------------------------------------------- i Required Reserve Acct Deposit (%) 0.50% 0.50% ii Reserve Acct Initial Deposit ($) iii Specified Reserve Acct Balance ($) $4,272,176.83 $4,017,976.48 iv Reserve Account Floor Balance ($) $1,000,000.00 $1,000,000.00 v Current Reserve Acct Balance ($) $4,272,176.83 $4,017,976.48 ---------------------------------------------------------------------------------------------------------------------------
Page 1 Sallie Mae Loan Trust 1995-1 2 - -------------------------------------------------------------------------------- II. 1995-1 TRANSACTIONS FROM: 7/01/96 THROUGH: 9/30/96 - -------------------------------------------------------------------------------- A STUDENT LOAN PRINCIPAL ACTIVITY i Regular Principal Collections $ 40,504,277.25 ii Principal Collections from Guarantor $ 8,336,900.38 iii Principal Reimbursements $ 2,842,522.44 iv Other System Adjustments $ (577.57) ---------------- v TOTAL PRINCIPAL COLLECTIONS $ 51,683,122.50 B STUDENT LOAN NON-CASH PRINCIPAL ACTIVITY i Other Adjustments $ 214,754.01 ii Capitalized Interest $ (1,082,930.20) ---------------- iii TOTAL NON-CASH PRINCIPAL ACTIVITY $ (868,176.19) -------------------------------------------------------------------------- C TOTAL STUDENT LOAN PRINCIPAL ACTIVITY $ 50,814,946.31 -------------------------------------------------------------------------- D STUDENT LOAN INTEREST ACTIVITY i Regular Interest Collections $ 15,456,574.89 ii Interest Claims Received from Guarantors $ 557,105.25 iii Interest Reimbursements $ 36,142.78 iv Other System Adjustments $ (163.96) v Special Allowance Payments $ 617,049.00 vi Subsidy Payments $ 792,317.27 ---------------- vii TOTAL INTEREST COLLECTIONS $ 17,459,025.23 E STUDENT LOAN NON-CASH INTEREST ACTIVITY i Interest Accrual Adjustment $ (111,637.14) ii Capitalized Interest $ 1,082,930.20 ---------------- iii TOTAL NON-CASH INTEREST ADJUSTMENTS $ 971,293.06 -------------------------------------------------------------------------- F TOTAL STUDENT LOAN INTEREST ACTIVITY $ 18,430,318.29 --------------------------------------------------------------------------
Page 2 Sallie Mae Loan Trust 1995-1 3 - -------------------------------------------------------------------------------- III. 1995-1 COLLECTION ACCOUNT ACTIVITY 7/01/96 THROUGH 9/30/96 - -------------------------------------------------------------------------------- A PRINCIPAL COLLECTIONS i Principal Payments Received-Cash $ 48,841,177.63 ii Cash Forwarded by Administrator on behalf of Seller $ 872,464.74 iii Cash Forwarded by Administrator on behalf of Servicer $ 8,223.64 iv Cash Forwarded by Administrator for Consolidation Activity $ 1,961,256.49 ---------------- v TOTAL PRINCIPAL COLLECTIONS $ 51,683,122.50 B INTEREST COLLECTIONS i Interest Payments Received-Cash $ 17,423,046.41 ii Cash Forwarded by Administrator on behalf of Seller $ 17,816.77 iii Cash Forwarded by Administrator on behalf of Servicer $ 475.34 iv Cash Forwarded by Administrator for Consolidation Activity $ 17,686.71 ---------------- v TOTAL INTEREST COLLECTIONS $ 17,459,025.23 C OTHER REIMBURSEMENTS $ 57,368.08 D ADMINISTRATOR ACCOUNT INVESTMENT INCOME $ 527,659.12 E TOTAL FUNDS RECEIVED $ 69,727,174.93 (LESS: SERVICING FEES PREVIOUSLY REMITTED) $ (1,318,723.20) -------------------------------------------------------------------------------------------- TOTAL FUNDS TRANSFERRED TO COLLECTION ACCOUNT $ 68,408,451.73 -------------------------------------------------------------------------------------------- F SERVICING FEE CALCULATION-CURRENT MONTH i Unit Charge Calculation $ 643,587.20 ii Percentage of Principal Calculation $ 1,029,774.70 iii Lesser of Unit or Principal Calculation $ 643,587.20 G SERVICING FEES DUE FOR CURRENT PERIOD $ 643,587.20 H CARRYOVER SERVICING FEES DUE $ 1,183,990.53
JULY 1996 Servicing Carryover $ 409,732.27 AUG 1996 Servicing Carryover $ 396,769.74 SEPT 1996 Servicing Carryover $ 386,187.50 ------------- $1,192,689.51 LESS: SERVICING ADJ [A iii + B iii] $ (8,698.98) ------------- CARRYOVER SERVICING FEE DUE $1,183,990.53 ============= I ADMINISTRATION FEES DUE $ 20,000.00 -------------------------------------------------------------------------------------------- J TOTAL FEES DUE FOR PERIOD $ 1,847,577.73 --------------------------------------------------------------------------------------------
Page 3 Sallie Mae Loan Trust 1995-1 4 - -------------------------------------------------------------------------------- IV. 1995-1 PORTFOLIO CHARACTERISTICS - --------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------- WEIGHTED AVG COUPON # OF LOANS % - ------------------------------------------------------------------------------------------------------------------------------------ STATUS 06/30/96 09/30/96 06/30/96 09/30/96 06/30/96 9/30/96 - ------------------------------------------------------------------------------------------------------------------------------------ INTERIM: IN SCHOOL Current 8.3938% 8.1719% 463 485 0.0963% 0.1055% GRACE Current 8.4151% 8.1812% 236 241 0.0491% 0.0524% - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL INTERIM 8.4012% 8.1750% 699 726 0.1454% 0.1580% - ------------------------------------------------------------------------------------------------------------------------------------ REPAYMENT ACTIVE Current 8.3358% 8.1805% 421,952 399,678 87.7717% 86.9674% 31-60 Days Delinquent 8.4178% 8.2289% 18,578 16,394 3.8645% 3.5672% 61-90 Days Delinquent 8.4499% 8.2275% 6,268 6,095 1.3038% 1.3262% 91-120 Days Delinquent 8.4367% 8.2166% 2,853 4,422 0.5935% 0.9622% Greater than 120 Days Delinquent 8.4440% 8.2028% 4,180 5,982 0.8695% 1.3016% DEFERMENT Current 8.3433% 8.1355% 14,578 17,074 3.0324% 3.7152% FORBEARANCE Current 8.3282% 8.1580% 7,617 7,248 1.5844% 1.5771% - ------------------------------------------------------------------------------------------------------------------------------------ TOTAL REPAYMENT 8.3430% 8.1814% 476,026 456,893 99.0198% 99.4171% - ------------------------------------------------------------------------------------------------------------------------------------ CLAIMS IN PROCESS (1) 8.4693% 8.2291% 4,013 1,953 0.8348% 0.4250% AGED CLAIMS REJECTED (2) 0% 0% - - 0% 0% - ------------------------------------------------------------------------------------------------------------------------------------ GRAND TOTAL 8.3443% 8.1816% 480,738 459,572 100.00% 100.00% - ------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------ PRINCIPAL AMOUNT % - ----------------------------------------------------------------------------------------------------------------------------- STATUS 06/30/96 09/30/96 06/30/96 09/30/96 - ----------------------------------------------------------------------------------------------------------------------------- INTERIM: IN SCHOOL Current $996,019.15 $1,057,103.97 0.1167% 0.1317% GRACE Current $530,365.75 $529,145.20 0.0621% 0.0659% - ----------------------------------------------------------------------------------------------------------------------------- TOTAL INTERIM $1,526,384.90 $1,586,249.17 0.1788% 0.1976% - ----------------------------------------------------------------------------------------------------------------------------- REPAYMENT ACTIVE Current $732,403,998.02 $680,405,628.84 85.7860% 84.7390% 31-60 Days Delinquent $36,020,757.54 $31,404,071.14 4.2191% 3.9111% 61-90 Days Delinquent $12,890,374.94 $12,333,766.79 1.5098% 1.5361% 91-120 Days Delinquent $6,127,438.95 $8,978,686.54 0.7177% 1.1182% Greater than 120 Days Delinquent $8,552,575.25 $12,382,302.76 1.0018% 1.5421% DEFERMENT Current $31,671,220.91 $36,731,017.08 3.7096% 4.5746% FORBEARANCE Current $16,790,639.37 $15,454,838.62 1.9667% 1.9248% - ----------------------------------------------------------------------------------------------------------------------------- TOTAL REPAYMENT $844,457,004.98 $797,690,311.77 98.9106% 99.3459% - ----------------------------------------------------------------------------------------------------------------------------- CLAIMS IN PROCESS (1) $7,774,067.30 $3,665,949.93 0.9106% 0.4566% AGED CLAIMS REJECTED (2) $0.00 $0.00 0% 0% - ----------------------------------------------------------------------------------------------------------------------------- GRAND TOTAL $853,757,457.18 $802,942,510.87 100.00% 100.00% - -----------------------------------------------------------------------------------------------------------------------------
(1) CLAIMS FILED AND UNPAID; INCLUDES CLAIMS REJECTED AGED LESS THAN 6 MONTHS. (2) CLAIMS REJECTED (SUBJECT TO CURE) AGED 6 MONTHS OR MORE; ALSO INCLUDES CLAIMS DEEMED INCURABLE PENDING REPURCHASE. Page 4 Sallie Mae Loan Trust 1995-1 5 - -------------------------------------------------------------------------------- V. 1995-1 INTEREST CALCULATION - -------------------------------------------------------------------------------- A Borrower Interest Accrued During Collection Period $ 16,189,000.60 B Interest Subsidy Payments Accrued During Collection Period $ 721,504.64 C SAP Payments Accrued During Collection Period $ 752,003.38 D INV Earnings Accrued for Collection Period (RESERVE & COLLECTION ACTS) $ 67,758.71 E Investment Earnings (ADMINISTRATOR ACT) $ 527,659.12 --------------- F NET EXPECTED INTEREST COLLECTIONS $ 18,257,926.45 G STUDENT LOAN RATE i Days in Collection Period (7/01/96-09/30/96) 92 ii Days in Year 366 iii Net Expected Interest Collections $ 18,257,926.45 iv Primary Servicing Fee $ 1,962,310.40 v Administration Fee $ 20,000.00 vi Total Pool Balance at Beginning of Collection Period $854,435,365.26 vii STUDENT LOAN RATE 7.57795%
ACCRUED INT FACTOR ACCRUAL PERIOD ------------ ----------------- H Class A-1 T-Bill Based Interest Rate 5.79761% I CLASS A-1 INTEREST RATE 0.014573224 (7/25/96-10/25/96) 5.79761% J Class A-2 T-Bill Based Interest Rate 5.97261% K CLASS A-2 INTEREST RATE 0.015013115 (7/25/96-10/25/96) 5.97261% L Certificate T-Bill Based Rate of Return 6.22261% M CERTIFICATE RATE OF RETURN 0.015641530 (7/25/96-10/25/96) 6.22261%
Page 5 Sallie Mae Loan Trust 1995-1 6 - -------------------------------------------------------------------------------- VI. 1995-1 INPUTS FROM PREVIOUS QUARTERLY SERVICING REPORTS 6/30/96 - -------------------------------------------------------------------------------- A Total Student Loan Pool Outstanding i Current Pool Balance $853,757,457.19 ii Interest To Be Capitalized $ 677,908.07 --------------- iii TOTAL STUDENT LOAN POOL OUTSTANDING $854,435,365.26 =============== B Total Note and Certificate Factor 0.85443536526 C TOTAL NOTE AND CERTIFICATE BALANCE $854,435,365.26
--------------------------------------------------------------------------------------------------------------- D NOTE BALANCE 7/25/96 CLASS A-1 CLASS A-2 CERTIFICATES --------------------------------------------------------------------------------------------------------------- i Current Factor-7/25/96 0.8059138203 1.0000000000 1.0000000000 ii Note Principal Shortfall $ 0.00 $ 0.00 $ 0.00 iii Expected Note Balance $604,435,365.26 $215,000,000.00 $35,000,000.00 --------------------------------------------------------------------------------------------------------------- iv NOTE BALANCE $604,435,365.26 $215,000,000.00 $35,000,000.00 ---------------------------------------------------------====================================================== E Interest Shortfall $ 0.00 $ 0.00 $ 0.00 F Interest Carryover $ 0.00 $ 0.00 $ 0.00 --------------------------------------------------------------------------------------------------------------- G Reserve Account Balance $ 4,272,176.83 H Unpaid Primary Servicing Fees from Prior Month(s) $ 0.00 I Unpaid Administration fees from Prior Quarter(s) $ 0.00 J Unpaid Carryover Servicing Fees from Prior Quarter(s) $ 0.00
Page 6 Sallie Mae Loan Trust 1995-1 7 - -------------------------------------------------------------------------------- VII. 1995-1 WATERFALL FOR DISTRIBUTIONS - --------------------------------------------------------------------------------
REMAINING FUNDS BALANCE -------------- A TOTAL AVAILABLE FUNDS (SECTION III E + SECTION V-D) $68,476,210.44 $68,476,210.44 B PRIMARY SERVICING FEES-CURRENT MONTH $ 643,587.20 $67,832,623.24 C ADMINISTRATION FEE-QUARTERLY $ 20,000.00 $67,812,623.24 D NOTEHOLDER'S INTEREST DISTRIBUTION AMOUNT i Class A-1 $ 8,808,571.97 $59,004,051.27 ii Class A-2 $ 3,227,819.73 $55,776,231.54 -------------- iii TOTAL NOTEHOLDER'S INTEREST DISTRIBUTION $12,036,391.70 E CERTIFICATEHOLDER'S RETURN DISTRIBUTION AMOUNT $ 547,453.55 $55,228,777.99 F NOTEHOLDER'S PRINCIPAL DISTRIBUTION AMOUNT i Class A-1 $50,840,068.34 $ 4,388,709.65 ii Class A-2 $ 0.00 $ 4,388,709.65 -------------- iii TOTAL NOTEHOLDER'S PRINCIPAL DISTRIBUTION $50,840,068.34 G CERTIFICATEHOLDER'S BALANCE DISTRIBUTION AMOUNT $ 0.00 $ 4,388,709.65 H INCREASE TO THE SPECIFIED RESERVE ACCOUNT BALANCE $ 0.00 $ 4,388,709.65 I CARRYOVER SERVICING FEES $ 1,183,990.53 $ 3,204,719.12 J NOTEHOLDER'S INTEREST CARRYOVER i Class A-1 $ 0.00 $ 3,204,719.12 i Class A-2 $ 0.00 $ 3,204,719.12 -------------- iii TOTAL NOTEHOLDER'S INTEREST CARRYOVER $ 0.00 K CERTIFICATEHOLDER'S RETURN CARRYOVER $ 0.00 $ 3,204,719.12 L EXCESS TO RESERVE ACCOUNT $ 3,204,719.12 $ 0.00
Page 7 Sallie Mae Loan Trust 1995-1 8 - -------------------------------------------------------------------------------- VIII. 1995-1 DISTRIBUTIONS - --------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------- A DISTRIBUTION AMOUNTS CLASS A-1 CLASS A-2 CERTIFICATES ----------------------------------------------------------------------------------------------------------------- i Quarterly Interest Due $ 8,808,571.97 $3,227,819.73 $547,453.55 ii Quarterly Interest Paid $ 8,808,571.97 $3,227,819.73 $547,453.55 --------------- ------------- ----------- iii INTEREST SHORTFALL $ 0.00 $ 0.00 $ 0.00 iv Interest Carryover Due $ 0.00 $ 0.00 $ 0.00 v Interest Carryover Paid $ 0.00 $ 0.00 $ 0.00 --------------- ------------- ----------- vi INTEREST CARRYOVER $ 0.00 $ 0.00 $ 0.00 vii Quarterly Principal Due (B) $ 50,840,068.34 $ 0.00 $ 0.00 viii Quarterly Principal Paid $ 50,840,068.34 $ 0.00 $ 0.00 --------------- ------------- ----------- ix QUARTERLY PRINCIPAL SHORTFALL $ 0.00 $ 0.00 $ 0.00 ----------------------------------------------------------------------------------------------------------------- x TOTAL DISTRIBUTION AMOUNT $ 59,648,640.31 $3,227,819.73 $547,453.55 ----------------------------------------------------------------------------------------------------------------- B PRINCIPAL DISTRIBUTION RECONCILIATION i Notes and Certificates Principal Balance 9/30/96 $854,435,365.26 ii Pool Balance 09/30/96 $803,595,296.92 --------------- iii Principal Distribution Amount $ 50,840,068.34 =============== C Total Principal Distribution $ 50,840,068.34 D Total Interest Distribution $ 12,583,845.25 --------------- E TOTAL CASH DISTRIBUTIONS-NOTE AND CERTIFICATES $ 63,423,913.59 --------------------------------------------------------------------------- F NOTE & CERTIFICATE BALANCES 07/25/96 10/25/96 --------------------------------------------------------------------------- i A-1 Note Balance $604,435,365.26 $553,595,296.92 A-1 Note Pool Factor 0.8059138203 0.7381270626 ii A-2 Note Balance $215,000,000.00 $215,000,000.00 A-2 Note Pool Factor 1.0000000000 1.0000000000 iii Certificate Balance $ 35,000,000.00 $ 35,000,000.00 Certificate Pool Factor 1.0000000000 1.0000000000 --------------------------------------------------------------------------- G RESERVE ACCOUNT RECONCILIATION i Beginning of Period Balance $ 4,272,176.83 ii Deposits to correct Shortfall $ 0.00 iii Deposits from Excess Servicing $ 3,204,719.12 --------------- iv Total Reserve Account Balance Available $ 7,476,895.95 v Required Reserve Account Balance $ 4,017,976.48 vi Shortfall Carried to Next Period $ 0.00 vii Excess Reserve - Release to SLM Funding Corp $ 3,458,919.47 viii Ending Reserve Account Balance $ 4,017,976.48
Page 8 Sallie Mae Loan Trust 1995-1 9 - -------------------------------------------------------------------------------- IX. 1995-HISTORICAL POOL INFORMATION - --------------------------------------------------------------------------------
--------------------------------------------------------------------------- 7/1/96 - 9/30/96 4/1/96 - 6/30/96 1/1/96 - 3/31/96 9/29/95 - 12/31/95 - ------------------------------------------------------------------------------------------------------------------------------------ BEGINNING STUDENT LOAN PORTFOLIO BALANCE $853,757,457.19 $905,375,401.17 $954,345,726.48 $1,000,126,078.04 - ------------------------------------------------------------------------------------------------------------------------------------ STUDENT LOAN PRINCIPAL ACTIVITY i Regular Principal Collections $ 40,504,277.25 $ 41,999,553.67 $ 45,086,756.56 $ 42,875,612.89 ii Principal Collections from Guarantor $ 8,336,900.38 $ 6,580,254.84 $ 482,294.51 $ 92,046.91 iii Principal Reimbursements $ 2,842,522.44 $ 3,722,370.03 $ 4,554,369.19 $ 2,775,561.40 iv Other System Adjustments $ (577.57) $ (48.49) $ - $ 39,190.77 -------------------------------------------------------------------------- v Total Principal Collections $ 51,683,122.50 $ 52,302,130.05 $ 50,123,420.26 $ 45,782,411.97 Student Loan Non-Cash Principal Activity i Other Adjustments $ 214,754.01 $ 185,344.16 $ 150,766.06 $ 233,926.53 ii Capitalized Interest $ (1,082,930.20) $ (869,530.23) $ (1,303,861.01) $ (235,986.94) -------------------------------------------------------------------------- iii Total Non-Cash Principal Activity $ (868,176.19) $ (684,186.07) $ (1,153,094.95) $ (2,060.41) - ------------------------------------------------------------------------------------------------------------------------------------ (-) TOTAL STUDENT LOAN PRINCIPAL ACTIVITY $ 50,814,946.31 $ 51,617,943.98 $ 48,970,325.31 $ 45,780,351.56 - ------------------------------------------------------------------------------------------------------------------------------------ STUDENT LOAN INTEREST ACTIVITY i Regular Interest Collections $ 15,456,574.89 $ 16,104,237.23 $ 18,105,760.68 $ 18,633,508.65 ii Interest Claims Received from Guarantors $ 557,105.25 $ 410,448.66 $ 13,929.01 $ 3,259.20 iii Interest Reimbursements $ 36,142.78 $ 33,086.35 $ 39,560.27 $ 17,871.78 iv Other System Adjustments $ (163.96) $ (14.31) $ - $ 7.70 v Special Allowance Payments $ 617,049.00 $ 537,884.11 $ 1,112,141.11 $ 43,719.37 vi Subsidy Payments $ 792,317.27 $ 836,267.57 $ 683,029.83 $ 5,919.00 -------------------------------------------------------------------------- vii Total Interest Collections $ 17,459,025.23 $ 17,921,909.61 $ 19,954,420.90 $ 18,704,285.70 Student Loan Non-Cash Interest Activity i Interest Accrual Adjustment $ (111,637.14) $ (112,327.13) $ (144,452.46) $ (227,131.25) ii Capitalized Interest $ 1,082,930.20 $ 869,530.23 $ 1,303,861.01 $ 235,986.94 -------------------------------------------------------------------------- iii Total Non-Cash Interest Adjustments $ 971,293.06 $ 757,203.10 $ 1,159,408.55 $ 8,855.69 -------------------------------------------------------------------------- TOTAL STUDENT LOAN INTEREST ACTIVITY $ 18,430,318.29 $ 18,679,112.71 $ 21,113,829.45 $ 18,713,141.39 (=) ENDING STUDENT LOAN PORTFOLIO BALANCE $802,942,510.88 $853,757,457.19 $905,375,401.17 $ 954,345,726.48 - ------------------------------------------------------------------------------------------------------------------------------------ (+) INTEREST TO BE CAPITALIZED $ 652,786.04 $ 677,908.07 $ 602,404.08 $ 639,070.92 - ------------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------------ (=) TOTAL POOL $803,595,296.92 $854,435,365.26 $905,977,805.25 $954,984,797.40 - ------------------------------------------------------------------------------------------------------------------------------------
Page 9 Sallie Mae Loan Trust 1995-1 10 - -------------------------------------------------------------------------------- X. PAYMENT HISTORY AND CPRS - --------------------------------------------------------------------------------
DISTRIBUTION ACTUAL SINCE ISSUED DATE POOL BALANCES CPR * Oct-95 $1,000,126,078 - Jan-96 $954,984,797 4.9% Apr-96 $905,977,805 5.0% Jul-96 $854,435,365 5.7% Oct-96 $803,595,297 6.3%
* "SINCE ISSUED CPR" IS BASED ON THE CURRENT PERIOD'S ENDING POOL BALANCE CALCULATED AGAINST THE ORIGINAL POOL BALANCE AND ASSUMING CUTOFF DATE POOL data. Page 10 Sallie Mae Loan Trust 1995-1 11 SALLIE MAE STUDENT LOAN TRUST 1995-1 OFFICER'S CERTIFICATE INDENTURE TRUSTEE ELIGIBLE LENDER TRUSTEE - ----------------- ----------------------- Bankers Trust Company Chase Manhattan Bank (USA) Four Albany Street 1 Chase Manhattan Plaza New York, NY 10006 Wilmington, Delaware 19801-1398 Attn: Corporate Trust & Agency Group Attn: Manager, Trust Division (212) 250-6547 (302) 575-5022 ADMINISTRATOR SERVICER - ------------- -------- Sallie Mae Sallie Mae Servicing Corporation 11600 Sallie Mae Drive 11600 Sallie Mae Drive Reston, Virginia 20190-4798 Reston, Virginia 20193 Attn: Director, Corporate Finance Operations ATTN: Director ABS Administration (703) 810-7711 Pursuant to Section 3.1 of the Administration Agreement (the "Agreement"), we, the undersigned, hereby certify that (I) a review of the activities and performances of the Servicer and Administrator from July 1, 1996 through September 30, 1996 has been made, and (ii) to the best of our knowledge, the Servicer and Administrator have fulfilled their obligations under the Agreement throughout such period. October 21, 1996 SALLIE MAE, AS ADMINISTRATOR /s/ Robert R. Levine - -------------------------------- Robert R. Levine, Vice President and Treasurer /s/ Mark G. Overend - ------------------------------- Mark G. Overend, Vice President and Controller 12 Sallie Mae Student Loan Trust 1996-1 Quarterly Servicing Report Report Date: 09/30/96 Reporting Period: 7/01/96-9/30/96 - -------------------------------------------------------------------------------- I. DEAL PARAMETERS - --------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------- A STUDENT LOAN PORTFOLIO CHARACTERISTICS 06/30/96 ACTIVITY 09/30/96 -------------------------------------------------------------------------------------------------------------------- i Portfolio Balance $1,410,958,484.15 ($61,812,664.09) $1,349,145,820.06 ii Interest to be Capitalized $10,991,431.27 $11,228,783.66 ----------------- ------------------ iii TOTAL POOL $1,421,949,915.42 $1,360,374,603.72 ================= ================== B i Weighted Average Coupon (WAC) 8.3764% 8.2286% ii Weighted Average Remaining Term 101.80 100.90 iii Number of Loans 594,758 577,299 iv Number of Borrowers 227,373 220,871 -------------------------------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------- C NOTES AND CERTIFICATES SPREAD BALANCE 7/25/96 % OF POOL BALANCE 10/25/96 % OF POOL --------------------------------------------------------------------------------------------------------------------------- i A-1 Notes 795452AD3 0.56% $895,949,915.42 63.009% $834,374,603.72 61.334% ii A-2 Notes 795452AE1 0.75% $473,500,000.00 33.299% $473,500,000.00 34.807% iii Certificates795452AF8 0.98% $52,500,000.00 3.692% $52,500,000.00 3.859% --------------------------------------------------------------------------------------------------------------------------- iv TOTAL NOTES AND CERTIFICATES $1,421,949,915.42 100.000% $1,360,374,603.72 100.000% =========================================================================================================================== --------------------------------------------------------------------------------------------------------------------------- D RESERVE ACCOUNT 07/25/96 10/25/96 --------------------------------------------------------------------------------------------------------------------------- i Required Reserve Acct Deposit (%) 0.25% 0.25% ii Reserve Acct Initial Deposit ($) iii Specified Reserve Acct Balance ($) $3,554,874.79 $3,400,936.51 iv Reserve Account Floor Balance ($) $1,500,000.00 $1,500,000.00 v Current Reserve Acct Balance ($) $3,554,874.79 $3,400,936.51 ---------------------------------------------------------------------------------------------------------------------------
1 Sallie Mae Loan Trust 1996-1 13 - -------------------------------------------------------------------------------- II. 1996-1 TRANSACTIONS FROM: 07/01/96 THROUGH: 09/30/96 - -------------------------------------------------------------------------------- A STUDENT LOAN PRINCIPAL ACTIVITY i Regular Principal Collections $41,001,385.22 ii Principal Collections from Guarantor $10,313,302.34 iii Principal Reimbursements $14,477,503.16 iv Other System Adjustments ($11,809.27) -------------- v TOTAL PRINCIPAL COLLECTIONS $65,780,381.45 B STUDENT LOAN NON-CASH PRINCIPAL ACTIVITY i Other Adjustments $1,320,897.53 ii Capitalized Interest ($5,288,614.89) -------------- iii TOTAL NON-CASH PRINCIPAL ACTIVITY ($3,967,717.36) -------------------------------------------------------------------------- C TOTAL STUDENT LOAN PRINCIPAL ACTIVITY $61,812,664.09 -------------------------------------------------------------------------- D STUDENT LOAN INTEREST ACTIVITY i Regular Interest Collections $17,372,003.89 ii Interest Claims Received from Guarantors $612,951.89 iii Interest Reimbursements $182,022.75 iv Other System Adjustments ($960.98) v Special Allowance Payments $775,767.11 vi Subsidy Payments $7,006,327.74 -------------- vii TOTAL INTEREST COLLECTIONS $25,948,112.40 E STUDENT LOAN NON-CASH INTEREST ACTIVITY i Interest Accrual Adjustment ($1,187,918.97) ii Capitalized Interest $5,288,614.89 -------------- iii TOTAL NON-CASH INTEREST ADJUSTMENTS $4,100,695.92 -------------------------------------------------------------------------- F TOTAL STUDENT LOAN INTEREST ACTIVITY $30,048,808.32 --------------------------------------------------------------------------
2 Sallie Mae Loan Trust 1996-1 14 - -------------------------------------------------------------------------------- III. 1996-1 COLLECTION ACCOUNT ACTIVITY 07/01/96 THROUGH 09/30/96 - -------------------------------------------------------------------------------- A PRINCIPAL COLLECTIONS i Principal Payments Received-Cash $51,314,687.56 ii Cash Forwarded by Administrator on behalf of Seller $3,880,227.66 iii Cash Forwarded by Administrator on behalf of Servicer $140.70 iv Cash Forwarded by Administrator for Consolidation Activity $10,585,325.53 -------------- v TOTAL PRINCIPAL COLLECTIONS $65,780,381.45 B INTEREST COLLECTIONS i Interest Payments Received-Cash $25,767,050.63 ii Cash Forwarded by Administrator on behalf of Seller $52,530.20 iii Cash Forwarded by Administrator on behalf of Servicer $1,198.02 iv Cash Forwarded by Administrator for Consolidation Activity $127,333.55 -------------- v TOTAL INTEREST COLLECTIONS $25,948,112.40 C OTHER REIMBURSEMENTS $61,405.62 D ADMINISTRATOR ACCOUNT INVESTMENT INCOME $589,116.14 E TOTAL FUNDS RECEIVED $92,379,015.61 (LESS: SERVICING FEES PREVIOUSLY REMITTED) ($1,744,754.55) -------------------------------------------------------------------------------------------------- TOTAL FUNDS TRANSFERRED TO COLLECTION ACCOUNT $90,634,261.06 -------------------------------------------------------------------------------------------------- F SERVICING FEE CALCULATION-CURRENT MONTH i Unit Charge Calculation $860,367.20 ii Percentage of Principal Calculation $1,256,397.21 iii Lesser of Unit or Principal Calculation $860,367.20 G SERVICING FEES DUE FOR CURRENT PERIOD $860,367.20 H CARRYOVER SERVICING FEES DUE $1,220,115.39
JUL 1996 Servicing Carryover $417,992.55 AUG 1996 Servicing Carryover $407,431.55 SEP 1996 Servicing Carryover $396,030.01 ------------- $1,221,454.11 LESS: Servicing ADJ [A iii + B iii] ($1,338.72) ------------- TOTAL CARRYOVER SERVICING FEE DUE $1,220,115.39 ============= I ADMINISTRATION FEES DUE $20,000.00 -------------------------------------------------------------------------------------------------- J TOTAL FEES DUE FOR PERIOD $2,100,482.59 --------------------------------------------------------------------------------------------------
3 Sallie Mae Loan Trust 1996-1 15 - -------------------------------------------------------------------------------- IV. 1996-1 PORTFOLIO CHARACTERISTICS - --------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------- WEIGHTED AVG COUPON # OF LOANS % - --------------------------------------------------------------------------------------------------------------------------------- STATUS 6/30/96 9/30/96 6/30/96 9/30/96 6/30/96 9/30/96 - --------------------------------------------------------------------------------------------------------------------------------- INTERIM: IN SCHOOL Current 8.3317% 8.1675% 42,207 40,103 7.0965% 6.9467% GRACE Current 8.3082% 8.1515% 26,179 24,361 4.4016% 4.2198% - --------------------------------------------------------------------------------------------------------------------------------- TOTAL INTERIM 8.3225% 8.1612% 68,386 64,464 11.4981% 11.1665% - --------------------------------------------------------------------------------------------------------------------------------- REPAYMENT ACTIVE Current 8.3683% 8.2268% 391,490 372,843 65.8234% 64.5840% 31-60 Days Delinquent 8.4461% 8.2651% 28,418 24,085 4.7781% 4.1720% 61-90 Days Delinquent 8.4443% 8.2652% 10,742 12,630 1.8061% 2.1878% 91-120 Days Delinquent 8.4188% 8.2836% 6,061 8,136 1.0191% 1.4093% Greater than 120 Days Delinquent 8.4253% 8.2714% 12,512 11,950 2.1037% 2.0700% DEFERMENT Current 8.4259% 8.2690% 56,552 57,718 9.5084% 9.9979% FORBEARANCE Current 8.3972% 8.2597% 18,963 19,855 3.1884% 3.4393% - --------------------------------------------------------------------------------------------------------------------------------- TOTAL REPAYMENT 8.3852% 8.2395% 524,738 507,217 88.2271% 87.8604% - --------------------------------------------------------------------------------------------------------------------------------- CLAIMS IN PROCESS (1) 8.4262% 8.2491% 1,634 5,618 0.2747% 0.9732% AGED CLAIMS REJECTED (2) 0.0000% 0.0000% - - 0% 0% - --------------------------------------------------------------------------------------------------------------------------------- GRAND TOTAL 8.3764% 8.2286% 594,758 577,299 100.00% 100.00% - --------------------------------------------------------------------------------------------------------------------------------- -------------------------------------------------------------------------------- Principal Amount % - -------------------------------------------------------------------------------------------------------------------------- STATUS 6/30/96 9/30/96 9/30/96 9/30/96 - -------------------------------------------------------------------------------------------------------------------------- INTERIM: IN SCHOOL Current $123,707,891.46 $115,553,753.55 8.7676% 8.5650% GRACE Current $79,219,632.85 $74,652,685.26 5.6146% 5.5333% - -------------------------------------------------------------------------------------------------------------------------- TOTAL INTERIM $202,927,524.31 $190,206,438.81 14.3822% 14.0983% - -------------------------------------------------------------------------------------------------------------------------- REPAYMENT ACTIVE Current $849,039,643.81 $787,184,214.78 60.1747% 58.3469% 31-60 Days Delinquent $62,560,873.31 $52,552,551.72 4.4339% 3.8952% 61-90 Days Delinquent $25,356,196.93 $32,028,678.70 1.7971% 2.3740% 91-120 Days Delinquent $14,611,465.45 $19,982,432.45 1.0356% 1.4811% Greater than 120 Days Delinquent $30,315,604.32 $28,878,790.29 2.1486% 2.1405% DEFERMENT Current $163,574,096.50 $164,244,366.46 11.5931% 12.1740% FORBEARANCE Current $58,659,931.57 $60,805,130.02 4.1575% 4.5069% - -------------------------------------------------------------------------------------------------------------------------- TOTAL REPAYMENT $1,204,117,811.89 $1,145,676,164.42 85.3404% 84.9186% - -------------------------------------------------------------------------------------------------------------------------- CLAIMS IN PROCESS (1) $3,913,147.94 $13,263,216.82 0.2773% 0.9831% AGED CLAIMS REJECTED (2) - - 0% 0% - -------------------------------------------------------------------------------------------------------------------------- GRAND TOTAL $1,410,958,484.14 $1,349,145,820.05 100.00% 100.00% - --------------------------------------------------------------------------------------------------------------------------
(1) CLAIMS FILED AND UNPAID; INCLUDES CLAIMS REJECTED AGED LESS THAN 6 MONTHS. (2) CLAIMS REJECTED (SUBJECT TO CURE) AGED 6 MONTHS OR MORE; ALSO INCLUDES CLAIMS DEEMED INCURABLE PENDING REPURCHASE. 4 Sallie Mae Loan Trust 1996-1 16 - -------------------------------------------------------------------------------- V. INTEREST CALCULATION - -------------------------------------------------------------------------------- A Borrower Interest Accrued During Collection Period $ 22,536,381.18 B Interest Subsidy Payments Accrued During Collection Period $ 5,847,240.37 C SAP Payments Accrued During Collection Period $ 993,236.60 D INV Earnings Accrued for Collection Period (RESERVE & COLLECTION ACTS) $ 58,757.08 E Investment Earnings (ADMINISTRATOR ACT) $ 589,116.14 ----------------- F NET EXPECTED INTEREST COLLECTIONS $ 30,024,731.37 G STUDENT LOAN RATE i Days in Collection Period (7/01/96-09/30/96) 92 ii Days in Year 366 iii Net Expected Interest Collections $ 30,024,731.37 iv Primary Servicing Fee $ 2,605,121.75 v Administration Fee $ 20,000.00 vi Total Pool Balance at Beginning of Collection Period $1,421,949,915.42 VII STUDENT LOAN RATE 7.66573%
ACCRUED INT FACTOR ACCRUAL PERIOD ------------ -------------- H Class A-1 T-Bill Based Interest Rate 5.78261% I CLASS A-1 INTEREST RATE 0.014535519 (7/25/96-10/25/96) 5.78261% J Class A-2 T-Bill Based Interest Rate 5.97261% K CLASS A-2 INTEREST RATE 0.015013115 (7/25/96-10/25/96) 5.97261% L Certificate T-Bill Based Rate of Return 6.20261% M CERTIFICATE RATE OF RETURN 0.015591257 (7/25/96-10/25/96) 6.20261%
5 Sallie Mae Loan Trust 1996-1 17 - -------------------------------------------------------------------------------- VI. INPUTS FROM PREVIOUS QUARTERLY SERVICING REPORTS 06/30/96 - -------------------------------------------------------------------------------- A Total Student Loan Pool Outstanding i Current Pool Balance $1,410,958,484.15 ii Interest To Be Capitalized $ 10,991,431.27 ----------------- iii TOTAL STUDENT LOAN POOL OUTSTANDING $1,421,949,915.42 ================= B Total Note and Certificate Factor 0.94796661028 C TOTAL NOTE AND CERTIFICATE BALANCE $1,421,949,915.42
---------------------------------------------------------------------------------------------------------------- D NOTE BALANCE 07/25/96 CLASS A-1 CLASS A-2 CERTIFICATES ---------------------------------------------------------------------------------------------------------------- i Current Factor-7/25/96 0.9198664429 1.0000000000 1.0000000000 ii Note Principal Shortfall $ 0.00 $ 0.00 $ 0.00 iii Expected Note Balance $895,949,915.42 $473,500,000.00 $52,500,000.00 --------------- --------------- -------------- iv NOTE BALANCE $895,949,915.42 $473,500,000.00 $52,500,000.00 E Interest Shortfall $ 0.00 $ 0.00 $ 0.00 F Interest Carryover $ 0.00 $ 0.00 $ 0.00 ---------------------------------------------------------------------------------------------------------------- G Reserve Account Balance $3,554,874.79 H Unpaid Primary Servicing Fees from Prior Month(s) $ 0.00 I Unpaid Administration fees from Prior Quarter(s) $ 0.00 J Unpaid Carryover Servicing Fees from Prior Quarter(s) $ 0.00
6 Sallie Mae Loan Trust 1996-1 18 - -------------------------------------------------------------------------------- VII. WATERFALL FOR DISTRIBUTIONS - --------------------------------------------------------------------------------
REMAINING FUNDS BALANCE -------------- A Total Available Funds (Section III E + Section V-D) $90,693,018.14 $90,693,018.14 B Primary Servicing Fees-Current Month $ 860,367.20 $89,832,650.94 C Administration Fee $ 20,000.00 $89,812,650.94 D Noteholder's Interest Distribution Amount i Class A-1 $13,023,097.02 $76,789,553.92 ii Class A-2 $ 7,108,709.95 $69,680,843.97 -------------- iii TOTAL NOTEHOLDER'S INTEREST DISTRIBUTION $20,131,806.97 E CERTIFICATEHOLDER'S RETURN DISTRIBUTION AMOUNT $ 818,540.99 $68,862,302.98 F Noteholder's Principal Distribution Amount i Class A-1 $61,575,311.70 $ 7,286,991.28 ii Class A-2 $ 0.00 $ 7,286,991.28 -------------- iii TOTAL NOTEHOLDER'S PRINCIPAL DISTRIBUTION $61,575,311.70 G CERTIFICATEHOLDER'S BALANCE DISTRIBUTION AMOUNT $ 0.00 $ 7,286,991.28 H Increase to the Specified Reserve Account Balance $ 0.00 $ 7,286,991.28 I Carryover Servicing Fees $ 1,220,115.39 $ 6,066,875.89 J Noteholder's Interest Carryover i Class A-1 $ 0.00 $ 6,066,875.89 i Class A-2 $ 0.00 $ 6,066,875.89 -------------- iii TOTAL NOTEHOLDER'S INTEREST CARRYOVER $ 0.00 K CERTIFICATEHOLDER'S RETURN CARRYOVER $ 0.00 $ 6,066,875.89 L EXCESS TO RESERVE ACCOUNT $ 6,066,875.89 $ 0.00
7 Sallie Mae Loan Trust 1996-1 19 - -------------------------------------------------------------------------------- VIII. DISTRIBUTIONS - --------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------- A DISTRIBUTION AMOUNTS CLASS A-1 CLASS A-2 CERTIFICATES ---------------------------------------------------------------------------------------------------------------------------- i Quarterly Interest Due $ 13,023,097.02 $7,108,709.95 $818,540.99 ii Quarterly Interest Paid $ 13,023,097.02 $7,108,709.95 $818,540.99 ----------------- ------------- ------------ iii INTEREST SHORTFALL $ 0.00 $ 0.00 $ 0.00 iv Interest Carryover Due $ 0.00 $ 0.00 $ 0.00 v Interest Carryover Paid $ 0.00 $ 0.00 $ 0.00 ----------------- ------------- ----------- vi INTEREST CARRYOVER $ 0.00 $ 0.00 $ 0.00 vii Quarterly Principal Due (B) $ 61,575,311.70 $ 0.00 $ 0.00 viii Quarterly Principal Paid $ 61,575,311.70 $ 0.00 $ 0.00 ----------------- ------------- ----------- ix QUARTERLY PRINCIPAL SHORTFALL $ 0.00 $ 0.00 $ 0.00 -------------------------------------------------------------------------------------------------------------------- x Total Distribution Amount $ 74,598,408.72 $7,108,709.95 $818,540.99 -------------------------------------------------------------------------------------------------------------------- B PRINCIPAL DISTRIBUTION RECONCILIATION i Notes and Certificates Principal Balance 09/30/96 $1,421,949,915.42 ii Pool Balance 09/30/96 $1,360,374,603.72 ----------------- iii Pool Exceeding Notes and Certificate Balance (i-ii) $ 61,575,311.70 ----------------- iv Principal Distribution Amount $ 61,575,311.70 ================= C Total Principal Distribution $ 61,575,311.70 D Total Interest Distribution $ 20,950,347.96 ----------------- E TOTAL CASH DISTRIBUTIONS-NOTE AND CERTIFICATES $ 82,525,659.66 -------------------------------------------------------------------------------------- F NOTE & CERTIFICATE BALANCES 07/25/96 10/25/96 -------------------------------------------------------------------------------------- i A-1 Note Balance (795452AD3) $895,949,915.42 $ 834,374,603.72 A-1 Note Pool Factor 0.9198664429 0.8566474371 ii A-2 Note Balance (795452AE1) $473,500,000.00 $ 473,500,000.00 A-2 Note Pool Factor 1.0000000000 1.0000000000 iii Certificate Balanc(795452AF8) $ 52,500,000.00 $ 52,500,000.00 Certificate Pool Factor 1.0000000000 1.0000000000 -------------------------------------------------------------------------------------- G RESERVE ACCOUNT RECONCILIATION i Beginning of Period Balance $ 3,554,874.79 ii Deposits to correct Shortfall $ 0.00 iii Deposits from Excess Servicing $ 6,066,875.89 ----------------- iv Total Reserve Account Balance Available $ 9,621,750.68 v Required Reserve Account Balance $ 3,400,936.51 vi Shortfall Carried to Next Period $ 0.00 vii Excess Reserve - Release to SLM Funding Corp $ 6,220,814.17 viii Ending Reserve Account Balance $ 3,400,936.51
8 Sallie Mae Loan Trust 1996-1 20 - -------------------------------------------------------------------------------- IX. HISTORICAL POOL INFORMATION - --------------------------------------------------------------------------------
-------------------------------------------------------------------- 7/1/96-9/30/96 4/1/96-6/30/96 2/5/96-3/31/96 - ------------------------------------------------------------------------------------------------------------------------------ BEGINNING STUDENT LOAN PORTFOLIO BALANCE $1,410,958,484.15 $1,459,260,458.15 $1,489,927,280.77 - ------------------------------------------------------------------------------------------------------------------------------ STUDENT LOAN PRINCIPAL ACTIVITY i Regular Principal Collections $41,001,385.22 $41,078,207.45 $27,226,246.55 ii Principal Collections from Guarantor $10,313,302.34 $842,636.38 $27,657.36 iii Principal Reimbursements $14,477,503.16 $12,387,879.90 $6,083,122.75 iv Other System Adjustments ($11,809.27) ($548.12) $2,229.83 -------------------------------------------------------------------- v Total Principal Collections $65,780,381.45 $54,308,175.61 $33,339,256.49 Student Loan Non-Cash Principal Activity i Other Adjustments $1,320,897.53 $1,000,024.50 $746,961.96 ii Capitalized Interest ($5,288,614.89) ($7,006,226.11) ($3,419,395.83) -------------------------------------------------------------------- iii Total Non-Cash Principal Activity ($3,967,717.36) ($6,006,201.61) ($2,672,433.87) - ------------------------------------------------------------------------------------------------------------------------------ (-) TOTAL STUDENT LOAN PRINCIPAL ACTIVITY $61,812,664.09 $48,301,974.00 $30,666,822.62 - ------------------------------------------------------------------------------------------------------------------------------ STUDENT LOAN INTEREST ACTIVITY i Regular Interest Collections $17,372,003.89 $17,084,616.87 $10,764,171.47 ii Interet Claims Received from Guarantors $612,951.89 $21,865.02 $326.78 iii Interest Reimbursements $182,022.75 $142,527.81 $50,757.10 iv Other System Adjustments ($960.98) $244.79 $10,446.21 v Special Allowance Payments $775,767.11 $343,884.36 $- vi Interest Subsidy Payments $7,006,327.74 $4,651,078.41 $- -------------------------------------------------------------------- vii Total Interest Collections $25,948,112.40 $22,244,217.26 $10,825,701.56 Student Loan Non-Cash Interest Activity i Interest Accrual Adjustment ($1,187,918.97) ($994,738.78) ($733,594.53) ii Capitalized Interest $5,288,614.89 $7,006,226.11 $3,419,395.83 -------------------------------------------------------------------- iii Total Non-Cash Interest Adjustments $4,100,695.92 $6,011,487.33 $2,685,801.30 -------------------------------------------------------------------- TOTAL STUDENT LOAN INTEREST ACTIVITY $30,048,808.32 $28,255,704.59 $13,511,502.86 (=) ENDING STUDENT LOAN PORTFOLIO BALANCE $1,349,145,820.06 $1,410,958,484.15 $1,459,260,458.15 - ------------------------------------------------------------------------------------------------------------------------------ (+) INTEREST TO BE CAPITALIZED $11,228,783.66 $10,991,431.27 $12,610,267.46 - ------------------------------------------------------------------------------------------------------------------------------ - ------------------------------------------------------------------------------------------------------------------------------ (=) TOTAL POOL $1,360,374,603.72 $1,421,949,915.42 $1,471,870,725.61 - ------------------------------------------------------------------------------------------------------------------------------
9 Sallie Mae Loan Trust 1996-1 21 - -------------------------------------------------------------------------------- X. PAYMENT HISTORY AND CPRS - --------------------------------------------------------------------------------
DISTRIBUTION ACTUAL SINCE ISSUED DATE POOL BALANCES CPR * Feb-96 $1,502,106,411 - Apr-96 $1,471,870,726 5.1% Jul-96 $1,421,949,915 5.6% Oct-96 $1,360,374,604 7.1%
* "SINCE ISSUED CPR" IS BASED ON THE CURRENT PERIOD'S ENDING POOL BALANCE CALCULATED AGAINST THE ORIGINAL POOL BALANCE AND ASSUMING CUTOFF DATE POOL DATA. 10 Sallie Mae Loan Trust 1996-1 22 SALLIE MAE STUDENT LOAN TRUST 1996-1 OFFICER'S CERTIFICATE INDENTURE TRUSTEE ELIGIBLE LENDER TRUSTEE - ----------------- ----------------------- Bankers Trust Company Chase Manhattan Bank (USA) Four Albany Street 1 Chase Manhattan Plaza New York, NY 10006 Wilmington, Delaware 19801-1398 Attn: Corporate Trust & Agency Group Attn: Manager, Trust Division (212) 250-6547 (302) 575-5022 ADMINISTRATOR SERVICER - ------------- -------- Sallie Mae Sallie Mae Servicing Corporation 11600 Sallie Mae Drive 11600 Sallie Mae Drive Reston, Virginia 20190-4798 Reston, Virginia 20193 Attn: Director, Corporate Finance Operations ATTN: Director ABS Administration (703) 810-7711
Pursuant to Section 3.1 of the Administration Agreement (the "Agreement"), we, the undersigned, hereby certify that (i) a review of the activities and performances of the Servicer and Administrator from July 1, 1996 through September 30, 1996 has been made, and (ii) to the best of our knowledge, the Servicer and Administrator have fulfilled their obligations under the Agreement throughout such period. October 21, 1996 SALLIE MAE, AS ADMINISTRATOR /s/ Robert R. Levine - -------------------------------- Robert R. Levine, Vice President and Treasurer /s/ Mark G. Overend - ------------------------------- Mark G. Overend, Vice President and Controller 23 SLM STUDENT LOAN TRUST 1996-2 QUARTERLY SERVICING REPORT REPORT DATE: 09/30/96 REPORTING PERIOD: 7/01/96-9/30/96 - -------------------------------------------------------------------------------- I. DEAL PARAMETERS - --------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------- A STUDENT LOAN PORTFOLIO CHARACTERISTICS 6/30/96 ACTIVITY 9/30/96 -------------------------------------------------------------------------------------------------------------------- i Portfolio Balance $1,468,666,284.76 ($48,529,551.22) $1,420,136,733.54 ii Interest to be Capitalized $14,944,789.14 $15,672,244.73 ----------------- ----------------- iii TOTAL POOL $1,483,611,073.90 $1,435,808,978.27 ================= ================= B i Weighted Average Coupon (WAC) 8.3560% 8.2023% ii Weighted Average Remaining Term 105.70 104.50 iii Number of Loans 618,098 606,964 iv Number of Borrowers 261,926 257,732 --------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------- C NOTES AND CERTIFICATES SPREAD BALANCE 7/25/96 % OF POOL BALANCE 10/25/96 % OF POOL ------------------------------------------------------------------------------------------------------------------------- i A-1 Notes 78442GAA4 0.51% $ 943,581,073.90 63.600% $ 895,778,978.27 62.388% ii A-2 Notes 78442GAB2 0.71% $ 487,000,000.00 32.825% $ 487,000,000.00 33.918% iii Certificates 78442GAC0 0.96% $ 53,030,000.00 3.574% $ 53,030,000.00 3.693% ------------------------------------------------------------------------------------------------------------------------- iv TOTAL NOTES AND CERTIFICATES $1,483,611,073.90 100.000% $1,435,808,978.27 100.000% =========================================================================================================================
------------------------------------------------------------------------------------------------------------------------- D RESERVE ACCOUNT 7/25/96 10/25/96 ------------------------------------------------------------------------------------------------------------------------- i Required Reserve Acct Deposit (%) 0.25% 0.25% ii Reserve Acct Initial Deposit ($) $3,787,575.00 iii Specified Reserve Acct Balance ($) $3,709,027.68 $3,589,522.45 iv Reserve Account Floor Balance ($) $1,515,030.00 $1,515,030.00 v Current Reserve Acct Balance ($) $3,709,027.68 $3,589,522.45 -------------------------------------------------------------------------------------------------------------------------
