NOTE PURCHASE AGREEMENT

 

WHEREAS, the Bank of America DTC 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. (“ TERI ”).

 

WHEREAS, the Program Lender and FMC are parties to a Note Purchase Agreement dated as of June 30, 2003, as amended to date (the “ Original Note Purchase Agreement ”). The parties desire to amend, restate and replace in full the Original Note Purchase Agreement with this Agreement.

 

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 that, 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.

 

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“ Bank of America DTC 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, (c) covered by and subject to all the benefits of the Guaranty Agreement, and (d) marketed with the Education Maximizer Mark.

 

“ Bank of America DTC Loan Pool ” or “ Pool ” shall mean and refer to a group of Bank of America DTC Notes purchased and pledged or intended to be purchased and pledged as collateral in a particular Securitization Transaction.

 

“ Bank of America DTC Notes ” shall mean notes or other forms of consumer debt instruments, evidencing Bank of America DTC Loans.

 

“Bank of America DTC Program” shall mean the Bank of America DTC 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 in the State of North Carolina 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 TERI dated as of June 30, 2003.

 

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“Depositor” shall mean the depositor, as such term is defined in Regulation AB, with respect to a Securitization Transaction.

 

“Education Maximizer Mark” shall mean the Education Maximizer mark owned by the Program Lender and licensed to FMC under the Education Maximizer License Agreement.

 

“Education Maximizer License Agreement” shall mean the license agreement between FMC and Program Lender as defined in the Umbrella Agreement.

 

“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 DTC Loan.

 

“Guaranty Agreement” means the Guaranty Agreement between Program Lender and TERI dated June 30, 2003, as it may be amended from time to time.

 

“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

 

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FMC’s ability to economically complete a Securitization Transaction; or (f) the occurrence of a TERI Insolvency Event.

 

“MBIA” means MBIA Insurance Corporation.

 

“Minimum Purchase Price” has the meaning set forth in Section 2.04.

 

“Loan Origination Agreement” refers to the Loan Origination Agreement, dated as of June 20, 2003, with respect to origination of Bank of America DTC Loans, as amended from time to time.

 

“Origination Records” means and refers to the original Bank of America DTC Loan Application and Note, a form of cosigner notice when required under 16 C.F.R. § 444, and any other standardized documentation specified from time to time in the Program Guidelines as required to be received by the Servicer from the Program Lender in order to service Bank of America DTC Loans adequately and accurately.

 

“Participating Institution” means an educational institution approved by TERI for receipt of Bank of America DTC 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 1200 North Seventh Street, Harrisburg, PA 17102.

 

“Pledged Account” has the meaning set forth in the Deposit and Security Agreement.

 

“Program Guidelines” means Appendix E to the Program Manual (as defined in the Umbrella Agreement.

 

“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

 

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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 DTC  Loan during the Right of First Refusal Period.

 

“Purchase Period” means, with respect to any particular Bank of America DTC 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; provided, however, for loans in pricing tiers [**] on Schedule 3.3 to the Guaranty Agreement, Purchase Period means, with respect to any such loan, the period beginning on the first date such loan becomes a Seasoned Loan and ending [**] days thereafter.

 

“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 DTC Loans. 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 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 Moody’s Investors Service, Inc., and/or Fitch Investors Services.

 

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“Regulation AB” means Subpart 229.1100—Asset Backed Securities (Regulation AB), 17 C.F.R. Sections 229.1100-229.1123, as such may be amended form time to time, and subject to such clarification and interpretation as have been provided by the SEC in the adopting release (Asset-Backed Securities, Securities Act Release No 33-8518, 70 Fed. Reg. 1,506, 1,531 (Jan. 7, 2005)) or by the staff of the SEC, or as may be provided by the SEC or its staff from time to time.

 

“Right of First Refusal Period” means for a Bank of America DTC 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 DTC Loan, provided that no such notice may be given until after expiration [**].

 

“Seasoned Loan” means a Bank of America DTC Loan as of fifteen (15) days after completion of all scheduled disbursements on the Bank of America DTC 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 (30) 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 DTC Loans not yet purchased by TERI.

 

“SEC” shall mean the Securities and Exchange Commission.

 

“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)

 

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(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 TERI and retained by the holder of Bank of America DTC Loans in accordance with the terms hereof and of the Guaranty Agreement.

 

“ Servicing Agreement ” refers to: (a) the Servicing Agreement entered into between Servicer and Program Lender with respect to servicing of Bank of America DTC 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 DTC 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.

 

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“ SPE ” means a special purpose entity formed and operated for the purpose of acting as purchaser and owner of Bank of America DTC Loans and other education loans.

 

“ TERI Insolvency Event ” means (1) the commencement by TERI 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 TERI to the appointment of or taking possession by a receiver, liquidator, trustee, custodian (or other similar official) of or for TERI or for any substantial part of its property, (3) the making by TERI of any assignment for the benefit of creditors, (4) the insolvency or the failure of TERI 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 TERI by one of the Rating Agencies, or (6) a default under one or more Guaranty Agreements to which TERI is a party because of a failure to pay claims, or the taking of action by TERI 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 plus the total principal amount of all BAGEL Seasoned Loans available to be sold and purchased from Program Lender.

