WFG DRAFT 8/3/98
EXHIBIT 99.2
[FORM OF]
SERVICING AGREEMENT
among
EFG STUDENT LOAN TRUST 1999-[ ]
as Issuer,
[EFG TECHNOLOGIES, a division
of Educational Finance Group, Inc.,
as Servicer,]
EFG FUNDING CORPORATION
as Depositor,
and
[ELIGIBLE LENDER TRUSTEE],
not in its individual capacity but solely
as Eligible Lender Trustee,
Dated as of [DATE]
SERVICING AGREEMENT dated as of [DATE], among EFG STUDENT LOAN TRUST
1999-[ ], a Delaware business trust (the "Issuer"), acting by and through
_____________, its trustee, (the "Trustee"), EFG TECHNOLOGIES, a division of
Educational Finance Group, Inc. ("EFG"), as servicer (the "Servicer"), EFG
Funding Corporation, as depositor (the "Depositor") and [ELIGIBLE LENDER
TRUSTEE], [a national banking association], solely as eligible lender trustee
and not in its individual capacity (the "Eligible Lender Trustee").
WHEREAS the Issuer desires to purchase from the Depositor a
portfolio of federally reinsured FFELP Student Loans purchased from EFG in the
ordinary course of business by the Depositor;
WHEREAS the Eligible Lender Trustee is willing to hold legal
title to, and serve as eligible lender trustee with respect to, such FFELP
Student Loans on behalf of the Issuer; and
WHEREAS the Servicer is willing to service such FFELP Student
Loans and undertake certain administrative functions with respect thereto.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants herein contained, the parties hereto agree as follows:
ARTICLE I.
Definitions and Usage
Capitalized terms used but not defined herein are defined in
Appendix A to the Administration Agreement, dated as of [DATE], among the
Issuer, the Educational Finance Group, LLP, as Administrator, and [INDENTURE
TRUSTEE], as Indenture Trustee, which also contains rules as to usage and
construction that shall be applicable herein.
ARTICLE II.
Custody of FFELP Student Loans
SECTION 2.1. Custody of Student Loan Files. To assure uniform
quality in servicing the FFELP Student Loans and to reduce administrative costs,
the Issuer hereby revocably appoints the Servicer, and the Servicer hereby
accepts such appointment, to act for the benefit of the Issuer and the Indenture
Trustee as Custodian of the following documents or instruments which are hereby
constructively delivered to the Indenture Trustee, as pledgee of the Issuer {(or
will be constructively delivered to the Indenture Trustee, as pledgee of the
Issuer, in the case of New Loans and Serial Loans, as of the applicable Transfer
Date, in the
case of Qualified Substitute FFELP Student Loans, as of the date of the relevant
Assignment to the Issuer, in the case of Consolidation Loans originated during
the Revolving Period by the Eligible Lender Trustee on behalf of the Issuer, as
of the applicable date of origination or in the case of Consolidation Loans the
principal balances of which are increased by the principal balances of any
related Add-on Consolidation Loans, as of the applicable Add-on Consolidation
Loan Funding Date)} with respect to each FFELP Student Loan:
(a) the original fully executed copy of the note evidencing
the FFELP Student Loan (including the original loan application fully executed
by the Borrower); and
(b) any and all other documents and computerized records that
the Servicer shall keep on file, in accordance with its customary procedures,
relating to such FFELP Student Loan or any Obligor with respect thereto.
SECTION 2.2. Duties of Servicer as Custodian. (a) Safekeeping.
The Servicer shall maintain custody of the Student Loan Files for the benefit of
the Issuer and the Indenture Trustee and maintain such accurate and complete
accounts, records and computer systems pertaining to each Student Loan File as
shall enable the Issuer to comply with the Basic Documents. In performing its
duties as custodian the Servicer shall act with reasonable care, using that
degree of skill and attention that the Servicer exercises with respect to the
student loan files relating to all comparable FFELP Student Loans that the
Servicer services and shall ensure that it complies with all applicable Federal
and State laws, including the Higher Education Act, with respect thereto. The
Servicer shall conduct, or cause to be conducted, periodic audits of the Student
Loan Files held by it under this Agreement and of the related accounts, records
and computer systems, in such a manner as shall enable the Issuer or the
Indenture Trustee to verify the accuracy of the Servicer's record keeping. The
Servicer shall promptly report to the Issuer and the Indenture Trustee any
failure on its part to hold the Student Loan Files and maintain its accounts,
records and computer systems as herein provided and promptly take appropriate
action to remedy any such failure. Nothing herein shall be deemed to require an
initial review or any periodic review by the Issuer, the Eligible Lender Trustee
or the Indenture Trustee of the Student Loan Files.
(a)(b) Maintenance of Records. The Servicer shall maintain
each Student Loan File at one of the locations specified in Schedule A to this
Agreement or at such other office as shall be specified by written notice to the
Issuer and the Indenture Trustee not later than 90 days after any change in
location. Upon reasonable prior notice of not less than three Business Days, the
Servicer shall make available to the Issuer and the Indenture Trustee or their
respective duly authorized representatives, attorneys or auditors a list of
locations of the Student Loan Files and the related accounts, records and
computer systems maintained by the Servicer.
(c) Release of Documents. Upon instruction from the Indenture
Trustee, the Servicer shall, as soon as practicable, release any Student Loan
File to the Indenture Trustee, the Indenture Trustee's agent, or the Indenture
Trustee's designee, as the case may be, at such place or places as the Indenture
Trustee may designate.
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SECTION 2.3. Instructions; Authority To Act. The Servicer
shall be deemed to have received proper instructions with respect to the Student
Loan Files upon its receipt of written instructions signed by a Responsible
Officer of the Indenture Trustee.
SECTION 2.4. Custodian's Indemnification. The Servicer as
Custodian shall pay for any actual loss, liability or expense, including
reasonable attorneys' fees, that may be imposed on, incurred by or asserted
against the Issuer, the Eligible Lender Trustee or the Indenture Trustee or any
of their officers, directors, employees and agents as a result of any improper
act or omission in any way relating to the maintenance and custody by the
Servicer as Custodian of the Student Loan Files as required by this Agreement
where the final determination that any such improper act or omission by the
Servicer resulted in such loss, liability or expense is established by a court
of law, by an arbitrator, or by way of settlement agreed to by the Servicer;
provided, however, that the amount of any liability with respect to any FFELP
Student Loan shall not exceed the amount that would have been paid if such FFELP
Student Loan had been accepted and paid by the related Guarantor as a claim, and
provided, further, that the Servicer shall not be liable to the Eligible Lender
Trustee for any portion of any such amount resulting from the willful
misfeasance, bad faith or negligence of the Eligible Lender Trustee and the
Servicer shall not be liable to the Indenture Trustee for any portion of any
such amount resulting from the willful misfeasance, bad faith or negligence of
the Indenture Trustee. This provision shall not be construed to limit the
Servicer's or any other party's rights, obligations, liabilities, claims or
defenses which arise as a matter of law or pursuant to any other provision of
this Agreement.
SECTION 2.5. Effective Period and Termination. The appointment
of EFG Technologies as Custodian shall become effective as of the Closing Date
and shall continue in full force and effect for so long as EFG Technologies
shall remain the Servicer hereunder. If all the rights and obligations of EFG
Technologies shall have been terminated under Section 6.1, the appointment of
EFG Technologies as Custodian shall be terminated simultaneously with the
effectiveness of such termination. As soon as practicable on or after any
termination of such appointment and in any event within ninety (90)days, EFG
Technologies shall deliver possession of the Student Loan Files to the Indenture
Trustee or the Indenture Trustee's agent at such place or places as the
Indenture Trustee may reasonably designate. EFG Technologies will continue to
hold the Student Loan Files as agent of the Indenture Trustee until the Student
Loan Files are transferred.
