EXHIBIT 10.18
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
PA Draft #9
Execution Draft
February 9, 2001
MASTER LOAN GUARANTY AGREEMENT
THIS MASTER LOAN GUARANTY AGREEMENT ("Agreement") is made and entered
into by and between THE EDUCATION RESOURCES INSTITUTE, INC. ("XXXX"), a private
non-profit corporation organized under Chapter 180 of the Massachusetts General
Laws, with its principal place of business at 000 Xxxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000 and THE FIRST MARBLEHEAD CORPORATION ("FMC"), a Delaware
corporation having a principal place of business at 00 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000. This Agreement is dated as of February 2, 2001.
RECITALS
WHEREAS, XXXX is a not-for-profit private loan guaranty company with
substantial experience developing and executing education loan programs made by
private lenders and guaranteed by XXXX; and
WHEREAS, FMC is a developer, marketer, and market maker for education
loans made by private lenders and sold by those lenders into Securitization
Transactions arranged by FMC and its affiliate, The National Collegiate Trust;
and
WHEREAS, FMC and XXXX contemplate executing and consummating a certain
Purchase and Sale Agreement pursuant to which XXXX will sell to First Marblehead
Education Resources ("FMER") its operating divisions that perform loan
underwriting, origination, marketing and claims management with respect to loans
guaranteed by XXXX; and
WHEREAS, FMC and XXXX contemplate that XXXX and FMER will enter into a
Master Servicing Agreement pursuant to which FMER will provide services to XXXX
in connection with the underwriting, origination, and claims management of
existing and future XXXX-guaranteed loans; and
WHEREAS, FMC and XXXX contemplate that XXXX and FMC Marketing Sub will
enter into a Loan Marketing Agreement pursuant to which FMC Marketing Sub will
provide marketing services to XXXX; and
WHEREAS, FMC and XXXX desire to arrange for XXXX to guaranty existing
and future FMC-sponsored loan programs, including, without limitation, the Bank
of America/GATE Loan Programs; and
WHEREAS, XXXX would benefit from FMC's creation of a new market for
Program Lenders to sell loans guaranteed by XXXX; and
WHEREAS, FMC and XXXX desire to set forth herein in detail the terms
pursuant to which XXXX will provide guarantees for the Bank of America/GATE Loan
Programs and FMC will continue to create a market for loans made under such
program; and
WHEREAS, FMC desires to set forth herein procedures to negotiate terms
and conditions for future XXXX-guaranteed programs to be marketed by FMC
Marketing Sub and purchased in Securitization Transactions.
NOW, THEREFORE, in consideration of these presents and the covenants
contained herein, the parties do hereby agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings.
1.01 "Asset Purchase Date" means the date of consummation of the
transactions contemplated by the Purchase and Sale Agreement.
1.02 "BA" or "Bank of America" means Bank of America, National Association,
a national banking association having its principal office in Charlotte, North
Carolina.
1.03 "BA Guaranty Agreement" means the form of Guaranty Agreement, attached
hereto as Exhibit C.
1.04 "BA Note Purchase Agreement" means a certain Note Purchase Agreement
between BA and FMC dated as of April 3, 2000.
1.05 "Deposit and Security Agreement" means an agreement between BA and XXXX
substantially in the form of Exhibit E attached hereto.
1.06 "Excess Deposited Funds" has the meaning set forth in Section 2.04.
1.07 "FMC Marketing Sub" means XXXX Marketing Services, Inc., a Delaware
corporation.
1.08 "FMC Purchase Program" means a loan program (including, without
limitation, the Bank of America/GATE Loan Programs) pursuant to which FMC has
agreed to enter
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into a Note Purchase Agreement with the Program Lender(s) and thereby create a
regular method for Program Lender(s) to sell XXXX-guaranteed loans. The Bank of
America/GATE Loan Programs are FMC Purchase Programs. No other loan program
shall be considered an "FMC Purchase Program" until FMC and XXXX have executed a
separate letter agreement as described in Section 2.05 hereof.
1.09 "FMER" means First Marblehead Education Resources, a Delaware
corporation.
1.10 "GAAP" means generally accepted accounting principles, consistently
applied.
1.11 "Bank of America/GATE Loan Programs" means, collectively, the loan
programs described in the Program Guidelines.
1.12 "GATE Student Loan Program" means the FMC-sponsored program providing
loans for graduate and undergraduate students who (a) may not have a credit
history but do not have significant negative credit history, (b) are enrolled at
schools that (i) agree to participate in the program, (ii) award the loans to
specified students, and (iii) in most cases, provide direct or indirect credit
support for the loans, as such program may be revised or modified from time to
time.
1.13 "Governmental Entity" has the meaning set forth in Section 6.04 below.
1.14 "Guaranty Agreement" means that form of Guaranty Agreement between XXXX
and a Program Lender attached hereto as Exhibit G.
1.15 "Loan Origination Agreement" means a form of agreement between XXXX and
a Program Lender substantially in the form of Exhibit D attached hereto.
1.16 "Master Servicing Agreement" means that certain agreement to be entered
into on the Asset Purchase Date between XXXX and FMER with respect to certain
loan origination, underwriting, and collection services provided by FMER to
XXXX.
1.17 "NCT" means The National Collegiate Trust, a Delaware business trust
owned by FMC.
1.18 "Note Purchase Agreement" means an agreement pursuant to which FMC
agrees with a Program Lender to use its best efforts to cause Securitization
Transactions to occur and which defines the terms pursuant to which NCT or an
NCT affiliate will purchase XXXX-guaranteed loans covered by a particular FMC
Purchase Program.
1.19 "Pledged Account" has the meaning set forth in Section 2.04.
1.20 "Program Guidelines" means, collectively, Exhibits A through J attached
to the BA Guaranty Agreement, as modified from time to time pursuant to the
terms hereof, and such similar guidelines as may hereafter by agreement of the
parties apply to any future FMC Purchase Program.
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1.21 "Program Lender" means (a) with respect to the Bank of America/GATE
Loan Programs, Bank of America, and (b) with respect to any future FMC Purchase
Program, any financial institution that agrees to act as lender pursuant to the
Program Guidelines governing such program and enters (x) into a Guaranty
Agreement substantially in the form of Exhibit G hereto or such other form as
XXXX and FMC may agree and (y) into a Note Purchase Agreement satisfactory to
FMC.
1.22 "Purchase and Sale Agreement" means an agreement to be entered into
between FMC and XXXX pursuant to which FMC agrees to cause FMER to purchase
certain tangible and intangible assets of XXXX.
1.23 "Rating Agencies" means Xxxxx'x Investors Services, Inc., Fitch IBCA,
and Standard & Poors, Inc., any successor thereto, and any other nationally
recognized statistical rating agency (as defined in the regulations of the
Securities and Exchange Commission) that now or hereafter issues a publicly
available credit rating of XXXX.
1.24 "Seasoned Loans" means all Bank of America/GATE Loans meeting the
following criteria:
(a) that have not been sold by BA, and
(b) either
(i) with respect to a Loan whose first scheduled borrower
payment is less than 30 months after the date of the first
disbursement, six months have expired after the date of such
first disbursement and the loan has been fully disbursed; or
(ii) with respect to Loans whose first scheduled borrower
payment is 30 months or more after the date of the first
disbursements, 30 months have expired following the date of first
disbursement; and
(c) FMC's right to purchase such Loan has not expired (such
expiration occurring [**] days after the first May 1 when such Loan first met
the definition of a "Seasoned Loan").
For purposes of subsection (b), the records of the Servicer established
after the first disbursement is actually made shall be dispositive, unless
manifestly erroneous. FMC shall prepare a monthly report to XXXX, based upon the
Servicer's monthly report of new loans posted to the servicing system. Such a
report shall include borrower name, loan number, principal amount, and the date
the loan will become a "Seasoned Loan."
1.25 "Securitization" or "Securitization Transaction" shall mean and refer
to a transaction in which one or more Program Lenders sell XXXX-guaranteed loans
to a Special Purpose Entity, which entity funds the acquisition of such loans by
the issuance
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of debt instruments or other obligations, which instruments or obligations are
limited in recourse to the proceeds of the loans being purchased by such special
purpose entity and certain other assets, such as the Pledged Account described
in Section 2.04 hereof, bond insurance and other assets supporting obligations
issued by the Special Purpose Entity. FMC shall make equity investments as
provided herein to provide additional funds for loan acquisition.
1.26 "Securitization Trust Agreement" means an agreement pursuant to which a
Sub Trust is created and the beneficial interests of its owners are established.
1.27 "Servicer" means: (a) with respect to the Bank of America/GATE Loan
Program, the Pennsylvania Higher Education Assistance Agency or such other
servicer as may be designated by FMC and approved by XXXX from time to time, and
(b) with respect to any other program, the servicer or servicers acceptable to
FMC and XXXX who agree with Program Lenders and with NCT to provide both pre-
and post-securitization loan servicing.
1.28 "Special Purpose Entity" or "Sub Trust" means an entity formed by NCT
or FMC for the limited purpose of conducting a Securitization Transaction in
which XXXX-guaranteed loans (and loans from other FMC programs) are purchased
from one or more Program Lenders.
1.29 "Subsequent Guaranty Fee" has the meaning set forth in the BA Guaranty
Agreement and in any other Guaranty Agreement that calls for the Program Lender
to pay guaranty fees to XXXX in addition to payment of TERI's initial guaranty
fee of [**], which fees may be either or both: (a) collected from the borrower
and/or paid by the Lender in connection with Loan disbursement, or (b) paid by
the Lender subsequent to the funding of the loan (for example, at the beginning
of loan repayment or at purchase in a Securitization Transaction).
ARTICLE II
AFFIRMATIVE COVENANTS OF XXXX RELATING TO
GATE FAMILY LOAN PROGRAM AND FUTURE PROGRAMS
2.01 GUARANTY AGREEMENT WITH BANK OF AMERICA. XXXX shall enter into a
Guaranty Agreement with Bank of America, as Program Lender under the Bank of
America/GATE Loan Programs, substantially in the form of Exhibit C attached
hereto, with such changes therein as may be requested by Bank of America and
approved by XXXX and FMC, which approval shall not be unreasonably withheld,
delayed or conditioned. XXXX shall maintain such Guaranty Agreement in full
force and effect unless and until either: (a) XXXX shall terminate the Guaranty
Agreement pursuant to the terms thereof, or (b) this Agreement is terminated.
2.02 LOAN ORIGINATION AGREEMENT. XXXX shall enter into a Loan Origination
Agreement with Bank of America relating to origination of the prepGATE Loan
Program (one of the Bank of America/GATE Loan Programs) substantially in the
form of Exhibit
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D attached hereto, with such changes therein as may be requested by Bank of
America and approved by XXXX and FMC, which approval shall not be unreasonably
withheld, delayed or conditioned.
2.03 APPROVAL OF PROGRAM GUIDELINES. The parties agree that the Program
Guidelines will need to be updated and be modified to respond to changed
conditions from time to time, and that new or revised Program Guidelines may
need to be developed for future FMC Purchase Programs. Modifications that affect
XXXX shall be made in a manner that does not interfere with the ordinary
advertising and origination cycle for education loans. Accordingly, the parties
shall exchange requests for modifications affecting XXXX in the last calendar
quarter of each year, on or prior to November 15th, and shall conclude their
discussions of any modifications by December 31 of each calendar year. All
modifications must be mutually acceptable. Any modifications to the Program
Guidelines that affect a Program Lender or Servicer must be approved by the
party affected. The parties shall use their best efforts to obtain such
approval.
2.04 SEGREGATION OF GUARANTY FEES. XXXX shall enter into a Deposit and
Security Agreement with Bank of America and the Agent named therein,
substantially in the form of Exhibit E attached hereto, providing, INTER ALIA,
for the segregation of a portion of guaranty fees payable to XXXX in respect of
loans originated under the BA Guaranty Agreement, and including the following
key terms:
(a) The Subsequent Guaranty Fees in respect of such loans shall be
paid directly to the Agent as soon as such fees become payable and deposited by
the Agent into a segregated fund, which shall be held as collateral to secure
TERI's obligation to purchase defaulted Bank of America/GATE Loans (the "Pledged
Account"). The Agent shall have a perfected security interest in any right of
XXXX to receive any Subsequent Guaranty Fee, and XXXX shall take all actions
necessary or appropriate to perfect such interest, including, without
limitation, execution of UCC-1 financing statements.
(b) The Agent shall be a financial institution acceptable to all of
the parties.
(c) From time to time, the Agent will release amounts from the
Pledged Account to enable XXXX to purchase defaulted loans ("Defaulted Loans").
XXXX shall deposit net amounts recovered with respect to Defaulted Loans to the
Pledged Account as set forth in the Deposit and Security Agreement. Such deposit
is computed after deduction of TERI's collection costs. Recoveries include any
repurchase of a "cured" loan by a Program Lender.
(d) Upon a sale of Seasoned Loans, the guaranty of which is
collateralized by the Pledged Account, in a Securitization Transaction, (i) the
indenture trustee in the Securitization Transaction shall become the Agent with
respect to the Pledged Account or (ii) some or all of the applicable Program
Lender's interest in the Pledged Account shall be assigned to such indenture
trustee, to secure TERI's obligation to pay guaranty claims to the Sub Trust.
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(e) XXXX shall be entitled to receive a payment of Excess Deposited
Funds quarterly. As used herein, "Excess Deposited Funds" means the amount by
which the balance of funds held in the Pledged Account exceeds [**] of the
principal of any XXXX-guaranteed loans held by the Sub Trust. FMC agrees to
consult with the Rating Agencies from time to time regarding reduction of such
percentage below [**] and to cause such reduction to be included in the terms of
future Securitization Transactions to the extent that it can be effected without
adverse effect upon either the credit rating or the financial terms of such
transactions.
(f) In the event that the Rating Agencies or a party to a
Securitization Transaction requires a modification to the terms under which the
Pledged Account will be held in such transaction, XXXX agrees to negotiate in
good faith with respect to such modification.
