DORAL BANK NY FSB
and
MRU LENDING, INC.
LOAN PROGRAM AGREEMENT
Dated as of July 25, 2005
TABLE OF CONTENTS
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1. DEFINITIONS...........................................................1
2. MARKETING OF LOANS; SCHOOL RELATIONSHIPS..............................1
3. BANK TO EXTEND CREDIT.................................................1
4. CONSUMER DOCUMENTS AND CREDIT POLICY..................................2
5. LOAN REFERRAL, PROCESSING AND ORIGINATION.............................2
6. SETTLEMENT WITH SCHOOLS...............................................3
7. CHECK STOCK...........................................................4
8. DISPUTES & REFUNDS....................................................4
9. CONDITIONS PRECEDENT TO THE OBLIGATIONS OF BANK.......................4
10. REPRESENTATIONS AND WARRANTIES........................................4
11. OTHER RELATIONSHIPS WITH BORROWERS....................................7
12. INDEMNIFICATION.......................................................7
13. TERM AND TERMINATION..................................................9
14. CONFIDENTIALITY......................................................11
15. PROPRIETARY MATERIALS................................................12
16. RELATIONSHIP OF PARTIES..............................................12
17. EXPENSES.............................................................13
18. EXAMINATION..........................................................13
19. INSPECTION...........................................................13
20. GOVERNING LAW; WAIVER OF JURY TRIAL..................................14
21. SEVERABILITY.........................................................14
22. ASSIGNMENT...........................................................14
23. THIRD PARTY BENEFICIARIES............................................14
24. NOTICES..............................................................14
25. AMENDMENT AND WAIVER.................................................14
26. ENTIRE AGREEMENT.....................................................15
27. COUNTERPARTS.........................................................15
28. INTERPRETATION.......................................................15
29. AGREEMENT SUBJECT TO APPLICABLE LAWS.................................15
30. FORCE MAJEURE........................................................15
31. ARBITRATION..........................................................16
32. HEADINGS.............................................................17
33. PRIVACY LAW COMPLIANCE...............................................17
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TABLE OF CONTENTS
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34. EXCLUSIVITY..........................................................17
SCHEDULES AND EXHIBITS
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SCHEDULE 1 Definitions
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THIS LOAN PROGRAM AGREEMENT (this "Agreement"), dated as of July 25, 2005
("Effective Date"), is made by and between Doral Bank NY FSB, a federally
chartered savings bank having its principal location at 000 Xxxx Xxxxxx Xxxxx,
Xxx Xxxx, XX 00000 ("Bank"), and MRU Lending, Inc., a Delaware corporation,
having its principal location at 1114 Avenue of the Xxxxxxxx, 00xx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000 ("MRU").
WHEREAS, MRU is engaged in the business of marketing student loans to
consumers and purchasing student loans; and
WHEREAS, Bank is in the business of originating various types of consumer
loans, including student loans; and
WHEREAS, the Parties desire to develop a nationwide program pursuant to
which MRU will market, and Bank will originate, student loans.
NOW, THEREFORE, in consideration of the foregoing and the terms,
conditions and mutual covenants and agreements herein contained, and for good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Bank and MRU mutually agree as follows:
1. Definitions. The terms used in this Agreement shall be defined as set forth
in Schedule 1.
2. Marketing of Loans; School Relationships.
(a) At its own cost, MRU shall promote and market the Program and the
Loan using any form of media determined to be appropriate by MRU,
including the Internet. Bank agrees that MRU may refer to Bank and
the Program in promotional and marketing materials, upon the
condition that any references to the Bank and/or the Program in any
such materials must receive the prior written approval of Bank,
which approval shall not be unreasonably withheld or delayed. Bank
shall review and approve or reject any references to the Bank and/or
Program in any such materials within three (3) days after receipt of
such materials, but may not otherwise alter the Program or such
materials without MRU's prior written consent. MRU shall ensure that
all promotional and marketing materials shall be accurate in all
material respects and not misleading. MRU shall ensure that all
promotional and marketing materials and strategies comply with
Applicable Laws.
(b) At its own cost, MRU shall solicit Applicants for participation in
the Program, shall make arrangements with Applicants and Schools to
provide services in connection with the processing and/or closing of
Loans and shall administer all such arrangements with Applicants and
Schools. Bank shall have no responsibility to solicit Applicants or
Schools or for any other involvement of Applicants and Schools in
the Program.
3. Bank to Extend Credit. MRU acknowledges that approval of an Application
creates a creditor-borrower relationship between Bank and Borrower which
involves, among other things, the disbursement of Loan proceeds and the
collection of Loan payments by Bank. Nothing in this Agreement shall obligate
Bank to extend credit to an Applicant if Bank determines that doing so would be
an unsafe or unsound banking practice. Bank shall provide prior written notice
of a decision not to extend credit to an Applicant in reliance on the preceding
sentence and, in all instances where Bank does not timely provide such prior
notice, MRU shall have no liability to Bank arising out of such extension of
credit.
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4. Consumer Documents and Credit Policy. The following documents, terms and
procedures ("Consumer Finance Materials") that have been approved by Bank and
that will be used by Bank initially with respect to the Loans are: (i) Program
description (terms and conditions of loans); (ii) Credit Policy; and (iii) form
of Application/Promissory Note. The Consumer Finance Materials shall not be
changed without the prior written consent of both Parties, which consent shall
not be unreasonably withheld or delayed. The Parties acknowledge that each Loan
Agreement and all other documents referring to the creditor for the Program
shall identify the Bank as the creditor at the time of Loan closing, and that
all checks or other items in repayment of Loans shall be made payable to Bank so
long as Bank owns such Loans. MRU shall ensure that the Consumer Finance
Materials comply with Applicable Laws.
5. Loan Referral, Processing and Origination.
(a) On behalf of the Bank, MRU shall solicit Applications from
Applicants and shall process such Applications on behalf of Bank
(including retrieving credit reports) to determine whether the
Applicant meets the eligibility criteria set forth in the Credit
Policy. On behalf of the Bank, MRU shall respond to all inquiries
from Applicants regarding the application process.
