Exhibit 10.39


 


Confidential Materials omitted and filed separately with the

Securities and Exchange Commission. 
Asterisks denote omissions.


 


LOAN PROGRAM AGREEMENT


 


This Loan Program Agreement (the “Agreement”) is entered into
this 20th day of April, 2010 (the “Execution Date”), by and among First
Marblehead Education Resources, Inc., a Delaware corporation having its
principal offices at One Cabot Road, Medford, Massachusetts 02155 (“FMER”),
The First Marblehead Corporation, a Delaware corporation having its principal
offices at 800 Boylston Street, 34th Floor,
Boston, Massachusetts 02199 (“FMC”), and SunTrust Bank, a Georgia
state-chartered banking corporation having an office located at 1001 Semmes
Avenue, Richmond, Virginia 23224 (“SunTrust”).  FMER, FMC and SunTrust are hereinafter
collectively referred to as the “Parties” and each individually as a “Party”.


 


WHEREAS, FMER and/or FMC are in the business of providing
private student loan outsourcing solutions, such as program design, marketing,
processing, underwriting, origination and/or portfolio administration services,
to banks and other financial institutions;


 


WHEREAS, FMC desires to provide certain credit enhancement
with respect to Loans (as defined below) originated under this Agreement;


 


WHEREAS, SunTrust desires to retain FMER to provide the
student loan outsourcing solutions as set forth in this Agreement; and


 


WHEREAS, the Parties will enter into a Servicing Agreement
executed and effective in 2010, with the Pennsylvania Higher Education Assistance
Agency (the “Servicing Agreement”).


 


NOW THEREFORE, in consideration of the promises and the
mutual covenants and agreements contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the Parties agree as follows:


 


ARTICLE 1.          DEFINITIONS; RULES OF
CONSTRUCTION


 


1.1           Definitions.  Capitalized terms used in this Agreement have
the meanings set forth below.


 


“Additional Institution” means a post-secondary educational
institution located in a SunTrust Sales State that has a cumulative cohort
default rate of over [**]% in the past two cohort years, as reported by the
U.S. Department of Education, but which shall nevertheless be treated as an
Eligible Institution under this Agreement, under the terms set forth in Section 2.8.1.  The list of Additional Institutions as of the
Execution Date is set forth in the Program Guidelines.


 


“Advertising Firms” has the meaning set forth in Section 2.7.1
herein.


 


“Affiliate” means, with respect to an entity, another entity
that at the time in question, directly or indirectly, owns or controls, is
owned or controlled by, or is under common ownership or common control with the
first entity.  For purposes of this
Agreement, “control” shall mean the power to direct the management or affairs
of an entity, the terms “common control” and “controlled by” shall have
meanings correlative to the foregoing, and “ownership” shall mean the
beneficial ownership of more than fifty per cent (50%) of the equity securities
of the entity.


 


“Applicant” means all co-applicants for a Loan under the Program
Guidelines, including any proposed Borrower and any proposed Cosigner who
begins an Application, regardless of whether the Application is complete.


 

















 


“Applicant Information” has the meaning set forth in Section 3.8.5.2
herein.


 


“Application” means a consumer’s application, whether in whole
or in part, for a Loan under this Program and originated via FMC’s or FMER’s
URI/URL or the SunTrust URI/URL.


 


“Application and Solicitation Disclosure” means the disclosure
required by 12 C.F.R. § 226.47(a) and Section 128(e)(1) of the
federal Truth-in-Lending Act.


 


“Approval Disclosure” means the disclosure required by 12 C.F.R.
§ 226.47(b) and Section 128(e)(2) of the federal
Truth-in-Lending Act.


 


“Approved Collectors” means a subcontracted collection agency
used by FMER and identified on Schedule 2 to Exhibit D.


 


“Article 9” has the meaning set forth in Section 7.1.10
herein.


 


“Average Daily Balance” means the average daily principal
(including financed fees) and accrued interest balance of all Loans in a Pool
during a given calendar month, as reported by the Servicer as of the last day
of such month.


 


“Books and Records” means all books and records necessary to
service and collect the Loans and specifically relating to the Loans,
including:  Applications, statements,
credit and collection files, file maintenance data, Credit Agreements,
disclosure statements, credit information files, correspondence, whether in
documentary form or on magnetic tape, computer disk or other form, and any
other records that evidence ownership or relate to servicing, administering or
enforcing the Loans.  “Books and
Records” shall not include general corporate financial and other records,
income tax returns, specific files of individual employees or other corporate
records not specifically relating to the Loans or which relate to the Loans
with respect to which information relating to the Loans cannot reasonably be
extracted.


 


“Borrower” means the individual person, or all individual
persons collectively, including all Student Borrowers and Cosigners, who
execute a Credit Agreement individually or, in the case of multiple Borrowers,
severally and jointly, for the purpose of obtaining a Loan from SunTrust under
the Program, and who have proceeds disbursed under the Credit Agreement.


 


“Business Day” means any day other than (a) a Saturday or a
Sunday, or (b) a day on which banking institutions in the State of Georgia
are authorized or obligated by law or executive order to be closed.


 


“CDAs” has the meaning set forth in Section 3.6.3.3 herein.


 


“Change in Control” means any of the following with respect to
any of the Parties:  (1) the
acquisition or a series of acquisitions within six (6) months of each
other by any other entity, individual or group (within the meaning of Sections
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”) of beneficial ownership (as defined in Rule 13d-3
promulgated under the Exchange Act) of more than fifty percent (50%) of the
common stock and/or other securities which have more than fifty percent (50%)
of the combined voting power of the securities entitled to vote in the election
of directors of such Party; or (2) the sale of all or substantially all of
the assets of such Party to any other entity, individual or group; or (3) the
reorganization, merger or consolidation of such Party in which the shareholders
of such Party immediately before such event will not immediately thereafter own
more than fifty percent (50%) of the combined voting power entitled to vote in
the election of directors of the reorganized, merged or consolidated Party’s
voting securities.  A “Change in Control”
shall not include any transactions with an entity that is an Affiliate of such
Party immediately prior to such transaction.


 


2

















 


“Charged Off Loan” means a Loan that is at least [**] days
delinquent in principal and interest or interest only or partial interest
payments or that has experienced an event of default, as set forth in the
Program Guidelines.


 


“Collegiate Custom Choice” means the product sourced through the
FMC URI/URL.


 


“Combination Program” means a private student loan program that
offers [**] to Applicant(s) simultaneously
when the Applicant(s) is/are configuring a loan by selecting specific loan
terms and parameters.


 


“Commodity Vendors” has the meaning set forth in Section 2.7.3
herein.


 


“Compensation Schedule” means the schedule attached hereto as Exhibit B,
showing FMC’s compensation for each Pricing Segment.


 


“Confidential Business Information” has the meaning set forth in
Section 14.2.3 herein.


 


“Consumer Information” means (a) “nonpublic personal
information” as such term is defined by the Privacy Requirements; and (b) any
personally identifiable information or records in any form (oral, written,
graphic, electronic, machine-readable, or otherwise) relating to a consumer,
including a consumer’s name, address, telephone number, Social Security number,
e-mail address, account number, loan payment or transactional account history,
account status; and the fact that the consumer has a relationship with
SunTrust.


 


“Cosigner” means a person other than the Student Borrower who
executes a Credit Agreement with a Student Borrower and thereby assumes joint
and several liability for the Loan.


 


“Costs and Fees” has the meaning set forth in Section 17.3
herein.


 


“Credit Agreement” means the loan request and credit agreement,
or other form of consumer debt instrument, evidencing a Borrower’s obligation
to repay the Loan, in the form attached to the Program Guidelines.


 


“Damages” has the meaning set forth in Section 16.1 herein.


 


“Default Prevention Services” means the services described in Section 4.6
herein.


 


“Delinquent Loan” means any Loan other than a Charged Off Loan
with respect to which any payment is [**] days or more past due.


 


“Disbursed Loan Amount” means the total principal balance
(including financed fees) of Loans actually disbursed to the Borrower’s
Eligible Institution, by means of electronic transfer or paper check, net of
post-disbursement cancellations whether in whole or part, and subject to the
Program Guidelines.


 


“Disbursement Date” means the date or dates on which Loan funds
are transmitted to the Student Borrower’s Eligible Institution or to the CDA,
which date shall be no earlier than the end of the cancellation period set
forth in the Final Disclosure in accordance with the Requirements of Law.


 


“Disclosing Party” has the meaning set forth in Section 14.2.5
herein.


 


“Early Awareness Services” means the services described in Section 4.5
herein.


 


“Effective Date” means the date established in the Effective
Date Communication pursuant to Section 18.1.1 of this Agreement.


 


“Effective Date Communication” has the meaning set forth in Section 18.1.1
herein.


 


“Effectiveness Conditions” has the meaning set forth in Section 18.1.1
herein.


 


3

















 


“Eligible Institution” means a post secondary educational
institution approved by SunTrust for receipt of Loan funds in conformity with
Program Guidelines and included in the list of Eligible Institutions adopted as
of the Execution Date in Section 2.8 and set forth in the Program
Guidelines.


 


“Execution Date” has the meaning set forth in the first
paragraph of this Agreement.


 


“Expected Charged Off Loan Volume” means, as established by the
Parties from time to time, (a) initially, the Expected Loan Volume that is
expected to become a Charged Off Loan, and (b) for each calendar quarter
after Loan origination begins, the total principal (including financed fees)
and accrued interest on the Disbursed Loan Amount that is expected to default
(within the meaning set forth in the Program Guidelines).  The Expected Charged Off Loan Volume shall
change each quarter during the Term to reflect the distribution of the
Disbursed Loan Amount in Loan pricing tiers.


 


“Expected Loan Volume” means the total principal amount
(including financed fees) of Loans expected to be funded by SunTrust for the
related Pool during each 12-month period subsequent to the Effective Date of
this Agreement.


 


“Final Disclosure” means the disclosure required by 12 C.F.R. §
226.47(c) and Section 128(e)(4) of the federal Truth-in-Lending
Act.


 


“Final Services Termination Period” has the meaning set forth in
Section 18.1.2.


 


“Fixed Rate Loan” means any Loan with respect to which the
interest rate for such Loan is determined in relation to a specific fixed rate
for the term of the Loan.


 


“FM Indemnified Party” means FMC, FMER, each Affiliate of FMC,
each Affiliate of FMER, and each of the respective current, former and future
officers, directors and employees of any of the foregoing.


 


“FMC Custom Model Property” means, for the purposes of this
Agreement, FMC’s custom and proprietary score model and all deliverables,
materials, software, flowcharts, ideas, concepts, designs, and reports or other
analyses which relate to FMC’s custom and proprietary score model including any
modifications, enhancements or derivative works thereof.


 


“FMC Intellectual Property”, as used in Section 16.2 and Section 16.3
only, has the meaning set forth in Section 16.2 herein.


 


“FMC Materials” means all promotional material prepared by FMC
in providing Production Support Services, including responses to Eligible
Institutions’ requests for proposals, printed materials, brochures, email
content, television and radio content, telemarketing scripts, fliers, inserts
and any web sites or web pages promoting Program Loans.


 


“FMC Production Support Services Activities” has the meaning set
forth in Section 2.3.


 


“FMC Production Support Services Work Product” has the meaning
set forth in Section 2.3.


 


“FMC
Sales States” has the meaning set forth in Section 2.2.1 and listed in
Schedule 1 to Exhibit E hereto.


 


“FMC Share of Portfolio Yield” means, for any given month, the
aggregate total for all Pricing Segments of the amount to be earned by FMC for
the Loans in each Pricing Segment, calculated as (a) the amount of the
margin earned by FMC for the Loans in each Pricing Segment as shown on the
Compensation Schedule, divided by the Borrower margin in each such Pricing
Segment, multiplied by (b) the Monthly Accrued Interest less, with respect
to Variable Rate Loans, interest accrued attributable to the LIBOR index.


 


4

















 


“FMC URI/URL” means a dedicated web link obtained and maintained
by FMC which tracks consumer traffic and loan application requests resulting
from FMC’s marketing efforts in connection with the Program.


 


“FMC Website” means the FMC-created and managed website separate
and apart from the SunTrust Website used to direct potential Borrowers to the
Program online application.


 


“FMER Funding Account” means an account in FMER’s name
maintained at a FDIC-insured depository institution, into which FMER will
deposit Loan funds for disbursement after receiving them from the SunTrust
Disbursement Account via automated clearinghouse debit.


 


“Force Majeure Event” has the meaning given such term in Section 19.11
herein.


 


“Forward Looking Materials” has the meaning set forth in Section 4.1.3.


 


“Fraud Database Data” has the meaning set forth in Section 3.10.2.


 


“Governmental Authority” means the federal government of the
United States, any state government, or any political subdivision of either, or
any agency, court or body of the federal government of the United States, of
any state, or of any other political subdivision of either, exercising
executive, legislative, judicial, regulatory or administrative functions.


 


“Indemnified Party” means a SunTrust Indemnified Party or a FM
Indemnified Party, as applicable.


 


“Indemnifying Party” means a Party that is obligated to
indemnify an Indemnified Party pursuant to the provisions of Section 16
herein.


 


“Information Security Program” means the written policies and
procedures adopted and maintained to (a) ensure the security and
confidentiality of Consumer Information; (b) protect against any
anticipated threats or hazards to the security or integrity of Consumer
Information; and (c) protect against unauthorized access to or use of
Consumer Information that could result in substantial harm or inconvenience to
SunTrust or any consumer.


 


“Initial Participation Account Deposit” means [**] percent
([**]%) of the product of the Expected Loan Volume for the Pool, multiplied by
the Participation Percentage.


 


“Initial Vendors” means the vendors shown on Schedule 4 to Exhibit D.


 


“Insurance Requirements” has the meaning set forth in Section 10.1
herein.


 


“Intellectual Property” has the meaning set forth in Section 11.1
herein.


 


“Interagency Guidelines” means the
applicable Interagency Guidelines Establishing Information Security Standards
and codified at 12 C.F.R. Parts 30, 208, 211, 225, 263, 308, 364, 568, and 570.


 


“Loan” means a loan of funds, including all disbursements
thereof and financed fees, made by SunTrust to a Borrower under the Program.


 


“Loan Origination Fee” means a fee that is:  (i) charged by SunTrust to the Borrower
of a Loan; (ii) equal to the amount set forth in the Pricing Schedule; and
(iii) financed as a part of the Loan amount.


 


“Loan Processing Fees” means that fee set forth in Section 6.3.1
herein.


 


“Loan Processing Services” means those services set forth in Article 3
herein.


 


“Marketers” has the meaning set forth in Section 2.7.1
herein.


 


“MG Private Student Loan Trust 2010-1” means the trust to be
established by FMC to purchase and hold Charged Off Loans.


 


5

















 


“Monthly Accrued Interest” means, for each calendar month, the
amount of interest that accrues on all outstanding Loans in a given Pricing
Segment during such month.


 


“Notice” has the meaning set forth in Section 17.1 herein.


 


“NPPI” has the meaning set forth in Section 14.2.4 herein.


 


“OFAC” has the meaning set forth in Section 3.8.1 herein.


 


“Online Application System” means the internet-based system used
by FMER for the (a) intake of Application information from Applicants, (b) rendering
and reporting of credit decisions on Applications, (c) delivery of Credit
Agreements and disclosures required by Requirements of Law, including
Truth-in-Lending Disclosures, and (d) loan status information and details.


 


“Outstanding Loan Volume” means, with respect to any Pool, the
amount of Loan volume that remains outstanding to SunTrust, and is not a
Charged Off Loan for which a payment from the Participation Account has
previously been made, as reflected on the Servicer’s servicing system and
reported by the Servicer to SunTrust and FMC on a monthly basis.


 


“Participation Account” means an interest-bearing account held
by SunTrust for the benefit of FMC and SunTrust at SunTrust, which account
shall hold Participation Account Deposits made by FMC and shall be subject to
the terms of this Agreement.


 


“Participation Account Administrative Fee” for each month during
the Term, means [**]% multiplied by the Average Daily Balance, divided by
[**].  During the Term, the Participation
Account Administrative Fee shall be modified quarterly as set forth in Section 7.1.5
of the Agreement to reflect the extent to which the distribution of the
Disbursed Loan Amount among pricing tiers changes the Projected Default Rate
for the Pool.


 


“Participation Account Deposits” has the meaning set forth in Section 7.1.1
herein.


 


“Participation Account Excess Percentage” has the meaning set
forth in Section 7.1.6 herein.


 


“Participation Account Payment” means the payments which are
made by SunTrust to FMC from the Participation Account pursuant to Section 7.1.6.


 


“Participation Cap” shall mean [**] dollars ($[**]), inclusive
of the amount of the Initial Participation Account Deposit for each Pool, plus
any amount over [**] dollars ($[**]) associated with the credit enhancement of
Loans funded pursuant to Sections 7.1.11 and 18.4.


 


“Participation Interest” means the Participation Percentage
multiplied by Expected Loan Volume. During the Term, the Participation Interest
shall be modified quarterly as set forth in Sections 7.1.1 and 7.1.3 of the
Agreement to reflect the extent to which the distribution of the Disbursed Loan
Amount among Borrower pricing tiers changes the Projected Default Rate for the
Pool.


 


“Participation Percentage” means an amount equal to [**] times
the Projected Default Rate.


 


“Person” means a natural person, a partnership, a corporation, a
limited liability company, a joint stock company, a business trust or other
entity or association.


 


“Personnel” means the employees, contractors, subcontractors,
and agents of a Party.


 


“Pool” means Loans funded during a 12-month period commencing on
the Effective Date of this Agreement or any anniversary thereof.


 


“Portfolio Management Services” means Default Prevention
Services and Early Awareness Services and all other services to be provided
pursuant to Sections 4.4 through and including 4.8 herein.


 


6

















 


“Portfolio Yield” means the sum of Monthly Accrued Interest for
all Loans for which are not Charged Off Loans.


 


“Pricing Schedule” means the loan pricing for each Pricing
Segment set forth in the Program Guidelines, including the Borrower loan
pricing portion which SunTrust may modify from time to time, subject to the
provisions of Section 3.7.


 


“Pricing Segment” means each of the [**] discrete interest rate
and fee combinations shown in the Pricing Schedule, with, as of the Execution
Date, [**] discrete interest rate and fee combinations for Fixed Rate Loans and
[**] discrete interest rate and fee combinations for Variable Rate Loans, along
with each discrete interest rate and fee combination shown in the Pricing Schedules
adopted after the Execution Date.


 


“Privacy Notice” means SunTrust’s privacy policy adopted
pursuant to Regulation P.


 


“Privacy Requirements” means (a) Title
V of the Gramm-Leach-Bliley Act, 15 U.S.C. 6801 et seq.; (b) federal
regulations implementing such act and codified at 12 C.F.R. Parts 40, 216, 332,
and 573; (c) Interagency Guidelines; and (d) other applicable federal
and state laws, rules, regulations, and orders relating to the privacy and
security of Consumer Information.


 


“Production Support Plan” means the FMC plan for selling the
Program to Eligible Institutions in the FMC Sales States, as set forth in
Schedule 2 to Exhibit E attached hereto, as modified by written agreement
of SunTrust and FMC from time to time.


 


“Production Support Reports” has the meaning set forth in Section 2.5
herein.


 


“Production Support Services” means the support services to be
provided pursuant to Article 2 herein.


 


“Program” means SunTrust’s loan program as described in the
Program Guidelines.


 


“Program Administration Services” means Program analytics and
development, administration of post-disbursement loan servicing, and
Participation Account administration services to be provided pursuant to
Sections 4.1, 4.2, and Article 7 of the Agreement.


 


“Program Administration Services Fee” means the fee paid to FMC
pursuant to Section 6.5 hereof calculated as the FMC Share of Portfolio
Yield, less the Program Support Services Fee, less the Participation Account
Administration Fee.


 


“Program Guidelines” means the Program Guidelines attached to
the Agreement as Exhibit F, which include loan origination guidelines,
underwriting guidelines, product terms and features, Borrower fees, Borrower
Credit Agreements, Servicing Guidelines, Applicant disclosures and forms of
Truth-in-Lending Disclosure Statements and other disclosures required by
Requirements of Law.


 


“Program Support Services” means those services set forth in Article 4
herein.


 


“Program Support Services Fee” means the fee paid to FMC
pursuant to Section 6.4.1 hereof.


 


“Projected Default Rate” means a percentage, the numerator of
which shall be the Expected Charged Off Loan Volume and the denominator of
which shall initially be the Expected Loan Volume. Each calendar quarter during
the Term, the Projected Default Rate shall be modified by using as the
denominator Disbursed Loan Amount as of quarter-end.


 


“Proprietary Information” has the meaning set forth in Section 14.2.1
herein.


 


“Purchase Price” has the meaning set forth in Section 5.2
herein.


 


“Purchased Loan” has the meaning set forth in Section 5.1
herein.


 


7

















 


“Receiving Party” has the meaning set forth in Section 14.2.6
herein.


 


“Recoveries”
shall mean amounts received by FMC, FMER, or any of their Affiliates from or on
behalf of Borrowers in payment of principal of, interest on, and late fees with
respect to, Charged Off Loans with respect to which SunTrust has received funds
from the Participation Account, net of collection fees and attorneys’ fees.


 


“Regulation P” means such regulation as is set forth at 12 C.F.R
Part 216.


 


“Requirements of Law” means, with respect to any Party, any
certificate of incorporation, articles of association and, as applicable,
by-laws or other organizational or governing documents of such Party, and each
of the following, in each case to the extent applicable to and binding on such
Party, its property or, in connection with this Agreement, its agents: (a) any
federal, state, county or local law, ordinance, statute, rule, regulation,
judgment, order, decree, injunction, permit, issuance or other determination or
finding of any Governmental Authority or self-regulatory organization or final
and binding determination of any arbitrator applicable to or binding upon such
Party or to which such Party is subject, and (b) any treaty, rule or
regulation, regulatory guidance or determination of (or agreement with) an
arbitrator or Governmental Authority (including usury laws, the Federal Truth
in Lending Act; Regulation B and Regulation Z of the Board of Governors of the
Federal Reserve System; the Equal Credit Opportunity Act; the Privacy
Requirements; the Fair Credit Reporting Act; the Fair and Accurate Credit
Transactions Act; the federal Fair Debt Collections Practices Act; the USA
PATRIOT Act; the Bank Secrecy Act and other state and federal laws or
regulations relating to anti-money laundering compliance; federal and state and
local tax laws, rules and regulations; and rules and regulations
relating to consumer protection, installment sales, telemarketing, unfair and
deceptive trade practices and collections, as each is amended from time to
time).


 


“Roster Date” means, for any particular Loan, the date that is
at least one Business Day prior to a scheduled Disbursement Date for such Loan,
and shall be the date on which FMER provides to SunTrust a disbursement roster
listing the Disbursement Date and disbursement amount for such Loan.


 


“Sanctions” has the meaning set forth in Section 3.8.1
herein.


 


“Security Systems” has the meaning set forth in Section 15.3.1
herein.


 


“Servicer” means Pennsylvania Higher Education Assistance
Agency, (d/b/a American Education Services), a public corporation and
governmental instrumentality organized under the laws of the Commonwealth of
Pennsylvania, 1200 North Seventh Street, Harrisburg, Pennsylvania 17102, or
another loan servicer mutually acceptable to SunTrust and FMC.


 


“Services” means Production Support Services, Loan Processing
Services and Program Support Services, as well as any additional services
agreed to by the Parties in writing to be performed under the Agreement.


 


“Servicing Agreement” refers to the Servicing Agreement that
will be entered into or to be entered into by and among Servicer, SunTrust and
FMC with respect to servicing of Loans, as amended from time to time.


 


“Servicing Guidelines” means the document by that name included
as part of the Servicing Agreement among the Parties and the Servicer.


 


“Student Borrower” means the individual person who is enrolled
at an Eligible Institution at the time of Application, executes a Credit
Agreement for the purpose of obtaining a Loan from SunTrust under the Program,
and who has proceeds disbursed under the Credit Agreement.


 


8

















 


“Subcontractor” means any third party retained by FMC and/or
FMER, as applicable, and approved by SunTrust in conformity with the
requirements of this Agreement to perform part of the Services.


 


“SunTrust Disbursement Account” means an account maintained at
SunTrust into which SunTrust deposits Loan funds for disbursement.


 


“SunTrust Indemnified Party” means SunTrust and its Affiliates,
and each of their respective current, former and future officers, directors and
employees.


 


“SunTrust
Marks” means the trade names, trademarks, logos or service marks of
SunTrust and its Affiliates set forth in Exhibit G, any trade names,
trademarks, logos or service marks used by SunTrust or any of its Affiliates in
connection with its full-service retail banking business, and any other trade
names, trademarks, logos or service marks that are used by SunTrust or any of
its Affiliates to identify itself to the public in connection with educational
loans, including the “Custom Choice” mark.


 


“SunTrust
Materials” means all promotional materials that include SunTrust Marks and
subject to SunTrust written approval, including responses to Eligible
Institutions’ requests for proposals, printed materials, brochures, email
content, television and radio content, telemarketing scripts, fliers, inserts
and any web sites or web pages promoting Loans.


 


“SunTrust Portfolio Income” means the portion of the Portfolio
Yield due to SunTrust, which shall be equal to the Portfolio Yield, less the
FMC Share of Portfolio Yield.


 


“SunTrust Sales States” has the meaning set forth in Section 2.2.1
herein and listed in Schedule 1 of Exhibit E hereto.


 


“SunTrust URI/URL” means a SunTrust dedicated web link obtained
and maintained by SunTrust which tracks consumer traffic and loan application
requests resulting from SunTrust’s marketing efforts in connection with the
Program.


 


“SunTrust Website” means the SunTrust-created and managed
website used to direct potential Borrowers to the Program online application.


 


“Term” has the meaning set forth in Section 18.1.2 herein.


 


“Third-Party Offers” has the meaning set forth in Section 4.3.1
herein.


 


“Title X” means Title X of the Higher Education Opportunity Act
of 2008, P.L. 110-315, 122 Stat. 3478, and its implementing regulations duly
adopted by federal regulatory agencies, including but not limited to the
Federal Reserve Board’s Regulation Z.


 


“Trade Secrets” has the meaning set forth in Section 14.2.2
herein.


 


“Transition Period” has the meaning set forth in Section 18.3.2
herein.


 


“Truth-in-Lending Disclosure Statements” shall mean the forms of
private student loan application and solicitation disclosures, approval
disclosures, and final disclosures required by Title X, as approved by
SunTrust.


 


“USA Patriot Act” has the meaning set forth in Section 3.8.4
herein.


 


“Variable Rate Loan” means any Loan with respect to which the
interest rate for such Loan is determined in relation to a published rate index
and changes on a monthly basis in accordance with the terms of the Program
Guidelines and the Credit Agreements.


 


“Volume Threshold” has the meaning set forth in Section 2.8.1.


 


1.2           Certain Rules of
Construction.  Except as
otherwise explicitly specified to the contrary,


 


9

















 


1.2.1        References to a
Section, Exhibit or Schedule means a Section of, or Schedule or Exhibit to,
this Agreement,


 


1.2.2        The words “including,”
“include” and “includes” will be construed as “including without limitation,” “include
without limitation” or “includes without limitation,” as applicable,


 


1.2.3        References to a
particular statute or regulation include all rules and regulations
promulgated thereunder and any applicable predecessor or successor statute or
regulation, in each case as amended or otherwise modified from time to time,


 


1.2.4        Words in the
singular or plural form include the plural and singular form, respectively,


 


1.2.5        Where specific
language is used to clarify or illustrate by example a general statement
contained herein, such specific language shall not be deemed to modify, limit
or restrict the construction of the general statement which is being clarified
or illustrated,


 


1.2.6        Any article,
section, subsection, paragraph or subparagraph headings contained in this
Agreement and the recitals at the beginning of this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement (other than with respect to any defined terms contained in the
recitals),


 


1.2.7        The word “or”
whenever used in this Agreement is used in the inclusive sense of “and/or” and
not the exclusive sense of “either/or,”


 


1.2.8        All references
to “the Agreement” or “this Agreement” in this Agreement shall mean “this
Agreement as amended,”


 


1.2.9        Whenever the
words “herein,” “hereto,” “hereof” or “hereunder” or “this Agreement” are used
in this Agreement, they shall be deemed to refer to this Agreement as a whole
including Exhibits and Schedules hereto, and not to any specific section nor to
exclude any Exhibits or Schedules hereto, and


 


1.2.10      Any reference
made in this Agreement to a statute or statutory provision shall mean such
statute or statutory provision as it has been amended through the date as of
which the particular portion of the Agreement is to take effect, or to any
successor statute or statutory provision relating to the same subject as the
statutory provision so referred to in this Agreement, and to any
then-applicable rules or regulations promulgated thereunder, unless
otherwise provided.


 


ARTICLE 2.          PRODUCTION SUPPORT SERVICES.


