Document:

exhibit10_7.htm

    

    AMENDED
AND RESTATED AGREEMENT FOR EDUCATION LOAN SERVICING

    

    

    This
Amended and Restated Agreement for Education Loan Servicing (the "Agreement") is
made as of the 1st day of January, 2008, among Citibank (South Dakota), N.A., a
national banking association having its principal place of business at 701 E.
60th St N., Sioux Falls, South Dakota (the "Service Provider"), The Student Loan
Corporation, a Delaware corporation having its principal place of business at 99
Garnsey Road, Pittsford, New York 14534 (the “Customer”),  and
Citibank, N.A., as trustee for The Student Loan Corporation, a national banking
association having a place of business at 99 Garnsey Road, Pittsford , New York
14534 ("Citibank").

    

    WHEREAS,
the parties desire that this Agreement shall amend and restate the Agreement for
Education Loan Servicing dated as of January 1, 2004, by and among Citibank
(South Dakota), N.A., The Student Loan Corporation and Citibank, N.A. (formerly
Citibank (New York State)), as trustee for The Student Loan Corporation;
and

    

    WHEREAS,
the Service Provider has developed systems and processes to originate and
service federally insured student loans as well as consumer loans made to
finance educational costs, including student loans made under Title IV, Part B
of the Higher Education Act of 1965, as amended (collectively referred to as
“Education Loans”) in accordance with the laws, rules and regulations applicable
to those loans;

    

    WHEREAS,
Customer acquires and services Education Loans from third party lenders both
directly and as a beneficial owner under a trust agreement in which Citibank
holds loans as an eligible lender trustee under the Higher Education
Act;

    

    WHEREAS,
Service Provider shall act as a sub-contractor with respect to those Education
Loans which Customer places with Service Provider for services in situations
where Customer is a primary contractor for a third party lender with respect to
such loans;

    

    WHEREAS,
Service Provider shall perform for Customer all services in accordance with
generally established procedures and industry standards and practices, including
specifically the Origination, Customer Service, and Default Management services
specified in Exhibit A attached to this Agreement and made a part hereof by
reference, and

    

    WHEREAS,
the Service Provider has agreed to make available to the Customer, and the
Customer wishes to receive, the Origination, Customer Service and Default
Management services described in Exhibit A (collectively “the
Services”),

    

    THEREFORE,
in consideration of these mutual promises and covenants contained herein, the
parties agree that the terms and provisions of the original Agreement for
Education Loan Servicing shall be amended and restated as follows:

    

    
      	
              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.

            

    

    

    Notwithstanding
the foregoing, the Service Provider is entitled to an increase in the Service
Fees for certain uncontrollable costs.  To initiate such an increase,
the Service Provider must give Customer a written notice specifying the proposed
increase or increases together with an explanation of the uncontrollable costs
on which they are based.  Such increases shall be effective
immediately after such notice is given, unless the parties agree on another
effective date or the Customer gives timely notice of non-acceptance under
subparagraph (c) below.  Uncontrollable costs are limited to postage
costs, telecommunication costs, wages, facilities, software and hardware
upgrades, equipment upgrades, and costs related to material changes to the
Services performed arising from changes to The Higher Education Act, guaranty
agency rules and regulations (federal or private insurer), FFEL program
regulations, or similar authority under which Education Loans are
made.  Service Provider and Customer shall negotiate in good faith the
amendment of Exhibit B to reflect the increase in Service Fees.

    

    
      	
              (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.

            

    

    

    Service
Provider and Customer acknowledge that Education Loans are difficult to service
and that conversion of such loans to another loan servicer is time consuming and
difficult.   The parties agree that extensive time periods for
notice and termination, in addition to Customer’s obligation to pay increased
servicing fees after notice of termination, are a reflection of the difficulty
and time necessary to convert Education Loans to another loan servicer.  Customer
is responsible for all direct conversion costs should both parties agree to
terminate the Agreement.

     

    
      	
              (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:

            

    

    

    SERVICE
PROVIDER:

    Citibank
(South Dakota), N.A.

    701 E.
60th
Street North

    Sioux
Falls, SD  57105

    

    Fax
Number:  605-330-6745

    Attention:  President

    

    

    CITIBANK:

    Citibank,
N.A., as eligible lender

    trustee
for The Student Loan Corporation

    99
Garnsey Road

    Pittsford,
New York 14534

    

    Fax
Number: 203-975-6724

    Attention:
President

    

    CUSTOMER:

    The
Student Loan Corporation

    99
Garnsey Road

    Pittsford,
NY 14534

    

    Fax
Number:  203-975-6724

    Attention:  Chief
Executive Officer; copy to General Counsel

    
 

    
      	
              13.

            	
              Contingency
      Plan.

            

    

    Service
Provider agrees to develop necessary business interruption and disaster
contingency plans which will meet with all required continuity of business
standards applicable to either Service Provider or Customer (with respect to the
Services), and will work with Customer to coordinate the continuity of business
planning to ensure that all foreseeable business interruptions are minimized so
as not to disrupt Customer’s business.

    

    
      	
              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.

            	
              Governing
      Law.

            

    

    
      	
               
      

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

            

    

    

    20.           Limited Role of Citibank as
an Eligible Lender Trustee.

    Service
Provider and Customer acknowledge that Citibank has entered into this Agreement
solely in its capacity as an eligible lender trustee for Customer and not in its
individual capacity.  Citibank has undertaken only those duties that
are required of it under its trust agreement with
Purchaser.  Accordingly, all recourse and remedies of Service Provider
shall be available only against Customer and the assets established under the
trust agreement and not against Citibank in its individual
capacity.

