Document:

exv10w1

 

Exhibit 10.1

 

LOAN AND SECURITY AGREEMENT

by and among

VISUAL NETWORKS, INC.,

VISUAL NETWORKS INTERNATIONAL OPERATIONS, INC.,

VISUAL NETWORKS OPERATIONS, INC.,

AVESTA TECHNOLOGIES, LLC,

and

NET2NET, LLC,

as Borrowers

and

SILICON VALLEY BANK,

as Bank

June 17, 2005

 

 

 

LOAN AND SECURITY AGREEMENT

          THIS LOAN AND SECURITY AGREEMENT (this “Agreement”) dated June 17, 2005, between SILICON
VALLEY BANK (“Bank”), whose address is 3003 Tasman Drive, Santa Clara, California 95054 and having
a loan production office at 8020 Towers Crescent Drive, Suite 475, Vienna, Virginia 22182 and
VISUAL NETWORKS, INC., a Delaware corporation (the “Company”), VISUAL NETWORKS INTERNATIONAL
OPERATIONS, INC., a Delaware corporation (“Visual Networks International Operations”), VISUAL
NETWORKS OPERATIONS, INC., a Delaware corporation (“Visual Networks Operations”), AVESTA
TECHNOLOGIES, LLC, a Delaware limited liability company (“Avesta Technologies”), and NET2NET, LLC,
a Delaware limited liability company (“Net2Net”) (Visual Networks International Operations, Visual
Networks Operations, Avesta Technologies and Net2Net, each a “Subsidiary” and collectively,
“Subsidiaries”) (Company and Subsidiaries, each a “Borrower” and collectively, “Borrowers”), whose
address is c/o the Company at 2092 Gaither Road, Rockville, Maryland 20850, provides the terms on
which Bank will lend to Borrowers and Borrowers will repay Bank. The parties agree as follows:

1. ACCOUNTING AND OTHER TERMS

          Accounting terms not defined in this Agreement will be construed following GAAP. Calculations
and determinations must be made following GAAP. The term “financial statements” includes the notes
and schedules. The terms “including” and “includes” always mean “including (or includes) without
limitation,” in this or any Loan Document.

2. LOAN AND TERMS OF PAYMENT

    2.1 Promise to Pay.

          Borrowers jointly and severally promise to pay Bank the unpaid principal amount of all Credit
Extensions and interest on the unpaid principal amount of the Credit Extensions.

          2.1.1 Revolving Advances.

          (a) At all times in which all Senior Secured Convertible Debentures have not been paid in full
by Borrowers (such period being called, the “Non-Formula Period”), Bank will make Advances not
exceeding the Committed Revolving Line.

          (b) At all times other than during the Non-Formula Period (such periods being called, the
“Formula Period”) Bank will make Advances not exceeding the lesser of (A) the Committed Revolving
Line or (B) the Borrowing Base. Advances during the Non-Formula Period will be repaid in full with
the initial Advance during the Formula Period. Amounts borrowed under this Section may be repaid
and reborrowed during the term of this Agreement. All Advances shall be evidenced by the Revolving
Promissory Note to be executed and delivered by Borrowers to Bank on the Closing Date and shall be
repaid in accordance with the terms of this Agreement.

          (c) To obtain an Advance, Company must notify Bank by facsimile or telephone by 3:00 p.m.
Eastern time on the Business Day the Advance is to be made. Company must promptly confirm the
notification by delivering to Bank the Loan Payment/Advance Request Form attached as Exhibit
B (the “Payment/Advance Form”). Bank will credit Advances to Company’s deposit account. Bank
may make Advances under this Agreement based on instructions from a Responsible Officer of Company
or his or her designee or without instructions if the Advances are necessary to meet Obligations
which have become due. Bank may rely on any telephone notice given by a person whom Bank
reasonably believes is a Responsible Officer of Company or designee. Borrowers will indemnify Bank
for any loss Bank suffers due to such reliance.

          (d) The Committed Revolving Line terminates on the Non-Formula Period Maturity Date, when all
Advances made during the Non-Formula Period are immediately due and payable. In the event that
Borrower satisfies the conditions to convert the Committed Revolving Line to the Formula Period,
the Committed Revolving Line will continue until the Formula Period Maturity Date, when all Formula
Period Advances are immediately due and payable.

 

			
	[***]	 	INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES AND EXCHANGE ACT
OF 1934, AS AMENDED.

 

 

          (e) Bank’s obligation to lend the undisbursed portion of the Committed Revolving Line will
terminate if, in Bank’s sole discretion, there has been a material adverse change in the general
affairs,
management, results of operation, condition (financial or otherwise) or the prospect of
repayment of the Obligations, or there has been any material adverse deviation by Borrowers from
the most recent business plan of Borrowers presented to and accepted by Bank prior to the execution
of this Agreement.

    2.2 Overadvances.

          If during the Non-Formula Period, Borrowers’ Obligations under Section 2.1.1 exceed the
Committed Revolving Line, or if during the Formula Period, Borrower’s Obligations under Section
2.1.1 exceed the lesser of either (i) the Committed Revolving Line or (ii) the Borrowing Base,
Borrowers shall immediately pay Bank the excess.

    2.3 Interest Rate, Payments.

          (a) Interest Rate. (i) Advances during the Non-Formula Period accrue interest on the
outstanding principal balance at a per annum rate equal to six percent (6%) above the Prime Rate
(the “Non-Formula Period Interest Rate”); (ii) Advances during the Formula Period accrue interest
on the outstanding principal balance at a per annum rate equal to two percent (2%) above the Prime
Rate (the “Formula Period Interest Rate”; together with Non-Formula Period Interest Rate being
called collectively the “Interest Rates”, and individually, the “Interest Rate”). After an Event
of Default, Obligations accrue interest at five percent (5%) above the Interest Rate effective
immediately before the Event of Default. The Interest Rates on the Obligations increase or decrease
when the Prime Rate changes. Interest is computed on a 360-day year for the actual number of days
elapsed.

          (b) Payments. Interest due on the Committed Revolving Line is payable on the Payment
Date of each month. Bank may debit any of any Borrowers’ deposit accounts including Account Number
                                         for principal and interest payments owing or any amounts any Borrower
owes Bank under any of the Loan Documents. Bank will promptly notify Company when it debits any
such accounts. These debits are not a set-off. Payments received after 12:00 noon Eastern time
are considered received at the opening of business on the next Business Day. When a payment is due
on a day that is not a Business Day, the payment is due the next Business Day and additional fees
or interest accrue.

          (c) Lockbox. All proceeds of Collateral shall be deposited by each Borrower into a
lockbox account.

2.4 Joint Liability.

          Each Person included in the term “Borrower” hereby covenants and agrees with Bank as follows:

          (a) The Obligations include all present and future indebtedness, duties, obligations, and
liabilities under the Loan Documents, whether now existing or contemplated or hereafter arising, of
any one or more of the Borrowers.

          (b) Reference in this Agreement and the other Loan Documents to the “Borrower” or otherwise
with respect to any one or more of the Persons now or hereafter included in the definition of
“Borrower” shall mean each and every such Person and any one or more of such Persons, jointly and
severally, unless the context requires otherwise.

          (c) Each Person included in the term “Borrower” in the discretion of its respective management
is to agree among themselves as to the allocation of the benefits of the proceeds of the Committed
Revolving Line, provided, however, that each such Person shall be deemed to have represented and
warranted to Bank at the time of allocation that each benefit and use of proceeds is permitted
under this Agreement.

          (d) For administrative convenience, each Person included in the term “Borrower” hereby
irrevocably appoints the Company as each Borrower’s attorney-in-fact, with power of substitution
(with the prior written consent of Bank in the exercise of its sole and absolute discretion), in
the name of the Company or in the name of any Borrower or otherwise to take any and all actions
with respect to this Agreement, the other Loan Documents, the Obligations and/or the Collateral
(including, without limitation,

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the proceeds thereof) as the Company may so elect from time to time, including, without
limitation, actions to (i) request advances under the Committed Revolving Line, and direct Bank to
disburse or credit the proceeds of any Advance directly to an account of the Company, any one or
more of such Persons or otherwise, which direction shall evidence the making of such Advance and
shall constitute the acknowledgment by each such Person of the receipt of the proceeds of such
Advance, (ii) enter into, execute, deliver, amend, modify, restate, substitute, extend and/or renew
this Agreement, any other Loan Documents, security agreements, mortgages, deposit account
agreements, instruments, certificates, waivers, letter of credit applications, releases, documents
and agreements from time to time, and (iii) endorse any check or other item of payment in the name
of such Person or in the name of the Company. The foregoing appointment is coupled with an
interest, cannot be revoked without the prior written consent of Bank, and may be exercised from
time to time through the Company’s Responsible Officer, or other Person or Persons designated by
the Company to act from time to time on behalf of the Company.

          (e) Each Person included in the term “Borrower” hereby irrevocably authorizes Bank to make
Advances to any one or more of such Persons, pursuant to the provisions of this Agreement upon the
written, oral or telephone request of any one or more of the Persons who is from time to time a
Responsible Officer of the Company under the provisions of the most recent certificate of corporate
resolutions and/or incumbency of the Person included in the term “Borrower” on file with Bank and
also upon the written, oral or telephone request of any one of the Persons who is from time to time
a Responsible Officer of the Company under the provisions of the most recent certificate of
corporate resolutions and/or incumbency for the Company on file with Bank.

          (f) Bank assumes no responsibility or liability for any errors, mistakes, and/or discrepancies
in the oral, telephonic, written or other transmissions of any instructions, orders, requests and
confirmations by any one or more of the Persons included in the term “Borrower” in connection with
any Credit Extension or any other transaction in connection with the provisions of this Agreement.

2.5 Inter-Company Debt, Contribution.

          Without implying any limitation on the joint and several nature of the Obligations, Bank
agrees that, notwithstanding any other provision of this Agreement, the Persons included in the
term “Borrower” may create reasonable inter-company indebtedness between or among the Persons
included in the term “Borrower” with respect to the allocation of the benefits and proceeds of the
Credit Extensions under this Agreement. The Persons included in the term “Borrower” agree among
themselves, and Bank consents to that agreement, that each such Person shall have rights of
contribution from all of the such Persons to the extent such Person incurs Obligations in excess of
the proceeds of the Advances received by, or allocated to such Person. All such indebtedness and
rights shall be, and are hereby agreed by the Persons included in the term “Borrower” to be,
subordinate in priority and payment to the indefeasible repayment in full in cash of the
Obligations, and, unless Bank agrees in writing otherwise, shall not be exercised or repaid in
whole or in part until all of the Obligations have been indefeasibly paid in full in cash. Each
Person included in the term “Borrower” agrees that all of such inter-company indebtedness and
rights of contribution are part of the Collateral and secure the Obligations. Each Person included
in the term “Borrower” hereby waives all rights of counter claim, recoupment and offset between or
among themselves arising on account of that indebtedness and otherwise. No Person included in the
term “Borrower” shall evidence the inter-company indebtedness or rights of contribution by note or
other instrument, and shall not secure such indebtedness or rights of contribution with any Lien or
security.

2.6 Borrowers are Integrated Group.

          Each Person included in the term “Borrower” hereby represents and warrants to Bank that each
of them will derive benefits, directly and indirectly, from each Credit Extension, both in their
separate capacity and as a member of the integrated group to which each such Person belongs and
because the successful operation of the integrated group is dependent upon the continued successful
performance of the functions of the integrated group as a whole, because (i) the terms of the
Credit Extension provided under this Agreement are more favorable than would otherwise would be
obtainable by such Persons individually, and (ii) the additional administrative and other costs and
reduced flexibility associated with
individual loan arrangements which would otherwise be required if obtainable would
substantially reduce the value to such Persons of the Credit Extension.

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2.7 Primary Obligations.

          The obligations and liabilities of each Person included in the term “Borrower” shall be
primary, direct and immediate, shall not be subject to any counterclaim, recoupment, set off,
reduction or defense based upon any claim that such Person may have against any one or more of the
other Persons included in the term “Borrower”, Bank and/or any other guarantor and shall not be
conditional or contingent upon pursuit or enforcement by Bank of any remedies it may have against
Persons included in the term “Borrower” with respect to this Agreement, or any of the other Loan
Documents, whether pursuant to the terms thereof or by operation of law. Without limiting the
generality of the foregoing, Bank shall not be required to make any demand upon any of the Persons
included in the term “Borrower”, or to sell the Collateral or otherwise pursue, enforce or exhaust
its or their remedies against the Persons included in the term “Borrower” or the Collateral either
before, concurrently with or after pursuing or enforcing its rights and remedies hereunder. Any
one or more successive or concurrent actions or proceedings may be brought against each Person
included in the term “Borrower”, either in the same action, if any, brought against any one or more
of the Persons included in the term “Borrower” or in separate actions or proceedings, as often as
Bank may deem expedient or advisable. Without limiting the foregoing, it is specifically
understood that any modification, limitation or discharge of any of the liabilities or obligations
of any one or more of the Persons included in the term “Borrower”, any other guarantor or any
obligor under any of the Loan Documents, arising out of, or by virtue of, any bankruptcy,
arrangement, reorganization or similar proceeding for relief of debtors under federal or state law
initiated by or against any one or more of the Persons included in the term “Borrower”, in their
respective capacities as borrowers and guarantors under this Agreement, or under any of the Loan
Documents shall not modify, limit, lessen, reduce, impair, discharge, or otherwise affect the
liability of any other Borrower under this Agreement in any manner whatsoever, and this Agreement
shall remain and continue in full force and effect. It is the intent and purpose of this Agreement
that each Person included in the term “Borrower” shall and does hereby waive all rights and
benefits which might accrue to any other guarantor by reason of any such proceeding, and the
Persons included in the term “Borrower” agree that they shall be liable for the full amount of the
obligations and liabilities under this Agreement regardless of, and irrespective to, any
modification, limitation or discharge of the liability of any one or more of the Persons included
in the term “Borrower”, any other guarantor or any other obligor under any of the Loan Documents,
that may result from any such proceedings.

    2.8 Fees.

          Borrowers will pay:

          (a) Facility Fee. A fully earned, nonrefundable fee in the amount of Forty Thousand
Dollars ($40,000), payable on the Closing Date.

          (b) Success Fee. A fully earned, nonrefundable fee pursuant to the terms of that
certain Commitment Letter dated May 25, 2005 (the “Commitment Letter”), which fee is due and
payable at the time set forth in the Commitment Letter. Notwithstanding the foregoing, in the
event the Obligations are terminated by Borrowers pursuant to the terms of this Agreement and the
Obligations are repaid in full, then at the time of such termination and repayment in full of the
Obligations, no Event of Default has occurred and is continuing, the Success Fee shall be
calculated by multiplying [***] times the Earned Percentage (as calculated in accordance with
Section 5 of the Commitment Letter) which would be applicable as of the date of the termination and
repayment in full of the Obligations. By way of example, if the termination and repayment in full
of the Obligations occurred on or prior to June 30, 2005 and the Loans have not been converted to a
Formula Facility, the Earned Percentage would be [***].

          (c) Bank Expenses. All Bank Expenses (including reasonable attorneys’ fees and
reasonable expenses) incurred through and after the date of this Agreement, are payable when due.

 

			
	[***]	 	INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH
THE SECURITIES AND EXCHANGE COMMISSION PURSUANT TO RULE 24b-2 UNDER THE SECURITIES AND EXCHANGE ACT
OF 1934, AS AMENDED.

4

 

3. CONDITIONS OF LOANS

    3.1 Conditions Precedent to Initial Credit Extension.

          Bank’s obligation to make the initial Credit Extension is subject to:

          (a) this Agreement;

          (b) the Revolving Promissory Note

          (c) a certificate of the Secretary or member, as applicable, of each Borrower with respect to
articles of incorporation, operating agreement, bylaws, incumbency and resolutions authorizing the
execution and delivery of this Agreement;

          (d) financing statements (Forms UCC-1);

          (e) insurance certificates;

          (f) payment of the fees and Bank Expenses then due specified in Sections 2.8(a) and 2.8(c)
hereof;

          (g) Certificate of Foreign Qualification (if applicable); and

          (h) such other documents, and completion of such other matters, as Bank may reasonably deem
necessary or appropriate.

    3.2 Conditions Precedent to First Advance During Formula Period.

          In addition to the conditions precedent in Section 3.1 hereof, Bank’s obligation to make the
initial Advance during Formula Period is subject to:

          (a) Bank shall have received written confirmation from the Company that all existing holders
of the Senior Secured Convertible Debentures have been paid in full; and

          (b) Bank has a first priority security interest on the Collateral (subject only to Permitted
Liens).

    3.3 Conditions Precedent to all Credit Extensions.

          Bank’s obligations to make each Credit Extension, including the initial Credit Extension, is
subject to the following:

          (a) timely receipt of any Payment/Advance Form; and

          (b) the representations and warranties in Section 5 must be true on the date of the
Payment/Advance Form and on the effective date of each Credit Extension and no Event of Default may
have occurred and be continuing, or result from the Credit Extension. Each Credit Extension is
Borrowers’ representation and warranty on that date that the representations and warranties of
Section 5 remain true.

4. CREATION OF SECURITY INTEREST

    4.1 Grant of Security Interest.

          Each Borrower grants Bank a continuing security interest in all presently existing and later
acquired Collateral to secure all Obligations and performance of each of Borrowers’ duties under
the Loan Documents, which in accordance with the provisions of Section 12.11, prior to the
repayment in full of the Senior Secured Convertible Debentures are pari pasu with
the rights of the holders of the Senior Secured Convertible Debentures. Except for Permitted
Liens, any security interest will be a first priority security interest in the Collateral. Bank
upon the occurrence and during the continuance of any Event of Default, may place a “hold” on any
deposit account of any Borrower maintained with Bank. If this
Agreement is terminated, Bank’s lien and security interest in the Collateral will continue
until Borrowers fully satisfy their Obligations.

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    4.2 Authorization to File.

          Each Borrower authorizes Bank to file financing statements without notice to any Borrower,
with all appropriate jurisdictions, as Bank deems appropriate, in order to perfect or protect
Bank’s interest in the Collateral.

    4.3 Release of Intellectual Property.

          Bank agrees that during the Formula Period upon written request of Borrowers, Bank will file
partial releases, at Borrowers’ expense, on its Lien on the Intellectual Property, provided that no
Event of Default shall have occurred and be continuing at such time.

5. REPRESENTATIONS AND WARRANTIES

          Each Borrower represents and warrants as follows:

    5.1 Due Organization and Authorization.

          Each Borrower and each Subsidiary is duly existing and in good standing in the state set forth
in the first page of this Agreement and qualified and licensed to do business in, and in good
standing in, any state in which the conduct of its business or its ownership of property requires
that it be qualified, except where the failure to do so could not reasonably be expected to cause a
Material Adverse Change. Each Borrower and each Subsidiary’s exact legal name is as set forth on
the first page of this Agreement. The execution, delivery and performance of the Loan Documents
have been duly authorized, and do not conflict with any Borrower’s formation documents, nor
constitute an event of default under any material agreement by which Borrower is bound. Borrower
is not in default under any agreement to which, or by which it is bound, in which the default could
reasonably be expected to cause a Material Adverse Change.

    5.2 Collateral.

          (a) Each Borrower has good title to its Collateral, free of Liens except Permitted Liens. The
Accounts are bona fide, existing obligations, and the service or property has been performed or
delivered to the account debtor or its agent for immediate shipment to and unconditional acceptance
by the account debtor. No Borrower has any notice of any actual or imminent Insolvency Proceeding
of any account debtor whose accounts are an Eligible Account in any Borrowing Base Certificate.
All Inventory is in all material respects of good and marketable quality, free from material
defects.

          (b) In addition, during the Non-Formula Period only:

          (i) except as noted on the Schedule, no Borrower is a party to, nor is bound by, any
material license or other material agreement with respect to which any Borrower is the
licensee that prohibits or otherwise restricts such Borrower from granting a security
interest in that Borrower’s interest in such license or agreement or any other property; and

          (ii) each Borrower is the sole owner of the Intellectual Property, except for
non-exclusive licenses granted to its customers in the ordinary course of business. Each
Patent is valid and enforceable and no part of the Intellectual Property has been judged
invalid or unenforceable, in whole or in part, and except as set forth in the Schedule no
claim has been made that any part of the Intellectual Property violates the rights of any
third party, except to the extent such claim could not reasonably be expected to cause a
Material Adverse Change.

    5.3 Litigation.

          Except as set forth in the Schedule, there are no actions or proceedings pending or, to the
knowledge of any Borrower’s Responsible Officers, threatened by or against any Borrower or any
Subsidiary in which a likely adverse decision could reasonably be expected to cause a Material
Adverse Change.

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    5.4 No Material Adverse Change in Financial Statements.

          All consolidated financial statements for any Borrower, and any Subsidiary, delivered to Bank
fairly present in all material respects Company’s consolidated financial condition and Company’s
consolidated results of operations. There has not been any material deterioration in any
Borrower’s consolidated financial condition since the date of the most recent consolidated
financial statements submitted to Bank.

    5.5 Solvency.

          The fair salable value of Borrowers’ assets (including goodwill minus disposition costs)
exceeds the fair value of its liabilities; the Borrowers are not left with unreasonably small
capital after the transactions in this Agreement or any of the Loan Documents; and Borrower is able
to pay its debts (including trade debts) as they mature.

    5.6 Regulatory Compliance.

          No Borrower is an “investment company” or a company “controlled” by an “investment company”
under the Investment Company Act. No Borrower is engaged as one of its important activities in
extending credit for margin stock (under Regulations T and U of the Federal Reserve Board of
Governors). Each Borrower has complied in all material respects with the Federal Fair Labor
Standards Act. Each Borrower has not violated any laws, ordinances or rules, the violation of
which could reasonably be expected to cause a Material Adverse Change. None of any Borrower’s or
any Subsidiary’s properties or assets has been used by any Borrower or any Subsidiary or, to the
best of any Borrower’s knowledge, by previous Persons, in disposing, producing, storing, treating,
or transporting any hazardous substance other than legally. Except as set forth in the Schedule,
each Borrower and each Subsidiary has timely filed all required tax returns and paid, or made
adequate provision to pay, all material taxes, except those being contested in good faith with
adequate reserves under GAAP. Each Borrower and each Subsidiary has obtained all consents,
approvals and authorizations of, made all declarations or filings with, and given all notices to,
all government authorities that are necessary to continue its business as currently conducted,
except where the failure to do so could not reasonably be expected to cause a Material Adverse
Change.

    5.7 Subsidiaries.

          No Borrower owns any stock, partnership interest or other equity securities except for
Permitted Investments.

    5.8 Full Disclosure.

          No written representation, warranty or other statement of any Borrower in any certificate or
written statement given to Bank (taken together with all such written certificates and written
statements to Bank) contains any untrue statement of a material fact or omits to state a material
fact necessary to make the statements contained in the certificates or statements not misleading.
It being recognized by Bank that the projections and forecasts provided by any Borrower in good
faith and based upon reasonable assumptions are not viewed as facts and that actual results during
the period or periods covered by such projections and forecasts may differ from the projected and
forecasted results.

    5.9 Securities Purchase Agreement Transaction.

          Bank has received true and correct copies of the Securities Purchase Agreement and each of the
other Security Purchase Agreement Documents, executed, delivered and/or furnished on or before the
Closing Date in connection with the Securities Purchase Agreement Transaction. Neither the
Securities Purchase Agreement nor any of the other Securities Purchase Agreement Documents have
been modified, changed, supplemented, canceled, amended or otherwise altered or affected, except as
otherwise disclosed to Bank in writing on or before the Closing Date. The Securities Purchase
Agreement Transaction has been effected, closed and consummated pursuant to, and in accordance
with, the terms and conditions of the Securities Purchase Agreement and with all applicable laws.

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6. AFFIRMATIVE COVENANTS

          Borrowers will do all of the following for so long as Bank has an obligation to make any
Credit Extension, or there are outstanding Obligations:

    6.1 Government Compliance.

          Each Borrower will maintain its and all Subsidiaries’ legal existence and good standing as a
Registered Organization in only the State set forth on the first page of this Agreement and
maintain qualification in each jurisdiction in which the failure to so qualify would reasonably be
expected to cause a material adverse effect on any Borrower’s business or operations. Each
Borrower will comply, and have each Subsidiary comply, with all laws, ordinances and regulations to
which it is subject, noncompliance with which could have a material adverse effect on any
Borrower’s business or operations or would reasonably be expected to cause a Material Adverse
Change. The Borrower may merge any Borrower or any Subsidiary of a Borrower into any other
Borrower or dissolve any Borrower if substantially all of the assets of such Borrower are first
transferred to any other Borrower.

    6.2 Financial Statements, Reports, Certificates.

          (a) Company will deliver to Bank: (i) as soon as available, but no later than thirty (30)
days after the last day of each month, a company prepared consolidated balance sheet and income
statement covering Company’s consolidated operations during the period certified by a Responsible
Officer and in a form acceptable to Bank; (ii) as soon as available, but no later than ninety (90)
days after the last day of Company’s fiscal year, audited consolidated financial statements
prepared under GAAP, consistently applied, together with an unqualified opinion on the financial
statements from an independent certified public accounting firm reasonably acceptable to Bank;
(iii) as soon as available, but no later than ninety (90) days after the last day of Company’s
fiscal year, the Company’s 10-K filing; (iv) a prompt report of any legal actions pending or
threatened against any Borrower or any Subsidiary that could result in damages or costs to any
Borrower or any Subsidiary of $500,000 or more; and (v) budgets, sales projections, operating plans
or other financial information Bank reasonably requests; and (vi) during the Non-Formula Period
only, prompt notice of any material change in the composition of the Intellectual Property,
including any subsequent ownership right of any Borrower in or to any Copyright, Patent or
Trademark not shown in any intellectual property security agreement between Borrowers and Bank or
knowledge of an event that materially adversely affects the value of the Intellectual Property.
Bank agrees that information received by Bank pursuant to this Section will be subject to the
provisions of Section 12.8 of this Agreement.

          (b) Within thirty (30) days after the last day of each month, Company will deliver to Bank a
Borrowing Base Certificate signed by a Responsible Officer of Company in the form of Exhibit
C, with aged listings of accounts receivable and accounts payable.

          (c) Within thirty (30) days after the last day of each month, Company will deliver to Bank
with the monthly financial statements a Compliance Certificate signed by a Responsible Officer of
Company in the form of Exhibit D.

          (d) Allow Bank to audit Borrowers’ Collateral at Borrower’s expense. Such audits will be
conducted no more often than every six (6) months unless an Event of Default has occurred and is
continuing.

    6.3 Inventory; Returns.

          Borrowers will keep all Inventory in good and marketable condition, free from material
defects. Returns and allowances between any Borrower and its account debtors will follow each
Borrower’s customary practices as they exist at execution of this Agreement. Company must promptly
notify Bank of all returns, recoveries, disputes and claims, that involve more than $200,000.

    6.4 Taxes.

          Each Borrower will make, and cause each Subsidiary to make, timely payment of all material
federal, state, and local taxes or assessments (other than taxes and assessments which any Borrower
is contesting in good faith, with adequate reserves maintained in accordance with GAAP) and will
deliver to Bank, on demand, appropriate certificates attesting to the payment.

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    6.5 Insurance.

          Each Borrower will keep its business and the Collateral insured for risks and in amounts
standard for such Borrower’s industry, and as Bank may reasonably request. Insurance policies will
be in a form, with companies, and in amounts that are satisfactory to Bank in Bank’s reasonable
discretion. All property policies will have a lender’s loss payable endorsement showing Bank as an
additional loss payee and all liability policies will show the Bank as an additional insured and
provide that the insurer must give Bank at least twenty (20) days notice before canceling its
policy. At Bank’s request, Borrowers will deliver certified copies of policies and evidence of all
premium payments. Proceeds payable under any policy will, at Bank’s option, be payable to Bank on
account of the Obligations.

   6.6 Primary Accounts.

          Each Borrower will maintain its primary operating and investment accounts with Bank.

   6.7 Financial Covenants.

          During the Formula Period only, Borrowers will maintain as of the last day of each month
(unless otherwise stated below):

          (a) Liquidity Ratio. A Liquidity Ratio of at least 1.50 to 1.00.

          (b) Minimum Revenue: Borrowers will achieve minimum ninety (90) day rolling revenue of not
less than the following amounts for each of the following periods:

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Ninety day
	Period	 	 	 	 	 	Rolling Revenue
	June 30, 2005,
July 31, 2005 and
August 31, 2005
	 	 	 	 	 	$	10,250,000;	 
	September 30, 2005 and
October 31, 2005
	 	 	 	 	 	$	11,000,000;	 
	November 30, 2005 and
December 31, 2005
	 	 	 	 	 	$	11,250,000 	 

          In addition to any and all other rights and remedies of Bank under the Loan Documents, in the
event Borrower fails to comply with the obligations of Section 6.7, Bank shall be entitled to an
additional Success Fee pursuant to the terms of the Commitment Letter.

    6.8 Subordination of Inside Debt.

          All present and future indebtedness of Borrowers to its officers, directors and shareholders
(other than Indebtedness currently outstanding under the Senior Secured Convertible Debentures)
(“Inside Debt”) shall, at all times, be subordinated to the Obligations pursuant to a subordination
agreement on Bank’s standard form. Borrowers represent and warrant that there is no Inside Debt
presently outstanding. Prior to incurring any Inside Debt in the future, Borrowers shall cause the
Person to whom such Inside Debt will be owed to execute and deliver to Bank a subordination
agreement on Bank’s standard form.

    6.9 Registration of Intellectual Property Rights.

          During the Non-Formula Period only, each Borrower:

          (a) shall not register any Copyrights with the United States Copyright Office unless it: (i)
has given at least fifteen (15) days’ prior notice to Bank of its intent to register such
Copyrights and has provided Bank with a copy of the application it intends to file with the United
States Copyright Office (excluding exhibits thereto); (ii) executes a security agreement or such
other documents as Bank may reasonably request in order to maintain the perfection and priority of
Bank’s security interest in the Copyrights proposed to be registered with the United States
Copyright Office; and (iii) records such security documents with the United States Copyright Office
contemporaneously with filing the Copyright
application(s) with the United States Copyright Office. Each Borrower shall promptly provide
to Bank a copy of the Copyright application(s) filed with the United States Copyright Office,
together with evidence of the recording of the security documents necessary for Bank to maintain
the perfection and priority of its security interest in such Copyrights;

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          (b) shall provide written notice to Bank of any application filed by Borrower in the United
States Patent Trademark Office for a patent or to register a trademark or service mark within
thirty (30) days of any such filing; and

          (c) will (i) protect, defend and maintain the validity and enforceability of the Intellectual
Property and promptly advise Bank in writing of material infringements and (ii) not allow any
Intellectual Property material to each Borrower’s business to be abandoned, forfeited or dedicated
to the public without Bank’s written consent.

    6.10 Additional Provisions Regarding Collateral.

          (a) Borrowers will provide written notice to Bank within thirty (30) days of entering or
becoming bound by any such license or agreement which are reasonably likely to have a material
impact on Borrowers’ business or financial condition (other than over-the-counter software that is
commercially available to the public).

          (b) Borrowers shall take such steps as Bank reasonably requests to obtain the consent of,
authorization by, or waiver by, any person whose consent or waiver is necessary for all such
licenses or contract rights to be deemed “Collateral” and for Bank to have a security interest in
it that might otherwise be restricted or prohibited by law or by the terms of any such license or
agreement (such consent or authorization may include a licensor’s agreement to a contingent
assignment of the license to Bank if the Bank determines that is necessary in its good faith
judgment), whether now existing or entered into in the future.

    6.11 Further Assurances.

          Borrowers will execute any further instruments and take further action as Bank reasonably
requests to perfect or continue Bank’s security interest in the Collateral or to effect the
purposes of this Agreement.

7. NEGATIVE COVENANTS

          Borrowers will not do any of the following without Bank’s prior written consent, for so long
as Bank has an obligation to make Credit Extensions or there are any outstanding Obligations:

    7.1 Dispositions.

          Convey, sell, lease, transfer or otherwise dispose of (collectively “Transfer”), or permit any
of its Subsidiaries to Transfer, all or any part of its business or property, except for
Transfers (i) of Inventory in the ordinary course of business; (ii) of non-exclusive licenses and
similar arrangements for the use of the property of any Borrower or its Subsidiaries in the
ordinary course of business; or (iii) of worn-out or obsolete Equipment.

    7.2 Changes in Business, Ownership, Management or Business Locations.

          Engage in or permit any of its Subsidiaries to engage in any business other than the
businesses currently engaged in by any Borrower or reasonably related thereto or have a material
change in its management or a change in its ownership of greater than twenty five percent (25%)
(other than by the sale of Borrowers’ equity securities in a public offering or to venture capital
investors so long as Borrowers identify and advise Bank of the venture capital investors prior to
the closing of the investment). Borrowers will not, without at least thirty (30) days prior
written notice, change their legal name, change their state of formation, relocate any Borrower’s
chief executive office or add any new offices or business locations.

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    7.3 Mergers or Acquisitions.

          Merge or consolidate, or permit any of its Subsidiaries to merge or consolidate, with any
other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of
the capital stock
or property of another Person, except where (i) no Event of Default has occurred and is
continuing or would result from such action during the term of this Agreement; (ii) a Borrower will
be or will control the surviving entity; and (iii) a Subsidiary may merge or consolidate into
another Subsidiary or into a Borrower.

    7.4 Indebtedness.

          Create, incur, assume, or be liable for any Indebtedness, or permit any Subsidiary to do so,
other than Permitted Indebtedness.

    7.5 Encumbrance.

          Create, incur, or allow any Lien on any of its property, or assign or convey any right to
receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so,
except for Permitted Liens, or permit any Collateral not to be subject to the first priority
security interest granted here, subject to Permitted Liens. In addition, during the Non-Formula
Period only, Borrowers shall not sell, transfer, assign, mortgage, pledge, lease, grant a security
interest in, or encumber, or enter into any agreement, document, instrument or other arrangement
(except with or in favor of the Bank) with any Person which directly or indirectly prohibits or has
the effect of prohibiting Borrowers from selling, transferring, assigning, mortgaging, pledging,
leasing, granting a security interest in or upon, or encumbering any of Borrowers’ Intellectual
Property.

    7.6 Distributions; Investments.

          Except as expressly permitted by Section 7.3, (i) directly or indirectly acquire or own any
Person, or make any Investment in any Person, other than Permitted Investments, or permit any of
its Subsidiaries to do so, or (ii) pay any dividends or make any distribution or payment or redeem,
retire or purchase any capital stock, except for any repurchase of stock or stock options from
former employees or directors of Borrowers in an aggregate amount not to exceed $100,000 under the
terms of applicable repurchase agreements, provided that at the time of such repurchase, no Event
of Default has occurred, is continuing or would exist after giving effect to any such repurchase.

    7.7 Transactions with Affiliates.

          Other than intercompany transaction between or among Borrowers and their Subsidiaries,
directly or indirectly enter into or permit to exist any material transaction with any Affiliate of
any Borrower except for transactions that are in the ordinary course of such Borrower’s business,
upon fair and reasonable terms that are no less favorable to any Borrower than would be obtained in
an arm’s length transaction with a nonaffiliated Person.

    7.8 Subordinated Debt.

          Make or permit any payment on any Subordinated Debt, except under the terms of the
Subordinated Debt, or amend any provision in any document relating to the Subordinated Debt without
Bank’s prior written consent.

    7.9 Compliance.

          Become an “investment company” or a company controlled by an “investment company,” under the
Investment Company Act of 1940 or undertake as one of its important activities extending credit to
purchase or carry margin stock, or use the proceeds of any Credit Extension for that purpose; fail
to meet the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited
Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards
Act or violate any other law or regulation, if the violation could reasonably be expected to have a
material adverse effect on Borrower’s business or operations or would reasonably be expected to
cause a Material Adverse Change, or permit any of its Subsidiaries to do so.

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8. EVENTS OF DEFAULT

          Any one of the following is an Event of Default:

    8.1 Payment Default.

          If Borrowers fail to pay any of the Obligations when due within three (3) days after their due
date. During the three (3) day period the failure to cure the default is not an Event of Default
(but no Credit Extension will be made during the cure period);

    8.2 Covenant Default.

          (a) If Borrowers fail to perform any obligation under Sections 6.2 or 6.7 or violates any of
the covenants contained in Article 7 of this Agreement, or

          (b) If any Borrower fails or neglects to perform, keep, or observe any other material term,
provision, condition, covenant, or agreement contained in this Agreement, in any of the Loan
Documents, or in any other present or future agreement between any Borrower and Bank and as to any
default under such other term, provision, condition, covenant or agreement that can be cured, has
failed to cure such default within ten (10) days after the occurrence thereof; provided, however,
that if the default cannot by its nature be cured within the ten (10) day period or cannot after
diligent attempts by Borrowers be cured within such ten (10) day period, and such default is likely
to be cured within a reasonable time, then Borrowers shall have an additional reasonable period
(which shall not in any case exceed thirty (30) days) to attempt to cure such default, and within
such reasonable time period the failure to have cured such default shall not be deemed an Event of
Default (provided that no Credit Extensions will be made during such cure period).

    8.3 Material Adverse Change.

          If there (i) occurs a material adverse change in the business, operations, or condition
(financial or otherwise) of any Borrower, or (ii) is a material impairment of the prospect of
repayment of any portion of the Obligations or (iii) is a material impairment of the value or
priority of Bank’s security interests in the Collateral.

    8.4 Attachment.

          If any material portion of any Borrower’s assets is attached, seized, levied on, or comes into
possession of a trustee or receiver and the attachment, seizure or levy is not removed in ten (10)
days, or if any Borrower is enjoined, restrained, or prevented by court order from conducting a
material part of its business or if a judgment or other claim becomes a Lien on a material portion
of any Borrower’s assets, or if a notice of lien, levy, or assessment is filed against any of any
Borrower’s assets by any government agency and not paid within ten (10) days after such Borrower
receives notice. These are not Events of Default if stayed or if a bond is posted pending contest
by such Borrower (but no Credit Extensions will be made during the cure period);

    8.5 Insolvency.

          If any Borrower becomes insolvent or if any Borrower begins an Insolvency Proceeding or an
Insolvency Proceeding is begun against any Borrower and not dismissed or stayed within 30 days (but
no Credit Extensions will be made before any Insolvency Proceeding is dismissed);

    8.6 Other Agreements.

          If there is a default under Borrowers’ indebtedness to the existing holders of the Senior
Secured Convertible Debentures pursuant to the terms of the Securities Purchase Agreement or in any
agreement between any Borrower and a third party that gives the third party the right to accelerate
any Indebtedness exceeding $200,000 or that could cause a Material Adverse Change;

    8.7 Judgments.

          If a money judgment(s) in the aggregate of at least $250,000 is rendered against any Borrower
and is unsatisfied and unstayed for 10 days (but no Credit Extensions will be made before the
judgment is stayed or satisfied);

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    8.8 Misrepresentations.

          If any Borrower or any Person acting for any Borrower makes any material misrepresentation or
material misstatement now or later in any warranty or representation in this Agreement or in any
writing delivered to Bank or to induce Bank to enter this Agreement or any Loan Document; or

    8.9 Subsidiaries.

          Any circumstance described in Sections 8.3, 8.4, 8.5 or 8.7 occurs to any Subsidiary of any
Borrower, which could, if taken as a whole, have a material adverse effect on the Borrowers.

9. BANK’S RIGHTS AND REMEDIES

    9.1 Rights and Remedies.

          When an Event of Default occurs and continues Bank may, without notice or demand, do any or
all of the following:

          (a) Declare all Obligations immediately due and payable (but if an Event of Default described
in Section 8.5 occurs all Obligations are immediately due and payable without any action by Bank);

          (b) Stop advancing money or extending credit for any Borrower’s benefit under this Agreement
or under any other agreement between any Borrower and Bank;

          (c) Settle or adjust disputes and claims directly with account debtors for amounts, on terms
and in any order that Bank in good faith considers advisable;

          (d) Make any payments and do any acts it considers necessary or reasonable to protect its
security interest in the Collateral. Borrowers will assemble the Collateral if Bank requires and
make it available as Bank designates. Bank may lawfully enter premises where the Collateral is
located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or
compromise any Lien which appears to be prior or superior to its security interest and pay all
expenses incurred. Each Borrower grants Bank a license to lawfully enter and occupy any of its
premises, without charge, to exercise any of Bank’s rights or remedies;

          (e) Apply to the Obligations any (i) balances and deposits of any Borrower with Bank or its
Affiliate it holds, or (ii) amount held by Bank owing to or for the credit or the account of any
Borrower;

          (f) Ship, reclaim, recover, store, finish, maintain, repair, prepare for sale, advertise for
sale, and sell the Collateral. Bank is granted a non-exclusive, royalty-free license or other
right to use, without charge, each Borrower’s labels, Patents, Copyrights, rights of use of any
name, trade secrets, trade names, Trademarks, service marks, and advertising matter, or any similar
property as it pertains to the Collateral, in completing production of, advertising for sale, and
selling any Collateral and, in connection with Bank’s exercise of its rights under this Section,
each Borrower’s rights under all licenses and all franchise agreements inure to Bank’s benefit; and

          (g) Bank may place a “hold” on any account maintained with Bank and deliver a notice of
exclusive control, any entitlement order, or other directions or instructions pursuant to any
control agreement or similar agreements providing control of any Collateral;

          (h) Dispose of the Collateral according to the Code; and

          (i) In addition to Bank’s rights in this Section, if any Borrower fails to comply with any
obligation under Section 6.7, Bank shall be entitled to an additional Success Fee pursuant to the
terms in the Commitment Letter.

    9.2 Power of Attorney.

          Effective only when an Event of Default occurs and during its continuance, each Borrower
irrevocably appoints Bank as its lawful attorney to: (i) endorse any Borrower’s name on any checks
or other forms of payment or security; (ii) sign each Borrower’s name on any invoice or bill of
lading for any Account or drafts against account debtors, (iii) make, settle, and adjust all claims
under any Borrower’s insurance policies; (iv) settle and adjust disputes and claims about the
Accounts directly with account debtors, for amounts and on terms Bank determines reasonable; and
(v) transfer the Collateral into the

13

 

name of Bank or a third party as the Code permits. Bank may exercise the power of attorney to
sign each Borrower’s name on any documents necessary to perfect or continue the perfection of any
security interest regardless of whether an Event of Default has occurred. Bank’s appointment as
each Borrower’s attorney in fact, and all of Bank’s rights and powers, coupled with an interest,
are irrevocable until all Obligations have been fully repaid and performed and Bank’s obligation to
provide Credit Extensions terminates.

    9.3 Accounts Collection.

          When an Event of Default occurs and during its continuance, Bank may notify any Person owing
any Borrower money of Bank’s security interest in the funds and verify the amount of the Account.
Each Borrower must collect all payments in trust for Bank and, if requested by Bank, immediately
deliver the payments to Bank in the form received from the account debtor, with proper endorsements
for deposit.

    9.4 Bank Expenses.

          If any Borrower fails to pay any amount or furnish any required proof of payment to third
persons, Bank may make all or part of the payment or obtain insurance policies required in Section
6.5, and take any action under the policies Bank deems prudent. Any amounts paid by Bank are Bank
Expenses and immediately due and payable, bearing interest at the then applicable rate and secured
by the Collateral. No payments by Bank are deemed an agreement to make similar payments in the
future or Bank’s waiver of any Event of Default.

    9.5 Bank’s Liability for Collateral.

          If Bank complies with reasonable banking practices and the Code, it is not liable for: (a) the
safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the
value of the Collateral; or (d) any act or default of any carrier, warehouseman, bailee, or other
Person. Each Borrower bears all risk of loss, damage or destruction of the Collateral.

    9.6 Remedies Cumulative.

          Bank’s rights and remedies under this Agreement, the Loan Documents, and all other agreements
are cumulative. Bank has all rights and remedies provided under the Code, by law, or in equity.
Bank’s exercise of one right or remedy is not an election, and Bank’s waiver of any Event of
Default is not a continuing waiver. Bank’s delay is not a waiver, election, or acquiescence. No
waiver is effective unless signed by Bank and then is only effective for the specific instance and
purpose for which it was given.

    9.7 Demand Waiver.

          Each Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment,
notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or
renewal of accounts, documents, instruments, chattel paper, and guarantees held by Bank on which
any Borrower is liable.

10. NOTICES

          All notices or demands by any party about this Agreement or any other related agreement must
be in writing and be personally delivered or sent by an overnight delivery service, by certified
mail, postage prepaid, return receipt requested, or by telefacsimile to the addresses set forth at
the beginning of this Agreement. A party may change its notice address by giving the other party
written notice.

11. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER

          Virginia law governs the Loan Documents without regard to principles of conflicts of law.
Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts in the
Commonwealth of Virginia provided, however, that if for any reason the Bank can not avail itself of
the courts of the Commonwealth of Virginia, each Borrower and Bank each submit to the jurisdiction
of the State and Federal Courts in Santa Clara County, California.

14

 

EACH BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY CONTEMPLATED
TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A
MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS
WAIVER WITH ITS COUNSEL.

12. GENERAL PROVISIONS

    12.1 Successors and Assigns.

          This Agreement binds and is for the benefit of the successors and permitted assigns of each
party. Borrowers may not assign this Agreement or any rights under it, other than as a result of
an acquisition permitted under Section 7.3, without Bank’s prior written consent which may be
granted or withheld in Bank’s discretion. Bank has the right, without the consent of or notice to
Borrowers, to sell, transfer, negotiate, or grant participation in all or any part of, or any
interest in, Bank’s obligations, rights and benefits under this Agreement.

    12.2 Indemnification.

          Each Borrower will indemnify, defend and hold harmless Bank and its officers, employees, and
agents against: (a) all obligations, demands, claims, and liabilities asserted by any other party
in connection with the transactions contemplated by the Loan Documents; and (b) all losses or Bank
Expenses incurred, or paid by Bank from, following, or consequential to transactions between Bank
and any Borrower (including reasonable attorneys fees and expenses), except for losses caused by
Bank’s gross negligence or willful misconduct.

   12.3 Time of Essence.

          Time is of the essence for the performance of all obligations in this Agreement.

   12.4 Severability of Provision.

          Each provision of this Agreement is severable from every other provision in determining the
enforceability of any provision.

    12.5 Amendments in Writing, Integration.

          All amendments to this Agreement must be in writing and signed by each Borrower and Bank.
This Agreement represents the entire agreement about this subject matter, and supersedes prior
negotiations or agreements other than the provisions of the Commitment Letter which pertain to the
Success Fee which do not merge into this Agreement and shall be deemed to survive the executed
delivery of this Agreement. Except as set forth in the previous sentence, all prior agreements,
understandings, representations, warranties, and negotiations between the parties about the subject
matter of this Agreement merge into this Agreement and the Loan Documents. Borrowers may terminate
this Agreement on not less than five (5) Business Days’ prior written notice to Bank, provided that
at the time of such notice all Obligations are paid in full, and no Event of Default has occurred
and is continuing.

    12.6 Counterparts.

          This Agreement may be executed in any number of counterparts and by different parties on
separate counterparts, each of which, when executed and delivered, are an original, and all taken
together, constitute one Agreement.

    12.7 Survival.

          All covenants, representations and warranties made in this Agreement continue in full force
while any Obligations remain outstanding. The obligations of each Borrower in Section 12.2 to
indemnify Bank will survive until all statutes of limitations for actions that may be brought
against Bank have run.

15

 

    12.8 Confidentiality.

          In handling any confidential information, Bank will exercise the same degree of care that it
exercises for its own proprietary information, but disclosure of information may be made (i) to
Bank’s subsidiaries or affiliates, (ii) to prospective transferees or purchasers of any interest in
the loans (provided, however, Bank shall use commercially reasonable efforts in obtaining such
prospective transferee or purchasers agreement to the terms of this provision), (iii) as required
by law, regulation,
subpoena, or other order, (iv) as required in connection with Bank’s examination or audit and
(v) as Bank considers appropriate in exercising remedies under this Agreement. Confidential
information does not include information that either: (a) is in the public domain or in Bank’s
possession when disclosed to Bank, or becomes part of the public domain after disclosure to Bank;
or (b) is disclosed to Bank by a third party, if Bank does not know that the third party is
prohibited from disclosing the information.

    12.9 Effective Date.

          Notwithstanding anything set forth in this Agreement or any Loan Document to the contrary,
this Agreement and all of the Loan Documents shall not be effective until the date on which the
Bank executes this Agreement as indicated on the signature page to this Agreement.

    12.10 Attorneys’ Fees, Costs and Expenses.

          In any action or proceeding between any Borrower and Bank arising out of the Loan Documents,
the prevailing party will be entitled to recover its reasonable attorneys’ fees and other
reasonable costs and expenses incurred, in addition to any other relief to which it may be
entitled.

    12.11 Third Party Beneficiaries.

          This Agreement provides that Bank’s first priority security interest on the Collateral will be
pari passu with the rights of the holders of the Senior Secured Convertible Debentures.
This Agreement and the duties and obligations contained herein shall be solely for the benefit of
Bank and the holders of the Senior Secured Convertible Debentures, as third-party beneficiaries,
and shall give such holders of the Senior Secured Convertible Debentures the right to prohibit Bank
from taking any enforcement action with respect to the Collateral which would violate Section 9 of
the Securities Purchase Agreement.

13. DEFINITIONS

    13.1 Definitions.

          In this Agreement:

          “Accounts” has the meaning set forth in the Code and includes all existing and later arising
accounts, contract rights, and other obligations owed any Borrower in connection with its sale or
lease of goods (including licensing software and other technology) or provision of services, all
credit insurance, guaranties, other security and all merchandise returned or reclaimed by any
Borrower and each Borrower’s Books relating to any of the foregoing.

          “Advance” or “Advances” is a loan advance (or advances) under the Committed Revolving Line.

          “Affiliate” of a Person is a Person that owns or controls directly or indirectly the Person,
any Person that controls or is controlled by or is under common control with the Person, and each
of that Person’s senior executive officers, directors, partners and, for any Person that is a
limited liability company, that Person’s managers and members.

          “Bank Expenses” are all audit fees and expenses and reasonable costs and expenses (including
reasonable attorneys’ fees and expenses) for preparing, negotiating, administering, defending and
enforcing the Loan Documents (including appeals or Insolvency Proceedings).

          “Borrower’s Books” are all of each Borrower’s books and records including ledgers, records
regarding each Borrower’s assets or liabilities, the Collateral, business operations or financial
condition and all computer programs or discs or any equipment containing the information.

          “Borrowing Base” is eighty percent (80%) of Eligible Accounts as determined by Bank from
Borrower’s most recent Borrowing Base Certificate; provided, however, that Bank may
lower the percentage of the Borrowing Base after performing an audit of Borrower’s Collateral.

          “Business Day” is any day that is not a Saturday, Sunday or a day on which the Bank is closed.

          “Closing Date” is the date of this Agreement.

          “Code” is the Uniform Commercial Code, in effect in the Commonwealth of Virginia as in effect
from time to time.

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          “Collateral” is the property described on Exhibit A.

          “Committed Revolving Line” is Advances of up to Four Million Dollars ($4,000,000).

          “Contingent Obligation” is, for any Person, any direct or indirect liability, contingent or
not, of that Person for (i) any indebtedness, lease, dividend, letter of credit or other obligation
of another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted
or sold with recourse by that Person, or for which that Person is directly or indirectly liable;
(ii) any obligations for undrawn letters of credit for the account of that Person; and (iii) all
obligations from any interest rate, currency or commodity swap agreement, interest rate cap or
collar agreement, or other agreement or arrangement designated to protect a Person against
fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent
Obligation” does not include endorsements in the ordinary course of business. The amount of a
Contingent Obligation is the stated or determined amount of the primary obligation for which the
Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability
for it determined by the Person in good faith; but the amount may not exceed the maximum of the
obligations under the guarantee or other support arrangement.

          “Copyrights” are all copyright rights, applications or registrations and like protections in
each work or authorship or derivative work, whether published or not (whether or not it is a trade
secret) now or later existing, created, acquired or held.

          “Credit Extension” is each Advance, or any other extension of credit by Bank for any
Borrower’s benefit.

          “Eligible Accounts” are Accounts in the ordinary course of a Borrower’s business that meet all
of each Borrower’s representations and warranties in Section 5; but Bank may change
eligibility standards by giving Company prior written notice. Unless Bank agrees otherwise in
writing, Eligible Accounts will not include:

          (a) Accounts that the account debtor has not paid within 90 days of invoice date;

          (b) Accounts for an account debtor, 50% or more of whose Accounts have not been paid within 90
days of invoice date;

          (c) Credit balances over 90 days from invoice date;

          (d) Accounts for an account debtor, including Affiliates, whose total obligations to Borrowers
exceed 25% of all Accounts, for the amounts that exceed that percentage, unless the Bank approves
in writing except for those certain Accounts from SBC Communications Inc., MCI, Inc., Sprint
Corporation, Verizon Communications Inc., AT&T Corp., for which the percentage may be 35%;

          (e) Accounts for which the account debtor does not have its principal place of business in the
United States;

          (f) Accounts for which the account debtor is a federal, state or local government entity or
any department, agency, or instrumentality except for Accounts of the United States if the payee
has assigned its payment rights to Bank and the assignment has been acknowledged under the
Assignment of Claims Act of 1940 (31 U.S.C. 3727);

          (g) Accounts for which any Borrower owes the account debtor, but only up to the amount owed
(sometimes called “contra” accounts, accounts payable, customer deposits or credit accounts);

          (h) Accounts for demonstration or promotional equipment, or in which goods are consigned,
sales guaranteed, sale or return, sale on approval, bill and hold, or other terms if account
debtor’s payment may be conditional;

          (i) Accounts for which the account debtor is a Borrower’s Affiliate, officer, employee, or
agent;

          (j) Accounts in which the account debtor disputes liability or makes any claim and Bank
believes there may be a basis for dispute (but only up to the disputed or claimed amount), or if
the Account Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or goes out of
business;

          (k) Accounts for which Bank reasonably determines collection to be doubtful.

17

 

          “Equipment” has the meaning set forth in the Code and includes all present and future
machinery, equipment, tenant improvements, furniture, fixtures, vehicles, tools, parts and
attachments in which any Borrower has any interest.

          “ERISA” is the Employment Retirement Income Security Act of 1974, and its regulations.

          “Formula Period Maturity Date” is December 31, 2005.

          “GAAP” is generally accepted accounting principles.

          “Indebtedness” is (a) indebtedness for borrowed money or the deferred price of property or
services, such as reimbursement and other obligations for surety bonds and letters of credit, (b)
obligations evidenced by notes, bonds, debentures or similar instruments, (c) capital lease
obligations and (d) Contingent Obligations.

          “Insolvency Proceeding” are proceedings by or against any Person under the United States
Bankruptcy Code, or any other bankruptcy or insolvency law, including assignments for the benefit
of creditors, compositions, extensions generally with its creditors, or proceedings seeking
reorganization, arrangement, or other relief.

          “Intellectual Property” is:

          (a) Copyrights, Trademarks and Patents including amendments, renewals, extensions, and all
licenses or other rights to use and all license fees and royalties from the use;

          (b) Any trade secrets and any intellectual property rights in computer software and computer
software products now or later existing, created, acquired or held;

          (c) All design rights which may be available to any Borrower now or later created, acquired or
held;

          (d) Any claims for damages (past, present or future) for infringement of any of the rights
above, with the right, but not the obligation, to sue and collect damages for use or infringement
of the intellectual property rights above;

          (e) All Proceeds and products of the foregoing, including all insurance, indemnity or warranty
payments.

          “Inventory” has the meaning set forth in the Code and includes is present and future inventory
in which any Borrower has any interest, including merchandise, raw materials, parts, supplies,
packing and shipping materials, work in process and finished products intended for sale or lease or
to be furnished under a contract of service, of every kind and description now or later owned by or
in the custody or possession, actual or constructive, of any Borrower, including inventory
temporarily out of its custody or possession or in transit and including returns on any accounts or
other Proceeds from the sale or disposition of any of the foregoing and any documents of title.

          “Investment” is any beneficial ownership of (including stock, partnership interest or other
securities) any Person, or any loan, advance or capital contribution to any Person.

          “Letter-of-credit right” means a right to payment or performance under a letter of credit,
whether or not the beneficiary has demanded or is at the time entitled to demand payment or
performance.

          “Lien” is a mortgage, lien, deed of trust, charge, pledge, security interest or other
encumbrance.

          “Liquidity Ratio” means the ratio of (i) the sum of (a) Quick Assets, plus (b) Accounts to
(ii) the aggregate amount of outstanding Obligations.

          “Loan Documents” are, collectively, this Agreement, the Revolving Promissory Note,
any note, or notes or guaranties executed by any Borrower, and any other present or future
agreement between any Borrower and/or for the benefit of Bank in connection with this Agreement,
all as amended, extended or restated.

          “Material Adverse Change” means the occurrence of any of the events set forth in Section 8.3.

18

 

          “Non-Formula Period Maturity Date” is October 31, 2005.

          “Obligations” are debts, principal, interest, Bank Expenses and other amounts Borrower owes
Bank now or later, including cash management services, letters of credit and foreign exchange
contracts, if any and including interest accruing after Insolvency Proceedings begin and debts,
liabilities, or obligations of any Borrower assigned to Bank.

          “Patents” are patents, patent applications and like protections, including improvements,
divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same.

          “Payment Date” is the fourteenth (14th) day of each month.

          “Permitted Indebtedness” is:

          (a) During the Non-Formula Period only, each Borrower’s indebtedness to the holders of the
Senior Secured Convertible Debentures;

          (b) Each Borrower’s indebtedness to Bank under this Agreement or any other Loan Document;

          (c) Indebtedness existing on the Closing Date and shown on the Schedule;

          (d) Subordinated Debt;

          (e) Indebtedness to trade creditors incurred in the ordinary course of business;

          (f) Indebtedness secured by Permitted Liens;

          (g) Indebtedness between any Borrowers who are parties to the Loan Documents; and

          (h) Extensions, refinancings, modifications, amendments and restatements of any item above,
provided that the principal amount is not increased or the terms thereof are not modified to impose
more burdensome terms upon Borrowers.

          “Permitted Investments” are:

          (a) Investments shown on the Schedule and existing on the Closing Date;

          (b) Investments in Subsidiaries; and

          (c) (i) marketable direct obligations issued or unconditionally guaranteed by the United
States or its agency or any State maturing within one (1) year from its acquisition, (ii)
commercial paper maturing no more than one (1) year after its creation and having the highest
rating from either Standard & Poor’s Corporation or Moody’s Investors Service, Inc., and (iii)
Bank’s certificates of deposit issued maturing no more than one (1) year after issue.

          “Permitted Liens” are:

          (a) Liens existing on the Closing Date and shown on the Schedule or arising under this
Agreement or other Loan Documents;

          (b) Liens for taxes, fees, assessments or other government charges or levies, either not
delinquent or being contested in good faith and for which such Borrower maintains adequate reserves
on its Books, if they have no priority over any of Bank’s security interests;

          (c) Purchase money Liens (i) on Equipment acquired or held by a Borrower or its Subsidiaries
incurred for financing the acquisition of the Equipment, or (ii) existing on equipment when
acquired, if the Lien is confined to the property and improvements and the Proceeds of the
equipment;

          (d) Licenses or sublicenses granted in the ordinary course of a Borrower’s business and any
interest or title of a licensor or under any license or sublicense, if the licenses and
sublicenses permit granting Bank a security interest;

          (e) Leases or subleases granted in the ordinary course of Borrower’s business, including in
connection with Borrower’s leased premises or leased property;

          (f) Liens in favor of the existing holders of the Senior Secured Convertible Debentures, which
Liens are pari passu with Bank’s Lien; and

          (g) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by
Liens described in (a) through (c), but any extension, renewal or replacement Lien must be
limited to the property encumbered by the existing Lien and the principal amount of the
indebtedness may not increase.

19

 

          “Person” is any individual, sole proprietorship, partnership, limited liability company, joint
venture, company association, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, firm, joint stock company, estate, entity or government
agency.

          “Prime Rate” is Bank’s most recently announced “prime rate,” even if it is not Bank’s lowest
rate.

          “Proceeds” has the meaning described in the Code as in effect from time to time.

          “Quick Assets” is, on any date, the Borrowers’ consolidated, unrestricted cash and cash
equivalents determined according to GAAP.

          “Registered Organization” means an organization organized solely under the law of a single
state or the United States and as to which the state or the United States must maintain a public
record showing the organization to have been organized.

          “Responsible Officer” is each of the Chief Executive Officer, the President, the Chief
Financial Officer and the Controller of any Borrower.

          “Revolving Promissory Note” means that certain Revolving Promissory Note of even date herewith
in the maximum principal amount of Four Million Dollars ($4,000,000) from Borrowers in favor of
Bank, together with all renewals, amendments, modifications and substitutions, therefor.

          “Schedule” is any attached schedule of exceptions.

          “Securities Purchase Agreement” means that certain securities purchase agreement dated March
25, 2002 issued by the Company and certain Subsidiaries to the holders thereunder.

          “Securities Purchase Agreement Documents” means collectively the Securities Purchase Agreement
and any and all other agreements, documents or instruments (together with any and all amendments,
modifications, and supplements thereto, restatements thereof, and substitutes therefor) previously,
now or hereafter executed and delivered by the Borrower, the Seller, or any other Person in
connection with the Securities Purchase Agreement Transaction.

          “Securities Purchase Agreement Transaction” means the purchase agreement transaction of the
Senior Secured Convertible Debentures contemplated by the provisions of the Securities Purchase
Agreement.

          “Senior Secured Convertible Debentures” means those certain senior secured convertible
debentures issued by the Company and certain Subsidiaries pursuant to the Securities Purchase
Agreement.

          “Subordinated Debt” is debt incurred by any Borrower subordinated to Borrowers’ indebtedness
owed to Bank and which is reflected in a written agreement in a manner and form acceptable to Bank
and approved by Bank in writing.

          “Subsidiary” is for any Person, or any other business entity of which more than fifty percent
(50%) of the voting stock or other equity interests is owned or controlled, directly or indirectly,
by the Person or one or more Affiliates of the Person.

          “Supporting Obligation” means a Letter-of-credit right, secondary obligation or obligation of
a secondary obligor or that supports the payment or performance of an account, chattel paper, a
document, a general intangible, an instrument or investment property.

          “Trademarks” are trademark and servicemark rights, registered or not, applications to register
and registrations and like protections, and the entire goodwill of the business of each Borrower
connected with the trademarks.

20

 

[Signatures appear on the following page]

21

 

	 	 	 	 	 	 	 
	 	 	BORROWERS:	 	 
	 
	 	 	 	 	 	 
	WITNESS/ATTEST:	 	VISUAL NETWORKS, INC.	 	 
	 
	 	 	 	 	 	 
	/s/ Sean Hunt

	 	By:
	 	/s/ Lawrence Barker	 	(SEAL)
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Lawrence Barker	 	 
	 

	 	 	 	Title: President	 	 
	 
	 	 	 	 	 	 
	WITNESS/ATTEST:	 	VISUAL NETWORKS INTERNATIONAL OPERATIONS, INC.	 	 
	 
	 	 	 	 	 	 
	/s/ Sean Hunt

	 	By:
	 	/s/ Lawrence Barker	 	(SEAL)
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Lawrence Barker	 	 
	 

	 	 	 	Title: President	 	 
	 
	 	 	 	 	 	 
	WITNESS/ATTEST:	 	VISUAL NETWORKS OPERATIONS, INC.	 	 
	 
	 	 	 	 	 	 
	/s/ Sean Hunt

	 	By:
	 	/s/ Lawrence Barker 	 	(SEAL)
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Lawrence Barker	 	 
	 

	 	 	 	Title: President	 	 
	 
	 	 	 	 	 	 
	WITNESS/ATTEST:	 	AVESTA TECHNOLOGIES, LLC	 	 
	 
	 	 	 	 	 	 
	/s/ Sean Hunt

	 	By:
	 	/s/ Lawrence Barker 	 	(SEAL)
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Lawrence Barker	 	 
	 

	 	 	 	Title: President	 	 
	 
	 	 	 	 	 	 
	WITNESS/ATTEST:	 	NET2NET, LLC	 	 
	 

	 	By:
	 	VISUAL NETWORKS, INC.	 	 
	 
	 	 	 	 	 	 
	/s/ Sean Hunt

	 	By:
	 	/s/ Lawrence Barker	 	(SEAL)
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Lawrence Barker	 	 
	 

	 	 	 	Title: President	 	 
	 
	 	 	 	 	 	 
	 	 	BANK:	 	 
	 
	 	 	 	 	 	 
	 	 	SILICON VALLEY BANK	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	 /s/ Megan Scheffel	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Name: Megan Scheffel	 	 
	 

	 	 	 	Title: Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	Effective as of June 17, 2005	 	 

22

 

EXHIBIT A

          The Collateral consists of all of each Borrower’s right, title and interest in and to the
following:

          All goods and equipment as defined in the Uniform Commercial Code now owned or hereafter
acquired, including, without limitation, all machinery, fixtures, vehicles (including motor
vehicles and trailers), and any interest in any of the foregoing, and all attachments, accessories,
accessions, replacements, substitutions, additions, and improvements to any of the foregoing,
wherever located;

          All Inventory as defined in the Uniform Commercial Code and includes, now owned or hereafter
acquired, including, without limitation, all merchandise, raw materials, parts, supplies, packing
and shipping materials, work in process and finished products including such inventory as is
temporarily out of Borrower’s custody or possession or in transit and including any returns upon
any accounts or other Proceeds, resulting from the sale or disposition of any of the foregoing and
any documents of title representing any of the above;

          All contract rights and general intangibles now owned or hereafter acquired, including,
without limitation, goodwill, trademarks, servicemarks, trade styles, trade names, patents, patent
applications, leases, license agreements, franchise agreements, blueprints, drawings, purchase
orders, customer lists, route lists, infringements, claims, computer programs, computer discs,
computer tapes, literature, reports, catalogs, design rights, income tax refunds, payments of
insurance and rights to payment of any kind;

          All Accounts as defined in the Uniform Commercial Code and includes now existing and hereafter
arising accounts, contract rights, royalties, license rights and all other forms of obligations
owing to any Borrower arising out of the sale or lease of goods, the licensing of technology or the
rendering of services by any Borrower, whether or not earned by performance, and any and all credit
insurance, guaranties, and other security therefor, as well as all merchandise returned to or
reclaimed by Borrower;

          All Letter-Of-Credit Rights (whether or not the letter of credit is evidenced by a writing);

          All documents, cash, deposit accounts, securities, securities entitlements, securities
accounts, investment property, financial assets, letters of credit, certificates of deposit,
instruments and chattel paper now owned or hereafter acquired and any Borrower’s Books relating to
the foregoing;

          All copyright rights, copyright applications, copyright registrations and like protections in
each work of authorship and derivative work thereof, whether published or unpublished, now owned or
hereafter acquired; all trade secret rights, including all rights to unpatented inventions,
know-how, operating manuals, license rights and agreements and confidential information, now owned
or hereafter acquired; all mask work or similar rights available for the protection of
semiconductor chips, now owned or hereafter acquired; all claims for damages by way of any past,
present and future infringement of any of the foregoing; and

          All Supporting Obligations and all of each Borrower’s Books relating to the foregoing and any
and all claims, rights and interests in any of the above and all substitutions for, additions and
accessions to and Proceeds thereof.

23

 

EXHIBIT B

Loan Payment/Advance Request Form

Deadline for same day processing is 3:00 E.S.T.

Fax To: VA (703) 356-7643                                                                 
                                                                 Date:                                           

o Loan Payment:                                            Client Name (Borrower)

From Account #:                                                              To Account #:                                         

                                         (Deposit Account #)                 
                 
X           (Loan Account #)

Principal:      $                      and/or Interest                      $

All Borrower’s representations and warranties in the Loan and Security Agreement are true, correct and complete in all material respects to on the date of the telephone transfer request for and advance, but
those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of the date:

Authorized Signature:                                              
                                  Phone Number:                                           

o  Loan Advance

Complete Outgoing Wire Request section below if all or a portion of the funds from this loan advance are for an outgoing wire.

From Account #:                                                                            To Account #:                                         

                                  (Loan Account #)
                                                            
         (Deposit Account #)

Amount of Advance: $                                         

All Borrower’s representations and warranties in the Loan and Security Agreement are true, correct and complete in all material respects to on the date of the telephone transfer request for and advance, but
those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of the date:

Authorized Signature:                                                              
                                  Phone Number:                                         

Outgoing Wire Request

Complete only if all or
a portion of funds from the loan advance above
are to be wired. 

Deadline for same day processing is 12:00 p.m., E.S.T.

Beneficiary
Name:                                                             
Amount of Wire:                                                             

Beneficiary
Bank:                                                             
Account Number:                                                             

City and
State:                                                                                 

Beneficiary Bank Transit (ABA) #:                                                    
Beneficiary Bank Code (Swift, Sort, Chip, etc.):                     

                 
                 
                                                                                                  (For International Wire Only)

Intermediary Bank:                                                             
 Transit (ABA) #:                                                             

For
Further Credit to:
                                                                                                                        

Special Instruction:

                                                                                                                        

By signing below, I (we) acknowledge and agree that my (our) funds transfer request shall be processed in accordance with and subject to the terms and conditions set forth in the agreements(s) covering funds
transfer service(s), which agreements(s) were previously received and executed by me (us).

Authorized Signature:                                         

           2nd
Signature (If Required)
                                                            

Print
Name/Title:                                                              
Print Name/Title:                                                             

Telephone Number:                                                          Telephone Number:

 

 

EXHIBIT C

BORROWING BASE CERTIFICATE

(For Use during Formula Period)

	 	 	 	 	 	 	 
	 
	Borrowers:

	 	Visual Networks, Inc.,
	 	Bank:
	 	Silicon Valley Bank
	 

	 	Visual Networks International Operations, Inc.,
	 	 	 	3003 Tasman Drive
	 

	 	Visual Networks Operations, Inc.,
	 	 	 	Santa Clara, CA 95054
	 

	 	Avesta Technologies, LLC, and	 	 	 	 
	 

	 	Net2Net, LLC	 	 	 	 
	 

	 	2092 Gaither Road	 	 	 	 
	 

	 	Rockville, Maryland 20850	 	 	 	 
	Commitment Amount: $4,000,000	 	 	 	 
	 
	 

	 	 	 	 	 	 	 	 	 
	ACCOUNTS RECEIVABLE	 	 	 	 	 	 
	1.

	 	Accounts Receivable Book Value as
of                   
	 	 	 	 	 	$                    
	2.

	 	Additions (please explain on reverse)
	 	 	 	 	 	$                    
	3.

	 	TOTAL ACCOUNTS RECEIVABLE
	 	 	 	 	 	$                    
	 
	ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)	 	 	 	 	 	 
	4.

	 	Amounts over 90 days due
	 	$                    
	 	 
	5.

	 	Balance of 50% over 90 day accounts
	 	$                    
	 	 
	6.

	 	Credit balances over 90 days
	 	$                    
	 	 
	7.

	 	Concentration Limits
	 	$                    
	 	 
	8.

	 	Foreign Accounts
	 	$                    
	 	 
	9.

	 	Governmental Accounts
	 	$                    
	 	 
	10.

	 	Contra Accounts
	 	$                    
	 	 
	11.

	 	Promotion or Demo Accounts
	 	$                    
	 	 
	12.

	 	Intercompany/Employee Accounts
	 	$                    
	 	 
	13.

	 	Other (please explain on reverse)
	 	$                    
	 	 
	14.

	 	TOTAL ACCOUNTS RECEIVABLE DEDUCTIONS
	 	 	 	 	 	$                    
	15.

	 	Eligible Accounts (#3 minus #14)
	 	 	 	 	 	$                    
	16.

	 	LOAN VALUE OF ACCOUNTS (80% of #15)
	 	 	 	 	 	$                    
	 
	BALANCES
	 	 	 	 	 	 	 	 
	17.

	 	Maximum Loan Amount
	 	$	4,000,000	 	 	 
	18.

	 	Total Funds Available [Lesser of #17 or #16]
	 	 	 	 	 	$                    
	19.

	 	Present balance owing on Line of Credit
	 	$                    
	 	 
	20.

	 	RESERVE POSITION (#18 minus #19 and #20)
	 	 	 	 	 	$                    

The undersigned represents and warrants that this is true, complete and correct, and that the
information in this Borrowing Base Certificate complies with the representations and warranties in
the Loan and Security Agreement between the undersigned and Silicon Valley Bank.

COMMENTS:

By:                                         

          Authorized Signer

     BANK USE ONLY

     Rec’d By:
                                     

                         Auth. Signer

     Date:                                         

     Verified:                                         

                         Auth. Signer

     Date:                                         

 

 

EXHIBIT D

COMPLIANCE CERTIFICATE

	 	 	 	 	 
	TO:

	 	SILICON VALLEY BANK
	 	 
	 

	 	3003 Tasman Drive	 	 
	 

	 	Santa Clara, California 95054	 	 
	 
	 	 	 	 
	FROM:

	 	VISUAL NETWORKS, INC.,	 	 
	 

	 	VISUAL NETWORKS INTERNATIONAL OPERATIONS, INC.,	 	 
	 

	 	VISUAL NETWORKS OPERATIONS, INC.,	 	 
	 

	 	AVESTA TECHNOLOGIES, LLC, and	 	 
	 

	 	NET2NET, LLC	 	 
	 

	 	2092 Gaither Road	 	 
	 

	 	Rockville, Maryland 20850	 	 

The undersigned authorized officer of Visual Networks, Inc. (“Company”) certifies that
under the terms and conditions of the Loan and Security Agreement among Company, the
Borrowers named therein and Bank (the “Agreement”), (i) Borrowers are in complete
compliance for the period ending                      with all required covenants except as
noted below and (ii) all representations and warranties in the Agreement are true and
correct in all material respects on this date. In addition, the authorized officer of
Company certifies that each Borrower and each Subsidiary (1) has timely filed all required
tax returns and paid, or made adequate provision to pay, all material taxes, except those
being contested in good faith with adequate reserves under GAAP and (ii) no liens have been
levied or claims made against any Borrower or any Subsidiary relating to unpaid employee
payroll or benefits which Borrower have not previously notified in writing to Bank.
Attached are the required documents supporting the certification. The Officer certifies
that these are prepared in accordance with Generally Accepted Accounting Principles (GAAP)
consistently applied from one period to the next except as explained in an accompanying
letter or footnotes. The Officer acknowledges that no borrowings may be requested at any
time or date of determination that any Borrower is not in compliance with any of the terms
of the Agreement, and that compliance is determined not just at the date this certificate
is delivered.

Please indicate compliance status by circling Yes/No under “Complies” column.

	 	 	 	 	 	 	 
	Reporting Covenant	 	Required 	 	Complies
	Monthly financial statements + CC
	 	Monthly within 30 days	 	Yes	 	No
	Annual (Audited)
	 	FYE within 90 days	 	Yes	 	No
	10-K
	 	FYE within 90 days	 	Yes	 	No
	A/R & A/P Agings
	 	Monthly within 30 days	 	Yes	 	No
	A/R Audit
	 	Semi-Annual	 	Yes	 	No
	Borrowing Base Certificate
(for use during the Formula Period only)
	 	Monthly within 30 days	 	Yes	 	No

	 	 	 	 	 	 	 	 	 
	Financial Covenant	 	Required	 	Actual	 	Complies
	For Use During the Formula Period Only:
	 	 	 	 	 	 	 	 
	Minimum Liquidity Ratio
	 	   1.50:1.00	 	_____:1.00	 	Yes	 	No
	 
	 	 	 	 	 	 	 	 
	Maintain on a Monthly Basis
	 	 	 	 	 	 	 	 
	Minimum 90-Day Rolling Revenue
	 	 	 	 	 	 	 	 
	June 30, 2005, July 31, 2005 and August 31, 2005
	 	$10,250,000	 	$————	 	Yes	 	No
	September 30, 2005 and October 31, 2005
	 	$11,000,000	 	$————	 	Yes	 	No
	November 30, 2005 and December 31, 2005
	 	$11,250,000	 	$————	 	Yes	 	No

 

 

Comments Regarding Exceptions: See Attached.

Sincerely,

                                        

Signature

                                        

Title

                                        

Date

BANK USE ONLY

Received by:                                         

                         authorized signer

Date:                                         

Verified:                                         

                    authorized signer

Date:                                         

Compliance Status:     Yes                     No                    

 

 

Schedule to Loan and Security Agreement

The exact correct corporate name of Borrower is (attach a copy of the formation documents, e.g.,
articles, partnership agreement):                                                             

Borrower’s State of formation:                                         

Borrower
has operated under only the following other names (if none, so state):                                                                                                     

All other addresses at which the Borrower does business are as follows (attach additional sheets if
necessary and include all warehouse addresses):

Borrower has deposit accounts and/or investment accounts located only at the following
institutions:

List Acct. Numbers:

Liens existing on the Closing Date and disclosed to and accepted by Bank in writing:

Investments existing on the Closing Date and disclosed to and accepted by Bank in writing:

Subordinated Debt:

Indebtedness on the Closing Date and disclosed to and consented to by Bank in writing:

The following is a list of the Borrower’s copyrights (including copyrights of software) which are
registered with the United States Copyright Office. (Please include name of the copyright and
registration number and attach a copy of the registration):

The following is a list of all software which the Borrower sells, distributes or licenses to
others, which is not registered with the United States Copyright Office. (Please include
versions which are not registered:

The following is a list of all of the Borrower’s patents which are registered with the United
States Patent Office. (Please include name of the patent and registration number and attach a copy
of the registration.):

The following is a list of all of the Borrower’s patents which are pending with the United States
Patent Office. (Please include name of the patent and a copy of the application.):

 

 

The following is a list of all of the Borrower’s registered trademarks. (Please include name of the
trademark and a copy of the registration.):

Borrower is not subject to litigation which would have a material adverse effect on the Borrower’s
financial condition, except the following (attach additional comments, if needed):

Tax ID Number                                                             

Organizational Number, if any:                                         

 

 

Section 5 of the Loan Commitment Letter dated
May 25, 2005 from Silicon Valley Bank (“Silicon”

or “Bank”) to Visual Networks, Inc. (“Borrower” or “Company”)

     5. Success Fee. Bank shall be entitled to receive a Success Fee (the “Success Fee”)
which shall be earned as described herein. The total amount of the Success Fee shall be determined
as follows:

          (A) if, as of October 31, 2005, no [***] (as hereinafter defined) has occurred, the Success
Fee shall be an amount equal to [***] and shall be due and payable in full on the applicable
Maturity Date.

          (B) if a [***] occurs on or before October 31, 2005, the Success Fee shall be equal to [***]
(as hereinafter defined), as determined below.

     A [***] shall be deemed to have occurred if [***].

     The [***] shall mean an amount equal to sum of the following amounts:

     [***]

     The percentage of the Success Fee that becomes earned (the “Earned Percentage”) shall be based
upon the timeframe that Facility A is outstanding but shall not exceed 100% and shall be determined
by taking the sum of the following:

	 	(a)	 	[***] upon closing of Facility A; plus
	 
	 	(b)	 	[***] in the event the Company draws on Facility A on or prior to June 30,
2005, plus;
	 
	 	(c)	 	[***] on June 30, 2005 if Facility A has not been converted to Facility B,
plus; and
	 
	 	(d)	 	commencing with the semi-monthly period beginning on July 1, 2005 and ending
July 15, 2005, [***] on each 15th and last day of each successive month that
Facility A remains in place; provided that, if Facility A remains in place on any date
during a particular semi-monthly period, the Earned Percentage shall be increased by
[***] for the entire semi-monthly period.

     By way of example, should the Loans close on June 15, 2005 and the Company draws under
Facility A on June 20, 2005 and Facility A is converted to Facility B on June 21, 2005 then the
Earned Percentage shall be [***] ([***] at closing plus [***] draw-down prior to June 30, 2005).
Assuming the same facts except Facility A is converted to Facility B on July 1, 2005 then the
Earned Percentage shall be [***] ([***] each at closing, draw prior to June 30, 2005 earned date
and July 15 semi-monthly period). Assuming the same facts as the initial example except Facility A
is converted to Facility B on June 16, 2005 and therefore the draw on June 20, 2005 is now under
Facility B then the Earned Percentage is [***]. Assuming a [***] does not occur by the Maturity
Date and Facility A is never converted into Facility B then the Earned Percentage shall be 100%.

     If a [***] occurs on or before October 31, 2005, the Success Fee shall be equal to the Earned
Percentage times the [***] and is due and payable upon the earlier of (i) a [***] (as defined
above) and (ii) the Maturity Date applicable pursuant to Paragraph 6 herein. The Success Fee shall
cease increasing upon the earlier of the (i) conversion of Facility A into Facility B or (b)
repayment of all obligations outstanding under the Loans in full. In the event that a [***] occurs
on or before October 31, 2005, Silicon shall only be entitled to the Success Fee pursuant to
Paragraph 5(B) above.

     In the event that either a [***] does not occur on or before October 31, 2005, or the Company
does not repay the outstanding balance of the Loans in full by the applicable Maturity Date, the
Success Fee described in paragraph 5(A) above would be immediately due, plus additional fees of
[***] will be due on the first day of the next calendar week and will increase by [***] per week or
any portion of such week, on the first day of each week prior to repayment in full (e.g. [***] week
two, [***] week three).

 

			
	[***]	 	INDICATES MATERIAL THAT HAS BEEN OMITTED AND FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN
REQUESTED. ALL SUCH OMITTED MATERIAL HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
PURSUANT TO RULE 24b-2 UNDER THE SECURITIES AND EXCHANGE ACT OF 1934, AS AMENDED.exv4w8

 

EXHIBIT 4.8.

CERTAIN PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT. THE SYMBOL “[****]” HAS
BEEN INSERTED IN PLACE OF THE PORTIONS SO OMITTED.

INDENTURE

Dated as of August 19, 2005

among

COLLEGIATE FUNDING SERVICES RESOURCES II, LLC

as Issuer

CRC FUNDING, LLC and CAFCO, LLC

as Conduit Lenders

THE FINANCIAL INSTITUTIONS FROM TIME TO TIME

PARTY HERETO

as Committed Lenders

CITICORP NORTH AMERICA, INC.

as Funding Agent

CITICORP NORTH AMERICA, INC.

as Administrative Agent

THE BANK OF NEW YORK

as Indenture Trustee and as Securities Intermediary

COLLEGIATE FUNDING PORTFOLIO ADMINISTRATION, L.L.C.

as Administrator

and

COLLEGIATE FUNDING MASTER SERVICING, L.L.C.

as Master Servicer

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	ARTICLE I ADVANCES
	 	 	2	 
	SECTION 1.01. Commitments to Lend; Limits on Lenders’ Obligations
	 	 	2	 
	SECTION 1.02. Borrowing Procedures
	 	 	3	 
	SECTION 1.03. Grant of Security Interest
	 	 	5	 
	SECTION 1.04. Release of Collateral
	 	 	6	 
	SECTION 1.05. Effect of Release
	 	 	7	 
	SECTION 1.06. Extension of the Facility Termination Date
	 	 	7	 
	 
	 	 	 	 
	ARTICLE II NOTES
	 	 	8	 
	SECTION 2.01. Notes
	 	 	8	 
	SECTION 2.02. Interest on Advances
	 	 	9	 
	SECTION 2.03. Repayments and Prepayments
	 	 	10	 
	SECTION 2.04. General Procedures
	 	 	10	 
	SECTION 2.05.Changes in Program Limit
	 	 	11	 
	SECTION 2.06. Characterization of Notes
	 	 	11	 
	SECTION 2.07. Taxes
	 	 	11	 
	 
	 	 	 	 
	ARTICLE III SETTLEMENTS
	 	 	13	 
	SECTION 3.01. Accounts; Investments by Indenture Trustee
	 	 	13	 
	SECTION 3.02. Collection of Moneys
	 	 	15	 
	SECTION 3.03. Collection Account
	 	 	15	 
	SECTION 3.04. Reserve Account
	 	 	18	 
	SECTION 3.05. Payments and Computations, Etc.; Monthly Advances
	 	 	19	 
	SECTION 3.06. Disbursement Account
	 	 	20	 
	SECTION 3.07. Guarantor Payment Account
	 	 	20	 
	 
	 	 	 	 
	ARTICLE IV FEES AND YIELD PROTECTION
	 	 	21	 
	SECTION 4.01. Fees
	 	 	21	 
	SECTION 4.02. Yield Protection
	 	 	21	 
	SECTION 4.03. Funding Losses
	 	 	23	 
	 
	 	 	 	 
	ARTICLE V CONDITIONS OF BORROWINGS
	 	 	23	 
	SECTION 5.01. Conditions Precedent to Initial Borrowing
	 	 	23	 
	SECTION 5.02. Conditions Precedent to All Borrowings
	 	 	26	 
	SECTION 5.03. Delivery of Roster of Student Loans
	 	 	28	 
	 
	 	 	 	 
	ARTICLE VI REPRESENTATIONS AND WARRANTIES
	 	 	28	 
	SECTION 6.01. Representations and Warranties of Issuer
	 	 	28	 
	SECTION 6.02. Reassignment upon Breach
	 	 	32	 
	SECTION 6.03. Representations and Warranties of Indenture Trustee
	 	 	33	 
	 
	 	 	 	 
	ARTICLE VII GENERAL COVENANTS OF ISSUER AND MASTER SERVICER
	 	 	33	 
	SECTION 7.01. Affirmative Covenants of Issuer
	 	 	33	 

 

 

	 	 	 	 	 
	 	 	Page	 
	 
	SECTION 7.02. Reporting Requirements of Issuer
	 	 	38	 
	SECTION 7.03. Servicing Covenants
	 	 	41	 
	SECTION 7.04. Negative Covenants of Issuer
	 	 	43	 
	 
	 	 	 	 
	ARTICLE VIII EVENTS OF TERMINATION
	 	 	45	 
	SECTION 8.01. Events of Termination
	 	 	45	 
	SECTION 8.02. Remedies
	 	 	47	 
	 
	 	 	 	 
	ARTICLE IX THE ADMINISTRATIVE AGENT; THE FUNDING AGENTS; INDENTURE TRUSTEE
	 	 	49	 
	SECTION 9.01. Authorization and Action
	 	 	49	 
	SECTION 9.02. Administrative Agent’s and Funding Agents’ Reliance, Indemnification, Etc
	 	 	50	 
	SECTION 9.03. Administrative Agent, Funding Agents and Affiliates
	 	 	51	 
	SECTION 9.04. Lender’s Advance Decision
	 	 	51	 
	SECTION 9.05. Delegation of Duties
	 	 	51	 
	SECTION 9.06. Successor Administrative Agent and Funding Agents
	 	 	51	 
	SECTION 9.07. Acceptance of the Trusts
	 	 	52	 
	SECTION 9.08. Fees, Charges and Expenses of Indenture Trustee
	 	 	54	 
	SECTION 9.09. Notice to Lenders if Event of Termination Occurs
	 	 	55	 
	SECTION 9.10. Intervention by Indenture Trustee
	 	 	55	 
	SECTION 9.11. Successors
	 	 	55	 
	SECTION 9.12. Resignation
	 	 	55	 
	SECTION 9.13. Removal
	 	 	55	 
	SECTION 9.14. Appointment of Successor
	 	 	56	 
	SECTION 9.15. Concerning Any Successor
	 	 	56	 
	SECTION 9.16. Appointment of Co-Trustee
	 	 	56	 
	SECTION 9.17. Successor Indenture Trustee as Trustee of Funds
	 	 	57	 
	SECTION 9.18. Indemnification
	 	 	57	 
	SECTION 9.19. Amendments; Waivers
	 	 	57	 
	 
	 	 	 	 
	ARTICLE X ASSIGNMENT OF LENDER’S INTEREST
	 	 	57	 
	SECTION 10.01. Restrictions on Assignments
	 	 	57	 
	SECTION 10.02. Rights of Assignee
	 	 	59	 
	SECTION 10.03. Evidence of Assignment
	 	 	60	 
	 
	 	 	 	 
	ARTICLE XI INDEMNIFICATION
	 	 	60	 
	SECTION 11.01. Indemnities
	 	 	60	 
	 
	 	 	 	 
	ARTICLE XII SERVICING OF PLEDGED STUDENT LOANS AND ADMINISTRATION OF ISSUER
	 	 	63	 
	SECTION 12.01. Duties of Master Servicer
	 	 	63	 
	SECTION 12.02. Collection of Pledged Student Loan Payments
	 	 	64	 
	SECTION 12.03. Realization upon Pledged Student Loans
	 	 	65	 
	SECTION 12.04. No Impairment or Amendment
	 	 	65	 
	SECTION 12.05. Purchase of Pledged Student Loans
	 	 	65	 
	SECTION 12.06. Reporting
	 	 	66	 

 

 

	 	 	 	 	 
	 	 	Page	 
	 
	SECTION 12.07. Annual Statement as to Compliance
	 	 	66	 
	SECTION 12.08. Access to Certain Documentation and Information Regarding Pledged Student Loans; Audits
	 	 	67	 
	SECTION 12.09. Servicer Expenses
	 	 	68	 
	SECTION 12.10. Appointment of Sub-Servicers
	 	 	68	 
	SECTION 12.11. Maintenance of Fidelity Bond and Errors and Omission Policy
	 	 	68	 
	SECTION 12.12. Representations of Master Servicer
	 	 	68	 
	SECTION 12.13. Sub-Servicing Limitations
	 	 	70	 
	SECTION 12.14. Indemnities of Master Servicer
	 	 	71	 
	SECTION 12.15. Collegiate Funding Master Servicing, L.L.C. Not To Resign as Master Servicer
	 	 	71	 
	SECTION 12.16. Servicer Default
	 	 	72	 
	SECTION 12.17. Appointment of Successor
	 	 	72	 
	SECTION 12.18. Master Servicer Fee
	 	 	73	 
	SECTION 12.19. Duties of Administrator
	 	 	73	 
	SECTION 12.20. Representations of Administrator
	 	 	73	 
	SECTION 12.21. Indemnities of Administrator
	 	 	75	 
	SECTION 12.22. Collegiate Funding Portfolio Administration, L.L.C. Not to Resign as Administrator
	 	 	75	 
	SECTION 12.23. Administrator’s Fee
	 	 	75	 
	 
	 	 	 	 
	ARTICLE XIII MISCELLANEOUS
	 	 	76	 
	SECTION 13.01. Amendments, Etc
	 	 	76	 
	SECTION 13.02. Notices, Etc
	 	 	76	 
	SECTION 13.03. No Waiver; Remedies
	 	 	77	 
	SECTION 13.04. Binding Effect; Survival
	 	 	77	 
	SECTION 13.05. Costs, Expenses and Taxes
	 	 	77	 
	SECTION 13.06. No Proceedings
	 	 	77	 
	SECTION 13.07. Captions and Cross References
	 	 	78	 
	SECTION 13.08. Integration
	 	 	78	 
	SECTION 13.09. Governing Law
	 	 	78	 
	SECTION 13.10. Waiver Of Jury Trial; Submission to Jurisdiction
	 	 	78	 
	SECTION 13.11. Execution in Counterparts
	 	 	79	 
	SECTION 13.12. No Recourse Against Other Parties
	 	 	79	 
	SECTION 13.13. Confidentiality
	 	 	79	 
	SECTION 13.14. Limitation of Liability
	 	 	80	 

 

 

 APPENDICES 

	 	 	 	 	 
	APPENDIX A

	 	Definitions
	 	 
	APPENDIX B

	 	Originators and Affiliated Sellers	 	 
	APPENDIX C

	 	Credit and Collection Policy	 	 
	APPENDIX D

	 	Agreed-Upon Procedures with respect to the Issuer, the
Master Servicer and each Affiliated Servicer	 	 

SCHEDULES

	 	 	 	 	 
	SCHEDULE 1

	 	Lender Groups
	 	 
	SCHEDULE 2

	 	Advance Rates	 	 
	SCHEDULE 6.0l(k)

	 	List of Offices of Issuer where Records Are Kept/Changes
in Chief Place of Business/Chief Executive Office	 	 

EXHIBITS

	 	 	 	 	 
	EXHIBIT 1.02

	 	Form of Borrowing Notice	 	 
	EXHIBIT 1.04

	 	Form of Release Certification
	 	 
	EXHIBIT 2.01

	 	Form of Note	 	 
	EXHIBIT 3.01(g)

	 	Perfection Provisions for Eligible Investments	 	 
	EXHIBIT 5.01(q)

	 	Closing List	 	 
	EXHIBIT 5.02(d)

	 	Form of Coverage Condition Certificate	 	 
	EXHIBIT 7.02(c)

	 	Form of Monthly Report	 	 
	EXHIBIT 10.01(a)

	 	Form of Assignment and Acceptance	 	 
	EXHIBIT 13.02

	 	Notice Addresses	 	 
	EXHIBIT A

	 	Form of Account Control Agreement	 	 
	EXHIBIT B

	 	Form of Student Loan Note	 	 

 

 

INDENTURE

Dated as of August 19, 2005

     THIS IS AN INDENTURE (“Indenture”), among COLLEGIATE FUNDING SERVICES RESOURCES II,
LLC, a Delaware limited liability company (“Issuer”), CRC Funding, LLC, CAFCO, LLC and the
other conduit lenders from time to time party hereto (each a “Conduit Lender” and
collectively, the “Conduit Lenders”), the financial institutions from time to time party
hereto (each, a “Committed Lender” and together with the Conduit Lenders, the
“Lenders”), Citicorp North America, Inc. (“CNAI”), as funding agent and the other
funding agents from time to time party hereto (in such capacity, a “Funding Agent” and
collectively, the “Funding Agents” for the Lenders in the Lender Groups described on
Schedule 1 hereto), CNAI, as agent for Lenders (in such capacity, the “Administrative
Agent”), The Bank of New York, as indenture trustee hereunder (in such capacity, the
“Indenture Trustee”), and as securities intermediary (in such capacity, the “Securities
Intermediary”), Collegiate Funding Portfolio Administration, L.L.C., as administrator (in such
capacity, the “Administrator”) and Collegiate Funding Master Servicing, L.L.C., as master
servicer (in such capacity, the “Master Servicer”). Unless otherwise indicated,
capitalized terms used in this Agreement are defined in Appendix A.

BACKGROUND

     1. The Conduit Lenders are special purpose entities engaged in the business of issuing
commercial paper and obtaining funding (directly or indirectly) in the commercial paper market and
using the proceeds from such funding to acquire interests in financial assets from various sellers
from time to time or to make loans to certain entities or to purchase notes of certain entities for
the purpose of financing financial assets of such entities.

     2. The Issuer will purchase from time to time Student Loans from the Affiliated Sellers (as
defined herein).

     3. The Issuer desires to fund the purchase of Student Loans by obtaining Advances from the
Lenders on the terms and conditions set forth herein.

     4. The Conduit Lenders may, from time to time, assign all or a part of such Advances or assign
interests therein or commitments to make such Advances to certain Program Support Providers (as
hereinafter defined) pursuant to the terms of the Program Support Agreements (as hereinafter
defined).

     5. Each of the Funding Agents is willing to act as the agent on behalf of each of its related
Conduit Lenders, Committed Lenders and the Program Support Providers pursuant to this Agreement and
the corresponding Program Support Agreements.

     NOW, THEREFORE, in consideration of the premises and the mutual agreements herein contained,
the parties hereto agree as follows:

 

 

ARTICLE I

ADVANCES

     SECTION 1.01. Commitments to Lend; Limits on Lenders’ Obligations.

     (a) Advances. Upon the terms and subject to the conditions of this Agreement, from
time to time prior to the Facility Termination Date, Issuer may request to the Administrative Agent
and each Funding Agent that each Conduit Lender make loans to Issuer secured by the Collateral
(each, an “Advance”). Each requested Advance shall be allocated among the Lender Groups
based upon each Lender Group’s Pro Rata Share. Each Funding Agent shall allocate, in its sole
discretion, each request for an Advance among the Conduit Lenders in the Lender Group to which such
Funding Agent is party. Each Conduit Lender may, in its sole discretion, make such Advances in an
amount up to the amount specified by the Funding Agent in its Lender Group, and if a Conduit Lender
elects not to make any amount of such Advance, the Committed Lenders in such Conduit Lender’s
Lender Group shall fund the amount of such Advance that is not made by such Conduit Lender, each in
an amount equal to its respective Lender Group Pro Rata Share of such Advance; provided
that no Advance shall be made by a Lender if, after giving effect thereto, (i) the then Total
Outstanding Advances would exceed the Program Limit at such time and (ii) in respect of any Lender
Group, the then Total Outstanding Advances held by all Lenders in such Lender Group would exceed
such Lender Group’s Group Limit at such time. Notwithstanding anything contained in this Agreement
to the contrary, no Committed Lender shall be obligated to provide the Administrative Agent, any
Funding Agent or Issuer with aggregate funds in connection with a Borrowing in an amount that would
exceed such Committed Lender’s unused Commitment then in effect less any amounts advanced by such
Committed Lender pursuant to a Program Support Agreement.

     (b) Use of Proceeds. Notwithstanding anything in this Agreement to the contrary, the
proceeds of each Advance made pursuant to Section 1.01(a) shall be used by Issuer only for
the purchase of Student Loans pursuant to a Purchase and Sale Agreement or to make deposits to the
Collection Account to be applied as permitted pursuant to Section 3.03(b) to the extent
that Collections are insufficient to pay amounts described in clauses first through
fifth of Section 3.03(b) and the proceeds of each Advance made pursuant to
Section 1.01(c) shall be used by Issuer only as provided in Section 1.01(c);
provided, however, in the case of the first Borrowing hereunder, such proceeds (or
a portion thereof) may be used to fund the Reserve Account so that the amount therein at least
equals the Reserve Account Minimum Balance.

     (c) Additional Advances. In addition to Advances pursuant to Section 1.01(a),
absent written notice from the Required Funding Agents that such Advances will not be made, prior
to the occurrence of an Event of Termination and so long as no Event of Termination would occur as
a result of such Advances on each Settlement Date, each Conduit Lender may (in its sole discretion)
and each Committed Lender shall (to the extent any Conduit Lender in such Committed Lender’s Lender
Group elects not to make such Advances) make Advances in an aggregate amount equal to all amounts
described in the first through fifth clauses of Section 3.03(b) that remain
unpaid after the application of funds from Collections and Available Funds

 

 

on deposit in the Collection Account pursuant to Section 3.03(b). On each Settlement
Date after the occurrence and during the continuance of an Event of Termination, absent written
notice from the Required Funding Agents that such Advances shall not be made, each Conduit Lender
may (in its sole discretion) and each Committed Lender shall (to the extent any Conduit Lender in
such Committed Lender’s Lender Group elects not to make such Advances) make Advances in an
aggregate amount equal to all amounts described in the first through third clauses
of Section 3.03(b) which remain unpaid after the application of funds from Collections and
Available Funds on deposit in the Collection Account pursuant to Section 3.03(b). Each
Conduit Lender may make an Advance under this Section 1.01(c) in its sole discretion. If a
Conduit Lender elects not to make such Advance, the Committed Lenders in such Conduit Lender’s
Lender Group shall fund such Advance, each in an amount equal to its respective Lender Group Pro
Rata Share of such Advance; provided, that no Advance shall be made by a Lender pursuant to
this Section 1.01(c) to the extent the Required Funding Agents have provided written notice
to the Administrative Agent that they will not make such Advances; provided,
further, that no Advance shall be made by a Lender if, after giving effect thereto, (i) in
respect of all Lenders, the then Total Outstanding Advances would exceed the Program Limit at such
time or (ii) in respect of any Lender Group, the then aggregate outstanding Advances with respect
to all Lenders in such Lender Group would exceed the Group Limit for such Lender Group at such
time. Advances made pursuant to this Section 1.01(c) shall constitute “Advances” as such
term is used in this Agreement and shall be secured by the Collateral. Notwithstanding anything
contained in this Agreement to the contrary, no Committed Lender shall be obligated to provide any
Funding Agent, the Administrative Agent or Issuer with aggregate funds in connection with a
Borrowing (x) after the Facility Termination Date, (y) in an amount that would exceed the Group
Limit of such Lender’s Lender Group at such time or (z) in an amount that would exceed such
Committed Lender’s unused Commitment then in effect less any amounts advanced by such Committed
Lender pursuant to a Program Support Agreement. The Indenture Trustee shall notify the
Administrative Agent and the Funding Agents in writing two (2) Business Days prior to each
Settlement Date if the amounts on deposit in the Collection Account will be insufficient to pay in
full the amounts described in the first through fifth clauses of Section
3.03(b). Each Funding Agent will promptly notify the Conduit Lenders in such Funding Agent’s
Lender Group or the Committed Lenders in such Funding Agent’s Lender Group, as applicable, of such
Funding Agent’s receipt of any such notice. Each Lender shall instruct its related Funding Agent
as to whether such Lender will fund the proposed Borrowing by telephone or telecopy by no later
than the close of its business on the Business Day following its receipt of any such request.

     SECTION 1.02. Borrowing Procedures.

     (a) Notice of Borrowing. Each Borrowing hereunder (other than a Borrowing pursuant to
Section 1.01(c)) shall be made upon Issuer’s irrevocable written notice, substantially in
the form of Exhibit 1.02 (a “Borrowing Notice”), delivered to the Administrative
Agent, the Funding Agents and the Indenture Trustee in accordance with Section 13.02 (which
notice must be received by the Administrative Agent and each Funding Agent prior to 11:00 a.m. (New
York City time), not less than two (2) Business Days prior to the requested Borrowing Date, which
notice shall specify (A) the amount requested to be borrowed by Issuer (which amount shall be in a
minimum amount of $[****] or in integral $[****] multiples in excess thereof), and (B) the
requested Borrowing Date). Each Funding Agent will promptly notify the Conduit Lenders in such
Funding Agent’s Lender Group or the Committed Lenders in such Funding Agent’s Lender

 

 

Group, as applicable, of such Funding Agent’s receipt of any Borrowing Notice. Issuer shall
request no more than three (3) Borrowings per week; provided, however, that in
order for Issuer to request three Borrowings in any week, Issuer must provide the Administrative
Agent, each Funding Agent and the Indenture Trustee with written notice of the requested amounts
and dates of all three (3) such Borrowings on or before the Friday of the preceding week (or if
such day is not a Business Day, the immediately preceding Business Day). Nothing in the foregoing
sentence shall limit Issuer’s obligation to deliver a Borrowing Notice not less than two (2)
Business Days prior to any requested Borrowing hereunder.

     (b) Funding of Borrowing. On the date of each Borrowing, upon satisfaction of the
applicable conditions set forth in Article V, the Conduit Lenders or the Committed Lenders,
as the case may be, shall make available to the Funding Agent for such Lender’s Lender Group at
such Funding Agent’s Office the principal amount of the applicable Lender Group’s Pro Rata Share of
such Borrowing (which, in the case of a Borrowing to be funded by the Committed Lenders, shall
consist of each Committed Lender remitting its Lender Group Pro Rata Share of the principal amount
of such Borrowing) and after receipt by such Funding Agent of such funds, such Funding Agent shall
make such funds available to Issuer in same day funds by depositing such funds in the Disbursement
Account (or, with respect to Borrowings made pursuant to Section 1.01(c), at the direction
of the Administrative Agent in the Administrative Agent’s sole discretion, such funds may be
applied directly to the unpaid amounts described in clauses first through fifth of
Section 3.03(b); provided, that any such payments for unpaid amounts owed under
Section 3.03(b) shall be paid in the priorities outlined in Section 3.03(b)).
Advances in connection with Borrowings to purchase any Student Loan shall be made in an amount not
to exceed the lesser of (A) the outstanding [****] of such Student Loan at such time, plus
accrued and unpaid interest thereon (to the extent not previously capitalized) multiplied by the
applicable Advance Rate for such Student Loan and (B) such Student Loan’s actual amortized purchase
price if purchased at a discount by Issuer. The obligation of each Committed Lender to remit its
Lender Group Pro Rata Share of any such Borrowing shall be several from that of each other
Committed Lender, and the failure of any Committed Lender to make such amount available to the
Funding Agent in such Committed Lender’s Lender Group shall not relieve any other Committed Lender
of its obligation hereunder.