 


2.1           Use of SunTrust Marks.  SunTrust hereby grants to each of FMC and
FMER a limited, royalty-free, nonexclusive license to use the SunTrust Marks
during the Term as necessary to solicit Loans until the termination date of
this Agreement and pursuant to the provisions of this Agreement, to use the
SunTrust Marks on and in connection with SunTrust Materials and in connection
with the ongoing origination services. 
Each of FMC and FMER acknowledges and agrees that (i) it is not
acquiring any right, title or interest in the SunTrust Marks and that the
SunTrust Marks, all rights therein, and the goodwill associated therewith, are,
and shall remain, the exclusive property of SunTrust; (ii) it shall take
no action that would reasonably be expected to adversely affect SunTrust’s
exclusive ownership of the SunTrust Marks or the goodwill associated with the
SunTrust Marks; and (iii) any and all goodwill arising from use of the
SunTrust Marks by FMC and/or FMER shall inure to the benefit of SunTrust.  Nothing herein shall give FMC or FMER any
right, title, or interest of any kind in or to the SunTrust 


 


10

















 


Marks,
except the right to use the SunTrust Marks in accordance with this Agreement,
and neither FMC nor FMER shall contest the validity of, or SunTrust’s title in
and to, the SunTrust Marks.  In the event
of any changes to the SunTrust Marks, FMC and/or FMER shall promptly make
necessary changes to the SunTrust Materials. 
Except as expressly permitted by this Agreement, neither FMC nor FMER
shall have the right to, and nothing in this Agreement or any other signed and
written agreement among the Parties shall be construed to give FMC or FMER the
right to, and FMC and FMER shall not, other than the use of the SunTrust Marks
in the specific manner as approved pursuant to the terms of this Agreement, use
any marks, symbols, copyrights, logos, designs, representations, ideas or other
proprietary designations or properties owned, developed, created by or licensed
to SunTrust or any Affiliates of SunTrust, including the use of SunTrust Marks
on or in conjunction with any goods or products of FMC or FMER not related to
the Program or this Agreement.  FMC shall
bear the costs of all FMC Materials, whether or not such FMC Materials use SunTrust
Marks.  Neither of FMC nor FMER shall
authorize use of, transfer, assign, lease or sub-license in whole or in part
any SunTrust Marks without SunTrust’s prior written consent.


 


2.2           Sales Support and
Restrictions on Marketing of the Program.


 


2.2.1        FMC shall
develop and implement a strategy and plan to generate interest among Eligible
Institutions in the FMC Sales States (as defined below) to participate in the
Program.  FMC and SunTrust agree that,
except as otherwise approved by the other Party, such Party shall solicit
interest from Eligible Institutions with respect to the Program only in the
respective states set forth with respect to such Party on Schedule 1 to Exhibit E
attached hereto (“FMC Sales States” and “SunTrust Sales States,”
respectively). Each Party may solicit potential Applicants via direct mail,
telephone solicitation, and the internet, but shall do so with respect to the
Program only in the FMC Sales States and SunTrust Sales States, respectively,
provided, however, that (a) with respect to solicitation through the
internet, FMC and SunTrust may each satisfy its respective obligations pursuant
to this subsection by using its commercially reasonable efforts to geoblock
potential Applicants with Internet Protocol (IP) addresses associated with a
location outside of their respective sales states, in each case to the extent
that geoblocking is available with respect to IP addresses associated with such
locations through the exercise of the commercially reasonable efforts of such
Party, and (b) unsolicited Applicants may apply for Loans through either
the FMC URI/URL or the SunTrust URI/URL. 
Notwithstanding the foregoing, each of the Parties may solicit potential
Applicants with respect to the Program through the use of direct mail, telephone
solicitation or internet to existing customers as of the Execution Date of such
Party or an Affiliate thereof regardless of where such customers of such Party
or its Affiliates may be located. 
Nothing in this Agreement shall be construed to restrict in any way any
Party’s marketing and sales of other financial or educational loan products
other than the Program.


 


In FMC Sales States, FMC shall interact directly with Eligible
Institutions as set forth in Production Support Plan. FMC shall also:


 


(i) Where the “SunTrust” name is to be used in FMC Materials
promoting the Program, consult with SunTrust on the preparation of such
materials (including brochures, advertisements, mailings, announcements, and
web site content) and comply with the provisions of Section 2.6 applicable
to the approval of such materials by SunTrust and the preparation and use of
such materials by FMC;


 


(ii) Submit a monthly status report that details FMC’s progress at
Eligible Institutions;


 


(iii) Submit standardized request for proposals template language
(and any changes to previously approved template language) to SunTrust for
approval; and


 


(iv) Provide daily processing support for SunTrust staff and
Eligible Institution support staff via a toll-free telephone number generally
from 9:00 am to 8:00 pm EST or EDT, as applicable.


 


2.2.2.       With respect to
sales and promotional activities in SunTrust Sales States, FMC shall:


 


(i) Participate in meetings with Eligible Institutions as
requested by SunTrust;


 


11














 


(ii) Contact Eligible Institutions to capture processing preferences
upon request from SunTrust;


 


(iii) Handle Eligible Institution contacts with respect to product
set-up, product detail, and time frames, as requested by SunTrust;


 


(iv) Attend internal SunTrust meetings as requested to conduct product
training for SunTrust staff; and


 


(v) Where the “SunTrust” name is to be used in SunTrust Materials
promoting the Program, if requested by SunTrust, consult with SunTrust on the
preparation of such materials (including brochures, advertisements, mailings,
announcements, and web site content).


 


2.2.3        With respect to
national conferences (e.g., NASFAA) during the Term, FMC shall exhibit under
its own name, and offer Collegiate Custom Choice materials at its booth at such
conferences.  In the event that a
financial aid officer from an Eligible Institution located in a SunTrust Sales
State requests information from a representative of FMC at FMC’s booth at such
a conference, FMC will direct such request to SunTrust.  If a financial aid officer from an Eligible
Institution located in a FMC Sales State requests information from SunTrust,
SunTrust will direct such request to FMC.


 


2.2.4        If during the
Term FMC exhibits at a state specific conference in a SunTrust School Sales
State or the regional SASFAA conference, FMC will not offer Collegiate Custom
Choice materials at its booth, provided, however, that at EASFAA conferences,
FMC shall offer Collegiate Custom Choice materials regardless of the state in
which such EASFAA conferences are held.


 


2.2.5        With respect to
the Program, FMC and SunTrust shall each respond to requests for proposals only
from Eligible Institutions in the FMC Sales States and the SunTrust Sales
States, respectively; provided, however, that with respect to requests for
proposals received by any Party from any and all Eligible Institutions outside
the FMC Sales States and the SunTrust Sales States, FMC or SunTrust may respond
to such requests for proposals as mutually agreed by the Parties on a case-by-case
basis.  If the Parties cannot reach
agreement about which Party will respond to such a request for proposal, then
no Party shall respond to that request for proposal.


 


2.3           FMC Production Support
Services Research; Ownership.


 


FMC may use the data collected in activities conducted pursuant to
Section 2.2.1 (“FMC Production Support Services Activities”) to prepare
deliverables, materials, ad copy, software, flowcharts, ideas, concepts,
designs, and reports or other analyses with respect to the results of those FMC
Production Support Services Activities (“FMC Production Support Services
Work Product”), including reports or studies regarding marketing trends,
the effectiveness of content and media and of techniques for utilizing each of
these, provided, however, that such FMC Production Support Services Work
Product does not include Consumer Information, which may be used to perform
analysis but shall not be included in reports or studies except on an
aggregated and de-identified basis.  Such
reports or studies may include comparative analyses of the capacity of
experimental marketing techniques to reach customers not found through
customary means (e.g., compare online responders to purchased target marketing
direct mail lists).  FMC may use FMC
Production Support Services Work Product for any lawful purpose, including in
support of other loan programs, during the Term and following termination of
the Agreement.  FMC may disclose FMC
Production Support Services Work Product to SunTrust and SunTrust may use any
FMC Production Support Services Work Product disclosed to it for any lawful
purpose during the Term and following termination of the Agreement.


 


2.4           Ownership.  All Applications and related Credit
Agreements created under the Program and this Agreement for Applicants and
Borrowers through the SunTrust URI/URL shall be owned by SunTrust and shall not
constitute property of FMC.  SunTrust
hereby authorizes FMC as its agent, to the extent permitted by Requirements of
Law, to use data collected from Applications and Loan inquiries to conduct
activities under this Article 2, including, with respect to Applications and
Loan inquiries received through 


 


12

















 


the
FMC URI/URL, retaining sources of customer lists and comparing such lists with
data obtained from partial or completed Applications, subject in all cases to
the confidentiality and information security provisions of this Agreement and
Requirements of Law; provided, however, FMC shall not use information obtained
or derived from Applications through the FMC URI/URL to solicit individuals for
financial services other than Loans under the Program Guidelines.  It shall not be deemed to be a breach of the
foregoing prohibition for FMC to undertake marketing and solicitation
activities for any product or service directed to the general public or based
on marketing lists derived from generally available data (such as credit bureau
reporting data) or from any source other than SunTrust; provided, however, that
during the Term and for three (3) years following the termination of this
Agreement FMC shall not: (a) use such marketing lists obtained by FMC in
performance of its obligations pursuant to this Agreement that are based on or
derived from Applications sourced through the SunTrust URI/URL or
(b) undertake marketing activities specifically or primarily targeted to
Applicants in SunTrust Sales States.


 


2.5           Production Support Reports.  In connection with the activities of SunTrust
under this Agreement, SunTrust may provide to FMC quarterly, a report and
analysis of the nature and effectiveness of its marketing activities under the
Production Support Plan (the “Production Support Reports”).  SunTrust may also develop from time to time
various reports which may contain detailed metrics, including, those set forth
in the Production Support Plan, analyses, studies and summaries of marketing
results relating to its activities under the Production Support Plan.


 


2.6           FMC Materials.  FMC covenants that it will cause all FMC
Materials to comply with Requirements of Law and to fairly and accurately
present Loans and the Program.  FMC shall
submit all FMC Materials to SunTrust for written approval prior to FMC’s use of
the FMC Materials.  SunTrust shall
provide comments or approval on FMC Materials submitted to it within ten (10)
Business Days of submission.  To the
extent that content templates are prepared, FMC may submit templates of FMC
Materials to SunTrust for written approval, provided, however, FMC shall not
use any final FMC Materials based on SunTrust-approved templates without
SunTrust’s prior written consent. 
SunTrust shall be responsible for the compliance of FMC Materials with
Requirements of Law to the extent, and only to the extent, of changes to such
FMC Materials required by SunTrust. 
SunTrust may use FMC Materials upon FMC’s prior written consent.


 


2.7                                 Retention of Vendors by FMC
and FMER.


 


2.7.1        In furtherance of its
efforts to locate effective marketing channels for Loans, SunTrust may, by its
prior written approval, authorize and direct FMC and/or FMER to select and
retain one or more marketing firms to: 
(i)  prepare content and
strategies for mass marketing (such as television and radio) and direct
marketing (such as telemarketing and web-based marketing) with respect to the
Program (such vendors collectively “Advertising Firms”) and (ii)
implement and administer all consumer contact in accordance with such content
and strategies and applicable Requirements of Law (such vendors collectively, “Marketers”).  Neither FMC nor FMER shall engage such
Advertising Firms or Marketers as remarketers or as marketers of the Program
under any product or brand name.  FMC
and/or FMER may enter into appropriate contracts with all Advertising Firms and
Marketers; provided, however, FMC and/or FMER provide copies of such contracts
to SunTrust within three (3) Business Days of receiving SunTrust’s written
request.  All marketing contracts shall
comply with the Production Support Plan.


 


2.7.2        FMC and/or FMER shall not
retain any Advertising Firm or Marketer, other than any Initial Vendors,
without first providing to SunTrust at least ten (10) Business Days advance
written notice of the identity, qualifications, and general proposed activities
of such Advertising Firm or Marketer. 
SunTrust may reasonably object to the selection or continued use of any
Advertising Firm or Marketer by providing written notice of SunTrust’s
reasonable objection, in which case FMC and/or FMER shall be prohibited from
using the proposed Advertising Firm or Marketer; provided, however, that if
SunTrust objects to the continued use of any Advertising Firm or Marketer, FMC
and/or FMER shall use 


 


13

















 


commercially
reasonable efforts to use a different, previously approved Advertising Firm or
Marketer to perform the work. If FMC and/or FMER is not able to use of a
different, previously approved Advertising Firm or Marketer to perform the
work, despite commercially reasonable efforts, FMC and/or FMER shall be required
to terminate the use of any such Advertising Firm or Marketer only when
permitted by the contract between such Advertising Firm or Marketer and FMC
and/or FMER and only after the Parties have identified and mutually agreed upon
a successor Advertising Firm or Marketer. 
If SunTrust does not respond to the notice from FMC or FMER with respect
to such proposed Advertising Firm or Marketer within ten (10) Business Days,
then contracting with such firm by FMC and/or FMER, directly or through
subcontract, shall be deemed to have been approved by SunTrust.


 


2.7.3        In addition,
subject to the next sentence of this Section 2.7.3, SunTrust authorizes FMC
and/or FMER to retain from time to time one or more firms, directly or through
subcontract, to provide ministerial services and production commodities in
connection with services received from Advertising Firms and Marketers under
this Agreement (“Commodity Vendors”), including the provision of media
commodities, electronic provision of a web-hosting environment, printing,
letter shop, data processing, broadcast production and editing services.  Neither FMC nor FMER will retain, either
directly or through subcontract, any Commodity Vendor to perform any of the
Services hereunder who will receive Consumer Information without obtaining
SunTrust’s approval pursuant to the requirements of this Section 2.7 above.


 


2.8           Eligible Institutions;
Promotion of Program.


 


2.8.1        SunTrust and
FMC shall on the Effective Date adopt the lists of post-secondary educational
institutions in the Program Guidelines as Eligible Institutions.  Additions to and removals from such lists
shall be performed as set forth in the Program Guidelines.  Loans made to Student Borrowers attending
Additional Institutions shall not exceed [**] dollars ($[**]) in Disbursed Loan
Amount (the “Volume Threshold”) unless, after the Volume Threshold is
exceeded, Loans made to Student Borrowers attending Additional Institutions
remain less than [**] percent ([**]%) of the Disbursed Loan Amount for the
Program.  On a monthly basis, FMC and
Program Lender shall monitor the Disbursed Loan Amount to Student Borrowers
attending Additional Institutions and if the Disbursed Loan Amount for Student
Borrowers attending the Additional Institutions reaches [**] dollars ($[**]),
the Parties shall confer in good faith regarding an adjustment to the
Compensation Schedule with respect to Loans to be made in excess of the Volume
Threshold to students enrolled at the Additional Institutions.  If the Disbursed Loan Amount to Student Borrowers
attending Additional Institutions exceeds the Volume Threshold and is greater
than [**] percent ([**]%) of the Disbursed Loan Amount for the Program, and no
agreement pursuant to the preceding sentence has been reached, then after such
date such Applications will not be covered by the credit enhancement the
provisions of Article 7.  All
Applications submitted for a credit inquiry by such date shall be processed in
accordance with Section 18.4 of this Agreement notwithstanding the Volume
Threshold.


 


2.8.2        FMC agrees that
it shall not encourage consumers to apply for a Loan before exhausting other
available forms of aid, including grants, scholarships and federally insured
education loans recommended by the Eligible Institution, as applicable.  FMC also shall use commercially reasonable
efforts to ensure that Eligible Institutions do not encourage consumers to
apply for a Loan before exhausting other available forms of aid, including
grants, scholarships and federally insured education loans recommended by the
Eligible Institution.  FMC agrees and
understands SunTrust will also promote all other available private student loan
products and options offered by SunTrust in the SunTrust Sales States;
provided, however, that SunTrust shall not present the Program as a loan
program for borrowers with poor credit or those with no other loan
options.  Without limiting the foregoing,
FMC acknowledges and understands that (i) SunTrust does not control which, if
any, private student loan product offered by SunTrust is chosen by any Eligible
Institution for inclusion on a preferred lender list, and (ii) Eligible
Institutions may decide to choose only one SunTrust private student loan
product for inclusion on a 


 


14

















 


preferred
lender list in order to create a preferred lender list with at least the number
of unaffiliated programs required by the Higher Education Opportunity Act of
2008 and its implementing regulations and other Requirements of Law.


 


2.9           Exclusivity.  FMC agrees that, for the Term of this
Agreement, it shall not design, facilitate or otherwise provide services for,
or offer to design, facilitate or otherwise provide services for a Combination
Program, except for the Program offered through this Agreement.


 


ARTICLE
3.  LOAN PROCESSING SERVICES


 


3.1                                 Web Application; Credit
Agreement.


 


3.1.1        FMER will use the forms of
Credit Agreements approved by SunTrust and included in the Program
Guidelines.  SunTrust and FMER shall
notify each other from time to time of recommended changes to the Credit
Agreements, and each shall respond promptly to such notifications, noting the
feasibility and desirability of such changes, as well as the implementation
time needed to make such changes.  After
SunTrust and FMER have reviewed and negotiated the proposed changes to the
Credit Agreements, the Parties shall agree on the written version of such
negotiated changes, and FMER shall revise the Credit Agreement in accordance
therewith.  SunTrust represents and
warrants that the forms of Credit Agreement comply, and as they may be modified
from time to time with SunTrust’s approval for inclusion in the Program
Guidelines, will comply, with the Program Guidelines and Requirements of
Law.  FMER represents that its use of
such forms shall comply with this Agreement, the Program Guidelines and
Requirements of Law.


 


3.1.2        FMER will use the Online
Application System approved in writing by SunTrust. FMER represents, warrants
and covenants that the content and operation of its Online Application System
complies with this Agreement, the Program Guidelines and Requirements of Law;
provided, however, that SunTrust represents, warrants and covenants that the
content of the Online Application System complies with the Program Guidelines
and Requirements of Law to the extent, and only to the extent, of content in
such Online Application System that is specifically required by SunTrust.  FMER shall accept Applications via both the
SunTrust Website and the FMC Website. 
The FMC Website is the responsibility of FMC subject to the conditions
set forth in this Agreement.  The FMC
Website shall comply with any requirements specified in this Section 3, the
Program Guidelines, and Requirements of Law, and shall be subject to SunTrust’s
approval.  SunTrust represents, warrants
and covenants that the content of the FMC Website complies with the Program
Guidelines and Requirements of Law to the extent, and only to the extent, of
content in such FMC Website that is specifically required by SunTrust.


 


3.2           Disclosures.  The forms of state and federal disclosures,
including application and solicitation disclosures, approval disclosures, final
disclosures, and adverse action notices, must be approved in writing by
SunTrust as set forth in the Program Guidelines.  FMER represents, warrants and covenants that
its use of such forms and disclosures, including mathematic calculations
contained therein, shall comply with the Agreement, the Program Guidelines and
all Requirements of Law.  Notwithstanding
anything in this Agreement or the Program Guidelines, FMC shall make the
Application and Solicitation Disclosure available to potential Borrowers at the
beginning of and during the entire Application process as directed by
SunTrust.  It is understood and agreed
that the Application and Solicitation Disclosure must be viewed and
acknowledged by potential Borrowers prior to the time such Borrower provides
application information.


 


3.3           Privacy Notice.  SunTrust will provide FMER and FMC with a web
link to its online Privacy Notice which FMC will make available on both the FMC
Website and each page of the Online Application System accessed via the FMC
URI/URL; provided, however, that neither FMC nor FMER is responsible for the
content of SunTrust’s Privacy Notice or its compliance with the requirements of
any Requirements of Law, including the Gramm-Leach-Bliley Act or Regulation
P.  FMER shall include its 


 


15

















 


privacy
statement in the Online Application System, and shall mail SunTrust’s initial
privacy policy to each Borrower on the first Disbursement Date for such
Borrower.


 


3.4           Additional Forms, Documents
and Disclosures; Changes.  Any
documentation not set forth in this Section 3 or the Program Guidelines that
SunTrust requires for the origination and processing of Applications will be
identified and provided by SunTrust to FMC for FMER and/or FMC’s use.  SunTrust represents, warrants and covenants
that any such form provided to FMC and/or FMER and any instructions with
respect thereto shall comply with the Agreement, the Program Guidelines and
Requirements of Law.  In the event FMER
and/or FMC determines changes should be made to the Program Guidelines or any
documentation contained therein, FMER and/or FMC, as applicable, shall not implement
such changes without SunTrust’s prior written consent.  If SunTrust agrees with FMC’s
recommendations, they shall be acknowledged by each of the Parties in writing
approving such recommendations, and they shall be implemented as soon as
reasonably practicable.  Within twenty
(20) Business Days of receiving a request from SunTrust to make changes to
either the Program Guidelines or the documentation contained therein (other
than changes to the Pricing Schedule, which shall instead be subject to Section
3.7 of this Agreement), FMER and/or FMC will provide in writing a response with
a statement of FMER’s and/or FMC’s ability to implement the change to deliver
the requested services and the terms and conditions on which FMER and/or FMC
would be willing to do so.  In the event
SunTrust elects to authorize such services on the terms and conditions set
forth in FMER’s and/or FMC’s response, SunTrust will, within twenty (20)
Business Days of its receipt of FMER’s and/or FMC’s response, respond to FMC
and/or FMER by executing and returning a change order to FMER and/or FMC
reflecting the agreed upon terms and conditions relating to such Services.  Such change in Services as agreed to by the
Parties shall be incorporated into a new or restated Exhibit to this Agreement
or as an addendum to the Program Guidelines, which shall be signed by duly
authorized representatives of the applicable Parties.


 


3.5           Credit Bureau Requests.  Simultaneously with the execution of and as a
condition of FMC’s and FMER’s obligations under this Agreement, SunTrust shall
execute a TransUnion Addendum in the form substantially similar to the attached
Exhibit C hereto authorizing FMER to make credit inquiries on SunTrust’s behalf
solely for purposes of this Program as permitted by Requirements of Law and the
Program Guidelines.


 


3.6           Application Receipt and
Review.


 


3.6.1        Upon receipt of
an Application for review from an Applicant, FMER will review the data for
completeness according to the eligibility standards in the Program
Guidelines.  If any necessary data are
outstanding, FMER will use commercially reasonable efforts to secure such data
from the Applicant on behalf of SunTrust as required by the Program
Guidelines.  After receipt of complete
data relating to a particular Applicant, FMER will review such data and, on a
preliminary basis, apply the standards in the Program Guidelines with respect
to loan underwriting and determine whether the Applicant is credit approved for
a Loan in accordance with the Program Guidelines.  FMER shall adhere to minimum custom credit
and FICO scores and credit tiers as set forth in the Program Guidelines.


 


Application review shall initially be conducted using FMER’s automated
Online Application System.  If any part
of the Application process cannot be conducted on an automated basis by the
Online Application System, but instead must be performed manually, such manual
performance shall not cause unnecessary delay and the performance of any such
manual process shall be completed in accordance with the service standards set
forth in the Program Guidelines.


 


3.6.1.1                     Applicant
Liaison.  FMER will respond promptly to
all inquiries that it or SunTrust may receive from any Applicant concerning the
status of an Application.  SunTrust will
promptly forward to FMER Application status inquiries from Applicants that
SunTrust receives.


 


16

















 


3.6.1.2                     Rejection of an
Application.  If an
Application is rejected or denied by FMER on behalf of SunTrust, FMER will so
notify the Applicant in accordance with Requirements of Law and the Program
Guidelines.


 


3.6.1.3                     Credit Approval
of an Application; Preliminary Approval; Approval Disclosure.  If an Application is credit approved by FMER
on behalf of SunTrust, FMER will provide the Applicant one or more repayment
schedules, interest rates, or other Loan options dependent on the Applicant’s
eligibility.  After the Applicant has
selected a Loan option, FMER will generate and provide a Credit Agreement to
the Applicant, along with a notice that the Applicant has passed the credit
check, and (b) appropriate instructions for completion of the Application
process.  Credit Agreements and
instructions will be provided to the Applicant by access to a secure internet
site or by U.S. mail.  To the extent
authorized by the Program Guidelines, FMER will provide the Applicant the
ability to electronically review, sign and return the Credit Agreement to
FMER.  To the extent required by the
Program Guidelines, FMER will communicate with the applicable Eligible
Institution in order to obtain the Eligible Institution’s certification of
enrollment and financial need.


 


3.6.2        Final Approval
of an Application.  Upon
receipt of the Credit Agreement and other requested information from an
Applicant who has received credit approval under Section 3.6.1, FMER will
perform the following functions and SunTrust will assist as indicated:


 


3.6.2.1                     Document Review.  FMER will review the Credit Agreement and any
supporting documentation required by the Program Guidelines and ensure that the
Credit Agreement has been executed in the name of all Applicants.  If any necessary data, signature(s), forms or
other information are outstanding, FMER will use commercially reasonable
efforts to secure such missing data, signatures, forms or other information on
behalf of SunTrust from the Applicant or the applicable Eligible Institution as
required.  FMER will use commercially
reasonable efforts to inquire of the Applicant as to all missing data promptly
after receipt of the incomplete Application. 
In processing Applications, FMER’s policies will comply with SunTrust’s
Customer Identification Program, Red Flags Program, OFAC Program, and Address
Mismatch Program and any other regulatory programs as required under this
Agreement and the Requirements of Law. 
Upon receipt of complete Application data, including certification of
enrollment and need by the Eligible Institution, FMER will continue processing
the Application hereunder.


 


3.6.2.2                     Final Review.  When FMER has possession of all necessary
data and documentation relating to particular Applicant(s), FMER will conduct a
final review to confirm that the Applicant(s) is approved for a Loan in
accordance with the standards and processes contained in the Program
Guidelines.


 


3.6.2.3                     Approval; Denial.  After completion of the final review, FMER
will, on behalf of SunTrust, approve or deny the Application.  Such decision will be made solely in
accordance with the Program Guidelines and any other SunTrust instructions that
are not inconsistent therewith and comply with Requirements of Law.  SunTrust covenants, represents, and warrants
that such instructions comply with this Agreement, the Program Guidelines, and
Requirements of Law.  For approved
Applications, FMER shall prepare and provide an Approval Disclosure to the
Applicant(s).  After delivery of the
Approval Disclosure, FMER shall not make any changes to the Application or
proposed Loan terms, except as permitted by Requirements of Law or the Program
Guidelines, and shall allow the Applicant to accept the Loan within the time
period prescribed under Requirements of Law and the Program Guidelines.  After the Applicant(s) have accepted the
Approval Disclosure using one of the methods set forth therein, FMER, on behalf
of SunTrust, will notify and send to the Applicant the Final Disclosure in
accordance with all Requirements of Law. 
FMER shall not disburse funds until the expiration of the right to
cancel, 


 


17

















 


as required under Requirements of Law. 
Cancellation shall be effective as set forth in the Program
Guidelines.  In the case of denial of an
Application, FMER will so notify the Applicant in accordance with Requirements
of Law (which, for the avoidance of doubt, shall include the Equal Credit Opportunity
Act and the Fair Credit Reporting Act).


 


3.6.3        Fulfillment and
Disbursement of Approved Loans.


 


3.6.3.1                     FMER shall
populate and distribute the Truth-in-Lending Disclosure Statements in
accordance with Requirements of Law and the Program Guidelines.


 


3.6.3.2                     By 12:00 p.m.
eastern standard or daylight time, as applicable, on the Roster Date for each
Loan, FMER will provide SunTrust with a disbursement roster detailing all Loans
scheduled for disbursement.  SunTrust
will fund each Loan on the disbursement roster by depositing in the SunTrust
Disbursement Account by no later than 11:59 p.m. eastern standard or daylight
time, as applicable, on the Roster Date, an amount equal to the sum to be
disbursed for the Loans on the disbursement roster.  SunTrust hereby authorizes FMER to access
such account by automated clearinghouse (“ACH”) debit to transfer the
disbursement funds to the FMER Funding Account and complete the disbursement of
the Loan on the Disbursement Date. 
SunTrust understands that FMER intends to disburse Loan proceeds from
the FMER Funding Account as frequently as necessary to accommodate the funding
needs of Borrowers and Eligible Institutions, including as frequently as
daily.  SunTrust agrees to fund the
SunTrust Disbursement Account as often as necessary to facilitate such frequent
disbursements.  Provided that adequate
funds are transferred by SunTrust to the SunTrust Disbursement Account, FMER
will complete disbursement of the Loans on the Disbursement Date by electronic
funds transfer to the applicable Eligible Institution or by check written in
accordance with the Program Guidelines. 
If the Borrower cancels or withdraws his or her Application or cancels
the Loan within the time permitted for cancellation under the Program
Guidelines, Requirements of Law or the Credit Agreement, FMER, as SunTrust’s
agent, will immediately process the cancellation by (a) requesting repayment of
any funds disbursed on the canceled Loan from the Borrower and the applicable
Eligible Institution, and (b) remitting such collected amounts to the Servicer
for the benefit of SunTrust.  In the
event the Borrower or Eligible Institution returns the funds to FMER, FMER
shall remit the funds to Servicer to process the cancellation for the benefit
of SunTrust.  Subsequent disbursements
with respect to any Loan may be canceled as set forth in the Program
Guidelines.