    

    
      
         

      

      
         

        
        

      

      
         

      

    

    IN
WITNESS WHEREOF, the Service Provider, Citibank and Customer have caused this
Agreement to be executed as of the date first written above.

    

    
      
        	 Citibank, NA., as	 	 	 Citibank
      (South Dakota), N.A.	 
	 Trustee
      for The Student Loan Corporation	 	 	 	 
	 	 	 	 	 
	
                /s/Valerie
      Delgado

              	 	 	
                /s/
      Kendall E. Stork

              	 
	
                Valerie
      Delgado

              	 	 	
                Kendall
      E. Stork

              	 
	
                Vice
      President

              	 	 	
                President
      

              	 

      

    

     

    
      
        	 The Student Loan Corporation	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	
                /s/Michael
      J. Reardon

              	 	 	
                 

              	 
	
                Michael
      J. Reardon

              	 	 	
                 

              	 
	
                President
      and CEO

              	 	 	
                 

              	 

      

    

     

     

     

    
       

    

    

    ATTACHMENTS:

    Exhibit
A: Services to be provided

    Schedule
1                                Services
Provided

    Schedule
2                                Services
relating to Outsourcing to Third Party Vendors

    

    Exhibit
B: Pricing

    

    Exhibit
C: Service Quality Standards Required of Service Provider

    
      
         

      

      
         

        
        

      

      
         

      

    

    

    EXHIBIT
A

    

    SERVICES
TO BE PROVIDED

    

    SCHEDULE
1

    SERVICES
PROVIDED

    

    

    ORIGINATIONS
AND CASH DISBURSEMENTS

    Management
of all student loan origination processes.  These processes include,
but are not limited to:  1) the receipt and processing of written,
faxed and electronically submitted applications, 2) communication of the
approval or denial of the loan application(s), 3) underwriting of credit based
loans, 4) exception processing of incomplete applications (arising from missing
information or documents) and other problem resolution, 5) management and
control of the various transmissions of information and loan proceeds
disbursement, 6)  guarantor reporting, and 7) loan refund and
cancellation processes.   It is understood that the student loan
origination processes include current and future multiple channels and multiple
products as well as all processes involved in the processing of these
products.  Project support in the form of testing, business analysis
and project management will be provided as required by the
Customer.

    

    

    CUSTOMER
SERVICE

    All
traditional student loan servicing after loan origination, originating support /
fulfillment, and retention processes.  Service Provider to provide the
management and handling of incoming telephone calls, correspondence (written and
electronic) for all products, current and future, and accompanying paper defined
as requests for service (whether from students, parents, schools, guarantor
agencies, the federal Department of Education, or others in the ordinary course
of the student lending business) including, for example and without limitation,
deferments, change of addresses, notices of graduation date changes, NIVR
management, credit bureau reporting, and servicing calls for all channels and
loan products offered including new channels and products mandated by law or
regulation or developed by Customer.  Manage and staff a retention
call unit within the Customer Service Phones operation.  From time to
time, the Servicer’s phone unit may be utilized for marketing
campaigns.  These campaigns will be mutually agreed to at the time of
inception and charged back with the same methodology as any other
service.  An appropriate secured storage location will be provided for
the storing and oversight of paper documents related to student loans (e.g.,
Promissory Note vault).  Provide workforce management support for
volume forecasting, capacity planning, staffing planning and ongoing monitoring
of performance levels.  Project support in the form of testing,
business analysis and project management will be provided as required by the
Customer.

    

    

    

    
      
         

      

      
         

        
        

      

      
         

      

    

    EXHIBIT
A

    

    SERVICES
TO BE PROVIDED

    

    

    

    DEFAULT
MANAGEMENT

    All the
servicing related to the handling and management of delinquent accounts together
with compliance with all the due diligence in collection requirements for the
FFEL and private loan products. In addition to collection management, Service
Provider will provide management and handling of recoveries, litigation
coordination, pre-repayment calling, and the handling, and filing of all default
claims to FFEL guarantor agencies or private insurers   The level
of servicing provided shall be no less than that required by applicable law,
regulation, or insurance agreement, but emphasis shall be placed upon managing
the portfolio such that underlying causes of delinquency are minimized to the
extent possible.  Strategies to achieve maximum performance of the
portfolio must be mutually agreed upon by the Service Provider and
Customer.  Project support in the form of testing, business analysis
and project management will be provided as required by the
Customer.

    

    HUMAN
RESOURCES

    Provide
human resource generalist and employee relations support.

    
      
        
          

           

        

         

      

      
         

        
        

      

      
         

      

    

    

    

    EXHIBIT
A

    

    SERVICES
TO BE PROVIDED

    

    SCHEDULE
2

    SERVICES
TO CUSTOMER FOR OUTSOURCED THIRD PARTY VENDORS

    

    Service
Provider may provide services to Customer with respect to processes that
Customer outsources to third party vendors.  Processes shall include
but are not limited to:

    

    Pre-repay
and pre-delinquency calls to FFELP and CitiAssist borrowers and co-signers,
Email management, Credit Disputes, Address Changes, Indexing, CAM and Phone
Referrals.

    

    Other
processes may be added to this list, provided both parties concur.

    

    Services
shall include:

    1.  Monitoring
and evaluation for quality standards

    2.  MIS
collection and distribution

    3.  Periodic
process improvement reviews

    4.  Risk
Control Self Assessment

    

    Evaluation/management
tools required by Service Provider shall be provided by Customer at its
cost.  Service Provider will evaluate the services being provided by
third-party vendors to Customer against established
standards.  Reports of these evaluations will be sent to Customer on a
periodic basis.  Major issues will be sent to Customer as soon as they
are identified.

