Exhibit 10.20
MONTANA GUARANTEED
STUDENT LOAN PROGRAM
Board of Regents of Higher Education
Montana University System
0000 Xxxxxxxx, Xxxxxx, Xxxxxxx 00000-0000
AGREEMENT TO GUARANTEE FEDERAL FAMILY EDUCATION LOANS
THIS AGREEMENT, entered into between the Board of Regents of Higher Education
(hereinafter referred to as the "Board") and
STUDENT LOAN FINANCE CORPORATION & SUBSIDIARIES (US BANK TRUSTEE) XXXXXXXX,
XX 00000-0000
(hereinafter referred to as "Lender") for the following federal loans:
:Xxxxxxxx (subsidized and unsubsidized) :PLUS
WITNESSETH:
WHEREAS, the Board has objectives and purposes that are solely educational
and charitable, and:
WHEREAS, the Board maintains a central office for the guarantee of loans made
by participating lenders to students attending eligible educational
institutions; and
WHEREAS, the lender affirms it's eligibility herein, and is desirous of
participating in the Guarantee Program of the Board subject to the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the initial loan which the Lender makes
or acquires hereunder, and in further consideration of the mutual covenants
hereinafter expressed, the Board and the Lender agree as follows:
The following shall govern the actions of the parties with respect to this
agreement:
1. (a) As used herein the following words shall have the meanings
respectively indicated:
AGREEMENT: a valid Agreement to Guarantee Federal Family
Education Loans between the Board and the Lender.
APPROVED NOTE: a Promissory Note, including the Repayment
Schedule addendum, guaranteed by the Board.
BORROWERS: the maker or makers of an Approved Note.
COMMON MANUAL: the loan policy manual as from time to time
amended or supplemented describing how the Guarantee Program is
to be administered.
DEFAULT: with respect to any Approved Note, the occurrence of any
event which shall constitute a default under the terms of such
Note.
ELIGIBLE EDUCATIONAL INSTITUTION: any institute of post secondary
education which is an "eligible institution" under the Guarantee
Program of the Board and the Federal Act. ELIGIBLE LENDER: a
Lender defined by the Federal Act who maintains offices within
the United States of America and provides services usual and
customary to entities engaged in the business of banking through
such offices.
FEDERAL ACT: the Higher Education Act of 1965 (Public Law
89-329), as amended and in effect from time to time, or any
successor enactment thereto, and the rules and regulations in
effect from time to time thereunder.
GUARANTEE PROGRAM: the Program undertaken by the Board pursuant
to the State Act under which the Board will guarantee payment of
principal and interest on eligible loans.
LOAN: a Loan made to a Borrower by the Lender, or a Loan made to
a Borrower by another lender and acquired by the Lender,
evidenced by an Approved Note.
LOAN APPLICATION: the application(s) for a Loan approved by the
Department of Education.
NOTICE OF DEFAULT: a notice that an Approved Note is in Default on an
approved form.
PROMISSORY NOTE: the loan agreement approved by the Department of
Education.
REPAYMENT SCHEDULE: the repayment schedule addendum to a Promissory
Note approved by the Department of Education.
RESERVE FUND: the fund established by the Board of Regents for the
purpose of reserving sufficient funds to purchase defaulted loans.
STATE ACT: Title 20, Chapter 26, Part 11 of the Montana Code
Annotated.
STUDENT: a person who meets the definition of an eligible student
under the Guarantee Program.
(b) All documents and instruments referred to in this Agreement shall
be in the form from time to time adopted and approved for use by the
Board.
2. Nothing contained in this Agreement shall obligate the Lender to make or
acquire any particular loan; but the Lender agrees that it will refinance
or extend the maturity of each Approved Note held by it under the Guarantee
Program, in accordance with the terms of such Approved Note and this
Agreement. The Lender will notify the Board within 30 days of any changes
in organizational ownership, via sale, merger, or other type of transfer,
or any changes in lender's legal name. However, it is further understood
that failure to provide this notice will not impact the guarantee of any
loan.
