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Lender Participation Agreement For Consolidation Loans

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This Lender Participation Agreement for Consolidation Loans (the " Agreement" ), to be effective as of the 1st day of April, 2002, is by and between The Bank of New York Trust Company of Florida, N. A., as eligible lender trustee for Consolidation Loan Funding, LLC (" Lender" ), and the Northwest Education Loan Association, a Washington nonprofit corporation (" NELA" ).


A. NELA is a private nonprofit guaranty agency operating under the Federal Family Education Loan Program (" FFELP" ) to administer, promote and facilitate student loans and related services for the benefit of students pursuing postsecondary education.

B. Lender wishes to secure the NELA guarantee on eligible consolidation loans made by the Lender to eligible borrowers under the Act (as defined below);

C. Lender has full legal power and authority to enter into an agreement for the performance of such guarantee services, qualifies as an eligible lender under the Act for purposes of making consolidation loans and is prepared to engage in the transactions contemplated by this Agreement; and

D. NELA is willing to make its consolidation loan guarantee available to Lender on the terms and conditions set forth in this Agreement.


NOW THEREFORE, in consideration of the foregoing premises and the mutual promises described herein, the parties hereto agree as follows:

1. Applicable Policies, Regulations, and Act . The performance of this Agreement is governed by Title IV, Part B of the Higher Education Act of 1965, (20 U.S.C. a7 1071 et seq.) as now or hereafter amended (" Act" ), and the effective regulations promulgated thereunder by the Secretary of Education (" Secretary" ), as now or hereafter amended (" Regulations" ). The performance of the parties hereunder shall also be governed by the Common Manual: Unified Student Loan Policy, as amended and updated from time to time and any other policies adopted and issued by NELA describing the administration of its loan guarantee program (the " Policies" ). If NELA adopts any policies different from or in addition to those stated in the Common Manual, NELA shall give notice to the Lender, by certified mail, return receipt requested, of any such amendment or revision. Lender shall not be bound by any such amendments issued by NELA if it has not received such notice. The Policies, Regulations and Act are hereby incorporated into this Agreement, with the same force and effect as if they were found in the body of the Agreement itself.

2. NELA Guarantee . VELA agrees to guarantee consolidation loans made by the Lender after the effective date of this Agreement (hereinafter " Consolidation Loans" ), provided that

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such loans are made pursuant to the terms of this Agreement and are eligible for guarantee and reinsurance under the Policies, Regulations and the Act. NELA agrees to deliver to Lender a Certificate of Comprehensive Insurance as defined in the Act, and Regulations.

3. Lender' s Agreements, Obligations and Warranties . With respect to Consolidation Loans to be guaranteed by NELA hereunder, the Lender agrees as follows:

3.1 Lender will only make a Consolidation Loan to an eligible borrower if such borrower certifies that he or she has no other application pending for a consolidation loan.

3.2 If Lender is not the holder of borrower' s underlying loans selected for consolidation, and all of the selected loans are held by a single holder, then prior to making a Consolidation Loan to the borrower, Lender shall obtain a certification from the borrower that the borrower has sought and been unable to obtain a consolidation loan with income sensitive repayment terms from the single holder of the loans selected for consolidation.

3.3 Each Consolidation Loan will bear interest and be subject to repayment in accordance with the Act.

3.4 Each Consolidation Loan made by Lender hereunder shall be made in an amount equal to the sum of the unpaid principal, accrued unpaid interest, collection charges, and late charges of all the eligible loans selected by the borrower for consolidation, and this amount shall not be less than the minimum amount required for the eligibility of a borrower under the Act and Regulations.

3.5 The Lender causes the proceeds of each Consolidation Loan that it makes to be paid to the holders of the underlying loans selected for consolidation in order to discharge the liability of the borrower on each such loan.

3.6 All actions taken by Lender, including but not limited to originating, disbursing, servicing, or collecting on Consolidation Loans, are in compliance with the Act, the Policies, and all other applicable local, state and federal laws and regulations for loan servicing, including collection activities.