(b) MRU shall forward to Bank mutually agreed information regarding
Applicants who meet the eligibility criteria set forth in the Credit
Policy. MRU shall have no discretion to override the Credit Policy
with respect to any Application without prior approval of Bank's
authorized officer.
(c) Subject to the terms of this Agreement, Bank shall originate Loans
with respect to Applicants who meet the eligibility criteria set
forth in the Credit Policy.
(d) Pursuant to procedures mutually agreed by the Parties, MRU shall
deliver adverse action notices to Applicants who do not meet Credit
Policy criteria or are otherwise denied by Bank.
(e) On behalf of the Bank, MRU shall prepare and deliver Loan Agreements
and other Loan documents to Borrowers and obtain Borrowers'
signatures on Loan Agreements and other Loan documents and obtain
any third party signatures required by Bank to finalize Loans and
take all other actions necessary to close Loans.
(f) On behalf of the Bank, MRU shall perform its obligations described
in this Section 5 and deliver any other customer communications to
Applicants and Borrowers as necessary to carry on the program, all
at MRU's own cost.
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(g) On behalf of Bank, MRU shall deliver any and all documents required
to be delivered to X.X. Xxxxxx Trust Company, National Association
(the "Custodian").
(h) On behalf of Bank, MRU, as master servicer for the bank, shall
deliver any and all documents required to be delivered to
Pennsylvania Higher Education Assistance Agency ("PHEAA")
6. Settlement with Borrowers and/or Schools.
(a) MRU will provide a Funding Statement to Bank by e-mail or as
otherwise mutually agreed by the Parties prior to 5:00 p.m. local
time in the jurisdiction where Bank is located on the Business Day
immediately preceding the Funding Date. Each Funding Statement shall
provide the Funding Amount for all Loans to be funded by Bank on the
next Funding Date and shall include, on a Loan-by-Loan basis, (i)
information identifying each Borrower scheduled to receive a Loan
and each Borrower or School scheduled to receive Loan proceeds
(e.g., name and address), (ii) the total amount of each Loan and the
amount of Loan proceeds (if any) to be transferred by ACH or wire
transfer to a Borrower or School, and all related information
required by the Funding Institution to settle an ACH or wire
transfer to the Borrower or School, (iii) the total amount of each
Loan and the amount of Loan proceeds (if any) to be transferred by
check to a Borrower or School, and the number of the check to be
issued, and (iv) the total amount of origination or other fees to be
paid to third parties and (v) a confirmation that the Borrower is
eligible for a Loan under the Credit Policy and has executed a Loan
Agreement and that the Loan Agreement and other Loan documents were
prepared in compliance with the Program Compliance Manual. Prior to
MRU's delivery of a Funding Statement to Bank, MRU shall deliver a
data file to the Funding Institution that contains the ACH or
instructions for wiring funds, as appropriate, from the Funding
Account to designated Borrowers' and/or Schools' accounts in
accordance with such Funding Statement. Currently, the Funding
Institution is JPMorgan Chase Bank, N.A. Bank shall provide MRU at
least five (5) days prior written notice of a change in the Funding
Institution.
(b) By 11:00 a.m. Eastern Standard Time on each Funding Date, Bank shall
instruct the Funding Institution to transfer by ACH, or wired funds,
immediately from the Funding Account to the accounts of Borrowers or
Schools designated in the applicable Funding Statement to receive
Loan proceeds by ACH or wire transfer in accordance with the Funding
Statement.
(c) On each Funding Date, MRU, on behalf of the Bank, shall prepare a
check drawn on the Funding Account for each Borrower or School that
requests payment of Loan proceeds by check and deliver each such
check to the appropriate Borrower or School in accordance with the
Funding Statement.
7. Check Stock. Bank shall deliver to MRU a stock of checks or electronic
instructions for printing checks for the Funding Account to be used for the
payment of Loan proceeds to Schools that request payment by check. As necessary,
Bank shall replenish the check stock or provide updated electronic instructions
for check printing. MRU shall safeguard such checks and limit access to such
checks to bonded employees who are authorized by MRU to handle such checks. MRU
shall prevent the issuance of such checks in amounts and to Persons other than
as provided in Funding Statements. Bank hereby appoints MRU with power of
substitution, as its lawful attorney in its name to issue checks on behalf of
Bank strictly in accordance with Section 6(c) hereof. Such power of attorney
shall remain in full force and effect until written notice of its termination is
delivered by Bank to MRU. If Bank terminates the power of attorney at a time
when this Agreement is still in full force and effect, then Bank shall make
other suitable arrangements, in consultation with MRU, to fund those Loans which
must be paid by check. Within ten (10) Business Days after the end of each
month, MRU shall deliver to Bank a reconciliation of all checks previously
delivered by Bank to MRU identifying the checks issued and voided. On behalf of
Bank, MRU shall store in a mutually agreed format an image of each check issued
pursuant to Section 6(c). As requested by Bank, MRU shall deliver such images to
Bank.
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8. Disputes & Refunds. MRU shall ensure that all adjustments and/or credits
agreed to with Borrowers, or Schools in resolving a dispute with Borrowers who
pay for tuition via Loans, shall promptly be communicated to the Party owning
and holding the Loan at the time of the adjustment and/or credit. Procedures for
applying such adjustments and/or credit to the Loans involved shall be mutually
agreed upon by the Parties or held by the Servicer, as applicable.
9. Conditions Precedent to the Obligations of Bank. The obligation of Bank to
originate and fund Loans is subject to the satisfaction of the following
conditions precedent at the time of or prior to the funding of each Loan by
Bank:
(a) The representations and warranties of MRU set forth in the Program
documents shall be true and correct in all material respects at the
time as of the time Bank funds each Loan (unless such representation
or warranty refers specifically to an earlier date); and
(b) The obligations of MRU set forth in the Program Documents to be
performed prior to the funding of each Loan by Bank shall have been
performed prior to the funding of such Loan by Bank.
