EXHIBIT 99.1
MASTER LOAN SALE AND CONTRIBUTION AGREEMENT
(The Pennsylvania Higher Education Assistance Agency
to PHEAA Student Loan Foundation, Inc.)
This Master Loan Sale and Contribution Agreement (this "Agreement") is
made and entered into as of _________, 2003, by and among PHEAA Student Loan
Foundation, Inc., a Pennsylvania nonprofit corporation (the "Purchaser"), acting
by and through Manufacturers and Traders Trust Company, or any successor entity
appointed in addition thereto or in lieu thereof by Purchaser, not individually
but solely as eligible lender trustee (the "Eligible Lender Trustee"), and the
Pennsylvania Higher Education Assistance Agency, a public corporation and
government instrumentality (the "Seller").
W I T N E S S E T H
WHEREAS, the Purchaser, by and through the Eligible Lender Trustee,
desires to acquire from the Seller certain FFELP Loans (as defined below) made
to assist students in obtaining a post-secondary education, title to which will
be held by the Eligible Lender Trustee pursuant to the Eligible Lender Trust
Agreement, and the Seller desires to sell and contribute certain FFELP Loans to
the Purchaser, title to which will be held by and through the Eligible Lender
Trustee, in accordance with the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties, intending to be legally bound, agree as follows:
Section 1. Definitions.
"Agreement" means this Master Loan Sale and Contribution Agreement
including all exhibits and schedules attached hereto, and any addenda,
supplements or amendments hereto.
"Borrower" means the student or parent obligor under an Eligible Loan.
"Business Day" means any day (i) other than a Saturday or a Sunday or
(ii) upon which banking and financial institutions in the Commonwealth of
Pennsylvania are authorized or obligated by law or government decree to be
closed.
"Eligible Lender Trust Agreement" means the Foundation Eligible Lender
Trust Agreement, dated __________, 2003, between the Eligible Lender Trustee and
the Purchaser.
"Eligible Lender Trustee" means, with respect to the FFELP Loans,
Manufacturers and Traders Trust Company, not individually but solely as eligible
lender trustee, or any other eligible lender trustee in addition to or in lieu
thereof.
"Eligible Loan" means a FFELP Loan which (i) has been or will be made to
a borrower for post secondary education; (ii) is Guaranteed; (iii) if such FFELP
Loan is a subsidized ▇▇▇▇▇▇▇▇ loan, qualifies the holder thereof to receive
Interest Subsidy Payments and Special Allowance Payments; if such FFELP Loan is
a consolidation loan authorized under Section 428C of the Higher Education Act,
qualifies the holder thereof to receive Interest Subsidy Payments and Special
Allowance Payments to the extent applicable; and if such FFELP Loan is a PLUS
loan authorized under Section 428B of the Higher Education Act, or an
unsubsidized ▇▇▇▇▇▇▇▇ loan authorized under Section 428H of the Higher Education
Act, such FFELP Loan qualifies the holder thereof to receive Special Allowance
Payments; (iv) is either (A) a consolidation loan or (B) was originated to, or
to parents on behalf of, a borrower attending a four-year college or university
or enrolled in a graduate degree program; and (v) complies with each
representation and warranty with respect thereto contained herein.
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"Federal Contracts" means all agreements between a Guarantee Agency and
the Secretary of Education providing for the payment by the Secretary of
Education of amounts authorized to be paid pursuant to the Higher Education Act,
including, but not limited to, reimbursement of amounts paid or payable upon
defaulted Eligible Loans and other student loans insured or guaranteed by any
Guarantee Agency and Interest Subsidy Payments and Special Allowance Payments,
if applicable, to holders of qualifying student loans guaranteed by any
Guarantee Agency.
"FFELP Loans" means those specific loans acquired by the Eligible Lender
Trustee, on behalf of the Purchaser, from the Seller pursuant to this Agreement,
inclusive of the promissory notes evidencing such loans, the related
documentation and the proceeds in connection with each thereof, which were
originated pursuant to the Federal Family Education Loan Program and the Higher
Education Act.
"Guarantee" means, with respect to a FFELP Loan, the guarantee by the
Guarantee Agency, in accordance with the terms and conditions of the Guarantee
Agreement, of the principal of and accrued interest on the FFELP Loan to the
maximum extent permitted under the Higher Education Act on FFELP Loans which
have been originated, held and serviced in full compliance with the Higher
Education Act, and the coverage of the FFELP Loan by the Federal Contracts
providing, among other things, for reimbursement to the Guarantee Agency for
losses incurred by it on defaulted Eligible Loans guaranteed by it to the extent
of the maximum reimbursement allowed by the Federal Contracts.
"Guarantee Agency" means a state agency or a private nonprofit
institution or organization which administers a student loan guaranty program
within a state pursuant to which such agency, institution or organization
guarantees or insures student loans and has entered into a Guarantee Agreement
with the Eligible Lender Trustee on behalf of the Purchaser, or any of such
Guaranty Agency's successors and assigns.
"Guarantee Agreement" means (i) the Federal Contracts, (ii) an agreement
between a Guarantee Agency and either the Eligible Lender Trustee or the Seller
providing for the Guarantee by such Guarantee Agency of the principal of and
accrued interest on Eligible Loans to Borrowers, made or acquired by the
Eligible Lender Trustee or the Seller from time to time, and (iii) any other
similar guarantee issued or agreement made by a Guarantee Agency to the
Purchaser or the Eligible Lender Trustee pertaining to Eligible Loans.
"Guaranteed" means, with respect to an FFELP Loan, that such loan is
covered by a Guarantee.
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"Higher Education Act" means Title IV, Parts B, F and G, of the Higher
Education Act of 1965, as amended or supplemented and in effect from time to
time, or any successor enactment thereto, and all regulations promulgated
thereunder and any directives issued by the Secretary of Education.
"Interest Subsidy Payments" means interest subsidy payments received
from the Secretary of Education pursuant to Section 428 of the Higher Education
Act or similar payments authorized by federal law or regulation.
