Document:

exv10w51

 

Exhibit 10.51

$125,000,000

ATLANTIC COAST AIRLINES HOLDINGS, INC.

6% CONVERTIBLE NOTES DUE 2034

PURCHASE AGREEMENT

February 19, 2004

 

 

      February 19, 2004

Morgan Stanley & Co. Incorporated

1585 Broadway

New York, New York 10036

Dear Sirs and Mesdames:

     Atlantic Coast Airlines Holdings, Inc., a Delaware corporation (the
“Company”), proposes to issue and sell to Morgan Stanley & Co. Incorporated
(the “Initial Purchaser”) $125,000,000 principal amount of its 6% Convertible
Notes due 2034 (the “Firm Securities”) to be issued pursuant to the provisions
of an Indenture dated as of February 25, 2004 (the “Indenture”) between the
Company and U.S. Bank National Association, as Trustee (the “Trustee”). The
Company also proposes to issue and sell to the Initial Purchaser not more than
an additional $25,000,000 principal amount of its 6% Convertible Notes due 2034
(the “Additional Securities”) if and to the extent that the Initial Purchaser
shall have determined to exercise the right to purchase such 6% Convertible
Notes due 2034 granted to the Initial Purchaser in Section 2 hereof. The Firm
Securities and the Additional Securities are hereinafter collectively referred
to as the “Securities”. The Securities will be convertible into shares of
common stock, par value $.02 per share, of the Company (the “Underlying
Securities”).

     The Securities and the Underlying Securities will be offered without being
registered under the Securities Act of 1933, as amended (the “Securities Act”),
only to qualified institutional buyers in compliance with the exemption from
registration provided by Rule 144A under the Securities Act.

     The Initial Purchaser and their direct and indirect transferees will be
entitled to the benefits of a Registration Rights Agreement dated the date
hereof between the Company and the Initial Purchaser (the “Registration Rights
Agreement”).

     In connection with the sale of the Securities, the Company has prepared a
preliminary offering memorandum (the “Preliminary Memorandum”) and will prepare
a final offering memorandum (the “Final Memorandum” and, with the Preliminary
Memorandum, each a “Memorandum”) including or incorporating by reference a
description of the terms of the Securities and the Underlying Securities, the
terms of the offering and a description of the Company. As used herein, the
term “Memorandum” shall include in each case the documents incorporated by
reference therein. The terms “supplement”, “amendment” and “amend” as used
herein with respect to a Memorandum shall include all documents deemed to be
incorporated by reference in the Preliminary

 

 

Memorandum or Final Memorandum
that are filed subsequent to the date of such Memorandum with the Securities
and Exchange Commission (the “Commission”) pursuant to the Securities Exchange
Act of 1934, as amended (the “Exchange Act”).

     1. Representations and Warranties. The Company represents and warrants to,
and agrees with, the Initial Purchaser that:

     (a) (i) Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in either Memorandum complied
or will comply when so filed in all material respects with the Exchange
Act and the applicable rules and regulations of the Commission
thereunder and (ii) the Preliminary Memorandum at its date did not
contain and the Final Memorandum, in the form used by the Initial
Purchaser to confirm sales as of its date and on the Closing Date (as
defined in Section 4), will not contain any untrue statement of a
material fact or omit to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, except that the representations and
warranties set forth in this paragraph do not apply to statements or
omissions in either Memorandum based upon information relating to the
Initial Purchaser furnished to the Company in writing by such Initial
Purchaser expressly for use therein.

     (b) The Company has been duly incorporated, is validly existing as
a corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in each Memorandum and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or be in good standing would not
have a material adverse effect on the Company and its subsidiaries,
taken as a whole.

     (c) Each subsidiary of the Company has been duly incorporated, is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority
to own its property and to conduct its business as described in each
Memorandum and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification, except
to the extent that the failure to be so qualified or be in good standing
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole; all of the issued shares of capital
stock of each

 

 

subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned
directly by the Company, free and clear of all liens, encumbrances,
equities or claims.

     (d) The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Memorandum.

     (e) The shares of common stock of the Company outstanding prior to
the issuance of the Securities have been duly authorized and are validly
issued, fully paid and non-assessable and not subject to any preemptive
or similar rights.

     (f) This Agreement has been duly authorized, executed and delivered
by the Company.

     (g) The Securities have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Initial Purchaser in accordance with
the terms of this Agreement, will be valid and binding obligations of
the Company, enforceable in accordance with their terms, subject to the
effects of applicable bankruptcy, insolvency and similar laws affecting
creditors’ rights generally and equitable principles of general
applicability, and will be entitled to the benefits of the Indenture and
the Registration Rights Agreement pursuant to which such Securities are
to be issued.

     (h) The Underlying Securities issuable upon conversion of the
Securities have been duly authorized and reserved and, when issued upon
conversion of the Securities in accordance with the terms of the
Securities, will be validly issued, fully paid and non-assessable, and
the issuance of the Underlying Securities will not be subject to any
preemptive or similar rights.

     (i) Each of the Indenture and the Registration Rights Agreement has
been duly authorized, executed and delivered by, and is a valid and
binding agreement of, the Company, enforceable in accordance with its
terms, subject to the effects of applicable bankruptcy, insolvency and
similar laws affecting creditors’ rights generally and equitable
principles of general applicability and except as rights to
indemnification and contribution under the Registration Rights Agreement
may be limited under applicable law.

     (j) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement, the

 

 

Indenture, the Registration Rights Agreement and the Securities will not
contravene any provision of applicable law or the certificate of
incorporation or by-laws of the Company or any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any subsidiary, and no consent,
approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the
Company of its obligations under this Agreement, the Indenture, the
Registration Rights Agreement or the Securities, except such as may be
required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Securities.

     (k) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Preliminary Memorandum.

     (l) There are no legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a party or
to which any of the properties of the Company or any of its subsidiaries
is subject other than proceedings accurately described in all material
respects in each Memorandum and proceedings that are not reasonably
likely to have a material adverse effect on the Company and its
subsidiaries, taken as a whole, or on the power or ability of the
Company to perform its obligations under this Agreement, the Indenture,
the Registration Rights Agreement or the Securities or to consummate the
transactions contemplated by the Final Memorandum.

     (m) The Company and its subsidiaries (i) are in compliance with any
and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (“Environmental Laws”), (ii) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are
in compliance with all terms and conditions of any such permit, license
or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as a
whole.

 

 

     (n) There are no costs or liabilities associated with Environmental
Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance
with Environmental Laws or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to
third parties) which would, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole.

     (o) The Company is not, and after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof as
described in the Final Memorandum will not be, required to register as
an “investment company” as such term is defined in the Investment
Company Act of 1940, as amended.

     (p) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D under the Securities Act, an “Affiliate”) of the
Company has directly, or through any agent, (i) sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any
security (as defined in the Securities Act) which is or will be
integrated with the sale of the Securities in a manner that would
require the registration under the Securities Act of the Securities or
(ii) offered, solicited offers to buy or sold the Securities by any form
of general solicitation or general advertising (as those terms are used
in Regulation D under the Securities Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities
Act.

     (q) It is not necessary in connection with the offer, sale and
delivery of the Securities to the Initial Purchaser in the manner
contemplated by this Agreement to register the Securities under the
Securities Act or to qualify the Indenture under the Trust Indenture Act
of 1939, as amended.

     (r) The Securities satisfy the requirements set forth in Rule
144A(d)(3) under the Securities Act.

     (s) No material labor dispute with the employees of the Company or
any of its subsidiaries exists, except as described in the Memorandum,
or, to the knowledge of the Company, is imminent; and the Company is not
aware of any existing, threatened or imminent labor disturbance by the
employees of any of its principal suppliers, manufacturers or
contractors that could have a material adverse affect on the Company and
its subsidiaries, taken as a whole.

 

 

     (t) Each of the Company and its subsidiaries has such permits,
licenses, consents, exemptions, franchises, authorizations and other
approvals (each, an “Authorization”) of, and has made all filings with
and notices to, all governmental or regulatory authorities and
self-regulatory organizations and all courts and other tribunals as are
necessary to own, lease, license and operate its respective properties
and to conduct its business, except to the extent the failure to have
any such Authorization or to make any such filing or notice would not,
singly or in the aggregate, reasonably be expected to have a material
adverse effect on the Company and its subsidiaries, taken as a whole,
and neither the Company nor any of the subsidiaries has received
notification of any revocation or modification of any such Authorization
or has reason to believe that any such Authorization will not be renewed
in the ordinary course, except where such revocation, modification or
non-renewal would not reasonably be expected to, singularly or in the
aggregate, have a material adverse effect on the Company and its
subsidiaries, taken as a whole. Each such Authorization is valid and in
full force and effect and each of the Company and its subsidiaries is in
compliance with all the terms and conditions thereof and with the rules
and regulations of the authorities and governing bodies having
jurisdiction with respect thereto; and no event has occurred (including,
without limitation, the receipt of any notice from any authority or
governing body) which allows or, after notice or lapse of time or both,
would allow, revocation, suspension or termination of any such
Authorization or results or, after notice or lapse of time or both,
would reasonably be expected to result in any other material impairment
of the rights of the holder of any such Authorization; except to the
extent such failure to be valid and in full force and effect or to be in
compliance, the occurrence of any such event or the presence of any such
restriction would not, singly or in the aggregate, reasonably be
expected to have a material adverse effect on the Company and its
subsidiaries, taken as a whole.

     2. Agreements to Sell and Purchase. Upon the basis of the representations
and warranties herein contained, but subject to the conditions hereinafter
stated, the Company hereby agrees to sell to the Initial Purchaser, and the
Initial Purchaser agrees to purchase from the Company $125,000,000 principal
amount of Firm Securities at a purchase price of 97.5% of the principal amount
thereof (the “Purchase Price”) plus accrued interest, if any, to the Closing
Date.

     On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the Initial Purchaser the Additional Securities, and the Initial Purchaser
shall have the right to purchase up to $25,000,000 principal amount of
Additional Securities

 

 

at the Purchase Price plus accrued interest, if any, to
the date of payment and delivery. The Initial Purchaser may exercise this right
in whole or from time to time in part by giving written notice not later than
30 days after the date of this Agreement. Any exercise notice shall specify
the principal amount of Additional Securities to be purchased by the Initial
Purchaser and the date on which such Additional Securities are to be purchased.
Each purchase date must be at least one business day after the written notice
is given and may not be earlier than the closing date for the Firm Securities
nor later than ten business days after the date of such notice. On each day,
if any, that Additional Securities are to be purchased (an “Option Closing
Date”), the Initial Purchaser agrees to purchase the principal amount of
Additional Securities set forth on such written notice.

     The Company hereby agrees that, without the prior written consent of the
Initial Purchaser, it will not, during the period ending 90 days after the date
of the Final Memorandum, (i) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, lend, or otherwise transfer or
dispose of, directly or indirectly, any shares of common stock or any
securities convertible into or exercisable or exchangeable for common stock or
(ii) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the common
stock, whether any such transaction described in clause (i) or (ii) above is to
be settled by delivery of common stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (A) the sale of the
Securities under this Agreement or (B) the issuance by the Company of the
Underlying Securities in accordance with the provisions of the Indenture or (C)
the issuance of by the Company of any shares of common stock upon the exercise
of an option or warrant or the conversion of a security outstanding on the date
hereof of which the Initial Purchaser has been advised in writing or (D) any
securities or options to purchase any securities of the Company granted or sold
pursuant to any employee equity compensation plan described in the Memorandum
or the documents incorporated by reference therein.

     3. Terms of Offering. The Initial Purchaser has advised the Company that
it will make an offering of the Securities purchased hereunder on the terms to
be set forth in the Final Memorandum, as soon as practicable after this
Agreement is entered into as in the Initial Purchaser’s judgment is advisable.

     4. Payment and Delivery. Payment for the Firm Securities shall be made to
the Company in Federal or other funds immediately available in New York City
against delivery of such Firm Securities for the account of the Initial
Purchaser at 10:00 a.m., New York City time, on February 25, 2004, or at such
other time on the same or such other date, not later than March 3, 2004, as
shall be designated in writing by the Initial Purchaser. The time and date of
such payment are hereinafter referred to as the “Closing Date.”

 

 

     Payment for any Additional Securities shall be made to the Company in
Federal or other funds immediately available in New York City against delivery
of such Additional Securities for the account of the Initial Purchaser at 10:00
a.m., New York City time, on the date specified in the corresponding notice
described in Section 2 or at such other time on the same or on such other date,
in any event not later than 30 days after the Closing Date, as shall be
designated in writing by the Initial Purchaser.

     The Securities shall be in definitive form or global form, as specified by
the Initial Purchaser, and registered in such names and in such denominations
as the Initial Purchaser shall request in writing not later than one full
business day prior to the Closing Date or the applicable Option Closing Date,
as the case may be. The Securities shall be delivered to the Initial Purchaser
on the Closing Date or an Option Closing Date, as the case may be, for the
account of the Initial Purchaser, with any transfer taxes payable in connection
with the transfer of the Securities to the Initial Purchaser duly paid, against
payment of the Purchase Price therefor plus accrued interest, if any, to the
date of payment and delivery.