10. Representations and Warranties.
(a) Bank hereby represents and warrants to MRU as of the Effective Date
that:
(1) Bank is an FDIC-insured [corporation/association], duly
organized, validly existing under the laws of the USA and has full
corporate power and authority to execute, deliver and perform its
obligations under this Agreement; the execution, delivery and
performance of this Agreement have been duly authorized, and are not
in conflict with and do not violate the terms of the charter or
bylaws of Bank and will not result in a breach of or constitute a
default under, or require any consent under, any indenture, loan or
agreement to which Bank is a party;
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(2) All approvals, authorizations, licenses, registrations,
consents, and other actions by, notices to, and filings with, any
Person that may be required in connection with the execution,
delivery, and performance of this Agreement by Bank, have been
obtained (other than those required to be made to or received from
Borrowers and Applicants);
(3) This Agreement constitutes a legal, valid, and binding
obligation of Bank, enforceable against Bank in accordance with its
terms, except (i) as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium,
receivership, conservatorship or other similar laws now or hereafter
in effect, including the rights and obligations of receivers and
conservators under federal law, which may affect the enforcement of
creditors' rights in general, and (ii) as such enforceability may be
limited by general principles of equity (whether considered in a
suit at law or in equity);
(4) There are no proceedings or investigations pending or, to
the best knowledge of Bank, threatened against Bank (i) asserting
the invalidity of this Agreement, (ii) seeking to prevent the
consummation of any of the transactions contemplated by the Bank
pursuant to this Agreement, (iii) seeking any determination or
ruling that, in the reasonable judgment of Bank, would materially
and adversely affect the performance by Bank of its obligations
under this Agreement, (iv) would have a materially adverse financial
effect on Bank or its operations if resolved adversely to it;
(5) Bank is not Insolvent; and
(6) The execution, delivery and performance of this Agreement
by Bank comply with state and federal banking laws applicable to
Bank.
(7) The bank shall maintain adequate data security and
disaster recovery protections that are at least consistent with
industry standards for the consumer lending industry.
(b) MRU hereby represents and warrants to Bank as of the Effective Date
that:
(1) MRU is a Delaware corporation, duly organized and validly
existing in good standing under the laws of the State of Delaware,
and has full power and authority to execute, deliver, and perform
its obligations under this Agreement; the execution, delivery, and
performance of this Agreement have been duly authorized, and are not
in conflict with and do not violate the terms of the articles or
bylaws of MRU and will not result in a breach of or constitute a
default under or require any consent under any indenture, loan, or
agreement to which MRU is a party;
(2) All approvals, authorizations, consents, and other actions
by, notices to, and filings with any Person required to be obtained
for the execution, delivery, and performance of this Agreement by
MRU, have been obtained;
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(3) This Agreement constitutes a legal, valid, and binding
obligation of MRU, enforceable against MRU in accordance with its
terms, except (i) as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium,
receivership, conservatorship or other similar laws now or
thereafter in effect, including the rights and obligations of
receivers and conservators under federal law, which may affect the
enforcement of creditors' rights in general, and (ii) as such
enforceability may be limited by general principals of equity
(whether considered in a suit at law or in equity); (4) There are no
proceedings or investigations pending or, to the best knowledge of
MRU threatened against MRU (i) asserting the invalidity of this
Agreement, (ii) seeking to prevent the consummation of any of the
transactions contemplated by the Parties pursuant to this Agreement,
(iii) seeking any determination or ruling that, in the reasonable
judgment of MRU would materially and adversely affect the
performance by MRU of its obligations under this Agreement, or (iv)
would have a materially adverse financial effect on MRU or its
operations if resolved adversely to it;
(5) MRU is not Insolvent; and
(6) The execution, delivery and performance of this Agreement
by MRU, the Consumer Finance Materials and the promotional and
marketing materials and strategies shall all comply with Applicable
Laws.
(7) MRU shall maintain adequate data security and disaster
recovery protections that are at least consistent with industry
standards for the consumer lending industry.
(c) MRU hereby represents and warrants to Bank as of each Funding Date,
to the best of MRU's knowledge, that:
(1) For each Loan then being funded: (i) all information in
the related Application is true and correct; (ii) the Loan is fully
enforceable and all required disclosures have been timely and
accurately delivered in compliance with Applicable Law; (iii) the
Loan Agreement and all other Loan documents are genuine and legally
binding and enforceable and not forged or otherwise fraudulent, and
conform to the requirements of the program; (iv) all necessary
approvals have been obtained; and (v) nothing exists that would
prohibit the sale of the Loan by Bank to a willing purchaser;
(2) Each Borrower listed on a Funding Statement is eligible
for a Loan under the Credit Policy and has executed a Loan
Agreement; and
(3) Each Borrower or School has complied with all of the
requirements to receive Loan proceeds under the applicable
agreement; the ACH or wire transfer information provided by MRU to
the Funding Institution is accurate and complete for each Loan the
proceeds of which are to be disbursed by ACH or wire transfer; the
payee name and amount are accurate and complete on, and MRU has
properly delivered, each check prepared by MRU, on behalf of the
Bank, for each Loan the proceeds of which are to be disbursed by
check; and the information on each Funding Statement is true and
correct in all respects.
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(d) The representations and warranties of Bank and MRU contained in this
Section 10, except those representations and warranties contained in
subsections 10(a)(4) and 10(b)(4), are made continuously throughout
the term of this Agreement. In the event that any investigation or
proceeding of the nature described in subsections 10(a)(4) and
10(b)(4) is instituted or threatened against either Party, such
Party shall promptly notify the other Party of the pending of any
threatened investigation or proceeding.
11. Other Relationships with Borrowers.
(a) MRU shall have the right, at its own expense, to solicit Applicants
and/or Borrowers with offerings of goods and services from MRU and
others.
