AMENDED AND RESTATED ADMINISTRATION AGREEMENT between PHEAA STUDENT LOAN TRUST I as Issuer and PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY as Administrator Dated as of July 1, 2004
Exhibit 99.2
AMENDED AND RESTATED ADMINISTRATION AGREEMENT
between
PHEAA
STUDENT LOAN TRUST I
as Issuer
and
PENNSYLVANIA
HIGHER EDUCATION ASSISTANCE AGENCY
as Administrator
Dated as of July 1, 2004
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Section 1. Representations of the Administrator and the Issuer. |
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Section 4. Annual Independent Certified Public Accountants’ Report |
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Section 23. Not Applicable to Pennsylvania Higher Education Assistance Agency in Other Capacities |
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Section 25. Merger or Consolidation of, or Assumption of the Obligations of, Administrator |
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Section 26. Limitation on Liability of Administrator and Others |
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Section 27. Pennsylvania Higher Education Assistance Agency not to Resign as Administrator |
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Section 28. Limitation of Liability of the Indenture Trustee |
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Section 30. Limitation of Liability of Eligible Lender Trustee |
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This AMENDED AND RESTATED ADMINISTRATION AGREEMENT is dated as of July 1, 2004 (this “Agreement”) between PHEAA STUDENT LOAN TRUST I, a Delaware statutory trust (the “Issuer”), and PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY, as administrator (the “Administrator”). This Agreement amends, restates, and replaces that certain Administration Agreement dated as of December 1, 2003 in its entirety.
Capitalized terms used herein and not defined herein shall have the meanings assigned to such terms in the Basic Documents (as defined below).
W I T N E S S E T H:
WHEREAS, the Issuer was formed pursuant to the trust agreement, dated January 15, 2003, by and between the PHEAA Student Loan Foundation, Inc., a Pennsylvania nonprofit corporation, as depositor (the “Depositor”) and Wachovia Bank of Delaware, National Association, a national banking association, as owner trustee (the “Owner Trustee”), as amended and restated by the Amended and Restated Trust Agreement, dated as of December 1, 2003 (the “Trust Agreement”), by and between the Depositor and the Owner Trustee;
WHEREAS, the Issuer will from time to time issue and sell series of student loan asset-backed notes (the “Notes”) pursuant to the Indenture of Trust dated as of December 1, 2003, among the Issuer, Manufacturers and Traders Trust Company, as Indenture Trustee, and Manufacturers and Traders Trust Company, as Eligible Lender Trustee, as amended by that certain First Amendment to the Indenture and First Supplemental Indenture, dated as of June 30, 2004 (the “Indenture”) and those Supplemental Indentures which may be executed from time to time in connection with the issuance of the Notes;
WHEREAS, the Issuer is required to perform certain duties in connection with the Notes, as set forth in the Indenture, the Supplemental Indentures, and certain other documents executed in connection with the issuance of the Notes (the “Basic Documents”);
WHEREAS, the Issuer desires to have the Administrator perform the duties of the Issuer under the Basic Documents and provide such additional services as the Issuer may from time to time request; and
WHEREAS, the Administrator has the capacity to provide the services required hereby and is willing to perform such services for the Issuer 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 hereto, intending to be legally bound, agree as follows:
Section 1. Representations of the Administrator and the Issuer.
(a) The Administrator makes the following representations:
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(A) Organization and Good Standing. The Administrator is a public corporation and an instrumentality of the Commonwealth of Pennsylvania, duly organized, validly existing and in good standing under the laws of the Commonwealth of Pennsylvania. The Administrator has all requisite power and authority to execute, deliver and perform its obligations under this Agreement.
(B) Power and Authority of the Administrator. The Administrator has taken all action necessary to authorize the execution and delivery by it of this Agreement, and this Agreement has been executed and delivered by one of its officers who is duly authorized to execute and deliver this Agreement on its behalf.
(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 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 is bound; or 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; or 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. Performance by the Administrator of the terms of this Agreement and of the transactions contemplated by this Agreement shall not result in the loss of any Guarantee Payments by the Issuer or any reinsurance payments with respect to any Financed Student Loan by the applicable Guarantor.