    

    
      
         

      

      
         

        
        

      

      
         

      

    

    

    EXHIBIT
B

    

    FEES
AND COMPENSATION

    

    Service Provider and Customer
acknowledge that each operates its respective business operations based, among
other things, upon financial forecasts of the revenue and/or expense of the
respective components of their businesses.  During the course of each
fiscal year, Service Provider and Customer each make changes to their financial
forecasts based upon the volume of business activity, changes in costs, business
improvement projects, funding costs, business environment and numerous other
factors.  Therefore, Service Provider and Customer have agreed to
negotiate an agreed upon financial and business forecast from which to base the
compensation due Service Provider from Customer.  Compensation will be
based on the Service Provider’s actual marginal cost as defined
below.

    

     Price
Determination

    

    Beginning with the first calendar
quarter of 2008 and ending with the termination of the Agreement, Service
Provider and Customer agree the compensation for the Services to be provided
under this Agreement For Education Loan Servicing, shall be determined by adding
10% to Service Provider’s actual marginal cost, provided however, that such
amount shall not exceed Service Provider’s fully loaded
cost.  “Marginal cost” for the purposes of this Paragraph shall mean
Service Provider’s marginal cost as agreed in writing by the
parties.   The parties acknowledge that Service Provider’s
marginal cost generally means its direct costs less general overhead and
administration expenses allocated to the provision of the Services. A business
forecast based on marginal cost will be provided on a quarterly basis for budget
purposes.  Charges will be billed one month in arrears to allow for
the calculation of actual marginal costs.

    

    Documentation

    Notwithstanding the requirement that
all amendments be in writing, amendments to the marginal cost or adjustments
thereto may take the form of electronic or facsimile 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.

    

    

    Dispute
Resolution

    In the event that a dispute with
respect to the fees and compensation due Service Provider shall arise and not be
resolved in accordance with the Service Agreement, Service Provider and Customer
shall each appoint two representatives to resolve the dispute.

     

    
      
      

    

     

    EXHIBIT
C

    

    SERVICE
QUALITY AND TIMELINESS STANDARDS REQUIRED OF SERVICE PROVIDER

    

    
      	
              PROCESS

            	
              STANDARD

            	
              %
      IN STD

            	
              QUALITY
      FACTOR

            
	
              ORIGINATION

            
	
              
    
	
              Origination
      Document on system (Data Entry)

            	
              1
      business day

            	
              99%

            	
              99%

            
	
              
    	
              
    	
              
    	
              
    
	
              Resets

            	
              2
      business days

            	
              98%

            	
              99%

            
	
              
    	
              
    	
              
    	
              
    
	
              Non
      Origination Documents on the System (Data Entry)

            	
              Acknowledgements
      3 business days

              Doc
      Locs 8 business days

              References
      8 business days

            	
              98%

            	
              99%

            
	
              
    	
              
    	
              
    	
              
    
	
              CitiAssist
      Applications

            	
              3
      days

            	
              85%

            	
              98%

            
	
              
    	
              
    	
              
    	
              
    
	
              FFELP
      (Stafford and Plus)

            	
              5  days

            	
              90%

            	
              98%

            
	
              
    	
              
    	
              
    	
              
    
	
              FFELP
      Plus Pre Screen

            	
              1
      hour

            	
              95%

            	
              98%

            
	
              
    	
              
    	
              
    	
              
    
	
              Document
      Control

            	
              Quality
      Only - Timeliness included in DE Standard

            	
              N/A

            	
              99%

            
	
              
    	
              
    	
              
    	
              
    
	
              Problem
      Applications

            	
              5
      business days

            	
              98%

            	
              98%

            
	
              
    	
              
    	
              
    	
              
    
	
              Loan
      Consolidation – Outgoing Lender Verification Certificates
      (LVCs)

            	
              10
      business days

            	
              100%

            	
              98%

            
	
              
    	
              
    	
              
    	
              
    
	
              Underwriting
      Credit Review – Manual

            	
              2
      business days

            	
              95%

            	
              98%

            
	
              
    	
              
    	
              
    	
              
    
	
              Underwriting
      Correspondence Inquiries

            	
              5
      business days

            	
              98%

            	
              98%

            
	
              
    	
              
    	
              
    	
              
    
	
              Underwriting
      Verifications

            	
              2
      business days

            	
              100%

            	
              98%

            
	
              
    	
              
    	
              
    	
              
    
	
              Loan
      Consolidation – CLASS Application Review

            	
              5
      business  days

            	
              98%

            	
              98%

            
	
              
    	
              
    	
              
    	
              
    
	
              Investigations

            	
              10
      days

            	
              90%

            	
              97%

            
	
              CASH
      DISBURSEMENT UNIT

            
	
              Check
      and Mastercheck Disbursements sent (includes
    reconcilements)

            	
              End
      of next business day

            	
              98%

            	
              N/A

            
	
              
    	
              
    	
              
    	
              
    
	
              EFT
      Disbursements

            	
              End
      of next business day

            	
              98%

            	
              N/A

            
	
              
    	
              
    	
              
    	
              
    
	
              Cancellations
      / Refunds

            	
              1
      business day

            	
              99%

            	
              98%

            
	
              CUSTOMER
      SERVICE PHONES

            
	
              Customer
      Service Phone Calls

            	
              Answered
      in 20 seconds

            	
              80%

            	
              96%

            
	
              
    	
              
    	
              
    	
              
    
	
              Abandoned
      Calls

            	
              2%

            	
              N/A

            	
              N/A

            
	
              
    	
              
    	
              
    	
              
    
	
              Average
      Seconds to Answer (ASA)

            	
              20
      seconds

            	
              N/A

            	
              N/A

            

    

     

    
      
      

    

    
    

    
      EXHIBIT
C

      