ARTICLE III.
Administration and Servicing of FFELP Student Loans
SECTION 3.1. Duties of Servicer. The Servicer, for the benefit
of the Issuer (to the extent provided herein), shall manage, service, administer
and make collections on the FFELP Student Loans with reasonable care, using that
degree of skill and attention that the Servicer exercises with respect to all
comparable FFELP Student Loans that it services. Without limiting the generality
of the foregoing or of any other provision set forth in this Agreement and
notwithstanding any other provision to the contrary set forth herein, the
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Servicer shall manage, service, administer and make collections with respect to
the FFELP Student Loans (other than collection of any Interest Subsidy Payments
and Special Allowance Payments, which the Eligible Lender Trustee will perform
on behalf of the Trust) in accordance with, and otherwise comply with, all
applicable Federal and state laws, including any applicable standards,
guidelines and requirements of the Higher Education Act and the applicable
Guarantee Agreement, the failure to comply with which would adversely affect the
eligibility of one or more of the FFELP Student Loans for Federal reinsurance or
Interest Subsidy Payments, Special Allowance Payments or Guarantee Payments or
would have an adverse effect on the Noteholders or the Company. {The Servicer
also hereby acknowledges that its obligation to service the FFELP Student Loans
includes all Consolidation Loans originated by the Issuer during the Revolving
Period, any Consolidation Loan supplemented from time to time during and after
the Revolving Period by the addition of the principal balance of any related
Add-on Consolidation Loan, any Qualified Substitute Student Loans conveyed to
the Issuer pursuant to Section 3.2 of the Loan Sale Agreement and those New
Loans and Serial Loans conveyed to the Eligible Lender Trustee on behalf of the
Trust pursuant to Section 2.2 of the Loan Sale Agreement and the related
Transfer Agreement, a copy of which shall be delivered to the Servicer by the
Depositor promptly upon execution thereof; provided that any failure by the
Depositor to so deliver a Transfer Agreement shall not affect the Servicer's
obligations hereunder to service all the FFELP Student Loans.}
The Servicer's duties shall include collection and posting of
all payments, responding to inquiries of borrowers on such FFELP Student Loans,
monitoring borrowers' status, making required disclosures to borrowers,
investigating delinquencies, sending payment coupons to borrowers and otherwise
establishing repayment terms, reporting tax information to borrowers, if
applicable, accounting for collections and furnishing monthly and annual
statements with respect thereto to the Administrator. Subject to the provisions
of Section 3.2, the Servicer shall follow its customary standards, policies and
procedures in performing its duties as Servicer. Without limiting the generality
of the foregoing, the Servicer is authorized and empowered to execute and
deliver, on behalf of itself, the Issuer, the Eligible Lender Trustee, the
Indenture Trustee, the Company and the Noteholders or any of them, instruments
of satisfaction or cancellation, or partial or full release or discharge, and
all other comparable instruments, with respect to such FFELP Student Loans;
provided, however, that the Servicer agrees that it will not (a) permit any
rescission or cancellation of an FFELP Student Loan except as ordered by a court
of competent jurisdiction or governmental authority or as otherwise consented to
in writing by the Eligible Lender Trustee and the Indenture Trustee or (b)
reschedule, revise, defer or otherwise compromise with respect to payments due
on any FFELP Student Loan except pursuant to any applicable Deferral or
Forbearance periods or otherwise in accordance with all applicable standards,
guidelines and requirements with respect to the servicing of the FFELP Student
Loans; provided further, however, that the Servicer shall not agree to any
decrease of the interest rate on, or the principal amount payable with respect
to, any FFELP Student Loan.
The Servicer, for the benefit of the Issuer and the Indenture
Trustee (to the extent provided herein), shall promptly and routinely furnish
the Eligible Lender Trustee and the Indenture Trustee with copies of all
material reports, records, and other documents and
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data as required by this Agreement or as may otherwise be required by the Higher
Education Act. All material correspondence received by the Servicer relating to
individual FFELP Student Loans shall be maintained in microcopy form or in
summary form in an automated history file established by the Servicer. The
Servicer shall furnish in good condition all forms and supplies as specified in
this Agreement and any Schedules hereto. The Eligible Lender Trustee and the
Indenture Trustee may transmit FFELP Student Loan account data to the Servicer
on these forms or by any other mutually acceptable means. In performing its
duties hereunder, the Servicer will be guided by and comply with the Higher
Education Act and applicable requirements of the related Guarantor. The Servicer
agrees to produce a clear and precise audit trail for each FFELP Student Loan
and to comply with such other reporting, servicing, and operating standards as
are contained in this Agreement.
The Eligible Lender Trustee on behalf of the Issuer hereby
grants a power of attorney and all necessary authorization to the Servicer to
maintain any and all collection procedures with respect to the FFELP Student
Loans, including filing, pursuing and recovering claims against the Guarantors
for Guarantee Payments and taking any steps to enforce such FFELP Student Loans
such as commencing a legal proceeding to enforce an FFELP Student Loan in the
name of the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Company or the Noteholders. The Eligible Lender Trustee or the Indenture Trustee
shall upon the written request of the Servicer or the Administrator furnish the
Servicer or the Administrator with any other powers of attorney and other
documents reasonably necessary or appropriate to enable the Servicer or the
Administrator to carry out their servicing and administrative duties hereunder.
SECTION 3.2. Collection of Student Loan Payments. The Servicer
shall make reasonable efforts (including all efforts that may be specified under
the Higher Education Act or any Guarantee Agreement) to collect all payments
called for under the terms and provisions of the FFELP Student Loans as and when
the same shall become due and shall follow such collection procedures as it
follows with respect to all comparable FFELP Student Loans that it services. The
Servicer shall allocate collections with respect to the FFELP Student Loans
between principal and interest in accordance with the terms of each such loan.
The Servicer may in its discretion waive any late payment charge or any other
fees that may be collected in the ordinary course of servicing an FFELP Student
Loan.
(a) The Servicer shall make reasonable efforts to claim,
pursue and collect all Guarantee Payments from the Guarantors pursuant to the
Guarantee Agreements with respect to any of the FFELP Student Loans as and when
the same shall become due and payable, shall comply with the Higher Education
Act and all other applicable laws and agreements with respect to claiming,
pursuing and collecting such payments and shall follow such practices and
procedures as it follows with respect to all comparable guarantee agreements and
FFELP Student Loans that it services. In connection therewith, the Servicer is
hereby authorized and empowered to convey to the related Guarantor the note and
the related Student Loan File representing any FFELP Student Loan in connection
with submitting a claim to the applicable Guarantor for a Guarantee Payment in
accordance with the terms of the applicable Guarantee Agreement.
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(b) The Eligible Lender Trustee shall, with the assistance of
the Servicer as set forth below and on behalf of the Issuer, make reasonable
efforts to claim, pursue and collect all Interest Subsidy Payments and Special
Allowance Payments from the Department with respect to any of the FFELP Student
Loans as and when the same shall become due and payable, shall comply with all
applicable laws and agreements with respect to claiming, pursuing and collecting
such payments and shall follow such practices and procedures as the Servicer
follows with respect to FFELP Student Loans serviced by it. All amounts so
collected by the Eligible Lender Trustee with respect to FFELP Student Loans
shall constitute Monthly Available Funds for the applicable Monthly Collection
Period and Available Funds for the applicable Collection Period, and shall be
deposited into the Collection Account in accordance with Section 4.1. In
connection therewith, the Servicer shall prepare and file with the Department on
a timely basis all claims forms and other documents and filings necessary or
appropriate in connection with the claiming of Interest Subsidy Payments and
Special Allowance Payments on behalf of the Eligible Lender Trustee and shall
otherwise assist the Eligible Lender Trustee in pursuing and collecting such
Interest Subsidy Payments and Special Allowance Payments from the Department.
