Exhibit 10.2
PURCHASE AND SALE AGREEMENT
This PURCHASE AND SALE AGREEMENT dated as of August 17, 2001 (as
amended, supplemented or otherwise modified from time to time, this
"Agreement"), is among GRAD PARTNERS, INC., a Delaware corporation ("Seller"),
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FIFTH THIRD BANK, not in its individual capacity but solely as eligible lender
trustee for the benefit of Seller (in such capacity, the "Grad Partners
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Trustee"), under a trust agreement, dated as of August 17, 2001 (the "Grad
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Partners Trust Agreement"), between Seller and the Grad Partners Trustee, GRAD
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PARTNERS PREMIER, LLC, a Delaware limited liability company, as purchaser
("Purchaser") and FIFTH THIRD BANK, not in its individual capacity but solely as
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eligible lender trustee ("Eligible Lender Trustee") for the benefit of
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Purchaser, under a Trust Agreement, dated as of August 17, 2001 (the "Trust
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Agreement"), between Purchaser and the Eligible Lender Trustee.
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WITNESSETH:
WHEREAS, Seller is engaged in a program of originating, purchasing and
financing Student Loans, which include FFEL Loans, HEAL Loans and Consumer
Education Loans;
WHEREAS, Purchaser intends to engage in a program of purchasing and
financing Student Loans, including FFEL Loans, HEAL Loans and Consumer Education
Loans;
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, certain Consumer Education Loans, HEAL Loans and FFEL
Loans in accordance with the terms and conditions of this Agreement; and
WHEREAS, the Grad Partners Trustee holds legal title to, and serves as
Grad Partners Trustee with respect to, the Student Loans on behalf of the
Seller; and
WHEREAS, the Eligible Lender Trustee holds legal title to, and serves
as Eligible Lender Trustee with respect to, the Student Loans on behalf of the
Purchaser.
NOW THEREFORE, in consideration of the foregoing premises and mutual
covenants herein contained, the parties agree as follows:
ARTICLE I
DEFINITIONS
Unless otherwise indicated, certain terms that are capitalized and used
in this Agreement are defined in Appendix A to the Indenture, dated as of August
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17, 2001 (as amended, amended
and restated supplemented or otherwise modified from time to time, the
"Indenture"), among Purchaser, Market Street Funding Corporation, as noteholder
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(the "Noteholder"), PNC Bank, National Association, as administrator for
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Noteholder (the "Administrator") and Fifth Third Bank, as eligible lender
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trustee (in such capacity, and together with any successor thereto in such
capacity, the "Eligible Lender Trustee") and as indenture trustee (in such
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capacity, and together with any successor thereto in such capacity, the
"Indenture Trustee"). The following words and terms used in this Agreement shall
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have the following meanings:
"Aggregate Purchase Price" means with respect to a Portfolio of Student
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Loans, the aggregate of the Purchase Prices for each Student Loan within such
Portfolio.
"Eligible Lender Trustee" has the meaning set forth in the preamble to
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this Agreement.
"Grad Partners Trustee" has the meaning set forth in the preamble to
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this Agreement.
"Grad Partners Trustee Agreement" has the meaning set forth in the
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preamble to this Agreement.
"Material Adverse Effect" means, with respect to any event or
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circumstance, a material adverse effect on:
(i) the business, assets, financial condition, operations or
prospects of Seller;
(ii) the ability of Seller to perform its obligations under
this Agreement;
(iii) the validity or enforceability as against Seller of this
Agreement;
(iv) the status, existence, perfection, priority or
enforceability of Purchaser's interest in the Student Loans sold
hereunder; or
(v) the collectibility or enforceability of any Student Loans
sold hereunder.
"Portfolio" means a group of Student Loans sold to Eligible Lender
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Trustee by the Grad Partners Trustee pursuant to Section 2.1 hereof on a Sale
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Date.
"Purchase Price" means, with respect to (a) the purchase of any FFEL
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Loan or HEAL Loan, an amount not to exceed the lesser of (i) 105.85% of the
outstanding Principal Balance of such FFEL Loan or HEAL Loan plus accrued and
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unpaid interest thereon or (ii) the Related Premium Amount with respect to any
such FFEL Loan or HEAL Loan; (b) the purchase of any Consumer Education Loan
which has the benefit of a Consumer Education Loan Guarantee Agreement the
Guarantor of which is TUITIONGard, an amount not to exceed the lesser of (i) the
outstanding Principal Balance of such Consumer Education Loan plus accrued and
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unpaid interest thereon or (ii) such Consumer Education Loan's actual purchase
price if purchased at a
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discount by Issuer; or (c) the purchase of any other type of Consumer Education
Loan, in an amount not to exceed the lesser of (i) 98% of the outstanding
Principal Balance of such Consumer Education Loan plus accrued and unpaid
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interest thereon or (ii) such Consumer Education Loan's actual purchase price,
if purchased by Seller at a discount; it being understood that if such Consumer
Education Loan has an initial deposit into the Reserve Account in an amount
equal to at least 2% of the Principal Balance thereof (or such greater amount as
requested by the Administrator at such time), the purchase price with respect
thereto may be made in an amount agreed to at such time between the
Administrator and the Purchaser (but not to exceed 100% of the Principal Balance
thereof) plus accrued and unpaid interest thereon.
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"Purchaser" has the meaning set forth in the preamble to this
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Agreement.
"Sale Date" means any date as of which Eligible Lender Trustee (on
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behalf of the Purchaser), in accordance with the terms of Section 2.3, purchases
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a Portfolio of Student Loans from the Grad Partners Trustee (on behalf of the
Seller).
"Seller" has the meaning set forth in the preamble to this Agreement.
