EXHIBIT 10.21
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
DATABASE SALE AND SUPPLEMENTATION AGREEMENT
THIS DATABASE SALE AND SUPPLEMENTATION AGREEMENT ("Agreement") is entered
into by and between THE EDUCATION RESOURCES, 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 FIRST MARBLEHEAD EDUCATION RESOURCES, INC. ("FMER"), a Delaware
corporation having its principal place of business at 00 Xxxxxx Xxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000. The First Marblehead Corporation ("FMC") joins
in this Agreement for the limited purposes set forth below. This Agreement is
dated as of June 20, 2001.
RECITALS
WHEREAS, FMER has entered into an Asset Purchase and Sale Agreement
pursuant to which FMER is acquiring certain tangible and intangible assets of
XXXX; and
WHEREAS, FMER has entered into a certain Master Servicing Agreement dated
as of July 1, 2001, pursuant to which FMER will deploy the assets acquired from
XXXX in providing comprehensive services in support of TERI's loan guarantee
programs; and
WHEREAS, it is a condition of FMER's willingness to acquire assets from
XXXX and provide long-term services under the Master Servicing Agreement that
FMER and FMC be the only third parties having rights to use Loan Database now
held and to be obtained in the future by XXXX.
NOW, THEREFORE, in consideration of these presents and the covenants
contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
Capitalized terms used in this Agreement without definition have the
meanings set forth in the Purchase and Sale Agreement. In addition, the
following terms have the following meanings:
"Closing Date" has the meaning set forth in the Purchase and Sale
Agreement.
"Database Note" has the meaning set forth in Section 4.01.
"Delivered Database" means the database created pursuant to Sections 3.01
and 3.02.
"Excluded Data" means (a) the name of any borrower or obligor, (b) any
unique identifier with respect to any borrower or obligor such as social
security number or complete mailing address, (c) the identity of any lender with
respect to any loan, and (d) any data of any type provided to or held by XXXX
with respect to loans originated by National City Bank.
"FMC" means The First Marblehead Corporation, a Delaware corporation
having a principal place of business at 00 Xxxxxx Xxxxxx, Xxxxxxxxxx,
Xxxxxxxxxxxxx 00000.
"FMER Default" means:
(a) A payment default shall have occurred under the Database Note and
shall not have been cured within any applicable cure period;
(b) FMER shall fail to make any payment required hereunder when due,
other than payments due under the Database Note, and such failure shall continue
for 15 days after XXXX shall provide written notice and demand for cure;
(c) FMER shall fail to perform any other covenant or agreement under
this Agreement and such failure shall continue for 30 days after XXXX shall
provide written notice and demand for cure;
(d) FMER shall become a debtor in any proceeding under the U.S.
Bankruptcy Code and such proceeding shall remain undismissed for a period of
sixty (60) days; or
(e) FMER and/or FMC shall default under the Purchase and Sale
Agreement or the Note issued pursuant thereto and such Note has been
accelerated, or the Master Servicing Agreement shall have been terminated for
cause by XXXX.
"FMER Restrictions" has the meaning set forth in Section 2.02.
"Initial Loan Database" means the data included in the Delivered Database
as initially created and delivered pursuant to Section 3.01.
"Law" has the meaning set forth in Section 6.03(b).
"Loan Database" consists of any and all data now or hereafter obtained,
generated, recorded, or otherwise received by XXXX in connection with its
business as a loan guarantor, including, without limitation, borrower data such
as credit scores and other credit information, loan payment histories and
statistics, default and recovery data,
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data regarding schools attended by borrowers and students whose education was
financed with XXXX-guaranteed loans, and underwriting criteria.
"Master Loan Guaranty Agreement" means the Agreement of that name between
XXXX and FMC dated as of February 2, 2001.
"Master Servicing Agreement" means the agreement of that name among FMER,
XXXX and FMC dated as of July 1, 2001.
"Outsource Provider" means FMER or such other provider of data services
as XXXX may retain from time to time.
"Purchase and Sale Agreement" means the Asset Purchase and Sale Agreement
among XXXX, FMER, FMC, and XXXX Marketing Services, Inc. dated as of April 6,
2001.
