Document:

exv10w37

 

EXHIBIT 10.37

Federal FFEL

Servicing Agreement

Education Loan Asset-Backed Trust-I

February 1, 2003

A C S

One World Trade Center, Suite 2200, Long Beach, CA 90831, 310/513-2700

2277 East 220th Street, Long Beach, CA 90810, 310/513-2700

2505 South Finley Road, Lombard, IL 60148, 630/620-2700

501 Bleecker Street, Utica NY 13501, 315/738-2300

 

 

	 	 	 	 	 
	TABLE OF CONTENTS	 	Page	 
	1.ACS Obligations
	 	 	1	 
	2.LENDER Obligations
	 	 	4	 
	3.Banking
	 	 	4	 
	4.Charges
	 	 	4	 
	5.Term and Termination
	 	 	6	 
	6.Examination of Records
	 	 	7	 
	7.Exclusion of Warranties and Limitations of ACS’s Liability
	 	 	7	 
	8.indemnification
	 	 	10	 
	9.Contingency Plan
	 	 	10	 
	10.Financial and Administrative Responsibility
	 	 	10	 
	11.Audits
	 	 	11	 
	12.Waiver of Jury Trial
	 	 	11	 
	13.Miscellaneous
	 	 	12	 
	14.ACS Representations and Warranties
	 	 	15	 
	15.Compliance With Lender Bond Documents
	 	 	16	 
	Signature Page
	 	 	18	 

	 	 	 	 	 
	Exhibit	 	 	 	 
	EXHIBIT A POST-ORIGINATION SERVICES
	 	 	19	 
	EXHIBIT B [Reserved]
	 	 	22	 
	EXHIBIT C SERVICING FEES
	 	 	23	 
	EXHIBIT D NOTE EXAMINATION ELECTION
	 	 	27	 
	EXHIBIT E BLANKET CURE TERMS
	 	 	29	 
	EXHIBIT E-1 CURE FEES
	 	 	32	 
	EXHIBIT F PLUS CREDIT REVIEW SERVICES TERMS
	 	 	33	 

	 	 	 
	

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	 	SERVICING AGREEMENT

THIS AGREEMENT is made and entered into as of February 1, 2003 by and between ACS Education
Services, Inc., f/k/a AFSA Data Corporation (“ACS”) and Education Loan Asset-Backed Trust I, the
beneficial owner (but not legal titleholder) of certain Student Loans (herein called the “LENDER”)
at Long Beach, California, with reference to the following facts:

	A.  	ACS has developed and is marketing a computerized origination, billing, record keeping,
accounting, reporting and loan management service designated as the “Guaranteed Student Loan
Processing Service” (the “Service”).
	 
	B.  	LENDER desires ACS to assist it in managing its Federal Stafford (SSL), Federal PLUS and
Federal Consolidation loans through the use of the Service.

Now, Therefore, ACS and LENDER hereby agree as follows:

1. ACS Obligations.

	 	A.  	ACS shall service LENDER’s Federal Stafford (SSL), Federal PLUS and Federal
Consolidation loan accounts as provided herein, and any similar student loan accounts
as may be mutually agreed upon (the “Accounts”). For the purposes of this Agreement,
an “Account” shall mean one or more loans having the same holder, borrower (and student
in the case of a Federal PLUS loan), loan program, Guarantor, maturity date and
repayment terms. Stafford loans, whether subsidized or unsubsidized, shall be
considered to have been made under the same loan program.
	 
	 	B.  	ACS shall perform all services and duties customary to the servicing of student
loans in accordance with generally established procedures and industry standards and
practices, including specifically the services and duties specified in Exhibit A
(Post-Origination Services) and Exhibit F (PLUS Credit Review Services Terms) attached
to this Agreement. Such services and duties shall be performed with respect to each
Account until such Account is paid in full (whether by the borrower or through the
payment of Guarantee benefits or otherwise) or deconverted from ACS’s servicing system
in accordance with this Agreement, or this Agreement is otherwise terminated in
accordance with Section 5 below.
	 
	 	C.  	ACS shall perform its services and duties hereunder in material compliance
with, and as required by, (i) the Higher Education Act, (ii) the applicable Guarantor
Regulations, (iii) the applicable Contract of Insurance or Guarantee, and (iv) any
other laws and regulations governing the servicing of the Accounts, and the foregoing
requirements shall determine the general scope of services hereunder. For purposes of
this Agreement, the “Higher Education Act” means Part B of Title IV of the Higher
Education Act of 1965, as amended from time to time, and the rules and regulations of
the U.S. Department of Education or any successor thereto (the “Department”)
promulgated thereunder, as amended from time to time, and “Guarantor Regulations” means
any manual of policies and procedures to be followed under the guarantee program
operated by applicable guarantor of

	 	 	 	 	 
	 
	

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	 	   	the loans involved (the “Guarantor”), as well as all supplements, amendments,
bulletins and updates, and all other written or unwritten policies, procedures,
rules and regulations promulgated or adopted, formally or informally, by such
Guarantor relating to its guarantee program or the administration, interpretations,
claims review or enforcement policies, procedures and practices thereunder, as the
same are reasonably interpreted and understood by ACS from time to time.

	 	D.  	Within a reasonable period after delivery of the loan files to ACS (generally
within 30 days unless otherwise expressly agreed), ACS shall (i) establish and maintain
records received by ACS with respect to each Account and complete records of ACS’s
servicing of the Account from the date such servicing commenced, (ii) maintain
possession of original promissory notes, loan applications and other required
supplements that it receives from LENDER, stored in a fire-rated, secure vault facility
located at 2277 E. 220th Street, Long Beach, California or 501 Bleecker Street, Utica,
New York, (iii) otherwise commence servicing the Accounts relating to such loan
documents, and (iv) microfilm or otherwise reproduce the promissory notes, loan
applications, and other required supplements and cause such reproductions to be stored
at Brambles Information Management Corporation or any equivalent facility.
	 
	 	E.  	If requested in writing by LENDER, for any loans not originated by ACS, ACS
shall make a Full Note Examination or an Abbreviated Note Examination of the original
promissory note and other loan documentation for each Account following receipt by ACS
for servicing, as requested by LENDER on Exhibit D (Note Examination Election).
Following such initial election, LENDER may from time to time with ACS’s consent, which
consent shall not be unreasonably withheld, select a different loan examination option
for a particular set of loans or for all subsequent loans by making a new election with
respect thereto or by other appropriate written notice to ACS.
	 
	 	F.  	By undertaking the loan examination and other duties provided above, ACS
assumes no responsibility for the origination, disbursement, documentation or prior
servicing of any loan (except to the extent that ACS performed or was obligated to
perform any of these services), it being understood and agreed that the originator
and/or prior servicer (if applicable) shall be responsible for all aspects of each loan
prior to the date on which ACS is required to commence servicing of such loan
hereunder. ACS shall not be liable in the overall conduct of the loan examination for
the entire portfolio being purchased by LENDER for failure, despite its reasonable
efforts, to detect any prior defect or note any exception during the loan examination
process. In the event of any such defect or exception, LENDER shall exhaust all
recourse and remedies against the original lender, prior servicer, or other responsible
parties before asserting any claim against ACS related thereto. The microfilm or other
reproduction of each borrower file made by ACS following delivery to ACS for servicing
shall be

	 	 	 	 	 
	 
	

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	 	   	prima facie evidence of the record of loan documentation received and reviewed by
ACS.

	 	G.  	If requested in writing by LENDER, ACS shall provide cure services for loans
that are unguaranteed due to non-ACS errors, as provided in Exhibit E (Blanket Cure
Terms).
	 
	 	H.  	If ACS reasonably determines that any Account has been rejected by a Guarantor
and cannot or is not to be cured hereunder, LENDER is responsible for providing
direction to ACS upon ACS’s written request for the disposition of such Account, which
shall remain on ACS’s servicing system pending such direction from LENDER. If LENDER
instructs ACS to deconvert any Accounts, ACS shall promptly provide the following
deconversion services:

	 	(1)  	Any files related to Accounts to be returned to LENDER shall be
assembled in substantially the manner in which they were received by ACS,
including any pertinent documents or information received or created by ACS
during its servicing;
	 
	 	(2)  	The files related to such Accounts shall be properly deposited
in the U.S. Mail as certified or registered mail addressed to LENDER unless
otherwise agreed by LENDER and ACS. ACS shall not be liable for any losses,
costs or damages incurred by LENDER if files are lost after being properly
deposited in the U.S. Mail. If so instructed by LENDER at any time, ACS shall
procure at LENDER’s expense such available insurance coverage as LENDER may
desire with respect to such shipments;
	 
	 	(3)  	A transmittal shall be provided by ACS to LENDER listing each
Account and certain other mutually-agreeable Account information; and
	 
	 	(4)  	Each Account record shall be removed from the ACS servicing
system.

	 	   	The deconversion and file preparation and shipping fees specified in Exhibit C
(Servicing Fees) shall apply to and shall be payable concurrently with any
deconversion of rejected Accounts as provided above, as well as any deconversion of
Accounts following any expiration or termination of this Agreement, or any other
removal of Accounts from this Agreement; provided, however, that no such fees shall
be charged for any deconversion of Accounts upon termination of this Agreement
pursuant to Section 5.B. (upon ACS breach) or 5.C. or 5.D. (except for
reimbursement of reasonable shipping charges as provided therein).

	 	I.  	If any of the Accounts are guaranteed by a Guarantor which permits electronic
interface or expedited or express claims filing or review processing (for. example,
Texas Guaranteed Student Loan Corporation’s Claims Automated Processing System (TGSLC’s
CAPS) or Northwest Education Loan Association’s

	 	 	 	 	 
	 
	

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	 	   	Express Claim Program (NELA’s ECP)), ACS may participate therein on LENDER’s behalf.
In such event, ACS is hereby authorized to enter into any participation agreement
or similar documentation required by such Guarantor on LENDER’s behalf as its agent
in order to participate therein.

2. LENDER Obligations.

	 	A.  	LENDER shall promptly transmit or cause to be transmitted to ACS any material
written communications it receives at any time with respect to any borrower’s Account,
including but not limited to letters, notices of death or disability, adjudications of
bankruptcy and like documents, and forms requesting deferment of repayment or loan
cancellations. ACS will have no liability for reliance upon information that would
have been corrected by timely transmittal to it of any such written communication, and
shall not bear any related servicing or other costs which reasonably could have been
avoided thereby.
	 