(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 governmental instrumentality having jurisdiction over the Administrator or its properties: (i) asserting the invalidity of this Agreement, the Indenture or any of the other Basic Documents to which the Administrator is a party, (ii) seeking to prevent the issuance of the Notes or the consummation of any of the transactions contemplated by this Agreement, the Indenture 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, the Indenture, any of the other Basic Documents or the Notes, or (iv) seeking to affect adversely the federal or state income tax attributes of the Issuer or the Notes.
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(F) All Consents. All authorizations, consents, licenses, 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 its duties as contemplated by this Agreement have in each case been duly obtained, effected or given and are in full force and effect.
(b) The Issuer makes the following representations:
(A) Organization and Good Standing. The Issuer is a Delaware statutory trust, duly organized, validly existing and in good standing under the laws of the State of Delaware. The Issuer has all requisite power and authority to execute, deliver and perform its obligations under this Agreement.
(B) Power and Authority of the Issuer. The Issuer has taken all action necessary to authorize the execution and delivery by it of this Agreement, and this Agreement has been executed and delivered by the Owner Trustee, who is duly authorized to execute and deliver this Agreement on its behalf.
(C) Binding Obligation. This Agreement constitutes a legal, valid and binding obligation of the Issuer, 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 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 organizational documents of the Issuer, or any indenture, agreement or other instrument to which the Issuer is a party or by which it is bound; or 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; or violate any law or, to the knowledge of the Issuer, any order, rule or regulation applicable to the Issuer of any court or of any federal or state regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Issuer or its properties. Performance by the Issuer of the terms of this Agreement and of the transactions contemplated by this Agreement shall not result in the loss of any Guarantee Payments by the Issuer or any reinsurance payments with respect to any Financed Student Loan by the applicable Guarantor.
(E) No Proceedings . There are no proceedings or investigations pending against the Issuer or, to its best knowledge, threatened against the Issuer, before any court, regulatory body, administrative agency or other governmental instrumentality having jurisdiction over the Issuer or its properties: (i) asserting the invalidity of this Agreement, the Indenture or any of the other Basic Documents to which the Issuer is a party, (ii) seeking to prevent the issuance of the Notes or the consummation of any of the
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transactions contemplated by this Agreement, the Indenture 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 Issuer of its obligations under, or the validity or enforceability of, this Agreement, the Indenture, any of the other Basic Documents or the Notes, or (iv) seeking to affect adversely the federal or state income tax attributes of the Issuer or the Notes.
(F) All Consents . All authorizations, consents, licenses, 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 Issuer in connection with the execution and delivery by the Issuer of this Agreement and the performance by the Issuer of its duties as contemplated by this Agreement have in each case been duly obtained, effected or given and are in full force and effect.
Section 2. Duties of the Administrator.
(a) Duties with Respect to the Basic Documents. The Administrator shall perform, or cause to be performed, all of its duties as Administrator under this Agreement and all of the duties of the Issuer under the Basic Documents (except duties involving the payment of money or any duty to indemnify or hold harmless any person), including without limitation the actions set forth herein. In addition, the Administrator shall consult with the Owner Trustee and the Indenture Trustee as the Administrator deems appropriate regarding the duties of the Issuer under the Basic Documents. The Administrator shall monitor the performance of the Issuer and shall advise the Owner Trustee and the Eligible Lender Trustee when action is necessary to comply with the Issuer’s duties under the Basic Documents. 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 Basic Documents. In furtherance of the foregoing, the Administrator shall take all action that is the duty of the Issuer to take pursuant to the Indenture or any Supplemental Indenture, including without limitation the following matters (references below in this subsection (a) being to sections of the Indenture):
(A) cause books for the registration and for the transfer of the Notes to be kept by the Indenture Trustee which has been appointed the transfer agent of the Issuer for the Notes (Section 2.03);
(B) the preparation of or obtaining of the documents and instruments required for authentication of the Notes and delivery of the same to the Indenture Trustee (Section 2.08);
(C) the preparation, obtaining or filing of the instruments, opinions and certificates and other documents required for the release of any Financed Student Loans from the lien of the Indenture (Section 5.07);
