CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE SECURITIES
AND EXCHANGE COMMISSION.
ASTERISKS DENOTE OMISSIONS. |
Note: This Agreement contains confidential &
proprietary information and may not be disclosed without theconsent
of both parties or as required by law
GUARANTY AGREEMENT
between
THE EDUCATION RESOURCES INSTITUTE, INC.
and
GMAC BANK
This
Guaranty Agreement (this "Agreement") is made as of this 30th day of May, 2003,
by and between The Education Resources Institute, Inc. ("XXXX"), a private
non-profit corporation organized under Chapter 180 of the Massachusetts General
Laws with its principal place of business at 00 Xx. Xxxxx Xxxxxx, 0xx
Xxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000, and GMAC Bank, (the "LENDER"), a federal
savings bank having a place of business located at 0000 Xxxxxxx Xxxx,
Xxxxxxxxxx, XX 00000.
WHEREAS, XXXX is in the business of providing financial assistance in the form
of loan guaranties to and on behalf of students enrolled in programs of higher
education and their parents at XXXX-approved schools; and
WHEREAS, the LENDER is willing to make Loans to eligible Borrowers under
the Program, and XXXX is willing to guaranty the payment of principal and interest against
the Borrowers' default or certain other events as more fully described below, in
accordance with the terms and conditions set forth in this Agreement.
NOW,
THEREFORE, in consideration of the mutual covenants contained herein, XXXX and
the LENDER agree as follows:
Section
1: DEFINITIONS
As used in this Agreement the following terms shall have the
following meanings:
| 1.1 |
"Agent" shall mean State Street Bank and Trust Company, its
successors and assigns, in its capacity as Agent under the Deposit and Security
Agreement among XXXX, the LENDER, the Agent, and the First Marblehead
Corporation ("FMC") of even date herewith (the "Deposit and Security
Agreement").
|
| 1.2 |
"Borrower" shall mean the person, or all persons
collectively, including all students, cosigners, coborrowers, guarantors,
endorsers, and accommodation parties, who execute a Promissory Note individually
or, in the case of multiple Borrowers, severally and jointly, for the purpose of
obtaining funds from the LENDER under the Program.
|
| 1.3 |
"Due Diligence" shall mean the utilization by the LENDER of
policies, practices and procedures in the origination, servicing and collection
of Loans that comply with the standards set forth in the Program Guidelines and
that comply with the requirements of federal and state law and regulation.
|
| 1.4 |
"Guaranty Claim" shall mean a claim by the LENDER to XXXX for a
guaranty payment with respect to a Loan pursuant to Section 2.1 of this
Agreement. |
| 1.5 |
"Guaranty Event" shall mean any of the following events with
respect to a Loan:
|
|
a. |
failure of a Borrower to make monthly principal and/or interest
payments on a Loan when due, provided such failure persists for a period of one
hundred eighty (180) consecutive days, |
|
b. |
the filing of a petition in bankruptcy with respect to a Borrower, |
|
c. |
the death of a Borrower, or |
|
d. |
fraud in the execution of a Promissory Note.
For Loans on which the Borrower is two or more persons, none of the above, with
the exception of paragraph b. and d, shall be a Guaranty Event unless one or
more such events shall have occurred with respect to all such persons. The
foregoing notwithstanding, if a Borrower files a petition in bankruptcy pursuant
to Chapter 7 of the U.S. Bankruptcy Code and does not seek a discharge of the
affected Loan(s) under 11 U.S.C. §523(a)(8)(B) of the U.S. Bankruptcy Code,
the LENDER at TERI's request will withdraw its guaranty claim unless or until
one of the other Guaranty Events shall have occurred with respect thereto. |
| 1.6 |
"Loan" shall mean a loan of funds, including all
disbursements thereof, made by the LENDER to a Borrower under the Program.
|
| 1.7 |
"Note Purchase Agreement" means the agreement of that name between
LENDER and The First Marblehead Corporation ("FMC") dated as of even date
herewith, as it may be amended from time to time.
|
| 1.8 |
"Program" shall mean the GMAC Bank Student Loan Program as
more fully described in the Program Guidelines.
|
| 1.9 |
"Program Guidelines" shall mean the GMAC Bank Student Loan Program
Guidelines attached hereto as Exhibit A, and all changes thereto as provided in
Section 6 hereof. The Program Guidelines (a) consist of the Program Overview,
the XXXX Underwriting, Origination and Loan Term Guidelines, the Servicing
Guidelines, and Program Borrower Documents (consisting of the forms of
Promissory Note and Truth in Lending Disclosure) and (b) are hereby incorporated
in this Agreement by reference and made a part hereof.
