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EXHIBIT 4.12
AGREEMENT TO GUARANTEE LOANS
Agreement Between
Michigan Higher Education Assistance Authority
Michigan Guaranty Agency
AND
The First National Bank of Chicago
as Trustee for the PNC Student Loan Trusts
Chicago, IL
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(Lender Name and City)
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THIS AGREEMENT dated this __________ day of __________________, 19__,
between the Michigan Higher Education Assistance Authority, an autonomous agency
of the Michigan Department of Treasury, with its component unit, the Michigan
Guaranty Agency, both located at 000 Xxxx Xxxxxxx, Xxxxxxx, Xxxxxxxx 00000
(collectively, the "Authority");
and
The First National Bank of Chicago
as Trustee for the PNC Student Loan Trusts
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Financial Institution
One First National Plaza Ste. 0126
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Address
Xxxxxxx, XX 00000
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City, State, Zip (the "Lender")
833364
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Lender Code Number
00-0000000
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EIN (Federal Tax/Employer ID #)
RECITALS
1. One of the purposes of the Authority is to assist persons in
meeting their expenses of post-secondary education or to assist a parent of a
dependent person who meets the requirements for a loan, by guaranteeing in
accordance with Title IV Part B of the Higher Education Act of 1965, as
amended, and any regulations promulgated pursuant thereto (the "Higher
Education Act"), the principal and interest of a loan pursuant to MCL 390.951
et seq; MSA 15.2097 (1) et seq. (the "Act").
2. The Authority is desirous of stimulating the lending of money to
assist students in obtaining a post-secondary school education.
3. The Lender is desirous of participating in the program of the
Authority that establishes the policies and procedures for implementing and
maintaining a loan guaranty under the provisions of the Act and applicable
federal law and regulations (the "Guaranty Loan Program") and, as a result,
obtain a guaranty from the Authority for each qualified loan made under the
Higher Education Act (the "Student Loans").
THEREFORE, in consideration of the Student Loans the Lender makes or
holds under the terms of the Guaranty Loan Program and the guaranty of the
Student Loans provided by the Authority, and in further consideration of the
mutual covenants provided herein, the parties agree as follows:
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AGREEMENT
1. Guaranty of Student Loans
The Authority agrees to issue a guaranty in accordance with the
Higher Education Act for principal and interest of all promissory notes
evidencing loans to be made or acquired under the Guaranty Loan Program by the
Lender, provided that the guaranty would not cause the aggregate amount of the
unpaid principal of all notes guaranteed by the Authority under the Guaranty
Loan Program to exceed the maximum dollar amount which may be supported by its
guaranty reserve, as required by paragraph 4 of this Agreement.
Nothing contained in this Agreement shall obligate the Lender
to make or acquire any particular loan or number of loans under the Guaranty
Loan Program.
2. Lender Representations and Warranties
A. The Lender agrees that it will accelerate or extend the
maturity of each note evidencing a loan made by it in accordance with the terms
of such note, this Agreement, and the Guaranty Loan Program.
B. The Lender will pay any required guaranty fee authorized by
the Act or the regulations promulgated under the Act, as determined by the
Authority or the applicable federal agency, of each Student Loan issued under
the Guaranty Loan Program.
C. The Lender will exercise reasonable care and diligence in
the making or acquiring, servicing and collection of Student Loans.
D. The Lender will not only comply with all provisions of the
Agreement but also with the Loan Procedures Manual issued by the Authority and
incorporated herein by reference.
E. The Lender shall make its books, records, and other written
materials with respect to each Student Loan guaranteed under this Agreement
available for inspection by the Authority, including but not limited to, all
loan applications, payment history, promissory notes, evidence of guaranty,
evidence of timely disbursement, Disclosure Statements, and any other loan
documents available for inspection by the Authority and shall cooperate with
any reasonable monitoring, audit, or investigation related to the Agreement.
F. The Lender will comply with all applicable federal and
state laws and regulations, including, but not limited to, the "due diligence"
requirements or other requirements of any of those laws and regulations
pertaining to the origination, disbursement, servicing, accounting, reporting
and collecting of each Student Loan.
G. The Lender shall not alter the terms of any promissory note
guaranteed under this Agreement, except as otherwise provided in paragraph 2(A)
of this
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Agreement and the Guaranty Loan Program.
H. The Lender is an eligible lender as that term is defined in
the Higher Education Act.
I. Each Student Loan which is to be guaranteed is an "Eligible
Loan" incurred by an "Eligible Student" for attendance at an "Eligible
Institution" as those terms are defined in the Higher Education Act.
J. The Lender does not discriminate on the basis of race,
creed, sex, color or national origin, or against any particular class or
category of borrowers by requiring that, as a condition for receipt of a loan,
the student or his or her family maintain a business relationship with the
Lender.
K. This Agreement constitutes a valid and binding obligation
of the Lender enforceable in accordance with its terms.
3. Guaranty
A. In the event of a default of payment with respect to any
promissory note guaranteed under this Agreement, and upon the Authority's
receipt from the Lender of a notice of default and request for reimbursement,
the Authority will promptly pay to the Lender the percentage required by the
Higher Education Act of the unpaid balance of principal and interest due
thereon.