"Queries" means statistical queries posed to XXXX by FMER with respect to
certain aspects of Loan Database resident on the automated data processing
systems of XXXX or its Outsource Provider, the responses to which shall not
include any Excluded Data.
"Retained Uses" means the right retained by XXXX to utilize the original
version of the Loan Database (including the original copy thereof and
information thereafter obtained, generated, recorded or otherwise received by
XXXX which would otherwise be deemed part of the Loan Database) for its own use
for purposes of designing, underwriting, implementing, evaluating and managing
education loan guarantee programs offered and guaranteed by XXXX.
"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 of debt instruments or other obligations, which instruments or
obligations are limited in recourse to the assets being purchased by such
special purpose entity and certain other assets, such as the Pledged Account
described in Section 2.04 of the Master Loan Guaranty Agreement, bond insurance
and other assets supporting obligations issued by the Special Purpose Entity.
"Surviving Obligations" shall mean the obligations of the parties
pursuant to Sections 2.01, 2.02, 2.03, and Articles VIII, IX, and X hereof,
which obligations shall survive termination of this Agreement.
"XXXX Default" means:
(a) XXXX shall fail to deliver any Update or Query response (other
than by reason of delay by FMER) that is required hereunder and such failure
shall continue for more than 30 days after written notice and demand for cure.
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(b) XXXX shall breach any other obligation hereunder and such failure
shall continue for more than 30 days after written notice and demand for cure.
(c) XXXX shall become a debtor in any proceeding under the U.S.
Bankruptcy Code and such proceeding shall remain undismissed for a period of
sixty (60) days.
(d) XXXX shall default under the Purchase and Sale Agreement, or the
Master Servicing Agreement shall have been terminated for cause by FMER.
"Updates" means the additional data provided to FMER pursuant to
Section 3.01.
ARTICLE II
DATABASE TRANSFER AND RESTRICTIONS
2.01 GRANT.
XXXX hereby transfers, assigns and grants to FMER all right, title, and
interest in and to the Delivered Database as a derivative of the Loan Database.
This grant includes, without limitation, the right to use and possess the
Delivered Database, together with the rights to share the data with FMC, to
disclose the data to others, to copy and manipulate the data, and generally to
exercise ownership of the Delivered Database and all modifications and
enhancements thereof, subject to the FMER Restrictions set forth in Section
2.02. FMER and FMC hereby agree to abide by and conform to the FMER
Restrictions. XXXX retains all right, title, and interest in and to the Loan
Database as such, subject to the XXXX Restrictions set forth in Section 2.03.
2.02 FMER RESTRICTIONS.
FMER agrees that its ownership of the Delivered Database is subject to
the following restrictions (the "FMER Restrictions"). FMER will not assign,
license, or disclose the Delivered Database for consideration, either in whole
or in part, in the form delivered or as part of a derivative work, without
TERI's consent, except that:
(a) FMER may sell or give the Delivered Database to FMC, which itself
will not assign, license or disclose the Delivered Database for
consideration, either in whole or in part, in the form delivered
or as part of a derivative work, without TERI's consent;
(b) FMER may sell, transfer or license the Delivered Database in
connection with a sale of substantially all the assets or business
of FMER.
Nothing in this section shall in any way restrict FMER's or FMC's right to
provide data from the Delivered Database or derivative works thereof to any
lender, rating agency, bond insurer, investor, credit enhancement provider or
other Person in connection with the planning, operation or marketing of an
education loan program by FMER or FMC, including, without limitation, in
connection with a Securitization Transaction,
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notwithstanding any consideration received by FMER or its Affiliates in
connection with such transaction. FMC and FMER agree that disclosures made under
the preceding sentence shall be subject to a confidentiality agreement pursuant
to which the receiving party agrees not to use the data except in support of the
education loan program in question and not to redisclose the data, except as
required by law.
2.03 XXXX RESTRICTIONS. XXXX agrees that during the term of this
Agreement it will use the Loan Database, and/or its retained copy of the
Delivered Database only for the Retained Uses. Specifically, but not by way of
limitation, XXXX will not sell, license or transfer, the Loan Database or any
substantial portion thereof to any person nor will it disclose the same except
in furtherance of the Retained Uses. Any such disclosure shall be subject to a
confidentiality agreement pursuant to which the receiving party agrees not to
use the data disclosed by XXXX except in support of TERI's guaranty program and
not to redisclose the data, except as required by law. If this Agreement
terminates under circumstances that do not trigger the operation of Section 5.03
below, XXXX will be entitled to create by independent efforts any database that
is derivative from the Loan Database; if the resulting work is identical or
substantially identical to the Delivered Database, XXXX may not sell such work
but may disclose its contents to any Outsource Provider. If this Agreement
terminates under circumstances that trigger the operation of Section 5.03 below,
the restrictions set forth in this Section 2.03 shall be of no force and effect.
2.04 DATABASE PROTECTION.
If the United States hereafter adopts any legal scheme for the protection
of databases apart from copyright, the parties will in good faith negotiate such
amendments to this Agreement as shall be necessary or advisable to allocate the
rights under such scheme in the same manner as set forth herein.
ARTICLE III
CREATION AND DELIVERY OF THE DELIVERED DATABASE
3.01 INITIAL LOAN DATABASE AND UPDATES.
XXXX and/or its Outsource Provider will create a derivative work of the
Loan Database as it exists on the Closing Date, by deleting therefrom all
Excluded Data. Such derivative work, and all modifications thereto made pursuant
to this Article III, will be referred to in this Agreement as the Delivered
Database and its contents as the Initial Loan Database. XXXX shall deliver the
first version of the Delivered Database to FMER within ten days after the
Closing Date in a mutually agreed medium and format. Thereafter, XXXX, or its
Outsource Provider, shall deliver Updates to FMER no less frequently than
monthly, also in a medium and format then employed by XXXX, or in any other
mutually agreed format and medium. Each Update shall consist of all additions or
modifications, other than Excluded Data, made to the Loan Database since the
last
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previous delivery hereunder, and shall be added to and deemed a part of the
Delivered Database.
3.02 QUERIES.
FMER shall also have the right to tender and receive prompt responses to
statistical Queries to XXXX, or its Outsource Provider, from time to time;
PROVIDED, HOWEVER, that such Query shall not require XXXX or its Outsource
Provider to expend an unreasonable amount of computer time or require additional
computer programming by XXXX, unless FMER shall pay directly, as and when
incurred, the cost of such computer time or programming payable to any third
party. Responses to Queries shall be based upon a review, analysis or
examination of the Loan Database, excluding Excluded Data. Responses to Queries
shall be added to and be deemed a part of the Delivered Database.
ARTICLE IV
CONSIDERATION
4.01 INITIAL DELIVERY.
In consideration of the initial delivery of the Delivered Database, FMER
shall pay to XXXX the sum of [**] Dollars ($[**], plus interest at the rate of
[**] percent ([**]%) per annum in [**] equal monthly installments of [**]Dollars
($[**]), beginning thirty (30) days after the Closing Date. On the Closing Date,
FMER will deliver to XXXX a note substantially in the form of Exhibit A attached
hereto, calling for payments of principal and interest at the time and in the
amount set forth in this subsection ("Database Note").
4.02 In consideration of the right to receive Updates and Queries, FMER
shall pay XXXX a monthly purchase fee of $62,294, in advance, beginning thirty
(30) days after the Closing Date on the same day of each month thereafter, and
continuing for sixty (60) months. Thereafter, if this Agreement is renewed
pursuant to Section 5.02 hereof, FMER shall pay the monthly purchase fee of
Twenty Thousand, Six Hundred and Twenty-Seven Dollars ($20,627) for sixty (60)
months, on the same monthly due date as the initial term.
ARTICLE V
TERM AND TERMINATION
5.01 DELIVERED DATABASE.
As to the Delivered Database, including, without limitation, the Initial
Loan Database, Queries and Updates actually delivered to FMER, the right and
ownership granted hereunder is perpetual and non-cancelable, except as provided
in Section 5.03 with respect to repurchase of assets under the Purchase and Sale
Agreement.
