EXHIBIT 10.3
DEPOSITOR TRANSFER AND SALE AGREEMENT
BY AND AMONG
EDUCATION FUNDING CAPITAL I, LLC,
a Delaware limited liability company,
FIFTH THIRD BANK,
not in its individual capacity, but solely
as eligible lender trustee on behalf of
Education Funding Capital I, LLC under
the Depositor Eligible Lender Trust
Agreement,
EDUCATION FUNDING CAPITAL TRUST-__
a Delaware business trust
and
-----------------------,
not in its individual capacity, but solely as co-owner
eligible lender trustee on behalf of
Education Funding Capital Trust-__
under the Trust Eligible Lender Trust Agreement
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dated as of ____________, 2003
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TABLE OF CONTENTS
PAGE
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ARTICLE I SALE, TRANSFER AND ACCEPTANCE OF TRANSFERRED
ASSETS............................................................................................................2
1.01 Sale, Transfer and Acceptance of Transferred Assets...................................................2
1.02 Consideration for Transfer of Transferred Assets......................................................2
1.03 Release of Depositor and Depositor Eligible Lender Trustee............................................2
ARTICLE II CLOSING................................................................................................3
2.01 Closing...............................................................................................3
2.02 General Procedure.....................................................................................3
ARTICLE III REPRESENTATIONS AND WARRANTIES OF DEPOSITOR AND DEPOSITOR ELIGIBLE LENDER TRUSTEE.....................3
3.01 Formation and Authority...............................................................................4
3.02 Execution, Delivery; Valid and Binding Agreement......................................................4
3.03 Brokerage.............................................................................................4
3.04 Regarding Financed Student Loans......................................................................4
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE TRUST AND TRUST ELIGIBLE LENDER TRUSTEE..........................7
4.01 Formation and Authority...............................................................................7
4.02 Execution, Delivery; Valid and Binding Agreement......................................................7
ARTICLE V COVENANTS OF DEPOSITOR..................................................................................8
5.01 Regarding Closing Conditions..........................................................................8
5.02 Regarding the Higher Education Act....................................................................8
5.03 Regarding Perfection of Security Interest in Financed Student Loans...................................8
5.04 Conditions Precedent to Repurchase Obligation.........................................................8
5.05 Repurchase by Depositor...............................................................................9
5.06 Regarding Tax Matters.................................................................................9
ARTICLE VI COVENANTS OF THE TRUST AND THE TRUST ELIGIBLE
LENDER TRUSTEE....................................................................................................9
6.01 Regarding Closing Conditions..........................................................................9
6.02 Regarding the Higher Education Act and the Financed Student Loans.....................................9
6.03 Regarding Tax Matters.................................................................................9
6.04 Restrictions Regarding Bankruptcy....................................................................10
ARTICLE VII CONDITIONS TO CLOSING................................................................................10
7.01 Conditions to Closing................................................................................10
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ARTICLE VIII TERMINATION.........................................................................................11
8.01 Termination..........................................................................................11
8.02 Effect of Termination................................................................................12
ARTICLE IX INDEMNIFICATION.......................................................................................12
9.01 Indemnification by the Depositor.....................................................................12
9.02 Indemnification by the Trust.........................................................................12
9.03 Legal Proceedings....................................................................................12
ARTICLE X MISCELLANEOUS..........................................................................................13
10.01 Expenses.............................................................................................13
10.02 Further Assurances...................................................................................13
10.03 Amendment and Waiver.................................................................................13
10.04 Notices..............................................................................................13
10.05 Assignment...........................................................................................14
10.06 Severability.........................................................................................14
10.07 Complete Agreement...................................................................................14
10.08 Counterparts.........................................................................................14
10.09 Governing Law........................................................................................14
APPENDIX A - Glossary of Defined Terms
APPENDIX B - Administration Agreement
APPENDIX C - Servicing Agreement
▇▇▇▇▇▇▇▇ ▇-▇ - Schedule of Financed Student Loans
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DEPOSITOR TRANSFER AND SALE AGREEMENT
This DEPOSITOR TRANSFER AND SALE AGREEMENT (this "Agreement"), dated as of
_____________, 2003, is made and entered into by and among EDUCATION FUNDING
CAPITAL I, LLC, a Delaware limited liability company (the "Depositor"), FIFTH
THIRD BANK, not in its individual capacity, but solely as eligible lender
trustee on behalf of the Depositor under the Depositor Eligible Lender Trust
Agreement (the "Depositor Eligible Lender Trustee"), EDUCATION FUNDING CAPITAL
TRUST-__, a Delaware statutory trust (the "Trust"), and ________________, not in
its individual capacity, but solely as eligible lender trustee on behalf of the
Trust under the Trust Eligible Lender Trust Agreement (the "Trust Eligible
Lender Trustee"):
A. The Depositor is a bankruptcy-remote special purpose entity that has
been organized for the limited purpose of facilitating the financing of the
Financed Student Loans under that certain Indenture of Trust dated as of
__________, 2003 (the "Indenture") among the Trust, Fifth Third Bank, as
indenture trustee, and Fifth Third Bank as eligible lender trustee on behalf of
the Trust (the "Trust Eligible Lender Trustee") and certain other indentures;
and
B. The Depositor has heretofore created the Trust pursuant to the Trust
Agreement dated as of _________________, as amended and restated by the Amended
and Restated Trust Agreement dated as of __________________ among the Depositor,
________________________, not in its individual capacity, but solely as owner
trustee (the "Owner Trustee") of the Trust, and ________________, not in its
individual capacity, but solely as co-owner trustee (the "Co-Owner Trustee") of
the Trust, acknowledged and agreed to by the Trust Eligible Lender Trustee on
behalf of the Trust.
