AMENDED AND RESTATED GUARANTY AGREEMENT between THE EDUCATION RESOURCES INSTITUTE, INC. and BANK OF AMERICA, N.A. (Bank of America School Channel Loan Programs)
EXHIBIT
99.24
Confidential
Materials omitted and filed separately with the
Securities
and Exchange Commission. Asterisks denote
omissions.
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Note: This
Agreement contains confidential & proprietary information and may not be
disclosed without the consent of both parties or as required by
law
AMENDED
AND RESTATED GUARANTY AGREEMENT
between
THE
EDUCATION RESOURCES INSTITUTE, INC.
and
BANK
OF AMERICA, N.A.
(Bank
of America School Channel Loan Programs)
This
Amended and Restated Guaranty
Agreement (this “Agreement") is made as of this 30th day of June, 2006, by and
between The Education Resources Institute, Inc. ("XXXX"), a private non-profit
corporation organized under Chapter 180 of the Massachusetts General Laws with
its principal place of business at 00 Xx. Xxxxx Xxxxxx, 0xx Xxxxx,
Xxxxxx,
Xxxxxxxxxxxxx 00000, and Bank of America, N.A. (the "LENDER"), a national
banking association organized under the laws of the United States and having
a
place of business located at 000 Xxxxxxxx Xxxx., Xxx Xxxxxxx, Xxxxxxxxxx
00000.
WHEREAS,
The First Marblehead
Corporation (“FMC”) and LENDER have established the Bank of America School
Channel Loan Programs (the "Programs") to assist parents in financing the cost
of education at private elementary and secondary schools and at various
institutions of higher education; and
WHEREAS,
pursuant to agreements between
the LENDER and FMC, the LENDER is the exclusive lender for the Programs, and
has
agreed to originate loans conforming to the Programs ("Loans"); and
WHEREAS,
pursuant to such agreements
between the LENDER and FMC, FMC has agreed to purchase or to cause to be formed
one or more special purpose business trusts or other entities (each an "SPE")
to
purchase promissory notes evidencing Loans following origination;
and
WHEREAS,
XXXX is in the business of
providing financial assistance in the form of loan guaranties to and on behalf
of students enrolled in programs of higher education and their parents at
XXXX-approved schools; and
WHEREAS,
the LENDER is willing to make
Loans to eligible Borrowers under the Program, and XXXX is willing to guaranty
the payment of principal and interest against the Borrowers' default or certain
other events as more fully described below, in accordance with the terms and
conditions set forth in this Agreement.
NOW,
THEREFORE, in consideration of the
mutual covenants contained herein, XXXX and the LENDER agree as
follows:
Section
1: DEFINITIONS
As
used
in this Agreement the following terms shall have the following
meanings:
1.1
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“Agent”
shall mean U.S. Bank National Association, its successors and assigns,
in
its capacity as Agent under the Deposit and Security Agreement between
XXXX and the LENDER, dated April 30,
2001.
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1.2
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“Authentication”
refers to the methods and processes used by a financial institution,
or
XXXX as its agent, to form a conclusion that it has established the
true
identity of an applicant who is communicating electronically, by
phone, or
in another non-face-to-face manner.
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1.3
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“Bank
of America Private Loan Programs” means the prepGATE Loan Program, the
Bank of America Private Undergraduate Loan Program and the Bank of
America
Private Graduate Professional Loan Programs, each as more fully described
in the Program Guidelines as the same may be amended from time to
time.
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1.4
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“Bank
of America School Channel Loan Programs” or the “Programs” means the Bank
of America Private Loan Programs and the Bank of America XXXX Loan
Programs, each as more fully described in the Program Guidelines
as the
same may be amended from time to
time.
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1.5
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“Bank
of America XXXX Loan Programs” means the Bank of America XXXX Alternative
Undergraduate Loan Program, the Bank of America XXXX Alternative
Graduate
Loan Program, the Bank of America XXXX Alternative Continuing Education
Loan Program, the Bank of America XXXX Alternative Health Professions
Loan
Program (including the CVS Loan Program), and the Bank of America
XXXX
ISLP Programs, each as more fully described in the Program Guidelines
as
the same may be amended from time to
time.
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1.6
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“Bank
of America XXXX ISLP Loan Programs” mean the Bank of America ISLP
Undergraduate Loan Program, the Bank of America ISLP Graduate Loan
Program
and the Bank of America ISLP Medical Loan Program, each as more fully
described in the Program Guidelines as the same may be amended from
time
to time. It does not include the Bank of America ISLP CanHelp
Program, which is not governed by this
Agreement.
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1.7
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"Borrower"
shall mean the person, or all persons collectively, including all
students, cosigners, coborrowers, guarantors, endorsers, and accommodation
parties, who execute a Promissory Note individually or, in the case
of
multiple Borrowers, severally and jointly, for the purpose of obtaining
funds from the LENDER under the
Programs.
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1.8
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"Due
Diligence" shall mean the utilization by the LENDER of policies,
practices
and procedures in the origination, servicing and collection of Loans
that
comply with the standards set forth in the Program Guidelines, that
comply
with the requirements of federal and state law and regulation, and,
to the
extent not inconsistent with the foregoing, that are in accord with
the
LENDER’s policies, practices and procedures applicable to its student loan
and credit portfolios and with sound lending practices utilized throughout
the consumer lending industry.