5.02 TERM: FUTURE UPDATES AND QUERIES.
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The right to receive (and obligation to pay for) Updates and Queries
under this Agreement shall continue for a term of five years, commencing on the
date first set forth above. Either party may renew this Agreement for one,
five-year renewal term by delivery of written notice to the other party not less
than sixty (60) days prior to the expiration date of this Agreement. FMER may
not renew this Agreement if it has defaulted under the Note issued by it
pursuant to the Purchase and Sale Agreement and such note has been accelerated.
5.03 REPURCHASE OF DELIVERED DATABASE.
XXXX may repurchase the Delivered Database upon the occurrence and
consummation of TERI's repurchase of Purchased Assets pursuant to Section 9.2 of
the Purchase and Sale Agreement. Such repurchase shall only be effective upon
payment to FMER of an amount equal to all amounts paid under Section 4.01
hereof, less a factor for amortization equal to [**] of the face amount of the
note delivered under Section 4.01 hereof multiplied by the number of months
between the Closing Date under the Purchase and Sale Agreement and the
repurchase date. Such repurchase shall also result in the forgiveness of any
other and further payments hereunder. Upon such repurchase pursuant to Section
9.2 of the Purchase and Sale Agreement, the repayment by XXXX to FMER, and the
delivery of written notice of termination pursuant to this Section by XXXX to
FMER, this Agreement shall terminate and FMER shall return and shall cause any
of its Affiliates to whom the Delivered Database or any portion thereof has been
disclosed to return to XXXX all copies, reproductions, modifications and
derivative works related to the Delivered Database, and any and all data packs
and other forms in which the Delivered Database or any portion thereof is held
and/or shall certify to XXXX that all such things have been destroyed. Further,
FMER and FMC immediately shall cancel or terminate any and all licenses, grants
for the use of or other similar arrangements it has entered into with any other
party with respect to the Delivered Database or any copies, reproductions,
modifications or derivative works related thereto. Thereafter, none of FMER, FMC
or any parties with whom FMER or FMC granted licenses, or other rights of use
with respect to the Delivered Database shall have the right to use any portion
of the Delivered Database and TERI's use and ownership of the Delivered Database
shall in no way be restricted.
5.04 FMER DEFAULT. FMER's right to receive future Updates and Queries
may be terminated by XXXX upon five (5) days' written notice upon the occurrence
of an FMER Default, in which event all further obligations of XXXX and FMER,
other than Surviving Obligations and other than FMER's obligation to make
payments under Sections 4.01 and 4.02, shall terminate. XXXX may accelerate the
obligations of FMER under Sections 4.01 and 4.02 if, but only if, the FMER
Default includes a failure to make a timely payment under said sections. In the
event that FMER in fact pays all amounts due under Sections 4.01 and 4.02,
whether in timely installment payments or after acceleration, FMER shall be
entitled to receive Updates and Queries for the remaining term of this
Agreement, but the restrictions of Section 2.03 shall no longer apply to XXXX.
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The obligation of FMER to make payments under Section 4.01 shall be
secured by the Security Agreement issued under the Purchase and Sale Agreement,
and said Security Agreement shall include as collateral all of FMER's right,
title and interest in the Delivered Database.
5.05 XXXX DEFAULT. FMER may, in its sole discretion, terminate this
Agreement as to future Updates and Queries upon five (5) days' written notice
upon the occurrence of a XXXX default, in which event all further obligations of
XXXX and FMER, other than Surviving Obligations, shall terminate.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF XXXX
XXXX represents and warrants to FMER, as of the date hereof, and, with
respect to the matters in Sections 6.03 and 6.05, as of the date of any Initial
Loan Database delivery, Update or Query, as follows:
6.01 ORGANIZATION AND QUALIFICATION.
XXXX (i) has been duly organized and is validly existing and in good
standing as a non-profit corporation under Chapter 180 of the Massachusetts
General Laws, (ii) 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, and (iii) is duly qualified or
licensed to do business, and is in good standing, in each jurisdiction where the
character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary.
6.02 AUTHORITY.
XXXX has all the necessary corporate power and authority to execute and
deliver this Agreement, to perform its obligations under this Agreement and to
consummate the 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 perform such obligations 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.