C. Capitalized words and terms used but not defined herein are defined in
Appendix A hereto which also contains rules as to usage and construction that
shall be applicable herein;
D. Each of the Depositor and the Depositor Eligible Lender Trustee
desires (i) to sell, transfer, assign and convey to the Trust and the Trust
Eligible Lender Trustee, as the case may be, for the benefit of the Trust all of
their respective right, title and interest in and to the Transferred Assets and
(ii) to carry out such transactions on the terms and subject to the conditions
set forth in this Agreement;
NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements and the conditions set forth in this Agreement and
other good and valuable consideration, receipt of which is hereby acknowledged,
the parties hereto hereby agree as follows:
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ARTICLE I
SALE, TRANSFER AND ACCEPTANCE OF TRANSFERRED ASSETS
1.01 Sale, Transfer and Acceptance of Transferred Assets.
(a) The Depositor, to the full extent of its right, title and
interest and as evidenced by the execution and delivery of this Agreement, does
hereby agree to sell, transfer, assign, set over and otherwise convey, without
recourse, to the Trust, and the Depositor Eligible Lender Trustee to the full
extent of its respective right, title and interest and as evidenced by the
execution and delivery of this Agreement, does hereby agree to sell, transfer,
assign, set over and otherwise convey, without recourse, to the Trust Eligible
Lender Trustee, for the benefit of the Trust, and each of the Trust and the
Trust Eligible Lender Trustee, as the case may be, for the benefit of the Trust
hereby agree to accept and acquire from the Depositor or the Depositor Eligible
Lender Trustee, as the case may be, all of the Depositor's and the Depositor
Eligible Lender Trustee's respective right, title and interest as of each
Closing Date, in and to the Transferred Assets, whether now owned or hereafter
acquired; provided, however, that with respect to such sale, transfer,
assignment, and conveyance to the Trust Eligible Lender Trustee, only the legal
title to the Financed Student Loans held by the Depositor Eligible Lender
Trustee is hereby sold, transferred, assigned, set over and conveyed to the
Trust Eligible Lender Trustee.
(b) The parties intend that the conveyance of all the respective
right, title and interest in the Transferred Assets be a sale of the Transferred
Assets from each of the Depositor and the Depositor Eligible Lender Trustee, as
the case may be, to each of the Trust and the Trust Eligible Lender Trustee, as
the case may be (a "Sale"), and the parties shall treat the transaction
contemplated by this Agreement for all purposes consistent with such intent and
not as a pledge of the Transferred Assets by the Depositor or the Depositor
Eligible Lender Trustee to secure a debt or other obligation of the Depositor or
the Depositor Eligible Lender Trustee.
1.02 Consideration for Transfer of Transferred Assets. The consideration
to be provided by the Trust to the Depositor and the Depositor Eligible Lender
Trustee for the Transfer of the Transferred Assets shall be payment of the
Purchase Price. The Trust Eligible Lender Trustee shall deposit a portion of the
Purchase Price equivalent to the origination fees owing to the United States
Department of Education with respect to the Financed Student Loans that are part
of the Transferred Assets into a separate account. Such funds shall be used to
pay such origination fees when due. The remainder of the Purchase Price shall be
paid to the Depositor.
1.03 Release of Depositor and Depositor Eligible Lender Trustee.
(a) The Depositor and the Depositor Eligible Lender Trustee hereby
acknowledge and agree that, upon Transfer of the Transferred Assets and payment
of the Purchase Price, the Trust will become the successor in interest to the
Depositor with respect to the Transferred Assets.
(b) The Depositor and the Depositor Eligible Lender Trustee hereby
acknowledge and agree that, upon Transfer of the Transferred Assets and payment
of the
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Purchase Price, the Trust Eligible Lender Trustee will become the successor in
interest to the Depositor Eligible Lender Trustee with respect to the
Transferred Assets.
ARTICLE II
CLOSING
2.01 Closing. The initial closing of the transactions contemplated by
this Agreement (the "Initial Closing") will take place at the offices of Squire,
▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, on ____________, 2003 or at such other place and on such
other date as shall be mutually agreed upon by the Depositor and the Trust (the
"Initial Closing Date"). One or more subsequent closings (each a "Subsequent
Closing," together with the Initial Closing, each a "Closing") of the
transactions contemplated by this Agreement may take place at such location and
on such dates as shall be mutually agreed upon by the Depositor and the Trust
(each a "Subsequent Closing" together with the Initial Closing Date, each a
"Closing Date).
2.02 General Procedure.
(a) At each Closing, and effective as of each Closing Date, each
party shall deliver to the party entitled to receipt thereof the documents
required to be delivered pursuant to Article VII and such other documents,
instruments and materials (or complete and accurate copies thereof, where
appropriate) as may be reasonably required in order to effectuate the intent and
provisions of this Agreement, including the applicable Appendix D, and all such
documents, instruments and materials shall be satisfactory in form and substance
to counsel for the receiving party.
(b) At the Initial Closing, and effective on the Initial Closing
Date, Education Lending Services, Inc. ("ELS") and the Trust shall execute and
deliver the Administration Agreement, providing for certain administrative
services to be performed by ELS for the Trust, in the form of Appendix B hereto
(the "Administration Agreement").
(c) At the Initial Closing, and effective on the Initial Closing
Date, ELS and the Trust shall execute and deliver the Servicing Agreement,
providing for ELS as the Servicer to provide the servicing, or arrange for the
servicing by a Subservicer, of the Financed Student Loans on behalf of the
Trust, in the form of Appendix C hereto (the "Servicing Agreement").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
DEPOSITOR AND DEPOSITOR ELIGIBLE LENDER TRUSTEE
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Each of the Depositor and the Depositor Eligible Lender Trustee, as the
case may be, hereby represents and warrants to the Trust and the Trust Eligible
Lender Trustee that, as of the date of this Agreement:
3.01 Formation and Authority. The Depositor is a limited liability
company duly formed, validly existing and in good standing under the laws of the
State of Delaware, and had at all relevant times and has all requisite power and
authority to enter into this Agreement and perform its obligations hereunder.