2.05 XXXX REVIEW OF DESIGN OF FUTURE PROGRAMS. FMC may, and to the extent
required by Sections 3.05 and 8.01(b), FMC shall from time to time, propose
additional FMC Purchase Programs for inclusion under this Agreement. XXXX agrees
to review such proposals promptly and to respond, in writing, to such proposals
within thirty (30) days, specifying any changes it requests in order to approve
such proposals for inclusion under this Agreement. Upon approval of an
additional FMC Purchase Program for inclusion under this Agreement, XXXX shall
give to FMC its written approval of the associated Program Guidelines, Guaranty
Agreement, Loan Origination Agreement, Deposit and Security Agreement, and Note
Purchase Agreement, all of which shall be in form and substance reasonably
satisfactory to FMC and XXXX.
2.06 APPROVAL OF SERVICERS. XXXX shall review and approve or deny within
thirty (30) days any proposed Servicer suggested by FMC or any Program Lender.
TERI's approved Servicer list presently includes Pennsylvania Higher Education
Assistance Authority, AFSA Data Corporation, Education Funding Services, USA
Group Servicing, Education Funding Group (formerly EduServ), Unipac Services
Corporation, and Great Lakes Higher Education Servicing.
XXXX will not unreasonably withhold its consent to the Program Lender's choice
of a servicer not previously approved by XXXX (it being acknowledged that the
Program Lender, not XXXX, bears the ultimate financial risk of retaining a
servicer that does comply with the Program Guidelines.)
TERI's approval of a Servicer is in no way an endorsement of such Servicer and
XXXX shall have no liability to the Program Lender or FMC for any losses arising
from such Servicer's failure to comply with the Program Guidelines or applicable
law, nor shall XXXX be required to honor any claim submitted by such Servicer if
the claim does not comply with the requirements of the applicable Guaranty
Agreement.
2.07 ISSUANCE OF CONTINUING GUARANTY AGREEMENT IN SECURITIZATION
TRANSACTION. In order to facilitate Securitization Transactions, XXXX agrees to
issue a new guaranty agreement to the new owner of XXXX-guaranteed loans in any
Securitization Transaction
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involving an FMC Purchase Program. Said guaranty agreement shall be on the same
terms and conditions as those applicable to the Program Lender selling the loans
in the Securitization Transaction.
2.08 OPINIONS IN SUPPORT OF SECURITIZATION. In order to facilitate
Securitization Transactions, XXXX agrees to provide the opinion of its
Massachusetts and federal law counsel, addressed to the parties in a
Securitization Transaction, to the effect that the form and terms of any
Promissory Note, disclosure, and other loan documents used by XXXX to originate
any FMC Purchase Program Loan sold in the Securitization Transaction comply with
all Massachusetts and federal law requirements. This requirement shall only
apply to loans actually originated by XXXX pursuant to an agreement with the
Program Lender.
ARTICLE III
COVENANTS OF FMC WITH RESPECT TO
GATE FAMILY LOAN PROGRAM AND FUTURE PROGRAMS
3.01 FACILITATION OF SECURITIZATION TRANSACTIONS. FMC has entered into a
Note Purchase Agreement with Bank of America, relating to purchase of all
Seasoned Loans made by Bank of America. FMC agrees for the benefit of XXXX to
perform its obligations pursuant to said Note Purchase Agreement. FMC further
agrees, for the benefit of XXXX, to [**] to cause a purchase of Bank of
America/GATE Loans in a Securitization Transaction pursuant to the Note Purchase
Agreement at least once per calendar year and that such Securitization
Transaction shall be scheduled to occur in the period March through May. In
addition, as soon as the volume of loans to mid-year graduates is sufficient to
make a second annual securitization economically reasonable, FMC will [**]to
cause a Securitization Transaction to occur in the fall of each year. The
purpose of this provision is to minimize the likelihood that large numbers of
loans will go into default and become subject of a Guaranty claim before all
Subsequent Guaranty fees have been paid into the Pledged Account.
3.02 STRUCTURE OF SECURITIZATION TRANSACTION FOR BENEFIT OF XXXX. FMC
agrees, either directly or through its affiliate, NCT, to structure any
Securitization Transaction in which loans made pursuant to an FMC Purchase
Program are purchased to include the following provisions:
(a) XXXX shall be entitled to receive the Excess Deposited Funds, as
defined in Section 2.04 above, to the extent any exist from time to time.
(b) If the Asset Purchase Date has occurred and if XXXX shall agree
to accede to ownership of the Sub Trust by execution of an Accession Agreement
in the form of Exhibit F attached hereto, then FMC will cause the terms of the
Securitization Trust Agreement to provide a beneficial interest for XXXX, as
owner, that will entitle XXXX to ownership of 25% of the Residual Value of
XXXX-guaranteed loans owned by such Sub Trust. The Securitization Trust
Agreement shall be satisfactory in form and substance to
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FMC and XXXX; PROVIDED, HOWEVER, that the consent of XXXX to the terms of such
Securitization Trust Agreement shall not be required (but such agreement SHALL
provide said 25% ownership) if this Agreement has been terminated pursuant to
Section 8.03(a) hereof. As used herein, the term "Residual Value" means the
proceeds of XXXX-guaranteed loans after (i) retirement of any debt or other
obligations of the Sub Trust incurred by the Sub Trust in connection with the
purchase of such loans, including, without limitation, payment of principal,
interest, premium, bond insurance and other credit support costs, structuring
costs, advisors fees and all other charges arising out of or incurred as a
result of a Securitization Transaction, whenever payable, and also including the
cost of any refinancing of such obligations, (ii) payment of all of the
operating costs of the Sub Trust (e.g., trustees' fees and trust administration
costs), not to exceed 75[**]basis points (0.75%) of the principal value of the
Sub trust corpus per annum, (iii) payment of all servicing fees, collection
agency fees and other charges assessed by third parties to service and collect
the loans that make up the trust corpus, and (iv) repayment of any cash equity
investment made by FMC or any affiliate of FMC in connection with the formation
of the Sub Trust and the purchase of the XXXX-guaranteed loans in question. XXXX
understands and agrees that there is no assurance that the Residual Value, as
defined herein, will have any cash value with respect to any particular Sub
Trust.
FMC agrees that it will not consummate any Securitization Transaction involving
XXXX-guaranteed loans prior to April 15, 2001. In the event FMC consummates a
Securitization Transaction after that date (but prior to the Asset Purchase
Date) involving XXXX-guaranteed loans that are FMC Purchase Loans, and FMC will
arrange for XXXX to receive the aforesaid ownership of 25%of the Residual Value
of XXXX-guaranteed loans in said transaction pursuant to an Accession Agreement,
under the terms of which TERI's rights will revert to FMC if the Asset Purchase
Date does not occur by January 1, 2002.
3.03 EQUITY INVESTMENT BY FMC IN SUB TRUST. If the Asset Purchase Date has
occurred, FMC agrees to make equity investments in Sub Trusts that purchase FMC
Purchase Program Loans. The amount of such equity investments shall be such
amount as is necessary: (i) to provide adequate funds to purchase all FMC
Purchase Program Loans then available for purchase under the applicable Note
Purchase Agreement (including, without limitation, all Seasoned Loans), and (ii)
to structure such transaction in accordance with Rating Agency guidelines and
the transaction structure requirements of FMC. FMC's obligation to make equity
investments in Sub Trusts shall not exceed the aggregate amount of $15 million
in total of all investments made from time to time, including both investments
to purchase Bank of America/GATE Loans and investments to purchase loans under
any future FMC Purchase Programs, whether or not such investments have been
repaid by any Sub Trust, in whole or in part. The terms of such equity
investments shall be without interest or other premium, but such equity
investments shall be entitled to a preference in repayment upon any liquidation
of the Sub Trust, prior to any distribution of Residual Interests.
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3.04 OTHER CUSTOMARY FEES. FMC and its affiliates shall also be entitled to
receive their customary fees in connection with the structuring of
Securitization Transactions and the administration of Sub Trusts, as such fees
are established from time to time. Such fees shall not exceed the amount charged
by FMC or its affiliates for securitization structuring and/or trust
administration in connection with similar transactions not involving
XXXX-guaranteed loans.
3.05 FMC OBLIGATION TO DEVELOP FUTURE PROGRAMS (PRIVATE LABEL). If the Asset
Purchase Date has occurred, FMC shall, as a consultant to XXXX, develop and
propose to XXXX consumer product pricing and repayment terms, together with
other program terms necessary for future securitization for one or more programs
of XXXX-guaranteed private education loans to be marketed by Program Lender(s)
(i) under such lender's proprietary branding and/or (ii) to students attending
one or more specified schools. Such programs will qualify as FMC Purchase
Programs. FMC's proposals will include underwriting criteria and pricing
matrices for the loans. It will also include any modifications to TERI's Program
Guidelines necessary to describe the program. Upon approval of the program by
XXXX, FMC will draft for TERI's approval a proposed Guaranty Agreement, Loan
Origination Agreement, model Loan Servicing Agreement acceptable for
securitization by FMC, and a form of Note Purchase Agreement to be entered into
between FMC and Program Lenders. FMC will propose the underwriting criteria and
pricing matrices within 30 days after the Asset Purchase Date and from time to
time thereafter. FMC shall receive no compensation for its services under this
Section 3.05 over and above the compensation it receives as a consequence of
securitization of the loans made pursuant to its proposals. FMER may receive
compensation under the Master Servicing Agreement for services that support
FMC's efforts pursuant to this Section.
ARTICLE IV
GENERAL COVENANTS OF XXXX
4.01 MAINTAIN 501(c)(3) STATUS. XXXX shall take all actions necessary or
appropriate to maintain its status as a tax-exempt organization pursuant to
Section 501(c)(3) of the Internal Revenue Code of the United States. Such action
shall include, without limitation, the maintenance of adequate staff levels and
expertise to supervise the activities of FMER under the Master Servicing
Agreement and to review and approve or reject FMC proposals for modifications to
existing FMC Purchase Programs and for the creation of new FMC Purchase
Programs.
4.02 GOVERNMENTAL APPROVALS. XXXX shall obtain and maintain all necessary
licenses, registrations, approvals, and governmental authorizations now or in
the future necessary to conduct its business as a loan guaranty agency.
4.03 PERFORM GUARANTY OBLIGATIONS. XXXX shall perform each and all of its
obligations under each and every Guaranty Agreement between XXXX and any Program
Lender covered by this Agreement.
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4.04 CREDIT RATINGS. XXXX shall use all reasonable efforts to maintain its
current credit ratings with the Rating Agencies.
4.05 REGULATORY COMMUNICATIONS. XXXX shall promptly forward to FMC any
notices, demands, reports or other communications from any regulator or
supervisory agency having jurisdiction over XXXX that in any way relate to or
could potentially affect any FMC Purchase Program or any other loan Guaranty
program offered by XXXX.
4.06 CONSULTATION WITH FMC. XXXX shall not offer any new loan guaranty
program nor shall it enter into any other financially material transaction or
assume any other material performance obligation (in addition to those currently
in effect) without first consulting with FMC and will not enter into any such
new program or obligation that will have a material adverse effect upon the
ability of XXXX to perform its obligations under this Agreement. This Section
4.06 is acknowledged not to apply to the entry by XXXX into any agreement with a
new lender under any existing XXXX credit-tested loan program, so long as the
terms of such agreement are substantially the same as for other lenders in such
program.
ARTICLE V
COVENANTS OF FMC
5.01 LICENSES AND PERMITS. FMC shall obtain and maintain all necessary
licenses and permits in order to perform its obligations under this Agreement.
5.02 PERFORMANCE OF AGREEMENTS. FMC will perform its obligations under the
Note Purchase Agreement and under similar note purchase agreements entered into
pursuant to this Agreement.
5.03 OWNERSHIP OF OPERATING SUBSIDIARIES. During the term hereof, FMC shall
be and remain the owner of 100% of the issued and outstanding voting securities
of FMER and FMER shall be and remain the owner of 100% of the issued and
outstanding voting securities FMC Marketing Sub.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF XXXX
XXXX represents and warrants to FMC as follows:
6.01 ORGANIZATION AND QUALIFICATION. XXXX is duly organized and validly
existing and is in good standing as a nonprofit corporation under the laws of
the Commonwealth of Massachusetts. XXXX has the requisite power and authority
and all necessary governmental approvals to own, lease and operate its
properties and to carry on its business as it is now being conducted. XXXX is
duly qualified or licensed to do business and is in good standing in each
jurisdiction where the character of the properties owned, or leased or operated
by it or the nature of its business makes such qualification or licensing
necessary.
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6.02 AUTHORITY.
(a) XXXX has all necessary corporate power and authority to execute
and deliver this Agreement and to perform its obligations under this Agreement
and to consummate the other transactions contemplated by this Agreement. The
execution and delivery of this Agreement by XXXX and the consummation by XXXX of
such transactions have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of XXXX are
necessary to authorize this Agreement or to consummate such transactions. This
Agreement has been duly authorized and validly executed and delivered by XXXX
and constitutes a legal, valid and binding obligation of XXXX, enforceable
against XXXX in accordance with its terms.
(b) The Board of Directors of XXXX has (i) approved this Agreement
and the other transactions contemplated by this Agreement, (ii) acting through
duly authorized committees, reviewed and analyzed all information (including,
without limitation, advice of counsel) that it has deemed necessary in order to
determine the appropriateness from TERI's point of view of the transactions
contemplated by this Agreement, and (iii) has declared that this Agreement and
the other transactions contemplated by this Agreement are advisable and in the
best interests of XXXX. XXXX shall provide to FMC a Clerk's certificate
attesting to the relevant board resolutions, the vote approving each and any
board minutes relating to the same.