"Issuer" means PHEAA Student Loan Trust I.
"Loan Purchase Date" means each date on which the Eligible Lender
Trustee, on behalf of the Purchaser, acquires Eligible Loans from the Seller, as
described in Section 2(b) hereof.
"Loan Transfer Addendum" means a Loan Transfer Addendum, in the form set
forth in Exhibit A executed by the Seller, the Purchaser and the Eligible Lender
Trustee.
"Loan Transfer Schedule" means a written schedule in the form attached
to the Loan Transfer Addendum.
"Master Note" means a Master Promissory Note in the form mandated by
Section 432(m)(1)(D) of the Higher Education Act, as added by Pub. L. 105-244,
ss. 427, 112 Stat. 1702 (1998) as amended by Public Law No: 106-554 (enacted
December 21, 2000) and as codified at 20 U.S.C. ss. 1082(m)(1).
"MPN Loan" means a FFELP Loan evidenced by a Master Note.
"Purchaser" means PHEAA Student Loan Foundation, Inc., a Pennsylvania
nonprofit corporation.
"Secretary of Education" means the Commissioner of Education and the
Secretary of the United States Department of Education (who succeeded to the
functions of the Commissioner of Education pursuant to the Department of
Education Organization Act), or any officer, board, body, commission or agency
succeeding to the functions thereof under the Higher Education Act.
"Seller" means The Pennsylvania Higher Education Assistance Agency, a
public corporation and government instrumentality.
"Special Allowance Payments" means special allowance payments authorized
to be made by the Secretary of Education pursuant to Section 438 of the Higher
Education Act or similar allowances authorized from time to time by federal law
or regulation.
"UCC" means the Uniform Commercial Code.
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Section 2. Sale and Contribution of FFELP Loans.
(a) Subject to the terms and conditions and in reliance upon
the representations, warranties and agreements set forth herein, the Seller does
hereby sell [and contribute], and does hereby transfer, assign and set over,
without recourse (except as expressly provided herein), to the Eligible Lender
Trustee, acting on behalf of the Purchaser; and the Purchaser, acting by and
through the Eligible Lender Trustee under the Eligible Lender Trust Agreement,
does hereby acquire from the Seller, all of Seller's right, title and interest
in and to those certain FFELP Loans which are Eligible Loans in the aggregate
unpaid principal amount as set forth in the Loan Transfer Addendum. Such sale
and transfer shall be effective as of the date set forth in the applicable Loan
Transfer Addendum.
(b) From time to time, on any Loan Purchase Date as shall be
designated in the future by the parties hereto, additional FFELP Loans which are
Eligible Loans may be either sold or contributed, and, upon the occurrence of
such sale or contribution shall be transferred, assigned and set over, without
recourse (except as expressly provided herein), to the Eligible Lender Trustee,
acting on behalf of the Purchaser; and the Purchaser, acting by and through the
Eligible Lender Trustee under the Eligible Lender Trust Agreement, shall acquire
from the Seller, all of Seller's right, title and interest in and to those
certain FFELP Loans upon (i) the execution and delivery by the parties of an
additional Loan Transfer Addendum which shall set forth the aggregate unpaid
principal amount of the related Eligible Loans contained in such portfolio, and
(ii) the Seller's delivery to the Purchaser of all documents required under
Section 4 hereof with respect to such Eligible Loans as of the applicable Loan
Purchase Date. Any subsequent acquisition of additional FFELP Loans shall be
governed in all respects by this Agreement together with the Loan Transfer
Addendum pertaining to such portfolio. With respect to any subsequent
acquisition of an additional portfolio of FFELP Loans pursuant hereto, the
parties hereto shall have executed a Loan Transfer Addendum not less than one
Business Day prior to the applicable Loan Purchase Date.
(c) Consummation of the sale and contribution of each FFELP
Loan shall require execution and delivery to the Purchaser of (i) a Seller's
Closing Certificate dated as of the applicable Loan Purchase Date in the form of
Exhibit B hereto (and delivery of the documents described in Exhibit B) (a
"Seller's Closing Certificate"); (ii) a Blanket Endorsement dated as of the
applicable Loan Purchase Date in the form set forth in Exhibit C hereto (each, a
"Blanket Endorsement"); and (iii) a ▇▇▇▇ of Sale dated as of the applicable Loan
Purchase Date in the form set forth in Exhibit D hereto (each, a "▇▇▇▇ of
Sale").
(d) It is the express intention of the parties hereto that
the conveyance from the Seller to the Eligible Lender Trustee on behalf of the
Purchaser be, and be construed as, a sale and contribution of the FFELP Loans,
and not a pledge by Seller to the Eligible Lender on behalf of the Purchaser to
secure a debt or other obligation of the Seller. However, if, notwithstanding
the aforementioned intent of the parties, any such FFELP Loans are held to be
the property of the Seller, then it is the express intent of the parties that
such conveyance be deemed as a pledge of such FFELP Loans to the Eligible Lender
Trustee on behalf of the Purchaser to secure a debt or other obligation of the
Seller and that this Agreement constitute a security agreement within the
meaning of the UCC. Accordingly, the Seller hereby grants to the Eligible Lender
Trustee on behalf of the Purchaser a first priority, continuing lien and
security interest in all right, title and interest of the Seller in, to and
under the FFELP Loans sold pursuant to this Agreement, and all proceeds in
respect thereof. The Seller shall take such actions as may be necessary to
ensure that if this Agreement were deemed to create a security interest, such
security interest would be a perfected security interest of first priority under
applicable law and will be maintained as such for the term of this Agreement.
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In furtherance of the foregoing, the Seller hereby authorizes the
Purchaser to file a UCC-1 financing statement identifying the Seller as debtor
and the Purchaser as secured party and describing the FFELP Loans subject to
this Agreement. The Seller shall not organize under the law of any jurisdiction
other than the state under which it is organized as of the initial Loan Purchase
Date (whether changing its jurisdiction of organization or organizing under an
additional jurisdiction) without giving 30 days prior written notice of such
action to the Purchaser. Before effecting such change, the Seller shall prepare
and file in the appropriate filing office any financing statements or other
statements necessary to continue the perfection of the Purchaser's interests in
the FFELP Loans.
