PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY LENDER AGREEMENT FOR GUARANTEE OF STUDENT LOANS
NATIONAL GUARANTY AGREEMENT WITH FEDERAL REINSURANCE (for loans to students
and parents of students pursuant to the Higher
Education Act of 1965, as amended)
WHEREAS The First National Bank of Chicago, not in its individual capacity
but solely as Eligible Lender Trustee on behalf of the First Union
Student Loan Trust 1997-1 pursuant to the Trust Agreement dated as
of July __, 1997, between First Union National Bank and the
Eligible Lender Trustee, as the same may be amended, including by
way of amendment and restatement, from time to time (the "Trust
Agreement") (Corporate Name)
Located at Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxx 0000, Xxxxxxxxx: Corporate Trust
Administration
(Street Address)
Xxxxxxx Xxxxxxxx 00000 (City)
(State) (Zip Code)
hereinafter referred to as the "Lender," wishes to be able to
secure guarantee of loans made to students pursuing programs of
higher or vocational education at eligible institutions, and to
parents of such students pursuant to the aforementioned federal
legislation, hereinafter referred to as the "Act;" and
WHEREAS, the Pennsylvania Higher Education Assistance Agency, hereinafter
referred to as the "Agency," was created by the Act of August 7, 1963, P.L. 549
for the purpose of improving higher educational opportunities and to that end
the Agency is empowered to guarantee loans; and
WHEREAS, the Lender wishes to participate in the Agency's National Guaranty
Program.
NOW THEREFORE, it is mutually agreed that:
1. Within such limits as may be set by it, the Agency shall guarantee the
full amount of all loans made by the Lender, or for loans with a first
disbursement on or after October 1, 1993, no less than 98% of the full
amount of all loans, including principal and interest, made by the
Lender, except that all loans continue to be 100% guaranteed in the
event of death, disability or bankruptcy regardless of disbursement
date, which are eligible for such guarantee under the Act, the
regulations issued under the Act and the Rules and Regulations and
policies of the Agency with the exception of those pertaining to
Pennsylvania Residency/Domicile, which Act, regulations, Rules and
Regulations and policies as they may be from time to time amended are
made part of this Agreement.
2. The Agency shall guarantee loans without regard to sex, age, race,
color, religion, handicapped status, income, national origin or any
other basis prohibited by applicable law and the Lender will not
discriminate in the making of loans to eligible borrowers or in the
treatment of such borrowers on any prohibited basis.
3. On all loans guaranteed, the Agency agreed to obtain maximum
reinsurance by means of an agreement with the Federal Government
pursuant to the Act.
4. The Lender authorizes the Agency to act as its representative with
respect to retaining the school's statement of the student's
enrollment and need. This document will be retained for the five-year
period as required of the Lender by federal regulations.
5. The Lender shall designate its Servicer to maintain for all loans
guaranteed a system of records and accounts, shall afford access
thereto, and shall furnish such periodic and separate reports as may
reasonably be required by the U.S. Secretary of Education and the
Agency, under the Act, regulations, Rules and Regulations and policies
identified above. For loans paid in full or otherwise discharged, the
records shall be retained by the Lender as required by the Act,
regulations, Rules and Regulations, and policies identified above.
6. The Agency agrees to purchase eligible loans made by the Lender
provided that such loans are in default (as defined by the Act,
regulations, Rules and Regulations and policies identified above); the
loan was made in accordance with the Act, regulations, Rules and
Regulations and policies identified above; the Lender has otherwise
exercised due diligence in the making, servicing, and collection of
such loans; and, title to the loan note has been subrogated to the
Agency by the Lender.
7. Failure of the Lender to comply with the terms hereof with respect to
an individual loan shall not invalidate the guarantee of the Agency to
the Lender with respect to other loans held in compliance with the
terms of this Agreement.
8. In making loans under the Act, the Lender will undertake to secure
such reductions in borrowers' obligations to pay interest on loans
held by the Lender as they may be eligible to receive under the Act
and regulations. The Lender further agrees to comply with all
applicable Federal and State laws in originating guaranteed student
loans.
9. The Agency agrees to maintain at all times reserve levels which comply
with Section 428(c)(10) of the Higher Education Act, as amended.
10. This Agreement may be terminated by the Lender upon sixty (60) days
written notice. The Agency may limit, suspend or terminate this
Agreement in the manner provided for by the Agency Rules and
Regulations. All rights, duties and obligations hereunder shall
immediately cease upon termination, except the rights and obligations
of the parties which existed as of the date of termination.
11. The Lender wishes to participate in the following programs: (Please
check all applicable programs)
|_| Xxxxxxxx
|_| PLUS
|_| SLS
|_| Consolidation
12. The Agency agrees to reimburse the Lender for any federal special
allowance payments lost with respect to an individual loan as a result
of a delay in payment of a claim under this Agreement by the Agency to
the Lender with respect to such loan.
13. The Agency agrees upon written request to furnish a copy of its most
recent audited financial statements to any holder of record of Notes
or Certificates (each as defined in Appendix A to the Indenture) of
First Union Student Loan Trust 1997-1.
IN WITNESS WHEREOF, the Lender and the Agency have caused this Agreement to be
duly executed and delivered this __ day of July, 1997.