The Eligible Lender Trustee shall upon the written request of the Servicer
furnish the Servicer with any power of attorney and other documents reasonably
necessary or appropriate to enable the Servicer to prepare and file such claims
forms and other documents and filings.
The Eligible Lender Trustee may hold legal title to FFELP
Loans for the benefit of the Depositor and one or more trusts, other than the
Trust, established by the Depositor to securitize student loans and may use, as
Eligible Lender Trustee for all such beneficiaries, one Department lender
identification number. The Eligible Lender Trustee may claim and collect
Interest Subsidy Payments and Special Allowance Payments with respect to FFELP
Student Loans beneficially owned by the Depositor, the Trust and such other
trusts using such common lender identification number. Notwithstanding anything
herein or in the Basic Documents to the contrary, any amounts assessed against
payments (including, but not limited to, Interest Subsidy Payments and Special
Allowance Payments) due from the Department to one beneficiary as a result of
amounts (including, but not limited to, Consolidation Fees) owing to the
Department from a second beneficiary will be deemed for all purposes hereof and
of the Basic Documents (including for purposes of determining amounts paid by
the Department with respect to the student loans beneficially owned by such
beneficiaries) to have been assessed against the second beneficiary and shall be
deducted by the Eligible Lender Trustee or the Servicer and paid to the first
beneficiary from any collections made by them which would otherwise have been
payable to the Collection Account for the second beneficiary.
SECTION 3.3. Realization upon FFELP Student Loans. For the
benefit of the Issuer, the Servicer shall use reasonable efforts consistent with
its customary servicing practices and procedures and including all efforts that
may be specified under the Higher Education Act or the applicable Guarantee
Agreement in its servicing of any delinquent FFELP Student Loans.
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SECTION 3.4. No Impairment. The Servicer shall not impair the
rights of the Issuer, the Eligible Lender Trustee, the Indenture Trustee, the
Company or the Noteholders in the FFELP Student Loans.
SECTION 3.5. Purchase of FFELP Student Loans; Reimbursement.
(a) Upon the discovery by the Servicer, the Issuer, the Eligible Lender Trustee,
the Indenture Trustee or the Depositor of any breach pursuant to Sections 3.1,
3.2, 3.3 or 3.4 hereof the party discovering the breach shall give prompt
written notice to the others. If the breach is not cured within sixty (60) days
after the Servicer becomes aware or receives written notice (whichever is
earlier) of such breach, the Servicer shall purchase or arrange for the purchase
of any FFELP Student Loan in which the interests of the Noteholders, the Issuer,
the Indenture Trustee or the Eligible Lender Trustee are materially and
adversely affected by such breach as of the first day succeeding the end of such
60-day period that is the last day of a Monthly Collection Period (it being
understood that any such breach that does not affect the related Guarantor's
obligation to guarantee payment of such FFELP Student Loan will not be
considered to have a material adverse effect for this purpose and it being
further understood that any dispute as to whether such Guarantor's obligation
has been so affected so as to create such a material adverse effect, shall be
resolved, for so long as the Notes are Outstanding, by the Indenture Trustee,
whose determination shall be dispositive, and after the Notes are no longer
Outstanding, by the Issuer, whose determination shall then be dispositive);
provided, however, that during each 12-month period following the Cutoff Date or
an anniversary of the Cutoff Date (a "Servicer Liability Period"), the Servicer
will be obligated to purchase FFELP Student Loans only to the extent its total
liability incurred during the then current Servicer Liability Period for such
purchases and any other liabilities under this Agreement exceeds an amount (the
"Servicer Liability Limit") equal to [0.15%] of the outstanding principal
balance of the FFELP Student Loans as of the Cutoff Date or, after the first
anniversary of the Cutoff Date, as of the preceding April 1.
(a)(b) In consideration of the purchase of any such FFELP
Student Loan pursuant to this Section 3.5, the Servicer shall remit, in the
manner specified in Section 4.1, the Purchase Amount and the Issuer shall
execute such assignments and other documents reasonably requested by the
Servicer in order to effect the transfer of such FFELP Student Loan to the
Servicer or its designee; provided, however, that the Servicer's total liability
for losses for rejected claims by the Guarantors for any FFELP Student Loan
based on any breach pursuant to Sections 3.1, 3.2, 3.3, or 3.4 hereof will not
exceed that amount which the related Guarantor would have been obligated to pay
with respect to such loan had its obligation to guarantee payment thereof not
been affected by the Servicer's breach. Subject to Section 5.2, the exclusive
remedy of the Noteholders, the Issuer, the Indenture Trustee, and the Eligible
Lender Trustee and the entire liability of Servicer for such a breach shall be
limited to requiring the Servicer to purchase FFELP Student Loans pursuant to
this Section 3.5.
[[SECTION 3.6. Servicing Fee. [[Is this SMS specific??]] The
Servicing Fee for each calendar month (the "Servicing Fee") shall be equal to
the lesser of (I) one twelfth of 1.0% of the aggregate principal balance of the
FFELP Student Loans as of the last day of the preceding calendar month and (II)
the sum of (i) one-twelfth of the In-School Percentage of the
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principal balance of each FFELP Student Loan as of the last day of the preceding
calendar month which was an In-School Loan on such date or, if the average
principal balance of the In-School Loans as of such date was [ ] or less, [ ]
per Borrower Account for each such loan, (ii) one-twelfth of the GRDF Percentage
of the principal balance as of the last day of the preceding calendar month of
each FFELP Student Loan which was a Grace, Repayment, Deferral or Forbearance
Student Loan as of such date or, if the average principal balance of such loans
as of such date was $3,000 or less, $3.00 per Borrower Account for each such
loan, (iii) a fee of $1.00 for each notification sent by the Servicer during the
preceding calendar month on behalf of the Trust to a borrower providing
information to such borrower with respect to Federal Consolidation Loan
programs, (iv) a one-time fee of $75.00 for each Federal Consolidation Loan
originated by the Eligible Lender Trustee on behalf of the Trust during the
preceding calendar month, (v) a fee of $25.00 for each FFELP Student Loan for
which, during the preceding calendar month, claim documentation was completed
and provided to the Guarantor or for which the Servicer performed bankruptcy or
ineligible Borrower Account processing (that, in the case of ineligible Borrower
Account processing, resulted in a demand letter being sent to the borrower), in
each case as required by the claims processing requirements of the Guarantor,
(vi) a fee of $.05 per FFELP Student Loan for storing and warehousing the
applicable loan documentation for each such loan during the preceding calendar
month, (vii) a one-time fee of $2.00 for each Serial Loan transferred by the
Depositor to the Trust during the preceding calendar month, (viii) a fee equal
to one-twelfth of the product of (a) the aggregate outstanding principal balance
of the FFELP Student Loans as of the last day of the preceding calendar month
and (b) .05%, which fee will be payable so long as 34 C.F.R. ss. 682.413 or any
successor section remains in effect and (ix) a fee of $70.00 per hour for system
development requests made by the Eligible Lender Trustee on behalf of the Trust
and provided by the Servicer during the preceding calendar month. For purposes
of making the determinations set forth in clauses (i) and (ii) of the preceding
sentence, the "In-School Percentage" and "GRDF Percentage" shall each be
determined based on the average principal balance of the In-School Loans and the
Grace, Repayment, Deferral and Forbearance Loans, respectively, as of the last
day of the preceding calendar month, as follows:]]
Average Principal In-School Average Principal GRDF Percentage
Balance Percentage Balance
----------------- ---------- ----------------- ---------------
$
$
The Servicing Fee (together with any portion of the Servicing Fee that remains
unpaid from prior Monthly Payment Dates) will be payable on each Monthly Payment
Date and will be paid solely out of Monthly Available Funds in the case of each
Monthly Payment Date that is not a Quarterly Payment Date (and out of Available
Funds in the case of each Quarterly Payment Date) and amounts on deposit in the
Reserve Account on such Monthly Payment Date (including each Quarterly Payment
Date) as provided in Sections 2(d)(iv)(A), 2(d)(v)(A) and
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2(e)(iv)(A) of the Administration Agreement. To the extent that, for any
Monthly Payment Date, the Servicing Fee is the amount calculated as described in
clause (I) of the first sentence of the preceding paragraph, then an amount (the
"Servicing Fee Shortfall") equal to the excess of the amount described in clause
(II) of such sentence over the amount described in clause (I) of such sentence
shall be payable on the next succeeding Quarterly Payment Date (or if such
Monthly Payment Date is also a Quarterly Payment Date, on such Quarterly Payment
Date) from any remaining Reserve Account Excess as provided in Section 2(e)(ii)
of the Administration Agreement. [To the extent such remaining Available Funds
are insufficient to pay the Servicing Fee Shortfall on any Distribution Date,
the Depositor shall be required to pay any unpaid Servicing Fee Shortfall
directly to the Servicer out of its own funds.] The Servicer will be obligated
to perform its servicing obligations whether or not it receives any amounts in
respect of Servicing Fee Shortfalls.