     (c) If, by 2:00 p.m. (New York time) on the date of any Borrowing (whether or not any Funding
Agent has advanced any Committed Lender’s share of such Borrowing), one or more Committed Lenders
(each, a “Defaulting Committed Lender”, and each Committed Lender other than the Defaulting
Committed Lender being referred to as a “Non-Defaulting Committed Lender”) fails to make
its Lender Group Pro Rata Share of the principal amount of such Borrowing available to the Funding
Agent in such Committed Lender’s Lender Group pursuant to Section 1.02(b) (the aggregate
amount not so made available to the Funding Agents being herein called in either case the
“Borrowing Deficit”), then the Administrative Agent shall, by no later than 2:30 p.m. (New
York time) on such date, instruct each Non-Defaulting Committed Lender to pay, by no later than
3:00 p.m. (New York time) on such date, in immediately available funds, to the account designated
by the Funding Agent in such Non-Defaulting Committed Lender’s Lender Group, an amount equal to the
lesser of (y) such Non-Defaulting Committed Lender’s proportionate share (based upon the relative
Commitments of the Non-Defaulting Committed Lenders) of the Borrowing Deficit and (z) its unused
Commitment. A Defaulting Committed Lender shall forthwith, upon demand, pay to each Funding Agent
for the

 

 

ratable benefit of the Non-Defaulting Committed Lenders in such Funding Agent’s Lender Group
all amounts paid by each Non-Defaulting Committed Lender in such Funding Agent’s Lender Group on
behalf of such Defaulting Committed Lender, together with interest thereon, for each day from the
date a payment was made by any such Non-Defaulting Committed Lender until the date such
Non-Defaulting Committed Lender has been paid such amounts in full, at a rate per annum equal to
the sum of the Alternate Base Rate plus 2.00%. No Defaulting Committed Lender shall be entitled to
a vote or consent with respect to any Transaction Document until it has paid the amounts set forth
in the preceding sentence.

      SECTION 1.03. Grant of Security Interest.

     (a) Issuer hereby grants to the Indenture Trustee, for the benefit of the Secured Parties, a
first priority, continuing lien and security interest in all right, title and interest of Issuer
in, to and under the Collateral, whether now owned or hereafter acquired or existing. Issuer
agrees that the foregoing sentence is intended to grant in favor of the Indenture Trustee, for the
benefit of the Secured Parties, a first priority, continuing lien and security interest in all of
the Issuer’s personal property. Such lien and security interest shall secure all of Issuer’s
obligations (monetary or otherwise) hereunder and under the other Transaction Documents to which
Issuer is a party, including, without limitation, the payments on the Notes, the payment of Fees
and all Indemnified Amounts and the obligation to cause the Master Servicer to turn over all
Collections (or cause all Collections to be remitted) to the Indenture Trustee for deposit into the
Collection Account. The Indenture Trustee hereby accepts the foregoing grant of a security
interest in the Collateral, and agrees to hold such security interest in trust for the benefit of
the Secured Parties pursuant to the terms of this Agreement. The Indenture Trustee agrees that it
has no security interest or other adverse claim to the Accounts or the Eligible Investments therein
that are Collateral other than pursuant to this Agreement or the other Transaction Documents and
that it will not enter into any agreement that would give any person or entity other than the
Indenture Trustee the right to give entitlement orders with respect to such Eligible Investments or
the Accounts, except as expressly permitted with respect to the Residual Payments Account.

     (b) All instruments representing or evidencing the Demand Note Collateral or any Collateral
described in clause (xi) of the definition of “Collateral” shall be delivered to and held by or on
behalf of the Indenture Trustee for the benefit of the Secured Parties pursuant hereto and shall be
in suitable form for transfer by delivery, or shall be accompanied by duly executed instruments of
transfer or assignment in blank, all in form and substance satisfactory to the Administrative
Agent. The Issuer shall not at any time ask for, sue or receive any payment on the Demand Note
Collateral (whether in cash or other assets, pursuant to a security interest, by exercise of any
right of set-off or otherwise) without the prior written consent of the Administrative Agent. The
Issuer agrees that it shall not, at any time, without the prior written consent of each of the
Funding Agents and the Administrative Agent, (i) sell, assign (by operation of law or otherwise) or
otherwise dispose of, or grant any option with respect to, any of the Demand Note Collateral, (ii)
create or permit to exist any adverse claim, judgment or Lien upon or with respect to any of the
Demand Note Collateral, except for the security interest under this Agreement, or (iii) amend,
waive, forgive, terminate or otherwise modify any of the Demand Note Collateral.

 

 

     (c) In connection with the foregoing grant of a security interest in the Collateral, each of
the Issuer and the Indenture Trustee hereby grants to the Administrative Agent (on behalf of the
Secured Parties) the right, at any time after the occurrence and during the continuation of an
Event of Termination, to give or withhold consents, directions, demands, extensions or waivers (in
each case, on behalf of the Issuer and the Indenture Trustee, respectively) under or with respect
to, and the right to take such actions necessary to maintain in full force and effect each of, the
Demand Note, the Servicing Agreements, the Guarantee Agreements, and the Purchase and Sale
Agreements, in each case to the extent applicable to the Pledged Student Loans and other
Collateral.

     (d) Each of the Issuer, the Administrator and the Master Servicer agrees that at any time and
from time to time, at its own expense, it will promptly execute and deliver all further instruments
and documents, and take all further action, that may be necessary or desirable, or that the
Administrative Agent or the Indenture Trustee may reasonably request, in order to enable the
Administrative Agent and the Indenture Trustee to exercise and enforce their respective rights and
remedies hereunder with respect to any Collateral.

     (e) The Issuer agrees that all proceeds of the Demand Note shall be deposited in the
Collection Account and that the Indenture Trustee shall have all rights of the Issuer with respect
to the Demand Note, including without limitation the right to demand payment and exercise remedies
with respect to the collateral pledged under the Demand Note, and that the Issuer shall not take
any action whatsoever with respect to the Demand Note without the prior written consent of the
Administrative Agent; provided, however, each of the Indenture Trustee and the Administrative Agent
agree that they will only demand payment under the Demand Note, direct the Issuer to demand payment
under the Demand Note or direct the distribution of funds from the Residual Payments Account in an
amount not to exceed the amount of Covered Claims owing from the Issuer, the Master Servicer, the
Administrator, each Affiliated Servicer or any other Affiliate of Issuer pursuant to this
Agreement, any Sub-Servicing Agreement or any other Transaction Document.

     SECTION 1.04. Release of Collateral. From time to time, Issuer may request the
Indenture Trustee to release its security interest in any Pledged Student Loans by delivering to
the Indenture Trustee, the Administrative Agent and each Funding Agent a notice substantially in
the form and substance of Exhibit 1.04 attached hereto (a “Notice of Release”) of
its desire that such a release occur. Issuer shall deliver preliminary Notice of Release at least
ten (10) days but no more than thirty (30) days before any day on which Issuer may desire that such
release occur and shall deliver a finalized Notice of Release at least two (2) days but no more
than thirty (30) days before such date. Issuer also shall provide written notice at least two (2)
Business Days prior to the day within the period covered by such Notice of Release on which it
desires that such release occur. Such Notice of Release shall state that Issuer plans to sell or
otherwise dispose of such Pledged Student Loans in connection with a sale, securitization or other
disposition thereof (which Pledged Student Loans will be specifically identified in such Notice of
Release, each a “Released Student Loan”). The release of the Indenture Trustee’s security
interest in any Pledged Student Loans pursuant to this Section 1.04 shall be subject to the
written consent of the Administrative Agent and each Funding Agent and to the following conditions
precedent:

 

 

     (i) before and after giving effect to such release,

     (A) there shall not exist any Event of Termination or Unmatured Event of
Termination;

     (B) the Coverage Condition is met;

     (C) no Lender is materially and adversely affected by the selection made by
Issuer of the Released Student Loans in comparison to purchasers of Pledged Student
Loans from Issuer in connection with any asset securitization or sale by Issuer
occurring during the Revolving Period; and

     (D) each Valuation Agent shall have determined that the remaining Collateral is
consistent with a program rated the equivalent of “A2” by Moody’s as reasonably
determined by each Valuation Agent using the ratings methodology the Valuation Agent
employs for rating the Notes.

     (ii) on or prior to such release, Issuer shall have delivered a Notice of Release to
the Indenture Trustee, the Administrative Agent and each Funding Agent, certifying that the
foregoing conditions described in clause (i) above shall have been satisfied in
connection therewith, together with a pro forma Coverage Condition Certificate demonstrating
compliance of the condition described in clause (B) above.

     (iii) on or prior to such release, Issuer shall have deposited into the Collection
Account cash in an amount equal to the amounts advanced hereunder by the Lenders to fund the
Issuer’s acquisition of such Released Student Loans in accordance with Section
1.02(b), plus accrued and unpaid interest thereon (to the extent not previously
capitalized) plus any unreimbursed Monthly Advance or any unreimbursed Advance made
pursuant to Section 1.01(c) with respect thereto for application as a repayment of
the Total Outstanding Advances on such date in accordance with Section 2.03(c).

     SECTION 1.05. Effect of Release. Upon the satisfaction of the foregoing conditions in
accordance with Section 1.04, all right, title and interest of the Indenture Trustee in, to
and under such Pledged Student Loans shall terminate and revert to Issuer, its successors and
assigns, and the right, title and interest of the Indenture Trustee in such Pledged Student Loans
shall thereupon cease, terminate and become void; and, upon the request of Issuer, its successors
or assigns, and at the cost and expense of Issuer, the Indenture Trustee shall deliver and, if
necessary, execute such UCC-3 financing statements and releases as are necessary or reasonably
requested by Issuer to terminate and remove of record any documents constituting public notice of
the security interest in such Released Student Loans granted hereunder being released.

     SECTION 1.06. Extension of the Facility Termination Date.

     (a) The Issuer, not more than ninety (90) days before the date set forth in clause (a) of the
definition of Facility Termination Date (the “Committed Lender Termination Date”), may
request that the Committed Lenders extend the Committed Lender Termination Date by giving the
Administrative Agent and each Funding Agent notice of such request. The Funding Agent shall
promptly notify the Committed Lenders in such Funding Agent’s Lender Group of such Funding Agent’s
receipt of such request, and each Committed Lender shall, not earlier than thirty (30) or later
than fifteen (15) days before the Committed Lender Termination Date, notify the

 

 

Funding Agent in such Committed Lender’s Lender Group whether or not it intends to consent to
such extension; provided, that if any Committed Lender fails to give such notice it shall
be deemed not to have consented to such extension. Consent to any extension requested by the
Issuer may be given or withheld in the sole and absolute discretion of each Committed Lender. Upon
receipt of consent by a Committed Lender to an extension, the Funding Agent in such Lender’s Lender
Group will promptly notify the Issuer thereof, and effective as of the Committed Lender Termination
Date the Committed Lender Termination Date then in effect shall be extended to the date specified
by the Administrative Agent and the Funding Agents in their sole discretion (but in no event to a
date that is more than three hundred sixty four (364) days after the Committed Lender Termination
Date then in effect, or if such day is not a Business Day, the next preceding Business Day). Each
Funding Agent will promptly give the Issuer notice of any failure of any Committed Lender in such
Lender’s Lender Group to consent to any requested extension of the Committed Lender Termination
Date (each Committed Lender which has declined or has been deemed to have declined to renew its
commitment hereunder, a “Non-Renewing Committed Lender”).

     (b) Any Funding Agent may declare, to the extent of the unused Program Limit, that the
Commitment of any Non-Renewing Committed Lender in such Funding Agent’s Lender Group to make
Advances shall automatically terminate on a date agreed upon by such Funding Agent and the Issuer.
Upon the termination of any Non-Renewing Committed Lender’s Commitment to make Advances pursuant to
the preceding sentence, the Program Limit, to the extent the Non-Renewing Committed Lender’s
Commitment is not assigned as provided in Section 1.06(c), shall be reduced in an amount
equal to the Commitment of such Non-Renewing Committed Lender immediately prior to the termination
of such Commitment.

     (c) Notwithstanding Section 1.06(b), except following the occurrence of an Event of
Termination, the Issuer, with the consent of the Funding Agent in such Non-Renewing Committed
Lender’s Lender Group and the Administrative Agent, may arrange for one or more banks (which may
include any Committed Lender) the short-term unsecured debt of which is rated at least equal to the
then existing ratings of the Promissory Notes issued by the Conduit Lenders, to assume all or part
of the Commitment of a Non-Renewing Committed Lender; provided, that each such assignment
satisfies the requirements of Section 10.01 hereof; provided, further, that
the Issuer shall have arranged for such assumption for all Non-Renewing Committed Lenders on a pro
rata basis. If a bank is willing to assume all or a part of the Non-Renewing Committed Lender’s
Commitment, then such bank, the Non-Renewing Committed Lender, the Issuer and the related Funding
Agent will promptly evidence such assumption and assignment pursuant to Section 10.03.

ARTICLE II

NOTES

     SECTION 2.01. Notes. The Advances shall be evidenced by promissory notes (as from
time to time supplemented, extended, amended or replaced, the “Notes”), substantially in
the form set forth in Exhibit 2.01, with appropriate insertions, dated the Closing Date,
payable to the order of each Funding Agent, for the benefit of the Lenders in such Funding Agent’s
Lender Group, in an amount equal to the Group Limit of such Funding Agent’s Lender Group (or, if

 

 

less, in the aggregate unpaid principal amount of all of the Advances made by such Lender
Group) on the Maturity Date or such other date as is specified herein. Principal of the Advances
shall be paid from time to time as set forth in Sections 2.03 and 3.03. Each
Funding Agent shall record in its records, or at its option on the schedule attached to the Notes,
the date and amount of each Advance made hereunder, the interest rate with respect thereto, each
repayment thereof, and the other information provided for thereon. The aggregate unpaid principal
amount so recorded shall be rebuttable presumptive evidence of the principal amount owing and
unpaid on the Notes. The failure so to record any such information or any error in so recording
any such information shall not, however, limit or otherwise affect the actual obligations of Issuer
hereunder or under the Notes to repay the principal amount of all Advances, together with all
interest accruing thereon, as set forth in this Agreement.

     SECTION 2.02. Interest on Advances.

     (a) Interest Rates. Each Advance shall accrue interest during each Settlement Period
at the following rates, which interest shall be payable as set forth in paragraph (b)
below:

     (i) at all times while the making or maintenance of such Advance (or the applicable
portion thereof) by a Conduit Lender is funded by the issuance of Promissory Notes, the
Promissory Note Rate for such Settlement Period; and

     (ii) at all times while the making or maintenance of such Advance (or the applicable
portion thereof) by a Conduit Lender is funded other than by the issuance of Promissory
Notes or is funded by the Committed Lenders, 1.00% per annum over the Eurodollar Rate, or if
the Eurodollar Rate is not available, the Alternate Base Rate;

provided, however, that to the extent that the Eurodollar Rate is selected to apply
to an Advance but such Advance is made with less than two (2) days prior notice, such Advance shall
accrue interest at the Alternate Base Rate; and provided further that for any day
while an Event of Termination or an Unmatured Event of Termination exists the rate of interest on
each Advance shall be an interest rate equal to 2.00% per annum above the Alternate
Base Rate in effect on such day.

     The interest rate on any Advance bearing interest at the Alternate Base Rate shall change
simultaneously with each change in the Alternate Base Rate.

     (b) Interest Settlement Dates. Interest accrued on each Advance shall be paid on each
of:

     (i) the Maturity Date;

     (ii) each Settlement Date;

     (iii) the date of any prepayment, in whole or in part, of the outstanding principal of
such Advance pursuant to Section 2.03(b) or Section 2.03(c) to the extent of
the amount being prepaid; and

     (iv) the date on which any Advance is accelerated pursuant to Section 8.02.

 

 

     SECTION 2.03. Repayments and Prepayments. Issuer shall repay in full the unpaid
principal amount of each Advance on the earlier to occur of (i) the date such amount is declared to
be accelerated pursuant to Section 8.02 or (ii) the Maturity Date. Prior thereto, Issuer:

     (a) may, from time to time on any Settlement Date with respect to any Advance, make a
prepayment, in whole or in part, of the outstanding principal amount of any such Advance;
provided, however, that

     (i) all such voluntary prepayments shall require at least two (2) Business Days’ (but
no more than five (5) Business Days’) prior written notice to the Administrative Agent and
the Funding Agents;

     (ii) all such voluntary partial prepayments shall be in a minimum amount of $[****] and
in integral multiples of $[****] or in an amount equal to the remaining amount outstanding;

     (iii) all amounts prepaid pursuant to this Section 2.03 shall be allocated
among the Lender Groups based upon the Lender Group’s Pro Rata Shares; and

     (iv) the Funding Agent for any Lender Group may determine the appropriate allocation
among the Lenders in such Funding Agent’s Lender Group of the amounts prepaid pursuant to
this Section 2.03 that are allocated to such Funding Agent’s Lender Group;

     (b) shall, on each date when any reduction in the Program Limit becomes effective, make a
prepayment of the Advances in an amount equal to the excess, if any, of the aggregate outstanding
principal amount of the Advances over the Program Limit as so reduced;

     (c) shall, (i) to the extent (A) there is a Reassignment of any Pledged Student Loans pursuant
to Section 6.02 or (B) the Master Servicer repurchases a Pledged Student Loan pursuant to
Section 12.05, in either case, prepay the principal amount of the Advances in an amount
equal to the principal portion of the Reassignment Amount or the Servicer Repurchase Amount, as
applicable, therefor on such date and (ii) to the extent there is a release of Collateral pursuant
to Section 1.04 or a withdrawal from the Collection Account pursuant to Section
3.04(b), prepay the principal balance of the Advances in the amount set forth in Section
1.04(iii) or Section 3.04(b) as applicable; and

     (d) shall, immediately upon the date on which any Advance is declared to be accelerated
pursuant to Section 8.02, repay the amount of the Total Outstanding Advances.

     Each such prepayment shall be subject to the payment of any amounts required by Section
4.03 resulting from a prepayment or payment of an Advance prior to the Settlement Date with
respect thereto.

     SECTION 2.04. General Procedures. No outstanding principal of an Advance shall be
considered reduced by any allocation, setting aside or distribution of any portion of Collections
unless such Collections shall have been actually delivered to the Administrative Agent for the
purpose of paying such principal. No principal or interest shall be considered paid by any

 

 

distribution of any portion of Collections if at any time such distribution is rescinded or
must otherwise be returned for any reason. No provision of this Agreement shall require the
payment or permit the collection of interest in excess of the maximum permitted by applicable law.

     SECTION 2.05. Changes in Program Limit

     (a) Reduction in Program Limit. The unused portion of the Program Limit may be
decreased by an amount of $[****] or any integral multiple of $[****] in excess thereof upon thirty
(30) days’ prior written notice by Issuer to the Administrative Agent and the Funding Agents;
provided the Program Limit shall in no event be less than $[****]. Each reduction in the
Program Limit shall be applied to each Lender Group based upon the respective Pro Rata Shares of
each Lender Group. Upon any reduction in the Program Limit, the Funding Agent for each Lender
Group shall allocate such reduction in the Program Limit based upon the Lender Group Pro Rata
Shares of the Committed Lenders in such Funding Agent’s Lender Group.

     (b) Increases in Program Limit. From time to time, the Issuer may request that the
Administrative Agent, the Funding Agents and the Lenders consent to increases in the Program Limit
in an amount equal to $[****] or any integral multiple of $[****] in excess thereof by providing a
written request therefor at least thirty (30) days’ prior to the proposed date of such increase to
the Administrative Agent, the Funding Agents and each of the Lenders. None of the Administrative
Agent, any Funding Agent or any of the Lenders shall be obligated in any manner to approve any such
increase and any such increase shall be subject to such terms and conditions as are acceptable to
the Administrative Agent, each Funding Agent and each of the Lenders agreeing to increase their
Program Limits in their sole discretion (including, without limitation, satisfaction of conditions
precedents of the type described in Section 5.01 and Section 5.04 hereof).

     SECTION 2.06. Characterization of Notes. Issuer, the Administrative Agent, each
Funding Agent and each Lender agree to treat the Notes for federal, state and local income and
franchise tax purposes, and for book purposes, as indebtedness only of Issuer.

     SECTION 2.07. Taxes. (a) All payments made by the Issuer under this Agreement shall
be made free and clear of, and without deduction or withholding for or on account of, any present
or future income, stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of net income taxes)
imposed on the Administrative Agent, any Funding Agent or any Lender as a result of a present or
former connection between the Administrative Agent, any Funding Agent or such Lender and the
jurisdiction of the Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from the Administrative
Agent, such Funding Agent or such Lender having executed, delivered or performed its obligations or
received a payment under, or enforced, this Agreement or any other Loan Document) (collectively,
the “Excluded Taxes”). If any such non-excluded taxes, levies, imposts, duties, charges,
fees, deductions or withholdings (“Non-Excluded Taxes”) or Other Taxes are required to be
withheld from any amounts payable to the Administrative Agent, any Funding Agent or any Lender
hereunder, the amounts so payable to the Administrative Agent, such Funding Agent or such Lender
shall be increased to the extent

 

 

necessary to yield to the Administrative Agent, such Funding Agent or such Lender (after
payment of all Non-Excluded Taxes and Other Taxes) interest or any such other amounts payable
hereunder at the rates or in the amounts specified in this Agreement; provided,
however, that the Issuer shall not be required to increase any such amounts payable to any
Lender with respect to any Non-Excluded Taxes that are United States withholding taxes imposed on
amounts payable to such Lender at the time such Lender becomes a party to this Agreement, except to
the extent that such Lender’s assignor (if any) was entitled, at the time of the assignment, to
receive additional amounts from the Issuer with respect to such Non-Excluded Taxes pursuant to this
paragraph.

     (b) In addition, the Issuer shall pay to the relevant Governmental Authority in accordance
with applicable law all taxes, levies, imposts, deductions, charges, assessments or fees of any
kind (including but not limited to any current or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies, but excluding Excluded Taxes) imposed upon the
Administrative Agent, such Funding Agent or such Lender that arises from any payment made hereunder
or from the execution, delivery, or registration of or otherwise similarly with respect to, this
Agreement (“Other Taxes”).

     (c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the Issuer, within thirty
(30) days thereafter the Issuer shall send to the Administrative Agent for its own account or for
the account of the Administrative Agent, the relevant Funding Agent or relevant Lender, as the case
may be, a certified copy of an original official receipt received by the Issuer showing payment
thereof. The Issuer agrees to indemnify the Administrative Agent, each Funding Agent and each
Lender from and against the full amount of the Non-Excluded Taxes and Other Taxes arising out of
this Agreement (whether directly or indirectly) imposed upon or paid by the Administrative Agent,
such Funding Agent or such Lender and any liability (including penalties, interest, and expenses
arising with respect thereto), whether or not such Non-Excluded Taxes or Other Taxes were correctly
or legally asserted by the relevant Governmental Authority.

     (d) Each Lender (or transferee) that is not a “U.S. Person” as defined in section 7701(a)(30)
of the Code (a “Non-U.S. Lender”) shall deliver to the Issuer, the Funding Agent in such
Lender’s Lender Group and the Administrative Agent two copies of either U.S. Internal Revenue
Service form W-8BEN or form W-8ECI, or, in the case of a Non-U.S. Lender claiming exemption from
the withholding of U.S. federal income tax under Section 871(h) or 881(c) of the Code with respect
to payments of “portfolio interest”, both a form W-8BEN and a certificate representing that such
Lender is not (i) a “bank” for purposes of Section 881(c) of the Code, (ii) a ten-percent
shareholder of the Issuer (within the meaning of Section 871(h)(3)(B) of the Code) or (iii) a
controlled foreign corporation related to the Issuer (within the meaning of Section 864(d)(4) of
the Code), or any subsequent versions thereof or successors thereto, in all cases properly
completed and duly executed by such Non-U.S. Lender, claiming complete exemption from, withholding
of U.S. federal income tax on all payments by the Issuer under this Agreement. Such forms shall be
delivered by each Non-U.S. Lender at least (5) five Business Days before the date of the initial
payment to be made pursuant to this Agreement by the Issuer to such Lender. In addition, each
Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form
previously delivered by such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Issuer
at any time it determines that it is no longer in

 

 

a position to provide any previously delivered certificate to the Issuer (or any other form of
certification adopted by the U.S. taxing authorities for such purpose). Notwithstanding any other
provision in this paragraph, a Non-U.S. Lender shall not be required to deliver any subsequent form
pursuant to this paragraph that such Non-U.S. Lender is not legally able to deliver.

     (d) A Lender which is entitled to an exemption from or reduction of non-U.S. withholding tax
under the law of the jurisdiction in which the Issuer is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall deliver to the Issuer
(with a copy to the Administrative Agent and the Funding Agent in such Lender’s Lender Group), at
the time or times prescribed by the applicable law or reasonably requested by the Issuer, such
properly completed and executed documentation prescribed by applicable law as will permit such
payments to be made without withholding or at a reduced rate, provided that such Lender is legally
entitled to complete, execute and deliver such documentation and in such Lender’s judgment such
completion, execution or submission would not materially prejudice the legal position of such
Lender.

     (e) In cases in which an Issuer makes a payment under this Agreement to a U.S. Person with
knowledge that such U.S. Person is acting as an agent for a foreign person, the Issuer will not
treat such payment as being made to a U.S. Person for purposes of Treas. Reg. § 1.1441-1(b)(2)(ii)
(or a successor provision) without the express written consent of such U.S. Person.

     (f) The agreements in this Section shall survive the termination of this Agreement and the
payment of all amounts payable hereunder.

ARTICLE III

SETTLEMENTS

     SECTION 3.01. Accounts; Investments by Indenture Trustee.

     (a) Accounts. On or before the first Borrowing Date, the Indenture Trustee shall
establish, for the benefit of the Lenders to the extent of its interests therein as provided
herein, the Disbursement Account, the Collection Account, the Reserve Account, the Guarantor
Payment Account and the Residual Payments Account, which accounts shall be segregated accounts
maintained at a Qualified Institution selected by the Issuer and approved by the Administrative
Agent and each Funding Agent. Each such Account shall be subject to the sole dominion and control
(as defined in Section 8-106 of the UCC) of the Indenture Trustee and neither the Issuer nor any
Affiliate of the Issuer shall have any withdrawal rights therefrom, except as expressly permitted
under this Agreement and the Residual Payments Account Control Agreement with respect to the
Residual Payments Account. The Eligible Investments and funds in each such Account shall be deemed
“financial assets” as defined in Section 8-102 of the UCC. In furtherance of the foregoing, the
Issuer and the Indenture Trustee agree to enter into the Account Control Agreement with respect to
each such Account as of the date hereof.

 

 

     Subject to the further provisions of this Section 3.01, the Indenture Trustee shall,
upon receipt, deposit into such Accounts all amounts received by it which are required to be
deposited
therein in accordance with the provisions hereof. All such amounts and all investments made
with such amounts, including all income and other gains from such investments, shall be held by the
Indenture Trustee in such Accounts as part of the Collateral as herein provided, subject to
withdrawal by the Indenture Trustee in accordance with, and for the purposes specified in the
provisions of, this Agreement and, with respect to the Residual Payments Account, subject to
withdrawal by CFS or the Issuer in accordance with the Residual Payments Account Control Agreement.

     (b) Administration of Payments. Unless otherwise advised by the Administrative Agent
in writing or required herein, the Indenture Trustee shall assume that any amount remitted to it by
the Master Servicer, any Sub-Servicer or the Issuer is to be deposited into the Collection Account
pursuant to Section 3.03. The Indenture Trustee may establish from time to time such
deadline or deadlines as it shall determine are reasonable or necessary in the administration
hereof after which all amounts received or collected by the Indenture Trustee on any day shall not
be deemed to have been received or collected until the next succeeding Business Day.

     (c) No Set-Off. The Indenture Trustee shall not have any right of set-off against
Collections, Accounts, or any investment therein, whether or not commingled to satisfy any other
obligations, and the Indenture Trustee hereby irrevocably waives any and all such rights.

     (d) Investments. Amounts in the Accounts shall be invested and reinvested by the
Indenture Trustee pursuant to an Issuer Order in one or more Eligible Investments. Subject to the
restrictions on the maturity of investments set forth in Section 3.01(f), each such Issuer
Order may authorize the Indenture Trustee to make the specific Eligible Investments set forth
therein, to make Eligible Investments from time to time consistent with the general instructions
set forth therein, or to make specific Eligible Investments pursuant to instructions received in
writing or by facsimile transmission from the employees or agents of Issuer identified therein, in
each case in such amounts as such Issuer Order shall specify. All income or other gains from the
investment of moneys deposited in the Accounts shall be deposited by the Indenture Trustee in the
Collection Account upon receipt and shall be deemed to constitute a portion of the Available Funds
for the related Settlement Date. Issuer agrees to report as its income for financial reporting and
tax purposes (to the extent reportable) all Investment Earnings on amounts in the Accounts. To the
extent that the issuer of any Eligible Investment grants voting rights to its holders, the Issuer
(or, after the occurrence and during the continuance of an Event of Termination, the Administrative
Agent) shall be responsible for exercising such voting rights.

     (e) Investments in the Absence of an Issuer Order; Notice of Uninvested Cash. In the
event that either (i) Issuer shall have failed to give investment directions to the Indenture
Trustee by 11:00 a.m., New York City time, on any Business Day on which there may be uninvested
cash deposited in the Collection Account, Disbursement Account, the Guarantor Payment Account or
Reserve Account or (ii) an Event of Termination or Unmatured Event of Termination shall have
occurred and be continuing, then the Indenture Trustee shall invest such funds in Eligible
Investments as directed by the Administrative Agent by 1:00 p.m., New York City time, on such
Business Day (to the extent such investments are then available) or, if no such directions are
given by such time, in Eligible Investments described in clause (a) of the definition
thereof. All Eligible Investments made by the Indenture Trustee shall mature no later than the
maturity date therefor permitted by Section 3.01(f).

 

 

     (f) Maturity of Eligible Investments. Unless otherwise specified by each Funding
Agent and the Administrative Agent in writing, Eligible Investments shall mature no later than the
Business Day prior to each Settlement Date in an amount sufficient to pay all interest and fees
hereunder and under the other Transaction Documents to which Issuer is a party due on such
Settlement Date. The Issuer hereby agrees to deposit into the Collection Account an amount equal
to any breakage costs that are deducted from the proceeds of Eligible Investments in the event that
any Eligible Investment is needed to pay amounts due on a Settlement Date and had a maturity date
later than the Business Day prior to such Settlement Date.

     (g) Form of Investment. Any investment of any funds in the Collection Account,
Disbursement Account, the Guarantor Payment Account and Reserve Account shall be made under the
following terms and conditions:

     (i) each such investment shall be made in the name of the Indenture Trustee, for the
benefit of Issuer and the Secured Parties (to the extent of their respective interests
therein), or in the name of a nominee of the Indenture Trustee;

     (ii) any certificate or other instrument evidencing such investment shall be delivered
directly to the Indenture Trustee (and endorsed to the Indenture Trustee in blank), and the
Indenture Trustee shall have sole possession of such instrument, and all income on such
investment;

     (iii) all other requirements set forth on Exhibit 3.01(g) are met; and

     (iv) the Indenture Trustee for the benefit of the Secured Parties shall have a first
priority perfected security interest in such investment, perfected by control to the extent
permitted under Article 9 of the UCC.

     (h) Indenture Trustee Not Liable. The Indenture Trustee shall not in any way be held
liable by reason of any insufficiency in the Accounts resulting from losses on investments made in
accordance with the provisions of this Section 3.01 (but the institution serving as
Indenture Trustee shall at all times remain liable for its own debt obligations, if any,
constituting part of such investments) except for gross negligence or intentional misconduct.

     SECTION 3.02. Collection of Moneys. If at any time Issuer, Administrator and/or the
Master Servicer shall receive any Collections on or in respect of any Pledged Student Loan
(including any Guarantee Payment), it shall hold such Collections for the benefit of the Indenture
Trustee (for the benefit of the Secured Parties), shall segregate such payment from the other
property of Issuer and shall, within two Business Days, deliver such payment in the form received
(endorsed as necessary for transfer) to the Indenture Trustee for deposit in the Collection Account
in accordance with Section 3.03. 

     SECTION 3.03. Collection Account.

     (a) Deposits. Each of Issuer and the Master Servicer shall remit or cause to be
remitted all Collections (other than Collections related to Defaulted Student Loans deposited to
the Reserve Account pursuant to Section 3.04(a)(ii)) received by either of them to the
Collection Account no later than the close of business on the second Business Day after receipt
thereof.

 

 

Issuer and the Master Servicer shall cause each Sub-Servicer to remit all Collections (other
than Collections related to Defaulted Student Loans deposited to the Reserve Account pursuant to
Section 3.04(a)(ii)) received by it to the Collection Account in accordance with the
applicable Sub-Servicing Agreement but, notwithstanding the terms of any Sub-Servicing Agreement,
(i) with respect to each Affiliated Servicer, no later than the close of business on the second
Business Day after such Affiliated Servicer’s receipt of such Collections and (ii) with respect to
Third Party Servicers, no less frequently than three (3) times per month and at least once every
fifteen (15) days. Master Servicer also shall, in its sole discretion, deposit into the Collection
Account the amount of any Monthly Advances determined to be made by Master Servicer pursuant to
Section 3.05(e) no later than the related Settlement Date. In addition, Issuer shall
deposit to the Collection Account no later than the close of business on the date payable pursuant
thereto, the aggregate Reassignment Amounts payable by Issuer pursuant to Section 6.02.
The Indenture Trustee shall also remit to the Collection Account any and all funds in the
Disbursement Account for which no wire transfer, ACH payment or check has been issued within ten
(10) Business Days of receipt of such funds in the Disbursement Account and have not otherwise been
distributed in accordance with Section 1.02(b). The Indenture Trustee shall deposit into
the Collection Account on the date of receipt thereof all Collections received by the Indenture
Trustee from the Master Servicer, Issuer, the Administrator, any Sub-Servicer, any affiliate of
Issuer or otherwise. Pursuant to Section 1.03(d), all proceeds of the Demand Note shall be
deposited in the Collection Account.

     (b) Settlement Date Procedures. Amounts on deposit on any Settlement Date in the
Collection Account representing Collections, Reserve Account Withdrawal Amounts transferred from
the Reserve Account pursuant to Section 3.04(b), Advances made pursuant to Section
1.01(c) and other Available Funds (net of any amounts reimbursable to Master Servicer in
respect of Monthly Advances pursuant to Section 3.05(e), which shall be paid to Master
Servicer) shall be withdrawn from the Collection Account by the Indenture Trustee at the written
direction of the Issuer (or, upon receipt of written notice from the Administrative Agent stating
that the Indenture Trustee may no longer rely on the Issuer’s directions, solely at the written
direction of the Administrative Agent) on such Settlement Date, in the amounts required, and
applied in the following order of priority:

     first, an amount equal to the Master Servicer’s Fees for the Pledged Student Loans
with respect to such Settlement Period plus any Master Servicer’s Fees not paid when due on
any prior Settlement Date shall be set aside in the Collection Account and paid to the Master
Servicer for the benefit of the Master Servicer and the Sub-Servicers, as applicable, on such
Settlement Date in the amount provided in Section 12.18 of this Agreement; provided
that following the occurrence of an Event of Termination, the Indenture Trustee may and at
the request of the Administrative Agent shall pay the portion of the Master Servicer’s Fees
consisting of sub-servicing fees directly to the Sub-Servicers (rather than through the Master
Servicer);

     second, an amount equal to the Indenture Trustee’s Fees with respect to such
Settlement Period, plus any Indenture Trustee’s Fees not paid when due on any prior Settlement Date
and all expenses incurred by the Indenture Trustee (including its reasonable fees of counsel) in
connection with the enforcement of this Agreement shall be set aside in the Collection Account and
paid to the Indenture Trustee on such Settlement Date;

 

 

     third, an amount equal to Administrative Expenses with respect to such Settlement
Period, plus any Administrative Expenses not paid when due on any prior Settlement Date shall be
set aside in the Collection Account and paid to the party to which such amounts are owed or to the
Issuer for payment to such party on such Settlement Date;

     fourth, an amount equal to the interest accrued (or to be accrued) in respect of all
Advances during such Settlement Period, plus any interest on the Advances not paid when due on any
prior Settlement Date and interest thereon shall be set aside in the Collection Account and ratably
paid to each Funding Agent, for the account of the Lenders in such Funding Agent’s Lender Group,
according to the respective principal amounts of the Total Outstanding Advances then held by each
of the Lenders in such Funding Agent’s Lender Group on such Settlement Date;

     fifth, an amount equal to all Funding Agent Fees accrued (or to be accrued) during
such Settlement Period, plus any Funding Agent Fees not paid when due on any prior Settlement Date,
together with interest thereon, shall be set aside in the Collection Account and ratably paid to
each Funding Agent, for the account of Lenders in such Funding Agent’s Lender Group, according to
the respective principal amounts of the Total Outstanding Advances then held by each of the Lenders
in such Funding Agent’s Lender Group or any other intended recipient of such Funding Agent Fees on
such Settlement Date;

     sixth, on each Settlement Date during the Liquidation Period, to each Funding Agent
according to the Pro Rata Share of such Funding Agent’s Lender Group, and applied to the
outstanding principal amount of the Advances; provided, that, the Funding Agent for any
Lender Group may determine the appropriate allocation among the Lenders in such Funding Agent’s
Lender Group of the amounts distributed pursuant to this clause sixth;

     seventh, an amount equal to any other amounts due and owing to the Indenture Trustee,
the Administrative Agent, any Funding Agent, any Affected Party, any Indemnified Party or the
Lenders pursuant to this Agreement shall be set aside in the Collection Account and paid to the
Indenture Trustee, Administrative Agent, such Funding Agent, such Affected Party, such Indemnified
Party or the Lenders, as the case may be, when due in accordance with this Agreement;

     eighth, during the Revolving Period, to the Indenture Trustee for deposit to the
Reserve Account in an amount equal to the amount by which the balance in the Reserve Account is
less than the Reserve Account Minimum Balance;

     ninth, an amount equal to the Administrator’s Fees for the Pledged Student Loans with
respect to such Settlement Period plus any Administrator’s Fees not paid when due on any prior
Settlement Date shall be set aside in the Collection Account and paid to the Administrator; and

     tenth, during the Revolving Period, in an amount, if any, directed by Issuer, ratably
to each Funding Agent, for the account of the Lenders in such Funding Agent’s Lender Group, ratably
according to the respective principal amounts of the Total Outstanding Advances then held by each
of the Lenders in such Funding Agent’s Lender Group and applied to the outstanding principal amount
of the Advances.

 

 

     (c) Use of Funds. The Indenture Trustee may withdraw funds from the Collection
Account for the purchase of Eligible Student Loans by the Issuer pursuant to any Purchase and Sale
Agreement on and after any Settlement Date only to the extent there are Available Funds remaining
in the Collection Account after application of clauses first through ninth of
Section 3.03(b) on such Settlement Date; provided that no Purchase
Termination Event shall have occurred with respect to the Affiliated Seller or with respect to the
Originator of such Eligible Student Loans. Any Student Loans purchased or originated by Issuer
with funds from the Collection Account shall automatically become Pledged Student Loans.

     (d) Releases of Collateral from Collection Account. On the date of any release of
Collateral pursuant to Section 1.04 hereof, at Issuer’s request, the Indenture Trustee may
withdraw funds from the Collection Account and may release its security interest on Pledged Student
Loans and Related Security purchased with funds from the Collection Account under Section
3.03(c) so long as the Asset Coverage Ratio after giving effect to such release is at least
equal to the greater of (i) a percentage equal to the Asset Coverage Ratio as listed on the
Coverage Condition Certificate most recently received by the Administrative Agent and the Funding
Agents and (ii) a percentage equal to the sum of (1) [****]% plus (2) an amount equal to
(A) a percentage equal to the average of the Excess Spread for each month since the later to have
occurred of (x) the Closing Date or (y) the date of the last Take-Out Securitization multiplied
by (B) the number of days that have elapsed since the later to have occurred of (x) the Closing
Date or (y) the date of the last Take-Out Securitization divided by (C) 365.

     (e) Final Payout Date. On the Final Payout Date, any funds remaining in the
Collection Account after giving effect to the provisions of Section 3.03 shall be paid to
the Issuer.

     SECTION 3.04. Reserve Account.

     (a) Establishment of Reserve Account. On or prior to the initial Borrowing Date,
Issuer shall deposit into the Reserve Account an amount equal to the Reserve Account Minimum
Balance. Thereafter, Issuer shall deposit to the Reserve Account (i) all amounts required to be
deposited therein pursuant to clause eighth of Section 3.03(b), and (ii) all
Collections received with respect to Pledged Student Loans that constitute Student Loans that have
become Defaulted Student Loans (unless the Issuer or the Master Servicer on its behalf has made a
Monthly Advance with respect to such Pledged Student Loans).

     (b) Withdrawals for Defaulted Student Loans. On the Business Day following the day on
which a Pledged Student Loan has become a Defaulted Student Loan, as set forth in a notice from the
Master Servicer, or on the day of receipt of such notice if received after a Pledged Student Loan
that constitutes a Student Loan has become a Defaulted Student Loan, unless the Issuer or the
Master Servicer on its behalf has made a Monthly Advance with respect to such Pledged Student Loan,
the Indenture Trustee shall transfer from the Reserve Account to the Collection Account an amount
equal to the [****] of such Defaulted Student Loan and all accrued and unpaid interest thereon (to
the extent not previously capitalized) (such amount, the “Reserve Account Withdrawal
Amount”) and shall deposit such Reserve Account Withdrawal Amount in the Collection Account for
application pursuant to the provisions of Section 3.03(b).

 

 

     (c) Withdrawals from Reserve Account. On each Settlement Date, the Indenture Trustee
shall withdraw from the Reserve Account the amounts on deposit therein and treat such amounts as
Collections and apply them as set forth in Section 3.03(b) to the extent such withdrawal is
necessary to pay the amounts set forth in Section 3.03(b).

     (d) Distribution on Final Payout Date. On the Final Payout Date, amounts remaining on
deposit in the Reserve Account shall be deposited into the Collection Account and distributed
pursuant to the provisions of Section 3.03.

     SECTION 3.05. Payments and Computations, Etc.; Monthly Advances.

     (a) Payments. All amounts to be paid or deposited by the Indenture Trustee or Issuer
to the Administrative Agent, Funding Agents or Lenders hereunder shall be paid or deposited in
accordance with the terms hereof no later than 11:00 a.m. (New York City time) on the day when due
in lawful money of the United States of America in same day funds, to the applicable Funding
Agent’s Account.

     (b) Late Payments. Issuer shall, to the extent permitted by law and subject to
Section 2.04, pay to Lenders interest on all amounts not paid or deposited by Issuer when
due hereunder at 2.00% per annum above the interest rate otherwise applicable to
such amount pursuant to this Agreement or, if no interest rate is otherwise applicable to such
amount pursuant to this Agreement, at 2.00% per annum above the Alternate Base
Rate, payable on demand.

     (c) Method of Computation. Unless otherwise provided for in the applicable fee
letter, all computations of interest, any fees payable under Section 4.01 and any other
fees payable by Issuer to Lenders, the Funding Agents or the Administrative Agent in connection
with Borrowings hereunder shall be calculated by the Administrative Agent on the basis of a year of
360 days (or in the case of interest calculated by reference to the Alternate Base Rate, 365 or 366
days, as applicable), for actual days elapsed.

     (d) Indenture Trustee’s Reliance. In making the deposits, distributions and
calculations required to be made by it hereunder, the Indenture Trustee shall be entitled to
conclusively rely, in good faith, on information supplied to the Indenture Trustee by the
Administrative Agent and the Funding Agents and, prior to the written notice by the Administrative
Agent to the contrary, the Issuer. The Issuer (or, if the Administrative Agent has notified the
Indenture Trustee not to follow the Issuer’s instructions, the Administrative Agent) agrees to
provide to the Indenture Trustee written instructions with respect to such distributions by 3:00
p.m. (New York City time) at least one (1) Business Day prior to each Settlement Date. If the
Indenture Trustee has not received such instructions by such time, the Indenture Trustee shall
immediately notify the Administrative Agent and the Funding Agents. The Indenture Trustee shall
only make distributions hereunder pursuant to the terms hereof or, if the express terms do not
conflict therewith, upon the written instructions of the Administrative Agent and the Funding
Agents, as applicable. The Indenture Trustee shall be fully protected in making disbursements
hereunder in accordance with the written instructions of the Administrative Agent, the Funding
Agents or the Issuer delivered in accordance with this Agreement.

 

 

     (e) Monthly Advances. If (i) Issuer (or a Servicer on its behalf) intends to apply
for or has applied for a Guarantee Payment from a Guarantor and Issuer or the Master Servicer, as
the case may be, has not received the related payment prior to the end of the Settlement Period
immediately preceding the current Settlement Date, or (ii) the Coverage Condition is not satisfied
because [****], then Master Servicer may, no later than the related Settlement Date, in its sole
discretion, deposit into the Collection Account an amount up to the amount of such payments applied
but not received or the amount necessary to satisfy such Coverage Condition, as applicable (such
deposits by Master Servicer are referred to herein as “Monthly Advances”). Master Servicer shall
have no obligation, legal or otherwise, to make any Monthly Advance, and the making of or decision
to make a particular Monthly Advance shall not create any obligation on Master Servicer, legal or
otherwise, to make any future Monthly Advances. If after making a Monthly Advance described in
clause (i) above, Issuer or the Master Servicer on its behalf, receives the Guarantee Payment for
which such Monthly Advance was made, then notwithstanding the order set forth in Section 3.03(b)
hereof, Master Servicer shall be reimbursed immediately from such Guarantee Payment, on deposit in
the Collection Account up to the amount of the related Monthly Advance. If after making a Monthly
Advance described in clause (ii) above, [****] and the Coverage Condition is satisfied within
thirty (30) days, then the Master Servicer shall be reimbursed for such Monthly Advance immediately
from the Collection Account.

     SECTION 3.06. Disbursement Account.

     (a) Establishment of Disbursement Account. On the initial Borrowing Date and on each
Borrowing Date thereafter, funds from the Lenders’ Advances shall be deposited into the
Disbursement Account by the Funding Agents in accordance with Section 1.02(b).

     (b) Withdrawals from Disbursement Account. The Master Servicer (or, if the
Administrative Agent has notified the Indenture Trustee not to follow the Master Servicer’s
directions, the Administrative Agent) shall direct the Indenture Trustee as to the disbursement of
all funds on deposit in the Disbursement Account; provided, that any funds disbursed from
the Disbursement Account shall be disbursed directly to the Person entitled to such funds (which in
the case of the acquisition of Pledged Student Loans, will be the seller or other transferor
thereof) or, to the extent the Issuer has previously paid such amounts and is seeking reimbursement
therefor, to the Issuer upon the Issuer furnishing the Indenture Trustee with satisfactory evidence
of such payment. The withdrawal of funds from the Disbursement Account shall be subject to each of
the conditions precedent set forth in Section 5.02 of this Agreement (unless expressly
waived by the Administrative Agent and each Funding Agent in writing). All funds not disbursed
from the Disbursement Account within ten Business Days after they are deposited into the
Disbursement Account shall be remitted by the Indenture Trustee to the Collection Account.

     (c) Distribution on Final Payout Date. On the Final Payout Date, amounts remaining on
deposit in the Disbursement Account shall be remitted to the Collection Account for distribution in
accordance with the provisions of Section 3.03(b).

 

 

     SECTION 3.07. Guarantor Payment Account.

     (a) Establishment of Guarantor Payment Account. On each Settlement Date, Issuer shall
deposit into the Guarantor Payment Account an amount equal to all amounts which will become due and
payable as of such Settlement Date.

     (b) Withdrawals from Guarantor Payment Account. From time to time, upon the written
request of the Issuer or the Administrative Agent specifying amounts are owing to such Guarantor
with respect to a Guarantee Agreement, the Indenture Trustee shall withdraw from the Guarantor
Payment Account such amounts and remit them directly to the applicable Guarantor. In the event
that insufficient funds are available in the Guarantor Payment Account, the Issuer shall promptly
make a deposit into the Guarantor Payment Account in the amount of the deficiency in the Guarantor
Payment Account. If the Issuer fails to make such a deposit, (i) the Administrative Agent may pay
the applicable amount to such Guarantor on behalf of the Lenders and (ii) any failure by the Issuer
to make such payment (or to reimburse the Administrative Agent, as applicable) that shall continue
unremedied for three (3) Business Days shall constitute an Event of Termination pursuant to
Section 8.01(a)(i) hereof.

     (c) Distribution on Final Payout Date. On the Final Payout Date, amounts remaining on
deposit in the Guarantor Payment Account shall be released to the Issuer.

ARTICLE IV

FEES AND YIELD PROTECTION

     SECTION 4.01. Fees. Issuer shall pay to the Administrative Agent, for its own
account, certain fees in the amounts and on the date set forth in the letter agreement between
Issuer and the Administrative Agent dated August 19, 2005 (as amended, restated, supplemented or
otherwise modified from time to time, the “Structuring Fee Letter”). Issuer shall also pay
to each Funding Agent or its designated representative, for its own account and for the Lenders in
such Funding Agent’s Lender Group certain fees in the amounts and on the dates set forth in the
applicable letter agreements between the Issuer and the Funding Agents (as amended, restated,
supplemented or otherwise modified from time to time, the “Funding Agent Fee Letters”).
Issuer shall also pay to the Indenture Trustee for the account of the Indenture Trustee the
Indenture Trustee’s Fees on the date set forth in the letter agreement (the “Indenture Trustee
Fee Letter”) between Issuer and the Indenture Trustee dated June 17, 2005.

     SECTION 4.02. Yield Protection.

     (a) If any Regulatory Change (including a change to Regulation D) occurring after the date
hereof:

     (A) shall subject an Affected Party to any Non-Excluded Tax or any obligation or right
to make Advances or to provide funding therefor;

     (B) shall impose, modify or deem applicable any reserve (including, without limitation,
any reserve imposed by the Federal Reserve Board, but excluding any reserve included in the
determination of interest on the Advances), special deposit or similar requirement against
assets of any Affected Party, deposits or obligations with or for the account of any
Affected Party or with or for the account of any affiliate (or entity deemed
by the Federal Reserve Board to be an affiliate) of any Affected Party, or credit
extended by any Affected Party;

 

 

     (C) shall change the amount of capital maintained or required or requested or directed
to be maintained by any Affected Party;

     (D) shall impose any other condition affecting any Advance owned or funded in whole or
in part by any Affected Party, or its obligations or rights, if any, to make Advances or to
provide funding therefor;

     (E) shall change the rate for, or the manner in which the Federal Deposit Insurance
Corporation (or a successor thereto) assesses, deposit insurance premiums or similar
charges; or

     (F) shall require the consolidation of all or any portion of the assets and liabilities
of such Affected Party’s Affiliates, sponsors, administrative agents or any other Person.

and the result of any of the foregoing is or would be

     (x) to increase the cost to or to impose a cost on an Affected Party funding or making
or maintaining any Advance, or any purchases, reinvestments, or loans or other extensions of
credit under any Program Support Agreement or any commitment of such Affected Party with
respect to any of the foregoing;

     (y) to reduce the amount of any sum received or receivable by an Affected Party under
this Agreement or any other Program Support Agreement, or under any Program Support
Agreement with respect thereto; or

     (z) in the sole determination of such Affected Party, to reduce the rate of return on
the capital of an Affected Party as a consequence of its obligations hereunder or under any
other Program Support Agreement or arising in connection herewith to a level below that
which such Affected Party could otherwise have achieved;

then within thirty (30) days after demand by such Affected Party, Issuer shall pay directly to such
Affected Party such additional amount or amounts as will compensate such Affected Party for such
additional or increased cost or such reduction including, without limitation, all interest and
penalties thereon or with respect thereto, and all out of pocket costs and expenses (including the
reasonable fees and expenses of counsel in defending against the same).

