EXHIBIT 10.12
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS
NOTE PURCHASE AGREEMENT
XXXX-GUARANTEED BANK OF AMERICA DIRECT TO CONSUMER LOAN PROGRAM
BANK OF AMERICA, N.A.
This Note Purchase Agreement, by and between Bank of America, N.A.
("Program Lender"), a national banking association organized under the laws of
the United States and having a principal office located at 000 Xxxxxxxx Xxxx.,
Xxx Xxxxxxx, Xxxxxxxxxx, and THE FIRST MARBLEHEAD CORPORATION, a Delaware
corporation having a principal place of business at 00 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxxx ("FMC"), is made as of June 30th, 2003;
W I T N E S S E T H:
WHEREAS, Program Lender is in the business of making education loans
under education lending programs, including, without limitation, the Bank of
America Direct to Consumer Loan Program (as defined in Section 1); and
WHEREAS, FMC exists to provide funds for education loans for the
benefit of students at Participating Institutions (as defined in Section 1); and
WHEREAS, in order to facilitate funding of Bank of America Direct to
Consumer Conforming Loans (as defined in Section 1), Program Lender has agreed
to sell, from time to time, pools containing Bank of America Direct to Consumer
Conforming Loans originated by Program Lender to FMC or a Purchaser Trust (as
defined in Section 1); and
WHEREAS, the Bank of America Direct to Consumer Conforming Loans are
made by Program Lender and purchased by FMC on the condition that they qualify
for and in fact are covered by a guaranty issued by The Education Resources
Institute, Inc. ("XXXX").
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NOW, THEREFORE, in consideration of these presents and the covenants
contained herein, the parties hereto hereby agree as follows:
I. DEFINITIONS. Capitalized terms used herein without definition have the
meanings set forth in the Program Guidelines.
"Affiliate" shall mean, as to any person, any other person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such person. A person shall be deemed to control another person if
the controlling person possesses, directly or indirectly, the power to direct or
to cause the direction of the management and policies of the other person,
whether through the ownership of voting securities, by contract or otherwise.
"Agent" means U.S. Bank, N.A., or a successor agent under the Deposit
and Security Agreement.
"Ambac" means Ambac Assurance Corporation.
"BAGEL Note Purchase Agreement" shall mean the agreement of same name
between FMC and Program Lender dated as of April 30, 2001.
"BAGEL Seasoned Loans" shall mean all loans that fall within the
definition of "Seasoned Loan" as set forth in the BAGEL Note Purchase Agreement.
"Bank of America Direct to Consumer Conforming Loans" shall mean Loans
(a) made in accordance with and conforming to the requirements of the Program
Guidelines at the time the Loans were made, (b) serviced by the Servicer in
accordance with the Program Guidelines, and (c) covered by and subject to all
the benefits of the Guaranty Agreement.
"Bank of America Direct to Consumer Loan Pool" or "Pool" shall mean and
refer to a group of Bank of America Direct to Consumer Notes purchased and
pledged or intended to be purchased and pledged as collateral in a particular
Securitization Transaction.
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"Bank of America Direct to Consumer Notes" shall mean notes or other
forms of consumer debt instruments, evidencing Bank of America Direct to
Consumer Conforming Loans.
"Bank of America Direct to Consumer Program" shall mean the Bank of
America Direct to Consumer Loan Program described in the Program Guidelines.
"Bond Insurer" means Ambac, MBIA, or any other provider of credit
insurance or note insurance with respect to the obligations of the Purchaser
Trust.
"Business Day" shall mean any day other than: (a) a Saturday or Sunday,
or (b) a day on which national banking institutions are required or authorized
by law or executive order to be closed.
"Co-lender Indemnification Agreement" means the form of Agreement
attached hereto as Exhibit C.
"Collateral" has the meaning set forth in the Deposit and Security
Agreement.
"Deposit and Security Agreement" means the agreement of that name among
Program Lender, Agent, FMC and XXXX dated as of June 30, 2003.
"First Marblehead" or "FMC" shall mean The First Marblehead
Corporation, a Delaware corporation.
"First Payment Date" means the date when the first monthly payment is
due with respect to a particular Bank of America Direct to Consumer Conforming
Loan.
"Guaranty Agreement" means the Guaranty Agreement between Program
Lender and XXXX dated June 30, 2003, as it may be amended from time to time.
"Loan" shall mean a loan of funds, including all disbursements thereof,
made by the Program Lender to a Borrower (as defined in the Guaranty Agreement)
under the Bank of America Direct to Consumer Program.
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"Market Disruption Event" means any of the following: (a) any
suspension or limitation on trading in securities generally on the New York
Stock Exchange or the National Association of Securities Dealers National Market
system; (b) any banking moratorium declared by federal, Massachusetts, or New
York authorities or authorities of the state in which Program Lender is
headquartered; (c) any outbreak or escalation of major hostilities or armed
conflict, or any declaration of war by Congress; (d) any change in federal or
state law or regulations that disrupts the functioning of the capital markets;
(e) the closing of the market for commercial paper or asset-backed securities or
significant disruption in the functioning of those markets, if, in the
reasonable judgment of FMC, the effect of any such event in (a) - (e) above
materially affects FMC's ability to economically complete a Securitization
Transaction; or (f) the occurrence of a XXXX Insolvency Event.
"MBIA" means MBIA Insurance Corporation.
"Minimum Purchase Price" has the meaning set forth in Section 2.04.
"Loan Origination Agreement" refers to (a) the Loan Origination
Agreement to be entered into between XXXX and Program Lender with respect to
origination of Bank of America Direct to Consumer Conforming Loans, as amended
from time to time, and (b) any subsequent agreement relating to origination
services provided to Program Lender with respect to Bank of America Direct to
Consumer Notes purchased under this Agreement that is acceptable in form and
substance to each of FMC and XXXX.
"Origination Records" means and refers to the original Bank of America
Direct to Consumer Loan Application and Note, a form of cosigner notice when
required under 16 C.F.R. Section 444, and any other standardized documentation
specified from time to time in the Program
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Guidelines as required to be received by the Servicer from the Program Lender in
order to service Bank of America Direct to Consumer Conforming Loans adequately
and accurately.
"Participating Institution" means an educational institution approved
by XXXX for receipt of Bank of America Direct to Consumer Conforming Loan funds.
"PHEAA" shall mean the Pennsylvania Higher Education Assistance Agency,
a public corporation and government instrumentality organized under the laws of
the Commonwealth of Pennsylvania, and having an address at 0000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxxxxxxx, XX 00000.
"Pledged Account" has the meaning set forth in the Deposit and Security
Agreement.
"Program Guidelines" means the Program Guidelines attached to the
Guaranty Agreement as Exhibit A.
"Purchase Date" shall mean (a) the date of consummation of a
Securitization Transaction with respect to a particular Pool of Seasoned Loans
originated by Program Lender, which date: (i) shall be set by written notice
from FMC to Program Lender, given to Program Lender not less than five (5)
Business Days in advance of the specified date, and (ii) shall occur [**]
(including any extension thereof) for each loan in such Pool in question, or (b)
the date on which FMC or a designee Purchaser Trust purchases a Bank of America
Direct to Consumer Conforming Loan during the Right of First Refusal Period.
"Purchase Period" means, with respect to any particular Bank of America
Direct to Consumer Loan, the period beginning on the first date such loan
becomes a "Seasoned Loan" and ending [**] days thereafter, as same may be
extended pursuant to the terms of this Agreement.
"Purchaser Trust" shall mean and refer to a trust or other SPE formed
or sponsored by FMC or by any Affiliate of FMC for the purpose of purchasing,
directly or indirectly, Bank of America Direct to Consumer Conforming Loans. Any
action required or permitted to be taken
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by FMC hereunder may be taken by a Purchaser Trust with respect to a particular
Pool, and FMC may assign its rights hereunder to a Purchaser Trust without the
consent of the Program Lender. If FMC elects to finance the purchase of such
Loans on an interim basis by using an SPE or any other temporary financing
vehicle as an interim holder, (i) the term Purchaser Trust shall include both
such interim holder and any other SPE to whom the Loans are ultimately
transferred in a Securitization Transaction; and (ii) the representations,
warranties and indemnities made by the Program Lender to FMC hereunder shall
pass directly to both the interim holder and the ultimate purchaser SPE.
"Rating Agencies" shall mean and refer to Standard and Poor's
Corporation and/or Xxxxx'x Investors Service, Inc., and/or Fitch Investors
Services.
"Right of First Refusal Period" means for a Bank of America Direct to
Consumer Loan, the earlier of (i) [**] days after expiration of the relevant
Purchase Period or (ii) [**] days after notice that a bona fide written offer
has been received by Program Lender under Section 2.02 with respect to such Bank
of America Direct to Consumer Loan, provided that no such notice may be given
until after expiration of [**].
"Seasoned Loan" means a Bank of America Direct to Consumer Conforming
Loan as of fifteen (15) days after completion of all scheduled disbursements on
the Bank of America Direct to Consumer Conforming Loan, but shall exclude any
loan disbursed by paper check if the paper check has not yet been paid by the
drawee. In the event a disbursement check is paid by the drawee more than thirty
days after it is written, the loan shall become a Seasoned Loan on the date of
such payment. For purposes of computation of the Minimum Purchase Price, the
term also includes defaulted Bank of America Direct to Consumer Conforming Loans
not yet purchased by XXXX.
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"Securitization Costs" means the actual costs and expenses incurred by
FMC, the Purchaser Trust, and all others entitled to payment for expenses by the
Purchaser Trust or FMC, in connection with a Securitization Transaction
including, without limitation, the following:
(Structuring and Origination Fees; Copy/Binding Costs)
(Underwriting Expenses)
(Rating Fee)
(Owner Trustee and Indenture Trustee Transaction and First Year Fees;
Expenses)
(Counsel for Indenture Trustee)
(Counsel for FMC)
(Servicer Auditor)
(Bond Insurer)
"Securitization Transaction" shall mean and refer to the purchase of a
Pool of Seasoned Loans by FMC or a Purchaser Trust funded through the issuance
and sale of commercial paper, certificates, bonds or other securities or
evidences of indebtedness, the repayment of which is supported by payments on
the Seasoned Loans included in such Pool. A Securitization Transaction may
include, without limitation, a continuing series of transactions occurring on a
periodic basis in which Program Lender makes a sale of then-outstanding Seasoned
Loans to a Purchaser Trust, which Purchaser Trust in turn either utilizes the
Pool directly as collateral for its own debt or resells the Pool (in whole or in
part) in further sales to a securitization conduit providing financing to the
Purchaser Trust or to another Purchaser Trust that issues financial instruments.
"Servicer" shall mean and refer to PHEAA, or such other servicer as may
be approved by FMC and XXXX and retained by the holder of Bank of America Direct
to Consumer Conforming Loans in accordance with the terms hereof and of the
Guaranty Agreement.
"Servicing Agreement" refers to: (a) the Servicing Agreement to be
entered into between Servicer and Program Lender with respect to servicing of
Bank of America Direct to Consumer
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Conforming Loans, as amended from time to time, and (b) any subsequent servicing
agreement between Program Lender and the Servicer governing servicing of Bank of
America Direct to Consumer Conforming Loans purchased under this Agreement, in
either case such agreement and any amendment thereto to be satisfactory in form
and substance to FMC and its counsel.
"SPE" means a special purpose entity formed and operated for the
purpose of acting as purchaser and owner of Bank of America Direct to Consumer
Conforming Loans and other education loans.