6.03 NO CONFLICTS. The execution and delivery of this Agreement by XXXX do
not, and the performance of this Agreement by XXXX will not:
(a) conflict with or violate any provision of TERI's Certificate of
Incorporation or Bylaws;
(b) conflict with or violate any foreign or domestic law, statute,
ordinance, rule, regulation, order, judgment or decree ("Law") applicable to
XXXX or by which any property or asset of XXXX is or may be bound or affected;
or
(c) result in any breach of or constitute a default (or an event
which, with or without notice or lapse of time or both, would become a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of an encumbrance on any property or
asset of XXXX under any note, bond, mortgage, indenture, contract, agreement,
commitment, lease, license, permit, franchise or other instrument or obligation
(collectively, "Contracts"), to which XXXX is a party or by which it or its
assets or properties is or may be bound or affected.
6.04 REQUIRED FILINGS AND CONSENTS. The execution and delivery of this
Agreement by XXXX do not, and the performance of this Agreement by XXXX will
not, require any consent, approval, authorization or permit of, or filing with
or notification to, any domestic or foreign national, federal, state,
provincial, or local governmental, regulatory
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or administrative authority, agency, commission, court, tribunal or body or
self-regulated entity (each, a "Governmental Entity").
6.05 PERMITS, COMPLIANCE WITH LAW. XXXX is in possession of all franchises,
grants, authorizations, licenses, permits, easements, variances, exceptions,
consents, certificates, approvals and orders of any Governmental Entity
necessary for XXXX to own, lease and operate its properties or to carry on its
business as now being conducted (collectively, the "XXXX Permits"), and, as of
the date of this Agreement, the suspension or cancellation of any of the XXXX
Permits is not pending or, to the knowledge of XXXX, threatened. XXXX is not in
conflict with, or in default or violation of (i) any law applicable to XXXX or
by which any property or asset of XXXX is or may be bound or affected, or (ii)
any XXXX Permits.
6.06 FINANCIAL STATEMENTS.
(a) Each of the consolidated balance sheets of XXXX (including, in
each case, the related notes and schedules) as of December 31, 1998, December
31, 1999, and any subsequent date of any financial statement provided to FMC,
fairly presented the consolidated financial position of XXXX as of their
respective dates in accordance with GAAP. Each of the consolidated statements of
income and cash flows of XXXX (including, in each case, any related notes and
schedules) for the years ended December 31, 1998 and December 31, 1999, and the
period ending with the date of the statement most recently provided to FMC
fairly presented, the consolidated results of operations and cash flows, as the
case may be, of XXXX for the periods set forth in those consolidated statements
of income and cash flows (subject, in the case of unaudited quarterly
statements, to notes and normal year-end audit adjustments that will not be
material in amount or effect), in each case in conformity with GAAP. All of such
balance sheets and statements comply as to form in all material respects with
all applicable accounting requirements.
(b) Except as and to the extent set forth on the consolidated audited
balance sheet of XXXX as of the date most recently provided to FMC, including
related notes, XXXX has no liabilities or obligations of any nature (whether
accrued, absolute, contingent or otherwise) that would be required to be
reflected on a balance sheet or in the related notes prepared in accordance with
GAAP, except for liabilities or obligations incurred in the ordinary course of
business since the date of such balance sheet that, individually or in the
aggregate have not resulted and could not reasonably be expected to result in a
Material Adverse Effect (as hereinafter defined) on XXXX. For purposes of this
Agreement, "Material Adverse Effect" shall mean any events, circumstances or
conditions that have had, or are reasonably likely to have, a material adverse
effect on the party's financial condition, results of operations, assets or
prospects.
6.07 LITIGATION. Except as set forth in Schedule 6.07 attached hereto, there
is no suit, claim, action, proceeding or investigation (collectively, "Claims")
pending or, to the knowledge of XXXX, threatened against XXXX before any court
or administrative agency
13
or regulatory agency. XXXX is not subject to an outstanding order, written
injunction or decree.
6.08 TAX FILINGS. XXXX has timely filed, in accordance with all applicable
law, all returns, declarations, reports, forms, estimates, information returns
and/or statements required to be filed in respect of any Taxes or by any
authority responsible for the enforcement of any taxes, including, without
limitation, the Internal Revenue Service of the United States and the
Massachusetts Department of Revenue.
6.09 501(c)(3) STATUS. No action, suit, proceeding, investigation, audit,
claim or assessment is presently pending or, to the knowledge of XXXX, proposed
with regard to the retention by XXXX of its status as a tax-exempt entity under
Section 501(c)(3) of the Internal Revenue Code.
6.10 CONFLICTING AGREEMENTS. XXXX is not a party to any contract which
purports to restrict or prohibit, in any respect, XXXX from, directly or
indirectly, engaging in any business contemplated by this Agreement. None of
TERI's officers, directors or key employees is a party to any agreement which,
by virtue of such person's relationship with XXXX, restricts in any respect XXXX
from, directly or indirectly, engaging in any of the businesses contemplated by
this Agreement.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF FMC
FMC hereby represents and warrants to XXXX, as follows:
7.01 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) FMC (i) is duly organized and is validly existing and in good
standing under the laws of the State of Delaware, (ii) has the requisite power
and authority and all necessary governmental approvals to own, lease and operate
the properties and to carry on its business as it is now being conducted, and
(iii) is duly qualified or licensed to do business, and is in good standing, in
each jurisdiction where the character of the property is owned, leased or
operated by it or the nature of its business makes such qualification or
licensing necessary.
(b) FMC is the owner of 100% of the outstanding equity interests in
NCT.
7.02 AUTHORITY.
(a) FMC has all the necessary power and authority to execute and
deliver this Agreement and to perform its obligations under this Agreement and
to consummate the transaction contemplated by this Agreement to be consummated
by it. The execution and delivery of this Agreement by FMC and the consummation
by FMC of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of FMC are necessary to authorize
14
this Agreement or to consummate such transactions. This Agreement has been duly
authorized and validly executed and delivered by FMC and constitutes a legal,
valid and binding obligation of FMC enforceable against FMC in accordance with
its terms.
7.03 NO CONFLICTS.
The execution and delivery of this Agreement by FMC does not, and the
performance of this Agreement by FMC will not:
(i) conflict with or violate any provision of FMC's Certificate of
Incorporation or Bylaws;
(ii) conflict with or violate any law applicable to FMC or by which
any property or asset of FMC is or may be bound or affected; or
(iii) result in any breach of or constitute a default (or an event
which, with or without notice or lapse of time or both, would become a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of an encumbrance on any property or
asset of FMC under, any contract to which FMC is a party or by which FMC or its
assets or properties is or may be bound or affected.
7.04 REQUIRED FILINGS AND CONSENTS. Except as set forth in Schedule 7.04
hereto, the execution and delivery of this Agreement by FMC do not, and the
performance of this Agreement by FMC will not, require any consent, approval,
authorization or permit of, or filing with, or notification to, any governmental
entity.
7.05 LITIGATION. There is no claim, action or proceeding pending or, to the
knowledge of FMC, threatened against FMC before any court or administrative or
regulatory body that, if adversely determined, individually or in the aggregate,
has resulted or could reasonably be expected to result in an adverse effect on
the consummation of the transactions contemplated by this Agreement. FMC is not
subject to any outstanding order, writ, injunction or decree which, individually
or in the aggregate, has resulted or could reasonably be expected to result in
an adverse effect on the consummation of the transactions contemplated by this
Agreement.
ARTICLE VIII
RELATIONSHIP OF THE PARTIES
8.01 EXCLUSIVITY.
(a) PRIOR TO ASSET PURCHASE DATE. Prior to the Asset Purchase Date,
this Agreement shall not restrict the ability of FMC to deal with other
guarantors, and FMC shall be free to enter into other similar agreements with
other persons, except that FMC
15
shall not employ the services of any other loan guaranty agency to insure
against the default of borrowers under the Bank of America/GATE Loan Program.
(b) AFTER THE ASSET PURCHASE DATE. On and after the Asset Purchase
Date and for so long as this Agreement remains in effect, FMC will not engage
any other guarantor to provide borrower default guaranties, except that this
provision shall not apply to: (i) any loan program that FMC proposes to XXXX and
XXXX declines to guarantee on terms acceptable to FMC, after FMC and XXXX have
negotiated the terms of such program in good faith; (ii) reinsurance programs
for XXXX-insured loans, (iii) programs where FMC uses no third-party borrower
default insurance, now or in the future (e.g., the GATE Student Loan Program,
including, without limitation, versions of such program where (A) participating
educational institutions provide partial guaranties, or (B) the originating
lender retains default risk after securitization), and (iv) so-called bond
insurance or wrap insurance used to support debt issued in a Securitization
Transaction (e.g., insurance issued by MBIA).
8.02 TERM AND TERMINATION.
(a) PRIOR TO ASSET PURCHASE DATE. On or prior to the Asset Purchase
Date, either party may terminate this Agreement upon 90 days' written notice to
the other party; provided, however, that such notice shall not be effective
prior to March 1, 2002.
(b) AFTER ASSET PURCHASE DATE. On and after the Asset Purchase Date,
this Agreement shall have a term of five years, commencing on the first day of
the first calendar month following the Asset Purchase Date. Either party may
renew this Agreement for one, five-year renewal term by delivery of written
notice to the other party not less than 60 days prior to the then-effective
expiration date of this Agreement.
8.03 TERMINATION FOR CAUSE.
(a) BY FMC FOR FAILURE OF CONSIDERATION. FMC may terminate this
Agreement on account of the lack of continued value of the XXXX Guaranty upon
the occurrence of any of the following events and upon the giving of the notice
provided below:
(i) XXXX shall fail to maintain its status as a tax-exempt
organization under Section 501(c)(3) of the Internal Revenue Code;
(ii) XXXX shall fail to pay any Guaranty claim (under any FMC Purchase
Program) due and owing within thirty days after demand for payment from the
Program Lender or loan owner involved, made after the deadline for such payment
as set forth in the applicable Guaranty Agreement, unless funds are available to
pay such claim from the Pledged Account concerned;
(iii) The Master Servicing Agreement shall fail to remain in full force
and effect for any reason.
16
(iv) XXXX shall permit its financial condition to suffer material
adverse change, as evidenced by
A. reduction of its rating by Xxxxx'x Investors Services,
Inc. to Ba3 (or lower) or by Fitch IBCA, Inc. lower than Baa2, unless
within sixty (60) days XXXX receives a strong indication from the
rating agency concerned that such reduction will be reversed and such
reduction is not reversed within a further sixty (60) days, provided
that during the interim FMC shall not be required to (x) enter into any
Securitization Transaction hereunder, (y) cause or permit the
origination of any new XXXX-guaranteed loans, or (z) comply with
Section 8.01(b) hereof.
B. the commencement of any action by any Governmental Entity
seeking to take possession of the assets of XXXX or control the
management of XXXX, unless XXXX promptly moves to dismiss such action
and the court concerned grants such motion, provided that during the
interim FMC shall have no obligations under Article III or Section
8.01(b) hereof.
C. any action is commenced by any Governmental Entity
seeking to liquidate the assets of XXXX, unless XXXX promptly moves to
dismiss such action and the court concerned grants such motion,
provided that during the interim FMC shall have no obligations under
Article III or Section 8.01(b) hereof.
D. Without the consent of FMC, XXXX enters into a workout
agreement or informal arrangement of its lender creditors pursuant to
which XXXX is permitted to pay substantially less than the full amount
of its obligations under existing Guaranty agreements.
(v) XXXX shall be in default under the Deposit and Security Agreement
or under any similar agreement with a Program Lender other than BA, such default
shall continue beyond any applicable cure period, and the affected Program
Lender shall accelerate or otherwise exercise one or more remedies for default
under such agreement.
Termination hereunder may be upon five days' written notice.
(b) BY XXXX FOR FAILURE OF CONSIDERATION. XXXX may terminate this
Agreement on account of the lack of continued value of FMC's participation in
XXXX loan programs upon the occurrence of any of the following events and upon
the giving of the notice provided below:
(i) FMC shall fail to consummate any scheduled Securitization
Transaction within ninety (90) days after the closing
date scheduled by FMC with the Program Lender and the
Servicer.
(ii) FMC shall fail to carry out its investment obligations
under Section 3.03.
17
(iii) The Master Servicing Agreement shall fail to remain in
full force and effect for any reason.
Termination hereunder may be upon five days' written notice.
(c) TERMINATION FOR CAUSE BY EITHER PARTY. In the event that either
party shall materially breach its obligations under this Agreement and shall
fail to cure such breach within 60 days after written notice and demand for such
cure or in the event that any representation or warranty of such party contained
herein was materially incorrect when given, then the other party may, upon 30
days' written notice, terminate this Agreement. In addition, in the event that
either party becomes a debtor in any proceeding under the U.S. Bankruptcy Code
or in any similar state insolvency or reorganization proceeding, then this
Agreement shall terminate, at the option of the other party, without further
notice (except where notice is permitted by applicable bankruptcy law without
court approval, in which case the terminating party shall deliver written notice
of termination).
8.04 EFFECT OF TERMINATION. Upon termination of this Agreement by either
party:
(a) FMC shall have no further obligation to purchase or agree to
purchase loans guaranteed by XXXX that are made after the Termination Date
(subject to FMC's obligations under any Note Purchase Agreement running to any
Program Lender).
(b) XXXX shall have no further obligation to guaranty any loan that
is made after the Termination Date, subject to any obligations that XXXX may
have to any Program Lender under any Guaranty Agreement.
For purposes of the foregoing subsections 8.04(a) and 8.04(b), a loan
is "made" when it is disbursed, and a loan that involves multiple disbursements
shall be deemed to be "made" on the date of the first disbursement.
(c) Neither party shall be excused from performing any obligation or
paying any monies due or earned prior to the effective date of termination,
including, without limitation, any obligation under any Guaranty Agreement.
(d) The provisions of Sections 2.04, 10.03, and 10.08 shall remain in
full force and effect notwithstanding termination.
(e) In the case of termination pursuant to Section 8.03(a), XXXX
shall have no obligation or liability to FMC for damages resulting from
termination. In the case of any other termination, the party whose breach or
nonperformance caused such termination shall be liable to the other party for
damages as provided by law.