 


3.6.3.3                     FMER shall
provide online and facsimile methods of certification for Eligible
Institutions.  SunTrust hereby authorizes
FMER, on SunTrust’s behalf and as SunTrust’s agent, to disburse funds under
this Agreement utilizing the systems operated by the ELM National Disbursement
Network, Great Lakes Central Disbursing System, disbursement services offered
by Texas Guaranteed Student Loan Corporation, Pennsylvania Higher Education
Assistance Authority / American Education Services or any other funds
disbursement agent as the Parties may agree to from time to time (collectively,
the “CDAs”).  As SunTrust’s agent, FMER
shall operate pursuant to future agreements and/or amendments to existing
agreements between SunTrust and the CDAs, copies of which shall be provided to
FMER no more than ten (10) Business Days after execution.  FMER is authorized to follow all rules and
procedures required by the CDA systems. 
Any action undertaken by FMER in conformity with the CDA systems will be
deemed to be in accordance with the Program Guidelines and the Agreement to the
extent set forth therein.  The Parties
agree to share equally and pay equal amounts required to pay the disbursement
charges and any other charges associated with the CDAs as the CDAs set those
fees on a monthly basis based on SunTrust’s membership status.


 


3.7           Pricing Schedule.  SunTrust may revise the Pricing Schedule set
forth in the Program Guidelines from time to time upon [**] Business Days prior
written notice to FMC; provided, however, that 


 


18

















 


SunTrust
agrees that any such change made by it shall be commercially reasonable, in
accordance with the representation and warranty made in Section 8.2.3 of this
Agreement, and with respect to Fixed Rate Loans, based on market conditions or
fluctuations in the cost of certain financial instruments.  Unless otherwise agreed by SunTrust and FMC
in writing, changes in the Pricing Schedule shall be effective for and applied
only to Applications submitted for a credit check after the effective date of
such changes, and not to Applications for which a credit check has already been
completed.


 


3.8           Performance of Regulatory
Programs.


 


3.8.1        OFAC Check.  FMER agrees that, in regards to all Services
provided to SunTrust, it will perform all necessary actions to ensure that FMER
and SunTrust are both in, and remain in, compliance with all applicable
Executive Orders, laws, rules, regulations and sanctions administered, enforced
or implemented by the United States Treasury Department’s Office of Foreign
Assets Control (“OFAC”) or any other Governmental Authority’s rules,
regulations and sanctions related to foreign asset control (collectively, the “Sanctions”).  As part of its obligations, FMER will
perform, prior to originating any Loan, all necessary reviewing and scanning of
an Applicant against the List of Specially Designated Nationals and Blocked
Persons administered by OFAC.  If
originating a Loan would violate any of the Sanctions, FMER agrees to not
originate any such Loan.  If FMER becomes
aware that the name of an Applicant is potentially or actually the subject of
one or more Sanctions, FMER will promptly notify SunTrust of such a fact by
following the notification provisions provided in Section 19.1 below, the
Program Guidelines, and the Servicing Guidelines, and FMER will provide
SunTrust with any requested information and documentation related to any such
violation or potential violation.  At the
request of SunTrust, FMER shall provide SunTrust with a data file or report
with information regarding all or a selected group of Loans that have been
applied for or established, as well as any other data and information
reasonably requested by SunTrust.  Such a
data file or report will contain the requested information in a form, format
and at intervals reasonably requested by SunTrust.


 


3.8.2        Employee Check.  All FMER employees performing services or
supporting FMER activities under this Agreement, regardless of their location,
shall be validated by FMER to not be on any list published and maintained by
the United States government of Persons with whom any U.S. Person is prohibited
from conducting business.  Currently, the
lists of such Persons can be found on the following web sites:


 


(i)            Denied Persons List on the
Bureau of Industry and Security at http://www.bis.doc.gov/dpl/Default.shtm.


 


(ii)           The Specially Designated
Nationals and Blocked Persons List of the Office of Foreign Assets Control —
Department of Treasury at http://www.treas.gov/offices/enforcement/ofac/sdn/.


 


(iii)          Office of Foreign Assets
Control — Recent OFAC Actions http://www.treas.gov/offices/enforcement/ofac/actions/.


 


(iv)          Palestinian Legislative Council
(PLC) List
http://www.treas.gov/offices/enforcement/ofac/programs/terror/ns/index.shtml.


 


FMER shall conduct periodic
reviews, no less frequently than quarterly, of the lists mentioned above.  FMER shall report to SunTrust immediately if
the name of any FMER employee performing the services matches with the name of
any Person listed on any list published by the United States government of
Persons with whom any U.S. Person is prohibited from doing business.  FMER shall mandate that each Subcontractor
shall validate that its own employees are not on the lists referred to above.


 


3.8.3        FACT Act.  Subject to Sections 3.6.2.1 and 3.8.5 of this
Agreement, FMER shall perform its obligations under this Agreement in
conformity with the requirements imposed on SunTrust as a user and furnisher of
consumer report information under the Fair and Accurate Credit Transactions Act
of 


 


19

















 


2003 and all regulations
issued pursuant thereto, including proper responses to fraud alerts, active
duty alerts, red flags, and address mismatch notices that are included in any
consumer report obtained in connection with the origination of a Loan and
timely and lawful forwarding to SunTrust of any identity theft report received
from any Applicant.


 


3.8.4        Suspicious Activity
Reporting.  FMER agrees
that on behalf of SunTrust, it will monitor for any potential or actual
suspicious activity detected regarding any Services that FMER performs on
behalf of SunTrust, including any potential or actual suspicious activity which
is committed by Applicants or Borrowers. 
Such suspicious activity includes any potential or actual activity or
transaction that would require SunTrust to file a Suspicious Activity Report as
described in the USA PATRIOT Act or 12 C.F.R. § 208.62 (“USA PATRIOT Act”)
or other activity which involves fraud, violations of federal, state or local
law or which appears to have no legitimate purpose.  If FMER becomes aware of any potential or
actual suspicious activity, FMER will promptly, and in all cases within
seventy-two (72) hours, notify SunTrust’s Consumer Lending Operations
Department of the precise nature of any such activity and provide SunTrust with
any information and documents concerning the matter.  Further, FMER agrees to reasonably cooperate
with SunTrust and to provide SunTrust with any additional information and
documentation requested regarding any investigation of potential or actual
suspicious activity.  The contact in the
SunTrust’s Consumer Lending Operations Department is Ms. Debra Hendricks, whose
contact information is:  Telephone: (804)
319-1533, Fax: (877) 862-8494, E-Mail: debra.hendricks@suntrust.com.  SunTrust may change its contact in its
Consumer Lending Operations Department at any time by written notice to FMC and
FMER that meets the requirements of Section 19.1.


 


3.8.5        Customer Identification
Program.  FMER agrees that prior to
establishing any Loan in the name of SunTrust, it will perform all aspects of
SunTrust’s Customer Identification Program, as indicated below, and which may
be amended from time to time by SunTrust on thirty (30) days written notice to
FMER.


 


3.8.5.1                     Applicant
Notice.  FMER agrees that Applicants
will be provided notice that FMER is requesting information about them on
behalf of SunTrust to verify their identities as required by Federal law.  FMER may use any verbal or written means of
such notification which is reasonably designed to provide such notice to
Applicants before the issuance of a Loan, including, but not limited to, one or
more of the following:


 


·                  Verbal
notification to the Applicant


 


·                  Notice on
Application form or other documents being provided to an Applicant


 


·                  Notice on a
website or other promotional items or SunTrust Materials


 


Upon request by SunTrust,
FMER will provide SunTrust with a copy and description of any methods of notice
used.


 


3.8.5.2                     Collection of
Applicant Information.  FMER
will collect and record the following information from each Applicant prior to
the initial disbursement of any Loan (the “Applicant Information”):


 


·                  Name


 


·                  Date of Birth


 


·                  Physical
Address (which includes a residential or business street address or if the
individual does not have such an address, an Army Post Office (APO) or Fleet
Post Office (FPO) box number, the residential or business street address of
next of kin or of another contact individual, or a description of the customer’s
physical location)


 


20














 


·                  For a United
States person, a Taxpayer Identification Number (or evidence of application for
one) and for a non-United States person, one or more of the following:  a Taxpayer Identification Number, a passport
number and country of issuance, an alien identification card number, or a
number and country of issuance of any other unexpired government-issued
document evidencing nationality or residence which bears a photograph or
similar safeguard


 


3.8.5.3                     Applicant
Identity Verification and Recordation.  FMER will verify the accuracy of the
Applicant Information through either a documentary method or a non-documentary
method.  Under either method, FMER will
record how such verification was done and the results of such verification.


 


·                  Documentary
methods of verifying the Applicant Information include reviewing and recording
one or more of the following types of unexpired identification: driver’s
license; passport; state identification card; armed forced identification card;
alien identification card; marticula consular card; instituto federal electoral
identification; cedula de identidad identification; diplomatic identification;
or diplomatic driver’s license.  The
recording of such verification will include recording the type of
identification reviewed, the number of such identification, the place of
issuance, the date of issuance and the date of expiration (if any) of such
identification.


 


·                  Non-documentary
methods of verifying the Applicant Information include comparing the
information with information obtained in advance from a consumer or credit
reporting agency, Lexis/Nexis, TrustedID, or if verification cannot be obtained
through those methods, verification may be obtained from the certification of
the Loan by the Eligible Institution.


 


3.8.5.4                     Addressing
Inconsistencies.  After
collecting and attempting to verify the Applicant Information, FMER will
attempt to resolve any inconsistencies in information.  If any such inconsistencies cannot be resolved
with a reasonable explanation and verification, FMER will not further process
or close any Loan for the Applicant. 
Further, FMER will notify SunTrust of the inconsistency for possible
further investigation.  FMER agrees to
fully cooperate with SunTrust in any such investigation.


 


3.8.5.5                     Comparison with
Government Lists.  As required
by the USA PATRIOT Act and its implementing regulations, FMER will verify that
an Applicant is not included on any lists of known or suspected terrorists or
terrorist organizations issued by the United States government.  If an Applicant is included on any such
lists, FMER will not establish a Loan for the Applicant and will immediately
notify SunTrust of such a fact.


 


3.8.5.6                     Access to and
Maintaining of Records.  FMER
agrees to allow SunTrust access to any records maintained regarding the
Applicant Information and its verification. 
Such access will include allowing access at SunTrust’s request and
direction to any individual or entity that is performing tests, audits or exams
of, for or on behalf of SunTrust.  FMER
agrees to maintain all records of Applicant Information along with any Loan
documentation it retains (or any copies thereof) for at least seven (7) years
from either the time the Loan is repaid and closed or the Loan is sold by
SunTrust to a third party and to keep records of the verification of the
Applicant Information for at least seven (7) years from the date of such
verification.


 


3.9           Transfer to Servicing System.  Within [**] Business Days following the first
disbursement of each Loan, FMER will forward to the Servicer a copy of the
original Credit Agreement, along with a complete copy of the Truth in Lending
Disclosure Statements (other than the Application and Solicitation Disclosure),
Student Borrower self-certification, income verification, enrollment verification/certification



 


21

















 


by
the Eligible Institution, missing information notices, and correspondence and
information received from the Applicant(s) except for verification
documentation received pursuant to Section 3.8.5.  FMER will cooperate with SunTrust or Servicer
in transferring all additional information necessary to service such Loan.  FMER will be responsible for the safe
maintenance of Loan documentation as set forth in Section 12.2 of this
Agreement.


 


3.10         Loan Origination Data.


 


3.10.1      Notwithstanding
any other provision of the Agreement, SunTrust hereby authorizes FMER to retain
and use records of applicable data and information relating to Borrowers
received under this Agreement, in identified form, for the limited purpose of
calculating cumulative education debt, annual loan limits and Program limits
with respect to the Borrower, and to provide Program Support Services set forth
in this Agreement.


 


3.10.2      Notwithstanding the
foregoing or any other provision of this Agreement to the contrary, FMER may
retain and use records of data and information relating to Applicants and
Borrowers received under this Agreement, in identified form, for the limited
purpose of identifying red flags or indications of identity theft or other
fraud (“Fraud Database Data”).  If
SunTrust’s education loan applications have previously been processed by FMER
prior to the date of this Agreement (in FMER’s capacity as either agent for
SunTrust or subcontractor of SunTrust’s agent), SunTrust hereby authorizes the
use of historic records of application data and information relating to
applicants and borrowers received under such agreement, in identified form, by
FMER for the limited purposes set forth in the preceding sentence.  SunTrust hereby authorizes FMER to disclose
the Fraud Database Data to its Affiliates, and to use records of application
data and information in FMER’s possession relating to any of SunTrust’s
historic education loan applications, for the limited purposes set forth above.


 


3.11         Reports.  FMER will provide to SunTrust the “Datamart”
report as set forth in Exhibit A on each Business Day.  All such reports, transmittals, records or
data files required, maintained or provided by FMER hereunder shall be accurate
in all material respects, and SunTrust shall have the right to rely
thereon.  Additional reports, including
reports for SunTrust’s use in connection with regulatory matters, may be
prepared by FMER as may be mutually agreed by the Parties.


 


3.12         Subcontractors.  FMER or FMC may retain Subcontractors to
provide customer service and ministerial services in connection with its
performance of Loan Processing Services, provided, however, that any such
Subcontractors other than the Initial Vendors must be approved by SunTrust in
accordance with the procedure set forth for Advertising Firms and Marketers in Section 2.7.2.


 


ARTICLE 4.          PROGRAM SUPPORT SERVICES


 


4.1           Program Analytics and
Development.


 


4.1.1        No later than
fifteen (15) days after the end of each calendar month, FMC shall review the
Pools on an aggregate basis and present such findings to SunTrust regarding
product reconfigurations including, but not limited to, the following
categories:  pricing, tier construction,
repayment options, repayment terms, and the list of Eligible Institutions in
the Program Guidelines.  The Parties may
recommend changes to the Program based on such review.  If the Parties agree with the other Party’s
recommendations and proposed changes to the Program, each Party shall approve
such recommendations by executing revised Program Guidelines or another revised
Exhibit hereto, as appropriate, which revised Exhibit shall be deemed
to be a part of this Agreement upon execution, and any changes pursuant to such
revised Exhibit shall be implemented as soon as reasonably practicable, or
upon the effective date provided in the applicable revised Exhibit.  If the Parties do not agree on the
recommended changes within ten (10) Business Days of the applicable
request, the Parties shall confer in good faith about the proposed
changes.  If the Parties cannot agree on
such changes within thirty (30) days after the date a Party first delivered
recommendations to the other Parties, then any Party may, by notice to the
other 


 


22

















 


Parties
delivered no later than thirty (30) days after the expiration of such thirty
(30) day period during which changes could not be agreed, terminate this
Agreement on fifteen (15) days’ written notice to the other Parties, subject to
Section 18.1 and Section 18.3 hereof. Notwithstanding the foregoing,
changes to the Pricing Schedule shall be subject to Section 3.7 and not to
this Section 4.1.1.


 


4.1.2        FMC shall
assist SunTrust with the initial and ongoing administration of the Program by
providing Program analytics and portfolio performance reporting on the
Pools.  FMC shall provide a key metrics
report monthly, containing the information set forth in Schedule 1 to Exhibit D
or as otherwise agreed to in writing by the Parties; provided however, that FMC
shall not be required to deliver such report more frequently than weekly.  To support this service, SunTrust will provide or cause to be provided to
FMC accurate and complete origination and servicing information periodically as
reasonably requested by FMC, including the amount of paid and unpaid principal
and accrued interest with respect to each Loan, and payment status, together
with the information contained in the data requirements set forth in this
Agreement.  FMC may create, use
and disclose, in any manner reasonably necessary, any data, or statistical
abstracts of data, from Borrowers as long as all information which identifies,
or which reasonably could be used to identify Borrowers has been removed.  FMC and
SunTrust shall participate in monthly conference calls to review portfolio
performance, and the Parties shall discuss whether to implement changes to the
Program Guidelines.  As a result of its
analysis of Loan data and performance metrics, FMC may also provide SunTrust
additional services such as Borrower retention strategies and prepayment
mitigation strategies, as agreed to in writing from time to time.


 


4.1.3        FMC
shall provide Services under this Section 4.1 in good faith and in
accordance with the same standard of care, judgment and conduct as would be
used by a reasonable and prudent professional providing such Services.  FMC EXPRESSLY DISCLAIMS ALL WARRANTIES,
EXPRESS OR IMPLIED, REGARDING OR RELATING TO FORWARD-LOOKING PORTFOLIO METRICS
AND OTHER PREDICTIVE MEASURES, DOCUMENTS, MATERIALS, ANALYSES, AND STATEMENTS
IT PROVIDES TO SUNTRUST (COLLECTIVELY, “FORWARD-LOOKING MATERIALS”).  WITH RESPECT TO THE FORWARD-LOOKING
MATERIALS, FMC (A) SPECIFICALLY DISCLAIMS ALL IMPLIED WARRANTIES OF
MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, AND ANY WARRANTY ARISING
UNDER STATUTE OR OTHERWISE IN LAW OR FROM A COURSE OF DEALING, COURSE OF
PERFORMANCE, USAGE OR TRADE PRACTICE; AND (B) DOES NOT WARRANT, GUARANTEE,
OR MAKE ANY REPRESENTATIONS REGARDING THE USE OF, OR THE RESULTS OF THE USE OF
THE FORWARD-LOOKING MATERIALS IN TERMS OF CORRECTNESS, QUALITY, ACCURACY OR
RELIABILITY.


 


4.2           Post-Disbursement Loan
Servicing.  FMC shall
perform its obligations to SunTrust as Portfolio Administrator, as defined and
more fully set forth in the Servicing Agreement.


 


4.3           Loan Sale; Right of First
Refusal.


 


4.3.1        SunTrust
agrees, in consideration of FMC’s undertakings pursuant to this Agreement, that
if SunTrust seeks or offers to sell, transfer, or assign one or more Loans to
any Person other than one of its Affiliates, SunTrust shall notify FMC of any
such proposed sale, transfer, or assignment, and invite FMC and its Affiliates
to participate as a potential purchaser in any bid process in connection
therewith.  If SunTrust receives any bona
fide third-party written offer to purchase such Loan(s) outside of a bid
process initiated by SunTrust (“Third-Party Offers”), SunTrust shall,
prior to accepting any Third-Party Offer, provide a copy of same to FMC, and
FMC (or an entity affiliated with or sponsored by FMC) shall have the sole and
exclusive right to notify SunTrust within [**] Business Days that it will
purchase such Loan(s) on the terms of the Third-Party Offer.  If, within [**] Business Days after receipt
of the Third-Party Offer from SunTrust, FMC (or an entity affiliated with or
sponsored by FMC) notifies SunTrust that it declines to purchase, or fails to
notify SunTrust that it (or an entity affiliated with or sponsored by it) will
purchase such Loan(s) on the terms of the Third-Party Offer, SunTrust
shall within its sole discretion 


 


23

















 


be
entitled to sell such Loan(s) to that third party, in whole or in part,
for its own account on the terms of the Third-Party Offer free and clear of any
claim under this Agreement.


 


4.3.2        SunTrust shall
not, without the express written consent of FMC, transfer, sell, or assign any
Loan to an entity that has no function other than to hold the Loans, or a “variable
interest entity”, within the meaning of Accounting Standards Codification,
810-10, Consolidation (ASC 810-10).


 


4.3.3        The funds in
the Participation Account (including ongoing rights and obligations related to
Recoveries) shall accompany any transfer, sale or securitization of Loans and
be available for the transferee under the terms of this Agreement if the rights
of FMC and FMER to perform Services related to such Loans and receive
compensation for such Services under the terms of this Agreement are also
transferred.


 


4.4           Portfolio Management
Services Generally.


 


4.4.1        SunTrust hereby
retains FMER to perform Portfolio Management Services.  FMER shall develop default prevention and
collection strategies and customized Borrower treatment streams to minimize
credit losses.  Upon SunTrust’s written request and approval, activities
may include:


 


(a)  education of Borrower and Cosigner about Loan
responsibilities both in writing and through calls in preparation for
repayment;


 


(b)  multi-channel (mail and outbound calling) contact strategies;
or


 


(c)  development and optimization of tools (payment plans,
forbearance, payment vehicles, etc.) tailored to SunTrust needs.


 


In
carrying out its duties with respect to the Portfolio Management Services and
subject to Section 4.6 and FMER’s indemnification obligations set forth
herein, FMER may retain and employ Subcontractors as provided herein.


 


4.4.2        Nothing in this
Agreement shall be construed to require or permit FMER to undertake direct or
indirect collection activities with respect to Borrowers or other consumer
obligors, it being the intent of the Parties that consumer-facing collection
activities be conducted by Subcontractors primarily engaged in the business of
collecting consumer debts for third parties.


 


4.4.3        SunTrust shall
cause Servicer to provide to FMER (a) consumer file data in the manner and
form described in Section 4.9.1, and (b) view-only access to Borrower
Loan accounts on Servicer’s system.


 


4.5           Early Awareness Services.  FMER shall perform the early awareness
services as described in this Section (“Early Awareness Services”).


 


4.5.1        Early Awareness
Services consist of activities intended to alert Borrowers who are approaching
the end of their Eligible Institution enrollment, or are no longer enrolled but
not yet in repayment, to their repayment obligations, available borrower
benefits (such as ACH automatic payments) and contact information for
Servicer.  An additional objective of the
Early Awareness Services shall be to educate Borrowers of upcoming payment
requirements and advise Borrowers, if appropriate under the circumstances, of
the existence of deferment, forbearance and modified graduated repayments
(MGRS) alternatives under Program Guidelines then in effect, to reduce the
number and percentage of Borrowers becoming subsequently delinquent in the
repayment process.  Early Awareness
Services include both telephonic and mail contacts, as well as address
verification and skip tracing; provided, however, Early Awareness Services
shall not include any activity that is prohibited by Requirements of Law, as
determined by SunTrust in its sole discretion.


 


4.5.2        Subject to Section 4.6
and FMER’s indemnification obligations set forth herein, FMER may retain the
Servicer and licensed, third party Subcontractors to perform Early Awareness
Services as 


 


24

















 


described in this Section. 
Subcontractors shall perform Early Awareness Services in compliance with
all Requirements of Law and this Agreement.


 


4.5.3        FMER shall
oversee the results of operations of Subcontractors and shall be responsible
for all activities performed by Subcontractors.


 


4.6           Default Prevention Services.  FMER shall provide Default Prevention
Services as described in this Section 4.6 (“Default Prevention Services”).


 


4.6.1  FMER shall
retain and be responsible for licensed, third party Subcontractors who are
Approved Collectors to perform Default Prevention Services.  FMER shall ensure Subcontractors perform
Default Prevention Services in compliance with all Requirements of Law and this
Agreement.  FMER shall manage
Subcontractors in order to minimize losses from those categories of Delinquent
Loans for which SunTrust and FMER agree from time to time that Default
Prevention Services will be performed (i.e., Loans at or beyond a specified
stage of delinquency).  Such tactics
shall be undertaken in order to incent Borrowers who are past due but with
respect to whom Servicer has not yet submitted a “Default Notification”
(as defined in the Servicing Guidelines) to SunTrust to become current.  FMER shall require Subcontractors to provide
dedicated staff to make outbound calls related to past due accounts referred by
FMER and receive inbound calls resulting from Subcontractor’s efforts.  FMER also shall require Subcontractors to
draft and mail letters and conduct other activities reasonably calculated to
minimize losses from Delinquent Loans. 
Default Prevention Services include both telephonic and mail contacts,
as well as address verification and skip tracing; provided, however, Default Prevention
Services shall not include any activity that is prohibited by Requirements of
Law, as determined by SunTrust in its sole discretion.


 


4.6.2  FMER shall use commercially reasonable
efforts to maximize collections in connection with the operations of
Subcontractors.


 


4.6.3  Notwithstanding anything to the contrary
herein or in the Program Guidelines or Servicing Agreement, and regardless of
the length of the delinquency of any Loan, in no event shall FMER and the
applicable Subcontractors continue the Default Prevention Services with respect
to each applicable Loan past the date a default notification is submitted with
respect to such Loan in accordance with the Servicing Guidelines.


 


4.6.4  Loan Payments.  Except as set forth in this Section 4.6.4,
neither FMER nor any Subcontractor shall solicit payments directly to FMER or
the Subcontractor from any Borrower or any other Person with respect to a
Delinquent Loan, or accept payments from any Borrower or any other Person with
respect to a Delinquent Loan. 
Subcontractors shall direct Borrowers and any other Persons making
payments on behalf of a Borrower with respect to a Loan to make such payments
directly to Servicer or may (i) receive payments by electronic check or
other electronic means and post such payments directly to Servicer’s payment
system of record, such that the Subcontractor shall have processed the payment
on behalf of SunTrust but will not itself have received the payment funds, or (ii) process
payments as an ACH transmission whereby entries are initiated by the
Subcontractor to the Automated Clearinghouse through the rules and
guidelines established by the National Automated Clearinghouse Association as
in effect from time to time.  The Parties
also acknowledge and agree that a Subcontractor may facilitate payments to
Servicer by taking information from a Borrower or other Person necessary to
effectuate such payments, and forwarding such information to Servicer.  This Section 4.6.4 shall not affect the
ability of Approved Collectors to forward Borrower payments.


 


4.7           Subcontractors.  FMC and/or FMER may utilize
the services of the Subcontractors listed in Schedule 2 to Exhibit D in
the performance of FMC’s and/or FMER’s Services, provided that:  (a) FMC and/or FMER take commercially
reasonable due diligence measures before engaging such Subcontractor, and on at
least an annual basis thereafter, (b) FMC and FMER will remain liable for
all responsibilities and obligations of FMC and/or FMER under the terms and
conditions of this Agreement, even if some of 


 


25

















 


such
responsibilities and obligations are performed by FMC’s or FMER’s
Subcontractors; and (c) FMC and/or FMER enters into a written Agreement
with any such Subcontractor that requires the Subcontractor to abide by the
terms and conditions of this Agreement, including Requirements of Law, that are
applicable to FMC and/or FMER, as applicable. 
FMC and FMER will pay, and hereby accept full and exclusive liability
for the payment of, any and all contributions and taxes for unemployment
compensation, disability insurance, old age pension, or annuities, and all
similar provisions now or hereafter imposed by any Governmental Authority,
which are imposed with respect to or measured by wages, salaries, or other
compensation paid by FMC and/or FMER to its Personnel; provided, however, that
with respect to Subcontractors, the foregoing obligates FMC and/or FMER to
compensate Subcontractor Personnel only as between SunTrust, on the one hand,
and FMC and/or FMER, on the other hand. Nothing in this Agreement shall
obligate SunTrust to compensate Personnel, including Personnel of
Subcontractors.


 


4.8           Special Accounts.


 


4.8.1        Bankruptcy.  In the event any Borrower becomes a debtor
under the U.S. Bankruptcy Code, FMER shall accept from Servicer the
documentation specified under “Bankruptcy Notification” set forth in the
Servicing Guidelines and file necessary proofs of claim and other documents
required to preserve the SunTrust’s interests in the subject Loan.  FMER shall promptly forward to SunTrust any
notice of an adversary proceeding received by it with respect to any Loan other
than a Charged Off Loan, and SunTrust shall be responsible for the management
and defense of such proceeding.


 


4.8.2        Deceased.  With respect to any Loan other than a Charged
Off Loan, in the event any Borrower subject to the Portfolio Management
Services is deceased, FMER shall be obligated to perform the applicable
activities required under this Agreement, the Program Guidelines and the
Servicing Agreement related to such deceased person.


 


4.8.3        Fraud.  With respect to any Application or Loan for
which fraud or identity theft is alleged, FMER shall assist SunTrust by
promptly performing its obligations and services required under the terms of
this Agreement, the Program Guidelines and the Servicing Agreement.


 


4.8.4        Complaints and
Requests for Information.  In
addition to any requirements set forth in the Program Guidelines and the
Servicing Agreement, FMER will immediately notify SunTrust regarding any
written consumer complaint that it receives relating to the Services performed
under this Agreement, and shall forward a copy of the complaint to
SunTrust.  FMER shall not respond to any
complaint or request for information on SunTrust’s behalf without prior written
approval of such response and attachments, if any.


 


4.8.5        Court Orders
and Litigation.  In addition
to the requirements in the Program Guidelines and the Servicing Agreement, FMC
and/or FMER shall promptly notify SunTrust upon receipt of any subpoenas to
forward documents, testify in court proceedings or otherwise provide evidence
with respect to its performance of any Services hereunder, and respond to such
subpoenas.  FMC and/or FMER shall provide
a copy of such responses, if applicable and if permitted by Requirements of
Law, to SunTrust.  FMC and/or FMER shall
promptly notify SunTrust upon receipt of any subpoenas to forward documents,
testify in court proceedings or otherwise provide evidence where SunTrust is
the addressee or named recipient.


