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EXHIBIT 10.12
AGREEMENT TO GUARANTEE LOANS
THIS AGREEMENT is entered into as of the 1st day of June, 1998, by and between
UNITED STUDENT AID FUNDS, INC., a private nonprofit corporation organized under
the General Corporation Law of the State of Delaware ("USA Funds") and Star
Bank, N.A. as Trustee for Student Loan Funding ("Lender").
WITNESSETH:
WHEREAS, USA Funds, a non profit corporation with objectives and purposes which
are exclusively educational and charitable, has entered into agreements with the
U.S. Secretary of Education pursuant to the Act; and
WHEREAS, the Lender is desirous of lending money to encourage education through
the Loan program of USA Funds in the manner described in this Agreement; and
WHEREAS, the Lender has full legal power and authority to contract for the
performance of such guarantee services, qualifies as an "eligible lender" under
the Act and is prepared to engage in the transactions contemplated by this
Agreement; and
WHEREAS, USA Funds is desirous of making its Loan Program and related services
available to the Lender, subject to the terms and conditions set forth herein;
NOW, THEREFORE, inconsideration of the initial loan which the Lender makes,
causes to be made or acquires, and in further consideration of the foregoing
premises and the mutual covenants contained in this Agreement, and of other good
and valuable consideration, the receipt of which is hereby acknowledged, USA
Funds and the Lender agree as follows:
ARTICLE I DEFINITIONS
As used herein, the following words have the meanings respectively indicated:
"Act" means Title IV of the Higher Education Act of 1965 (20 U.S.C. Section 1071
et seq.) As amended and in effect from time to time, or any successor enactment
thereto, and the effective regulations promulgated thereunder and any binding
directives issued by the U.S. Department of Education.
"Agreement" means this Agreement to Guarantee Loans between USA Funds and the
Lender.
"Borrower" means an individual who is the maker of a Note and who obtains a Loan
from the lender in accordance with the Act and the Loan Program.
"Default" means with respect to any Note, the occurrence of any event that
constitutes a default under the terms of the Act.
"Educational Institution" means any institution of postsecondary education that
is an "eligible institution" under the Act and is eligible under the Loan
Program.
"Federal Reinsurance" means the obligation assumed by the Federal government as
set forth in the Act and contracts between USA Funds and the U.S. Department of
Education.
"Guarantee" means a commitment by USA Funds to pay the Lender a percentage of
the unpaid principal balance plus accrued unpaid interest of a Loan upon
submission by the Lender of a valid claim and supporting documentation in
accordance with the Act, the Loan Program, and the Policies.
"Guarantee Fee" means a charge based upon the principal Loan amount which charge
is collected from the Lender by USA Funds. The Lender may cause this charge to
be passed on to the Borrower.
"Guarantee Reserve" means an account maintained by USA Funds for the Guarantee
of Loans and
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payment of claims in accordance with the terms of this Agreement.
"Limitation" means an action taken by USA Funds that restricts the Lender's
participation in the Loan Program.
"Loan" means a disbursement(s) of money, contingent upon an agreement to repay,
made by the Lender pursuant to the Act, the Loan program, and the Policies.
"Loan Application" means the application for a Loan on a form approved by the
U.S. Department of Education and USA Funds, which form must be executed by an
applicant, certified by an Educational Institution, and accepted by a Lender in
accordance with the Policies.
"Loan Program" means the procedures and policies for implementing and
maintaining a Loan Guarantee under the provisions of the Act, Policies,
applicable law, and regulations, and as otherwise agreed to by and between the
Lender and USA Funds.
"Note" means a promissory note of a Borrower for a Loan set forth upon the
appropriate form approved by USA Funds, which note meets the criteria set forth
by the Policies and the Act.
"Policies" mean the policies adopted and issued by USA Funds describing the
administration of the Loan Program, including any subsequently issued written
notices.
"Special Allowance" means those sums which are payable by the U.S. Department of
Education to the Lender under the Act.
"Student" means an "eligible student" as described in the Act.
"Suspension" means the temporary ineligibility of the Lender from participation
in the Loan Program.
"Termination" means the removal of the Lender from participation in the Loan
Program.
ARTICLE II PROGRAM ADMINISTRATION
A. By this Agreement USA Funds and the Lender hereby agree to
participate in the Loan Program as follows:
1. The Lender agrees to make Loans or cause Loans to be made
to eligible Borrowers pursuant to the terms of the Loan Program;
2. USA Funds agrees to Guarantee Loans originated and
maintained in accordance with the terms of the Loan Program; and
3. USA Funds agrees to provide certain administrative services
in connection with each Loan Guarantee as required by the Loan Program and the
Act.
B. Loans may be originated only on behalf of Students attending
Educational Institutions.
C. Administrative services that USA funds shall provide for the Lender
under the Loan Program in accordance with this Agreement and the Policies are as
follows:
1. Processing Loan Applications to determine if such Loan
Applications are eligible for Guarantee;
2. Recording Borrower status from time to time as reported by
the Lender and Educational Institutions;
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3. Providing certain management and information reports for
the Lender and Educational Institutions; and
4. Providing preclaims assistance and claims processing for
delinquent and defaulted Loans.
D. The lender agrees that, in respect of all Loans made or acquired by
it under the Loan Program of USA Funds and all Notes held or acquired by the
Lender from time to time, it will:
1. Comply with the Act;
2. Cause reasonable care and diligence to be exercised in the
making, servicing and collection of Loans, as prescribed in the Policies;
3. Use the Loan Application, Note and such other forms
developed or otherwise approved by USA Funds;
4. Cause a Guarantee Fee to be paid to USA Funds in accordance
with the requirements of the Loan Program and Article IV of this Agreement;
5. Comply with all procedures, policies and conditions on its
part to be performed as set forth in this Agreement and the Policies; except
when the provisions of this Agreement of the Policies are inconsistent with the
Act as a result of changes to the Act, in which case the Act is controlling;
6. Comply with all Federal and state laws and regulations
applicable to the Loan program, including but not limited to applicable portions
of the Federal Consumer Credit Protection Act and the Equal Credit Opportunity
Act; and
7. Provide promptly to USA Funds such information and reports
as may from time to time be reasonably requested by USA Funds.