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(D) the preparation, obtaining or filing of the instruments, opinions and certificates and other documents required for a transfer of the Notes (Section 2.03);
(E) the obtaining and preservation of 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, and each other instrument and agreement included in the Indenture Trust Estate (Section 4.11);
(F) the preparation of all supplements, amendments, financing statements, continuation statements, instruments of further assurance and other instruments necessary to protect the Indenture Trust Estate (Section 4.04);
(G) the duty to cause the diligent enforcement of all of the terms, covenants and conditions of the Servicing Agreement and, if any Servicer Default arises from the failure of the Servicer to perform any of its duties under the Servicing Agreement, the taking of all reasonable steps available to remedy such failure; (Section 4.05);
(H) the preparation of or obtaining documents and instruments required with respect to the execution of Supplemental Indentures and the mailing to the Noteholders, each Rating Agency and any Counterparties of notices with respect to such Supplemental Indentures (Sections 8.01 and 8.02);
(I) the compliance with any written directive of the Indenture Trustee with respect to the sale of the Indenture Trust Estate in a commercially reasonable manner if an Event of Default shall have occurred and be continuing (Section 6.04);
(J) the preparation and, after execution by the Issuer, the filing with the Commission, any applicable State agencies and the Indenture Trustee of all 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 and the transmission of such summaries to the Noteholders (Section 4.17);
(K) the filing of the Indenture, if applicable (Section 7.03);
(L) the preparation and delivery of monthly statements to the Note Owners, to the Indenture Trustee and to the Rating Agencies, for the Indenture Trustee to forward within five (5) days of receipt to each Noteholder (Section 12.04);
(M) the preparation and obtaining of documents and instruments required by the Student Loan Acquisition Certificate (Exhibit A to the Indenture);
(N) the direction to the Indenture Trustee as to the investment of money held in any Fund (Section 5.05); and
(O) the preparation and obtaining of any documents and instruments required for the termination of the Indenture (Articles X and XI).
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(b) 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 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 federal and state securities and tax laws, and shall take all appropriate action that is the duty of the Issuer to take pursuant to the Basic Documents. In furtherance thereof, the Issuer shall, execute and deliver to the Administrator and to each successor Administrator appointed pursuant to the terms hereof, one or more powers of attorney substantially in the form of Exhibit B hereto, appointing the Administrator the attorney-in-fact of the Issuer for the purpose of executing on behalf of the Issuer all such documents, reports, filings, instruments, certificates and opinions. Subject to Section 9 hereof, 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 Issuer and are reasonably within the capability of the Administrator.
(B) Notwithstanding anything in this Agreement or the other Basic Documents to the contrary, the Administrator shall deliver to the Eligible Lender Trustee, the Indenture Trustee, the Rating Agencies and the Servicer, as applicable, an Administrator’s Certificate (the “Administrator’s Certificate”) containing all the information necessary:
(i) to pay the Department any Consolidation Fees due and payable to the Department, to the extent such Consolidation Fees are not being deducted by the Department out of Special Allowance Payments or Interest Subsidy Payments, which Administrator’s Certificate shall be delivered on the date that is three (3) Business Days prior to the date such fees are to be remitted to the Department;
(ii) to pay the Depositor, pursuant to Section 2 of the Loan Sale Agreement and the related Loan Transfer Addendum, on each Transfer Date, the purchase price for Financed Student Loans purchased by the Eligible Lender Trustee on behalf of the Issuer on such date;
(iii) to pay the Servicer the Servicing Fee from funds on deposit in the Revenue Fund pursuant to the terms of the Servicing Agreement;
(iv) to make all the distributions required by Sections 2(d), 2(e) and 2(f) hereof to be delivered on each Determination Date; and
(v) to prepare (or cause to be prepared) and furnish (or cause to be furnished) to each Noteholder and to the Internal Revenue Service and state and local taxing authorities, as applicable, such tax information, forms and reports as may be required by applicable law.
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(C) 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 accordance with any directions received from the Issuer and shall be, in the Administrator’s opinion, no less favorable to the Issuer or the Noteholders than would be available from unaffiliated parties; provided, however, that in the event the Administrator subcontracts or otherwise delegates any of its duties or obligations under this Agreement, the Administrator shall remain responsible for the performance of its duties and obligations under this Agreement.