PENNSYLVANIA HIGHER EDUCATION ASSISTANCE AGENCY
By:__________________________________
Title
THE FIRST NATIONAL BANK OF CHICAGO,
NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY
AS ELIGIBLE LENDER TRUSTEE ON BEHALF OF
FIRST UNION STUDENT LOAN TRUST 1997-1
By:____________________________________
Authorized Signature
Title:
D.E. Lender Code Number: 833220
Federal Tax Identification Number
00-0000000
Approved as to form and legality this _____ day of Approved as to form and legality this _____ day of
__________, 1997 __________, 1997
------------------------------ -------------------------------
PHEAA Chief Counsel Deputy Attorney General
NEW JERSEY HIGHER EDUCATION ASSISTANCE AUTHORITY
GUARANTY LOAN AGREEMENT
(Secondary Market)
This AGREEMENT is made this __ day of July, 1997, by and between New Jersey
Higher Education Assistance Authority, a body corporate and politic with
corporate succession, created by N.J.S.A. 18A:72-1 et seq., as amended, whose
office is located at 0 Xxxxxxxxxxxx Xxxxx, XX 000, Xxxxxxx, Xxx Xxxxxx 00000
("Authority") and The First National Bank of Chicago, not in its individual
capacity but solely as Eligible Lender Trustee on behalf of the First Union
Student Loan Trust 1997-1 pursuant to the Trust Agreement dated as of July __,
1997, between First Union National Bank and the Eligible Lender Trustee, as the
same may be amended, with its principal office at ______________________________
("Lender").
WHEREAS, Lender wishes to be able to secure guarantee of loans held by
Lender that have been made to or on behalf of students pursuing programs of
postsecondary education at eligible institutions pursuant to Title IV of the
Higher Education Act of 1965, as amended (the "Act"), regulations thereunder,
and applicable state law; and
WHEREAS, the Authority, which exists for the purpose of providing
assistance to students pursuing programs of postsecondary education at eligible
institutions as defined by the Act, regulations thereunder, and N.J.S.A. 18A:
72-1 et seq., is authorized to guarantee loans; and
WHEREAS, the Authority desires that Lender shall hold loans that have been
made to or on behalf of students, at Lender's option in each instance, the
Authority to guarantee the payment thereof upon the terms, conditions and
agreements herein contained;
NOW, THEREFORE, it is mutually agreed that:
1. Within such limits as may be set by the Act, regulations thereunder, New
Jersey statutes, regulations thereunder, and this AGREEMENT, the Authority
(i) shall guarantee loans with a first disbursement prior to October 1,
1993 no less than 100 percent of full amount of such loans, including
principal and interest, held by the Lender, and (ii) shall guarantee loans
with a first disbursement on or after October 1, 1993 no less than 98
percent of the full amount of all loans, including principal and interest,
made by the Lender, except that all loans continue to be 100 percent
guaranteed in the event of death, disability or bankruptcy, situations
covered by Section 428(j) or Section 439(q) of the Act or other non-default
claim (e.g., closed school or false certification) regardless of
disbursement date.
2. Whenever any guaranteed loan shall be in default (as defined by the Act,
regulations thereunder, New Jersey statutes, and regulations thereunder),
or upon the death or total and permanent disability of a borrower, or upon
bankruptcy, situations covered by Section 428(j) or Section 439(q) of the
Act or other non-default claim, the Authority shall purchase the loan,
provided that the loan was made in accordance with the Act, regulations
thereunder, New Jersey statutes, regulations thereunder; Lender has
exercised due diligence in the making, servicing, and collection of such
loan; Lender has subrogated title to the loan note to the Authority; and
Lender has otherwise performed its obligations under this AGREEMENT.
3. The Authority shall guarantee loans without regard to sex, age, race,
color, religion, handicapped status, income, national origin or any other
basis prohibited by applicable law and Lender shall not discriminate in the
making of loans to eligible borrowers, as defined by the Act and New Jersey
statutes, or in the treatment of such borrowers on any prohibited basis.
4. Lender shall provide notification to the Authority when it acquires a loan
for which the Authority has issued a notice of loan guarantee. Regarding a
guaranteed loan already held by Lender, in order for a loan account to
remain subject to the Authority guarantee obligation, the loan may be
transferred only to another approved lender or eligible holder of New
Jersey guaranteed loans.
5. Lender shall notify the Authority of any servicing or management of
Lender's guaranteed loan portfolio performed by an agent(s) other than the
holder of record.
6. Payment of a loan may be extended in whole or in part, and the provisions
of the loan may be modified without notice to and without affecting the
liability of the Authority, if such extension or modification complies with
the requirements for loans under this AGREEMENT, the Act, regulations
thereunder, New Jersey statutes, and regulations thereunder.
7. In holding or servicing guaranteed loans for or on behalf of eligible
borrowers, Lender shall assist them in securing such reductions in their
obligations to pay interest on loans held by the Lender as they may be
eligible to receive under the Act and regulations thereunder.
8. Lender shall maintain for all loans guaranteed a system of records and
accounts, shall afford access thereto, and shall furnish such periodic and
separate reports as may reasonably be required by the U.S. Department of
Education and the Authority, under the Act, regulations thereunder, New
Jersey statutes, and regulations thereunder. For loans paid in full or
otherwise discharged, Lender shall also maintain records as required by the
Act, regulations thereunder, New Jersey statutes, and regulations
thereunder. For example, Lender shall retain the records required for each
loan for not less than five years following the date the loan is repaid in
full by the borrower.
9. The Authority shall maintain at all times reserve levels which comply with
the Act, regulations thereunder, N.J.S.A. 18A:71-1 et seq. and regulations
thereunder.
10. Failure of Lender to comply with the terms of this AGREEMENT with respect
to an individual loan or loans shall not invalidate the guarantee of the
Authority to Lender with respect to other loans held in compliance with the
terms of this AGREEMENT.
11. Lender agrees to comply with all applicable Federal and State statutes,
rules, and regulations, whether applicable presently or hereafter.
12. This AGREEMENT may be terminated by either party by giving thirty (30)
days' notice in writing to the other party by certified mail. All rights
and obligations hereunder shall immediately cease upon termination, except
the rights and obligations of the parties which existed prior to the date
of such termination.
13. The Authority and Lender each represents to the other that it has the full
and unencumbered right to enter into this AGREEMENT and to fully perform
its obligations hereunder.