SECTION 3.7. Servicer's Report. On or before the fifteenth day
of each month (or, if any such day is not a Business Day, on the next succeeding
Business Day), the Servicer shall deliver to the Administrator a servicer's
report with respect to the preceding calendar month containing all information
necessary for the Administrator to prepare the Administrator's Certificate,
referred to in Section 2(b)(ii) of the Administration Agreement, covering such
preceding calendar month.
SECTION 3.8. Annual Statement as to Compliance; Notice of
Default. The Servicer shall deliver to the Eligible Lender Trustee and the
Indenture Trustee (with a copy to the Depositor), on or before April 30 of each
year beginning April 30, 1999, an Officers' Certificate of the Servicer, dated
as of December 31 of the preceding year, stating that a review of the activities
of the Servicer during the preceding 12-month period (or, in the case of the
first such certificate, during the period from the Closing Date to December 31,
1999 and of its performance has been made under such officers' supervision and
to the best of such officers' knowledge, based on such review, the Servicer has
fulfilled all its obligations under this Agreement in all material respects
throughout such year (or in the case of the first such Officer's Certificate,
such shorter period) or, if there has been a default in the fulfillment of any
such obligation, specifying each such default known to such officers and the
nature and status thereof. The Indenture Trustee shall send a copy of each such
Officers' Certificate and each report referred to in this Section 3.8 to the
Rating Agencies. A copy of each such Officers' Certificate and each report
referred to in this Section 3.8 may be obtained by any Noteholder or Note Owner
by a request in writing to the Trustee addressed to its Corporate Trust Office,
together with evidence satisfactory to the Trustee that such Person is one of
the foregoing parties. Upon the telephone request of the Trustee, the Indenture
Trustee will promptly furnish the Trustee a list of Noteholders as of the date
specified by the Trustee.
(a) The Servicer shall deliver to the Eligible Lender Trustee,
the Trustee, the Indenture Trustee, the Depositor and the Rating Agencies,
promptly after having obtained knowledge thereof, but in no event later than
five Business Days thereafter, written notice in an Officers' Certificate of the
Servicer of any event which with the giving of notice or lapse of time, or both,
would become a Servicer Default under Section 6.1 or would cause the Servicer to
fail to meet any Rating Agency Condition.
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SECTION 3.9. Annual Independent Certified Public Accountants'
Report. The Servicer shall cause a firm of independent certified public
accountants, which may also render other services to the Servicer, the Depositor
or their Affiliates, to deliver to the Trustee and the Indenture Trustee (with a
copy to the Depositor) within 180 days of the end of the Servicer's regular
fiscal-year ended September 30 or calendar-year audit period, an audit report
that encompasses the Servicer's portion of the annual Lender Audit (as defined
in the Higher Education Act), or any successor thereto, as required of a lender
under the Higher Education Act, for the preceding year (or, in the case of the
first such report, during the period from the Closing Date to December 31, 1999.
The Indenture Trustee shall send a copy of each such report to the Rating
Agencies.
Such report will also indicate that the firm is independent of
the Servicer within the meaning of the Code of Professional Ethics of the
American Institute of Certified Public Accountants.
SECTION 3.10. Access to Certain Documentation and Information
Regarding FFELP Student Loans. Upon at least three Business Days' prior notice,
the Servicer shall provide the Noteholders access to the Student Loan Files in
such cases where the Noteholders shall be required by applicable statutes or
regulations to review such documentation, as demonstrated by evidence
satisfactory to the Servicer in its reasonable judgment. Access shall be
afforded without charge, but only upon reasonable request and during the normal
business hours at the respective offices of the Servicer. Nothing in this
Section shall affect the obligation of the Servicer to observe any applicable
law prohibiting disclosure of information regarding the Obligors and the failure
of the Servicer to provide access to information as a result of such obligation
shall not constitute a breach of this Section.
SECTION 3.11. Servicer Expenses. The Servicer shall be
required to pay all expenses incurred by it in connection with its activities
hereunder, including fees and disbursements of independent accountants, taxes
imposed on the Servicer, and expenses incurred in connection with distributions
and reports to the Administrator or the Noteholders, as the case may be.
SECTION 3.12. Appointment of Subservicer. The Servicer may at
any time appoint a subservicer to perform all or any portion of its obligations
as Servicer hereunder; provided, however, that the Rating Agency Condition shall
have been satisfied in connection therewith; provided further that the Servicer
shall remain obligated and be liable to the Issuer, the Eligible Lender Trustee,
the Indenture Trustee and the Noteholders for the servicing and administering of
the FFELP Student Loans in accordance with the provisions hereof without
diminution of such obligation and liability by virtue of the appointment of such
subservicer and to the same extent and under the same terms and conditions as if
the Servicer alone were servicing and administering the FFELP Student Loans. The
fees and expenses of the subservicer shall be as agreed between the Servicer and
its subservicer from time to time and none of the Issuer, the Eligible Lender
Trustee, the Indenture Trustee or the Noteholders shall have any responsibility
therefor.
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ARTICLE IV.
Deposits into the Collection Account
SECTION 4.1. Deposits into the Collection Account. The
Servicer shall deposit into the Collection Account (in the case of clauses (i)
and (ii) within two Business Days of receipt of freely available funds
therefor):
(i) all identifiable payments received by the Servicer by or
on behalf of Obligors on the FFELP Student Loans, including any
Guarantee Payments with respect to the FFELP Student Loans;
(ii) all Liquidation Proceeds on the FFELP Student Loans;
(iii) with respect to Purchased FFELP Student Loans, the
aggregate Purchase Amounts, when such amounts are due, as provided in
Section 3.5 hereof; and
(iv) all other amounts required to be deposited into the
Collection Account by the Servicer pursuant to the terms hereof.