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1.9
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“FMC”
shall mean The First Marblehead Corporation, a Delaware corporation
located at 000 Xxxxxxxx Xx., 00xx
Xxxxx,
Xxxxxx, XX 00000.
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1.10
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“Guaranty
Claim” shall mean a claim by the LENDER to XXXX for a guaranty payment
with respect to a Loan pursuant to Section 2.1 of this
Agreement.
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1.11
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"Guaranty
Event" shall mean any of the following events with respect to a
Loan:
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a.
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failure
of a Borrower to make monthly principal and/or interest payments
on a Loan
when due, provided such failure persists for a period of one hundred
eighty (180) consecutive days,
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b.
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the
filing of a petition in bankruptcy with respect to a Borrower,
or
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c.
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the
death of a Borrower.
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For
Loans
on which the Borrower is two or more persons, none of the above, with the
exception of paragraph b, shall be a Guaranty Event unless one or more such
events shall have occurred with respect to all such persons. The foregoing
notwithstanding, if a Borrower files a petition in bankruptcy pursuant to
Chapter 7 of the U.S. Bankruptcy Code and does not seek a discharge of the
affected Loan(s) under 11 U.S.C. §523(a)(8)(B) of the U.S. Bankruptcy Code, the
LENDER at TERI's request will withdraw its Guaranty Claim unless or until one
of
the other Guaranty Events shall have occurred with respect thereto.
1.12
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"Loan"
shall mean a loan of funds, including all disbursements thereof,
made by
the LENDER under the Programs.
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1.13
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“Loan
Origination Agreement” means the amended and restated agreement of that
name between LENDER and XXXX dated as of June 30, 2006, as it may
be
amended from time to time.
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1.14
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“Note
Purchase Agreement” means the amended and restated agreement of that name
between LENDER and FMC dated as of June 30, 2006, as may be hereinafter
amended.
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1.15
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"Program
Guidelines" shall mean (i) Underwriting, Origination and Loan Term
Guidelines for Bank of America SC Loan Programs, (ii) the XXXX Servicing
Guidelines, and (iii) Specific Program Summaries for Bank of America
SC
Loan Programs, copies of the Program Guidelines are attached hereto
as
Xxxxxxxx X0, X0, X0 and A4 all as may be amended from time to
time.
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1.16
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"Promissory
Note" shall mean a promissory note executed by a Borrower evidencing
a
Loan, as set forth in the Program Guidelines, as the same may be
amended
from time to time.
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1.17
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“Securitization
Transaction” shall mean and refer to a purchase of Loans guaranteed
hereunder by a special purpose entity formed by FMC, which purchase
is
funded through the issuance of debt instruments or other securities
by
such entity, the repayment of which is supported by payments on the
Loans.
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1.18
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“XXXX
Electronic Signature Process” means the process described in Exhibit
C attached hereto.
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Section
2: GUARANTEE
OF LOANS
2.1
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XXXX
hereby guarantees to the LENDER, unconditionally except as set forth
in
Section 2.2 below, the payment of 100% of the principal of and accrued
interest on every Loan as to which a Guaranty Event has
occurred. “Accrued interest" shall mean interest accrued and
unpaid to the date of payment in full by XXXX of a Guaranty Claim,
less
any interest that shall have accrued after the filing of a Guaranty
Claim
but before XXXX shall have received all the documentation necessary
to
process the Guaranty Claim as set forth in the Program
Guidelines. XXXX will use all reasonable efforts to make
payment on its guaranty within sixty (60) days, and will in any event
make
payment within ninety (90) days, of receipt by XXXX of a Guaranty
Claim
from the LENDER stating the name of the Borrower and the type of
Guaranty
Event that has occurred accompanied by the full claim documentation
required in the Program Guidelines.
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2.2
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TERI's
guaranty is conditioned upon the
following:
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a.
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The
LENDER must have filed its Guaranty Claim within the time period
and
following the procedures specified in the Program
Guidelines.
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b.
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The
LENDER and its predecessors in interest must at all times have exercised
Due Diligence with respect to the Loan (or shall have cured any failure
to
exercise Due Diligence under the reinstatement provisions in Section
2.4
hereof and the Program Guidelines), and must have complied with all
other
requirements of the Program Guidelines applicable to the
Loan.
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c.
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The
LENDER shall have paid to XXXX the Initial Guaranty Fee (as defined
in
Section 3.3.a. below) for the Loan in question, and shall have paid
to the
Agent any Subsequent Guaranty Fee (as defined in Section 3.3.b. below)
for
the Loan in question which is due and payable as provided in Section
3.3.b. below.
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d.
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XXXX
must have received from the LENDER the original Promissory Note,
enforceable against the Borrower (except as provided in this Section
2.2.d. below), endorsed to XXXX in such manner as to transfer to
XXXX all
rights in and title to such Promissory Note, free and clear of all
liens
and encumbrances, and of all defenses, counterclaims, offsets, and
rights
of rescission that might be raised by the Borrower. Submission
of a Guaranty Claim to XXXX shall constitute the LENDER's certification
that the conditions of 2.2.b. and 2.2.d. have been met, and XXXX
is
entitled to rely on such
certification.