(b) Except as necessary to carry out its rights and responsibilities
under this Agreement and the Loan Sale Agreement, Bank shall not use
Applicant and/or Borrower information and shall not provide any
Applicant and/or Borrower information to any Person, except to the
extent required to do so under Applicable Law or legal process.
(c) Notwithstanding subsection 11(b), Bank may make solicitations for
goods and services to the public, other than solicitations for
private student loans, which may include one or more Applicants or
Borrowers; provided that Bank does not use or permit a third party
to use any list of Applicants and/or Borrowers in connection with
such solicitations; provided, however, Bank shall not be obligated
to redact the names of Applicants and/or Borrowers from marketing
lists acquired from third parties (e.g., subscription lists) that
Bank uses for solicitations.
(d) The terms of this Section 11 shall survive the expiration or earlier
termination of this Agreement.
12. Indemnification.
(a) Bank agrees to indemnify and hold harmless MRU and its Affiliates,
and the officers, directors, employees, representatives,
shareholders, agents and attorneys of such entities (the "MRU
Indemnified Parties") from and against any and all claims, actions,
liability, judgments, damages, costs and expenses, including
reasonable attorneys' fees, that may arise from (i) gross
negligence, willful misconduct or breach of any of Bank's
obligations or undertakings under this Agreement by Bank or its
agents or representatives, or (ii) a violation by Bank or its agents
or representatives of any New York or federal banking law applicable
to Bank's participation in the Program.
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(b) MRU agrees to indemnify and hold harmless Bank and its Affiliates,
and the officers, directors, employees, representatives,
shareholders, agents and attorneys of such entities (the "Bank's
Indemnified Parties") from and against any and all claims, actions,
liability, judgments, damages, costs and expenses, including
reasonable attorneys' fees, that may arise from (i) gross
negligence, willful misconduct or breach of any of MRU's obligations
or undertakings under this Agreement by MRU or its agents or
representatives, or (ii) a violation by MRU or its agents or
representatives of any New York or federal banking law, applicable
to MRU's participation in the program.
(c) The MRU Indemnified Parties and the Bank Indemnified Parties are
sometimes referred to herein as the "Indemnified Parties," and MRU
or Bank, as an indemnitor hereunder, is sometimes referred to herein
as the "Indemnifying Party."
(d) Any Indemnified Party seeking indemnification hereunder shall
promptly notify the Indemnifying Party, in writing, of any notice
received by the Indemnified Party of the assertion by any third
party of any claim or of the commencement by any third party of any
legal or regulatory proceeding, arbitration or action, against the
Indemnified Party with respect to which the Indemnifying Party is or
may be obligated to provide indemnification (an "Indemnifiable
Claim"), specifying in reasonable detail the nature of the claim,
and, if known, the amount, or an estimate of the amount, of the
claim, provided that failure to promptly give such notice shall only
limit the liability of the Indemnifying Party to the extent of the
actual prejudice, if any, suffered by such Indemnifying Party as a
result of such failure. The Indemnified Party shall provide to the
Indemnifying Party as promptly as practicable thereafter information
and documentation reasonably requested by such Indemnifying Party to
defend against the claim asserted.
(e) The Indemnifying Party shall have thirty (30) days after receipt of
any notification of an Indemnifiable Claim (a "Claim Notice") to
undertake, conduct and control, through counsel of its own choosing,
and at its own expense, the settlement or defense thereof, and the
Indemnified Party shall cooperate with the Indemnifying Party in
connection therewith if such cooperation is so requested and the
request is reasonable. If the Indemnifying Party assumes
responsibility for the settlement or defense of any such claim, (i)
the Indemnifying Party shall permit the Indemnified Party to
participate in such settlement or defense through counsel chosen by
the Indemnified Party (subject to the consent of the Indemnifying
Party, which consent shall not be unreasonably withheld); provided
that, other than in the event of a conflict of interest requiring
the retention of separate counsel, the fees and expenses of such
counsel shall not be borne by the Indemnifying Party; and (ii) the
Indemnifying Party shall not settle any Indemnifiable Claim without
the Indemnified Party's consent, which consent shall not be
unreasonably withheld or delayed for any reason if the settlement
involves only the payment of money, and which consent may be
withheld for any reason if the settlement involves more than the
payment of money, including any admission by the Indemnified Party.
As long as the Indemnifying Party is contesting any such
Indemnifiable Claim in good faith, the Indemnified Party shall not
pay or settle such claim without the Indemnifying Party's consent,
which consent shall not be unreasonably withheld.
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(f) If the Indemnifying Party does not notify the Indemnified Party
within thirty (30) days after receipt of the Claim Notice that it
elects to undertake the defense of the Indemnifiable Claim described
therein, the Indemnified Party shall have the right, upon written
notice to the Indemnifying Party, to contest, settle or compromise
the Indemnifiable Claim in the exercise of its reasonable
discretion; provided that the Indemnified Party shall notify the
Indemnifying Party of any compromise or settlement of any such
Indemnifiable Claim. No action taken by the Indemnified Party
pursuant to this paragraph (f) shall deprive the Indemnified Party
of its rights to indemnification pursuant to this Section 12.
(g) The terms of this Section 12 shall survive the expiration or earlier
termination of this Agreement.
13. Term and Termination.
(a) This Agreement shall have an initial term of thirty-six (36) months
from the Effective Date (the "Initial Term") and shall renew
automatically up to two (2) times for successive additional terms of
twelve (12) months each (each a "Renewal Term"), unless either Party
provides notice of non-renewal to the other Party at least thirty
(30) days prior to the end of the Initial Term or any Renewal Term
or this Agreement is earlier terminated in accordance with the
provisions hereof.
(b) Either party shall have the right to terminate this Agreement
without cause, by providing written notice 90 days prior to the date
of termination, if MRU concurrently terminates the Loan Sale
Agreement under Section 9(b) thereof.