The Depositor Eligible Lender Trustee is an Ohio banking corporation, duly
formed and validly existing under the laws of the State of Ohio, and had at all
relevant times and has all requisite power and authority to enter into this
Agreement and perform its obligations hereunder. The Depositor Eligible Lender
Trustee was at all relevant times and is an "eligible lender" under the
provisions of the Higher Education Act.
3.02 Execution, Delivery; Valid and Binding Agreement. The authorization,
execution and delivery of this Agreement, the consummation of the transactions
herein contemplated and compliance with the terms, conditions and provisions of
this Agreement do not and will not conflict with or result in a breach of any of
the terms, conditions or provisions of any agreement or instrument to which
either the Depositor or the Depositor Eligible Lender Trustee is a party or by
which either is bound or constitute a default thereunder; neither the Depositor
nor the Depositor Eligible Lender Trustee is a party to or bound by any
agreement or instrument or subject to any charter or other corporate restriction
or judgment, order, writ, injunction, decree, law, rule or regulation which may
materially and adversely affect the ability of either the Depositor or the
Depositor Eligible Lender Trustee to perform its respective obligations under
this Agreement. This Agreement constitutes a valid and binding obligation of
each of the Depositor and the Depositor Eligible Lender Trustee enforceable
against such party in accordance with its terms, subject to the effects of
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and
other similar laws relating to or affecting creditors' rights generally and
court decisions with respect thereto, and no consent, approval or authorization
is required in connection with the consummation of the transactions herein
contemplated, except for those that have been obtained.
3.03 Brokerage. No broker or finder has acted for the Depositor or the
Depositor Eligible Lender Trustee in connection with this Agreement or the
transactions contemplated hereby, and no third party shall be entitled to
receive any fees for financial advisory services or similar compensation in
connection with the transactions contemplated by this Agreement based on any
arrangement or agreement made by or on behalf of the Depositor or the Depositor
Eligible Lender Trustee.
3.04 Regarding Financed Student Loans. The Depositor (or the Depositor
Eligible Lender Trustee where expressly otherwise stated) hereby represents and
warrants to the Trust that as of the date of Transfer of the Transferred Assets:
(a) Any information furnished by the Depositor to the Trust or its
agents with respect to any Financed Student Loan is true, complete and correct
in all material respects.
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(b) Each Financed Student Loan has been duly executed and delivered
and constitutes the legal, valid and binding obligation of the maker (and the
endorser, if any) thereof, enforceable in accordance with its terms.
(c) The amount of the unpaid principal balance of each Financed
Student Loan shown on the applicable Appendix D, Schedule of Financed Student
Loans is correct, and no counterclaim, offset, defense or right to rescission
exists with respect to any Financed Student Loan that can be asserted and
maintained or that, with notice, lapse of time, or the occurrence or failure to
occur of any act or event, could be asserted and maintained by the student
borrower against the Depositor or the Trust as assignee thereof. The Depositor
has taken all reasonable actions to assure that no maker of a Financed Student
Loan has acquired or may acquire a defense to the payment thereof. No Financed
Student Loan carries a rate of interest less than, or in excess of, the
applicable rate of interest required by the Higher Education Act. If the Higher
Education Act permits the Depositor to charge an interest rate less than the
applicable rate of interest, the Trust may approve, in its sole discretion, in
writing, interest reductions which are part of a student borrower repayment
incentive program of the Depositor, the terms of which have been fully described
in detail and in writing to the Trust.
(d) Each Financed Student Loan provides for periodic payments that
will fully amortize the amount financed over its term to maturity, exclusive of
any deferral or forbearance periods.
(e) The Depositor and the Depositor Eligible Lender Trustee are the
sole owners and holders of each Financed Student Loan and have full right and
authority to Transfer the same free and clear of all liens, pledges or
encumbrances, and upon the delivery of a fully executed blanket endorsement with
regard to the promissory notes and applications evidencing the Transfer of the
Financed Student Loans to the Trust and the Trust Eligible Lender Trustee
pursuant to this Agreement, the Trust and the Trust Eligible Lender Trustee will
acquire full right, title and interest in, or alternatively, a lien and
perfected security interest in, such Financed Student Loans free and clear of
all liens, pledges or encumbrances whatsoever. All documentation relating to the
Financed Student Loans, including the original promissory note (or an original
or copy of each Master Promissory Note) for each Financed Student Loan, is in
the possession of the applicable Servicer or Subservicer, as the case may be.
(f) Each Financed Student Loan was originated in the United States
of America, its territories or its possessions in accordance with the Federal
Family Education Loan Program, complies in all respects with the requirements of
the Higher Education Act and is a Financed Student Loan as those terms are
defined in this Agreement.
(g) The information set forth in the applicable Appendix D
accurately describes and identifies the Financed Student Loans transferred as
part of the Transferred Assets.
(h) The Depositor and any Servicer or Subservicer, as the case may
be, have each exercised and shall continue to exercise, until the consummation
of the Transfer, due diligence and reasonable care in making, administering,
servicing and collecting the Financed Student Loans.
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(i) Each Financed Student Loan is Guaranteed; each Guarantee, is in
full force and effect, is freely transferable as an incident to the transfer of
the related Financed Student Loan and is valid and binding upon the parties
thereto; all amounts due and payable to the Secretary or a Guarantee Agency, as
the case may be, have been paid or will be paid in full by the Seller, and none
of the Financed Student Loans has at any time been tendered to either the
Secretary or any Guarantee Agency for payment.
(j) Each Financed Student Loan was made in compliance with all
applicable local, state and federal laws, rules and regulations, including,
without limitation, all applicable nondiscrimination, truth-in-lending, consumer
credit and usury laws.
(k) Each Financed Student Loan is evidenced by a single executed
promissory note (which may be in electronic form), which note is a valid and
binding obligation of the student borrower, enforceable by or on behalf of the
holder thereof in accordance with its terms, subject to bankruptcy, insolvency
and other laws relating to or affecting creditors' rights.
(l) No Financed Student Loan has a payment that is more than 90
days delinquent.
