EXHIBIT 10.100
EXECUTION COPY
PRIVATE LOAN PROGRAM
LOAN ORIGINATION AND SALE AGREEMENT
This Private Loan Program Origination and Sale Agreement (the "Agreement")
is made and entered into as of this 28th day of July, 2005, by and among
Richland State Bank, a South Dakota State Bank (the "Bank"); Richland Loan
Processing Center, Inc., a South Dakota corporation and wholly owned subsidiary
of the Bank ("RLPC"); UICI, a Delaware corporation ("UICI"); and UICI Funding
Corp. 2, a Delaware corporation and wholly owned subsidiary of UICI ("UFC2").
RECITALS:
A. The Bank is an FDIC-insured bank, chartered by the State of South
Dakota, authorized to originate and make loans throughout the United
States.
B. Under UICI's former College First Alternative Loan program, The MEGA
Life and Health Insurance Company ("MEGA") and Mid-West National
Life Insurance Company of Tennessee ("Mid-West") (each a wholly
owned subsidiary of UICI) formerly offered an interest-sensitive
whole life insurance product that was in certain cases issued with a
child term rider, pursuant to which MEGA or Mid-West, as the case
may be, committed to provide private student loans to help fund the
named child's higher education if certain restrictions and
qualifications are satisfied.
C. While UICI has terminated its College First Alternative Loan
program, there remain outstanding in-force insurance policies
previously issued under the College First Alternative Loan program
by MEGA or Mid-West, pursuant to which MEGA or Mid-West, as the case
may be, has had and continues to have a commitment to make available
Private Loans (as defined below) to Eligible Borrowers (as defined
below).
D. RLPC provides services in connection with the review, approval and
disbursement of the Private Loans.
E. UFC2 desires to purchase the Private Loans funded by the Bank and
originated by RLPC under the terms of this Agreement.
AGREEMENT:
In consideration of the foregoing Recitals, the following mutual and
respective covenants and agreements of the parties, and for other valuable
consideration, the receipt and sufficiency of which are acknowledged, on and as
of the Effective Date the parties agree as follows:
1. Definitions. Unless otherwise defined herein, capitalized terms
shall have the meanings set forth below:
"Approved Private Loan Program" means a program for making Private
Loans that are not FFEL loans to or for the benefit of students for certain
higher education expenses (as certified by an Eligible Institution) that has
been approved by UICI and/or its designee and UFC2 and identified in the College
First Alternative Loan Program Manual.
"Approved Program Fees" means the loan fees, including any
guarantee, origination, insurance, or reserve fund fees or prepaid finance
charges, charged to Eligible Borrowers and deducted from one or more
disbursements.
"Confidential Information" means "non-public personal financial
information" (as such term is defined in the Gramm-Leach-Bliley Act and/or the
regulations implementing the provisions of that Act) and other
personally-identifiable information relating to Borrowers. Information made
available to the general public shall not be considered Confidential
Information.
"Effective Date" means July 28, 2005.
"Eligible Borrower" means an Eligible Student or other qualified
individual who meets the Program Eligibility Requirements relating to an obligor
of a Program Loan.
"Eligible Institution" means an institution of higher education that
meets the Program Eligibility Requirements relating to an educational
institution participating in the Program.
"Eligible Student" means a student attending an Eligible Institution
who meets the Program Eligibility Requirements relating to a student receiving
financial assistance under the Program.
"Loan Application and Promissory Note" or "Note" means the form of
the application and promissory note that meets the Program Eligibility
Requirements to be executed and delivered by each Eligible Borrower in order to
obtain a Program Loan, as such forms are set forth in the Program Manual.
"Private Loan" means an education loan that is not a Federal Family
Education Loan (FFEL) made to a student or parent of a dependent student, but
which is offered pursuant to the College First Alternative Loan Program Manual.
"College First Alternative Loan Program Manual" or "Program Manual"
means the document setting forth the requirements, documents, processing
procedures and other information relating to the Program and the Program Loans,
as amended or supplemented from time to time.
"Processing Procedures" means the procedures for processing the
review, approval or disapproval and disbursement of Program Loans, as set forth
in the Program Manual.
"Program" means the CFLD Private Loan Programs as described in the
Program Manual.
"Program Eligibility Requirements" means all of the terms and
conditions of a Program Loan as set forth in the Program Manual, including
eligibility criteria for borrowers, schools, and students, and all requirements
that must be met in order for a prospective borrower to qualify for and receive
a Program Loan, including, but not limited to, meeting the Underwriting Criteria
required under the Program.
"Program Loan" means a Private Loan made to an Eligible Borrower for
the purpose of financing part or all of the educational expenses of an Eligible
Student at an Eligible Institution that is made under the CFLD Private Loan
Program.
"Program Manual" means the College First Alternative Loan Program
Manual.
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"Program Materials" means all promissory notes, documents, and
materials used in connection with the performance of the parties' obligations
under this Agreement, including without limitation, applications, disclosures
required by the Rules, and all other materials with the exception of Advertising
Materials.
"Purchaser" means UFC2 or UFC2s' designated nominee or assignee.
"Regulatory Authority" means the Federal Deposit Insurance
Corporation and any local, state, or federal regulatory authority having
jurisdiction or exercising regulatory authority or similar oversight with
respect to Bank, RLPC, MEGA, Mid-West, UFC2, or Servicers.
"Rules" means all local, state, and federal statutes or ordinances
applicable to the acts of Bank, RLPC, MEGA, Mid-West, UFC2, or any Servicer as
they may relate to the Program; any order, decision, injunction, or similar
pronouncement of any court, tribunal, or arbitration panel issued with respect
to Bank, RLPC, MEGA, Mid-West, UFC2, or any Servicer in connection with this
Agreement; and any regulations, policy statements, and any similar pronouncement
of any regulatory authority having jurisdiction with respect to the acts of
Bank, RLPC, MEGA, Mid-West, UFC2, or any third party service provider as they
relate to the Program.
"Servicer" means the servicing entity designated by UFC2 to service
the Program Loans on behalf of the Purchaser.
"Underwriting Criteria" means the requirements for determining the
creditworthiness of one or more Eligible Borrowers for purposes of qualifying
for a Program Loan, as set forth in the Program Manual.
2. Program Materials.
a. UICI (or its designees) will be responsible for the development of
all Program Materials used in connection with the CFLD Private Loan
Programs and shall bear all costs thereof. All Program Materials
shall be subject to and must receive the prior written approval of
Bank, which approval shall not be unreasonably withheld. UICI agrees
not to use or disseminate any Program Materials unless such
materials have been approved in advance by Bank in writing. UICI
shall pay all reasonable attorneys' fees associated with Bank's
review of the Program Materials. Bank may at any time retract or
modify any approval previously given by it with respect to any
Program Materials if Bank reasonably determines that such action is
necessary in order to remain in compliance with any applicable Rules
or for the safe and sound operation of Bank.
b. Neither UICI nor MEGA nor Mid-West shall have authority to use any
trade names, trademarks, or service marks of Bank or RLPC except by
means of any Program Materials approved by Bank pursuant to this
section.
c. UICI (or its designees) will also be responsible for the preparation
and distribution of all Program Materials relating to the approval
and origination of the Program Loans including, without limitation,
the Loan Application and Promissory Note, and shall bear all costs
thereof. Such information and Program Materials will comply with the
Program Eligibility Requirements and shall include a copy of the
Bank's privacy policy.