(c) During the Initial Term and any Renewal Term of this Agreement, Bank
may terminate this Agreement at any time upon written notice to MRU
if MRU defaults on its obligations to make a payment to Bank as
provided in Section 2 of the Loan Sale Agreement. Bank shall not
have the right to terminate this Agreement without cause, except in
the manner provided in subsection 13(a) or 13 (b) above.
(d) Either Party shall have a right to terminate this Agreement
immediately upon written notice to the other Party in any of the
following circumstances ("with cause"):
(1) any representation or warranty made by the other Party in
this Agreement shall be incorrect in any material respect and shall
not have been corrected within thirty (30) Business Days after
written notice thereof has been given to such other Party;
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(2) the other Party shall default in the performance of any
material obligation or undertaking under this Agreement and such
default shall continue for thirty (30) Business Days after written
notice thereof has been given to such other Party;
(3) the other Party shall commence a voluntary case or other
proceeding seeking liquidation, reorganization, or other relief with
respect to itself or its debts under any bankruptcy, insolvency,
receivership, conservatorship or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver,
liquidator, conservator, custodian, or other similar official of it
or any substantial part of its property, or shall consent to any
such relief or to the appointment of a trustee, receiver,
liquidator, conservator, custodian, or other similar official or to
any involuntary case or other proceeding commenced against it, or
shall make a general assignment for the benefit of creditors, or
shall fail generally to pay its debts as they become due, or shall
take any corporate action to authorize any of the foregoing;
(4) an involuntary case or other proceeding, whether pursuant
to banking regulations or otherwise, shall be commenced against the
other Party seeking liquidation, reorganization, or other relief
with respect to it or its debts under any bankruptcy, insolvency,
receivership, conservatorship or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver,
liquidator, conservator, custodian, or other similar official of it
or any substantial part of its property; or an order for relief
shall be entered against either Party under the federal bankruptcy
laws as now or hereafter in effect;
(5) either Party has terminated the Loan Sale Agreement and
any applicable notice period provided therein shall have expired.
(e) Bank shall not be obligated to approve or originate any new Loans
after termination of this Agreement.
(f) After providing or receiving notice of termination and prior to the
date on which the first post-termination Loan disbursement is
scheduled to occur, upon written request of MRU, Bank shall, for a
period of twelve (12) months from the date of termination of this
Agreement, continue to disburse proceeds with respect to the Loans
committed to or outstanding as of the date of termination and shall
originate Loans to Applicants who have not received Loans but have
been approved under the Credit Policy and have received loan
commitment letters under the Program prior to the date of
termination of this Agreement, all pursuant to the terms of this
Agreement and subject to MRU's purchase from Bank of such Loans and
the related Loan receivables pursuant to the terms of the Loan Sale
Agreement. Notwithstanding any provision of the Program Documents,
Bank shall have no obligation to originate or fund Loans after the
date of termination of this Agreement if Bank is directed by a
Regulatory Authority to cease such activity.
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(g) The termination of this Agreement either in part or in whole shall
not discharge any Party from any obligation incurred prior to such
termination. No termination nor rejection or failure to assume the
executory obligations of this Agreement in the bankruptcy or
receivership of either Party shall be deemed to impair or affect the
obligations pertaining to any executed obligations, including,
without limitation, pre-termination breaches of representations and
warranties by either Party and pertaining to the obligations that
expressly survive termination of this Agreement.
(h) The terms of this Section 13 shall survive the expiration or earlier
termination of this Agreement.
14. Confidentiality.
(a) Each Party agrees that Confidential Information of the other Party
shall be used by such Party solely in the performance of its
obligations and exercise of its rights pursuant to the Program
Documents. Except as required by Applicable Laws or legal process,
neither Party (the "Restricted Party") shall disclose Confidential
Information of the other Party to third parties; provided, however,
that the Restricted Party may disclose Confidential Information of
the other Party (i) to the Restricted Party's Affiliates, agents,
representatives or subcontractors for the sole purpose of fulfilling
the Restricted Party's obligations under this Agreement (as long as
the Restricted Party exercises reasonable efforts to prohibit any
further disclosure by its Affiliates, agents, representatives or
subcontractors), (ii) to the Restricted Party's auditors,
accountants and other professional advisors, or to a Regulatory
Authority or (iii) to any other third party as mutually agreed in
writing by the Parties.
(b) A Party's Confidential Information shall not include information
that:
(1) is generally available to the public;
(2) has become publicly known, without fault on the part of
the Party who now seeks to disclose such information (the
"Disclosing Party"), subsequent to the Disclosing Party acquiring
the information;
(3) was otherwise known by, or available to, the Disclosing
Party prior to entering into this Agreement; or
(4) becomes available to the Disclosing Party on a
non-confidential basis from a Person, other than a Party to this
Agreement, who is not known by the Disclosing Party to be bound by a
confidentiality agreement with the non-Disclosing Party or otherwise
prohibited from transmitting the information to the Disclosing
Party.
(c) Upon written request or upon the termination of this Agreement, each
Party shall, within thirty (30) days, return to the other Party all
Confidential Information of the other Party in its possession that
is in written form, including by way of example, but not limited to,
reports, plans, and manuals; provided, however, that either Party
may maintain in its possession all such Confidential Information of
the other Party required to be maintained under Applicable Laws
relating to the retention of records for the period of time required
thereunder.
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(d) In the event that a Restricted Party is requested or required in any
legal proceeding to disclose any Confidential Information of the
other Party, the Restricted Party will provide the other Party with
prompt notice of such request(s) so that the other Party may seek an
appropriate protective order or other appropriate remedy and/or
waive the Restricted Party's compliance with the provisions of this
Agreement. In the event that the other Party does not seek such a
protective order or other remedy, or such protective order or other
remedy is not obtained, or the other Party grants a waiver
hereunder, the Restricted Party may furnish that portion (and only
that portion) of the Confidential Information of the other Party
which the Restricted Party is legally compelled to disclose and will
exercise such efforts to obtain reasonable assurance that
confidential treatment will be accorded any Confidential Information
of the other Party so furnished as the Restricted Party would
exercise in assuring the confidentiality of any of its own
confidential information.