|
| 1.10 |
"Promissory Note" shall mean a promissory note evidencing a Loan
executed by a Borrower in the form attached hereto as part of the Program
Guidelines or as approved pursuant to Section 3.2 below.
|
| 1.11 |
"Securitization Transaction" shall mean and refer to (a) a
purchase of Loans guaranteed hereunder by a special purpose entity ("SPE")
formed by FMC, which purchase is funded through the issuance of debt instruments
or other securities by such entity, the repayment of which is supported by
payments on the Loans or (b) any other transaction whereby a Loan is transferred
from the LENDER to FMC or one of its affiliates.
|
Section 2: GUARANTY OF LOANS
| 2.1 |
XXXX hereby guarantees to the LENDER, unconditionally except as
set forth in Section 2.2 below, the payment of 100% of the principal of and
accrued interest on every Loan as to which a Guaranty Event has occurred.
"Accrued interest" shall mean interest accrued and unpaid to the date of payment
in full by XXXX of a Guaranty Claim, less any interest that shall have accrued
after the filing of a Guaranty Claim but before XXXX shall have received all the
documentation necessary to process the Guaranty Claim as set forth in the
Program Guidelines. XXXX will use all reasonable efforts to make payment on its
guaranty within sixty (60) days, and will in any event make payment within
ninety (90) days, of receipt by XXXX of a Guaranty Claim from the LENDER stating
the name of the Borrower and the type of Guaranty Event that has occurred
accompanied by the full claim documentation required in the Program Guidelines.
|
| 2.2 |
TERI's guaranty is conditioned upon the following:
|
|
a. |
The LENDER must have filed its Guaranty Claim within the time
period and following the procedures specified in the Program Guidelines. |
|
b. |
The LENDER and its predecessors in interest must at all times have
exercised Due Diligence with respect to the Loan in question (or shall have
cured any failure to exercise Due Diligence under the reinstatement provisions
in Section 2.4 hereof and the Program Guidelines), and must have complied with
all other requirements of the Program Guidelines applicable to the Loan. |
|
c. |
The LENDER shall have paid to XXXX the Guaranty Fee in accordance
with Section 3.3 below and Schedule 3.3. |
|
d. |
XXXX must have received from the LENDER the Promissory Note
relating to the Loan in question, (i) executed in accordance with the Servicing
Guidelines (set forth within th Program Guidelines), (ii) enforceable against
the Borrower (except as provided in this Section 2.2.d., below), and (iii)
endorsed to XXXX in such manner as to transfer to XXXX all rights in and title
to such Promissory Note, free and clear of all liens and encumbrances, and of
all defenses, counterclaims, offsets, and rights of rescission that might be
raised by the Borrower. Submission of a Guaranty Claim to XXXX shall constitute
the LENDER's certification that the conditions of 2.2.b. and 2.2.d. have been
met, and XXXX is entitled to rely on such certification.
Subsections 2.2.b. and 2.2.d. above notwithstanding, if a Loan that is the
subject of a Guaranty Claim was originated by XXXX on behalf of the LENDER
pursuant to a Loan Origination Agreement between the parties, (i) XXXX will not
deny the LENDER's Guaranty Claim on such Loan if the sole basis for denial is a
violation of the Program Guidelines or a violation of Massachusetts or federal
law committed by XXXX in the origination process, and (ii) XXXX will have no
recourse against the LENDER in the event that TERI's actions or omissions in the
origination process shall have given rise to a successful defense in favor of
the Borrower in a suit on the Promissory Note relating to such Loan. |
| 2.3 |
TERI's guaranty obligation with respect to any Loan shall not be
terminated or otherwise affected or impaired (i) by the LENDER's or its
servicer's granting an extension of time to the Borrower to make scheduled
payments, or by any other indulgence the LENDER may grant to the Borrower,
provided that all extensions and other indulgences meet the forbearance
standards and other requirements of the Program Guidelines; or, Section 2.2.d.
above notwithstanding, (ii) because of any fraud in the execution of the
Promissory Note relating to such Loan, (iii) because of any illegal or
improper acts of the Borrower, or (iv) because the Borrower may be relieved of
liability for such Loan due to lack of contractual capacity or any other
statutory exemption.