     (b) Each Affected Party will promptly notify Issuer, the Administrative Agent and the Funding
Agent in such Affected Party’s Lender Group of any event of which it has actual knowledge which
will entitle such Affected Party to compensation pursuant to this Section 4.02;
provided, however, no failure to give or delay in giving such notification shall
adversely affect the rights of any Affected Party to such compensation.

     (c) In determining any amount provided for or referred to in this Section 4.02, an
Affected Party may use any reasonable averaging and attribution methods that it (in its sole

 

 

discretion) shall deem applicable and which it applies on a consistent basis. Any Affected
Party when making a claim under this Section 4.02 shall submit to Issuer a statement as to
such increased cost or reduced return, which statement shall, in the absence of manifest error, be
conclusive and binding upon Issuer.

     SECTION 4.03. Funding Losses. In the event that any Program Support Provider or any
Lender shall incur any loss or expense (including, without limitation, any loss or expense incurred
by reason of the liquidation or reemployment of deposits or other funds acquired by such Program
Support Provider or Lender to make any purchase or maintain any purchase) as a result of (i) any
settlement with respect to any Advance being made on any day other than the applicable Settlement
Date with respect thereto, or (ii) any Borrowing not being made in accordance with a request
therefor under Section 1.02, then, within thirty (30) days of written notice from the
Funding Agent in such Lender’s or Program Support Provider’s Lender Group to Issuer, Issuer shall
pay to the Funding Agent in such Lender’s or Program Support Provider’s Lender Group for the
account of such Program Support Provider or the Lenders, the amount of such loss or expense
(including, without duplication, any related Termination Fee). Such written notice shall, in the
absence of manifest error, be conclusive and binding upon Issuer. In addition, in the event that
the Issuer shall make a repayment or prepayment of the principal amount of any Advance that is
funded or maintained by Promissory Notes on any day other than the applicable Settlement Date with
respect to such Advance without giving the notice required by Section 2.03(a)(i), the
Issuer shall pay to each Funding Agent for the account of the Lenders in each such Funding Agent’s
Lender Group on such Settlement Date, the Termination Fee with respect to such Advance.

ARTICLE V

CONDITIONS OF BORROWINGS

     SECTION 5.01. Conditions Precedent to Initial Borrowing. The initial Borrowing
hereunder is subject to the condition precedent that the Administrative Agent (unless otherwise
indicated) shall have received, on or before the date of such Borrowing the following, each (unless
otherwise indicated) dated on or about the Closing Date and in form and substance satisfactory to
the Administrative Agent and the Funding Agents:

     (a) A copy of the resolutions of the Board of Managers of Issuer approving this Agreement and
the other Transaction Documents to which Issuer is a party to be delivered by it hereunder and the
transactions contemplated hereby, together with a copy of the Limited Liability Company Agreement
of Issuer, each certified by its secretary or assistant secretary;

     (b) A good standing certificate for Issuer issued by the State of Delaware and a certificate
of qualification to do business in the State of Virginia issued by the Secretary of State of each
such State, as of a recent date acceptable to the Administrative Agent and the Lenders;

     (c) A certificate of the secretary or assistant secretary of Issuer certifying the names and
true signatures of the officers authorized on its behalf to sign the Transaction Documents to be
delivered by it (on which certificate the Administrative Agent and Lenders may conclusively
rely until such time as the Administrative Agent and Lenders shall receive from Issuer a
revised certificate meeting the requirements of this clause):

 

 

     (d) The Certificate of Formation of Issuer, duly certified by the Secretary of State of
Delaware and by the secretary or assistant secretary of the Issuer, as of a recent date acceptable
to the Administrative Agent and the Lenders, together with a copy of the operating agreement of the
Issuer, duly certified by the secretary or assistant secretary of the Issuer;

     (e) A copy of the resolutions of the Board of Managers of Master Servicer, each Affiliated
Servicer, each Affiliated Seller, CFS and the Administrator approving this Agreement, the other
Transaction Documents to which such Person, as applicable, is a party to be delivered by it
hereunder and the transactions contemplated hereby, certified by its secretary or assistant
secretary;

     (f) A good standing certificate for each of Master Servicer, CFS and the Administrator issued
by the State of Virginia and a good standing certificate for each of CFO and CFS-SunTech Servicing
LLC issued by the State of Delaware, in each case, dated as of a recent date and acceptable to the
Administrative Agent and the Lenders;

     (g) A certificate of the secretary or assistant secretary of CFO, CFS-SunTech Servicing LLC,
CFS and the Administrator certifying the names and true signatures of the officers authorized on
its behalf to sign the Transaction Documents to be delivered by it (on which certificate the
Administrative Agent and Lenders may conclusively rely until such time as the Administrative Agent
and Lenders shall receive from Issuer a revised certificate meeting the requirements of this
clause);

     (h) The Certificate of Formation of Master Servicer, CFS and the Administrator duly certified
by the Secretary of State of Virginia and by the secretary or assistant secretary of the Master
Servicer, CFS or the Administrator, as applicable, and the Certificate of Formation of CFO and
CFS-SunTech Servicing LLC duly certified by the Secretary of State of Delaware and by the secretary
or assistant secretary of CFO or CFS-SunTech Servicing LLC, as applicable, in each case, dated as
of a recent date acceptable to the Administrative Agent and the Lenders, together with a copy of
the operating agreement of each such Person, duly certified by the secretary or assistant secretary
of such Person, as applicable;

     (i) A certificate of the secretary or assistant secretary of the Indenture Trustee certifying
(A) a copy of a good standing certificate of the Indenture Trustee certified as of a recent date by
the Banking Department of the State of New York and (B) a copy of or excerpt of the bylaws of the
Indenture Trustee including the names and true signatures of the officers authorized on its behalf
to sign the Transaction Documents to be delivered by it (on which certificate the Administrative
Agent, the Funding Agents and Lenders may conclusively rely until such time as the Administrative
Agent shall receive from Issuer a revised certificate meeting the requirements of this clause);

     (j) A certificate of an officer of the Issuer certifying that each of the Guarantee Agreements
that have been provided to the Administrative Agent are true and correct copies thereof and remain
in full force and effect;

 

 

     (k) (i) Financing statements on Form UCC-1 (A) naming Issuer as the debtor and the Indenture
Trustee, for the benefit of the Secured Parties, as the secured party, (B) naming each Affiliated
Seller as debtor, Issuer as secured party and the Indenture Trustee, as assignee secured party and
(C) other similar instruments or documents, in proper form for filing in the offices in which
filings are necessary or, in the opinion of the Administrative Agent, any Funding Agent or any
Lender, desirable under the UCC or any comparable law of all appropriate jurisdictions to perfect
the Indenture Trustee’s security interest in the Collateral, for the benefit of the Secured Parties
and (ii) if applicable, continuation statements with respect to the financing statements described
in clause (i);

     (l) A search report as of a recent date acceptable to the Administrative Agent, the Funding
Agents and the Lenders provided in writing to the Administrative Agent by Issuer, in a form
acceptable to the Administrative Agent and the Lenders, listing all effective financing statements
that name Issuer or any Affiliated Seller as debtor and that are filed in the jurisdictions in
which filings were made pursuant to clause (k) above and in such other jurisdictions that
Administrative Agent, any Funding Agent or any Lender shall reasonably request, together with
copies of such financing statements (none of which shall cover any Collateral or if so covered, the
Administrative Agent shall have received duly executed termination statements with respect
thereto);

     (m) Favorable opinions of counsel to (i) the Issuer, the Master Servicer, Affiliated Seller
and each Affiliated Servicer and, if requested by the Administrative Agent or any Lender, each of
the other parties to each Purchase and Sale Agreement and each Sub-Servicing Agreement in each case
in form and substance reasonably satisfactory to the Administrative Agent, the Funding Agents and
the Lenders, including without limitation security interest opinions, a true sale opinion with
respect to transfers under each Purchase and Sale Agreement, and a non-substantive consolidation
opinion with respect to (A) each Affiliated Seller and each Affiliated Servicer, on the one hand,
and (B) the Issuer, on the other hand, and (ii) the Indenture Trustee in form and substance
acceptable to the Administrative Agent;

     (n) Such powers of attorney as the Administrative Agent or any Funding Agent shall reasonably
request to enable the Administrative Agent to collect all amounts due under any and all Collateral;

     (o) All fees and expenses then due and owing hereunder shall have been paid in full;

     (p) A Note with respect to each Lender Group, duly executed by Issuer;

     (q) Copies of each Guarantee Agreement, not previously received by the Administrative Agent,
duly executed by the related Guarantor and the Issuer and certified by Issuer as being a true and
correct copy thereof and, with respect to the NHIC Guarantee Agreement, evidence reasonably
satisfactory to the Administrative Agent that NHIC has received all authorizations, consents,
approvals, licenses, exemptions of or filings or registrations with all governmental commissions,
regulatory bodies, boards, bureaus, agencies and instrumentalities of the Commonwealth of Virginia
necessary to allow it to conduct business as an insurance company therein and to issue the NHIC
Guarantee Agreement;

 

 

     (r) Copies of each Sub-Servicing Agreement between the Master Servicer and any applicable
Sub-Servicer (including all amendments thereto), not previously received by the Administrative
Agent, duly executed by the parties thereto and certified by Issuer as being a true and correct
copy thereof;

     (s) Evidence that the Accounts have been established and that on or prior to the initial
Borrowing, the amount on deposit in the Reserve Account is at least equal to the Reserve Account
Minimum Balance;

     (t) A Pro-Forma Coverage Condition Certificate, executed by an authorized officer of the
Issuer, showing that (after giving effect to the initial Borrowing) the Coverage Condition is met;

     (u) The executed original of the Demand Note (delivered by the Issuer in pledge to the
Indenture Trustee for the benefit of the Secured Parties) and the Residual Payments Account Control
Agreement and evidence that the Residual Payments Account has been established; and

     (v) Each other document, instrument, agreement and certificate identified on the Closing List
attached as Exhibit 5.01(q).

By accepting the proceeds of the initial Borrowing after the Closing Date, Issuer shall be deemed
to have represented and warranted that all of the conditions precedent listed in this Section
5.01 have been met.

     SECTION 5.02. Conditions Precedent to All Borrowings. Each Borrowing (including the
initial Borrowing) shall be subject to the further conditions precedent that on the date of such
Borrowing the following statements shall be true and the Issuer (by accepting the proceeds of such
Borrowing) shall be deemed to have certified that all such conditions precedent are satisfied on
the date of each such Borrowing:

     (a) the representations and warranties contained in Section 6.01 are correct in all
material respects on and as of such day as though made on and as of such day and shall be deemed to
have been made (and to be correct in all material respects) on such day;

     (b) no Material Adverse Change in the condition of Issuer, any Affiliated Seller, CFS, the
Administrator, any Affiliated Servicer or the Master Servicer or in the collectibility of the
Pledged Student Loans taken as a whole has occurred and is continuing;

     (c) no event has occurred and is continuing, or would result from such Borrowing that
constitutes an Event of Termination or Unmatured Event of Termination;

     (d) if such Borrowing is the first Borrowing of any calendar week, the Administrative Agent
and each Funding Agent shall have received a pro-forma Coverage Condition Certificate,
substantially in the form of Exhibit 5.02(d), executed by an authorized officer of Issuer,
showing that after giving effect to each proposed Borrowing, the Coverage Condition is met;

     (e) the Facility Termination Date shall not have occurred;

 

 

     (f) the applicable Sub-Servicers, in each case as bailee for the Indenture Trustee for the
benefit of the Secured Parties, shall have received the original (or facsimile copies of the)
Student Loan Notes that will be acquired or otherwise financed with the proceeds of such Borrowing;

     (g) all conditions precedent to Issuer’s acquisition of the Student Loans to be acquired or
otherwise funded with the proceeds of such Borrowing (other than the payment of the purchase price
therefor) shall have been satisfied and no Purchase Termination Event shall have occurred with
respect to the seller of such Student Loans;

     (h) the Administrative Agent shall have received acknowledgment of releases or termination
statements on Form UCC-3 and any other documents necessary to evidence or release any security
interest (other than that of the Indenture Trustee) in the Student Loans to be acquired or
otherwise funded with the proceeds of such Borrowing, to the extent required for any such prior
security interest to be terminated;

     (i) the Issuer has paid all fees and expenses due hereunder at such time; and

     (j) with respect to any Student Loan, prior to any Borrowing with respect thereto and prior to
its inclusion in the calculation of the Coverage Condition, (A) each such Student Loan shall be (1)
covered by and serviced in accordance with the applicable Sub-Servicing Agreement in form and
substance satisfactory to the Administrative Agent and the Funding Agents and (2) the
Administrative Agent shall have received such other opinions, approvals, documents and certificates
with respect to such Student Loan as the Administrative Agent and the Funding Agents shall
reasonably request and (B) if such Student Loan has the benefit of a Guarantee Agreement and the
Guarantor thereof is NHIC, the Administrative Agent and the Funding Agents have conducted such due
diligence (including visiting the offices of NHIC) as the Administrative Agent and the Funding
Agents shall deem necessary with respect to such Student Loan in their sole discretion;

     (k) the amount on deposit in the Reserve Account after giving effect to such Borrowing shall
be at least equal to the Reserve Account Minimum Balance;

     (l) the Issuer shall have delivered to the Administrative Agent and each Funding Agent, if so
requested by Administrative Agent or any such Funding Agent, a copy of each Purchase and Sale
Agreement entered into after the Closing Date, in each case duly executed by Issuer, and each other
party thereto;

     (m) Such powers of attorney as the Administrative Agent or any Funding Agent shall reasonably
request to enable the Administrative Agent to collect all amounts due under any and all Collateral;

     (n) No suit, action or other proceeding, investigation or injunction, or final judgment
relating thereto, shall be pending or threatened before any court or governmental agency, seeking
to restrain or prohibit or to obtain damages or other relief in connection with any of the
Transaction Documents or the consummation of the Transaction;

 

 

     (o) No statute, rule, regulation or order shall have been enacted, entered or deemed
applicable by any government or governmental or administrative agency or court that would make the
transactions contemplated by any of the Transaction Documents illegal or otherwise prevent the
consummation thereof; and

     (p) The Issuer shall be in full compliance with its obligations pursuant to Section
6.02.

Notwithstanding the foregoing, the conditions precedent described in clauses (a),
(b), (d), (e), (f), (g), (h), (i),
(j), (l), (m), and (n) above shall not apply to Borrowings made
pursuant to Section 1.01(c) of this Agreement.

     SECTION 5.03. Delivery of Roster of Student Loans. In connection with any Borrowing
(other than a Borrowing pursuant to Section 1.01(c) of this Agreement), Issuer (or the
Master Servicer on its behalf) shall have delivered to the Indenture Trustee a roster of Student
Loans to be financed by the Issuer in connection with such Borrowing reflecting (i) any Student
Loans not originated by the Issuer or its Affiliates, as soon as possible but no later than five
(5) Business Days after the acquisition thereof, (ii) with respect to any Student Loans originated
by Issuer or its Affiliates, within five (5) Business Days after such origination and (iii) such
additional information reasonably requested by the Administrative Agent and any Funding Agent.
Notwithstanding the foregoing, with respect to the initial Borrowing, Issuer shall have delivered
the Schedule of Pledged Student Loans to the Indenture Trustee on or before the date of such
initial Borrowing.

ARTICLE VI

REPRESENTATIONS AND WARRANTIES

     SECTION 6.01. Representations and Warranties of Issuer. Issuer represents and
warrants as follows:

     (a) Organization, Corporate Powers. Issuer is a limited liability company duly
organized, validly existing solely under the laws of the State of Delaware, is in good standing
under the laws of the State of Delaware, has all necessary corporate power to carry on its present
business, is duly licensed or qualified in all jurisdictions where the nature of its activities
require such licensing or qualifying, and has full power, right and authority to enter into this
Agreement, the other Transaction Documents to which it is, or will be, a party and the transactions
contemplated hereby and thereby, to issue the Notes and to perform each and all of the matters and
things herein and therein provided for.

     (b) Issuer Authority, etc. The execution, delivery and performance by Issuer of this
Agreement, the Notes and the other Transaction Documents to which it is, or will be, a party and
the transactions contemplated hereby and thereby have been duly authorized by all necessary
corporate action and this Agreement, the Notes and such Transaction Documents constitute the legal,
valid and binding obligations of Issuer enforceable against Issuer in accordance with their terms,
except to the extent that enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors’ rights generally and general principles of
equity, regardless of whether such enforceability is considered in a proceeding in equity or law.

 

 

     (c) Compliance with Laws and Contracts. (i) The execution, delivery and performance
by Issuer of this Agreement, the Notes and the other Transaction Documents to which Issuer is a
party do not and will not (w) conflict with, result in any breach of any of the terms and
provisions of, nor constitute (with or without notice or lapse of time or both) a violation of the
certificate of formation or operating agreement of Issuer, (x) violate any provision of any law,
rule, regulation, order, writ, judgment, injunction, decree, determination or award to which Issuer
or its property is subject; (y) result in a breach of or constitute a default under the provisions
of any indenture, loan or credit agreement or any other material agreement, lease or instrument to
which Issuer may be or is subject or by which it, or its property, is bound; or (z) result in, or
require, the creation or imposition of any Lien on or with respect of any of the properties of
Issuer other than the Lien in favor of the Indenture Trustee provided herein; and (ii) the Issuer
is not in violation of, or in default under, any such law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award or any such indenture, agreement, lease or instrument.
The Issuer, each of the Pledged Student Loans and the form of Student Loan Note evidencing each
Pledged Student Loan are in compliance with all applicable federal, state and local laws and
regulations thereunder including (without limitation) the Equal Credit Opportunity Act, the Fair
Debt Collection Practices Act, the Truth in Lending Act, the Federal Trade Commission Act, the
Federal Reserve Board’s Regulation B, applicable laws relating to usury, truth-in-lending,
education lending, fair credit billing, fair credit reporting, fair debt collection practices,
privacy, consumer credit protection and disclosure, and other applicable consumer credit laws and
equal credit opportunity laws.

     (d) Governmental Approvals. Issuer has obtained all authorizations, consents,
approvals, licenses, exemptions of or filings or registrations with all governmental commissions,
regulatory bodies, boards, bureaus, agencies and instrumentalities, domestic or foreign, necessary
to the conduct of its business or necessary to the valid execution, delivery and performance by
Issuer of this Agreement, the Notes and the other Transaction Documents to which Issuer is, or will
be, a party (the “Approvals”), and such Approvals remain in full force and effect.

     (e) Litigation. There is no action, suit, proceeding, inquiry or investigation at law
or in equity or before or by any court, public board or body pending or, to the knowledge of
Issuer, overtly threatened in writing against or affecting the Issuer (x) asserting the invalidity
of this Agreement or any other Transaction Document, (y) seeking to prevent the consummation of any
of the transactions contemplated by this Agreement and the other Transaction Documents, or (z)
wherein an unfavorable decision, ruling or finding would have a Material Adverse Effect on the
Issuer or which affects, or purports to affect, the validity or enforceability against Issuer of
any Transaction Document.

     (f) Employee Benefit Plans. All “employee benefit plans” (as such term is defined in
ERISA) of Issuer and each of its ERISA Affiliates (individually, a “Plan” and collectively
the “Plans”) have been maintained and operated in substantial compliance with all
applicable provisions of the Code and ERISA and the regulations and published interpretations
thereunder. No Plan is insolvent or in reorganization. No proceedings have been instituted to
terminate any

 

 

Plan, and no conditions exist which would permit the institution of proceedings to terminate
any such Plan. Issuer has no liability of any kind whatsoever, whether direct, indirect,
contingent or otherwise, on account of (i) any violation of the health care continuation
requirements of Part 6 of Title I of ERISA or Section 4980B of the Code, (ii) under Section 502(i)
or Section 502 (l) of ERISA or Section 4975 of the Code, (iii) under Section 302 of ERISA or
Section 412 of the Code or (iv) under Title IV of ERISA.

     (g) Perfected Interest. Each Pledged Student Loan, including the related Student Loan
Note, is owned by the Issuer, free and clear of any adverse claim, judgment or Lien other than the
Lien created pursuant to this Agreement. All other Collateral is owned by Issuer free and clear of
any adverse claim, judgment or Lien other than the Lien created pursuant to this Agreement. Except
for the filing of the financing statements described in Section 5.01, no further action,
including any filing or recording of any document, is necessary in order to establish, protect and
perfect the first priority security interest of the Indenture Trustee, for the benefit of the
Secured Parties, in the Collateral as against any third party in any applicable jurisdiction,
including, without limitation, any purchaser from, or creditor of, Issuer. No financing statement
or other instrument similar in effect covering any of the Collateral or any interest therein is on
file in any recording office except such as may be filed (i) in connection with any Lien arising
solely as the result of any action taken by the Lenders (or any assignee thereof), any Funding
Agent or by the Administrative Agent, (ii) in favor of the Indenture Trustee or (iii) for which
UCC-3 termination statements have been filed. No consent of any other Person and no authorization,
approval, or other action by, and no notice to or filing with, any governmental authority or
regulatory body is required for (x) the pledge by the Issuer of the Collateral pursuant to this
Agreement, (y) for the perfection or maintenance of the security interest created hereby (including
the first priority nature of such security interest) or (z) for the exercise by the Administrative
Agent of the rights provided for in this Agreement or the remedies in respect of the Collateral
pursuant to this Agreement.

     (h) Accuracy of Information. All information (including each Monthly Report) supplied
by, or on behalf of, Issuer in writing to the Indenture Trustee, the Lenders, the Funding Agents or
the Administrative Agent in connection with this Agreement or the transactions contemplated hereby
is true and accurate in all material respects as of the date thereof stated or certified. No
information, exhibit or report furnished by Issuer to the Indenture Trustee, the Lenders, the
Funding Agents or the Administrative Agent in connection with this Agreement contained any untrue
statement of material fact or omitted any material fact necessary in order to prevent the
statements contained therein in light of the circumstances under which such statements were or are
made from being misleading in any material respect. The financial information regarding the Issuer
as heretofore delivered to any of the Indenture Trustee, the Lenders, the Funding Agents or the
Administrative Agent correctly and fairly presents the financial condition of the Issuer as of the
date hereof.

     (i) Terminations. No Event of Termination or Unmatured Event of Termination exists.

     (j) Margin Regulations. The use of all funds obtained by Issuer under this Agreement
will not conflict with or contravene any of Regulations T, U and X promulgated by the Board of
Governors of the Federal Reserve System from time to time.

 

 

     (k) Issuer Information. The chief place of business and chief executive office of
Issuer are located at the address of Issuer referred to in Section 13.02, and the offices
where Issuer keeps all its books, records and documents relating to the Pledged Student Loans are
located at the addresses specified in Schedule 6.01(k) (or at such other locations,
notified to the Administrative Agent in accordance with Section 7.01(f), in jurisdictions
where all action necessary to maintain the Indenture Trustee’s first priority perfected security
interest, for the benefit of the Secured Parties, in the Collateral has been taken and completed).
The exact legal name of the Issuer is set forth on the signature page hereof. The Issuer’s
organizational identification number is 3972327. Other than as described on Schedule
6.01(k), the Issuer has not changed its name, changed its organizational structure, changed its
jurisdiction of organization, changed its chief place of business/chief executive office or used
any name other than its exact legal name at any time during the past five years. The Location of
the Issuer is Delaware.

     (l) No Disclosure Required. Under applicable laws and regulations in effect on the
date hereof, Issuer is not required to file a copy of this Agreement with the Securities and
Exchange Commission or any other governmental authority; provided, however, that
Collegiate Funding Services, Inc., the ultimate parent company of the Issuer, may be required to
file a copy of this Agreement, and any amendments, restatements, supplements or other modifications
hereto, with the Securities and Exchange Commission .

     (m) Capital of Issuer. Issuer is Solvent.

     (n) Issuer Not an Investment Company. Issuer is not required to register as an
“investment company” within the meaning of the Investment Company Act of 1940, as amended.

     (o) Eligible Student Loans. All Pledged Student Loans are Eligible Student Loans.
Each Student Loan included as an Eligible Student Loan in the calculation of the Coverage
Condition, is an Eligible Student Loan.

     (p) Material Adverse Effect. No Material Adverse Change in the condition of the
Issuer, the Administrator, any Affiliated Servicer or the Master Servicer (or, to Issuer’s
knowledge, any Third Party Servicer) has occurred and is continuing.

     (q) Prior Business Activity. The Issuer has no other business activity except as
contemplated in this Agreement and upon the date hereof is not party to any other debt, financing
or other material transaction or agreement other than the Transaction Documents.

     (r) Subsidiaries. The Issuer has no subsidiaries.

     (s) Acquisition of Student Loans. With respect to each Pledged Student Loan, the
Issuer has acquired such Pledged Student Loan pursuant to the applicable Purchase and Sale
Agreement in exchange for payment to the Affiliated Seller in an amount which constitutes fair
consideration and reasonably equivalent value (and such acquisition is not void or subject to
avoidance under any section of the Bankruptcy Code) and, to the extent that the Affiliated Seller
has acquired such Pledged Student Loan from an Originator, the Affiliated Seller has acquired such
Pledged Student Loan pursuant to a Purchase and Sale Agreement in exchange for payment

 

 

to the Originator in an amount which constitutes fair consideration and reasonably equivalent
value (and such acquisition is not void or subject to avoidance under any section of the Bankruptcy
Code).

     (t) Demand Note; Residual Payments Account; Residual Payments Account Control
Agreement. On or prior to the initial Borrowing, and at all times thereafter, each of the
Demand Note and the Residual Payments Account Control Agreement shall have been duly authorized,
executed and delivered by CFS, and shall constitute the legal, valid and binding obligation of CFS,
and CFS shall not be not in default under any of the terms thereunder. The Residual Payments
Account shall have been validly established and the Indenture Trustee, as assignee of the Issuer,
as secured party under the Demand Note, has a perfected security interest in the Demand Note and
the Residual Payments Account, subject only to the Intercreditor Agreement.

     (u) Tax Status. Issuer has filed all tax returns (federal, state and local) required
to be filed and has paid or made adequate provision for the payment of all taxes, assessments and
other governmental charges.

     (v) [Electronic Signatures. Reserved.]

     SECTION 6.02. Reassignment upon Breach. Issuer, the Administrative Agent, any Funding
Agent or the Indenture Trustee, as the case may be, shall inform the other parties to this
Agreement promptly, in writing, upon the discovery of any breach in any material respects of the
representations and warranties made or deemed made by Issuer pursuant to Section 6.01(g) or
(o) or any breach in any material respects of the covenants of Issuer made pursuant to
Section 7.03. Unless any such breach shall have been cured within fifteen (15) days
following the discovery thereof by Issuer or receipt by Issuer of written notice from the Indenture
Trustee, such Funding Agent or the Administrative Agent of such breach, the Pledged Student Loan as
to which such representation and warranty or covenant relates shall be reassigned to Issuer (a
“Reassignment”) as of the first day succeeding the end of such 15-day period that is the
last day of a calendar month. In consideration of and simultaneously with the Reassignment of such
Pledged Student Loan, Issuer shall deposit to the Collection Account immediately available funds
equal to the outstanding [****] of such Pledged Student Loan, plus accrued and unpaid interest
thereon (to the extent not previously capitalized), plus any unreimbursed Monthly Advance with
respect thereto (the “Reassignment Amount”). Notwithstanding the foregoing, so long as no
Event of Termination shall have occurred and be continuing, during the Revolving Period, Issuer
may, at its option in lieu of depositing such Reassignment Amount to the Collection Account on such
date, may pledge to the Indenture Trustee on such date for inclusion in the Collateral a new
Eligible Student Loan in substitution for such Pledged Student Loan with respect to which a
Borrowing could be made (assuming Issuer requested a Borrowing in connection with such new Eligible
Student Loan pursuant to Section 1.02) in an amount at least equal to the Reassignment
Amount, by delivering an updated Schedule of Pledged Student Loans to the Indenture Trustee
reflecting such substitution and delivering to the applicable Sub-Servicer, as bailee for the
Indenture Trustee, if not already in its possession the original (or a facsimile copy of the)
Student Loan Note for the new Student Loan to be included in the Collateral; provided,
however, that the aggregate outstanding [****] of all such substitute Student Loans shall
not at any time exceed 10% of the Total Outstanding Advances. The Indenture Trustee shall execute
such documents
reasonably requested by Issuer in order to effect such reassignment and to release the
Indenture Trustee’s Lien thereunder.

 

 

     SECTION 6.03. Representations and Warranties of Indenture Trustee. The Indenture
Trustee hereby represents and warrants as follows:

     (a) Due Organization. It is a banking corporation duly organized and validly existing
in good standing under the laws of the State of New York. It has all requisite corporate power and
authority to execute, deliver and perform its obligations under this Agreement.

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

     (c) No Conflict. Neither the execution nor the delivery by it of this Agreement, nor
the consummation by it of the transactions contemplated hereby nor compliance by it with any of the
terms or provisions hereof will contravene any federal or applicable state law, governmental rule
or regulation governing the banking or trust powers of the Indenture Trustee or any judgment or
order binding on it, or constitute any default under its charter documents or by-laws or any
indenture, mortgage, contract, agreement or instrument to which it is a party or by which any of
its properties may be bound.

     (d) Binding Obligation. This Agreement constitutes, and each other Transaction
Document to be executed by the Indenture Trustee when duly executed and delivered, will constitute,
a legal, valid and binding obligation of the Indenture Trustee, enforceable in accordance with its
terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, or other
similar laws affecting the enforcement of creditors’ rights generally and by general principles of
equity, regardless of whether such enforceability is considered in a proceeding in equity or at
law.

ARTICLE VII

GENERAL COVENANTS OF ISSUER AND MASTER SERVICER

     SECTION 7.01. Affirmative Covenants of Issuer. From the date hereof until the Final
Payout Date, Issuer will, unless the Administrative Agent and the Funding Agents shall otherwise
consent in writing:

     (a) Compliance with Laws, Etc. Comply in all material respects with all applicable
federal, state and local laws, rules, regulations and orders, including those with respect to the
Pledged Student Loans and including (without limitation) the Equal Credit Opportunity Act, the Fair
Debt Collection Practices Act, the Truth in Lending Act, the Federal Trade Commission Act, the
Federal Reserve Board’s Regulation B, applicable laws relating to usury, truth-in-lending,
education lending, fair credit billing, fair credit reporting, fair debt collection practices,
privacy, consumer credit protection and disclosure, and other applicable consumer credit laws and
equal credit opportunity laws except to the extent that failure to comply with such laws, rules,
regulations and orders would not have a Material Adverse Effect on the Issuer.

 

 

     (b) Preservation of Existence. Preserve and maintain its existence as a limited
liability company, and its rights, franchises and privileges in the jurisdiction of its formation,
and qualify and remain qualified in good standing as a foreign limited liability company in each
jurisdiction where the failure to preserve and maintain such existence, rights, franchises,
privileges and qualification could be reasonably expected to have a Material Adverse Effect on the
Issuer.

     (c) Audits. (i) At any time and from time to time during regular business hours,
permit the Administrative Agent, the Funding Agents, the Lenders, the Indenture Trustee or any of
their agents or representatives, upon prior written notice of at least ten (10) Business Days if no
Event of Termination has occurred and is continuing, (y) to examine and make copies of and
abstracts from all books, records and documents (including, without limitation, computer tapes and
disks) in the possession or under the control of Issuer relating to the Collateral, and (z) to
visit the offices and properties of Issuer for the purpose of examining such materials described in
clause (i)(y) above, and to discuss matters relating to Pledged Student Loans or Issuer’s
performance under the Transaction Documents with any of the officers or employees of Issuer having
knowledge of such matters; (ii) without limiting the provisions of clause (i) above, from
time to time on the reasonable request of the Administrative Agent or, in the event of an
investigation, audit (not in the ordinary course) or other proceeding instigated by the Department,
permit certified public accountants or other auditors acceptable to the Administrative Agent to
conduct, at Issuer’s expense, a review of Issuer’s books and records with respect to the Pledged
Student Loans; and (iii) without limiting the foregoing, once per calendar year or, upon the
occurrence and during the continuance of an Event of Termination, at any time at the request of the
Administrative Agent, cooperate fully with the Administrative Agent or any auditor or
representative appointed by the Administrative Agent in an agreed upon procedures audit (including
inspection of the legend required to be placed on certain Student Loan Notes pursuant to
Section 7.01(q) and covering each of the items and procedures listed on Appendix C
hereto and such other items and procedures as reasonably requested by the Administrative Agent) at
Issuer’s expense with respect to all Pledged Student Loans.

     (d) Keeping of Records and Books of Account. Maintain and implement administrative
and operating procedures (including, without limitation, an ability to recreate records evidencing
the Pledged Student Loans in the event of the destruction of the originals thereof), and keep and
maintain, or cause to be kept and maintained, all documents, books, records and other information
reasonably necessary or advisable for the collection of all the Pledged Student Loans (including,
without limitation, records adequate to permit the daily identification of each new Pledged Student
Loan included in the Collateral from time to time and all Collections of, payments on and
adjustments to each existing Pledged Student Loan).

     (e) Performance and Compliance with Student Loans. At its expense, timely and fully
perform and comply with all material provisions, covenants and other promises required to be
observed by it under the Student Loan Notes, the Guarantee Agreements, the Sub-Servicing Agreements
and other agreements to which Issuer is a party related to the Collateral.

 

 

     (f) Location of Records. Keep its chief place of business and chief executive office,
and the offices where it keeps its records concerning the Pledged Student Loans and all agreements
related to such Collateral (and all original documents relating thereto, unless such
documents have been delivered to the applicable Sub-Servicer or a bailee thereof), at the
address(es) of Issuer referred to in Schedule 6.01(k) or, upon thirty (30) days’ prior
written notice to the Administrative Agent, at such other locations in jurisdictions where all
action required to maintain the Indenture Trustee’s first priority perfected security interest, for
the benefit of the Secured Parties, in the Pledged Student Loans shall have been taken and
completed. Keep its Location at the Location identified in Section 6.01(a) or, upon thirty
(30) days’ prior written notice to the Administrative Agent, at such other “Location” where all
action required to maintain the Indenture Trustee’s first priority perfected interest, for the
benefit of the Secured Parties, in the Collateral shall have been taken and completed.

     (g) Administration of the Program. Administer, operate and maintain its student loan
program in such manner as to ensure that such program will benefit in all material respects from
Guarantee Agreements related thereto, and will promptly notify the Administrative Agent and each
Funding Agent of any default under any Guarantee Agreement.

     (h) Guarantee Agreements and Sub-Servicing Agreements; Enforcement. (i) Maintain in
effect all Guarantee Agreements and Sub-Servicing Agreements, diligently and promptly enforce its
rights thereunder and take, or cause the Master Servicer (directly or through the applicable
Sub-Servicer) to take, all commercially reasonable steps, actions and proceedings necessary or
appropriate for the enforcement of all material terms, covenants and conditions of each Student
Loan that is a Pledged Student Loan, including the prompt payment of all principal and interest
payments and all other amounts due with respect to such Student Loans, including Guarantee
Payments, and (ii) enter into Sub-Servicing Agreements with Sub-Servicers so that all Student Loans
that are Pledged Student Loans are covered thereby.

     (i) Insurance. Maintain in effect directors’ and officers’ insurance in such
liability and amounts and with such deductibles as are customary in the industry and provide prompt
notice to the Administrative Agent and each Funding Agent of any material changes in such
insurance.

     (j) Separate Business. At all times:

     (i) (y) maintain and prepare financial reports, financial statements, books and
records and bank accounts separate from those of its Affiliates and any other Person or
entity and (z) not permit any Affiliate or any other Person independent access to its bank
accounts;

     (ii) not commingle its funds and other assets with those of any Affiliate or any other
Person or entity (other than any such commingling which might result from the performance of
the Master Servicer’s duties in accordance with this Agreement or any Sub-Servicer’s duties
in accordance with the applicable Sub-Servicing Agreement);

     (iii) conduct its own business in its own name and hold all of its assets in its own
name and in such a manner that it will not be costly or difficult to segregate, ascertain or
identify its individual assets from those of any Affiliate or any other Person;

     (iv) remain Solvent and pay its debts and liabilities (including employment and
overhead expenses) from its assets as the same become due:

 

 

     (v) do all things necessary to observe limited liability company formalities (including
the separateness provisions contained in its organizational documents), and preserve its
existence as a single-purpose, bankruptcy-remote entity;

     (vi) enter into transactions with Affiliates only if each such transaction is
commercially reasonable and on substantially similar terms as a transaction that would be
entered into on an arm’s-length basis with a Person other than an Affiliate of Issuer
(provided, however, that this clause shall not be interpreted to prohibit the Demand Note);

     (vii) pay the salaries of its own employees, if any, from its own funds and maintain a
sufficient number of employees in light of its contemplated business operations;

     (viii) compensate each of its consultants and agents from its own funds for services
provided to it and pay from its own assets all obligations of any kind incurred;

     (ix) not (y) acquire or hold obligations or securities of any Affiliate or any of the
stockholders of Issuer (other than the Demand Note) or (z) buy or hold any evidence of
indebtedness issued by any other Person or entity, other than cash, Eligible Investments and
Pledged Student Loans;

     (x) allocate fairly and reasonably and pay from its own funds the cost of (i) any
overhead expenses (including paying for any office space) shared with any Affiliate of
Issuer and (ii) any services (such as asset management, legal and accounting) that are
provided jointly to Issuer and one or more of its Affiliates;

     (xi) maintain and utilize separate stationery, invoices and checks bearing its own
name, separate office space (which may be a separately identified area in office space
shared with one or more Affiliates of Issuer), a separate mailing address, and a separate
telephone number;

     (xii) not make any loans or advances to, or pledge its assets for the benefit of, any
other Person or entity, including, without limitation, any Affiliate (except as contemplated
by its operating agreement and this Agreement);

     (xiii) be, and at all times hold itself out to the public as, a legal entity separate
and distinct from any other Person;

     (xiv) to the extent known by the Issuer, correct any misunderstanding regarding the
separate identity of the Issuer;

     (xv) not identify itself or any of its Affiliates as a division or part of any other
entity;

     (xvi) maintain adequate capital for the normal obligations reasonably foreseeable in a
business of its size and character and in light of its contemplated business operations;

 

 

     (xvii) not amend, modify or otherwise change its organizational documents, or suffer
the same to be amended, modified or otherwise changed in any manner without the prior
written consent of the Administrative Agent and the Required Funding Agents;

     (xviii) maintain at all times at least one independent director provided by Lord SPV
Corp. who is not, and has not been for five years preceding the date hereof, a director,
officer, employee or shareholder (or a family member of one of the foregoing) of any
Affiliate of the Issuer (other than the Issuer or any other securitization vehicle that is
an Affiliate of the Issuer);

     (xix) conduct in its business and activities in all respects in compliance with the
assumptions contained in the legal opinion of Stroock & Stroock & Lavan LLP dated on or
about the Closing Date relating to true sale and substantive consolidation issues;

     (xx) not change any of its (i) legal name, (ii) the name under which it does business,
(iii) its type of organization or (iv) the jurisdiction in which it is organized, unless, in
each case, (1) each of the Indenture Trustee, the Administrative Agent, each Funding Agent
and each Lender shall have received not less than thirty (30) days’ prior written notice
thereof and (2) the Issuer has taken all action required to maintain the Indenture Trustee’s
first priority perfected security interest for the benefit of the Secured Parties in the
Collateral;

     (k) Delivery of Student Loan Notes. Issuer shall deliver or cause to be delivered to
the applicable Sub-Servicers, in each case as bailee for the Indenture Trustee for the benefit of
the Secured Parties, the original (or a facsimile copy of the) Student Loan Note for each Pledged
Student Loan.

     (l) [Reserved].

     (m) [Reserved].

     (n) Purchase and Sale Agreements; Enforcement. Issuer shall monitor each Originator
and each Affiliated Seller and shall provide the Administrative Agent and each Funding Agent prompt
notice of the occurrence of any event listed in clauses (a) through (e) of the definition of
“Purchase Termination Event”. Issuer shall enforce its rights with respect to all material
obligations of the Originators and the Affiliated Sellers under each Purchase and Sale Agreement
and all other transaction documents to which any Originator or Affiliated Seller, as applicable, is
a party.

     (o) Deposit of Collections. Issuer shall deposit and shall cause the Affiliated
Sellers, the Affiliated Servicers, the Administrator and the Master Servicer to deposit, and shall
exercise all rights available to it under its agreements with Originators to cause such Originators
to deposit or to forward to the Issuer or Master Servicer for deposit, all Collections into the
Collection Account as soon as practicable following receipt thereof, but no later than two Business
Days after receipt thereof. Issuer shall not (and shall not allow any Affiliated Seller, any
Affiliated Servicer, the Administrator or the Master Servicer to) deposit any amounts other than
Collections (and other amounts required by the terms of this Agreement to be deposited into the
Collection Account) into the Collection Account.

 

 

     (p) Additional Financing Statements. Issuer shall file or cause to be filed, and
authorizes the Administrative Agent and the Indenture Trustee to file, UCC financing statements
against all Originators and Affiliated Sellers deemed necessary or desirable by the Administrative
Agent or the Indenture Trustee to perfect the security interest or ownership interest in the Issuer
in Student Loans and related assets acquired from such Originators or Affiliated Sellers. In
addition, at the request of the Administrative Agent or the Indenture Trustee the Issuer shall file
or cause to be filed, and authorizes the Administrative Agent, the Funding Agents and the Indenture
Trustee to file, UCC financing statement assignments assigning to the Indenture Trustee any
financing statement showing the Issuer as secured party with respect to the Collateral.

     (q) Marking of Student Loan Notes. The Issuer shall cause each Student Loan Note that
is not in the possession of a Third Party Servicer to be marked with the following legend: “This
note and related documentation is subject to a Uniform Commercial Code Security Agreement between
The Bank of New York, a New York banking corporation, as Trustee (the “Trustee”), and
Collegiate Funding Services, L.L.C. or a direct or indirect subsidiary or affiliate thereof and
Financing Statements evidencing the Trustee’s security interest therein have been filed of record
in the manner provided for by the Uniform Commercial Code and, where applicable, 20 U.S.C. §
1082(m)(1)(E) and § 1087(d)(3). The granting of another security interest in, or the sale of, this
note and related documentation would, without consent of the Trustee, violate the Trustee’s rights
under the Indenture.” This Agreement constitutes a “Uniform Commercial Code Security Agreement”.

     (r) Demand Note; Residual Payments Account; Residual Payments Account Control
Agreement. Issuer shall maintain in effect each of the Demand Note and the Residual Payments
Account Control Agreement, diligently and promptly enforce its rights thereunder and cause CFS to
maintain the existence of the Residual Payments Account.

     (s) [Electronic Signatures. Reserved.]

     SECTION 7.02. Reporting Requirements of Issuer. From the date hereof until the Final
Payout Date, Issuer (or the Administrator on its behalf) will, unless the Administrative Agent and
the Required Funding Agents shall otherwise consent in writing, furnish to the Administrative Agent
and each Funding Agent:

     (a) Quarterly Financial Statements. As soon as available and in any event within
forty five (45) days after the end of each of the first three quarters of each fiscal year of
Issuer, copies of the financial statements of the Issuer, that are in conformity with generally
accepted accounting principles, along with a certificate by an authorized officer of Issuer
certifying that such copies are the true and complete copies of the financial statements and that
such financial statements fairly present in all material respects the financial condition of the
Issuer as of the date delivered;

     (b) Annual Financial Statements. As soon as available and in any event within one
hundred twenty (120) days after the end of each fiscal year of Issuer, copies of the unaudited
financial statements of Issuer, in conformity with generally accepted accounting principles, along
with a certificate by an authorized officer of Issuer certifying that such copies are the true and
complete copies of the financial statements and that such financial statements fairly present
in all material respects the financial condition of the Issuer as of the date delivered;

 

 

     (c) Monthly Report. On or before the 20th day of each month (or, if any such day is
not a Business Day, on the next succeeding Business Day), a Monthly Report (which may be the same
Monthly Report referred to in Section 12.06 hereof) with respect to the preceding calendar
month in electronic form together with a signed copy of such Monthly Report delivered by facsimile,
messenger or overnight courier;

     (d) ERISA. Promptly after the filing or receiving thereof, copies of all reports and
notices with respect to any “reportable event” described in Section 4043 of ERISA which Issuer or
an ERISA Affiliate thereof files under ERISA with the Internal Revenue Service, the Pension Benefit
Guaranty Corporation or the U.S. Department of Labor or which Issuer receives from the Internal
Revenue Service, the Pension Benefit Guaranty Corporation;

     (e) Events of Termination. Immediately upon becoming aware of the existence of any
Event of Termination or Unmatured Event of Termination, a written statement of an authorized
officer of Issuer setting forth details of such event and the action that Issuer proposes to take
with respect thereto; and immediately upon becoming aware of any Servicer Event of Default, written
notice thereof;

     (f) Litigation. As soon as possible and in any event within five (5)Business Days of
Issuer’s actual knowledge thereof, written notice of (i) any litigation, investigation or
proceeding which may exist at any time that could have a Material Adverse Effect and (ii) any
material adverse development in previously disclosed litigation, including in each case, if known
to Issuer, any of the same against the Administrator, any Affiliated Seller, any Guarantor, the
Master Servicer or any Sub-Servicer;

     (g) Act Amendments. Promptly after the occurrence thereof, written notice of any
Material Change in the Equal Credit Opportunity Act, the Fair Debt Collection Practices Act, the
Truth in Lending Act, the Federal Trade Commission Act, the Federal Reserve Board’s Regulation B,
applicable laws relating to usury, truth-in-lending, education lending, fair credit billing, fair
credit reporting, fair debt collection practices, privacy, consumer credit protection and
disclosure, and other applicable consumer credit laws and equal credit opportunity laws or any
other law rule or regulation of the United States or, if applicable, any state thereof; provided
that for purposes of this section a “Material Change” shall mean a change that could have a
Material Adverse Effect on the Issuer, the Master Servicer, any Affiliated Seller, any Affiliated
Servicer or any other Affiliate of the Master Servicer or have a Material Adverse Effect on the
Collateral, the Collateral Value or the rating on the Notes as reasonably determined by each
Valuation Agent using the ratings methodology the Valuation Agent employs for rating the Notes;

     (h) Financial Statements of Guarantors. With respect to each Guarantor, promptly
after receipt thereof, copies of (i) any annual audited financial statements of such Guarantor
certified by an independent certified public accounting firm and (ii) any annual statement blank of
such Guarantor that have been received by Issuer;

 

 

     (i) Financial Statements and Annual Compliance Audit of the Master Servicer (or any
Sub-Servicer). With respect to the Master Servicer (and each Sub-Servicer), promptly after
receipt thereof, copies of any annual audited financial statements of the Master Servicer (or
Sub-Servicer, as applicable), certified by an independent certified public accounting firm that
have been received by Issuer;

     (j) Schedule of Pledged Student Loans. (i) No later than the 20th Business Day of
each calendar month, a schedule of all Pledged Student Loans (including, without limitation, those
financed during the preceding calendar month) and, (ii) no later than five (5) Business Days after
the request of any Funding Agent in connection with the performance of any Portfolio Valuation by a
Valuation Agent, a schedule of all Pledged Student Loans in electronic form acceptable to such
Person including all information necessary for the performance of such Portfolio Valuation;

     (k) Coverage Condition Certificate. Concurrently with the delivery of the Monthly
Report referred to in clause (c) above, and no later than three (3) Business Days after the
occurrence of a Material Adverse Change in the condition of any Guarantor or Third Party Servicer,
a Coverage Condition Certificate, substantially in the form of Exhibit 5.02(d), executed by
an authorized officer of Issuer;

     (l) Credit and Collection Policy. Promptly after the occurrence thereof, written
notice of material changes in the Credit and Collection Policy;

     (m) [Reserved];

     (n) [Reserved];

     (o) [Reserved];

     (p) Purchase and Sale Agreements. Promptly at the request of the Administrative Agent
or any Funding Agent, a copy of each Purchase and Sale Agreement executed by the Issuer;

     (q) Notice of Material Events. Issuer shall be obligated promptly (but in any event
within five Business Days) to inform the Administrative Agent and each Funding Agent in writing of
the occurrence of any of the following:

     (i) the submission of any claim or the initiation or threat of any legal process,
litigation or administrative or judicial investigation, or rule making or disciplinary
proceeding by or against the Issuer, any Affiliated Servicer, any Affiliated Seller, the
Administrator or the Master Servicer that (A) could be required to be disclosed to the
Securities and Exchange Commission or (B) could result in a Material Adverse Change with
respect to the Issuer, the Administrator, any Affiliated Servicer, any Affiliated Seller or
the Master Servicer, or the promulgation of any proceeding or any proposed or final rule
which would result in a Material Adverse Change with respect to the Issuer, the
Administrator, any Affiliated Servicer, any Affiliated Seller or the Master Servicer.

 

 

     (ii) any change in the Location of the Issuer’s principal offices or any change in the
Location of the Issuer’s books and records;

     (iii) the occurrence of any Event of Termination, any default under any Guarantee
Agreement or Sub-Servicing Agreement (whether or not such default constitutes an Event of
Termination) or any other event circumstance or condition that has resulted or has a
material probability of resulting in a Material Adverse Change in respect of the Issuer;

     (iv) the commencement of any proceedings by or against the Issuer, any Affiliated
Servicer, any Affiliated Seller, the Administrator or the Master Servicer under any
applicable bankruptcy, reorganization, liquidation, rehabilitation, insolvency or other
similar law now or hereafter in effect or of any proceeding in which a receiver, liquidator,
conservator, trustee or similar official shall have been, or may be, appointed or requested
for the Issuer, any Affiliated Servicer, any Affiliated Seller, the Administrator or the
Master Servicer or any of its assets;

     (v) the receipt of notice that (A) the Issuer, any Affiliated Servicer, any Affiliated
Seller, the Administrator or the Master Servicer is being placed under regulatory
supervision, (B) any license, permit, charter, registration or approval necessary for the
conduct of the Issuer’s, any Affiliated Servicer’s, any Affiliated Seller’s, the
Administrator or the Master Servicer’s business is to be, or may be suspended or revoked, or
(C) the Issuer, any Affiliated Servicer, any Affiliated Seller, the Administrator or the
Master Servicer is to cease and desist any practice, procedure or policy employed by the
Issuer, any Affiliated Servicer, any Affiliated Seller, the Administrator or the Master
Servicer in the conduct of its business, and such cessation may result in a Material Adverse
Change with respect to the Issuer, any Affiliated Servicer, any Affiliated Seller, the
Administrator or the Master Servicer; and

     (vi) any failure to pay when due any indebtedness of the Issuer.

     (r) Other. Promptly, from time to time, such other information, documents, records or
reports respecting the Collateral or the condition or operations, financial or otherwise, of Issuer
as the Administrative Agent, the Funding Agents, the Lenders or Indenture Trustee, may from time to
time reasonably request in order to protect the interests of the Administrative Agent, the Funding
Agents, the Lenders and Indenture Trustee, under or as contemplated by this Agreement.

     SECTION 7.03. Servicing Covenants. From the date hereof until the Final Payout Date,
Issuer (or the Master Servicer on its behalf) will, unless the Administrative Agent and the
Required Funding Agents shall otherwise consent in writing comply with the following covenants.