 


4.9           Servicer Data to be
Delivered for Program Support Services


 


4.9.1        Data Requirements:


 


4.9.1.1                     On a daily basis, SunTrust
shall, through the Servicer, provide the following data to FMC, along with
other data reasonably requested from time to time and necessary for the
performance of the Services:


 


·              Default
prevention data regarding Loans thirty-one (31) or more days past due


 


26

















 


·              Default claims
data for Charged Off Loans


·              Loan level
Borrower communication details and call disposition data reflecting dates and
times of attempts and contacts, current principal balance, amounts outstanding
and past due, promise-to-pay dates and other results of calls


 


4.9.1.2                     On a weekly basis, SunTrust
shall, through the Servicer, provide the following data to FMC, along with
other data reasonably requested from time to time and necessary for the
performance of the Services:


 


·              Loan level
detail, including information on the following subjects:


 


·              Identifying
information, such as account ID, name, address, birth date, Social Security
number, and telephone number


·              Disbursement
dates and amounts


·              Loan type


·              Current
principal balance


·              Interest rate,
accrued interest, and capitalization


·              Current loan
status


·              Enrollment
status


·              Deferment and
forbearance


 


4.9.1.3                     On a monthly basis, SunTrust
shall, through the Servicer, provide the following data to FMC no later than
the third (3rd) Business Day
of each month, along with other data reasonably requested from time to time and
necessary for the performance of the Services:


 


·              Loan level
detail, including information on the following subjects:


 


·              Commonline data


·              Identifying
information, such as account ID, name, address, birth date, Social Security number,
and telephone number


·              Disbursement
dates and amounts


·              Loan type


·              Current
principal balance


·              Interest rate,
accrued interest, and capitalization


·              Current loan
status


·              Enrollment
status


·              Deferment and
forbearance


·              Pricing tier


·              Loan payments


·              Repayment
period


·              School identity
and type


 


·              Transaction
details for the month reflecting Borrower account activity


·              Data reflecting
eligibility for and usage of Borrower benefits


 


27

















 


4.9.2        Data
Format:  File layouts must provide for “fixed-width” fields using the ASCII
character set.  Delimited data is also
acceptable, provided that FMC’s consent to the delimiter must be obtained.  If
comma-delimited fields are being submitted, then all text fields must be
enclosed in double quotes.


 


4.9.3        Data Transmission:  Files will need to be encrypted (PGP
preferred) and delivered to FMC via FTP.  The
filenames must include unique identifiers for servicer name, snapshot or
transaction file category, and contain a date-time-stamp.


 


Example filename for raw data file: xxxxSD00.csv_ccyymmddhhmmss.sfx


XXXX
= Client Abbreviation,


SD
= Transaction Detail (Monthly Loan Transaction),


00
= Tiebreaker


sfx=current file suffix as .pgp


 


Example filename for PGP-encrypted data file: xxxxTD00.csv_ccyymmddhhmmss.sfx


XXXX
= Client Abbreviation,


TD
= Transaction Detail (Monthly Loan Transaction),


00
= Tiebreaker


sfx=current
file suffix as .pgp


 


4.10         Portfolio
Management Transfer.  SunTrust reserves the right to perform all
Services set forth in Sections 4.4 through 4.8 upon [**] Business Days prior written notice to FMC if, after the full funding of
the Participation Account at the end of the Term and at the time SunTrust
delivers such notice, the amount of the balance in the Participation Account is
below [**] per cent ([**]%) of the Participation Percentage multiplied
by Outstanding Loan Volume.  For example,
if Outstanding Loan Volume is $[**], and the Participation Percentage is [**]%, then SunTrust may deliver to FMC its notice of its election to perform
all Services set forth in Sections 4.4 to 4.8 if the balance in the
Participation Account is less than $[**].  In the event SunTrust provides
such notice to FMC, and the Services provided in this Section 4 are
terminated, (a) the transition rules set forth in Section 18.3.2
shall apply, and (b) after the end of the Transition Period, SunTrust
shall no longer be obligated to pay to FMC the fee set forth in Section 6.4.1.


 


ARTICLE 5.  PURCHASE


 


5.1                                 FMC’s Purchase
Obligations.  SunTrust
shall be entitled to cause FMC (or its Affiliate designee) to purchase, subject
to the terms and conditions set forth in this Section 5, any Loan (each
such Loan purchased pursuant to this Section 5, a “Purchased Loan”).  Such right shall apply to any Loan that is
reasonably determined by SunTrust to be a Loan which should not have been
approved due to FMER’s or FMC’s failure to comply in any material respect with
the terms of this Agreement, the Program Guidelines or Requirements of Law, and
not due to any action or omission of SunTrust. 
In order to exercise such purchase right, SunTrust, pursuant to the
terms of and within the time limitation set forth in the Program Guidelines and
Servicing Agreement, shall make demand of FMC in writing that FMC purchase such
Loans as have been so determined for an amount equal to the Purchase Price,
calculated in the manner set forth below. 
If FMC objects to SunTrust’s characterization of any Loan as a Loan
which should not have been approved, the dispute resolution procedure set forth
in this Agreement shall apply; if FMC provides no such objection to SunTrust
within ten (10) Business Days of SunTrust’s written purchase demand, then
FMC shall pay SunTrust the Purchase Price in immediately available funds
(outside of funds in the Participation Account) within fifteen (15) Business
Days after receipt of SunTrust’s purchase notice.


 


5.2                                 Purchase Price.  The “Purchase Price” for each
Purchased Loan shall be an amount equal to the outstanding balance of the Loan,
including accrued and unpaid interest through the date the Loan is removed from
the Servicer’s system.


 


28














 


5.3                                 Conveyance.  Upon payment of the Purchase Price with
respect to such Loans which should not have been approved, SunTrust shall
convey to MG Private Student Loan Trust 2010-1, at FMC’s cost and expense, any
such Purchased Loan.  No later than the
time that is contemporaneous with the payment of the Purchase Price, SunTrust
shall deliver, or cause to be delivered, to MG Private Student Loan Trust
2010-1 (or its designee) the Credit Agreement, all related Loan documentation
and complete Loan file relating to such Purchased Loan and shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse absent any violation by FMC or SunTrust of Requirements of Law or the
Credit Agreement, as shall be necessary to vest in FMC (or its Affiliate
designee) title to such Purchased Loan.


 


ARTICLE 6.  FEES


 


6.1           Invoices.  All fees will be invoiced to SunTrust by FMC
on behalf of itself and FMER at the following address:


 


SunTrust Bank


SunTrust Education Loans


1001 Semmes Avenue


Richmond, VA 23224


Attn: Marnie Crane


 


SunTrust
may change its designated address for invoices at any time by written notice to
FMC which meets the requirements of Section 19.1.


 


6.2           General.  All fees shall be paid by SunTrust within
sixty (60) days after SunTrust’s receipt of the invoice therefor, except fees
subject to good faith dispute between the Parties.  In the event any fees have been made for a
cancelled Disbursement, as defined by the cancellation window described in the
Servicing Guidelines, SunTrust shall offset future fees with any and all prior
fees paid for such cancelled Disbursement. 
Except as set forth in this Article 6, Section 18.1.2, Section 18.3.1,
or as otherwise set forth in this Agreement, no fees will be paid after the
termination of this Agreement, except for Applications which have already been
submitted and credit approved prior to the termination of this Agreement.  Except pursuant to an indemnity obligation or
as otherwise expressly stated in this Agreement, no other amounts shall be due
or payable by SunTrust.


 


6.3           Loan Processing Services
Fees.


 


6.3.1        For the Loan
Processing Services rendered during the Term of this Agreement, FMC shall
invoice to SunTrust on a monthly basis, and SunTrust shall pay to FMER fees
(the “Loan Processing Fees”)” equal to [**]% of the principal amount of
the Disbursed Loan Amount for the prior month.


 


6.3.2        Loan Processing
Fees shall be invoiced monthly as agreed by the Parties from time to time.  FMC’s invoice for FMER’s Loan Processing
Services will state the number and amount of Loans disbursed during the month
covered by the invoice.


 


6.4           Program Support
Services Fees.


 


6.4.1        For Program Support Services
rendered during the Term of this Agreement, other than Production Support
Services and Program Administration Services, SunTrust shall pay FMC an ongoing
monthly fee equal to [**]% multiplied by the Average Daily Balance, divided by
[**].  SunTrust shall be invoiced on a
monthly basis by the Servicer and shall remit payment to the Servicer for all
Program Support Services fees incurred hereunder.


 


6.4.2        For Production Support
Services rendered during the Term of this Agreement, FMC shall invoice SunTrust
for, and SunTrust shall pay FMC, a fee equal to [**]% of the Disbursed Loan
Amount 


 


29

















 


in
the previous month for Loans sourced through the FMC URI/URL, payable monthly
in accordance with this Article 6.


 


6.5           Participation
Account Administrative Fee; Program Administration Services Fees.


 


6.5.1        For administration of the
Participation Account, SunTrust shall pay the monthly Participation Account
Administrative Fee as set forth in this Agreement.  For Program Administration Services, SunTrust
shall pay FMC the monthly Program Administration Services Fee.


 


6.5.2        SunTrust shall be invoiced
for this fee monthly by FMC.


 


6.5.3        Notwithstanding Section 6.5.1,
in the event the Program Administration Services Fee is less than $[**],
SunTrust shall offset the Participation Account Administrative Fee by an amount
equal to the amount the Program Administration Services Fee falls below $[**].


 


6.6           After termination of this
Agreement, SunTrust shall continue to pay FMC the Program Administration
Services Fee on a monthly basis.


 


6.7           For
example purposes only, with respect to the fees for Program Support Services,
Participation Account Administration, and Program Administration Services:


 


	
  Average
  Daily Balance

  	
   

  	
  $[**]

  	
   

  	
   

  
	
  Monthly
  Accrued Interest

  	
   

  	
  $[**]

  	
   

  	
   

  
	
  Sum
  of accrued interest due to FMC in each pricing segment

  	
   

  	
  $[**]

  	
   

  	
   

  
	
  Program
  Support Services Fee

  	
   

  	
  $[**]

  	
   

  	
  ([**]%
  * Average Daily Balance)/ [**]

  
	
  Participation
  Account Administrative Fee (monthly)

  	
   

  	
  $[**]

  	
   

  	
  ([**]%
  * Average Daily Balance)/ [**]

  
	
  Program
  Administration Services Fee (monthly)

  	
   

  	
  $[**]

  	
   

  	
  (FMC
  Share of Portfolio Yield, less the Program Support Services Fee, less the
  Participation Account Administrative Fee)

  



 


ARTICLE 7.          FMC CREDIT ENHANCEMENT


 


7.1           Participation by FMC.  In connection with
Loans originated and funded under the terms of this Agreement, FMC agrees to
fund the Participation Account for charge off coverage and credit enhancement
purposes.  The Participation Account
shall be governed by this Article VII and an agreement between FMC and
SunTrust regarding deposits, withdrawals, and procedures relating to the Participation
Account (the “Participation Account Deposit Agreement”).  SunTrust agrees to compensate FMC, by paying
to FMC an undivided fractional interest in the Portfolio Yield from its
portfolio of such Loans, on the following terms and conditions:


 


7.1.1        Initial Participation
Account Deposit; Quarterly Participation Account Deposits.  Prior to the commencement of the Loan
Processing Services, FMC shall deposit the Initial Participation Account
Deposit in a Participation Account for the initial Pool, which amount shall be
counted toward the Participation Cap. 
Not later than fifteen (15) days following the end of each calendar
quarter, FMC shall calculate the average of (i) the Participation Interest
on the initial Pool as of the end of such quarter and (ii) the
Participation Percentage multiplied by the Disbursed Loan Amount as of the end
of such quarter, in each case after giving effect to changes to the Projected
Default Rate as of quarter-end.  Not
later than fifteen (15) days following the end of the calendar quarter, and
subject to the Participation Cap, FMC shall deposit in the Participation
Account the amount, if any, by which the foregoing average exceeds the
cumulative previous deposits made by FMC to the Participation Account as of the
end of such quarter (each, a “Participation Account Deposit”).  The Parties intend that additional
Participation Account Deposits shall be made by FMC quarterly through the
expiration or termination of this Agreement, 


 


30

















 


subject
to the Participation Cap, to the extent the distribution of the Disbursed Loan
Amount among pricing tiers changes the Projected Default Rate, and therefore,
the Participation Interest, for the Pools, taken together.


 


7.1.2        Initial Participation
Account Deposit Reconciliation.  On the last day of the month in which the
first anniversary of the Initial Participation Account Deposit by FMC occurs,
FMC shall be entitled to a payment from the Participation Account of any amount
by which the sum of Participation Account Deposits exceeds the Participation
Percentage multiplied by the Disbursed Loan Amount, including remaining
scheduled Loan disbursements, through the last day of such month (e.g., if Loan
volume is substantially below projections, the amount, if any, by which the
Initial Participation Account Deposit exceeded the required deposit for
Disbursed Loan Amount during the first year of the Agreement).  SunTrust agrees to withdraw and pay such
amounts to FMC within fifteen (15) days after the end of such month.


 


7.1.3        Participation Account
Deposits for Subsequent Pool; Reconciliation.  With respect to the second Pool during the
Term, subject to the Participation Cap, FMC shall deposit an Initial
Participation Account Deposit in the Participation Account prior to the
disbursement of the first Loan in such Pool. 
Not later than fifteen (15) days following the end of each calendar
quarter during the second year of the Term, FMC shall calculate the average of (i) the
Participation Interest on the Pools as of the end of such quarter and (ii) the
Participation Percentage multiplied by the Disbursed Loan Amount as of the end
of such quarter, in each case after giving effect to changes to the Projected
Default Rate as of quarter-end.  Not
later than fifteen (15) days following the end of the calendar quarter, FMC
shall deposit in the Participation Account the amount, if any, by which the
foregoing average exceeds the cumulative previous deposits in the Participation
Account as of the end of such quarter, minus amounts paid from the
Participation Account pursuant to Section 7.1.2. Not later than 270 days
following the end of the then-current Term (to allow for all final
disbursements and any cancellations thereof to be made), and subject to the
Participation Cap, (a) if the sum of previous deposits in the
Participation Account as of the end of the then-current Term is less than the
Participation Percentage for all Pools multiplied by the Disbursed Loan Amount
plus the amount of all remaining scheduled Loan disbursements, for all Pools as
of the end of the then-current Term, after giving effect to changes to the
Projected Default Rate as of the end of the Term, then FMC shall deposit a
final Participation Account Deposit into the Participation Account equal to the
amount of such difference, or (b) if the sum of all Participation Account
Deposits is greater than the Participation Percentage for all Pools multiplied
by the Disbursed Loan Amount plus the amount of all remaining scheduled Loan
disbursements for all Pools, then FMC shall be entitled to payments from the
Participation Account of any amount by which the sum of Participation Account
Deposits exceeds the Participation Percentage for all Pools as of the end of
the Term multiplied by the Disbursed Loan Amount plus the amount of all
remaining scheduled Loan disbursements for all Pools as of the end of the
Term.  SunTrust agrees to withdraw and
pay to FMC such amounts subject to subsection (b) above, if any, no later
than two hundred eighty-five (285) days after the end of the Term.


 


7.1.4        Charged Off Loan Payments.  Not later than thirty (30) days following the
end of each month, SunTrust shall withdraw on a monthly basis from the
Participation Account, to the extent of available funds, the outstanding
principal and accrued interest balance as of the date each Charged Off Loan is
moved from the Servicer’s system.  Upon
SunTrust’s withdrawal under this Section 7.1.4, SunTrust shall assign the
Charged Off Loan to FMC (or its Affiliate designee) by delivering, or causing
to be delivered, the Credit Agreement, all related Loan documentation and
complete Loan file relating to such Charged Off Loan and shall execute and
deliver such instruments of transfer or assignment, in each case without
recourse absent any violation by FMC or SunTrust of Requirements of Law or the
Credit Agreement, as shall be necessary to vest in FMC (or its Affiliate
designee) title to such Purchased Loan. 
On the date of any payment under this Section, SunTrust shall only be
entitled to withdraw a payment in an amount equal to the outstanding principal
and accrued interest balance as of the date each Charged Off Loan is moved from
the Servicer’s system.  Notwithstanding
any other provision in this Agreement to the 


 


31

















 


contrary,
if the funds in the Participation Account are not sufficient to cover the
payment to SunTrust for any Charged Off Loan, the payment to SunTrust for such
Charged Off Loan will be made when funds become available through the deposit
of Recoveries in the Participation Account. 
Funds deposited in the Participation Account under Section 7.1.5
hereof shall not be available for withdrawal by SunTrust under this Section 7.1.4.


 


7.1.5        Participation Account
Administrative Fee.  Not later
than thirty (30) days following the end of each month, SunTrust shall deposit
the Participation Account Administrative Fee in the Participation Account.  Regardless of whether funds in the
Participation Account are sufficient to cover the payment to SunTrust for any
Charged Off Loan, the Participation Account Administrative Fee deposited by
SunTrust shall be released to FMC within two (2) Business Days of deposit
into the Participation Account.  During
the Term, the Participation Account Administrative Fee shall be modified
quarterly to reflect the extent to which the distribution of the Disbursed Loan
Amount among pricing tiers changes the Projected Default Rate for the
Pool.  FMC shall invoice SunTrust for the
amount of such fee as set forth in Section 6.2.


 


7.1.6        Participation Account
Payments.  In addition
to any payments set forth in Section 7.1.2, payments shall be made to FMC
monthly, after the date that is forty-eight (48) months after the Effective
Date, to the extent that funds in the Participation Account as of the end of
any month, as a percentage of Outstanding Loan Volume as of the end of such
month, exceed the ratio, expressed as a percentage, of the Participation
Percentage, after giving effect to changes to the Projected Default Rate as of
the end of the Term to Disbursed Loan Amount (such excess, the “Participation
Account Excess Percentage”).  Such
monthly payment to FMC at the end of any such month (the “Participation
Account Payment”) in which the Participation Account Excess Percentage is
positive shall equal the Participation Account Excess Percentage multiplied by
the Outstanding Loan Volume at the end of such month.


 


7.1.7        Recoveries.  After the payment to SunTrust with respect to
any Charged Off Loans under Section 7.1.4, and after SunTrust has assigned
the Charged Off Loan to FMC, Recoveries shall be deposited in the Participation
Account by MG Student Loan Trust 2010-1 and its agents.


 


7.1.8        Review of Participation
Reporting.  FMC and
SunTrust shall review the quarterly Participation Account report during the
first ten (10) days after receiving it and shall notify the other Party in
writing (which may be in the form of an email communication) if it in good
faith disputes any items in such report during such 10-day period.  If either FMC or SunTrust disputes items in
the report, the payments required in Section 7.1.4 relating to such
disputed item shall be withheld until such dispute is resolved to the
satisfaction of FMER, SunTrust and FMC. 
If, within thirty (30) days of receiving a notice of dispute, the
Parties are unable to resolve the dispute, any Party may invoke the dispute
resolution procedures of this Agreement.


 


7.1.9        Account Access.  SunTrust agrees that it shall provide
view-only online access to the Participation Account to FMC and/or FMER
employees designated by FMC and/or FMER from time to time.


 


7.1.10      Security Interest in
Participation Account.  FMC
hereby grants SunTrust a security interest in the Participation Account
pursuant to Article 9 of the Georgia Uniform Commercial Code (“Article 9”).  SunTrust is responsible for perfecting this
security interest in accordance with Article 9.  FMC shall cooperate in good faith to enable
SunTrust to perfect its security interest in the Participation Account,
including, but not limited to, by entering into a mutually acceptable
Participation Account Deposit Agreement with SunTrust.  Any such Participation Account Deposit
Agreement or similar agreement, or other means of perfecting SunTrust’s
security interest, shall be consistent with the purpose and terms of this
Agreement.  SunTrust shall be entitled to
enforce its security interest in the Participation Account in accordance with Article 9,
subject to the terms of this Agreement, only upon the occurrence of


 


32

















 


one or more events giving
SunTrust the right to terminate this Agreement pursuant to Section 18.2.1
hereof.


 


7.1.11      Participation Cap and
Transition.  At such
time as FMC has deposited, in the aggregate and inclusive of Initial
Participation Account Deposits, [**] dollars ($[**]) in the Participation
Account, FMC shall monitor the number and amount of pending Applications and
amount of potential Loan disbursements, and FMC and SunTrust shall confer and
mutually establish a date to cease accepting new Applications.  Such date shall reasonably approximate the
date on which cumulative deposits in the Participation Account, whether
previously made by FMC or which FMC will be obligated to make once Loan
disbursements are complete, are expected to equal or exceed [**] dollars
($[**]), after giving effect to estimated future Loan disbursements that will
be made for all Applications submitted for a credit inquiry on or before such
date.  All Applications submitted for a
credit inquiry by such date shall be processed in accordance with Section 18.4
of this Agreement, and FMC shall make Participation Account Deposits in
connection with any Loans made for such applications, regardless of whether the
total deposits ultimately made by FMC in the Participation Account are less
than or greater than [**] dollars ($[**]).


 


ARTICLE 8.  REPRESENTATIONS AND WARRANTIES


 


8.1           Representations and
Warranties of the Parties.  Each
Party hereby represents and warrants to the other Parties as of the Execution
Date and throughout the Term of this Agreement as follows:


 


8.1.1        Organization.  It is duly organized, validly existing and in
good standing under the laws of its state of organization and/or the United
States, and has full power and authority to conduct its business as it is
presently being conducted.


 


8.1.2        Authorization.  It has all necessary authority and has taken
all necessary action to enter into this Agreement, and subject to the
satisfaction or waiver of the Effectiveness Conditions, on the Effective Date,
to consummate the transactions contemplated hereby and to perform its
obligations hereunder.  This Agreement
has been duly executed and delivered by each Party and is a legal, valid and
binding obligation of each Party, enforceable against it in accordance with its
terms, except as the enforcement thereof may be limited by applicable
bankruptcy, insolvency, rearrangement, reorganization or similar debtor relief
legislation affecting the rights of creditors generally from time to time in
effect and by general principles of equity (regardless of whether such
enforcement is sought in a proceeding at law or in equity) and the discretion
of the court before which any such proceeding may be brought.


 


8.1.3        Absence of Conflicts.  Neither the execution and delivery of this
Agreement by any Party nor the performance by any Party of its obligations
hereunder will result in (i) a violation of the articles of incorporation
or charter documents of such Party, (ii) a breach of, or a default under
any contract, agreement, instrument, lease, commitment, franchise, license,
permit or authorization to which such Party is a party or by which it or its
assets are bound, which breach or default would have a material adverse effect
on its business or financial condition or its ability to consummate the
transactions contemplated hereby, or (iii) a violation by such Party of
any Requirements of Law, which violation would have a material adverse effect
on such Party’s business or financial condition, its ability to consummate the
transactions contemplated hereby or perform its obligations hereunder, or which
could materially impair the enforceability of the Loans.


 


8.1.4        Consents and Approvals.  Each Party has obtained any and all consents,
approvals or authorizations of, and made any and all declarations, filings or
registrations with, any Governmental Authority, or any other Person, required
to be obtained or made by such Party in order to execute, deliver and perform
its obligations under this Agreement or consummate the transactions
contemplated hereby, except where the failure to do so would not have a
material adverse effect on its business or financial condition, its ability to
consummate the transactions contemplated hereby or perform its obligations
hereunder, or which would not materially impair the enforceability of the
Loans.


 


33

















 


8.1.5        Litigation.  There is no action, order, writ, injunction,
judgment or decree outstanding or claim, suit, litigation, proceeding, labor
dispute, arbitral action or investigation pending, or to the actual knowledge
of any Party threatened, against or relating to such Party that would likely
have a material adverse effect on this Agreement or on its business or
financial condition, its ability to consummate the transactions contemplated
hereby or perform its obligations hereunder, or which could materially impair
the enforceability of the Loans.


 


8.1.6        Compliance with Law.  It does and will at all times comply with all
applicable Requirements of Law, in all material respects including the
provisions of Title X and the marketing and conduct requirements of Section 1011
thereof, 15 U.S.C. § 1650.


 


8.1.7        Intellectual Property.  It owns, or has the right to use under valid
and enforceable agreements, all intellectual property rights reasonably
necessary for and related to its performance under this Agreement and such
performance will not infringe or violate any intellectual property rights of
any other Person.


 


Each
Party is bound by the representations and warranties specifically designated to
it within this Agreement and any exhibit attached hereto.


 


8.2           Representations and
Warranties of SunTrust.  With
respect to Loan Processing Services and subject to FMER’s and FMC’s
representations, warranties and covenants regarding compliance with
Requirements of Law as expressly set forth in the Agreement, SunTrust
represents, warrants and covenants to FMC and FMER that it will at all times
comply with all Requirements of Law. 
Without limiting the generality of the foregoing, SunTrust represents,
warrants and covenants that:


 


8.2.1        all documents
and forms provided by SunTrust to FMC or FMER and all instructions with respect
thereto, including the forms of loan applications and Credit Agreements,  comply with all Requirements of Law;


 


8.2.2        SunTrust is a
federally-insured financial institution and has obtained any and all consents,
approvals or authorizations of, and made any and all declarations, filings or
registrations with, any Governmental Authority, or any other Person, required
to be obtained or made by it in order to advertise, make, fund, hold or collect
Loans; and


 


8.2.3        the Program
Guidelines, including but not limited to the Pricing Schedule, all marketing
activities and SunTrust Materials with respect to the Program conform to all
Requirements of Law, including the Truth-in-Lending Act and Regulation Z, the
Federal Trade Commission Act and any interpretations issued by the Federal
Trade Commission and federal banking regulators, the Equal Credit Opportunity
Act, Higher Education Opportunity Act Title X, the Student Lending
Accountability, Transparency and Enforcement Act, all implementing regulations
and all similar state and/or federal laws that may be now in effect or
hereinafter enacted.


 


8.3           Representations and
Warranties of FMER.  With
respect to Loan Processing Services, FMER hereby represents and warrants to
SunTrust at the time of each Loan disbursement, subject to the exceptions noted
in subsection 8.3.12 below, as follows:


 


8.3.1        With respect to
each Loan originated hereunder, a Credit Agreement has been duly and properly
executed by the Borrower thereunder and is enforceable against such Borrower 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.


 


8.3.2        Without limiting the
generality of the foregoing subsection 8.3.1, each Loan has been made to a
Borrower who, at the time of origination of the Loan:


 


34

















 


(i)            had the legal capacity to
execute and deliver a Credit Agreement under Requirements of Law, including
attaining the age of majority;


 


(ii)           was not
deceased; and,


 


(iii)          was a United States citizen/national
or a permanent resident alien of the United States.


 


8.3.3        Except as
expressly otherwise approved in writing by SunTrust, each Loan has been
originated in the United States of America, its territories, its possessions or
other areas subject to its jurisdiction, by FMER in the ordinary course of its
business.


 


8.3.4        Each Loan has
been originated in conformity in all material respects with the Program
Guidelines and all Requirements of Law with respect to the origination thereof,
including the Equal Credit Opportunity Act and any applicable usury laws.  No Application for a Loan shall be, or has
been, rejected, approved or discouraged by FMER on behalf of SunTrust on the
basis of race, sex, color, religion, national origin, age (other than laws
limiting the capacity to enter a binding contract) or marital status, the fact
that all or a part of any Applicant’s income derives from any public assistance
program, or the fact that any Applicant has, in good faith, exercised any right
under the Consumer Credit Protection Act.


 


8.3.5        Each Loan has
been documented on forms set forth in the Program Guidelines, which forms,
except to the extent otherwise modified from time to time pursuant to Section 3.1.1,
(a) require interest accrual (whether or not such interest is being paid
currently or is being capitalized) and yield interest at the applicable rate
thereto, (b) 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 Loan by its maturity, as such maturity may be
modified in accordance with any applicable deferral or forbearance periods
granted in accordance with Requirements of Law and the Program Guidelines; and (c) contain
consumer loan terms in strict conformity with the Program Guidelines;


 


8.3.6        With respect to
each Loan (subject to SunTrust’s obligations above), FMER has provided or
caused to be provided, all notices, statements and disclosures required under
the Program Guidelines, Requirements of Law, and rules and regulations
with respect to the origination thereof, including but not limited to the
Truth-in-Lending Disclosure Statements, and each such notice, statement and
disclosure was true, correct and complete in all material respects when
provided;


 


8.3.7        Neither FMER
nor any of its Affiliates has received any notice or communication alleging
noncompliance with the Program Guidelines, or any applicable Requirement of Law
with regard to the origination of any Loan.


 


8.3.8        FMER has not
impaired, waived, altered or modified the terms of any Credit Agreement.


 


8.3.9        All data and
records provided by or on behalf of FMER to SunTrust (and the Servicer) with
respect to each Loan shall be true, correct and complete when provided in all
material respects.


 


8.3.10      At the time of
application, according to the credit bureau report or self-reported application
information, no Borrower was a debtor in a bankruptcy proceeding.


 


8.3.11      All agreements
with Subcontractors shall require the Subcontractors to perform in accordance
with the relevant portions of this Agreement, the Program Guidelines, the
Servicing Agreement, and Requirements of Law.


 


35














 


8.3.12                  All of FMC’s
and FMER’s representations, warranties and covenants hereunder are subject to
the following:


 


(i)                                     FMC’s and FMER’s
representations, warranties and covenants hereunder shall not be breached by
any occurrence or condition to the extent such occurrence or condition is
caused by a breach of one or more of SunTrust’s representations, warranties or
covenants regarding compliance with Requirements of Law or the failure of
SunTrust to perform any of its other agreements hereunder related to FMER’s or
FMC’s performance as expressly set forth in this Agreement.


 


(ii)                                  Execution of
Credit Agreements shall be deemed lawful and complete if: (A) an original
document received by U.S. mail contains original signatures purporting to be
the signatures of all Borrowers, (B) a copy received by fax contains
copies of signatures purporting to be signatures of all Borrowers, or (C) if
execution is by electronic signature, the Borrower who is electronically
signing has satisfied the authentication criteria set forth in the Program
Guidelines.