      SERVICE
QUALITY STANDARDS REQUIRED OF SERVICE PROVIDER

      

      
        	
                PROCESS

              	
                STANDARD

              	
                %
      IN STD

              	
                ACCURACY
      STANDARD

              
	
                CUSTOMER
      SERVICE PAPER

              
	
                
    
	
                Service
      Inquiries (Correspondence and Address Changes)

              	
                5
      days

              	
                98%

              	
                97%

              
	
                
    	
                
    	
                
    	
                
    
	
                Internet
      Correspondence Response – Front End

              	
                24
      hours

              	
                98%

              	
                97%

              
	
                
    	
                
    	
                
    	
                
    
	
                Investigations
      (Levels I, II, III, V, and VI)

              	
                10
      days

              	
                90%

              	
                97%

              
	 
      	 
      	 
      	 
      
	
                
    	
                
    	
                
    	
                
    
	
                SSCRs
      processed – Manual

              	
                25
      days

              	
                95%

              	
                97%

              
	
                
    	
                
    	
                
    	
                
    
	
                Grad
      Date Rejects – Borrower initiated

              	
                5
      days

              	
                95%

              	
                97%

              
	
                
    	
                
    	
                
    	
                
    
	
                Grad
      Date Rejects – Non Borrower initiated

              	
                25
      days

              	
                95%

              	
                97%

              
	
                
    	
                
    	
                
    	
                
    
	
                Manifest
      Rejects

              	
                25
      days

              	
                95%

              	
                97%

              
	
                
    	
                
    	
                
    	
                
    
	
                Credit
      Disputes / Appeals

              	
                7
      days

              	
                98%

              	
                97%

              
	
                
    	
                
    	
                
    	
                
    
	
                Deferment
      Processing

              	
                5
      days

              	
                95%

              	
                97%

                 

              
	
                
    	
                
    	
                
    	
                
    
	
                Pre-claim
      Rejects

              	
                30
      days

              	
                 98%

              	
                97%

              
	
                
    	
                
    	
                
    	
                
    
	
                Delinquent
      Claim Review

              	
                330
      days

              	
                98%

              	
                97%

              
	
                
    	
                
    	
                
    	
                
    
	
                Death
      and Disability Claims

              	
                45
      days

              	
                 98%

              	
                97%

              
	 
      	 
      	 
      	 
      
	
                
    	
                
    	
                
    	
                
    
	
                Claims
      Payments

              	
                30
      days

              	
                 98%

              	
                97%

              
	
                
    	
                
    	
                
    	
                
    
	
                Bankruptcy
      Claims

              	
                30
      days

              	
                 100%

              	
                97%

              
	 
      	 
      	 
      	 
      
	
                
    	
                
    	
                
    	
                
    
	
                Return
      Claims- Non Bankruptcy

              	
                30
      days

              	
                80%

              	
                97%

              
	
                
    	
                
    	
                
    	
                
    
	
                Return
      Claims – Bankruptcy

              	
                30
      days

              	
                100%

              	
                97%

              
	 
      	 
      	 
      	 
      
	
                
    	
                
    	
                
    	
                
    
	
                Supplemental
      Claims

              	
                30
      days

              	
                 98%

              	
                97%

              
	
                
    	
                
    	
                
    	
                
    
	
                Private
      Loan Delinquent Claim Review

              	
                180
      days

              	
                98%

              	
                97%

              
	
                RISK

              
	
                
    
	
                Outbound
      Collection Calls

              	
                Minimum
      of 1 call per bucket if contact, 2 calls per bucket if no
      contact.

              	
                100%

              	
                97%

              
	
                
    	
                
    	
                
    	
                
    
	
                Inbound
      Collection Calls

              	
                Answered
      in 20 seconds

              	
                80%

              	
                97%

              
	
                
    	
                
    	
                
    	
                
    
	
                Skip
      Trace

              	
                 10
      days from notification

              	
                100%

              	
                97%

              
	
                
    	
                
    	
                
    	
                
    
	
                Recovery
      Cure Process

              	
                150
      days

              	
                100%

              	
                97%

              

      

      

       

      All days
in calendar days unless otherwise noted.Hong Kong Winalite Group, Inc.: Exhibit 10.1 - Prepared by TNT Filings
Inc.

  

Exhibit 10.1

MASTER PURCHASE AND SUPPLY AGREEMENT

This MASTER PURCHASE AND SUPPLY AGREEMENT (“Agreement”) is made as of May 1, 2008, between and among The Hong Kong Winalite Group Limited, a Hong Kong company (“Winalite”); and Shenzhen Yuelang Techno Industrial Co., Ltd., a company organized and existing under the laws of the People’s Republic of China (“Manufacturer”). Each of the foregoing is referred to as a “Party” and together as the “Parties”.  Capitalized terms not otherwise defined have the meanings assigned to them in Exhibit A to this Agreement.

RECITALS

A.

Manufacturer holds the rights to certain patented technology used in the manufacture of the products identified on Exhibit B (the “Products”).

B.

Winalite has been organized to centralize and coordinate the marketing, sale and distribution of branded products, including those previously manufactured and/or distributed by third parties using the name “Winalite;” accordingly, the ownership and rights to that name and brand are also being consolidated within Winalite.

C.

Winalite desires to purchase Products from Manufacturer, and Manufacturer desires to sell Products to Winalite for resale and distribution worldwide, pursuant to the terms and conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the mutual promises and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are acknowledged by the Parties, the Parties agree as follows:

AGREEMENT

1.

Purchase Orders.  

(a)

Winalite will order Products from Manufacturer on Winalite’s standard purchase order form (each, a “Purchase Order”).  Each Purchase Order will be deemed accepted by Manufacturer unless specifically rejected in writing by Manufacturer within five (5) days of the date of the Purchase Order.