	 	B.  	LENDER shall examine all reports submitted to it by ACS promptly upon receipt
and promptly notify ACS of any discovered errors. ACS shall not be responsible for
damages or losses caused by any error disclosed by a report to LENDER unless such error
is brought to ACS’s attention within sixty (60) days after receipt by LENDER. This
time restriction shall be extended for the Lender Reporting System (LaRS) quarterly
reports, for which the LENDER shall have 90 days to bring an error to the attention of
ACS.
	 
	 	C.  	LENDER shall be responsible for assuring that the form documents that have been
used in the origination of the Accounts (other than such documents created
independently by ACS) are in compliance with all applicable federal, state and local
laws and regulations, including without limitation any consumer loan laws or disclosure
requirements applicable thereto, and shall defend, indemnify and hold ACS harmless from
any violation or non-compliance with any of the foregoing.

3. Banking.

	   	All borrower and other remittances shall be deposited to an ACS account at a remittance
banking/lock box facility at a bank selected by ACS which is reasonably acceptable to
LENDER, with all earnings on such account being retained by ACS. Such remittances shall be
promptly processed and posted to borrower Accounts and the associated funds shall be
transferred to LENDER by ACH or wire transfer on a mutually acceptable schedule.

4. Charges.

	A.  	LENDER shall pay ACS for services rendered in the prior month according to the
schedule of fees in Exhibit C (Servicing Fees), within fifteen (15) days after receipt
of an invoice sent by ACS to LENDER. Payments become delinquent if

	 	 	 	 	 
	 
	

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	 	   	not received by ACS within thirty (30) days from the date the invoice is received by
LENDER, and thereafter shall incur a late charge of one and one-half percent
(1-1/2%) per month until paid.

	 	B.  	The fees specified in Exhibit C shall remain fixed during the first twelve (12)
months of this Agreement. Unless otherwise expressly agreed, charges during each
subsequent twelve (12) month period of this Agreement may be increased over such fees
charged during the previous twelve (12) month period by an amount equal to the greater
of (i) the percentage increase in the U.S. Department of Labor’s Consumer Price Index
for Urban Wage Earners and Clerical Workers, U.S. City Average (1982-84=100) (the
“CPI”) for the most recent twelve (12) month period available at the time of each
annual adjustment, or (ii) three percent (3%) per annum. (If at any adjustment date
the CPI is no longer published, then any replacement index specified by the Bureau of
Labor Statistics or successor U.S. governmental agency shall be substituted therefor,
with appropriate application of any necessary conversion formula as may be specified by
such agency, or if no such replacement index has been so specified, then a comparable
cost-of-living index as may be mutually agreed between the parties shall be used.)
	 
	 	C.  	ACS’s fees are subject to adjustment by ACS (i) in the event of any increase in
telephone or postage rates, or (ii) as provided in Section 5.C below.
	 
	 	D.  	In addition to any other servicing fees or expense reimbursements to which ACS
shall be entitled under this Agreement, LENDER agrees to reimburse ACS for (i) any
sales or use taxes or similar taxes now or hereafter imposed upon any goods or services
provided by or activities of ACS hereunder, and (ii) any expenses which ACS incurs as a
result of any additional work required due to any transfer of the guarantee on serviced
loans to a new or successor Guarantor, or any Guarantor error, or any testing,
reconciliation or remediation project or other non-routine activity required by the
particular needs of Guarantor or LENDER or resulting from third party errors.
	 
	 	E.  	In the event of any good faith dispute by LENDER regarding any amount billed by
ACS, LENDER may by written notice to ACS detailing the grounds for the dispute withhold
payment of such disputed amount for a reasonable period pending resolution of the
dispute, but shall pay the undisputed portion billed when and as due. If the dispute
has not been mutually resolved within sixty (60) days after the date initially due,
LENDER shall deposit the withheld amount into an independent escrow reasonably
satisfactory to ACS pending mutual agreement or court decision regarding proper
disposition of such funds. Failure of LENDER to pay the undisputed portion of a
billing or to place any disputed amount in escrow as provided above shall constitute a
default hereunder.
	 
	 	F.  	ACS shall have the right to offset any amounts due from ACS to LENDER against
the servicing fees or other amounts due ACS hereunder.

	 	 	 	 	 
	 
	

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5. Term and Termination.

	 	A.  	This Agreement is for a term beginning March 1, 2002, and ending on the fifth
(5th) anniversary of such date; provided, however, that unless either party shall give
the other written notice of its intention not to renew this Agreement at least ninety
(90) days prior to its scheduled expiration date, this Agreement shall automatically
renew for successive twelve (12)-month periods thereafter, subject to any renegotiated
terms which may be mutually desired.
	 
	 	B.  	Either party may terminate this Agreement before its expiration upon a material
breach by the other party, if such breach has not been cured within ninety (90) days
after written notice of such material breach has been sent to the other party, which
written notice shall specify in reasonable detail the alleged breach and reference this
provision; provided, however, that the notice and cure period shall only be thirty (30)
days if the breach is the non-payment of ACS’s fees or other charges.
	 
	 	C.  	In the event of changes in the Higher Education Act, Guarantor Regulations, or
other current or future law, regulation or other requirement applicable to the serviced
loans, including without limitation, any changes in any interpretation, claims review
or enforcement policies, procedures or practices with respect thereto (and including,
without limitation, implementation or enforcement of third-party servicer regulations
promulgated by the Department), which in ACS’s reasonable determination expose ACS to
materially increased risk of liability to the Secretary of Education, LENDER or any
other party, impose materially increased duties or obligations upon ACS, cause ACS to
incur materially additional expense, or materially restrict or derogate from ACS’s
indemnification rights or liability limitations under this Agreement, ACS shall have
the right, at its option, to (i) terminate this Agreement upon 180 days’ prior written
notice to LENDER, or (ii) propose to LENDER an amendment to this Agreement which in
ACS’s reasonable judgment appropriately addresses the increased risk, duties or
obligations (which may include an adjustment to ACS’s fees and/or expense
reimbursements), and if the parties are unable to agree upon such amendment within
thirty (30) days after the same is submitted to LENDER, ACS shall be entitled to
terminate this Agreement upon 180 days’ prior written notice to LENDER. ACS shall not
be entitled to charge any deconversion fees hereunder in connection with the
deconversion of LENDER’s loans from ACS’s system following any termination by ACS under
this Section 5.C, but ACS shall be entitled to receive reimbursement of its reasonable
file preparation and shipping costs.
	 
	 	D.  	In the event that ACS announces or actually commences a wind-down of its
servicing activities for the purpose of exiting the student loan servicing business,
LENDER shall have the right, at its option, to terminate this Agreement upon 90 days’
prior written notice to ACS. In such event ACS shall not be entitled to

	 	 	 	 	 
	 
	

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	 	   	charge any deconversion fees hereunder in connection with the deconversion of
LENDER’s loans from ACS’s system following any termination by ACS under this Section
5.D, but ACS shall be entitled to receive reimbursement of its reasonable file
preparation and shipping costs.

6. Examination of Records.

LENDER or its agent shall have the right, at reasonable hours and under reasonable circumstances on
a mutually-agreeable schedule, to examine all LENDER’s assigned student loan records and material
serviced by ACS that it deems necessary to determine compliance with this Agreement. ACS shall
submit to like examination by any governmental agency or authority having supervisory jurisdiction
over LENDER.

7. Exclusion of Warranties and Limitations of ACS’s Liability.

	 	A.  	ACS shall be entitled to reasonably rely upon any information or data supplied
to it by LENDER, any party on LENDER’s behalf, or any third party normally relied upon
by servicers in the student loan industry, and shall have no liability for any error or
loss caused by such information or data being incomplete or inaccurate. ACS shall not
be responsible for reviewing and verifying the compliance of forms and processes
prescribed by the Secretary or Guarantor with applicable state and federal laws and
regulations, and ACS shall be fully entitled to rely upon and use such materials and
processes, unless notified to the contrary by LENDER, and shall have no liability for
any damages or loss resulting from such use absent such notice.
	 
	 	B.  	ACS shall use due care and diligence in performing its services in a timely
manner consistent with the applicable student loan program as reasonably interpreted
and understood by ACS. ACS hereby excludes and disclaims any and all other warranties
with respect to its services under this Agreement, and no employee, agent or
representative of ACS has the authority to bind ACS to any other oral or written
representation or warranty. LENDER will review all processing output, reports and
other information provided to it by ACS and will use due care and diligence to detect
and notify ACS of any errors therein which LENDER discovers. Upon prompt notification
to or discovery by ACS of any processing error or data inaccuracy, ACS shall re-perform
any processing to the extent practicable and necessary, without charge if ACS is at
fault and otherwise at a rate equal, in ACS’s best and reasonable judgment, to the
greater of its original charge for such processing or its direct and allocated indirect
cost of such reprocessing. ACS agrees to provide, at cost to LENDER if necessitated by
the nature of the data submitted, such evidence as LENDER may reasonably require which
will verify the complete and proper execution of the corrections.
	 
	 	C.  	ACS shall be entitled to cure at its own expense any error or omission in the
performance of its duties under this Agreement by the reperformance of such

	 	 	 	 	 
	 
	

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	 	   	duties to the extent such reperformance will reasonably eliminate or mitigate any
losses to LENDER caused by such error or omission.

	 	D.  	Notwithstanding the form in which any legal or equitable action may be brought,
whether in contract, tort, negligence, strict liability or otherwise, ACS’s liability,
if any, arising out of or in any way related to any act or omission by ACS in
connection with this Agreement or its services hereunder, including but not limited to
errors due to ACS, its equipment, operators, programmers, or program, shall be limited
to direct losses of principal and interest on rejected claims resulting directly and
primarily from ACS’s negligence or willful misconduct. In the event a loan is rejected
by a Guarantor directly and primarily due to ACS’s negligence or willful misconduct,
and ACS is unable to cure the loan within twelve (12) months of the final reject date,
ACS shall reimburse LENDER for all principal and accrued interest loss thereon
(including such loss during the period of non-guarantee) by the end of the thirteenth
(13th) month following the final reject date, and the loan shall thereupon be assigned
and transferred to ACS or its designee, and this shall be the sole and exclusive remedy
of LENDER relating to such occurrences.
	 
