EXHIBIT 99.2
MASTER LOAN SALE AGREEMENT
(PHEAA Student Loan Foundation, Inc. to PHEAA Student Loan Trust I)
This Master Loan Sale Agreement (this "Agreement") is made and
entered into as of ___________, 2003, by and among PHEAA Student Loan Trust I, a
Delaware statutory trust (the "Purchaser") acting by and through Manufacturers
and Traders Trust Company (or any additional or successor entity appointed by
Purchaser), not individually but solely in its capacity as eligible lender
trustee (the "Eligible Lender Trustee") and PHEAA Student Loan Foundation, Inc.,
a Pennsylvania nonprofit corporation (the "Seller") acting by and through
Manufacturers and Traders Trust Company, not individually but solely as eligible
lender trustee (the "Seller Trustee").
WITNESSETH
WHEREAS, the Purchaser, by and through the Eligible Lender
Trustee, desires to purchase and acquire from the Seller, by and through the
Seller Trustee, 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, by and through the Seller Trustee, 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.
WHEREAS, the Seller is the settlor and sole beneficiary of the
Purchaser.
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 Loan Sale 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 Issuer Eligible
Lender Trust Agreement, dated ______________, 2003, between the Eligible Lender
Trustee and the Purchaser.
"Eligible Lender Trustee" means Manufacturers and Traders
Trust Company (or any additional or successor entity appointed by Purchaser),
not individually but solely in its capacity as eligible lender trustee on behalf
of the Purchaser.
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"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 Xxxxxxxx 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 Xxxxxxxx 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.
"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 Trustee on
behalf of 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, or any successors and assignees thereof, pursuant to which such
agency, institution or organization guarantees or insures student loans, and
which has entered into a Guarantee Agreement with the Eligible Lender Trustee on
behalf of the Purchaser.
"Guarantee Agreement" means the Federal Contracts, an
agreement between a Guarantee Agency and either the Eligible Lender Trustee or
the Seller Trustee 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 Trustee from time to time,
and any other similar guarantee issued or agreement made by a Guarantee Agency
to the Purchaser or the Eligible Lender Trustee pertaining to Eligible Loans.
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"Guaranteed" means, with respect to an FFELP Loan, that such
loan is covered by a Guarantee.
"Higher Education Act" shall mean 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 Trustee, on behalf of 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 Seller Trustee, the
Purchaser and the Eligible Lender Trustee.
"Loan Transfer Schedule" means a written schedule in the form
attached to the Loan Transfer Addendum.
"Master Loan Sale Agreement" means the Master Loan Sale and
Contribution Agreement by and among PHEAA Student Foundation, Inc., acting by
and through Manufacturers and Traders Trust Company, not individually but solely
as eligible lender trustee and The Pennsylvania Higher Education Assistance
Agency including all exhibits and schedules attached hereto, and any addenda,
supplements or amendments hereto.
"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" PHEAA Student Loan Trust I.
"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 PHEAA Student Loan Foundation, Inc.
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"Seller Trustee" means Manufacturers and Traders Trust
Company, not individually but solely in its capacity as eligible lender trustee
acting on behalf of the Seller (the "Seller Trustee").
"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, as amended from time
to time.
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, acting by and through the Seller Trustee, does hereby either sell,
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 thereof, 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 Xxxx of Sale dated as of the
applicable Loan Purchase Date in the form set forth in Exhibit D hereto (each, a
"Xxxx of Sale").
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(d) It is the express intention of the parties
hereto that the conveyance from Seller Trustee on behalf of 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 Trustee 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 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.
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
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 the Pennsylvania Higher Education
Assistance Agency ("PHEAA") rebates to Seller any unamortized premium on a FFELP
Loan transferred by Seller to Purchaser hereunder (the "Repaid Loan") because
PHEAA originates a FFELP Loan that is a consolidation loan under Section 428C of
the Higher Education Act and part or all of the proceeds of such consolidation
loan are used to repay the principal and interest due on the Repaid Loan, then
Seller shall rebate to Purchaser any unamortized premium paid by PHEAA to Seller
in connection with such Repaid Loan.
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Section 3. Assignment of Master Loan Sale Agreement. The
Seller hereby assigns all of its right, title and interest in the Master Loan
Sale Agreement to the Purchaser in its individual capacity and not acting by and
through the Eligible Lender Trustee.