(c) Allocations and Distributions. On each Determination Date, the Administrator shall calculate all amounts required to be transferred from the Acquisition Fund and the Reserve Fund to the Revenue Fund and from the Revenue Fund to the Distribution Account and the amounts to be distributed therefrom on the Distribution Date or other dates from which amounts therein are to be distributed.
(d) Acquisition Fund. The Administrator shall instruct the Indenture Trustee to deposit into the Acquisition Fund, the Reserve Fund and such other funds or accounts as are appropriate, the proceeds derived from the sale of Notes. The Administrator shall instruct the Indenture Trustee in writing to make withdrawals from amounts deposited in the Acquisition Fund as provided in the Indenture.
(e) Revenue Fund. The Administrator shall instruct the Indenture Trustee to deposit into the Revenue Fund all Revenues derived from Financed Student Loans and all other Revenues derived from money or assets on deposit in the Acquisition Fund, the Reserve Fund, all Counterparty Derivative Payments and any other amounts deposited thereto by the Issuer, all as provided in the Indenture. The Administrator shall also instruct the Indenture Trustee in writing to make withdrawals from amounts deposited in the Revenue Fund as provided in the Indenture.
(f) Reserve Fund. The Administrator shall instruct the Indenture Trustee to deposit into the Reserve Fund from the proceeds from the sale of the Notes the amount provided in the related prospectus supplement. The Administrator shall also instruct the Indenture Trustee in writing to make withdrawals from amounts deposited in the Reserve Fund as provided in the Indenture.
(g) Statements to Noteholders. The Administrator shall provide to the Indenture Trustee and any Counterparties (with a copy to the Rating Agencies) the information required under Section 12.04 of the Indenture.
(h) Non-Ministerial Matters. With respect to matters that in the reasonable judgment of the Administrator are non-ministerial, the Administrator shall not take any action unless within a reasonable time before the taking of such action, the Administrator shall have notified the Indenture Trustee of the proposed action and the Indenture Trustee shall (except with respect to Section 2(h)(v) below) have consented to it. For the purpose of the preceding sentence, “non-ministerial matters” shall include, without limitation:
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(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 Financed Student Loans);
(C) the amendment, change or modification of the Basic Documents;
(D) the appointment of successor Indenture Trustees pursuant to the Indenture or the appointment of successor administrators or successor servicers, or the consent to the assignment by the Indenture Trustee of its obligations under the Indenture; and
(E) the removal of the Indenture Trustee.
(i) Derivative Products. The Administrator may, from time to time, direct the Issuer to enter into Derivative Products or amendments to Derivative Products pursuant to the terms of any Supplemental Indenture, provided that after entering into such Derivative Product or amendment to such Derivative Product, the notional amount of all of Derivative Products to which the Issuer is a party is less than or equal to the outstanding principal balance of the Notes.
(j) Qualification of Issuer. The Administrator shall provide to the Owner Trustee and the Eligible Lender Trustee a list of jurisdictions in which the Issuer is required to be licensed.
Section 3. Annual Statement as to Compliance.
(a) The Administrator shall deliver to the Owner Trustee, the Indenture Trustee and any Counterparties, on or before September 15 of each year beginning September 15, 2004, an Administrator’s Certificate relating to the period ending on the preceding June 30, stating that (i) a review of the activities of the Administrator during the preceding 12-month period (or, in the case of the first such certificate, during the period from the initial Closing Date to June 30) and of its performance under this Agreement has been made under such officer’s supervision and (ii) to the best of such officer’s knowledge, based on such review, the Administrator has fulfilled all its obligations under this Agreement throughout such year or, if there has been a default in the fulfillment of any such obligation, specifying each such default known to such officer and the nature and status thereof. The Indenture Trustee shall send a copy of each such Administrator’s Certificate to the Rating Agencies. A copy of such Administrator’s Certificate and each report referred to in Section 4 may be obtained by any Noteholder or Note Owner by a request in writing to the Indenture Trustee addressed to its Corporate Trust Office, together with evidence satisfactory to the Indenture Trustee that such Person is a Noteholder or Note Owner.