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"Trust Agreement" has the meaning set forth in the preamble to this
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Agreement.
ARTICLE II
STUDENT LOAN SALES
2.1 [Reserved.]
2.2 Student Loan Sales. On the terms and subject to the conditions of
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this Agreement (including Article III), and in express reliance upon the
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representations, warranties and covenants set forth herein, the Seller and the
Grad Partners Trustee may from time to time, in the sole discretion of the
Seller, sell all of the right, title and interest of each such Person,
respectively, in certain Portfolios of Student Loans plus accrued and unpaid
interest thereon, together with all Related Security to Eligible Lender Trustee
(for the benefit of the Purchaser), and Eligible Lender Trustee may, at the
direction of and in the sole discretion of the Purchaser, purchase such
Portfolios of Student Loans as of the related Sale Dates therefor, from time to
time, prior to the Termination Date as requested by Seller in accordance with
Section 2.3 and in each case in consideration of the Aggregate Purchase Price
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for such Portfolio as of the opening of business on the applicable Sale Date.
Such Aggregate Purchase Price shall be paid in cash to the extent the Purchaser
has cash available therefor.
2.3 Requests for Additional Student Loan Sales. Seller may propose that
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Eligible Lender Trustee purchase, at the direction of Purchaser, additional
Portfolios of Student Loans on written notice from Seller to Purchaser received
by Purchaser not later than 11:00 a.m. (New York City
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time) on the second Business Day prior to the day of such proposed purchase and
sale. Each such notice of proposed purchase and sale shall be in the form of
Exhibit A and shall have attached thereto a list of the Student Loans to be
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included in such Portfolio.
2.4 [Reserved.]
2.5 True Sales. (a) Each of the Seller and the Purchaser intend the
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transactions hereunder to constitute true sales of the Student Loans and Related
Security with respect thereto by the Grad Partners Trustee (on behalf of the
Seller) to the Eligible Lender Trustee (on behalf of the Purchaser) providing
the Eligible Lender Trustee with all of the Grad Partners Trustee's right, title
and interest in and to the Student Loans and Related Security with respect
thereto, and no party hereto intends the transactions contemplated hereunder to
be, or for any purpose to be characterized as, a loan from the Seller to the
Purchaser.
(b) In the event (but only to the extent) that the conveyance of
Student Loans and the Related Security with respect thereto hereunder is
characterized by a court, governmental authority or regulatory body as a loan
rather than a sale or contribution, the Seller and the Grad Partners Trustee
shall be deemed hereunder to have granted to the Purchaser and the Eligible
Lender Trustee, and the Seller and the Grad Partners Trustee hereby assigns and
grants to the Purchaser and the Eligible Lender Trustee, a security interest in
all of their right, title and interest now or hereafter existing in, to and
under all Student Loans and the Related Security with respect thereto.
ARTICLE III
SALE/PURCHASE OF STUDENT LOANS
3.1 Conditions to Initial Purchase. The purchase of the initial
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Portfolio hereunder is subject to the condition precedent that Purchaser shall
have received, on or before the date hereof, the following, and each in form,
substance and date satisfactory to Purchaser:
(a) A copy of the resolutions of the Board of Directors of Seller
authorizing the transactions contemplated hereby, certified by the Secretary or
Assistant Secretary of Seller;
(b) Executed financing statements on Form UCC-1 naming each of the
Seller and the Grad Partners Trustee as debtor and Purchaser, as secured party
and the Indenture Trustee, for the benefit of the Secured Parties, as the
assignee of the Seller, in proper form for filing in the office in which the
filings are necessary or, in the opinion of Purchaser, desirable under the UCC
or any comparable law of all appropriate jurisdictions to perfect the interest
of Purchaser in the Student Loans sold hereunder.
(c) A search report provided in writing to Purchaser by the applicable
filing offices, listing all effective financing statements that name Seller and
the Grad Partners Trustee as debtor
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and that are filed in the jurisdictions where Seller and the Grad Partners
Trustee has its principal place of business, together with copies of such
financing statements; and
(d) Evidence (i) of the execution and delivery by each of the parties
thereto of each of the other Transaction Documents to be executed and delivered
in connection herewith and (ii) that each of the conditions precedent to the
execution, delivery and effectiveness of the other Transaction Documents has
been satisfied.
3.2 Conditions to all Purchases. All purchases hereunder (including the
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initial purchase) and Purchaser's obligations to pay the Aggregate Purchase
Price therefor shall be subject to the following conditions precedent:
(a) all representations, warranties and statements by or on behalf of
Seller contained in this Agreement shall be true and correct on the applicable
Sale Date and Seller shall be in compliance with all agreements and covenants
contained in this Agreement; and
(b) the entire interest of Seller in each Student Loan in the
Portfolio shall have been duly assigned by endorsement to Purchaser, such
endorsement to be without recourse except as provided herein, and all Student
Loan Notes and all other books, records and documents evidencing such Student
Loans have been delivered to the applicable Sub-Servicer in accordance with the
applicable Servicing Agreement.
By accepting the Aggregate Purchase Price related to the sale of any
Portfolio, Seller shall be deemed to have certified that the conditions
contained in clauses (a) and (b) of this Section 3.2 have been satisfied.
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3.3 Consummation of Sale and Purchase of Portfolios. To consummate the
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sale and purchase of a Portfolio of Student Loans, on or before the applicable
Sale Date, Seller shall deliver to Purchaser such instruments of transfer,
including a ▇▇▇▇ of sale, dated the applicable Sale Date, and a blanket
endorsement in the form attached hereto as Exhibit B with respect to the
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Portfolio to be sold. On the applicable Sale Date, the Grad Partners Trustee
shall at the direction of the Seller, sell, transfer and convey to Eligible
Lender Trustee (for the benefit of the Purchaser) all of the Grad Partners
Trustee's right, title and interest in, to and under the Student Loans included
in the Portfolio, all accrued and unpaid interest thereon and the Related
Security therefor free and clear of all Liens (other than Permitted Liens).