(f) Termination of this Agreement shall not affect the obligations of
the parties under any Note Purchase Agreement, Guaranty Agreement, or
Securitization Transaction already in effect at the time of termination.
18
ARTICLE IX
CONDITIONS PRECEDENT
9.01 CONDITIONS TO EACH PARTY'S OBLIGATIONS UNDER THIS AGREEMENT. The
respective obligations of each party to perform their covenants under this
Agreement is subject to the satisfaction or waiver of each of the following
conditions:
(a) Bank of America shall have entered into the BA Guaranty Agreement
and the Deposit and Security Agreement with XXXX;
(b) Bank of America shall have entered into the Loan Origination
Agreement with XXXX with respect to the prepGATE Loan Program;
(c) Bank of America shall have given its written approval to the
Program Guidelines;
(d) The Servicer shall have approved the Program Guidelines as
qualifying for servicing under existing agreements between Bank of America and
Servicer;
(e) An Agent acceptable to the parties shall have entered into the
Deposit and Security Agreement; and
(f) Each party shall have delivered to the other, the opinion of its
corporate counsel to the effect that this Agreement has been duly authorized by
all necessary corporate or other organizational action, this Agreement is within
the corporate or other organizational power of such party, and that this
Agreement has been duly executed and delivered by an authorized officer of the
party.
Each party covenants to use its best efforts to cause the occurrence of
the foregoing conditions within 60 days after the date of this Agreement. If
such conditions shall not have been satisfied or waived within said 60-day
period, then either party may thereafter terminate this Agreement with respect
to the Bank of America/GATE Loan Programs by written notice to the other party.
9.02 CONDITIONS ON OBLIGATIONS OF FMC. FMC shall not be obligated to perform
its covenants under this Agreement unless and until the following conditions
shall have been satisfied or waived by FMC:
(a) Bank of America and FMC shall have entered into mutually
satisfactory modifications to the BA Note Purchase Agreement and any related
agreements to reflect the addition of the XXXX guaranty to the Bank of
America/GATE Loan Program and the expansion of those programs for 2001-2002;
19
(b) Bank of America shall have entered into a form of Deposit and
Security Agreement substantially in the form of Exhibit E with XXXX and FMC and
the representations and warranties of XXXX contained therein shall be true and
correct upon such execution.
(c) The Servicer shall have entered into a satisfactory agreement
with FMC to service the Bank of America/GATE Loans after securitization.
ARTICLE X
MISCELLANEOUS
10.01 ASSIGNMENT. This Agreement may not be assigned by either party without
the express written consent of the other party. The parties agree that the
performance of each party under this Agreement is personal and depends both upon
the financial condition and the unique business characteristics of each party.
The foregoing limitation shall not apply to any transfer by operation of law,
such as a merger or consolidation, nor to any change in the ownership of FMC.
10.02 AMENDMENT; WAIVER. This Agreement may not be modified or amended
without a writing, signed by the person asserting the validity of such
modification or amendment. 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.
10.03 ELECTRONIC RECORDS AND SIGNATURES. The parties intend that reasonably
reliable electronic records and signatures shall be binding upon the parties in
accordance with the provisions of the Federal Electronic Signatures in Global
and National Commerce Act. The parties agree that records and signatures
transmitted by facsimile when bearing the routing information and imprints
ordinarily provided by such technology, shall constitute binding records and
signatures upon the parties. Either party may, in any facsimile, expressly rebut
the binding effect of such communication, but such exclusion from this section
shall only apply to that particular facsimile transmission. The parties further
agree that a notice under Section 10.05 may be given by e-mail and shall
constitute a writing. The parties further agree that e-mail, voice mail or other
recording of voices shall not constitute an electronic signature for purposes of
the parties' transactions under this Agreement. Finally, other forms of
electronic record and signature may be adopted by the parties by subsequent
agreement from time to time.
10.04 CHOICE OF LAW. This Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Massachusetts, without reference
to choice of law rules.
10.05 NOTICES. All notices given by any party to the other under this
Agreement shall be in writing and shall be delivered:
20
(a) Personally, by electronic record, as herein defined, by overnight
courier, prepaid, or by depositing the same in the United States mail,
certified, return receipt requested, with postage prepaid, addressed to the
party at the address set forth below. Any party may change the address to which
notices are to be sent by notice of such change to the other party given as
provided herein. Such notices shall be effective on the date received. Notice
shall be given as follows:
If to FMC:
Xxxxxx Xxxxxxx Xxxxxx
The First Marblehead Corporation
00 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
E-Mail: xxxxxxx@xxxxxxxx.xxx; xxxxxx@xxxxxxxx.xxx
With a copy to Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxx Xxxxxx
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xx 00000
Phone: 000-000-0000
Fax: 000-000-0000
E-Mail: xxxxxxxx@xxxxxxxxxxxx.xxx; xxxxxxxxx@xxxxxxxxxxxx.xxx
If to XXXX:
Xxxxxx X. Xxxxxx
President and Chief Executive Officer
The Education Resources Institute
000 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
E-Mail: xxxxxx@xxxx.xxx
With a copy to:
Xxxxxxx X. Xxxxx, Esq.
Hill & Xxxxxx, A Professional Corporation
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000-0000
Phone: 000 000-0000
Fax: 000 000-0000
E-Mail: xxxxxx@xxxxxxxxxx.xxx
21
and a copy to:
Xxxxxxx X. Xxxxxx, Esq.
Xxxxx, Xxxxxxxx & Strong, LLP
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Phone: 000-000-0000
Fax: 000-000-0000
E-Mail: xxxxxxx@xxxxxxxx.xxx
10.06 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall constitute one agreement.
10.07 NO THIRD PARTIES BENEFITED. This Agreement is made and entered into for
the protection and legal benefit of the parties, and their permitted successors
and assigns, 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.
10.08 WAIVER OF JURY TRIAL. EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY
CONTROVERSY WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE EACH SUCH PARTY HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO TRIAL BY
JURY WITH RESPECT TO ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I) NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF SUCH LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY UNDERSTANDS AND HAS
CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH PARTY MAKES THIS
WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.
10.09 SEVERABILITY. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions of this Agreement.
If any provision of this Agreement, or the application of that provision to any
person or any circumstance, is invalid or enforceable, (a) a suitable and
equitable provision shall be substituted for that provision in order to carry
out, so far as may be valid and enforceable, the intent and purpose of the
invalid or unenforceable provision, and (b) the remainder of this Agreement and
the application of the provision to other persons or circumstances shall not be
affected by such invalidity or unenforceability, nor shall such invalidity or
unenforceability affect the validity or enforceability of the provision, or the
application of that provision in any other jurisdiction.
22
10.10 COMPLETE AGREEMENT. This Agreement constitutes the entire agreement of
the parties with respect to arrangements for XXXX to guarantee FMC Purchase
Programs and supersedes all prior discussions and agreements with respect to
such issue. This Agreement contemplates the execution and consummation of other
further agreements, which shall integrate with and affect this Agreement, to the
extent set forth therein.
10.11 INTERPRETATION. The table of contents and headings of this Agreement
are for convenience of reference only, do not constitute part of this Agreement,
and shall not be deemed to limit or otherwise affect any other provisions of
this Agreement. Where a reference in this Agreement is made to a section,
exhibit or annex, that reference shall be to a section of or exhibit or annex to
this Agreement, unless otherwise indicated. Neither party shall be deemed the
drafter of this Agreement or any of the exhibits hereto.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers as of the date above first
written.
WITNESS: FIRST MARBLEHEAD CORPORATION
By: /s/ Xxxxx Xxxxx
----------------------- ---------------------------
Its: Chief Operating Officer
Print Name: Xxxxx Xxxxx
THE EDUCATION RESOURCES
INSTITUTE, INC.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------- ---------------------------
Its: Senior Vice President, Finance
Print Name: Xxxxxxx X. Xxxxxx
23
TABLE OF EXHIBITS
MASTER LOAN GUARANTY AGREEMENT
NOTE: First Marblehead Corporation is not a party to the following Exhibits
C, D and/or G.. Pursuant to Item 601 of Regulation S-K, such exhibits
are not being filed herewith.
Exhibit A - Intentionally omitted.
Exhibit B - Intentionally omitted.
Exhibit C - Form of Guaranty Agreement with Bank of America
Exhibit D - Form of Loan Origination Agreement with Bank of America.
Exhibit E - Deposit and Security Agreement with Bank of America - filed
herewith
Exhibit F - Accession Agreement - filed herewith.
Exhibit G - Generic Guaranty Agreement
24
EXHIBIT E
TO
MASTER LOAN GUARANTY AGREEMENT
DEPOSIT AND SECURITY AGREEMENT
(GENERIC)
This deposit and security agreement (this "Deposit and Security
Agreement") is made and entered into as of ____________, 2001, by and among THE
EDUCATION RESOURCES INSTITUTE, INC., a private non-profit corporation organized
under Chapter 180 of the Massachusetts General Laws with its principal place of
business at 000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxxxxx 00000 ("XXXX"),
THE FIRST MARBLEHEAD CORPORATION, a corporation organized under the General
Corporation Law of the State of Delaware with its principal place of business at
00 Xxxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000 ("FMC") and [BANK NAME], a
[BANK TYPE] organized and existing under the laws of [BANK JURISDICTION] with a
place of business at 000 X. Xxxxxxxx Xxxxxx, Xxxx, Xxxxxxxxxx 00000, in its
capacity as lender and initial owner (in such capacity, "Lender") and [AGENT
NAME, BANK TYPE AND JURISDICTION] in its capacity as agent for the Owners (as
hereinafter defined) (in such capacity, "Agent").
25
WHEREAS, FMC is organized to assist financing undergraduate, graduate
and professional educations, as well as private elementary and secondary
educations; and
WHEREAS, FMC administers the [PRODUCT NAME] Loan programs whereby
parents and/or students may apply for loans to finance education costs; and
WHEREAS, Lender is willing to make Loans to Borrowers under the
[PRODUCT NAME] Loan Programs upon certain terms and conditions, including but
not limited to the guaranty of the payment of principal and interest by XXXX
pursuant to the terms of the Guaranty Agreement (hereafter defined) and the
deposit of certain monies with Agent, on behalf of Owners (hereafter defined),
as security for such payment as more fully described herein and in accordance
with the terms and conditions set forth in this Deposit and Security Agreement;
and
WHEREAS, under the terms of the Guaranty Agreement, XXXX guaranties the
payment of principal and interest on the Loans in exchange for the payment of
certain guarantee fees; and
WHEREAS, pursuant to the Note Purchase Agreement of even date therewith
between Lender and FMC ("Note Purchase Agreement"), FMC has agreed to use its
best efforts to cause the purchase of Loans in a Securitization Transaction; and
WHEREAS, it is the intention of Lender, Agent, XXXX and FMC that this
Deposit and Security Agreement shall apply to each Loan that is subject to the
Guaranty Agreement.
NOW, THEREFORE, in consideration of the premises and for other good and
valuable consideration, the parties agree as follows:
1. DEFINITIONS. Capitalized terms not otherwise defined in this
section, in the recitals hereto or elsewhere in this Deposit and Security
Agreement shall have the meanings ascribed to such terms in the Guaranty
Agreement. In addition:
(a) "Collateral" shall have the meaning set forth in Section 5.
(b) "Owner" means the owner from time to time of any Loan, including
Lender to the extent that Lender is an owner of any Loan but
excludes any Securitization Owner Trustee after the transfer of a
portion of the Pledged Account described in Sections 4(b) and
4(g).
(c) "Pool Cut Off Date" means a date established by FMC not more than
sixty (60) days before the closing of a Securitization
Transaction, as of which date FMC will determine all Loans
eligible for purchase under the Note Purchase Agreement.
26
(d) "Guaranty Agreement" shall mean the Guaranty Agreement among
Lender and XXXX dated as of ____________, 2001, and any
amendments or modifications thereto.
(e) "Guaranty Fees" shall mean, collectively, all of the fees payable
to XXXX and/or the Agent for the guarantee of a Loan as described
in Section 3.3 of the Guaranty Agreement.
(f) "Recoveries" shall mean and include: (i) any and all cash,
checks, drafts, orders and all other instruments for the payment
of money received by XXXX from or on behalf of Borrowers in
payment of principal of, interest on, late fees with respect to,
and costs of collecting defaulted Loans with respect to which
XXXX has paid Guaranty Claims, from funds in the Pledged Account,
net of actual costs of collection retained by or payable to
third-party collectors and attorneys, and the proceeds of all of
the foregoing, (ii) (A) any amount received by XXXX upon the sale
or other transfer of defaulted Loans with respect to which XXXX
has paid Guaranty Claims (including the sale of such Loans to the
prior Owner thereof as provided in Section 3.4 of the Guaranty
Agreement or the sale of the right to collect such Loans or other
similar rights with respect thereto), less (B) any costs actually
incurred by XXXX in connection with the release of such Loans
from a collector, and (iii) in connection with any pledge or
assignment of defaulted Loans (or rights with respect thereto) to
secure a loan to XXXX, (A) the amount of such loan, less (B) any
costs actually incurred by XXXX in connection with the release of
such Loans from a collector. Lender, FMC and each Owner benefited
hereby agree to entertain a proposal from XXXX and to negotiate
in good faith with respect to a specified percentage charge for
such collection costs and release costs, based upon historical
averages of such costs.
(g) "Secured Obligations" shall have the meaning set forth in
Section 6.
(h) "Securitization Owner Trustee" means the owner trustee or other
person who holds legal title to the assets of an SPE formed by
The National Collegiate Trust or by FMC for the purpose of
purchasing Loans pursuant to the Note Purchase Agreement.
(i) "Securitization Indenture Trustee" means the trustee or
collateral agent who holds a security interest in assets of an
SPE to secure debt obligations of the SPE incurred to finance the
purchase of Loans.
(j) "Securitization Transaction" means a transaction in which an SPE
purchases Loans pursuant to the Note Purchase Agreement and funds
the cost of such purchase, in whole or in part, with debt
obligations secured by the Loans.