(e) Delivery and payment for the FFELP Loans shall take
place at a location agreed to by the parties not later than the applicable Loan
Purchase Date set forth in the Loan Transfer Addendum pertaining to such FFELP
Loans.
(f) Subject to the terms and conditions of this Agreement,
the Purchaser agrees to acquire the FFELP Loans by and through the Eligible
Lender Trustee at the price set forth in or determined pursuant to the
applicable Loan Transfer Addendum. The excess of the fair market value of the
FFELP Loans acquired over such price, if any, shall be deemed a contribution by
Seller to the capital of the Purchaser. Seller shall continue due diligence (as
such term is defined in the Higher Education Act) servicing in compliance with
the Higher Education Act with respect to each FFELP Loan, at Seller's cost, up
to the applicable Loan Purchase Date; thereafter, servicing shall be paid for
by, and shall be the responsibility of, the Purchaser.
(g) If Seller originates a FFELP Loan that is a
consolidation loan under Section 428C of the Higher Education Act, and if part
or all of the proceeds of such consolidation loan are used to repay the
principal and interest due on a FFELP Loan transferred by the Seller to the
Purchaser hereunder, then the Seller shall rebate the unamortized premium on the
repaid FFELP Loan paid by the Purchaser to Seller in connection with the
acquisition of said FFELP Loan.
Section 3. Representations and Warranties of Seller, Purchaser and
Eligible Lender Trustee.
(a) The Seller hereby represents to the Purchaser and the
Eligible Lender Trustee as of each Loan Purchase Date that:
(i) Due Authority. The Seller has, in all material
respects, all requisite power and authority and legal right to own its
properties and conduct its business as such properties are presently
owned and such business is conducted, and to execute, deliver and
perform its obligations under this Agreement.
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(ii) No Violation. The execution and delivery of this
Agreement, the consummation of the transactions herein contemplated and
compliance with the terms, conditions and provisions of this Agreement
do not and will not conflict with or result in a breach of any of the
terms, conditions or provisions of any agreement or instrument to which
the Seller is a party or by which it is bound or constitute a default
thereunder.
(iii) No Conflicts. The Seller is not a party to or
bound by any agreement or instrument or subject to any charter or other
organizational restriction or judgment, order, writ, injunction, decree,
law, rule or regulation which may materially and adversely affect the
ability of the Seller to perform its obligations under this Agreement,
and this Agreement constitutes a valid and binding obligation of the
Seller enforceable against it in accordance with its terms, subject to
the effects of bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar laws relating to or affecting
creditors' rights generally and general equitable principles.
(iv) No Consent Required. No consent, approval or
authorization is required in connection with the consummation of the
transactions herein contemplated, except for those that have been
obtained.
(v) Organization and Good Standing. The Seller is duly
organized, validly existing and in good standing under the laws of its
applicable jurisdiction of organization.
(b) The Purchaser hereby represents to Seller and the
Eligible Lender Trustee as of each Loan Purchase Date that:
(i) Due Authority. The Purchaser has, in all material
respects, all requisite power and authority and legal right to own its
properties and conduct its business as such properties are presently
owned and such business is conducted, and to execute, deliver and
perform its obligations under this Agreement.
(ii) No Violation. The execution and delivery of this
Agreement, the consummation of the transactions herein contemplated and
compliance with the terms, conditions and provisions of this Agreement
do not and will not conflict with or result in a breach of any of the
terms, conditions or provisions of any agreement or instrument to which
the Purchaser is a party or by which it is bound or constitute a default
thereunder.
(iii) No Conflicts. The Purchaser is not a party to or
bound by any agreement or instrument or subject to any charter or other
organizational restriction or judgment, order, writ, injunction, decree,
law, rule or regulation which may materially and adversely affect the
ability of the Purchaser to perform its obligations under this
Agreement, and this Agreement constitutes a valid and binding obligation
of the Purchaser enforceable against it in accordance with its terms,
subject to the effects of bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other similar laws relating to or
affecting creditors' rights generally and general equitable principles.
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(iv) No Consent Required. No consent, approval or
authorization is required in connection with the consummation of the
transactions herein contemplated, except for those that have been
obtained.
(v) Organization and Good Standing. The Purchaser is
duly organized, validly existing and in good standing under the laws of
its applicable jurisdiction of organization.
(c) The Eligible Lender Trustee hereby represents to the
Purchaser and the Seller as of each Loan Purchase Date that:
(i) Due Authority. The Eligible Lender Trustee has, in
all material respects, all requisite power and authority and legal right
to own its properties and conduct its business as such properties are
presently owned and such business is conducted, and to execute, deliver
and perform its obligations under this Agreement.
(ii) No Violation. The execution and delivery of this
Agreement, the consummation of the transactions herein contemplated and
compliance with the terms, conditions and provisions of this Agreement
do not and will not conflict with or result in a breach of any of the
terms, conditions or provisions of any agreement or instrument to which
the Eligible Lender Trustee is a party or by which it is bound or
constitute a default thereunder.
(iii) No Conflicts. The Eligible Lender Trustee is not a
party to or bound by any agreement or instrument or subject to any
charter or other organizational restriction or judgment, order, writ,
injunction, decree, law, rule or regulation which may materially and
adversely affect the ability of the Eligible Lender Trustee to perform
its obligations under this Agreement, and this Agreement constitutes a
valid and binding obligation of the Eligible Lender Trustee enforceable
against it in accordance with its terms, subject to the effects of
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance and other similar laws relating to or affecting creditors'
rights generally and general equitable principles.
(iv) No Consent Required. No consent, approval or
authorization is required in connection with the consummation of the
transactions herein contemplated, except for those that have been
obtained.