(m) The Depositor or the originating lender has reported, or will
report when due and has paid or will pay out of the Purchase Price, the amount
of origination fees and consolidation rebate fees, if any, authorized to be
collected with respect to each Financed Student Loan pursuant to Section 438(c)
of the Higher Education Act to the Secretary for the period in which the fee was
authorized to be collected.
(n) The Depositor or the originating lender has made any refund of
origination fee collected in connection with any Financed Student Loan, which
may be required pursuant to the Higher Education Act.
(o) The transactions contemplated by this Agreement are and will be
in the ordinary course of the Depositor's business, and the Depositor has valid
business reasons for Transferring the Financed Student Loans rather than
obtaining a secured loan with the Financed Student Loans as collateral. Both
before and immediately after giving effect to any Transfer: (i) the Depositor
Transferred or will Transfer the Financed Student Loans to the Trust without any
intent to hinder, delay or defraud any current or future creditor of the
Depositor; (ii) the Depositor was not engaged and was not about to engage, and
will not engage in, any business or transaction for which any property remaining
with the Depositor was or will constitute unreasonably small capital in relation
to the business of the Depositor or the transaction; (iii) the Depositor did not
intend or will not intend to incur, and did not believe or reasonably should not
have believed, or will not believe or reasonably shall not have believed, that
it would incur debts beyond its ability to pay as they become due; and (iv) the
Depositor was not and will not be insolvent or did not or will not become
insolvent as a result of any Transfer.
(p) Each Transfer of the Financed Student Loans (including all
payments due or to become due thereunder) by the Depositor pursuant to this
Agreement is not subject to and will not result in any tax, fee or governmental
charge payable by the Trust or the Depositor to any federal, state or local
government ("Transfer Taxes") except such Transfer Taxes as are paid
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by the Depositor at the time of Transfer and except UCC filing fees. In the
event that the Trust receives actual notice of any unpaid Transfer Taxes arising
out of the Transfer of the Financed Student Loans, on written demand by the
Trust, or upon the Depositor otherwise being given notice thereof, the Depositor
shall pay, and otherwise indemnify and hold the Trust harmless therefor. The
Depositor shall not be responsible for the Trust's income taxes, if any.
(q) The Depositor has conducted or caused to be conducted on its
behalf a reasonable investigation of sufficient scope and content to enable it
to make in good faith the representations and warranties contained in this
Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE
TRUST AND TRUST ELIGIBLE LENDER TRUSTEE
Each of the Trust and the Trust Eligible Lender Trustee, as applicable,
hereby represents and warrants to the Depositor that, as of the date of this
Agreement:
4.01 Formation and Authority. The Trust is a business trust validly
created under the laws of the State of Delaware, and had at all relevant times
and has all requisite power and authority under the Trust Agreement to enter
into this Agreement and perform its obligations hereunder. The Trust Eligible
Lender Trustee is an Ohio banking corporation, duly formed and validly existing
under the laws of the State of Ohio, and had at all relevant times and has all
requisite power and authority to enter into this Agreement and perform its
obligations hereunder. The Trust Eligible Lender Trustee was at all relevant
times and is an "eligible lender" under the provisions of the Higher Education
Act.
4.02 Execution, Delivery; Valid and Binding Agreement. The authorization,
execution and delivery of this Agreement, the consummation of the transactions
herein contemplated and compliance with the terms, conditions and provisions of
this Agreement do not and will not conflict with or result in a breach of any of
the terms, conditions or provisions of any agreement or instrument to which
either the Trust or the Trust Eligible Lender Trustee is a party or by which
either is bound or constitute a default thereunder; neither the Trust nor the
Trust Eligible Lender Trustee is a party to or bound by any agreement or
instrument or subject to any charter or other corporation restriction or
judgment, order, writ, injunction, decree, law, rule or regulation which may
materially and adversely affect the ability of either the Trust or the Trust
Eligible Lender Trustee to perform its respective obligations under this
Agreement. This Agreement constitutes a valid and binding obligation of each of
the Trust and the Trust Eligible Lender Trustee enforceable against such party
in accordance with its terms, subject to the effects of bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance and other similar laws
relating to or affecting creditors' rights generally and court decisions with
respect thereto, and no consent, approval or authorization is required in
connection with the consummation of the transactions herein contemplated, except
for those that have been obtained.
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ARTICLE V
COVENANTS OF DEPOSITOR
The Depositor covenants and agrees with the Trust as follows:
5.01 Regarding Closing Conditions. The Depositor shall take all
commercially reasonable actions necessary to cause the conditions applicable to
itself and the Trust set forth in Section 7.01 to be satisfied and to consummate
the transactions contemplated herein as soon as reasonably possible after the
satisfaction thereof.
5.02 Regarding the Higher Education Act. The Depositor shall, both before
and after each Closing Date, take all such action, or refrain from taking such
action, to the extent necessary and reasonable to be taken or not taken by the
Depositor in its capacity as assignor in order to comply with the requirements
of the Higher Education Act, so that the receipt of Special Allowance Payments
and Interest Subsidy Payments, if applicable, with respect to Financed Student
Loans will not be adversely affected.
5.03 Regarding Perfection of Security Interest in Financed Student Loans.
The Depositor shall furnish and file, and shall cause the Depositor Eligible
Lender Trustee to furnish and file, if appropriate, any document reasonably
requested by the Trust to perfect the Trust's and the Trust Eligible Lender
Trustee's ownership interest in the Financed Student Loans.
5.04 Conditions Precedent to Repurchase Obligation. At the request of
either the Trust or the Trust Eligible Lender Trustee, the Depositor shall
repurchase, or, shall cause the Depositor Eligible Lender Trustee, as
applicable, to repurchase, pursuant to the terms set forth in Section 5.05, each
Financed Student Loan with respect to which:
(a) Any representation or warranty contained in Section 3.04 shall
prove to be materially incorrect;
(b) The Secretary or a Guarantee Agency, as the case may be,
refuses to honor all or part of a claim filed with respect to a Financed Student
Loan, including any claim for Interest Subsidy Payments, Special Allowance
Payments, insurance, reinsurance or Guarantee Payments due to any circumstance
or event that occurred prior to the Transfer of such Financed Student Loan to
the Trust; or
(c) On account of any wrongful or negligent act or omission of the
Depositor or the Depositor Eligible Lender Trustee, the originating lender or
its or their servicing agents, as the case may be, that occurred prior to the
Transfer of a Financed Student Loan to the Trust, a defense that makes the
Financed Student Loan unenforceable is asserted by a student borrower, maker or
endorser, if any, of the Financed Student Loan with respect to his or her
obligation to pay all or any of such Financed Student Loan.