E. The Lender shall cause all Loan disbursements to be made by check or
draft requiring the personal endorsement of the Borrower or by electronic funds
transfer. Except as expressly provided in the Act, the Lender will not accept
authorization of anyone, even by power of attorney, to endorse a check or draft
on behalf of the Borrower. The Lender shall cause the Loan to be disbursed
jointly to the Borrower and the Educational Institution if so required by the
terms of the Loan Program.
F. USA Funds will in accordance with the Act continue its Guarantee of
a Loan if an extension of the maturity date is required as a result of the
Borrower's eligibility under the Act for a deferment or forbearance; provided,
however, that such continuance of USA Funds' Guarantee of a Loan shall be only
for so long as an extension of the maturity date is in accordance with the Act
and the Loan Program.
G. The Lender will pursuant to the direction of USA Funds repay or
cause the repayment of any Special Allowance received by the Lender under the
Act to which the Lender is not rightfully entitled.
H. Subject to the prior written approval of the Lender, which approval
shall not be unreasonably withheld, USA Funds may transfer the Guarantee of
Loans to any other guarantor which has given to USA Funds its prior written
approval of such transfer.
I. By this Agreement, USA Funs and the Lender agree that upon the
filing of a claim by the Lender, such claim will be processed in the following
manner:
1. In the event of a Default in respect of a Loan, the lender
will follow (or cause to be followed) the procedure set forth in the Policies.
USA Funds does not guarantee payment by the Borrower of any delinquency charges
imposed for late payments and will not accept a Default claim based solely on
non-payment of such charges. Upon receipt by USA Funds from the Lender (or
Servicer) of a
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Default notice together with the Notice (assigned to USA Funds), the Loan
Application, and evidence satisfactory to USA Funds that the Loan evidenced by
such Note was originated and serviced, and collection efforts were made, in
accordance with applicable laws and regulations and with the Policies, USA Funds
will pay to the Lender the amount of the unpaid balance of principal and
interest due on such Note under the terms of the Act and the Policies (other
than any portion of such interest payable by the U.S. Department of Education
under the Act), provided the Lender has complied in all material respects with
the requirements of the Loan Program, this Agreement, and the Policies in
respect of such Note. USA Funds will thereupon succeed to all the rights of the
Lender under such Note. No claim submitted to USA Funds by the Lender with
respect to a Loan that has been Guaranteed will be paid by USA Funds unless USA
Funds has received from the Lender (or Servicer) the appropriate documentation.
2. Upon bankruptcy, death, or permanent and total disability,
as defined in the Act, of the Borrower USA Funds will pay to the Lender the
amount of the unpaid balance of principal and interest due on such Loan under
the terms of the Act and the Policies (other than any portion of such interest
payable by the U.S. Department of Education under the Act), provided the Lender
has complied in all material respects with the requirements of the Loan Program,
this Agreement and the Policies in respect of such Loan.
J. Nothing contained in this Agreement shall obligate the Lender to
make, certify, cause to certify or acquire any particular Loan or number of
Loans under this Loan Program.
K. The Lender will permit the U.S. Secretary of Education or USA Funds
or both to examine during normal business hours all Loan records and files, upon
reasonable notice and at reasonable intervals, for the purpose of verifying the
accuracy of information provided by the Lender under the Act an din order to
conduct an audit and compliance review.
L. If USA Funds determines that the Lender has violated the terms of
this Agreement or the Loan Program, USA Funds shall take such action as is
necessary to protect its interests. This action may include but not be limited
to implementation o the Limitation, Suspension, or Termination procedures set
out in the Policies.
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS BY THE LENDER
The Lender represents and warrants to, and covenants with, USA Funds that:
A. The Lender is a duly authorized "eligible lender" under the Act in
every state in which it is originating Loans under the Act as well as the state
in which it is organized and incorporated and has authorized the execution and
delivery of this Agreement.
B. The Lender is and will continue to qualify at all times during the
term of this Agreement as an "eligible lender" under the Act.
C. The Lender will, at all times, conform its actions, policies and
procedures t the Act, this Agreement and all applicable Federal and state laws
and regulations.
ARTICLE IV GUARANTEE FEE AND GUARANTEE RESERVE
A. As partial payment for the administrative services provided by USA
Funds for the Lender and in order for USA Funds to maintain a Guarantee Reserve
sufficient to Guarantee Loans in accordance with this Agreement USA Funds will
charge to the Lender and the Lender may charge each Borrower a Guarantee Fee
which fee shall not exceed the amount allowable under the Loan Program.
B. The Lender shall be billed monthly by USA Funds with an itemized
statement listing each Loan Application Guaranteed and the Guarantee Fee. USA
Funds will automatically place the Lender on the Guarantee Fee billing system.
The Lender must pay any Guarantee Fee due within thirty (30) days of
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billing. The Lender will be charged interest at the rate of one percent (1%) per
month, twelve percent (12%) per annum, for past due Guarantee Fee bills. If the
Guarantee Fee for a Loan is not paid within one hundred twenty (12) calendar
days the Guarantee on that Loan will be canceled.
C. So long as the Lender is current in its payment of Guarantee Fee
billings USA Funds will Guarantee each new Loan made to a Borrower, or purchased
or acquired that such loan was Guaranteed by USA Funds at the time for such
purchase or acquisition) by the Lender pursuant to this Agreement; provided,
however, that USA Funds shall not be obligated to Guarantee any such Loan if:
1. Such Guarantee would cause the aggregate amount of unpaid
principal and interest of all Notes to exceed the Guarantee capacity of USA
Funds for the Loan Program or the Educational Institution allocation for which
the Guarantee is to be issued, or
2. USA Funds in its sole discretion determines that the
procedures and requirements of the Act and other applicable law and regulations,
this Agreement, or the Policies have not been complied with in respect to such
Loan.