(a) The Eligible Lender Trustee shall deposit into the
Collection Account within two Business Days of the receipt thereof, the
aggregate amount of Interest Subsidy Payments and Special Allowance Payments
received by it with respect to the FFELP Student Loans.
(b) The Issuer shall deposit into the Collection Account, the
aggregate Purchase Amount with respect to Purchased FFELP Student Loans and all
other amounts to be paid by the Seller under Sections 3.2 and 5.1 of the Loan
Sale Agreement when such amounts are due, as provided in Section 3.3 of the Loan
Sale Agreement.
(c) {The Indenture Trustee, at the written direction of the
Administrator, shall withdraw from the Collateral Reinvestment Account and
deposit into the Collection Account on each Determination Date during the
Revolving Period, an amount equal to the Capitalized Interest Amount for the
preceding Collection Period, as provided in Section 2(f) of the Administration
Agreement.}
(d) {The Indenture Trustee, at the written direction of the
Administrator, shall withdraw from the Collateral Reinvestment Account and
deposit into the Collection Account on any date during the Revolving Period
specified by the Administrator, such amounts as the Administrator may determine
are needed to make required distributions from Monthly Available Funds or
Available Funds, as the case may be, on Monthly Payment Dates.}
ARTICLE V.
The Servicer
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SECTION 5.1. Representations of Servicer. The Servicer makes
the following representations on which the Issuer is deemed to have relied in
acquiring (beneficially together with legal title acquired through the Eligible
Lender Trustee) the FFELP Student Loans and appointing the Servicer as servicer
hereunder. The representations speak as of the execution and delivery of this
Agreement and as of the Closing Date in the case of the {Initial} FFELP Student
Loans{, and will be deemed to speak as of the applicable Transfer Date, in the
case of New Loans and Serial Loans,} as of the date of the relevant Assignment
in the case of any Qualified Substitute Student Loan, {as of the date of
origination in the case of any Consolidation Loan added to the Trust during the
Revolving Period and as of the applicable Add-on Consolidation Loan Funding Date
in the case of any Consolidation Loan the principal balance of which has been
increased by the principal balance of a related Add-on Consolidation Loan}, but
shall survive the sale, transfer and assignment of legal title to the FFELP
Student Loans to the Eligible Lender Trustee on behalf of the Issuer and
beneficial ownership thereof to the Issuer (and the origination of such
Consolidation Loans) and the pledge thereof to the Indenture Trustee pursuant to
the Indenture and otherwise.
(a) Organization and Good Standing. [The Servicer is a
division of Educational Finance Group, Inc. with the power and authority to own
its properties and to conduct its business as such properties are currently
owned and such business is presently conducted, and has the legal right to
service the FFELP Student Loans.]
(b) Power and Authority of the Servicer. The Servicer has the
corporate power and authority to execute and deliver this Agreement and to carry
out its terms, and the execution, delivery and performance of this Agreement has
been duly authorized by the Servicer by all necessary corporate action.
(c) Binding Obligation. This Agreement constitutes a legal,
valid and binding obligation of the Servicer, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency, reorganization and similar
laws relating to creditors' rights generally and subject to general principles
of equity.
(d) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof or
thereof do not conflict with, result in any breach of any of the terms and
provisions of, nor constitute (with or without notice or lapse of time or both)
a default under, [[the certificate of incorporation or by-laws of the
Servicer,]] or any indenture, agreement or other instrument to which the
Servicer is a party or by which it shall be bound; nor result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of any
such indenture, agreement or other instrument; nor violate any law or, to the
knowledge of the Servicer, any order, rule or regulation applicable to the
Servicer of any court or of any Federal or state regulatory body, administrative
agency or other governmental instrumentality having jurisdiction over the
Servicer or its properties. Performance by the Servicer of its servicing duties
with respect to the FFELP Student Loans, and compliance by the Servicer with the
terms of this Agreement, will not result in the loss of any Guarantee Payments
by the Trust or any reinsurance payments with respect to any FFELP Student Loan
by the applicable Guarantor.
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(e) No Proceedings. There are no proceedings or investigations
pending against the Servicer or, to its best knowledge, threatened against the
Servicer, before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Servicer or its
properties: (i) asserting the invalidity of this Agreement or any of the other
Basic Documents to which the Servicer is a party, (ii) seeking to prevent the
issuance of the Notes or the consummation of any of the transactions
contemplated by this Agreement, or any of the other Basic Documents, (iii)
seeking any determination or ruling that could reasonably be expected to have a
material and adverse effect on the performance by the Servicer of its
obligations under, or the validity or enforceability of, this Agreement, any of
the other Basic Documents or the Notes or (iv) seeking to affect adversely the
Federal or state income tax attributes of the Issuer or the Notes.
(f) All Consents. All authorizations, consents, orders or
approvals of or registrations or declarations with any court, regulatory body,
administrative agency or other government instrumentality required to be
obtained, effected or given by the Servicer in connection with the execution and
delivery by the Servicer of this Agreement and the performance by the Servicer
of its duties contemplated by this Agreement have in each case been duly
obtained, effected or given and are in full force and effect.
SECTION 5.2. Indemnities of Servicer. The Servicer shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement.
The Servicer shall pay for any loss, liability or expense,
including reasonable attorney's fees, that may be imposed on, incurred by or
asserted against the Issuer, the Eligible Lender Trustee, the Indenture Trustee,
the Depositor, the Administrator, or the Noteholders or any of the officers,
directors, employees and agents of the Issuer, the Eligible Lender Trustee, the
Indenture Trustee, the Administrator or the Depositor to the extent that such
loss, liability or expense arose out of, or was imposed upon any such Person
through, the negligence, willful misfeasance or bad faith of the Servicer in the
performance of its obligations and duties under this Agreement or by reason of
the reckless disregard of its obligations and duties under this Agreement, where
the final determination that any such loss, liability or expense arose out of,
or was imposed upon any such Person through, any such negligence, willful
misfeasance, bad faith or recklessness on the part of the Servicer is
established by a court of law, by an arbitrator or by way of settlement agreed
to by the Servicer; provided, however, that the Servicer's obligation arising
under this Section 5.2 shall apply only to the extent that the sum of such
obligation and any other liabilities of the Servicer under this Agreement
exceeds the Servicer Liability Limit for any Servicer Liability Period (as such
terms are defined in Section 3.5). Notwithstanding the foregoing, if the
Servicer is rendered unable, in whole or in part, by a force outside the control
of the parties hereto (including acts of God, acts of war, fires, earthquakes
and other disasters) to satisfy its obligations under this Agreement, the
Servicer shall not be deemed to have breached any such obligation upon delivery
of written notice of such event to the other parties hereto, for so long as the
Servicer remains unable to perform such obligation as a result of such event.
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For purposes of this Section, in the event of the termination
of the rights and obligations of EFG Technologies as Servicer pursuant to
Section 6.1, or a resignation by such Servicer pursuant to this Agreement, such
Servicer shall be deemed to be the Servicer pending appointment of a successor
Servicer pursuant to Section 6.2.
Liability of the Servicer under this Section shall survive the
resignation or removal of the Eligible Lender Trustee or the Indenture Trustee
or the termination of this Agreement and shall include reasonable fees and
expenses of counsel and expenses of litigation. If the Servicer shall have made
any indemnity payments pursuant to this Agreement and the Person to or on behalf
of whom such payments are made thereafter collects any of such amounts from
others, such person shall promptly repay such amounts to the Servicer, without
interest.