(b) The Administrator shall deliver to the Issuer, the Indenture Trustee and any Counterparties, promptly after having obtained knowledge thereof, but in no event later than two (2) Business Days thereafter, written notice of any event which with the giving of notice or lapse of time, or both, would become an Administrator Default under Section 12 hereof.
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Section 4. Annual Independent Certified Public Accountants’ Report. The Administrator shall cause a firm of independent certified public accountants, which may also render other services to the Administrator, to deliver to the Owner Trustee, the Indenture Trustee and any Counterparties on or before September 15 of each year beginning September 15, 2004, a report addressed to the Administrator, the Owner Trustee, the Indenture Trustee and any Counterparties (which report may be combined with other reports required to be delivered by such accountants to the Administrator, the Owner Trustee, and the Indenture Trustee under the Basic Documents), to the effect that such firm has examined certain documents and records relating to the administration of the Financed Student Loans and of the Issuer during the Administrator’s preceding fiscal year ended June 30 (or, in the case of the first such report, during the period from the initial Closing Date to June 30) and that, on the basis of the accounting and auditing procedures considered appropriate under the circumstances, such firm is of the opinion that the administration of the Issuer was conducted in compliance with the terms of this Agreement, 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. The Indenture Trustee shall send a copy of each such report to the Rating Agencies.
Such report will also indicate that the firm is independent of the Administrator within the meaning of the Code of Professional Ethics of the American Institute of Certified Public Accountants.
Section 5. Administrator Expenses. The Administrator 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 Administrator and expenses incurred in connection with distributions and reports to the Noteholders and any Counterparties.
Section 6. Records. The Administrator shall maintain appropriate books of account and records relating to services performed hereunder, which books of account and records shall be accessible for inspection by the Issuer at any time during normal business hours.
Section 7. Compensation. Subject to the terms of the Indenture, 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 a fee of 0.25% per annum of the outstanding principal balance of the student loans owned by the Issuer as determined on the last day of each calendar month (the “Administration Fee”), which shall be solely an obligation of the Issuer and payable solely from the Revenue Fund. The Administration Fee shall be paid on the 25th day of the following calendar month, or if the 25th day is not a Business Day, the following Business Day. If (a) the default rate on the Financed Student Loans owned by the Issuer is equal to or greater than 16% during the period from December 10, 2003 through December 9, 2004, (b) the average daily yield to maturity (expressed as an annual percentage) on 91-day United States Treasury Bills during any calendar quarter during which such calendar month falls is equal to or greater than 9%, (c) if at any time during the preceding Collection Period, (i) there was a Net Loan Rate Restriction Period or portion thereof in effect, or (ii) any Auction Rate Notes accrued interest at the Maximum Loan Rate, (d) on the Quarterly Distribution Date occurring immediately prior to the last day of such calendar month with respect to the Series 2003-1 Class A-1 Notes or the Series 2004-1 Class A-1
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Notes was less than the Targeted Principal Amount then due, or (e) an Event of Default has occurred and is continuing, then, subject to the other provisions of the Indenture with respect to application of moneys, only one-fifth of the Administration Fee shall be paid in the normal order of priority, and the remaining balance of the Administration Fee shall be subordinated and paid after the payment of any amount payable under Section 4.03(c)(xii) of the Second Supplemental Indenture.
Section 8. Additional Information to Be Furnished. The Administrator shall furnish to the Issuer and any Counterparties from time to time such additional information regarding the Collateral as the Issuer or any Counterparty shall reasonably request. Following the time, if any, that any Counterparty’s counterparty ratings fall below “A3” by ▇▇▇▇▇’▇, “A-” by S&P, “A-” by Fitch or their equivalent, upon request of a Rating Agency, the Administrator shall furnish to such Rating Agency cash flow projections for the Issuer.
Section 9. 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 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 in any way and shall not otherwise be deemed an agent of the Issuer.
Section 10. No Joint Venture. Nothing contained in this Agreement (i) shall constitute the Administrator and the Issuer 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 other.
Section 11. 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 even though such Person may engage in business activities similar to those of the Issuer or the Indenture Trustee.
