EXHIBIT 10.19
CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.
MASTER SERVICING AGREEMENT
THIS MASTER SERVICING 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 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 and effective as of July 1, 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, as of June 20, 2001, FMER has acquired those assets of XXXX used
to perform various services relating to such XXXX-guaranteed loan programs
(including underwriting, documentation and other origination services, technical
support, disbursements, customer service, collections, accounting services,
guarantee claims management and administrative services), and is hiring former
XXXX employees who perform such services; and
WHEREAS, XXXX desires FMER to assist XXXX in the performance of such
services, and FMER is willing to assist XXXX in the performance of such
services, in accordance with the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of these presents, the mutual promises
made in this Agreement and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the meanings
specified:
1.01 "AAA" has the meaning set forth in Section 11.11.
1.02 "AFFILIATE" means, with respect to any Person, any other Person
controlling, controlled by or under common control with, such Person. As used in
this definition, "CONTROL" (including,
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with its correlative meanings, "CONTROLLING," "CONTROLLED BY" and "UNDER COMMON
CONTROL WITH") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting securities, by contract or otherwise.
1.03 "AGREEMENT" has the meaning set forth in the preamble hereto.
1.04 "BUDGET ARBITRATION" has the meaning set forth in Section 3.02(e)(iv).
1.05 "CAPITAL EXPENSES" means any and all expenses or payments which, in
accordance with GAAP, should be capitalized and expensed over multiple years.
1.06 "CONFIDENTIAL INFORMATION" has the meaning set forth in Section 11.15(a).
1.07 "COST CENTER" has the meaning set forth in Section 3.02.
1.08 "CUSTOMER CONTACT EMPLOYEES" means those employees of XXXX listed on
EXHIBIT D hereof who are engaged in certain activities in connection with TERI's
loan origination business.
1.09 "FMER" has the meaning in the preamble hereto.
1.10 "FMER PERMITS" has the meaning set forth in Section 7.07.
1.11 "GAAP" means generally accepted accounting principles, consistently
applied.
1.12 "GATE STUDENT LOAN PROGRAM" means the FMC-sponsored program providing
loans for graduate and undergraduate students who (a) may or 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 AUTHORITY" means any federal, state, municipal, local,
territorial or other governmental department, commission, board, bureau, agency,
regulatory authority, instrumentality, judicial or administrative body, domestic
or foreign.
1.14 "INDEMNIFIABLE LOSS" has the meaning set forth in Section 9.01(a)
1.15 "INDEMNIFYING PARTY" has the meaning set forth in Section 9.01(d).
1.16 "INDEMNITEE" has the meaning set forth in Section 9.01(c).
1.17 "LAWS" means all laws, statutes, rules, regulations, ordinances and other
pronouncements having the effect of law of the United States, any foreign
country or any domestic or foreign state, county, city or other political
subdivision of any Governmental Authority.
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1.18 "LICENSE" has the meaning set forth in Section 2.05.
1.19 "MARKETING SERVICES AGREEMENT" means the agreement by that name of even
date herewith between XXXX and TMSI.
1.20 "MATERIAL FAILURE OF PERFORMANCE" has the meaning set forth in
Section 8.02(b)(iv).
1.21 "PERFORMANCE STANDARDS" has the meaning set forth in Section 8.02(b)(i).
1.22 "PERSON" means any individual, partnership, corporation, association,
trust, limited liability company, joint venture, unincorporated organization and
any government, governmental department or agency or political subdivision
thereof.
1.23 "PROGRAM" means any arrangement whereby XXXX has agreed to originate and/
or guarantee loans.
1.24 "PROGRAM GUIDELINES" means the Program Guidelines adopted by XXXX and
used as the basis for determining whether, when and to what extent to extend
credit under a Program. The Program Guidelines approved and adopted by XXXX in
effect as of the date of this Agreement (which may be amended or revised from
time to time by XXXX).
1.25 "PURCHASE AND SALE AGREEMENT" means that certain Asset Purchase and Sale
Agreement among FMER, FMC, TMSI and XXXX dated as of April 6, 2001.
1.26 "SERVICES" has the meaning set forth in Article II.
1.27 "SERVICING INFORMATION" means information necessary to perform the
Services, such as loan application and origination data, collection data, copies
of contracts creating obligations that FMER will perform on behalf of XXXX, and
such other information, data and records as is reasonably necessary for FMER to
perform the Services.
1.28 "XXXX" has the meaning set forth in the preamble hereto.
1.29 "XXXX PERMITS" has the meaning set forth in Section 6.05.
1.30 "THIRD PARTY CLAIM" has the meaning set forth in Section 9.02(a).
1.31 "TMSI means XXXX Marketing Services, Inc., a wholly-owned subsidiary of
FMER.
1.32 "TRANSFERRED COSTS" has the meaning set forth in Section 3.02.
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ARTICLE II
SERVICING
2.01 FMER SERVICES. XXXX hereby hires, designates and appoints FMER as its
agent and consultant to provide, and FMER hereby accepts such appointment and
agrees to provide, all origination services (including underwriting,
documentation, technical support and disbursements), customer service,
collections, accounting services, guarantee claims management and administrative
services reasonably required to service the Programs including, without
limitation, the services described in EXHIBIT B attached hereto and made a part
hereof (the "Services"). The appointment includes a limited power to act as
attorney-in-fact for purposes of prosecuting and settling all collections of
defaulted loans.
2.02 EXCLUSIVITY. It is expressly understood and agreed that during the first
two years of the term of this Agreement, FMER shall provide the Services solely
to XXXX and its Affiliates and shall not provide the same or similar services to
any other Person; PROVIDED, HOWEVER, that the foregoing limitation shall not
apply to any services rendered in connection with the GATE Student Loan Programs
or any other loan program sponsored or managed by FMC.
2.03 XXXX ASSISTANCE. XXXX shall provide such information and shall take such
action as may be reasonably required to assist FMER in its performance of the
Services.
2.04 USE OF SERVICE MARKS. The parties acknowledge that in dealing with
lenders, borrowers, and others in the course of performing its obligations under
this Agreement, it may be desirable, to avoid confusion or for other reasons,
for FMER to act in TERI's name, using the service marks and trademarks described
in Exhibit A attached hereto, and any other marks that XXXX may from time to
time hereafter adopt (collectively, the "Service Marks"). Accordingly, XXXX
hereby grants to FMER a limited, nonexclusive, terminable license to use the
Service Marks solely in performing the Services hereunder and as limited by this
section 2.04. The parties agree that nothing herein shall give to FMER any
right, title or interest in and to the Service Marks (except the right to use
the same in accordance with the terms of this Agreement), that the Service Marks
are the sole property of XXXX, and that any and all uses of the Service Marks by
FMER and the goodwill pertaining thereto shall inure to the sole benefit of
XXXX. It is expressly agreed and understood that FMER is not purchasing or
acquiring any right, title or interest in the Service Marks. FMER agrees that if
any rights in the Service Marks accrue to FMER by operation of law, this
Agreement irrevocably assigns such rights to XXXX and grants to XXXX a power of
attorney, coupled with an interest, to execute such instruments as may be
necessary or advisable to confirm such assignment. All uses of the Service Marks
by FMER shall be conducted in accordance with all policies and procedures of
XXXX in effect from time to time and shall be presented in a professional
manner, consistent with the image and use of the Service Marks by XXXX. In all
events, FMER may make any use of the Service Marks which has been expressly
approved in writing by XXXX.
2.05 CUSTOMER CONTACT EMPLOYEES. The parties agree and acknowledge that
certain of the employees of XXXX engage in certain activities in connection with
TERI's loan origination
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business that, when such employees are transferred to FMER, may require a
license pursuant to M.G.L. chapter 140, Sections 96-114A (the "License"). XXXX
agrees to employ the Customer Contact Employees, subject to TERI's customary
rights as employer of those employees, until FMER receives the License. Such
continued employment by XXXX shall include responsibility for the payroll and
fringe benefit plans existing as of the date hereof for the Customer Contact
Employees. XXXX shall direct such Customer Contact Employees to continue to
perform their current duties. XXXX will make available the services of the
Customer Contact Employees to FMER. XXXX will not charge FMER for such services
so long as such services are provided solely for the benefit of XXXX. FMER will
provide management, human resources support, and each and every other service
with respect to the Customer Contact Employees contemplated hereunder. FMER will
remain responsible for the quality of all services required hereunder.
ARTICLE III
SERVICING FEES
3.01 SERVICING FEES. In consideration for the Services, XXXX agrees to pay, in
U.S. dollars, an annual fee equal to FMER's Transferred Costs. FMER shall xxxx
XXXX monthly for its actual Transferred Costs. XXXX shall pay FMER for such
Transferred Costs as billed, within seven (7) days of receipt of such xxxx. The
aggregate Transferred Costs billed by FMER to XXXX during any budget year shall
not exceed the amounts reflected in the annual budget as approved by XXXX and as
adjusted under section 3.02(e).
3.02 TRANSFERRED COSTS. For purposes of this Article III, "Transferred Costs"
shall be computed in accordance with GAAP, utilizing the following procedure:
(a) FMER shall establish "Cost Centers" that record all costs of
providing services under this Agreement. The Cost Centers shall include costs
associated with:
(i) origination services, including underwriting, document
preparation, and lender support; and
(ii) collection services, including management of collection of
defaulted loans and default prevention.