(e) The terms of this Section 14 shall survive the expiration or earlier
termination of this Agreement.
15. Proprietary Materials. The Bank hereby provides MRU with a non-exclusive
royalty free right and license to use and reproduce the Bank's name, logo,
registered trademarks and service marks ("Proprietary Material") on the
Applications, Loan Agreements, marketing materials, and otherwise in connection
with fulfillment of MRU's obligations under this Agreement; provided, however,
that (a) MRU shall at all times comply with written instructions provided by
Bank regarding the use of its Proprietary Material, and (b) MRU acknowledges
that, except as specifically provided in this Agreement, it will acquire no
interest in Bank's Proprietary Material. Except as contemplated in Section
13(f), upon termination of this Agreement, MRU will cease using Bank's
Proprietary Material.
16. Relationship of Parties. The Parties agree that in performing their
responsibilities pursuant to this Agreement, they are in the position of
independent contractors. This Agreement is not intended to create, nor does it
create and shall not be construed to create, a relationship of partner or joint
venturer or any association for profit between Bank and XXX.
00. Expenses.
(a) Except as set forth herein, each Party shall bear the costs and
expenses of performing its obligations under this Agreement.
(b) MRU shall pay all ACH or wire transfer costs for ACH transfers or
wire transfers authorized by Bank and executed by the Funding
Institution pursuant to a Funding Statement.
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(c) MRU shall pay all costs of obtaining credit reports, delivering
adverse action notices, completing loan packages and closing loans.
(d) Each Party shall be responsible for payment of any federal, state,
or local taxes or assessments associated with the performance of its
obligations under this Agreement and for compliance with all filing,
registration and other requirements with regard thereto.
18. Examination. Each Party agrees to submit to any examination that may be
required by a Regulatory Authority having jurisdiction over the other Party,
during regular business hours and upon reasonable prior notice, and to otherwise
provide reasonable cooperation to the other Party in responding to such
Regulatory Authorities' inquiries and requests relating to the Program.
19. Inspection. Each Party, upon reasonable prior notice from the other Party,
agrees to submit to an inspection of its books, records, accounts, and
facilities relevant to the Program, from time to time, during regular business
hours subject, in the case of Bank, to the duty of confidentiality it owes to
its customers and banking secrecy and confidentiality requirements otherwise
applicable under Applicable Laws. All expenses of inspection shall be borne by
the Party conducting the inspection.
(a) Bank agrees that it shall provide to, or cause to be provided to,
MRU such access as is necessary to perform a daily reconciliation of
deposits and disbursements in the performance of its duties under
the Program Documents.
(b) MRU shall store all documentation and electronic data related to its
participation in the soliciting and processing of Loans, and shall
make such documentation and data available during any inspection by
Bank or its designee.
20. Governing Law. Except as preempted or controlled by federal law, this
Agreement shall be interpreted and construed in accordance with the laws of the
State of New York, without giving effect to the rules, policies, or principles
thereof with respect to conflicts of laws.
21. Severability. Any provision of this Agreement which is deemed invalid,
illegal or unenforceable in any jurisdiction, shall, as to that jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability,
without affecting in any way the remaining portions hereof in such jurisdiction
or rendering such provision or any other provision of this Agreement invalid,
illegal, or unenforceable in any other jurisdiction.
22. Assignment. This Agreement and the rights and obligations created under it
shall be binding upon and inure solely to the benefit of the Parties and their
respective successors, and permitted assigns. Neither Party shall be entitled to
assign or transfer any interest under this Agreement without the prior written
consent of the other Party; provided that, MRU may not assign this Agreement to
any Affiliate without Bank's prior written consent, which shall not be
unreasonably withheld. No assignment under this section shall relieve a Party of
its obligations under this Agreement occurring prior to such transfer.
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23. Third Party Beneficiaries. Nothing contained herein shall be construed as
creating a third-party beneficiary relationship between either Party and any
other Person.
24. Notices. All notices and other communications that are required or may be
given in connection with this Agreement shall be in writing and shall be deemed
received (i) on the day delivered, if delivered by hand; (ii) on the day
transmitted, if transmitted by facsimile or e-mail with receipt confirmed; or
(iii) three (3) Business Days after the date of mailing to the other Party, if
mailed first-class postage prepaid, at the following address, or such other
address as either Party shall specify in a notice to the other:
To Bank:
Doral Bank NY
000 Xxxx Xxxxxx Xxxxx
Xxx Xxxx, XX 00000
Telephone: 000-000-0000
Facsimile: _______________
To MRU: MRU Lending, Inc.
1114 Ave of the Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: _________________________
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
25. Amendment and Waiver. This Agreement may be amended only by a written
instrument signed by each of the Parties. The failure of a Party to require the
performance of any term of this Agreement or the waiver by a Party of any
default under this Agreement shall not prevent a subsequent enforcement of such
term and shall not be deemed a waiver of any subsequent breach. All waivers must
be in writing and signed by the Party against whom the waiver is to be enforced.
26. Entire Agreement. The Program Documents, including exhibits, constitute the
entire agreement between the Parties with respect to the subject matter thereof,
and supersede any prior or contemporaneous negotiations or oral or written
agreements with regard to the same subject matter.
27. Counterparts. This Agreement may be executed and delivered by the Parties in
any number of counterparts, and by different Parties on separate counterparts,
each of which counterpart shall be deemed to be an original and all of which
counterparts, taken together, shall constitute one and the same instrument.
28. Interpretation. The Parties acknowledge that each Party and its counsel have
reviewed and revised this Agreement and that the normal rule of construction to
the effect that any ambiguities are to be resolved against the drafting party
shall not be employed in the interpretation of this Agreement or any amendments
thereto, and the same shall be construed neither for nor against either Party,
but shall be given a reasonable interpretation in accordance with the plain
meaning of its terms and the intent of the Parties.