5.05 Repurchase by Depositor. Upon the occurrence of any of the
conditions set forth in Section 5.04 and upon the request of the Trust or any
permitted assignee thereof under Section 10.05, the Depositor shall pay, or
cause to be paid, to the Trust an amount equal to the same percentage of the
then-outstanding Principal Balance of such Financed Student Loan as the
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Depositor originally paid in the Purchase Price for such Financed Student Loan,
plus interest and Special Allowance Payments accrued and unpaid with respect to
such Financed Student Loan from the applicable Closing Date to and including the
date of repurchase, plus any attorneys' fees, legal expenses, court costs,
servicing fees or other expenses incurred by the Trust or the appropriate
successors or assigns in connection with such Financed Student Loan and arising
out of the reasons for the repurchase. With respect to any Financed Student Loan
repurchased by the Depositor pursuant to this Agreement, the Trust Eligible
Lender Trustee shall transfer, without recourse, representation or warranty, to
the Depositor Eligible Lender Trustee, on behalf of Depositor all of Trust's and
the Trust Eligible Lender Trustee's right, title and interest in and to such
Financed Student Loan, and all security and documents relating thereto.
5.06 Regarding Tax Matters. The Depositor shall be responsible for all
taxes attributable to the ownership of the Transferred Assets for all periods
prior to the applicable Closing Date.
ARTICLE VI
COVENANTS OF THE TRUST AND THE
TRUST ELIGIBLE LENDER TRUSTEE
Each of the Trust and the Trust Eligible Lender Trustee covenants and
agrees with the Depositor as follows:
6.01 Regarding Closing Conditions. Each of the Trust and the Trust
Eligible Lender Trustee shall take all commercially reasonable actions necessary
to cause the conditions applicable to itself set forth in Section 7.01 to be
satisfied and to consummate the transactions contemplated herein as soon as
reasonably possible after the satisfaction thereof.
6.02 Regarding the Higher Education Act and the Financed Student Loans.
Each of the Trust and the Trust Eligible Lender Trustee shall, both before and
after each Closing Date, take all such action, or refrain from taking such
action, as is necessary to comply with the requirements of the Higher Education
Act, so that the receipt of Special Allowance Payments and Interest Subsidy
Payments, if applicable, with respect to the Financed Student Loans will not be
adversely affected.
6.03 Regarding Tax Matters. The Trust shall be responsible for the
payment of all taxes attributable to the ownership of the Transferred Assets for
all periods after the applicable Closing Date; provided, however, that the Trust
shall be responsible for the payment of such taxes only from the Transferred
Assets.
6.04 Restrictions Regarding Bankruptcy. Neither the Trust nor the Trust
Eligible Lender Trustee shall, for any reason, institute proceedings for the
Depositor to be adjudicated as bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against the Depositor, or
file a petition seeking or consenting to reorganization or relief under any
applicable federal or state law relating to the bankruptcy of the Depositor, or
consent to the
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appointment of a receiver, liquidator, assignee, trustee, sequestrator (or other
similar official) of the Depositor or a substantial part of the property of the
Depositor or cause or permit the Depositor to make any assignment for the
benefit of creditors, or admit in writing the inability of the Depositor to pay
its debts generally as they become due, or declare or effect a moratorium on the
debt of the Depositor or take any action in furtherance of any such action.
ARTICLE VII
CONDITIONS TO CLOSING
7.01 Conditions to Closing. The obligation of each party to consummate
the transactions contemplated by this Agreement is subject to the satisfaction
of the following conditions on or before each Closing Date:
(a) The respective representations and warranties of the Depositor,
the Depositor Eligible Lender Trustee, the Trust and the Trust Eligible Lender
Trustee set forth in Articles III and IV hereof, respectively, shall be true and
correct in all material respects at and as of the applicable Closing Date as
though then made, except that any such representation or warranty made as of a
specified date (other than the date hereof) shall only need to have been true on
and as of such date;
(b) Each party shall have performed in all material respects all of
the covenants and agreements required to be performed and complied with by it
under this Agreement prior to the applicable Closing Date;
(c) Each party shall have obtained, or caused to be obtained, each
consent and approval required in order to complete the transactions contemplated
hereby including, without limitation, rating agency confirmations;
(d) There shall not be threatened, instituted or pending any action
or proceeding, before any court or governmental authority or agency, domestic or
foreign, challenging or seeking to make illegal, or to delay or otherwise
directly or indirectly restrain or prohibit, the consummation of the
transactions contemplated hereby or seeking to obtain material damages in
connection with such transactions;
(e) On the applicable Closing Date, the Depositor shall have
received from the Trust the Purchase Price in immediately available funds;
(f) On the Initial Closing Date or each Subsequent Closing Date, as
applicable, the Depositor, the Depositor Eligible Lender Trustee, the Trust or
the Trust Eligible Lender Trustee, as applicable (and any other parties to each
of the following agreements or instruments), shall have executed and delivered
the following to the applicable parties, together with the execution and
delivery of this Agreement (provided, however, that this Agreement shall be deem
delivered immediately prior to, but nevertheless subject to, the delivery of the
following agreements or instruments):
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(1) On the Initial Closing Date, an executed original
Administration Agreement between the Trust and the
Administrator, or, if previously delivered, a confirmation
thereof;
(2) On the Initial Closing Date, an executed original Servicing
Agreement between the Trust and the Servicer, or, if
previously delivered, a confirmation thereof;
(3) On the Initial Closing Date and each Subsequent Closing
Date, bills of sale, blanket endorsements and such other
instruments of transfer, assignment and delivery as each of
the Trust and the Trust Eligible Lender Trustee shall have
reasonably requested pursuant to Section 2.02;
(4) On the Initial Closing Date and each Subsequent Closing
Date, a certificate of an appropriate officer of the
Depositor and the Depositor Eligible Lender Trustee, dated
the applicable Closing Date, stating that the conditions set
forth in subsections 7.01 (b) and (c) to be satisfied by the
Depositor and the Depositor Eligible Lender Trustee,
respectively, have been satisfied; and
(5) On the Initial Closing Date, (a) legal opinions, in form and
substance satisfactory to the parties listed in subsection
7.01(a) and their counsel, with respect to the organization
and authority of the Depositor and Trust and such other
matters as such counsel may reasonably require and (b) such
other opinions, documents, instruments and agreements ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ LLP, the Trust or the Trust Eligible Lender
Trustee, or their respective counsels, may request.