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Subsections
2.2.b. and 2.2.d. above notwithstanding, if a Loan that is the subject of a
Guaranty Claim was originated by XXXX on behalf of the LENDER pursuant to a
Loan
Origination Agreement between the parties, (i) XXXX will not deny the LENDER's
Guaranty Claim on such Loan if the sole basis for denial is a violation of
the
Program Guidelines or a violation of Massachusetts or federal law committed
by
XXXX in the origination process, and (ii) XXXX will have no recourse against
the
LENDER in the event that TERI’s actions or omissions in the origination process
shall have given rise to a defense in favor of the Borrower in a suit on the
Promissory Note. In addition, a loan originated by XXXX using the XXXX
Electronic Signature Process that otherwise qualifies in all respects for
coverage under the Guaranty Agreement shall not be denied such coverage on
account of any defect in the XXXX Electronic Signature Process.
2.3
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TERI's
guaranty obligation with respect to any Loan shall not be terminated
or
otherwise affected or impaired (i) by the LENDER’s granting an extension
to the Borrower of time to make scheduled payments, or by any other
indulgence the LENDER may grant to the Borrower, provided that all
extensions and other indulgences meet the forbearance standards and
other
requirements of the Program Guidelines; or, Section 2.2.d. above
notwithstanding, (ii) because of any fraud in the execution of the
Promissory Note, (iii) because of any illegal or improper acts of the
Borrower, (iv) because the Borrower may be relieved of liability
for such
Loan due to lack of contractual capacity or any other statutory
exemption.
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2.4
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XXXX
may deny the LENDER’s Guaranty Claim on any Loan on the grounds of Due
Diligence deficiencies. If XXXX properly denies the LENDER’s
claim on any Loan on the grounds of Due Diligence deficiencies, the
LENDER
may thereafter require that XXXX reinstate the guaranty of such Loan
if
(a) the LENDER corrects such deficiencies and receives four (4)
consecutive full on-time monthly payments from the Borrower, according
to
any schedule permitted by the Program Guidelines, and if at the time
of
the LENDER’s request the Borrower is within thirty (30) days of being
current on all principal and interest payments on such Loan, or (b)
the
LENDER satisfies any other method of cure set forth in the Program
Guidelines.
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2.5
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TERI's
guaranty hereunder is a continuing and absolute guaranty of payment
and
not merely of collection, covering Loans made in accordance herewith
either (i) prior to termination of this Agreement, or (ii) based
upon
applications received by the LENDER prior to such termination; and
shall
not affect TERI's obligations to the LENDER then existing, whether
direct
or indirect, absolute or contingent, then due or thereafter to become
due.
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2.6
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XXXX
agrees not to exercise any right of subrogation, reimbursement, indemnity,
contribution or the like against the Borrower of any Loan unless
and until
all TERI's obligations under this Agreement with respect to such
Loan have
been satisfied in full, except to the extent that it is deemed a
valid
claimant as a contingent creditor, for example, under Title 11 of
the
United States Code (the "Bankruptcy Code"), or applicable state
law.
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2.7
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XXXX
will permit the LENDER, any duly designated representative of the
LENDER,
or any governmental body having jurisdiction over the LENDER (subject
to
written notice being provided to XXXX by the LENDER, identifying
the
requesting party and the date of the review), to examine and audit
the
books and records of XXXX pertaining to the Loans, at any time during
TERI's regular business hours, provided that in the case of examinations
by the LENDER or its representative absent good cause (i) XXXX must
be
given ten (10) business days' prior written notice and, (ii) no more
than
one such audit may be conducted with respect to any twelve-month
period or
will take place in any twelve-month period. In no event will
any audit be performed during July, August, September, or October
in any
year except at the request of a regulatory authority having jurisdiction
over the LENDER.
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2.8
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XXXX
will indemnify the LENDER and hold it harmless from and against any
loss,
cost, damage and expense that the LENDER may suffer as a result of
claims
arising out of TERI's actions or omissions relative to the LENDER’s
participation in the Program. "Expense" includes, without limitation,
the
LENDER’s reasonable attorney's fees. XXXX will further
indemnify the LENDER and hold it harmless from and against any claim
brought against the LENDER by any Borrower based on actions or omissions
of the LENDER that were mandated under the Program
Guidelines.
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2.9
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Although
the LENDER agrees not to use any loan servicer not approved by XXXX,
the
LENDER acknowledges that TERI's approval of a servicer is in no way
an
endorsement of such servicer and that XXXX shall have no liability
to the
LENDER for any losses arising from such servicer's failure to comply
with
Due Diligence or the Program Guidelines or applicable law, nor shall
XXXX
be required to honor any claim submitted by such servicer if the
claim
does not comply with the requirements of this
Agreement.
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Section
3: OBLIGATIONS
OF THE LENDER
3.1
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In
originating, servicing, disbursing, and collecting Loans, the LENDER
will
comply, and cause its servicer and others acting on its behalf to
comply,
at all times with all Program Guidelines (including Due Diligence
requirements) and all applicable requirements of federal and
state laws and regulations.
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3.2
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The
LENDER will use Promissory Notes, Loan applications, disclosure
statements, and other forms as set forth in the Program Guidelines,
as the
same may be amended from time to time. Without limiting the
generality of Section 3.1, the LENDER warrants the conformity of
such
instruments and any agreed successors thereto with all applicable
legal
requirements, other than those of federal and Massachusetts laws
and
regulations, and XXXX warrants their conformity with Massachusetts
and
federal laws.