D. The Guarantee Reserve of USA Funds will be held, maintained, and
invested solely in accordance with the prevailing standards of prudent
management in the disposition of funds required for fiduciaries by Title 12,
Section 3302 of the Delaware Code of 1953, as amended. By execution hereof,
Lender consents to the management of said funds pursuant to the investment
policies and procedures adopted by USA Funds from time to time.
ARTICLE V TERMINATION
Except with respect to Loans that have been Guaranteed by USA Funds and continue
to be outstanding under this Agreement, this Agreement may be terminated by
either party with or without cause upon not less than ninety (90) calendar days
written notice to the other party. Such termination will not affect any Notes
that are outstanding or duties arising prior to the effective date of the
termination.
ARTICLE VI LIMITATION OF LIABILITY AND INDEMNIFICATION
A. If the Lender violates or fails to comply with any applicable law or
governmental regulations in respect of a Loan or participation in the Loan
Program, then the Lender agrees to assume liability for, and does hereby
indemnify, protect, and keep harmless USA Funds, its successors and assigns,
from and against, any and all liabilities, losses, and claims, imposed on,
incurred by or asserted against USA Funds, relating to or arising out of such
violation or failure by the Lender to comply, regardless of whether USA Funds
purchased such Loan from the Lender.
B. The liability of USA Funds under this Agreement shall be limited to
payment of the Guarantee under Paragraph I of Article II of this Agreement and
this shall constitute its sole liability under this Agreement. USA Funds shall
not be liable for any indirect, incidental or consequential damages (including
but not limited to lost profits, lost revenue, or failure to realize expected
savings) regardless of the form of the action and whether such damages are
foreseeable.
ARTICLE VII MISCELLANEOUS
A. ASSIGNMENT/SUBCONTRACT. This Agreement will inure to the benefit of
and be binding upon the parties and their respective successors and permitted
assigns; provided, however, that:
1. This Agreement may not be assigned in whole or in part by
USA Funds without the prior express written consent of Lender, which consent
will not be reasonably withheld; provided, however, that USA Funds shall have
the right without the consent of Lender to assign its rights and obligations
hereunder to any affiliate or any transferee of all or substantially all of the
assets of USA
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Funds, which contracts with the U.S. Department of Education (or its successors)
under the Act, or to subcontract its obligations to any person.
2. Lender shall not assign any rights or obligations under the
Agreement in whole or in part without the prior express written consent of USA
Funds, which consent will not be unreasonably withheld; provided, however, that
Lender shall have the right without the consent of USA Funds to assign its
rights and obligations hereunder to any affiliate or any transferee of all or
substantially all of the assets of Lender, or to subcontract its obligations to
any person.
B. AMENDMENT. Except as otherwise provided in this Agreement, this
Agreement may not be varied by oral agreement, but only as agreed to in writing
by all parties.
C. WAIVER OF RIGHTS. No failure by any party to exercise, or any delay
in exercising, and no course of dealing with respect to any right of such party
or any obligation of any other party under this Agreement will operate as a
waiver, unless, and only to the extent, agreed to in writing by all parties. Any
single or partial exercise by any party of its rights shall not preclude such
party from any other or further exercise of such right or the exercise of any
other right. Any single or partial waiver by any party of any obligation of any
other party under this Agreement will constitute a waiver of such obligation
only as specified in such waiver and will not constitute a waiver of any other
obligation.
D. COMMUTATIVE REMEDIES. Except as otherwise provided in this
Agreement, no remedy by the terms of this Agreement conferred upon or reserved
to a party is intended to be exclusive of any other remedy, but each and every
such remedy shall be cumulative and in addition to every other remedy given
under this Agreement or existing at law or in equity or by statute on or after
the date of this Agreement including without limitation, the right to such
equitable relief by way of injunction to prevent the breach or threatened breach
of any of the provisions of this Agreement or to enforce the performance.
E. SEVERABILITY. Any provision of this Agreement that is held to be
prohibited, unenforceable, or not authorized by any court of competent
jurisdiction will, as to such jurisdiction, be ineffective to the extent of such
prohibition, unenforceability, or non-authorization without invalidating the
remaining provisions or affecting the validity, enforceability, or legality of
such provision in any other jurisdiction.
F. GOVERNING LAW; VENUE; ENTIRE AGREEMENT. Except to the extent that
this Agreement may be governed by Federal law, this Agreement is governed by,
interpreted, construed and enforced in accordance with the laws of the State of
Indiana, without reference to its principles of conflict of laws. A lawsuit
under this Agreement shall only be brought in a court of competent jurisdiction
located within the State of Indiana.
This Agreement constitutes the entire agreement between the parties and
supersedes any and all prior agreements, written or oral, not incorporated
herein, with respect to the subject matter of this Agreement. All prior
writings, correspondence, memoranda, agreements, representations, statements,
warranties, covenants, negotiations, and undertakings, express or implied, of
any kind or character whatsoever with respect to the subject matter of this
Agreement are superceded.
G. NOTICES. Any notice required or permitted by this Agreement shall be
in writing and shall be deemed to have been given if send by first class mail,
overnight carrier, facsimile, ro personal delivery, addressed (i) if to USA
Funds, to the attention of General Counsel, Legal Division, at 00 Xxxxx Xxxxxxxx
Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000, (ii) if to the Lender, at the address
indicated in this Agreement, or (iii) at such other address as the party to be
notified has designated upon reasonable notice. Notices made pursuant to this
paragraph by facsimile, overnight carrier, ro personal delivery will be deemed
to be effective upon receipt. Notices made pursuant to this paragraph by first
class mail will be deemed to be effective no later than the fifth business day
following the mailing of such notice.
