Form 2EA46 2009-2010 Master Participation Agreement and 2009-2010 M

LOAN PURCHASE PROGRAMS ELECTRONIC ANNOUNCEMENT #46
Date:

January 16, 2009

To:

FFEL Program Community

From:

James Manning, Acting Chief Operating Officer
Federal Student Aid

Subject:

2009-2010 Loan Purchase Programs Agreements

In Electronic Announcement #43, posted on January 15, 2009, we provided the Federal Register
Notice that was published on that date, announcing the terms and conditions of both the 20092010 Loan Purchase Programs and the ABCP Conduit Put Program.
The attachment to this announcement provides the “Master Participation Agreement” and the
“Master Loan Sales Agreement” for the 2009-2010 Loan Purchase Programs.
As noted in Electronic Announcement #43, in separate Electronic Announcements we will
provide additional information about the 2009-2010 Loan Purchase Programs, including the
procedures under which a holder of FFEL Program loans submits documents executing a
“Master Loan Sale Agreement 2009-2010” and/or a “Master Participation Agreement 20092010.”
Thank you for your continued support of these FFEL Loan Purchase Programs.
Attachment: 2009-2010 Master Participation Agreement
2009-2010 Master Loan Sales Agreement

2009 MASTER PARTICIPATION AGREEMENT

UNITED STATES DEPARTMENT OF EDUCATION

JANUARY 1, 2009

PARTICIPATION INTERESTS IN ELIGIBLE LOANS MADE PURSUANT TO THE
FEDERAL FAMILY EDUCATION LOAN PROGRAM

TABLE OF CONTENTS
Page
Section 1.

Terms. ......................................................................................................................2

Section 2.

Commitment to Lend Under the FFEL Program. ....................................................3

Section 3.

Definitions................................................................................................................3

Section 4.

Delivery of Loans to Custodian; Purchase and Sale of Participation
Interests. .................................................................................................................14

Section 5.

Participation Certificates; Loan Schedule and Custodial Certifications................16

Section 6.

Security Interest. ....................................................................................................19

Section 8.

Reporting; Due Diligence. .....................................................................................20

Section 9.

Conditions Precedent. ............................................................................................22

Section 10.

Representations and Warranties of the Sponsor, the Eligible Lender
Trustee and Custodian............................................................................................24

Section 11.

Collections; Distributions. .....................................................................................32

Section 12.

Servicing of Eligible Loans. ..................................................................................33

Section 13.

Enforcement of the Servicing Agreements. ...........................................................34

Section 14.

Liability of the Sponsor and the Custodian; Indemnities.......................................35

Section 15.

Redemption; Put Option; Termination...................................................................36

Section 16.

Sponsor and Servicer Events of Default; Remedies. .............................................39

Section 17.

Custodian Events of Default; Removal of Custodian. ...........................................39

Section 18.

Delegation of Duties by the Custodian.. ................................................................40

Section 19.

Custodian Not to Resign.. ......................................................................................40

Section 20.

Merger of the Custodian. .......................................................................................41

Section 21.

No Transfer of Participation Certificates or Participation Interests.......................41

Section 22.

Fees and Expenses. ................................................................................................41

Section 23.

Tax Matters. ...........................................................................................................41

Section 24.

Set-off.. ..................................................................................................................42

Section 25.

Survival of Covenants. ..........................................................................................43

Section 26.

Communication and Notice Requirements ............................................................43

Section 27.

Form of Instruments...............................................................................................44

Section 28.

Amendment; Waiver..............................................................................................44

Section 29.

Severability Clause. ...............................................................................................44

Section 30.

Governing Law.. ....................................................................................................44
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Section 31.

Exhibits.. ................................................................................................................44

Section 32.

General Interpretive Principles. .............................................................................45

Section 33.

Reproduction of Documents.. ................................................................................45

Section 34.

Further Agreements.. .............................................................................................45

Section 35.

Other Department Program....................................................................................45

Section 36.

Adoption.. ..............................................................................................................46

Section 37.

Integration. .............................................................................................................46

EXHIBITS
Exhibit A
Exhibit B
Exhibit C
Exhibit D
Exhibit E
Exhibit F
Exhibit G
Exhibit H

FORM OF ADOPTION AGREEMENT
FORM OF OFFICER’S CERTIFICATE
FORM OF OPINION OF COUNSEL TO THE SPONSOR
FORM OF PARTICIPATION PURCHASE REQUEST
FORM OF CLASS A PARTICIPATION CERTIFICATE
FORM OF CLASS B PARTICIPATION CERTIFICATE
FORM OF SECURITY RELEASE CERTIFICATION
FORM OF NOTICE OF INTENT TO PARTICIPATE

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MASTER PARTICIPATION AGREEMENT
This is a Master Participation Agreement, dated as of January 1, 2009 (“2009 Master
Participation Agreement”), among the United States Department of Education (“Department”),
an individual Eligible Lender or the holder of beneficial interests in Loans (such entity,
“Sponsor”), and if the latter, the related Eligible Lender Trustee, each made party to this Master
Participation Agreement by executing an Adoption Agreement in the form attached hereto as
Exhibit A (“Adoption Agreement”), and the Sponsor’s Custodian made party to this Master
Participation Agreement by executing the Adoption Agreement (“Custodian”).
WHEREAS, pursuant to Section 459A of the Higher Education Act of 1965, as amended,
the Department has the authority to purchase Stafford Loans and PLUS Loans, on such terms as
the Secretary of Education, the Secretary of the Treasury, and the Director of the Office of
Management and Budget jointly determine are in the best interest of the United States to
encourage Eligible Lenders to provide students and parents access to Stafford Loans and PLUS
Loans made under the Federal Family Education Loan Program for the 2009-2010 academic
year;
WHEREAS, the Sponsor has an ownership interest in certain Stafford Loans and PLUS
Loans guaranteed under the Higher Education Act;
WHEREAS, the Sponsor may desire to sell Participation Interests (as defined below) in
such loans from time to time and the Department may desire to purchase such Participation
Interests from the Sponsor;
WHEREAS, to the extent that the Department, the Sponsor, the Eligible Lender Trustee
(if applicable) and the Custodian enter into an Adoption Agreement, this Master Participation
Agreement shall provide for the Sponsor to sell to the Department certain Participation Interests
in such loans by transfer to the Custodian as trustee for the benefit of the Department and the
Sponsor, as applicable, of all of the Sponsor’s right, title and interest in, to and under such loans
(including the right to service such loans) and by the creation and conveyance to the Department
and the Sponsor of the Participation Interests, all on the terms and conditions set forth below;
WHEREAS, upon the execution of the Adoption Agreement, the Custodian shall be
appointed by the Sponsor and the Department to hold legal title to each such loan and to hold in
its physical possession (either directly or through a delegee) the related promissory note and all
documents and records related to each such loan and the Custodian shall agree, in its capacity as
trustee, to accept the transfer of legal title to such loans from time to time, to hold such loans
(including the right to service such loans) and such documents and records in trust for the benefit
of the Sponsor or the Department, as applicable, and to issue the Participation Interests in such
loans as provided herein; and
WHEREAS, by its execution of an Adoption Agreement to this Master Participation
Agreement, and upon each transfer of Participation Interests to the Department hereunder, the
Sponsor shall represent to the Department that it or the entities on whose behalf it holds FFELP
loans as an aggregator of FFELP loans, shall continue to participate in the Federal Family
Education Loan Program and that at such time as funds become reasonably available to it or to

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those entities from private sources on affordable terms, it will originate new FFELP loans or
acquire FFELP loans made by other lenders after the Department’s purchases of Participation
Interests in Loans from the Sponsor.
NOW, THEREFORE, in connection with the mutual promises contained herein, the
parties hereto agree as follows:
Section 1.
Terms. This 2009 Master Participation Agreement establishes the terms
under which the Sponsor, together with any Eligible Lender Trustee that holds legal title to
Eligible Loans on behalf of that Sponsor and that is authorized on behalf of that Sponsor to sell
Eligible Loans, may sell, and the Department shall purchase, Participation Interests in the
Eligible Loans specified on each Loan Schedule attached to each Participation Purchase Request
as the parties may execute from time to time pursuant to this Master Participation Agreement,
subject to the terms of this Master Participation Agreement. Each such Participation Purchase
Request shall be substantially in the form of Exhibit D, attached hereto, incorporating by
reference the terms of this Master Participation Agreement, and shall be a separate agreement
among the Sponsor, an Eligible Lender Trustee (if applicable), the Custodian and the Department
with respect to the Participation Interests covered by the terms of such Participation Purchase
Request and the Eligible Loans underlying such Participation Interests covered by the terms of
such Participation Purchase Request for all purposes.
If the terms of a Participation Purchase Request conflict with the terms of this Master
Participation Agreement, the terms of this Master Participation Agreement shall supersede and
govern except to the extent that such conflict is specifically noted in the Participation Purchase
Request and the parties acknowledge and agree that notwithstanding such conflict, the terms of
the Participation Purchase Request shall govern.
The Department will not execute an Adoption Agreement to enter into a Master
Participation Agreement with any Sponsor after July 1, 2010. Further, in order to sell any
Participation Interests pursuant to this Master Participation Agreement, the Sponsor must notify
the Department no later than July 1, 2010 that it will sell such Participation Interests, and must
exercise the option to sell Participation Interests in Eligible Loans on or before August 1, 2010.
The Sponsor may sell a Participation Interest after August 1, 2010 only if that interest is in a
Loan that is a Purchased Eligible Loan and the following conditions are met: (a) the first
disbursement on the Purchased Eligible Loan was made by July 1, 2010, (b) such Loan became
subject to a Participation Interest by August 1, 2010, (c) the final disbursement on such Loan is
made no later than September 30, 2010, (d) the Sponsor notifies the Department that the Sponsor
intends to redeem the Participation Interest in the fully-disbursed Loan and sell the loan to the
Department under the Put Option, and (e) the Sponsor completes the sale of the Participation
Interest in the fully-disbursed Loan no later than thirty (30) calendar days after the second
disbursement. If a Sponsor fails to meet these deadlines, as applicable, the right to sell
Participation Interests hereunder shall terminate and the Department will not honor any
commitment to purchase Participation Interests.
No Loan will be eligible to become subject to a Participation Interest for sale hereunder
to the Department if the first disbursement was made prior to the date on which the Department
received the 2009 Notice of Intent to Participate from the Sponsor. Any Eligible Lender that

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claims Special Allowance Payments at the rate payable for eligible not-for-profit holders of loans
and that seeks to aggregate Eligible Loans to become subject to Participation Interests hereunder
must do so through a Sponsor that aggregates only loans that qualify for Special Allowance
Payments at that rate.
Section 2.
Commitment to Lend Under the FFEL Program. By its execution of
an Adoption Agreement, and upon each sale hereunder, the Sponsor represents to the
Department:
(a)
If the Sponsor acts on its own behalf, that it shall continue to participate in the
FFELP (either itself or through an Eligible Lender Trustee) and that at such time as funds
become reasonably available to it from private sources, it will originate new FFELP loans or
acquire FFELP loans made by other lenders after the date of the sale of the Participation Interests
to the Department hereunder, and
(b)
If the Sponsor acts on behalf of any other entity as an aggregator of FFELP loans,
that it is authorized to represent, and has received written assurance from each such entity, which
assurance will be provided to the Department upon request, that at such time as funds become
reasonably available to them from private sources, each of these entities will continue, as
applicable, to originate or finance the origination of FFELP loans, or to acquire or finance the
acquisition of FFELP loans made by other lenders, after the date of the sale of the Participation
Interests to the Department hereunder.
Section 3.
Definitions. For purposes of this Master Participation Agreement the
following capitalized terms shall have the respective meanings set forth below:
“Adoption Agreement” means an Adoption Agreement, substantially in the form of
Exhibit A, attached hereto, of which this 2009 Master Participation Agreement forms a part by
reference, by and among the Department, a Sponsor, an Eligible Lender Trustee (if applicable),
and a Custodian obligating each of the parties thereto the terms of this Master Participation
Agreement.
“Adverse Event” shall mean the occurrence of any of the following with respect to a
Person:
(i)

a decree or order of a court or agency or supervisory authority having jurisdiction
for the appointment of a conservator or receiver or liquidator or other similar
official in any insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings, or for the winding-up or liquidation of its affairs, shall have
been entered against such Person and such decree or order shall have remained in
force, undischarged or unstayed for a period of sixty (60) calendar days; or

(ii)

such Person shall consent to the appointment of a conservator or receiver or
liquidator or other similar official in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to such
Person or relating to all or substantially all of such Person's property; or

(iii) such Person shall admit in writing its inability to pay its debts as they become due,
file a petition to take advantage of any applicable insolvency or reorganization
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statute, make an assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations.
“Agreement” shall mean, collectively, this Master Participation Agreement and the
related Adoption Agreement and all amendments thereto.
“Borrower” means the student or parent obligor on a Loan.
“Business Day” means any day other than (i) a Federal holiday, (ii) a Saturday or
Sunday, or (iii) any other day on which banking institutions or trust companies, operating in the
state(s) or jurisdiction(s) in which either the Custodian or the Servicer is headquartered, are
authorized or obligated by law, regulation or executive order to remain closed.
“Capital Account” has the meaning set forth in Section 23(c) hereof.
“Class A Participation Certificate” has the meaning set forth in Section 5(b) hereof.
“Class A Participation Interest” means a participation interest in one or more Eligible
Loans, which consists of (A) a 100% beneficial ownership interest in the principal portion of
such Eligible Loans, and (B) the right to receive the Participant’s Yield in respect of such
Eligible Loans.
“Class B Participation Certificate” has the meaning set forth in Section 5(b) hereof.
“Class B Participation Interest” means a participation interest in one or more Eligible
Loans which consists of (A) the right to either redeem such Eligible Loans or to exercise the Put
Option pursuant to Section 15 hereof and (B) the right to receive all Collections on such Eligible
Loans other than (1) the Participant’s Yield, and (2) principal collections on such Eligible Loans.
“Code” means the United States Internal Revenue Code of 1986, as amended from time
to time, or any successor statute thereto.
“Collateral” has the meaning set forth in Section 6(a) hereof.
“Collection Account” means the segregated account established pursuant to Section 11(a)
hereof.
“Collections” has the meaning set forth in Section 11(a) hereof.
“Commercial Paper Rate” means the commercial paper rate determined by the
Department on a quarterly basis and published pursuant to Section 438(b)(2)(I)(i)(I) of the
Higher Education Act or such substitute rate as may be authorized by applicable law.
“Custodian” means the custodian of Eligible Loans designated by the Sponsor (or a
successor custodian appointed pursuant to Section 17 hereof), which is a party hereto pursuant to
an Adoption Agreement executed and delivered pursuant to the terms hereof, and (i) which is a
National or State-chartered bank, (ii) which is an Eligible Lender, and (iii) as to which the
representations and warranties set forth in Section 10(c) of this Agreement are true and correct.

4

“Custodian Event of Default” means one or more of the following shall occur and be
continuing with respect to the Custodian:
(i)

if for any reason the Custodian is no longer an Eligible Lender; or

(ii)

any failure by the Custodian to remit to the Department or the Sponsor, as
applicable, any Collections pursuant to Section 11 hereof; or

(iii) any failure by the Custodian to duly observe or perform, in any material respect,
any other covenants, obligations or agreements of the Custodian as set forth in the
Agreement, which failure continues unremedied for a period of thirty (30) calendar
days after the earlier of the date on which (i) the Custodian shall have actual
knowledge of such failure, or (ii) written notice of such failure, requiring the same
to be remedied, shall have been given to the Custodian by the Sponsor or the
Department; or
(iv)

an Adverse Event with respect to the Custodian shall have occurred and be
continuing beyond the expiration of any applicable grace period; or

(v)

the Custodian attempts to sell or otherwise dispose of all or substantially all of its
property or assets, or to assign any of its obligations hereunder or all or any portion
of the Eligible Loans subject to a Participation Interest hereunder.

“Department” has the meaning set forth in the preamble hereto.
“Eligible Borrower Benefits” means only those borrower benefits for a Loan that are (i)
unconditional upfront fee reductions which are accrued and paid or made prior to the date on
which a Participation Interest is sold hereunder, or (ii) permitted reductions in interest rates of
not more than 0.25 percent that are contingent on the use of an automatic payment process by the
Borrower for any payments due.
“Eligible Lender” means any entity that is an eligible lender under Section 435(d) of the
Higher Education Act.
“Eligible Lender Trustee” means an Eligible Lender that holds legal title to an Eligible
Loan for the benefit or on behalf of the Sponsor which holds the related beneficial ownership
interest in such Eligible Loan, that is authorized to sell Eligible Loans on behalf of the Sponsor,
and that executes an Adoption Agreement together with such Sponsor.
“Eligible Loan” means a Loan that meets the following criteria as of the applicable
Purchase Date:
(i) the Loan was made for a loan period that includes, or begins on or after, July 1, 2009
and on which the first disbursement is made on or after May 1, 2009 but no later than
July 1, 2010 and, if not fully disbursed on the Purchase Date, is scheduled to be fully
disbursed no later than September 30, 2010;

5

(ii)

the Loan has been originated and serviced in compliance with all requirements of
applicable law, including the Higher Education Act and the implementing
regulations, the Equal Credit Opportunity Act, Regulation B and other applicable
consumer credit laws and equal credit opportunity laws, as applicable to such
Loan;

(iii) at least one disbursement has been made on the Loan;
(iv)

the Loan is guaranteed at least 97% as to principal and interest by the applicable
Guarantor and eligible for reinsurance by the Department in accordance with the
Higher Education Act;

(v)

the Loan bears interest at a stated rate equal to the maximum rate permitted under
the Higher Education Act for such loan, except as modified by an Eligible
Borrower Benefit;

(vi)

the Loan is eligible for the payment of quarterly Special Allowance Payments;

(vii) if the Loan is not yet in repayment status, the Loan is eligible for payment of
Interest Subsidy Payments, or if not eligible, has interest either billed quarterly to
the Borrower or capitalized to the extent permitted by the applicable Guarantor
(unless, by the Purchase Date, the Seller would not otherwise have billed the
borrower quarterly for interest accrued on the Loan);
(viii) the Loan is evidenced by a signed Promissory Note in the form (including any
required addenda) published by, and prescribed by, the Department, without change
of any kind, and is not subject to any agreement not contained in the note that
would bar, condition, or limit either transfer of the loan or the exercise by a
transferee of the rights of the Lender under the terms of the note, except as such an
agreement relates exclusively to borrower benefits on the loan.
(ix)

immediately prior to the transfer of title to the Custodian, the Sponsor, together
with the Eligible Lender Trustee (if applicable), had good and marketable title to,
and was the sole owner of, the Loan, free and clear of any security interest, lien,
charge, claim, offset, defense, counterclaim or encumbrance of any nature (other
than one that will be released simultaneously with the purchase of the related Class
A Participation Interest pursuant to a Security Release Certification), and no right
of rescission, offsets, defenses or counterclaims have been asserted or threatened
with respect to the Loan;

(x)

the Loan has not been modified, extended or renegotiated in any way, except as
required or permitted under the Higher Education Act or other applicable laws,
rules and regulations, and the applicable Guarantee Agreement;

(xi)

the Loan constitutes a legal, valid and binding obligation to pay on the part of the
related Borrower enforceable in accordance with its terms and is not subject to a
current bankruptcy proceeding;

6

(xii) the Loan has no borrower benefits or other incentive programs other than Eligible
Borrower Benefits;
(xiii) if the Loan is subject to a servicing agreement, such servicing agreement is an
Eligible Servicing Agreement and is terminable upon thirty (30) calendar days
notice without any liability on the part of the Department;
(xiv) the sale or assignment of the Loan to the Custodian does not conflict with law or
require notice to or consent, except for such consent, approval, authorizations or
orders, if any, that have been obtained prior to the related Purchase Date, and for
any notices to Borrowers and Guarantors required by the Higher Education Act;
(xv) if the Loan is made under Section 428 (Subsidized Stafford Loans) or Section 428H
(Unsubsidized Stafford Loans) of the Higher Education Act, Participation Interests
in such Loan shall have been sold to the Department together with Participation
Interests in all of the Borrower’s other Subsidized Stafford Loans and Unsubsidized
Stafford Loans that are Eligible Loans and that are held by or on behalf of the
Sponsor; and
(xvi) the Loan is eligible to be sold to the Department under the Put Option, or, if not
fully disbursed on the applicable Purchase Date, is scheduled to be fully disbursed
by September 30, 2010 and upon such final disbursement eligible to be sold to the
Department under the Put Option.
Without limitation, the following loans shall not be eligible for sale to the Department
pursuant to the terms of this Agreement:
(i)

loans which do not comply with the representations and warranties set forth in
Section 10(b) of this Master Participation Agreement;

(ii)

FFELP Consolidation Loans or any other types of loans not specifically described
in this Master Participation Agreement;

(iii) loans disbursed for academic years other than the 2009-2010 academic year;
(iv)

loans that will not have at least one disbursement as of July 1, 2010;

(v)

loans in which the Department has previously purchased a Participation Interest,
whether or not that interest has been redeemed;

(vi)

loans on which the lender has committed to providing the Borrower with any
borrower benefits other than Eligible Borrower Benefits, without regard to whether
such a commitment purports to bind only the Lender;

(vii) loans that are more than 255 days delinquent, or on which a default claim or other
claim for payment on the loan has been filed with the related Guarantor; and

7

(viii) loans made by a guarantor or other lender as a Lender of Last Resort, pursuant to
HEA Section 428(j), 20 U.S.C. Section 1078(j), whether made with Federal
advances or other funds.
“Eligible Servicing Agreement” means a servicing agreement that meets the criteria set
forth in Section 12(c) hereof.
“Equal Credit Opportunity Act” means the Equal Credit Opportunity Act (15 U.S.C.
Section 1691 et seq.) as amended.
“Exception Report” has the meaning set forth in Section 5(d) hereof.
“FFELP” means the Federal Family Education Loan Program authorized under title IV,
Part B of the Higher Education Act.
“Guarantee Agreement” means an agreement between a Guarantor and the Sponsor or the
Eligible Lender Trustee (if applicable), that provides for the payment by such Guarantor of
amounts authorized to be paid pursuant to the Higher Education Act to holders of qualifying
FFELP loans guaranteed in accordance with the Higher Education Act.
“Guarantor” means any FFELP guaranty agency with which the Sponsor or the Eligible
Lender Trustee (if applicable) has in place a Guarantee Agreement, and which guarantor is
reinsured by the Department of Education for a percentage of claims paid for a given federal
fiscal year.
“Higher Education Act” means the Higher Education Act of 1965, as amended, 20 U.S.C.
§ 1001 et seq.
“Interest Subsidy Payments” means the interest subsidy payments on certain FFELP
loans authorized to be made by the Department pursuant to Section 428 of the Higher Education
Act.
“Loan” means a FFELP Subsidized Stafford Loan or Unsubsidized Stafford Loan or
FFELP PLUS Loan made to a student (or in the case of a parent PLUS loan, made to a parent of
a dependent student) evidenced by a Promissory Note and all related Loan Documents together
with any guaranties and other rights relating thereto including, without limitation, Interest
Subsidy Payments and Special Allowance Payments, together with the servicing rights related
thereto.
“Loan Documents” means with respect to each Loan, the following documents (except as
otherwise specifically provided by the Department):
(i)

a copy of the loan application if a separate application was provided to the
Sponsor;

(ii)

a copy of the signed Promissory Note;

(iii) the repayment schedule;

8

(iv)

a record of each disbursement;

(v)

notices of changes in a Borrower's address and status as at least a half-time student;

(vi)

evidence of the Borrower's eligibility for a deferment;

(vii) the documents required for the exercise of forbearance;
(viii) documentation of the assignment of the loan, if any;
(ix)

a payment history showing the date and amount of each payment received from or
on behalf of the Borrower, and the amount of each payment that was attributed to
principal, interest, late charges, and other costs;

(x)

a collection history showing the date and subject of each communication between
the Sponsor and the Borrower or endorser relating to collection of a delinquent
Loan, each communication other than regular reports by the Sponsor showing that
an account is current, between the Sponsor and a credit bureau regarding the loan,
each effort to locate a Borrower whose address is unknown at any time, and each
request by the Sponsor for default aversion assistance on the Loan;

(xi)

documentation of any master promissory note confirmation process or processes;

(xii) any additional records that are necessary to document the validity of a claim
against the guarantee or the accuracy of reports submitted by the Sponsor; and
(xiii) a statement identifying the name and location of the entity in possession of the
original electronic promissory note and, if different, the name, company, address
and contact information of the person who is able to provide the affidavit or
certification described in 34 C.F.R. Section 682.414(a)(6)(i), including any
necessary supporting documentation.
“Loan Schedule” means the schedule (in the form provided by the Department) attached
to each Participation Purchase Request and completed by or on behalf of the Sponsor and the
Eligible Lender Trustee (if applicable) that lists, by Borrower, (i) the Loans proposed to be
subject to the related Participation Interests, (ii) the name and address of the Borrower, the loan
number, the qualifying institution attended by the Borrower and the scheduled outstanding
Principal Balance and accrued interest thereon as of the related Purchase Date and (iii) any other
information the Department may require including but not limited to certain identification
numbers and dates relating to the Eligible Loans.
“Loan Schedule and Custodial Certification” means the Loan Schedule in the form
included with Exhibit E and Exhibit F attached to each Participation Certificate, and certified by
the Custodian as a complete and accurate listing of all of the Eligible Loans subject to
Participation Interests evidenced by each such Participation Certificate as to which the Custodian
(i) holds legal title and (ii) has physical possession (either directly or through its delegee) of all
required Loan Documents in trust for the benefit of holders of the Participation Interests.

9

“Master Loan Sale Agreement” or “2009 Master Loan Sale Agreement” means the
Master Loan Sale Agreement dated January 1, 2009, together with the related adoption
agreement among the Department, the Sponsor, and the Eligible Lender Trustee (if applicable).
“Master Participation Agreement” has the meaning set forth in the preamble hereto.
“Notice of Intent to Participate” or “2009 Notice of Intent to Participate” means the
notice provided to the Department by an Eligible Lender or a lender other than an Eligible
Lender, together with an Eligible Lender Trustee, of its intent to participate in the loan purchase
programs, which shall be in the form attached hereto as Exhibit H.
“Participant’s Yield” means with respect to each Participation Interest for each fiscal
quarter during which the Department holds the related Class A Participation Interest, an amount
equal to (i)

(1) the daily average of the principal balance of such Class A Participation Interest
multiplied by (2) the product of (A) the Commercial Paper Rate plus the applicable
Spread, and (B) the number of days in such fiscal quarter, and (3) divided by 360,

(ii)

reduced by any amount of such Participant’s Yield in respect of such fiscal quarter
previously paid to the Department pursuant to Section 11(b) hereof, and

(iii)

increased by the amount of Participant’s Yield remaining unpaid with respect to
any prior fiscal quarters.

“Participation Interest” means a Class A Participation Interest or a Class B Participation
Interest.
“Participation Purchase Request” means a request substantially in the form of Exhibit D
attached hereto, executed by authorized officers of each of the Sponsor, the Eligible Lender
Trustee (if applicable) and the Custodian and delivered to the Department, which (i) sets forth
the Eligible Loans for which Class A Participation Interests are offered for sale to the
Department, (ii) certifies that the representations and warranties made by the Sponsor in
Section 10(a), and (b) of this Master Participation Agreement are true and correct, (iii) certifies
that the Custodian holds legal title to each Eligible Loan for which the Class A Participation
Interests are offered for sale to the Department and (iv) certifies that the Custodian or its
designee holds all required Loan Documents for each Eligible Loan for which the Class A
Participation Interests are offered for sale to the Department.
“Partner” has the meaning set forth in Section 23(b) hereof.
“Partnership” has the meaning set forth in Section 23(a) hereof.
“Permitted Investments” means overnight or short-term U.S. Treasury securities that will,
in all cases, mature on or prior to the day immediately preceding the date such funds are required
to be disbursed.

10

“Person” means an individual, corporation, limited liability company, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization or government or
any agency or political subdivision thereof.
“PLUS Loan” means a Loan described in Section 428B of the Higher Education Act and
shall include loans to parents, designated as “PLUS Loans” or loans to graduate or professional
students, designated “Grad PLUS Loans.”
“Principal Balance” with respect to a Loan means the outstanding principal amount of the
Loan, plus capitalized interest.
“Promissory Note” means the master promissory note of the Borrower and any
amendment thereto evidencing the Borrower’s obligation with regard to a student loan
guaranteed under the Higher Education Act, either in paper form or in the electronic records
evidencing the same.
“Purchase Date” means the effective date on which the Custodian receives payment from
the Department of the Purchase Price for Class A Participation Interests, which shall be as soon
as practicable after the Department receives the related Participation Purchase Request.
“Purchase Price” has the meaning set forth in Section 4(c) hereof.
“Purchased Eligible Loan” means an Eligible Loan in which a Participation Interest has
been purchased by the Department.
“Put Option” means, with respect to a Purchased Eligible Loan, the right of the Sponsor,
through the Eligible Lender Trustee (if applicable), pursuant to Section 15, to sell such
Purchased Eligible Loan to the Department against the Department’s right to receive all future
Collections under such Eligible Loans.
“Redemption Payment” means, with respect to a Purchased Eligible Loan to be redeemed
pursuant to Section 15, an amount equal to the greater of (i) the proceeds of the sale or other
transfer of such Purchased Eligible Loan, if any, including proceeds received subsequent to the
redemption date, and (ii) the Purchase Price paid by the Department in exchange for the Class A
Participation Interest in such Purchased Eligible Loan together with any Participant’s Yield on
such Purchase Price calculated through the date of the next scheduled distribution to the
Department, less (with respect to (ii)) any amount that the Sponsor demonstrates to the
satisfaction of the Department, in its sole discretion, was received with respect to such Purchased
Eligible Loan and remitted to the Department pursuant to Section 11(b) in satisfaction of a
portion of the Participant’s Yield and Purchase Price with respect to such Purchased Eligible
Loan.
“Regulation B” means the federal regulations governing the Equal Credit Opportunity
Act as it appears in Title 12, Code of Federal Regulations, Part 202.
“Reporting Date” has the meaning set forth in Section 8(a) hereof.

11

“Responsible Officer” means any director, vice president, assistant vice president, any
associate or any other officer of the Custodian or Sponsor, as applicable, customarily performing
functions similar to those performed by any of the above designated officers and with respect to
a particular matter, to whom such matter is referred because of such officer’s knowledge of and
familiarity with the particular subject and having direct responsibility for the administration of
this Agreement.
“Secretary” means the Secretary of Education, and “Department” means the United
States Department of Education, and either term includes any official of the Department duly
authorized to perform any function with respect to the transactions under this Agreement.
“Security Release Certification” means the certification executed by the Sponsor and a
lienholder with respect to one or more Loans substantially in the form of Exhibit G hereto.
“Servicer” means the Sponsor in its capacity as servicer or another servicer of FFELP
loans that will service the Eligible Loans pursuant to an Eligible Servicing Agreement.
“Servicer Event of Default” means one or more of the following events that occurs and is
continuing with respect to the Servicer:
(i)

any failure by the Servicer to remit to the Custodian any Collections within two (2)
Business Days following receipt, or any failure by the Servicer to pay any other
amounts required to be paid by the Servicer hereunder or under any related Eligible
Servicing Agreement, which failure continues unremedied for a period of one (1)
Business Day following the Servicer becoming aware of such failure; or

(ii)

any failure by the Servicer to duly observe or perform, in any material respect, any
other covenants, obligations or agreements of the Servicer as set forth in this
Master Participation Agreement or in any Eligible Servicing Agreement, which
failure continues unremedied for a period of thirty (30) calendar days after the date
on which notice of such failure, requiring the same to be remedied, shall have been
given to the Servicer by the Sponsor, the Custodian or the Department; or

(iii) a decree or order of a court or agency or supervisory authority having jurisdiction
for the appointment of a conservator or receiver or liquidator or other similar
official in any insolvency, readjustment of debt, marshalling of assets and liabilities
or similar proceedings, or for the winding-up or liquidation of its affairs, shall have
been entered against the Servicer and such decree or order shall have remained in
force, undischarged or unstayed for a period of sixty (60) calendar days; or
(iv)

the Servicer shall consent to the appointment of a conservator or receiver or
liquidator or other similar official in any insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to the
Servicer or relating to all or substantially all of the Servicer's property; or

(v)

the Servicer shall admit in writing its inability to pay its debts as they become due,
file a petition to take advantage of any applicable insolvency or reorganization

12

statute, make an assignment for the benefit of its creditors, or voluntarily suspend
payment of its obligations; or
(vi)

any representation or warranty made by the Servicer under any Eligible Servicing
Agreement shall prove to be untrue or incomplete in any material respect, which
failure shall continue unremedied for a period of thirty (30) calendar days after the
date on which written notice of such failure, requiring the same to be remedied,
shall have been given to the Servicer by the Sponsor, the Custodian or the
Department; or

(vii) the Servicer attempts to sell or otherwise dispose of all or substantially all of its
property or assets, or to assign its servicing responsibilities with respect to any
Eligible Loans or any portion thereof, except with the consent of the Sponsor; or
(viii) the Servicer fails to maintain its license to do business or service the Eligible
Loans, or for any reason the Servicer is not qualified or eligible to service Eligible
Loans.
“Special Allowance Payments” means special allowance payments on FFELP loans
authorized to be made by the Department pursuant to Section 438 of the Higher Education Act.
“Sponsor” has the meaning set forth in the preamble hereto.
“Sponsor Event of Default” means one or more of the following shall have occurred and
is continuing with respect to the Sponsor:
(i)

if for any reason the Sponsor or the Eligible Lender Trustee (if applicable) is no
longer an Eligible Lender; or

(ii)

any failure by the Sponsor to remit or cause to be remitted to the Custodian any
Collections with respect to Purchased Eligible Loans within two (2) Business Days
following receipt, or any failure by the Sponsor to pay when due any other amounts
required to be paid by the Sponsor under this Agreement; or

(iii) any failure by the Sponsor to duly observe or perform, in any material respect, any
other covenant, obligation or agreement of the Sponsor as set forth in this Master
Participation Agreement or in any Eligible Servicing Agreement, which failure
continues unremedied for a period of thirty (30) calendar days after the earlier of
the date on which (1) the Sponsor shall have actual knowledge of such failure, or
(2) written notice of such failure, requiring the same to be remedied, shall have
been given to the Sponsor by the Department; or
(iv)

an Adverse Event with respect to the Sponsor shall have occurred and be
continuing beyond the expiration of any applicable grace period; or

(v)

any representation or warranty made by the Sponsor pursuant to Section 10(a)
hereof shall prove to be untrue or incomplete in any material respect, which failure
shall continue unremedied for a period of thirty (30) calendar days after the earlier

13

of the date on which (i) the Sponsor shall have actual knowledge of such failure, or
(ii) written notice of such failure, requiring the same to be remedied, shall have
been given to the Sponsor by the Department; or
(vi)

the Sponsor attempts to sell or otherwise dispose of all or substantially all of its
property or assets.

“Spread” means fifty (50) basis points or, at the option of the Department following the
occurrence of a Sponsor Event of Default, three hundred (300) basis points.
“Stafford Loan” means a Subsidized Stafford Loan or an Unsubsidized Stafford Loan.
“Subsidized Stafford Loan” means a Loan described in Section 428(a) of the Higher
Education Act.
“Tax Liability” has the meaning set forth in Section 23(d) hereof.
“Termination Date” means earliest to occur of (i) the date on which the Sponsor notifies
the Department that it will no longer be a participant under the Agreement and reduces the
outstanding balance of the Class A Participation Interests to zero, (ii) at the option of the
Department, upon the occurrence of a Sponsor Event of Default, (iii) July 1, 2010, if the Sponsor
shall not have entered into a Master Loan Sale Agreement with the Department by such date, and
(iv) September 30, 2010.
“Treasury Regulations” means the regulations promulgated by the United States
Department of the Treasury under the Code.
“Unsubsidized Stafford Loan” means a Loan described in Section 428H of the Higher
Education Act.
Section 4.
Interests.

Delivery of Loans to Custodian; Purchase and Sale of Participation

(a)
The Sponsor shall request that the Department purchase Class A Participation
Interests by delivering to the Department (i) a Participation Purchase Request, appropriately
completed and executed by the Sponsor, the Eligible Lender Trustee (if applicable) and the
Custodian, and (ii) a Loan Schedule setting forth the Eligible Loans proposed to be subject to
such Class A Participation Interests and the scheduled Principal Balance of such Eligible Loans
as of the requested Purchase Date. If the Department agrees that the Participation Purchase
Request satisfies the requirements of this Agreement, the Department shall execute such
Participation Purchase Request and return a copy to the Sponsor and the Eligible Lender Trustee
(if applicable). Any such Participation Purchase Request delivered to the Department pursuant
to this Section 4(a) shall be irrevocable and shall bind the Sponsor and the Eligible Lender
Trustee (if applicable) to transfer the Eligible Loans set forth on the related Loan Schedule in
accordance with Section 4(b) below. As a condition precedent to the Department’s purchase of
Participation Interests in Eligible Loans hereunder, both the originating lender and, if different
from the related Sponsor, the related Sponsor, must each have provided to the Department a

14

timely 2009 Notice of Intent to Participate in the Loan Purchase Programs (in the form attached
here as Exhibit H).
(b) (i)

With respect to any Eligible Loan for which the Department has executed and
returned to the Sponsor and the Eligible Lender Trustee (if applicable) a
Participation Purchase Request pursuant to Section 4(a) hereof, prior to the
Purchase Date therefor, (1) if the Sponsor is an Eligible Lender, the Sponsor
shall cause all of its right, title and interests in and to the related Eligible Loans,
including the right to service such Eligible Loan, to be transferred to and held
in the name of the Custodian, who shall hold all such rights, title and interests
in trust for the Sponsor until the Purchase Date, or (2) if the Sponsor is not an
Eligible Lender, the Eligible Lender Trustee shall cause all of its right, title and
interests in and to the related Eligible Loans, and the Sponsor shall cause all of
its beneficial interests in such Eligible Loans and the right to service such
Eligible Loan, to be transferred to and held in the name of the Custodian, who
shall hold all such rights, title and interests in trust for the Sponsor, until the
Purchase Date. The Sponsor shall cause all related Loan Documents to be
delivered to the Custodian or its designee. From and after the Purchase Date for
such Eligible Loans, the Custodian shall hold all such Eligible Loans and all
related Loan Documents in a secure place in trust for the holders of the
Participation Interests in accordance with the terms of this Master Participation
Agreement until the Class A Participation Interests are redeemed in full;
provided that if the Loan Documents relating to such Eligible Loans are
delivered to the Custodian’s designee, the Custodian shall cause such designee
to hold all such Loan Documents in trust for the holders of the Participation
Interests in accordance with the terms of this Master Participation Agreement.

(ii) The Custodian shall not release, nor shall it permit its designee to release, any
Loan Documents relating to Purchased Eligible Loans to any Person except (1)
to the Sponsor upon receipt of the related Redemption Payment by the
Custodian for the benefit of the Department, (2) to the Department upon the
Sponsor’s exercise of the Put Option with respect thereto, (3) in connection
with servicing-related functions as may be required or permitted under the
Higher Education Act, or (4) as otherwise may be permitted in writing by the
Department.
(c) (i)

On the related Purchase Date, provided that all conditions precedent set forth in
Section 9(a) and (b) hereof have been satisfied in the manner prescribed in this
Agreement and in accordance with any guidance interpreting the provisions of
this Agreement that the Department has published in, or incorporated by,
Electronic Announcement #34, dated October 31, 2008 (or if unsatisfied, the
Department has permitted in the Department’s sole discretion, such unsatisfied
conditions to be cured within an acceptable period of time following the
Purchase Date), the Department shall purchase the related Class A Participation
Interests from the Sponsor by remitting to the Custodian, who shall in turn,
simultaneously remit to the Sponsor, a purchase price equal to the Principal

15

Balance of the related Eligible Loans to become subject to such Class A
Participation Interests on such Purchase Date (“Purchase Price”).
(ii)

All payments hereunder shall be made by electronic funds transfer in
accordance with the payment process that the Department adopts and discloses
to the recipient prior to receipt by the Department of a Participation Purchase
Request related to that payment and with instructions provided by the recipient.

(iii) As of the date of delivery of each Eligible Loan to the Custodian, the Sponsor
hereby sells and assigns its interest in such Eligible Loan in exchange for the
Participation Interests and the agreement of the Custodian to act as custodian
and trustee pursuant to the Agreement.
(iv) Upon receipt of the Purchase Price, the Sponsor shall cause the Custodian to
deliver to the Department the Class A Participation Interests in such Eligible
Loans, and the related updated Loan Schedule and Custodial Certification to be
attached to the Class A Participation Certificate.
(d)
Any Purchased Eligible Loans redeemed by the Sponsor pursuant to Section 15
shall cease to be subject to the Participation Interests upon such redemption.
(e)
In the case of a single Purchased Eligible Loan evidenced by a separate
Promissory Note, each such Promissory Note will be held in the name of the Custodian. If a
Purchased Eligible Loan is evidenced together with other Loans that are not Purchased Eligible
Loans by a Master Promissory Note, the Custodian shall indicate by book entry on its books and
records that the Custodian, in its capacity as trustee, is the legal owner of the Loan that was sold
under this Master Participation Agreement and that the Sponsor is the legal owner of those Loans
evidenced by the Promissory Note that have not been sold hereunder.
(f)
The Sponsor may not sell Class A Participation Interests to the Department more
frequently than weekly.
(g)
It is understood and agreed that a common law trust is hereby created into which
Eligible Loans are transferred on the related Purchase Date thereof, and the Custodian shall hold
legal title to such Eligible Loans, shall create the Participation Certificates and shall issue and
deliver the Participation Interests, in each case as trustee for the benefit of the holders of the
Participation Interests.
Section 5.

Participation Certificates; Loan Schedule and Custodial Certifications.

(a)
On or prior to the initial Purchase Date, the Custodian shall issue the Class A
Participation Certificate and the Class B Participation Certificate, and shall deliver the same to
the Department and the Sponsor, respectively. The Class A Participation Certificate shall
evidence all Class A Participation Interests sold to the Department on a Purchase Date, and the
Class B Participation Certificate shall evidence all Class B Participation Interests delivered to the
Sponsor on a Purchase Date.

16

(b)
Each Class A Participation Certificate shall be a definitive participation certificate
substantially in the form of Exhibit E hereto, to be issued in the name of, or at the direction of,
the Department (each, a “Class A Participation Certificate”). Each Class B Participation
Certificate shall be a definitive participation certificate substantially in the form of Exhibit F
hereto, to be issued in the name of, or at the direction of, the Sponsor (each, a “Class B
Participation Certificate”). The Class B Participation Certificate, and the Class B Participation
Interests issued thereunder shall be subordinated to the Class A Participation Certificate and the
Class A Participation Interests issued thereunder.
(c)
Each Participation Certificate shall have attached thereto a Loan Schedule and
Custodial Certification listing each of the Purchased Eligible Loans evidenced by such
Participation Certificate and the current Principal Balance of each such Purchased Eligible Loan.
Each Participation Certificate shall be executed on behalf of the Custodian, as trustee, by a
Responsible Officer of the Custodian. The signature of any such Responsible Officer on the
Participation Certificates may be manual or facsimile. Participation Certificates bearing the
manual or facsimile signatures of individuals who were at any time the Responsible Officers of
the Custodian shall bind the Custodian, notwithstanding the fact that such individuals or any of
them have ceased to hold such offices prior to the authentication and delivery of such
Participation Certificates or did not hold such offices at the date of issuance of such Participation
Certificates.
(d) (i)

On the initial Purchase Date, in exchange for the payment of the Purchase Price
by the Department, the Custodian shall prepare and deliver to the Department
(1) an initial Loan Schedule and Custodial Certification that lists the Eligible
Loans transferred to the Custodian as of such date, which shall be attached to
the Class A Participation Certificate, and (2) a report listing all discrepancies
from the Loan Documents that are required to be delivered to the Custodian or
its designee with respect to such Eligible Loans (an “Exception Report”).

(ii)

On each subsequent Purchase Date or on any date prior to the Termination Date
on which Eligible Loans are redeemed by the Sponsor or the Put Option is
exercised, the Custodian shall prepare and deliver to the Sponsor and the
Department an updated Loan Schedule and Custodial Certification that reflects
the addition or removal of any Eligible Loans as of such date. The Custodian
will attach each updated Loan Schedule and Custodial Certification to the Class
A Participation Certificate. Each subsequently delivered updated Loan
Schedule and Custodial Certification replaces any previously delivered Loan
Schedule and Custodial Certification, and any such previously delivered Loan
Schedule and Custodial Certification shall automatically be cancelled. The
Custodian shall provide to the Sponsor a copy of each Loan Schedule and
Custodial Certification.

(i)

In connection with any delivery by the Custodian of a Loan Schedule and
Custodial Certification, the Custodian shall be deemed to represent and warrant
to the Sponsor and the Department that –

(e)

17

(ii)

(1)

the information set forth on each such Loan Schedule and Custodial
Certification is complete, true and correct in all respects as of the date
of such delivery and at all times until such Loan Schedule and
Custodial Certification is canceled,

(2)

legal title to each Loan listed on the Loan Schedule and Custodial
Certification is held by the Custodian in trust for the benefit of
holders of the Participation Interests,

(3)

with respect to each Loan listed on the Loan Schedule and Custodial
Certification, all related Loan Documents have been delivered to and
are held by the Custodian or its designee in trust for the holders of the
Participation Interests, and

(4)

with respect to each Loan listed on the Loan Schedule and Custodial
Certification, all Loan Documents delivered to the Custodian have
been reviewed by the Custodian and appear on their face to comply in
all respects to the requirements of the Agreement and customary
custodial procedures with respect to FFELP loans.

Notwithstanding the foregoing, if the Custodian has delegated its obligation
hereunder to hold and review Loan Documents to another party pursuant to
Section 18 hereof, if a Custodian is in compliance with Section 18 hereof, a
Custodian shall be protected from loss if in good faith it issues a Loan Schedule
and Custodial Certification, or a related Exception Report, in reliance on a
certification from such delegee as to any matters necessary for the Custodian to
issue the Loan Schedule and Custodial Certification and the Exception Report.

(f)
In the event that the Custodian receives evidence satisfactory to it that a
Participation Certificate has been lost, mutilated, stolen or destroyed, the Custodian shall issue
and authenticate a new Participation Certificate and shall deliver a replacement Participation
Certificate of the same class, together with a replacement Loan Schedule and Custodial
Certification. Any subsequently delivered Participation Certificate and Loan Schedule and
Custodial Certification shall replace any previously delivered Participation Certificate and Loan
Schedule and Custodial Certification and any replaced Participation Certificate and Loan
Schedule and Custodial Certification shall be automatically cancelled. The applicant for any
such new Participation Certificate may be required to pay any taxes and governmental charges
and all expenses and charges of the Custodian in connection with the issuance of such
Participation Certificate. All Participation Certificates shall be held and owned upon the express
condition that, to the extent permitted by law, the foregoing conditions are exclusive with respect
to the replacement and payment of mutilated, destroyed, stolen or lost Participation Certificates.
(g)
The outstanding principal balance of the Class A Participation Interests evidenced
by the Class A Participation Certificate shall be equal to the aggregate Purchase Price paid with
respect to the related Purchased Eligible Loans (including the Purchase Price for any related
Subsequent Disbursement), reduced by the amount of any Redemption Payments or other
payments allocable to principal that have been received by the Custodian and remitted to the

18

Department with respect to any such Loans and applied to the outstanding principal balance of
such Class A Participation Interest through the end of the most recent calendar month. Upon the
purchase by the Department of additional Class A Participation Interests in Purchased Eligible
Loans, the aggregate outstanding principal balance of the Class A Participation Interests
evidenced by the Class A Participation Certificate shall be increased by the Purchase Price with
respect to each such additional Purchased Eligible Loans, and any Subsequent Disbursements.
Section 6.

Security Interest.

(a)
In the event, for any reason, any transfer of title to Loans and purchase of
Participation Interests hereunder is construed by any court or regulatory authority as a loan rather
than as a purchase, the Sponsor and the Eligible Lender Trustee (if applicable) hereby grants to
the Custodian, and the Custodian hereby assigns the same to the Department, as security for the
repayment of such loan and the performance of all other obligations of the Sponsor hereunder, a
first priority security interest in all of their respective rights, title and interest in and to the
following property, whether now existing or hereafter acquired: (i) the Purchased Eligible Loans;
(ii) Collections and funds to be collected with respect to such Purchased Eligible Loans; (iii) any
monies on deposit in accounts established hereunder (including the Collection Account), (iv) all
proceeds thereon and related thereto, and (v) all related tangible and intangible rights and
security with respect thereto (collectively, “Collateral”). Subject to Section 15(f), the lien on
such Collateral granted hereunder shall be deemed to be released with respect to any Purchased
Eligible Loan by Custodian and the Department upon the Sponsor’s remittance of the
Redemption Payment with respect to such Loan to the Department in accordance with Section 15
hereto, and the release of such Loan from the related Class A Participation Interest. The
Department has the right to take all steps necessary to ensure perfection and priority in the
Collateral, including filing one or more Uniform Commercial Code financing statements with the
applicable filing office.
(b)
Each of the Sponsor, the Eligible Lender Trustee (if applicable) and the Custodian
hereby authorize the Department, at the Sponsor’s expense, to perform all acts which the
Department deems appropriate to protect, preserve and realize upon the Purchased Eligible
Loans, including, but not limited to, the right to take possession of and endorse and collect any
checks, drafts, notes, acceptances or other instruments for the payment of moneys due with
respect to any Promissory Note, complete blanks in documents, transfer servicing and execute
assignments and other instruments on behalf of the Sponsor as its attorney in fact. This power of
attorney is coupled with an interest and is irrevocable without Department’s consent.
(c)
This Master Participation Agreement creates a valid and continuing interest (as
defined in the applicable Uniform Commercial Code) in the Purchased Eligible Loans in favor of
the Department, which security interest is prior to all other liens, charges, security interests,
mortgages or other encumbrances, and is enforceable as such as against creditors of and
purchasers from the Sponsor.
(d)
Pursuant to the Higher Education Act, a security interest in student loans is
perfected in the same manner as an interest in “accounts” within the meaning of the applicable
Uniform Commercial Code.

19

(e)
This Master Participation Agreement constitutes a “financing statement” and a
“security agreement” under Article 9 of the applicable Uniform Commercial Code.
Section 7.
Subsequent Disbursements. To the extent of funds made available by or
received from the Sponsor, the Custodian shall make any disbursements that are scheduled and
due after the initial disbursement on a Purchased Eligible Loan (each, a “Subsequent
Disbursement”). The Sponsor shall provide to or at the direction of the Custodian the funds
necessary to make any such Subsequent Disbursements, and the Sponsor, if requested by the
Custodian, hereby agrees make such disbursements directly to the applicable educational
institution as the delegee of the Custodian. The Custodian shall issue to the Sponsor the related
Participation Interests in such Subsequent Disbursements, and the Sponsor shall sell to the
Department Class A Participation Interests in the Purchased Eligible Loan with respect to the
initial disbursement and such Subsequent Disbursements. Consistent with the terms of
Section 4, the Department shall only purchase a Class A Participation Interest in any Subsequent
Disbursement of a Purchased Eligible Loan if such Subsequent Disbursement shall have been
made by the Custodian or the Sponsor pursuant to the terms of this Section 7 prior to the related
Purchase Date, and notice thereof shall have been provided to the Department.
Section 8.

Reporting; Due Diligence.

(a)
On a monthly basis on the day of the month specified by the Department
(“Reporting Date”) or as otherwise specified below, the Sponsor shall provide or cause the
Custodian or the Servicer, as applicable, to provide to the Department, the following:
(i)

on the date of execution of the Adoption Agreement and on each Reporting
Date, a twelve (12) month rolling forecast, estimating the number of Loans
and the Principal Balance thereof that the Sponsor reasonably believes, in
good faith, that it will cause to become subject to Participation Interests and
sold to the Department hereunder, and the number and Principal Balance of
Purchased Eligible Loans that the Sponsor expects to redeem in each of the
months following the date of such projection through September 2010;

(ii)

a listing of all principal and interest payments or other payments received on
each Purchased Eligible Loan subject to a Participation Interest during the
previous calendar month and the current amount of principal and interest due
and owing on such Purchased Eligible Loans;

(iii) information on Loans by schools, delinquencies, and other features as may be
requested by the Department from the Sponsor or the Custodian;
(iv) with respect to each Servicer, any audit reports or other annual
compliance/operational audits performed on such Servicer relating to the
servicing of FFELP loans;
(v)

within 60 calendar days following the consummation of the initial
Participation Purchase Request hereunder and on any subsequent dates
specified by the Department, the Sponsor shall and shall cause each Servicer
to provide to the Department a statement of compliance with respect to this
Agreement and any related documents, Eligible Servicing Agreements and

20

applicable law, together with an agreed upon procedures letter delivered by
an independent public accountant with respect to this Agreement, all in forms
acceptable to the Department; and
(vi) such other information as requested by the Department shall be delivered to
the Department, which may include Redemption Payment calculations as
defined in clause (ii) of the definition of Redemption Payment, the
calculation of other amounts due and owing to the Department or Sponsor
upon exercise of the Put Option with respect to Purchased Eligible loans, and
audited annual financial statements or unaudited quarterly financial
statements of the Sponsor and any Servicer or their respective consolidated
groups.
(b)
following:

On each Reporting Date, the Custodian shall provide to the Department the
(i)

a monthly settlement date report with respect to each Loan subject to a Class
A Participation Interest, which shall include all loan activity for the prior
calendar month including loan disbursements, and an aggregation of the
Participant’s Yield and principal paid to the Department with respect to each
Class A Participation Interest (a “Settlement Date Report”); and

(ii) prior to the later of (i) 90 calendar days after the Termination Date, or (ii) the
date on which the Department publishes audit guidance, an audit of the
Custodian’s activities under that Participation Interest conducted by an
independent auditor selected by the Sponsor (which may be the same auditor
that is performing audits on behalf of the Sponsor or the Servicer).
(c)
The Department and its representatives have the right to request, schedule and
conduct, during normal business hours and upon reasonable prior notice, a due diligence/audit of
the Servicer’s operations, the Loan Documents, the Eligible Loans and the Settlement Date
Reports. At any time and from time to time during a calendar year, the Department shall have
the right to request, schedule and conduct, during normal business hours and upon reasonable
prior notice, additional due diligence of the Sponsor and the Custodian. The Sponsor and
Custodian shall ensure that each and any delegated Servicer provide such access. All expenses
incurred as a result of such due diligence shall be borne by the Sponsor.
(d)
Pursuant to Section 432(f) of the Higher Education Act, the Sponsor, the Eligible
Lender Trustee (if applicable) and the Custodian each hereby grants the Department and its
agents (including but not limited to legal counsel and internal or external auditors), (i) the right at
any time and from time to time during regular business hours, (ii) to examine and make copies of
and abstracts from all books, records and documents (including, without limitation, computer
tapes and disks) in the possession or under the control of the Sponsor, the Eligible Lender
Trustee or the Custodian relating to Participation Interests sold hereunder or the Loans subject to
such Participation Interests and (iii) to visit the offices of the Sponsor, the Eligible Lender
Trustee or the Custodian for the purpose of examining such material described in clause (ii)
above, and to discuss matters relating to such Participation Interests or Loans or the performance

21

of the Sponsor, the Eligible Lender Trustee (if applicable) or the Custodian hereunder with any
of their respective officers and employees having knowledge of such matters.
(e)
The Custodian may, in good faith, prepare any of the reports, statements or other
information to be delivered by the Custodian to the Department hereunder in reliance on
information provided to it by the Servicer or any other delegee so long as the Custodian is in
compliance with Section 18 hereof with respect to such delegee.
Section 9.

Conditions Precedent.

(a)
On or prior to the initial Purchase Date, the Sponsor shall deliver or cause to be
delivered the following documents to the Department:
(i)

the Adoption Agreement, duly executed by the Sponsor, the Eligible Lender
Trustee (if applicable) and the Custodian in four counterparts;

(ii)

unless the Sponsor has entered into the Master Participation Agreement dated
July 25, 2008 and has reaffirmed in the Adoption Agreement submitted
pursuant to Section 9(a)(i) the certification and opinion of counsel provided
regarding the July 25, 2008 Agreement –
(1)

a duly executed officer’s certificate of the Sponsor, in substantially the
form of Exhibit B hereto, together with all required attachments
thereto, and

(2)

an opinion of counsel to the Sponsor, in substantially the form of
Exhibit C hereto;

(iii) certified copies of all agreements of the Sponsor, if any, with other Eligible
Lenders or holders of beneficial interests in FFELP loans, to aggregate,
transfer or cause the transfer of legal title to, and sell participation interests in
Eligible Loans under the Agreement;
(iv) tax lien, Uniform Commercial Code lien and judgment search reports with
respect to the Sponsor and the Eligible Lender Trustee (if applicable) in all
relevant jurisdictions;
(v)

certified copies of all related Eligible Servicing Agreements;

(vi) the Class A Participation Certificate representing the Class A Participation
Interests purchased on such Purchase Date, which shall have attached thereto
a Loan Schedule and Custodial Certification, certified by the Custodian as an
accurate listing of all of the Eligible Loans as to which the Custodian (i)
holds legal title and (ii) has physical possession (either directly or through its
delegee) of all related Loan Documents in trust for the benefit of the holders
of the Participation Interests; and
(vii) such other documents as the Department may request.

22

(b)
On or prior to each Purchase Date (including the initial Purchase Date), the
Sponsor (or the Custodian, as applicable) shall be required to deliver each of the following to the
Department or the Custodian, as applicable:
(i)

Activities Prior to the Related Purchase Date. The Sponsor shall have
provided any assistance requested by the Department in determining that all
required documentation on the related Eligible Loans is present and correct.

(ii)

Participation Purchase Request/Loan Schedule. The Sponsor shall deliver to
the Department:
(1)

A Participation Purchase Request that has been duly authorized and
executed by an authorized officer of each of the Sponsor, the Eligible
Lender Trustee (if applicable) and the Custodian; and

(2)

The Loan Schedule, attached to the Participation Purchase Request,
identifying each of the Eligible Loans proposed to become subject to
Participation Interests.

(iii) Loan Documents. The Sponsor shall deliver to the Custodian or its designee all
Loan Documents related to each of the Eligible Loans proposed to become
subject to Participation Interests.
(iv) Loan Schedule and Custodial Certification. The Custodian shall have
delivered to the Department an updated Loan Schedule and Custodial
Certification reflecting each of the Eligible Loans proposed to become subject
to Participation Interests and all other Eligible Loans then subject to
Participation Interests hereunder, which shall replace the previous Loan
Schedule and Custodial Certification.
(v)

Exception Report. To the extent applicable, the Custodian shall have delivered
to the Department (with a copy to the Sponsor) an Exception Report with
respect to the Eligible Loans proposed to become subject to Participation
Interests; provided that the Department shall not be obligated to purchase a
Participation Interest in any Eligible Loan as to which a discrepancy shall be
listed on such Exception Report unless in its sole discretion, the Department
has either waived such discrepancy or given the Sponsor the opportunity to
cure such discrepancy and the Sponsor shall have cured the same to the
satisfaction of the Department.