(v) Organization and Good Standing. The Eligible Lender
Trustee is duly organized, validly existing and in good standing under
the laws of its applicable jurisdiction of organization.
The representations and warranties set forth in this Section 3 shall
survive the transfer and assignment of the FFELP Loans to Purchaser and the
Eligible Lender Trustee. Upon discovery by Seller, Purchaser or Eligible Lender
Trustee of a breach of any of the representations and warranties set forth in
this Section 3, the party discovering such breach shall give prompt notice to
the other party.
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Section 4. Representations and Warranties of the Seller Relating to the
FFELP Loans. The Seller hereby represents to Purchaser and the Eligible Lender
Trustee as of each Loan Purchase Date with respect to the FFELP Loans
transferred on such Loan Purchase Date that:
(a) Loan Transfer Schedule True and Correct. Any information
furnished by the Seller to the Purchaser, the Eligible Lender Trustee or either
of their respective agents with respect to a FFELP Loan on the Loan Transfer
Schedule attached to the applicable Loan Transfer Addendum is true and correct
in all material respects.
(b) No Defenses. No counterclaim, offset, defense or right
to rescission exists with respect to any FFELP Loan which can be asserted and
maintained or which, with notice, lapse of time or the occurrence or failure to
occur of any act or event could be asserted and maintained by the Borrower
against the Seller or the Purchaser as assignee thereof.
(c) Applicable Rate of Interest. No FFELP Loan carries a
rate of interest less than, or in excess of, the applicable rate of interest
required by the Higher Education Act. [If the Higher Education Act permits the
Seller to charge an interest rate less than the applicable rate of interest, no
FFELP Loan acquired hereunder bears interest at a rate lower than the applicable
rate of interest; provided, however, that the Purchaser may approve, in its sole
discretion, in writing, interest reductions which are part of a borrower
repayment incentive program of the Seller, the terms of which have been fully
described in detail and in writing to the Purchaser].
(d) Enforceability. Each FFELP Loan constitutes the legal,
valid and binding obligation of the Borrower thereof, enforceable in accordance
with its terms.
(e) Compliance with Higher Education Act. Each FFELP Loan
complies with all material requirements of the Higher Education Act to the
extent necessary to maintain the related Guarantee and eligibility for all
applicable Special Allowance Payments and Interest Subsidy Payments, and is an
Eligible Loan.
(f) Eligible Lender. The Eligible Lender Trustee, on behalf
of Seller, has applied for and received the Secretary of Education's or a
Guarantee Agency's designation as an "Eligible Lender" under the Higher
Education Act, and the Eligible Lender Trustee, on behalf of Seller, has entered
into all agreements required to be entered into for participation in the Federal
Family Education Loan Program under the Higher Education Act.
(g) Sole Owner, No Encumbrances. The Seller is the sole
owner and holder of each FFELP Loan and has full right and authority to sell and
contribute the same free and clear of all liens, claims or encumbrances; and
immediately prior to the transfer of each FFELP Loan by the Seller, each such
FFELP Loan is free of any and all liens, claims, encumbrances and security
interests of any description.
(h) Due Diligence. With respect to each FFELP Loan, the
Seller and any independent servicer have each exercised and shall continue to
exercise, until the related Loan Purchase Date, due diligence as defined under
the Higher Education Act and reasonable care in originating, administering,
servicing and collecting the FFELP Loans.
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(i) Origination Fees. The Seller or the lender that
originated a FFELP Loan, has reported [and has paid] the amount of origination
fees, if any, authorized to be collected with respect to the loan pursuant to
Section 438(c) of the Higher Education Act to the Secretary of Education for the
period in which the fee was authorized to be collected.
(j) Refunds Paid. The Seller or originating lender has made
any refund of an origination fee collected in connection with any FFELP Loan
which may be required pursuant to the Higher Education Act.
(k) Guarantees. Each FFELP Loan is Guaranteed; each
Guarantee is in full force and effect, is freely transferable as an incident to
the transfer of the related FFELP Loan and is valid and binding upon the parties
thereto; all amounts due and payable to the Secretary of Education or a
Guarantee Agency, as the case may be, have been or will be paid in full by the
Seller, and none of the FFELP Loans has at any time been tendered to either the
Secretary of Education or any Guarantee Agency for payment.
(l) Compliance with Law. Each FFELP Loan was made in
compliance with all applicable local, state and federal laws, rules and
regulations, including, without limitation, all applicable nondiscrimination,
truth-in-lending, consumer credit and usury laws.
(m) Binding Obligation. Each FFELP Loan is evidenced by an
executed promissory note (which may be in electronic form), which note is a
valid and binding obligation of the Borrower, enforceable by or on behalf of the
holder thereof in accordance with its terms, subject to applicable bankruptcy,
insolvency and other laws relating to or affecting creditors' rights. All
documentation required by the related Guarantor in connection with the payment
of any claim on such FFELP loan relating to each FFELP Loan is in the possession
of the applicable Servicer or Subservicers, as the case may be.
(n) No Delinquencies over 120 Days. No FFELP Loan has a
payment that is more than 120 days overdue.
(o) Interest Accrual. Each FFELP Loan is accruing interest
(whether or not such interest is being paid currently, either by the Borrower or
the Secretary of Education) or such interest is being capitalized.
(p) Account Classification. Each FFELP Loan constitutes an
"account" within the meaning of the applicable Uniform Commercial Code.
(q) No Pledge of Collateral. Other than pursuant to this
Agreement, the Seller has not pledged, assigned, transferred, granted a security
interest in, or otherwise conveyed any of the FFELP Loans. The Seller has not
authorized the filing of and is not aware of any financing statements against
the Seller that include a description of collateral covering the FFELP Loans
other than any financing statement relating to transfer of the FFELP Loans
pursuant to this Agreement. The Seller is not aware of any judgment or tax lien
filings against the Seller. None of the FFELP Loans has any marks or notations
indicating that they have been pledged, assigned or otherwise conveyed to any
person other than the Purchaser.