     (a) Servicing. Issuer (or the Master Servicer on its behalf) shall cause each
applicable Sub-Servicer to service, administer and make collections with respect to the Pledged
Student Loans in accordance in all material respects with the Credit and Collection Policy and all
applicable federal, state and local laws, including (without limitation) the Equal Credit

 

 

Opportunity Act, the Fair Debt Collection Practices Act, the Truth in Lending Act, the Federal
Trade Commission Act, the Federal Reserve Board’s Regulation B, applicable laws relating to usury,
truth-in-lending, education lending, fair credit billing, fair credit reporting, fair debt
collection practices, privacy, consumer credit protection and disclosure, and other applicable
consumer credit laws and equal credit opportunity laws, and all applicable standards, guidelines
and requirements of any Guarantee Agreement, the failure to comply with which would adversely
affect the ability to receive any Guarantee Payments or could otherwise be reasonably expected to
have a material adverse effect on the Lenders. Issuer (or the Master Servicer on its behalf) shall
not and shall not permit any Sub-Servicer to (i) rescind or cancel any Pledged Student Loan except
as ordered by a court of competent jurisdiction or governmental authority or as otherwise consented
to in writing by the Administrative Agent and the Required Funding Agents or (ii) reschedule,
revise, defer or otherwise compromise with respect to payments due on any Pledged Student Loan
except pursuant to any applicable deferral or forbearance periods permitted by the Credit and
Collection Policy or otherwise in accordance with all applicable standards, guidelines and
requirements with respect to the servicing of the Pledged Student Loans. Issuer (or the Master
Servicer on its behalf) shall not otherwise agree, or permit any Sub-Servicer to otherwise agree,
to any decrease of the interest rate on, or the principal amount payable with respect to, any
Pledged Student Loan except as otherwise permitted in accordance with the Credit and Collection
Policy or any applicable standards, guidelines and requirements of any Guarantee Agreement. Issuer
(or the Master Servicer on its behalf) shall cause each Sub-Servicer to take any action required to
be taken to maintain each such Guarantee Agreement and to maintain any and all collection
procedures with respect to the Pledged Student Loans, including (i) filing, pursuing and recovering
claims against the Guarantors for Guarantee Payments with respect to such Pledged Student Loans,
(ii) taking any steps to enforce such Pledged Student Loan such as commencing a legal proceeding to
enforce a Pledged Student Loan in the name of Issuer for the benefit of the Indenture Trustee and
the Secured Parties and (iii) taking any other collection efforts that may be necessary or
reasonable under the Credit and Collection Policy or any Guarantee Agreement to collect any Pledged
Student Loan. Notwithstanding any of the foregoing, the Issuer (or the Master Servicer or any
Sub-Servicer) shall be permitted to reschedule, revise, defer or otherwise compromise payments or
take other reasonable actions with respect to Student Loans that are Defaulted Student Loans in
connection with maximizing the recovery on such Defaulted Student Loans.

     (b) Collection of Pledged Student Loan Payments. Issuer (or the Master Servicer on
its behalf) shall, and shall cause the applicable Sub-Servicer, to make reasonable efforts
(including all efforts that may be specified under any Guarantee Agreement) to collect all payments
called for under the terms and provisions of the Pledged Student Loans as and when the same shall
become due.

     (c) Collection of Guarantee Payments. Issuer (or the Master Servicer on its behalf)
shall, or shall cause each applicable Sub-Servicer, to make reasonable efforts to claim, pursue and
collect all Guarantee Payments from the Guarantors pursuant to the Guarantee Agreements with
respect to any of the Pledged Student Loans that have the benefit of a Guarantee Agreement as and
when the same shall become due and payable, and shall comply, and shall cause the Sub-Servicers to
comply, in all material respects with all applicable laws and agreements with respect to claiming,
pursuing and collecting such payments. In connection therewith, Issuer (or the applicable
Sub-Servicer on its behalf) is hereby authorized and empowered to convey to any

 

 

Guarantor the Student Loan Note and the related Pledged Student Loan file representing any
Pledged Student Loan that is covered by such Guarantee Agreement in connection with submitting a
claim to such Guarantor for a Guarantee Payment in accordance with the terms of the applicable
Guarantee Agreement whereupon the Lien of the Indenture Trustee relating to such Pledged Student
Loan shall be released without any further action of any kind.

     (d) [Reserved].

     (e) Realization upon Pledged Student Loans. Issuer (or the Master Servicer on its
behalf) shall cause, or shall cause each applicable Sub-Servicer, to use reasonable efforts
consistent with customary servicing practices and procedures and including, all efforts that may be
specified under any Guarantee Agreement in its servicing of any delinquent Pledged Student Loans.

     (f) Marking of Student Loan Notes. The Master Servicer shall ensure that each Student
Loan Note that is not in the possession of a Third Party Servicer is marked with the legend set
forth in Section 7.01(q).

     (g) Demand Note, Residual Payments Account Control Agreement, Residual Payments
Account The Master Servicer shall maintain in full force and effect each of the Demand Note
and the Residual Payments Account Control Agreement and maintain the existence of the Residual
Payments Account.

     (h) [Electronic Signatures. Reserved.]

     SECTION 7.04. Negative Covenants of Issuer. From the date hereof until the Final
Payout Date, Issuer will not, without the prior written consent of the Administrative Agent and the
Required Funding Agents.

     (a) Sales, Liens, Etc. Except as otherwise provided herein, sell, assign (by
operation of law or otherwise) or otherwise dispose of, or create or suffer to exist any Lien upon
or with respect to, any Pledged Student Loan or other Collateral, or any interest therein, or any
account to which any Collections of or payments on any Pledged Student Loans or other Collateral
are sent, or any right to receive income or proceeds from or in respect of any of the foregoing;
provided that Issuer may (i) transfer a Pledged Student Loan that is a Student Loan that
has the benefit of a Guarantee Agreement to a Guarantor if such Guarantor has paid the [****] plus
accrued interest thereof to Issuer.

     (b) Extension or Amendment. Extend, terminate, waive, amend or otherwise modify the
terms of any Pledged Student Loan, except pursuant to Section 7.03(a), or terminate, waive,
amend or otherwise modify the terms of any other Transaction Document.

     (c) Change in Business. Make any change in the character of its business, which
change could reasonably be expected to impair the collectibility of any Pledged Student Loan or
otherwise materially adversely affect the interests or remedies of the Administrative Agent, the
Funding Agents, the Indenture Trustee or Lenders under this Agreement or any other Transaction
Document.

 

 

     (d) Consolidation, Mergers, etc. Merge into, or consolidate with, one or more
corporations or other entities, or be a party to any transaction involving the transfer of any
substantial portion of its assets, revenues or properties to or with any corporation or other
Person.

     (e) Use of Proceeds. Use the proceeds of any Advance for any purpose other than
acquiring or making Student Loans, funding the Reserve Account and paying fees and expenses
incurred in connection with the transactions contemplated by this Agreement.

     (f) Master Servicer Limitations. Permit any Pledged Student Loans to be serviced by
any Sub-Servicer (other than the Sub-Servicers servicing the Pledged Student Loans on the date
hereof).

     (g) Guarantor Limitations. Permit any Pledged Student Loan to be guaranteed by any
guaranty agency or entity other than a Guarantor.

     (h) Payment Instructions. Change, nor permit the Originators, the Affiliated Sellers,
the Master Servicer, or any Sub-Servicer, to change payment instructions to any Obligor.

     (i) ERISA. Establish or be a party to any plan, multiemployer plan or benefit plan
under ERISA.

     (j) Issuer’s Legal Status. Without providing at least thirty (30) days prior written
notice to the Administrative Agent and each Funding Agent and satisfying all other requirements set
forth in this Agreement with respect to such action, change its name, place of business, chief
executive office, Location, mailing address or organizational identification number or change its
type of organization, jurisdiction of organization or other legal structure.

     (k) Credit and Collection Policies. Permit or implement any material change in the
Credit and Collection Policy other than such changes that are not within the discretion of the
Issuer or Master Servicer.

     (l) Issuer’s Ability to Conduct Business. (a) Guarantee any obligation of any Person,
including any Affiliate; (b) engage, directly or indirectly, in any business other than the actions
required or permitted to be performed under the Transaction Documents; (c) incur, create or assume
any Indebtedness not arising under or expressly permitted by this Agreement or any other
Transaction Document; (d) make or permit to remain outstanding any loan or advance to, or own or
acquire any stock or securities of, any Person, except that the Issuer may invest in those
investments permitted under the Transaction Documents and may make any advance required or
expressly permitted to be made pursuant to any provision of the Transaction Documents and permit
the same to remain outstanding in accordance with such provisions; (e) to the fullest extent
permitted by law, engage in any dissolution, liquidation, consolidation, merger, asset sale or
transfer of ownership interests other than such activities as are expressly permitted under this
Agreement; or (f) form, acquire or hold any subsidiary (whether corporate, partnership, limited
liability company or other).

     (m) Business. Own assets or engage in any business other than the assets and
transactions specifically contemplated in this Agreement and the other Transaction Documents.

 

 

     (n) Exclusivity of National City Origination Agreement. Purchase any Student Loans in
violation of the exclusivity provisions of the National City Origination Agreement.

ARTICLE VIII

EVENTS OF TERMINATION

     SECTION 8.01. Events of Termination. The following events shall be “Events of
Termination” hereunder:

     (a) Issuer or any Affiliated Seller shall fail to make (i) any payment or deposit required to
be made by it hereunder or under any other Transaction Document when due (without giving effect to
any payment or deposit that is made from Advances made pursuant to Section 1.01(c)) or when
due and such failure shall continue unremedied for three (3) Business Days after the Issuer has
knowledge or has received notice thereof or (ii) any payment of principal or interest under the
Notes when due;

     (b) Any representation or warranty (other than a representation and warranty made or deemed
made pursuant to Section 6.0l(g) or Section 6.01(o) with respect to a Pledged
Student Loan as to which Issuer has complied with Section 6.02) made or deemed made by
Issuer (or any of its officers), the Administrator or any Affiliated Seller under or in connection
with this Agreement or any other Transaction Document to which it is a party or any other
information or report delivered pursuant hereto shall prove to have been false or incorrect in any
material respect when made and, to the extent such representation or warranty is capable of being
remedied, such representation or warranty shall not have been remedied within five (5) Business
Days’ notice to or knowledge thereof by the Issuer, the Master Servicer, the Administrator or any
Affiliated Seller;

     (c) Issuer, the Master Servicer, the Administrator or any Affiliated Seller shall fail to
perform or observe (i) any term, covenant or agreement contained in Sections 7.01(c),
7.01(j), 7.01(k), 7.01(n), 7.01(o), 7.02 or 7.04 at
any time or (ii) any other term, covenant or agreement contained in this Agreement or any of the
other Transaction Documents on its part to be performed or observed, other than those payment
defaults identified in Section 8.01(a) above, if such failure listed in subclause (ii) of
this clause (c) shall remain unremedied for the shorter of five (5) Business Days after notice to
or knowledge thereof by the Issuer, the Administrator, the Master Servicer or any Affiliated Seller
or the cure period provided for in any such Transaction Document;

     (d) An Event of Bankruptcy shall have occurred with respect to Issuer, the Administrator, the
Master Servicer, any Affiliated Seller or CFS;

     (e) (i) Any litigation (including, without limitation, derivative actions), arbitration
proceedings or governmental proceedings not disclosed in writing by Issuer to the Administrative
Agent and each Funding Agent prior to the date of execution and delivery of this Agreement is
pending against Issuer or any of its Affiliates, or (ii) any material development not so disclosed
has occurred in any litigation (including, without limitation, derivative actions), arbitration
proceedings or governmental proceedings so disclosed, which, in the case of clause (i)

 

 

or (ii), in the opinion of the Administrative Agent, any Funding Agent or the Lenders,
has a reasonable likelihood of having a Material Adverse Effect on the Issuer or any of its
Affiliates;

     (f) The Internal Revenue Service shall file notice of a lien pursuant to Section 6323 of the
Code with regard to any of the assets of Issuer or any of its Affiliates and such lien shall not
have been released within five Business Days or the Pension Benefit Guaranty Corporation shall, or
shall indicate its intention to, file notice of a lien pursuant to Section 4068 of ERISA with
regard to any of the assets of Issuer or any of its Affiliates and such lien shall not have been
released within five Business Days;

     (g) The failure to vest and maintain vested in the Indenture Trustee a valid, perfected first
priority Lien on the Collateral, for the benefit of the Secured Parties;

     (h) A Servicer Event of Default shall have occurred with respect to the Master Servicer or any
Affiliated Servicer;

     (i) A Guarantor Event of Default shall have occurred with respect to any Guarantor;

     (j) A Servicer Event of Default shall have occurred with respect to any Third Party Servicer
or a Sub-Servicing Agreement shall not be in full force and effect for any reason, unless a
replacement Third Party Servicer acceptable to the Administrative Agent and the Required Funding
Agents shall have been identified and shall have executed a replacement Sub-Servicing Agreement
within thirty (30) days of such event;

     (k) The Coverage Condition is not satisfied with respect to any Settlement Period or on any
Calculation Date described in clause (b)(iii) of the definition of Calculation Date and such
condition continues for two (2) Business Days;

     (l) The average Excess Spread for any consecutive three month period is less than [****]%;

     (m) [****];

     (n) Any change in law becomes effective that reduces the rate of return on Eligible Student
Loans, reduces the guaranteed value of Eligible Student Loans, imposes additional requirements on
servicers of Eligible Student Loans or in any other way adversely affects the interests of the
Administrative Agent, the Funding Agents or the Lenders to the extent that such amendment would
cause the value of the Collateral to cease being consistent with a program rated “A2” by Moody’s as
reasonably determined by each Valuation Agent using the ratings methodology the Valuation Agent
employs for rating the Notes;

     (o) A Take-Out Securitization shall not have been completed on or before the date that is
nineteen (19) calendar months after the Closing Date;

     (p) The Issuer shall fail to maintain its status as a single purpose bankruptcy remote limited
liability company;

 

 

     (q) The Issuer, the Administrator, CFS, the Master Servicer, any Affiliated Servicer or any
Affiliated Seller shall fail to pay, or shall default in the payment of, any principal or premium
or interest on any Indebtedness beyond any applicable grace period, or the Issuer, the
Administrator, CFS, the Master Servicer, any Affiliated Servicer or any Affiliated Seller shall
breach or default with respect to any other term of any evidence of any Indebtedness (provided that
for the Administrator, CFS, the Master Servicer, an Affiliated Servicer or an Affiliated Seller,
the amount of such Indebtedness must be at least $250,000), or of any loan agreement, mortgage,
indenture or other agreement relating thereto, if such failure, breach or default continues beyond
any applicable grace period, if the effect of such failure, default or breach (x) is to cause the
holder or holders of that Indebtedness (or a trustee on behalf of such holder or holders) to cause
that Indebtedness to become or be declared due prior to its stated maturity or (y) would permit the
holder of such Indebtedness to accelerate the maturity of such Indebtedness;

     (r) (i) One or more judgments for the payment of money shall be rendered against the Issuer or
(ii) one or more judgments for the payment of money in an aggregate amount in excess of $100,000
shall be rendered against the Administrator, CFS, the Master Servicer, any Affiliated Servicer, or
any Affiliated Seller and the same shall remain undischarged for a period of thirty (30)
consecutive days during which execution shall not be effectively stayed or a satisfactory bond
against such judgment shall not have been posted, or any action shall be legally taken by a
judgment creditor to attach or levy upon any assets of the Issuer, the Administrator, CFS, the
Master Servicer, any Affiliated Servicer or any Affiliated Seller to enforce any such judgment;

     (s) A Material Adverse Change has occurred and is continuing in the condition of the Issuer,
the Administrator, CFS, any Affiliated Seller, the Master Servicer, or any Affiliated Servicer;

     (t) [****];

     (u) As of the initial Borrowing, and at any time thereafter, (i) either of the Demand Note or
the Residual Payments Account Control Agreement shall for any reason cease to be a legal, valid and
binding obligation of CFS enforceable in accordance with its terms; (ii) the Residual Payments
Account shall cease to exist; (iii) any breach or default shall occur under the Demand Note or the
Residual Payments Account Control Agreement; or (iv) CFS or any Affiliate thereof (including any
trustee in bankruptcy) shall exercise any right of set-off against the indebtedness evidenced by
the Demand Note or any other Demand Note Collateral, shall assert the invalidity or
unenforceability of the Demand Note or any other Demand Note Collateral or shall assert the
invalidity or unenforceability of the pledge to the Indenture Trustee for the benefit of the
Secured Parties hereunder of any Demand Note Collateral; or (v) the Issuer shall fail to have a
perfected security interest in the Demand Note Collateral, subject only to the Intercreditor
Agreement; and

     (v) [****].

 

 

     SECTION 8.02. Remedies.

     (a) Optional Acceleration. Upon the occurrence of an Event of Termination (other than
an Event of Termination described in subsection (d) of Section 8.01), the
Administrative Agent may, or at the request of any Funding Agent shall, declare that the Facility
Termination Date has occurred and the unpaid principal amount of the Notes to be due and payable
immediately, by a notice in writing to Issuer, and upon any such declaration, the Facility
Termination Date shall occur and such principal amount shall be immediately due and payable,
together with all accrued and unpaid interest thereon (to the extent not previously capitalized),
without presentment, demand, protest or other notice of any kind, all of which are hereby waived by
Issuer.

     (b) Automatic Acceleration. Upon the occurrence of an Event of Termination described
in subsection (d) of Section 8.01, with respect to the Issuer the Facility
Termination Date shall occur automatically and the unpaid principal amount of the Notes shall
automatically become due and payable, together with all accrued and unpaid interest thereon (to the
extent not previously capitalized), without presentment, demand, protest or notice of any kind, all
of which are hereby waived by Issuer.

     (c) Master Servicer Replacement. Upon the occurrence of an Event of Termination, the
Administrative Agent may, or at the request of any Funding Agent, shall replace the Master
Servicer.

     (d) Additional Remedies. Upon any acceleration of the Notes pursuant to this
Section 8.02, no Borrowings thereafter will be made, and the Administrative Agent, the
Funding Agents, the Lenders, and the Indenture Trustee shall have, in addition to all other rights
and remedies under this Agreement or otherwise, all other rights and remedies provided under the
UCC of each applicable jurisdiction and other applicable laws to a secured party, which rights
shall be cumulative, including, without limitation, the right to foreclose upon the Collateral and
sell all or any portion thereof at public or private sale (and Issuer agrees that, to the extent
that notice of such sale is required, notice ten (10) days prior to such sale shall be adequate and
reasonable notice for all purposes); provided however that if the acceleration of
the Notes results solely from the failure of one or more Committed Lenders to extend the Facility
Termination Date pursuant to Section 1.06 and no additional Event of Termination has
occurred and is continuing, the Administrative Agent shall refrain from selling all or any portion
of the Collateral or replacing the Master Servicer until on or after the date which is 90 days
after the Facility Termination Date. The Issuer has provided the Administrative Agent with a power
of attorney authorizing the Administrative Agent to endorse the Pledged Student Loans which the
Administrative Agent agrees to exercise only upon the occurrence of and during the continuation of
an Event of Termination.

     (e) Portfolio Valuation. Upon the occurrence of any Event of Termination, or at any
time after five (5) Business Days prior notice to the Issuer, each Valuation Agent may at its
discretion (and shall at the request of any Funding Agent) perform a Portfolio Valuation on some or
all of the Student Loans constituting a portion of the Collateral.

     (f) Setoff; Sharing of Payments. Regardless of the other means of obtaining payment
of any of the obligations of the Issuer, the Administrator or the Master Servicer hereunder or
under any other Transaction Document, each of the Administrative Agent, the Funding Agents,

 

 

the Indenture Trustee, the Lenders and any Program Support Provider is hereby authorized at
any time and from time to time, without notice to the Issuer, the Administrator or the Master
Servicer (any such notice being expressly waived by the Issuer, the Administrator and the Master
Servicer) and to the fullest extent permitted by law, to set off and apply such deposits and other
sums against the obligations of the Issuer, the Administrator or the Master Servicer, as
applicable, under this Agreement and the other Transaction Documents, whether or not the
Administrative Agent, the Funding Agents, the Indenture Trustee, the Lenders or Program Support
Provider shall have made any demand under this Agreement or the other Transaction Documents and
although such obligations may be contingent or unmatured. Except as may be otherwise provided
herein, the Lenders, the Administrative Agent, the Funding Agents and the Program Support Providers
agree that all setoffs and other recoveries from the Issuer, the Administrator or the Master
Servicer shall be shared amongst the Lenders, the Administrative Agent, the Funding Agents and the
Program Support Providers as Collections in accordance with the terms of Section 3.03(b).

     (g) Demand Note; Residual Payments Account. The Administrative Agent and the
Indenture Trustee agree that they shall only exercise their right to demand payment under the
Demand Note or their right to deliver a Notice of Exclusive Control under the Residual Payments
Account Control Agreement on or after the occurrence of and during the continuance of an Event of
Termination and subject to the Intercreditor Agreement. Subject to the Intercreditor Agreement,
upon the occurrence of and during the continuance of an Event of Termination, the Administrative
Agent may, and at the request of any Funding Agent shall, (i) direct the Indenture Trustee to
demand payment under the Demand Note in accordance with the terms of the Demand Note and the
Residual Payments Account Control Agreement, (ii) exercise remedies available under the Demand Note
and (iii) take exclusive control over the Residual Payments Account pursuant to the Residual
Payments Account Control Agreement and terminate or suspend the ability of the Issuer or CFS to
make withdrawals therefrom. All rights of the Indenture Trustee and the Administrative Agent in
the Demand Note and the Residual Payments Account Control Agreement shall terminate upon the
payment in full of all of Issuer’s obligations hereunder and under the other Transaction Documents
and the reasonable determination by Administrative Agent that no further amounts with respect to
Covered Claims against the Issuer, the Master Servicer, the Administrator, any Affiliated Servicer
or any other Affiliate of Issuer pursuant to this Agreement, any Sub-Servicing Agreement or any
other Transaction Document could be required.

ARTICLE IX

THE ADMINISTRATIVE AGENT; THE FUNDING AGENTS; INDENTURE TRUSTEE

     SECTION 9.01. Authorization and Action. The Lenders have appointed and authorized the
Administrative Agent (or its designees) to take such action as agent on their behalf and to
exercise such powers under this Agreement as are delegated to the Administrative Agent by the terms
hereof, together with such powers as are reasonably incidental thereto. Each Lender has appointed
and authorized the Funding Agent (or its designees) in such Lender’s Lender Group to take such
action as agent on their behalf and to exercise such powers under this Agreement as are delegated
to a Funding Agent by the terms hereof, together with such powers as are reasonably incidental
thereto. The provisions of this Article IX are solely for the benefit

 

 

of the Administrative Agent, the Funding Agents and the Lenders. The Issuer shall not have
any rights as a third-party beneficiary or otherwise under any of the provisions hereof. No
Funding Agent shall have any responsibility hereunder to any Lender other than the Lenders in its
Lender Group.

     SECTION 9.02. Administrative Agent’s and Funding Agents’ Reliance, Indemnification,
Etc. (a) The Administrative Agent, the Funding Agents and their respective directors,
officers, agents or employees shall not be liable for any action taken or omitted to be taken by it
or them under or in connection with the Transaction Documents except for its or their own gross
negligence, bad faith or willful misconduct. Without limiting the generality of the foregoing, the
Administrative Agent and each Funding Agent: (a) may consult with legal counsel (including counsel
for Issuer or any Affiliate of Issuer), independent certified public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (b) makes no warranty or
representation to the Lenders or any other holder of any interest in the Collateral and shall not
be responsible to the Lenders or any such other holder for any statements, warranties or
representations made or deemed made in or in connection with any Transaction Document; (c) shall
not have any duty to ascertain or to inquire as to the performance or observance of any of the
terms, covenants or conditions of any Transaction Document on the part of Issuer, the Administrator
or the Master Servicer or to inspect the property (including the books and records) of Issuer, the
Administrator or the Master Servicer; (d) shall not be responsible to the Lenders or any other
holder of any interest in the Collateral for the due execution, legality, validity, enforceability,
genuineness, sufficiency or value of any Transaction Document; and (e) shall incur no liability
under or in respect of this Agreement by acting upon any notice (including notice by telephone),
consent, certificate or other instrument or writing (which may be by facsimile or telex) believed
by it to be genuine and signed or sent by the proper party or parties.

     (b) Each Lender agrees to reimburse and indemnify the Administrative Agent and the Funding
Agent in its Lender Group and their respective officers, directors, employees, representatives,
counsel and agents (to the extent the Administrative Agent or such Funding Agent is not paid or
reimbursed by the Issuer and the Master Servicer), ratably according to the respective principal
amounts of the Total Outstanding Advances then held by each of them (or if the Total Outstanding
Advances are equal to zero are such time, ratably in accordance with such Lender’s Pro Rata Share),
from and against any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against the Administrative Agent or such Funding Agent in any
way relating to or arising out of this Agreement or any other Transaction Document or any action
taken or omitted by the Administrative Agent or such Funding Agent under this Agreement or any the
Transaction Document, provided that no Lender shall be liable for any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the Administrative Agent’s or such Funding Agent’s gross negligence or
willful misconduct. Without limitation of the foregoing, each Lender agrees to reimburse the
Administrative Agent and the Funding Agent in its Lender Group promptly upon demand for its ratable
share of any out-of-pocket expenses (including reasonable counsel fees) incurred by the
Administrative Agent or such Funding Agent in connection with the preparation, execution, delivery,
administration, modification, amendment

 

 

or enforcement (whether through negotiations, legal proceedings or otherwise) of, or legal
advice in respect of rights or responsibilities under, this Agreement or any other Transaction
Document, to the extent that the Administrative Agent or such Funding Agent is not reimbursed for
such expenses by the Issuer, the Administrator and the Master Servicer.

     SECTION 9.03. Administrative Agent, Funding Agents and Affiliates. With respect to
any Advance made by the Administrative Agent or any Funding Agent, the Administrative Agent or such
Funding Agent shall have the same rights and powers under this Agreement as would a Lender if it
had made such Advance (or portion thereof) and may exercise the same as though such Person were not
the Administrative Agent or Funding Agent hereunder. The Administrative Agent, the Funding Agents
and any of their respective Affiliates may generally engage in any kind of business with Issuer,
the Administrator, the Master Servicer, any Obligor, any of their respective Affiliates and any
Person who may do business with or own securities of Issuer, the Master Servicer, any Obligor or
any of their respective Affiliates, all as if Administrative Agent or any such Funding Agent were
not serving in such capacity and without any duty to account therefor to the Lenders or any other
holder of an interest in the Collateral.

     SECTION 9.04. Lender’s Advance Decision. Each Lender acknowledges that it has,
independently and without reliance upon the Administrative Agent, any Funding Agent, any Valuation
Agent, any Affiliate of the Administrative Agent, Valuation Agent or any Funding Agent or any other
Lender, and based on such documents and information as it has deemed appropriate, made its own
evaluation and decision to enter into this Agreement and, if it so determines, to make Advances
hereunder. Each Lender also acknowledges that it will, independently and without reliance upon the
Administrative Agent, any Valuation Agent, any Funding Agent, any Affiliate of the Administrative
Agent, any Funding Agent, any Valuation Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own decisions in taking
or not taking action under this Agreement.

     SECTION 9.05. Delegation of Duties. The Administrative Agent and the Funding Agents
may delegate each or any of their respective duties under this Agreement by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to
such duties. The Administrative Agent and the Funding Agents shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.

     SECTION 9.06. Successor Administrative Agent and Funding Agents. (a) The
Administrative Agent may, upon thirty (30) days’ notice to Issuer, each Funding Agent, each Lender
and each other party hereto, resign as Administrative Agent. If the Administrative Agent shall
resign, then, the Lenders during such thirty-day period shall appoint a successor administrative
agent, whereupon such successor agent shall succeed to the rights, powers and duties of the
Administrative Agent and references herein to the Administrative Agent shall mean such successor
administrative agent, effective upon its appointment; and such former Administrative Agent’s
rights, powers and duties in such capacity shall be terminated, without any other or further act or
deed on the part of such former Administrative Agent or any of the parties to this Agreement. If
no such successor administrative agent is appointed within such thirty-day period, the
Administrative Agent may petition a court of competent jurisdiction to

 

 

appoint a successor Administrative Agent. After any retiring Administrative Agent’s
resignation hereunder as such agent, the provisions of this Article IX, Article XI
and Section 13.05 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement.

     (b) The “Administrative Agent” shall include any successors to the Administrative Agent as a
result of a merger, consolidation, combination, conversion, reorganization or any other transaction
(or series of related transactions) in which shares of the Administrative Agent’s capital stock are
sold or exchanged for or converted or otherwise changed into other stock or securities, cash and/or
any other property, or the sale, lease, assignment, transfer or other conveyance of a majority of
the assets of the Administrative Agent in any transaction (or series of related transactions).
Notwithstanding anything to the contrary in Section 9.06(a) and Section 10.01(c),
no consent of the Lenders shall be required in connection with the succession of the Administrative
Agent as a result of any of the foregoing transactions.

     (c) Any Funding Agent may, upon thirty (30) days’ notice to Issuer, each Lender in its Lender
Group and the Administrative Agent, resign as the Funding Agent. If any Funding Agent shall
resign, then, Lenders in such resigning Funding Agent’s Lender Group shall appoint, during such
thirty (30) day period, a successor agent, whereupon such successor funding agent shall succeed to
the rights, powers and duties of such Funding Agent and references herein to such Funding Agent
shall mean such successor agent, effective upon its appointment; and such former Funding Agent’s
rights, powers and duties in such capacity shall be terminated, without any other or further act or
deed on the part of such former Funding Agent or any of the parties to this Agreement. If no such
successor funding agent is appointed within such thirty (30) day period, the Funding Agent may
petition a court of competent jurisdiction to appoint a successor funding agent. After any
retiring Funding Agent’s resignation hereunder as such Funding Agent, the provisions of this
Article IX, Article XI and Section 13.05 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Funding Agent under this Agreement.

     (d) Any “Funding Agent” shall include any successors to such Funding Agent as a result of a
merger, consolidation, combination, conversion, reorganization or any other transaction (or series
of related transactions) in which shares of such Funding Agent’s capital stock are sold or
exchanged for or converted or otherwise changed into other stock or securities, cash and/or any
other property, or the sale, lease, assignment, transfer or other conveyance of a majority of the
assets of such Funding Agent in any transaction (or series of related transactions).
Notwithstanding anything to the contrary in Section 9.06(a) and Section 10.01(c),
no consent of the Lenders shall be required in connection with the succession of any Funding Agent
as a result of any of the foregoing transactions.

     SECTION 9.07. Acceptance of the Trusts. Each Lender, each Funding Agent and the
Administrative Agent hereby appoints The Bank of New York, as Indenture Trustee hereunder. The
Indenture Trustee accepts and agrees to execute the trusts granted to it by this Agreement, but
only upon the terms and conditions set forth herein. The Indenture Trustee, prior to the
occurrence of an Event of Termination and after the curing of all Events of Termination which may
have occurred, undertakes to perform such duties and only such duties as are specifically set forth
in this Agreement and no implied covenants or obligations shall be read into this Agreement against
the Indenture Trustee. The Indenture Trustee shall not be liable for any of its

 

 

actions or inactions hereunder except to the extent that such actions constitute negligence or
willful misconduct by the Indenture Trustee.

     In case an Event of Termination has occurred of which the Indenture Trustee has, or is deemed
to have, notice in accordance with this Agreement and has not been cured, the Indenture Trustee
agrees to act in accordance with the instructions and orders of the Administrative Agent, but in
any such event, only upon and subject to the following expressed terms and conditions:

     (a) The Indenture Trustee may execute any of the trusts or powers hereof and perform any of
its duties by or through attorneys, agents, receivers, employees or co-trustees but shall be
responsible for the conduct of the same in accordance with the standard specified above, except as
otherwise provided herein and except for the acts and omissions of agents of Persons other than the
Indenture Trustee chosen by Issuer and approved by the Administrative Agent and the Funding Agents
and shall be entitled to advice of counsel concerning all matters of trusts hereof and the duties
hereunder, and may in all cases pay such reasonable compensation to all such attorneys, agents,
receivers, and employees as may reasonably be employed in connection with the trusts hereof. The
Indenture Trustee may act upon the opinion or advice of an attorney or accountant selected by it in
the exercise of reasonable care. The Indenture Trustee shall not be responsible for any loss or
damage resulting from any action or nonaction of such Person which is in good faith and in reliance
upon such opinion or advice. The Indenture Trustee shall not be responsible for any action or
inaction of the Master Servicer, any Sub-Servicer or any party hereto except as provided herein or
under applicable laws, rules and regulations.

     (b) The Indenture Trustee shall not be responsible for any recital herein, or in the Notes, or
for the validity of the execution by Issuer of this Agreement, or of any supplemental indentures or
instruments of further assurance, or for the sufficiency of the security for the Notes issued
hereunder or intended to be secured hereby, or for the value or title of the property herein
conveyed or otherwise as to the maintenance of the security hereof.

     (c) The Indenture Trustee shall not be accountable for the use or application by Issuer of the
Notes or the proceeds thereof or for the use or application of any money paid over by the Indenture
Trustee in accordance with the provisions of this Agreement or for the use and application of other
money received by the Indenture Trustee.

     (d) The Indenture Trustee shall be protected in acting upon any notice, requisition, request,
consent, certificate, order, opinion, affidavit, letter, telegram or other paper or document
reasonably believed to be genuine and correct and to have been signed or sent by the proper Person
or Persons. Any action taken by the Indenture Trustee pursuant to this Agreement upon the request
or authority or consent of any Person who at the time of making such request or giving such
authority or consent is the owner of the Notes shall be conclusive and binding upon all future
owners of the Notes and upon any Notes issued in exchange therefor or in place thereof.

     (e) Except as otherwise expressly provided in this Agreement, as to the existence or
nonexistence of any fact or as to the sufficiency or validity of any instrument, paper or
proceeding, the Indenture Trustee shall be entitled to conclusively rely upon a certificate of the
Administrative Agent as sufficient evidence of facts therein contained, and prior to the

 

 

occurrence of a default of which the Indenture Trustee has been notified as provided in
subsection (g) of this Section, or of which by said subsection it is deemed to have notice,
shall also be at liberty to accept a dealing, transaction or action as necessary or expedient, but
may at its discretion secure such further evidence deemed necessary or advisable, but shall in no
case be bound to secure the same.

     (f) The permissive right of the Indenture Trustee to do things enumerated in this Agreement
shall not be construed as a duty. The Indenture Trustee shall not be answerable for other than its
negligence or willful misconduct; provided, however, that the Indenture Trustee
shall not be liable for any error of judgment made in good faith, unless it shall be proved that
such Person was negligent in ascertaining the pertinent facts.

     (g) The Indenture Trustee shall not be required to take notice or be deemed to have notice of
any Event of Termination or other default hereunder except failure by Issuer to cause to be made
any of the payments to the Indenture Trustee for the account of the Lenders required to be made by
Article III, or Events of Termination under clause (a) of Section 8.01,
unless the Indenture Trustee shall be specifically notified in writing of such default by Issuer,
the Lenders, any Funding Agent or the Administrative Agent.

     (h) The Indenture Trustee shall not be required to give any bond or surety in respect of the
execution of the said trusts and powers or otherwise in respect of the premises.

     (i) No provision of this Agreement shall require the Indenture Trustee to expend or risk its
own funds or otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds
for believing that repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.

     (j) If any Event of Termination under this Agreement shall have occurred and be continuing,
the Indenture Trustee shall exercise such of the rights and powers vested in it by this Agreement,
and shall use the same degree of care as a prudent person would exercise or use in the
circumstances in the conduct of his or her own affairs.

     (k) All moneys received by the Indenture Trustee shall, until used or applied or invested as
herein provided, be held in trust for the purposes for which they were received in the Collection
Account.

     (l) The Indenture Trustee shall file or cause to be filed, at the expense of the Issuer,
Uniform Commercial Code continuation statements to the Uniform Commercial Code financing statements
in favor of the Indenture Trustee originally filed at the delivery of this Agreement prior to every
fifth year.

     (m) Whether or not herein expressly so provided, every provision of this Agreement relating to
the conduct or affecting the liability of or affording protection to the Indenture Trustee shall be
subject to the provisions of this Section 9.07.

 

 

     SECTION 9.08. Fees, Charges and Expenses of Indenture Trustee. The Indenture Trustee
shall be entitled to payment of the Indenture Trustee’s Fees for its services rendered
hereunder and to payment of, or reimbursement for, all advances, reasonable counsel fees and
expenses and other out-of-pocket expenses reasonably and necessarily made or incurred by the
Indenture Trustee, in connection with such services and waives any lien on the Collateral with
respect to accrued and unpaid fees and reasonable expenses, including any indemnification pursuant
to Section 9.18, other than any such lien arising pursuant to the Transaction Documents.

     SECTION 9.09. Notice to Lenders if Event of Termination Occurs. If an Event of
Termination occurs of which the Indenture Trustee is by Section 9.07(g) required to take
notice or if notice of default be given as provided in said Section 9.07(g), then the
Indenture Trustee shall give written notice thereof by registered or certified mail to Issuer, the
Lenders, the Funding Agents and the Administrative Agent.

     SECTION 9.10. Intervention by Indenture Trustee. To the extent permitted by
applicable law, in any judicial proceeding to which Issuer is a party, the Indenture Trustee shall
intervene if directed to do so in writing by the Administrative Agent.

     SECTION 9.11. Successors. Any corporation or association into which the Indenture
Trustee may be converted or merged, or with which it may be consolidated, or to which it may sell
or transfer its corporate trust business and assets as a whole or substantially as a whole, or any
corporation or association resulting from any such conversion, sale, merger, consolidation or
transfer to which it is a party, ipso facto, shall be and become successor
Indenture Trustee hereunder and vested with all of the title to the whole property or trust estate
and all the trusts, powers, discretions, immunities, privileges and all other matters as was its
predecessor, without the execution or filing of any instrument or any further act, deed or
conveyance on the part of any of the parties hereto, anything herein to the contrary
notwithstanding.

     SECTION 9.12. Resignation. The Indenture Trustee may at any time resign from the
trusts hereby created by giving ninety (90) days’ written notice to Issuer, the Funding Agents and
the Administrative Agent, and such resignation shall take effect at the end of such ninety (90)
days, or upon the earlier appointment and acceptance of a successor Indenture Trustee, as provided
in Section 9.14, hereof, or removal as provided in Section 9.13 hereof.
Notwithstanding the foregoing, resignation of the Indenture Trustee shall not be effective until a
successor or temporary Indenture Trustee is appointed and has accepted such appointment;
provided, however, if an instrument of acceptance shall not have been delivered
within one hundred twenty (120) days after giving such notice of resignation, the resigning
Indenture Trustee may petition a court of competent jurisdiction for the appointment of a
successor, and any attorneys’ fees and expenses incurred in connection with such petition shall be
payable by Issuer, unless such failure is due to the gross negligence, bad faith or willful
misconduct of the Administrative Agent or any Funding Agent in not exercising its rights under
Section 9.14, in which event such fees and expenses shall be paid by the Administrative
Agent or any such Funding Agent, as applicable.

     SECTION 9.13. Removal. The Indenture Trustee may be removed by the Administrative
Agent or any Funding Agent at any time, by an instrument in writing delivered to the Indenture
Trustee, with, prior to the occurrence of an Event of Termination, the written consent of the
Issuer which consent shall not be unreasonably withheld. Notwithstanding the
foregoing, removal of the Indenture Trustee shall not be effective until a successor is
appointed and has accepted such appointment.

 

 

     SECTION 9.14. Appointment of Successor. In case the Indenture Trustee shall resign or
be removed, or be dissolved, or shall be in course of dissolution or liquidation, or otherwise
become incapable of acting hereunder, or in case it shall be taken under the control of any public
officer or officers, or of a receiver appointed by a court, a successor may be appointed by the
Administrative Agent and the Funding Agents with the consent (which consent shall not be
unreasonably withheld) of Issuer by an instrument in writing signed by the Administrative Agent and
the Funding Agents. If in a proper case no appointment of a successor Indenture Trustee shall be
made pursuant to the foregoing provisions of this Section 9.14 within fifteen (15) days
after the Indenture Trustee shall have given written notice as provided in Section 9.12
hereof, the Indenture Trustee, Issuer, the Administrative Agent, the Funding Agents or the Lenders
may apply to a court of jurisdiction to appoint a successor Indenture Trustee. Said court may
thereupon, after such notice, if any, as such court may deem proper and prescribe, appoint a
successor Indenture Trustee. Each such successor Indenture Trustee shall agree in writing to be
bound by the provisions of Section 13.06.

     SECTION 9.15. Concerning Any Successor. Every successor Indenture Trustee appointed
hereunder shall execute, acknowledge and deliver to its predecessor and also to Issuer the
Administrative Agent and the Funding Agents an instrument in writing accepting such appointment
hereunder, and thereupon such successor, without any further act, deed or conveyance, shall become
fully vested with all the estates, properties, rights, powers, trusts, duties and obligations of
its predecessor; but such predecessor shall, nevertheless, upon receipt of a request from the
Administrative Agent or any Funding Agent, execute and deliver an instrument transferring to such
successor all the estates, properties, rights, powers and trusts of such predecessor hereunder; and
every predecessor shall deliver all securities and moneys held by it as Indenture Trustee hereunder
to its successor.

     SECTION 9.16. Appointment of Co-Trustee. It is the purpose of this Agreement that
there shall be no violation of any law of any jurisdiction denying or restricting the right of
banking corporations or associations to transact business as the Indenture Trustee in such
jurisdiction. It is recognized that in case of litigation under this Agreement or any other
Transaction Document or any Student Loan or related agreement, and in particular in case of the
enforcement thereof on default, or in case of a conflict of interest, or in case the Indenture
Trustee deems that by reason of any present or future law of any jurisdiction it may not exercise
any of the powers, rights or remedies herein granted to the Indenture Trustee or hold title to the
properties, in trust, as herein granted, or take any other action which may be desirable or
necessary in connection therewith, it may be necessary that the Indenture Trustee appoint an
additional institution, which must be a commercial bank with trust powers, as a separate or
co-trustee. The following provisions of this Section 9.16 are intended to accomplish these
ends. In the event that the Indenture Trustee appoints an additional individual or institution as
a separate or co-trustee, each and every remedy, power, right, claim, demand, cause of action,
immunity, estate, title, interest and lien expressed or intended by this Agreement to be exercised
by or vested in or conveyed to the Indenture Trustee with respect thereto shall be exercisable by
and vest in such separate or co-trustee but only to the extent necessary to enable such separate or
co-trustee to exercise such powers, rights and remedies, and every covenant and obligation

 

 

necessary to the exercise thereof by such separate or co-trustee shall run to and be
enforceable by either of them.

     Should any instrument in writing from Issuer be required by the separate or co-trustee so
appointed by the Indenture Trustee for more fully and certainly vesting in and confirming to him,
her or it such properties, rights, powers, trusts, duties and obligations, any and all such
instruments in writing shall, on request, be executed, acknowledged and delivered by Issuer. In
case any separate or co-trustee, or a successor to either, shall die, become incapable of acting,
resign or be removed, all the estates, properties, rights, powers, trusts, duties and obligations
of such separate or co-trustee, so far as permitted by law, shall vest in and be exercised by the
Indenture Trustee until the appointment of a new Indenture Trustee or a successor to such separate
or co-trustee.

     SECTION 9.17. Successor Indenture Trustee as Trustee of Funds. In the event of a
change of the Indenture Trustee the predecessor which has resigned or been removed shall cease to
be trustee of any funds then held by it hereunder and the successor Indenture Trustee shall become
such trustee.

     SECTION 9.18. Indemnification.

     (a) The Indenture Trustee shall not be under any obligation or duty to perform any act at the
request of the Administrative Agent, any Funding Agent or Issuer or to institute or defend any suit
in respect hereof or to exercise any remedy hereunder unless properly indemnified to its
satisfaction subject to Section 9.07(i) hereof. The Indenture Trustee shall not be
required to take notice, or be deemed to have knowledge, of any default of Issuer, except as
provided in Section 9.07(g).

     (b) Issuer agrees to indemnify the Indenture Trustee for, and to hold it harmless against, any
loss, liability or expense, including attorneys’ fees, incurred without gross negligence, bad faith
or willful misconduct on the Indenture Trustee’s part, arising out of or in connection with the
acceptance or administration of the trust or trusts hereunder, including the costs and expenses
(including reasonable counsel fees) of defending itself against any claim or liability in
connection with the exercise or performance of any of its powers or duties hereunder except as a
result of gross negligence, bad faith or willful misconduct on its part.

     SECTION 9.19. Amendments; Waivers. The Indenture Trustee shall not extend, terminate,
waive, amend or otherwise modify the terms of any Pledged Student Loan, except pursuant to
Section 7.03(a), or, without the prior written consent of the Administrative Agent and the
Required Funding Agents, extend, terminate, waive, amend or otherwise modify the terms of any other
Transaction Document.

 

 

ARTICLE X

ASSIGNMENT OF LENDER’S INTEREST

     SECTION 10.01. Restrictions on Assignments.

     (a) This Agreement and each Lender’s rights and obligations herein (including ownership of the
Notes) shall be assignable, in whole or in part, by such Lender and its successors and assigns with
the prior written consent of the Administrative Agent, the Funding Agent for the applicable Lender
Group and the Issuer; provided, however, that the consent of the Issuer and the
Administrative Agent shall not be unreasonably withheld and the consent of the Issuer shall not be
required if an Event of Termination shall have occurred and be continuing; and provided,
further, that no consent of the Issuer shall be required if the assignment is made (a) by
any Committed Lender to any Funding Agent, any other Committed Lender, any Affiliate of any Funding
Agent or any Committed Lender (other than a director or officer of any Funding Agent or such
Committed Lender), to any Program Support Provider or any Person which (i) is in the business of
issuing commercial paper notes and (ii) is associated with or administered by any Funding Agent or
any Affiliate of any Funding Agent or (b) by any Conduit Lender to any Program Support Provider or
any Person which (i) is in the business of issuing commercial paper notes and (ii) is associated
with or administered by any Funding Agent or any Affiliate of any Funding Agent. Each assignor
may, in connection with the assignment, disclose to the applicable assignee any information
relating to Issuer or the Collateral furnished to such assignor by or on behalf of the Lenders,
Issuer, the Funding Agents or the Administrative Agent.

     (b) Each Lender may at any time grant to any Program Support Provider participating interests
in the Advances. In the event of any such grant by such Lender of a participating interest to a
Program Support Provider, except as set forth in paragraph (f) below, such Lender shall
remain solely responsible for the performance of its obligations hereunder. Issuer agrees that
each Program Support Provider shall be entitled to the benefits of Sections 4.02 and
4.03.

     (c) This Agreement and the rights and obligations of the Administrative Agent hereunder shall
be assignable, in whole or in part, by the Administrative Agent and its successors and assigns with
the consent of Issuer and the Funding Agents, which consent shall not be unreasonably withheld;
provided that, if (i) such assignment is to an Affiliate of any Funding Agent, (ii) it
becomes unlawful for any Funding Agent to serve as the Administrative Agent or (iii) an Event of
Termination exists, no such consent of Issuer shall be necessary. This Agreement and the rights
and obligations of each Funding Agent hereunder shall be assignable, in whole or in part, by any
such Funding Agent and its successors and assigns with the consent of Issuer and the Administrative
Agent, which consent shall not be unreasonably withheld; provided that, if (i) such
assignment is to an Affiliate of such Funding Agent, (ii) it becomes unlawful for such Funding
Agent to serve as a Funding Agent or (iii) an Event of Termination exists, no such consent of
Issuer shall be necessary.

     (d) Issuer may not assign its rights or delegate its obligations hereunder or any interest
herein without the prior written consent of the Administrative Agent, the Funding Agents and the
Lenders.

     (e) Without limiting any other rights that may be available under applicable law, the rights
of the Lenders may be enforced through them or by their agents.

     (f) In the event that the Advances have been assigned in their entirety pursuant to one or
more Program Support Agreements, and the Administrative Agent or any Funding Agent requests that
Issuer acknowledge the assignment of the Advances to the Program Support

 

 

Providers parties to such Program Support Agreements (or an agent on their behalf), Issuer
agrees (i) to enter into such amendments to this Agreement and the other Transaction Documents as
the Administrative Agent, the Funding Agents or the Lenders may reasonably request in order to
reflect the substitution of such Program Support Providers, or an agent therefor, as the Lenders
and the release of the Lenders of all further obligations hereunder, (ii) to authorize and deliver
Uniform Commercial Code financing statements, or amendments thereto or assignments thereof, to
reflect such assignment and substitution and (iii) to take such other actions as the Administrative
Agent, the Funding Agents or the Lenders shall reasonably request in connection with such
assignment, release and substitution.

     (g) Any Lender may, without consent of the Issuer, sell participations to one or more banks or
other entities (each, a “Participant”) in all or a portion of its rights and obligations
hereunder (including the outstanding Advances); provided that following the sale of a participation
under this Agreement (i) the obligations of such Lender shall remain unchanged, (ii) such Lender
shall remain solely responsible to the other parties hereto for the performance of such obligations
and (iii) the Issuer, the Funding Agents, the Administrative Agent, the other Lenders and the
Master Servicer shall continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to
which such Lender sells such a participation shall provide that the Participant shall not have any
right to direct the enforcement of this Agreement or the other Transaction Documents or to approve
any amendment, modification or waiver of any provision of this Agreement or the other Transaction
Documents; provided that such agreement or instrument may provide that such Lender will not,
without the consent of the Participant, agree to any amendment, modification or waiver that (x)
reduces the amount of principal or interest that is payable on account of any Advance or delays any
scheduled date for payment thereof or (y) reduces any fees payable by the Issuer to the
Administrative Agent or any Funding Agent (to the extent relating to payments to the Participant)
or delays any scheduled date for payment of such fees. The Issuer acknowledges and agrees that the
Lenders’ sources of funds may derive in part from their Participants. Accordingly, references in
Sections 4.01, 4.02, 4.03, 13.05 and the other terms and provisions
of this Agreement and the other Transaction Documents to determinations, reserve and capital
adequacy requirements, expenses, increased costs, reduced receipts and the like as they pertain to
the Lenders shall be deemed also to include those of their Participants.

     (h) Notwithstanding any other provision of this Section 10.01, any Lender may at any
time pledge or grant a security interest in all or any portion of its rights (including, without
limitation, rights to payment of interest and repayment of Advances) under this Agreement to secure
obligations of such Lender to a Federal Reserve Bank, without notice to or consent of any Person;
provided, that no such pledge or grant of a security interest shall release a Lender from
any of its obligations hereunder or substitute any such pledgee or grantee for such Lender as a
party hereto.

     SECTION 10.02. Rights of Assignee. Upon the assignment by a Lender in accordance with
this Article X, the assignee receiving such assignment shall have all of the rights of such
Lender with respect to the Transaction Documents and the Collateral (or such portion thereof as has
been assigned).

 

 

     SECTION 10.03. Evidence of Assignment. Any assignment of a Lender’s rights and
obligations hereunder, the Commitment and the Notes (or any portion thereof) to any Person may be
evidenced by an Assignment and Assumption Agreement or such other instrument(s) or document(s) as
may be satisfactory to the assigning Lender, the Funding Agent for to the assignor Lender’s Lender
Group, the Administrative Agent and the assignee.

ARTICLE XI

INDEMNIFICATION

     SECTION 11.01. Indemnities.