     5. Conditions to the Initial Purchaser’s Obligations. The obligations of
the Initial Purchaser to purchase and pay for the Firm Securities on the
Closing Date are subject to the following conditions:

     (a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:

          (i) there shall not have occurred any downgrading, nor
shall any notice have been given of any intended or potential
downgrading or of any review for a possible change that does not
indicate the direction of the possible change, in the rating
accorded the Company or any of the Company’s securities or in
the rating outlook for the Company by any “nationally recognized
statistical rating organization,” as such term is defined for
purposes of Rule 436(g)(2) under the Securities Act; and

          (ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a
whole, from that set forth in the Preliminary Memorandum
provided to prospective purchasers of the Securities that, in
your judgment, is material and adverse and that makes it, in
your judgment, impracticable to market the Securities on the
terms and in the manner contemplated in the Final Memorandum.

 

 

     (b) The Initial Purchaser shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer
of the Company, to the effect set forth in Section 5(a)(i) and to the
effect that the representations and warranties of the Company contained
in this Agreement are true and correct as of the Closing Date and that
the Company has complied with all of the agreements and satisfied all of
the conditions on its part to be performed or satisfied hereunder on or
before the Closing Date.

     The officer signing and delivering such certificate may rely upon
the best of his or her knowledge as to proceedings threatened.

     (c) The Initial Purchaser shall have received on the Closing Date
an opinion of Gibson, Dunn & Crutcher LLP, outside counsel for the
Company, dated the Closing Date, to the effect set forth in Exhibit A.
Such opinion shall be rendered to the Initial Purchaser at the request
of the Company and shall so state therein.

     (d) The Initial Purchaser shall have received on the Closing Date
an opinion of Richard J. Kennedy, Vice President, General Counsel and
Secretary of the Company, dated the Closing Date, to the effect set
forth in Exhibit B. Such opinion shall be rendered to the Initial
Purchaser at the request of the Company and shall so state therein

     (e) The Initial Purchaser shall have received on the Closing Date
an opinion of Davis Polk & Wardwell, counsel for the Initial Purchaser,
dated the Closing Date, to the effect set forth in Exhibit C.

     (f) The Initial Purchaser shall have received on each of the date
hereof and the Closing Date a letter, dated the date hereof or the
Closing Date, as the case may be, in form and substance satisfactory to
the Initial Purchaser, from KPMG, independent public accountants,
containing statements and information of the type ordinarily included in
accountants’ “comfort letters” to underwriters with respect to the
financial statements and certain financial information contained in or
incorporated by reference into each Memorandum; provided that the letter
delivered on the Closing Date shall use a “cut-off date” not earlier
than the date hereof.

     (g) The “lock-up” agreements, each substantially in the form of
Exhibit D hereto, between the Initial Purchaser and certain
shareholders, officers and directors of the Company relating to sales
and certain other dispositions of shares of common stock or certain
other securities, delivered to the Initial Purchaser on or before the
date hereof, shall be in full force and effect on the Closing Date.

 

 

     The obligation of the Initial Purchaser to purchase Additional Securities
hereunder is subject to the delivery to the Initial Purchaser on the applicable
Option Closing Date of such documents as it may reasonably request with respect
to the good standing of the Company, the due authorization, execution and
authentication of the Additional Securities to be sold on such Option Closing
Date and other matters related to the execution and authentication of such
Additional Securities.

     6. Covenants of the Company. In further consideration of the agreements of
the Initial Purchaser contained in this Agreement, the Company covenants with
the Initial Purchaser as follows:

     (a) To furnish to the Initial Purchaser in New York City, without
charge, prior to 10:00 a.m. New York City time on the business day next
succeeding the date of this Agreement and during the period mentioned in
Section 6(c), 1,100 copies of the Final Memorandum and any supplements
and amendments thereto as the Initial Purchaser may reasonably request.

     (b) Before amending or supplementing either Memorandum, to furnish
to the Initial Purchaser a copy of each such proposed amendment or
supplement and not to use any such proposed amendment or supplement to
which the Initial Purchaser reasonably objects.

     (c) If, during such period after the date hereof and prior to the
date on which all of the Securities shall have been sold by the Initial
Purchaser, any event shall occur or condition exist as a result of which
it is necessary to amend or supplement the Final Memorandum in order to
make the statements therein, in the light of the circumstances when the
Final Memorandum is delivered to a purchaser, not misleading, or if, in
the opinion of counsel for the Initial Purchaser, it is necessary to
amend or supplement the Final Memorandum to comply with applicable law,
forthwith to prepare and furnish, at its own expense, to the Initial
Purchaser, either amendments or supplements to the Final Memorandum so
that the statements in the Final Memorandum as so amended or
supplemented will not, in the light of the circumstances when the Final
Memorandum is delivered to a purchaser, be misleading or so that the
Final Memorandum, as amended or supplemented, will comply with
applicable law.

     (d) To endeavor to qualify the Securities for offer and sale under
the securities or Blue Sky laws of such jurisdictions as the Initial
Purchaser shall reasonably request.

 

 

     (e) Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be
paid all expenses incident to the performance of its obligations under
this Agreement, including: (i) the fees, disbursements and expenses of
the Company’s counsel and the Company’s accountants in connection with
the issuance and sale of the Securities and all other fees or expenses
in connection with the preparation of each Memorandum and all amendments
and supplements thereto, including all printing costs associated
therewith, and the delivering of copies thereof to the Initial
Purchaser, in the quantities herein above specified, (ii) all costs and
expenses related to the transfer and delivery of the Securities to the
Initial Purchaser, including any transfer or other taxes payable
thereon, (iii) the cost of printing or producing any Blue Sky or legal
investment memorandum in connection with the offer and sale of the
Securities under state securities laws and all expenses in connection
with the qualification of the Securities for offer and sale under state
securities laws as provided in Section 6(d) hereof, including filing
fees and the reasonable fees and disbursements of counsel for the
Initial Purchaser in connection with such qualification and in
connection with the Blue Sky or legal investment memorandum, (iv) the
fees and expenses, if any, incurred in connection with the admission of
the Securities for trading in PORTAL or any appropriate market system,
(v) the costs and charges of the Trustee and any transfer agent,
registrar or depositary, (vi) the cost of the preparation, issuance and
delivery of the Securities, (vii) the document production charges and
expenses associated with printing this Agreement and (viii) all other
cost and expenses incident to the performance of the obligations of the
Company hereunder for which provision is not otherwise made in this
Section. It is understood, however, that except as provided in this
Section, Section 8, and the last paragraph of Section 10, the Initial
Purchaser will pay all of their costs and expenses, including fees and
disbursements of their counsel, transfer taxes payable on resale of any
of the Securities by them and any advertising expenses connected with
any offers they may make.

     (f) Neither the Company nor any Affiliate will sell, offer for sale
or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Securities Act) which could be integrated
with the sale of the Securities in a manner which would require the
registration under the Securities Act of the Securities.

     (g) Not to solicit any offer to buy or offer or sell the Securities
or the Underlying Securities by means of any form of general
solicitation or general advertising (as those terms are used in
Regulation D under the

 

 

Securities Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Securities
Act.

     (h) While any of the Securities or the Underlying Securities remain
“restricted securities” within the meaning of the Securities Act, to
make available, upon request, to any seller of such Securities the
information specified in Rule 144A(d)(4) under the Securities Act,
unless the Company is then subject to Section 13 or 15(d) of the
Exchange Act.

     (i) If requested by the Initial Purchaser, to use its reasonable
best efforts to permit the Securities to be designated PORTAL securities
in accordance with the rules and regulations adopted by the National
Association of Securities Dealers, Inc. relating to trading in the
PORTAL Market.

     (j) During the period of two years after the Closing Date or any
Option Closing Date, if later, the Company will not, and will not permit
any of its affiliates (as defined in Rule 144 under the Securities Act)
to resell any of the Securities or the Underlying Securities which
constitute “restricted securities” under Rule 144 that have been
reacquired by any of them.

     (k) Not to take any action prohibited by Regulation M under the
Exchange Act in connection with the distribution of the Securities
contemplated hereby.

     7. Offering of Securities; Restrictions on Transfer. (a) The Initial
Purchaser represents and warrants that it is a qualified institutional buyer as
defined in Rule 144A under the Securities Act (a “QIB”). The Initial Purchaser
agrees with the Company that (i) it will not solicit offers for, or offer or
sell, such Securities by any form of general solicitation or general
advertising (as those terms are used in Regulation D under the Securities Act)
or in any manner involving a public offering within the meaning of Section 4(2)
of the Securities Act and (ii) it will solicit offers for such Securities only
from, and will offer such Securities only to, persons that it reasonably
believes to be QIBs.

     8. Indemnity and Contribution. (a) The Company agrees to indemnify and
hold harmless the Initial Purchaser, each person, if any, who controls the
Initial Purchaser within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act, and each affiliate of the Initial Purchaser
within the meaning of Rule 405 under the Securities Act from and against any
and all losses, claims, damages and liabilities (including, without limitation,
any legal or other expenses reasonably incurred in connection with defending or
investigating any such action or claim) caused by any untrue statement or
alleged untrue

 

 

statement of a material fact
contained in either Memorandum (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto), or caused by any
omission or alleged omission to state therein a material fact necessary to make
the statements therein in the light of the circumstances under which they were
made not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission or alleged
untrue statement or omission based upon information relating to the Initial
Purchaser furnished to the Company in writing by the Initial Purchaser
expressly for use therein.

     (b) The Initial Purchaser agrees to indemnify and hold harmless the
Company, its directors, its officers and each person, if any, who controls the
Company within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Company to the Initial Purchaser, but only with reference to
information relating to the Initial Purchaser furnished to the Company in
writing by or on behalf of the Initial Purchaser expressly for use in either
Memorandum or any amendments or supplements thereto.

     (c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 8(a) or 8(b), such person (the “indemnified party”)
shall promptly notify the person against whom such indemnity may be sought (the
“indemnifying party”) in writing and the indemnifying party, upon request of
the indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of
both parties by the same counsel would be inappropriate due to actual or
potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for all such indemnified
parties and that all such fees and expenses shall be reimbursed as they are
incurred. Such firm shall be designated in writing by the Initial Purchaser, in
the case of parties indemnified pursuant to Section 8(a), and by the Company,
in the case of parties indemnified pursuant to Section 8(b). The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written

 

 

consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse
the indemnified party for fees and expenses of counsel as contemplated by the
second and third sentences of this paragraph, the indemnifying party agrees
that it shall be liable for any settlement of any proceeding effected without
its written consent if (i) such settlement is entered into more than 30 days
after receipt by such indemnifying party of the aforesaid request and (ii) such
indemnifying party shall not have reimbursed the indemnified party in
accordance with such request prior to the date of such settlement. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement of any pending or threatened proceeding in respect
of which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional release of such indemnified party from all
liability on claims that are the subject matter of such proceeding.

     (d) To the extent the indemnification provided for in Section 8(a) or 8(b)
is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such paragraph, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Initial Purchaser on
the other hand from the offering of the Securities or (ii) if the allocation
provided by clause 8(d)(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause 8(d)(i) above but also the relative fault of the Company on the
one hand and of the Initial Purchaser on the other hand in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the Initial
Purchaser on the other hand in connection with the offering of the Securities
shall be deemed to be in the same respective proportions as the net proceeds
from the offering of the Securities (before deducting expenses) received by the
Company and the total discounts and commissions received by the Initial
Purchaser as set forth in the Final Memorandum, bear to the aggregate offering
price of the Securities. The relative fault of the Company on the one hand and
of the Initial Purchaser on the other hand 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 by the Initial Purchaser and the
parties’ relative

 

 

intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.

     (e) The Company and the Initial Purchaser agree that it would not be just
or equitable if contribution pursuant to this Section 8(d) were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in Section 8(d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in Section 8(d) shall be deemed to include,
subject to the limitations set forth above, 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
Section 8, the Initial Purchaser shall not be required to contribute any amount
in excess of the amount by which the total price at which the Securities resold
by it in the initial placement of such Securities were offered to investors
exceeds the amount of any damages that the Initial Purchaser 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 Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.

     (f) The indemnity and contribution provisions contained in this Section 8
and the representations, warranties and other statements of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation
made by or on behalf of the Initial Purchaser, any person controlling the
Initial Purchaser or any affiliate of the Initial Purchaser or by or on behalf
of the Company, its officers or directors or any person controlling the Company
and (iii) acceptance of and payment for any of the Securities.

     9. Termination. The Initial Purchaser may terminate this Agreement by
notice given to the Company, if after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on, or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the Nasdaq National Market,
the Chicago Board of Options Exchange, the Chicago Mercantile Exchange or the
Chicago Board of Trade, (ii) trading of any securities of the Company shall
have been suspended on any exchange or in any over-the-counter market, (iii) a
material disruption in securities settlement, payment or clearance services in
the United States shall have occurred, (iv) any moratorium on
commercial banking activities shall have been declared by Federal or New
York State authorities or (v) there shall have occurred any outbreak or
escalation of

 

 

hostilities, or any change in financial markets or any calamity
or crisis that, in the judgment of the Initial Purchaser, is material and
adverse and which, singly or together with any other event specified in this
clause (v), makes it, in the judgment of the Initial Purchaser, impracticable
or inadvisable to proceed with the offer, sale or delivery of the Securities on
the terms and in the manner contemplated in the Final Memorandum.