Subject to the satisfaction of the conditions set forth in Section 3.2,
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Purchaser shall pay to Seller the Aggregate Purchase Price for such Portfolio on
the related Sale Date.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties of Seller. Seller represents and
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warrants as follows:
(a) Organization, Corporate Powers. Seller is a corporation duly
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organized, validly existing and in good standing under the laws of the State of
Delaware, has all necessary corporate power to carry on its present business, is
duly licensed or qualified in all jurisdictions where the nature of its
activities require such licensing or qualifying; and has full power, right and
authority to enter into this Agreement, the other Transaction Documents to which
it is a party and the transactions contemplated hereby and thereby, to sell and
assign Student Loans hereunder and to perform each and all of the matters and
things herein and therein provided.
(b) Corporate Authority, etc. The execution, delivery and performance
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by Seller of this Agreement and the other Transaction Documents to which it is,
or will be, a party and the transactions contemplated hereby and thereby have
been duly authorized by all necessary corporate action and this Agreement, and
such Transaction Documents constitute the legal, valid and binding obligations
of Seller enforceable against Seller in accordance with their terms, except to
the extent that enforceability may be limited by bankruptcy, insolvency,
reorganization or other laws affecting creditors' rights generally and general
principles of equity, regardless of whether such enforceability is considered in
a proceeding in equity or law.
(c) Compliance with Laws and Contracts. The execution, delivery and
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performance by Seller of this Agreement and the other Transaction Documents to
which Seller is a party do not and will not (i) violate any provision of any
law, rule, regulation, order, writ, judgment, injunction, decree, determination
or award to which Seller or its property is subject, or of the articles of
incorporation of Seller; (ii) result in a breach of or constitute a default
under the provisions of any indenture, loan or credit agreement or any other
agreement, lease or instrument to which Seller may be or is subject or by which
it, or its property, is bound; or (iii) result in, or require, the creation or
imposition of any Lien on or with respect of any of the properties of Seller and
Seller is not in violation of, or in default under, any such law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award or
any such indenture, agreement, lease or instrument.
(d) Governmental Approvals. Seller has obtained all authorizations,
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consents, approvals, licenses, exemptions of or filings or registrations with
all governmental commissions, regulatory bodies, boards, bureaus, agencies and
instrumentalities, domestic or foreign, necessary to the conduct of its
business, or necessary to the valid execution, delivery and performance by
Seller of this Agreement and the other Transaction Documents to which Seller is,
or will be, a party (the "Approvals"), and such Approvals remain in full force
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and effect.
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(e) Litigation. There is no action, suit, proceeding, inquiry or
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investigation at law or in equity or before or by any court, public board or
body pending or, to the knowledge of Seller, which affects, or purports to
affect, the validity or enforceability against Seller of any Transaction
Document to which is a party.
(f) Employee Benefit Plans. All "employee benefit plans" (as such term
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is defined in ERISA) of Seller and each of its ERISA Affiliates (as defined in
ERISA) (individually, a "Plan" and collectively the "Plans") are in compliance
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in all material respects with any applicable provisions of ERISA and the
regulations and published interpretations thereunder, except for compliance
amendments which may be required due to changes in such laws and regulations and
which were not addressed by the latest determination letters and for which the
retroactive amendment period has not expired. No Plan is insolvent or in
reorganization. No proceedings have been instituted to terminate any Plan, and
no conditions exist which would permit the institution of proceedings to
terminate any such Plan.
(g) Perfected Interest. Immediately prior to the sale thereof by
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Seller to Purchaser hereunder, each Student Loan sold to Purchaser hereunder and
the Related Security, is owned by Seller, free and clear of any Lien other than
any Lien created hereby. Except for the filing of the financing statements
referred to in Section 3.1(b), no further action, including any filing or
recording of any document, is necessary in order to establish, protect and
perfect the interest of Purchaser, as a first priority ownership interest in any
applicable jurisdiction, including, without limitation, any purchaser from, or
creditor of, Seller. No financing statement or other instrument similar in
effect covering any of the Student Loans sold hereunder or any interest therein
is on file in any recording office except such as may be filed in favor of the
Purchaser (in connection with this Agreement) or the Indenture Trustee.
(h) Accuracy of Information. All information (including each Monthly
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Report) supplied by, or on behalf of, Seller in writing to Purchaser, the
Indenture Trustee or the Administrator in connection with this Agreement or the
transactions contemplated hereby is true and accurate in all material respects
as of the date thereof stated or certified. No information, exhibit or report
furnished by Seller to the Purchaser, the Indenture Trustee and the
Administrator in connection with this Agreement contained any material
misstatement.
(i) Eligible Student Loans. Each Student Loan sold by Seller to
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Purchaser hereunder was an Eligible Student Loan as of the applicable Sale Date
for such Student Loan. Each FFEL Loan is entitled to full Special Allowance
Payments pursuant to Section 438(b) of the Higher Education Act, as amended.
(j) Financial Statements. The financial statements of Seller for its
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fiscal year ended December 31, 2000, including balance sheets, all examined and
reported on by certified public accountants or other auditors acceptable to the
Administrator, all as heretofore delivered to the Administrator correctly and
fairly present the financial condition of Seller as of such date and the result
of the operations of Seller for such periods, and are in accordance with
generally accepted
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accounting principles consistently applied except as stated in the notes
thereto, and are in accordance with standard accounting procedures of Seller
consistently applied, and (y) there has been no material adverse change in the
condition, financial or otherwise, of Seller since December 31, 2000, from that
set forth in said financial statements.