(b)

Each Purchase Order delivered to Manufacturer under this Agreement will be deemed a part of and/or incorporated into this Agreement, provided, however, that the only binding terms of such Purchase Order will be the specific terms identifying the Products ordered, the quantity, delivery schedule, delivery method, destination and FOB/CIF designation. The Parties expressly agree that all other provisions of Buyer’s Purchase Orders or Manufacturer’s order acknowledgement are void, it being the express intent of the Parties that this Agreement governs the general terms of sale.

1

(c)

All Purchase Orders will be delivered to Manufacturer by facsimile, e-mail or international courier.

(d)

The form and content of the Purchase Orders, including any terms and conditions appearing on or attached to the Purchase Orders, will be determined in the sole discretion of Winalite; provided, however, that Manufacturer will have five (5) days from receipt of any Purchase Order to object in writing to any change to the commercial terms thereof, as compared to the immediately preceding Purchase Order accepted or deemed accepted by Manufacturer. If Manufacturer so objects, the Purchase Order will be deemed canceled. If Manufacturer does not so object, the Purchase Order will be deemed accepted.

2.

Prices.  

(a)

The prices (the “Prices”) for the Products are set forth on Exhibit C, which may be amended from time to time by written agreement of the Parties. No amendment of the Prices will be effective for a period of ninety (90) days after agreement thereon by the Parties.

(b)

The Prices include all charges such as for packaging, packing, customs duties imposed before passage of title, and all taxes except sales, use and other such taxes imposed upon the sale or transfer of Products for which Winalite may be responsible under applicable law.

3.

Delivery.  

(a)

Time and rate of delivery are of the essence of all purchases made under this Agreement. The minimum agreed period between Winalite’s delivery of a Purchase Order and the scheduled delivery date (“Leadtime”) will be no less than thirty (30) days unless a longer period is stated in the Purchase Order or a shorter period is agreed to in writing between the Parties.

(b)

Deliveries will state in the applicable Purchase Order. Winalite may within ten (10) days prior to the scheduled delivery date require Product to be drop-shipped to its distributors located outside of Hong Kong. Unless otherwise agreed, the shipping charges will be borne by the Manufacturer.

(c)

If Manufacturer delivers Products more than ten (10) days in advance of the scheduled delivery date, Winalite, after notice to Manufacturer, may either (i) return such Products, at the Manufacturer’s costs and expense, for subsequent delivery on the original scheduled delivery date or (ii) retain such Products and postpone payment until it would have been due if Manufacturer had delivered the Products as scheduled. If Manufacturer is more than fifteen (15) days late in meeting a scheduled delivery date (a “Late Delivery”), then Winalite may require that Manufacturer ship the Products via a premium means at Manufacturer’s expense. Manufacturer will not be responsible for delays or defects in delivery resulting from unforeseen, superseding circumstances, including delays of carriers.

(d)

The following delivery-related terms have the meaning set forth below:

(i)

For C.I.F., “Shipment Date” means the date on which the Products are delivered on board the common carrier in           (or such other port as Manufacturer may ship Products from in the future). For F.O.B., “Shipment Date” means the date on which the Products are delivered to Winalite’s common carrier in           (or such other port as Manufacturer may ship Products from in the future).

2

(ii)

“Delivery” will have occurred on the Shipment Date.

(iii)

When Products are delivered to or on board the common carrier after the originally scheduled delivery date with the delay caused by Winalite, the delivery will be deemed timely.

(iv)

When Products are delivered otherwise but in compliance with this Agreement or any other written agreement of the Parties, the delivery will be timely.

4.

Payment and Terms.

(a)

All purchases of Product will be on open account. Payment terms will be ninety (90) days net upon invoice by Manufacturer, unless otherwise specified in the applicable Purchase Order. Any amounts owed to Winalite due to permitted rejections of Product or agreed discrepancies on paid invoices will be, at Winalite’s option, fully credited against future invoices payable to Manufacturer, or paid by Manufacturer within thirty (30) days from Manufacturer’s receipt of a debit memo or other written request for payment by Winalite.

5.

Quality, Inspection and Acceptance.

(a)

All Products will conform to the specifications attached as Exhibit D, as they may be amended from time to time by written agreement of the Parties (the “Specifications”).

(b)

Without limitation, the Specifications may include product marking and labeling, including country-of-origin marking, product inserts and other similar requirements for the Products.

(c)

Winalite may perform source inspection and process control audits at Manufacturer’s facilities at any time during normal business hours, but this does not relieve Manufacturer of its obligation to deliver conforming Products or waive Winalite’s right to reject non-conforming Products.

(d)

Winalite may reject non-conforming Products at any time within ninety (90) days after Delivery.

(e)

Products will be deemed non-conforming if they fail to comply with the applicable Specifications. Winalite may within ninety (90) days after Delivery return non-conforming shipments of Product to Manufacturer for replacement, with Manufacturer bearing all costs and risk of loss including, without limitation, additional shipping expenses. Winalite will not be required to obtain Manufacturer’s advance consent for any returns of non-conforming Products. Manufacturer will replace all such Products and ship the replacement Products to Winalite (or at Winalite’s instructions) within fifteen (15) days of receipt by Manufacturer of the defective Products.

6.