SLM STUDENT LOAN TRUST 1996-2 PAGE 1 24 - -------------------------------------------------------------------------------- II. 1996-2 TRANSACTIONS FROM: 7/01/96 THROUGH: 9/30/96 - --------------------------------------------------------------------------------
A STUDENT LOAN PRINCIPAL ACTIVITY i Regular Principal Collections $37,115,081.98 ii Principal Collections from Guarantor $1,608,162.94 iii Principal Reimbursements $14,131,988.74 iv Other System Adjustments ($1,484.32) ---------- v TOTAL PRINCIPAL COLLECTIONS $52,853,749.34 B STUDENT LOAN NON-CASH PRINCIPAL ACTIVITY i Other Adjustments $1,010,052.49 ii Capitalized Interest ($5,334,250.61) -------------- iii TOTAL NON-CASH PRINCIPAL ACTIVITY ($4,324,198.12) --------------------------------------------------------------------------------------- C TOTAL STUDENT LOAN PRINCIPAL ACTIVITY $48,529,551.22 --------------------------------------------------------------------------------------- D STUDENT LOAN INTEREST ACTIVITY i Regular Interest Collections $15,710,941.68 ii Interest Claims Received from Guarantors $65,496.81 iii Interest Reimbursements $161,064.40 iv Other System Adjustments ($18.17) v Special Allowance Payments $481,518.57 vi Subsidy Payments $9,023,779.62 ------------- vii TOTAL INTEREST COLLECTIONS $25,442,782.91 E STUDENT LOAN NON-CASH INTEREST ACTIVITY i Interest Accrual Adjustment ($986,037.72) ii Capitalized Interest $5,334,250.61 ------------- iii TOTAL NON-CASH INTEREST ADJUSTMENTS $4,348,212.89 --------------------------------------------------------------------------------------- F TOTAL STUDENT LOAN INTEREST ACTIVITY $29,790,995.80 ---------------------------------------------------------------------------------------
SLM STUDENT LOAN TRUST 1996-2 PAGE 2 25 III. 1996-2 COLLECTION ACCOUNT ACTIVITY 7/01/96 THROUGH 9/30/96 A PRINCIPAL COLLECTIONS i Principal Payments Received-Cash $ 38,723,244.92 ii Cash Forwarded by Administrator on behalf of Seller $ 3,812,573.18 iii Cash Forwarded by Administrator on behalf of Servicer $ 3,723.37 iv Cash Forwarded by Administrator for Consolidation Activity $ 10,314,207.87 --------------- v TOTAL PRINCIPAL COLLECTIONS $ 52,853,749.34 B INTEREST COLLECTIONS i Interest Payments Received-Cash $ 25,281,736.68 ii Cash Forwarded by Administrator on behalf of Seller $ 43,231.12 iii Cash Forwarded by Administrator on behalf of Servicer $ 2.47 iv Cash Forwarded by Administrator for Consolidation Activity $ 117,812.64 --------------- v TOTAL INTEREST COLLECTIONS $ 25,442,782.91 C OTHER REIMBURSEMENTS $ 46,552.01 D ADMINISTRATOR ACCOUNT INVESTMENT INCOME $ 421,497.77 E LESS: FUNDS BORROWED FOR PRIOR COLLECTION PERIOD $ (3,410,553.29) F TOTAL FUNDS RECEIVED $ 75,354,028.74 (LESS: SERVICING FEES PREVIOUSLY REMITTED) $ (2,362,278.56) ------------------------------------------------------------------------------------------------------------ TOTAL FUNDS TRANSFERRED TO COLLECTION ACCOUNT $ 72,991,750.18 ------------------------------------------------------------------------------------------------------------ G SERVICING FEE CALCULATION-CURRENT MONTH i Unit Charge Calculation $ 1,171,443.88 ii Percentage of Principal Calculation $ 1,639,485.85 iii Lesser of Unit or Principal Calculation $ 1,171,443.88 H SERVICING FEES DUE FOR CURRENT PERIOD $ 1,171,443.88 I CARRYOVER SERVICING FEES DUE $ 1,437,588.33 JUL 1996 Servicing Carryover $492,821.81 AUG 1996 Servicing Carryover $480,450.39 SEP 1996 Servicing Carryover $468,041.97 ------------- $1,441,314.17 LESS: Servicing ADJ [A iii + B iii] ($3,725.84) ------------- TOTAL: CARRYOVER SERVICING FEE DUE $1,437,588.33 ============= J ADMINISTRATION FEES DUE $ 20,000.00 ------------------------------------------------------------------------------------------------------------ K TOTAL FEES DUE FOR PERIOD $ 2,629,032.21 ------------------------------------------------------------------------------------------------------------
SLM STUDENT LOAN TRUST 1996-2 PAGE 3 26 - -------------------------------------------------------------------------------- IV. 1996-2 PORTFOLIO CHARACTERISTICS - --------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------- WEIGHTED AVG COUPON # OF LOANS % - ----------------------------------------------------------------------------------------------------------------------------------- STATUS 6/30/96 9/30/96 6/30/96 9/30/96 6/30/96 9/30/96 - ----------------------------------------------------------------------------------------------------------------------------------- INTERIM: IN SCHOOL Current 8.3698% 8.1569% 86,074 81,401 13.9256% 13.4112% GRACE Current 8.3435% 8.1539% 45,412 40,147 7.3471% 6.6144% - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL INTERIM 8.3605% 8.1558% 131,486 121,548 21.2727% 20.0256% - ----------------------------------------------------------------------------------------------------------------------------------- REPAYMENT ACTIVE Current 8.3328% 8.2030% 368,184 348,505 59.5673% 57.4177% 31-60 Days Delinquent 8.4072% 8.2501% 27,727 23,070 4.4859% 3.8009% 61-90 Days Delinquent 8.3780% 8.2472% 10,771 14,766 1.7426% 2.4328% 91-120 Days Delinquent 8.3782% 8.2547% 6,265 8,538 1.0136% 1.4067% greater than 120 Days Delinquent 8.3931% 8.2534% 7,141 13,647 1.1553% 2.2484% DEFERMENT Current 8.4370% 8.2489% 48,819 53,162 7.8983% 8.7587% FORBEARANCE Current 8.3641% 8.2336% 17,456 20,304 2.8241% 3.3452% - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL REPAYMENT 8.354% 8.217% 486,363 481,992 78.6870% 79.4103% - ----------------------------------------------------------------------------------------------------------------------------------- CLAIMS IN PROCESS (1) 8.4183% 0.1175% 249.00 3,424 0.0403% 0.5641% AGED CLAIMS REJECTED (2) 0.0000% 0.0000% - - 0% 0% - ----------------------------------------------------------------------------------------------------------------------------------- GRAND TOTAL 8.356% 8.202% 618,098 606,964 100.00% 100.00% - ----------------------------------------------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------- PRINCIPAL AMOUNT % - ------------------------------------------------------------------------------------------------------------------- STATUS 6/30/96 9/30/96 6/30/96 9/30/96 - ------------------------------------------------------------------------------------------------------------------- INTERIM: IN SCHOOL Current $ 242,075,889.03 $ 226,777,199.14 16.4827% 15.9687% GRACE Current $ 133,262,167.87 $ 120,083,083.78 9.0737% 8.4557% - -------------------------------------------------------------------------------------------------------------------- TOTAL INTERIM $ 375,338,056.90 $ 346,860,282.92 25.5564% 24.4244% - -------------------------------------------------------------------------------------------------------------------- REPAYMENT ACTIVE Current $ 788,778,958.06 $ 724,340,151.13 53.7072% 51.0050% 31-60 Days Delinquent $ 61,095,812.74 $ 51,250,739.52 4.1600% 3.6089% 61-90 Days Delinquent $ 23,797,260.54 $ 34,971,358.47 1.6203% 2.4625% 91-120 Days Delinquent $ 14,070,084.55 $ 19,851,809.69 0.9580% 1.3979% greater than 120 Days Delinquent $ 15,979,638.31 $ 30,639,717.21 1.0880% 2.1575% DEFERMENT Current $ 138,988,786.45 $ 147,701,768.70 9.4636% 10.4005% FORBEARANCE Current $ 50,034,804.14 $ 57,054,348.03 3.4068% 4.0175% - -------------------------------------------------------------------------------------------------------------------- TOTAL REPAYMENT $1,092,745,344.79 $1,065,809,892.75 74.4039% 75.0498% - -------------------------------------------------------------------------------------------------------------------- CLAIMS IN PROCESS (1) $ 582,883.06 $ 7,466,557.86 0.0397% 0.5258% AGED CLAIMS REJECTED (2) $ - $ - 0% 0% - -------------------------------------------------------------------------------------------------------------------- GRAND TOTAL $1,468,666,284.75 $1,420,136,733.53 100.00% 100.00% - --------------------------------------------------------------------------------------------------------------------
(1) CLAIMS FILED AND UNPAID; INCLUDES CLAIMS REJECTED AGED LESS THAN 6 MONTHS. (2) CLAIMS REJECTED (SUBJECT TO CURE) AGED 6 MONTHS OR MORE; ALSO INCLUDES CLAIMS DEEMED INCURABLE PENDING REPURCHASE. SLM STUDENT LOAN TRUST 1996-2 PAGE 4 27 V. INTEREST CALCULATION A Borrower Interest Accrued During Collection Period $ 21,839,844.29 B Interest Subsidy Payments Accrued During Collection Period $ 7,896,978.12 C SAP Payments Accrued During Collection Period $ 886,199.83 D INV Earnings Accrued for Collection Period (RESERVE & COLLECTION ACTS) $ 57,708.06 E Investment Earnings (ADMINISTRATOR ACT) $ 421,497.77 ----------------- F NET EXPECTED INTEREST COLLECTIONS $ 31,102,228.07 G STUDENT LOAN RATE i Days in Collection Period (7/01/96-09/30/96) 92 ii Days in Year 366 iii Net Expected Interest Collections $ 31,102,228.07 iv Primary Servicing Fee $ 3,533,722.44 v Administration Fee $ 20,000.00 vi Total Pool Balance at Beginning of Collection Period $1,483,611,073.90 vii STUDENT LOAN RATE 7.38705% ACCRUED INT FACTOR ACCRUAL PERIOD ---------- -------------- H Class A-1 T-Bill Based Interest Rate 5.73261% I CLASS A-1 INTEREST RATE 0.014409836 (7/25/96-10/25/96) 5.73261% J Class A-2 T-Bill Based Interest Rate 5.93261% K CLASS A-2 INTEREST RATE 0.014912568 (7/25/96-10/25/96) 5.93261% L Certificate T-Bill Based Rate of R 6.18261% M CERTIFICATE RATE OF RETURN 0.015540984 (7/25/96-10/25/96) 6.18261% - ------------------------------------------------------------------------------------------------------------------------------------
SLM STUDENT LOAN TRUST 1996-2 PAGE 5 28 - -------------------------------------------------------------------------------- VI. INPUTS FROM PREVIOUS QUARTERLY SERVICING REPORTS 6/30/96 - -------------------------------------------------------------------------------- A Total Student Loan Pool Outstanding i Current Pool Balance $1,468,666,284.76 ii Interest To Be Capitalized $ 14,944,789.14 ----------------- iii TOTAL STUDENT LOAN POOL OUTSTANDING $1,483,611,073.90 ================= B Total Note and Certificate Factor 0.97926184557 C TOTAL NOTE AND CERTIFICATE BALANCE $1,483,611,073.90
------------------------------------------------------------------------------------------------------------------------- D NOTE BALANCE 7/25/96 CLASS A-1 CLASS A-2 CERTIFICATES ------------------------------------------------------------------------------------------------------------------------- i Current Factor-7/25/96 0.9677754604 1.0000000000 1.0000000000 ii Note Principal Shortfall $ 0.00 $ 0.00 $ 0.00 iii Expected Note Balance $943,581,073.90 $487,000,000.00 $53,030,000.00 --------------- --------------- -------------- iv NOTE BALANCE $943,581,073.90 $487,000,000.00 $53,030,000.00 E Interest Shortfall $ 0.00 $ 0.00 $ 0.00 F Interest Carryover $ 0.00 $ 0.00 $ 0.00 -------------------------------------------------------------------------------------------------------------------------
G Reserve Account Balance $3,709,027.68 H Unpaid Primary Servicing Fees from Prior Month(s) $ 0.00 I Unpaid Administration fees from Prior Quarter(s) $ 0.00 J Unpaid Carryover Servicing Fees from Prior Quarter(s) $1,092,102.38 K Interest Due on Upaid Carryover Servicing Fees $ -
SLM STUDENT LOAN TRUST 1996-2 PAGE 6 29 - -------------------------------------------------------------------------------- VII. Waterfall for Distributions - --------------------------------------------------------------------------------
REMAINING FUNDS BALANCE ------------- A Total Available Funds ( Sections III -F + V-D+VIII-G) $73,168,963.47 $73,168,963.47 B Primary Servicing Fees-Current Month $ 1,171,443.88 $71,997,519.59 C Administration Fee $ 20,000.00 $71,977,519.59 D Noteholder's Interest Distribution Amount i Class A-1 $13,596,848.53 $58,380,671.06 ii Class A-2 $ 7,262,420.62 $51,118,250.44 -------------- iii TOTAL NOTEHOLDER'S INTEREST DISTRIBUTION $20,859,269.15 E CERTIFICATEHOLDER'S RETURN DISTRIBUTION AMOUNT $ 824,138.38 $50,294,112.06 F Noteholder's Principal Distribution Amount i Class A-1 $47,802,095.63 $ 2,492,016.43 ii Class A-2 $ 0.00 $ 2,492,016.43 -------------- iii TOTAL NOTEHOLDER'S PRINCIPAL DISTRIBUTION $47,802,095.63 G CERTIFICATEHOLDER'S BALANCE DISTRIBUTION AMOUNT $ 0.00 $ 2,492,016.43 H Increase to the Specified Reserve Account Balance $ 0.00 $ 2,492,016.43 I Carryover Servicing Fees (1) $ 2,492,016.43 $ (0.00) J Noteholder's Interest Carryover i Class A-1 $ 0.00 $ 0.00 i Class A-2 $ 0.00 $ 0.00 -------------- iii TOTAL NOTEHOLDER'S INTEREST CARRYOVER $ 0.00 K Certificateholder's Return Carryover $ 0.00 $ 0.00 L EXCESS TO RESERVE ACCOUNT $ 0.00 $ 0.00
(1) Includes unpaid carryover fees from prior period (with interest). Current shortfall to the Servicer is $52,607.23 - -------------------------------------------------------------------------------- SLM STUDENT LOAN TRUST 1996-2 PAGE 7 30 - -------------------------------------------------------------------------------- VIII. DISTRIBUTIONS - --------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------------------------- A DISTRIBUTION AMOUNTS CLASS A-1 CLASS A-2 CERTIFICATES -------------------------------------------------------------------------------------------------------------------------- i Quarterly Interest Due $13,596,848.53 $7,262,420.62 $824,138.38 ii Quarterly Interest Paid $13,596,848.53 $7,262,420.62 $824,138.38 -------------- ------------- ----------- iii INTEREST SHORTFALL $ 0.00 $ 0.00 $ 0.00 iv Interest Carryover Due $ 0.00 $ 0.00 $ 0.00 v Interest Carryover Paid $ 0.00 $ 0.00 $ 0.00 -------------- ------------- ----------- vi INTEREST CARRYOVER $ 0.00 $ 0.00 $ 0.00 vii Quarterly Principal Due (B) $47,802,095.63 $ 0.00 $ 0.00 viii Quarterly Principal Paid $47,802,095.63 $ 0.00 $ 0.00 -------------- ------------- ----------- ix QUARTERLY PRINCIPAL SHORTFALL $ 0.00 $ 0.00 $ 0.00 -------------------------------------------------------------------------------------------------------------------------- x Total Distribution Amount $61,398,944.16 $7,262,420.62 $824,138.38 --------------------------------------------------------------------------------------------------------------------------
B PRINCIPAL DISTRIBUTION RECONCILIATION i Notes and Certificates Principal Balance 09/30/96 $1,483,611,073.90 ii Pool Balance 09/30/96 $1,435,808,978.27 ----------------- iii Pool Exceeding Notes and Certificate Balance (i-ii) $ 47,802,095.63 ----------------- iv Principal Distribution Amount $ 47,802,095.63 ================= C Total Principal Distribution $ 47,802,095.63 D Total Interest Distribution $ 21,683,407.53 ----------------- E TOTAL CASH DISTRIBUTIONS-NOTE AND CERTIFICATES $ 69,485,503.16
------------------------------------------------------------------------------------ F NOTE & CERTIFICATE BALANCES 7/25/96 10/25/96 ------------------------------------------------------------------------------------ i A-1 Note Balance (78442GAA4) $943,581,073.90 $895,778,978.27 A-1 Note Pool Factor 0.9677754604 0.9187476700 ii A-2 Note Balance (78442GAB2) $487,000,000.00 $487,000,000.00 A-2 Note Pool Factor 1.0000000000 1.0000000000 iii Certificate Balanc(78442GAC0) $ 53,030,000.00 $ 53,030,000.00 Certificate Pool Factor 1.0000000000 1.0000000000 ------------------------------------------------------------------------------------
G RESERVE ACCOUNT RECONCILIATION i Beginning of Period Balance $3,709,027.68 ii Deposits to correct Shortfall $ 0.00 iii Deposits from Excess Servicing $ 0.00 ------------- iv Total Reserve Account Balance Available $3,709,027.68 v Required Reserve Account Balance $3,589,522.45 vi Shortfall Carried to Next Period $ 0.00 vii EXCESS RESERVE -RELEASE TO WATERFALL $ 119,505.23 viii Ending Reserve Account Balance $3,589,522.45
- -------------------------------------------------------------------------------- SLM STUDENT LOAN TRUST 1996-2 PAGE 8 31 - -------------------------------------------------------------------------------- IX. 1996-2 HISTORICAL POOL INFORMATION - --------------------------------------------------------------------------------
7/1/96-9/30/96 4/8/96-6/30/96 ------------------------------------------------------------------------------------------------------------- BEGINNING STUDENT LOAN PORTFOLIO BALANCE $1,468,666,284.76 $1,499,948,797.64 ------------------------------------------------------------------------------------------------------------- STUDENT LOAN PRINCIPAL ACTIVITY i Regular Principal Collections $ 37,115,081.98 $ 32,387,112.35 ii Principal Collections from Guarantor $ 1,608,162.94 $ 232,013.54 iii Principal Reimbursements $ 14,131,988.74 $ 5,880,791.49 iv Other System Adjustments $ (1,484.32) $ (1,709.32) ------------------------------------------- v Total Principal Collections $ 52,853,749.34 $ 38,498,208.06 Student Loan Non-Cash Principal Activity i Other Adjustments $ 1,010,052.49 $ 700,262.22 ii Capitalized Interest $ (5,334,250.61) $ (7,915,957.40) ------------------------------------------- iii Total Non-Cash Principal Activity $ (4,324,198.12) $ (7,215,695.18) ------------------------------------------------------------------------------------------------------------- (-) TOTAL STUDENT LOAN PRINCIPAL ACTIVITY $ 48,529,551.22 $ 31,282,512.88 ------------------------------------------------------------------------------------------------------------- STUDENT LOAN INTEREST ACTIVITY i Regular Interest Collections $ 15,710,941.68 $ 13,326,889.75 ii Interest Claims Received from Guaranties $ 65,496.81 $ 4,693.63 iii Interest Reimbursements $ 161,064.40 $ 90,073.72 iv Other System Adjustments $ (18.17) $ 309.87 v Special Allowance Payments $ 481,518.57 $ - vi Subsidy Payments $ 9,023,779.62 $ - ------------------------------------------- vii Total Interest Collections $ 25,442,782.91 $ 13,421,966.97 Student Loan Non-Cash Interest Activity i Interest Accrual Adjustment $ (986,037.72) $ (689,754.99) ii Capitalized Interest $ 5,334,250.61 $ 7,915,957.40 ------------------------------------------- iii Total Non-Cash Interest Adjustments $ 4,348,212.89 $ 7,226,202.41 ------------------------------------------- TOTAL STUDENT LOAN INTEREST ACTIVITY $ 29,790,995.80 $ 20,648,169.38 (=) ENDING STUDENT LOAN PORTFOLIO BALANCE $1,420,136,733.54 $1,468,666,284.76 ------------------------------------------------------------------------------------------------------------- (+) INTEREST TO BE CAPITALIZED $ 15,672,244.73 $ 14,944,789.14 ------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------------------------------- (=) TOTAL POOL $1,435,808,978.27 $1,483,611,073.90 -------------------------------------------------------------------------------------------------------------
SLM STUDENT LOAN TRUST 1996-2 PAGE 9 32
- -------------------------------------------------------------------------------- X. PAYMENT HISTORY AND CPRS - -------------------------------------------------------------------------------- DISTRIBUTION ACTUAL SINCE ISSUED DATE POOL BALANCES CPR * Apr-96 $1,517,607,923 - Jul-96 $1,483,611,074 4.1% Oct-96 $1,435,808,978 5.2% - --------------------------------------------------------------------------------
* "SINCE ISSUED CPR" IS BASED ON THE CURRENT PERIOD'S ENDING POOL BALANCE CALCULATED AGAINST THE ORIGINAL POOL BALANCE AND ASSUMING CUTOFF DATE POOL DATA. SLM STUDENT LOAN TRUST 1996-2 PAGE 10 33 SLM STUDENT LOAN TRUST 1996-2 OFFICER'S CERTIFICATE INDENTURE TRUSTEE ELIGIBLE LENDER TRUSTEE - ----------------- ----------------------- Bankers Trust Company Chase Manhattan Bank (USA) Four Albany Street 1 Chase Manhattan Plaza New York, NY 10006 Wilmington, Delaware 19801-1398 Attn: Corporate Trust & Agency Group Attn: Manager, Trust Division (212) 250-6547 (302) 575-5022 ADMINISTRATOR SERVICER - ------------- -------- Sallie Mae Sallie Mae Servicing Corporation 11600 Sallie Mae Drive 11600 Sallie Mae Drive Reston, Virginia 20190-4798 Reston, Virginia 20193 Attn: Director, Corporate Finance Operations ATTN: Director ABS Administration (703) 810-7711
================================================================================ Pursuant to Section 3.1 of the Administration Agreement (the "Agreement"), we, the undersigned, hereby certify that (i) a review of the activities and performances of the Servicer and Administrator from July 1, 1996 through September 30, 1996 has been made, and (ii) to the best of our knowledge, the Servicer and Administrator have fulfilled their obligations under the Agreement throughout such period. October 21, 1996 SALLIE MAE, AS ADMINISTRATOR /s/ ROBERT R. LEVINE - ---------------------------------- Robert R. Levine, Vice President and Treasurer /s/ MARK G. OVEREND - ---------------------------------- Mark G. Overend, Vice President and Controller 34 SLM STUDENT LOAN TRUST 1996-3 QUARTERLY SERVICING REPORT REPORT DATE: 9/30/96 REPORTING PERIOD: 6/17/96-9/30/96 - -------------------------------------------------------------------------------- I. DEAL PARAMETERS - --------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------- A STUDENT LOAN PORTFOLIO CHARACTERISTICS 6/17/96 ACTIVITY 9/30/96 ---------------------------------------------------------------------------------------------------------------------- i Portfolio Balance $1,485,028,174.57 ($37,632,788.33) $1,447,395,386.24 ii Interest to be Capitalized $17,675,903.67 $18,816,445.60 ----------------- ----------------- iii Total Pool $1,502,704,078.24 $1,466,211,831.84 ----------------- ----------------- iv Reserve Account Balance - $3,756,760.00 ----------------- ----------------- B v TOTAL ADJUSTED POOL $1,502,704,078.24 $1,469,968,591.84 ================= ================= i Weighted Average Coupon (WAC) 8.3718% 8.1609% ii Weighted Average Remaining Term 114.30 112.60 iii Number of Loans 521,045 513,697 iv Number of Borrowers 207,948 205,646
------------------------------------------------------------------------------------------------------------------------- C NOTES AND CERTIFICATES SPREAD BALANCE 7/9/96 % OF POOL BALANCE 10/25/96 % OF POOL ------------------------------------------------------------------------------------------------------------------------- i A-1 Notes 78442GAD8 0.49% $ 901,000,000.00 59.798% $ 864,218,591.84 58.792% ii A-2 Notes 78442GAE6 0.68% $ 553,000,000.00 36.702% $ 553,000,000.00 37.620% iii Certificates78442GAF3 0.95% $ 52,750,000.00 3.501% $ 52,750,000.00 3.589% ------------------------------------------------------------------------------------------------------------------------- iv TOTAL NOTES AND CERTIFICATES $1,506,750,000.00 100.000% $1,469,968,591.84 100.000% =========================================================================================================================
------------------------------------------------------------------------------------------------------- D RESERVE ACCOUNT 7/09/96 10/25/96 ------------------------------------------------------------------------------------------------------- i Required Reserve Acct Deposit (%) 0.25% 0.25% ii Reserve Acct Initial Deposit ($) $3,756,760.00 iii Specified Reserve Acct Balance ($) $3,756,760.00 $3,674,921.48 iv Reserve Account Floor Balance ($) $1,502,704.00 $1,502,704.00 v Current Reserve Acct Balance ($) $3,756,760.00 $3,674,921.48
SLM STUDENT LOAN TRUST 1996-3 PAGE 1 35 - -------------------------------------------------------------------------------- II. 1996-3 TRANSACTIONS FROM: 6/17/96 THROUGH: 9/30/96 - -------------------------------------------------------------------------------- A STUDENT LOAN PRINCIPAL ACTIVITY i Regular Principal Collections $30,349,661.79 ii Principal Collections from Guarantor $489,106.84 iii Principal Reimbursements $12,486,491.73 iv Other System Adjustments $5,047.44 --------- v TOTAL PRINCIPAL COLLECTIONS $43,330,307.80 B STUDENT LOAN NON-CASH PRINCIPAL ACTIVITY i Other Adjustments $1,290,030.17 ii Capitalized Interest ($6,987,549.64) ------------- iii TOTAL NON-CASH PRINCIPAL ACTIVITY ($5,697,519.47) ------------------------------------------------------------------------------------------ C TOTAL STUDENT LOAN PRINCIPAL ACTIVITY $37,632,788.33 ------------------------------------------------------------------------------------------ D STUDENT LOAN INTEREST ACTIVITY i Regular Interest Collections $15,754,166.36 ii Interest Claims Received from Guarantors $11,357.11 iii Interest Reimbursements $178,669.39 iv Other System Adjustments $437.04 v Special Allowance Payments $496,885.43 vi Subsidy Payments $10,221,660.77 vii TOTAL INTEREST COLLECTIONS $26,663,176.10 E Student Loan Non-Cash Interest Activity i Interest Accrual Adjustment ($1,268,293.82) ii Capitalized Interest $6,987,549.64 ------------- iii TOTAL NON-CASH INTEREST ADJUSTMENTS $5,719,255.82 ------------------------------------------------------------------------------------------ F TOTAL STUDENT LOAN INTEREST ACTIVITY $32,382,431.92 ------------------------------------------------------------------------------------------
SLM STUDENT LOAN TRUST 1996-3 PAGE 2 36 - -------------------------------------------------------------------------------- III. 1996-3 Collection Account Activity 6/17/96 through 9/30/96 - -------------------------------------------------------------------------------- A PRINCIPAL COLLECTIONS i Principal Payments Received-Cash $ 30,838,768.63 ii Cash Forwarded by Administrator on behalf of Seller $ 3,334,560.30 iii Cash Forwarded by Administrator on behalf of Servicer $ 168.93 iv Cash Forwarded by Administrator for Consolidation Activity $ 9,156,809.94 --------------- v TOTAL PRINCIPAL COLLECTIONS $ 43,330,307.80 B INTEREST COLLECTIONS i Interest Payments Received-Cash $ 26,484,069.67 ii Cash Forwarded by Administrator on behalf of Seller $ 63,673.44 iii Cash Forwarded by Administrator on behalf of Servicer $ - iv Cash Forwarded by Administrator for Consolidation Activity $ 115,432.99 --------------- v TOTAL INTEREST COLLECTIONS $ 26,663,176.10 C OTHER REIMBURSEMENTS $ 50,797.53 D ADMINISTRATOR ACCOUNT INVESTMENT INCOME $ 270,477.93 E FUNDS BORROWED FROM NEXT COLLECTION PERIOD $ - F TOTAL FUNDS RECEIVED $ 70,314,759.36 (LESS: SERVICING FEES PREVIOUSLY REMITTED) $ (1,703,651.36) ------------------------------------------------------------------------------------------------------- TOTAL FUNDS TRANSFERRED TO COLLECTION ACCOUNT $ 68,611,108.00 ------------------------------------------------------------------------------------------------------- G SERVICING FEE CALCULATION-CURRENT MONTH i Unit Charge Calculation $ 972,812.82 ii Percentage of Principal Calculation $ 1,422,263.26 iii Lesser of Unit or Principal Calculation $ 972,812.82 H SERVICING FEES DUE FOR CURRENT PERIOD $ 972,812.82 I CARRYOVER SERVICING FEES DUE $ 1,251,240.76 JUL 1996 Servicing Carryover $344,044.59 AUG 1996 Servicing Carryover $457,914.66 SEP 1996 Servicing Carryover $449,450.44 ----------- $1,251,409.69 LESS: Servicing ADJ [A iii + B iii] ($168.93) ------------- TOTAL: CARRYOVER SERVICING FEE DUE $1,251,240.76 ============= J Administration Fees Due $ 20,000.00 ------------------------------------------------------------------------------------------------------- K TOTAL FEES DUE FOR PERIOD $ 2,244,053.58 -------------------------------------------------------------------------------------------------------
SLM STUDENT LOAN TRUST 1996-3 PAGE 3 37 - -------------------------------------------------------------------------------- IV. 1996-3 PORTFOLIO CHARACTERISTICS - --------------------------------------------------------------------------------
-------------------------------------------------------------------------------------------------------- WEIGHTED AVG COUPON # OF LOANS % - ----------------------------------------------------------------------------------------------------------------------------------- STATUS 6/17/96 9/30/96 6/17/96 9/30/96 6/17/96 9/30/96 - ----------------------------------------------------------------------------------------------------------------------------------- INTERIM: IN SCHOOL Current 8.3030% 7.9340% 103,468 101,470 19.8578% 19.7529% GRACE Current 8.3006% 8.0091% 87,661 47,969 16.8241% 9.3380% - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL INTERIM 8.3019% 7.9597% 191,129 149,439 36.6819% 29.0909% - ----------------------------------------------------------------------------------------------------------------------------------- REPAYMENT ACTIVE Current 8.3996% 8.2642% 251,705 248,753 48.3077% 48.4241% 31-60 Days Delinquent 8.4431% 8.2676% 24,685 21,367 4.7376% 4.1595% 61-90 Days Delinquent 8.4304% 8.2687% 10,763 14,785 2.0657% 2.8782% 91-120 Days Delinquent 0.0000% 8.2780% - 9,010 0.0000% 1.7540% greater than 120 Days Delinquent 0.0000% 8.2833% - 11,484 0.0000% 2.2356% DEFERMENT Current 8.5289% 8.2878% 28,398 39,556 5.4502% 7.7003% FORBEARANCE Current 8.4972% 8.2738% 14,365 19,034 2.7570% 3.7053% - ----------------------------------------------------------------------------------------------------------------------------------- TOTAL REPAYMENT 8.421% 8.269% 329,916 363,989 63.3181% 70.8568% - ----------------------------------------------------------------------------------------------------------------------------------- CLAIMS IN PROCESS (1) 0.0000% 8.3370% - 269 0.0000% 0.0524% AGED CLAIMS REJECTED (2) 0.0000% 0.0000% - - 0% 0% - ----------------------------------------------------------------------------------------------------------------------------------- GRAND TOTAL 8.372% 8.161% 521,045 513,697 100.00% 100.00% - ----------------------------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------------------ PRINCIPAL AMOUNT % - ---------------------------------------------------------------------------------------------------------------- STATUS 6/17/96 9/30/96 6/17/96 9/30/96 - ---------------------------------------------------------------------------------------------------------------- INTERIM: IN SCHOOL Current $ 337,489,354.73 $ 328,657,204.53 22.7261% 22.7068% GRACE Current $ 270,442,104.23 $ 170,566,666.58 18.2112% 11.7844% - ---------------------------------------------------------------------------------------------------------------- TOTAL INTERIM $ 607,931,458.96 $ 499,223,871.11 40.9374% 34.4912% - ---------------------------------------------------------------------------------------------------------------- REPAYMENT Active Current $ 662,320,661.42 $ 642,217,973.46 44.5999% 44.3706% 31-60 Days Delinquent $ 62,498,690.86 $ 52,352,839.22 4.2086% 3.6170% 61-90 Days Delinquent $ 27,093,033.64 $ 35,777,881.13 1.8244% 2.4719% 91-120 Days Delinquent $ 0.00 $ 22,293,783.91 0.0000% 1.5403% greater than 120 Days Delinquent $ 0.00 $ 28,877,998.95 0.0000% 1.9952% DEFERMENT Current $ 82,683,866.05 $ 111,224,735.88 5.5678% 7.6845% FORBEARANCE Current $ 42,500,463.64 $ 54,775,608.55 2.8619% 3.7844% - ---------------------------------------------------------------------------------------------------------------- TOTAL REPAYMENT $ 877,096,715.61 $ 947,520,821.10 59.0626% 65.4639% - ---------------------------------------------------------------------------------------------------------------- CLAIMS IN PROCESS (1) $ - $ 650,694.03 0.0000% 0.0450% AGED CLAIMS REJECTED (2) $ - $ - 0% 0% - ---------------------------------------------------------------------------------------------------------------- GRAND TOTAL $1,485,028,174.57 $1,447,395,386.24 100.00% 100.00% - ----------------------------------------------------------------------------------------------------------------
(1) CLAIMS FILED AND UNPAID; INCLUDES CLAIMS REJECTED AGED LESS THAN 6 MONTHS. (2) CLAIMS REJECTED (SUBJECT TO CURE) AGED 6 MONTHS OR MORE; ALSO INCLUDES CLAIMS DEEMED INCURABLE PENDING REPURCHASE. SLM STUDENT LOAN TRUST 1996-3 PAGE 4 38 - -------------------------------------------------------------------------------- V. 1996-3 INTEREST CALCULATION - -------------------------------------------------------------------------------- A Borrower Interest Accrued During Collection Period $24,207,602.16 B Interest Subsidy Payments Accrued During Collection Period $10,537,076.63 C SAP Payments Accrued During Collection Period $ 840,661.10 D INV Earnings Accrued for Collection Period (RESERVE & COLLECTION ACTS) $ 45,625.29 E Investment Earnings (ADMINISTRATOR ACT) $ 270,477.93 -------------- F NET EXPECTED INTEREST COLLECTIONS $35,901,443.11 G STUDENT LOAN RATE i Days in Collection Period (6/17/96-09/30/96) 106 ii Days in Year 366 iii Net Expected Interest Collections $ 35,901,443.11 iv Primary Servicing Fee $ 2,676,464.18 v Administration Fee $ 20,000.00 vi Total Pool Balance at Beginning of Collection Period $1,502,704,078.24 vii STUDENT LOAN RATE 7.62966%
ACCRUED INT FACTOR ACCRUAL PERIOD ---------- -------------- H Class A-1 T-Bill Based Interest Rate 5.72889% I CLASS A-1 INTEREST RATE 0.016904918 (7/09/96-10/25/96) 5.72889% J Class A-2 T-Bill Based Interest Rate 5.91889% K CLASS A-2 INTEREST RATE 0.017465574 (7/09/96-10/25/96) 5.91889% L Certificate T-Bill Based Rate of Return 6.18889% M CERTIFICATE RATE OF RETURN 0.018262295 (7/09/96-10/25/96) 6.18889%
SLM STUDENT LOAN TRUST 1996-3 PAGE 5 39 - -------------------------------------------------------------------------------- VI. 1996-3 INPUTS FROM PREVIOUS QUARTERLY SERVICING REPORTS 6/17/96 - -------------------------------------------------------------------------------- A Total Student Loan Pool Outstanding i Current Pool Balance $1,485,028,174.57 ii Interest To Be Capitalized $ 17,675,903.67 ----------------- iii TOTAL STUDENT LOAN POOL OUTSTANDING $1,502,704,078.24 ================= B Total Note and Certificate Factor 1.00000000000 C TOTAL NOTE AND CERTIFICATE BALANCE $1,506,750,000.00
------------------------------------------------------------------------------------------------------------------ D NOTE BALANCE 7/09/96 CLASS A-1 CLASS A-2 CERTIFICATES ------------------------------------------------------------------------------------------------------------------ i Current Factor-7/9/96 1.0000000000 1.0000000000 1.0000000000 ii Note Principal Shortfall $ 0.00 $ 0.00 $ 0.00 iii Expected Note Balance $901,000,000.00 $553,000,000.00 $52,750,000.00 --------------- --------------- -------------- iv NOTE BALANCE $901,000,000.00 $553,000,000.00 $52,750,000.00 E Interest Shortfall $ 0.00 $ 0.00 $ 0.00 F Interest Carryover $ 0.00 $ 0.00 $ 0.00 ------------------------------------------------------------------------------------------------------------------
G Reserve Account Balance $3,756,760.00 H Unpaid Primary Servicing Fees from Prior Month(s) $ 0.00 I Unpaid Administration fees from Prior Quarter(s) $ 0.00 J Unpaid Carryover Servicing Fees from Prior Quarter(s) $ 0.00 K Interest Due on Upaid Carryover Servicing Fees $ -
- -------------------------------------------------------------------------------- SLM STUDENT LOAN TRUST 1996-3 PAGE 6 40 - -------------------------------------------------------------------------------- VII. 1996-3 WATERFALL FOR DISTRIBUTIONS - --------------------------------------------------------------------------------
REMAINING FUNDS BALANCE ------------- A Total Available Funds (Sections III -F + V-D) $68,656,733.29 $68,656,733.29 B Primary Servicing Fees-Current Month $ 972,812.82 $67,683,920.47 C Administration Fee $ 20,000.00 $67,663,920.47 D Noteholder's Interest Distribution Amount i Class A-1 $15,231,331.12 $52,432,589.35 ii Class A-2 $ 9,658,462.42 $42,774,126.93 -------------- iii TOTAL NOTEHOLDER'S INTEREST DISTRIBUTION $24,889,793.54 E CERTIFICATEHOLDER'S RETURN DISTRIBUTION AMOUNT $ 963,336.06 $41,810,790.87 F Noteholder's Principal Distribution Amount i Class A-1 $36,781,408.16 $ 5,029,382.71 ii Class A-2 $ 0.00 $ 5,029,382.71 -------------- iii TOTAL NOTEHOLDER'S PRINCIPAL DISTRIBUTION $36,781,408.16 G CERTIFICATEHOLDER'S BALANCE DISTRIBUTION AMOUNT $ 0.00 $ 5,029,382.71 H Increase to the Specified Reserve Account Balance $ 0.00 $ 5,029,382.71 I Carryover Servicing Fees $ 1,251,240.76 $ 3,778,141.95 J Noteholder's Interest Carryover i Class A-1 $ 0.00 $ 3,778,141.95 i Class A-2 $ 0.00 $ 3,778,141.95 -------------- iii TOTAL NOTEHOLDER'S INTEREST CARRYOVER $ 0.00 K CERTIFICATEHOLDER'S RETURN CARRYOVER $ 0.00 $ 3,778,141.95 L EXCESS TO RESERVE ACCOUNT $ 3,778,141.95 $ 0.00
SLM STUDENT LOAN TRUST 1996-3 PAGE 7 41 VIII. 1996-3 DISTRIBUTIONS
---------------------------------------------------------------------------------------------------------------- A DISTRIBUTION AMOUNTS CLASS A-1 CLASS A-2 CERTIFICATES i Quarterly Interest Due $15,231,331.12 $9,658,462.42 $963,336.06 ii Quarterly Interest Paid $15,231,331.12 $9,658,462.42 $963,336.06 -------------- ------------- ----------- iii INTEREST SHORTFALL $ 0.00 $ 0.00 $ 0.00 iv Interest Carryover Due $ 0.00 $ 0.00 $ 0.00 v Interest Carryover Paid $ 0.00 $ 0.00 $ 0.00 -------------- ------------- ----------- vi INTEREST CARRYOVER $ 0.00 $ 0.00 $ 0.00 vii Quarterly Principal Due (B) $36,781,408.16 $ 0.00 $ 0.00 viii Quarterly Principal Paid $36,781,408.16 $ 0.00 $ 0.00 -------------- ------------- ----------- ix QUARTERLY PRINCIPAL SHORTFALL $ 0.00 $ 0.00 $ 0.00 ---------------------------------------------------------------------------------------------------------------- x Total Distribution Amount $52,012,739.28 $9,658,462.42 $963,336.06 ----------------------------------------------------------------------------------------------------------------
B PRINCIPAL DISTRIBUTION RECONCILIATION i Notes and Certificates Principal Balance 09/30/96 $1,506,750,000.00 ii Adjusted Pool Balance 09/30/96 $1,469,968,591.84 ----------------- iii Adjusted Pool Exceeding Notes and Certificate Balance (i-ii) $ 36,781,408.16 ----------------- IV PRINCIPAL DISTRIBUTION AMOUNT $ 36,781,408.16 ================= C Total Principal Distribution $ 36,781,408.16 D Total Interest Distribution $ 25,853,129.60 ----------------- E TOTAL CASH DISTRIBUTIONS-NOTE AND CERTIFICATES $ 62,634,537.76
--------------------------------------------------------------------------------------------------- F NOTE & CERTIFICATE BALANCES 7/09/96 10/25/96 --------------------------------------------------------------------------------------------------- i A-1 Note Balance (78442GAA4) $901,000,000.00 $864,218,591.84 A-1 Note Pool Factor 1.0000000000 0.9591771275 ii A-2 Note Balance (78442GAB2) $553,000,000.00 $553,000,000.00 A-2 Note Pool Factor 1.0000000000 1.0000000000 iii Certificate Balance (78442GAC0) $ 52,750,000.00 $ 52,750,000.00 Certificate Pool Factor 1.0000000000 1.0000000000 ---------------------------------------------------------------------------------------------------
G RESERVE ACCOUNT RECONCILIATION i Beginning of Period Balance $3,756,760.00 ii Deposits to correct Shortfall $ 0.00 iii Deposits from Excess Servicing $3,778,141.95 ------------- iv Total Reserve Account Balance Available $7,534,901.95 v Required Reserve Account Balance $3,674,921.48 vi Shortfall Carried to Next Period $ 0.00 vii EXCESS RESERVE -RELEASE TO SLM FUNDING CORP $3,859,980.47 viii Ending Reserve Account Balance $3,674,921.48
SLM STUDENT LOAN TRUST 1996-3 PAGE 8 42
- -------------------------------------------------------------------------------- X. 1996-3 PAYMENT HISTORY AND CPRS - -------------------------------------------------------------------------------- DISTRIBUTION ACTUAL SINCE ISSUED DATE POOL BALANCES CPR * Jun-96 $1,502,704,078 - Oct-96 $1,466,211,474 6.3%
* "SINCE ISSUED CPR" IS BASED ON THE CURRENT PERIOD'S ENDING POOL BALANCE CALCULATED AGAINST THE ORIGINAL POOL BALANCE AND ASSUMING CUTOFF DATE POOL DATA. - -------------------------------------------------------------------------------- SLM STUDENT LOAN TRUST 1996-3 PAGE 9 43 SLM STUDENT LOAN TRUST 1996-3 OFFICER'S CERTIFICATE INDENTURE TRUSTEE ELIGIBLE LENDER TRUSTEE - ----------------- ----------------------- Bankers Trust Company Chase Manhattan Bank (USA) Four Albany Street 1 Chase Manhattan Plaza New York, NY 10006 Wilmington, Delaware 19801-1398 Attn: Corporate Trust & Agency Group Attn: Manager, Trust Division (212) 250-6547 (302) 575-5022 ADMINISTRATOR SERVICER - ------------- -------- Sallie Mae Sallie Mae Servicing Corporation 11600 Sallie Mae Drive 11600 Sallie Mae Drive Reston, Virginia 20190-4798 Reston, Virginia 20193 Attn: Director, Corporate Finance Operations ATTN: Director ABS Administration (703) 810-7711
Pursuant to Section 3.1 of the Administration Agreement (the "Agreement"), we, the undersigned, hereby certify that (i) a review of the activities and performances of the Servicer and Administrator from July 9, 1996 through September 30, 1996 has been made, and (ii) to the best of our knowledge, the Servicer and Administrator have fulfilled their obligations under the Agreement throughout such period. October 21, 1996 SALLIE MAE, AS ADMINISTRATOR /s/ ROBERT R. LEVINE - ---------------------------------- Robert R. Levine, Vice President and Treasurer /s/ MARK G. OVEREND - ---------------------------------- Mark G. Overend, Vice President and Controller EX-99.1 9 PURCHASE AGREEMENT 1 EXHIBIT 99.1 PURCHASE AGREEMENT MASTER SECURITIZATION TERMS NUMBER 1000 These Purchase Agreement Master Securitization Terms Number 1000 ("Master Terms") dated as of October 3, 1996 among SLM Funding Corporation ("Funding"), Chase Manhattan Bank USA, National Association, not in its individual capacity but solely as Interim Eligible Lender Trustee (the "Interim Eligible Lender Trustee") for the benefit of Funding under the Interim Trust Agreement dated as of October 1, 1996 between Funding and the Interim Eligible Lender Trustee, and Student Loan Marketing Association ("Sallie Mae"), shall be effective upon execution by the parties hereto. References to Funding herein mean the Interim Eligible Lender Trustee for all purposes involving the holding or transferring of legal title to the Eligible Loans. WHEREAS, Sallie Mae is the owner of certain student loans guaranteed under the Higher Education Act; WHEREAS, Sallie Mae may desire to sell its interest in such loans from time to time and Funding may desire to purchase such loans from Sallie Mae; WHEREAS, the Interim Eligible Lender Trustee is willing to hold legal title to, and serve as eligible lender trustee with respect to, such loans on behalf of Funding; NOW, THEREFORE, in connection with the mutual promises contained herein, the parties hereto agree as follows: SECTION 1. TERMS These Master Terms establish the terms under which Sallie Mae may sell and Funding (and with respect to legal title, the Interim Eligible Lender Trustee on behalf of Funding) may purchase the Loans (and all obligations of the Borrowers thereunder) specified on each Purchase Agreement as the parties may execute from time to time pursuant to these Master Terms. Each such Purchase Agreement shall be substantially in the form of Attachment A hereto, incorporating by reference the terms of these Master Terms, and shall be a separate agreement among Sallie Mae, Funding, and the Interim Eligible Lender Trustee on behalf of Funding with respect to the Loans covered by the terms of such Purchase Agreement. If the terms of a Purchase Agreement conflict with the terms of these Master Terms, the terms of such Purchase Agreement shall supersede and govern. SECTION 2. DEFINITIONS Capitalized terms used but not otherwise defined herein shall have the definitions set forth in Appendix A hereto. 2 For purposes hereof: (A) "Account" means all of the Eligible Loans hereunder of one (1) Borrower that are of the same Loan type made under the identical subsection of the Higher Education Act and in the same status. (B) "Bill of Sale" means that document executed by an authorized officer of Sallie Mae which shall set forth the Loans offered by Sallie Mae and accepted for purchase by the Interim Eligible Lender Trustee for the benefit of Funding and which shall sell, assign and convey to the Interim Eligible Lender Trustee for the benefit of Funding and its assignees all rights, title and interest of Sallie Mae in the Loans listed on the Bill of Sale and will certify that the representations and warranties made by Sallie Mae pursuant to Section 5(A) of these Master Terms are true and correct. (C) "Borrower" means the obligor on a Loan. (D) "Consolidation Loan" means a Loan made pursuant to and in full compliance with Section 428C of the Higher Education Act. (E) "Cutoff Date" means with respect to the first sale hereunder, September 2, 1996, and, with respect to subsequent sales hereunder, a date agreed to by Sallie Mae and Funding to use in determining the Principal Balance and accrued interest to be capitalized for purposes of completing the Loan Transmittal Summary Form. (F) "Deferred Payment" means an amount equal to 66 _ of the amount distributed to Funding pursuant to Section 2.8 C(G) of the Administration Agreement (exclusive of the amount of any such distribution attributable to the reduction from time to time of the Specified Reserve Account Balance). (G) "Delinquent" means the period any payment of principal or interest due on the Loan is overdue. (H) "Eligible Loan" means a Loan offered for sale by Sallie Mae under the Purchase Agreement which as of the Cutoff Date is current or no more Delinquent than permitted under the Purchase Agreement in payment of principal or interest and which meets the following criteria as of the effective date of the Bill of Sale: (i) is a Stafford Loan, a Consolidation Loan, a PLUS Loan or SLS Loan; 2 3 (ii) is owned by Sallie Mae and is fully disbursed; (iii) is guaranteed as to principal and interest by the applicable Guarantor to the maximum extent permitted by the Higher Education Act for such Loan; (iv) bears interest at a stated rate of not less than the maximum rate permitted under the Higher Education Act for such Loan; (v) is eligible for the payment of the quarterly special allowance at the full and undiminished rate established under the formula set forth in the Higher Education Act for such Loan; (vi) if not yet in repayment status, is eligible for the payment of interest benefits by the Secretary or, if not so eligible, is a Loan for which interest either is billed quarterly to Borrower or deferred until commencement of the repayment period, in which case such accrued interest is subject to capitalization to the full extent permitted by the applicable Guarantor; (vii) is supported by the following documentation: (a) for each Loan: 1. loan application, and any supplement thereto, 2. original promissory note and any addendum thereto or a certified copy thereof if more than one loan is represented by a single promissory note and all loans so represented are not being sold at the same time, 3. evidence of guarantee, 4. any other document and/or record which Funding may be required to retain pursuant to Regulations; and (b) for each Loan only if applicable: 1. payment history (or similar document) including (i) an indication of the Principal Balance and the date through which interest has been paid, each as of the Cutoff Date and (ii) an accounting of the allocation of all payments by Borrower or on Borrower's 3 4 behalf to principal and interest on the Loan, 2. documentation which supports periods of current or past deferment or past forbearance, 3. a collection history, if the Loan was ever in a delinquent status, including detailed summaries of contacts and including the addresses or telephone numbers used in contacting or attempting to contact Borrower and any endorser and, if required by the Guarantor, copies of all letters and other correspondence relating to due diligence processing, 4. evidence of all requests for skip-tracing assistance and current address of Borrower, if located, 5. evidence of requests for pre-claims assistance, and evidence that the Borrower's school(s) have been notified, 6. a record of any event resulting in a change to or confirmation of any data in the Loan file. (I) "Initial Payment" means the dollar amount specified in the applicable Purchase Agreement. (J) "Loan" means the Note or Notes offered for sale pursuant to the Purchase Agreement and related documentation together with any guaranties and other rights relating thereto including, without limitation, Interest Subsidy Payments and Special Allowance Payments. (K) "Loan Transmittal Summary Forms" means the forms provided to Sallie Mae by Funding and completed by Sallie Mae which list, by Borrower, the Loans subject to the Bill of Sale and the outstanding Principal Balance and accrued interest thereof as of the Cutoff Date. (L) "Note" means the promissory note of the Borrower and any amendment thereto evidencing the Borrower's obligation with regard to a student loan guaranteed under the Higher Education Act. (M) "PLUS Loan" means a Loan which was made pursuant to the PLUS Program established under Section 428B of the Higher Education Act (or predecessor provisions). 