14. This AGREEMENT sets forth the entire agreement of the parties with respect
to any and all loans which may be made hereunder.
15. If any provision of this AGREEMENT is invalid under the Act, regulations
thereunder, New Jersey statutes, or regulations thereunder, and the
invalidity shall not affect other provisions of this AGREEMENT which can be
given effect without the invalid provisions, then to this end, the
provisions of this AGREEMENT are severable.
16. This AGREEMENT is to be interpreted under the laws of the State of New
Jersey.
IN WITNESS WHEREOF, the parties have caused this AGREEMENT to be executed
by their duly authorized representatives, and their respective seals to be
affixed, as of the dates indicated below.
Date: NEW JERSEY HIGHER EDUCATION ASSISTANCE AUTHORITY
----------------
By:
Xxxxxxxxxx Xxxxxxxxx
Title: Secretary/Treasurer
Date: THE FIRST NATIONAL BANK OF CHICAGO,
--------------- NOT IN ITS INDIVIDUAL CAPACITY BUT
SOLELY AS ELIGIBLE LENDER TRUSTEE
ON BEHALF OF FIRST UNION STUDENT
LOAN TRUST 1997-1
(Lender Name)
By:_______________________________
Title:____________________________
D.E. Code: 833220
EIN Code: 00-0000000
THE CONNECTICUT STUDENT LOAN FOUNDATION
AGREEMENT WITH LENDER
THIS AGREEMENT executed on the date hereinafter set forth by and between
the CONNECTICUT STUDENT LOAN FOUNDATION ("Foundation") and The First National
Bank of Chicago, not in its individual capacity but solely as Eligible Lender
Trustee on behalf of the First Union Student Loan Trust 1997-1 pursuant to the
Trust Agreement dated as of July __, 1997, between First Union National Bank and
the Eligible Lender Trustee, as the same may be amended ("Lender").
RECITALS
The Foundation is a Connecticut nonprofit corporation chartered pursuant to
the General Statutes of the State of Connecticut for the purpose of improving
opportunities for higher education for Connecticut residents and for those
individuals who attend eligible institutions of higher education located in
Connecticut.
In order to provide such opportunities, the Foundation participates in a
program established and administered pursuant to Title IV, Part B of the Higher
Education Act of 1965, as amended 20 U.S.C. Sec. 1071 et seq. ("Act") whereby
the Foundation insures certain education loans made by eligible financial
institutions to eligible borrowers.
The Lender is a qualified financial institution which desires to
participate in said program.
NOW THEREFORE, in consideration of the mutual promises herein contained,
the parties covenant and agree as follows:
1. Lender hereby represents and warrants to the Foundation that is an
"eligible lender" within the meaning of the Act.
2. Lender agrees that in the event and in each event it submits a loan to the
Foundation for insurance pursuant to the Act, Lender will be subject to and
bound by, and the Lender and the submitted loan will be in compliance with,
the provisions of the "Program" as defined in Section 3 hereof which govern
the conduct, obligations, rights and liabilities of the Lender
participating in the program.
3. For purposes of this Agreement, "Program" shall mean the Act, Chapter 187a
of the Connecticut General Statutes and the rules, regulations, official
and unofficial interpretative opinions, letters and like promulgations of
the United States Department of Education, the Foundation (including but
not limited to the Foundation's Lenders Manual and Bulletins) and/or any
other successor or additional Federal or Connecticut agency having
jurisdiction over the Program, as these Regulations may be, and may be from
time to time, amended. Such Regulations are incorporated herein and made a
part of hereof by this reference.
4. In consideration of the mutual promises contained herein, the Foundation
promises to reimburse the Lender in the amount of one hundred percent
(100%) of any proven loss incurred by the Lender due to the default, death,
permanent and total disability, or bankruptcy of the borrower of any loan
held by the Lender and guaranteed by the Foundation under this Agreement.
However, it is understood that where the maximum allowable reimbursement
percentage to Lenders is otherwise defined, or reduced by statute or
regulation, that reimbursement percentage shall prevail.
5. The Foundation shall perform its obligations under this Agreement in
accordance with the terms of the Program and in compliance with all other
applicable federal and state laws and regulations.
6. The application and promissory note utilized by the Lender when
participating in this Program shall be those supplied by the Foundation or
those prepared by the Lender after obtaining prior written approval of the
use of such forms by the Foundation.
7. During the continuation of this Agreement, Lender will cooperate in the
administration of the Program with the Foundation, the Department of
Education and any successor or additional State or Federal agency having
jurisdiction in the Program.
8. The Lender and the Foundation hereby agree to hold the other party harmless
and make whole the other party from any and all liabilities and costs
(including attorney's fees) caused by the Lender's or the Foundation's
negligent actions or omissions or willful misconduct in the performance of
its obligations under this Agreement. This provision shall survive any
termination of this Agreement.
9. The Foundation may terminate this Agreement as provided under the Federal
Act and Regulations. Failure of the Foundation to timely terminate the
Agreement or reject an individual loan shall not constitute a waiver by the
Foundation or subsequent violation, nor shall it constitute a waiver of any
of the Foundation's other rights under this Agreement. The Lender may
terminate this Agreement by giving ninety (90) days' prior written notice
to the Foundation. Termination shall not affect any obligations incurred
under this Agreement prior to the time that such termination became
effective.
10. This Agreement shall insure to the benefit of, and be binding upon, the
Foundation, the Lender, and their respective successors and assigns. Except
to the extent expressly preempted by Federal Law, this Agreement shall be
governed by the laws of the State of Connecticut.
11. This Agreement supersedes all existing agreements between the Foundation
and Lender pertaining to the matters described herein.
IN WITNESS WHEREOF, the parties hereto have caused this Instrument to be
executed this __ day of July, 1997.