H. CONFIDENTIAL/PROPRIETARY MATERIALS. The terms and conditions of this
Agreement shall be considered confidential All materials, procedures, written
instruments, files, and records developed by either party specifically pursuant
to this Agreement are and shall be treated as proprietary in nature. Each
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party to this Agreement has developed or may develop materials, procedures,
written instruments, files, or records which may be similar to those involved in
this Agreement. Neither party to this Agreement shall have or acquire any
proprietary or any other right whatsoever in any such materials, procedures,
written instruments, files, or records developed by the other party. Neither
party to this Agreement may benefit from, deal in, sell, license, publish, use,
or otherwise exploit for any purpose those materials, procedures, written
instruments, files, ro records developed by the other party except as expressly
provided in this Agreement. This Agreement shall not in any way restrict the
right of each party, for its own exclusive benefit, to deal in, sell, license,
publish, use, or otherwise exploit for all purposes those materials, procedures,
written instruments, files, or records developed by it.
I. NO RECOURSE. No recourse under or upon this Agreement or any claim
based thereon shall be had against any incorporator, member, officer, employee,
or trustee, as such, past, present, or future, of a party or of any successor
organizations, either directly or through a party or any successor
organizations. This Agreement is solely a corporate obligation and no personal
liability against any incorporator, member, officer, employee, or trustee, past,
present or future of the parties shall attach through a party or any successor
corporations, because of this Agreement.
J. EXECUTION. This Agreement will not be binding on either party until
it has been executed and delivered by both parties. Delivery may be by
facsimile. This Agreement may be executed in any number of counter party, each
of which shall be an original, but which together constitute one and the same
instrument.
K. INTERPRETATION/CONSTRUCTION. In this Agreement unless the context
otherwise requires:
Any headings preceding the tests of the several articles and
sections of this Agreement, and any table of contents or marginal notes
appending to copies, shall be solely for convenience of reference and shall not
constitute a party of this Agreement, nor shall they affect its meaning,
construction or effect.
L. AUTHORITY. The parties represent that the undersigned are duly
authorized representatives of the parties.
M. INDEPENDENT PARTIES. The parties agree that no legal relationship of
an kind exists as a result of this Agreement, other than the covenants expressly
contained herein. This Agreement shall not constitute, create, give effect to or
otherwise imply a joint venture, partnership or business organization of any
kind. The parties to this Agreement are independent parties and the personnel of
one party shall not deemed the personnel of the other. Nothing in this Agreement
shall grant to either party any right to make commitments of any kind or to
create any obligation for or on behalf of the other without the prior written
consent of the other party, except to the extent stated herein.
N. FORCE MAJEURE. If a party is delayed from competing performance of
any or all of its obligations under this Agreement by an act of God or any other
occurrence beyond its reasonable control, then performance shall be excused for
as long as it is reasonably necessary to complete performance.
O. LITIGATION COSTS AND ATTORNEYS FEES. If any action, at law or
equity, including an action for declaratory relief, is brought to enforce or
interpret this Agreement, then the prevailing party shall be entitled to recover
its reasonable costs, expenses, and attorney fees from the other party, in
addition to other relief that maybe awarded.
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IN WITNESS WHEREOF, United Student Aid Funds, Inc. and the Lender have each
caused this Agreement to Guarantee Loans to be executed by their respective
authorized officers and to take effect on the date first above written.
Star Bank, N.A. as Trustee for
Student Loan Funding UNITED STUDENT AID FUNDS, INC.
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Lender
By: /s/ Xxxxx X. Xxxxxxx By: /s/ June X. XxXxxxxxx
----------------------------------- ------------------------------
Authorized Signature Authorized Signature
Xxxxx X. Xxxxxxx, Senior Trust Officer June X. XxXxxxxxx
----------------------------------------- ------------------------------
Printed Name, Title Printed Name, Title
000 Xxxxxx Xxxxxx, XX0000, X.X. Xxx 0000
-----------------------------------------
Xxxxxxx
Xxxxxxxxxx, Xxxx 00000-0000
-----------------------------------------
City, State, Zip
00-0000000
-----------------------------------------
Federal Identification Number
829626, 830631, 831008, 831299, 831455,
831640, 831692, 831785, 833361, 833207
-----------------------------------------
ED Lender Code Number
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CONSOLIDATION LOAN PROGRAM
AGREEMENT TO GUARANTEE CONSOLIDATION LOANS
THIS AGREEMENT is entered into as of the 1st day of June, 1998, by and between
UNITED STUDENT AID FUNDS, INC., a private nonprofit corporation organized under
the General Corporation Law of the State of Delaware ("USA Funds") and Star
Bank, N.A. as Trustee for Student Loan Funding ("Lender").
WITNESSETH:
WHEREAS, USA Funds, a non profit corporation with objectives and purposes which
are exclusively educational and charitable, has entered into a reinsurance
agreement with the U.S. Secretary of Education pursuant to the Act; and
WHEREAS, USA Funds maintains facilities for the provision of guarantee services
with respect to approved loans made to Eligible Borrowers for the consolidation
of their objections with respect to Eligible Student Loans; and
WHEREAS, USA Funds is desirous of making its consolidation loan guarantee
program and related services available to Lender, subject to the term sand
conditions set forth herein; and
WHEREAS, the Lender has full legal power and authority to contract for the
performance of such guarantee services, qualifies as an "eligible lender" under
the Act for the making of Consolidation Loans and is prepared to engage in the
transactions contemplated by this Agreement; and
NOW, THEREFORE, inconsideration of the initial Consolidation Loan which the
Lender makes hereunder, and in further consideration of the foregoing premises
and the mutual covenants contained in this Agreement, and of other good and
valuable consideration, the receipt of which is hereby acknowledged, USA Funds
and the Lender agree as follows:
ARTICLE I DEFINITIONS
As used herein, the following words have the meanings respectively indicated:
"Act"means Title IV of the Higher Education Act of 1965 (20 U.S.C. Section 1071
et seq.) As amended and in effect from time to time, or any successor enactment
thereto, and the effective regulations promulgated thereunder and any binding
directives issued by the U.S. Department of Education.
