EXECUTION COPY
Exhibit 99.2
Confidential Materials omitted and filed
separately with the
Securities and Exchange Commission. Asterisks denote
omissions.
NOTE PURCHASE
AGREEMENT
BANK OF AMERICA DTC
PROGRAM
BANK OF AMERICA,
N.A.
This Note Purchase Agreement (" 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 100 North Tryon Street,
Charlotte, North Carolina, and THE FIRST MARBLEHEAD CORPORATION, a
Delaware corporation having a principal place of business at 30
Little Harbor, Marblehead, Massachusetts (" FMC "), is
amended and restated in full as of April 1, 2006 (" Effective
Date ");
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 DTC 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 DTC
Loans (as defined in Section 1), Program Lender has agreed to sell,
from time to time, pools containing Bank of America DTC Loans
originated by Program Lender to FMC or a Purchaser Trust (as
defined in Section 1); and
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.
"
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.
"
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 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 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.
"
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)
(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.
"
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.
"
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 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 ($[**]), FMC will [**] purchase or cause the purchase of
the Seasoned Loans in a Securitization Transaction, but will have
no obligation to do so if FMC is unable to do so [**].
(2) Greater than [**]
Dollars ($[**]) 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 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 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 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
(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 ($[**]), but shall be reinstated if the above requirements
are met in any subsequent calendar year during the Term of this
Agreement. The Additional Volume premium shall not be cumulative.
For example, in the event that the total principal amount [**] of
Bank of America DTC Loans disbursed hereunder during calendar years
2006 and 2007 exceeds [**] dollars ($[**]), 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:
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(1)
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The Seasoned Loans included in the related Pool originated by
Program Lender and all payments due or to become due thereon;
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(2)
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Any claims against TERI and proceeds of such claims with respect
to origination of the Seasoned Loans included in the Pool;
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(3)
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Any claims against Servicer with respect to servicing of the
Seasoned Loans prior to the Purchase Date.
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(4)
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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)
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All rights of Program Lender under the Guaranty Agreement with
respect to the Seasoned Loans in the Pool.
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(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):
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(1)
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Program Lender shall have delivered to the Purchaser Trust a
duly authorized and executed Pool Supplement;
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(2)
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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;
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(3)
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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;
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(4)
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(a) Program Lender shall have performed and observed the terms
and conditions of this Agreement in all material respects;
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(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;
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(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)
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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)
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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;
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(7)
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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;
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(8)
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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;
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(9)
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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 ;
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(10)
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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)
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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);
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(12)
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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;
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(13)
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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
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(14)
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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):
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(1)
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Purchaser Trust shall have delivered to Program Lender a duly
authorized and executed Pool Supplement;
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(2)
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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);
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(3)
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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;
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(4)
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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
prospective purchaser in connection with the Securitization
Transaction in question;
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(5)
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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;
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(6)
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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;
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(7)
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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 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
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(8)
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Purchaser Trust assumes certain liabilities as set forth in
Section 3.07 of this Agreement.
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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.
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).
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.
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
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, 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 America DTC Loan originated by Program
Lender sold hereunder and any accompanying notices and
disclosures;
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(i)
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Conforms to all applicable state and federal laws, rules and
regulations, and
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(ii)
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Was documented on forms set forth in the Program Guidelines,
including without limitation, promissory note forms that
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(A)
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Require interest accrual (whether or not such interest is being
paid currently or is being capitalized) and yield interest at the
rate applicable thereto; and
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(B)
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Provide or, when the payment schedule with respect thereto is
determined, will provide for payments on a periodic basis that
fully amortize the principal amount of the Bank of America DTC Loan
by its maturity, as such maturity may be modified in accordance
with any applicable deferral or forbearance periods granted in
accordance with applicable laws and the Program Guidelines; and
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