|
| 2.4 |
Except as provided in sections 2.2 and 2.3 above, XXXX may deny
the LENDER's Guaranty Claim on any Loan on the grounds of Due Diligence
deficiencies. If XXXX properly denies the LENDER's Guaranty Claim on any Loan on
the grounds of Due Diligence deficiencies, the LENDER may thereafter require
that XXXX reinstate the guaranty of such Loan if (a) the LENDER corrects such
deficiencies and receives four (4) consecutive full on-time monthly payments
from the Borrower, according to any schedule permitted by the Program
Guidelines, and if at the time of the LENDER's request the Borrower is within
thirty (30) days of being current on all principal and interest payments on such
Loan, or (b) the LENDER satisfies any other method of cure set forth in the
Program Guidelines.
|
| 2.5 |
TERI's guaranty hereunder is a continuing and absolute guaranty of
payment and not merely of collection, covering Loans made in accordance herewith
based upon applications received by the LENDER prior to termination of this
Agreement; and such termination shall not affect TERI's obligations to the
LENDER then existing, whether direct or indirect, absolute or contingent, then
due or thereafter to become due.
|
| 2.6 |
XXXX agrees not to exercise any right of subrogation,
reimbursement, indemnity, contribution or the like against the Borrower of any
Loan unless and until all of TERI's obligations to the LENDER under this
Agreement with respect to such Loan have been satisfied in full, except to the
extent that it is deemed a valid claimant as a contingent creditor, for example,
under Title 11 of the United States Code (the "Bankruptcy Code"), or applicable
state law.
|
| 2.7 |
XXXX will permit the LENDER, any duly designated representative of
the LENDER, or any governmental body having jurisdiction over the LENDER
(subject to written notice being provided to XXXX by the LENDER, identifying the
requesting party and the date of the review), to examine and audit the books and
records of XXXX pertaining to the Loans, at any time during TERI's regular
business hours, provided that in the case of examinations by the LENDER or its
representative, absent good cause (i) XXXX must be given ten (10) business days'
prior written notice and, (ii) no more than one such audit may be conducted with
respect to any twelve-month period or will take place in any twelve-month
period. In no event will any audit be performed during July, August, September,
or October in any year except at the request of a regulatory authority having
jurisdiction over the LENDER.
|
| 2.8 |
XXXX will indemnify the LENDER and hold it harmless from and
against any loss, cost, damage or expense that the LENDER may suffer as a result
of claims to the extent they arise out of TERI's actions or omissions relative
to the LENDER's participation in the Program and do not arise out of the
LENDER's actions or omissions. "Expense" includes, without limitation, the
LENDER's reasonable attorney's fees. XXXX will further indemnify the LENDER and
hold it harmless from and against any claim brought against the LENDER by any
Borrower based on actions or omissions of the LENDER that were mandated under
the Program Guidelines.
|
| 2.9 |
The LENDER acknowledges that TERI's approval of a servicer is in
no way an endorsement of such servicer and that XXXX shall have no liability to
the LENDER for any losses arising from such servicer's failure to comply with
Due Diligence or the Program Guidelines or applicable law, nor shall XXXX be
required to honor any claim submitted by such servicer if the claim does not
comply with the requirements of this Agreement.
|
Section 3:
OBLIGATIONS OF THE LENDER
| 3.1 |
In originating (in the event and to the extent XXXX is not
performing origination services for Lender), servicing, disbursing, and
collecting Loans, the LENDER will comply, and cause its servicer and others
acting on its behalf to comply, at all times with all Program Guidelines
(including Due Diligence requirements) and all applicable requirements of
federal and state laws and regulations.
|
| 3.2 |
a. The LENDER will use Promissory
Notes, Loan applications, disclosure statements, and other forms mutually
agreeable to the parties. The forms of Promissory Notes, Loan applications and
disclosure statement attached hereto as part of the Program Guidelines are
agreed to be satisfactory to both parties. Without limiting the generality of
Sections 3.1 and 4.1, the LENDER warrants the conformity of such instruments and
any agreed successors thereto with all applicable legal requirements of the
federal Home Owners Loan Act and of states other than the state of
Massachusetts, and XXXX warrants their conformity with Massachusetts and federal
laws other than the federal Home Owners Loan Act.