Section 4. Representations and Warranties of the Seller, the
Purchaser and the Eligible Lender Trustee.
(a) 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.
(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
restriction in its charter or other organizational document or subject
to any 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 the
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.
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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 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
restriction in its charter or other organizational document or subject
to any 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.
(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 restriction in its charter or other organizational
document or subject to any 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.
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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
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 4 shall
survive the transfer and assignment of the FFELP Loans to Purchaser by and
through the Eligible Lender Trustee. Upon discovery by Seller, Purchaser or the
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. Representations and Warranties of the Seller
Relating to the FFELP Loans. The Seller hereby represents to Purchaser 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 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.
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(f) Eligible Lender. The Eligible Lender
Trustee, on behalf of the 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 the
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.
(i) Origination Fees. The Seller or the lender
that originated a FFELP Loan has reported 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 a claim on such FFELP Loan is in the possession
of the applicable servicer or subservicer as the case may be.
(n) No Delinquencies over 90 Days. No FFELP Loan
has a payment that is more than 90 days overdue.
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(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.
(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 5 shall survive the related Loan Purchase Date and the
assignment of such FFELP Loan to Purchaser by and through the Eligible Lender
Trustee. Upon discovery by the Seller, the Purchaser, or the Eligible Lender
Trustee of a breach of any of the representations and warranties set forth in
this Section 5, the party discovering such breach shall give prompt notice to
the other party.
Section 6. 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 8 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.
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(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 Xxxx 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 Xxxx 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.
Section 7. 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 8. Repurchase Obligation. If:
(a) any representation or warranty made or
furnished by the Seller or the Eligible Lender Trustee pursuant to Sections 5
and 12(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;
11
(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 7(b); or
(e) the obligation that Seller purports to be a
FFELP Loan is not, in fact, a FFELP Loan;
then the Seller, acting by and through the Seller Trustee, 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 9. 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 10. 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 11. 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.
12
Section 12. 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 the Purchaser in Purchaser's individual capacity and not acting by and
through the Eligible Lender Trustee, 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 person other than the
Purchaser, 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.
(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 13. 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, Eligible Lender Trustee shall, and hereby
does, hold legal title to such FFELP Loans pursuant to the Issuer Eligible
Lender Trust Agreement. Subject to the Issuer 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 14. 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.
13
(c) This Agreement shall be governed by the laws
of the Commonwealth of Pennsylvania, without giving effect to principles of
conflicts of law.
(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.
(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 Trust I c/o
Wachovia Bank of Delaware, National Association
One Xxxxxx Square, Suite 102
000 Xxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Administration
Telephone: (302) 888 - 7528
Facsimile: (302) 888 - 7544
14
with a copy to the Eligible Lender Trustee at:
Manufacturers and Traders Trust Company
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Corporate Trust Services
Telephone: (717) 255 - 2323
Facsimile: (717) 231 - 2608
If to the Seller:
PHEAA Student Loan Foundation, Inc.
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000 - 1444
Attention: __________________
Telephone: (717) _____________
Facsimile: (717) ______________
with a copy to the Seller Trustee at:
Manufacturers and Traders Trust Company
000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Corporate Trust Services
Telephone: (717) 255 - 2323
Facsimile: (717) 231 - 2608
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.
(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.
15
(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 Eligible Lender Trust Agreement dated as of __________, 2003,
between the Purchaser 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.
(l) The parties hereto acknowledge that the
credit providers of the Purchaser, through an indenture or other financing
arrangement, shall be third party beneficiaries of this Agreement with the power
and right to enforce the provisions thereof, 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.
PHEAA STUDENT LOAN FOUNDATION, INC.,
as Seller
By:
-------------------------------------
Name:
Title:
PHEAA STUDENT LOAN TRUST I,
as Purchaser
By: WACHOVIA BANK OF DELAWARE, NATIONAL
ASSOCIATION, as Owner Trustee
By:
-------------------------------------
Name:
Title:
MANUFACTURERS AND TRADERS TRUST
COMPANY, not in its individual capacity
but solely as Seller Trustee and
Eligible Lender Trustee
By:
-------------------------------------
Name:
Title:
16
EXHIBIT A
LOAN TRANSFER ADDENDUM
This Loan Transfer Addendum (the "Addendum") is made and
entered into as of ____________, 20__, by and among PHEAA Student Loan Trust I
(the "Purchaser") acting by and through Manufacturers and Traders Trust Company,
not individually but solely as eligible lender trustee (the "Eligible Lender
Trustee"), and PHEAA Student Loan Foundation, Inc. (the "Seller") acting by and
through Manufacturers and Traders Trust Company, not individually but solely as
eligible lender trustee (the "Seller Trustee").