CONNECTICUT STUDENT LOAN FOUNDATION
BY: Xxxx X. Xxxxxxx
-----------------------
TITLE: President
-----------------------
THE FIRST NATIONAL BANK OF CHICAGO,
NOT IN ITS INDIVIDUAL CAPACITY BUT
SOLELY AS ELIGIBLE LENDER TRUSTEE
ON BEHALF OF FIRST UNION STUDENT LOAN TRUST 1997-1
BY:
------------------------------
TITLE:
----------------------------
E.I.N. #: 00-0000000
---------------------------
CSLF
Lender/Servicer Activation Information
Lender Name & Address Federal Lender Code:
-------------------------------- ------------------
================================
--------------------------------
Servicer Name & Address CSLF use only
________________________________ Servicer Code:
-------------------------------- ------------------
================================
Participation: Yes No
Xxxxxxxx _______ _______
Unsub _______ _______
PLUS** _______ _______
** Credit Checks for PLUS Loan must be directed to:
================================================================
================================================================
Report Distribution: Lender Servicer
Notice of Guarantee _______ _______
Reports _______ _______
Insurance Billing _______ _______
Technical Contact:
--------------------------------------------
Comments or Special Instructions:
--------------------------------------------
NEW YORK STATE HIGHER EDUCATION SERVICES CORPORATION
LOAN GUARANTEE AGREEMENT WITH LENDING INSTITUTION
AGREEMENT, made this __ day of July, 1997, by and between the NEW YORK
STATE HIGHER EDUCATION SERVICES CORPORATION, an educational corporation created
by an act of the Legislature of the State of New York, with its principal office
at Xxx Xxxxxxxx Xxxxx, Xxxxxx, Xxx Xxxx (hereinafter referred to as the
"Corporation"), and The First National Bank of Chicago, not in its individual
capacity but solely as Eligible Lender Trustee on behalf of the First Union
Student Loan Trust 1997-1 pursuant to the Trust Agreement dated as of July __,
1997, between First Union National Bank and the Eligible Lender Trustee, as the
same may be amended, located at ______________________________________________
(hereinafter referred to as the "Lending Institution").
WITNESSETH:
WHEREAS, the Corporation was created and operates pursuant to Article 14 of
the Education Law of the State of New York for the purpose of assisting eligible
students who are attending or planning to attend colleges or vocational
institutions in said State or elsewhere to meet their expenses of higher
education, or vocational education, and to that end the Corporation is empowered
by said Article to lend money and/or to guarantee the loan of money to students
and their parents upon such terms and conditions as the Corporation may
prescribe, and
WHEREAS, the Corporation has executed an agreement with the U.S. Department
of Education to guarantee educational loans, pursuant to part B of subchapter IV
of chapter 28 of Title 20 of the United States Code, and
WHEREAS, the Corporation desires that the Lending Institution shall make
such loans, at the Lending Institution's option in each instance, the
Corporation to guarantee the payment thereof upon the terms, conditions and
agreements herein contained.
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
it is agreed as follows:
A. The Lending Institution agrees, at its option in each instance, to make
educational loans to persons determined to be eligible by the Corporation, using
the forms, procedures and methods from time to time established by the
Corporation and/or the United States Department of Education. The loan thus made
shall thereupon be under the guaranty of the Corporation as hereinafter set
forth. If the Corporation disapproves any application, it will so notify the
Lending Institution and the applicant. While any applicant is indebted to the
Lending Institution on account of any loan made hereunder, the Corporation will
approve no other application from that applicant if the loan is to be made by
any other Lending Institution unless the prior Lending Institution consents to
sell to the new lender the principal amount and interest then outstanding and
owing or the student requests a change in lender in accord with NYSHESC rules &
procedures, including due to the Lender of the Last Resort Program. The
educational institution will be asked to notify the Corporation promptly if the
student ceases for any reason to be enrolled, or never enrolls, in that
institution, such notice specifying the reason for such cessation, and this
information will be promptly transmitted to the Lending Institution.
B. The Lending Institution agrees to repurchase from the Corporation any
loans which the Corporation or the U.S. Department of Education determines were
improperly defaulted.
C. The Lending Institution must pay an insurance premium to the Corporation
for each Corporation guaranteed loan disbursed, based upon the rate found in the
Corporation's regulations. However, if the Corporation determines that the
Lending Institution owes payments or money to the Corporation, the Corporation
may utilize a set-off against any funds which the Corporation owes to the
Lending Institution.
D. The Lending Institution agrees to use "due diligence" in making,
servicing and collecting loans made hereunder, as that term may from time to
time be defined or established by applicable laws, rules and regulations.
E. To the extent allowable under federal law, the Corporation hereby
GUARANTEES to the Lending Institution, its successors and assigns, the prompt
payment of the principal of each such note and interest thereon specified when
due, together with each and every promissory note taken by the Lending
Institution, either in whole or in part, in renewal or extension of the payment
of each such note. The Corporation's guarantee shall extend to any loan made by
the Lending Institution hereunder and to any such loan transferred or assigned
by the Lending Institution to any lender which is authorized to participate in
the guaranteed educational loan programs administered by the Corporation. It
shall also apply to any loan guaranteed by the Corporation which is transferred
or assigned to the Lending Institution by any such authorized participating
lender. The Corporation's guarantee shall be subject, however, to any defenses
the Corporation may have or may assert against the holder, transferor or
assignor, and nothing herein contained shall be deemed to waive or release any
defense to the guarantee.
F. The Lending Institution agrees: that this agreement, any loans made
pursuant to this agreement and the guarantee of the Corporation, are all subject
to all applicable federal and New York State laws, rules, regulations and
policies governing the guaranteed educational loan programs administered by the
Corporation; to comply with all such laws, rules, regulations and policies; to
submit to the Corporation such information and reports, including but not
limited to the manifest, and to carry out such procedures as the Corporation may
from time to time require or as are set forth in applicable law, rules,
regulations and policies. The Lending Institution will endeavor to notify the
Corporation promptly following payment and discharge of each given student's
indebtedness relative hereto.