(b) FMER shall record expenses attributable to each Cost Center
utilizing the same accounting categories and principles as previously used by
XXXX to record expenses, including, as appropriate, the following:
(i) Recovery
(ii) Bankruptcy
(iii) QCPM
(iv) Loan Origination
(v) Claims
(vi) Preclaims Collection
(vii) Customer Service
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(viii) Education Finance/Administration
(ix) BSR/IST
(x) Human Resources/Office Management
(xi) Finance
(xii) Executive
FMER shall include depreciation expense for the Cost Centers. Capital Expenses
may include capital improvements in support of XXXX Marketing Services, Inc.
Depreciation expense may only be included in Cost Centers to the extent that
such expense reflects a Capital Expense previously approved by XXXX in a capital
expenditure budget submitted and approved in accordance with section 3.02(e).
Depreciation of the purchase price of tangible assets purchased under the
Purchase and Sale Agreement shall be permitted under the Initial Budget approved
under subsection 3.02(e)(i).
(c) During the first two years of this Agreement, only expenses
directly related to providing services under this Agreement and services
permitted under Section 2.02 shall be incurred by a Cost Center. In the event
that a Cost Center will provide support for both XXXX-guaranteed loan programs
and other programs (such as the GATE Student Loan Program) FMER shall propose a
fair and equitable method of allocation of costs as part of its budget proposed
under subsection 3.02(e) and shall not begin providing services for such other
programs until the method of allocation of costs is agreed upon. Cost allocation
methods may include, without limitation, hourly charges, percentage commissions,
and relative size of loan portfolios serviced, as appropriate. A failure to
agree regarding allocation methods shall be an arbitrable dispute to be resolved
simultaneously with any other disputes under the Budget Arbitration process set
forth in Section 11.11.
(d) The parties contemplate that all Cost Centers will incur employee
expense only with respect to former XXXX employees, as an initial matter. That
is, the Cost Centers will be staffed with former XXXX employees. Over time,
employment levels may increase or decrease in each Cost Center, and such
increases or decreases in expenses shall be reflected in Transferred Costs,
except to the extent that proration of expenses is required for a particular
Cost Center under the terms of this Agreement.
(e) TERI's Board of Directors will have a right of reasonable review
and approval of the annual budget for Transferred Costs. Budgets will be
reviewed and established in accordance with the following procedure:
(i) INITIAL BUDGET. Within 15 days after execution of this
Agreement, FMER will propose any revisions to the existing 2001 XXXX
budget for the Cost Centers. TERI's Board of Directors shall appoint a
budget review committee (the "Budget Committee") within the same period.
TERI's chief executive officer, or, in the case of proposed revisions in
excess of [**]% of the existing budget, the Budget Committee, shall
approve or deny all or part of FMER's request within thirty (30) days of
receipt. The chief executive officers of FMER and XXXX shall meet
promptly thereafter to resolve any differences. If any dispute is not so
resolved, FMER shall perform the Services at a
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price established in accordance with the decision of the Budget
Committee, but shall have the right to demand Budget Arbitration as
provided in Section 11.11 below, by written notice given within sixty
(60) days after receipt of the Budget Committee's decision.
(ii) ANNUAL BUDGET. At least 45 days before the end of any XXXX
budget year, FMER will present a proposed budget to XXXX. The Budget
Committee shall approve or deny all or part of FMER's request within
thirty (30) days of receipt. The chief executive officers of FMER and
XXXX shall meet promptly thereafter to resolve any differences. If any
dispute is not so resolved, FMER shall perform the Services at a price
established in accordance with the decision of the Budget Committee, but
shall have the right to demand Budget Arbitration as provided in Section
11.11 below, by written notice given within sixty (60) days after receipt
of the Budget Committee's decision.
(iii) BUDGET ADJUSTMENT.
A. FMER may apply to TERI's chief executive officer for
budget adjustments based upon increased volume of Services being
performed as compared to the assumptions used in the then-current
budget. Adjustments approved without review by the Budget
Committee shall not exceed, individually or in the aggregate, [**]
percent ([**]%) of the annual budget per budget year. If a
requested adjustment is denied or reduced in an amount greater
than [**] percent ([**]%) of such adjustment, FMER may demand
Budget Arbitration by written notice given within thirty (30) days
after receipt of such denial or reduction.
B. In the event that the volume of loan origination
Services performed changes by more than [**] percent ([**]%) as
compared to the volume assumed in the budget (computed on a
quarterly basis for the then-current budget year) (a "Threshold
Change"), then FMER may, in the case of an increase, and shall, in
the case of a decrease, within thirty (30) days after the
Threshold Change appears in FMER's quarterly reports, propose a
revised budget to the Budget Committee. The Budget Committee shall
approve or deny all or part of FMER's request within thirty (30)
days of receipt. The chief executive officers of FMER and XXXX
shall meet promptly thereafter to resolve any differences. If any
dispute is not so resolved, FMER shall perform the Services at a
price established in accordance with the decision of the Budget
Committee, but shall have the right to demand Budget Arbitration
as provided in Section 11.11 below, by written notice given within
sixty (60) days after receipt of the Budget Committee's decision.
(iv) BUDGET ARBITRATION. As used herein, "Budget Arbitration"
refers to arbitration conducted in accordance with Section 11.11 hereof.
In any such arbitration, FMER shall be entitled to recover any additional
reasonable costs (above what is allowed in the then-current budget as it
relates to the disputed budget item) of labor, materials, equipment and
third-party services reasonably necessary to perform the services in
accordance with the Performance Standards. Any arbitration award
increasing
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compensation to FMER shall be effective as of the beginning of the budget
period to which such award relates.
(v) SPECIAL RULE FOR VOLUME-BASED INCREASES. The Budget
Committee may condition its approval of any budget increase that is
requested on account of projected increased volume of loan origination
Services. Such condition shall relate to risk sharing by FMER with
respect to recovery (to the extent budgeted) of such additional budgeted
costs out of incremental origination revenues paid to XXXX. Any such
condition shall place no more than [**] percent ([**]%) of the risk of
failure to achieve budget targets on FMER and shall clearly define the
method of determining whether incremental cost recovery has been
achieved. If XXXX proposes risk sharing, it shall also propose equal
sharing of the excess over budget of actual incremental revenues versus
actual incremental costs, in the same percentages.
For example, assume that FMER projects additional loan origination
expense of $[**] to be matched by an additional $[**] of
origination-related revenues. XXXX may propose that FMER's payment for
services may be reduced by up to [**]% of the amount by which actual
incremental loan origination revenues are less than actual incremental
costs, and FMER shall be entitled to the same percentage of any excess of
incremental revenues over costs.
In a similar manner, assume that the approved budget projected
only $[**] of incremental loan origination revenues, for a budgeted loss
of $[**]. If the actual incremental loss is $[**], FMER is responsible
for $[**] of that loss, and its reimbursement for Transferred Costs is
reduced by that amount. If the actual incremental loss is only $[**],
FMER receives a bonus above actual Transferred Costs of $[**].
If FMER refuses to accept a proposed risk sharing arrangement, the
requested increase may be denied to the extent of the amount proposed for
sharing. In such event, FMER's recourse to Budget Arbitration regarding
the proposed risk sharing shall be limited to the reasonableness and
clarity of the proposed measures of incremental cost and revenue, but
FMER may not challenge the fact of a proposal to share risk that
otherwise conforms to this Section. The arbitrator's determination of the
appropriate measures of incremental cost and revenue shall be final and
the budget increase shall become effective subject to risk sharing.
FMER may obtain Budget Arbitration of the reasonableness of the
gross amount of a risk-shared cost budget on the same terms that apply to
any other Budget Arbitration. That is, the amount of the budget, as
opposed to the risk sharing proposal, remains fully arbitrable.
Risk sharing under this subsection 3.02(v) shall apply only to
costs of Services relating to TERI's fee-based loan origination services.
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ARTICLE IV
AUDIT
4.01 XXXX AUDITS. XXXX shall have the right, in its discretion, from time to
time during the Term of this Agreement, to audit and conduct a performance
review of FMER with respect to FMER's performance of the Services and adherence
to the Performance Standards. Upon request by XXXX, FMER shall provide XXXX or
persons authorized by and acting on behalf of XXXX with reasonable access during
normal business hours to FMER's facilities and to FMER's accounting and business
records in order to permit XXXX, or such authorized persons, to audit (or
perform compliance reviews with respect to) FMER's supporting procedures,
controls and security methods associated with the services being provided to
XXXX. XXXX shall also have the right as often as it shall reasonably deem
necessary, to audit, at its expense, all books and records of FMER relating to
Transferred Costs billed by FMER to XXXX. FMER shall reasonably cooperate with
XXXX or such other persons authorized by XXXX in the conduct of any such audit,
including providing access to officers and the independent auditors of FMER for
discussion of any such audit.
4.02 AUDITS BY GOVERNMENTAL AUTHORITIES. In addition, FMER shall allow any
Governmental Authority having jurisdiction over TERI's business reasonable
access during normal business hours to the records and procedures of FMER
related to this Agreement. FMER shall reasonably cooperate with such
Governmental Authority in the conduct of any such audit, including providing
access to officers and the independent auditors of FMER for discussion of any
such audit.