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(r) Record Ownership in Eligible Lender. Upon consummation
of the sale and contribution on a Loan Purchase Date the Seller's records and
those of its servicer will indicate that the FFELP Loans transferred to
Purchaser on that date are owned by the Eligible Lender Trustee on behalf of
Purchaser.
Each representation and warranty with respect to a FFELP Loan contained
in this Section 4 shall survive the related Loan Purchase Date and the
assignment of such FFELP Loan to the Purchaser by and through the Eligible
Lender Trustee. Upon discovery by Seller, Purchaser or Eligible Lender Trustee
of a breach of any of the representations and warranties set forth in this
Section 4, the party discovering such breach shall give prompt notice to the
other party.
Section 5. Conditions of Purchase. The Purchaser's obligation to acquire
and pay for the FFELP Loans hereunder by and through the Eligible Lender Trustee
as of any applicable Loan Purchase Date shall be subject to each of the
following conditions precedent:
(a) All representations, warranties and statements by or on
behalf of the Seller contained in this Agreement shall be true on the applicable
Loan Purchase Date.
(b) Any notification to or approval by the Secretary of
Education or a Guarantee Agency required by the Higher Education Act or a
Guarantee Agreement as a condition to the assignment of the FFELP Loans shall
have been made or received and evidence thereof delivered to the Purchaser.
(c) The entire interest of the Seller in each FFELP Loan
shall have been duly transferred pursuant to a Blanket Endorsement, such
endorsement to be without recourse except as provided in Section 7 hereof.
(d) Physical custody and possession of the FFELP Loans
(including all information and documentation which is described in a Seller's
Closing Certificate) shall be transferred in the manner directed by the
Purchaser.
(e) Delivery by the Seller to the Purchaser on or before the
applicable Loan Purchase Date of the following documentation: a Seller's Closing
Certificate; a Blanket Endorsement; a ▇▇▇▇ of Sale; and UCC-1 Financing
Statements reflecting the transfer from the Seller to the Eligible Lender
Trustee on behalf of the Purchaser.
(f) Delivery by the Seller to the Purchaser, not less than
one business day prior to the applicable Loan Purchase Date, of a fully executed
and completed Loan Transfer Addendum, with respect to FFELP Loans referred to in
the related ▇▇▇▇ of Sale.
(g) Adequate funds are available to the Purchaser from an
indenture or other financing agreement relating to notes which will finance the
acquisition of FFELP Loans under this Agreement.
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Section 6. Rejection of FFELP Loans.
(a) If (i) the Seller is unable to make or furnish the
representations and warranties required to be made or furnished by it pursuant
to this Agreement as to a FFELP Loan or (ii) the Purchaser determines that the
Seller is unable to fulfill one or more covenants or conditions of this
Agreement as to a FFELP Loan or (iii) the Purchaser, in its reasonable judgment,
deems that a FFELP Loan does not comply with the terms and conditions of this
Agreement or is not being delivered in compliance with such terms and conditions
or (iv) the Purchaser, in its reasonable judgment deems that a FFELP Loan is for
any reason unacceptable to it, then the Purchaser may refuse to accept and pay
for such FFELP Loan (or any substitute FFELP Loan offered by the Seller in lieu
thereof).
(b) If the Purchaser rejects a FFELP Loan, the Purchaser
shall provide notice to the Seller by registered mail, together with a letter
identifying each rejected FFELP stating the basis for its rejection, and a
demand for repurchase of each such FFELP Loan. Purchaser or its designee shall
deliver any documentation or loan file in its possession with respect to each
rejected FFELP to the Seller or its designee as soon as practicable after
Purchaser's determination thereof.
The liability of the Purchaser in connection with the loss of or damage
to any FFELP Loan to be returned to the Seller is limited to such loss or damage
occurring as a result of its gross negligence or willful misconduct in handling
or safekeeping FFELP Loans.
Section 7. Repurchase Obligation. If:
(a) any representation or warranty made or furnished by the
Seller pursuant to Sections 4 and 11(a) of this Agreement shall prove to have
been materially incorrect;
(b) the Secretary of Education or a Guarantee Agency, as the
case may be, refuses to honor all or part of a claim filed with respect to a
FFELP Loan, including any claim for Interest Subsidy Payments, Special Allowance
Payments, insurance, reinsurance or Guarantee payments on account of any
circumstance or event that occurred prior to the sale and contribution of such
FFELP Loan to the Purchaser by and through the Eligible Lender Trustee;
(c) on account of any wrongful or negligent act or omission
of the Seller, the originating lender or its or their servicing agents, that
occurred prior to the sale and contribution of a FFELP Loan to the Purchaser, a
defense that makes the loan unenforceable is asserted by a Borrower, maker or
endorser, if any, of the FFELP Loan with respect to his or her obligation to pay
all or any part of the FFELP Loan;
(d) a FFELP Loan is required to be repurchased pursuant to
subsection 6(b); or
(e) the obligation that Seller purports to be a FFELP Loan
is not, in fact, a FFELP Loan;
11
then the Seller shall be obligated to repurchase such FFELP Loan or purported
FFELP Loan upon the request of the Purchaser or any assignee of the Purchaser
hereunder by paying to the Purchaser or such assignee an amount equal to (a) the
then outstanding principal balance of such FFELP Loan or purported FFELP Loan,
plus (b) all interest accrued and unpaid on such FFELP Loan or purported FFELP
Loan calculated from the applicable Loan Purchase Date to and including the date
of repurchase, plus (c) all applicable Special Allowance Payments accrued and
unpaid with respect to such FFELP Loan or purported FFELP Loan calculated from
the applicable Loan Purchase Date to and including the date of repurchase, plus
(d) any amounts owed to the Secretary of Education with respect to the
repurchased FFELP Loan or purported FFELP Loan, or such other repurchase amount
as shall be set forth in the related Loan Transfer Addendum.