4 5 (N) "Principal Balance" means the outstanding principal amount of the Loan, plus interest expected to be capitalized (if any), less amounts which may not be insured (such as late charges). (O) "Purchase Agreement" means a Purchase Agreement (including any attachments thereto), substantially in the form of Attachment A hereto, of which these Master Terms form a part by reference. (P) "Purchase Price" means the sum of the Initial Payment and Deferred Payment. (Q) "Sale Agreement" means the Sale Agreement Master Securitization Terms Number 1000 among SLM Funding Corporation as seller, Chase Manhattan Bank USA, National Association as Interim Eligible Lender Trustee and Eligible Lender Trustee. (R) "Secretary" means the United States Secretary of Education or any successor. (S) "SLS Loan" means a Loan which was made pursuant to the Supplemental Loans for Students Program established under Section 428A of the Higher Education Act (or predecessor provisions), including Loans referred to as ALAS Loans or Student PLUS Loans. (T) "Stafford Loans" mean Subsidized Stafford Loans and Unsubsidized Stafford Loans. (U) "Subsidized Stafford Loan" means a Loan for which the interest rate is governed by Section 427A(a) or 427A(d) of the Higher Education Act. (V) "Unsubsidized Stafford Loan" means a Loan made pursuant to Section 428H of the Higher Education Act. SECTION 3. SALE/PURCHASE (A) Consummation of Sale and Purchase The sale and purchase of Eligible Loans pursuant to a Purchase Agreement shall be consummated upon Funding's receipt from Sallie Mae of the Bill of Sale and the payment by Funding to Sallie Mae of the Initial Payment, and when consummated such sale and purchase shall be effective as of the date of the Bill of Sale. Sallie Mae and Funding shall use their best efforts to perform promptly their respective obligations pursuant to such Purchase Agreement. 5 6 (B) Settlement of the Initial Payment Funding on the date of the Bill of Sale shall pay Sallie Mae the Initial Payment by wire transfer of immediately available funds to the account specified by Sallie Mae. (C) Interest Subsidy and Special Allowance Payments On the date of the Bill of Sale, Sallie Mae shall be entitled to all Interest Subsidy Payments and Special Allowance Payments on the Loans subject to each Bill of Sale accruing up to but not including the date of the Bill of Sale. The Interim Eligible Lender Trustee on behalf of Funding shall be entitled to all Special Allowance Payments and Interest Subsidy Payments accruing from the date of the Bill of Sale. (D) Special Programs In consideration of the sale of the Eligible Loans under these Master Terms and each Purchase Agreement, Funding agrees to cause the Servicer to offer borrowers of Trust Student Loans all special programs, whether or not in existence as of the date of any Purchase Agreement, generally offered to the obligors of comparable loans owned by Sallie Mae subject to terms and conditions of Section 3.12 of the Servicing Agreement. (E) Deferred Payment Funding shall pay the Deferred Payment to Sallie Mae when and as the same is received by Funding. If the Trust Student Loans are purchased by Funding pursuant to Section 6.1 of the Administration Agreement, Funding shall pay to Sallie Mae as part of the Deferred Payment 66 2/3% of the present value of the excess of the projected future yield on the Trust Student Loans after the date of such purchase over the projected cost to Funding of carrying the Trust Student Loans as reasonably estimated by Funding assuming (1) that interest rates applicable to the Trust Student Loans in effect on the date of such purchase remain in effect, (2) that the cost to Funding of carrying the Trust Student Loans is equal to the blended rate on the Notes and Certificates on the date of such purchase, (3) that the servicing costs and loss experience applicable to the Trust Student Loans during the one year period preceding such purchase continue during the remaining life of the Trust Student Loans and (4) a discount rate equal to the blended rate on the Notes and Certificates on the date of such purchase. If the Trust Student Loans are sold pursuant to the auction provision in Section 4.4 of the Indenture, 6 7 Funding shall pay to Sallie Mae as part of the Deferred Payment 66 2/3% of the amount, if any, by which the sale price exceeds the Minimum Purchase Amount and any costs of terminating the Trust. Funding shall also be obligated to pay Sallie Mae as part of the Deferred Payment, in the event that the provisions of Section 2.8C(F) of the Administration Agreement are operative, upon payment in full of the Notes and Certificates to the extent of amounts then distributable by the Trust to Funding, 66 2/3% of the aggregate amount that would have been distributed to Funding pursuant to Section 2.8C(G) of the Administration Agreement (exclusive of the amount of any such distribution attributable to the reduction from time to time of the Specified Reserve Account Balance) but for the operation of Section 2.8C(F) of the Administration Agreement. SECTION 4. CONDITIONS PRECEDENT TO PURCHASE (A) Activities Prior to the Purchase Date Sallie Mae shall provide any assistance requested by Funding in determining that all required documentation on the Loans is present and correct. (B) Continued Servicing Following the execution of each Purchase Agreement, Sallie Mae shall service, or cause to be serviced, all Loans subject to such Purchase Agreement as required under the Higher Education Act until the date of the Bill of Sale. (C) Bill of Sale/Loan Transmittal Summary Form Sallie Mae shall deliver to Funding: (i) a Bill of Sale executed by an authorized officer of Sallie Mae, covering Loans offered by Sallie Mae and accepted by Funding as set forth thereon, selling, assigning and conveying to the Interim Eligible Lender Trustee on behalf of Funding and its assignees all right, title and interest of Sallie Mae, including the insurance interest of Sallie Mae, in each of the Loans, and stating that the representations and warranties made by Sallie Mae in Section 5 of these Master Terms are true and correct on and as of the date of the Bill of Sale; and (ii) the Loan Transmittal Summary Form, attached to the Bill of Sale, identifying each of the Eligible Loans which is the subject of the Bill of Sale and 7 8 setting forth the unpaid Principal Balance of each such Loan. (D) Endorsement Sallie Mae shall provide a blanket endorsement transferring the entire interest of Sallie Mae in the Loans to the Interim Eligible Lender Trustee on behalf of Funding with the form of endorsement provided for in the Purchase Agreement. At the direction of and in such form as Funding may designate, Sallie Mae also agrees to individually endorse any Eligible Loan as Funding may request from time to time. (E) Officer's Certificate Sallie Mae shall furnish to Funding, with each Bill of Sale provided in connection with each purchase of Loans pursuant to these Master Terms, an Officer's Certificate, dated as of the date of such Bill of Sale, in substantially the form of Attachment C. (F) Loan Transfer Statement Upon Funding's request, Sallie Mae shall deliver to Funding one (1) or more Loan Transfer Statements (Department of Education Form OE 1074 or its equivalent) provided by Funding, executed by Sallie Mae and dated the date of the Bill of Sale. Sallie Mae agrees that Funding and the Interim Eligible Lender Trustee may use the Bill of Sale, including the Loan Transmittal Summary Form attached to the Bill of Sale, in lieu of OE Form 1074, as official notification to the Guarantor of the assignment by Sallie Mae to the Interim Eligible Lender Trustee on behalf of Funding of the Loans listed on the Bill of Sale. (G) Power of Attorney Sallie Mae hereby grants to Funding and the Interim Eligible Lender Trustee for the benefit of Funding an irrevocable power of attorney, which power of attorney is coupled with an interest, to individually endorse or cause to be individually endorsed in the name of Sallie Mae any Eligible Loan to evidence the transfer of such Eligible Loan to Funding and the Interim Eligible Lender Trustee for the benefit of Funding and to cause to be transferred physical possession of any Note from Sallie Mae or the Servicer to Funding or the Interim Eligible Lender Trustee or any custodian on their behalf. 8 9 SECTION 5. REPRESENTATIONS AND WARRANTIES OF SALLIE MAE AND INTERIM ELIGIBLE LENDER TRUSTEE (A) General Sallie Mae represents and warrants to Funding that with respect to a portfolio of Loans, as of the date of each Purchase Agreement and Bill of Sale: (i) Sallie Mae is an eligible lender or other qualified holder of loans originated pursuant to the Federal Family Education Loan Program established under the Higher Education Act; (ii) Sallie Mae is duly organized and existing under the laws of the applicable jurisdiction; (iii) Sallie Mae has all requisite power and authority to enter into and to perform the terms of the Purchase Agreement; and (iv) Sallie Mae will not, with respect to any Loan purchased under Purchase Agreements executed pursuant to these Master Terms, agree to release any Guarantor from any of its contractual obligations as an insurer of such Loan or agree otherwise to alter, amend or renegotiate any material term or condition under which such Loan is insured, except as required by law or rules and regulations issued pursuant to law, without the express prior written consent of Funding. (B) Particular Sallie Mae represents and warrants to Funding as to the Loans purchased by Funding under each Purchase Agreement and each Bill of Sale executed pursuant these Master Terms that: (i) Sallie Mae has good title to, and is the sole owner of, the Loans, free and clear of all security interests, liens, charges, claims, offsets, defenses, counterclaims or encumbrances of any nature and no right of rescission, offsets, defenses or counterclaims have been asserted or threatened with respect to the Loans; (ii) The Loans are Eligible Loans and the description of the Loans set forth in the Purchase Agreement is true and correct; 9 10 (iii) Sallie Mae is authorized to sell, assign, transfer and repurchase the Loans; and the sale, assignment and transfer of such Loans is or, in the case of a Loan repurchase by Sallie Mae, will be made pursuant to and consistent with the laws and regulations under which Sallie Mae operates, and will not violate any decree, judgment or order of any court or agency, or conflict with or result in a breach of any of the terms, conditions or provisions of any agreement or instrument to which Sallie Mae is a party or by which Sallie Mae or its property is bound, or constitute a default (or an event which could constitute a default with the passage of time or notice or both) thereunder; (iv) The Loans are each in full force and effect in accordance with their terms and are legal, valid and binding obligations of the respective Borrowers thereunder subject to no defenses (except the defense of infancy); (v) Each Loan has been duly made and serviced in accordance with the provisions of the Federal Family Education Loan Program established under the Higher Education Act, and has been duly insured by a Guarantor; such guarantee is in full force and effect and is freely transferable to the Interim Eligible Lender Trustee on behalf of Funding as an incident to the purchase of each Loan; and all premiums due and payable to such Guarantor shall have been paid in full as of the date of the Bill of Sale; (vi) Any payments on the Loans received by Sallie Mae which have been allocated to reduction of principal and interest on such Loans have been allocated on a simple interest basis; the information with respect to the Loans as of the Cutoff Date as stated on the Loan Transmittal Summary Form is true and correct; (vii) Due diligence and reasonable care have been exercised in the making, administering, servicing and collecting the Loans and, with respect to any Loan for which repayment terms have been established, all disclosures of information required to be made pursuant to the Higher Education Act have been made; (viii) All origination fees authorized to be collected pursuant to Section 438 of the Higher Education Act have been paid to the Secretary; 10 11 (ix) Each Loan has been duly made and serviced in accordance with the provisions of all applicable federal and state laws; (x) No Loan is more than ninety (90) days delinquent as of the Cutoff Date and no default, breach, violation or event permitting acceleration under the terms of any Loan has arisen; and neither Sallie Mae nor any predecessor holder of any Loan has waived any of the foregoing other than as permitted by the Basic Documents; (xi) It is the intention of Sallie Mae, the Interim Eligible Lender Trustee and Funding, and Sallie Mae hereby warrants that, the transfer and assignment herein contemplated constitute a valid sale of the Loans from Sallie Mae to the Interim Eligible Lender Trustee on behalf of Funding and that the beneficial interest in and title to such Loans not be part of Sallie Mae's estate in the event of the bankruptcy of Sallie Mae or the appointment of a receiver with respect to Sallie Mae; (xii) There is only one original executed copy of the promissory note evidencing each Loan; and (xiii) No Borrower of any Loan as of the Cutoff Date is noted in the related Loan File as being currently involved in a bankruptcy proceeding. (C) The Interim Eligible Lender Trustee represents and warrants that as of the date of each Purchase Agreement and each Bill of Sale: (i) The Interim Eligible Lender Trustee is a national banking association duly organized and validly existing in good standing under the laws of the United States and having 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 Purchase Agreement; (ii) The Interim Eligible Lender Trustee has taken all corporate action necessary to authorize the execution and delivery by it of the Purchase Agreement, and the Purchase Agreement will be executed and delivered by one of its officers who is duly authorized to execute and deliver the Purchase Agreement on its behalf; (iii) Neither the execution nor the delivery by it of the Purchase Agreement, nor the consummation by it of the transactions contemplated hereby nor compliance by it with 11 12 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 Interim 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; and (iv) The Interim Eligible Lender Trustee is an "eligible lender" as such term is defined in Section 435(d) of the Higher Education Act, for purposes of holding legal title to the Trust Student Loans as contemplated by the Purchase Agreement and the other Basic Documents, it has a lender identification number with respect to the Trust Student Loans from the Department and has in effect a Guarantee Agreement with each of the Guarantors with respect to the Trust Student Loans. SECTION 6. PURCHASE OF TRUST STUDENT LOANS; REIMBURSEMENT Each party to this Agreement shall give notice to the other parties promptly, in writing, upon the discovery of any breach of Sallie Mae's representations and warranties made pursuant to Section 5 hereof which has a materially adverse effect on the interest of Funding in any Trust Student Loan. In the event of such a material breach which is not curable by reinstatement of the Guarantor's guarantee of such Trust Student Loan, Sallie Mae shall repurchase any affected Trust Student Loan not later than 120 days following the earlier of the date of discovery of such material breach and the date of receipt of the Guarantor reject transmittal form with respect to such Trust Student Loan. In the event of such a material breach which is curable by reinstatement of the Guarantor's guarantee of such Trust Student Loan, unless the material breach shall have been cured within 360 days following the earlier of the date of discovery of such material breach and the date of receipt of the Guarantor reject transmittal form with respect to such Trust Student Loan, Sallie Mae shall purchase such Trust Student Loan not later than the sixtieth day following the end of such 360-day period. Sallie Mae shall also remit as provided in Section 2.6 of the Administration Agreement on the date of purchase of any Trust Student Loan pursuant to this Section 6 an amount equal to all nonguaranteed interest amounts and forfeited Interest Subsidy Payments and Special Allowance Payments with respect to such Trust Student Loan. In consideration of the purchase of any such Trust Student Loan pursuant to this Section 6, Sallie Mae shall remit the Purchase Amount in the manner specified in Section 2.6 of the Administration Agreement. In addition, if any breach of Section 5 hereof by Sallie Mae does not trigger such purchase obligation but does result in 12 13 the refusal by a Guarantor to guarantee all or a portion of the accrued interest (or any obligation of Funding to repay such interest to a Guarantor), or the loss (including any obligation of Funding to repay the Department) of Interest Subsidy Payments and Special Allowance Payments, with respect to any Trust Student Loan affected by such breach, then Sallie Mae shall reimburse Funding by remitting an amount equal to the sum of all such nonguaranteed interest amounts and such forfeited Interest Subsidy Payments or Special Allowance Payments in the manner specified in Section 2.6 of the Administration Agreement not later than (i) the last day of the next Collection Period ending not less than 60 days from the date of the Guarantor's refusal to guarantee all or a portion of accrued interest or loss of Interest Subsidy Payments or Special Allowance Payments, or (ii) in the case where Sallie Mae reasonably believes such losses are likely to be collected, not later than the last day of the next Collection Period ending not less than 360 days from the date of the Guarantor's refusal to guarantee all or a portion of accrued interest or loss of Interest Subsidy Payments or Special Allowance Payments. At the time such payment is made, Sallie Mae shall not be required to reimburse Funding for interest that is then capitalized, however, such amounts shall be reimbursed if the borrower subsequently defaults and such capitalized interest is not paid by the Guarantor. Anything in this Section 6 to the contrary notwithstanding, if as of the last Business Day of any month the aggregate outstanding principal amount of Trust Student Loans with respect to which claims have been filed with and rejected by a Guarantor or with respect to which the Servicer determines that claims cannot be filed pursuant to the Higher Education Act as a result of a breach by Sallie Mae or the Servicer, exceeds 1% of the Pool Balance, Sallie Mae (and the Servicer as provided in the Servicing Agreement) shall purchase, within 30 days of a written request of the Eligible Lender Trustee or the Indenture Trustee, such affected Trust Student Loans in an aggregate principal amount such that after such purchase the aggregate principal amount of such affected Trust student Loans is less than 1% of the Pool Balance. The Trust Student Loans to be purchased by Sallie Mae and the Servicer pursuant to the preceding sentence shall be based on the date of claim rejection (or the date of notice referred to in the first sentence of this Section 6) with Trust Student Loans with the earliest such date to be purchased first. In lieu of repurchasing Trust Student Loans pursuant to this Section 6, Sallie Mae may, at its option, substitute Eligible Loans or arrange for the substitution of Eligible Loans which are substantially similar on an aggregate basis as of the date of substitution to the Trust Student Loans for which they are being substituted with respect to the following characteristics: 13 14 (1) status (i.e., in-school, grace, deferment, forbearance or repayment), (2) program type (i.e., Unsubsidized Stafford, Subsidized Stafford, PLUS or SLS), (3) school type, (4) total return, (5) principal balance, and (6) remaining term to maturity. In addition, each substituted Eligible Loan will comply, as of the date of substitution, with all of the representations and warranties made hereunder. In choosing Eligible Loans to be substituted pursuant to this Section 6, Sallie Mae shall make a reasonable determination that the Eligible Loans to be substituted will not have a material adverse effect on the Noteholders and the Certificateholders. In the event that Sallie Mae elects to substitute Eligible Loans pursuant to this Section 6, Sallie Mae will remit to the Administrator the amount of any shortfall between the Purchase Amount of the substituted Eligible Loans and the Purchase Amount of the Trust Student Loans for which they are being substituted. Sallie Mae shall also remit to the Administrator an amount equal to all nonguaranteed interest amounts and forfeited Interest Subsidy Payments and Special Allowance Payments with respect to the Trust Student Loans in the manner provided in Section 2.6 of the Administration Agreement. The sole remedy of Funding, the Eligible Lender Trustee, the Certificateholders and the Noteholders with respect to a breach by Sallie Mae pursuant to Section 5 hereof shall be to require Sallie Mae to purchase Trust Student Loans, to reimburse Funding as provided above or to substitute Student Loans pursuant to this Section. The Eligible Lender Trustee shall have no duty to conduct any affirmative investigation as to the occurrence of any condition requiring the purchase of any Trust Student Loan or the reimbursement for any interest penalty pursuant to this Section 6. SECTION 7. OBLIGATION TO REMIT SUBSEQUENT PAYMENTS AND FORWARD COMMUNICATIONS (A) Any payment received by Sallie Mae with respect to amounts accrued after the Date of the Bill of Sale for any Loan sold to Funding, which payment is not reflected in the Loan Transmittal Summary Form, shall be received by Sallie Mae in trust for the account of Funding and Sallie Mae hereby disclaims any title to or interest in any such 14 15 amounts. Within two (2) business days following the date of receipt, Sallie Mae shall remit to Funding an amount equal to any such payments on a list provided by Funding identifying the Loans with respect to which such payments were made, the amount of each such payment and the date each such payment was received. (B) Any written communication received at any time by Sallie Mae with respect to any Loan subject to this Purchase Agreement shall be transmitted by Sallie Mae to Servicer within two (2) business days of receipt. Such communications shall include, but not be limited to, letters, notices of death or disability, notices of bankruptcy, forms requesting deferment of repayment or loan cancellation, and like documents. SECTION 8. CONTINUING OBLIGATION OF SALLIE MAE Sallie Mae shall provide all reasonable assistance necessary for Funding to resolve account problems raised by any Borrower, the Guarantor or the Secretary provided such account problems are attributable to or are alleged to be attributable to (a) an event occurring during the period Sallie Mae owned the Loan, or (b) a payment made or alleged to have been made to Sallie Mae. Further, Sallie Mae agrees to execute any financing statements at the request of Funding in order to reflect Funding's interest in the Loans. SECTION 9. LIABILITY OF SALLIE MAE; INDEMNITIES Sallie Mae shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by Sallie Mae under this Purchase Agreement. (i) Sallie Mae shall indemnify, defend and hold harmless Funding and the Interim Eligible Lender Trustee in its individual capacity and their officers, directors, employees and agents from and against any taxes that may at any time be asserted against any such Person with respect to the transactions contemplated herein and in the other Basic Documents (except any such income taxes arising out of fees paid to the Interim Eligible Lender Trustee), including any sales, gross receipts, general corporation, tangible personal property, privilege or license taxes (but, in the case of Funding, not including any taxes asserted with respect to, and as of the date of, the sale of the Loans to the Interim Eligible Lender Trustee on behalf of Funding, or asserted with respect to ownership of the Trust Student Loans) and costs and expenses in defending against the same. 15 16 (ii) Sallie Mae shall indemnify, defend and hold harmless Funding and the Interim Eligible Lender Trustee in its individual capacity, and the officers, directors, employees and agents of Funding, and the Interim Eligible Lender Trustee from and against any and all costs, expenses, losses, claims, damages and liabilities arising out of, or imposed upon such Person through, Sallie Mae's willful misfeasance, bad faith or gross negligence in the performance of its duties under the Purchase Agreement, or by reason of reckless disregard of its obligations and duties under the Purchase Agreement. (iii) Sallie Mae shall be liable as primary obligor for, and shall indemnify, defend and hold harmless the Interim Eligible Lender Trustee in its individual capacity and its officers, directors, employees and agents from and against, all costs, expenses, losses, claims, damages, obligations and liabilities arising out of, incurred in connection with or relating to the Purchase Agreement, the other Basic Documents, the acceptance or performance of the trusts and duties set forth herein and in the Sale Agreement or the action or the inaction of the Interim Eligible Lender Trustee hereunder, except to the extent that such cost, expense, loss, claim, damage, obligation or liability: (a) shall be due to the willful misfeasance, bad faith or negligence (except for errors in judgment) of the Interim Eligible Lender Trustee, (b) shall arise from any breach by the Interim Eligible Lender Trustee of its covenants made under any of the Basic Documents; or (c) shall arise from the breach by the Interim Eligible Lender Trustee of any of its representations or warranties made in its individual capacity set forth in these Master Terms or any Purchase Agreement. In the event of any claim, action or proceeding for which indemnity will be sought pursuant to this paragraph, the Interim Eligible Lender Trustee's choice of legal counsel shall be subject to the approval of Sallie Mae, which approval shall not be unreasonably withheld. Indemnification under this Section shall survive the resignation or removal of the Interim Eligible Lender Trustee and the termination of these Master Terms, and shall include reasonable fees and expenses of counsel and expenses of litigation. If Sallie Mae shall have made any indemnity payments pursuant to this Section and the Person to or on behalf of whom such payments are made thereafter shall collect any of such amounts from others, such Person shall promptly repay such amounts to Sallie Mae, without interest. 16 17 SECTION 10. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF SALLIE MAE Any Person (a) into which Sallie Mae may be merged or consoli dated, (b) which may result from any merger or consolidation to which Sallie Mae shall be a party or (c) which may succeed to the properties and assets of Sallie Mae substantially as a whole, shall be the successor to Sallie Mae without the execution or filing of any document or any further act by any of the parties to this Purchase Agreement; provided, however, that Sallie Mae hereby covenants that it will not consummate any of the foregoing transactions except upon satisfaction of the following: (i) the surviving Person, if other than Sallie Mae, executes an agreement of assumption to perform every obligation of Sallie Mae under the Purchase Agreement, (ii) immediately after giving effect to such transaction, no representation or warranty made pursuant to Section 5 shall have been breached, (iii) the surviving Person, if other than Sallie Mae, shall have delivered to the Interim Eligible Lender Trustee an Officers' Certificate and an Opinion of Counsel each stating that such consolidation, merger or succession and such agreement of assumption comply with this Section and that all conditions precedent, if any, provided for in this Purchase Agreement relating to such transaction have been complied with, and that the Rating Agency Condition shall have been satisfied with respect to such transaction (iv) if Sallie Mae is not the surviving entity, Sallie Mae shall have delivered to the Interim Eligible Lender Trustee an Opinion of Counsel either (A) stating that, in the opinion of such counsel, all financing statements and continuation statements and amendments thereto have been executed and filed that are necessary fully to preserve and protect the interest of Funding and the Interim Eligible Lender Trustee in the Loans and reciting the details of such filings, or (B) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such interests. SECTION 11. LIMITATION ON LIABILITY OF SALL IE MAE AND OTHERS Sallie Mae and any director or officer or employee or agent thereof may rely in good faith on the advice of counsel or on any document of any kind, prima facie properly executed and submitted by any Person respecting any matters arising hereunder (provided that such reliance shall not limit in any way Sallie Mae's obligations under Section 6.) Sallie Mae shall not be under any obligation to appear in, prosecute or defend any legal action that shall not be incidental to its obligations under these Master Terms or any Purchase Agreement, and that in its opinion may involve it in any expense or liability. Except as provided herein, the repurchase (or substitution) and reimbursement obligations of Sallie Mae will constitute the sole remedy available to Funding for uncured breaches; provided, 17 18 however, that the information with respect to the Loans listed on the Bill of Sale may be adjusted in the ordinary course of business subsequent to the date of the Bill of Sale and to the extent that the aggregate Principal Balance of the Loans listed on the Bill of Sale is less than the aggregate Principal Balance stated on the Bill of Sale, Sallie Mae shall remit such amount to the Interim Eligible Lender Trustee on behalf of Funding. Such reconciliation payment shall be made from time to time but no less frequently than semi-annually. SECTION 12. LIMITATION OF LIABILITY OF INTERIM ELIGIBLE LENDER TRUSTEE Notwithstanding anything contained herein to the contrary, these Master Terms and any Purchase Agreement have been signed by Chase Manhattan Bank USA, National Association not in its individual capacity but solely in its capacity as Interim Eligible Lender Trustee for Funding and in no event shall Chase Manhattan Bank USA, National Association in its individual capacity have any liability for the representations, warranties, covenants, agreements or other obligations of Funding, under these Master Terms or any Purchase Agreement or in any of the certificates, notices or agreements delivered pursuant hereto, as to all of which recourse shall be had solely to the assets of Funding. SECTION 13. EXPENSES Except as otherwise provided herein, each party to these Master Terms or any Purchase Agreement shall pay its own expense incurred in connection with the preparation, execution and delivery of these Master Terms and any Purchase Agreement and the transactions contemplated herein or therein. SECTION 14. SURVIVAL OF COVENANTS/SUPERSESSION All covenants, agreements, representations and warranties made herein and in or pursuant to any Purchase Agreements executed pursuant to these Master Terms shall survive the consummation of the purchase of the Loans provided for in each Purchase Agreement. All covenants, agreements, representations and warranties made or furnished pursuant hereto by or on behalf of Sallie Mae shall bind and inure to the benefit of any successors or assigns of Funding and shall survive with respect to each Loan. Each Purchase Agreement supersedes all previous agreements and understandings between Funding and Sallie Mae with respect to the subject matter thereof. These Master Terms and any Purchase Agreement may be changed, modified or discharged, and any rights or obligations hereunder may be waived, only by a written instrument signed by a duly authorized officer of the party against whom enforcement of any such waiver, change, modification or discharge is sought. The waiver 18 19 by Funding of any covenant, agreement, representation or warranty required to be made or furnished by Sallie Mae or the waiver by Funding of any provision herein contained or contained in any Purchase Agreement shall not be deemed to be a waiver of any breach of any other covenant, agreement, representation, warranty or provision herein contained, nor shall any waiver or any custom or practice which may evolve between the parties in the administration of the terms hereof or of any Purchase Agreement, be construed to lessen the right of Funding to insist upon the performance by Sallie Mae in strict accordance with said terms. SECTION 15. COMMUNICATION AND NOTICE REQUIREMENTS All communications, notices and approvals provided for hereunder shall be in writing and mailed or delivered to Sallie Mae or Funding, as the case may be, addressed as set forth in the Purchase Agreement or at such other address as either party may hereafter designate by notice to the other party. Notice given in any such communication, mailed to Sallie Mae or Funding by appropriately addressed registered mail, shall be deemed to have been given on the day following the date of such mailing. SECTION 16. FORM OF INSTRUMENTS All instruments and documents delivered in connection with these Master Terms and any Purchase Agreement, and all proceedings to be taken in connection with these Master Terms and any Purchase Agreement and the transactions contemplated herein and therein, shall be in a form as set forth in the attachments hereto, and Funding shall have received copies of such documents as it or its counsel shall reasonably request in connection therewith. Any instrument or document which is substantially in the same form as an Attachment hereto or a recital herein will be deemed to be satisfactory as to form. SECTION 17. AMENDMENT These Master Terms and any Purchase Agreement may be amended by the parties thereto without the consent of the related Noteholders or Certificateholders for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of such Master Terms and Purchase Agreements or of modifying in any manner the rights of such Noteholders or Certificateholders; provided that such action will not, in the opinion of counsel satisfactory to the related Indenture Trustee and Eligible Lender Trustees, materially and adversely affect the interest of any such Noteholder or Certificateholder. In addition, these Master Terms and any Purchase Agreement may also be amended from time to time by Sallie Mae, the Interim Eligible Lender Trustee and Funding, with the consent of the 19 20 Noteholders of Notes evidencing a majority of the Outstanding Amount of the Notes and the consent of the Certificateholders of Certificates evidencing 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 these Master Terms or any Purchase Agreements 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 time of, collections of payments with respect to 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 of Certificates, the Noteholders or the Certificateholders of which are required to consent to any such amendment, without the consent of all outstanding Noteholders and Certificateholders. Promptly after the execution of any such amendment or consent (or, in the case of the Rating Agencies, five Business Days prior thereto), the Interim Eligible Lender Trustee shall furnish written notification of the substance of such amendment or consent to the Indenture Trustee, each Certificateholder, and each of the Rating Agencies. It shall not be necessary for the consent of Certificateholders or Noteholders 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. Prior to the execution of any amendment to these Master Terms, the Interim Eligible Lender Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating that execution of such amendment is authorized or permitted by this Agreement and the Opinion of Counsel referred to in Section 7.1 I((i) of the Administration Agreement. The Interim Eligible Lender Trustee may, but shall not be obligated to, enter into any such amendment which affects the Interim Eligible Lender Trustee's own rights, duties or immunities under this Agreement or otherwise. SECTION 18. NONPETITION COVENANTS Notwithstanding any prior termination of these Master Terms Sallie Mae and the Interim Eligible Lender Trustee shall not acquiesce, petition or otherwise invoke or cause Funding to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against Funding under any Federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignees, trustee, custodian, sequestrator or other similar official of Funding or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Funding. 20 21 SECTION 19. GOVERNING LAW These Master Terms and any Purchase Agreement shall be government by and construed in accordance with the laws of the State of New York. 21 22 STUDENT LOAN MARKETING SLM FUNDING CORPORATION ASSOCIATION (Purchaser) (Seller) By: /s/ DENISE B. MCGLONE By: /s/ MARK G. OVEREND ------------------------- ---------------------------- Name: Denise B. McGlone Name: Mark G. Overend ----------------------- -------------------------- Title: Executive Vice President Title: Treasurer and Controller ------------------------ ------------------------ and Chief Financial Officer --------------------------- CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION - ---------------------------------------------- Not in its individual capacity but solely as Interim Eligible Lender Trustee By: /s/ JOHN W. MACK --------------------------------------- Name: John W. Mack ------------------------------------- Title: Second Vice President ------------------------------------ 22 23 ATTACHMENT A PURCHASE AGREEMENT Dated as of October 3, 1996 PURCHASE AGREEMENT NUMBER 1 Sallie Mae hereby offers for sale to Chase Manhattan Bank USA, National Association as Interim Eligible Lender Trustee for the benefit of SLM Funding Corporation ("Funding") under the Interim Trust Agreement dated as of October 1, 1996 between Funding and the Interim Eligible Lender Trustee, the entire right, title and interest of Sallie Mae in the Loans described in the Bill of Sale and Loan Transmittal Summary Form incorporated herein and, to the extent indicated below, the Interim Eligible Lender Trustee for the benefit of Funding accepts Sallie Mae's offer. In order to qualify as Eligible Loans, no payment of principal or interest shall be more than ninety (90) days Delinquent as of the Cutoff Date which date shall be September 2, 1996. TERMS, CONDITIONS AND COVENANTS In consideration of the Purchase Price, Sallie Mae hereby sells to the Interim Eligible Lender Trustee for the benefit of Funding the entire right, title and interest of Sallie Mae in the Loans accepted for purchase, subject to all the terms and conditions of the Purchase Agreement Master Securitization Terms Number 1000 ("Master Terms") and any amendments thereto, incorporated herein by reference, among Sallie Mae, Funding, and the Interim Eligible Lender Trustee. The Initial Payment of the Loans shall equal $1,496,933,610.44 (equal to $1,501,238,568.44 (representing the offering price of the Securities less underwriters' commissions) less (a) $3,752,958 (representing the Reserve Account Initial Deposit), (b) $527,000 (representing a capital contribution from Sallie Mae to Funding to be used to purchase a 1% interest in the Certificates) and (c) $25,000 (representing the initial deposit into the Collection Account). This document shall constitute a Purchase Agreement as referred to in the Master Terms and, except as modified herein, each term used herein shall have the same meaning as in the Master Terms. All references in the Master Terms to Loans or Eligible Loans shall be deemed to refer to the Loans governed by this Purchase Agreement. Sallie Mae hereby makes, as of the date hereof, all the representations and warranties contained in the Master Terms and makes such representations and warranties with respect to the Loans governed by this Purchase Agreement. Sallie Mae authorizes the Interim Eligible Lender Trustee for the benefit of Funding to use a copy of the Bill of Sale, including the Loan Transmittal Summary Form attached to the Bill of Sale (in lieu of OE Form 1074), as official notification to the Guarantor of assignment to the Interim Eligible Lender Trustee on behalf of Funding of the Loans on the date of purchase. 1 24 The parties hereto intend that the transfer of Loans described in the Bill of Sale and Loan Transmittal Summary Form be, and be construed as, a valid sale of such Loans from Sallie Mae to the Interim Eligible Lender Trustee for the benefit of Funding. However, in the event that notwithstanding the intention of the parties, such transfer is deemed to be a transfer for security, then Sallie Mae hereby grants to the Interim Eligible Lender Trustee for the benefit of Funding a first priority security interest in and to all Loans described in the Bill of Sale and Loan Transmittal Summary Form to secure a loan in an amount equal to the Purchase Price of such loans. STUDENT LOAN MARKETING SLM FUNDING CORPORATION ------------------------ ASSOCIATION (Purchaser) - ----------- (Seller) By: /s/ Denise B. McGlone By: /s/ Mark G. Overend ------------------------- ------------------------------ Name: Denise B. McGlone Name: Mark G. Overend ----------------------- ---------------------------- Title: Executive Vice President Title: Treasurer and Controller ------------------------ ------------------------ and Chief Financial Officer --------------------------- CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION - ---------------------------------------------- Not in its individual capacity but solely as Interim Eligible Lender Trustee By: /s/ John W. Mack ----------------------------- Name: John W. Mack --------------------------- Title: Second Vice President -------------------------- 2 25 PURCHASE AGREEMENT NUMBER 1 BLANKET ENDORSEMENT DATED OCTOBER 3, 1996 Student Loan Marketing Association ("Sallie Mae"), by execution of this instrument, hereby endorses the attached promissory note which is one (1) of the promissory notes ("the Notes") described in the Bill of Sale executed by Sallie Mae in favor of Chase Manhattan Bank USA, National Association as the Interim Eligible Lender Trustee for the benefit of SLM Funding Corporation ("Funding"). This endorsement is in blank, unrestricted form and without recourse except as provided in Section 6 of the Master Terms referred to in the Purchase Agreement among Sallie Mae, Funding, and the Interim Eligible Lender Trustee which covers this promissory note. This endorsement may be effected by attaching either this instrument or a facsimile hereof to each or any of the Notes. Notwithstanding the foregoing, Sallie Mae agrees to individually endorse each Note in the form provided by Funding as Funding may from time to time require or if such individual endorsement is required by the Guarantor of the Note. THE SALE AND PURCHASE OF THE LOANS SHALL BE SUBJECT TO THE TERMS, CONDITIONS AND COVENANTS, INCLUDING THE BLANKET ENDORSEMENT, AS SET FORTH IN THE PURCHASE AGREEMENT. BY EXECUTION HEREOF, SALLIE MAE ACKNOWLEDGES THAT SALLIE MAE HAS READ, UNDERSTANDS AND AGREES TO BE BOUND BY ALL TERMS, CONDITIONS AND COVENANTS OF THE PURCHASE AGREEMENT. THE SALE AND PURCHASE SHALL BE CONSUMMATED UPON FUNDING'S PAYMENT TO SALLIE MAE OF THE INITIAL PAYMENT (AS DEFINED IN THE MASTER TERMS) AND, UNLESS OTHERWISE AGREED BY SALLIE MAE AND FUNDING, SHALL BE EFFECTIVE AS OF THE DATE OF THE BILL OF SALE. =================================== SELLER PURCHASER - --------------------------------- ----------------------------------- Chase Manhattan Bank USA, Student Loan Marketing Association National Association, 1050 Thomas Jefferson Street, N.W. not in its individual capacity Washington, D.C. 20007 but solely as Interim Eligible Lender Trustee for the benefit Lender Code: of the SLM Funding Corporation -------------- under the Interim Trust Agreement dated Oct. 1, 1996 By: /s/ Denise B. McGlone --------------------------- (Signature of Authorized Officer of Seller) Name: Denise B. McGlone By: /s/ John W. Mack ---------------------------- ---------------------- (Signature of Authorized Title: Executive Vice President and Signatory for Purchaser) ---------------------------- Chief Financial Officer ---------------------------- Name: John W. Mack ----------------------------- Title: Second Vice President ----------------------- Date of Purchase: Oct. 3, 1996 --------------------------------------
- ----------------------------------------------------------------------- NOTE: Boxed areas on this form are to be completed by Purchaser. - ----------------------------------------------------------------------- 1 26 BILL OF SALE DATED OCTOBER 3, 1996 The undersigned ("Sallie Mae"), for value received and pursuant to the terms and conditions of Purchase Agreement Number 1 ("Purchase Agreement") among SLM Funding Corporation ("Funding"), and Chase Manhattan Bank USA, National Association as Interim Eligible Lender Trustee for the benefit of Funding under the Interim Trust Agreement dated as of October 1, 1996 between Funding and the Interim Eligible Lender Trustee, does hereby sell, assign and convey to the Interim Eligible Lender Trustee for the benefit of Funding and its assignees all right, title and interest of Sallie Mae, including the insurance interest of Sallie Mae under the Federal Family Education Loan Program (20 U.S.C. 1071 et seq.), in the Loans identified herein which the Interim Eligible Lender Trustee for the benefit of Funding has accepted for purchase. The portfolio accepted for purchase by the Interim Eligible Lender Trustee for the benefit of Funding and the effective date of sale and purchase are described below and the individual Accounts are listed on the Schedule A attached hereto. Sallie Mae hereby makes the representations and warranties set forth in Section 5 of the Purchase Agreement Master Securitization Terms Number 1000 incorporated by reference in the Purchase Agreement. Sallie Mae authorizes the Interim Eligible Lender Trustee on behalf of Funding to use a copy of this document (in lieu of OE Form 1074) as official notification to the Guarantor(s) of assignment to the Interim Eligible Lender Trustee for the benefit of Funding of the Loans on the date of purchase.