(vi) Eligible Lender Trustee. The Eligible Lender Trustee (if applicable) shall have
delivered to the Department such additional documents and information as the
Department shall have requested to evidence that the Eligible Lender Trustee is
fully authorized to transfer title to each Eligible Loan to the Custodian on
behalf of the Sponsor.
(vii) Security Release Certification. If any of the Eligible Loans are subject to any
security interest, pledge or hypothecation for the benefit of any Person, the
Sponsor shall disclose that interest and deliver to the Department a fully
executed Security Release Certification in the form of Exhibit G to this
Agreement with respect to such Eligible Loans.
23

(viii) List of Lockboxes. The Sponsor shall have delivered to the Department a list
of lockboxes and copies of lockbox servicing instructions, to the extent not
already provided.
(ix) Additional Documents. The Sponsor shall have delivered to the Department
such additional documents and information as the Department shall have
requested, including any documents set forth under Section 9(a) not previously
delivered to the Department.
Section 10.
Representations and Warranties of the Sponsor, the Eligible Lender
Trustee and Custodian.
(a)
Representations as to the Sponsor and the Eligible Lender Trustee. The Sponsor,
as to each matter referenced below, and to the extent expressly required below, the Eligible
Lender Trustee (if applicable), represents and warrants to the Department and the Custodian, as
of the date the Adoption Agreement is executed and as of each Purchase Date:
(i)

Each of the Sponsor and the Eligible Lender Trustee (if applicable) (1) is
duly organized, validly existing and in good standing under the laws of the
State of its formation or of the United States, as applicable, (2) has all
licenses necessary to carry out its business as now being conducted or is
otherwise exempt under applicable law from such licensing or qualification
or is otherwise not required under applicable law to effect such licensing or
qualification and no demand for such licensing or qualification has been
made upon the it by any such state, and (3) is in compliance with the laws of
any such state to the extent necessary to ensure the enforceability of each
Loan. No licenses or approvals obtained by it have been suspended or
revoked by any court, administrative agency, arbitrator or governmental body
and no proceedings are pending which might result in such suspension or
revocation;

(ii)

The Sponsor or the Eligible Lender Trustee (if applicable) is an “eligible
lender” as such term is defined in Section 435(d) of the Higher Education
Act, it has a lender identification number issued by the Department with
respect to the Loans;

(iii)

The Sponsor or the Eligible Lender Trustee (if applicable) has in effect a
Guarantee Agreement with a Guarantor with respect to each of the Loans;

(iv) The Sponsor intends to sell to the Department during the term of this
Agreement Class A Participation Interests in Eligible Loans, that it estimates,
in good faith, will have an aggregate Principal Balance of not less than
$50,000,000;
(v)

With respect to each state or jurisdiction therein in which the Sponsor
undertakes origination activities, Sponsor is in full compliance with such
state’s or jurisdiction’s (as applicable) laws, rules, regulations, orders,
settlement agreements and other standards and procedures, including those
promulgated by agencies or officers thereof, applicable to it and pertaining to
the conduct of participants in the student loan industry (including, without

24

limitation, any applicable “code of conduct” for participants in the student
loan industry that applies to the Sponsor as a matter of law, to the extent that
non-compliance with such a code of conduct would adversely affect the
Department’s right or interests with respect to the Loans in which it acquired
participation interest);
(vi) The Sponsor has administered, operated and maintained its student loan
program in such a manner as to ensure that such program and the Loans will
benefit, in all material respects, from the FFELP, the Guarantee Agreements
related thereto and the federal program of reimbursement for FFELP loans
pursuant to the Higher Education Act;
(vii) Neither the Sponsor nor the Eligible Lender Trustee (if applicable) has, with
respect to any Purchased Eligible Loan, agreed to release any Guarantor from
any of its contractual obligations as a guarantor of such Loan or agreed
otherwise to alter, amend or renegotiate any material term or condition under
which such Loan is guaranteed, except as required by law or rules and
regulations issued pursuant to law, without the express prior written consent
of the Department;
(viii) Each of the Sponsor and the Eligible Lender Trustee (if applicable) (1) has,
or, for Loans already transferred to the Custodian, had at the time of such
transfer, all requisite power and authority to hold each Loan, to transfer each
Loan, and to execute, deliver and perform, and to enter into and consummate,
all transactions contemplated by this Agreement, (2) has duly authorized the
execution, delivery and performance of this Agreement, and (3) has duly
executed and delivered this Agreement. This Agreement, assuming due
authorization, execution and delivery by the Department, constitutes a legal,
valid and binding obligation of each of the Sponsor and the Eligible Lender
Trustee (if applicable), enforceable against each of them in accordance with
its terms except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the
enforcement of rights of creditors generally, and to general principles of
equity (regardless of whether such enforceability is considered in a
proceeding in equity or law); provided, however, that if the Sponsor is not an
Eligible Lender, the power and authority to hold and sell each Loan described
in clause (1) shall refer, with respect to the Sponsor, to the beneficial interest
of the Sponsor, and with respect to the Eligible Lender Trustee, to its interest
as the legal title holder of the Loan;
(ix) The execution and delivery of this Agreement by each of the Sponsor and the
Eligible Lender Trustee (if applicable) and the performance of and
compliance with the terms of this Agreement will not violate its formation
documents or constitute a default under or result in a breach or acceleration
of, any material contract, agreement or other instrument to which it is a party
or which may be applicable to it or its assets;
(x)

Neither the Sponsor nor the Eligible Lender Trustee (if applicable) is in
violation of, and the execution and delivery of this Agreement by it and its

25

performance and compliance with the terms of this Agreement will not
constitute a violation with respect to, any order or decree of any court or any
order or regulation of any federal, state, municipal or governmental agency
having jurisdiction over it or its assets, which violation might have
consequences that would materially and adversely affect the condition
(financial or otherwise) or its operations or its assets or might have
consequences that would materially and adversely affect the performance of
its obligations and duties hereunder;
(xi) The Sponsor does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every covenant contained in this
Agreement;
(xii) There are no actions or proceedings against, or investigations of, the Sponsor
or the Eligible Lender Trustee (if applicable) before any court, administrative
agency or other tribunal (1) that might prohibit its entering into this
Agreement, (2) that seeks to prevent the transfer of the Loans to the
Custodian or the creation and sale of the Participation Interests or the
consummation of the transactions contemplated by this Agreement, or (3)
that might prohibit or materially and adversely affect the performance of its
obligations under, or the validity or enforceability of, this Agreement;
(xiii) No consent, approval, authorization or order of any court or governmental
agency or body is required for the execution, delivery and performance by the
Sponsor or the Eligible Lender Trustee (if applicable) of, or compliance by it
with, this Agreement or the consummation of the transactions contemplated
by this Agreement, except for such consents, approvals, authorizations or
orders, if any, that have been obtained prior to the related Purchase Date;
(xiv) The consideration received by the Sponsor upon the sale of the Participation
Interests constitutes fair consideration and reasonably equivalent value for
such Participation Interests;
(xv) The Sponsor is solvent and will not be rendered insolvent by the
consummation of the transactions contemplated hereby. The Sponsor is not
transferring any Participation Interests with any intent to hinder, delay or
defraud any of its creditors;
(xvi) The Sponsor has an internal quality control program that verifies, on a regular
basis, the existence and accuracy of its legal documents, credit documents
and underwriting decisions, including all such documents and decisions that
would affect the validity of the representations and warranties required under
this Section 10(a). The program shall include evaluating and monitoring the
overall quality of the Sponsor’s loan production and the servicing of such
loans. The program must use commercially-reasonable processes and
procedures to ensure that Loans are originated and serviced in accordance
with applicable law, to prevent and detect dishonest, fraudulent, or negligent
acts; and to guard against errors and omissions by officers, employees, or
other authorized persons. At a minimum this program and processes must
include maintenance of an errors and omissions insurance policy to the same

26

extent that the Sponsor adopts this practice for its other credit transaction, or
that it is required to do so under arrangements governing its financing. To
the extent that the Sponsor uses, or is required to use, periodic independent
auditor reviews of its transactions, these processes must include those
reviews for transactions that include the activities of the Sponsor under this
Agreement.
(xvii) If the Sponsor is acting as an aggregator on behalf of any other entity, it has
received a certification from such entity (which it will provide to the
Department upon request) that such entity has agreed to continue to
participate in the FFEL program and that at such time as funds become
reasonably available to it from private sources, it will originate new FFELP
loans after the Department’s purchases of Participation Interests from the
Sponsor hereunder.
(b)
Loan Level Representations. The Sponsor, and to the extent expressly required
below, the Eligible Lender Trustee (if applicable), represents and warrants to the Department as
to the Eligible Loans subject to any Class A Participation Interest as of each related Purchase
Date and as of each date such Loans are subject to a Class A Participation Interest:
(i)

At the time of transfer of title to the Custodian, the Sponsor or the Eligible
Lender Trustee (as applicable) has good and marketable title to, and the
Sponsor and Eligible Lender Trustee together are the sole owners of, the
Loans, free and clear of any security interest or lien (other than an interest or
lien that will be released simultaneously with the purchase of the related Class
A Participation Interest pursuant to a Security Release Certification), charges,
claims, offsets, defenses, counterclaims or encumbrances of any nature and no
right of rescission, offsets, defenses or counterclaims have been asserted or
threatened with respect to the Loans;

(ii)

Each Loan is an Eligible Loan and the description of and information
regarding the Loans set forth in the Participation Purchase Request and the
Loan Schedule is true, complete and correct;

(iii) The Sponsor or the Eligible Lender Trustee (if applicable) is authorized to
transfer the Loans to the Custodian, to cause the Participation Interests to be
issued and to sell the Participation Interests to the Department; and the
transfer of the Loans to the Custodian and issuance and sale of the
Participation Interests will be made pursuant to and consistent with the laws
and regulations under which the Sponsor or the Eligible Lender Trustee (if
applicable) operates, and will not violate any decree, judgment or order of any
court or agency, or conflict with or result in a breach of any of the terms,
conditions or provisions of any agreement or instrument to which it is a party
or by which it or its property is bound, or constitute a default (or an event
which could constitute a default with the passage of time or notice or both)
thereunder;

27

(iv)

The Loans are each in full force and effect in accordance with their terms and
are legal, valid and binding obligations of the respective Borrowers thereunder
subject to no defenses;

(v)

No consents and approvals are required by the terms of the Loans for the
consummation of the sale of the Participation Interests hereunder to the
Department;

(vi)

Each Loan has been duly made and serviced in accordance with the provisions
of the FFELP established under the Higher Education Act, and has been duly
guaranteed by a Guarantor; the Guarantee Agreement is in full force and
effect and is freely transferable to the Custodian as trustee for the benefit of
the Department as an incident to the purchase of each Participation Interest;
and all premiums due and payable to such Guarantor as of the related
Purchase Date shall have been paid in full;

(vii) Each Loan provides or, when the payment schedule with respect thereto is
determined, will provide for payments on a periodic basis that fully amortize
the Principal Balance thereof by its maturity, as such maturity may be
modified in accordance with any deferral or forbearance periods granted in
accordance with applicable law, including, the Higher Education Act,
Department regulations, or any applicable Guarantee Agreement;;
(viii) Any payments on the Loans received by the Sponsor that have been allocated
to the reduction of principal and interest on such Loans have been allocated on
a simple interest basis;
(ix)

Due diligence and reasonable care have been exercised in the making,
administering, servicing and collecting on the Loans and, with respect to any
Loan for which repayment terms have been established, all disclosures of
information required to be made pursuant to the Higher Education Act have
been made;

(x)

Each Borrower is an eligible borrower under the terms of Section 428, 428B
or 428H of the Higher Education Act, as applicable;

(xi)

All Borrower origination fees and loan fees required pursuant to Section 438
of the Higher Education Act have been paid to the Secretary or appropriately
reserved by the Sponsor or the Eligible Lender Trustee (if applicable) for
payment to the Secretary;

(xii) Each Loan is denominated and payable only in Dollars in the United States;
(xiii) Sponsor has delivered or caused to be delivered to the Custodian as the legal
owner of the Loan and trustee for the Department or to the designee of the
Custodian, each of the Loan Documents with respect to such Loan;

28

(xiv) The transfer and assignment herein contemplated constitute a valid sale of the
Participation Interests from the Sponsor to the Department, and the beneficial
interest in and title to such Participation Interests shall not be part of the
Sponsor’s estate in the event of the bankruptcy of the Sponsor or the
appointment of a receiver with respect to the Sponsor;
(xv) There is only one original executed copy of the Promissory Note evidencing
each Loan. For Loans that were executed electronically, the Sponsor of such
Loan (or its designee) has possession of the electronic records evidencing the
Promissory Note, including all Loan Documents. The Promissory Notes that
evidence the Loans have no marks or notations indicating that they have been
pledged, assigned or otherwise conveyed to any Person other than the
Department, other than one that evidences -(1)

an interest or lien that has already been released or will be released
simultaneously with the purchase of the Loan hereunder pursuant
to the terms of the Security Release Certification,

(2)

an assignment or transfer to or from a predecessor in interest of the
Sponsor, or

(3)

a lien in favor of the Department or any interest of the Custodian
under the 2009 Master Participation Agreement,

(xvi) To the extent any Loan is evidenced by an electronic Promissory Note or an
electronic record, or to the extent the signature of the obligor on any
Promissory Note is an electronic signature, the Sponsor has complied (and has
caused any originator or servicer of the Loan to comply) with all regulations
and other requirements provided by the applicable Guarantor or the
Department relating to the validity and enforceability of such Promissory
Note;
(xvii) Other than the conveyance to the Custodian as trustee for the benefit of the
Department or transfer of legal title to the Eligible Lender Trustees (if
applicable), neither the Sponsor nor the Eligible Lender Trustee (if applicable)
has pledged, assigned, sold, granted a security interest in, or otherwise
conveyed any of the Loans unless that action or interest has been rescinded,
terminated or released, or will be so, simultaneously with the purchase of the
related Class A Participation Interest pursuant to a Security Release
Certification). Neither the Sponsor nor the Eligible Lender Trustee (if
applicable) has authorized the filing of or is aware of any financing statements
against either party that includes a description of collateral covering the
Purchased Eligible Loans hereunder (whether or not additional collateral is
covered by such financing statements) or any other security interest that has
not been terminated, or that will not be terminated upon purchase of the
related Class A Participation Interest by the Department. Neither the Sponsor

29

nor the Eligible Lender Trustee (if applicable) is aware of any judgment or tax
lien filings against it;
(xviii) No Borrower of a Loan is noted in the related loan file as being currently
involved in a bankruptcy proceeding;
(xix) Each grant of the Purchased Eligible Loans by the Sponsor pursuant to this
Master Participation Agreement is not subject to the bulk transfer act or any
similar statutory provisions in effect in any applicable jurisdiction; and
(xx) Each grant of the Purchased Eligible Loans (including all payments due or to
become due thereunder) by the Sponsor pursuant to this Master Participation
Agreement is not subject to and will not result in any tax, fee or governmental
charge payable by the Sponsor to any federal, state or local government.
(c)
Representations and Warranties of the Custodian. The Custodian represents and
warrants to the Department and the Sponsor, as of the date the Adoption Agreement is executed
and at all times thereafter:
(i)

The Custodian is duly organized, validly existing and in good standing under
the laws of the State of its formation. The Custodian has all licenses
necessary to carry out its business as now being conducted or is otherwise
exempt under applicable law from such licensing or qualification or is
otherwise not required under applicable law to effect such licensing or
qualification and no demand for such licensing or qualification has been made
upon the Custodian by any such state. No licenses or approvals obtained by
the Custodian have been suspended or revoked by any court, administrative
agency, arbitrator or governmental body and no proceedings are pending
which might result in such suspension or revocation;

(ii)

The Custodian is an “eligible lender” as such term is defined in
Section 435(d)(1)(A) of the Higher Education Act, and is a National or Statechartered bank;

(iii) The Custodian has a long-term senior unsecured debt rating of not less than
investment grade by at least one of Standard & Poor’s, a division of The
McGraw-Hill Companies, Inc., Moody’s Investors Service, Inc. or Fitch
Ratings, or any of their successors in interest;
(iv)

The Custodian has a combined capital and surplus of at least $50,000,000, as
set forth in its most recent published annual report of condition;

(v)

The Custodian has demonstrated, to the satisfaction of the Department, that it
has the administrative capability and operating systems adequate to discharge
faithfully the functions of the Custodian under this Agreement, and has
allocated sufficient staff (including Responsible Officers of the corporation) to
carry out such duties;

30

(vi)

The Custodian is not affiliated with the Sponsor or the Eligible Lender
Trustee;

(vii) The Custodian is not aware of any liens in existence with respect to any
Purchased Eligible Loan held by the Custodian, other than the lien of the
Department and any interest or lien that will be released simultaneously with
the purchase of the related Class A Participation Interest pursuant to a
Security Release Certification;
(viii) The Custodian has all requisite power and authority to hold each Loan as
trustee, and to execute, deliver and perform, and to enter into and
consummate, all transactions contemplated by this Agreement. The Custodian
has duly authorized the execution, delivery and performance of this
Agreement, has duly executed and delivered the Adoption Agreement, and
this Agreement, assuming due authorization, execution and delivery by each
of the Sponsor and the Department, constitutes a legal, valid and binding
obligation of the Custodian, enforceable against it in accordance with its terms
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of rights
of creditors generally, and to general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or law);
(ix)

The execution and delivery of the Adoption Agreement by the Custodian and
the performance of and compliance with the terms of this Agreement will not
violate the Custodian's formation documents or constitute a default under or
result in a breach or acceleration of, any material contract, agreement or other
instrument to which the Custodian is a party or which may be applicable to the
Custodian or its assets;

(x)

The Custodian is not in violation of, and the execution and delivery of this
Agreement by the Custodian and its performance and compliance with the
terms of this Agreement will not constitute a violation with respect to, any
order or decree of any court or any order or regulation of any federal, state,
municipal or governmental agency having jurisdiction over the Custodian or
its assets, which violation might have consequences that would materially and
adversely affect the condition (financial or otherwise) or the operation of the
Custodian or its assets or might have consequences that would materially and
adversely affect the performance of its obligations and duties hereunder;

(xi)

The Custodian does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every covenant contained in this
Agreement;

(xii) There are no actions or proceedings against, or investigations of, the
Custodian before any court, administrative agency or other tribunal (i) that
might prohibit its entering into this Agreement, (ii) seeking to prevent the
transfer of the Loans to the Custodian or the creation and sale of the

31

Participation Interests or the consummation of the transactions contemplated
by this Agreement or (iii) that might prohibit or materially and adversely
affect the performance by the Custodian of its obligations under, or the
validity or enforceability of, this Agreement; and
(xiii) No consent, approval, authorization or order of any court or governmental
agency or body is required for the execution, delivery and performance by the
Custodian of, or compliance by the Custodian with, this Agreement or the
consummation of the transactions contemplated by this Agreement, except for
such consents, approvals, authorizations or orders, if any, that have been
obtained.
Section 11.

Collections; Distributions.

(a)
The Sponsor shall cause a Collection Account to be established at the Custodian
for the purpose of holding all payments and other proceeds of any kind received on or with
respect to the Purchased Eligible Loans and any funds received by reason of a Borrower
cancellation of a Purchased Eligible Loan or a return of Title IV, HEA funds from the institution
attended by such Borrower, and without the netting of any amounts (“Collections”) for the
benefit of the Department, as holder of the Class A Participation Interests. The Sponsor shall
cause the Servicers, as defined below, to deposit all Collections as soon as possible, but in no
event later than two (2) Business Days after receipt of funds, into the Collection Account. The
Custodian hereby grants to the Department a first priority precautionary security interest in the
Collection Account, all Collections at any time on deposit therein and all proceeds and products
thereof. Amounts on deposit in the Collection Account may be invested only in Permitted
Investments.
(b)
On the first Business Day of each calendar month or such other date as agreed to
between the Custodian and the Department, the Custodian shall distribute all funds then on
deposit in the Collection Account to be applied in the following order of priority:
first, to the Department to pay the aggregate outstanding Participant’s Yield then
due and owing to the Department (together with all outstanding Participant’s
Yield not paid to the Department on any previous distribution date due to
insufficient funds on deposit in the Collection Account);
second, to the Department to reduce the aggregate outstanding principal balance
of the Class A Participation Interests held by the Department (calculated pursuant
to Section 5(g) through the end of the most recent calendar month), until such
balance is reduced to zero; and
third, to the Sponsor, any remaining amounts.
(c)
Upon the request of the Sponsor, the Custodian may distribute funds then on
deposit in the Collection Account to the Department on a regular basis, but not more frequently
than weekly.

32

(d)
Following the Termination Date, but on or before October 20, 2009, the
Custodian shall distribute any funds remaining on deposit in the Collection Account, in the
following order of priority:
first, to the Department, the aggregate outstanding Participant’s Yield then due
and owing;
second, to the Department to reduce the aggregate outstanding principal balance
of the Class A Participation Interests (calculated pursuant to Section 5(g) through
the end of the most recent calendar month) until such balance is reduced to zero;
and
third, to the Sponsor, any remaining amounts.
(e)
All distributions by the Custodian hereunder shall be made by electronic transfer
in funds available on the next business day in accordance with the instructions provided by the
recipient.
(f)
The Custodian shall calculate any amounts due to the Department or the Sponsor
hereunder and all such calculations shall be subject to verification by the Department.
Section 12.

Servicing of Eligible Loans.

(a)
Each Eligible Loan which is subject to a Participation Interest shall be serviced by
a Servicer (which may be the Sponsor) at the direction of the Custodian pursuant to the terms of
an Eligible Servicing Agreement, and in accordance with Department regulations. No entity that
is subject to sanction by the Department may act as a Servicer. A Sponsor that services its own
Loans and that proposes to service Purchased Eligible Loans for the Custodian must enter into an
Eligible Servicing Agreement with the Custodian to perform that function.
(b)
The Sponsor will be responsible for the payment of any servicing related fees and
expenses incurred in connection with the servicing of the related Eligible Loans.
(c)
A servicing agreement will be deemed to be an “Eligible Servicing Agreement” if
the agreement:
(i)

contains customary terms and conditions that reflect a negotiated, armslength transaction;

(ii)

provides for not more than a fair market servicing fee;

(iii) includes usual and customary representations, warranties, covenants and
events of default;
(iv)

acknowledges or has been amended to acknowledge that the Department is
an intended third-party beneficiary of such agreement entitling the
Department to instruct the Servicer and exercise remedies with respect to

33

the applicable Eligible Loans upon the occurrence of a Servicer Event of
Default;
(v)

provides that the Servicer will deposit all Collections into the Collection
Account not later than two (2) Business Days after receipt;

(vi)

provides that upon notice of the exercise of the Put Option or other
acquisition of an Eligible Loan by the Department, such agreement may be
terminable by the Department, in its sole discretion, upon thirty (30) days’
notice and the Eligible Loans deconverted and transferred to a designee of
the Department without the payment by the Department of any de-boarding,
deconversion or related costs, penalties or fees to the related Servicer and
that the servicing shall be transferred as instructed by the Department; and

(vii) provides that the Servicer shall deliver to the Custodian all documents and
information necessary to enable the Custodian to oversee the Servicer as
provided herein.
(d)
The Custodian shall take all reasonable steps, actions and proceedings necessary
to ensure that each Servicer will manage, service, administer, make collections and calculate any
amounts owed to the Department with respect to the Eligible Loans (including collection of any
Interest Subsidy Payments and Special Allowance Payments and calculate any negative Special
Allowance Payments owing with respect to the Eligible Loans) in compliance with all applicable
Federal and State laws, including all applicable rules, regulations and other requirements of the
Higher Education Act and the applicable Guarantee Agreement. The Custodian shall ensure that
each Servicer shall be responsible for segregating, marking each Eligible Loan as owned by the
Custodian and remitting to the Custodian all payments received on the Eligible Loans for the
benefit of the Department as the holder of the Class A Participation Certificate, including but not
limited to, physical or electronic marking of relevant computer records.
Section 13.

Enforcement of the Servicing Agreements.

(a)
The Custodian shall take all reasonable steps, actions and proceedings necessary
to enforce all terms, covenants and conditions of the Servicing Agreement, and shall cause the
Servicer to specify whether Collections received by it and deposited into the Collection Account
represent principal or interest.
(b)
The Custodian shall not permit the release of the obligations of the Servicer under
the Servicing Agreement except in conjunction with amendments or modifications permitted by
Section 13(f) below.
(c)
At all times, to the extent permitted by law, cause to be defended, enforced,
preserved and protected the rights and privileges of the Custodian and the Department under or
with respect to the Servicing Agreement.
(d)
The Custodian shall notify the Department in writing promptly upon becoming
aware of any default or failure to perform any obligations on the part of the Servicer under the
Servicing Agreement.
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(e)
The Custodian shall not waive any default by the Servicer under the Servicing
Agreement without the written consent of the Department.
(f)
The Custodian shall not consent or agree to or permit any amendment or
modification of the Servicing Agreement which will in any manner materially adversely affect
the rights or security of the Department. Pursuant to the Servicing Agreement, the Sponsor and
the Custodian shall be entitled to receive and rely upon an opinion of outside counsel that any
such amendment or modification will not materially adversely affect the rights or security of the
Department.
Section 14.

Liability of the Sponsor and the Custodian; Indemnities.

(a)
The Sponsor shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Sponsor under this Agreement, and to the extent of
any obligations delegated by the Custodian to the Sponsor pursuant to the terms hereof.
(i)

The Sponsor shall indemnify, defend and hold harmless the Department and
its officers, directors, employees and agents in their individual capacity from
and against any taxes that may at any time be asserted against any such
person with respect to the transactions contemplated herein and in the other
documents related hereto, including any sales, gross receipts, general
corporation, tangible and intangible personal property, privilege or license
taxes and costs and expenses in defending against the same.

(ii)

The Sponsor shall indemnify, defend and hold harmless the Department and
its officers, directors, employees and agents in their individual capacity, from
and against any and all liability for any and all costs, expenses (including,
without limitation, costs and expenses of litigation and of investigation
counsel fees, damages, judgments and amounts paid in settlement), losses,
claims, damages and liabilities that may be imposed on, incurred by, or
asserted against the Department in any way relating to or arising out of this
Agreement or, the Sponsor’s, the Eligible Lender Trustee’s (if applicable), or
the Servicer’s willful misfeasance, bad faith or negligence in the performance
of its respective duties under this Agreement or the Servicing Agreement, as
applicable, or by reason of a breach by the Sponsor, the Eligible Lender
Trustee or the Servicer of any of their respective representations, warranties,
covenants or other obligations or duties under this Agreement or the
Servicing Agreement, as applicable.

(iii) The Sponsor shall reimburse, indemnify, defend and hold harmless the
Custodian and its directors, officers, agents and employees in their individual
capacity from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, or out-of-pocket expenses of any
kind or nature whatsoever, including reasonable attorney’s fees, that may be
imposed on, incurred by, or asserted against it or them in any way relating to
or arising out of this Agreement or the Custodian’s ownership of legal title to
the Purchased Eligible Loans.

35

(b)
The Custodian shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Custodian under this Agreement, and with respect to
those obligations delegated by it pursuant to the terms hereof, only to the extent the Custodian
shall not have complied with Section 18. The Custodian shall indemnify, defend and hold
harmless the Department and the officials, employees and agents of the Department in their
individual capacity from and against liability for any and all costs, expenses (including, without
limitation, costs and expenses of litigation and of investigation counsel fees, damages, judgments
and amounts paid in settlement), losses, claims, damages and liabilities that may be imposed on,
incurred by, or asserted against the Department in any way relating to or arising out of the
Custodian’s willful misfeasance, bad faith or negligence in the performance of its duties under
this Agreement, or by reason of its breach of any of its representations, warranties, covenants or
other obligations or duties under this Agreement. Notwithstanding anything in this Agreement to
the contrary, in no event shall the Custodian be liable for any special, consequential, punitive or
indirect damages resulting from any action taken or omitted to be taken by it hereunder or in
connection herewith. The foregoing sentence shall survive the removal of the Custodian and the
termination of this Agreement. Except to the extent of losses, claims, damages and liabilities
that arise out of the Custodian’s willful misfeasance, bad faith or negligence in the performance
of its duties under this Agreement, the amount of Custodian’s liabilities to the Department and its
officials, employees and agents under this Section 14(b) shall be limited to the amount of the
aggregate fees paid to it for its services hereunder.
(c)
Indemnification under this Section 14 shall survive the resignation or the
termination of this Agreement, and shall include reasonable fees and expenses of counsel and
expenses of litigation. If the Sponsor or Custodian, as applicable, shall have made any indemnity
payments pursuant to this Section and the person to or on behalf of whom such payments are
made thereafter shall collect any of such amounts from others, such Person shall promptly repay
such amounts to the Sponsor or Custodian, as applicable, without interest.
Section 15.

Redemption; Put Option; Termination.

(a)
On or at any time before the Termination Date with respect to each Purchased
Eligible Loan, the Sponsor that intends to redeem or put a Purchased Eligible Loan shall notify
the Department and the Custodian of its election to either (1) pay to the Custodian for the benefit
of the Department the related Redemption Payment, or (2) exercise the Put Option with respect
thereto. Upon receipt of such notification, the Custodian shall compute the calculation in clause
(ii) of the definition of Redemption Payment based upon the data provided by the Sponsor in
such notification.
(b)
Upon receipt of the Redemption Payment with respect to a Purchased Eligible
Loan, the Custodian shall promptly (1) remit such Redemption Payment to the Department, (2)
transfer legal title and release all of its interests in and to such Purchased Eligible Loan to the
Sponsor or the Eligible Lender Trustee (if applicable), (3) deliver or cause to be delivered all
related Loan Documents to the Sponsor, and (4) cancel the Class A Participation Interest and the
Class B Participation Interest with respect to such Purchased Eligible Loan.
(c)

(i) In order to exercise the Put Option with respect to a Purchased Eligible Loan,

36

the Sponsor shall (1) together with its Eligible Lender Trustee, if applicable,
have entered into a Master Loan Sale Agreement (which may be done at any
time on or before July 1, 2009 notwithstanding any other document or
agreement), (2) comply with the requirements set forth in Sections 4A, 4D
and 4F of the Master Loan Sale Agreement, (3) comply with each of the
conditions precedent set forth in Sections 5A and 5B(i) of the Master Loan
Sale Agreement, (4) prepare and deliver to the Custodian for execution the
documents set forth in Sections 5B(iii) through (vii) and 5C of the Master
Loan Sale Agreement, (5) make each of the representations and warranties
set forth in Section 6 of the Master Loan Sale Agreement as they pertain to
the Sponsor as of both the date of the Adoption Agreement and the date the
related Put Option is exercised, and as they pertain to such Purchased Eligible
Loan as of the Purchase Date under this Agreement and as of the date the
related Put Option is exercised, (6) ensure the delivery of all related servicing
rights with respect to such Purchased Eligible Loan to the Department, and
(7) cause the related Servicing Agreement with respect to such Purchased
Eligible Loan to be terminated.
(ii)

Upon the Custodian’s receipt of a request by the Sponsor to exercise the Put
Option with respect to a Purchased Eligible Loan, the Custodian shall
promptly (1) transfer legal title and release all of its interests in and to such
Purchased Eligible Loan to the Department, (2) deliver or cause to be
delivered all related Loan Documents to the Department or its designee, and
(3) cancel the Class A Participation Interest and the Class B Participation
Interest with respect to such Purchased Eligible Loan.

(iii)

The Sponsor and the Department may, at the discretion of the Department,
net settle all amounts then due and owing to either party with respect to
Purchased Eligible Loans with respect to which the Put Option has been
exercised, and the Department will remit to the Custodian any net amount
due to the Sponsor, which the Custodian will deposit into the Collection
Account and remit to the Department or the Sponsor in accordance with the
provisions of Section 11 of this Agreement. The Department will credit in
the foregoing settlement process the amount of any Interest Subsidy
Payments or Special Allowance Payments then due, owing, and payable with
respect to the Eligible Purchased Loans for the most recently completed fiscal
quarter, and deduct any negative Special Allowance Payments due and owing
with respect to the Eligible Purchased Loans for the most recently completed
fiscal quarter.

(iv)

Following the exercise of the Put Option with respect to a Purchased Eligible
Loan, such Loan shall immediately become subject to the Master Loan Sale
Agreement as though it had been sold thereunder and the Sponsor shall be
bound by the terms of the Master Loan Sale Agreement in all respects with
respect to such Loan.

37

(v)

Notwithstanding anything herein to the contrary, and without regard to
whether the Sponsor executed a 2009 Master Loan Sales Agreement, a lender
providing interim financing (the “financing lender”) to the Sponsor for Loans
prior to the related Purchase Date therefor shall have the right to exercise the
Sponsor’s option to sell loans to the Department by the Put Option with
respect to such Loans pursuant to this Section 15 if (1) such lender presents
to the Department and the Custodian a power of attorney that is duly
executed by the Sponsor and the Eligible Lender Trustee (if applicable and to
the extent necessary) and is enforceable in each applicable jurisdiction, (2)
the notice required by Section 4A(i) of the Master Loan Sale Agreement has
been given by the Sponsor or the financing lender, and (3) the Loans are
Eligible Loans. For the avoidance of doubt, the financing lender, in
exercising its rights under this Section 15(c)(v), shall not be obligated to
perform any of the obligations of the Sponsor or the Eligible Lender Trustee
(if applicable) hereunder, including any obligation to file a Notice of Intent to
Participate with the Department, or to make Subsequent Disbursements with
respect to any Loan put to the Department by such lender.

(d)
Notwithstanding the foregoing, the following will apply with respect to the
Sponsor’s redemption or exercise of the Put Option with respect to Purchased Eligible Loans:
(i)

Any Purchased Eligible Loan that becomes and remains delinquent must be
redeemed by the Sponsor not later than the 255th day of such delinquency;

(ii)

Any redemption or exercise of the Put Option with respect to a particular
Purchased Eligible Loan that is a Stafford Loan shall require the redemption
or exercise of the Put Option, as applicable, by the Sponsor, with respect to
any other Purchased Eligible Loan that is a Stafford Loan for which the
Borrower is the same.