Section 8. Notification to Borrowers. The servicing agent on behalf of
the Seller shall notify Borrowers under the FFELP Loans as required by the
Higher Education Act of the assignment and transfer to the Eligible Lender
Trustee of the Seller's interest in such FFELP Loans, and the Seller shall
direct each Borrower to make all payments thereon directly to the Purchaser or
as it may otherwise designate.
Section 9. Obligations To Forward Payments and Communications.
(a) The Seller shall promptly remit, or cause to be
remitted, to the Purchaser all funds received by the Seller after the applicable
Loan Purchase Date that constitute payments of principal or interest (including
Interest Subsidy Payments) or Special Allowance Payments accrued after the
applicable Loan Purchase Date with respect to any FFELP Loan.
(b) The Seller shall immediately transmit to the Purchaser
any communication received by the Seller after the applicable Loan Purchase Date
with respect to a FFELP Loan or the Borrower under such a FFELP Loan. Such
communication shall include, but not be limited to, letters, notices of death or
disability, adjudication of bankruptcy and similar documents and forms
requesting deferment of repayment or loan cancellations.
Section 10. Payment of Expenses and Taxes. Each party to this Agreement
shall pay its own expenses incurred in connection with the preparation,
execution and delivery of this Agreement and the transactions herein
contemplated, including, but not limited to, the fees and disbursements of
counsel; provided, however, that Seller shall pay any transfer or other taxes
and recording or filing fees payable in connection with the sale and
contribution of the FFELP Loans.
Section 11. Special Provisions Relating to MPN Loans.
(a) The Seller hereby represents and warrants that the
Seller is transferring all of its right, title and interest in the MPN Loans to
Eligible Lender Trustee acting on behalf of and for the benefit of the
Purchaser, that it has not assigned any interest in such MPN Loans (other than
security interests that have been released or ownership interests that the
Seller has reacquired) to any other person, and that no prior holder of the MPN
Loans has assigned any interest in such MPN Loans (other than security interests
that have been released or ownership interests that such prior holder has
reacquired) to any person other than a predecessor in title to the Seller. The
Seller hereby covenants that the Seller shall not attempt to transfer to any
other person any interest in any MPN Loan transferred hereunder.
12
(b) The Seller hereby authorizes the Purchaser to file a
UCC-1 financing statement identifying the Seller as debtor and the Purchaser as
secured party and describing the MPN Loans transferred pursuant to this
Agreement. The preparation or filing of such UCC-l financing statement is solely
for additional protection of the Purchaser's interest in the MPN Loans and shall
not be deemed to contradict the express intent of the Seller and the Purchaser
that the transfer of MPN Loans under this Agreement is an absolute assignment of
such MPN Loans and is not a transfer of such MPN Loans as security for a debt.
Section 12. Eligible Lender Trustee Provisions.
(a) The Eligible Lender Trustee hereby represents and
warrants to the Seller and the Purchaser that the Eligible Lender Trustee has
applied for and has received the Secretary of Education's or a Guarantee
Agency's designation as an "Eligible Lender" under the Higher Education Act, and
the Eligible Lender Trustee has entered into all agreements required to be
entered into for participation in the Federal Family Education Loan Program
under the Higher Education Act, and to hold title to such loans on behalf of and
for the benefit of Purchaser.
(b) The parties hereto agree that upon the transfer of any
FFELP Loans hereunder, the Eligible Lender Trustee shall, and hereby does, hold
legal title to such FFELP Loans pursuant to the Foundation Eligible Lender Trust
Agreement. Subject to the Foundation Eligible Lender Trust Agreement, the
Eligible Lender Trustee shall continue to hold legal title to such loans for the
benefit of Purchaser until such time as (i) a successor Eligible Lender Trustee
is appointed by Purchaser and accepts title to such loans, or (ii) until
otherwise agreed by Purchaser in writing.
Section 13. Other Provisions.
(a) The Seller shall, at its expense, execute all other
documents and take all other steps as may be requested by the Purchaser or the
Eligible Lender Trustee from time to time to effect the sale and contribution
hereunder of the FFELP Loans.
(b) This Agreement, including the Exhibits hereto, sets
forth the entire understanding among the parties hereto as to the subject matter
set forth herein. The provisions of this Agreement cannot be waived or modified
unless such waiver or modification is in writing and signed by parties hereto.
Inaction or failure to demand strict performance shall not be deemed a waiver.
(c) This Agreement shall be governed by the laws of the
Commonwealth of Pennsylvania, without giving effect to principles of conflict of
laws.
(d) All covenants and agreements herein contained shall
extend to and be obligatory upon all successors of the respective parties
hereto.
(e) This Agreement may be simultaneously executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
13
(f) If any provision of this Agreement shall be held, deemed
to be or shall, in fact, be inoperative or unenforceable as applied in any
particular situation, such circumstances shall not have the effect of rendering
the provision in question inoperative or unenforceable in any other situation or
of rendering any other provision or provisions herein contained invalid,
inoperative or unenforceable to any extent whatsoever. The invalidity of any one
or more phrases, sentences, clauses or paragraphs herein contained shall not
affect the remaining portions of this Agreement or any part hereof.
(g) All notices, requests, demands or other instruments
which may or are required to be given by either party to the other shall be in
writing, and each shall be deemed to have been properly given when served
personally on an officer of the party to whom such notice is given or upon
expiration of a period of 72 hours from and after the postmark thereof when
mailed, postage prepaid, by registered or certified mail, requesting return
receipt, and on the next business day if sent by overnight courier or by
telecopy, addressed as follows:
If to the Purchaser:
PHEAA Student Loan Foundation, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇- 1444
Attention: ______________
Telephone: (717) ___________
Facsimile: (717) ____________
with a copy to the Eligible Lender Trustee at:
Manufacturers and Traders Trust Company
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Corporate Trust Services
Telephone: (717) 255 - 2323
Facsimile: (717) 231 - 2608
If to the Seller:
The Pennsylvania Higher Education Assistance Agency
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ - 1444
Attention: __________________
Telephone: (717) ______________
Facsimile: (717) _______________
Any party may change the address and name of the addressee to which
subsequent notices are to be sent to it by notice to the others given as
aforesaid, but any such notice of change, if sent by mail, shall not be
effective until the fifth day after it is mailed.