LISTING OF LOANS OFFERED BY ACCEPTED BY ELIGIBLE SELLER LENDER TRUSTEE NUMBER OF PRINCIPAL NUMBER OF PRINCIPAL LOAN TYPE LOANS* BALANCE* LOANS BALANCE - --------------------------------------------------------------------------------------------------------- SUBSIDIZED STAFFORD - ---------- -------- Interim 162,909 506,927,961 162,909 506,927,961 Repayment 310,787 566,983,758 310,787 566,983,758 UNSUBSIDIZED STAFFORD - --------------------- Deferred 61,021 211,590,806 61,021 211,590,806 Repayment 10,796 29,912,376 10,796 29,912,376 PLUS/SLS - -------- Deferred 7,166 33,129,561 7,166 33,129,561 Non-Deferred 55,749 152,638,821 55,749 152,638,821 CONSOLI- - -------- DATION 0 0 0 0 - ------ TOTAL 608,428 1,501,183,283 608,428 1,501,183,283 ======== ============= ======= =============
ADDITIONAL LOAN CRITERIA Not in claims status, not previously rejected Not in litigation Last disbursement is greater than 120 days from cutoff date Loan is not swap-pending 1 27 GUARANTOR(S): American Student Assistance Guarantor Arizona Education Loan Program California Student Aid Commission Connecticut Student Loan Foundation Educational Credit Management Corporation Florida Office of Student Financial Assistance Great Lakes Higher Education Corporation Illinois Student Assistance Commission Iowa College Aid Commission Michigan Higher Education Assistance Authority Missouri Coordinating Board for Higher Education New Jersey Higher Education Assistance Authority N.Y. State Higher Education Services Corporation Northstar Guarantee Inc. Northwest Education Loan Association Oklahoma State Regents for Higher Education Oregon State Scholarship Commission Pennsylvania Higher Education Assistance Agency Tennessee Student Assistance Corporation Texas Guaranteed Student Loan Corporation United Student Aid Funds, Inc. *Based upon Sallie Mae's estimated calculations, which may be adjusted upward or downward based upon Funding's reconciliation. SELLER ==================================== ================================== PURCHASER Student Loan Marketing Association ==================================== 1050 Thomas Jefferson Street, N.W. Chase Manhattan Bank USA, Washington, D.C. 20007 National Association, not in its individual capacity Lender Code: but solely as Interim Eligible -------------- Lender Trustee for the benefit By: /s/ Denise B. McGlone of SLM Funding Corporation ----------------------------- (Signature of Authorized Officer of Seller) By: /s/ John W. Mack -------------------------- (Signature of Authorized Name: Denise B. McGlone Signatory for Purchaser) ---------------------------- Title: Executive Vice President and Name: John W. Mack ---------------------------- ------------------------ Chief Financial Officer ----------------------- Title: Second Vice President ----------------------- Date of Purchase: ------------- =====================================
===================================================================== NOTE: Boxed areas are for completion by Purchaser ===================================================================== 2 28 OFFICER'S CERTIFICATE I, ______________________________, of the Student Loan Marketing Association (the "Sallie Mae"), hereby certify to SLM Funding Corporation that: 1. The person(s) named below are at the date hereof the duly elected, qualified and acting officers of Sallie Mae holding the offices indicated and the signature following each name is the genuine signature of the person named:
TITLE NAME SIGNATURE ----- ---- --------- - ------------------------ ---------------------- ---------------------- - ------------------------ ---------------------- ---------------------- - ------------------------ ---------------------- ----------------------
2. Any of the above-named person(s) is duly authorized to sign agreements providing for the sale of student loans to SLM Funding Corporation. WITNESS my hand this day ___ of _________________, 199__. By: -------------------------------------------- (Not an officer listed above) Name: ------------------------------------------ Title: ----------------------------------------- 1 29 PURCHASE AGREEMENT Dated as of October 3, 1996 PURCHASE AGREEMENT NUMBER 1 Sallie Mae hereby offers for sale to Chase Manhattan Bank USA, National Association as Interim Eligible Lender Trustee for the benefit of SLM Funding Corporation ("Funding") under the Interim Trust Agreement dated as of October 1, 1996 between Funding and the Interim Eligible Lender Trustee, the entire right, title and interest of Sallie Mae in the Loans described in the Bill of Sale and Loan Transmittal Summary Form incorporated herein and, to the extent indicated below, the Interim Eligible Lender Trustee for the benefit of Funding accepts Sallie Mae's offer. In order to qualify as Eligible Loans, no payment of principal or interest shall be more than ninety (90) days Delinquent as of the Cutoff Date which date shall be September 2, 1996. TERMS, CONDITIONS AND COVENANTS In consideration of the Purchase Price, Sallie Mae hereby sells to the Interim Eligible Lender Trustee for the benefit of Funding the entire right, title and interest of Sallie Mae in the Loans accepted for purchase, subject to all the terms and conditions of the Purchase Agreement Master Securitization Terms Number 1000 ("Master Terms") and any amendments thereto, incorporated herein by reference, among Sallie Mae, Funding, and the Interim Eligible Lender Trustee. The Initial Payment of the Loans shall equal $1,496,933,610.44 (equal to $1,501,238,568.44 (representing the offering price of the Securities less underwriters' commissions) less (a) $3,752,958 (representing the Reserve Account Initial Deposit), (b) $527,000 (representing a capital contribution from Sallie Mae to Funding to be used to purchase a 1% interest in the Certificates) and (c) $25,000 (representing the initial deposit into the Collection Account). This document shall constitute a Purchase Agreement as referred to in the Master Terms and, except as modified herein, each term used herein shall have the same meaning as in the Master Terms. All references in the Master Terms to Loans or Eligible Loans shall be deemed to refer to the Loans governed by this Purchase Agreement. Sallie Mae hereby makes, as of the date hereof, all the representations and warranties contained in the Master Terms and makes such representations and warranties with respect to the Loans governed by this Purchase Agreement. Sallie Mae authorizes the Interim Eligible Lender Trustee for the benefit of Funding to use a copy of the Bill of Sale, including the Loan Transmittal Summary Form attached to the Bill of Sale (in lieu of OE Form 1074), as official notification to the Guarantor of assignment to the Interim Eligible Lender Trustee on behalf of Funding of the Loans on the date of purchase. 1 30 The parties hereto intend that the transfer of Loans described in the Bill of Sale and Loan Transmittal Summary Form be, and be construed as, a valid sale of such Loans from Sallie Mae to the Interim Eligible Lender Trustee for the benefit of Funding. However, in the event that notwithstanding the intention of the parties, such transfer is deemed to be a transfer for security, then Sallie Mae hereby grants to the Interim Eligible Lender Trustee for the benefit of Funding a first priority security interest in and to all Loans described in the Bill of Sale and Loan Transmittal Summary Form to secure a loan in an amount equal to the Purchase Price of such loans. STUDENT LOAN MARKETING SLM FUNDING CORPORATION ASSOCIATION ----------------------- - ----------- (Purchaser) (Seller) By: /s/ Denise B. McGlone By: /s/ Mark G. Overend ------------------------- -------------------------------------- Name: Denise B. McGlone Name: Mark G. Overend ----------------------- ------------------------------------ Title: Executive Vice President Title: Treasurer and Controller ------------------------ ------------------------ and Chief Financial Officer --------------------------- CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION Not in its individual capacity but solely as Interim Eligible Lender Trustee By: /s/ John W. Mack -------------------------- Name: John W. Mack ----------------------- Title: Second Vice President ---------------------- 2 31 PURCHASE AGREEMENT NUMBER 1 BLANKET ENDORSEMENT DATED OCTOBER 3, 1996 Student Loan Marketing Association ("Sallie Mae"), by execution of this instrument, hereby endorses the attached promissory note which is one (1) of the promissory notes ("the Notes") described in the Bill of Sale executed by Sallie Mae in favor of Chase Manhattan Bank USA, National Association as the Interim Eligible Lender Trustee for the benefit of SLM Funding Corporation ("Funding"). This endorsement is in blank, unrestricted form and without recourse except as provided in Section 6 of the Master Terms referred to in the Purchase Agreement among Sallie Mae, Funding, and the Interim Eligible Lender Trustee which covers this promissory note. This endorsement may be effected by attaching either this instrument or a facsimile hereof to each or any of the Notes. Notwithstanding the foregoing, Sallie Mae agrees to individually endorse each Note in the form provided by Funding as Funding may from time to time require or if such individual endorsement is required by the Guarantor of the Note. THE SALE AND PURCHASE OF THE LOANS SHALL BE SUBJECT TO THE TERMS, CONDITIONS AND COVENANTS, INCLUDING THE BLANKET ENDORSEMENT, AS SET FORTH IN THE PURCHASE AGREEMENT. BY EXECUTION HEREOF, SALLIE MAE ACKNOWLEDGES THAT SALLIE MAE HAS READ, UNDERSTANDS AND AGREES TO BE BOUND BY ALL TERMS, CONDITIONS AND COVENANTS OF THE PURCHASE AGREEMENT. THE SALE AND PURCHASE SHALL BE CONSUMMATED UPON FUNDING'S PAYMENT TO SALLIE MAE OF THE INITIAL PAYMENT (AS DEFINED IN THE MASTER TERMS) AND, UNLESS OTHERWISE AGREED BY SALLIE MAE AND FUNDING, SHALL BE EFFECTIVE AS OF THE DATE OF THE BILL OF SALE. ============================== SELLER PURCHASER ==================================== ============================== Student Loan Marketing Association Chase Manhattan Bank USA, 1050 Thomas Jefferson Street, N.W. National Association, Washington, D.C. 20007 not in its individual capacity but solely as Interim Eligible Lender Code: Lender Trustee for the benefit -------------- of the SLM Funding Corporation under the Interim Trust By: /s/ Denise B. McGlone Agreement dated Oct. 1, 1996 --------------------------------- (Signature of Authorized Officer of Seller) By: /s/ John W. Mack Name: Denise B. McGlone --------------------------- ------------------------------- (Signature of Authorized Title: Executive Vice President and Signatory for Purchaser) Chief Financial Officer Name: John W. Mack ------------------------- Title: Second Vice President ------------------------ Date of Purchase: Oct. 3, 1996 ============================== ------------------------------------------------------------------------- NOTE: Boxed areas on this form are to be completed by Purchaser. ------------------------------------------------------------------------- 1 32 BILL OF SALE DATED OCTOBER 3, 1996 The undersigned ("Sallie Mae"), for value received and pursuant to the terms and conditions of Purchase Agreement Number 1 ("Purchase Agreement") among SLM Funding Corporation ("Funding"), and Chase Manhattan Bank USA, National Association as Interim Eligible Lender Trustee for the benefit of Funding under the Interim Trust Agreement dated as of October 1, 1996 between Funding and the Interim Eligible Lender Trustee, does hereby sell, assign and convey to the Interim Eligible Lender Trustee for the benefit of Funding and its assignees all right, title and interest of Sallie Mae, including the insurance interest of Sallie Mae under the Federal Family Education Loan Program (20 U.S.C. 1071 et seq.), in the Loans identified herein which the Interim Eligible Lender Trustee for the benefit of Funding has accepted for purchase. The portfolio accepted for purchase by the Interim Eligible Lender Trustee for the benefit of Funding and the effective date of sale and purchase are described below and the individual Accounts are listed on the Schedule A attached hereto. Sallie Mae hereby makes the representations and warranties set forth in Section 5 of the Purchase Agreement Master Securitization Terms Number 1000 incorporated by reference in the Purchase Agreement. Sallie Mae authorizes the Interim Eligible Lender Trustee on behalf of Funding to use a copy of this document (in lieu of OE Form 1074) as official notification to the Guarantor(s) of assignment to the Interim Eligible Lender Trustee for the benefit of Funding of the Loans on the date of purchase.
LISTING OF LOANS OFFERED BY ACCEPTED BY ELIGIBLE SELLER LENDER TRUSTEE NUMBER OF PRINCIPAL NUMBER OF PRINCIPAL LOAN TYPE LOANS* BALANCE* LOANS BALANCE - ------------------------------------------------------------------------------------------------- SUBSIDIZED STAFFORD - ---------- -------- Interim 162,909 506,927,961 162,909 506,927,961 Repayment 310,787 566,983,758 310,787 566,983,758 UNSUBSIDIZED STAFFORD - --------------------- Deferred 61,021 211,590,806 61,021 211,590,806 Repayment 10,796 29,912,376 10,796 29,912,376 PLUS/SLS - -------- Deferred 7,166 33,129,561 7,166 33,129,561 Non-Deferred 55,749 152,638,821 55,749 152,638,821 CONSOLI- - -------- DATION 0 0 0 0 - ------ TOTAL 608,428 1,501,183,283 608,428 1,501,183,283 ======= ============= ======= =============
ADDITIONAL LOAN CRITERIA Not in claims status, not previously rejected Not in litigation Last disbursement is greater than 120 days from cutoff date Loan is not swap-pending 1 33 GUARANTOR(S): American Student Assistance Guarantor Arizona Education Loan Program California Student Aid Commission Connecticut Student Loan Foundation Educational Credit Management Corporation Florida Office of Student Financial Assistance Great Lakes Higher Education Corporation Illinois Student Assistance Commission Iowa College Aid Commission Michigan Higher Education Assistance Authority Missouri Coordinating Board for Higher Education New Jersey Higher Education Assistance Authority N.Y. State Higher Education Services Corporation Northstar Guarantee Inc. Northwest Education Loan Association Oklahoma State Regents for Higher Education Oregon State Scholarship Commission Pennsylvania Higher Education Assistance Agency Tennessee Student Assistance Corporation Texas Guaranteed Student Loan Corporation United Student Aid Funds, Inc. *Based upon Sallie Mae's estimated calculations, which may be adjusted upward or downward based upon Funding's reconciliation. =============================== SELLER PURCHASER ==================================== =============================== Student Loan Marketing Association Chase Manhattan Bank USA, 1050 Thomas Jefferson Street, N.W. National Association, Washington, D.C. 20007 not in its individual capacity but solely as Interim Eligible Lender Code: Lender Trustee for the benefit -------------- of SLM Funding Corporation By: /s/ Denise B. McGlone By: /s/ John W. Mack -------------------------------- --------------------------- (Signature of Authorized (Signature of Authorized Officer of Seller) Signatory for Purchaser) Name: Denise B. McGlone Name: John W. Mack ------------------------------- ------------------------- Title: Executive Vice President and Title: Second Vice President ------------------------------ Chief Financial Officer Date of Purchase: ------------------------------ ------------- =============================== ================================================== NOTE: Boxed areas are for completion by Purchaser ================================================== 2 EX-99.2 10 SALE AGREEMENT 1 EXHIBIT 99.2 SALE AGREEMENT MASTER SECURITIZATION TERMS NUMBER 1000 These Sale Agreement Master Securitization Terms Number 1000 ("Master Sale Terms") dated as of October 3, 1996 among SLM Funding Corporation ("Seller"), Chase Manhattan Bank USA, National Association, not in its individual capacity but solely as Interim Eligible Lender Trustee (the "Interim Eligible Lender Trustee") for the benefit of the Seller under the Interim Trust Agreement dated as of October 1, 1996 between Seller and the Interim Eligible Lender Trustee, Chase Manhattan Bank USA, National Association, not in its individual capacity but solely as Eligible Lender Trustee on behalf of SLM Student Loan Trust 1996-4( the "Eligible Lender Trustee"), and SLM Student Loan Trust 1996-4 (the "Purchaser"), shall be effective upon execution by the parties hereto. References to the Seller herein mean the Interim Eligible Lender Trustee, and references to the Purchaser mean the Eligible Lender Trustee, for all purposes involving the holding or transferring of legal title to the Trust Student Loans. WHEREAS, the Seller is the owner of certain student loans guaranteed under the Higher Education Act; WHEREAS, legal title to such loans is vested in the Interim Eligible Lender Trustee, as trustee for the benefit of the Seller as the sole beneficiary; WHEREAS, Seller may desire to sell its interest in such loans from time to time and Purchaser may desire to purchase such loans from Seller; WHEREAS, the Eligible Lender Trustee is willing to hold legal title to, and serve as eligible lender trustee with respect to, such loans for the benefit of the Purchaser; NOW, THEREFORE, in connection with the mutual promises contained herein, the parties hereto agree as follows: SECTION 1. TERMS These Master Sale Terms establish the terms under which Seller (and with respect to legal title, the Interim Eligible Lender Trustee for the benefit of Seller) may sell and Purchaser (and with respect to legal title, the Eligible Lender Trustee on behalf of the Purchaser) may purchase the Loans (and all obligations of the Borrowers thereunder) specified on each Sale Agreement (" Sale Agreement") as the parties may execute from time to time pursuant to these Master Sale Terms. Each such Sale Agreement shall be substantially in the form of Attachment A hereto, incorporating by reference the terms of these Master Sale Terms, and shall be a separate agreement among Seller, Purchaser, Eligible Lender Trustee on behalf of Purchaser, and the Interim Eligible Lender Trustee for the benefit of Seller 2 with respect to the Loans covered by the terms of such Sale Agreement for all purposes. If the terms of a Sale Agreement conflict with the terms of these Master Sale Terms, the terms of such Sale Agreement shall supersede and govern. SECTION 2. DEFINITIONS Capitalized terms used but not otherwise defined herein shall have the definitions set forth in Appendix A hereto. For purposes hereof: (A) "Account" means all of the Eligible Loans hereunder of one (1) Borrower that are of the same Loan type made under the identical subsection of the Higher Education Act and in the same status. (B) "Bill of Sale" means that document executed by an authorized officer of the Seller and the Interim Eligible Lender Trustee for the benefit of Seller which shall set forth the Loans offered by the Seller and the Interim Eligible Lender Trustee for the benefit of the Seller and accepted for purchase by the Eligible Lender Trustee on behalf of the Purchaser and which shall sell, assign and convey to the Eligible Lender Trustee on behalf of the Purchaser and its assignees all right, title and interest of the Seller and of the Interim Eligible Lender Trustee for the benefit of the Seller in the Loans listed on the Bill of Sale and will certify that the representations and warranties made by the Seller pursuant to Section 5(A) of these Master Sale Terms are true and correct. (C) "Borrower" means the obligor on a Loan. (D) "Consolidation Loan" means a Loan made pursuant to and in full compliance with Section 428C of the Higher Education Act. (E) "Cutoff Date" means with respect to the first sale hereunder, September 2, 1996, and, with respect to subsequent sales hereunder, a date agreed to by Seller and Purchaser to use in determining the Principal Balance and accrued interest to be capitalized for purposes of completing the Loan Transmittal Summary Form. (F) "Deferred Payment" means all amounts equal to amounts distributed to the Seller pursuant to Section 2.8 C(G) of the Administration Agreement (exclusive of the amount of any such distribution attributable to the reduction from time to time of the Specified Reserve Account Balance). 2 3 (G) "Delinquent" means the period any payment of principal or interest due on the Loan is overdue. (H) "Eligible Loan" means a Loan offered for sale by Seller under the Sale Agreement which as of the Cutoff Date is current or no more Delinquent than permitted under the Sale Agreement in payment of principal or interest and which meets the following criteria as of the effective date of the Bill of Sale: (i) is a Stafford Loan, a Consolidation Loan, a PLUS Loan or SLS Loan; (ii) is owned by Seller and is fully disbursed; (iii) is guaranteed as to principal and interest by the applicable Guarantor to the maximum extent permitted by the Higher Education Act for such Loan; (iv) bears interest at a stated rate of not less than the maximum rate permitted under the Higher Education Act for such Loan; (v) is eligible for the payment of the quarterly special allowance at the full and undiminished rate established under the formula set forth in the Higher Education Act for such Loan; (vi) if not yet in repayment status, is eligible for the payment of interest benefits by the Secretary or, if not so eligible, is a Loan for which interest either is billed quarterly to Borrower or deferred until commencement of the repayment period, in which case such accrued interest is subject to capitalization to the full extent permitted by the applicable Guarantor; (vii) is supported by the following documentation: (a) for each Loan: 1. loan application, and any supplement thereto, 2. original promissory note and any addendum thereto or a certified copy thereof if more than one loan is represented by a single promissory note and all loans so represented are not being sold at the same time, 3. evidence of guarantee, 3 4 4. any other document and/or record which Purchaser may be required to retain pursuant to the Higher Education Act; and (b) for each Loan only if applicable: 1. payment history (or similar document) including (i) an indication of the Principal Balance and the date through which interest has been paid, each as of the Cutoff Date and (ii) an accounting of the allocation of all payments by Borrower or on Borrower's behalf to principal and interest on the Loan, 2. documentation which supports periods of current or past deferment or past forbearance, 3. a collection history, if the Loan was ever in a delinquent status, including detailed summaries of contacts and including the addresses or telephone numbers used in contacting or attempting to contact Borrower and any endorser and, if required by the Guarantor, copies of all letters and other correspondence relating to due diligence processing, 4. evidence of all requests for skip-tracing assistance and current address of Borrower, if located, 5. evidence of requests for pre-claims assistance, and evidence that the Borrower's school(s) have been notified, 6. a record of any event resulting in a change to or confirmation of any data in the Loan file. (I) "Initial Payment" means the dollar amount specified in the applicable Sale Agreement. (J) "Loan" means the Note or Notes offered for sale pursuant to the Sale Agreement and related documentation together with any guaranties and other rights relating thereto including, without limitation, Interest Subsidy Payments and Special Allowance Payments. 4 5 (K) "Loan Transmittal Summary Forms" means the forms provided to Seller by Purchaser and completed by Seller which list, by Borrower, the Loans subject to the Bill of Sale and the outstanding Principal Balance and accrued interest thereof as of the Cutoff Date. (L) "Note" means the promissory note of the Borrower and any amendment thereto evidencing the Borrower's obligation with regard to a student loan guaranteed under the Higher Education Act. (M) "PLUS Loan" means a Loan which was made pursuant to the PLUS Program established under Section 428B of the Higher Education Act(or predecessor provisions). (N) "Principal Balance" means the outstanding principal amount of the Loan, plus interest expected to be capitalized (if any), less amounts which may not be insured (such as late charges). (O) "Purchase Price" means the sum of the Initial Payment and Deferred Payment. (P) "Secretary" means the United States Secretary of Education or any successor. (Q) "SLS Loan" means a Loan which was made pursuant to the Supplemental Loans for Students Program established under Section 428A of the Higher Education Act(or predecessor provisions), including Loans referred to as ALAS Loans or Student PLUS Loans. (R) "Stafford Loans" means Subsidized Stafford Loans and Unsubsidized Stafford Loans. (S) "Subsidized Stafford Loan" means a Loan for which the interest rate is governed by Section 427A(a) or 427A(d) of the Higher Education Act. (T) "Unsubsidized Stafford Loan" means a Loan made pursuant to Section 428H of the Higher Education Act. 5 6 SECTION 3. SALE/PURCHASE (A) Consummation of Sale and Purchase The sale and purchase of Eligible Loans pursuant to a Sale Agreement shall be consummated upon Purchaser's receipt from the Seller and the Interim Eligible Lender Trustee for the benefit of the Seller of the Bill of Sale and the payment by Purchaser to Seller of the Initial Payment, and when consummated such sale and purchase shall be effective as of the date of the Bill of Sale. Seller and Purchaser shall use their best efforts to perform promptly their respective obligations pursuant to such Sale Agreement. (B) Settlement of the Initial Payment Purchaser on the date of the Bill of Sale shall pay Seller the Initial Payment by wire transfer in immediately available funds to the account specified by Seller. (C) Interest Subsidy And Special Allowance Payments On the date of the Bill of Sale, Seller shall be entitled to all Interest Subsidy Payments and Special Allowance Payments on the Loans subject to each Bill of Sale accruing up to but not including the date of the Bill of Sale. The Purchaser and the Eligible Lender Trustee for the benefit of Purchaser shall be entitled to all Special Allowance Payments and Interest Subsidy Payments accruing from the date of the Bill of Sale. (D) Special Programs In consideration of the sale of the Eligible Loans under these Master Sale Terms and each Sale Agreement, Purchaser agrees to cause the Servicer to offer borrowers of Trust Student Loans all special programs whether or not in existence as of the date of any Sale Agreement generally offered to the obligors of comparable loans owned by Sallie Mae subject to the terms and conditions of Section 3.12 of the Servicing Agreement. (E) Deferred Payment Receipt by the Seller of amounts distributed to the Seller pursuant to Section 2.8C(G) of the Administration Agreement (exclusive of the amount of any such distribution attributable to the reduction from time to time of the Specified Reserve Account Balance) shall constitute payment to the Seller of the Deferred Payment portion of the Purchase Price. 6 7 SECTION 4. CONDITIONS PRECEDENT TO SALE AND PURCHASE (A) Activities Prior to the Sale Following the execution of a Sale Agreement, Seller shall provide any assistance requested by Purchaser in determining that all required documentation on the Loans is present and correct. (B) Continued Servicing Seller shall service, or cause to be serviced, all Loans as required under the Higher Education Act until the date of the Bill of Sale. (C) Bill of Sale/Loan Transmittal Summary Form Seller shall deliver to Purchaser: (i) a Bill of Sale executed by an authorized officer of the Seller and the Interim Eligible Lender Trustee for the benefit of the Seller, covering Loans offered by the Seller and accepted by Purchaser as set forth thereon, selling, assigning and conveying to the Eligible Lender Trustee for the benefit of the Purchaser and its assignees all right, title and interest of the Seller and the Interim Eligible Lender Trustee for the benefit of the Seller, including the insurance interest of the Interim Eligible Lender Trustee for the benefit of the Seller, in each of the Loans, and stating that the representations and warranties made by Seller in Section 5 of these Master Sale Terms are true and correct on and as of the date of the Bill of Sale; and (ii) the Loan Transmittal Summary Form, attached to the Bill of Sale, identifying each of the Eligible Loans which is the subject of the Bill of Sale and setting forth the unpaid Principal Balance of each such Loan. (D) Endorsement The Seller shall provide a blanket endorsement transferring the entire interest of the Seller and the Interim Eligible Lender Trustee for the benefit of Seller in the Loans to the Eligible Lender Trustee for the benefit of the Purchaser with the form of endorsement provided for in the Sale Agreement. At the direction of and in such form as Purchaser may designate, the Seller also agrees to individually endorse 7 8 any Eligible Loan as Purchaser may request from time to time. (E) Officer's Certificate Seller shall furnish to Purchaser, with each Bill of Sale provided in connection with each sale of Loans pursuant to these Master Sale Terms, an Officer's Certificate, dated as of the date of such Bill of Sale, in substantially the form of Attachment C. (F) Loan Transfer Statement Upon Purchaser's request, Seller shall deliver to Purchaser one (1) or more Loan Transfer Statements (Department Form OE 1074 or its equivalent) provided by Purchaser, executed by the Interim Eligible Lender Trustee for the benefit of the Seller and dated the date of the Bill of Sale. Seller agrees that Purchaser and the Eligible Lender Trustee may use the Bill of Sale, including the Loan Transmittal Summary Form attached to the Bill of Sale, in lieu of OE Form 1074, as official notification to the Guarantor of the assignment by the Interim Eligible Lender Trustee for the benefit of the Seller to the Eligible Lender Trustee for the benefit of the Purchaser of the Loans listed on the Bill of Sale: (G) Power of Attorney Seller and the Interim Eligible Lender Trustee hereby grant to the Eligible Lender Trustee on behalf of the Purchaser an irrevocable power of attorney, which power of attorney is coupled with an interest, to individually endorse or cause to be individually endorsed in the name of the Seller and the Interim Eligible Lender Trustee for the benefit of the Seller any Eligible Loan to evidence the transfer of such Eligible Loan to the Eligible Lender Trustee on behalf of the Purchaser and to transfer or to cause to be transferred physical possession of any Note from Sallie Mae or the Servicer to the Eligible Lender Trustee or the Indenture Trustee or any other custodian on behalf of either of them. SECTION 5. REPRESENTATIONS AND WARRANTIES OF SELLER AND ELIGIBLE LENDER TRUSTEE (A) General Seller represents and warrants to Purchaser that with respect to a portfolio of Loans as of the date of each Sale Agreement and Bill of Sale; 8 9 (i) The Interim Eligible Lender Trustee is an eligible lender or other qualified holder of loans originated pursuant to the Federal Family Education Loan Program established under the Higher Education Act; (ii) The Interim Eligible Lender Trustee and the Seller are duly organized and existing under the laws of the applicable jurisdiction; (iii) The Interim Eligible Lender Trustee and the Seller have all requisite power and authority to enter into and to perform the terms of these Master Sale Terms and each Sale Agreement; and (iv) The Interim Eligible Lender Trustee and the Seller will not, with respect to any Loan purchased under Sale Agreements executed pursuant to these Master Sale Terms, agree to release any Guarantor from any of its contractual obligations as an insurer of such Loan or agree otherwise to alter, amend or renegotiate any material term or condition under which such Loan is insured, except as required by law or rules and regulations issued pursuant to law, without the express prior written consent of Purchaser. (B) Particular Seller represents and warrants to Purchaser as to the Loans purchased by Purchaser under each Sale Agreement and each Bill of Sale executed pursuant to these Master Sale Terms: (i) The Interim Eligible Lender Trustee for the benefit of the Seller has good title to, and is the sole owner of, the Loans, free and clear of all security interests, liens, charges, claims, offsets, defenses, counterclaims or encumbrances of any nature and no right of rescission, offsets, defenses, or counterclaims have been asserted or threatened with respect to the Loans; (ii) The Loans are Eligible Loans and the description of the Loans set forth in the Sale Agreement and the Loan Transmittal Summary Form is true and correct; (iii) The Interim Eligible Lender Trustee and the Seller are authorized to sell, assign, transfer and repurchased the Loans; and the sale, assignment and transfer of such Loans is or, in the case of a Loan repurchased by the Seller and or the Interim Eligible Lender Trustee, will be made pursuant to and 9 10 consistent with the laws and regulations under which the Seller and the Interim Eligible Lender Trustee operate, and will not violate any decree, judgment or order of any court or agency, or conflict with or result in a breach of any of the terms, conditions or provisions of any agreement or instrument to which the Interim Eligible Lender Trustee or the Seller is a party or by which the Interim Eligible Lender Trustee or Seller or its property is bound, or constitute a default (or an event which could constitute a default with the passage of time or notice or both) thereunder; (iv) The Loans are each in full force and effect in accordance with their terms and are legal, valid and binding obligations of the respective Borrowers thereunder subject to no defenses (except the defense of infancy); (v) Each Loan has been duly made and serviced in accordance with the provisions of the Federal Family Education Loan Program established under the Higher Education Act, and has been duly insured by a Guarantor; such guarantee is in full force and effect and is freely transferable to the Eligible Lender Trustee for the benefit of the Purchaser as an incident to the purchase of each Loan; and all premiums due and payable to such Guarantor shall have been paid in full as of the date of the Bill of Sale; (vi) Any payments on the Loans received by the Interim Eligible Lender Trustee for the benefit of the Seller which have been allocated to reduction of principal and interest on such Loans have been allocated on a simple interest basis; the information with respect to the Loans as of the Cutoff Date as stated on the Loan Transmittal Summary Form is true and correct; (vii) Due diligence and reasonable care have been exercised in the making, administering, servicing and collecting the Loans and, with respect to any Loan for which repayment terms have been established, all disclosures of information required to be made pursuant to the Higher Education Act have been made; (viii) All origination fees authorized to be collected pursuant to Section 438 of the Higher Education Act have been paid to the Secretary; 10 11 (ix) Each Loan has been duly made and serviced in accordance with the provisions of all applicable federal and state laws; (x) No Loan is more than ninety (90) days Delinquent as of the Cutoff Date and no default, breach, violation or event permitting acceleration under the terms of any Loan has arisen; and neither the Seller nor any predecessor holder of any Loan has waived any of the foregoing other than as permitted by the Basic Documents; (xi) It is the intention of Seller, the Interim Eligible Lender Trustee, the Eligible Lender Trustee, and the Purchaser, and the Seller hereby warrants, that the transfer and assignment herein contemplated constitute a valid sale of the Loans from Seller and the Interim Eligible Lender Trustee to the Eligible Lender Trustee for the benefit of Purchaser and that the beneficial interest in and title to such Loans not be part of the Seller's estate in the event of the bankruptcy of the Seller or the appointment of a receiver with respect to Seller; (xii) There is only one original executed copy of the promissory note evidencing each Loan; and (xiii) No Borrower of any Loan as of the Cutoff Date is noted in the related Loan File as being currently involved in a bankruptcy proceeding. (C) The Eligible Lender Trustee and the Purchaser represent and warrant that as of the date of each Sale Agreement and each Bill of Sale: (i) The Eligible Lender Trustee is a national banking association duly organized and validly existing in good standing under the laws of the United States and having an office located within the state of Delaware; and it has all requisite corporate power and authority to execute, deliver and perform its obligations under this Sale Agreement; (ii) The Eligible Lender Trustee has taken all corporate action necessary to authorize the execution and delivery by it of these Master Sale Terms and each Sale Agreement, and these Master Sale Terms and each Sale Agreement have been and will be executed and delivered by one of its officers who is duly authorized to execute and deliver the Sale Agreement on its behalf; (iii) Neither the execution nor the delivery by it of these Master Sale Terms and each Sale Agreement, nor the 11 12 consummation by it of the transactions contemplated hereby or thereby nor compliance by it with any of the terms or provisions hereof or thereof 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; and (iv) The Eligible Lender Trustee is an "eligible lender" as such term is defined in Section 435(d) of the Higher Education Act, for purposes of holding legal title to the Trust Student Loans as contemplated by these Master Sale Terms and each Sale Agreement and the other Basic Documents, it has a lender identification number with respect to the Trust Student Loans from the Department and has in effect a Guarantee Agreement with each of the Guarantors with respect to the Trust Student Loans. SECTION 6. PURCHASE OF TRUST STUDENT LOANS; REIMBURSEMENT Each party to this Agreement shall give notice to the other such parties and to the Servicer, the Administrator and Sallie Mae promptly, in writing, upon the discovery of any breach of Seller's representations and warranties made pursuant to Section 5 hereof which has a materially adverse effect on the interest of the Purchaser in any Trust Student Loan. In the event of such a material breach which is not curable by reinstatement of the applicable Guarantor's guarantee of such Trust Student Loan, Seller shall repurchase any affected Trust Student Loan not later than 120 days following the earlier of the date of discovery of such material breach and the date of receipt of the Guarantor reject transmittal form with respect to such Trust Student Loan. In the event of such a material breach which is curable by reinstatement of the applicable Guarantor's guarantee of such Trust Student Loan, unless the material breach shall have been cured within 360 days following the earlier of the date of discovery of such material breach and the date of receipt of the Guarantor reject transmittal form with respect to such Trust Student Loan, the Seller shall purchase such Trust Student Loan not later than the sixtieth day following the end of such 360-day period. The Seller shall also remit as provided in Section 2.6 of the Administration Agreement on the date of purchase of any Trust Student Loan pursuant to this Section 6 an amount equal to all nonguaranteed interest amounts and forfeited Interest Subsidy Payments and Special Allowance Payments with respect to such Trust Student Loan. In consideration of the purchase of any such Trust Student Loan pursuant to this Section 6, the Seller shall remit the Purchase Amount in the manner specified in Section 2.6 of the Administration Agreement. 