"Agreement" means this Agreement to Guarantee Consolidation Loans between USA
Funds and the Lender and any amendments thereto.
"Borrower" means an Eligible Borrower who is the maker of a Note and who obtains
a Consolidation Loan from the Lender in accordance with the Act, the
Certificate, and this Agreement.
"Certificate" means the instrument of comprehensive insurance coverage issued by
USA Funds in accordance with the Act and executed by the Lender.
"Consolidation Loan" means disbursement of money, contingent upon an agreement
to repay, made by the Lender pursuant to Section 428C of the Act (20 U.S.C.
Section 1078.3), or any successor enactment thereto, the Policies, and this
Agreement.
"Consolidation Loan Program" means the procedures and policies for implementing
and maintaining each Consolidation Loan guaranteed under the provisions of the
Act, applicable law and regulations, the Policies, and as otherwise agreed to by
and between the Lender and USA Funds in accordance with this Agreement.
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"Default" means with respect to any Note, the occurrence of any event that
constitutes a default under the terms of the Act.
"Eligible Borrower" means as "eligible borrower" of a Consolidation Loan as
described in the Act and the Policies.
"Eligible Student Loan" means an education loan eligible for consolidation as
described in the Act.
"Federal Reinsurance" means the risk assumed by the Federal government as set
forth in the Act.
"Guarantee" means a commitment by USA Funds to pay the Lender a percentage of
the unpaid principal balance plus accrued unpaid interest of a Consolidation
Loan, as provided by the Act and the Policies, upon submission by the Lender of
a valid claim and supporting documentation in accordance with the Act, the
Consolidation Loan Program, the Certificate, and the Policies.
"Limitation" means an action taken by USA Funds that restricts the Lender's
participation in the Consolidation Loan Program.
"Note" means a promissory note of a Borrower for a Consolidation Loan set forth
upon the appropriate form approved by USA Funds, which note meets the criteria
set forth by the Policies and the Act.
"Policies" mean the policies adopted and issued by USA Funds describing the
administration of the Consolidation Loan Program, including any subsequently
issued written notices.
"Suspension" means the temporary ineligibility of the Lender from participation
in the Consolidation Loan Program.
"Termination" means the removal of the Lender from participation in the
Consolidation Loan Program.
ARTICLE II PROGRAM ADMINISTRATION
A. By this Agreement USA Funds and the Lender hereby agree to
participate in the Consolidation Loan Program as follows:
1. The Lender agrees to make Consolidation Loans or cause
Consolidation Loans to be made only to Eligible Borrowers pursuant to the terms
of the Consolidation Loan Program;
2. USA Funds agrees to provide for the Guarantee of
Consolidation Loans which have been processed in accordance with the terms of
the Consolidation Loan Program; and
3. USA Funds agrees to provide administrative services for the
continued maintenance of each Consolidation Loan Guaranteed as required by the
Consolidation Loan Program and the Act.
B. A Consolidation Loan may be Guaranteed only if the Lender fully
complies with the Policies and the terms and conditions for Consolidation Loans
as set forth in the Act.
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C. Administrative services that USA Funds will provide for the Lender
under the Consolidation Loan Program are as follows:
1. The provision of management and information reports for the
Lender;
2. The provision of preclaims assistance and claims
processing; and
3. The provision of all other services and duties required to
be performed by a guarantor under the Act with respect to Consolidation Loans
under the Consolidation Loan Program,
D. The Lender agrees that, with respect to all Consolidation Loans made
or acquired under the Consolidation Loan Program of USA Funds and all Notes held
or acquired by the Lender from time to time:
1. It will exercise or cause to be exercised reasonable care
and diligence in the making, servicing, and collection thereof, as prescribed in
this Agreement, the Certificate, and the Policies;
2. It will originate a Consolidation Loan to an Eligible
Borrower (on request of that Borrower) only if The Eligible Borrower certifies
that he or she has no other application pending for a Consolidation Loan and (i)
it holds an outstanding Eligible Student Loan of that Eligible Borrower that has
been selected by the Eligible Borrower for consolidation, or (ii) the Eligible
Borrower certifies that he or she has sought and has been unable to obtain a
Consolidation Loan with income-sensitive repayment terms acceptable to the
Eligible Borrower from the holders of the Eligible Student Loans (which are so
selected for consolidation) of that Eligible Borrower.
3. It will make use of the Note and such other forms approved
by USA Funds;
4. It will cause each Consolidation Loan originated by R to
bear interest on the unpaid principal balance of such Consolidation Loan at an
annual rate that is less than or equal to the rate specified by the Act;
5. It will cause each Consolidation Loan originated by it to
be subject to repayment in accordance with the terms of the Certificate and the
Act;
6. It will cause each Consolidation Loan originated by it to
be made in an amount which is equal to the sum of the unpaid principal, accrued
unpaid interest, collection charges, and late charges of all Eligible Student
Loans received by the Borrower and selected for consolidation, and which is not
less than the minimum amount required for the eligibility of the Borrower under
the Act;
7. It will cause the proceeds of each Consolidation Loan
originated by the Lender to be paid by the Lender to the holder or holders of
the Eligible Student Loans received by the Borrower and selected for
consolidation in order to discharge the liability of the Borrower on such
Eligible Student Loans;
8. It will offer a choice of repayment schedules, established
by the Lender in accordance with the Act, to the Borrower;
9. It will comply with all Federal and state laws and
regulations, and the Policies, applicable thereto, including but not limited to
the Federal Fair Credit Reporting Act and the Equal Credit Opportunity Act; and
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10. It will provide promptly to USA Funds such information and
reports as may from time to time be reasonably requested by USA Funds.
E. The Lender will, pursuant to the direction of USA Funds, repay or
cause the repayment to the US Department of Education of any special allowance
(as described in the Act) received by the Lender under the Act to which the
Lender is not rightfully entitled.