(k) Margin Regulations. The use of all funds obtained by Seller under
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this Agreement will not conflict with or contravene any of Regulations T, U and
X promulgated by the Board of Governors of the Federal Reserve System from time
to time.
(l) Offices. The chief place of business and chief executive office of
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Seller are located at the address of Seller referred to in Section 5.1(e) (or at
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such other locations, notified to Purchaser and the Administrator in accordance
with Section 5.1(e), in jurisdictions where all action necessary to maintain
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Purchaser's first priority perfected interest in the Student Loans purchased
hereunder has been taken and completed).
(m) No Disclosure Required. Under applicable laws and regulations in
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effect on the date hereof, Seller is not required to file a copy of this
Agreement with the Securities and Exchange Commission or any other governmental
authority.
(n) Capital of Seller. Seller is Solvent.
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(o) Seller Not an Investment Company. Seller is not required to
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register as an "investment company" within the meaning of the Investment Company
Act of 1940, as amended.
(p) Seller Qualifications. Seller possesses all necessary
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qualifications and licenses to enter into Consumer Education Loans in all states
in which it enters into Consumer Education Loans that have been included in the
Collateral.
4.2 Reassignment upon Breach. Each of Seller, Purchaser, the
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Administrator or the Indenture Trustee, as the case may be, shall inform the
others promptly, in writing, upon the discovery of any breach in any material
respects of the representations and warranties made by Seller pursuant to
Section 4.1(g) or (i) or any breach in any material respects of the covenants of
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Seller made pursuant to Section 5.4. Following the occurrence of any such
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breach, the Student Loan as to which such representation and warranty or
covenant relates shall be reassigned to and repurchased by the Seller (or the
Grad Partners Trustee on its behalf) (a "Reassignment") at such time. In
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consideration of and simultaneously with the reassignment of such Student Loan,
Seller shall deposit to the Collection Account immediately available funds equal
to the unpaid principal balance of such Student Loan, plus accrued and unpaid
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interest thereon, plus any Unamortized Premium thereon (the "Reassignment
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Amount"). Notwithstanding the foregoing, so long as no Event of Default shall
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have occurred and be continuing, during the Revolving Period, Seller may, at its
option in lieu of depositing such Reassignment Amount to the Collection Account
on such date, assign to Eligible Lender Trustee (and upon such assignment,
Purchaser and Eligible Lender Trustee shall pledge to the Indenture Trustee on
such date for inclusion in the Collateral)
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a new Eligible Student Loan in substitution for such Student Loan that would
have a Purchase Price (assuming such new Eligible Student Loan was purchased
pursuant to Section 1.02 of the Indenture on the date of such Reassignment) at
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least equal to the Reassignment Amount, by executing and delivering to Eligible
Lender Trustee an assignment of such Eligible Student Loan and delivering to the
applicable Sub-Servicer, as bailee for the Indenture Trustee, if not already in
its possession, the original Student Loan Note for such Eligible Student Loan.
Purchaser and Eligible Lender Trustee shall execute such documents reasonably
requested by Seller in order to effect such reassignment and to release their
interests therein.
ARTICLE V
GENERAL COVENANTS OF SELLER
5.1 Affirmative Covenants of Seller. From the date hereof until the
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Final Payout Date, Seller will, unless Purchaser and the Administrator shall
otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply in all material respects with
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all applicable laws, rules, regulations and orders, including those with respect
to the Student Loans.
(b) Preservation of Existence. Preserve and maintain its corporate
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existence, rights, franchises and privileges in the jurisdiction of its
formation, and qualify and remain qualified in good standing as a foreign
corporation in each jurisdiction where the nature of its business requires.
(c) Audits. (i) At any time and from time to time during regular
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business hours, permit each of Purchaser, the Administrator, Noteholder, the
Indenture Trustee or any of their agents or representatives, upon prior written
notice of at least three Business Days if no Event of Default is continuing, (A)
to examine and make copies of and abstracts from all books, records and
documents (including, without limitation, computer tapes and disks) in the
possession or under the control of Seller relating to the Student Loans sold to
Purchaser hereunder, and (B) to visit the offices and properties of Seller for
the purpose of examining such materials described in clause (i)(A) next above,
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and to discuss matters relating to such Student Loans or Seller's performance
hereunder with any of the officers or employees of Seller having knowledge of
such matters; and (ii) without limiting the provisions of clause (i) next above,
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from time to time on the reasonable request of the Administrator or, in the
event of an investigation, audit (not in the ordinary course) or other
proceeding instigated by the Department, permit certified public accountants or
other auditors acceptable to the Administrator to conduct, at Seller's expense,
a review of Seller's books and records with respect to such Student Loans.
(d) Performance and Compliance with Student Loans. At its expense,
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timely and fully perform and comply with all material provisions, covenants and
other promises required to
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be observed by it under the Student Loan Notes, the Servicing Agreements and
other agreements to which Seller is a party related to the Student Loans sold to
Purchaser hereunder.
(e) Location of Chief Executive Office. Keep its chief place of
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business and chief executive office at the address of Seller set forth below its
signature hereto or, upon 30 days' prior written notice to Purchaser and the
Administrator, at such other address in jurisdictions where all action required
to maintain Purchaser's first priority perfected ownership interest in the
Student Loans sold to Purchaser hereunder shall have been taken and completed.
(f) Books and Records. Note on its books and records that the Student
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Loans sold pursuant hereto have been sold.