 


(iii)                               In performing
its obligations under this Agreement, FMC and FMER shall be entitled to rely on
the accuracy and completeness of all information provided to it by SunTrust,
any Borrower or any Eligible Institution.


 


(iv)                              To the extent
that FMER has followed the policies and procedures set forth in its Customer
Identification Program, Red Flags Program and Address Mismatch Program, neither
FMC nor FMER shall not be liable with respect to any Borrower fraud, identity
theft or defective execution with respect to any Applicant or Borrower (or
purported Applicant or Borrower).


 


8.4                                 Custom Scoring
Model.  FMC represents and warrants
that its custom and proprietary score model complies with Requirements of Law,
including that the model does not use (i) any of the following elements as
inputs or model variables: gender, age, race, color, religion, national origin,
childbearing or familial status, marital status, ethnic group, veteran status,
disability, receipt of income from any public assistance program, or good faith
exercise of any right under the federal Consumer Credit Protection Act, or any
other factor prohibited by Requirements of Law, or (ii) geographic
information in a way that would result in restricting credit from geographic
areas on any basis prohibited by Requirements of Law.


 


8.5                                 Performance of
FMER and FMC.  Each of
FMER and FMC acknowledge and agree with SunTrust that each of them shall be
jointly and severally liable to SunTrust for any failure of either of them to
perform as required by the terms of this Agreement.


 


8.6                                 Licensing.  Each Party warrants that it will maintain
during the effectiveness of this Agreement the legal authority to conduct all
of the activities required to be conducted by it pursuant to the terms of this
Agreement.  As of the Execution Date,
FMER has applied for the licenses set forth on Exhibit J (the “FMER
License Applications”).  If the FMER
License Application in Massachusetts has not been approved prior to the
Effective Date, FMER shall not charge SunTrust the fee set forth Section 6.3.1
for any Loan for which any Borrower is a resident of Massachusetts until FMER
obtains its Massachusetts license.  If
the FMER License Application in New Jersey has not been approved prior to the
Effective Date, FMER shall not accept any Applications for which any Applicant
is a resident of New Jersey, until FMER obtains its New Jersey license.


 


ARTICLE 9.     COMPLIANCE
WITH REQUIREMENTS OF LAW.  Each
Party shall comply with all applicable Requirements of Law in all material
respects in performing its respective obligations under this Agreement.  Notwithstanding the foregoing, the Parties
acknowledge and agree that unless expressly 


 


36

















 


set
forth in the Agreement, neither FMER nor FMC makes any representation or
warranties regarding conformity of any loan servicing processes or loan product
terms or any forms, documents or disclosures with Requirements of Law.  With respect to all aspects of the Program
for which FMER and FMC make no express representations, including the Program
Guidelines, SunTrust shall be responsible for compliance of such aspect of the
Program with Requirements of Law.


 


ARTICLE 10.                      INSURANCE.


 


10.1                           FMC shall (on behalf of itself and its Affiliates)
at all times and at its sole cost and expense, keep in full force and effect
until one (1) year after termination of this Agreement, the insurance
coverage in amounts no less than what is specified on Exhibit H,
attached hereto and incorporated herein (“Insurance Requirements”).  All insurance policies or bonds required by
this Agreement will be issued by insurance companies with an A.M. Best
Rating of not less than “A1”, a Standard & Poor’s rating of not less
than “A-”, or a Moody’s rating of not less than “A3”.  Except as otherwise approved in writing by
SunTrust, FMC must also ensure that its Subcontractors comply with the
Insurance Requirements.  FMC shall also
maintain workers compensation insurance in compliance with all applicable
Requirements of Law.


 


10.2                           No insurance
policy shall be cancelled, amended or modified by FMC in any manner that
materially limits, restricts, or conditions the coverage provided, decreases
the amount of coverage or increases the deductible, or in any other way reduces
the coverage provided with the result that the Insurance Requirements are no
longer met, without the prior written consent of SunTrust, which shall not be
unreasonably withheld.  Cancellation,
amendment or modification of any insurance policy shall not relieve either FMC
of its continuing obligation to maintain insurance coverage in accordance with
the Insurance Requirements.


 


10.3                           FMC agrees to
waive, and will require its insurers to waive, all rights of subrogation
against SunTrust, its directors, officers, and Personnel as it relates to the
General Liability and Umbrella Liability policies required on Exhibit H.  On or
prior to the Effective Date, FMC will provide SunTrust with a certificate of
insurance evidencing such required coverage; provided that SunTrust reserves
the right to require FMC to deliver complete copies of FMC’s insurance policies
from time to time thereafter.  In
addition, SunTrust will be notified of any material change or cancellation of
such policies with at least thirty (30) days prior written notice.  Notwithstanding any other provision in this
Agreement, if FMC, at any time, neglects or refuses to maintain or
deliver evidence of the insurance required herein within a reasonable time
after SunTrust’s request, or should such insurance be canceled or materially
changed with the result that the Insurance Requirements are no longer met
without SunTrust’s consent, SunTrust will have the right to immediately
terminate this Agreement without penalty, subject to Section 18 hereof.


 


ARTICLE 11.                      INTELLECTUAL
PROPERTY.


 


11.1                           Except as
otherwise agreed to in writing by the Parties, in connection with the provision
of Services as specified in this Agreement, each Party shall retain all right,
title and interest in and to its intellectual property, Proprietary
Information, systems, software, programs, processes, technology, services,
methodologies, models, products, trademarks, service marks and any other
materials or rights, tangible or intangible (collectively, “Intellectual
Property”) and nothing shall or shall be construed to restrict, impair,
transfer, license, convey or otherwise alter or deprive either Party of any of
its rights or proprietary interests in its Intellectual Property, including any
modifications, enhancements or derivative works thereof.


 


11.2                           No Party may
use any other Party’s Intellectual Property for any purpose other than as
specified in this Agreement.  Upon
expiration or termination of this Agreement, all licenses granted by any Party
to the other shall immediately terminate without notice required, and each
Party shall return the other Party’s Intellectual Property and all copies or
derivative works made thereof, as specifically permitted hereunder.  


 


37

















 


Each
Party shall have no further rights or licenses to use the other Party’s
Intellectual Property or any such copies or derivative works, except as
specifically agreed between the Parties in writing.


 


11.3                           Nothing
contained in this Agreement shall be construed as granting to any Party any
right or license under any of the other Parties’ present or future patent
rights or copyrights, or as granting to any Party any right or license to use
for any purpose other than those purposes expressly stated herein any of the
other Parties’ information or any other information, materials or results
received, discovered, or produced by any Party in connection with the Services
performed for SunTrust.


 


ARTICLE 12.                      BOOKS
AND RECORDS; AUDIT RIGHTS


 


12.1                           Maintenance of
Books and Records.  Each Party
will keep proper books and records reflecting all of its activities and
transactions under this Agreement so that its financial statements can be
maintained in accordance with generally acceptable accounting practices.  Each Party shall maintain its books and
records relating to activities under this Agreement throughout the term hereof
and thereafter for such periods as are required under applicable Requirements
of Law or such Party’s policy, whichever is longer.


 


12.2                           Recordkeeping
Requirements.  FMER shall
retain the original Credit Agreement for each Loan (or a copy thereof in the
case of execution by fax or electronic signature as permitted in the Program
Guidelines), along with a complete copy of the Truth in Lending Disclosure
Statements (other than the Application and Solicitation Disclosure), income
verification, enrollment verification/certification of the Loan by the Eligible
Institution, credit bureau report, missing information notices, correspondence
from the Applicant(s), and all other documents and data related to the Loan,
whether originally sent to SunTrust (and forwarded to FMER) or to FMER.  FMER shall also retain records of the time
and date each Applicant acknowledges the Application and Solicitation
Disclosure and records of the content of the Application and Solicitation
Disclosure that each Applicant viewed at such date and time.  FMER will be responsible for the safe
maintenance of such Loan documentation and all records of Applicant Information
for at least seven (7) years from either the time the Loan is fully repaid
or the Loan is sold by SunTrust to a third party.


 


12.3                           Audit Rights.


 


12.3.1                  General Audits.  SunTrust shall have the right to review,
inspect and audit, at SunTrust’s expense, at such reasonable times as mutually
agreed by the Parties, and upon at least ten (10) Business Days’ advance
notice, the books, records, documents, other writings, information, whether in
hard copies, electronic form or otherwise, of FMC or any Affiliate thereto
performing Services to the extent related to: (i) such Party’s activities
hereunder or (ii) conformance with such Party’s obligations
hereunder.  Upon at least ten (10) Business
Days’ advance written notice to FMC, and subject to FMC’s reasonable security
requirements, FMC shall provide to SunTrust (and SunTrust’s internal and
external auditors, inspectors, regulators and other representatives that
SunTrust may designate from time to time) access at reasonable hours to FMC’s
Personnel, to the facilities at or from which Services are then being provided,
and to FMC’s records and other pertinent information, all to the extent
relevant to FMC’s obligations under this Agreement.  Such access shall be provided for the purpose
of performing audits and inspections of FMC and its businesses and to examine
FMC’s performance under this Agreement, including: (a) verifying the
integrity of data related to or concerning systems in FMC’s possession and
control; (b) examining the systems that process, store, support and
transmit such data; (c) examining the controls (e.g., organizational
controls, input/output controls, system modification controls, processing
controls, system design controls and access controls) and the security,
disaster recovery and back-up practices and procedures; (d) examining FMC’s
measurement, monitoring and management tools; and (e) enabling SunTrust to
meet applicable legal, regulatory and contractual requirements.  FMC shall provide any assistance reasonably
requested by SunTrust or its designee, and at SunTrust’s expense, in conducting
any such audit.  Such audit and any
information obtained therefrom shall be subject to the confidentiality 


 


38

















 


restrictions
contained in this Agreement and SunTrust shall be responsible for enforcing
such restrictions with respect to its internal and external auditors,
inspectors, regulators (to the extent permitted by Requirements of Law) and
other representatives.  SunTrust shall
also have the right to perform a monthly audit of Application and Loan files at
a time and using procedures mutually acceptable to FMER and SunTrust.


 


12.3.2                  Within five (5) Business
Days of receipt of any audit notice, FMC shall notify SunTrust, in writing, of
any objections to the scope of the review, inspection or audit or the
supporting documentation requested, it being understood that any objections
must be based upon a reasonable and documented belief that such review,
inspection, audit or documentation is not reasonably related to the obligations
of FMC or FMER under this Agreement or would require the disclosure of
Proprietary Information (other than information that is proprietary solely as a
result of this Agreement).  The Parties
shall cooperate in good faith to resolve objections with respect to any review,
inspection or audit proposed by SunTrust and such review, inspection or audit
shall not commence until such objections are resolved, unless sooner required
for compliance with a court order, civil investigation demand or other
Governmental Authority inquiry.  In the
event the Parties are not able to resolve such objections, the matter shall be
resolved in accordance with the procedures set forth in Article 17.


 


12.3.3                  Any review,
inspection or audit to be performed by SunTrust pursuant to this Section 12.3
shall be conducted only during normal business hours, using reasonable care not
to cause damage and not to interrupt the normal business operations of the
Party to be inspected.


 


12.4                           Regulatory
Agency Requirements.  FMC and
FMER understand and acknowledge that SunTrust is subject to examination by a
Governmental Authority with authority over SunTrust and its Affiliates.  FMC and FMER agree to cooperate fully with
any examination or inquiry by any such Governmental Authority at SunTrust’s
expense.  FMC and FMER further
acknowledge that SunTrust, as a regulated financial institution, is required to
engage in ongoing oversight of its relationship with FMC and FMER, including
reviewing such Parties’ compliance with Privacy Requirements, insurance
coverage, and performance under this Agreement. 
FMC and FMER agree to notify SunTrust promptly in writing in the event
it experiences any material adverse change, including material financial
difficulty, other catastrophic event, material change in strategic goals, or significant
staffing changes relative to its obligations under this Agreement.  With respect to audits and examinations
related to the Program to be performed on FMC and/or FMER by a Governmental
Authority with authority over SunTrust and its Affiliates, SunTrust shall
provide FMC with as much prior written notice as reasonably practicable;
provided, however, that the notice requirement of Section 12.3.1 shall not
apply to any such audit or examination.


 


12.5                           Regulatory
Audits.  Within ten (10) Business
Days of its receipt, FMC shall provide SunTrust with a copy of the final
written results of any audit performed by a Governmental Authority, unless such
results are confidential under Requirements of Law; it being understood that
FMC shall not be required to disclose the results of any examinations conducted
by, or correspondence with, the U.S. Office of Thrift Supervision (“OTS”) that
are deemed confidential by the OTS.  If
any audit results in FMC being notified that it is not in compliance with any
Requirements of Law, or relevant and generally accepted accounting principle or
other material audit requirement related to the Services, FMC shall immediately
notify SunTrust and confer with SunTrust to determine the merits of the alleged
violation and the appropriate response. 
In the event the Parties conclude that the auditor’s or regulator’s
notice of violation is accurate, in whole or in part, FMC shall promptly use
commercially reasonable efforts to comply with such audit to the extent that
the alleged violations are deemed accurate by the Parties at no cost to
SunTrust.


 


ARTICLE 13.                      PRIVACY
AND SECURITY POLICIES


 


13.1                           Privacy and
Security.                                FMC’s privacy
and security policies, as of the Execution Date, are attached hereto and
incorporated herein as Exhibit I. 
FMC reserves the right to modify its privacy and 


 


39

















 


security
policies in its reasonable discretion from time to time by notice, in writing,
to SunTrust; provided, however, that any modifications that materially
adversely affect SunTrust’s rights or interests must be approved in advance and
in writing by SunTrust before FMC implements such modifications. Within ten (10) Business
Days after receipt of a modification notice from FMC, SunTrust shall notify FMC
as to whether it believes the proposed modifications will materially adversely
affect SunTrust’s rights or interests. 
If SunTrust notifies FMC that the proposed modifications will materially
adversely affect SunTrust’s rights or interests, SunTrust and FMC shall confer
regarding how such proposed modifications may be altered so that they would not
materially adversely affect SunTrust’s rights or interests.  In the event SunTrust and FMC are unable to
reach agreement on proposed modifications within sixty (60) days after the date
of FMC’s original notice, the dispute shall be resolved using the procedures
set forth in Article 17.


 


ARTICLE 14.                      CONFIDENTIALITY
OF PROPRIETARY INFORMATION.


 


14.1                           Proprietary
Information Access or Exchange.  In the performance of this Agreement, each
Party may disclose to the other Party certain Proprietary Information.


 


14.2                           Definitions.  For the purposes of this Agreement, the
following terms will have the definitions set forth below.


 


14.2.1                “Proprietary
Information” means Trade Secrets, Confidential Business Information, and
NPPI.


 


14.2.2                  “Trade
Secrets” means trade secrets as defined under Georgia law, as amended from
time to time, and will include without limitation and without regard to form,
technical or non-technical data, formulae, patterns, compilations, programs,
software programs, devices, methods, techniques, drawings, processes, financial
data, financial plans, product plans, non-public forecasts, studies,
projections, analyses, all customer data of any kind, lists of actual or
potential customers, business and contractual relationships, or any other
information similar to the foregoing that: (a) derives economic value,
actual or potential, from not being generally known and not being readily
ascertainable by proper means to other persons who can obtain economic value
from its disclosure or use; and (b) is the subject of efforts that are
reasonable under the circumstances to maintain its secrecy.  For the sake of clarity, “Trade Secrets” will
include information provided to any Party by any third parties, which such
Party is obligated to hold in confidence.


 


14.2.3                  “Confidential
Business Information” means (a) any valuable, secret business
information, other than Trade Secrets, that is designated or identified as confidential
at the time of the disclosure or is by its nature clearly recognizable as
confidential information to a reasonably prudent person with knowledge of the
Disclosing Party’s business and industry, and (b) for purposes of this
Agreement, FMC Custom Model Property.


 


14.2.4                  “NPPI”
means non-public, personally identifiable information of SunTrust’s customers,
SunTrust Personnel or other individuals, which has been provided to SunTrust by
such persons or their representatives.


 


14.2.5                   “Disclosing
Party” means the Party disclosing any Proprietary Information hereunder,
whether such disclosure is directly from or through the Disclosing Party’s
Personnel.


 


14.2.6                  “Receiving
Party” means the Party receiving any Proprietary Information hereunder,
whether such disclosure is received directly from or through the Receiving
Party’s Personnel.


 


14.3                           Exclusions.  Notwithstanding the definition of Proprietary
Information above, Proprietary Information does not include any information
that: (a) was in the Receiving Party’s possession before being disclosed
to it by the Disclosing Party without a duty of confidentiality on the
Receiving Party; (b) 


 


40

















 


is or becomes a matter of public knowledge through
no fault of the Receiving Party; (c) is rightfully received by the
Receiving Party from a third party without a duty of confidentiality; (d) is
disclosed by the Disclosing Party to a third party without a duty of
confidentiality on the third party; (e) is independently developed by the
Receiving Party without use of or reference to the Disclosing Party’s
Proprietary Information; or (f) is disclosed by the Receiving Party with
the Disclosing Party’s prior written approval without a duty of confidentiality
on the Party making such disclosure or the third party to which disclosure is
authorized.  In addition, notwithstanding
anything else contained in this Article 14 or this Agreement, nothing in
this Article 14 will be construed to prohibit disclosure of any
information to regulatory agencies, rating agencies, attorneys, accountants,
servicers and/or consultants of a Party, and/or the employees and agents of any
of the foregoing, who are obliged to respect the confidentiality thereof.


 


14.4                           Ownership and Restrictions on Use.  The Receiving Party acknowledges and agrees
that except to the extent otherwise expressly provided herein, the Proprietary
Information of the Disclosing Party will remain the sole and exclusive property
of the Disclosing Party or a third party providing such information to the
Disclosing Party, and the disclosure of such information to the Receiving Party
does not confer upon it any license, interest, or right of any kind in or to
the Proprietary Information, except as provided under this Agreement.  At all times and notwithstanding any
termination or expiration of this Agreement, the Receiving Party agrees that it
will:  (a) hold in strict confidence
and not disclose to any third party the Proprietary Information of the
Disclosing Party, except as approved in writing by the Disclosing Party; (b) only
permit access to the Proprietary Information of the Disclosing Party to those
of its Personnel who have a need to know and have signed confidentiality
agreements or are otherwise bound by confidentiality obligations substantially
similar to those contained in this Agreement; (c) be responsible to the
Disclosing Party for any third party’s use and disclosure of the Proprietary
Information provided to such third party by the Receiving Party; (d) only
use Proprietary Information that it receives to carry out the purposes of the
Agreement and for no other purpose whatsoever; and (e) use at least the
same degree of care it would use to protect its own Proprietary Information of
like importance, but in no event less than a reasonable degree of care,
including maintaining information security standards for such Proprietary
Information as are commercially reasonable and customary for the type of
information.  Specifically, with regard
to NPPI, FMC and FMER will comply with the information security standards
specific to such information set forth in this Agreement.  No Party will communicate any information to
the other Party in violation of the proprietary rights of any third party.


 


To
the extent FMC or FMER delivers or is required to deliver to SunTrust any FMC
Custom Model Property, FMC shall own all right, title and interest (including
all trademarks, trade secrets, copyrights, patents and any other intellectual
property rights) in such FMC Custom Model Property.  In addition, FMC may use the data collected
in activities conducted pursuant to this Agreement to prepare, develop, or
modify FMC Custom Model Property, provided, however, that such FMC Custom Model
Property does not include Consumer Information, which may be used to perform
analysis but shall not be included in reports, studies or other FMC Custom
Model Property except on an aggregated and de-identified basis.  In consideration of its obligations under
this Agreement, FMC shall own all right, title and interest in and to all FMC
Custom Model Property.  FMC Custom Model
Property shall not constitute a “work made for hire” as that term is defined in
the federal Copyright Act.  FMC may use
FMC Custom Model Property for any lawful purpose, including in support of other
loan programs, during the term of the Agreement and following termination of
the Agreement.


 


14.5                           Required Disclosures.  If the Receiving Party is required by a
Governmental Authority or law to disclose any of the Proprietary Information of
the Disclosing Party, the Receiving Party must, if legally permissible: (a) first
give written notice of such required disclosure to the Disclosing Party; (b) make
a reasonable effort to obtain a protective order requiring that the Proprietary
Information so disclosed be used only for the purposes for which disclosure is
required; (c) take reasonable steps to allow the Disclosing Party to seek
to protect the confidentiality of the Proprietary Information required to be
disclosed; and (d) disclose only that part of the Proprietary Information
which, in the opinion of its legal 


 


41

















 


counsel, it is required to disclose.  The foregoing requirements will not apply and
are not intended to limit any Party’s ability to fully comply with requests for
information from regulators or the Internal Revenue Service, as permitted by
the last sentence of Section 14.3.


 


14.6                           Notice of Unauthorized Disclosures.  Each Party to this Agreement will immediately
notify the other Parties in writing upon discovery of any loss or unauthorized
disclosure of the Proprietary Information of the other Parties.


 


14.7                           Limit on Reproductions.  The Receiving Party will not reproduce the
Disclosing Party’s Proprietary Information in any form except as reasonably necessary
to fulfill such Party’s duties and obligations and otherwise comply with the
agreements of such Party under this Agreement. 
Any reproduction of any Proprietary Information by the Receiving Party
will remain the property of the Disclosing Party and will contain any and all
confidential or proprietary notices or legends that appear on the original,
unless otherwise authorized in writing by the Disclosing Party.


 


14.8                           Document Destruction — Information Erasure.  Except as otherwise set forth in this Agreement,
upon the earlier of:  termination of this
Agreement, the written request of the Disclosing Party, or when no longer
needed by any Party for fulfillment of its obligations under this Agreement,
each Receiving Party will either: (a) promptly return to the Disclosing
Party all documents and other tangible (including electronic) materials
containing the Disclosing Party’s Proprietary Information, including all copies
thereof in its possession or control; or (b) erase or destroy all such
materials by the following methods.  If
return, erasure, or destruction is not feasible, then the Receiving Party may
maintain the Disclosing Party’s Proprietary Information in compliance with the
requirements of the confidentiality and information security provisions of this
Agreement; provided, however, that when the return, destruction, or erasure of
any such materials becomes feasible for the Receiving Party, the Receiving
Party must comply with the requirements of (a) or (b) above within
sixty (60) calendar days.  Notwithstanding
the foregoing, SunTrust understands and agrees that FMC or FMER shall maintain
encrypted, archived back-up tapes stored at a secure, offsite location that
include transaction history received in connection with the Services and this
Agreement and related documents and records for purposes of internal and
external auditing of controls and recordkeeping requirements.


 


	
  TYPE OF PROPRIETARY INFORMATION 

  STORED OR USED

  	
   

  	
  DESTRUCTION METHOD

  
	
  Hard Copy

  	
   

  	
  Shredding, pulverizing, burning, or other suitable
  destruction method so that any Proprietary Information is not readable at all
  and cannot be reassembled or reconstructed in any way so that it is
  practicably readable.

  
	
  Electronic Tangible Media, such as CDs, Disks,
  Tapes

  	
   

  	
  Destruction or erasure of such media so that any
  Proprietary Information is not readable at all and cannot be reassembled or
  reconstructed in any way so that it is practicably readable.

  
	
  Hard Drive Storage or similar Computer or Device
  Storage

  	
   

  	
  Erasure or elimination of Proprietary Information
  from such device so that any Proprietary Information is not readable at all
  and cannot be reassembled or reconstructed in any way so that it is
  practicably readable.

  



 


14.9                           Equitable Relief.  If any Party should breach or threaten to
breach any provision of this Article  14 of the Agreement, the
non-breaching Party, in addition to any other remedy it may have at law or in
equity, will be entitled to seek a restraining order, injunction, or other
similar remedy in order to 


 


42

















 


specifically enforce the provisions of this
Agreement.  Each Party specifically
acknowledges that money damages alone would be an inadequate remedy for the
injuries and damages that would be suffered and incurred by the non-breaching
Party as a result of a breach of any provision of this Agreement.  In the event that any Party should seek an
injunction hereunder, the other Parties hereby waive any requirement for the
submission of proof of the economic value of any Proprietary Information or the
posting of a bond or any other security.


 


14.10                     Survival.  Notwithstanding any termination of this
Agreement, all of the Receiving Party’s nondisclosure and use obligations
pursuant to this Article 14 will survive:  (a) for three (3) years
after termination with respect to any Confidential Business Information
received prior to such termination, other than the FMC Custom Model Property,
for which the Receiving Party’s nondisclosure and non-use obligations pursuant
to this Article 14 will survive indefinitely;  (b) with respect
to Trade Secrets, for so long as such information continues to constitute a
trade secret under Requirements of Law; and (c) with respect to NPPI, for
so long as required by applicable state and federal laws.


 


14.11                     Prior Agreements.  The provisions set forth in this Agreement
supersede any previous agreement between the Parties relating to the protection
of any Proprietary Information.


 


14.12                     Information related to Tax Structure and Treatment.  It is the Parties’ mutual intent
that the tax structure and tax treatment of the transactions contemplated by
this Agreement will not be confidential and, that notwithstanding anything
herein to the contrary, each Party and its Personnel may disclose to any and
all Persons of any kind, the tax structure and tax treatment of the
transactions contemplated herein such that the transactions will be treated as
not having been offered under conditions of confidentiality for purposes of Section 1.6011-4(b)(3) (or
any successor provision) of the Treasury Regulations promulgated under Section 6011
of the Internal Revenue Code of 1986, as amended, and any comparable provision
in the law of any other jurisdiction.


 


ARTICLE 15.                      INFORMATION
SECURITY.


 


15.1                           General
Requirements.  FMC will
provide information, data back-up procedures, and information security so as to
reasonably ensure that any Proprietary Information provided by or for SunTrust
is not lost, stolen, modified, disclosed to or accessed by any other party
(other than those permitted parties under Article 14 of this Agreement)
without SunTrust’s prior written approval. 
Such security measures will equal or exceed standard industry practices
for similar entities dealing with Proprietary Information.  FMC warrants to SunTrust that FMC will
reasonably monitor, evaluate and adjust its information security systems and
procedures, its data security systems, and its processes in response to
relevant changes in technology, changes in the sensitivity of any SunTrust
Proprietary Information, as reasonably determined by SunTrust, and internal and
external threats to information security. 
FMC will promptly notify SunTrust of: (a) any unauthorized
possession, use, or knowledge or attempt thereof, of the data-processing files,
transmission messages, or other SunTrust Proprietary Information by any person
or entity that may become known; (b) the effect of such; and (c) the
corrective action FMC has taken in response thereto.


 


15.2                           FMC Encryption.  FMC represents and warrants that, to the
extent FMC will be placing, and retaining SunTrust Proprietary Information on
the following types of devices, FMC will encrypt with whole disk encryption all
laptop computers maintaining SunTrust Proprietary Information on such
devices.  To the extent personal digital assistants (PDAs) do not
contain or provide access to Consumer Information, PDAs may be
password-protected. Other portable devices (including, but not limited to,
thumb drives) must be encrypted and files on portable media (including, but not
limited to, tapes and CDs) must be encrypted.  All encryption must meet a
minimum standard of Advanced Encryption Standard (AES) algorithm with a minimum
key strength of 256-bit.


 


15.3                           Information
Security Audits.  During the
term of this Agreement, and for one (1) year following termination:


 


43














 


15.3.1                  Audit Scope.  Solely with respect to SunTrust Proprietary
Information, to assess the effective protection of such information, SunTrust
will have the right to conduct remote or on-site audits of FMC, at SunTrust’s
discretion and expense (except as set forth below), to review the information
and data security systems and procedures and processes of FMC (collectively,
the “Security Systems”) at any time during FMC’s regular business hours,
upon no less than ten (10) Business Days prior written notice to
FMC.  Testing conducted will be performed only on ports of application
hosts, operating systems, and web server software utilized in the course of
performing Services for SunTrust. 
Testing will emulate tactics used by outside attackers with and without
knowledge of specific applications, and with malicious intent, however, no such
tactic shall interrupt services (e.g., denial of service attacks).  Testing will not include the following
actions or methods: changes to assigned user passwords; telephone modem probes
and scans (active and passive); intentional viewing of email content, internet
caches, and/or cookie files; or DoS attacks (smurf, land, SYN flood, etc.).  Such audits and reviews may be performed by
SunTrust, its agent, or an independent third party bound by a nondisclosure
provision substantially similar to that set forth above in this Agreement, and
may include reasonable testing of the Security Systems, including periodic
vulnerability scans.  Upon request, SunTrust shall provide to FMC the results
of, and any data obtained from, such vulnerability assessment. Any such
information security tests will be scheduled by mutual agreement of the
Parties.  FMC will provide SunTrust with such reasonable assistance and
information as may be necessary for the performance of such testing.  SunTrust will use reasonable,
industry-standard precautions to prevent or minimize any risks to FMC’s
Security Systems that may be associated with such testing, and the Parties will
cooperate in structuring the testing so as to avoid harming the rights and
interests of FMC or any third parties. 
FMC agrees to promptly grant reasonable access to logs, policies,
records, other materials, and FMC Personnel reasonably required for
SunTrust to perform the audit.  SunTrust will reasonably determine the
extent and methodology of the testing subject to the approval of FMC, such
approval not to be unreasonably withheld.  Further, FMC agrees to make
available to SunTrust the results of any third party’s or its own testing,
monitoring and auditing of such Security Systems; provided, however, that FMC
will not be required to make available any such results which would breach
confidentiality obligations between FMC and any third party.  To the extent that any system data or
information is obtained by SunTrust in the course of such assessment, such data
or information shall be Confidential Business Information of FMC and FMER, and
SunTrust shall treat it in accordance with Article 14.  In no event shall SunTrust retain any code
from FMC’s or FMER’s systems or decompile, disassemble, or reverse engineer any
such code, in whole or in part.  Neither
SunTrust nor its representatives shall introduce any malicious or unauthorized
code (virus, Trojans, worms, trap door, etc.) or undisclosed features into
FMC’s or FMER’s systems intending to disable, deactivate, interfere with or
otherwise harm such systems or data or provide access not authorized by FMC or
FMER.