6.03 NO CONFLICTS.
Except as set forth in Schedule 6.03 attached hereto, the execution and
delivery of this Agreement by XXXX do not, and the performance of this Agreement
by XXXX will not:
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(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 of the Loan Database is or may be bound by 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 any right of termination, amendment, acceleration or cancellation of, or
result in the creation of any lien 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
may be bound or affected.
6.04 REQUIRED GOVERNMENTAL CONSENTS AND COMPLIANCE WITH LAW.
The execution and delivery of this Agreement by XXXX do not, and the
performance by XXXX of its obligations under this Agreement 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, administrative authority, agency, commission,
court, tribunal or arbitral body or self-regulated entity (each, a "Governmental
Entity"), other than a notification to the Massachusetts Attorney General.
6.05 GOOD TITLE.
XXXX has good right and power to convey the Delivered Database pursuant
to the terms of this Agreement, free and clear of all liens, encumbrances,
claims and restrictions.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF FMER AND FMC
Each of FMER and FMC represents and warrants to XXXX, as to itself, as of
the date hereof, and as of the date of the Initial Loan Database delivery and
the date of any Update or Query, as follows:
7.01 ORGANIZATION; AUTHORITY.
(a) Each of FMER and FMC has been duly organized and is validly
existing and in good standing under the laws of the jurisdiction of its
incorporation, 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 now being conducted, and is duly qualified or licensed to do
business and is in good standing in each jurisdiction where the
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character of the properties owned, leased or operated by it or the nature of its
business makes such qualification or licensing necessary.
(b) Each of FMER and FMC has all the necessary corporate power and
authority to execute and deliver this Agreement and to perform its obligations
under this Agreement and to consummate the transactions contemplated by this
Agreement. The execution and delivery of this Agreement by FMER and FMC and the
consummation by FMER and FMC of such transactions has been duly and validly
authorized by all necessary corporate action and no other corporate proceedings
on the part of FMER and FMC are necessary to authorize this Agreement or to
perform their obligations under this Agreement. This Agreement has been duly
authorized and validly executed and delivered by FMER and FMC and constitutes a
legal, valid and binding obligation of FMER and FMC, enforceable against FMER
and FMC in accordance with its terms.
7.02 NO CONFLICTS.
The execution and delivery of this Agreement by FMER and FMC do not, and
the performance of this Agreement by FMER and FMC will not:
(a) conflict with or violate any provision of FMER's or FMC's
certificate of incorporation or bylaws;
(b) conflict with or violate any provision of Law applicable to FMER
or FMC or by which any property or asset of FMER or FMC is or may be bound; 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 a lien on any property or asset of
FMER or FMC under any Contract to which FMER or FMC is a party or by which it or
its assets or properties is or may be bound or affected.
7.03 FILINGS AND CONSENTS.
The execution and delivery of this Agreement FMER and FMC do not, and the
performance of this Agreement by FMER and FMC will not require any consent,
approval, authorization or permit of, or filing with a notification to, any
Governmental Entity.
ARTICLE VIII
FMC GUARANTEE
FMC hereby guarantees the full and timely performance by FMER of each of
its obligations pursuant to this Agreement. Such Guarantee is primary and not
secondary and it shall not be necessary, in order for XXXX to enforce such
guarantee, for XXXX to
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institute suit or exhaust any remedies against FMER or make any claim or demand
against FMER before requiring performance by FMC hereunder.
