AMENDEDAND RESTATED AGREEMENT FOR EDUCATION LOAN SERVICING

1.

Services to Be Performed.

 

The Service Provider shall perform the services described in Exhibit A (“the Services”) for Customer as an independent contractor on a non-exclusive basis.  Unless stated explicitly, nothing contained herein shall be deemed to create any partnership, joint venture, or relationship of principal and agent between the parties hereto or any of their affiliates or subsidiaries, or to provide either party with any right, power or authority, whether express or implied, to create any duty or obligation on behalf of the other party.  Such Services shall be rendered in a professional manner and shall meet acceptable quality measurements, performance levels, and other standards as the parties may agree upon from time to time.

2.

Subcontractors.

 

The Service Provider may retain a subcontractor or subcontractors to perform any number of Services on behalf of the Customer with the Customer’s approval.  The Service Provider will be responsible for the subcontractor’s actions and shall ensure that the subcontractor(s) is subject to and complies with all of the terms and conditions of this Agreement.  If the Service Provider retains a subcontractor or subcontractors, the Service Provider remains responsible for compliance with laws, regulations, policies, procedures and quality standards.

3.

Fees and Expenses.

(a)  

As compensation for the Services, the Customer shall pay to the Service Provider the fees as set forth in this Agreement and/or such other exhibits made part of this Agreement.  All fees will not exceed the fair value of the Services.  All invoices shall be paid within thirty (30) days from receipt of periodic invoices.  All invoices submitted to the Customer shall itemize the Services provided and the corresponding fees charged in accordance with the fee schedules set forth in this Agreement as Exhibit B.    In accordance with the express terms of this paragraph and Paragraph 20 of this Agreement, Service Provider and Customer acknowledge that Customer shall be solely responsible for compensation of the Services provided.

(b)  

The parties acknowledge that certain costs and expenses of the Service Provider may increase or decrease at times throughout the term of this Agreement.  The parties also recognize that this Agreement may be in force for a considerable period of time and it is impractical to construct an automatic cost adjustment provision into the Agreement.

(c)  

In the event the Customer does not accept the proposed modification in fees or expenses, it shall provide written notification to the Service Provider within thirty (30) days of its receipt of Service Provider’s notice of the proposed increase.  If the parties thereafter fail to reach agreement on an increase or modification of the Service Fees, the Service Provider may, within 90 days after giving its notice of increase to Customer, give written notice of termination of this Agreement.  The termination will take effect 270 days after the Service Provider’s notice of increase, or such other date as is mutually agreed to by the parties.  Notwithstanding Customer’s non-acceptance of the fee increase, Service Provider’s proposed modification in fees or expenses shall take effect 180 days after Service Provider’s notice of termination and such amended pricing shall be in effect from that date until this Agreement is terminated.

(d)  

In the event that a notice period or time period for termination of this Agreement shall extend beyond the termination date or any subsequent termination date described in Paragraph 5 (a), the termination date of this Agreement will be the later of the dates.

4.

Responsibilities of the Parties.

(a)  

The Service Provider shall perform the Services subject to applicable laws, regulations, policies, procedures, quality measurements, performance levels, and other standards as described in Exhibit C.  The Customer and Service Provider may amend Exhibit C at any time upon mutual consent to include those quality measurements, performance levels, and other standards reasonably necessary to guide the Service Provider in its performance of the Services required by the Agreement. In addition, in the case of a significant and unusual event, the Customer and Service Provider can negotiate a temporary adjustment to the affected service standards and fees that may result.  The Service Provider may require that the Customer pay additional fees if the required additional services materially increase Service Provider’s cost of providing the Services, in accordance with the procedure set forth in Paragraph 3.

(b)  

The Customer retains the processes and functions not set forth on Exhibit A,.    Service Provider and Customer may amend Exhibit A upon mutual agreement or if necessary to facilitate Service Provider’s performance of the Services required by this Agreement.

5.

Term and Termination.

(a)  

This Agreement will be for a term of 1 year from the date hereof; provided however, that this Agreement will be extended for successive one (1) year periods unless either party, by written notice to the other, shall give at least 180 days prior notice of its intention to terminate the Agreement at the end of the current contract year, in which case there shall be no automatic extension.  Termination in accordance with this paragraph will be without penalty to either party.  Both parties will remain responsible for their respective obligations with regard to actions, events, and services received or rendered prior to the date such termination becomes effective.