|
|
b. |
In addition, upon TERI's request, the LENDER will submit to XXXX
sample copies of promotional and marketing materials used in connection with the
Program. No such request for promotional and marketing materials shall
constitute or be construed as a representation or warranty by XXXX that such
materials comply with applicable law or with the LENDER's obligations under this
Agreement, and no such request by XXXX shall excuse the LENDER's performance of
any of its obligations under this Agreement. Lender warrants that all
promotional and marketing materials it uses in connection with the Program and
its use thereof comply with all applicable federal and state laws and
regulations. |
| 3.3 |
The LENDER will pay a guaranty fee for each Loan (the "Guaranty
Fee") as follows:
|
|
a |
At the time of each disbursement of the Loan, the LENDER will
promptly remit to XXXX [**] of the principal amount of the Loan disbursed (the
"Initial Guaranty Fee"). |
|
b. |
At such times as are set forth in Schedule 3.3 attached hereto and
incorporated herein by reference, such additional fees as are set forth in the
fifth and sixth columns of Schedule 3.3 ("Subsequent Guaranty Fee"). |
|
i. |
If the terms of Schedule 3.3 call for any Guaranty Fees to be paid
to XXXX or to the Agent concurrent with the Securitization Transaction, the
LENDER shall pay such fees directly (and be reimbursed in the Securitization
Transaction to the extent provided in the Note Purchase Agreement). |
|
ii. |
In the event that a Guaranty Claim is made with respect to a Loan
before a Subsequent Guaranty Fee is scheduled to be paid by the LENDER for such
Loan, the Subsequent Guaranty Fee shall become immediately due and payable. |
|
iii. |
In the event that a loan is prepaid in full prior to the date that
a Subsequent Guaranty Fee is scheduled to be paid by the LENDER for such Loan,
the Subsequent Guaranty Fee shall nevertheless become due and payable at the
time that would have applied if such prepayment had not occurred. For example,
if a Subsequent Guaranty Fee is due at the time of a Securitization Transaction
and a Loan is prepaid before it is eligible for Securitization, then the
Subsequent Guaranty Fee with respect to such Loan shall become due at the first
Securitization Transaction in which such Loan would have been eligible for
inclusion, had prepayment not occurred. |
|
iv. |
In the event that FMC fails to purchase any Loan under the Note
Purchase Agreement, and the LENDER sells such Loan to a third party, the
Guaranty Fees due with respect to such loan at the time of a Securitization
Transaction will instead be paid by the LENDER at the time the loan is sold to
the third party. |
|
v. |
In the event FMC has no further right or obligation under the Note
Purchase Agreement to purchase a Loan in a Securitization Transaction, the
LENDER shall pay all Subsequent Guaranty Fees that are due to be paid at the
time of securitization as set forth in Schedule 3.3. Such fees shall be payable
(A) with respect to any Loan already funded, within thirty (30) days after
presentation of an invoice by XXXX to the Lender, and (B) with respect to Loans
funded after the date of such invoice, at the time of disbursement. |
|
vi. |
In the event that the LENDER fails to sell any Loan to FMC because
the LENDER has breached the Note Purchase Agreement, the LENDER shall pay all
Subsequent Guaranty Fees that are due to be paid at the time of securitization
as set forth in Schedule 3.3. Such fees shall be payable directly to XXXX and
shall not be subject to the Deposit and Security Agreement. |
|
c. |
Failure to remit any Guaranty Fee within thirty (30) days of the
time set forth above will not affect the validity of the guaranty for any Loan
for which the Guaranty Fee has already been paid in full, but, as a result, XXXX
will have the right, at its discretion to (i) void its obligation to guarantee
or collect the Loan to which such Guaranty Fee relates or (ii) collect the
amount of any such Guaranty Fee and to add interest at the rate of eighteen
percent (18%) per annum from the disbursement date of the Loan to which such
Guaranty Fee relates, plus any costs (including attorneys' fees and expenses)
incurred by XXXX in collecting or attempting to collect such Guaranty Fee from
the LENDER. |
|
d. |
Anything in the Program Guidelines to the contrary
notwithstanding, if the LENDER is required under the terms of a Promissory Note
to refund all or part of the Guaranty Fees identified above to a Borrower, XXXX
will refund all or part of the Guaranty Fee it has received and the Agent will
refund all or part of any Guaranty Fee it has received (in each case related to
the refund to such Borrower) to the LENDER upon being so advised by the LENDER
in writing. |
| 3.4 |
If XXXX shall have purchased a Loan pursuant to Section 2.1 above,
the LENDER will promptly repurchase such Loan upon request from XXXX if (i) XXXX
succeeds, after purchasing, in obtaining from the Borrower three full
consecutive on-time monthly payments, according to any schedule permitted by the
Program Guidelines, provided that on the date of TERI's notice to repurchase,
the Borrower is within thirty (30) days of being current on his or her payments
on such Loan, and provided further that this repurchase obligation may be
invoked by XXXX only once as to any Loan (in which case, the Loan shall be
considered "rehabilitated"); or (ii) if XXXX should determine that the Loan does
not meet the conditions set forth in subsections b., c. and d. of Section 2.2
above. With respect to the repurchase of any Guaranteed Loan pursuant to this
Section 3.4, the repurchase price shall be equal to (1) the remaining unpaid
principal balance of such Loan, plus (2) any accrued and unpaid interest
thereon.