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3.3
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The
LENDER will pay a guaranty fee for each Loan (the "Guaranty Fee")
as
follows:
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a.
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At
the time of each disbursement of the Loan, the LENDER will remit
to XXXX
one and one-half percent (1.5%) of the principal amount of Loan disbursed
(the “Initial Guaranty Fee”).
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b.
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At
such times as are set forth in Schedule 3.3 attached hereto and
incorporated herein by reference, such additional fees as are set
forth in
the fifth through seventh columns of Schedule 3.3 (“Subsequent Guaranty
Fee”).
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i.
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If
the terms of Schedule 3.3 call for any Guaranty Fees to be paid concurrent
with the Securitization Transaction, the LENDER shall pay such fees
directly (and be reimbursed in the Securitization Transaction to
the
extent provided in the Note Purchase
Agreement).
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ii.
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In
the event that a Guaranty Claim is made with respect to a Loan before
a
Subsequent Guaranty Fee is scheduled to be paid by the LENDER for
such
Loan, the Subsequent Guaranty Fee shall become immediately due and
payable.
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iii.
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In
the event that a loan is prepaid in full prior to the date that a
Subsequent Guaranty Fee is scheduled to be paid by the LENDER for
such
Loan, the Subsequent Guaranty Fee shall nevertheless become due and
payable at the time that would have applied if such prepayment had
not
occurred. For example, if a Subsequent Guaranty Fee is due at
the time of a Securitization Transaction and a Loan is prepaid before
it
is eligible for Securitization, then the Subsequent Guaranty Fee
with
respect to such Loan shall become due at the first Securitization
Transaction in which such Loan would have been eligible for inclusion,
had
prepayment not occurred.
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iv.
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In
the event that FMC fails to purchase any Loan under the Note Purchase
Agreement, and the LENDER sells such Loan to a third party, the Guaranty
Fees due with respect to such loan at the time of a Securitization
Transaction will instead be paid by the LENDER at the time the loan
is
sold to the third party.
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v.
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In
the event FMC has no further right or obligation under the Note Purchase
Agreement to purchase a Loan in a Securitization Transaction, the
LENDER
shall pay all Subsequent Guaranty Fees that are due to be paid at
the time
of securitization as set forth in Schedule 3.3. Such fees shall be
payable
(A) with respect to any Loan already funded, within thirty (30) days
after
presentation of an invoice by XXXX to LENDER, and (B) with respect
to
Loans funded after the date of such invoice, at the time of
disbursement.
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vi.
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In
the event that the LENDER fails to sell any Loan to FMC because the
LENDER
has breached the Note Purchase Agreement, the LENDER shall pay all
Subsequent Guaranty Fees that are due to be paid at the time of
securitization as set forth in Schedule 3.3. Such fees shall be payable
directly to XXXX and shall not be subject to the Deposit and Security
Agreement.
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c.
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Failure
to remit any Guaranty Fee within thirty (30) days of the time set
forth
above will not affect the validity of the guaranty for any Loan for
which
the Guaranty Fee has already been paid in full, but, as a result,
XXXX
will have the right, at its discretion to (i) void its obligation
to
guarantee or collect the Loan to which such Guaranty Fee relates
or (ii)
collect the amount of any such Guaranty Fee and to add interest at
the
rate of eighteen percent (18%) per annum from the disbursement date
of the
Loan to which such Guaranty Fee relates, plus any costs (including
attorneys’ fees and expenses) incurred by XXXX in collecting or attempting
to collect such Guaranty Fee from the
LENDER.
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d.
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Anything
in the Program Guidelines to the contrary notwithstanding, if the
LENDER
is required under the terms of a Promissory Note to refund all or
part of
the Guaranty Fees identified above to a Borrower, XXXX will refund
all or
part of the Initial Guaranty Fee it has received and the Agent will
refund
all or part of any Subsequent Guaranty Fee it has received (in each
case
related to the refund to such Borrower) to the LENDER upon being
so
advised by the LENDER in writing.
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e.
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For
purposes of application and interpretation of Schedule 3.3, LENDER
and FMC
(acting jointly) shall, from time to time, propose to XXXX a list
of those
schools to be included on a “preferred” list. Loans to finance
education at those schools will qualify for “preferred” fee levels shown
on Schedule 3.3. XXXX shall, within thirty (30) days, approve
or disapprove, in whole or in part, proposals from FMC and
LENDER.
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f.
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LENDER
shall pay to XXXX a Subsequent Guaranty Fee in addition to the Subsequent
Guaranty Fees shown on Schedule 3.3 for loans identified as School
Channel
loans on Schedule 3.3 at the time of each
securitization transaction. The fee shall be computed by (a) determining
the product of the risk-weighted administration fee percentage for
each
pricing tier multiplied by the original gross principal amount of
the
Loans being sold by the LENDER in each pricing tier, (b) adding together
all such products to produce a risk-weighted administrative allowance,
and
(c) subtracting the amount of Initial Guaranty Fees already paid
to XXXX
by the LENDER. If the computation produces a negative number, no
supplemental fee is due. The risk-weighted administrative fee percentages
are set forth in Schedule 3.3.g attached hereto. Fees
due from the LENDER to XXXX under this Section
3.3.g shall not be subject to the Deposit and
Security Agreement.
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3.4
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If
XXXX shall have purchased a Loan due to the occurrence or alleged
occurrence of a Guaranty Event described in Section 1.4.a. and/or
1.4.b.
above, the LENDER will promptly repurchase such Loan from XXXX, (i)
if
XXXX succeeds, after purchase, in obtaining from the Borrower three
full
consecutive on-time monthly payments, according to any schedule permitted
by the Program Guidelines, provided that on the date of TERI's notice
to
repurchase, the Borrower is within thirty (30) days of being current
on
his or her payments on such Loan; provided that this repurchase obligation
may be invoked by XXXX only once as to any Loan; or (ii) subject
to
Section 2.3 above, if XXXX should determine that the Loan does not
meet
the conditions set forth in subsection (b), (c) and (d) of Section
2.2
above. With respect to the repurchase of any Guaranteed Loan
pursuant to this Section 3.4, the repurchase price shall be equal
to (1)
the remaining unpaid principal balance of such Loan, plus (2) any
accrued
unpaid interest thereon.
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3.5
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To
the extent permitted by applicable law, the LENDER will deliver to
XXXX
such reports, documents, and other information concerning the Loans
as
XXXX may reasonably require, and permit independent auditors or authorized
representatives of XXXX, and governmental agencies, if any, having
regulatory authority over XXXX, to have access to the operational
and
financial records and procedures directly applicable to Loans and
to the
LENDER's participation in the
Program.
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LENDER
shall provide a monthly report containing information set forth on
Exhibit B hereto at TERI’s expense; XXXX shall arrange directly
with the loan servicer to receive the report and negotiate any necessary
fee. Any other reporting or information shall be provided upon TERI’s
agreement to reimburse LENDER for its incremental cost of such
report.
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3.6
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If
the LENDER should violate any term of this Agreement, it will be
liable to
XXXX for all loss, cost, damage, and expense sustained by XXXX as
a
result. The LENDER will indemnify XXXX and hold it harmless
from and against all loss, cost, damage, and expense that XXXX may
suffer
as a result of claims arising out of the LENDER's actions or omissions
relative to the LENDER’s participation in the Program unless such actions
or omissions are specifically required by this Agreement. The
LENDER will similarly indemnify XXXX with respect to any defenses
arising
from the LENDER’s violation of or failure to comply with any law,
regulation, or order, or any term of this Agreement, that may be
raised by
a Borrower to any suit upon a Promissory Note. "Expense"
includes, without limitation, TERI's reasonable attorney's
fees.
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Section
4:
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INTENTIONALLY
OMITTED
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Section
5: REPRESENTATIONS
AND WARRANTIES
5.1
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Each
party represents and warrants to the other that its execution, delivery
and performance of this Agreement are within its power and authority,
have
been authorized by proper proceedings, and do not and will not contravene
any provision of law or such party's organization documents or by-laws
or
contravene any provision of, or constitute an event of default or
an event
which, with the lapse of time or with the giving of notice or both,
would
constitute an event of default, under any other agreement, instrument
or
undertaking by which such party is bound. Each party represents
and warrants that it has and will maintain in full force and effect
all
licenses required under applicable state, federal, local or other
law for
the conduct of all activities contemplated by this Agreement and
comply
with all requirements of such applicable law relative to its licenses
and
the conduct of all activities contemplated by this
Agreement. This Agreement and all of its terms and provisions
are and shall remain the legal and binding obligation of the parties,
enforceable in accordance with its terms subject to bankruptcy and
insolvency laws. The warranties given herein shall survive any
termination of this Agreement.
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5.2
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Each
party represents and warrants to the other that its computer and
processing systems will (a) operate continuously without errors relating
to date information; (b) continue to function and will not generate
invalid or incorrect results as a result of date information, including
any date information representing dates from different centuries
or more
than one century; and (c) have been designed to be and in fact are,
Year
2000 compatible such that (i) all data created or stored by the software
will be correct, regardless of the date information contained therein
or
the date the data is created or stored; (ii) all calculations performed
will be correct regardless of the date information used or the date
the
calculations are performed; (iii) all date-related user interface
functions and data fields include a century indication; and (iv)
all
reports generated will include a century
indication.
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5.3
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The
parties acknowledge that XXXX is not an insurer or reinsurer and
the
LENDER expressly waives all claims it might otherwise have under
applicable law were XXXX to be held by any court or regulatory agency
to
be acting as an insurer or reinsurer hereunder. The only
obligations of XXXX to the LENDER shall be those expressly set forth
herein.
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Section
6:
MISCELLANEOUS
6.1
|
Neither
party is or will hold itself out to be the agent, partner, or joint
venturer of the other party with regard to any transaction under
or
pursuant to this Agreement.
|
6.2
|
Each
party's respective rights, remedies, powers, privileges, and discretions
("Rights and Remedies") shall be cumulative and not
exclusive. No delay or omission by either party in exercising
or enforcing any of its Rights and Remedies shall operate as to constitute
a waiver of them. No waiver by a party of any default under
this Agreement shall operate as a waiver of any subsequent or other
default under this Agreement. No single or partial exercise by
a party of any of its Rights and Remedies shall preclude the other
or
further exercise of such Rights and Remedies. No waiver or
modification by a party of the Rights and Remedies on any one occasion
shall be deemed a continuing waiver. A party may exercise its
various Rights and Remedies at such time or times and in such order
of
preference as it in its sole discretion may
determine.
|
6.3
|
This
Agreement (including the Program Guidelines and all exhibits and
schedules
hereto), together with (i) the Deposit and Security Agreement and
(ii) the
Loan Origination Agreement, of even date herewith, between XXXX and
the
LENDER ((i) and (ii) together, the “Ancillary Agreements”), represents the
entire understanding of the parties with respect to the subject matter
hereof. This Agreement, together with any contemporaneous
contract concerning credit analysis and the Ancillary Agreements,
supersedes all prior communications whatsoever between the parties
relative in any way to Loans or the LENDER’s participation in the
Program. This Agreement may be modified only by written
agreement of the parties hereto, except as may otherwise be set forth
herein.
|
6.4
|
Any
determination that any provision of this Agreement is invalid, illegal,
or
unenforceable in any respect shall not affect the validity, legality,
or
enforceability of such provision in any other instance and shall
not
affect the validity, legality, or enforceability of any other provision
of
this Agreement.
|
6.5
|
Each
of the parties will timely implement, if it has not already, and
will
maintain, a reasonable disaster recovery plan. Subject to the
foregoing, no party hereto shall be responsible for, or in breach
of this
Agreement if it is unable to perform as a result of delays or failures
due
to any cause beyond its control, howsoever arising, and not due to
its own
act or negligence and that cannot be overcome by the exercise of
due
diligence. Such causes shall include, but not be limited to,
labor disturbances, riots, fires, earthquakes, floods, storms, lightning,
epidemics, wars, terrorist acts, civil disorder, hostilities,
expropriation or confiscation of property, failure or delay by carriers,
interference by civil and military authorities whether by legal proceeding
or in fact and whether purporting to act under some constitution,
decree,
law or otherwise, acts of God and perils of the
sea.
|
6.6
|
This
Agreement shall be governed by and construed in accordance with the
laws
of the Commonwealth of Massachusetts, without regard to the conflict
of
laws provisions thereof.
|
6.7
|
This
Agreement will be binding on the parties' respective successors and
assigns. Except as otherwise set forth in this Section 6.7,
this Agreement may not be assigned by either party without the other’s
written consent.
|
a.
|
The
LENDER may, without TERI’s consent, assign any Loan, together with the
provisions hereof as applicable to such Loan, to another entity
participating in the Program, or to an SPE formed by the LENDER,
in each
case upon written notice to XXXX.
|
b.
|
XXXX
specifically acknowledges that FMC or an SPE sponsored by FMC is
expected
to purchase some or all of the Loans, and this Agreement shall inure
to
the benefit of FMC or any such SPE upon such purchase. No
notice of such purchase or consent to the assignment of the LENDER’s
rights under this Agreement in connection with a purchase of some
or all
of the Loans by FMC or any SPE sponsored by FMC shall be
necessary.
|
c.
|
In
assigning any Loan and its rights under this Agreement relating to
such
Loan in accordance with Section 5.7(a), (i) the LENDER’s written notice to
XXXX must be made within thirty (30) days after said assignment and
must
identify each Loan to which such assignment relates, and (ii) XXXX
will
fully cooperate with any Securitization Transaction or other sale
of a
portfolio of Loans, provided it is given thirty (30) days advance
written
notice of the date that information or documents are required of
it and
provided that its reasonable legal fees and other expenses incurred
in
connection with such transaction are reimbursed by the seller of
such
Loans.
|
d.
|
Except
for any assignment hereunder to FMC or any SPE sponsored by FMC in
connection with a purchase of Loans as described in subsection b.
above,
no assignment of Loans or the LENDER’s rights hereunder without TERI’s
express written consent shall release the LENDER from any liability
to
XXXX under this Agreement arising out of the LENDER’s ownership of such
Loans (whether arising prior to, as a result of or after the sale
of such
Loans by the LENDER) including, without limitation, the LENDER’s
obligation to pay any unpaid Guaranty Fees and to repurchase Loans
pursuant to Section 3.4.
|
|
e.
|
LENDER
acknowledges that XXXX has outsourced or subcontracted some or all
of its
administrative functions, including but not limited to the processing
of
guarantee claims, to First Marblehead Education Resources, Inc. In
addition, LENDER acknowledges that XXXX has subcontracted and may
hereafter subcontract any administrative obligations necessary or
convenient to XXXX to perform its obligations hereunder, and that
such
subcontracts do not and shall not require the consent of the LENDER.