Winalite Brand. Winalite

Manufacturer hereby transfers to Winalite all right, title and interest it may have in and to the word “Winalite,” including without limitation any trademark, trade name, or copyright to that word and any representation or design incorporating that word (collectively, the “Winalite Brand”). Winalite hereby grants to Manufacturer during the Term of this Agreement a royalty-free license to use the Winalite Brand only in connection with the manufacturing and sale to Winalite of the Products. Manufacturer will not use the Winalite Brand in connection with the manufacturing of any products or items for sale to any Person other than Winalite without the advance written approval of Winalite. Should Manufacturer acquire any rights in the Winalite Brand, whether by operation of law or otherwise, Manufacturer will, at the cost and expense of Winalite, immediately, upon the request of Winalite, irrevocably unconditionally and effectively, assign such rights to Winalite.  Manufacturer hereby acknowledges, declares and agrees that it has no rights, and/or interest, of whatsoever nature in Winalite Brand save for the licenses granted to it by Winalite pursuant to the provisions of this Agreement.  Manufacturer hereby, irrevocably and unconditionally, waives, in favor of Winalite, any such rights which it may acquire, whether by operation of law or otherwise.  The provisions of this clause will remain in full force and effect notwithstanding the expiration or earlier termination of this Agreement.

3

7.

License Grant.

Manufacturer grants to Winalite a world-wide, royalty-free license during the Term of this Agreement to use any patents, copyrights, trademarks, trade names or other intellectual property which is owned or to which Manufacturer has rights, solely for the purposes of marketing, selling and distributing the Products.

8.

Exclusivity.

With the exception of the market in People’s Republic of China, manufacturer will manufacture the Products exclusively for Winalite and, unless approved in advance in writing by Winalite, will not manufacture or sell the Products, any functionally equivalent products, or any products employing or incorporating any patented or proprietary technology used in the production of the Products to any other Person.

9.

Warranties; Intellectual Property Indemnification.

(a)

Manufacturer warrants for three (3) years from the shipment date that all Products will be free from defects in material, workmanship and design which adversely affect the performance of the Products, and will comply with all applicable health and safety, and consumer protection, laws and regulations. The warranties will survive any inspection, delivery payment or termination of this Agreement.

(b)

Manufacturer warrants that it has the right to manufacture and convey the Products to Winalite and that the Products when shipped will be free of all liens and encumbrances.

(c)

Manufacturer warrants to Winalite that it has all intellectual property and other rights necessary to manufacture and sell the Products to Winalite, and that the design, manufacture, marketing and sale of the Products does not and will not infringe the intellectual property rights of any other Person.

(d)

Manufacturer will defend, at its expense, any claims against Winalite alleging that the Products, or any part thereof, infringe any patent, copyright, trademark, trade secret, mask work or other intellectual property interests in any country and will pay all costs and damages awarded, if Manufacturer is notified promptly in writing of such claim. If an injunction against Winalite’s or Winalite’s customer’s or distributor’s use, sale, lease, license or other distribution of Products or any part thereof results from such a claim (or if Winalite reasonably believes such a claim is likely), Manufacturer will, at its expense (and in addition to Manufacturer’s other obligations hereunder) and as Winalite requests, use its best efforts to
(i) obtain for Winalite and its customers and distributors the right to continue using, selling, leasing, licensing or otherwise distributing the Products, or
(ii) replace or modify the Products so that they become non-infringing but functionally equivalent.

4

10.

Compliance with Laws.  

Each Party will at all times and at its own expense (a) strictly comply with all applicable laws, rules, regulations and governmental orders, now or hereafter in effect, relating to its performance of this Agreement,
(b) pay all fees and other charges required by such laws, rules, regulations and orders, and
(c) maintain in full force and effect all licenses, permits, authorizations, registrations and qualifications from all applicable governmental departments and agencies to the extent necessary to perform its obligations hereunder.

11.

Representations and Warranties.

Each Party represents and warrants to the other, as to itself and not as to the other, as follows:

(a)

It is a company duly organized under the laws of the country identified in its address on the signature page of this Agreement and has all requisite corporate power and authority to enter into, deliver and perform its obligations under this Agreement. When duly executed and delivered by it, this Agreement will constitute an obligation which is valid, binding on and enforceable against it.

(b)

All corporate action necessary to execute, deliver and perform its obligations under this Agreement has been duly taken.

(c)

It has all necessary business and other governmental licenses, permits and authorizations to permit it to perform its obligations under this Agreement.

12.

Confidential Information.  

Notwithstanding any other provision of this Agreement, the Parties agree to maintain in confidence, and not to disclose to other Person, either during the Term of this Agreement or during a period of five (5) years thereafter, any and all Confidential Information furnished by a Party (the “Disclosing Party”) to the other Party (the “Receiving Party”). “Confidential Information” means and includes any information of any nature except for information (i) which at the time of disclosure is, or subsequently becomes, part of the public domain through no fault of the Receiving Party, (ii) which at the time of disclosure, is already known to the Receiving Party and the Receiving Party can prove such prior knowledge, or (iii) which is subsequently disclosed on a non-confidential basis to the Receiving Party by a third Party whose receipt and disclosure does not constitute a violation of any confidentiality obligation to the Disclosing Party. Confidential Information may include, but will not be limited to, processes, compilations of information, records, specifications, cost and pricing information, customer lists, catalogs, booklets, technical advertising and selling data, samples, and the fact of the Disclosing Party’s intent to manufacture, market, sell or distribute any new product, and except for information which is public or general industry knowledge, all information furnished by the Disclosing Party to the Receiving Party will be considered to be Confidential Information, whether or not specifically so designated. The Receiving Party will take all reasonable steps to protect the Confidential Information from unauthorized disclosure, including, but not limited to, informing its employees in writing of the confidential nature of the information and binding those employees to maintain the confidentiality of the information to the same extent as provided herein. The Receiving Party further agrees not to use any Confidential Information in any way, directly or indirectly, except as required in the course of the performance of the terms of this Agreement and approved in writing and in advance by the Disclosing Party.