ARTICLE VIII
TERMINATION
8.01 Termination. This Agreement may be terminated at any time:
(a) by the mutual consent of the Depositor and the Trust; or
(b) by either the Depositor or the Trust if there has been a
material misrepresentation, breach of warranty or breach of covenant on the part
of the other in the representations, warranties and covenants set forth in this
Agreement.
8.02 Effect of Termination. In the event of termination of this Agreement
by either the Depositor or the Trust as provided in Section 8.01,
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(a) if such termination occurs prior to the Initial Closing Date,
this Agreement shall become void and there shall be no liability on the part of
the Depositor or the Trust, or their respective employees, officers, directors,
members or trustees, except that Sections 7.01, 9.01. 9.01, 9.03, 10.01 and
10.09 hereof shall survive indefinitely, and except with respect to willful
breaches of this Agreement prior to the time of such termination; and
(b) if such termination occurs after to the Initial Closing Date,
this Agreement shall become void and there shall be no liability on the part of
the Depositor or the Trust, or their respective employees, officers, directors,
members or trustees, except that Sections 3.04, 5.04, 5.05, 7.01, 10.01 and
10.09 hereof shall survive indefinitely, and except with respect to willful
breaches of this Agreement prior to the time of such termination.
ARTICLE IX
INDEMNIFICATION
9.01 Indemnification by the Depositor. The Depositor agrees to indemnify
the Trust and its employees, officers, directors, members and trustees (the
"Trust Indemnified Parties") with respect to, and hold the Trust Indemnified
Parties harmless from, any loss, liability or expense (including, but not
limited to, reasonable legal fees) which the Trust Indemnified Parties may
directly or indirectly incur or suffer by reason of, or which results, arises
out of or is based upon the failure of the Depositor to comply with any
covenants or other commitments made by the Depositor in this Agreement or any
other agreement or document delivered by the Depositor in connection herewith.
9.02 Indemnification by the Trust. The Trust agrees to indemnify the
Depositor and its officers, directors, employees and trustees (the "Depositor
Indemnified Parties") with respect to, and hold the Depositor Indemnified
Parties harmless from, any loss, liability or expense (including, but not
limited to, reasonable legal fees) which the Depositor Indemnified Parties may
directly or indirectly incur or suffer by reason of, or which results, arises
out of or is based upon the failure of the Trust to comply with any covenants or
other commitments made by the Trust in this Agreement or any other agreement or
document delivered by the Trust in connection herewith.
9.03 Legal Proceedings. In the event the Depositor or the Trust becomes
involved in any legal, governmental or administrative proceeding which may
result in indemnification claims hereunder, such party shall promptly notify the
other party against whom indemnity may be sought (the "Indemnifying Party") in
writing and in full detail of the filing, and of the nature of such proceeding.
The Indemnifying Party may, at its option and expense, defend any such
proceeding if the proceeding could give rise to an indemnification obligation
hereunder. If the Indemnifying Party elects to defend any proceeding, it shall
have full control over the conduct of such proceeding, although each party being
indemnified shall have the right to retain legal counsel at its own expense and
shall have the right to approve any settlement of any dispute giving rise to
such proceeding, provided that such approval may not be withheld unreasonably by
the party being indemnified. The party being indemnified shall reasonably
cooperate with the Indemnifying Party in such proceeding.
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ARTICLE X
MISCELLANEOUS
10.01 Expenses. Except as otherwise expressly provided for herein, each
party will pay all of its respective expenses incurred (including attorneys' and
accountants' fees) in connection with the negotiation of this Agreement, the
performance of its respective obligations hereunder and the consummation of the
transactions contemplated by this Agreement (whether consummated or not).
10.02 Further Assurances. Each of the Depositor, the Depositor Eligible
Lender Trustee, the Trust and the Trust Eligible Lender Trustee agrees that, on
and after each Closing Date, it shall take all appropriate action and execute
any documents, instruments or conveyances of any kind which may be reasonably
necessary or advisable to carry out the transfers of assets and assumptions of
liabilities provided for herein.
10.03 Amendment and Waiver. This Agreement may be amended in writing by
the parties thereto for the purpose of adding any provisions to or changing in
any manner or eliminating any of the provisions of this Agreement.
10.04 Notices. All notices, demands and other communications to be given
or delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when personally delivered or three
business days after being mailed by first class U.S. mail, return receipt
requested, or when receipt is acknowledged, if sent by facsimile, telecopy or
other electronic transmission device. Notices, demands and communications to the
parties will, unless another address is specified in writing, be sent to the
address indicated below:
Notices to the Depositor: Education Funding Capital I, LLC
Six ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇-▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Notices to the Trust: ____________________________________
____________________________________
____________________________________
____________________________________
Attention: _________________________
with copies of all notices to: ▇▇▇▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
10.05 Assignment. This Agreement and all of the provisions hereof will be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted
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assigns, except that neither this Agreement nor any of the rights, interests or
obligations hereunder may be assigned by any party hereto without the prior
written consent of the other parties hereto; provided, however, that the Trust
may assign its rights under this Agreement to the Indenture Trustee, as such
party is identified in, and in connection with the transactions contemplated by,
the Indenture.