G. The Lending Institution agrees to reimburse the Corporation for any
additional expenses, including travel and lodging expenses, incurred by the
Corporation in performing an audit of the Lending Institution which results from
the Lending Institution's location outside of the State of New York.
H. This agreement may be terminated by either party giving thirty (30)
days' notice in writing to the other party by registered mail, but no such
termination shall affect the liability of the Corporation or the Lending
Institution hereunder with respect to loans made by the Lending Institution
prior to the effective date of such termination. This agreement shall terminate
upon repeal of the regulations of the Corporation authorizing this agreement or
upon any other change in law which shall have the effect of removing the
authority of the Corporation to enter into the same.
I. This agreement shall apply to any and all NYSHESC guaranteed loans first
disbursed hereunder on or after October 1, 1993. Any loans first disbursed prior
to October 1, 1993 and guaranteed by NYSHESC pursuant to a previous agreement
between NYSHESC and the Lending Institution shall continue to carry the
guarantee of the Corporation, subject to the terms of all applicable federal and
New York State laws, rules, regulations and policies governing the guaranteed
educational loan programs administered by the Corporation which were in effect
at the time those prior loans were disbursed, and subject to the provisions of
such prior agreements.
IN WITNESS whereof, the parties have caused this instrument to be executed
by their respective duly authorized officers.
NEW YORK STATE HIGHER EDUCATION SERVICES CORPORATION
THE FIRST NATIONAL BANK OF
CHICAGO, NOT IN ITS INDIVIDUAL
CAPACITY BUT SOLELY AS ELIGIBLE
LENDER TRUSTEE ON BEHALF OF
FIRST UNION STUDENT LOAN
TRUST 1997-1
(Name of Lending Institution)
By: ______________________________________
(signature)
Name:
Title: ____________________
AGREEMENT TO GUARANTEE LOANS
THIS AGREEMENT is entered into as of the __ day of July, 1997, by and between
UNITED STUDENT AID FUNDS, INC., a private, nonprofit corporation organized under
the General Corporation Law of the State of Delaware ("USA Funds") and The First
National Bank of Chicago, not in its individual capacity but solely as Eligible
Lender Trustee on behalf of the First Union Student Loan Trust 1997-1 pursuant
to the Trust Agreement dated as of July __, 1997, between First Union National
Bank and the Eligible Lender Trustee, as the same may be amended ("Lender").
WITNESSETH:
WHEREAS, USA Funds, a nonprofit corporation with objectives and purposes which
are exclusively educational and charitable, has entered into agreements with the
U.S. Secretary of Education pursuant to the Act; and
WHEREAS, the Lender is desirous of lending money to encourage education through
the Loan Program of USA Funds in the manner described in this Agreement; and
WHEREAS, the Lender has full legal power and authority to contract for the
performance of such guarantee services, qualifies as an "eligible lender" under
the Act and is prepared to engage in the transactions contemplated by this
Agreement; and
WHEREAS, USA Funds is desirous of making its Loan Program and related services
available to the Lender, subject to the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the initial loan which the Lender makes,
causes to be made or acquires, and in further consideration of the foregoing
premises and the mutual covenants contained in this Agreement, and of other good
and valuable consideration, the receipt of which is hereby acknowledged, USA
Funds and the Lender agree as follows:
ARTICLE I DEFINITIONS
As used herein, the following words have the meanings respectively indicated:
"Act" means Title IV of the Higher Education Act of 1965 120 U.S.C. paragraph
1071 et seq.) as amended and in effect from time to time, or any successor
enactment thereto, and the effective regulations promulgated thereunder and any
binding directives issued by the U.S. Department of Education.
"Agreement" means this Agreement to Guarantee Loans between USA Funds and the
Lender.
"Borrower" means an individual who is the maker of a Note and who obtains a Loan
from the Lender in accordance with the Act and the Loan Program.
"Default" means with respect to any Note, the occurrence of any event that
constitutes a default under the terms of the Act.
"Educational Institution" means any institution of postsecondary education that
is an "eligible institution" under the Act and is eligible under the Loan
Program.
"Federal Reinsurance" means the obligation assumed by the Federal government as
set forth in the Act and contracts between USA Funds and the U.S. Department of
Education.
"Guarantee" means a commitment by USA Funds to pay the Lender a percentage of
the unpaid principal balance plus accrued unpaid interest of a Loan upon
submission by the Lender of a valid claim and supporting documentation in
accordance with the Act, the Loan Program, and the Policies.
"Guarantee Fee" means a charge based upon the principal Loan amount, which
charge is collected from the Lender by USA Funds. The Lender may cause this
charge to be passed on to the Borrower.
"Guarantee Reserve" means an account maintained by USA Funds for the Guarantee
of Loans and payment of claims in accordance with the terms of this Agreement.
"Limitation" means an action taken by USA Funds that restricts the Lender's
participation in the Loan Program.
"Loan" means a disbursement(s) of money, contingent upon an agreement to repay,
made by the Lender pursuant to the Act, the Loan Program, and the Policies.
"Loan Application" means the application for a Loan on a form approved by the
U.S. Department of Education and USA Funds, which form must be executed by an
applicant, certified by an Educational Institution, and accepted by a Lender in
accordance with the Policies.
"Loan Program" means the procedures and policies for implementing and
maintaining a Loan Guarantee under the provisions of the Act, Policies,
applicable law, and regulations, and as otherwise agreed to by and between the
Lender and USA Funds.
"Note" means a promissory note of a Borrower for a Loan set forth upon the
appropriate form approved by USA Funds, which note meets the criteria set forth
by the Policies and the Act.
