EXHIBIT 99.2
SELLER TRANSFER AND SALE AGREEMENT
BY AND AMONG
EDUCATION LENDING GROUP, INC.,
a Delaware corporation,
FIFTH THIRD BANK,
not in its individual capacity,
but solely as eligible lender trustee on behalf
of Education Lending Group, Inc.
under the Seller Eligible Lender Trust Agreement,
EDUCATION FUNDING CAPITAL I, LLC,
a Delaware limited liability company,
AND
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
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dated as of October 1, 2003
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TABLE OF CONTENTS
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PAGE
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ARTICLE I SALE, TRANSFER AND ACCEPTANCE OF TRANSFERRED ASSETS..................1
1.01 Sale, Transfer and Acceptance of Transferred Assets................1
1.02 Consideration for Transfer of Transferred Assets...................2
1.03 Release of Seller and Seller Eligible Lender Trustee...............2
ARTICLE II CLOSING.............................................................2
2.01 Closing............................................................2
2.02 General Procedure..................................................3
ARTICLE III REPRESENTATIONS AND WARRANTIES OF SELLER AND SELLER ELIGIBLE
LENDER TRUSTEE.................................................................3
3.01 Formation and Authority............................................3
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 DEPOSITOR AND THE
DEPOSITOR ELIGIBLE LENDER TRUSTEE..............................................7
4.01 Formation and Authority............................................7
4.02 Execution, Delivery; Valid and Binding Agreement...................7
ARTICLE V COVENANTS OF SELLER..................................................7
5.01 Regarding Closing Conditions.......................................7
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 Seller...............................................8
5.06 Regarding Tax Matters..............................................9
ARTICLE VI COVENANTS OF THE DEPOSITOR AND THE DEPOSITOR 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..................................9
ARTICLE VII CONDITIONS TO CLOSING.............................................10
7.01 Conditions to Closing.............................................10
ARTICLE VIII TERMINATION......................................................11
8.01 Termination.......................................................11
8.02 Effect of Termination.............................................11
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ARTICLE IX INDEMNIFICATION....................................................12
9.01 Indemnification by the Seller.....................................12
9.02 Indemnification by the Depositor..................................12
9.03 Legal Proceedings.................................................12
ARTICLE X MISCELLANEOUS.......................................................12
10.01 Expenses..........................................................12
10.02 Further Assurances................................................13
10.03 Amendment and Waiver..............................................13
10.04 Notices...........................................................13
10.05 Assignment........................................................13
10.06 Severability......................................................13
10.07 Complete Agreement................................................14
10.08 Counterparts......................................................14
10.09 Governing Law.....................................................14
APPENDIX A - Glossary of Defined Terms
APPENDIX B - Form of Depositor Administration Agreement
APPENIDIX C - Form of Depositor Servicing Agreement
APPENDIX D-1 - Schedule of Financed Student Loans
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SELLER TRANSFER AND SALE AGREEMENT
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This SELLER TRANSFER AND SALE AGREEMENT (this "Agreement"), dated as of
October 1, 2003, is made and entered into by and among EDUCATION LENDING GROUP,
INC., a Delaware corporation (the "Seller"), FIFTH THIRD BANK, not in its
individual capacity, but solely as eligible lender trustee on behalf of the
Seller under the Seller Eligible Lender Trust Agreement (the "Seller Eligible
Lender Trustee"), EDUCATION FUNDING CAPITAL I, LLC, a Delaware limited liability
company (the "Depositor"), and 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"):
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 October
1, 2003 among Education Funding Capital Trust-III (the "Trust"), a Delaware
statutory trust, and Fifth Third Bank, an Ohio banking corporation, 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. 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;
C. Each of the Seller and the Seller Eligible Lender Trustee desires (i)
to sell, transfer, assign and convey to the Depositor and the Depositor Eligible
Lender Trustee, as the case may be, for the benefit of the Depositor, 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:
ARTICLE I
SALE, TRANSFER AND ACCEPTANCE OF TRANSFERRED ASSETS
1.01 Sale, Transfer and Acceptance of Transferred Assets.
(a) The Seller, 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 Depositor, and the Seller 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 Depositor
Eligible Lender Trustee, for the benefit of the Depositor, and each of the
Depositor and the Depositor Eligible Lender Trustee, as the case may be, for the
benefit of the Depositor, hereby agrees to accept and acquire from the Seller or
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the Seller Eligible Lender Trustee, as the case may be, all of the Seller's and
the Seller 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 Depositor Eligible Lender Trustee, only the
legal title to the Financed Student Loans held by the Seller Eligible Lender
Trustee is hereby sold, transferred, assigned, set over and conveyed to the
Depositor 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 Seller and the Seller Eligible Lender Trustee, as the
case may be, to each of the Depositor and the Depositor Eligible Lender Trustee,
as the case may be, 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 Seller or the Seller Eligible Lender Trustee to
secure a debt or other obligation of the Seller or the Seller Eligible Lender
Trustee. However, in the event (but only to the extent) that, notwithstanding
the intent of the parties, a court of competent jurisdiction were to hold that
the Transferred Assets are deemed not to have been sold and therefore continue
to be the property of the Seller and the Seller Eligible Lender Trustee, as the
case may be, then this Agreement shall be deemed to be a conveyance by the
Seller and the Seller Eligible Lender Trustee, as the case may be, of a valid
and binding lien on and a security interest in all of the Seller's and the
Seller Eligible Lender Trustee's respective right, title and interest in the
Transferred Assets, whether now owned or hereafter acquired, to the Depositor
and the Depositor Eligible Lender Trustee, as the case may be.
1.02 Consideration for Transfer of Transferred Assets. The
consideration to be provided by the Depositor to the Seller and the Seller
Eligible Lender Trustee for the Transfer of the Transferred Assets shall be
payment of the Purchase Price.
1.03 Release of Seller and Seller Eligible Lender Trustee.
(a) The Seller and the Seller Eligible Lender Trustee hereby
acknowledge and agree that, upon Transfer of the Transferred Assets and payment
of the Purchase Price, the Depositor will become the successor in interest to
the Seller with respect to the Transferred Assets.
(b) The Seller and the Seller Eligible Lender Trustee hereby
acknowledge and agree that, upon Transfer of the Transferred Assets and payment
of the Purchase Price, the Depositor Eligible Lender Trustee will become the
successor in interest to the Seller 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 October 31, 2003 or at
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such other place and on such other date as shall be mutually agreed upon by the
Seller and the Depositor (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 Seller
and the Depositor (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 hereof 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 Depositor shall execute
and deliver an administration agreement, providing for certain administrative
services to be performed by ELS for the Depositor, in the form of Appendix B
hereto (the "Depositor Administration Agreement").
(c) At the Initial Closing, and effective on the Initial Closing
Date, ELS and the Depositor shall execute and deliver a servicing agreement,
providing for ELS to arrange for the servicing of the Financed Student Loans on
behalf of the Depositor, in the form of Appendix C hereto (the "Depositor
Servicing Agreement").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF
SELLER AND SELLER ELIGIBLE LENDER TRUSTEE
Each of the Seller and the Seller Eligible Lender Trustee, as the case may
be, hereby represents and warrants to the Depositor and the Depositor Eligible
Lender Trustee that, as of the date of this Agreement:
3.01 Formation and Authority. The Seller is a corporation 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 Seller 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. Furthermore, the Seller Eligible Lender Trustee, was at
all relevant times and is an "eligible lender" under the provisions of the
Higher Education Act.
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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 Seller or the Seller Eligible Lender Trustee is a
party or by which either is bound or constitute a default thereunder; neither
the Seller nor the Seller 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 Seller or the Seller
Eligible Lender Trustee to perform its respective obligations under this
Agreement. This Agreement constitutes a valid and binding obligation of each of
the Seller and the Seller 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 Seller or the
Seller 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 Seller or the Seller
Eligible Lender Trustee.