(iii) If Sponsor determines that a Purchased Eligible Loan is not, or was not on the
Purchase Date, an Eligible Loan, the Sponsor must redeem that loan.
(e)
On the Termination Date, all Eligible Loans then subject to Participation Interests,
and the related servicing rights attributable to such Eligible Loans, for which the Sponsor has not
made the Redemption Payment shall become the property of the Department without any further
action by the Department and the Participation Interests and the rights of the Department and the
Sponsor under this Agreement shall be automatically terminated. Upon the termination of this
Agreement, the Custodian shall remit to the Sponsor the excess (if any) of the aggregate amount
of any Redemption Payments made under this Agreement over the obligations due and owing to
the Department by the Sponsor.
(f)
In no event shall the Custodian permit any Purchased Eligible Loans to be
released from a Class A Participation Interest if, after giving effect to such release, the
outstanding Principal Balance of the Purchased Eligible Loans that remain subject to the Class A
Participation Interests is less than the aggregate outstanding principal balance of the Class A
Participation Interests and Participant’s Yield then due and owing to the Department.

38

Section 16.
(a)

Sponsor and Servicer Events of Default; Remedies.

(i)

Upon the occurrence of a Sponsor or Servicer Event of Default that pertains
to a loan level defect or noncompliance, or a breach of a warranty or
representation, the Department will allow the Sponsor or Servicer not more
than thirty (30) calendar days to cure that default.

(ii)

A Sponsor that determines that a Purchased Eligible Loan is not, or was not
on the Purchase Date, an Eligible Loan, the Sponsor must redeem that loan
and must notify the Custodian and the Department of that action. The
Sponsor may do so either by disclosing the transaction through an updated
Purchase Request, Loan Schedule, or Custodial Certification, or otherwise, if
no subsequent Purchase Requests are planned. A Sponsor that timely
redeems such a loan and reports or causes that action to be reported to the
Department shall not be considered to breach a representation or warranty
regarding the eligibility of that loan.

(b)
For any other Event of Default, and for loan-level events of default that remain
uncured after this 30-day period, the Department, at its sole option, shall have the right to
exercise any or all of the following rights and remedies:
(i)

The Department may deem the Termination Date to immediately occur with
respect to this Agreement or all or any portion of the Purchased Eligible
Loans as it may determine in its sole discretion, whereupon the Sponsor shall
remit the Redemption Payment to the Department and/or exercise the Put
Option in accordance with Section 15 with respect to each Purchased Eligible
Loan subject to such termination;

(ii)

The Department may increase the Spread to three hundred (300) basis points;
and/or

(iii) The Department may limit, suspend or terminate the eligibility of the
Sponsor, if an Eligible Lender, with respect to participation as a FFELP
lender, pursuant to 34 C.F.R. part 682 subpart G, or may suspend or debar the
Sponsor pursuant to 34 C.F.R. Part 85, or both.
Section 17.

Custodian Events of Default; Removal of Custodian.

(a)
Upon the occurrence of any Custodian Event of Default, (i) either the Department
or the Sponsor, with the consent of the Department, upon at least thirty (30) Calendar days’ prior
written notice to the Custodian, may remove and discharge the Custodian from the performance
of its obligations hereunder, and (ii) the Department shall have the further right, exercisable at its
sole discretion, to limit, suspend or terminate the eligibility of the Custodian with respect to
participation as a FFELP lender, pursuant to 34 C.F.R. part 682 subpart G, or may suspend or
debar the Custodian pursuant to 34 C.F.R. Part 85, or both.
(b)
Promptly after the giving of notice of removal of the Custodian, the Sponsor shall
appoint, by written instrument, a successor custodian that meets all of the criteria of eligibility of
39

a custodian under this Master Participation Agreement, and the Sponsor shall cause such
successor custodian to become a party to this Master Participation Agreement by executing a
counterpart of the Adoption Agreement within thirty (30) Calendar days’ of notice of removal to
the Custodian.
(c)
In the event of any removal of the Custodian pursuant to Section 17(a) hereof, the
Custodian shall promptly transfer to the successor custodian, as directed in writing, legal title to
all Eligible Loans and all Loan Documents being administered under this Agreement, and shall
cooperate and comply with all other reasonable requests in connection with the transfer of the
Purchased Eligible Loans and the Collection Account to the successor custodian. Any cost of
shipment arising out of the removal of the Custodian shall be at the expense of the Sponsor.
(d)
In the event a Custodian (or successor custodian) is removed, by any Person or for
any reason permitted hereunder, such removal shall not become effective until (i) in the case of
removal by the Department, the Department by instrument or concurrent instruments in writing
(signed and acknowledged by an authorized representative or an attorney-in-fact) filed with the
Custodian removed have appointed a successor custodian or otherwise the Sponsor shall have
appointed a successor, and (ii) the successor custodian has accepted appointment as such.
Section 18.
Delegation of Duties by the Custodian. The Custodian may delegate to
another Eligible Lender (including the Sponsor) or to the related Servicer certain of its
obligations hereunder.
(a)
Notwithstanding the foregoing, the Custodian must perform and shall not delegate
its obligations to do the following: (i) hold legal title in its own name to each of the Purchased
Eligible Loans, (ii) issue and authenticate the Participation Certificates, (iii) issue the
Participation Interests, (iv) create and deliver each Loan Schedule and Custodial Certification
and each of the reports required to be delivered by the Custodian under Section 8(b) hereof, and
(v) hold and disburse all Collections, collect any Redemption Payments in accordance with the
terms hereof, net settle any exercise of the Put Option, and perform any other collection and
remittance functions ancillary to the transactions contemplated herein between the Sponsor and
the Department (except as expressly permitted in Section 7 hereof).
(b)
If the Custodian delegates any of its obligations to a delegee as permitted in this
Section 18: (i) the Custodian shall exercise due care in its appointment of such delegee, (ii) if the
Custodian performs any of its non-delegated obligations hereunder in reliance on such delegee’s
performance of delegated obligations, such reliance shall be reasonable under the circumstances,
(iii) the Custodian shall take those steps that are reasonable under the circumstances to ascertain
whether such delegee is properly performing the delegated obligations, and (iv) if such delegee
has failed to perform any of its delegated obligations, the Custodian shall either assume the
delegated obligations or promptly appoint a successor delegee to perform such obligations.
Section 19.
Custodian Not to Resign. The Custodian may not resign from its duties
and obligations as custodian hereunder unless such resignation is agreed to by the Department
and the Sponsor.

40

Section 20.
Merger of the Custodian. Any corporation into which the Custodian may
be merged or with which it may be consolidated, or any corporation resulting from any merger or
consolidation to which the Custodian shall be a party, or any corporation succeeding to all or
substantially all of the custodial or trust business of the Custodian, shall be the successor to the
Custodian hereunder, provided that such corporation shall be otherwise qualified and eligible
under this Master Participation Agreement, without the execution or filing of any paper or any
further act on the part of any other parties hereto.
Section 21. No Transfer of Participation Certificates or Participation Interests. None
of the Participation Certificates or any Participation Interest may be sold, assigned, transferred,
pledged, or hypothecated by any party hereto without the prior written consent of each other
party hereto; provided that the Sponsor may grant a security interest in any of the Class B
Participation Interests to any Person providing interim financing to the Sponsor.
Section 22.

Fees and Expenses.

(a)
The Sponsor shall be required to pay (i) all of the costs and expenses which are
incurred by it in connection with the negotiation, preparation, execution and delivery of this
Agreement and any other related documents, including, without limitation, the reasonable fees
and out-of-pocket expenses of counsel for such Sponsor, (ii) all costs and expenses of servicing
the Eligible Loans, (iii) the cost of audits and reports required to be delivered under this
Agreement by the Sponsor, the Custodian and the Servicer, (iv) all costs and expenses incurred
in connection with the transfer and delivery of the Eligible Loans to the Custodian and (v) the
fees of the Custodian and any fees and expenses incurred in connection with transferring
ownership of any Eligible Loans to the Custodian or to the Department in connection with the
exercise of the Put Option or any other acquisition of ownership of the Eligible Loans by the
Department. The Sponsor is responsible for any fee or other charge owed to the Department or
to the guaranty agency on a Purchased Eligible Loan after such Purchased Eligible Loan has
been transferred to the Custodian, including amounts owed to the Department as a recapture of
excess interest.
(b)
The Custodian shall be required to pay all of the costs and expenses which are
incurred by it in connection with the negotiation, preparation, execution and delivery of this
Agreement and any or any other related documents, including, without limitation, the reasonable
fees and out-of-pocket expenses of its counsel.
(c)
The Department shall be required to pay all of the costs and expenses which are
incurred by it in connection with the negotiation, preparation, execution and delivery of this
Agreement and any or any other related documents, including, without limitation, the reasonable
fees and out-of-pocket expenses of its counsel.
Section 23.

Tax Matters.

(a)
The parties hereto understand and agree that the economic arrangement related to
the distribution provisions of Section 11, are intended to be treated as a partnership (the
“Partnership”) for tax purposes, and that the income, gain, loss, credit and expenses attributable

41

to such arrangement shall be treated as items of income, gain, loss, credit and expenses of the
Partnership. The parties agree to treat the Partnership as a partnership for tax purposes.
(b)
The Partnership’s fiscal year shall end on December 31 of each year unless
otherwise required by Section 706 of the Code and the Treasury Regulations. As soon as
practicable after the end of each fiscal year (but no later than six (6) months after the end of each
fiscal year), the Custodian will prepare and mail, or cause to be prepared and mailed, to the
Department and the Sponsor (each, a “Partner”, and together, the “Partners”) information on
Schedule K-1 to Form 1065 and such additional information as shall enable each Partner to
prepare its federal, state and local income tax returns in accordance with the laws then
prevailing.
(c)
The Custodian shall establish and maintain a separate capital account (a “Capital
Account”) for each Partner in accordance with the Treasury Regulations promulgated under
Section 704(b) of the Code. The Capital Accounts of the Partners shall be adjusted and
maintained in a manner that as closely as possible gives economic effect to the provisions of this
Agreement. No later than as of the end of each fiscal year of the Partnership, the Partnership’s
income, gains, losses and expenses for U.S. federal, state and local income tax purposes shall be
allocated among the Capital Accounts in a manner that as closely as possible gives economic
effect to the provisions of this Agreement. With respect to any fiscal period during which any
Partner’s economic interest in the Partnership changes by reason of any event described in
Section 706(d)(1) of the Code and Treasury Regulations issued thereunder, allocations of the
Partnership’s income, gain, loss and expense shall be adjusted appropriately to take into account
the varying interests of the Partners during such period. The Partnership shall select the method
of making such adjustments, which method shall be used consistently thereafter. Items of
income, gain, loss, deduction and credit, as determined for U.S. federal income tax purposes
shall be allocated in a manner consistent with the requirements of Section 704(c) of the Code.
(d)
If the Partnership incurs any obligation to pay directly any amount in respect of
taxes, including but not limited to withholding taxes imposed on any Partner’s share of the
Partnership gross or net income and gains (or items thereof), income taxes, and any interest,
penalties or additions to tax (“Tax Liability”), or the amount of cash or other property to which
the Partnership otherwise would be entitled is reduced as a result of withholding by other parties
in satisfaction of any such Tax Liability, all payments by the Partnership in satisfaction of that
Tax Liability and all reductions in the amount of cash or fair market value of property to which –
but for such Tax Liability – the Partnership would have been entitled shall be treated, pursuant to
this Agreement, as distributed to those Partners or former Partners to which the related Tax
Liability is attributable. Notwithstanding any other provision of this Agreement, subsequent
distributions to the Partners shall be adjusted by the Partnership in an equitable manner so that,
after all such adjustments have been made and to the extent feasible, the burden of taxes
withheld at the source or paid by the Partnership is borne by those Partners to which such tax
obligations are attributable. The Partnership shall determine the amount (if any) of any Tax
Liability attributable to any Partner taking into account any differences in the Partner’s status,
nationality or other characteristics.
Section 24.
Set-off. In addition to any rights and remedies of the Department
provided in this Agreement and by law, the Department shall have the right, without prior notice

42

to the Sponsor, any such notice being expressly waived by the Sponsor to the extent permitted by
applicable law, upon any amount becoming due and payable to the Department by the Sponsor
hereunder with respect to any Purchased Eligible Loan or otherwise, to set-off and appropriate
and apply against such amount any and all Collections then on deposit in the Collection Account.
The Department agrees to notify promptly the Sponsor after any such set-off and application
made by the Department, and to provide, upon objection by the Sponsor, such review as may be
required by applicable law regarding objections to the existence and amount of the claim
enforced by such set-off. The review is to be conducted on written submissions, and failure to
give such notice shall not affect the validity of such set-off and application.
Section 25.
Survival of Covenants. All covenants, agreements, representations and
warranties made herein and in or pursuant to any related documents or agreements executed
pursuant to this Agreement shall survive the consummation of the acquisition of the Participation
Interests by the Department. All covenants, agreements, representations and warranties made or
furnished pursuant hereto by or on behalf of the Sponsor shall bind and inure to the benefit of
any successors or assigns of the Department and shall survive with respect to each Participation
Interest and each Loan subject to a Participation Interest.
Section 26.
Communication and Notice Requirements. All communications, notices
and approvals provided for hereunder shall be in writing and mailed or delivered to the Sponsor,
the Custodian or the Department, as the case may be, at such address as either party may
hereafter designate by notice to the other party. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if mailed, by
registered or certified mail, return receipt requested, or, if by other means, when received by the
other party at the address as follows:
If to the Department:
By U.S. Postal Service mail:
United States Department of Education
400 Maryland Avenue, SW
UCP, Room 111G3
Washington, DC 20202-5402
Attention: FFEL Agreement Process Team
By courier or express mail:
United States Department of Education
830 First Street, N.E.
Room 111G3
Washington, DC 20202-5402
Attention: FFEL Agreement Process Team
If to the Sponsor or the Eligible Lender Trustee:
The address designated in the Adoption Agreement.

43

If to the Custodian:
The address designated in the Adoption Agreement.
Section 27.
Form of Instruments. All instruments and documents delivered in
connection with this Agreement and any Class A Participation Certificate, and all proceedings to
be taken in connection with this Agreement and any Class A Participation Certificate and the
transactions contemplated herein and therein, shall be in a form as set forth in the attachments
hereto, and the Department shall have received copies of such documents as it or its counsel shall
reasonably request in connection therewith. Any instrument or document which is substantially
in the same form as an attachment hereto or a recital herein will be deemed to be satisfactory as
to form.
Section 28. Amendment; Waiver. This Agreement, any Class A Participation
Certificate and any document or instrument delivered in accordance herewith or therewith may
be amended by the parties hereto and thereto with the written consent of all parties hereto or
thereto. No term or provision of this Agreement may be waived or modified unless such waiver
or modification is consistent with the requirements of Section 459A of the Higher Education Act,
is in writing and is signed by the party against whom such waiver or modification is sought to be
enforced.
Section 29.
Severability Clause. Any part, provision, representation or warranty of
this Agreement which is prohibited or unenforceable or is held to be void or unenforceable in
any jurisdiction shall be ineffective, as to such jurisdiction, to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any such prohibition
or unenforceability in any jurisdiction as to any Loan shall not invalidate or render unenforceable
such provision in any other jurisdiction. To the extent permitted by applicable law, the parties
hereto waive any provision of law which prohibits or renders void or unenforceable any
provision hereof. If the invalidity of any part, provision, representation or warranty of this
Agreement shall deprive any party of the economic benefit intended to be conferred by this
Agreement, the parties shall negotiate in good-faith, to develop a structure the economic effect of
which is nearly as possible the same as the economic effect of this Agreement without regard to
such invalidity.
Section 30.
Governing Law. This Agreement and any Class A Participation
Certificate and the rights and obligations of the parties thereto shall be governed by and
construed in accordance with Federal law. To the extent there may be no applicable Federal law,
the internal laws of the State of New York (without giving regard to conflicts of laws principles
other than Sections 5-1401 and 5-1402 of the New York General Obligations Law) shall be
deemed reflective of Federal law to the extent that to do so would not frustrate the purposes of
any provision of the Agreement or the transactions governed thereby.
Section 31.
Exhibits. The exhibits to this Agreement are hereby incorporated and
made a part hereof and are an integral part of this Agreement.

44

Section 32.
General Interpretive Principles. For purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(i)

the terms defined in this Agreement have the meanings assigned to them in
this Agreement and include the plural as well as the singular, and the use of
any gender herein shall be deemed to include the other gender;

(ii)

accounting terms not otherwise defined herein have the meanings assigned
to them in accordance with generally accepted accounting principles;

(iii)

references herein to “Articles,” “Sections,” “Subsections,” “Paragraphs,”
and other Subdivisions without reference to a document are to designated
Articles, Sections, Subsections, Paragraphs and other subdivisions of this
Agreement;

(iv)

reference to a Subsection without further reference to a Section is a
reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to Paragraphs and other
subdivisions;

(v)

the words “herein,” “hereof,” “hereunder” and other words of similar
import refer to this Agreement as a whole and not to any particular
provision;

(vi)

the word “day” or “days” shall mean calendar day(s) unless expressly
stated otherwise; and

(vii) the term “include” or “including” shall mean without limitation by reason
of enumeration.
Section 33.
Reproduction of Documents. This Agreement and all documents relating
hereto, including, without limitation, (a) consents, waivers and modifications which may
hereafter be executed, (b) documents received by any party at the closing, and (c) financial
statements, certificates and other information previously or hereafter furnished, may be
reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a party in the regular
course of business, and that any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
Section 34.
Further Agreements. Each of the Sponsor and the Eligible Lender Trustee
(if applicable) agrees to execute and deliver to the other such reasonable and appropriate
additional documents, instruments or agreements as may be necessary or appropriate to
effectuate the purposes of this Agreement.
Section 35.
Other Department Program. Separately, the Department is offering a Loan
Purchase Commitment Program (as referred to in the Notice of Intent to Participate) for eligible
45

FFELP loans. This Agreement does not require, nor does it preclude, the participation of an
Eligible Lender in that separate program except to the extent specified in Section 15 hereof.
Section 36.
Adoption. This Agreement shall be effective with respect to the Sponsor,
the Eligible Lender Trustee (if applicable) and the Custodian as of the day and year on which an
Adoption Agreement, in the form attached hereto as Exhibit A, is entered into by and among the
Sponsor, the Eligible Lender Trustee (if applicable), the Custodian and the Department.
Section 37.
Integration. This Master Participation Agreement together with the
related Adoption Agreement embodies the entire agreement and understanding of the parties
hereto and supersedes any and all prior agreements, arrangements and understandings relating
the matters for which they provide, except to the extent that interpretative guidance published
electronically by the Department in, or incorporated by, Electronic Announcement #34 addresses
a matter provided for in these Agreements and is consistent with the terms of these Agreements.

[NO FURTHER TEXT ON THIS PAGE]

46

Exhibit A
ADOPTION AGREEMENT
[Must be used by Sponsor that is Not a PartyTo July 25, 2008 Master Participation Agreement]
This Adoption Agreement, dated as of the date set forth on the signature page, among the
United States Department of Education (“Department”), the Sponsor (as listed in Section 1
hereof) (“Sponsor”)[, the Eligible Lender Trustee (as listed in Section 1A hereof) (“Eligible
Lender Trustee”)] and the Custodian (as listed in Section 2 hereof) (“Custodian”) is made
pursuant to the 2009 Master Participation Agreement dated January 1, 2009, published by the
Department (“Master Participation Agreement”). Capitalized terms used but not otherwise
defined herein, shall have the meanings set forth in the Master Participation Agreement.
a)
The Department desires to purchase from the Sponsor, and the Sponsor
desires to sell to the Department, in each case through the Custodian, certain Participation
Interests in Eligible Loans from time to time pursuant to the terms and conditions set forth in the
Master Participation Agreement.
b)
The Department and the Sponsor desire to set forth herein the terms and
conditions of such purchase and sale arrangements.
c)
[Each of] [T]he Sponsor [and the Eligible Lender Trustee] desires to
transfer title to the Eligible Loans to the Custodian, and the Custodian hereby accepts such
delivery and agrees to hold such Eligible Loans and all supporting documentation delivered in
connection with such Eligible Loans in trust for the benefit of the holders of the Participation
Interests.
d)
This Adoption Agreement shall supersede and replace all prior agreements
among the parties regarding the sale of Participation Interests in those Eligible Loans described
in the Agreement by the Sponsor to the Department.
NOW, THEREFORE, in consideration of the above recitals and for other good and
valuable consideration, the receipt and adequacy of which are hereby acknowledged, the
Department and the Sponsor hereby agree as follows:
Section 1.

“Sponsor” shall mean:
[NAME OF SPONSOR]
[ADDRESS]
[LENDER ID]

The above address shall be the Sponsor’s address for the purpose of receiving
notices pursuant to the Master Participation Agreement.

A-1

[Section 1A. “Eligible Lender Trustee” shall mean:
[NAME OF ELIGIBLE LENDER TRUSTEE]
[ADDRESS]
[LENDER ID]
The above address shall be the Eligible Lender Trustee’s address for the
purpose of receiving notices pursuant to the Master Participation
Agreement.]
Section 2.

“Custodian” shall mean:
[NAME OF CUSTODIAN]
[ADDRESS]

The above address shall be the Custodian’s address for the purpose of receiving
notices pursuant to the Master Participation Agreement.
Section 3.
Purchase and Sale of Participation Interests. Following the date of this
Adoption Agreement, [each of] the Sponsor [and the Eligible Lender Trustee] agrees to
participate in the Department's Participation Purchase Program for Participation Interests in
Eligible Loans made pursuant to the Federal Family Education Loan Program under the Master
Participation Agreement and to deliver to the Department such Participation Interests in the
aggregate principal amounts as evidenced by Participation Purchase Requests and related
attachments entered into among the Sponsor, [the Eligible Lender Trustee], the Custodian
holding legal title to the Eligible Loans in trust for the holders of the Participation Interests
pursuant to the Master Participation Agreement. The Sponsor agrees to sell to the Department,
and the Department agrees to purchase from the Sponsor such Participation Interests on the terms
and subject to the conditions of the Master Participation Agreement as the same may be
supplemented or amended from time to time. The Custodian agrees to hold each Eligible Loan
and, either directly or through its designee, all supporting documentation and records in trust for
the benefit of the holders of the Participation Interests, and to issue the Participation Interests
pursuant to the terms and conditions of the Master Participation Agreement as the same may be
supplemented or amended from time to time. Each of the Sponsor, [the Eligible Lender Trustee],
the Department and the Custodian hereby acknowledges and agrees to all terms and provisions of
the Master Participation Agreement which relate to the creation of and selling of Participation
Interests which are incorporated herein in their entirety as if such had been set forth herein, as the
same may be supplemented or amended from time to time.
Section 4.
Incorporation of Master Participation Agreement. Each of the Sponsor,
[the Eligible Lender Trustee], the Department and the Custodian hereby acknowledges and
agrees to all terms and provisions of the Master Participation Agreement which are incorporated
herein in their entirety as if such had been set forth herein in their entirety, as the same may be
supplemented or amended from time to time.
Section 5.
Governing Law. This Adoption Agreement and the rights and obligations
of the parties hereto shall be governed by and construed in accordance with Federal law. To the
extent that there may be no applicable Federal law, the internal laws of the State of New York
A-2

(without giving regard to conflicts of laws principles other than Sections 5-1401 and 5-1402 of
the New York General Obligations Law) shall be deemed reflective of Federal law to the extent
that to do so would not frustrate the purposes of any provision of this Adoption Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have caused this Adoption Agreement to be
duly executed by their respective officers hereunto duly authorized, as of the day and year first
above written.
United States Department of Education

By:
Name:
Title:
Date of Adoption Agreement: ___________
(to be inserted by the Department)

[NAME OF SPONSOR], as Sponsor

By:
Name:
Title:

[[NAME OF ELIGIBLE LENDER TRUSTEE], as
Eligible Lender Trustee

By:
Name:
Title:

[NAME OF CUSTODIAN], as Custodian

By:
Name:
Title:

A-3

]

[May be used by Sponsor that is PartyTo July 25, 2008 Master Participation Agreement]
ADOPTION AGREEMENT
This Adoption Agreement, dated as of the date set forth on the signature page, among the
United States Department of Education (“Department”), the Sponsor (as listed in Section 1
hereof) (“Sponsor”)[, the Eligible Lender Trustee (as listed in Section 1A hereof) (“Eligible
Lender Trustee”)] and the Custodian (as listed in Section 2 hereof) (“Custodian”) is made
pursuant to the 2009 Master Participation Agreement dated January 1, 2009, published by the
Department (“Master Participation Agreement”). Capitalized terms used but not otherwise
defined herein, shall have the meanings set forth in the Master Participation Agreement.
a)
The Department desires to purchase from the Sponsor, and the Sponsor
desires to sell to the Department, in each case through the Custodian, certain Participation
Interests in Eligible Loans from time to time pursuant to the terms and conditions set forth in the
Master Participation Agreement.
b)
The Department and the Sponsor desire to set forth herein the terms and
conditions of such purchase and sale arrangements.
c)
[Each of] [T]he Sponsor [and the Eligible Lender Trustee] desires to
transfer title to the Eligible Loans to the Custodian, and the Custodian hereby accepts such
delivery and agrees to hold such Eligible Loans and all supporting documentation delivered in
connection with such Eligible Loans in trust for the benefit of the holders of the Participation
Interests.
d)
This Adoption Agreement shall supersede and replace all prior agreements
among the parties regarding the sale of Participation Interests in those Eligible Loans defined in
the Agreement by the Sponsor to the Department.
NOW, THEREFORE, in consideration of the above recitals and for other good and
valuable consideration, the receipt and adequacy of which are hereby acknowledged, the
Department and the Sponsor hereby agree as follows:
Section 1.

“Sponsor” shall mean:
[NAME OF SPONSOR]
[ADDRESS]
[LENDER ID]

The above address shall be the Sponsor’s address for the purpose of receiving
notices pursuant to the Master Participation Agreement.

A-4

[Section 1A. “Eligible Lender Trustee” shall mean:
[NAME OF ELIGIBLE LENDER TRUSTEE]
[ADDRESS]
[LENDER ID]
The above address shall be the Eligible Lender Trustee’s address for the
purpose of receiving notices pursuant to the Master Participation
Agreement.]
Section 2.

“Custodian” shall mean:
[NAME OF CUSTODIAN]
[ADDRESS]

The above address shall be the Custodian’s address for the purpose of receiving
notices pursuant to the Master Participation Agreement.
Section 3.
Purchase and Sale of Participation Interests. Following the date of this
Adoption Agreement, [each of] the Sponsor [and the Eligible Lender Trustee] agrees to
participate in the Department's Participation Purchase Program for Participation Interests in
Eligible Loans made pursuant to the Federal Family Education Loan Program under the Master
Participation Agreement and to deliver to the Department such Participation Interests in the
aggregate principal amounts as evidenced by Participation Purchase Requests and related
attachments entered into among the Sponsor, [the Eligible Lender Trustee], the Custodian
holding legal title to the Eligible Loans in trust for the holders of the Participation Interests
pursuant to the Master Participation Agreement. The Sponsor agrees to sell to the Department,
and the Department agrees to purchase from the Sponsor such Participation Interests on the terms
and subject to the conditions of the Master Participation Agreement as the same may be
supplemented or amended from time to time. The Custodian agrees to hold each Eligible Loan
and, either directly or through its designee, all supporting documentation and records in trust for
the benefit of the holders of the Participation Interests, and to issue the Participation Interests
pursuant to the terms and conditions of the Master Participation Agreement as the same may be
supplemented or amended from time to time. Each of the Sponsor, [the Eligible Lender Trustee],
the Department and the Custodian hereby acknowledges and agrees to all terms and provisions of
the Master Participation Agreement which relate to the creation of and selling of Participation
Interests which are incorporated herein in their entirety as if such had been set forth herein, as the
same may be supplemented or amended from time to time.
Section 4.
Incorporation of Master Participation Agreement. Each of the Sponsor,
[the Eligible Lender Trustee], the Department and the Custodian hereby acknowledges and
agrees to all terms and provisions of the Master Participation Agreement which are incorporated
herein in their entirety as if such had been set forth herein in their entirety, as the same may be
supplemented or amended from time to time.
Section 5.
Governing Law. This Adoption Agreement and the rights and obligations
of the parties hereto shall be governed by and construed in accordance with Federal law. To the
extent that there may be no applicable Federal law, the internal laws of the State of New York
A-5

(without giving regard to conflicts of laws principles other than Sections 5-1401 and 5-1402 of
the New York General Obligations Law) shall be deemed reflective of Federal law to the extent
that to do so would not frustrate the purposes of any provision of this Adoption Agreement.
Section 6.
Reaffirmation of Certification by Sponsor’s Officer and Opinion of
Counsel.
On [mm/dd/yy] the Sponsor executed an Officer’s Certificate and provided an
Opinion of Counsel supporting the Sponsor’s Adoption Agreement for the July 25, 2008 Master
Participation Agreement. The Sponsor hereby reaffirms the representations made in that
Certificate as remaining true and correct as of the date on which the Sponsor executes this
Adoption Agreement. The Sponsor further represents that is has requested and received
confirmation from the Counsel who issued the Opinion of Counsel that nothing stated in the
Opinion has changed in any material respect through the date on which the Sponsor executes this
Adoption Agreement.
[Signature Page Follows]
IN WITNESS WHEREOF, the parties hereto have caused this Adoption Agreement to be
duly executed by their respective officers hereunto duly authorized, as of the day and year first
above written.
United States Department of Education

By:
Name:
Title:
Date of Adoption Agreement: ___________
(to be inserted by the Department)

A-6

[NAME OF SPONSOR], as Sponsor

By:
Name:
Title:

[[NAME OF ELIGIBLE LENDER TRUSTEE], as
Eligible Lender Trustee

By:
Name:
Title:

[NAME OF CUSTODIAN], as Custodian

By:
Name:
Title:

A-7

]

Exhibit B
OFFICER’S CERTIFICATE
I, ________________________, hereby certify that I am the duly elected
______________ of [SPONSOR], a ______________ (“Sponsor”), and further certify, on behalf
of the Sponsor as follows:
1.
Attached hereto as Attachment I are a true and correct copy of the
[Certificate of Incorporation and by-laws][Certificate of limited partnership and limited
partnership agreement] of the Sponsor as are in full force and effect on the date hereof.
2.
No proceedings looking toward merger, liquidation, dissolution or
bankruptcy of the Sponsor are pending or contemplated.
3.
Each person who, as an officer or attorney-in-fact of the Sponsor, signed
(a) the Adoption Agreement dated as of ____________ between the Department[, the Eligible
Lender Trustee] and the Sponsor pursuant to the Master Participation Agreement (“Agreement”),
dated as of January 1, 2009, by the Department of Education (“Department”) and (b) any other
document delivered prior hereto or on the date hereof in connection with the sale of the
Participation Interests in accordance with the Agreement was, at the time of such signing and
delivery, and is as of the date hereof, duly elected or appointed, qualified and acting as such
officer or attorney-in-fact, and the signatures of such persons appearing on such documents are
their genuine signatures.
4.
Attached hereto as Attachment II is a true and correct copy of the
resolutions duly adopted by the board of directors of the Sponsor on ________________, 200_
(“Resolutions”) with respect to the authorization and approval of the sale of the Participation
Interests; said Resolutions have not been amended, modified, annulled or revoked and are in full
force and effect on the date hereof.
5.
Attached hereto as Attachment III is a Certificate of Good Standing of the
Sponsor dated ______________, 200_. No event has occurred since ___________________,
200_ which has affected the good standing of the Sponsor under the laws of the State of
___________.
6.
All of the representations and warranties of the Sponsor contained in
Section 10(a) of the Agreement were true and correct in all material respects as of the date
hereof.
7.
[Each of] [T]he Sponsor [and the Eligible Lender Trustee] has performed
or will have performed all of its duties and has satisfied or will have satisfied all the material
conditions on its part to be performed or satisfied prior to the related Purchase Date pursuant to
the Agreement.