(b)  

Either party shall have the right to immediately terminate this Agreement by giving the other  written notice if  (i) a person owning more than 50% of the voting shares of the other party ceases to own more than 50% of the voting shares of the other party; (ii) the other party shall be wound up, go into liquidation, or for any other reason shall cease or threaten to cease to carry on its business or shall transfer its business; (iii) a decree or order by a court or governmental agency or authority shall be entered for the appointment of a conservator, receiver or liquidator for the other party in an insolvency, readjustment of debt, marshaling of assets and liabilities or similar proceeding, or the other party shall consent to such appointment.  Termination under this subparagraph shall be effective 270 days after Customer’s written notice to Service Provider, and upon 270 days after Service Provider’s written notice to Customer.

(c)  

If either party materially breaches the terms or duties imposed upon it by this Agreement, the non-breaching party may, at its option, give the other party at least thirty (30) days written notice of the breach.  The notice shall specify the nature of the breach.  If, at the end of the notice period, the breaching party has not remedied the breach then the Agreement may be terminated by the non-breaching party by notice given within 90 days after the expiration of the notice period specifying a termination date satisfactory to the non-breaching party, provided however, that any termination under this paragraph shall not prejudice the rights of either party against the other.

(d)  

In the event that any notice period or time period for termination of this Agreement under any subparagraph of this Paragraph 5 shall extend beyond the termination date or any subsequent termination date described in Paragraph 5 (a), the termination date of this Agreement will be the later of the respective dates.

6.

Compliance with Laws.

 

Each party hereto agrees that it shall comply with all applicable federal, state and local laws, ordinances, codes and regulations in the performance of its obligations or receipts of Services under this Agreement, including obtaining the necessary permits and certificates where required.  The parties agree to comply with all laws and executive orders relating to equal opportunity or non-discrimination as applicable.  If at any time during the term of this Agreement, a party is informed or information comes to its attention that it is or may be in violation of any law, ordinance or code (or if it is so determined by any court, tribunal or other authority), that party shall immediately take all appropriate steps to remedy such violation and comply with such law, regulation, ordinance or code in all respects.  Further, each party shall establish and maintain all proper records (particularly, but without limitation, accounting records) required by any law, code of practice or corporate policy applicable to it from time to time.

7.

Audit.

 

Customer shall have the right, during normal business hours, to inspect Service Provider’s books and records that pertain to the Services rendered in order to verify the amount and calculation of such fees.  Service Provider shall keep adequate records of its Services hereunder.  Each party shall pay its own respective costs and expenses in connection with this provision.  Customer shall have the same right, during normal business hours, to inspect, audit, and confirm Service Provider’s compliance with the laws, regulations, policies, procedures, and service quality standards set forth in Exhibit C and as such may be amended from time to time.

8.

Indemnification.

(a)  

Each party to this Agreement shall indemnify and hold harmless the other party and any of its directors, officers, employees, agents, and subcontractors from and against any action or threatened action, suit or proceeding arising out of or as a result of, the indemnifying party's performance under this Agreement and against any and all claims, expenses, losses or damages (including reasonable attorneys' fees that result from the actions or inaction of the indemnifying party); provided, however, that in no event shall a party to this Agreement be obligated for any claims, expenses, losses, or damages resulting from the negligent or willful acts or omissions of the other party, its agents, employees or subcontractors.

(b)  

A party seeking indemnification under this Agreement shall (i) give prompt written notice to the indemnifying party as to the existence of the indemnifiable event, (ii) provide such information, cooperation and assistance as may reasonably be necessary for the defense of such action or claim and (iii) grant full authority to the indemnifying party to defend or settle such action or claim.  A party seeking indemnification shall not compromise or settle any action or claim without the consent of the indemnifying party.

(c)  

In the event that Service Provider shall take any action in connection with the Services or other responsibilities under this Agreement (whether or not such action constitutes negligence), or fails to take any action required under this Agreement which causes any serviced loan in Customer’s portfolio to require an interest or principal adjustment, or to be denied the benefits of any applicable guaranty or insurance, Service Provider shall have a reasonable time to cause such benefits to be reinstated.  If such benefits are not reinstated within 4 months of denial or termination of guaranty or insurance benefits, Service Provider shall, subject to the limitations of subparagraphs (d), (e), (f) and (g) of this Paragraph 8, pay to Customer an amount equal to the outstanding principal balance plus all accrued interest through the date of the original loss of benefits, less the amount subject to any lender risk sharing under either the FFEL program or any private program.

(d)  

Service Provider and Customer acknowledge that servicing errors can occur during the ordinary course of business which can cause loss of guaranty or insurance benefits, operating losses and interest adjustments and are included within the pricing set forth in Exhibit B.  Service Provider’s liability arising under Paragraph 8(c) shall begin to accrue when operating losses that are directly attributable to the Service Provider’s actions, on an annual basis (calculated monthly), exceed .026 of 1% (2.6 basis points) times the average dollar balance of Education Loans in repayment status; and when Adjustment and Refunds on an annual basis (calculated monthly) exceed .018 of 1% (1.8 basis points) times the average dollar balance of Education Loans in repayment status.