F. By this Agreement, USA Funds and the Lender agree that upon the
filing of a claim by the Lender, such claim shall be processed in the following
manner:
1. In the event of a Default, the Lender will follow (or cause
to be followed) the procedure set forth in The Policies and the Act. USA Funds
does not Guarantee payment by the Borrower of any delinquency charges imposed
for late payments and will not pay the Lender any such delinquency charges. Upon
receipt by USA Funds from the Lender (or servicer) of a request for claim
reimbursement form together with the Note (assigned to USA Funds) and evidence
satisfactory to USA Funds that the Consolidation Loan evidenced by such Note was
originated and serviced, and collection efforts were made, in accordance with
applicable laws, regulations and with the Policies, USA Funds will pay to the
Lender the percentage of the amount of the unpaid balance of principal and
interest due on such Note under the terms of the Act and the Policies (other
than any portion of such interest payable by the U.S. Department of Education
under the Act) provided the Lender has complied in all material respects with
the requirements of the Consolidation Loan Program, the Certificate. this
Agreement. and the Policies. USA Funds will succeed to all the rights of the
Lender under such Note.
2. Upon the filing of a valid claim, other than a Default
claim, as defined in the Act and the Policies, USA Funds will pay to the Lender
the percentage of the amount of the unpaid balance of principal and interest due
on such Note under the terms of the Act and the Policies (other than any portion
of such interest payable by the U.S. Department of Education under the Act)
provided the Lender has complied in all material respects with the requirements
of the Consolidation Loan Program, the Certificate, this Agreement, and @
Policies.
G. USA Funds reserves the right, upon ninety (90) calendar days written
notice, to charge to the Lender a fee, or increase any fee charged the Lender,
to cover the costs io USA Funds of guaranteeing new Consolidation Loans pursuant
to this Agreement and the Certificate.
H. Nothing contained in this Agreement will obligate the Lender to
make, certify, cause to certify or acquire any particular Consolidation Loan or
number of Consolidation Loans under the Consolidation Loan Program.
I. The Lender will permit the U.S. Secretary of Education or USA Funds
or both to examine during normal business hours all 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 under the Act
and in order to conduct an audit and compliance review.
J. If USA Funds determines that the Lender has violated the terms of
this Agreement or the Consolidation Loan Program, USA Funds may take such action
as is necessary to protect its interests. This action may include but not be
limited to implementation of the Limitation, Suspension, or Termination
procedures set out in the Policies.
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ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS BY THE LENDER
The Lender represents and warrants to, and covenants with, USA Funds that:
A. The Lender is a duly authorized 'eligible lender' under the Act in
every state in which it is originating Consolidation Loans under the Act as well
as the state in which it is organized and incorporated and has authorized the.
execution and delivery of this Agreement.
B. The Lender is and will continue to qualify at all times during the
term of this Agreement as an "eligible lender" under the Act.
C. The Lender will, at all times, conform its actions, policies and
procedures to the Act, this Agreement, all applicable Federal and state laws and
regulations, and the Policies.
ARTICLE IV TERMINATION
Except with respect to Consolidation Loans that have been Guaranteed by USA
Funds and continue to be outstanding under this Agreement, this Agreement may be
terminated by either party with or without cause upon not less than ninety (90)
calendar days written notice to the other party. Such termination will not
affect any Notes that are outstanding or duties arising prior to the effective
date of the termination.
ARTICLE V LIMITATION OF LIABILITY AND INDEMNIFICATION
A. If the Lender violates or fails to comply with any applicable law or
governmental regulations in respect of a Consolidation Loan or participation in
the Consolidation Loan Program, then the Lender agrees to assume liability for,
and does hereby indemnify, protect, and keep harmless USA Funds, its successors
and assigns, from and against, any and all liabilities, losses, and claims,
imposed on, incurred by, or asserted against USA Funds, relating to or arising
out of such violation or failure by the Lender to comply, regardless of whether
USA Funds purchased such Consolidation Loan from the Lender.
B. The liability of USA Funds under this Agreement shall be limited to
payment of the Guarantee under Paragraph F of Article 11 of this Agreement and
this shall constitute its sole liability under this Agreement. USA Funds shall
not be liable for any indirect, incidental or consequential damages (including
but not limited to lost profits, lost revenue, or failure to realize expected
savings) regardless of the form of the action and whether such damages are
foreseeable.
ARTICLE VI MISCELLANEOUS
A. Assignment/Subcontract. This Agreement will inure to the benefit of
and be binding upon the parties and their respective successors and permitted
assigns; provided, however, that:
1. This Agreement may not be assigned in whole or in part by
USA Funds without the prior express written consent of Lender, which consent
will not be unreasonably withheld; provided, however, that USA Funds shall have
the right without the consent of Lender to assign its rights and obligations
hereunder to any affiliate or any transferee of all or substantially all of the
assets of USA Funds, which contracts with the U.S. Department of Education (or
its successors) under the Act or to subcontract its obligations to any person.
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2. Lender shall not assign any rights or obligations under the
Agreement in whole or in part without the prior express written consent of USA
Funds, which consent will not be unreasonably withheld; provided, however, that
Lender shall have the right without the consent of USA Funds to assign its
rights and obligations hereunder to any affiliate or any transferee of all or
substantially all of the assets of Lender, or to subcontract is obligations to
any person.
B. Amendment. Except as otherwise provided in this Agreement. this
Agreement may not be varied by oral agreement, but only by an instrument in
writing executed by both parties.
C. Waiver of Rights. No failure by any party to exercise, or any delay
in exercising, and no course of dealing with respect to any right of such party
or any obligation of any other party under this Agreement will operate as a
waiver thereof, unless, and only to the extent, agreed to in writing by all
parties hereto. Any single or partial exercise by any party of its rights shall
not preclude such party from any other or further exercise of such right or the
exercise of any other right. Any single or partial waiver by any party of any
obligation of any other party under this Agreement will constitute a waiver of
such obligation only as specified in such waiver and will not constitute a
waiver of any other obligation.