	 	E.  	If applicable, and notwithstanding any other provision of this Agreement, ACS’s
liability, if any, arising out of or in any way related to any act or omission by ACS
in connection with any loans which (i) entered repayment status prior to the date that
ACS’s assumes servicing responsibility, or (ii) have previously been cured following
non-ACS servicing error (i.e., rehab loans), shall be limited to general money damages
in an aggregate amount with respect to any Account not to exceed the amount paid for
ACS’s services by LENDER with respect to such Account, and this shall be the sole and
exclusive remedy of LENDER relating to such occurrences.
	 
	 	F.  	ACS shall have no liability for its failure to comply with any law, rule,
regulation or other requirement applicable to any of the serviced loans, including
without limitation any change in any interpretation, claim reviews or enforcement
policies, procedures or practices with respect thereto, (i) which was not articulated
in writing and actually made known to ACS or the student loan servicing industry
generally a reasonable period in advance of its implementation, (ii) which is
inconsistent with general industry practices or prior Guarantor conduct or requirements
unless and until ACS shall have been notified thereof and had a reasonable opportunity
to comply with such new requirement and then only with respect to servicing performed
after the date thereof (i.e., not on a retroactive basis with respect to servicing
which has previously occurred based upon prior requirements), or (iii) during any
period in which the Department and/or any Guarantor shall have indicated that it will
not enforce any such requirement, even if such requirement may legally be in effect.

	 	 	 	 	 
	 
	

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	 	G.  	In no event, regardless of ACS’s ability to reperform or cure any error, shall
ACS be liable under any circumstances, (i) for any incidental, indirect, special,
punitive or consequential damages, or (ii) for failure to provide services herein for
reasons beyond its reasonable control, or (iii) for any violation of applicable law,
regulation or other requirement under this Agreement, where ACS’s action or inaction
was not negligent as determined by reference to legally relevant factors (including
without limitation general industry standards in effect at such time), or (iv) for any
losses, liabilities or expenses directly or indirectly arising in whole or in part from
or relating to any Guarantor error, or (v) for any losses, liabilities or expenses
directly or indirectly arising in whole or in part from or relating to any data
transmission or electronic data interchange (EDI) failure or error not primarily and
directly due to ACS’s negligence, or (vi) for the uncollectibility or non-payment of
any amounts payable on or with respect to Accounts serviced hereunder, or the failure
of any Guarantor to pay any claim on a loan Account for any reason (including but not
limited to the bankruptcy or insolvency of the Guarantor) except where the
uncollectibility or failure to pay such claim is directly and primarily as a result of
ACS’s negligence or willful misconduct as provided hereinabove. These limitations on
ACS’s liability and exclusion of damages are independent of any other remedy or
provision herein and shall not be affected by ACS’s inability to reperform or cure any
error or any failure of any other remedy or provision.
	 
	 	H.  	ACS’s sole liability under or in connection with this Agreement or its
services, whether in contract, tort, negligence, strict liability, pursuant to
violation of statute or regulation, or under any other theory, shall be limited as
provided in this Section 7 and Section 8, and the provisions hereof shall constitute
the sole and exclusive remedy of LENDER for breaches hereof by ACS
	 
	 	I.  	No claim or action, regardless of form, arising out of or in any way related to
any act or omission by ACS in connection with this Agreement or its services hereunder
shall be brought by LENDER more than one year after LENDER discovers the act or
omission by ACS giving rise to such claim or action. In the case of rejected claims
filed by LENDER due to ACS negligence or willful misconduct, such one-year period shall
commence at the end of the 13th month following the final reject date.
	 
	 	J.  	The parties agree that the foregoing provisions shall survive the termination
of this Agreement and have been reflected in the amount of the charges payable by
LENDER to ACS for the Service, are an essential part of the basis for the bargain
between the parties, and that ACS would not have entered into this Agreement but for
such provisions.

	 	 	 	 	 
	 
	

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8. Indemnification.

	A.  	If ACS or LENDER is required to appear in or is made a defendant in any legal
action or other proceeding commenced by a borrower or other third party with respect to
any loan Account for which services are provided hereunder, subject to the limitations
contained in this Agreement, LENDER shall defend and indemnify ACS against, and hold it
harmless from, all claims, losses, liabilities, and reasonable expenses (including
reasonable attorneys’ fees) arising thereunder, unless and until a final judgment is
entered by a court properly holding that the claim or action resulted directly and
primarily from the negligence or willful misconduct by ACS under this Agreement, in
which case ACS shall thereafter defend and indemnify LENDER against, and hold it
harmless from, all claims, losses, liabilities, and expenses (including reasonable
attorneys’ fees) arising from such negligence or willful misconduct (subject to Section
7 above). In particular, without limiting the foregoing, it is understood that ACS
shall be entitled to a defense and indemnity as provided above where a student alleges
that he or she did not receive a proper education and/or was defrauded by the school or
lender, or that a prior or subsequent servicer or collection agency committed any error
or misconduct or violated any law or regulation.
	 
	B.  	Notwithstanding the foregoing, ACS will further defend, indemnify and save
LENDER harmless from and against any and all claims, losses and liability relating to
(i) any infringement or threatened infringement of any patent, copyright trademark,
trade secret or other proprietary rights of any third party, or (ii) any physical loss
or damage to property of a third party, or (iii) any loss or damage arising from bodily
injury, including death, when such loss or damage is caused by the negligent acts,
omissions or intentional wrongdoing of ACS, its employees, subcontractors or agents and
which arise out of the performance of this Agreement, provided that (a) LENDER gives
ACS prompt written notice of any such claim of loss or damage and, (b) if such loss or
damage involves claims by third parties, LENDER allows ACS to control, and reasonably
cooperates with ACS in, any related defense and all related settlement negotiations.

9. Contingency Plan.

ACS shall maintain a reasonably comprehensive contingency plan for disaster recovery and continued
servicing of the Accounts (the “Plan”) and allow LENDER to review said Plan at ACS’s site. Such
review shall be no more frequently than on an annual basis or within sixty (60) days of
implementing any material changes to the Plan.

10. Financial and Administrative Responsibility.

	 	A.  	Each party hereto represents that it is currently in compliance with, and
agrees to maintain its compliance with, all financial and administrative responsibility
standards or requirements which may be established from time to time by the

	 	 	 	 	 
	 
	

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	 	   	Department or any Guarantor for participation in the Title IV, Higher Education Act
programs for which ACS provides services hereunder. Each party shall have the right
to terminate this Agreement upon ninety (90) days’ written notice to the other in
the event that the Department’s financial or administrative responsibility standards
or requirements are hereafter changed and as a result such party does not thereafter
satisfy such standards or requirements.

	 	B.  	ACS agrees to provide LENDER with annual consolidated audited financial
statements, as soon as the same are made available to ACS during the term of this
Agreement.
	 
	 	C.  	ACS agrees to maintain insurance bonds and other insurance in full force and
effect at all times during the term of this Agreement that meet the following
requirements: (i) a fidelity bond (or direct surety bond) with a policy limit of not
less than $50,000,000, a deductible of not more than $1,000,000 and per occurrence
coverage of not less than $50,000,000; and (ii) an errors and omissions policy with a
policy limit of not less than $50,000,000 in the aggregate per occurrence (with no per
occurrence coverage minimum), and a deductible of not more than $1,000,000.

11. Audits.

ACS agrees to provide LENDER with (i) a copy of ACS’s annual SAS 70 servicer audit without charge,
and (ii) a copy of ACS’s Lender Audit Guide audit report, as required by the Department under the
Higher Education Act, at a prorated charge consistent with the manner charged by ACS generally to
its other clients.

LENDER acknowledges that ACS shall have the right and obligation to cooperate fully with
independent auditors, the Secretary of Education, the Department’s Inspector General, the
Comptroller General of the United States, and any applicable Guarantor, or their authorized
representatives, in the conduct of audits, investigations, and program reviews with respect to
LENDER or the Title IV, Higher Education Act programs administered by ACS for LENDER, as authorized
by law. Furthermore, LENDER agrees to provide ACS with written notice and copies of all audit
reports or findings (preliminary or final) relating to ACS’s administration of any aspect of such
program for LENDER, as soon as such audit reports or findings are available to LENDER. LENDER
further agrees to indemnify, reimburse and hold ACS harmless from the cost of cooperating with,
responding to or appealing any such audit report or finding (including any reasonable cost of an
attestation engagement performed for any such response or appeal, attorneys’ fees and costs),
unless such audit was caused by any ACS misconduct.

12. Waiver of Jury Trial.

THE PARTIES HEREBY EXPRESSLY WAIVE ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM., DEMAND, ACTION OR
CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR ANY OTHER DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH, OR IN ANY WAY CONNECTED WITH OR

	 	 	 	 	 
	 
	

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RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO WITH RESPECT TO THIS AGREEMENT OR ANY
SUCH OTHER DOCUMENT OR AGREEMENT, OR THE SERVICES AND TRANSACTIONS RELATED HERETO OR THERETO,
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT OR OTHERWISE.

13. Miscellaneous.

	 	A.  	All specifications, tapes, data cards, programs, forms and procedures used or
developed by ACS in connection with this Agreement (except those supplied by LENDER)
shall be and remain the sole property of ACS.
	 
	 	B.  	All information belonging to LENDER shall be retained by ACS in confidence.
ACS shall not use, make, and/or maintain a list of LENDER’s Account names, addresses,
and/or account numbers for any purpose other than fulfillment of its duties as Servicer
under this Agreement. Upon termination or expiration of this Agreement, ACS shall
deconvert the loan Accounts as provided in Section 1.H above. This provision shall
survive termination of this Agreement.
	 