"XXXX Insolvency Event" means (1) the commencement by XXXX of a
voluntary petition under the federal bankruptcy laws, as now constituted or
hereafter amended, or any other applicable federal or state bankruptcy,
insolvency or other similar laws, (2) the consent by XXXX to the appointment of
or taking possession by a receiver, liquidator, trustee, custodian (or other
similar official) of or for XXXX or for any substantial part of its property,
(3) the making by XXXX of any assignment for the benefit of creditors, (4) the
insolvency or the failure of XXXX generally to pay its debts as such debts
become due, (5) the downgrading of TERI's credit worthiness below the rating on
January 2, 2003 or the placement of a negative watch on XXXX by one of the
Rating Agencies, or (6) a default under one or more Guaranty Agreements to which
XXXX is a party because of a failure to pay claims, or the taking of action by
XXXX in furtherance of any of the foregoing.
"Term" shall mean the period commencing on the effective date hereof
and ending upon termination hereof, all as set forth in Article X.
"Total Principal Amount" means the total principal amount of Seasoned
Loans available to be sold and purchased from Program Lender [**].
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"Trust Agreement" means, with respect to any particular Securitization
Transaction, the agreement pursuant to which a Purchaser Trust is formed.
"Trust Indenture" means, with respect to any particular Securitization
Transaction, the agreement pursuant to which FMC or a Purchaser Trust issues
evidences of indebtedness secured by the payments on the related Bank of America
Direct to Consumer Conforming Loans.
"Umbrella Agreement" shall mean that certain agreement of same name
among Program Lender, FMC, and XXXX dated as of June 30, 2003.
II. AGREEMENT FOR PURCHASE AND SALE OF NOTES.
2.01. PURCHASE AND SALE.
[**] during the Term of this Agreement and subject to the conditions
set forth herein, Program Lender shall sell to FMC or a designee
Purchaser Trust, and FMC or such Purchaser Trust shall purchase, every
Seasoned Loan owned by Program Lender on the Purchase Date.
2.02. PRE-CLOSING INFORMATION; FMC PURCHASE.
(a) LOAN INFORMATION. Program Lender will cause Servicer to inform
FMC periodically of information reasonably requested by FMC in anticipation of a
Securitization Transaction, including, without limitation, the number of
Seasoned Loans ready for purchase, the amount of paid and unpaid principal and
accrued interest with respect to each such Seasoned Loan, payment status
(including defaulted loans presented for guaranty payment), and the identity of
Participating Institutions affected by the Securitization, together with the
information contained in PHEAA's MR-50 and MR-53 reports and TERI's weekly
origination report, which reports shall be provided in electronic media in the
Servicer's or TERI's standard format. FMC hereby agrees and covenants to hold
information contained in the reports confidential and only use such information
for the purposes outlined in Section VI of the Umbrella Agreement.
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(b) PURCHASE SCHEDULING. FMC will [**] specify Purchase Dates
that fall within each November and each June, but in any event will, subject
to Sections 2.02(d) and 3.01(b), purchase or cause a Purchaser Trust to
purchase [**] all of the Seasoned Loans held by Program Lender prior to the
expiration of [**] for any loan in the Pool (i.e., at least once every six
(6) months). FMC shall have the sole and exclusive right to purchase such
Bank of America Direct to Consumer Loans [**], which right may be assigned to
one or more Purchaser Trusts. FMC may reschedule the Purchase Date without
penalty of any kind, [**](i.e., before any Loan then held by Program Lender
has been seasoned for [**]. The [**] with respect to any Loan may be extended
due to lack of volume as set forth in Section 2.02(d) or for a failure to
comply with one or more conditions as set forth in Section 3.01(b). Program
Lender agrees, in consideration of FMC's undertaking pursuant to this
section, not to sell or offer to sell to any third person any interest in any
Bank of America Direct to Consumer Loan originated by Program Lender [**]
with respect to such Loan. During [**], if Program Lender receives any bona
fide third-party written offer to purchase such Bank of America Direct to
Consumer Conforming Loan, and if Program Lender desires to accept such offer,
Program Lender shall, prior to accepting any such offer, provide a copy of
same to FMC, and FMC (or a Purchaser Trust) shall have the sole and exclusive
right to purchase such Bank of America Direct to Consumer Conforming Loan on
the terms of such third-party offer [**] for such Bank of America Direct to
Consumer Conforming Loan. If FMC (or a Purchaser Trust) fails to exercise
such right [**] with respect to such Loan, Program Lender shall within its
sole discretion be entitled to: (i) sell such Bank of America Direct to
Consumer Conforming Loan to any third party or to retain such Bank of America
Direct to Consumer Conforming Loan, in whole or in part, for its own account,
free and clear of any claim under this Agreement; and/or (ii) immediately
terminate this Agreement.
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(c) SECURITIZATION AND PURCHASE COMMITMENT BASED UPON VOLUME. In the
event that the Total Principal Amount held by Program Lender is:
(1) Less than [**] Dollars ($[**]), FMC will [**] purchase or
cause the purchase of the Seasoned Loans in a Securitization Transaction, but
will have no obligation to do so if FMC is unable to do so after [**].
(2) Greater than [**] Dollars ($[**]) but less than [**]
Dollars ($[**]),] FMC shall purchase or cause the purchase of all Seasoned
Loans; provided, however, that such obligation shall be effective only if
lenders whose loans aggregate [**] Dollars ($[**])] or more in principal amount
agree to have their loans included in the same Securitization Transaction (FMC
shall use reasonable efforts under this Section 2.02(c)(2) to cause lenders to
permit the addition of Seasoned Loans in a Securitization Transaction).
(3) Greater than [**] Dollars ($[**]), FMC shall purchase or
cause the purchase of all Seasoned Loans in a Securitization Transaction.
(d) EXTENSION OF PURCHASE PERIOD DUE TO LACK OF VOLUME. In the event
that the volume conditions (set forth in Section 2.02(c)) for a binding purchase
commitment are not satisfied, FMC may, but need not, declare [**] with respect
to each Bank of America Direct to Consumer Conforming Loan that is then a
Seasoned Loan extended by [**] days. FMC may continue to declare such
extensions, in its discretion, until the earlier of: (a) the date when such
volume conditions have been satisfied or (b) the date this Agreement expires or
is terminated (in which event FMC shall schedule a Purchase Date for all
outstanding Bank of America Direct to Consumer Loans, to occur prior to the
expiration of the Purchase Period for the last loan made subject to this
Agreement; PROVIDED, HOWEVER, that if this Agreement is terminated under
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subsection 2.02(b)(ii) on account of FMC's failure to purchase Seasoned Loans,
then Program Lender shall not be required to sell loans hereunder and shall
have recourse to its remedies under Section 2.02(e)).
(e) DAMAGES FROM FAILURE TO PURCHASE. If FMC or a Purchaser Trust fails
to purchase within a Purchase Period (as the same may be extended pursuant to
Section 2.02(d)) one or more Seasoned Loans prior to the end of the Purchase
Period with respect to such Loans, to the extent such failure is not excused
under Section 3.01(b), FMC shall pay to Program Lender as liquidated damages
[**] of the Total Principal Amount of all Seasoned Loans as to which the
Purchase Period has expired; provided, however, that if FMC pays said [**]
liquidated damages amount and Program Lender subsequently sells the Loans in
question to FMC, a Purchaser Trust or any third party during the Right of First
Refusal Period, the [**] liquidated damages amount shall be refunded to FMC to
the extent the sum of (i) the [**] liquidated damages amount and (ii) the total
amount received by Program Lender for such Loans exceeds the Minimum Purchase
Price (as defined in Section 2.04 and computed as of the actual purchase date).
If a failure to purchase is continuing, additional damages may become payable at
thirty-day intervals as the Purchase Period expires as to additional loans. Such
payments shall constitute liquidated damages in full satisfaction of FMC's
obligations with respect to the purchase of such loans, and FMC shall have no
further liability to Program Lender with respect thereto. Once the Right of
First Refusal Period for a Bank of America Direct to Consumer Loan has
expired, Program Lender shall be under no further obligation to offer such
Bank of America Direct to Consumer Loan to FMC (or a Purchaser Trust) for
purchase.
(f) FMC RELIANCE ON PROGRAM GUIDELINES. Program Lender further
agrees, in consideration of FMC's undertaking pursuant to this section, that no
change will be made in either the Program Guidelines or the interest rate and
terms, as well as other consumer loan terms and conditions of Bank of America
Direct to Consumer Loans without FMC's prior written consent, which consent
shall not be unreasonably withheld.
(g) PURCHASER TRUST INVOLVEMENT. Any action required or
permitted to be taken by FMC hereunder may be taken by a Purchaser Trust with
respect to a particular Pool, and FMC may assign its rights hereunder to a
Purchaser Trust without the consent of the Program Lender. If FMC elects to
finance the purchase of such Loans on an interim basis by using an SPE or any
other temporary financing vehicle as an interim holder, (i) the term Purchaser
Trust shall include both such interim holder and any other SPE to whom the Loans
are ultimately transferred in a Securitization Transaction; and (ii) the
representations, warranties and indemnities made by
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the Program Lender to FMC hereunder shall pass directly to both the interim
holder and the ultimate purchaser SPE.
2.03. POOL SUPPLEMENT.
Each purchase and sale of the Seasoned Loans included in a Pool on a
Purchase Date shall be made pursuant to a Pool Supplement substantially in the
form of Exhibit A which shall: (1) set forth the Minimum Purchase Price for the
Seasoned Loans included in the Pool, (2) incorporate by reference the terms and
conditions of this Agreement applicable to sales of Bank of America Direct to
Consumer Conforming Loans, and (3) include a Schedule of Seasoned Loans setting
forth the details and characteristics of each such Seasoned Loan included in the
Pool. Each Pool Supplement shall be executed by an authorized agent of each
Purchaser Trust and the Program Lender and shall be delivered on the related
Purchase Date. The Purchaser Trust shall provide a preliminary settlement sheet
in the form of Schedule 1 to the Pool Supplement not less than two (2) Business
Days prior to the Purchase Date.
2.04. MINIMUM PURCHASE PRICE.
On the Purchase Date, Program Lender shall assign and convey all
Seasoned Loans included in the Pool to FMC, or a Purchaser Trust, in
consideration of receipt of the Minimum Purchase Price therefor. For purposes of
this Agreement the term "Minimum Purchase Price" shall mean the sum of:
(a) The unpaid principal amount [**]of the Seasoned Loans in the Pool; plus
(b) All accrued and unpaid interest on such Bank of America Direct to
Consumer Loans, [**]; plus
(c) All fees paid by Bank of America to XXXX with respect to such Bank of
America Direct to Consumer Loans [**]; plus
(d) The amount of any Guaranty Fees [**]; plus
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(e) A marketing fee and loan premium, [**]:
1. with respect to K-12 Creditworthy Loans, [**]%;
2. with respect to Continuing Education Creditworthy Loans,
[**]%[**] [**]%[**];
3. with respect to Undergraduate Creditworthy Loans, [**]%[**]
[**]%[**]; and
4. with respect to Graduate Creditworthy Loans, [**]%[**][**]%
[**].
III. PROCEDURES AND CONDITIONS FOR TRANSFER.
3.01. CONVEYANCES OF BANK OF AMERICA DIRECT TO CONSUMER CONFORMING
LOANS; CONDITIONS TO PURCHASE.
(a) On each Purchase Date, upon execution and delivery of the
related Pool Supplement, Program Lender shall sell, transfer, assign, set over
and otherwise convey to FMC or the Purchaser Trust, without recourse, all right,
title and interest of Program Lender in and to:
(1) The Seasoned Loans included in the related Pool originated
by Program Lender and all payments due or to become due
thereon;
(2) Any claims against XXXX and proceeds of such claims with
respect to origination of the Seasoned Loans included in
the Pool;
(3) Any claims against Servicer with respect to servicing of
the Seasoned Loans prior to the Purchase Date.
(4) The proceeds of any and all of the foregoing received
after the Purchase Date or received prior thereto and not
credited against the Minimum Purchase Price as computed on
the Purchase Date; and
(5) All rights of Program Lender under the Guaranty Agreement
with respect to the Seasoned Loans in the Pool.
(b) The obligation of FMC and/or any Purchaser Trust to purchase the
Seasoned Loans on the related Purchase Date shall be subject to satisfaction of
the following conditions
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(any of which may be waived by FMC or such Purchaser Trust, in whole or in part
in its sole discretion):
(1) Program Lender shall have delivered to the Purchaser Trust
a duly authorized and executed Pool Supplement;
(2) Each of the representations and warranties made by Program
Lender with respect to the Seasoned Loans included in such
Pool shall be true and correct in all material respects as
of the related Purchase Date;
(3) Lender shall have entered into an Origination Agreement
and a Servicing Agreement satisfactory in form and
substance to FMC and such agreements shall be in full
force and effect as of the Purchase Date and shall not
have been modified except with the express prior written
consent of FMC and Program Lender;
(4) (a) Program Lender shall have performed and observed the
terms and conditions of this Agreement in all material
respects;
(b) Program Lender and XXXX shall have performed and
observed the terms and conditions of the Origination
Agreement in all material respects and there shall not
have occurred a default thereunder;
(c) Program Lender and Servicer shall have performed and
observed the terms and conditions of the Servicing
Agreement in all material respects and there shall not
have occurred a default thereunder;
(5) Program Lender shall have complied with the provisions of
the Umbrella Agreement applicable to the Seasoned Loans
included in the Pool;
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(6) The Seasoned Loans to be purchased shall have been
originated and serviced in conformity with the Program
Guidelines in all material respects and shall be covered
by the Guaranty Agreement;
(7) If requested by FMC, XXXX shall have executed and
delivered a confirmation of guaranty in the form of a
Certificate of Guaranty, covering all Seasoned Loans being
purchased, for the benefit of the Purchaser Trust and the
indenture trustee in the Securitization Transaction;
(8) The Agent, acting pursuant to the Deposit and Security
Agreement, shall have transferred to the indenture trustee
in the Securitization Transaction the portion of the
Pledged Account and the Collateral specified in Section 4
of the Deposit and Security Agreement;
(9) If required by any other Lender whose loans are included
in the Securitization Transaction, the Program Lender
shall have executed and delivered a Co-Lender
Indemnification Agreement substantially in the form of
Exhibit B;
(10) Program Lender shall, at its own expense, on or prior to
the Purchase Date, indicate in computer files relating to
Bank of America Direct to Consumer Conforming Loans that
the Seasoned Loans identified in the related Pool
Supplement have been sold to the Purchaser Trust pursuant
to this Agreement and such Pool Supplement;
(11) Program Lender hereby authorizes the filing of a UCC-1
financing statement with respect to the Seasoned Loans
included in such Pool in the appropriate office of the
jurisdiction in which the Program Lender is
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located (or, in the event of a change of law, Program
Lender shall have taken, but at no additional cost or
expense to the Program Lender, such action as may be
reasonably required by the Purchaser Trust);
(12) As of such Purchase Date: (i) Program Lender was not
insolvent and will not become insolvent as a result of the
sale and transfer of Seasoned Loans on such Purchase Date,
(ii) Program Lender did not intend to incur or believe
that it would incur debts that would be beyond Program
Lender's ability to pay as such debts matured, (iii) such
transfer was not made with actual intent to hinder, delay
or defraud any Person, and (iv) Program Lender was "Well
Capitalized," as such term is defined by the rules and
regulations promulgated by the Office of the Comptroller
of the Currency as in effect on the Purchase Date;
(13) In the reasonable judgment of FMC, no Market Disruption
Event has occurred; provided that if satisfaction of the
condition set forth in this Section 3.01(b)(13) is the
only outstanding condition to closing, FMC shall schedule
a new Purchase Date as soon as is reasonably practicable
after the Market Disruption Event has ceased; and
(14) Program Lender shall have delivered to counsel for FMC a
Certificate substantially in the form of Exhibit D
attached hereto.
(c) The obligation of Program Lender to sell the Seasoned Loans
included in the Pool on a related Purchase Date is subject to satisfaction of
the following conditions (any of which may be waived by Program Lender in whole
or in part, in its sole discretion):
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(1) Purchaser Trust shall have delivered to Program Lender a
duly authorized and executed Pool Supplement;
(2) Purchaser Trust shall have paid the Minimum Purchase Price
to Program Lender by wire transfer of immediately
available funds within twenty-four (24) hours after the
Purchase Date (such Minimum Purchase Price shall be based
on the best information available from the Servicer as of
the Purchase Date; no later than thirty (30) days
following the Purchase Date, the Purchaser Trust shall
recalculate the Minimum Purchase Price to reflect
adjustments for transactions (including, without
limitation, additional accrued interest and payments
received), and whichever party is deemed to owe the other
such adjustment shall deliver such adjustment to such
other party, by wire transfer of immediately available
funds);
(3) FMC shall have complied with the terms of the Umbrella
Agreement applicable to the Seasoned Loans included in the
Pool and no default of FMC under the Umbrella Agreement
relating to any Seasoned Loan shall have materially
impaired the rights of the Program Lender in connection
with the purchase and sale of the Pool to be sold on the
Purchase Date;
(4) FMC and Purchaser Trust shall have executed and delivered
an Indemnification Agreement substantially in the form of
Exhibit C attached hereto, PROVIDED, HOWEVER, that an
Indemnification Agreement shall not be required if FMC
executes and delivers to Program Lender a certificate
which states that no Offering Materials (as defined in
Exhibit C attached hereto) were distributed or provided to
any securities purchaser or
18
prospective purchaser in connection with the
Securitization Transaction in question;
(5) In the event the subject Pool contains loans originated by
persons and entities other than Program Lender, and its
designated agent (to the extent permitted under the
Umbrella Agreement), each such person and entity shall
have delivered to Program Lender a Co-Lender
Indemnification Agreement;
(6) If the trustee or other fiduciary under the related Trust
Indenture is not Wachovia Trust Company, N.A., Program
Lender shall have approved such trustee or fiduciary, with
such approval not to have been unreasonably withheld;
(7) Program Lender shall have received an opinion of Xxxxxxxx,
Xxxxxxx & Wood or other securities counsel to the
Purchaser Trust and FMC, addressed to Program Lender and
satisfactory to Program Lender in form and substance. Such
opinion shall, with respect to any securities issued by
the Purchaser Trust, state that nothing has come to the
attention of such counsel that would lead it to believe
that the Offering Materials (as defined in the
Indemnification Agreement attached hereto as Exhibit C) in
connection with the matters described therein contain any
untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary
to make the statements therein not misleading; PROVIDED,
HOWEVER, that Xxxxxxxx, Xxxxxxx & Xxxx may except the B of
A Information (as defined in Exhibit C attached hereto)
from the scope of its
19
opinion, and FURTHER PROVIDED, HOWEVER, that such opinion
shall not be required if FMC executes and delivers to
Program Lender a certificate which states that no Offering
Materials (as defined in Exhibit C attached hereto) were
distributed or provided to any securities purchaser or
prospective purchaser in connection with the
Securitization Transaction in question; and
(8) Purchaser Trust assumes certain liabilities as set forth
in Section 3.07 of this Agreement.
3.02. DELIVERY OF DOCUMENTS.
On the Purchase Date, Program Lender shall deliver to the Servicer, as
agent for the Purchaser Trust, and/or to the trustee of the Trust Indenture,
each Bank of America Direct to Consumer Note evidencing a Seasoned Loan included
in the Pool and the related Origination Records. If a Co-Lender Indemnification
Agreement is required as a condition of FMC's or any Purchaser Trust's
obligations under Section 3.01(b)(8) hereof, Program Lender shall execute and
deliver a Co-Lender Indemnification Agreement to each lender selling loans in
the Securitization Transaction.
3.03. CONFIRMATION OF REPRESENTATIONS AND WARRANTIES.
In each Pool Supplement, Program Lender shall confirm and certify its
representations and warranties contained herein as if fully set forth in the
Pool Supplement.
3.04. RIGHTS TRANSFERRED.
The transfer of funds pursuant to Section 2.04 hereof shall constitute,
and the delivery to FMC, or its designated Purchaser Trust of each Pool
Supplement shall evidence, a sale and assignment to FMC or the Purchaser Trust
of the related Seasoned Loans and of all of Program
20
Lender's interest in such Seasoned Loans. As purchaser of such Seasoned Loans,
FMC or the Purchaser Trust shall receive: (i) interest on such Seasoned Loans
from and after the Purchase Date, and (ii) any and all other payments and
recoveries received by the Servicer or Program Lender from the borrowers and
co-signers of such Seasoned Loans, or others pursuant to, or in respect of, such
Seasoned Loans from and after the Purchase Date, and all proceeds thereof.
3.05. SUBSEQUENT RECEIPTS.
In the event that Program Lender shall receive, subsequent to any such
assignment, any amounts whatsoever in respect to the Seasoned Loans so assigned
in the nature of those described in Section 3.04 above, such amounts shall be
held by Program Lender in trust for FMC or the Purchaser Trust to which it has
sold the Notes, and the Program Lender shall deliver such amounts within one
business day to the trustee under the Trust Indenture.
3.06. ASSIGNMENT OF ORIGINATION RIGHTS.
Program Lender shall insure that Program Lender's rights under the
Servicing Agreement and the Origination Agreement with respect to any matters
occurring prior to the Purchase Date and affecting the Seasoned Loans included
in each Pool shall be transferred to FMC or the Purchaser Trust by execution and
delivery of a Pool Supplement. Program Lender shall require the party who
originated each such Seasoned Loan to complete any loan origination services
being performed for Program Lender on the Purchase Date so that complete
Origination Records are ready for transfer to the Purchaser Trust (or to
Servicer on its behalf).
3.07. NO ASSUMPTION OF LIABILITY TO FUND BANK OF AMERICA DIRECT TO
CONSUMER LOAN NOTES.
By their purchase of Seasoned Loans (and any related Bank of America
Direct to Consumer Notes), neither FMC nor any Purchaser Trust, shall assume any
liability, responsibility
21
or obligation with respect to any disbursements or reimbursements that are due
and owing, or which are, or may be alleged to be due and owing, by Program
Lender to any Seasoned Loan borrower by reason of the Seasoned Loans included in
the Pool and evidenced by the Bank of America Direct to Consumer Notes.
Notwithstanding the foregoing, FMC or the Purchaser Trust shall assume from
Program Lender any liability to repurchase from XXXX a defaulted Loan upon cure
of the default, with respect to any Loan that would be a Seasoned Loan but for
such default and purchase by XXXX. Such repurchase obligation shall be governed
by the Certificate of Guaranty described in Section 3.01(b)(7), above. Such
Certificate of Guaranty should be substantially in the form of Exhibit C of the
Guaranty Agreement.
3.08. SERVICING AND ORIGINATION COSTS.
Program Lender shall be solely responsible for and shall pay all costs
due to any third party from Program Lender (including, without limitation,
amounts due to XXXX or Servicer) with respect to origination of Bank of America
Direct to Consumer Conforming Loans and with respect to loan servicing of Bank
of America Direct to Consumer Conforming Loans incurred prior to purchase of a
Bank of America Direct to Consumer Conforming Loan hereunder. FMC shall be
solely responsible for and shall pay any obligations it has incurred in
connection with the Bank of America Direct to Consumer Conforming Loans and
shall be solely responsible for arranging and paying all costs for servicing of
the Bank of America Direct to Consumer Conforming Loans after purchase of such
Loans.