|
| 3.5 |
To the extent permitted by applicable law, the LENDER will (i)
deliver to XXXX such reports, documents, and other information concerning the
Loans as XXXX may reasonably require, and (ii) permit independent auditors,
authorized representatives of XXXX and governmental agencies, if any, having
regulatory authority over XXXX, to have access to the operational and financial
records and procedures directly applicable to Loans and to the LENDER's
participation in the Program. LENDER will cause its loan servicer to deliver to
XXXX such reports, documents, and other detailed information concerning each
Loan as XXXX may reasonably require. LENDER shall provide a monthly report
containing the information set forth on Exhibit B hereto at LENDER's expense
XXXX shall arrange directly with the loan servicer to receive the report. Any
other reporting or information shall be provided upon TERI's agreement to
reimburse LENDER for its incremental cost of such report.
|
| 3.6 |
If the LENDER should violate any term of this Agreement, it will
be liable to XXXX for all loss, cost, damage or expense sustained by XXXX as a
result. The LENDER will indemnify XXXX and hold it harmless from and against all
loss, cost, damage or expense that XXXX may suffer as a result of claims to the
extent they arise out of the LENDER's actions or omissions relative to the
LENDER's participation in the Program unless such actions or omissions are
specifically required by this Agreement, and do not arise out of TERI's actions
or omissions. The LENDER will similarly indemnify XXXX with respect to any
defenses arising from the LENDER's violation of or failure to comply with any
term of this Agreement, that may be raised by a Borrower to any suit upon a
Promissory Note. "Expense" includes, without limitation, TERI's reasonable
attorney's fees.
|
Section
4: REPRESENTATIONS AND WARRANTIES
| 4.1 |
Each party represents and warrants to the other that its
execution, delivery and performance of this Agreement are within its power and
authority, have been authorized by proper proceedings, and do not and will not
contravene any provision of law or such party's organizational documents or
by-laws or contravene any provision of, or constitute an event of default or an
event which, with the lapse of time or with the giving of notice or both, would
constitute an event of default, under any other agreement, instrument or
undertaking by which such party is bound. Each party represents and warrants
that it has and will maintain in full force and effect all licenses required
under applicable state, federal, local or other law for the conduct of all
activities contemplated by this Agreement and comply with all requirements of
such applicable law relative to its licenses and the conduct of all activities
contemplated by this Agreement. This Agreement and all of its terms and
provisions are and shall remain the legal and binding obligation of the parties,
enforceable in accordance with its terms subject to bankruptcy and insolvency
laws. The warranties given herein shall survive any termination of this
Agreement.
|
| 4.2 |
The parties acknowledge that XXXX is not an insurer or reinsurer
and the LENDER expressly waives all claims it might otherwise have under
applicable law were XXXX to be held by any court or regulatory agency to be
acting as an insurer or reinsurer hereunder. The only obligations of XXXX to the
LENDER shall be those expressly set forth herein.
|
Section 5:
MISCELLANEOUS
| 5.1 |
Neither party is or will hold itself out to be the agent, partner,
or joint venturer of the other party with regard to any transaction under or
pursuant to this Agreement.
|
| 5.2 |
Each party's respective rights, remedies, powers, privileges, and
discretions ("Rights and Remedies") shall be cumulative and not exclusive. No
delay or omission by either party in exercising or enforcing any of its Rights
and Remedies shall operate as to constitute a waiver of them. No waiver by a
party of any default under this Agreement shall operate as a waiver of any
subsequent or other default under this Agreement. No single or partial exercise
by a party of any of its Rights and Remedies shall preclude the other of further
exercise of such Rights and Remedies. No waiver or modification by a party of
the Rights and Remedies on any one occasion shall be deemed a continuing waiver.