3. The lender agrees that, in respect of all loans made or otherwise acquired
by it under the Guarantee Program and all Approved Notes held by it from
time to time, it will, and it will cause its agents to:
(a) exercise "due diligence" as defined in the Federal Act and the Common
Manual in the making, servicing, and collection thereof;
(b) comply with all procedures and conditions of its part to be performed
set forth in this Agreement, the Federal Act, and the Common Manual;
(c) comply with all Federal and State laws and regulations applicable
thereto, including, without limitation, the Federal Consumer Credit
Protection Act and regulations thereunder;
(d) provide promptly to the Board such information and reports as may from
time to time be reasonably requested by the Board;
(e) permit the Board to examine the student loan records and files for the
purpose of conducting a program review and compliance as required by law
and regulations; and
(f) permit the Secretary of Education or other agencies designated by the
Secretary, and the Board, to have access to the lender's records in order
to assure the accuracy of reports required in section 682.414(a)(4)(i) of
the federal regulations.
(g) not sell, assign, or transfer the ownership of any Loan guaranteed by
the Board pursuant to this Agreement to any person or organization that
does not, at the time of sale, assignment, or transfer, have a valid
Agreement with the Board.
4. Upon payment to the Board of any premium or other fee required under the
Guarantee Program or upon the acquisition of a loan for which such premium
or fee has been paid, the Board will Guarantee each Promissory Note made or
acquired by the Lender, provided, however, that the Board shall not be
obligated to guarantee any such Note if the Board in its sole discretion
determines that the procedures and requirements of applicable law and
regulations, this Agreement on the Common Manual have not been complied
with in respect of such Promissory Note.
5. The Board will guarantee each extension or refinancing of any Approved Note
which has been guaranteed by the Board; provided, however, that the action
is in accordance with the terms of the underlying Approved Note or the
procedures and requirements of applicable law and regulations, this
Agreement and the Common Manual.
6. (a) In the event of a Default in respect to any Approved Note, the Lender
shall follow the policy set forth in the Common Manual. The Board 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 from the Lender of a Notice of
Default together with the Approved Note
guaranteed by the Board (or a certified true and exact copy), the Loan
Application, and evidence of collection effort satisfactory to the Board,
the Board will pay to the Lender in accordance with the Common Manual 100%
(as loans guaranteed prior to October 1, 1993), or not less than 98% (as to
loans guaranteed on or after October 1, 1993), as the case may be, of the
unpaid balance principal and all interest due on such Approved Note (other
than any portion of such interest payable by the U.S. Department of
Education under the Federal Act as allowed by the Department of Education
and as amended by the Act and accepted by the Lender provided the Lender
has complied in all material respect with the policies and requirements of
applicable laws and regulations, this Agreement and the Common Manual in
respect of such Approved Note. Upon death, permanent and total disability
of the Borrower, (or in the case of a parent borrower, the death of the
student for whom the parent borrowed), the Borrower's remaining liability
will be discharged by the Board as provided by the Federal Act.
(b) The liability of the Board as guarantor of any Approved Note in
accordance herewith shall not be affected by the fact that the Borrower was
a minor at the time of execution of the Note.
(c) The Board is obligated to make payments under this Agreement solely
from the revenues or other funds in the reserve fund maintained by the
Board; neither the State of Montana nor any political subdivision thereof
is obligated to pay the same, and neither the faith and credit nor the
taxing power of the State of Montana or any of its political subdivisions
is pledged to the payments to be made by the Board under this Agreement.
(See "Federal Reinsurance" below.)
7. The Board covenants that, so long as the Lender is the holder of an
Approved Note, the Board shall maintain in the Reserve Fund an amount that
is greater than or equal to the minimum reserve level required under the
Higher Education Act. Should said reserve level fall below the minimum
amount required the Board shall be subject to the provision as set forth in
Section 428(c)(9) of the Higher Education Act.