3.04 Regarding Financed Student Loans. The Seller (or the Seller
Eligible Lender Trustee where expressly otherwise stated) hereby represents and
warrants to the Depositor that as of the date of Transfer of the Transferred
Assets:
(a) Any information furnished by the Seller to the Depositor or
its agents with respect to any Financed Student Loan is true, complete and
correct in all material respects.
(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 Seller or the Depositor as assignee thereof. The Seller 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 Seller to charge an interest rate less than the
applicable rate of interest, the Depositor may approve, in its sole discretion,
in writing, interest reductions which are part of a student
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borrower repayment incentive program of the Seller, the terms of which have been
fully described in detail and in writing to the Depositor.
(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 Seller and the Seller 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 Depositor and the Depositor Eligible Lender
Trustee pursuant to this Agreement, the Depositor and the Depositor Eligible
Lender Trustee will acquire full right, title and interest in the 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 Seller 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.
(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.
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(l) No Financed Student Loan has a payment that is more than 90 days
delinquent.
(m) The Seller 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 Seller 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 Seller's business, and the Seller 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 Seller
Transferred or will Transfer the Financed Student Loans to the Depositor without
any intent to hinder, delay or defraud any current or future creditor of the
Seller; (ii) the Seller 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 Seller was or will constitute unreasonably small capital in relation to the
business of the Seller or the transaction; (iii) the Seller 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
Seller 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 Seller pursuant to this
Agreement is not subject to and will not result in any tax, fee or governmental
charge payable by the Depositor or the Seller to any federal, state or local
government ("Transfer Taxes") except such Transfer Taxes as are paid by the
Seller at the time of Transfer and except UCC filing fees. In the event that the
Depositor receives actual notice of any unpaid Transfer Taxes arising out of the
Transfer of the Financed Student Loans, on written demand by the Depositor, or
upon the Seller otherwise being given notice thereof, the Seller shall pay, and
otherwise indemnify and hold the Depositor harmless therefor. The Seller shall
not be responsible for the Depositor's income taxes, if any.
(q) The Seller 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.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE DEPOSITOR
AND THE DEPOSITOR ELIGIBLE LENDER TRUSTEE
Each of the Depositor and the Depositor Eligible Lender Trustee, as
applicable, hereby represents and warrants to the Seller that, as of the date of
this Agreement:
4.01 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.
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 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 corporation 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.
ARTICLE V
COVENANTS OF SELLER
The Seller covenants and agrees with the Depositor as follows:
5.01 Regarding Closing Conditions. The Seller shall take all
commercially reasonable actions necessary to cause the conditions applicable to
itself and the Depositor 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.
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5.02 Regarding the Higher Education Act. The Seller 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
Seller 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 Seller shall furnish and file, and shall cause the Seller Eligible Lender
Trustee to furnish and file, if appropriate, any document reasonably requested
by the Depositor to perfect the Depositor's and the Depositor Eligible Lender
Trustee's ownership interest in the Financed Student Loans.
5.04 Conditions Precedent to Repurchase Obligation. At the request of
either the Depositor or the Depositor Eligible Lender Trustee, the Seller shall
repurchase, or, shall cause the Seller 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
Depositor; or
(c) On account of any wrongful or negligent act or omission of the
Seller or the Seller 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 Depositor, 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 Seller. Upon the occurrence of any of the conditions
set forth in Section 5.04 and upon the request of the Depositor or any permitted
assignee thereof under Section 10.05, the Seller shall pay, or cause to be paid,
to the Depositor an amount equal to the same percentage of the then-outstanding
Principal Balance of such Financed Student Loan as the Seller 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 Depositor 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
Seller pursuant to this Agreement, the Depositor Eligible Lender Trustee shall
transfer, without recourse, representation or warranty, to the Seller Eligible
Lender Trustee, on behalf of Seller, all of the Depositor's and the Depositor
Eligible Lender Trustee's right, title and interest in and to such Financed
Student Loan, and all security and documents relating thereto.