A party may exercise its various Rights and Remedies at such time or times and
in such order of preference as it in its sole discretion may determine. In no
event will either party be liable to the other for special, incidental, or
consequential damages, including but not limited to lost profits, even if
advised in advance of the possibility of the same, or for punitive or exemplary
damages, provided that such exclusions shall not apply to the indemnification
against an award of such damages pursuant to a third party claim.
|
| 5.3 |
This Agreement (including the Program Guidelines and all exhibits
and schedules hereto), together with (i) the Deposit and Security Agreement and
(ii) the Loan Origination Agreement, of even date herewith, between XXXX and the
LENDER ((i) and (ii) together, the "Ancillary Agreements"), represents the
entire understanding of the parties with respect to the subject matter hereof.
This Agreement, together with any contemporaneous contract concerning credit
analysis and the Ancillary Agreements, supersedes all prior communications
whatsoever between the parties relative in any way to Loans or the LENDER's
participation in the Program. This Agreement may be modified only by written
agreement of the parties hereto, except as may otherwise be set forth herein.
|
| 5.4 |
Any determination that any provision of this Agreement is invalid,
illegal, or unenforceable in any respect shall not affect the validity,
legality, or enforceability of such provision in any other instance and shall
not affect the validity, legality, or enforceability of any other provision of
this Agreement.
|
| 5.5 |
Each of the parties will timely implement, if it has not already,
and will maintain, a reasonable disaster recovery plan. Subject to the
foregoing, no party hereto shall be responsible for, or in breach of this
Agreement if it is unable to perform as a result of delays or failures due to
any cause beyond its control, howsoever arising, and not due to its own act or
negligence and that cannot be overcome by the exercise of due diligence. Such
causes shall include, but not be limited to, labor disturbances, riots, fires,
earthquakes, floods, storms, lightning, epidemics, wars, hostilities, terrorist
acts, civil disorder, expropriation or confiscation of property, failure or
delay by carriers, interference by civil and military authorities whether by
legal proceeding or in fact and whether purporting to act under some
constitution, decree, law or otherwise, acts of God and perils of the sea.
|
| 5.6 |
This Agreement shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts, without regard to the
conflict of laws provisions thereof.
|
| 5.7 |
This Agreement will be binding on the parties' respective
successors and assigns. Except as otherwise set forth in this Section 5.7, this
Agreement may not be assigned by either party without the other's written
consent.
|
|
a. |
The LENDER may, without TERI's consent, assign any Loan, together
with the provisions hereof as applicable to such Loan, to another entity
participating in the Program, or to an SPE formed by the LENDER, in each case
upon written notice to XXXX. |
|
b. |
XXXX specifically acknowledges that FMC or an SPE sponsored by FMC
is expected to purchase some or all of the Loans, and this Agreement shall inure
to the benefit of FMC or any such SPE upon such purchase. No notice of such
purchase or consent to the assignment of the LENDER's rights under this
Agreement in connection with a purchase of some or all of the Loans by FMC or
any SPE sponsored by FMC shall be necessary. |
|
c. |
In assigning any Loan and its rights under this Agreement relating
to such Loan in accordance with Section 5.7(a), (i) the LENDER's written notice
to XXXX must be made within thirty (30) days after said assignment and must
identify each Loan to which such assignment relates, and (ii) XXXX will fully
cooperate with any Securitization Transaction or other sale of a portfolio of
Loans, provided it is given thirty (30) days advance written notice of the date
that information or documents are required of it and provided that its
reasonable legal fees and other expenses incurred in connection with such
transaction are reimbursed by the seller of such Loans. |
|
d. |
Except for any assignment hereunder to FMC or any SPE sponsored by
FMC in connection with a purchase of Loans as described in subsection b. above,
no assignment of Loans or the LENDER's rights hereunder without TERI's express
written consent shall release the LENDER from any liability to XXXX under this
Agreement arising out of the LENDER's ownership of such Loans (whether arising
prior to, as a result of or after the sale of such Loans by the LENDER)
including, without limitation, the LENDER's obligation to pay any unpaid
Guaranty Fees and to repurchase Loans pursuant to Section 3.4. |
|
e. |
The Lender acknowledges that XXXX has outsourced or subcontracted
some or all of its administrative functions, including but not limited to the
processing of guarantee claims, to First Marblehead Education Resources, Inc. In
addition, the Lender acknowledges that XXXX has subcontracted and may hereafter
subcontract any administrative obligations necessary or convenient to XXXX to
perform its obligations hereunder, and that such subcontracts do not and shall
not require the consent of the LENDER. Such outsourcing or subcontracting shall
not relieve XXXX of its obligations under this Agreement. |
| 5.8 |
Notice for any purpose hereunder may be given by any means
requiring receipt signature, or by facsimile transmission confirmed by first
class mail. In the case of XXXX, notices should be sent to its President, and if
by fax, to (000) 000-0000. In the case of the LENDER, notices should be sent to
its President, with a copy to its General Counsel, and if by fax, to
000-000-0000. Either party may from time to time change the person,
address or fax number for notice purposes by formal notice to the other party.