(g) Separate Existence of Purchaser. Take such actions as shall be
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required in order that:
(i) Purchaser's operating expenses will not be paid by Seller;
(ii) Purchaser's books and records will be maintained separately
from those of Seller;
(iii) Seller will strictly observe corporate formalities in its
dealing with Purchaser;
(iv) Seller shall not commingle its funds with any funds of
Purchaser;
(v) Seller will maintain arm's length relationships with
Purchaser and Seller will be compensated at market rates
for any services it renders or otherwise furnishes to
Purchaser; and
(vi) Seller will not be, and will not hold itself out to be,
responsible for the debts of Purchaser or the decisions or
actions in respect of the daily business and affairs of
Purchaser.
5.2 Reporting Requirements of Seller. From the date hereof until the
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Final Payout Date, Seller (or the Master Servicer on its behalf) will, unless
the Administrator and Purchaser shall otherwise consent in writing, furnish to
the Administrator and Purchaser:
(a) Quarterly Financial Statements. As soon as available and in any
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event within 90 days after the end of each of the first three quarters of each
fiscal year of Seller, copies of the financial statements of Seller prepared in
conformity with generally accepted accounting principles, duly certified by an
authorized officer of Seller;
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(b) Annual Financial Statements. As soon as available and in any event
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within 120 days after the end of each fiscal year of Seller, copies of the
financial statements of Seller prepared in conformity with generally accepted
accounting principles, duly certified by an independent certified public
accountant of recognized standing selected by Seller;
(c) ERISA. Promptly after the filing or receiving thereof, copies of
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all reports and notices with respect to any Reportable Event defined in Article
IV of ERISA which Seller, or an ERISA Affiliate (as defined in ERISA) thereof,
files under ERISA with the Internal Revenue Service, the Pension Benefit
Guarantee Corporation or the U.S. Department of Labor or which Seller receives
from the Pension Benefit Guarantee Corporation;
(d) Event of Defaults. Immediately upon becoming aware (i) of any
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failure of Seller to comply with the terms and conditions of this Agreement, or
(ii) that any representation, warranty or statement made by Seller pursuant to
this Agreement was false or incorrect in any material respect when made or
deemed made, a written statement of the chief financial officer or chief
accounting officer of Seller setting forth details of such event and the action
that Seller proposes to take with respect thereto;
(e) Litigation. As soon as possible and in any event within five
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Business Days of Seller's actual knowledge thereof, written notice of (i) any
litigation, investigation or proceeding which may exist at any time which could
reasonably be expected to have a Material Adverse Effect with respect to the
Seller's business, the Student Loans, this Agreement (or the transactions and
other agreements contemplated hereby) or otherwise and (ii) any material adverse
development in previously disclosed litigation, including in each case, any of
the same against the Master Servicer (or any Sub-Servicer);
(f) Schedule of Student Loans. No later than the fifth Business Day
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after the Sale Date for any Student Loans hereunder, the Schedule of Student
Loans, updated to reflect the Student Loans transferred on such Sale Date, shall
be delivered to the Indenture Trustee and the Administrator;
(g) Credit and Collection Policy. Promptly after the occurrence
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thereof, written notice of any changes in the Credit and Collection Policy; and
(h) Other. Promptly, from time to time, such other information,
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documents, records or reports respecting the Student Loans sold to Purchaser
hereunder or the condition or operations, financial or otherwise, of Seller, as
the Administrator or Purchaser, may from time to time reasonably request in
order to protect the interests of the Administrator, Noteholder and Indenture
Trustee, under or as contemplated by this Agreement and the other Transaction
Documents.
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5.3 Negative Covenants of Seller. From the date hereof until the Final
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Payout Date, Seller (or the Master Servicer on its behalf) will not, without the
prior written consent of the Administrator and Purchaser:
(a) Sales, Liens, Etc. Except as otherwise provided herein, sell,
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assign (by operation of law or otherwise) or otherwise dispose of, or create or
suffer to exist any Lien upon or with respect to, any Student Loan sold to
Purchaser hereunder, or any interest therein, or any account to which any
Collections of any such Student Loans are sent, or any right to receive income
or proceeds from or in respect of any of the foregoing; provided, however, that
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Seller may transfer (or cause the Grad Partners Trustee to transfer) any Student
Loan for serialization or consolidation purposes so long as Seller shall have
deposited to the Collection Account the Principal Balance thereof, plus accrued
and unpaid interest thereon.
(b) Change in Business. Make any change in the character of its
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business, which change would impair the collectibility of any Student Loan or
otherwise materially adversely affect the interests or remedies of Purchaser,
the Administrator, the Indenture Trustee or Noteholder under this Agreement or
any other Transaction Document.
(c) Consolidation, Mergers, etc. Merge into, or consolidate with, one
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or more corporations, or be a party to any transaction involving the transfer of
any substantial portion of its assets, revenues or properties to or with any
corporation or other Person, without the prior written consent of Purchaser and
the Administrator.
5.4 Servicing Covenants. From the date hereof until the Final Payout
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Date, Seller (or the Master Servicer on its behalf) will, unless the
Administrator and Purchaser shall otherwise consent in writing, cause each
applicable Sub-Servicer to service, administer and make collections with respect
to the Student Loans sold to Eligible Lender Trustee hereunder in accordance in
all material respects with all applicable federal and state laws, the failure to
comply with which could reasonably be expected to have a material adverse effect
on Purchaser or the Noteholder. Seller (or the Master Servicer on its behalf)
shall not permit any Sub-Servicer to (i) rescind or cancel any such Student Loan
except as ordered by a court of competent jurisdiction or governmental authority
or as otherwise consented to in writing by the Administrator or (ii) reschedule,
revise, defer or otherwise compromise with respect to payments due on any such
Student Loan except pursuant to any applicable deferral or forbearance periods
or otherwise in accordance with all applicable standards, guidelines and
requirements with respect to the servicing of the Student Loans. Seller (or the
Master Servicer on its behalf) shall not agree, or permit any Sub-Servicer to
agree, to any decrease of the interest rate on, or the principal amount payable
with respect to, any such Student Loan except as otherwise permitted in
accordance with any applicable standards, guidelines and requirements of federal
or state Law. Seller (or the Master Servicer on its behalf) shall cause each
Sub-Servicer to maintain any and all collection procedures with respect to such
Student Loans, including taking any steps to enforce such Student Loans such as
commencing a legal proceeding to enforce such a Student Loan in the name of
Purchaser.