B. In the event that a borrower on a note guaranteed under
this Agreement shall file a petition in bankruptcy or have a petition filed
against him or her, or the borrower shall die or become totally and permanently
disabled, the Authority will promptly pay to the Lender the percentage required
by the Higher Education Act of the unpaid balance of principal and interest due
thereon.
C. The Lender shall make diligent collection efforts (as
required by the Higher Education Act) before demanding payment by the Authority.
D. The Authority agrees that it will comply with all
applicable federal and state laws and regulations, and the Authority's rules
and regulations, in performing its obligations under this Agreement.
E. This Agreement constitutes a valid and binding obligation
of the Authority enforceable in accordance with its terms.
4. Reserve Requirements
The Authority will hold and maintain as a capital reserve cash
or marketable securities at an amount no less than two percent (2%) of the
aggregate amount of unpaid principal of all notes guaranteed under the
Authority's Guaranty Loan Program, as long as the Lender is the holder of any
note evidencing a loan made under the Guaranty Loan Program.
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5. Remedies
A. The Lender and the Authority agree that if either shall
violate or fail to comply with any of the terms of this Agreement, the other
party may recover all damages for the violation or failure to comply sustained
by the non-breaching party.
B. In addition to the remedies set forth in paragraph 5(A),
the parties shall have all remedies available at law or in equity including,
but not limited to, immediate termination of this Agreement, equitable relief
by way of injunction (mandatory or prohibitory), prevention of the breach or
threatened breach of any provisions of this Agreement, or enforcement of
performance thereof. All of the remedies provided by paragraph 5 shall be
cumulative, and the exercise by the parties of any one or more of them shall
not in any way alter or diminish the rights of the parties to any other remedy
provided by this or other agreements or by law. In the event of any default or
breach of this Agreement, the non-breaching party shall be entitled to
reimbursement of all the costs for enforcing any of such terms, including any
reasonable or necessary attorney's fees.
6. Termination
This Agreement may be terminated by either party upon not less
than sixty (60) days written notice to the other party; provided, however, that
any termination of this Agreement shall comply with the Higher Education Act.
Obligations incurred under this Agreement shall not be affected by such
termination prior to its effective date.
7. Compliance with Federal Regulations
If the Lender fails to comply with the Act and is limited,
suspended or terminated by the Secretary of the U.S. Department of Education
from participating as an Eligible Lender under the Higher Education Act, then
this Agreement and the Lender's participation with the Authority under the
Guaranty Loan Program will likewise be immediately limited, suspended, or
terminated. The sixty (60) day written termination notice is not applicable
under this provision.
8. Loans to Minors
The parties agree that any person otherwise qualifying for a
loan shall not be disqualified to receive a loan guaranteed by the Authority by
reason of his or her being a minor. For the purpose of applying for, receiving
and repaying a loan, any minor shall be deemed to have full legal capacity to
act and shall have all the rights, powers, privileges and obligations of a
person of full age with respect thereto, pursuant to Section 8 of the Act.
9. Not a State Obligation
Obligations incurred under this Agreement by the Authority are
not obligations of the State of Michigan.
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10. Unenforceable Provisions
Any provision of this Agreement which is prohibited,
unenforceable or not authorized in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition,
unenforceability or non-authorization without invalidating the remaining
provisions hereof or effecting the validity, enforceability or legality of such
provisions in any other jurisdiction.
11. Notices
Any notices required or authorized by this Agreement shall be
sent by regular mail to the following address:
IF TO LENDER: The First National Bank of Chicago
as Trustee for the PNC Student Loan Trusts
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One First National Plaza Ste. 0126
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Xxxxxxx, XX 00000
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IF TO AUTHORITY: Michigan Higher Education Assistance
Authority
X.X. Xxx 00000
Xxxxxxx XX 00000
12. Amendment to Agreement
This Agreement can only be amended by a formal amendment made
in writing and executed by the parties hereto.
13. Governing Law
The Agreement shall be governed by and interpreted in
accordance with the laws of the State of Michigan.
14. No Personal Liability
No officer or employee of the Authority or the State of
Michigan, including any person executing the Agreement, shall be liable
personally under the Agreement or subject to any personal liability for any
reason relating to the execution of the Agreement. Likewise, no officer or
employee of the Lender, including any person executing the Agreement, shall be
liable personally under the Agreement or subject to any personal liability for
any reason relating to the execution of the Agreement.
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15. Indemnification
If the Lender shall violate or fail to comply with any
applicable law or governmental regulation with respect to a Student Loan or
participation in the Guaranty Loan Program, then the Lender shall indemnify and
hold the Authority, including any member, officer or employee, harmless against
any and all claims asserted, including any liability, cost or expense,
including reasonable counsel fees, incurred in any action or proceeding brought
by reason of any claim arising or resulting from, or in any way connected with,
this Agreement, except if the claim results from the willful misconduct or sole
negligence of the Authority.
The parties have executed the Agreement by their duly authorized
officers as of March 21, 1997.
FOR THE LENDER
By /s/ Xxxxxxx X. Xxxxxx
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Its Assistant Vice President
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Title
FOR THE MICHIGAN HIGHER EDUCATION
ASSISTANCE AUTHORITY
By /s/ H. Xxxx Xxxxxx
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Its Executive Director
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Title
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