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29. Agreement Subject to Applicable Laws. If (a) either Party has been advised
by legal counsel of a change in Applicable Laws or any judicial decision of a
court having jurisdiction over such Party or any interpretation of a Regulatory
Authority that, in the view of such legal counsel, would have a materially
adverse effect on the rights or obligations of such Party under this Agreement
or the financial condition of such Party, (b) either Party shall receive a
lawful written request of any Regulatory Authority having jurisdiction over such
Party, including any letter or directive of any kind from any such Regulatory
Authority, that prohibits or restricts such Party from carrying out its
obligations under this Agreement, or (c) either Party has been advised by legal
counsel that there is a material risk that such Party's or the other Party's
continued performance under this Agreement would violate Applicable Laws, then
the Parties shall meet and consider in good faith any modifications, changes or
additions to the Program or the Program Documents that may be necessary to
eliminate such result. Notwithstanding any other provision of the Program
Documents, including Section 13 hereof, if the Parties are unable to reach
agreement regarding modifications, changes or additions to the Program or the
Program Documents within ten (10) Business Days after the Parties initially
meet, either Party may terminate this Agreement upon five (5) Business Days'
prior written notice to the other Party. A Party may suspend performance of its
obligations under this Agreement, or require the other Party to suspend its
performance of its obligations under this Agreement, if any event described in
subsections 29(a), (b) or (c) above occurs.
30. Force Majeure. If any Party shall be unable to carry out the whole or any
part of its obligations under this Agreement by reason of a Force Majeure Event,
then the performance of the obligations under this Agreement of such Party as
they are affected by such cause shall be excused during the continuance of the
inability so caused, except that should such inability not be remedied within
thirty (30) days after the date of such cause, the Party not so affected may at
any time after the expiration of such thirty (30) day period, during the
continuance of such inability, terminate this Agreement on giving written notice
to the other Party and without payment of a termination fee or other penalty. To
the extent that the Party not affected by a Force Majeure Event is unable to
carry out the whole or any part of its obligations under this Agreement because
a prerequisite obligation of the Party so affected has not been performed, the
Party not affected by a Force Majeure Event also is excused from such
performance during such period. A "Force Majeure Event" as used in this
Agreement shall mean an event that is not reasonably within the control of the
affected Party or its subcontractors (including, but not limited to, acts of
God, acts of governmental authorities, strikes, war, riot, acts of terrorism,
and any other causes of such nature), and which by exercise of reasonable due
diligence, such affected Party or its subcontractors could not reasonably have
been expected to avoid, overcome or obtain, or cause to be obtained, a
commercially reasonable substitute therefore. No Party shall be relieved of its
obligations hereunder if its failure of performance is due to removable or
remediable causes which such Party fails to remove or remedy using commercially
reasonable efforts within a reasonable time period. Either Party rendered unable
to fulfill any of its obligations under this Agreement by reason of a Force
Majeure Event shall give prompt notice of such fact to the other Party, followed
by written confirmation of notice, and shall exercise due diligence to remove
such inability with all reasonable dispatch.
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31. Arbitration.
(a) The Parties agree to resolve all disputes arising under or relating
to this Agreement by the following alternate dispute resolution
process: (a) the Parties agree to seek a fair and prompt negotiated
resolution within fifteen (15) Business Days of notice of a dispute
provided by one Party to the other Party, or such longer period of
time mutually agreed by the Parties; and (b) if the Parties do not
reach a mutually satisfactory resolution within the foregoing
period, the dispute shall be resolved by binding arbitration
conducted in accordance with the American Arbitration Association
("AAA") Commercial Arbitration Rules in effect on the date hereof,
as modified in this Agreement. The arbitrator selected shall
determine whether a claim arises out of or is related to this
Agreement. The Parties confirm that by agreeing to this alternate
dispute resolution process, they intend to give up their right to
have any dispute arising under or relating to this Agreement decided
in court by a judge or jury.
(b) Any arbitration initiated under this Section 31 shall be conducted
in New York, New York.
(c) Under any arbitration initiated under this Section 31, each Party
shall select an arbitrator, and the arbitrators selected by both
Parties shall select a third arbitrator who shall conduct the
arbitration between the Parties. Each of the arbitrators shall be an
attorney with at least fifteen (15) years experience in commercial
law.
(d) The arbitrators shall take such steps as may be necessary to hold a
private hearing within one hundred twenty (120) calendar days of the
initial demand for arbitration and to conclude the hearing within
three (3) calendar days, and the arbitrators' decision, which shall
be in writing, shall be made not later than fourteen (14) calendar
days after the hearing. The Parties have included these time limits
in order to expedite the proceeding, but they are not
jurisdictional, and the arbitrators may for good cause afford or
permit reasonable extensions or delays, which shall not affect the
validity of the award. The written decision of the arbitrators shall
contain a brief statement of the claim(s) determined, the award made
on each claim and the reasons for the disposition of each claim. The
arbitrators may not award punitive, consequential or incidental
damages in any arbitration initiated hereunder. Absent fraud,
collusion or willful misconduct by the arbitrators, the award shall
be final and judgment may be entered in any court having
jurisdiction thereof.
(e) In making the decision and award, the arbitrator shall apply
substantive federal and New York law, as applicable. All statutes of
limitations which would otherwise be applicable shall apply to any
arbitration proceeding hereunder.
(f) The terms of this Section 31 shall survive the expiration or earlier
termination of this Agreement.
- 16 -
32. Headings. Captions and headings in this Agreement are for convenience only,
and are not to be deemed part of this Agreement.
33. Privacy Law Compliance. Subject to Applicable Laws, Bank and MRU shall
comply with the privacy policy agreed upon by both Parties with respect to
Applicants and Borrowers. MRU shall be responsible for providing Applicants and
Borrowers with all required privacy disclosures on behalf of Bank.
34. Exclusivity. Subject to Section 13(b), during the term of this Agreement,
Bank shall not enter into any agreement(s) with parties other than MRU for the
origination by Bank of private student loans (i.e., not government guaranteed)
and the sale of such loans to a third party.