14
(h) This Agreement may not be terminated by either party
hereto except in the manner and with the effect herein specifically provided
for.
(i) This Agreement shall not be assignable by the Seller, in
whole or in part, without the prior written consent of the Purchaser.
(j) No remedy by the terms of this Agreement conferred upon
or reserved to the Purchaser is intended to be exclusive of any other remedy,
but each and every such remedy shall be cumulative and in addition to every
other remedy given under this Agreement or existing at law or in equity
(including, without limitation, the right to equitable relief by way of
injunction) or by statute on or after the date of this Agreement.
(k) Acts to be taken by the Purchaser with respect to
acquiring and holding title to FFELP Loans hereunder shall be taken by the
Eligible Lender Trustee as directed by the Purchaser in accordance with the
terms of the Foundation Eligible Lender Trust Agreement dated as of
_____________, 2003, between the Purchaser and the Eligible Lender Trustee. The
Eligible Lender Trustee qualifies as an "eligible lender" trustee under the
Higher Education Act, and all references herein to the Purchaser shall
incorporate by this reference the fact that the Eligible Lender Trustee will be
acquiring and holding title to FFELP Loans on behalf of the Purchaser, all as
required under the Higher Education Act.
15
(l) The parties hereto acknowledge that the Issuer and
credit providers of the Purchaser and/or the Issuer, as the case may be, through
an indenture or other financing arrangement, shall be third party beneficiaries
of this Agreement with the power and right to enforce the provisions hereof, and
that the Issuer and any such credit providers may become an assignee of the
Purchaser. The foregoing creates a permissive right on the part of such third
party beneficiaries, and such third party beneficiaries shall be under no duties
or obligations hereunder.
IN WITNESS WHEREOF, the parties have hereunto set their hands as of the
day and year first above written.
THE PENNSYLVANIA HIGHER EDUCATION
ASSISTANCE AGENCY, as Seller
By:
--------------------------------------------
Name:
Title:
PHEAA STUDENT LOAN FOUNDATION, INC.,
as Purchaser
By:
--------------------------------------------
Name:
Title:
MANUFACTURERS AND TRADERS TRUST
COMPANY, not in its individual capacity but
solely as Eligible Lender Trustee
By:
--------------------------------------------
Name:
Title: Vice President
16
EXHIBIT A
LOAN TRANSFER ADDENDUM
This Loan Transfer Addendum (the "Addendum") is made and entered into as
of the ____ day of ____________, 20__, by and among PHEAA Student Loan
Foundation, Inc. (the "Purchaser") acting by and through Manufacturers and
Traders Trust Company, not individually but solely as eligible lender trustee
(the "Eligible Lender Trustee"), and The Pennsylvania Higher Education
Assistance Agency (the "Seller").
WHEREAS, the parties hereto entered into the Master Loan Sale and
Contribution Agreement, dated as of _______ __, 2003 (the "Master Agreement"),
and the Seller wishes to sell and contribute a portfolio of Eligible Loans (as
defined in the Master Agreement) to the Purchaser, pursuant to and in accordance
with the terms and conditions of the Master Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, the parties hereto agree as follows:
1. Definitions. All capitalized terms in this Addendum shall have the
same meanings given to them in the Master Agreement, unless otherwise
specifically stated herein.
2. Sale and Contribution of Eligible Loans. Subject to the terms and
conditions of the Master Agreement and in reliance upon the representations,
warranties and covenants as set forth in the Master Agreement, the Seller agrees
to sell and contribute to the Eligible Lender Trustee, as trustee under the
Eligible Lender Trust Agreement on behalf of the Purchaser, a portfolio of
Eligible Loans identified in the Loan Transfer Schedule attached hereto, having
an aggregate outstanding principal balance of approximately $_______ (the
"Current Purchase Portfolio"). The difference between the fair market value of
the FFELP Loans and the purchase price of the Current Purchase Portfolio shall
be considered a capital contribution by the Seller to the Purchaser.
3. Purchase Price. Subject to the terms and conditions of the Master
Agreement, the Purchaser agrees to acquire the Eligible Loans in the Current
Purchase Portfolio at a purchase price equal to the sum of (i) ______% of the
aggregate unpaid principal balance thereof plus (ii) 100% of the accrued and
unpaid interest thereon, each as of the Loan Purchase Date set forth in Section
4 hereof plus (iii) the entire amount of any origination fees which are
authorized to be charged by the Higher Education Act with respect to the FFELP
Loans being transferred.
4. Loan Purchase Date. The Loan Purchase Date shall be [no later than ]
_________ __, 20__.
5. Representations and Warranties. The Seller hereby makes the
representations and warranties set forth in (i) Section 4 of the Master
Agreement, with respect to all the FFELP Loans and (ii) Section 11 (a) of the
Master Agreement, with respect to the MPN Loans as of the Loan Purchase Date set
forth in Section 4 hereof.
17
6. Effect on Master Agreement. This Addendum sets forth the terms of
sale and contribution solely with respect to the Current Purchase Portfolio.
This Addendum shall have no effect upon any other sale or contribution of any
Eligible Loans consummated or contemplated prior to or after the Loan Purchase
Date, and all other terms, conditions and agreements contained in the Master
Agreement shall remain in full force and effect. Prior or subsequent sales and
contributions of Eligible Loans shall each be governed by a separate Loan
Transfer Addendum.