12 13 In addition, if any breach of Section 5 hereof by the Seller does not trigger such purchase obligation but does result in the refusal by a Guarantor to guarantee all or a portion of the accrued interest (or any obligation of the Purchaser to repay such interest to a Guarantor), or the loss (including any obligation of the Purchaser to repay the Department) of Interest Subsidy Payments and Special Allowance Payments, with respect to any Trust Student Loan affected by such breach, then the Seller shall reimburse the Purchaser by remitting an amount equal to the sum of all such nonguaranteed interest amounts and such forfeited Interest Subsidy Payments or Special Allowance Payments in the manner specified in Section 2.6 of the Administration Agreement not later than (i) the last day of the next Collection Period ending not less than 60 days from the date of the Guarantor's refusal to guarantee all or a portion of accrued interest or loss of Interest Subsidy Payments or Special Allowance Payments, or (ii) in the case where the Seller reasonably believes such losses are likely to be collected, not later than the last day of the next Collection Period ending not less than 360 days from the date of the Guarantor's refusal to guarantee all or a portion of accrued interest or loss of Interest Subsidy Payments or Special Allowance Payments. At the time such payment is made, the Seller shall not be required to reimburse the Purchaser for interest that is then capitalized, however, such amounts shall be reimbursed if the borrower subsequently defaults and such capitalized interest is not paid by the Guarantor. Anything in this Section 6 to the contrary notwithstanding, if as of the last Business Day of any month the aggregate outstanding principal amount of Trust Student Loans with respect to which claims have been filed with and rejected by a Guarantor or with respect to which the Servicer determines that claims cannot be filed pursuant to the Higher Education Act as a result of a breach by the Seller or the Servicer, exceeds 1% of the Pool Balance, the Seller or the Servicer shall purchase, within 30 days of a written request of the Eligible Lender Trustee or the Indenture Trustee, such affected Trust Student Loans in an aggregate principal amount such that after such purchase the aggregate principal amount of such affected Trust Student Loans is less than 1% of the Pool Balance. The Trust Student Loans to be purchased by the Seller or the Servicer pursuant to the preceding sentence shall be based on the date of claim rejection (or the date of notice referred to in the first sentence of this Section 6), with Trust Student Loans with the earliest such date to be purchased first. In lieu of repurchasing Trust Student Loans pursuant to this Section 6, the Seller may, at its option, substitute Eligible Loans or arrange for the substitution of Eligible Loans which are substantially similar on an aggregate basis as of the date of substitution to the Trust Student Loans for which they 13 14 are being substituted with respect to the following characteristics: (1) status (i.e., in-school, grace, deferment, forbearance or repayment), (2) program type (i.e., Unsubsidized Stafford, Subsidized Stafford, PLUS or SLS), (3) school type, (4) total return, (5) principal balance, and (6) remaining term to maturity. In addition, each substituted Eligible Loan will comply, as of the date of substitution, with all of the representations and warranties made hereunder. In choosing Eligible Loans to be substituted pursuant to this Section 6, the Seller shall make a reasonable determination that the Eligible Loans to be substituted will not have a material adverse effect on the Noteholders and the Certificateholders. In the event that Seller elects to substitute Eligible Loans pursuant to this Section 6, the Seller will remit to the Administrator the amount of any shortfall between the Purchase Amount of the substituted Eligible Loans and the Purchase Amount of the Trust Student Loans for which they are being substituted. The Seller shall also remit to the Administrator an amount equal to all nonguaranteed interest amounts and forfeited Interest Subsidy Payments and Special Allowance Payments with respect to the Trust Student Loans in the manner provided in Section 2.6 of the Administration Agreement. The sole remedy of the Purchaser, the Eligible Lender Trustee, the Certificateholders and the Noteholders with respect to a breach by the Seller pursuant to Section 5 hereof shall be to require the Seller to purchase Trust Student Loans, to reimburse the Purchaser as provided above or to substitute Student Loans pursuant to this Section. The Eligible Lender Trustee shall have no duty to conduct any affirmative investigation as to the occurrence of any condition requiring the purchase of any Trust Student Loan or the reimbursement for any interest penalty pursuant to this Section 6. SECTION 7. OBLIGATION TO REMIT SUBSEQUENT PAYMENTS AND FORWARD COMMUNICATIONS (A) Any payment received by Seller with respect to amounts accrued after the Date of the Bill of Sale for any Loan sold to Purchaser, which payment is not reflected in the 14 15 Loan Transmittal Summary Form, shall be received by Seller in trust for the account of Purchaser and the Seller hereby disclaims any title to or interest in any such amounts. Within two (2) business days following the date of receipt, Seller shall remit to Purchaser an amount equal to any such payments along with a listing on a form provided by Purchaser identifying the Loans with respect to which such payments were made, the amount of each such payment and the date each such payment was received. (B) Any written communication received at any time by Seller with respect to any Loan subject to any Sale Agreement shall be transmitted by Seller to Servicer within two (2) business days of receipt. Such communications shall include, but not be limited to, letters, notices of death or disability, notices of bankruptcy, forms requesting deferment of repayment or loan cancellation, and like documents. SECTION 8. CONTINUING OBLIGATION OF SELLER Seller shall provide all reasonable assistance necessary for Purchaser to resolve account problems raised by any Borrower, the Guarantor or the Secretary provided such account problems are attributable to or are alleged to be attributable to (a) an event occurring during the period Seller owned the Loan, or (b) a payment made or alleged to have been made to Seller. Further, the Seller agrees to execute any financing statements at the request of the Purchaser in order to reflect the Purchaser's interest in the Loans. SECTION 9. LIABILITY OF SELLER; INDEMNITIES The Seller shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Seller under this Sale Agreement. (i) The Seller shall indemnify, defend and hold harmless the Purchaser and the Eligible Lender Trustee in its individual capacity and their officers, directors, employees and agents from and against any taxes that may at any time be asserted against any such Person with respect to the transactions contemplated herein and in the other Basic Documents (except any such income taxes arising out of fees paid to the Eligible Lender Trustee), including any sales, gross receipts, general corporation, tangible and intangible personal property, privilege or license taxes and costs and expenses in defending against the same. (ii) The Seller shall indemnify, defend and hold harmless the Purchaser and the Eligible Lender Trustee in its 15 16 individual capacity and their officers, directors, employees and agents of the Purchaser and the Eligible Lender Trustee from and against any and all costs, expenses, losses, claims, damages and liabilities arising out of, or imposed upon such Person through, the Seller's willful misfeasance, bad faith or gross negligence in the performance of its duties under the Sale Agreement, or by reason of reckless disregard of its obligations and duties under the Sale Agreement. (iii) The Seller shall be liable as primary obligor for, and shall indemnify, defend and hold harmless the Eligible Lender Trustee in its individual capacity and its officers, directors, employees and agents from and against, all costs, expenses, losses, claims, damages, obligations and liabilities arising out of, incurred in connection with or relating to the Sale Agreement, the other Basic Documents, the acceptance or performance of the trusts and duties set forth herein and in the Sale Agreement or the action or the inaction of the Eligible Lender Trustee hereunder, except to the extent that such cost, expense, loss, claim, damage, obligation or liability: (a) shall be due to the willful misfeasance, bad faith or negligence (except for errors in judgment) of the Eligible Lender Trustee, (b) shall arise from any breach by the Eligible Lender Trustee of its covenants in its individual capacity under any of the Basic Documents; or (c) shall arise from the breach by the Eligible Lender Trustee of any of its representations or warranties in its individual capacity set forth in these Master Sale Terms or any Sale Agreement. In the event of any claim, action or proceeding for which indemnity will be sought pursuant to this paragraph, the Eligible Lender Trustee's choice of legal counsel shall be subject to the approval of the Seller, which approval shall not be unreasonably withheld. Indemnification under this Section shall survive the resignation or removal of the Eligible Lender Trustee and the termination of these Master Sale Terms and shall include reasonable fees and expenses of counsel and expenses of litigation. If the Seller shall have made any indemnity payments pursuant to this Section and the Person to or for the benefit of whom such payments are made thereafter shall collect any of such amounts from others, such Person shall promptly repay such amounts to the Seller, without interest. SECTION 10. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF SELLER Any Person (a) into which the Seller may be merged or consolidated, (b) which may result from any merger or consolidation to which the Seller shall be a party or (c) which may suc- 16 17 ceed to the properties and assets of the Seller substantially as a whole, shall be the successor to the Seller without the execution or filing of any document or any further act by any of the parties to these Master Sale Terms; provided, however, that the Seller hereby covenants that it will not consummate any of the foregoing transactions except upon satisfaction of the following: (i) the surviving Person, if other than the Seller, executes an agreement of assumption to perform every obligation of the Seller under these Master Sale Terms, (ii) immediately after giving effect to such transaction, no representation or warranty made pursuant to Section 5 herein shall have been breached, (iii) the surviving Person, if other than the Seller, shall have delivered to the Eligible Lender Trustee an Officers' Certificate and an Opinion of Counsel each stating that such consolidation, merger or succession and such agreement of assumption comply with this Section and that all conditions precedent, if any, provided for in these Master Sale Terms relating to such transaction have been complied with, and that the Rating Agency Condition shall have been satisfied with respect to such transaction, (iv) if the Seller is not the surviving entity, such transaction will not result in a material adverse Federal or state tax consequence to the Purchaser, the Noteholders or the Certificateholders and (v) if the Seller is not the surviving entity, the Seller shall have delivered to the Eligible Lender Trustee an Opinion of Counsel either (A) stating that, in the opinion of such counsel, all financing statements and continuation statements and amendments thereto have been executed and filed that are necessary fully to preserve and protect the interest of the Purchaser and the Eligible Lender Trustee, respectively, in the Loans and reciting the details of such filings, or (B) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such interests. SECTION 11. LIMITATION ON LIABILITY OF SELLER AND OTHERS The Seller and any director or officer or employee or agent thereof may rely in good faith on the advice of counsel or on any document of any kind, prima facie properly executed and submitted by any Person respecting any matters arising hereunder (provided that such reliance shall not limit in any way the Seller's obligations under Section 5 herein). The Seller shall not be under any obligation to appear in, prosecute or defend any legal action that shall not be incidental to its obligations under these Master Sale Terms or any Sale Agreement, and that in its opinion may involve it in any expense or liability. Except as provided herein, the repurchase (or substitution) and reimbursement obligations of Seller will constitute the sole remedy available to Purchaser for uncured breaches; provided, however, that the information with respect to the Loans listed on the Bill of Sale may be adjusted in the ordinary course of business subsequent to the date of the Bill of Sale and to the 17 18 extent that the aggregate Principal Balance listed on the Bill of Sale is less than the aggregate Principal Balance stated on the Bill of Sale, Seller shall remit such amount to the Eligible Lender Trustee for the benefit of the Purchaser. Such reconciliation payment shall be made from time to time but no less frequently than semi-annually. SECTION 12. LIMITATION OF LIABILITY OF ELIGIBLE LENDER TRUSTEE Notwithstanding anything contained herein to the contrary, these Master Sale Terms and any Sale Agreement have been signed by Chase Manhattan Bank USA, National Association not in its individual capacity but solely in its capacity as Eligible Lender Trustee for the Purchaser and the Interim Eligible Lender Trustee for the Seller, as the case may be, and in no event shall Chase Manhattan Bank USA, National Association in its individual capacity, have any liability for the representations, warranties, covenants, agreements or other obligations of the Eligible Lender Trustee, the Interim Eligible Lender Trustee, the Purchaser or of the Seller, respectively, under these Master Sale Terms or any Sale Agreement or in any of the certificates, notices or agreements delivered pursuant hereto, as to all of which recourse shall be had solely to the assets of the Purchaser or the Seller, as the case may be. SECTION 13. EXPENSES Except as otherwise provided herein, each party to these Master Sale Terms or any Sale Agreement shall pay its own expense incurred in connection with the preparation, execution and delivery of these Master Sale Terms or any Sale Agreement and the transactions contemplated herein or therein. SECTION 14. SURVIVAL OF COVENANTS/SUPERSESSION All covenants, agreements, representations and warranties made herein and in or pursuant to any Sale Agreements executed pursuant to these Master Sale Terms shall survive the consummation of the purchase of the Loans provided for in each Sale Agreement. All covenants, agreements, representations and warranties made or furnished pursuant hereto by or for the benefit of Seller shall bind and inure to the benefit of any successors or assigns of Purchaser and shall survive with respect to each Loan. Each Sale Agreement supersedes all previous agreements and understandings between Purchaser and Seller with respect to the subject matter thereof. A Sale Agreement may be changed, modified or discharged, and any rights or obligations hereunder may be waived, only by a written instrument signed by a duly authorized officer of the party against whom enforcement of any such waiver, change, modification or discharge is sought. The waiver by Purchaser of 18 19 any covenant, agreement, representation or warranty required to be made or furnished by Seller or the waiver by Purchaser of any provision herein contained or contained in any Sale Agreement shall not be deemed to be a waiver of any breach of any other covenant, agreement, representation, warranty or provision herein contained or contained in any Sale Agreement, nor shall any waiver or any custom or practice which may evolve between the parties in the administration of the terms hereof or of any Sale Agreement, be construed to lessen the right of Purchaser to insist upon the performance by Seller in strict accordance with said terms. SECTION 15. COMMUNICATION AND NOTICE REQUIREMENTS All communications, notices and approvals provided for hereunder shall be in writing and mailed or delivered to Seller or Purchaser, as the case may be, addressed as set forth in the Sale Agreement or at such other address as either party may hereafter designate by notice to the other party. Notice given in any such communication, mailed to Seller or Purchaser by appropriately addressed registered mail, shall be deemed to have been given on the day following the date of such mailing. SECTION 16. FORM OF INSTRUMENTS All instruments and documents delivered in connection with these Master Sale Terms and any Sale Agreement, and all proceedings to be taken in connection with these Master Sale Terms and any Sale Agreement and the transactions contemplated herein and therein, shall be in a form as set forth in the attachments hereto, and Purchaser shall have received copies of such documents as it or its counsel shall reasonably request in connection therewith. Any instrument or document which is substantially in the same form as an Attachment hereto or a recital herein will be deemed to be satisfactory as to form. SECTION 17. AMENDMENT These Master Sale Terms and any Sale Agreement may be amended by the parties thereto without the consent of the related Noteholders or Certificateholders for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of such Master Sale Terms and Sale Agreements or of modifying in any manner the rights of such Noteholders or Certificateholders; provided that such action will not, in the opinion of counsel satisfactory to the related Eligible Lender Trustees, materially and adversely affect the interest of any such Noteholder or Certificateholder. In addition, these Master Sale Terms and any Sale Agreement may also be amended from time to time by the Seller, the Interim Eligible Lender Trustee, the Eligible Lender Trustee and the 19 20 Purchaser, with the consent of the Noteholders of Notes evidencing a majority of the Outstanding Amount of the Notes and the consent of the Certificateholders of Certificates evidencing 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 these Master Sale Terms or any Sale 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 time of, collections of payments with respect to 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 of Certificates, the Noteholders or the Certificateholders of which are required to consent to any such amendment, without the consent of all outstanding Noteholders and Certificateholders. Promptly after the execution of any such amendment or consent (or, in the case of the Rating Agencies, five Business Days prior thereto), the Eligible Lender Trustee shall furnish written notification of the substance of such amendment or consent to the Indenture Trustee, each Certificateholder, and each of the Rating Agencies. It shall not be necessary for the consent of Certificateholders or Noteholders 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. Prior to the execution of any amendment to these Master Sale Terms, the Eligible Lender Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating that execution of such amendment is authorized or permitted by this Sale Agreement and the Opinion of Counsel referred to in Section 7.1 I((i) of the Administration 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 18. NONPETITION COVENANTS Notwithstanding any prior termination of these Master Sale Terms, Seller and the Interim Eligible Lender Trustee shall not acquiesce, petition or otherwise invoke or cause Purchaser to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against Purchaser under any Federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of Purchaser 20 21 or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Purchaser. Notwithstanding any prior termination of these Master Sale Terms, the Eligible Lender Trustee and the Purchaser shall not acquiesce, petition or otherwise invoke or cause Seller to invoke the process of commencing or sustaining a case against the Seller under any federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of Seller or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Purchaser. SECTION 19. ASSIGNMENT Seller and the Interim Eligible Lender Trustee each hereby assigns its entire right, title and interest as purchaser and as the Interim Eligible Lender Trustee under the Purchase Agreement Master Securitization Terms Number 1000 and any Purchase Agreement thereunder to Purchaser as of the date hereof and acknowledges that the Purchaser and the Eligible Lender Trustee on behalf of the Purchaser will assign the same, together with the right, title and interest of the Purchaser and the Eligible Lender Trustee hereunder, to the Indenture Trustee under the Indenture. SECTION 20. GOVERNING LAW These Master Sale Terms and any Sale Agreements shall be governed by and construed in accordance with the laws of the State of New York. 21 22 SLM STUDENT LOAN TRUST 1996-4 SLM FUNDING CORPORATION (Purchaser) (Seller) by Chase Manhattan Bank USA, National Association not in its individual capacity but solely as Eligible Lender By: /s/ Mark G. Overend ------------------------------- Trustee Name: Mark G. Overend ----------------------------- By: /s/ John W. Mack Title: Treasurer and Controller ----------------------------- -------------------------- Name: John W. Mack --------------------------- Title: Second Vice President -------------------------- CHASE MANHATTAN BANK USA, CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION NATIONAL ASSOCIATION (Not in its individual (Not in its individual capacity capacity but solely as but solely as Interim Eligible Eligible Lender Trustee) Lender Trustee) By: /s/ John W. Mack By: /s/ John W. Mack ----------------------------- ----------------------------- Name: John W. Mack Name: John W. Mack --------------------------- --------------------------- Title: Second Vice President Title: Second Vice President -------------------------- -------------------------- 22 23 ATTACHMENT A SALE AGREEMENT DATED AS OF OCTOBER 3, 1996 SALE AGREEMENT NUMBER 1 Each of the Chase Manhattan Bank USA, National Association as Interim Eligible Lender Trustee (the "Interim Eligible Lender Trustee") for the benefit of SLM Funding Corporation (the "Seller") and the Seller hereby offer for sale to the Eligible Lender Trustee on behalf of SLM Student Loan Trust 1996-4 ("Purchaser") the entire right, title and interest of the Seller and the Interim Eligible Lender Trustee in the Loans described in the Bill of Sale and Loan Transmittal Summary Form incorporated herein and, to the extent indicated below, the Eligible Lender Trustee on behalf of the Purchaser accepts the Seller's and the Interim Eligible Lender Trustee's offer. In order to qualify as Eligible Loans, no payment of principal or interest shall be more than ninety (90) days Delinquent as of the Cutoff Date which date shall be September 2, 1996. TERMS, CONDITIONS AND COVENANTS In consideration of the Purchase Price, each of the Seller and the Interim Eligible Lender Trustee for the benefit of the Seller hereby sells to the Eligible Lender Trustee for the benefit of the Purchaser the entire right, title and interest of the Seller and the Interim Eligible Lender Trustee in the Loans accepted for purchase, subject to all the terms and conditions of the Sale Agreement Master Securitization Terms Number 1000 ("Master Sale Terms") and amendments, each incorporated herein by reference, among Seller, Interim Eligible Lender Trustee, Purchaser, and the Eligible Lender Trustee. The Initial Payment of the Loans shall equal $1,497,460,610.44 (equal to $1,501,238,568.44 (representing the offering price of the Securities less underwriters' commissions) less $3,752,958 (representing the Reserve Account Initial Deposit) less $25,000 (representing the initial deposit into the Collection Account). This document shall constitute a Sale Agreement as referred to in the Master Sale Terms and, except as modified herein, each term used herein shall have the same meaning as in the Master Sale Terms. All references in the Master Sale Terms to Loans or Eligible Loans shall be deemed to refer to the Loans governed by this Sale Agreement. Seller hereby makes, as of the date hereof, all the representations and warranties contained in the Master Sale Terms and makes such representations and warranties with respect to the Loans governed by this Sale Agreement. Each of the Seller and the Interim Eligible Lender Trustee for the benefit of the Seller authorizes the Eligible Lender Trustee for the benefit of the Purchaser to use a copy of the Bill of Sale, including the Loan Transmittal Summary Form attached to the Bill of Sale (in lieu of OE Form 1074) as official notification to the applicable Guarantors of assignment to the Eligible Lender Trustee for the benefit of the Purchaser of the Loans on the date of purchase. 1 24 The parties hereto intend that the transfer of Loans described in the Bill of Sale and Loan Transmittal Summary Form be, and be construed as, a valid sale of such Loans. However, in the event that notwithstanding the intentions of the parties, such transfer is deemed to be a transfer for security, then each of the Interim Eligible lender Trustee and the Seller hereby grants to the Eligible Lender Trustee on behalf of the Purchaser a first priority security interest in and to all Loans described in the Bill of Sale and Loan Transmittal Summary Form to secure a loan in an amount equal to the Purchase Price of such Loans. SLM FUNDING CORPORATION SLM STUDENT LOAN TRUST 1996-4 - ----------------------- ----------------------------- (Seller) (Purchaser) by Chase Manhattan Bank USA, National Association not in its individual capacity but By: /s/ Mark G. Overend solely as Eligible Lender Trustee ----------------------------- Name: Mark G. Overend --------------------------- Title: Treasurer and Controller By: /s/ John W. Mack --------------------------- ----------------------------- Name: John W. Mack --------------------------- Title: Second Vice President -------------------------- CHASE MANHATTAN BANK USA, CHASE MANHATTAN BANK USA, - ------------------------- ------------------------- NATIONAL ASSOCIATION NATIONAL ASSOCIATION - -------------------- -------------------- (not in its individual (not in its individual capacity but solely as Interim capacity but solely as Eligible Eligible Lender Trustee) Lender Trustee) By: /s/ John W. Mack By: /s/ John W. Mack ----------------------------- ----------------------------- Name: John W. Mack Name: John W. Mack --------------------------- --------------------------- Title: Second Vice President Title: Second Vice President -------------------------- -------------------------- 2 25 SALE AGREEMENT NUMBER 1 BLANKET ENDORSEMENT DATED OCTOBER 3, 1996 SLM Funding Corporation ("Seller") and Chase Manhattan Bank USA, National Association as Interim Eligible Lender Trustee for the benefit of the Seller, by execution of this instrument, hereby endorses the attached promissory note which is one (1) of the promissory notes ("the Notes") described in the Bill of Sale executed by the Seller and the Interim Eligible Lender Trustee for the benefit of the Seller in favor of Chase Manhattan Bank USA, National Association as Eligible Lender Trustee on behalf of SLM Student Loan Trust 1996-4 (the "Purchaser"). This endorsement is in blank, unrestricted form and without recourse except as provided in Section 6 of the Master Sale Terms referred to in the Sale Agreement among Seller, Purchaser, Interim Eligible Lender Trustee, and the Eligible Lender Trustee which covers this promissory note. This endorsement may be effected by attaching either this instrument or a facsimile hereof to each or any of the Notes. Notwithstanding the foregoing, the Interim Eligible Lender Trustee for the benefit of the Seller agrees to individually endorse each Note in the form provided by Purchaser as Purchaser may from time to time require or if such individual endorsement is required by the Guarantor of the Note. THE SALE AND PURCHASE OF THE LOANS SHALL BE SUBJECT TO THE TERMS, CONDITIONS AND COVENANTS, INCLUDING THE BLANKET ENDORSEMENT, AS SET FORTH IN THE SALE AGREEMENT MASTER LOAN SECURITIZATION TERMS 1000. BY EXECUTION HEREOF, THE SELLER ACKNOWLEDGES THAT THE SELLER HAS READ, UNDERSTANDS AND AGREES TO BE BOUND BY ALL TERMS, CONDITIONS AND COVENANTS OF THE SALE AGREEMENT (" SALE AGREEMENT"). THE SALE AND PURCHASE SHALL BE CONSUMMATED UPON PURCHASER'S PAYMENT TO SELLER OF THE INITIAL PAYMENT AS DEFINED IN THE MASTER SALE TERMS AND, UNLESS OTHERWISE AGREED BY SELLER AND PURCHASER, SHALL BE EFFECTIVE AS OF THE DATE OF THE BILL OF SALE. =================================== SELLER PURCHASER ========================================== =================================== Chase Manhattan Bank USA, National Chase Manhattan Bank USA, Association not in its individual National Association capacity but solely in its individual not in its individual capacity capacity but solely as Interim Eligible but solely as Eligible Lender Lender Trustee for the Benefit of SLM Trustee on behalf of SLM Funding Corporation Student Loan Trust 1996-4 Lender Code: 833 253 By: /s/ John W/ Mack By: /s/ John W. Mack -------------------------- ------------------------------------ (Signature of Authorized (Signature of Authorized Signatory for Purchaser) Officer) Name: John W. Mack Name: John W. Mack ------------------------ ---------------------------------- Title: Second Vice President Title: Second Vice President ----------------------- --------------------------------- Date of Purchase: Oct. 3, 1996 =====================================
------------------------------------------------------------------------ NOTE: Boxed areas on this form are to be completed by Purchaser. ------------------------------------------------------------------------ 1 26 ATTACHMENT B BILL OF SALE DATED OCTOBER 3, 1996 The undersigned SLM Funding Corporation ("Seller") and Chase Manhattan Bank USA, National Association as Interim Eligible Lender Trustee for the benefit of the Seller under the Interim Trustee Agreement dated as of October 1, 1996 ("Interim Eligible Lender Trustee"), for value received and pursuant to the terms and conditions of Sale Agreement Number 1 ("Sale Agreement") among Seller, the Interim Eligible Lender Trustee, SLM Student Loan Trust 1996-4 ("Purchaser") and Chase Manhattan Bank USA, National Association as the Eligible Lender Trustee, do hereby sell, assign and convey to the Eligible Lender Trustee on behalf of Purchaser and its assignees all right, title and interest of Seller and the Interim Eligible Lender Trustee, including the insurance interest of Seller and the Interim Eligible Lender Trustee under the Federal Family Education Loan Program (20 U.S.C. 1071 et seq.), in the Loans identified herein which the Eligible Lender Trustee on behalf of Purchaser has accepted for purchase. The portfolio accepted for purchase by the Eligible Lender Trustee on behalf of Purchaser and the effective date of sale and purchase are described below and the individual Accounts are listed on the Schedule A attached hereto. Seller hereby makes the representations and warranties set forth in Section 5 of the Sale Agreement Master Securitization Terms Number 1000 incorporated by reference in the Sale Agreement. Seller and the Interim Eligible Lender Trustee authorize the Eligible Lender Trustee on behalf of Purchaser to use a copy of this document (in lieu of OE Form 1074) as official notification to the Guarantor(s) of assignment to the Eligible Lender Trustee on behalf of Purchaser of the Loans on the date of purchase.
LISTING OF LOANS OFFERED BY ACCEPTED BY ELIGIBLE seller LENDER TRUSTEE NUMBER OF PRINCIPAL NUMBER OF PRINCIPAL LOAN TYPE LOANS* BALANCE** LOANS* BALANCE** --------------------------------------------------------------------------------------------------- SUBSIDIZED STAFFORD ---------- -------- Interim 162,909 506,927,961 162,909 506,927,961 Repayment 310,787 566,983,758 310,787 566,983,758 UNSUBSIDIZED STAFFORD --------------------- Deferred 61,021 211,590,806 61,021 211,590,806 Repayment 10,796 29,912,376 10,796 29,912,376 PLUS/SLS -------- Deferred 7,166 33,129,561 7,166 33,129,561 Non-Deferred 55,749 152,638,821 55,749 152,638,821 CONSOLI- -------- DATION 0 0 0 0 ------ TOTAL 608,428 1,501,183,283 608,428 1,501,183,283 ======= ============= ======= =============
ADDITIONAL LOAN CRITERIA Not in claims status, not previously rejected Not in litigation Last disbursement is greater than 120 days from cutoff date Loan is not swap-pending 1 27 GUARANTOR(S): American Student Assistance Guarantor Arizona Education Loan Program California Student Aid Commission Connecticut Student Loan Foundation Educational Credit Management Corporation Florida Office of Student Financial Assistance Great Lakes Higher Education Corporation Illinois Student Assistance Commission Iowa College Aid Commission Michigan Higher Education Assistance Authority Missouri Coordinating Board for Higher Education New Jersey Higher Education Assistance Authority N.Y. State Higher Education Services Corporation Northstar Guarantee Inc. Northwest Education Loan Association Oklahoma State Regents for Higher Education Oregon State Scholarship Commission Pennsylvania Higher Education Assistance Agency Tennessee Student Assistance Corporation Texas Guaranteed Student Loan Corporation United Student Aid Funds, Inc. *Based upon Seller's estimated calculations, which may be adjusted upward or downward based upon Purchaser's reconciliation. **Includes interest to be capitalized. SELLER =================================== ================================== PURCHASER Chase Manhattan Bank USA, National =================================== Association not in its Chase Manhattan Bank USA, individual capacity but solely as National Association Interim Eligible Lender Trustee on not in its individual capacity behalf of SLM Funding Corporation but solely as Eligible Lender Trustee on behalf of SLM Lender Code: Student Loan Trust 1996-4 -------------- By: /s/ John W. Mack By: /s/ John W. Mack -------------------------------- -------------------------- (Signature of Authorized Officer) (Signature of Authorized Signatory for Purchaser) Name: John W. Mack Name: John W. Mack ------------------------------ ------------------------ Title: Second Vice President Title: Second Vice President ----------------------------- --------------------- Date of Purchase: ------------- SLM FUNDING CORPORATION ==================================== By: /s/ Mark G. Overend -------------------------------- (Signature of Authorized Officer) Name: Mark G. Overend --------------------------------------- Title: Second Vice President ---------------------------------------
2 28 ============================================================ NOTE: Boxed areas are for completion by Purchaser ============================================================ 3 29 OFFICER'S CERTIFICATE I, ______________________________, of ________________________ (the "Seller"), hereby certify to SLM Student Loan Trust 1996-4 that: 1. The person(s) named below are at the date hereof the duly elected, qualified and acting officers of the Seller holding the offices indicated and the signature following each name is the genuine signature of the person named:
TITLE NAME SIGNATURE ----- ---- --------- ---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ---------------------- ----------------------
2. Any of the above-named person(s) is duly authorized to sign agreements providing for the sale of student loans to the SLM Student Loan Trust 1996-4. WITNESS my hand this day ___ of _________________, 199__. By: ------------------------------------------ (Not an officer listed above) Name: ------------------------------------------ Title: ----------------------------------------- 1 30 SALE AGREEMENT DATED AS OF OCTOBER 3, 1996 SALE AGREEMENT NUMBER 1 Each of the Chase Manhattan Bank USA, National Association as Interim Eligible Lender Trustee (the "Interim Eligible Lender Trustee") for the benefit of SLM Funding Corporation (the "Seller") and the Seller hereby offer for sale to the Eligible Lender Trustee on behalf of SLM Student Loan Trust 1996-4 ("Purchaser") the entire right, title and interest of the Seller and the Interim Eligible Lender Trustee in the Loans described in the Bill of Sale and Loan Transmittal Summary Form incorporated herein and, to the extent indicated below, the Eligible Lender Trustee on behalf of the Purchaser accepts the Seller's and the Interim Eligible Lender Trustee's offer. In order to qualify as Eligible Loans, no payment of principal or interest shall be more than ninety (90) days Delinquent as of the Cutoff Date which date shall be September 2, 1996. TERMS, CONDITIONS AND COVENANTS In consideration of the Purchase Price, each of the Seller and the Interim Eligible Lender Trustee for the benefit of the Seller hereby sells to the Eligible Lender Trustee for the benefit of the Purchaser the entire right, title and interest of the Seller and the Interim Eligible Lender Trustee in the Loans accepted for purchase, subject to all the terms and conditions of the Sale Agreement Master Securitization Terms Number 1000 ("Master Sale Terms") and amendments, each incorporated herein by reference, among Seller, Interim Eligible Lender Trustee, Purchaser, and the Eligible Lender Trustee. The Initial Payment of the Loans shall equal $1,497,460,610.44 (equal to $1,501,238,568.44 (representing the offering price of the Securities less underwriters' commissions) less $3,752,958 (representing the Reserve Account Initial Deposit) less $25,000 (representing the initial deposit into the Collection Account). This document shall constitute a Sale Agreement as referred to in the Master Sale Terms and, except as modified herein, each term used herein shall have the same meaning as in the Master Sale Terms. All references in the Master Sale Terms to Loans or Eligible Loans shall be deemed to refer to the Loans governed by this Sale Agreement. Seller hereby makes, as of the date hereof, all the representations and warranties contained in the Master Sale Terms and makes such representations and warranties with respect to the Loans governed by this Sale Agreement. Each of the Seller and the Interim Eligible Lender Trustee for the benefit of the Seller authorizes the Eligible Lender Trustee for the benefit of the Purchaser to use a copy of the Bill of Sale, including the Loan Transmittal Summary Form attached to the Bill of Sale (in lieu of OE Form 1074) as official notification to the applicable Guarantors of assignment to the Eligible Lender Trustee for the benefit of the Purchaser of the Loans on the date of purchase. 1 31 The parties hereto intend that the transfer of Loans described in the Bill of Sale and Loan Transmittal Summary Form be, and be construed as, a valid sale of such Loans. However, in the event that notwithstanding the intentions of the parties, such transfer is deemed to be a transfer for security, then each of the Interim Eligible lender Trustee and the Seller hereby grants to the Eligible Lender Trustee on behalf of the Purchaser a first priority security interest in and to all Loans described in the Bill of Sale and Loan Transmittal Summary Form to secure a loan in an amount equal to the Purchase Price of such Loans. SLM FUNDING CORPORATION SLM STUDENT LOAN TRUST 1996-4 - ----------------------- ----------------------------- (Seller) (Purchaser) by Chase Manhattan Bank USA, National Association not in its individual capacity but By: /s/ Mark G. Overend solely as Eligible Lender Trustee ----------------------------- Name: Mark G. Overend --------------------------- Title: Treasurer and Controller By: /s/ John W. Mack --------------------------- ----------------------------- Name: John W. Mack --------------------------- Title: Second Vice President -------------------------- CHASE MANHATTAN BANK USA, CHASE MANHATTAN BANK USA, - ------------------------- ------------------------- NATIONAL ASSOCIATION NATIONAL ASSOCIATION - -------------------- -------------------- (not in its individual (not in its individual capacity but solely as Interim capacity but solely as Eligible Eligible Lender Trustee) Lender Trustee) By: /s/ John W. Mack By: /s/ John W. Mack ----------------------------- ----------------------------- Name: John W. Mack Name: John W. Mack --------------------------- --------------------------- Title: Second Vice President Title: Second Vice President -------------------------- -------------------------- 2 32 SALE AGREEMENT NUMBER 1 BLANKET ENDORSEMENT DATED OCTOBER 3, 1996 SLM Funding Corporation ("Seller") and Chase Manhattan Bank USA, National Association as Interim Eligible Lender Trustee for the benefit of the Seller, by execution of this instrument, hereby endorses the attached promissory note which is one (1) of the promissory notes ("the Notes") described in the Bill of Sale executed by the Seller and the Interim Eligible Lender Trustee for the benefit of the Seller in favor of Chase Manhattan Bank USA, National Association as Eligible Lender Trustee on behalf of SLM Student Loan Trust 1996-4 (the "Purchaser"). This endorsement is in blank, unrestricted form and without recourse except as provided in Section 6 of the Master Sale Terms referred to in the Sale Agreement among Seller, Purchaser, Interim Eligible Lender Trustee, and the Eligible Lender Trustee which covers this promissory note. This endorsement may be effected by attaching either this instrument or a facsimile hereof to each or any of the Notes. Notwithstanding the foregoing, the Interim Eligible Lender Trustee for the benefit of the Seller agrees to individually endorse each Note in the form provided by Purchaser as Purchaser may from time to time require or if such individual endorsement is required by the Guarantor of the Note. THE SALE AND PURCHASE OF THE LOANS SHALL BE SUBJECT TO THE TERMS, CONDITIONS AND COVENANTS, INCLUDING THE BLANKET ENDORSEMENT, AS SET FORTH IN THE SALE AGREEMENT MASTER LOAN SECURITIZATION TERMS 1000. BY EXECUTION HEREOF, THE SELLER ACKNOWLEDGES THAT THE SELLER HAS READ, UNDERSTANDS AND AGREES TO BE BOUND BY ALL TERMS, CONDITIONS AND COVENANTS OF THE SALE AGREEMENT (" SALE AGREEMENT"). THE SALE AND PURCHASE SHALL BE CONSUMMATED UPON PURCHASER'S PAYMENT TO SELLER OF THE INITIAL PAYMENT AS DEFINED IN THE MASTER SALE TERMS AND, UNLESS OTHERWISE AGREED BY SELLER AND PURCHASER, SHALL BE EFFECTIVE AS OF THE DATE OF THE BILL OF SALE. =================================== SELLER PURCHASER ========================================== =================================== Chase Manhattan Bank USA, National Chase Manhattan Bank USA, Association not in its individual National Association capacity but solely in its individual not in its individual capacity capacity but solely as Interim Eligible but solely as Eligible Lender Lender Trustee for the Benefit of SLM Trustee on behalf of SLM Funding Corporation Student Loan Trust 1996-4 Lender Code: 833 253 By: /s/ John W/ Mack By: /s/ John W. Mack -------------------------- ------------------------------------ (Signature of Authorized (Signature of Authorized Signatory for Purchaser) Officer) Name: John W. Mack Name: John W. Mack ------------------------ ---------------------------------- Title: Second Vice President Title: Second Vice President ----------------------- --------------------------------- Date of Purchase: Oct. 3, 1996 =====================================
------------------------------------------------------------------------ NOTE: Boxed areas on this form are to be completed by Purchaser. ------------------------------------------------------------------------ 1 33 BILL OF SALE DATED OCTOBER 3, 1996 The undersigned SLM Funding Corporation ("Seller") and Chase Manhattan Bank USA, National Association as Interim Eligible Lender Trustee for the benefit of the Seller under the Interim Trustee Agreement dated as of October 1, 1996 ("Interim Eligible Lender Trustee"), for value received and pursuant to the terms and conditions of Sale Agreement Number 1 ("Sale Agreement") among Seller, the Interim Eligible Lender Trustee, SLM Student Loan Trust 1996-4 ("Purchaser") and Chase Manhattan Bank USA, National Association as the Eligible Lender Trustee, do hereby sell, assign and convey to the Eligible Lender Trustee on behalf of Purchaser and its assignees all right, title and interest of Seller and the Interim Eligible Lender Trustee, including the insurance interest of Seller and the Interim Eligible Lender Trustee under the Federal Family Education Loan Program (20 U.S.C. 1071 et seq.), in the Loans identified herein which the Eligible Lender Trustee on behalf of Purchaser has accepted for purchase. The portfolio accepted for purchase by the Eligible Lender Trustee on behalf of Purchaser and the effective date of sale and purchase are described below and the individual Accounts are listed on the Schedule A attached hereto. Seller hereby makes the representations and warranties set forth in Section 5 of the Sale Agreement Master Securitization Terms Number 1000 incorporated by reference in the Sale Agreement. Seller and the Interim Eligible Lender Trustee authorize the Eligible Lender Trustee on behalf of Purchaser to use a copy of this document (in lieu of OE Form 1074) as official notification to the Guarantor(s) of assignment to the Eligible Lender Trustee on behalf of Purchaser of the Loans on the date of purchase.