"Policies" means the policies adopted and issued by USA Funds describing the
administration of the Loan Program, including any subsequently issued written
notices.
"Special Allowance" means those sums which are payable by the U.S. Department of
Education to the Lender under the Act.
"Student" means an "eligible student" as described in the Act.
"Suspension" means the temporary ineligibility of the Lender from participation
in the Loan Program.
"Termination" means the removal of the Lender from participation in the Loan
Program.
ARTICLE II PROGRAM ADMINISTRATION
A. By this Agreement USA Funds and the Lender hereby agree to participate in the
Loan Program as follows:
1. The Lender agrees to make Loans or cause Loans to be made to eligible
Borrowers pursuant to the terms of the Loan Program;
2. USA Funds agrees to Guarantee Loans originated and maintained in accordance
with the terms of the Loan Program; and
3. USA Funds agrees to provide certain administrative services in connection
with each Loan Guarantee as required by the Loan Program and the Act.
B. Loans may be originated only on behalf of Students attending Educational
Institutions.
C. Administrative services that USA Funds shall provide for the Lender under the
Loan Program in accordance with this Agreement and the Policies are as follows:
1. Processing Loan Applications to determine if such Loan Applications are
eligible for Guarantee;
2. Recording Borrower status from time to time as reported by the Lender and
Educational Institutions;
3. Providing certain management and information reports for the Lender and
Educational Institutions; and
4. Providing preclaims assistance and claims processing for delinquent and
defaulted Loans.
D. The Lender agrees that, in respect of all Loans made or acquired by it under
the Loan Program of USA Funds and all Notes held or acquired by the Lender from
time to time, it will:
1. Comply with the Act;
2. Cause reasonable care and diligence to be exercised in the making, servicing
and collection of Loans, as prescribed in the Policies;
3. Use the Loan Application, Note and such other forms developed or otherwise
approved by USA Funds;
4. Cause a Guarantee Fee to be paid to USA Funds in accordance with the
requirements of the Loan Program and Article IV of this Agreement;
5. Comply with all procedures, policies and conditions on its part to be
performed as set forth in this Agreement and the Policies, except when the
provisions of the Agreement or the Policies are inconsistent with the Act as a
result of changes to the Act, in which case the Act is controlling;
6. Comply with all Federal and state laws and regulations applicable to the Loan
Program, including but not limited to applicable portions of the Federal
Consumer Credit Protection Act and the Equal Credit Opportunity Act; and
7. Provide promptly to USA Funds such information and reports as may from time
to time be reasonably requested by USA Funds.
E. The Lender shall cause all Loan disbursements to be made by check or draft
requiring the personal endorsement of the Borrower or by electronic funds
transfer. Except as expressly provided in the Act, the Lender will not accept
authorization of anyone, even by power of attorney, to endorse a check or draft
on behalf of the Borrower. The Lender shall cause the Loan to be disbursed
jointly to the Borrower and the Educational Institution if so required by the
terms of the Loan Program.
F. USA Funds will in accordance with the Act continue its Guarantee of a Loan if
an extension of the maturity date is required as a result of the Borrower's
eligibility under the Act for a deferment or forbearance; provided, however,
that such continuance of USA Funds' Guarantee of a Loan shall be only for so
long as an extension of the maturity date is in accordance with the Act and the
Loan Program.
G. The Lender will pursuant to the direction of USA Funds repay or cause the
repayment of any Special Allowance received by the Lender under the Act to which
the Lender is not rightfully entitled.
H. Subject to the prior written approval of the Lender, which approval shall not
be unreasonably withheld, USA Funds may transfer the Guarantee of Loans to any
other guarantor which has given to USA Funds its prior written approval of such
transfer.
I. By this Agreement USA Funds and the Lender agree that upon the filing of a
claim by the Lender, such claim will be processed in the following manner:
1. In the event of a Default in respect of a Loan, the Lender will follow (or
cause to be followed) the procedure set forth in the Policies. USA Funds does
not guarantee payment by the Borrower of any delinquency charges imposed for
late payments and will not accept a Default claim based solely on non-payment of
such changes. Upon receipt by USA Funds from the Lender (or servicer) of a
Default notice together with the Note (assigned to USA Funds, the Loan
Application, and evidences satisfactory to USA Funds that the Loan evidenced by
such Note was originated and serviced, and collection efforts were made, in
accordance with applicable laws and regulations and with the Policies, USA Funds
will pay to the Lender the amount of the unpaid balance of principal and
interest due on such Note under the terms of the Act and the Policies (other
than any portion of such interest payable by the U.S. Department of Education
under the Act), provided the Lender has complied in all material respects with
the requirements of the Loan Program, this Agreement, and the Policies in
respect of such Note. USA Funds will thereupon succeed to all the rights of the
Lender under such Note. No claim submitted to USA Funds by the Lender with
respect to a Loan that has been Guaranteed will be paid by USA Funds unless USA
Funds has received from the lender (or servicer) the appropriate documentation.
2. Upon bankruptcy, death, or permanent and total disability, as defined in the
Act, of the Borrower USA Funds will pay to the Lender the amount of the unpaid
balance of principal and interest due on such Loan under the terms of the Act
and the Policies (other than any portion of such interest payable by the U.S.
Department of Education under the Act), provided the Lender has complied in all
material respects with the requirements of the Loan Program, this Agreement and
the Policies in respect of such Loan.
J. Nothing contained in this Agreement shall obligate the Lender to make,
certify, cause to certify or acquire any particular Loan or number of Loans
under the Loan Program.
K. The Lender will permit the U.S. Secretary of Education or USA Funds or both
to examine during normal business hours all Loan records and files, upon
reasonable notice and at reasonable intervals, for the purpose of verifying the
accuracy of information provided by the Lender under the Act and in order to
conduct an audit and compliance review.