|
Section 6:
CHANGES TO PROGRAM GUIDELINES
The parties agree that the Program Guidelines will need to be
updated and modified from time to time to respond to changed conditions. The
parties intend to make such modifications in a manner that does not interfere
with the ordinary advertising and origination cycle for education loans.
Amendments necessary to meet state or federal regulatory requirements may be
made at any time. With respect to all other changes, the parties shall exchange
requests for modification of the Program Guidelines, including without
limitation any requested changes to the provisions of the Program Guidelines
concerning the Guaranty Fees, in the first part of the first calendar quarter of
each year. Each party shall respond in writing to proposals from the other
within thirty (30) days, and both parties will attempt to resolve any
differences within thirty (30) days after receiving a response to a request. All
modifications must be mutually acceptable. Any modifications approved by the
parties and not requiring system adjustments by the LENDER's loan servicer shall
take effect within thirty (30) days after approval. Modifications requiring
system adjustments by the LENDER's loan servicer shall take effect as soon after
approval as such servicer shall be able to adjust its systems to accept loans
made on the modified terms, and the LENDER agrees to take such actions as are
reasonably necessary to ensure that such servicer adjusts its systems as
promptly as practicable. The parties shall use their best efforts to conclude
all negotiations of proposed changes prior to May 1 of each year. The foregoing
process shall not apply to modification of the Servicing Guidelines, which are
subject to the modification process contained therein.
Section 7: TERM
AND TERMINATION
| 7.1 |
The initial term of this Agreement shall commence on the date
first set forth above, and shall continue until [**]. Thereafter, this Agreement
may be renewed by mutual agreement of the parties not less than [**] days prior
to the end of the then-current term.
|
| 7.2 |
In the event that the parties are unable to agree on a proposed
modification to the Program Guidelines as provided in Section 6, above, the
party proposing the modification shall have the option of terminating this
Agreement effective immediately upon written notice of termination to the other
party, provided that the party desiring to exercise this option to terminate
does so within [**] of the end of the [**] day period provided in Section 6 for
the resolution of any differences. In the event of termination under this
Section 7.2 and for no other reason, neither party shall be subject to any
termination fees or penalties.
|
| 7.3 |
To the extent permitted by applicable law, if either party should
become subject to bankruptcy, receivership, or other proceedings affecting the
rights of its creditors generally, the party becoming subject to such
proceedings will promptly notify the other party thereof, and this Agreement
will be deemed terminated immediately upon the initiation of such proceedings
without the need of notice to the other party.
|
| 7.4 |
Termination shall be prospective only and shall not affect the
obligations of the parties hereto which were incurred prior to such termination
or any of the warranties and indemnities contained herein or the provisions of
Section 8 below (regarding confidentiality). Not less than [**] days prior to
the effective date of termination, XXXX may, by additional notice to the Lender,
terminate its obligation to assume the guaranty of all or any subset of
otherwise qualifying Loans for which applications were received after the date
of Lender's receipt of such additional notice. In the absence of such additional
notice XXXX will, subject to the terms and conditions of this Agreement, assume
the guaranty of all Loans as to which a commitment to lend is made prior to the
effective date of termination. In the event this Agreement terminates or expires
and only one disbursement of a multi-disbursement loan has been made prior to
that date, the other disbursement will also be guaranteed pursuant to the terms
of this Agreement.
|
| 7.5 |
Notwithstanding the foregoing, if the Lender is determined to be a
"troubled" institution, as defined in 12 CFR, Section 563.555, the Office of
Thrift Supervision may terminate this Agreement upon reasonable notice and
without penalty.
