Exhibit 10.12
LENDER PARTICIPATION AGREEMENT
FOR CONSOLIDATION LOANS
This Lender Participation Agreement for Consolidation Loans (the "Agreement"),
to be effective as of the 30th day of January, 2002, is by and between STUDENT
LOAN FINANCE CORPORATION & SUBSIDIARIES (US BANK, TRUSTEE) ("Lender"), and the
Northwest Education Loan Association, a Washington nonprofit corporation
("NELA").
RECITALS
A. NELA is a private nonprofit guaranty agency operating under the Federal
Family Education Loan Program ("FFELP") to administer, promote and facilitate
student loans and related services for the benefit of students pursuing
postsecondary education.
B. Lender wishes to secure the NELA guarantee on eligible consolidation loans
made by the Lender to eligible borrowers under the Act (as defined below);
C. Lender has full legal power and authority to enter into an agreement for the
performance of such guarantee services, qualifies as an eligible lender under
the Act for purposes of making consolidation loans and is prepared to engage in
the transactions contemplated by this Agreement; and
D. NELA is willing to make its consolidation loan guarantee available to Lender
on the terms and conditions set forth in this Agreement.
AGREEMENT
NOW THEREFORE, in consideration of the foregoing premises and the mutual
promises described herein, the parties hereto agree as follows:
1. Applicable Policies, Regulations, and Act. The performance of this Agreement
is governed by Title IV, Part B of the Higher Education Act of 1965, (20 U.S.C.
(S) 1071 et seq.) as now or hereafter amended ("Act"), and the effective
regulations promulgated thereunder by the Secretary of Education ("Secretary"),
as now or hereafter amended ("Regulations"). The performance of the parties
hereunder shall also be governed by the Common Manual: Unified Student Loan
Policy, as amended and updated from time to time and any other policies adopted
and issued by NELA describing the administration of its loan guarantee program
(the "Policies"). If NELA adopts any policies different from or in addition to
those stated in the Common Manual, NELA shall give notice to the Lender, by
certified mail, return receipt requested, of any such amendment or revision.
Lender shall not be bound by any such amendments issued by NELA if it has not
received such notice. The Policies, Regulations and Act are hereby incorporated
into this Agreement, with the same force and effect as if they were found in the
body of the Agreement itself.
2. NELA Guarantee. NELA agrees to guarantee consolidation loans made by the
Lender after the effective date of this Agreement (hereinafter "Consolidation
Loans"), provided that such loans are made pursuant to the terms of this
Agreement and are eligible for guarantee and
reinsurance under the Policies, Regulations and the Act. NELA agrees to deliver
to Lender a Certificate of Comprehensive Insurance as defined in the Act, and
Regulations.
3. Lender's Agreements, Obligations and Warranties. With respect to
Consolidation Loans to be guaranteed by NELA hereunder, the Lender agrees as
follows:
3.1 Lender will only make a Consolidation Loan to an eligible borrower if
such borrower certifies that he or she has no other application pending for a
consolidation loan.
3.2 if Lender is not the holder of borrower's underlying loans selected for
consolidation, and all of the selected loans are held by a single holder, then
prior to making a Consolidation Loan to the borrower, Lender shall obtain a
certification from the borrower that the borrower has sought and been unable to
obtain a consolidation loan with income sensitive repayment terms from the
single holder of the loans selected for consolidation.
3.3 Each Consolidation Loan will bear interest and be subject to repayment
in accordance with the Act.
3.4 Each Consolidation Loan made by Lender hereunder shall be made in an
amount equal to the sum of the unpaid principal, accrued unpaid interest,
collection charges, and late charges of all the eligible loans selected by the
borrower for consolidation, and this amount shall not be less than the minimum
amount required for the eligibility of a borrower under the Act and Regulations.
3.5 The Lender cause the proceeds of each Consolidation Loan that it makes
to be paid to the holders of the underlying loans selected for consolidation in
order to discharge the liability of the borrower on each such loan.
3.6 All actions taken by Lender, including but not limited to originating,
disbursing, servicing, or collecting on Consolidation Loans, are in compliance
with the Act, the Policies, and all other applicable local, state and federal
laws and regulations for loan servicing, including collection activities.
3.7 Lender shall give NELA prompt notice of its intention to discontinue
the making of Consolidation Loans.
3.8 With regard to the Consolidation Loans made hereunder, Lender will
maintain and provide information and reports in accordance with the Act,
Regulations and Policies and Lender shall permit NELA and the Secretary to
examine and copy during normal business hours all such Consolidation Loan
records and files upon reasonable notice and at reasonable intervals for the
purpose of verifying the accuracy of information provided by the Lender
concerning Lender's administration of Consolidation Loans guaranteed by NELA,
and in order to conduct audits and compliance reviews.
3.9 Lender, pursuant to the Act and Regulations, will assist borrowers in
securing reductions in their obligations to pay interest on Consolidation Loans
if such interest is eligible for subsidy under the Act.