L. If USA Funds determines that the Lender has violated the terms of this
Agreement or the Loan Program, USA Funds shall take such action as is necessary
to protect its interests. This action may include but not be limited to
implementation of the Limitation, Suspension, or Termination procedures set out
in the Policies.
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS BY THE LENDER
The Lender represents and warrants to, and covenants with, USA Funds that:
A. The Lender is a duly authorized "eligible lender" under the Act in every
state in which it is originating Loans under the Act as well as the state in
which it is organized and incorporated and has authorized the execution and
delivery of this Agreement.
B. The Lender is and will continue to qualify at all times during the term of
this Agreement as an "eligible lender" under the Act.
C. The Lender will, at all times, conform its actions, policies and procedures
to the Act, this Agreement and all applicable Federal and state laws and
regulations.
ARTICLE IV GUARANTEE FEE AND GUARANTEE RESERVE
A. As partial payment for the administrative services provided by USA Funds for
the Lender and in order for USA Funds to maintain a Guarantee Reserve sufficient
to Guarantee Loans in accordance with this Agreement USA Funds will charge to
the Lender and the Lender may charge each Borrower a Guarantee Fee which fee
shall not exceed the amount allowable under the Loan Program.
B. The Lender shall be billed monthly by USA Funds with an itemized statement
listing each Loan Application Guaranteed and the Guarantee Fee, USA Funds will
automatically place the Lender on the Guarantee Fee billing system. The Lender
must pay any Guarantee Fee due within thirty (30) days of billing. The Lender
will be charged interest at the rate of one percent (1%) per month, twelve
percent (12%) per annum, for past due Guarantee Fee bills. If the Guarantee Fee
for a Loan is not paid within one hundred twenty (120) calendar days the
Guarantee on that Loan will be canceled.
C. So long as the Lender is current in its payment of Guarantee Fee billings,
USA Funds will Guarantee such new Loan made so a Borrower by the Lender pursuant
to this Agreement; provided, however, that USA Funds shall not be obligated to
Guarantee any such Loan if:
1. Such Guarantee would cause the aggregate amount of unpaid principal and
interest of all Notes to exceed the Guarantee capacity of USA Funds for the Loan
Program or the Educational Institution allocation for which the Guarantee is to
be issued, or
2. USA Funds in its sole discretion determines that the procedures and
requirements of the Act and other applicable law and regulations, this
Agreement, or the Policies have not been complied with in respect to such Loan.
D. The Guarantee Reserve of USA Funds will be held, maintained, and invested
solely in accordance with the prevailing standards of prudent management in the
disposition of funds required of fiduciaries by Title 12, Section 3502 of the
Delaware Code of 1993, as amended. By execution hereof, Lender consents to the
management of said funds pursuant to the investment policies and procedures
adopted by USA Funds from time to time.
ARTICLE V TERMINATION
Except with respect to Loans that have been Guaranteed by USA Funds and continue
to be outstanding under this Agreement, this Agreement may be terminated by
either party with or without cause upon not less than ninety (90) calendar days'
written notice to the other party. Such termination will not affect any Notes
that are outstanding or duties arising prior to the effective date of the
termination.
ARTICLE VI LIMITATION OF LIABILITY AND INDEMNIFICATION
A. If the Lender violates or fails to comply with any applicable law or
governmental regulations in respect of a Loan or participation in the Loan
Program, then the Lender agrees to assume liability for, and does hereby
indemnify, protect, and keep harmless USA Funds, its successors and assigns,
from the against, any and all liabilities, losses, and claims, imposed on,
incurred by, or asserted against USA Funds, relating to or arising out of such
violation or failure by the Lender to comply, regardless of whether USA Funds
purchased such Loan from the Lender.
B. The liability of USA Funds under this Agreement shall be limited to payment
of the Guarantee under Paragraph 1 of Article II of this Agreement and this
shall constitute its sole liability under this Agreement. USA Funds shall not be
liable for any indirect, incidental or consequential damages (including but not
limited to lost profits, lost revenues, or failure to realize expected savings)
regardless of the form of this action and whether such damages are foreseeable.
ARTICLE VII MISCELLANEOUS
A. Assignment/Subcontract. This Agreement will inure to the benefit of and be
binding upon the parties and their respective successors and permitted assigns;
provided, however, that:
1. This Agreement may not be assigned in whole or in part by USA Funds without
the prior express written consent of Lender, which consent will not be
unreasonably withheld; provided, however, that USA Funds shall have the right
without the consent of Lender to assign its rights and obligations hereunder to
any affiliate or any transferee of all or substantially all of the assets of USA
Funds, which contracts with the U.S. Department of Education (or its successors)
under the Act, or to subcontract its obligations to any person.
2. Lender shall not assign any rights or obligations under this Agreement in
whole or in part without the prior express written consent of USA Funds, which
consent will not be unreasonably withheld; provided, however, that Lender shall
have the right without the consent of USA Funds to assign its rights and
obligations hereunder to any affiliate or any transferee of all or substantially
all of the assets of Lender, or to subcontract its obligations to any person.
B. Amendment. Except as otherwise provided in this Agreement, this Agreement may
not be varied by oral agreement, but only as agreed to in writing by all
parties.
C. Waiver of Rights. No failure by any party to exercise, or any delay in
exercising, and no course of dealing with respect to any right of such party or
any obligation of any other party under this Agreement will operate as a waiver,
unless, and only to the extent, agreed to in writing by all parties. Any single
or partial exercise by any party of its rights shall not preclude such party
from any other or further exercise of such right or the exercise of any other
right. Any single or partial waiver by any party of any obligation of any other
party under this Agreement will constitute a waiver of such obligation only as
specified in such waiver and will not constitute a waiver of any other
obligation.