10.06 Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
10.07 Complete Agreement. This Agreement and the documents referred to
herein contain the complete agreement between the parties and supersede any
prior understandings, agreements or representations by or between the parties,
written or oral, which may have related to the subject matter hereof in any way.
10.08 Counterparts. This Agreement may be executed in one or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counterparts taken together will constitute one and the same
instrument.
10.09 Governing Law. The law, without regard to conflicts of laws
principles, of the State of Ohio will govern all questions concerning the
construction, validity and interpretation of this Agreement and the performance
of the obligations imposed by this Agreement.
[Remainder of page intentionally left blank]
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement on
the day, month and year first above written.
EDUCATION FUNDING CAPITAL I, LLC __________________________________
a Delaware limited liability company an _____________ banking corporation
("Depositor") not in its individual capacity, but
solely as eligible lender trustee on
behalf of the Depositor
("Depositor Eligible Lender Trustee")
By:____________________________________ By:___________________________________
Title: Senior Vice President - Finance Title:________________________________
EDUCATION FUNDING CAPITAL TRUST-__ _______________________________,
a(n) ________________ banking
By: FIFTH THIRD BANK corporation not in its individual
not in its individual capacity, capacity, but solely as eligible
but solely as Co-Owner Trustee lender trustee on behalf of
of EDUCATION FUNDING CAPITAL Education Funding Capital TRUST-__
TRUST-__ ("Trust Eligible Lender Trustee")
("Trust")
By:____________________________________ By:___________________________________
Title:_________________________________ Title:________________________________
APPENDIX A
to
Depositor Transfer and Sale Agreement,
dated as of ____________________, 2003
DEFINITIONS AND USAGE
Usage
The following rules of construction and usage shall be applicable to
any instrument that is governed by this Appendix:
(a) All terms defined in this Appendix shall have the defined meanings
when used in any instrument governed hereby and in any certificate or other
document made or delivered pursuant thereto unless otherwise defined therein.
(b) The words "hereof," "herein," "hereunder" and words of similar
import when used in an instrument refer to such instrument as a whole and not to
any particular provision or subdivision thereof; references in an instrument to
"Article," "Section" or another subdivision or to an attachment are, unless the
context otherwise requires, to an article, section or subdivision of or an
attachment to such instrument; and the term "including" means "including without
limitation."
(c) The definitions contained in this Appendix are equally applicable
to both the singular and plural forms, as well as to past, present and future
tense of such terms and to the masculine as well as to the feminine and neuter
genders of such terms.
(d) Any agreement, instrument or statute defined or referred to below
or in any agreement or instrument that is governed by this Appendix means such
agreement or instrument or statute as from time to time amended, modified or
supplemented, including (in the case of agreements or instruments) by waiver or
consent and (in the case of statutes) by succession of comparable successor
statutes and includes (in the case of agreements or instruments) references to
all attachments thereto and instruments incorporated therein.
Definitions
"Administration Agreement" shall mean the Administration Agreement, dated
as of ____________, 2003 between the Administrator and the Trust, as amended or
restated from time to time.
"Administrator" shall mean Education Lending Services, Inc. in its capacity
as Administrator of the Trust, or any ------------- successor thereto as
permitted by the Administration Agreement.
A-1
"Appendix D" shall mean ▇▇▇▇▇▇▇▇ ▇-▇ with respect to the Initial Closing
Date and an additional Appendix D, sequentially numbered in ascending order
beginning with Appendix D-2 on the first Subsequent Closing Date, with respect
to each Subsequent Closing Date, collectively referred to herein as Appendix D.
"Co-Owner Trustee" shall mean_______________, not in its individual
capacity but solely as co-owner trustee of the Trust, and its successors and
assigns.
"Depositor" shall mean Education Funding Capital I, LLC, a limited
liability company formed under the laws of the State of Delaware, and its
successors and assigns.
"Depositor Eligible Lender Trust Agreement" shall mean the Eligible Lender
Trust Agreement, dated as of May 1, 2002, between Depositor and the Depositor
Eligible Lender Trustee, not in its individual capacity, but solely in its
capacity as eligible lender trustee on behalf of the Depositor, and its
successor and assigns, as amended or restated from time to time.
"Depositor Eligible Lender Trustee" shall mean Fifth Third Bank, not in its
individual capacity, but solely in its capacity as eligible lender trustee on
behalf of the Depositor under the Depositor Eligible Lender Trust Agreement, and
its successor and assigns.
"ELG Transfer Agreement" shall mean that certain Transfer and Sale
Agreement, dated as of ___________, 2003 by and among Education Lending Group,
Inc. ("Education Lending Group"), Fifth Third Bank, not in its individual
capacity but solely as Eligible Lender Trustee on behalf of Education Lending
Group, the Depositor and the Depositor Eligible Lender Trustee.
"ELS" shall mean Education Lending Services, Inc., a corporation formed
under the laws of Delaware, and its successors and assigns.
"Financed Student Loans" shall mean, collectively, the student loans
identified by the lender identification numbers, portfolio numbers or other
identifying numbers described in the applicable Appendix D hereto.
"Guarantee" or "Guaranteed" shall mean, with respect to a Financed Student
Loan, the guarantee by the Guarantee Agency, pursuant to such Guaranty Agency's
Guarantee Agreement, of the maximum percentage of the principal of and accrued
interest on such Financed Student Loan allowed by terms of the Higher Education
Act with respect to such Financed Student Loans at the time it was originated
and the coverage of such Financed Student Loan by the federal reimbursement
contracts, providing, among other things, for reimbursement to the Guarantee
Agency for losses incurred by it on defaulted Financed Student Loans guaranteed
by it of at least the minimum reimbursement allowed by the Higher Education Act
with respect to a particular Financed Student Loan.