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3. Loan Review and Approval Procedures.
a. The Bank, through RLPC, will review the information provided for
each Program Loan for completeness and accept or reject each
application for a Program Loan in accordance with the Program
Eligibility Requirements, the Program Manual and this Agreement.
b. Upon receipt of a Loan Application and Promissory Note from an
Eligible Institution, RLPC and Bank will take the following actions:
(1) RLPC will review the data for completeness according to the
Underwriting Criteria and other standards for the loan
application review process set forth in the Program Manual,
and will review the Loan Application and Promissory Note to
ensure that it has been properly filled out and executed.
(2) If any necessary data or signature(s) are absent, RLPC will
deal directly with the applicant or the educational
institution as necessary or appropriate to secure complete
data and/or signatures. (The term "applicant" in this
Agreement refers to all co-applicants.) RLPC will inquire of
the applicant as to all missing data, in most cases not more
than five (5) days after receipt of the incomplete
application.
(3) The underwriting information provided to RLPC shall include a
certification by the Eligible Institution (the "School
Certification") certifying that the student Borrower is
currently enrolled at such Eligible Institution in a qualified
course of study for the requisite minimum hours. Loans
underwritten using "Alternative Certification" methods will be
processed in accordance with the "Alternative Certification"
procedures as outlined in the Program Manual.
(4) Within five (5) business days after all necessary data have
been received by RLPC, Bank will approve or reject the
application. Such decision will be made in accordance with the
Program Eligibility Requirements.
(5) RLPC will notify the applicant of the Bank's decision in
accordance with applicable law, including but not limited to
the Equal Credit Opportunity Act and Regulation B thereunder.
(6) Upon Bank's approval of a Loan Application and Promissory
Note, the Bank will disburse the Loan proceeds as set forth in
Section 4 hereof.
(7) Bank will collect all Approved Program Fees out of the Program
Loan proceeds and shall distribute such to UFC2 at least
monthly.
(8) After the initial disbursement of the Program Loan, RLPC will
hold and retain the signed Loan Application and Promissory
Note and all required disclosures and documents on behalf of
and as custodian for the Bank.
c. RLPC's duties shall also include the following: Truth-in-Lending
disclosures; privacy policy disclosures pursuant to the
Gramm-Leach-Bliley Act (15 U.S.C. 6801 et seq.) and regulations
thereunder on behalf of the Bank and the Purchaser (if required by
law); and any account reconciliation and loan balance adjustment
credited or paid to the appropriate party.
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4. Loan Origination and Disbursement Procedures.
a. The Bank will originate and fund all Program Loans that are approved
by Bank, including the funding of the initial disbursement (the
"Initial Disbursement") and any subsequent disbursements (the
"Subsequent Disbursements") under each Program Loan. The Bank will
not be required to originate and fund any Program Loan that RLPC or
the Bank determines does not meet the Program Eligibility
Requirements or rejects for any other reason authorized under this
Agreement.
b. In the event that UFC2 fails or refuses to purchase any Program Loan
that meets the Program Eligibility Requirements and the terms of
this Agreement, the Bank shall not be obligated to fund any new
Program Loans commencing on the date of such failure or refusal.
However, if, prior to UFC2's failure or refusal to purchase any such
Program Loans, the Bank has made a commitment to a Borrower to fund
subsequent disbursements, the subsequent disbursements shall not be
considered a new Program Loan for purposes of this section and the
Bank shall remain bound by the commitment to fund any subsequent
disbursements regardless of UFC2's purchase of the loan.
c. The Bank's origination and funding of the Initial Disbursement of
each Approved Loan shall be accomplished either by submission of a
check drawn on the Bank or by electronic funds transfer of such
funds, in each case to the Eligible Institution in which the student
borrower is enrolled.
d. Each Eligible Institution will then make the first disbursement of
Loan proceeds to or for the benefit of each Borrower in accordance
with the terms of the Loan Application and Promissory Note executed
by the Borrower. Provided that the Bank has transmitted the loan
proceeds in accordance with the applicable Loan Application and
Promissory Note, the Bank will not be liable for (i) any
disbursement by any Eligible Institution to any Eligible Borrower,
or (ii) any disbursement by the Bank to any Eligible Institution.
e. Any refunds of previously disbursed Program Loans will be
transmitted by the respective Eligible Institution to RLPC for
posting to the Borrower's account, and then forwarded to the Bank.
Upon receipt by the Bank, such funds will be remitted to UFC2 in the
form of an adjustment in the next sale from the Bank to UFC2.
f. Most Program Loans require additional Subsequent Disbursements
following the Initial Disbursement and prior to subsequent semesters
or quarters of each applicable school academic year. Subject to
approval by Bank and RLPC of an applicable School Certification, the
Bank will make Subsequent Disbursements to or for the benefit of the
Eligible Borrower on the applicable disbursement dates.
5. Loan Sale and Assignment Procedures.
a. From time to time (but no less frequently than once every 60 days)
the Bank may request UFC2 to purchase all Program Loans originated
and disbursed by the Bank during the term of this Agreement without
recourse. UFC2 agrees to purchase any such Program Loan in
accordance with the terms of this Section 5.
b. Upon requesting UFC2 to purchase Program Loans in accordance with
this Agreement, the Bank shall cause RLPC to send UFC2 a detailed
list of Program Loans for purchase, such list to include information
regarding any credit overrides which have taken place.
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RLPC shall only include those Program Loans on the list that, to its
knowledge, are valid Program Loans and for which RLPC has all
necessary documentation to support their validity. RLPC certifies to
UFC2 that each Program Loan on the list is a valid loan.
c. UFC2 will transfer the funds for the purchase of each Program Loan
and Subsequent Disbursement on the first business day following the
date UFC2 receives the list of certified Program Loans and
Subsequent Disbursements for purchase from RLPC. The Bank will
retain the right and obligation to make any Subsequent Disbursement.
d. The purchase price for the Initial Disbursement of each Program Loan
shall be an amount equal to the sum of (i) outstanding principal
amount of such Program Loan (including all Approved Program Fees
with respect thereto) and (ii) accrued interest on such Program Loan
to the date of purchase (the "Purchase Price"), and the Purchase
Price shall be paid by transfer of immediately available funds to
the Bank in the aggregate amount of the Purchase Price for all
Program Loans then being purchased.