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5.06 Regarding Tax Matters. The Seller 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 DEPOSITOR AND THE
DEPOSITOR ELIGIBLE LENDER TRUSTEE
Each of the Depositor and the Depositor Eligible Lender Trustee covenants
and agrees with the Seller as follows:
6.01 Regarding Closing Conditions. Each of the Depositor and the
Depositor 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 Depositor and the Depositor 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 Depositor 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
Depositor shall be responsible for the payment of such taxes only from the
Transferred Assets.
6.04 Restrictions Regarding Bankruptcy. Neither the Depositor nor the
Depositor Eligible Lender Trustee shall, for any reason, institute proceedings
for the Seller to be adjudicated as bankrupt or insolvent, or consent to the
institution of bankruptcy or insolvency proceedings against the Seller, or file
a petition seeking or consenting to reorganization or relief under any
applicable federal or state law relating to the bankruptcy of the Seller, or
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the Seller or a substantial part of
the property of the Seller or cause or permit the Seller to make any assignment
for the benefit of creditors, or admit in writing the inability of the Seller to
pay its debts generally as they become due, or declare or effect a moratorium on
the debt of the Seller or take any action in furtherance of any such action.
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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
Seller, the Seller Eligible Lender Trustee, the Depositor and the Depositor
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 Seller shall have received
from the Depositor the Purchase Price in immediately available funds;
(f) On the Initial Closing Date or each Subsequent Closing Date as
applicable, the Seller, the Seller Eligible Lender Trustee, the Depositor or the
Depositor 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):
(1) On the Initial Closing Date, an original executed Depositor
Administration Agreement between the Depositor and the
Administrator, or, if previously delivered, a confirmation
thereof;
(2) On the Initial Closing Date, an executed original Depositor
Servicing Agreement between the Depositor and the Servicer,
or, if previously delivered, a confirmation thereof;
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(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 Depositor and the Depositor 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 each of the
Seller and the Seller 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
Seller and the Seller 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 respective counsel, with respect to the
organization and authority of each of the Seller and the
Depositor, and such other matters as such counsel may
reasonably require and (b) such other opinions, documents,
instruments and agreements ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ LLP, the
Depositor or the Depositor 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 Seller and the Depositor; or
(b) by either the Seller or the Depositor 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 Seller or the Depositor as provided in Section 8.01:
(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 Seller or the Depositor, or their respective employees, officers, directors,
members or trustees, except that Sections 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.
(b) If such termination occurs subsequent to the Initial Closing
Date, this Agreement shall become void and there shall be no liability on the
part of the Seller or the Depositor, or their respective employees, officers,
directors, members or trustees, except that Sections 3.04, 5.04, 5.05, 7.01,
9.01, 9.02, 9.03, 10.01 and 10.09 hereof shall survive
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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 Seller. The Seller agrees to indemnify the
Depositor and its officers, directors, members and employees (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 Seller to comply with any covenants
or other commitments made by the Seller in this Agreement or any other agreement
or document delivered by the Seller in connection herewith.
9.02 Indemnification by the Depositor. The Depositor agrees to
indemnify the Seller and its Board of Directors, officers and employees (the
"Seller Indemnified Parties") with respect to, and hold the Seller Indemnified
Parties harmless from, any loss, liability or expense (including, but not
limited to, reasonable legal fees) which the Seller 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.
9.03 Legal Proceedings. In the event the Seller or the Depositor
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.
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
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and the consummation of the transactions contemplated by this Agreement (whether
consummated or not).
10.02 Further Assurances. Each of the Seller, the Seller Eligible
Lender Trustee, the Depositor and the Depositor 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 Seller: Education Lending Group, Inc.