8. (a) No change, other than the extension of the maturity date pursuant to
paragraph 5 of this Agreement, or other changes specifically permitted by
the Common Manual or the Federal Act, shall be made in the terms of any
Approved Note, except with the prior written consent of the Board. Any such
change made without such consent shall have the effect, at the option of
the Board, of voiding the Board's guarantee of such Approved Note.
(b) If the Lender shall violate or fail to comply with any applicable law
or governmental regulation or provision of this Agreement in respect of any
Approved Note, then the Lender hereby agrees to assume liability for, and
does hereby indemnify, protect and hold harmless the Board, its successors,
assigns, directors, officers, or agents, from and against any and all
liabilities, losses, damages, penalties, claims, actions, expenses and
disbursements, including legal fees and expenses, imposed on or incurred by
them or any of them, in any way relating to or arising out of such
violation or failure to comply, regardless of whether the Board shall have
paid under its guarantee for such Approved Note.
9. The Board or its designated agent will furnish to the Lender from time to
time a certificate as to the names and/or facsimile signatures of the
officers or agents authorized to execute in its name and on its behalf
guarantees of Approved Notes under this Agreement; and hereby warrants to
the Lender that the authority so certified shall continue in full force and
effect until the Board shall have delivered to the Lender written notice of
revocation thereof. No recourse under or upon this Agreement or any
Approved Note or guarantee thereof, or for any claim based thereon or
otherwise in respect thereof, shall be had against any member, officer,
employee or agent, as such, past, present, or future, of the Board or of
any successor either directly or through the Board or any successor.
10. Any notice required or permitted by the Agreement shall be in writing and
shall be deemed to have been duly given if mailed, first class postage
prepaid, addressed (i) if to the Board, 0000 Xxxxxxxx, X.X. Xxx 000000,
Xxxxxx, XX 00000-0000, (ii) if to the Lender, at the address indicated
below, or (iii) at such other address of which the party to be notified
shall have given notice as aforesaid.
11. This Agreement may be terminated by either party upon not less than 15 days
written notice to the other party. Such termination shall not affect any
obligation incurred pursuant to this Agreement prior to the time that such
termination notice becomes effective.
12. This Agreement shall inure to the benefit of and be binding upon the Board
and the Lender and their respective successors and assigns. This Agreement
supersedes all existing agreements between the parties with respect to the
subject matter hereof. This Agreement shall not be varied by oral
agreement, but only by an instrument in writing duly executed by the
parties hereto. Any waiver or modification, expressed or implied, by the
Board, of any term or condition contained in this Agreement shall operate
as such only in the specific instance and shall not be construed as a
waiver or modification of any such condition generally or in any other
instance.
13. The obligations of the parties shall be governed by the laws and
regulations of the State of Montana.
14. The rights vested in the Board of fulfill the terms of this Agreement shall
not be hereafter limited or altered nor shall the rights and remedies of
the Lender be impaired in any manner until the Loans are fully met and
discharged.
IN WITNESS WHEREOF, the Board and the Lender have each caused this instrument to
be executed the 30/th/ day of January, 2002 by their respective duly authorized
officers.
STUDENT LOAN FINANCE CORPORATION BOARD OF RENTS OF HIGHER EDUCATION
& SUBSIDIARIES (US BANK, TRUSTEE) MONTANA UNIVERSITY SYSTEM
By /s/ Xxx Xxxxxx CORPORATE TRUST OFFICER /s/ Xxxxxxx X.(Illegible)
---------------------------------------- ---------------------------------
Commissioner of Higher Education
000 XXXXX XXXX XXXXXX XXX 0000
XXXXX XXXXX, XX 00000-0000
00-0000000
-----------------------------------
Federal Tax Identification Number
FEDERAL REINSURANCE
Loans made pursuant to the Higher Education Act of 1965 and guaranteed by the
Board which go into default are reinsured under an agreement with the U.S.