LISTING OF LOANS OFFERED BY ACCEPTED BY ELIGIBLE seller LENDER TRUSTEE NUMBER OF PRINCIPAL NUMBER OF PRINCIPAL LOAN TYPE LOANS* BALANCE** LOANS* BALANCE** --------------------------------------------------------------------------------------------------- SUBSIDIZED STAFFORD ---------- -------- Interim 162,909 506,927,961 162,909 506,927,961 Repayment 310,787 566,983,758 310,787 566,983,758 UNSUBSIDIZED STAFFORD --------------------- Deferred 61,021 211,590,806 61,021 211,590,806 Repayment 10,796 29,912,376 10,796 29,912,376 PLUS/SLS -------- Deferred 7,166 33,129,561 7,166 33,129,561 Non-Deferred 55,749 152,638,821 55,749 152,638,821 CONSOLI- -------- DATION 0 0 0 0 ------ TOTAL 608,428 1,501,183,283 608,428 1,501,183,283 ======= ============= ======= =============
ADDITIONAL LOAN CRITERIA Not in claims status, not previously rejected Not in litigation Last disbursement is greater than 120 days from cutoff date Loan is not swap-pending 1 34 GUARANTOR(S): American Student Assistance Guarantor Arizona Education Loan Program California Student Aid Commission Connecticut Student Loan Foundation Educational Credit Management Corporation Florida Office of Student Financial Assistance Great Lakes Higher Education Corporation Illinois Student Assistance Commission Iowa College Aid Commission Michigan Higher Education Assistance Authority Missouri Coordinating Board for Higher Education New Jersey Higher Education Assistance Authority N.Y. State Higher Education Services Corporation Northstar Guarantee Inc. Northwest Education Loan Association Oklahoma State Regents for Higher Education Oregon State Scholarship Commission Pennsylvania Higher Education Assistance Agency Tennessee Student Assistance Corporation Texas Guaranteed Student Loan Corporation United Student Aid Funds, Inc. *Based upon Seller's estimated calculations, which may be adjusted upward or downward based upon Purchaser's reconciliation. **Includes interest to be capitalized. SELLER =================================== ================================== PURCHASER Chase Manhattan Bank USA, National =================================== Association not in its Chase Manhattan Bank USA, individual capacity but solely as National Association Interim Eligible Lender Trustee on not in its individual capacity behalf of SLM Funding Corporation but solely as Eligible Lender Trustee on behalf of SLM Lender Code: Student Loan Trust 1996-4 -------------- By: /s/ John W. Mack By: /s/ John W. Mack -------------------------------- -------------------------- (Signature of Authorized Officer) (Signature of Authorized Signatory for Purchaser) Name: John W. Mack Name: John W. Mack ------------------------------ ------------------------ Title: Second Vice President Title: Second Vice President ----------------------------- --------------------- Date of Purchase: ------------- SLM FUNDING CORPORATION ==================================== By: /s/ Mark G. Overend -------------------------------- (Signature of Authorized Officer) Name: Mark G. Overend --------------------------------------- Title: Second Vice President ---------------------------------------
2 EX-99.3 11 ADMINISTRATION AGREEMENT 1 EXHIBIT 99.3 ================================================================================ ADMINISTRATION AGREEMENT among SALLIE MAE SERVICING CORPORATION, SLM FUNDING CORPORATION, STUDENT LOAN MARKETING ASSOCIATION, as Administrator SLM STUDENT LOAN TRUST 1996-4, CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION, not in its individual capacity but solely as Eligible Lender Trustee and BANKERS TRUST COMPANY not in its individual capacity but solely as Indenture Trustee Dated as of October 3, 1996 ================================================================================ 2 TABLE OF CONTENTS
Page ---- ARTICLE I Section 1.1 Definitions and Usage . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE II Section 2.1 Duties with Respect to the Indenture . . . . . . . . . . . . . . . . . 2 Section 2.2 Duties with Respect to the Issuer . . . . . . . . . . . . . . . . . . 4 Section 2.3 Establishment of Trust Accounts . . . . . . . . . . . . . . . . . . . 5 Section 2.4 Collections . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 2.5 Application of Collections . . . . . . . . . . . . . . . . . . . . . . 8 Section 2.6 Additional Deposits . . . . . . . . . . . . . . . . . . . . . . . . . 8 Section 2.7 Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Section 2.8 Reserve Account . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 2.9 Statements to Certificateholders and Noteholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Section 2.10 Non-Ministerial Matters . . . . . . . . . . . . . . . . . . . . . . . 16 Section 2.11 Exceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 2.12 Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 2.13 Servicer and Administrator Expenses . . . . . . . . . . . . . . . . . 16 ARTICLE III Section 3.1 Administrator's Certificate; Servicer's Report . . . . . . . . . . . 17 Section 3.2 Annual Statement as to Compliance; Notice of Default; Financial Statement . . . . . . . . . . . . . . . . . . 18 Section 3.3 Annual Independent Certified Public Accountants' Reports . . . . . . . . . . . . . . . . . . . . . . . . 19 ARTICLE IV Section 4.1 Representations of Administrator . . . . . . . . . . . . . . . . . . . 20 Section 4.2 Liability of Administrator; Indemnities . . . . . . . . . . . . . . . 21 Section 4.3 Merger or Consolidation of, or Assumption of the Obligations of, Administrator . . . . . . . . . . . . . . . . . 23 Section 4.4 Limitation on Liability of Seller, Administrator and Others . . . . . . . . . . . . . . . . . . . . . . 24 Section 4.5 Administrator May Own Certificates or Notes . . . . . . . . . . . . . 25 Section 4.6 Student Loan Marketing Association Not to Resign as Administrator . . . . . . . . . . . . . . . . . . . . . . 25
i 3 ARTICLE V Section 5.1 Administrator Default . . . . . . . . . . . . . . . . . . . . . . . . 25 Section 5.2 Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . 27 Section 5.3 Notification to Noteholders and Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . 28 Section 5.4 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . 28 ARTICLE VI Section 6.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 ARTICLE VII Section 7.1 Protection of Interests in Trust . . . . . . . . . . . . . . . . . . . 31 ARTICLE VIII Section 8.1 Independence of the Administrator . . . . . . . . . . . . . . . . . . 33 Section 8.2 No Joint Venture . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Section 8.3 Other Activities of Administrator . . . . . . . . . . . . . . . . . . 34 Section 8.4 Powers of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Section 8.5 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Section 8.6 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Section 8.7 Limitations on Rights of Others . . . . . . . . . . . . . . . . . . . 36 Section 8.8 Assignment to Indenture Trustee . . . . . . . . . . . . . . . . . . . 36 Section 8.9 Nonpetition Covenants . . . . . . . . . . . . . . . . . . . . . . . . 36 Section 8.10 Limitation of Liability of Eligible Lender Trustee and Indenture Trustee . . . . . . . . . . . . . . . . 37 Section 8.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Section 8.12 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Section 8.13 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Section 8.14 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Appendix A
ii 4 ADMINISTRATION AGREEMENT SLM Student Loan Trust 1996-4, (the "Issuer"), the Student Loan Marketing Association (the "Administrator"), Chase Manhattan Bank USA, National Association, not in its individual capacity but solely as Trustee (the "Eligible Lender Trustee"), Sallie Mae Servicing Corporation (the "Servicer"), SLM Funding Corporation (the "Seller") and Bankers Trust Company, a New York banking corporation, not in its individual capacity but solely as Indenture Trustee (the "Indenture Trustee") agree as follows: WHEREAS, the Issuer is issuing the Notes pursuant to the Indenture dated as of October 1, 1996 (the "Indenture"), between the Issuer and the Indenture Trustee and the Certificates pursuant to the Trust Agreement dated as of October 1, 1996 between the Depositor and the Eligible Lender Trustee; WHEREAS, the Issuer has entered into certain of the Basic Documents in connection with the issuance of the Notes and the Certificates, including the Sale Agreement and the Servicing Agreement; WHEREAS, pursuant to the Basic Documents, the Issuer and the Eligible Lender Trustee are required to perform certain duties in connection with (a) the Notes and the Collateral therefor pledged pursuant to the Indenture and (b) the Certificates; WHEREAS, the Issuer, the Eligible Lender Trustee and the Indenture Trustee desire to have the Administrator and the Servicer perform certain of the duties of the Issuer and the Eligible Lender Trustee referred to in the preceding clause, and to provide such additional services consistent with the terms of this Agreement and the Basic Documents as the Issuer and the Eligible Lender Trustee may from time to time request; WHEREAS, the Administrator and the Servicer have the capacity to provide the services required hereby and are willing to perform such services for the Issuer and the Eligible Lender Trustee on the terms set forth herein; NOW, THEREFORE, in consideration of the mutual covenants contained herein, and other good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties agree as follows: ARTICLE I SECTION 1.1 Definitions and Usage. Except as otherwise specified herein 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. 5 ARTICLE II SECTION 2.1 Duties with Respect to the Indenture. The Administrator agrees to consult with the Eligible Lender Trustee regarding the duties of the Issuer under the Indenture and the Depository Agreements. The Administrator shall monitor the performance of the Issuer and shall advise the Eligible Lender Trustee when action is necessary to comply with the Issuer's duties under the Indenture and the Depository Agreements. The Administrator shall prepare for execution by the Issuer or shall cause the preparation by other appropriate Persons of all such documents, reports, filings, instruments, certificates and opinions as it shall be the duty of the Issuer to prepare, file or deliver pursuant to the Indenture and the Depository Agreements. In furtherance of the foregoing, the Administrator shall take the actions with respect to the following matters that it is the duty of the Issuer or the Indenture Trustee to take pursuant to the Indenture (references being to Sections of the Indenture): a. preparing or obtaining the documents and instruments required for authentication of the Notes and delivering the same to the Indenture Trustee (Section 2.2); b. preparing, obtaining or filing the instruments, opinions and certificates and other documents required for the release of collateral (Section 2.9); c. obtaining and preserving the Issuer's qualification to do business in each jurisdiction in which such qualification is or shall be necessary to protect the validity and enforceability of the Indenture, the Notes, the Collateral and each other instrument and agreement included in the Indenture Trust Estate (Section 3.4); d. preparing all supplements, amendments, financing statements, continuation statements, instruments of further assurance and other instruments, in accordance with Section 3.5 of the Indenture, necessary to protect the Indenture Trust Estate (Section 3.5); e. the delivery by the Issuer of the Opinion of Counsel on the Closing Date and the annual delivery of Opinions of Counsel, in accordance with Section 3.6 of the Indenture, as to the Indenture Trust Estate, and the annual delivery of the Officers' Certificate of the Issuer and certain other statements, in accordance with Section 3.9 of the Indenture, as to compliance with the Indenture (Sections 3.6 and 3.9); 2 6 f. in the event of a Servicer Default, the taking of all reasonable steps available to enforce the Issuer's rights under the Basic Documents in respect of such Servicer Default (Section 3.7(d)); g. the preparation and obtaining of documents and instruments required for the release of the Issuer from its obligations under the Indenture (Section 3.10); h. monitoring the Issuer's obligations as to the satisfaction and discharge of the Indenture and preparation of an Officers' Certificate of the Issuer and obtaining of the Opinion of Counsel and the Independent Certificate relating thereto (Section 4.1); i. sale of the Indenture Trust Estate in a commercially reasonable manner if an Event of Default has occurred and is continuing (Section 5.4) or an Insolvency Event with respect to the Seller has occurred and is continuing (Section 6.5(b)); j. preparing and, after execution by the Issuer, filing with the Commission, any applicable State agencies and the Indenture Trustee of documents required to be filed on a periodic basis with, and summaries thereof as may be required by rules and regulations prescribed by, the Commission and any applicable State agencies (Section 7.3); k. the opening of one or more accounts in the Issuer's name, the preparation of Issuer Orders, Officers' Certificates of the Issuer and Opinions of Counsel and all other actions necessary with respect to investment and reinvestment of funds in the Trust Accounts (Sections 8.2 and 8.3); l. the preparation of an Issuer Request and Officers' Certificate of the Issuer and the obtaining of an Opinion of Counsel and Independent Certificates, if necessary, for the release of the Indenture Trust Estate (Sections 8.4 and 8.5); m. the preparation of Issuer Orders and the obtaining of Opinions of Counsel with respect to the execution of supplemental indentures (Sections 9.1, 9.2 and 9.3); n. the preparation of or obtaining of the documents and instruments required for the execution and authentication of new Notes conforming to any supplemental indenture and the delivery of the same to the Eligible Lender Trustee and the Indenture Trustee, respectively (Section 9.6); 3 7 o. the preparation of all Officers' Certificates of the Issuer, Opinions of Counsel and Independent Certificates with respect to any requests by the Issuer to the Indenture Trustee to take any action under the Indenture (Section 11.1(a); p. the preparation and delivery of Officers' Certificates of the Issuer and the obtaining of Independent Certificates, if necessary, for the release of property from the lien of the Indenture (Section 11.1(b)); q. the preparation and delivery to Noteholders and the Indenture Trustee of any agreements with respect to alternate payment and notice provisions (Sections 11.6); and r. the recording of the Indenture, if applicable (Section 11.15). SECTION 2.2 Duties with Respect to the Issuer. A. In addition to the duties of the Administrator set forth above and in the other Basic Documents, the Administrator shall perform such calculations and shall prepare for execution by the Issuer or the Eligible Lender Trustee or shall cause the preparation by other appropriate Persons of all such documents, reports, filings, instruments, certificates and opinions as it shall be the duty of the Issuer or the Eligible Lender Trustee to prepare, file or deliver pursuant to the Basic Documents, and at the request of the Eligible Lender Trustee shall take all appropriate action that it is the duty of the Issuer to take pursuant to the Basic Documents. Subject to Section 8.1, and in accordance with the directions of the Eligible Lender Trustee, the Administrator shall administer, perform or supervise the performance of such other activities in connection with the Collateral (including the Basic Documents) as are not covered by any of the foregoing provisions and as are expressly requested by the Eligible Lender Trustee and are reasonably within the capability of the Administrator. B. The Administrator shall be responsible for performance of the duties of the Eligible Lender Trustee set forth in Section 5.4(a), (b), (c) and (d) of the Trust Agreement with respect to, among other things, accounting and reports to Certificateholders; provided, however, that the Eligible Lender Trustee shall retain responsibility for the distribution of the Schedule K-1's necessary to enable each Certificateholder to prepare its Federal and state income tax returns. C. The Administrator shall perform the duties of the Administrator specified in Section 10.2 of the Trust Agreement required to be performed in connection with the resignation or 4 8 removal of the Eligible Lender Trustee, and any other duties expressly required to be performed by the Administrator under the Trust Agreement and the other Basic Documents. D. In carrying out the foregoing duties or any of its other obligations under this Agreement, the Administrator may enter into transactions with or otherwise deal with any of its Affiliates; provided, however, that the terms of any such transactions or dealings shall be, in the Administrator's opinion, no less favorable to the Issuer than would be available from unaffiliated parties. SECTION 2.3 Establishment of Trust Accounts. A.1. The Administrator, for the benefit of the Issuer, shall establish and maintain in the name of the Indenture Trustee an Eligible Deposit Account (the "Collection Account"), bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Issuer. The Collection Account will initially be established as a segregated trust account in the name of the Indenture Trustee with the corporate trust department of Bankers Trust Company. 2. The Administrator, for the benefit of the Issuer, shall establish and maintain in the name of the Indenture Trustee an Eligible Deposit Account (the "Reserve Account"), bearing a designation clearly indicating that the funds deposited therein are held for the benefit of the Issuer. The Reserve Account will initially be established as a segregated trust account in the name of the Indenture Trustee with the corporate trust department of Bankers Trust Company. B. Funds on deposit in the Collection Account and the Reserve Account (collectively, the "Trust Accounts") shall be invested by the Indenture Trustee (or any custodian or designated agent with respect to any amounts on deposit in such accounts) in Eligible Investments pursuant to written instructions by the Administrator; provided, however, it is understood and agreed that the Indenture Trustee shall not be liable for the selection of, or any loss arising from such investment in, Eligible Investments. All such Eligible Investments shall be held by (or by any custodian on behalf of) the Indenture Trustee for the benefit of the Issuer; provided that on the Business Day preceding each Distribution Date all interest and other investment income (net of losses and investment expenses) on funds on deposit therein shall be deposited into the Collection Account and shall be deemed to constitute a portion of the Available Funds for such Distribution Date. Other than as described in the following proviso or as otherwise permitted by the Rating Agencies, funds on deposit in the Trust Accounts shall be invested in Eligible Investments that will mature so that such funds will be available at the close of business on the Business 5 9 Day preceding the following Monthly Servicing Payment Date (to the extent necessary to pay the Primary Servicing Fee payable on such date) or Distribution Date; provided, however, that funds on deposit in Trust Accounts may be invested in Eligible Investments of the Indenture Trustee which may mature so that such funds will be available on such Monthly Servicing Payment Date or Distribution Date. Funds deposited in a Trust Account on a Business Day which immediately precedes a Monthly Servicing Payment Date or Distribution Date upon the maturity of any Eligible Investments are not required to be invested overnight. C.1. The Seller and the Issuer have pledged to the Indenture Trustee all of their respective right, title and interest in all funds on deposit from time to time in the Trust Accounts and in all proceeds thereof (including all income thereon) and all such funds, investments, proceeds and income shall be part of the Trust Estate. Subject to the Administrator's power to instruct the Indenture Trustee pursuant to paragraph B above and paragraph C.3 below, the Trust Accounts shall be under the sole dominion and control of the Indenture Trustee for the benefit of the Noteholders and the Issuer. If, at any time, any of the Trust Accounts ceases to be an Eligible Deposit Account, the Indenture Trustee (or the Administrator on its behalf) agrees, by its acceptance hereto, that it shall within 10 Business Days (or such longer period, not to exceed 30 calendar days, as to which each Rating Agency may consent) establish a new Trust Account as an Eligible Deposit Account and shall transfer any cash and/or any investments to such new Trust Account. In connection with the foregoing, the Administrator agrees that, in the event that any of the Trust Accounts are not accounts with the Indenture Trustee, the Administrator shall notify the Indenture Trustee in writing promptly upon any of such Trust Accounts ceasing to be an Eligible Deposit Account. 2. With respect to the Trust Account Property, the Indenture Trustee agrees, by its acceptance hereof, that: (A) any Trust Account Property that is held in deposit accounts shall be held solely in Eligible Deposit Accounts, subject to the last sentence of Section 2.3C.1; and, subject to Section 2.3B, each such Eligible Deposit Account shall be subject to the exclusive custody and control of the Indenture Trustee, and the Indenture Trustee shall have sole signature authority with respect thereto; (B) any Trust Account Property that constitutes Physical Property shall be Delivered to the Indenture Trustee in accordance with paragraph (a) of the definition of "Delivery" and shall be held, pending maturity or disposition, solely by the Indenture Trustee or a financial intermediary (as such term is defined in 6 10 Section 8-313(4) of the UCC) acting solely for the Indenture Trustee; (C) any Trust Account Property that is a book-entry security held through the Federal Reserve System pursuant to Federal book-entry regulations shall be Delivered in accordance with paragraph (b) of the definition of "Delivery" and shall be maintained by the Indenture Trustee, pending maturity or disposition, through continuous book-entry registration of such Trust Account Property as described in such paragraph; and (D) any Trust Account Property that is an "uncertificated security" under Article 8 of the UCC and that is not governed by clause (C) above shall be Delivered to the Indenture Trustee in accordance with paragraph (c) of the definition of "Delivery" and shall be maintained by the Indenture Trustee, pending maturity or disposition, through continued registration of the Indenture Trustee's (or its nominee's) ownership of such security. 3. The Administrator shall have the power, revocable for cause or upon the occurrence and during the continuance of an Administrator Default by the Indenture Trustee or by the Eligible Lender Trustee with the consent of the Indenture Trustee, to instruct the Indenture Trustee to make withdrawals and payments from the Trust Accounts for the purpose of permitting the Servicer, the Administrator or the Eligible Lender Trustee to carry out its respective duties hereunder or permitting the Indenture Trustee to carry out its duties under the Indenture. SECTION 2.4 Collections. The Servicer shall remit within two Business Days of receipt thereof to the Collection Account all payments by or on behalf of the Obligors with respect to the Trust Student Loans (other than Purchased Student Loans), and all Liquidation Proceeds, both as collected during the Collection Period, and the Eligible Lender Trustee shall remit within two Business Days of receipt thereof to the Collection Account any Interest Subsidy Payments and Special Allowance Payments received by it with respect to the Trust Student Loans during the Collection Period. Notwithstanding the foregoing, for so long as (i) the senior unsecured obligations of the Administrator (or any affiliate of the Administrator which guarantees the obligations of the Administrator hereunder) shall have been assigned a long-term rating of not less than "AA-" (or equivalent rating) or a short-term rating of not less than "A-1" (or equivalent rating) by each of the Rating Agencies or the remitting by the Servicer and the Eligible Lender Trustee of the amounts referred to in this Section 2.4 to the Administrator will not result in a downgrading or withdrawal of any of the then current ratings of 7 11 any of the Securities by any of the Rating Agencies and (ii) no Administrator Default shall have occurred and be continuing, the Servicer and the Eligible Lender Trustee shall remit such collections within two Business Days of receipt thereof to the Administrator, and the Administrator need not deposit such collections into the Collection Account until one Business Day immediately prior to the next following Monthly Servicing Payment Date (in an amount up to the Servicing Fee then due) or Distribution Date together with interest on such amounts (less Servicing Fees paid during such period) calculated on a daily basis from the first day of the month following receipt thereof by the Administrator to the day such amounts are remitted by the Administrator to the Collection Account at a rate equal to the Federal Funds Rate less .20% ; provided, however, that, if the Administrator (and each such Affiliate which guarantees the obligations of the Administrator) is rated below AA- and A-1+ by Standard & Poor's, the Administrator shall deposit all such collections into the Collection Account at least as frequently as the next following Monthly Servicing Payment Date, unless less frequent deposits will not result in a downgrading or withdrawal of Standard & Poor's then current ratings on the Notes or the Certificates. In the event that any of the foregoing conditions for ceasing daily remittances shall no longer be satisfied, then the Administrator shall deposit all collections held by it into the Collection Account within two Business Days thereof. SECTION 2.5 Application of Collections. A. With respect to each Trust Student Loan, all collections (including all Guarantee Payments) with respect thereto for each Collection Period shall be applied to interest and principal on such Trust Student Loan by the Servicer in accordance with its customary practice. B. All Liquidation Proceeds shall be applied to the related Trust Student Loan. SECTION 2.6 Additional Deposits. A. The Servicer shall deposit or cause to be deposited in the Collection Account the aggregate purchase price with respect to Purchased Student Loans as determined pursuant to Section 3.5 of the Servicing Agreement and all other amounts to be paid by the Servicer under Section 3.5 of the Servicing Agreement when such amounts are due, and the Seller shall deposit or cause to be deposited in the Collection Account the aggregate Purchase Amount with respect to Purchased Student Loans and all other amounts to be paid by the Seller under Section 6 of the Sale Agreement when such amounts are due. B. Notwithstanding anything to the contrary set forth in paragraph (A) above, if daily deposits to the Collection Account 8 12 are not required pursuant to Section 2.4, the Seller and the Servicer shall pay the amounts referred to in paragraph (A) above that would otherwise be deposited into the Collection Account to the Administrator. The Administrator shall not be required to deposit such amounts into the Collection Account until the Business Day preceding each Distribution Date; provided, however, that, on or before the Business Day preceding each Monthly Servicing Payment Date that is not a Distribution Date, the Administrator shall deposit into the Collection Account that portion of such amounts received by it that is equal to the sum of the Servicing Fee payable on such date and provided, further that the Administrator shall also deposit into the Collection Account on such date interest on such amounts calculated on a daily basis from the first day of the month following receipt thereof by the Administrator to the day such amounts (less Servicing Fees paid during such period) are remitted by the Administrator to the Collection Account at a rate equal to the Federal Funds Rate less .20%. C. The Issuer shall make an initial deposit of $25,000 on the Closing Date into the Collection Account from the proceeds of the sale of the Notes and Certificates. SECTION 2.7 Distributions. A. On each Determination Date, the Administrator shall calculate all amounts required to determine the amounts to be deposited in the Collection Account from the Reserve Account and the amounts to be distributed therefrom on the related Distribution Date. On the 5th Business Day preceding each Monthly Servicing Payment Date that is not a Distribution Date, the Administrator shall calculate all amounts required to determine the amounts to be deposited in the Collection Account from the Reserve Account and the amounts to be distributed therefrom on the related Monthly Servicing Payment Date. B. The Administrator shall instruct the Indenture Trustee in writing no later than the second business day preceding each Monthly Servicing Payment Date that is not a Distribution Date (based on the information contained in the Administrator's Certificate and the related Servicer's Report delivered pursuant to Section 3.1 (A) and (B)) to distribute to the Servicer, by 1:00 p.m. (New York time) on such Monthly Servicing Payment Date, from and to the extent of the Available Funds on deposit in the Collection Account the Primary Servicing Fee due with respect to the preceding calendar month, and the Indenture Trustee shall comply with such instructions. C. The Administrator shall instruct the Indenture Trustee in writing no later than the second business day preceding each Distribution Date (based on the information contained in the Administrator's Certificate and the related Servicer's Report 9 13 delivered pursuant to Section 3.1 (A) and (C)) to make the following deposits and distributions to the Persons or to the account specified below by 1:00 p.m. (New York time) on such Distribution Date, to the extent of the amount of Available Funds in the Collection Account, in the following order of priority, and the Indenture Trustee shall comply with such instructions: 1. to the Servicer, the Primary Servicing Fee due on such Distribution Date; 2. to the Administrator, from the amount of Available Funds remaining after the application of clause 1, the Administration Fee due on such Distribution Date and all unpaid Administration Fees from prior Collection Periods; 3. to the Noteholders, from the amount of Available Funds remaining after the application of clauses 1 and 2, the Noteholders' Interest Distribution Amount, ratably, without preference or priority of any kind, according to the amounts payable on the Notes in respect of Noteholders' Interest Distribution Amount; 4. to the Eligible Lender Trustee on behalf of the Certificateholders, from the amount of Available Funds remaining after the application of clauses 1 through 3, the Certificateholders' Return Distribution Amount, for distribution by the Eligible Lender Trustee pursuant to the Trust Agreement, ratably, without preference or priority of any kind, according to the amounts payable in respect of Certificateholders' Return Distribution Amount; 5. to the Class A-1 Noteholders, from the amount of Available Funds remaining after the application of clauses 1 through 4, the Noteholders' Principal Distribution Amount, ratably, without preference or priority of any kind, according to the amounts payable on the Class A-1 Notes for principal; 6. on each Distribution Date on and after which the Class A-1 Notes have been paid in full, to the Class A-2 Noteholders, from the amount of Available Funds remaining after the application of clauses 1 through 5, the Noteholders' Principal Distribution Amount, ratably, without preference or priority of any kind, according to the amounts payable on the Class A-2 Notes for principal; 7. on each Distribution Date on and after the date on which the Notes have been paid in full, to the Eligible Lender Trustee on behalf of the Certificateholders, 10 14 from the amount of Available Funds remaining after the application of clauses 1 through 6, the Certificate Balance Distribution Amount for distribution by the Eligible Lender Trustee pursuant to the Trust Agreement, ratably, without preference or priority of any kind, according to the amounts payable in respect of the Certificate Balance; 8. to the Reserve Account, from the amount of Available Funds remaining after the application of clauses 1 through 7, the amount, if any, necessary to reinstate the balance of the Reserve Account up to the Specified Reserve Account Balance; 9. to the Servicer, from the amount of Available Funds remaining after the application of clauses 1 through 8, the aggregate unpaid amount of the Carryover Servicing Fee, if any; 10. to the Noteholders, from the amount of Available Funds remaining after the application of clauses 1 through 9, the aggregate unpaid amount of Note Interest Carryover, if any, ratably, without preference or priority of any kind, according to the amounts due and payable on the Notes in respect of Note Interest Carryover; 11. to the Eligible Lender Trustee on behalf of the Certificateholders, from the amount of Available Funds remaining after the application of clauses 1 through 10, the aggregate unpaid amount of the Certificate Return Carryover, if any, for distribution by the Eligible Lender Trustee pursuant to the Trust Agreement, ratably, without preference or priority of any kind, according to the amounts payable in respect of Certificate Return Carryover; and 12. to the Reserve Account, the amount of Available Funds remaining after the application of clauses 1 through 11. Notwithstanding the foregoing, if on any Distribution Date following all distributions to be made on such Distribution Date the Outstanding Amount of the Notes would be in excess of the sum of the outstanding principal balance of the Trust Student Loans and any accrued but unpaid interest on the Trust Student Loans as of the last day of the related Collection Period plus the balance of the Reserve Account on such Distribution Date following such distributions, or if an Insolvency Event with respect to the Seller or an Event of Default has occurred and is continuing, amounts on deposit in the Collection Account and the Reserve Account shall be applied on such Distribution Date to the payment of the Noteholders' Distribution Amount before any amounts are 11 15 applied to the payment of the Certificateholders' Distribution Amount. SECTION 2.8 Reserve Account. A. On the Closing Date, the Issuer shall deposit the Reserve Account Initial Deposit into the Reserve Account. B.1. In the event that the Primary Servicing Fee for any Monthly Servicing Payment Date or Distribution Date exceeds the amount distributed to the Servicer pursuant to Sections 2.7B and 2.7C.1 on such Monthly Servicing Payment Date or Distribution Date, the Administrator shall instruct the Indenture Trustee in writing to withdraw from the Reserve Account on such Monthly Servicing Payment Date or Distribution Date an amount equal to such excess, to the extent of funds available therein, and to distribute such amount to the Servicer; provided, however, that, except as provided in Sections 2.8B and 2.8C, amounts on deposit in the Reserve Account will not be available to cover any unpaid Carryover Servicing Fees to the Servicer. 2. In the event that the Administration Fee for any Distribution Date exceeds the amount distributed to the Administrator pursuant to Section 2.7C.2 on such Distribution Date, the Administrator shall instruct the Indenture Trustee in writing to withdraw from the Reserve Account on each Distribution Date an amount equal to such excess, to the extent of funds available therein after giving effect to paragraph B.1 above, and to distribute such amount to the Administrator. 3. In the event that the Noteholders' Interest Distribution Amount and the Certificateholders' Return Distribution Amount for a Distribution Date exceeds the amount distributed to Noteholders and to the Certificateholders pursuant to Section 2.7C.3 and C.4 on such Distribution Date, the Administrator shall instruct the Indenture Trustee in writing to withdraw from the Reserve Account on such Distribution Date an amount equal to such excess, to the extent of funds available therein after giving effect to paragraphs B.1 and B.2 above, and to distribute such amount to the Noteholders and to the Certificateholders entitled thereto, in the same order and priority as is set forth in Sections 2.7C.3 and C.4 subject to the last paragraph of Section 2.7C. 4. In the event that the Noteholders' Principal Distribution Amount on the Final Distribution Date with respect to each Class of Notes exceeds the amount 12 16 distributed to such Noteholders pursuant to Section 2.7C.5 and 2.7C.6 on such Distribution Date, the Administrator shall instruct the Indenture Trustee in writing to withdraw from the Reserve Account on such final Distribution Date an amount equal to such excess, to the extent of funds available therein after giving effect to paragraphs B.1, B.2 and B.3 above, and to distribute such amount to the Noteholders entitled thereto, in the same order and priority as is set forth in Sections 2.7C.5 and 2.7C.6. 5. In the event that the Certificateholders' Balance Distribution Amount on the final Distribution Date with respect to the Certificates exceeds the amount distributed to the Certificateholders pursuant to Section 2.7C.7 on such Distribution Date, the Administrator shall instruct the Indenture Trustee in writing to withdraw from the Reserve Account on such Distribution Date an amount equal to such excess, to the extent of funds available therein after giving effect to paragraphs B.1 through B.4 above, and to distribute such amount to the Eligible Lender Trustee on behalf of the Certificateholders, for distribution to the Certificateholders entitled thereto. C. After giving effect to Section 2.8B, if the amount on deposit in the Reserve Account on any Distribution Date (after giving effect to all deposits or withdrawals therefrom on such Distribution Date other than pursuant to this paragraph C) is greater than the Specified Reserve Account Balance for such Distribution Date, the Administrator shall instruct the Indenture Trustee in writing (A) to pay to the Noteholders out of such excess in the Reserve Account an amount equal to the Note Principal Shortfall, if any; (B) to pay to the Certificateholders out of such excess in the Reserve Account an amount equal to the Certificate Balance Shortfall, if any; (C) to pay to the Servicer out of such excess in the Reserve Account an amount equal to the amount described in Section 2.7C.9 for such Distribution Date (to the extent not otherwise paid to the Servicer on such Distribution Date); (D) to pay to the Noteholders out of such excess an amount equal to the amount described in Section 2.7C.10 for such Distribution Date (to the extent not otherwise paid to the Noteholders on such Distribution Date); (E) to pay to the Certificateholders out of such excess an amount equal to the amount described in Section 2.7C.11 for such Distribution Date (to the extent not otherwise paid to the Certificateholders on such Distribution Date); (F) in the event the Trust Student Loans are not sold pursuant to Section 6.1A, to pay as an accelerated payment of principal balance of the Notes or Certificate Balance, as the case may be, first to the Noteholders in the same order and priority as is set forth in Sections 2.7C.5 and C.6 until the principal amount of the Notes is paid in full and then to the 13 17 Certificateholders until the Certificate Balance is reduced to zero, provided that the amount of such distribution shall not exceed the outstanding principal balance of the Notes or the Certificate Balance, as applicable, after giving effect to all other payments in respect of principal of Notes and Certificate Balance to be made on such date; and (G) to distribute the remaining amount of such excess to the Seller. Amounts properly distributed to the Seller pursuant to this paragraph C shall be deemed released from the Trust Estate and the security interest therein granted to the Indenture Trustee, and the Seller shall in no event thereafter be required to refund any such distributed amounts. D. Following the payment in full of the aggregate outstanding principal balance of the Notes and the Certificate Balance and of all other amounts owing or to be distributed hereunder or under the Indenture or the Trust Agreement to Noteholders, Certificateholders, the Servicer or the Administrator and the termination of the Trust (including, to the extent owing, any Carryover Servicing Fees, Note Interest Carryover and Certificate Return Carryover), any amount remaining on deposit in the Reserve Account shall be distributed to the Seller. The Seller shall in no event be required to refund any amounts properly distributed pursuant to this Section 2.8D. SECTION 2.9 Statements to Certificateholders and Noteholders. On each Determination Date preceding a Distribution Date, the Administrator shall provide to the Indenture Trustee and the Eligible Lender Trustee (with a copy to the Rating Agencies) for the Indenture Trustee to forward on such succeeding Distribution Date to each Noteholder of record and for the Eligible Lender Trustee to forward on such succeeding Distribution Date to each Certificateholder of record a statement, setting forth at least the following information as to the Notes and the Certificates to the extent applicable: a. the amount of such distribution allocable to principal of each class of the Notes; b. the amount of the distribution allocable to interest on each class of the Notes; c. the amount of the distribution allocable to the Certificate Balance; d. the amount of the distribution allocable to return on the Certificates; e. the amount, if any, of the distribution allocable to any Note Interest Carryover and any Certificate Return Carryover, together with any remaining outstanding amount of each thereof; 14 18 f. the Pool Balance as of the close of business on the last day of the preceding Collection Period; g. the aggregate outstanding principal balance of the Notes, the Note Pool Factor, the Certificate Balance and the Certificate Pool Factor as of such Distribution Date, after giving effect to payments allocated to principal reported under clauses (a) and (c) above; h. the Note Rate for the next period for any class of Notes and the Certificate Rate for any class of Certificates; i. the amount of the Servicing Fee and any Carryover Servicing Fee paid to the Servicer on such Distribution Date and on the two preceding Monthly Servicing Payment Dates, and the amount, if any, of the Carryover Servicing Fee remaining unpaid after giving effect to any such payments; j. the amount of the Administration Fee paid to the Administrator on such Distribution Date; k. the amount of the aggregate Realized Losses, if any, for the related Collection Period and the balance of Trust Student Loans that are delinquent in each delinquency period as of the end of such Collection Period; l. the amount of any Note Interest Shortfall, Note Principal Shortfall, Certificate Return Shortfall and Certificate Balance Shortfall, if any, in each case as applicable to each class of Securities, and the change in such amounts from the preceding statement; m. the aggregate Purchase Amounts for Trust Student Loans, if any, that were repurchased by the Seller or purchased by the Servicer from the Issuer in such Collection Period; and n. the balance of the Reserve Account on such Distribution Date, after giving effect to changes therein on such Distribution Date. Each amount set forth pursuant to clauses (a), (b), (c), (d), (e), (i), (j) and (l) above shall be expressed as a dollar amount per $1,000 of original principal balance of a Certificate or Note, as applicable. A copy of the statements referred to above may be obtained by any Certificate Owner or Note Owner by a written request to the Eligible Lender Trustee or the Indenture Trustee, respectively, addressed to the respective Corporate Trust Office. 15 19 SECTION 2.10 Non-Ministerial Matters. With respect to matters that in the reasonable judgment of the Administrator are nonministerial, the Administrator shall not take any action unless within a reasonable time before the taking of such action, the Administrator shall have notified the Eligible Lender Trustee of the proposed action and the Eligible Lender Trustee shall not have withheld consent or provided an alternative direction. For the purpose of the preceding sentence, "non-ministerial matters" shall include: a. the amendment of or any supplement to the Indenture; b. the initiation of any claim or lawsuit by the Issuer and the compromise of any action, claim or lawsuit brought by or against the Issuer (other than in connection with the collection of the Trust Student Loans); c. the amendment, change or modification of the Basic Documents; d. the appointment of successor Note Registrars, successor Paying Agents and successor Indenture Trustees pursuant to the Indenture or the appointment of Successor Administrators or Successor Servicers, or the consent to the assignment by the Note Registrar, Paying Agent or Indenture Trustee of its obligations under the Indenture; and e. the removal of the Indenture Trustee. SECTION 2.11 Exceptions. Notwithstanding anything to the contrary in this Agreement, except as expressly provided herein or in the other Basic Documents, the Administrator shall not be obligated to, and shall not, (1) make any payments to the Noteholders under the Basic Documents, (2) sell the Indenture Trust Estate pursuant to Section 5.4 of the Indenture, (3) take any other action that the Issuer directs the Administrator not to take on its behalf, (4) in connection with its duties hereunder assume any indemnification obligation of any other Person or (5) service the Trust Student Loans. SECTION 2.12 Compensation. As compensation for the performance of the Administrator's obligations under this Agreement and as reimbursement for its expenses related thereto, the Administrator shall be entitled to $20,000 for each Collection Period payable on the related Distribution Date (the "Administration Fees") payable in arrears which shall be solely an obligation of the Issuer. SECTION 2.13 Servicer and Administrator Expenses. Each of the Servicer and the Administrator shall be severally required to pay 16 20 all expenses incurred by it in connection with its activities hereunder, including fees and disbursements of independent accountants, taxes imposed on the Servicer or the Administrator, as the case may be, and expenses incurred in connection with distributions and reports to the Administrator or to the Certificateholders and the Noteholders, as the case may be. ARTICLE III SECTION 3.1 Administrator's Certificate; Servicer's Report. A. On or before the tenth day of each month (or, if any such day is not a Business Day, on the next succeeding Business Day), the Servicer shall deliver to the Administrator a Servicer's Report with respect to the preceding month containing all information necessary for the Administrator to receive in connection with the preparation of the Administrator's Officers' Certificate and the Administrator's Certificate covering such calendar month referred to in paragraph B below. On or before the tenth day (or, if any such day is not a Business Day, on the next succeeding Business Day), preceding each Distribution Date the Servicer shall deliver to the Administrator a Servicer's Report with respect to the preceding Collection Period containing all information necessary for the Administrator to receive in connection with the preparation of the Administrator's Officers' Certificate and the Administrator's Certificate covering such calendar month referred to in paragraph C below. B. On the 2nd Business Day prior to each Monthly Servicing Payment Date that is not a Distribution Date, the Administrator shall deliver to the Eligible Lender Trustee and the Indenture Trustee, an Officer's Certificate of the Administrator containing all information necessary to pay the Servicer the Servicing Fee due on such Monthly Servicing Payment Date pursuant to Section 2.7B. C. On each Determination Date prior to a Distribution Date, the Administrator shall deliver to the Eligible Lender Trustee and the Indenture Trustee, with a copy to the Rating Agencies, an Administrator's Certificate containing all information necessary to make the distributions pursuant to Sections 2.7 and 2.8, if applicable, for the Collection Period preceding the date of such Administrator's Certificate. D. Prior to each Determination Date, the Administrator shall determine the Note Rates and the Certificate Rate that will be applicable to the Distribution Date following such Determination Date, in compliance with its obligation to prepare and deliver an Administrator's Certificate on such Determination Date pursuant to this Section 3.1. In connection therewith, the Administrator shall calculate the T-Bill Rate in accordance with 17 21 the definition thereof and shall also determine the Student Loan Rate with respect to such Distribution Date. E. The Administrator shall furnish to the Issuer from time to time such information regarding the Collateral as the Issuer shall reasonably request. SECTION 3.2 Annual Statement as to Compliance; Notice of Default; Financial Statements. A. Each of the Servicer and the Administrator shall deliver to the Eligible Lender Trustee and the Indenture Trustee on or before 120 days after the end of the fiscal year of the Servicer and the Administrator, an Officer's Certificate of the Servicer or the Administrator, as the case may be, dated as of December 31 of the preceding year, stating that (i) a review of the activities of the Servicer or the Administrator, as the case may be, during the preceding 12-month period (or, in the case of the first such certificate, during the period from the Closing Date to December 31, 1996) and of its performance under this Agreement has been made under such officers' supervision and (ii) to the best of such officers' knowledge, based on such review, the Servicer or the Administrator, as the case may be, has fulfilled its obligations in all material respects under this Agreement and, with respect to the Servicer, the Servicing Agreement throughout such year or, if there has been a material default in the fulfillment of any such obligation, specifying each such material default known to such officers and the nature and status thereof. The Indenture Trustee shall send a copy of each such Officers' Certificate and each report referred to in Section 3.1 to the Rating Agencies. A copy of each such Officers' Certificate and each report referred to in Section 3.1 may be obtained by any Certificateholder, Certificate Owner, Noteholder or Note Owner by a request in writing to the Eligible Lender Trustee addressed to its Corporate Trust Office, together with evidence satisfactory to the Eligible Lender Trustee that such Person is one of the foregoing parties. Upon the telephone request of the Eligible Lender Trustee, the Indenture Trustee will promptly furnish the Eligible Lender Trustee a list of Noteholders as of the date specified by the Eligible Lender Trustee. B. The Servicer shall deliver to the Eligible Lender Trustee, the Indenture Trustee and the Rating Agencies, promptly after having obtained knowledge thereof, but in no event later than five Business Days thereafter, written notice in an Officers' Certificate of the Servicer of any event which with the giving of notice or lapse of time, or both, would become a Servicer Default under Section 5.1 of the Servicing Agreement. C. The Administrator shall deliver to the Eligible Lender Trustee, the Indenture Trustee and the Rating Agencies, promptly 18 22 after having obtained knowledge thereof, but in no event later than five Business Days thereafter, written notice in an Officers' Certificate of the Administrator of any event which with the giving of notice or lapse of time, or both, would become an Administrator Default under Sections 5.1A or B or would cause the Student Loan Marketing Association to fail to meet the requirement of clause (i) of Section 2.4. D. The Administrator shall provide to the Eligible Lender Trustee, the Indenture Trustee and the Rating Agencies (a) as soon as possible and in no event more than 120 days after the end of each fiscal year of the Administrator audited financials as at the end of and for such year and (b) as soon as possible and in no event more than 45 days after the end of each quarterly accounting period of the Administrator unaudited financials as at the end of and for such period. SECTION 3.3 Annual Independent Certified Public Accountants' Reports. Each of the Servicer and the Administrator shall cause a firm of independent certified public accountants, which may also render other services to the Servicer or the Administrator, as the case may be, to deliver to the Eligible Lender Trustee, the Indenture Trustee and the Rating Agencies on or before March 31 of each year, a report addressed to the Servicer or the Administrator, as the case may be, the Eligible Lender Trustee and the Indenture Trustee, to the effect that such firm has examined certain documents and records relating to the servicing of the Trust Student Loans, or the administration of the Trust Student Loans and of the Trust, as the case may be, during the preceding calendar year (or, in the case of the first such report, during the period from the Closing Date to December 31, 1996) and that, on the basis of the accounting and auditing procedures considered appropriate under the circumstances, such firm is of the opinion that such servicing or administration, respectively, was conducted in compliance with those terms of this Agreement and in the case of the Servicer, the Servicing Agreement, including any applicable statutory provisions incorporated therein and such additional terms and statutes as may be specified from time to time by the Administrator, except for (i) such exceptions as such firm shall believe to be immaterial and (ii) such other exceptions as shall be set forth in such report. Such report will also indicate that the firm is independent of the Servicer or the Administrator, as the case may be, within the meaning of the Code of Professional Ethics of the American Institute of Certified Public Accountants. 