ARTICLE IX
INDEMNIFICATION
9.01 INDEMNIFICATION.
(a) XXXX will indemnify, defend and hold harmless FMER and FMC from
and against any and all claims, demands or suits (by any person or entity),
losses, liabilities, damages (including any consequential, special, indirect,
punitive or incidental damages), obligations, payments, costs and expenses
(including, without limitation, the costs and expenses of any and all actions,
suits, proceedings, assessments, judgments, settlements and compromises relating
thereto and reasonable attorneys' fees and reasonable disbursements in
connection therewith), to the extent the foregoing are not covered by insurance
(each, an "Indemnifiable Loss"), asserted against or suffered by FMER or FMC
relating to, or resulting from, or arising out of any breach by XXXX of any
representation, warranty or covenant (without regard to any qualifications with
respect to materiality contained therein) contained in this Agreement; PROVIDED,
HOWEVER, that in the case of any Indemnifiable Loss arising under this Section
9.01, (x) such indemnification shall be effective only with respect to claims
regarding the Initial Loan Database, written notice of which is received by XXXX
no later than the second anniversary of the date of this Agreement, and (y) such
indemnification shall be effective only with respect to claims regarding any
Update or Query, written notice of which is received by XXXX no later than the
second anniversary of the date of delivery of the Update or Query in question,
and (z) no amounts shall be due and payable until and unless the aggregate
amount of such Indemnifiable Loss is equal to $75,000 or more (when aggregated
with all Indemnifiable Losses under the Purchase and Sale Agreement), at which
point such indemnification shall relate to all Indemnifiable Losses; and (zz)
TERI's total liability under this indemnity shall not exceed amounts received by
XXXX under this Agreement and the Purchase and Sale Agreement at the time of
assertion of claims together with the right of FMER to set off against such
Indemnifiable Loss any amounts remaining to be paid to XXXX hereunder.
Notwithstanding the foregoing clause (z), TERI's obligation to indemnify
hereunder shall not be subject to such minimum amount of Indemnifiable Loss with
respect to any cost incurred by FMER or FMC in defense of any claim by any
person that this Agreement and/or the transfer of the Delivered Database
hereunder violates a contractual right of such person to designate data as
confidential, which right is first exercised after the date hereof (a "Contract
Claim"). In the event that a Contract Claim is asserted against FMER or FMC,
XXXX shall elect one of two optional courses of action, as follows:
(i) In the event that termination of its contract with the
claimant would moot any claims against FMC and FMER, XXXX
may elect to cause such termination, or
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(ii) XXXX may elect to indemnify FMER for costs of defending
such claim, in which event TERI's liability for costs of
defense shall be limited to the lesser of 50% of such
costs, or $100,000. The foregoing limitation shall not
apply to any loss or cost relating to any judgement
actually entered against FMER or FMC, which loss or cost
shall be subject to the general minimum amount of $75,000
set forth above. The availability of defense costs under
this provision shall not restrict FMER's general rights
under this indemnity should losses as a result of a
Contract Claim exceed such minimum amount.
(b) FMER will indemnify, defend and hold harmless XXXX from and
against any and all Indemnifiable Losses asserted against or suffered by XXXX
relating to, resulting from, or arising out of any breach by FMER of any
representation, warranty or covenant contained in this Agreement; PROVIDED,
HOWEVER, that (X) such indemnification shall remain in effect only with respect
to claims, written notice of which is received by FMER no later than the second
anniversary of the date of termination of this Agreement, (Y) no amounts shall
be due and payable until and unless the aggregate amount of such Indemnifiable
Losses (aggregated with Indemnifiable Losses under the Purchase and Sale
Agreement) is equal to $75,000 or more, at which point such indemnification
shall relate to all Indemnifiable Losses, and FMER's total liability under this
provision shall not exceed the total amount paid by FMER under this Agreement.
(c) Any person entitled to receive indemnification under this
Agreement (an "Indemnitee") having a claim under these indemnification
provisions shall make a good faith effort to recover all losses, damages, costs,
and expenses from insurers of such Indemnitee under applicable insurance
policies so as to reduce the amount of any Indemnifiable Loss hereunder. The
amount of any Indemnifiable Loss shall be reduced (i) to the extent that
Indemnitee receives any insurance proceeds with respect to an Indemnifiable Loss
and (ii) to take into account any net tax benefit recognized by the Indemnitee
arising from the recognition of the Indemnifiable Loss and any payment actually
received with respect to an Indemnifiable Loss.
(d) The expiration, termination or extinguishment of any covenant
shall not affect the parties' obligations under this Section 9.01 if the
Indemnitee provided the person to provide indemnification under this Agreement
(the "Indemnifying Party") with proper notice of the claim or event for which
indemnification is sought, prior to such expiration, termination or
extinguishment.