B-1

All capitalized terms used herein and not otherwise defined shall have the
meaning assigned to them in the Agreement.
IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal
of the Sponsor.
Dated: _________________________
[Seal]
[SPONSOR NAME]
(Sponsor)
By:
Name:
Title: [Responsible Officer]

I, _______________________, Secretary of the Sponsor, hereby certify that
_________________________ is the duly elected, qualified and acting [Responsible Officer] of
the Sponsor and that the signature appearing above is his/her genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:_________________________
[Seal]
[SPONSOR NAME]
(Sponsor)
By:
Name:
Title: [Assistant] Secretary

B-2

Exhibit C
OPINION OF COUNSEL TO THE SPONSOR
______________________________
(Date)
United States Department of Education
400 Maryland Avenue, SW
Washington, DC 20202
Attention: [_____________]
[Custodian]
[Address]
Attention: [_____________]
Re:

2009 Master Participation Agreement,

Ladies and Gentlemen:
I have acted as counsel to [SPONSOR], a _________________ (“Sponsor”), in
connection with the sale of certain Participation Interests by the Sponsor to the Department of
Education (“Department”) pursuant to a 2009 Master Participation Agreement, dated as of
January 1, 2009, and the related Adoption Agreement dated as of _____________, between the
Sponsor, [the Eligible Lender Trustee] and the Department (“Agreement”). Capitalized terms
not otherwise defined herein have the meanings set forth in the Agreement.
In connection with rendering this opinion letter, I, or attorneys working under my
direction, have examined, among other things, originals, certified copies or copies otherwise
identified to my satisfaction as being true copies of the following:
A.
B.

C.

D.

The Agreement;
The Sponsor's [Certificate of Incorporation and by-laws][certificate of
limited partnership and limited partnership agreement], as amended to
date;
Resolutions adopted by the Board of Directors of the Sponsor with
specific reference to actions relating to the transactions covered by
this opinion (“Board Resolutions”); and
Such other documents, records and papers as we have deemed
necessary and relevant as a basis for this opinion.

For the purpose of rendering this opinion, I have made such documentary, factual and
legal examinations as I deemed necessary under the circumstances. As to factual matters, I have
relied upon statements, certificates and other assurances of public officials and of officers and
other representatives of the Sponsor, and upon such other certificates as I deemed appropriate,
which factual matters have not been independently established or verified by me. I have also

C-1

assumed, among other things, the genuineness of all signatures, the legal capacity of all natural
persons, the authenticity of all documents submitted to me as originals, and the conformity to
original documents of all documents submitted to me as copies and the authenticity of the
originals of such copied documents.
On the basis of and subject to the foregoing examination, and in reliance thereon, and
subject to the assumptions, qualifications, exceptions and limitations expressed herein (if any), I
am of the opinion that:
1.
The Sponsor has been duly [incorporated][formed] and is validly existing and in
good standing under the laws of the State of __________ with corporate power and authority to
own its properties and conduct its business as presently conducted by it. The Sponsor has the
corporate power and authority to service the Loans, and to execute, deliver, and perform its
obligations under the Agreement.
2.
the Sponsor.

The Agreement has been duly and validly authorized, executed and delivered by

3.
The Agreement constitutes valid the legal and binding obligation of the Sponsor,
enforceable against the Sponsor in accordance with its terms.
4.
No consent, approval, authorization or order of any state or federal court or
government agency or body is required for the execution, delivery and performance by the
Sponsor of the Agreement or the consummation of the transactions contemplated by the
Agreement, except for those consents, approvals, authorizations or orders which previously have
been obtained.
5.
The fulfillment of the terms of or the consummation of any other transactions
contemplated in the Agreement will not result in a breach of any term or provision of the
[certificate of incorporation or by-laws][certificate of limited partnership or limited partnership
agreement] of the Sponsor, or, to the best of my knowledge, will not conflict with, result in a
breach or violation of, or constitute a default under, (i) the terms of any indenture or other
agreement or instrument known to me to which the Sponsor is a party or by which it is bound,
(ii) any State of ____________ or federal statute or regulation applicable to the Sponsor, or (iii)
any order of any State of ____________ or federal court, regulatory body, administrative agency
or governmental body having jurisdiction over the Sponsor, except in any such case where the
default, breach or violation would not have a material adverse effect on the Sponsor or its ability
to perform its obligations under the Agreement.
6.
There is no action, suit, proceeding or investigation pending or, to the best of my
knowledge, threatened against the Sponsor which, in my judgment, either in any one instance or
in the aggregate, would draw into question the validity of the Agreement or which would be
likely to impair materially the ability of the Sponsor to perform under the terms of the
Agreement.

C-2

7.
The sale of each Participation Interest as and in the manner contemplated by the
Agreement is sufficient fully to transfer to the Department all right, title and interest of the
Sponsor thereto as the owner thereof.
8.
The Agreement is effective to create, in favor of the Custodian and the
Department, a valid security interest under the Uniform Commercial Code in all of the right, title
and interest of the Sponsor in, to and under the Collateral. Upon the filing of financing
statements on Form UCC-1 naming Sponsor as “Debtor”, Custodian as “Secured Party”, and the
Department as “Assignee” describing the Collateral, with the [Secretary of State of
___________], the security interests in the Collateral above will constitute fully perfected
security interests under the Uniform Commercial Code in all right, title and interest of the
Sponsor in, to and under such of the Collateral that can be perfected by filing under the Uniform
Commercial Code.
[Assumptions and qualifications, if any]
I am admitted to practice law in the State of ___________, and I render no opinion herein
as to matters involving the laws of any jurisdiction other than the State of _________ and the
Federal laws of the United States of America.
Very truly yours,

C-3

Exhibit D
PARTICIPATION PURCHASE REQUEST
[insert date]
United States Department of Education
400 Maryland Avenue, SW
Washington, DC 20202
Attention: _______________________
Participation Purchase Request Reference:_____________________
Ladies/Gentlemen:
Reference is made to the Master Participation Agreement dated January 1, 2009 (“2009
Master Participation Agreement;” capitalized terms used but not otherwise defined herein shall
have the meanings given them in the Master Participation Agreement), among the United States
(“Sponsor”), [the
Department of Education (“Department”), the undersigned Sponsor
undersigned Eligible Lender Trustee (“Eligible Lender Trustee”),] and the undersigned
Custodian (“Custodian”), each of which have been made party to the Master Participation
Agreement by executing the Adoption Agreement (“Adoption Agreement”).
In accordance with Section 4(a) of the Master Participation Agreement, the Sponsor
hereby requests that you, the Department, agree to purchase participation interests that consist of
(a) a 100% beneficial ownership interest in the principal portion of each Eligible Loan listed on
the Loan Schedule attached hereto and (b) the right to receive the Participant’s Yield in respect
of such Eligible Loans (“Class A Participation Interests”), in connection with which we shall sell
to you the Class A Participation Certificate representing such Class A Participation Interests.
The Purchase Price shall be ______ [insert applicable Purchase Price pursuant to the terms of
the Master Participation Agreement]. The Purchase Date shall be the date on which the
Custodian receives payment of the Purchase Price from the Department in exchange for the Class
A Participation Interests. The Sponsor hereby certifies to the Department and the Custodian that,
as of the date hereof, it is in compliance with all of the representations and warranties set forth in
Section 10(a) of the Master Participation Agreement.
The Custodian hereby certifies that upon the delivery of each Loan Schedule and
Custodial Certification and the receipt of the Purchase Price from the Department, the Custodian
shall hold the Loan Documents (either directly or indirectly through its designee) and legal title
with respect to each such Eligible Loan continuously in trust for the benefit of the holders of the
Participation Interests until such time as all Participation Interests in such Eligible Loans are
redeemed or the Put Option is exercised and the Class A Participation Interests are terminated

D-1

Sincerely,
[SPONSOR], as Sponsor

By:
Name:
Title:

[[ELIGIBLE LENDER TRUSTEE], as Eligible
Lender Trustee

By:
Name:
Title:

[CUSTODIAN], as Custodian

By:
Name:
Title:

Acknowledged
UNITED STATES DEPARTMENT OF EDUCATION

By:
Name:
Title:
[Loan Schedule to be Attached]

D-2

]

Exhibit E
CLASS A PARTICIPATION CERTIFICATE
Date:____________, 200_
Reference is made to (i) the 2009 Master Participation Agreement dated January 1, 2009
and (ii) the Adoption Agreement, dated as of [___] by and among [____] as Sponsor
(“Sponsor”), [[____] as Eligible Lender Trustee (“Eligible Lender Trustee”),] [____] as
Custodian (“Custodian”) and the Department of Education (“Department”) pursuant to which the
Sponsor[, the Eligible Lender Trustee] and the Custodian became parties to the Master
Participation Agreement. Capitalized terms used but not defined herein shall have the respective
meanings assigned to such terms in the Master Participation Agreement.
This Class A Participation Certificate evidences the ownership of the Department of the
Class A Participation Interests in the Eligible Loans listed on Schedule A hereto having an
aggregate Principal Balance as set forth on Schedule A hereto.
The Custodian shall, and is hereby authorized to, record in accordance with its usual
practice, the amount of additional Eligible Loan that becomes subject to the Class A
Participation Interests represented by this Class A Participation Certificate, and the related
Purchase Date, and the date and amount of each principal payment received hereunder on the
schedule annexed hereto and any such recordation shall constitute prima facie evidence of the
accuracy of the amount so recorded; provided, that the failure of the Custodian to make such
recordation (or any error in such recordation) shall not affect the obligations of the Sponsor
hereunder or under the Master Participation Agreement.
This Class A Participation Certificate is issued pursuant to, and is entitled to the benefits
of, the Master Participation Agreement, to which reference is hereby made for a statement of the
terms and conditions governing this Class A Participation Certificate, including the terms and
conditions under which this Class A Participation Certificate may be prepaid or its maturity date
accelerated. Repayment of the Purchase Price for the Class A Participation Interests is subject to
the exercise of the Put Option as described in the Master Participation Agreement. This Class A
Participation Certificate and the related Class A Participation Interests are secured by the
Eligible Loans as more particularly described in the Master Participation Agreement.
THIS CLASS A PARTICIPATION CERTIFICATE HAS NOT BEEN AND WILL NOT
BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (“SECURITIES ACT”), AND HAS NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR
REGULATORY AUTHORITY OF ANY STATE. THIS CLASS A PARTICIPATION
CERTIFICATE IS NON-TRANSFERABLE EXCEPT AS OTHERWISE EXPRESSLY
PERMITTED IN THE MASTER PARTICIPATION AGREEMENT.
No failure on the part of the Department to exercise, and no delay in exercising, any right
hereunder or under the Master Participation Agreement shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies available to the
E-1

Department hereunder and under the Master Participation Agreement are cumulative and not
exclusive of any remedies provided by law.
THIS CLASS A PARTICIPATION CERTIFICATE AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH FEDERAL LAW. TO THE EXTENT THAT
THERE MAY BE NO APPLICABLE FEDERAL LAW, THE INTERNAL LAWS OF THE
STATE OF NEW YORK (WITHOUT GIVING REGARD TO CONFLICTS OF LAWS
PRINCIPLES OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW) SHALL BE DEEMED REFLECTIVE OF FEDERAL LAW
INSOFAR AS TO DO SO WOULD NOT FRUSTRATE THE PURPOSES OF ANY
PROVISION OF THE MASTER PARTICIPATION AGREEMENT OR THE
TRANSACTIONS GOVERNED THEREBY.
[CUSTODIAN],
in its capacity as trustee

By: ____________________________________
Name:
Title:

E-2

Schedule A
to Class A Participation Certificate
LOAN SCHEDULE AND CUSTODIAL CERTIFICATION

E-3

Exhibit F
CLASS B PARTICIPATION CERTIFICATE

Date:____________, 200_
Reference is made to (i) the 2009 Master Participation Agreement dated January 1, 2009,
and (ii) the Adoption Agreement, dated as of [___] by and among [____] as Sponsor
(“Sponsor”), [[____] as Eligible Lender Trustee (“Eligible Lender Trustee”),] [____] as
Custodian (“Custodian”) and the Department of Education (“Department”) pursuant to which the
Sponsor[, the Eligible Lender Trustee] and the Custodian became parties to the Master
Participation Agreement. Capitalized terms used but not defined herein shall have the respective
meanings assigned to such terms in the Master Participation Agreement.
This Class B Participation Certificate evidences the ownership of the Sponsor of the
Class B Participation Interests in the Eligible Loans listed on Schedule A hereto having an
aggregate Principal Balance as set forth on Schedule A hereto.
The Custodian shall, and is hereby authorized to, record in accordance with its usual
practice, the amount of additional Eligible Loan that becomes subject to the Class B Participation
Interests represented by this Class B Participation Certificate, and the related Purchase Date, and
the date and amount of each principal payment received hereunder on the schedule annexed
hereto and any such recordation shall constitute prima facie evidence of the accuracy of the
amount so recorded; provided, that the failure of the Custodian to make such recordation (or any
error in such recordation) shall not affect the obligations of the Sponsor hereunder or under the
Master Participation Agreement.
This Class B Participation Certificate is issued pursuant to, and is entitled to the benefits
of, the Master Participation Agreement, to which reference is hereby made for a statement of the
terms and conditions governing this Class B Participation Certificate. This Class B Participation
Certificate and the related Class B Participation Interests are subordinated to the Class A
Participation Interests in Eligible Loans sold to the Department by the Sponsor under the Master
Participation Agreement. This Class B Participation Certificate and the related Class B
Participation Interests are secured by the Eligible Loans as more particularly described in the
Master Participation Agreement and represent the right of the holder to either (i) redeem the
Eligible Loans in exchange for payment of the Redemption Payment to the Department or (ii)
exercise the Put Option with respect to the Eligible Loans, each as described in the Master
Participation Agreement.
THIS CLASS B PARTICIPATION CERTIFICATE HAS NOT BEEN AND WILL NOT
BE REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “SECURITIES ACT”), AND HAS NOT BEEN APPROVED OR
DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR
REGULATORY AUTHORITY OF ANY STATE. THIS CLASS B PARTICIPATION
CERTIFICATE IS NON-TRANSFERABLE EXCEPT AS OTHERWISE EXPRESSLY
PERMITTED IN THE MASTER PARTICIPATION AGREEMENT.
F-1

No failure on the part of the Sponsor to exercise, and no delay in exercising, any right
hereunder or under the Master Participation Agreement shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder or thereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies available to the Sponsor
hereunder and under the Master Participation Agreement are cumulative and not exclusive of any
remedies provided by law.
THIS CLASS B PARTICIPATION CERTIFICATE AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH FEDERAL LAW. TO THE EXTENT THAT
THERE MAY BE NO APPLICABLE FEDERAL LAW, THE INTERNAL LAWS OF THE
STATE OF NEW YORK (WITHOUT GIVING REGARD TO CONFLICTS OF LAWS
PRINCIPLES OTHER THAN SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK
GENERAL OBLIGATIONS LAW) SHALL BE DEEMED REFLECTIVE OF FEDERAL LAW
INSOFAR AS TO DO SO WOULD NOT FRUSTRATE THE PURPOSES OF ANY
PROVISION OF THE MASTER PARTICIPATION AGREEMENT OR THE
TRANSACTIONS GOVERNED THEREBY.
[CUSTODIAN],
in its capacity as trustee

By: ____________________________________
Name:
Title:

F-2

Schedule A
to Class B Participation Certificate
LOAN SCHEDULE AND CUSTODIAL CERTIFICATION

[TO BE PROVIDED BY THE DEPARTMENT]

F-3

Exhibit G
SECURITY RELEASE CERTIFICATION
I.

Release of Security Interest

___________________________, hereby relinquishes any and all right, title and interest
it may have in and to the Loans described on the schedule attached hereto upon purchase of a
Participation Interest therein by the Department of Education from the Sponsor named below
pursuant to that certain Master Participation Agreement dated January 1, 2009, and the related
Adoption Agreement between the Sponsor, [the Eligible Lender Trustee] and the Department of
Education dated as of ______________________, as of the date and time of receipt by
______________________________ of $__________ for such Participation Interests in such
Loans (“Date and Time of Sale”), and certifies that, as of the Date and Time of Sale all notes,
assignments and other documents in its possession relating to such Loans have been delivered
and released to the Sponsor named below or its designees other than copies thereof that are
retained by the undersigned or its designee (in electronic or paper medium).
Name and Address of Financial Institution
(Name) ____________________________________
(Address)____________________________________
By:______________________________________
Title:
II.

Certification of Release

The Sponsor named below hereby certifies to the Department of Education that, as of the
Date and Time of Sale of the Participation Interests in the above mentioned Loans to the
Department of Education, the security interests in the Loans released by the above named
corporation comprise all security interests relating to or affecting any and all such Loans.
The Sponsor warrants that, as of such time, there are and will be no other security
interests affecting any or all of such Loans.
Sponsor: ____________________________
By:
Name: ______________________________
Title:

III.

Custodian Certification

The Custodian named below hereby certifies to the Department of Education that the
Custodian has remitted the payment described in Section I of this Certification to the Financial
G-1

Institution named there, and that the Custodian on mm/dd/yy received acknowledgement from
the Financial Institution of its receipt of that payment.

Custodian
By:
Name:
Title:

Date:

mm/dd/yy

G-2

Loan Schedule

G-3

Exhibit H
2009 NOTICE OF INTENT TO PARTICIPATE

[__________, 200_]
U.S. Department of Education
Washington, D.C.
By: E-mail: [email protected]

Re:

Loan Purchase Commitment Program and/or Loan Participation Purchase
Program for Eligible FFELP Loans

Ladies and Gentlemen:
The undersigned, an eligible Federal Family Education Loan Program (FFELP) lender under
Section 435(d)(1) of the Higher Education Act of 1965, as amended (HEA), eligible lender
trustee, or holder of beneficial interests in FFELP Loans (“Undersigned”), hereby notifies the
Department of Education that it intends to participate in the Loan Purchase Commitment
Program (the “Purchase Program”) or the Loan Participation Purchase Program (the
“Participation Program”) for the 2009-2010 academic year, or both programs. Both programs
are authorized under Section 459A of the HEA, as amended, and are generally described in the
Notice of Terms and Conditions published in the Federal Register, Vol. 73, No. 127, July 1,
2008, and more particularly as to the 2009-2010 academic year, in the Notice published in the
Federal Register on or about January 15, 2009 (Federal Register Notice). By signifying intent to
participate in one or both of the programs offered the undersigned does not commit to actually
participate in either program.
By signifying its intent to participate in such program(s), the Undersigned hereby certifies and
agrees that:
If the Undersigned participates in either of the programs, it will continue to originate or acquire
FFELP loans made to students and parents.
If the Undersigned participates in the Participation Program, it will sell, from time to time,
participation interests in FFELP loans to the Department of Education with an aggregate unpaid
principal balance of not less than $50,000,000 in loans either held by such eligible lender or
aggregated with other FFELP loans held by one or more eligible lenders. (The Undersigned
recognizes that there is no minimum for the Purchase Program)
The Undersigned acknowledges that it shall not be permitted to sell FFELP loans or participation
interests therein to the Department of Education with respect to which the first disbursement was
made prior to the date on which the Department of Education receives this 2009 Notice of Intent
to Participate.

H-1

The Department of Education will return to the Undersigned, via electronic mail (e-mail),
information indicating the date the 2009 Notice of Intent to Participate was received by the
Department of Education.
The Department of Education will accept signed copies of this 2009 Notice of Intent sent as a
PDF attachment via e-mail at the address below.
The Undersigned is aware that it must refer to the Federal Register Notice and to the agreements
referred to therein for a complete description of the terms and conditions under which the
Department of Education will administer the Purchase Program and the Participation Program
for the 2009-2010 academic year. The Undersigned also is aware that in order to participate in
either of these programs, it must execute a Master Agreement for the respective program. If the
Undersigned is a beneficial holder of FFELP loans, the Undersigned has included on this form
the LID(s) under which it operates. If the Undersigned, as an eligible lender trustee, files this
Notice on behalf of its beneficial holders of FFELP loans, the Undersigned has included the
name and LID of each of those beneficial holders.
This 2009 Notice of Intent to Participate is executed and dated as of the date first listed above.
By executing and delivering to the Department this 2009 Notice of Intent, the Undersigned now
possesses an option to participate in the Loan Purchase Commitment Program and the Loan
Participation Purchase Program.
The Undersigned asks that the Department of Education please direct all inquiries and
correspondence relating to these programs to:
[UNDERSIGNED NAME AND LENDER ID NUMBER]
[ELIGIBLE LENDER TRUSTEE NAME OR BENEFICIAL
HOLDER NAME, IF ANY AND LIDS]
[STREET ADDRESS]
[CITY], [STATE] [ZIP]
Attention of: [NAME], [TITLE]
By Phone - [XXX-XXX-XXXX]
By Fax – [XXX-XXX-XXXX]
By E-mail – [email address]
[NAME OF ENTITY]
By:___________________________
Name:
Title:
The completed, signed, and dated Notice of Intent to Participate should be sent as a PDF
attachment to an e-mail message addressed to [email protected]. The e-mail
message subject line should read “Submission of Notice of Intent to Participate.”
For questions concerning the submission and receipt of the email please call (202) 377-4401.

H-2

Paperwork Burden Statement
According to the Paperwork reduction Act of 1995, no persons are required to respond to a
collection of information unless such collection displays a valid OMB control number. The
valid OMB control number for this information collection is 1845-XXXX. The time required to
complete the Master Participation Agreement and Exhibits A, B, and C for this information
collection is estimated to average 20 hours per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the
information collection. If you have any comments concerning the accuracy of the time
estimate(s) or suggestions for improving this form, please write to: U.S. Department of
Education, Washington, D.C. 20202-4537. If you have comments or concerns regarding the
status of your individual submission of this form, write directly to: Policy Liaison and
Implementation, Federal Student Aid, U.S. Department of Education, 400 Maryland Avenue,
S.W., UCP3, 11th floor, Washington D.C. 20202-4537.
The time required to complete Exhibits D, E, F and G for this information collection is estimated
to be 2 hours per response, including time to review instructions, search existing data resources,
gather the data needed and complete and review the information collection.
Additionally, the time required to complete Exhibit H for this information collection is estimated
to be 1 hour per response, including time to review instructions, search existing data resources,
gather the data needed and complete and review the information collection.

2009 MASTER LOAN SALE AGREEMENT

UNITED STATES DEPARTMENT OF EDUCATION

JANUARY 1, 2009

ELIGIBLE LOANS MADE PURSUANT TO THE
FEDERAL FAMILY EDUCATION LOAN PROGRAM

TABLE OF CONTENTS
Page
Section 1.

Terms.........................................................................................................................1

Section 2.

Commitment to Lend Under the FFELP.. .................................................................2

Section 3.

Definitions.................................................................................................................2

Section 4.

Sale/Purchase. ...........................................................................................................9

Section 5.

Conditions Precedent to Purchase. ..........................................................................11

Section 6.

Representations and Warranties of the Seller and the Eligible Lender Trustee......15

Section 7.

Rescission of Purchase; Obligation to Reimburse and Indemnify..........................21

Section 8.

Obligation to Remit Subsequent Payments and Forward Communications. ..........21

Section 9.

Continuing Obligation of the Seller. .......................................................................22

Section 10.

Liability of the Seller; Indemnities..........................................................................22

Section 11.

Transfer of Servicing...............................................................................................22

Section 12.

Merger or Consolidation of, or Assumption of the Obligations of, the Seller........23

Section 13.

Expenses..................................................................................................................24

Section 14.

Survival of Covenants.. ...........................................................................................24

Section 15.

Communication and Notice Requirements. ............................................................24

Section 16.

Form of Instruments. ...............................................................................................25

Section 17.

Amendment; Waiver. ..............................................................................................25

Section 18.

Audits.. ....................................................................................................................25

Section 19.

Severability Clause..................................................................................................25

Section 20.

Governing Law........................................................................................................25

Section 21.

Exhibits....................................................................................................................26

Section 22.

General Interpretive Principles................................................................................26

Section 23.

Reproduction of Documents....................................................................................26

Section 24.

Further Agreements.................................................................................................26

Section 25.

Other Department Program. ....................................................................................27

Section 26.

Adoption..................................................................................................................27

Section 27.

Integration. ..............................................................................................................27

-i-

EXHIBITS
EXHIBIT A
EXHIBIT B
EXHIBIT C
EXHIBIT D
EXHIBIT E
EXHIBIT F
EXHIBIT G
EXHIBIT H

-

FORM OF ADOPTION AGREEMENT
FORM OF SELLER’S OFFICER’S CERTIFICATE
FORM OF OPINION OF COUNSEL TO THE SELLER
FORM OF 45-DAY NOTICE OF INTENT TO SELL LOANS
FORM OF BILL OF SALE
FORM OF SECURITY RELEASE CERTIFICATION
FORM OF NOTICE OF ASSIGNMENT AND DESIGNATION OF PAYEE
FORM OF NOTICE OF INTENT TO PARTICIPATE

- ii -

MASTER LOAN SALE AGREEMENT
This is a Master Loan Sale Agreement, dated January 1, 2009 (“2009 Master Loan Sale
Agreement”), among the United States Department of Education (“Department”) and an
individual Eligible Lender (as defined below) or the holder of beneficial interests in Loans (such
entity, “Seller”), and if the latter, the related Eligible Lender Trustee, in each case made party to
this Master Loan Sale Agreement by executing an Adoption Agreement in the form attached
hereto as Exhibit A.
WHEREAS, pursuant to Section 459A of the Higher Education Act of 1965, as amended,
the Department has the authority to purchase Stafford Loans and PLUS Loans, on such terms as
the Secretary of Education, the Secretary of the Treasury, and the Director of the Office of
Management and Budget jointly determine are in the best interest of the United States to
encourage Eligible Lenders to provide students and parents access to Stafford Loans and PLUS
Loans made under the Federal Family Education Loan Program for the 2009-2010 academic
year;
WHEREAS, the Seller has an ownership interest in certain Stafford Loans and PLUS
Loans guaranteed under the Higher Education Act;
WHEREAS, the Seller may desire to sell its interest in such loans from time to time and
the Department may desire to purchase such loans from the Seller;
WHEREAS, to the extent that the Department, the Seller and the Eligible Lender Trustee
(if applicable) enter into an Adoption Agreement, this Master Loan Sale Agreement shall provide
for the Seller to sell to the Department certain of such loans by sale and transfer to the
Department of all of the Seller’s and the Eligible Lender Trustee’s (if applicable) right, title and
interest in, to and under such loans (including the right to service such loans) as authorized by
the Higher Education Act, all on the terms and conditions set forth below; and
WHEREAS, by its execution of an Adoption Agreement to this 2009 Master Loan Sale
Agreement, and upon each transfer hereunder, the Seller shall represent to the Department that it
shall continue to participate in the Federal Family Education Loan Program and that at such time
as funds become reasonably available to it from private sources, it will originate new FFELP
loans or acquire FFELP loans made by other lenders after the Department’s purchases of Loans
from the Seller.
NOW, THEREFORE, in connection with the mutual promises contained herein, the
parties hereto agree as follows:
Section 1.
Terms. This 2009 Master Loan Sale Agreement establishes the terms
under which the Seller, together with an Eligible Lender Trustee, if any, which holds legal title to
Eligible Loans on behalf of the Seller and which is authorized to sell Eligible Loans on behalf of
the Seller, may sell, and the Department shall purchase, the Eligible Loans (and all obligations of
the Borrowers thereunder) specified on each Loan Schedule attached to each Bill of Sale as the
parties may execute from time to time pursuant to this Master Loan Sale Agreement, subject to
the terms of this Master Loan Sale Agreement. Each such Bill of Sale shall be substantially in
the form of Exhibit E, attached hereto, incorporating by reference the terms of this Master Loan
1

Sale Agreement, and shall be a separate agreement among the Seller, the Eligible Lender Trustee
(if applicable) and the Department with respect to the Loans covered by the terms of such Bill of
Sale for all purposes. If the terms of a Bill of Sale conflict with the terms of this Master Loan
Sale Agreement, the terms of this Master Loan Sale Agreement shall supersede and govern
except to the extent that such conflict is specifically noted in the Bill of Sale and the parties
acknowledge and agree that notwithstanding such conflict, the terms of the Bill of Sale shall
govern.
In order to sell any Loans pursuant to this 2009 Master Loan Sale Agreement, the Seller
must notify the Department that it will sell such Loan(s) no later than August 14, 2010, and must
complete the sale on or before September 30, 2010. If an Eligible Lender fails to meet one or
both of these dates, the right to sell Loans hereunder shall terminate and the Department will not
honor any commitment to purchase loans.
No Loan will be eligible for sale hereunder to the Department if the first disbursement
was made prior to the date on which the Department received a completed 2009 Notice of Intent
to Participate from the Seller.
If an Eligible Lender wishes to sell a Loan to the Department that it did not originate,
both the Eligible Lender and the originating Lender must each deliver a completed 2009 Notice
of Intent to Participate to the Department prior to the date on which it originated or acquired the
Loan, as the case may be.
Section 2.
Commitment to Lend Under the FFELP. By its execution of an
Adoption Agreement, and upon each sale hereunder, the Seller represents to the
Department that it shall continue to participate in the FFELP (either itself or through an
Eligible Lender Trustee) and that at such time as funds become reasonably available to it
from private sources, it will originate new FFELP loans or acquire FFELP loans made by
other lenders after the date of the sale of the Loans to the Department hereunder.
Section 3.
Definitions. For purposes of this 2009 Master Loan Sale Agreement, the
following capitalized terms shall have the respective meanings set forth below:
A.
“Adoption Agreement” means an Adoption Agreement, substantially in the form
of Exhibit A, attached hereto, of which this 2009 Master Loan Sale Agreement forms a part by
reference, by and among the Department, a Seller and an Eligible Lender Trustee (if applicable)
obligating each of the parties thereto to the terms of this Master Loan Sale Agreement. If the
terms of an Adoption Agreement conflict with the terms of this Master Loan Sale Agreement, the
terms of this Master Loan Sale Agreement shall govern except to the extent that such conflict is
specifically noted in such Adoption Agreement and the parties acknowledge and agree that
notwithstanding such conflict, the terms of the Adoption Agreement shall govern.
B.
“Bill of Sale” means each document in the form of Exhibit E, attached hereto,
executed by an authorized officer of the Seller and acknowledged by the Department, which
shall (i) set forth the Loans offered by the Seller and accepted for purchase by the Department,
(ii) sell, assign and convey to the Department and its assignees, all right, title and interest of the
Seller, in the Loans listed on that Bill of Sale and (iii) certify that the representations and
2

warranties made by the Seller pursuant to Sections 6A and 6B of this Master Loan Sale
Agreement are true and correct.
C.