e. Upon purchase of the Initial Disbursement of a Program Loan, the
ownership of such Program Loan shall be assigned by the Bank without
recourse to UFC2, except as otherwise stated in the Program Manual,
on behalf of the Purchaser, by execution and delivery by the Bank of
a "Loan Assignment" substantially in the form attached to and
incorporated in this Agreement as Exhibit "1", setting forth the
Borrower, the School and the disbursed amount of each Program Loan,
and a "Bill of Sale", substantially in the form attached to and
incorporated in this Agreement as Exhibit "2". A duly authorized
officer of the Bank will execute the Loan Assignment and Bill of
Sale and send such Loan Assignment and Bill of Sale to UFC2.
f. The Bank will provide a copy of the executed Loan Assignment to
RLPC, receipt of which will authorize RLPC to forward the Promissory
Note and supporting documentation to the Servicer designated by
UFC2. RLPC shall move the loans to the Servicer designated by UFC2
within ten (10) business days of receipt of the Loan Assignment and
shall make certain that the Loan Application and Promissory Note,
Disclosures and all supporting documentation are delivered to the
Servicer within fifteen (15) days of receipt of the Loan Assignment.
g. If necessary, RLPC will execute and deliver a bailment agreement and
such other documents reasonably requested by UFC2 to perfect the
Security Interest of the Purchaser in the Program Loans after the
purchase thereof and prior to the Program Loans being transferred to
the Servicer.
h. The Bank will sell the portion of each Program Loan represented by
each Subsequent Disbursement and receive payment of the Purchase
Price for each Subsequent Disbursement from UFC2 in the same manner
as payments are made in connection with the Initial Disbursement.
Upon receipt of such payment, the Bank will execute an "Assignment
of Subsequent Disbursements" substantially in the form attached
hereto and incorporated in this Agreement as Exhibit "3".
i. The Bank agrees to promptly forward to RLPC or to the Servicer, as
applicable, any payments or communications received at any time
relating to each Program Loan, including, but not limited to, change
of address, change of school status, or notice of bankruptcy, death,
or disability.
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j. In the event UFC2 shall fail to purchase any Program Loan from Bank
following the Initial Disbursement, UICI shall carry out UFC2's
obligations herein, including the obligation to purchase the loan
from Bank for the Purchase Price. In the event UFC2 shall fail to
purchase any Subsequent Disbursement made by Bank, Bank shall give
UFC2 two (2) days' notice of said default. If UFC2 fails to purchase
the Subsequent Disbursement within said notice period, UICI shall
pay the Bank the Purchase Price owed with respect to said Subsequent
Disbursement and UFC2 shall immediately sell the program loan upon
which the Subsequent Disbursement was made back to Bank. The
repurchase price paid by Bank to UFC2 shall be an amount equal to
the remaining unpaid principal balance and accrued interest upon the
Program Loan, less any attorneys' fees and costs incurred by Bank in
enforcing UFC2's duty to sell the Program Loan back to Bank (the
"Repurchase Price"). Upon receipt of the Repurchase Price, UFC2
shall immediately assign the loan back to Bank and forward the
original Promissory Note, Collateral Agreement and supporting
documentation to Bank. Upon receipt of the Promissory Note and
UFC2's assignment, UICI or its designee agrees to purchase the
Program Loan from Bank. The price paid by UICI for the purchase of
the Program Loan shall be equal to the Repurchase Price paid by Bank
to UFC2. For purposes of this paragraph, UICI may allow a designee
of its choosing to carry out its obligations stated herein. UICI's
designation of a third party designee shall not, however, relieve
UICI of any of its obligations set forth in this paragraph except to
the extent the same are performed by said designee.
6. Fees.
a. Underwriting Fee. In consideration of RLPC's loan application review
and underwriting, reporting and cancellation services, UFC2 will pay
to RLPC as an underwriting fee (the "Underwriting Fee") the amount
of one and one-half percent (1.5%) of the original principal amount
of each disbursed Loan. The Underwriting Fee shall be paid to RLPC
at the time and in the manner as set forth in the Program Manual.
b. Legal Fees and Programming Costs. All legal fees and programming
costs incurred by the Bank and RLPC for the administration of the
CFLD Program will be passed-through and paid by UFC2 at the time the
expenses are incurred, so long as any programming costs are
reasonable and are pre-approved by UFC2.
7. Representations, Warranties and Covenants of Bank. As of the
Effective Date, and as of the date of sale of each disbursement of each Program
Loan to the Purchaser, the Bank represents, warrants and covenants to UFC2 and
UICI as follows:
a. The Bank is a state banking corporation duly organized, validly
existing and in good standing under the laws of the State of South
Dakota.
b. All actions necessary to lawfully and properly perform this
Agreement have been or will be undertaken by the directors and
officers of the Bank.
c. This Agreement is the valid and binding agreement of the Bank,
enforceable against the Bank in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws in effect
which affect the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies.
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d. The Bank is duly authorized in the State of South Dakota to
originate Loans to the Borrowers who meet the requirements
established in the Program Manual. The Program Loans will be
originated and disbursed by the Bank in accordance with applicable
law, and will be enforceable under the laws of South Dakota in
accordance with their terms. The Bank makes no representation or
warranty as to the choice of law rules which may be applied by a
court of competent jurisdiction.
e. The Bank possesses all necessary qualifications and licenses to
enter into the Program Loans and any consent or approval of any
federal or state banking or regulatory authorities for the making or
performance of the Agreement has been obtained.
f. There is no action or proceeding pending or threatened against the
Bank before any court or administrative agency, nor any existing
order of any court or administrative agency, that could reasonably
have a material adverse effect on the Bank's ability to perform its
obligations under the Agreement.
g. Each Program Loan is a valid loan that (i) meets the Program
Eligibility Requirements, as defined in the Program Manual; and (ii)
has not been satisfied, subordinated or rescinded, and no right of
rescission, set-off, counterclaim or defense exists or to the Bank's
knowledge has been asserted with respect to such Program Loan.
h. The Bank has complete and unrestricted right and authority to sell,
convey, assign, transfer and deliver to the Purchaser all of the
Program Loans being sold to the Purchaser pursuant to this
Agreement, provided that such sale shall be without any recourse to
the Bank and without any representation or warranty on the part of
the Bank, whether expressed or implied, except as set forth in this
Agreement.
i. The Bank is the sole owner and holder of each Program Loan to be
purchased and upon sale of such Program Loan the Purchaser will
receive full right, title, and interest therein, free and clear of
any liens, pledges or encumbrances.
j. All right, title and interest of the Bank in and to the Program
Loans and rights in connection with the Program Loans to be assigned
by the Bank to Purchaser under this Agreement will be validly
conveyed and assigned by the Bank to the Purchaser by delivery of
the Notes, together with the Loan Assignment and Assignment of
Subsequent Disbursements, pursuant to Section 4.
k. Each Program Loan shall comply at the time it is originated and on
the date it is sold to Purchaser hereunder, in all material respects
with all requirements of applicable federal law and regulations
thereunder and South Dakota's usury laws.
l. All agents and representatives acting on behalf of the Bank have
full power and authority to perform any and all acts necessary to
the execution, performance and completion of this Agreement.
m. On the initial payment date of the Purchase Price for the first
disbursement of each Program Loan (as set forth in Section 4), the
first installment of proceeds of that Program Loan will have been
fully disbursed; on the payment date for the sale of any Subsequent
Disbursement, the portion of Loan proceeds representing such
Subsequent Disbursement will have been fully disbursed.
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n. Bank has taken all necessary actions to approve the credit criteria
applicable to the Program Loans and has approved all loans which are
to be disbursed.
o. The Bank represents and warrants that at all times during the term
of this Agreement and, to the extent necessary for the protection of
Confidential Information or the integrity of any data to which the
Bank may have had access during the term of this Agreement, at all
times after the termination of this Agreement, the Bank shall comply
with all applicable privacy laws pertaining to the Confidential
Information. Such laws shall include, by way of example but not of
limitation: the Right to Financial Privacy Act (12 USC Section 3401
et seq.); the FinanciaL Services Modernization Act, also known as
the Gramm-Leach-Bliley Act (15 USC Section 6801 et seq.;
implementing regulations available at 12 CFR Section 40.18.); the
Electronic Signatures in Global and National Commerce Act (E-Sign
Act) (Public Law 106-229); the Electronic Communications Privacy Act
(18 USC Section 2701 et seq.); the Fair Credit Reporting Act (15 USC
Section 1681 et seq.); and tHE Family Education Rights and Privacy
Act (20 USC Section 1232g); and the Privacy Act of 1974 (5 USC
Section 552a). The Bank will comply in all respects with any
requests by any governmental entity with jurisdiction to enforce
such privacy laws by providing access to the Bank's information,
allowing inspections of its records, and in all other respects.
8. Representations, Warranties and Covenants of UFC2. As of the
Effective Date and as of the date of each purchase of Program Loans by UFC2,
UFC2 represents, warrants and covenants to the Bank as follows:
a. UFC2 is a Delaware corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware. All
actions necessary to lawfully and properly perform this Agreement
have been or will be undertaken by the respective officers,
directors and shareholders of UFC2.
b. Each Purchaser will be a duly organized legal entity, validly
existing and in good standing under the laws of the jurisdiction of
its organization. All actions necessary for any Purchaser to
lawfully and properly purchase, assign, re-assign or reconvey any
Program Loans will have been undertaken by the appropriate
representatives of each Purchaser as of the date any Program Loans
are sold to any Purchaser.
c. All agents and representatives acting on behalf of UFC2 or any
Purchaser, as applicable, have or will have full power and authority
to perform any and all acts necessary to the execution, performance
and completion of this Agreement.
d. UFC2 will have complete and unrestricted power to purchase all
Program Loans under the terms of and in accordance with this
Agreement, by transfer and assignment of all of the Bank's right,
title and interest in the Program Loan to UFC2, and UFC2 will not be
under any restraint, legal or otherwise, from doing so.
e. UFC2 has the power and authority to assign and convey the Program
Loan and the Promissory Note executed in connection therewith back
to Bank in the event the same is required under the terms and
conditions of this Agreement and UFC2 shall take no future action
with respect to any Promissory Note assigned herein to preclude
reassignment to the Bank if required under the terms and conditions
of this Agreement.
f. UFC2 represents and warrants that at all times during the term of
this Agreement and, to the extent necessary for the protection of
Confidential Information or the integrity of any
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data to which UFC2 may have had access during the term of this
Agreement, at all times after the termination of this Agreement,
UFC2 shall comply with all applicable privacy laws pertaining to the
Confidential Information. Such laws shall include, by way of example
but not of limitation, the Right to Financial Privacy Act (12 USC
Section 3401 et seq.); the Financial Services Modernization Act,
also known as the Gramm-Leach-Bliley Act (15 USC Section 6801 et
seq.; implementing regulations available at 12 CFR Section 40.18.);
the Electronic Signatures in Global and National Commerce Act
(E-Sign Act) (Public Law 106-229); the Electronic Communications
Privacy Act (18 USC Section 2701 et seq.); the Fair Credit Reporting
Act (15 USC Section 1681 et seq.); and tHE Family Education Rights
and Privacy Act (20 USC Section 1232g); and the Privacy Act of 1974
(5 USC Section 552a). UFC2 will comply in all respects with any
requests any governmental entity with jurisdiction to enforce such
privacy laws by providing access to UFC2 information, allowing
inspections of its records, and in all other respects.
9. Representations, Warranties and Covenants of RLPC.
a. RLPC is a South Dakota corporation, validly existing and in good
standing under the laws of the State of South Dakota.
b. All actions necessary to lawfully and properly perform this
Agreement have been taken by the respective officers, directors and
shareholders of RLPC and the Agreement is the valid and binding
obligation of RLPC, enforceable against RLPC in accordance with its
terms, except as such enforceability may be limited by applicable
bankruptcy, insolvency, moratorium, reorganization or similar laws
in effect which affect the enforcement of creditors' rights
generally and by equitable limitations on the availability of
specific remedies.
c. Each Program Loan (i) meets the Program Eligibility Requirements, as
defined in the Program Manual; and (ii) has not been satisfied,
subordinated or rescinded, and no right of rescission, set-off,
counterclaim or defense exists or to the Bank's knowledge has been
asserted with respect to such Program Loan.
d. All agents and representatives acting on behalf of RLPC, as
applicable, have or will have full power and authority to perform
any and all acts necessary to the execution, performance and
completion of this Agreement.
e. RLPC represents and warrants that at all times during the term of
this Agreement and, to the extent necessary for the protection of
Confidential Information or the integrity of any data to which RLPC
may have had access during the term of this Agreement, at all times
after the termination of this Agreement, RLPC shall comply with all
applicable privacy laws pertaining to the Confidential Information.
Such laws shall include, by way of example but not of limitation,
the Right to Financial Privacy Act (12 USC Section 3401 et seq.);
the Financial Services Modernization Act, also known as the
Gramm-Leach-Bliley Act (15 USC Section 6801 et seq.; implementing
regulations available at 12 CFR Section 40.18.); the Electronic
Signatures in Global and National Commerce Act (E-Sign Act) (Public
Law 106-229); the Electronic Communications Privacy Act (18 USC
Section 2701 et seq.); the Fair Credit Reporting Act (15 USC Section
1681 et seq.); and tHE Family Education Rights and Privacy Act (20
USC Section 1232g); and the Privacy Act of 1974 (5 USC Section
552a). RLPC will comply in all respects with any requests by any
governmental entity with jurisdiction to enforce such privacy laws
by providing access to RLPC information, allowing inspections of its
records, and in all other respects.
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10. Representations, Warranties and Covenants of UICI.
a. UICI is a Delaware corporation, validly existing and in good
standing under the laws of the State of Delaware.
b. All actions necessary to lawfully and properly perform this
Agreement have been taken by the respective officers and managers of
MEGA, and the Agreement is the valid and binding obligation of MEGA,
enforceable against MEGA in accordance with its terms, except as
such enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or similar laws in effect
which affect the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies.
c. All agents and representatives acting on behalf of UICI have or will
have full power and authority to perform any and all acts necessary
to the execution, performance and completion of this Agreement.
d. UICI represents and warrants that at all times during the term of
this Agreement and, to the extent necessary for the protection of
Confidential Information or the integrity of any data to which UICI
may have had access during the term of this Agreement, at all times
after the termination of this Agreement, UICI shall comply with all
applicable privacy laws pertaining to the Confidential Information.
Such laws shall include, by way of example but not of limitation,
the Right to Financial Privacy Act (12 USC Section 3401 et seq.);
the Financial Services Modernization Act, also known as the
Gramm-Leach-Bliley Act (15 USC Section 6801 et seq.; implementing
regulations available at 12 CFR Section 40.18.); the Electronic
Signatures in Global and National Commerce Act (E-Sign Act) (Public
Law 106-229); the Electronic Communications Privacy Act (18 USC
Section 2701 et seq.); the Fair Credit Reporting Act (15 USC Section
1681 et seq.); and tHE Family Education Rights and Privacy Act (20
USC Section 1232g); and the Privacy Act of 1974 (5 USC Section
552a). UICI will comply in all respects with any requests by any
governmental entity with jurisdiction to enforce such privacy laws
by providing access to UICI information, allowing inspections of its
records, and in all other respects.
11. Conditions of Purchase.
a. The obligation of UFC2 to purchase and pay the Purchase Price for
each Program Loan shall be subject to the condition precedent that
each representation, warranty, covenant and agreement of the Bank
and RLPC under this Agreement shall be true and correct.
b. The obligation of the Bank and RLPC to perform their respective
obligations under this Agreement shall be subject to the condition
precedent that UFC2 has entered into a servicing agreement with
either ACS or such other Servicer as mutually agreed upon by the
parties not later than the Effective Date.
12. Security Requirements. The parties agree that they shall use their
best efforts to protect any and all Confidential Information against intrusion,
theft, alteration, unauthorized access, loss, damage, or any means by which a
person without authorization from the parties may obtain access to Confidential
Information and/or may erase, alter, or modify all or any portion of the
Confidential Information. The parties specifically acknowledge and agree that
they will use commercially reasonable efforts to provide a level of security for
computer information systems, specifically including any and all computer or
information systems on which any portion of the Confidential Information may be
processed
-11-
or stored at any time, that is consistent with the level customarily maintained
by financial institutions. The parties specifically acknowledge and agree that
they will provide appropriate security to protect against unauthorized access by
"insiders" (i.e., persons who have been given access to the system or the
Confidential Information in order to perform computer related services for the
parties, but who may intentionally or inadvertently cause damage to data or to
the computer system). "Insiders" shall be deemed to include but shall not be
limited to employees, former employees, and independent contractors of the
parties.
13. Legal Opinion.
a. On or before the Effective Date, the Bank will exercise all
reasonable efforts to arrange to have an opinion of South Dakota
legal counsel provided and addressed to UICI and UFC2, upon which
subsequent assignees of the Notes may rely. The opinion will be
generally to the effect that: (i) the Bank is empowered under
applicable federal and state law to perform this Agreement and that
this Agreement is the legal, valid and binding agreement of the Bank
under such law; (ii) the Bank's performance of this Agreement will
not conflict with or violate applicable law; and (iii) each of the
Notes is enforceable under South Dakota law against the Borrower
thereunder in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
moratorium, reorganization or similar laws in effect which affect
the enforcement of creditors' rights generally and by equitable
limitations on the availability of specific remedies. Such opinion
will be subject to reasonable and customary qualifications,
assumptions and exceptions and shall otherwise be in substantially
the form attached hereto as Exhibit 4.
b. UFC2 will not have any obligation to purchase Program Loans
hereunder until receipt of such opinion.
c. Upon written request by UFC2, the Bank will exercise all reasonable
efforts to subsequently provide annual confirmations from South
Dakota counsel that the legal opinion remains valid, accurate and
effective; provided, however, that, UFC2 will not have any
obligation to continue to purchase Program Loans if such opinion is
not received within 30 days of such request.
d. UFC2 will pay all reasonable expenses of legal counsel related to
such opinion and any annual confirmations or updates.
14. Survival of Representations, Warranties and Covenants. The
representations, warranties and covenants made by the parties to this Agreement
shall continue throughout the term of this Agreement, and shall survive the
expiration or earlier termination of this Agreement until each Program Loan sold
hereunder is paid in full. All such covenants shall be enforceable by law or in
equity against the respective parties, their successors and assigns, by the
other parties, their respective successors and assigns.
15. Term of Agreement. This Agreement shall continue for an initial term
of one year from and after the Effective Date, unless previously terminated in
accordance with the provisions of Section 16, 17 or 18. If neither party
notifies the other party of its election to terminate this Agreement on any
anniversary of the Effective Date, this Agreement shall automatically be
extended for successive annual periods of one year from and after each
anniversary of the Effective Date. Any such notice of election to terminate this
Agreement on any succeeding anniversary of the Effective Date shall be given by
a party to the other party at least 90 days prior to such anniversary of the
Effective Date.
-12-
16. Bank's Right of Termination. The Bank shall have the right to
terminate this Agreement upon the occurrence of any one or more of the following
events:
a. Failure of either UFC2 or UICI to timely observe or perform its
obligations in any material respect under this Agreement or the
failure of any Purchaser to observe or perform any obligations in
any material respect as contemplated by this Agreement.
b. If any financial statement or other representation, warranty,
covenant, statement or certificate furnished by UFC2, UICI, or any
Purchaser to the Bank in connection with this Agreement or any sale
of Program Loans is materially and adversely incorrect as of the
date it is made or delivered.
c. If Bank determines that an immediate termination is necessary to
protect the safety and soundness of Bank, if termination of the
Agreement is required or requested by any Regulatory Authority, or
if Bank determines in its sole discretion that its actions
contemplated under this Agreement or the actions or activities of
UFC2, UICI, or any Purchaser violate any applicable Rule.
d. For any reason, without penalty, provided that the Bank gives not
less than one hundred and twenty (120) days' prior written notice to
all other parties of its intent to terminate the Agreement. Nothing
in this section shall affect the Bank's duty to make subsequent
disbursements to those Borrowers to whom such disbursements were
promised prior to the termination.
17. UFC2's and UICI's Right of Termination. Each of UICI and UFC2 shall
have the right to terminate this Agreement upon the occurrence of any one or
more of the following events:
a. Failure of the Bank to timely observe or perform its obligations in
any material respect under this Agreement or as contemplated by this
Agreement with respect to any Purchaser.
b. If any financial statement or other representation, warranty,
covenant, statement or certificate furnished by the Bank to UFC2 or
any Purchaser in connection with this Agreement or any sale of
Program Loans is materially and adversely incorrect as of the date
it is made or delivered.
c. If termination of the Agreement is required or requested by any
Regulatory Authority, or if UICI or UFC2 determines in its sole
discretion that its actions contemplated under this Agreement or the
actions or activities of the Bank or any Purchaser violates any
applicable Rule.
d. For any reason, without penalty, provided that the UFC2 or UICI
gives not less than one hundred and twenty (120) days' prior written
notice to all other parties of its intent to terminate the
Agreement. Nothing in this section shall affect the Bank's duty to
make subsequent disbursements to those Borrowers to whom such
disbursements were promised prior to the termination.
18. Termination Due to Legal Restrictions. The Bank, RLPC, UICI or UFC2
may terminate this Agreement if, due to a change in any state or federal law,
regulation, ruling, or any interpretation of any such law, regulation or ruling
after the Effective Date, the program for the underwriting, approval,
origination and funding of Program Loans to Borrowers as contemplated by this
Agreement cannot, in the
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reasonable judgment of the Bank, RLPC, UICI or UFC2, as supported by the legal
opinion of legal counsel for such party, lawfully be continued by any such
party.
19. Notice and Consequences of Termination. If any party terminates this
Agreement pursuant to Sections 16, 17 or 18, respectively, this Section shall
apply to such termination. Upon any event permitting such termination, the
terminating party shall give the other party written notice of its intention to
terminate this Agreement, setting forth the basis for such termination. Unless
the failure or condition giving rise to the termination notice has been cured,
termination of this Agreement shall be effective 30 days after the mailing of
notice in all cases, except that termination shall be effective immediately in
the case of a termination under Section 18, under Section 16(c) or for any
termination under Section 16(a) resulting from the failure of UFC2 to pay any
fee or purchase any Program Loan, or under Section 17(c) or for any termination
under Section 17(a) resulting from the failure of the Bank to timely perform its
obligations in any material respect. Termination of this Agreement shall not
impair the rights of any party to seek and enforce legal or equitable rights and
remedies, and notwithstanding any such termination, all rights and remedies of
the parties to this Agreement shall survive.
20. Indemnification.
a. Indemnification by UICI and UFC2. Each of UICI and UFC2 agrees to
indemnify and hold harmless the Bank and RLPC and each of the Bank's
and RLPC's officers, directors, employees and agents (collectively,
a "Bank Indemnified Party") from and against any and all claims,
demands, actions, causes of action, losses, damages (including,
without limitation, actual damages, compensatory damages, punitive
damages and extra-contractual damages), liabilities, penalties,
regulatory fines, costs and expenses (including, without limitation,
attorneys' fees, investigation costs and all other reasonable costs
associated with the defense thereof) (collectively, "Losses"),
incurred by, or made against, a Bank Indemnified Party and arising
out of or relating to the following:
(i) any breach of, or any inaccuracy in, any representation or
warranty made by UICI or UFC2 in this Agreement;
(ii) any breach of, or failure by, UICI or UFC2 to perform any
covenant or obligation to be performed by UICI or UFC2 set
forth in this Agreement;
(iii) any actions, inaction, conduct, or other activities of UICI or
UFC2, or their affiliates, successors, assigns, independent
contractors, service providers, or other third parties related
to the sale or assignment of any Program Loan pursuant to the
terms of this Agreement;
(iv) the Bank's or RLPC's performance under this Agreement or any
agreement between the Bank or RLPC and with any Servicer, any
insurer of Program Loans or any other agreements related to
the Bank's origination and funding of Program Loans; and
(v) otherwise arising out of or in connection with any Program
Loan made to or owing by any Borrower, including any claims or
defenses of any Borrower or regulatory authority relating to
the violation of any applicable law;
provided, however, that no Bank Indemnified Party shall be entitled
to indemnification for any Loss under the foregoing clauses (i),
(ii), (iii), (iv), or (v) if such Loss is due to the gross
negligence, bad faith or willful misconduct on the part of such Bank
-14-
Indemnified Party. The foregoing indemnification does not cover any
risk of default of a Program Loan by a Borrower due to nonpayment,
bankruptcy, death or disability (but excluding any nonpayment based
on a claim that the Program Loan is unenforceable in accordance with
its terms). This indemnification of Bank Indemnified Parties provide
herein shall survive the expiration of the term of this Agreement or
any earlier termination hereof.
b. Indemnification by Bank and RLPC. Each of the Bank and RLPC agrees
to indemnify and hold harmless UICI and UFC2 and each of UICI's and
UFC2's officers, directors, employees and agents (collectively, a
"UICI Indemnified Party") from and against any and all Losses, as
incurred, arising out of or relating to the following:
(i) any breach of, or any inaccuracy in, any representation or
warranty made by the Bank or RLPC in this Agreement; and
(ii) any breach of, or failure by, the Bank or RLPC to perform any
covenant or obligation to be performed by the Bank or RLPC set
forth in this Agreement;
provided, however, that no UICI Indemnified Party shall be entitled
to indemnification for any Loss under the foregoing clauses (i) or
(ii) if such Loss is due to the gross negligence, bad faith or
willful misconduct on the part of such UICI Indemnified Party. The
foregoing indemnification does not cover any risk of the default of
a Program Loan by a Borrower due to nonpayment, bankruptcy, death or
disability (but excluding any nonpayment based on a claim that the
Program Loan is unenforceable in accordance with its terms). This
indemnification of UICI Indemnified Parties provided herein shall
survive the expiration of the term of this Agreement or any earlier
termination hereof.
c. Conduct of Indemnification Proceedings.
(i) If any proceeding shall be brought or asserted against any
person and/or entity entitled to indemnity hereunder (an
"Indemnified Party"), such Indemnified Party promptly shall
notify the person from whom indemnity is sought (the
"Indemnifying Party") in writing, and the Indemnifying Party
shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to the Indemnified Party and
the payment of all fees and expenses incurred in connection
with the defense thereof; provided, however, that the failure
of any Indemnified Party to give such notice shall not relieve
the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except to the extent (and only to
the extent) that it shall be finally determined by a court of
competent jurisdiction (which determination is not subject to
appeal or further review) that such failure shall have
proximately and materially adversely prejudiced the
Indemnifying Party.
(ii) An Indemnified Party shall have the right to employ separate
counsel in any such proceeding and to participate in the
defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party or Parties
unless: (1) the Indemnifying Party has agreed in writing to
pay such fees and expenses; or (2) the Indemnifying Party
shall have failed promptly to assume the defense of such
Proceeding and to employ counsel reasonably satisfactory to
such Indemnified Party in any such Proceeding; or (3) the
named parties to any such proceeding (including any impleaded
parties) include both such Indemnified
-15-
Party and the Indemnifying Party, and such Indemnified Party shall
have been advised by counsel that a conflict of interest is likely
to exist if the same counsel were to represent such Indemnified
Party and the Indemnifying Party (in which case, if such Indemnified
Party notifies the Indemnifying Party in writing that it elects to
employ separate counsel at the expense of the Indemnifying Party,
the Indemnifying Party shall not have the right to assume the
defense thereof and such counsel shall be at the reasonable expense
of the Indemnifying Party). The Indemnifying Party shall not be
liable for any settlement of any such proceeding effected without
its written consent, which consent shall not be unreasonably
withheld, delayed or conditioned. No Indemnifying Party shall,
without the prior written consent of the Indemnified Party, effect
any settlement of any pending proceeding in respect of which any
Indemnified Party is a party, unless such settlement includes an
unconditional release of such Indemnified Party from any and all
liability on claims that are the subject matter of such proceeding.
