EXHIBIT 10.1
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
BANK OF AMERICA GATE EDUCATION LOAN PROGRAM:
UMBRELLA AGREEMENT
(BofA)
THIS UMBRELLA AGREEMENT (the "Agreement") is made and dated as of April
30, 2001, by and among THE FIRST MARBLEHEAD CORPORATION, a corporation organized
under Delaware law ("FMC"), and BANK OF AMERICA, N.A., a national banking
association (the "Program Lender").
RECITALS
A. FMC and the Program Lender have established the Bank of
America/GATE(R) Loan Programs (the "Bank of America GATE Education Loan
Programs"), including the prepGATE(R) Loan program, the Bank of America GATE(R)
Undergraduate Loan Program and the Bank of America GATE(R) Graduate Loan
Programs to assist parents and students in financing the cost of education at
private elementary and secondary schools and at various institutions of higher
education. Loans made under the Bank of America GATE Education Loan Programs are
guaranteed by The Educational Resources Institute, Inc., a Massachusetts
non-profit corporation ("▇▇▇▇") pursuant to a Guaranty Agreement between Program
Lender and ▇▇▇▇. Pursuant to the Bank of America GATE Education Loan Programs,
FMC promotes the expansion of educational finance activities by agreeing to
purchase or cause to be formed one or more special purpose business trusts or
other entities (each an "SPE") to purchase promissory notes (the "Notes")
evidencing loans conforming to the Bank of America GATE Education Loan Programs
("Bank of America GATE Conforming Loans") following origination. The purchase
price payable by each SPE for a given pool of Bank of America GATE Conforming
Loans is funded through issuance and sale by the SPE of certificates or other
evidences of indebtedness, or by direct loans to the SPE, in either case the
repayment of which is supported or collateralized by the income stream from the
Bank of America GATE Conforming Loans included in such pool (each such
transaction, a "Securitization Transaction").
B. FMC has requested that the Program Lender originate and make
available for purchase by SPEs from time to time Bank of America GATE Conforming
Loans and serve as a primary lending institution participating in the Bank of
America GATE Education Loan Programs.
C. The parties desire to set forth herein certain terms and
conditions affecting FMC and the Program Lender relating to their participation
in the Bank of America GATE Education Loan Programs.
NOW, THEREFORE, in consideration of the above Recitals and for other
good and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
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AGREEMENT
1. DEFINITIONS. For purposes of this Agreement, the following terms
shall have the following meanings:
"AFFILIATE" shall mean, as to any person, any other person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such person. A person shall be deemed to control another person if
the controlling person possesses, directly or indirectly, the power to direct or
to cause the direction of the management and policies of the other person,
whether through the ownership of voting securities, by contract or otherwise.
"AGENT" means State Street Bank & Trust Company.
"BANK OF AMERICA GATE CONFORMING LOANS" means a loan made to finance
educational expenses at a Participating Institution, on terms and conditions in
conformity with the Product Specifications.
"BANK OF AMERICA GATE EDUCATION LOAN PROGRAM" means the loan program FMC
and Program Lender have established under this Agreement, as more fully
described in the Product Specifications.
"BUSINESS DAY" shall mean any day other than: (a) a Saturday or Sunday,
or (b) a day on which banking institutions in the State of California are
required or authorized by law or executive order to be closed.
"CHANGE IN CONTROL" means:
(a) with respect to Program Lender, the occurrence of any of the
following events:
(i) the acquisition by any other entity, individual or group
(within the meaning of Sections 13(d) (3) or 14(d)(2) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act")
of beneficial ownership (as defined in Rule 13d 3 promulgated
under the Exchange Act) of more than fifty percent (50%) of the
common stock of the Program Lender and/or other securities which
have more than fifty percent (50%) of the combined voting power
of the Program Lender's securities entitled to vote in the
election of directors; or
(ii) the sale of all or substantially all of the common stock or
assets of the Program Lender to any other entity, individual or
group; or
(iii) the reorganization, merger or consolidation of the Program
Lender in which the shareholders of Program Lender immediately
before such event will not immediately thereafter own more than
fifty percent (50%) of the combined voting power entitled to vote
in the election of directors of the reorganized, merged or
consolidated Program Lender's voting securities.
(b) with respect to FMC, the occurrence of any of the following:
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(i) the sale of all or substantially all the assets of FMC to an
entity that directly, or through an Affiliate, participates as a
lender in the Federal Family Education Loan Program ("FFELP") or
the ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ Direct Loan Program ("Direct Loan Program");
or
(ii) the transfer of more than fifty percent (50%) of the shares
or other equity interests entitled to vote, in one transaction or
a series of related transactions, to an entity that directly, or
through an Affiliate, participates as a lender in the FFELP or
the Direct Loan Program.
A "Change in Control" for either party shall not include any
transactions with an entity which is an Affiliate immediately prior to
such transaction, nor shall it include a public offering.
"COMMON CUSTOMER" shall mean any applicant or co-applicant who is
approved for and receives a Bank of America GATE Conforming Loan from Program
Lender, and any student whose educational expenses are financed with the
proceeds of such loan.
"COMPETING PRODUCT" shall mean any credit-tested or credit ready loan
for the purposes of financing educational expenses, made by Program Lender to a
parent borrower or Student borrower pursuant to a private alternative education
loan program, other than:
- a Bank of America GATE Conforming Loan;
- any other ▇▇▇▇-guaranteed loan;
- the Signature Select and Signature loan programs, but only with
respect to existing educational institutions;
- loans under tax-exempt state-funded programs;
- any other program not actively marketed by Program Lender or
its Affiliates; or
- any other program to which Program Lender has committed by
contract prior to the date of this Agreement.
"CROSSOVER DATE" SHALL HAVE THE MEANING ASSIGNED TO IT IN SECTION 2 OF
THIS AGREEMENT.
"DEPOSIT AND SECURITY AGREEMENT" means a certain Deposit and Security
Agreement among Program Lender, ▇▇▇▇, the Agent and FMC substantially in the
form of Exhibit F attached hereto.
"EFFECTIVE DATE" shall have the meaning given such term in Paragraph 21
below.
"FMER" means First Marblehead Educational Resources, Inc., a Delaware
corporation. FMER is a wholly-owned subsidiary of FMC.
"GATE STUDENT LOAN PROGRAM" means the loan program FMC and Program
Lender have established to assist students in financing the cost of education at
various institutions of higher education, which is operated by FMC and Bank of
America under the Student Umbrella Agreement.
"GUARANTY AGREEMENT" means the Guaranty Agreement between Program Lender
and ▇▇▇▇, substantially in the form of Exhibit G attached hereto.
"LICENSE AGREEMENTS" refers to reciprocal license agreements between FMC
and Program Lender, dated as of November 21, 1996, as amended as provided in
Section 5 hereof.
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"NEW NOTE PURCHASE AGREEMENT" means an agreement between Program Lender
and FMC, substantially in the form of Exhibit E attached hereto.
"NOTES" has the meaning assigned to it in Recital A above.
"PARTICIPATING INSTITUTION" shall mean an institution approved by ▇▇▇▇
for participation in ▇▇▇▇-guaranteed programs.
"PHEAA" means the Pennsylvania Higher Education Assistance Agency.
"prepGATE CONFORMING LOAN" means a certain type of Bank of America GATE
Conforming Loan that is made under the prepGATE Loan Program and conforms to the
Product Specifications for prepGATE loans.
"prepGATE LOAN PROGRAM" means the loan program FMC and BA have
established to assist parents in financing the cost of education at private
elementary and secondary schools as more fully described in the Product
Specifications.
"prepGATE ORIGINATION SERVICES AGREEMENT" means an agreement between
▇▇▇▇ and Program Lender with respect to origination of prepGATE Loans
substantially in the form of Exhibit E attached hereto.
"PRODUCT SPECIFICATIONS" shall mean (i) Underwriting, Origination and
Loan Term Guidelines for prepGATE Loan Program, Bank of America GATE
Undergraduate Loan Program and Bank of America GATE Graduate Loan Programs, (ii)
the ▇▇▇▇ Servicing Guidelines, and (iii) Specific Program Summaries for prepGATE
Loan Program, Bank of America GATE Undergraduate Program and Bank of America
GATE Graduate Loan Programs, copies of which are attached hereto as Exhibits A
through C all as amended from time to time.
"PROGRAM MANAGER" means FMC or such Affiliate of FMC as may be
designated as Program Manager in the Product Specifications from time to time
(such designation to be subject to Program Lender's consent, which will not be
unreasonably withheld).
"SECURITIZATION TRANSACTION" has the meaning set forth in Recital
paragraph "A."
"SERVICER" means PHEAA, or a successor servicer appointed in conformity
with Section 9 hereof.
"SPE" means a special purpose business trust or other special purpose
entity formed to purchase Bank of America GATE Conforming Loans in a
Securitization Transaction.
"STUDENT UMBRELLA AGREEMENT" means that certain Umbrella Agreement
between Program Lender and FMC dated as of June 1, 1996, as amended.
"▇▇▇▇ LENDERS" means financial institutions or other lenders who have
entered into a Guaranty Agreement with ▇▇▇▇.
"▇▇▇▇ LOANS" means loans guaranteed by ▇▇▇▇.
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"▇▇▇▇ MARKETING SERVICES" means a Delaware corporation by that name,
which is a 100% subsidiary of FMER.
"▇▇▇▇ PRIVATE LABEL PROGRAM" means an education loan program involving
loans guaranteed by ▇▇▇▇ and originated by a lender (other than Program Lender)
who takes full responsibility for marketing the loans, generally under a brand
selected by and identified with that lender.
"TERMINATION DATE" shall mean June 30, 2002, as such date may be
extended under the terms hereof. After such date, this Agreement shall
automatically renew for successive one-year terms; PROVIDED, HOWEVER that at any
time after June 30, 2002, either party may terminate this Agreement upon one
hundred and eighty (180) days written notice.
2. GATE STUDENT LOAN PROGRAM UNAFFECTED; TRANSITION TO BANK OF
AMERICA GATE EDUCATION LOAN PROGRAMS.
The Program Lender participates in the GATE Student Loan Program
pursuant to the Student Umbrella Agreement. This Agreement does not affect the
Student Umbrella Agreement or the GATE Student Loan Program.
The Program Lender also participates in the GATE Family Loan Program
pursuant to an Umbrella Agreement between FMC and the Program Lender dated April
3, 2000 ("Existing Family Umbrella Agreement"). Except as set forth herein, the
Existing Family Umbrella Agreement shall remain in full force and effect
notwithstanding the execution and operation of this Agreement. The Existing
Family Umbrella Agreement will continue to govern the origination, including
underwriting and disbursement, under the GATE Family Loan Program until May 1,
2001 ("the Crossover Date"). No loans originated under the Existing Family
Umbrella Agreement are presently guaranteed by ▇▇▇▇ under the Guaranty
Agreement. After the Crossover Date, no new GATE Family Loan applications will
be accepted, but pending applications will be originated, underwritten, and
disbursed as part of the GATE Family Loan Programs under the terms of the
Existing Family Umbrella Agreement. All loans made under the Existing Family
Umbrella Agreement will continue to be serviced under the existing Servicing
Agreement between Program Lender and PHEAA dated May 8, 2000, as amended and
will be sold pursuant to the Note Purchase Agreement between FMC and Program
Lender dated April 3, 2000.
On and after the Crossover Date, all new applications for Bank of
America GATE Education Loans and GATE Family Loans will be eligible for
processing under this Agreement, guaranteed by ▇▇▇▇ (if approved), and eligible
for purchase under the New Note Purchase Agreement.
3. TERM OF AGREEMENT. This Agreement shall be effective from the
Effective Date to but not including the Termination Date, unless earlier
terminated under Sections 23 or 24 hereof.
4. LOAN UNDERWRITING AND FUNDING.
(a) FORMS. Program Lender and FMC, in consultation with ▇▇▇▇, shall
agree upon standard Note and Disclosure forms, in conformity with California
law, to be included in the Product Specifications. Program Lender shall utilize
such disclosure and note forms for all Bank of America GATE Education Loans,
other than prepGATE Loans. Program Lender shall provide to ▇▇▇▇ for its use on
Program Lender's behalf a version of the prepGATE Loan forms that have similarly
been conformed to California law.
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(b) ORIGINATION OF prepGATE LOANS. Loan underwriting, documentation
and disbursement shall be performed by ▇▇▇▇ under the Origination Services
Agreement, in conformity therewith. Program Lender shall cause ▇▇▇▇ to provide
to Program Manager a copy of TERI's periodic loan origination reports when the
same are prepared for Program Lender. Program Lender shall cause ▇▇▇▇ to
transfer the loans to the data processing system of Servicer upon completion of
origination.
(c) ORIGINATION OF BANK OF AMERICA GATE EDUCATION LOANS OTHER THAN
prepGATE. Program Lender has reviewed the Product Specifications and approved
the same, including the credit underwriting guidelines contained therein, which
guidelines reflect the credit policies of the Program Lender, as well as the
credit criteria used by ▇▇▇▇ in determining whether to guarantee loans. Program
Lender shall receive applications for Bank of America GATE Education Loans,
underwrite the same in accordance with Product Specifications, approve or deny
the same, and document approved loans, all in accordance with the Product
Specifications. Program Lender shall disburse the same to the Participating
Institutions and shall disburse guaranty fees to ▇▇▇▇ and/or the Agent in
accordance with the terms of the Guaranty Agreement. Program Lender shall
provide origination reports to ▇▇▇▇ and FMC as described in the Guaranty
Agreement and in the New Note Purchase Agreement. Program Lender shall document
all Bank of America GATE Education Loans in accordance with all applicable law
and shall provide all disclosures required by applicable law.
5. JOINT MARKETING EFFORTS. Program Lender shall develop marketing
materials for distribution to potential Participating Institutions and borrowers
relating to the Bank of America GATE Education Loan Programs. Program Lender
shall develop for review and input by FMC a marketing plan for the Bank of
America GATE Education Loan Programs including milestones, cost sharing
arrangements, and other appropriate terms.. Except for the prepGATE Family Loan
Program, which shall retain its existing brand, FMC and Program Lender agree to
develop a mutually acceptable brand to place on all products and materials
associated with the marketing of the Bank of America GATE Education Loan
Programs. Subject to the confidentiality provisions of Paragraph 8 below, each
party hereto agrees to provide such information as may be reasonably required by
the other party in connection with marketing the BA GATE Loan Programs;
provided, however, that no party shall distribute any printed material, whether
relating to the Bank of America GATE Education Loan Programs or otherwise, which
contains the name or information concerning or provided by the other party
without the prior consent of such other party, which consent shall not be
unreasonably withheld. The parties agree to promptly amend the License
Agreements, in order to provide that FMC grants to the Program Lender a
nonexclusive license to use (subject to FMC approval) any and all trademarks and
tradenames associated with the Bank of America GATE Education Loan Programs and
that Program Lender grants to FMC a non-exclusive license to use (subject to
Program Lender approval) Program Lender's name and logos in connection with the
Bank of America GATE Education Loan Programs.
6. EXCLUSIVITY; NONCOMPETITION.
(a) Except as otherwise provided below, FMC will not, during the term
of this Agreement, enter into any agreement with any other financial institution
or other regulated or nonregulated lender (a "Competing Lender") which calls for
FMC to design, market and arrange the purchase of alternative education loans or
otherwise in contemplation of the participation of such Competing Lender in
making Bank of America GATE Conforming Loans without first offering to Program
Lender the first opportunity to participate as the program lender for any such
product. If within thirty (30) days after the offer is made, Program Lender
declines participation or if FMC and Program Lender are unable to reach
agreement as to the terms of Program Lender's participation as a lender for the
product, then FMC shall be free of any restriction under this Agreement with
respect to such product. Notwithstanding the above, (a) FMC will be permitted to
arrange a securitization transaction for any ▇▇▇▇-guaranteed
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program, regardless of the identity of the lender; (b) FMC will be permitted to
provide customer product pricing and repayment terms, together with other
program terms necessary for future securitizations, to current and prospective
▇▇▇▇ Lenders under any ▇▇▇▇ Private Label Program; (c) FMER and ▇▇▇▇ Marketing
Services may market ▇▇▇▇ Loans to lenders and educational institutions; and (d)
FMER may contract to provide full outsourcing support for all current ▇▇▇▇
functions, including, without limitation, loan underwriting and origination,
guaranty claim processing and defaulted loan collection. During the term of this
Agreement, Program Lender will offer FMC the first opportunity to participate as
the secondary market for any Competing Product. If within thirty (30) days after
the offer is made, FMC declines participation or if FMC and Program Lender are
unable to reach agreement as the terms of FMC's participation as a secondary
market for the Competing Product, then Program Lender shall be free of any
restriction under this Agreement with respect to such Competing Product. Nothing
in this Section 6(a) governs any activity with respect to the GATE Student Loan
Program or alters any exclusivity arrangement in the Student Umbrella Agreement.
(b) Prior to the sale of a note relating to a Common Customer under
the Note Purchase Agreement, FMC shall not, with respect to the Common
Customers whose Notes are sold in such sale, (i) solicit such Common
Customers, or (ii) market any products to Common Customers. After any
sale of Notes under the Note Purchase Agreement, Program Lender shall
not, with respect to the Common Customers whose Notes are sold in such
sale, (i) solicit Common Customers for Competing Products, or (ii)
market Competing Products to Common Customers, pursuant to a promotional
scheme that is targeted specifically to Bank of America GATE Conforming
Loan borrowers, without the prior written consent of FMC, given in FMC's
sole and absolute discretion. Nothing in this Section 6(c) shall require
Program Lender to delete the names of Common Customers from general
lists of Program Lender's customers, lists of customers of Program
Lender's Affiliates, or purchased lists of prospects used for
solicitation.
7. SOLICITATION FOR OTHER BUSINESS. Except as expressly provided in
Section 6(b) of this Agreement, above, Program Lender and FMC shall each have
the non-exclusive right to solicit Common Customers for any products and
services, to the extent permitted by applicable law.
8. CONFIDENTIAL INFORMATION; PROPRIETARY INFORMATION.
(a) All information of any kind and description relating to borrowers
under Bank of America GATE Conforming Loans originated by the Program Lender
(and rejected applicants for such Loans), the Notes originated by the Program
Lender, the Program Lender's loan processing operations or any other information
that has been or will be made available by the Program Lender or any of its
Affiliates to FMC or has otherwise been obtained by FMC from the Program Lender
or any of its Affiliates (other than as expressly excluded from such information
as provided below, "Confidential Information") is made available by the Program
Lender and accepted by FMC, with the understanding and agreement that such
Confidential Information is property valuable to the Program Lender which has
been developed through the expenditure of substantial time and money and that
the Program Lender desires to retain it in confidence and withhold its
availability to others. "Confidential Information" shall not include (a)
information that has become generally available to the public other than as a
result of a disclosure by or through FMC, or its officers, employees, agents or
other representatives, (b) information that was available to such persons on a
non-confidential basis prior to its disclosure to FMC, and (c) information that
becomes available to FMC from a source not subject, to the best knowledge of FMC
after due inquiry, to any prohibition against disclosing the information to FMC,
including, without limitation, information obtained from any purchase of the
Notes in any Securitization Transaction or otherwise relating to any Bank of
America GATE Conforming Loan sold by the Program Lender in any
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Securitization Transaction, information received from or relating to any
Participating Institution and information received from or relating to the
activities of third parties, other than the Program Lender, retained by FMC in
connection with the administration or marketing of the Bank of America GATE
Education Loan Programs. FMC agrees that except as required by law and except as
is reasonably necessary in connection with any Securitization Transaction, any
and all Confidential Information and any information or knowledge which may be
imparted through receipt or examination of Confidential Information will not be
copied or communicated to any third party or used by FMC or any of its officers,
employees, agents or other representatives without the express prior written
consent of the Program Lender. FMC will take reasonable precautions to prevent
any unauthorized disclosure of Confidential Information. FMC agrees to return or
destroy all written and other tangible Confidential Information, including all
extracts and copies thereof, immediately upon request. Except as expressly
contemplated by the marketing programs referred to in Paragraph 5 above and
incidental communications regarding the Bank of America GATE Education Loan
Programs initiated by borrowers in the course of which such borrowers are
referred to the Program Lender, until a Bank of America GATE Conforming Loan is
sold by the Program Lender, in connection with a Securitization Transaction or
otherwise, neither FMC nor any of its Affiliates shall enter into any
communication with the borrower thereunder. Except as expressly provided in the
immediately preceding sentence, the obligations of FMC set forth in this
Paragraph 8(a) shall survive the Termination Date.
(b) All information relating to the Bank of America GATE Education
Loan Programs that has been or will be made available to the Program Lender or
any of its Affiliates by FMC or has otherwise been obtained by the Program
Lender or any of its Affiliates from FMC (other than such information which
constitutes Confidential Information or other than as expressly excluded from
such information as provided below, "Proprietary Information") is made available
by FMC and accepted by the Program Lender with the understanding and agreement
that such Proprietary Information is property valuable to FMC which has been
developed through the expenditure of substantial time and money and that FMC
desires to retain it in confidence and not to permit its commercial use by
others. "Proprietary Information" shall not include: (a) information that has
become generally available to the public other than as a result of a disclosure
by or through the Program Lender, (b) information derived by Program Lender from
sources other than activities under or related to this Agreement, (c)
information required by law to be disclosed (but only to the extent such
disclosure is legally required), and (d) reporting of loan information to credit
bureaus in the ordinary course of business. Program Lender will take reasonable
precautions to prevent any unauthorized commercial use of Proprietary
Information. The obligations of the Program Lender set forth in this paragraph
8(b) shall survive the Termination Date.
9. PRODUCT SPECIFICATIONS. As used in this Agreement, the term
"Product Specifications" refers to the Product Specifications for BOTH the
prepGATE and Bank of America GATE Education Loan Programs. The Product
Specifications may not be modified in any Program Lender-related manner during
the term of this Agreement without the prior written consent of the Program
Lender, which consent shall not be unreasonably withheld. Program Lender-related
modifications to the Product Specifications shall include any change to loan
terms, borrower eligibility, or any other change that would affect Program
Lender's rights, obligations, responsibilities, or costs. The parties agree to
negotiate in good faith with respect to any proposed changes in the Product
Specifications during the fourth calendar quarter of each year and to attempt to
finalize revisions by December 31 of each year.
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10. FMC EFFORTS; FMC FEES FOR SECURITIZATION SERVICES.
(a) FMC agrees to use its best efforts to continue to market the Bank
of America GATE Education Loan Programs, to promote Program Lender's
participation in the same and to assist in arranging Securitization Transactions
not less than once each calendar year.
(b) Nothing contained in this Agreement shall restrict FMC's right to
separately negotiate with other parties to a Securitization Transaction fees for
its services as investment advisor, financial advisor or otherwise.
11. SECURITIZATION PROVISIONS. FMC (for itself and each SPE) agrees
that:
(a) Any Offering Materials (as defined in Exhibit D attached hereto)
relating to each Securitization Transaction will contain a statement to the
effect that: (1) the certificates being offered thereunder do not represent an
interest in, or obligation of, the Program Lender or its parent, Bank of America
Corporation, (2) no purchaser of such certificates shall have any recourse to
the Program Lender or Bank of America Corporation, (3) neither the certificates
nor the notes evidencing Bank of America GATE Conforming Loans supporting such
certificates are insured or guaranteed by the Federal Deposit Insurance
Corporation or, at the request of or for the account of the Program Lender or
Bank of America Corporation, by any other governmental agency, and (4) the
underwriting criteria employed by the Program Lender in originating the Bank of
America GATE Conforming Loans are different from those utilized by the Program
Lender and its Affiliates in originating student loans under other existing
student loan programs;
(b) FMC shall, or shall cause the applicable SPE to, perform the acts
and assume the duties of depositor and manager pursuant to the provisions of the
trust or other agreement or instrument under which the certificates or other
evidences of indebtedness will be issued in any Securitization Transaction.
Under no circumstances shall Program Lender be obligated to perform any such
duties. Neither Program Lender nor any of its directors or other representatives
shall execute any registration statement filed with the Securities and Exchange
Commission in connection with any Securitization Transaction.
(c) The certificates or other evidences of indebtedness to be issued
by FMC and/or any SPEs in Securitization Transactions shall be issued and sold
by FMC and/or such SPEs, with or without the assistance of FMC, but in any event
without any participation whatsoever on the part of Program Lender except as
expressly provided in subparagraph (2) below. Without limiting the generality of
the foregoing, it is expressly acknowledged and agreed by FMC that Program
Lender shall not (1) attend any "road shows" or meetings with investors or
prospective investors, (2) prepare, assist in preparing or review any written or
oral materials or prospectuses to be provided to investors or potential
investors or to be filed with the Securities and Exchange Commission, any state
securities commission, any stock exchange or NASDAQ other than excerpts from
such documents describing the Program Lender and its procedures drafted
expressly for inclusion in such documents, or (3) otherwise be responsible in
any way for soliciting, or assisting FMC or any SPE in soliciting, the purchases
of certificates or other evidences of indebtedness to be issued in any
Securitization Transaction.
(d) FMC shall file or shall cause the applicable SPE to file any
registration statement and periodic reports required to be filed under the
Securities Exchange Act of 1934.
(e) Without the prior written consent of Program Lender, which
consent shall not be unreasonably withheld, Bank of America GATE Conforming
Loans or other ▇▇▇▇-guaranteed loans
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originated by any person or entity other than Program Lender will not be
included in any Securitization Transaction, and by proposing that such Bank of
America GATE Conforming Loans be included in any Securitization Transaction
which will include Bank of America GATE Conforming Loans originated by Program
Lender, FMC and the applicable SPE shall be deemed to have represented and
warranted that such other Bank of America GATE Conforming Loans were originated
under Product Specifications approved by ▇▇▇▇. The execution and delivery to
Program Lender of a Co-Lender Indemnification Agreement by other participating
"Program Lenders" in any Securitization Transaction shall be a condition
precedent to any agreement of Program Lender to permit the pooling of Bank of
America GATE Conforming Loans or other ▇▇▇▇-guaranteed loans originated by such
other person or entity with Bank of America GATE Conforming Loans originated by
Program Lender in a Securitization Transaction).
12. NO ASSIGNMENT. No party may assign its rights or obligations
under this Agreement without the prior written consent of the parties hereto,
PROVIDED, HOWEVER, that Program Lender may assign its rights hereunder to an
Affiliate that is a banking organization having the legal power and right under
applicable law (including, without limitation, usury law) to make Bank of
America GATE Conforming Loans in all fifty (50) states of the U.S. and the
District of Columbia. Program Lender shall bear all costs arising out of such
assignment, including, without limitation, any costs for legal advice relating
to loan compliance and documentation. FMC may assign its rights hereunder to a
corporation or partnership that succeeds to substantially all the business of
FMC as now conducted. No assignment shall relieve the assignor of liability
hereunder. Any assignment in violation hereof shall be automatically null and
void.
13. AMENDMENT. This Agreement may not be amended nor terms or
provisions hereof waived unless such amendment or waiver is in writing and
signed by all parties hereto.
14. NO WAIVER. No delay or failure by any party to exercise any
right, power or remedy hereunder shall constitute a waiver thereof by such
party, and no single or partial exercise by any party of any right, power or
remedy shall preclude other or further exercise thereof or any exercise of any
other rights, powers or remedies.
15. ENTIRE AGREEMENT. This Agreement and the documents and agreements
referred to herein embody the entire agreement and understanding among the
parties hereto and supersede all prior agreements and understandings relating to
the subject matter hereof and thereof.
16. NOTICES. All notices given by any party to the others under this
Agreement shall be in writing delivered: (a) personally, (b) by facsimile
transmission, (c) by overnight courier, prepaid, or (d) by depositing the same
in the United States mail, certified, return receipt requested, with postage
prepaid, addressed to the party at the address set forth below. Any party may
change the address to which notices are to be sent by notice of such change to
each other party given as provided herein. Such notices shall be effective on
the date received. Notices shall be given as follows:
If to Program Lender:
▇▇▇▇▇ ▇▇▇▇▇▇
Bank of America
National Student Lending Group
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
10
With a copy to:
▇▇▇▇ ▇▇▇▇▇
Bank of America
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to FMC:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
The First Marblehead Corporation
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
17. ATTORNEYS' FEES. In the event of a lawsuit or arbitration
proceeding arising out of or relating to this Agreement, the prevailing party
shall be entitled to recover costs and reasonable attorneys' fees incurred in
connection with the lawsuit or arbitration proceeding, as determined by the
court or arbitrator.
18. GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of California (without regard to
conflict-of-law rules).
19. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which together shall constitute one agreement.
20. NO THIRD PARTIES BENEFITED. This Agreement is made and entered
into for the sole protection and legal benefit of the parties, and their
permitted successors and assigns, and no other person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement.
21. EFFECTIVE DATE. This Agreement shall be effective as of April 30,
2001 (the "Effective Date"); PROVIDED, HOWEVER, that if any of the following
conditions has not occurred on or before September 15, 2001, then this Agreement
shall, at the option of any party as evidenced by written notice to such effect
given to the other parties as provided herein, terminate and be of no further
force or effect:
(a) Each of the parties hereto shall have executed and delivered to
the others a counterpart of this Agreement;
(b) The Program Lender and FMC shall have executed and delivered to
the other the New Note Purchase Agreement;
(c) Each of the following shall have been executed and delivered in
form and substance satisfactory to FMC:
11
(i) the Guaranty Agreement;
(ii) the Deposit and Security Agreement; and
(iii) the Origination Services Agreement.
(d) Program Lender shall have entered into one or more agreements for
loan servicing with the Servicer, in form and substance satisfactory to Program
Lender and to FMC. FMC, in its sole discretion, may waive the condition set
forth in this Section 21(d); provided, however, that any such waiver by FMC
shall not excuse the Program Lender from its obligations pursuant to Section
22(a) of this Agreement.
Each of the parties agrees to use its best efforts to cause these
conditions subsequent to be satisfied.
22. COVENANTS OF PROGRAM LENDER CONCERNING SERVICING. Program Lender
agrees that:
(a) Program Lender shall use its best efforts to maintain the
Origination Services Agreement and the servicing agreement with the Servicer in
full force and effect; and
(b) Program Lender will not amend the loan origination and servicing
agreements with the Servicer in any respect concerning Bank of America GATE
Conforming Loans as to which FMC has an option to purchase without the prior
written consent and approval of FMC.
23. TERMINATION FOR CAUSE; SUSPENSION. FMC or Program Lender may
terminate this Agreement for cause by notice to the other if:
(a) The other party materially breaches this Agreement and fails to
cure such material breach, within 60 days of written demand for cure. For
purposes of this Agreement, the failure to make any payment required hereunder
shall constitute a material breach; or
(b) The other party shall file any proceeding under the U.S.
Bankruptcy Code or similar state insolvency act, or shall be the subject of any
involuntary bankruptcy proceeding, which proceeding is not dismissed within 60
days after the filing thereof.
(c) The Guaranty Agreement is terminated or ▇▇▇▇ becomes a debtor in
any bankruptcy or insolvency proceeding.
Either party to this Agreement may suspend the processing of new
applications for Bank of America GATE Education Loans in the event that ▇▇▇▇
experiences a material adverse financial change such as a reduction of its
credit rating below investment grade, or a default is declared under any ▇▇▇▇
guaranty agreement with any lender. Such suspension shall continue, at the
discretion of the party declaring the same, until the adverse change is cured.
24. TERMINATION UPON CHANGE IN CONTROL. Either party shall be
entitled to terminate this Agreement and the Note Purchase Agreement upon thirty
(30) days' notice following the occurrence of any transaction which results in,
or the execution of one or more agreements to enter into a transaction that
would result in, a Change in Control of the other party.
12
25. EFFECT OF TERMINATION. Upon termination of this Agreement for any
reason:
(a) Program Lender shall not be obligated to accept any additional
applications for Bank of America GATE Conforming Loans but shall complete all
scheduled funding with respect to applications it has already approved and shall
pay any fees that would have been due (but for such termination) to FMC related
to such disbursements.
(b) FMC's rights to purchase notes under the New Note Purchase
Agreement shall not be affected.
(c) FMC and BA may notify all Participating Institutions of the
termination of the BA/GATE Program (but shall also have the right to offer a
replacement program).
(d) Each party shall cease and desist in the use of the other's
trademarks, tradenames, servicemarks and logos, in accordance with the terms of
the License Agreements.
26. THE SERVICER. The parties have selected PHEAA as Servicer to
service Bank of America GATE Conforming Loans and ▇▇▇▇ to originate prepGATE
Loans. In the event of a termination of either or both of the agreements between
Program Lender and Servicer or ▇▇▇▇ (whether on account of breach, expiration or
otherwise), the parties shall agree upon a mutually acceptable replacement. Any
replacement origination agreement and/or servicing agreement must be
satisfactory to both FMC and Program Lender, in form and substance. Any
replacement agreement shall initially be entered into with Program Lender but
rights thereunder relating to groups of Bank of America GATE Conforming Loan
transferred in a Securitization Transaction shall be assignable to the owner of
the Notes so transferred. The selection of any successor Servicer must also
conform to the requirements of the Note Purchase Agreement. A successor servicer
may be an Affiliate of either party.
27. INFORMAL DISPUTE RESOLUTION. Any controversy or claim between the
parties arising from or in connection with this Agreement or the relationship of
the parties under this Agreement whether based on contract, tort, common law,
equity statute, regulation, order or otherwise, and whether arising before or
after the termination of this Agreement ("Dispute") shall be resolved as
follows:
(a) Upon written request of either party, the parties will each
appoint a designated representative whose task it will be to meet for the
purpose of endeavoring to resolve such Dispute.
(b) The designated representatives shall meet as often as the parties
reasonably deem necessary to discuss the problem in an effort to resolve the
Dispute without the necessity of any formal proceeding.
(c) Arbitration proceedings for the resolution of a Dispute under
Section 28 may not be commenced until the earlier of:
(i) the designated representatives conclude in good faith that
amicable resolution through continued negotiation of the
matter does not appear likely; or
(ii) the expiration of the thirty (30) day period immediately
following the initial request to negotiate the Dispute.
28. MANDATORY ARBITRATION; REFERENCE.
13
(a) Any controversy or claim between or among the parties, including
but not limited to those arising out of or relating to this Agreement and any
claim based on or arising from an alleged tort, shall at the request of any
party be determined by arbitration. The arbitration shall be conducted in
accordance with the United States Arbitration Act (Title 9, U.S. Code),
notwithstanding the choice of law provision in this Agreement, and under the
Commercial Rules of the American Arbitration Association ("AAA"). The
arbitrator(s) shall give effect to statutes of limitation in determining any
claim. Any controversy concerning whether an issue is arbitrable shall be
determined by the arbitrator(s). Judgment upon the arbitration award may be
entered in any court having jurisdiction. The institution and maintenance of an
action for judicial relief or pursuit of a provisional or ancillary remedy shall
not constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.
(b) No provision of this paragraph shall limit the right of any party
to exercise self-help remedies such as setoff, foreclosure against or sale of
any real or personal property collateral or security, or obtaining provisional
or ancillary remedies from a court of competent jurisdiction before, after, or
during the pendency of any arbitration or other proceeding. The exercise of a
remedy does not waive the right of any party to resort to arbitration or
reference. At the option of any party holding a deed of trust, foreclosure under
such deed of trust or mortgage may be accomplished either by exercise of power
of sale under the deed of trust or mortgage or by judicial foreclosure.
29. PERMISSIBLE LEGAL PROCEEDINGS. Notwithstanding anything contained
in Sections 27 and 28, (a) a party may institute legal proceedings to seek a
temporary restraining order or other temporary or preliminary injunctive relief
to prevent immediate and irreparable harm to such party, and for which monetary
damages would be inadequate, pending final resolution of the dispute,
controversy or claim pursuant to arbitration, and (b) a party may institute
legal proceedings if necessary to preserve a superior position with respect to
other creditors. Such conduct shall not constitute a waiver of the right of
either party to resort to arbitration to obtain relief other than that specified
in this Section 29.
30. CONSENT TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING WITH
RESPECT TO THIS AGREEMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF
CALIFORNIA OR OF THE UNITED STATES FOR THE NORTHERN DISTRICT OF CALIFORNIA, AND
BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE PARTIES HERETO
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NON-EXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE PARTIES HERETO IRREVOCABLY WAIVES ANY
OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS
AGREEMENT OR ANY DOCUMENT RELATED HERETO.
14
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
THE FIRST MARBLEHEAD CORPORATION
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
Title: COO
------------------------------
BANK OF AMERICA NA
By: /s/ ▇ ▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇ ▇ ▇▇▇▇▇▇
-------------------------------
Title: SVP
------------------------------
15
TABLE OF EXHIBITS
NOTE: First Marblehead Corporation is not a party to the following Exhibits A,
B, C, E and/or G. Pursuant to Item 601 of Regulation S-K, such exhibits
are not being filed herewith.
Exhibit A -- Underwriting, Origination and Loan Term Guidelines for
prepGATE Loan Program, Bank of America GATE Undergraduate Loan
Program and Bank of America GATE Graduate Loan Programs
Exhibit B -- ▇▇▇▇ Servicing Guidelines
Exhibit C -- Specific Program Summaries
Exhibit D -- New Note Purchase Agreement - filed herewith.
Exhibit E -- Origination Services Agreement
Exhibit F -- Deposit and Security Agreement - filed herewith.
Exhibit G -- Guaranty Agreement
16
[EXHIBIT D TO UMBRELLA AGREEMENT]
DRAFT #6
8/01/01
NOTE PURCHASE AGREEMENT
BANK OF AMERICA GATE(R) LOAN PROGRAM
This Note Purchase Agreement, by and between BANK OF AMERICA, N.A.
("Program Lender"), a national banking association organized under the laws of
the United States and having a principal office located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, and THE FIRST MARBLEHEAD CORPORATION, a Delaware
corporation having a principal place of business at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ("FMC"), dated as of April 30, 2001;
W I T N E S S E T H:
WHEREAS, Program Lender is in the business of making education loans
under education ending programs, including, without limitation, the Bank of
America GATE Education Loan Program (as hereinafter defined); and
WHEREAS, FMC exists to arrange funding for education loans for the
benefit of students at Participating Institutions; and
WHEREAS, in order to facilitate funding of Bank of America GATE
Conforming Loans, Program Lender has agreed to sell, from time to time, pools
containing Bank of America GATE Conforming Loans originated by Program Lender to
FMC or a Purchaser Trust (all as hereinafter defined).
WHEREAS, the Bank of America GATE Education Loans are made by Program
Lender and purchased by FMC on the condition that they qualify for and in fact
are covered by a guaranty issued by The Education Resources Institute, Inc.
("▇▇▇▇").
NOW, THEREFORE, in consideration of these presents and the covenants
contained herein, the parties hereto hereby agree as follows:
1
I. DEFINITIONS.
Capitalized terms used herein without definition have the meanings set
forth in the Program Guidelines.
"Affiliate" shall mean, as to any person, any other person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such person. A person shall be deemed to control another person if
the controlling person possesses, directly or indirectly, the power to direct or
to cause the direction of the management and policies of the other person,
whether through the ownership of voting securities, by contract or otherwise.
"Bank of America GATE Conforming Loans" shall mean loans (a) conforming
to the requirements of the Product Specifications at the time the loans were
made, (b) serviced by the Servicer in accordance with the Product
Specifications, and (c) covered by and subject to all the benefits of the
Guaranty Agreement.
"Bank of America GATE Education Loan Pool" or "Pool" shall mean and
refer to a group of Bank of America GATE Notes purchased and pledged or intended
to be purchased and pledged as collateral in a particular Securitization
Transaction.
"Bank of America GATE Notes" shall mean notes or other forms of consumer
debt instruments, evidencing Bank of America GATE Conforming Loans.
"Business Day" shall mean any day other than: (a) a Saturday or Sunday,
or (b) a day on which banking institutions in the State of California are
required or authorized by law or executive order to be closed.
"Co-Lender Indemnification Agreement" means the form of Agreement
attached hereto as Exhibit C.
"Collateral" has the meaning set forth in the Deposit and Security
Agreement.
"Deposit and Security Agreement" means the agreement of that name among
Program Lender, ▇▇▇▇, FMC, and State Street Bank & Trust Company, dated as of
April 30, 2001.
2
"First Marblehead" or "FMC" shall mean The First Marblehead Corporation,
a Delaware corporation.
"GATE Program" shall mean the Bank of America GATE Education Loan
Program described in the Product Specifications.
"Guaranty Agreement" means the agreement of that name between Program
Lender and ▇▇▇▇, dated as of April 30, 2001.
"Minimum Purchase Price" has the meaning set forth in Section 2.04.
"Option Period" means, with respect to any particular Bank of America
GATE Conforming Loan, the period beginning on the first May 1 when such loan
first becomes a Seasoned Loan and ending five hundred and forty (540) days
thereafter.
"Origination Records" means and refers to the original Bank of America
GATE Education Loan Application and Note, a form of cosigner notice when
required under 16 C.F.R. Section 444, and any other standardized documentation
specified from time to time in the Product Specifications as required to be
received by the Servicer from the Program Lender in order to service Bank of
America GATE Conforming Loans adequately and accurately.
"Origination Services Agreement" refers to (a) the Origination Services
Agreement entered into between Servicer and Program Lender with respect to
origination of prepGATE Conforming Loans, as amended from time to time, and (b)
any subsequent agreement relating to origination services provided to Program
Lender with respect to Bank of America GATE Education Loan Notes purchased under
this Agreement.
"Participating Institution" means an educational institution approved by
▇▇▇▇ for receipt of Bank of America GATE Program funds.
"Product Specifications" has the meaning set forth in the Umbrella
Agreement.
"Purchase Date" shall mean the date of consummation of a Securitization
Transaction with respect to a particular Pool including Bank of America GATE
Conforming Loans originated by Program
3
Lender, which date: (a) shall be set by written notice from FMC to Program
Lender, given to Program Lender not less than five (5) Business Days in advance
of the specified date, and (b) shall occur during the Option Period for each
loan in the Pool in question.
"Purchaser Trust" shall mean and refer to a trust or other SPE formed
for the purpose of purchasing Bank of America GATE Conforming Loans by FMC or by
any Affiliate of FMC. Any action required or permitted to be taken by FMC
hereunder may be taken by a Purchaser Trust with respect to a particular Pool.
"Rating Agencies" shall mean and refer to Standard and Poor's
Corporation and/or ▇▇▇▇▇'▇ Investors Service, Inc., and/or Duff & ▇▇▇▇▇▇, and/or
Fitch Investors Services.
"Seasoned Loan" means a Bank of America GATE Conforming Loan made by
Program Lender that becomes "seasoned" in accordance with the following
criteria:
(a) The following Bank of America GATE Conforming Loans will be deemed to be
"Seasoned Loans" immediately upon final disbursement:
(i) prepGATE loans (as defined in the Product Specifications);
(b) The following Bank of America GATE Conforming Loans will be deemed to be
"Seasoned Loans" twenty-four (24) months following final disbursement:
(i) Bank of America GATE Undergraduate Education Loans (as defined in the
Product Specifications) made to Borrowers in their first (1st), second
(2nd) or third (3d) academic year;
(c) The following Bank of America GATE Conforming Loans will be deemed to be
"Seasoned Loans" upon the scheduled graduation date (i.e., at the beginning of
the grace period before scheduled repayment begins):
(i) Bank of America GATE Undergraduate Education Loans (as defined in
the Product Specifications) made to Borrowers in their fourth (4th) or later
academic year; and
(ii) Bank of America GATE Graduate Professional Education Loans (as
defined in the Product Specifications).
4
(d) Notwithstanding subparagraphs (a) through (c), above, Bank of America
GATE Conforming Loans will be deemed to be "Seasoned Loan" immediately
upon the occurrence of any of the following events:
(i) the Bank of America GATE Conforming Loan enters repayment because
the Borrower ceases to be enrolled at the Participating Institution or
in an approved residency period in the case of a loan to a Borrower in
a medical or dental degree program, as and to the extent required by
the Product Specifications; or
(ii) a "Guaranty Event" (as defined in the Guaranty Agreement) occurs
with respect to such Bank of America GATE Conforming Loan.
"Securitization Costs" means the actual costs and expenses incurred by
FMC, the Purchaser Trust, and all others entitled to payment for expenses by the
Purchaser Trust or FMC, in connection with a Securitization Transaction,
including, without limitation, the following:
(Structuring and Origination Fees;
Copy/Binding Costs)
(Underwriting Expenses)
(Rating Fee)
(Transaction and First Year Fees; Expenses)
Owner Trustee and Indenture Trustee (Transaction and First Year Fees; Expenses)
(Counsel for Indenture Trustee)
(Counsel for FMC)
(Servicer Audit)
(Bond Insurer)
"Securitization Transaction" shall mean and refer to the purchase of a
Pool of Bank of America GATE Conforming Loans by a Purchaser Trust funded
through the issuance and sale of commercial paper, certificates, bonds or other
securities or evidences of indebtedness, the repayment of which is supported by
payments on the Bank of America GATE Conforming Loans included in such Pool. A
Securitization Transaction may include, without limitation, a continuing series
of transactions occurring on a periodic basis in which Program Lender makes a
sale of then-outstanding Seasoned Loans to a Purchaser Trust, which Purchaser
Trust in turn either utilizes the Pool directly as collateral for its own debt
or resells the Pool (in whole or in part) in further sales to a securitization
conduit providing financing to the Purchaser Trust.
5
"Servicer" shall mean and refer to The Pennsylvania Higher Education
Assistance Agency ("PHEAA"), or such other servicer as may be retained by the
holder of Bank of America GATE Conforming Loans in accordance with the terms
hereof and of the Umbrella Agreement.
"Servicing Agreement" refers to: (a) the Servicing Agreement entered
into between Servicer and Program Lender with respect to servicing of Bank of
America GATE Conforming Loans, as amended from time to time, and (b) any
subsequent servicing agreement between Program Lender and the Servicer governing
servicing of Bank of America GATE Conforming Loans purchased under this
Agreement.
"Servicing Assignment and Servicer Consent Letter" means the form of
assignment and consent attached hereto as Exhibit B.
"SPE" means a special purpose entity formed and operated for the sole
purpose of acting as purchaser and owner of Bank of America GATE Conforming
Loans.
"Term" shall mean the period commencing on the effective date hereof and
ending upon termination hereof, all as set forth in Article X.
"Trust Agreement" means, with respect to any particular Securitization
Transaction, the agreement pursuant to which a Purchaser Trust is formed.
"Trust Indenture" means, with respect to any particular Securitization
Transaction, the agreement pursuant to which FMC or a Purchaser Trust issues
evidences of indebtedness secured by the payments on the related Bank of America
GATE Conforming Loans.
"Umbrella Agreement" shall mean and refer to that certain Umbrella
Agreement by and between Program Lender and First Marblehead, dated as of April
15, 2001.
6
II. AGREEMENT FOR PURCHASE AND SALE OF NOTES.
2.01. PURCHASE AND SALE.
On each Purchase Date during the Term of this Agreement and subject to
the conditions set forth herein, Program Lender shall sell to FMC or a designee
Purchaser Trust, and FMC or such Purchaser Trust shall purchase, every Seasoned
Loan owned by Program Lender on the Purchase Date.
2.02. PRE-CLOSING INFORMATION; FMC BEST EFFORTS.
(a) REPORTING.
Program Lender will cause Servicer to inform FMC periodically of
information reasonably requested by FMC in anticipation of a Securitization
Transaction, including, without limitation, the number of Seasoned Loans ready
for purchase, principal and accrued interest with respect to each such Loan,
payment status (including defaulted loans presented for guaranty payment), and
the identity of Participating Institutions affected by the Securitization.
Program Lender shall also provide summary data, monthly, of applications in
process and approved loans not yet originated (numbers, dollar amounts by
program, borrower expected repayment date and other agreed data). Program Lender
will provide summary data, monthly, of rejected applications (numbers and dollar
amounts by program). Program Lender shall also cause Servicer to provide its
MR50 Reports to FMC. FMC covenants and agrees that it will use data in the MR50
Report solely for the purpose of producing portfolio-level reports specific to
forecasting and structuring Securitization Transactions. After production of
such reports, FMC will return all data storage devices containing MR50 data to
PHEAA and will delete all MR50 data (other than the portfolio-level reports)
from its system.
FMC will use its best efforts to specify a Purchase Date and consummate
a Securitization Transaction in which a Purchaser Trust will purchase all of the
Seasoned Loans, not less than once each calendar year. FMC shall have the sole
and exclusive right to purchase all Bank of America GATE Conforming Loans during
the Option Period for each such loan, which right may be assigned to one or more
Purchaser Trusts. Program Lender agrees, in consideration of FMC's undertaking
pursuant to this
7
section, [**]. Program Lender shall be free to use Bank of America GATE
Conforming Loans as collateral for loans to Program Lender and/or to sell
participations in its portfolio of Bank of America GATE Conforming Loans;
PROVIDED, HOWEVER, that Program Lender must sell and deliver Seasoned Loans free
and clear of any such interests on any Purchase Date. Program Lender shall be
entitled at any time and from time to time, in its sole discretion, to sell a
Seasoned Loan to a third party or to retain a Bank of America GATE Conforming
Loan, in whole or in part, for its own account, in the event that FMC or its
designee is unable to or fails to acquire such Seasoned Loan prior to the
expiration of such Option Period. In such event, the Program Lender may sell or
retain such Seasoned Loan to any purchaser, free and clear of any claim under
this Agreement.
2.03. POOL SUPPLEMENT.
Each purchase and sale of the Seasoned Loans originated by Program
Lender included in a Pool on a Purchase Date shall be made pursuant to a Pool
Supplement substantially in the form of Exhibit A which shall: (1) set forth the
Minimum Purchase Price for the Seasoned Loans originated by Program Lender
included in the Pool, (2) incorporate by reference the terms and conditions of
this Agreement applicable to sales of Seasoned Loans, and (3) include a Schedule
of Seasoned Loans setting forth the details and characteristics of such Pool.
Each Pool Supplement shall be executed by an authorized agent of each Purchaser
Trust and the Program Lender and shall be delivered on the related Purchase
Date. The Purchaser Trust shall provide a preliminary settlement sheet in the
form of Schedule 1 to the Pool Supplement not less than two (2) Business Days
prior to the Purchase Date.
2.04. MINIMUM PURCHASE PRICE.
On the Purchase Date, Program Lender shall assign and convey all
Seasoned Loans originated by Program Lender included in the Pool to FMC, or a
Purchaser Trust, in consideration of receipt of the Minimum Purchase Price
therefor. For purposes of this Agreement the term "Minimum Purchase Price" shall
mean the sum of:
(a) The [**] the Seasoned Loans in question including, without
limitation, [**]; plus
8
(b) [**] such Seasoned Loans, in accordance with the terms of the
Bank of America GATE Notes, excluding [**] already included [**];
plus
(c) With respect to Loans [**], the amount of any [**]. If the terms
of the Guaranty Agreement call for [**] concurrent with the
Securitization Transaction, Program Lender may elect either: (i)
to [**] under this clause, or (ii) for the Purchaser Trust [**];
plus
(d) [**] with respect to Seasoned Loans described in subsection (b)
of the definition of "Seasoned Loans," such [**] from the
Purchase Date of the first Securitization Transaction that occurs
after such loan is first disbursed until the Purchase Date when
such loan is sold to a Purchaser Trust.
2.05. FAILURE OF FMC TO SECURITIZE.
In the event that: (a) FMC fails to specify a Purchase Date and to
consummate a Securitization Transaction with respect to a Pool of Seasoned Loans
prior to the end of the Option Period applicable to that Pool, and (b) Program
Lender subsequently sells such a Pool in a transaction that, if it had been
conducted by a Purchaser Trust, would constitute a Securitization Transaction,
THEN FMC will reimburse Program Lender for the LESSER of (c) the amount by which
Lender Securitization Expenses exceeds [**] percent ([**]%) of the outstanding
principal amount of the loans sold in the transaction, or (d) the difference
between the [**] received by Program Lender. For purposes only of this Section
2.06, the following terms have the following meanings:
"Lender Securitization Expenses" means actual costs paid by Program
Lender (or deducted from sale proceeds otherwise payable to Program Lender) for
expenses of the type described in the definition of "Securitization Expenses,"
including, without limitation, [**].
"Program Lender's Unrecovered Investment in the Pool" means the sum of
unpaid principal of and accrued, unpaid interest on the Seasoned Loans
in the Pool on the date of sale.
III. PROCEDURES AND CONDITIONS FOR TRANSFER.
3.01. CONVEYANCES OF BANK OF AMERICA GATE CONFORMING LOANS; CONDITIONS
TO PURCHASE.
(a) On each Purchase Date, upon execution and delivery of the related
Pool Supplement, Program Lender shall sell, transfer, assign, set over and
otherwise convey to FMC or the Purchaser Trust, without recourse, all right,
title and interest of Program Lender in and to:
9
(1) The Seasoned Loans included in the related Pool originated
by Program Lender and all payments due or to become due
thereon;
(2) Any proceeds with respect to the Seasoned Loans originated
by Program Lender included in such Pool from recourse to
▇▇▇▇ under the Origination Services Agreement regarding
origination of prepGATE Conforming Loans;
(3) Any claims Program Lender may have under the Servicing
Agreement with respect to acts or omissions of the
Servicer affecting the Seasoned Loans being purchased;
(4) The proceeds of any and all of the foregoing received
after the Purchase Date or received prior thereto and not
credited against the Minimum Purchase Price as computed on
the Purchase Date (and, pursuant to Section 3.07, the
Purchaser Trust shall assume certain liabilities of
Program Lender thereunder);
(5) All rights of Program Lender under the Guaranty Agreement
with respect to the loans in the Pool.
(b) The obligation of the Purchaser Trust to purchase the Seasoned
Loans originated by Program Lender on the related Purchase Date shall be subject
to satisfaction of the following conditions (each and all of which may be waived
by such Purchaser Trust, in whole or in part in its sole discretion):
(1) Program Lender shall have delivered to the Purchaser Trust
a duly authorized and executed Pool Supplement;
(2) Each of the representations and warranties made by Program
Lender pursuant to Section 5.02 with respect to the
Seasoned Loans originated by Program Lender included in
such Pool shall be true and correct as of the related
Purchase Date;
(3) The Origination Services Agreement and the Servicing
Agreement shall be in full force and effect as of the
related Purchase Date and Program Lender and Servicer
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shall have executed and delivered a Servicing Assignment
and Servicer Consent Letter;
(4) Program Lender and ▇▇▇▇ shall have performed and observed
the terms and conditions of this Agreement and the
Origination Services Agreement and there shall not have
occurred a default under either the Origination Services
Agreement or the Servicing Agreement;
(5) Program Lender shall have complied with the provisions of
the Umbrella Agreement applicable to the Seasoned Loans
included in the Pool;
(6) The loans to be purchased shall have been originated and
serviced in conformity with the Product Specifications and
shall be covered by the Guaranty Agreement;
(7) The Agent pursuant to the Deposit and Security Agreement,
shall have transferred to the indenture trustee in the
Securitization Transaction the portion of the Pledged
Account and the Collateral specified in Section 4 of the
Deposit and Security Agreement;
(8) If required by any other Lender whose loans are included
in the Securitization Transaction, the Program Lender
shall have executed and delivered a Co-Lender
Indemnification Agreement substantially in the form of
Exhibit C;
(9) Program Lender shall, at its own expense, on or prior to
the Purchase Date, indicate in computer files relating to
Seasoned Loans that the Seasoned Loans identified in the
related Pool Supplement have been sold to the Purchaser
Trust pursuant to this Agreement and such Pool Supplement;
(10) Program Lender shall have executed and delivered for
filing a UCC-1 financing statement with respect to the
Seasoned Loans originated by Program Lender included in
such Pool in the appropriate office of the jurisdiction in
which the chief executive office of the Program Lender is
located (or, in the event of a
11
change of law, Program Lender shall have taken, but [**]to
the Program Lender, such action as may be reasonably
advised by the Purchaser Trust);
(11) As of such Purchase Date: (i) Program Lender was not
insolvent and will not become insolvent as a result of the
transfer of Seasoned Loans on such Purchase Date, (ii)
Program Lender did not intend to incur or believe that it
would incur debts that would be beyond Program Lender's
ability to pay as such debts matured, (iii) such transfer
was not made with actual intent to hinder, delay or
defraud any Person, and (iv) Program Lender was "Well
Capitalized," as such term is defined by the Office of the
Comptroller of the Currency on the Purchase Date; and
(12) Program Lender shall have executed and delivered an
Indemnification Agreement substantially in the form of
Exhibit D attached hereto, PROVIDED, HOWEVER, that an
Indemnification Agreement shall not be required if FMC
executes and delivers to Program Lender a certificate
which states that no Offering Materials (as defined in
Exhibit D attached hereto) were distributed or provided to
any securities purchaser or prospective purchaser in
connection with the Securitization Transaction in
question.
(c) The obligation of Program Lender to sell the Seasoned Loans
originated by Program Lender included in the Pool on a related Purchase Date are
subject to satisfaction of the following conditions (each and all of which may
be waived by Program Lender in whole or in part, in its sole discretion):
(1) Purchaser Trust shall have delivered to Program Lender a
duly authorized and executed Pool Supplement;
(2) Purchaser Trust shall have paid the Minimum Purchase Price
to Program Lender by wire transfer of immediately
available funds within [**] after the Purchase
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Date (such Minimum Purchase Price shall be based on the
best information available from the Servicer as of the
Purchase Date; no later than [**] following the Purchase
Date, the Purchaser Trust shall recalculate the Minimum
Purchase Price to reflect adjustments for transactions
(including, without limitation, additional accrued
interest and payments received), and whichever party is
deemed to owe the other such adjustment shall deliver such
adjustment to such other party, by wire transfer of
immediately available funds);
(3) FMC shall have complied with the terms of the Umbrella
Agreement applicable to the Seasoned Loans included in the
Pool and no default of FMC under the Umbrella Agreement
relating to any Seasoned Loans shall have materially
impaired the rights of the Program Lender in connection
with the purchase and sale of the Pool to be sold on the
Purchase Date;
(4) FMC and Purchaser Trust shall have executed and delivered
an Indemnification Agreement substantially in the form of
Exhibit D attached hereto, PROVIDED, HOWEVER, that an
Indemnification Agreement shall not be required if FMC
executes and delivers to Program Lender a certificate
which states that no Offering Materials (as defined in
Exhibit D attached hereto) were distributed or provided to
any securities purchaser or prospective purchaser in
connection with the Securitization Transaction in
question.
(5) In the event the subject Pool contains loans originated by
persons and entities other than Program Lender (to the
extent permitted under the Umbrella Agreement), each such
person and entity shall have delivered to Program Lender a
Co-Lender Indemnification Agreement;
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(6) If the trustee or other fiduciary under the related Trust
Indenture is not State Street Bank and Trust, Program
Lender shall have approved such trustee or fiduciary, with
such approval not to have been unreasonably withheld; and
(7) Program Lender shall have received an opinion of Thacher,
▇▇▇▇▇▇▇▇ & ▇▇▇▇, or other securities counsel to the
Purchaser Trust and FMC, addressed to Program Lender and
satisfactory to Program Lender in form and substance. Such
opinion shall, with respect to any securities issued by
the Purchaser Trust, state that nothing has come to the
attention of such counsel that would lead it to believe
that the Offering Materials (as defined in the
Indemnification Agreement attached hereto as Exhibit D) in
connection with the matters described therein contain any
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary
to make the statements therein not misleading; PROVIDED,
HOWEVER, that Thacher, ▇▇▇▇▇▇▇▇ & ▇▇▇▇ may except the B of
A Information (as defined in Exhibit D attached hereto)
from the scope of its opinion, and FURTHER PROVIDED,
HOWEVER, that such opinion shall not be required if FMC
executes and delivers to Program Lender a certificate
which states that no Offering Materials (as defined in
Exhibit D attached hereto) were distributed or provided to
any securities purchaser or prospective purchaser in
connection with the Securitization Transaction in
question.
3.02. DELIVERY OF DOCUMENTS.
On the Purchase Date, Program Lender shall deliver to the Servicer, as
agent for the Purchaser Trust and/or to the trustee of the Trust Indenture, each
Bank of America GATE Note originated by Program Lender included in the Pool and
the related Origination Records. If a Co-Lender Indemnification Agreement is
required as a condition of Program Lender's obligations under Section 3.01(c)(4)
hereof, Program Lender shall execute and deliver a Co-Lender Indemnification
Agreement to each lender selling Bank of America GATE Conforming Loans in the
Securitization Transaction.
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3.03. CONFIRMATION OF REPRESENTATIONS AND WARRANTIES.
In each Pool Supplement, Program Lender shall confirm its
representations and warranties contained in Section 5.02 hereof.
3.04. RIGHTS TRANSFERRED.
The transfer of funds pursuant to Section 2.04 hereof shall constitute,
and the delivery to FMC, or its designated Purchaser Trust of each Pool
Supplement shall evidence, a sale and assignment to FMC or the Purchaser Trust
of the related Seasoned Loans and of all of Program Lender's interest in such
Seasoned Loans. As assignee of such Seasoned Loans, FMC or the Purchaser Trust
shall receive: (i) interest on such Seasoned Loans from and after the Purchase
Date, and (ii) any and all other payments and recoveries received by the
Servicer or Program Lender from the borrowers and cosigners of such Seasoned
Loans, or others pursuant to, or in respect of, such Seasoned Loans from and
after the Purchase Date, and all proceeds thereof.
3.05. SUBSEQUENT RECEIPTS.
In the event that Program Lender shall receive, subsequent to any such
assignment, any amounts whatsoever in respect to the Bank of America GATE
Conforming Loans so assigned in the nature of those described in Section 3.04
above, such amounts shall be held by Program Lender in trust for FMC or the
Purchaser Trust to which it has sold the Notes, and the Program Lender shall
promptly deliver such amounts to the trustee under the Trust Indenture.
3.06. ASSIGNMENT OF ORIGINATION RIGHTS.
Program Lender shall insure that Program Lender's rights under the
Servicing Agreement and the Origination Services Agreement with respect to the
Seasoned Loans in each Pool shall be transferred to FMC or the Purchaser Trust
by execution and delivery of a Servicing Assignment and Servicer Consent Letter.
Program Lender shall require ▇▇▇▇ to complete any loan origination services
being performed for Program Lender under the Origination Services Agreement on
the Purchase Date so that complete Origination Records are ready for transfer to
the Purchaser Trust (or to Servicer on its behalf).
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3.07. NO ASSUMPTION OF LIABILITY TO FUND BANK OF AMERICA GATE EDUCATION
LOAN NOTES.
By their purchase of Bank of America GATE Education Loan Notes, FMC, and
all Purchaser Trusts, shall assume no liability, responsibility or obligation
with respect to any payments which are due and owing, or which are, or may be
alleged to be due and owing, by Program Lender to any Participating Institution
or to any GATE Loan borrower by reason of the Seasoned Loans originated by
Program Lender included in the Pool evidenced by the Bank of America GATE
Education Loan Notes. Program Lender shall be solely responsible to fulfill its
obligations under any agreements it may have with Participating Institution
regarding origination and funding of such Seasoned Loans. Notwithstanding the
foregoing, the Purchaser Trust shall assume from Program Lender any liability to
repurchase from ▇▇▇▇ a defaulted Loan upon cure of the default, with respect to
any Loan that would be a Seasoned Loan but for such default and purchase by
▇▇▇▇.
3.08. SERVICING AND ORIGINATION COSTS.
Except as expressly set forth in the definition of "Minimum Purchase
Price," Program Lender shall be solely responsible for and shall [**]
(including, without limitation, [**]) with respect to origination of Bank of
America GATE Conforming Loans and with respect to loan servicing of Bank of
America GATE Conforming Loans incurred prior to purchase of a Bank of America
GATE Conforming Loan hereunder. FMC shall be solely responsible for and shall
[**] in connection with [**].
IV. LIMITATION OF OBLIGATIONS OF FMC AND PURCHASER TRUST.
4.01. Except as provided in Section 2.05 of this Agreement, FMC's
obligation in connection with the purchase of Seasoned Loans is [**] to occur
and to use the proceeds thereof to fund the purchase of Seasoned Loans by a
Purchaser Trust. Upon the designation of a Purchase Date and a Purchaser
Trust by FMC, FMC shall be obligated to cause the consummation of a
Securitization Transaction and the payment of the Minimum Purchase Price to
Program Lender; PROVIDED, HOWEVER, that the obligation of FMC and any
Purchaser Trust to consummate the Securitization Transaction shall be
conditioned upon and subject to the receipt by the Purchaser Trust of
Securitization Transaction proceeds [**]
V. REPRESENTATIONS AND WARRANTIES.
5.01. REPRESENTATIONS AND WARRANTIES OF FMC.
16
FMC makes the following representations and warranties as of the date
hereof, as of the date of each purchase of Bank of America GATE Conforming Loans
and as of any other date specified below. FMC shall cause each Purchaser Trust
to make substantially the same representations and warranties in a Pool
Supplement as of the date of each purchase of Bank of America GATE Conforming
Loans:
(a) FMC represents and warrants that it is and shall remain a
Delaware corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware, and has the authority to conduct all
activities contemplated by this Agreement.
(b) FMC has full power and authority to perform its obligations under
this Agreement, and has duly authorized the execution, delivery and performance
of, and has duly delivered this Agreement, and this Agreement constitutes the
legal, valid and binding obligation of FMC enforceable against FMC in accordance
with its terms, except that such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws.
(c) Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, nor the fulfillment of or
compliance with the terms and conditions hereof, will conflict with, or result
in a breach of, or constitute a default under, any of the terms, conditions or
provisions of any legal restriction or any agreement or instrument to which FMC
is now a party or by which it is bound.
5.02. REPRESENTATIONS AND WARRANTIES OF PROGRAM LENDER.
Program Lender makes the following representations and warranties as of
the date hereof, as of the date of each sale of Seasoned Loans originated by
Program Lender to FMC or a Purchaser Trust, and as of any other date specified
below:
(a) Program Lender represents and warrants that it is, and shall
continue to be, a national banking association duly organized, validly existing
and in good standing under the laws of the United States, and has the authority
to conduct all activities contemplated by this Agreement.
17
(b) Program Lender has full power and authority to perform its
obligations under this Agreement, and has duly authorized the execution,
delivery and performance of, and has duly delivered this Agreement, and this
Agreement constitutes the legal, valid and binding obligation of Program Lender
enforceable against Program Lender in accordance with its terms, except as such
enforceability may be limited by (i) receivership, conservatorship and
supervisory powers of bank regulatory agencies generally, (ii) applicable
bankruptcy, receivership, conservatorship, insolvency, reorganization,
moratorium or other similar laws affecting creditors' rights generally from time
to time in effect, or (iii) general principles of equity.
(c) Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, nor the fulfillment of or
compliance with the terms and conditions hereof, will conflict with, or result
in a breach of, or constitute a default under, any of the terms, conditions or
provisions of any legal restriction or any agreement or instrument to which
Program Lender is now a party or by which it is bound.
(d) Each of the Seasoned Loans originated by Program Lender sold to
FMC or a Purchaser Trust pursuant to any Securitization Transaction is the
valid, binding and enforceable obligation of the borrower executing the same,
and of any cosigner thereto, enforceable against each borrower, any student
maker named therein, and any cosigner thereunder in accordance with its terms
except as enforceability may be affected by bankruptcy, insolvency, moratorium
or other similar laws affecting the rights of creditors generally and by
equitable principles.
(e) Each Seasoned Loan originated by Program Lender sold hereunder
and any accompanying notices and disclosures conforms to all applicable state
and federal laws, rules and regulations. The origination of each Seasoned Loan
by Program Lender was conducted in accordance with all applicable state and
federal laws concerning the actions of the Participating Institution and Program
Lender including, without limitation, the Equal Credit Opportunity Act. No
application to Program Lender for a Bank of America GATE Conforming Loan shall
be, or has been, rejected,
18
approved or discouraged by Program Lender on the basis of race, sex, color,
religion, national origin, age (other than laws limiting the capacity to enter a
binding contract) or marital status, the fact that all or a part of the
borrower's or co-signer's, income derives from any public assistance program, or
the fact that the applicant, borrower or any co-signer has, in good faith,
exercised any right under the Consumer Credit Protection Act.
(f) Each Seasoned Loan originated by Program Lender sold to FMC or
Purchaser Trust is in compliance in all material respects with any applicable
usury laws at the time made and of the time of assignment to FMC or a Purchaser
Trust.
(g) Program Lender has no actual knowledge of any defense to payment
with respect to any Seasoned Loan sold under this Agreement. There is no action
before any state or federal court, administrative or regulatory body, pending or
threatened against Program Lender in which an adverse result would have a
material adverse effect upon the validity or enforceability of Seasoned Loans
originated by Program Lender and included in the Pool.
(h) Each and every Seasoned Loan sold pursuant to this Agreement is
free and clear of any liens, claims or demands of any person claiming by or
through Program Lender, and Program Lender has the absolute right to transfer
the same to FMC or a Purchaser Trust.
(i) With respect to each GATE Note originated by Program Lender and
included in the Pool, the terms thereof have not been impaired, waived, altered
or modified in any respect, except pursuant to written forbearance agreements in
accordance with the requirements of and in the terms set forth in the Product
Specifications.
5.03. EXCLUSIVE REPRESENTATIONS AND WARRANTIES.
The representations and warranties set forth in Section 5.02 above are
the sole and exclusive representations and warranties made by the Program
Lender, its representatives, agents, officers, directors and other employees,
with respect to this Agreement, any Pool Supplement, any Bank of
19
America GATE Conforming Loan, any obligor, and the sale of any Bank of America
GATE Conforming Loan to the Purchaser Trust hereunder or otherwise.
5.04. REMEDY FOR BREACH OF REPRESENTATIONS AND WARRANTIES.
In the event any representation or warranty made by Program Lender
pursuant to Section 5.02 above shall prove to be inaccurate or incomplete in any
material and adverse respect as of the date when made, Program Lender shall have
the right (but not the obligation) to elect by written notice to FMC to be given
by Program Lender no later than sixty (60) days after receipt of written notice
from FMC of such alleged breach to repurchase the affected Seasoned Loan or
Loans no later than such 60th day for a cash purchase price equal to the
outstanding principal balance thereof plus all accrued and unpaid interest. Upon
receipt of said repurchase price, FMC shall, or, if applicable, shall cause the
Purchaser Trust or the Servicer to, deliver the GATE Note and the Origination
Records relating thereto to Program Lender, duly endorsed or assigned to Program
Lender or to such person as Program Lender may direct, in any such case, without
recourse to FMC or the Purchaser Trust. If Program Lender elects to repurchase
the affected Seasoned Loan or Loans as provided herein, subject only to Section
8.02 hereof, such remedy shall be the sole and exclusive remedy of any person or
entity, including, without limitation, FMC, the Purchaser Trust and the trustee
or any other fiduciary under any Trust Indenture, with respect to such breach.
If Program Lender shall not so elect to repurchase the affected Seasoned Loans
within said sixty (60) day period, then Program Lender shall indemnify FMC, the
Purchaser Trust and any fiduciary under the Trust Agreement from any and all
loss, cost, damage and expense, including reasonable attorneys' fees and legal
expenses and sums paid, liabilities incurred or expenses paid or incurred in
connection with settling claims, counterclaims, defenses, suits or judgments or
obtaining or attempting to obtain release from liability, in any such case by
reason of any alleged breach specified in such written notice given by FMC to
the Program Lender.
VI. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND INDEMNITIES.
20
As to any Seasoned Loans purchased hereunder, the representations and
warranties contained herein and the indemnifications contained in Article VIII
hereof with respect to such Seasoned Loans shall survive until each such
Seasoned Loan is paid in full.
VII. MISCELLANEOUS.
7.01. NO ASSIGNMENT.
No party may assign its rights or obligations under this Agreement
without the prior written consent of the parties hereto, PROVIDED, HOWEVER,
that: (a) Program Lender may assign its rights hereunder to an Affiliate that is
a national banking association having the legal power and right under applicable
law (including, without limitation, usury law in the State where it is located)
to make Bank of America GATE Conforming Loans, and (b) FMC shall have the right
to create a Purchaser Trust to exercise FMC's rights to purchase each Pool. No
assignment shall relieve the assignor of liability hereunder. Any assignment in
violation hereof shall be automatically null and void.
7.02. AMENDMENT.
This Agreement may not be amended nor terms or provisions hereof waived
unless such amendment or waiver is in writing and signed by all parties hereto.
7.03. NO WAIVER.
No delay or failure by any party to exercise any right, power or remedy
hereunder shall constitute a waiver thereof by such party, and no single or
partial exercise by any party of any right, power or remedy shall preclude other
or further exercise thereof or any exercise of any other rights, powers or
remedies.
7.04. ENTIRE AGREEMENT.
This Agreement and the documents and agreements referred to herein
embody the entire agreement and understanding among the parties hereto and
supersede all prior agreements and understandings relating to the subject matter
hereof and thereof.
7.05. NOTICES.
21
All notices given by any party to the others under this Agreement shall
be in writing delivered: (a) personally, (b) by facsimile transmission, (c) by
overnight courier, prepaid, or (d) by depositing the same in the United States
mail, certified, return receipt requested, with postage prepaid, addressed to
the party at the address set forth below. Any party may change the address to
which notices are to be sent by notice of such change to each other party given
as provided herein. Such notices shall be effective on the date received.
Notices shall be given as follows:
If to Program Lender:
▇▇▇▇▇ ▇▇▇▇▇▇
Bank of America
National Student Lending Group
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇ ▇▇▇▇▇
Bank of America
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
If to FMC:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
The First Marblehead Corporation
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
7.06. ATTORNEYS' FEES.
22
In the event of a lawsuit or arbitration proceeding arising out of or
relating to this Agreement, the prevailing party shall be entitled to recover
costs and reasonable attorneys' fees incurred in connection with the lawsuit or
arbitration proceeding, as determined by the court or arbitrator.
7.07. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the State of California (without reference to choice-of-law rules).
7.08. COUNTERPARTS.
This Agreement may be executed in any number of counterparts, all of
which together shall constitute one agreement.
7.09. NO THIRD PARTIES BENEFITED.
This Agreement is made and entered into for the protection and legal
benefit of the parties, and their permitted successors and assigns (including,
without limitation, any Purchaser Trust), and each and every Indemnified Person
(all of which shall be entitled to enforce the Indemnity contained in Sections
8.01 and 8.02 hereof), and no other person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement.
7.10. OPINIONS.
Concurrent with the execution hereof, each party shall deliver to the
other the opinion of its corporate counsel (which may be internal counsel) to
the effect that this Agreement has been duly authorized by all necessary
corporate or other organizational action, this Agreement is within the corporate
or other organizational power of such party and that this Agreement has been
duly executed and delivered by an authorized officer of the party.
VIII. INDEMNIFICATION.
8.01. BY PROGRAM LENDER - SECURITIES MATTERS.
Subject to the limitations on remedies for breach of representations and
warranties set forth in Section 5.04 above, Program Lender shall indemnify and
hold harmless FMC, each Purchaser Trust and
23
any fiduciary under any Trust Indenture, and any officer, director, employee or
agent of any of the foregoing (herein, collectively, referred to as the
"Indemnified Persons") against any and all liabilities, losses, costs, damages
and expenses, including, without limitation, attorneys' fees and legal expenses
and sums paid, liabilities incurred or expenses paid or incurred in connection
with settling claims, suits or judgments or obtaining or attempting to obtain
release from liability under the Trust Indenture or this Agreement which such
Indemnified Person may sustain or incur by reason of any untrue statement of a
material fact in any Offering Materials (as defined in the form of Co-Lender
Indemnification Agreement) or by any failure to state in such Offering Materials
a material fact necessary to make the statements therein not misleading (but
only to the extent the same relate to information relating to Program Lender and
the Bank of America GATE Conforming Loans originated by Program Lender furnished
in writing by Program Lender expressly for use in the applicable Offering
Materials). This section shall survive any termination of this Agreement.
8.02. BY PROGRAM LENDER - SPECIAL.
Notwithstanding any repurchase of Seasoned Loans under Section 5.04
hereof, IN THE EVENT THAT: (a) a claim, counterclaim or defense to payment of a
Bank of America GATE Conforming Loan (hereinafter a "claim") is asserted against
FMC, a Purchaser Trust or any other Indemnified Person, the substance of which
claim, if true, would constitute a material breach or misrepresentation of the
representations and warranties contained in any of subsections 5.02(d), (e), or
(f) AND (b) such claim is not dismissed or abandoned as against such Indemnified
Person following a repurchase under Section 5.04, THEN (c) Program Lender shall
indemnify and hold harmless such Indemnified Person from all costs of defense of
such claim and all costs of settlement and/or payment of a judgment on such
claim.
IX. DISPUTE RESOLUTION
9.01. INFORMAL DISPUTE RESOLUTION.
Any controversy or claim between the parties arising from or in
connection with this Agreement or the relationship of the parties under this
Agreement whether based on contract, tort, common law,
24
equity, statute, regulation, order or otherwise, and whether arising before or
after the termination of this Agreement ("Dispute") shall be resolved as
follows:
(a) Upon written request of either party, the parties will each
appoint a designated representative whose task it will be to meet for the
purpose of endeavoring to resolve such Dispute.
(b) The designated representatives shall meet as often as the parties
reasonably deem necessary to discuss the problem in an effort to resolve the
Dispute without the necessity of any formal proceeding.
(c) Arbitration proceedings for the resolution of a Dispute under
Section 9.02 may not be commenced until the earlier of:
(i) the designated representatives conclude in good faith that
amicable resolution through continued negotiation of the matter does not
appear likely; or
(ii) the expiration of the thirty (30) day period immediately
following the initial request to negotiate the Dispute.
9.02. ARBITRATION.
If the provisions of Section 9.01 have been satisfied, but the Dispute
has not been resolved, then the Dispute shall be settled pursuant to the
following:
(a) Any controversy or claim between or among the parties arising out
of or relating to this Agreement or any agreements or instruments relating
hereto or delivered in connection herewith and any claim based on or arising
from an alleged tort, shall at the request of any party be determined by
arbitration. The arbitration shall be conducted in accordance with the United
States Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law
provision in this Agreement, and under the Commercial Rules of the American
Arbitration Association ("AAA"). The arbitrator(s) shall give effect to statutes
of limitation in determining any claim. Any controversy concerning whether an
issue is
25
arbitrable shall be determined by the arbitrator(s). Judgment upon the
arbitration award may be entered in any court having jurisdiction. The
institution and maintenance of an action for judicial relief or pursuit of a
provisional or ancillary remedy shall not constitute a waiver of the right of
any party, including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial relief.
(b) No provision of this Section shall limit the right of any party
to this Agreement to exercise self-help remedies such as setoff, foreclosure
against or sale of any real or personal property collateral or security, or
obtaining provisional or ancillary remedies from a court of competent
jurisdiction before, after, or during the pendency of any arbitration or other
proceeding. The exercise of a remedy does not waive the right of either party to
resort to arbitration or reference. At the option of any party holding a deed of
trust, foreclosure under such deed of trust or mortgage may be accomplished
either by exercise of power of sale under the deed of trust or mortgage or by
judicial foreclosure.
9.03. PERMISSIBLE LEGAL PROCEEDINGS.
Notwithstanding anything contained in Sections 9.01 and 9.02, (a) a
party may institute legal proceedings to seek a temporary restraining order or
other temporary or preliminary injunctive relief to prevent immediate and
irreparable harm to such party, and for which monetary damages would be
inadequate, pending final resolution of the dispute, controversy or claim
pursuant to arbitration, and (b) a party may institute legal proceedings if
necessary to preserve a superior position with respect to other creditors. Such
conduct shall not constitute a waiver of the right of either party to resort to
arbitration to obtain relief other than that specified in this Section 9.03.
X. TERM AND TERMINATION.
10.01. TERM.
26
This Agreement shall remain in full force and effect until the later of
(a) expiration or termination of the Umbrella Agreement, or (b) the expiration
of the Option Period of all Bank of America GATE Conforming Loans made pursuant
to the Umbrella Agreement. After termination of this Agreement, certain
obligations hereunder shall survive as provided in Article VI hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
WITNESS: BANK OF AMERICA NA
By: /s/▇.▇. ▇▇▇▇▇▇
------------------------------ ---------------------------------
Print Name: Print Name: ▇.▇. ▇▇▇▇▇▇
------------------- -------------------------
Title: SVP
------------------------------
THE FIRST MARBLEHEAD CORPORATION
By: /s/▇▇▇▇▇ ▇▇▇▇▇
------------------------------ ---------------------------------
Print Name: Print Name: ▇▇▇▇▇ ▇▇▇▇▇
------------------- -------------------------
Title: CEO
------------------------------
27
NOTE PURCHASE AGREEMENT
INDEX TO EXHIBITS
Exhibit A Pool Supplement
Exhibit B Servicing Assignment and Servicer Consent Letter
Exhibit C Co-Lender Indemnification Agreement
Exhibit D Indemnification Agreement
28
EXHIBIT A TO NOTE PURCHASE AGREEMENT
[Form of Pool Supplement]
This Pool Supplement ("Supplement") is entered into pursuant to and
forms a part of that certain Note Purchase Agreement (the "Agreement") dated as
of April 30, 2001, by and between The First Marblehead Corporation ("FMC") and
Bank of America NA. This Supplement is dated ___________________, _______.
Capitalized terms used in this Supplement without definitions have the meaning
set forth in the Agreement.
ARTICLE 1: PURCHASE AND SALE.
In consideration of the Minimum Purchase Price set forth in Schedule 1
attached hereto, Program Lender hereby transfers, sells, sets over and assigns
to [name of purchasing entity] ("Purchaser Trust"), upon the terms and
conditions set forth in the Agreement (which are incorporated herein by
reference with the same force and effect as if set forth in full herein), each
Seasoned Loan described in the attached Schedule 2. Program Lender hereby
transfers and delivers to Purchaser Trust each Bank of America GATE Note
evidencing such Seasoned Loan and all Origination Records relating thereto, in
accordance with the terms of the Agreement. Purchaser Trust hereby purchases
said Seasoned Loans and Bank of America GATE Notes on said terms and conditions.
ARTICLE 2: PRICE.
The amounts paid pursuant to this Supplement are:
"Minimum Purchase Price" shall mean the sum of:
(a) The [**] the Seasoned Loans in question including, without
limitation, [**]; plus
(b) [**] such Seasoned Loans, in accordance with the terms of the
Bank of America GATE Notes, excluding [**]; plus
(c) With respect to Seasoned Loans [**], the amount of [**]. If the
terms of the Guaranty Agreement call for [**] concurrent with the
Securitization Transaction, Program Lender may elect either: (i)
to [**] under this clause, or (ii) for the [**]; plus
(d) [**] with respect to Seasoned Loans described in subsection (b)
of the definition of "Seasoned Loans," such [**] the Purchase
Date of the first Securitization Transaction that occurs after
such loan is first disbursed until the Purchase Date when such
loan is sold to a Purchaser Trust.
Purchase Price is: $__________________
ARTICLE 3: REPRESENTATIONS AND WARRANTIES.
3.01. BY PROGRAM LENDER.
1
Program Lender repeats the representations and warranties contained in
Section 5.02 of the Agreement and confirms the same are true and correct as of
the date hereof.
3.02. BY PURCHASER TRUST.
The Purchaser Trust hereby represents and warrants to the Program Lender
that at the date of execution and delivery of this Supplement by the Purchaser
Trust:
(a) The Purchaser Trust is duly organized and validly existing as a
business trust under the laws of the State of Delaware with the due power and
authority to own its properties and to conduct its business as such properties
are currently owned and such business is presently conducted, and had at all
relevant times, and has, the power, authority and legal right to acquire and own
the Bank of America GATE Conforming Loans.
(b) The Purchaser Trust is duly qualified to do business and has
obtained all necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall require such
qualifications.
(c) The Purchaser Trust has the Power and authority to execute and
deliver this Pool Supplement and to carry out its respective terms; the
Purchaser Trust has the power and authority to purchase the Seasoned Loans and
rights relating thereto as provided herein from the Program Lender and the
Purchaser Trust has duly authorized such purchase from the Program Lender by all
necessary action; and the execution, delivery and performance of this Pool
Supplement has been duly authorized by the Purchaser Trust by all necessary
action on the part of the Purchaser Trust.
(d) This Pool Supplement, together with the Agreement of which this
Supplement forms a part, constitutes a legal, valid and binding obligation of
the Purchaser Trust, enforceable in accordance with its terms.
(e) The consummation of the transactions contemplated by the
Agreement and this Supplement and the fulfillment of the terms hereof do not
conflict with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under, the
governing instruments of the Purchaser Trust or any indenture, agreement or
other instrument to which the Purchaser Trust is a party or by which it is
bound; or result in the creation or imposition of any lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument; or violate any law or any order, rule or regulation applicable to
the Purchaser Trust of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Purchaser Trust or its properties.
(f) There are no proceedings or investigations pending, or
threatened, before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Purchaser Trust or its
properties: (1) asserting the invalidity of the Agreement or this Pool
Supplement, (2) seeking to prevent the consummation of any of the transactions
contemplated by the Agreement or this Pool Supplement, or (3) seeking any
determination or ruling that is likely to materially or adversely affect the
performance by the Purchaser Trust of its obligations under, or the validity or
enforceability of the Agreement or this Pool Supplement.
2
ARTICLE 4: CROSS RECEIPT.
Program Lender hereby acknowledges receipt of the Minimum Purchase
Price. Purchaser Trust hereby acknowledges receipt of the Seasoned Loans and the
Bank of America GATE Notes included in the Pool.
ARTICLE 5: ASSIGNMENT OF ORIGINATION AND SERVICING RIGHTS.
Program Lender has assigned and set over to Purchaser Trust so much of
its rights under the Origination Services Agreement and the Servicing Agreement
as relate to the Seasoned Loans described in Schedule 2, including, without
limitation, the right to continued loan servicing under the Servicing Agreement
pursuant to a Servicing Assignment and Servicer consent Letter delivered
herewith.
IN WITNESS WHEREOF, the parties have caused this Supplement to be
executed as of the date set forth above.
PURCHASER NAME:
-----------------------------
By:
By:
----------------------------------
Print Name:
--------------------------
Title:
-------------------------------
BANK OF AMERICA NA
By:
----------------------------------
Print Name:
--------------------------
Title:
-------------------------------
3
Schedule 1 to Pool Supplement
(SAMPLE)
SETTLEMENT SCHEDULE
FMC 200__-S-__
XYZ UNIVERSITY
DISBURSEMENT DATE # OF LOANS FACE VALUE AMOUNT DISBURSED
[TO BE REVISED]
4
EXHIBIT B TO NOTE PURCHASE AGREEMENT
[PROGRAM LENDER NAME]
SERVICING ASSIGNMENT AND
SERVICER CONSENT LETTER
[Applies ONLY if Program Lender holds
Servicing Agreement and FMC does
not hold direct agreement with Servicer]
[DATE]
[Servicer Name and Address]
Attention: President
Ladies and Gentlemen:
Reference is hereby made to that certain Servicing Agreement (the
"Servicing Agreement"), dated __________, by and between [Servicer Name] (the
"Servicer") and [Program Lender Name] ("Program Lender"), a copy of which is
attached hereto as Exhibit A. Capitalized terms not otherwise defined herein
shall have the meanings set forth in the Servicing Agreement. Pursuant to
Section ____ of the Servicing Agreement, the parties hereto agree as follows:
1. Program Lender hereby assigns its interest in the Servicing Agreement
with respect to the student loans identified on the attached Schedule I(the
"Student Loans") to [Name of Securitization SPE] ("SPE"), and the Servicer
hereby consents thereto.
2. The Servicer hereby consents to the assignment and grant by [SPE] of
a security interest in the Servicing Agreement to [Name of Securitization
Indenture Trustee] (the "Trustee"), as provided in the Indenture, dated as of
[DATE] between [SPE] and the Trustee (the "Indenture"), for the benefit of the
Bondholders (as defined below) and MBIA Insurance Corporation (the "Bond
Insurer").
[3. Program Lender hereby assigns its interest in the Origination
Agreement, dated _________, by and between the Servicer and Program Lender (the
"Origination Agreement"), a copy of which is attached hereto as Exhibit B, to
[SPE], with respect to the Student Loans. The Servicer hereby consents to the
foregoing assignment by Program Lender and of the assignment and grant by [SPE]
to the Trustee of a security interest in the Origination Agreement, as provided
in the Indenture, for the benefit of the Bondholders and the Bond Insurer.]
4. The Servicer hereby confirms that it will not terminate the Servicing
Agreement until the appointment of a successor servicer by [SPE], with the
consent of the Bond Insurer for so long as Bonds are outstanding, unless the
Servicing Agreement otherwise expires in accordance with its terms.
5. [SPE] hereby confirms that (i) it will not terminate the Servicer for
cause pursuant to Section ____ of the Servicing Agreement (a) without the
consent of the Bond Insurer for so long as Bonds are outstanding, and (b) until
a successor servicer acceptable to the Bond Insurer
1
is appointed, and (ii) it will terminate the Servicer for cause pursuant to
Section ____ of the Servicing Agreement, if directed by the Bond Insurer to do
so.
6. The representations and warranties of the Servicer in the Servicing
Agreement are true and correct in all material respects at and on the date
hereof (the "Closing Date"), with the same effect as if made on the Closing
Date.
7. The Servicer hereby confirms that it has complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied under the Servicing Agreement.
8. The Servicer agrees not to cause the filing of a petition in
bankruptcy against [SPE] for the nonpayment to the Servicer of any amounts owed
to it under the Servicing Agreement until at least 366 days after the payment in
full of the Bonds.
9. The Servicer hereby agrees to provide the Bond Insurer with copies of
all notices, reports and other information at the same time and in the same
manner in which such information is required to be given to Program Lender and
[SPE] pursuant to the Servicing Agreement or other information as is requested
by the Bond Insurer. In addition, for so long as any Bonds are outstanding, any
action that requires the consent of [SPE] under the Servicing Agreement,
including, without limitation, any amendment to the Servicing Agreement with
respect to the Student Loans, shall also require the prior consent of the Bond
Insurer.
10. The Servicer hereby agrees to provide the Bond Insurer with its
quarterly and annual audited financial statements.
11. The Servicer hereby grants the Bond Insurer the right for so long as
any of the Bonds remain outstanding, to perform ongoing due diligence review of
the Servicer's servicing activities with respect to the Student Loans provided
that such due diligence be conducted in a reasonable manner, convenient to both
the Servicer and the Bond Insurer.
12. It is expressly understood and agreed by the parties hereto that (a)
this Agreement is executed and delivered by [SPE Owner Trustee], not
individually or personally solely as Owner Trustee of [SPE] under the Trust
Agreement dated as of [DATE], with [SPE Sponsor], in the exercise of the powers
and authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Trust is made and
intended not as personal representations, undertaking and agreements by the
Owner Trustee but is made and intended for the purpose for binding only the
Trust, (c) nothing herein contained shall be construed as creating any liability
on the Owner Trustee, individually or personally, to perform any covenant either
expressed or implied contained herein, all such liability, if any, being
expressly waived by the parties hereby and by any Person claiming by, through or
under the parties hereto, and (d) under no circumstances shall the Owner Trustee
be personally liable for the payment of any indebtedness or expenses of the
Trust or be liable for the breach or failure of any obligation, representation,
warranty or covenant made or undertaken by the Trust under this Agreement or the
other Trust Related Documents.
13. The parties hereto acknowledge and agree that for so long as any
Bonds are outstanding, the Bond Insurer is a third-party beneficiary hereof and
of the Servicing Agreement,
2
and the Bond Insurer shall have the right to exercise all rights of [SPE] under
the Servicing Agreement.
Please acknowledge your acceptance and agreement to the foregoing by
signing and returning the enclosed duplicate letter.
Very truly yours,
PROGRAM LENDER
By:
--------------------------
Print Name:
Title:
Accepted and Agreed:
[SERVICER
________________________]
By:
--------------------------
Print Name:
Title:
[SPE NAME]
By: [OWNER TRUSTEE]
By:
--------------------------
Print Name:
Title:
3
EXHIBIT C TO NOTE PURCHASE AGREEMENT
CO-LENDER INDEMNIFICATION AGREEMENT
THIS CO-LENDER INDEMNIFICATION AGREEMENT (the "Agreement") is made as of
[DATE], by and between [Names and Addresses of Co-Lenders] ("Co-Lender"), and
BANK OF AMERICA NA ("BOA"), a national banking association organized under the
laws of the United States, with its headquarters and principal place of business
located at _____________ (Co-Lender and BOA are sometimes collectively referred
to as the "Program Lenders" and are each sometimes severally referred to as a
"Program Lender").
RECITALS
A. The Program Lenders are participants in the GATE: Guaranteed Access to
Education(R) Program and/or the Bank of America GATE(R) Loan Program and/or the
prepGATE(SM) Loan Program (collectively, the "GATE Program") pursuant to which
each of the Program Lenders originate educational loans (the "GATE Loans") to
pay the costs of attending institutions of education which are themselves
participants in the GATE Program (the "Participating Institutions").
B. Each of the Program Lenders, individually, have entered into an
agreement (each, a "Purchase Agreement") with The
First Marblehead Corporation
or The National Collegiate Trust, pursuant to which Purchase Agreements such
Program Lenders have agreed to sell certain GATE Loans to [Name of Purchasing
Entity] (the "Purchaser Trust"), each such purchase to be funded through the
issuance and sale of certificates, bonds or other evidences of indebtedness, the
repayment of which are supported by such GATE Loans (the "Subject Securitization
Transaction").
C. As a condition precedent to the obligation of each Program Lender to
consummate the sale of GATE Loans originated by them to the Purchaser Trust, all
Program Lenders whose GATE Loans will be included in the Subject Securitization
Transaction are required to execute and deliver to the other Program Lenders a
copy of this Agreement.
NOW, THEREFORE, in consideration of the foregoing Recitals and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES
1.01 Each Program Lender represents and warrants to each other Program
Lender, as to itself, that as of the date hereof:
(a) It is and shall continue to be a national banking association, duly
organized, validly existing and in good standing under the laws of the United
States and has the power and authority to originate and/or hold GATE Loans, to
consummate the transaction contemplated by
1
the Purchase Agreement to which it is a party, and to execute and deliver and
perform its obligations under this Agreement;
(b) This Agreement has been duly authorized, executed and delivered and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms except as enforceability may be limited by (a) the
receivership, conservatorship and similar supervisory powers of bank regulatory
agencies generally, as well as bankruptcy, insolvency, liquidation,
receivership, moratorium, reorganization or other similar laws affecting the
enforcement of the rights of creditors; (b) general principles of equity
(including availability of equitable remedies), whether enforcement is sought in
a proceeding in equity or at law; and (c) applicable securities laws and public
policy considerations underlying the securities laws to the extent that such
public policy considerations limit the enforceability of the provisions of this
Agreement which purport to provide indemnification with respect to securities
law liabilities;
(c) Each GATE Loan included in the Subject Securitization Transaction
originated by it is the valid, binding and enforceable obligation of the
borrower executing the same, and of any cosigner thereto, enforceable against
the borrower and cosigner thereunder in accordance with its terms except as
enforceability may be affected by bankruptcy, insolvency, moratorium or other
similar laws affecting the rights of creditors generally and by equitable
principles;
(d) Each GATE Loan included in the Subject Securitization Transaction
originated by it and any accompanying notices and disclosures conforms to all
applicable state and federal laws, rules and regulations and the origination
thereof was conducted in accordance with all applicable state and federal laws
concerning the actions of the Participating Institution and the Program Lender,
including, without limitation, the Equal Credit Opportunity Act;
(e) Each GATE Loan included in the Subject Securitization Transaction
originated by it is in compliance in all material respects with any
applicable usury laws at the time made and as of the time of sale to the
Purchaser Trust pursuant to the Purchase Agreement to which the Program
Lender is a party; and
(f) The Program Lender has no actual knowledge of any defense to payment
with respect to any GATE Loan included in the Subject Securitization Transaction
originated by it nor is there any action before any state or federal court,
administrative or regulatory body, pending or threatened against the Program
Lender in which an adverse result would have a material adverse effect upon the
validity or enforceability of any such GATE Loan.
ARTICLE 2
INDEMNIFICATION
2.01 Cross-Indemnification. Each Program Lender (an "Indemnifying Program
Lender") hereby agrees to indemnify, hold harmless and defend each other Program
Lender and such other Program Lender's respective officers, directors,
employees, attorneys, agents (not
2
including any Participating Institution or the servicer of any GATE Loan) and
each person who controls such other Program Lender within the meaning of either
Section 15 of the Securities Act of 1933, as amended, or Section 20 of the
Securities Exchange Act of 1934, as amended (collectively and severally, the
"Indemnified Parties"), from and against any and all claims, obligations,
penalties, actions, suits, judgments, costs, disbursements, losses, liabilities
and/or damages (including, without limitation, reasonable external attorneys'
fees and the allocated costs of internal salaried attorneys) of any kind
whatsoever which may at any time be imposed on, assessed against or incurred by
any such Indemnified Party in any way relating to or arising out of the
inaccuracy or incompleteness of any representation or warranty made by the
Indemnifying Program Lender hereunder or the inaccuracy or incompleteness of any
representation or warranty made by the Indemnifying Program Lender to any
Participating Institution in connection with the GATE Program or the Subject
Securitization Transaction. The indemnity provided by each Indemnifying Program
Lender hereunder is in addition to any liability which such Program Lender may
otherwise have to the Indemnified Parties, at law, in equity or otherwise, in
connection with the Subject Securitization Transaction.
2.02 Procedure for Indemnification. In case any proceeding (including any
governmental investigation) shall be instituted against any Indemnified Party in
respect of which indemnity is sought pursuant to Section 2.01, such Indemnified
Party shall promptly notify the applicable Indemnifying Program Lender in
writing. The Indemnifying Program Lender, upon request of the Indemnified Party,
shall acknowledge its obligation, subject to the terms hereof, to indemnify the
Indemnified Party in writing and shall retain counsel reasonably satisfactory to
the Indemnified Party to represent the Indemnified Party and any others the
Indemnifying Program Lender may designate in such proceeding and the
Indemnifying Program Lender shall pay the fees and disbursements of such counsel
related to such proceeding, within a reasonable period of time after such fees
and disbursements are billed by such counsel. If the Indemnifying Program Lender
fails to acknowledge its obligation, subject to the terms hereof, to indemnify
in writing or fails to retain such counsel within a reasonable period of time
after such notice was given, then the Indemnified Party shall have the right to
retain its own counsel, and the fees and expenses of such counsel shall be at
the expense of the Indemnifying Program Lender. In any such proceeding, any
Indemnified Party shall have the right to retain its own counsel, but the fees
and expenses of such counsel shall be at the expense of such Indemnified Party
unless (a) the preceding sentence is applicable, (b) the Indemnifying Program
Lender and the Indemnified Party shall have mutually agreed to the retention of
such counsel or (c) the named parties to any such proceeding (including any
impleaded parties) include both the Indemnifying Program Lender and the
Indemnified Party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the Indemnifying Program Lender shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees and expenses of more than one separate firm (in addition to
any local counsel) for all such Indemnified Parties, and that all such fees and
expenses shall be reimbursed as they are incurred.
2.03 Settlements of Proceedings. The Indemnifying Program Lender shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Program Lender agrees to indemnify the
Indemnified Party from and against any loss or liability by reason of such
settlement or judgment. No Indemnifying Program Lender, without the prior
written consent of the Indemnified Party, shall effect any settlement of any
pending or threatened proceeding in
3
respect of which any Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject of such proceeding.