5

13.

Term and Termination.  

(a)

The term of this Agreement (the “Term”) will commence on the date first set forth above and continue until terminated in accordance with this Section
13.

(b)

This Agreement will terminate:

(i)

upon six (6) months advance notice by either Party, by written notice delivered to the non-terminating Party specifying the effective date of such termination;

(ii)

immediately by written notice of a Party (1) upon the material breach by any other Party of that Party’s obligations hereunder and the failure of such Party to cure such breach within thirty (30) working days after written notice from the non-breaching Party; or
(2) upon the filing of a voluntary or involuntary petition in bankruptcy by another Party or of which such other Party is the subject, or the insolvency of the other, or the commencement of any proceedings placing the other in receivership, or of any assignment by the other for the benefit of creditors.

(c)

Consequences of Termination.  

On the effective date of any termination of this Agreement, (i) all licenses and grants of intellectual property, including those set forth in Sections
6 and 7  and , will terminate immediately except as necessary to permit the sale of remaining inventory of Product as contemplated by this Section
13(c); (ii) at the option of the Disclosing Party, the Receiving Party will
return or destroy all Intellectual Property of the Disclosing Party having
tangible form in its possession, custody, or control; (iii) Winalite and any of its customers and/or distributors may continue to market, sell and distribute such Products as may already have been Delivered;
(iv) all amounts due or payable from either Party to the other will continue to be due and payable despite such termination. Expiry or termination of this Agreement in accordance with its terms will not give either party the right to claim any damages or compensation, indemnity or reimbursement whatsoever from the other by reason of such expiry or termination (including, but not limited to, any claims in respect of present or prospective loss of profits or distribution rights, or any similar loss or for expenditures, investments, commitments or otherwise), but  such expiry or termination will be without prejudice to any rights or remedies available to, or any obligations or liabilities accrued to, either party at the effective date of termination.

(d)

Survival.   In the event of termination of this Agreement for any reason whatsoever, Section
9 (Warranties), Section 12 (Confidential Information), and Section
13(c) (Consequences of Termination) hereof will survive for as long as necessary to effectuate their purposes and will bind the Parties and their representatives, successors and assigns.

6

14.

Dispute Resolution.  

(a)

Friendly Negotiations.    The parties will attempt in the first instance to resolve all disputes arising out of or relating to this Agreement (“Disputes”) through friendly consultations.

(b)

Commencement of Arbitration.   If no mutually acceptable settlement of the Dispute is made within sixty (60) days from the commencement of the settlement negotiation or if any Party refuses to engage in any settlement negotiation, any Party may submit the Dispute for arbitration.

(c)

Arbitration.    If a Dispute is not resolved by consultations within sixty (60) days after one Party has served written notice on the other Party for the commencement of such consultations, then such Dispute will be finally settled and determined by arbitration in Hong Kong under the Arbitration Rules of the United Nations Commission on International Trade Law by arbitrators appointed in accordance with such Rules. The arbitration and appointing authority will be the Hong Kong International Arbitration Centre (“HKIAC”). The arbitration will be conducted by a panel of three arbitrators, one chosen by Winalite, one chosen by Manufacturer, and the third by agreement of the Parties; failing agreement within thirty (30) days of commencement of the arbitration proceeding, the HKIAC will appoint the third arbitrator. The proceedings will be confidential and conducted in English. The arbitral tribunal will have the authority to grant any equitable and legal remedies that would be available in any judicial proceeding instituted to resolve a disputed matter, and its award will be final and binding on the parties. The arbitral tribunal will determine how the parties will bear the costs of the arbitration. Notwithstanding the foregoing, each Party will have the right at any time to immediately seek injunctive relief, an award of specific performance or any other equitable relief against the other Party in any court or other tribunal of competent jurisdiction. During the pendency of any arbitration or other proceeding relating to a Dispute between the parties, the parties will continue to exercise their remaining respective rights and fulfill their remaining respective obligations under this Agreement, except with regard to the matters under dispute.

15.

Miscellaneous.  

(a)

No Partnership.  This Agreement does not establish either Party as an agent, partner, joint venturer, employee, servant, or legal representative of the other for any purpose whatsoever, and neither has the right to bind the other in any way.

(b)

Further Assurances.   Each Party will execute and/or cause to be delivered to each other Party such instruments and other documents, and will take such other actions, as such other Party may reasonably request for the purpose of carrying out or evidencing any of the transactions contemplated by this Agreement.

(c)

Fees and Expenses.   Each Party will bear its own fees and expenses incurred in connection with the negotiation, execution and performance of its obligations under this Agreement and any other agreements relating hereto.

(d)

Payment of Applicable Taxes.  Manufacturer will bear the cost of, and will pay, all local taxes, stamp taxes, government charges, registration fees, or any other sums required to be paid in connection with this Agreement, the purchase and sale of Products, its performance under this Agreement, or any right to use any Intellectual Property granted hereunder.

7

(e)

Notices.   Any notice or other communication required or permitted to be delivered to any Party will be in writing and will be deemed properly delivered, given and received upon dispatch by hand, registered mail, courier or express delivery service with receipt confirmed by signature of the addressee, to the address set forth beneath the name of such Party below (or to such other address as such Party may specify in a written notice given to the other Parties):

  
	
  
  If to Winalite:

	
  
  The Hong Kong Winalite Group Ltd.

606, 6/F, Ginza Plaza, Mongkok, Kowloon,

Hong Kong, S.A.R.