“Borrower” means the student or parent obligor on a Loan.

D.
“Business Day” means any day other than (i) a Federal or applicable State
holiday, or (ii) a Saturday or Sunday.
E.
“Custodian” means the custodian of loans pursuant to Master Participation
Agreement between the Department, a custodian bank, and, as applicable, an Eligible Lender or
an Eligible Lender Trustee and a holder of a beneficial ownership interest in FFELP loans.
F.
“Eligible Borrower Benefits” means only those borrower benefits for a Loan that
are (i) unconditional upfront fee reductions which are accrued and paid or made prior to the date
on which a Loan is sold hereunder, or (ii) permitted reductions in interest rates of not more than
0.25 percent that are contingent on the use of an automatic payment process by the Borrower for
any payments due.
G.
“Eligible Lender” means an entity that is an eligible lender under Section 435(d)
of the Higher Education Act that holds Eligible Loans (whether directly or as an Eligible Lender
Trustee).
H.
“Eligible Lender Trustee” means an Eligible Lender that holds legal title to a
Loan for the benefit or on behalf of the Seller which holds the related beneficial ownership
interest in such Loan that is authorized to sell Eligible Loans on behalf of the Seller, and that
executes an Adoption Agreement together with such Seller.
I.
“Eligible Loan” means a Loan that meets the following criteria as of the
applicable Purchase Date:
(i)

the Loan was made for loan periods that include, or begin on or after, July
1, 2009, the first disbursement on the Loan is made on or after May 1,
2009 but no later than July 1, 2010, and the Loan is fully disbursed no
later than September 30, 2010;

(ii)

the Loan is owned by the Seller, together with the Eligible Lender Trustee
(if applicable), and is fully disbursed;

(iii)

the Loan has been originated and serviced in compliance with all
requirements of applicable law, including the Higher Education Act and
the implementing regulations, the Equal Credit Opportunity Act,
Regulation B and other applicable consumer credit laws and equal credit
opportunity laws, as applicable to such Loan;

(iv)

the Loan is guaranteed at least 97% as to principal and interest by the
applicable Guarantor and eligible for reinsurance by the Department in
accordance with the Higher Education Act;

3

(v)

the Loan bears interest at a stated rate equal to the maximum rate
permitted under the Higher Education Act for such loan, except as the rate
is modified by an Eligible Borrower Benefit;

(vi)

the Loan is eligible for the payment of quarterly Special Allowance
Payments;

(vii)

if the Loan is not yet in repayment status, the Loan is eligible for payment
of Interest Subsidy Payments, or if not eligible, has interest either billed
quarterly to the Borrower or capitalized to the extent permitted by the
applicable Guarantor (unless, by the Purchase Date, the Seller would not
otherwise have billed the borrower quarterly for interest accrued on the
Loan);

(viii) the Loan is evidenced by a signed Promissory Note in the form (including
any required addenda) published by, and prescribed by, the Department,
without change of any kind, and is not subject to any agreement not
contained in the note that would bar, condition, or limit either transfer of
the loan or the exercise by a transferee of the rights of the Lender under
the terms of the note, except as such an agreement relates exclusively to
borrower benefits on the loan;
(ix)

the Seller, together with the Eligible Lender Trustee (if applicable), has
good and marketable title to the Loan free and clear of any encumbrance,
lien or security interest or any other prior commitment other than as may
be granted in favor of the Department or that will be released pursuant to a
Security Release Certification upon the transfer hereunder;

(x)

the Loan has not been modified, extended or renegotiated in any way,
except as required or permitted under the Higher Education Act or other
applicable laws, rules and regulations, and the applicable Guarantee
Agreement;

(xi)

the Loan constitutes a legal, valid and binding obligation to pay on the part
of the related Borrower enforceable in accordance with its terms and is not
subject to a current bankruptcy proceeding;

(xii)

the Loan is supported by the documents required under this Agreement;

(xiii) the Loan has no borrower benefits or other incentive programs other than
Eligible Borrower Benefits;
(xiv)

if the Loan is subject to a servicing agreement, such servicing agreement
is terminable with respect to such Loan upon thirty (30) days’ notice by
the Department without the payment by the Department of any deboarding, deconversion or related fees or expenses of the related servicer
and without any liability on the part of the Department;
4

(xv)

the sale or assignment of the Loan does not conflict with any law or
require notice to or consent, approval, authorization or order of any Person
or governmental authority, except for such consent, approval,
authorizations or orders, if any, that have been obtained prior to the related
Purchase Date, and for any notices to Borrowers and Guarantors required
by the Higher Education Act;

(xvi)

if the Loan is made under Section 428 (Subsidized Stafford Loans) or
Section 428H (Subsidized Stafford Loans) of the Higher Education Act,
such Loan shall have been sold to the Department together with all of the
Borrower’s other Subsidized Stafford Loans and Unsubsidized Stafford
Loans that are Eligible Loans and that are held by or on behalf of the
Seller; and

(xvii) the Loan has been originated or acquired by either an Eligible Lender or a
lender that is not an Eligible Lender and the legal title of such Loan is held
by an Eligible Lender Trustee, and pursuant to Section 1 above, the
Department has timely received the Notices of Intent to Participate.
The following loans shall, without limitation, not be eligible for sale to the Department
pursuant to the terms of this 2009 Master Loan Sale Agreement:
(i)

loans which do not comply with the representations and warranties set
forth in Section 6B of this Master Loan Sale Agreement;

(ii)

FFELP consolidation loans or any other types of loans not specifically
described in this Master Loan Sale Agreement;

(iii)

loans disbursed for academic years other than 2009-2010;

(iv)

loans on which the lender has committed to providing the Borrower with
any borrower benefits other than Eligible Borrower Benefits, without
regard to whether such a commitment purports to bind only the Lender;

(v)

loans on which a default claim or other claim for payment on the loan has
been filed with the related Guarantor; and

(vi)

loans made by a guarantor or other lender as a Lender of Last Resort,
pursuant to Section 428(j) of the Higher Education Act, whether made
with Federal advances or other funds.

J.
“Equal Credit Opportunity Act” means the Equal Credit Opportunity Act (15
U.S.C. Section 1691 et seq.) as amended.
K.
“FFELP” means the Federal Family Education Loan Program authorized under
title IV, Part B of the Higher Education Act.

5

L.
“Guarantee Agreement” means an agreement between a Guarantor and the Seller
or the Eligible Lender Trustee (if applicable) that provides for the payment by such Guarantor of
amounts authorized to be paid pursuant to the Higher Education Act to holders of qualifying
FFELP student loans guaranteed in accordance with the Higher Education Act.
M.
“Guarantor” means any FFELP guaranty agency with which the Seller or the
Eligible Lender Trustee (if applicable) has in place a Guarantee Agreement, and which guarantor
is reinsured by the Department of Education for a percentage of claims paid for a given federal
fiscal year.
N.
“Higher Education Act” means the Higher Education Act of 1965, as amended, 20
U.S.C. Section 1001 et seq.
O.
“Interest Subsidy Payments” means the interest subsidy payments on certain
FFELP student loans authorized to be made by the Department pursuant to Section 428 of the
Higher Education Act.
P.
“Loan” means a FFELP Subsidized Stafford Loan or Unsubsidized Stafford Loan
or FFELP PLUS Loan that was made to a student or in the case of a parent PLUS loan, made to a
parent of a dependent student, evidenced by a Promissory Note and all related Loan Documents
together with any guaranties and other rights relating thereto including, without limitation,
Interest Subsidy Payments and Special Allowance Payments, together with the servicing rights
related thereto.
Q.
“Loan Documents” means with respect to each Loan, the following documents
(except as otherwise specifically provided by the Department):
(i)

a copy of the loan application if a separate application was provided to the
Seller;

(ii)

a copy of the signed Promissory Note;

(iii)

if the loan is in repayment, the repayment schedule;

(iv)

a record of each disbursement;

(v)

notices of changes in a Borrower’s address and status as at least a halftime student;

(vi)

evidence of the Borrower’s eligibility for a deferment;

(vii)

the documents required for the exercise of forbearance;

(viii) documentation of the assignment of the loan, if any;
(ix)

a payment history showing the date and amount of each payment received
from or on behalf of the Borrower, and the amount of each payment that
was attributed to principal, interest, late charges, and other costs;
6

(x)

a collection history showing the date and subject of each communication
between the Seller and the Borrower or endorser relating to collection of a
delinquent Loan, each communication other than regular reports by the
Seller showing that an account is current, between the Seller and a credit
bureau regarding the loan, each effort to locate a Borrower whose address
is unknown at any time, and each request by the Seller for default aversion
assistance on the Loan;

(xi)

documentation of any master promissory note confirmation process or
processes;

(xii)

any additional records that are necessary to document the validity of a
claim against the guarantee or the accuracy of reports submitted by the
Seller; and

(xiii) a statement identifying the name and location of the entity in possession of
the original electronic promissory note and, if different, the name,
company, address and contact information of the person who is able to
provide the affidavit or certification described in 34 C.F.R. Section
682.414(a)(6)(i), including any necessary supporting documentation.
R.
“Loan Schedule” means the schedule attached to each Bill of Sale (in the form
provided by the Department) and completed by or on behalf of the Seller and the Eligible Lender
Trustee (if applicable) that lists, by Borrower, (i) the Loans sold to the Department pursuant to
such Bill of Sale, (ii) the name and address of such Borrower, the loan number, the qualifying
institution attended by the Borrower, and the outstanding Principal Balance and accrued interest
of such Loans as of the related Purchase Date, and (iii) any other information the Department
may require including but not limited to certain identification numbers and dates relating to the
Eligible Loans.
S.
“Master Loan Sale Agreement” or “2009 Master Loan Sale Agreement” means
this January 1, 2009 Master Loan Sale Agreement, of which the Adoption Agreement forms a
part by reference.
T.
“Master Participation Agreement” or “2009 Master Participation Agreement”
means the Master Participation Agreement dated January 1, 2009, together with the related
adoption agreement among the Department, the Seller, the Eligible Lender Trustee (if applicable)
and the related Custodian.
U.
“Notice of Intent to Participate” means the notice provided to the Department by
an Eligible Lender or by an entity other than an Eligible Lender that holds a beneficial ownership
interest in Eligible Loans and the Eligible Lender Trustee for that entity, of its intent to become a
Seller hereunder, which shall be in the form attached hereto as Exhibit H.
V.
“Person” means an individual, corporation, limited liability company, partnership,
joint venture, association, joint-stock company, trust, unincorporated organization or government
or any agency or political subdivision thereof.
7

W.
“PLUS Loan” means a Loan described in Section 428B of the Higher Education
Act and shall include loans to parents, designated as “PLUS Loans” or loans to graduate or
professional students, designated “Grad PLUS Loans.”
X.
“Principal Balance” means the outstanding principal amount of the Loan, plus
interest capitalized through the Purchase Date (if any).
Y.
“Promissory Note” means the master promissory note of the Borrower and any
amendment thereto evidencing the Borrower’s obligation with regard to a student loan
guaranteed under the Higher Education Act, either in paper form or in the electronic records
evidencing the same.
Z.
“Purchase Date” means with respect to any purchase, the effective date of the
related Bill of Sale by which the related Loans are sold to the Department and legal title to such
Loans is conveyed to the Department. The latest Purchase Date hereunder shall be September
30, 2010.
AA. “Purchase Price” means with respect to each Loan sold to the Department
hereunder, (i) the outstanding Principal Balance of the Loan as of the related Purchase Date, plus
(ii) accrued and unpaid interest on the Loan up to but not including the related Purchase Date,
plus (iii) a reimbursement of the one percent (1%) loan fee (as provided by Section 438(d) of the
Higher Education Act) previously paid by the Seller to the Department, plus (iv) $75.00 for such
Loan.
BB. “Regulation B” means the federal regulations governing the Equal Credit
Opportunity Act as it appears in Title 12, Code of Federal Regulations, Part 202.
CC. “Responsible Officer” means any director, vice president, assistant vice president,
any associate or any other officer of the Seller, customarily performing functions similar to those
performed by any of the above designated officers and with respect to a particular matter, to
whom such matter is referred because of such officer’s knowledge of and familiarity with the
particular subject and having direct responsibility for the administration of this Agreement.
DD. “Secretary” means the Secretary of Education, and “Department” means the
United States Department of Education, and either term includes any official of the Department
duly authorized to perform any function with respect to the transactions under this Master Loan
Sale Agreement.
EE.
“Security Release Certification” means the certification executed by the Seller
and a lienholder with respect to one or more Loans substantially in the form of Exhibit F hereto.
FF.

“Seller” has the meaning set forth in the preamble hereof.

GG. “Special Allowance Payments” means special allowance payments on FFELP
student loans authorized to be made by the Department pursuant to Section 438 of the Higher
Education Act.

8

HH.

“Stafford Loan” means a Subsidized Stafford Loan or an Unsubsidized Stafford

Loan.
II.
“Subsidized Stafford Loan” means a Loan described in Section 428(a) of the
Higher Education Act.
JJ.
“Unsubsidized Stafford Loan” means a Loan described in Section 428H of the
Higher Education Act.
Section 4.

Sale/Purchase.

A.

Notices.

(i)

The Seller shall notify the Department of its intent to sell loans under this
Agreement by submitting to the Department a 45-Day Notice of Intent to Sell
Loans And Projected Loan Schedule Summary of Loans to Be Sold Pursuant to
the Master Loan Sale Agreement, in the form of Exhibit D to this Agreement, that
describes the loans proposed for sale and the date the Seller proposes to have the
sale consummated. The Seller shall submit this Notice at least forty-five (45)
calendar days prior to the Purchase Date proposed by the Seller for the first sale
of loans under this Agreement, and, with the prior written consent of the
Department, at least thirty (30) calendar days prior to any subsequent sale of loans
under this Agreement.

(ii)

The Seller shall provide the Department, at least seven (7) Business Days before
the requested Purchase Date, a list of all loans to be sold with information
regarding each loan required by the Department.

B.
Consummation of Sale and Purchase. The sale and purchase of Loans pursuant to
a Bill of Sale shall be consummated upon (i) the Department’s receipt from the Seller and the
Eligible Lender Trustee (if applicable) of the related Bill of Sale together with a Loan Schedule
attached thereto, (ii) the delivery of the related Promissory Notes and related Loan Documents to
the Department, (iii) the payment by the Department to the Seller of the Purchase Price, and (iv)
the satisfaction of all other conditions precedent set forth in Section 5B hereof in the manner set
forth in this Agreement (or if unsatisfied, the Department has permitted such unsatisfied
conditions to be cured within an acceptable period of time following the Purchase Date, in the
Department’s sole discretion).
Upon delivery of the executed Bill of Sale and payment by the Department of the
Purchase Price with respect to the related Loans being sold on such Purchase Date, (x) if the
Seller is an Eligible Lender, the Seller thereby sells, transfers, assigns, sets over and conveys to
the Department, without recourse, but subject to the terms of the Agreement, all rights, title and
interest of the Seller in and to the Loans listed on the Loan Schedule delivered in connection
with the related Purchase Date, or (y) if the Seller is not an Eligible Lender, the Eligible Lender
Trustee thereby sells, transfers, assigns, sets over and conveys to the Department, without
recourse, but subject to the terms of the Agreement, all of its rights, title and interest in and to the
related Eligible Loans, and the Seller thereby sells, transfers, assigns, sets over and conveys to
the Department, without recourse, but subject to the terms of the Agreement, all of its beneficial
9

interests in such Eligible Loans, and (z) the Seller sells, transfers, assigns, sets over and conveys
to the Department all of the related servicing files and servicing rights appurtenant to the related
Loans, the related Promissory Notes and related Loan Documents (including, without limitation,
any rights of the Seller to receive from any third party any documents which constitute a part of
the loan or servicing files) and all rights and obligations arising under the documents contained
therein.
The Department and the Seller acknowledge and agree that the Purchase Price paid for
each Loan includes consideration for release by the Seller of any claim it may otherwise have
with respect to related servicing rights appurtenant to such Loan. Such sale and purchase shall
be effective as of the date of the payment to the Seller. The Seller shall use its best efforts to
perform promptly its obligations pursuant to such Bill of Sale with respect to each Loan.
Notwithstanding anything herein to the contrary, a lender providing interim financing
(the “financing lender”) to the Seller for Loans prior to the sale to the Department hereunder
shall have the right to exercise the Seller’s option to sell Loans to the Department on the
Purchase Date and perform pursuant to the Bill of Sale, if (i) the financing lender presents to the
Department a power of attorney that is duly executed by the Seller and the Eligible Lender
Trustee (if applicable and to the extent necessary) and is enforceable in each applicable
jurisdiction, (ii) the Loans are Eligible Loans (except that a Loan need not be fully disbursed in
order to satisfy this clause (ii)), (iii) the notice required under Section 4.A(i) has been provided
by the Seller or by the financing lender, and (iv) the financing lender makes all of the
representations and warranties with respect to the Loans as are set forth in Section 6B hereof.
For the avoidance of doubt, except as provided in clauses (iii) and (iv) of the previous sentence,
the financing lender, in exercising its rights under this Section 4B, shall not be obligated to
perform any of the obligations of the Seller or the Eligible Lender Trustee (if applicable)
hereunder, including any obligation to file a Notice of Intent to Participate with the Department,
or to make any further disbursements with respect to any Loan sold to the Department by that
financing lender.
C.
Settlement of the Purchase Price; Remittance to Assignee of Seller. On the
Purchase Date, the Department shall pay to the Seller or the assignee of the Seller the Purchase
Price by electronic transfer in funds available by the next Business Day to the account specified
by the Seller. A Seller may assign its right to payment to lender that provides financing to Seller
to make or acquire loans. To assign its right to payment of proceeds of a sale, the Seller and the
lender must execute a Notice of Assignment and Designation of Payee in form of Exhibit G
attached to this Agreement for proceeds of the sale that have been assigned, and must submit that
Notice to the Department with the Bill of Sale.
D.
Purchase Frequency. The Seller may not sell Loans to the Department more
frequently than weekly.
E.
Interest Subsidy and Special Allowance Payments and Fees. The Seller shall be
entitled to all Interest Subsidy Payments and Special Allowance Payments on the Loans up to but
not including the related Purchase Date, and shall be responsible for the payment of fees, if any,
applicable to Loans accruing up to but not including the related Purchase Date. The Department
shall be entitled to all payments on a Loan which are received after the Purchase Date.
10

F.
Transfer of Servicing. The Seller shall cause each related servicer of the Loans to
transfer servicing in accordance with the directions of the Department and in accordance with
industry standards related to the prudent servicing of FFELP loans.
G.
Intent of the Parties. With respect to each sale of Loans pursuant to this Master
Loan Sale Agreement and the related Bills of Sale, it is the express intention of the Seller and the
Department, and the Seller hereby warrants that, the transfer and assignment constitute a valid
sale of such Loans and the rights to service such Loans from the Seller to the Department, and
that the legal and beneficial interest in and title to such Loans shall not be part of the Seller’s
estate in the event of the bankruptcy of the Seller or the appointment of a receiver with respect to
the Seller. If such transfer and assignment is deemed to be a pledge to secure a loan and not a
sale, then the parties also intend and agree that the Seller shall be deemed to have granted, and in
such event does hereby grant, to the Department, a first priority security interest in all of its right,
title and interest in, to and under such Loans, including the servicing rights appurtenant thereto,
all payments of principal or interest on such Loans due after the related Purchase Date, all other
payments made in respect of such Loans after the related Purchase Date and all proceeds thereof
and that this Master Loan Sale Agreement shall constitute a security agreement under applicable
law. If such transfer and assignment is deemed to be a pledge to secure a loan and not a sale, the
Seller consents to the Department hypothecating and transferring such security interest in favor
of Department’s successors or assigns.
Section 5.

Conditions Precedent to Purchase.

A.
Initial Document Delivery. Not less than twenty (20) Business Days prior to the
first Purchase Date hereunder, the Seller shall submit to the Department fully executed originals
of the following documents:
(i)

an Adoption Agreement, in substantially the form of Exhibit A hereto,
duly executed by the Seller and the Eligible Lender Trustee (if applicable),
in three counterparts;

(ii)

if the Seller has not entered into the Master Loan Sales Agreement dated
July 25, 2008 with the Department –

(iii)

(1)

an officer’s certificate, in substantially the form of Exhibit B
hereto, including all attachments thereto, and

(2)

an opinion of counsel to the Seller, in substantially the form of
Exhibit C hereto; and

such other documents as the Department may request.

11

B.
Purchase Date Closing Conditions. Any purchase of Loans pursuant to this
Master Loan Sale Agreement on any Purchase Date is subject to the following conditions
precedent being satisfied (and the Seller, by accepting payment, shall be deemed to have certified
that all such conditions are satisfied on such Purchase Date):
(i)

Activities Prior to the Related Purchase Date. The Seller shall have
provided any assistance requested by the Department in determining that
all required documentation on the related Loans is present and correct.

(ii)

Servicing Released. Each Loan subject to a servicing agreement shall
have been released from such servicing agreement upon the sale to the
Department hereunder. The Seller shall be responsible for, and shall have
paid, any de-boarding, deconversion or related fees or expenses to the
related servicer. The Department shall obtain all rights to service such
Loan and may, in its sole discretion require deconversion of such Loan in
order to service the loan itself or through a third-party servicer of its
designation.

(iii)

Bill of Sale/Loan Schedule/Loan Documents. The Seller shall deliver to
the Department:
(1)

A Bill of Sale that has been duly authorized and executed by an
authorized officer of the Seller and the Eligible Lender Trustee (if
applicable), covering the applicable Loans offered by the Seller
and acknowledged and accepted by the Department as set forth
thereon;

(2)

The Loan Schedule attached to the Bill of Sale identifying each of
the Eligible Loans proposed to be sold; and

(3)

The Loan Documents for each Loan listed on the Loan Schedule.

(4)

In the case of a purchase of Loans evidenced by electronically
signed promissory notes, the Seller may, for all such Loans, satisfy
its obligation to provide those Loan Documents included in section
3 Q (xi), (xii) and (xiii) by providing with the Bill of Sale, or not
later than November 30, 2009 for any Bill of Sale submitted by
that date, a “representative affidavit,” with full supporting material,
that describes the procedures the Lender used to make and hold a
particular Loan and the procedures whereby that Seller will be able
to meet any additional needs of the Department for records
supporting that Loan, and a certification that such representative
affidavit describes the procedures that have been and will be used
respecting all other Loans sold to the Department (unless otherwise
indicated respecting any such other Loans, in which case a separate
representative affidavit shall be provided) under this Master Loan
Sales Agreement. The Department shall consider a representative
12

affidavit acceptable only if it contains each of the following
elements:
(I)

The name and location of the entity in possession of any
original electronic promissory note.

(II)

A description (such as a flow chart) of the steps followed
by the borrower to execute the promissory note (including
those relating to any applicable master promissory note
confirmation process).

(III)

A copy of each computer screen as it appeared to the
borrower when signing the note electronically.

(IV)

A description of the field edits and any other security
measures used to ensure the integrity of the data submitted
to the originator electronically.

(V)

A description of how the executed promissory note has
been preserved so as to ensure that it could not be altered
after it was executed.

(VI)

Documentation supporting the Seller’s authentication and
electronic signature process.

(VII) An indication of the Seller’s capability and readiness to
provide Loan-specific affidavits for particular Loans in the
future, as may be requested by the Department.
(iv)

Endorsement. At the direction of and in such form as the Department may
designate, the Seller also agrees to individually endorse any Loan as the
Department may request from time to time.

(v)

Eligible Lender Trustee Sales. The Eligible Lender Trustee (if applicable)
shall have delivered to the Department such additional documents and
information as the Department shall have requested to evidence that the
Eligible Lender Trustee is fully authorized to sell each related Loan on
behalf of the Seller.

(vi)

Security Release Certification. If any of the Loans is subject to any
security interest, pledge or hypothecation for the benefit of any Person, the
Seller shall annotate the Bill of Sale to disclose that interest, and shall
deliver to the Department a Security Release Certification, in the form of
Exhibit F attached hereto executed by such Person.

(vii)

Additional Documents. The Seller shall have delivered to the Department
such additional documents and information as the Department shall have
requested.

(viii) Additional Notices of Loan Transfer. The Seller shall deliver to the
Borrower such notices of loan transfer as may be required by the Higher
13

Education Act and implementing regulations. The Seller agrees that the
Department may use the related Bill of Sale, together with the related,
attached Loan Schedule, as official notification to the Guarantor of the
assignment by the Seller and the Eligible Lender Trustee (if applicable) on
behalf of the Seller to the Department of the Loans listed on such Loan
Schedule.
(ix)

Independent Public Accountant Review. Upon the consummation of the
initial purchase of Loans hereunder, and on any subsequent dates specified
by the Department (but not more often than monthly), the Seller shall
deliver an agreed upon procedures letter by an independent public
accountant with respect to the Loans proposed to be sold on such Purchase
Date, in form acceptable to the Department.

C.
Power of Attorney. The Seller hereby grants to the Department an irrevocable
power of attorney, which power of attorney is coupled with an interest, authorizing the
Department to take the following actions as it determines necessary to enforce a loan sold under
this Agreement –
(i)

to individually endorse or cause to be individually endorsed in the name of
the Seller any Loan sold to the Department hereunder,

(ii)

to evidence the transfer of such Loan to the Department,

(iii)

if the original promissory noted executed by the borrower has not been
transferred previously to the Department, --

(iv)

(1)

to cause the original promissory noted executed by the borrower
that is in the possession of the Seller or its agent to be made
available to the Department, or

(2)

if the Loan sold to the Department was made on the basis of a copy
of the note executed by the borrower, to obtain confirmation from
the Seller of that fact that also identifies the entity in possession of
the note executed by the borrower, and

to perform all other acts which the Department deems appropriate to
protect, preserve and realize upon the Loans sold hereunder, including, but
not limited to, the right to take possession of and endorse and collect any
checks, drafts, notes, acceptances or other instruments for the payment of
moneys due with respect to any Promissory Note, complete blanks in
documents, transfer servicing and execute assignments and other
instruments on behalf of the Seller as its attorney in fact.

14

Section 6.
Trustee.

Representations and Warranties of the Seller and the Eligible Lender

A.
Representations as to the Seller and the Eligible Lender Trustee. The Seller, as to
each matter referenced below, and to the extent expressly required below, the Eligible Lender
Trustee (if applicable), represents and warrants to the Department, as of the date the Adoption
Agreement is executed and as of the date of each Bill of Sale that:
(i)

Each of the Seller and the Eligible Lender Trustee (if applicable) (1) is
duly organized, validly existing and in good standing under the laws of the
State of its formation or of the United States, as applicable, (2) has all
licenses necessary to carry out its business as now being conducted or is
otherwise exempt under applicable law from such licensing or
qualification or is otherwise not required under applicable law to effect
such licensing or qualification and no demand for such licensing or
qualification has been made upon it by any such state, and (3) in any event
is in compliance with the laws of any such state to the extent necessary to
ensure the enforceability of each Loan. No licenses or approvals obtained
by it have been suspended or revoked by any court, administrative agency,
arbitrator or governmental body and no proceedings are pending which
might result in such suspension or revocation;

(ii)

The Seller or the Eligible Lender Trustee (if applicable) is an “eligible
lender” as such term is defined in Section 435(d) of the Higher Education
Act, has a lender identification number issued by the Department with
respect to the Loans, and has in effect a Guarantee Agreement with a
Guarantor with respect to each of the Loans;

(iii)

With respect to each state or jurisdiction therein in which the Seller
undertakes origination activities, Seller is in full compliance with such
state’s or jurisdiction’s (as applicable) laws, rules, regulations, orders,
settlement agreements and other standards and procedures, including those
promulgated by agencies or officers thereof, applicable to it and pertaining
to the conduct of participants in the student loan industry (including,
without limitation, any applicable “code of conduct” for participants in the
student loan industry that applies to the Seller as a matter of law, to the
extent that non-compliance with such a code of conduct would adversely
affect the Department’s rights or interests with respect to the Loans that it
purchases);

(iv)

The Seller has administered, operated and maintained its FFEL program in
such manner as to ensure that such program and the Loans will benefit, in
all material respects, from the FFELP, the Guarantee Agreements related
thereto and the federal program of reimbursement for FFELP loans
pursuant to the Higher Education Act;

15

(v)

The Seller has not, with respect to any Loan sold under any Bill of Sale
executed pursuant to this Master Loan Sale Agreement, agreed to release
any Guarantor from any of its contractual obligations as a guarantor of
such Loan or agreed otherwise to alter, amend or renegotiate any material
term or condition under which such Loan is guaranteed, except as required
by law or rules and regulations issued pursuant to law, without the express
prior written consent of the Department;

(vi)

Each of the Seller and the Eligible Lender Trustee (if applicable) (1) has
all requisite power and authority to hold each Loan, to sell each Loan, and
to execute, deliver and perform, and to enter into and consummate, all
transactions contemplated by this Master Loan Sale Agreement, (2) has
duly authorized the execution, delivery and performance of this Master
Loan Sale Agreement and (3) has duly executed and delivered this Master
Loan Sale Agreement. This Master Loan Sale Agreement, assuming due
authorization, execution and delivery by the other parties hereto,
constitutes the legal, valid and binding obligation of the Seller and the
Eligible Lender Trustee (if applicable), enforceable against each of them
in accordance with its terms except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting the enforcement of rights of creditors generally, and to
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or law); provided, however, that if the
Seller is not an Eligible Lender, the power and authority to hold and sell
each Loan described in clause (vi)(1) shall refer, with respect to the Seller,
to the beneficial interest of the Seller, and with respect to the Eligible
Lender Trustee, to its interest as the legal title holder of the Loan;

(vii)

The execution and delivery of this Master Loan Sale Agreement by each
of the Seller and the Eligible Lender Trustee (if applicable) and the
performance of and compliance with the terms of this Master Loan Sale
Agreement will not violate its formation documents or constitute a default
under or result in a breach or acceleration of, any material contract,
agreement or other instrument to which it is a party or which may be
applicable to it or its assets;

(viii) Neither the Seller nor the Eligible Lender Trustee (if applicable) is in
violation of, and the execution and delivery of this Master Loan Sale
Agreement by it and its performance and compliance with the terms of this
Master Loan Sale Agreement will not constitute a violation with respect
to, any order or decree of any court or any order or regulation of any
federal, state, municipal or governmental agency having jurisdiction over
it or its assets, which violation might have consequences that would
materially and adversely affect the condition (financial or otherwise) or its
operations or its assets or might have consequences that would materially
and adversely affect the performance of its obligations and duties
hereunder;
16

(ix)

The Seller does not believe, nor does it have any reason or cause to
believe, that it cannot perform each and every covenant contained in this
Master Loan Sale Agreement;

(x)