27
(k) "XXXX Guarantee Fee Entitlement" means a portion of Guaranty Fees
equal to one and one-half percent (1.5%) of the principal amount
of a Loan, payable in accordance with Section 3.3 of the Private
Loan Guarantee Agreement.
2. CREATION AND FUNDING OF PLEDGED ACCOUNT. Upon the execution of
this Deposit and Security Agreement, XXXX shall establish one or more new
investment accounts (individually and collectively, the "Pledged Account") with
Agent in the name of XXXX for the purpose of receiving portions of the Guaranty
Fees, Recoveries and earnings as provided in this Section 2. Lender, XXXX and
FMC agree that the Pledged Account shall be funded by XXXX with a portion of the
Guaranty Fees, all Recoveries with respect to Loans on which XXXX has paid
Guaranty Claims, and earnings on the Pledged Account, and shall be pledged to
Agent, on behalf of Owners from time to time of the Loans, all under the terms
of this Deposit and Security Agreement. XXXX hereby irrevocably directs Lender
to deposit the following amounts into the Pledged Account:
(a) any and all Guaranty Fees payable by Lender with respect to a
Loan under the Guaranty Agreement, other than amounts payable to
XXXX with respect to the XXXX Guarantee Fee Entitlement;
(b) all Recoveries, which amounts shall be remitted by XXXX to Agent
by the 15th day of each month, for Recoveries received during the
preceding month; and
(c) all earnings on the Pledged Account, which amounts shall be
retained at all times by the Agent in the Pledged Account.
XXXX hereby agrees to deposit into the Pledged Account, or to transfer to Lender
for deposit as described above, all Recoveries.
3. PLEDGED ACCOUNT INVESTMENT AND MAINTENANCE.
(a) XXXX shall pay any Owner from the Pledged Account any amounts
owed to such Owner by XXXX under the Guaranty Agreement for
Guaranty Claims. Lender and FMC understand and agree that XXXX
shall be required to pay Owners any such claim amounts out of
TERI's general reserves and other assets only to the extent that
and for so long as the Pledged Account is without sufficient
funds or is otherwise unavailable to promptly pay Owners whatever
amounts are then due and payable to Owners under the Guaranty
Agreement. The Pledged Account shall be maintained under the
following conditions:
(i) Funds shall be deposited only with institutions which are
federally insured;
(ii) Funds shall be invested only in strict accordance with
TERI's written investment policy ("Investment Policy"),
the most current copy of which is attached hereto as
Exhibit A. XXXX shall not alter this Investment Policy
with respect to assets in the Pledged Account
28
without the prior express written consent of Agent, on
behalf of Owners, and of FMC, which consent shall not be
unreasonably withheld or delayed provided the alterations
requested by XXXX do not provide for or permit
investments in accounts, instruments or other potential
investment vehicles less conservative in risk and/or as
to which the perfection of the first priority security
interest of Agent, on behalf of Owners, may be more
difficult than those investments permitted under TERI's
current Investment Policy;
(iii) The Agent may refuse to invest in any instrument, account
or other financial or other arrangement (including,
without limitation, repurchase agreements) if the same
would not be subject to the first priority security
interest of Agent, on behalf of Owners, in such funds or
other such instrument as so invested;
(iv) The Pledged Account shall be funded as set forth in this
Deposit and Security Agreement. XXXX shall not deposit,
nor permit any other entity to deposit, any funds from
any other source, and shall particularly exclude from the
Pledged Account, the deposit or commingling of any funds
or assets from the general reserves, operating capital or
other corporate assets of XXXX, except to the extent such
amounts constitute Recoveries;
(v) The Agent shall, in a timely manner, sell, exchange,
invest, and otherwise deal with the property in the
Pledged Account as XXXX shall direct in writing to the
Agent. In the event XXXX shall fail to deliver to Agent
any investment instruction for money held in the Pledged
Account, Agent shall invest the same in the [DESIGNATE
MONEY MARKET FUND]. Unless XXXX otherwise directs, Agent
shall choose the broker through which any trade shall be
made, including any broker affiliated with Agent. If XXXX
directs Agent to use a specific broker, Agent shall have
no responsibility for its execution. Agent shall not be
responsible to obtain the "best price" for securities
bought or sold, but shall use the same trading practices
and principles as customarily used for its own
securities;
(vi) Notwithstanding the foregoing, while there is a default
by XXXX under Section 8 hereof continuing, of which Agent
has notice, Agent, and not XXXX, shall direct
investments; and
(vii) The Agent shall: in a timely manner (a) follow and use
customary and normal collection efforts to collect all
income and principal payments on the funds in the Pledged
Account; (b) perform the necessary clerical and
bookkeeping services relative to the funds in the Pledged
Account; and (c) advise XXXX of all maturities,
redemptions, exchanges, tenders, and shareholder rights
and options.
29
(b) XXXX hereby authorizes Lender and/or Agent to make whatever
deposits, withdrawals and transfers may be necessary to effect
the purposes hereof. The funds in the Pledged Account shall be
subject to the terms and conditions contained in this Deposit and
Security Agreement.
(c) No interest, dividends, distributions or other earnings of
whatever nature which are paid and derived from the Pledged
Account (collectively, "Earnings") shall be withdrawn or paid to
XXXX or any other person or entity unless pursuant to the
provision of subsection (d). All Earnings shall be fully,
immediately and completely reinvested in the Pledged Account. Any
other provisions of this Deposit and Security Agreement to the
contrary (either expressly or by implication) notwithstanding,
all Earnings shall be credited to and deemed income of XXXX and
not Owners or Agent, and shall be so treated by XXXX.
(d) Withdrawals and disbursements from the Pledged Account shall be
made only in accordance with the following provisions:
(i) Any Owner shall receive from the Pledged Account the full
amount of any valid Guaranty Claims made under the
Guaranty Agreement for defaulted Loans, such claims to be
processed and paid by XXXX in accordance with the terms
of the Guaranty Agreement;
(ii) [Intentionally omitted];
(iii) Upon the sale of Loans to a Securitization Owner Trustee
pursuant to Section 4 hereof, the amount provided in
subsections 4(b) and 4(g) shall be transferred to the
Securitization Indenture Trustee;
(iv) In the event TERI's income should become subject to
federal income taxation or the income from the Pledged
Account should become subject to excise tax under Section
4940 of the Internal Revenue Code, XXXX shall be entitled
to the release from the Pledged Account of amounts equal
to the taxes actually paid with respect to the income on
the Pledged Account. XXXX shall provide Agent and FMC
with a written request for any such withdrawal, which
request shall be accompanied by clear supporting
documentation. Agent shall respond to TERI's withdrawal
request within fifteen (15) days after Agent's receipt of
any such request and shall, with the consent of the
Owners, (A) promptly permit XXXX to withdraw the
requested funds from the Pledged Account, (B) provide
written notice to XXXX of whatever additional
documentation or information Agent, any Owner or FMC may
reasonably require before agreeing to the withdrawal
request, or (C) deny the request and provide XXXX with a
written statement of the reasons for denial, which denial
must be reasonably based on the
30
requirements set forth in this Section 3(d). Upon TERI's
submission to Agent of such additional required
documentation or information, Agent shall promptly, with
the consent of the Owners, (X) permit XXXX to withdraw
such funds from the Pledged Account, or (Y) deny the
request and provide XXXX with a written statement of the
reasons for denial, which denial must be reasonably based
on the requirements set forth in this Section 3(d);
(v) Any Owner shall receive from the Pledged Account the full
amount of any refunded Guaranty Fees due and owing to
such Owner for cancelled Loans pursuant to Section 2.16
of the Guaranty Agreement, such amounts to be paid by the
15th day of each month for Loan cancellations the
supporting documentation for which has been received by
Agent during the preceding month.
(e) The Agent shall not be liable for the depreciation in value of
any property held hereunder due to its compliance with TERI's
written direction on the Investment Policy.
(f) The Agent shall take delivery of such money or other property as
delivered to it by XXXX, or others, and shall retain custody of
the same in the Pledged Account. The Agent may take title to the
property comprising the Pledged Account in one or more nominees,
but Agent shall be responsible for the acts of such nominees. The
parties hereto acknowledge that property may be held through any
central securities depository, clearing agency or any federal
reserve bank, and the Agent shall not be responsible for their
actions or failures to act.
4. PROCEDURE IN A SECURITIZATION TRANSACTION.
(a) FMC contemplates arranging one or more Securitization
Transactions per year, at the closing of which all Seasoned Loans
(as defined in the Note Purchase Agreement) outstanding on the
Pool Cut Off Date will be purchased. The parties anticipate that
each such purchase will include the sale of some, but not all
Loans with respect to which funds were held in the Pledged
Account in the Pool Cut Off Date. In order to facilitate a
Securitization Transaction closing, the parties have agreed to
the procedure set forth in this section.
(b) XXXX agrees to enter into an agreement substantially identical to
this Deposit and Security Agreement with the Securitization
Indenture Trustee as agent for the purchaser of the Loans and its
pledgees, pursuant to which that portion of the Pledged Account
which is applicable to the Loans being securitized (the
"Transferred Pledged Account") will be transferred to such new
agent and this
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Deposit and Security Agreement will cease to apply to the assets
so transferred.
The amounts and rights so transferred are further defined in
Section 4(g), below.
(c) Notwithstanding a closing of a Securitization Transaction, Agent
shall continue to serve as Agent with respect to any funds and
Collateral remaining in the Pledged Account and this Agreement
shall remain in full force and effect with respect to such
Pledged Account and Collateral.
(d) Lender, Agent and XXXX may rely upon any reports, calculations or
other data provided by FMC with respect to Seasoned Loans,
balances in the Pledged Account as of the Pool Cut Off Date,
earnings in the Pledged Account to be transferred in the
Securitization Transaction, and any other information necessary
for a Securitization Transaction closing, absent manifest error.
(e) At a Securitization Transaction closing, Lender shall pay (or
cause to be paid) into the Transferred Pledged Account (after the
same is transferred to and held by the Securitization Indenture
Trustee), the full amount of any Subsequent Guarantee Fees not
yet paid with respect to the Loans being purchased in such
Securitization Transaction.
(f) FMC, XXXX, the Securitization Owner Trustee and the
Securitization Indenture Trustee may, but need not, agree at the
conclusion of the closing of a Securitization Transaction, to
transfer the Transferred Pledged Account and the Collateral to
other collateral accounts held under the security agreements
created in the Securitization Transaction.
(g) For purposes of determining the rights transferred to the
Securitization Indenture Trustee, the portion of the Pledged
Account and Collateral to be transferred shall include:
(i) cash balances and investments held by the Agent equal to
the sum of:
A. Guaranty Fees paid into the Pledged Account with
respect to Loans being purchased in the
Securitization Transaction, plus
B. A sum representing accrued earnings on such
Guaranty Fees then held in the Pledged Account,
computed by multiplying the amount under (A),
above, times (x) the weighted average monthly rate
of return on the funds in the Pledged Account for
each month when any such Guaranty Fee was held in
the Pledged Account, times (y) the dollar-weighted
average number of months that the Guaranty Fees in
question were held in the Pledged Account
(provided, however, that such sum
32
shall in no event exceed cash balance in the
Pledged Account after deducting sums under
subsection (i)(A), above);
(ii) all Recoveries with respect to Loans that
(A) have been purchased by XXXX on account of
default after the date of the Pool Cut Off Date
for the most recent preceding Securitization
Transaction;
(B) have never been included in a Securitization
Transaction; and
(C) would have been Seasoned Loans under the Note
Purchase Agreement as of the Pool Cut Off Date,
but for the default and purchase by XXXX. FMC
shall designate all such Loans, Recoveries with
respect to which are part of the Collateral
transferred in any Securitization Transaction.
Such designation shall be binding upon Lender,
Agent and XXXX absent manifest error.
(iii) All rights to receive Subsequent Guarantee Fees with
respect to the Loans transferred.
(h) The agreement between the Securitization Indenture Trustee and
XXXX shall provide that, if the balance of principal of Loans
held by or pledged to the Securitization Indenture Trustee is
less than 100% of the balance in the Pledged Account held by the
Securitization Indenture Trustee (or such lesser percentage as
FMC, as structuring advisor, shall recommend for inclusion in the
terms of the Agreement), the Securitization Indenture Trustee
shall, if no default exists hereunder, quarterly pay to XXXX the
amount of such excess. The Securitization Indenture Trustee may
rely wholly upon FMC to compute and determine the amount of such
excess.
5. SECURITY INTEREST. XXXX hereby pledges, assigns, and sets over to
Agent, on behalf of Owners from time to time, as security for payment by XXXX of
the Secured Obligations (as hereinafter defined), all of TERI's right, title,
and interest in and to (i) the Pledged Account and (ii) TERI's right to receive
Guaranty Fees and Recoveries. The foregoing shall not be deemed to grant a
security interest in defaulted Loans. In furtherance thereof, XXXX hereby grants
to Agent a first priority security interest in all of TERI's right, title, and
interest in and to:
(a) all personal property comprising and/or contained in the Pledged
Account, as provided in this Deposit and Security Agreement, both
tangible and intangible, whether now owned or hereafter acquired
by XXXX and wheresoever located, including without limitation:
33
(i) all contract rights, claims, instruments, notes and
accounts, whether now existing or hereafter arising,
including, without limitation, all of the same evidencing
or representing indebtedness due or to become due to XXXX
(all hereinafter called the "Accounts");
(ii) all funds and investments thereof, whether in the form of
certificates of deposit, repurchase agreements, U.S.