ARTICLE V
ACCOUNTS, RECORDS AND REPORTS
5.01 ACCOUNTS AND RECORDS. Books of account and records relating to the
Programs and the Loans, together with a general ledger and financial statements,
shall be maintained by FMER on behalf of XXXX, in accordance with GAAP, where
applicable, and in accordance with good business practice, and FMER shall
cooperate and provide such information to XXXX as is available with respect to
such books and records.
5.02 REPORTS. FMER will provide to TERI's Board of Directors or President all
operational and financial reports presently created by XXXX for its Board of
Directors or for its senior management, and any other reports reasonably
required for XXXX to operate its business. Such reports shall be provided in
substantially the same format and frequency as presently provided by XXXX for
its Board of Directors and senior management.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF XXXX
XXXX hereby represents and warrants to FMER that:
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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.
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.
The execution and delivery of this Agreement by XXXX and the performance by XXXX
of such obligations 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.
(b) The Board of Directors of XXXX has (i) approved 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 FMER 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. Except as set forth on Schedule 6.03, 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 Laws 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,
to which XXXX is a party or by which it or its assets or properties is or may be
bound or affected.
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6.04 REQUIRED FILINGS AND CONSENTS. Except as set forth in Section 3.4 of the
Purchase and Sale Agreement, 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 Governmental Authority.
6.05 PERMITS, COMPLIANCE WITH LAWS. XXXX is in possession of all franchises,
grants, authorizations, licenses, permits, easements, variances, exceptions,
consents, certificates, approvals and orders of any Governmental Authority
necessary for XXXX to own, lease and operate its properties or to carry on its
business as now being conducted (collectively, the "XXXX Permits") (except such
XXXX Permits the absence of which would not have a material adverse effect upon
the business or assets of XXXX), 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 laws 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 LITIGATION. Except as set forth in Schedule 6.07 attached hereto, there
is no suit, claim, action, proceeding or investigation pending or, to the
knowledge of XXXX, threatened against XXXX before any court or administrative
agency or regulatory agency. XXXX is not subject to an outstanding order,
written injunction or decree.
6.07 501(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.
6.08 CONFLICTING AGREEMENTS. XXXX is not a party to any contract which
purports to restrict or prohibit, in any respect, XXXX from, directly or
indirectly, entering into and performing its obligations under 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, entering into and performing its
obligations under this Agreement.
6.09 INFORMATION SHARING. For the limited purposes of providing FMER with
information necessary to perform the Services as set forth in this Agreement,
XXXX has the legal authority to provide FMER with Servicing Information now or
hereafter in TERI's possession. The disclosure of Servicing Information by XXXX
to FMER pursuant hereto will not conflict with any contractual or legal
obligation of XXXX not to disclose such information or, to the extent such
disclosure does conflict with any such contractual obligation, XXXX has obtained
the consent of all parties to such contract(s) to such disclosure. FMER's sole
remedy for breach of the foregoing representations and warranties contained in
this Section 6.09 shall be to seek indemnification in accordance with the terms
of Section 9.01(a)(ii).
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ARTICLE VII
REPRESENTATIONS AND WARRANTIES OF FMER
FMER hereby represents and warrants to XXXX, as follows:
7.01 ORGANIZATION AND QUALIFICATION. FMER (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 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.
7.02 AUTHORITY. FMER has all the necessary power and authority to execute and
deliver this Agreement and to perform its obligations under this Agreement. The
execution and delivery of this Agreement by FMER and the performance by FMER of
its obligations hereunder have been duly and validly authorized by all necessary
corporate action and no other corporate proceedings on the part of FMER are
necessary to authorize this Agreement or to perform its obligations under this
Agreement. This Agreement has been duly authorized and validly executed and
delivered by FMER and constitutes a legal, valid and binding obligation of FMER
enforceable against FMER in accordance with its terms.
7.03 NO CONFLICTS. The execution and delivery of this Agreement by FMER does
not, and the performance of this Agreement by FMER will not:
(a) conflict with or violate any provision of FMER's certificate of
incorporation or bylaws;
(b) conflict with or violate any Laws applicable to FMER or by which
any property or asset of FMER 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 FMER under, any contract to which FMER is a party or by which FMER 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 FMER do not, and the
performance of this Agreement by FMER will not, require any consent, approval,
authorization or permit of, or filing with, or notification to, any Governmental
Authority.
7.05 LITIGATION. There is no claim, action or proceeding pending or, to the
knowledge of FMER, threatened against FMER before any court or administrative or
regulatory body that, if adversely determined, individually or in the aggregate,
has resulted or could reasonably be
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expected to result in an adverse effect on the performance by FMER of its
obligations under this Agreement. FMER 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
performance by FMER of its obligations under this Agreement.
7.06 CONFLICTING AGREEMENTS. FMER is not a party to any contract which
purports to restrict or prohibit, in any respect, FMER from, directly or
indirectly, entering into and performing its obligations under this Agreement.
None of FMER's officers, directors or key employees is a party to any agreement
which, by virtue of such person's relationship with FMER, restricts in any
respect FMER from, directly or indirectly, entering into and performing its
obligations under this Agreement.
7.07 PERMITS, COMPLIANCE WITH LAW. Except as set forth in Schedule 7.07, FMER
is in possession of all franchises, permits, grants, authorizations, licenses,
easements, variances, exceptions, consents, certificates, approvals and orders
of any Governmental Authority necessary for FMER to own, lease and operate its
properties or to carry on its business and perform the Services (collectively,
the "FMER Permits"), except such FMER Permits, the absence of which would not
have a material adverse effect upon the business or assets of FMER, and, as of
the date of this Agreement, the suspension or cancellation of any of the FMER
Permits is not pending or, to the knowledge of FMER, threatened. FMER is not in
conflict with, or in default or violation of (i) any laws applicable to FMER or
by which any property or asset of FMER is bound or affected, or (ii) any FMER
Permits.
7.08 LICENSE APPLICATION. FMER applied for a License, duly submitting its
application on May 28, 2001.
ARTICLE VIII
ADDITIONAL COVENANTS
8.01 COVENANTS OF XXXX.
(a) MAINTAIN 501(c)(3) STATUS. XXXX shall take all actions (if any)
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 this Agreement.
(b) GOVERNMENTAL APPROVALS. XXXX shall maintain all XXXX Permits now
necessary for its business and shall obtain any XXXX Permits that in the future
may become necessary to conduct its business as a loan guaranty agency.
(c) PERFORM GUARANTEE OBLIGATIONS. XXXX shall perform each and all of
its obligations under each and every Loan Guarantee Agreement between XXXX and
any Program Lender as currently performed, consistent with existing agreements
and courses of dealing.
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(d) REGULATORY COMMUNICATIONS. XXXX shall promptly forward to FMER any
notices, demands, reports or other communications from any Governmental
Authority having jurisdiction over XXXX that in any way relate to or could
potentially affect any Program offered by XXXX.
8.02 COVENANTS OF FMER.
(a) LICENSES AND PERMITS. FMC shall obtain and maintain all necessary
licenses and permits in order to perform its obligations under this Agreement.
(b) SERVICE PERFORMANCE STANDARDS.
(i) FMER shall provide the Services in accordance with the performance
standards set forth in EXHIBIT C (the "Performance Standards").
(ii) FMER's failure to perform in accordance with the Performance
Standards due to any event covered by Section 11.14(b) of this
Agreement shall not be considered to be a failure for which FMER
shall be responsible under this Section 8.02(b).
(iii) FMER shall report to XXXX regarding its failure to satisfy any
Performance Standard by the end of the third week following the
end of the month in which the failure occurred for those
performance standards having a monthly measuring time period as
set forth on Exhibit C and by the end of the [**] the end of the
quarter in which the failure occurred for those performance
standards having a quarterly measuring period as set forth on
Exhibit C (or, in any event as soon as such reports are available
if available earlier). FMER shall include in such report (A) its
diagnosis of the cause of such failure, and (B) a description of
its plan for cure. FMER shall thereafter advise XXXX weekly
regarding the status of cure efforts.
(iv) FMER's overall satisfaction of the Performance Standards shall be
judged by the aggregate time period when a material portion of the
"sub indicators" shown on Exhibit C are out of specification.
Specifically, if [**] percent ([**]%) or more of the sub
indicators fail to meet the Performance Standard by more than the
permitted variation for either: (a) a period of [**] consecutive
months, or (b) more than [**] months in any [**] period, then
Material Failure of Performance shall have occurred and XXXX shall
have the right to terminate under Section 10.02(b). In applying
the foregoing standard, different sub indicators that are beyond
permitted variation do not count toward the total of [**] percent
([**]%) in different months.
For example, if all sub indicators in Criteria Categories 2 and 3
(a total of 8) exceed permitted variation for [**] consecutive
months but are "cured" in the [**] and all sub indicators in
Criteria Categories 6 and 7 (a total of 8) exceed permitted
variation in the next succeeding month, a Material Failure of
Performance has not occurred.
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8.03 COVENANTS OF FMC.
(a) PROVISION OF WORKING CAPITAL. FMC shall provide FMER with adequate
working capital to perform the Services hereunder.
(b) FMC GUARANTY. FMC hereby guarantees the full and timely
performance by FMER 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 institute suit or exhaust any remedies against FMER or make any
claim or demand against FMER, before requiring performance by FMC
hereunder.