D. Cumulative Remedies. Except as otherwise provided in this Agreement, no
remedy by the terms of this Agreement conferred upon or reserved to a party 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 or by statute on or after the date of
this Agreement including, without limitation, the right to such equitable relief
by way of injunction to prevent the breach or threatened breach of any of the
provisions of this Agreement or to enforce the performance.
E. Severability. Any provision of this Agreement that is held to be prohibited,
unenforceable, or not authorized by any court of competent jurisdiction will, as
to such jurisdiction, be ineffective to the extent of such prohibition,
unenforceability, or non-authorization without invalidating the remaining
provisions or affecting the validity, enforceability, or legality of such
provision in any other jurisdiction.
F. Governing Laws; Venue; Entire Agreement. Except to the extent that this
Agreement may be governed by Federal law, this Agreement is governed by,
interpreted, construed and enforced in accordance wit the laws of the State of
Indiana, without reference to its principles of conflict of laws. A lawsuit
under this Agreement shall only be brought in a court of competent jurisdiction
located within the State of Indiana.
This Agreement constitutes the entire agreement between the parties and
supersedes any and all prior agreements, written or oral, not incorporated
herein, with respect to the subject matter of this Agreement. All prior
writings, correspondences, memoranda, agreements, representations, statements,
warranties, covenants, negotiations, and undertakings, express or implied, of
any kind or character whatsoever with respect to the subject matter of this
Agreement are superseded.
G. Notice. Any notices required or permitted by this Agreement shall be in
writing and shall be deemed to have been given if sent by first class mail,
overnight carrier, facsimile, or personal delivery, addressed (i) if to USA
Funds, to the attention of General Counsel, Legal Division, at 00 Xxxxx Xxxxxxxx
Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000, (ii) if to the Lender, at the address
indicated in this Agreement, or (iii) at such other address as the party to be
notified has designated upon reasonable notice. Notices made pursuant to this
paragraph by facsimile, overnight carrier, or personal delivery will be deemed
to be effective upon receipt. Notice made pursuant to this paragraph by first
class mail will be deemed to be effective no later than the fifth business day
following the mailing of such notice.
H. Confidential/Proprietary Materials. The terms and conditions of this
Agreement shall be considered confidential. All materials, procedures, written
instruments, files, and records developed by either party specifically pursuant
to this Agreement are and shall be treated as proprietary in nature. Each party
to the Agreement has developed or may develop materials, procedures, written
instruments, files, or records which may be similar to those involved in this
Agreement. Neither party to this Agreement shall have or acquire any proprietary
or any other right whatsoever in any such materials, procedures, written
instruments, files, or records developed by the other party. Neither party to
this agreement may benefit from, deal in, sell, license, publish, use, or
otherwise exploit for any purpose those materials, procedures, written
instruments, files, or records developed by the other party except as expressly
provided in this Agreement. This Agreement shall not in any way restrict the
right of each party, for its own exclusive benefit to deal in, sell, license,
publish, use, or otherwise exploit for all purposes those materials, procedures,
written instruments, files, or records developed by it.
I. No Recourse. No recourse under or upon this Agreement or any claim based
thereon shall be had against any incorporator, member, officer, employee, or
trustee, as such, past, present, or future, of a party or of any successor
organizations, either directly or through a party or any successor
organizations. This Agreement is solely a corporate obligation and no personal
liability against any incorporator, member, officer, employee, or trustee, past,
present, or future of the parties shall attach through a party or any successor
corporations, because of this Agreement.
J. Execution. This Agreement will not be binding on either party until it has
been executed and delivered by both parties. Delivery may be by facsimile. This
Agreement may be executed in any member of counterparts, each of which shall be
an original, but which together constitute one and the same instrument.
K. Interpretation/Construction. In this Agreement unless the contract otherwise
requires:
Any headings preceding the texts of the several articles and sections of this
Agreement, and any table of contents or marginal notes appending to copies,
shall be solely for convenience of reference and shall not constitute a part of
this Agreement, nor shall they affect the meaning, construction or effect.
The parties agree that each party and its counsel reviewed this Agreement and
that this Agreement shall be construed as a whole according to its fair meaning
and not strictly for or against a party.
L. Authority. The parties represent that the undersigned are duly authorized
representatives of the parties.
M. Independent Parties. The parties agree that no legal relationship of any kind
exists as a result of this Agreement, other than the covenants expressly
contained herein. This Agreement shall not constitute, create, give effect to or
otherwise imply a joint venture, partnership or business organization of any
kind. The parties to this Agreement are independent parties and the personnel of
one party shall not be deemed the personnel of the other. Nothing in this
Agreement shall grant to either party any right to make commitments of any kind
or to create any obligation for or on behalf of the other without the prior
written consent of the other party, except to the extent stated herein.
N. Force Majeure. If a party is delayed from completing performance of any or
all of the obligations under this Agreement by an act of God or any other
occurrence beyond its reasonable control, then performance shall be excused for
as long as it is reasonably necessary to complete performance.
O. Litigation Costs and Attorney Fees. If any action, at law or equity,
including an action for declaratory relief, is brought to enforce or interpret
this Agreement, then the prevailing party shall be entitled to recover its
reasonable costs, expenses, and attorney fees from the other party, in addition
to any other relief that may be awarded.
IN WITNESS WHEREOF, United Student Aid Funds, Inc. and the Lender have each
caused this Agreement to Guarantee Loans to be executed by their respective
authorized officers and to take effect on the date first above written.
THE FIRST NATIONAL BANK OF CHICAGO, NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS
ELIGIBLE LENDER TRUSTEE ON BEHALF OF FIRST UNION STUDENT LOAN TRUST 1997-1
Lender
By:
Authorized Signature
Printed Names, Title
Address
City, State, Zip
00-0000000
Federal Identification Number
833220
ED Lender Code Number
UNITED STUDENT AID FUNDS, INC.
By:
Authorized Signature
Printed Name, Title