     10. Effectiveness; Effect of Termination. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.

     If this Agreement shall be terminated by the Initial Purchaser because of
any failure or refusal on the part of the Company to comply with the terms or
to fulfill any of the conditions of this Agreement, or if for any reason the
Company shall be unable to perform its obligations under this Agreement, the
Company will reimburse the Initial Purchaser for all out-of-pocket expenses
(including the fees and disbursements of their counsel) reasonably incurred by
the Initial Purchaser in connection with this Agreement or the offering
contemplated hereunder. If this Agreement is terminated by reason of the
default of the Initial Purchaser, the Company shall not be obligated to
reimburse the Initial Purchaser on account of such expenses.

     11. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if
the signatures thereto and hereto were upon the same instrument.

     12. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.

     13. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.

 

 

	 	 	 
	

	 	Very truly yours,
	 
	 	 
	

	 	ATLANTIC COAST AIRLINES HOLDINGS, INC.
	 
	 	 
	

	 	By:

	

	 	Name:
	

	 	Title:
	 
	 	 
	Accepted as of the date hereof
	 	 
	 
	 	 
	MORGAN STANLEY & CO. INCORPORATED
	 	 
	 
	 	 
	By: 

Name:
	 	 
	Title:
	 	 

 

 

EXHIBIT A

OPINION OF GIBSON, DUNN & CRUTCHER LLP

     The opinion of Gibson, Dunn & Crutcher, LLP, to be delivered pursuant to
Section 5(c) of the Purchase Agreement shall be to the effect that:

     A. The Purchase Agreement has been duly authorized, executed and delivered
by the Company.

     B. The shares of common stock of the Company initially issuable upon
conversion of the Securities have been duly authorized and reserved for
issuance and, when issued and delivered in accordance with the provisions of
the Securities and the Indenture, will be validly issued, fully paid and
non-assessable.

     C. The Securities have been duly authorized by the Company and, when
executed and authenticated in accordance with the provisions of the Indenture
and delivered to and paid for by the Initial Purchaser in accordance with the
terms of the Purchase Agreement, will be valid and binding obligations of the
Company, enforceable in accordance with their terms, subject to the effects of
applicable bankruptcy, insolvency and similar laws affecting creditors’ rights
generally and equitable principles of general applicability and will be
entitled to the benefits of the Indenture and the Registration Rights Agreement
pursuant to which such Securities are to be issued.

     D. Each of the Indenture and the Registration Rights Agreement has been
duly authorized, executed and delivered by, and is a valid and binding
agreement of, the Company, enforceable in accordance with its terms, subject to
the effects of applicable bankruptcy, insolvency and similar laws affecting
creditors’ rights generally and equitable principles of general applicability
and except that such counsel shall render no opinion regarding rights to
indemnification and contribution under the Registration Rights Agreement.

     E. The execution and delivery by the Company of, and the performance by
the Company of its obligations under, the Purchase Agreement, the Indenture,
the Registration Rights Agreement and the Securities will not contravene any
provision of applicable law or the certificate of incorporation or by-laws of
the Company or, to the best of such counsel’s knowledge, any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
identified in the Company’s most recent SEC filing on Form 10-K as constituting
an agreement material to the Company and its subsidiaries, taken as a whole,
or, to the best of such counsel’s knowledge, any judgment, order or decree of
any governmental body, agency or court having jurisdiction over the Company or
any subsidiary, and no consent, approval, authorization or order of, or
qualification with, any U.S. or New York state governmental body or agency is
required for the

 

 

performance by the Company of its obligations under the Purchase
Agreement, the Indenture , the Registration Rights Agreement or the Securities,
except such as may be required by the securities or Blue Sky laws of the
various states in connection with the offer and sale of the Securities and by
Federal and state securities laws with respect to the Company’s obligations
under the Registration Rights Agreement.

     F. The Company is not, and after giving effect to the offering and sale of
the Securities and the application of the proceeds thereof as described in the
Final Memorandum will not be, required to register as an “investment company”
as such term is defined in the Investment Company Act of 1940, as amended.

     G. Based upon the representations, warranties and agreements of the
Company in Sections 1(p), 1(r), 6(f) and 6(g) of the Purchase Agreement and of
the Initial Purchaser in Section 7 of the Purchase Agreement, it is not
necessary in connection with the offer, sale and delivery of the Securities to
the Initial Purchaser under the Purchase Agreement or in connection with the
initial resale of such Securities by the Initial Purchaser in accordance with
Section 7 of the Purchase Agreement to register the Securities under the
Securities Act of 1933 or to qualify the Indenture under the Trust Indenture
Act of 1939, it being understood that no opinion is expressed as to any
subsequent resale of any Security or Underlying Security.

          In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent auditors of the Company and the Initial
Purchaser’s representatives and their counsel at which the contents of the
Memorandum and related matters were discussed. Because the purpose of such
counsel’s professional engagement was not to establish or confirm factual
matters and because the scope of such counsel’s examination of the affairs of
the Company did not permit us to verify the accuracy, completeness or
fairness of the statements set forth in the Memorandum, such counsel is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Memorandum except
insofar as such statements specifically relate to us and except to the extent
set forth in clause (G) above.

          In addition, such counsel shall also state that on the basis of the
foregoing, and except for the financial statements and schedules and the
notes thereto, no facts have come to such counsel’s attention that would lead
such counsel to believe that the Memorandum as of the date thereof or as of
the Closing Date contains an untrue statement of a material fact or omitted
or omits, as the case may be, to state a material fact necessary in order to
make the

2

 

statements therein, in the light of the circumstances under which they
were made, not misleading.

          In addition, such counsel shall also state that on the basis of the
foregoing and in reliance thereon, and subject to the assumptions,
exceptions, qualifications and limitations set forth in the letter, such
counsel is of the opinion that (i) insofar as the statements in the Final
Memorandum under the captions “Description of Securities,” “Description of
Capital Stock” and “Plan of Distribution” (but only as to the description of
the Purchase Agreement and the Lock-up Agreement) purport to describe
specific provisions of the Securities, the Stock and the legal matters or
documents described therein, such statements present in all material respects
an accurate summary of such provisions, (ii) insofar as the statements in the
Final Memorandum under the caption “Certain United States Federal Income Tax
Considerations” purport to describe the provisions of the United States
federal tax laws referred to therein, such statements present in all material
respects an accurate summary of such provisions, and (iii) the Exchange Act
Reports when they were filed with the Commission, complied on their face as
to form in all material respects with the requirements of the Exchange Act,
and the rules and regulations of the Commission thereunder.

          With respect to all of the above, such counsel shall express no opinion or
belief concerning the financial statements (and related notes thereto) and
schedules and other information of an accounting or financial nature included
or incorporated by reference in the Memorandum or documents incorporated by
reference therein, or omitted therefrom.

3

 

EXHIBIT B

OPINION OF RICHARD J. KENNEDY

     The opinion of Richard J. Kennedy, to be delivered pursuant to Section
5(d) of the Purchase Agreement shall be to the effect that:

     A. The Company has been duly incorporated and is a validly existing
corporation in good standing under the laws of the jurisdiction of its
incorporation, with the requisite the corporate power and authority to own its
property and to conduct its business as described in the Final Memorandum.

     B. Each subsidiary of the Company has been duly incorporated and is a
validly existing corporation in good standing under the laws of the
jurisdiction of its incorporation, with the requisite corporate power and
authority to own its property and to conduct its business as described in the
Final Memorandum; all of the issued shares of capital stock of each subsidiary
of the Company have been duly and validly authorized and issued, are fully paid
and non-assessable, and are owned directly by the Company, free and clear of
all liens, encumbrances, equities or claims.

     C. The statements relating to legal matters, documents or proceedings in
“Item 3 — Legal Proceedings” of the Company’s most recent annual report on Form
10-K included or incorporated by reference in the Final Memorandum, fairly
summarize in all material respects such matters, documents or proceedings and
includes all information that is required to be disclosed under Item 103 of
Regulation S-K and such counsel does not know of any other legal or
governmental proceedings pending or to his knowledge threatened to which the
Company or any of its subsidiaries is a party or to which any of the properties
of the Company or any of its subsidiaries is subject proceedings, which such
counsel believes are likely to have a material adverse effect on the power or
ability of the Company to perform its obligations under the Purchase Agreement,
the Indenture, the Registration Rights Agreement or the Securities or to
consummate the transactions contemplated by the Final Memorandum.

 

 

EXHIBIT C

OPINION OF DAVIS POLK & WARDWELL

     The opinion of Davis Polk & Wardwell to be delivered pursuant to Section
5(e) of the Purchase Agreement shall be to the effect that:

     A. The Purchase Agreement has been duly authorized, executed and delivered
by the Company.

     B. The Securities have been duly authorized by the Company and, when
executed and authenticated in accordance with the provisions of the Indenture
and delivered to and paid for by the Initial Purchaser in accordance with the
terms of the Purchase Agreement, will be valid and binding obligations of the
Company, enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency and similar laws affecting creditors’ rights generally
and equitable principles of general applicability, and will be entitled to the
benefits of the Indenture and the Registration Rights Agreement pursuant to
which such Securities are to be issued.

     C. The Underlying Securities issuable upon conversion of the Securities
have been duly authorized and reserved and, when issued upon conversion of the
Securities in accordance with the terms of the Securities, will be validly
issued, fully paid and non-assessable, and the issuance of the Underlying
Securities will not be subject to any preemptive or similar rights.

     D. Each of the Indenture and the Registration Rights Agreement has been
duly authorized, executed and delivered by, and is a valid and binding
agreement of, the Company, enforceable in accordance with its terms, subject to
applicable bankruptcy, insolvency and similar laws affecting creditors’ rights
generally and equitable principles of general applicability, and except as
rights to indemnification and contribution under the Registration Rights
Agreement may be limited under applicable law.

     E. The statements relating to legal matters, documents or proceedings
included in the Final Memorandum under the captions “Description of
Securities,” “Description of Capital Stock,” “Plan of Distribution” and
“Transfer Restrictions,” fairly summarize in all material respects such
matters, documents or proceedings.

     F. Nothing has come to the attention of such counsel to cause such counsel
to believe that (except for the financial statements and financial schedules
and other financial and statistical data, as to which such counsel need not
express any belief) the Final Memorandum when issued contained, or as of the
date such opinion is delivered contains, any untrue statement of a material
fact or omitted or

2

 

omits to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

     With respect to the matters referred to in the paragraph above, Davis Polk
& Wardwell may state that their beliefs are based upon their participation in
the preparation of the Final Memorandum (and any amendments or supplements
thereto) and review and discussion of the contents thereof (including the
review of, but not participation in the preparation of, the incorporated
documents), but are without independent check or verification except as
specified.

     G. Based upon the representations, warranties and agreements of the Company in
Sections 1(p), 1(r), 6(f) and 6(g) of the Purchase Agreement and of the
Initial Purchaser in Section 7 of the Purchase Agreement, it is not necessary
in connection with the offer, sale and delivery of the Securities to the
Initial Purchaser under the Purchase Agreement or in connection with the
initial resale of such Securities by the Initial Purchaser in accordance with
Section 7 of the Purchase Agreement to register the Securities under the
Securities Act of 1933 or to qualify the Indenture under the Trust Indenture
Act of 1939, it being understood that no opinion is expressed as to any
subsequent resale of any Security or Underlying Security.

3

 

EXHIBIT D

[FORM OF LOCK-UP LETTER]

February  , 2004

Morgan Stanley & Co. Incorporated

1585 Broadway

New York, NY 10036

Dear Sirs and Mesdames:

     The undersigned understands that Morgan Stanley & Co. Incorporated
(“Morgan Stanley”) proposes to enter into a Purchase Agreement (the “Purchase
Agreement”) with Atlantic Coast Airlines Holdings Inc., a Delaware corporation
(the “Company”), providing for the offering (the “Offering”) by Morgan Stanley,
of $125,000,000 principal amount of Convertible Debt Securities of the Company
(the “Securities”). The Securities will be convertible into shares of Common
Stock par value $0.02 of the Company (the “Common Stock”).