8.04 LONG-TERM EXCLUSIVITY. During the term of this Agreement, XXXX shall
obtain all Services from FMER, and shall not provide such services for itself or
obtain such Services from any other servicer. During the term of this Agreement,
FMER shall not provide the Services or any similar services to any other
guarantor of education loans.
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 (but excluding 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 FMER or FMC by an unrelated
third party relating to, resulting from or arising out of any breach by XXXX of
any representation, warranty, covenant or agreement (without regard to any
qualifications with respect to materiality contained therein) contained in this
Agreement; PROVIDED, HOWEVER, (i) that in the case of any Indemnifiable Loss
arising under this Section 9.01(a), no amounts shall be due and payable until
and unless the aggregate amount of such Indemnifiable Losses is equal to $50,000
or more (when aggregated with Indemnifiable Loss under the Marketing Services
Agreement), at which point such indemnification shall relate to all
Indemnifiable Losses; and PROVIDED, FURTHER, (ii) that FMER shall be entitled to
indemnification without regard to such minimum amount in the event that any
Program Lender asserts any claim that this Agreement or performance hereunder
violates a contractual right of such Program Lender to designate data as
confidential, which right is first exercised after the date hereof (a "Contract
Claim"), in which case the following procedure shall apply:
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(A) XXXX may elect to terminate its contract with the Program Lender,
if such termination would moot any claim against FMER or FMC
asserted by the Program Lender, or
(B) XXXX may elect to indemnify FMER for the costs of defending the
claim, in which event XXXX shall reimburse FMER for 50% of the
costs of litigation, but not more than $100,000, with respect to
defense of such claim. The foregoing limitation shall not apply to
any loss or cost of any judgment actually entered against FMER or
FMC, which loss or cost shall be subject to the general minimum
amount of $50,000 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 XXXX by an unrelated
third party relating to, resulting from or arising out of any breach by FMER or
FMC of any representation, warranty, covenant or agreement contained in this
Agreement; PROVIDED, HOWEVER, that in the case of any Indemnifiable Loss arising
under this Section 9.01(b), no amounts shall be due and payable until and unless
the aggregate amount of such Indemnifiable Losses is equal to $50,000 or more
(when aggregated with Indemnifiable Losses under the Marketing Services
Agreement), at which point such indemnification shall relate to all
Indemnifiable Losses.
(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 or
agreement shall not affect the parties' obligations under this Section 9.01 if
the Indemnitee provided the person required 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.
(e) Any claim under this Section 9.01 must be brought within two (2)
years after termination of this Agreement.
(f) The rights and obligations of indemnification under this
Section 9. 01 shall not be limited or subject to set-off based on any violation
or alleged violation of any obligation under this Agreement or otherwise,
including but not limited to breach or alleged breach by the Indemnitee of any
representation, warranty, covenant or agreement contained in this Agreement.
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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 or any Affiliate of 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 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) [Intentionally omitted.]
(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, N.A. or its
successor), will promptly be repaid by the 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 will then be
in
17
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.
(e) Subject to Section 9.01(a) and 9.01(b) hereof, 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
RELATIONSHIP OF THE PARTIES
10.01 TERM AND TERMINATION. This Agreement shall have a term of five (5) 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, PROVIDED, HOWEVER, that such renewal shall not be effective unless:
(i) TMSI also renews the Marketing Services Agreement; and
(ii) FMC also renews this Agreement, the Master Loan Guaranty
Agreement, and the Marketing Services Agreement.
10.02 TERMINATION FOR CAUSE.
(a) TERMINATION OF MASTER LOAN GUARANTY AGREEMENT. If the Master Loan
Guaranty Agreement between XXXX and The First Marblehead Corporation, dated as
of February 2, 2001, shall have been terminated for cause under Section 8.03
thereof, then in the case of termination of such agreement by FMC, FMER or FMC
may terminate this Agreement and in the case of termination of such agreement by
XXXX, then XXXX may terminate this Agreement. In either case, termination of
this Agreement must be by written notice delivered within thirty (30) days of
termination of the Master Loan Guaranty Agreement.
(b) TERMINATION FOR FAILURE TO CONFORM TO SERVICING STANDARDS. In the
event of a Material Failure of Performance Standards as defined in Section
8.02(b)(iv), XXXX may terminate this Agreement upon thirty (30) days' written
notice.
(c) TERMINATION FOR CAUSE BY EITHER PARTY. In the event that either
party shall materially breach its obligations under this Agreement (other than a
breach subject to Section
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10.02(b) hereof) and shall fail to cure such breach within thirty (30) 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 thirty (30) days' written
notice, terminate this Agreement.
(d) TERMINATION IN THE EVENT OF BANKRUPTCY. 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).
10.03 EFFECT OF TERMINATION. Upon termination of this Agreement by either
party:
(a) Neither party shall be excused from performing any obligation or
paying any monies due or earned prior to the effective date of termination.
(b) The provisions of Sections 9.01, 9.02, and all of Article XI shall
remain in full force and effect notwithstanding termination.
(c) In the case of termination by XXXX pursuant to Section 10.02(b) or
10.02(c), FMER shall continue to provide Services, in conformity with the
Performance Standards, and assistance in transitioning the Services to a new
servicer for up to six (6) months, for consideration at the same rates set forth
in Article III of this Agreement. In addition, if such a termination occurs at a
time when Section 9.2 of the Purchase and Sale Agreement does not apply, FMER
shall xxxxx XXXX a nonexclusive license to use certain software then in use by
FMER, on the following terms and conditions:
(i) The license shall apply to the proprietary software
purchased by FMER from XXXX under the Purchase and Sale Agreement that has the
functionality generally described in Schedule 10.03(c) attached hereto, with all
enhancements to such software, to the extent necessary to perform the functions
described in Schedule 10.03(c) and such additional similar or related functions
as FMER may have added by enhancement of the software described in such Schedule
10.03(c);
(ii) FMER shall be entitled to receive a fair market value
license fee, determined in part based on the value of the software when
purchased from XXXX plus the value of all enhancements purchased by FMER, but
excluding the value of enhancements to the extent XXXX reimbursed FMER for the
cost thereof under this Agreement;
(iii) Such license shall be subject to and conditioned upon the
proprietary rights of any third party in any such enhancements, and XXXX shall
be responsible for the cost to obtain the consent of any such third party (other
than an affiliate of FMER) to such license;
(iv) Such license shall be nonexclusive and perpetual;
19
(v) Such license shall be without representation, warranty or
indemnity, other than warranty of title (subject to the consent of third parties
referred to above);
(vi) Such license shall contain other reasonable and customary
terms consistent with the foregoing, as FMER and XXXX may require.
In the event that the parties are unable to agree upon the terms of the
license, they shall submit the matters on which they cannot agree to arbitration
pursuant to Section 11.11 hereof.
ARTICLE XI
MISCELLANEOUS
11.01 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.
11.02 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.
11.03 NOTICES. All notices given by any party to the other under this Agreement
shall be in writing and shall be delivered 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
With a copy to:
Xxxxxxx X. Xxxxxxx, Esq.
Xxxxxx Xxxxxx
Xxx Xxxxxxxx Xxxxxx
Xxxxxxxx, Xx 00000
Phone: 000-000-0000
20
Fax: 000-000-0000
E-Mail: xxxxxxxx@xxxxxxxxxxxx.xxx
If to XXXX:
Xxxxxx 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
11.04 ENTIRE AGREEMENT. This Agreement (including any exhibits and schedules to
this Agreement) constitutes the entire agreement among the parties with respect
to the subject matter hereof and supersedes all other prior agreements,
understandings, representations and warranties, both written and oral, among the
parties, with respect to the subject matter of this Agreement.
11.05 NO THIRD PARTY BENEFICIARIES. This Agreement is not intended to confer
upon any person other than the parties to this Agreement any rights or remedies
under this Agreement.
11.06 AMENDMENT. This Agreement may be amended by the parties to this Agreement
only by a writing executed by their duly authorized representatives with the
requisite formalities.
11.07 WAIVER. Any party to this Agreement may (a) extend the time for the
performance of any obligation or other act of any other party to this Agreement,
(b) waive any inaccuracy in the representations and warranties contained in this
Agreement or in any document delivered pursuant to this Agreement, and (c) waive
compliance with any agreement or condition contained in this Agreement. Any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed by the party or parties to be bound thereby.
11.08 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 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 unenforceable, (a) a suitable and
21
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.
11.09 INTERPRETATION. The 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.
11.10 ASSIGNMENT. 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. FMER shall have the right to
subcontract the Services, subject to TERI's reasonable approval of the financial
and technical capability of the subcontractor to provide the subcontracted
Services and the absence of conflict between such subcontracts and TERI's
contractual obligations. FMER shall require any subcontractor to agree to the
confidentiality provisions contained in Section 11.15. No such subcontracting
shall relieve FMER of its obligations under this Agreement, and any breach or
material failure of performance of this Agreement by a subcontractor (including,
without limitation, any failure of a subcontractor to satisfy the Performance
Standards) shall be deemed to be a breach or material failure of performance by
FMER.