9.02 DEFENSE OF CLAIMS.
(a) If any Indemnitee receives notice of the assertion of any claim or
of the commencement of any claim, action, or proceeding made or brought by any
person who is not a party to this Agreement (a "Third Party Claim") with respect
to which indemnification is to be sought from an Indemnifying Party, the
Indemnitee will give such Indemnifying Party reasonably prompt written notice
thereof, but in any event not
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later than ten (10) days after the Indemnitee's receipt of notice of such Third
Party Claim. Such notice shall describe the nature of the Third Party Claim in
reasonable detail and will indicate the estimated amount, if practicable, of the
Indemnifiable Loss that has been or may be sustained by the Indemnitee. The
Indemnifying Party will have the right to participate in or, by giving written
notice to the Indemnitee, to elect to assume the defense of any Third Party
Claim at such Indemnifying Party's own expense and by such Indemnifying Party's
own counsel, and the Indemnitee will cooperate in good faith in such defense at
such Indemnitee's own expense.
(b) If within ten (10) days after an Indemnitee provides written
notice to the Indemnifying Party of any Third Party Claim, the Indemnitee
receives written notice from the Indemnifying Party that such Indemnifying Party
has elected to assume the defense of such Third Party Claim as provided in the
last sentence of Section 9.02(a), the Indemnifying Party will not be liable for
any legal expenses subsequently incurred by the Indemnitee in connection with
the defense thereof; PROVIDED, HOWEVER, that if the Indemnifying Party fails to
take reasonable steps necessary to defend diligently such Third Party Claim
within twenty (20) days after receiving notice from the Indemnitee that the
Indemnitee believes the Indemnifying Party has failed to take such steps, the
Indemnitee may assume its own defense, and the Indemnifying Party will be liable
for all reasonable expenses thereof. Without the prior written consent of the
Indemnitee, the Indemnifying Party will not enter into any settlement of any
Third Party Claim which would lead to liability or create any financial or other
obligation on the part of the Indemnitee for which the Indemnitee is not
entitled to indemnification hereunder. If a firm offer is made to settle a Third
Party Claim without leading to liability or the creation of a financial or other
obligation on the part of the Indemnitee for which the Indemnitee is not
entitled to indemnification hereunder, the Indemnifying Party may accept and
agree to such offer, and shall give written notice to the Indemnitee to that
effect.
(c) Any claim by an Indemnitee on account of an Indemnifiable Loss
which does not result from a Third Party Claim (a "Direct Claim") will be
asserted by giving the Indemnifying Party reasonably prompt written notice
thereof, stating the nature of such claim in reasonable detail and indicating
the estimated amount, if practicable, but in any event not later than ten (10)
days after the Indemnitee becomes aware of such Direct Claim, and the
Indemnifying Party will have a period of thirty (30) days within which to
respond to such Direct Claim. If the Indemnifying Party does not respond within
such thirty (30) day period, the Indemnifying Party will be deemed to have
accepted such claim. If the Indemnifying Party rejects such claim, the
Indemnitee will be free to seek enforcement of its rights to indemnification
under this Agreement.
(d) If the amount of any Indemnifiable Loss, at any time subsequent to
the making of an indemnity payment in respect thereof, is reduced by recovery,
settlement or otherwise under or pursuant to any insurance coverage, or pursuant
to any claim, recovery, settlement or payment by or against any other entity,
the amount of such reduction, less any costs, expenses or premiums incurred in
connection therewith (together with interest thereon from the date of payment
thereof at the prime rate then in effect of Bank of America, NA or its
successor), will promptly be repaid by the
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Indemnitee to the Indemnifying Party. Upon making any indemnity payment, the
Indemnifying Party will, to the extent of such indemnity payment, be subrogated
to all rights of the Indemnitee against any third party in respect of the
Indemnifiable Loss to which the indemnity payment relates; provided, however,
that (i) the Indemnifying Party is then in compliance with its obligations under
this Agreement in respect of such Indemnifiable Loss and (ii) until the
Indemnitee recovers full payment of its Indemnifiable Loss, any and all claims
of the Indemnifying Party against any such third party on account of said
indemnity payment is hereby made expressly subordinated and subjected in right
of payment to the Indemnitee's rights against such third party. Without limiting
the generality or effect of any other provision hereof, each such Indemnitee and
Indemnifying Party will duly execute upon request all instruments reasonably
necessary to evidence and perfect the above-described subrogation and
subordination rights. Nothing in this Section 9.02(d) shall be construed to
require any party hereto to obtain or maintain any insurance coverage. The
rights contained herein shall not be duplicative of any reductions effected
pursuant to Section 9.01(c) hereof.