SECTION 5.3. Merger or Consolidation of, or Assumption of the
Obligations of, Servicer. The Servicer hereby agrees that, upon any merger or
consolidation of the Servicer into another Person, any merger or consolidation
to which the Servicer shall be a party resulting in the creation of another
Person or any Person succeeding to the properties and assets of the Servicer
substantially as a whole, the Servicer shall cause such Person (if other than
the Servicer) to execute an agreement of assumption to perform every obligation
of the Servicer hereunder, deliver to the Eligible Lender Trustee, the Trustee
and Indenture Trustee an Officers' Certificate and an Opinion of Counsel each
stating that such consolidation, merger or succession and such agreement of
assumption comply with this Section and that all conditions precedent provided
for in this Agreement relating to such transaction have been complied with,
cause the Rating Agency Condition to have been satisfied with respect to such
transaction and cure any existing Servicer Default or any continuing event
which, after notice or lapse of time or both, would become a Servicer Default.
Upon compliance with the foregoing requirements, such Person shall be the
successor to the Servicer under this Agreement without further act on the part
of any of the parties to this Agreement.
SECTION 5.4. Limitation on Liability of Servicer and Others.
Neither the Servicer nor any of the directors, officers, employees or agents of
the Servicer shall be under any liability to the Issuer or the Noteholders,
except as provided under this Agreement, for any action taken or for refraining
from the taking of any action pursuant to this Agreement or for errors in
judgment; provided, however, that this provision shall not protect the Servicer
or any such person against any liability that would otherwise be imposed by
reason of willful misfeasance, bad faith or negligence in the performance of
duties or by reason of reckless disregard of obligations and duties under this
Agreement. The Servicer and any director, officer, employee or agent of the
Servicer may rely in good faith on any document of any kind prima facie properly
executed and submitted by any person respecting any matters arising under this
Agreement.
Except as provided in this Agreement, the Servicer shall not
be under any obligation to appear in, prosecute or defend any legal action that
shall not be incidental to its duties to service the FFELP Student Loans in
accordance with this Agreement, and that in its opinion may involve it in any
expense or liability; provided, however, that the Servicer may
14
undertake any reasonable action that it may deem necessary or desirable in
respect of this Agreement and the other Basic Documents and the rights and
duties of the parties to this Agreement and the other Basic Documents and the
interests of the Noteholders under the Indenture.
SECTION 5.5. EFG Technologies Not to Resign as Servicer.
Subject to the provisions of Section 5.3, EFG Technologies shall not resign from
the obligations and duties hereby imposed on it as Servicer under this Agreement
except upon determination that the performance of its duties under this
Agreement shall no longer be permissible under applicable law. Notice of any
such determination permitting the resignation of EFG Technologies shall be
communicated to the Trustee, the Eligible Lender Trustee, the Indenture Trustee
and the Rating Agencies at the earliest practicable time (and, if such
communication is not in writing, shall be confirmed in writing at the earliest
practicable time) and any such determination shall be evidenced by an Opinion of
Counsel to such effect delivered to the Eligible Lender Trustee and the
Indenture Trustee concurrently with or promptly after such notice. No such
resignation shall become effective until the Indenture Trustee or a Successor
Servicer shall have assumed the responsibilities and obligations of EFG
Technologies in accordance with Section 6.2.
ARTICLE VI.
Default
SECTION 6.1. Servicer Default. If any one of the following
events (a "Servicer Default") shall occur and be continuing:
(a) any failure by the Servicer to deliver to the Indenture
Trustee for deposit in any of the Trust Accounts any payment required
by the Basic Documents, which failure continues unremedied for three
Business Days after written notice of such failure is received by the
Servicer from the Indenture Trustee, the Trustee or the Administrator
or after discovery of such failure by an officer of the Servicer; or
(b) any failure by the Servicer duly to observe or to perform
in any material respect any other covenants or agreements of the
Servicer set forth in this Agreement or any other Basic Document, which
failure shall materially and adversely affect the rights of Noteholders
and continue unremedied for a period of thirty (30) days after the date
on which written notice of such failure, requiring the same to be
remedied, shall have been given (A) to the Servicer, by the Indenture
Trustee, the Trustee or (B) to the Servicer, and to the Indenture
Trustee, the Administrator and the Trustee by Noteholders representing
not less than 25% of the Outstanding Amount of the Notes; or
(c) any limitation, suspension or termination by the
Department of the Servicer's eligibility to service FFELP Student Loans
which materially and adversely affects its ability to service the FFELP
Student Loans; or
(d) an Insolvency Event occurs with respect to the
Servicer;
15
then, and in each and every case, so long as the Servicer Default shall not have
been remedied, either the Indenture Trustee or the Noteholders of Notes
evidencing not less than 75% of the Outstanding Amount of the Notes by notice
then given in writing to the Servicer (and to the Indenture Trustee, the
Eligible Lender Trustee and the Trustee if given by the Noteholders) may
terminate all the rights and obligations (other than the obligations set forth
in Section 5.2) of the Servicer under this Agreement. On or after the receipt by
the Servicer of such written notice, all authority and power of the Servicer
under this Agreement, whether with respect to the Notes, the FFELP Student Loans
or otherwise, shall, without further action, pass to and be vested in the
Indenture Trustee or such successor Servicer as may be appointed under Section
6.2; and, without limitation, the Indenture Trustee, the Trustee and the
Eligible Lender Trustee are hereby authorized and empowered to execute and
deliver, for the benefit of the predecessor Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement of the
FFELP Student Loans and related documents, or otherwise. The predecessor
Servicer shall cooperate with the successor Servicer, the Indenture Trustee, the
Trustee and the Eligible Lender Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer under this Agreement,
including the transfer to the successor Servicer for administration by it of all
cash amounts that shall at the time be held by the predecessor Servicer for
deposit, or shall thereafter be received by it with respect to a Student Loan.
All reasonable costs and expenses (including attorneys' fees) incurred in
connection with transferring the Student Loan Files to the successor Servicer
and amending this Agreement and any other Basic Documents to reflect such
succession as Servicer pursuant to this Section shall be paid by the predecessor
Servicer upon presentation of reasonable documentation of such costs and
expenses. Upon receipt of notice of the occurrence of a Servicer Default, the
Trustee shall give notice thereof to the Rating Agencies.
SECTION 6.2. Appointment of Successor. Upon receipt by the
Servicer of notice of termination pursuant to Section 6.1, or the resignation by
the Servicer in accordance with the terms of this Agreement, the predecessor
Servicer shall continue to perform its functions as Servicer under this
Agreement, in the case of termination, only until the date specified in such
termination notice or, if no such date is specified in a notice of termination,
until receipt of such notice and, in the case of resignation, until the later of
(x) the date 120 days from the delivery to the Trustee, the Eligible Lender
Trustee and the Indenture Trustee of written notice of such resignation (or
written confirmation of such notice) in accordance with the terms of this
Agreement and (y) the date upon which the predecessor Servicer shall become
unable to act as Servicer as specified in the notice of resignation and
accompanying Opinion of Counsel. In the event of the termination hereunder of
the Servicer, the Issuer shall appoint a successor Servicer acceptable to the
Indenture Trustee, and the successor Servicer shall accept its appointment by a
written assumption in form acceptable to the Indenture Trustee and the
Administrator. In the event that a successor Servicer has not been appointed at
the time when the predecessor Servicer has ceased to act as Servicer in
accordance with this Section, the Indenture Trustee without further action shall
automatically be appointed the successor Servicer and the Indenture Trustee
shall be entitled to the Servicing Fee. Notwithstanding the above, the Indenture
Trustee shall, if it shall be unwilling or legally unable so to act, appoint
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or petition a court of competent jurisdiction to appoint, any established
institution whose regular business shall include the servicing of FFELP Student
Loans, as the successor to the Servicer under this Agreement; provided, however,
that such right to appoint or to petition for the appointment of any such
successor Servicer shall in no event relieve the Indenture Trustee from any
obligations otherwise imposed on it under the Basic Documents until such
successor has in fact assumed such appointment.