3.7 Lender shall give NELA prompt notice of its intention to discontinue the making of Consolidation Loans.

3.8 With regard to the Consolidation Loans made hereunder, Lender will maintain and provide information and reports in accordance with the Act, Regulations and Policies and Lender shall permit NELA and the Secretary to examine and copy during normal business hours all such Consolidation Loan records and files upon reasonable notice and at reasonable intervals for the purpose of verifying the accuracy of information provided by the Lender concerning Lender' s administration of Consolidation Loans guaranteed by NELA, and in order to conduct audits and compliance reviews.

3.9 Lender, pursuant to the Act and Regulations, will assist borrowers in securing reductions in their obligations to pay interest on Consolidation Loans if such interest is eligible for subsidy under the Act.

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4. Warranties Made Upon Assignment of Promissory Note . With respect to any promissory note guaranteed by NELA hereunder, the Lender hereby agrees and warrants that upon assignment of such note by Lender to NELA or to any third party: (a) the obligations of the borrower(s) and any endorser upon such note are valid and enforceable in accordance with the terms of the note, and not subject to any defenses; (b) all information furnished to NELA in connection with such promissory note is, in all material aspects, true and accurate; (c) the promissory note qualifies for insurance under the Act and Regulations; (d) the Lender has complied with the Act, Regulations, and all other applicable laws, rules and regulations with respect to the promissory note and the Consolidation Loan; and (e) if the note is further assigned by any party, the warranties made by the Lender upon assignment to NELA shall inure to and benefit all such assignees including NELA and the federal government.

5. Amendments . From time to time, the federal government may amend the Act or the Regulations. This Agreement shall continue in full force and effect, and any such amendments shall be incorporated into it, unless a party gives notice of termination of the Agreement. Any such governmental action constitutes notice to the parties of the changes, and NELA shall not be responsible for notifying Lender of any such amendments.

6. Termination .

6.1 Either party may terminate this Agreement without cause by providing written notice to the other party specifying the date of termination at least thirty (30) days prior to the intended date of termination. This Agreement will automatically terminate sixty (60) days after receipt by NELA of a statement that Lender no longer intends to make Consolidation Loans under this Agreement.

6.2 Upon termination, the relationship between NELA and Lender created by this Agreement shall cease on the termination date except as provided herein. Termination will not affect the guarantee of NELA or the obligations of Lender as to loans guaranteed prior to the termination date under the Agreement, except in accordance with the Act, Regulations, or Policies. Such guarantee and obligations, including, but not limited to, the obligation to allow NELA and the Secretary access to records, shall continue in full force and effect under the terms of the Agreement between NELA and Lender which was in force at the time each particular loan was initially held by Lender.

7. Breaches .

7.1 Upon material breach by Lender of this Agreement, whether of the provisions found in the Agreement itself or of its incorporated provisions, NELA is entitled, immediately upon delivery of written notice to Lender, to suspend or withdraw its guarantee in part or entirely, as to the loan or loans affected by the breach.

7.2 A material breach by Lender shall be a defense by NELA to any claim or action by Lender upon the guarantee of the loan directly affected by the material breach.

7.3 Upon any breach by Lender, whether material or not, of any provision of this Agreement, including those incorporated by reference, NELA is entitled to written assurance from Lender that the breach has been remedied.

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7.4 The waiver by any party of any breach of any provision of this Agreement shall not operate or be construed as waiver of any provision as to any subsequent breach.

8. Severability .

8.1 This Agreement. If any term, covenant, condition, or provision of this Agreement or the application thereof to any person or circumstance shall, at any time, or to any extent, be determined invalid or unenforceable, the remaining provisions hereof shall not be affected thereby and shall be deemed valid and fully enforceable to the extent provided by law.

8.2 Policies, Regulations and Act . If any provision of the Policies, Regulations, or Act are rescinded, repealed, withdrawn, held to be invalid or otherwise rendered inoperative, the remaining provisions are not affected, and continue in full force.

9. Entire Agreement Modifications . This Agreement, including any incorporated provision, constitutes the entire understanding between the parties and supersedes any prior written or oral understanding between them as to the subject matter contained herein. This Agreement may not be amended, changed or modified, in whole or in part, except by an instrument in writing signed by Lender and by NELA.

10. Captions . The captions and headings of the paragraphs of this Agreement are for convenience and reference only and may not be used to interpret or define the provisions hereof.

11. Indemnification by Lender . Lender shall indemnify and hold NELA harmless from and against any and all losses,
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