3.09. SECURITIZATION COSTS. FMC or the Purchaser Trust shall be solely
responsible for and shall pay any Securitization Costs and any and all
obligations it has incurred in connection with the purchase, financing of
purchase and securitization of the Seasoned Loans.
22
3.10. EFFECT OF LOAN CANCELLATIONS. In the event that the Borrower
cancels a Seasoned Loan in a manner and at a time permitted under the Program
Guidelines, if that Seasoned Loan has already been purchased under this
Agreement, Program Lender will return to the Purchaser Trust all amounts
received by it with respect to such purchase. FMC shall prepare an accounting of
all such cancellations within 30 days after the last date permitted for
cancellation of Seasoned Loans purchased on a particular Purchase Date.
IV. LIMITATION OF OBLIGATIONS OF FMC AND PURCHASER TRUST. [Intentionally
Omitted.]
V. REPRESENTATIONS AND WARRANTIES.
5.01. REPRESENTATIONS AND WARRANTIES OF FMC.
FMC makes the following representations and warranties as of the date
hereof, as of the date of each purchase of Seasoned Loans and as of any other
date specified below. FMC shall cause each Purchaser Trust to make substantially
the same representations and warranties in a Pool Supplement as of the date of
each purchase of Seasoned Loans:
(a) FMC represents and warrants that it is and shall remain a
Delaware corporation duly organized, validly existing and in good standing under
the laws of the State of Delaware, and has the requisite corporate authority to
conduct all activities and consummate all transactions contemplated by this
Agreement.
(b) FMC has all requisite corporate power and authority to execute,
deliver and perform its obligations under this Agreement, and has duly
authorized the execution, delivery and performance of, and has duly executed and
delivered this Agreement, and this Agreement constitutes the legal, valid and
binding obligation of FMC enforceable against FMC in accordance with its terms,
except that such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws.
23
(c) Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, nor the fulfillment of or
compliance with the terms and conditions hereof, will conflict with, or result
in a breach of, or constitute a default under, any of the terms, conditions or
provisions of any legal restriction or any agreement or instrument to which FMC
is now a party or by which it is bound.
5.02. REPRESENTATIONS AND WARRANTIES OF PROGRAM LENDER.
Program Lender makes the following representations and warranties as of
the date hereof, as of the date of each sale of Seasoned Loans to FMC or a
Purchaser Trust, and as of any other date specified below:
(a) Program Lender represents and warrants that it is, and shall
continue to be, a national banking association duly organized, validly existing
and in good standing under the laws of the United States, and has the requisite
authority to conduct all activities and consummate all transactions contemplated
by this Agreement.
(b) Program Lender has all requisite power and authority to execute,
deliver and perform its obligations under this Agreement, and has duly
authorized the execution, delivery and performance of, and has duly executed and
delivered this Agreement, and this Agreement, together with each Pool Supplement
executed pursuant hereto, constitutes the legal, valid and binding obligation of
Program Lender enforceable against Program Lender in accordance with its terms,
except as such enforceability may be limited by (i) receivership,
conservatorship and supervisory powers of bank regulatory agencies generally,
(ii) applicable bankruptcy, receivership, conservatorship, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally from time to time in effect, or (iii) general principles of equity.
24
(c) Neither the execution and delivery of this Agreement, the
consummation of the transactions contemplated hereby, nor the fulfillment of or
compliance with the terms and conditions hereof, will conflict with, or result
in a breach of, or constitute a default under, any of the terms, conditions or
provisions of any legal restriction or any agreement or instrument to which
Program Lender is now a party or by which it is bound.
(d) Each of the Bank of America Direct to Consumer Conforming Loans
originated by Program Lender and sold to FMC or a Purchaser Trust pursuant to
any Securitization Transaction (i) is the valid, binding and enforceable
obligation of the borrower executing the same, and of any cosigner thereto,
enforceable against each borrower, any student maker named therein, and any
cosigner thereunder in accordance with its terms except as enforceability may be
affected by bankruptcy, insolvency, moratorium or other similar laws affecting
the rights of creditors generally and by equitable principles, (ii) is covered
by and entitled to the benefits of the Guaranty Agreement, and (iii) is a
Seasoned Loan.
(e) Each Bank of America Direct to Consumer Conforming Loan
originated by Program Lender sold hereunder and any accompanying notices and
disclosures conforms to all applicable state and federal laws, rules and
regulations and each Bank of America Direct to Consumer Conforming Loan was
documented on forms set forth in the Program Guidelines and contained consumer
loan terms and involved guaranty fees payable to XXXX in strict conformity with
the Program Guidelines. The origination of each Bank of America Direct to
Consumer Conforming Loan was conducted in accordance with the Program Guidelines
and all applicable state and federal laws including, without limitation, the
Equal Credit Opportunity Act. No application to Program Lender for a Bank of
America Direct to Consumer Conforming Loan shall be, or has been, rejected,
approved or discouraged by Program Lender on the basis of race,
25
sex, color, religion, national origin, age (other than laws limiting the
capacity to enter a binding contract) or marital status, the fact that all or a
part of the borrower's or co-signer's, income derives from any public assistance
program, or the fact that the applicant, borrower or any co-signer has, in good
faith, exercised any right under the Consumer Credit Protection Act.
(f) Each Bank of America Direct to Consumer Conforming Loan
originated by Program Lender sold to FMC or Purchaser Trust is in compliance
with any applicable usury laws at the time made and of the time of assignment to
FMC or a Purchaser Trust.
(g) There is no defense to payment, counterclaim, right of
rescission or setoff with respect to any Bank of America Direct to Consumer
Conforming Loan sold under this Agreement. There is no action before any state
or federal court, administrative or regulatory body, pending or threatened
against Program Lender in which an adverse result would have a material adverse
effect upon the validity or enforceability of Bank of America Direct to Consumer
Conforming Loans originated by Program Lender and included in the Pool.
(h) Each and every Bank of America Direct to Consumer Conforming
Loan sold pursuant to this Agreement is owned by Program Lender free and clear
of any liens, claims or demands of any person, and Program Lender has the
absolute right to transfer the same to FMC or a Purchaser Trust.
(i) With respect to each Bank of America Direct to Consumer Note
originated by Program Lender and included in the Pool: (A) the terms thereof
have not been impaired, waived, altered or modified in any respect, except
pursuant to written forbearance agreements in accordance with the requirements
of and in the terms set forth in the Program Guidelines, and (B) such Bank of
America Direct to Consumer Note has been serviced at all times in accordance
with the Program Guidelines.
26
(j) Such other reasonable representations and warranties relating to
the origination, servicing, characteristics, legality, conditions and status of
the Bank of America Direct to Consumer Conforming Loans as may reasonably be
required by the Bond Insurer for the first securitization occurring prior to
December 31, 2003, and are customary and prudent in the securitization of
student loans. Any representation or warranty required under this subsection
5.02(j) shall be set forth in detail in the relevant Pool Supplement.
5.03. EXCLUSIVE REPRESENTATIONS AND WARRANTIES.
The representations and warranties set forth in Section 5.02 above are
the sole and exclusive representations and warranties made by the Program
Lender, its representatives, agents, officers, directors and other employees,
with respect to this Agreement, any Pool Supplement, any Bank of America Direct
to Consumer Conforming Loan, any obligor, and the sale of any Bank of America
Direct to Consumer Conforming Loan to the Purchaser Trust hereunder or
otherwise.
5.04. REMEDY FOR BREACH OF REPRESENTATIONS AND WARRANTIES.
In the event any representation or warranty made by Program Lender
pursuant to Section 5.02 above shall prove to be inaccurate or incomplete as of
the date when made, Program Lender shall have the right (but not the obligation)
to elect by written notice to FMC to be given by Program Lender no later than
sixty (60) days after receipt of written notice from FMC of such alleged breach
to repurchase the affected Bank of America Direct to Consumer Conforming Loan or
Loans no later than such 60th day for a cash purchase price equal to the
outstanding principal balance thereof plus all accrued and unpaid interest. Upon
receipt of said repurchase price, FMC shall, or, if applicable, shall cause the
Purchaser Trust or the Servicer to, deliver the Bank of America Direct to
Consumer Note and the Origination Records relating thereto to Program
27
Lender, duly endorsed or assigned to Program Lender or to such person as Program
Lender may direct, in any such case, without recourse to FMC or the Purchaser
Trust. Whether or not Program Lender exercises its right of repurchase, Program
Lender shall indemnify FMC, any Purchaser Trust and any fiduciary under the
Trust Agreement pursuant to Article VIII of this Agreement.
VI. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND INDEMNITIES.
As to any Bank of America Direct to Consumer Conforming Loans purchased
hereunder, the representations and warranties contained herein and the
indemnifications and indemnification procedures contained in Article VIII hereof
with respect to such Bank of America Direct to Consumer Conforming Loans shall
survive until each such Bank of America Direct to Consumer Conforming Loan is
paid in full.
VII. MISCELLANEOUS.
7.01. NO ASSIGNMENT.
No party may assign its rights or obligations under this Agreement
without the prior written consent of the parties hereto, PROVIDED, HOWEVER,
that: (a) Program Lender may assign its rights hereunder to an Affiliate that is
a national banking association or state-chartered bank having the legal power
and right under applicable law (including, without limitation, usury law in the
State where it is located) to make Bank of America Direct to Consumer Conforming
Loans, and (b) FMC shall may assign its rights hereunder to one or more
Purchaser Trusts or other interim or permanent holders of Bank of America Direct
to Consumer Conforming Loans. No assignment shall relieve the assignor of
liability hereunder. Any assignment in violation of this Section 7.01 shall be
automatically null and void.
7.02. AMENDMENT.
28
This Agreement may not be amended nor terms or provisions hereof waived
unless such amendment or waiver is in writing and signed by all parties hereto.
7.03. NO WAIVER.
No delay or failure by any party to exercise any right, power or remedy
hereunder shall constitute a waiver thereof by such party, and no single or
partial exercise by any party of any right, power or remedy shall preclude other
or further exercise thereof or any exercise of any other rights, powers or
remedies.
7.04. ENTIRE AGREEMENT.
This Agreement and the documents and agreements referred to herein
embody the entire agreement and understanding among the parties hereto and
supersede all prior agreements and understandings relating to the subject matter
hereof and thereof.
7.05. NOTICES.
All notices given by any party to the others under this Agreement shall
be in writing delivered: (a) personally, (b) by facsimile transmission, (c) by
overnight courier, prepaid, or (d) by depositing the same in the United States
mail, certified, return receipt requested, with postage prepaid, addressed to
the party at the address set forth below. Any party may change the address to
which notices are to be sent by notice of such change to each other party given
as provided herein. Such notices shall be effective on the date received.
Notices shall be given as follows:
If to Program Lender:
Xxxxx Xxxxxx
Senior Vice President
National Student Lending Group
000 Xxxxxxxx Xxxx. 0xx Xxxxx
XX 9-169-04-02
Xxx Xxxxxxx, XX 00000
29
With a copy to:
Xxxx Xxxxx
Bank of America
000 Xxxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
If to FMC:
Xxxxxx Xxxxxxx Xxxxxx
The First Marblehead Corporation
00 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
E-Mail: xxxxxxx@xxxxxxxx.xxx
With a copy to:
Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxx Xxxxxx
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
E-Mail: xxxxxxxx@xxxxxxxxxxxx.xxx
7.06. ATTORNEYS' FEES.
In the event of a lawsuit or arbitration proceeding arising out of or
relating to this Agreement, the prevailing party shall be entitled to recover
costs and reasonable attorneys' fees incurred in connection with the lawsuit or
arbitration proceeding, as determined by the court or arbitrator.