     To induce Morgan Stanley to continue their efforts in connection with the
Offering, the undersigned hereby agrees that, without the prior written consent
of Morgan Stanley, it will not, during the period commencing on the date hereof
and ending 90 days after the date of the final offering memorandum relating to
the Offering (the “Final Memorandum”), (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any option or contract
to sell, grant any option, right or warrant to purchase, lend, or otherwise
transfer or dispose of, directly or indirectly, any shares of Common Stock or
any securities convertible into or exercisable or exchangeable for Common Stock
or (2) enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the Common
Stock, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (a) the sale of any
Securities to Morgan Stanley pursuant to the Purchase Agreement or (b)
transactions relating to shares of Common Stock or other securities acquired in
open market transactions after the completion of the Offering; (c) the transfer
of shares of Common Stock as a bona fide gift or gifts, provided that the donee
or donees thereof agree to be bound in writing by the restrictions set forth
herein; or (d) transfers of shares of Common Stock or Common Stock equivalents
to a trust where the beneficiaries of the trust

 

 

are drawn solely from a group consisting of the undersigned and immediate
family members of the undersigned provided that (i) the trust agrees to enter
into a lock-up letter substantially in the form of this letter and (ii) the
undersigned shall not be required to, and shall not voluntarily, file a report
on Form 4 under Section 16(a) of the Securities Exchange Act of 1934 reporting
a reduction in beneficial ownership of shares of Common Stock during the
restricted period referred in the foregoing sentence. Immediate family member
of a person means the spouse, lineal descendants, father, mother, brother,
sister, father-in-law, mother-in-law, brother-in-law and sister-in-law of such
person

     In addition, the undersigned agrees that, without the prior written
consent of Morgan Stanley, it will not, during the period commencing on the
date hereof and ending 90 days after the date of the Final Memorandum, make any
demand for or exercise any right with respect to, the registration of any
shares of Common Stock or any security convertible into or exercisable or
exchangeable for Common Stock. The undersigned also agrees and consents to the
entry of stop transfer instructions with the Company’s transfer agent and
registrar against the transfer of the undersigned’s shares of Common Stock
except in compliance with the foregoing restrictions.

     The undersigned understands that the Company and Morgan Stanley are
relying upon the agreement set forth in this letter (the “Lock-Up Agreement”)
in proceeding toward consummation of the Offering. The undersigned further
understands that this Lock-Up Agreement is irrevocable and shall be binding
upon the undersigned’s heirs, legal representatives, successors and assigns.

     Notwithstanding anything to the contrary herein, this Lock-Up Agreement
shall terminate on March 15, 2004, in the event the closing of the Offering has
not been consummated on or before such date. Whether or not the Offering
actually occurs depends on a number of factors, including market conditions.
Any Offering will only be made pursuant to a Purchase Agreement, the terms of
which are subject to negotiation between the Company and Morgan Stanley.

     This Lock-Up Agreement shall be governed by and construed in accordance
with the laws of the State of New York, without regard to principles of
conflict of laws.

	 	 	 
	

	 	Very truly yours,
	 
	 	 
	

	 	

	

	 	(Name)
	 
	 	 
	

	 	

	

	 	(Address)<PAGE>

                                                                     Exhibit 4.1

================================================================================

                      AMENDED AND RESTATED TRUST AGREEMENT

                                      among

                                SLM FUNDING LLC,
                                  as Depositor

                 CHASE MANHATTAN BANK USA, NATIONAL ASSOCIATION,
                    not in its individual capacity but solely
                           as Eligible Lender Trustee

                                       and

                      DEUTSCHE BANK TRUST COMPANY AMERICAS,
                    not in its individual capacity but solely
                              as Indenture Trustee

                             Dated as of May 5, 2004

================================================================================

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                Page
                                                                                                                ----
<S>                                                                                                             <C>
                                 ARTICLE I

SECTION 1.1 Definitions and Usage............................................................................     1

                             ARTICLE II ORGANIZATION

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 Holder of the Excess Distribution Certificate...................................     3
SECTION 2.8 Title to Trust Property..........................................................................     3
SECTION 2.9 Representations, Warranties and Covenants of the Depositor.......................................     3
SECTION 2.10 Intentionally Omitted...........................................................................     3
SECTION 2.11 Authorization of Depositor......................................................................     4

      ARTICLE III BENEFICIAL OWNERSHIP AND EXCESS DISTRIBUTION CERTIFICATE

SECTION 3.1 Initial Beneficial Ownership.....................................................................     4
SECTION 3.2 Intentionally Omitted............................................................................     4
SECTION 3.3 Intentionally Omitted............................................................................     4
SECTION 3.4 Intentionally Omitted............................................................................     4
SECTION 3.5 Intentionally Omitted............................................................................     4
SECTION 3.6 Intentionally Omitted............................................................................     4
SECTION 3.7 Intentionally Omitted............................................................................     4
SECTION 3.8 Corporate Trust Office...........................................................................     4
SECTION 3.9 Intentionally Omitted............................................................................     4
SECTION 3.10 Intentionally Omitted...........................................................................     4
SECTION 3.11 Intentionally Omitted...........................................................................     4
SECTION 3.12 Intentionally Omitted...........................................................................     4
SECTION 3.13 The Excess Distribution Certificate.............................................................     5

                  ARTICLE IV ACTIONS BY ELIGIBLE LENDER TRUSTEE

SECTION 4.1 Prior Notice to the Holder of the Excess Distribution Certificate With Respect
                       to Certain Matters....................................................................     9
SECTION 4.2 Action with Respect to Sale of the Trust Student Loans...........................................    10
SECTION 4.3 Action with Respect to Bankruptcy................................................................    10
SECTION 4.4 Restrictions.....................................................................................    10
</TABLE>

                                      -i-

<PAGE>

<TABLE>
<S>                                                                                                              <C>
SECTION 4.5 Intentionally Omitted............................................................................    10

              ARTICLE V APPLICATION OF TRUST FUNDS; CERTAIN DUTIES

SECTION 5.1 Application of Trust Funds.......................................................................    10
SECTION 5.2 Method of Payment................................................................................    11
SECTION 5.3 No Segregation of Moneys; No Interest............................................................    11
SECTION 5.4 Reports to the Holder of the Excess Distribution Certificate, the Internal
                       Revenue Service and Others............................................................    11
SECTION 5.5 Intentionally Omitted............................................................................    11
SECTION 5.6 Intentionally Omitted............................................................................    11

           ARTICLE VI AUTHORITY AND DUTIES OF ELIGIBLE LENDER TRUSTEE

SECTION 6.1 General Authority................................................................................    11
SECTION 6.2 General Duties...................................................................................    12
SECTION 6.3 Action upon Instruction..........................................................................    12
SECTION 6.4 No Duties Except as Specified in this Agreement or in Instructions...............................    13
SECTION 6.5 No Action Except Under Specified Documents or Instructions.......................................    14
SECTION 6.6 Restrictions.....................................................................................    14

               ARTICLE VII CONCERNING THE ELIGIBLE LENDER TRUSTEE

SECTION 7.1 Acceptance of Trusts and Duties..................................................................    14
SECTION 7.2 Intentionally Omitted............................................................................    15
SECTION 7.3 Representations and Warranties...................................................................    15
SECTION 7.4 Reliance; Advice of Counsel......................................................................    16
SECTION 7.5 Not Acting in Individual Capacity................................................................    16
SECTION 7.6 Eligible Lender Trustee Not Liable for Excess Distribution Certificate or Trust
                       Student Loans.........................................................................    16
SECTION 7.7 Eligible Lender Trustee May Own Notes............................................................    17

       ARTICLE VIII COMPENSATION AND INDEMNITY OF ELIGIBLE LENDER TRUSTEE

SECTION 8.1 Eligible Lender Trustee's Fees and Expenses......................................................    17
SECTION 8.2 Payments to the Eligible Lender Trustee..........................................................    17
SECTION 8.3 Indemnity .......................................................................................    18

                    ARTICLE IX TERMINATION OF TRUST AGREEMENT

SECTION 9.1 Termination of Trust Agreement...................................................................    18
</TABLE>

                                      -ii-

<PAGE>

<TABLE>
<S>                                                                                                              <C>
               ARTICLE X SUCCESSOR ELIGIBLE LENDER TRUSTEES AND ADDITIONAL
                                 ELIGIBLE LENDER TRUSTEES

SECTION 10.1 Eligibility Requirements for Eligible Lender Trustee............................................    18
SECTION 10.2 Resignation or Removal of Eligible Lender Trustee...............................................    19
SECTION 10.3 Successor Eligible Lender Trustee...............................................................    19
SECTION 10.4 Merger or Consolidation of Eligible Lender Trustee..............................................    20
SECTION 10.5 Appointment of Co-Eligible Lender Trustee or Separate Eligible Lender Trustee...................    20

                            ARTICLE XI MISCELLANEOUS

SECTION 11.1 Supplements and Amendments......................................................................    22
SECTION 11.2 No Legal Title to Trust Estate in Holder of the Excess Distribution Certificate.................    22
SECTION 11.3 Limitations on Rights of Others.................................................................    23
SECTION 11.4 Notices ........................................................................................    23
SECTION 11.5 Severability....................................................................................    23
SECTION 11.6 Separate Counterparts...........................................................................    23
SECTION 11.7 Successors and Assigns..........................................................................    23
SECTION 11.8 No Petition.....................................................................................    23
SECTION 11.9 No Recourse.....................................................................................    24
SECTION 11.10 Headings.......................................................................................    24
SECTION 11.11 Governing Law..................................................................................    24
</TABLE>

Exhibit A      Form of Excess Distribution Certificate
Exhibit B      Form of Certificate of Trust
Exhibit C      Form of Transferor Letter
Exhibit D-1    Form of Transferee Letter (Non-Rule 144A)
Exhibit D-2    Form of Transferee Letter (Rule 144A)

Appendix A to Trust Agreement

                                     -iii-

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         AMENDED AND RESTATED TRUST AGREEMENT dated as of May 5, 2004, among SLM
FUNDING LLC, a Delaware limited liability company, as the Depositor, CHASE
MANHATTAN BANK USA, NATIONAL ASSOCIATION, a national banking association, not in
its individual capacity but solely as the Eligible Lender Trustee, and DEUTSCHE
BANK TRUST COMPANY AMERICAS, a New York banking corporation, not in its
individual capacity but solely as the Indenture Trustee, acting as the Excess
Distribution Certificate Paying Agent hereunder.

                                   WITNESSETH:

         The Depositor and the Eligible Lender Trustee are parties to the trust
agreement dated as of April 22, 2004 (the "Short-Form Trust Agreement") pursuant
to which a trust known as "SLM Student Loan Trust 2004-4" was established;

         The Depositor, the Indenture Trustee and the Eligible Lender Trustee
desire to amend and restate the Short-Form Trust Agreement upon the terms and
conditions set forth herein 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.

                                   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 2004-4", 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 statutory trust within the meaning of Section 3801(a)
of the Delaware Statutory Trust Act for which the Eligible Lender 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 Statutory 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 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
         Excess Distribution Certificate pursuant to this Agreement and to sell
         the Notes in one or more transactions;

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                  (ii) with the proceeds of the sale of the Notes, to fund the
         Reserve Account pursuant to Section 2.9 of the Administration
         Agreement, to purchase the Trust Student Loans pursuant to the Sale
         Agreement and to make the upfront payment pursuant to the Interest Rate
         Cap Agreement;

                  (iii) to Grant the Trust Estate to the Indenture Trustee
         pursuant to the Indenture, and to hold, manage and distribute to the
         holder of the Excess Distribution Certificate 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 (including any agreements representing Eligible Purchase
         Obligations) 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
         Noteholders and the others specified in Sections 2.7 and 2.8 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 $100.00. 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 holder of the Excess
Distribution Certificate, subject to the obligations of the Trust under the
other Basic Documents. It is the intention of the parties hereto that the Trust
constitute a statutory trust under Delaware law and that this Agreement
constitute the governing instrument of such trust. Effective as of the date
hereof, the Eligible Lender Trustee shall have all rights, powers and duties set
forth herein with respect to accomplishing the purposes of the Trust.

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         SECTION 2.7 Liability of the Holder of the Excess Distribution
Certificate. No holder of the Excess Distribution Certificate (in such capacity)
shall have any personal liability for any liability or obligation of the Trust.

         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
limited liability company 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 power and authority to execute and deliver
this Agreement and to carry out its terms; the Depositor has full 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 action; and the execution, delivery and performance of this
Agreement has been duly authorized by the Depositor by all necessary 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 Certificate of Formation
or operating agreement of the Depositor, or any indenture, agreement or other
instrument to which the Depositor is a party or by which it is bound; nor result
in the creation or imposition of any Lien upon any of its properties pursuant to
the terms of any such indenture, agreement or other instrument (other than
pursuant to the Basic Documents); nor violate any law or, to the Depositor's
knowledge, any order, rule or regulation applicable to the Depositor of any
court or of any Federal or state regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Depositor or its
properties.

         (e) The Depositor agrees for the benefit of the Noteholders and the
holder of the Excess Distribution Certificate that it will comply with each of
the requirements set forth in the Certificate of Formation and its operating
agreement.

         SECTION 2.10 Intentionally Omitted.

                                      -3-
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         SECTION 2.11 Authorization of the Depositor. The Depositor is
authorized and directed to execute on behalf of the Issuer, and, after
execution, to deliver to the Administrator for filing with the Commission, all
documents and forms required to be filed in accordance with applicable law or
the rules and regulations prescribed by the Commission.