Secretary of Education ("Secretary"). Under that agreement for loans guaranteed
prior to October 1, 1993, 100% of the losses from such defaults will be borne by
the Secretary except that: (a) if, for any Federal fiscal year, the amount of
such reimbursement payments by the Secretary equals or exceed 5% of the loans
which are guaranteed by the Board and which were in repayment at the end of the
preceding fiscal year, the amount to be paid the Board as reimbursement for such
excess shall be equal to 90% of the amount of such excess; and (b) if, for any
Federal fiscal year, the amount of such reimbursement equals or exceeds 9% of
such loans, the amount to be paid as reimbursement for such excess shall be
equal to 80% of the amount of such excess. For loans guaranteed on or after
October 1, 1993 but before October 1, 1998, losses borne by the Secretary are
98%, 88%, and 78% respectively. For loans guaranteed on or after October 1, 1998
the losses borne by the Secretary are 95%, 85%, and 75% respectively.
AGREEMENT BETWEEN STUDENT LOAN FINANCE CORPORATION AND SUBSIDIARIES, THROUGH
US BANK, N.A. AS ELIGIBLE LENDER TRUSTEE AND THE MONTANA GUARANTEED STUDENT
LOAN PROGRAM WITH RESPECT TO THE GUARANTY OF CONSOLIDATION LOANS MADE UNDER
SECTION 428C OF THE HIGHER EDUCATION ACT OF 1965
Student Loan Finance Corporation and subsidiaries (SLFC), through US
Bank, N.A. as Eligible Lender Trustee ("the Trustee") hereby enters into an
agreement with Montana Guaranteed Student Loan Program ("Guarantor") for
Guarantor to guarantee Consolidation Loans that are originated or acquired by
SLFC under Section 428C of the Higher Education Act of 1965, as amended and in
effect from time to time, or any successor enactment thereto (the "Act") through
the issuance to SLFC by Guarantor of a Certificate of Comprehensive Insurance.
The Guarantor and SLFC hereby agree as follows:
1. No claim submitted to Guarantor by SLFC with respect to a
Consolidation Loan which has been guaranteed and which is in default
will be paid by Guarantor unless Guarantor has received a Notice of
Default together with the Note (or true and exact imaged or other copy
thereof) assigned to Guarantor and evidence required under the Act
that i) the Consolidation Loan evidenced by such Note was originated
and serviced, and collection efforts were made, in accordance with
this Agreement and ii) SLFC complied in all material respects with the
requirements of Section 428C of the Higher Education Act as amended,
(and Federal Regulations issued thereunder) the Common Manual and this
Agreement.
2. SLFC will make a Consolidation Loan to an eligible borrower (on
request of the borrower) only if the borrower certifies that the
borrower has no other application pending under Section 428C of the
Act, and
(a) At least one of the borrower's underlying loans to be included in
the original consolidation have a Montana Guaranteed Student Loan
Program guarantee, and
(b) In cases where the borrower's underlying FFELP loans are held by
a single lender, the borrower certifies that the borrower has sought
and was unable to obtain a consolidation loan through the holder of
the borrower's underlying FFELP loans.
3. Each Consolidation Loan made or acquired by SLFC will bear interest,
and be subject to repayment, in accordance with the provisions of
Section 428C of the Act and the Common Manual.
4. Each Consolidation Loan made by the SLFC, notwithstanding any other
provision of Part B of Title IV of the Act limiting the annual or
aggregate principal amount for all insured loans made to a borrower,
will be in an amount which is equal to the sum of unpaid principal and
accrued interest and late charges of all loans received by the
eligible borrower which are selected by the borrower for
consolidation.
5. The proceeds of each Consolidation Loan made by SLFC will be paid by
SLFC to the holder or holders of the eligible loans selected by the
borrower for consolidation to discharge the liability on such loans.