-12-
ARTICLE VI
ADDITIONAL OBLIGATIONS AND RIGHTS
IN RESPECT OF THE SOLD STUDENT LOANS
6.1 Obligation of Seller to Forward Payments. Seller shall promptly remit,
----------------------------------------
or cause to be remitted, to Purchaser all funds received by Seller on or after
the applicable Sale Date which constitute Collections with respect to any
Student Loan sold hereunder, and agrees that all such payments shall be deemed
to be held in trust for Purchaser.
6.2 Obligation of Seller to Forward Communications. Seller shall
----------------------------------------------
immediately transmit to the Sub-Servicers any communication received by Seller
after the Sale Date with respect to a Student Loan, including from any Obligor
under a Student Loan. Such communication shall include, but not be limited to,
letters, notices of death or disability, adjudication of bankruptcy and similar
documents and forms requesting deferment of repayment or loan cancellations.
6.3 Rights of Purchaser and Sub-Servicer. Seller authorizes Purchaser and,
------------------------------------
subject to the limitations set forth in Section 5.4, the applicable Sub-Servicer
-----------
or their respective designees to take any and all steps in Seller's name
necessary or desirable in their respective determination to collect all amounts
due under any Student Loan sold hereunder, including, without limitation,
endorsing Seller's name on checks and other instruments representing Collections
and enforcing such Student Loans and any related guarantees. Seller hereby
grants to each Sub-Servicer and the Indenture Trustee an irrevocable power of
attorney, with full power of substitution, coupled with an interest, to take in
the name of Seller all steps necessary or advisable to endorse, negotiate or
otherwise realize on any writing or other right of any kind held or transmitted
by Seller or the Grad Partners Trustee or transmitted or received by Purchaser
or Eligible Lender Trustee (whether or not from Seller or the Grad Partners
Trustee) in connection with any Student Loan sold hereunder.
6.4 Further Action Evidencing Purchases. Seller agrees that from time to
-----------------------------------
time, at its expense, it will promptly execute and deliver all further
instruments and documents, and take all further action that Purchaser or
Administrator may reasonably request in order to perfect, protect or more fully
evidence the sale of Student Loans purchased by Eligible Lender Trustee
hereunder, or to enable Purchaser or its designee to exercise or enforce any of
its rights hereunder or under any Transaction Document. If Seller fails to
perform any of its agreements or obligations under this Agreement, Purchaser or
its designee may (but shall not be required to) itself perform, or cause
performance of, such agreement or obligation, and the expenses of Purchaser or
its designee incurred in connection therewith shall be payable by Seller.
-13-
ARTICLE VII
INDEMNIFICATION
7.1 Indemnity of Seller. Without limiting any other rights which any such
-------------------
Person may have hereunder or under applicable law, Seller hereby agrees to
indemnify Purchaser, and each of its assigns (including the third party
beneficiaries specified in Section 8.10), and all officers, directors, employees
------------
and agents of any of the foregoing (each a "Purchase and Sale Indemnified
-----------------------------
Party"), forthwith on demand, from and against any and all damages, losses,
-----
claims, liabilities and related costs and expenses, including reasonable
attorneys' fees and disbursements (all of the foregoing being collectively
referred to as "Indemnified Amounts") awarded against or incurred by any of them
-------------------
arising out of or relating to (i) claims asserted against a Purchase and Sale
Indemnified Party by a Person, and relating to the transactions contemplated by
the Transaction Documents or the Student Loans, (ii) acts or omissions by the
Master Servicer or any Sub-Servicer, (iii) the items described in clause (i)
----------
through (iv) of the last sentence of this Section 7.1, or (iv) use of proceeds
---- -----------
hereunder, excluding, however, (a) Indemnified Amounts to the extent determined
--------- -------
by a court of competent jurisdiction to have resulted from gross negligence or
willful misconduct on the part of such Purchase and Sale Indemnified Party, (b)
recourse for Defaulted Student Loans, and (c) Indemnified Amounts arising out of
any taxes, fees, assessments, interest, or penalties arising out of, assessed
against or based upon the income or gross receipts of any Purchase and Sale
Indemnified Party or any failure or delay in filing an accurate return with
respect thereto and imposed by the jurisdiction under the laws of which such
Purchase and Sale Indemnified Party was organized. Without limiting the
foregoing, Seller shall indemnify each Purchase and Sale Indemnified Party for
Indemnified Amounts arising out of or relating to:
(i) any representation or warranty made by Seller (or any of its
officers or Affiliates) under or in connection with any Transaction
Document or any other information or report delivered by or on behalf of
Seller pursuant hereto, which shall have been false, incorrect or
misleading in any respect when made or deemed made;
(ii) the failure by Seller to comply with any applicable law, rule or
regulation with respect to any Student Loan, or the nonconformity of any
Student Loan with any such applicable law, rule or regulation;
(iii) the failure due to acts or omissions of Seller to vest and
maintain vested in Eligible Lender Trustee first priority perfected
ownership interest, in the Student Loans sold to Eligible Lender Trustee
hereunder, free and clear of any Lien, other than a Lien arising solely as
a result of an act of Noteholder, the Administrator or the Indenture
Trustee; or
(iv) the failure to file, or any delay in filing, financing
statements or other similar instruments or documents under the UCC of any
applicable jurisdiction or other applicable laws with respect to any such
Student Loans.