                                  ARTICLE III

                            Beneficial Ownership and
                         Excess Distribution Certificate

         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 Excess Distribution Certificate, the Depositor shall be the sole
beneficial owner of the Trust.

         SECTION 3.2 Intentionally Omitted.

         SECTION 3.3 Intentionally Omitted.

         SECTION 3.4 Intentionally Omitted.

         SECTION 3.5 Intentionally Omitted.

         SECTION 3.6 Intentionally Omitted.

         SECTION 3.7 Intentionally Omitted.

         SECTION 3.8 Corporate Trust Office. The Eligible Lender Trustee
initially designates Christiana Center/OPS4, 500 Stanton Christiana Road,
Newark, Delaware 19713, as its principal Corporate Trust Office, at which it
shall act as Trustee of the Trust. The Excess Distribution Certificate
Registrar's New York office and its authenticating agent's office are located
at:

                  Deutsche Bank Trust Company Americas
                  60 Wall Street, 26th Floor
                  Mailstop NYC60-2606
                  Attn:  Trust & Securities Services/Structured Finance Services
                  Telephone: (212) 250-8454
                  Facsimile: (212) 797-8606

         SECTION 3.9 Intentionally Omitted.

         SECTION 3.10 Intentionally Omitted.

         SECTION 3.11 Intentionally Omitted.

         SECTION 3.12 Intentionally Omitted.

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         SECTION 3.13 The Excess Distribution Certificate.

         (a) General. The Excess Distribution Certificate shall be issued in one
or more registered, definitive physical certificates substantially in the form
of Exhibit A hereto, in minimum percentage interests of at least 10% and
integral multiples of 10% in excess thereof. The Excess Distribution Certificate
shall receive payments as provided in Sections 2.8(l) and 2.9(f), as applicable,
of the Administration Agreement. The Excess Distribution Certificate shall be
executed on behalf of the Trust by manual or facsimile signature of an
authorized officer of the Eligible Lender Trustee. An Excess Distribution
Certificate bearing the manual or facsimile signatures of individuals who were,
at the time when such signatures were affixed, authorized to sign on behalf of
the Trust, shall be valid and binding obligations of the Trust, notwithstanding
that such individuals or any of them shall have ceased to be so authorized prior
to the authentication and delivery of such Excess Distribution Certificate or
did not hold such offices at the date of authentication and delivery of such
Excess Distribution Certificate.

         (b) Authentication. Concurrently with the sale of the Trust Student
Loans to the Trust pursuant to the Sale Agreement, the Eligible Lender Trustee
shall cause the Excess Distribution Certificate to be executed on behalf of the
Trust, authenticated and delivered to or upon the written order of the
Depositor, signed by its president or any vice president, without further action
by the Depositor. For all purposes hereunder, the Depositor shall be the initial
holder of the Excess Distribution Certificate. No Excess Distribution
Certificate shall entitle its holder to any benefit under this Agreement, or
shall be valid for any purpose, unless there shall appear on such Excess
Distribution Certificate a certificate of authentication substantially in the
form set forth in Exhibit A, executed by the Eligible Lender Trustee or JPMorgan
Chase Bank, as the Eligible Lender Trustee's authenticating agent, by manual
signature; such authentication shall constitute conclusive evidence that such
Excess Distribution Certificate shall have been duly authenticated and delivered
hereunder. The Excess Distribution Certificate shall be dated the date of its
authentication. No further Excess Distribution Certificates shall be issued
except pursuant to paragraph (c) or (d) below.

         (c) Registration of Transfer and Exchange. The Excess Distribution
Certificate Registrar shall keep or cause to be kept, at the office or agency
maintained pursuant to paragraph (f) below, the Excess Distribution Certificate
Register in which, subject to such reasonable regulations as it may prescribe,
the Eligible Lender Trustee shall provide for the registration of the Excess
Distribution Certificate and of transfers and exchanges of the Excess
Distribution Certificate as herein provided. Deutsche Bank Trust Company
Americas shall be the initial Excess Distribution Certificate Registrar.

         Upon surrender for registration of transfer of the Excess Distribution
Certificate at the office or agency maintained pursuant to paragraph (f) below,
the Eligible Lender Trustee shall execute, authenticate and deliver (or shall
cause JPMorgan Chase Bank as its authenticating agent to authenticate and
deliver), in the name of the designated transferee, a new Excess Distribution
Certificate dated the date of authentication by the Eligible Lender Trustee or
any authenticating agent. At the option of the holder of the Excess Distribution
Certificate, the Excess Distribution Certificate may be exchanged for another
Excess Distribution Certificate upon surrender of the Excess Distribution
Certificate to be exchanged at the office or agency maintained pursuant to
paragraph (f) below.

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         An Excess Distribution 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 Excess Distribution Certificate Registrar duly executed by the holder
thereof or his attorney duly authorized in writing, with such signature (other
than for transfers or exchanges to or among any Affiliates of the Depositor)
guaranteed by a member firm of the New York Stock Exchange or a commercial bank
or trust company. An Excess Distribution 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 the Excess Distribution Certificate, but the Eligible Lender Trustee
or the Excess Distribution 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 the Excess Distribution Certificate.

         The preceding provisions of this Section notwithstanding, the Eligible
Lender Trustee shall not be required to make and the Excess Distribution
Certificate Registrar need not register transfers or exchanges of the Excess
Distribution Certificate for a period of 15 days preceding any Distribution Date
with respect to the Excess Distribution Certificate.

         (d) Mutilated, Destroyed, Lost or Stolen Excess Distribution
Certificate. If (1) a mutilated Excess Distribution Certificate shall be
surrendered to the Excess Distribution Certificate Registrar, or if the Excess
Distribution Certificate Registrar shall receive evidence to its satisfaction of
the destruction, loss or theft of the Excess Distribution Certificate, and (2)
there shall be delivered to the Excess Distribution Certificate Registrar and
the Eligible Lender Trustee such security or indemnity as may be required by
them to save each of them and the Trust harmless, then in the absence of notice
that such Excess Distribution 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 Excess
Distribution Certificate, a new Excess Distribution Certificate of like tenor.
In connection with the issuance of any new Excess Distribution Certificate under
this Section, the Eligible Lender Trustee and the Excess Distribution
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 Excess Distribution Certificate issued pursuant to this paragraph
shall constitute conclusive evidence of ownership in the Trust, as if originally
issued, whether or not the lost, stolen or destroyed Excess Distribution
Certificate shall be found at any time.

         (e) Persons Deemed Owners. Prior to due presentation of the Excess
Distribution Certificate for registration of transfer, the Eligible Lender
Trustee and the Excess Distribution Certificate Registrar and any agent of
either of them may treat the Person in whose name the Excess Distribution
Certificate shall be registered in the Excess Distribution Certificate Register
as the owner of such Excess Distribution Certificate for the purpose of
receiving distributions thereon and for all other purposes whatsoever, and
neither the Eligible Lender Trustee, the Excess Distribution Certificate
Registrar nor any agent thereof shall be bound by any notice to the contrary.

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         (f) Maintenance of Office or Agency. The Eligible Lender Trustee shall
maintain in the Borough of Manhattan, The City of New York, an office or offices
or agency or agencies where the Excess Distribution Certificate 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 Excess
Distribution Certificate may be served.

         (g) Appointment of Excess Distribution Certificate Paying Agent. The
Excess Distribution Certificate Paying Agent shall make distributions to the
holder of the Excess Distribution Certificate from the amounts received from the
Indenture Trustee pursuant to Sections 2.8(l) and 2.9(f) of the Administration
Agreement and shall report the amounts of such distributions to the Indenture
Trustee (if the Excess Distribution Certificate Paying Agent is not the
Indenture Trustee). Any Excess Distribution 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 Excess Distribution Certificate
Paying Agent if the Eligible Lender Trustee determines in its sole discretion
that the Excess Distribution Certificate Paying Agent shall have failed to
perform its obligations under this Agreement in any material respect. The Excess
Distribution Certificate Paying Agent shall initially be the Indenture 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
Indenture Trustee shall be permitted to resign as Excess Distribution
Certificate Paying Agent upon 30 days' written notice to the Eligible Lender
Trustee. In the event that the Indenture Trustee shall no longer be the Excess
Distribution Certificate Paying Agent, the Eligible Lender Trustee shall appoint
a successor to act as Excess Distribution Certificate Paying Agent (which shall
be a bank or trust company). The Eligible Lender Trustee shall cause such
successor Excess Distribution Certificate Paying Agent or any additional Excess
Distribution Certificate Paying Agent appointed by the Eligible Lender Trustee
to execute and deliver to the Eligible Lender Trustee an instrument in which
such successor Excess Distribution Certificate Paying Agent or additional Excess
Distribution Certificate Paying Agent shall agree with the Eligible Lender
Trustee that as Excess Distribution Certificate Paying Agent, such successor
Excess Distribution Certificate Paying Agent or additional Excess Distribution
Certificate Paying Agent will hold all sums, if any, held by it for payment to
the holder of the Excess Distribution Certificate in trust for the benefit of
such holder until such sums shall be paid to such holder. The Excess
Distribution Certificate Paying Agent shall return all unclaimed funds to the
Eligible Lender Trustee and upon removal of an Excess Distribution Certificate
Paying Agent such Excess Distribution Certificate Paying Agent shall also return
all funds in its possession to the Eligible Lender Trustee. The provisions of
Articles VII and VIII of the Indenture shall apply to the Indenture Trustee also
in its role as Excess Distribution Certificate Paying Agent, for so long as the
Indenture Trustee shall act as Excess Distribution Certificate Paying Agent and,
to the extent applicable, to any other paying agent appointed hereunder. Any
reference in this Agreement to the Excess Distribution Certificate Paying Agent
shall include any co-paying agent unless the context requires otherwise.

         (h) Restrictions on Transfer of the Excess Distribution Certificate.
(i) The Excess Distribution Certificate may be transferred to any Affiliate of
the Depositor, without any requirement to provide any officer's certificates or
legal opinions that would otherwise be required if such proposed transfer was
being made to a Person who is not an Affiliate of the Depositor.

                                      -7-
<PAGE>

                  (ii) Except as provided above, the Excess Distribution
         Certificate shall not be sold, pledged, transferred or assigned except
         as provided below:

                           (A) The Excess Distribution Certificate has not been
         registered or qualified under the Securities Act of 1933, as amended
         (the "Securities Act") or any state securities law. No transfer, sale,
         pledge or other disposition of the Excess Distribution Certificate or
         any interest therein shall be made unless such transfer is made
         pursuant to an effective registration statement under the Securities
         Act and effective registration or qualification under applicable state
         securities laws, or is made in a transaction which does not require
         such registration or qualification. In the event that a transfer is to
         be made without registration or qualification, the Eligible Lender
         Trustee shall require, in order to assure compliance with such laws,
         that the prospective transferor and transferee each certify to the
         Eligible Lender Trustee, the Excess Distribution Certificate Registrar,
         the Administrator, and, if it is not the proposed transferor, the
         Depositor, in writing, the facts surrounding the transfer. Such
         certifications shall be substantially in the forms of Exhibit C hereto
         and Exhibit D-1 or D-2 hereto, as applicable. In the event that such a
         transfer is to be made within two years from the date of the initial
         issuance of the Excess Distribution Certificate pursuant hereto (other
         than a transfer as to which the proposed transferee has provided a
         certificate in the form of Exhibit D-2), the Eligible Lender Trustee in
         its sole discretion, may require that there shall also be delivered to
         the Eligible Lender Trustee, the Excess Distribution Certificate
         Registrar, the Administrator, or, if it is not the proposed transferor,
         the Depositor, at the expense of the transferor, an opinion of counsel
         that such transfer may be made pursuant to an exemption from the
         Securities Act and such state securities laws. Any such opinion of
         counsel shall not be an expense of the Eligible Lender Trustee, the
         Excess Distribution Certificate Registrar, the Administrator, and, if
         it is not the proposed transferor, the Depositor. None of the
         Depositor, the Administrator or the Eligible Lender Trustee is
         obligated to register or qualify the Excess Distribution Certificate
         under the Securities Act or any other securities law or to take any
         action not otherwise required under this Agreement to permit the
         transfer of the Excess Distribution Certificate without registration or
         qualification. Any such holder of the Excess Distribution Certificate
         desiring to effect such transfer shall, and does hereby agree to,
         indemnify the Eligible Lender Trustee, the Excess Distribution
         Certificate Registrar, the Administrator, and, if it is not the
         proposed transferor, the Depositor, against any liability that may
         result if the transfer is not so exempt or is made in accordance with
         such applicable federal and state laws.