35. Press Releases / Statements. Neither Bank nor MRU may issue a press release
mentioning the other party without the prior consent and review of the other
party, which consent shall not be unreasonably withheld.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by
their duly authorized officers as of the date first written above.
Doral Bank NY FSB
By: /s/ Xxxx Xxx
-------------
Title: President
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MRU Lending, Inc.
By: /s/ Xxxxxx Xxxx
----------------------------
Title: Chief Financial Officer
- 18 -
Schedule 1
Definitions
(a) "ACH" means the Automated Clearinghouse.
(b) "Affiliate" means, with respect to a Party, a Person who directly or
indirectly controls, is controlled by or under common control with the
Party. For the purpose of this definition, the term "control" (including
with correlative meanings, the term controlling, controlled by and under
common control with) means the power to direct the management or policies
of such Person, directly or indirectly, through the ownership of
twenty-five percent (25%) or more of a class of voting securities of such
Person.
(c) "MRU Indemnified Parties" shall have the meaning set forth in Section
12(a).
(d) "Applicable Law" means all federal, state and local laws, statutes,
regulations and orders applicable to a Party or relating or affecting any
aspect of the program, and all requirements of any Regulatory Authority
having jurisdiction over a Party, as any such laws, statutes, regulations,
orders and requirements may be amended and in effect from time to time
during the term of this Agreement.
(e) "Applicant" means an individual who is a consumer who requests a Loan from
Bank.
(f) "Application" means any request from an Applicant for a Loan in the form
required by Bank.
(g) "Bank" shall have the meaning set forth in the introductory paragraph of
this Agreement.
(h) "Bank Indemnified Parties" shall have the meaning set forth in Section
12(b).
(i) "Borrower" means an Applicant to whom Bank has made a Loan and/or who is
liable, jointly or severally, for amounts owing with respect to a Loan.
(j) "Business Day" means any day, other than (i) a Saturday or Sunday, or (ii)
a day on which banking institutions in the State of New York are
authorized or obligated by law or executive order to be closed.
(k) "Claim Notice" shall have the meaning set forth in Section 12(e).
(l) "Confidential Information" means the terms and conditions of this
Agreement, and any proprietary information or non-public information of a
Party, including a Party's proprietary marketing plans and objectives.
(m) "Consumer Finance Materials" shall have the meaning set forth in Section
4.
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(n) "Credit Policy" means the minimum requirements of income, residency,
employment history, credit history, and/or other such considerations that
Bank uses to approve or deny an Application and to authorize originating a
Loan as may be in effect from time to time.
(o) "Disclosing Party" shall have the meaning set forth in Section 14(b)(2).
(p) "Effective Date": shall have the meaning set forth in the introductory
paragraph of this Agreement.
(q) "Force Majeure Event" shall have the meaning set forth in Section 30.
(r) "Funding Account" means a demand deposit account of Bank at the Funding
Institution against which checks are drawn for the payment of Loan
proceeds to Borrowers and/or Schools and ACH transfers or wire transfers
are settled for the payment of Loan proceeds to Borrowers and/or Schools.
(s) "Funding Amount" means the aggregate amount of all Loan proceeds to be
disbursed to Borrowers and/or Schools and/or third parties, as listed on a
Funding Statement.
(t) "Funding Date" means, with respect to each Funding Statement, the date on
which Bank disburses the Loan proceeds as provided on such Funding
Statement and in accordance with such Funding Statement.
(u) "Funding Institution" means the insured depository institution designated
by Bank through which Loan proceeds are paid to Borrowers and/or Schools.
(v) "Funding Statement" means the statement prepared by MRU each Business Day
that contains the computation of the Funding Amount, and all information
necessary for the transfer of Loan proceeds from the Funding Account to
the accounts designated by Borrowers and/or Schools and/or third parties
and such other information as set forth in Section 6(a) and as shall be
reasonably requested by Bank and mutually agreed by the Parties.
(w) "Holding Period" menas the time from which the loan is disbursed until it
is sold to a qualified third party such as MRU.
(x) "Indemnifiable Claim" shall have the meaning set forth in Section 12(d).
(y) "Insolvent" means the failure to pay debts in the ordinary course of
business, the inability to pay its debts as they come due or the condition
whereby the sum of an entity's debts is greater than the sum of its
assets.
(z) "Loan" means a closed-end installment loan originated by Bank pursuant to
the Program for the purpose of financing a Borrower's costs of higher
education, including specifically, but not limited to, tuition and related
expenses.
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(aa) "Loan Agreement" means the document containing the terms and conditions of
a Loan including all disclosures required by Applicable Law.
(bb) "Loan Sale Agreement" means that Loan Sale Agreement dated as of
_____________,____, between Bank and MRU pursuant to which Bank agrees to
sell to MRU and MRU agrees to purchase from Bank the Loans.
(cc) "Losses" shall have the meaning set forth in Section 12(a).
(dd) "Party" means either MRU or Bank and "Parties" means MRU and Bank.
(ee) "Person" means any legal person, including any individual, corporation,
limited liability company, partnership, joint venture, association, joint
stock company, trust, unincorporated organization, governmental entity, or
other entity of similar nature.
(ff) "Program" means the consumer student loan program to be offered by Bank to
Borrowers pursuant to the terms of this Agreement, initially as described
in Exhibit A attached hereto.
(gg) "Program Documents" means this Agreement and the Loan Sale Agreement.
(hh) INTENTIONALLY DELETED.
(ii) "Proprietary Materials" shall have the meaning set forth in Section 15.
(jj) "Regulatory Authority" means any federal, state or local regulatory agency
or other governmental agency or authority having jurisdiction over a Party
and, in the case of Bank, shall include, but not be limited to the Federal
Deposit Insurance Corporation.
(kk) "Restricted Party" shall have the meaning set forth in Section 14(a).
(ll) "School" means universities, colleges and other institutions of higher
learning to which Loan proceeds are delivered at the request of Borrowers.
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