Such
outsourcing or subcontracting shall not relieve XXXX of its obligations
under this Agreement.
|
6.8
|
Notice
for any purpose hereunder may be given by any means requiring receipt
signature, or by facsimile transmission confirmed by first class
mail. In the case of XXXX, notices should be sent to its
President, and if by fax, to (000) 000-0000, or to its Senior Vice
President-Loan Programs, Fax No. (000) 000-0000. In the case of
the LENDER, notices should be sent to Bank of America Student Banking
Group, Bank of America,
N.A., Mail
Code:
NC1-002-15-26,
Xxxxxxxxx,
XX
00000-0000, Attention: Xxxx Xxxxxx, and if by fax, (000)
000-0000. Either party may from time to time change the person,
address or fax number for notice purposes by formal notice to the
other
party.
|
6.9
|
For
the Bank of America School Channel Loan Program, XXXX has
established a system of risk-based pricing based on tiered guaranty
fees
and/or tiered interest rates that correspond to the actual risk of
lending
to borrowers with lesser creditworthiness (“Risk-Based
Pricing”) The Risk-Based Pricing system is set forth in the
Program Guidelines attached hereto. XXXX bases Risk-Based
Pricing upon the projected net cost of defaults, which XXXX believes
provides business justification for the pricing levels set forth
in the
Risk-Based Pricing it has offered to LENDER. Any representation
or warranty of compliance with federal or state law made by XXXX
in this
Guaranty Agreement, or the Loan Origination Agreement between the
parties
of same date, that may relate to Risk-Based Pricing does not extend
beyond
the pricing actually included in the Program Guidelines attached
hereto.
|
Section
7: CHANGES
TO PROGRAM GUIDELINES
The
parties agree that the Program Guidelines will need to be updated and modified
from time to time to respond to changed conditions. The parties
intend to make such modifications in a manner that does not interfere with
the
ordinary advertising and origination cycle for education loans. Amendments
necessary to meet state or federal regulatory requirements may be made at any
time. XXXX may request, in writing, modifications to the Program
Guidelines, including without limitation any requested changes to the provisions
of the Program Guidelines concerning the Guaranty Fees, in the first part of
the
first calendar quarter of each year. LENDER shall respond in writing to
proposals from XXXX within thirty (30) days, and both parties will attempt
to
resolve any differences within thirty (30) days after XXXX receives a response
to a request. All modifications must be mutually acceptable. Modifications
shall
take effect as soon after XXXX and the LENDER’s loan servicer shall be able to
adjust their systems to accept loans made on the modified terms, and the LENDER
agrees to take such actions as are reasonably necessary to ensure that its
loan
servicer adjusts its systems as promptly as practicable. The parties shall
use
their best efforts to conclude all negotiations of proposed changes prior to
May
1 of each year. The foregoing process shall not apply to modification of the
Servicing Guidelines, which are subject to the modification process contained
therein.
Section
8: TERM
AND TERMINATION
8.1
|
The
initial term of this Agreement shall commence on June 30, 2006, and
shall
continue until June 30, 2007. Thereafter, this Agreement shall
automatically renew for successive one-year terms unless either party
provides written notice of non-renewal and termination not less than
[**]
days prior to the end of the then-current
term.
|
8.2
|
In
the event that the parties are unable to agree on a proposed modification
to the Program Guidelines as provided in Section 7, above, XXXX shall
have
the option of terminating this Agreement effective immediately upon
written notice of termination to LENDER, provided that XXXX does
so within
[**] days of the end of the [**] day period provided in Section 6
for the
resolution of any differences.
|
8.3
|
To
the extent permitted by applicable law, if either party should become
subject to bankruptcy, receivership, or other proceedings affecting
the
rights of its creditors generally, the party becoming subject to
such
proceedings will promptly notify the other party thereof, and this
Agreement will be deemed terminated immediately upon the initiation
of
such proceedings without the need of notice to the other
party.
|
8.4
|
Termination
shall be prospective only and shall not affect the obligations of
the
parties hereto which were incurred prior to such termination or any
of the
warranties and indemnities contained herein or the provisions of
Section 9
below (regarding confidentiality). Not less than [**] days
prior to the effective date of termination, XXXX may, by additional
notice
to the Lender, terminate its obligation to assume the guaranty of
all or
any subset of otherwise qualifying Loans as to which a commitment
to lend
is made after the Lender's receipt of such additional notice. In
the
absence of such additional notice XXXX will, subject to the terms
and
conditions of this Agreement, assume the guaranty of all Loans as
to which
a commitment to lend is made prior to the effective date of termination.
In the event this Agreement terminates or expires and only one
disbursement of a multi-disbursement loan has been made prior to
that
date, the other disbursement will also be guaranteed pursuant to
the terms
of this Agreement.
|
Section
9: CONFIDENTIALITY;
RESTRICTIONS ON USE OF INFORMATION
9.1
|
During
the course of negotiating this Agreement and hereafter during the
pendency
of this Agreement, the parties from time to time may have revealed
or may
hereafter reveal to each other certain information concerning their
respective business plans, business methods, financial data and
projections, and/or information that is not generally known in the
student
loan industry, including, without limitation, the terms and conditions
of
this Agreement. All the foregoing is referred to herein as
“Confidential Information.” In TERI’s case, its Confidential
Information also includes, but is not limited to, information concerning
the operation of its telephone and on-line loan applications procedures,
and its online credit scoring system. Each party will use reasonable
efforts to preserve the confidentiality of Confidential Information
contained herein or disclosed to it by the other party, such efforts
to be
not less vigilant than those that such party uses to protect its
own
proprietary information. The foregoing is subject to the
following qualifications:
|
a.
|
No
party will be so bound with respect to information that is or becomes
public knowledge in the student loan industry (but if it does so
through
any fault of such party that fault will be considered a material
breach of
this Agreement);
|
b.