Attn:  President or CEO

Fax:  +86 20 22268318

	 	 
	
  
  With Copies to:

	
  
  Thelen Reid Brown Raysman & Steiner LLP

101 Second Street, Suite 1800

San Francisco, CA 94105

Attn: Thomas M. Shoesmith

Fax: +1 415 371 1200

	 	 
	
  
  If to Manufacturer:

	
  
  深圳市月朗科技有限公司

深圳市罗湖区嘉宾路4208号太平洋商贸大厦1808-1809室

Attn: 陈怀诗

Fax:  +86 755 82136253

	 	 
	
  
  With Copies to:

	
  
  Thelen Reid Brown Raysman & Steiner LLP

101 Second Street, Suite 1800

San Francisco, CA 94105

Attn: Thomas M. Shoesmith

Fax: +1 415 371 1200

  

 

(f)

Publicity.   No press release, publicity, disclosure or notice to any Person concerning any of the transactions contemplated by this Agreement will be issued, given, made or otherwise disseminated by Manufacturer at any time without the prior written approval of Winalite.

(g)

Headings, Gender and Usage.   The headings contained in this Agreement are for convenience of reference only, and will not be deemed to be a part of this Agreement and will not be referred to in connection with the construction or interpretation of this Agreement. For purposes of this Agreement:
(i) the words “include” and “including” will be taken to include the words, “without limitation;” and
(ii) whenever the context requires, the singular number will include the plural, and vice versa; and each of the masculine, feminine and neuter genders will refer to the others.

8

(h)

Governing Law and Language.   This Agreement, including all matters of construction, validity and performance, will in all respects be governed by, and construed in accordance with, the laws of Hong Kong, S.A.R. (without giving effect to principles relating to conflict of laws).  This Agreement is written in English and the English language will govern any interpretation of this Agreement.

(i)

Successors and Assigns; Parties in Interest.   Except as otherwise expressly provided herein, the provisions of this Agreement will inure to the benefit of, and be binding upon, the successors, permitted assigns, heirs, executors and administrators of the Parties.

(j)

Assignments, Successors, and No Third-Party Rights.   Manufacturer may not assign any of its rights or delegate any of its obligations under this Agreement without the written consent of Winalite. Without the prior written consent of Manufacturer, Winalite may only assign its rights or delegate its obligations under this Agreement to an affiliate controlled by, or under common control with, Winalite. No Person not a Party to this Agreement or a permitted assignee has any rights under this Agreement.

(k)

Amendments.   This Agreement may not be amended, modified, altered or supplemented other than in a writing duly executed and delivered on behalf of all Parties.
 

(l)

Interpretation.  Each Party acknowledges that it has participated in the drafting of this Agreement, and any applicable rule of construction to the effect that ambiguities are to be resolved against the drafting party will not be applied in connection with the construction or interpretation of this Agreement.

(m)

Severability.    In case any provision of the Agreement will be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions will not in any way be affected or impaired thereby.

(n)

Waiver.   No failure or delay by any Party to exercise any right, power or remedy under this Agreement will operate as a waiver of any such right, power or remedy.

(o)

Entire Agreement.   The Agreement sets forth the entire understanding of the Parties relating to the subject matter hereof and supersedes all prior agreements and understandings, written or oral, among or between any of the Parties relating to the subject matter hereof.

(p)

Counterparts. This Agreement may be executed in any number of counterparts. When each Party has signed and delivered to all other Parties at least one such counterpart, each of the counterparts will constitute one and the same instrument.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

9

IN WITNESS WHEREOF, the Parties have executed this Master Purchase and Supply Agreement as of the date first above written.

	
  
  “Winalite”

The Hong Kong Winalite Group, Ltd.

By:    _/s/ Jingjun Hu

Print name and title:                       

 

Jingjun Hu

Authorized Representative

 

Address:    

606, 6/F, Ginza Plaza, Mongkok, Kowloon,

Hong Kong, S.A.R.

	
  
  “Manufacturer”

Shenzhen Yuelang Techno Industrial Co., Ltd.

By:    _/s/ Huaishi Chen

Print name and title:                       

 

Huaishi Chen

Authorized Representative  

 

Address:    

深圳市罗湖区嘉宾路4208号太平洋商贸大厦1808-1809室__________________

10

EXHIBIT A

Definitions

As used in this Master Purchase and Supply Agreement, the following capitalized terms have the meanings assigned to them in this Exhibit A:

	
  
  “Confidential Information”

	
  
  is defined in Section 12.

	
  
  “Delivery”

	
  
  is defined in Section 3(d)(ii).  

	
  
  “Disclosing Party”

	
  
  is defined in Section 12.

	
  
  “Disputes”

	
  
  is defined in Section 14(a).

	
  
  “HKIAC”

	
  
  is defined in Section 14(c).

	
  
  “Late Delivery”

	
  
  is defined in Section 3(c).

	
  
  “Leadtime”

	
  
  is defined in Section 3(a).

	
  
  “Manufacturer”

	
  
  is defined in the first paragraph of this Agreement.

	
  
  “Party” and “Parties”

	
  
  are defined in the first paragraph of this Agreement.

	
  
  “Person”

	
  
  means an individual, a corporation, a partnership, an association, a trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof.

	
  
  “Prices”

	
  
  is defined in Section 2(a).

	
  “Products”	
  
  is defined in Recital A.  

	
  
  “Purchase Order”

	
  
  is defined in Section 1(a).  

	
  
  “Receiving Party”

	
  
  is defined in Section 12.  

	
  
  “Shipment Date”

	
  
  is defined in Section 3(d)(i).  

	
  
  “Specifications”

	
  
  is defined in Section 5(a).  

	
  
  “Term”

	
  
  is defined in Section 13.  

	
  
  “Winalite Brand”

	
  
  is defined in Section 6.

	
  
  “Winalite”

	
  
  is defined in the first paragraph of this Agreement.

11

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