SLFC will determine the appropriate method of paying off loans retired
by Consolidation Loans.
6. A certificate of comprehensive insurance will be issued by the
Guarantor to SLFC in accordance with Section 428C (b)(2) of the Act.
7. No insurance premiums or origination fees shall be charged to the
borrower.
8. The Guarantor acknowledges that SLFC will rely on statements signed by
the holders of loans to be consolidated in determining that those
loans are legal, valid and binding obligations that were made and
serviced in compliance with applicable laws and regulations and, for
loans made under Title IV Part B, that the insurance is in full force
and effect. SLFC need not obtain or retain any further information
with respect to the loans selected for consolidation. SLFC hereby
certifies that loans selected for consolidation that SLFC owns are
legal, valid and binding obligations that were made in compliance with
all applicable laws and regulations and that the insurance on such
loans is in full force and effect.
9. Consolidation Loans made by SLFC will not be eligible for any grace
period remaining on the underlying loans or the payment of interest
benefits, unless provided by federal law, with respect to such loans.
10. A borrower's Consolidation Loan application/promissory note,
disclosure statement, and other documents associated with the
Consolidation Loan need not be notarized.
11. SLFC will reach agreement with the Guarantor for the periodic
electronic transmittal to the Guarantor of appropriate master file
data with respect to Consolidation Loans in lieu of the normal
reporting requirements that have been established by the Guarantor for
loans insured under the FFELP program. SLFC will retain master file
data with respect to the separate balances of the particular loans
consolidated at the time of consolidation.
12. SLFC shall restructure repayment schedules in accordance with 428C
(c)(2) of the Act and the Common Manual and offer repayment schedules
as otherwise required by Section 428C of the Act.
13. Either party may terminate this agreement by providing 90 days written
notice to the other party. If SLFC no longer intends to originate or
acquire Consolidation Loans, SLFC must notify MGSLP so that the
Certificate of Comprehensive Insurance for Consolidation Loans can be
terminated in a timely fashion and in a manner which will not affect
the guarantee of any Consolidation Loan originated or acquired by SLFC
prior to such termination. Termination of this agreement shall not
affect the guarantee of any loans made or acquired prior to said
termination.
14. This agreement shall be in effect, subject to the Act, the Certificate
of Comprehensive Insurance for Consolidation Loans, and the Common
Manual, from the date of its execution by MGSLP until terminated by
either party. Termination notices must be sent to the Director of
MGSLP or SLFC, at the addresses listed in section 6 and 7 of the
Certificate of Comprehensive Insurance for Consolidation Loans with
respect to MGSLP, and as follows with respect to SLFC:
Student Loan Finance Corporation
000 XX 0/xx/ Xxxxxx
Xxxxxxxx, XX 00000
FOR Student Loan Finance Corporation and FOR the Guarantor
subsidiaries through US Bank, N.A. as Eligible
Lender Trustee
By: /s/ Xxx Xxxxxx By: /s/ Xxxxxx Xxxxxxxxx
------------------------------------------- -----------------------
Name: XXX XXXXXX Name: XXXXXX XXXXXXXXX
----------------------------------------- ---------------------
Title: CORPORATE TRUST OFFICER Title: DIRECTOR
---------------------------------------- --------------------
Date: 1-30-2002 Date: Feb. 15, 2002
----------------------------------------- --------------------
CERTIFICATE OF COMPREHENSIVE INSURANCE FOR CONSOLIDATION LOANS
WHEREAS, Student Loan Finance Corporation and subsidiaries (SLFC), through US
Bank, N.A. as Eligible Lender Trustee, wishes to confirm and to secure insurance
on Consolidation Loans that were either originated by SLFC or were originated by
another lender and acquired by SLFC pursuant to Part IV, Part B, Section 428C of
the Higher Education Act of 1965, as amended and in effect from time to time, or
any successor enactment thereto, (the "Act"), and
WHEREAS, Montana Guaranteed Student Loan Program (the "Guarantor") is authorized
by the Act to provide such loan insurance through the issuance of a certificate
of comprehensive insurance coverage under the provisions of Section 428C (b)(2)
of the Act.