-14-
7.2 Promptly after the receipt by a Purchase and Sale Indemnified Party
of a notice of the commencement of any action, suit, proceeding, investigation
or claim against such Purchase and Sale Indemnified Party or Parties as to which
it proposes to demand indemnification from Seller pursuant to Section 7.1, such
-----------
Purchase and Sale Indemnified Party shall notify Seller in writing of the
commencement thereof, but the failure so to notify Seller will not relieve
Seller from any liability which Seller may have to such Purchase and Sale
Indemnified Party pursuant to Section 7.1.
-----------
ARTICLE VIII
MISCELLANEOUS
8.1 Amendments, etc. No amendment or waiver of any provision of this
---------------
Agreement nor consent to any departure by Seller therefrom shall in any event be
effective unless the same shall be in writing and signed by: (a) Purchaser,
Seller, Eligible Lender Trustee, Grad Partners Trustee and the Administrator
(with respect to an amendment); or (b) Purchaser, the Administrator, Eligible
Lender Trustee and Grad Partners Trustee (with respect to a waiver or consent by
them) or Seller (with respect to a waiver or consent by it), as the case may be,
and then such waiver or consent shall be effective only in the specific instance
and for the specific purpose for which given. The parties acknowledge that,
before entering into such an amendment or granting such a waiver or consent,
Noteholder may also be required to obtain the approval of some or all of the
Program Support Providers to obtain confirmation from certain rating agencies
that such amendment, waiver or consent will not result in a withdrawal or
reduction of the ratings of the Commercial Paper Notes.
8.2 Notices, etc. All notices and other communications provided for
------------
hereunder shall, unless otherwise stated herein, be in writing (including
facsimile communication) and shall be personally delivered or sent by express
mail or courier or by certified mail, postage-prepaid, or by facsimile, to the
intended party at the address or facsimile number of such party set forth under
its name on the signature pages hereof or at such other address or facsimile
number as shall be designated by such party in a written notice to the other
parties hereto. All such notices and communications shall be effective, (i) if
personally delivered or sent by express mail or courier or if sent by certified
mail, when received, and (ii) if transmitted by facsimile, when sent, receipt
confirmed by telephone or electronic means.
-15-
8.3 No Waiver; Cumulative Remedies. No failure on the part of Purchaser,
------------------------------
the Issuer, Eligible Lender Trustee, the Administrator, any Purchase and Sale
Indemnified Party, the Indenture Trustee or Noteholder to exercise, and no delay
in exercising, any right hereunder shall operate as a waiver thereof (unless
waived in writing); nor shall any single or partial exercise of any right
hereunder preclude any other or further exercise thereof or the exercise of any
other right. The remedies herein provided are cumulative and not exclusive of
any remedies provided by law.
8.4 Binding Effect; Assignability. This Agreement shall be binding upon
-----------------------------
and inure to the benefit of Purchaser, Seller and their respective successors
and permitted assigns. Seller may not assign its rights hereunder or any
interest herein without the prior consent of Purchaser and the Administrator.
Purchaser may not assign its rights hereunder or any interest herein without the
prior written consent of Seller and the Administrator. This Agreement shall
create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect until the
Final Payout Date. The rights and remedies with respect to any breach of any
representation and warranty made by Seller pursuant to this Agreement and the
indemnification and payment provisions of Article VII and Section 8.6 shall be
----------- -----------
continuing and shall survive any termination of this Agreement.
8.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
-------------
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
8.6 Costs, Expenses and Taxes. In addition to the obligations of Seller
-------------------------
under Article VII, Seller agrees to pay on demand:
-----------
(a) all reasonable costs and expenses in connection with Purchaser's
and/or its assigns' enforcement of this Agreement; and
(b) all stamp and other similar taxes and fees payable or determined to be
payable in connection with the execution, delivery, filing and recording of this
Agreement or any documents or instruments delivered pursuant hereto, and agrees
to indemnify each Purchase and Sale Indemnified Party against any liabilities
with respect to or resulting from any delay in paying or omission to pay such
taxes and fees.
8.7 Waiver of Jury Trial. EACH PARTY HERETO EXPRESSLY WAIVES ANY RIGHT TO
--------------------
A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
UNDER THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR UNDER ANY AMENDMENT,
INSTRUMENT OR DOCUMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN
CONNECTION HEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH
THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, AND AGREES THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
-16-
8.8 Captions and Cross References; Incorporation by Reference. The various
---------------------------------------------------------
captions (including, without limitation, the table of contents) in this
Agreement are included for convenience only and shall not affect the meaning or
interpretation of any provision of this Agreement. References in this Agreement
to any underscored Section or Exhibit are to such Section or Exhibit of this
Agreement, as the case may be. The Exhibits hereto are hereby incorporated by
reference into and made a part of this Agreement.
8.9 Execution in Counterparts. This Agreement may be executed in any
-------------------------
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and all of
which when taken together shall constitute one and the same agreement.
8.10 Acknowledgment and Agreement. By execution below, Seller expressly
----------------------------
acknowledges and agrees that all of Purchaser's rights, title, and interests in,
to, and under this Agreement shall be assigned for collateral purposes by
Purchaser to the Indenture Trustee for the benefit of the Secured Parties
pursuant to the Indenture, and Seller consents to such assignment. Each of the
parties hereto acknowledges and agrees that the Administrator, the Noteholder,
the Indenture Trustee and the Secured Parties are third party beneficiaries of
the rights of Purchaser arising hereunder.