	 	C.  	Both parties agree to maintain the confidentiality of this Agreement and all
amendments hereto, and the terms hereof, and any audit reports or findings (preliminary
or final) relating to ACS’s administration of any Title IV, Higher Education Act
program for LENDER, and not to disclose or deliver the same (or any copies, excerpts or
summaries thereof) to the Department, any other government agency, national accrediting
agency, or any other third party (whether pursuant to regulation, governmental request,
or otherwise) without first using best efforts to give the other party prior written
notice of such intention, which notice shall be sent by fax, Federal Express or other
overnight delivery service, and addressed to the other party. The other party may, at
its option, thereupon take appropriate steps to assure that any such information which
may be entitled to protection from disclosure under the Freedom of Information Act
(FOIA) is so protected, and the first party shall cooperate with such efforts to
protect from FOIA disclosure any information of the other party which the other party
believes to constitute trade secrets, or of a commercial or financial interest, or of a
privileged or confidential nature, etc., including the inclusion with such disclosure
or delivery of appropriate submissions asserting protection from FOIA disclosure.
Notwithstanding the foregoing, either party may disclose or deliver any of the
foregoing to their independent auditors on a confidential basis, provided that such
auditors shall not disclose or deliver the same without the disclosing party first
complying with this paragraph.
	 
	 	D.  	This Agreement and its performance shall be governed by the internal laws of
the State of California.

	 	 	 	 	 
	 
	

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	 	E.  	This Agreement may not be assigned except to an entity succeeding to
substantially all of the business or assets of the assigning party, with written notice
to the other party; provided, however, that LENDER may collaterally assign its interest
hereunder to a trustee under an indenture pursuant to which the Lender incurs
indebtedness (the “Trustee”). The Trustee shall be a third party beneficiary hereof,
entitled to enforce the provisions of this Agreement against ACS.
	 
	 	F.  	ACS reserves the right to change any part or all of the Service; provided,
however, that such change shall not abrogate or in any way modify the substantive
provisions of, and general duties of ACS under, this Agreement.
	 
	 	G.  	UNDER agrees to provide ACS upon request with LENDER’s current financial
statements and such other financial information as ACS may request from time to time.
	 
	 	H.  	If either party is rendered unable, wholly or in part, to carry out its
obligations under this Agreement (other than the payment of money) by reason of any act
of God, civil disturbance, strike or labor unrest, breakdown or interruption of power
or communications systems, computer or other equipment failure, failure of
subcontractors or suppliers, or other circumstances or event outside such party’s
reasonable control (whether or not similar to the foregoing), the obligations of such
party shall be suspended to the extent thereof, and such party shall not be liable to
the other party for any non-performance hereunder or incomplete performance as a result
of such occurrence.
	 
	 	I.  	This Agreement supersedes any prior agreement and contains the entire agreement
of the parties on the subject matter hereof. No other agreement, statement or promise
made by any party to any employee, officer or agent of the other party to this
Agreement, or any other person, that is not in writing and signed by both parties to
this Agreement, shall be binding upon them. No waiver, alteration or modification of
the Agreement shall bind ACS or LENDER unless in writing and duly executed by ACS and
LENDER.
	 
	 	J.  	In the event any Account is transferred off ACS’s servicing system, whether in
connection with a termination or expiration of this Agreement, a sale of Accounts, or
otherwise, unless otherwise expressly provided herein or agreed in writing at the time
of such transfer off, LENDER agrees to pay ACS the deconversion and file preparation
and shipping fees specified in Exhibit C (Servicing Fees).
	 
	 	K.  	Any notice required under this Agreement (including any Exhibit) shall be in
writing and shall be effective upon personal delivery or facsimile transmission or upon
receipt after being sent by Federal Express or mailed by registered or certified mail,
return receipt requested, postage pre-paid, addressed as follows: If

	 	 	 	 	 
	 
	

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	 	   	to ACS, at One World Trade Center, Suite 2200, Long Beach, California 90831-2200,
Attn: President, or if to LENDER to:

	 	   	Education Loan Asset-Backed Trust I

c/o CLF Administration Company, L.L.C.

c/o Lord Securities Corporation

Attn: Mr. Dean Christianson

48 Wall Street, 27th Floor

New York, NY 10005
	 
	 	   	With copies to:
	 
	 	   	The Bank of New York

Attn: Corporate Trust Manager

10161 Centurion Parkway, 2nd

Floor Jacksonville, FL 32256
	 
	 	   	and
	 
	 	   	John J. Witmeyer III, Esq.

Ford Marrin Esposito Mitmeyer & Gleser, L.L.P.

Wall Street Plaza

New York, NY 10005-1875
	 
	 	   	Each party may specify a different address by sending to the other written notice of
such different address as provided herein.

	 	L.  	The section captions in this Agreement are for convenience only and will not be
deemed part of this Agreement or used in the interpretation thereof. Both parties and
their counsel have participated in the preparation, drafting and negotiation of this
Agreement. Accordingly, this Agreement shall be construed according to its fair
language and any ambiguities shall not be resolved against either party as the drafting
party.
	 
	 	M.  	The invalidity, illegality or unenforceability of any provision or term of this
Agreement in any instance shall not affect the validity or enforceability of such
provision in any other instance or the validity or enforceability of any other
provision, and each such provision shall be enforced to the fullest extent possible.
	 
	 	N.  	This Agreement may be executed in one or more counterparts, each of which shall
be deemed an original and all of which taken together shall constitute one and the same
agreement.
	 
	 	O.  	Limited Role of the Delaware Trustee. It is expressly understood and agreed by
the parties hereto that (a) this Agreement is executed and delivered by The Bank of New
York (Delaware), not individually or personally, but solely as trustee of

	 	 	 	 	 
	 
	

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	 	   	the LENDER in the exercise of the powers and authority conferred and vested in it,
(b) each of the representations, undertakings and agreements herein made on the part
of the LENDER is made and intended not as personal representations, undertakings and
agreements by The Bank of New York (Delaware) but is made and intended for the
purpose of binding only the LENDER, (c) nothing herein contained shall be construed
as creating any liability on The Bank of New York (Delaware), individually or
personally, to perform any covenant either expressed or implied contained herein,
all such liability, if any, being expressly waived by the parties hereto and by any
Person claiming by, through or under the parties hereto and (d) under no
circumstances shall The Bank of New York (Delaware) be personally liable for the
payment of any indebtedness or expenses of the LENDER or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or undertaken
by the LENDER under this Agreement.

14. ACS Representations and Warranties.

	   	ACS hereby represents and warrants to LENDER the following:

	 	(i)  	ACS is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, and is duly qualified or licensed to do
business and in good standing under the laws of each jurisdiction where the performance
of, and consummation of the transactions contemplated by, this Agreement requires it to
be so qualified or licensed. ACS is eligible as a third party servicer to service
LENDER’s loans under the Higher Education Act and applicable Guarantor Rules and
Regulations.
	 
	 	(ii)  	ACS has full power and authority under its organizational documents to execute
and deliver this Agreement and to perform its obligations under, and consummate the
transactions contemplated by this Agreement.
	 
	 	(iii)  	This Agreement has been duly authorized, executed and delivered by ACS and
constitutes a valid, legal and binding agreement of ACS, enforceable against it in
accordance with its terms, except to the extent that enforcement may be limited by
applicable bankruptcy or insolvency laws and by general principles of equity. Neither
the execution, delivery or performance by ACS of this Agreement will conflict with or
result in a breach or violation of or default under any of (i) organizational documents
of ACS, (ii) any laws applicable to ACS in effect as of the date hereof affecting the
Accounts, (iii) any judgment, order, injunction, award or decree of any court, agency
or authority, or (iv) any contract, instrument, or agreement to which it is a party or
may be subject.
	 
	 	(iv)  	ACS owns or has the right to use the Service including any databases, output
formats, computer systems, software, know-how, technologies, and processes used by it
to perform its obligations hereunder, and such property does not and

	 	 	 	 	 
	 
	

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	 	   	will not infringe upon or violate any patent, copyright, or other proprietary rights
of any third party.

	 	(v)  	There is no legal action, claim, proceeding, investigation, or controversy
pending or to the best of ACS’s knowledge threatened against it, which would materially
and adversely affect its ability to perform its obligations under this Agreement.

15. Compliance With Lender Bond Documents.

In the event that any loans which LENDER delivers to ACS for servicing hereunder constitute
“Financed Student Loans” under the Indenture of Trust dated as of March 1, 2002 (the “Indenture”),
between Lender and The Bank of New York, as Eligible Lender Trustee, and The Bank of New York, as
Indenture Trustee (the “Trustee”), or are pledged in connection with, or constitute collateral
under any similar indenture or loan agreement pledging or granting to any entity a security
interest therein (all such loans or other loans pledged to or held by a trustee or other entity are
hereafter referred to as the “Pledged Education Loans”), ACS agrees as follows:

(a) At the request of the Trustee or other pledgee of such Pledged Education Loans, ACS will
enter into a Custodian Agreement or other similar document, in form and substance reasonably
acceptable to ACS, LENDER and such Trustee or other pledgee, for the purpose of establishing
a bailment with respect to any Pledged Education Loans pledged to the Trustee or other
pledgee.

(b) ACS shall hold all Pledged Education Loans and related documentation as bailee for and
on behalf of the Trustee (or such other pledgee as may be applicable) for Trustee’s intended
purpose of perfecting the security or other interests of such Trustee or other pledgee
therein.

(c) All sums received by ACS with respect to Pledged Education Loans shall be held on behalf
of the Trustee or other applicable pledgee, including but not limited to, all payments of
principal and interest, and insurance or guarantee payments. All such funds shall be held
in a segregated account (which may, however, contain funds belonging to other ACS servicing
customers, including ACS affiliates) and shall not be commingled with any of ACS’s other
funds and shall be accounted for such that all such funds are identified separately from all
other payments received by ACS in respect of the servicing of loans. Any such amounts, if
received by ACS, shall be remitted only to the Trustee or other pledgee, and not to the
LENDER, unless otherwise directed by the Trustee or other applicable pledgee.

(d) If any loans are Pledged Education Loans, all periodic reports (including those on
Exhibit A) required to be furnished pursuant to this Agreement shall be furnished to the
Trustee at the following address: The Bank of New York, Attn: Corporate Trust Manager, 10161
Centurion Parkway, 2nd Floor, Jacksonville, FL 32256.

(e) With respect to the servicing of any Pledged Education Loans on behalf of or for the
benefit of the Trustee or any other applicable pledgee, no amendment, modification,

	 	 	 	 	 
	 
	

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or addition to this Agreement shall be effective with respect to any Trustee or such other
applicable pledgee without their written approval, consent, or direction of Trustee.