 

“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 DTC Loans.

 

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“Umbrella Agreement” shall mean that certain agreement of same name between Program Lender and FMC of even date.

 

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 in accordance with Section 6 of the Umbrella Agreement.

 

(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 [**] for any loan in the Pool (i.e., at least once every [**]). FMC shall have the sole and exclusive right to purchase such Seasoned Loans [**], which right may be

 

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assigned to one or more Purchaser Trusts. FMC may reschedule the Purchase Date without penalty of any kind, provided that the Purchase Date occurs prior to [**] (i.e., before any Seasoned Loan then held by Program Lender has been seasoned for [**]. The [**] with respect to any Seasoned 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 Seasoned Loan originated by Program Lender [**] with respect to such Seasoned Loan. During [**], if Program Lender receives any bona fide third-party written offer to purchase such Seasoned Loan, and if Program Lender desires to accept such offer, Program Lender shall, prior to accepting any such offer, provide a certificate of an officer of Program Lender, certifying to the terms of same to FMC, and FMC (or a Purchaser Trust) shall have the sole and exclusive right to purchase such Seasoned Loan on the terms of such third-party offer [**] for such Seasoned Loan. If FMC (or a Purchaser Trust) fails to exercise such right [**] with respect to such Seasoned Loan, Program Lender shall within its sole discretion be entitled to: (i) sell such Seasoned Loan to any third party or to retain such Seasoned 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.

 

(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 [**].

 

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(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 [**] 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 DTC 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 DTC Loans, to occur [**] for the last loan made subject to this Agreement; provided, however , that if this Agreement is terminated under 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

 

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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 Seasoned 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 Seasoned 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 (30)-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 Seasoned 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 DTC Loan has expired, Program Lender shall be under no further obligation to offer such Bank of America DTC 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 DTC 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

 

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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.

 

(h)            Notwithstanding Section 2.02(b) and (e), with respect to Bank of America DTC Loans in pricing tiers [**] in Schedule 3.3 to the Guaranty Agreement ( “Lower Tier Loans” ), FMC shall specify a Purchase Date to purchase or cause a Purchaser Trust to purchase within the Purchase Period each and every Seasoned Loan held by Program Lender that is a Lower Tier Loan. FMC shall have the sole and exclusive right to purchase all Lower Tier Loans during the Purchase Period, which right may be assigned to one or more Purchaser Trusts. FMC may reschedule the Purchase Date without penalty of any kind, provided that the Purchase Date occurs prior to [**] for each Seasoned Loan. The [**] with respect to any Lower Tier Loan that is a Seasoned Loan may be extended 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 Lower Tier Loan, except as set forth herein. In the event that FMC (or a Purchaser Trust) shall fail to purchase any Lower Tier Loan [**] then Program Lender shall be entitled to sell such Lower Tier Loan to any third party or to retain such Lower Tier Loans, in whole or in part, for its own account free and clear of any claim under this Agreements. In the event that Program Lender elects to sell such Lower Tier Loans to a third party, FMC shall pay to Program Lender the Lesser of (i) [**]% of the total principal amount of all Lower Tier Loans [**], or (ii) the amount

 

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by which [**] such Lower Tier Loans exceeds the [**] for such Seasoned Loans in a sale to a third party. Such payments by FMC shall [**] with respect to the purchase of such Lower Tier Loans.

 

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 DTC 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 DTC Loans, in accordance with the terms of the Bank of America DTC Notes [**]; plus

 

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(c)            All fees paid by the Program Lender to TERI with respect to such Bank of America DTC Loans [**]; plus

 

(d)            The amount of any Guaranty Fees [**] plus

 

(e)            A marketing fee and loan premium, [**]:

 

1.              With respect to K-12 Creditworthy Loans, [**]%;

 

2.              With respect to Continuing Education Creditworthy Loans, [**]% [**] and [**]% [**];

 

3.              With respect to Undergraduate Creditworthy Loans, [**]% [**],[**]% [**]; [**]% [**]; and [**]% [**]; and

 

4.              With respect to Graduate Creditworthy Loans, [**]% [**]; [**]% [**]; [**]% [**]; and [**]% [**].

 

2.05        Volume Incentive . If, during any calendar year during the term of this Agreement, the total principal amount [**] of Bank of America DTC Loans disbursed hereunder during such year exceeds [**] dollars ($[**]), then the premiums to be paid pursuant to Section 2.04 of this Agreement with respect to “Undergraduate Creditworthy Loans” and “Graduate Creditworthy Loans” shall be increased by [**]%) (the “Additional Volume Premium” ). Such increase in premium under Section 2.04 shall take effect with respect to loans made available for sale hereunder during the next calendar year. The increased premium shall terminate at the end of any calendar year in which the total principal amount [**] of Bank of America DTC Loans disbursed hereunder does not exceed [**] dollars ($[**]), but shall be reinstated if the above requirements are met in any subsequent calendar year during the Term of this Agreement. The Additional Volume premium shall not be cumulative. For example, in the event that the total principal amount [**] of Bank of America DTC Loans disbursed hereunder during

 

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calendar years 2006 and 2007 exceeds [**] dollars ($[**]), there will be [**]%) increase for Seasoned Loans purchased in calendar year 2007 and 2008 and no additional [**]%) increase for Seasoned Loans purchased in calendar year 2008.