"Guarantee Agency" shall mean any entity authorized to guaranty student
loans under the Higher Education Act and with which the Depositor Eligible
Lender Trustee or the Trust Eligible Lender Trustee maintains a Guarantee
Agreement.
A-2
"Guarantee Agreement" shall mean an agreement between a Guarantee Agency
and either the Depositor Eligible Lender Trustee or the Trust Eligible Lender
Trustee providing for the Guarantee by such Guarantee Agency of the principal of
and accrued interest on the Financed Student Loans.
"Guarantee Program" shall mean a Guarantee Agency's student loan guaranty
program pursuant to which such Guarantee Agency guarantees or insures student
loans.
"Higher Education Act" shall mean Title IV, Part B of the Higher Education
Act of 1965, as amended, or any successor federal act, and all regulations,
directives and guidelines promulgated thereunder from time to time.
"Indenture" shall mean the Indenture of Trust dated as of _________, 2003
among the Trust, the Indenture Trustee, and the Trust Eligible Lender Trustee on
behalf of the Trust.
"Indenture Trustee" shall mean Fifth Third Bank, not in its individual
capacity but solely as indenture trustee under the Indenture.
"Interest Subsidy Payments" shall mean payments, designated as such,
consisting of interest subsidies by the Department of Education in respect of
Financed Student Loans originated under the Higher Education Act to the Trust
Eligible Lender Trustee on behalf of the Trust in accordance with the Higher
Education Act.
"Master Promissory Note" shall mean a Master Promissory Note in the form
mandated by Section 432(m)(1)(D) of the Higher Education Act.
"Principal Balance" shall mean the aggregate unpaid principal balance of
the Financed Student Loans as set forth in the applicable Appendix D.
"Purchase Agreements" shall mean the ELG Transfer Agreement, in each case
as from time to time amended or supplemented in accordance with the terms
thereof, and in each case only to the extent that each such Purchase Agreement
covers Financed Student Loans.
"Purchase Price" shall mean the amount of cash consideration totaling the
outstanding principal balance, accrued interest and premium with respect to the
Financed Student Loans as set forth in the applicable Appendix D; provided
however that the amount of premium paid will not exceed the amount of premium
reflected in the most recent cash flows approved by the rating agencies.
"Secretary" shall mean the Secretary of the United States Department of
Education, an agency of the federal government, or any successor to the
functions thereof under the Higher Education Act.
"Servicer" shall mean ELS, in its capacity as Servicer of the Financed
Student Loans, or any permitted successor Servicer under the Servicing
Agreement.
A-3
"Servicing Agreement" shall mean the Servicing Agreement, dated as of
_______________, 2003 between the Servicer and the Trust, as amended or restated
from time to time.
"Special Allowance Payments" shall mean payments, designated as such,
consisting of effective interest subsidies by the Department of Education to the
Trust Eligible Lender Trustee in accordance with the Higher Education Act in
respect of the Financed Student Loans originated under the Act.
"Subservicer" shall mean Great Lakes Educational Loan Services, Inc. or ACS
Education Loan Services, Inc., in its capacity as Subservicer of the Financed
Student Loans, and/or any permitted Subservicer, under the Servicing Agreement.
"Transfer" shall mean, and it is the intention of the parties hereto that
it mean, with respect to the Transferred Assets, the sale, transfer, assignment
and conveyance of, or to sell, transfer, assign and convey, the Transferred
Assets, provided, however, that if a court of competent jurisdiction were to
hold that any such sale, transfer, assignment or conveyance were not a sale,
transfer, assignment and conveyance, then with respect to the Transferred
Assets, "Transfer" shall be deemed to mean (i) a conveyance of a valid and
binding lien on and a security interest in, or (ii) to convey a valid and
binding lien on and a security interest in, the Transferred Assets.
"Transferred Assets" shall mean all rights of the Depositor and Depositor
Eligible Lender Trustee in and to the Financed Student Loans listed on the
applicable Appendix D, including all collections received and to be received
with respect thereto for the period on and after the date of the Transfer, the
Guarantee Agreements with respect thereto and the Purchase Agreements.
"Trust" shall mean Education Funding Capital Trust-II, the business trust
created under the laws of the State of Delaware by the Trust Agreement.
"Trust Agreement" shall mean the Trust Agreement, dated as of _____________
("Initial Trust Agreement") among the Depositor, ________________________, as
Owner Trustee and ________________ as Co-Owner Trustee as subsequently amended
and restated as of ___________________ (the "Amended and Restated Trust
Agreement," together with the Initial Trust Agreement, the "Trust Agreement")
among the Depositor, the Owner Trustee, and the Co-Owner Trustee, acknowledged
and agreed to by the Trust Eligible Lender Trustee, as amended or restated from
time to time.
"Trust Eligible Lender Trust Agreement" shall mean the Eligible Lender
Trust Agreement, dated as of ____________, 2003 between the Trust and the Trust
Eligible Lender Trustee, not in its individual capacity, but solely in its
capacity as eligible lender trustee on behalf of the Trust, as amended or
restated from time to time.
▇-▇
▇▇▇▇▇▇▇▇ ▇
to
Depositor Transfer and Sale Agreement,
dated as of ________________, 2003
FORM OF ADMINISTRATION AGREEMENT
B-1
APPENDIX C
to
Depositor Transfer and Sale Agreement,
dated as of _______________, 2003
FORM OF SERVICING AGREEMENT
▇-▇
▇▇▇▇▇▇▇▇ ▇-▇
to
Depositor Transfer and Sale Agreement,
dated as of _____________, 2003
SCHEDULE OF FINANCED STUDENT LOANS
Student Loan Outstanding Principal Accrued Premium TOTAL
------------ --------------------- ------- ------- -----
Balance Interest PURCHASE
------- -------- --------
PRICE
-----
_____ Borrowers $______________ $____________ $_________ $__________*
*Detailed description of the Financed Student Loans on file with Education
Lending Services, Inc, as ▇▇▇▇▇▇▇▇▇▇▇▇.
▇-▇