7.07. GOVERNING LAW.
This Agreement shall be governed by and construed in accordance with the laws of
the Commonwealth of Massachusetts (without reference to choice-of-law rules).
7.08. COUNTERPARTS.
30
This Agreement may be executed in any number of counterparts, all of
which together shall constitute one agreement.
7.09. NO THIRD PARTIES BENEFITED.
This Agreement is made and entered into for the protection and legal
benefit of the parties, and their permitted successors and assigns (including,
without limitation, any Purchaser Trust), and each and every Indemnified Person
(all of which shall be entitled to enforce the Indemnity contained in Sections
8.01 and 8.02 hereof), and no other person shall be a direct or indirect legal
beneficiary of, or have any direct or indirect cause of action or claim in
connection with, this Agreement.
7.10. OPINIONS.
Concurrent with the execution hereof, each party shall deliver to the
other the opinion of its corporate counsel (which may be internal counsel) to
the effect that this Agreement has been duly authorized by all necessary
corporate or other organizational action, this Agreement is within the corporate
or other organizational power of such party and that this Agreement has been
duly executed and delivered by an authorized officer of the party.
VIII. INDEMNIFICATION.
8.01. BY PROGRAM LENDER.
Regardless of the exercise or nonexercise of the repurchase right under
Section 5.04, Program Lender shall indemnify and hold harmless FMC, each
Purchaser Trust and any fiduciary under any Trust Indenture, and any officer,
director, employee or agent of any of the foregoing (herein, collectively
referred to as the "Indemnified Persons") against any and all liabilities,
losses, costs, damages and expenses, including, without limitation, attorneys'
fees and legal expenses and sums paid, liabilities incurred or expenses paid or
incurred in connection with
31
settling claims, suits or judgments or obtaining or attempting to obtain release
from liability under the Trust Indenture or this Agreement which such
Indemnified Person may sustain or incur by reason of any breach of any
representation, warranty or covenant of Program Lender contained herein. This
section shall survive any termination of this Agreement.
8.02. BY FMC.
FMC or the applicable Purchaser Trust, as the case may be, shall
indemnify and hold harmless Program Lender and any officer, director, employee
or agent of Program Lender (herein, collectively referred to as "Indemnified
Persons") against any and all liabilities, losses, costs, damages, and expenses,
including, without limitation, attorneys' fees and legal expenses and sums paid,
liabilities incurred or expenses paid or incurred in connection with settling
claims or judgments or obtaining or attempting to obtain release from liability,
which such Indemnified Person may sustain or incur by reason of any breach of
any representation, warranty or covenant of FMC or the applicable Purchaser
Trust, as the case may be, contained herein. This section shall survive any
termination of this Agreement.
8.03. INDEMNITY PROCEDURES.
(a) In the event that any claim or demand for which an indemnifying
party would be liable to an Indemnified Person hereunder is asserted against or
sought to be collected from an Indemnified Person by a third party (an
"Action"), the Indemnified Person shall promptly notify the indemnifying party
of such Action, specifying the nature of such claim or demand and the amount or
the estimated amount thereof to the extent feasible (which estimate the parties
agree shall not be conclusive of the final amount of such claims and demand)
(the "Claim Notice"). The failure to provide the Claim Notice to the
indemnifying party promptly will not relieve the indemnifying party of any
liability it may have to the Indemnified Person giving the Claim
32
Notice, except to the extent that the indemnifying party demonstrates that the
defense of such action is actually and materially prejudiced by the indemnifying
party's failure to give such Claim Notice promptly. The indemnifying party shall
have ten (10) days from the delivery of the Claim Notice (the "Notice Period")
to notify the Indemnified Person: (1) whether or not the indemnifying party
disputes liability to the Indemnified Person hereunder with respect to such
claim or demand; and (2) notwithstanding any such dispute, whether or not the
indemnifying party desires, at its sole cost and expense, to defend the
Indemnified Person against such claim or demand in which case the indemnifying
party shall assume all past and future responsibility for such action and shall
reimburse the Indemnified Person for all expenses in connection with the Action.
Notwithstanding the assumption by the indemnifying party of the defense of any
Action, the Indemnified Person shall be permitted to participate in such defense
at its cost and expense. If the indemnifying person elects to defend the
Indemnified Person, notice shall be given within the Notice Period, then the
indemnifying party will have the right and obligation to defend the Indemnified
Person by appropriate proceedings, which shall be followed to a final
conclusion.
(b) If the indemnifying party elects not to defend the Indemnified
Person against such Action, whether by not giving the Indemnified Person timely
notice as provided above, or otherwise, then the Action may be defended by the
Indemnified Person at the indemnifying party's cost and expense (without
imposing any obligation on any Indemnified Person to defend any such claim or
demand), in which case it may defend such Action in such a manner as it may deem
appropriate (including settlement) and then that portion thereof as to which
such defense is unsuccessful, in each case, shall be conclusively deemed to be a
liability of the indemnifying party hereunder; PROVIDED that if the indemnifying
party shall have disputed its liability to the
33
Indemnified Person hereunder, then such determination or settlement shall not
affect the right of the indemnifying party to dispute the Indemnified Person's
claim for indemnification.
(c) In the event an Indemnified Person should have a claim against
the indemnifying party hereunder that does not involve a claim or demand being
asserted against or sought to be collected from it by a third party, the
Indemnified Person shall promptly send a Claim Notice with respect to such claim
to the indemnifying party. If the indemnifying party disputes its liability with
respect to such claim or demand, the Indemnified Person shall have the right to
pursue all of its legal and equitable remedies against the indemnifying party
for indemnity hereunder.
8.04. PAYMENT. Upon the determination of the liability under Section
8.03 hereof, the indemnifying party shall pay to the Indemnified Person within
ten (10) days after such determination, the amount of any claim for
indemnification made hereunder, subject to the limitations set forth herein.
Upon payment in full of any claim, either by set off or otherwise, the entity
making payment shall be subrogated to the rights of the Indemnified Person
against any Person, with respect to the subject matter of such claim.
IX. DISPUTE RESOLUTION
9.01. INFORMAL DISPUTE RESOLUTION.
Any controversy or claim between the parties arising from or in
connection with this Agreement or the relationship of the parties under this
Agreement whether based on contract, tort, common law, equity, statute,
regulation, order or otherwise, and whether arising before or after the
termination of this Agreement ("Dispute") shall be resolved as follows:
34
(a) Upon written request of either party, the parties will each
appoint a designated representative whose task it will be to meet for the
purpose of endeavoring to resolve such Dispute.
(b) The designated representatives shall meet as often as the
parties reasonably deem necessary to discuss the problem in an effort to resolve
the Dispute without the necessity of any formal proceeding.
(c) Arbitration proceedings for the resolution of a Dispute under
Section 9.02 may not be commenced until the earlier to occur of the following:
(i) the designated representatives conclude in good faith that
amicable resolution through continued negotiation of the matter does
not appear likely; or
(ii) the expiration of the thirty (30) day period immediately
following the initial request to negotiate the Dispute.
9.02. ARBITRATION.
If the provisions of Section 9.01 have been satisfied, but the Dispute
has not been resolved, then the Dispute shall be settled pursuant to the
following:
(a) Any controversy or claim between or among the parties arising
out of or relating to this Agreement or any agreements or instruments relating
hereto or delivered in connection herewith and any claim based on or arising
from an alleged tort, shall at the request of any party be determined by
arbitration. The arbitration shall be conducted in accordance with the United
States Arbitration Act (Title 9, U.S. Code), notwithstanding any choice of law
provision in this Agreement, and under the Commercial Rules of the American
Arbitration Association ("AAA"). The arbitrator(s) shall give effect to statutes
of limitation in determining any claim. Any controversy concerning whether an
issue is arbitrable shall be determined by the arbitrator(s). Judgment upon the
arbitration award may be entered in any court having jurisdiction. The
35
institution and maintenance of an action for judicial relief or pursuit of a
provisional or ancillary remedy shall not constitute a waiver of the right of
any party, including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial relief.
(b) No provision of this Section shall limit the right of any party
to this Agreement to exercise self-help remedies such as setoff, foreclosure
against or sale of any real or personal property collateral or security, or
obtaining provisional or ancillary remedies from a court of competent
jurisdiction before, after, or during the pendency of any arbitration or other
proceeding. The exercise of a remedy does not waive the right of either party to
resort to arbitration or reference.
9.03. PERMISSIBLE LEGAL PROCEEDINGS.
Notwithstanding anything contained in Sections 9.01 and 9.02, (a) a
party may institute legal proceedings to seek a temporary restraining order or
other temporary or preliminary injunctive relief to prevent immediate and
irreparable harm to such party, and for which monetary damages would be
inadequate, pending final resolution of the dispute, controversy or claim
pursuant to arbitration, and (b) a party may institute legal proceedings if
necessary to preserve a superior position with respect to other creditors. Such
conduct shall not constitute a waiver of the right of either party to resort to
arbitration to obtain relief other than that specified in this Section 9.03.
X. TERM AND TERMINATION.
10.01. TERM AND TERMINATION. This Agreement shall remain in full force
and effect until expiration or termination of the Umbrella Agreement. After
termination, certain obligations will continue as provided in Article VI of this
Agreement and Section 2(b) of the Umbrella Agreement.
36
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
WITNESS: BANK OF AMERICA, N.A.:
------------------------------
By: /s/ Xxxxx Xxxxxx
----------------------------------- --------------------------------
Print Name: Print Name: Xxxxx Xxxxxx
------------------------ ------------------------
Title: Senior Vice President
-----------------------------
THE FIRST MARBLEHEAD CORPORATION
By: /s/ Xxxxx Xxxxx
----------------------------------- --------------------------------
Print Name: Print Name: Xxxxx Xxxxx
------------------------ ------------------------
Title: President
-----------------------------
37
NOTE PURCHASE AGREEMENT
INDEX TO EXHIBITS
Exhibit A Pool Supplement
Exhibit B Indemnification Agreement
Exhibit C Co-Lender Indemnification Agreement
Exhibit D Certificate of Bank of America, N.A.
38
EXHIBIT A TO NOTE PURCHASE AGREEMENT
[Form of Pool Supplement]
This Pool Supplement ("Supplement") is entered into pursuant to and forms a part
of that certain Note Purchase Agreement (the "Agreement") dated as of
__________, by and between The First Marblehead Corporation ("FMC") and Bank of
America, N.A. This Supplement is dated __________________, _____________.
Capitalized terms used in this Supplement without definitions have the meaning
set forth in the Agreement.
ARTICLE 1: PURCHASE AND SALE.
In consideration of the Minimum Purchase Price set forth in Schedule 1
attached hereto, Program Lender hereby transfers, sells, sets over and assigns
to [name of purchasing entity] ("Purchaser Trust"), upon the terms and
conditions set forth in the Agreement (which are incorporated herein by
reference with the same force and effect as if set forth in full herein), each
Bank of America Direct to Consumer Conforming Loan described in the attached
Schedule 2 ("the Transferred Bank of America Direct to Consumer Loans") along
with all of Program Lender's rights under the Guaranty Agreement relating to the
Transferred Bank of America Direct to Consumer Loans. Program Lender hereby
transfers and delivers to the Purchaser Trust each Bank of America Direct to
Consumer Note evidencing such Bank of America Direct to Consumer Conforming Loan
and all Origination Records relating thereto, in accordance with the terms of
the Agreement. Purchaser Trust hereby purchases said Bank of America Direct to
Consumer Notes on said terms and conditions.