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4. Warranties Made Upon Assignment of Promissory Note. With respect to any
promissory note guaranteed by NELA hereunder, the Lender hereby agrees and
warrants that upon assignment of such note by Lender to NELA or to any third
party: (a) the obligations of the borrower(s) and any endorser upon such note
are valid and enforceable in accordance with the terms of the note, and not
subject to any defenses; (b) all information furnished to NELA in connection
with such promissory note is, in all material aspects, true and accurate; (c)
the promissory note qualifies for insurance under the Act and Regulations; (d)
the Lender has complied with the Act, Regulations, and all other applicable
laws, rules and regulations with respect to the promissory note and the
Consolidation Loan; and (e) if the note is further assigned by any party, the
warranties made by the Lender upon assignment to NELA shall inure to and benefit
all such assignees including NELA and the federal government.
5. Amendments. From time to time, the federal government may amend the Act or
the Regulations. This Agreement shall continue in full force and effect, and any
such amendments shall be incorporated into it, unless a party gives notice of
termination of the Agreement. Any such governmental action constitutes notice to
the parties of the changes, and NELA shall not be responsible for notifying
Lender of any such amendments.
6. Term. The initial term of this Agreement shall be from the effective date of
this Agreement until September 30, 2002. Thereafter, this Agreement shall be
automatically renewed for additional terms of one year, unless NELA or the
Lender gives notice thirty (30) days prior to the end of any term of this
Agreement that the Agreement will not be renewed.
7. Termination.
7.1 Either party may terminate this Agreement upon at least thirty (30)
days written notice to the other party specifying the date of termination.
Termination by NELA shall be in compliance with the limitation, suspension and
termination requirements of the Act, Regulations and Policies to the extent
applicable. This Agreement will automatically terminate sixty (60) days after
receipt by NELA of a statement that Lender no longer intends to make
Consolidation Loans under this Agreement.
7.2 Upon termination, the relationship between NELA and Lender created by
this Agreement shall cease on the termination date except as provided herein.
Termination will not affect the guarantee of NELA or the obligations of Lender
as to loans guaranteed prior to the termination date under the Agreement, except
in accordance with the Act, Regulations, or Policies. Such guarantee and
obligations, including, but not limited to, the obligation to allow NELA and the
Secretary access to records, shall continue in full force and effect under the
terms of the Agreement between NELA and Lender which was in force at the time
each particular loan was initially held by Lender.
8. Breaches.
8.1 Upon material breach of this Agreement, whether of the provisions found
in the Agreement itself or of its incorporated provisions, NELA is entitled,
immediately upon delivery of written notice to Lender, to suspend or withdraw
its guarantee in part or entirely, as to the loan or loans affected by the
breach.
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8.2 A material breach shall be a defense by NELA to any claim or action by
Lender upon the guarantee of the loan directly affected by the material breach.
8.3 Upon any breach, whether material or not, of any provision of this
Agreement, including those incorporated by reference, NELA is entitled to
written assurance from Lender that the breach has been remedied.
8.4 The waiver by any party of any breach of any provision of this
Agreement shall not operate or be construed as waiver of any provision as to any
subsequent breach.
9. Severability.
9.1 This Agreement. If any term, covenant, condition, or provision of this
Agreement or the application thereof to any person or circumstance shall, at any
time, or to any extent, be determined invalid or unenforceable, the remaining
provisions hereof shall not be affected thereby and shall be deemed valid and
fully enforceable to the extent provided by law.
9.2 Policies, Regulations and Act. If any provision of the Policies,
Regulations, or Act are rescinded, repealed, withdrawn, held to be invalid or
otherwise rendered inoperative, the remaining provisions are not affected, and
continue in full force.
10. Entire Agreement - Modifications. This Agreement, including any incorporated
provision, constitutes the entire understanding between the parties and
supersedes any prior written or oral understanding between them as to the
subject matter contained herein. This Agreement may not be amended, changed or
modified, in whole or in part, except by an instrument in writing signed by
Lender and by NELA.
11. Captions. The captions and headings of the paragraphs of this Agreement are
for convenience and reference only and may not be used to interpret or define
the provisions hereof.
12. Indemnification by Lender. Lender shall indemnify and hold NELA harmless
from and against any and all losses, liabilities, obligations, damages,
penalties, claims, actions, suits, costs, and expenses, including reasonable
attorneys' fees or loss of collection fees, incurred by or asserted against
NELA, which arise out of or relate to the acts or omissions of Lender in
performing its obligations under this Agreement; Lender's violation of the Act,
Regulations, or Policies; Lender's material failure to comply with its
obligations under this Agreement; or the assertion by a borrower of any claim or
defense which could have been asserted against the Lender, whether or not such
claim or defense existed at the date of execution of this Agreement or the
promissory note by the borrower. Upon request by NELA, the Lender, at its
expense, shall undertake or assume the defense of any action in which any such
claim described in this Section 11 is asserted against NELA. This
indemnification provision shall survive any termination of this Agreement.