|
No
party will be so bound with respect to information that is now or
hereafter comes into its possession by its own documented independent
efforts or from a third party who, so far as the recipient party
has
reason to believe, is under no comparable restriction with respect
to such
information;
|
c.
|
Either
party may disclose Confidential Information to its attorneys, auditors,
agents, and consultants who are bound to maintain the confidentiality
of
such information;
|
d.
|
Either
party may disclose Confidential Information in the context of any
regulatory review of its operations or as compelled by law, regulation,
or
court order, provided that in the context of a court order the party
required to disclose will (i) give the other party prompt written
notice
upon learning of the requirement so that the other party may take
appropriate action to prevent or limit the disclosure, (ii) consult
with
the other party and use all reasonable efforts to agree on the nature,
form, timing and content of the disclosure, (iii) except as otherwise
agreed under (ii), disclose no more than its counsel advises is legally
required, and (iv) inform the Court and all counsel concerned that
such
information is and should be treated as confidential information
of the
other party; and
|
e.
|
Information
concerning Loans and Borrowers that comes into TERI’s possession shall not
be considered Confidential Information of the
Lender.
|
f.
|
Without
limiting the foregoing, XXXX may disclose any of the LENDER’s Confidential
Information to any entity to which XXXX subcontracts its obligations
under
this Agreement pursuant to Section 6.7(e)
hereof.
|
9.2
|
In
accordance with the provisions
of Title V of the Xxxxx-Xxxxx-Xxxxxx Act (the “GLB Act”) and Federal
Reserve Board Regulation P (“Regulation P”), XXXX agrees, as a financial
institution subject to Regulation P, to respect and protect the security
and confidentiality of any “nonpublic personal information” (as defined in
the GLB Act and Regulation P) relating to applicants for Loans and
to
Borrowers, including, where applicable, the restrictions on the disclosure
of such information set forth in the GLB Act and Regulation
P.
|
|
Notwithstanding
the foregoing, XXXX may purchase credit score analysis and validation
services from time to time from consumer reporting agencies. In order
to
perform the score analysis and validation services, the consumer
reporting
agencies may access personal information about applicants and borrowers,
including (i) application information and loan servicing data
concerning loans funded by Lender and guaranteed by XXXX,
(ii) application data concerning loan applications that were approved
but not funded (e.g., due to withdrawal of the loan application),
and
(iii) application data concerning denied applications. In order to
facilitate the analysis of this data and the score validation process,
XXXX may retain third party database vendors to receive and store
this
data in a secure database, and to provide XXXX and the consumer reporting
agencies with restricted access to such information. In order to
comply with applicable privacy laws, TERI will contract with the
consumer
reporting agencies and such third party database vendors to ensure
that
the information is protected and used only for the purposes of providing
the score validation and analysis
services.
|
9.3
|
Without
limiting the foregoing, XXXX may retain as its own property and use
for
any lawful purpose any or all aggregated or de-identified data concerning
Loan applicants and Borrowers, which does not include the name, address
or
social security number of the Loan applicants or
Borrowers. XXXX may sell, assign, transfer or disclose such
information to third parties including, without limitation, FMC,
who may
also use such information for any lawful
purpose.
|
|
REMAINDER
OF THIS PAGE INTENTIONALLY LEFT
BLANK
|
IN
WITNESS WHEREOF, XXXX and the LENDER
have caused this instrument to be executed by their duly authorized officers
under seal as of the day and year indicated above.
THE EDUCATION RESOURCES INSTITUTE, INC. | BANK OF AMERICA, N.A. | |||
By:
/s/
Xxxxxxx X. Xxxxxxxx, Xx.
|
By:
/s/
Xxxx
Xxxxxx
|
|||
Print Name: Xxxxxxx X. Xxxxxxxx, Xx. | Print Name: Xxxx Xxxxxx | |||
Title:
Treasurer and
CFO
|
Title:
Senior
Vice President
|
|
TABLE
OF EXHIBITS
|
Exhibit
A1 --
|
Program
Guidelines for the Bank of America Private Undergraduate Education
Loan
Program and the Bank of America Private Graduate Professional Education
Loan Program.
|
Exhibit
A2 --
|
Program
Guidelines for the prepGATE Loan Program, the Bank of America XXXX
Alternative Undergraduate Loan Program, the Bank of America XXXX
Alternative Graduate Loan Program, the Bank of America XXXX Alternative
Continuing Education Loan Program, the Bank of America XXXX Alternative
Health Professions Loan Program (including the CVS Loan
Program).
|
Exhibit
A3 --
|
Program
Guidelines for Bank of America ISLP Undergraduate Loan Program and
the
Bank of America ISLP Graduate Loan
Program.
|
Exhibit
A4 --
|
Program
Guidelines for the Bank of America ISLP Medical Loan
Program.
|
Exhibit
B
|
--
|
Servicer
Data Requirements
|
|
Schedule
3.3 –
Guaranty Fee Amounts
|
|
EXHIBIT
A
|
|
Program
Guidelines
|
|
[**]
|
EXHIBIT
B
Servicer
Data Requirements
[**]
EXHIBIT
C
XXXX
Electronic Signature Process
[**]
SCHEDULE
3.3
[**]