 


15.3.2                  Audit Finding / Remediation.  Should such an audit, test or review reveal
that the Security Systems or the contemplated Services do not effectively
protect any SunTrust Proprietary Information, then FMC will prepare and present
to SunTrust within thirty (30) days of receipt of the relevant audit, test, or
review finding a remediation plan, including proposed modifications of the
Security Systems, the cost, proposed allocation of such costs among the
Parties, and deadlines to meet the information security requirements of
SunTrust, its regulators, and the provisions of Requirements of Law.  Should the Parties be unable to agree to a
remediation plan within thirty (30) days of FMC’s preparation and presentation
of such plan to SunTrust pursuant to the previous sentence, or shall FMC or
FMER, as applicable, be unable to complete and install adequate modifications
(as set forth in the plan of remediation)  within the
deadline set forth in any such plan of remediation, then any Party shall be
entitled to immediately terminate this Agreement for cause as provided in Section 18.2.7.


 


44

















 


15.3.3                  Audit Costs.  Prior to the initiation of any audit or
review as permitted under this Agreement, the Parties will discuss and mutually
agree upon a reasonable estimate of the total costs of the audit, which Party
will bear these costs, and the payment schedule for such costs.  SunTrust
will reimburse FMC’s reasonable incremental direct expenses associated with the
audit (e.g., reasonable copy charges or other reasonable standard expenses),
but not any other expenses, such as a charge for access to FMC Personnel or
other sources of information.  It is the intent of the Parties that
SunTrust bear the agreed upon cost of any such audit as described in this Article 15,
unless a substantial and previously unknown security breach is identified as a
result of such audit.


 


15.4                           Procedures for
Security Breaches.  In the
event FMC and/or FMER, as applicable, knows or reasonably believes that there
has been any unauthorized access or attempted unauthorized access to Proprietary
Information of SunTrust or Consumer Information in the possession or control of
FMC or FMER, as applicable, that compromises the security, confidentiality or
integrity of such Proprietary Information or Consumer Information, FMC or FMER,
as applicable, shall take the following actions:


 


(a)               immediately notify SunTrust
of such unauthorized access or attempted unauthorized access;


 


(b)              take reasonable
steps to remedy the circumstances that permitted any such unauthorized access
to occur;


 


(c)               take reasonable
steps to prohibit further disclosure of Proprietary Information or Consumer
Information;


 


(d)              upon request,
cooperate with SunTrust or its agents to investigate the scope and content of
the unauthorized access; and


 


(e)               take corrective
action as required by SunTrust in its sole discretion as related to SunTrust
Consumer Information.


 


ARTICLE 16.                      INDEMNIFICATION;
EXCLUSIONS FROM LIABILITY


 


16.1                           Mutual General
Indemnity.


 


Subject
to the conditions set forth in Section 16.4 and the limitations in Section 16.6,
each Party will indemnify, defend, and hold the applicable Indemnified Parties
harmless from and against any and all damages (including any and all third party claims against
such Indemnified Party and damages resulting therefrom, whether ordinary,
direct, indirect, incidental, special, consequential, or exemplary), judgments,
liabilities, fines, penalties, losses, claims, actions, demands, lawsuits,
costs, and expenses including reasonable attorneys’ fees (collectively, “Damages”)
incurred by such Indemnified Parties that arise out of or relate to any:


 


(a)                                  gross
negligence, willful misconduct or fraud of the Indemnifying Party;


 


(b)                                 breach of the
Indemnifying Party’s confidentiality or information security obligations under
this Agreement;


 


(c)                                  breach of the
Indemnifying Party’s representations or warranty obligations or covenants under
this Agreement; and


 


(d)                                 failure by the
Indemnifying Party to comply with Requirements of Law applicable to it or with
the Program Guidelines,


 


provided,
however, that in the case of any Damages resulting from a breach or failure
described in Section 16.1(b), Section 16.1(c) or Section 16.1(d),
no Indemnified Party shall be entitled to indemnification under this Article 16
to the extent that such breach or failure occurred as a result of or in 


 


45

















 


connection
with the willful misconduct or fraud of an Indemnified Party, any failure of
any representation or warranty made by an Indemnified Party in or pursuant to
this Agreement to be true and correct, the non-fulfillment or non-performance
of any covenant or obligation of an Indemnified Party contained in this
Agreement, or the failure by an Indemnified Party to comply with Requirements
of Law applicable to it or with the Program Guidelines.


 


For
purposes of this Article 16, the acts or omissions of a Party’s Personnel
will be deemed the acts or omissions of such Party.


 


16.2                           FMC
Infringement Indemnity.


 


FMC,
at its expense, will defend, indemnify, and hold each SunTrust Indemnified
Party harmless from and against any and all Damages that arise out of or relate
to third party claims against a SunTrust Indemnified Party associated with
SunTrust’s use of any FMC Intellectual Property and the infringement by such
FMC Intellectual Property of such third party’s patent, trade secret,
copyright, or trademark or other intellectual property right.  For purposes of this Section 16.2 and Section 16.3
only, “FMC Intellectual Property” will include the following:  FMC’s custom and proprietary credit scoring
model and the Online Application System.


 


16.3                           Specific
Conditions and Additional Remedies Associated with FMC’s Infringement Indemnity.


 


16.3.1                  Additional
Remedies.                              In the event a
court of competent jurisdiction makes a determination that any FMC Intellectual
Property infringes or otherwise violates any third party intellectual property
right, or if FMC determines that any FMC Intellectual Property likely infringes
or otherwise violates such third party’s intellectual property right, FMC, at
its option and sole expense, in addition to the indemnification obligation set
forth above, will:


 


16.3.1.1
modify the infringing portion of any FMC Intellectual Property so as to make it
non-infringing and non-violating, while maintaining equivalent functionality
that is reasonably satisfactory to SunTrust;


 


16.3.1.2
replace the infringing portion of any FMC Intellectual Property with a
non-infringing and non-violating solution having equivalent functionality that
is reasonably satisfactory to SunTrust; or


 


16.3.1.3
obtain the right for SunTrust to continue using the infringing or violating
portion of FMC Intellectual Property.


 


16.3.2                  Conditions.                                  FMC’s
intellectual property infringement indemnity obligations will not apply to the
extent of any applicable third party claim resulting solely from:


 


16.3.2.1
modifications to any FMC Intellectual Property by any party other than FMC or
its authorized Personnel that are made without FMC’s written approval and only
to the extent such modifications caused the infringement or violation;


 


16.3.2.2
the combination of any FMC Intellectual Property with other products,
processes, or materials prohibited by FMC in the applicable specifications if,
but for such other products, processes, or materials, the infringement would
not have occurred; or


 


16.3.2.3
SunTrust’s use of any FMC Intellectual Property other than in accordance with
the terms and conditions of this Agreement or the applicable specifications
relating to such FMC Intellectual Property.


 


16.4                           General Conditions on Indemnity Obligations.  Each
potential Indemnifying Party’s obligations under this Agreement will be subject
to the Indemnified Party: (a) promptly, after receipt of
any written claim, notice of any action giving rise to a claim for indemnification
or the discovery by such Indemnified Party of any Damages that may give rise to
a claim for indemnification, providing the
Indemnifying Party 


 


46

















 


notice of the claim, action or Damages (provided that failure to so notify the
potential Indemnifying Party will not relieve the potential Indemnifying
Party of its indemnification obligations, except to the extent that the
potential Indemnifying Party’s ability to defend against the claim or event
with respect to which indemnification is sought is adversely affected by the
failure of the potential Indemnified Party to give prompt notice as required by
this Section); (b) providing reasonable cooperation and assistance
in the defense or settlement of any claim; and (c) granting the
Indemnifying Party control over the
defense and settlement of the same (provided that any
Indemnified Party shall be entitled to participate in the defense and
settlement of the claim and to employ counsel at its own expense to assist in
the handling of the claim; and provided further that the Indemnified Party does
not invoke its retained right to defend as stated below).


 


The Indemnifying Party will not agree to any
settlement which results in an admission of liability by the Indemnified Party
without the Indemnified Party’s prior written consent.


 


16.5                           Reservation of
Right to Defend.  If either
SunTrust, on the one hand, or FMC or FMER, on the other hand, as an Indemnified
Party, reasonably determines that the Indemnifying Party has failed to
diligently assume and maintain a prompt and vigorous defense of any claim to
which Indemnified Party is entitled to indemnification hereunder and with
respect to which the conditions set forth in Section 16.4 have been
satisfied, either SunTrust, on the one hand, or FMC or FMER, on the other hand,
as an Indemnified Party, may, at its own expense, option and discretion, assume
sole control of the defense of any claim and all related settlement
negotiations with counsel of its own choosing and without waiving any other
rights to indemnification.  If SunTrust
or FMC and/or FMER, as applicable, provides sufficient evidence to support its
right to defend pursuant to this Section, the Indemnifying Party will pay all
costs and expenses (including reasonable attorneys’ fees) incurred by such
Indemnified Party in such defense. 
Notwithstanding anything to the contrary in the foregoing, SunTrust or
FMC and/or FMER, as applicable, will not accept any settlement on behalf of the
Indemnifying Party that results in an admission of liability by the
Indemnifying Party without the Indemnifying Party’s express written consent.


 


16.6                           Exclusions from
Liability.


 


16.6.1                  Except for each Party’s
respective indemnification obligations in respect of third party claims against
an Indemnified Party, in no event shall any Party be liable for indirect,
incidental, special, consequential, or exemplary or punitive damages (or any
comparable category or form of such damages, howsoever characterized in any
jurisdiction), regardless of the form of action, whether in contract, tort,
strict liability or otherwise, and even if foreseeable or if such Party has
been advised of the possibility of such damages.


 


16.6.2                  The limitation of liability
provisions of Section 16.6.1 do not apply to liability that is the result
of the Party seeking to limit its liability hereunder in connection with (i) a
breach of its confidentiality, privacy or security obligations contained in
this Agreement (including with respect to any Consumer Information or NPPI, or
any Intellectual Property or other Proprietary Information of another Party to
this Agreement), (ii) such Party’s violation of Requirements of Law or (iii) such
Party’s fraud or willful misconduct.


 


16.6.3                  SunTrust acknowledges and
agrees that any liability of FMC and/or FMER hereunder to SunTrust or any of
its Affiliates for Damages in any way related to a Loan that is purchased by
FMC pursuant to Section 5 shall be reduced in proportion to the Purchase
Price of any such Loan that is purchased by FMC or any of its Affiliates
pursuant to Section 5.


 


16.7                           Exclusive
Remedies.  EXCEPT IN
CONNECTION WITH (I) THE OTHER PARTY’S FRAUD, WILLFUL MISCONDUCT OR GROSS
NEGLIGENCE, (II) A PARTY’S EXERCISE OF EQUITABLE REMEDIES AVAILABLE TO IT,
(III) THE RIGHTS OF SUNTRUST PURSUANT TO SECTION 5 OR (IV) A
PARTY’S RIGHT TO SET OFF AMOUNTS PAYABLE TO THE OTHER PARTY AGAINST AMOUNTS
OWED TO IT BY SUCH OTHER PARTY, IT IS UNDERSTOOD 


 


47

















 


AND
AGREED THAT THE INDEMNIFICATION OBLIGATIONS OF A PARTY SET FORTH IN THIS ARTICLE 16
CONSTITUTE THE SOLE AND EXCLUSIVE REMEDIES OF A PARTY AGAINST ANY OTHER PARTY
HERETO IN RESPECT OF THIS AGREEMENT OR THE SUBJECT MATTER HEREOF.


 


ARTICLE 17.                      DISPUTE
RESOLUTION


 


17.1                           Except as
otherwise expressly set forth in this Agreement, the Parties agree that any
dispute arising in connection with the interpretation of this Agreement or the
performance of either Party under this Agreement or otherwise relating to this
Agreement will be treated in accordance with the procedures set forth in this Article 17,
prior to the resort by either Party to arbitration or litigation in connection
with such dispute.  The dispute will be referred for resolution first to a
Senior Vice President for SunTrust, and the General Counsel or Chief Financial
Officer for FMC.  Such procedure will be invoked by either Party
presenting to the other Party a Notice of Request for Resolution of Dispute (a “Notice”)
identifying the issues in dispute sought to be addressed hereunder.  A telephone or personal conference of those
executives will be held within ten (10) Business Days after the delivery
of the Notice.  In the event that the telephone or personal conference
between these executives does not take place or does not resolve the dispute,
either Party may refer the dispute to binding arbitration pursuant to the
arbitration provisions set forth below.


 


17.2
                        Except as
otherwise expressly set forth in this Agreement and except for actions for
equitable relief, all claims or disputes between the Parties arising out of or
relating to this Agreement will be decided by arbitration pursuant to the
Commercial Arbitration Rules of the American Arbitration Association in
effect at the time of the claim or dispute and in accordance with Title 9 of
the United States Code.  Notice of the demand for arbitration must be
provided in writing to the other Party and must be made within a reasonable
time after the dispute has arisen.  If the amount claimed to be in dispute
is equal to or greater than Two Hundred Fifty Thousand Dollars ($250,000), then
the arbitration will be decided by a panel of three (3) arbitrators
selected under the Commercial Arbitration Rules of the American
Arbitration Association.  If the amount
claimed to be in dispute is less than that amount, then the arbitration will be
decided by one (1) arbitrator selected pursuant to the same rules. 
Said arbitration will occur within sixty (60) calendar days after the Party
demanding arbitration delivers the written demand on the other Party, unless
the Parties mutually agree otherwise in writing.  The award rendered by
the arbitrators will be final and specifically enforceable under Requirements
of Law, and judgment may be entered upon it in any court having jurisdiction
thereof.  No arbitration arising out of or relating to this Agreement may
include, by consolidation, joinder or in any other manner, any Person not a
Party to this Agreement.  Neither Party will appeal such award nor seek
review, modification, or vacation of such award in any court or regulatory
agency.


 


17.3                           The arbitrators
will award to the prevailing Party, if any, as determined by the arbitrators,
all of its Costs and Fees.  “Costs and Fees” mean all reasonable
pre-award expenses of the arbitration, including the arbitrators’ fees,
administrative fees, travel expenses, and out-of-pocket expenses, such as
copying, telephone, court costs, witness fees and attorneys’ fees.


 


17.4                           No provision of
this Article 17 shall limit the right of any Party to this Agreement to
seek to exercise any equitable remedies available to it (whether available in a
court of law or a court of equity), exercise self-help remedies such as setoff,
or obtain provisional or ancillary remedies from a court of competent
jurisdiction before, after, or during the pendency of any arbitration or other
proceeding.  The exercise of a remedy
does not waive the right of either party to resort to arbitration.


 


17.5                           Permissible
Legal Proceedings. 
Notwithstanding anything contained in this Article 17, (a) a
Party may institute legal proceedings to seek a temporary restraining order or
other temporary or preliminary injunctive relief to prevent immediate and
irreparable harm to such Party, and for which monetary damages would be
inadequate, pending final resolution of the dispute, controversy or claim 


 


48

















 


pursuant
to arbitration, and (b) a Party may institute legal proceedings if
necessary to preserve a superior position with respect to other creditors.  Such conduct shall not constitute a waiver of
the right of either party to resort to arbitration to obtain relief other than
that specified in this Section 17.5.


 


ARTICLE 18.                      TERM
AND TERMINATION


 


18.1.1                  Effective Date.  This Agreement shall be effective following
the satisfaction or waiver of each of the conditions set forth in this Section 18.1.1(a) through
(g) (the “Effectiveness Conditions”).  Each of the Parties covenants and agrees with
each other Party to act in good faith and use its best efforts to work
diligently to satisfy of all of the Effectiveness Conditions and thereafter
execute and deliver the Effective Date Communication at the earliest
practicable date.  Upon the satisfaction
or waiver of each and every Effectiveness Condition, the Parties shall establish
the Effective Date of this Agreement in a writing signed by all Parties (the “Effective
Date Communication”).  Until the
execution of the Effective Date Communication by each of the Parties, no Party
shall have any of the rights set forth in this Agreement or any obligation to
perform any of the duties, covenants or other agreements set forth in this
Agreement, or otherwise be subject to any of the restrictions contained herein,
other than (i) the obligations to act in good faith and use its best
efforts to work diligently to satisfy of all of the Effectiveness Conditions at
the earliest practicable date, and any other provisions of this Section 18.1.1,
(ii) all applicable obligations with respect to any Confidential Business
Information or Proprietary Information of the other Party or any Consumer
Information hereunder, including obligations and restrictions pursuant to
Articles 11, 13, 14, 15 and 19 with respect to any such information or other
materials that a Party is provided or to which it otherwise has access prior to
the Effective Date, (iii) the representations and warranties of the
Parties set forth in Section 8.1, and (iv) Article 16, in
connection with any Party’s breach of any of its respective representations or
warranties set forth in Section 8.1, or its failure to perform any
covenant or obligation, set forth in any of the Articles or Sections referenced
in Section 18.1.1(ii) above.


 


The Effectiveness Conditions are:


 


(a) Each of SunTrust, FMC, and the Servicer shall have executed
the Servicing Agreement, including Servicing Guidelines satisfactory to
SunTrust, FMC, and the Servicer;


 


(b) Each of SunTrust and FMC shall have executed the Participation
Account Deposit Agreement;


 


(c) The Parties’ written approval of the Program Guidelines,
including the forms of Credit Agreements and Truth-in-Lending Disclosures;


 


(d) The execution of documents establishing and governing the
purchase of Charged Off Loans by MG Student Loan Trust 2010-1;


 


(e) SunTrust’s written approval of the Online Application System,
including processes for complying with Title X;


 


(f) SunTrust’s written approval of the FMC Website and FMC
Materials; and


 


(g) Complete execution of the TransUnion Addendum in a form
substantially similar to attached Exhibit C.


 


If the Effectiveness Conditions are not satisfied or waived prior to September 1,
2010 as evidenced by the Parties’ execution of the Effective Date Communication
prior to such date, then this Agreement may be automatically terminated by any
Party on such date pursuant to this Section 18.1.1 and no Party shall have
any further obligation under this Agreement except for any such obligation
hereunder that is intended to survive the termination of this Agreement.  The provisions of Section 18.1.1(ii), (iii) and
(iv), to the extent applicable, and any other provisions hereof referenced
therein or otherwise necessary to the interpretation of any such provisions,
shall survive any termination of this Agreement as a result of the failure of
the Effectiveness Conditions to be satisfied or waived prior to September 1,
2010.


 


49

















 


18.1.2                  Term of Agreement.  Subject to Section 18.1.1 and this Section 18.1.2,
this Agreement and the Services contemplated hereby shall commence on the
Effective Date and shall continue through the earlier of two (2) years
after the Effective Date or the date on which the Participation Cap is reached,
unless earlier terminated pursuant to the provisions of this Section (the “Term”);
provided, however, that notwithstanding the expiration of the Term or
termination of Loan Processing Services, the Program Administration Services
and Program Support Services set forth in Article 4 shall continue to be
provided, and the associated fees and compensation to FMC and/or FMER therefor
shall continue to accrue and become payable for such Services, for all periods
through the month following the month during which the principal and interest
of each Loan have been fully paid and remitted to SunTrust (the “Final
Services Termination Period”). 
Notwithstanding the foregoing, if the Agreement is terminated prior to
the Final Services Termination Period pursuant to Section 18.1.2, Program
Support Services shall no longer be performed by FMC and FMER and the Program
Support Services Fee due in Section 6.4.1 shall no longer by paid by
SunTrust to FMC.  In addition, in
connection with a breach that is not cured as permitted by Section 18.2.2,
a Force Majeure Event pursuant to Section 18.2.3, or a failure of audit
remediation of the scope and for the applicable period described in Section 15.3.2,
the Program Support Services may be terminated prior to the end of the Final
Services Termination Period to the extent that such uncured breach, Force
Majeure Event, or audit remediation failure, as applicable, is directly related
to the Services that a Party seeks to terminate, and the Party seeking to
terminate under such provisions timely gives the other Parties the notice of
termination specified in Section 18.2.2, 18.2.3 or 18.2.6, as applicable.  In the event of termination of Program
Support Services under the preceding sentence, the Program Support Services Fee
shall no longer be payable to FMC.  This
Agreement may be extended for an additional Term or Terms upon the terms and
conditions set forth in a mutual written agreement among the Parties.


 


If
FMC or SunTrust undergoes a Change in Control, the other Party may elect to
terminate Loan Processing Services upon sixty (60) Business Days prior written
notice; provided, however, that prior to delivering such notice, the Party
considering such termination shall meet with representatives of the successor
entity and engage in good faith negotiations for the continuation of this
Agreement upon mutually acceptable terms and conditions.


 


18.2                           Termination for
Cause.  From and after the Effective
Date, FMC and SunTrust may each terminate the Agreement, subject to Section 18.1.2
and Section 18.3, immediately (after giving effect to notice and cure
periods set forth in Sections 18.2.1 to 18.2.6, as applicable) by delivery of a
written notice of termination to the affected Party or Parties, if:


 


18.2.1                  Insolvency or
Reorganization.  The other
Party shall file a petition to take advantage of any applicable insolvency or
reorganization statute; or shall file a petition or answer seeking or shall
consent to the appointment of a conservator or receiver or liquidator in any
insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceedings of or relating to such Party or Parties or relating to all
or substantially all of its or their property; or a decree or order of a court
or agency or supervisory authority having jurisdiction in the premises for the
appointment of a conservator or receiver or liquidator in any insolvency,
readjustment of debt, marshaling of assets and liabilities or similar
proceedings, or the winding-up or liquidation of its affairs, shall have been
entered against such Party or Parties, which decree or order entered against
such Party or Parties shall have remained in force undischarged or unstayed for
a period of fifteen (15) days; or such Party or Parties shall be insolvent,
admit in writing its inability to pay its or their debts generally as they
become due, make an assignment for the benefit of its creditors or voluntarily
suspend payment of its obligations; or


 


18.2.2                  Breach.  The other Party fails to perform any of its
obligations (including the failure to pay fees for Services when due and not
the subject of a good faith dispute) in any material respect, or shall breach
any of its or their representations, warranties or covenants in this Agreement,
in any material respect and such failure or breach continues unremedied after
the expiration of thirty (30) days following 


 


50

















 


written
notice to such Party or Parties specifying the nature of such failure or breach
and stating the intention of the terminating Party to terminate this Agreement
absent a cure of such failure or breach in all material respects within such
thirty (30) day period; or


 


18.2.3                  Force Majeure
Event.  In the event that a Force
Majeure Event occurs, if any Party is prevented from performing or its
performance is rendered impracticable for a period of at least five (5) days
after notice of such event and inability to perform was provided to the other
Party or Parties, provided, however, that if the Party previously unable to
perform regains its ability to perform hereunder within five (5) days
after notice of the event and inability to perform, the notice of termination
must be delivered to the other Parties no later than thirty (30) days after the
Party regains such ability to perform and notifies the other Parties thereof;
or


 


18.2.4                  Failure to
Agree on Program Changes.  If
SunTrust and FMC cannot agree on Program changes (other than changes to the
Pricing Schedule) following full compliance with the procedures set forth in Section 4.1.1,
then any Party may terminate this Agreement on fifteen (15) days’ written
notice to the other Parties, provided, however, that such notice of termination
is delivered to the other Parties no later than thirty (30) days after the
expiration of the thirty (30) day period described in Section 4.1.1 during
which changes could not be agreed; or


 


18.2.5                  Governmental
Authority.  To the
extent required by Requirements of Law, a Governmental Authority with oversight
of SunTrust requires, in writing, termination of this Agreement because, among
other things, SunTrust is considered a “troubled” institution, which
termination shall be without penalty to SunTrust; provided, however, that such
termination shall be effective only to the extent of the Services required by
such Governmental Authority to be terminated; or


 


18.2.6                  Audit
Remediation Failure. As set forth in Section 15.3.2, if the
Parties are unable to agree to a remediation plan within thirty (30) days of
FMC’s preparation and presentation of such plan to SunTrust pursuant to the
first sentence of Section 15.3.2, or if FMC or FMER, as applicable, shall
be unable to complete and install adequate modifications (as set forth in the
plan of remediation) within the deadline set forth in any such plan of
remediation; provided, however, that if (i) subsequent to such thirty (30)
day period a remediation plan shall be agreed, or if subsequent to such other
deadline set forth in any such plan of remediation, FMC or FMER, as applicable,
is able to complete and install adequate modifications in accordance therewith,
as applicable, and (ii) the Agreement has not been effectively terminated prior
to such agreement or completion of modifications, then no Party may deliver a
notice of termination under this Section 18.2.6 thereafter in connection
with such subsequently remedied failure described in this subsection or Section 15.3.2.


 


18.3                           Rights and
Obligations Upon Notice of Termination.


 


18.3.1                  Requirements
Upon Termination.  As of the
effective date of termination of this Agreement, FMER shall (i) cease
accepting new applications for Loans and (ii) unless otherwise agreed by
the Parties in writing, process all Applications received prior to the
effective date of termination through disbursement or denial.  In addition, upon the termination of this
Agreement for any reason:


 


(A)                              FMC shall make
a final Participation Account Deposit in the Participation Account pursuant to Section 7.1.3
and shall thereafter not be required to make further Participation Account
Deposits;


 


(B)                                payments
pursuant to Section 6.5.1, Section 7.1.4, Section 7.1.5, and Section 7.1.7
shall continue notwithstanding such termination;


 


(C)                                releases from
the Participation Account pursuant to Section 7.1.6 shall continue
notwithstanding such termination.


 


51

















 


18.3.2                  Transition
Services.  Upon notice
of termination of this Agreement or any Services provided hereunder, the
Parties shall meet to develop a plan to wind down the affected Services and
transition for the terminated Services, to extend for a period not to exceed
ninety (90) days past the effective date of termination (the “Transition
Period”), unless mutually agreed by the Parties in writing to be longer
than ninety (90) days.  The fees paid for
Services provided during the Transition Period shall be in accordance with the
fees in effect at the expiration or termination of this Agreement.  Except as otherwise set forth in this
Agreement, upon the conclusion of the Transition Period for any specific
Services, each Party shall cease the affected Services and return to the other
Party or Parties, as applicable, or destroy all Proprietary Information and/or
Consumer Information in accordance with Section 14.8 of this Agreement,
except as necessary pursuant to any Requirements of Law.


 


18.4                           Requirements
Upon Termination.  In addition
to the requirements contained in Section 18.3.2 of the Agreement, (i) in
the event that less than all disbursements of a multi-disbursement Loan have
been made prior to the date of termination, the remaining disbursement(s) will
also be made pursuant to the terms of this Agreement, (ii) Loan
Applications will no longer be accepted by FMER as of the termination date, (iii) any
legal commitments already made to Borrowers shall be fulfilled and all
Applications received for a credit inquiry prior to termination shall be
processed through denial or final disbursement.


 


18.5                           Rights Upon
Termination.  With
respect to the termination of Portfolio Management Services, FMER shall provide
to SunTrust a final reconciliation of all amounts collected by Subcontractors,
collect all original files from Subcontractors, and transmit all such files to
SunTrust.


 


ARTICLE 19.                      MISCELLANEOUS


 


19.1                           Notice
Procedure; Addresses.  All
notices, demands and other communications hereunder shall be in writing and
shall be deemed to have been duly given and received at the time delivered by
hand, if personally delivered; when receipt is acknowledged, if mailed by
certified mail, postage prepaid, return receipt requested; the next Business
Day after timely delivery to the courier, if sent by overnight air courier
guaranteeing next-day delivery; and when received, if delivered by hand, as
follows:


 




	
  If
  to SunTrust:

  SunTrust
  Bank

  Attn:
  W. Mark Smith

  Executive
  Vice President

  1001
  Semmes Avenue

  Mail
  Code CS-RVW-7900

  Richmond,
  VA 23224

   

  	
   

  	
  If
  to FMC:

  The
  First Marblehead Corporation

  Attn:
  Chief Executive Officer

  800
  Boylston Street, 34th Floor

  Boston,
  MA 02199-8157

   

  If
  to FMER:

  First
  Marblehead Education Resources, Inc.