(f) ACS waives any lien that it might have pursuant to statute or otherwise available at law
or in equity on any and all notes evidencing Pledged Education Loans held by it on behalf of
the Trustee, and on all related documentation, including all moneys and proceeds derived
therefrom or relating thereto. Notwithstanding the foregoing, if ACS incurs cost or expense
(i) due to an “unreasonable act” of a Guarantor resulting in the Guarantor’s refusal to pay
a claim, or (ii) due to LENDER failing to make payments to the Department required by law or
Regulation, ACS may offset such cost or expense against moneys derived from Pledged
Education Loans serviced by ACS and held by LENDER on behalf of the Trustee. In addition,
ACS may offset against such derived moneys in the event fees due it are not paid in
accordance with this Agreement.

	 	 	 	 	 
	 
	

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(g) If there is an Event of Default under the Indenture and the Trustee forecloses on its
security interest on the Education Loans, then the Trustee shall assume all duties and
obligations of the LENDER hereunder.

Executed as of the day and year first above written.

ACS EDUCATION SERVICES, INC.

	 	 	 
	By

	 	/s/ Steven E. Snyder

	Title

	 	Managing Director

	 
	 	 
	By:

	 	/s/ Melissa Hankin

	Title:

	 	Senior Vice President

EDUCATION LOAN ASSET-BACKED TRUST-I

By: The Bank of New York (Delaware), as Delaware Trustee

	 	 	 
	By

	 	/s/ Michael Santino

	Print Name

	 	Michael Santino

	Title

	 	Senior Vice President

	 	 	 	 	 
	 
	

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EXHIBIT A

POST-ORIGINATION SERVICES

1. LOAN CONVERSION

At the time of purchase or placement of a loan with ACS for servicing, the loan shall be converted
and a note examination may be conducted in accordance to predetermined criteria. The tasks
involved in loan conversion generally include:

Origination and Verification of Account Data

Generation of Receipt of Loans Transferred

Account Package Preparation

Generation of Exceptions Report

Renegotiation of Rejected Accounts

Reconciliation and Balancing

Keypunch Account Data

Microfilm and Microfiche Copies

Run Serialization Crosscheck

Edit and Error Correction

Appropriate Vault Space

Generate Sale Transmittal

Mail Conversion Notification to Borrower

2. BORROWER RELATIONS

Borrower relations begin during In-school Status and continue throughout the life of the loan.
During this period, the Service generally provides the following printed notices to the borrower
and required telephone contacts:

Introductory Letter

Pre-Grace Statement

Separation Data Change Letters

Disclosure Statement

Phone/Address Verification

Grace Expiration/First Payment Reminder

Student Status Verification (as required)

Skip Trace Locate Letters

Response to Borrower Inquiry Letters

Deferment Processed Notices:

Continuing

Forbearance

Unemployment

Other Deferment

Billing Notices:

Interim Interest Notices

	 	 	 	 	 
	 
	

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Regular Installment and Past Due Payment Notices

Interim and Payout Demand Notices

Telephone Contacts:

Due Diligence Borrower Calls

Due Diligence Parent/Relative Calls

Skip Tracing Calls

Response to Borrower Inquiry Calls

     All other activities of this nature required of a lender under the HEA and Guarantor
Regulations within the scope of ACS’s responsibilities hereunder.

3. RELATED LOAN SERVICING ACTIVITIES

Related loan servicing activities include:

Lock Box Remittance Banking

Payment Processing

Name/Address Updates

Payment Research and Special Handling

Interest Capitalization

Payment Reapplication

Internal Audit of Default Claim

Diligent Skip-Tracing and Pursuit of Payments from Delinquent Borrowers

Claim Preparation and Submission

Reperformance/Renegotiation

     All other activities of this nature required of a lender under the HEA and Guarantor
Regulations within the scope of ACS’s responsibilities hereunder.

4. REPORTING

     Record keeping and accounting are performed as part of the Service. A series of monthly reports
are provided to LENDER regarding the status of its loans. This reporting includes:

Loans Transferred/Removed Ledger

Student Loan Ledger

Monthly Transaction Report

Accounting Entry Summary Report

Portfolio Summary and Analysis — Characteristics

Portfolio Summary and Analysis — Delinquency

Portfolio Summary and Analysis — Maturity Analysis

Portfolio Summary and Analysis — Reconciliation

Delinquent Report and Summary

Name/Address Report

Paid-in-Full Ledger

Receipt for Loans Transferred

Customer Service Report Card

	 	 	 	 	 
	 
	

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Department of Education Lender Reporting System (LaRS) reports (or their successor)

	 	 	 	 	 
	 
	

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EXHIBIT B

[RESERVED]

	 	 	 	 	 
	 
	

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EXHIBIT

SERVICING FEES

	 	 	 	 	 	 
	ORIGINATION SERVICES*	 	 	 	 	 
	FEDERAL SSL/PLUS	 	 	Manual	 	Automated
	Less than $2.5 Million/Year
	 	 	$16.00	 	$10.50
	Greater than $2.5 Million/Year
	 	 	$10.50	 	$8.95
	CONSOLIDATION
	 	 	$55 per funded	 	$55 per funded
	 
	 	 	application; $20 for each	 	application; $20 for each
	 
	 	 	application not funded	 	application not funded
	SET UP FEES FOR NEWLY
ORIGINATED LOANS**
FEDERAL SSL/PLUS
	 	 	 	 	 
	Fee per Disbursement
	 	 	$2.30	 	$1.30

	 	 	 	 	 	 	 
	MONTHLY SERVICING	 	 	 	Grace and	 	Consolidation
	FEDERAL FFEL	 	In-school+	 	Repayment+# R	 	Repayment#
	Per Month^
	 	$1.44	 	$3.18	 	$3.00

	 	 	 
	DEFAULT RELATED FEES^^	 	 
	FEDERAL FFEL	 	 
	Claim Filing
	 	$20.20 +50 BP
	Resubmission
	 	$20.20
	Underpaid Claim Processing
	 	$20.20
	DDB Certification
	 	$22.40
	Resales
	 	$28.00
	Repurchases
	 	$20.20
	Recalls
	 	$20.20

	*  	Loans originated by ACS will be disbursed from an ACS maintained bank account. A separate
loan origination and set-up fee is charged for each type of loan originated based upon each
application.
	 
	**  	Client disbursed loans will be placed with ACS within 30 days of disbursement. Automated fee
assumes that data will be transmitted in a format acceptable to ACS.

	 	 	 	 	 
	 
	

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	   	+ In-school and grace status accounts with one or more unsubsidized
FFELP loans are charged an additional $.20 per month.
	 
	#  	Repayment fees are charged the month an account is set up for
servicing and continue through the month following the month an
account is paid in full by the borrower, guarantor, or is otherwise
removed from the system.
	 
	   	^ Delinquency surcharge of $3.00 per account delinquent over 30 days if
portfolio delinquency exceeds ACS’s average delinquency by more than
1% for the month.
	 
	   	^^ Assumes guarantor policies, procedures and practices are in accordance
with generally established industry standards.

	 	 	 	 	 
	 
	

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ADDITIONAL AND OPTIONAL SERVICES

	 	 	 	 
	Ad Hoc Reporting
	 	 	$75/hour; $200 minimum per report
	Bond Swap
	 	 	$2.00/account
	Borrower Incentive Programs
	 	 	$3,000 one-time program set-up fee, plus $2.00 set-up fee per participating borrower
	Deconversion
	 	 	$40/account during the term and
$25/account at expiration
	Paper or Fiche Reports
	 	 	Quotation
	File Preparation
	 	 	Cost plus 20%
	File Shipping
	 	 	Cost plus 20%
	Initial Portfolio Conversion Fees
	 	 	Quotation
	Late Charges
	 	 	25% of Collected Amount
	Legal Review of Documents
	 	 	Cost plus 20%
	Master File Tape (Standard Format)
	 	 	$100/each
	NSF Charges
	 	 	Direct Cost
	On-line Access Via the Internet
	 	 	$150/month first 2 users;
$50/month for each user >2
	Overpaid Refunds
	 	 	$3.40/each
	PLUS Credit Review
	 	 	$3.30/application
	PLUS Pre-Approval
	 	 	$5.00/decision
	Post-Conversion Research
	 	 	$20/hour
	Private Loan Program Setup
	 	 	$5,000
	Sales Extracts
	 	 	$1,000 per extract; 2 extracts included in each sale transaction
	Securitization Setup
	 	 	$15,000 + Bond Swap Fee
	Special Reports
	 	 	Programming time at $85/hr; testing time at $45/hr
	Special Activities (Requested byClient or
	 	 	Quotation

	 	 	 	 	 
	 
	

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	 	Guarantor)
	 	 	 	 
	 	Special Delivery (Requested by Client)

	 	 	Cost plus 20%	 
	 	Tax Notices and IRS Reporting (1098E)

	 	 	$0.65/notice	 
	 	 
	 	 	 	 
	 	Wire Transfer Fees > 5/month

	 	 	Direct Cost	 
	 

NOTE Minimum monthly billing: $500.00.

	 	 	 
	 
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EXHIBIT D

NOTE EXAMINATION ELECTION

LENDER hereby makes the following election with respect to any Note Examination or other document
examination to be performed by ACS in connection with loan files to be serviced by ACS hereunder
(other than any loans which may be originated by ACS for LENDER):

ACS ENCOURAGES ALL LENDERS TO HAVE A NOTE EXAMINATION PERFORMED UPON ALL NON-ACS ORIGINATED FILES
TO BE DELIVERED TO ACS FOR SERVICING, SO AS TO MINIMIZE TO THE EXTENT POSSIBLE THE LIKELIHOOD OF
LOSSES OR OTHER SERVICING PROBLEMS WHICH MAY RESULT FROM MISSING OR INADEQUATE LOAN DOCUMENTATION.
IF LENDER ELECTS NOT TO HAVE A NOTE EXAMINATION, LENDER THEREBY AGREES TO ACCEPT FULL
RESPONSIBILITY FOR ANY LOSSES OR SERVICING ERRORS WHICH RESULT IN WHOLE OR IN PART FROM MISSING OR
INADEQUATE LOAN DOCUMENTATION. NOTWITHSTANDING LENDER’S ELECTION, ACS’S LIABILITY FOR ANY LOSSES
ARISING FROM ITS FAILURE TO DETECT MISSING, INCOMPLETE, INACCURATE, OR ERRONEOUS DATA OR DOCUMENTS
SHALL BE SUBJECT TO THE LIABILITY LIMITATIONS SPECIFIED IN SECTIONS 1.F AND 7 OF THE SERVICING
AGREEMENT.