There are no actions or proceedings against, or investigations of, the Seller
before any court, administrative agency or other tribunal (1) that might
prohibit its entering into this Master Loan Sale Agreement, (2) that seeks
to prevent the sale of the Loans or the consummation of the transactions
contemplated by this Master Loan Sale Agreement or (3) that might
prohibit or materially and adversely affect the performance by the Seller
of its obligations under, or the validity or enforceability of, this Master
Loan Sale Agreement;

(xi)

No consent, approval, authorization or order of any court or governmental
agency or body is required for the execution, delivery and performance by
the Seller or the Eligible Lender Trustee (if applicable) of, or compliance
by it with, this Master Loan Sale Agreement or the consummation of the
transactions contemplated by this Master Loan Sale Agreement, except for
such consents, approvals, authorizations or orders, if any, that have been
obtained prior to the related Purchase Date;

(xii)

The transfer of the Loans shall be treated as a sale on the books and
records of the Seller and the Eligible Lender Trustee (if applicable), and
each of the Seller and the Eligible Lender Trustee (if applicable) will treat
the disposition of the Loans pursuant to this Master Loan Sale Agreement
for tax and accounting purposes as a sale. Each of the Seller and the
Eligible Lender Trustee (if applicable) shall maintain a complete set of
books and records for each Loan which shall be clearly marked to reflect
the ownership of each Loan by the Department;

(xiii) The consideration received by the Seller upon the sale of the Loans
constitutes fair consideration and reasonably equivalent value for such
Loans;
(xiv)

The Seller is solvent and will not be rendered insolvent by the
consummation of the transactions contemplated hereby. The Seller is not
transferring any Loan with any intent to hinder, delay or defraud any of its
creditors; and

(xv)

The Seller has an internal quality control program that verifies, on a
regular basis, the existence and accuracy of its legal documents, credit
documents and underwriting decisions, including all such documents and
decisions that would affect the validity of the representations and
warranties required under this Section 6A. The program shall include
evaluating and monitoring the overall quality of the Seller’s loan
production and the servicing of such loans. The program must use
commercially-reasonable processes and procedures to ensure that the
17

Loans are originated and serviced in accordance with applicable law, to
prevent and detect dishonest, fraudulent, or negligent acts; and to guard
against errors and omissions by officers, employees, or other authorized
persons. At a minimum this program and processes must include
maintenance of an errors and omissions insurance policy to the same
extent that the Seller adopts this practice for its other credit transactions,
or that it is required to do so under arrangements governing its financing.
To the extent that the Seller uses, or is required to use, periodic
independent auditor reviews of its transactions, these processes must
include those reviews for transactions that include the activities of the
Seller under this Agreement.
B.
Loan Level Representations. The Seller, and to the extent expressly required
below, the Eligible Lender Trustee (if applicable), represents and warrants to the Department as
to each Loan purchased by the Department under a Bill of Sale, as of the related Purchase Date:
(i)

The Seller or the Eligible Lender Trustee (as applicable) has good and
marketable title to, and the Seller and Eligible Lender Trustee together are
the sole owners of, the Loans, free and clear of any security interest or
lien, charge, claim, offset, defense, counterclaim or encumbrance of any
nature (including, without limitation, any circumstance or condition that
could impair transfer of title to the Loans free and claim of the claim of
any party), other than one that will be released simultaneously with the
purchase of the Loan hereunder pursuant to the terms of a Security
Release Certification. No right of rescission, offsets, defenses or
counterclaims have been asserted or threatened with respect to any Loan.
The sale of each Loan constitutes the absolute transfer of all right, title and
interests of the Seller and the Eligible Lender Trustee (if applicable) in
such Loan to the Department free and clear of any lien or adverse claim;

(ii)

Each Loan is an Eligible Loan and the description of and information
regarding the Loans set forth in the Bill of Sale and the Loan Schedule is
true, complete and correct;

(iii)

The Seller or the Eligible Lender Trustee (as applicable) is authorized to
sell, assign, transfer and reacquire the Loans; and the sale, assignment and
transfer of such Loans is or, in the case of a Loan reacquisition by the
Seller or the Eligible Lender Trustee (if applicable), will be made pursuant
to and consistent with the laws and regulations under which each of the
Seller and the Eligible Lender Trustee (if applicable) operates, and will not
violate any decree, judgment or order of any court or agency, or conflict
with or result in a breach of any of the terms, conditions or provisions of
any agreement or instrument to which it is a party or by which the it or its
property is bound, or constitute a default (or an event which could
constitute a default with the passage of time or notice or both) thereunder;

18

(iv)

Each Loan is in full force and effect in accordance with its terms and is the
legal, valid and binding obligations of the respective Borrower thereunder
subject to no defenses;

(v)

No consents and approvals are required by the terms of any Loan for the
consummation of the sale of such Loans hereunder to the Department;

(vi)

Each Loan has been duly made and serviced in accordance with the
provisions of the FFELP established under the Higher Education Act, and
has been duly guaranteed by a Guarantor; the Guarantee Agreement is in
full force and effect, and all premiums due and payable to such Guarantor
as of the related Purchase Date shall have been paid in full;

(vii)

Each Loan provides or, when the payment schedule with respect thereto is
determined, will provide for payments on a periodic basis that fully
amortize the Principal Balance thereof by its maturity, as such maturity
may be modified in accordance with any deferral or forbearance granted in
accordance with applicable law, including the Higher Education Act,
Department regulations, or any applicable Guarantee Agreement;

(viii) Any payments on a Loan received by the Seller that have been allocated to
the reduction of principal and interest on such Loan have been allocated
on a simple interest basis;
(ix)

Each Loan has been duly made and serviced in accordance with the
provisions of the related program under which such Loan was originated
and all applicable federal, state and local laws;

(x)

Due diligence and reasonable care have been exercised in the making,
administering, servicing and collecting on each Loan and, all disclosures
of information required to be made pursuant to the Higher Education Act
prior to the Purchase Date have been made;

(xi)

Each Borrower is an eligible borrower under the terms of Section 428,
428B or 428H of the Higher Education Act, as applicable;

(xii)

All borrower origination and loan fees required by Section 438 of the
Higher Education Act have been paid to the Secretary or appropriately
reserved by the Seller or the Eligible Lender Trustee (if applicable) for
payment to the Secretary;

(xiii) Each Loan is denominated and payable only in Dollars in the United
States;
(xiv)

The transfer and assignment herein contemplated constitute a valid sale of
the Loans from the Seller or the Eligible Lender Trustee (if applicable) to
the Department, and the beneficial interest in and title to such Loans shall
not be part of the Seller’s or the Eligible Lender Trustee’s (if applicable)
19

estate in the event of its bankruptcy or the appointment of a receiver with
respect to it;
(xv)

(xvi)

There is only one originally executed Promissory Note evidencing each
Loan, and such original Promissory Note (or a true and correct copy
thereof) has been delivered to the Department. For Loans that were
executed electronically, the Seller of such Loan (or its designee) has
possession of the electronic records evidencing the Promissory Note,
including all Loan Documents. The Promissory Notes that evidence the
Loans have no marks or notations indicating that they have been pledged,
assigned or otherwise conveyed to any Person other than the Department
or the Department’s designee, other than those that evidence -(1)

an interest or lien that has already been released or will be released
simultaneously with the purchase of the Loan hereunder pursuant
to the terms of the Security Release Certification,

(2)

an assignment or transfer to or from a predecessor in interest of the
Seller, or

(3)

a lien in favor of the Department or any interest of the Custodian
under the 2009 Master Participation Agreement or the July 25,
2008 Master Participation Agreement;

To the extent any Loan is evidenced by an electronic Promissory Note or
an electronic record, or to the extent the signature of the obligor on any
Promissory Note is an electronic signature, the Seller has complied (and
has caused any originator or servicer of the Loan to comply) with all
regulations and other requirements provided by the applicable Guarantor
or the Department relating to the validity and enforceability of such
Promissory Note;

(xvii) Neither the Seller nor the Eligible Lender Trustee (if applicable) has
pledged, assigned, sold, granted a security interest in, or otherwise
conveyed any of the Loans unless that action or interest has been
rescinded, terminated or released, or will be so, simultaneously with the
purchase of the Loan hereunder pursuant to a Security Release
Certification. Neither the Seller nor the Eligible Lender Trustee (if
applicable) has authorized the filing of or is aware of any financing
statements against it that include a description of collateral covering the
Loans hereunder (whether or not additional collateral is covered by such
financing statements) or any other security interest that has not been
terminated, or that will not be terminated upon purchase by the
Department. Neither the Seller nor the Eligible Lender Trustee (if
applicable) is aware of any judgment or tax lien filings against it; and

20

(xviii) No Borrower of a Loan as of the related Bill of Sale is noted in the related
Loan File as being currently involved in a bankruptcy proceeding.
Section 7.

Rescission of Purchase; Obligation to Reimburse and Indemnify.

Upon the occurrence of any of the conditions set forth in this Section 7A, the
A.
Department may rescind its purchase of a Loan, and upon written demand by the Department,
the Seller shall repay to the Department the Purchase Price for such Loan less any payments
received by the Department on that Loan plus accrued and unpaid interest, and applicable
negative Special Allowance Payments that would have been paid with respect to such Loan from
the Purchase Date to and including the date of repayment, plus any amounts otherwise owed to
the Secretary with respect to such Loan, plus any attorneys’ fees, legal expenses, court costs,
damages, servicing fees or other fees and expenses incurred by the Department in connection
with such Loan by reason of the occurrence of such a condition, and the Department shall
thereupon relinquish its interest in such Loan to the Seller. These conditions are:
(i)

Any representation or warranty made or furnished by the Seller or the
Eligible Lender Trustee (if applicable) pursuant to Sections 6A and 6B of
this Master Loan Sale Agreement shall prove to have been materially
incorrect as of the applicable Purchase Date (except that the Department
may allow the Seller or the Eligible Lender Trustee up to thirty (30)
Calendar Days to cure an unfounded representation or warranty made or
furnished under Section 6B);

(ii)

On account of any circumstance or event that occurred prior the Purchase
Date of the Loan, a defense is asserted by a Borrower of the Loan with
respect to such Borrower’s obligation to pay all or any part of the Loan,
and the Department, in good faith, believes that the facts reported, if true,
raise a reasonable doubt as to the legal enforceability of such Loan; or

(iii)

The Loan is not, in fact, an Eligible Loan on its Purchase Date.

B.
In addition to the obligation described above, the Seller shall indemnify the
Department and any subsequent purchaser of the Loans and hold them harmless against liability
for any losses, damages, penalties, fines, forfeitures, reasonable and necessary legal fees and
related costs, judgments, and other costs and expenses resulting from any claim, demand,
defense or assertion based on or grounded upon, or resulting from, any of the circumstances
described in Section 7A.
Section 8.

Obligation to Remit Subsequent Payments and Forward Communications.

A.
Any payment received by the Seller with respect to amounts accrued after the date
of the related Bill of Sale for any Loan sold to the Department, which payment is not reflected in
the related Loan Schedule, shall be held by the Seller in trust for the account of the Department
and the Seller hereby disclaims any title to or interest in any such amounts. Within two (2)
Business Days following the date of receipt, the Seller shall remit to the Department an amount
equal to any such payments along with a listing on a form provided by the Department
21

identifying the Loans with respect to which such payments were made, the amount of each such
payment and the date each such payment was received.
B.
Any written communication received at any time by the Seller or the Eligible
Lender Trustee (if applicable) with respect to any Loan subject to this Master Loan Sale
Agreement or the related Bill of Sale shall be transmitted to the Department, or its designated
agent, within two (2) Business Days of receipt. Such communications shall include, but not be
limited to, letters, notices of death or disability, notices of bankruptcy, forms requesting
deferment of repayment or loan cancellation, and like documents.
Section 9.
Continuing Obligation of the Seller. The Seller shall provide all
reasonable assistance necessary for the Department to resolve account problems raised by any
Borrower, the Guarantor or the Secretary provided such account problems are attributable to or
are alleged to be attributable to (a) an event occurring during the period the Seller owned the
related Loan, or (b) a payment made or alleged to have been made to the Seller.
Section 10. Liability of the Seller; Indemnities. The Seller shall be liable in
accordance herewith only to the extent of the obligations specifically undertaken by the Seller
under this Master Loan Sale Agreement and each related Bill of Sale.
A.
The Seller shall indemnify, defend and hold harmless the Department and its
officers, employees and agents in their individual capacity from and against any taxes that may at
any time be asserted against any such person with respect to the transactions contemplated herein
and in the other documents related hereto, including any sales, gross receipts, general
corporation, tangible and intangible personal property, privilege or license taxes and costs and
expenses in defending against the same.
B.
In addition to the indemnity of the Department set forth in Section 7A hereof, the
Seller shall indemnify, defend and hold harmless the Department and its officers, employees and
agents in their individual capacity, from and against liability for any and all costs, expenses
(including, without limitation, costs and expenses of litigation and of investigation counsel fees,
damages, judgments and amounts paid in settlement), losses, claims, damages and liabilities
arising out of, or imposed upon such person through, the Seller’s or the Eligible Lender Trustee’s
(if applicable) willful misfeasance, bad faith or negligence in the performance of its respective
duties under this Agreement, or by reason of its breach of any of its representations, warranties,
covenants or other obligations or duties under this Agreement.
C.
The obligation to indemnify under Section 7 and this Section 10 shall survive the
termination of this Master Loan Sale Agreement, and shall include reasonable fees and expenses
of counsel and expenses of litigation. If the Seller shall have made any indemnity payments
pursuant to this Section and the person to or on behalf of whom such payments are made
thereafter shall collect any of such amounts from others, such Person shall promptly repay such
amounts to the Seller, without interest.
Section 11. Transfer of Servicing. The Seller hereby agrees that the Loans are being
purchased by the Department on a servicing-released basis. If the Loan is subject to a servicing
agreement with any third party servicer, such agreement must be terminable with respect to such
22

Loan upon thirty (30) Calendar Days’ notice by the Department (which may be given at any time
following the Department’s receipt of the Seller’s notice of intent to sell such Loan pursuant to
Section 4A hereof; provided, however, that such termination shall in no event be effective prior
to the consummation of the sale of such Loan to the Department), and the Seller shall be
responsible for any de-boarding, deconversion or related fees or expenses of such servicer.
Accordingly, upon purchase of any Loan, the Department shall obtain all rights to service such
Loan and may, in its sole discretion require deconversion of such Loan in order to service the
Loan itself or through a third-party servicer of its designation. The Seller shall deliver, or cause
the servicer of the Loans to deliver, the servicing and all related servicing files and records with
respect to the Loans to the designee specified by the Department in accordance with the
servicing transfer provisions provided by the Department to the Seller or its designated servicer;
provided, however, that the Seller and its designees may retain copies (in electronic or paper
medium) of the servicing files related to the origination and servicing of the Loans sold to the
Department hereunder.
Section 12.

Merger or Consolidation of, or Assumption of the Obligations of, the

Seller.
A. Except as provided in Section 12B, any Person (a) into which the Seller or the
Eligible Lender Trustee (if applicable) may be merged or consolidated, (b) which may result
from any merger or consolidation to which the Seller or the Eligible Lender Trustee (if
applicable) shall be a party or (c) which may succeed to the properties and assets of the Seller or
the Eligible Lender Trustee (if applicable) substantially as a whole, shall be the successor to the
Seller or the Eligible Lender Trustee (if applicable) without the execution or filing of any
document or any further act by any of the parties to this Master Loan Sale Agreement.
B. A surviving person described in Section 12A that is neither the Seller nor the Eligible
Lender Trustee (if applicable), may be the successor to the Seller or Eligible Lender Trustee
under this Agreement only if –
(i)

(ii)

Promptly following such merger or consolidation, the surviving person executes
and delivers to the Department –
(1)

An agreement of assumption to perform every obligation of the Seller or
the Eligible Lender Trustee (if applicable) under this Master Loan Sale
Agreement and each Bill of Sale, and

(2)

An Officers’ Certificate in the form of Exhibit B and an Opinion of
Counsel in the form of Exhibit C each stating that such consolidation,
merger or succession, and the agreement of assumption described in
Section 12B(i)(I), comply with this Section, and that all conditions
precedent, if any, provided for in this Master Loan Sale Agreement
relating to such transaction have been complied with; and

Immediately after the merger, consolidation or succession took effect, no
representation or warranty made pursuant to Section 6 shall have been breached.

23

Section 13. Expenses. The Department shall pay the legal fees and expenses of its
attorneys. The Seller shall pay all other costs and expenses incurred in connection with
preparation, execution and delivery of this Master Loan Sale Agreement and any Bill of Sale and
the transactions contemplated herein or therein, including, without limitation, the reasonable fees
and out-of-pocket expenses of counsel for any Seller with respect thereto, and all other costs and
expenses incurred in connection with the transfer and delivery of the Loans to the Department,
including, without limitation, any fees and expenses incurred in connection with transferring
ownership of any Loans to the Department. The Seller is not required to pay for expenses
related to the servicing of Loans after the Loans are transferred to the Department. The Seller is
responsible for the costs it incurs for activities required under Section 8 and Section 9 of this
Master Loan Sale Agreement.
Section 14. Survival of Covenants. All covenants, agreements, representations and
warranties made herein and in or pursuant to any Bills of Sale executed pursuant to this Master
Loan Sale Agreement shall survive the consummation of the acquisition of the Loans provided
for in the related Bill of Sale. All covenants, agreements, representations and warranties made or
furnished pursuant hereto by or on behalf of the Seller and the Eligible Lender Trustee (if
applicable) shall bind and inure to the benefit of any successors or assigns of the Department and
shall survive with respect to each Loan.
Section 15. Communication and Notice Requirements. All communications, notices
and approvals provided for hereunder shall be in writing and mailed or delivered to the Seller,
the Eligible Lender Trustee (if applicable), or the Department, as the case may be, at such
address as either party may hereafter designate by notice to the other party. All demands, notices
and communications hereunder shall be in writing and shall be deemed to have been duly given
if mailed, by registered or certified mail, return receipt requested, or, if by other means, when
received by the other party at the address as follows:
If to the Department:
By U.S. Postal Service mail:
United States Department of Education
400 Maryland Avenue, SW
UCP, Room 111G3
Washington, DC 20202-5402
Attention: FFEL Agreement Process Team
By courier or express mail:
United States Department of Education
830 First Street, N.E.
Room 111G3
Washington, DC 20202-5402
Attention: FFEL Agreement Process Team

24

If to the Seller or the Eligible Lender Trustee:
The address designated in the accompanying Adoption Agreement.
Section 16. Form of Instruments. All instruments and documents delivered in
connection with this Master Loan Sale Agreement and any Bill of Sale, and all proceedings to be
taken in connection with this Master Loan Sale Agreement and any Bill of Sale and the
transactions contemplated herein and therein, shall be in a form as set forth in the attachments
hereto, and the Department shall have received copies of such documents as it or its counsel shall
reasonably request in connection therewith.
Section 17. Amendment; Waiver. This Master Loan Sale Agreement, any Bill of Sale
and any document or instrument delivered in accordance herewith or therewith may be amended
by the parties hereto and thereto with the written consent of all parties hereto or thereto. No term
or provision of this Master Loan Sale Agreement may be waived or modified unless such waiver
or modification is consistent with the requirements of Section 459A of the Higher Education Act,
is in writing and signed by the party against whom such waiver or modification is sought to be
enforced.
Section 18. Audits. Pursuant to Section 432(f) of the Higher Education Act, Seller
hereby grants the Department and its agents (including but not limited to, legal counsel and
internal or external auditors), the right at any time and from time to time during regular business
hours, (i) to examine and make copies of and abstracts from all books, records and documents
(including, without limitation, computer tapes and disks) in the possession or under the control of
Seller relating to Loans sold hereunder and (ii) to visit the offices of Seller for the purpose of
examining such material described in clause (i) above, and to discuss matters relating to such
Loans or Seller’s performance hereunder with any officers and employees of Seller having
knowledge of such matters.
Section 19. Severability Clause. Any part, provision, representation or warranty of
this Master Loan Sale Agreement which is prohibited or which is held to be void or
unenforceable shall be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof. Any part, provision, representation or warranty of
this Master Loan Sale Agreement which is prohibited or unenforceable or is held to be void or
unenforceable in any jurisdiction shall be ineffective, as to such jurisdiction, to the extent of such
prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction as to any Loan shall not invalidate or
render unenforceable such provision in any other jurisdiction. To the extent permitted by
applicable law, the parties hereto waive any provision of law which prohibits or renders void or
unenforceable any provision hereof. If the invalidity of any part, provision, representation or
warranty of this Master Loan Sale Agreement shall deprive any party of the economic benefit
intended to be conferred by this Master Loan Sale Agreement, the parties shall negotiate, in
good-faith, to develop a structure the economic effect of which is nearly as possible the same as
the economic effect of this Master Loan Sale Agreement without regard to such invalidity.
Section 20. Governing Law. This Master Loan Sale Agreement and any Bill of Sale
and the rights and obligations of the parties thereto shall be governed by and construed in
25

accordance with Federal law. To the extent there may be no applicable Federal law, the internal
laws of the State of New York (without giving regard to conflicts of laws principles other than
Sections 5-1401 and 5-1402 of the New York General Obligations Law) shall be deemed
reflective of Federal law insofar as to do so would not frustrate the purposes of any provision of
this Master Loan Sale Agreement or the transactions governed thereby.
Section 21. Exhibits. The exhibits to this Master Loan Sale Agreement are hereby
incorporated and made a part hereof and are an integral part of this Master Loan Sale Agreement.
Section 22. General Interpretive Principles. For purposes of this Master Loan Sale
Agreement, except as otherwise expressly provided or unless the context otherwise requires:
A.
The terms defined in this Master Loan Sale Agreement have the meanings
assigned to them in this Master Loan Sale Agreement and include the plural as well as the
singular, and the use of any gender herein shall be deemed to include the other gender;
B.
Accounting terms not otherwise defined herein have the meanings assigned to
them in accordance with generally accepted accounting principles;
C.
References herein to “Articles,” “Sections,” “Subsections,” “Paragraphs,” and
other Subdivisions without reference to a document are to designated Articles, Sections,
Subsections, Paragraphs and other subdivisions of this Master Loan Sale Agreement;
D.
Reference to a Subsection without further reference to a Section is a reference to
such Subsection as contained in the same Section in which the reference appears, and this rule
shall also apply to Paragraphs and other subdivisions;
E.
The words “herein,” “hereof,” “hereunder” and other words of similar import
refer to this Master Loan Sale Agreement as a whole and not to any particular provision; and
F.
The term “include” or “including” shall mean without limitation by reason of
enumeration.
Section 23. Reproduction of Documents. This Master Loan Sale Agreement and all
documents relating thereto, including, without limitation, (a) consents, waivers and modifications
which may hereafter be executed, (b) documents received by any party at the closing, and (c)
financial statements, certificates and other information previously or hereafter furnished, may be
reproduced by any photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties agree that any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding, whether or not the
original is in existence and whether or not such reproduction was made by a party in the regular
course of business, and that any enlargement, facsimile or further reproduction of such
reproduction shall likewise be admissible in evidence.
Section 24. Further Agreements. Each of the Seller and the Eligible Lender Trustee
(if applicable) agrees to execute and deliver to the other such reasonable and appropriate
additional documents, instruments or agreements as may be necessary or appropriate to
effectuate the purposes of this Master Loan Sale Agreement.
26

Section 25. Other Department Program. Separately, the Department is offering a Loan
Participation Purchase Program (as referred to in the Notice of Intent to Participate) for eligible
FFELP loans. This Master Loan Sale Agreement does not require, nor does it preclude, the
participation of the Seller in that separate program.
Section 26. Adoption. This Master Loan Sale Agreement shall be effective with
respect to any Seller and the Eligible Lender Trustee (if applicable) as of the day and year on
which an Adoption Agreement, in the form attached hereto as Exhibit A, is entered into by both
such Seller, the Eligible Lender Trustee (if applicable) and the Department.
Section 27. Integration. This Master Loan Sale Agreement together with the related
Adoption Agreement embodies the entire agreement and understanding of the parties hereto and
supersedes any and all prior agreements, arrangements and understandings relating the matters
for which they provide, except to the extent that interpretative guidance published by the
Department in, or incorporated by, Electronic Announcement #34 dated October 31, 2008
addresses a matter provided for in these Agreements and is consistent with the terms of these
Agreements.
[NO FURTHER TEXT ON THIS PAGE]

27

EXHIBIT A
[Must Be Used By Seller That Is Not a Party To July 25, 2008 Master Loan Sales Agreement]
ADOPTION AGREEMENT
This Adoption Agreement, dated as of the date set forth on the signature page, among the
United States Department of Education (“Department”) [, the Eligible Lender Trustee (as listed
in Section 1A hereof) (“Eligible Lender Trustee”)] and the Seller (as listed in Section 1 hereof)
(“Seller”) is made pursuant to the Master Loan Sale Agreement dated January 1, 2009, published
by the Department (“Master Loan Sale Agreement”). Capitalized terms used but not otherwise
defined herein, shall have the meanings set forth in the Master Loan Sale Agreement.
a)
The Department desires to purchase and the Seller desires to sell to the
Department, from time to time, certain Eligible Loans (as that term is defined in the Master Loan
Sale Agreement).
b)
The Department[, the Eligible Lender Trustee] and the Seller desire to set
forth herein the terms and conditions of such purchase and sale arrangements.
c)
This Adoption Agreement shall supersede and replace all prior agreements
between the parties regarding the sale of Eligible Loans by the Seller [and the Eligible Lender
Trustee] to the Department.
NOW, THEREFORE, in consideration of the above recitals and for other good and
valuable consideration, the receipt and adequacy of which are hereby acknowledged, the
Department and the Seller hereby agree as follows:
Section 1. “Seller” shall mean:
[SELLER]
[ADDRESS]
[LENDER ID]
The above address shall be the Seller’s address for the purpose of receiving notices pursuant to
the Master Loan Sale Agreement.
[Section 1A. “Eligible Lender Trustee” shall mean:
[ELIGIBLE LENDER TRUSTEE]
[ADDRESS]
[LENDER ID]
The above address shall be the Eligible Lender Trustee’s address for the purpose of receiving
notices pursuant to the Master Loan Sale Agreement.]
Section 2. Purchase and Sale of Loans. Following the date of this Adoption Agreement,
the Seller agrees to participate in the Department’s Purchase Program for Eligible Loans made
pursuant to the Federal Family Education Loan Program under the Master Loan Sale Agreement
A-1

and to deliver to the Department such Loans in the aggregate principal amounts as evidenced by
Bills of Sale executed by the Seller and acknowledged and accepted by the Department pursuant
to the Master Loan Sale Agreement. The Seller agrees to sell to the Department and the
Department agrees to purchase from the Seller such Loans on the terms and subject to the
conditions of the Master Loan Sale Agreement as the same may be supplemented or amended
from time to time. Each of the Seller and the Department hereby acknowledges and agrees to all
terms and provisions of the Master Loan Sale Agreement which relate to the selling of Loans
which are incorporated herein in their entirety as if such had been set forth herein in their
entirety, as the same may be supplemented or amended from time to time.
Section 3. Incorporation of Master Loan Sale Agreement. [Each of] [T]he Seller [and the
Eligible Lender Trustee] and the Department hereby acknowledges and agrees to all terms and
provisions of the Master Loan Sale Agreement which are incorporated herein in their entirety as
if such had been set forth herein in their entirety, as the same may be supplemented or amended
from time to time.
Section 4. Governing Law. This Adoption Agreement and the rights and obligations of
the parties hereto shall be governed by and construed in accordance with Federal law. Insofar as
there may be no applicable Federal law, the internal laws of the State of New York (without
giving regard to conflicts of laws principles other than Sections 5-1401 and 5-1402 of the New
York General Obligations Law) shall be deemed reflective of Federal law insofar as to do so
would not frustrate the purposes of any provision of this Adoption Agreement.
[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have caused this Adoption Agreement to be
duly executed by their respective officers hereunto duly authorized, as of the day and year first
above written.

A-2

United States Department of Education

By:
Name:
Title:

Date of Adoption Agreement: ________________
(to be inserted by the Department)

[SELLER], as Seller

By:
Name:
Title:

[[ELIGIBLE LENDER TRUSTEE], as Eligible
Lender Trustee

By:
Name:
Title:

A-3

[May Be Used By Seller That Is Party To July 25, 2008 Master Loan Sales Agreement]
ADOPTION AGREEMENT
This Adoption Agreement, dated as of the date set forth on the signature page, among the
United States Department of Education (“Department”) [, the Eligible Lender Trustee (as listed
in Section 1A hereof) (“Eligible Lender Trustee”)] and the Seller (as listed in Section 1 hereof)
(“Seller”) is made pursuant to the Master Loan Sale Agreement 2007-2008, dated November 24,
2008, published by the Department (“Master Loan Sale Agreement”). Capitalized terms used
but not otherwise defined herein, shall have the meanings set forth in the Master Loan Sale
Agreement 2007-2008.
a)
The Department desires to purchase and the Seller desires to sell to the
Department, from time to time, certain Eligible Loans (as that term is defined in the Master Loan
Sale Agreement).
b)
The Department[, the Eligible Lender Trustee] and the Seller desire to set
forth herein the terms and conditions of such purchase and sale arrangements.
c)
This Adoption Agreement shall supersede and replace all prior agreements
between the parties regarding the sale of Eligible Loans by the Seller [and the Eligible Lender
Trustee] to the Department.
NOW, THEREFORE, in consideration of the above recitals and for other good and
valuable consideration, the receipt and adequacy of which are hereby acknowledged, the
Department and the Seller hereby agree as follows:
Section 1. “Seller” shall mean:
[SELLER]
[ADDRESS]
[LENDER ID]
The above address shall be the Seller’s address for the purpose of receiving notices pursuant to
the Master Loan Sale Agreement.
[Section 1A. “Eligible Lender Trustee” shall mean:
[ELIGIBLE LENDER TRUSTEE]
[ADDRESS]
[LENDER ID]
The above address shall be the Eligible Lender Trustee’s address for the purpose of receiving
notices pursuant to the Master Loan Sale Agreement.]
Section 2. Purchase and Sale of Loans. Following the date of this Adoption Agreement,
the Seller agrees to participate in the Department’s Purchase Program for Eligible Loans made
pursuant to the Federal Family Education Loan Program under the Master Loan Sale Agreement
and to deliver to the Department such Loans in the aggregate principal amounts as evidenced by
A-4

Bills of Sale executed by the Seller and acknowledged and accepted by the Department pursuant
to the Master Loan Sale Agreement. The Seller agrees to sell to the Department and the
Department agrees to purchase from the Seller such Loans on the terms and subject to the
conditions of the Master Loan Sale Agreement as the same may be supplemented or amended
from time to time. Each of the Seller and the Department hereby acknowledges and agrees to all
terms and provisions of the Master Loan Sale Agreement which relate to the selling of Loans
which are incorporated herein in their entirety as if such had been set forth herein in their
entirety, as the same may be supplemented or amended from time to time.
Section 3. Incorporation of Master Loan Sale Agreement. [Each of] [T]he Seller [and the
Eligible Lender Trustee] and the Department hereby acknowledges and agrees to all terms and
provisions of the Master Loan Sale Agreement which are incorporated herein in their entirety as
if such had been set forth herein in their entirety, as the same may be supplemented or amended
from time to time.
Section 4. Governing Law. This Adoption Agreement and the rights and obligations of
the parties hereto shall be governed by and construed in accordance with Federal law. Insofar as
there may be no applicable Federal law, the internal laws of the State of New York (without
giving regard to conflicts of laws principles other than Sections 5-1401 and 5-1402 of the New
York General Obligations Law) shall be deemed reflective of Federal law insofar as to do so
would not frustrate the purposes of any provision of this Adoption Agreement.
Section 5. Reaffirmation of Certification by Seller’s Officer and Opinion of Counsel.
On [mm/dd/yy], the Seller executed an Officer’s Certification and provided an Opinion of
Counsel supporting the Seller’s Adoption Agreement for the July 25, 2008 Master Loan Sales
Agreement. The Seller hereby reaffirms the representations made in that Certification as
remaining true and correct as of the date on which the Seller executes this Adoption Agreement.
The Seller further represents that it has requested and received confirmation from the Counsel
who issued the Opinion of Counsel that nothing stated in the Opinion has changed in any
material respect through the date on which the Seller executes this Adoption Agreement.
[Signature Page Follows]

A-5

IN WITNESS WHEREOF, the parties hereto have caused this Adoption Agreement to be
duly executed by their respective officers hereunto duly authorized, as of the day and year first
above written.