                           (B) No transfer of the Excess Distribution
         Certificate will be registered by the Eligible Lender Trustee or the
         Excess Distribution Certificate Registrar unless the Eligible Lender
         Trustee, the Excess Distribution Certificate Registrar, the
         Administrator, and, if it is not the proposed transferor, the Depositor
         receives a representation from the proposed transferee of the Excess
         Distribution Certificate, substantially in the form of Exhibit D-1 or
         D-2, as the case may be, that such transferee is not acquiring the
         Excess Distribution Certificate directly or indirectly for, on behalf
         of or with the assets of a Plan. If any proposed transferee shall
         become a holder of the Excess Distribution Certificate in violation of
         these provisions, then the last preceding permitted transferee shall be
         restored, to the extent permitted by law, to all rights as holder of
         the Excess Distribution Certificate, retroactive to the date of
         registration of such transfer of the Excess

                                      -8-
<PAGE>

         Distribution Certificate. Neither the Eligible Lender Trustee nor the
         Excess Distribution Certificate Registrar shall have any liability to
         any person for any registration or transfer of the Excess Distribution
         Certificate that is not permitted or for making any payments due on the
         Excess Distribution Certificate to the holder thereof or for taking any
         action with respect to such holder under this Agreement. Any proposed
         transferee who becomes a holder of the Excess Distribution Certificate
         shall agree to indemnify the Eligible Lender Trustee, the Excess
         Distribution Certificate Registrar, the Administrator, and, if it is
         not the proposed transferor, the Depositor, against any loss, damage or
         penalty incurred as a result of the transfer of the Excess Distribution
         Certificate to such proposed transferee in violation of such
         restrictions.

                           (C) The prospective transferee shall be aware that
         the Excess Distribution Certificate shall bear legends referring to the
         restrictions contained in sub-clauses (A) and (B) above and by its
         acceptance of the Excess Distribution Certificate agrees to abide by
         such restrictions.

                           (D) The prospective transferee shall deliver an
         opinion of counsel addressed to the Eligible Lender Trustee, the
         Administrator, and, if it is not the proposed transferor, the
         Depositor, to the effect that, (1) as a matter of federal income tax
         law, such prospective transferee is permitted to accept the transfer of
         the Excess Distribution Certificate, (2) such transfer or pledge would
         not jeopardize the tax treatment of the Trust, (3) such transfer or
         pledge would not subject the Trust to any entity-level tax, (4) such
         transfer or pledge would not jeopardize the status of the Notes as debt
         for all purposes, and (5) such pledge or transfer would not cause the
         Trust to be treated, for federal income tax purposes, as an association
         or a publicly traded partnership taxable as a corporation.

                           (E) No pledge or transfer of the Excess Distribution
         Certificate shall be effective unless such purchase or transfer is to a
         single beneficial owner.

                  (iii) Any holder of the Excess Distribution Certificate, as
         evidenced by its agreement to accept the rights conferred under the
         Excess Distribution Certificate, is hereby deemed to accept all
         obligations of the Depositor under this Agreement.

                                   ARTICLE IV

                       Actions by Eligible Lender Trustee

         SECTION 4.1 Prior Notice to the Holder of the Excess Distribution
Certificate 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 holder of the Excess Distribution Certificate and each of the
Rating Agencies in writing of the proposed action and the holder of the Excess
Distribution Certificate shall not have notified the Eligible Lender Trustee in
writing prior to the 30th calendar day after such notice is given that it has
withheld consent or provided alternative direction:

                                      -9-
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         (a)      the initiation of any material claim or lawsuit by the Trust
                  (except claims or lawsuits brought in connection with the
                  collection of the Trust Student Loans) and the compromise of
                  any material action, claim or lawsuit brought by or against
                  the Trust (except with respect to the aforementioned claims or
                  lawsuits for collection of Trust Student Loans);

         (b)      the amendment of the Indenture by a supplemental indenture in
                  circumstances where the consent of any class of Noteholders is
                  required;

         (c)      the amendment of the Indenture by a supplemental indenture in
                  circumstances where the consent of any class of Noteholder is
                  not required and such amendment materially adversely affects
                  the interests of the holder of the Excess Distribution
                  Certificate; or

         (d)      the amendment of the Interest Rate Cap Agreement in
                  circumstances where the consent of any class of Noteholders is
                  required or in circumstances where the consent of Noteholders
                  is not required but where such amendment materially adversely
                  affects the interests of the holder of the Excess Distribution
                  Certificate.

         SECTION 4.2 Action with Respect to Sale of the Trust Student Loans. The
Eligible Lender Trustee shall not have the power, except upon the written
direction of the holder of the Excess Distribution Certificate and except as
expressly provided in the Basic Documents, to sell the Trust Student Loans after
the payment in full of the Notes.

         SECTION 4.3 Action with Respect to Bankruptcy. The Eligible Lender
Trustee shall not have the power to commence a voluntary proceeding in
bankruptcy relating to the Trust without the prior approval of the holder of the
Excess Distribution Certificate and the delivery to the Eligible Lender Trustee
by the holder of the Excess Distribution Certificate of a certificate certifying
that the holder of the Excess Distribution Certificate reasonably believes that
the Trust is insolvent.

         SECTION 4.4 Restrictions. Neither the Depositor nor the holder of the
Excess Distribution Certificate shall direct the Eligible Lender Trustee to take
or refrain from taking any action if such action or inaction would be contrary
to any obligation of the Trust or the Eligible Lender Trustee under this
Agreement or any of the other Basic Documents or would be contrary to Section
2.3 nor shall the Eligible Lender Trustee be permitted to follow any such
direction, if given.

         SECTION 4.5 Intentionally Omitted.

                                    ARTICLE V

                   Application of Trust Funds; Certain Duties

         SECTION 5.1 Application of Trust Funds.

         (a)      On each Distribution Date, the Excess Distribution Certificate
                  Paying Agent shall distribute to the holder of the Excess
                  Distribution Certificate any amounts payable

                                      -10-
<PAGE>

                  in respect of the Excess Distribution Certificate in
                  accordance with the Administration Agreement.

         (b)      In the event that any withholding tax is imposed on the
                  Trust's payment to the holder of the Excess Distribution
                  Certificate, such tax shall reduce the amount otherwise
                  distributable on the Excess Distribution Certificate.

         SECTION 5.2 Method of Payment. Distributions required to be made to the
holder of the Excess Distribution Certificate on any Distribution Date shall be
made to the holder of record on the preceding Record Date either by wire
transfer, in immediately available funds, to the account of such holder at a
bank or other entity having appropriate facilities therefor, if such holder
shall have provided to the Excess Distribution Certificate Registrar appropriate
written instructions signed by two authorized officers, if any, at least five
Business Days prior to such Distribution Date, or, if not, by check mailed to
such holder at the address of such holder appearing in the Excess Distribution
Certificate Register.

         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 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 Reports to the Holder of the Excess Distribution
Certificate, the Internal Revenue Service and Others. The Eligible Lender
Trustee shall provide (or cause to be provided) any reports or other information
required to be provided to the holder of the Excess Distribution Certificate
pursuant to the Code, the regulations promulgated thereunder or other applicable
law. In addition, the Eligible Lender Trustee shall provide (or cause to be
provided) any information concerning the Excess Distribution Certificate to the
Internal Revenue Service or other taxing authority as required under the Code,
the regulations promulgated thereunder or other applicable law. 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 Intentionally Omitted.

         SECTION 5.6 Intentionally Omitted.

                                   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 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
denominated in U.S. Dollars in the aggregate principal amount of $2,526,179,000.
The Eligible Lender Trustee is also

                                      -11-
<PAGE>

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 2.4 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 of 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
Noteholders and the holder of the Excess Distribution Certificate subject to and
in accordance with the provisions of this Agreement and the other Basic
Documents. Without limiting the foregoing, the Eligible Lender Trustee shall on
behalf of the Trust file and prove any claim or claims that may exist on behalf
of the Trust against the Depositor in connection with any claims paying
procedure as part of an insolvency or a receivership proceeding involving the
Depositor. Notwithstanding the foregoing, the Eligible Lender Trustee shall be
deemed to have discharged its duties and responsibilities hereunder and under
the other Basic Documents to the extent the Administrator has agreed in the
Administration Agreement to perform and act or to discharge any duty of the
Eligible Lender Trustee hereunder or under any other Basic Document, and the
Eligible Lender Trustee shall not be held liable for the default or failure of
the Administrator to carry out its obligations under the Administration
Agreement. Except as expressly provided in the Basic Documents, the Eligible
Lender Trustee shall have no obligation to administer, service or collect the
Trust Student Loans or to maintain, monitor or otherwise supervise the
administration, servicing or collection of the Trust Student Loans.

         SECTION 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, 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 holder of the

                                      -12-
<PAGE>

Excess Distribution Certificate 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 holder of the Excess
Distribution Certificate 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, the other Basic Documents, as it shall deem to be in the best
interests of the holder of the Excess Distribution Certificate, 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, 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 holder of the Excess Distribution Certificate requesting
instruction and, to the extent that the Eligible Lender Trustee acts or refrains
from acting in good faith in accordance with any such instruction received, the
Eligible Lender Trustee shall not be liable, on account of such action or
inaction, to any Person. If the Eligible Lender Trustee shall not have received
appropriate instruction within 10 days of such notice (or within such shorter
period of time as reasonably may be specified in such notice or may be necessary
under the circumstances) it may, but shall be under no duty to, take or refrain
from taking such action, not inconsistent with this Agreement or the other Basic
Documents, as it shall deem to be in the best interest of the holder of the
Excess Distribution Certificate, 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.

                                      -13-
<PAGE>

         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 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. Neither the Depositor nor the holder of the Excess Distribution
Certificate shall 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, the Depositor or the holder of the Excess
Distribution Certificate;

         (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;

                                      -14-
<PAGE>

         (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 Excess Distribution Certificate, and the
Eligible Lender Trustee shall in no event assume or incur any liability, duty,
or obligation to any Noteholder or the holder of the Excess Distribution
Certificate, 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, any other Basic Document, at the request, order
or direction of the Depositor or holder of the Excess Distribution Certificate,
unless the Depositor or such holder has offered to the Eligible Lender Trustee
security or indemnity satisfactory to it against the costs, expenses and
liabilities that may be incurred by the Eligible Lender Trustee therein or
thereby. The right of the Eligible Lender Trustee to perform any discretionary
act enumerated in this Agreement or in any other Basic Document shall not be
construed as a duty, and the Eligible Lender Trustee shall not be answerable for
other than its negligence or willful misconduct in the performance of any such
act.

         SECTION 7.2 Intentionally Omitted.

         SECTION 7.3 Representations and Warranties. The Eligible Lender Trustee
hereby represents and warrants to the Depositor, for the benefit of the
Noteholders, the Interest Rate Cap Counterparty and the holder of the Excess
Distribution Certificate, that:

         (a) It is duly organized and validly existing in good standing under
the laws of its governing jurisdiction and has an office located within the
State of Delaware. It has all requisite corporate power and authority to
execute, deliver and perform its obligations under this Agreement.

         (b) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will be
executed and delivered by one of its officers who is duly authorized to execute
and deliver this Agreement on its behalf.

         (c) Neither the execution nor the delivery by it of this Agreement, nor
the consummation by it of the transactions contemplated hereby nor compliance by
it with any of the terms or provisions hereof will contravene any Federal or
Delaware state law, governmental rule or regulation governing the banking or
trust powers of the Eligible Lender Trustee or any

                                      -15-
<PAGE>

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 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 Excess Distribution
Certificate or Trust Student Loans. The recitals contained herein and in the
Excess Distribution Certificate (other than the signature of and authentication
by the Eligible Lender Trustee on the Excess

                                      -16-
<PAGE>

Distribution Certificate) shall be taken as the statements of the Depositor and
the Eligible Lender Trustee assumes no responsibility for the correctness
thereof. The Eligible Lender Trustee makes no representations as to the validity
or sufficiency of this Agreement, the Excess Distribution Certificate, or any
other Basic Document (other than the signature of and authentication by the
Eligible Lender Trustee on the Excess Distribution Certificate), 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 the holder of the
Excess Distribution Certificate 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 Notes. The Eligible Lender
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may deal with the Depositor, the holder of the Excess Distribution
Certificate, the Administrator, the Indenture Trustee or 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.

         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.

                                      -17-
<PAGE>

         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 (1) the final distribution
by the Excess Distribution Certificate Paying Agent 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 of the Trust Agreement and
(2) the filing of the certificate of cancellation by the Eligible Lender Trustee
pursuant to section 9.1(b) below. The bankruptcy, liquidation, dissolution,
death or incapacity of the holder of the Excess Distribution Certificate shall
not (x) operate to terminate this Agreement or the Trust, nor (y) entitle such
holder'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), none of the Depositor, any
Noteholder or the holder of the Excess Distribution Certificate shall be
entitled to revoke or terminate the Trust.

         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 Statutory Trust
Act.

                                   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 as may be directed by the Depositor; (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 Statutory Trust Act; and (vi) having (or having a parent which has)
a rating in respect of its long-term 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

                                      -18-
<PAGE>

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). If the Eligible
Lender Trustee shall publish reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising or examining authority,
then for the purpose of this Section, the combined capital and surplus of the
Eligible Lender Trustee shall be deemed to be its combined capital and surplus
as set forth in its most recent report of condition so published. In case at any
time the Eligible Lender Trustee shall cease to be eligible in accordance with
the provisions of this Section, the Eligible Lender Trustee shall resign
immediately in the manner and with the effect specified in Section 10.2.