____   FULL NOTE EXAMINATION

	 	   	If LENDER has elected Full Note Examination, ACS agrees to undertake a general review in
accordance with standard industry practice of the loan documentation listed on note
examination checklists to be generated by ACS and approved by LENDER. By undertaking such
review, however, ACS does not guarantee or assure the genuineness, accuracy, completeness or
compliance of such documentation with any contract or with applicable law and regulation.

____   ABBREVIATED NOTE EXAMINATION

	 	   	If LENDER has elected Abbreviated Note Examination, ACS agrees to undertake a general review
in accordance with standard industry practice of the loan documentation listed for the
categories of data selected by LENDER from note examination checklists to be generated by
ACS and approved by LENDER. By undertaking such review, however, ACS does not guarantee or
assure the genuineness, accuracy, completeness or compliance of such documentation with any
contract or with applicable law and regulation. LENDER acknowledges and agrees that it
shall be responsible for any losses or servicing errors which result in whole or in part
from missing or inadequate loan documentation which might have been discovered in a Full
Note Examination.

____  NO NOTE EXAMINATION

	 	   	By electing and instructing ACS not to undertake any Note Examination or other document
examination prior to commencing servicing, LENDER acknowledges and

	 	 	 
	 
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	 	27

 

 

	 	 	 
	

	 	FEDERAL FFEL
	

	 	 
	

	 	SERVICING AGREEMENT

	 	   	agrees that LENDER assumes the risk and full responsibility for missing or inadequate loan
documentation and for any losses or servicing errors that might have been avoided had a Full
Note Examination been undertaken, and agrees that ACS shall not be liable under any
circumstances for any such losses or servicing errors.

	 	 	 
	 
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	 	28

 

 

	 	 	 
	

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EXHIBIT E

BLANKET CURE TERMS

The following Blanket Cure Terms shall apply between LENDER and ACS when in the course of its
servicing, ACS submits claims to Guarantors which are rejected by the Guarantor for servicing
errors which occurred prior to ACS’s servicing or for which ACS is otherwise not liable under the
Servicing Agreement.

	1.  	Cure Services for Rejected Account(s)

	 	A.  	For any Account rejected by the Guarantor in whole or in part because of
servicing error which occurred prior to ACS’s servicing or for which ACS is otherwise
not liable under the Servicing Agreement, ACS and/or an outside collection agency
selected by ACS will attempt to reinstate the guaranty (cure) on the Account under the
terms and conditions specified below and for the fees specified herein.
	 
	 	B.  	Cure services shall generally include.

	 	(1)  	Using best efforts to locate the borrower in the event the
borrower’s address is invalid;
	 
	 	(2)  	Upon location, certifying, in a manner acceptable to the
Department and the applicable Guarantor, that the borrower has been located in
the event a “locate cure” is required;
	 
	 	(3)  	Performing all written and telephone contacts as required for
locate cure by the Department and the Guarantor necessary to claim file the
Account with the Guarantor; and/or
	 
	 	(4)  	Using best efforts to cause the borrower to make one full
payment or return a signed repayment obligation (RO) in the event a “payment or
RO cure” is required.

	 	C.  	ACS will use best efforts to undertake such cure services within 30 days of
receipt of a rejected Account. If ACS is unable to cure the Account within an
approximate 45-day period following commencement of cure services, or if ACS in its
sole judgment determines not to attempt to cure the Account itself, ACS will place the
Account with a “1st placement” outside collection agency for a period generally not
longer than 180 days. If the “1st placement” collection agency is unable to cure the
Account within the specified time frame, ACS will then place the Account with a “2nd
placement” collection agency for a period generally not longer than 270 days. If the
“2nd placement” collection agency is unable to cure the Account within the specified
time frame, ACS will then place the Account with a “3rd placement” collection agency
for a period generally not longer than an

	 	 	 
	 
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	 	SERVICING AGREEMENT

	 	   	additional 270 days. Following placement with any outside collection agency, ACS
shall only be responsible for administrative services in interfacing with such
agency on the Accounts involved. ACS shall not have any responsibility for training
or otherwise supervising the outside collection agency or its personnel.
	 
	 	D.  	For the cure services specified herein, LENDER shall pay to ACS a fee for each
Account cured as specified in Exhibit E-l. Such fees are subject to adjustment from
time to time upon 30 days’ prior written notice from ACS to LENDER.
	 
	 	E.  	If LENDER wishes ACS to arrange on LENDER’s behalf for additional collection
agency services on rejected Accounts for which no cure is successfully accomplished
hereunder, the terms applicable thereto are set forth in Exhibit E-2. If no Exhibit
E-2 is attached, ACS shall not provide such services.

	2.  	Limitations on ACS’s Liability

	 	A.  	LENDER acknowledges that in placing Accounts with outside collection agencies,
ACS is merely providing an administrative service to LENDER. Accordingly, ACS does not
guarantee the success of its or any outside collection agency’s cure efforts and shall
not otherwise be responsible for the failure of any cure efforts to reinstate or obtain
payment of any Account. ACS makes no warranties or representations, expressed or
implied, regarding the cure services or the outside collection agencies used.
	 
	 	B.  	Subject to the provisions set forth herein, in the event of any error by ACS
for which ACS would be liable under the Servicing Agreement, ACS shall be responsible
only for reperformance of any cure activity or erroneous processing to the extent
practicable and necessary without charge to LENDER. With respect to cure services
under this Exhibit, ACS shall not otherwise be liable for damages or other monetary
relief except in the case of ACS’s gross negligence or willful misconduct.
	 
	 	C.  	ACS shall not under any circumstances, regardless of any failure of the
foregoing remedies, be liable for (i) the error or misconduct of any outside collection
agency, or (ii) for losses or damages caused by circumstances or events beyond ACS’s
reasonable control, or (iii) for any special, indirect, incidental, punitive, or
consequential damages of any nature.

	3.  	Termination

The cure services provided for in this Exhibit may be terminated by either party upon 30 days’
written notice to the other. Termination shall not affect any payment obligations of the parties
arising from services provided during the term of the Servicing Agreement, or from cures obtained
on Accounts after termination. Following termination, unless otherwise instructed by LENDER in
writing, ACS shall permit the outside collection agencies to continue to work any Accounts already
placed which such agencies believe will result in a cure within a reasonable

	 	 	 
	 
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period of time following termination. All other Accounts shall be recalled from such agencies
within 30 days after termination.

	4.  	Exclusions and Deconversion

LENDER hereby gives approval for ACS to undertake the cure services outlined in Section 1 of this
Exhibit on Accounts with a principal balance outstanding (PBO) of $500 or greater. Accounts with
PBOs less than the aforementioned amount or Accounts which are not successfully cured within the
time frames described above will be deconverted for the fees specified in the Servicing Agreement.

	5.  	Incorporation by Reference

The terms of the Servicing Agreement are incorporated herein by reference and shall be applicable
to the cure services contemplated by this Exhibit, to the extent not inconsistent with or contrary
to any provision herein. In the event of any conflict, the terms of this Exhibit shall prevail.

	 	 	 
	 
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	 	SERVICING AGREEMENT

EXHIBIT E-1

CURE FEES

     Subject to the Blanket Cure Terms to which this Exhibit E-1 is attached, the following fees
shall apply to all services provided thereunder.

	 	 	 	 	 	 	 
	 	 	 	 	Cure Fee/Account	 
	I.
	 	Accounts Successfully Cured Internally by ACS	 	$	200.00	 
	II.
	 	Accounts Successfully Cured by Agency - 1st Placement	 	$	275.00	 
	III.
	 	Accounts Successfully Cured by Agency - 2nd Placement	 	$	400.00	 
	IV.
	 	Accounts Successfully Cured by Agency - 3rd Placement	 	$	500.00	 

	 	 	 
	 
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	 	SERVICING AGREEMENT

EXHIBIT F

PLUS CREDIT REVIEW SERVICES TERMS

ACS shall provide the following PLUS Credit Review Services, subject to all of the terms and
conditions of the Servicing Agreement to which this Exhibit F is attached.

	1.  	Definitions

	 	A.  	As used herein the following words shall have the meanings respectively
indicated:

“Adverse Credit” or “Adverse Credit history” means that the credit history of an Applicant reflects
any condition or event which would at the time of such Loan Application disqualify the Applicant
from eligibility for a PLUS Loan under the Higher Education Act or any applicable Guarantor
Regulations. As of the effective date hereof, each of the following is understood to be a
disqualifying Adverse Credit item which will be identified by ACS on its credit review reports:

	 	(a)  	any account or debt shown on the Applicant’s credit report is
ninety (90) or more days delinquent as of the date of the credit report; or
	 
	 	(b)  	at any time during the five (5) years preceding the date of the
credit report, the Applicant has been the subject of a default determination,
bankruptcy discharge, foreclosure, repossession, tax lien, wage garnishment, or
write-off of a Higher Education Act, Title IV debt.

“Applicant” means an individual who has submitted a Loan Application to LENDER.

“Borrower” means an individual who is the maker or co-maker of a promissory note and who obtains a
PLUS Loan from LENDER in accordance with the Higher Education Act and any applicable Guarantor
Regulations.

“Educational Institution” means any institution of postsecondary education which is an “eligible
institution” under the Higher Education Act and is eligible under any applicable Guarantor
Regulations.

“Loan Application” means the application for a PLUS Loan, which application must be executed by a
prospective Borrower, certified by an Educational Institution, and accepted by LENDER.

“PLUS Loan” means a loan made under the Federal PLUS Program established under the Higher Education
Act.

“Servicing Agreement” shall mean the Servicing Agreement between ACS and LENDER to which these PLUS
Credit Review Services Terms are attached, or to which they relate.

	 	 	 
	 
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	 	SERVICING AGREEMENT

	 	B.  	Any other capitalized terms used herein shall have the same meanings as set
forth in the Servicing Agreement, unless the context otherwise requires.