Section 12. Administrator Default. For the purposes of this Agreement and the Indenture, each of the following events shall constitute an Administrative Default:
(a) any failure by the Administrator to direct the Indenture Trustee to make any required distributions from any of the Trust Accounts, which failure continues unremedied for five (5) Business Days after written notice of such failure is received by the Administrator from the Indenture Trustee or after discovery of such failure by an officer of the Administrator; or
(b) any failure by the Administrator to duly observe or to perform in any material respect any other covenants or agreements of the Administrator set forth in this Agreement or any other Basic Documents, which failure shall (i) materially and adversely affect the rights of Noteholders and (ii) continues unremedied for a period of sixty (60) days after the date of discovery of such failure by an officer of the Administrator or on which written notice of
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such failure, requiring the same to be remedied, shall have been given (A) to the Administrator by the Indenture Trustee or (B) to the Administrator and to the Indenture Trustee by the Noteholders representing not less than 25% of the Outstanding Amount of the Notes; or
(c) the occurrence of an Event of Insolvency involving the Administrator; or
(d) any representation or warranty made by the Administrator hereunder or under any other Basic Document, or in any certificate furnished by the Administrator hereunder or under any Basic Document, shall prove to be untrue or incomplete in any material respect.
In the event of any Administrator Default, and so long as such default remains unremedied, 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, the Issuer and the Counterparty if given by the Noteholders), may terminate all the rights and obligations (other than the obligations set forth in Section 24 hereof) 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 or the Financed 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 13 hereof; and the Indenture Trustee and the Issuer 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, the Indenture Trustee, the Issuer 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 and expenses) incurred in connection with such transfer of responsibilities and amending this Agreement to reflect such succession as Administrator pursuant to this Section shall be paid by the predecessor Administrator upon presentation of reasonable documentation of such costs and expenses. Upon receipt of notice of the occurrence of an Administrator Default, the Indenture Trustee shall give notice thereof to the Rating Agencies and any Counterparties.
Section 13. Appointment of Successor.
(a) Upon receipt by the Administrator of notice of termination pursuant to Section 12 hereof, 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, 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 a successor Administrator has accepted and assumed the responsibilities of the Administrator and, in the case of resignation, until the earlier of (x) the date one hundred and twenty (120) days from the delivery to the Issuer 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 legally unable to act as Administrator as specified in the notice of resignation and accompanying Opinion of Counsel. In the event of termination
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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 (with prior written notice to any Counterparties ) shall, if it shall be unwilling or legally unable so to act, appoint or petition a court of competent jurisdiction to appoint, as the successor to the Administrator under this Agreement, any established institution the regular business of which includes the servicing or administration of student loans.
(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 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 of the Senior Notes or the Subordinate Notes 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 under applicable law or any final order of a court or administrative agency with jurisdiction over the Administrator or its properties, as evidenced by an Opinion of Counsel to such effect delivered to the Indenture Trustee, the Issuer and the Eligible Lender Trustee. Notwithstanding the foregoing or anything to the contrary herein or in the Basic Documents, the Indenture Trustee, to the extent it is acting as successor Administrator pursuant hereto, 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 Basic Documents.
Section 14. Notification to Noteholders. Upon any termination of, or appointment of a successor to, the Administrator pursuant to Section 12 or 13, the Indenture Trustee shall give prompt written notice thereof to Noteholders, any Counterparties 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 15. Waiver of Past Defaults. The Noteholders of Notes evidencing not less than a majority of the Outstanding Amount of the Notes may, on behalf of all Noteholders, 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 to the extent provided in such waiver. No such waiver shall extend to any subsequent or other default or impair any right consequent thereto.
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Section 16. Notices. Any notice, report or other communication given hereunder shall be in writing (or in the form of facsimile notice, followed by written notice) sent by the United States first class mail postage prepaid and addressed as follows:
(a) if to the Issuer, to
c/o Wachovia Bank of Delaware, National Association
One ▇▇▇▇▇▇ Square, Suite 102
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Telephone: (302) 888 - 7528
Facsimile: (302) 888 - 7544
(b) if to the Eligible Lender Trustee, to
Manufacturers and Traders Trust Company
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(c) if to the Administrator, to
Pennsylvania Higher Education Assistance Agency
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(d) if to the Indenture Trustee, to
Manufacturers and Traders Trust Company
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▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
(e) if to any Counterparties, to the address specified in any Agreements or to such other address as any party shall have provided to the other parties in writing. Any notice
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required to be in writing hereunder shall be deemed given if such notice is mailed by certified mail, postage prepaid, or hand-delivered to the address of such party as provided above.