  Attn:
  Managing Director

  One
  Cabot Road

  Medford,
  MA 02155

  
	
   

  	
   

  	
   

  
	
  With
  a copy to:

  SunTrust
  Bank

  Legal
  Department

  303
  Peachtree Street, N.E., 36th Floor

  Atlanta,
  GA 30308

  	
   

  	
  For
  either FMC, FMER, as applicable,

  with
  a copy to:

  The
  First Marblehead Corporation

  Legal
  Department

  800
  Boylston Street, 34th Floor

  Boston,
  MA 02199-8157

  






 


52

















 


The
Persons or addresses to which mailings or deliveries shall be made may be
changed from time to time by notice given pursuant to the provisions of this
Section.


 


19.2                           Press Releases;
Regulatory Reports.  No Party
shall issue any press release or other announcement regarding the subject
matter of this Agreement without the written consent of the other affected
Parties with respect to mutually acceptable language (which consent shall not
be unreasonably withheld), unless a Party refuses to consent and the Party desiring
to issue the release or other announcement is advised by its legal counsel that
the press release or other announcement is required in order to comply with
applicable Requirements of Law. 
Notwithstanding the foregoing, SunTrust acknowledges that FMC expects to
be required pursuant to Requirements of Law to file this Agreement and a report
regarding this Agreement with the Securities and Exchange Commission which FMC
shall provide to SunTrust at least three (3) Business Days prior to FMC
releasing such report to provide SunTrust a reasonable opportunity to review,
comment, and consent, which consent shall not be unreasonably withheld.


 


19.3                           Relationship of
the Parties.  The Parties
agree that in carrying out their responsibilities pursuant to this Agreement
they are in the position of independent contractors.  This Agreement is not intended to create, nor
does it create and shall not be construed to create, a relationship of partners
or joint venturers, fiduciaries or any association for profit between and among
the Parties or any of their respective Affiliates.


 


19.4                           Expenses.  Except as is otherwise specifically provided
in this Agreement, each Party shall pay its own costs and expenses in
connection with this Agreement and the transactions contemplated hereby,
including all regulatory fees, attorneys’ fees, accounting fees and other
expenses.


 


19.5                           Successors and
Assigns.  All terms and provisions of
this Agreement shall be binding upon and shall inure to the benefit of the
Parties, and each of their respective permitted transferees, successors and
assigns.  Neither Party may assign or
transfer any right or obligation under this Agreement without the prior written
consent of the other Party; provided, however, that (i) no prior written
consent of the other Party is required in the event that FMC or FMER assigns or
delegates any Services set forth in this Agreement to the other or to any other
Affiliate of FMC, including but not limited to First Marblehead Data Services, Inc.,
and such assignee or delegatee would be able to make the representations and
warranties of FMC or FMER, as applicable, herein, and comply with each of the
covenants and other agreements of FMC or FMER, as applicable, herein.  Notwithstanding the foregoing, neither
SunTrust, on the one hand, nor FMC and/or FMER, on the other hand, shall be
permitted to assign or otherwise transfer the rights and obligations of this
Agreement (including any transfer by operation of law) to any Person completing
a Change in Control of the assigning Party, without the written consent of the
other Party and the assumption by the Person completing such Change in Control
of all of the assigning or transferring Party’s obligations under this
Agreement.


 


19.6                           Multiple
Counterparts.  This
Agreement may be executed in multiple counterparts, each of which shall be
deemed an original for all purposes and all of which shall be deemed,
collectively, one agreement.


 


19.7                           Drafting;
Captions.  Each Party
acknowledges that its legal counsel participated in the drafting of this
Agreement.  The Parties hereby agree that
the rule of construction that ambiguities are to be resolved against the
drafting Party shall not be employed in the interpretation of this Agreement to
favor one Party over any other.  Further,
the captions, headings and arrangements used in this Agreement are for
convenience only and do not in any way affect, limit or amplify the terms and
provisions hereof.


 


53














 


19.8         Entire Agreement; Amendments.  The making, execution and delivery of this
Agreement by the Parties have been induced by no representations, warranties,
statements or agreements other than those herein expressed.  This Agreement, including the Schedules and
Exhibits attached hereto, embodies the entire understanding of the Parties, and
there are no further or other agreements or understandings, written or oral, in
effect among the Parties relating to the subject matter hereof.  This Agreement may be amended or modified
only by a written instrument signed by each of the Parties.


 


19.9         Waiver.  None of the Parties shall be deemed to have
waived any of its rights, powers or remedies under this Agreement unless such
waiver is approved in writing by an authorized representative of the waiving
Party.  No delay or failure by any Party
to exercise any right, power or remedy hereunder shall constitute a waiver
thereof by such Party, and no single or partial exercise by any Party of any
right, power or remedy shall preclude other or further exercise thereof or any
exercise of any other rights, powers or remedies.


 


19.10       Severability.  Whenever possible, each provision of this
Agreement will be interpreted in such manner as to be effective and valid under
Requirements of Law, but if any provision of this Agreement is held to be
prohibited by or invalid under Requirements of Law, such provision will be
ineffective only to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Agreement.


 


19.11       Disaster Recovery and Force Majeure.  Each of the Parties will timely implement, if
it has not already, and maintain a reasonable disaster recovery plan.  Upon request by SunTrust, FMC shall promptly provide
to SunTrust a description of and summary test results for FMC’s disaster
recovery plan, including such information as may reasonably be requested by
SunTrust to comply with Requirements of Law. 
Upon the occurrence of any disaster requiring use of FMC’s disaster
recovery plan, FMC shall promptly notify SunTrust of same, and FMC shall
provide to SunTrust access to services equal to services provided to other
clients.  Subject to the foregoing, no
Party hereto shall be responsible for, or in breach of, this Agreement if it is
unable to perform or its performance is rendered impracticable as a result of
delays or failures due to any cause beyond its control, howsoever arising, and
not due to its own act or negligence and that cannot be overcome by the exercise
of due diligence.  Such causes shall
include, but not be limited to, labor disturbances, riots, fires, earthquakes,
floods, storms, lightning, epidemics, terrorist attacks, wars, civil disorder,
hostilities, expropriation or confiscation of property, failure or delay by
carriers, interference by civil and military authorities whether by legal
proceeding or in fact and whether purporting to act under some constitution,
decree, law or otherwise, or acts of God (each such event, a “Force Majeure
Event”).  Upon the occurrence of a
Force Majeure Event, the Party declaring such event shall provide written
notice thereof to the other Party as soon as practicable.  Notwithstanding any other provision in this
Agreement, either SunTrust or FMC may immediately terminate this Agreement if
the other Party cannot perform the Services (in the case of FMC) or otherwise
perform their obligations hereunder for more than five (5) days, subject
to the provisions of Section 18.1 and Section 18.3, and provided,
however, that if the Party previously unable to perform regains its ability to
perform hereunder, the notice of termination must be delivered to the other
Parties no later than thirty (30) days after the Party regains such ability to
perform and notifies the other Parties thereof.


 


19.12       GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF GEORGIA,
WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE THAT
WOULD CAUSE THE APPLICATION OF LAWS OF ANY JURISDICTION OTHER THAN TO THOSE OF
THE STATE OF GEORGIA.  EACH PARTY WAIVES
ITS RIGHT TO A JURY TRIAL WITH RESPECT TO ANY ACTION OR CLAIM ARISING OUT OF
ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, ANY RIGHTS OR OBLIGATIONS
HEREUNDER OR THE PERFORMANCE OF ANY SUCH RIGHTS OR OBLIGATIONS.


 


54

















 


19.13       No Third Parties Benefitted.  This Agreement is made and entered into for
the protection and legal benefit of the Parties, and their permitted successors
and assigns, and each and every Indemnified Party (all of which shall be
entitled to enforce the indemnity contained herein), and no other Person shall
be a direct or indirect legal beneficiary of, or have any direct or indirect
cause of action or claim in connection with, this Agreement.


 


19.14       Permitted Filing.  Each Party may file this Agreement (with
redactions as permitted by Requirements of Law) with the appropriate state or
federal regulators, including the Securities and Exchange Commission, as
required by such regulators.


 


19.15       Survival.  Any and all provisions, promises, and
warranties contained herein, which by their nature or effect are required or
intended to be observed, kept or performed after expiration or termination of
this Agreement (including representations and warranties, confidentiality,
information security, audit rights, indemnification, limitation of liability,
dispute resolution and miscellaneous provisions), will survive the expiration
or termination of this Agreement and remain binding upon and for the benefit of
the Parties hereto.


 


[Signatures
appear on next page]


 


55

















 


IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers, being first duly
authorized, as of the day and year first above written.


 


	
  SUNTRUST BANK

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ W. Mark Smith

  	
   

  
	
  Name: 

  	
  W. Mark Smith

  	
   

  
	
  Title:

  	
  Executive Vice President

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  THE FIRST MARBLEHEAD CORPORATION

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Daniel Maxwell Meyers

  	
   

  
	
  Name: 

  	
  Daniel Maxwell Meyers

  	
   

  
	
  Title:

  	
  President and CEO

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  FIRST MARBLEHEAD EDUCATION RESOURCES, INC.

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
  /s/ Michael Plunkett

  	
   

  
	
  Name: 

  	
  Michael Plunkett

  	
   

  
	
  Title:

  	
  President

  	
   

  



 

















 


EXHIBIT A


 


Datamart Report


 


In
addition to the data set forth in the Program Guidelines and Servicing
Agreement, the report shall consist of loan level data and provide at least the
following information with respect to each Loan application:


 


·                  Identifying information and demographic
information


 


·                  Repayment option


 


·                  Enrollment status


 


·                  Grade level


 


·                  Applicable borrower benefits for which the
borrower may become eligible


 


·                  Missing information reasons, if any


 


·                  Decline reasons, if applicable


 


·                  Current application status


 


·                  Acquisition channel


 


·                  Residency status (own, rent, live with
parents)


 


·                  Credit score (including FMC custom credit
score)


 


i

















 


EXHIBIT B


Compensation Schedule


 


[**]


 


i

















 


EXHIBIT C


TransUnion Addendum


 


AGENT ADDENDUM TO THE TRANSUNION
MASTER SERVICES


AGREEMENT FOR CONSUMER REPORTING
AND ANCILLARY SERVICES


 


This Agent Addendum (“Addendum”), effective the      
day of              ,
2010 (the “Effective Date”), by and between Trans Union LLC, with its principal
place of business located at 555 West Adams, Chicago, Illinois 60661 (“TransUnion”),
SunTrust Bank, with its principal place of business located at 303 Peachtree
Street, Atlanta, GA 30308 (“SUBSCRIBER”), and First Marblehead Education
Resources, with its principal place of business located at                                            
(“Agent”), is meant to modify the terms of the Master Agreement for Consumer
Reporting and Ancillary Services entered between TransUnion and Subscriber on
or about August 26, 2003 (the “MSA”).


 


RECITALS


 


WHEREAS, SUBSCRIBER has entered into an agreement with
Agent for the purpose of conducing the project indicated on the attached
Schedule A (the “Project”);


 


WHEREAS, the Project requires TransUnion to disclose
Services and Services Information directly to Agent on behalf of SUBSCRIBER;


 


WHEREAS, SUBSCRIBER desires TransUnion disclose such
Services and Services Information directly to Agent, and TransUnion has agreed
to such disclosure, subject to the terms contained in both the MSA and this
Addendum; and,


 


WHEREAS, SUBSCRIBER desires that TransUnion invoice Agent
for the Services and Services Information disclosed to Agent as more fully
explained herein.


 


NOW, THEREFORE, in exchange for the mutual promises and
covenants contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:


 


1.               The forgoing Recitals are
hereby incorporated by reference as a material part of this Agreement.


 


2.               Capitalized terms not
defined herein shall have the definition ascribed in the MSA.


 


3.               SUBSCRIBER hereby appoints
Agent its agent with all necessary authority to disclose to, and, request and
receive from, TransUnion, Services or Services Information.  Moreover, SUBSCRIBER hereby authorizes
TransUnion to disclose Services and Services information to Agent.


 


4.               SUBSCRIBER shall at all
times be responsible and ensure Agent’s compliance with the terms and
conditions of the MSA.  Additionally
SUBSCRIBER hereby represents to TransUnion that it has entered into a written
agreement with Agent containing obligations and restrictions consistent with
its obligations and restrictions under the MSA. 
SUBSCRIBER further agrees to enforce such obligations and restrictions
against Agent to the satisfaction of TransUnion, and to immediately notify
TransUnion upon the discovery of any violation of such obligations and
restrictions by Agent.  In the event
SUBSCRIBER fails to enforce said obligations and restrictions to TransUnion’s
satisfaction, SUBSCRIBER hereby agrees to assign to TransUnion 


 


i

















 


all such enforcement rights
against Agent.


 


5.               TransUnion, subject to the
terms of the MSA and this Addendum, agrees to: 1) disclose Services and
Services Information to Agent on behalf of SUBSCRIBER; and, 2) allow Agent to
access Services and Services Information on behalf of Subscriber.


 


6.               Agent certifies that it will
request and use any information provided as part of the TransUnion services
pursuant to this Addendum in compliance with the terms and conditions of the
MSA and only on behalf of SUBSCRIBER one-time and only for the specific
permissible purpose certified by SUBSCRIBER at the time of its request.  Agent further certifies that it will limit
the disclosure of Services and Services Information to those individuals inside
its organization with a “need to know”, and that it will not disclose such
information to any third party other than the SUBSCRIBER.


 


7.               SUBSCRIBER and Agent shall
at all times be responsible for compliance with, and any violation of, the
terms, certifications, obligations and restrictions as set forth in the MSA
with respect to Services and/or Services Information disclosed to Agent,
including, but not limited to, those terms related to compliance with laws and
security.  Moreover, and without regard
to any cap on liability set forth in the MSA, SUBSCRIBER and Agent shall jointly
and severally defend, indemnify and hold TransUnion harmless from and against
any and all claims, expenses, costs, damages, settlements, judgments or awards,
including attorney’s fees, directly or indirectly resulting from, or alleged to
have directly or indirectly resulted from, disclosure hereunder.


 


8.               SUBSCRIBER authorizes, and
TransUnion agrees, that for any Services and/or Services Information accessed
by its Agent, TransUnion will invoice SUBSCRIBER care-of
Agent, at a rate previously agreed upon by TransUnion and Agent, at the
following address                                                                                                    ,
which may be changed upon written notice to TransUnion in accordance with
Paragraph 11.  Agent shall remit to
TransUnion payment to TransUnion Invoice within thirty (30) days of the invoice
date, regardless whether or not it has collected such payment from
SUBSCRIBER.  Without limiting any of
TransUnion’s remedies for non payment or late payment of invoices, invoices
which are not paid by Agent within sixty (60) days of the invoice date shall be
subject to a late charge of one and one-half percent (1.5%) per month (18% per
year) or the maximum allowed by law, whichever is less.  If collection efforts are required, Agent
shall pay all costs of collection, including reasonable attorneys’ fees.


 


9.               Notwithstanding the
forgoing, SUBSCRIBER, in accordance with the terms of the MSA, shall remain
responsible for payment of any unpaid or untimely paid invoices, as well as any
fees associated therewith, submitted to SUBSCRIBER care-of
Agent.


 


10.         Agent recognizes the
confidential nature of the information contained in the TransUnion
invoice(s).  Agent shall keep all
information in any way related to the TransUnion invoice(s), whether received
from either TransUnion or SUBSCRIBER, in confidence and shall not use such
information except for purposes of this Addendum, nor disclose such information
to any person or persons outside of its organization.  Moreover, Agent shall limit the disclosure of
such information inside its organization to employees having a need to know who
are subject to written obligations of confidentiality substantially similar to
those contained herein.  Furthermore, no
information related to the TransUnion invoice(s), whether received from
TransUnion or SUBSCRIBER, shall be copied or duplicated in any form or manner
except as necessary to carry out the purpose of this Addendum.


 


ii

















 


11.         All notices and correspondence
required under the Addendum shall be sent to the Parties at the following
addresses.  Either party may change such
name and address by notice to the other in accordance herewith.  Any such change shall take effect immediately
upon receipt of such notice.


 


	
  TransUnion
  LLC

  	
   

  	
  SunTrust
  Bank

  
	
  555
  West Adams

  	
   

  	
   

  
	
  Chicago, IL
  60661

  	
   

  	
   

  
	
  Attn:
  General Counsel

  	
   

  	
  Attn:
                                

  
	
   

  	
   

  	
   

  
	
  First
  Marblehead Education Resources

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Attn:
                                

  	
   

  	
   

  



 


12.         All terms of the MSA are
incorporated into this Addendum and are expressly applicable to all orders and
payments hereunder.  In the event of a
conflict between any of the terms of this Addendum and those of the MSA, the
terms of this Addendum shall govern.  The
remaining terms of the MSA shall at all times remain in full force and effect.


 


13.         This Addendum shall be
coterminous with the MSA unless earlier terminated by SUBSCRIBER in accordance
with the termination provisions contained in the MSA or by TransUnion upon
written notice to SUBSCRIBER.


 


[Signatures appear on next page]


 


iii

















 


IN WITNESS WHEREOF, the parties, intending to
be legally bound, have caused this Addendum to be executed by their duly
authorized representatives as of the Effective Date.


 


 


	
  TransUnion LLC

  	
   

  	
  SunTrust
  Bank

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name
  and Title of Signer

  	
   

  	
   

  	
  Name
  and Title of Signer

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date
  Signed

  	
   

  	
   

  	
  Date
  Signed

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  First Marblehead Education
  Resources

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Name
  and Title of Signer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Date
  Signed

  	
   

  	
   

  	
   

  



 


iv

















 


Schedule A


 


Project
Description: Student Loan Originations


 


All
SUBSCRIBER orders placed hereunder shall be made under the following TransUnion
Subscriber Code(s):                                    .


 


v














 


Exhibit D


 


Schedule
1             Key Metrics Report


Schedule
2             Approved Collectors


Schedule
3             Default Collection Reports


Schedule
4             Approved Initial Vendors


Schedule
5             Settlement Authority


 

















 


Schedule 1 to Exhibit D


Key Metrics Report


 


The
report shall consist of aggregate program data and metrics and provide
information in at least the following categories:


 


·                  Application metrics


·                  Configuration and submission
rate


·                  Application status—pending
configuration; submitted, unbooked; missing information; in review; awaiting
certification; Approval Disclosure sent; Approval Disclosure accepted; closing;
Final Disclosure sent


·                  Cosign rate


·                  Booking rate


·                  Cancellation rate


·                  Grade-level and degree-level
breakout, if available


 


·                  Initial credit decisions


 


·                  Conditional approvals


·                  Declines and top decline
reasons


·                  Applications Pending Review


·                  Counteroffers—Accept/Decline/Pending


 


·                  Approvals by acquisition channel and
disbursement method


 


·                  Repayment option and repayment term
distribution


 


i

















 


Schedule 2 to Exhibit D


Approved Collectors


 


NCO
Financials Systems, Inc.


 


Diversified
Collection Services, Inc.


 


Collection
Company of America


 


Simm
Associates, Inc.


 


American
Education Services


 


Estate
Information Services, Inc.


 


ii

















 


Schedule 3 to Exhibit D


Default Collection Reports


 


On
a monthly basis, FMC shall provide reports containing at least the following
information:


 


· defaulted
Loans


· balances and
borrowers in each delinquency stage, including forbearance


· balances and
borrowers entering repayment next month


· # of cures by
type (re-enter deferment, forbearance, payment, etc.)


· # on loans on
automatic payment


· flow rates by
delinquency stage, compared to historical measures


· liquidation
rate


· # of right
party contacts made


 


iii

















 


Schedule 4 to Exhibit D


Approved Initial Vendors


 


1.     Google


Cambridge,
MA


Services:  Online advertising tracking, optimization and
analysis.


 


2.     Interwoven


Sunnyvale, CA


Services: Content Management system provider


 


3.     Center Partners 


Fort Collins, CO


Services: Call center operations, including inbound customer service
calls, outbound customer service calls, outbound telemarketing


 


4.     JLS Mailing Services, Inc.


Brockton,
MA


Services:
Mail pick-up; folding and stuffing envelopes, mail processing, storage and
management of fulfillment materials and supplies


 


5.     National Student
Clearinghouse


Herndon, VA


Services: student enrollment verification


 


6.     Trans Union LLC


Chicago, IL


Services:
Consumer reports, Total ID, fraud readiness


 


7.     Nicholas Barone


Buffalo,
NY


Graphic
Designer:  Brand, website, advertising and collateral design.


 


8.     Patricia Lenz Bovie


Boston,
MA


Copywriter: 
Copy for website, advertising and collateral materials


 


9.     Matthew Mombrea


Buffalo,
NY


Programmer: 
Programming work to build and update FMC Website


 


iv

















 


Schedule 5 to Exhibit D


Settlement Authority


 


FMER
and Approved Collectors may offer a settlement of the Loan obligation in full
for a payment of a percentage of the outstanding Loan balance, as follows:


 


	
  Days
  Delinquent

  	
   

  	
  Customer Contact Method

  	
   

  	
  Cash Settlement Offer

  (% of outstanding balance)

  
	
  [**]

  	
   

  	
  Email

  	
   

  	
  As low as [**]%

  
	
  [**]

  	
   

  	
  Settlement Letter

  	
   

  	
  As low as [**]%

  
	
  [**]

  	
   

  	
  Call Campaign

  	
   

  	
  As low as [**]%

  
	
  [**]

  	
   

  	
  Email

  	
   

  	
  As low as [**]%

  
	
  [**]

  	
   

  	
  Settlement Letter

  	
   

  	
  As low as [**]%

  
	
  [**]

  	
   

  	
  Call Campaign

  	
   

  	
  As low as [**]%

  



 


Communication
of the settlement offer shall be to both the Borrower and Cosigner (where
applicable).


 


iv

















 


Exhibit E


Schedule 1


School Sales Activity States


 


Each
of FMC and SunTrust shall restrict in-person Eligible Institution sales
activities for the Program as listed below:


 


	
  SunTrust Sales States

  	
   

  	
  FMC Sales States

  
	
  Florida

  	
   

  	
  Arizona

  
	
  Georgia

  	
   

  	
  Arkansas

  
	
  Maryland

  	
   

  	
  California

  
	
  North
  Carolina

  	
   

  	
  Connecticut

  
	
  Pennsylvania

  	
   

  	
  Indiana

  
	
  South
  Carolina

  	
   

  	
  Kansas

  
	
  Tennessee

  	
   

  	
  Louisiana

  
	
  Virginia

  	
   

  	
  Maine

  
	
  District
  of Columbia

  	
   

  	
  Massachusetts

  
	
   

  	
   

  	
  Michigan

  
	
   

  	
   

  	
  Minnesota

  
	
   

  	
   

  	
  Mississippi

  
	
   

  	
   

  	
  Missouri

  
	
   

  	
   

  	
  Nebraska

  
	
   

  	
   

  	
  New
  Hampshire

  
	
   

  	
   

  	
  New
  Jersey

  
	
   

  	
   

  	
  Ohio

  
	
   

  	
   

  	
  Oklahoma

  
	
   

  	
   

  	
  Rhode
  Island

  
	
   

  	
   

  	
  Vermont

  
	
   

  	
   

  	
  West
  Virginia

  



 


v

















 


Schedule 2


 


Production Support Plan


 


The
Program will be marketed by the FMC sales team directly to Eligible
Institutions within the FMC Sales States.  Within the FMC Sales States and
in accordance with the terms of the Agreement, the FMC sales team will leverage
various presentation materials to build awareness of the Program among
financial aid officers, present the Program to Eligible Institutions, respond to
requests for proposals and provide Eligible Institutions with regular updates
about the Program, and will conduct the following activities to support the
promotion of the student loan product:


 


·                  Onsite visits to targeted Eligible
Institutions in the FMC Sales States


·                  Webinars to key Eligible Institutions who
require application demonstrations or additional product training


·                  Attend and/or exhibit at state, regional and
national conferences to support FMC Sales States product sales, including
NASFAA


·                  Monthly email communications to Eligible
Institutions in FMC Sales States to highlight product features, interest rate
changes or pertinent information in the industry


·                  Provide training onsite or via webinar as
requested by Eligible Institutions on subjects including but not limited to:
the product, product processing, servicing, default management


·                  Conduct mailings to Eligible Institutions and
potential Applicants in accordance with Sections 2.2.1 and 2.2.5 of the
Agreement


 


In
addition, FMC will provide students in FMC Sales States with collateral
materials and a link to the FMC Website so they have easy access to get more
information about the Program.


 


FMC
will also market the program using open channel activities, including:
geo-targeted online advertising, and possibly email and/or direct mail prior to
future peak periods for customer retention purposes.


 


iv

















 


EXHIBIT F


Program Guidelines


 


TO BE ADOPTED PRIOR TO THE
EFFECTIVE DATE


 

















 


EXHIBIT G


SunTrust Service Marks


 


SunTrust


 


Custom
Choice


 





 





 





 














 


EXHIBIT H


 





INSURANCE REQUIREMENTS


 


WORKERS’
COMPENSATION:


	
  (A)

  	
  Workers’
  Compensation: Statutorily Required

  
	
  (B)

  	
  Employer’s
  Liability:

  
	
   

  	
  (1)

  	
  Bodily
  Injury by Accident, for Each Accident:

  	
  $ [**]

  
	
   

  	
  (2)

  	
  Bodily
  Injury for Each Employee by Disease:

  	
  $ [**]

  
	
   

  	
  (3)

  	
  Policy
  Limit for Bodily Injury by Disease:

  	
  $ [**]

  



 


COMMERCIAL
GENERAL LIABILITY:


	
  Written
  on a per occurrence basis to include coverage for: Broad Form Property
  Damage; Bodily Injury; Personal Injury; Blanket Contractual Liability;
  Products/Completed Operations.

  
	
  (A)

  	
  Combined
  Single Limit Per Occurrence:

  	
  $[**]

  
	
  (B)

  	
  General
  Aggregate:

  	
  $[**]

  
	
  (C)

  	
  Fire
  Legal Liability Per Occurrence:

  	
  $[**]

  
	
  (D)

  	
  Medical
  Expense Per Person per Occurrence:

  	
  $[**]

  
	
  SunTrust
  Banks, Inc., its subsidiaries, affiliate companies, its officers,
  directors and employees will be listed as additional insureds.  FMC’s insurance will be primary and
  non-contributory.

  



 


AUTOMOTIVE
LIABILITY:


	
  Such
  policy will include coverage for all vehicles owned, hired, non-hired,
  non-owned and borrowed by FMC in the performance of the Services covered by
  this Agreement.

  
	
  Combined
  Single Limit:

  	
  $[**]

  



 


UMBRELLA
LIABILITY:


	
  Combined
  Single Limit:

  	
  $[**]

  
	
  SunTrust
  Banks, Inc., its subsidiaries, affiliate companies, its officers,
  directors and employees will be listed as additional insureds.

  



 


ERRORS &
OMISSIONS LIABILITY (PROFESSIONAL LIABILITY):


	
  Such policy will include coverage for actual or
  alleged breach of duty, act, error, and omission, misstatement, misleading
  statement or neglect in the rendering of or failure to render the Services
  under this Agreement.

  
	
  Combined Single Limit:

  	
  $[**]

  



 


FIDELITY
BOND (CRIME INSURANCE):


	
  Including blanket employee dishonesty:

  	
  $[**]

  



 


CYBER /
PRIVACY LIABILITY:


 Such policy will include coverage
for first and third party legal liability as a result of a physical privacy
breach or breach of privacy regulations, as well as damages and claims for
expenses arising out of computer attacks  caused
by security failures.        $[**]


 

















 


EXHIBIT I


FMC Privacy and Security Policies


 

















 


[**]


 


A
total of thirty-five pages were omitted pursuant to a request for
confidential treatment.


 

















 


The
First Marblehead Corporation


Employee
Code of Conduct


 


On
June 21, 2010, our board of directors approved our revised Code of
Conduct.


 


Letter
from the Chairman & Chief Executive Officer


 


Dear
Fellow Employees,


 


At
First Marblehead, integrity is a fundamental corporate value. We are strongly
committed to it, and to the ethical conduct, honesty and compliance with law
that underlie it. Integrity is vital to our long-term relationships with
clients, colleagues and investors, particularly at this time in the history of
our Company and industry.


 


Our
Code of Conduct outlines standards for employee conduct. It is intended to
raise your awareness about what is expected of each of us, to provide you with
guidance if you have questions about what is proper conduct for you or anyone
else, and to encourage you to report any ethical, accounting or legal problems
that you may confront. Given the variety of situations to which our standards
apply, the Code is not intended to provide you with a roadmap for every
question that you have or specific concern that may arise. Each of us is
expected to use our judgment and common sense in order to comply not only with
the letter of the Code but also with its spirit. 




Please
read the Code carefully and thoroughly, as it has been updated to clarify some
requirements as well as to reflect our growing and evolving businesses. You are
required to formally acknowledge that you have read the Code, understand it,
and agree to abide by it.


 


The
principles of the Code apply to everyone at First Marblehead regardless of job
function or seniority. Each of us must do our part to prevent or correct
violations and maintain a culture where absolutely nothing compromises our
commitment to integrity. I encourage you to discuss any questions or concerns
you may have about the Code or any activity at our Company with any member of
the Code of Conduct Committee.