D. Cumulative Remedies. Except as otherwise provided in this Agreement,
no remedy by the terms of this Agreement conferred upon or reserved to a party
is intended to be exclusive of any other remedy, but each and every such remedy
shall be cumulative and in addition to every other remedy given under this
Agreement or existing at law or in equity or by statute on or after the date of
this Agreement including, without limitation, the right to such equitable relief
by way of injunction, mandatory or prohibitory, to prevent the breach or
threatened breach of any of the provisions of this Agreement or to enforce the
performance hereof.
E. Severability. Any provision of this Agreement which is held to be
prohibited, unenforceable. or not authorized by any court of competent
jurisdiction will, as to such jurisdiction, be ineffective to the extent of
such prohibition, unenforceability, or non-authorization without invalidating
the remaining provisions hereof or affecting the validity, enforceability, or
legality of such provision in any other jurisdiction.
F. Governing Law; Venue; Entire Agreement. Except to the extent that
this Agreement may be governed by Federal law, this Agreement is governed by,
interpreted, construed and enforced in accordance with the laws of the State of
Indiana, without reference to its principles of conflict of laws. A lawsuit
under this Agreement shall only be brought in a court of competent jurisdiction
located within the State of Indiana.
This Agreement constitutes the entire agreement between the
parties and supersedes any and all prior agreements, written or oral, not
incorporated herein, with respect to the subject matter of this Agreement. All
prior writings, correspondence, memoranda, agreements, representations,
statements, warranties, covenants, negotiations, and undertakings, express or
implied, of any kind or character whatsoever with respect to the subject matter
of this Agreement are superseded hereby.
G. Notices. Any notice required or permitted by this Agreement shall be
in writing and shall be deemed to have been given if sent by first class mail,
overnight carrier, facsimile, or personal delivery, addressed (i) if to USA
Funds, to the attention of General Counsel, Legal Division, at 00 Xxxxx Xxxxxxxx
Xxxxxx, Xxxxxxxxxxxx, Xxxxxxx 00000, (ii) it to the Lender, at the address
indicated in this Agreement, or (iii) at such other address as the party to be
notified has designated upon reasonable notice. Notices made pursuant to this
paragraph by facsimile, overnight carrier, or personal delivery will be deemed
to be effective upon receipt. Notices made pursuant to this paragraph by first
class mail will be deemed to be effective no later than the fifth business day
following the mailing of such notice.
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H. Confidential/Proprietary Materials. The terms and conditions of this
Agreement shall be considered confidential. All materials, procedures, written
instruments, files, and records developed by either party specifically pursuant
to this Agreement are and shall be treated as proprietary in nature. Each party
to this Agreement has developed or may develop materials, procedures, written
instruments, files, or records which may be similar to those involved in this
Agreement. Neither party to this Agreement shall have or acquire any proprietary
or any other right whatsoever in any such materials, procedures, written
instruments, files, or records developed by the other party. Neither party to
this Agreement may benefit from, deal in, sell, license, publish, use, or
otherwise exploit for any purpose those materials, procedures, written
instruments, files, or records developed by the other party except as expressly
provided in this Agreement. This Agreement shall not in any way restrict the
right of each party, for its own exclusive benefit, to deal in, sell, license,
publish, use, or otherwise exploit for all purposes those materials, procedures,
written instruments, files, or records developed by it.
1. No Recourse. No recourse under or upon this Agreement or
any claim based thereon or in respect thereof shall be had against any
incorporator, member, officer, employee, or trustee, as such, past, present, or
future, of a party or of any successor organizations, either directly or through
a party or any successor organizations. This Agreement is solely a corporate
obligation and no personal liability against any incorporator, member, officer,
employee, or trustee, past, present, or future of the parties shall attach
through a party or any successor corporations, because of this Agreement.
J. Execution. This Agreement will not be binding on either party until
it has been executed and delivered by both parties. Delivery may be by
facsimile. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but which together constitute one and the same
instrument.
K. Interpretation/Construction. In this Agreement unless the context
otherwise requires:
Any headings preceding the texts of the several articles and
sections of this Agreement, and any table of contents or marginal notes
appending to copies hereof, shall be solely for convenience of reference and
shall not constitute a part of this Agreement, nor shall they affect its
meaning, construction or effect.
The parties agree that each party and its counsel reviewed
this Agreement and that this Agreement shall be construed as a whole according
to its fair meaning and not strictly for or against any party.
L. Authority. The parties represent that the undersigned are duly
authorized representatives of the parties.
M. Independent Parties. The parties agree that no legal relationship of
any kind exists as a result of this Agreement, other than the covenants
expressly contained herein. This Agreement shall not constitute, create, give
effect to or otherwise imply a joint venture, partnership or business
organization of any kind. The parties to this Agreement are independent parties
and the personnel of one party shall not be deemed the personnel of the other.
Nothing in this Agreement shall grant to either party any right to make
commitments of any kind or to create any obligation for or on behalf of the
other without the prior written consent of the other party, except to the
extent stated herein.
N. Force Majeure. If a party is delayed from completing performance of
any or all of its obligations under this Agreement by an act of God or any other
occurrence beyond its reasonable control, then performance shall be excused for
as long as it is reasonably necessary to complete performance.
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0. Litigation Costs and Attorney Fees. if any action, at law or equity,
including an action for declaratory relief, is brought to enforce or interpret
this Agreement, then the prevailing party shall be entitled to recover its
reasonable costs, expenses, and attorney fees from the other party, in addition
to any other relief that may be awarded.
IN WITNESS WHEREOF, United Student Aid Funds, Inc. and the Lender have each
caused this Agreement to Guarantee Loans to be executed by their respective
authorized officers and to take effect on the date first above written.
STAR BANK, N.A. as Trustee for UNITED STUDENT AID FUNDS, INC.