11.11 ARBITRATION. In the event of any dispute between XXXX and FMER relating
to the proper determination of Transferred Costs under Article III or necessary
modifications to the Performance Standards under Exhibit C or the terms of a
license under Section 10.03(c), XXXX and FMER agree that such dispute shall be
resolved by means of arbitration in accordance with the commercial arbitration
rules of the American Arbitration Association ("AAA"), and judgment upon the
award rendered by the arbitrator(s) may be entered in any court of competent
jurisdiction. Such arbitration shall proceed in Boston, Massachusetts and shall
be governed by Massachusetts law. In any dispute between the parties that is
subject to arbitration hereunder, where the aggregate of all claims and the
aggregate of all counterclaims each is an amount less than $250,000, the
arbitration shall be heard by one arbitrator to be selected by mutual agreement
of the parties. In the event the parties are unable to agree on an arbitrator
within thirty (30) days, the arbitration shall be heard by one arbitrator
appointed by the AAA. If the aggregate amount of the claims or counterclaims
exceeds $250,000, the arbitration shall be heard by a panel of three
arbitrators, to be selected as follows: XXXX and FMER shall each select one
arbitrator, and the arbitrators so selected shall select a third arbitrator by
mutual agreement. In the event the arbitrators selected by the parties are
unable to agree on the third arbitrator within thirty (30)
22
days, the third arbitrator shall be appointed by the AAA. The arbitrator(s)
hearing any arbitration pursuant to this Section 11.11 shall have substantial
experience in the area of consumer loan origination, debt collection and
guaranty processing and claims administration, and shall otherwise be qualified
to address the issues presented competently. The arbitration decision shall be
binding upon XXXX, FMER and FMC. In the event a party, having been given notice
and opportunity, fails or refused to appear or participate in an arbitration or
in any stage of the arbitration, the proceedings will nevertheless be conducted
to conclusion and final award. Any award rendered under such circumstances will
be as valid and enforceable as if both parties had appeared and participated
fully at all stages. Depositions may be taken and other discovery obtained
during such arbitration proceedings to the same extent as authorized in civil
judicial proceedings in the Commonwealth of Massachusetts. The arbitrator(s)
shall be limited to awarding compensatory damages and shall have no authority to
award punitive, exemplary or similar type damages. The prevailing party in the
arbitration proceeding shall be entitled to recover its expenses including the
costs of the arbitration proceeding, expert witness fees and reasonable
attorneys' fees.
11.12 REMEDIES. Subject to the terms of this Agreement, the parties will be
entitled to enforce their rights under this Agreement specifically (without
posting a bond or other security), to recover damages by reason of any breach of
any provision of this Agreement and to exercise all other rights existing in
their favor. The parties hereto agree and acknowledge that money damages may not
be an adequate remedy for any breach of the provisions of this Agreement and
that any party may in its sole discretion apply to any court of law or equity of
competent jurisdiction for specific performance and/or injunctive relief in
order to enforce or prevent any violation of the provisions of this Agreement.
In the event of any dispute involving the terms of this Agreement, the
prevailing party shall be entitled to collect reasonable fees and expenses
incurred by the prevailing party in connection with such dispute from the other
parties to such dispute.
11.13 FURTHER ASSURANCES. On and after the date hereof, each of XXXX, FMER and
FMC shall: (i) cooperate with the other in good faith to give effect to the
terms hereof and execute, acknowledge and deliver all such acknowledgments,
documents and other instruments; and (ii) take such further action as any party
may reasonably request to enable such party to exercise its rights or perform
its obligations under, or to fully and completely effectuate, the terms,
conditions and intent of this Agreement.
11.14 FORCE MAJEURE AND RESTRICTED PERFORMANCE.
(a) If performance by XXXX of any obligation under this Agreement is
prevented, restricted, delayed or interfered with by reason of labor disputes,
strikes, acts of God, floods, lightning, severe weather, shortages of materials,
rationing, utility or communication failures, failure or substantial delay in
receiving electronic data, earthquakes, war, revolution, civil commotion, acts
of public enemies, blockade, embargo or any other FORCE MAJEURE which is or are
beyond the reasonable control of XXXX, XXXX shall provide written notice to FMER
identifying the cause of the prevention, restriction, delay or interference and
XXXX shall be excused from the performance to the extent of the prevention,
restriction, delay or interference, so long as XXXX is
23
taking reasonable action to accomplish such performance as promptly as possible
under the circumstances.
(b) If performance by FMER of any service or obligation under this
Agreement is prevented, restricted, delayed or interfered with by reason of
labor disputes, strikes, acts of God, floods, lightning, severe weather,
shortages or materials, rationing, utility or communication failures, failure or
substantial delay in receiving electronic data, earthquakes, war, revolution,
civil commotion, acts of public enemies, blockade, embargo, other FORCE MAJEURE
which is or are beyond the reasonable control of FMER, FMER shall be excused
from the performance to the extent of the prevention, restriction, delay or
interference, so long as it is taking reasonable actions to accomplish such
performance as promptly as possible under the circumstances.
11.15 CONFIDENTIALITY AND RESTRICTIONS ON USE OF INFORMATION, FIREWALL.
(a) XXXX and FMER each acknowledge that in the course of the
operations contemplated by this Agreement, and in the course of communications
relative to this Agreement, it has received and will receive information
concerning the other's finances, business plans, business methods, and the like
that is not generally known in the student loan industry ("Confidential
Information"). Each party will respect and use all reasonable efforts to
maintain the confidentiality of the other's Confidential Information unless and
until such information becomes generally known through no fault of the receiving
party.
(b) In accordance with the provisions of Title V of the
Xxxxx-Xxxxx-Xxxxxx Act (the "GLB Act") and Federal Reserve Board Regulation P
("Regulation P"), FMER agrees to respect and protect the security and
confidentiality of any "nonpublic personal information" (as defined in the GLB
Act and Regulation P) it receives from XXXX including, where applicable, the
restrictions on the re-use and disclosure of such information set forth in the
GLB Act and Regulation P.
(c) FMER agrees to use all information it receives from XXXX
concerning Program loans and borrowers including, without limitation, nonpublic
personal information described in Section 11.15(b) and all Servicing
Information, solely for purposes of providing the Services and not to disclose
the same to any Person except (i) as necessary to perform the Services, and (ii)
only subject to a confidentiality agreement. In particular and not by way of
limitation, FMER shall establish clear policies and procedures to prevent the
disclosure of Servicing Information to FMC. Such policies shall restrict
disclosures to FMC solely to the Delivered Database as defined in the Database
Sale and Supplementation Agreement of even date herewith among XXXX, FMER and
FMC. FMC agrees to be bound by the restrictions contained in this Section 11.15.
11.16 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
24
communication, but such exclusion from this Section shall only apply to that
particular facsimile transmission. The parties further agree that a notice under
Section 11.03 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.
IN WITNESS WHEREOF, XXXX and FMER have executed this Agreement as of the
date first above written.
THE EDUCATION RESOURCES INSTITUTE, INC.
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Print Name: Xxxxxx X. Xxxxxx
------------------------
Title: President & CEO
-----------------------------
FIRST MARBLEHEAD EDUCATION RESOURCES, INC.
By: /s/ Xxxxx X. Xxxxx
--------------------------------
Print Name: Xxxxx X. Xxxxx
------------------------
Title: President
-----------------------------
THE FIRST MARBLEHEAD CORPORATION
By: /s/ Xxxxx X. Xxxxx
--------------------------------
Print Name: Xxxxx X. Xxxxx
------------------------
Title: Senior VP and COO
-----------------------------
25
Schedules 7.04 and 7.07
Small Loan Company License from the Massachusetts Division of Banks, pursuant to
M.G.L. Chapter 140, sections 96-114A and 209 C.M.R. 12.00 (the "License").
FMER has applied for the License. Pending its issuance, certain personnel will
remain in the employment of XXXX, as more fully set forth in the Amendment to
Master Servicing Agreement of even date herewith. The arrangements described in
said Amendment shall not be deemed a breach of the representation contained in
Section 7.07.
26
SCHEDULE 10.03(c) TO MASTER SERVICING AGREEMENT
XXXX CREATED SOFTWARE
WEB APPLICATION ENTRY - ability to apply for XXXX Alternative loans through
TERI's Website.
WEB ONLINE STATUS - ability to review the status of a XXXX loan application
through TERI's Website
WEB ONLINE SCHOOL CERTIFICATION - ability for schools to provide the school
specific information through TERI's Website.
WEB APPLICATION QUALIFICATION - databases that supports our Application
Qualification matrix that determines the type of XXXX originated product
applicant is eligible for.
GUARANTEE SYSTEM - A set of files that contain all the loans that XXXX has
guaranteed.
INTERFACES:
- Process that takes records from our CreditScoring Databases and writes
them to an Internal AS400 file
- Process that creates daily transaction files to be sent to our ALE loan
origination system
- Process that allows parameters to be entered that will select Pre-Claim
records to be outsourced to Collection agencies
- Process that allows payment files be received from Collection agencies
to be applied to Default accounts
27
- TABLE OF EXHIBITS
Exhibit A - List of XXXX Xxxxx
Exhibit B - Services
Exhibit C - Performance Standards
Exhibit D - Customer Contact Employees
28
EXHIBIT A
LIST OF XXXX XXXXX
THE FEDERALLY REGISTERED TRADEMARKS AND SERVICE MARKS LISTED BELOW.