THE PENNSYLVANIA HIGHER EDUCATION
ASSISTANCE AGENCY, as Seller
By:
------------------------------------
Name:
Title:
PHEAA STUDENT LOAN FOUNDATION, INC.,
as Purchaser
By:
------------------------------------
Name:
Title:
MANUFACTURERS AND TRADERS TRUST
COMPANY, not in its
individual capacity but
solely as Eligible Lender Trustee
By:
------------------------------------
Name:
Title: Vice President
18
LOAN TRANSFER SCHEDULE
19
EXHIBIT B
SELLER'S CLOSING CERTIFICATE
The Pennsylvania Higher Education Assistance Agency (the "Seller") does
hereby certify that all representations, warranties and statements by or on
behalf of the Seller contained in the Master Loan Sale and Contribution
Agreement, dated as of ______ __, 2003 (the "Master Agreement"), by and among
the Seller, and PHEAA Student Loan Foundation, Inc. (the "Purchaser") acting by
and through Manufacturers and Traders Trust Company, not individually but solely
as eligible lender trustee (the "Eligible Lender Trustee"), are true and correct
on and as of _____ __, 20__, without exception or qualification whatsoever;
FURTHERMORE, the Seller does hereby certify that the following
documents, where applicable to each FFELP Loan (as defined in the Master
Agreement) acquired under the Master Agreement, have heretofore been delivered,
or are delivered herewith, to the Purchaser or the document custodian designated
by the Purchaser, pursuant to subsection 5(d) of the Master Agreement:
- Department of Education application or Guarantee Agency
application, as supplemented;
- Interim note(s) for each Loan that is not an MPN Loan;
- Payout note(s) for each Loan that is not an MPN Loan;
- Disclosure and Loan information statement;
- Guarantee Agreement, Agreement for Participation in the
Guaranteed Loan Program and Notification of Loan Approval by the
Guarantee Agency with respect to each Guaranteed Loan (or
certified copy thereof);
- Any other documentation held by the Seller relating to the
history of such Eligible Loan;
- Secretary of Education and Guarantee Agency Loan Transfer
Statements;
- Evidence of Loan disbursement; and
20
- Any other document required to be submitted with a claim to the
Guarantee Agency.
In addition, the Seller shall furnish to the Purchaser a copy of the
filed Uniform Commercial Code financing statement, if any, securing the interest
of the Purchaser in each Eligible Loan upon Seller's receipt thereof from the
applicable recording office;
IN WITNESS WHEREOF, the undersigned has caused this Certificate to be
executed and delivered by an officer hereunto duly authorized as of ______ __,
20__.
THE PENNSYLVANIA HIGHER EDUCATION
ASSISTANCE AGENCY
By:
--------------------------------------
Name:
------------------------------
Title:
------------------------------
21
EXHIBIT C
BLANKET ENDORSEMENT OF
STUDENT LOAN PROMISSORY NOTES
Pursuant to the Master Loan Sale and Contribution Agreement, dated as of
______ __, 2003 (the "Master Loan Sale and Contribution Agreement"), the
undersigned ("Seller"), by execution of this instrument, hereby endorses all
promissory notes (the Promissory Notes") purchased by Manufacturers and Traders
Trust Company, as eligible lender trustee (the "Eligible Lender Trustee") for
PHEAA Student Loan Foundation, Inc. (the "Purchaser"). This endorsement is in
blank, unrestricted form. This endorsement is without recourse, except as
provided under the terms of the Master Loan Sale and Contribution Agreement. All
right, title, and interest of Seller in and to the promissory notes and related
documentation identified in the attached loan ledger are transferred and
assigned to the Eligible Lender Trustee on behalf of the Purchaser.
This endorsement may be further manifested by attaching this instrument
or a facsimile hereof to each or any of the Promissory Notes and related
documentation acquired by the Eligible Lender Trustee on behalf of the Purchaser
from Seller, or by attaching this instrument to the loan ledger schedule, as the
Purchaser may require or deem necessary.
Dated this _________ __, 20__.
THE PENNSYLVANIA HIGHER EDUCATION
ASSISTANCE AGENCY
By:
--------------------------------
Name:
Title:
22
EXHIBIT D
▇▇▇▇ OF SALE
FOR VALUE RECEIVED, The Pennsylvania Higher Education Assistance Agency
(the "Seller"), pursuant to the terms and conditions of the Master Loan Sale and
Contribution Agreement, dated as of _______ __, 2003 (the "Master Loan Sale and
Contribution Agreement"), by and among the Seller, and PHEAA Student Loan
Foundation, Inc. (the "Purchaser") acting by and through Manufacturers and
Traders Trust Company, not individually but solely as eligible lender trustee
(the "Eligible Lender Trustee"), does hereby sell, contribute and transfer to
the Eligible Lender Trustee on behalf of the Purchaser and its successors and
assigns, all right, title and interest of the Seller in and to the following:
(1) The loans described in ANNEX I, attached hereto (the "Loans"),
including any guarantees of the Loans issued by a guarantee agency pursuant to
the Federal Family Education Loan Program (20 U.S.C. ss. 1071 et seq.);
(2) All promissory notes and related documentation evidencing the
indebtedness represented by such Loans; and
(3) All proceeds of the foregoing including, without limitation, all
payments made by the obligor thereunder or with respect thereto, all guarantee
payments made by any guarantee agency with respect thereto, and all interest
benefit payments and special allowance payments with respect thereto made under
Title IV, Part B, of the Higher Education Act of 1965, as amended, and all
rights to receive such payments, but excluding any proceeds of the sale and
contribution made hereby.
TO HAVE AND TO HOLD the same unto the Eligible Lender Trustee on behalf
of the Purchaser, its successors and assigns, forever. This ▇▇▇▇ of Sale is made
pursuant to and is subject to the terms and provisions of the Master Loan Sale
and Contribution Agreement, and is without recourse, except as provided in the
Master Loan Sale and Contribution Agreement.
IN WITNESS WHEREOF, the Seller has caused this instrument to be executed
by one of its officers duly authorized to be effective as of ______ __, 20__.
THE PENNSYLVANIA HIGHER EDUCATION
ASSISTANCE AGENCY
By:
---------------------------------------
Name:
Title:
23
ANNEX I
24