NOW THEREFORE, it is agreed that:
l. Within the limits established by the provisions of this certificate
and without further action by the Guarantor, all Consolidation Loans
which are eligible for insurance under the Act which will be made in
conformity with Section 428C of the Act, the Common Manual and (a) if
originated by the SLFC were made in conformity with an agreement
entered into between the Guarantor and SLFC pursuant to such section
of the Act, and (b) if acquired by SLFC were made in conformity with
an agreement entered into by the Guarantor and the originator pursuant
to such section of the Act, shall be insured from the time of
disbursement against the loss of interest and principal by the
Guarantor.
2. A Consolidation Loan which will be originated by SLFC will not be
insured under this certificate unless SLFC 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) in the case of loans made under Part B of the
Act, that the insurance on such loan is in full force and effect.
3. This certificate shall apply to loans made or acquired after the date
of its acceptance by the SLFC and prior to the expiration of the
authority in Section 428C of the Act to make and insure Consolidation
Loans.
4. This certificate applies to loans in an aggregate original principal
amount of up to $100,000,000; provided, however, that upon a written
request of SLFC, the Guarantor may increase such maximum amount.
5. With respect to loans insured under this certificate, SLFC shall
submit such reports to the Guarantor as it may reasonably require to
carry out its responsibilities under the Act.
6. All claims submitted by SLFC under this certificate will be directed
to:
Montana Guaranteed Student
Loan Program XX Xxx 000000
Xxxxxx, XX 00000-0000
7. All administrative and procedural matters related to loans issued
under this certificate will be directed to:
Montana Guaranteed Student Loan
Program XX Xxx 000000
Xxxxxx, XX 00000-0000
8. Repayment terms offered to borrowers will include all those
provided by law. Graduated and income sensitive payment schedules
may provide for an initial period of interest only payments.
Loans will be made for up to the maximum period provided by law
and the interest rate will be equal to or less than the
applicable rate.
9. If at any time prior to the expiration of this certificate, SLFC
no longer proposes to make Consolidation Loans insured hereunder,
it shall notify Montana Guaranteed Student Loan Program and this
certificate may be terminated with respect to any future
Consolidation Loans on a mutually agreed upon date.
The insurance of loans made or acquired under this certificate
prior to this expiration, or the termination thereof under this
paragraph, shall not be affected by such expiration or
termination.
10. The issuance by the Guarantor of Guarantees for Consolidation
Loans originated by SLFC under the Consolidation Loan Program is
made in reliance on the implied representations of SLFC that all
requirements set forth in the Agreement and the eligibility of
such Consolidation Loans for Federal Reinsurance have been met.
Each Consolidation Loan guaranty is conditioned upon compliance
with the Act and the Common Manual by each and every holder with
respect to such Consolidation Loan. The delegation of one or more
functions to a servicing agency or another party does not relieve
SLFC of its responsibilities in administering Consolidation
Loans.
11. SLFC will at all times be subject to the Limitation, Suspension
and Termination procedures set out in the Common Manual
(provided, however, that any such Limitation, Suspension or
Termination shall not affect the insurance of any Consolidation
loan originated or acquired by SLFC prior to written notice
received by SLFC of the initiation of such Limitation, Suspension
or Termination.
Montana Guaranteed Student Loan Program
By: /s/ Xxxxxx Xxxxxxxxx
-----------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Director
ACCEPTED THIS 30/th/ DAY OF January, 2002
Student Loan Finance Corporation and subsidiaries through US Bank, N.A. as
Eligible Lender Trustee
By: /s/ Xxx Xxxxxx
----------------------------------------
Name: XXX XXXXXX
Title: CORPORATE TRUST OFFICER