Treasury Bills, U.S. Treasury Notes, investment grade
commercial paper, U.S. Treasury Bonds, Federal agency
notes or other investments, securities (whether
certificated or uncertificated and specifically including
any securities which are purchased through and for which
records are maintained on a book entry system through any
financial intermediary (as defined in Section 8-313 of
the Uniform Commercial Code)), payment intangibles and
general intangibles, whether now existing or hereafter
arising and wheresoever located, or otherwise (all
hereinafter called the "Intangibles");
(iii) all right, title, and interest of XXXX in or to all
instruments and documents covering or relating to the
above described property, including but not limited to,
all books, records, computer printouts, tapes, disks,
ledger sheets, files and other data (all such instruments
and documents being called the "Related Documents");
(iv) all interest, dividends, and/or other earnings of any
kind which are paid with respect to or derived from the
Pledged Account, and all proceeds of any of the
foregoing, and the present and continuing right to make
claim for, collect, receive and receipt for, any and all
such interest, dividends, and/or other earnings; and
(v) all the proceeds of all of the foregoing;
(b) all contract and other rights of XXXX to receive payment of
Guaranty Fees, including TERI's rights to Initial Guarantee Fees,
from Lender under Section 3.3 of the Guaranty Agreement; TERI's
rights to receive Supplemental Guarantee Fees from Lender or an
Owner pursuant to such Section, and any separate undertaking or
agreement by an Owner to pay such Supplemental Guarantee Fees;
(c) all Recoveries and all rights of XXXX to receive or collect
Recoveries; and
(d) all proceeds of the foregoing.
All of the foregoing property in which Agent has been granted a security
interest is hereinafter collectively referred to as "Collateral". It is
expressly understood and agreed that this security interest and assignment shall
automatically attach to any and all future deposits
34
to, earnings from, and proceeds of the Pledged Account immediately upon deposit
or accrual, and all Guaranty Fees and Recoveries immediately upon the receipt
thereof, without the making or doing of any further act or thing whatsoever.
XXXX shall promptly take all further action, and execute and deliver to Agent
such other documents, as may be requested from time to time by Agent to create,
evidence, maintain and effect Agent's security interest in the Pledged Account
and the other rights pledged hereunder.
This security interest shall be assigned to the extent set forth in
Section 4 of this Agreement in connection with a Securitization Transaction.
6. OBLIGATIONS SECURED. The security interest of Agent under this
Deposit and Security Agreement secures (a) the payment and performance of all
indebtedness, obligations, and liabilities of XXXX arising at any time, now or
in the future, pursuant to the Guaranty Agreement; (b) performance by XXXX of
the agreements set forth in this Deposit and Security Agreement; (c) all
payments made or expenses incurred by Agent, any Owner or FMC, including,
without limitation, reasonable attorney's fees and legal expenses, in the
exercise, preservation or enforcement of any of the rights, powers or remedies
of Agent, any such Owner or FMC, or in the enforcement of the obligations of
XXXX, under this Deposit and Security Agreement or the Guaranty Agreement
(whether or not paid or incurred in the context of a state or federal
bankruptcy, insolvency, or reorganization proceeding); and (d) any renewals,
continuations or extensions of any of the foregoing (all of which are
collectively referred to as the "Secured Obligations"). From and after any given
Securitization Transaction closing, the Secured Obligations shall be limited to
those relating to Loans not yet purchased in any Securitization Transaction.
7. WITHDRAWAL. XXXX shall not (except as provided in Sections 3(d)
and (4) withdraw any funds from or further assign, pledge, or hypothecate the
Pledged Account or any portion of the Pledged Account to any individual, person,
entity or other third party without the express prior written consent of Agent,
on behalf of Owners, and FMC in their sole discretion. Any withdrawals by XXXX
shall be by wire transfer unless XXXX requests, in writing, another reasonable
form of payment.
8. DEFAULT. XXXX shall be in default of this Deposit and Security
Agreement if XXXX fails to remit to Lender, in accordance with the terms and
provisions of the Guaranty Agreement, the principal balance (including
capitalized fees and interest) and accrued interest and late fees on any Loan as
to which a Guarantee Event (as defined in the Guaranty Agreement) has occurred
and as to which the conditions set forth in the Guaranty Agreement to payment of
a Guaranty Claim have been satisfied. Either XXXX, Agent or Lender shall be in
default of this Deposit and Security Agreement if (a) any representation,
warranty, or statement made by such party in or pursuant to this Deposit and
Security Agreement or the Guaranty Agreement is found to be false or erroneous
in any material respect, or (b) such party shall fail or omit to perform or
observe any covenant or agreement made by it in this Deposit and Security
Agreement or the Guaranty Agreement.
9. REMEDIES UPON DEFAULT. Agent shall, to whatever extent is
reasonably necessary to cure any default under this Deposit and Security
Agreement, have all of the
35
rights and remedies of a secured party under the Massachusetts Uniform
Commercial Code (as the same may be amended from time to time), as well as all
rights and remedies provided by any other applicable law, at law, or in equity.
Without limiting the generality of the foregoing, Agent shall also have the
right, during the term of this Deposit and Security Agreement, to do any or all
of the following upon a default and until any such default is cured:
(a) ACCELERATION. Without any notice or demand, Agent may declare any
or all Secured Obligations then in default to be immediately due
and payable.
(b) POSSESSION. Without notice, demand, or hearing, any right to
which is hereby waived by XXXX, Agent shall have full power and
authority to hold, sequester, set-off or withdraw any and all
funds from the Pledged Account and to, in Agent's sole
discretion, subject to its duty to the Owners, (i) apply the
proceeds to any Loan as to which a Guarantee Event has occurred
and XXXX has failed to remit to the related Owner thereof the
principal balance (including capitalized fees and interest) and
accrued interest and late fees thereon in accordance with the
terms and conditions of the Guaranty Agreement and (ii) hold the
funds in the Pledged Account without making any disbursements of
any kind to XXXX as otherwise provided in this Deposit and
Security Agreement, and to apply the funds to any Loan if and
when a Guarantee Event occurs and XXXX fails to promptly remit to
the related Owner the unpaid principal balance (including
capitalized fees and interest) and accrued interest and late fees
thereon in accordance with the conditions of the Guaranty
Agreement.
(c) ASSEMBLING COLLATERAL. Agent may require XXXX to assemble the
Collateral and to make it available to Agent at any convenient
place designated by Agent.
(d) OPERATION. Agent may take such measures as Agent may deem
necessary or proper for the protection and preservation of the
Collateral or for the most advantageous beneficial exercise of
its remedies hereunder.
(e) COLLECTION OF ACCOUNTS.
(i) XXXX hereby constitutes and appoints Agent its true and
lawful attorney (which appointment is coupled with an
interest), with full power of substitution, either in
Agent's own name or in the name of XXXX, to ask for,
demand, xxx for, collect, receive, receipt and give
acquittance for, any and all moneys due or to become due
to XXXX with respect to defaulted Loans or otherwise
under or by virtue of any Account; to endorse checks,
drafts, orders, and other instruments for the payment of
money payable to XXXX on account thereof, to settle,
compromise, prosecute, or defend any action, claim, or
proceeding
36
with respect thereto; and to sell, assign, pledge,
transfer, and make any agreement respecting, of otherwise
deal with, the same.
(ii) XXXX agrees that all Recoveries shall be the property of
Agent, on behalf of Owners, to whatever extent may be
necessary to facilitate full and complete payment to
Owners of all amounts owed it under the Guaranty
Agreement. All such Recoveries received by XXXX shall be
deposited (properly endorsed for collection where
required), not later than the next Business Day, in the
Pledged Account, for the payment of all of the Secured
Obligations then in default, XXXX agrees not to commingle
any such collections or proceeds with any of its other
funds or property and agrees to hold the same upon an
express trust for Agent, on behalf of the Owners, until
deposited in the Pledged Account, as aforesaid.
(iii) Agent agrees to provide notice to XXXX of Agent's
exercise of any of its rights under this Section 9(e).
(f) TRANSFER OF INTANGIBLES. Agent shall have the right to take
possession of any agreement or other document evidencing any of
the Intangibles, and may apply for or seek, on behalf of and as
attorney-in-fact for XXXX, any necessary consent to the
assignment, transfer, conveyance, sale, renewal, reissuance or
other disposition of the same, and XXXX shall cooperate fully
with Agent in doing so and shall take all actions reasonably
requested by Agent in furtherance thereof. XXXX hereby
constitutes and appoints Agent its true and lawful attorney
(which appointment is coupled with an interest) with full power
of substitution, either in Agent's own name or in the name of
XXXX, to assign, transfer and convey, subject to all requirements
of law, any and all of TERI's rights in and to any of the
Intangibles.
(g) DISPOSITION. Agent may assign, transfer, convey, or otherwise
dispose of any or all of the Collateral, as Agent in its
discretion may determine, by public or private sale subject to
TERI's rights to retain copies of the Related Documents now or in
the future in TERI's possession; and Agent shall use its best
efforts to obtain full value for any such Collateral, based upon
then existing recognized markets for such Collateral. Agent shall
provide XXXX with reasonable written notice of the time and place
of any such sale.
(h) PROCEEDS. All proceeds from the sale or other disposition of
Collateral by Agent under this Deposit and Security Agreement,
all other moneys received by Agent pursuant to the terms of this
Deposit and Security Agreement shall be applied as follows:
(i) First, to the payment of all expenses incurred by Agent
in connection with this Deposit and Security Agreement or
the exercise of any right or remedy hereunder, or any
sale or disposition, including, but not
37
limited to the expenses of taking, advertising,
processing, preparing and storing the Collateral to be
sold, all court costs and Agent's reasonable legal fees
in connection therewith;
(ii) Second, to the payment of valid Guaranty Claims in
accordance with the terms thereof in the order in which a
complete claim (including all required documentation) is
received, treating all claims received the same day as
received at the same time (if there are not sufficient
funds in the Pledged Account to pay all claims payable
therefrom received on a given day, all such claims shall
be paid in part, pro rata, from the Pledged Account), and
(iii) Third, any remainder to be held pursuant to the terms of
this Deposit and Security Agreement as continuing
security for TERI's payment of the remaining Secured
Obligations.
Agent shall apply any such proceeds, monies, or balances in
accordance with this Deposit and Security Agreement promptly upon
its receipt of the same. In respect of any application pursuant
to clause (ii) above, such proceeds, monies, or balances shall be
applied by Agent to discharge in whole or in part any unpaid
Secured Obligation, notwithstanding any manifestation of an
intent to the contrary expressed in writing or otherwise by XXXX
at any time. Upon any sale of Collateral by Agent (whether
pursuant to a power of sale granted by a statute or under a
judicial proceeding), the receipt of Agent or of the officer
making the sale shall be a sufficient discharge to the purchaser
or purchasers of the Collateral so sold and such purchaser or
purchasers shall not be obligated to see to the application of
any part of the purchase money paid over to Agent or such
officer, or be answerable in any way for the misapplication
thereof. Notwithstanding the sale or other disposition of any
Collateral by Agent hereunder, XXXX shall remain liable for any
deficiency. Any Loan with respect to which Agent makes payment in
full to Owner hereunder will forthwith be transferred to XXXX on
the terms and conditions set forth in the Guaranty Agreement.
10. REMEDIES CUMULATIVE. All rights, remedies, or powers conferred
upon Agent herein or by law shall be cumulative and concurrent at the option of
Agent, and Agent may, to whatever extent is reasonably necessary to cure any
default, foreclose or exercise the power of sale or any other remedy available
to it successively upon any default or upon successive defaults hereunder
without the necessity of declaring all sums secured hereby to be due and
payable. Upon any such occasion, Lender shall be authorized to sell or dispose
of all or any such part of the Collateral as provided in this Deposit and
Security Agreement and as permitted by law. The remaining Collateral shall
continue as security for any other sums remaining due after such sale, lease, or
disposition or thereafter to become due or payable on any of the Secured
Obligations.
11. AGENT.
38
(a) APPOINTMENT OF AGENT. Subject in all respects to the terms and
provisions of this Deposit and Security Agreement, Lender, as
sole initial Owner, hereby appoints Agent to act as agent for the
benefit of Owners with respect to the Pledged Account and liens
upon and the security interests in the Collateral, the rights and
remedies granted and the receipt and disbursement of funds under
and pursuant to this Deposit and Security Agreement, and Agent
hereby accepts such appointment and agrees to act as such agent.
To the extent legally necessary to enable Agent to enforce or
otherwise foreclose and realize upon any of the liens or security
interests in the Collateral in any legal proceeding which Agent
either commences or joins as a party in accordance with the terms
hereof, FMC and each Owner from time to time agree to join as a
party in such proceeding and take such action therein
concurrently to enforce and obtain a judgment for the payment of
their respective portion of the Secured Obligations.
(b) DUTIES OF AGENT. Each Owner hereby irrevocably authorizes Agent
to receive and disburse funds in accordance with the provisions
of this Deposit and Security Agreement and, subject to Agent
having been directed to take such action in accordance with the
terms of this Deposit and Security Agreement, to take such action
on its behalf under the provisions of any other instruments,
documents and agreements referred to therein and to exercise such
powers thereunder as are specifically delegated to Agent by the
terms thereof and such other powers as are reasonably incidental
thereto. Agent is hereby irrevocably authorized to take all
actions on behalf of Owners to enforce the rights and remedies of
the Agent and Owners provided for herein or by applicable law
with respect to the liens upon and security interests in the
Collateral granted to secure the Secured Obligations; provided,
however, that, except as otherwise specified herein, (i) Agent
shall act solely at and in accordance with the written direction
of Owners and (ii) Agent shall not, without the written consent
of all Owners, release or terminate by affirmative action or
consent any lien upon or security interest in any Collateral
granted under this Deposit and Security Agreement. Agent agrees
to make such demands and give such notices under this Deposit and
Security Agreement as may be requested by, and to take such
action to enforce this Deposit and Security Agreement and to
foreclose upon, collect and dispose of the Collateral or any
portion thereof as may be directed by, Owners, PROVIDED, HOWEVER,
that Agent shall not be required to take any action that is
contrary to law or the terms of this Deposit and Security
Agreement. Once a direction to take any action has been given by
Owners to Agent, and subject to any other directions which may be
given from time to time by Owners, decisions regarding the manner
in which any such action is to be implemented and conducted (with
the exception of any decision to settle, compromise or dismiss
any legal proceeding, with or without prejudice) shall be made by
Agent, with the assistance and upon the advice of its counsel.