Student Loan Funding
By: /s/ Xxxxx X. Xxxxxxx By: /s/ June X. XxXxxxxxx
----------------------------------- ------------------------------
Authorized Signature Authorized Signature
Xxxxx X. Xxxxxxx, Senior Trust Officer June X. XxXxxxxxx
------------------------------------------ ---------------------------------
Printed Name, Title Printed Name, Title
000 Xxxxxx Xxxxxx, XX0000, X.X. Xxx 0000
-----------------------------------------
Xxxxxxx
Xxxxxxxxxx, Xxxx 00000-0000
-----------------------------------------
City, State, Zip
00-0000000
-----------------------------------------
Federal Identification Number
829626, 830631, 831008, 831299, 831455,
831640, 831692, 831785, 833361, 833207
-----------------------------------------
ED Lender Code Number
-8-
17
CONSOLIDATION LOAN PROGRAM
CERTIFICATE OF COMPREHENSIVE GUARANTEE COVERAGE
THIS CERTIFICATE is entered into as of the 1st day of June, 1998, by and between
UNITED STUDENT AID FUNDS, INC., a private nonprofit corporation organized under
the General Corporation Law of the State of Delaware ("USA Funds") and Star
Bank, N.A. as Trustee for Student Loan Funding ("Lender") for certain
Consolidation Loans made pursuant to Part B of Title IV of the Higher Education
Act of 1965 (20 U.S.C. Section 1071 et seq.) As amended and in effect from time
to time.
USA Funds and the Lender agree and certify as follows:
1. As used herein, the following words have the meanings respectively
indicated:
"Agreement" means the Agreement to Guarantee Consolidation Loans between USA
Funds and the Lender, and any amendments thereto.
"Certificate" means this Certificate of Comprehensive Guarantee Coverage issued
by USA Funds to the Lender in accordance with the Act.
2. In this Certificate, unless the context or this Certificate
otherwise requires, all definitions and other provisions of the Agreement are
controlling. This Certificate is hereby incorporated into the Agreement and made
a part thereof.
3. If the Lender complies with the requirements of the Act, the
Policies, the Agreement, and this Certificate, USA Funds will make its Guarantee
available to the Lender to partially insure the Lender against loss of principal
and interest on Consolidation Loans made or acquired by the Lender. The
aggregate amount of such Guarantee shall at no time exceed $200,000,000;
provided, however, that upon receipt of a written request of the Lender, USA
Funds may increase the aggregate amount of such Guarantee.
4. The issuance by USA Funds of Guarantees for Consolidation Loans
originated by the Lender under the Consolidation Loan Program is made in
reliance on the representations of the Lender contained in this Certificate and
the Agreement. The continuance of Guarantees issued by USA Funds for
Consolidation Loans is conditioned upon continued compliance by each and every
holder of such Consolidation Loan with applicable laws and regulations, and the
Policies. The delegation of one or more functions to a servicing agency or
another party does not relive the Lender of its responsibilities in
administering Consolidation Loans.
5. No Consolidation Loan originated by the Lender will be covered by
USA Funds' Guarantee unless and until the Lender has determined, in accordance
with reasonable and prudent business practice, with respect to each Eligible
Student Loan being consolidated (i) that each such Eligible Student Loan is a
legal, valid, and binding obligation; (ii) that each such Eligible Student Loan
was originated and serviced in compliance with applicable laws and regulations;
and (iii) with respect to all Eligible Student Loans made, insured, or
guaranteed under the Act, that the insurance or guarantee on each such Eligible
Student Loan is in full force and effect.
6. The Lender will at all times be subject to the reporting
requirements identified in the Policies and the Limitation, Suspension and
Termination procedures set out in the Policies (provided, however, that any such
Limitation, Suspension, or Termination shall not affect the Guarantee of any
Consolidation Loan originated by the Lender prior to the initiation of such
Limitation, Suspension, or Termination).
7. All claims on Consolidation Loans Guaranteed pursuant to this
Certificate and all related administrative functions to be performed by USA
Funds pursuant to this Certificate, the Agreement, or the Policies shall be
processed or performed by USA Funds or its contractors at offices located in
Fishers, Indiana or at such other office of USA Funds or its contractors as may
be designated by USA Funds.
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8. The Lender may offer to the Eligible Borrower and establish such
alternative repayment terms on a Consolidation Loan as will promote the
objectives of the Consolidation Loan Program; provided, however, that such
alternative repayment terms are in accordance with the Act, the Policies, and
the Agreement.
9. This Certificate shall be in effect, subject to the Act, the
Agreement, and the Policies, from the date first above written until expiration
of the authority in the Act to make or Guarantee Consolidation Loans, but no
later than December 31, 2005. Termination of the Agreement terminates this
Certificate.
10. Except with respect to Consolidation Loans that have been
Guaranteed by USA Funds and continue to be outstanding under this Certificate,
this Certificate may be terminated by either party with or without cause upon
not less than ninety (90) calendar days prior express written notice to the
other party. Such termination will not affect any Notes which are outstanding or
duties undertaken prior to the effective date of the termination. If the Lender,
prior to the expiration of this Certificate, not longer makes Consolidation
Loans, the Lender will so notify USA Funds.
IN WITNESS WHEREOF, United Student Aid Funds, Inc. and the Lender have each
caused this Comprehensive Guarantee Coverage to be executed by their respective
authorized officers and to take effect on the date first above written.
Star Bank N.A. as Trustee for
Student Loan Funding UNITED STUDENT AID FUNDS, INC.
--------------------------------------
Lender
By: /s/ Xxxxx X. Xxxxxxx By: /s/ June X. XxXxxxxxx
--------------------------------------- ----------------------------------
Authorized Signature Authorized Signature
Xxxxx X. Xxxxxxx, Senior Trust Officer June X. XxXxxxxxx
------------------------------------------ ----------------------------------
Printed Name, Title Printed Name, Title
00-0000000
-----------------------------------------
Federal Identification Number
829626, 830631, 831008, 831299, 831455,
831640, 831692, 831785, 833361, 833207
-----------------------------------------
ED Lender Code Number
-2-