Section 17. Amendments. This Agreement may be amended from time to time by a written amendment duly executed and delivered by the Issuer and the Administrator without the consent of the Noteholders, for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of the Noteholders; provided, however, that such amendment will not, in an Opinion of Counsel obtained on behalf of the Issuer and satisfactory to the Indenture Trustee, materially and adversely affect the interest of any Noteholder. This Agreement may also be amended by the Issuer and the Administrator, with the prior written consent of any Counterparties and the Noteholders of at least a majority in Outstanding Amount of the Notes for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Agreement or of modifying in any manner the rights of Noteholders; provided, however, that no such amendment may (i) increase or reduce in any manner the amount of, or accelerate or delay the timing of, collections of payments with respect to the Financed Student Loans or distributions that are required to be made for the benefit of the Noteholders or (ii) reduce the aforesaid percentage of the Noteholders which are required to consent to any such amendment, without the consent of all Outstanding Noteholders. Prior to the execution of any such amendment, the Administrator shall furnish written notification of the substance of such amendment to each of the Rating Agencies.
Section 18. Assignment. Except as provided herein or as contemplated by the Indenture, this Agreement may not be assigned by either party without the prior written consent of the other party; provided, however, the Administrator may assign its obligations and duties as administrator to an Affiliate if the Rating Agencies provide a Rating Confirmation.
Section 19. Governing Law. This Agreement shall be construed in accordance with the laws of the Commonwealth of Pennsylvania, without reference to its conflict of laws provisions, and the obligations, rights and remedies of the parties hereunder shall be determined in accordance with such laws.
Section 20. 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 21. Counterparts. This Agreement may be executed in counterparts, each of which when so executed shall together constitute but one and the same agreement.
Section 22. 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.
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Section 23. Not Applicable to Pennsylvania Higher Education Assistance Agency in Other Capacities. Nothing in this Agreement shall affect any obligation the Pennsylvania Higher Education Assistance Agency may have in any other capacity under any other Basic Documents.
Section 24. 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 Owner Trustee (in its individual and trustee capacities), and the Indenture Trustee, and any of the officers, directors, employees and agents of the Issuer, the Indenture Trustee, and the Owner Trustee 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 the 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.
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 25 hereof) as Administrator pursuant to Section 12 hereof 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 13 hereof.
Indemnification under this Section shall survive the resignation or removal of the Owner Trustee and 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 Agreement 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 25. 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 Pennsylvania Higher Education Assistance Agency, 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 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 and (iii) the Administrator shall have delivered to the Indenture Trustee and any Counterparties an Administrator’s Certificate or an Opinion of Counsel stating that such consolidation, merger or succession and such agreement of assumption comply with this Section and that all conditions
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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.
Section 26. Limitation on Liability of 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, the Indenture Trustee or any Counterparties, 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 this provision 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 its duties or by reason of reckless disregard of obligations and its 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 Financed Student Loans and the Issuer 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 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 Basic Documents and the interests of the Noteholders under the Indenture.
Section 27. Pennsylvania Higher Education Assistance Agency not to Resign as Administrator. Subject to the provisions of Sections 18 and 25 hereof, the Pennsylvania Higher Education Assistance Agency 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 Pennsylvania Higher Education Assistance Agency or its properties, as evidenced by an Opinion of Counsel to such effect delivered to the Indenture Trustee, the Issuer and the Eligible Lender Trustee. Notice of any such determination permitting the resignation of the Pennsylvania Higher Education Assistance Agency shall be communicated to the Indenture Trustee, any Rating Agencies rating any of the Outstanding Notes, and any Counterparties 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 Indenture Trustee and any Counterparties 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 Pennsylvania Higher Education Assistance Agency in accordance with Section 13 hereof.