Notwithstanding the provisions of the preceding sentence, any and
all
39
decisions to settle, compromise or dismiss any legal proceeding,
with or without prejudice, which implements, approves, or results
in or has the effect of causing any release, change or
occurrence, where such release, change or occurrence otherwise
would require unanimous approval of all Owners pursuant to the
terms of this Deposit and Security Agreement, also shall require
the unanimous approval of all Owners.
(c) REQUESTING INSTRUCTIONS. Agent may at any time request directions
from Owners as to any course of action or other matter relating
to the performance of its duties under this Deposit and Security
Agreement and Owners shall respond to such request in a
reasonably prompt manner.
(d) EMERGENCY ACTIONS. If Agent has asked Owners for instructions
following the receipt of any notice of a default under Section 8
hereof or under the Guaranty Agreement and if the Owners have not
responded to such request within 30 days, Agent shall be
authorized to take such actions with regard to such default which
Agent, in good faith, believes to be reasonably required to
protect the Collateral from damage or destruction; PROVIDED,
HOWEVER, that once instructions have been received from Owners,
the actions of Agent shall be governed thereby and the Agent
shall not take any further action which would be contrary
thereto.
(e) AMENDMENTS. An amendment, supplement, modification, restatement
or waiver of any provision of this Deposit and Security Agreement
or any document necessary to consummate the transactions
contemplated hereby, any consent to any departure by any party
therefrom, or the execution or acceptance by Agent of any
document related thereto not in effect on the date hereof shall
be effective if, and only if, consented to in writing by the
Owners; provided, however, that (i) no amendment, supplement,
modification, restatement, waiver, consent or such document not
in effect on the date hereof which imposes any additional
responsibilities upon Agent shall be effective without the
written consent of Agent, and (ii) except as otherwise provided
herein, no amendment, supplement, modification, waiver or consent
shall release any Collateral from the lien or security interest
created by this Deposit and Security Agreement or narrow the
scope of the property or assets in which a lien or security
interest is granted pursuant thereto without the written consent
of all Owners. -
(f) ADMINISTRATIVE ACTIONS. Agent shall have the right to take such
actions hereunder and under any document necessary to consummate
the transactions contemplated hereby, not inconsistent with the
instructions of Owners or the terms of this Deposit and Security
Agreement, as Agent deems necessary or appropriate to perfect or
continue the perfection of the liens on the Collateral for the
benefit of Owners.
40
(g) AGENT ACTING THROUGH OTHERS. Agent may perform any of its duties
under this Deposit and Security Agreement and any document
necessary to consummate the transactions contemplated hereby or
through attorneys (which attorneys may be the same attorneys who
represent Lender or any Owner), agents or other persons
reasonably deemed appropriate by Agent. In addition, Agent may
act in good faith reliance upon the opinion or advice of
attorneys selected by Agent. In all cases Agent may pay customary
and reasonable compensation to all such attorneys, agents or
other persons as may be employed in connection with the
performance of its duties under this Deposit and Security
Agreement and any document necessary to consummate the
transactions contemplated hereby.
(h) RESIGNATION AND REMOVAL OF AGENT.
(i) Agent (A) may resign at any time upon notice to Owners,
XXXX and FMC, and (B) may be removed at any time upon the
written request of the Owners sent to Agent and XXXX. In
addition, if FMC shall give notice of a Complete
Securitization Transaction in which all Loans then-owned
by Lender shall be purchased, Agent shall resign upon
consummation of such Securitization Transaction.
(ii) If Agent shall resign or be removed, the Owners shall
have the right to select a replacement Agent by notice to
Agent and XXXX. In a Complete Securitization Transaction,
the Securitization Indenture Trustee shall become the
replacement Agent.
(iii) Upon selection of any replacement of Agent, Agent shall
assign all of the liens upon and security interests in
all Collateral and all right, title and interest of the
Agent under this Deposit and Security Agreement and any
document necessary to consummate the transactions
contemplated hereby, to the replacement Agent, without
recourse to Agent or any Owner.
(iv) No resignation or removal of Agent shall become effective
until a replacement Agent shall have been selected as
provided herein and shall have assumed in writing the
obligations of Agent hereunder and under any document
necessary to consummate the transactions contemplated
hereby. In the event that a replacement Agent shall not
have been selected as provided herein or shall not have
assumed such obligations within 90 days after the
resignation or removal of Agent, then Agent may apply to
a court of competent jurisdiction for the appointment of
a replacement Agent.
(v) Any replacement Agent shall be a bank, trust company, or
insurance company having capital, surplus and undivided
profits of at least $100
41
million; PROVIDED, HOWEVER, that any Securitization
Indenture Trustee may become an Agent as provided in
Section 4.
(i) LIABILITY OF AGENT. In absence of gross negligence, willful
misconduct or a breach of this Deposit and Security Agreement,
Agent will not be liable to Owners, XXXX or FMC for any action or
failure to act or any error of judgment, negligence, mistake or
oversight on its part or on the part of any of its officers,
directors, employees or agents.
(j) NO RELIANCE ON AGENT. Neither Agent nor any of its officers,
directors, employees or agents (including, but not limited to,
any attorneys acting at the direction or on behalf of Agent)
shall be deemed to have made any representations or warranties,
express or implied, with respect to, nor shall Agent or any such
officer, director, employee or agent be liable to XXXX, FMC or
any Owner or responsible for (i) any warranties or recitals made
by any party in this Deposit and Security Agreement, certificate,
instrument or document executed by any party in connection
therewith, (ii) the due or proper execution or authorization of
this Deposit and Security Agreement by any party other than
Agent, or the effectiveness, enforceability, validity,
genuineness or collectibility as against any party of this
Deposit and Security Agreement, certificate, instrument or
document executed by any of the parties in connection therewith,
(iii) the present or future solvency or financial worth of any
party, or (iv) the value, condition, existence or ownership of
any of the Collateral or the perfection of any lien upon or
security interest in the Collateral whether now or hereafter held
or granted) or the sufficiency of any action, filing, notice or
other procedure taken or to be taken to perfect, attach or vest
any lien or security interest in the Collateral. Except as may be
required by Section 11(b) hereof, Agent shall not be required,
either initially or on a continuing basis, to (A) make any
inquiry, investigation, evaluation or appraisal respecting, or
enforce performance by any party of, any of the covenants
contained in this Deposit and Security Agreement or obligations
of any party under any certificate, instrument or document
executed by any of the parties in connection therewith, or (B)
undertake any other actions (other than actions expressly
required to be taken by it under this Deposit and Security
Agreement). Nothing in this Deposit and Security Agreement or any
certificate, instrument or document executed by any of the
parties in connection therewith, expressed or implied, is
intended to or shall be so construed as to impose upon Agent any
obligations, duties or responsibilities except as set forth in
this Deposit and Security Agreement and therein. Agent shall be
protected in acting upon any notice, request, consent,
certificate, order, affidavit, letter, telegram, telecopy or
other paper or document given to it by any person reasonably and
in good faith believed by it to be genuine and correct and to
have been signed or sent by such person. Agent shall have no duty
to inquire as to the performance or observance of any of the
terms, covenants or conditions of this Deposit and Security
Agreement. Except upon the direction of Owners pursuant to
Section 11(b) of this Deposit and Security
42
Agreement, Agent will not be required to inspect the properties
or books and records of any party for any purpose, including to
determine compliance by the parties with their respective
covenants respecting the perfection of security interests.
(k) LIMITED AGENCY. Agent, XXXX, FMC and Owners agree that it is the
intent of the FMC and Owners to limit the scope of the powers of
Agent to the specific powers delegated hereunder, together with
such powers as are reasonably incidental thereto, and Agent does
not and shall not have any other right or authority to bind the
FMC or any Owner or XXXX in any other manner or thing whatsoever.
(1) COMPENSATION. Agent shall be entitled to receive compensation in
accordance with the fee schedule attached hereto as EXHIBIT B and
shall be reimbursed for ordinary and necessary expenses,
including legal fees. Such fees and expenses shall be charged to
income on or, if insufficient, to principal of, the Pledged
Account. Agent agrees to look solely to the Collateral for its
compensation and expenses hereunder and neither FMC nor any Owner
shall be responsible for the payment thereof, nor shall XXXX have
liability hereunder beyond the Collateral except as expressly
provided herein.
(m) MONTHLY REPORTS. Agent shall promptly provide XXXX, FMC, Lender
and any other Owners with a monthly summary of all investment
activity with respect to the Pledged Account, all earnings or
losses thereon, itemized accounts of disbursements made
hereunder, and all expenses and fees reimbursed or paid to Agent,
and a valuation of the Collateral as of end of the month.
(n) NO DUTY TO INQUIRE. The Agent may rely and act upon any written
direction delivered to it as provided herein, if purported to
have been signed by XXXX, FMC or an Owner, as appropriate. The
Agent shall not be required to take notice, and shall not be
deemed to have notice, of any fact or occurrence, unless the
Agent has actual knowledge thereof. The Agent shall have no
obligation to determine the correctness or truth of any statement
set forth in any certificate delivered to the Agent hereunder.
(o) FUNDS ADVANCED. Agent shall have no obligation to advance funds
to purchase investments on behalf of the Pledged Account or XXXX.
If Agent does in fact advance funds, Agent shall notify XXXX. If
XXXX fails to immediately reimburse Agent for such advance plus
interest at Agent's Prime Rate from the date of advance, Agent
shall sell or otherwise liquidate such investments in the Pledged
Account to reimburse itself in full for same. "Prime Rate" means
the fluctuating rate of interest which is publicly announced from
time to time by Agent as its principal place of business as being
its "prime rate" or "base rate" thereafter in effect, with each
change in the Prime Rate automatically, immediately and without
notice changing the fluctuating interest rate thereafter
applicable hereunder, it being agreed that
43
the Prime Rate is not necessarily the lowest rate of interest
then available from Agent on fluctuating rate loans.
12. POSSESSION OF COLLATERAL. Throughout the term of this Deposit and
Security Agreement, possession of the Collateral shall be maintained by Agent,
or its agent or nominee (if Agent so chooses from time to time), as necessary
and appropriate to perfect Agent's security interest therein as provided in, and
subject to the terms of, this Deposit and Security Agreement; PROVIDED, HOWEVER,
that Agent shall at all times be responsible for the safekeeping of the
Collateral and the acts of any such agent or nominee. If any part of the
Collateral consists of "book-entry" securities, Agent shall have such securities
held in the name of Agent at the appropriate Federal Reserve Bank or other
depository, and Agent shall take such other actions as are necessary to maintain
a prior perfected security interest in such "book-entry" securities in
accordance with federal regulations or applicable law regarding "book-entry"
securities.
13. TERMINATION OF SECURITY INTERESTS. This Deposit and Security
Agreement and the security interests under this Deposit and Security Agreement
shall terminate when all amounts due and owing on account of, and all
obligations and liabilities of XXXX in respect of, the Secured Obligations shall
have been fully performed, satisfied, and paid as provided in this Deposit and
Security Agreement. At such time, Agent shall promptly reassign and deliver to
XXXX, without recourse or representation, against TERI's receipt, all Collateral
then held by Agent. Agent shall promptly execute and cause to be filed
termination statements in respect of any financing statements filed under this
Deposit and Security Agreement. The security interests hereunder shall terminate
as to all Collateral lawfully withdrawn by or paid to XXXX hereunder, upon the
occurrence of such withdrawal or payment.
14. REPRESENTATIONS AND WARRANTIES.
(a) Each party, with respect to itself, represents and warrants that:
(i) The making and performance of this Deposit and Security
Agreement and the activities contemplated hereby have
been duly authorized by all necessary corporate action
and do not and will not:
(A) violate any provision of law, or any regulation,
order, decree, writ or injunction, or any
provision of such party's charter or bylaws; or
(B) violate or result in the breach of, or constitute
a default or require any consent under, any
agreement or instrument by which it or any of its
property may be bound or affected; and
(ii) This Deposit and Security Agreement is the legal, valid
and binding obligation of such party, enforceable in
accordance with the terms hereof.
44
(iii) There is no pending or threatened litigation that would,
if resolved adversely to such party, adversely impact
third party's ability to perform any of its obligations
under this Deposit and Security Agreement or the Guaranty
Agreement.
(b) XXXX represents and warrants that, except for the security
interests of Agent created under this Deposit and Security
Agreement, XXXX is and will be the owner of the Collateral,
whenever acquired or arising, free and clear of all liens,
security interests, claims, encumbrances, charges, set-offs,
defenses, and counterclaims.
(c) The foregoing representations and warranties are subject to (i)
the exercise of judicial discretion in accordance with the
general principles of equity; (ii) the valid exercise of the
police powers of the several states of the United States of
America and of the constitutional powers of the United States of
America and (iii) bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditor's rights generally.
15. COVENANTS OF XXXX. XXXX agrees and covenants with Lender and FMC
as follows:
(a) MAINTENANCE AND USE OF COLLATERAL. XXXX shall not permit the
Collateral to be used in violation of the Guaranty Agreement or
this Deposit and Security Agreement.
(b) TAXES. XXXX shall, if so obligated, pay and discharge when due
all taxes, assessments, license or permit fees, levies, and other
charges upon the Collateral, and XXXX shall, if so obligated,
also pay and discharge when due all other taxes, levies, or
assessments relating to its business which, if unpaid, might give
rise to any penalty, security interest, lien, charge, levy,
assessment, or encumbrance in, on or against the Collateral. The
Collateral and all income and/or proceeds of the Collateral shall
be, and be treated by XXXX as being, the property of XXXX, and
XXXX shall report the Collateral and all such proceeds as its
sole property until, unless and except to the extent any of the
Collateral is paid and transferred to an Owner pursuant to the
Guaranty Agreement and this Deposit and Security Agreement.