ARTICLE 3
MISCELLANEOUS
3.01 Notices. All demands, notices and communications upon or to any
Program Lender under this Agreement shall be in writing, personally delivered or
mailed by certified mail, return receipt requested, to such Program Lender at
its address set forth below or to such other address as may hereafter be
furnished by such Program Lender to the other Program Lenders hereunder in
writing, and shall be deemed to have been duly given upon receipt.
If to Co-Lender:
_________________________
_________________________
_________________________
with a copy to:
_________________________
_________________________
_________________________
If to BOA:
▇▇▇▇▇ ▇▇▇▇▇▇
Bank of America
National Student Lending Group
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
with a copy to:
▇▇▇▇ ▇▇▇▇▇
Bank of America
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
4
3.02 Successors and Assigns. This Agreement is binding on the Program
Lenders and their respective successors and assigns. No Program Lender shall
assign its rights or obligations under this Agreement without the prior written
consent of all other Program Lenders hereunder, and any assignment in violation
of this prohibition shall be automatically deemed null and void.
3.03 Arbitration.
(a) Any controversy or claim between or among the Program Lenders
hereunder arising out of or relating to this Agreement or any agreements or
instruments relating hereto or delivered in connection herewith and any claim
based on or arising from an alleged tort relating hereto, shall, at the request
of any party, be determined by arbitration. The arbitration shall be conducted
in accordance with the United States Arbitration Act (Title 9, U.S. Code),
notwithstanding any choice of law provision of this Agreement, and under the
Commercial Rules of the American Arbitration Association ("AAA"). The
arbitrator(s) shall give effect to statutes of limitation in determining any
claim. Any controversy concerning whether an issue is arbitrable shall be
determined by the arbitrator(s). Judgment upon the arbitration award may be
entered in any court having jurisdiction. The institution and maintenance of an
action for judicial relief or pursuit of a provisional or ancillary remedy shall
not constitute a waiver of the right of any party, including the plaintiff, to
submit the controversy or claim to arbitration if any other party contests such
action for judicial relief.
(b) No provision of this Section 3.03 shall limit the right of any party
to this Agreement to exercise self-help remedies such as setoff, foreclosure
against or sale of any real or personal property collateral or security, or
obtaining provisional or ancillary remedies from a court of competent
jurisdiction before, after, or during the pendency of any arbitration or other
proceeding. The exercise of a remedy does not waive the right of either party to
resort to arbitration or reference.
3.04 Costs and Attorneys' Fees. In the event of a lawsuit or arbitration
proceeding arising out of or relating to this Agreement, the prevailing
party(ies) is (are) entitled to recover costs and reasonable attorneys' fees
(including the allocated cost of internal salaried attorneys) incurred in
connection with the lawsuit or arbitration proceeding, as determined by the
court or arbitrator.
3.05 Severability. Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
3.06 Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
3.07 Headings. The headings of the various Articles and Sections herein
are for convenience of reference only and shall not define or limit any of the
terms or provisions hereof.
3.08 Amendment. This Agreement may not be amended nor terms or provisions
hereof waived unless such amendment or waiver is in writing and signed by all
parties hereto.
5
3.09 No Waiver. No delay or failure by any party to exercise any right,
power or remedy hereunder shall constitute a waiver thereof by such party, and
no single or partial exercise by any party of any right, power or remedy shall
preclude other or further exercise thereof or any exercise of any other rights,
powers or remedies.
3.10 Entire Agreement. This Agreement embodies the entire agreement and
understanding between the parties with respect to the subject matter hereof and
supersedes all prior agreements and understandings relating to the subject
matter hereof and thereof.
3.11 Governing Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Delaware without regard to its
conflict of laws doctrine.
3.12 No Third Party Beneficiaries. This Agreement is made and entered into
for the protection and legal benefit of the parties hereto, their permitted
successors and assigns, and each and every Indemnified Party, and no other
person shall be a direct or indirect beneficiary of, or have any direct or
indirect cause of action or claim in connection with, this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
CO-LENDER(S)
By:
--------------------------
Print Name:
Title:
BANK OF AMERICA NA
By:
--------------------------
Print Name:
Title:
6
EXHIBIT D TO NOTE PURCHASE AGREEMENT
INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT (the "Agreement") is made
_____________________, 2000, by and among [NAME OF PURCHASER TRUST (the
"Trust"), The First Marblehead Corporation ("First Marblehead"), and BANK OF
AMERICA NA ("B of A").
WITNESSETH:
WHEREAS, pursuant to that certain Note Purchase Agreement dated April 30,
2001 (the "Note Purchase Agreement") between First Marblehead, as purchaser, and
B of A, B of A will sell to the Trust and the Trust will purchase from B of A
certain Bank of America GATE Conforming Loans ("Contracts");
WHEREAS, contemporaneously with the transactions contemplated by the Note
Purchase Agreement, the Trust will sell securities backed by a pool consisting
of the Contracts (the "Securitization");
WHEREAS, First Marblehead assists the Trust in the Securitization process;
and
WHEREAS, the parties wish to set forth their agreements with respect to
certain aspects of the Securitization, on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
set forth herein, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINITIONS. Capitalized terms used herein without
definition have the meanings assigned thereto in the Note Purchase Agreement.
Whenever used in this Agreement, the following words and phrases shall have the
following meanings:
"Agreement" means this Indemnification Agreement, as it may be amended from
time to time.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time.
"B of A Information" means solely the information set forth [to be
determined]
"Indemnified Party" has the meaning set forth in Section 4.03.
"Indemnifying Party" has the meaning set forth in Section 4.03.
1
"Offering Materials" means: (a) any private placement memoranda and any
other offering material given in connection with a sale or offer to sell,
whether or not such sale or offer to sell was required to be registered under
the Securities Act, and (b) any Registration Statement filed with the Commission
pursuant to which any Contract or interest therein is sold or offered for sale,
including the Prospectus relating thereto and any preliminary prospectuses and
amendments and supplements to such Registration Statement, Prospectus and
preliminary prospectus, including post-effective amendments and all exhibits and
all material incorporated by reference therein.
"Prospectus" has the meaning given to such term in the Securities Act.
"Registration Statement" has the meaning given to such term in the
Securities Act.
"Securities" means securities backed by the pool of Contracts that are to
be issued by the Trust.
"Securities Act" means the Securities Act of 1933, as amended from time to
time.
"Transaction Documents" means the Note Purchase Agreement and the Pool
Supplement issued pursuant thereto.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Each of the Trust and First Marblehead jointly and severally represents and
warrants to B of A, and B of A hereby represents and warrants to the Trust and
First Marblehead, as of the date hereof and the Purchase Date, as follows:
(1) It is a corporation, business trust, or, in the case of B of A, a
national banking association, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, and it has the
corporate power to own its assets and to transact the respective business in
which it is currently engaged. It is duly qualified to do business as a foreign
corporation or other entity and is in good standing in each jurisdiction in
which its type of organization and the character of the business transacted by
it or properties owned or leased by it requires such qualification and in which
the failure to so qualify would have a material adverse effect on its business,
properties, assets, or condition (financial or other);
(2) It has obtained all necessary licenses and approvals, in all
jurisdictions in which the ownership or lease of property or the conduct of its
business and its type of organization requires such licenses or approvals unless
the failure to obtain any such licenses or approvals would have no material
adverse effect on the ability of such party to fulfill its obligations
hereunder;
(3) It has the power and authority to execute and deliver this Agreement
and to carry out the terms hereof; and the execution, delivery and performance
of this Agreement by it has been duly authorized by all necessary action;
(4) This Agreement constitutes its legal, valid and binding obligation,
enforceable against it in accordance with its terms except as enforcement of
such terms may be limited by bankruptcy, insolvency or similar laws affecting
the enforcement of creditors' rights generally and by the availability of
equitable remedies, and except as enforcement of any terms relating to
indemnification may be limited by applicable securities law;
(5) For B of A and the Trust only, the consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof do not
conflict with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under, its
governing documents, or any material indenture, agreement or other instrument to
which it is a party or by which it is bound; or result in the creation or
imposition of any lien upon any of its properties pursuant to the terms of any
such indenture, agreement or other instrument; or violate any law or any order,
rule or regulation applicable to it of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over it or its properties; and
(6) There are no proceedings or investigations pending, or threatened,
before any court, regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over it or its properties: (1) asserting the
invalidity of this Agreement (2) seeking to prevent the consummation of any of
the transactions contemplated by this Agreement, or (3) seeking any
determination or ruling that is likely to materially and adversely affect the
performance by it of its obligations hereunder or the validity and
enforceability of this Agreement.
ARTICLE 3
CONDITIONS TO CLOSING
[Intentionally Omitted]
ARTICLE 4
INDEMNIFICATION
SECTION 4.01. INDEMNIFICATION BY FIRST MARBLEHEAD AND THE TRUST. The
Trust and First Marblehead jointly and severally agree to indemnify, hold
harmless and defend B of A, its officers, directors, employees, attorneys,
agents and each Person who controls B of A within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act, as follows:
(a) against any and all loss, liability, claim, damage and expense
whatsoever arising out of any untrue statement or alleged untrue statement
of a material fact contained in any Offering Materials under the heading,
[to be determined] ["Method of Distribution"] or the omission or alleged
omission therefrom of a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading;
(b) against any and all loss, liability, claim, damage and expense
whatsoever to the extent of the aggregate amount paid in settlement of any
litigation, or investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever, based upon any
such untrue statement or omission, or any such inaccuracy, if such
settlement is effected with the written consent of the Trust and First
Marblehead; and
(c) against any and all expense whatsoever (including the fees and
disbursements of counsel chosen by the B of A) reasonably incurred in
investigating, preparing or defending against any litigation, or
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever, based upon any such untrue
statement or omission, or any such inaccuracy, to the extent that any such
expense is not paid under (a) or (b) above.
This indemnity agreement will be in addition to any liability which the
Trust and First Marblehead may otherwise have.
SECTION 4.02. INDEMNIFICATION BY B OF A. B of A agrees to indemnify and
hold harmless the Trust and First Marblehead and each person, if any, who
controls NCT or First Marblehead within the meaning of Section 15 of the
Securities Act of 1933, as amended (the "1993 Act"), as follows:
(a) against any and all loss, liability, claim, damage and expense
whatsoever arising out of any untrue statement or alleged untrue statement
of a material fact contained in the B of A Information (or any amendment or
supplement thereto approved in writing by B of A) or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading;
(b) against any and all loss, liability, claim, damage and expense
whatsoever to the extent of the aggregate amount paid in settlement of any
litigation, or investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever, based upon any
such untrue statement or omission, or any such inaccuracy, if such
settlement is effected with the written consent of B of A; and
(c) against any and all expense whatsoever (including the fees and
disbursements of counsel chosen by the Trust and First Marblehead)
reasonably incurred in investigating, preparing or defending against any
litigation, or investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever, based upon any such
untrue statement or omission, or any such inaccuracy, to the extent that
any such expense is not paid under (a) or (b) above.
This indemnity agreement will be in addition to any liability which B of A
may otherwise have.
SECTION 4.03. PROCEDURE FOR INDEMNIFICATION. In case any proceeding
(including any governmental investigation) shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to Section 4.01 or
4.02, such Person (hereinafter called the "Indemnified Party") shall promptly
notify the person against whom such indemnity may be sought (hereinafter called
the "Indemnifying Party") in writing. The Indemnifying Party, upon request of
the Indemnified Party, shall acknowledge its obligation, subject to the terms
hereof, to indemnify the Indemnified Party in writing and shall retain counsel
reasonably satisfactory to the Indemnified Party to represent the Indemnified
Party and any others the Indemnifying Party may designate in such proceeding and
the Indemnifying Party shall pay the fees and disbursements of such counsel
related to such proceeding, as and when such fees and disbursements are billed
by such counsel. If the Indemnifying Party fails to acknowledge its obligation,
subject to the terms hereof, to indemnify in writing or fails to retain such
counsel within a reasonable period of time after such notice was given, then the
Indemnified Party shall have the right to retain its own counsel, and the fees
and expenses of such counsel shall be at the expense of the Indemnifying Party.
In any such proceeding, any Indemnified Party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party unless (a) the preceding sentence is applicable, (b)
the Indemnifying Party and the Indemnified Party shall have mutually agreed to
the retention of such counsel or (c) the named parties to any such proceeding
(including any impleaded parties) include both the Indemnifying Party and the
Indemnified Party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the Indemnifying Party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm (in addition to any
local counsel) for all such Indemnified Parties, and that all such fees and
expenses shall be reimbursed as they are incurred.
SECTION 4.04. SETTLEMENTS OF PROCEEDINGS. The Indemnifying Party shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Party agrees to indemnify the Indemnified Party
from and against any loss or liability by reason of such settlement or judgment.
No Indemnifying Party, without the prior written consent of the Indemnified
Party, shall effect any settlement of any pending or threatened proceeding in
respect of which any Indemnified Party is or could have been a party and
indemnity could have been sought hereunder by such Indemnified Party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such proceeding.
SECTION 4.05. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Sections 4.01 and 4.02 hereof is for any reason held to be unenforceable by the
Indemnified Parties although applicable in accordance with its terms, B of A, on
the one hand, and the Trust and First Marblehead, on the other, shall contribute
to the aggregate losses, liabilities, claims, damages and expenses of the nature
contemplated in Sections 4.01 and 4.02 that are incurred by B of A, the Trust
and First Marblehead in such proportions that (i) the Trust and First Marblehead
shall be responsible for that portion represented by the percentage that the
gross fee earnings of First Marblehead in the Securitization bear to the sum of
such fees and the purchase price paid by the
Trust for the Contracts, and (ii) B of A shall be responsible for the balance;
PROVIDED, HOWEVER, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation.
The Trust, First Marblehead and B of A agree that it would not be just and
equitable if contribution pursuant to this Section 4.05 were determined by PRO
RATA allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party pursuant to
Section 4.01 or 4.02 shall be deemed to include, subject to the limitations set
forth above, any legal or other expense reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
ARTICLE 5
MISCELLANEOUS
SECTION 5.01. NOTICES. All demands, notices and communications upon or
to B of A, the Trust and First Marblehead under this Agreement shall be in
writing, personally delivered or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt (a) The
First Marblehead Corporation, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇; (b)
[ADDRESS FOR PURCHASER TRUST], (c) B of A _____________________________________
___________________________________, or such other address as may hereafter be
furnished to the other parties in writing.
SECTION 5.02. SUCCESSORS AND ASSIGNS. This Agreement is binding on B of
A's, the Trust's and First Marblehead's successors and assignees. Each party
hereto agrees that it will not assign this Agreement without the other parties'
prior written consent.
SECTION 5.03. ARBITRATION.
(a) Any controversy or claim between or among the parties arising
out of or relating to this Agreement or any agreements or instruments
relating hereto or delivered in connection herewith and any claim based on
or arising from an alleged tort, shall at the request of any party, be
determined by arbitration. The arbitration shall be conducted in accordance
with the United States Arbitration Act (Title 9, U.S. Code),
notwithstanding any choice of law provision in this Agreement, and under
the Commercial Rules of the American Arbitration Association ("AAA"). The
arbitrator(s) shall give effect to statutes of limitation in determining
any claim. Any controversy concerning whether an issue is arbitrable shall
be determined by the arbitrator(s). Judgment upon the arbitration award may
be entered in any court having jurisdiction. The institution and
maintenance of an action for judicial relief or pursuit of a provisional or
ancillary remedy shall not constitute a waiver of the right of any party,
including the plaintiff, to submit the controversy or claim to arbitration
if any other party contests such action for judicial relief.
(b) No provision of this Section 5.03 shall limit the right of any
party to this Agreement to exercise self-help remedies such a setoff,
foreclosure against or sale of any real or personal property collateral or
security, or obtaining provisional or ancillary remedies from a court of
competent jurisdiction before, after, or during the pendency of any
arbitration or other proceeding. The exercise of a remedy does not waive
the right of either party to resort to arbitration or reference.
SECTION 5.04. COSTS AND ATTORNEYS' FEES. In the event of a lawsuit or
arbitration proceeding arising out of or relating to this Agreement, the
prevailing party is entitled to recover costs and reasonable attorneys' fees
incurred in connection with the lawsuit or arbitration proceeding, as determined
by the court or arbitrator.
SECTION 5.05. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 5.06. COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 5.07. HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 5.08. LIMITATION OF RECOURSE TO THE TRUST. Notwithstanding any
provision of this Agreement to the contrary, all obligations of the Trust under
this Agreement shall be payable only from the rights of the Trust in the
Contracts. No recourse shall be had against the general funds of the Trust, nor
against any income or proceeds of the Contracts not available, in accordance
with the Trust Instrument, for distribution. To the extent that the interests of
the Trustee and the bond holders under the Trust Instrument are fully satisfied,
or if proceeds of the Contracts are otherwise distributed to the owners of the
Trust free and clear of claims of said Trustee (as defined in the Trust
Instrument), claims against the Trust may be satisfied from the Contracts or the
distributable proceeds thereof.
BANK OF AMERICA NA
By:
--------------------------------
Print Name:
Title:
[NAME OF PURCHASER TRUST]
By: [NAME OF TRUSTEE], not in its individual
capacity but SOLELY in its capacity as Trustee
By:
--------------------------------
Print Name:
Title:
THE FIRST MARBLEHEAD CORPORATION
By:
--------------------------------
Print Name:
Title:
[EXHIBIT F TO UMBRELLA AGREEMENT]
DEPOSIT AND SECURITY AGREEMENT
(GENERIC)
This deposit and security agreement (this "Deposit and Security
Agreement") is made and entered into as of April 30, 2001, by and among THE
EDUCATION RESOURCES INSTITUTE, INC., a private non-profit corporation organized
under Chapter 180 of the Massachusetts General Laws with its principal place of
business at ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("▇▇▇▇"),
THE FIRST MARBLEHEAD CORPORATION, a corporation organized under the General
Corporation Law of the State of Delaware with its principal place of business at
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ("FMC") and BANK OF AMERICA,
NATIONAL ASSOCIATION, in its capacity as lender and initial owner (in such
capacity, "Owner") and STATE STREET BANK AND TRUST COMPANY, a trust company
organized under the laws of the Commonwealth of Massachusetts, solely in its
capacity as agent for the Owner (as hereinafter defined) (in such capacity,
"Agent") and in its capacity as Bank as described in Section 12 (in such
capacity, "Bank").
WHEREAS, FMC is organized to assist financing undergraduate, graduate and
professional educations, as well as private elementary and secondary educations;
and
WHEREAS, FMC administers the Bank of America GATE Education Loan programs
whereby parents and/or students may apply for loans to finance education costs;
and
WHEREAS, Lender is willing to make Loans to Borrowers under the Bank of
America GATE Education Loan Programs upon certain terms and conditions,
including but not limited to the guaranty of the payment of principal and
interest by ▇▇▇▇ pursuant to the terms of the Guaranty Agreement (hereafter
defined) and the deposit of certain monies with Agent, on behalf of Owner
(hereafter defined), as security for such payment as more fully described herein
and in accordance with the terms and conditions set forth in this Deposit and
Security Agreement; and
WHEREAS, under the terms of the Guaranty Agreement, ▇▇▇▇ guaranties the
payment of principal and interest on the Loans in exchange for the payment of
certain Guaranty Fees (as hereinafter defined); and
WHEREAS, pursuant to the Note Purchase Agreement of even date therewith
between Lender and FMC ("Note Purchase Agreement"), FMC has agreed to use its
best efforts to cause the purchase of Loans in a Securitization Transaction; and
1
WHEREAS, it is the intention of Lender, ▇▇▇▇ and FMC that this Deposit
and Security Agreement shall apply to each Loan that is subject to the Guaranty
Agreement.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the parties agree as follows:
1. DEFINITIONS. Capitalized terms not otherwise defined in this
section, in the recitals hereto or elsewhere in this Deposit and Security
Agreement shall have the meanings ascribed to such terms in the Guaranty
Agreement, a true and complete copy of which is attached as Exhibit 6 to this
Agreement. In addition:
(a) "Affiliate" means, with respect to any person, any other person which,
directly or indirectly, is in control of, is controlled by, or is under
common control with, such person.
(b) "Bank" means State Street Bank and Trust Company, acting solely in its
capacity as securities intermediary as described in Section 12 hereof.
(c) "Collateral" shall have the meaning set forth in Section 5.
(d) "Pool Cut Off Date" means a date established by FMC not more than sixty (60)
days before the closing of a Securitization Transaction, as of which date
FMC will determine all Loans eligible for purchase under the Note Purchase
Agreement.
(e) "Guaranty Agreement" shall mean the Guaranty Agreement among Lender and ▇▇▇▇
dated as of April 30, 2001, and any amendments or modifications thereto.
(f) "Guaranty Claims" shall mean a claim made by Owner for payment by ▇▇▇▇
following a Guaranty Event.
(g) "Guaranty Fees" shall mean, collectively, all of the fees payable to ▇▇▇▇
and/or the Agent for the guarantee of a Loan as described in Section 3.3 of
the Guaranty Agreement including both Initial and Subsequent Guaranty Fees.
(h) "Recoveries" shall mean and include: (i) any and all cash, checks, drafts,
orders and all other instruments for the payment of money received by ▇▇▇▇
from or on behalf of Borrowers in payment of principal of, interest on, late
fees with respect to, and costs of collecting defaulted Loans with respect
to which ▇▇▇▇ has paid Guaranty Claims, from funds in the Pledged Account,
net of actual costs of collection retained by or payable to third-party
collectors and attorneys, and the proceeds of all of the foregoing, (ii) (A)
any amount received by ▇▇▇▇ upon the sale or other transfer of defaulted
Loans with respect to which ▇▇▇▇ has paid Guaranty Claims (including the
sale of such Loans to the Owner as provided in Section 3.4 of the Guaranty
Agreement or the sale of the right to collect such Loans or other similar
rights with respect thereto), less (B) any costs actually incurred by ▇▇▇▇
in connection with the release of such Loans from a collector, and (iii) in
connection with any pledge or assignment of defaulted Loans (or rights with
respect
thereto) to secure a loan to ▇▇▇▇, (A) the amount of such loan, less (B) any
costs actually incurred by ▇▇▇▇ in connection with the release of such Loans
from a collector. FMC and Owner agree to entertain a proposal from ▇▇▇▇ and
to negotiate in good faith with respect to a specified percentage charge for
such collection costs and release costs, based upon historical averages of
such costs.
(i) "Secured Obligations" shall have the meaning set forth in Section 6.
(j) "Securitization Owner Trustee" means the owner trustee or other person who
holds legal title to the assets of an SPE formed by The National Collegiate
Trust or by FMC for the purpose of purchasing Loans pursuant to the Note
Purchase Agreement.
(k) "Securitization Indenture Trustee" means the trustee or collateral agent who
holds a security interest in assets of an SPE to secure debt obligations of
the SPE incurred to finance the purchase of Loans.
(l) "Securitization Transaction" means a transaction in which an SPE purchases
Loans pursuant to the Note Purchase Agreement and funds the cost of such
purchase, in whole or in part, with debt obligations secured by the Loans.
(m) "SPE" means a Delaware business trust or other special purpose entity formed
by FMC for the sole purpose of purchasing a portfolio of Loans and other
education loans in a Securitization Transaction.
(n) "▇▇▇▇ Guarantee Fee Entitlement" means a portion of Guaranty Fees equal to
one and one-half percent (1.5%) of the principal amount of a Loan, payable
to ▇▇▇▇ in accordance with Section 3.3 of the Guaranty Agreement.
2. CREATION AND FUNDING OF PLEDGED ACCOUNT. Upon the execution of this
Deposit and Security Agreement, the Agent shall establish one or more investment
accounts (individually and collectively, the "Pledged Account") in the manner
described in Section 12 hereof, for the purpose of depositing upon receipt
portions of the Guaranty Fees, Recoveries and earnings as provided in this
Section 2. Lender, ▇▇▇▇ and FMC agree that the Pledged Account shall be funded
by ▇▇▇▇ with a portion of the Guaranty Fees, all Recoveries with respect to
Loans on which ▇▇▇▇ has paid Guaranty Claims, and earnings on the Pledged
Account, and shall be pledged to Agent, on behalf of the Owner from time to time
of the Loans, all under the terms of this Deposit and Security Agreement. ▇▇▇▇
hereby irrevocably directs Lender to deposit the following amounts into the
Pledged Account:
(a) any and all Guaranty Fees payable by Owner with respect to a Loan
under the Guaranty Agreement, less the ▇▇▇▇ Guarantee Fee
Entitlement, which fees will be deposited into the Pledged Account
by Lender or its disbursing agent as Loans are disbursed to
Borrowers or at such other time as fees are due from Lender to
▇▇▇▇.
(b) all Recoveries, which amounts shall be remitted by ▇▇▇▇ to Agent on
the 15th day of each month, for Recoveries received during the
preceding month.
Any amounts remitted to Agent by Lender or its disbursing agent for deposit into
the Pledged Account shall be accompanied by a notice in the form of Exhibit 1,
and such amounts shall be deposited by the Agent into the appropriate
sub-Account as directed. Lender shall notify Agent in writing if it will
transmit funds via a disbursing agent and will instruct such agent to comply
with transmittal procedures contained in this Agreement. Agent shall hold all
assets in the Pledged Account as directed in Section 12 hereof.
3. PLEDGED ACCOUNT INVESTMENT AND MAINTENANCE.
(a) The Agent, acting at the written direction of ▇▇▇▇, which direction
shall be in the form of Exhibit 2 attached hereto, shall pay Owner
from the Pledged Account any amounts owed to such Owner by ▇▇▇▇
under the Guaranty Agreement for Guaranty Claims. ▇▇▇▇ shall be
required to pay Owner any such claim amounts out of TERI's general
reserves and other assets only to the extent that and for so long
as the Pledged Account is without sufficient funds or is otherwise
unavailable to promptly pay Owner whatever amounts are then due and
payable to Owner under the Guaranty Agreement. The Pledged Account
shall be maintained under the following conditions:
(i) Funds shall be deposited only with institutions which are
federally insured;
(ii) Funds shall be invested only in Permitted Investments as
defined in Exhibit 3 attached hereto;
(iii) The Agent shall have no obligation to invest in any
instrument, account or other financial or other arrangement
(including, without limitation, repurchase agreements) if
the same would not be subject to the first priority
security interest of Agent, on behalf of Owner, in such
funds or other such instrument as so invested; provided
that, except as expressly set forth herein, the Agent will
have no obligation to ensure such perfection;
(iv) The Pledged Account shall be funded as set forth in this
Deposit and Security Agreement. ▇▇▇▇ shall not deposit, nor
permit any other entity to deposit, any funds from any
other source, and shall particularly exclude from the
Pledged Account, the deposit or commingling of any funds or
assets from the general reserves, operating capital or
other corporate assets of ▇▇▇▇, except to the extent such
amounts constitute Recoveries;
(v) Subject to subparagraph 3(a)(ii), above, the Agent shall,
in a timely manner, sell, exchange, invest, and otherwise
deal with the property in
the Pledged Account as ▇▇▇▇ shall direct in writing to the
Agent. Except to the extent that the Agent shall receive
contrary specific written investment instructions from
▇▇▇▇, Agent shall invest the Funds in State Street's
Insured Money Market Account (IMMA). All such investments
shall be subject to availability (including time-of-day
limitations);
(vi) Notwithstanding the foregoing, while there is a default by
▇▇▇▇ under Section 8 hereof continuing, of which Agent has
actual notice, Owner or FMC (with Owner's written consent)
and not ▇▇▇▇, shall direct Agent to invest according to
such policies as Owner (or FMC, with Owner's written
consent) may adopt. Such policies shall be not less prudent
than those set forth in Exhibit 3 provided that Agent shall
have no responsibility for the determination of purchase of
or otherwise in respect of such investments;
(vii) The Agent shall: in a timely manner (a) follow and use
customary and commercially reasonable collection efforts to
collect all income and principal payments on the
investments in the Pledged Account; (b) perform the
necessary clerical and bookkeeping services relative to the
funds in the Pledged Account; and (c) provide to ▇▇▇▇ and,
after written request and while there is a default by ▇▇▇▇
under Section 8 continuing, to Owner: (1) monthly reports
(including daily activity logs) of transactions in the
Pledged Account; and (2) any communications Agent receives
from the issuer of any investments held in the Pledged
Account.
(b) ▇▇▇▇ hereby authorizes Agent and Owner to make whatever deposits,
withdrawals and transfers as are specifically directed by ▇▇▇▇ or
Owner, as the case may be, subject to the terms and conditions
contained in this Deposit and Security Agreement. Prior to receipt
by Agent of written notice of a default by ▇▇▇▇ hereunder from
Owner or FMC, Agent shall make withdrawals to pay Guaranty Claims
in accordance with the instructions of ▇▇▇▇ and without
confirmation from Owner.
(c) No interest, dividends, distributions or other earnings of whatever
nature which are paid and derived from the Pledged Account
(collectively, "Earnings") shall be withdrawn or paid to ▇▇▇▇ or
any other person or entity unless pursuant to the provision of
subsection (d). All Earnings shall be fully, immediately and
completely reinvested in the Pledged Account. Any other provisions
of this Deposit and Security Agreement to the contrary (either
expressly or by implication) notwithstanding, all Earnings net of
losses shall be credited to and deemed income of ▇▇▇▇ and not Owner
or Agent, and shall be so treated by ▇▇▇▇.
(d) Withdrawals and disbursements from the Pledged Account shall be
made only in accordance with the following provisions:
(i) To compensate the Agent pursuant to Section 11(m) hereof;
(ii) Upon receipt by the Agent of a Payment of Guaranty Claims
Direction Letter from ▇▇▇▇, substantially in the form of
Exhibit 2, the Agent shall release to Owner from the
Pledged Account the full amount of any valid Guaranty
Claims made under the Guaranty Agreement for defaulted
Loans, such claims to be processed and paid by ▇▇▇▇ in
accordance with the terms of the Guaranty Agreement;
(iii) Upon receipt by the Agent of a Transferred Pledged Account
Letter from FMC, substantially in the form of Exhibit 4
confirming the sale of Loans to a Securitization Owner
Trustee pursuant to Section 4 hereof, the Agent shall
release to the Securitization Owner Trustee pursuant to
instructions set forth in such notice the amounts provided
in subsections 4(b) and 4(g);
(iv) In the event TERI's income should become subject to federal
income taxation or the income from the Pledged Account
should become subject to excise tax under Section 4940 of
the Internal Revenue Code, ▇▇▇▇ shall be entitled to the
release from the Pledged Account of amounts equal to the
taxes actually paid with respect to the income on the
Pledged Account. ▇▇▇▇ shall provide Agent and Owner (with a
copy to FMC) with a written request substantially in form
of Exhibit 5 attached hereto, for any such withdrawal,
which request shall be accompanied by documentation as to
the amounts to be withdrawn ("Withdrawal Request"). Not
later than (15) days following receipt by the Agent of a
Withdrawal Request, FMC or the Owner may either (i) notify
the Agent of any objection to such Withdrawal Request along
with reasons for such objection or (ii) request any further
information or documentation relating to such request. If
the Agent does not receive an objection or request for
further information from the Owner with such (15) day
period, the Owner shall deemed to have consented to the
Withdrawal Request, and the Agent shall thereafter promptly
permit ▇▇▇▇ to withdraw the requested funds from the
Pledged Account. If FMC or Owner makes a timely request
pursuant to clause (ii) above, the Agent shall provide
written notice to ▇▇▇▇ of whatever additional documentation
or information Owner or FMC may reasonably require before
agreeing to the Withdrawal Request. Upon timely receipt by
the Agent of an objection from Owner or FMC as to any
Withdrawal Request, the Agent shall deny the request and
provide ▇▇▇▇ with a written statement of the Owner's or
FMC's reasons for denial, which denial must be reasonably
based on the requirements set forth in this Section 3(d);
provided that the Agent shall have no
responsibility for determining the reasonableness of any
denial or request. Upon TERI's submission to Owner, FMC and
Agent of such additional required documentation or
information, Agent shall promptly, upon receipt of the
written consent of the Owner, (X) permit ▇▇▇▇ to withdraw
such funds from the Pledged Account, or (Y) if the Owner
shall not so consent, deny the request and provide ▇▇▇▇
with a written statement of the reasons for denial (to the
extent provided by the Owner).
(v) Owner shall receive from the Pledged Account the full
amount of any refunded Guaranty Fees due and owing to such
Owner for cancelled Loans pursuant to Section 2.16 of the
Guaranty Agreement, such amounts to be paid on the 15th day
of each month for Loan cancellations the supporting
documentation for which has been received by Agent during
the preceding month. Upon written direction from ▇▇▇▇ in
the form attached hereto as Exhibit 2, the Agent shall
release such funds.
(e) The Agent shall not be liable for the depreciation in value of any
property held in the Pledged Account due to its compliance with
TERI's written investment direction. The Agent shall have no
liability for any investment losses, including without limitation
any market loss on any investment liquidated prior to maturity in
order to make a payment required hereunder.
(f) The Agent shall take delivery of such money it receives from ▇▇▇▇,
or Owner, and shall retain custody of the same in the Pledged
Account. The Agent may take title to the property comprising the
Pledged Account in one or more nominees, but Agent shall be
responsible for the acts of such nominees. The parties hereto
acknowledge that property may be held through any central
securities depository, clearing agency or any federal reserve bank,
and the Agent shall not be responsible for their actions or
failures to act.
4. PROCEDURE IN A SECURITIZATION TRANSACTION.
(a) FMC contemplates arranging one or more Securitization Transactions
per year, at the closing of which all Seasoned Loans (as defined in
the Note Purchase Agreement) outstanding on the Pool Cut Off Date
will be purchased. FMC, ▇▇▇▇ and Lender anticipate that each such
purchase will include the sale of some, but not all Loans with
respect to which funds were held in the Pledged Account in the Pool
Cut Off Date. In order to facilitate a Securitization Transaction
closing, such parties have agreed to the procedure set forth in
this section.
(b) ▇▇▇▇ agrees to enter into an agreement substantially identical to
this Deposit and Security Agreement with the Securitization
Indenture Trustee as agent for the purchaser of the Loans and its
pledgees, pursuant to which that portion of
the Pledged Account which is applicable to the Loans being
securitized (the "Transferred Pledged Account") will be transferred
to such new agent and this Deposit and Security Agreement will
cease to apply to the assets so transferred.
The amounts and rights so transferred are further defined in
Section 4(g), below. Agent shall transfer such amounts pursuant to
Section 3(d)(iii) pursuant to the written instructions of FMC and
Owner, and Agent shall have no responsibility for determining the
correctness or adequacy of such amounts.
(c) Notwithstanding a closing of a Securitization Transaction, Agent
shall continue to serve as Agent with respect to any funds and
Collateral remaining in the Pledged Account and this Agreement
shall remain in full force and effect with respect to the Pledged
Account and Collateral.
(d) Owner, Agent and ▇▇▇▇ may rely upon any reports, calculations or
other data provided by FMC with respect to Seasoned Loans, balances
in the Pledged Account as of the Pool Cut Off Date, earnings in the
Pledged Account to be transferred in the Securitization
Transaction, and any other information necessary for a
Securitization Transaction closing, absent manifest error.
(e) At a Securitization Transaction closing, Owner shall pay (or cause
to be paid) into the Transferred Pledged Account (after the same is
transferred to and held by the Securitization Indenture Trustee),
the full amount of any Subsequent Guarantee Fees not yet paid with
respect to the Loans being purchased in such Securitization
Transaction.
(f) FMC, ▇▇▇▇, the Securitization Owner Trustee and the Securitization
Indenture Trustee may, but need not, agree at the conclusion of the
closing of a Securitization Transaction, to transfer the
Transferred Pledged Account and the Collateral to other collateral
accounts held under the security agreements created in the
Securitization Transaction.
(g) For purposes of determining the rights transferred to the
Securitization Indenture Trustee, the portion of the Pledged
Account and Collateral to be transferred shall include:
(i) cash balances and investments held by the Agent equal to
the sum of:
A. Guaranty Fees paid into the Pledged Account with
respect to Loans being purchased in the
Securitization Transaction plus any Guaranty Fees
held in the Pledged Account with respect to Loans
that (x) were scheduled for purchase under the Note
Purchase Agreement, but (y) have been prepaid in full
(but, in
any event, not more than the balance in the Pledged
Account), plus
B. A sum representing accrued earnings on such Guaranty
Fees then held in the Pledged Account, computed by
multiplying the amount under (A), above, times (x)
the weighted average monthly rate of return on the
funds in the Pledged Account for each month when any
such Guaranty Fee was held in the Pledged Account,
times (y) the dollar-weighted average number of
months that the Guaranty Fees in question were held
in the Pledged Account (provided, however, that such
sum shall in no event exceed cash balance in the
Pledged Account after deducting sums under subsection
(i)(A), above); provided, further, that this sum will
be calculated by FMC and provided to the Agent, and
the Agent will not be responsible for the
verification of this sum.
(ii) all Recoveries with respect to Loans that
(A) have been purchased by ▇▇▇▇ on account of default
after the date of the Pool Cut Off Date for the most
recent preceding Securitization Transaction;
(B) have not previously been included in a
Securitization Transaction; and
(C) would have been Seasoned Loans under the Note
Purchase Agreement as of the Pool Cut Off Date, but
for the default and purchase by ▇▇▇▇. FMC shall
designate all such Loans (with the written consent of
Owner, such consent not to be unreasonably withheld),
Recoveries with respect to which are part of the
Collateral transferred in any Securitization
Transaction. Such designation shall be binding upon
Agent and ▇▇▇▇ absent manifest error.
(iii) All rights to receive Subsequent Guarantee Fees with
respect to the Loans transferred.
(h) The agreement between the Securitization Indenture Trustee and ▇▇▇▇
shall provide that, if the balance of principal of Loans held by or
pledged to the Securitization Indenture Trustee is less than 100%
of the balance in the Pledged Account held by the Securitization
Indenture Trustee (or such lesser percentage as FMC, as structuring
advisor, shall recommend for inclusion in the terms of the
Agreement), the Securitization Indenture Trustee shall, if no
default exists hereunder, quarterly pay to ▇▇▇▇ the amount of such
excess. The Securitization Indenture Trustee may rely wholly upon
FMC to compute and determine the amount of such excess.
5. SECURITY INTEREST. ▇▇▇▇ hereby pledges, assigns, and sets over to
Agent, on behalf of Owner, as security for payment by ▇▇▇▇ of the Secured
Obligations (as hereinafter defined), all of TERI's right, title, and interest
in and to (i) the Pledged Account and (ii) TERI's right to receive Guaranty Fees
and Recoveries. The foregoing shall not be deemed to include a grant of security
interest in defaulted Loans. In furtherance thereof, ▇▇▇▇ hereby grants to Agent
a first priority security interest in all of TERI's right, title, and interest
in and to:
(a) all personal property comprising and/or contained in the Pledged
Account, as provided in this Deposit and Security Agreement, both
tangible and intangible, whether now owned or hereafter acquired by
▇▇▇▇ and wheresoever located, including without limitation:
(i) all contract rights, claims, instruments, notes and
accounts, whether now existing or hereafter arising,
including, without limitation, all of the same evidencing
or representing indebtedness due or to become due to ▇▇▇▇
(all hereinafter called the "Accounts");
(ii) all funds and investments thereof, whether in the form of
certificates of deposit, repurchase agreements, U.S.
Treasury Bills, U.S. Treasury Notes, investment grade
commercial paper, U.S. Treasury Bonds, Federal agency notes
or other investments, securities (whether certificated or
uncertificated and specifically including any securities
which are purchased through and for which records are
maintained on a book entry system through any financial
intermediary (as defined in Section 8-313 of the Uniform
Commercial Code)), payment intangibles and general
intangibles, whether now existing or hereafter arising and
wheresoever located, or otherwise (all hereinafter called
the "Intangibles");
(iii) all right, title, and interest of ▇▇▇▇ in or to all
instruments and documents covering or relating to the above
described property, including but not limited to, all
books, records, computer printouts, tapes, disks, ledger
sheets, files and other data (all such instruments and
documents being called the "Related Documents");
(iv) all interest, dividends, and/or other earnings of any kind
which are paid with respect to or derived from the Pledged
Account, and all proceeds of any of the foregoing, and the
present and continuing right to make claim for, collect,
receive and receipt for, any and all such interest,
dividends, and/or other earnings; and
(v) all the proceeds of all of the foregoing;
(b) all contract and other rights of ▇▇▇▇ to receive payment of
Guaranty Fees, including TERI's rights to Initial Guarantee Fees,
from Lender under Section 3.3 of the Guaranty Agreement; TERI's
rights to receive Subsequent Guarantee Fees from Owner pursuant to
such Section, and any separate undertaking or agreement by Owner to
pay such Subsequent Guarantee Fees;
(c) all Recoveries and all rights of ▇▇▇▇ to receive or collect
Recoveries; and
(d) all proceeds of the foregoing.
All of the foregoing property in which Agent has been granted a security
interest is herein collectively referred to as "Collateral". It is expressly
understood and agreed that this security interest and assignment shall
automatically attach to any and all future deposits to, earnings from, and
proceeds of the Pledged Account immediately upon deposit or accrual, and all
Guaranty Fees and Recoveries immediately upon the receipt thereof, without the
making or doing of any further act or thing whatsoever. ▇▇▇▇ shall promptly take
all further action, and execute and deliver to Agent such other documents, as
may be requested from time to time by Agent to create, evidence, maintain and
effect Agent's security interest in the Pledged Account and the other rights
pledged hereunder.
6. SECURED OBLIGATIONS. The security interest of Agent under this
Deposit and Security Agreement secures (a) the payment and performance of all
indebtedness, obligations, and liabilities of ▇▇▇▇ arising at any time, now or
in the future, pursuant to the Guaranty Agreement; (b) performance by ▇▇▇▇ of
the agreements set forth in this Deposit and Security Agreement; (c) all
payments made or expenses incurred by Agent, Owner or FMC, including, without
limitation, reasonable attorney's fees and legal expenses, in the exercise,
preservation or enforcement of any of the rights, powers or remedies of Agent,
Owner or FMC, or in the enforcement of the obligations of ▇▇▇▇, under this
Deposit and Security Agreement or the Guaranty Agreement (whether or not paid or
incurred in the context of a state or federal bankruptcy, insolvency, or
reorganization proceeding); and (d) any renewals, continuations or extensions of
any of the foregoing (all of which are collectively referred to as the "Secured
Obligations"). From and after any given Securitization Transaction closing, the
Secured Obligations shall no longer include TERI's obligations under the
Guaranty Agreement to the extent they relate to the Loans sold in such
Securitization Transaction or to any obligation of ▇▇▇▇ arising with respect to
Loans so sold after the occurrence of the Securitization Transaction.
7. WITHDRAWAL. ▇▇▇▇ shall not (except as provided in Sections 3(d) and
(4)) withdraw any funds from or further assign, pledge, or hypothecate the
Pledged Account or any portion of the Pledged Account to any individual, person,
entity or other third party without the express prior written consent of Agent,
acting at the direction of Owner and FMC (each acting in its sole discretion).
Any withdrawals by ▇▇▇▇ shall be by wire transfer unless ▇▇▇▇ requests, in
writing, another reasonable form of payment.
8. DEFAULT. ▇▇▇▇ shall be in default of this Deposit and Security
Agreement if ▇▇▇▇ fails to remit to Owner from the Pledged Account or otherwise,
in accordance with the terms and provisions of the Guaranty Agreement, the
principal balance (including capitalized fees and interest) and accrued interest
and late fees on any Loan as to which a Guarantee Event (as defined in the
Guaranty Agreement) has occurred and as to which the conditions set forth in the
Guaranty Agreement to payment of a Guaranty Claim have been satisfied. The Agent
shall not be charged with or deemed to have notice or knowledge of a default
unless notified in writing by Owner or FMC. Either ▇▇▇▇, Agent or Owner shall be
in default of this Deposit and Security Agreement if (a) any representation,
warranty, or statement made by such party in or pursuant to this Deposit and
Security Agreement or the Guaranty Agreement is found to be false or erroneous
in any material respect, or (b) such party, subject to Section 11(j) with
respect to the Agent, shall fail or omit to perform or observe any covenant or
agreement made by it in this Deposit and Security Agreement or the Guaranty
Agreement. Upon receipt by Agent of a written notice of default by ▇▇▇▇ from
Owner or FMC, Agent shall cease disbursing any funds at the request of ▇▇▇▇, and
shall follow all instructions of Owner, unless and until such notice is
rescinded, in writing, by both Owner and FMC.
9. REMEDIES UPON DEFAULT. Agent shall have all of the rights and
remedies of a secured party under the New York Uniform Commercial Code (as the
same may be amended from time to time including without limitation, amendments
to adopt revisions to Article 9 thereof)(hereinafter, "the UCC")), as well as
all rights and remedies provided by any other applicable law, at law, or in
equity. Without limiting the generality of the foregoing, Agent shall also have
the right, during the term of this Deposit and Security Agreement, to do any or
all of the following upon a default and until any such default is cured:
(a) ACCELERATION. Without any notice or demand, Agent may declare any
or all Secured Obligations then in default to be immediately due
and payable, which rights shall be exercised solely upon the
written direction of Owner.
(b) POSSESSION. Without notice, demand, or hearing, any right to which
is hereby waived by ▇▇▇▇, Agent shall have full power and authority
to hold, sequester, set-off or withdraw any and all funds from the
Pledged Account and to, solely at the written direction of the
Owner, (i) remit funds to Owner for application to any Loan as to
which a Guarantee Event has occurred and ▇▇▇▇ has failed to remit
to Owner the principal balance (including capitalized fees and
interest) and accrued interest and late fees thereon in accordance
with the terms and conditions of the Guaranty Agreement and (ii)
hold the funds in the Pledged Account without making any
disbursements of any kind to ▇▇▇▇ as otherwise provided in this
Deposit and Security Agreement, and to apply the funds to any Loan
if and when a Guarantee Event occurs and ▇▇▇▇ fails to promptly
remit to Owner the unpaid principal balance (including capitalized
fees and interest) and accrued interest and late fees thereon in
accordance with the conditions of the Guaranty Agreement.
(c) ASSEMBLING COLLATERAL. Agent acting at the written direction of the
Owner may require ▇▇▇▇ to assemble the Collateral and to make it
available to Agent at any convenient place designated by Agent.
(d) OPERATION. Agent acting solely at the written direction of the
Owner may take such measures as may be necessary or proper for the
protection and preservation of the Collateral or for the most
advantageous beneficial exercise of its remedies hereunder.
(e) COLLECTION OF ACCOUNTS.
(i) ▇▇▇▇ hereby constitutes and appoints Agent its true and
lawful attorney (which appointment is coupled with an
interest), with full power of substitution, either in
Agent's own name or in the name of ▇▇▇▇, to ask for,
demand, ▇▇▇ for, collect, receive, receipt and give
acquittance for, any and all moneys due or to become due to
▇▇▇▇ that are part of the Collateral; to endorse checks,
drafts, orders, and other instruments for the payment of
money payable to ▇▇▇▇ on account thereof, to settle,
compromise, prosecute, or defend any action, claim, or
proceeding with respect thereto; and to sell, assign,
pledge, transfer, and make any agreement respecting, or
otherwise deal with, the same.
(ii) ▇▇▇▇ agrees that all Recoveries shall be the property of
Agent, on behalf of Owner, to whatever extent may be
necessary to facilitate full and complete payment to Owner
of all amounts owed it under the Guaranty Agreement. All
such Recoveries received by ▇▇▇▇ shall be remitted to Agent
(properly endorsed for collection where required), not
later than the next Business Day, and accompanied by
Exhibit 2 and deposited by Agent in the Pledged Account,
for the payment of all of the Secured Obligations then in
default, ▇▇▇▇ agrees not to commingle any such collections
or proceeds with any of its other funds or property and
agrees to hold the same upon an express trust for Agent, on
behalf of the Owner, until deposited in the Pledged
Account, as aforesaid.
(iii) Agent agrees to provide notice to ▇▇▇▇ of Agent's exercise
of any of its rights under this Section 9(e). Agent shall
have no obligation to act personally to collect any amount
under this Section 9(e). Owner or FMC shall arrange any
necessary third-party collection services.
(f) TRANSFER OF INTANGIBLES. Agent shall have the right to take
possession of any agreement or other document evidencing any of the
Intangibles, and may apply for or seek, on behalf of and as
attorney-in-fact for ▇▇▇▇, any necessary consent to the assignment,
transfer, conveyance, sale, renewal, reissuance or other
disposition of the same, and ▇▇▇▇ shall cooperate fully with Agent
in doing so and shall take all actions reasonably requested by
Agent in
furtherance thereof. ▇▇▇▇ hereby constitutes and appoints Agent its
true and lawful attorney (which appointment is coupled with an
interest) with full power of substitution, either in Agent's own
name or in the name of ▇▇▇▇, to assign, transfer and convey,
subject to all requirements of law, any and all of TERI's rights in
and to any of the Intangibles.
(g) DISPOSITION. Agent may assign, transfer, convey, any or all of the
Collateral, as Agent (acting at the written direction of Owner) may
determine, by public or private sale subject to TERI's rights to
retain copies of the Related Documents now or in the future in
TERI's possession. Agent shall provide ▇▇▇▇ with reasonable written
notice of the time and place of any such sale.
(h) Proceeds. All proceeds from the sale or other disposition of
Collateral by Agent under this Section 9 of this Deposit and
Security Agreement, all other moneys received by Agent pursuant to
the terms of this Deposit and Security Agreement shall be applied
as follows:
(i) First, to the payment of all expenses incurred by Agent in
connection with this Deposit and Security Agreement or the
exercise of any right or remedy hereunder, or any sale or
disposition, including, but not limited to the expenses of
taking, advertising, processing, preparing and storing the
Collateral to be sold, all court costs and Agent's
reasonable legal fees in connection therewith;
(ii) Second, to the payment of valid Guaranty Claims in
accordance with the terms thereof in the order in which a
complete claim (including all required documentation) is
received, treating all claims received the same day as
received at the same time (if there are not sufficient
funds in the Pledged Account to pay all claims payable
therefrom received on a given day, all such claims shall be
paid in part, pro rata, from the Pledged Account as
directed by Owner;
(iii) Third, any remainder to be held pursuant to the terms of
this Deposit and Security Agreement as continuing security
for TERI's payment of the remaining Secured Obligations.
Agent shall apply any such proceeds, monies, or balances in
accordance with this Deposit and Security Agreement promptly upon
its receipt of the same. In respect of any application pursuant to
clause (ii) above, such proceeds, monies, or balances shall be
applied by Agent to discharge in whole or in part any unpaid
Secured Obligation, notwithstanding any manifestation of an intent
to the contrary expressed in writing or otherwise by ▇▇▇▇ at any
time. Upon any sale of Collateral by Agent (whether pursuant to a
power of sale granted by a statute or under a judicial proceeding),
the receipt of Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the
Collateral so sold and such purchaser or purchasers shall not
be obligated to see to the application of any part of the purchase
money paid over to Agent or such officer, or be answerable in any
way for the misapplication thereof. Notwithstanding the sale or
other disposition of any Collateral by Agent hereunder, ▇▇▇▇ shall
remain liable for any deficiency. Any Loan with respect to which
Agent makes payment in full to Owner hereunder will forthwith be
transferred to ▇▇▇▇ on the terms and conditions set forth in the
Guaranty Agreement.
10. REMEDIES CUMULATIVE. All rights, remedies, or powers conferred upon
Agent herein or by law shall be cumulative and concurrent at the option of
Agent, and Agent may, to whatever extent is reasonably necessary to cure any
default, foreclose or exercise the power of sale or any other remedy available
to it successively upon any default or upon successive defaults hereunder
without the necessity of declaring all sums secured hereby to be due and
payable. Upon any such occasion, Agent (at the direction of Owner) shall be
authorized to sell or dispose of all or any such part of the Collateral as
provided in this Deposit and Security Agreement and as permitted by law. The
remaining Collateral shall continue as security for any other sums remaining due
after such sale, lease, or disposition or thereafter to become due or payable on
any of the Secured Obligations.
11. AGENT.
(a) APPOINTMENT OF AGENT. Subject in all respects to the terms and
provisions of this Deposit and Security Agreement, Owner hereby
appoints Agent to act as agent for its benefit with respect to the
Pledged Account and liens upon and the security interests in the
Collateral, the rights and remedies granted and the receipt and
disbursement of funds under and pursuant to this Deposit and
Security Agreement, and Agent hereby accepts such appointment and
agrees to act as such agent in accordance with the terms and
conditions set forth herein. To the extent legally necessary to
enable Agent to enforce security interests in the Collateral in any
legal proceeding which Agent either joins as a party in accordance
with the terms hereof, FMC and Owner from time to time agree to
join as a party in such proceeding and take such action therein
concurrently to enforce and obtain a judgment for the payment of
their respective portion of the Secured Obligations.
(b) DUTIES OF AGENT. Owner hereby irrevocably authorizes Agent to
receive and disburse funds in accordance with the provisions of
this Deposit and Security Agreement and, subject to Agent having
been directed in writing and been offered satisfactory indemnity to
take such action in accordance with the terms of this Deposit and
Security Agreement, to take such action on its behalf under the
provisions of this Deposit and Security Agreement and to exercise
such powers thereunder as are specifically delegated to Agent by
the terms thereof and such other powers as are reasonably
incidental thereto. Agent is hereby irrevocably authorized to take
all actions on behalf of Owner to enforce the rights and remedies
of the Agent and Owner provided for herein or by applicable law
with respect to the liens upon and security interests in the
Collateral granted to secure the Secured Obligations; provided,
however, that, (i) Agent shall act solely at and in accordance with
the written direction of Owner and (ii) Agent shall not, except as
otherwise expressly set forth herein, without the written consent
of Owner, release or terminate by affirmative action or consent any
lien upon or security interest in any Collateral granted under this
Deposit and Security Agreement. Agent agrees to make such demands
and give such notices under this Deposit and Security Agreement as
may be requested by, and to take such action to enforce this
Deposit and Security Agreement and to foreclose upon, collect and
dispose of the Collateral or any portion thereof as may be directed
by, Owner, PROVIDED, HOWEVER, that Agent shall not be required to
take any action that is contrary to law or the terms of this
Deposit and Security Agreement. Once a direction to take any action
has been given by Owner to Agent, and subject to any other
directions which may be given from time to time by Owner, decisions
regarding the manner in which any such action is to be implemented
and conducted (with the exception of any decision to settle,
compromise or dismiss any legal proceeding, with or without
prejudice) shall be made by Agent, with the assistance and upon the
advice of its counsel. Notwithstanding the provisions of the
preceding sentence, any and all decisions to settle, compromise or
dismiss any legal proceeding, with or without prejudice, shall
require the approval of Owner.
(c) Limited Role of Agent. Notwithstanding any term of this Deposit and
Security Agreement to the contrary:
(i) Any permissive power or grant of authority or power to the
shall not be construed to be mandatory or to create an affirmative
obligation on the part of the Agent to exercise such power or
authority.
(ii) The Agent shall not be charged with or deemed to have notice
or knowledge of any Guaranty Event, Securitization Transaction or
default, unless and until (and except to the extent) it has
received written notice thereof from ▇▇▇▇ or the Owner or FMC, as
the case may be. The Agent may rely conclusively on any such
written notice without further inquiry or investigation.
(iii) The Agent shall be under no obligation or duty to take any
action in connection with, or to exercise any right of recovery or
remedy against, the Collateral or ▇▇▇▇, including without
limitation the exercise of any right or remedy pursuant to this
Section 11, unless and except to the extent it has received express
written instruction from the Owner, and in such case, its
obligation to take action in accordance with such instruction shall
be subject to the terms of this Agreement.
(iv) Upon request at any time or times, the Owner shall certify in
writing to the Agent, the amount and nature of any Guaranty Claims
outstanding, and the Agent may rely conclusively thereon without
further inquiry or investigation.
(v) In no instance shall the Agent have any liability for any
action taken pursuant to the instruction of the Owner.
(vi) Subject to Section 12 hereof, the Agent is not responsible for
the creation, perfection, continuation or priority of any security
interest hereunder, and shall not be responsible for determining
compliance with applicable requirements of the Uniform Commercial
Code or other applicable law in connection with any exercise of
rights or remedies or liquidation of or foreclosure upon
Collateral. Without limiting the foregoing, the Agent shall have no
responsibility to determine whether any actions are necessary, or
to take any actions (including without limitation any applicable
filings) that may be necessary (except to the extent expressly
instructed in writing by the Owner, with the consent of FMC,
subject to the terms of this Agreement) to comply with the
requirements of revised UCC Article 9 (as recommended for enactment
by the National Conference of Commissioners on Uniform State Laws
and the American Law Institute), if and when adopted in any
relevant jurisdiction, or other changes in applicable law.
(vii) The Agent shall not be responsible for the genuineness,
authenticity, sufficiency, value, validity or marketability of any
stock certificates or other item of property delivered to it from
time to time pursuant to this Agreement.
(viii) The Agent shall not be under any duty to monitor, determine,
investigate or compel compliance by ▇▇▇▇ with any term of this
Agreement.
(d) REQUESTING INSTRUCTIONS. Agent may at any time request directions
from Owner as to any course of action or other matter relating to
the performance of its duties under this Deposit and Security
Agreement and Owner shall respond to such request in a reasonably
prompt manner.
(e) EMERGENCY ACTIONS. If Agent has asked Owner for instructions
following the receipt of any notice of a default under Section 8
hereof or under the Guaranty Agreement and if the Owner has not
responded to such request within 30 days, Agent shall be authorized
to take such actions with regard to such default which Agent, in
good faith, believes to be reasonably required to protect the
Collateral from damage or destruction; PROVIDED, HOWEVER, that once
instructions have been received from Owner, the actions of Agent
shall be governed thereby and the Agent shall not take any further
action which would be contrary thereto.
(f) AMENDMENTS. An amendment, supplement, modification, restatement or
waiver of any provision of this Deposit and Security Agreement or
any document necessary to consummate the transactions contemplated
hereby, any consent to any departure by any party therefrom, or the
execution or acceptance by Agent of any document related thereto
not in effect on the date hereof shall be effective if, and only
if, consented to in writing by the Owner
and FMC; provided, however, that no amendment, supplement,
modification, restatement, waiver, consent or such document not in
effect on the date hereof which imposes any additional
responsibilities upon Agent shall be effective without the written
consent of Agent.
(g) ADMINISTRATIVE ACTIONS. Agent shall have the right to take such
actions hereunder and under any document necessary to consummate
the transactions contemplated hereby, not inconsistent with the
instructions of Owner or the terms of this Deposit and Security
Agreement, as Agent deems necessary or appropriate to perfect or
continue the perfection of the liens on the Collateral for the
benefit of Owner.
(h) AGENT ACTING THROUGH OTHERS. Agent may perform any of its duties
under this Deposit and Security Agreement and any document
necessary to consummate the transactions contemplated hereby or
through attorneys (which attorneys may be the same attorneys who
represent Owner), agents or other persons reasonably deemed
appropriate by Agent. In addition, Agent may act in good faith
reliance upon the opinion or advice of attorneys selected by Agent.
In all cases Agent may pay customary and reasonable compensation to
all such attorneys, agents or other persons as may be employed in
connection with the performance of its duties under this Deposit
and Security Agreement and any document necessary to consummate the
transactions contemplated hereby.
(i) RESIGNATION AND REMOVAL OF AGENT.
(i) Agent (A) may resign at any time upon notice to Owner, ▇▇▇▇
and FMC, and (B) may be removed at any time upon the
written request of the Owner (with the written consent of
FMC and, absent a default under Section 8 then continuing,
of ▇▇▇▇, neither of which consents shall be unreasonably
withheld) sent to Agent and ▇▇▇▇.
(ii) If Agent shall resign or be removed, the Owner (with the
written consent of FMC and, absent a default under Section
8 then continuing, of ▇▇▇▇, neither of which consents shall
be unreasonably withheld) shall have the right to select a
replacement Agent by notice to Agent and ▇▇▇▇. If ▇▇▇▇ is
dissatisfied with the service provided by Agent, ▇▇▇▇ may
request removal of the Agent in writing to Owner and FMC,
setting forth its reasons for dissatisfaction and any
proposed replacement Agent. Owner and FMC shall review such
request in good faith, having in mind TERI's need for
efficient and effective administrative interaction with the
Agent.
(iii) Upon selection of any replacement of Agent, Agent shall
assign all of the liens upon and security interests in all
Collateral and all right, title and interest of the Agent
under this Deposit and Security Agreement and any document
necessary to consummate the transactions
contemplated hereby, to the replacement Agent, without
recourse to Agent or Owner.
(iv) No resignation or removal of Agent shall become effective
until a replacement Agent shall have been selected as
provided herein and shall have assumed in writing the
obligations of Agent hereunder and under any document
necessary to consummate the transactions contemplated
hereby. In the event that a replacement Agent shall not
have been selected as provided herein or shall not have
assumed such obligations within 90 days after the
resignation or removal of Agent, then Agent may apply to a
court of competent jurisdiction for the appointment of a
replacement Agent.
(v) Any replacement Agent shall be a bank, trust company, or
insurance company having capital, surplus and undivided
profits of at least $100 million.
(j) LIABILITY OF AGENT. In absence of willful misconduct, or negligent
breach of this Deposit and Security Agreement, Agent will not be
liable to Owner, ▇▇▇▇ or FMC for any action or failure to act or
any error of judgment, negligence, mistake or oversight on its part
or on the part of any of its officers, directors, employees or
agents. In no event shall the Agent be liable for indirect,
punitive, special or consequential damage or loss (including but
not limited to lost profits) whatsoever, even if the Agent has been
informed of the likelihood of such loss or damage and regardless of
the form of action.
(k) NO RELIANCE ON AGENT. Neither Agent nor any of its officers,
directors, employees or agents (including, but not limited to, any
attorneys acting at the direction or on behalf of Agent) shall be
deemed to have made any representations or warranties, express or
implied, with respect to, nor shall Agent or any such officer,
director, employee or agent be liable to ▇▇▇▇, FMC or Owner or
responsible for (i) any warranties or recitals made by any party
(other than Agent) in this Deposit and Security Agreement, nor in
any certificate, instrument or document executed by any party
(other than Agent) in connection therewith, (ii) the due or proper
execution or authorization of this Deposit and Security Agreement
by any party other than Agent, or the effectiveness,
enforceability, validity, genuineness or collectibility as against
any party (other than Agent) of this Deposit and Security
Agreement, nor of any certificate, instrument or document executed
by any of the parties (other than Agent) in connection therewith,
(iii) the present or future solvency or financial worth of any
party, or (iv) subject to Section 12 hereof, the value, condition,
existence or ownership of any of the Collateral or the perfection
of any lien upon or security interest in the Collateral whether now
or hereafter held or granted) or the sufficiency of any action,
filing, notice or other procedure taken or to be taken to perfect,
attach or vest any lien or security interest in the Collateral.
Except as may be required by Section 11(b) hereof,
Agent shall not be required, either initially or on a continuing
basis, to (A) make any inquiry, investigation, evaluation or
appraisal respecting, or enforce performance by any party of, any
of the covenants contained in this Deposit and Security Agreement
or obligations of any party under any certificate, instrument or
document executed by any of the parties in connection therewith, or
(B) undertake any other actions (other than actions expressly
required to be taken by it under this Deposit and Security
Agreement). Nothing in this Deposit and Security Agreement or any
certificate, instrument or document executed by any of the parties
in connection therewith, expressed or implied, is intended to or
shall be so construed as to impose upon Agent any obligations,
duties or responsibilities except as set forth in this Deposit and
Security Agreement and therein. Agent shall be protected in acting,
and shall be entitled to rely upon, any notice, request, consent,
certificate, order, affidavit, letter, telegram, telecopy or other
paper or document given to it by any person reasonably and in good
faith believed by it to be genuine and to have been signed or sent
by such person. Agent shall have no duty to inquire as to the
performance or observance of any of the terms, covenants or
conditions of this Deposit and Security Agreement. Except upon the
direction of Owner pursuant to Section 11(b) of this Deposit and
Security Agreement, Agent will not be required to inspect the
properties or books and records of any party for any purpose,
including to determine compliance by the parties with their
respective covenants respecting the perfection of security
interests.
(l) LIMITED AGENCY. Agent, ▇▇▇▇, FMC and Owner agree that it is the
intent of the FMC and Owner to limit the scope of the powers of
Agent to the specific powers delegated hereunder, together with
such powers as are reasonably incidental thereto, and Agent does
not and shall not have any other right or authority to bind the FMC
or Owner or ▇▇▇▇ in any other manner or thing whatsoever.
(m) COMPENSATION. Owner and ▇▇▇▇ direct Agent to withdraw from the
Pledged Account all sums necessary to pay or reimburse the Agent
for its fees and expenses in accordance with the fee schedule
attached hereto as EXHIBIT 7, which includes, without limitation a
right to reimbursement for legal fees and other actual out of
pocket expenses paid to third parties. Agent shall notify FMC, ▇▇▇▇
and Owner of amounts so withdrawn no less frequently than
quarterly, and FMC shall reimburse the Pledged Account for such
amounts within thirty (30) days of receipt of such notice. In the
event that amounts in the Pledged Account are insufficient to pay
the Agent amounts due under Exhibit 7, FMC shall pay such amounts
to Agent on demand. Pursuant to Exhibit 7, Agent shall be
reimbursed for ordinary and necessary expenses, including legal
fees in connection with the preparation of this agreement, or
arising out of or in connection with the administration of this
Agreement or the exercise, enforcement or performance of any right,
remedy, term, or provision of this Agreement by Owner, the filing
or recording of UCC financing statements and other documents
(including all taxes in connection therewith) in public offices,
the payment or discharge of any taxes,
insurance premiums, encumbrances other otherwise protecting,
maintaining, preserving or refurbishing the Collateral, or
realizing upon the Collateral, or curing any default and the
Agent's liens and security interest thereon and collecting any
deficiency, whether through judicial proceedings or otherwise, or
in defending or prosecuting any actions or proceedings arising out
or relating to the transaction to which this Agreement relates;
provided, further, that the Agent shall have a first lien on, and
security interest in, the Collateral as security for such
compensation, expenses and disbursements. ▇▇▇▇ shall reimburse FMC
on demand for fifty percent (50%) of any amounts FMC actually pays
to Agent in excess of (1) Agent's regular fees set forth in
sections one and two of Exhibit 7, and (2) legal fees for
preparation of this Agreement.
(n) MONTHLY REPORTS. Agent shall promptly provide ▇▇▇▇, FMC, and Owner
with a monthly summary of all investment activity with respect to
the Pledged Account, all earnings or losses thereon, itemized
accounts of disbursements made hereunder, and all expenses and fees
reimbursed or paid to Agent, and a valuation of the Pledged Account
as of end of the month.
(o) NO DUTY TO INQUIRE. The Agent may rely and act upon any written
direction delivered to it as provided herein and reasonably and in
good faith believed by it to be genuine, if purported to have been
signed by ▇▇▇▇, FMC or Owner, as appropriate. The Agent shall not
be required to take notice, and shall not be deemed to have notice,
of any fact or occurrence, unless the Agent has actual knowledge
thereof. The Agent shall have no obligation to determine the
correctness or truth of any statement set forth in any certificate
delivered to the Agent hereunder; provided that the Agent shall at
all times be required to act in good faith hereunder.
(p) FUNDS ADVANCED. Agent shall have no obligation to advance funds to
purchase investments on behalf of the Pledged Account or ▇▇▇▇. If
Agent does in fact advance funds, Agent shall notify ▇▇▇▇. If ▇▇▇▇
fails to immediately reimburse Agent for such advance plus interest
at Agent's Prime Rate from the date of advance, Agent shall sell or
otherwise liquidate such investments in the Pledged Account to
reimburse itself in full for same. "Prime Rate" means the
fluctuating rate of interest which is publicly announced from time
to time by Agent as its principal place of business as being its
"prime rate" or "base rate" thereafter in effect, with each change
in the Prime Rate automatically, immediately and without notice
changing the fluctuating interest rate thereafter applicable
hereunder, it being agreed that the Prime Rate is not necessarily
the lowest rate of interest then available from Agent on
fluctuating rate loans.
(q) Indemnity.
Notwithstanding anything in this Agreement to the contrary, the
Agent shall be under no obligation to expend or risk its own funds
or otherwise incur any financial liability in the exercise of any
of its rights or powers, or to take any
action to protect, preserve or enforce any rights or interests in
the Collateral (including, without limitation, the Collateral) or
to take any action toward the execution or enforcement of its
powers under this Agreement or under the Guaranty Agreement,
whether on its own motion or on the request of Owner, that in the
reasonable opinion of the Agent may involve loss, liability or
unreimbursed expense to it, unless ▇▇▇▇, FMC or the Owner shall
offer and furnish reasonable security or indemnity against such
loss, liability and expense to the Agent.
▇▇▇▇ and FMC covenant and agree, jointly and severally, to
indemnify the Agent (and its directors, officers and employees) and
hold it (and such directors, officers and employees) harmless from
and against any loss, liability, damage, cost and expense of any
nature incurred by the Agent arising out of or in connection with
this Agreement or with the administration of its duties hereunder,
including but not limited to attorney's fees and other costs and
expenses of defending or preparing to defend against any claim of
liability unless and except to the extent such loss, liability,
damage, cost and expense shall be caused by the Agent's negligence,
or willful misconduct. The foregoing indemnification and agreement
to hold harmless shall survive the termination of this Agreement.
▇▇▇▇ and FMC agree, jointly and severally, (i) to assume any and
all obligations imposed now or hereafter by any applicable tax law
with respect to any payment or distribution of the Collateral or
performance of other activities under this Agreement (other than
taxes imposed on the net income of Agent), (ii) to instruct the
Agent in writing with respect to the Agent's responsibility for
withholding and other taxes, assessments or other governmental
charges, and to instruct the Agent with respect to any
certifications and governmental reporting that may be required
under any laws or regulations that may be applicable in connection
with its acting as Agent under this Agreement, and (iii) to
indemnify and hold the Agent harmless from any liability or
obligation on account of taxes, assessments, additions for late
payment, interest, penalties, expenses and other governmental
charges that may be assessed or asserted against the Agent in
connection with, on account of or relating to the Collateral, the
management established hereby, any payment or distribution of or
from the Collateral pursuant to the terms hereof or other
activities performed under the terms of this Agreement, including
without limitation any liability for the withholding or deduction
of (or the failure to withhold or deduct) the same, and any
liability for failure to obtain proper certifications or to report
properly to governmental authorities in connection with this
Agreement, including costs and expenses (including reasonable legal
fees and expenses), interest and penalties. The foregoing
indemnification and agreement to hold harmless shall survive the
termination of this Agreement.
(r) PLEDGE ACCOUNT NOT SUBJECT TO SET-OFF. Agent agrees that it holds
the Pledged Account for the benefit of Owner, subject to the terms
of this Agreement. The Pledged Account shall not be subject to, and
Agent agrees not to exercise, any
right of set off against the Pledged Account to secure or collect
claims of Agent against ▇▇▇▇ that arise out of transactions
unrelated to this Agreement.
12. POSSESSION OF COLLATERAL. Throughout the term of this Deposit and
Security Agreement, possession of the Collateral shall be maintained by Agent,
or its agent or nominee (if Agent so chooses from time to time), as necessary
and appropriate to perfect Agent's security interest therein as provided in, and
subject to the terms of, this Deposit and Security Agreement; PROVIDED, HOWEVER,
that Agent shall at all times be responsible for the safekeeping of the
Collateral and the acts of any such agent or nominee. Agent's sole
responsibility with respect to perfection of the security interest created
hereunder shall be to act in accordance with the instructions of Owner. Owner
hereby instructs Agent that:
(a) all cash in the Pledged Account shall be deposited in one or more
deposit accounts held by Bank and subject to the terms of this
Agreement.
(b) all investment property in the Pledged Account shall be either:
(i) securities entitlements held in the name of Agent on the
books of one or more securities intermediaries (which may
include the Bank) who hold securities accounts for and in
the name of Agent in the ordinary course of business, or
(ii) certificated securities in the physical possession of
Agent;
The parties agree that this Deposit and Security Agreement constitutes a control
agreement as to cash deposits, securities, and investment property held in the
Pledged Account.
As used in this Section 12, the terms "investment property,"
"securities," "securities entitlement," "securities intermediary," and "control
agreement" have the meaning set forth in the UCC.
The foregoing instructions may be modified in writing by Owner, with the
written consent of FMC.
For purposes of this Agreement, the parties confirm and agree as follows:
(A) The Bank confirms that it has established the Pledged Account in
accordance with Section 2.
(B) The Bank agrees that the Pledged Account is and will be maintained as a
"securities account" within the meaning of Section 8-501 of the UCC.
(C) The Bank agrees to treat Agent, (acting at the direction of ▇▇▇▇ or Owner
in accordance with the terms of this Agreement), as the entitlement
holder (within the meaning of Section 8-102(a)(7) of the UCC) with
respect to each item of Collateral, including, but
not limited to, all financial assets credited to or carried in the
Pledged Account.
(D) The Bank agrees to treat Agent (acting at the direction of ▇▇▇▇ or Owner
in accordance with the terms of this Agreement) as the person entitled to
exercise the rights that comprise any financial assets credited to or
carried in the Pledged Account.
(E) The Bank agrees that all Collateral properly identified and delivered or
transferred to the Bank pursuant to this Agreement will be promptly
credited to the Pledged Account.
(F) All securities (or other investment property or financial assets credited
to the Pledged Account) credited to the Pledged Account, if any, shall be
registered in the name of the Agent or its nominee, indorsed to the Agent
or its nominee or in blank or credited to another securities account
maintained in the name of the Agent, PROVIDED, HOWEVER, that such
registration, indorsement or maintenance shall in each case be in the
name of the Agent on behalf of the Agent (for the benefit of ▇▇▇▇ or
Owner in accordance with the terms of this Agreement).
(G) The Bank confirms that it is a "securities intermediary" as defined in
Section 8-102(a)(14) of the UCC and a "Securities Intermediary" as
defined in 31 C.F.R. 357.2 with respect to the Pledged Account.
(H) Upon the receipt of the Collateral by the Agent, the Agent hereby agrees,
either to indicate by book entry that such Collateral has been credited
to and is carried in the Pledged Account or accept such Collateral for
credit to the Pledged Account.
(I) The parties hereto agree that each item of Collateral (other than cash)
credited to or carried in the Pledged Account shall be treated as a
financial asset under Articles 8 and 9 of the UCC.
(J) If at any time the Bank shall receive an entitlement order or any other
order from Agent (acting in accordance with the terms of this Agreement)
relating to the Pledged Account or any financial asset credited thereto
or carried therein or any other Collateral, the Bank agrees that it shall
comply with such entitlement order or other order without further consent
of any other person.
(K) The parties hereto agree that Bank shall have sole dominion and control
of all of the Collateral, including but not limited to all cash,
financial assets and all security entitlements of Agent, credited to the
Pledged Account. The Bank agrees that it shall take all entitlement
orders and other directions and instructions with respect to the Pledged
Account or any financial asset credited thereto or required to be
credited thereto solely from the Agent and that it will not transfer or
release the Collateral to any other person, except in accordance with an
entitlement order from Agent (acting in accordance with the terms of this
Agreement).
13. TERMINATION OF SECURITY INTERESTS. This Deposit and Security
Agreement and the security interests under this Deposit and Security Agreement
shall terminate when all
amounts due and owing on account of, and all obligations and liabilities of ▇▇▇▇
in respect of, the Secured Obligations shall have been fully performed,
satisfied, and paid as provided in this Deposit and Security Agreement as
certified to the Agent in writing by the Owner. At such time, Agent shall
promptly reassign and deliver to ▇▇▇▇, without recourse or representation,
against TERI's receipt, all Collateral then held by Agent. ▇▇▇▇ shall prepare
and Agent shall, upon receipt of written request of ▇▇▇▇, execute and return to
▇▇▇▇ for filing, at TERI's expense, termination statements in respect of any
financing statements filed under this Deposit and Security Agreement. The
security interests hereunder shall terminate as to all Collateral lawfully
withdrawn by or paid to ▇▇▇▇ hereunder, upon the occurrence of such withdrawal
or payment.
14. REPRESENTATIONS AND WARRANTIES.
(a) Each party, with respect to itself, represents and warrants that:
(i) The making and performance of this Deposit and Security
Agreement and the activities contemplated hereby have been
duly authorized by all necessary corporate action and do
not and will not:
(A) violate any provision of law, or any regulation,
order, decree, writ or injunction, or any provision
of such party's charter or bylaws; or
(B) violate or result in the breach of, or constitute a
default or require any consent under, any agreement
or instrument by which it or any of its property may
be bound or affected; and
(ii) This Deposit and Security Agreement is the legal, valid and
binding obligation of such party, enforceable in accordance
with the terms hereof.
(iii) There is no pending or threatened litigation that would, if
resolved adversely to such party, adversely impact such
party's ability to perform any of its obligations under
this Deposit and Security Agreement or the Guaranty
Agreement.
(b) ▇▇▇▇ represents and warrants that, except for the security
interests of Agent created under this Deposit and Security
Agreement, ▇▇▇▇ is and will be the owner of the Collateral,
whenever acquired or arising, free and clear of all liens, security
interests, claims, encumbrances, charges, set-offs, defenses, and
counterclaims.
(c) The foregoing representations and warranties are subject to (i) the
exercise of judicial discretion in accordance with the general
principles of equity; (ii) the valid exercise of the police powers
of the several states of the United States of America and of the
constitutional powers of the United States of America and
(iii) bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting creditor's rights generally.
15. COVENANTS OF ▇▇▇▇. ▇▇▇▇ agrees and covenants with Owner and FMC as
follows:
(a) MAINTENANCE AND USE OF COLLATERAL. ▇▇▇▇ shall not permit the
Collateral to be used in violation of the Guaranty Agreement or
this Deposit and Security Agreement.
(b) TAXES. ▇▇▇▇ shall, if so obligated, pay and discharge when due all
taxes, assessments, license or permit fees, levies, and other
charges upon the Collateral, and ▇▇▇▇ shall, if so obligated, also
pay and discharge when due all other taxes, levies, or assessments
relating to its business which, if unpaid, might give rise to any
penalty, security interest, lien, charge, levy, assessment, or
encumbrance in, on or against the Collateral. The Collateral and
all income and/or proceeds of the Collateral shall be, and be
treated by ▇▇▇▇ as being, the property of ▇▇▇▇, and ▇▇▇▇ shall
report the Collateral and all such proceeds as its sole property
until, unless and except to the extent any of the Collateral is
paid and transferred to Owner pursuant to the Guaranty Agreement
and this Deposit and Security Agreement. If any amounts are paid by
FMC to Agent under Section 11(q) hereof with respect to (i) any
taxes or assessments legally imposed on ▇▇▇▇, or (ii) any amounts
▇▇▇▇ is legally obligated to pay the Agent under the Guaranty
Agreement or this Agreement, ▇▇▇▇ will promptly reimburse FMC for
all such amounts.
(c) NO ENCUMBRANCE. Except as otherwise expressly permitted in this
Deposit and Security Agreement, ▇▇▇▇ shall not sell, assign,
transfer, pledge, hypothecate, or otherwise dispose of or encumber
any of the Collateral or any interest therein until all of the
Secured Obligations are fully satisfied. ▇▇▇▇ shall protect and
defend the Collateral from and against any and all claims, demands,
or legal proceedings brought or asserted by any party other than
Agent.
(d) MAINTENANCE OF SECURITY INTEREST. ▇▇▇▇ agrees that it shall do all
things necessary to preserve and maintain the security interests of
Agent under this Deposit and Security Agreement as a first priority
lien in the Collateral and shall not permit the creation of any
other lien, charge, security interest, or encumbrance in the
Collateral. ▇▇▇▇ agrees that it shall execute and if necessary
deliver to Agent for execution and ▇▇▇▇ shall file or record, or
cause to be filed or recorded, such notices, financing statements,
continuation statements, certificates of title, and other
documents, and shall deliver to Agent upon request therefor such
securities, agreements, writings, documents, certificates,
instruments, or other intangibles, as Agent reasonably deems
necessary from time to time to perfect and maintain the perfection
of the security interests of Agent under this Deposit and Security
Agreement. All
documents which are being filed or recorded shall be prepared by
and in form and substance satisfactory to FMC. Agent, FMC or ▇▇▇▇
shall have the right to file this Deposit and Security Agreement
and any financing statement reflecting the content of this
Agreement for record in any governmental office.
(e) RECORDS, STATEMENTS, AND RELATED DOCUMENTS. ▇▇▇▇ agrees:
(i) when reasonably requested to do so by Agent, Owner or FMC,
to prepare and deliver to Agent, Owner and FMC a schedule
in form satisfactory to Agent, certified by an authorized
officer of ▇▇▇▇, listing all Collateral and the location
thereof;
(ii) to keep accurate and complete records at all times in
respect of the Collateral and to deliver to Agent, Owner
and FMC copies of such records and such other information
regarding the Collateral which Agent, Owner or FMC may
reasonably request; and
(iii) that at any reasonable time during TERI's normal business
hours, and after reasonable notice (at least three (3)
business days), Agent, Owner, FMC or their authorized
representatives may enter the premises of ▇▇▇▇ to inspect
and copy the books and records of ▇▇▇▇, all of which
records shall be kept at the principal offices of ▇▇▇▇,
except as permitted under paragraph (f) below. Any such
examination or inspection shall be at the expense of the
party requesting such examination or inspection, unless
there is then existing a default under this Deposit and
Security Agreement, or unless the examination or inspection
is the result of a notice (other than a notice of name
change) given by ▇▇▇▇ pursuant to paragraph (g) below, or
unless the examination or inspection uncovers a default not
cured within thirty (30) days hereunder, in which case such
examination or inspection shall be at TERI's expense.
(f) LOCATION. The principal office of ▇▇▇▇ is located at ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, and all books
of account and records relating to the collateral and TERI's
business are located at TERI's principal office. ▇▇▇▇ shall not,
without giving Agent and FMC at least ten (10) days prior written
notice, change the location of any of the Collateral or the
location at which it does business, including, without limitation,
the location at which any books of account or records relating to
the Collateral and TERI's business are kept.
(g) NOTICE. ▇▇▇▇ shall promptly notify Agent, Owner and FMC of any
change in TERI's name or any physical loss, destruction, or damage
to any material portion of the Collateral. ▇▇▇▇ shall also promptly
notify Agent, Owner and FMC of any default hereunder. In the event
of a name change, ▇▇▇▇ shall
take such actions, if any, as shall be necessary to maintain the
security interests of Agent hereunder.
(h) FURTHER INFORMATION. ▇▇▇▇ shall execute and deliver, or cause to be
executed and delivered, to Agent, in a form satisfactory to Agent,
TERI's certification of its tax identification number, its
direction under 17 C.F.R 240.146.2 and such other documents as
Agent shall reasonably request to perform its obligations
hereunder.
(i) Notwithstanding any term of Section 15 (or any other term of this
Deposit and Security Agreement) to the contrary:
(i) upon receipt of any notice described in Section 15(f) or (g),
the Agent shall have no obligation to take any action other than to
forward such information to the Owner and FMC;
(ii) upon receipt of any other information or notice described in
or pursuant to Section 15 (other than as described in Section 15(i)
above), the Agent shall be under no duty or obligation to examine
or take any action with respect thereto other than to retain such
information in order to make it available to Owner upon their
written request; and
(iii) the Agent is under no duty (A) to request any written
statements pursuant to Section 15(e)(i) or (B) to request any
action, including any filings or recordings, pursuant to Section
15(d).
(j) Owner, FMC and Agent shall coordinate their requests to ▇▇▇▇ for
inspections, documents and other actions under this Section 15 in
order to avoid placing unreasonable burden upon ▇▇▇▇.
16. WAIVER. No delays or omissions by either party in exercising or
enforcing any of its respective rights, remedies, powers, privileges and
discretions ("Rights and Remedies") shall operate as or constitute a waiver of
any such Rights and Remedies. No waiver by a party of any default under this
Deposit and Security Agreement or the Guaranty Agreement shall operate as a
waiver of any other default under the Deposit and Security Agreement. No single
or partial exercise by a party of any of its Rights and Remedies shall preclude
the other of further exercise of such Rights and Remedies. No waiver or
modification of a party's Rights and Remedies on any one occasion shall be
deemed a waiver on any subsequent occasion, nor shall it be deemed a continuing
waiver. All Rights and Remedies shall be cumulative and not alternative or
exclusive, and a party may exercise any such Rights and Remedies or any of them
at such time or times and in such order of preference as that party in its sole
discretion may determine.
17. [Intentionally Omitted.]
18. CONFIDENTIALITY. The parties acknowledge that this Deposit and
Security Agreement contains confidential information and agree not to disclose
any of the terms and
conditions relating to this Deposit and Security Agreement and the Pledged
Account without the prior express written consent of the others. The provisions
of the foregoing sentence to the contrary notwithstanding, any such information
may be disclosed to any employees, officers, directors or representatives of the
parties to effect the purpose of the Bank of America GATE Education Loan
Programs and to the attorneys and accountants of the parties on a confidential
basis. This provision shall, further, not be construed to prohibit the
disclosure of any information relating to this Deposit and Security Agreement
(a) that is now or in the future becomes public information, (b) as may be
required by applicable law or this Deposit and Security Agreement or the
Guaranty Agreement, (c) to the underwriters and rating agencies, their
employees, agents and attorneys and to such others as Owner may determine
necessary (including regulators and potential investors in a private or public
offering) in connection with the sale, securitization or other financing of any
of the Loans, and (d) as necessary to perfect or enforce the security interest
in the Collateral granted hereunder.
19. CHOICE OF LAW. This Deposit and Security Agreement shall be
governed and construed in accordance with New York law, without regard to
principles of conflict of laws. The parties each consent to jurisdiction in the
appropriate Court Department for Suffolk County, located in Boston,
Massachusetts, and the United States District Court for the District of
Massachusetts, as judicial forums within which any action by or against the
Agent (but not any other party) to enforce the provisions hereof or any disputes
arising under this Deposit and Security Agreement may be brought. It is
understood and agreed that, should any dispute arise with respect to the
delivery, ownership, right of possession, and/or disposition of the Pledged
Account, or should any claim be made upon the Agent or the Pledged Account by a
third party, the Agent upon receipt of notice of such dispute or claim is
authorized and shall be entitled (at its sole option and election) to retain in
its possession without liability to anyone, all or any of said Pledged Account
until such dispute shall have been settled either by the mutual written
agreement of the parties involved or by a final order, decree or judgment of a
court in the United States of America, the time for perfection of an appeal of
such order, decree or judgment having expired. The Agent may, but shall be under
no duty whatsoever to, institute or defend any legal proceedings which relate to
the Pledged Account.
20. SEVERABILITY. If at any time one or more provisions of this Deposit
and Security Agreement is or becomes invalid, illegal or unenforceable in whole
or in part, the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
21. ASSIGNMENT. This Deposit and Security Agreement may not be assigned
by any party without the others' prior express written consent, except as may be
required pursuant to Section 4 or permitted pursuant to this Section 21.
22. HEADINGS. The section headings used in this Deposit and Security
Agreement are for convenience of reference only and are not to affect the
construction or to be taken into consideration in interpreting this Deposit and
Security Agreement.
23. AMENDMENT. This Deposit and Security Agreement may be amended or
modified only by the written agreement of ▇▇▇▇, Agent, on behalf of Owner, and
FMC.
24. NOTICES. All notices under this Deposit and Security Agreement
shall be sent by any means requiring receipt signature, or if by facsimile
confirmed by first-class mail, postage or other delivery charge prepaid to
▇▇▇▇:
The Education Resources Institute, Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Senior Vice President
and if such notice regards a default hereunder, with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Strong, LLP
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Owner:
▇▇▇▇▇ ▇▇▇▇▇▇
Bank of America
National Student Lending Group
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
With a copy to:
▇▇▇▇ ▇▇▇▇▇
Bank of America
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FMC:
The First Marblehead Corporation
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Chairman, CEO
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
and if such notice regards a default hereunder, with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Agent:
- by first class mail, to:
State Street Bank and Trust Company
Global Investors Services Group
Corporate Trust
▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: THE EDUCATION RESOURCES INSTITUTE,
INC. DEPOSIT AND SECURITY AGREEMENT
- if by fax addressed as
above and sent to
the following telecopy
number:
Fax: ▇▇▇-▇▇▇-▇▇▇▇
- if by hand, certified or
registered mail or overnight
courier or delivery, to:
State Street Bank and Trust Company
Global Investors Services Group
Corporate Trust, ▇▇▇ ▇▇▇▇▇
▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: THE EDUCATION RESOURCES INSTITUTE INC.
DEPOSIT AND SECURITY AGREEMENT
Any party may, by notice to the other party in accordance with this section,
designate a different address for notices thereafter under this Deposit and
Security Agreement.
25. NON-BUSINESS DAYS. Any action required or permitted to be taken or
done hereunder on a day which is not a business day in Boston, Massachusetts may
be taken or done on the next business day with the same effect as if taken or
done on such non-business day.
26. COUNTERPARTS. This Deposit and Security Agreement may be executed
in multiple counterparts, each of which shall be deemed an original, but all of
which shall together be deemed a single agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Deposit and
Security Agreement to be executed by their respective officers, being first duly
authorized, as of the day and year first above written.
THE EDUCATION RESOURCES INSTITUTE, INC.
By:
--------------------------
BANK OF AMERICA, N.A.
By:
--------------------------
THE FIRST MARBLEHEAD CORPORATION
By:
--------------------------
STATE STREET BANK AND TRUST COMPANY
as Agent and as Bank
By:
--------------------------
Exhibits to Deposit and Security Agreement
Exhibit 1 - Remittance of Guaranty Fees and/or Recoveries Letter
Exhibit 2 - Payment of Guaranty Claims Direction Letter
Exhibit 3 - ▇▇▇▇ Investment Policy
Exhibit 4 - Transferred Pledged Account Letter
Exhibit 5 - Withdrawal Request
Exhibit 6 - Guaranty Agreement
Exhibit 7 - Fee Schedule
EXHIBIT 1
REMITTANCE OF GUARANTY FEES AND/OR RECOVERIES LETTER
[OWNER LETTERHEAD (or Owner Disbursing Agent) OR ▇▇▇▇ IF RECOVERIES FROM ▇▇▇▇]
STATE STREET BANK AND TRUST CO.
2 AVE. DELAFAYETTE ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: ▇▇▇▇/FMC Pledged Account #
Ladies and Gentlemen:
Reference is made to (i) the Deposit and Security Agreement (the
"Deposit and Security Agreement"), dated as of ___, 2001, by and among STATE
STREET BANK AND TRUST COMPANY, as Agent Bank (the "Agent"), THE EDUCATION
RESOURCES INSTITUTE, INC., ("▇▇▇▇"), THE FIRST MARBLEHEAD CORPORATION ("FMC")
and Bank of America, N.A. ("OWNER"). Capitalized terms used and not otherwise
defined herein have the respective meanings ascribed to such terms in the
Deposit and Security Agreement.
In accordance with the Deposit and Security Agreement, The following
amounts will be wired to the Pledged Account:
1. $___________________ Total Guaranty Fees*
*ATTACHED IS A LIST OF EACH LOAN NAME, LOAN NUMBER, AND AMOUNT
ASSOCIATED WITH THIS GUARANTY FEE REMITTANCE.
2. $____________________ Total Recovery**
** ATTACHED IS A LIST OF EACH LOAN NAME, LOAN NUMBER, AND AMOUNT
ASSOCIATED WITH THIS RECOVERY REMITTANCE.
$_____________________ Total Amount wired to Agent
The above-referenced funds will be wired to the Agent using the following wire
instruction:
STATE STREET BANK & TRUST
COMPANY
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ABA # ▇▇▇-▇▇▇-▇▇▇
A/C# 5984-8069
ATTENTION: ▇▇▇▇/FMC DEPOSIT ACCOUNT
SEI ###### - 000
Please contact me at [OWNER CONTACT TELEPHONE NUMBER (OR ▇▇▇▇] should you have
any questions regarding this request.
AUTHORIZED SIGNATURE
[OWNER/▇▇▇▇]
EXHIBIT 2
PAYMENT OF GUARANTY CLAIMS (OR REFUND OF GUARANTY FEES) DIRECTION LETTER
[▇▇▇▇ LETTERHEAD]
STATE STREET BANK AND TRUST CO.
2 AVE. DELAFAYETTE ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: ▇▇▇▇/FMC Pledged Account #
Ladies and Gentlemen:
Reference is made to (i) the Deposit and Security Agreement (the
"Deposit and Security Agreement"), dated as of ___, 2001, by and among STATE
STREET BANK AND TRUST COMPANY, as Agent Bank (the "Agent"), THE EDUCATION
RESOURCES INSTITUTE, INC., ("▇▇▇▇"), THE FIRST MARBLEHEAD CORPORATION ("FMC")
and Bank of America, N.A. ("OWNER"). Capitalized terms used and not otherwise
defined herein have the respective meanings ascribed to such terms in the
Deposit and Security Agreement.
In accordance with the Deposit and Security Agreement, Please remit
$___________________ in Guarantee Claims [refund of guaranty fees] to Owner;
PLEASE USE THE FOLLOWING WIRE INSTRUCTIONS:
[Bank Name]
[Bank Location]
ABA #
A/C#
ATTENTION: ▇▇▇▇/FMC Guarantee Claims
Comments:
In addition, please fax this direction letter along with the attached
breakdown, which lists the Loan(s), associated with the above-referenced
claim funds to:
[OWNER] Attention: [Name]; and [SERVICER] Attention: [Name]:
Fax Number: ____________ Fax Number: _____________
Please contact me at [▇▇▇▇ CONTACT TELEPHONE NUMBER] should you have any
questions regarding this request.
AUTHORIZED SIGNATURE
▇▇▇▇
Enc
EXHIBIT 3
INVESTMENT POLICY
The Education Resources Institute, Inc.
Investment Policy
▇▇▇▇ management invests in the following categories of instruments:
SHORT-TERM INVESTMENTS
Certificates of Deposit
Repurchase Agreements
U.S. Treasury Bills and Notes
Commercial Paper (AA or better)
Money Market Funds
LONG-TERM INVESTMENTS
U.S. Treasury Bonds and Notes
Federal Agency Issues
Limitations on the term, quality, and aggregate amounts of investments are as
follows:
Short-term investments are those of a period less than two years. Long-term
investments are two to ten years in duration. The mix of short and
long-term investments shall be determined by staff according to fluctuating
cash flow demands and investment opportunities.
Of that portion of funds deemed appropriate for long-term investment, no
more than 50 percent shall be invested beyond five years.
Limits on investment in Certificates of Deposit are:
A maximum of $500,000 invested in any one bank. Such bank must have ratio
of reserves and retained earning which meet total capital ratio standards
and must be insured by the Federal Deposit Insurance Corporation.
A maximum of $100,000 invested in any one bank that does not meet the above
note requirement, but still must be FDIC insured.
Limits on investments in Repurchase Agreements are:
A maximum of $500,000 invested in any one bank. Such bank must have ratio
of reserves and retained earnings which meet total capital ratio standards
and must be insured by the Federal Deport Insurance Corporation.
Money market funds may be used to maximize returns on corporate operating
accounts but not for long-term investment purposes.
EXHIBIT 4
TRANSFERRED PLEDGED ACCOUNT LETTER
[FMC LETTERHEAD]
STATE STREET BANK AND TRUST CO.
2 AVE. DELAFAYETTE ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Re: ▇▇▇▇/FMC Pledged Account #
Ladies and Gentlemen:
Reference is made to (i) the Deposit and Security Agreement (the
"Deposit and Security Agreement"), dated as of ___, 2001, by and among STATE
STREET BANK AND TRUST COMPANY, as Agent Bank (the "Agent"), THE EDUCATION
RESOURCES INSTITUTE, INC., ("▇▇▇▇"), THE FIRST MARBLEHEAD CORPORATION ("FMC")
and Bank of America, N.A. ("OWNER"). Capitalized terms used and not otherwise
defined herein have the respective meanings ascribed to such terms in the
Deposit and Security Agreement.
In accordance with the Deposit and Security Agreement, Please remit
$___________________ in Transferred Pledged Account funds to [SECURITIZATION
TRUSTEE NAME], the Securitization Owner Trustee as follows:
WIRE INSTRUCTIONS:
[Bank Name]
[Bank Location]
ABA #
A/C#
ATTENTION: Transferred ▇▇▇▇/FMC Pledged Account Funds
Comments:
In addition, attached is a list of each loan name, loan number, and amount
associated with this transfer remittance. This letter as well as the attached
list should be faxed to [SECURITIZATION TRUSTEE NAME] at [SECURITIZATION TRUSTEE
FACSIMILE NUMBER] prior to the funds being wired.
Please contact me at [FMC CONTACT TELEPHONE NUMBER] should you have any
questions regarding this request.
AUTHORIZED SIGNATURE
FMC
Enc
EXHIBIT 5
REQUEST FOR REIMBURSEMENT OF INCOME TAX OR OTHER TAX AMOUNTS
[▇▇▇▇ LETTERHEAD]
STATE STREET BANK AND TRUST CO.
2 AVE. DELAFAYETTE ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
BANK OF AMERICA, N.A.
NATIONAL STUDENT LENDING GROUP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
ATTENTION: ▇▇▇▇▇ ▇▇▇▇▇▇
Re: ▇▇▇▇/FMC Pledged Account #
Ladies and Gentlemen:
Reference is made to (i) the Deposit and Security Agreement (the
"Deposit and Security Agreement"), dated as of ___, 2001, by and among STATE
STREET BANK AND TRUST COMPANY, as Agent Bank (the "Agent"), THE EDUCATION
RESOURCES INSTITUTE, INC., ("▇▇▇▇"), THE FIRST MARBLEHEAD CORPORATION ("FMC")
and OWNER. Capitalized terms used and not otherwise defined herein have the
respective meanings ascribed to such terms in the Deposit and Security
Agreement.
In accordance with section 3(d)(iv) of the Deposit and Security
Agreement, this is to inform you that ▇▇▇▇ has been assessed and has paid the
sum of $______________________________ in income or excise taxes with respect to
income earned on the Pledged Account. We hereby request reimbursement of such
amount to be sent as follows:
PLEASE USE THE FOLLOWING WIRE INSTRUCTIONS:
[Bank Name]
[Bank Location]
ABA #
A/C#
ATTENTION: ▇▇▇▇
Comments:
In accordance with the Deposit and Security Agreement, we are
forwarding a copy of this request to FMC. We have also enclosed
documentation to support this request.
Please contact me at [▇▇▇▇ CONTACT TELEPHONE NUMBER] should you have any
questions regarding this request.
AUTHORIZED SIGNATURE
▇▇▇▇
Enc
EXHIBIT 6
[Copy of Guaranty Agreement]
To be provided
EXHIBIT 7
To
Deposit and Security Agreement
Agent's Compensation
1. [**] Dollars ($[**]) for each deposit to the Pledged Account (regardless of
the total amount deposited and the number of loans related to such
deposit).
2. [**] Basis Points [**]%) annually multiplied by the balance in the Pledged
Account, payable monthly based on the average of the first day's and last
day's balance in the Pledged Account.
3. Legal fees and other actual out of pocket expenses paid to third parties
shall be reimbursed at cost.