13. Indemnification by NELA. NELA hereby indemnifies and holds Lender harmless
against any and all liabilities, obligations, losses, damages, penalties,
claims, actions, suits, costs, and expenses, including reasonable attorneys'
fees and expenses, incurred by or asserted against Lender, which arise out of or
relate to the acts or omissions of NELA in performing its obligations under this
Agreement; NELA's violation of the Act or Regulations; or NELA's
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material failure to comply with its obligations under this Agreement. Upon
request by Lender, NELA, at its expense, shall undertake or assume the defense
of any action in which any such claim described in this Section 12 is asserted
against Lender. This indemnification provision shall survive any termination of
this Agreement.
14. Assignment and Successors. The rights and obligations of NELA under this
Agreement shall inure to the benefit of and be binding upon its successors and
assigns. The rights and obligations of Lender hereunder are non-assignable
except in accordance with Policies, Regulations or Act.
15. Notices. Any notice required under this Agreement shall be sufficient if in
writing and sent by certified or registered mail, postage prepaid, to the
following address:
If to Lender: STUDENT LOAN FINANCE CORPORATION (US BANK, TRUSTEE)
000 XXXXXXXXX XXXXX XXXXXX
XXXXXXXX, XX 00000-0000
ATTN AVP OF COMPLIANCE & CUSTOMER RELATIONS
If to NELA: Northwest Education Loan Association
000 Xxxxx Xxxxxx
000 Xxxxxx Xxxxxxxx
Xxxxxxx, XX 00000
Attn.: Vice President, Program Services
16. Attorneys' Fees. If any dispute arises from the performance or breach of any
term of this Agreement, whether or not any suit or arbitration proceeding is
commenced, then the prevailing party shall be entitled to its reasonable
attorneys' fees and costs.
17. Governing Law. This Agreement is made and shall be construed and enforced in
accordance with, the laws of Washington State without regard to its conflicts of
law principles.
18. Survival of Terms. Upon termination of all or any part of this Agreement,
those provisions of the Agreement which by their terms are intended to extend
beyond the termination of the Agreement shall remain in full force and effect.
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IN WITNESS WHEREOF, NELA and the Lender have each caused this instrument to be
executed by their respective authorized officers and to take effect on the date
and year first above written.
LENDER: STUDENT LOAN FINANCE NORTHWEST EDUCATION
CORPORATION & SUBSIDIARIES LOAN ASSOCIATION
(US BANK, TRUSTEE) (833405)
By: /s/ Xxx Xxxxxx By: /s/ Xxxxxxxx X. Xxxxxxxx
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Signature Xxxxxxxx X. Xxxxxxxx
Vice President,
Program Services
XXX XXXXXX
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Print or Type Name
CORPORATE TRUST OFFICER
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Title
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CERTIFICATE OF COMPREHENSIVE INSURANCE
For Consolidation Loans made in accordance with Title IV, Part B of the Higher
Education Act of 1965, as amended.
The Northwest Education Loan Association, hereinafter referred to as "NELA",
certifies that all consolidation loans made by Student Loan Finance Corporation
and Subsidiaries (US Bank, Trustee) hereinafter referred to as the "Lender," in
conformity with the requirements of Part B of Title IV of the Higher Education
Act of 1965, as amended, are fully guaranteed against loss of principal and
interest by NELA, provided:
l. That the Lender has determined to its satisfaction, in accordance with
reasonable and prudent business practices, for each loan being consolidated:
(a) that the loan is a legal, valid and binding obligation of the
borrower;
(b) that each such loan was made and serviced in compliance with
applicable laws and regulations; and
(c) that the guarantee of such loan is in full force and effect.
2. That the consolidation loan(s) have been or will be made on or after March 1,
2002, but no later than September 30, 2002.
3. That the total unpaid principal amount of all consolidation loans made under
this certificate will not exceed one million dollars ($1,000,000.00).
4. That, if the Lender, prior to the expiration of this certificate, no longer
proposes to make consolidation loans, the lender will so notify NELA in order
that the certificate may be terminated. Such termination shall not affect the
guarantee on any consolidation loan made prior to the termination.
5. That the Lender's loan consolidation program practices are subject to NELA's
Guaranteed Student Loan Program Lender Participation Limitation, Suspension or
Termination procedures. The guarantee on any consolidation loan(s) made under
this certificate prior to NELA's imposition of a limitation, suspension or
termination action shall not be affected by such action.
6. That the Lender complies with NELA's reporting requirements specified in the
NELA Rules.
7. That the Lender complies with the terms set forth in the Lender Participation
Agreement for Consolidation Loans.
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NELA's office at 000 Xxxxx Xxxx Xxxxxx X., Xxxxx 000, Xxxxxxx Xxxxxxxxxx 00000
is designated as the location where guarantee claims will be processed and other
related administrative functions performed.
NORTHWEST EDUCATION LOAN ASSOCIATION
By /s/ Xxxxxxxx X. Xxxxxxxx Date February 27, 2002
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Xxxxxxxx X. Xxxxxxxx
Vice President,
Program Services
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