United States Department of Education

By:
Name:
Title:

Date of Adoption Agreement: ________________
(to be inserted by the Department)

[SELLER], as Seller

By:
Name:
Title:
Date executed by Seller:_______________
[[ELIGIBLE LENDER TRUSTEE], as Eligible
Lender Trustee

By:
Name:
Title:

A-6

EXHIBIT B
SELLER’S OFFICER’S CERTIFICATE
I, ________________________, hereby certify that I am the duly elected
______________ of [SELLER], a ______________ (“Seller”), and further certify, on behalf of
the Seller as follows:
1.
Attached hereto as Attachment I are a true and correct copy of the
[Certificate of Incorporation and by-laws][certificate of limited partnership and limited
partnership agreement][certificate of formation and limited liability company operating
agreement] of the Seller as are in full force and effect on the date hereof.
2.
No proceedings looking toward merger, liquidation, dissolution or
bankruptcy of the Seller are pending or contemplated.
3.
Each person who, as an officer or attorney-in-fact of the Seller, signed (a)
the Adoption Agreement between the Department[, the Eligible Lender Trustee] and the Seller
pursuant to the 2009 Master Loan Sale Agreement (“Agreement”) dated January 1, 2009, by the
Department of Education (“Department”) and (b) any other document delivered prior hereto or
on the date hereof in connection with the sale of the Loans in accordance with the Agreement
and the related Bill of Sale was, at the respective times of such signing and delivery, and is as of
the date hereof, duly elected or appointed, qualified and acting as such officer or attorney-in-fact,
and the signatures of such persons appearing on such documents are their genuine signatures.
4.
Attached hereto as Attachment II is a true and correct copy of the
resolutions duly adopted by the board of directors of the Seller on ________________, 200_
(“Resolutions”) with respect to the authorization and approval of the sale of the Loans; said
Resolutions have not been amended, modified, annulled or revoked and are in full force and
effect on the date hereof.
5.
Attached hereto as Attachment III is a Certificate of Good Standing of the
Seller dated ______________, 200_. No event has occurred since ___________________, 200_
which has affected the good standing of the Seller under the laws of the State of ___________.
6.
All of the representations and warranties of the Seller [and the Eligible
Lender Trustee] contained in Section 6A of the Agreement were true and correct in all material
respects as of the date hereof.
7.
[Each of] [T]he Seller [and the Eligible Lender Trustee] will have
performed all of its duties and satisfied all the material conditions on its part to be performed or
satisfied prior to the related Purchase Date pursuant to the Agreement and the related Bill of
Sale.
All capitalized terms used herein and not otherwise defined shall have the
meaning assigned to them in the Agreement.

B-1

IN WITNESS WHEREOF, I have hereunto signed my name and affixed the seal
of the Seller.
Dated: _________________________
[Seal]
[SELLER]
(Seller)
By:
Name:
Title: [Responsible Officer]

I, _______________________, Secretary of the Seller, hereby certify that
_________________________ is the duly elected, qualified and acting [Responsible Officer] of
the Seller and that the signature appearing above is his/her genuine signature.
IN WITNESS WHEREOF, I have hereunto signed my name.
Dated:_________________________
[Seal]
[SELLER]
(Seller)
By:
Name:
Title: [Assistant] Secretary

B-2

EXHIBIT C
OPINION OF COUNSEL TO THE SELLER
______________________________
(Date)
United States Department of Education
400 Maryland Avenue, SW
Washington, DC 20202
Re:

2009 Master Loan Sale Agreement

Gentlemen:
I have acted as counsel to [SELLER], a _________________ (“Seller”), in
connection with the sale of certain Loans by the Seller to the Department of Education
(“Department”) pursuant to a 2009 Master Loan Sale Agreement dated January 1, 2009 and
the related Adoption Agreement between the Seller, [the Eligible Lender Trustee] and the
Department (“Agreement”). Capitalized terms not otherwise defined herein have the
meanings set forth in the Agreement.
In connection with rendering this opinion letter, I, or attorneys working under my
direction, have examined, among other things, originals, certified copies or copies otherwise
identified to my satisfaction as being true copies of the following:
A.
B.

C.

D.

The Agreement;
The Seller’s [Certificate of Incorporation and by-laws][certificate of
limited partnership and limited partnership agreement][certificate of
formation and limited liability company operating agreement], as
amended to date;
Resolutions adopted by the Board of Directors of the Seller with
specific reference to actions relating to the transactions covered by
this opinion (“Board Resolutions”); and
Such other documents, records and papers as we have deemed
necessary and relevant as a basis for this opinion.

For the purpose of rendering this opinion, I have made such documentary, factual
and legal examinations as I deemed necessary under the circumstances. As to factual
matters, I have relied upon statements, certificates and other assurances of public officials
and of officers and other representatives of the Seller, and upon such other certificates as I
deemed appropriate, which factual matters have not been independently established or
verified by me. I have also assumed, among other things, the genuineness of all signatures,
the legal capacity of all natural persons, the authenticity of all documents submitted to me as
originals, and the conformity to original documents of all documents submitted to me as
copies and the authenticity of the originals of such copied documents.

C-1

On the basis of and subject to the foregoing examination, and in reliance thereon,
and subject to the assumptions, qualifications, exceptions and limitations expressed herein
(if any), I am of the opinion that:
1.
The Seller has been duly [incorporated][formed] and is validly
existing and in good standing under the laws of the State of __________ with corporate
power and authority to own its properties and conduct its business as presently conducted by
it. The Seller has the corporate power and authority to service the Loans, and to execute,
deliver, and perform its obligations under the Agreement.
2.
The Agreement has been duly and validly authorized, executed and
delivered by the Seller.
3.
The Agreement constitutes valid the legal and binding obligation of
the Seller, enforceable against the Seller in accordance with its terms.
4.
No consent, approval, authorization or order of any state or federal
court or government agency or body is required for the execution, delivery and performance
by the Seller of the Agreement or the consummation of the transactions contemplated by the
Agreement, except for those consents, approvals, authorizations or orders which previously
have been obtained.
5.
The fulfillment of the terms of or the consummation of any other
transactions contemplated in the Agreement will not result in a breach of any term or
provision of the [certificate of incorporation or by-laws][certificate of limited partnership or
limited partnership agreement][certificate of formation and limited liability company
operating agreement] of the Seller, or, to the best of my knowledge, will not conflict with,
result in a breach or violation of, or constitute a default under, (i) the terms of any indenture
or other agreement or instrument known to me to which the Seller is a party or by which it is
bound, (ii) any State of ____________ or federal statute or regulation applicable to the
Seller, or (iii) any order of any State of ____________ or federal court, regulatory body,
administrative agency or governmental body having jurisdiction over the Seller, except in
any such case where the default, breach or violation would not have a material adverse
effect on the Seller or its ability to perform its obligations under the Agreement.
6.
There is no action, suit, proceeding or investigation pending or, to the
best of my knowledge, threatened against the Seller which, in my judgment, either in any
one instance or in the aggregate, would draw into question the validity of the Agreement or
which would be likely to impair materially the ability of the Seller to perform under the
terms of the Agreement.
7.
The sale of each Loan as and in the manner contemplated by the
Agreement is sufficient fully to transfer to the Department all right, title and interest of the
Seller thereto as noteholder.
[Assumptions and qualifications, if any]

C-2

I am admitted to practice law in the State of ___________, and I render no
opinion herein as to matters involving the laws of any jurisdiction other than the State of
_________ and the Federal laws of the United States of America.
Very truly yours,

C-3

EXHIBIT D
45-DAY NOTICE OF INTENT TO SELL LOANS
AND PROJECTED LOAN SCHEDULE SUMMARY OF LOANS TO BE SOLD
PURSUANT TO THE MASTER LOAN SALE AGREEMENT
To: U.S. Department of Education

[_________________, 200__]
] [Selling Lender or Custodian ID (LID)]

From: [Selling Lender]

The Seller submits this “45-Day Notice of Intent to Sell Loans and Projected Loan Schedule
Summary of Loans to be Sold” (45-Day Notice) to the U.S. Department of Education (the
Department) to notify the Department that the Seller has identified FFEL Program loans that are
Eligible Loans, under the Master Loan Sale Agreement (MLSA), that the Seller intends to sell to
the Department under the Loan Purchase Commitment Program on [Date of Sale

] at

a total purchase price of [$_____________________.00]. The Seller provides with this 45-Day
Notice data describing the characteristics of the loans scheduled to be sold.
By submitting this 45-Day Notice the Seller certifies that:
1. The Seller has submitted, and the Department of Education has acknowledged, receipt of
the Sellers “Notice of Intent to Participate;”
2. The Seller has executed, or will execute, a Master Loan Sale Agreement (MLSA) with
the Department and will comply with all provisions of that Agreement and other
procedural and process directions provided by the Department;
3. The Seller will sell to the Department only those fully disbursed loans that the Seller
identified in its preparation of this 45-Day Notice that are Eligible Loans, as defined in
section 3 I of the MLSA, as of the date of the proposed sale to the Department;
4. With the Bill of Sale as defined in section 3 B of the MLSA and related Schedule of
Loans submitted pursuant to this 45-Day Notice, and with respect to the identified loans
noted above, the Seller –
a. Will include the Eligible Loans described in paragraph 3, and no other loans;
b. Will sell all Eligible Loans described in paragraph 3 except any that have been
fully cancelled or otherwise paid in full, or any that are not Eligible Loans by the
date the Seller submits the Bill of Sale; and
c. Will adjust the selling price and loan level detail to account for removed loans and
for changes to the outstanding principal balance and/or the accrued borrower

D-1

interest on identified loans since the filing of this 45-Day Notice;
5. The Seller understands that submission of this 45-Day Notice to the Department as a PDF
attachment to an e-mail sent by the Seller, or its agent, to the e-mail address indicated
below meets the requirements of section 4 A of the MLSA; and
6. The Seller understands that upon receipt and review of this 45-Day Notice, the
Department will send an e-mail to the Seller’s contact e-mail address, as provided below,
in which the Department will acknowledge the date on which the Department received
this 45-Day Notice, the date on which the Department proposes as the projected date of
sale, and the total projected purchase price to be paid by the Department.
Both pages of this completed, signed and dated “45-Day Notice of Intent to Sell Loans and
Projected Loan Schedule Summary of Loans to be Sold” should be sent as a PDF attachment
to an e-mail message addressed to [email protected]. The e-mail message subject line
should read “45 Day Notice.”
Selling Lender/Holder Authority:
Signature of Authorized Official:
Typed Name of Authorized Official:
Title of Authorized Official:
Phone Number and E-mail Address of Authorized Official:
[____________________, 200__]

D-2

Selling Lender [_________________________] Selling Lender or Custodian ID1 [___________]

Requested Purchase Date: [MM/DD/CCYY] (May not be less than 45 calendar days
from date this notice is submitted to the U.S Department of Education)

PROJECTED LOAN SCHEDULE SUMMARY OF LOANS TO BE SOLD
Loan Type

Est’d
Number
of Loans

Orig. Amount
Disb’d

Est’d
Est’d Borrower
Outstanding
Int Acc’d On
Prin on Purchase Purchase Date
Date

$

$

$

$

$

$

PLUS

$

$

$

TOTAL

$

$

$

Stafford
Sub’d
Stafford
Unsub’d

PURCHASE PRICE CALCULATION
Total Outstanding
Principal at Purchase
Date

$[

. ]

Total Borrower’s
Accrued/Unpaid Interest
at Purchase Date

$[

. ]

1% fee reimbursement

Total Original Amt Disb’d
$[

$75 Fee per loan

Total number of loans [

TOTAL
FINAL
PURCHASE PRICE

. ] X .01

$[

. ]

] X $75

$[

. ]

$[

. ]

Seller to list all Originating Lender IDs (LIDs) and Department’s Receipt Date of Notice of
Intent (NOI) to Participate:
LID
LID
LID
1

NOI date: mm/dd/yy
NOI date: mm/dd/yy
NOI date: mm/dd/yy

LID
LID
LID

NOI date: mm/dd/yy
NOI date: mm/dd/yy
NOI date: mm/dd/yy

If these loans are currently held in a Participation Agreement with the Department, use Custodian’s ID number.

D-3

EXHIBIT E
(To Be Used For Loans With No Custodian)
BILL OF SALE
(“Seller”) as the Seller [and

_______________________________ as the Eligible Lender
Trustee (“ELT”)] under that certain Master Loan Sale Agreement (“the MLSA”), dated January
1, 2009 and that certain Adoption Agreement executed in connection therewith by the Seller [,
the ELT], and the Department of Education (“the Department”) as of ____

] do[es] hereby sell, transfer, assign, set over and

convey to the Department as purchaser under the Agreement all right, title and interest of the
Seller [and the ELT] in and to the Loans included on the Loan Schedule attached hereto, together
with the related servicing files and servicing rights appurtenant thereto, the related Promissory
Notes and related Loan Documents (including, without limitation, any rights of the Seller to
receive from any third party any documents which constitute a part of the loan or servicing files)
and all rights and obligations arising under the documents contained therein, as of the date and
time of receipt by the Seller of the Purchase Price of $_____________________ for such Loans.
The Seller has requested that the purchase date be ___________________ (“Purchase Date”).
This sale is without recourse but subject to the terms of the Agreement. Pursuant to the MLSA,
the Seller has delivered to the Department or its designee the documents for each Loan to be
purchased as set forth in the Agreement.
On the Purchase Date, the ownership of each Loan and the related Promissory Note and
the contents of the Loan file and servicing file shall vest in the Department and the ownership of
all records and documents with respect to the related Loan prepared by or which come into the
possession of the Seller shall vest in the Department, and the Seller shall have delivered such
records as are required by the Department, or its designee, to the Department or its designee
(except that copies thereof may be retained as provided in the MLSA). During any period that
the related Loan files and servicing files are retained by the Seller, such files shall be retained
and maintained, in trust, by the Seller for the benefit of the Department.
If any of the Loans were made under a Master Promissory Note, this Bill of Sale excludes
an assignment of right[s] of the Seller [or ELT] to offer future loans under such Master
Promissory Note, and the Seller [or ELT] expressly reserve[s] such right to offer future Loans

E-1

under such Master Promissory Note. The Department agrees and warrants that it will not offer
or make any future loans under such Note.
The Seller authorizes the Department to use a copy of this Bill of Sale, including the
Loan Schedule attached, as official notification to the applicable Guaranty Agency(s) of
assignment to the Department of the Loans purchased pursuant hereto on the Purchase Date.
[Each of] [T]he Seller [and the ELT] named below hereby certifies to the Department that
with respect to the Loans included on the Loan Schedule attached here, as of the date of the
Seller’s signature below (Check one of the following) –
_____ No security interests of any kind have been granted that are now in effect.
_____ Security interests have been granted to __________
(“Secured Lender”) that will be released by that Secured Lender using the revised “Security
Release Certification” (Exhibit F to the Master Loan Sales Agreement).
[Each of] [T]he Seller [and the ELT] confirms to the Department that the representations
and warranties set forth in Section 6 of the MLSA are true and correct with respect to the Seller
[and the ELT] and the Loans included on the Loan Schedule attached hereto as of the date
hereof, and that all statements made in the Seller’s Officer’s Certificate (Exhibit B of the MLSA)
or reaffirmed in the Adoption Agreement, and all attachments thereto remain complete, true and
correct in all respects as of the date hereof, and that the Loan characteristics identified on the
attached Loan Schedule are true and correct as of the date hereof.
Capitalized terms used here and not otherwise defined have the meanings given in the
MLSA.
IN WITNESS WHEREOF, the undersigned Seller/Sponsor [and the ELT] have executed
and delivered this Bill of Sale as of the latest date below written.

, as Seller
Signature____________________________________________________________________________
Typed Name: _________________________________________________________________________
Title:________________________________________________________________________________
Date: _________________________________________________________________
__________
, as Eligible Lender Trustee
Signature:____________________________________________________________________________
Name:_______________________________________________________________________________
Title:________________________________________________________________________________
Date: _________________________________________________________________

Acknowledged by the United States Department of Education:
E-2

BILL OF SALE
(To Be Used For Loans With a Custodian)
______________________ is the Custodian under that certain
Master Participation Agreement (“the MPA”) between the Custodian, ___________, as Sponsor [, ___Name of Eligible Lender Trustee>____, as the Eligible Lender
Trustee (“ELT”)], and the Department of Education (“the Department”) and under the Adoption
Agreement executed in connection therewith dated _____]. The Sponsor now as Seller [and the ELT] and the Custodian do
hereby sell, transfer, assign, set over and convey to the Department all their right, title and
interest in and to the Loans included on the Loan Schedule attached hereto, together with the
related servicing files and servicing rights appurtenant thereto, the related Promissory Notes and
related Loan Documents (including, without limitation, any rights of the Seller to receive from
any third party any documents which constitute a part of the loan or servicing files) and all rights
and obligations arising under the documents contained therein, as of the date and time of receipt
by the Seller of the Purchase Price of $_____________________ for such Loans. The Seller has
requested that the purchase date be _______________ (“Purchase Date”). This sale is without
recourse but subject to the terms of the Master Loan Sales Agreement (“MLSA”) between the
Sponsor, as Seller, [the ELT] and the Department adopted on ______. Pursuant to the MLSA the Seller or the Custodian has
delivered to the Department or its designee the documents for each Loan to be purchased as set
forth in the Agreement.
On the Purchase Date, the ownership of each Loan and the related Promissory Note and
the contents of the Loan file and servicing file shall vest in the Department and the ownership of
all records and documents with respect to the related Loan prepared by or which come into the
possession of the Seller shall vest in the Department, and the Seller or the Custodian shall have
delivered such records as are required by the Department, or its designee, to the Department or
its agent (except that copies thereof may be retained as provided in the MLSA). During any
period that the related Loan files and servicing files are retained by the Seller, such files shall be
retained and maintained, in trust, by the Seller for the benefit of the Department.

E-3

If any of the Loans were made under a Master Promissory Note, this Bill of Sale excludes
an assignment of right[s] of the Seller [or ELT] to offer future loans under such Master
Promissory Note, and the Seller [or ELT] expressly reserve[s] such right to offer future Loans
under such Master Promissory Note. The Department agrees and warrants that it will not offer
or make any future loans under such Note.
The Seller authorizes the Department to use a copy of this Bill of Sale, including the Loan
Schedule attached, as official notification to the applicable Guaranty Agency(s) of assignment to
the Department of the Loans purchased pursuant hereto on the Purchase Date.
[Each of] [T]he Seller [and the ELT] confirm[s] to the Department that the representations
and warranties set forth in Section 6 of the MLSA are true and correct with respect to the Seller
[and the ELT] and the Loans included on the Loan Schedule attached hereto as of the date
hereof, and that all statements made in the Seller’s Officer’s Certificate or reaffirmed in the
Adoption Agreement, and all attachments thereto remain complete, true and correct in all
respects as of the date hereof, and that the Loan characteristics identified on the attached Loan
Schedule are true and correct as of the date hereof.
Capitalized terms used here and not otherwise defined have the meanings set forth in the
MLSA.
IN WITNESS WHEREOF, the undersigned Seller/Sponsor [and the Eligible Lender
Trustee] and the Custodian have executed and delivered this Bill of Sale as of the latest date
below written.
_____________________________________________________________, as Seller
By:__________________________________________________________________________________
Signature
Name:_______________________________________________________________________________
Typed
Title:________________________________________________________________________________

Typed
Date: _______________________________
_________________________________, as Eligible Lender Trustee
By:__________________________________________________________________________________
Signature
Name:_______________________________________________________________________________
Typed
Title:________________________________________________________________________________
Typed
Date: _________________________________

E-4

_________
_______________________________________, as Custodian
By:__________________________________________________________________________________
Signature
Name:_______________________________________________________________________________
Typed
Title:________________________________________________________________________________
Typed
Date: ________________________________

Acknowledged by the United States Department of Education:

E-5

BILL OF SALE ATTACHMENT
AND FINAL LOAN SCHEDULE SUMMARY OF LOANS
SOLDPURSUANT TO THE MASTER LOAN SALE AGREEMENT
To: U.S. Department of Education

[_________________, 200__]

From: [_____Seller___________________] [Seller’s Lender or Custodian ID (LID)]2

Scheduled Purchase Date: [MM/DD/CCYY]
(Must be submitted with the BILL OF SALE to the U.S Department of Education)
FINAL LOAN SCHEDULE SUMMARY OF LOANS SOLD
Loan Type

Number

Org Amt Dis’d

Outstanding
Prin on Purchase
Date

Borrower Int Acc’d On
Purchase Date

$

$

$

$

$

$

PLUS

$

$

$

TOTAL

$

$

$

Stafford
Sub’d
Stafford
Unsub’d

PURCHASE PRICE CALCULATION
Total Outstanding
Principal at Purchase
Date
Total Borrower’s
Accrued/Unpaid Interest
at Purchase Date
1% fee reimbursement

Total number of loans [

TOTAL FINAL
PURCHASE PRICE

2

. ]

$[

. ]

Total Original Amt Disb’d
$[

$75 Fee per loan

$[

. ] X .01

$[

. ]

] X $75

$[

. ]
$[

If these loans are currently held in a Participation Agreement with the Department, use Custodian’s ID number.

E-6

. ]

EXHIBIT F
SECURITY RELEASE CERTIFICATION

I. Release of Security Interest
___________________________(the Secured Lender), hereby
relinquishes any and all right, title and interest it may have in and to the Loans described on the
Schedule of Loans attached hereto upon purchase thereof by the Department of Education (“the
Department”) from ____

_____ (“Seller”) pursuant to a Bill of Sale

executed by the Seller on ______ under that certain
Master Loan Sale Agreement (“the MLSA”) dated January 1, 2009, and the related Adoption
Agreement between the Seller, [the Eligible Lender Trustee] and the Department dated as of
____. This release is effective as of the
date and time of receipt by the Secured Lender of $________________ from the purchase of
such Loans (“Date and Time of Receipt”). The Secured Lender also certifies that, as of the Date
and Time of Receipt, (i) all notes, assignments and other documents in its possession relating to
such Loans will have been delivered and released to the Seller named below or its designees,
other than copies thereof that are retained by the undersigned or its designee (in electronic or
paper medium), (ii) all appropriate Uniform Commercial Code termination statements will
promptly be filed evidencing the release of its lien on the related Loans, and (iii) the Department
will be notified in writing by the Secured Lender of the release.

Secured Lender’s Name: ________________________________________________________
Address: ______________________________________________________________________
_______________________________________________________________________
Signed Name: _____________________________________________
Typed Name: ____________________________________________________________
Title: _________________________________________________________________________
Date: ___________________________________________________________________
F-1

II.

Certification of Release

The Seller hereby certifies to the Department of Education that, as of the date stated below, the
security interests to be released by the above named Secured Lender in the Loans in the Schedule
referred to above comprise all security interests relating to or affecting any and all such Loans.
The Seller warrants that, as the date stated below, there are no other security interests affecting
any or all of such Loans, and none will be created.
Seller’s Name: ________________________________________________________________
Signed Name: _________________________________________________________________
Typed Name: ______________________________________________________________
Title: ________________________________________________________________________
Date:

F-2

Schedule 1
Loan Schedule

F-3

EXHIBIT G
NOTICE OF ASSIGNMENT AND DESIGNATION OF PAYEE
______________________________________ (“the Seller”) provides notice
to the U.S. Department of Education (“the Department”) that the Seller has assigned to
_____________________________, as the “Creditor” the right to receive
any payments due the Seller, or to become due the Seller, from the Department pursuant to a
certain Bill of Sale executed by the Seller on __________
under the Master Loan Sale Agreement (“the MLSA”), dated January 1, 2009, and the related
Adoption Agreement between the Seller, [the Eligible Lender Trustee] and the Department dated
as of ____. The Seller and the Creditor
intend this notice to meet any applicable requirements of the Assignment of Claims Act of 1940,
as amended, 31 U.S.C. 3727, 41 U.S.C. 15. A true copy of the instrument of assignment
executed by the Seller on ___________, is attached to this notice.
The Seller and the Creditor further agree and notify the Department that payments due or to
become due pursuant to the Bill of Sale noted above should be made to the Creditor and remitted
to the following financial institution for deposit to the account listed here:
Name on Account: ___________________________________________________________
Account Number: ____________________________________________________________
Name of Financial Institution: __________________________________________________
Address of Financial Institution: ________________________________________________
ABA Number of Financial Institution: ___________________________________________
Name of Seller: _______________________________________________________________
Signed Name: _________________________________________________________________
Typed Name: _________________________________________________________________
Title: ________________________________________________________________________
Date: ________________________________________________________________________

G-1

Name of Creditor: ______________________________________________________________
Address: ______________________________________________________________________
______________________________________________________________________
Phone and E-Mail Contact: ______________________________________________________
Signed Name: __________________________________________________________________
Typed Name: __________________________________________________________________
Title: _________________________________________________________________________
Date: _________________________________________________________________________

Acknowledged by the United States Department of Education:

G-2

EXHIBIT H
2009 NOTICE OF INTENT TO PARTICIPATE
[__________, 200_]
U.S. Department of Education
Washington, D.C.
By: E-mail: [email protected]

Re:

Loan Purchase Commitment Program and/or Loan Participation Purchase
Program for Eligible FFELP Loans

Ladies and Gentlemen:
The undersigned, an eligible Federal Family Education Loan Program (FFELP) lender under
Section 435(d)(1) of the Higher Education Act of 1965, as amended (HEA), eligible lender
trustee, or holder of beneficial interests in FFELP Loans (“Undersigned”), hereby notifies the
Department of Education that it intends to participate in the Loan Purchase Commitment
Program (the “Purchase Program”) or the Loan Participation Purchase Program (the
“Participation Program”) for the 2009-2010 academic year, or both programs. Both programs
are authorized under Section 459A of the HEA, as amended, and are generally described in the
Notice of Terms and Conditions published in the Federal Register, Vol. 73, No. 127, July 1,
2008, and more particularly as to the 2009-2010 academic year, in the Notice published in the
Federal Register on or about January 15, 2009 (Federal Register Notice). By signifying intent to
participate in one or both of the programs offered the undersigned does not commit to actually
participate in either program.
By signifying its intent to participate in such program(s), the Undersigned hereby certifies and
agrees that:
If the Undersigned participates in either of the programs, it will continue to originate or acquire
FFELP loans made to students and parents.
If the Undersigned participates in the Participation Program, it will sell, from time to time,
participation interests in FFELP loans to the Department of Education with an aggregate unpaid
principal balance of not less than $50,000,000 in loans either held by such eligible lender or
aggregated with other FFELP loans held by one or more eligible lenders. (The Undersigned
recognizes that there is no minimum for the Purchase Program)
The Undersigned acknowledges that it shall not be permitted to sell FFELP loans or participation
interests therein to the Department of Education with respect to which the first disbursement was
made prior to the date on which the Department of Education receives this 2009 Notice of Intent
to Participate.

H-1

The Department of Education will return to the Undersigned, via electronic mail (e-mail),
information indicating the date the 2009 Notice of Intent to Participate was received by the
Department of Education.
The Department of Education will accept signed copies of this 2009 Notice of Intent sent as a
PDF attachment via e-mail at the address below.
The Undersigned is aware that it must refer to the Federal Register Notice and to the agreements
referred to therein for a complete description of the terms and conditions under which the
Department of Education will administer the Purchase Program and the Participation Program
for the 2009-2010 academic year. The Undersigned also is aware that in order to participate in
either of these programs, it must execute a Master Agreement for the respective program. If the
Undersigned is a beneficial holder of FFELP loans, the Undersigned has included on this form
the LID(s) under which it operates. If the Undersigned, as an eligible lender trustee, files this
Notice on behalf of its beneficial holders of FFELP loans, the Undersigned has included the
name and LID of each of those beneficial holders.
This 2009 Notice of Intent to Participate is executed and dated as of the date first listed above.
By executing and delivering to the Department this 2009 Notice of Intent, the Undersigned now
possesses an option to participate in the Loan Purchase Commitment Program and the Loan
Participation Purchase Program.
The Undersigned asks that the Department of Education please direct all inquiries and
correspondence relating to these programs to:
[UNDERSIGNED NAME AND LENDER ID NUMBER]
[ELIGIBLE LENDER TRUSTEE NAME OR BENEFICIAL
HOLDER NAME, IF ANY AND LIDS]
[STREET ADDRESS]
[CITY], [STATE] [ZIP]
Attention of: [NAME], [TITLE]
By Phone - [XXX-XXX-XXXX]
By Fax – [XXX-XXX-XXXX]
By E-mail – [email address]
[NAME OF ENTITY]
By:___________________________
Name:
Title:
The completed, signed, and dated Notice of Intent to Participate should be sent as a PDF
attachment to an e-mail message addressed to [email protected]. The e-mail
message subject line should read “Submission of Notice of Intent to Participate.”
For questions concerning the submission and receipt of the email please call (202) 377-4401.
H-2

Paperwork Burden Statement
According to the Paperwork reduction Act of 1995, no persons are required to respond to a
collection of information unless such collection displays a valid OMB control number. The
valid OMB control number for this information collection is 1845-XXXX. The time required to
complete the Master Loan Sales Agreement and Exhibits A, B, and C for this information
collection is estimated to average 12 hours per response, including the time to review
instructions, search existing data resources, gather the data needed, and complete and review the
information collection. If you have any comments concerning the accuracy of the time
estimate(s) or suggestions for improving this form, please write to: U.S. Department of
Education, Washington, D.C. 20202-4537. If you have comments or concerns regarding the
status of your individual submission of this form, write directly to: Policy Liaison and
Implementation, Federal Student Aid, U.S. Department of Education, 400 Maryland Avenue,
S.W., UCP3, 11th floor, Washington D.C. 20202-4537.
The time required to complete Exhibit D for this information collection is estimated to be 2
hours per response, including time to review instructions, search existing data resources, gather
the data needed and complete and review the information collection.
Additionally, the time required to complete Exhibits E, F, G and H for this information
collection is estimated to be 1 hour per response, including time to review instructions, search
existing data resources, gather the data needed and complete and review the information
collection.