8.11 No Proceedings. Seller hereby agrees that it will not institute
--------------
against Purchaser or the Noteholder, or join any other Person in instituting
against Purchaser or the Noteholder, any insolvency proceeding (namely, any
proceeding of the type referred to in the definition of Event of Bankruptcy) so
long as any Commercial Paper Notes issued by Noteholder shall be outstanding or
there shall not have elapsed one year plus one day since the last day on which
any such Commercial Paper Notes shall have been outstanding. The foregoing shall
not limit Seller's right to file any claim in or otherwise take any action with
respect to any insolvency proceeding that was instituted by any Person other
than Seller.
8.12 Liability of the Grad Partners Trustee and the Eligible Lender
--------------------------------------------------------------
Trustee. (a) The Seller and the Purchaser acknowledge that (i) the Eligible
-------
Lender Trustee is entering into this Agreement solely in its capacity as trustee
for Purchaser and not in its individual capacity and (ii) the Grad Partners
Trustee is entering into this Agreement solely in the capacity as trustee for
Seller and not in its individual capacity.
(b) The representations, warranties and covenants of Eligible Lender
Trustee are made solely at the direction of Purchaser without independent
investigation of Eligible Lender Trustee, and Eligible Lender Trustee has
undertaken only those duties required of it under its trust agreement with
Purchaser. Accordingly, all recourse and remedies, if any, of Seller hereunder
shall be available only against Purchaser and the assets of the trust estate
held by Eligible Lender Trustee for the benefit of Purchaser and not against
Eligible Lender Trustee in its individual capacity.
-17-
(c) The representations, warranties and covenants of the Grad Partners
Trustee are made solely at the direction of Seller without independent
investigation of the Grad Partners Trustee, and the Grad Partners Trustee has
undertaken only those duties required of it under its trust agreement with
Seller. Accordingly, all recourse and remedies, if any, of Purchaser hereunder
shall be available only against Seller and the assets of the trust estate held
by the Grad Partners Trustee for the benefit of Seller and not against the Grad
Partners Trustee in its individual capacity.
[Signatures to be found on the pages following.]
-18-
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
GRAD PARTNERS, INC.,
as Seller
By__________________________________
Title:
Address:
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Telephone No.:
Facsimile No.:
Purchase and Sale Agreement
(Grad Partners)
S-1
GRAD PARTNERS PREMIER, LLC,
as Purchaser
By_________________________________
Title:
Address:
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Telephone No.:
Facsimile No.:
Purchase and Sale Agreement
(Grad Partners)
S-2
FIFTH THIRD BANK
solely in its capacity as
Eligible Lender Trustee
and not in its individual
capacity
By_________________________________
Title:
Address:
[Address]
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone No.:
Facsimile No.:
Purchase and Sale Agreement
(Grad Partners)
S-3
FIFTH THIRD BANK
solely in its capacity as
Grad Partners Trustee
and not in its individual
capacity
By_________________________________
Title:
Address:
[Address]
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Telephone No.:
Facsimile No.:
Purchase and Sale Agreement
(Grad Partners)
S-4
EXHIBIT A
---------
FORM OF PURCHASE
AND SALE REQUEST
Ladies and Gentlemen:
All capitalized terms used but not otherwise defined herein which are
defined in the Purchase and Sale Agreement, dated as of August 17, 2001 between
the undersigned, as Seller, and Grad Partners Premier, LLC, as Purchaser (as
amended, modified or supplemented from time to time, the "Purchase Agreement"),
------------------
have the same meanings when used herein.
The undersigned refers to the Purchase Agreement and hereby gives you
notice pursuant to Section 2.3 of the Purchase Agreement that the undersigned
-----------
hereby requests that Purchaser purchase an additional Portfolio of Student Loans
(the "Requested Purchase") under the Purchase Agreement, and in that connection
------------------
sets forth below the information relating to the Requested Purchase as required
by Section 2.3 of the Purchase Agreement:
-----------
(i) The Sale Date of the Requested Purchase is [______________].
(ii) Annex 1 hereto contains a list of the Student Loans contained in
the Portfolio.
(iii) The estimated Aggregate Purchase Price of such Portfolio on the
proposed Sale Date is [$___________].
[Signatures to be found on the page following.]
A-1
IN WITNESS WHEREOF, we have caused this Purchase and Sale Request to be
executed and delivered by the undersigned on the date first written above.
Very truly yours,
in its capacity as trustee
By:________________________________
Name:______________________________
Title:_____________________________
A-2
EXHIBIT B
---------
FORM OF BLANKET ENDORSEMENT
[GRAD PARTNERS, INC.] ("Holder"), by execution of this instrument, hereby
------
endorses the attached promissory note to Grad Partners Premier, LLC
("Purchaser"). This Blanket Endorsement is without recourse, except as provided
---------
in that certain Purchase and Sale Agreement (the "Agreement") dated as of August
---------
17, 2001, between the Holder and Purchaser. The attached promissory note is one
of the promissory notes (the "Notes") described in the ▇▇▇▇ of Sale of even date
-----
herewith executed by the Holder in favor of Purchaser pursuant to the Agreement,
and this endorsement may be effected by attaching this instrument or a copy
hereof to this or any of the Notes. Notwithstanding the foregoing, the Holder
agrees to individually endorse (manually or by facsimile signature) each Note as
Purchaser may from time to time require, upon the same terms and conditions
contained in this Blanket Endorsement.
Dated as of _______________.
GRAD PARTNERS, INC.
By:______________________________
Title:
B-1