ARTICLE 2: PRICE.
The amounts paid pursuant to this Supplement is the Minimum Purchase
Price, as that term is defined in Section 2.04 of the Agreement.
ARTICLE 3: REPRESENTATIONS AND WARRANTIES.
3.01. BY PROGRAM LENDER.
Program Lender repeats the representations and warranties contained in
Section 5.02 of the Agreement and confirms the same are true and correct as of
the date hereof with respect to the Agreement and to this Supplement.
3.02. BY PURCHASER TRUST.
The Purchaser Trust hereby represents and warrants to the Program
Lender that at the date of execution and delivery of this Supplement by the
Purchaser Trust:
39
(a) The Purchaser Trust is duly organized and validly existing as a
business trust under the laws of the State of Delaware with the due power and
authority to own its properties and to conduct its business as such properties
are currently owned and such business is presently conducted, and had at all
relevant times, and has, the power, authority and legal right to acquire and own
the Transferred Bank of America Direct to Consumer Loans.
(b) The Purchaser Trust is duly qualified to do business and has
obtained all necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business shall require such
qualifications.
(c) The Purchaser Trust has the power and authority to execute and
deliver this Pool Supplement and to carry out its respective terms; the
Purchaser Trust has the power and authority to purchase the Transferred Bank of
America Direct to Consumer Loans and rights relating thereto as provided herein
from the Program Lender and the Purchaser Trust has duly authorized such
purchase from the Program Lender by all necessary action; and the execution,
delivery and performance of this Pool Supplement has been duly authorized by the
Purchaser Trust by all necessary action on the part of the Purchaser Trust.
(d) This Pool Supplement, together with the Agreement of which this
Supplement forms a part, constitutes a legal, valid and binding obligation of
the Purchaser Trust, enforceable in accordance with its terms.
(e) The consummation of the transactions contemplated by the
Agreement and this Supplement and the fulfillment of the terms hereof do not
conflict with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time) a default under, the
governing instruments of the Purchaser Trust or any indenture, agreement or
other instrument to which the Purchaser Trust is a party or by which it is
bound; or result in the creation or imposition of any lien upon any of its
properties pursuant to the terms of any such indenture, agreement or other
instrument; or violate any law or any order, rule or regulation applicable to
the Purchaser Trust of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having jurisdiction
over the Purchaser Trust or its properties.
(f) There are no proceedings or investigations pending, or
threatened, before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over the Purchaser Trust or its
properties: (1) asserting the invalidity of the Agreement or this Pool
Supplement, (2) seeking to prevent the consummation of any of the transactions
contemplated by the Agreement or this Pool Supplement, or (3) seeking any
determination or ruling that is likely to materially or adversely affect the
performance by the Purchaser Trust of its obligations under, or the validity or
enforceability of the Agreement or this Pool Supplement.
ARTICLE 4: CROSS RECEIPT.
40
Program Lender hereby acknowledges receipt of the Minimum Purchase
Price. Purchaser Trust hereby acknowledges receipt of the Transferred Bank of
America Direct to Consumer Loans included in the Pool.
ARTICLE 5: ASSIGNMENT OF ORIGINATION, GUARANTY AND SERVICING RIGHTS.
OPTION ONE - Purchaser Assures Program Lender's Servicing Agreement
Program Lender hereby assigns and sets over to Purchaser Trust so much of its
rights under the Guaranty Agreement, the Loan Origination Agreement, and the
Servicing Agreement as relate to the Transferred Bank of America Direct to
Consumer Loans described in Schedule 2, including, without limitation, the right
to continued loan servicing under the Servicing Agreement pursuant to a
Servicing Assignment and Servicer consent Letter delivered herewith.
ARTICLE 6: OWNER TRUSTEE.
It is expressly understood and agreed by the parties hereto that (a)
this Pool Supplement is executed and delivered by _____________________________
(the "Owner Trustee") not individually or personally, but solely as owner
trustee of the Purchaser Trust under the Trust Agreement dated as of
_____________________________________, with __________________________, in the
exercise of the powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the part of the
Purchaser Trust are made and intended not as personal representations,
undertakings and agreements by the Owner Trustee, but are made and intended for
the purpose for binding only the Purchaser Trust, (c) nothing herein contained
shall be construed as creating any personal or individual liability on the Owner
Trustee, to perform any covenant either expressed or implied contained herein,
all such liability, if any, being expressly waived by the parties hereby and by
any person claiming by, through, or under the parties hereto, and (d) under no
circumstances shall the Owner Trustee be personally liable for the payment of
any indebtedness or expenses of the Purchaser Trust or be liable for the breach
or failure of any obligation, representation, warranty or covenant made or
undertaken by the Purchaser Trust under this Supplement or any other documents
related to the Bank of America Direct to Consumer Notes.
IN WITNESS WHEREOF, the parties have caused this Supplement to be
executed as of the date set forth above.
THE FIRST MARBLEHEAD CORPORATION
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
41
PURCHASER NAME:
By: OWNER TRUSTEE
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
BANK OF AMERICA, N.A.:
----------------------------
By:
--------------------------------
Print Name:
------------------------
Title:
-----------------------------
42
Schedule 1 to the Pool Supplement (Sample)
Note Purchase Agreement for _________ Bank Dated ________
The National Collegiate Master Student Loan Trust ___
Settlement Schedule ( ________ Bank) - _________, 2003 Sale
(Final Reconciliation)
All numbers are final and are based on _________, 2003 PHEAA Servicing Tapes
Category 1: Undergraduate Loans
Number
Of Loans Total Outstanding Total Outstanding XXXX Origination Marketing Fee/ Net Marketing Fee
Loan Principal Interest Fees Premium Principal as % of Net
43
EXHIBIT B TO
NOTE PURCHASE AGREEMENT
CO-LENDER INDEMNIFICATION AGREEMENT
THIS CO-LENDER INDEMNIFICATION AGREEMENT (the "Agreement") is made as of [DATE],
by and between [Names and Addresses of Co-Lenders] ("Co-Lender"), and Bank of
America, N.A. ("Program Lender"), a national banking association organized under
the laws of the United States, with its headquarters and principal place of
business located at 000 Xxxxxxxx Xxxx., Xxx Xxxxxxx, Xxxxxxxxxx (Co-Lender and
Bank of America are sometimes collectively referred to as the "Lenders" and are
each sometimes severally referred to as a "Lender").
RECITALS
A. The Lenders are participants in certain private education loan
programs to pay the costs of attending institutions of education
which are themselves participants in the XXXX Program (the
"Participating Institutions") whereunder such loans (the "XXXX
Loans") are guaranteed by The Education Resources Institute,
Inc. ("XXXX") (collectively, the "XXXX Programs").
B. Each of the Lenders, individually, have entered into an
agreement (each, a "Purchase Agreement") with The
First
Marblehead Corporation or The National Collegiate Trust,
pursuant to which Purchase Agreements such Lenders have agreed
to sell certain XXXX Loans to [Name of Purchasing Entity] (the
"Purchaser Trust"), each such purchase to be funded through the
issuance and sale of certificates, bonds or other evidences of
indebtedness, the repayment of which are supported by such XXXX
Loans (the "Subject Securitization Transaction").
C. As a condition precedent to the obligation of each Lender to
consummate the sale of XXXX Loans originated by them to the
Purchaser Trust, all Lenders whose XXXX Loans will be included
in the Subject Securitization Transaction are required to
execute and deliver to the other Lenders requesting same a copy
of this Agreement.
NOW, THEREFORE, in consideration of the foregoing Recitals and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
REPRESENTATIONS AND WARRANTIES
1.01. Each Lender represents and warrants to each other Lender
requesting this Agreement, as to itself, that as of the date hereof:
(a) It is a national banking association, duly organized, validly
existing and in good standing under the laws of the United States and has the
power and authority to originate and/or
44
hold XXXX Loans, to consummate the transaction contemplated by the Purchase
Agreement to which it is a party, and to execute and deliver and perform its
obligations under this Agreement;
(b) This Agreement has been duly authorized, executed and delivered
and constitutes its legal, valid and binding obligation, enforceable against it
in accordance with its terms except as enforceability may be limited by (a) the
receivership, conservatorship and similar supervisory powers of bank regulatory
agencies generally, as well as bankruptcy, insolvency, liquidation,
receivership, moratorium, reorganization or other similar laws affecting the
enforcement of the rights of creditors; (b) general principles of equity
(including availability of equitable remedies), whether enforcement is sought in
a proceeding in equity or at law; and (c) applicable securities laws and public
policy considerations underlying the securities laws to the extent that such
public policy considerations limit the enforceability of the provisions of this
Agreement which purport to provide indemnification with respect to securities
law liabilities;
(c) Each XXXX Loan included in the Subject Securitization
Transaction originated by it is the valid, binding and enforceable obligation of
the borrower executing the same, and of any cosigner thereto, enforceable
against the borrower and cosigner thereunder in accordance with its terms except
as enforceability may be affected by bankruptcy, insolvency, moratorium or other
similar laws affecting the rights of creditors generally and by equitable
principles;
(d) At the time of origination, each XXXX Loan included in the
Subject Securitization Transaction originated by it and any accompanying notices
and disclosures conforms in all material respects to all applicable state and
federal laws, rules and regulations and the origination thereof was conducted in
material compliance with all applicable state and federal laws concerning the
actions of the Lender, including, without limitation, the Equal Credit
Opportunity Act;
(e) At the time of origination, each XXXX Loan included in the
Subject Securitization Transaction originated by it is in compliance in all
material respects with any applicable usury laws at the time made and as of the
time of sale to the Purchaser Trust pursuant to the Purchase Agreement to which
Lender is a party; and
(f) The respective Lender has no actual knowledge of any defense to
payment with respect to any XXXX Loan included in the Subject Securitization
Transaction originated by it nor is there any action before any state or federal
court, administrative or regulatory body, pending against the Lender with regard
to its XXXX Loans in which an adverse result would have a material adverse
effect upon the validity or enforceability of its XXXX Loans.
ARTICLE 2
INDEMNIFICATION
2.01. Cross-Indemnification. Each Lender (an "Indemnifying Party")
hereby agrees to indemnify, hold harmless and defend each other and such other
Lender's respective officers, directors, employees, attorneys, agents (not
including any Participating Institution or the servicer of any XXXX Loan) and
each person who controls such other Lender within the meaning of either
45
Section 15 of the Securities Act of 1933, as amended, or Section 20 of the
Securities Exchange Act of 1934, as amended (collectively and severally, the
"Indemnified Parties"), from and against any and all claims, obligations,
penalties, actions, suits, judgments, costs, disbursements, losses, liabilities
and/or damages (including, without limitation, reasonable external attorneys'
fees and the allocated costs of internal salaried attorneys) of any kind
whatsoever which may at any time be imposed on, assessed against or incurred by
any such Indemnified Party in any way relating to or arising out of the material
inaccuracy or incompleteness of any representation or warranty made by the
Indemnifying Lender hereunder or the material inaccuracy or incompleteness of
any representation or warranty made by the Indemnifying Lender to any
Participating Institution in connection with the XXXX Program or the Subject
Securitization Transaction. The indemnity provided by each Indemnifying Lender
hereunder is in addition to any liability which such Lender may otherwise have
to the Indemnified Parties, at law, in equity or otherwise, in connection with
the Subject Securitization Transaction.
