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Exhibit 10.7
EDUCATIONAL CREDIT HOLDER AGREEMENT
MANAGEMENT CORPORATION FOR PAYMENT ON
GUARANTEE OF STUDENT LOANS
WITH FEDERAL REINSURANCE
(for loans to students and parents of
students pursuant to the Higher
Education Act of 1965, as amended)
WHEREAS, The First National Bank of Chicago, not in its individual capacity but
solely as Eligible Lender Trustee on behalf of the KeyCorp Student Loan Trust
1999-A, pursuant to the Trust Agreement dated as of July 13, 1998, between Key
Bank USA, National Association and the Eligible Lender Trustee, as the same may
be amended, including by way of amendment and restatement, from time to time
(the "Trust Agreement")
Located at One First National Plaza, Suite 0126, Chicago, Illinois 60670
(the "Holder") holds or wishes to acquire and hold guaranteed loans (the
"Loans") made to students pursuing programs of higher or vocational education at
eligible institutions, and to parents of such students, pursuant to the
aforementioned federal legislation (the "Act"); and
WHEREAS, the Holder represents that it is an "eligible lender" under the
provisions of the Act, the regulations issued under the Act and the Rules and
Regulations and policies of the Educational Credit Management Corporation
("ECMC") as such policies may be implemented or amended;
WHEREAS, the guarantee on the Loans or the right to reinstate a previously
issued guarantee of another entity has been transferred to ECMC by the United
States Department of Education or by another Guaranty Agency under the Act; and
WHEREAS, ECMC, relying upon the Holder's representation that it qualifies as an
eligible lender under the provisions of the Act, the regulations issued under
the Act and the Rules and Regulations and policies of ECMC, wishes to allow the
acquisition and holding of the Loans by the Holder in accordance with the policy
expressed in the Act.
NOW, THEREFORE, it is mutually agreed that:
1. Within such limits as may be set by it, ECMC agrees to honor any
previously issued guarantee of the Loans by another entity or to
reinstate a previously issued guarantee of the Loans by another entity,
to the extent that the Loans are eligible for such guarantee under the
Act, the regulations issued under the Act and the Rules and Regulations
and policies of ECMC, which Act, regulations, Rules and Regulations and
policies, as they may be from time to time amended, are made part of
this Agreement.
2. ECMC agrees to purchase eligible Loans held by the Holder provided that
(a) the Loans are in default (as defined by the Act, regulations, Rules
and Regulations and policies identified above); (b) the Loans have been
made in accordance with the Act, regulations, Rules and
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Regulations and policies identified above; (c) the Holder has
requested pre-claim assistance from ECMC or the prior guarantor as
required by the Act, regulations, and the Rules and Regulations and
policies of ECMC; (d) the Holder has otherwise exercised due diligence
in the making, servicing, and collection of such loans; (e) with
respect to any Loan, the Holder has not committed any act or omitted to
do any act, the commission or omission of which would cause ECMC to
lose its reinsurance pursuant to the Act with respect to such Loan; and
(f) title to the promissory notes evidencing the Loans has been
subrogated to ECMC by the Holder.
3. With respect to all Loans previously guaranteed by another entity, ECMC
represents that it has negotiated an agreement with the Federal
Government with respect to reinsurance pursuant to the Act and with
respect to the maintenance of reserves for the purchase of Loans in
default.
4. ECMC and the Holder agree that the guarantee previously issued by
another entity on any Loan shall be effective for the term of the Loan
determined in accordance with the Act, regulations, Rules and
Regulations and policies identified above and beginning on the date of
receipt by ECMC of the guarantee fee, if any is required, or, if no fee
is required, beginning on the latter of the date of disbursement or on
the date of reinstatement of the guarantee by ECMC.
5. The Holder, its agents and servicers, shall maintain for all Loans a
system of records and accounts, shall afford ECMC access thereto, and
shall furnish such periodic and separate reports as may reasonably be
required by the U.S. Secretary of Education and ECMC under the Act,
regulations, Rules and Regulations and policies identified above. For
Loans paid in full or otherwise discharged, the records shall be
retained by the Holder as required by the Act, regulations, Rules and
Regulations, and policies identified above. This Section 5 shall
survive the termination of this Agreement.
6. Holder shall promptly repurchase any Loan where the repurchase of such
Loan is required in accordance with the Act, regulations, or Rules and
Regulations and policies of ECMC. Holder agrees to repurchase the Loans
if for any reason ECMC is denied reinsurance on said Loans or if said
Loans are determined to be unenforceable. Holder shall indemnify and
hold ECMC harmless from any and all losses including costs and
attorneys' fees which ECMC may incur based upon Holder's failure to
repurchase the Loans as provided herein. This Section 6 shall survive
the termination of this Agreement.
7. ECMC and the Holder agree that this Agreement shall in no manner
constitute an agreement by ECMC to issue new guarantees pursuant to the
Act at any time for any Loans issued by the Holder, or for any Loans
acquired by the Holder which were not so guaranteed prior to such
acquisition.
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8. This Agreement may be terminated by either party upon sixty (60) days
written notice to the other party. The termination notice shall specify
a termination date which shall not be sooner than sixty-five (65) days
after the mailing of the termination notice. ECMC may, in addition and
at its option, suspend or limit this Agreement in the manner provided
for by ECMC Rules and Regulations. No limitation, suspension, or
termination shall affect the guarantee on Loans previously covered by
this Agreement.
9. This Agreement may be terminated by the United States Secretary of
Education (the "Secretary") upon thirty (30) days advance written
notice to Holder, pursuant to the provisions of 20 U.S.C. ss. 1072. No
limitation, suspension, or termination shall affect the guarantee on
Loans previously covered by this Agreement.
10. This Agreement may not be assigned by Holder without the express
written consent of ECMC said consent shall not be unreasonably withheld
by ECMC.
11. The laws of the State of Minnesota shall govern the validity,
performance and enforcement of this Agreement.
12. ECMC agrees upon written request to furnish a copy of its most recent
audited financial statements to any holder of record of Notes or
Certificates (each as defined in the Trust Agreement) of KeyCorp
Student Loan Trust 1999-A.
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IN WITNESS WHEREOF, the Holder and ECMC have caused this Agreement to
be duly executed and delivered as of the 1st day of January, 1999.
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity, but
solely as Eligible Lender Trustee
on behalf of KeyCorp Student Loan
Trust 1999-A
By:
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Title:
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Lender Code: 833220
Federal Tax ID: 36-7111819
EDUCATIONAL CREDIT MANAGEMENT CORPORATION
By:
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Title:
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