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Notices to the Depositor: Education Funding Capital I, LLC
▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇-▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇
with copies of all notices to: ▇▇▇▇▇▇▇▇ ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, 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 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 Depositor may assign its rights under this Agreement
to any of the Trust, the Co-Owner Trustee and 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
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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 LENDING GROUP, INC., a FIFTH THIRD BANK, an Ohio banking
Delaware corporation corporation, not in its individual
("Seller") capacity but solely as eligible
lender trustee on behalf of the Seller
("Seller Eligible Lender Trustee")
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
----------------------------------- -----------------------------------
Title: Senior Vice President - Finance Title: AVP
------------------------------- ---------------------------------
EDUCATION FUNDING CAPITAL I, LLC, FIFTH THIRD BANK, an Ohio banking
a Delaware limited liability company corporation, not in its individual
(the "Depositor") capacity, but solely as eligible
lender trustee on behalf of the
Depositor
(the "Depositor Eligible Lender
Trustee")
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇-▇▇▇▇▇▇▇
----------------------------------- ------------------------------------
Title: Senior Vice President - Finance Title: AVP
------------------------------- ---------------------------------
APPENDIX A
to
Seller Transfer and Sale Agreement,
dated as of October 1, 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. References to a
Person are also to its permitted successors and assigns.
Definitions
-----------
"Administrator" shall mean ELS in its capacity as Administrator of the
Depositor or any successor thereto as permitted by the Depositor Administration
Agreement.
"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.
"Consolidation Loan Rebate Amount" means the payment due to the Secretary
of Education pursuant to Section 428C(f) of the Higher Education Act.
A-1
"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 Administration Agreement" shall mean the Administration
Agreement, dated as of October 1, 2003 between the Administrator and the
Depositor, as amended or restated from time to time.
"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.
"Depositor Servicing Agreement" shall mean the Servicing Agreement, dated
as of October 1, 2003, between the Servicer and the Depositor, as amended or
restated from time to time.
"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 Seller Eligible Lender
Trustee or the Depositor Eligible Lender Trustee maintains a Guarantee
Agreement.
"Guarantee Agreement" shall mean an agreement between a Guarantee Agency
and either the Depositor Eligible Lender Trustee or the Seller Eligible Lender
Trustee providing for the Guarantee by such Guarantee Agency of the principal of
and accrued interest on the Financed Student Loans.
A-2
"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 October 1, 2003
among the Education Funding Capital Trust-III, the Indenture Trustee, and the
Trust Eligible Lender Trustee.
"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
Depositor Eligible Lender Trustee 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 on the applicable Appendix D.
"Purchase Price" shall mean the sum of (i) the outstanding principal
balance, accrued interest and premium with respect to the Financed Student Loans
minus (ii) 100% of the accrued and unpaid Consolidation Loan Rebate Amount from
the beginning of the calendar month in which the Closing Date occurs to and
including the Closing Date as set forth in the applicable Appendix D.
"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.
"Seller" shall mean Education Lending Group, Inc., a corporation formed
under the laws of the State of Delaware, and its successors and assigns.
"Seller Eligible Lender Trust Agreement" shall mean the Amended and
Restated Eligible Lender Trust Agreement, dated as of July 22, 2003, between the
Seller and the Seller Eligible Lender Trustee, not in its individual capacity,
but solely in its capacity as eligible lender trustee on behalf of the Seller,
and its successors and assigns, as amended or restated from time to time.
"Seller 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 Seller, and its successor and assigns.
A-3
"Servicer" shall mean Education Lending Services, Inc., in its capacity as
servicer of the Financed Student Loans, or any permitted successor
Servicer under the Depositor Servicing Agreement.
"Special Allowance Payments" shall mean payments, designated as such,
consisting of effective interest subsidies by the Department of Education to the
Depositor 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 Services, Inc. in its capacity as Subservicer of the
Financed Student Loans, and/or any permitted Subservicer, under the Depositor
Servicing Agreement.
"Transfer" shall mean, and it is the intention of the parties that it shall
mean, with respect to the Transferred Assets, the sale, transfer, assignment and
conveyance of, or to sell, transfer, assign and convey, the Transferred Assets.
"Transferred Assets" shall mean all rights of the Seller and Seller
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 and the
Guarantee Agreements with respect thereto.
▇-▇
▇▇▇▇▇▇▇▇ ▇
to
Seller Transfer and Sale Agreement,
Dated as of October 1, 2003
FORM OF DEPOSITOR ADMINISTRATION AGREEMENT
B-1
APPENDIX C
to
Seller Transfer and Sale Agreement,
Dated as of October 1, 2003
FORM OF DEPOSITOR SERVICING AGREEMENT
C-1