     (a) General Indemnity. Without limiting any other rights that any such Person may
have hereunder or under applicable law (including, without limitation, the right to recover damages
for breach of contract), Issuer hereby agrees to indemnify each of the Administrative Agent, the
Funding Agents, the Lenders (including, in the case of each Conduit Lender, the members of such
Conduit Lender), each Valuation Agent, the Program Support Providers, the Indenture Trustee, the
Master Servicer (if not an Affiliated Seller or an Affiliate of the Affiliated Seller), each of
their respective Affiliates, and all successors, transferees, participants and assigns and all
officers, directors, employees, advisors, representatives and agents of any of the foregoing (each
an “Indemnified Party”), from and against any and all damages, losses, claims, liabilities
and related costs and expenses, including reasonable attorneys’ fees and disbursements (all of the
foregoing being collectively referred to as “Indemnified Amounts”) awarded against or
incurred by any of them arising out of or relating to the Transaction Documents or the funding of
the Advances or in respect of any Pledged Student Loan, excluding, however, (a)
Indemnified Amounts to the extent determined by a court of competent jurisdiction to have resulted
from gross negligence or willful misconduct on the part of such Indemnified Party or (b) recourse
for Defaulted Pledged Student Loans (except as specifically provided herein). Without limiting the
foregoing, Issuer shall indemnify each Indemnified Party for Indemnified Amounts arising out of or
relating to:

     (i) the adjustment or any non-cash reduction in the outstanding [****] of any Pledged
Student Loan other than as expressly permitted hereunder;

     (ii) the transfer by Issuer of any interest in the Collateral other than the grant of a
security interest granted to the Indenture Trustee, for the benefit of the Secured Parties,
pursuant to Section 1.03 or as permitted under Section 7.04(a);

     (iii) any representation or warranty made or deemed made by Issuer (or any of its
officers or Affiliates) under or in connection with any Transaction Document or any other
information or report delivered by or on behalf of Issuer pursuant hereto, which shall have
been false, incorrect or misleading in any respect when made or deemed made;

     (iv) the failure by Issuer to comply with any applicable law, rule or regulation with
respect to any Pledged Student Loan or the nonconformity of any Pledged Student Loan with
any such applicable law, rule or regulation, including in each case (without limitation)
failure to comply with the Equal Credit Opportunity Act, the Fair Debt

 

 

Collection Practices Act, the Truth in Lending Act, the Federal Trade Commission Act,
the Federal Reserve Board’s Regulation B, applicable laws to usury, truth-in-lending,
education lending, fair credit billing, fair credit reporting, fair debt collection
practices, privacy, consumer credit protection and disclosure and other applicable consumer
credit laws and equal credit opportunity laws;

     (v) the failure to vest and maintain vested in the Indenture Trustee, for the benefit
of the Secured Parties, a first priority perfected security interest, in the Collateral,
free and clear of any Lien, other than a Lien arising solely as a result of an act of the
Lenders, the Funding Agents or the Administrative Agent, whether existing at the time of any
Borrowing or at any time thereafter;

     (vi) the failure to file, or any delay in filing, financing statements, continuation
statements or other similar instruments or documents under the UCC of any applicable
jurisdiction or other applicable laws with respect to any item of the Collateral, whether at
the time of any Borrowing or at any time thereafter;

     (vii) any dispute, claim, offset or defense (other than discharge in bankruptcy) of the
Obligor to the payment of any Student Loan or Guarantee Agreement in, or purporting to be
in, the Collateral (including, without limitation, a defense based on such Student Loan or
Guarantee Agreement not being a legal, valid and binding obligation of such Obligor
enforceable against it in accordance with its terms or any defense based on the failure to
comply with the Equal Credit Opportunity Act, the Fair Debt Collection Practices Act, the
Truth in Lending Act, the Federal Trade Commission Act, the Federal Reserve Board’s
Regulation B, applicable laws relating to usury, truth-in-lending, education lending, fair
credit billing, fair credit reporting, fair debt collection practices, privacy, consumer
credit protection and disclosure and other applicable consumer credit laws and equal credit
opportunity laws);

     (viii) any Regulatory Change after the date of this Agreement that results in any
Non-Excluded Tax, all interest and penalties thereon or with respect thereto, and all
out-of-pocket costs and expenses, including the reasonable fees and expenses of counsel in
defending against the same, which may arise by reason of the Advances, or any interest in
the item of the Collateral;

     (ix) the failure by the Issuer to comply with any term, provision or covenant contained
in any Transaction Document to which it is party;

     (x) any Lien (other than the Lien granted to the Indenture Trustee under this
Agreement) attaching to any Student Loan or any Related Security or Collections with respect
thereto, whether existing at the time that such Student Loan initially arose or at any time
thereafter;

     (xi) any claim or action of whatever sort arising out of or in connection with the
origination or servicing of any Pledged Student Loan or any other services which gave rise
to any Pledged Student Loan to the extent such origination, servicing or services were
provided by the Issuer or an Affiliate of the Issuer or, if such origination,

 

 

servicing or services were provided by a Person not the Issuer or an Affiliate of the
Issuer, to the extent the Issuer is entitled to recover such Indemnified Amounts from such
non-Affiliate or another Person;

     (xii) the failure to pay when due any taxes and fees payable by the Issuer, any
Affiliated Seller or any Originator in connection with the Collateral or the execution,
delivery, filing and recording of this Agreement or the other agreements and documents to be
delivered hereunder (including any UCC financing statements);

     (xiii) the payment by such Indemnified Party of taxes, including, without limitation,
any taxes imposed by any jurisdiction on amounts payable and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto, to the extent
caused by the Issuer’s actions or failure to act in breach of this Agreement;

     (xiv) the commingling of Collections with any other funds of the Issuer or any
Affiliate of the Issuer;

     (xv) any failure by the Issuer to give reasonably equivalent value to any Affiliated
Seller or the failure of any Affiliated Seller to give reasonably equivalent value to any
Originator in consideration for the transfer by such Affiliated Seller to the Issuer (or of
such Originator to an Affiliated Seller) of any Student Loans, or any attempt by any Person
to void any such transfer under any statutory provision or common law or equitable action,
including, without limitation, any provision of the Bankruptcy Code;

     (xvi) the failure of the Master Servicer or any Sub-Servicer perform its servicing and
other obligations under the Transaction Documents or to remit any Collections pursuant to
the instructions of the Administrative Agent, the Funding Agents or the Indenture Trustee
given in accordance with this Agreement, whether by reason of the exercise of setoff rights
or otherwise;

     (xvii) any investigation, litigation or proceeding related to this Agreement or the use
of proceeds of purchases made pursuant to this Agreement or any other Transaction Document
delivered hereunder or in respect of any of the Student Loans related hereto;

     (xviii) any claim brought by any Person arising from any activity by the Issuer or an
Affiliate of the Issuer in servicing, administering or collecting any Student Loan; or

     (xix) the sale or pledge by the Issuer, any Affiliated Seller or any Originator of any
Student Loan in violation of any applicable law, rule or regulation.

The exclusion in clause (b) of the first sentence of this Section 11.01 shall not apply to
any Indemnified Amounts described in clauses (i) through (xix) above. Any amounts subject to the
indemnification provisions of this Section 11.01 shall be paid by the Issuer to the related
Indemnified Party within five Business Days following demand therefor accompanied by reasonable
supporting documentation with respect to such amounts; provided, however, that no
amounts payable hereunder shall be paid to the Master Servicer if the Master Servicer is an
Affiliated Seller or an Affiliate of the Affiliated Seller or of the Issuer until all amounts
payable hereunder are made to the other Indemnified Parties.

 

 

     (b) Contest of Tax Claim; After-Tax Basis. If any Indemnified Party shall have notice
of any attempt to impose or collect any tax or governmental fee or charge for which indemnification
will be sought from Issuer under Section 11.01(a)(viii), such Indemnified Party shall give
prompt and timely notice of such attempt to Issuer. Indemnification hereunder shall be in an
amount necessary to make the Indemnified Party whole after taking into account any tax consequences
to the Indemnified Party of the payment of any of the aforesaid taxes and the receipt of the
indemnity provided hereunder or of any refund of any such tax previously indemnified hereunder,
including the effect of such tax or refund on the amount of tax measured by net income or profits
which is or was payable by the Indemnified Party.

ARTICLE XII

SERVICING OF PLEDGED STUDENT LOANS AND ADMINISTRATION OF ISSUER

     SECTION 12.01. Duties of Master Servicer. The Master Servicer, for the benefit of
Issuer and the Lenders (to the extent provided herein), shall appoint one or more Sub-Servicers
approved by the Administrative Agent and the Funding Agents to manage, service, administer and make
collections on the Pledged Student Loans. The Master Servicer shall (and shall cause each
Sub-Servicer to) exercise reasonable care, using that degree of skill and attention that the Master
Servicer (or such Sub-Servicer) exercises with respect to all comparable student loans that it
services but in any event, in accordance with customary and usual standards of practice of prudent
lenders and loan servicers administering similar student loans. Without limiting the generality of
the foregoing or of any other provision set forth in this Agreement and notwithstanding any other
provision to the contrary set forth herein, the Master Servicer shall and shall cause the
applicable Sub-Servicer to manage, service, administer and make collections with respect to the
Pledged Student Loans in accordance with, and otherwise comply with, all applicable federal and
state laws, state and local laws, including (without limitation) the Equal Credit Opportunity Act,
the Fair Debt Collection Practices Act, the Truth in Lending Act, the Federal Trade Commission Act,
the Federal Reserve Board’s Regulation B, applicable laws relating to usury, truth-in-lending,
education lending, fair credit billing, fair credit reporting, fair debt collection practices,
privacy, consumer credit protection and disclosure, and other applicable consumer credit laws and
equal credit opportunity laws, and any Guarantee Agreement, the failure to comply with which would
adversely affect the eligibility of one or more of the Pledged Student Loans for receipt of
Guarantee Payments or would have an adverse effect on the Lenders or any other Secured Party. The
Master Servicer and each Sub-Servicer shall comply with the Credit and Collection Policies.

     The Master Servicer’s duties (and the duties of the applicable Sub-Servicers on behalf of the
Master Servicer) shall include collection and posting of all payments, responding to inquiries of
borrowers on such Pledged Student Loans, monitoring borrowers’ status, making required disclosures
to borrowers, investigating delinquencies, sending payment coupons or billing notices to borrowers
and otherwise establishing repayment terms, reporting tax information to borrowers, if applicable,
accounting for collections and furnishing monthly and quarterly statements with respect thereto to
the Administrative Agent and the Funding Agents. Unless otherwise expressly provided herein, the
Master Servicer shall and shall cause the applicable Sub-Servicer to follow its customary
standards, policies and procedures in performing its duties as servicer. Without limiting the
generality of the foregoing, the Master Servicer is authorized

 

 

and empowered to execute and deliver (and may cause the applicable Sub-Servicer to execute and
deliver), on behalf of itself, Issuer, the Indenture Trustee, the Lenders or any of them,
instruments of satisfaction or cancellation, or partial or full release or discharge, and all other
comparable instruments, with respect to such Pledged Student Loans; provided,
however, that the Master Servicer agrees that it will not (nor will it permit a
Sub-Servicer to) (a) permit any rescission or cancellation of a Pledged Student Loan except as
ordered by a court of competent jurisdiction or governmental authority or as otherwise consented to
in writing by the Administrative Agent, the Required Funding Agents and the Indenture Trustee or
(b) reschedule, revise, defer or otherwise compromise with respect to payments due on any Pledged
Student Loan except pursuant to any applicable deferral or forbearance periods permitted by the
Credit and Collection Policy or otherwise in accordance with all applicable standards, guidelines
and requirements of any Guarantee Agreement or as permitted under Section 7.03(a);
provided further, however, that the Master Servicer shall not agree (nor
shall it permit any Sub-Servicer to agree) to any decrease of the interest rate on, or the
principal amount payable with respect to, any Pledged Student Loan except in accordance with the
applicable standards, guidelines and requirements of any Guarantee Agreement or a Reduced Rate
Program.

     The Issuer hereby grants a power of attorney and all necessary authorization to the Master
Servicer to (or to cause the applicable Sub-Servicer to) maintain any and all collection procedures
with respect to the Pledged Student Loans it services (or sub-services), including filing, pursuing
and recovering claims against the Guarantors for Guarantee Payments and taking any steps to enforce
such Pledged Student Loan such as commencing a legal proceeding to enforce a Pledged Student Loan
in the name of Issuer, the Indenture Trustee, the Lenders and the Secured Parties. The Indenture
Trustee shall upon the written request of the Master Servicer or the Administrative Agent furnish
the Master Servicer or the Administrative Agent (or at written the direction of the Master Servicer
or the Administrative Agent, the related Sub-Servicer) with any other powers of attorney and other
documents reasonably necessary or appropriate to enable the Master Servicer or the Administrative
Agent (or related Sub-Servicer) to carry out their servicing and administrative duties hereunder
(or under the related Sub-Servicing Agreement).

     The Master Servicer or the Administrator may hold the Student Loan Notes representing Pledged
Student Loans for not later than five (5) days after the date of any Borrowing prior to forwarding
those Student Loan Notes to Sub-Servicers. Each of the Master Servicer and the Administrator
acknowledges and agrees that it will hold each such Student Loan Note as bailee pursuant to Section
9-313 of the UCC for the Indenture Trustee for the benefit of the Secured Parties.

     To the extent that any provisions of this Indenture conflict with any provisions of any other
servicing or administration agreement between the Issuer and Master Servicer, the terms of this
Indenture shall govern.

     SECTION 12.02. Collection of Pledged Student Loan Payments.

     (a) The Master Servicer shall (and shall cause the applicable Sub-Servicers to) make
reasonable efforts (including all efforts that may be specified under any Guarantee Agreement) to
collect all payments called for under the terms and provisions of the Pledged Student Loans as and
when the same shall become due and shall follow such collection procedures as it follows

 

 

with respect to all comparable student loans that it services. With the written consent of
the Administrative Agent and the Required Funding Agents, the Master Servicer (or at the direction
of the Master Servicer, the related Sub-Servicer) may in its discretion waive any charge or any
other fee that may be collected in the ordinary course of servicing a Pledged Student Loan. The
Master Servicer shall (and shall cause the applicable Sub-Servicers to) remit all collections
relating to the Pledged Student Loans to the Collection Account no later than the close of business
on the second Business Day after receipt thereof; provided, however, that any Third
Party Servicer may remit such collections to the Collection Account, as applicable, less frequently
(but no less frequently than three times per month and at least once every fifteen days). The
Master Servicer shall not (and shall not allow any Affiliated Seller to) deposit any amounts other
than Collections (and other amounts required by the terms of this Agreement to be deposited into
the Collection Account) into the Collection Account.

     (b) The Master Servicer shall (and shall cause the applicable Sub-Servicer to) make reasonable
efforts to claim, pursue and collect all Guarantee Payments from the Guarantors pursuant to the
Guarantee Agreements with respect to any of the Pledged Student Loans as and when the same shall
become due and payable, shall comply with all applicable laws and agreements with respect to
claiming, pursuing and collecting such payments and shall follow such practices and procedures as
it follows with respect to all comparable guarantee agreements and student loans that it services.
In connection therewith, the Master Servicer is hereby authorized and empowered (or at the
direction of the Master Servicer, the related Sub-Servicer is authorized and empowered) to convey
to any Guarantor the Student Loan Note and the related loan documents representing any Pledged
Student Loan in connection with submitting a claim to such Guarantor for a Guarantee Payment in
accordance with the terms of the applicable Guarantee Agreement.

     (c) The Master Servicer shall cause the applicable Sub-Servicer to manage, service, administer
and make collections with respect to the Pledged Student Loans in accordance with, and otherwise
comply with, all applicable federal and state laws, including all applicable standards, guidelines
and requirements of any applicable Guarantee Agreement.

     SECTION 12.03. Realization upon Pledged Student Loans. For the benefit of Issuer, the
Lenders and the Secured Parties, the Master Servicer shall (and shall cause the applicable
Sub-Servicer to) use reasonable efforts consistent with its customary servicing practices and
procedures and including all efforts that may be specified under any applicable Guarantee Agreement
in its servicing (or sub-servicing) of any delinquent Pledged Student Loans.

     SECTION 12.04. No Impairment or Amendment. The Master Servicer shall not (nor shall
it permit the applicable Sub-Servicer to) impair the rights of Issuer, the Indenture Trustee, the
Lenders or any Secured Party in such Pledged Student Loans. The Master Servicer shall not extend,
terminate, waive, amend or otherwise modify the terms of any Pledged Student Loan, except pursuant
to Section 7.03(a), or, without the prior written consent of the Administrative Agent and
the Required Funding Agents, extend, terminate, waive, amend or otherwise modify the terms of any
other Transaction Document.

 

 

     SECTION 12.05. Purchase of Pledged Student Loans. The Master Servicer shall inform
the Administrative Agent, the Funding Agents and the Indenture Trustee promptly, in
writing, upon the discovery of any breach pursuant to Section 12.01, 12.02,
12.03 or 12.04. Unless any such breach shall have been cured within sixty (60)
days following such discovery (or, at the Master Servicer’s election, the last day of the first
month following such discovery), the Master Servicer shall purchase any Pledged Student Loan in
which the interests of the Lenders or the other Secured Parties are materially and adversely
affected as determined by the Administrative Agent, the Funding Agents or the Lenders by such
breach as of the first day succeeding the end of such sixty (60) day period that is the last day of
a Settlement Period for an amount equal to the outstanding [****] of such Student Loan,
plus accrued and unpaid interest thereon (to the extent not previously capitalized),
plus any unreimbursed Monthly Advance with respect thereto (the “Servicer Repurchase
Amount"'). Such Servicer Repurchase Amount shall be deposited by the Master Servicer into the
Collection Account on such date and applied as a repayment of the Total Outstanding Advances on
such date in accordance with Section 2.03(c). If the Master Servicer takes any action or
fails to take any action (including, without limitation, all actions taken or not taken by a
Sub-Servicer on its behalf) during any Settlement Period pursuant to the sections referred to above
that materially impairs the rights of Issuer, the Indenture Trustee, the Administrative Agent, the
Funding Agents or the Lenders in any Pledged Student Loan or otherwise than as provided in such
sections, the Master Servicer shall purchase such Pledged Student Loan as of the last day of such
Settlement Period for an amount equal to Servicer Repurchase Amount (and such Servicer Repurchase
Amount shall be deposited by the Master Servicer into the Collection Account on such date and
applied as a repayment of the Total Outstanding Advances on such date in accordance with
Section 2.03(c)). Notwithstanding the foregoing, the Master Servicer, at its option, may
permit or cause a Sub-Servicer to purchase a Pledged Student Loan in its stead, in the manner and
for the reasons set forth above.

     SECTION 12.06. Reporting. (a) On or before the 20th day of each month (or, if any
such day is not a Business Day, on the next succeeding Business Day), the Master Servicer shall (or
shall cause each Sub-Servicer to) deliver to the Administrative Agent and the Funding Agents a
Monthly Report (which may be the same Monthly Report referred to in Section 7.02(c) hereof)
with respect to the preceding calendar month.

     (b) Quarterly Financial Statements. As soon as available and in any event within 45
days after the end of each of the first three quarters of each fiscal year of Parent, copies of the
financial statements of Parent, that are in conformity with generally accepted accounting
principles, along with a certificate by an authorized officer of Parent certifying that such copies
are the true and complete copies of the financial statements and that such financial statements
fairly present in all material respects the financial condition of Parent as of the date delivered;
and

     (c) Annual Financial Statements. As soon as available and in any event within one
hundred twenty (120) days after the end of each fiscal year of Parent, copies of the financial
statements of Parent prepared and duly certified by any nationally recognized public accounting
firm approved by the Administrative Agent, in conformity with generally accepted accounting
principles, along with a certificate by an authorized officer of Parent certifying that such copies
are the true and complete copies of the financial statements and that such financial statements
fairly present in all material respects the financial condition of Parent as of the date delivered.

 

 

     SECTION 12.07. Annual Statement as to Compliance.

     (a) The Master Servicer shall (and the Master Servicer shall cause each Sub-Servicer to)
deliver to the Indenture Trustee and the Administrative Agent, on or before July 30 of each year
beginning July 30, 2006, an officers’ certificate of the Master Servicer (and each Sub-Servicer) as
the case may be, dated as of December 31 of the preceding year, stating that (i) a review (the
scope of which shall be satisfactory to the Administrative Agent and the Funding Agents) of the
activities of the Master Servicer (and each Sub-Servicer on its behalf), during the preceding
12-month period has been made under such officers’ supervision and (ii) to the best of such
officers’ knowledge, based on such review, the Master Servicer (or such Sub-Servicer), as the case
may be, has fulfilled all its obligations under this Agreement (or the related Sub-Servicing
Agreement), as applicable, throughout such year or, if there has been a default in the fulfillment
of any such obligation, specifying each such default known to such officers and the nature and
status thereof.

     (b) The Master Servicer shall deliver to the Indenture Trustee, the Funding Agents and the
Administrative Agent promptly after having obtained knowledge thereof, but in no event later than
five Business Days thereafter, written notice in an officers’ certificate of the Master Servicer of
any event which with the giving of notice or lapse of time, or both, would constitute an Event of
Termination or a Servicer Event of Default.

     (c) The Master Servicer shall deliver to the Administrative Agent and each Funding Agent on an
annual basis promptly after receipt thereof, copies of any annual audited financial statements of
each Sub-Servicer that, certified by an independent certified public accounting firm that have been
received by the Master Servicer.

     SECTION 12.08. Access to Certain Documentation and Information Regarding Pledged Student
Loans; Audits. (a) Upon reasonable prior notice, the Master Servicer shall (and shall cause
the Sub-Servicers to) provide to the Indenture Trustee, each Funding Agent and the Administrative
Agent access to the all files and documents in its possession relating to the Pledged Student
Loans. Access shall be afforded without charge, but only upon reasonable request and during the
normal business hours at the respective offices of the Master Servicer (or the applicable
Sub-Servicer). Nothing in this Section 12.08 shall affect the obligation of the Master
Servicer (or the applicable Sub-Servicer on its behalf) to observe any applicable law prohibiting
disclosure of information regarding the Obligors and the failure of the Master Servicer (or the
applicable Sub-Servicer) to provide access to information as a result of such obligation shall not
constitute a breach of this Section 12.08.

     (b) The Master Servicer shall cooperate fully with the Administrative Agent, the Funding
Agents and the Lenders or any auditor or representative appointed by the Administrative Agent and
the Lenders in an agreed upon procedures audit with respect to all Pledged Student Loans covering
each of the items and procedures listed on Appendix D hereto (which shall include
inspection of the legend on each Student Loan Note); provided, however, that except
after the occurrence and during the continuation of an Event of Termination, the Administrative
Agent, the Funding Agents and the Lenders shall not request more than one such audit with respect
to the Master Servicer and each Affiliated Servicer in any calendar year. In addition to the
foregoing, and, subject to the terms of the applicable Sub-Servicing Agreements, the Master
Servicer shall cause each Third Party Servicer to cooperate fully with the Administrative Agent,
the Funding Agents and the Lenders or any auditor or representative

 

 

appointed by the Administrative Agent, the Funding Agents and the Lenders in an agreed upon
procedures audit with respect to all Pledged Student Loans (which shall include inspection of the
legend on each Student Loan Note); provided, however, that except after the
occurrence and during the continuation of an Event of Termination, the Administrative Agent, the
Funding Agents and the Lenders shall not request more than one such audit with respect to each
Third Party Servicer in any calendar year.

     SECTION 12.09. Servicer Expenses. The Master Servicer shall be required to pay or
cause to be paid all expenses incurred by it (or its agents acting on its behalf) in connection
with its activities hereunder, including fees and disbursements of independent accountants, taxes
imposed on the Master Servicer and expenses incurred in connection with distributions and reports
to be delivered by it hereunder, enforcement of Defaulted Pledged Student Loans and the costs of
all agreed upon procedures audits described in Section 12.08.

     SECTION 12.10. Appointment of Sub-Servicers. The Master Servicer shall appoint one or
more Sub-Servicers to perform all of its obligations as Master Servicer hereunder, and without
notice or consent, delegate specific duties to sub-contractors who are in the business of
performing such duties; provided, however, that the Master Servicer shall remain
obligated and be liable to Issuer, the Administrator, the Administrative Agent, the Funding Agents,
the Lenders and the other Secured Parties for the servicing and administering of the Pledged
Student Loans, in accordance with the provisions hereof without diminution of such obligation and
liability by virtue of the appointment of such Sub-Servicers or other delegation of such duties and
to the same extent and under the same terms and conditions as if the Master Servicer alone were
servicing and administering the Pledged Student Loans. The fees and expenses of each Sub-Servicer
(and any such sub-contractors) shall be as agreed between the Master Servicer and the applicable
Sub-Servicer or a sub-contractor from time to time and none of Issuer, Lenders, the Funding Agents,
the Administrative Agent, the Administrator, Indenture Trustee or any Secured Party shall have any
responsibility therefor.

     SECTION 12.11. Maintenance of Fidelity Bond and Errors and Omission Policy. The
Master Servicer shall maintain such policy or policies of insurance covering errors and omissions
and a fidelity bond in respect of its officers, employees and agents with a policy limit of not
less than $10,000,000 and with no deductible and a general liability policy covering the Master
Servicer and its subsidiaries with a policy limit of not less than $25,000,000 with no deductible.
The Master Servicer shall cause each Sub-Servicer to maintain in full force and effect, such policy
or policies of insurance covering errors and omissions and a fidelity bond in respect of its
officers, employees and agents in accordance with the applicable Sub-Servicing Agreement and as
approved by the Administrative Agent and the Required Funding Agents.

     SECTION 12.12. Representations of Master Servicer. The Master Servicer makes the
following representations on which Issuer, the Administrator, the Funding Agents, the Lenders and
each Secured Party is deemed to have relied in entering into this Agreement and appointing the
Master Servicer, as Master Servicer hereunder.

     (a) Organization and Good Standing. The Master Servicer is duly organized and validly
existing as a limited liability company in good standing under the laws of the State of Virginia,
with the power and authority to own its properties and to conduct its business as such

 

 

properties are currently owned and such business is presently conducted, and had at all
relevant times, and has, the power, authority and legal right to master service the Pledged Student
Loans.

     (b) Due Qualification. The Master Servicer is duly qualified to do business and has
obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease
of property or the conduct of its business (including the master servicing of the Pledged Student
Loans as required by this Agreement) shall require such qualifications.

     (c) Power and Authority of the Master Servicer. The Master Servicer has the corporate
power and authority to execute and deliver this Agreement and each of the other Transaction
Documents to which it is a party and to carry out their respective terms; and the execution,
delivery and performance of this Agreement and each of the other Transaction Documents to which it
is a party have been duly authorized by the Master Servicer by all necessary corporate action.

     (d) Binding Obligation. This Agreement and each of the other Transaction Documents to
which it is a party constitutes a legal, valid and binding obligation of the Master Servicer
enforceable in accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization and similar laws relating to creditors’ rights generally, and subject to
general principles of equity.

     (e) No Violation. The consummation of the transactions contemplated by this Agreement
and the fulfillment of the terms hereof shall not conflict with, result in any breach of any of the
terms and provisions of, nor constitute (with or without notice or lapse of time or both) a default
under the certificate of formation or operating agreement of the Master Servicer, or any indenture,
agreement or other instrument to which the Master Servicer is a party or by which it shall be bound
nor result in the creation or imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement or other instrument (other than this Agreement); which
breach or default could reasonably be expected to have a Material and Adverse Effect on the
condition of the Master Servicer, financial or otherwise, or adversely affect the transactions
contemplated by this Agreement; nor violate any law or, to the knowledge of the Master Servicer,
any order, rule or regulation applicable to the Master Servicer of any court or of any federal or
state regulatory body, administrative agency or other governmental instrumentality having
jurisdiction over the Master Servicer or its properties.

     (f) No Proceedings. There are no proceedings, or, to the Master Servicer’s best
knowledge, investigations pending, or, to the Master Servicer’s best knowledge, threatened against
the Master Servicer, before any court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Master Servicer or its properties: (i) asserting the
invalidity of this Agreement or any other Transaction Document to which it is a party, (ii) seeking
to prevent the consummation of any of the transactions contemplated by this Agreement, and the
other Transaction Documents, or (iii) seeking any determination or ruling that could reasonably be
expected to have a Material and Adverse Effect on the performance by the Master Servicer of its
obligations under, or the validity or enforceability of, this Agreement or any other Transaction
Document to which it is a party.

 

 

     (g) No Amendment or Waiver. No provision of a Pledged Student Loan has been waived,
altered or modified in any respect, except pursuant to a document, instrument or writing included
in the files relating to such Pledged Student Loan.

     (h) Collection Practices. The servicing and collection practices used by the Master
Servicer (or each Sub-Servicer on its behalf) with respect to the Pledged Student Loans have been
in all respects in compliance with Accepted Servicing Procedures, and all applicable laws and
regulations.

     (i) Location of Files Relating to Pledged Student Loans. The files and records
relating to each Pledged Student Loan are kept in the offices of the applicable Sub-Servicer on
behalf of the Master Servicer identified to the Administrative Agent in writing prior to the date
hereof, or at such other office identified to the Administrative Agent in writing, and all such
files have been delivered to and are in the possession of the applicable Sub-Servicer.

     (j) Not an Investment Company. The Master Servicer is not required to register as an
“investment company” within the meaning of the Investment Company Act of 1940, as amended.

     (k) Accuracy of Information. All information supplied by, or on behalf of, the Master
Servicer in writing to the Indenture Trustee, the Funding Agents or the Administrative Agent in
connection with this Agreement, any Transaction Document or the transactions contemplated thereby
is true and accurate in all material respects. No information furnished by the Master Servicer to
the Indenture Trustee, any Funding Agent or the Administrative Agent in connection with this
Agreement, any Transaction Document or the transactions contemplated thereby contained any untrue
statement of material fact or omitted any material fact necessary in order to prevent the
statements contained therein in light of the circumstances under which such statements were or are
made from being misleading in any material respect.

     (l) Possession of Purchase and Sale Agreements. The Master Servicer has in its
possession an original of each Purchase and Sale Agreement described in Section 5.01(m)
hereof (including each Purchase and Sale Agreement described in parentheticals to such Sections).

     SECTION 12.13. Sub-Servicing Limitations. The Master Servicer shall not permit any
Pledged Student Loans to be serviced by any Sub-Servicer (other than the Sub-Servicers servicing
the Pledged Student Loans on the date hereof) without first obtaining the written consent of the
Administrative Agent and the Funding Agents and demonstrating to the satisfaction of the
Administrative Agent that all requirements and conditions required by the Administrative Agent
applicable to such new Sub-Servicer have been satisfied in all material respects for such
Sub-Servicer, which satisfaction shall be evidenced by such written consent, and delivering to the
Administrative Agent an opinion of counsel addressed to the Lenders, the Funding Agents, Issuer,
the Administrator, the Indenture Trustee and the Administrative Agent in form and substance and
written by counsel acceptable to the Administrative Agent including, without limitation, an opinion
to the effect that each action necessary to perfect a first priority security interest in each of
the Pledged Student Loans being or to be serviced by such Sub-Servicer has been accomplished and
that the perfection and priority of the Indenture Trustee’s security interest in the Collateral
will not be affected by the use of such Sub-Servicer, or if it will

 

 

be affected, setting forth the steps necessary to continue such perfection and priority, and
completing such steps to the satisfaction of the Administrative Agent at the Master Servicer’s
expense.

     SECTION 12.14. Indemnities of Master Servicer. The Master Servicer agrees to
indemnify each Indemnified Party for Indemnified Amounts arising out of or resulting from any of
the following:

     (i) reliance on any representation or warranty made or deemed made by the Master
Servicer or any Sub-Servicer under this Agreement or any other Transaction Document to which
it is a party, which shall have been false or incorrect when made or deemed made;

     (ii) the failure by the Master Servicer or any Sub-Servicer to comply with any term,
provision or covenant contained in any Transaction Document to which it is party or with any
applicable law, rule or regulation with respect to any Pledged Student Loan or the Related
Security including in each case (without limitation) failure to comply with the Equal Credit
Opportunity Act, the Fair Debt Collection Practices Act, the Truth in Lending Act, the
Federal Trade Commission Act, the Federal Reserve Board’s Regulation B, applicable laws to
usury, truth-in-lending, education lending, fair credit billing, fair credit reporting, fair
debt collection practices, privacy, consumer credit protection and disclosure and other
applicable consumer credit laws and equal credit opportunity laws ;

     (iii) the commingling of Collections with any other funds; and

     (iv) any claim brought by any Person arising from any activity by the Master Servicer
or any Sub-Servicer in servicing, administering or collecting any Student Loan; and

     (v) any action or omission by the Master Servicer or any Sub-Servicer that reduces or
impairs the rights of the Administrative Agent, any Funding Agent or any Lender with respect
to any Collateral or the value of any such Collateral.

Any amounts subject to the indemnification provisions of this Section 12.12 shall be paid
by the Master Servicer to the related Indemnified Party within five (5) Business Days following
demand therefor accompanied by reasonable supporting documentation with respect to such amounts.

     SECTION 12.15. Collegiate Funding Master Servicing, L.L.C. Not To Resign as Master
Servicer. Without the prior written consent of the Administrative Agent and the Funding
Agents, Collegiate Funding Master Servicing, L.L.C. shall not resign from the obligations and
duties hereby imposed on it as Master Servicer under this Agreement except upon determination that
the performance of its duties under this Agreement shall no longer be permissible under applicable
law. Notice of any such determination permitting the resignation of Collegiate Funding Master
Servicing, L.L.C. as Master Servicer shall be communicated to the Administrative Agent and the
Indenture Trustee at the earliest practicable time (and, if such communication is not in writing,
shall be confirmed in writing at the earliest practicable time)

 

 

and any such determination shall be evidenced by an opinion of counsel (in form and substance
reasonable acceptable to the Administrative Agent) to such effect delivered concurrently with or
promptly after such notice. No such resignation shall become effective until the Administrative
Agent or a successor Master Servicer reasonably acceptable to the Administrative Agent and the
Funding Agents shall have assumed the responsibilities and obligations of Collegiate Funding Master
Servicing, L.L.C., as Master Servicer hereunder.

     SECTION 12.16. Servicer Default. If any Servicer Event of Default with respect to the
Master Servicer shall occur and be continuing then, and in each and every case, so long as the
Servicer Event of Default shall not have been remedied, the Administrative Agent at the request of
the Lenders or any Funding Agent, by notice then given in writing to the Master Servicer may
terminate all the rights and obligations of the Master Servicer in such capacity under this
Agreement and each of the other Transaction Documents to which it is a party, as Master Servicer.
On or after the receipt by the Master Servicer of such written notice, all authority and power of
the Master Servicer under this Agreement, whether with respect to the Student Loan Notes or the
Pledged Student Loans or otherwise, shall, without further action, pass to and be vested in the
Administrative Agent or such successor Master Servicer as may be appointed by the Administrative
Agent at the request of the Lenders or any Funding Agent; and, without limitation, the
Administrative Agent is hereby authorized and empowered to execute and deliver, for the benefit of
the predecessor Master Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and endorsement of the
Pledged Student Loans and related documents, or otherwise. The predecessor Master Servicer shall
cooperate with the successor Master Servicer in effecting the termination of the responsibilities
and rights of the predecessor Master Servicer under this Agreement and all agreements with the
Sub-Servicers, including the transfer to the successor Master Servicer of its rights under all
existing Sub-Servicing Agreements and for administration by it of all cash amounts that shall at
the time be held by the predecessor Master Servicer for deposit, or shall thereafter be received by
it with respect to a Pledged Student Loan. All reasonable costs and expenses (including reasonable
attorneys’ fees) incurred in connection with transferring all files and other documents in respect
of each Pledged Student Loan to the successor Master Servicer and amending this Agreement, the
Sub-Servicing Agreements and any other Transaction Documents to reflect such succession as Master
Servicer pursuant to this Section 12.16 shall be paid by the predecessor Master Servicer
upon presentation of reasonable documentation of such costs and expenses.

     SECTION 12.17. Appointment of Successor. Upon receipt by the Master Servicer of
notice of termination pursuant to Section 12.16, or the resignation by the Master Servicer
in accordance with the terms of this Agreement, the predecessor Master Servicer shall continue to
perform its functions as Master Servicer under this Agreement in the case of termination, only
until the date specified in such termination notice or, if no such date is specified in a notice of
termination, until receipt of such notice and, in the case of resignation, until the later of (x)
the date one hundred twenty (120) days from the delivery to the Administrative Agent and each
Funding Agent of written notice of such resignation (or written confirmation of such notice) in
accordance with the terms of this Agreement and (y) the date upon which the predecessor Master
Servicer shall become unable to act as Master Servicer as specified in the notice of resignation
and accompanying opinion of counsel. In the event of the termination hereunder of a Master

 

 

Servicer, the Administrative Agent and the Funding Agents shall appoint a successor Master
Servicer and the successor Master Servicer shall accept its appointment by a written assumption in
form acceptable to the Administrative Agent and each Funding Agent. In the event that a successor
Master Servicer has not been appointed at the time when the predecessor Master Servicer has ceased
to act as Master Servicer hereunder, the Administrative Agent without further action shall
automatically be appointed the successor Master Servicer.

     SECTION 12.18. Master Servicer Fee. For servicing the Pledged Student Loans under the
Agreement, the Master Servicer shall be paid an amount equal to (i) the Master Servicer’s Fee less
(ii) the amount of fees paid directly to the Sub-Servicers pursuant to clause first of
Section 3.03(b), for each calendar month payable on each Settlement Date pursuant to clause
first of Section 3.03(b).

     SECTION 12.19. Duties of Administrator. Any action required to be taken by the Issuer
hereunder may be taken by the Administrator on behalf of the Issuer. The Issuer shall be fully
responsible for each of the representations, warranties, certifications and other statements made
herein, in any other Transaction Document, any Advance Request, any Notice of Release or any other
communication hereunder or thereunder by the Administrator on its behalf as if such
representations, warranties, certifications or statements had been made directly by the Issuer. In
addition, the Issuer shall be fully responsible for all actions of the Administrator taken on its
behalf under this Agreement or any other Transaction Document as if such actions had been taken
directly by the Issuer. Nothing in this section shall limit the responsibility or liability of the
Administrator under this Agreement or any other Transaction Document.

     SECTION 12.20. Representations of Administrator. The Administrator makes the
following representations on which Issuer and each Secured Party is deemed to have relied in
entering into this Agreement and appointing the Administrator, as Administrator hereunder.

     (a) Organization and Good Standing. The Administrator is duly organized and validly
existing as a limited liability company in good standing under the laws of the State of Virginia,
with the power and authority to own its properties and to conduct its business as such properties
are currently owned and such business is presently conducted, and had at all relevant times, and
has, the power, authority and legal right to administer the Issuer and the Pledged Student Loans.

     (b) Due Qualification. The Administrator is duly qualified to do business and has
obtained all necessary licenses and approvals in all jurisdictions in which the ownership or lease
of property or the conduct of its business shall require such qualifications.

     (c) Power and Authority of the Administrator. The Administrator has the corporate
power and authority to execute and deliver this Agreement and each of the other Transaction
Documents to which it is a party and to carry out their respective terms; and the execution,
delivery and performance of this Agreement and each of the other Transaction Documents to which it
is a party have been duly authorized by the Administrator by all necessary corporate action.

 

 

     (d) Binding Obligation. This Agreement and each of the other Transaction Documents to
which it is a party constitutes a legal, valid and binding obligation of the Administrator
enforceable in accordance with their respective terms, subject to applicable bankruptcy,
insolvency, reorganization and similar laws relating to creditors’ rights generally, and subject to
general principles of equity.

     (e) No Violation. The consummation of the transactions contemplated by this Agreement
and the fulfillment of the terms hereof shall not conflict with, result in any breach of any of the
terms and provisions of, nor constitute (with or without notice or lapse of time or both) a default
under the certificate of formation or operating agreement of the Administrator, or any indenture,
agreement or other instrument to which the Administrator is a party or by which it shall be bound
nor result in the creation or imposition of any Lien upon any of its properties pursuant to the
terms of any such indenture, agreement or other instrument (other than this Agreement); which
breach or default could reasonably be expected to have a Material and Adverse Effect on the
condition of the Administrator, financial or otherwise, or adversely affect the transactions
contemplated by this Agreement; nor violate any law or, to the knowledge of the Administrator, any
order, rule or regulation applicable to the Administrator of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality having jurisdiction
over the Administrator or its properties.

     (f) No Proceedings. There are no proceedings, or, to the Administrator’s best
knowledge, investigations pending, or, to the Administrator’s best knowledge, threatened against
the Administrator, before any court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Administrator or its properties: (i) asserting the
invalidity of this Agreement or any other Transaction Document to which it is a party, (ii) seeking
to prevent the consummation of any of the transactions contemplated by this Agreement, and the
other Transaction Documents, or (iii) seeking any determination or ruling that could reasonably be
expected to have a Material and Adverse Effect on the performance by the Administrator of its
obligations under, or the validity or enforceability of, this Agreement or any other Transaction
Document to which it is a party.

     (g) Not an Investment Company. The Administrator is not required to register as an
“investment company” within the meaning of the Investment Company Act of 1940, as amended.

     (h) Accuracy of Information. All information supplied by, or on behalf of, the
Administrator in writing to the Indenture Trustee, the Administrative Agent or any Funding Agent in
connection with this Agreement, any Transaction Document or the transactions contemplated thereby
is true and accurate in all material respects. No information furnished by the Administrator to
the Indenture Trustee, the Administrative Agent or any Funding Agent in connection with this
Agreement, any Transaction Document or the transactions contemplated thereby contained any material
misstatement, untrue statement of material fact or omitted any material fact necessary in order to
prevent the statements contained therein in light of the circumstances under which such statements
were or are made from being misleading in any material respect.

 

 

     SECTION 12.21. Indemnities of Administrator. The Administrator agrees to indemnify
each Indemnified Party for Indemnified Amounts arising out of or resulting from any of the
following:

     (i) reliance on any representation or warranty made or deemed made by the Administrator under
this Agreement or any other Transaction Document to which it is a party, which shall have been
false or incorrect when made or deemed made;

     (ii) the failure by the Administrator to comply with any term, provision or covenant contained
in any Transaction Document to which it is party or with any applicable law, rule or regulation
with respect to any Pledged Student Loan or the Related Security;

     (iii) the commingling of Collections by the Administrator with any other funds; and

     (iv) any claim brought by any Person arising from any activity by the Administrator in
servicing, administering or collecting any Student Loan or in administering the Issuer; and

     (v) any action or omission by the Administrator that reduces or impairs the rights of the
Administrative Agent, any the Funding Agent or any Lender with respect to any Collateral or the
value of any such Collateral.

     Any amounts subject to the indemnification provisions of this Section 12.20 shall be paid by the
Administrator to the related Indemnified Party within five (5) Business Days following demand
therefor accompanied by reasonable supporting documentation with respect to such amounts.

     SECTION 12.22. Collegiate Funding Portfolio Administration, L.L.C. Not to Resign as
Administrator. Without the prior written consent of the Administrative Agent and the Funding
Agents, Collegiate Funding Portfolio Administration, L.L.C. shall not resign from the obligations
and duties hereby imposed on it as Administrator under this Agreement except upon determination
that the performance of its duties under this Agreement shall no longer be permissible under
applicable law. Notice of any such determination permitting the resignation of Collegiate Funding
Portfolio Administration, L.L.C. as Administrator shall be communicated to the Administrative Agent
at the earliest practicable time (and, if such communication is not in writing, shall be confirmed
in writing at the earliest practicable time) and any such determination shall be evidenced by an
opinion of counsel (in form and substance reasonably acceptable to the Administrative Agent) to
such effect delivered concurrently with or promptly after such notice. No such resignation shall
become effective until the Administrative Agent or a successor Administrator reasonably acceptable
to the Administrative Agent and the Funding Agents shall have assumed the responsibilities and
obligations of Collegiate Funding Portfolio Administration, L.L.C., as Administrator hereunder.

     SECTION 12.23. Administrator’s Fee. For acting as Administrator pursuant to this
Agreement, the Administrator shall be paid an amount equal to the Administrator’s Fee for each
calendar month payable on each Settlement Date pursuant to clause ninth of Section
3.03(b).

 

 

ARTICLE XIII

MISCELLANEOUS

     SECTION 13.01. Amendments, Etc. No amendment to or waiver of any provision of this
Agreement nor consent to any departure by Issuer, the Administrator or Master Servicer therefrom
shall in any event be effective unless the same shall be in writing and signed by the Issuer, the
Administrator, the Master Servicer, the Administrative Agent, the Indenture Trustee, and the
Required Funding Agents and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given; provided, however, that no such amendment,
waiver or consent shall, without the consent of each Funding Agent and each affected Lender, (a)
amend the definitions of Eligible Student Loan, Defaulted Student Loan or Required Funding Agents
contained in this Agreement or modify the then existing [****]; (b) amend, modify or waive any
provision of this Agreement in any way which would (i) reduce the amount of principal or interest
that is payable on account of any Advance or delay any scheduled date for payment thereof; (ii)
reduce fees payable by the Issuer to the Administrative Agent, the Funding Agents or the Conduit
Lenders which relate to payments to Committed Lenders or delay the dates on which such fees are
payable; or (iii) modify any provisions relating to reserves so as to reduce such reserves; (c)
agree to the payment of a different rate of interest on the Advances pursuant to Section
2.02(a)(ii) of this Agreement; (d) amend or waive the Event of Termination relating to the
bankruptcy of the Issuer or any Affiliated Seller in Section 8.01 of this Agreement; (e) amend this
Section 13.01 in any way other than expanding the list of amendments, waivers or consents
that require the consent of each Committed Lender; and provided further, that the consent of a
Committed Lender shall be required to (a) increase the amount of its Commitment and (b) extend the
termination date of its Commitment. Any such amendment, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given. To the extent the consent
of any of the parties hereto (other than the Issuer and the Master Servicer) is required under any
of the Transaction Documents, the determination as to whether to grant or withhold such consent
shall be made by such party in its sole discretion without any implied duty toward any other
Person, expect as otherwise expressly provided herein or therein. The parties acknowledge that,
before entering into such an amendment or granting such a waiver or consent, Lenders may also be
required to obtain the approval of some or all of the Program Support Providers or to obtain
confirmation from certain Rating Agencies that such amendment, waiver or consent will not result in
a withdrawal or reduction of the ratings of the Promissory Notes.

     SECTION 13.02. Notices, Etc. All notices and other communications provided for
hereunder shall, unless otherwise stated herein, be in writing (including facsimile communication)
and shall be personally delivered or sent by express mail or courier or by certified mail, postage
prepaid, or by facsimile, to the intended party at the address or facsimile number of such party
set forth on Exhibit 13.02 of this Agreement or at such other address or facsimile number
as shall be designated by such party in a written notice to the other parties hereto. All such
notices and communications shall be effective, (a) if personally delivered or sent by express mail
or courier or if sent by certified mail, when received, and (b) if transmitted by facsimile, when
sent, receipt confirmed by telephone or electronic means.

 

 

     SECTION 13.03. No Waiver; Remedies. No failure on the part of Issuer, the Master
Servicer, the Administrator, the Administrative Agent, any Funding Agent, any Affected Party, any
Indemnified Party, the Indenture Trustee or any Lender to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof (unless waived in writing); nor shall any single
or partial exercise of any right hereunder preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not exclusive of any
remedies provided by law.

     SECTION 13.04. Binding Effect; Survival. This Agreement shall be binding upon and
inure to the benefit of Issuer, the Administrative Agent, the Indenture Trustee, the Master
Servicer, the Administrator, the Funding Agents, the Lenders, and their respective successors and
assigns, and the provisions of Section 4.02 and Article XI shall inure to the
benefit of the Affected Parties and the Indemnified Parties, respectively, and their respective
successors and assigns; provided, however, nothing in the foregoing shall be deemed
to authorize any assignment not permitted by Section 10.01. This Agreement shall create
and constitute the continuing obligations of the parties hereto in accordance with its terms, and
shall remain in full force and effect until the Final Payout Date. The rights and remedies with
respect to any breach of any representation and warranty made or deemed made by Issuer, the Master
Servicer or Administrator hereunder and the indemnification and payment provisions of Articles
IX and XI and Sections 2.06, 4.02, 12.14, 12.21,
13.05, 13.06 and 13.12 shall be continuing and shall survive any
termination of this Agreement.

     SECTION 13.05. Costs, Expenses and Taxes. In addition to its obligations under
Article XI, Issuer agrees to pay within three Business Days of demand:

     (a) all reasonable costs and expenses incurred by the Administrative Agent, any Program
Support Provider, the Indenture Trustee, the Funding Agents and the Lenders and their respective
Affiliates in connection with due diligence, negotiation, preparation, execution and delivery, the
administration (including periodic auditing) the amendment to, or waiver of, or the enforcement of,
or any actual or claimed breach of, this Agreement and the other Transaction Documents, including,
without limitation (i) the reasonable fees and expenses of counsel to any of such Persons incurred
in connection with any of the foregoing or in advising such Persons as to their respective rights
and remedies under any of the Transaction Documents, and (ii) all reasonable out-of-pocket expenses
(including reasonable fees and expenses of independent accountants), incurred in connection with
any review of Issuer’s or the Master Servicer’s books and records either prior to the execution and
delivery hereof or pursuant to Section 7.01(c) or any Sub-Servicing Agreement; and

     (b) all stamp and other taxes and fees payable or determined to be payable in connection with
the execution, delivery, filing and recording of this Agreement or the other Transaction Documents,
and agrees to indemnify each Indemnified Party against any liabilities with respect to or resulting
from any delay in paying or omission to pay such taxes and fees.

     SECTION 13.06. No Proceedings. Issuer, the Master Servicer, the Administrator, the
Indenture Trustee, the Funding Agents, and the Administrative Agent each hereby agrees that it will
not institute against any Conduit Lender, or join any other Person in instituting against any
Conduit Lender, any insolvency proceeding (namely, any proceeding of the type referred to in

 

 

the definition of Event of Bankruptcy) so long as any Promissory Notes issued by such Conduit
Lender shall be outstanding or there shall not have elapsed one year plus one day since the last
day on which any such Promissory Notes shall have been outstanding. The foregoing shall not limit
Issuer’s right to file any claim in or otherwise take any action with respect to any insolvency
proceeding that was instituted by any Person other than Issuer. The provisions of this Section
13.06 shall survive the termination of this Agreement.

     SECTION 13.07. Captions and Cross References. The various captions (including,
without limitation, the table of contents) in this Agreement are provided solely for convenience of
reference and shall not affect the meaning or interpretation of any provision of this Agreement.
Unless otherwise indicated, references in this Agreement to any Section, Appendix, Schedule or
Exhibit are to such Section of or Appendix, Schedule or Exhibit to this Agreement, as the case may
be, and references in any Section, subsection, or clause to any subsection, clause or subclause are
to such subsection, clause or subclause of such Section, subsection or clause.

     SECTION 13.08. Integration. This Agreement and the other Transaction Documents,
contains a final and complete integration of all prior expressions by the parties hereto with
respect to the subject matter hereof and shall constitute the entire understanding among the
parties hereto with respect to the subject matter hereof, superseding all prior oral or written
understandings.

     SECTION 13.09. Governing Law. THIS AGREEMENT, INCLUDING THE RIGHTS AND DUTIES OF THE
PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF
NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAWS BUT OTHERWISE
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES), EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE
INTERESTS OF INDENTURE TRUSTEE AND THE SECURED PARTIES IN THE COLLATERAL IS GOVERNED BY THE LAWS OF
ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.

     SECTION 13.10. Waiver Of Jury Trial; Submission to Jurisdiction. EACH OF THE ISSUER,
THE MASTER SERVICER AND THE ADMINISTRATOR HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN
ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER
TRANSACTION DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY BE IN
THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM ANY BANKING OR OTHER RELATIONSHIP
EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT AND AGREES THAT ANY
SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT A JURY TRIAL. EACH OF THE ISSUER,
THE ADMINISTRATOR AND THE MASTER SERVICER HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE
COURTS OF THE STATE OF NEW YORK AND THE COURTS OF THE UNITED STATES LOCATED IN THE STATE OF NEW
YORK FOR THE PURPOSE OF ADJUDICATING ANY CLAIM OR CONTROVERSY ARISING IN CONNECTION WITH THIS
AGREEMENT OR ANY

 

 

OTHER TRANSACTION DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY AND, FOR
SUCH PURPOSE, HEREBY WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS, AND ANY OBJECTION
TO VENUE THEREIN OF ANY ACTION INSTITUTED HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR
EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION 13.10
SHALL AFFECT THE RIGHT OF ANY LENDER, ANY FUNDING AGENT, THE ADMINISTRATIVE AGENT OR THE INDENTURE
TRUSTEE TO BRING ANY ACTION OR PROCEEDING AGAINST ANY PARTY HERETO OR ITS PROPERTY IN THE COURTS OF
ANY OTHER JURISDICTION.