(e)  

Service Provider’s maximum liability for a Single Occurrence (as defined below) shall be limited to an amount equal to the average of monthly compensation paid to date during the term of this Agreement.  Service Provider’s maximum liability for indemnification for multiple Single Occurrences under this Paragraph 8 during any one calendar year shall be limited to an amount equal to the total compensation paid by Customer to Service Provider for the calendar year.  In the event the total number of months during the calendar year is less than twelve, the maximum liability shall not exceed the average of monthly compensation multiplied by twelve.  For purposes herein, the term “Single Occurrence” shall mean an event pursuant to which losses resulting from a single action or inaction do not exceed the average monthly compensation paid to date by Customer to Service Provider during the term of this Agreement.  Service Provider shall pay to Customer any amounts owed under this subparagraph (e) within 90 days of the date on which a final determination is made regarding Customer’s right to indemnification hereunder.

(f)  

Service Provider’s liability for indemnification for a “Castastrophic Event” (as defined below) under this Paragraph 8 shall not be limited to the average of monthly compensation paid to date by Customer to Service Provider during the term of this Agreement.  Instead, Service Provider shall compensate Customer for all losses resulting from the Catastrophic Event within 90 days of the date on which a final determination is made regarding Customer’s right to indemnification hereunder, provided, however, that, Service Provider shall increase the fees charged Customer under Paragraph 3 herein by an incremental ten percent (10%), until such time as Service Provider has been fully compensated by such incremental ten percent (10%) for the losses incurred hereunder which are in excess of the average of monthly compensation resulting from the Catastrophic Event.  For purposes herein, the term “Catastrophic Event” shall mean an event pursuant to which losses, incurred from a Single Occurrence or loss that may relate to a recurring series of losses which are the result of a single action or inaction, exceed the average monthly compensation owed by Customer to Service Provider paid to date during the term of this Agreement.

                    (g)

In the event of a termination of this Agreement prior to the full repayment of any amounts owed under this Paragraph 8, Customer agrees to pay a termination fee to Service Provider taking into consideration any amounts of unpaid balance owed by either party to the other under the terms of this Paragraph 8.

(h)  

Any remedies for breach by Service Provider shall be limited to this Paragraph 8.  In no event shall Service Provider be liable under any theory of tort, contract, strict liability or other legal or equitable theory for any lost profits, exemplary, punitive, special, incidental, indirect or consequential damages, each of which is hereby excluded by agreement of the parties.  Any action for the breach of any provision of this Agreement shall be commenced within one (1) year from the date of such breach.

(i)  

Notwithstanding anything to the contrary set forth in this Paragraph 8, with respect only to the services to be performed which are set forth in Schedule 2 of Exhibit A attached hereto, Service Provider provides no guarantee to Customer for such services performed by a third party vendor, nor is Service Provider responsible for any losses incurred by Customer due to third-party vendor performance; however, the indemnification provisions set forth in Paragraph 8 of this Agreement shall remain effective in all respects with respect to any additional services to be performed by the Service Provider for Customer set forth in Schedule 2 to Exhibit A to this Agreement.  Each of the parties hereto acknowledge and agree that Service Provider shall indemnify Customer and Citibank for any claims arising out of or as a result of Service Provider’s performance of all such additional services or the failure to perform such additional services, all as more particularly set forth in Paragraph 8 of this Agreement.

9.

Confidentiality.

 

The Customer and the Service Provider agree that all information provided pursuant to this Agreement by each party to the other party is confidential and proprietary information of the disclosing party, including non-public personal information regarding customers of Service Provider, Customer or Citibank. No party shall use any information provided by the other party for any purpose other than as permitted or required for performance under this Agreement or as provided by applicable law, including without limitation, the provisions of Title V of the Gramm-Leach-Bliley Act (P.L. 106-102).  Each party agrees not to disclose or provide any information provided by the other party to any third party, with the exception of (i) directors, officers, employees, attorneys, and auditors (collectively “employees”) of the party or its affiliates or subsidiaries who have a need to know in the course of performing, receiving, or reviewing the performance of Services under this Agreement and are bound to retain the confidentiality of the information, and (ii) vendors, subcontractors, and other service providers (collectively “vendors”) who are necessary for the Service Provider to provide services to the Customer or for the Customer to coordinate its operation with those of the Service Provider under this Agreement, and are bound to retain the confidentiality of the information without the express written consent of the other party, and each party agrees to take all reasonable measures, including, without limitation, measures taken by each party to safeguard its own confidential information to prevent any such disclosure by employees and vendors.  In no event shall the Customer divulge to any third party the contents in any invoices/charge documentation that it receives from the Service Provider without the written consent of the Service Provider, except as otherwise provided by law or regulation.  Nothing provided herein shall prevent any party from disclosing information to the extent the information (i) is or hereafter becomes part of the public domain through no fault of that party; (ii) is rightfully received from or furnished to a third party without similar restriction of the third party's rights; (iii) is independently developed by it; (iv) is disclosed pursuant to requirements of law; or (v) is already known to it.  If either party hires another person to assist it in the performance of this Agreement, or assigns any portion of its responsibilities or obligations under this Agreement to another person, the assigning or delegating party shall cause its assignee or delegate to be bound to retain the confidentiality of the information.

10.

Assignment.

 

Either party may assign any of its rights or delegate any of its obligations or responsibilities under this Agreement with the prior written consent of the other, which consent shall not to be unreasonably withheld.  The parties expressly anticipate that either party may assign such obligations and responsibilities to any of its subsidiaries or affiliates having reasonably adequate resources to perform the obligations and undertake the responsibilities under this Agreement.  All assignments shall be evidenced by an assignment document executed in a form to be provided by the Customer.  All terms and conditions of this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their successors and authorized assigns, and no other person or entity shall have any rights or beneficial interests herein or hereunder.

11.

Corporate Authority; Further Assurances.

(a)  

Each party presents and warrants that the execution and performance of this Agreement is authorized by its charter or certificate of incorporation and by its board of directors and that this Agreement has been duly executed by its officer so authorized, and agrees to furnish the other party with satisfactory evidence of same upon request.  Each party agrees to negotiate in good faith the execution of such other documents or agreements as may be necessary or desirable for the implementation of this Agreement and the effective execution of the transactions contemplated hereby, and will continue to do so during the term of this Agreement.

(b)  

Each party represents that there are no actions, suits or proceedings existing, pending, or to the knowledge of either party threatened against or affecting either party before any court, arbitrator, governmental or administrative body or agency, that might affect the validity or enforceability of this Agreement or that might result in any materially adverse effect on either party's ability to perform its obligations hereunder.  The performance of this Agreement by each party will not violate, result in breach of, or conflict with (i) its charter, certificate of incorporation, by-laws or any agreement to which it is a party or will be bound, and (ii) any law, rule, regulation, order, judgment, or decree binding on such party.

12.

Notices.

 

All notices and other communications under this Agreement, (including any invoices) shall be sent prepaid to the appropriate party at the following address via overnight delivery service, inter-office courier, United States Postal Service, or by facsimile or other electronic mail if the party includes its facsimile or electronic mail address below:

13.

Contingency Plan.

14.

Regulatory.

 

Each party agrees that at the request of the other it will permit the banking or other state or federal supervisors, applicable FFEL program guaranty agencies, and applicable insurance companies to examine the servicing relationship between the parties pursuant to this Agreement and the performance of and the records of the Services.

15.

Entire Agreement.

 

This Agreement is the sole agreement between the parties with respect to the provision of the Services, and supersedes all prior oral or written agreements for the Services.  This Agreement may be signed in counter-parts, either in original form or in the form of facsimile copies, all of which taken together shall constitute one instrument.

16.

Amendment.

 

This Agreement, including all Exhibits and Schedules, may be modified only by a written agreement signed by each of the parties hereto.  Notwithstanding the requirement that all amendments be in writing, amendments to this Agreement, its Exhibits or Schedules, may take the form of electronic communication between the parties through their respective authorized representatives.  Such amendments may be deemed signed by electronic means through an electronic message of acknowledgment in a form agreeable to the parties.

17.

Force Majeure.

 

Neither party shall be liable for delays or failure in its performance hereunder caused by any act of God, war, strike, labor dispute, work stoppage, fire, act of government, or any other cause, whether similar or dissimilar, beyond the control of that party and beyond COB planning requirements.

18.

Severability.

 

If any provision of this Agreement is deemed to be illegal, invalid or unenforceable for any reason, the remaining provisions of this Agreement shall be unaffected, and this Agreement shall continue in full force and effect unless such provision was an essential element of the agreement of the parties or the enforcement of the remaining provisions would place an unfair or disproportionate burden on or result in an unfair enrichment of one of the parties.

19.

 

This Agreement will be governed by and construed in accordance with the internal laws of the State of South Dakota.