         SECTION 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 Statutory Trust Act. The
Administrator shall provide notice of such resignation or removal of the
Eligible Lender Trustee and to each of the Rating Agencies.

         SECTION 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

                                      -19-
<PAGE>

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 the holder of the Excess Distribution
Certificate, 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 or association into which the Eligible Lender Trustee may be merged
or converted or with which it may be consolidated, or any corporation or
association resulting from any merger, conversion or consolidation to which the
Eligible Lender Trustee shall be a party, or any corporation or association
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 or association shall be
eligible pursuant to Section 10.1; and provided further that the Eligible Lender
Trustee shall mail notice of such merger or consolidation to the Rating Agencies
not less than 15 days prior to the effective date thereof.

         SECTION 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

                                      -20-
<PAGE>

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;

                  (ii) no trustee under this Agreement shall be personally
         liable by reason of any act or omission of any other trustee under this
         Agreement; and

                  (iii) the Administrator and the Eligible Lender Trustee acting
         jointly may at any time accept the resignation of or remove any
         separate trustee or co-trustee.

         Any notice, request or other writing given to the Eligible Lender
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of appointment, either jointly with the Eligible
Lender Trustee or separately, as may be provided therein, subject to all the
provisions of this Agreement, specifically including every provision of this
Agreement relating to the conduct of, affecting the liability of, or affording
protection to, the Eligible Lender Trustee. Each such instrument shall be filed
with the Eligible Lender Trustee and a copy thereof given to the Administrator.

         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.

                                      -21-
<PAGE>

                                   ARTICLE XI

                                  Miscellaneous

         SECTION 11.1 Supplements and Amendments. This Agreement may be amended
by the holder of the Excess Distribution Certificate and the Eligible Lender
Trustee, with prior written notice to the Rating Agencies, without the consent
of any of the Noteholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement or for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions in this Agreement or
modifying in any manner the rights of the Noteholders; provided, however, that
such action shall not, as evidenced by an Opinion of Counsel, adversely affect
in any material respect the interests of any Noteholder.

         This Agreement may also be amended from time to time by the holder of
the Excess Distribution Certificate and the Eligible Lender Trustee, with prior
written notice to the Rating Agencies, with the consent of (i) the Class A
Noteholders evidencing not less than a majority of the Outstanding Amount of the
Class A Notes and (ii) the Class B Noteholders evidencing not less than a
majority of the Class B Notes, for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
modifying in any manner the rights of the Class A Noteholders or Class B
Noteholders, as the case may be; 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 (b) reduce
the aforesaid percentage of the Outstanding Amount of any class of Notes
required to consent to any such amendment, without the consent of all the
outstanding Noteholders of such class.

         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 the holder of the Excess Distribution Certificate,
the Indenture Trustee and each of the Rating Agencies.

         It shall not be necessary for the consent of the Noteholders or the
Indenture Trustee pursuant to this Section to approve the particular form of any
proposed amendment or consent, but it shall be sufficient if such consent shall
approve the substance thereof. The manner of obtaining such consents (and any
other consents of provided for in this Agreement or in any other Basic Document)
and of evidencing the authorization of the execution thereof 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 Holder of the Excess
Distribution Certificate. The holder of the Excess Distribution Certificate
shall not have legal title to any part of the Trust Estate. The holder of the
Excess Distribution Certificate shall be entitled to receive

                                      -22-
<PAGE>

distributions with respect to its undivided beneficial ownership interest
therein only in accordance with Section 3.13 of this Agreement. No transfer, by
operation of law or otherwise, of any right, title, or interest of the holder of
the Excess Distribution Certificate to and in its beneficial ownership interest
in the Trust Estate shall operate to terminate this Agreement or the trusts
hereunder or entitle any transferee to an accounting or to the transfer to it of
legal title to any part of the Trust Estate.

         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 holder of the Excess Distribution
Certificate, 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 this Agreement or any covenants, conditions or provisions contained
herein.

         SECTION 11.4 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 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 with copies to Deutsche Bank Trust Company Americas, 60 Wall
Street, 26th Floor, Mailstop NYC60-2606, Attn: Trust & Securities
Services/Structured Finance Services; if to the Depositor, addressed to SLM
Funding LLC, 11600 Sallie Mae Drive, MDC V1784, Reston, Virginia 20193, or, as
to each party, at such other address as shall be designated by such party in a
written notice to each other party.

         SECTION 11.5 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

         SECTION 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 and inure to the benefit of, the
Depositor and its successors, the Eligible Lender Trustee and its successors,
each holder of the Excess Distribution Certificate and its successors and
permitted assigns, all as herein provided. Any request, notice, direction,
consent, waiver or other instrument or action by a Noteholder or the holder of
the Excess Distribution Certificate shall bind the successors and assigns of
such holder.

         SECTION 11.8 No Petition.

         (a) Neither the Depositor, nor any other holder of the Excess
Distribution Certificate (as evidenced by its acceptance of the Excess
Distribution Certificate) will institute against the

                                      -23-
<PAGE>

Trust, at any time, any bankruptcy proceedings under any United States Federal
or state bankruptcy or similar law in connection with any obligations relating
to the Excess Distribution Certificate, the Notes, this Agreement or any of the
other Basic Documents. The foregoing shall not limit the rights of the
Depositor, nor any holder of the Excess Distribution Certificate to file any
claim in, or otherwise take any action with respect to, any insolvency
proceeding that was instituted against the Trust by a Person other than the
Depositor or such other holder of the Excess Distribution Certificate.

         (b) The Eligible Lender Trustee (not in its individual capacity but
solely as Eligible Lender Trustee), by entering into this Agreement, the holder
of the Excess Distribution Certificate by accepting the Excess Distribution
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 Notes, this Agreement or any
of the other Basic Documents. The foregoing shall not limit the rights of the
Eligible Lender Trustee to file any claim in, or otherwise take any action with
respect to, any insolvency proceeding that was instituted against the Issuer by
a Person other than the Eligible Lender Trustee.

         SECTION 11.9 No Recourse. Each holder of the Excess Distribution
Certificate by accepting the Excess Distribution Certificate acknowledges that
such holder's certificate represents 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, the Interest
Rate Cap Counterparty 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 Excess Distribution Certificate or the other Basic Documents.

         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.

                                      -24-
<PAGE>

         IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated 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 J. CASHIN
                                          Name: John J. Cashin
                                          Title: Vice President

                                      SLM FUNDING LLC,
                                      as the Depositor

                                      By: /s/ MARK L. HELEEN
                                          Name: Mark L. Heleen
                                          Title: Vice President

                                      -25-
<PAGE>

Acknowledged and agreed as to
Section 3.13(c) and Section 3.13(g)
of this Amended and Restated Trust Agreement

DEUTSCHE BANK TRUST COMPANY AMERICAS,
not in its individual capacity but solely
as the initial Excess Distribution
Certificate Paying Agent

By: /s/ MICHELE H.Y. VOON
    Name: Michele H.Y. Voon
    Title: Assistant Vice President

                                      -26-
<PAGE>

                                                                       EXHIBIT A
                                                          TO THE TRUST AGREEMENT

                              [PLEASE SEE ATTACHED]

                                      A-1
<PAGE>

                                                                       EXHIBIT B

                                     FORM OF

                              CERTIFICATE OF TRUST
                                       OF
                                SLM STUDENT LOAN
                                  TRUST 2004-4

         This Certificate of Trust of SLM STUDENT LOAN TRUST 2004-4 (the
"Trust") is being duly executed and filed on behalf of the Trust by the
undersigned, as trustee, to form a statutory trust under the Delaware Statutory
Trust Statute (12 Del. C. Section 3801 et seq.) (the "Act").

         1. Name. The name of the statutory trust formed by this Certificate of
Trust is SLM STUDENT LOAN TRUST 2004-4.

         2. Delaware Trustee. The name and business address of the eligible
lender trustee of the Trust in the State of Delaware are the Chase Manhattan
Bank USA, National Association, c/o JPMorgan Chase Bank, 500 Stanton Christiana
Road, Christiana Center/OPS4/3rd Floor, Newark, Delaware 19713. Attn:
Institutional Trust Services.

         3. Effective Date. This Certificate of Trust shall be effective upon
filing.

         IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
of Trust in accordance with Section 3811(a)(1) of the Act.

                                    CHASE MANHATTAN BANK USA,
                                    NATIONAL ASSOCIATION, not in its
                                    individual capacity but solely as Eligible
                                    Lender Trustee

                                    By: _______________________________
                                    Name:
                                    Title:

                                      B-1

<PAGE>

                                                                       EXHIBIT C
                                                     [FORM OF TRANSFEROR LETTER]

[Date]

Sallie Mae, Inc.
as Administrator
11600 Sallie Mae Drive
Reston, Virginia 20193

Deutsche Bank Trust Company Americas,
as Excess Distribution Certificate Registrar
60 Wall Street, 26th Floor
Mailstop NYC60-2606
Attention: Trust & Securities Services/Structured Finance Services

Chase Manhattan Bank USA, National Association
as Eligible Lender Trustee
Christiana Center/OPS4
500 Stanton Christiana Road
Newark, Delaware 19713

Re:      SLM Student Loan Trust 2004-4,
         Excess Distribution Certificate (the "Certificate")

Ladies and Gentlemen:

         In connection with our disposition of the above Certificate, we certify
that (a) we understand that the Certificate has not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), and is being disposed
by us in a transaction that is exempt from the registration requirements of the
Securities Act, and (b) we have not offered or sold the Certificate to, or
solicited offers to buy the Certificate from, any person, or otherwise
approached or negotiated with any person with respect thereto, in a manner that
would be deemed, or taken any other action would result in, a violation of
Section 5 of the Securities Act.

Very truly yours,

_________________________________________
[Print Name of Transferor]

By: ______________________________________
      Authorized Officer

                                      C-1

<PAGE>

                                                                     EXHIBIT D-1
                                     [FORM OF TRANSFEREE LETTER (NON-RULE 144A)]

[Date]

Sallie Mae, Inc.
as Administrator
11600 Sallie Mae Drive
Reston, Virginia 20193

Deutsche Bank Trust Company Americas,
as Excess Distribution Certificate Registrar
60 Wall Street, 26th Floor
Mailstop NYC60-2606
Attention: Trust & Securities Services/Structured Finance Services

Chase Manhattan Bank USA, National Association
as Eligible Lender Trustee
Christiana Center/OPS4
500 Stanton Christiana Road
Newark, Delaware  19713

Re:      SLM Student Loan Trust 2004-4,
         Excess Distribution Certificate (the "Certificate")

Ladies and Gentlemen:

         In connection with our acquisition of the above Certificate, we certify
that (a) we understand that the Certificate is not being registered under the
Securities Act of 1933, as amended (the "Securities Act"), or any state
securities laws and is being transferred to us in a transaction that is exempt
from the registration requirements of the Securities Act and any such laws, (b)
we are an institutional "accredited investor," as defined in Rule 501 (a) (1),
(2), (3) or (7) of Regulation D under the Securities Act or an entity in which
all of the equity owners come within such paragraphs, and have such knowledge
and experience in financial and business matters that we are capable of
evaluating the merits and risks of investments in the Certificate, (c) we have
had the opportunity to ask questions of and receive answers from the Depositor
concerning the purchase of the Certificate and all matters relating thereto or
any additional information deemed necessary to our decision to purchase the
Certificate, (d) we are not acquiring the Certificate for, on behalf of or with
the assets of, an employee benefit plan or other retirement arrangement which is
subject to Title I of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and/or Section 4975 of the Internal Revenue Code of 1986, as
amended (the "Code") (each, a "Plan"), (e) we are acquiring the Certificate for
investment for our own account and not with a view to any distribution of the
Certificate (but without prejudice to our right at all times to sell or
otherwise dispose of the Certificate in accordance with clause (g) below), (f)
we have not offered or sold the Certificate to, or solicited offers to buy the

                                     D-1-1

<PAGE>

Certificate from, any person, or otherwise approached or negotiated with any
person with respect thereto, or taken any other action which would result in a
violation of Section 5 of the Securities Act, and (g) we will not sell, transfer
or otherwise dispose of the Certificate unless (1) such sale, transfer or other
disposition is made pursuant to an effective registration statement under the
Securities Act or is exempt from such registration requirements, and if
requested, we will at our expense provide an opinion of counsel satisfactory to
the addressees of this Letter that such sale, transfer or other disposition may
be made pursuant to an exemption from the Securities Act, (2) the purchaser or
transferee of such Certificate has executed and delivered to you a certificate
to substantially the same effect as this certificate and (3) the purchaser or
transferee has otherwise complied with any conditions for transfer set forth in
the Trust Agreement relating to the Certificate.