19 23 ARTICLE IV SECTION 4.1 Representations of Administrator. The Student Loan Marketing Association, as Administrator, makes the following representations on which the Issuer is deemed to have relied in acquiring the Trust Student Loans. The representations speak as of the execution and delivery of this Agreement and as of the Closing Date and shall survive the sale of the Trust Student Loans to the Eligible Lender Trustee on behalf of the Issuer and the pledge thereof to the Indenture Trustee pursuant to the Indenture. A. Organization and Good Standing. The Administrator is duly organized and validly existing under the laws of the United States of America, with the 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. Power and Authority. The Administrator has the corporate power and authority to execute and deliver this Agreement and to carry out its terms, and the execution, delivery and performance of this Agreement have been duly authorized by the Administrator by all necessary corporate action. C. Binding Obligation. This Agreement constitutes a legal, valid and binding obligation of the Administrator 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. No Violation. The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof or thereof do not conflict with, result in any breach of any of the terms and provisions of, nor constitute (with or without notice or lapse of time or both) a default under, the charter or by-laws of the Administrator, or any indenture, agreement or other instrument to which the Administrator is a party or by which it shall be 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 knowledge of the Administrator, any order, rule or regulation applicable to the Administrator of any court or of any Federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Administrator or its properties. E. No Proceedings. There are no proceedings or investigations pending against the Administrator or, to its best knowledge, threatened against the Administrator, before any court, regulatory body, administrative agency or other 20 24 governmental instrumentality having jurisdiction over the Administrator or its properties: (i) asserting the invalidity of this Agreement or any of the other Basic Documents, the Notes or the Certificates, (ii) seeking to prevent the issuance of the Notes or the Certificates or the consummation of any of the transactions contemplated by this Agreement or any of the other Basic Documents, (iii) seeking any determination or ruling that could reasonably be expected to have a material and adverse effect on the performance by the Administrator of its obligations under, or the validity or enforceability of, this Agreement, any of the other Basic Documents, the Notes or the Certificates or (iv) seeking to affect adversely the Federal or state income tax attributes of the Issuer, the Notes or the Certificates. F. All Consents. All authorizations, consents, orders or approvals of or registrations or declarations with any court, regulatory body, administrative agency or other government instrumentality required to be obtained, effected or given by the Administrator in connection with the execution and delivery by the Administrator of this Agreement and the performance by the Administrator of the transactions contemplated by this Agreement have been duly obtained, effected or given and are in full force and effect. SECTION 4.2 Liability of Administrator; Indemnities. The Administrator shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Administrator under this Agreement. The Administrator shall indemnify, defend and hold harmless the Issuer, the Certificateholders and the Noteholders and any of the officers, directors, employees and agents of the Issuer from and against any and all costs, expenses, losses, claims, damages and liabilities to the extent that such cost, expense, loss, claim, damage or liability arose out of, or was imposed upon any such Person through, the gross negligence, willful misfeasance or bad faith of the Administrator in the performance of its duties under this Agreement or by reason of reckless disregard of its obligations and duties hereunder or thereunder. The Administrator shall indemnify the Indenture Trustee in its individual capacity and any of its officers, directors, employees and agents against any and all loss, liability or expense (including attorneys' fees) incurred by it in connection with the performance of its duties under the Indenture and the other Basic Documents. The Indenture Trustee shall notify the Issuer and the Administrator promptly of any claim for which it may seek indemnity. Failure by the Indenture Trustee to so notify the Issuer and the Administrator shall not relieve the Issuer or the Administrator of its obligations hereunder and under the other Basic Documents. The Administrator shall defend the claim and the Administrator shall not be liable for the legal 21 25 fees and expenses of the Indenture Trustee after it has assumed such defense; provided, however, that, in the event that there may be a conflict between the positions of the Indenture Trustee and the Administrator in conducting the defense of such claim, the Indenture Trustee shall be entitled to separate counsel the fees and expenses of which shall be paid by the Administrator on behalf of the Issuer. Neither the Issuer nor the Administrator need reimburse any expense or indemnify against any loss, liability or expense incurred by the Indenture Trustee through the Indenture Trustee's own willful misconduct, negligence or bad faith. The Administrator shall indemnify each of the Eligible Lender Trustee and the Interim Eligible Lender Trustee in its individual capacity and any of its officers, directors, employees and agents against any and all loss, liability, claims, damages, costs, penalties, taxes (excluding taxes payable by it on any compensation received by it for its services as trustee) or expense (including attorneys' fees) incurred by it in connection with the performance of its duties under the Interim Trust Agreement, the Trust Agreement and the other Basic Documents. Without limiting the generality of the foregoing, the Administrator shall indemnify the Eligible Lender Trustee in its individual capacity and any of its officers, directors, employees and agents against any and all liability relating to or resulting from any of the following: (i) any claim that the Trust Student Loans (or any guarantee with respect thereto) are delinquent, uncollectable, uninsured, illegal, invalid or unenforceable; (ii) any claim that the Trust Student Loans have not been made, administered, serviced or collected in accordance with applicable federal and state laws or the requirements of any Guarantor; or (iii) any claim that any original note or other document evidencing or relating to the Trust Student Loans has been lost, misplaced or destroyed. The Eligible Lender Trustee shall notify the Administrator promptly of any claim for which it may seek indemnity. Failure by the Eligible Lender Trustee to so notify the Administrator shall not relieve the Administrator of its obligations hereunder and under the other Basic Documents. The Administrator shall defend the claim and the Administrator shall not be liable for the legal fees and expenses of the Eligible Lender Trustee after it has assumed such defense; provided, however, that, in the event that there may be a conflict between the positions of the Eligible Lender Trustee and the Administrator in conducting the defense of such claim, the Eligible Lender Trustee shall be 22 26 entitled to separate counsel the fees and expenses of which shall be paid by the Administrator on behalf of the Issuer. Neither the Issuer nor the Administrator need reimburse any expense or indemnify against any loss, liability or expense incurred by the Eligible Lender Trustee through the Eligible Lender Trustee's own willful misconduct, negligence or bad faith. The Seller shall pay reasonable compensation to the Indenture Trustee and the Eligible Lender Trustee and shall reimburse the Indenture Trustee and the Eligible Lender Trustee for all reasonable expenses, disbursements and advances. For purposes of this Section, in the event of the termination of the rights and obligations of the Administrator (or any successor thereto pursuant to Section 4.3) as Administrator pursuant to Section 5.1, or a resignation by such Administrator pursuant to this Agreement, such Administrator shall be deemed to be the Administrator pending appointment of a successor Administrator pursuant to Section 5.2. Indemnification under this Section shall survive the resignation or removal of the Eligible Lender Trustee or the Indenture Trustee or the termination of this Agreement and shall include reasonable fees and expenses of counsel and expenses of litigation. If the Administrator shall have made any indemnity payments pursuant to this Section and the Person to or on behalf of whom such payments are made thereafter collects any of such amounts from others, such Person shall promptly repay such amounts to the Administrator, without interest. SECTION 4.3 Merger or Consolidation of, or Assumption of the Obligations of, Administrator. Any Person (a) into which the Administrator may be merged or consolidated, (b) which may result from any merger or consolidation to which the Administrator shall be a party or (c) which may succeed to the properties and assets of the Administrator substantially as a whole, shall be the successor to the Administrator without the execution or filing of any document or any further act by any of the parties to this Agreement; provided, however, that the Administrator hereby covenants that it will not consummate any of the foregoing transactions except upon satisfaction of the following: (i) the surviving Administrator, if other than the Student Loan Marketing Association, executes an agreement of assumption to perform every obligation of the Administrator under this Agreement, (ii) immediately after giving effect to such transaction, no representation or warranty made pursuant to Section 4.1 shall have been breached and no Administrator Default, and no event that, after notice or lapse of time, or both, would become an Administrator Default shall have occurred and be continuing, (iii) the surviving Administrator, if other than the Student Loan Marketing Association, shall have delivered to the Eligible Lender Trustee and the Indenture Trustee an Officers' Certificate 23 27 and an Opinion of Counsel each stating that such consolidation, merger or succession and such agreement of assumption comply with this Section and that all conditions precedent, if any, provided for in this Agreement relating to such transaction have been complied with, and that the Rating Agency Condition shall have been satisfied with respect to such transaction, (iv) unless the Student Loan Marketing Association is the surviving entity, such transaction will not result in a material adverse Federal or state tax consequence to the Issuer, the Noteholders or the Certificateholders and (v) unless the Student Loan Marketing Association is the surviving entity, the Administrator shall have delivered to the Eligible Lender Trustee and the Indenture Trustee an Opinion of Counsel either (A) stating that, in the opinion of such counsel, all financing statements and continuation statements and amendments thereto have been executed and filed that are necessary fully to preserve and protect the interest of the Eligible Lender Trustee and Indenture Trustee, respectively, in the Trust Student Loans and reciting the details of such filings, or (B) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such interests. Anything in this Section 4.3 to the contrary notwithstanding, the Administrator may at any time assign its rights, obligations and duties under this Agreement to an Affiliate provided that the Rating Agencies confirm that such assignment will not result in a downgrading or a withdrawal of the ratings then applicable to the Notes and the Certificates. SECTION 4.4 Limitation on Liability of Seller, Administrator and Others. Neither the Administrator nor any of its directors, officers, employees or agents shall be under any liability to the Issuer, the Noteholders or the Certificateholders, or to the Indenture Trustee or the Eligible Lender Trustee except as provided under this Agreement for any action taken or for refraining from the taking of any action pursuant to this Agreement or for errors in judgment; provided, however, that these provisions shall not protect the Administrator or any such person against any liability that would otherwise be imposed by reason of willful misfeasance, bad faith or negligence in the performance of duties or by reason of reckless disregard of obligations and duties under this Agreement. The Administrator and any of its directors, officers, employees or agents may rely in good faith on the advice of counsel or on any document of any kind, prima facie properly executed and submitted by any Person respecting any matters arising hereunder. Except as provided in this Agreement, the Administrator shall not be under any obligation to appear in, prosecute or defend any legal action that shall not be incidental to its duties to administer the Trust Student Loans and the Trust in accordance with this Agreement and that in its opinion may involve it in any expense or liability; provided, however, that the Administrator may undertake any reasonable action that it may 24 28 deem necessary or desirable in respect of this Agreement and the other Basic Documents and the rights and duties of the parties to this Agreement and the other Basic Documents and the interests of the Certificateholders under this Agreement and the Noteholders under the Indenture and under this Agreement. SECTION 4.5 Administrator May Own Certificates or Notes. The Administrator and any Affiliate thereof may in its individual or any other capacity become the owner or pledgee of Certificates or Notes with the same rights as it would have if it were not the Administrator or an Affiliate thereof, except as expressly provided herein or in any other Basic Document. SECTION 4.6 Student Loan Marketing Association Not to Resign as Administrator. Subject to the provisions of Section 4.3, the Student Loan Marketing Association shall not resign from the obligations and duties imposed on it as Administrator under this Agreement except upon determination that the performance of its duties under this Agreement shall no longer be permissible under applicable law or shall violate any final order of a court or administrative agency with jurisdiction over the Student Loan Marketing Association or its properties. Notice of any such determination permitting or requiring the resignation of the Student Loan Marketing Association shall be communicated to the Eligible Lender Trustee and the Indenture Trustee at the earliest practicable time (and, if such communication is not in writing, shall be confirmed in writing at the earliest practicable time) and any such determination shall be evidenced by an Opinion of Counsel to such effect delivered to the Eligible Lender Trustee and the Indenture Trustee concurrently with or promptly after such notice. No such resignation shall become effective until the Indenture Trustee or a successor Administrator shall have assumed the responsibilities and obligations of the Student Loan Marketing Association in accordance with Section 5.2. Anything in this Section 4.7 to the contrary notwithstanding, the Administrator may resign at any time subsequent to the assignment of its duties and obligations hereunder pursuant to Section 4.3. ARTICLE V SECTION 5.1 Administrator Default. If any one of the following events (an "Administrator Default") shall occur and be continuing: A. (i) in the event that daily deposits into the Collection Account are not required, any failure by the Administrator to deliver to the Indenture Trustee for deposit in the Trust Accounts any Available Funds required to be paid on or before the Business Day immediately preceding any Monthly Servicing Payment Date or Distribution Date, as applicable, or (ii) any failure by the Administrator to direct the Indenture 25 29 Trustee to make any required distributions from either of the Trust Accounts, which failure in case of either clause (i) or (ii) continues unremedied for five Business Days after written notice of such failure is received by the Administrator from the Indenture Trustee or the Eligible Lender Trustee or after discovery of such failure by an officer of the Administrator; or B. any failure by the Administrator duly to observe or to perform in any material respect any other term, covenant or agreement of the Administrator set forth in this Agreement or any other Basic Document, which failure shall (i) materially and adversely affect the rights of Noteholders or Certificateholders and (ii) continue unremedied for a period of 60 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given (A) to the Administrator by the Indenture Trustee or the Eligible Lender Trustee or (B) to the Administrator, the Indenture Trustee and the Eligible Lender Trustee by the Noteholders or Certificateholders, as applicable, representing not less than 25% of the Outstanding Amount of the Notes or 25% of the outstanding Certificate Balance (including any Certificates owned by the Seller); or C. an Insolvency Event occurs with respect to the Administrator; then, and in each and every case, so long as the Administrator Default shall not have been remedied, either the Indenture Trustee or the Noteholders evidencing not less than 25% of the Outstanding Amount of the Notes, by notice then given in writing to the Administrator (and to the Indenture Trustee and the Eligible Lender Trustee if given by the Noteholders) may terminate all the rights and obligations (other than the obligations set forth in Section 4.2) of the Administrator under this Agreement. On or after the receipt by the Administrator of such written notice, all authority and power of the Administrator under this Agreement, whether with respect to the Notes, the Certificates, the Trust Student Loans or otherwise, shall, without further action, pass to and be vested in the Indenture Trustee or such successor Administrator as may be appointed under Section 5.2; and, without limitation, the Indenture Trustee and the Eligible Lender Trustee are hereby authorized and empowered to execute and deliver, for the benefit of the predecessor Administrator, as attorney-in-fact or otherwise, any and all documents and other instruments, and to do or accomplish all other acts or things necessary or appropriate to effect the purposes of such notice of termination. The predecessor Administrator shall cooperate with the successor Administrator, 26 30 the Indenture Trustee and the Eligible Lender Trustee in effecting the termination of the responsibilities and rights of the predecessor Administrator under this Agreement. All reasonable costs and expenses (including attorneys' fees) incurred in connection with amending this Agreement to reflect such succession as Administrator pursuant to this Section shall be paid by the predecessor Administrator (other than the Indenture Trustee acting as the Administrator under this Section 5.1) upon presentation of reasonable documentation of such costs and expenses. Upon receipt of notice of the occurrence of an Administrator Default, the Eligible Lender Trustee shall give notice thereof to the Rating Agencies. SECTION 5.2 Appointment of Successor. A. Upon receipt by the Administrator of notice of termination pursuant to Section 5.1, or the resignation by the Administrator in accordance with the terms of this Agreement, the predecessor Administrator shall continue to perform its functions as Administrator under this Agreement in the case of termination, only until the date specified in such termination notice or, if no such date is specified in a notice of termination, until receipt of such notice and, in the case of resignation, until the later of (x) the date 120 days from the delivery to the Eligible Lender Trustee and the Indenture Trustee of written notice of such resignation (or written confirmation of such notice) in accordance with the terms of this Agreement and (y) the date upon which the predecessor Administrator shall become unable to act as Administrator as specified in the notice of resignation and accompanying Opinion of Counsel (the "Transfer Date"). In the event of the termination hereunder of the Administrator the Issuer shall appoint a successor Administrator acceptable to the Indenture Trustee, and the successor Administrator shall accept its appointment by a written assumption in form acceptable to the Indenture Trustee. In the event that a successor Administrator has not been appointed at the time when the predecessor Administrator has ceased to act as Administrator in accordance with this Section, the Indenture Trustee without further action shall automatically be appointed the successor Administrator and the Indenture Trustee shall be entitled to the Administration Fee. Notwithstanding the above, the Indenture Trustee shall, if it shall be unwilling or legally unable so to act, appoint or petition a court of competent jurisdiction to appoint any established institution whose regular business shall include the servicing of student loans, as the successor to the Administrator under this Agreement. B. Upon appointment, the successor Administrator (including the Indenture Trustee acting as successor Administrator), shall be the successor in all respects to the predecessor Administrator and shall be subject to all the responsibilities, duties and liabilities placed on the predecessor Administrator that arise 27 31 thereafter or are related thereto and shall be entitled to an amount agreed to by such successor Administrator (which shall not exceed the Administration Fee unless such compensation arrangements will not result in a downgrading or withdrawal of any rating on the Notes or the Certificates by any Rating Agency) and all the rights granted to the predecessor Administrator by the terms and provisions of this Agreement. C. The Administrator may not resign unless it is prohibited from serving as such by law as evidenced by an Opinion of Counsel to such effect delivered to the Indenture Trustee and the Eligible Lender Trustee. Notwithstanding the foregoing or anything to the contrary herein or in the other Basic Documents, the Indenture Trustee, to the extent it is acting as successor Administrator pursuant hereto and thereto, shall be entitled to resign to the extent a qualified successor Administrator has been appointed and has assumed all the obligations of the Administrator in accordance with the terms of this Agreement and the other Basic Documents. SECTION 5.3 Notification to Noteholders and Certificateholders. Upon any termination of, or appointment of a successor to, the Administrator pursuant to this Article V, the Eligible Lender Trustee shall give prompt written notice thereof to Certificateholders and the Indenture Trustee shall give prompt written notice thereof to Noteholders and the Rating Agencies (which, in the case of any such appointment of a successor, shall consist of prior written notice thereof to the Rating Agencies). SECTION 5.4 Waiver of Past Defaults. The Noteholders of Notes evidencing a majority of the Outstanding Amount of the Notes (or the Certificateholders of Certificates evidencing a majority of the outstanding Certificate Balance, in the case of any default which does not adversely affect the Indenture Trustee or the Noteholders) may, on behalf of all Noteholders and Certificateholders, waive in writing any default by the Administrator in the performance of its obligations hereunder and any consequences thereof, except a default in making any required deposits to or payments from any of the Trust Accounts (or giving instructions regarding the same) in accordance with this Agreement. Upon any such waiver of a past default, such default shall cease to exist, and any Administrator Default arising therefrom shall be deemed to have been remedied for every purpose of this Agreement. No such waiver shall extend to any subsequent or other default or impair any right consequent thereto. 28 32 ARTICLE VI SECTION 6.1 Termination. A. Optional Purchase of All Trust Student Loans. The Administrator shall notify the Seller and the Indenture Trustee in writing, within 15 days after the last day of any Collection Period as of which the then outstanding Pool Balance is 12% or less of the Initial Pool Balance, of the percentage that the then outstanding Pool Balance bears to the Initial Pool Balance. As of the last day of any Collection Period immediately preceding a Distribution Date as of which the then outstanding Pool Balance is 10% or less of the Initial Pool Balance, the Eligible Lender Trustee on behalf and at the direction of the Seller, or any other "eligible lender" (within the meaning of the Higher Education Act) designated by the Seller in writing to the Eligible Lender Trustee and the Indenture Trustee, shall have the option to purchase the Trust Estate, other than the Trust Accounts. To exercise such option, the Seller shall deposit pursuant to Section 2.6 in the Collection Account an amount equal to the aggregate Purchase Amount for the Trust Student Loans and the related rights with respect thereto, plus the appraised value of any such other property held by the Trust other than the Trust Accounts, such value to be determined by an appraiser mutually agreed upon by the Seller, the Eligible Lender Trustee and the Indenture Trustee, and shall succeed to all interests in and to the Trust; provided, however, that the Seller may not effect such purchase if such aggregate Purchase Amounts do not equal or exceed the Minimum Purchase Amount plus any Note Interest Carryover and any Certificate Return Carryover. In the event the Seller fails to notify the Eligible Lender Trustee and the Indenture Trustee in writing prior to the acceptance by the Indenture Trustee of a bid to purchase the Trust Estate pursuant to Section 4.4 of the Indenture that the Seller intends to exercise its option to purchase the Trust Estate, the Seller shall be deemed to have waived its option to purchase the Trust Estate as long as the Seller has received 5 business days' notice from the Indenture Trustee as provided in Section 4.4 of the Indenture. B. Insolvency of the Seller. Upon any sale of the assets of the Trust pursuant to Section 9.2 of the Trust Agreement, the Administrator shall instruct the Indenture Trustee in writing to deposit the net proceeds from such sale after all payments and reserves therefrom (including the expenses of such sale) have been made (the "Insolvency Proceeds") in the Collection Account. On the first Distribution Date following the date on which the Insolvency Proceeds are deposited in the Collection Account, the Administrator shall instruct the Indenture Trustee to make the following distributions (after the application on such Distribution Date of the amount of Available Funds and amounts on deposit in the Reserve Account pursuant to Sections 2.7 and 2.8) 29 33 from the Insolvency Proceeds and any funds remaining on deposit in the Reserve Account (including the proceeds of any sale of investments therein as described in the following sentence): a. to the Noteholders, any unpaid Noteholders' Interest Distribution Amount for such Distribution Date as set forth in Sections 2.7C.3; b. to the Noteholders, the outstanding principal balance of the Notes in the same order and priority as is set forth in Sections 2.7C.5 and C.6; c. to the Certificateholders, any unpaid Certificate Return Distribution Amount for such Distribution Date; d. to the Certificateholders, the Certificate Balance; e. to the Servicer, any unpaid Carryover Servicing Fees; f. to the Noteholders, any unpaid Note Interest Carryover; and g. to the Certificateholders, any unpaid Certificate Return Carryover. Any investments on deposit in the Reserve Account which will not mature on or before such Distribution Date shall be sold by the Indenture Trustee at such time as will result in the Indenture Trustee receiving the proceeds from such sale not later than the Business Day preceding such Distribution Date. Any Insolvency Proceeds remaining after the deposits described above shall be paid to the Seller. C. Notice. Notice of any termination of the Trust shall be given by the Administrator to the Eligible Lender Trustee and the Indenture Trustee as soon as practicable after the Administrator has received notice thereof. D. Succession. Following the satisfaction and discharge of the Indenture and the payment in full of the principal of and interest on the Notes, the Certificateholders shall succeed to the rights of the Noteholders hereunder and the Eligible Lender Trustee shall succeed to the rights of, and assume the obligations of, the Indenture Trustee pursuant to this Agreement and any other Basic Documents. 30 34 ARTICLE VII SECTION 7.1 Protection of Interests in Trust. A. The Seller shall execute and file such financing statements and cause to be executed and filed such continuation statements, all in such manner and in such places as may be required by law fully to preserve, maintain, and protect the interest of the Issuer, the Eligible Lender Trustee and the Indenture Trustee in the Trust Student Loans and in the proceeds thereof. The Seller shall deliver (or cause to be delivered) to the Eligible Lender Trustee and the Indenture Trustee file-stamped copies of, or filing receipts for, any document filed as provided above, as soon as available following such filing. B. Neither the Seller nor the Servicer shall change its name, identity or corporate structure in any manner that would, could or might make any financing statement or continuation statement filed in accordance with paragraph A above seriously misleading within the meaning of Section 9-402(7) of the UCC, unless it shall have given the Eligible Lender Trustee and the Indenture Trustee at least five days' prior written notice thereof and shall have promptly filed appropriate amendments to all previously filed financing statements or continuation statements. C. Each of the Seller and the Servicer shall have an obligation to give the Eligible Lender Trustee and the Indenture Trustee at least 60 days' prior written notice of any relocation of its principal executive office if, as a result of such relocation, the applicable provisions of the UCC would require the filing of any amendment of any previously filed financing or continuation statement or of any new financing statement and shall promptly file any such amendment. The Servicer shall at all times maintain each office from which it shall service Trust Student Loans, and its principal executive office, within the United States of America. D. The Servicer shall maintain accounts and records as to each Trust Student Loan accurately and in sufficient detail to permit (i) the reader thereof to know at any time the status of such Trust Student Loan, including payments and recoveries made and payments owing (and the nature of each) and (ii) reconciliation between payments or recoveries on (or with respect to) each Trust Student Loan and the amounts from time to time deposited by the Servicer in the Collection Account in respect of such Trust Student Loan. E. The Servicer shall maintain its computer systems so that, from and after the time of sale of the Trust Student Loans to the Eligible Lender Trustee on behalf of the Issuer, the Servicer's master computer records (including any backup archives) that refer to a Trust Student Loan shall indicate 31 35 clearly the interest of the Issuer, the Eligible Lender Trustee and the Indenture Trustee in such Trust Student Loan and that such Trust Student Loan is owned by the Eligible Lender Trustee on behalf of the Issuer and has been pledged to the Indenture Trustee. Indication of the Issuer's, the Eligible Lender Trustee's and the Indenture Trustee's interest in a Trust Student Loan shall be deleted from or modified on the Servicer's computer systems when, and only when, the related Trust Student Loan shall have been paid in full or repurchased. F. If at any time the Seller or the Administrator shall propose to sell, grant a security interest in, or otherwise transfer any interest in student loans to any prospective purchaser, lender or other transferee, the Servicer shall give to such prospective purchaser, lender or other transferee computer tapes, records or printouts (including any restored from backup archives) that, if they refer in any manner whatsoever to any Trust Student Loan, indicate clearly that such Trust Student Loan has been sold and is owned by the Eligible Lender Trustee on behalf of the Issuer and has been pledged to the Indenture Trustee. G. Upon reasonable notice, the Servicer shall permit the Indenture Trustee and its agents at any time during normal business hours to inspect, audit and make copies of and abstracts from the Servicer's records regarding any Trust Student Loan. H. Upon request, at any time the Eligible Lender Trustee or the Indenture Trustee have reasonable grounds to believe that such request would be necessary in connection with its performance of its duties under the Basic Documents, the Servicer shall furnish to the Eligible Lender Trustee or to the Indenture Trustee (in each case, with a copy to the Administrator), within five Business Days, a list of all Trust Student Loans (by borrower social security number, type of loan and date of issuance) then held as part of the Trust, and the Administrator shall furnish to the Eligible Lender Trustee or to the Indenture Trustee, within 20 Business Days thereafter, a comparison of such list to the list of Initial Trust Student Loans set forth in Schedule A to the Indenture as of the Closing Date, and, for each Trust Student Loan that has been removed from the pool of loans held by the Eligible Lender Trustee on behalf of the Issuer, information as to the date as of which and circumstances under which each such Trust Student Loan was so removed. I. The Seller shall deliver to the Eligible Lender Trustee and the Indenture Trustee: (1) promptly after the execution and delivery of this Agreement and of each amendment thereto and on each Transfer Date, an Opinion of Counsel either (A) stating that, in the opinion of such counsel, all financing statements and 32 36 continuation statements have been executed and filed that are necessary fully to preserve and protect the interest of the Eligible Lender Trustee and the Indenture Trustee in the Trust Student Loans, and reciting the details of such filings or referring to prior Opinions of Counsel in which such details are given, or (B) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such interest; and (2) within 120 days after the beginning of each calendar year beginning with the first calendar year beginning more than three months after the Cutoff Date, an Opinion of Counsel, dated as of a date during such 120-day period, either (A) stating that, in the opinion of such counsel, all financing statements and continuation statements have been executed and filed that are necessary fully to preserve and protect the interest of the Eligible Lender Trustee and the Indenture Trustee in the Trust Student Loans, and reciting the details of such filings or referring to prior Opinions of Counsel in which such details are given, or (B) stating that, in the opinion of such counsel, no such action shall be necessary to preserve and protect such interest; provided that a single Opinion of Counsel may be delivered in satisfaction of the foregoing requirement and that of Section 3.6(b) of the Indenture. Each Opinion of Counsel referred to in clause (1) or (2) above shall specify (as of the date of such opinion and given all applicable laws as in effect on such date) any action necessary to be taken in the following year to preserve and protect such interest. J. The Seller shall, to the extent required by applicable law, cause the Certificates and the Notes to be registered with the Commission pursuant to Section 12(b) or Section 12(g) of the Exchange Act within the time periods specified in such sections. ARTICLE VIII SECTION 8.1 Independence of the Administrator. For all purposes of this Agreement, the Administrator shall be an independent contractor and shall not be subject to the supervision of the Issuer or the Eligible Lender Trustee with respect to the manner in which it accomplishes the performance of its obligations hereunder. Unless expressly authorized by the Issuer, the Administrator shall have no authority to act for or represent the Issuer or the Eligible Lender Trustee in any way and shall not otherwise be deemed an agent of the Issuer or the Eligible Lender Trustee. SECTION 8.2 No Joint Venture. Nothing contained in this Agreement (i) shall constitute the Administrator and either of 33 37 the Issuer or the Eligible Lender Trustee as members of any partnership, joint venture, association, syndicate, unincorporated business or other separate entity, (ii) shall be construed to impose any liability as such on any of them or (iii) shall be deemed to confer on any of them any express, implied or apparent authority to incur any obligation or liability on behalf of the others. SECTION 8.3 Other Activities of Administrator. Nothing herein shall prevent the Administrator or its Affiliates from engaging in other businesses or, in its sole discretion, from acting in a similar capacity as an administrator for any other person or entity even though such person or entity may engage in business activities similar to those of the Issuer, the Eligible Lender Trustee or the Indenture Trustee. SECTION 8.4 Powers of Attorney. The Eligible Lender Trustee and the Indenture Trustee shall upon the written request of the Administrator furnish the Administrator with any powers of attorney and other documents reasonably necessary or appropriate to enable the Administrator to carry out its administrative duties hereunder. SECTION 8.5 Amendment. This Agreement (other than Sections 2.1 and 2.2) may be amended by the Seller, the Servicer, the Administrator, the Eligible Lender Trustee and the Indenture Trustee, 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 delivered to the Eligible Lender Trustee and the Indenture Trustee, adversely affect in any material respect the interests of any Noteholder or Certificateholder. Sections 2.1 and 2.2 may be amended from time to time by a written amendment duly executed and delivered by the Eligible Lender Trustee, the Indenture Trustee and the Administrator, without the consent of the Noteholders and the Certificateholders, for the purpose of adding any provision to or changing in any manner or eliminating any of the provisions of such Article; provided that such amendment will not, in an Opinion of Counsel obtained on behalf of the Issuer and satisfactory to the Indenture Trustee and the Eligible Lender Trustee, materially and adversely affect the interest of any Noteholder or Certificateholder. This Agreement (other than Sections 2.1 and 2.2) may also be amended from time to time by the Seller, the Servicer, the Administrator, the Indenture Trustee and the Eligible Lender 34 38 Trustee, and Sections 2.1 and 2.2 may also be amended by the Eligible Lender Trustee, the Administrator and the Indenture Trustee, with the consent of the Noteholders of Notes evidencing a majority of the Outstanding Amount of the Notes and the consent of the Certificateholders of Certificates evidencing 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 with respect to 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, the Noteholders or the Certificateholders of which are required to consent to any such amendment, without the consent of all outstanding Noteholders and Certificateholders. Promptly after the execution of any such amendment (or, in the case of the Rating Agencies, fifteen days prior thereto), the Eligible Lender Trustee shall furnish written notification of the substance of such amendment to each Certificateholder, the Indenture Trustee and each of the Rating Agencies. It shall not be necessary for the consent of Certificateholders or Noteholders 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. Prior to the execution of any amendment to this Agreement, the Eligible Lender Trustee and the Indenture 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 and the Opinion of Counsel referred to in Section 7.1I(1). The Eligible Lender Trustee and the Indenture Trustee may, but shall not be obligated to, enter into any such amendment which affects the Eligible Lender Trustee's or the Indenture Trustee's, as applicable, own rights, duties or immunities under this Agreement or otherwise. SECTION 8.6 Assignment. Notwithstanding anything to the contrary contained herein, except as provided in Section 4.3 of the Servicing Agreement and Section 4.3 of this Agreement, this Agreement may not be assigned by the Seller, the Administrator or the Servicer. This Agreement may be assigned by the Eligible Lender Trustee only to its permitted successor pursuant to the Trust Agreement. 35 39 SECTION 8.7 Limitations on Rights of Others. The provisions of this Agreement are solely for the benefit of the Seller, the Servicer, the Issuer, the Indenture Trustee and the Eligible Lender Trustee and for the benefit of the Certificateholders and the Noteholders, as third party beneficiaries, and nothing in this Agreement, 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 8.8 Assignment to Indenture Trustee. The Seller hereby acknowledges and consents to any Grant by the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of the Noteholders of a security interest in all right, title and interest of the Issuer in, to and under the Trust Student Loans and the assignment of any or all of the Issuer's rights and obligations under this Agreement and the Sale Agreement and the Seller's rights under the Purchase Agreement to the Indenture Trustee. The Servicer hereby acknowledges and consents to the assignment by the Issuer to the Indenture Trustee pursuant to the Indenture for the benefit of the Noteholders of any and all of the Issuer's rights and obligations under this Agreement and under the Servicing Agreement. SECTION 8.9 Nonpetition Covenants. A. Notwithstanding any prior termination of this Agreement, the Servicer, the Administrator, the Interim Eligible Lender Trustee and the Seller shall not, prior to the date which is one year and one day after the termination of this Agreement, acquiesce, petition or otherwise invoke or cause the Issuer to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Issuer under any Federal or state bankruptcy, insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Issuer or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Issuer. B. Notwithstanding any prior termination of this Agreement, the Servicer, the Administrator, the Issuer and the Eligible Lender Trustee shall not, prior to the date which is one year and one day after the termination of this Agreement, acquiesce, petition or otherwise invoke or cause the Seller to invoke the process of any court or government authority for the purpose of commencing or sustaining a case against the Seller under any insolvency or similar law or appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar official of the Seller or any substantial part of its property, or ordering the winding up or liquidation of the affairs of the Seller. 36 40 SECTION 8.10 Limitation of Liability of Eligible Lender Trustee and Indenture Trustee. A. Notwithstanding anything contained herein to the contrary, this Agreement has been signed by Chase Manhattan Bank USA, National Association not in its individual capacity but solely in its capacity as Eligible Lender Trustee of the Issuer and in no event shall Chase Manhattan Bank USA, National Association in its individual capacity have any liability for the representations, warranties, covenants, agreements or other obligations of the Issuer or the Eligible Lender Trustee hereunder or in any of the certificates, notices or agreements delivered pursuant hereto as to all of which recourse shall be had solely to the assets of the Issuer. B. Notwithstanding anything contained herein to the contrary, this Agreement has been accepted by Bankers Trust Company not in its individual capacity but solely as Indenture Trustee and in no event shall Bankers Trust Company have any liability for the representations, warranties, covenants, agreements or other obligations of the Issuer hereunder or in any of the certificates, notices or agreements delivered pursuant hereto, as to all of which recourse shall be had solely to the assets of the Issuer. SECTION 8.11 Governing Law. This Agreement shall be construed in accordance with the laws of the State of New York, without reference to its conflict of law provisions, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws. SECTION 8.12 Headings. The section headings hereof have been inserted for convenience of reference only and shall not be construed to affect the meaning, construction or effect of this Agreement. SECTION 8.13 Counterparts. This Agreement may be executed in counterparts, each of which when so executed shall together constitute but one and the same agreement. SECTION 8.14 Severability. Any provision of this Agreement that is prohibited or unenforceable in any jurisdiction shall 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. 37 41 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered as of the day and year first above written. SLM STUDENT LOAN TRUST 1996-4, by Chase Manhattan Bank USA, National Association, not in its individual capacity but solely as Eligible Lender Trustee, By: /s/ John W. Mack ------------------------------- Name: John W. Mack ----------------------------- Title: Second Vice President ---------------------------- STUDENT LOAN MARKETING ASSOCIATION By: /s/ Denise B. McGlone ------------------------------- Name: Denise B. McGlone ----------------------------- Title: Executive Vice President --------------------------- Chief Financial Officer --------------------------- SLM FUNDING CORPORATION By: /s/ Mark G. Overend ------------------------------- Name: Mark G. Overend ----------------------------- Title: Treasurer and Controller ---------------------------- SALLIE MAE SERVICING CORPORATION By: /s/ Robert D. Friedhoff ------------------------------- Name: Robert D. Friedhoff ----------------------------- Title: President ---------------------------- 38 42 CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION, not in its individual capacity but solely as Eligible Lender Trustee By: /s/ John W. Mack ------------------------------- Name: John W. Mack ----------------------------- Title: Second Vice President ---------------------------- BANKERS TRUST COMPANY, not in its individual capacity but solely as Indenture Trustee By: /s/ Lara Graff ------------------------------- Name: Lara Graff ----------------------------- Title: Assistant Vice President ---------------------------- 39 EX-99.4 12 SERVICING AGREEMENT 1 EXHIBIT 99.4 ================================================================================ SERVICING AGREEMENT among SALLIE MAE SERVICING CORPORATION, STUDENT LOAN MARKETING ASSOCIATION, as Administrator SLM STUDENT LOAN TRUST 1996-4, CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION not in its individual capacity but solely as Eligible Lender Trustee and BANKERS TRUST COMPANY not in its individual capacity but solely as Indenture Trustee Dated as of October 3, 1996 ================================================================================ 2 TABLE OF CONTENTS
Page ---- ARTICLE I Section 1.1 Definitions and Usage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 ARTICLE II Section 2.1 Custody of Trust Student Loan Files . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 2.2 Duties of Servicer as Custodian . . . . . . . . . . . . . . . . . . . . . . . . . . 2 Section 2.3 Maintenance of and Access to Records . . . . . . . . . . . . . . . . . . . . . . . 3 Section 2.4 Release of Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 2.5 Instructions; Authority To Act . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 2.6 [RESERVED] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Section 2.7 Effective Period and Termination . . . . . . . . . . . . . . . . . . . . . . . . . 3 ARTICLE III Section 3.1 Duties of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Section 3.2 Collection of Trust Student Loan Payments . . . . . . . . . . . . . . . . . . . . 6 Section 3.3 Realization upon Trust Student Loans . . . . . . . . . . . . . . . . . . . . . . . 7 Section 3.4 No Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Section 3.5 Purchase of Trust Student Loans; Reimbursement . . . . . . . . . . . . . . . . . . 7 Section 3.6 Primary Servicing Fee; Carryover Servicing Fee . . . . . . . . . . . . . . . . . . 10 Section 3.7 Access to Certain Documentation and Information Regarding Trust Student Loans . . . . . . . . . . . . . . . . . . . 10 Section 3.8 Servicer Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 3.9 Appointment of Subservicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 3.10 Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Section 3.11 Covenants and Agreements of the Issuer, Administrator, Eligible Lender Trustee and Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Section 3.12 Special Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Section 3.13 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Section 3.14 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Section 3.15 Administration Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Section 3.16 Lender Identification Number . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 ARTICLE IV Section 4.1 Representations of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Section 4.2 Indemnities of Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Section 4.3 Merger or Consolidation of, or Assumption of the Obligations of, Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Section 4.4 Limitation on Liability of Servicer . . . . . . . . . . . . . . . . . . . . . . . 17 Section 4.5 Sallie Mae Servicing Corporation Not to Resign as Servicer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
i 3 ARTICLE V Section 5.1 Servicer Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 Section 5.2 Appointment of Successor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Section 5.3 Notification to Noteholders and Certificateholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Section 5.4 Waiver of Past Defaults . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 ARTICLE VI Section 6.1 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Section 6.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Section 6.3 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Section 6.4 Entire Agreement; Severability . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Section 6.5 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Section 6.6 Relationship of Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Section 6.7 Captions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Section 6.8 Nonliability of Directors, Officers and Employees of Servicer, the Eligible Lender Trustee, the Indenture Trustee and the Administrator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 Section 6.9 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Section 6.10 Limitation of Liability of Eligible Lender Trustee and Indenture Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 25 Attachment A Schedule of Fees Attachment B Servicer Locations Attachment C Reports Appendix A
ii 4 SERVICING AGREEMENT Sallie Mae Servicing Corporation ("Servicer"), a corporation organized under the laws of the State of Delaware, hereby agrees with SLM Student Loan Trust 1996-4 (the "Issuer"), Chase Manhattan Bank USA, National Association, not in its individual capacity but in its capacity as trustee under a trust agreement dated October 1, 1996 between SLM Funding Corporation and Chase Manhattan Bank USA, National Association ("Eligible Lender Trustee"), the Student Loan Marketing Association, a federally chartered corporation ("Administrator") and Bankers Trust Company, a New York banking corporation, not in its individual capacity but in its capacity as Indenture Trustee under an Indenture dated October 1, 1996 between SLM Student Loan Trust 1996-4 and Bankers Trust Company (the "Indenture Trustee"), as follows: WHEREAS, Eligible Lender Trustee will acquire certain education loans to be held in the Trust formed pursuant to a trust agreement (the "Trust Agreement"), dated as of October 1, 1996, between SLM Funding Corporation and Eligible Lender Trustee; WHEREAS, the Issuer will issue notes (the "Notes") pursuant to an indenture (the "Indenture"), dated as of October 1, 1996, between the Issuer and the Indenture Trustee and trust certificates (the "Certificates") pursuant to the Trust Agreement, which Notes and Certificates are payable from the assets of the Issuer; WHEREAS, the Issuer, the Administrator and the Eligible Lender Trustee desire Servicer to service said education loans held by the Eligible Lender Trustee on behalf of the Issuer, and Servicer is willing to service said education loans for the Issuer, the Administrator, the Eligible Lender Trustee and the Indenture Trustee; NOW, THEREFORE, in consideration of the premises and mutual covenants herein contained, the parties hereto agree as follows: ARTICLE I SECTION 1.1 Definitions and Usage. Except as otherwise specified herein 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. 5 ARTICLE II SECTION 2.1 Custody of Trust Student Loan Files. To assure uniform quality in servicing the Trust Student Loans and to reduce administrative costs, the Issuer hereby revocably appoints the Servicer, and the Servicer hereby accepts such appointment, to act for the benefit of the Issuer and the Indenture Trustee as custodian of the following documents or instruments (collectively the "Trust Student Loan Files") which are hereby constructively delivered to the Indenture Trustee, as pledgee of the Issuer with respect to each Trust Student Loan: (a) the original fully executed copy of the note evidencing the Trust Student Loan; and (b) any and all other documents and computerized records that the Servicer shall keep on file, in accordance with its customary procedures, relating to such Trust Student Loan or any obligor with respect thereto. SECTION 2.2 Duties of Servicer as Custodian. The Servicer shall hold the Trust Student Loan Files for the benefit of the Issuer and the Indenture Trustee and maintain such accurate and complete accounts, records and computer systems pertaining to each Trust Student Loan File as shall enable the Issuer to comply with this Agreement. In performing its duties as custodian the Servicer shall act with reasonable care, using that degree of skill and attention that the Servicer exercises with respect to the student loan files relating to comparable student loans that the Servicer services on behalf of the Student Loan Marketing Association and shall ensure that it fully complies with all applicable Federal and state laws, including the Higher Education Act, with respect thereto. The Servicer shall take all actions necessary with respect to the Trust Student Loan Files held by it under this Agreement and of the related accounts, records and computer systems, in order to enable the Issuer or the Indenture Trustee to verify the accuracy of the Servicer's record keeping with respect to the Servicer's obligations as custodian hereunder. The Servicer shall promptly report to the Issuer, the Administrator and the Indenture Trustee any material failure on its part to hold the Trust Student Loan Files and maintain its accounts, records and computer systems as herein provided and promptly take appropriate action to remedy any such failure. Nothing herein shall be deemed to require an initial review or any periodic review by the Issuer, the Eligible Lender Trustee or the Indenture Trustee of the Trust Student Loan Files. If in the reasonable judgment of the Eligible Lender Trustee it is necessary to preserve the interests of the Noteholders, Certificateholders and the Trust in the Trust Student Loans or at the request of the Administrator, the Servicer shall transfer physical possession of the notes evidencing the Trust Student Loans to the Eligible Lender Trustee, the Indenture Trustee or 2 6 any other custodian for either of them designated by the Eligible Lender Trustee. SECTION 2.3 Maintenance of and Access to Records. The Servicer shall maintain each Trust Student Loan File at one of its offices specified in Attachment B to this Agreement or at such other office as shall be consented to by the Issuer and the Indenture Trustee upon written notice to the Issuer and the Indenture Trustee. Upon reasonable prior notice, the Servicer shall make available to the Issuer and the Indenture Trustee or their respective duly authorized representatives, attorneys or auditors a list of locations of the Trust Student Loan Files and the related accounts, records and computer systems maintained by the Servicer at such times during normal business hours as the Issuer or the Indenture Trustee shall instruct. SECTION 2.4 Release of Documents. Upon written instruction from the Indenture Trustee, the Servicer shall release any Trust Student Loan File to the Indenture Trustee, the Indenture Trustee's agent, or the Indenture Trustee's designee, as the case may be, at such place or places as the Indenture Trustee may reasonably designate, as soon as practicable. The Indenture Trustee shall cooperate with the Servicer to provide the Servicer with access to the Trust Student Loan Files in order for the Servicer to continue to service the Trust Student Loans after the release of the Trust Student Loan Files. In the event the Servicer is not provided access to the Trust Student Loan Files, the Servicer shall not be deemed to have breached its obligations pursuant to Section 3.1, 3.2, 3.3 or 3.4 if it is unable to perform such obligations due to its inability to have access to the Trust Student Loans Files. The Servicer shall not be liable for any losses with respect to the servicing of such Trust Student Loans arising after the release of the related Trust Student Loan Files to the extent the losses are attributable to the Servicer's inability to have access to the related Trust Student Loan Files. SECTION 2.5 Instructions; Authority To Act. The Servicer shall be deemed to have received proper instructions with respect to the Trust Student Loan Files upon its receipt of written instructions signed by a Responsible Officer of the Indenture Trustee. SECTION 2.6 [RESERVED]. SECTION 2.7 Effective Period and Termination. Sallie Mae Servicing Corporation's appointment as custodian shall become effective as of the Closing Date and shall continue in full force and effect for so long as Sallie Mae Servicing Corporation shall remain the Servicer hereunder. If Sallie Mae Servicing 3 7 Corporation or any successor Servicer shall resign as Servicer in accordance with the provisions of this Agreement or if all the rights and obligations of Sallie Mae Servicing Corporation or any such successor Servicer shall have been terminated under Section 5.1, the appointment of Sallie Mae Servicing Corporation or such successor Servicer as custodian shall be terminated simultaneously with the effectiveness of such resignation or termination. On or prior to the effective date of any resignation or termination of such appointment, the Servicer shall deliver the Trust Student Loan Files to the successor Servicer, the Indenture Trustee or the Indenture Trustee's agent, at the direction of the Indenture Trustee, at such place or places as the Indenture Trustee may reasonably designate. In establishing an effective date for the termination of the Servicer as custodian of the Trust Student Loan Files, the parties shall provide for a reasonable period for the Servicer to deliver the Trust Student Loan Files to its designated successor. ARTICLE III SECTION 3.1 Duties of Servicer. The Servicer, for the benefit of the Issuer (to the extent provided herein), shall manage, service, administer and make collections on the Trust Student Loans with reasonable care, using that degree of skill and attention that the Servicer exercises with respect to comparable student loans that it services on behalf of the Student Loan Marketing Association from the Closing Date (or with respect to Trust Student Loans which are sold to the Issuer following the Closing Date, such later date as the Trust Student Loans are delivered to Servicer for servicing hereunder) until the Trust Student Loans are paid in full. At any time that substantially all remaining Trust Student Loans are repurchased by SLM Funding Corporation from the Issuer pursuant to Section 6.1 of the Administration Agreement, the Servicer agrees to execute, at the request of SLM Funding Corporation, a new servicing agreement which agreement shall include terms and conditions substantially the same as the terms and conditions of this Agreement; provided, however, the Servicer shall not be required to so execute a new servicing agreement until it has received all Servicing Fees then due and payable hereunder. Without limiting the generality of the foregoing or of any other provision set forth in this Agreement and notwithstanding any other provision to the contrary set forth herein, the Servicer shall manage, service, administer and make collections with respect to the Trust Student Loans (including collection of any Interest Subsidy Payments and Special Allowance Payments on behalf of the Eligible Lender Trustee) in accordance with, and otherwise comply with, all applicable Federal and state laws, including all applicable rules, regulations and other requirements of the Higher Education Act and the applicable Guarantee Agreement, the failure to comply with which would adversely affect the eligibility of one or more of the Trust Student Loans for Federal reinsurance or 4 8 Interest Subsidy Payments or Special Allowance Payments or one or more of the Trust Student Loans for receipt of Guarantee Payments. The Servicer's duties shall include, but shall not be limited to, collection and posting of all payments, responding to inquiries of borrowers on such Trust Student Loans, monitoring borrowers' status, making required disclosures to borrowers, performing due diligence with respect to borrower delinquencies, sending payment coupons to borrowers and otherwise establishing repayment terms, reporting tax information to borrowers, if applicable, accounting for collections and furnishing monthly statements with respect thereto to the Administrator. The Servicer shall follow its customary standards, policies and procedures in performing its duties as Servicer. Without limiting the generality of the foregoing, the Servicer is authorized and empowered to execute and deliver, on behalf of itself, the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the Certificateholders and the Noteholders or any of them, instruments of satisfaction or cancellation, or partial or full release or discharge, and all other comparable instruments, with respect to such Trust Student Loans; provided, however, that the Servicer agrees that it will not (a) permit any rescission or cancellation of a Trust Student Loan except as ordered by a court of competent jurisdiction or governmental authority or as otherwise consented to in writing by the Eligible Lender Trustee and the Indenture Trustee provided, however, that the Servicer may write off any delinquent Trust Student Loan if the remaining balance of the borrower's account is less than $50 or (b) reschedule, revise, defer or otherwise compromise with respect to payments due on any Trust Student Loan except pursuant to any applicable interest only, deferral or forbearance periods or otherwise in accordance with all applicable standards, guidelines and requirements with respect to the servicing of Student Loans; provided further, however, that the Servicer shall not agree to any reduction of yield with respect to any Trust Student Loan (either by reducing borrower payments or reducing principal balance) except as permitted in accordance with Section 3.12 or otherwise if, and to the extent, the