(a) Upon appointment, the successor Servicer (including the
Indenture Trustee acting as successor Servicer) shall be the successor in all
respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties and liabilities placed on the predecessor Servicer that
arise thereafter or are related thereto and shall be entitled to an amount
agreed to by such successor Servicer (which shall not exceed the Servicing Fee,
unless such compensation arrangements will not result in a downgrading of the
ratings of the Notes by any Rating Agency) and all the rights granted to the
predecessor Servicer by the terms and provisions of this Agreement.
(b) The Servicer may not resign unless it is prohibited from
serving as such by law as evidenced by an Opinion of Counsel to such effect
delivered to the Trustee, the Indenture Trustee and the Eligible Lender Trustee.
Notwithstanding the foregoing or anything to the contrary herein or in the other
Basic Documents, the Indenture Trustee, to the extent it is acting as successor
Servicer pursuant hereto, shall be entitled to resign to the extent a qualified
successor Servicer has been appointed and has assumed all the obligations of the
Servicer in accordance with the terms of this Agreement and the other Basic
Documents.
SECTION 6.3. Notification to Noteholders and the Company. Upon
any termination of, or appointment of a successor to, the Servicer pursuant to
this Article VI, the Indenture Trustee shall give prompt written notice thereof
to Noteholders, the Administrator, the Eligible Lender Trustee, the Issuer and
the Rating Agencies (which, in the case of any such appointment of a successor,
shall consist of prior written notice thereof to the Rating Agencies).
SECTION 6.4. Waiver of Past Defaults. The Noteholders of Notes
evidencing not less than a majority of the Outstanding Amount of the Notes may,
on behalf of all Noteholders, waive in writing any default by the Servicer in
the performance of its obligations hereunder, and any consequences thereof,
except a default in making any required deposits to or payments from any of the
Trust Accounts (or giving instructions regarding the same) in accordance with
this Agreement. Upon any such waiver of a past default, such default shall cease
to exist, and any Servicer Default arising therefrom shall be deemed to have
been remedied for every purpose of this Agreement. No such waiver shall extend
to any subsequent or other default or impair any right consequent thereto.
ARTICLE VII.
Miscellaneous
17
SECTION 7.1. Amendment. This Agreement may be amended by the
Servicer, the Trustee and the Eligible Lender Trustee, with the consent of the
Indenture Trustee, but without the consent of any of the Noteholders, to cure
any ambiguity, to correct or supplement any provisions in this Agreement or for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions in this Agreement or of modifying in any manner the rights
of the Noteholders; provided, however, that such action shall not, as evidenced
by an Opinion of Counsel delivered to the Eligible Lender Trustee, the Trustee
and the Indenture Trustee, adversely affect in any material respect the
interests of any Noteholder.
This Agreement may also be amended from time to time by the
Servicer, the Trustee and the Eligible Lender Trustee, with the consent of the
Indenture Trustee, the consent of the Noteholders of Notes evidencing not less
than a majority of the Outstanding Amount of the Notes, for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Noteholders; provided, however, that no such amendment shall (a) increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments with respect to FFELP Student Loans or distributions
that shall be required to be made for the benefit of the Noteholders or (b)
reduce the aforesaid percentage of the Outstanding Amount of the Notes, the
Noteholders of which are required to consent to any such amendment, without the
consent of all outstanding Noteholders.
Promptly after the execution of any such amendment or consent
(or, in the case of the Rating Agencies, five Business Days prior thereto), the
Trustee shall furnish written notification of the substance of such amendment or
consent to the Indenture Trustee and each of the Rating Agencies.
It shall not be necessary for the consent of Noteholders
pursuant to this Section to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof.
Prior to the execution of any amendment to this Agreement, the
Eligible Lender Trustee, the Trustee and the Indenture Trustee shall be entitled
to receive and rely upon an Opinion of Counsel stating that the execution of
such amendment is authorized or permitted by this Agreement and the Opinion of
Counsel referred to in Section 6.2(f) of the Loan Sale Agreement. The Eligible
Lender Trustee, the Trustee and the Indenture Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Eligible Lender
Trustee's, the Trustee's or the Indenture Trustee's, as applicable, own rights,
duties or immunities under this Agreement or otherwise.
SECTION 7.2. Protection of Interests in Trust. The Servicer
shall not change its name, identity or corporate structure in any manner that
would, could or might make any financing statement or continuation statement
filed in accordance with Section 6.2(a) of the Loan Sale Agreement seriously
misleading within the meaning of ss.9-402(7) of the UCC or otherwise, unless it
shall have given the Eligible Lender Trustee, the Trustee, the Indenture
18
Trustee and the Rating Agencies at least five days' prior written notice thereof
and shall have promptly filed appropriate amendments to all previously filed
financing statements or continuation statements.
(a) The Servicer shall have an obligation to give the Eligible
Lender Trustee, the Trustee and the Indenture Trustee at least sixty (60) days'
prior written notice of any relocation of its principal executive office if, as
a result of such relocation, the applicable provisions of the UCC would require
the filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall promptly file any such
amendment. The Servicer shall at all times maintain each office from which it
shall service FFELP Student Loans, and its principal executive office, within
the United States of America.
(b) The Servicer shall maintain accounts and records of each
Student Loan accurately and in sufficient detail to permit the reader thereof to
know at any time the status of such Student Loan, including payments and
recoveries made and payments owing (and the nature of each) and reconciliation
between payments or recoveries on (or with respect to) each Student Loan and the
amounts from time to time deposited in the Collection Account in respect of such
Student Loan.
(c) The Servicer shall, by use of a distinct identification
code, maintain its computer systems so that, from and after the time of sale
under the Loan Sale Agreement of the FFELP Student Loans, the Servicer's master
computer records (including any backup archives) that refer to an FFELP Student
Loan shall indicate clearly the interest of the Issuer, the Eligible Lender
Trustee and the Indenture Trustee in such FFELP Student Loan and that such FFELP
Student Loan is owned legally by the Eligible Lender Trustee on behalf of the
Issuer and beneficially by the Issuer and has been pledged to the Indenture
Trustee. Indication of the Issuer's, the Eligible Lender Trustee's and the
Indenture Trustee's interest in an FFELP Student Loan shall be deleted from or
modified on the Servicer's computer systems when, and only when, the related
FFELP Student Loan shall have been paid in full or repurchased.
(d) If at any time the Servicer shall propose to sell, grant a
security interest in, or otherwise transfer any interest in FFELP Student Loans
to any prospective purchaser, lender or other transferee, the Servicer shall
give to such prospective purchaser, lender or other transferee computer tapes,
records or printouts (including any restored from backup archives) that, if they
shall refer in any manner whatsoever to any FFELP Student Loan, shall indicate
clearly that such FFELP Student Loan has been sold and is owned legally by the
Eligible Lender Trustee on behalf of the Issuer and beneficially by the Issuer
and has been pledged to the Indenture Trustee.