(e) A failure to give timely notice as provided in this Section 9.02
will not affect the rights or obligations of any party hereunder except if, and
only to the extent that, as a result of such failure, the party which was
entitled to receive such notice was actually prejudiced as a result of such
failure.
ARTICLE X
MISCELLANEOUS
10.01 SURVIVAL.
The Surviving Obligations shall survive termination of this Agreement for
a period of two years after the termination date.
10.02 COUNTERPARTS.
This Agreement may be executed in any number of counterparts, each such
counterpart being deemed to be an original instrument, and all such counterparts
shall together constitute the same agreement.
10.03 GOVERNING LAW.
This Agreement shall be deemed to be made in and in all respects shall be
interpreted, construed and governed by and in accordance with the law of the
Commonwealth of Massachusetts without regard to conflict of law principles.
10.04 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
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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.
10.05 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 10.06 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.
10.06 NOTICES. All notices given by any party to the other under this
Agreement shall be in writing and shall be delivered:
(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 FMER:
Xxxxx Xxxxx
The First Marblehead Corporation
00 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
E-Mail: xxxxxx@xxxxxxxx.xxx
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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:
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
10.07 [Intentionally Omitted.]
10.08 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 or 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 unenforceable, (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.
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10.09 INTERPRETATION.
The Table of Contents and headings in 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 of the provisions of this Agreement.
Where a reference in this Agreement is made to a Section, exhibit or schedule,
that reference shall be to a Section of or exhibit or schedule to this Agreement
unless otherwise indicated. Neither party shall be deemed the drafter of this
Agreement or any of the exhibits hereto, which Agreement and exhibits are the
product of detailed, arms' length negotiations between the parties and their
respective counsel.
10.10 ASSIGNABILITY.
Except as provided in Section 2.02(b), this Agreement may not be assigned
by either party without the express written consent of the other party, which
consent shall not be unreasonably withheld. Any purported assignment in
violation of this provision shall be ineffective and void. The foregoing
restriction shall not apply to a merger, consolidation or other transfer by
operation of law, nor to any change in the equity ownership or control of either
party.
10.11 PRESERVATION OF DATA SEPARATION; FIREWALL.
FMER is also receiving from XXXX certain Servicing Information, as
defined in the Master Servicing Agreement. FMER receives such data and
information solely as agent under said agreement and not for any other purpose.
FMER agrees to keep Servicing Information separate and apart from the Delivered
Database and not to commingle the same. FMER shall establish written policies
and procedures to prevent the disclosure of Servicing Information to FMC or any
other person, except where explicitly allowed under a written consulting
agreement between XXXX and such person, and to prevent the commingling of
Servicing Information with the Delivered Database. A copy of such policies and
procedures shall be delivered to XXXX as soon as practical after the date
hereof. FMC agrees to abide by such policies and procedures. Such policies shall
prohibit any person utilizing Delivered Database from directly accessing
computer systems of the Outsource Provider in a way that would allow the
association of any particular individual with the deidentified information in
the Delivered Database.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers as of the date above first
written.
WITNESS: FIRST MARBLEHEAD EDUCATION
RESOURCES, INC.
/s/ Xxxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
--------------------------- --------------------------------
Name: Xxxxx X. Xxxxx
Title: President
THE EDUCATION RESOURCES
INSTITUTE, INC.
/s/ [Illegible] By: Xxxxxx X. Xxxxxx
--------------------------- ---------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President & CEO
THE FIRST MARBLEHEAD CORPORATION
/s/ Xxxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
--------------------------- --------------------------------
Name: Xxxxx X. Xxxxx
Title: Senior VP and COO
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