 


Our
Code provides a foundation, but the value we get from it depends on your level
of dedication to upholding its principles. Please join me in renewing our
commitment to protecting and strengthening First Marblehead’s reputation for
integrity and the trust that our clients, colleagues and investors have placed
in each of us.


 


Daniel
Meyers

Chairman & Chief Executive Officer


 


Introduction


We are
all equal under the Code


 


At
The First Marblehead Corporation (Company), we are committed to upholding the
highest standards of honest, ethical conduct. Always. Without compromise. That
commitment also reflects our goals to meet and exceed the expectations of our
stakeholders — those groups of people with a vested interest in the success of
our Company.


 


Our
Code of Conduct (Code) summarizes the shared values and behaviors we must
exhibit in all of our business transactions and interactions with our key
stakeholders, including customers, fellow employees, business partners,
suppliers, shareholders, government regulators and communities.


 


Our
Code applies equally to all employees and officers. In addition, our vendors,
consultants and other business partners are expected to uphold our ethical
standards and values. Compliance with our Code, Company policies and
procedures, and applicable laws and regulations is a responsibility that we
take seriously, and we will hold each other accountable in meeting that
responsibility.


 

















 


Our
leaders and managers are expected to serve as ethical role models.


 


They
are expected to be familiar with our Code and effectively communicate its
importance and guidelines and answer the questions of those who report to them.


 


Leaders
and managers also have an obligation to create a positive work environment in
which Company personnel feel comfortable asking questions or reporting concerns.


 


Leaders
and managers who fail to meet this responsibility or who do not act promptly to
report suspected misconduct will be subject to disciplinary action that may
include termination.


 


Raising
and Reporting Ethical Issues


 


What to
do when you think something is wrong


 


If
you believe that any employee, officer, director or anyone working on our
behalf may have engaged in ethical or legal misconduct, it is your
responsibility to promptly report the matter to your manager or any member of
the Code of Conduct Committee (see the list and contact information at the end
of this document or on our HR intranet). Doing so helps us to address issues
and prevent future misconduct. Suspected Code violations can be reported to
anyone on our Code of Conduct Committee, or call our toll-free HOTLINE,
866-709-9950, or e-mail CodeOfConduct@fmd.com, where you can leave a message
about any suspected violation. While we prefer that you identify yourself when
reporting suspected violations so that we may follow up with you, you may leave
messages anonymously.


 


We
will promptly and thoroughly investigate complaints to determine whether
violations have occurred and if so, how to effectively address them.
Disciplinary measures for violations may include, but are not limited to:


·                  reprimands


·                  warnings


·                  probation or suspension without pay


·                  demotions


·                  reductions in salary


·                  restitution


·                  termination of employment


 


Certain
violations may require external reporting


 


Certain
violations of our Code may require us to refer the matter to the appropriate
governmental or regulatory authorities for investigation or prosecution.


 


We
may also be required to report particular violations to clients, and the
clients may report the violation to appropriate regulators. Employees, officers
and directors are expected to cooperate fully with any inquiry or investigation
by the Company regarding an alleged violation of our Code. Failure to cooperate
with any such inquiry or investigation may result in disciplinary action up to
and including discharge.


 


If
the alleged violation involves an executive officer, then the Board of
Directors and the Chief Executive Officer (but only to the extent that the CEO
is not involved in the alleged violation) will determine whether a violation of
our Code has occurred and, if so, will determine the disciplinary measures to
be taken.


 


While
we prefer to coordinate matters internally, nothing in our Code should
discourage you from reporting any illegal activity, including any violation of
securities laws or any other federal state or foreign law, rule or
regulation, to the appropriate regulatory authority.


 


You are
protected


 


Employees,
officers and directors will not fire, demote, suspend, threaten, harass or in
any other manner discriminate or retaliate against a person because he or she
reports a violation, unless it is determined that the report 


 

















 


was
made with knowledge that it was false. Our Code does not prevent you from
testifying, participating or otherwise assisting in any state or federal
administrative, judicial or legislative proceeding or investigation.


 


Reporting
Process


 


You
have three options for reporting a violation:


 





 


If
the alleged violation involves a member of the Code of Conduct Committee, that
member will not participate in the investigative process.  In addition,
suspected violations involving a member of the Audit Committee may be reported
to WilmerHale LLP, our outside counsel.  All contact information is
included at the end of this Code.


 


Concerns
about Accounting or Auditing Matters


 


Reporting
your concerns


 


If
you become aware of an actual or potential problem with our accounting,
internal accountings controls or auditing matters, please raise your concerns
immediately, by using the reporting process on page 6, by contacting the 


 

















 


Chairman
of the Audit Committee directly or by contacting Susan Murley at WilmerHale
LLP, our outside counsel, (617) 526-6000.


 


All
concerns of merit will be forwarded to the Audit Committee, and a record of all
complaints and concerns received by us will be provided to the Audit Committee
each quarter.  Again, you may report any concerns regarding accounting or
auditing matters confidentially and anonymously.


 


Working
with independent auditors or regulators


 


We
are expected to cooperate completely and provide all information requested in
any internal or external investigation, audit or regulatory inquiry. This
requires us to provide accurate and complete information to these parties when
requested.


·                  No one may directly or indirectly make or
cause to be made a false or misleading statement.


·                  No one may omit to state, or cause another
person to omit to state, any material fact in connection with any audit review,
examination or investigation.


·                  No one may directly, or indirectly, take any
action to coerce, manipulate, mislead or fraudulently influence any independent
public or certified public accountant engaged in the performance of an audit or
review of our financial statement.


 


Reporting
Company Information


 


Compliance
with all laws, rules and regulations is vital


 


We
report corporate and business data to a number of regulatory agencies,
including the Securities and Exchange Commission, the Internal Revenue Service
and the New York Stock Exchange, in addition to the financial and educational
institutions and other enterprises with which we do business. The accuracy and
integrity of this information is critical to maintain our marketplace
reputation and business model.


It
is the responsibility of each one of us to comply with all laws, rules and
regulations applicable to our business, as well as our Code and Company
policies.


 


You are
responsible for the accuracy of books, records and public reports


 


Because
our regulators, shareholders and other business partners rely on the detailed
information contained in our business records, we must make sure that the
information we provide is accurate, timely and complete. You are responsible
for the accuracy of the records and reports you create and/or review. Accurate
information is essential to our ability to meet our legal and regulatory
obligations.




All
of our books, records and accounts must be maintained in accordance with all
applicable regulations and standards and accurately reflect the true nature of
the transactions they record.


 


Financial
statements


 


Our
financial statements must conform to generally accepted accounting principles,
as well as our accounting policies and internal control procedures.


·                  No undisclosed or unrecorded account or fund
can be established for any purpose.


·                  No false or misleading entries can be made in
our books or records for any reason.


·                  No disbursement of corporate funds or other
corporate property can be made without adequate supporting documentation.


It
is our policy to provide full, fair, timely and understandable disclosure in
reports and documents filed with, or submitted to, our regulators and in other
public communications.


 

















 


Protecting
Company Assets


 


Protection
of our company assets


 


We
are all trusted to respect and safeguard Company property, which includes both
physical and intangible assets. We must be diligent and work together to
prevent identity theft, destruction or misappropriation of Company property,
including our physical property, consumer information, proprietary client
information, confidential and proprietary internal information and intellectual
property.


 


Protecting
physical assets


 


At
all times we must protect and respect Company facilities, equipment and
supplies from theft, loss, damage or misuse. Company issued portable devices,
such as a BlackBerry or laptop, intended to promote work efficiency, should
always be used for acceptable work-related purposes.


 


Protecting
intellectual property


 


We
also have an obligation to protect our intangible assets. Intellectual property
refers to those intangible assets of the Company which include business
methods, inventions, publications, patents, copyrights and trademarks. We were
all asked to sign a non-disclosure agreement when we were hired. These signed agreements
are kept in Human Resources and represent each of our individual commitments to
protect our intellectual property. In addition, it is our policy to respect the
intellectual property of others and to adhere strictly to all relevant laws and
regulations regarding the patents, trademarks or copyrights owned by others.


 


Example:


 


Q. 
John & Joe are on the T after work discussing their day.  John
brings up comments made by management at a Town Hall meeting held earlier in
the week.  He is interested in knowing Joe’s thoughts on certain
statements about stock options and pending clients, which John names, that were
confidentially made to employees at the meeting.  How should Joe respond?


 


A. 
Without drawing further attention to John’s specific statements, Joe should
make clear to John that the timing and setting are inappropriate for the
conversation.  John’s public statements are in breach of his
confidentiality obligations under our Code and are especially inappropriate if
he is wearing anything identifying him with First Marblehead (fleece, name
badge, computer bag or other item).


 


Protecting
Information


 


Consumer
information


 


We
are all required to comply with the privacy policy applicable to the
applications and loans we facilitate. In addition, federal and state law and
contract requirements impose strict rules protecting information about
loan applicants and borrowers. 



All consumer data is confidential. Individual department policies define
personnel who are authorized to access consumer data, and only authorized
personnel with a need to know are permitted access.


 


Unauthorized
access to consumer data is prohibited. Consumer data may only be used and
disclosed to third parties in accordance with applicable law and applicable
contractual requirements and restrictions. 


 


All
consumer data, such as personal data provided to us by or about loan applicants
and borrowers, must be safeguarded against unauthorized access in accordance
with our Information Security Policy. If you have any questions concerning
access to, use of, or safeguarding of consumer data, contact our Chief Risk
Officer.


 


Company
information


 


Proprietary
and confidential information is generally not available to the public and
includes internal business information, such as contract documentation,
business processes, and corporate strategies and plans.


 


We
must maintain the confidentiality of proprietary and confidential information
entrusted to us by the Company or other companies, including our suppliers and
clients, except when disclosure is authorized by a manager or is legally
mandated.


 

















 


Unauthorized
disclosure of any proprietary or confidential information is prohibited. In
addition, you should take appropriate precautions to ensure that confidential
or sensitive business information, whether it is proprietary to us or another
company, is not communicated within the Company except to authorized personnel
or outside parties who need this information for legitimate business purposes.


 


You
may find yourself in a position where a third party asks you for information
concerning the Company. You must not discuss internal Company matters with
anyone outside the Company, except as required in the performance of your
duties and after a confidentiality agreement is in place. You must use the
Company’s assets only for legitimate business purposes and not use them for any
personal benefit or for the benefit of any third party. 


 


If
you are unsure whether or not you should share information with a third party,
contact your manager or the General Counsel for guidance.


 


Client
information


 


We
are all responsible for protecting the confidentiality and security of our
clients’ proprietary and confidential information. Unauthorized disclosure of
client information to third parties, or internal parties not having a need to
know the information, is prohibited. We must take care to safeguard client
information and to ensure that client information is communicated within the
Company only to the extent that employees, officers or directors with a need to
know are able to perform their duties. This obligation continues even after our
employment with the Company ends.


 


Protecting
Information


 


Send
requests for company information to Investor Relations


 


To
further protect the Company’s information and make certain that it is released
to the public in a manner that is both accurate and consistent, only designated
spokespersons may communicate with the public on behalf of the Company. This
applies particularly to requests from the media, market professionals (including
securities analysts, institutional investors, investment advisors, brokers and
dealers) and security holders.


 


If
you receive any requests, you must decline to comment and refer the inquirer to
Investor Relations: 800-895-4283 or info@fmd.com


 


Our employees’
personal information deserves protection too


 


Just
as we are committed to maintaining the privacy and confidentiality of our
Company and client information, we are also committed to maintaining the
privacy and confidentiality of our employees’ personal information.


 


Employment
information or medical records must not be shared or discussed inside or
outside of the Company except as authorized by the employee or officer or as is
required by law. Within the Company access must be limited only to those who
have a substantial and legitimate need to know the information or who require
information due to legal process.


 


Gifts
and Entertainment


 


Before
accepting a gift, check the guidelines


 


In
the course of our work with clients and to build or strengthen good working
relationships, it may be acceptable to give gifts or entertainment to, or
accept gifts or entertainment from suppliers, vendors or business partners.
However, good judgment, discretion and moderation should always be guides in
these situations. We may never solicit, accept or give gifts or entertainment
that may influence or be perceived to influence business decisions.


 


You
must not accept, or permit any member of your immediate family to accept any
gifts or gratuities from any client, supplier, vendor or other person doing or
seeking to do business with the Company, other than items of insignificant
value (<$50 in total from anyone in any calendar year).


 

















 


Any
gifts you receive that are of significant value (>$50) should be returned
immediately and reported to your manager and the General Counsel. If immediate
return is not practical, the gift should be given promptly to the Company for
charitable donation or such other disposition as the Company believes
appropriate.


 


If
you are unsure about whether a gift or specific event is in compliance, please
ask your manager or a member of the Code of Conduct Committee for guidance.


 


Example:




Q. A vendor has offered Tim two tickets to a Celtics playoff game.  The
vendor cannot make the game but told Tim to take a friend and enjoy
himself.  Can Tim accept the tickets?


 


A.
No.  Since the vendor is not accompanying Tim to the game, the tickets are
really a gift and not business entertainment.  The Company limit for
accepting gifts without approval is less than $50.  Tim cannot accept the
tickets.


 


Before
you give to others, consider how it may be perceived


 


Gifts,
gratuities or other favors from you to clients, suppliers, vendors or other
persons doing or seeking to do business with us that are of insignificant value
(<$50 in total to anyone in any calendar year) are permitted if made in
compliance with the terms of this paragraph.


 


All
gifts, gratuities or other favors of significant value (>$50 in total to any
party in any calendar year) from you to clients, suppliers, vendors or other
persons doing or seeking to do business with us are prohibited unless approved
in advance by the General Counsel.


 


Bribes
and kickbacks are criminal acts, prohibited by law. You must not offer, give,
solicit or receive any form of bribe or kickback anywhere in the world where we
conduct business.


 


All
gifts, gratuities or other favors, regardless of value, are prohibited if:


·                  not made in compliance with applicable law
and our Code or policies to which the recipient may be subject, or


·                  given in consideration or expectation of any
action by the recipient, or


·                  given to government officials. Requests for
exceptions should be submitted to the General Counsel.


 


What’s reasonable (<$50)


·                  A bottle of wine of reasonable value from a
client or vendor


·                  Tickets to a local sporting or cultural event
with a value of less than $50


·                  An unsolicited gift of modest value given by
a vendor


·                  Modest gifts of gratitude or to acknowledge
personal events such as weddings, births or anniversaries


 


What’s excessive (>$50)


·                  A case of fine wine


·                  Front row tickets to a professional sports
team playoff game


·                  A golf outing which includes tee time, hotel
and other accommodations


·                  Cash, gift cards or other stored value
products that are similar to cash


·                  A lavish gift, such as a leather briefcase,
fine jewelry or art


 


Fair
Dealing and Conflicts of Interest


 


We are
committed to dealing fairly with other businesses




Our actions in the student loan marketplace define who we are as a company. We
support vigorous yet fair competition. We not only have a responsibility to the
regulatory, client and shareholder communities, but we also have an obligation
to deal fairly and responsibly with our suppliers and competitors.


 

















 


Fair
dealing requires that we recognize and strive for the highest standards of
honesty and integrity in the business community. We concentrate on anticipating
and satisfying the needs of our clients and customers. While we will vigorously
compete in our marketplace each and every day, we will not seek to restrict the
competitive opportunities of our rivals in any way that may be considered
deceitful or unethical.


 


Avoid
conflicts of interest




A “conflict of interest” is defined as engaging in an activity in which you
have a personal interest that intersects with or interferes with the interests
of the Company. A conflict of interest can arise whenever you take action or
have an interest that prevents you from performing your duties and
responsibilities honestly and objectively.


 


You
must act in the best interests of the Company and may not engage in any
activity or have a personal interest, like a substantial financial investment,
that presents a conflict of interest. For these reasons you may not perform
services as a consultant, employee, officer, advisor or in any other capacity
for, or have a financial interest in, a competitor of the Company, other than
services performed at our request, a financial interest representing less than
one percent (1%) of the outstanding shares of a publicly-held company or as may
otherwise be approved by our Board of Directors.


 


In
addition, no one may use his or her position with our Company to influence a
transaction with a supplier or client in which such a person, or an immediate
family member, has any personal interest, other than a financial interest
representing less than one percent (1%) of the outstanding shares of a
publicly-held company.


 


You
are responsible for immediately disclosing any material transaction, or
personal or financial relationship that might reasonably be expected to create
a conflict of interest to the General Counsel. If you are a senior manager, you
are also responsible for reporting such a transaction or relationship to the
Board of Directors, which will be responsible for determining whether the
transaction or relationship constitutes a conflict of interest.


 


Example:


 


Q. 
Mike runs a small home business selling magazine subscriptions.  He does
most of his work on weekends and it in no way conflicts with his performance at
work.  Recently, Mike has been eating lunch at his desk and using his
First Marblehead computer to process pending orders.  The Code says
limited personal use of Company equipment is OK.  Is this limited activity
acceptable?


 


A. 
No.  Under our Code, engaging in any activity which potentially interferes
with the interests of the Company presents a conflict of interest.  Our
Company’s digital resources are used for business purposes, and personal use,
especially in today’s resource and content rich website environment, does
strain the system.  Mike must run his “home” business from home.


 


Compliance
with the Law


 


In
addition to the regulatory requirements regarding the disclosure of Company
financial information, we are also subject to federal, state and local laws
that govern the way we do business. You are expected to use good judgment and
common sense in complying with all applicable laws, rules and regulations.
If you are in doubt, ask for advice and guidance from your manager, General
Counsel or the Chief Risk Officer. Inside information and insider trading In
the course of your employment with us, you may come into possession of inside
information. “Inside information” is non-public information about the Company
or other companies with which we have a relationship that, if publicly
disclosed, might be of use to our competitors, or otherwise harmful to us or
our clients. Material inside information about a company is inside information
that would be considered important by a reasonable investor in determining
whether to buy, sell or hold securities of that company. Information concerning
any of the following subjects, or our plans with respect to any of these
subjects could be considered to be material inside information:


·                  our revenues or earnings


·                  our capital markets activities


·                  a new loan program or a significant
development with regard to an existing one


·                  the establishment, modification or
termination of agreements with business partners or strategic partners


 














 


·                  the loss of, delay or gain of a significant
contract regarding our clients


·                  a merger or acquisition involving us


·                  a change in our control or a significant
change in our management


·                  a change in or dispute with our auditors


This
list is illustrative only. There are many other circumstances that could give
rise to material inside information.


 


Ask
before you trade


 


If
you have material inside information about us or other companies, including our
suppliers and clients, as a result of their relationship with us, you are
prohibited by law and Company policy from trading in our securities or those of
other such companies, as well as communicating such information to others who
might trade on the basis of that information. Buying, selling or tipping
(disclosing inside information to someone who trades a security based on the
information you provided) violates not only our policy but the laws of many
countries. Violations may carry both civil and criminal penalties for those
involved. If you are in doubt, ask for guidance from your manager, the General
Counsel or the Chief Risk Officer.


 


Example:


 


Q.
Stephen knows about a potential business development that will likely make our
Company’s stock price rise.  He knows that he cannot trade on this
information but wants to tell his friend this information and encourage him to
buy shares of the Company’s securities.  Can Stephen do this?




A. No.  The potential business development is considered material
nonpublic information.  If Stephen shares this information with his
friend, he would be engaging in tipping, which violates our Code and the
Company’s Insider Trading Policy.  Stephen and his friend might also be
subject to criminal penalties for violating insider trading laws.


 


Respect
for the Individual


 


We
should respect and value one another




We strive to maintain a workplace that allows everyone to contribute at the
highest level in an atmosphere that fosters growth and innovation. In our daily
decisions and actions, we should all be responsible for maintaining a workplace
that is free of harassment and discrimination and that promotes respect for
individuals.


 


We
make employment, pay and promotion decisions without regard to race, color,
religion, gender, age, national origin or ancestry, sexual orientation or other
protected class status. The Company is committed to full compliance with all
anti-discrimination laws, including state and federal laws against
discrimination and harassment in employment, the Americans with Disabilities
Act and the guidelines under the Massachusetts Commission Against
Discrimination and the Equal Employment Opportunity Commission. (Please refer
to the First Marblehead Employee Handbook for additional information on your
rights under these laws.)


 


Harassment
and discrimination are not tolerated


 


We
are committed to maintaining a workplace that is free of harassment and
discrimination. “Harassment” includes offensive behavior that interferes with
another individual’s work environment or that has the purpose or effect of
creating an intimidating or hostile work environment. Harassment may include
conduct done physically or verbally, or done in person or by other means. It
may also include conduct that is sexual in nature or otherwise inappropriate.
To that end, we are committed to upholding the existing laws regarding sexual
harassment and equality of employment opportunities. We will not tolerate
retaliation against an individual who reports sexual or other forms of
harassment or discrimination.  Retaliation is unlawful.


 


“Sexual
harassment” is defined by Massachusetts law as requests for sexual favors, and
other verbal or physical conduct of a sexual nature when submission to or
rejection of such advances, requests or conduct is made either explicitly or
implicitly a term or condition of employment or as a basis for employment
decisions; or when such advances, requests or conduct have the purpose or
effect of unreasonably interfering with an individual’s work 


 

















 


performance
by creating an intimidating, hostile, humiliating, or sexually offensive work
environment. Discrimination on the basis of sex includes, but is not limited
to, sexual harassment.


 


We
will investigate all complaints of sexual or other harassment and take
appropriate disciplinary or corrective action when necessary. For further
information on how to initiate a complaint or investigation, please see the
First Marblehead Employee Handbook, or call the HOTLINE.


 


Example:




Q.  Linda feels harassed by her manager, Justin.  He frequently makes
improper comments about her appearance when alone, making her
uncomfortable.  Linda has told Justin his comments bother her on more than
one occasion, but he has not changed or stopped the behavior.  What should
she do?




A.  Linda should report Justin’s conduct to Human Resources or a member of
the Code of Conduct Committee immediately.  Justin’s actions are unwanted
and violate the Code and our Company’s policy against harassment.  The
harassing behavior will not be tolerated.


 


Workplace
Policies


 


Employee
safety and health




Our greatest asset is you, so we are committed to the highest standards of your
safety and protection. In addition to maintaining a harassment-free
environment, we are also committed to a drug- and violence-free workplace.


 


Workplace
violence includes intimidation, threats, physical attack or property damage
directed at a fellow employee, officer or director. Anyone who engages in these
behaviors may be subject to disciplinary action up to and including
termination.


 


No
illegal drugs or alcohol on the job. In addition, the Company is committed to
fostering the health and well-being of all of us. That commitment is
jeopardized when someone uses illegal drugs or alcohol on the job, comes to
work with these substances present in his or her body or possesses, sells or
distributes drugs in the workplace.


 


It
is a violation of our policy and our Code for anyone to possess, sell or trade
or offer for sale illegal drugs or otherwise engage in the illegal use of
drugs, intoxicants or alcohol on the job. Anyone who engages in the behaviors
outlined may be considered in violation and may be subject to disciplinary
action, up to and including termination.


 


Report violence promptly:


 


If
you know of actual or potential workplace violence, call or e-mail the HOTLINE.
If you believe someone is in immediate danger dial 911 and contact building
security:




Medford Security: (781) 396-2559 

Prudential Security: (617) 236-3114


 


Political
activities and contributions


 


You
are encouraged to exercise your rights as voters and citizens. However,
political activity must take place on your own time and you may not use Company
resources or assets directly or indirectly for any political activities, except
as otherwise approved by the Board of Directors or in connection with your job
responsibility. You may not allow your status as an employee or officer to be
used in support of a particular political candidate or issue, except if
approved by the Board of Directors or in connection with your job
responsibilities.


 


In
addition, you may not pressure, either directly, or indirectly, employees,
officers or directors to make political contributions or to participate in
support of a political party, issue or candidate. Finally, corporate funds or
assets 


 

















 


may
not be used to support a political party, an elected official or the campaign
of any candidate for local, state or federal elected office.


 


Workplace
Policies


 


Responsible
use of e-mail and the internet at work


 


Systems
facilitating access to e-mail and the internet are Company resources that are
provided primarily for business use, so you need to exercise good judgment in
using these assets.  All e-mails and documents residing on Company systems
are the property of the Company and employees, officers and directors should
have no expectation of privacy.


 


Any
use of e-mail or internet access for inappropriate purposes, including gaining
access to pornographic or other unsuitable websites, is strictly
prohibited.  In addition, employees, officers and directors are legally
responsible for their blog and social network postings and may be subject to
liability if contents are found to be defamatory, harassing or in violation of
any applicable law.  It is expected that e-mail and internet usage is
business appropriate.


 


Example:




Q.  Samantha notices that several individuals who sit near her regularly
play games and watch movies on their Company computers.  She finds out
that some of the websites these individuals are accessing are restricted and
should be blocked by the Company’s internet filtering tools.  When testing
access to these websites from her work computer, Samantha was redirected and
received a message saying the websites were blocked.  What should Samantha
do?




A.  Samantha should report her concerns to her manager or any member of
the Code of Conduct Committee and she can choose to do so confidentially. 
The situation will be investigated.  If it is determined that individuals
intentionally bypassed security controls allowing them access, they will be
disciplined.  Further, any retaliation against Samantha for reporting this
information will not be tolerated.


 


Working
together to protect the environment


 


We
are firmly committed to protecting the environment. We comply with all
applicable environmental laws and regulations, as well as any guidelines set
forth by the Company. Our commitment means that we must operate with respect
for the environment by working to minimize environmental hazards, conserve and
protect natural resources, and manage our energy usage.


 


We
encourage individuals to do their part too. We should recycle, turn off lights
and computers when they are not in use, and take public transportation whenever
possible. If you have ideas, please share them with your manager or e-mail:
facilitiesdept@fmd.com.


 


Supporting
Our Code of Conduct


 


We have
to work together to uphold the Code


 


Our
Code not only outlines our operating responsibilities and guidelines, it is an
agreement that we share about the ethics and values which guide our business
actions and decisions. We are all responsible for upholding and enforcing it.


 


If
you develop any questions or concerns about ethical behavior in our workplace
we encourage you to raise them or report them.


 


Waivers
of the Code


 


While
most of the policies contained in our Code must be strictly adhered to, in some
cases exceptions may be possible. If you believe that an exception to any of
these policies may be appropriate, you should first contact your 


 

















 


manager.
If your manager agrees that an exception is appropriate, the written approval
of the General Counsel must then be obtained. The General Counsel is
responsible for maintaining a record of all requests for exceptions to any of
these policies and the disposition of the requests.


 


Any
executive officer who seeks an exception to any of these policies should contact
the General Counsel. Any waiver of our Code for executive officers must be made
only by the Board of Directors of the Company and will be disclosed as required
by the law or regulation.


 


As
First Marblehead employees, we agree:


·                  To prepare and maintain accurate business and
financial reports


·                  Not to mislead or inappropriately influence
auditors or regulators


·                  To protect the confidential information and
intellectual property of our company, clients and partners and to keep private
consumer information secure


·                  Not to give or accept inappropriate gifts
(generally gifts of >$50 per year)


·                  To use company resources—especially e-mail
and internet—only for appropriate purposes


·                  To deal fairly with business partners,
vendors and competitors


·                  Not to engage in insider trading or any other
illegal activities


·                  To maintain a safe workplace


 


The
Code of Conduct is available online via the Human Resources Intranet page. Hard
copies of the Code are available in the mail room or by request from HR.


 


Contact
Information


Code
of Conduct Committee Member = (M)


 


Bill
Baumer (M)


Managing
Director & Chief Risk Officer


The
First Marblehead Corporation


800
Boylston Street, 34th Floor


Boston,
MA 02199-8157


(617)
638-2093


bbaumer@fmd.com


 


Greg
Woods (M)


Managing
Director & General Counsel


The
First Marblehead Corporation


800
Boylston Street, 34th Floor


Boston,
MA 02199-8157


(617)
638-2176


gwoods@fmd.com


 


Jo-Ann
Burnham (M)


Managing
Director, Human Resources


The
First Marblehead Corporation


800
Boylston Street, 34th Floor


Boston,
MA 02199-8157


(617)
638-2005


jburnham@fmd.com


 


Ken
Klipper (M)


Managing
Director & Chief Financial Officer


The
First Marblehead Corporation


800
Boylston Street, 29th Floor


Boston,
MA 02199-8157


(617)
638-2163


kklipper@fmd.com


 


Daniel
Meyers


Chairman &
Chief Executive Officer


The
First Marblehead Corporation


 

















 


800
Boylston Street, 34th Floor


Boston,
MA 02199-8157


(617)
638-2001


dmeyers@fmd.com


 


Peter
Drotch


Chairman
– Audit Committee


The
First Marblehead Corporation Board of Directors


800
Boylston Street, 34th Floor


Boston,
MA 02199-8157


(508)
872-6647


 


Outside
Counsel


Wilmer
Cutler Pickering Hale and Dorr LLP


60
State Street 


Boston,
MA 02105 


(617)
526-6000


Attention:
Susan Murley, Esquire


 


Code
of Conduct HOTLINE: CodeOfConduct@fmd.com or 866.709.9950


 

















 


EXHIBIT J


FMER License Applications


 


Massachusetts
– Small Loan Company license


New
Jersey – Consumer Lender license