(c) NO ENCUMBRANCE. Except as otherwise expressly permitted in this
Deposit and Security Agreement, XXXX shall not sell, assign,
transfer, pledge, hypothecate, or otherwise dispose of or
encumber any of the Collateral or any interest therein until all
of the Secured Obligations are fully satisfied. XXXX shall
protect and defend the Collateral from and against any and all
claims, demands, or legal proceedings brought or asserted by any
party other than Agent.
45
(d) MAINTENANCE OF SECURITY INTEREST. XXXX agrees that it shall do
all things Agent from time to time deems reasonably necessary to
preserve and maintain the security interests of Agent under this
Deposit and Security Agreement as a first priority lien in the
Collateral and shall not permit the creation of any other lien,
charge, security interest, or encumbrance in the Collateral. XXXX
agrees that it shall execute and deliver and, if requested by
Agent, shall file or record, or cause to be filed or recorded,
such notices, financing statements, continuation statements,
certificates of title, and other documents, and shall deliver to
Agent upon request therefor such securities, agreements,
writings, documents, certificates, instruments, or other
intangibles, as Agent reasonably deems necessary from time to
time to perfect and maintain the perfection of the security
interests of Agent under this Deposit and Security Agreement. All
documents which are being filed or recorded shall be prepared by
and in form and substance satisfactory to Agent and FMC. Agent,
FMC or XXXX shall have the right to file this Deposit and
Security Agreement and any financing statement reflecting the
content of this Agreement for record in any governmental office.
(e) RECORDS, STATEMENTS, AND RELATED DOCUMENTS. XXXX agrees:
(i) when reasonably requested to do so by Agent or FMC, to
prepare and deliver to Agent and FMC a schedule in form
satisfactory to Agent, certified by an authorized officer
of XXXX, listing all Collateral and the location thereof;
(ii) to keep accurate and complete records at all times in
respect of the Collateral and to deliver to Agent and FMC
copies of such records and such other information
regarding the Collateral which Agent or FMC may
reasonably request; and
(iii) that at any reasonable time during TERI's normal business
hours, and after reasonable notice (at least three (3)
business days), Agent, FMC or their authorized
representatives may enter the premises of XXXX to inspect
and copy the books and records of XXXX, all of which
records shall be kept at the principal offices of XXXX,
except as permitted under paragraph (f) below. Any such
examination or inspection shall be at the expense of the
party requesting such examination or inspection, unless
there is then existing a default under this Deposit and
Security Agreement, or unless the examination or
inspection is the result of a notice (other than a notice
of name change) given by XXXX pursuant to paragraph (g)
below, or unless the examination or inspection uncovers a
default not cured within thirty (30) days hereunder, in
which case such examination or inspection shall be at
TERI's expense.
46
(f) LOCATION. The principal office of XXXX is located at 000 Xxxxxx
Xxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxxxxxxx 00000-0000, and all
books of account and records relating to the collateral and
TERI's business are located at TERI's principal office. XXXX
shall not, without giving Agent and FMC at least ten (10) days
prior written notice, change the location of any of the
Collateral or the location at which it does business, including,
without limitation, the location at which any books of account or
records relating to the Collateral and TERI's business are kept.
(g) NOTICE. XXXX shall promptly notify Agent and FMC of any change in
TERI's name or any physical loss, destruction, or damage to any
material portion of the Collateral. XXXX shall also promptly
notify Agent and FMC of any default hereunder.
(h) FURTHER INFORMATION. XXXX shall execute and deliver, or cause to
be executed and delivered, to Agent, in a form satisfactory to
Agent, TERI's certification of its tax identification number, its
direction under 17 C.F.R 240.146.2 and such other documents as
Agent shall reasonably request to perform its obligations
hereunder.
16. WAIVER. No delays or omissions by either party in exercising or
enforcing any of its respective rights, remedies, powers, privileges and
discretions ("Rights and Remedies") shall operate as or constitute a waiver of
any such Rights and Remedies. No waiver by a party of any default under this
Deposit and Security Agreement or the Guaranty Agreement shall operate as a
waiver of any other default under the Deposit and Security Agreement. No single
or partial exercise by a party of any of its Rights and Remedies shall preclude
the other of further exercise of such Rights and Remedies. No waiver or
modification of a party's Rights and Remedies on any one occasion shall be
deemed a waiver on any subsequent occasion, nor shall it be deemed a continuing
waiver. All Rights and Remedies shall be cumulative and not alternative or
exclusive, and a party may exercise any such Rights and Remedies or any of them
at such time or times and in such order of preference as that party in its sole
discretion may determine.
17. [Intentionally Omitted.]
18. CONFIDENTIALITY. The parties acknowledge that this Deposit and
Security Agreement contains confidential information and agree not to disclose
any of the terms and conditions relating to this Deposit and Security Agreement
and the Pledged Account without the prior express written consent of the others.
The provisions of the foregoing sentence to the contrary notwithstanding, any
such information may be disclosed to any employees, officers, directors or
representatives of the parties to effect the purpose of the [PRODUCT NAME] Loan
Programs and to the attorneys and accountants of the parties on a confidential
basis. This provision shall, further, not be construed to prohibit the
disclosure of any information relating to this Deposit and Security Agreement
(a) that is now or in the future becomes public information, (b) as may be
required by applicable law or this Deposit and Security Agreement or the
Guaranty Agreement, (c) to the underwriters and rating agencies,
47
their employees, agents and attorneys and to such others as Owners may determine
necessary (including regulators and potential investors in a private or public
offering) in connection with the sale, securitization or other financing of any
of the Loans, and (d) as necessary to perfect or enforce the security interest
in the Collateral granted hereunder.
19. CHOICE OF LAW. This Deposit and Security Agreement shall be
governed and construed in accordance with Massachusetts law, without regard to
principles of conflict of laws. The parties each consent to jurisdiction in the
appropriate Court Department for Suffolk County, located in Boston,
Massachusetts, and the United States District Court for the District of
Massachusetts, as judicial forums within which any action to enforce the
provisions hereof or any disputes arising under this Deposit and Security
Agreement may be brought.
20. SEVERABILITY. If at any time one or more provisions of this
Deposit and Security Agreement is or becomes invalid, illegal or unenforceable
in whole or in part, the validity, legality, and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
21. ASSIGNMENT. This Deposit and Security Agreement may not be
assigned by any party without the others' prior express written consent, except
as may be required pursuant to Section 4 or permitted pursuant to this Section
21. Any other provision in this Deposit and Security Agreement to the contrary
notwithstanding, XXXX, Agent, Lender and FMC agree that Lender shall not be
required to obtain the consent of Agent, XXXX or FMC to Lender's sale to any
third party lender and/or investor or other purchaser of any portion or all of
the Loans; nor shall any such sale of the Loans constitute or be deemed a
default under this Deposit and Security Agreement or invalidate in any way the
terms and provisions of the Guaranty Agreement.
22. HEADINGS. The section headings used in this Deposit and Security
Agreement are for convenience of reference only and are not to affect the
construction or to be taken into consideration in interpreting this Deposit and
Security Agreement.
23. AMENDMENT. This Deposit and Security Agreement may be amended or
modified only by the written agreement of XXXX, Agent, on behalf of Owners, and
FMC.
24. NOTICES. All notices under this Deposit and Security Agreement
shall be sent by any means requiring receipt signature, or if by facsimile
confirmed by first-class mail, postage or other delivery charge prepaid to
XXXX:
The Education Resources Institute, Inc.
000 Xxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Attention: Xxxx X. XxXxxxx, Senior Vice President
48
and if such notice regards a default hereunder, with a copy to:
Xxxxxxx X. Xxxxxx, Esq.
Xxxxx, Xxxxxxxx & Strong, LLP
Xxx Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000-0000
Lender:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
and if such notice regards a default hereunder, with a copy to:
-----------------------
-----------------------
-----------------------
-----------------------
FMC:
The First Marblehead Corporation
Attn: Xxxxxx Xxxxxxx Xxxxxx
Chairman, CEO
00 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
and if such notice regards a default hereunder, with a copy to:
Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxx Xxxxxx
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Agent:
------------------
------------------
------------------
------------------
49
and if such notice regards a default hereunder, with a copy to:
------------------
------------------
------------------
------------------
Any party may, by notice to the other parry in accordance with this section,
designate a different address for notices thereafter under this Deposit and
Security Agreement.
25. NON-BUSINESS DAYS. Any action required or permitted to be taken
or done hereunder on a day which is not a business day in the Cities in which
the principal offices of Agent, XXXX and FMC are located may be taken or done on
the next business day with the same effect as if taken or done on such
non-business day.
26. BENEFIT OF OWNERS. This agreement is for the benefit not only of
Lender and FMC but also of the Owners from time to time, and its provisions may
be enforced by such Owners.
27. COUNTERPARTS. This Deposit and Security Agreement may be executed
in multiple counterparts, each of which shall be deemed an original, but all of
which shall together be deemed a single agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Deposit and
Security Agreement to be executed by their respective officers, being first duly
authorized, as of the day and year first above written.
THE EDUCATION RESOURCES INSTITUTE, INC.
By:
---------------------------
LENDER:
----------------------
By:
---------------------------
THE FIRST MARBLEHEAD CORPORATION
By:
---------------------------
AGENT:
--------------------------------------
By:
---------------------------
50
EXHIBIT F
TO
MASTER LOAN GUARANTY AGREEMENT
ACCESSION AGREEMENT
[SUB TRUST NAME]
______________________, 2001
[XYZ, TRUSTEE
ADDRESS]
Ladies and Gentlemen:
We refer to the Securitization Trust Agreement, dated as of
_____________________ (the "Trust Agreement"), between The National Collegiate
Trust (the "Company") and XYZ (in its capacity as trustee thereunder, the "Owner
Trustee"). We propose to acquire a beneficial interest in Sub Trust Name, a
Delaware business trust (the "Trust") formed pursuant to the Trust Agreement.
Capitalized terms used herein without definition have the meanings given them in
the Trust Agreement.
1. We understand that our Trust Certificate is not being registered
under the Securities Act of 1933, as amended (the "1933 Act"), or any state
securities or "Blue Sky" law, and is being sold to us in a transaction that is
exempt from the registration requirements of the 1933 Act and any applicable
state laws.
2. We have such knowledge and experience in financial and business
matters as to be capable of evaluating the merits and risks of an investment in
the Trust, we are able to bear the economic risk of investment in the Trust, and
we are an "accredited investor" as defined in Regulation D under the 1933 Act.
3. We acknowledge that none of the Trust, the Company or the Owner
Trustee has advised us concerning the federal or state income tax consequences
of owning a beneficial interest in the Trust, including the tax status of the
Trust or the likelihood that distributions from the Trust would be characterized
as "unrelated business income" for federal tax purposes, and we have consulted
with our own tax advisor with respect to such matters.
4. We are acquiring our Trust Certificate for our own account and not
for the benefit of any other person and not with a view to any distribution of
our beneficial interest in the Trust, subject to the understanding that
disposition of our property shall at all times be and remain within our control.
5. We agree that our beneficial interest in the Trust must be held
indefinitely by us unless subsequently registered under the 1933 Act and any
applicable state securities or "Blue
51
Sky" law or unless exemptions from the registration requirements of the 1933 Act
and applicable state laws are available.
6. We agree that in the event that at some future time we wish to
dispose of or exchange any of our beneficial interest in the Trust, we will not
transfer or exchange any of our beneficial interest in the Trust unless we have
obtained the prior written consent to such transfer or exchange pursuant to [THE
APPLICABLE SECTION] of the Trust Agreement, and either:
A. (1) the transfer or exchange is made to an
Eligible Purchaser (as defined below), (2) a letter to
substantially the same effect as this letter is executed promptly
by such Eligible Purchaser, and (3) all offers or solicitations
in connection with the sale (if a sale), whether made directly or
through any agent acting on our behalf, are limited only to
Eligible Purchasers and are not made by means of any form of
general solicitation or general advertising whatsoever; or
B. our beneficial interest in the Trust is sold in a
transaction that does not require registration under the 1933 Act
and any applicable state "Blue Sky" law.
"Eligible Purchaser" means a corporation, partnership or other entity
which we have reasonable grounds to believe and do believe can make
representations with respect to itself to substantially the same effect as the
representations set forth herein.
7. We understand that our Trust Certificate bears a legend to
substantially the following effect:
THE BENEFICIAL INTEREST IN THE TRUST REPRESENTED BY THIS TRUST
CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW, AND MAY NOT BE
DIRECTLY OR INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED OF
(INCLUDING PLEDGED) BY THE HOLDER HEREOF UNLESS IN THE OPINION OF
COUNSEL SATISFACTORY TO THE OWNER TRUSTEE SUCH TRANSACTION IS EXEMPT
FROM REGISTRATION UNDER THE ACT AND STATE SECURITIES LAWS. THE TRANSFER
OF THIS TRUST CERTIFICATE WILL NOT BE EFFECTIVE UNLESS THE TRANSFEREE
HAS DELIVERED TO THE OWNER TRUSTEE A LETTER IN THE FORM REQUIRED BY
SECTION [APPLICABLE REFERENCE] OF THE TRUST AGREEMENT AND THE
TRANSFEREE PROVIDES THE OWNER TRUSTEE WITH EVIDENCE SATISFACTORY TO THE
OWNER TRUSTEE DEMONSTRATING THE TRANSFEROR'S COMPLIANCE WITH SECTION
[APPLICABLE REFERENCE] OF THE TRUST AGREEMENT.
8. We agree to be bound by all the terms and conditions of our Trust
Certificate and the Trust Agreement.
52
Very truly yours,
THE EDUCATION RESOURCES INSTITUTE, INC.
BY:
------------------------------------
NAME:
-------------------------------
TITLE:
-------------------------------
ACCEPTED AND ACKNOWLEDGED THIS
_____ DAY OF ___________, 2001.
XYZ,
NOT IN ITS INDIVIDUAL CAPACITY, BUT SOLELY AS OWNER TRUSTEE
BY:
------------------------------------
NAME:
-------------------------------
TITLE:
-------------------------------
53