REGISTRATION DATE OF REGISTRATION RENEWAL
XXXX NO. CLASS FIRST USE DATE DATE
CONNECTED 1,908,878 41 4/10/93 8/1/95 8/1/2000-
8/1/2001
HIGHER EDUCATION 2,035,326 16 4/84 2/4/97 2/4/2002-
INFORMATION CENTER
2/4/2003
HIGHER EDUCATION 2,035,325 42 4/84 2/4/97 2/4/2002-
INFORMATION CENTER
2/4/2003
XXXX 1,487,085 37 8/16/85 5/3/88 Filed
Accepted
1,497,032 36 6/3/86 7/19/88 Lapsed (No
longer used)
THE EDUCATION RESOURCES 1,487,086 36 8/16/85 5/3/88 Filed
INSTITUTE Accepted
THE COMMON LAW TRADEMARKS AND SERVICE MARKS, INCLUDING BUT NOT LIMITED TO:
ALP
CEL
Dual Loan
Health Professional Plan
PEP
PharmD
PLEASE
29
EXHIBIT B
SERVICES
In connection with servicing the Programs, FMER shall perform substantially the
same scope of services presently performed by XXXX employees in all of the Cost
Centers set forth in Section 3.02, EXCEPT THAT the in-house attorney employed by
XXXX to conduct collections with respect to bankrupt borrowers, and his
principal assistant (the "Bankruptcy Collectors") shall remain XXXX employees
and shall be responsible for all direct contact with such borrowers in
connection with collection of TERI's claim against such borrowers. FMER will
provide office space and office support for the Bankruptcy Collectors to the
full extent it may do so without becoming licensable as a collection agency
under
Massachusetts law.
30
EXHIBIT C
PERFORMANCE STANDARDS
FMER PERFORMANCE:
While the Agreement is in effect, FMER shall at all times maintain the necessary
telephone lines, computer capacity and staff necessary to provide the Services
in accordance with the performance standards set forth in this EXHIBIT C (the
"Performance Standards"). On an annual basis and/or in the event that either
party reasonably anticipates an increase of more than [**] percent ([**]%) of
volume of Services, FMER and XXXX will review whether it is appropriate to
change, substitute, amend, add or delete any Performance Standard. With respect
to any proposed modification, the parties shall meet and negotiate in good faith
to determine a mutually satisfactory resolution to any proposed modification
based on all relevant business factors, including, without limitation:
- Changes in the business requirements of XXXX;
- Improvements and efficiencies in technology and in industry practice;
- Changes in the U.S. economy affecting Borrower ability to pay, recovery
rates and default aversion;
- Projected changes in volume of Services.
In the event that either party delivers to the other a written notice of impasse
with respect to a proposed modification to a Performance Standard after not less
than three meetings to discuss such proposal, then the party delivering such
notice may demand arbitration of the proposal under Section 11.11. Pending the
outcome of arbitration, existing Performance Standards shall continue to apply.
The arbitrator shall have the authority to approve or deny, in whole or in part,
the proposed modification, based on the foregoing standards, together with
then-current industry practice. Any change in a Performance Standard requested
by XXXX and approved by the arbitrator that would increase cost to FMER by more
than $[**] may be the subject of an interim budget review request under Section
3.02(e)(iii).
31
The Performance Standards appear in the following chart:
PERFORMANCE STANDARDS
PERFORMANCE TESTING PERMITTED
CRITERIA CATEGORY "SUB INDICATORS" MEASURE STANDARD TIME PERIOD VARIATION (+/-)
------------------------------------------------------------------------------------------------------------------------
1. LOAN ORIGINATION a.[**] [**] [**] [**] [**]
b.[**] [**] [**] [**] [**]
c.[**] [**] [**] [**] [**]
d.[**] [**] [**] [**] [**]
e.[**] [**] [**] [**] [**]
f.[**] [**] [**] [**] [**]
------------------------------------------------------------------------------------------------------------------------
2. QC & PM a.[**] [**] [**] [**] [**]
b.[**] [**] [**] [**] [**]
c.[**] [**] [**] [**] [**]
d.[**] [**] [**] [**] [**]
e.[**] [**] [**] [**] [**]
------------------------------------------------------------------------------------------------------------------------
3. CUSTOMER SERVICE a.[**] [**] [**] [**]
b.[**] [**] [**] [**]
c.[**] [**] [**] [**]
------------------------------------------------------------------------------------------------------------------------
4. CLAIMS REVIEW a.[**] [**] [**] [**] [**]
------------------------------------------------------------------------------------------------------------------------
5. DEFAULT PREVENTION a.[**] [**] [**]% [**] [**]%
========================================================================================================================
6. RECOVERY [**]
a. Q1 $ [**] [**] [**]%
b. Q2 $ [**] [**] [**]%
c. Q3 $ [**] [**] [**]%
d. Q4 $ [**] [**] [**]%
$ [**] [**] [**]%
e.[**] Yearly [**]% [**] [**]%
------------------------------------------------------------------------------------------------------------------------
7. MANAGEMENT REPORTS a.[**] [**] [**] [**] [**]
b.[**] [**] [**] [**] [**]
c.[**] [**] [**] [**] [**]
------------------------------------------------------------------------------------------------------------------------
* Exceptions * [**]
* [**]
* [**]
CURRENT PERIOD 1999 2000
CRITERIA CATEGORY "SUB INDICATORS" AVERAGE AVERAGE AVERAGE
------------------------------------------------------------------------------------------------------
1. LOAN ORIGINATION a.[**] [**] [**] [**]
b.[**] [**] [**] [**]
c.[**] [**] [**] [**]
d.[**] [**] [**] [**]
e.[**] [**] [**] [**]
f.[**] [**] [**] [**]
------------------------------------------------------------------------------------------------------
2. QC & PM a.[**] [**] [**] [**]
b.[**] [**] [**] [**]
c.[**] [**] [**] [**]
d.[**] [**] [**] [**]
e.[**] [**] [**] [**]
------------------------------------------------------------------------------------------------------
3. CUSTOMER SERVICE a.[**] [**] [**] [**]
b.[**] [**] [**] [**]
c.[**] [**] [**] [**]
------------------------------------------------------------------------------------------------------
4. CLAIMS REVIEW a.[**] [**] [**] [**]
------------------------------------------------------------------------------------------------------
5. DEFAULT PREVENTION a.[**] [**] [**] [**]
======================================================================================================
6. RECOVERY
a. Q1
b. Q2
c. Q3
d. Q4
$[**] $[**] $[**]
e.[**] [**] [**]% [**]%
------------------------------------------------------------------------------------------------------
7. MANAGEMENT REPORTS a.[**] [**] [**] [**]
b.[**] [**] [**] [**]
c.[**] [**] [**] [**]
------------------------------------------------------------------------------------------------------
* Exceptions * [**]
* [**]
* [**]
32
EXHIBIT D
CUSTOMER CONTACT EMPLOYEES
Customer Contact Employees are those employees on the following roster
who have the word "Delay" 3 columns to the right of their last names.
XXXX TO FMER EMPLOYEE LISTING
"DEAR"
FIRST NAME LAST NAME NAME DEPARTMENT
Xxxx X. Xxxxxxx Xxxx Customer Service Delay
Nilelaya X Xxxxxx Nilelaya Customer Service Xxxxx
Xxxxxx Xxxxxxx Xxxxxx Customer Service Delay
Xxxx X. Xxxxxx Xxxx Customer Service Delay
Xxxxx X. Xxxxx Xxxxx Customer Service Delay
Xxxxxx X. Xxxxx Xxxxxx Customer Service Delay
Xxxxxxx X. Xxxxxxx Xxxxxxx Customer Service Xxxxx
Xxxxx M Xxx Xxxxx Customer Service Delay
Xxxxx X. Xxxxxx Xxxxx Customer Service Delay
Xxxxxx X. Xxxxxx Xxxxxx Customer Service Delay
Bolisha Enaibe Bolisha Customer Service Xxxxx
Xxxxxxxx Xxxxxxxxxx Xxxxxxxx Customer Service Delay
Ronathan L Xxxxxxxx Xxx Customer Service Delay
Xxxx X. Xxxxxxxx Xxxx Customer Service Xxxxx
Xxxxxxxx Xxxxxxxxx Xxxxxxxx Customer Service Delay
Xxxxxx X. Xxxxx Xxxxxx Customer Service Delay
Xxxx X. Xxxxx Xxxx Customer Service Xxxxx
Xxxxx Xxxxxxx Xxxxx Customer Service Delay
Xxxxxxxx X. Xxxxxxxxxx Xxxxxxxx Customer Service Xxxxx
Xxxx A Xxxxxxx Xxxx Customer Service Xxxxx
Xxxxxxx Xxxxxx Xxxxxxx Customer Service Delay
Xxxxxxx Xxxxx Xxxxxxx Customer Service Delay
Xxxxx X. Xxxxx Xxxxx Customer Service Delay
Xxxxxxxxx Xxxx Xxxxxx Xxxx Customer Service Xxxxx
Xxxxxxx M Xxxxxxxxxxx Xxxxxxx Customer Service Delay
Xxxxx X. Xxxxxxxx Xxxxx Customer Service Delay
Xxxxx X. XxXxxx Xxxxx Customer Service Delay
Xxxxxxxx X. Xxxxxxxx Xxxxxxxx Customer Service Delay
Xxxxx X. Xxxxxx Xxxxx Customer Service Xxxxx
Xxxxx Xxxxxxx Xxxxx Customer Service Delay
Xxxx X. Xxxxxx Xxxx Customer Service Delay
33
Xxxxxxx X. Xxxxx Xxxxxxx Customer Service Delay
Xxxxxx X. Xxxxxx Xxxxxx Customer Service Delay
Xxxx X. Xxxxxxxx Xxxx Customer Service Delay
Xxxxxxx X. Xxxxxxxx Xxxx Customer Service Delay
Xxxxxxx X. Xxxxxx Xxxxxxx Customer Service Xxxxx
Xxxxxxx J Xxxxx Xxxxxxx Customer Service Delay
Xxxxxxxx X. Xxxxx Xxxxxxxx Customer Service Xxxxx
Xxxxx Xxxxxxxx Xxxxx Customer Service Delay
Xxxxxxxxxxx X. Xxxxxxxxxx Xxxxx Customer Service Xxxxx
Xxxxxx Xxxxx Xxxxxx Customer Service Delay
Xxxxxx Xxxxxx Xxxxxx Customer Service Xxxxx
Xxxxxx Xxxxxxxxx Xxxxxx Customer Service Delay
Xxxxx X. Xxxxxx Xxxxx Customer Service Xxxxx
Xxxxx Xxxxxx Xxxxx Customer Service Delay
Xxxxxxx Xxx Bai Loan Origination Delay
Xxxxxx X. Xxxxxxxx XxXx Loan Origination Xxxxx
Xxxx-Xxx Xxxx Xxxxx Loan Origination Xxxxx
Xxxxxxxx Xxxxxxxxx Xxxxxxxx Loan Origination Delay
Xxxxx Xxx Xxxxx Loan Origination Xxxxx
Xxxx Xxxxxxxxxxxx Xxxx Loan Origination Delay
Xxxxxx X. Xxxxxxxx Xxxxxx Loan Origination Xxxxx
Xxxxxx Margharita Lauren Loan Origination Delay
Xxxx Xxxx-Xxxxxx Xxxx Loan Origination Delay
Xxxxxx Xxxxx Xxxxxx Loan Origination Xxxxx
Xxxxxx Xxxxxxxx Xxxxxx Loan Origination Xxxxx
Xxxxx Xxxxxxxxx Xxxxx Loan Origination Delay
Xxxxxx X. Xxxx Xxxxxx Loan Origination Delay
Min X. Xxxx Min Loan Origination Xxxxx
Xxxx Proper Xxxx Quality Control Xxxxx
Xxxxxxx Xxxxx Xxxxxxx Quality Control Delay
Xxxx X. Xxxxx Xxxxxxx Xxxx Quality Control Xxxxx
Xxx Xxxxxxx Xxx Quality Control Delay
63
Xxxxxxx X Xxxxx Xxxxx Bankruptcy FMER
Xxxx X. Xxxxxx Xxxx Bankruptcy FMER
Xxxxxxxx Xxxxxxx Xxxxxxxx Bankruptcy FMER
Xxxxx X. Xxxxxxxx Xxx Claim Review FMER
Xxxxxxx Xxxxxxx Georgia Claim Review FMER
Tin Khine Tin Claim Review FMER
Xxxxxx X Xxxx Xxxxxx Claim Review FMER
Xxxxxxxxx X'Xxxxx Xxxxxxxxx Claim Review FMER
Xxx X. Xx Xxx Claim Review FMER
Xxxxxxx Xxxxx Xxxxxxx Default Prevention FMER
Xxxxxx X Xxxx Xxxxx Default Prevention FMER
34
Xxxxxxxx XxXxxxxxx Xxxxx Default Prevention FMER
Xxx X Xxxxx Xxx Default Prevention FMER
Xxxxx X Xxxxxx Xxxxx Education Finance FMER
Xxxx X. XxXxxxx Xxxx Education Finance FMER
Xxxx X. Xxxxxxx Xx. Xxxx Education Finance FMER
Xxxxx Xxxxxxx Xxxxx Finance/Administration FMER
Xxxxxxxxxx Xxxxx Cherryanne Finance/Administration FMER
Xxxxx X Xxxxxxxxxxxxx Irina Finance/Administration FMER
Xxxxx X. Xxxxxx Xxxxx Finance/Administration FMER
Xxxxxx X XxXxxxx Xxxxxx Finance/Administration FMER
Xxxxxxx X Xxxxx Xxxx Finance/Administration FMER
Xxxx Xxxx Xxxx Finance/Administration FMER
Xxxxxxx X. Xxxxxx Xxx Finance/Administration FMER
Xxxxxxx Xxxx Xxxxxxx Finance/Administration FMER
Xxxxxxx Xxxxxx Xxxxxxx Finance/Administration FMER
Xxxxxxx Xxxxxx Xxxxxxx Finance/Administration FMER
Xxxxx Xxxxx Xxxxx Finance/Administration FMER
Xxxxxxxx X. Xxxxxxxx Xxxxx Human Resources FMER
Xxxxx Xxxxxxxxx Xxxxx Human Resources FMER
Xxxxxxxx Xxxxx Xxxxxxxx IS&T FMER
Xxxxx X. Xxxxx Ronan IS&T FMER
Xxxxx Xxxxxxx Xxxxx IS&T FMER
Xxxxxx Xxxxxx Xxxxxx IS&T FMER
Xxxxx X. Xxxxxxx Xxxxx IS&T FMER
Xxxxxx Xxxxxxxxxxx Claire IS&T FMER
Xxxxxxxx X. Xxxxxxxx Xxx IS&T FMER
Xxxxx X. Xxxxxx Xxxxx IS&T FMER
Xxxxxxx X. Xxxxxxx XX Xxxx IS&T FMER
Xxxx X. Xxxxxxx Xxxx IS&T FMER
Xxxxxxx X. Xxxxxxx Xxxx IS&T FMER
Xxxxxxxxx A Xxxxxx Xxxxx IS&T FMER
Xxxx X. Xxxxxxxx Xxxx Loan Origination FMER
Xxxxxx X. Xxxxx Xxxxxx Loan Origination FMER
Xxxxxxx Xxxx Mariana Loan Origination FMER
Hui Min Cen Hui Min Loan Origination FMER
Xxxxxx Xxxx Xxxxxx Loan Origination FMER
Fun Fun Cong Fun Fun Loan Origination FMER
Xxxxxxxxx X. Xxxxxxx Xxxxx Loan Origination FMER
Shizhen Fan Shizhen Loan Origination FMER
Xiao Xxxx Xxxxx Xxxx Xxxx Loan Origination FMER
Xxxxxxxx Xx Xiangqun Loan Origination FMER
Cam Xxxxx Cam Loan Origination FMER
Xxxxxx X Xxxxxxxxxx Xxxxxx Loan Origination FMER
Xxxx Xxx Xxx Xxxxxx Xxx Loan Origination FMER
35
Xxxx Xxxx Xxxxxx Xxxx Loan Origination FMER
Xxxx-Xxxxx Xxxxxx Xxxxx Loan Origination FMER
Hong Ho Nguyen Hong Ho Loan Origination FMER
Xxxx X. Xxxx Tram Loan Origination FMER
Xxxxx Xxxxxx Tan Xxxxx Xxxxxx Loan Origination FMER
Xxxxxx X. Xxx Xxxxxx Loan Origination FMER
Soi Ha U Soi Ha Loan Origination FMER
Xxx Xxx Yu Xxx Xxx Loan Origination FMER
Mei Xx Xxxxx Mei Le Loan Origination FMER
Xxx X. Xxx Hui Loan Origination FMER
Xxxxx Xxxxxx Xxxxx Quality Control FMER
Zihue Chen Zihue Quality Control FMER
Xxxxxxx Xxxxxxxx Xxxx Quality Control FMER
Xxxxx X. Xxxxxxx Xxxxx Quality Control FMER
Xxxxxx Xx Yuting Quality Control FMER
Xxxxxxxxx Xxxx Xxxxx Xxxxxxxxx Quality Control FMER
Yen Xxxxx Xxxxx Xxx Xxxxx Quality Control FMER
Xxxxxxxx X. Xxxxxxxxxxxx Xxxxxxxx Quality Control FMER
Xxxxxxx Xxxxxx Brikena Quality Control FMER
Dao K Xxx Xxx Quality Control FMER
Xxxxxxx X. Xxxxxxxx Xxxxxxx Quality Control FMER
Xxxx Xxx Xxxxxx Xxxx Quality Control FMER
Xxxx Loan T Xxxxxx Loan Quality Control FMER
Xxxxx X. Xxxxxx Xxxxx Quality Control FMER
Xxxxxx X. Xxxxxx Xxxxxx Quality Control FMER
Xxxx X. Xxxxxx Xxxx Quality Control FMER
Xxxxxxxx Ou Xxxxxxxx Quality Control FMER
Xxxxxxx X. Xxxx Xxxxxxx Quality Control FMER
Xxxxxxx X. Xxxxx Xxxxxxx Quality Control FMER
Xxxxx Xxxx Xxxxx Quality Control FMER
Xxxxx X. Xxxxxxxxxxx Xxxxx Quality Control FMER
Xxxxx X. Xxxxxxx Javal Recovery FMER
Xxxxxx Xxxxxxx Xxxxxx Recovery FMER
Xxxxx X. Xxxxxxxxx Xxxxx Recovery FMER
Xxxxxx X. Xxxxx Xxxxxx Recovery FMER
Miti Sheqi Miti Recovery FMER
Xxxx Xxxxx Xxxx Recovery FMER
91
Xxxxxx Xxxxxxxxxx Xxx Marketing TMSI
Xxxxx Xxxxxx Xxxxx Marketing TMSI
Xxxx Xxxxxx Xxxxxxxxx Xxxx Marketing TMSI
Xxx Xxxxxx Xxx Marketing TMSI
Xxxxx X Xxxxx Xxxx Marketing TMSI
Communications
Tysaliek X. Xxxxx Ty Marketing
Communications TMSI
6
36
FIRST SUPPLEMENT TO
MASTER SERVICING AGREEMENT
THIS FIRST SUPPLEMENT TO
MASTER SERVICING AGREEMENT ("Supplement")
supplements that certain
Master Servicing Agreement by and among The Education
Resources Institute, Inc. ("XXXX"), First Marblehead Education Resources, Inc.
("FMER"), and The
First Marblehead Corporation ("FMC") dated as of July 1, 2001
(the "MSA"). This Supplement is dated as of July 1, 2001.
WHEREAS, the MSA contains a general grant of authority for FMER to do all
things necessary to provide the services described in the MSA; and
WHEREAS, certain necessary acts such as making of payments from XXXX bank
accounts may require more specific authority than is granted in the MSA, and the
parties desire that such grants of authority be specific.
NOW, THEREFORE, in consideration of these presents and the covenants
contained herein the parties hereto hereby agree as follows:
1. Capitalized terms used herein without definition shall have
the meanings set forth in the MSA.
2. Without in any way limiting the general authority granted to
FMER in the MSA, the following specific authorities are
granted:
(a) FMER is authorized to prepare payroll for continuing XXXX
employees upon receipt of attendance/verification from the
applicable XXXX manager. The following FMER employees are
authorized to sign payroll checks: Xxxxxxx Xxxxx, Xxxx
XxXxxxx, and Xxxxx XxXxxxxxx.
(b) FMER is authorized to process XXXX accounts payable,
claims payments and loan origination disbursements. The
following FMER employees are authorized to sign checks and
make wire transfers with respect to accounts payable and
loan disbursements: Xxxxxxx Xxxxx, Xxxx XxXxxxx, and Xxxxx
XxXxxxxxx. Two signatures shall be required for any
accounts payable check or wire in excess of $7,500. Claims
payments shall be made over the signature of Xxxxxxx
Xxxxx. Any accounts payable transaction in excess of the
standard authority levels set forth in Exhibit A shall
require the prior written approval of a XXXX officer
having authority to make payments of
37
the size in question on behalf of XXXX.
(c) FMER is authorized to transfer funds among XXXX accounts
at Fleet Bank, State Street Bank and Key Bank in
furtherance of its duties under the MSA. The following
FMER employees are authorized to make such transfers:
Xxxxxxx Xxxxx, Xxxx XxXxxxx, and Xxxxx XxXxxxxxx.
Transaction confirmations shall be provided to the XXXX
president promptly upon request.
(d) FMER is authorized to support XXXX investments in
accordance with the investment policy approved by the XXXX
Audit and Investment Committee. Xxxxxxx Xxxxx is
authorized to execute investments in accordance with such
policy. All transaction advices and confirmations shall be
provided to the XXXX president promptly upon request.
The receipt of advices or confirmations under this section
shall not constitute ratification of any improper act or
payment.
3. In the event that any FMER employee named in the foregoing
authorization becomes unavailable for any extended period of
time, whether by reason of disability or otherwise, XXXX shall
name a replacement FMER employee, after consultation with
FMER.
4. In consideration of their agreement to assume additional
responsibilities, FMER agrees to indemnify and hold harmless
the named FMER employees (Xxxxxxx Xxxxx, Xxxx XxXxxxx, and
Xxxxx XxXxxxxxx), and any other FMER employees subsequently
named to exercise authority under this Supplement, from and
against any loss, cost, damage or expense relating to any
claims made by any person arising out of or relating to their
exercise of the authority granted herein, if such exercise of
authority was made in good faith. This indemnity includes all
costs of defense (including attorneys' fees). The named
employees shall be entitled to payment of the cost of defense
until it is held in a final judgment of a court of competent
jurisdiction that the employee in question did not act in good
faith. FMER and XXXX agree that any indemnity payments under
this paragraph shall constitute Transferred Costs. Neither the
existence of this indemnity nor any reimbursement to FMER for
payments under this indemnity shall affect the liability of
FMER (or lack thereof) for any breach of the MSA alleged to
arise out of any matter covered by this indemnity.
5. In its sole discretion, XXXX may conduct and FMER shall
cooperate fully with periodic audits of payments, transfers
and investments made by FMER from XXXX funds. Such audits
shall be at TERI's expense and shall not unreasonably
38
interfere with the daily operations of FMER.
[Remainder of the page intentionally left blank]
39
IN WITNESS WHEREOF, the parties hereto have caused this First Supplement
to
Master Servicing Agreement to be executed by their duly authorized officers
as of the date set forth above.
THE EDUCATION RESOURCES
INSTITUTE, INC.
By: /s/ Xxx X. Xxxxx
-------------------
Acting President
FIRST MARBLEHEAD EDUCATION
RESOURCES, INC.
By: /s/ Xxxxx Xxxxx
--------------------
THE
FIRST MARBLEHEAD
CORPORATION
By: /s/ Xxxxx Xxxxx
--------------------
40
EXHIBIT A TO FIRST SUPPLEMENT TO
MASTER SERVICING AGREEMENT
Payment Type Frequency Approval Threshold(1)
--------------------------------------------------------------------------------
Claims payments Monthly $[**]
(per servicer or lender)
Lender transfers from pledged Monthly $[**]
accounts to pay claims (per
transfer)
Payroll Weekly $[**]
Loan origination (per loan Daily $[**]
disbursement)
Professional fees Monthly $[**]
All other accounts payable Weekly $[**]
----------
(1) Approval is required for payments in excess of the amounts listed in this
column.
41
AMENDMENT TO FIRST SUPPLEMENT TO
MASTER SERVICING AGREEMENT
THIS AMENDMENT TO FIRST SUPPLEMENT TO MASTER SERVICING AGREEMENT
("Amendment") amends that certain First Supplement to Master Servicing Agreement
by and among The Education Resources Institute, Inc. ("XXXX"), First Marblehead
Education Resources, Inc. ("FMER"), and The
First Marblehead Corporation ("FMC")
dated July 1, 2001 ("First Supplement"), which supplements that certain Master
Servicing Agreement by and among XXXX, FMER, and FMC dated July 1, 2001 (the
"MSA"). This Amendment is dated October 15, 2002.
WHEREAS, the parties wish to amend the First Supplement to provide that
signing authority on behalf of XXXX in financial matters be modified by deleting
Xxxxx XxXxxxxxx and adding Xxxxxxx Xxxxxxxxxxx.
NOW, THEREFORE, in consideration of these presents and the covenants
contained herein the parties hereto hereby agree as follows:
6. The First Supplement is hereby amended by removing Xxxxx
XxXxxxxxx'x name in each and every instance and replacing it
with Xxxxxxx Xxxxxxxxxxx.
7. Except as amended herein, the First Supplement and the MSA
remain in full force and effect.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to First Supplement to Master Servicing Agreement to be
executed by their duly authorized officers as of the date set forth
above.
THE EDUCATION RESOURCES
INSTITUTE, INC.
By: /s/ Xxxxxxxx X. X'Xxxxx
------------------------
FIRST MARBLEHEAD EDUCATION
RESOURCES, INC.
By: /s/ Xxxxx Xxxxx
-----------------------
THE
FIRST MARBLEHEAD
CORPORATION
By: /s/ Xxxxx Xxxxx
-----------------------
SECOND SUPPLEMENT TO MASTER SERVICING AGREEMENT
THIS SECOND SUPPLEMENT TO MASTER SERVICING AGREEMENT ("Supplement")
supplements that certain Master Servicing Agreement by and among The Education
Resources Institute, Inc. ("XXXX"), First Marblehead Education Resources, Inc.
("FMER"), and The
First Marblehead Corporation ("FMC") dated as of July 1, 2001
(the "MSA"). This Supplement is dated as of May 1, 2002.
NOW, THEREFORE, in consideration of these presents and the covenants
contained herein the parties hereto hereby agree as follows:
1. Capitalized terms used herein without definition shall have the
meanings set forth in the MSA.
2. Section 3.01 of the MSA is amended by adding the following sentence
at the end:
"In addition, XXXX shall pay FMER the amounts set forth in
Section 3.03."
3. A Section 3.03 is hereby added to the MSA to read:
"3.03. In addition to Transferred Costs, XXXX shall pay to FMER
[**] ([**]%) of the amounts it receives under Section 1(d)(7) of
the Amended and Restated Loan Origination Agreement between Bank
One, N.A. and XXXX dated as of May 13, 2002 ("Bank One Loan
Origination Agreement"); provided, however, that the parties agree
to review the percentage of revenues shared under this Agreement
annually."
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplement to Master Servicing Agreement to be executed by their duly
authorized officers as of the date set forth above.
THE EDUCATION RESOURCES
INSTITUTE, INC.
By: /s/ Xxx X. Xxxxx
-------------------------
FIRST MARBLEHEAD EDUCATION
RESOURCES, INC.
By: /s/ Xxxxx Xxxxx
-------------------------
THE
FIRST MARBLEHEAD CORPORATION
By: /s/ Xxxxx Xxxxx
---------------------