|
Section
8: CONFIDENTIALITY; RESTRICTIONS ON USE OF
INFORMATION
| 8.1 |
During the course of negotiating this Agreement and hereafter
during the pendency of this Agreement, the parties from time to time may have
revealed or may hereafter reveal to each other certain information concerning
their respective business plans, business methods, financial data and
projections, and/or information that is not generally known in the student loan
industry, including, without limitation, the terms and conditions of this
Agreement. All the foregoing is referred to herein as "Confidential
Information." In TERI's case, its Confidential Information also includes, but is
not limited to, information concerning the operation of its telephone and
on-line loan applications procedures, and its online credit scoring system. Each
party will use reasonable efforts to preserve the confidentiality of
Confidential Information contained herein or disclosed to it by the other party,
such efforts to be not less vigilant than those that such party uses to protect
its own proprietary information. The foregoing is subject to the following
qualifications:
|
|
a. |
No party will be so bound with respect to information that is or
becomes public knowledge in the student loan industry (but if it does so through
any fault of such party that fault will be considered a material breach of this
Agreement); |
|
b. |
No party will be so bound with respect to information that is now
or hereafter comes into its possession by its own documented independent efforts
or from a third party who, so far as the recipient party has reason to believe,
is under no comparable restriction with respect to such information; |
|
c. |
Either party may disclose Confidential Information to its
attorneys, auditors, agents, and consultants who are bound to maintain the
confidentiality of such information; |
|
d. |
Either party may disclose Confidential Information in the context
of any regulatory review of its operations or as compelled by law, regulation,
or court order, provided that in the context of a court order the party required
to disclose will (i) give the other party prompt written notice upon learning of
the requirement so that the other party may take appropriate action to prevent
or limit the disclosure, (ii) consult with the other party and use all
reasonable efforts to agree on the nature, form, timing and content of the
disclosure, (iii) except as otherwise agreed under (ii), disclose no more than
its counsel advises is legally required, and (iv) inform the Court and all
counsel concerned that such information is and should be treated as confidential
information of the other party; and |
|
e. |
Information concerning Loans and Borrowers that comes into TERI's
possession shall not be considered Confidential Information of the Lender. |
|
f. |
Without limiting the foregoing, XXXX may disclose any of the
LENDER's Confidential Information to any entity to which XXXX subcontracts its
obligations under this Agreement pursuant to Section 5.7(e) hereof. |
| 8.2 |
In accordance with the provisions of Title V of the
Xxxxx-Xxxxx-Xxxxxx Act (the "GLB Act") and Federal Reserve Board Regulation P
("Regulation P"), XXXX agrees, as a financial institution subject to Regulation
P, to respect and protect the security and confidentiality of any "nonpublic
personal information" (as defined in the GLB Act and Regulation P) relating to
applicants for Loans and to Borrowers, including, where applicable, the
restrictions on the re-use and disclosure of such information set forth in the
GLB Act and Regulation P.
|
| 8.3 |
Without limiting the foregoing, XXXX may retain as its own
property and use for any lawful purpose any or all aggregated or de-identified
data concerning Loan applicants and Borrowers, which does not include the name,
address or social security number of the Loan applicants or Borrowers. XXXX may
sell, assign, transfer or disclose such information to third parties including,
without limitation, FMC, who may also use such information for any lawful
purpose.
|
IN
WITNESS WHEREOF, XXXX and the LENDER have caused this Agreement to be executed
by their duly authorized officers under seal as of the day and year indicated
above.
THE EDUCATION RESOURCES
INSTITUTE, INC.
By: /s/ Xxxxxxxx X. X'Xxxxx
Print Name: Xxxxxxxx X. X'Xxxxx
Title: President |
GMAC Bank
By: /s/ Xxxxxxx X. XxXxxx
Print Name: Xxxxxxx X. XxXxxx
Title: Senior Vice President |
TABLE OF EXHIBITS
Exhibit A – Program Guidelines for GMAC Bank Student
Loan Program
Exhibit B – Servicer Data Requirements
Schedule 3.3 – Guaranty Fee Amounts
Exhibit A –
Program Guidelines for GMAC Bank Student Loan Program
[**]
EXHIBIT B
Servicer Data Requirements
[**]
| May 12, 2003 |
March 21, 2003
(Page 1 of 1)
|
SCHEDULE 3.3 TO GUARANTY AGREEMENT BETWEEN XXXX AND GMAC
BANK
[**]