(iii) All fees and expenses of the Indemnified Party (including reasonable
fees and expenses to the extent incurred in connection with
investigating or preparing to defend such proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified
Party, as incurred, within fifteen (15) business days of a detailed
written notice thereof to the Indemnifying Party (regardless of
whether it is ultimately determined that an Indemnified Party is not
entitled to indemnification hereunder; provided, that the
Indemnifying Party may require such Indemnified Party to undertake
to reimburse all such fees and expenses to the extent it is finally
judicially determined that such Indemnified Party is not entitled to
indemnification hereunder).
21. Notices. All notices, requests, demands or other communications
contemplated in the performance of this Agreement, other than notices of
approval or disapproval of Program Loans, as provided for in Section 3, shall be
in writing and shall be deemed to have been duly given as follows: (i) on the
third day after deposit in the United States Mail, postage prepaid, either First
Class or Certified Mail (return receipt requested, if by Certified Mail); (ii)
upon actual delivery following deposit with an overnight delivery or courier
service; (iii) upon confirmation of transmission by telephonic facsimile; or
(iv) upon delivery by personal delivery or messenger service. In each case, any
such notice, request, demand or other communication shall be addressed or sent
to the parties at the following addresses or facsimile numbers, or such other
addresses or numbers as provided by written notice from time to time:
(a) To the Bank: Eldon V. Eighmy, President
Richland State Bank
501 Jay Street
Bruce, SD 57220
TEL: (605) 627-5671
FAX: (605) 627-5264
With a copy to: Keith Gauer
Davenport, Evans, Hurwitz and Smith, L.L.P.
P. O. Box 1030
Sioux Falls, SD 57101-1030
TEL: (605) 336-2880
FAX: (605) 336-3639
(b) To UFC2 and UICI: UICI Funding Corporation 2
-16-
UICI
9151 Grapevine Highway
North Richland Hills, TX 76180
Attn: Mr. Glenn W. Reed
TEL: (817) 255-5419
FAX: (817) 255-5394
With a copy to: The MEGA Life and Health Insurance Company
College Fund Life Division
1331 West Memorial Road, Suite 112
Oklahoma City, Oklahoma 73114
TEL: (405) 302-1407
FAX: (888) 529-8311
Attn: Paula Padgett, Vice President
(c) To RLPC: Joan Larson, President
Richland Loan Processing Center, Inc.
3904 W. Technology Avenue, Suite 104
Sioux Falls, SD 57106
TEL: (605) 323-2990
FAX: (605) 361-3947
22. Assignment.
a. Neither this Agreement nor any rights hereunder are assignable by
any party in whole or in part except to a Company wholly owned by
one of the parties or a Company who assumes ownership, or is a
successor, of one of the parties without the prior written consent
of the other parties. No such assignment with or without consent
shall act as a release to any of the parties of its liabilities or
obligations hereunder.
b. Notwithstanding the foregoing, UFC2 may assign its rights hereunder
to any trustee appointed to act on behalf of the holders of UFC2'
financial obligations under an indenture of trust between UFC2 and
such trustee, any provider of credit to UFC2 and/or, to any one or
more persons, corporations or other entities which may acquire the
Program Loans to be purchased hereunder, and such assignments may
assign any part of or all rights of UFC2 hereunder (including
without limitation rights with respect to the purchase of particular
Program Loans) and may include several and partial assignments to
different entities at the same time. For purposes of fulfilling its
obligations to purchase Program Loans hereunder, UFC2 may assign its
rights and obligations hereunder to one or more transferee
corporations, limited liability companies or other entities that are
owned in whole or in part by UFC2 or that are owned in whole or in
part by any corporation that has an ownership interest in UFC2 or in
which UFC2 has an ownership interest or affiliation, and such
assignments may assign any part of or all rights of UFC2 hereunder
(including without limitation rights with respect to the purchase of
particular Program Loans) and may include several and partial
assignments to different entities at the same time or at different
times. Notwithstanding any assignment contemplated herein, UFC2
shall remain contractually obligated to comply with all of the terms
and conditions of this Agreement as if no such assignment had taken
place. UFC2's continuing liability shall be in addition to the
liability of any assignee hereunder.
-17-
23. Entire Agreement; Amendments. This Agreement, and the documents
executed and delivered pursuant hereto, constitute the entire agreement between
the parties hereto and the same supersedes and merges all prior communications,
representations, or agreements, either oral or written, between the parties
hereto with respect to the subject matter hereof. This Agreement may be amended,
altered or modified by, and only by, a written instrument which: (i) identifies
this Agreement; (ii) reflects, recites or otherwise indicates that it is
intended as an amendment or modification of this Agreement; and (iii) is
executed by all parties to this Agreement. All parties will reasonably
accommodate any modifications or amendments to this Agreement requested by any
regulatory authority having jurisdiction over the Bank.
24. Expenses. Except as otherwise provided herein, the parties to this
Agreement will each pay their own expenses including, but without limitation,
the fees and expenses of their agents, representatives and accountants,
incidental to the preparation and performance of this Agreement. Notwithstanding
the foregoing, UFC2 agrees to pay one-half of the reasonable legal fees and
expenses associated with the preparation of this Agreement by counsel to the
Bank, together with any legal opinion prepared by South Dakota counsel to the
Bank with respect to the transactions contemplated by this Agreement.
25. Underwriting Changes. The Underwriting Criteria may be changed as
follows:
a. UICI or its designee may propose changes to the Underwriting
Criteria and related Processing Procedures with respect to Program
Loans not yet approved or funded, subject to the prior written
consent of the Bank and UFC2, which consent will not be unreasonably
withheld or delayed. Upon the adoption of such changes, the Bank and
UFC2 will notify UICI of such adoption and its consent. Such changes
to the Underwriting Criteria shall be effective upon receipt by UICI
of the written consent of the Bank and UFC2.
b. Bank may change the Underwriting Criteria and relating processing
procedures with respect to Program Loans not yet approved or funded
upon prior written approval of UICI and UFC2. In the event Bank
exercises its right to change the Underwriting Criteria under this
subsection, UICI and UFC2 shall have the right to cease the purchase
of future Program Loans after the effective date of said change in
Underwriting Criteria.
26. Program Loan Volume. Bank shall have the right to place a limit on
the number and dollar amount of Program Loans funded by Bank under this
Agreement by providing UFC2 with written notice of such limit. In connection
therewith, UFC2 agrees that nothing herein shall be deemed to require Bank to
fund any specific number or dollar amount of Program Loans or maintain any
particular level or volume of loans
27. Nonexclusive Agreement. UICI and UFC2 acknowledge and agree that the
terms of this Agreement are not exclusive and that the Bank and RLPC are free to
engage in the student loan business either on their own or with other parties at
their discretion.