Servicer or the Administrator reimburses the Issuer in an amount sufficient to offset any such effective yield reduction made by the Servicer consistent with such customary servicing procedures as it follows with respect to comparable Student Loans which it services on behalf of the Student Loan Marketing Association. The Eligible Lender Trustee on behalf of the Issuer hereby grants a power of attorney and all necessary authorization to the Servicer to maintain any and all collection procedures with respect to the Trust Student Loans, including filing, pursuing and recovering claims with the Guarantors for Guarantee Payments and with the Department for Interest Benefit Payments and Special Allowance Payments and taking any steps to enforce such Trust Student Loans such as commencing a legal proceeding to enforce a Trust Student 5 9 Loan in the names of the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the Certificateholders and the Noteholders. The Eligible Lender Trustee shall upon the written request of the Servicer furnish the Servicer with any other powers of attorney and other documents reasonably necessary or appropriate to enable the Servicer to carry out its servicing and administrative duties hereunder. SECTION 3.2 Collection of Trust Student Loan Payments. A. The Servicer shall make reasonable efforts (including all efforts that may be specified under the Higher Education Act or any Guarantee Agreement) to collect all payments called for under the terms and provisions of the Trust Student Loans as and when the same shall become due and shall follow such collection procedures as it follows with respect to comparable student loans that it services on behalf of the Student Loan Marketing Association. The Servicer shall allocate collections with respect to the Trust Student Loans between principal and interest in accordance with Section 2.5 of the Administration Agreement. The Servicer may in its discretion waive any late payment charge or any other fees that may be collected in the ordinary course of servicing a Trust Student Loan. B. The Servicer shall make reasonable efforts to claim, pursue and collect all Guarantee Payments from the Guarantors pursuant to the Guarantee Agreements with respect to any of the Trust Student Loans as and when the same shall become due and payable, shall comply with all applicable laws and agreements with respect to claiming, pursuing and collecting such payments and shall follow such practices and procedures as it follows with respect to comparable guarantee agreements and student loans that it services on behalf of the Student Loan Marketing Association. In connection therewith, the Servicer is hereby authorized and empowered to convey to any Guarantor the note and the related Trust Student Loan File representing any Trust Student Loan in connection with submitting a claim to such Guarantor for a Guarantee Payment in accordance with the terms of the applicable Guarantee Agreement. All amounts so collected by the Servicer shall constitute Available Funds for the applicable Collection Period and shall be deposited into the Collection Account or transferred to the Administrator in accordance with Section 2.4 of the Administration Agreement. The Eligible Lender Trustee shall, upon the written request of the Servicer, furnish the Servicer with any power of attorney and other documents necessary or appropriate to enable the Servicer to convey such documents to any Guarantor and to make such claims. C. The Servicer on behalf of the Eligible Lender Trustee shall, on behalf of the Issuer, make reasonable efforts to claim, pursue and collect all Interest Subsidy Payments and Special Allowance Payments from the Department with respect to any of the 6 10 Trust Student Loans as and when the same shall become due and payable, shall comply with all applicable laws and agreements with respect to claiming, pursuing and collecting such payments and shall follow such practices and procedures as the Servicer follows with respect to comparable student loans that it services on behalf of the Student Loan Marketing Association. All amounts so collected by the Servicer shall constitute Available Funds for the applicable Collection Period and shall be deposited into the Collection Account or transferred to the Administrator in accordance with Section 2.4 of the Administration Agreement. In connection therewith, the Servicer shall prepare and file with the Department on a timely basis all claims forms and other documents and filings necessary or appropriate in connection with the claiming of Interest Subsidy Payments and Special Allowance Payments on behalf of the Eligible Lender Trustee and shall otherwise assist the Eligible Lender Trustee in pursuing and collecting such Interest Subsidy Payments and Special Allowance Payments from the Department. The Eligible Lender Trustee shall upon the written request of the Servicer furnish the Servicer with any power of attorney and other documents reasonably necessary or appropriate to enable the Servicer to prepare and file such claims forms and other documents and filings. SECTION 3.3 Realization upon Trust Student Loans. For the benefit of the Issuer, the Servicer shall use reasonable efforts consistent with its servicing practices and procedures that it utilizes with respect to comparable student loans that it services on behalf of the Student Loan Marketing Association and including all efforts that may be specified under the Higher Education Act or any Guarantee Agreement in its servicing of any delinquent Trust Student Loans. SECTION 3.4 No Impairment. The Servicer shall not impair the rights of the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the Certificateholders or Noteholders in such Trust Student Loans. SECTION 3.5 Purchase of Trust Student Loans; Reimbursement. A. The Servicer, the Administrator, the Eligible Lender Trustee and the Indenture Trustee shall give notice to the other parties promptly, in writing, upon the discovery of any breach of the provisions of Section 3.1, 3.2, 3.3 or 3.4 which has a materially adverse effect on the interest of the Issuer. In the event of such a material breach which is not curable by reinstatement of the Guarantor's guarantee of such Trust Student Loan, the Servicer shall purchase the affected Trust Student Loan not later than 120 days following the earlier of the date of discovery of such material breach and the date of receipt of the Guarantor reject transmittal form with respect to such Trust Student Loan. In the event of a material breach with respect to such Trust Student Loan which is curable by reinstatement of the 7 11 Guarantor's guarantee of such Trust Student Loan, unless the material breach shall have been cured within 360 days following the earlier of the date of discovery of such material breach and the date of receipt of the Guarantor reject transmittal form with respect to such Trust Student Loan, the Servicer shall purchase such Trust Student Loan not later than the sixtieth day following the end of such 360-day period. The purchase price hereunder will be the unpaid principal amount of such Trust Student Loan plus accrued interest (calculated using the applicable percentage that would have been insured pursuant to Section 428(b)(1)(G) of the Higher Education Act) plus an amount equal to all forfeited Interest Subsidy Payments and Special Allowance Payments with respect to such Trust Student Loan. The Servicer shall remit the purchase price to the Administrator as provided in Section 2.6 of the Administration Agreement on the date of purchase of any Trust Student Loan pursuant to this Section 3.5. In consideration of the purchase of any such Trust Student Loan pursuant to this Section 3.5, the Servicer shall remit the Purchase Amount in the manner specified in Section 2.6 of the Administration Agreement. Any breach that relates to compliance with the requirements of the Higher Education Act or of the applicable Guarantor but that does not affect such Guarantor's obligation to guarantee payments of a Trust Student Loan will not be considered to have a material adverse effect for purposes of this Section 3.5A. B. In addition, if any breach of Section 3.1, 3.2, 3.3 or 3.4 by the Servicer does not trigger such purchase obligation but does result in the refusal by a Guarantor to guarantee all or a portion of the accrued interest (or any obligation of the Issuer to repay such interest to a Guarantor), or the loss (including any obligation of the Issuer to repay to the Department) of Interest Subsidy Payments and Special Allowance Payments, with respect to any Trust Student Loan affected by such breach, then the Servicer shall reimburse the Issuer in an amount equal to the sum of all such nonguaranteed interest amounts that would have been owed to the Issuer by the Guarantor but for such breach by the Servicer and such forfeited Interest Subsidy Payments or Special Allowance Payments by netting such sum against the Servicing Fee payable to the Servicer for such period and remitting any additional amounts owed in the manner specified in Section 2.6 of the Administration Agreement not later than (i) the last day of the next Collection Period ending not less than 60 days from the date of the Guarantor's refusal to guarantee all or a portion of accrued interest or loss of Interest Subsidy Payments or Special Allowance Payments, or (ii) in the case where the Servicer reasonably believes such amounts are likely to be collected, not later than the last day of the next Collection Period ending not less than 360 days from the date of the Guarantor's refusal to guarantee all or a portion of accrued interest or loss of Interest Subsidy Payments or Special Allowance Payments. At the time such payment is made, the Servicer shall not be required to reimburse the Issuer for 8 12 interest that is then capitalized, however, such amounts shall be reimbursed if the borrower subsequently defaults and such capitalized interest is not paid by the Guarantor. C. Anything in this Section 3.5 to the contrary notwithstanding, if as of the last Business Day of any month the aggregate outstanding principal amount of Trust Student Loans with respect to which claims have been filed with and rejected by a Guarantor or with respect to which the Servicer determines that claims cannot be filed pursuant to the Higher Education Act as a result of a breach by the Servicer or the Seller, exceeds 1% of the Pool Balance, the Servicer or the Seller, as appropriate, shall purchase, within 30 days of a written request of the Eligible Lender Trustee or Indenture Trustee, such affected Trust Student Loans in an aggregate principal amount such that after such purchase the aggregate principal amount of such affected Trust Student Loans is less than 1% of the Pool Balance. The Trust Student Loans to be purchased by the Servicer or the Seller pursuant to the preceding sentence shall be based on the date of claim rejection (or date of notice referred to in the first sentence of this Section 3.5) with the Trust Student Loans with the earliest such date to be purchased first. D. In lieu of repurchasing Trust Student Loans pursuant to this Section 3.5, the Servicer may, at its option, with the prior consent of the Administrator, substitute Student Loans or arrange for the substitution of Student Loans which are substantially similar as of the date of substitution on an aggregate basis to the Trust Student Loans for which they are being substituted with respect to the following characteristics: (1) status (i.e., in-school, grace, deferment, forbearance or repayment), (2) program type (i.e., unsubsidized Stafford, subsidized Stafford, PLUS or SLS), (3) school type, (4) total return, (5) principal balance, and (6) remaining term to maturity. In addition, each substituted Student Loan shall comply, as of the date of substitution, with the representations and warranties made by the Seller in the Sale Agreement. In choosing Student Loans to be substituted pursuant to this subsection D, the Servicer shall make a reasonable determination that the Student Loans to be substituted will not have a material adverse effect on the Noteholders and the Certificateholders. In the event the Servicer elects to substitute Student Loans pursuant to this Section 3.5 and the Administrator consents to such substitution, the Servicer will remit to the Administrator the amount of any shortfall between the Purchase Amount of the 9 13 substituted Student Loans and the Purchase Amount of the Trust Student Loans for which they are being substituted. The Servicer shall also remit to the Administrator an amount equal to all nonguaranteed interest amounts that would have been owed to the Issuer by the Guarantor but for the breach of the Servicer and forfeited Interest Subsidy Payments and Special Allowance Payments with respect to the Trust Student Loans in the manner provided in Section 2.6 of the Administration Agreement. E. The sole remedy of the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the Certificateholders and the Noteholders with respect to a breach pursuant to Section 3.1, 3.2, 3.3 or 3.4 shall be to require the Servicer to purchase Trust Student Loans, to reimburse the Issuer as provided above or to substitute Student Loans pursuant to this Section. F. The Eligible Lender Trustee shall have no duty to conduct any affirmative investigation as to the occurrence of any condition requiring the purchase of any Trust Student Loan or the reimbursement for any interest penalty pursuant to this Section 3.5. G. The Servicer shall not be deemed to have breached its obligations pursuant to Section 3.1, 3.2, 3.3 or 3.4 if it is rendered unable to perform such obligations, in whole or in part, by a force outside the control of the parties hereto (including acts of God, acts of war, fires, earthquakes, hurricanes, floods and other disasters). The Servicer shall diligently perform its duties under this Agreement as soon as practicable following the termination of such interruption of business. SECTION 3.6 Primary Servicing Fee; Carryover Servicing Fee. The Primary Servicing Fee for each calendar month and any Carryover Servicing Fees payable on any Distribution Date in arrears by the Issuer shall be equal to the amounts determined by reference to the schedule of fees attached hereto as Attachment A. Notwithstanding anything to the contrary contained herein or in any other Basic Document, the Servicer shall be entitled to receive any Carryover Servicing Fee on any Distribution Date only if and to the extent that sufficient funds are available pursuant to Section 2.7.C of the Administration Agreement. SECTION 3.7 Access to Certain Documentation and Information Regarding Trust Student Loans. Upon reasonable prior notice, the Servicer shall provide to the Administrator and its agents access to the Trust Student Loan Files and shall permit the Administrator to examine and make copies of, and abstracts from, the records and books of account of the Servicer relating to the Trust Student Loans and shall permit the Administrator to undertake periodic site reviews of the Servicer's operations relating to the servicing of the Trust Student Loans (including on the premises of any agent of the Servicer). Reasonable access 10 14 shall be afforded to the Administrator without charge, but only upon reasonable request and during the normal business hours at the respective offices of the Servicer. Nothing in this Section shall affect the obligation of the Servicer to observe any applicable law prohibiting disclosure of information regarding the Obligors and the failure of the Servicer to provide access to information as a result of such obligation shall not constitute a breach of this Section. SECTION 3.8 Servicer Expenses. The Servicer shall be required to pay all expenses incurred by it in connection with its activities hereunder, including fees and disbursements of independent accountants, taxes imposed on the Servicer and expenses incurred in connection with distributions and reports to the Administrator provided, however, the Carryover Servicing Fee will be subject to increase agreed to by the Administrator, the Eligible Lender Trustee and the Servicer to the extent that a demonstrable and significant increase occurs in the costs incurred by the Servicer in providing the services to be provided hereunder, whether due to changes in applicable governmental regulations, Guarantor program requirements or regulations or postal rates. SECTION 3.9 Appointment of Subservicer. The Servicer may at any time, upon the written consent of the Administrator, appoint a subservicer to perform all or any portion of its obligations as Servicer hereunder; provided, however, that any applicable Rating Agency Condition shall have been satisfied in connection therewith; provided further that the Servicer shall remain obligated and be liable to the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the Certificateholders and the Noteholders for the servicing and administering of the Trust Student Loans in accordance with the provisions hereof without diminution of such obligation and liability by virtue of the appointment of such subservicer and to the same extent and under the same terms and conditions as if the Servicer alone were servicing and administering the Trust Student Loans. The fees and expenses of the subservicer shall be as agreed between the Servicer and its subservicer from time to time and none of the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the Certificateholders or the Noteholders shall have any responsibility therefor. With respect to satisfying the Rating Agency Condition referred to above, the term "subservicer" shall be deemed not to include systems providers, systems developers or systems maintenance contractors, collection agencies, credit bureaus, lock box providers, mail service providers and other similar types of service providers. SECTION 3.10 Reports. With respect to Trust Student Loans, Servicer shall prepare reports and data and furnish the following information to the Issuer, the Administrator, the Eligible Lender 11 15 Trustee and the Indenture Trustee, unless otherwise noted, at the specified times: (a) The reports and data listed in Attachment C, at the times indicated in the attachment; (b) Within 30 days following the end of each calendar quarter, to the Department, owner's request for interest and Special Allowance Payments (ED 799); (c) To credit bureaus selected by Servicer, credit bureau reporting in accordance with the Higher Education Act; (d) At any time the Eligible Lender Trustee or the Indenture Trustee, as the case may be, shall have reasonable grounds to believe that such request would be necessary in connection with its performance of its duties under related documents, and within five (5) business days of receipt of a request therefor, the Servicer shall furnish to the Eligible Lender Trustee or to the Indenture Trustee a list of all Trust Student Loans (by borrower social security number, type and outstanding principal balance) and any additional information requested relating to the Trust Student Loans; and (e) From time to time as may be reasonably requested, reports and data providing additional information on the Trust Student Loans. SECTION 3.11 Covenants and Agreements of the Issuer, Administrator, Eligible Lender Trustee and Servicer. The Issuer, the Administrator, the Servicer and the Eligible Lender Trustee each agree that: A. Any payment and any communications received at any time by the Issuer, Administrator and the Eligible Lender Trustee with respect to a Trust Student Loan shall be immediately transmitted to the Servicer. Such communications shall include, but not be limited to, requests or notices of loan cancellation, notices of borrower disqualification, letters, changes in address or status, notices of death or disability, notices of bankruptcy and forms requesting deferment of repayment or forbearance. B. The Servicer may change any part or all of its equipment, data processing programs and any procedures and forms in connection with the services performed hereunder so long as Servicer continues to service the Trust Student Loans in conformance with the requirements herein. The Servicer shall not make any material change in its servicing system and operations with respect to the Trust Student Loans without the prior written consent of the Administrator which consent will not be 12 16 unreasonably withheld. Each written request for consent by the Servicer shall be acted upon promptly by the Administrator. Anything in this paragraph B. to the contrary notwithstanding, the Servicer will not be required to request the consent of the Administrator with respect to any changes in the Servicer's servicing system and operations which the Servicer reasonably determines are required due to changes in the Higher Education Act or Guarantor program requirements. C. The Eligible Lender Trustee will furnish Servicer with a copy of any and all Guarantee Agreements relating to the Trust Student Loans serviced hereunder. D. The Servicer may and, at the direction of the Administrator, shall include marketing or informational material generally provided to borrowers of loans owned by the Student Loan Marketing Association with communications sent to a borrower. E. The Servicer may, in its discretion, if requested by a borrower of a Trust Student Loan, arrange for the sale of such Trust Student Loan to another lender which holds another student loan of such borrower at a price not less than the Purchase Amount. F. The Servicer shall arrange for the sale of a Trust Student Loan to the Student Loan Marketing Association upon receipt of notice from the Student Loan Marketing Association that it has received an executed consolidation loan application from the borrower of such Trust Student Loan. The sale price for such Trust Student Loan shall equal the Purchase Amount. SECTION 3.12 Special Programs. The Servicer shall offer borrowers of the Trust Student Loans all special programs (e.g., Great Rewards(SM), Great Returns(SM) and Direct Repay), whether or not in existence as of the date of this Agreement, generally offered to the obligors of comparable loans owned by the Student Loan Marketing Association and serviced by the Servicer; provided, however, to the extent any such program is not required by the Higher Education Act and effectively reduces borrower interest rate or principal balances on the Trust Student Loans, such special program shall be applied to the Trust Student Loans only if and to the extent the Issuer receives payment from the Student Loan Marketing Association (and the Servicer receives notice of such payment) in an amount sufficient to offset such effective yield reductions. The Student Loan Marketing Association shall be deemed to be a third party beneficiary of this Section 3.12 and shall make appropriate arrangements to compensate the Servicer for increased costs associated with material changes to existing special programs or the implementation and support of any new special programs. 13 17 SECTION 3.13 Financial Statements. The Servicer shall provide to the Administrator at any time that the Servicer is not an Affiliate of the Administrator (a) as soon as possible and in no event more than 120 days after the end of each fiscal year of the Servicer audited financials as at the end of and for such year and (b) as soon as possible and in no event more than 30 days after the end of each quarterly accounting period of the Servicer unaudited financials as at the end of and for such period. SECTION 3.14 Insurance. The Servicer shall maintain or cause to be maintained insurance with respect to its property and business against such casualties and contingencies and of such types and in such amounts as is customary in the case of institutions of the same type and size. SECTION 3.15 Administration Agreement. The Servicer agrees to perform all duties required of the Servicer under the Administration Agreement using that degree of skill and attention that the Servicer exercises with respect to its comparable business activities. SECTION 3.16 Lender Identification Number. The Eligible Lender Trustee may permit trusts, other than the Issuer, established by the Seller to securitize student loans, to use the Department lender identification number applicable to the Issuer if the servicing agreements with respect to such other trusts include provisions substantially similar to this paragraph. In such event, the Servicer may claim and collect Interest Subsidy Payments and Special Allowance Payments with respect to Trust Student Loans and student loans in such other trusts using such common lender identification number. Notwithstanding anything herein or in the Basic Documents to the contrary, any amounts assessed against payments (including, but not limited to, Interest Subsidy Payments and Special Allowance Payments) due from the Department to any such other trust using such common lender identification number as a result of amounts owing to the Department from the Issuer will be deemed for all purposes hereof and of the Basic Documents (including for purposes of determining amounts paid by the Department with respect to the student loans in the Trust and such other trust) to have been assessed against the Issuer and shall be deducted by the Administrator or the Servicer and paid to such other trust from any collections made by them which would otherwise have been payable to the Collection Account for the Issuer. Any amounts assessed against payments due from the Department to the Issuer as a result of amounts owing to the Department from such other trust using such common lender identification number will be deemed to have been assessed against such other trust and will be deducted by the Administrator or the Servicer from any collections made by them which would otherwise be payable to the collection account for such other trust and paid to the Issuer. 14 18 ARTICLE IV SECTION 4.1 Representations of Servicer. The Servicer makes the following representations on which the Issuer is deemed to have relied in acquiring (through the Eligible Lender Trustee) the Trust Student Loans and appointing the Servicer as servicer hereunder. The representations speak as of the execution and delivery of this Agreement and as of the Closing Date, but shall survive the sale, transfer and assignment of the Trust Student Loans to the Eligible Lender Trustee on behalf of the Issuer and the pledge thereof to the Indenture Trustee pursuant to the Indenture. A. Organization and Good Standing. The Servicer is duly organized and validly existing as a corporation chartered under the laws of the State of Delaware and in good standing under the laws of the State of Delaware, with the power and authority to own its properties and to conduct its business as such properties are currently owned and such business is presently conducted, and had at all relevant times, and has, the power, authority and legal right to service the Trust Student Loans and to hold the Trust Student Loan Files as custodian. B. Due Qualification. The Servicer is duly qualified to do business and has obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease of property or the conduct of its business (including the servicing of the Trust Student Loans as required by this Agreement) shall require such qualifications. C. Power and Authority. The Servicer has the power and authority to execute and deliver this Agreement and to carry out its terms; and the execution, delivery and performance of this Agreement have been duly authorized by the Servicer by all necessary action. No registration with or approval of any governmental agency is required for the due execution and delivery by, and enforceability against, the Servicer of this Agreement. D. Binding Obligation. This Agreement constitutes a legal, valid and binding obligation of the Servicer enforceable in accordance with its terms subject to bankruptcy, insolvency and other similar laws affecting creditors rights generally and subject to equitable principles. E. No Violation. The consummation of the transactions contemplated by this Agreement and the fulfillment of the terms hereof will not conflict with, result in any breach of any of the terms and provisions of, nor constitute (with or without notice or lapse of time or both) a default under, the charter or by-laws of the Servicer, or any indenture, agreement or other instrument to which the Servicer is a party or by which it shall be bound; 15 19 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 this Agreement and the other Basic Documents); nor violate any law or, to the best of the Servicer's knowledge, any order, rule or regulation applicable to the Servicer of any court or of any Federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Servicer or its properties. F. No Proceedings. There are no proceedings or investigations pending, or, to the Servicer's best knowledge, threatened, before any court, regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Servicer or its properties: (i) asserting the invalidity of this Agreement or any of the other Basic Documents to which the Servicer is a party, (ii) seeking to prevent the consummation of any of the transactions contemplated by this Agreement or any of the other Basic Documents to which the Servicer is a party, (iii) seeking any determination or ruling that could reasonably be expected to have a material and adverse effect on the performance by the Servicer of its obligations under, or the validity or enforceability of, this Agreement or any of the other Basic Documents to which the Servicer is a party, or (iv) relating to the Servicer and which might adversely affect the Federal or state income tax attributes of the Notes or the Certificates. SECTION 4.2 Indemnities of Servicer. The Servicer shall be liable in accordance herewith only to the extent of the obligations specifically undertaken by the Servicer under this Agreement. The Servicer shall pay for any loss, liability or expense, including reasonable attorneys' fees, that may be imposed on, incurred by or asserted against the Issuer or the Eligible Lender Trustee by the Department pursuant to the Higher Education Act, to the extent that such loss, liability or expense arose out of, or was imposed upon the Issuer through, the negligence, willful misfeasance or bad faith of the Servicer in the performance of its obligations and duties under this Agreement or by reason of the reckless disregard of its obligations and duties under this Agreement, where the final determination that any such loss, liability or expense arose out of, or was imposed upon the Issuer or the Eligible Lender Trustee through, any such negligence, willful misfeasance, bad faith or recklessness on the part of the Servicer is established by a court of law, by an arbitrator or by way of settlement agreed to by the Servicer. Notwithstanding the foregoing, if the Servicer is rendered unable, in whole or in part, by a force outside the control of the parties hereto (including acts of God, acts of war, fires, earthquakes, hurricanes, floods and other disasters) to satisfy its 16 20 obligations under this Agreement, the Servicer shall not be deemed to have breached any such obligation upon delivery of written notice of such event to the other parties hereto, for so long as the Servicer remains unable to perform such obligation as a result of such event. For purposes of this Section, in the event of the termination of the rights and obligations of Sallie Mae Servicing Corporation (or any successor thereto pursuant to Section 4.3) as Servicer pursuant to Section 5.1, or a resignation by such Servicer pursuant to this Agreement, such Servicer shall be deemed to be the Servicer pending appointment of a successor Servicer pursuant to Section 5.2. Liability of the Servicer under this Section shall survive the resignation or removal of the Eligible Lender Trustee or the Indenture Trustee or the termination of this Agreement. If the Servicer shall have made any payments pursuant to this Section and the Person to or on behalf of whom such payments are made thereafter collects any of such amounts from others, such Person shall promptly repay such amounts to the Servicer, without interest. SECTION 4.3 Merger or Consolidation of, or Assumption of the Obligations of, Servicer. The Servicer hereby agrees that, upon (a) any merger or consolidation of the Servicer into another Person, (b) any merger or consolidation to which the Servicer shall be a party resulting in the creation of another Person or (c) any Person succeeding to the properties and assets of the Servicer substantially as a whole, the Servicer shall (i) cause such Person (if other than the Servicer) to execute an agreement of assumption to perform every obligation of the Servicer hereunder, (ii) deliver to the Eligible Lender Trustee and Indenture Trustee an Officers' Certificate and an Opinion of Counsel each stating that such consolidation, merger or succession and such agreement of assumption comply with this Section and that all conditions precedent provided for in this Agreement relating to such transaction have been complied with, (iii) cause the Rating Agency Condition to have been satisfied with respect to such transaction and (iv) cure any existing Servicer Default or any continuing event which, after notice or lapse of time or both, would become a Servicer Default. Upon compliance with the foregoing requirements, such Person shall be the successor to the Servicer under this Agreement without further act on the part of any of the parties to this Agreement. SECTION 4.4 Limitation on Liability of Servicer. The Servicer shall not be under any liability to the Issuer, the Noteholders, the Certificateholders, the Administrator, the Eligible Lender Trustee or the Indenture Trustee except as provided under this Agreement, for any action taken or for refraining from the taking of any action pursuant to this Agreement, for errors in judgment, 17 21 for any incorrect or incomplete information provided by schools, borrowers, Guarantors and the Department, for the failure of any party to this Servicing Agreement or any other Basic Document to comply with its respective obligations hereunder or under any other Basic Document or for any losses attributable to the insolvency of any Guarantor; provided, however, that this provision shall not protect the Servicer against its obligation to purchase Student Loans from the Trust pursuant to Section 3.5 hereof or to pay to the Trust amounts required pursuant to Section 3.5 hereof or against any liability that would otherwise be imposed by reason of willful misfeasance, bad faith or negligence in the performance of duties or by reason of reckless disregard of obligations and duties under this Agreement. The Servicer may rely in good faith on any document of any kind prima facie properly executed and submitted by any person respecting any matters arising under this Agreement. Except as provided in this Agreement, the Servicer shall not be under any obligation to appear in, prosecute or defend any legal action where it is not named as a party; provided, however, that the Servicer may undertake any reasonable action that it may deem necessary or desirable in respect of this Agreement and the other Basic Documents and the rights and duties of the parties to this Agreement and the other Basic Documents and the interests of the Certificateholders and the Noteholders. To the extent that the Servicer is required to appear in or is made a defendant in any legal action or other proceeding relating to the servicing of the Trust Student Loans, the Issuer shall indemnify and hold the Servicer harmless from all cost, liability or expense of the Servicer not arising out of or relating to the failure of the Servicer to comply with the terms of this Agreement. SECTION 4.5 Sallie Mae Servicing Corporation Not To Resign as Servicer. Subject to the provisions of Section 4.3, Sallie Mae Servicing Corporation shall not resign from the obligations and duties hereby imposed on it as Servicer under this Agreement except upon determination that the performance of its duties under this Agreement are no longer permissible under applicable law. Notice of any such determination permitting the resignation of Sallie Mae Servicing Corporation shall be communicated to the Eligible Lender Trustee and the Indenture Trustee at the earliest practicable time (and, if such communication is not in writing, shall be confirmed in writing at the earliest practicable time) and any such determination shall be evidenced by an Opinion of Counsel to such effect delivered to the Eligible Lender Trustee and the Indenture Trustee concurrently with or promptly after such notice. No such resignation shall become effective until the Indenture Trustee or a successor Servicer shall have assumed the responsibilities and obligations of Sallie Mae Servicing Corporation in accordance with Section 5.2. 18 22 ARTICLE V SECTION 5.1 Servicer Default. If any one of the following events (a "Servicer Default") shall occur and be continuing: (1) any failure by the Servicer (i) to deliver to the Indenture Trustee for deposit in the Trust Accounts any payment required by the Basic Documents to which the Servicer is a signatory or (ii) in the event that daily deposits into the Collection Account are not required, to deliver to the Administrator any payment required by the Basic Documents, which failure in case of either clause (i) or (ii) continues unremedied for five Business Days after written notice of such failure is received by the Servicer from the Eligible Lender Trustee, the Indenture Trustee or the Administrator or five Business Days after discovery of such failure by an officer of the Servicer; or (2) any failure by the Servicer duly to observe or to perform in any material respect any other covenant or agreement of the Servicer set forth in this Agreement or any other Basic Document to which the Servicer is a signatory, which failure shall (i) materially and adversely affect the rights of Noteholders or Certificateholders and (ii) continues unremedied for a period of 60 days after the date on which written notice of such failure, requiring the same to be remedied, shall have been given (A) to the Servicer by the Indenture Trustee, the Eligible Lender Trustee or the Administrator or (B) to the Servicer, and to the Indenture Trustee and the Eligible Lender Trustee by the Noteholders or Certificateholders, as applicable, representing not less than 25% of the Outstanding Amount of the Notes or not less than 25% of the outstanding Certificate Balance provided, however any breach of Sections 3.1, 3.2, 3.3 or 3.4 shall not be deemed a Servicer Default so long as the Servicer is in compliance with its repurchase and reimbursement obligations under Section 3.5; or (3) an Insolvency Event occurs with respect to the Servicer; or (4) any failure by the Servicer to comply with any requirements under the Higher Education Act resulting in a loss of its eligibility as a third-party servicer; then, and in each and every case, so long as the Servicer Default shall not have been remedied, either the Indenture Trustee, or the Noteholders of Notes evidencing not less than 25% of the Outstanding Amount of the Notes, by notice then given in writing 19 23 to the Servicer (and to the Indenture Trustee and the Eligible Lender Trustee if given by the Noteholders) may terminate all the rights and obligations (other than the obligations set forth in Section 3.5 and Section 4.2) of the Servicer under this Agreement. As of the effective date of termination of the Servicer, all authority and power of the Servicer under this Agreement, whether with respect to the Notes, the Certificates or the Trust Student Loans or otherwise, shall, without further action, pass to and be vested in the Indenture Trustee or such successor Servicer as may be appointed under Section 5.2. The predecessor Servicer shall cooperate with the successor Servicer, the Indenture Trustee and the Eligible Lender Trustee in effecting the termination of the responsibilities and rights of the predecessor Servicer under this Agreement, including the transfer to the successor Servicer for administration by it of all cash amounts that shall at the time be held by the predecessor Servicer for deposit, or shall thereafter be received by it with respect to a Trust Student Loan. All reasonable costs and expenses (including attorneys' fees) incurred in connection with transferring the Trust Student Loan Files to the successor Servicer and amending this Agreement and any other Basic Documents to reflect such succession as Servicer pursuant to this Section shall be paid by the predecessor Servicer (other than the Indenture Trustee acting as the Servicer under this Section 5.1) upon presentation of reasonable documentation of such costs and expenses. Upon receipt of notice of the occurrence of a Servicer Default, the Eligible Lender Trustee shall give notice thereof to the Rating Agencies. SECTION 5.2 Appointment of Successor. A. Upon receipt by the Servicer of notice of termination pursuant to Section 5.1, or the resignation by the Servicer in accordance with the terms of this Agreement, the predecessor Servicer shall continue to perform its functions as Servicer under this Agreement, in the case of termination, only until the date specified in such termination notice or, if no such date is specified in a notice of termination, until receipt of such notice and, in the case of resignation, until the Indenture Trustee or a successor Servicer shall have assumed the responsibilities and duties of Sallie Mae Servicing Corporation. In the event of the termination hereunder of the Servicer, the Issuer shall appoint a successor Servicer acceptable to the Indenture Trustee, and the successor Servicer shall accept its appointment by a written assumption in form acceptable to the Indenture Trustee. In the event that a successor Servicer has not been appointed at the time when the predecessor Servicer has ceased to act as Servicer in accordance with this Section, the Indenture Trustee without further action shall automatically be appointed the successor Servicer and the Indenture Trustee shall be entitled to the Servicing Fee and any Carryover Servicing Fees. Notwithstanding the above, the Indenture Trustee shall, if 20 24 it shall be unwilling or legally unable so to act, appoint or petition a court of competent jurisdiction to appoint any established institution whose regular business shall include the servicing of student loans, as the successor to the Servicer under this Agreement; provided, however, that such right to appoint or to petition for the appointment of any such successor Servicer shall in no event relieve the Indenture Trustee from any obligations otherwise imposed on it under the Basic Documents until such successor has in fact assumed such appointment. B. Upon appointment, the successor Servicer (including the Indenture Trustee acting as successor Servicer) shall be the successor in all respects to the predecessor Servicer and shall be subject to all the responsibilities, duties and liabilities placed on the predecessor Servicer that arise thereafter or are related thereto and shall be entitled to an amount agreed to by such successor Servicer (which shall not exceed the Servicing Fee unless the Rating Agency Condition is satisfied with respect to such compensation arrangements) and all the rights granted to the predecessor Servicer by the terms and provisions of this Agreement. C. The Servicer may not resign unless it is prohibited from serving as such by law as evidenced by an Opinion of Counsel to such effect delivered to the Indenture Trustee and the Eligible Lender Trustee. Notwithstanding the foregoing or anything to the contrary herein or in the other Basic Documents, the Indenture Trustee, to the extent it is acting as successor Servicer pursuant hereto and thereto, shall be entitled to resign to the extent a qualified successor Servicer has been appointed and has assumed all the obligations of the Servicer in accordance with the terms of this Agreement and the other Basic Documents. SECTION 5.3 Notification to Noteholders and Certificateholders. Upon any termination of, or appointment of a successor to, the Servicer pursuant to this Article V, the Eligible Lender Trustee shall give prompt written notice thereof to Certificateholders and the Indenture Trustee shall give prompt written notice thereof to Noteholders and the Rating Agencies (which, in the case of any such appointment of a successor, shall consist of prior written notice thereof to the Rating Agencies). SECTION 5.4 Waiver of Past Defaults. The Noteholders of Notes evidencing a majority of the Outstanding Amount of the Notes (or the Certificateholders of Certificates evidencing not less than a majority of the outstanding Certificate Balance, in the case of any default which does not adversely affect the Indenture Trustee or the Noteholders) may, on behalf of all Noteholders and Certificateholders, waive in writing any default by the Servicer in the performance of its obligations hereunder and any consequences thereof, except a default in making any required deposits to or payments from any of the Trust Accounts (or giving 21 25 instructions regarding the same) in accordance with this Agreement. Upon any such waiver of a past default, such default shall cease to exist, and any Servicer Default arising therefrom shall be deemed to have been remedied for every purpose of this Agreement and the Administration Agreement. No such waiver shall extend to any subsequent or other default or impair any right consequent thereto. ARTICLE VI SECTION 6.1 Amendment. A. This Agreement may be amended by the Servicer, the Issuer, the Administrator, the Eligible Lender Trustee and the Indenture Trustee, without the consent of any of the Noteholders or the Certificateholders, to comply with any change in any applicable federal or state law, 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; provided, however, that such action shall not, as evidenced by an Opinion of Counsel delivered to the Eligible Lender Trustee and the Indenture Trustee, adversely affect in any material respect the interests of any Noteholder or Certificateholder. B. This Agreement may also be amended from time to time by the Servicer, the Issuer, the Administrator, the Eligible Lender Trustee and the Indenture Trustee, with the consent of the Noteholders of Notes evidencing a majority of the Outstanding Amount of the Notes and the consent of the Certificateholders of Certificates (including any Certificates owned by the Seller) evidencing 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 with respect to 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, the Noteholders or the Certificateholders of which are required to consent to any such amendment, without the consent of all outstanding Noteholders and Certificateholders. It shall not be necessary for the consent of Certificateholders or Noteholders pursuant to paragraph B. to approve the particular form of any proposed amendment or consent, but it shall be sufficient if such consent shall approve the substance thereof. 22 26 Promptly after the execution of any amendment to this Agreement (or, in the case of the Rating Agencies, fifteen days prior thereto), the Eligible Lender Trustee shall furnish written notification of the substance of such amendment to each Certificateholder, the Indenture Trustee and each of the Rating Agencies. Prior to the execution of any amendment to this Agreement, the Eligible Lender Trustee and the Indenture 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 Indenture Trustee may, but shall not be obligated to, execute and deliver such amendment which affects its rights, powers, duties or immunities hereunder. SECTION 6.2 Notices. All notices hereunder shall be given by United States certified or registered mail, by telegram or by other telecommunication device capable of creating written record of such notice and its receipt. Notices hereunder shall be effective when received and shall be addressed to the respective parties hereto at the addresses set forth below, or at such other address as shall be designated by any party hereto in a written notice to each other party pursuant to this section. If to Servicer, to: Sallie Mae Servicing Corporation 11600 Sallie Mae Drive, Reston, Virginia 20193 Director of ABS Administration If to Issuer, to: SLM Student Loan Trust 1996-4 c/o Chase Manhattan Bank USA, National Association, 802 Delaware Avenue, Wilmington, Delaware 19801, Attn: Corporate Trust Dept. with a copy to: The Chase Manhattan Bank, 450 West 33rd Street, 15th Floor, New York, New York 10001, Attn: Structured Finance Services If to the Administrator, to: Student Loan Marketing Association, 11600 Sallie Mae Drive, Reston, Virginia 20193, Attn: Director, Corporate Finance Operations If to the Eligible Lender Trustee, to: Chase Manhattan Bank USA, National Association, 802 Delaware Avenue, Wilmington, Delaware 19801, Attn: Corporate Trust Dept. 23 27 with a copy to: The Chase Manhattan Bank, 450 West 33rd Street, 15th Floor, New York, New York 10001, Attn: Structured Finance Services. If to the Indenture Trustee, to: Bankers Trust Company, Four Albany Street, 10th Floor, New York, New York 10006, Attn: Corporate Trust and Agency Group, Facsimile No.: (212) 250-6439 SECTION 6.3 Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed to be an original, and such counterparts shall constitute one (1) and the same instrument. SECTION 6.4 Entire Agreement; Severability. This Agreement constitutes the entire agreement between the Issuer, the Administrator, the Eligible Lender Trustee, the Indenture Trustee and Servicer. All prior representations, statements, negotiations and undertakings with regard to the subject matter hereof are superseded hereby. If any term or provision of this Agreement or the application thereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remaining terms and provisions of this Agreement, or the application of such terms or provisions to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall be valid and enforced to the fullest extent permitted by law. SECTION 6.5 Governing Law. The terms of this Agreement shall be subject to all applicable provisions of the Higher Education Act and shall be construed in accordance with and governed by the laws of the State of New York. SECTION 6.6 Relationship of Parties. Servicer is an independent contractor and, except for the services which it agrees to perform hereunder, the Servicer does not hold itself out as an agent of any other party hereto. Nothing herein contained shall create or imply an agency relationship among Servicer and any other party hereto, nor shall this Agreement be deemed to constitute a joint venture or partnership between the parties. SECTION 6.7 Captions. The captions used herein are for the convenience of reference only and not part of this Agreement, and shall in no way be deemed to define, limit, describe or modify the meanings of any provision of this Agreement. SECTION 6.8 Nonliability of Directors, Officers and Employees of Servicer, the Eligible Lender Trustee, the Indenture Trustee and 24 28 the Administrator. No member of the board of directors or any officer, employee or agent of Servicer, the Administrator, the Eligible Lender Trustee or the Indenture Trustee (or any Affiliate of any such party) shall be personally liable for any obligation incurred under this Agreement. SECTION 6.9 Assignment. This Agreement may not be assigned by the Servicer except as permitted under Sections 4.3, 4.5 and 5.2 hereof. This Agreement may not be assigned by the Administrator except as permitted under Sections 4.3 and 4.6 of the Administration Agreement. SECTION 6.10 Limitation of Liability of Eligible Lender Trustee and Indenture Trustee. A. Notwithstanding anything contained herein to the contrary, this Agreement has been signed by Chase Manhattan Bank USA, National Association not in its individual capacity but solely in its capacity as Eligible Lender Trustee of the Issuer and in no event shall Chase Manhattan Bank USA, National Association in its individual capacity or, except as expressly provided in the Trust Agreement, as Eligible Lender Trustee have any liability for the representations, warranties, covenants, agreements or other obligations of the Issuer or the Eligible Lender Trustee hereunder or in any of the certificates, notices or agreements delivered pursuant hereto as to all of which recourse shall be had solely to the assets of the Issuer. B. Notwithstanding anything contained herein to the contrary, this Agreement has been signed by Bankers Trust Company not in its individual capacity but solely as Indenture Trustee and in no event shall Bankers Trust Company have any liability for the representations, warranties, covenants, agreements or other obligations of the Issuer hereunder or in any of the certificates, notices or agreements delivered pursuant hereto, as to all of which recourse shall be had solely to the assets of the Issuer. 25 29 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed on their behalf by their duly authorized officers as of October 3, 1996. SALLIE MAE SERVICING CORPORATION By: /s/ Robert D. Friedhoff ------------------------------ Name: Robert D. Friedhoff --------------------------- Title: President -------------------------- STUDENT LOAN MARKETING ASSOCIATION, as Administrator By: /s/ Denise B. McGlone ------------------------------- Name: Denise B. McGlone ----------------------------- Title: Executive Vice President and ---------------------------- Chief Financial Officer ---------------------------- SLM STUDENT LOAN TRUST 1996-4 by Chase Manhattan Bank USA, National Association not in its individual capacity but solely as Eligible Lender Trustee By: /s/ John W. Mack ------------------------- Name: John W. Mack ----------------------- Title: Second Vice President ---------------------- CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION not in its individual capacity but solely as Trustee under a Trust Agreement dated October 1, 1996 between SLM Funding Corporation and Chase Manhattan Bank USA, National Association By: /s/ John W. Mack ------------------------ Name: John W. Mack ---------------------- Title: Second Vice President --------------------- 26 30 BANKERS TRUST COMPANY, not in its individual capacity but solely as Indenture Trustee under an Indenture dated October 1, 1996 between SLM Student Loan Trust 1996-4 and Bankers Trust Company. By: /s/ Lara Graff --------------------------- Name: Lara Graff ------------------------- Title: Assistant Vice President ------------------------- 27 31 ATTACHMENT A SCHEDULE OF FEES The Servicer will receive a Primary Servicing Fee and a Carryover Servicing Fee (together, the "Servicing Fee"). The "Primary Servicing Fee" for any month (except for the period from the Closing Date to and including October 31, 1996) is an amount equal to the lesser of (i) the Unit Amount and (ii) 1/12th of 1.26% of the outstanding principal amount of the Trust Student Loans, in each case as of the last day of the preceding calendar month, plus any such amounts from prior Monthly Servicing Payment Dates that remain unpaid. The "Unit Amount" for any month is equal to $4.72 times the number of accounts in the Trust during such month. The Primary Servicing Fee will be payable out of Available Funds and amounts on deposit in the Reserve Account on the 25th day of each month (or, if any such date is not a business day, on the next succeeding business day), commencing November 25, 1996 (each, a "Monthly Servicing Payment Date"). The "Carryover Servicing Fee" is the sum of (a) the amount, if any, as of any Monthly Servicing Payment Date by which (i) 1/12th of 1.26% of the outstanding principal amount of the Trust Student Loans exceeds (ii) the Unit Amount, in each case as of the last day of the preceding calendar month, (b) the amount of increases in the costs incurred by the Servicer which are agreed to pursuant to Section 3.8 of the Servicing Agreement, (c) any Conversion Fees, Transfer Fees and Removal Fees (as defined below) incurred since the last Distribution Date and (d) any amounts described in (a), (b) and (c) above that remain unpaid from prior Distribution Dates. The Carryover Servicing Fee will be payable to the Servicer on each succeeding Distribution Date out of Available Funds after payment on such Distribution Date of the Primary Servicing Fee, the Administration Fee, the Noteholders' Distribution Amount, the Certificateholders' Distribution Amount, and the amount, if any, necessary to be deposited in the Reserve Account to reinstate the balance thereof to the Specified Reserve Account Balance. The Servicer shall receive a pro rata portion of the Primary Servicing Fee and the Carryover Servicing Fee for the period from the Closing Date to and including October 31, 1996. Servicer will be paid a fee ("Conversion Fee") for any Student Loan added to the Trust Estate which Student Loan is not serviced on the Servicer's system unless such Student Loan is being substituted into the Trust Estate by the Servicer pursuant to Section 3.5 of this Agreement. The Conversion Fee is equal to the greater of $17.00 per account or the Servicer's verifiable costs plus 15%. Servicer will be paid a fee ("Transfer Fee") for any Student Loan transferred in or out of the Trust Estate which is at the 1 32 time of transfer being serviced on the Servicer's system (regardless of the owner) unless such Student Loans are being removed or added to the Trust in order to comply with the Servicer's purchase/substitution obligation under Section 3.5 of this Agreement. The Transfer Fee is equal to $4.00 per account transaction. Servicer will be paid a fee ("Removal Fee") for performing all activities required to remove a Trust Student Loan from the Servicer's system to another servicer unless such Trust Student Loan is being removed due to the termination of the Servicer pursuant to Section 5.1 of this Agreement. The Removal Fee is equal to $10.00 per account plus any verifiable direct expenses incurred for shipping such Trust Student Loan to the new servicer. 2 33 ATTACHMENT B Loan Servicing Center/Florida P.O. Box 2975 Panama City, Florida 32402-2975 (904) 271-9207 Loan Servicing Center/Kansas P.O. Box 309 Lawrence, Kansas 66044 (913) 841-0234 Loan Servicing Center/New England 135 Beaver Street Waltham, Massachusetts 02154 (617) 893-9522 Loan Servicing Center/Pennsylvania 220 Lasley Avenue Hanover Industrial Estates Wilkes-Barre, Pennsylvania 18706 (717) 821-3600 Loan Servicing Center/Texas 777 Twin Creek Drive Killeen, Texas 76543 (817) 554-4500 Loan Servicing Center/Washington 107 South Harvard Street Spokane, Washington 99204 (509) 455-9224 1 34 ATTACHMENT C REPORTS 1. CLASS Report 800 - Monthly activity summary report 2. CLASS Report 801 - Monthly average/ending balance report 3. CLASS Report 802 - Monthly activity detail 4. CLASS Report 803 - Monthly conversion/removal summary 5. CLASS Report 807 - Monthly delinquency aging report 6. CLASS Report 810 - Monthly characteristics summary 7. CLASS Report 866 - Monthly average/ending balance offset fee report 8. CLASS Report 882 - Great Rewards/Direct Repay Report 9. Monthly Cash Reconciliation Report 10. Quarterly ED799 billing (prepared from CLASS Reports 824, 825, 827, 828 and 829; supporting detail CLASS Reports 865, 868, 870 and 871; and the OE799 SAS library) 11. Portfolio Characteristics, Financial Activity, Quarterly calculation of Accrued Interest to be capitalized, Delinquency Detail and Claims extracts. 1 -----END PRIVACY-ENHANCED MESSAGE-----