                                          Very truly yours,

                                          __________________________________
                                          [Print Name of Transferee]

                                          By:_______________________________
                                              Authorized Officer

                                     D-1-2

<PAGE>

                                                                     EXHIBIT D-2
                                         [FORM OF TRANSFEREE LETTER (RULE 144A)]

[Date]

Sallie Mae, Inc.
as Administrator
11600 Sallie Mae Drive
Reston, Virginia  20193

Deutsche Bank Trust Company Americas,
as Excess Distribution Certificate Registrar
60 Wall Street, 26th Floor
Mailstop NYC60-2606
Attention: Trust & Securities Services/Structured Finance Services

Chase Manhattan Bank USA, National Association
as Eligible Lender Trustee
Christiana Center/OPS4
500 Stanton Christiana Road
Newark, Delaware 19713

Re:      SLM Student Loan Trust 2004-4,
         Excess Distribution Certificate (the "Certificate")

Ladies and Gentlemen:

         In connection with our acquisition of the above Certificate, we certify
that (a) we understand that the Certificate is not being registered under the
Securities Act of 1933, as amended (the "Securities Act"), or any state
securities laws and is being transferred to us in a transaction that is exempt
from the registration requirements of the Securities Act and any such laws, (b)
we have such knowledge and experience in financial and business matters that we
are capable of evaluating the merits and risks of investments in the
Certificate, (c) we have had the opportunity to ask questions of and receive
answers from the Depositor concerning the purchase of the Certificate and all
matters relating thereto or any additional information deemed necessary to our
decision to purchase the Certificate, (d) we are not acquiring the Certificate
for, on behalf of or with the assets of, an employee benefit plan or other
retirement arrangement which is subject to Title I of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and/or Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code") (each, a "Plan"), (e) we
have not, nor has anyone acting on our behalf offered, transferred, pledged,
sold or otherwise disposed of the Certificate, any interest in the Certificate
or any other similar security to, or solicited any offer to buy or accept a
transfer, pledge or other disposition of the Certificate, any interest in the
Certificate or any other similar security from, or otherwise approached or
negotiated with respect to the Certificate, any interest in the Certificate or
any other similar security with, any person in any manner, or made any general
solicitation by means

                                      D-2-1
<PAGE>

of general advertising or in any other manner, or taken any other action, that
would constitute a distribution of the Certificate under the Securities Act or
that would render the disposition of the Certificate a violation of Section 5 of
the Securities Act or require registration pursuant thereto, nor will act, nor
has authorized or will authorize any person to act, in such manner with respect
to the Certificate, (f) we are a "qualified institutional buyer" as that term is
defined in Rule 144A under the Securities Act ("Rule 144A") and have completed
either of the forms of certification to that effect attached hereto as Annex 1
or Annex 2. We are aware that the sale to us is being made in reliance on Rule
144A. We are acquiring the Certificate for our own account or for resale
pursuant to Rule 144A and further understand that the Certificate may be resold,
pledged or transferred only (1) to a person reasonably believed to be a
qualified institutional buyer that purchases for its own account or for the
account of a qualified institutional buyer to whom notice is given that the
resale, pledge or transfer is being made in reliance on Rule 144A, or (ii)
pursuant to another exemption from registration under the Securities Act.

                                            Very truly yours,

                                            __________________________________
                                            [Print Name of Transferee]

                                            By:_______________________________
                                                  Authorized Officer

                                     D-2-2

<PAGE>

                                                                         ANNEX 1
                        QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

          [For Transferees Other Than Registered Investment Companies]

         The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Letter to which this certification
relates with respect to the Certificate described therein:

         1.       As indicated below, the undersigned is the President, Chief
                  Financial Officer, Senior Vice President or other executive
                  officer of the Buyer.

         2.       In connection with purchases by the Buyer, the Buyer is a
                  "qualified institutional buyer" as that term is defined in
                  Rule 144A under the Securities Act of 1933, as amended ("Rule
                  144A") because (i) the Buyer owned and/or invested on a
                  discretionary basis $____________(1) in securities (except for
                  the excluded securities referred to below) as of the end of
                  the Buyer's most recent fiscal year (such amount being
                  calculated in accordance with Rule 144A and (ii) the Buyer
                  satisfies the criteria in the category marked below.

                  ___      Corporation, etc. The Buyer is a corporation (other
                           than a bank, savings and loan association or similar
                           institution), Massachusetts or similar business
                           trust, partnership, or charitable organization
                           described in Section 501 (c) (3) of the Internal
                           Revenue Code of 1986, as amended.

                  ___      Bank. The Buyer (a) is a national bank or banking
                           institution organized under the laws of any State,
                           territory or the District of Columbia, the business
                           of which is substantially confined to banking and is
                           supervised by the State or territorial banking
                           commission or similar official or is a foreign bank
                           or equivalent institution, and (b) has an audited net
                           worth of at least $25,000,000 as demonstrated in its
                           latest annual financial statements, a copy of which
                           is attached hereto.

                  ___      Savings and Loan. The Buyer (a) is a savings and loan
                           association, building and loan association,
                           cooperative bank, homestead association or similar
                           institution, which is supervised and examined by a
                           State or Federal authority having supervision over
                           any such institutions or is a foreign savings and
                           loan association or equivalent institution and (b)
                           has an audited net worth of at least $25,000,000 as
                           demonstrated in its latest annual financial
                           statements, a copy of which is attached hereto.

--------------------------
(1)      Buyer must own and/or invest on a discretionary basis at least
         $100,000,000 in securities unless Buyer is a dealer, and, in that case,
         Buyer must own and/or invest on a discretionary basis at least
         $10,000,000 in securities.

                                    Annex 1-1

<PAGE>

                  ___      Broker-dealer. The Buyer is a dealer registered
                           pursuant to Section 15 of the Securities Exchange Act
                           of 1934.

                  ___      Insurance Company. The Buyer is an insurance company
                           whose primary and predominant business activity is
                           the writing of insurance or the reinsuring of risks
                           underwritten by insurance companies and which is
                           subject to supervision by the insurance commissioner
                           or a similar official or agency of a State, territory
                           or the District of Columbia.

                  ___      State or Local Plan. The Buyer is a plan established
                           and maintained by a State, its political
                           subdivisions, or any agency or instrumentality of the
                           State or its political subdivisions, for the benefit
                           of its employees.

                  ___      ERISA Plan. The Buyer is an employee benefit plan
                           within the meaning of Title I of the Employee
                           Retirement Income Security Act of 1974.

                  ___      Investment Advisor. The Buyer is an investment
                           advisor registered under the Investment Advisors Act
                           of 1940.

                  ___      Small Business Investment Company. The Buyer is a
                           small business investment company licensed by the
                           U.S. Small Business Administration under Section
                           301(c) or (d) of the Small Business Investment Act of
                           1958.

                  ___      Business Development Company. The Buyer is a business
                           development company as defined in Section 202(a)(22)
                           of the Investment Advisors Act of 1940.

                  ___      Qualified Institutional Buyers. The Buyer owned
                           and/or invested on a discretionary basis less than
                           $100,000,000, but it is an entity in which all of the
                           equity owners are qualified institutional buyers.

         3.       The term "securities" as used herein does not include (i)
                  securities of issuers that are affiliated with the Buyer, (ii)
                  securities that are part of an unsold allotment to or
                  subscription by the Buyer, if the Buyer is a dealer, (iii)
                  securities issued or guaranteed by the U.S. or any
                  instrumentality thereof, (iv) bank deposit notes and
                  certificates of deposit, (v) loan participations, (vi)
                  repurchase agreements, (vii) securities owned but subject to a
                  repurchase agreement and (viii) currency, interest rate and
                  commodity swaps.

         4.       For purposes of determining the aggregate amount of securities
                  owned and/or invested on a discretionary basis by the Buyer,
                  the Buyer used the cost of such securities to the Buyer and
                  did not include any of the securities referred to in the
                  preceding paragraph, except (i) where the Buyer reports its
                  securities holdings in its financial statements on the basis
                  of their market value, and (ii) no current information with
                  respect to the cost of those securities has been published. If
                  clause (ii) in the preceding sentence applies, the securities
                  may be valued at market. Further, in determining such
                  aggregate amount, the Buyer may have included securities owned
                  by subsidiaries of the Buyer, but only if such

                                    Annex 1-2

<PAGE>

                  subsidiaries are consolidated with the Buyer in its financial
                  statements prepared in accordance with generally accepted
                  accounting principles and if the investments of such
                  subsidiaries are managed under the Buyer's direction. However,
                  such securities were not included if the Buyer is a
                  majority-owned, consolidated subsidiary of another enterprise
                  and the Buyer is not itself a reporting company under the
                  Securities Exchange Act of 1934, as amended.

         5.       The Buyer acknowledges that it is familiar with Rule 144A and
                  understands that the seller to it and other parties related to
                  the Certificate are relying and will continue to rely on the
                  statements made herein because one or more sales to the Buyer
                  may be in reliance on Rule 144A.

         6.       Until the date of purchase of the Rule 144A Securities, the
                  Buyer will notify each of the parties to which this
                  certification is made of any changes in the information and
                  conclusions herein. Until such notice is given, the Buyer's
                  purchase of the Certificate will constitute a reaffirmation of
                  this certification as of the date of such purchase. In
                  addition, if the Buyer is a bank or savings and loan is
                  provided above, the Buyer agrees that it will furnish to such
                  parties updated annual financial statements promptly after
                  they become available.

____________________________________
[Print Name of Transferee]

By:_________________________________
Name:
Title:

Date:______________________

                                    Annex 1-3

<PAGE>

                                                                         ANNEX 2
                        QUALIFIED INSTITUTIONAL BUYER STATUS UNDER SEC RULE 144A

           [For Transferees That are Registered Investment Companies]

         The undersigned (the "Buyer") hereby certifies as follows to the
parties listed in the Rule 144A Transferee Letter to which this certification
relates with respect to the Certificate described therein:

         1.       As indicated below, the undersigned is the President, Chief
                  Financial Officer or Senior Vice President of the Buyer or, if
                  the Buyer is a "qualified institutional buyer" as that term is
                  defined in Rule 144A under the Securities Act of 1933, as
                  amended ("Rule 144A") because Buyer is part of a Family of
                  Investment Companies (as defined below), is such an officer of
                  the Adviser.

         2.       In connection with purchases by Buyer, the Buyer is a
                  "qualified institutional buyer" as defined in SEC Rule 144A
                  because (i) the Buyer is an investment company registered
                  under the Investment Company Act of 1940, as amended and (ii)
                  as marked below, the Buyer alone, or the Buyer's Family of
                  Investment Companies, owned at least $100,000,000 in
                  securities (other than the excluded securities referred to
                  below) as of the end of the Buyer's most recent fiscal year.
                  For purposes of determining the amount of securities owned by
                  the Buyer or the Buyer's Family of Investment Companies, the
                  cost of such securities was used, except (i) where the Buyer
                  or the Buyer's Family of Investment Companies reports its
                  securities holdings in its financial statements on the basis
                  of their market value, and (ii) no current information with
                  respect to the cost of those securities has been published. If
                  clause (ii) in the preceding sentence applies, the securities
                  may be valued at market.

                  ___      The Buyer owned $______________ in securities (other
                           than the excluded securities referred to below) as of
                           the end of the Buyer's most recent fiscal year (such
                           amount being calculated in accordance with Rule
                           144A).

                  ___      The Buyer is part of a Family of Investment Companies
                           which owned in the aggregate $_____________ in
                           securities (other than the excluded securities
                           referred to below) as of the end of the Buyer's most
                           recent fiscal year (such amount being calculated in
                           accordance with Rule 144A).

         3.       The term "Family of Investment Companies" as used herein means
                  two or more registered investment companies (or series
                  thereof) that have the same investment adviser or investment
                  advisers that are affiliated (by virtue of being majority
                  owned subsidiaries of the same parent or because one
                  investment adviser is a majority owned subsidiary of the
                  other).

                                    Annex 2-1

<PAGE>

         4.       The term "securities" as used herein does not include (i)
                  securities of issuers that are affiliated with the Buyer or
                  are part of the Buyer's Family of Investment Companies, (ii)
                  securities issued or guaranteed by the U.S. or any
                  instrumentality thereof, (iii) bank deposit notes and
                  certificates of deposit, (iv) loan participations, (v)
                  repurchase agreements, (vi) securities owned but subject to a
                  repurchase agreement and (vii) currency, interest rate and
                  commodity swaps.

         5.       The Buyer is familiar with Rule 144A and understands that the
                  parties listed in the Rule 144A Transferee Letter to which
                  this certification relates are relying and will continue to
                  rely on the statements made herein because one or more sales
                  to the Buyer will be in reliance on Rule 144A. In addition,
                  the Buyer will only purchase for the Buyer's own account.

         6.       Until the date of purchase of the Certificate, the undersigned
                  will notify the parties listed in the Rule 144A Transferee
                  Letter to which this certification relates of any changes in
                  the information and conclusions herein. Until such notice is
                  given, the Buyer's purchase of the Certificate will constitute
                  a reaffirmation of this certification by the undersigned as of
                  the date of such purchase.

                                          __________________________________
                                          Print Name of Buyer or Adviser

                                          By:_______________________________
                                          Name:
                                          Title:

                                          [IF AN ADVISER:]

                                          __________________________________
                                          Print Name of Buyer

                                          Date:______________________

                                    Annex 2-2

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