	2.  	Credit Review Services

	 	A.  	ACS and LENDER hereby agree to a PLUS credit review services arrangement
whereby—

	 	(1)  	LENDER agrees to make PLUS Loans to individuals eligible to be
Borrowers pursuant to the terms of the Higher Education Act and any applicable
Guarantor Regulations;
	 
	 	(2)  	ACS agrees to act as an agent of LENDER for the receipt,
evaluation, handling and maintenance of certain PLUS Loan credit information on
behalf of LENDER, in order to assist LENDER in making decisions with respect to
the approval or denial of PLUS Loans consistent with the terms of the Higher
Education Act and any applicable Guarantor Regulations; and
	 
	 	(3)  	LENDER makes the final lending decision, in accordance with the
procedures established herein and such credit history appeal processes
(relating to credit report errors or extenuating circumstances) as may be
further determined by LENDER.

	 	B.  	ACS agrees to provide the following credit review services on behalf of LENDER:

	 	(1)  	Review Loan Applications for information required by credit
bureaus for performing a credit check. In this regard, LENDER shall assure
that all Loan Applications with co-Applicants shall include the social security
number of each Applicant. LENDER or the Educational Institution of the
Applicant(s) will be contacted if additional information is required.
	 
	 	(2)  	Generate and submit to a national credit bureau appropriate
Applicant information for the purpose of obtaining credit information for each
Applicant.
	 
	 	(3)  	Receive and evaluate a credit report from a national credit
bureau for each Applicant. ACS shall be entitled to rely upon all information
furnished to ACS by a national credit bureau and shall not be liable or
responsible in any manner for any inaccuracy or error contained in the credit
report obtained by ACS on LENDER’s behalf from a national credit bureau.
	 
	 	(4)  	Identify each Applicant for a PLUS Loan who does not
have an Adverse Credit history by generating and providing to LENDER a
disbursement report related to loan origination.

	 	 	 
	 
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	 	SERVICING AGREEMENT

	 	(5)  	Identify each Applicant for a PLUS Loan who has an Adverse
Credit history by generating and providing to TENDER a credit review report
which:

	 	a.  	Lists the name, address, and social security
number of each Applicant who has an Adverse Credit history;
	 
	 	b.  	Lists the Adverse Credit factors found on the
Applicant’s credit bureau report which, absent extraordinary
circumstances, require credit denial; and
	 
	 	c.  	Provides the name and address of the credit
bureau accessed for the Adverse Credit history information.

	 	(6)  	Generate and mail to the Applicant an “adverse action” letter
on behalf of LENDER and in LENDER’s name with respect to each Applicant who has
been identified as having an Adverse Credit history, within 30 days after ACS
receives a completed Loan Application from LENDER and the credit bureau report
and otherwise comply with the Equal Credit Opportunity Act (ECOA) and
Regulation B thereunder to the extent applicable to ACS’s services.
	 
	 	(7)  	Upon request by LENDER from time to time, return the original
or a copy of each Loan Application processed by ACS (other than electronically
transmitted Loan Applications, which will not be transmitted to LENDER) for
which an Adverse Credit history exists, and other information in ACS’s
possession regarding its review of such Loan Application.
	 
	 	(8)  	Maintain accurate books and records of all transactions
hereunder, including Adverse Credit history reports of Applicants processed for
LENDER hereunder.

	 	C.  	LENDER agrees that, with respect to all PLUS Loans processed under these PLUS
Credit Review Services Terms, it will:

	 	(1)  	Assure that all information set forth in Loan Applications and
all other information provided to ACS in connection with the performance of its
services hereunder is accurate and complete.
	 
	 	(2)  	Be responsible for handling and evaluating all appeals of
credit denial.
	 
	 	(3)  	Communicate, if appropriate after the credit denial appeal
process is completed, its approval of a Loan Application to ACS for each
Applicant which ACS previously identified as possessing an Adverse Credit
history by submitting a letter attached to the Loan Application (or a copy of
the Loan Application) requesting the PLUS Loan to be guaranteed, due to

	 	 	 
	 
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	 	SERVICING AGREEMENT

	 	   	error or other extenuating circumstances relating to the original credit
information obtained by ACS on LENDER’s behalf, and properly documenting
such error correction or other extenuating circumstances.

	 	D.  	Nothing contained in these PLUS Credit Review Services Terms shall make ACS a
loan production office or a holder or originator of any PLUS Loan, the application of
which has been processed hereunder. LENDER acknowledges that it has sole authority and
responsibility for the decision to approve or deny PLUS Loans hereunder.

	3.  	Term

The credit review services contemplated by these PLUS Credit Review Services Terms shall commence
on the date first mentioned above and continue until the sooner of (i) termination by either party,
with or without cause, upon not less than thirty (30) days’ written notice to the other party; or
(ii) automatic termination upon the termination or expiration of the Servicing Agreement.

	4.  	Liability Limitations

In performing its PLUS Loan credit review services and other Loan Application processing functions,
ACS shall only be liable for its own gross negligence or intentional misconduct. ACS shall have no
responsibility for the inaccuracy or incompleteness of any Loan Application or credit bureau report
or the information contained thereon, or for any credit decision made by the Lender. Subject to
the foregoing, the provisions of the Servicing Agreement limiting ACS’s liability are also hereby
incorporated by reference and shall be binding between the parties hereto with respect to the PLUS
Loan credit review services and other matters contemplated herein.

	5.  	Incorporation by Reference

The terms of the Servicing Agreement are incorporated herein by reference and shall be applicable
to the PLUS Loan credit review services, to the extent not inconsistent with or contrary to any
provision herein. In the event of any conflict, the terms of this Exhibit shall prevail.

	 	 	 
	 
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(g) If there is an Event of Default under the Indenture and the Trustee forecloses on its
security interest on the Education Loans, then the Trustee shall assume all duties and
obligations of the LENDER hereunder.

Executed as of the day and year first above written.

ACS EDUCATION SERVICES, INC.

	 	 	 	 	 
	By
	 	 	 	 
	

	 	 	 	 
	Title

	 	Steven E. Snyder, Managing Director	 	 
	 
	 	 	 	 
	By
	 	 	 	 
	

	 	 	 	 
	Title

	 	Meliss Hankin, Senior Vice President	 	 

EDUCATION LOAN ASSET-BACKED TRUST-I

By: The Bank of New York (Delaware), as Delaware Trustee

	 	 	 	 	 
	By:
	 	 	 	 
	

	 	 	 	 
	 
	 	 	 	 
	Print Name:
	 	 	 	 
	

	 	 	 	 
	 
	 	 	 	 
	Title:
	 	 	 	 
	

	 	 	 	 

	 	 	 
	 
	Confidential and Proprietary

	 	37exv10w38

 

EXHIBIT 10.38

Guarantee Agreement

Between

Massachusetts Higher Education Assistance Corporation

And

The Bank of New York as eligible lender trustee for Education Loan Asset-Backed Trust I

     WHEREAS, The Massachusetts Higher Education Assistance Corporation doing business as American
Student Assistance (hereinafter “ASA”), at 330 Stuart Street, Boston, Massachusetts 02116, a
private nonprofit corporation created by Chapter 298 of the Acts of 1956 of the Commonwealth,
administers several loan guarantee programs providing financial assistance to and on behalf of
students enrolled in programs of higher education; and

     WHEREAS, The Bank of New York as eligible lender trustee for Education Loan Asset-Backed
Trust I (hereinafter “LENDER”), solely in the capacity of eligible lender trustee and without
recourse to assets held by The Bank of New York other than those held in trust for Education Loan
Asset-Backed Trust I, qualifies as an eligible lender under one or more of these programs,
fulfilling such criteria as have been set forth by federal and state statute and regulation, and
those set forth by the Board of Directors of ASA pertaining to the particular program; and

     WHEREAS, LENDER is willing to make loans to eligible borrowers as such are defined in
this agreement and in the policies of ASA, and ASA is willing to guarantee the payment of principal
and interest in the event of the borrower’s default of repayment in accordance with the terms and
conditions set forth herein.

     NOW THEREFORE, in consideration of the mutual covenants contained herein, ASA and LENDER
agree as follows:

Section 1. DEFINITIONS

     These definitions are meant to incorporate and be consistent with the more detailed
definitions within the Federal Family Education Loan Program Regulations located at 34 C.F.R. §
682. et seq.

     1. “AGREEMENT” — shall mean this GUARANTEE agreement to the extent that LENDER and ASA have
indicated the willingness of each to participate in the programs as evidenced by signature or
initial.

     2. “BORROWER” — shall mean any person or persons executing a promissory note individually or
jointly for the purpose of obtaining funds from LENDER under one of the programs authorized by this
Agreement.

     3. “DEFAULT” — shall mean the failure of the BORROWER to repay borrowed amounts when due,
and/or the failure of the BORROWER to comply with the terms of the promissory note.

     4. “DUE DILIGENCE” — shall mean the utilization by LENDER of policies, practices and
procedures in the origination, servicing and collection of loans which are consistent with LENDER’s
policies, practices and procedures applicable to its other consumer loan and credit portfolios and
which comply with the requirements of federal and state statute and regulation and ASA policies.
DUE DILIGENCE includes, but is not limited to, the remission of guarantee fees to ASA in an amount
and time frame as specified by ASA.

     5. “FEDERAL STUDENT LOAN RESERVE FUND” (referred to as Federal Fund) shall mean the reserve
account maintained by ASA as a source from which to pay insurance claims and to assure LENDER of
the ASA’s ability to perform its commitments to LENDER under this Agreement.

     6. “FORMS” — shall mean such application forms, promissory notes and administrative forms as
are provided by and/or required by ASA for participation in any of the programs authorized by this
AGREEMENT.

 

 

     7. “GUARANTEE” — shall mean the guarantee of payment given by ASA to LENDER by which ASA
covenants to pay to LENDER such principal and interest as may be provided by the terms of each
program after being assured that LENDER has exercised DUE DILIGENCE in its origination, servicing
and collection and that the necessary documents have been submitted to ASA in the form required.

     8. “LIMITATION, SUSPENSION OR TERMINATION” — shall mean the restrictions imposed by ASA upon
LENDER’s continued participation in any of the programs authorized by this AGREEMENT. The cause of
such restrictions, the process by which such restrictions may be imposed, and their nature and
scope are set forth in Section 3 of this AGREEMENT.

     9. “SCHOOL” — Shall mean an institution of higher education as that term is defined in section
481 of the ACT and 34 CFR 682.200, whose programs satisfy the definition of “eligible program” in
34 CFR 668 and which has in effect a current agreement with the Secretary under 34 CFR 682.600.