(e) The Servicer shall permit the Indenture Trustee and its
agents at any time during normal business hours to inspect, audit and make
copies of and abstracts from the Servicer's records regarding any FFELP Student
Loan; provided, however, that the Servicer is given reasonable prior notice of
at least 3 Business Days.
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(f) Upon request, at any time the Eligible Lender Trustee, the
Trustee or the Indenture Trustee shall have reasonable grounds to believe that
such request would be necessary in connection with its performance of its duties
under the Basic Documents, the Servicer shall furnish to the Eligible Lender
Trustee, the Trustee or the Indenture Trustee (in each case, with a copy to the
Administrator), within five (5) Business Days, a list of all FFELP Student Loans
(by borrower social security number, type of loan and date of issuance) then
held as part of the Trust, and shall cause the Administrator to furnish to the
Eligible Lender Trustee, the Trustee or the Indenture Trustee, within 20
Business Days thereafter, a comparison of such list to the list of {Initial}
FFELP Student Loans set forth in Schedule A to the Loan Sale Agreement as of the
Closing Date, and, for each FFELP Student Loan that has been added to or removed
from the pool of loans owned legally by the Eligible Lender Trustee on behalf of
the Issuer, information as to the date as of which and circumstances under which
each such FFELP Student Loan was so added or removed.
SECTION 7.3. Notices. Unless otherwise agreed by the
recipient, all demands, notices and communications upon or to the Depositor, the
Servicer, the Trustee, the Eligible Lender Trustee, the Indenture Trustee, the
Administrator or the Rating Agencies under this Agreement shall be in writing,
personally delivered or mailed by certified mail, return receipt requested (or
in the form of telex or facsimile notice, followed by written notice delivered
as aforesaid or postage prepaid, first class mail), and shall be deemed to have
been duly given upon receipt;
(a) in the case of the Depositor, to
EFG Funding Corporation
One Financial Place
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: President and Chief Executive Officer
Telephone: [PHONE]
Telecopy: [FAX]
with a copy to:
-----------------------------
-----------------------------
Attention:
Telephone:
Telecopy:
(b) in the case of [ELIGIBLE LENDER TRUSTEE], to
[ELIGIBLE LENDER TRUSTEE]
[ADDRESS]
Attention:
Telephone:
20
Telecopy:
(c) in the case of the Servicer, to
EFG Technologies
[ADDRESS]
Attention:
Telephone:
Telecopy:
with a copy to
Office of the General Counsel
[ADDRESS]
Attention:
Telephone:
Telecopy:
(d) in the case of the Issuer, to
EFG Student Loan Trust ____-_
c/o
[ADDRESS]
with a copy to the Trustee
at the Corporate Trust Office of the
Trustee
(e) in the case of the Trustee, at the Corporate Trust
Office of the Trustee;
(f) in the case of the Indenture Trustee, at its
Corporate Trust Office;
(g) in the case of the Administrator, to
Educational Finance Group, Inc.
One Financial Place
000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxxxxx 00000
Attention: President and Chief Executive Officer
Telephone:
Telecopy:
with a copy to:
Office of the General Counsel
[ADDRESS]
Attention:
21
Telephone:
Telecopy:
(h) [in the case of Moody's, to
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: ABS Monitoring Department
Telephone: (000) 000-0000
(i) in the case of Fitch, to
Fitch Investors Service, L.P.
Xxx Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Asset Backed Monitoring Unit
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
(j) in the case of Duff & Xxxxxx, to
Duff & Xxxxxx Credit Rating Co.
[ADDRESS]
Attention: Asset Backed Monitoring Unit
Telephone:
Facsimile:
or, as to each of the foregoing, at such other address as shall be designated by
written notice to the other parties.]
SECTION 7.4. Assignment. Notwithstanding anything to the
contrary contained herein, except as provided in the succeeding sentence, as
provided in Section 5.3 and as provided in the provisions of this Agreement
concerning the resignation of the Servicer, this Agreement may not be assigned
by the Servicer. This Agreement may only be assigned by the Eligible Lender
Trustee or the Trustee to its permitted successor pursuant to the Eligible
Lender Trust Agreement or Trust Agreement, as the case may be. The Depositor may
assign its rights, obligations and duties hereunder to an affiliate in whole or
in part.
SECTION 7.5. Limitations on Rights of Others. The provisions
of this Agreement are solely for the benefit of the Servicer, the Issuer and the
Eligible Lender Trustee and for the benefit of the Administrator, the Indenture
Trustee and the Noteholders, as third party beneficiaries, and nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Trust
22
Estate or under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.
SECTION 7.6. Severability. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 7.7. Separate Counterparts. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
SECTION 7.8. Headings. The headings of the various Articles
and Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
SECTION 7.9. Governing Law. This Agreement shall be construed
in accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 7.10. Non-Petition Covenants. Notwithstanding any
prior termination of this Agreement, the Servicer shall not, prior to the date
which is one year and one day after the termination of this Agreement with
respect to the Issuer, acquiesce, petition or otherwise invoke or cause the
Issuer to invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Issuer under any Federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Issuer.
SECTION 7.11. Limitation of Liability of Eligible Lender
Trustee, Trustee and Indenture Trustee. (a) Notwithstanding anything contained
herein to the contrary, this Agreement has been signed by [ELIGIBLE LENDER
TRUSTEE] not in its individual capacity but solely in its capacity as Eligible
Lender Trustee of the Issuer and in no event shall [ELIGIBLE LENDER TRUSTEE] in
its individual capacity or, except as expressly provided in the Trust Agreement,
as beneficial owner of the Issuer have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder
or in any of the certificates, notices or agreements delivered pursuant hereto
as to all of which recourse shall be had solely to the assets of the Issuer.
(b) Notwithstanding anything contained herein to the
contrary, this Agreement has been signed by [TRUSTEE] not in its individual
capacity but solely in its capacity as Eligible Lender Trustee of the Issuer and
in no event shall [TRUSTEE] in its
23
individual capacity or, except as expressly provided in the Trust Agreement, as
beneficial owner of the Issuer have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder
or in any of the certificates, notices or agreements delivered pursuant hereto
as to all of which recourse shall be had solely to the assets of the Issuer.
(c) Notwithstanding anything contained herein to the contrary,
this Agreement has been accepted by [INDENTURE TRUSTEE] not in its individual
capacity but solely as Indenture Trustee and in no event shall [INDENTURE
TRUSTEE] have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder or in any of the
certificates, notices or agreements delivered pursuant hereto, as to all of
which recourse shall be had solely to the assets of the Issuer.
24
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed by their respective officers as of the day and
year first above written.
EFG STUDENT LOAN TRUST 1999-[ ],
By: [TRUSTEE], not in its individual
capacity but solely as
Trustee on behalf of the Trust,
By
--------------------------------
Name:
Title:
EDUCATIONAL FINANCE GROUP, INC.
By
--------------------------------
Name:
Title:
EFG FUNDING CORPORATION
By
--------------------------------
Name:
Title:
[ELIGIBLE LENDER TRUSTEE], not in its
individual capacity but solely as Eligible
Lender Trustee,
By
--------------------------------
Name:
Title:
25
Acknowledged and accepted
as of the day and year first
above written:
[INDENTURE TRUSTEE], not in
its individual capacity but
solely as Indenture Trustee
By
-----------------------------
Name:
Title:
26
SCHEDULE A
The Servicer shall maintain each Student Loan File at one of the locations
listed below:
