Document:

exv10w27

 

EXHIBIT 10.27

LENDER PARTICIPATION AGREEMENT

FOR CONSOLIDATION LOANS

This Lender Participation Agreement for Consolidation Loans (the “Agreement”), to be effective as
of the 1st day of April, 2002, is by and between The Bank of New York Trust Company of Florida, N.
A., as eligible lender trustee for Consolidation Loan Funding, LLC (“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. § 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. VELA agrees to guarantee consolidation loans made by the Lender after
the effective date of this Agreement (hereinafter “Consolidation Loans”), provided that

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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 causes 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.    Termination.

     6.1    Either party may terminate this Agreement without cause by providing written notice to the
other party specifying the date of termination at least thirty (30) days prior to the intended date
of termination. 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.

     6.2    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.

7.    Breaches.

     7.1    Upon material breach by Lender 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.

     7.2    A material breach by Lender 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.

     7.3    Upon any breach by Lender, 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.

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     7.4    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.

8.    Severability.

     8.1    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.

     8.2    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.

9.    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.

10.    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.

11.    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 or Policies;
Lender’s material failure to comply with its obligations under this Agreement; 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; or any act or omission by Lender that results in a refusal by the U.S. Department of
Education to reinsure a Loan originated or held by Lender and guaranteed under this Agreement. Upon
request by NELA, the Lender, at its expense, shall undertake or assume the defense of any action in
which any such claim described herein is asserted against NELA. This indemnification provision
shall survive any termination of this Agreement.

12.    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 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.

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13.    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.

14.    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:

	 	Consolidation Loan Funding, LLC

c/o CLF Management Corp.

5005 Wateridge Vista Drive, Suite 150

San Diego, CA 92121

Attn: Ryan Katz
	 
	 	 
	          With a copy to:

	 	The Bank of New York Trust Company of Florida

10161 Centurion Parkway, 2nd Floor

Jacksonville, Florida 32256

Attn: Corporate Trust Manager
	 
	 	 
	          If to NELA:

	 	Northwest Education Loan Association

190 Queen Anne Avenue N., Suite 300

Seattle, WA 98109

Attn: Vice President, Program Services
	 
	 	 
	          With a copy to:

	 	Northwest Education Loan Association

190 Queen Anne Ave. N., Suite 300

Seattle, WA 98109

Attn: General Counsel

15.    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.

16.    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.

17.    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.

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.

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	THE BANK OF NEW YORK TRUST
COMPANY OF FLORIDA, N.A., AS
ELIGIBLE LENDER TRUSTEE FOR
CONSOLIDATION LOAN FUNDING, LLC

	 	NORTHWEST EDUCATION LOAN

ASSOCIATION
	By: /s/ Tricia Heintz

	 	By: /s/ Jennifer L. Freimund
	 

	 	 
	Signature

Tricia Heintz

	 	Jennifer L. Freimund

Vice President,

Program Services
	Print or Type Name
	 	 
	 
	Vice President
	 	 
	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 The Bank of New York Trust Company of Florida, as eligible lender
trustee for Consolidation Loan Funding, LLC 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:

18.    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.

19.    That the consolidation loan(s) have been or will be made on or after April 1, 2002, but no
later than September 30, 2002.

20.    That the total unpaid principal amount of all consolidation loans made under this certificate
will not exceed three hundred million dollars ($300,000,000.00).

21.    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.

22.    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.

23.    That the Lender complies with NELA’s reporting requirements specified in the NELA rules.

24.    That the Lender complies with the terms set forth in the Lender Participation Agreement for
Consolidation Loans.

NELA’s office at 190 Queen Anne Avenue N., Suite 300, Seattle Washington 98109 is designated as the
location where guarantee claims will be processed and other related administrative functions
performed.

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NORTHWEST EDUCATION LOAN ASSOCIATION

	 	 	 
	By /s/ Jennifer L. Freimund

	 	Date April 1, 2002
	
Jennifer L. Freimund

Vice President, Program Services
	 	 

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Northwestern Education Loan Association

AGREEMENT TO GUARANTEE LOANS

     This Agreement to Guarantee Loans (“Agreement”), to be effective the 1st day of April, 2002,
is by and between The Bank of New York Trust Company of Florida, N.A., as eligible lender trustee
for Consolidation Loan Funding, LLC (“Lender”), and Northwest Education Loan Association, a
Washington nonprofit corporation (“NELA”).

RECITALS

     A.    NELA is a private nonprofit guaranty and service agency operating under the Federal Family
Education Loan (“FFEL”) Program to provide, promote and facilitate student loans for the benefit of
the citizens and students of institutions of higher education situated in NELA’s area of service.

     B.    Lender wishes to secure the NELA guarantee on eligible loans made to students pursuing
programs of higher education, and to parents of dependent undergraduate and graduate students.

     C.    The FFEL Program includes the Stafford (formerly SLS), PLUS and Consolidation Loan
Programs. The requirements for each of these loan programs vary. The program variations include
different interest rates, different application procedures and forms, and different terms.

     D.    Lender is an eligible lender as defined in the Act, and has full legal authority to enter
into an agreement for the performance of the guarantee services described in this Agreement.

     NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises described
below, the parties hereto agree as follows:

     1.    Applicable Policies, Regulations, and Act. The performance of this Agreement is
governed by the applicable Regulations promulgated by the Secretary of Education (“Secretary”), as
now or hereafter amended (34 C.F.R. 668 and 34 C.F.R. 682) (“Regulations”); and Title IV, Part B of
the Higher Education Act of 1965, as now or hereafter amended (20 U.S.C. § 1071-1087-2) (“Act”).
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 Agreements
itself.

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     2.    NELA Guarantee. NELA agrees to guarantee eligible FFEL Program loans purchased or
acquired by Lender after the effective date of this Agreement, and eligible PLUS and Stafford loans
made by Lender after the effective date of this Agreement, provided that such loans are eligible
for guarantee and approved by NELA. For purposes of this Agreement, eligibility shall be
determined by, and in accordance with, the Policies, Regulations, and Act. Lender understands and
agrees that NELA’s agreement to guarantee loans in this Agreement does not apply to Consolidation
Loans originated by Lender. NELA reserves the right, to be exercised in its sole discretion, to
refuse to guarantee any loan.

     3.    Lender’s Obligations and General Warranties. With respect to loans made,
purchased, or held by Lender, Lender and any third party conducting loan-servicing activities on
behalf of Lender, agree and warrant as follows:

          3.1    Lender will comply with all the Policies, Regulations and provisions of the Act
appropriate to the respective Programs; and

          3.2    All actions taken by Lender, including but not limited to making, servicing, or collecting
on those loans, are in compliance with the Policies, the Regulations, the Act, and all other local,
state and federal laws and regulations for loan servicing, including collection activities.

     4.    Warranties Made Upon Assignment of Promissory Note. With respect to any promissory
note guaranteed by NELA, the Lender hereby agrees and warrants that upon assignment of such note by
Lender to NELA or to any third party:

          4.1    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;

          4.2    All information furnished to NELA in connection with such promissory note is, in all
material aspects, true and accurate;

          4.3    The promissory note qualified for insurance under the FFEL Program;

          4.4    The Lender has complied with the Policies, Regulations, the Act and all other applicable
laws and regulations with respect to the promissory note and the loan; and

          4.5    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.    Lender’s Obligation to Secure Interest Reductions for Borrower. Lender
acknowledges that pursuant to the Policies, Regulations and Act, Lender is obligated to assist
borrowers under the FFEL Program in securing reductions in their obligations to pay interest on
loans made or held by Lender if such interest is eligible for subsidy under the Policies,
Regulations, or Act.

     6.    Amendments. From time to time the federal government may amend the Act, or the
Secretary may amend or repeal any of the Regulations. This Agreement shall continue in full

2

 

force
and effect, and any such change in the Act or Regulations shall be incorporated into it, unless a
party gives notice of termination of this Agreement within thirty days of any such change, and
specifies the amendment or repeal of the Act or Regulation as the reason for terminating the
Agreement. Any government action to amend or repeal the Act or regulations constitutes notice to
the parties of such change, the NELA shall not be responsible for notifying Lender of any such
change.

     7.    Termination.

          7.1    Either party may terminate this Agreement without cause by providing written notice to the
other party specifying the date of termination at least thirty (30) days prior to the intended date
of termination. 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 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 by Lender of this Agreement, whether of the provisions found in the
Agreement itself or its incorporated provisions, NELA is entitled to suspend or withdraw its
guarantee, in part or entirely, as to the loan or loans affected by the breach, provided that NELA
has notified Lender of such breach and Lender has failed to cure such breach within thirty (30)
days of such notice.

          8.2    A material breach by Lender shall be a defense by NELA to any claim or action by Lender
upon the guarantee of a loan directly affected by the material breach.

          8.3    Upon any breach by Lender, whether material or not, of any provisions 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.

3

 

          9.2    Policies, Regulation and Act. If any provisions of the Policies, Regulations, or
the Act are rescinded, repealed, withdrawn, held to be invalid, or otherwise rendered inoperative,
the remaining provisions are not affected, and shall continue in full force.

     10.    Entire Agreement; Modifications. This Agreement, including any incorporated
provisions, constitutes the entire understanding between the parties and supersedes any prior
written or oral understanding between them. 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 or Policies;
Lender’s material failure to comply with its obligations under this Agreement; 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; or any act or omission by Lender that results in a refusal by the U.S. Department of
Education to reinsure a Loan originated or held by Lender and guaranteed under this Agreement.
Upon request by NELA, the Lender, at its expense, shall undertake or assume the defense of any
action in which any such claim described herein 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 NELA’s 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 herein is asserted
against Lender. This indemnification provisions 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 nonassignable except in accordance with the 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 applicable address below:

	 	 	 
	          If to Lender:

	 	Consolidation Loan Funding, LLC

c/o CLF Management Corp.

5005 Wateridge Vista Drive, Suite 150

San Diego, CA 92121

Attn: Ryan Katz

4

 

	 	 	 
	          With a copy to:

	 	The Bank of New York Trust Company of Florida

10161 Centurion Parkway, 2nd Floor

Jacksonville, Florida 32256

Attn: Corporate Trust Manager
	 
	 	 
	           If to NELA:

	 	Northwest Education Loan Association

190 Queen Anne Avenue N., Suite 300

Seattle, WA 98109

Attn: Vice President, Program Services
	 
	 	 
	          With a copy to:

	 	Northwest Education Loan Association

190 Queen Anne Ave. N., Suite 300

Seattle, WA 98109

Attn: General Counsel

     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.    Cumulative Remedies. No remedy conferred upon or reserved by any party hereto is
intended to be exclusive of any other remedy, but each and every such remedy shall be cumulative
and in addition to any 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.

     19.    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 on the date and year first above written.

	 	 	 
	THE BANK OF NEW YORK TRUST
COMPANY OF FLORIDA, N.A., AS
ELIGIBLE LENDER TRUSTEE FOR
CONSOLIDATION LOAN FUNDING, LLC

	 	NORTHWEST EDUCATION LOAN

ASSOCIATION
	By:
/s/ Tricia Heintz

	 	By: /s/ Jennifer L.
Freimund
	 

	 	 
	Signature

Tricia Heintz

	 	Jennifer L. Freimund

Vice President,

Program Services
	Print or Type Name
	 	 
	 
	Vice President
	 	 
	Title
	 	 

6exv10w28

 

EXHIBIT 10.28

GREAT LAKES EDUCATIONAL LOAN SERVICES, INC.

Student Loan Servicing Agreement

This Agreement, is made as of January 1, 2004, between the GREAT LAKES EDUCATIONAL LOAN SERVICES,
INC. (“Great Lakes”) and HIGHER EDUCATION FUNDING I, a Delaware statutory trust the Delaware
trustee for which is The Bank of New York (Delaware), as beneficial owner of loans the legal title
to which will be held by The Bank of New York, as Eligible Lender Trustee (“Eligible Lender
Trustee”), Lender #834117 (the “Lender”), an eligible institution engaged in providing loans
(“Loans”) to students and parents under Tide 1V, Part B of the Higher Education Act of 1965, as
amended (hereinafter the “Act”).

WITNESSETH:

Whereas, Great Lakes has established a program for servicing Loans under the Act; and

Whereas, the Lender desires that Great Lakes service Loans which are purchased by the Lender and
which are covered by the Act, according to the terms and conditions set forth herein.

Now Therefore, in consideration of the promises and the terms and conditions set forth herein, the
Lender agrees as follows:

1. Loans to be Serviced. Great Lakes and the Lender agree that Great Lakes shall service all Loans
covered by the Act which are made or purchased by the Lender and which ate guaranteed by Great
Lakes Higher Education Guaranty Corporation, and which are submitted to Great Lakes by the Lender
and accepted by Great Lakes for servicing.

2. Great Lakes’ Duties as Servicer.

     (a) Great Lakes as servicer of the Loans shall perform all of the Lender’s obligations as
holder of Loans as required by the Act and all regulations issued by the U. S. Department of
Education or by the guarantor to implement the Act. Great Lakes shall have full power to sign and
act on the Lender’s behalf as the Lender’s agent in all transactions with borrowers serviced
hereunder. Lender does hereby authorize, constitute, and appoint Great Lakes on its behalf and as
its attorney in fact, to endorse those promissory notes for which a claim has been filed with the
guarantor. Great Lakes will carry out its responsibilities hereunder in a diligent and lawful
manner.

     (b) Great Lakes shall complete all forms and reports required by the U. S. Department of
Education and by Great Lakes Higher Education Guaranty Corporation.

     (c) Great Lakes shall prepare a “Lender’s Interest and Special Allowance Request and
Report-LaRS” to be used in billing the U.S. Department of Education (the “Department”) for interest
and the special allowance for all eligible loans on a quarterly basis. Great Lakes agrees to

 

 

submit the electronic report to the Department within 30 days following the last day of each
quarter (March 31, June 30, September 30, December 31).

     Great Lakes shall accrue and capitalize interest on those Loans not eligible for interest
subsidy.

     (d) Great Lakes shall verify the current status of all borrowers not less often than annually
through direct contact with each borrower to ensure correct account information. Great Lakes shall
also seek to verify the borrower’s status by direct or indirect contact with educational
institutions.

     (e) Great Lakes shall respond to all borrower inquiries in a prompt, courteous and thorough
manner.

     (f) When a Loan becomes due for repayment, Great Lakes shall prepare a payment schedule and
disclosure statement and mail it to the borrower for signature(s). Prior to the first payment due
date, repayment coupons will be prepared and sent to the borrowers.

     (g) Great Lakes shall collect when and as due and remit to Lender all principal, interest,
charges and fees including late fees) owed by borrowers. Great Lakes shall post to the borrower’s
account all payments of principal, interest and other charges. Cash receipts shall be remitted to
the Lender daily via an ACH transfer initiated by Great Lakes the day after collection. In the
event that Great Lakes services Loans that secure more than one series or class of bonds or other
indebtedness of Lender, Great Lakes will report all payment allocations separately by financing.

     (h) Great Lakes shall provide reports via email to the Lender and the Eligible Lender Trustee
of all monetary transactions as well as periodic summary and account information as required in the
“Lender Service Manual” including such items as:

          (1) Detailed periodic reports to support all cash transactions processed;

          (2) Monthly portfolio summary reports and supporting data listings;

          (3) A monthly listing of delinquent accounts; and

          (4) A quarterly report of billings to the U. S. Department of Education for interest
and special allowances.

     (i) Great Lakes shall automatically credit the Lender’s account whenever a borrower overpays
an account by less than $5.00, and the Lender, at its discretion, can reimburse the borrower. When
the overpayment is more than $5.00, Great Lakes shall remit the overpayment directly to the
borrower.

When a borrower’s balance owing is less than $10.00, Great Lakes may, at its discretion, write-off
the balance.

2

 

     (j) Great Lakes shall handle all required borrower contact functions and shall meet all
servicing “due diligence” requirements, as that term is used under the Act and implementing
regulations. Such functions include, for example, skip tracing, contacting delinquent borrowers,
handling borrower requests for extensions or deferments, and preparing and processing claims,
including death, disability, default, closed school, false certification and bankruptcy claims.

     (k) Great Lakes agrees to prepare and submit all papers and documents necessary to strictly
follow reimbursement procedures specified in the guarantor’s Common Manual upon default of borrower
and further agrees to promptly remit proceeds to Lender upon receipt from the guarantor.

3. Lender’s Responsibilities. Lender agrees to promptly notify Great Lakes of any transactions
involving the Lender and the borrower and/or changes in status or demographic data on any of its
accounts if received from sources other than Great Lakes. Lender specifically agrees to promptly
notify Great Lakes of any bankruptcy action taken with respect to any Loan.

4. Fees. The Lender agrees to pay Great Lakes the fees established by Great Lakes from time to
time for services rendered pursuant to this Agreement. The current fee schedule is attached to this
Agreement as Schedule A. Increases or decreases in such schedule may be made from time to time;
provided however, that the Lender shall be given 60 days written notice prior to the effective date
of any change in the fee schedule. Such effective date shall be the beginning of a calendar quarter
(April 1, July 1, October 1, January 1). Statements for services rendered will be provided on a
monthly basis and are payable upon receipt.

5. Liability. Great Lakes shall exercise care and due diligence in performing the services
required by this Agreement. To the extent that Great Lakes is required to appear in, or is made a
defendant in any legal action or other proceeding commenced by a party other than Lender with
respect to any matter arising hereunder, Lender shall indemnify and hold Great Lakes harmless from
all loss, liability and expense (including reasonable attorney’s fees) except for any loss,
liability or expense arising out of or relating to Great Lakes’ acts or omissions with regard to
the performance of services hereunder. Subject to paragraph 13 below, Great Lakes shall indemnify
and hold Lender harmless from all loss, liability and expense (including reasonable attorney’s
fees) arising out of or relating to Great Lakes’ acts or omissions with regard to the performance
of services hereunder provided however that Great Lakes shall not be liable in the performance of
such services except for its negligence or misconduct and provided further that in no event shall
Great Lakes be responsible or liable for any consequential damages with respect to any matter
whatsoever arising out of this Agreement.

     Either party shall have the right to mitigate its liability under this Agreement by taking
such actions as may be appropriate, including but not limited to reperformance.

     If, within a twelve-month period beginning on the date a claim is denied or would have been
denied if filed timely, or a cure should be initiated pursuant to the terms of this Agreement,
Great Lakes is unable to cure a Loan or to demonstrate that none of the stated reasons for claim
denial is attributable to Great Lakes, Great Lakes will purchase the subrogated rights to collect
on such Loan from the Lender. Upon payment by Great Lakes of the sum of the unpaid principal amount
plus interest and special allowance foregone by Lender at the applicable rate at the time

3

 

of purchase, the Loan shall be considered a “Subrogated Loan” and shall no longer be
considered a “Loan” as defined in this Agreement.

     For any Subrogated Loan for which insurance is reinstated in accordance with guarantor policy,
Lender will pay Great Lakes an amount equal to the principal balance, of the Subrogated Loan
including any unreinsured interest that may have been capitalized, insured accrued interest, and
Special Allowance collectible. After such payment, the subrogation right purchased by Great Lakes
is void and such Loan shall be deemed a Loan subject to this Agreement and will no longer be a
Subrogated Loan.

     Except as to loans originated by Great Lakes, Great Lakes does not assume, and acceptance for
servicing shall not result in, any responsibility for the correctness or completeness of Loan
related papers transmitted to Great Lakes as a part of or in conjunction with the commitment of any
Loans to Great Lakes for servicing, and Great Lakes shall not be responsible for any procedural
errors or omissions (including due diligence violations) which may have occurred prior to
initiation of servicing of a Loan hereunder by Great Lakes.

6. Confidentiality. Information about each borrower furnished to Great Lakes hereunder is
furnished upon the express condition that the information will be kept confidential by Great Lakes.
All such information, except as may be otherwise required by statute, by court order or as may be
necessary in Great Lakes’ reasonable judgment to the performance of the services required under
this Agreement, shall be held in confidence by Great Lakes.

7. Examination of Records. The Lender or its designated representative may at any time during
Great Lakes’ regular business hours examine, at the sole expense of the Lender, the records which
Great Lakes maintains on the Lender’s loans.

8. Termination.

     (a) This Agreement shall remain in full force and effect until terminated or modified as
provided herein. This Agreement may be terminated only at the end of a calendar quarter (March 31,
June 30, September 30, December 31), and only if written notice is given: (i) by the Lender to
Great Lakes at least 30 days prior to the end of a calendar quarter, or (ii) by Great Lakes to the
Lender at least 180 days prior to the end of a calendar quarter.

     (b) In the event that this Agreement is terminated as provided in subsection (a) above, Great
Lakes shall continue its full servicing until the date of termination and shall provide to the
Lender a full set of periodic reports, adjusted through the date of termination. Great Lakes shall
retain all notes, records and papers, as well as a copy of all computer-stored data relating to the
Lender’s accounts as required by the Act. Great Lakes shall make available to the Lender on demand
copies of all computer records relating to the Lender’s accounts. Such copies of the computer
records will be provided and updated at the times desired by Lender in order to facilitate a
transfer to another servicing agent. The Lender agrees to pay Great Lakes the servicing removal fee
identified on Schedule A. Upon the Lender’s request, Great Lakes may agree to provide servicing
removal services beyond those identified in this section. Such agreement between Great Lakes and
the Lender shall include sufficient additional charges to

4

 

cover Great Lakes’ costs. Great Lakes agrees that Lender shall be entitled to injunctive
relief to enforce the provisions of this subsection.

     (c) The Lender shall be liable for all charges incurred for services performed pursuant to
this Agreement up to the termination date.

     (d) Great Lakes shall continue to be liable for all acts or failures to act which occur prior
to termination (or the following loan transactions: sale or transfer to another Lender, servicing
transfer to Lender or another servicer, purchase by the guarantor or payment in full), but shall
not be liable for post-termination activities except that Great Lakes shall be obligated to remit
to the Lender any collections received by Great Lakes subsequent to termination and to provide the
reports and records herein required.

9. Amendments. Except as provided in section 4, this Agreement may be amended by Great Lakes at
anytime upon 30 days written notice to the Lender, provided that the provisions of this Agreement
shall at all times be consistent with the Act and applicable regulations. In the event of any such
modification by Great Lakes the Lender has 30 days in which to accept or reject the modification by
notice in writing. In the event of rejection of proposed modification, either party may exercise
its right to terminate as provided in section 8. In the event of termination for this reason, such
modification shall not apply to the Lender.

10. Governing Law. This Agreement shall be interpreted under the laws of the State of Wisconsin.

11. No Implied Waiver. Any waiver or modification, expressed or implied, by Great Lakes or by the
Lender of any breach of this Agreement shall not be construed to be a waiver of any such breach or
any acquiescence thereto; nor shall any delay or omission by Great Lakes or by the Lender to
exercise any right arising from any such breach affect or impair the respective party’s right to
such breach or any future breach.

12. Arbitration. In the event that the parties hereto shall fail to agree regarding any provision
of this Agreement, such disputes shall be resolved by arbitration procedures established by the
American Arbitration Association by a panel of three neutral arbitrators who shall render a written
opinion explaining the reasons for their award. The decision of any arbitrator under this paragraph
shall be final and binding upon the parties.

13. Limitation of Liability. Great Lakes and the Lender recognize that Great Lakes’ Lender
servicing programs are separate and distinct from GLHEGC’s guarantee program. The Lender
specifically agrees to look only to Great Lakes in its capacity as a servicing agent for any claims
under this Agreement relating to its functions as servicing agent. Lender specifically waives any
claim against GLHEGC’s Guarantee Fund as defined in 34 CFR 682.410(a)(1) and against GLHEGC’s
Federal Reserve Fund and Administrative Operating Fund and all other escrows required under the
Higher Education Act of 1965 as amended for claims under this Agreement.

14. Assignment. Lender may assign this Agreement to any affiliate and Great Lakes may assign this
Agreement to any affiliate to which its FFELP lender servicing program is transferred in whole or
substantial part. Except as provided herein, this Agreement may not be assigned without the prior
consent of the non-assigning party, which shall not be unreasonably withheld.

5

 

Notwithstanding the foregoing, this Agreement has been made and entered into not only for the
benefit of Great Lakes and the Lender but also for the benefit of the Lender’s Trustee in
connection with the financing of Loans; the Lender shall have the right to assign this Agreement to
the Trustee and, upon assignment, its provisions may be enforced not only by the parties to this
Agreement but by the Trustee; the foregoing creates a permissive right on behalf of the Trustee but
if the Trustee takes an assignment of this Agreement then the Trustee to the extent of the trust
corpus shall fulfill the payment obligations of the Lender to Great Lakes as servicer under this
Agreement but the Trustee’s obligations shall be solely on behalf of and shall be limited to the
trust corpus and the Trustee shall have no personal liability for such obligations. Upon such an
assignment, this Agreement shall inure to the benefit of the Trustee and its successors and
assigns. Without limiting the generality of the foregoing, all representations, covenants and
agreements in this Agreement which expressly confer rights upon the Lender or the Trustee shall be
for the benefit of, and run directly to, the Trustee and the Trustee shall be entitled to rely on
and enforce such representations, covenants and agreements to the same extent as if it were a party
hereto.

15. Compliance With Lender Bond Documents. In the event that any Loans which Lender delivers to
Great Lakes for servicing hereunder constitute “Financed Student Loans” under the Indenture of
Trust dated as of January 1, 2004 (the Indenture”), between Lender and The Bank of New York, as
Eligible Lender Trustee and The Bank of New York as Indenture Trustee (the “Trustee”), or are
pledged in connection with, or constitute collateral under any similar indenture or loan agreement
pledging or granting to any entity a security interest therein (all such Loans or other loans
pledged to or held by a trustee or other entity are hereafter referred to as the “Pledged Education
Loans”), Great Lakes agrees as follows:

(a) At the request of the Trustee or other pledgee of such Pledged Education Loans, Great Lakes
will enter into a Custodian Agreement or other similar document, in form and substance reasonably
acceptable to Great Lakes, Lender and such Trustee or other pledgee, for the purpose of
establishing a bailment with respect to any Pledged Education Loans pledged to the Trustee or other
pledgee.

(b) Great Lakes shall hold all Pledged Education Loans and related documentation as bailee for and
on behalf of the Trustee (or such other pledgee as may be applicable) for Trustee’s intended
purpose of perfecting the security or other interests of such Trustee or other pledgee therein.

(c) All sums received by Great Lakes with respect to Pledged Education Loans shall be held on
behalf of the Trustee or other applicable pledgee, including but not limited to, all payments of
principal and interest, and insurance or guarantee payments. All such funds shall be held in a
segregated account (which may, however, contain funds belonging to other Great Lakes servicing
customers, including Great Lakes affiliates) and shall not be commingled with any of Great Lakes’
other funds and shall be accounted for such that all such funds are identified separately from all
other payments received by Great Lakes in respect of the servicing of loans. Any such amounts, if
received by Great Lakes, shall be remitted only to the Trustee or other pledgee, and not to the
Lender, unless otherwise directed by the Trustee or other applicable pledgee.

6

 

(d) If any Education Loans are Pledged Education Loans, all periodic reports required to be
furnished pursuant to this Agreement shall be furnished to the Trustee.

(e) With respect to the servicing of any Pledged Education Loans on behalf of or for the benefit of
the Trustee or any other applicable pledgee, no amendment, modification, or addition to this
Agreement shall be effective with respect to any Trustee or such other applicable pledgee without
their written approval, consent, or direction of Trustee

(f) Great Lakes waives any lien that it might have pursuant to statute or otherwise available at
law or in equity on any and all notes evidencing Pledged Education Loans held by it on behalf of
the Trustee, and on all related documentation, including all moneys and proceeds derived therefrom
or relating thereto. Notwithstanding the foregoing, if Great Lakes incurs cost or expense (i) due
to an “unreasonable act” of a Guarantor resulting in the Guarantor’s refusal to pay a claim, or
(ii) due to Lender failing to make payments to the Department required by law or Regulation, Great
Lakes may offset such cost or expense against moneys derived from Pledged Education Loans serviced
by Great Lakes and held by Lender on behalf of the Trustee. In addition, Great Lakes may offset
against such derived moneys in the event fees due it are not paid in accordance with this
agreement.

(g) Great Lakes shall administer and collect all Pledged Education Loans in a competent, diligent
and orderly fashion and in accordance with all requirements of the Act, the Secretary and this
Agreement.

If there is an Event of Default under the Indenture and the Trustee forecloses on its security
interest on the Education Loans, then the Trustee shall assume all duties and obligations of the
Issuer Lender hereunder.

16. Limited Role of the Delaware Trustee. It is expressly understood and agreed by the parties
hereto that (a) this Agreement is executed and delivered by The Bank of New York (Delaware), not
individually or personally, but solely as trustee of the Issuer in the exercise of the powers and
authority conferred and vested in it, (b) each of the representations, undertakings and agreements
herein made on the part of the Issuer is tirade and intended not as personal representations,
undertakings and agreements by The Bank of New York (Delaware) but is made and intended for the
purpose of binding only the Issuer, (c) nothing herein contained shall be construed as creating any
liability on The Bank of New York (Delaware), individually or personally, to perform any covenant
either expressed or implied contained herein, all such liability, if any, being expressly waived by
the parties hereto and by any Person claiming by, through or under the parties hereto and (d) under
no circumstances shall The Bank of New York (Delaware) be personally liable for the payment of any
indebtedness or expenses of the Issuer or be liable for the breach or failure of any obligation,
representation, warranty or covenant made or undertaken by the Issuer under this Agreement.

17. Notices. All notices, requests, demands or other instruments which may or are required to be
given by any party to any other party shall be in writing and such shall be deemed to have been
properly given when served personally on an officer of the entity to which such notice is to be
given, or upon expiration of a period of 48 hours from and after the postmark thereof when
mailed postage prepaid by registered or certified mail, requesting return receipt, addressed as
follows:

7

 

	 	 	 	 	 	 	 
	If intended for Great Lakes Educational Loan Services, Inc.:	 	 
	 
	 	 	 	 	 	 
	 	 	Chief Servicing Officer
	 	 	Great Lakes Educational Loan Services, Inc.
	 	 	2401 International Lane
	 	 	P. O. Box 7858
	 	 	Madison, WI 53707
	 
	 	 	 	 	 	 
	If intended for Lender:	 	 
	 
	 	 	 	 	 	 
	 	 	Higher Education Funding I
	 	 	c/o CLF Administration Company, L.L.C.
	 	 	Attn: Mr. Ryan Katz
	 	 	1700 South Diagonal Road, Suite 625B
	 	 	Alexandria, VA 22314
	 
	 	 	 	 	 	 
	 	 	With copies to:
	 
	 	 	 	 	 	 
	

	 	 	 	The Bank of New York	 	 
	

	 	 	 	Attn: Corporate Trust Manager	 	 
	

	 	 	 	10161 Centurion Parkway, 2nd Floor	 	 
	

	 	 	 	Jacksonville, FL 32256	 	 
	

	 	 	 	Fax number: 904/645-1921	 	 
	 
	 	 	 	 	 	 
	

	 	 	 	                    -and-	 	 
	 
	 	 	 	 	 	 
	

	 	 	 	John J. Witmeyer III, Esq.	 	 
	

	 	 	 	Ford Martin Esposito Witmeyer & Gleser, L.L.P.	 	 
	

	 	 	 	Wall Street Plaza	 	 
	

	 	 	 	New York, NY 10005-1875	 	 

          In Witness Whereof, the parties hereto have executed this Agreement as of the date and year
first above written.

	 	 	 	 	 	 	 
	GREAT LAKES EDUCATIONAL	 	HIGHER EDUCATION FUNDING I
	LOAN SERVICES, INC.	 	by the Bank of New York (Delaware),
	 	 	 	 	as Delaware Trustee
	 
	 	 	 	 	 	 
	By:

	 	/s/ Michael J. Noack
	 	By:
	 	/s/ William T. Lewis
	

	 	 
	 	 	 	 
	

	 	Michael J. Noack	 	 	 	 
	

	 	Chief Servicing Officer
	 	Its:
	 	Senior Vice President
	

	 	 	 	 	 	 

8

 

GREAT LAKES EDUCATIONAL LOAN SERVICES, INC.

STUDENT LOAN SERVICING AGREEMENT

HIGHER EDUCATION FUNDING I AS BENEFICIAL OWNER OF LOANS THE

LEGAL TITLE TO WHICH WILL BE HELD BY THE BANK OF NEW YORK, AS

ELIGIBLE LENDER TRUSTEE

SCHEDULE A – FEES

The Lender agrees to pay the following fees to Great Lakes upon receipt of a monthly statement for
services rendered pursuant to this agreement:

Monthly Service Fees:

$1.25 per borrower per month during interim (in-school) period

$3.05 per borrower per month during grace period

$3.25 per borrower per month during first 12 months of repayment servicing

$2.88 per borrower per month during the remainder of the repayment period

Servicing Removal Fee:

$14.00 per account, plus actual cost of additional services requested to remove an
active account from the servicing system

Late Charge Assessment Fee:

Great Lakes shall receive 25% of the late fee revenue collected from delinquent borrowers

Monthly Extract Fee:

$100.00 per month

Consolidation loans will be charged the standard repayment servicing fees.

The total monthly amount due will be the actual fees calculated as described above or $75,
whichever is greater.

Great Lakes may agree to provide the lender with services beyond those normally included in the
servicing program. Such agreement between Great Lakes and the lender shall include sufficient
additional charges to cover Great Lakes’ costs.

Increases or decreases to this fee schedule may be made from time to time as provided in Section 5
of this agreement.

9

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