     10. “FEDERAL FAMILY EDUCATION LOAN PROGRAM” — shall mean the Federal Stafford Loan, Federal
PLUS Loan, Federal Supplementary Loans for Students, Federal Consolidation Loan and other federal
education loan programs administered by ASA.

		
	Section 2. 	TERMS AND CONDITIONS OF LOANS ORIGINATED AND HELD UNDER THE FEDERAL FAMILY EDUCATION
LOAN PROGRAM ADMINISTERED BY ASA

     1. Statutes governing the FEDERAL FAMILY EDUCATION LOAN PROGRAM are enacted as Part B of Title
IV of The Higher Education Act of 1965, as amended (20 United States Code Section 1071 et seq.).
Regulations affecting program administration are adopted by the Secretary of the United States
Department of Education and are published in the Code of Federal Regulations. Proposed revisions to
such Regulations are published in the Federal Register.

     2. ASA participates in the FEDERAL FAMILY EDUCATION LOAN PROGRAM as a private nonprofit
guarantee agency pursuant to contractual agreements with the United States Department of Education.
These agreements confer eligibility upon BORROWERS to receive full or partial interest subsidy,
upon lenders to receive interest and special allowance payments and upon ASA to receive insurance
and reinsurance payments in the event of death, disability, bankruptcy, closed school, false
certification or DEFAULT. ASA hereby represents and covenants that it will structure and operate
its programs in such a manner as to preserve to the full extent possible the benefits of these
federal agreements.

     3. LENDER covenants that it will comply with all applicable requirements of federal and state
statutes and regulations and with all requirements and policies of ASA. Furthermore, LENDER will
administer the FEDERAL FAMILY EDUCATION LOAN PROGRAM in conformity with sound lending practices and
standards of DUE DILIGENCE as applied to the programs.

     4. In its administration of the FEDERAL FAMILY EDUCATION LOAN PROGRAM, LENDER shall utilize
forms approved and distributed by ASA and/or by the United States Department of Education. LENDER
will also be authorized to collect and shall collect such fees as may be required of the BORROWER,
by ASA, or the United States Department of Education, and shall apply the payment or allocation of
such fees as directed.

     5. In the event of the DEFAULT, death, total and permanent disability, closed school, false
certification or discharge in bankruptcy of a BORROWER, as such events are defined in applicable
law and regulation, ASA will accept a claim for payment upon its GUARANTEE and, if satisfied that
the loan is based on an enforceable note and that standards of DUE DILIGENCE have been met, make
payment to LENDER in an amount equal to the outstanding and unpaid principal amount plus interest
accrued since the date of last payment or maturity to the date of payment by ASA, to the extent
that such interest does not exceed the maximum number of days authorized by ASA or federal law and
regulations.

-2-

 

     6. LENDER agrees that it will prepare and make available such reports or other information as
may be reasonably required by ASA or the United States Department of Education and further, that
independent auditors or authorized representatives of ASA or such Department shall have access to
the operations and financial records and procedures pertaining to the Stafford, PLUS, SLS and
Consolidation programs or any other federal program administered by ASA.

     7. If LENDER shall violate, or fail to comply with, any of the terms of this Agreement, it
shall become liable to ASA in an amount equal to the damages sustained by ASA by virtue of such
violation or failure to comply. ASA may, at its option, and in addition to any other remedies
available to it at law or in equity, invoke and apply the provisions of Section 3 of this AGREEMENT
relating to LIMITATION, SUSPENSION OR TERMINATION.

		
	Section 3. 	LIMITATION, SUSPENSION OR TERMINATION OF LENDER PARTICIPATION

     1. As a lender participating in the FEDERAL FAMILY EDUCATION LOAN PROGRAM administered by ASA,
LENDER shall administer its loan portfolio(s) in accordance with applicable federal and state law
and regulations, with ASA policies, and with sound lending practices.

     2. In the event that ASA determines that LENDER’s administration of such programs does not
satisfy the required levels of DUE DILIGENCE or that the DEFAULT or delinquency rate of loans
originated or held by LENDER is excessive, ASA will inform LENDER of the noted deficiencies and of
corrective actions required in order to continue participation.

     3. LENDER shall implement the recommended corrective action and/or take other action to
rectify each of the administrative deficiencies noted by ASA within the time specified by ASA or as
agreed to by LENDER and ASA.

     4. In the event that LENDER fails to rectify such deficiencies in a timely and prudent manner,
ASA may, in its discretion, impose LIMITATION, SUSPENSION OR TERMINATION sanctions as it may deem
appropriate, after affording LENDER an opportunity to respond. However, ASA may impose such
sanctions on LENDER without a hearing if ASA determines that emergency action is necessary in order
to prevent monetary loss to ASA and the federal government. LENDER may appeal any LIMITATION,
SUSPENSION OR TERMINATION sanctions by ASA.

     5. LIMITATION sanctions provide for the continued participation of LENDER but subject to such
special conditions, procedures or timetables as may be established by ASA.

     6. SUSPENSION sanctions include the temporary termination of LENDER’s eligibility for
participation for a specified period of time or until LENDER satisfies the standards established by
ASA to remove the SUSPENSION.

     7. TERMINATION sanctions may be invoked by ASA where the administrative deficiencies are
substantial and where LENDER has not taken timely corrective action. TERMINATION of LENDER’s
eligibility for participation will be effected after having provided LENDER with an opportunity for
a hearing. Restoration of LENDER’s eligibility for participation can be accomplished only upon
submission of a new application for such participation and ASA’s approval of such application after
consideration of eligibility standards then required by the Board of Directors.

     Any LIMITATION, SUSPENSION OR TERMINATION hereunder shall be prospective only and shall not
affect the obligations of the parties hereto which were incurred prior to such LIMITATION,
SUSPENSION OR TERMINATION.

     The AGREEMENT may be modified only by written agreement of the parties hereto. Any waiver,
modification or failure to insist upon the strict performance of the duties of either party to this
AGREEMENT shall not be construed as a waiver or modification generally or of such particular
condition in a subsequent instance.

-3-

 

     This AGREEMENT may be terminated by either party at anytime by providing at least thirty (30)
days’ written notice of such termination to the other party hereto. Such termination, however,
shall be prospective only and shall not affect the obligations of the parties hereto, which were
incurred prior to such termination.

     IN WITNESS WHEREOF, ASA and LENDER have caused this instrument to be executed by duly
authorized officers and affixed with the corporate seal of each as of the day and year indicated
below.

     By checking below, LENDER signifies its intent to participate in the programs checked.

	 	 	 
	[X]

	 	Participation in the Federal (Subsidized and Unsubsidized) Stafford Loan Programs
	[X]

	 	Participation in the Federal PLUS Loan Program
	[X]

	 	Participation in the Federal Consolidation Program
	[ ]

	 	Participation in the Federal Loan Rehabilitation Program
	[ ]

	 	Participation in the ASA Lender of Last Resort Program

MASSACHUSETTS HIGHER EDUCATION ASSISTANCE CORPORATION doing business as AMERICAN STUDENT ASSISTANCE

	 	 	 	 	 	 	 	 	 
	By:
	 	 	/s/ Susan Nathan	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Printed Name:
	 	 	Susan Nathan	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Title:
	 	 	Vice President	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Date:
	 	 	2/26/03	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Witness:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	LENDER:
	 	 	The Bank of New York as eligible lender trustee for Education Loan Asset-Backed Trust I.	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By:
	 	 	/s/ Mark McLaughlin	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Printed Name:
	 	 	Mark McLaughlin	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Title:
	 	 	Vice President	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Date:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Witness:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	EIN #:
	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Lender Code:
	 	 	833922	 	 	 	 

-4-

 

CERTIFICATE OF COMPREHENSIVE INSURANCE

For Consolidation Loans made in accordance with The Federal Family Education Loan Program (“FFELP”)
of the Higher Education Act of 1965, as amended and formerly known as the Guaranteed Student Loan
programs.

Massachusetts Higher Education Assistance Corporation doing business as American Student Assistance
(ASA7), herein referred to as the “Agency,” authorizes that all Consolidation Loans made in
conformity with the requirements of the FFELP of the Higher Education Act of 1965, as amended
(“Act”), by The Bank of New York as eligible lender trustee for Education Loan Asset-Backed Trust
I, herein referred to as the “Lender,” are fully insured against loss of principal and interest by
the Agency, provided:

	 	1.  	The Lender has determined to its satisfaction, in accordance
with reasonable and prudent business practices, that for each loan being
consolidated -

	 	(a)  	the loan is a legal, valid, and binding
obligation of the borrower;
	 
	 	(b)  	such loan was made and serviced in compliance
with applicable laws and regulations; and
	 
	 	(c)  	the insurance on such loan is in full force and
effect.

	 	2.  	The Consolidation Loan(s) are made on or after July 1, 1987,
unless limited by the Act.
	 
	 	3.  	The total unpaid principal amount of all Consolidation Loans
made under this certificate is equal to or less than $1,000,000.00.
	 
	 	4.  	If the Lender, prior to expiration of this certification (which
occurs upon reaching of the dollar limit), no longer proposes to make
Consolidation Loans, the Lender shall notify the Agency so that the certificate
may be terminated. Such termination shall not affect the insurance on any
Consolidation Loan made prior to such termination.
	 
	 	5.  	The Lender’s loan consolidation program practices are subject
to the Agency’s FFELP Lender Participation Limitation, Suspension or
Termination procedures. The insurance on any loan(s) made under this
certificate prior to the Agency’s imposition of a limitation, suspension or
termination action shall not be affected by such action.
	 
	 	6.  	The Lender complies with the Agency’s Federal Consolidation
Loan policies and procedures. (As published in the Common Manual and/or
provided by the guarantor).
	 
	 	7.  	The Lender notifies the Agency of the alternative repayment
terms which will be offered by the Lender.

Please note that the Agency reserves the right to change or modify the total amount of insurance
granted to the Lender under this Certificate, provided the Agency so notifies the Lender promptly
thereafter.

The Agency’s office at 330 Stuart Street, Boston, Massachusetts 02116 is designated as the office
which will process claims and perform other related administrative functions.

	 	 	 
	/s/ Susan Nathan

	 	2-26-03
	 

	 	 
	Susan Nathan

Vice President

	 	Date

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