     SECTION 13.11. Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which when taken together shall
constitute one and the same agreement.

     SECTION 13.12. No Recourse Against Other Parties. No recourse under any obligation,
covenant or agreement of the Issuer, the Master Servicer, the Administrator, the Funding Agents,
the Lenders, the Administrative Agent, the Program Support Providers or, the Indenture Trustee
contained in this Agreement shall be had against any stockholder, member, employee, officer,
director, or incorporator of any such Person; provided, however, that nothing in
this Section 13.12 shall relieve any of the foregoing Persons from any liability which such
Person may otherwise have for his/her or its gross negligence or willful misconduct.

     SECTION 13.13. Confidentiality.

     (a) Each of the Issuer, the Administrator and the Master Servicer agrees that it shall not
(and shall not allow any of its Affiliates to) disclose to any Person or entity the existence of
this Agreement, the other Transaction Documents or the terms hereof (including, without limitation,
any specific pricing information provided by the Administrative Agent, the Funding Agents and
Affiliates of the Administrative Agent and any Funding Agent or the amount or terms of any fees
payable to the Administrative Agent, any Funding Agent and Affiliates of the Administrative Agent
and any Funding Agent in connection with the Transaction) or the structure of the Transaction, any
related structures developed by the Administrative Agent, any Funding Agent and Affiliates of the
Administrative Agent or any Funding Agent for the Issuer, the Administrator or the Master Servicer,
any related analyses, computer models, information or documents, any written or oral reports from
the Administrative Agent, the Funding Agents and Affiliates of the Administrative Agent and any
Funding Agent to the Issuer, the Administrator or the Master Servicer or any related written
information, to the extent that such items do not constitute “Structure and Tax Aspects” under
Internal Revenue Code Sections 6011, 6111 and 6112 or the regulations promulgated thereunder, or
the existence and status of any ongoing negotiations between the Issuer and its Affiliates and the
Administrative Agent, the Funding Agents and Affiliates of the Administrative Agent and the Funding
Agents concerning the Transaction (collectively, the “Product Information”), except to its
and its Affiliates’ employees, officers, directors, advisors, representatives, accountants, legal
counsel and agents (collectively, the “Company Representatives”) who have a need to know
the Product Information for the purpose of assisting in the negotiation and completion of the

 

 

Transaction and who agree to be bound by the provisions of this Section 13.13 and to
use such Product Information only in connection with the Transaction and not for any other purpose.
The Issuer will be responsible for any failure of any Company Representative to comply with the
provisions of this Section 13.13. “Product Information” shall not include, however,
information that is a matter of general public knowledge or has heretofore been or is hereafter
published in any source generally available to the public other than as a result of a disclosure by
any person required to keep such information confidential as provided in this section. The Issuer,
the Administrator and the Master Servicer may disclose Product Information to the extent required
by applicable law, regulation, subpoena or other legal process.

     (b) Each of the Secured Parties agrees (i) to keep all non-public information with respect to
the Issuer, the Administrator and the Master Servicer and their respective Affiliates which such
Secured Party receives pursuant to the Transaction Documents (collectively, the “Issuer
Information”) confidential and to disclose Issuer Information only to those of its officers,
employees, advisors, representatives, agents, accountants, legal counsel and other representatives
of the Secured Parties (collectively, the “Secured Party Representatives”), to the rating
agencies or to their Program Support Providers which, in each case, may have a need to know or
review such Issuer Information for the purpose of assisting in the negotiation, completion,
administration and evaluation of the Facility (ii) to use the Issuer Information only in connection
with the Facility and not for any other purpose; and (iii) to cause its related Secured Party
Representatives to comply with the provisions of this Section 13.13(b).

     (c) Notwithstanding anything in this Agreement or in any other Transaction Document, the
Issuer Information may be disclosed by any Secured Party (i) to permitted assignees and
participants and potential assignees and participants in the Facility to the extent such disclosure
is made pursuant to a written agreement of confidentiality similar to this Section 13.13,
(ii) to the Rating Agencies, (iii) to any actual or potential subordinated investor in any Conduit
Lender or liquidity provider if such investor or liquidity provider, as the case may be, has signed
a confidentiality agreement substantially on the terms of this Section 13.13, (iv) to
dealers and investors in respect of promissory notes of any Conduit Lender and credit enhancers in
accordance with the customary practices of such Conduit Lender for disclosures to dealers,
investors or credit enhancers, as the case may be, it being understood that any such disclosure to
dealers or investors will not identify the Issuer or any of its affiliates by name and (v) to any
other person or entity with the Issuer’s prior written consent.

     (d) The provisions of this Section 13.13 shall survive the termination of this
Agreement.

     SECTION 13.14. Limitation of Liability. No claim may be made by the Issuer, the
Administrator, Master Servicer, any of their Affiliates, or any other Person against the Lenders,
the Funding Agents, any Program Support Provider, the Administrative Agent or the Indenture Trustee
or their respective Affiliates, directors, officers, employees, attorneys or agents for any
special, indirect, consequential or punitive damages in respect of any claim for breach of contract
or any other theory of liability arising out of or related to the transactions contemplated by this
Agreement, or any act, omission or event occurring in connection therewith; and each of the Issuer,
the Administrator and the Master Servicer hereby waives, releases, and agrees not to sue
upon any claim for any such damages, whether or not accrued and whether or not known or
suspected to exist in its favor.

 

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective
officers thereunto duly authorized, as of the date first above written.

	 	 	 	 	 
	 	COLLEGIATE FUNDING RESOURCES II, LLC, as Issuer

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Signature Page to

Indenture

 

 

CRC FUNDING, LLC, as a Conduit Lender

By: CITICORP NORTH AMERICA, INC., as its
attorney-in-fact

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	Roger W. Saylor 	 
	 	 	Title:  	Director and Vice President 	 
	 

Signature Page to

Indenture

 

 

CAFCO, LLC, as a Conduit Lender

By: CITICORP NORTH AMERICA, INC., as its
attorney-in-fact

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	Roger W. Saylor 	 
	 	 	Title:  	Director and Vice President 	 
	 

Signature Page to

Indenture

 

 

	 	 	 
	Commitment:
	 	 
	$

	 	CITIBANK, N.A., as Committed Lender with respect to CAFCO, LLC

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	Roger W. Saylor 	 
	 	 	Title:  	Director and Vice President 	 
	 

Signature Page to

Indenture

 

 

	 	 	 
	Commitment:
	 	 
	$

	 	CITIBANK, N.A., as Committed Lender with respect to CRC Funding,
LLC

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	Roger W. Saylor 	 
	 	 	Title:  	Director and Vice President 	 
	 

Signature Page to

Indenture

 

 

	 	 	 	 	 
	 	CITICORP NORTH AMERICA, INC.,

as Administrative Agent and as a Funding Agent

 	 
	 	By:  	 	 
	 	 	Name:  	Roger W. Saylor 	 
	 	 	Title:  	Director and Vice President 	 
	 

Signature Page to

Indenture

 

 

	 	 	 	 	 
	 	THE BANK OF NEW YORK, as Indenture Trustee and

as Securities Intermediary

 	 
	 	By:  	 	 
	 	 	Name:  	William Cardozo 	 
	 	 	Title:  	Agent 	 
	 

Signature Page to

Indenture

 

 

	 	 	 	 	 
	 	COLLEGIATE FUNDING PORTFOLIO ADMINISTRATION,
L.L.C., as Administrator	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	COLLEGIATE FUNDING MASTER SERVICING, L.L.C., as
Master Servicer	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Signature Page to

Indenture

 

 

APPENDIX A

DEFINITIONS

     This is Appendix A to the Indenture, dated as of August 19, 2005, 2005 among Collegiate
Funding Services Resources II, LLC, as Issuer, CRC Funding, LLC, and CAFCO, LLC and the other
conduit lenders from time to time party thereto, as Conduit Lenders, the financial institutions
from time to time party thereto, as Committed Lenders, Citicorp North America, Inc. and the other
funding agents from time to time party thereto, as Funding Agents, Citicorp North America, Inc., as
Administrative Agent, The Bank of New York, as Indenture Trustee and as Securities Intermediary,
Collegiate Funding Portfolio Administration, L.L.C., as Administrator, and Collegiate Funding
Master Servicing, L.L.C. as Master Servicer (as amended, supplemented or otherwise modified from
time to time, this “Agreement”). Each reference in this Appendix A to any Section, the
Preamble, Appendix or Exhibit refers to such Section of or Appendix, Preamble or Exhibit to this
Agreement.

     A. Defined Terms. As used in this Agreement, unless the context requires a different
meaning, the following terms have the meanings indicated below (such definitions to be applicable
to both the singular and plural forms of such terms):

     “Accepted Servicing Procedures” means that the Master Servicer shall (or shall cause
the applicable Sub-Servicer to) manage, service, administer and make collections on the Pledged
Student Loans in accordance with the Credit and Collection Policies and with reasonable care, using
that degree of skill and attention that the Master Servicer (or such Sub-Servicer) exercises with
respect to all comparable student loans that it services but, in any event, in accordance with
customary and usual standards of practice of prudent lenders and loan servicers administering
similar student loans. The Master Servicer shall (or shall cause the applicable Sub-Servicer to)
manage, service, administer and make collections with respect to the Pledged Student Loans in
accordance with, and otherwise comply with, all applicable federal and state laws, including all
applicable standards, guidelines and requirements and any applicable Guarantee Agreement. These
procedures shall include collection and posting of all payments, responding to inquiries of
borrowers on such Pledged Student Loans, monitoring borrowers’ status, making required disclosures
to borrowers, investigating delinquencies, sending billing statements or payment coupons to
borrowers and otherwise establishing repayment terms, reporting tax information to borrowers, if
applicable, accounting for collections and furnishing monthly and quarterly statements with respect
thereto to the Administrative Agent and the Funding Agents. The Master Servicer shall (or shall
cause the applicable Sub-Servicer to) follow its customary standards, policies and procedures in
performing its duties as Master Servicer (or Sub-Servicer, as the case may be).

     “Account Control Agreement” means each Account Control Agreement among the Issuer, the
Indenture Trustee and the Securities Intermediary with respect to an Account, in the form and
substance attached as Exhibit A.

     “Accounts” means the Disbursement Account, the Guarantor Payment Account, the
Collection Account, the Reserve Account and the Residual Payments Account.

APPENDIX A

 

 

     [****]

     [****]

     [****]

     “Administrative Agent” has the meaning set forth in the preamble.

     “Administrative Expenses” means the administrative and operating expenses of the
Issuer (including, without limitation, the fees of its independent directors), excluding the Master
Servicer’s Fee and the Administrator’s Fee.

     “Administrator” has the meaning set forth in the preamble.

     “Administrator’s Fee” means an aggregate amount equal to (i) for each Settlement
Period other than the initial Settlement Period, the product of (a) the outstanding weighted
average [****] of all Pledged Student Loans during such Settlement Period multiplied by (b)
[****]% and (ii) for the initial Settlement Period, the product of (a) the outstanding weighted
average [****] of all Pledged Student Loans during such Settlement Period multiplied by (b)
[****]% multiplied by (c) a fraction equal to the number of days in the initial Settlement
Period divided by 30; in each case, payable to the Master Servicer and/or the Sub-Servicers
pursuant to Section 3.03(b) and the provisions of Section 12.23 of the Agreement.

     “Advance” has the meaning set forth in Section 1.01.

     “Advance Date” means each date on which an Advance is consummated, which date shall be
a Business Day.

     “Advance Rate” means the advance rate set forth on Schedule 2.

     “Affected Party” means each of the Lenders, each Program Support Provider, and any
assignee or participant of any Lender or any Program Support Provider.

     “Affiliate” when used with respect to a Person, means any other Person controlling,
controlled by, or under common control with, such Person.

     “Affiliated Sellers” means those Affiliates of the Issuer set forth on Appendix B
and such other affiliated sellers as may be approved by the Administrative Agent and the
Funding Agents from time to time in writing, in each case that are party to a Purchase and Sale
Agreement.

     “Affiliated Servicer” means each of CFS-SunTech Servicing LLC, and each other
Sub-Servicer that is an Affiliate of the Issuer.

     “Agreement” has the meaning set forth in the first paragraph of this Appendix
A.

     “Alternate Base Rate” means, on any date, a fluctuating rate of interest per annum
equal to the highest of:

APPENDIX A

2

 

     (a) with respect to the calculation of “Alternate Base Rate” (i) for any Lender in a Lender
Group of which CNAI is the Funding Agent, the rate of interest announced publicly by Citibank in
New York, New York, from time to time as Citibank’s base rate and (ii) for any Lender in a Lender
Group of which CNAI is not the Funding Agent, the rate of interest described in the applicable fee
letter with the Issuer;

     (b) the Federal Funds Rate (as defined below) most recently determined by the applicable
Reference Bank plus 0.50%; and

     (c) 1/2 of one percent per annum above the latest three-week moving average of secondary market
morning offering rates in the United States for three-month certificates of deposit of major United
States money market banks, such three-week moving average being determined weekly on each Monday
(or, if any such day is not a Business Day on the next succeeding Business Day) for the three-week
period ending on the previous Friday by Citibank on the basis of such rates reported by certificate
of deposit dealers to and published by the Federal Reserve Bank of New York or, if such publication
shall be suspended or terminated, on the basis of quotations for such rates received by Citibank
from three New York certificate of deposit dealers of recognized standing selected by Citibank, in
either case, adjusted to the nearest 1/4 of one percent or, if there is no nearest 1/4 of one percent,
to the next higher 1/4 of one percent.

The Alternate Base Rate is not necessarily intended to be the lowest rate of interest determined by
the Reference Bank in connection with extensions of credit.

     “Approvals” has the meaning set forth in Section 6.01(d).

     “Approved Origination Agreement” means (i) the National City Origination Agreement and
(ii) each other Origination Agreement in such form which is approved by the Administrative Agent
and the Required Funding Agents in writing prior to the execution thereof.

     “Asset Coverage Ratio” for any Calculation Date means the ratio of (i) Collateral
Value to (ii) the sum of the Total Outstanding Advances, accrued and unpaid interest (to
the extent not previously capitalized), Fees, Administrator’s Fees and Master Servicer’s Fees as of
such Calculation Date.

     “Assignment and Acceptance” means an Assignment and Acceptance Agreement in
substantially the form and substance of Exhibit 10.01(a) attached hereto and delivered to
the Administrative Agent, the Funding Agent for the assignor Lender and the Funding Agent for the
assignee Lender in connection with an assignment of a Lender’s obligations hereunder in accordance
with Section 10.01(a).

     “Available Funds” means (i) all Collections, (ii) all Reassignment Amounts, (ii) all
Monthly Advances and (iv) all Investment Earnings.

     “Borrowing” means the aggregate Advances made on a Borrowing Date.

     “Borrowing Date” means each date on which a Borrowing is consummated, which date shall
be a Business Day.

APPENDIX A

3

 

     “Borrowing Deficit” has the meaning set forth in Section 1.02(c).

     “Borrowing Notice” has the meaning set forth in Section 1.02(a).

     “Business Day” means a day on which the commercial banks in New York City are not
authorized or required to be closed for business.

     “Calculation Date” means (a) the last date of each Settlement Period utilized in
providing the Monthly Report and in determining (i) the Coverage Condition or (b) if different, (i)
with respect to the determination of (1) the Coverage Condition in connection with the release of
Released Student Loans pursuant to Section 1.04, the last date of the Settlement Period
immediately preceding such release or such other date as determined by the Administrative Agent,
(ii) with respect to the determination of (1) the Coverage Condition in connection with a Borrowing
pursuant to Section 5.02(d), the last date of the Settlement Period immediately preceding
such Borrowing after giving effect to such Borrowing, (iii) with respect to the determination of
Asset Coverage Ratio in connection with the occurrence of a Material Adverse Change in the
condition of any Guarantor or Sub-Servicer, the last date of the Settlement Period immediately
preceding such release or such other date as determined by the Administrative Agent, (iv) any other
date as may be mutually agreed upon by the Administrative Agent and the Master Servicer or (v) any
date upon which any Valuation Agent conducts a Portfolio Valuation pursuant to Section
8.02(e).

     “Capital Lease Obligations” of any Person means the obligations of such Person to pay
rent or other amounts under any lease of (or other arrangement conveying the right to use) real or
personal property, or a combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such Person under U.S. generally accepted
accounting principles, and the amount of such obligations shall be the capitalized amount thereof
determined in accordance with United States generally accepted accounting principles.

     “Career School/Non Degree Granting Institution Loan” means except as otherwise
approved as such in writing by the Administrative Agent and the Required Funding Agents, a Student
Loan, the borrower of which is attending an accredited institution, which is a career school or is
not a degree granting institution; provided, however, that Student Loans to
students attending [****] shall not constitute Career School/Non Degree Granting Institution Loans.

     “CFO” Collegiate Funding Originations, LLC, a Delaware limited liability company.

     “CFO Purchase and Sale Agreement” means the Purchase and Sale Agreement dated as of
the Closing Date between CFO and the Issuer as the same may be amended, restated, supplemented or
otherwise modified from time to time with the consent of the Administrative Agent and the Required
Funding Agents.

     “CFS” means Collegiate Funding Services, L.L.C., a Delaware limited liability company.

     “Citibank” means Citibank, N.A., a national banking association.

     “Closing Date” means August 19, 2005.

APPENDIX A

4

 

     “CNAI” has the meaning set forth in the preamble.

     “Code” means the Internal Revenue Code of 1986, as amended, and the regulations,
rulings and proclamations promulgated thereunder.

     “Collateral” means all of Issuer’s right, title and interest in, to and under the
following: (i) the Financed Student Loans and any additional Student Loans which are not Financed
Student Loans but which have been purchased, originated, funded or otherwise acquired with funds on
deposit in the Collection Account pursuant to the provisions of Section 3.03(c) and each
other Student Loan that is otherwise financed pursuant to this Agreement (collectively, the
“Pledged Student Loans”); (ii) the Related Security, (iii) all right to receive payment for
losses with respect to the Pledged Student Loans under the Guarantee Agreements; (iv) all borrower
interest with respect to Pledged Student Loans; (v) the Accounts and any other account established
by Issuer pursuant to the Agreement in the name of the Indenture Trustee for the benefit of the
Secured Parties, and all investments therein; (vi) all funds on deposit in the accounts described
in clause (v), together with all certificates and instruments, if any, from time to time
evidencing such accounts, and funds on deposit and all investments made with such funds, all claims
thereunder or in connection therewith, and interest, dividends, moneys, instruments, securities and
other property from time to time received, receivable or otherwise distributed in respect of any or
all of the foregoing; (vii) all right, title and interest under each Purchase and Sale Agreement,
each Sub-Servicing Agreement, each Origination Agreement, each purchase agreement, the other
Transaction Documents (except for the Guarantee Agreement, for which the Collateral is as set forth
in clause (iii)) and each other document, instrument, certificate and agreement relating to the
collecting, servicing and administration of any Pledged Student Loan, the Issuer or the
transactions contemplated by the Transaction Documents (other than such right, title and interest
as it relates solely to Student Loans which no longer constitute part of the Collateral); (viii)
the Demand Note, all additional indebtedness from time to time owed to the Issuer by CFS and
related to the Demand Note, and the instruments evidencing such indebtedness, the Residual Payments
Account, the Residual Payments Account Control Agreement, and all interest, cash, instruments and
other property from time to time received, receivable or otherwise distributed in respect of or in
exchange for the foregoing, and all of Issuer’s rights as secured party with respect to the
foregoing and the collateral pledged thereunder; (ix) all books and records (including computer
tapes and disks) related to the foregoing; (x) all other personal and fixture property of every
kind and nature of the Issuer including without limitation all goods (including inventory,
equipment and any accessions thereto), instruments (including promissory notes), documents,
accounts, chattel paper (whether tangible or electronic), deposit accounts, letter-of-credit
rights, commercial tort claims, securities and all other investment property, supporting
obligations, any other contract rights or rights to the payment of money, insurance claims and
proceeds, and all general intangibles (including all payment intangibles) and (xi) all Collections
and other proceeds of any and all of the foregoing.

     “Collateral Value” means [****].

     “Collection Account” means the account established at a Qualified Institution, in the
name of the Indenture Trustee, for the benefit of the Secured Parties, which account has been
designated as the Collection Account, including any subaccounts, and any other account designated
as the Collection Account by the Indenture Trustee or the Administrative Agent.

APPENDIX A

5

 

     “Collections” means (i) all funds which are received by Issuer, the Master Servicer,
any Sub-Servicer or the Indenture Trustee or any other Person on behalf of Issuer from or on behalf
of the related Obligors in payment of any amounts owed (including, without limitation, all
Guarantee Payments, finance charges, interest and all other charges) in respect of the Pledged
Student Loans, or applied to such amounts owed by such Obligors, (ii) all funds received pursuant
to the Sub-Servicing Agreements, including all payments representing the purchase price of any
repurchased Pledged Student Loan, (iii) all funds received by Issuer, the Administrator, the
Indenture Trustee or the Master Servicer pursuant to the Purchase and Sale Agreements or from any
other source in respect of the Pledged Student Loans and (iv) all proceeds of the Demand Note.

     “Committed Lender” has the meaning set forth in the preamble.

     “Committed Lender Termination Date” has the meaning set forth in Section 1.06.

     “Commitment” means the obligation of a Committed Lender to make Advances pursuant to
this Agreement in an amount not to exceed, in aggregate, the amount set forth opposite such
Committed Lender’s name on the signature pages to this Agreement, as such amount may be modified
from time to time in accordance with the terms of the Agreement.

     “Company Representatives” has the meaning set forth in Section 13.13(a).

     “Conduit Lender” has the meaning set forth in the preamble.

     “Coverage Condition” means the requirements that (i) for any Calculation Date the
Asset Coverage Ratio is greater than or equal to [****]% and (ii) for any Calculation Date on which
the Total Outstanding Advances are greater than $10,000,000, the sum of (A) [****], (B) the amounts
on deposit in the Collection Account and (C) the amounts on deposit in the Disbursement Account (in
each case, as of such Calculation Date) is greater than or equal to the Total Outstanding Advances
as of such Calculation Date.

     “Coverage Condition Certificate” means a certificate certifying as to the Coverage
Condition substantially in the form of Exhibit 5.02(d) to the Agreement.

     “Covered Claim” means (a) any and all damages, losses, claims, liabilities and related
costs and expenses, including reasonable attorneys’ fees and disbursements arising out of or
related to the Transaction Documents or the funding of the Advances or in respect of any Pledged
Student Loan, including without any limitation Indemnified Amounts payable under Section
11.01 of this Agreement, but excluding recourse for any Defaulted Student Loan which is a
Defaulted Student Loan solely due to the default of the Obligor on the Student Loan and (b) any
indemnity claim and any claim arising from (i) the failure to comply with any Transaction Document,
(ii) from the inaccuracy of any representation or warranty, or (iii) from any action, event,
circumstances or condition that would give rise to an indemnity claim or repurchase obligation.

APPENDIX A

6

 

     “Credit and Collection Policy” means the policies and procedures attached hereto as
Appendix C with respect to the origination and collection of Student Loans as such policies
and procedures may be amended from time to time with the written consent of the Administrative
Agent and the Required Funding Agents.

     “Custody Agreement” means a custody agreement made by a Sub-Servicer in favor of the
Indenture Trustee with respect to the Pledged Student Loans.

     [****]

     “Defaulted Amount” means, as of any date, the aggregate outstanding [****]
plus accrued interest of such Student Loan.

     “Defaulted Pledged Student Loan” means any Pledged Student Loan that is a Defaulted
Student Loan.

     “Defaulted Student Loan” means any Student Loan (i) that is defaulted with respect to
any applicable servicing requirements; (ii) as to which any payment, or portion thereof, is more
than [****] days past due from the original due date therefor; or (iii) the Obligor of which is the
subject of an Event of Bankruptcy or is deceased or disabled.

     “Defaulting Committed Lender” has the meaning set forth in Section 1.02(c).

     “Deferment” means the deferment period specified in the Credit and Collection
Policies.

     “Demand Note” means that certain Non-Recourse Demand Note made by CFS to the order of
the Issuer on or before the date of the initial Borrowing in the original principal amount of
$20,000,000 which evidences indebtedness of CFS to the Issuer payable on demand pursuant to the
terms of the Demand Note, the Residual Payments Account Control Agreement and this Agreement, and
which note was provided to the Issuer as part of the initial capitalization of the Issuer, and
which is secured by the Demand Note Collateral, as the same may from time to time be amended,
restated, supplemented or otherwise modified, and any instrument given substitution or as a
replacement therefor at any time.

     “Demand Note Collateral” means the collateral described in the Demand Note.

     “Department” means the United States Department of Education, or any successor thereto
or to the functions thereof.

     “Disbursement Account” means the account established at a Qualified Institution, in
the name of the Indenture Trustee, for the benefit of the Secured Parties, which account has been
designated as the Disbursement Account, and any other account designated as the “Disbursement
Account” by the Administrative Agent or by the Indenture Trustee.

     “Dollars” means dollars in lawful money of the United States of America.

     “Eligible Borrower” means, a matriculated student (or a co-signor or parent on behalf
of a matriculated student) enrolled in a four-year undergraduate degree program or a graduate
degree program at an Eligible Institution or a program at a Career School/Non Degree Granting
Institution and who is a United States citizen, United States national or legal permanent resident.

APPENDIX A

7

 

     “Eligible Institution” means an institution that is (i) an accredited institution of
higher education, (ii) a vocational school or (iii) any other institution that, in all of the above
cases, is an “eligible institution” as defined in the Higher Education Act.

     “Eligible Investments” means cash or any one or more of the following obligations or
securities:

     (a) marketable direct obligations issued or unconditionally guaranteed by the United States
government and backed by the full faith and credit of the United States government;

     (b) domestic and Eurodollar certificates of deposit and time deposits, bankers’ acceptances
and floating rate certificates of deposit issued by any commercial bank organized under the laws of
the United States, any state thereof, the District of Columbia, any foreign bank, or its branches
or agencies (fully protected against currency fluctuations), which, at the time of acquisition, are
rated A–1 (or better) by S&P (or its successors) or P-1 (or better) by Moody’s (or its successors);

     (c) commercial paper of United States and foreign banks and bank holding companies and their
subsidiaries and United States and foreign finance, commercial industrial or utility companies
which, at the time of acquisition, are rated A-1 (or better) by S&P (or its successors) or P-1 (or
better) by Moody’s (or its successors);

     (d) marketable direct obligations of any state of the United States of America or any
political subdivision of any such state given on the date of such investment the highest credit
rating by Moody’s (or its successors) and S&P (or its successors); and

     (e) shares in mutual funds rated “Aa2” or higher by Moody’s or rated “AA” or higher by S&P
(in any amount) issued by a bank, trust company or insurance company with its principal place of
business in the United States of America which has a combined capital, surplus and undivided
profits of at least $100 million;

     provided, that all such Eligible Investments in clauses (a) through (e) above shall mature in
accordance with the provisions specified in Section 3.01(f) of the Agreement and provided
further that the Issuer and the Indenture Trustee have not been notified in writing by the
Administrative Agent that such investment is “ineligible”.

     “Eligible Pledged Student Loan” as of any date means a Pledged Student Loan that is an
Eligible Student Loan as of such date.

     “Eligible Student Loan” means a Student Loan, on any date of determination:

     (a) that was generated in the United States, its territories, its possessions or other areas
subject to its jurisdiction by an Originator and sold to CFO pursuant to an Approved Origination
Agreement which has not been amended or otherwise modified except with the prior written consent of
the Administrative Agent and each Funding Agent, and transferred by CFO to the Issuer pursuant to a
Purchase and Sale Agreement, or if consented to in writing by the Funding Agents, purchased in the
ordinary course of its business by CFO (or any other Affiliated Seller) from an Originator pursuant
to a Purchase and Sale Agreement and sold to the Issuer

APPENDIX A

8

 

pursuant to the terms of the CFO Purchase and Sale Agreement (or such other Purchase and Sale
Agreement entered into between the Issuer and the applicable Affiliated Seller) (it being
understood that if such Student Loan is acquired by the Issuer pursuant to a Purchase and Sale
Agreement (other than the Purchase and Sale Agreements defined in clause (i) of the
definition thereof), the Administrative Agent, the Funding Agents and the Lenders shall, if so
requested, have received acceptable documentation prior to such acquisition including without
limitation a favorable opinion or opinions of counsel to the applicable Originator(s) thereunder in
form and substance reasonably satisfactory to the Administrative Agent, the Funding Agents and the
Lenders);

     (b) that constitutes an instrument, account or a general intangible as defined in the Uniform
Commercial Code as in effect in the jurisdiction that governs the perfection of the interests of
Issuer therein and the perfection of the Indenture Trustee’s interest therein;

     (c) the borrower thereof is an Eligible Borrower;

     (e) is not a Defaulted Student Loan;

     (f) that provides or, when the payment schedule with respect thereto is determined, will
provide for payments on a periodic basis that fully amortize the [****] thereof by its maturity, as
such maturity may be modified in accordance with any deferral or forbearance periods permitted
under any applicable Guarantee Agreement and the Credit and Collection Policy;

     (g) with regard to which the warranty of Issuer in Section 6.01(g) is true and
correct;

     (h) the sale or assignment of which to Issuer pursuant to a Purchase and Sale Agreement and
the granting of a security interest to the Indenture Trustee pursuant to this Indenture does not
contravene or conflict with any law or regulation, or require the consent or approval of, or notice
to, any Person;

     (i) that is denominated and payable only in Dollars in the United States;

     (j) that together with the related Student Loan Note therefor represents the genuine, legal,
valid and binding payment obligation of the related borrower, enforceable by or on behalf of the
holder thereof against such borrower in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, fraudulent conveyance and similar laws relating to
creditors’ rights generally and subject to general principles of equity; and that has not been
satisfied, subordinated or rescinded and no right of rescission, setoff, counterclaim or defense
has been asserted or, to Issuer’s knowledge, overtly threatened in writing with respect to such
Student Loan;

     (k) that complied at the time it was originated or made, and on the date that such Student
Loan becomes a Pledged Student Loan complies, and Issuer and its agents, with respect to such
Student Loan, have at all times complied, in all material respects with all requirements of
applicable federal, state and local laws and regulations thereunder, including, without limitation,
the Equal Credit Opportunity Act, the Fair Debt Collection Practices Act, the Truth in Lending Act,
the Federal Trade Commission Act, the Federal Reserve Board’s Regulation B, applicable

APPENDIX A

9

 

laws relating to usury, truth-in-lending, education lending, fair credit billing, fair credit
reporting, fair debt collection practices, privacy, consumer credit protection and disclosure, and
other applicable consumer credit laws and equal credit opportunity laws, as applicable to such
Student Loan and that complies and has at all times complied with all applicable Guarantee
Agreements and all regulations;

     (l) that is the subject of a valid Sub-Servicing Agreement and as to which a Servicer Event of
Default has not occurred;

     (m) that was initially originated by a national banking association and complies in all
material respects with the applicable Credit and Collection Policy and all other requirements of
the related Guarantor and such other requirements have been approved by the Administrative Agent
and each Funding Agent;

     (n) that is part of a Student Loan program which has been underwritten and approved by the
Administrative Agent and the Funding Agents;

     (o) for which all of the conditions set forth in Section 5.02(j) for a Borrowing with
respect to such Student Loan and for its inclusion in the Coverage Condition shall have been
satisfied;

     (p) that with respect to any Student Loan that has the benefit of a Guarantee Agreement (i) is
the subject of a valid Guarantee Agreement with a Guarantor that has not been amended or otherwise
modified except with the prior written consent of the Administrative Agent and each Funding Agent
and as to which neither a Guarantor Event of Default nor a Material Adverse Change with respect to
the applicable Guarantor has occurred, (ii) qualifies the Lenders to receive the maximum Guarantee
Payments available under the applicable Guarantee Agreement (net of any deductible delineated under
such Guarantee Agreement), (iii) with respect to which Issuer is not in default in any material
respect in the performance of any of its covenants and agreements made in the applicable Guarantee,
and (iv) with respect to which all amounts due and payable to a Guarantor, as the case may be, have
been paid in full or deposited in the Guarantor Payment Account;

     (q) for which the inclusion of such Student Loan as an Eligible Student Loan shall not result
in an Event of Termination;

     (r) with respect to which an original or facsimile copy of the associated Student Loan Note is
either (i) in the possession of a Third Party Servicer or (ii) in the possession of an Affiliated
Servicer and marked with the legend set forth in Section 7.01(q);

     (s) [electronic signatures — reserved];

     (t) the Obligor of which has a FICO Score of greater than or equal to [****]; and

     (u) the Student Loan Note evidencing such Student Loan is in the form attached as
Exhibit B to the Agreement or in such other form as is approved by the
Administrative Agent and Funding Agents from time to time in writing.

APPENDIX A

10

 

     “ERISA” means the U.S. Employee Retirement Income Security Act of 1974, as amended
from time to time.

     “ERISA Affiliate” means (i) any corporation which is a member of the same controlled
group of corporations (within the meaning of Section 414(b) of the Code) as Issuer, (ii)
partnership or other trade or business (whether or not incorporated) under common control (within
the meaning of Section 414(c) of the Code) with Issuer, or (iii) member of the same affiliated
service group (within the meaning of Section 414(m) of the Code) as Issuer, any corporation
described in clause (i) above or any partnership or trade or business described in clause (ii)
above.

     “Eurodollar Rate” means, for any Settlement Period, an interest rate per annum
(rounded upward to the nearest 1/16th of 1.00%) determined pursuant to the following formula:

	 	 	 	 	 	 	 	 	 
	 

	 	Eurodollar Rate
	 	=
	 	LIBOR
 

1.00 — Eurodollar Reserve Percentage
	 	 

     Where,

     “Eurodollar Reserve Percentage” means, for any Settlement Period, the maximum reserve
percentage (expressed as a decimal, rounded upward to the nearest 1/100th of 1.00%) in effect on
the date LIBOR for such Settlement Period is determined under regulations issued from time to time
by the Federal Reserve Board for determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement) with respect to “Eurocurrency”
funding (currently referred to as “Eurocurrency liabilities”) having a term comparable to such
Settlement Period.

     “Event of Bankruptcy” shall be deemed to have occurred with respect to a Person if
either:

          (a) a case or other proceeding shall be commenced, without the application or
consent of such Person, in any court, seeking the liquidation, reorganization, debt
arrangement, dissolution, winding up, or composition or readjustment of debts of
such Person, the appointment of a trustee, receiver, custodian, liquidator,
assignee, sequestrator or the like for such Person or all or substantially all of
its assets, or any similar action with respect to such Person under any law relating
to bankruptcy, insolvency, reorganization, winding up or composition or adjustment
of debts, and such case or proceeding shall continue undismissed, or unstayed and in
effect, for a period of sixty (60) consecutive days; or an order for relief in
respect of such Person shall be entered in an involuntary case under the federal
bankruptcy laws or other similar laws now or hereafter in effect; or

          (b) such Person shall commence a voluntary case or other proceeding under any
applicable bankruptcy, insolvency, reorganization, debt arrangement, dissolution or
other similar law now or hereafter in effect, or shall consent to the appointment of
or taking possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) for, such Person or for any

APPENDIX A

11

 

substantial part of its property, or shall make any general assignment for the
benefit of creditors, or shall fail to, or admit in writing its inability to, pay
its debts generally as they become due, or, if a corporation or similar entity, its
board of directors shall vote to implement any of the foregoing.

     “Event of Termination” has the meaning set forth in Section 8.01.

     [****]

     “Excess Spread” means, the annualized percentage, calculated on the last day of each
month, which is a fraction, the numerator of which is the positive difference, if any, between (x)
(i) the Expected Interest Collections for such month with respect to the Pledged Student Loans and
(ii) proceeds under any Guarantee Agreement, and (y) the sum of (iii) all fees payable to the
Master Servicer, Administrator or any Sub-Servicers for such month with respect to the Pledged
Student Loans, (iv) all other Fees payable hereunder for such month, and (v) all interest payable
to the Lenders in respect of the Advances for such month pursuant to Section 2.02 and (vi)
net charge-offs of Pledged Student Loans and the denominator of which is the weighted average
[****] of all Pledged Student Loans during such month.

     “Exchange Act” means the Securities and Exchange Act of 1934, as amended.

     “Expected Interest Collections” means, for any calendar month, the sum of (i) the
amount of interest due or accrued with respect to the Pledged Student Loans and payable by the
related Obligors thereof during such calendar month (whether or not such interest is actually paid)
and (ii) Investment Earnings for such calendar month.

     “Facility Termination Date” means the earliest to occur of (a) with respect to the
Committed Lenders’ Commitments hereunder, August 18, 2006 or, if the Facility Termination Date has
been extended pursuant to Section 1.06, such later date, (b) with respect to the Conduit
Lenders, the earlier of (i) the Maturity Date unless such date is extended with the consent of the
parties hereto and (ii) the termination of the commitment of any Program Support Provider to the
related Conduit Lender with respect to this Agreement (unless such Program Support Provider is
replaced in accordance with the terms and conditions of the related Program Support Agreement or,
assuming that such Program Support Provider is also a Committed Lender, the Program Limit is
reduced in accordance with Section 1.06(b), (c) the date determined pursuant to Section
8.02, (d) the date specified by the Issuer upon at least thirty (30) Business Day’s prior
written notice to the Administrative Agent, each Funding Agent and each of the Lenders.

     “FDIC” means the Federal Deposit Insurance Corporation, or any agency succeeding
substantially to its responsibilities.

     “Federal Funds Rate” means, for any period, the per annum rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication, published by the Federal
Reserve Board (including any such successor, “H.15(519)”) for such day opposite the caption
“Federal Funds (Effective)”. If on any relevant day such rate is not yet published in H.15(519),
the rate for such day will be the rate set forth in the daily statistical release designated as the
Composite 3:30 p.m. Quotations for U.S. Government Securities, or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor,

APPENDIX A

12

 

the “Composite 3:30 p.m. Quotation”) for such day under the caption “Federal Funds
Effective Rate.” If on any relevant day the appropriate rate for such previous day is not yet
published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate for such day will be
the arithmetic mean as determined by the Administrative Agent of the rates for the last transaction
in overnight Federal funds arranged prior to 9:00 a.m. (New York time) on that day by each of three
leading brokers of Federal funds transactions in New York City selected by the Administrative
Agent.

     “Federal Reserve Board” means the Board of Governors of the Federal Reserve System, or
any successor thereto or to the functions thereof.

     “Fees” means (without duplication) all fees payable by Issuer pursuant to the
Structuring Fee Letter, Funding Agent Fee Letters, the Guarantee Agreements, the Indenture Trustee
Fee Letter and this Agreement.

     “FFELP Program” means the Federal Family Education Loan Program authorized under the
Higher Education Act, including Federal Stafford Loans authorized under Sections 427 and 428
thereof, Federal Supplemental Loans for Students authorized under Section 428A thereof, Federal
PLUS Loans authorized under Section 428B thereof, Federal Consolidation Loans authorized under
Section 428C thereof and Unsubsidized Loans authorized under Section 428H thereof.

     “FICO Score” means a statistical credit score with respect to Obligors generated by
models developed by a third party and made available to other Persons through Equifax Inc. based on
an Obligor’s historical credit data, including, among other things, payment history, delinquencies
on accounts, levels of outstanding indebtedness, length of credit history, types of credit and
bankruptcy experience. [****].

     “Final Payout Date” means the date immediately following the later to occur of (i) the
Maturity Date and (ii) the date on which the principal and interest of the Notes shall have been
paid in full and all other amounts payable by Issuer under the Transaction Documents shall have
been paid in full.

     “Financed Student Loan” means each Student Loan acquired or funded, or purported to be
acquired or funded, with the proceeds of Advances.

     “Funding Agent” has the meaning set forth in the preamble.

     “Funding Agent Fee Letters” has the meaning set forth in Section 4.01.

     “Funding Agent Fees” means the fees payable by the Issuer pursuant to the Funding
Agent Fee Letters.

     “Funding Agent’s Account” means, (i) with respect to CNAI, the special account number
[****] of the Indenture Trustee maintained at the office of Citibank, N.A. at New York, New York,
or such other account as may be so designated in writing by CNAI to Issuer and the Indenture
Trustee and (ii) with respect to any other Funding Agent, the special account designated in writing
by such Funding Agent to Issuer and the Indenture Trustee.

APPENDIX A

13

 

     “Funding Agent’s Office” means (i) with respect to CNAI, the office of Citicorp North
America, Inc. at 450 Mamaroneck Avenue, Harrison, New York 10528, or such other address as shall be
designated by CNAI in writing to Issuer and the Lenders in any Lender Group of which CNAI is the
Funding Agent and (ii) with respect to any other Funding Agent, the office of designated in writing
to Issuer and the Lenders in such Funding Agent’s Lender Group, or such other address as shall be
designated by such Funding Agent in writing to Issuer and the Lenders in any Lender Group of which
such Funding Agent is the Funding Agent.

     “Governmental Authority” means any nation or government, any state or other political
subdivision thereof, any central bank (or similar monetary or regulatory authority) thereof, any
body or entity exercising executive, legislative, judicial, regulatory or administrative functions
or pertaining to government, including without limitation any court, and any Person owned or
controlled, through stock or capital ownership or otherwise, by any of the foregoing.

     “Group Limit” means, for each Lender Group, the sum of the Commitments of the
Committed Lenders in such Lender Group.

     “Guarantee” of or by any Person (the “guarantor”) means any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any indebtedness or other obligation of any other Person (the “primary
obligor”) in any manner, whether directly or indirectly, and including any obligation of the
guarantor, direct or indirect, (a) to purchase or pay (or advance or supply funds for the purchase
or payment of) such indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or lease property,
securities or services for the purpose of assuring the owner of such indebtedness or other
obligation of the payment thereof, (c) to maintain working capital, equity capital or any other
financial statement condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such indebtedness or obligation.

     “Guarantee Agreement” means any of, and “Guarantee Agreements” means all of,
the agreements (or insurance policies) pursuant to which a Guarantor guarantees (or insures)
certain Student Loans included or to be included in the Pledged Student Loans in effect on the
Closing Date and any such agreements that thereafter become effective that are approved in writing
by the Administrative Agent and the Required Funding Agents, in each case as the same may be
amended, supplemented or otherwise modified from time to time.

     “Guarantee Payment” means any payment by a Guarantor pursuant to a Guarantee Agreement
in respect of a Pledged Student Loan.

     “Guarantee Release Amount” means, with respect to any Pledged Student Loan released
pursuant to Section 1.04, all origination and upfront fees with respect to such Released
Pledged Student Loans.

     “Guaranteed Amount” means with respect to a Student Loan, the amount of such Student
Loan guaranteed under a Guarantee Agreement.

APPENDIX A

14

 

     “Guarantor” means NHIC and such other third-party guarantors (or insurers) which are
approved by the Administrative Agent and the Funding Agents in writing.

     “Guarantor Fees” means the fees, expenses and other amounts payable to the Guarantors
pursuant to the Guarantee Agreements.

     “Guarantor Event of Default” means (a) the occurrence of an Event of Bankruptcy with
respect to such Guarantor; (b) the rating by the Rating Agencies on the long-term unsecured debt of
such Guarantor shall fall below A by S&P, below A2 by Moody’s or below A+ by A.M. Best Company,
Inc.; and (c) an event of default occurs under its Guarantee Agreement.

     “Guarantor Payment Account” means the account established at a Qualified Institution
in the name of the Indenture Trustee, for the benefit of the Secured Parties, which account has
been designated as the “Guarantor Payment Account” by the Indenture Trustee or the Administrative
Agent.

     “Higher Education Act” means the Higher Education Act of 1965, as amended or
supplemented from time to time, or any successor federal act, together with any rules (including,
without limitation, the Common Manual), regulations and interpretations promulgated thereunder.

     “Indebtedness” of any Person means, without duplication, (a) all obligations of such
Person for borrowed money or with respect to deposits or advances of any kind, (b) all obligations
of such Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of
such Person upon which interest charges are customarily paid, (d) all obligations of such Person
under conditional sale or other title retention agreements relating to property acquired by such
Person, (e) all obligations of such Person in respect of the deferred purchase price of property or
services (excluding current accounts payable incurred in the ordinary course of business), (f) all
indebtedness of others secured by any mortgage, encumbrance, lien, pledge, charge or security
interest of any kind on property owned or acquired by such Person, whether or not the Indebtedness
secured thereby has been assumed, (g) all Guarantees by such Person of Indebtedness of others, (h)
all Capital Lease Obligations of such Person, (i) all obligations of such Person to reimburse any
bank or other Person in respect of amounts paid under letters of credit and similar instruments,
(j) all obligations, contingent or otherwise, of such Person in respect of bankers’ acceptances and
(k) obligations of such Person under any foreign exchange contract, currency swap agreement,
interest rate swap, cap or collar agreement or other similar agreement or arrangement designed to
alter the risks of that Person arising from fluctuations in currency values or interest rates, in
each case whether contingent or matured. The Indebtedness of any Person shall include the
indebtedness of any other entity (including any partnership in which such Person is a general
partner) to the extent such Person is liable therefor as a result of such Person’s ownership
interest in or other relationship with such entity, except to the extent the terms of such
indebtedness provide that such Person is not liable therefor.

     “Indemnified Amounts” has the meaning set forth in Section 11.01.

     “Indemnified Party” has the meaning set forth in Section 11.01.

     “Indenture Trustee” has the meaning set forth in the preamble.

APPENDIX A

15

 

     “Indenture Trustee Fee Letter” has the meaning set forth in Section 4.01.

     “Indenture Trustee’s Fees” means the fees payable to the Indenture Trustee by Issuer
pursuant to the Indenture Trustee Fee Letter.

     “Intercreditor Agreement” means the Intercreditor Agreement dated on or prior to the
date of the initial Borrowing among the Issuer, the Administrative Agent, the Indenture Trustee,
CFS, Collegiate Funding of Delaware, LLC and JPMorgan Chase Bank, N.A., as amended, restated,
supplemented or otherwise modified from time to time.

     “Investment Earnings” means, with respect to each Settlement Date, all investment
earnings (net of losses and investment expenses) on investments or other amounts which are on
deposit in the Accounts.

     “Issuer” has the meaning set forth in the preamble.

     “Issuer Order” means a direction letter, in such form as the Indenture Trustee and
Issuer may agree to specifying the Eligible Investments that funds in the Collection Account and
the Reserve Account shall be invested in pursuant to Section 3.01.

     “Lender” means either a Conduit Lender or a Committed Lender.

     “Lender Group” means, the Conduit Lenders, their related Committed Lenders, the
Funding Agent acting as agent for such Conduit Lenders and related Committed Lenders and the
Program Support Providers with respect to such Conduit Lender, in each case as described on
Schedule 1 hereto.

     “Lender Group Pro Rata Share” means, with respect to any Committed Lender, a fraction
(expressed as a percentage) computed by dividing such Committed Lender’s Commitment by the
aggregate Commitments of all Committed Lenders in such Committed Lender’s Lender Group.

     “Lenders” has the meaning set forth in the preamble.

     “LIBOR” for any Settlement Period means the rate of interest per annum at which
deposits in U.S. Dollars are offered by the principal office of Citibank in London, England to
prime banks in the London interbank market at 11:00 a.m. (London time) two Business Days before the
first day of such Settlement Period in an amount approximately equal or comparable to the then
outstanding Advances and for a period equal to such Settlement Period.

     “Lien” means any interest in property securing an obligation owed to, or a claim by, a
Person other than the owner of the property, whether such interest is based on the common law,
statute or contract, and including but not limited to the security interest lien arising from a
mortgage, encumbrance, pledge, assignment, conditional sale or trust receipt for a lease,
consignment or bailment for security purposes. The term “Lien” shall include reservations,
exceptions, encroachments, easements, rights of way, covenants, conditions, restrictions, leases
and other title exceptions and encumbrances affecting property.

APPENDIX A

16

 

     “Liquidation Period” means the period commencing on the Facility Termination Date and
ending on the Final Payout Date.

     “Location” means, with respect to any Person, the location within the meaning of
Section 9-307 of the UCC as in effect in the State of New York from time to time.

     “Master Servicer” has the meaning set forth in the preamble.

     “Master Servicer’s Fee” means an aggregate amount equal to (i) for each Settlement
Period other than the initial Settlement Period, the product of (a) the outstanding weighted
average [****] of all Pledged Student Loans during such Settlement Period multiplied by (b)
[****]% and (ii) for the initial Settlement Period, the product of (a) the outstanding weighted
average [****] of all Pledged Student Loans during such Settlement Period multiplied by (b)
[****]% multiplied by (c) a fraction equal to the number of days in the initial Settlement
Period divided by 30; in each case, payable to the Master Servicer and/or the Sub-Servicers
pursuant to Section 3.03(b) and the provisions of Section 12.18 of the Agreement.

     “Material Adverse Change” means the occurrence of an event or a change in
circumstances which has or could be reasonably be viewed as having a Material Adverse Effect.

     “Material Adverse Effect” with respect to any event or circumstance and any Person,
means that such event or circumstance would cause the rating of the Notes to fall below the
equivalent of “A2” by Moody’s as reasonably determined by any Valuation Agent using the ratings
methodology the Valuation Agent employs for rating the Notes or a material adverse effect on:

          (i) the business, assets, financial condition, prospects or operations of such Person;

          (ii) the ability of such Person to perform its obligations under this Agreement or any
other Transaction Document;

          (iii) the validity, enforceability or collectibility of this Agreement, any other
Transaction Document to which such Person is a party, a material amount of the Pledged
Student Loans or the Student Loan Notes, any Sub-Servicing Agreement or the Guarantee
Agreements;

          (iv) the status, existence, perfection, priority or enforceability of the Indenture
Trustee’s security interest in the Collateral; or

          (v) a Guarantor’s obligation to guarantee payment of a Pledged Student Loan.

     “Maturity Date” means August 18, 2008.

     “Monthly Advances” has the meaning set forth in Section 3.05(e).

     “Monthly Payment Ratio” means the ratio, computed as of the last day of any Settlement
Period, expressed as an annualized percentage, of (i) the difference between (A) the aggregate

APPENDIX A

17

 

Collections received with respect to Pledged Student Loans during such Settlement Period and
(B) all capitalized interest accrued during such Settlement Period with respect to all Student
Loans that are Pledged Student Loans in Repayment status, divided by (ii) the weighted
average aggregate [****] of all Student Loans that are Pledged Student Loans in Repayment status.

     “Monthly Report” means a report, in substantially the form of Exhibit 7.02(c),
furnished by Issuer (or the Master Servicer or the Administrator on its behalf) to the
Administrative Agent and the Funding Agents.

     “Moody’s” means Moody’s Investors Service, Inc.

     “National City Origination Agreement” means the Private Loan Program Agreement among
National City Bank, N.A., Collegiate Funding Services, L.L.C., CFS-SunTech Servicing L.L.C. and
Collegiate Funding Services, Inc. dated as of May 19, 2005 as the same may be amended, restated,
supplemented or otherwise modified from time to time with the consent of the Administrative Agent
and the Required Funding Agents.

     [****]

     “NHIC” means New Hampshire Insurance Company.

     “Non-Defaulting Committed Lender” has the meaning set forth in Section 1.02(c).

     “Non-Excluded Taxes” has the meaning set forth in Section 2.07(d).

     “Non-Renewing Committed Lender” has the meaning set forth in Section 1.07.

     “Note” has the meaning set forth in Section 2.01.

     “Notice of Release” has the meaning set forth in Section 1.04.