2.02. Procedure for Indemnification. In case any proceeding (including
any governmental investigation) shall be instituted against any Indemnified
Party in respect of which indemnity is sought pursuant to Section 2.01, such
Indemnified Party shall promptly notify the applicable Indemnifying Party in
writing. The Indemnifying Party, upon request of the Indemnified Party, shall
acknowledge its obligation, subject to the terms hereof, to indemnify the
Indemnified Party in writing and shall retain counsel reasonably satisfactory to
the Indemnified Party to represent the Indemnified Party and any others the
Indemnifying Party may designate in such proceeding and the Indemnifying Party
shall pay the fees and disbursements of such counsel related to such proceeding,
within a reasonable period of time after such fees and disbursements are billed
by such counsel. If the Indemnifying Party fails to acknowledge its obligation,
subject to the terms hereof, to indemnify in writing or fails to retain such
counsel within a reasonable period of time after such notice was given, then the
Indemnified Party shall have the right to retain its own counsel, and the fees
and expenses of such counsel shall be at the expense of the Indemnifying Party.
In any such proceeding, any Indemnified Party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the expense
of such Indemnified Party unless (a) the preceding sentence is applicable, (b)
the Indemnifying Party and the Indemnified Party shall have mutually agreed to
the retention of such counsel or (c) the named parties to any such proceeding
(including any impleaded parties) include both the Indemnifying Party and the
Indemnified Party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the Indemnifying Party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm (in addition to any
local counsel) for all such Indemnified Parties, and that all such fees and
expenses shall be reimbursed as they are incurred.
2.03. Settlements of Proceedings. The Indemnifying Party shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the Indemnifying Party agrees to indemnify the Indemnified Party
from and against any loss or liability by reason of such settlement or judgment.
No Indemnifying Party, without the prior written consent of the Indemnified
Party, shall effect any settlement of any pending or threatened proceeding in
respect of which any Indemnified
46
Party is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability on claims
that are the subject of such proceeding.
ARTICLE 3
MISCELLANEOUS
3.01. Notices. All demands, notices and communications upon or to any
Lender under this Agreement shall be in writing, personally delivered or mailed
by certified mail, return receipt requested, to such Lender at its address set
forth below or to such other address as may hereafter be furnished by such
Lender to the other Lenders hereunder in writing, and shall be deemed to have
been duly given upon receipt.
If to Co-Lender:
__________________________
__________________________
__________________________
with a copy to:
__________________________
__________________________
__________________________
If to Bank of America, N.A.:
Xxxxx Xxxxxx
Bank of America
National Student Lending Group
000 Xxxxx Xxxxxxxx Xxxxxx, 0xx Xxxxx
Xxxx, XX 00000
With a copy to:
Xxxx Xxxxx
000 Xxxxxxxxxx Xxxxxx
0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
3.02. Successors and Assigns. This Agreement is binding on the Lenders
and their respective successors and assigns. No Lender shall assign its rights
or obligations under this Agreement without the prior written consent of all
other Lender hereunder, other than to its
47
wholly owned affiliate, and any assignment in violation of this prohibition
shall be automatically deemed null and void.
3.03. Arbitration. The parties acknowledge that this Agreement
evidences a transaction involving interstate commerce. Any controversy or claim
arising out of or relating to this Agreement, or the breach of the same, shall
be settled through consultation and negotiation in good faith and a spirit of
mutual cooperation for up to fifteen (15) days commencing on the date when one
party gives written notice to the other party of any controversy or claim.
However, if those attempts fail, the parties agree that any misunderstandings or
disputes arising from this Agreement shall be decided by binding arbitration
which shall be conducted, upon request by either party, in New York, New York or
such other mutually agreed upon location, before one (1) arbitrator designated
by the American Arbitration Association (the "AAA"), in accordance with the
terms of the Commercial Arbitration Rules of the AAA, and, to the maximum extent
applicable, the United States Arbitration Act (Title 9 of the United States
Code). Notwithstanding anything herein to the contrary, either party may proceed
to a court of competent jurisdiction to obtain equitable relief at any time.
3.04. Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
3.05. Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.
3.06. Headings. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
3.07. Amendment. This Agreement may not be amended nor terms or
provisions hereof waived unless such amendment or waiver is in writing and
signed by all parties hereto.
3.08. No Waiver. No delay or failure by any party to exercise any
right, power or remedy hereunder shall constitute a waiver thereof by such
party, and no single or partial exercise by any party of any right, power or
remedy shall preclude other or further exercise thereof or any exercise of any
other rights, powers or remedies.
3.09. Entire Agreement. This Agreement embodies the entire agreement
and understanding between the parties with respect to the subject matter hereof
and supersedes all prior agreements and understandings relating to the subject
matter hereof and thereof.
3.10. Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York without regard to
its conflict of laws doctrine.
48
3.11. No Third Party Beneficiaries. This Agreement is made and entered
into for the protection and legal benefit of the parties hereto, their permitted
successors and assigns, and each and every Indemnified Party, and no other
person shall be a direct or indirect beneficiary of, or have any direct or
indirect cause of action or claim in connection with, this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
CO-LENDER(S)
----------------------
By:
-------------------
Print Name:
Title:
BANK OF AMERICA, N.A.
----------------------
By:
-------------------
Print Name:
Title:
49
EXHIBIT C TO
NOTE PURCHASE AGREEMENT
INDEMNIFICATION AGREEMENT
This INDEMNIFICATION AGREEMENT (the "Agreement") is made
__________________, 2000, by and among [NAME OF PURCHASER TRUST (the "Trust"),
The
First Marblehead Corporation ("First Marblehead"), and BANK OF AMERICA N.A.
("B of A").
WITNESSETH:
WHEREAS, pursuant to that certain Note Purchase Agreement dated April
30, 2001 (the "Note Purchase Agreement") between First Marblehead, as purchaser,
and B of A, B of A will sell to the Trust and the Trust will purchase from B of
A certain Bank of America GATE Conforming Loans ("Contracts");
WHEREAS, contemporaneously with the transactions contemplated by the
Note Purchase Agreement, the Trust will sell securities backed by a pool
consisting of the Contracts (the "Securitization");
WHEREAS, First Marblehead assists the Trust in the Securitization
process; and
WHEREAS, the parties wish to set forth their agreements with respect to
certain aspects of the Securitization, on the terms and subject to the
conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants set forth herein, the parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINITIONS. Capitalized terms used herein without
definition have the meanings assigned thereto in the Note Purchase Agreement.
Whenever used in this Agreement, the following words and phrases shall have the
following meanings:
"Agreement" means this Indemnification Agreement, as it may be amended
from time to time.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time.
"B of A Information" means solely the information set forth [to be
determined]
"Indemnified Party" has the meaning set forth in Section 4.03.
50
"Indemnifying Party" has the meaning set forth in Section 4.03.
"Offering Materials" means: (a) any private placement memoranda and any
other offering material given in connection with a sale or offer to sell,
whether or not such sale or offer to sell was required to be registered under
the Securities Act, and (b) any Registration Statement filed with the Commission
pursuant to which any Contract or interest therein is sold or offered for sale,
including the Prospectus relating thereto and any preliminary prospectuses and
amendments and supplements to such Registration Statement, Prospectus and
preliminary prospectus, including post-effective amendments and all exhibits and
all material incorporated by reference therein.
"Prospectus" has the meaning given to such term in the Securities Act.
"Registration Statement" has the meaning given to such term in the
Securities Act.
"Securities" means securities backed by the pool of Contracts that are
to be issued by the Trust.
"Securities Act" means the Securities Act of 1933, as amended from time
to time.
"Transaction Documents" means the Note Purchase Agreement and the Pool
Supplement issued pursuant thereto.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
Each of the Trust and First Marblehead jointly and severally represents
and warrants to B of A, and B of A hereby represents and warrants to the Trust
and First Marblehead, as of the date hereof and the Purchase Date, as follows:
(1) It is a corporation, business trust, or, in the case of B of A,
a national banking association, duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, and it has the
corporate power to own its assets and to transact the respective business in
which it is currently engaged. It is duly qualified to do business as a foreign
corporation or other entity and is in good standing in each jurisdiction in
which its type of organization and the character of the business transacted by
it or properties owned or leased by it requires such qualification and in which
the failure to so qualify would have a material adverse effect on its business,
properties, assets, or condition (financial or other);
(2) It has obtained all necessary licenses and approvals, in all
jurisdictions in which the ownership or lease of property or the conduct of its
business and its type of organization requires such licenses or approvals unless
the failure to obtain any such licenses or approvals would have no material
adverse effect on the ability of such party to fulfill its obligations
hereunder;
51
(3) It has the power and authority to execute and deliver this
Agreement and to carry out the terms hereof; and the execution, delivery and
performance of this Agreement by it has been duly authorized by all necessary
action;
(4) This Agreement constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms except as
enforcement of such terms may be limited by bankruptcy, insolvency or similar
laws affecting the enforcement of creditors' rights generally and by the
availability of equitable remedies, and except as enforcement of any terms
relating to indemnification may be limited by applicable securities law;
(5) For B of A and the Trust only, the consummation of the
transactions contemplated by this Agreement and the fulfillment of the terms
hereof do not conflict with, result in any breach of any of the terms and
provisions of, or constitute (with or without notice or lapse of time) a default
under, its governing documents, or any material indenture, agreement or other
instrument to which it is a party or by which it is bound; or result in the
creation or imposition of any lien upon any of its properties pursuant to the
terms of any such indenture, agreement or other instrument; or violate any law
or any order, rule or regulation applicable to it of any court or of any federal
or state regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over it or its properties; and
(6) There are no proceedings or investigations pending, or
threatened, before any court, regulatory body, administrative agency or other
governmental instrumentality having jurisdiction over it or its properties: (1)
asserting the invalidity of this Agreement (2) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement, or (3)
seeking any determination or ruling that is likely to materially and adversely
affect the performance by it of its obligations hereunder or the validity and
enforceability of this Agreement.
ARTICLE 3
CONDITIONS TO CLOSING
[Intentionally Omitted]
ARTICLE 4
INDEMNIFICATION
SECTION 4.01. INDEMNIFICATION BY FIRST MARBLEHEAD AND THE TRUST.
The Trust and First Marblehead jointly and severally agree to indemnify, hold
harmless and defend B of A, its officers, directors, employees, attorneys,
agents and each Person who controls B of A within the meaning of either Section
15 of the Securities Act or Section 20 of the Exchange Act, as follows:
(a) against any and all loss, liability, claim, damage and
expense whatsoever arising out of any untrue statement or alleged
untrue statement of a material fact contained in any Offering Materials
under the heading, [to be determined] ["Method of Distribution"] or the
omission or alleged omission therefrom of a material fact necessary
52
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading;
(b) against any and all loss, liability, claim, damage and
expense whatsoever to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever, based upon any such untrue statement or omission, or any
such inaccuracy, if such settlement is effected with the written
consent of the Trust and First Marblehead; and
(c) against any and all expense whatsoever (including the fees
and disbursements of counsel chosen by the B of A) reasonably incurred
in investigating, preparing or defending against any litigation, or
investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever, based upon any such
untrue statement or omission, or any such inaccuracy, to the extent
that any such expense is not paid under (a) or (b) above.
This indemnity agreement will be in addition to any liability which the
Trust and First Marblehead may otherwise have.