 

2.06        Transition . The changes to the Original Note Purchase Agreement effected hereby, including, without limitation, the new prices and payments contained herein, shall be effective with respect to Bank of America DTC Loans the applications for which were received by Program Lender (or its processing agent) on or after April 1, 2006.

 

III.            Procedures and Conditions for Transfer .

 

3.01.         Conveyances of Bank of America DTC 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 TERI 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

 

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(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 (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)            The Loan Origination Agreement and Servicing Agreement 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 TERI shall have performed and observed the terms and conditions of the Loan 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;

 

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(5)            Program Lender shall have complied with the provisions of the Umbrella Agreement applicable to the Seasoned Loans included in the Pool;

 

(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, TERI 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 DTC 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;

 

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(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 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.

 

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(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):

 

(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

 

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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;

 

(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 Thatcher, Profitt & 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

 

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therein or necessary to make the statements therein not misleading; provided , however , that such securities counsel may except the B of A Information (as defined in Exhibit C attached hereto) from the scope of its opinion, and further provided , however , that such opinion shall not be required if FMC executes and delivers to Program Lender a certificate which states that no Offering Materials (as defined in Exhibit 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 DTC 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.

 

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3.04.         Rights Transferred .

 

The transfer of funds pursuant to Section 2.04 hereof shall constitute, and the delivery to FMC, or its designated Purchaser Trust of each Pool Supplement shall evidence, a sale and assignment to FMC or the Purchaser Trust of the related Seasoned Loans and of all of Program Lender’s interest in such Seasoned Loans. As 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 (1) 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 Loan 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).

 

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3.07.         No Assumption of Liability to Fund Bank of America DTC Loan Notes .

 

By their purchase of Seasoned Loans (and any related Bank of America DTC Notes), neither FMC nor any Purchaser Trust, shall assume any liability, responsibility 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 DTC Notes. Notwithstanding the foregoing, FMC or the Purchaser Trust shall assume from Program Lender any liability to repurchase from TERI a defaulted Bank of America DTC Loan upon cure of the default, with respect to any such Bank of America DTC Loan that would be a Seasoned Loan but for such default and purchase by TERI. 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 TERI or Servicer) with respect to origination of Bank of America DTC Loans and with respect to loan servicing of Bank of America DTC Loans incurred prior to purchase of a Bank of America DTC Loan hereunder. FMC shall be solely responsible for and shall pay any obligations it has incurred in connection with the Bank of America DTC Loans and shall be solely responsible for arranging and paying all costs for servicing of the Bank of America DTC Loans after purchase of such Loans.

 

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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.

 

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 thirty (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

 

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constitutes the legal, valid and binding obligation of FMC enforceable against FMC in accordance with its terms, except that such enforceability may be limited by bankruptcy, insolvency, reorganization or other similar laws.

 

(c)            Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions hereof, will conflict with, or result in a breach of, or constitute a default under, any of the terms, conditions or provisions of any legal restriction or any agreement or instrument to which FMC is now a party or by which it is bound.

 

5.02.         Representations and Warranties of Program Lender .

 

Program Lender makes the following representations and warranties as of the date hereof, as of the date of each sale of Seasoned Loans 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,

 

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receivership, conservatorship, insolvency, reorganization, moratorium or other similar laws affecting creditors’ rights generally from time to time in effect, or (iii) general principles of equity.

 

(c)            Neither the execution and delivery of this Agreement, the consummation of the transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions hereof, will conflict with, or result in a breach of, or constitute a default under, any of the terms, conditions or provisions of any legal restriction or any agreement or instrument to which Program Lender is now a party or by which it is bound.

 

(d)            Each of the Bank of America DTC 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, duly and properly executed by each borrower, any student maker named therein, and any cosigner thereunder, and 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, to the extent of 100% of the principal thereof and accrued interest thereon, and (iii) is a Seasoned Loan, fully disbursed with no further requirement for future advances thereunder.

 

(e)            Each Bank of America DTC Loan was originated in the United States of America, its territories, its possessions or other areas subject to its jurisdiction by Program Lender, or its agents, in the ordinary course of its business and was made to a borrower with legal capacity to execute and deliver the Bank of America DTC Note under applicable law. Each Bank of

 

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America DTC Loan originated by Program Lender sold hereunder and any accompanying notices and disclosures;

 

(i)             Conforms to all applicable state and federal laws, rul