28. Relationship of the Parties. The relationships of the parties
hereunder are that of independent contractors to each other in performing their
respective obligations hereunder. Nothing in this Agreement shall be deemed or
is intended to be deemed, nor shall it cause, Bank, RLPC, UICI and UFC2 to be
treated as partners, joint venturers, or otherwise as joint associates for
profit. Nothing herein shall in any manner be deemed to cause UICI or UFC2 to be
an agent of the Bank or RLPC, and UICI and UFC2 shall have no authority to act
on behalf of Bank or RLPC or to bind Bank in any manner.
-18-
29. Regulatory Examinations, Audits, and Financial Information.
a. UICI and UFC2 agree to submit to any examination which may be
required by any Regulatory Authority with audit and examination
authority over Bank, to the fullest extent of such Regulatory
Authority.
b. UICI, UFC2, Bank, and RLPC (either directly or by the use of
accountants or other agents or representatives) may audit, inspect,
and review each other party to this Agreement's files, records, and
books pertaining to matters involving this Agreement. The parties
agree to submit such information to each other as any party may from
time to time reasonably request in order to ascertain the other
party's compliance with the requirements of this Agreement and
compliance with all applicable laws and regulations, including
copies and results of any audits, examinations, or similar reviews
undertaken by any party itself.
c. The parties to this Agreement acknowledge that each party is
entitled to information concerning the financial condition and
general ability of each other party to meet its financial
commitments set forth herein. Each party agrees to provide each
other party such information concerning the foregoing as any party
may from time to time reasonably request. The information requested
may include, but is not limited to, all financial statements of any
party to this Agreement.
30. Setoff and Other Bank Remedies. In the event of any failure by UICI
or UFC2 to perform any of their obligations hereunder, Bank shall have all
rights and remedies available at law or in equity. Without limiting the
generality of the foregoing, UICI and UFC2 grant Bank a contractual security
interest in, and acknowledge that Bank shall have a contractual and statutory
right of setoff against, any and all accounts, funds, moneys, and other
properties of UICI and UFC2 at Bank or which come into possession of Bank for
the purpose of satisfying the obligations of UICI and UFC2 hereunder. Bank
shall, however, give UICI and UFC2 written notice of any claim, including the
dollar amount of the claim, and give five (5) business days after receipt of the
notice for UICI and UFC2 to remedy the claim. During the five (5) business day
remedy period, Bank shall have the right to place a hold upon any funds
necessary to satisfy the claim; provided, however, that Bank shall not place a
hold on any funds exceeding the amount of the claim. The security interest
granted herein shall not, however, include the Promissory Notes after their sale
to UFC2. UFC2 and UICI agree that none of their deposits at Bank shall be
considered "special" deposits unavailable for setoff by Bank unless Bank has
specifically so agreed in a separate writing. UFC2 and UICI agree that the
rights and remedies of Bank described herein are in addition to all other rights
which Bank may have by law or equity, including SDCL 44-11-11. In connection
therewith, UFC2 and UICI agree to execute and deliver such other writings,
financing statements, and other documents and to take whatever other actions are
requested by Bank to conform, perfect, and continue all security interests
granted by UFC2 and UICI to Bank and to enable Bank to realize the rights and
remedies set forth therein.
31. Notifications. Each party hereto shall immediately notify all other
parties to this Agreement of any case, action, proceeding, or complaint filed
under the law of any jurisdiction relating to (i) any material portions or
duties in this Agreement, (ii) any bankruptcy, insolvency, or relief of debts,
(iii) seeking appointment of a receiver, trustee, custodian or other similar
official for itself or for any substantial part of its property, or (iv) any
other action not contemplated herein which may affect such notifying party's
ability to carry out the terms and obligations of this Agreement.
32. Section Headings and References. The Section captions and other
headings contained in this Agreement are for reference purposes only and shall
not affect the meaning or interpretation of this
-19-
Agreement. Unless another agreement is specifically identified, all references
to Sections are intended to refer to the corresponding Sections of this
Agreement.
33. Binding Clause. Except as otherwise provided in this Agreement, this
Agreement shall inure to the benefit of and become binding upon the parties,
their respective representatives, successors and permitted assigns.
34. Counterparts; Facsimile Signatures. This Agreement may be executed
and delivered by the parties in any number of counterparts, and by different
parties on separate counterparts, each of which counterpart shall be deemed to
be an original and all of which counterparts, taken together, shall constitute
one and the same instrument. Signatures transmitted by electronic facsimile
shall be effective to bind all parties, provided that original signed
counterparts shall be circulated among the parties reasonably promptly after
transmission of such signature pages by facsimile.
35. Construction and Interpretation. This Agreement shall be interpreted
and construed to give it full force and effect, and in such a manner so as to
make it legal and binding to the maximum extent permitted by law.
36. Severability. If any term or provision of this Agreement is
determined to be invalid, illegal or unenforceable for any reason, or if the
application of any term or provision of this Agreement to any fact,
circumstance, event, occurrence, person or entity is determined to be invalid,
illegal or unenforceable for any reason, all other provisions of this Agreement,
and all permitted applications of any such term or provision, shall be given
separate and independent effect to the fullest extent permitted by law, and
shall not be affected by any such determination, interpretation or construction.
37. Mutual Preparation. This Agreement has been drafted and prepared
jointly and mutually by both parties, following arms-length negotiations and
upon the advice of independent legal counsel to all parties. Any presumption
that any ambiguities or discrepancies in this Agreement should be construed to
the benefit or detriment of either party shall not apply.
[Balance of page intentionally left blank]
-20-
38. Governing Law, Jurisdiction and Venue. This Agreement shall be
governed by and construed in accordance with the laws of the State of South
Dakota and of the United States of America. UFC2 and UICI hereby agree and
consent to the exclusive jurisdiction and venue in the United States District
Court for the District of South Dakota in connection with any dispute with the
Bank or RLPC arising out of or relating to this Agreement.
39. Related Party Transaction. The parties acknowledge and agree that
the arrangement contemplated by this Agreement constitutes a transaction between
UICI and a party related thereto and, accordingly, in accordance with procedures
adopted by the Board of Directors of UICI, at a meeting of the UICI Board of
Directors held on July 28, 2005, this Agreement and the transactions
contemplated hereby were approved by a majority of the disinterested outside
directors of UICI.
The Bank, RLPC, UICI and UFC2 have executed this Agreement on the dates
set forth below, to be effective as of the Effective Date.
"BANK"
RICHLAND STATE BANK, a South Dakota State Bank
Date: __________________________ By:__________________________________________
Eldon V. Eighmy, President and
Chief Executive Officer
"UFC2"
UICI FUNDING CORP. 2.
Date: __________________________ By:__________________________________________
Glenn W. Reed, President
"UICI"
UICI
Date: __________________________ By:__________________________________________
Glenn W. Reed, Executive Vice President
"RLPC"
RICHLAND LOAN PROCESSING CENTER, INC.
Date: __________________________ By:__________________________________________
Joan Larson, President
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