SECTION 4.02. INDEMNIFICATION BY B OF A. B of A agrees to
indemnify and hold harmless the Trust and First Marblehead and each person, if
any, who controls NCT or First Marblehead within the meaning of Section 15 of
the Securities Act of 1933, as amended (the "1993 Act"), as follows:
(a) against any and all loss, liability, claim, damage and
expense whatsoever arising out of any untrue statement or alleged
untrue statement of a material fact contained in the B of A Information
(or any amendment or supplement thereto approved in writing by B of A)
or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading;
(b) against any and all loss, liability, claim, damage and
expense whatsoever to the extent of the aggregate amount paid in
settlement of any litigation, or investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever, based upon any such untrue statement or omission, or any
such inaccuracy, if such settlement is effected with the written
consent of B of A; and
(c) against any and all expense whatsoever (including the fees
and disbursements of counsel chosen by the Trust and First Marblehead)
reasonably incurred in investigating, preparing or defending against
any litigation, or investigation or proceeding by any governmental
agency or body, commenced or threatened, or any claim whatsoever, based
upon any such untrue statement or omission, or any such inaccuracy, to
the extent that any such expense is not paid under (a) or (b) above.
53
This indemnity agreement will be in addition to any liability which B
of A may otherwise have.
SECTION 4.03. PROCEDURE FOR INDEMNIFICATION. In case any
proceeding (including any governmental investigation) shall be instituted
involving any Person in respect of which indemnity may be sought pursuant to
Section 4.01 or 4.02, such Person (hereinafter called the "Indemnified Party")
shall promptly notify the person against whom such indemnity may be sought
(hereinafter called the "Indemnifying Party") in writing. The Indemnifying
Party, upon request of the Indemnified Party, shall acknowledge its obligation,
subject to the terms hereof, to indemnify the Indemnified Party in writing and
shall retain counsel reasonably satisfactory to the Indemnified Party to
represent the Indemnified Party and any others the Indemnifying Party may
designate in such proceeding and the Indemnifying Party shall pay the fees and
disbursements of such counsel related to such proceeding, as and when such fees
and disbursements are billed by such counsel. If the Indemnifying Party fails to
acknowledge its obligation, subject to the terms hereof, to indemnify in writing
or fails to retain such counsel within a reasonable period of time after such
notice was given, then the Indemnified Party shall have the right to retain its
own counsel, and the fees and expenses of such counsel shall be at the expense
of the Indemnifying Party. In any such proceeding, any Indemnified Party shall
have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party unless (a) the
preceding sentence is applicable, (b) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (c) the
named parties to any such proceeding (including any impleaded parties) include
both the Indemnifying Party and the Indemnified Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Indemnifying Party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees and expenses of more than one
separate firm (in addition to any local counsel) for all such Indemnified
Parties, and that all such fees and expenses shall be reimbursed as they are
incurred.
SECTION 4.04. SETTLEMENTS OF PROCEEDINGS. The Indemnifying Party
shall not be liable for any settlement of any proceeding effected without its
written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Party agrees to indemnify the
Indemnified Party from and against any loss or liability by reason of such
settlement or judgment. No Indemnifying Party, without the prior written consent
of the Indemnified Party, shall effect any settlement of any pending or
threatened proceeding in respect of which any Indemnified Party is or could have
been a party and indemnity could have been sought hereunder by such Indemnified
Party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability on claims that are the subject matter of
such proceeding.
SECTION 4.05. CONTRIBUTION. In order to provide for just and
equitable contribution in circumstances in which the indemnification provided
for in Sections 4.01 and 4.02 hereof is for any reason held to be unenforceable
by the Indemnified Parties although applicable in accordance with its terms, B
of A, on the one hand, and the Trust and First Marblehead, on the other, shall
contribute to the aggregate losses, liabilities, claims, damages and
54
expenses of the nature contemplated in Sections 4.01 and 4.02 that are incurred
by B of A, the Trust and First Marblehead in such proportions that (i) the Trust
and First Marblehead shall be responsible for that portion represented by the
percentage that the gross fee earnings of First Marblehead in the Securitization
bear to the sum of such fees and the purchase price paid by the Trust for the
Contracts, and (ii) B of A shall be responsible for the balance; PROVIDED,
HOWEVER, that no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the 0000 Xxx) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
The Trust, First Marblehead and B of A agree that it would not be just
and equitable if contribution pursuant to this Section 4.05 were determined by
PRO RATA allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party pursuant to
Section 4.01 or 4.02 shall be deemed to include, subject to the limitations set
forth above, any legal or other expense reasonably incurred by such Indemnified
Party in connection with investigating or defending any such action or claim. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
ARTICLE 5
MISCELLANEOUS
SECTION 5.01. NOTICES. All demands, notices and communications
upon or to B of A, the Trust and First Marblehead under this Agreement shall be
in writing, personally delivered or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt (a) The
First Marblehead Corporation, 00 Xxxxxx Xxxxxx, Xxxxxxxxxx, XX 00000; (b)
[ADDRESS FOR PURCHASER TRUST], (c) B of A______________________________________
__________________________________, or such other address as may hereafter be
furnished to the other parties in writing.
SECTION 5.02. SUCCESSORS AND ASSIGNS. This Agreement is binding on
B of A's, the Trust's and First Marblehead's successors and assignees. Each
party hereto agrees that it will not assign this Agreement without the other
parties' prior written consent.
SECTION 5.03. ARBITRATION.
(a) Any controversy or claim between or among the parties
arising out of or relating to this Agreement or any agreements or
instruments relating hereto or delivered in connection herewith and any
claim based on or arising from an alleged tort, shall at the request of
any party, be determined by arbitration. The arbitration shall be
conducted in accordance with the United States Arbitration Act (Title
9, U.S. Code), notwithstanding any choice of law provision in this
Agreement, and under the Commercial Rules of the American Arbitration
Association ("AAA"). The arbitrator(s) shall give effect to statutes of
limitation in determining any claim. Any controversy concerning whether
an issue is arbitrable shall be determined by the arbitrator(s).
Judgment upon the arbitration award
55
may be entered in any court having jurisdiction. The institution and
maintenance of an action for judicial relief or pursuit of a
provisional or ancillary remedy shall not constitute a waiver of the
right of any party, including the plaintiff, to submit the controversy
or claim to arbitration if any other party contests such action for
judicial relief.
(b) No provision of this Section 5.03 shall limit the right of
any party to this Agreement to exercise self-help remedies such a
setoff, foreclosure against or sale of any real or personal property
collateral or security, or obtaining provisional or ancillary remedies
from a court of competent jurisdiction before, after, or during the
pendency of any arbitration or other proceeding. The exercise of a
remedy does not waive the right of either party to resort to
arbitration or reference.
SECTION 5.04. COSTS AND ATTORNEYS' FEES. In the event of a lawsuit
or arbitration proceeding arising out of or relating to this Agreement, the
prevailing party is entitled to recover costs and reasonable attorneys' fees
incurred in connection with the lawsuit or arbitration proceeding, as determined
by the court or arbitrator.
SECTION 5.05. SEVERABILITY. Any provision of this Agreement that
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 5.06. COUNTERPARTS. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
SECTION 5.07. HEADINGS. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
SECTION 5.08. LIMITATION OF RECOURSE TO THE TRUST. Notwithstanding
any provision of this Agreement to the contrary, all obligations of the Trust
under this Agreement shall be payable only from the rights of the Trust in the
Contracts. No recourse shall be had against the general funds of the Trust, nor
against any income or proceeds of the Contracts not available, in accordance
with the Trust Instrument, for distribution. To the extent that the interests of
the Trustee and the bond holders under the Trust Instrument are fully satisfied,
or if proceeds of the Contracts are otherwise distributed to the owners of the
Trust free and clear of claims of said Trustee (as defined in the Trust
Instrument), claims against the Trust may be satisfied from the Contracts or the
distributable proceeds thereof.
BANK OF AMERICA NA
By:
-------------------------------
Print Name:
56
Title:
[NAME OF PURCHASER TRUST]
By: [NAME OF TRUSTEE], not in its individual
capacity but SOLELY in its capacity as
Trustee
By:
-------------------------------
Print Name:
Title:
THE
FIRST MARBLEHEAD CORPORATION
By:
-------------------------------
Print Name:
Title:
57
EXHIBIT D
CERTIFICATE
OF
BANK OF AMERICA, N.A.
This Certificate is being delivered to Xxxxxxx Xxxxxxxx & Xxxx ("TPW")
for reliance hereon by TPW in rendering its opinion letter to which this
Certificate is annexed, dated the date hereof (the "OPINION LETTER"). The
undersigned understands, acknowledges and agrees that the facts set forth in the
Opinion Letter have been relied upon by TPW in rendering the Opinion Letter and
by each addressee thereof and other parties to the transactions to which the
Opinion Letter relates in the consummation of those transactions. Capitalized
terms not defined herein have the meanings assigned to them in the Opinion
Letter and the Agreements. The undersigned hereby represents, warrants,
covenants and certifies, after reasonable investigation and review and
consultation as appropriate with its attorneys and independent accountants, as
follows:
1. The transfers pursuant to the Agreements of the Student Loans by
the Bank to the Trust were intended to constitute sales. Those transfers will be
reported as such in the general ledgers and other accounting records, and in any
separate unconsolidated financial statements of the Bank. Those transfers (i)
were intended to constitute a sale of the Student Loans and will be reported as
such under United States generally accepted accounting principles ("GAAP") and
for United States federal income tax purposes such that the Student Loans will
no longer be included in any consolidated financial statements in which the
financial statements of the Bank are included and (ii) meet all of the
requirements for such accounting and tax treatment, except that the undersigned
makes no representation, warranty, covenant or certification herein as to
whether any requirement under GAAP that the Student Loans have been legally
isolated from the Bank has been satisfied, which requirement is the subject of
the Opinion Letter.
2. Except as described in the Agreements and the Opinion Letter,
neither the Bank nor any affiliate thereof now has or intends to acquire at any
time any other direct or indirect ownership or other economic interest in, or
other right or obligation with respect to, any Student Loan or security backed
thereby.
3. The Agreements have been approved by the Board of Directors of
the Bank acting through its Finance Committee pursuant to resolutions dated
___________ and a written consent of the Finance Committee effective as of
_____________, which approval is reflected in the minutes of the Board of
Directors of the Bank and its Finance Committee, and copies thereof will be
maintained continuously from the time of execution in the official records of
the Bank.
4. The factual statements in the Opinion Letter are accurate,
including with limitation the following:
(i) Pursuant to [the 2000 Student Loan Purchase Agreement,]
[the 2000 Pool Supplement,] [the 2001 Student Loan Purchase Agreement] [and the
2001 Pool Supplement,] the Bank sold 100% of its ownership interest in the
Student Loans to the Trust for consideration
consisting only of cash. Simultaneously with the transfer of ownership of the
Student Loans to the Trust, pursuant to the Indenture the Trust assigned and
granted a security interest in the Student Loans and certain other property to
the Trustee as secured party on behalf of the holders of the Notes and the Bond
Insurer. Except as described in the Agreements, the Bank has not acquired, and
does not intend to acquire at any time, directly or indirectly any residual,
equity or other ownership or economic interest, or any other right or obligation
that could be determined to constitute recourse with respect to any Student Loan
or Note.
(ii) The Notes are also entitled to the benefits of the Note
Guaranty Insurance Policy with respect to amounts required to be available for
distribution thereon. Neither the Bank or the Trust nor any affiliate of either
has any liability to the Bond Insurer except for payment of the premium
therefor, the Indemnity Agreement and for the usual and customary
representations and warranties.
The undersigned has executed this Certificate as of the date of the
Opinion Letter.
BANK OF AMERICA, N.A.
By: /s/Xxxxxxxx X. Xxxxxx
-------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Senior Vice President