     “Obligor” means a Person obligated to make payments with respect to a Student Loan,
including the students, co-signors and the Guarantors.

     “Origination Agreement” means an agreement providing for the origination of Pledged
Student Loans by or on behalf of an Originator.

     “Originators” means those Originators set forth on Appendix B hereto and such other
originators as may be approved by the Administrative Agent and the Funding Agents from time to time
in writing.

     “Other Taxes” has the meaning assigned to it in Section 2.07(b).

     “Parent” means Collegiate Funding Services, Inc., a Delaware corporation.

     “Participant” has the meaning assigned to it in Section 10.01(g).

     “Permitted Payments” has the meaning assigned to it in Section 1.03(b).

APPENDIX A

18

 

     “Person” means an individual, partnership, corporation (including a business trust),
joint stock company, limited liability company, trust, unincorporated association, joint venture,
government or any agency or political subdivision thereof or any other entity.

     “Pledged Student Loan” has the meaning assigned to it in the definition of
“Collateral”.

     “Plan” has the meaning assigned to it in Section 6.01(f).

     “Portfolio Valuation” means a determination by a Valuation Agent of the fair market
value of part or all of the actual Collateral as of any Calculation Date at the equivalent of a
program rated “A2” by Moody’s as reasonably determined by the Valuation Agent using the ratings
methodology the Valuation Agent employs for rating the Notes.

     [****]

     “Pro Rata Share” means, (a) with respect to a Committed Lender, a fraction (expressed
as a percentage) computed by dividing such Committed Lender’s Commitment by the aggregate
Commitments of all Committed Lenders, as the same may be amended by Assignment and Acceptances from
time to time) and (b) with respect to a Lender Group, a fraction (expressed as a percentage)
computed by dividing the aggregate Commitments of all Committed Lenders in such Lender Group by the
aggregate Commitments of all Committed Lenders.

     “Product Information” has the meaning set forth in Section 13.13(a).

     “Program Limit” means $180,000,000, as such amount may be increased from time to time
in accordance with Section 2.05(b) and decreased from time to time in accordance with
Section 2.05(a).”

     “Program Support Agreement” means and includes any agreement entered into by any
Program Support Provider providing for the issuance of one or more letters of credit for the
account of a Conduit Lender, the issuance of one or more surety bonds for which a Conduit Lender is
obligated to reimburse the applicable Program Support Provider for any drawings thereunder, the
sale by a Conduit Lender to any Program Support Provider of Advances (or portions thereof) and/or
the making of loans and/or other extensions of credit to a Conduit Lender in connection with such
Conduit Lender’s securitization program, together with any letter of credit, surety bond or other
instrument issued thereunder (but excluding any discretionary advance facility provided by the
Administrative Agent or any Funding Agent).

     “Program Support Provider” means and includes any Person (other than any customer of a
Conduit Lender) now or hereafter extending credit or having a commitment to extend credit to or for
the account of, or to make purchases from, a Conduit Lender or issuing a letter of credit, surety
bond, guarantee or other instrument to support any obligations arising under or in connection with
the Conduit Lender’s securitization program.

     “Promissory Note Rate” means, for any Settlement Period:

     (a) for Advances held by any Conduit Lender in the Lender Group of which CNAI is the Funding
Agent, the per annum rate equal to the weighted average of the per annum rates paid

APPENDIX A

19

 

or payable by such Conduit Lender from time to time as interest on or otherwise (by means of
interest rate hedges or otherwise) in respect of the Promissory Notes that are allocated, in whole
or in part, by the Administrative Agent (on behalf of such Conduit Lender) to fund or maintain such
Conduit Lender’s Advances during such Settlement Period, as determined by the Administrative Agent
(on behalf of such Conduit Lender) and reported to the Issuer and the Master Servicer, which rates
shall reflect and give effect to the commissions of placement agents and dealers in respect of
Promissory Notes, to the extent such commissions are allocated, in whole or in part, to such
Promissory Notes by the Administrative Agent (on behalf of such Conduit Lender); provided,
however, that if any component of such rate is a discount rate, in calculating the
“Promissory Note Rate” for such Settlement Period, the Administrative Agent shall for such
component use the rate resulting from converting such discount rate to an interest bearing
equivalent rate per annum; provided, further, that the Promissory Note Rate with
respect to Advances funded by Participants shall be the same rate as in effect from time to time on
Advances or portions thereof that are not funded by a Participant; provided,
further, that if all of the Advances maintained by such Conduit Lender are funded by
Participants, then the Promissory Note Rate shall be such Conduit Lender’s pool funding rate in
effect from time to time for its largest size pool of transactions which settles with a frequency
corresponding to the Settlement Period, or

     (b) for Advances held by any Conduit Lender in the Lender Group of which any other Funding
Agent is the Funding Agent, for any Settlement Period, the per annum rate set forth in the
applicable Funding Agent Fee Letter.

     “Promissory Notes” means, collectively, (i) promissory notes issued by the Conduit
Lenders and (ii) participations sold by the Conduit Lenders pursuant to Section 10.01(g);
provided that the term “Promissory Notes” shall not include the interests sold by
the Conduit Lenders under a Program Support Agreement.

     “Purchase and Sale Agreement” means (i) the CFO Purchase and Sale Agreement; (ii) each
loan purchase agreement for the sale of Student Loans which is approved by the Administrative Agent
and the Funding Agents in writing prior to the execution thereof; in each case together with such
opinions, UCC financing statements and any other documents as the Administrative Agent or the
Funding Agents may require, and in each case as the same may be amended, restated, supplemented, or
otherwise modified from time to time with the prior written consent of the Administrative Agent and
the Required Funding Agents.

     “Purchase Termination Event” with respect to an Originator or an Affiliated Seller
means the occurrence of any of the following events, to the extent that the Issuer has actual
knowledge or has been given written notice of such event: (a) a Material Adverse Change in the
condition of such Originator or Affiliated Seller has occurred and is continuing; (b) an Event of
Bankruptcy has occurred with respect to such Originator or Affiliated Seller; (c) such Originator
or Affiliated Seller shall fail to pay, or shall default in the payment of, any principal or
premium or interest on any Indebtedness beyond any applicable grace period, or such Originator or
Affiliated Seller shall breach or default with respect to any other term of any evidence of any
Indebtedness, or of any loan agreement, mortgage, indenture or other agreement relating thereto, if
such failure, default or breach continues beyond any applicable grace period, if the effect of such
failure, default or breach (i) is to cause the holder or holders of that Indebtedness (or a trustee
on behalf

APPENDIX A

20

 

of such holder or holders) to cause that Indebtedness to become or be declared due prior to
its stated maturity or (ii) would permit the holder of such Indebtedness to accelerate the maturity
of such Indebtedness and if the amount of the Indebtedness involved in all such failures, defaults
and breaches is greater than $100,000; (d) one or more judgments for the payment of money in an
aggregate amount in excess of $100,000 shall be rendered against such Originator or Affiliated
Seller and the same shall remain undischarged for a period of thirty (30) consecutive days during
which execution shall not be effectively stayed or a satisfactory bond against such judgment shall
not have been posted, or any action shall be legally taken by a judgment creditor to attach or levy
upon any assets of such Originator or Affiliated Seller to enforce any such judgment and a bond
shall not have been posted or (e) a “Termination Date” shall occur under any Purchase and Sale
Agreement or any event that would cause or permit termination under an Origination Agreement shall
occur.

     “Qualified Institution” means Citibank, any Funding Agent, the Indenture Trustee, and,
with respect to the Collection Account, the Disbursement Account, the Guarantor Payment Account and
the Reserve Account, the Indenture Trustee or any bank or trust company which has (a) a long-term
unsecured debt rating of at least “A2” by Moody’s and at least “A” by S&P and (b) a short-term
rating of at least “P-1” by Moody’s and at least “A-1” by S&P.

     “Ratings Agencies” means Moody’s and S&P.

     “Reassignment” has the meaning set forth in Section 6.02.

     “Reassignment Amount” has the meaning set forth in Section 6.02.

     “Reference Bank” means (i) for calculations of “Alternate Base Rate” with respect to
any Lender in a Lender Group of which CNAI is the Funding Agent, Citibank and (ii) for calculations
of “Alternate Base Rate” with respect to any Lender in a Lender Group of which CNAI is not the
Funding Agent, the reference bank designed to the Issuer in writing by the Funding Agent.

     “Regulation D” means Regulation D of the Federal Reserve Board, or any other
regulation of the Federal Reserve Board that prescribes reserve requirements applicable to
nonpersonal time deposits or “Eurocurrency Liabilities” as presently defined in Regulation D, as in
effect from time to time.

     “Regulatory Change” means, relative to any Affected Party:

          (a) any change after the date of this Agreement in (or the adoption implementation,
change in phase-in or commencement of effectiveness of) any

     (i) United States federal or state law or foreign law applicable to such
Affected Party;

     (ii) regulation, interpretation, directive, requirement or request (whether or
not having the force of law) applicable to such Affected Party of (A) any court,
government authority charged with the interpretation or administration

APPENDIX A

21

 

of any law referred to in clause (a)(i) or of (B) any fiscal, monetary or other
authority having jurisdiction over such Affected Party; or

     (iii) generally accepted accounting principles or regulatory accounting
principles applicable to such Affected Party and affecting the application to such
Affected Party of any law, regulation, interpretation, directive, requirement or
request referred to in clause (a)(i) or (a)(ii) above; or

          (b) any change after the date of this Agreement in the application to such Affected
Party of any existing law, regulation, interpretation, directive, requirement, request or
accounting principles referred to in clause (a)(i), (a)(ii),
(a)(iii) or (b) above.

     “Related Security” means, with respect to any Pledged Student Loan: (a) all of
Issuer’s right, title and interest in and to the Student Loan Note(s) and all other agreements that
relate to such Pledged Student Loan; (b) all of Issuer’s right to receive payment for losses under
any Guarantee Agreement related thereto; (c) all security interests or liens and property subject
thereto from time to time purporting to secure payment of such Pledged Student Loan, whether
pursuant to the Student Loan Note related to such Pledged Student Loan or otherwise; (d) all UCC
financing statements covering any collateral securing payment of such Pledged Student Loan; (e) all
other guarantees and other agreements or arrangements of whatever character from time to time
supporting or securing payment of such Pledged Student Loan; and (f) all rights of Issuer with
respect to such Pledged Student Loan under the related Sub-Servicing Agreement and the related
Origination Agreement.

     “Released Student Loan” has the meaning assigned to it in Section 1.04.

     “Repayment” means the period of time during which a borrower under a Student Loan is
required to make installment payments to repay the aggregate principal amount plus accrued
interest of all amounts borrowed by virtue of the Student Loan Note(s) executed by such borrower.

     “Required Funding Agents” means at any time (a) Funding Agents for Lender Groups
including Lenders then holding at least 66 2/3% of the Total Outstanding Advances or (b) if no
Advances are outstanding, Committed Lenders whose Commitments total at least 66 2/3% of the
aggregate of all Commitments at such time.

     “Reserve Account” means the account established at a Qualified Institution, in the
name of the Indenture Trustee, for the benefit of the Secured Parties, which account has been
designated as the “Reserve Account”, including any subaccounts of such account, and any other
account designated as the Reserve Account by the Indenture Trustee or the Administrative Agent.

     “Reserve Account Minimum Balance” means at any time, an amount equal to the greater of
(A) $1,000,000 and (B) an amount equal to 1.00% of the Program Limit.

     “Reserve Account Withdrawal Amount” has the meaning assigned to it in Section
3.04(b).

APPENDIX A

22

 

     “Residual Payments Account” means the account maintained with the Indenture Trustee
and subject to the Residual Payments Account Control Agreement, subject to the Intercreditor
Agreement.

     “Residual Payments Account Control Agreement” means the account control agreement
providing that the Indenture Trustee (as assignee of the Issuer) may exercise control over the
Residual Payments Account after the occurrence and during the continuance of an Event of
Termination.

     “Revolving Period” means the period commencing on the date hereof and ending on the
Facility Termination Date.

     “Schedule of Pledged Student Loans” a listing of certain Student Loans of Issuer
delivered to and held by the Indenture Trustee (or set forth on the Master Servicer’s or any
applicable Sub-Servicer’s system) pursuant to Section 5.03 (which Schedule may be in the
form of microfiche or computer file or other medium acceptable to the Indenture Trustee) which
includes information reasonably requested by the Administrative Agent and any Funding Agent, as
such listing may be amended, restated, supplemented or otherwise modified from time to time.

     “Secured Parties” means the Lenders, the Funding Agents, the Administrative Agent, the
Valuation Agents, the Indemnified Parties and the other Affected Parties, as their respective
interests appear under the Agreement.

     “Securities Intermediary” means The Bank of New York in its capacity as securities
intermediary with respect to the Accounts.

     “Servicer Event of Default” means, with respect to the Master Servicer or any
Sub-Servicer: (i) the Master Servicer or such Sub-Servicer shall fail in any material respect to
perform or observe any term, covenant or agreement that is an obligation of the Master Servicer or
such Sub-Servicer under any Sub-Servicing Agreement or any Transaction Document (other than as
referred to in clause (ii) below) and such failure continues unremedied for the lesser of
(x) thirty days after (a) written notice thereof shall have been given by the Administrative Agent
to Issuer or the Master Servicer or (b) the Master Servicer or such Sub-Servicer has actual
knowledge thereof or (y) the grace period with respect to such provision as listed in the
applicable Transaction Document ; (ii) the Master Servicer or any such Affiliated Servicer shall
fail to make any payment or deposit required to be made by it under any Transaction Document when
due in any amount and such failure shall remain unremedied for three Business Days; (iii) any such
Third Party Servicer shall fail to make any payment(s) or deposit(s) to be made by it under any
Sub-Servicing Agreement or any Transaction Document when due in an amount equal to or greater than
(A) $5,000 in connection with any one incident or (B) $25,000 in connection with all such incidents
in any twelve calendar month period, and, in any event, such failure shall remain unremedied for
three Business Days; (iv) any representation or warranty made or deemed to be made by the Master
Servicer or such Sub-Servicer (or any of its officers) under or in connection with any
Sub-Servicing Agreement or any Transaction Document or any information or report delivered pursuant
to any Sub-Servicing Agreement or any Transaction Document shall prove to have been false or
incorrect in any material respect when made and such condition shall remain unremedied for 30 days
after (a) written notice thereof shall have been given by the

APPENDIX A

23

 

Administrative Agent or to the Master Servicer or (b) the Master Servicer or such Sub-Servicer
has actual knowledge thereof; (v) an Event of Bankruptcy shall have occurred with respect to the
Master Servicer or such Sub-Servicer; (vi) (a) any litigation (including, without limitation,
derivative actions), arbitration proceedings or governmental proceedings not disclosed in writing
by Issuer to the Administrative Agent prior to the execution and delivery of the Indenture is
pending against the Master Servicer or such Sub-Servicer or any of its Affiliates, or (b) any
material development not so disclosed has occurred in any such litigation or proceedings so
disclosed, which in the case of clause (a) or (b), in the opinion of the
Administrative Agent or the Lenders, has a reasonable likelihood of having a Servicer Material
Adverse Effect with respect to the Master Servicer or such Sub-Servicer; (vii) there shall exist
any event or occurrence that has had or has a reasonable likelihood of causing a Servicer Material
Adverse Effect; (viii) the Master Servicer or such Sub-Servicer shall fail to maintain policies of
insurance or fidelity bonds in accordance with the provisions of Section 12.11; or (ix) the
Master Servicer or such Sub-Servicer shall fail to comply with all material requirements and
regulations under the Equal Credit Opportunity Act, the Fair Debt Collection Practices Act, the
Truth in Lending Act, the Federal Trade Commission Act, the Federal Reserve Board’s Regulation B,
applicable laws relating to usury, truth-in-lending, education lending, fair credit billing, fair
credit reporting, fair debt collection practices, privacy, consumer credit protection and
disclosure, and other applicable consumer credit laws and equal credit opportunity laws.

     “Servicer Material Adverse Effect” means with respect to the Master Servicer or any
Sub-Servicer and any event or circumstance, a material adverse effect on:

(i) the business, assets, financial condition, prospects or operations of the Master
Servicer or such Sub-Servicer;

(ii) the ability of the Master Servicer or such Sub-Servicer to perform its obligations
under any Transaction Document to which it is a party;

(iii) the collectibility or enforceability of a material amount of the Pledged Student
Loans, or any Guarantee Agreement with respect to a material amount of the Pledged Student
Loans; or

(iv) the status, existence, perfection, priority or enforceability of the Indenture
Trustee’s security interest in the Collateral.

     “Servicer Repurchase Amount” has the meaning set forth in Section 12.05 of the
Agreement.

     “Settlement Date” means the date which is the second Business Day after the end of a
Settlement Period or, with respect to Advances bearing interest with reference to the Eurodollar
Rate or the Alternate Base Rate, the last day of the Settlement Period.

     “Settlement Period” means: (i) initially the period commencing on the date hereof
pursuant to Section 1.02 of the Agreement (or in the case of any fees payable hereunder,
commencing on the date hereof) and ending on the last day of the same calendar month, and (ii)
thereafter, each monthly period ending on the last day of the calendar month; provided,
however, that during the Liquidation Period the Settlement Period shall be such period
determined by the

APPENDIX A

24

 

Administrative Agent in its sole discretion (which may be a period as short as one Business
Day).

     “Solvent” means, with respect to any Person at any time, a condition under which:

(i) the fair value and present fair saleable value of such Person’s total assets is, on
the date of determination, greater than such Person’s total liabilities (including
contingent and unliquidated liabilities) at such time;

(ii) the fair value and present fair saleable value of such Person’s assets is greater
than the amount that will be required to pay such Person’s probable liability on its
existing debts as they become absolute and matured (“debts”, for this purpose, includes all
legal liabilities, whether matured or unmatured, liquidated or unliquidated, absolute,
fixed, or contingent);

(iii) such Person is and shall continue to be able to pay all of its liabilities as
such liabilities mature; and

(iv) such Person does not have unreasonably small capital with which to engage in its
current and in its anticipated business.

For purposes of this definition:

(A) the amount of a Person’s contingent or unliquidated liabilities at any time shall
be that amount which, in light of all the facts and circumstances then existing, represents
the amount which can reasonably be expected to become an actual or matured liability;

(B) the “fair value” of an asset shall be the amount which may be realized within a
reasonable time either through collection or sale of such asset at its regular market value;

(C) the “regular market value” of an asset shall be the amount which a capable and
diligent business person could obtain for such asset from an interested buyer who is willing
to purchase such asset under ordinary selling conditions; and

(D) the “present fair saleable value” of an asset means the amount which can be
obtained if such asset is sold with reasonable promptness in an arms length transaction in
an existing and not theoretical market.

     “S&P” means Standard & Poor’s, a division of The McGraw-Hill Companies, Inc.

     “Structuring Fee Letter” has the meaning set forth in Section 4.01.

     “Student Loan” means an education loan made to an Eligible Borrower that is not
granted under the FFELP Program.

APPENDIX A

25

 

     “Student Loan Notes” means the promissory notes or other writings or records
evidencing the Student Loans.

     “Sub-Servicer” means CFS-SunTech Servicing LLC, Intellirisk Management Corporation and
such other sub-servicers as are approved from time to time in accordance with the terms of the
Agreement.

     “Sub-Servicing Agreement” means each servicing agreement between the Master Servicer
and the applicable Sub-Servicer with respect to the servicing of the Student Loans, as the same may
be amended, supplemented or otherwise modified from time to time in accordance with the terms
thereof and with the terms of the Agreement.

     “Take-Out Securitization” means an asset securitization, financing or similar
transaction pursuant to which all or substantially all of the Pledged Student Loans are released
from the lien of this Agreement pursuant to Section 1.04.

     “Termination Fee” with respect to any Advance means the amount, if any, by which (i)
the additional interest that would have accrued on such Advance during its current Settlement
Period if the outstanding principal amount of such Advance had not been repaid prior to the
Settlement Date for such Settlement Period exceeds (ii) the income, if any, that the applicable
Lender will receive by investing the proceeds for such principal repayment in investments that are
permissible for such Lender and that will mature on such Settlement Date.

     “Third Party Servicer” a Sub-Servicer that is not an Affiliate of the Issuer.

     [****]

     “Total Outstanding Advances” at any time means the sum of (a) the aggregate amount
disbursed to the Issuer by the Lenders in connection with the funding of any Advance (or portion
thereof) pursuant to the Agreement, less (b) any payments made by the Issuer and actually
received by or on behalf of the Lenders and applied to reduce the principal balance of any Advance
pursuant to Section 2.03 of the Agreement (which have not been rescinded or otherwise
returned for any reason), provided, however, that if the Total Outstanding Advances
shall have been reduced, pursuant to clause (b) above, by any distribution, and thereafter all or a
portion of such distribution is rescinded or must otherwise be returned for any reason, such Total
Outstanding Advances shall be increased by the amount of such rescinded or returned distribution as
though it had not been made.

     “Transaction” has the meaning set forth in Section 13.13(a).

     “Transaction Documents” means this Agreement, the Notes, the Structuring Fee Letter,
the Funding Agent Fee Letters, the Indenture Trustee Fee Letter, each Sub-Servicing Agreement, each
Custody Agreement, the Guarantee Agreements, the Purchase and Sale Agreements, each Origination
Agreement, the Demand Note, the Residual Payments Account Control Agreement, all Program Support
Agreements, the Account Control Agreements, the Intercreditor Agreement, and the other documents,
certificates, instruments, agreements and notices to be executed and delivered in connection
herewith.

APPENDIX A

26

 

     “UCC” means the Uniform Commercial Code as from time to time in effect in the
applicable jurisdiction or jurisdictions.

     “Unmatured Event of Termination” means any event which, with the giving of notice or
lapse of time, or both, would become an Event of Termination.

     “Valuation Agent” means each Funding Agent or Affiliate thereof designated by a Lender
Group with its consent to act as Valuation Agent hereunder on behalf of such Lender Group.

     [****]

     B. Other Terms. All accounting terms not specifically defined herein shall be
construed in accordance with generally accepted accounting principles. All terms used in Article 9
of the UCC in the State of New York, and not specifically defined herein, are used herein as
defined in such Article 9.

     C. Computation of Time Periods. Unless otherwise stated in this Agreement, in the
computation of a period of time from a specified date to a later specified date, the word “from”
means “from and including” and the words “to” and “until” each means “to but excluding”. All
references to New York time shall mean the time in New York, New York.

APPENDIX A

27

 

APPENDIX B

ORIGINATORS AND AFFILIATED SELLERS

	 	 	 
	Originators:

	 	National City Bank, N.A.
	 
	 	 
	Affiliated Sellers:

	 	Collegiate Funding Originations, LLC

APPENDIX B

 

 

APPENDIX C

CREDIT AND COLLECTION POLICY

     Attached hereto are the following Exhibits from the National City Origination Agreement:

Exhibit C (Loan Requirements)

Exhibit E (Purchase Guidelines)

Exhibit F (Servicing Guidelines)

Exhibit G (Underwriting Guidelines, Credit Policy and Procedures)

APPENDIX C

 

 

APPENDIX D

AGREED-UPON PROCEDURES WITH RESPECT TO THE ISSUER,

THE MASTER SERVICER AND EACH AFFILIATED SERVICER

(Attached hereto)

APPENDIX D

 

 

SCHEDULE 1

LENDER GROUPS

	 	 	 	 	 
	Funding Agent	 	Conduit Lender(s)	 	Committed Lender(s)
	Citicorp North America, Inc.

	 	CAFCO, LLC
	 	Citibank, N.A.
	 
	 	 	 	 
	 

	 	CRC Funding, LLC	 	 

SCHEDULE 1

 

 

SCHEDULE 2

ADVANCE RATES

[****]%

SCHEDULE 2

 

 

SCHEDULE 6.0L(K)

LIST OF OFFICES OF ISSUER WHERE RECORDS ARE KEPT

c/o CFS-SunTech Servicing LLC

6510 Old Canton Road

Ridgeland, Mississippi 39157

Changes in Chief Place of Business/Chief Executive Office

In September 2004, CFO changed its chief place of business/chief executive office from the
following address:

100 Riverside Parkway, Suite 125

Fredericksburg, Virginia 22406

to the following address:

Collegiate Funding Services Resources II, LLC

10304 Spotsylvania Avenue, Suite 200

Fredericksburg, Virginia 22408

SCHEDULE 6.01(k)

 

 

EXHIBIT 1.02

FORM OF BORROWING NOTICE

(Attached hereto)

EXHIBIT 1.02

 

 

BORROWING NOTICE

[DATE]

Citicorp North America, Inc.,

as Administrative Agent and as a Funding Agent

450 Mamaroneck Avenue

Harrison, NY 10528

Attention: Global Securitization

Ladies and Gentlemen:

     All capitalized terms used but not otherwise defined herein are defined in the Indenture dated
as of August 19, 2005, 2005 (as amended, supplemented or modified from time to time, the
“Indenture”) among Collegiate Funding Services Resources II, LLC, (“Issuer”), CRC
Funding, LLC and CAFCO, LLC and the other conduit lenders from time to time party thereto
(collectively, the “Conduit Lenders”), the financial institutions from time to time party
thereto (each, a “Committed Lender” and together with the Conduit Lenders, the
“Lenders”), Citicorp North America, Inc., and the other funding agents from time to time
party thereto as funding agents (the “Funding Agents”), Citicorp North America, Inc., as
administrative agent for Lenders (in such capacity, and together with any successor thereto in such
capacity, the “Administrative Agent”), The Bank of New York, as indenture trustee
thereunder (in such capacity, and together with any successor thereto in such capacity, the
“Indenture Trustee”), and as securities intermediary, Collegiate Funding Portfolio
Administration, L.L.C., as administrator, and Collegiate Funding Master Servicing, L.L.C., as
master servicer (in such capacity, the “Master Servicer”), and have the same meanings when
used herein.

     The undersigned refers to the Indenture and hereby gives you notice, irrevocably, pursuant to
Section 1.02 of the Indenture that the undersigned hereby requests a Borrowing (the
“Requested Borrowing”) under the Indenture, and in connection therewith sets forth below
the information relating to the Requested Borrowing as required by Section 1.02(a) of the
Indenture:

	 	(i)	 	The Borrowing Date of the Requested Borrowing is [Date                    ];
	 
	 	(ii)	 	The principal amount of the Requested Borrowing is [$                    ];
and

	 	(A)	 	The principal amount of the Requested Borrowing to be provided
by Lenders in the Lender Group of which [                     ] is the Funding Agent is
[$                    ]1; and
	 
	 	(B)	 	The principal amount of the Requested Borrowing to be provided
by Lenders in the Lender Group of which [                     ] is the Funding Agent is
[$                     ]; and

	 	(iii)	 	The Total Outstanding Advances after giving effect to such borrowing shall be
[$                     ].

 

	
	1 Allocation of Advances is based upon each Lender
Group’s Pro Rata Share.

EXHIBIT 1.02

 

 

     The proceeds of the Requested Borrowing will be used to purchase or otherwise acquire Student
Loans on the Borrowing Date. The undersigned hereby certifies as of the date hereof, and as of the
Borrowing Date of the Requested Borrowing, as follows:

	 	(a)	 	the representations and warranties contained in Section
6.01 of the Indenture are correct after giving effect to the Requested
Borrowing and to the application of the Proceeds therefrom, as through made on
and as of such dates;
	 
	 	(b)	 	no event has occurred and is continuing, or would result from
such Requested Borrowing or from the application of the proceeds therefrom,
that constitutes an Event of Termination or an Unmatured Event of Termination;
	 
	 	(c)	 	the original Student Loan Notes (or facsimile copies thereof),
if any, that will be acquired or otherwise financed with the proceeds of the
Requested Borrowing have been delivered to the Sub-Servicers of an approved
bailee;
	 
	 	(d)	 	all conditions precedent to the Requested Borrowing as set
forth in Section 5.02 of the Indenture have been met or will be met
immediately after using the proceeds of the Requested Borrowing for the purpose
or purposes set forth therein; and
	 
	 	(f)	 	all conditions precedent to the initial Borrowing under the
Indenture, as set forth in Section 5.01 of the Indenture, have been
met, have been waived by the Administrative Agent and each Funding Agent or
will be met as of the Borrowing Date of the Requested Borrowing unless waived
by the Administrative Agent and each Funding Agent.

[SIGNATURE PAGE FOLLOWS]

EXHIBIT 1.02

 

 

     IN WITNESS WHEREOF, we have caused this Borrowing Notice to be executed and delivered by the
undersigned on the date first written above.

	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	COLLEGIATE FUNDING SERVICES
	 	 	RESOURCES II, LLC
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:

EXHIBIT 1.02

 

 

EXHIBIT 1.04

FORM OF RELEASE CERTIFICATION

(Attached hereto)

EXHIBIT
1.04

 

 

REQUEST FOR RELEASE OF COLLATERAL

[DATE]

The Bank of New York

as Indenture Trustee

c/o The Bank of New York Trust Company, N.A.

10161 Centurion Parkway

Jacksonville, FL 32256

Attn: Clay Cardozo, Agent

Citicorp North America, Inc.,

as Administrative Agent and as a Funding Agent

450 Mamaroneck Avenue

Harrison, NY 10528

Attention: Global Securitization

Ladies and Gentlemen:

     Reference is hereby made to that certain Indenture dated as of August 19, 2005, 2005 (as
amended, supplemented or modified from time to time, the “Indenture”) among Collegiate
Funding Services Resources II, LLC, (“Issuer”), CRC Funding, LLC and CAFCO, LLC, and the
other conduit lenders from time to time party thereto (collectively, the “Conduit
Lenders”), the financial institutions from time to time party thereto (each, a “Committed
Lender” and together with the Conduit Lenders, the “Lenders”), Citicorp North America,
Inc. and the other funding agents from time to time party thereto, as funding agents (the
“Funding Agents”), Citicorp North America, Inc., as administrative agent for Lenders (in
such capacity, and together with any successor thereto in such capacity, the “Administrative
Agent”), The Bank of New York, as indenture trustee thereunder (in such capacity, and together
with any successor thereto in such capacity, the “Indenture Trustee”), and as securities
intermediary, Collegiate Funding Portfolio Administration, L.L.C., as administrator, and Collegiate
Funding Master Servicing, L.L.C., as master servicer (in such capacity, the “Master
Servicer”). Capitalized terms used but not otherwise defined herein, shall have the meaning
assigned to such terms in the Indenture.

     This letter constitutes a Notice of Release pursuant to Section 1.04 of the Indenture.
The Issuer desires to sell or otherwise dispose of the Pledged Student Loans (the “Subject
Pledged Student Loans”) identified on Exhibit A attached hereto in connection with a
[sale/securitization/ other disposition] on [                    ] (the
“Release Date”) and hereby requests that the Indenture Trustee release its security
interest in the Subject Pledged Student Loans on the Release Date.

     The Issuer hereby represents and warrants as of the date hereof that before and after giving
effect to the release requested herein:

	 	(i)	 	there shall not exist any Event of Termination or Unmatured
Event of Termination;

EXHIBIT 1.04

 

 

	 	(ii)	 	the Coverage Condition is met (as demonstrated in the pro forma
Coverage Condition Certificate attached hereto as Exhibit B);
	 
	 	(iii)	 	no Lender is materially and adversely affected by the
selection made by Issuer of the Subject Pledged Student Loans in comparison to
purchasers of Pledged Student Loans from Issuer in connection with any asset
securitization or sale by Issuer occurring during the Revolving Period;
	 
	 	(iv)	 	the Issuer has been informed by the Administrative Agent and
the Funding Agents that the condition set forth in Section 1.04(i)(D)
of the Indenture will be satisfied after giving effect to the release of the
Subject Pledged Student Loans; and
	 
	 	(v)	 	all conditions to the release of the Subject Pledged Student
Loans set forth in the Indenture will be satisfied in connection with such
release.

[SIGNATURE PAGE FOLLOWS]

EXHIBIT
1.04

 

 

     IN WITNESS WHEREOF, the undersigned has caused this Notice of Release to be executed by its
duly authorized officer as of the date first above written.

	 	 	 	 	 
	 	 	COLLEGIATE FUNDING SERVICES
	 	 	RESOURCES II, LLC
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:

	 	 	 	 	 
	Consented to as of the date first	 	 
	written above:	 	 
	 
	 	 	 	 
	CITICORP NORTH AMERICA, INC.,	 	 
	as Administrative Agent and as a Funding	 	 
	Agent	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

[OTHER FUNDING AGENTS]

EXHIBIT 1.04

 

 

EXHIBIT 2.01

FORM OF NOTE

(Attached hereto)

EXHIBIT 2.01

 

 

NOTE

	 	 	 
	$[                    ]

	 	[                    ]

     FOR VALUE RECEIVED, the undersigned, COLLEGIATE FUNDING SERVICES RESOURCES II, LLC (the
“Issuer”), hereby promises to pay to the order of [FUNDING AGENT] (the “Funding
Agent”), as funding agent for the Lenders in the Lender Group (as defined in the Indenture
referred to below) of which the Funding Agent is party or such other date as may be specified in
the Indenture referred to below, the principal amount of [                    ] DOLLARS AND 00/100
($[                    ]), or, if less, the aggregate unpaid principal amount of all of the Advances (as
defined in the Indenture, dated as of August 19, 2005, by and among the Issuer, the Lenders from
time to time party thereto, Citicorp North America, Inc., as Administrative Agent, The Bank of New
York, as Indenture Trustee and as Securities Intermediary, Collegiate Funding Portfolio
Administration, L.L.C., as administrator, and Collegiate Funding Master Servicing, L.L.C. as
Master Servicer (as the same may be amended, restated, modified or supplemented from time to time,
called the “Indenture”)) made by the Lenders to the Issuer pursuant to the Indenture (as
shown in the records of the Funding Agent or at the Funding Agent’s option, on the schedule
attached hereto and any continuation thereof). Each Advance shall be payable from time to time in
amounts as provided in the Indenture, and in any event shall be payable on the Maturity Date or
such other date as specified in the Indenture. Capitalized terms used herein and not defined
herein shall have the meanings given to such terms in the Indenture.

     The undersigned also promises to pay interest on the unpaid principal amount of each Advance
evidenced by this Note from the date of such Advance until such Advance is paid in full, at the
rates and payable on the dates specified in the Indenture.

     This Note evidences indebtedness incurred as Advances under, and is entitled to the benefits
of, the Indenture, to which Indenture reference is hereby made for a statement of its terms and
conditions, including those under which the maturity of this Note may be accelerated. Upon the
occurrence of an Event of Termination as specified in the Indenture, the principal balance hereof
and the interest accrued hereon may be declared to be forthwith due and payable.

     This Note is secured by and entitled to the benefits specified in Section 1.03 of the
Indenture, and reference is hereby made to such Section 1.03 for a description of the
nature and extent of the collateral and the rights of the parties to and beneficiaries of the
Indenture in respect of such collateral.

     In addition to and not in limitation of the foregoing and the provisions of the Indenture, the
undersigned further agrees, subject only to any limitation imposed by applicable law, to pay on
demand all expenses, including reasonable attorneys’ fees and legal expenses, incurred by the
holder of this Note in endeavoring to collect any amounts payable hereunder which are not paid when
due, whether by acceleration or otherwise.

     All parties hereto, whether as makers, endorsers, or otherwise, severally waive presentment
for payment, demand, protest and notice of dishonor.

EXHIBIT 2.01

 

 

THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK (INCLUDING SECTION 5-1401 AND 5-1402 OF THE GENERAL OBLIGATIONS LAW BUT OTHERWISE WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES).

	 	 	 	 	 
	 	 	COLLEGIATE FUNDING SERVICES
	 	 	RESOURCES II, LLC
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:

EXHIBIT 2.01

 

 

EXHIBIT 3.01(G)

PERFECTION PROVISIONS FOR ELIGIBLE INSTRUMENTS

          A. 1. With respect to any direct obligations of or obligations insured or guaranteed by the
United States of America (“Government Securities”), issued in book-entry form through the
facilities of the Federal Reserve Bank of Cleveland (the “Federal Reserve”), registered in the name
of Issuer, by (i) the direction of Issuer to the Indenture Trustee to request the Federal Reserve
to list Issuer as the registered owner of the Government Securities and to register the pledge of
the Government Securities to the Indenture Trust, as a secured party, and (ii) the making by the
Federal Reserve of appropriate and accurate entries in its records which reflect that such
Government Securities are held for the sole and exclusive account of the Indenture Trustee.

              2. With respect to any Government Securities which are held in the “street name” of the
Indenture Trustee, as financial intermediary for Issuer, by the making by the Indenture Trustee of
appropriate entries on its books to indicate that such Government Securities are held by it solely
in its capacity as Indenture Trustee so long as the book entries referred to are continuously
maintained.

          B. 1. With respect to obligations issued or guaranteed by any instrumentality or agency of the
United States of America, whether now existing or hereafter organized, which bear the full faith
and credit of the United States of America (“Government-Backed Securities”), issued in book-entry
form through the facilities of the Participants Trust Company (“PTC”), registered in the name of
Issuer, buy (i) the direction of Issuer to the Indenture Trustee to request the PTC Custodian to
list Issuer as the registered owner of the Government-Backed Securities and to register the pledge
of the Government-Backed Securities to the Indenture Trustee, as a secured party, (ii) the making
by the PTC Custodian (the “PTC Custodian”) of appropriate and accurate entries on its books to
indicate that the Government-Backed Securities are held for the sole and exclusive account of the
Indenture Trustee and (iii) the sending by the PTC Custodian to the Indenture Trustee of a
confirmation of the transfer of such Government-Backed Securities to the Indenture Trustee.

              2. With respect to any Government-Backed Securities which are held in the “street name” of the
Indenture Trustee, as financial intermediary for Issuer, upon the making by the Indenture Trustee
of appropriate entries on its books to indicate that such Government-Backed Securities are held by
it solely in its capacity as Indenture Trustee, so long as the book entries referred to are
continuously maintained.

          C. With respect to certificates of deposit, as described in the definition of Eligible
Investments in the Indenture, by (i) the actual physical delivery of the certificate of deposit to
the Indenture Trustee, as secured party and (ii) the continuous possession by the Indenture Trustee
of such certificate of deposit.

          D. With respect to any guaranteed investment contract, by the filing of appropriate financing
statements in the applicable filing offices.

EXHIBIT 3.01(g)

 

 

EXHIBIT 5.01(Q)

CLOSING LIST

(Attached hereto)

EXHIBIT 5.01(q)

 

 

EXHIBIT 5.02(D)

FORM OF COVERAGE CONDITION CERTIFICATE

(Attached hereto)

EXHIBIT 5.02(d)

 

 

EXHIBIT 7.02(C)

FORM OF MONTHLY REPORT

(Attached hereto)

EXHIBIT 7.02(c)

 

 

MONTHLY REPORT

[                    ,                     ]

Citicorp North America, Inc.,

as Administrative Agent and as a Funding Agent

450 Mamaroneck Avenue

Harrison, NY 10528

Attention: Global Securitization

Ladies and Gentlemen;

     All capitalized terms used but not otherwise defined herein are defined in the Indenture dated
as of August 19, 2005 (as amended, supplemented or modified from time to time, the
“Indenture”) among Collegiate Funding Services Resources II, LLC, (“Issuer”), CRC
Funding, LLC and CAFCO, LLC and the other conduit lenders from time to time party thereto
(collectively, the “Conduit Lenders”), the financial institutions from time to time party
thereto (each, a “Committed Lender” and together with the Conduit Lenders, the
“Lenders”), Citicorp North America, Inc., and the other funding agents from time to time
party thereto as funding agents (the “Funding Agents”), Citicorp North America, Inc., as
administrative agent for Lenders (in such capacity, and together with any successor thereto in such
capacity, the “Administrative Agent”), The Bank of New York, as indenture trustee
thereunder (in such capacity, and together with any successor thereto in such capacity, the
“Indenture Trustee”), and as securities intermediary, Collegiate Funding Portfolio
Administration, L.L.C., as administrator, and Collegiate Funding Master Servicing, L.L.C., as
master servicer (in such capacity, the “Master Servicer”), and have the same meanings when
used herein.

     The undersigned hereby certifies that no Event of Termination has occurred and that no
Servicer Event of Default has occurred.

     The undersigned hereby represents and warrants that this Monthly Report is a true and accurate
in all material respects.

[SIGNATURE PAGES FOLLOW]

EXHIBIT 7.02(c)

 

 

     IN WITNESS WHEREOF, we have caused this Monthly Report to be executed and delivered by the
undersigned on the date as written below.

	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	COLLEGIATE FUNDING SERVICES
	 	 	RESOURCES II, LLC, as Issuer
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 	 	COLLEGIATE FUNDING MASTER
	 	 	SERVICING, L.L.C.
	 	 	as Master Servicer
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

EXHIBIT 7.02(c)

 

 

EXHIBIT 10.01(A)

FORM OF ASSIGNMENT AND ACCEPTANCE

(Attached hereto)

EXHIBIT 10.01(a)

 

 

ASSIGNMENT AND ACCEPTANCE

     ASSIGNMENT AND ACCEPTANCE dated [                    , 20                    ], between [                    ] (the
“Assignor”) and [                    ] (the “Assignee”).

PRELIMINARY STATEMENTS

     A. Reference is made to the Indenture dated as of August 19, 2005 (as amended, supplemented or
modified from time to time, the “Indenture”) among Collegiate Funding Services Resources
II, LLC, (“Issuer”), CRC Funding, LLC and CAFCO, LLC and the other conduit lenders from
time to time party thereto (collectively, the “Conduit Lenders”), the financial
institutions from time to time party thereto (each, a “Committed Lender” and together with
the Conduit Lenders, the “Lenders”), Citicorp North America, Inc., and the other funding
agents from time to time party thereto as funding agents (the “Funding Agents”), Citicorp
North America, Inc., as administrative agent for Lenders (in such capacity, and together with any
successor thereto in such capacity, the “Administrative Agent”), The Bank of New York, as
indenture trustee thereunder (in such capacity, and together with any successor thereto in such
capacity, the “Indenture Trustee”), and as securities intermediary, Collegiate Funding
Portfolio Administration, L.L.C., as administrator, and Collegiate Funding Master Servicing,
L.L.C., as master servicer (in such capacity, the “Master Servicer”). Capitalized terms
used herein and not otherwise defined hereto shall have the meanings ascribed to such terms in the
Indenture.

     B. The Assignor is a [Conduit/Committed] Lender under the Indenture and desires to sell and
assign to the Assignee, and the Assignee desires to purchase and assume from the Assignor, on the
terms and conditions set forth below, a [                    ] percent [(                    %)] interest in the [Conduit Lenders’
rights and obligations under the Indenture/aggregate Commitments] (the “Assigned
Percentage”), consisting of portions of the Assignor’s [Pro Rata Share/Commitment] together
with the Assignor’s rights and obligations under the Indenture with respect to the Assigned
Percentage.

     NOW, THEREFORE, the Assignor and the Assignee hereby agree as follows:

     1. In consideration of the Assignee’s payment to the Assignor of [$                    ], the
Assignor hereby irrevocably sells and assigns to the Assignee, and the Assignee hereby irrevocably
purchases and assumes from the Assignor, as of the “Effective Date” (as defined below), the
Assigned Percentage, together (a) with all of the Assignor’s rights and obligations under the
Indenture and the other Transaction Documents with respect to such Assigned Percentage[, including,
without limitation, the any obligations to make Advances thereunder]2, (b) to the extent
permitted to be assigned under applicable law, all claims, suits, causes of action and any other
right of the Assignor (in its capacity as a Lender) against any Person, whether known or unknown
arising under or in connection with the Indenture, any other documents or instruments delivered
pursuant thereto or the loan transactions governed thereby or in any way based on or related to any
of the foregoing, including, but not limited to, contract claims, tort claims, malpractice claims,
statutory claims and all other claims at law or in equity related to the rights and obligations
sold and assigned pursuant to clause (a) above (the rights and obligations

 

			
	2	 	Insert if Assignor is a Committed Lender.

EXHIBIT 10.01(a)

 

 

sold and assigned pursuant to clauses (a) and (b) above being referred to herein collectively as,
the “Assigned Interest”). Such sale and assignment is without recourse to the Assignor
and, except as expressly provided in this Assignment and Acceptance, without representation or
warranty by the Assignor.

     2. The Assignor (a) represents and warrants that (i) it is the legal and beneficial owner of
the Assigned Interest, (ii) the Assigned Interest is free and clear of any lien, encumbrance or
other adverse claim and (iii) it has full power and authority, and has taken all action necessary,
to execute and deliver this Assignment and Acceptance and to consummate the transactions
contemplated hereby; and (b) assumes no responsibility with respect to (i) any statements,
warranties or representations made in or in connection with the Indenture or any other Transaction
Document (other than those made in clause (a) above), (ii) the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the Transaction Documents or any
collateral thereunder, (iii) the financial condition of Master Servicer, Issuer, any of its
Affiliates or any other Person obligated in respect of any Transaction Document or (iv) the
performance or observance by Master Servicer, Issuer or any of its Affiliates or any other Person
of any of their respective obligations under any Transaction Document.

     3. The Assignee (a) represents and warrants that (i) it has full power and authority, and has
taken all action necessary, to execute and deliver this Assignment and Acceptance and to consummate
the transactions contemplated hereby and to become a Lender under the Indenture, (ii) from and
after the Effective Date, it shall be bound by the provisions of the Indenture as a Lender
thereunder and, to the extent of the Assigned Interest, shall have the obligations of a Lender
thereunder, (iii) it has received a copy of the Indenture, together with copies of the most recent
financial statements delivered pursuant to Section 7.02 thereof, as applicable, and such other
documents and information as it has deemed appropriate to make its own credit analysis and decision
to enter into this Assignment and Acceptance and to purchase the Assigned Interest on the basis of
which it has made such analysis and decision independently and without reliance on the
Administrative Agent or any other Lender, and (iv) if it is a Lender that is not created or
organized under the laws of the United States or a political subdivision thereof, attached to the
Assignment and Acceptance is any documentation required to be delivered by it pursuant to the terms
of the Indenture, duly contemplated and executed by the Assignee; and (b) agrees that (i) it will,
independently and without reliance on the Administrative Agent, the Assignor or any other Lender,
and based on such documents and information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action under the Transaction Documents, and
(ii) it will perform in accordance with their terms all of the obligations which by the terms of
the Transaction Documents are required to be performed by it as a Lender.

     4. The effective date for this Assignment and Acceptance shall be [                                         , 20                    ] (the
“Effective Date”).3 Following the execution of this Assignment and Acceptance,
it will be delivered to the Administrative Agent [for acceptance by the Administrative Agent and
Issuer (which shall not be unreasonably withheld) and].4

 

			
	3	 	Such date shall be inserted by the
Administrative Agent and which shall be the effective date of recordation of
transfer in the register therefor.
	 
	4	 	Delete if consent to Assignment and
Acceptance is not required under Section 10.01(a) of the Indenture.

EXHIBIT 10.01(a)

 

 

     5. From and after the Effective Date, the Administrative Agent shall make all payments under
the Indenture in respect of the Assigned Interest (including, without limitation, all payments of
principal, interest and fees with respect thereto) to the Assignee. The Assignor and Assignee
shall make all appropriate adjustments in payments under the Indenture for periods prior to the
Effective Date directly between themselves.

     6. This Assignment and Acceptance shall be binding upon, and inure to the benefit of, the
parties hereto and their respective successors and assigns. This Assignment and Acceptance may be
executed in any number of counterparts, which together shall constitute one instrument. Delivery
of an executed counterpart of a signature page of this Assignment and Acceptance by telecopy shall
be effective as delivery of a manually executed counterpart of this Assignment and Acceptance.
This Assignment and Acceptance shall be interpreted, and the rights and liabilities of the parties
hereto determined in accordance with, the laws of the State of New York.

[SIGNATURE PAGES FOLLOWS]

EXHIBIT 10.01(a)

 

 

     IN WITNESS WHEREOF, intending to be legally bound, each of the undersigned has caused this
Assignment and Acceptance to be executed on its behalf by its officer thereunto duly authorized, as
of [                                         , 20                    ].

	 	 	 	 	 
	 	 	[NAME OF ASSIGNOR]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:
	 
	 	 	 	 
	 	 	[New Pro Rata Share                     %]
	 
	 	 	 	 
	 	 	[New Commitment $                    ]
	 
	 	 	 	 
	 	 	[NAME OF ASSIGNEE]
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Name:
	 

	 	 	 	Title:
	 
	 	 	 	 
	 	 	Notice Address:
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	 
	 
	 	 	 	 
	 	 	[New Pro Rata Share                     %]
	 
	 	 	 	 
	 	 	[New Commitment $                    ]

EXHIBIT 10.01(a)

 

 

	 	 	 	 	 
	 
	 	 	 	 
	Consented to and Accepted:	 	 
	 
	 	 	 	 
	CITICORP NORTH AMERICA, INC.,	 	 
	as Administrative Agent	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	[                    ],	 	 
	as Funding Agent	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

Name:
	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	COLLEGIATE FUNDING SERVICES	 	 
	RESOURCES II, LLC, as Issuer	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	 

	 	 
	 

	 	Name:	 	 
	 

	 	Title:	 	 

EXHIBIT 10.01(a)

 

 

EXHIBIT 13.02

NOTICE ADDRESSES

COLLEGIATE FUNDING SERVICES RESOURCES II, LLC, as Issuer

10304 Spotsylvania Avenue, Suite 200

Fredericksburg, Virginia 22408

Attention: Dan Long

Telephone: (540) 735-1253

Facsimile: (540) 374-2021

COLLEGIATE FUNDING RESOURCES I, LLC

10304 Spotsylvania Avenue, Suite 100

Fredericksburg, Virginia 22408

Attention: Kevin Landgraver

Facsimile: (540) 374-2021

THE BANK OF NEW YORK,

as Indenture Trustee and as Securities Intermediary

The Bank of New York

c/o The Bank of New York Trust Company, N.A.

10161 Centurion Parkway

Jacksonville, Florida 32256

Attn: Clay Cardozo

Facsimile: (904)-645-1931

COLLEGIATE FUNDING PORTFOLIO ADMINISTRATION, L.L.C.

as Administrator

10304 Spotsylvania Avenue, Suite 100

Fredericksburg, Virginia 22408

Attention: Kevin Landgraver

Facsimile: (540) 374-2021

COLLEGIATE FUNDING MASTER SERVICING, L.L.C.

as Master Servicer

10304 Spotsylvania Avenue, Suite 100

Fredericksburg, Virginia 22408

Attention: Kevin Landgraver

Facsimile: (540) 374-2021

EXHIBIT
13.02

 

 

CITICORP NORTH AMERICA, INC., CITIBANK, N.A., CRC FUNDING, LLC OR CAFCO, LLC:

c/o Citicorp North America, Inc.

388 Greenwich Street, 19th Floor

New York, New York 10013

Attention: Roger W. Saylor

Telephone: (212) 816-0542

Facsimile: (212) 816-0336

E-Mail: roger.w.saylor@citigroup.com

With Copies To:

For Portfolio Reports:

c/o Citicorp North America, Inc.

450 Mamaroneck Avenue

Harrison, New York 10528

Attention: Robert Kohl

Telephone: (914) 899-7218

Facsimile: (914) 899-7903

E-Mail: robert.kohl@citigroup.com

Funding/Paydown/Revolving Period Notices:

c/o Citicorp North America, Inc.

450 Mamaroneck Avenue

Harrison, New York 10528

Attention: Mary Jo Gavigan

Telephone: (914) 899-7122

Facsimile: (914) 899-7890

with copies to: c/o Citicorp North America, Inc.

450 Mamaroneck Avenue

Harrison, New York 10528

Attention: Jennifer Klotz

Telephone: (914) 899-7679

Facsimile: (914) 899-7890

EXHIBIT 13.02

 

 

EXHIBIT A

FORM OF ACCOUNT CONTROL AGREEMENT

(Attached hereto)

EXHIBIT A

 

 

EXHIBIT B

FORM OF STUDENT LOAN NOTE

(Attached hereto)

EXHIBIT B

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