WHEREAS, the parties hereto entered into the Master Loan Sale
Agreement, dated as of ________ __, 2003 (the "Agreement"), and the Seller
wishes to sell and contribute a portfolio of Eligible Loans (as defined in the
Agreement) to the Purchaser, pursuant to and in accordance with the terms and
conditions of the 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 Agreement, unless otherwise specifically
stated herein.
2. Sale and Contribution of Eligible Loans. Subject to the terms
and conditions of the Agreement and in reliance upon the representations,
warranties and covenants as set forth in the 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
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 5 of the Agreement, with
respect to all the FFELP Loans and (ii) Section 12 (a) of the Agreement, with
respect to the MPN Loans as of the Loan Purchase Date set forth in Section 4
hereof.
17
6. Effect on 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 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.
PHEAA STUDENT LOAN FOUNDATION, INC.,
as Seller
By:
-------------------------------------
Name:
Title:
PHEAA STUDENT LOAN TRUST I, as Purchaser
By: WACHOVIA BANK OF DELAWARE,
NATIONAL ASSOCIATION, as Owner Trustee
By:
-------------------------------------
Name:
Title:
MANUFACTURERS AND TRADERS TRUST COMPANY,
not in its individual capacity but
solely as Seller Trustee and Eligible
Lender Trustee
By:
-------------------------------------
Name:
Title:
18
LOAN TRANSFER SCHEDULE
19
EXHIBIT B
SELLER'S CLOSING CERTIFICATE
PHEAA Student Loan Foundation, Inc. (the "Seller") does hereby
certify that all representations, warranties and statements by or on behalf of
the Seller contained in the Agreement, dated as of _______ __, 2003 (the
"Agreement"), by and among the Seller, acting by and through Manufacturers and
Traders Trust Company, not individually but solely as eligible lender trustee
(the "Seller Trustee"), and PHEAA Student Loan Trust I (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__;
FURTHERMORE, the Seller does hereby certify that the following
documents, where applicable to each FFELP Loan (as defined in the Agreement)
acquired under the Agreement, have heretofore been, or are simultaneously
herewith, delivered to the Purchaser or its Custodian, pursuant to subsection
6(d) of the 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
- Any other document required to be submitted with a
claim to the Guarantee Agency.
20
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__.
PHEAA STUDENT LOAN FOUNDATION, INC.
By:
-------------------------------------
Name:
Title:
21
EXHIBIT C
BLANKET ENDORSEMENT OF STUDENT LOAN PROMISSORY NOTES
Pursuant to the Agreement, dated as of _______ __, 2003 (the
"Agreement"), the undersigned ("Seller"), by execution of this instrument,
hereby endorses all promissory notes purchased by Manufacturers and Traders
Trust Company, as eligible lender trustee (the "Eligible Lender Trustee"), for
PHEAA Student Loan Trust I (the "Purchaser"). This endorsement is in blank,
unrestricted form. This endorsement is without recourse, except as provided
under the terms of the 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__.
PHEAA STUDENT LOAN FOUNDATION, INC.
By:
-------------------------------------
Name:
Title:
22
EXHIBIT D
XXXX OF SALE
FOR VALUE RECEIVED, PHEAA Student Loan Foundation, Inc. (the
"Seller"), pursuant to the terms and conditions of the Agreement, dated as of
_________ __, 2003 (the "Agreement"), by and among the Seller, acting by and
through Manufacturers and Traders Trust Company, not individually but solely as
eligible lender trustee (the "Seller Trustee"), and PHEAA Student Loan Trust I
(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 Xxxx of
Sale is made pursuant to and is subject to the terms and provisions of the
Agreement, and is without recourse, except as provided in the 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__.
PHEAA STUDENT LOAN FOUNDATION, INC.
By:
-------------------------------------
Name:
Title:
23