Section 28. Limitation of Liability of the Indenture Trustee. Notwithstanding anything contained herein to the contrary this Agreement has been acknowledged by Manufacturers and Traders Trust Company not in its individual capacity but solely as Indenture
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Trustee and in no event shall Manufacturers and Traders 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 29. Limitation of Liability of the Owner Trustee. It is expressly understood and agreed by the parties hereto that (a) this Agreement is executed and delivered by the Owner Trustee, not individually or personally but solely as owner trustee of the Issuer, in the exercise of the powers and authority conferred and vested in it under the Trust Agreement, (b) each of the representations, undertakings and agreements herein made on the part of the Issuer is made and intended not as personal representations, undertakings and agreements by the Owner Trustee but is made and intended for the purpose of binding only the Issuer and (c) under no circumstances shall the Owner Trustee be personally liable for the payment of any indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation, representation, warranty or covenant made or undertaken by the Issuer under this Agreement or the other Basic Documents.
Section 30. Limitation of Liability of Eligible Lender Trustee. Notwithstanding any other provision in this Agreement or the other Basic Documents, nothing in this Agreement or the other Basic Documents shall be construed to limit the legal responsibility of the Eligible Lender Trustee or the Indenture Trustee to the U.S. Secretary of Education or a Guarantor for any violations of statutory or regulatory requirements that may occur with respect to loans held by the Eligible Lender Trustee or the Indenture Trustee pursuant to, or to otherwise comply with their obligations under, the Higher Education Act or implementing regulations.
Section 31. Third-Party Beneficiaries. The Noteholders and any Counterparties are third-party beneficiaries to this Agreement and are entitled to the rights and benefits hereunder and may enforce the provisions hereof as if they were parties hereto; provided, however, that in the case of any Counterparty, such right to enforcement and the right to provide consents or waivers pursuant to the provisions hereof or to take other actions as provided herein are conditioned upon its not being in default under its Derivative Product.
Section 32. Indemnification of Owner Trustee. The Administrator shall pay compensation to the Owner Trustee based to on the written fee agreement between the Administrator and the Owner Trustee and shall reimburse the Owner Trustee for all reasonable expenses, disbursements and advances, and indemnify, defend and hold harmless the Owner Trustee and its officers, directors, employees and agents from and against all costs, expenses, losses, subject to the limitations of Section 8.02 of the Trust Agreement.
Section 33. Consents. With respect to any action to be taken hereunder that requires the consent of a party hereto or of the Owner Trustee or the Indenture Trustee, such consent shall not be unreasonably withheld, delayed or conditioned.
Section 34. Defined Terms. Capitalized terms used herein and not defined herein shall have the meanings given to such terms in the Indenture.
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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.
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[ACKNOWLEDGMENT OF OWNER TRUSTEE AND INDENTURE TRUSTEE FOLLOWS]
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KNOW ALL MEN BY THESE PRESENTS, PHEAA Student Loan Trust I (the “Issuer”) does hereby make, constitute and appoint Pennsylvania Higher Education Assistance Agency, as Administrator under the Administration Agreement (as defined below), and its agents and attorneys, as Agents and Attorneys-in-Fact of the Issuer, to execute on behalf of the Issuer all such documents, reports, filings (including filings under the Uniform Commercial Code as adopted in any relevant jurisdiction), instruments, certificates and opinions as it should be the duty of the Issuer to prepare, file or deliver pursuant to the Basic Documents (as defined in the Administration Agreement), including without limitation, to appear for and represent the Issuer in connection with the preparation, filing and audit of any federal, state and local tax returns pertaining to the Issuer, and with full power to perform any and all acts associated with such returns and audits that the Issuer could perform, including without limitation, the right to distribute and receive confidential information, defend and assert positions in response to audits, initiate and defend litigation, and to execute waivers of restriction on assessments of deficiencies, consents to the extension of any statutory or regulatory time limit, and settlements. For the purpose of this Power of Attorney, the term “Administration Agreement” means the Amended and Restated Administration Agreement dated as of July 1, 2004, between the Issuer and Pennsylvania Higher Education Assistance Agency, as Administrator, as such may be amended from time to time.
All powers of attorney for this purpose heretofore filed or executed by Issuer are hereby revoked.
EXECUTED as of , 200 .
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Before me, the undersigned authority, on this day personally appeared [ ] known to me to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that such person signed the same for the purposes and considerations therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this [ ] day of [ ].
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