Christa Mcauliffe Incentive Program

CHRISTA MCAULIFFE INCENTIVE PROGRAM

Promissory Note And Disclosure Statement

Borrower’s Rights and Responsibilities

I. PROMISE TO REPAY:

The borrower promises to pay to the STATE OF DELAWARE (lender) the entire principal sum of amounts disbursed under this promissory note, plus interest. This loan will become due, and may be redeemed or repaid, according to the provisions described in Section III.

II. ELIGIBILITY REQUIREMENTS:

This promissory note is issued under the CHRISTA MCAULIFFE PROFESSIONAL INCENTIVE PROGRAM, hereafter referred to as “CHRISTA MCAULIFFE”. Participation in this program requires the borrow to be enrolled as a full or part time student at an accredited, non-profit college university and studying in a degree program that leads towards teacher certification.Initial award of the CHRISTA MCAULIFFE must meet the GPA, SAT score and class rank as established by the Delaware Higher Education Office, hereinafter referred to as DHEO. Subject to available funding, this loan may be renewed by borrower for each year of continued enrollment in an eligible degree program and satisfactory academic progress as defined by the enrolling institution.

III. REPAYMENT:

(a) GRACE PERIOD: Upon graduation or withdrawal from an eligible degree program, the borrower will enter into a 12-month grace period. DHEO will send notification to the borrower upon the start of the grace period inclusive of instructions for service and cash repayment (refer to sections III (b) and III (c) below). Repayment of the CHRISTA MCAULIFFE will commence immediately upon the completion of the grace period. The borrower is responsible for providing current employment status to DHEO at least 30 days prior to the end of the grace period as specified in section IV.

(b) SERVICE REPAYMENT: The purpose of the CHRISTA MCAULIFFE is to develop a strong source of highly qualified teachers for the State of Delaware. Therefore service repayment is an allowable option for the borrower. Borrowers providing full-time teaching service in a state of Delaware public or charter school are immediately entered into service repayment status. While in service repayment status no repayment of award principal or interest is required. Service repayment will be calculated as a 1:1 ratio for the borrower, therefore one year of the loan will be forgiven for each year of full-time teaching service in a state of Delaware public or charter school. Upon completion of 5 years of full-time teaching service within a Delaware public or charter school, borrower’s loan including the full principal and interest charges will be forgiven in its entirety. Borrower is responsible for providing updated and accurate reporting of the borrower’s employment status. Any changes to employment status must be reported within 30 days of the occurrence. Refer to section IV for guidelines in reporting employment status.

(c) CASH REPAYMENT: If borrower fails to secure a full-time teaching status in a Delaware public or charter school upon completion of the grace period, borrower will enter into a cash repayment status. If, at any time, borrower fails to maintain a full-time teaching status in a Delaware public or charter school, borrower will enter into cash repayment status within 30 days of change in employment status. Upon entering into cash repayment status, borrower’s account will be transferred to the Division of Revenue for processing. The Division of Revenue will determine the repayment plan for borrower to commence payment on the full principal and interest charges.

If during the period of cash repayment the borrower begins qualifying employment, payments will be deferred and the 1:1 service repayment ratio will be applied. Under no circumstances will payments already made by the borrower be reimbursed as a result of obtaining qualifying employment.

(d) LOAN CANCELLATION: The borrower’s loan will be cancelled only upon fulfillment of one of the criteria listed below:

1. Completion of 5 years full-time teaching service in a Delaware public or charter school;
2. Full repayment of the principal and interest charges within a 10 year period; or
3. Death of the borrower.

IV. REPORTING REQUIREMENTS

(a)EMPLOYMENT STATUS: The borrower is responsible for submitting all required documentation as requested by DHEO to validate current employment status. The borrower must submit updated documentation by July 30 of each year. All changes to employment status, including but not limited to employer, school eligibility, full or part-time status must be reported to DHEO within 30 days of the change.

(b)ENROLLMENT STATUS: The borrower is responsible for providing written notification to DHEO within 30 days of completionof an eligible degree program.

(c)CONTACT INFORMATION: The borrower is responsible for maintaining a current address, phone number and email address on file with DHEO. Any changes must be provided within 30 days of the change.

V.INTEREST AND PENALTIES

(a)INTEREST RATES: Initial interest on the sum of the principal amount plus all subsequent renewal awards for CHRISTA MCAULIFFE shall be charged upon completion of the grace period. Interest shall continue to accrue at a monthly rate for the duration of the cash repayment status or deferment status (refer to section V (b)).

(b)DEFERMENT: The borrower may request deferment for up to one year while enrolled in an eligible degree program and up to one additional year while in cash repayment status.The borrower must submit a written request for deferment and provide documentation to DHEO. Deferment is at the discretion of DHEO and may be granted for the following reasons:

1. Financial hardship;
2. Severe or prolonged illness;
3. Inability to secure qualifying employment;
4. Delayed enrollment in eligible program due to military or full-time volunteer service; or
5. Failure to pass qualifying examinations to complete service requirements of degree program.

VI. DEFAULT:

Upon entering cash repayment status, borrower is responsible for making monthly payments according to the schedule and due date established by the Division of Revenue. Failure to make a payment or payment arrangement within 60 days of the due date will constitute default. Failure to meet the required terms of this agreement will constitute default. In addition, the initiation of bankruptcy proceedings, either voluntary or involuntary shall also constitute default status under the terms of this note and subject the debtor to cash repayment as set forth here in this agreement. Any default may be reported to credit bureau organizations, which may significantly and adversely affect the borrower's credit rating. Upon entering a default status, the outstanding principal balance of the loan and all interest charged to date will be due in full and payable immediately to the State of Delaware..DHEO will provide all requested information on the repayment status of this loan to any credit bureau organization upon the request of the borrower.

VII.ADDITIONAL AGREEMENTS:

Borrower may, without penalty, prepay all or any part of the principal or accrued interest of this loan at any time, and isentitled to a rebate of any unearned interest that may have been paid.

After June 30 of each year, DHEO will forward an account statement identifying all loan account activity since the origination of thefirst loan, including, but not limited to, the current balance.

This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, except where Federal Law has precedence. Borrower consents to jurisdiction and venue in the State of Delaware. If any term or provision of this Agreement is found by a court of competent jurisdiction to be invalid, illegal or otherwise unenforceable, the same shall not affect the other terms or provisions hereof or the whole of this Agreement, but such term or provision shall be deemed modified to the extent necessary in the court's opinion to render such term or provision enforceable, and the rights and obligations of the parties shall be construed and enforced accordingly, preserving to the fullest permissible extent the intent and agreements of the parties herein set forth.

Validity and enforcement of this Agreement is subject to appropriations by the General Assembly of the specific funds necessary for award funding. Should such funds not be appropriated the borrower will remain obligated solely for funds awarded and disbursed pursuant to this agreement. Additionally, the borrower will remain obligated to the full terms of the agreement with regards to redemption and repayment for the full amount of the principal and interest awarded and disbursed pursuant to this agreement. Should such funds not be appropriated, Delaware’s obligation to award additional funds shall be extinguished upon the end of the fiscal year in which Delaware fails to appropriate monies for the ensuing fiscal year.

Borrower’s signature below certifies agreement to the full terms and conditions outlined above for the CHRISTA MCAULIFFE. Borrowercertifies this promissory note has beenread in its entirety and agrees to borrow the awarded amount. Borrower understands that any changes to the amount borrowed will be included in the annual statement provided by DHEO at the end of the award year. Borroweris entitled to a fully signed copy of this promissory note.

Borrower’s Signature:Date: