CREDIT AGREEMENT
by and between
MRU LENDING, INC.,
as Borrower
THE INSTITUTIONS FROM TIME TO TIME
PARTY HERETO AS LENDERS,
and
NOMURA CREDIT & CAPITAL, INC.
as Agent
Dated as of February 4, 2005
TABLE OF CONTENTS
Page
ARTICLE I
ADVANCES .................................................................. 2
SECTION 1.01. Commitments to Lend; Limits on Lenders'
Obligations ......................................... 2
SECTION 1.02. Borrowing Procedures ................................ 2
SECTION 1.03. Grant of Security Interest .......................... 4
SECTION 1.04. Release of Collateral ............................... 4
SECTION 1.05. Effect of Release ................................... 5
SECTION 1.06. Extension of the Facility Termination Date .......... 6
SECTION 1.07. Determination of Fair Market Value .................. 6
ARTICLE II
NOTE ...................................................................... 6
SECTION 2.01. Note ................................................ 6
SECTION 2.02. Interest on Advances ................................ 7
SECTION 2.03. Repayments and Prepayments .......................... 8
SECTION 2.04. General Procedures .................................. 9
SECTION 2.05. Characterization of Note ............................ 9
SECTION 2.06. Taxes ............................................... 9
ARTICLE III
SETTLEMENTS ............................................................... 11
SECTION 3.01. Accounts; Investments by Agent ...................... 12
SECTION 3.02. Collection of Moneys ................................ 13
SECTION 3.03. Collection Account .................................. 13
SECTION 3.04. Reserve Account and Origination Fee Subaccount ...... 15
SECTION 3.05. Reserved ............................................ 15
SECTION 3.06. Payments and Computations, Etc ...................... 15
SECTION 3.07. Obligations with respect to Certain Releases of
Funds from the Collection Account; Obligation to
Prepare Corrected Monthly Reports ................... 16
SECTION 3.08. Disbursement Account ................................ 16
ARTICLE IV
FEES AND YIELD PROTECTION ................................................. 17
SECTION 4.01. Fees ................................................ 17
SECTION 4.02. Increased Costs ..................................... 17
i
SECTION 4.03. Funding Indemnification ............................. 17
ARTICLE V
CONDITIONS OF BORROWINGS .................................................. 18
SECTION 5.01. Closing Date Conditions Precedent ................... 18
SECTION 5.02. Conditions Precedent to Initial Borrowing ........... 21
SECTION 5.03. Conditions Precedent to All Borrowings .............. 22
ARTICLE VI
REPRESENTATIONS AND WARRANTIES ............................................ 24
SECTION 6.01. Representations and Warranties of the Borrower ...... 24
ARTICLE VII
GENERAL COVENANTS OF THE BORROWER ......................................... 28
SECTION 7.01. Affirmative Covenants of the Borrower ............... 28
SECTION 7.02. Reporting Requirements of the Borrower .............. 34
SECTION 7.03. Servicing Covenants ................................. 36
SECTION 7.04. Negative Covenants of the Borrower .................. 37
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES; SET-OFF ...................................... 39
SECTION 8.01. Events of Default ................................... 39
SECTION 8.02. Remedies ............................................ 42
ARTICLE IX
THE AGENT ................................................................. 42
SECTION 9.01. Appointment; Nature of Relationship ................. 42
SECTION 9.02. Powers .............................................. 43
SECTION 9.03. General Immunity .................................... 43
SECTION 9.04. No Responsibility for Advances, Creditworthiness,
Collateral, Recitals, Etc ........................... 43
SECTION 9.05. Action on Instructions of Lenders ................... 43
SECTION 9.06. Employment of Agents and Counsel .................... 43
SECTION 9.07. Reliance on Documents; Counsel ...................... 44
SECTION 9.08. The Agent's Reimbursement and Indemnification ....... 44
SECTION 9.09. Rights as a Lender .................................. 44
SECTION 9.10. Lender Credit Decision .............................. 44
SECTION 9.11. Successor Agent ..................................... 45
SECTION 9.12. Transaction Documents ............................... 45
ii
ARTICLE X
ASSIGNMENT OF LENDER'S INTEREST ........................................... 45
SECTION 10.01. Restrictions on Assignments ......................... 45
SECTION 10.02. Evidence of Assignment .............................. 47
ARTICLE XI
INDEMNIFICATION ........................................................... 47
SECTION 11.01. Indemnities ......................................... 47
ARTICLE XII
SERVICING OF PLEDGED STUDENT LOANS ........................................ 50
SECTION 12.01. Appointment of Servicer(s) .......................... 50
ARTICLE XIII
MISCELLANEOUS ............................................................. 50
SECTION 13.01. Amendments, Etc ..................................... 50
SECTION 13.02. Notices, Etc ........................................ 50
SECTION 13.03. No Waiver; Remedies ................................. 50
SECTION 13.04. Binding Effect; Survival ............................ 51
SECTION 13.05. Costs, Expenses and Taxes ........................... 51
SECTION 13.06. Captions and Cross References ....................... 51
SECTION 13.07. Integration ......................................... 51
SECTION 13.08. Governing Law ....................................... 52
SECTION 13.09. Waiver Of Jury Trial; Submission to Jurisdiction .... 52
SECTION 13.10. Execution in Counterparts ........................... 52
SECTION 13.11. No Recourse Against Other Parties ................... 52
SECTION 13.12. Confidentiality ..................................... 53
SECTION 13.13. Limitation of Liability ............................. 54
SECTION 13.14. Actions to be Taken on Days other than Business Days 54
iii
APPENDICES
APPENDIX A Definitions
APPENDIX B Originators
APPENDIX C Agreed-Upon Procedures with respect to the Borrower
APPENDIX D Approved Reduced Rate Programs
APPENDIX E Underwriting Guidelines
SCHEDULES
SCHEDULE 6.0 l(k) List of Offices of the Borrower where Records Are Kept
and Changes in the Borrower Information
SCHEDULE 13.02 Notice Addresses
EXHIBITS
EXHIBIT 1.02 Form of Borrowing Notice
EXHIBIT 1.04 Form of Release Certification
EXHIBIT 2.01 Form of Note
EXHIBIT 5.03(d) Form of Coverage Condition Certificate
EXHIBIT 7.02(c) Form of Monthly Report
EXHIBIT 10.01(a) Form of Assignment and Acceptance
EXHIBIT 12.01 List of Approved Servicers
EXHIBIT A Closing List
iv
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (the "Agreement") is made as of February 4,
2005 by and between MRU LENDING, INC., a Delaware corporation (the "Borrower"),
the institutions from time to time party hereto as lenders (each, a "Lender" and
collectively, the "Lenders") and NOMURA CREDIT & CAPITAL, INC. ("Nomura"), in
its capacity as contractual representative for itself and the other Lenders (the
"Agent"). Unless otherwise indicated, capitalized terms used in this Agreement
are defined in Appendix A.
BACKGROUND
1. The Borrower will originate or purchase from time to time Student
Loans.
2. The Borrower intends to finance the Student Loans as provided herein by
borrowing Advances from Lenders. The Borrower has requested Lenders, and Lenders
have agreed, subject to the terms and conditions contained in this Agreement, to
make Advances to the Borrower from time to time during the term of this
Agreement, which Advances will be secured by such Student Loans and other
Collateral.
3. Nomura has been requested by Lenders, and is willing, to act as the
Agent.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein contained, the parties hereto agree as follows:
ARTICLE I
ADVANCES
SECTION 1.01. Commitments to Lend; Limits on Lenders' Obligations.
(a) The Advances. Upon the terms and subject to the conditions hereinafter
set forth, each Lender, severally and not jointly with any other Lender, agrees
to make to the Borrower, from time to time during the period from the date
hereof to, but not including, the Commitment Termination Date, loans secured by
the Collateral (each, an "Advance") in an aggregate principal amount up to such
Lender's Commitment; provided, however, that the Total Outstanding Advances
shall at no time exceed the aggregate of all of the Lenders' Commitments. Within
such limits of time and amount and subject to the other provisions of this
Agreement, the Borrower may borrow, repay without premium or penalty any or all
Advances, except as provided in Sections 2.03 and 4.03, and reborrow any or all
Advances pursuant to this Section 1.01.
(b) Use of Proceeds. Notwithstanding anything in this Agreement to the
contrary, the proceeds of each Advance shall be used by the Borrower only (A) to
purchase Student Loans on the date such Advance is made pursuant to a Purchase
and Sale Agreement, (B) to fund Student Loans originated by or on behalf of the
Borrower on the date such Advance is made, (C) to make deposits to the
Disbursement Account to fund Student Loans to be originated by or on behalf of
the Borrower in accordance with Section 3.08(b), (D) to fund recaptures of Fair
Market Value on any Settlement Date in accordance with Section 1.02(d) below, or
(E) to make deposits to the Collection Account as permitted by Section 3.03(c).
SECTION 1.02. Borrowing Procedures.
(a) Notice of Borrowing. Each Borrowing hereunder shall be made upon the
Borrower's irrevocable written notice, substantially in the form of Exhibit 1.02
(a "Borrowing Notice"), delivered to the Agent with a copy to the Lenders in
accordance with Section 13.02 (which notice must be received by the Agent prior
to 10:00 a.m., New York City time) not less than (i) if the requested Borrowing
is not more than $2,500,000 and is not a Fair Market Value Recapture Advance,
one (1) Business Day, or (ii) otherwise, three Business Days, prior to the
requested Borrowing Date, which notice shall specify (A) the amount requested to
be borrowed by the Borrower (which amount shall be in a minimum amount of
$1,000,000 or in integral multiples of $250,000 in excess thereof), (B) the date
of such Borrowing (which shall be a Business Day) and (C) the proposed use of
the proceeds of such Borrowing. Any Borrowing Notice received by the Agent after
the time specified therefor in the immediately preceding sentence shall be
deemed to have been received by the Agent on the next Business Day, and the date
specified in the Borrowing Notice as the proposed Borrowing Date shall be deemed
to be the Business Day immediately succeeding the proposed Borrowing Date
specified in such Borrowing Notice. The Agent shall promptly (but in any event
by 11:00 a.m. (New York City time) on the date of its deemed receipt of a
Borrowing Notice) notify the Borrower and the Lenders of its receipt of such
Borrowing Notice and shall specify: (A) the proposed date and the time and
method of disbursement of such Borrowing as set forth in such Borrowing Notice;
(B) the amount of such Borrowing; and (C) each Lender's Pro Rata Share of such
Borrowing.
2
(b) Funding of Borrowing. On the date of each Borrowing, upon satisfaction
of the applicable conditions set forth in Article V and subject to Section
1.01(a), each Lender shall remit its Pro Rata Share of the principal amount of
such Borrowing to the Agent's Account by no later than 1:00 p.m. (New York City
time) on the Borrowing Date specified or deemed specified in such Borrowing
Notice, and the Agent shall upon fulfillment of the applicable conditions set
forth in Article V, and to the extent the Lenders have made funds available to
it for such purpose, fund such Advance to the Borrower in U.S. Dollars and
immediately available funds to the Disbursement Account prior to 2:00 p.m. (New
York City time) on the Borrowing Date specified or deemed specified in such
Borrowing Notice; provided, that if any Lender (other than a Lender that is the
same entity as the Agent or an Affiliate of the Agent) fails to remit such funds
to the Agent in a timely manner, the Agent may, but shall not be required to,
advance on behalf of any such Lender, such Lender's Pro Rata Share of such
Advance on the applicable Borrowing Date unless such Lender shall have notified
the Agent prior to such Borrowing Date that it does not intend to make available
its Pro Rata Share of such Advance on such date. If the Agent makes such
Advance, each of the Borrower and such defaulting Lender severally, but not
jointly, shall be liable to repay the Agent the amount thereof immediately upon
the Agent's demand therefor, together with interest thereon from the date such
amount is advanced until repaid in full at a rate equal to, in the case of such
Lender, the Base Rate and, in the case of the Borrower, the interest rate
applicable to such Advance. Until such amount is repaid to the Agent by such
Lender or the Borrower, (i) such Advance shall be deemed for all purposes to be
an Advance made by the Agent to the Borrower, and the Agent shall for all
purposes hereunder be deemed a "Lender" and shall be entitled to all rights,
remedies and benefits as such hereunder and under the other Transaction
Documents, (ii) the term "Required Lenders" for purposes of this Agreement shall
mean Lenders (excluding all Lenders whose failure to fund their Pro Rata Share
of any such Advance has not been cured) then holding at least 50% of the
outstanding Advances (or if no Advances are outstanding at such time, whose
aggregate Commitments total more than 50% of the aggregate Commitments of all
Lenders), and (iii) any such Lender who has failed to fund its Pro Rata Share of
any such Advance shall not be entitled to any Commitment Fee. Upon the repayment
of the principal and interest of any such Advance by such Lender to the Agent,
such repayment shall be treated (to the extent of the principal amount thereof)
as the funding of such Lender's Pro Rata Share of the Advances to which such
amounts relate. No such repayment or payment by the Borrower shall prejudice its
rights in respect of any default by such Lender hereunder. The failure of any
Lender to fulfill its Commitment to fund any Advance on any Borrowing Date shall
not relieve any other Lender of its Commitment to fund any such Advance on such
date, but no Lender shall be responsible for the failure of any other Lender to
fulfill such Commitment of any other Lender.
3
(c) Amount of Advances. (i) Advances in connection with Borrowings to fund
any Student Loan originated by or on behalf of the Borrower shall be made in an
amount not to exceed the lesser of (x) [CONFIDENTIAL](1) or (y)
[CONFIDENTIAL](2) and (ii) Advances in connection with Borrowings to fund the
purchase of any Student Loan from a third party shall be made in an amount not
to exceed the lesser of (x) [CONFIDENTIAL](3) or (y) [CONFIDENTIAL](4).
(d) Fair Market Value Recapture Advances. The Borrower may, in accordance
with Section 1.02(a), request that an Advance (a "Fair Market Value Recapture
Advance") be made on any Settlement Date in an amount not to exceed the excess,
if any, of (I) [CONFIDENTIAL](5) over (II) the Total Outstanding Advances.
Borrowings of Fair Market Value Recapture Advances are subject to the same
conditions precedent as all other Borrowings hereunder provided that in
determining whether the Coverage Condition is met for purposes of Section
5.03(d), the proviso in the definition of Coverage Condition shall not apply.
SECTION 1.03. Grant of Security Interest.
(a) The Borrower hereby grants to the Agent, for the benefit of the
Secured Parties, a first priority, continuing lien and security interest in all
right, title and interest of the Borrower in, to and under the Collateral,
whether now owned or hereafter acquired or existing. Such lien and security
interest shall secure all of the Borrower's obligations (monetary or otherwise)
hereunder and under the other Transaction Documents to which the Borrower is a
party, including, without limitation, the payments on the Notes, the payment of
Fees and all Indemnified Amounts and the obligation to cause each Servicer to
turn over all Collections, if any, (or cause all Collections to be remitted) to
the Agent for deposit into the Collection Account (such secured obligations are
hereinafter sometimes collectively referred to as the "Secured Obligations").
The Agent hereby accepts the foregoing grant of a security interest in the
Collateral, and agrees to hold such security interest for the benefit of the
Secured Parties pursuant to the terms of this Agreement.
(b) In connection with the foregoing grant of a security interest in the
Collateral, the Borrower hereby grants to the Agent (on behalf of the Secured
Parties) the right, at any time after the occurrence and during the continuation
of an Event of Default, to give or withhold consents, directions, demands,
extensions or waivers (in each case, on behalf of the Borrower) under or with
respect to, and the right to take such actions necessary to maintain in full
force and effect each of the Servicing Agreements and the Purchase and Sale
Agreements, in each case to the extent applicable to the Pledged Student Loans
and other Collateral.
(c) The Borrower agrees that at any time and from time to time, at the
expense of the Borrower, it will promptly execute and deliver all further
instruments and documents and take all further action, that may be necessary or
desirable, or that the Agent may reasonably request, in order to enable the
Agent to exercise and enforce its rights and remedies hereunder or under any
other Transaction Document with respect to any Collateral.
SECTION 1.04. Release of Collateral. From time to time, the Borrower may
request that the Agent release its security interest in any Pledged Student
Loans by delivering to the Agent a notice substantially in the form of Exhibit
1.04 attached hereto (a "Notice of Release") of its desire that such a release
occur and specifically identify the applicable Pledged Student Loans (each a
"Released Student Loan"), such Notice of Release to be delivered at least three
(3) Business Days but no more than 30 days prior to the day on which it desires
that such release occur. The release of the Agent's security interest in any
Pledged Student Loans pursuant to this Section 1.04 shall be subject to the
following conditions precedent:
----------
(1), (2), (3), (4), (5) CONFIDENTIAL TREATMENT has been requested for the
redacted portion pursuant to Rule 406 of the Securities Act of 1933, as amended.
The confidential redacted portions have been filed separately with the United
State Securities and Exchange Commission.
4
(i) before and after giving effect to such release,
(A) there shall not exist (y) any Event of Default or (z) an
Unmatured Event of Default that shall not be cured by such release;
(B) the Coverage Condition is met; and
(C) no Lender is materially and adversely affected by the
selection made by the Borrower of the Released Student Loans;
(ii) on or prior to such release, the Borrower shall have delivered
(A) a Notice of Release to the Agent certifying that the foregoing
conditions described in clauses (i)(A), (B) and (C) above shall have been
satisfied in connection therewith and (B) a pro forma Coverage Condition
Certificate demonstrating compliance of the condition described in clause
(i)(B) above; provided that in generating such pro forma Coverage
Condition Certificate, the Borrower shall utilize such Calculation Date or
Calculation Dates as the Agent may direct as contemplated in the
definition of Calculation Date,
(iii) on or prior to such release, the Borrower shall have deposited
into the Collection Account cash in an amount equal to the lesser of the
amount advanced by the Lenders with respect to such Pledged Student Loans
or the outstanding Principal Balance of such Pledged Student Loans, plus
accrued and unpaid interest thereon (except with respect to a Pledged
Student Loan that is rescinded by the borrower thereof and interest
thereon is forgiven by the Borrower pursuant to the Underwriting
Guidelines) for application as a repayment of the Advances on such date in
accordance with Section 2.03(d); and
(iv) the Borrower shall have provided three Business Days written
notice to the Agent of such release.
SECTION 1.05. Effect of Release. Upon the satisfaction of the foregoing
conditions in accordance with Section 1.04, (i) all right, title and interest of
the Agent in, to and under such Released Student Loans shall terminate and
revert to the Borrower, its successors and assigns, (ii) the right, title and
interest of the Agent in such Released Student Loans shall thereupon cease,
terminate and become void and (iii) thereafter, such Released Student Loans
shall no longer be Pledged Student Loans. The Lenders and the Agent agree and
acknowledge that no releases of financing statements or other recorded evidence
of the right, title and interest of the Agent shall be necessary to effect the
release thereof; provided, however, that the Agent shall promptly authorize the
filing of any such releases of financing statements and other evidence of
termination of the Lien hereof with respect to such Released Student Loans as
the Borrower may reasonably require. Any Person who purchases any of such
Released Student Loans following the release thereof in accordance with the
provisions of this Agreement shall be entitled to rely on this provision.
Promptly upon such release made in accordance with Section 1.04, at the request
of the Borrower, the Agent shall (i) provide written notice to the Servicer, the
Custodian and the Paying Agent stating that its lien upon, and security interest
in, the Student Loans identified in such written notice has terminated and (ii)
return the Warehouse Trust Receipt relating to the Released Student Loans to the
Custodian as provided in Section 6 of the Custodial Agreement.
5
SECTION 1.06. Extension of the Facility Termination Date. The Facility
Termination Date may be extended on the terms set forth in this Agreement for
one (1) additional year upon the request of the Borrower to the Agent and each
Lender not less than ninety (90) days prior to the Facility Termination Date and
the written consent of the Agent and each of the Lenders thereto. Such consent
may be given or withheld in the sole and absolute discretion of the Agent and
each Lender.
SECTION 1.07. Determination of Fair Market Value. The Agent shall
determine Fair Market Value (i) with respect to each Settlement Period ending
after the date on which the Total Outstanding Advances first exceed
[CONFIDENTIAL](6), by delivering notice thereof in accordance with the
definition of "Fair Market Value" no later than three Business Day prior to the
Determination Date with respect to such Settlement Period, and (ii) at its
discretion at any other time by giving three Business Days prior written notice
to the Borrower in accordance with the definition of "Fair Market Value". A
determination of Fair Market Value made in accordance with the procedures
described in the definition of "Fair Market Value" shall be conclusive in all
respects and the Agent shall be deemed to have complied fully with its
obligations under this Agreement in determining and applying Fair Market Value
if it follows such procedures.
ARTICLE II
NOTE
SECTION 2.01. Note. The Advances of each Lender shall be evidenced by a
promissory note (each as from time to time supplemented, extended, amended or
replaced, a "Note", and collectively, the "Notes"), substantially in the form
set forth in Exhibit 2.01, with appropriate insertions, dated the Closing Date,
payable to the order of such Lender in the maximum principal amount equal to the
Commitment of such Lender (or, if less, in the aggregate unpaid principal amount
of all of the Advances made by such Lender) on the Final Repayment Date or such
other earlier date as is specified herein. Principal of the Advances shall be
paid from time to time as set forth in Sections 2.03 and 3.03. The Agent shall
record in its records the date and amount of each Advance made hereunder, the
interest rate with respect thereto, each repayment thereof, and other
information it deems appropriate. The aggregate unpaid principal amount so
recorded shall be presumptive evidence of the principal amount owing and unpaid
on each Note. The failure so to record any such information or any error in so
recording any such information shall not, however, limit or otherwise affect the
actual obligations of the Borrower hereunder or under the Notes to repay the
principal amount of all Advances, together with all interest accruing thereon,
as set forth in this Agreement.
----------
(6) CONFIDENTIAL TREATMENT has been requested for the redacted portion pursuant
to Rule 406 of the Securities Act of 1933, as amended. The confidential redacted
portions have been filed separately with the United State Securities and
Exchange Commission.
6
SECTION 2.02. Interest on Advances.
(a) Interest Rates. Each Advance shall accrue interest on each day such
Advance is outstanding during each Determination Period at [CONFIDENTIAL](7) per
annum over LIBOR for such Determination Period, or if LIBOR is not available,
the Base Rate, which interest shall be payable as set forth in clause (b) below
based upon calculations performed by the Agent; provided, however that for any
day while an Event of Default exists the rate of interest on each Advance shall
be an interest rate equal to [CONFIDENTIAL](8) per annum above the Base Rate in
effect on such day.
The interest rate on any Advance bearing interest by reference to LIBOR
shall be reset on the first day of each Determination Period and remain fixed
for such Determination Period. The interest rate on any Advance bearing interest
at the Base Rate shall change simultaneously with each change in the Base Rate.
The Agent shall promptly notify the Borrower of each change of LIBOR or the Base
Rate. One Business Day prior to each Determination Date, the Agent shall deliver
to the Borrower a written calculation of interest for the Determination Period
ending on (but excluding) such Determination Date.
(b) Interest Settlement Dates. Interest accrued on each Advance shall be
paid on each of:
(i) the Final Repayment Date;
(ii) each Settlement Date;
(iii) the date of any prepayment, in whole or in part, of the
outstanding principal of such Advance pursuant to Section 1.04 or Sections
2.03(b) through (f) to the extent of the amount being prepaid; and
(iv) the date on which any Advance is accelerated pursuant to
Section 8.02.
----------
(7), (8) CONFIDENTIAL TREATMENT has been requested for the redacted portion
pursuant to Rule 406 of the Securities Act of 1933, as amended. The confidential
redacted portions have been filed separately with the United State Securities
and Exchange Commission.
7
SECTION 2.03. Repayments and Prepayments. The Borrower shall repay in full
the unpaid principal amount of each Advance on the earlier to occur of (i) the
date such amount is declared to be accelerated pursuant to Section 8.02 or (ii)
Final Repayment Date. Prior thereto, the Borrower:
(a) may, on any Business Day (but in any event, except as provided in
clauses (b) through (f) below, no more frequently than three times in any
calendar month) with respect to any Advance, make a voluntary prepayment, in
whole or in part, of the outstanding principal amount of any such Advance plus
accrued and unpaid interest thereon; provided, however, that
(i) all such voluntary prepayments shall require at least two
Business Days' (but no more than five Business Days') prior written notice
to the Agent; and
(ii) all such voluntary partial prepayments shall be in a minimum
amount of $1,000,000 and an integral multiple of $500,000 or an amount
equal to the remaining Advances outstanding together will all other
amounts owed by the Borrower hereunder and under the other Transaction
Documents;
(b) shall, (i) on each date when the Total Outstanding Advances exceed the
aggregate of the Lenders' Commitments or (ii) on each Settlement Date for which
the Total Outstanding Advances exceed the Borrowing Base as of the last day of
the corresponding Settlement Period [CONFIDENTIAL](9) make a prepayment of the
Advances in an amount equal to such excess;
(c) shall, upon any breach in any material respects of the representations
and warranties made or deemed made by the Borrower pursuant to Section 6.01(g)
or (o) or any breach in any material respects of the covenants of the Borrower
made pursuant to Section 7.03, to the extent that such breach has not been cured
within five (5) days following the discovery thereof by the Borrower or receipt
by the Borrower of written notice from any Lender or the Agent of such breach,
prepay the Advances in an amount equal to the outstanding Principal Balance of
the Pledged Student Loan(s) as to which such representation and warranty or
covenant relates; provided that any prepayment related to a breach of the
representation and warranties made or deemed made by the Borrower in Section
6.01(o) shall be made on the Settlement Date succeeding the date that is five
(5) days following the discovery thereof by the Borrower or receipt by the
Borrower of written notice from any Lender or the Agent of such breach;
(d) shall, to the extent there is a release of Collateral pursuant to
Section 1.04, on the date of such release, make a prepayment in the amount set
forth in Section 1.04(iii); and
(e) shall, on each Settlement Date, prepay the Advances in an amount equal
to the outstanding Principal Balance of each Pledged Student Loan that has
become a Defaulted Student Loan during the applicable Settlement Period.
----------
(9) CONFIDENTIAL TREATMENT has been requested for the redacted portion pursuant
to Rule 406 of the Securities Act of 1933, as amended. The confidential redacted
portions have been filed separately with the United State Securities and
Exchange Commission.
8
Each such prepayment shall be subject to the payment of any amounts
required by Section 4.03 resulting from a prepayment or payment of an Advance
prior to the Settlement Date with respect thereto. All of the foregoing
repayments and prepayments shall be deposited into the Collection Account and
applied to the Advances of the Lenders based upon their Pro Rata Share thereof.
Upon the Agent's receipt of a prepayment of Advances pursuant to
subsections (c) or (e) of this Section 2.03 related to any Pledged Student Loan,
(i) all right, title and interest of the Agent in, to and under such Pledged
Student Loan shall terminate and revert to the Borrower, its successors and
assigns, (ii) the right, title and interest of the Agent in such Pledged Student
Loan shall thereupon cease, terminate and become void and (iii) thereafter, such
Pledged Student Loan shall no longer be a Pledged Student Loan. The Lenders and
the Agent agree and acknowledge that no releases of financing statements or
other recorded evidence of the right, title and interest of the Agent shall be
necessary to effect the release thereof; provided, however, that the Agent shall
promptly authorize the filing of any such releases of financing statements and
other evidence of termination of the Lien hereof with respect to Pledged Student
Loans released pursuant to this section as the Borrower may reasonably require..
Any Person who purchases such Pledged Student Loan following the release thereof
in accordance with the provisions of this Agreement shall be entitled to rely on
this provision. Promptly upon such release made in accordance with this Section
2.03, the Agent shall (i) provide written notice to the Servicer, the Custodian
and the Paying Agent stating that its lien upon, and security interest in, the
Student Loans identified in such written notice has terminated and (ii) return
the Warehouse Trust Receipt relating to the released Pledged Student Loans to
the Custodian as provided in Section 6 of the Custodial Agreement. The Borrower,
each Lender or the Agent, as the case may be, shall inform the other parties to
this Agreement promptly, in writing, upon the discovery of any event that would
give rise to a prepayment obligation pursuant to subsections (b), (c) or (e) of
this Section 2.03.
SECTION 2.04. General Procedures. No outstanding principal of an Advance
shall be considered reduced by any allocation, setting aside or distribution of
any portion of Collections unless such Collections shall have been actually
delivered to the Agent for the purpose of paying such principal. No principal or
interest shall be considered paid by any distribution of any portion of
Collections if at any time such distribution is rescinded or must otherwise be
returned for any reason. No provision of this Agreement shall require the
payment or permit the collection of interest in excess of the maximum permitted
by applicable law.
SECTION 2.05. Characterization of Note. The Borrower, the Agent and each
Lender agree to treat each Note for federal, state and local income and
franchise tax purposes, and for book purposes, as indebtedness only of the
Borrower.
SECTION 2.06. Taxes.
(a) All payments made by the Borrower under this Agreement shall be made
free and clear of, and without deduction or withholding for or on account of,
any present or future income, stamp or other taxes, levies, imposts, duties,
charges, fees, deductions or withholdings, now or hereafter imposed, levied,
collected, withheld or assessed by any Governmental Authority, excluding net
income taxes and franchise taxes (imposed in lieu of net income taxes) imposed
on the Agent or any Lender as a result of a present or former connection between
the Agent or such Lender and the jurisdiction of the Governmental Authority
imposing such tax or any political subdivision or taxing authority thereof or
therein (other than any such connection arising solely from the Agent or such
Lender having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement or any other Transaction Document)
(collectively, the "Excluded Taxes"). If any such non-excluded taxes, levies,
imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded
Taxes") or Other Taxes are required to be withheld from any amounts payable to
the Agent or any Lender hereunder, the amounts so payable to the Agent or such
Lender shall be increased to the extent necessary to yield to the Agent or such
Lender (after payment of all Non-Excluded Taxes and Other Taxes) interest or any
such other amounts payable hereunder at the rates or in the amounts specified in
this Agreement; provided, however, that the Borrower shall not be required to
increase any such amounts payable to any Lender with respect to any Non-Excluded
Taxes that are United States withholding taxes imposed on amounts payable to
such Lender at the time such Lender becomes a party to this Agreement, except to
the extent that such Lender's assignor (if any) was entitled, at the time of the
assignment, to receive additional amounts from the Borrower with respect to such
Non-Excluded Taxes pursuant to this paragraph.
9
(b) In addition, the Borrower shall pay to the relevant Governmental
Authority in accordance with applicable law all taxes, levies, imposts,
deductions, charges, assessments or fees of any kind (including but not limited
to any current or future stamp or documentary taxes or any other excise or
property taxes, charges or similar levies, but excluding Non-Excluded Taxes and
Excluded Taxes) imposed upon the Agent or such Lender that arises from any
payment made hereunder or from the execution, delivery, or registration of or
otherwise similarly with respect to, this Agreement ("Other Taxes"); provided
that the Agent or such Lender, as applicable, shall give the Borrower 30 days
prior written notice of any claim for payment of Other Taxes, which notice
includes reasonable details describing such Other Taxes.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by the
Borrower, within sixty (60) days thereafter the Borrower shall send to the Agent
for its own account or for the account of the Agent or relevant Lender, as the
case may be, a certified copy of an original official receipt received by the
Borrower showing payment thereof. If the Borrower reasonably believes that any
Non-Excluded Taxes or Other Taxes arising out of this Agreement are not
correctly or legally asserted by the relevant Governmental Authority, the
Borrower may, within 30 days of receipt of request from the relevant
Governmental Authority for payment of the Non-Excluded Tax or Other Tax, request
that the Lender provide it, within 30 days of the request, with an opinion from
an independent law firm or accounting firm acceptable to both the Borrower and
the Lender, to the effect that the item of Non Excluded Tax or Other Tax is
correctly and legally asserted. The Borrower agrees to indemnify the Agent and
each Lender from and against the full amount of the Non-Excluded Taxes and Other
Taxes arising out of this Agreement (whether directly or indirectly) imposed
upon or paid by the Agent or such Lender and any liability (including penalties,
interest, and expenses arising with respect thereto), in case such an opinion is
provided.
(d) Each Lender (or transferee) that is not a "U.S. Person" as defined in
section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver to the
Borrower and the Agent two copies of either U.S. Internal Revenue Service form
W-8BEN or form W-8ECI (as applicable), or, in the case of a Non-U.S. Lender
claiming exemption from the withholding of U.S. federal income tax under Section
871(h) or 881(c)(3)(A) of the Code with respect to payments of "portfolio
interest", a certificate representing that such Lender is not (i) a "bank" for
purposes of Section 881(c) of the Code, (ii) a ten-percent shareholder of the
Borrower (within the meaning of Section 871(h)(3)(B) of the Code) or (iii) a
controlled foreign corporation (as determined in Code Section 957(a)) related to
the Borrower (within the meaning of Section 864(d)(4) of the Code), and a Form
W-8BEN, or any subsequent versions thereof or successors thereto, in all cases
properly completed and duly executed by such Non-U.S. Lender, claiming complete
exemption from, or a reduced rate of, withholding of U.S. federal income tax on
all payments by the Borrower under this Agreement. Such forms shall be delivered
by each Non-U.S. Lender at least (5) five Business Days before the date of the
initial payment to be made pursuant to this Agreement by the Borrower to such
Lender. In addition, each Non-U.S. Lender shall deliver such forms promptly upon
the obsolescence or invalidity of any form previously delivered by such Non-U.S.
Lender. Each Non-U.S. Lender shall promptly notify the Borrower at any time it
determines that it is no longer in a position to provide any previously
delivered certificate to the Borrower (or any other form of certification
adopted by the U.S. taxing authorities for such purpose). Notwithstanding any
other provision in this paragraph, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this paragraph that such Non-U.S. Lender is not
legally able to deliver.
10
(e) A Lender which is entitled to an exemption from or reduction of
non-U.S. withholding tax under the law of the jurisdiction in which the Borrower
is located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Agent), at the time or times prescribed by the applicable law or reasonably
requested by the Borrower, such properly completed and executed documentation
prescribed by applicable law as will permit such payments to be made without
withholding or at a reduced rate, provided that such Lender is legally entitled
to complete, execute and deliver such documentation and in such Lender's
judgment such completion, execution or submission would not materially prejudice
the legal position of such Lender.
(f) In cases in which the Borrower makes a payment under this Agreement to
a U.S. Person with knowledge that such U.S. Person is acting as an agent for a
foreign person, the Borrower will not treat such payment as being made to a U.S.
Person for purposes of Treas. Reg. ss. 1.1441-1(b)(2)(ii) (or a successor
provision) without the express written consent of such U.S. Person.
(g) The agreements in this Section shall survive the termination of this
Agreement and the payment of all amounts payable hereunder.
11
ARTICLE III
SETTLEMENTS
SECTION 3.01. Accounts; Investments by Agent.
(a) Accounts. On or before the first Borrowing Date, the Borrower shall
establish, in the name of the Agent, for the benefit of the Lenders to the
extent of their interests therein as provided herein, the Disbursement Account,
the Collection Account and the Reserve Account, which accounts shall be
segregated accounts maintained at the Paying Agent or another Qualified
Institution approved by the Agent. The Reserve Account shall include the
Origination Fee Subaccount. Each Account shall be subject to the sole dominion
and control (as defined in Section 9-104 of the UCC) of the Agent and the
Borrower shall have no withdrawal rights therefrom. In furtherance of the
foregoing, the Borrower and the Agent agree to enter into the Paying Agency
Agreement with respect to the Accounts as of the date hereof.
Each of the Agent and Paying Agent shall, upon receipt, deposit into such
Accounts all amounts received by it which are required to be deposited therein
in accordance with the provisions hereof. All such amounts and all investments
made with such amounts, including all income and other gains from such
investments, shall be held by the Paying Agent in trust for the benefit of the
Agent in such Accounts as part of the Collateral as herein provided, subject to
withdrawal in accordance with, and for the purposes specified in the provisions
of, this Agreement and the Paying Agency Agreement.
(b) Reserved.
(c) Investments. Amounts in the Reserve Account, the Disbursement Account
and the Collection Account shall be invested and reinvested by the Paying Agent
in accordance with the terms of the Paying Agency Agreement. All income or other
gains from the investment of moneys deposited in the Accounts shall be deposited
by the Paying Agent in the Collection Account upon receipt in accordance with
the terms of the Paying Agency Agreement and shall be deemed to constitute a
portion of the Available Funds for the related Settlement Date. Subject to the
foregoing sentence and the other provisions of this Agreement, all Investment
Earnings shall be for the account of the Borrower and the Borrower agrees to
report as its income for financial reporting and tax purposes (to the extent
reportable) all Investment Earnings on amounts in the Accounts.
(d) Agent Not Liable. The Agent shall not in any way be held liable by
reason of any insufficiency in the Accounts resulting from losses on investments
in Eligible Investments made both (i) pursuant to a Borrower Order reasonably
believed to be genuine and correct and to have been signed or sent by the proper
Person and (ii) in accordance with the provisions of this Section 3.01 (but the
institution serving as Agent shall at all times remain liable for its own debt
obligations, if any, constituting part of such investments).
12
SECTION 3.02. Collection of Moneys. If at any time the Borrower shall
receive any Collections on or in respect of any Pledged Student Loan, it shall
hold such Collections for the benefit of the Agent (for the benefit of the
Secured Parties), shall segregate such payment from the other property of the
Borrower and shall, within two Business Days, deliver such payment in the form
received (endorsed as necessary for transfer) to the Paying Agent for deposit in
the Collection Account in accordance with Section 3.03.
SECTION 3.03. Collection Account.
(a) Deposits. The Borrower shall remit or cause to be remitted all
Collections received by it to the Collection Account no later than the close of
business on the second Business Day after receipt thereof. The Borrower shall
cause each Servicer to remit all Collections received by it to the Collection
Account within three (3) Business Days after receipt thereof. The Borrower shall
cause each Originator of Pledged Student Loans to deposit all Collections into
the Collection Account as soon as possible following the Originator's receipt
thereof and in accordance with the terms of the applicable Purchase and Sale
Agreement. Each of the Agent and the Paying Agent shall deposit into the
Collection Account on the date of receipt thereof all Collections received by it
from the Borrower, any Servicer, any Affiliate of the Borrower or otherwise.
(b) Settlement Date Procedures. Amounts on deposit on any Settlement Date
received during the immediately preceding Settlement Period in the Collection
Account and all amounts on deposit in the Reserve Account (including the
Origination Fee Subaccount) and other Available Funds shall be withdrawn from
the Collection Account and the Reserve Account by the Paying Agent (at the
written direction of the Borrower (through a Borrower Order) or, if the Borrower
fails to provide a Borrower Order or if an Event of Default has occurred and is
continuing, as directed by the Agent) on such Settlement Date, in the amounts
required, and applied in the following order of priority:
first, an amount equal to Servicers' Fees for the Pledged Student
Loans with respect to such Settlement Period shall be set aside in the
Collection Account and paid ratably to each Servicer on such Settlement
Date;
second, an amount equal to the Custodian's Fees and the Paying
Agent's Fees with respect to such Settlement Period shall be set aside in
the Collection Account and paid to the Custodian and the Paying Agent,
pari passu, on such Settlement Date;
third, an amount equal to the interest accrued in respect of all
Advances during the Determination Period immediately preceding such
Settlement Date shall be set aside in the Collection Account and paid to
the Agent for the account of the Lenders on such Settlement Date;
fourth, an amount equal to all Fees accrued (or to be accrued)
during such Settlement Period (that have not been paid pursuant to clauses
first and second of this Section 3.03(b)), if any, shall be set aside in
the Collection Account and paid to the Agent for the account of the
Lenders or any other intended recipient of such Fees on such Settlement
Date;
13
fifth, an amount equal to the principal portion of the prepayments
made or required to be made pursuant to Section 2.03 with respect to such
Settlement Period shall be applied to the payment of the outstanding
principal amount of the Advances;
sixth, (i) during the Revolving Period, to the Agent for the account
of the Lenders an amount equal to the Principal Distribution Amount for
such Settlement Period to be applied to the payment of the outstanding
principal amount of the Advances, and (ii) during the Liquidation Period,
to the Agent for the account of the Lenders all remaining amounts up to,
and to be applied to the payment of, the outstanding principal amount of
the Advances;
seventh, an amount equal to any other amounts due and owing to the
Agent, any Affected Party, any Indemnified Party, the Lenders or any other
Secured Party pursuant to this Agreement, the other Transaction Documents
and in respect of any other Secured Obligations shall, in each case, be
set aside in the Collection Account and paid to the Agent, such Affected
Party, such Indemnified Party, the Lenders or the applicable Secured
Parties as the case may be, when due in accordance with this Agreement and
the other Transaction Documents;
eighth, during the Revolving Period, to the Agent for deposit to the
Reserve Account in an amount equal to the amount by which the balance in
the Reserve Account is less than the Reserve Account Minimum Balance; and
ninth, so long as no Event of Default or Unmatured Event of Default
shall have occurred and be continuing, all remaining amounts shall be
released to the Borrower.
(c) Shortfall Amount. The Borrower shall notify the Agent in writing on or
before each Determination Date if the funds to be applied pursuant to Section
3.03(b) on the related Settlement Date will be insufficient to pay in full the
amounts required to be paid pursuant to clauses first through eighth of Section
3.03(b) (the amount by which such funds are insufficient being the "Shortfall
Amount"). The Borrower shall, not later than such Determination Date, deposit
into the Collection Account funds equal to the Shortfall Amount, and such funds
shall be deemed to be Available Funds and shall be withdrawn from the Collection
Account on such Settlement Date and applied in accordance with Section 3.03(b).
In addition, if despite giving effect to the foregoing a Shortfall Amount exists
on any Settlement Date, each Lender may, in its sole discretion, make Advances
in an aggregate amount up to all amounts described in the first and second
clauses of Section 3.03(b) which would otherwise remain unpaid after the
application of funds from Collections and Available Funds (including funds
deposited by the Borrower pursuant to the foregoing sentence) pursuant to
Section 3.03(b). The proceeds of such Advances shall be deposited by the Agent
into the Collection Account and shall be deemed to constitute Available Funds to
be withdrawn from the Collection Account on such Settlement Date and applied in
accordance with Section 3.03(b).
(d) Final Payout Date. On the Final Payout Date, (i) any funds remaining
in the Reserve Account shall be deposited into the Collection Account and
distributed pursuant to the provisions of Section 3.03(b) and (ii) any funds
remaining in the Collection Account after giving effect to the provisions of
Section 3.03(b) shall be paid to the Borrower.
14
SECTION 3.04. Reserve Account and Origination Fee Subaccount.
(a) Establishment of Reserve Account. On and prior to the initial
Borrowing Date, the Borrower shall deposit into the Reserve Account an amount
equal to the Reserve Account Minimum Balance. Thereafter, the Borrower shall
deposit (i) to the Reserve Account, all amounts required to be deposited therein
pursuant to clause eighth of Section 3.03(b) and (ii) [CONFIDENTIAL](10).
(b) [CONFIDENTIAL](11).
(c) Withdrawals from Reserve Account. On each Settlement Date, the Paying
Agent shall withdraw from the Reserve Account (including the Origination Fee
Subaccount) the amounts on deposit therein and treat such amounts as Collections
and apply them as set forth in Section 3.03(b) to the extent such withdrawal is
necessary to pay the amounts set forth in Section 3.03(b).
(d) Distribution on Final Payout Date. On the Final Payout Date, amounts
remaining on deposit in the Reserve Account shall be deposited into the
Collection Account and distributed pursuant to the provisions of Section
3.03(b).
SECTION 3.05. Reserved.
SECTION 3.06. Payments and Computations, Etc.
(a) Payments. All amounts to be paid or deposited by the Borrower to the
Agent or Lenders hereunder shall be paid or deposited in accordance with the
terms hereof no later than 1:00 p.m. (New York City time) on the day when due in
lawful money of the United States of America in same day funds, to the Agent's
Account.
(b) Late Payments. The Borrower shall, to the extent permitted by law and
subject to Section 2.04, pay to the Lenders interest on all amounts not paid or
deposited by the Borrower when due to the Lenders hereunder at 2% per annum
above the interest rate otherwise applicable to such amount pursuant to this
Agreement or, if no interest rate is otherwise applicable to such amount
pursuant to this Agreement, at 2% per annum above the Base Rate, payable on
demand.
(c) Method of Computation. All computations of interest, any fees payable
under Section 4.01 and any other fees payable by the Borrower to Lenders or the
Agent in connection with Borrowings hereunder shall be calculated by the Agent
on the basis of a year of 360 days (or in the case of interest calculated by
reference to the Base Rate, 365 or 366 days, as applicable), for actual days
elapsed.
(d) Agent's and Paying Agent's Reliance. In making the deposits,
distributions and calculations required to be made by it hereunder, each of the
Agent and Paying Agent shall be entitled to rely, in good faith, on information
supplied to it by the Borrower. The Borrower agrees to provide to the Agent and
Paying Agent written instructions with respect to such distributions by 1:00
p.m. (New York City time) at least two Business Days prior to each Settlement
Date.
----------
(10), (11) CONFIDENTIAL TREATMENT has been requested for the redacted portion
pursuant to Rule 406 of the Securities Act of 1933, as amended. The confidential
redacted portions have been filed separately with the United State Securities
and Exchange Commission.
15
SECTION 3.07. Obligations with respect to Certain Releases of Funds from
the Collection Account; Obligation to Prepare Corrected Monthly Reports. To the
extent that any amounts were released to the Borrower from the Collection
Account on any Settlement Date based on one or more inaccurate Monthly Reports,
the Borrower hereby agrees (1) that such amounts constitute proceeds of
Collateral which were improperly received by the Borrower and (2) to deposit
immediately available funds into the Collection Account, within two Business
Days after the Borrower is first aware or has been provided notice of such
inaccuracy, in an amount equal to any funds that were released to the Borrower
in reliance on such inaccurate Monthly Report(s) (and that would not have been
released to the Borrower on a subsequent Settlement Date pursuant to an accurate
Monthly Report) such that the aggregate amount of funds retained by the Borrower
is equal to the aggregate amount of funds that would have been released to the
Borrower had all Monthly Reports been accurate. In the event that any Monthly
Report contains mistakes as to (i) the Coverage Condition, Excess Spread or
Excess Concentration Amount or (ii) any other information that resulted in funds
being released to the Borrower that would not have been released to the Borrower
pursuant to an accurate Monthly Report, the Borrower will provide a corrected
report within two (2) Business Days after becoming first aware or being notified
of such mistakes.
SECTION 3.08. Disbursement Account.
(a) Establishment of Disbursement Account. On the initial Borrowing Date
and on each Borrowing Date thereafter, funds from the Lenders' Advances shall be
deposited into the Disbursement Account by the Agent.
(b) Withdrawals from Disbursement Account. The Borrower shall, with the
written consent of the Agent, which consent shall be evidenced by the Agent
countersigning the relevant Borrower Order, direct the Paying Agent as to the
disbursement of all funds on deposit in the Disbursement Account; provided, that
any funds disbursed from the Disbursement Account shall be disbursed directly to
the Person entitled to such funds (which (1) in the case of the acquisition of
Pledged Student Loans, will be the seller or other transferor thereof and (2) in
the case of the origination of Pledged Student Loans, will be the Person
designated by the Verification Agent (or, if the Agent and Lenders have agreed
in writing that the Borrower is no longer obligated to maintain in effect the
Verification Agent Agreement, the Borrower) to the Agent as the entity to which
the proceeds of such loans are to be disbursed) or, to the extent the Borrower
has previously paid such amounts and is seeking reimbursement therefor, to the
Borrower upon the Borrower furnishing the Agent with satisfactory evidence of
such payment. All funds deposited into the Disbursement Account that constitute
disbursements of Pledged Student Loans that were subsequently rescinded shall be
remitted by the Paying Agent to the Collection Account no later than the
Determination Date after such rescission and shall constitute Available Funds to
be distributed on the related Settlement Date in accordance with the provisions
of Section 3.03(b).
16
(c) Distribution on Final Payout Date. On the Final Payout Date, amounts
remaining on deposit in the Disbursement Account shall be remitted to the
Collection Account for distribution in accordance with the provisions of Section
3.03(b).
ARTICLE IV
FEES AND YIELD PROTECTION
SECTION 4.01. Fees. The Borrower agrees to pay to the Agent, for the
account of the Lenders, in such proportion as the Agent and each such Lender
shall agree, a fee (the "Commitment Fee"), payable on the Closing Date as set
forth in the Fee Letter. In addition, the Borrower agrees to pay, and shall pay,
to the Agent for its own account such other fees as are specified in the
Supplemental Agreement.
SECTION 4.02. Increased Costs. If, due to either (i) the introduction
after the Closing Date of, or any change after the Closing Date in, the
interpretation or administration of any law, rule or regulation, or (ii) the
compliance by any Lender with any guideline or request promulgated or made after
the Closing Date from any central bank or other governmental authority (whether
or not having the force of law), which (x) subjects or would subject such Lender
to any fee, expense, charge or other increased cost based upon the existence of
such Lender's Commitment hereunder and other commitments of this type or (y)
affects or would affect the amount of capital required or expected to be
maintained by such Lender or any corporation controlling such Lender and the
amount of such capital is increased by or based upon the existence of such
Lender's Commitment hereunder and other commitments of this type, then, in each
case, upon demand by such Lender, the Borrower shall pay to such Lender, from
time to time as specified by such Lender, additional amounts ("Increased Costs")
sufficient to compensate such Lender or such corporation, in light of such
circumstances, to the extent that such Lender reasonably determines such fee,
expense, charge or increase in cost or capital to be allocable to the existence
of such Lender's Commitment. A certificate as to such amounts submitted to the
Borrower by such Lender shall, in the absence of manifest error, be conclusive
and binding for all purposes. Notwithstanding the foregoing, if Increased Costs
exceed $165,000 in any year and the Borrower provides evidence reasonably
satisfactory to the Agent and Lenders that other lenders in the syndicated loan
market similarly situated to the Lenders are not passing on to borrowers costs
similar to such Increased Costs, then the Borrower may, by giving prior written
notice to the Agent and the Lenders, request that the Facility Termination Date
occur on the date specified in such notice (which date shall be at least 30
Business Days after the date on which such notice is delivered). Upon such
request and prior to the requested Facility Termination Date, the Agent and the
Lenders may reduce Increased Costs for such year to an amount less than or equal
to $165,000 by giving written notice to the Borrower thereof, otherwise the
Facility Termination Date requested by the Borrower shall be the Facility
Termination Date.
SECTION 4.03. Funding Indemnification. If any payment or settlement of an
Advance occurs on a date which is not the last day of the applicable Settlement
Period, whether because of acceleration, prepayment, or otherwise, or an Advance
is not made on the date specified by the Borrower for any reason other than
default by the Lenders, the Borrower indemnifies each Lender for any loss or
cost incurred by it resulting therefrom, including, without limitation, any
Breakage Cost or any other loss or cost in liquidating or employing deposits
acquired to fund or maintain the Advance. The Borrower shall not be responsible
for any Breakage Costs or any other loss, cost, or expenses arising as the time
of, and arising solely as a result of, any assignment made pursuant to Section
10.01 and the reallocation of any portion of the Advances of the Lender making
such assignment unless, in each case, such assignment is requested by the
Borrower.
17
ARTICLE V
CONDITIONS OF BORROWINGS
SECTION 5.01. Closing Date Conditions Precedent. The initial Borrowing is
subject to the condition precedent that the Agent shall have received, on or
before the Closing Date (unless otherwise indicated) and, if requested by the
Agent, on any subsequent date on or prior to the initial Borrowing, in form and
substance satisfactory to the Agent and the Lenders:
(a) A copy of the resolutions of the Board of Directors of the Borrower
approving this Agreement and the other Transaction Documents to which the
Borrower is a party to be delivered by it hereunder and the transactions
contemplated hereby, certified by its secretary or assistant secretary;
(b) A good standing certificate for the Borrower issued by the State of
Delaware and a certificate of qualification to do business in the States of
Colorado, Florida, Georgia, Illinois, Indiana, Massachusetts, Maryland,
Michigan, Minnesota, North Carolina, New Jersey, New York, Tennessee, Texas,
Virginia, Washington and Wisconsin issued by the Secretary of State of each such
State, each as of a recent date acceptable to the Agent and the Lenders;
(c) A certificate of the secretary or assistant secretary of the Borrower
certifying the names and true signatures of the officers authorized on its
behalf to sign the Transaction Documents to be delivered by it (on which
certificate the Agent and Lenders may conclusively rely until such time as the
Agent and Lenders shall receive from the Borrower a revised certificate meeting
the requirements of this clause (c)):
(d) The Certificate of Incorporation of the Borrower, together with such
amendments thereto providing for a limited corporate purpose, an independent
director and other provisions relating to bankruptcy remoteness as are
satisfactory to the Agent and Lenders, duly certified by the Secretary of State
of Delaware and by the secretary or assistant secretary of the Borrower, as of a
recent date acceptable to the Agent and the Lenders, together with a copy of the
bylaws of the Borrower, duly certified by the secretary or assistant secretary
of the Borrower;
(e) A copy of the resolutions of the Board of Directors of the Parent
approving each Transaction Document to which the Parent is a party and the
transactions contemplated thereby, certified by its secretary or assistant
secretary;
18
(f) A good standing certificate for the Parent issued by the State of
Delaware and a certificate of qualification to do business in the States of
California and New York issued by the Secretary of State of each such State,
each as of a recent date acceptable to the Agent and the Lenders;
(g) A certificate of the secretary or assistant secretary of the Parent
certifying the names and true signatures of the officers authorized on its
behalf to sign the Transaction Documents to be delivered by it (on which
certificate the Agent and Lenders may conclusively rely until such time as the
Agent and Lenders shall receive from the Parent a revised certificate meeting
the requirements of this clause (g));
(h) The Certificate of Incorporation of the Parent, duly certified by the
Secretary of State of Delaware and by the secretary or assistant secretary of
the Parent, as of a recent date acceptable to the Agent and the Lenders,
together with a copy of the bylaws of the Parent, duly certified by the
secretary or assistant secretary of the Parent;
(i) A copy of the resolutions of the Board of Directors of Holdco
approving the Transaction Documents to which Holdco is a party and the
transactions contemplated thereby, certified by its secretary or assistant
secretary;
(j) A good standing certificate for Holdco issued by the State of Delaware
and a certificate of qualification to do business in the States of California
and New York issued by the Secretary of State of each such State, each as of a
recent date acceptable to the Agent and the Lenders;
(k) A certificate of the secretary or assistant secretary of Holdco
certifying the names and true signatures of the officers authorized on its
behalf to sign the Transaction Documents to be delivered by it (on which
certificate the Agent and Lenders may conclusively rely until such time as the
Agent and Lenders shall receive from Holdco a revised certificate meeting the
requirements of this clause (k)):
(l) The Certificate of Formation of Holdco, duly certified by the
Secretary of State of Delaware and by the secretary or assistant secretary of
the Holdco, as of a recent date acceptable to the Agent and the Lenders,
together with a copy of the limited liability company agreement of Holdco, duly
certified by the secretary or assistant secretary of Holdco;
(m) Financing statements on Form UCC-1 (i) (A) naming the Borrower as the
debtor and the Agent, for the benefit of the Secured Parties, as the secured
party, (B) naming Holdco as the debtor and the Agent, for the benefit of the
Secured Parties, as the secured party, and (C) other similar instruments or
documents, in proper form for filing in the offices in which filings are
necessary or, in the opinion of the Agent or any Lender, desirable under the UCC
or any comparable law of all appropriate jurisdictions to perfect the Agent's
security interest in the Collateral and the "Pledged Property" (as defined in
the Pledge Agreement), for the benefit of the Secured Parties and (ii) if
applicable, on or after the Closing Date continuation statements with respect to
the financing statements described in clause (i);
19
(n) A search report as of a recent date acceptable to the Agent and the
Lenders provided in writing to the Agent by the Borrower, in a form acceptable
to the Agent and the Lenders, listing all effective financing statements that
name the Borrower or Holdco as debtor and that are filed in the jurisdictions in
which filings were made pursuant to subsection (n) above and in such other
jurisdictions that Agent or any Lender shall reasonably request, together with
copies of such financing statements (none of which shall cover any Collateral or
"Pledged Property" (as defined in the Pledge Agreement) or if so covered, the
Agent shall have received duly executed termination statements with respect
thereto);
(o) (i) Favorable opinions of counsel to the Borrower in form and
substance reasonably satisfactory to the Agent and the Lenders, including
(without limitation) general corporate matters, security interest opinions,
non-contravention opinions, non-consolidation of the Borrower and Holdco with
the Parent and (ii) a favorable opinion of counsel to the Parent in form and
substance reasonably satisfactory to the Agent and the Lenders with respect to
securities law matters relating to the Parent's preferred stock offering;
(p) Affidavits of officers of the Parent attesting to (i) the separateness
of the Parent from Holdco and the Borrower and certain facts related thereto and
(ii) their understanding that the Borrower has received more favorable terms and
conditions under this Agreement because of such separateness;
(q) (i) All fees and expenses then due hereunder and presented to the
Borrower shall have been paid in full including, without limitation, legal fees
and expenses of Sidley ▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇ LLP, counsel to the Agent, and legal
fees and expenses of ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, McGuireWoods LLP and ▇▇▇▇▇▇ ▇▇▇▇, LLP,
counsel to the Borrower, and (ii) all fees, expenses or other payments to
consultants or other professional advisors to the Borrower shall have been paid
in full unless specific written arrangements for the payment of such fees,
expenses or other payments at a later date shall have been made;
(r) The Notes, duly executed by the Borrower;
(s) A copy of the Custodial Agreement, duly executed by the Borrower and
the Custodian and certified by the Borrower as being a true and correct copy
thereof and a Servicing Agreement between the Borrower and PHEAA, as Servicer,
duly executed by the Borrower, PHEAA and legal counsel to PHEAA to evidence such
counsel's approval as to the form and legality of such agreement (and which
agreement's effectiveness is subject only to receipt of the signature of the
Deputy Attorney General of the State of Pennsylvania thereon, approving such
agreement as to form and legality);
(t) A copy of this Agreement and, to the extent not otherwise specifically
referenced in this Section 5.01 or in Section 5.02, each of the other
Transaction Documents and each other document, certificate, instrument and
agreement listed on the closing list attached as Exhibit A hereto (to the extent
not previously received by the Agent), duly executed by, as applicable, the
Borrower, each Lender, the Agent and each other party thereto;
(u) Such other documents, opinions and certificates as the Lenders or the
Agent may reasonably request;
20
(v) Evidence that the Accounts have been established;
(w) An agreement by each Servicer (which may be contained in an amendment
to the applicable Servicing Agreement) pursuant to which the applicable Servicer
has agreed (A) to provide to the Agent (I) promptly upon the request of the
Agent, each financial statement required to be provided by it under the
applicable Servicing Agreement, (II) promptly upon the request of the Agent, its
annual SAS 70 report and (III) at the same time it delivers a copy of the same
to the Borrower, each notice that refers to any default by the Borrower of its
obligations under the applicable Servicing Agreement or any other event that
would allow such Servicer to terminate the applicable Servicing Agreement and
(B) that it will allow the Agent a period of at least thirty days to cure any
such default or otherwise take any action that will prevent termination of such
Servicing Agreement;
(x) Satisfactory evidence that there is no action, suit, proceeding,
inquiry or investigation at law or in equity or before or by any court, public
board or body pending or, to the knowledge of the Borrower, overtly threatened
in writing against or affecting the Borrower (x) asserting the invalidity of
this Agreement or any other Transaction Document, (y) seeking to prevent the
consummation of any of the transactions contemplated by this Agreement and the
other Transaction Documents, or (z) wherein an unfavorable decision, ruling or
finding would have a Material Adverse Effect on the Borrower or which affects,
or purports to affect, the validity or enforceability against the Borrower of
any Transaction Document; and
(y) Satisfactory evidence that no statute, rule, regulation or order shall
have been enacted, entered or deemed applicable by any government or
governmental or administrative agency or court that would make the transactions
contemplated by any of the Transaction Documents illegal or otherwise prevent
the consummation thereof.
SECTION 5.02. Conditions Precedent to Initial Borrowing. The initial
Borrowing is subject to the further condition precedent that the Agent shall
have received, on or before the date of such initial Borrowing (unless otherwise
indicated), in form and substance satisfactory to the Agent and the Lenders:
(a) The Servicing Agreement referred to in Section 5.01(s), duly executed
by the Deputy Attorney General of the State of Pennsylvania to evidence its
approval of such agreement as to form and legality;
(b) A favorable opinion of counsel to PHEAA, in its capacity as a
Servicer, in form and substance reasonably satisfactory to the Agent;
(c) The Verification Agent Agreement, duly executed by the Borrower and
the Verification Agent, and certified by the Borrower as being a true and
correct copy thereof;
(d) Evidence that at the initial Borrowing (after giving effect to
deposits into the Reserve Account pursuant to Section 3.04(a) hereof on such
date) the amount on deposit in the Reserve Account is at least equal to the
Reserve Account Minimum Balance;
21
(e) The Schedule of Pledged Student Loans with respect to each Student
Loan that is to be acquired or otherwise funded with the proceeds of such
initial Borrowing and the Agent shall have completed its due diligence with
respect to each of the Student Loans listed on the Schedule of Pledged Student
Loans and shall not have rejected any of the Student Loans listed on the
Schedule of Pledged Student Loans as not being Eligible Student Loans;
(f) A legal opinion of ▇▇▇▇▇▇ ▇▇▇▇ LLP, counsel to the Borrower, in form
and substance reasonably satisfactory to the Agent, concluding that (i) the
Borrower is permitted under all applicable laws to be a lender of Student Loans
[CONFIDENTIAL](12) and (ii) that the Underwriting Guidelines and form of the
Student Loan Notes comply with all consumer protection and other applicable
laws;
(g) A Warehouse Trust Receipt from the Custodian acknowledging that it is
holding, as bailee on behalf of the Agent, an original Student Loan Note with
respect to each Pledged Student Loan; and
(h) A pro-forma settlement statement prepared in respect of the initial
Borrowing (that shall include a pro forma Coverage Condition Certificate and a
certification that all representations and warranties hereunder are true and
correct, and shall include, or be accompanied by a listing of Pledged Student
Loans).
By accepting the proceeds of the initial Borrowing, the Borrower shall be
deemed to have represented and warranted that all of the conditions precedent to
the commencement of the Revolving Period have been met.
SECTION 5.03. Conditions Precedent to All Borrowings. Each Borrowing
(including the initial Borrowing) shall be subject to the further conditions
precedent that on the date of such Borrowing the following statements shall be
true (or will be true immediately after using the proceeds of such Borrowing for
the purpose or purposes for which such proceeds were borrowed) and the Borrower
(by accepting the proceeds of such Borrowing) shall be deemed to have certified
that all such conditions precedent are satisfied at such time:
(a) the representations and warranties contained in Section 6.01 are
correct in all material respects on and as of such day as though made on and as
of such day and shall be deemed to have been made (and to be correct in all
material respects) on such day (unless the same specifically relates to an
earlier date);
(b) no Material Adverse Change in the condition of the Borrower, the
Parent or Holdco has occurred since the Closing Date and is continuing;
(c) no event has occurred and is continuing, or would result from such
Borrowing that constitutes an Event of Default or Unmatured Event of Default;
----------
(12) CONFIDENTIAL TREATMENT has been requested for the redacted portion pursuant
to Rule 406 of the Securities Act of 1933, as amended. The confidential redacted
portions have been filed separately with the United State Securities and
Exchange Commission.
22
(d) the Agent shall have received a pro-forma Coverage Condition
Certificate, substantially in the form of Exhibit 5.03(d), executed by an
Authorized Officer of the Borrower, showing that after giving effect to each
proposed Borrowing, the Coverage Condition is met;
(e) the Commitment Termination Date shall not have occurred;
(f) the Custodian as bailee for the Agent for the benefit of the Secured
Parties, shall have received the original Student Loan Note with respect to each
of the Student Loans that will be acquired or otherwise financed with the
proceeds of such Borrowing and shall have issued a Warehouse Trust Receipt
covering such Student Loan to the Agent;
(g) all conditions precedent to the Borrower's acquisition of the Student
Loans to be acquired or otherwise funded with the proceeds of such Borrowing
(other than the payment of the purchase price therefor) shall have been
satisfied and no Purchase Termination Event shall have occurred with respect to
the seller of such Student Loans;
(h) the Agent shall have received acknowledgment of releases or
termination statements on Form UCC-3 and any other documents necessary to
evidence or release any security interest (other than that of the Agent) in the
Student Loans to be acquired or otherwise funded with the proceeds of such
Borrowing, to the extent required for any such prior security interest to be
terminated;
(i) the Borrower has paid all fees and expenses due hereunder at such
time;
(j) prior to any Borrowing with respect thereto and prior to its inclusion
in the calculation of the Coverage Condition, (A) (1) each Student Loan shall be
submitted to a Servicer to be serviced in accordance with a Servicing Agreement
in form and substance satisfactory to the Agent as approved by the Lenders, (2)
to the extent not covered by an opinion previously delivered pursuant to Section
5.01(o), the Agent shall have received an opinion letter in form and substance
and written by counsel acceptable to the Agent including, without limitation, an
opinion to the effect that each action necessary to perfect a first priority
security interest in favor of the Agent in each such Student Loan so included
and the Related Security thereto has been accomplished and (3) the Agent shall
have received such other opinions, approvals, documents and certificates with
respect to such Student Loan as the Agent and the Lenders shall reasonably
request, and (B) the Agent and Lenders have conducted such due diligence as the
Agent and Lenders shall deem necessary with respect to such Student Loan;
(k) the amount on deposit in the Reserve Account (after giving effect to
deposits into the Reserve Account pursuant to Section 1.01(b) hereof on the date
of the initial Borrowing) shall be at least equal to the Reserve Account Minimum
Balance;
(l) the Borrower shall have delivered to the Agent a copy of each Purchase
and Sale Agreement pursuant to which any Pledged Student Loan was purchased in
each case duly executed by the Borrower and each other party thereto;
(m) there is no action, suit, proceeding, inquiry or investigation at law
or in equity or before or by any court, public board or body pending or, to the
knowledge of the Borrower, overtly threatened in writing against or affecting
the Borrower (x) asserting the invalidity of this Agreement or any other
Transaction Document, (y) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement and the other Transaction Documents,
or (z) wherein an unfavorable decision, ruling or finding would have a Material
Adverse Effect on the Borrower or which affects, or purports to affect, the
validity or enforceability against the Borrower of any Transaction Document;
23
(n) no statute, rule, regulation or order shall have been enacted, entered
or deemed applicable by any government or governmental or administrative agency
or court that would make the transactions contemplated by any of the Transaction
Documents illegal or otherwise prevent the consummation thereof;
(o) the Agent shall have received from the Borrower a supplement to the
Schedule of Pledged Student Loans that provides all applicable information
required by such schedule with respect to each Student Loan that is to be
acquired or otherwise funded with the proceeds of such Borrowing and the Agent
shall have completed its due diligence with respect to each of the Student Loans
listed on such supplement and shall not have rejected any of the Student Loans
listed on such supplement as not being Eligible Student Loans;
(p) (i) the applicable Borrowing Date for such Borrowing shall occur
within 12 months after the date of each of the opinions of counsel to the
Borrower referred to in clause (i) of Section 5.01(o) or Section 5.02(f) or (ii)
the Agent and Lenders shall have received updated opinions of counsel to the
Borrower referred in clause (i) of Section 5.01(o) and Section 5.02(f) each in
form and substance reasonably satisfactory to the Agent and the Lenders, in each
case dated no more than 12 months prior to the applicable Borrowing Date for
such Borrowing; and
(q) the Borrower has delivered to the Agent appropriate wire transfer
instructions with respect to each disbursement to be made of the proceeds of
such Borrowing.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
SECTION 6.01. Representations and Warranties of the Borrower. The Borrower
represents and warrants as follows:
(a) Organization, Corporate Powers. The Borrower is a corporation duly
organized, validly existing solely under the laws of the State of Delaware, is
in good standing under the laws of the State of Delaware, has all necessary
corporate power to carry on its present business, is duly licensed or qualified
in all jurisdictions where the nature of its activities require such licensing
or qualifying, and has full power, right and authority to enter into this
Agreement, the other Transaction Documents to which it is, or will be, a party
and the transactions contemplated hereby and thereby, to issue the Note and to
perform its obligations herein and therein provided for.
24
(b) Borrower Authority, etc. The execution, delivery and performance by
the Borrower of this Agreement, the Notes and the other Transaction Documents to
which it is, or will be, a party and the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action and this
Agreement, the Notes and such Transaction Documents constitute the legal, valid
and binding obligations of the Borrower enforceable against the Borrower in
accordance with their terms, except to the extent that enforceability may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally and general principles of equity, regardless of
whether such enforceability is considered in a proceeding in equity or law.
(c) Compliance with Laws and Contracts. (i) The execution, delivery and
performance by the Borrower of this Agreement, the Notes and the other
Transaction Documents to which the Borrower is a party do not and will not (w)
conflict with, result in any material breach of any of the terms and provisions
of, nor constitute (with or without notice of lapse of time or both) a violation
of the articles of incorporation or by-laws of the Borrower, (x) violate any
material provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award to which the Borrower or its property
is subject; (y) result in a material breach of or constitute a default under the
provisions of any loan or credit agreement or any other material agreement,
lease or instrument to which the Borrower may be or is subject or by which it,
or its property, is bound; or (z) result in, or require, the creation or
imposition of any Lien on or with respect of any of the properties of the
Borrower other than the Lien in favor of the Agent provided herein; and (ii) the
Borrower is not in violation of, or in material default under, any such law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award or any such loan or credit agreement, other agreement, lease or
instrument. The Borrower is in compliance in all material respects with all
applicable federal, state and local laws and regulations thereunder including
(without limitation) the Equal Credit Opportunity Act, the Fair Debt Collection
Practices Act, the Truth in Lending Act, the Federal Trade Commission Act, the
Federal Reserve Board's Regulation B, applicable laws relating to usury,
truth-in-lending, education lending, fair credit billing, fair credit reporting,
fair debt collection practices, privacy, consumer credit protection and
disclosure, licensing and other applicable consumer credit laws and equal credit
opportunity laws.
(d) Governmental Approvals. The Borrower has obtained all authorizations,
consents, approvals, licenses (including, without limitation, appropriate
authorizations, consents and approvals and licenses, if any, permitting it to be
a lender of Student Loans under applicable law [CONFIDENTIAL](13)), exemptions
of or filings or registrations with all governmental commissions, regulatory
bodies, boards, bureaus, agencies and instrumentalities, domestic or foreign,
necessary to the conduct of its business or necessary to the valid execution,
delivery and performance by the Borrower of this Agreement, the Note and the
other Transaction Documents to which the Borrower is, or will be, a party (the
"Approvals"), and such Approvals remain in full force and effect.
----------
(13) CONFIDENTIAL TREATMENT has been requested for the redacted portion pursuant
to Rule 406 of the Securities Act of 1933, as amended. The confidential redacted
portions have been filed separately with the United State Securities and
Exchange Commission.
25
(e) Litigation. There is no action, suit, proceeding, inquiry or
investigation at law or in equity or before or by any court, public board or
body pending or, to the knowledge of the Borrower, overtly threatened in writing
against or affecting the Borrower (x) asserting the invalidity of this Agreement
or any other Transaction Document, (y) seeking to prevent the consummation of
any of the transactions contemplated by this Agreement and the other Transaction
Documents, or (z) wherein an unfavorable decision, ruling or finding would have
a Material Adverse Effect on the Borrower or which affects, or purports to
affect, the validity or enforceability against the Borrower of any Transaction
Document.
(f) Employee Benefit Plans. Neither the Borrower nor any of its ERISA
Affiliates maintains or operates any "employee benefit plans" (as such term is
defined in ERISA).
(g) Perfected Security Interest. (i) Each Pledged Student Loan, including
the related original Student Loan Note, is owned by the Borrower free and clear
of any adverse claim, judgment or Lien other than the Lien created hereby and
(ii) the Custodian has (and will retain) possession of the related original
Student Loan Note. All other Collateral is owned by the Borrower free and clear
of any adverse claim, judgment or Lien other than the Lien created pursuant to
this Agreement. Except for the filing of the financing statements described in
Section 5.01(m) and the entering into of the Paying Agency Agreement as
described in Section 3.01(a), no further action, including any filing or
recording of any document, is necessary in order to establish, protect and
perfect the first priority security interest of the Agent, for the benefit of
the Secured Parties, in the Collateral as against any third party in any
applicable jurisdiction, including, without limitation, any purchaser from, or
creditor of, the Borrower. No financing statement or other instrument similar in
effect covering any of the Collateral or any interest therein is on file in any
recording office except such as may be filed (i) in connection with any Lien
arising solely as the result of any action taken by the Lenders (or any assignee
thereof) or by the Agent, (ii) in favor of the Agent or (iii) for which UCC
termination statements have been filed. No consent of any other Person and no
authorization, approval, or other action by, and no notice to or filing with,
any governmental authority or regulatory body is required (x) for the pledge by
the Borrower of the Collateral pursuant to this Agreement, (y) for the
perfection or maintenance of the security interest created hereby (including the
first priority nature of such security interest) or (z) for the exercise by the
Agent of the rights provided for in this Agreement or the remedies in respect of
the Collateral pursuant to this Agreement.
(h) Accuracy of Information. Neither this Agreement nor any other
Transaction Document to which the Borrower is a party, or any certificate nor
statement (including, without limitation, any Monthly Report) furnished to the
Agent or any Lender by the Borrower in connection herewith contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein and therein not misleading. There
is no fact known to the Borrower which has or could reasonably be expected to
have a Material Adverse Effect which has not been set forth in this Agreement or
in the other Transaction Documents, certificates and statements furnished to the
Agent or any Lender in connection with the transactions contemplated hereby
except those arising from general economic or political conditions.
(i) Terminations. No Event of Default or Unmatured Event of Default,
exists.
26
(j) Margin Regulations. The use of all funds obtained by the Borrower
under this Agreement will not conflict with or contravene any of Regulations T,
U and X promulgated by the Board of Governors of the Federal Reserve System from
time to time.
(k) Borrower Information. The chief place of business and chief executive
office of the Borrower are located at the address of the Borrower referred to in
Section 13.02, and the offices where the Borrower keeps all its books, records
and documents relating to the Pledged Student Loans are located at the addresses
specified in Schedule 6.01(k) (or at such other locations, notified to the Agent
in accordance with Section 7.01(f), in jurisdictions where all action necessary
to maintain the Agent's first priority perfected security interest, for the
benefit of the Secured Parties, in the Collateral has been taken and completed);
it being understood that each Servicer keeps certain collateral, loan level and
servicing information relating to the Pledged Student Loans at such Servicer's
office. The exact legal name of the Borrower is set forth on the signature page
hereof. The Borrower's organizational identification number is 3857936. Except
as provided on Schedule 6.01(k), the Borrower has not changed its name, changed
its corporate structure, changed its jurisdiction of organization, changed its
chief place of business/chief executive office or used any name other than its
exact legal name at any time during the past five years. The Location of the
Borrower is Delaware.
(l) No Disclosure Required. Under applicable laws and regulations in
effect on the date hereof, the Borrower is not required to file a copy of this
Agreement with the Securities and Exchange Commission or any other governmental
authority.
(m) Capital of the Borrower. The Borrower is Solvent.
(n) Borrower Not an Investment Company. The Borrower is not required to
register as an "investment company" within the meaning of the Investment Company
Act of 1940, as amended.
(o) Eligible Student Loans. All Financed Student Loans are Eligible
Student Loans. Each Student Loan included as an Eligible Student Loan in the
calculation of the Coverage Condition, is an Eligible Student Loan.
(p) Material Adverse Effect. No Material Adverse Change in the condition
of the Borrower, Holdco or the Parent has occurred since the Closing Date and is
continuing.
(q) Acquisition of Student Loans. With respect to each Pledged Student
Loan, such Student Loan was either purchased by the Borrower pursuant to a
Purchase and Sale Agreement or originated by or on behalf of the Borrower.
(r) Certain Purchase and Sale Agreements. The Borrower has not purchased
any Student Loan which constitutes a Pledged Student Loan other than pursuant to
a Purchase and Sale Agreement.
(s) Tax Status. The Borrower has filed all tax returns (federal, state and
local) required to be filed and has paid or made adequate provision for the
payment of all taxes, assessments and other governmental charges unless such tax
or assessment is being actively contested in good faith and adequate reserves
have been established therefor in accordance with GAAP.
27
(t) [CONFIDENTIAL](14).
ARTICLE VII
GENERAL COVENANTS OF THE BORROWER
SECTION 7.01. Affirmative Covenants of the Borrower. From the date hereof
until the Final Payout Date, the Borrower will, unless the Agent and the Lenders
shall otherwise consent in writing:
(a) Compliance with Laws, Etc. (i) Comply in all material respects with
all applicable federal, state and local laws, rules, regulations and orders,
including those with respect to the Pledged Student Loans and including (without
limitation) the Equal Credit Opportunity Act, the Fair Debt Collection Practices
Act, the Truth in Lending Act, the Federal Trade Commission Act, the Federal
Reserve Board's Regulation B, applicable laws relating to usury,
truth-in-lending, education lending, fair credit billing, fair credit reporting,
fair debt collection practices, privacy, consumer credit protection and
disclosure, licensing and other applicable consumer credit laws and equal credit
opportunity laws.
(b) Preservation of Existence. Preserve and maintain its existence as a
Delaware corporation, and its rights, franchises and privileges in the
jurisdiction of its formation, and qualify and remain qualified in good standing
as a foreign corporation in each jurisdiction where the failure to preserve and
maintain such existence, rights, franchises, privileges and qualification could
be reasonably expected to have a Material Adverse Effect on the Borrower.
(c) Audits. (i) At any time and from time to time permit the Agent or any
of its agents or representatives, at their own expense, to visit the offices and
properties of the Borrower to review documents relating to Student Loans that
are to become Pledged Student Loans, (ii) upon two (2) business day's prior
written notice, during regular business hours, permit the Agent, the Lenders or
any of their agents or representatives, at their own expense, (y) to examine and
make copies of and abstracts from all books, records and documents (including,
without limitation, computer tapes and disks) in the possession or under the
control of the Borrower relating to the Collateral or the Borrower's origination
or acquisition of Student Loans, and (z) to visit the offices and properties of
the Borrower for the purpose of examining such materials described in clause
(ii)(y) next above, and to discuss matters relating to Pledged Student Loans or
the Borrower's performance under the Transaction Documents with any of the
officers or employees of the Borrower having knowledge of such matters; (iii)
without limiting the provisions of clause (ii) next above, from time to time but
no more than once per calendar quarter on the reasonable request of the Agent,
at the Agent's expense, or at any time in the event of an investigation, audit
(not in the ordinary course) or other proceeding instigated by a Governmental
Authority or upon the occurrence and during the continuation of an Event of
Default, at the Borrower's expense, permit certified public accountants or other
auditors acceptable to the Agent to conduct a review of the Borrower's books and
records with respect to the Pledged Student Loans; and (iv) without limiting the
foregoing, once per calendar year or, upon the occurrence and during the
continuance of an Event of Default, at any time at the request of the Agent,
cooperate fully with the Agent or any auditor or representative appointed by the
Agent in an agreed upon procedures audit and covering each of the items and
procedures listed on Appendix C hereto and such other items and procedures
reasonably requested by the Agent) at the Borrower's expense with respect to all
Pledged Student Loans; in each case subject to all applicable provisions of
federal privacy law.
----------
(14) CONFIDENTIAL TREATMENT has been requested for the redacted portion pursuant
to Rule 406 of the Securities Act of 1933, as amended. The confidential redacted
portions have been filed separately with the United State Securities and
Exchange Commission.
28
(d) Keeping of Records and Books of Account. Maintain and implement
administrative and operating procedures (including, without limitation, an
ability to recreate records evidencing the Pledged Student Loans in the event of
the destruction of the originals thereof), and keep and maintain, or cause to be
kept and maintained, all documents, books, records and other information
reasonably necessary or advisable for the collection of all the Pledged Student
Loans (including, without limitation, records adequate to permit the daily
identification of each new Pledged Student Loan included in the Collateral from
time to time and all Collections of, payments on and adjustments to each
existing Pledged Student Loan).
(e) Performance and Compliance with Student Loans. At its expense, timely
and fully perform and comply with all material provisions, covenants and other
promises required to be observed by it under the Student Loan Notes, the
Servicing Agreements and other agreements to which the Borrower is a party
related to the Collateral.
(f) Location. Keep its chief place of business and chief executive office,
and the offices where it keeps its records concerning the Pledged Student Loans
and all agreements related to such Collateral (and all original documents
relating thereto, unless such documents have been delivered to the Custodian or
a bailee thereof), at the address(es) of the Borrower referred to in Schedule
6.01(k) or, upon 30 days' prior written notice to the Agent, at such other
locations selected by the Borrower with respect to which all actions required to
maintain the Agent's first priority, perfected security interest, for the
benefit of the Secured Parties, in the Collateral have been taken and completed.
Keep its Location at the Location identified in Section 6.01(k) or, upon 30
days' prior written notice to the Agent, at such other "Location" where all
action required to maintain the Agent's first priority perfected security
interest, for the benefit of the Secured Parties, in the Collateral shall have
been taken and completed.
(g) Servicing Agreements, Custodial Agreement, Paying Agency Agreement and
Verification Agent Agreement; Enforcement. (i) Maintain in effect all Servicing
Agreements and the Custodial Agreement, Paying Agency Agreement and, unless
otherwise consented to in writing by the Agent and the Lenders, the Verification
Agent Agreement, diligently and promptly enforce its rights thereunder and take,
or use commercially reasonable steps to cause the applicable Servicer to take,
all reasonable steps, actions and proceedings necessary or appropriate for the
enforcement of all material terms, covenants and conditions of each Student Loan
that is a Pledged Student Loan and for the compliance by the applicable Servicer
with the servicing guidelines set forth in the applicable Servicing Agreement,
including the prompt payment of all principal and interest payments and all
other amounts due with respect to such Student Loans, (ii) enter into Servicing
Agreements with Servicers so that all Pledged Student Loans are covered by a
Servicing Agreement, (iii) maintain at all times the appointment of a Paying
Agent that is obligated to perform the duties and obligations of the Paying
Agent under this Agreement and the Paying Agency Agreement and (iv) not agree to
any amendment or other modification of the Custodial Agreement, Paying Agency
Agreement or Verification Agent Agreement, including an amendment that would
allow the Custodian to be released from any of the obligations described in
Section 5.02(g) hereof, without the prior written consent of the Agent.
29
(h) Servicer Events of Default; Replacement Servicer. If a Servicer Event
of Default shall have occurred with respect to any Servicer or any Servicing
Agreement shall not be in full force and effect for any reason, identify a
replacement Servicer and execute a replacement Servicing Agreement, in each case
acceptable to the Agent and the Lenders, within 30 days of such event (or within
such longer period agreed to by the Agent and the Lenders).
(i) Insurance. Maintain in effect directors' and officers' insurance in
such liability and amounts and with such deductibles as are customary in the
industry and provide prompt notice to the Agent of any material changes in such
insurance.
(j) Separate Business. At all times:
(i) (y) maintain and prepare financial reports, financial
statements, books and records and bank accounts separate from those of the
Parent, its other Affiliates and any other Person or entity and (z) not
permit the Parent, any other Affiliate or any other Person independent
access to its bank accounts;
(ii) not commingle its funds and other assets with those of the
Parent, any other Affiliate or any other Person or entity (other than any
such commingling which might result from the performance of the Borrower's
duties in accordance with this Agreement or any Servicer's duties in
accordance with the applicable Servicing Agreement);
(iii) conduct its own business in its own name and hold all of its
assets in its own name and in such a manner that it will not be costly or
difficult to segregate, ascertain or identify its individual assets from
those of the Parent, any other Affiliate or any other Person;
(iv) remain Solvent and pay its debts and liabilities (including
employment and overhead expenses) from its assets as the same become due;
(v) do all things necessary to observe procedural formalities
(including the separateness provisions contained in its organizational
documents), and preserve its existence as a single-purpose,
bankruptcy-remote entity;
(vi) enter into transactions with Affiliates only if each such
transaction is commercially reasonable and on substantially similar terms
as a transaction that would be entered into on an arm's-length basis with
a Person other than an Affiliate of the Borrower;
30
(vii) pay the salaries of its own employees, if any, from its own
funds and maintain a sufficient number of employees in light of its
contemplated business operations;
(viii)compensate each of its consultants and agents from its own
funds for services provided to it and pay from its own assets all
obligations of any kind incurred;
(ix) not (y) acquire or hold obligations or securities of any
Affiliate or any of the stockholders of the Borrower or (z) buy or hold
any evidence of indebtedness issued by any other Person or entity, other
than cash, Eligible Investments and Pledged Student Loans;
(x) allocate fairly and reasonably and pay from its own funds the
cost of (i) any overhead expenses (including paying for any office space)
shared with any Affiliate of the Borrower and (ii) any services (such as
asset management, legal and accounting) that are provided jointly to the
Borrower and one or more of its Affiliates;
(xi) maintain and utilize separate stationery, invoices and checks
bearing its own name, separate office space (which may be a separately
identified area in office space shared with one or more Affiliates of the
Borrower) and a separate mailing address;
(xii) (1) not incur, create or assume any Indebtedness not arising
under or expressly permitted (such as Permitted Debt) by this Agreement or
any other Transaction Documents and (2) not make any loans or advances to,
or pledge its assets for the benefit of, any other Person or entity,
including, without limitation, the Parent or any other Affiliate;
(xiii)be, and at all times hold itself out to the public as, a legal
entity separate and distinct from any other Person;
(xiv) to the extent known by the Borrower, correct any
misunderstanding regarding the separate identity of the Borrower;
(xv) not identify itself or any of its Affiliates as a division or
part of any other entity;
(xvi) not amend, modify or otherwise change its organizational
documents, or suffer the same to be amended, modified or otherwise changed
in any manner without the prior written consent of the Agent;
(xvii)maintain at all times at least one independent director
provided by Global Securitization Services, LLC (or such other third party
service provider approved by the Agent) who is not, and has not been for
five (5) years preceding the date hereof, a director, officer, employee or
shareholder (or a family member of one of the foregoing) of any Affiliate
of the Borrower;
(xviii) conduct in its business and activities in all respects in
compliance with the assumptions contained in the legal opinion of
McGuireWoods LLP dated on or about the Closing Date relating to
substantive consolidation issues;
31
(xix) not change any of (i) its corporate name, (ii) the name under
which it does business, (iii) its type of organization or (iv) the
jurisdiction in which it is organized, unless, in each case, (1) each of
the Agent and each Lender shall have received not less than thirty (30)
days' prior written notice thereof and (2) the Borrower has taken all
action required to maintain the Agent's first priority perfected security
interest for the benefit of the Secured Parties in the Collateral;
(xx) ensure that all future registration statements and annual,
quarterly or other regular reports which the Borrower, Parent or any of
their respective Affiliates files with the U.S. Securities and Exchange
Commission include a statement that the Transaction Documents require that
the Borrower and Holdco maintain bankruptcy remote status and that the
Borrower and Holdco are separate from the Parent and its other Affiliates;
(xxi) not amend, modify or otherwise change its organizational
documents;
(and the Borrower acknowledges that the Lenders are entering into the
transactions contemplated by this Agreement in reliance upon the Borrower's
identity as a legal entity that is separate from the Parent).
(k) Delivery of Student Loan Notes. The Borrower shall deliver or cause to
be delivered to the Custodian (and cause the Custodian to retain possession of),
in each case as bailee for the Agent for the benefit of the Secured Parties the
original Student Loan Note with respect to each Pledged Student Loan.
(l) Business. The Borrower shall not own assets or engage in any business
other than the assets and transactions specifically contemplated in this
Agreement and the other Transaction Documents.
(m) Purchase and Sale Agreements; Enforcement of Rights Against
Originators. The Borrower shall retain copies of all Purchase and Sale
Agreements (and associated assignments and bills of sale) pursuant to which any
Pledged Student Loans were acquired by the Borrower or any Affiliate of the
Borrower. The Borrower shall provide the Agent prompt notice of the occurrence
of any event listed in clauses (a) through (e) of the definition of "Purchase
Termination Event" of which it has knowledge with respect to any Originator of
Pledged Student Loans. The Borrower shall enforce its rights with respect to (i)
all material obligations of the Originators under each Purchase and Sale
Agreement, in each case relating to any Pledged Student Loan and (ii) all other
transaction documents to which any Originator of any Pledged Student Loan is a
party.
(n) Deposit of Collections. The Borrower shall deposit (or shall cause to
be deposited) all Collections in accordance with the provisions of Section
3.03(a) hereof.
32
(o) Additional Financing Statements. The Borrower shall file or cause to
be filed, and authorizes the Agent to file, UCC financing statements and all UCC
amendments and termination statements against all Affiliated Originators and
each other Originator with respect to which the applicable Purchase and Sale
Agreement contains a back-up grant of a security interest in the Student Loans
and related assets, in each case, sufficient (or in the sole determination of
the Agent, desirable) to perfect the first priority, perfected security interest
of the Borrower in Student Loans and related assets acquired from such
Originators. In addition, at the request of the Agent, the Borrower shall file
or cause to be filed, and authorizes the Agent to file, UCC financing statement
assignments assigning to the Agent any financing statement showing the Borrower
as secured party with respect to the Collateral.
(p) Notice of Material Events. The Borrower shall be obligated to inform
the Agent in writing of the occurrence of any of the following:
(i) within three Business Days after the Borrower has knowledge (or
reasonably should have had knowledge) of the submission of any claim or
the initiation or threat of any legal process, litigation or
administrative or judicial investigation, or rule making or disciplinary
proceeding by or against the Borrower that could result in a Material
Adverse Change with respect to the Borrower or the promulgation of any
proceeding or any proposed or final rule which would result in a Material
Adverse Change with respect to the Borrower;
(ii) at least thirty days prior to any change in the location of the
Borrower's principal offices or any change in the location of the
Borrower's books and records;
(iii) immediately upon becoming aware of the commencement of any
proceedings by or against the Borrower under any applicable bankruptcy,
reorganization, liquidation, rehabilitation, insolvency or other similar
law now or hereafter in effect or of any proceeding in which a receiver,
liquidator, conservator, trustee or similar official shall have been, or
may be, appointed or requested for the Borrower or any of its assets;
(iv) immediately upon receiving notice that (A) the Borrower is
being placed under regulatory supervision, (B) any license, permit,
charter, registration or approval necessary for the conduct of the
Borrower's business is to be, or may be suspended or revoked, or (C) the
Borrower is to cease and desist any practice, procedure or policy employed
by the Borrower in the conduct of its business, and such cessation may
result in a Material Adverse Change with respect to the Borrower; or
(v) immediately upon any failure to pay when due any Indebtedness of
the Borrower which involves an outstanding principal balance of $250,000
or more.
(q) Actions with respect to Bankruptcy Petitions. The Borrower hereby
agrees that it will timely object to all proceedings of the type described in
clause (a) of the definition of "Event of Bankruptcy" instituted against it.
33
(r) Adequate Capital. The Borrower shall at all times maintain adequate
capital for the normal obligations reasonably foreseeable in a business of its
size and character and in light of its contemplated business operations.
(s) Guarantee Agreements. To the extent any Pledged Student Loans becomes
guaranteed (or insured) by a third party, the Borrower will promptly execute and
deliver all further instruments and documents, and take all actions necessary to
perfect a first priority security interest in favor of the Agent in all of the
Borrower's right, title and interest in the related guarantee agreement and
provide the Agent with copies of all agreements and other information requested
by the Agent concerning such guarantee.
SECTION 7.02. Reporting Requirements of the Borrower. From the date hereof
until the Final Payout Date, the Borrower will, unless the Agent and the Lenders
shall otherwise consent in writing, furnish to the Agent:
(a) Quarterly Financial Statements. As soon as available and in any event
within 45 days (or such shorter period proscribed by law for filing such
financial statements with the U.S. Securities and Exchange Commission) after the
end of each of the first three quarters of each fiscal year of the Parent and
Borrower, (i) copies of the consolidated financial statements of the Parent as
filed on Form 10-Q with the U.S. Securities and Exchange Commission in
conformity with generally accepted accounting principles, along with a
certificate of the chief financial officer or treasurer of the Borrower
certifying that such copies are the true and complete copies of the financial
statements and that such information fairly presents in all material respects
the financial condition of the Parent as of the date delivered, and (ii)
consolidating financial statements of the Parent in conformity with generally
accepted accounting principles, along with a certificate by an Authorized
Officer of the Parent certifying that such copies are the true and complete
copies of the financial statements and that such information fairly presents in
all material respects the financial condition of the Parent as of the date
delivered;
(b) Annual Financial Statements. As soon as available and in any event
within 90 days (or such shorter period proscribed by law for filing such
financial statements with the U.S. Securities and Exchange Commission) after the
end of each fiscal year of the Parent and Borrower, copies of (i) the audited
consolidated financial statements of the Parent prepared in accordance with
generally accepted accounting principles, as filed on Form 10-K with the U.S.
Securities and Exchange Commission, accompanied by (A) an auditor's report,
unqualified as to scope, of a nationally recognized public accounting firm
approved by the Agent, (B) any management letters prepared by said accountants
and (C) a certificate of said accountants that, in the course of their
examination necessary for their certification of the foregoing, they have
obtained no knowledge of any Event of Default or Unmatured Event of Default, or
if, in the opinion of said accountants, any Event of Default or Unmatured Event
of Default shall exist, stating the nature and status thereof, and (ii) the
unaudited consolidating financial statements of the Parent prepared and duly
certified by any nationally recognized public accounting firm approved by the
Agent, in conformity with generally accepted accounting principles, along with a
certificate by an Authorized Officer of the Parent certifying that such copies
are the true and complete copies of the financial statements and that such
information fairly presents in all material respects the financial condition of
the Parent as of the date delivered;
34
(c) Monthly Report. On or before each Determination Date, a Monthly Report
with respect to the preceding Settlement Period in electronic form together with
a signed copy of such Monthly Report delivered by facsimile, messenger or
overnight courier;
(d) SEC Filings. Promptly upon the filing thereof, copies of all
registration statements and annual, quarterly or other regular reports which the
Borrower, Parent or any of their respective Affiliates files with the U.S.
Securities and Exchange Commission, including, without limitation, all
certifications and other filings required by Section 302 and Section 906 of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and all rules and regulations related thereto;
(e) ERISA. Promptly after the filing or receiving thereof, copies of all
reports and notices with respect to any "reportable event" described in Section
4043 of ERISA which the Borrower or an ERISA Affiliate thereof files under ERISA
with the Internal Revenue Service, the Pension Benefit Guaranty Corporation or
the U.S. Department of Labor or which the Borrower receives from the Internal
Revenue Service or the Pension Benefit Guaranty Corporation;
(f) [Reserved];
(g) Litigation. As soon as possible and in any event within three Business
Days of the Borrower's actual knowledge thereof, written notice of (i) any
litigation, investigation or proceeding against any Servicer, the Custodian or
the Paying Agent which may exist at any time that could reasonably be expected
to materially and adversely affect the Borrower and (ii) any material adverse
development in any litigation previously disclosed in accordance with subclause
(i) above;
(h) Changes in Law. Promptly after the occurrence thereof, written notice
of changes in the Equal Credit Opportunity Act, the Fair Debt Collection
Practices Act, the Truth in Lending Act, the Federal Trade Commission Act, the
Federal Reserve Board's Regulation B, applicable laws relating to usury,
truth-in-lending, education lending, fair credit billing, fair credit reporting,
fair debt collection practices, privacy, consumer credit protection and
disclosure, licensing and other applicable consumer credit laws and equal credit
opportunity laws or any other law, rule or regulation of the United States that
could have a Material Adverse Effect on any party to the Transaction Documents
or to the transactions contemplated by the Transaction Documents;
(i) Financial Statements and Annual Compliance Audit of each Servicer.
With respect to each Servicer, promptly after receipt thereof, copies of all
reports (including audited financial statements, SAS 70 reports and annual
compliance audit reports, as applicable) and other documents delivered to the
Borrower by such Servicer pursuant to the applicable Servicing Agreement;
(j) Schedule of Pledged Student Loans. (i) On or before the date that is
five Business Days prior to each Determination Date, and in addition, upon the
occurrence and during the continuation of an Event of Default, no more than
three Business Days after the request of the Agent, a Schedule of Pledged
Student Loans in electronic form acceptable to the Agent including all
information necessary for the Agent to determine the Fair Market Value of the
Pledged Student Loans and (ii) on or before each Determination Date, together
with the delivery of each Monthly Report, a revised Schedule of Pledged Student
Loans in electronic form acceptable to the Agent indicating any changes from the
Schedule of Pledged Student Loans delivered pursuant to clause (i) above;
35
(k) Coverage Condition Certificate. On or before each Determination Date
and together with the delivery of each Monthly Report, a Coverage Condition
Certificate substantially in the form of Exhibit 5.03(d), executed by an
Authorized Officer of the Borrower;
(l) Portfolio Reports. On or before each Determination Date, a loan
portfolio report of Student Loan portfolio activity and delinquency statistics
for the immediately preceding month, segmented by loan type, loan status,
Servicer and school type, including, without limitation, (i) updated principal
balances for each Pledged Student Loan, (ii) the then current interest rate and
monthly payment amount for each Pledged Student Loan, (iii) the number of days
and amount by which any payment on a Pledged Student Loan is delinquent and (iv)
any other information reasonably required by the Agent or the Custodian; and
(m) Annual Budgets and Operating Plans. No later than five Business Days
after presentation thereof, the annual budgets and operating plans of Parent and
its Subsidiaries presented to the boards of directors of Parent and its
Subsidiaries;
(n) Other. Promptly, from time to time, such other information, documents,
records or reports respecting the Collateral or the condition or operations,
financial or otherwise, of the Borrower as the Agent or the Lenders may from
time to time reasonably request in order to protect the interests of the Agent
and the Lenders under or as contemplated by this Agreement.
SECTION 7.03. Servicing Covenants. From the date hereof until the Final
Payout Date, the Borrower will, unless the Agent and the Lenders shall otherwise
consent in writing comply with the following covenants.
(a) Servicing. In the event the Pledged Student Loans are not serviced by
a Servicer, the Borrower shall service, administer and make collections with
respect to the Pledged Student Loans in accordance in all material respects with
all applicable federal and state laws, including (without limitation) the Equal
Credit Opportunity Act, the Fair Debt Collection Practices Act, the Truth in
Lending Act, the Federal Trade Commission Act, the Federal Reserve Board's
Regulation B, applicable laws relating to usury, truth-in-lending, education
lending, fair credit billing, fair credit reporting, fair debt collection
practices, privacy, consumer credit protection and disclosure, licensing and
other applicable consumer credit laws and equal credit opportunity laws, the
failure to comply with which would be reasonably expected to have a material
adverse effect on the Lenders. The Borrower shall not (i) rescind or cancel any
Pledged Student Loan except as ordered by a court of competent jurisdiction or
Governmental Authority or as otherwise consented to in writing by the Agent,
(ii) reschedule, revise, defer or otherwise compromise with respect to payments
due on any Pledged Student Loan except pursuant to any applicable deferral or
forbearance periods or otherwise in accordance with all applicable standards,
guidelines and requirements with respect to the servicing of the Pledged Student
Loans or (iii) adjust or provide any non-cash reduction in the outstanding
Principal Balance of any Pledged Student Loan other than pursuant to a Reduced
Rate Program; provided, however, that the Borrower may, in its sole discretion,
waive any final remaining amounts owing under a Pledged Student Loan up to and
including $100.00 (such amount, a "De Minimis Amount") except as otherwise
permitted in accordance with any Reduced Rate Program; provided, further,
however, that the Borrower shall not agree to any decrease of the interest rate
on, or the principal amount payable (other than a De Minimis Amount) with
respect to, any Pledged Student Loan.
36
(b) Collection of Pledged Student Loan Payments. In the event the Pledged
Student Loans are not serviced by a Servicer, the Borrower shall make reasonable
efforts to collect all payments (subject to the provisions of Section 7.03(a))
called for under the terms and provisions of the Pledged Student Loans as and
when the same shall become due.
(a) Realization upon Pledged Student Loans. In the event the Pledged
Student Loans are not serviced by a Servicer, the Borrower shall use reasonable
efforts consistent with customary servicing practices and procedures (including,
without limitation, engaging a collection agency) in its servicing of any
delinquent Pledged Student Loans. Any collection agency engaged by the Borrower
to service delinquent Pledged Student Loans must be approved in writing by the
Agent unless such collection agency has agreed to comply with the servicing
standards, as applicable, set forth in Section 7.03(a).
SECTION 7.04. Negative Covenants of the Borrower. From the date hereof
until the Final Payout Date, the Borrower will not, without the prior written
consent of the Agent and the Lenders:
(a) Sales, Liens, Etc. Except as otherwise provided herein, sell, assign
(by operation of law or otherwise) or otherwise dispose of, or create or suffer
to exist any Lien upon or with respect to, any Pledged Student Loan or other
Collateral, or any interest therein, or any account to which any Collections of
or payments on any Pledged Student Loans or other Collateral are sent, or any
right to receive income or proceeds from or in respect of any of the foregoing.
(b) Extension or Amendment. (i) Extend, terminate, waive, amend or
otherwise modify the terms of any Pledged Student Loan except in accordance with
the express provisions of the applicable Servicing Agreement or except solely in
connection with waiving any De Minimis Amount pursuant to the provisions of
Section 7.03(a) or in accordance with any Reduced Rate Program, (ii) terminate,
waive, amend or otherwise modify the terms of any Servicing Agreement
(including, without limitation, any amendment, restatement, supplement or
modification to a Servicing Agreement that would reduce the frequency of
deposits to the Collection Account), (iii) terminate, waive, amend or otherwise
modify the terms of any Purchase and Sale Agreement, (iv) terminate, waive,
amend or otherwise modify the terms of the Custodial Agreement or consent to the
assignment by the Custodian of its rights, or the delegation by the Custodian of
its obligations, under the Custodial Agreement or (v) terminate, waive, amend or
otherwise modify any other Transaction Document, in each case to which it is a
party.
(c) Change in Business. Make any change in the character of its business,
which change could reasonably be expected to impair the collectibility of any
Pledged Student Loan or otherwise materially adversely affect the interests or
remedies of the Agent or Lenders under this Agreement or any other Transaction
Document.
37
(d) Consolidation, Mergers, etc. To the fullest extent permitted by law,
dissolve, liquidate, merge into, or consolidate with, one or more corporations
or other entities, or be a party to any transaction involving the transfer of
any substantial portion of its assets, revenues or properties to or with any
corporation or other Person, (i) without the prior written consent of the Agent
and the Lenders or (ii) other than solely with respect to the transfer of
Released Student Loans released pursuant to the provisions of Section 1.04
hereof.
(e) Use of Proceeds. Use the proceeds of any Advance for any purpose other
than acquiring or making Student Loans, funding recaptures of Fair Market Value,
funding the Reserve Account and paying fees and expenses incurred in connection
with the transactions contemplated by this Agreement.
(f) Servicer Limitations. Permit any Pledged Student Loans to be serviced
by any Servicer without first obtaining the written consent of the Agent and the
Lenders (other than Servicers specifically named in the definition of the term
"Servicer" in Appendix A) and demonstrating to the satisfaction of the Agent and
the Lenders that all requirements and conditions required by the Agent and the
Lenders applicable to such new Servicer have been satisfied in all material
respects for such Servicer, which satisfaction shall be evidenced by such
written consent.
(g) Reserved.
(h) Payment Instructions. Change, nor permit the Originators or any
Servicer to change, payment instructions to any Obligor without the prior
written consent of the Agent.
(i) ERISA. Establish or be a party to any plan, multiemployer plan or
benefit plan under ERISA.
(j) Borrower's Legal Status. Without providing at least 30 days prior
written notice to the Agent and satisfying all other requirements set forth in
this Agreement with respect to such action, change its name, place of business,
chief executive office, mailing address or organizational identification number
or change its type of organization, jurisdiction of organization or other legal
structure.
(b) Underwriting Guidelines. Permit or implement any material change in
the Underwriting Guidelines without the prior written consent of the Agent and
the Lenders.
(k) Borrower's Ability to Conduct Business. (a) Guarantee any obligation
of any Person, including any Affiliate; (b) own assets or engage, directly or
indirectly, in any business other than the ownership of the assets contemplated
by, and actions required or permitted to be performed under, the Transaction
Documents; (c) incur, create or assume any Indebtedness not arising under or
expressly permitted by this Agreement or any other Transaction Document,
provided that the Borrower shall be entitled to incur Permitted Debt; (d) make
or permit to remain outstanding any loan or advance to, or own or acquire any
stock or securities of, any Person, except that the Borrower may make student
loans, may invest in those investments permitted under the Transaction Documents
and may make any advance required or expressly permitted to be made pursuant to
any provision of the Transaction Documents and permit the same to remain
outstanding in accordance with such provisions; (e) to the fullest extent
permitted by law, engage in any dissolution, liquidation, consolidation, merger,
asset sale or transfer of ownership interests other than such activities as are
expressly permitted under this Agreement; or (f) form, acquire or hold any
subsidiary (whether corporate, partnership, limited liability company or other).
38
ARTICLE VIII
EVENTS OF DEFAULT; REMEDIES; SET-OFF
SECTION 8.01. Events of Default. The following events shall be "Events of
Default" hereunder:
(a) (i) The Borrower shall fail to make any payment or deposit of
principal, interest or fees to be made by it hereunder or under any Transaction
Document (other than the Verification Agent Agreement) when due and such failure
is not remedied within one (1) Business Day, (ii) the Borrower shall fail to
make any prepayment required pursuant to Sections 2.03(b) through (e) when due
and such failure is not remedied within one (1) Business Day, (iii) the Borrower
shall fail to pay the Shortfall Amount when due and such failure is not remedied
within one (1) Business Day, or (iv) the Borrower shall fail to make any other
payment or deposit to be made by it hereunder or under any Transaction Document
(other than the Verification Agent Agreement) when due and such failure shall
continue unremedied for three Business Days after the Borrower has knowledge or
has received notice thereof; provided that clause (iv) shall not apply to
failures to pay resulting from reasonable billing disputes between the Borrower
and the Custodian, Paying Agent or any Servicer so long as such Person continues
to perform its duties and obligations under the Transaction Document(s) to which
it is a party;
(b) Any representation or warranty (other than a representation and
warranty made or deemed made pursuant to Section 6.0l(g) or (o) with respect to
a Pledged Student Loan as to which the Borrower has complied with Section
2.03(c)) made or deemed to be made by the Borrower (or any of its officers) or
any Affiliated Originator under or in connection with this Agreement or any
other Transaction Document to which it is a party or any other information or
report delivered pursuant hereto shall prove to have been false or incorrect in
any material respect when made unless such breach, if able to be remedied, has
been remedied within ten Business Days after the Borrower has knowledge or has
received notice thereof; provided that no breach of any particular
representation and warranty shall be deemed able to be remedied more than twice
per calendar year;
(c) the Borrower shall fail to perform or observe (i) any term, covenant
or agreement contained in any of Sections 7.01(c), 7.01(h), 7.01(k), the first
sentence of 7.01(m), 7.01(n), 7.02 or 7.04 and not expressly covered by any
other clause (other than clause (c)(ii)) of this Section 8.01, or (ii) any other
term, covenant or agreement contained in this Agreement or any of the other
Transaction Documents on its part to be performed or observed if such failure
shall remain unremedied for the longer of fifteen (15) Business Days after
notice or knowledge thereof or the cure period provided for such event in the
applicable Transaction Document;
39
(d) Holdco or the Parent, as applicable, shall (i) fail to comply with
Sections 3.2.1, 3.2.3, 3.2.4 or 3.2.11 of the Pledge Agreement or (ii)(A) fail
to make any payment or deposit, (B) breach any representation or warranty, or
(C) fail to observe any other term, covenant or agreement in any Transaction
Document and such failure or breach shall not have been cured within any
applicable cure period, or if none is specified, within ten (10) Business Days;
(e) An Event of Bankruptcy shall have occurred with respect to the
Borrower or Holdco;
(f) (i) Any litigation (including, without limitation, derivative
actions), arbitration proceedings or governmental proceedings not disclosed in
writing by the Borrower to the Agent prior to the date of execution and delivery
of this Agreement is pending against the Borrower or Holdco, or (ii) any
material development not so disclosed has occurred in any litigation (including,
without limitation, derivative actions), arbitration proceedings or governmental
proceedings so disclosed, which, in the case of clause (i) or (ii), in the
opinion of the Agent or the Lenders, has a reasonable likelihood of having a
Material Adverse Effect on the Borrower or Holdco;
(g) (i) The Internal Revenue Service shall file notice of a lien pursuant
to Section 6321 of the Code with regard to any of the assets of the Borrower or
any other entity contained in the same Control Group as the Borrower and such
lien shall not have been released within thirty (30) Business Days or (ii) the
Pension Benefit Guaranty Corporation shall, or shall indicate its intention to,
file notice of a lien pursuant to Section 4068 of ERISA with regard to any of
the assets of the Borrower or any of its ERISA Affiliates and such lien shall
not have been released within five (5) Business Days;
(h) The Agent shall fail to have a valid, perfected first priority Lien on
the Collateral, for the benefit of the Secured Parties (so long as such failure
is not due solely to the Agent's disposition of or release of such Collateral);
(i) The Coverage Condition is not satisfied on any Settlement Date with
respect to the related Settlement Period and such condition continues for two
(2) Business Days;
(j) [CONFIDENTIAL](15);
(k) [CONFIDENTIAL](16);
(l) The Tangible Net Worth of the Borrower, determined as of the last day
of any fiscal quarter of the Borrower, commencing as of the Closing Date, shall
be less than $1,000,000 (excluding the amounts on deposit in the Reserve Account
and the Borrower's residual interests in securitization transactions);
----------
(15) , (16) CONFIDENTIAL TREATMENT has been requested for the redacted portion
pursuant to Rule 406 of the Securities Act of 1933, as amended. The confidential
redacted portions have been filed separately with the United State Securities
and Exchange Commission.
40
(m) The Borrower or Holdco shall fail to pay or shall default in the
payment of any principal of or premium or interest on any of its Indebtedness
that is outstanding when the same becomes due and payable (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise), and such
failure shall continue unremedied or unwaived after the applicable grace period,
if any, specified in the agreement, mortgage, indenture or instrument relating
to such Indebtedness; or any other event shall occur or condition shall exist
under any agreement, mortgage, indenture or instrument relating to any such
Indebtedness and shall continue unremedied or unwaived after the applicable
grace period, if any, specified in such agreement, mortgage, indenture or
instrument, if the effect of such event or condition is to accelerate the
maturity of such Indebtedness;
(n) Either (i) the Parent shall cease to own 100% of the membership
interests of Holdco free and clear of all Liens or (ii) Holdco shall cease to
own 100% of the common stock of the Borrower free and clear of all Liens (other
than the pledge by Holdco to the Agent, for the benefit of the Secured Parties,
of the common stock of the Borrower pursuant to the Pledge Agreement);
(o) the Borrower shall fail to maintain its status as a single purpose
bankruptcy remote corporation;
(p) (i) One or more judgments for the payment of money in an aggregate
amount in excess of $100,000 shall be rendered against the Borrower or Holdco
and the same shall remain undischarged for a period of thirty (30) consecutive
days during which execution shall not be effectively stayed or a satisfactory
bond against such judgment shall not have been posted, or (ii) any action shall
be legally taken by a judgment creditor holding a final judgment to attach or
levy upon any assets of the Borrower or Holdco to enforce any judgment rendered
against the Borrower or Holdco;
(q) A Material Adverse Change in the condition of the Borrower or Holdco
has occurred and is continuing;
(r) A material adverse change in the overall qualifications or overall
ability of the Borrower under any applicable laws to be a lender of Student
Loans shall have occurred and shall have continued for 90 days;
(s) The Borrower shall fail to deliver a Monthly Report on the date
required hereunder, and such failure shall continue unremedied for three
Business Days; and
(t) [CONFIDENTIAL](17).
----------
(17) CONFIDENTIAL TREATMENT has been requested for the redacted portion pursuant
to Rule 406 of the Securities Act of 1933, as amended. The confidential redacted
portions have been filed separately with the United State Securities and
Exchange Commission.
41
SECTION 8.02. Remedies.
(a) Optional Acceleration. Upon the occurrence of an Event of Default
(other than an Event of Default described in subsection (e) of Section 8.01),
the Agent may, or, at the request of Required Lenders shall, declare that the
Commitment Termination Date and Final Repayment Date have occurred and the
unpaid principal amount of the Advances to be due and payable immediately, by a
notice in writing to the Borrower, and upon any such declaration, the Commitment
Termination Date and Final Repayment Date shall occur and such principal amount
shall be immediately due and payable, together with all accrued and unpaid
interest thereon, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.
(b) Automatic Acceleration. Upon the occurrence of an Event of Default
described in subsection (e) of Section 8.01 with respect to the Borrower or
Holdco, the Commitment Termination Date and Final Repayment Date shall occur
automatically and the unpaid principal amount of the Advances shall
automatically become due and payable, together with all accrued and unpaid
interest thereon, without presentment, demand, protest or notice of any kind,
all of which are hereby waived by the Borrower.
(c) Additional Remedies. Upon any acceleration of the Advances pursuant to
this Section 8.02, no Borrowings thereafter will be made, and the Agent and the
Lenders shall have, in addition to all other rights and remedies under this
Agreement or otherwise, all other rights and remedies provided under the UCC of
each applicable jurisdiction and other applicable laws to a secured party, which
rights shall be cumulative, including, without limitation, the right to
foreclose upon the Collateral and sell all or any portion thereof at public or
private sale (and the Borrower agrees that, to the extent that notice of such
sale is required, notice 10 days prior to such sale shall be adequate and
reasonable notice for all purposes).
ARTICLE IX
THE AGENT
SECTION 9.01. Appointment; Nature of Relationship. Nomura is appointed by
the Lenders as the Agent hereunder and under each other Transaction Document,
and each of the Lenders irrevocably authorizes the Agent to act as the
contractual representative of such Lender with the rights and duties expressly
set forth herein and in the other Transaction Documents. The Agent agrees to act
as such contractual representative upon the express conditions contained in this
Article IX. Notwithstanding the use of the defined term "Agent," it is expressly
understood and agreed that the Agent shall not have any fiduciary
responsibilities to any Lender by reason of this Agreement and that the Agent is
merely acting as the representative of the Lenders with only those duties as are
expressly set forth in this Agreement and the other Transaction Documents. In
its capacity as the Lenders' contractual representative, the Agent (i) does not
assume any fiduciary duties to any of the Lenders, (ii) is a "representative" of
the Lenders within the meaning of Section 9-102 of the UCC and (iii) is acting
as an independent contractor, the rights and duties of which are limited to
those expressly set forth in this Agreement and the other Transaction Documents.
Each of the Lenders agrees to assert no claim against the Agent on any agency
theory or any other theory of liability for breach of fiduciary duty, all of
which claims each Lender waives.
42
SECTION 9.02. Powers. The Agent shall have and may exercise such powers
under the Transaction Documents as are specifically delegated to the Agent by
the terms of each thereof, together with such powers as are reasonably
incidental thereto. The Agent shall have no implied duties or fiduciary duties
to the Lenders, or any obligation to the Lenders to take any action hereunder or
under any of the other Transaction Documents except any action specifically
provided by the Transaction Documents required to be taken by the Agent.
SECTION 9.03. General Immunity. Neither the Agent nor any of its
directors, officers, agents or employees shall be liable to the Borrower or any
Lender for any action taken or omitted to be taken by it or them hereunder or
under any other Transaction Document or in connection herewith or therewith
except to the extent such action or inaction is found in a final non-appealable
judgment by a court of competent jurisdiction to have arisen solely from (i) the
gross negligence or willful misconduct of such Person or (ii) breach of contract
by such Person with respect to the Transaction Documents.
SECTION 9.04. No Responsibility for Advances, Creditworthiness,
Collateral, Recitals, Etc. Neither the Agent nor any of its directors, officers,
agents or employees shall be responsible for or have any duty to ascertain,
inquire into, or verify (i) any statement, warranty or representation made in
connection with any Transaction Document or any Borrowing hereunder; (ii) the
performance or observance of any of the covenants or agreements of any obligor
under any Transaction Document; (iii) the satisfaction of any condition
specified in Article V, except receipt of items required to be delivered solely
to the Agent; (iv) the existence or possible existence of any Unmatured Event of
Default or Event of Default or (v) the validity, effectiveness or genuineness of
any Transaction Document or any other instrument or writing furnished in
connection therewith. The Agent shall not be responsible to any Lender for any
recitals, statements, representations or warranties herein or in any of the
other Transaction Documents, for the perfection or priority of any of the Liens
on any of the Collateral, or for the execution, effectiveness, genuineness,
validity, legality, enforceability, collectibility, or sufficiency of this
Agreement or any of the other Transaction Documents or the transactions
contemplated thereby, or for the financial condition of any guarantor of any or
all of the Obligations, the Borrower or any of their respective subsidiaries.
SECTION 9.05. Action on Instructions of Lenders. The Agent shall in all
cases be fully protected in acting, or in refraining from acting, hereunder and
under any other Transaction Document in accordance with written instructions
signed by the Required Lenders, and such instructions and any action taken or
failure to act pursuant thereto shall be binding on all of the Lenders and on
all holders of Notes. The Agent shall be fully justified in failing or refusing
to take any action hereunder and under any other Transaction Document unless it
shall first be indemnified to its satisfaction by the Lenders pro rata against
any and all liability, cost and expense that it may incur by reason of taking or
continuing to take any such action.
SECTION 9.06. Employment of Agents and Counsel. The Agent may execute any
of its duties as the Agent hereunder and under any other Transaction Document by
or through employees, agents, and attorney-in-fact and shall not be answerable
to the Lenders, except as to money or securities received by it or its
authorized agents, for the default or misconduct of any such agents or
attorneys-in-fact selected by it with reasonable care. The Agent shall be
entitled to advice of counsel concerning the contractual arrangement between the
Agent and the Lenders and all matters pertaining to the Agent's duties hereunder
and under any other Transaction Document.
43
SECTION 9.07. Reliance on Documents; Counsel. The Agent shall be entitled
to rely upon any Note, notice, consent, certificate, affidavit, letter,
telegram, statement, paper or document believed by it to be genuine and correct
and to have been signed or sent by the proper person or persons, and, in respect
to legal matters, upon the opinion of counsel selected by the Agent, which
counsel may be employees of the Agent.
SECTION 9.08. The Agent's Reimbursement and Indemnification. The Lenders
agree to reimburse and indemnify the Agent ratably in proportion to their
respective Pro Rata Shares (i) for any amounts not reimbursed by the Borrower
for which the Agent is entitled to reimbursement by the Borrower under the
Transaction Documents, (ii) for any other expenses incurred by the Agent on
behalf of the Lenders, in connection with the preparation, execution, delivery,
administration and enforcement of the Transaction Documents and (iii) for any
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind and nature whatsoever which may be
imposed on, incurred by or asserted against the Agent in any way relating to or
arising out of the Transaction Documents or any other document delivered in
connection therewith or the transactions contemplated thereby, or the
enforcement of any of the terms thereof or of any such other documents, provided
that no Lender shall be liable for any of the foregoing to the extent any of the
foregoing is found in a final non-appealable judgment by a court of competent
jurisdiction to have arisen solely from the gross negligence or willful
misconduct of the Agent.
SECTION 9.09. Rights as a Lender. With respect to its Commitment and
Advances made by it and the Notes issued to it, the Agent shall have the same
rights and powers hereunder and under any other Transaction Document as any
Lender and may exercise the same as through it were not the Agent, and the term
"Lender" or "Lenders", as applicable, shall, unless the context otherwise
indicates, include the Agent in its individual capacity. The Agent may accept
deposits from, lend money to, and generally engage in any kind of trust, debt,
equity or other transaction, in addition to those contemplated by this Agreement
or any other Transaction Document, with the Borrower or any of its Affiliates in
which such Person is not prohibited hereby from engaging with any other Person.
SECTION 9.10. Lender Credit Decision. Each Lender acknowledges that it
has, independently and without reliance upon the Agent or any other Lender and
based on the financial statements prepared by the Borrower and such other
documents and information as it has deemed appropriate, made its own credit
analysis and decision to enter into this Agreement and the other Transaction
Documents. Each Lender also acknowledges that it will, independently and without
reliance upon the Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Transaction Documents.
44
SECTION 9.11. Successor Agent. The Agent may resign at any time by giving
written notice thereof to the Lenders and the Borrower, and the Agent may be
removed at any time with or without cause by written notice received by the
Agent from the Required Lenders. Upon any such resignation or removal, the
Required Lenders shall have the right to appoint, on behalf of the Borrower and
the Lenders, a successor Agent. If no successor Agent shall have been so
appointed by the Required Lenders and shall have accepted such appointment
within thirty (30) days after the retiring Agent's giving notice of resignation,
then the retiring Agent may appoint, on behalf of the Borrower and the Lenders,
a successor Agent. Notwithstanding anything herein to the contrary, so long as
no Event of Default has occurred and is continuing, each such successor Agent
shall be subject to approval by the Borrower, which approval shall not be
unreasonably withheld. Such successor Agent shall be a commercial bank or other
type of institution acceptable to the Lenders having capital and retained
earnings of at least $50,000,000. Upon the acceptance of any appointment as the
Agent hereunder by a successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Agent, and the retiring Agent shall be discharged from its
duties and obligations hereunder and under the other Transaction Documents.
After any retiring Agent's resignation hereunder as Agent, the provisions of
this Article IX shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the Agent
hereunder and under the other Transaction Documents.
SECTION 9.12. Transaction Documents. Each Lender authorizes the Agent to
enter into each of the Transaction Documents to which it is a party and to take
all action contemplated by such documents. Each Lender agrees that no Lender
shall have the right individually to seek to realize upon the security interest
granted by this Agreement or any other Transaction Document, it being understood
and agreed that such rights and remedies may be exercised solely by the Agent
for the benefit of the Lenders upon the terms of the Transaction Documents.
ARTICLE X
ASSIGNMENT OF LENDER'S INTEREST
SECTION 10.01. Restrictions on Assignments.
(a) (i) Any Lender may at any time, without the consent of the Borrower or
the Agent, assign all or any portion of its rights under this Agreement and any
Note to a Federal Reserve Bank and (ii) any Lender which is a fund or commingled
investment vehicle that invests in commercial loans in the ordinary course of
its business may at any time, without the consent of the Borrower or the Agent,
pledge or assign all or any part of its rights under this Agreement and the
other Transaction Documents to a trustee or other representative of holders of
obligations owed or securities issued by such Lender as collateral to secure
such obligations or securities; provided, however, that no such assignment or
pledge shall release the transferor Lender from its obligations hereunder. Each
Lender may assign to one or more banks or other entities all or any part or
portion of its rights and obligations hereunder (including, without limitation,
its Commitment, its Notes or its Advances); provided, however, that each such
assignment (i) shall be in form and substance acceptable to the Agent and (ii)
shall be to a bank or other financial institution which is acceptable to the
Agent in its sole discretion; provided, further, however, that no such
assignment shall be permitted without the Borrower's prior written consent
(which may be withheld in its sole and absolute discretion) unless an Event of
Default shall have occurred and be continuing at the time thereof. Upon, and to
the extent of, any assignment (unless otherwise stated therein) made by any
Lender hereunder, the assignee or purchaser of such assignment shall be a Lender
hereunder for all purposes of this Agreement. Without limiting the foregoing,
each assignee and each purchaser of an assignment shall, to the fullest extent
permitted by law, have the same rights and benefits hereunder with respect to
the rights and benefits so assigned or participated as it would have if it were
a Lender hereunder.
45
(b) This Agreement and the rights and obligations of the Agent hereunder
shall be assignable, in whole or in part, by the Agent and its successors and
assigns with the prior written consent of the Borrower, provided that, if (i)
such assignment is to an Affiliate of Nomura, (ii) it becomes unlawful for
Nomura to serve as the Agent or (iii) an Event of Default exists, no such
consent of the Borrower shall be necessary.
(c) The Borrower may not assign its rights or delegate its obligations
hereunder or any interest herein without the prior written consent of the Agent
and each of the Lenders.
(d) Without limiting any other rights that may be available under
applicable law, the rights of the Lenders may be enforced through them or by
their agents.
(e) Any Lender may, with the prior written consent of the Borrower (which
may be withheld in its sole and absolute discretion) unless an Event of Default
shall have occurred and be continuing at the time thereof, sell participations
to one or more banks or other entities (each, a "Participant") in all or a
portion of its rights and obligations hereunder (including the outstanding
Advances); provided that following the sale of a participation under this
Agreement (i) the obligations of such Lender and the Borrower shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Borrower, the Agent
and the other Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement. Any permitted agreement or instrument pursuant to which such Lender
sells such a participation shall provide that the Participant shall not have any
right to direct the enforcement of this Agreement or the other Transaction
Documents or to approve any amendment, modification or waiver of any provision
of this Agreement or the other Transaction Documents; provided that such
agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver that
(i) reduces the amount of principal or interest that is payable on account of
any Advance or delays any scheduled date for payment thereof or (ii) reduces any
fees payable by the Borrower to the Agent (to the extent relating to payments to
the Participant) or delays any scheduled date for payment of such fees.
46
SECTION 10.02. Evidence of Assignment. Any assignment of a Lender's rights
and obligations hereunder, its Commitment and its Note (or any portion thereof)
to any Person may be evidenced by an Assignment and Acceptance or such other
instrument(s) or document(s) as may be satisfactory to the assigning Lender, the
Borrower (so long as no Event of Default shall have occurred and be continuing
at such time), the Agent and the assignee.
ARTICLE XI
INDEMNIFICATION
SECTION 11.01. Indemnities.
(a) General Indemnity. Without limiting any other rights that any such
Person may have hereunder or under applicable law (including, without
limitation, the right to recover damages for breach of contract), the Borrower
hereby agrees to indemnify each of the Agent and the Lender and, each of their
respective Affiliates, members, and all successors, transferees, participants
and assigns and all officers, directors, employees, advisors and agents of any
of the foregoing (each an "Indemnified Party"), forthwith on demand, from and
against any and all damages, losses, claims, liabilities and related costs and
expenses, including attorneys' fees and disbursements (all of the foregoing
being collectively referred to as "Indemnified Amounts") awarded against or
incurred by any of them arising out of or relating to the Transaction Documents
or the funding of the Advances or in respect of any Pledged Student Loan,
excluding, however, Indemnified Amounts to the extent determined by a court of
competent jurisdiction to have resulted from gross negligence or willful
misconduct on the part of such Indemnified Party. Without limiting the
foregoing, the Borrower shall indemnify each Indemnified Party for Indemnified
Amounts arising out of or relating to:
(i) the adjustment or any non-cash reduction in the outstanding
Principal Balance of any Pledged Student Loan other than as expressly
permitted hereunder or under the applicable Servicing Agreement;
(ii) the transfer by the Borrower of any interest in the Collateral
other than the grant of the security interest granted to the Agent, for
the benefit of Lenders and the other Secured Parties, pursuant to Section
1.03;
(iii) any representation or warranty made or deemed made by the
Borrower (or any of its officers or Affiliates) under or in connection
with any Transaction Document or any other information or report delivered
by or on behalf of the Borrower pursuant hereto, which shall have been
false, incorrect or misleading in any respect when made or deemed made;
(iv) the failure by the Borrower to comply with any applicable law,
rule or regulation with respect to any Pledged Student Loan or the
nonconformity of any Pledged Student Loan with any such applicable law,
rule or regulation, including in each case (without limitation) failure to
comply with the Equal Credit Opportunity Act, the Fair Debt Collection
Practices Act, the Truth in Lending Act, the Federal Trade Commission Act,
the Federal Reserve Board's Regulation B, applicable laws relating to
usury, truth-in-lending, education lending, fair credit billing, fair
credit reporting, fair debt collection practices, privacy, consumer credit
protection and disclosure and other applicable consumer credit laws and
equal credit opportunity laws;
47
(v) the failure to vest and maintain vested in the Agent, for the
benefit of the Secured Parties, a first priority perfected security
interest, in the Collateral, free and clear of any Lien, other than a Lien
arising solely as a result of an act of the Lenders or the Agent, whether
existing at the time of any Borrowing or at any time thereafter;
(vi) the failure to file, or any delay in filing, financing
statements, continuation statements, or other similar instruments or
documents under the UCC of any applicable jurisdiction or other applicable
laws with respect to any item of the Collateral, whether at the time of
any Borrowing or at any time thereafter;
(vii) any dispute, claim, offset or defense (other than discharge in
bankruptcy) of the Obligor to the payment of any Student Loan in, or
purporting to be in, the Collateral, any diminution in value of the
Collateral, or any other claim brought by any Person, in each case,
arising from any activity or inactivity by the Borrower or an Affiliate of
the Borrower in connection with the Collateral (including, without
limitation, a defense based on such Student Loan not being a legal, valid
and binding obligation of such Obligor enforceable against it in
accordance with its terms or any defense based on the failure to comply
with the Equal Credit Opportunity Act, the Fair Debt Collection Practices
Act, the Truth in Lending Act, the Federal Trade Commission Act, the
Federal Reserve Board's Regulation B, applicable laws relating to usury,
truth-in-lending, education lending, fair credit billing, fair credit
reporting, fair debt collection practices, privacy, consumer credit
protection and disclosure and other applicable consumer credit laws and
equal credit opportunity laws);
(viii)the introduction after the Closing Date of, or any change
after the Closing Date in, the interpretation or administration of any
law, rule or regulation that results in any tax or governmental fee or
charge (but not including taxes upon or measured by net income or gross
revenues), all interest and penalties thereon or with respect thereto, and
all out-of-pocket costs and expenses, including the reasonable fees and
expenses of counsel in defending against the same, which may arise by
reason of the Advances, or any interest in the item of the Collateral;
(ix) the failure by the Borrower to comply with any term, provision
or covenant contained in any Transaction Document to which it is party;
(x) any Lien (other than the Lien granted to the Agent under this
Agreement) attaching to any Student Loan or any Related Security or
Collections with respect thereto, arising in connection with any action or
inaction by the Borrower or any Affiliate of the Borrower whether existing
at the time that such Student Loan initially arose or at any time
thereafter;
48
(xi) any claim or action of whatever sort arising out of or in
connection with the servicing of any Student Loan to the extent such
servicing was provided by the Borrower or an Affiliate of the Borrower or,
if such servicing was provided by a Person not the Borrower or an
Affiliate of the Borrower, to the extent the Borrower is entitled to
recover such Indemnified Amounts from such non-Affiliate or another
Person;
(xii) the failure to pay when due any taxes and fees payable by the
Borrower or any Originator in connection with the Collateral or the
execution, delivery, filing and recording of this Agreement or the other
agreements and documents to be delivered hereunder (including any UCC
financing statements);
(xiii)the payment by such Indemnified Party of taxes, including,
without limitation, any taxes imposed by any jurisdiction on amounts
payable and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, to the extent caused by the
Borrower's actions or failure to act in breach of this Agreement,
excluding, however, any taxes which the Borrower is expressly not
obligated to pay pursuant to Sections 2.06 and 4.02;
(xiv) the commingling of Collections with any other funds of the
Borrower or any Affiliate of the Borrower;
(xv) any failure by the Borrower to give reasonably equivalent value
to any Originator in consideration for the transfer by such Originator to
the Borrower of any Student Loans, or any attempt by any Person to void
any such transfer under any statutory provision or common law or equitable
action, including, without limitation, any provision of the Bankruptcy
Code;
(xvi) any investigation, litigation or proceeding arising out of or
related to this Agreement or the use of proceeds of the Advances made
pursuant to this Agreement or any other Transaction Document delivered
hereunder or in respect of any of the Student Loans related hereto;
(xvii)the sale or pledge by the Borrower or any Affiliated
Originator of any Student Loan in violation of any applicable law, rule or
regulation.
Any amounts subject to the indemnification provisions of this Section 11.01
shall be paid by the Borrower to the related Indemnified Party within five (5)
Business Days following demand therefor accompanied by reasonable supporting
documentation with respect to such amounts.
49
(b) Contest of Tax Claim; After-Tax Basis. If any Indemnified Party shall
have notice of any attempt to impose or collect any tax or governmental fee or
charge for which indemnification will be sought from the Borrower under Section
11.01(a)(xiii), such Indemnified Party shall give prompt and timely notice of
such attempt to the Borrower. Indemnification hereunder shall be in an amount
necessary to make the Indemnified Party whole after taking into account any tax
consequences to the Indemnified Party of the payment of any of the aforesaid
taxes and the receipt of the indemnity provided hereunder or of any refund of
any such tax previously indemnified hereunder, including the effect of such tax
or refund on the amount of tax measured by net income or profits which is or was
payable by the Indemnified Party.
ARTICLE XII
SERVICING OF PLEDGED STUDENT LOANS
SECTION 12.01. Appointment of Servicer(s). The Borrower, for the benefit
of the Agent and the Lenders, shall appoint one or more Servicers approved by
the Agent and the Lenders to manage, service, administer and make collections on
the Pledged Student Loans pursuant to agreements that are satisfactory in form
and substance to the Agent. For purposes of this Section 12.01, the Servicers
listed on Exhibit 12.01 shall be deemed approved by the Agent and the Lenders.
The fees and expenses of each Servicer (and any such sub-contractors) shall be
as agreed between the Borrower and the applicable Servicer or a sub-contractor
from time to time and none of the Lenders or the Agent shall have any
responsibility therefor.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01. Amendments, Etc. No amendment or waiver of any provision of
this Agreement nor consent to any departure by the Borrower therefrom shall in
any event be effective unless the same shall be in writing and signed by each of
the parties hereto and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given.
SECTION 13.02. Notices, Etc. All notices and other communications provided
for hereunder shall, unless otherwise stated herein, be in writing (including
facsimile communication) and shall be personally delivered or sent by express
mail or courier or by certified mail, postage prepaid, or by facsimile, to the
intended party at the address or facsimile number of such party set forth on
Schedule 13.02 attached hereto or at such other address or facsimile number as
shall be designated by such party in a written notice to the other parties
hereto. All such notices and communications shall be effective, (a) if
personally delivered or sent by express mail or courier or if sent by certified
mail, when received, and (b) if transmitted by facsimile, when sent, receipt
confirmed by telephone or electronic means.
SECTION 13.03. No Waiver; Remedies. No failure on the part of the
Borrower, the Agent, any Affected Party, any Indemnified Party or any Lender to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof (unless waived in writing); nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
50
SECTION 13.04. Binding Effect; Survival. This Agreement shall be binding
upon and inure to the benefit of the Borrower, the Agent and the Lenders, and
their respective successors and assigns, and the provisions of Section 4.02 and
Article XI shall inure to the benefit of the Affected Parties and the
Indemnified Parties, respectively, and their respective successors and assigns;
provided, however, nothing in the foregoing shall be deemed to authorize any
assignment not permitted by Section 9.06 or Section 10.01. This Agreement shall
create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect until the
Final Payout Date. The rights and remedies with respect to any breach of any
representation and warranty made or deemed made by the Borrower pursuant to
Article VI and the indemnification and payment provisions of Articles IX and XI
and Sections 2.06, 4.02, 13.05, 13.06 and 13.12 shall be continuing and shall
survive any termination of this Agreement.
SECTION 13.05. Costs, Expenses and Taxes. In addition to its obligations
under Article XI, the Borrower agrees to pay within fifteen Business Days of
demand therefor:
(a) all reasonable costs and expenses incurred by the Agent and the
Lenders and their respective Affiliates in connection with the negotiation,
preparation, execution and delivery, the administration (including periodic
auditing) the amendment to, or waiver of, or the enforcement of, or any actual
or claimed breach of, this Agreement and the other Transaction Documents,
including, without limitation (i) the fees and expenses of counsel to any of
such Persons incurred in connection with any of the foregoing or in advising
such Persons as to their respective rights and remedies under any of the
Transaction Documents, and (ii) all reasonable out-of-pocket expenses (including
reasonable fees and expenses of independent accountants), incurred in connection
with any review of the Borrower's books and records either prior to the
execution and delivery hereof or pursuant to Section 7.01(c) or a Servicing
Agreement; and
(b) all stamp and other taxes and fees payable or determined to be payable
in connection with the execution, delivery, filing and recording of this
Agreement or the other Transaction Documents, and agrees to indemnify each
Indemnified Party against any liabilities with respect to or resulting from any
delay in paying or omission to pay such taxes and fees.
SECTION 13.06. Captions and Cross References. The various captions
(including, without limitation, the table of contents) in this Agreement are
provided solely for convenience of reference and shall not affect the meaning or
interpretation of any provision of this Agreement. Unless otherwise indicated,
references in this Agreement to any Section, Appendix, Schedule or Exhibit are
to such Section of or Appendix, Schedule or Exhibit to this Agreement, as the
case may be, and references in any Section, subsection, or clause to any
subsection, clause or subclause are to such subsection, clause or subclause of
such Section, subsection or clause.
SECTION 13.07. Integration. This Agreement and the other Transaction
Documents, contains a final and complete integration of all prior expressions by
the parties hereto with respect to the subject matter hereof and shall
constitute the entire understanding among the parties hereto with respect to the
subject matter hereof, superseding all prior oral or written understandings.
51
SECTION 13.08. Governing Law. THIS AGREEMENT, INCLUDING THE RIGHTS AND
DUTIES OF THE PARTIES HERETO, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK (INCLUDING SECTIONS 5-1401 AND 5-1402 OF
THE GENERAL OBLIGATIONS LAW BUT OTHERWISE WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES), EXCEPT TO THE EXTENT THAT THE PERFECTION OF THE INTERESTS OF THE
SECURED PARTIES IN THE COLLATERAL IS GOVERNED BY THE LAWS OF ANY JURISDICTION
OTHER THAN THE STATE OF NEW YORK.
SECTION 13.09. Waiver Of Jury Trial; Submission to Jurisdiction. THE
BORROWER HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, ANY OTHER
TRANSACTION DOCUMENT OR UNDER ANY AMENDMENT, INSTRUMENT OR DOCUMENT DELIVERED OR
WHICH MAY BE IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR ARISING FROM
ANY BANKING OR OTHER RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR
ANY OTHER TRANSACTION DOCUMENT AND AGREES THAT ANY SUCH ACTION OR PROCEEDING
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THE BORROWER HEREBY SUBMITS
TO THE NON-EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE
COURTS OF THE UNITED STATES LOCATED IN THE STATE OF NEW YORK FOR THE PURPOSE OF
ADJUDICATING ANY CLAIM OR CONTROVERSY ARISING IN CONNECTION WITH THIS AGREEMENT
OR ANY OTHER TRANSACTION DOCUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY
AND THEREBY AND, FOR SUCH PURPOSE, HEREBY WAIVES ANY OBJECTION BASED ON FORUM
NON CONVENIENS, AND ANY OBJECTION TO VENUE THEREIN OF ANY ACTION INSTITUTED
HEREUNDER AND CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS
DEEMED APPROPRIATE BY THE COURT. NOTHING IN THIS SECTION 13.10 SHALL AFFECT THE
RIGHT OF ANY LENDER OR THE AGENT TO BRING ANY ACTION OR PROCEEDING AGAINST ANY
PARTY HERETO OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION.
SECTION 13.10. Execution in Counterparts. This Agreement may be executed
in any number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement.
SECTION 13.11. No Recourse Against Other Parties. No recourse under any
obligation, covenant or agreement of the Lenders, the Agent or the Borrower
contained in this Agreement shall be had against any stockholder, employee,
officer, director, or incorporator of any of the Lenders, the Agent or the
Borrower; provided, however, that nothing in this Section 13.11 shall relieve
any of the foregoing Persons from any liability which such Person may otherwise
have for his/her or its gross negligence or willful misconduct.
52
SECTION 13.12. Confidentiality.
(a) The Borrower and each Secured Party agrees that it shall not (and
shall not allow any of its Affiliates to) disclose to any Person or entity the
terms hereof or the terms of any other Transaction Document (including, without
limitation, any specific pricing information provided by the Agent and its
Affiliates or the amount or terms of any fees payable to the Agent and its
Affiliates in connection with the transaction contemplated by the Transaction
Documents (the "Transaction")) or the structure of the Transaction, any related
structures developed by the Agent and its Affiliates for the Borrower or its
Affiliates, any related analyses, computer models, information or documents, any
written or oral reports from the Agent and its Affiliates to the Borrower or its
Affiliates or from the Borrower or its Affiliates to any Secured Party or any
related written information, or the existence and status of any ongoing
negotiations between the Borrower and its Affiliates and the Agent and its
Affiliates concerning the Transaction (collectively, the "Product Information"),
except to its and its Affiliates' employees, officers, directors, advisors,
representatives, accountants, legal counsel and agents (collectively, the
"Representatives") who have a need to know the Product Information for the
purpose of assisting in the negotiation and completion of the Transaction and
who agree to be bound by the provisions of this Section 13.12 and to use such
Product Information only in connection with the Transaction and not for any
other purpose. The Borrower and each Secured Party, respectively, will be
responsible for any failure of any of its Representatives to comply with the
provisions of this Section 13.12. "Product Information" shall not include,
however, information that is a matter of general public knowledge or has
heretofore been or is hereafter published in any source generally available to
the public. Notwithstanding the foregoing, the Borrower and each Secured Party
may (i) disclose Product Information to the extent required by applicable law,
regulation, subpoena or other legal process, (ii) file copies of the Transaction
Documents with the Securities Exchange Commission to the extent required by law,
rule or regulation and (iii) submit copies of the Transaction Documents to one
or more Rating Agencies as required by such Rating Agency(ies), and each Secured
Party may disclose Product Information to its Permitted Recipients (as defined
in Section 13.12(b) below) which, in each case, may have a need to know or
review such Product Information for the purpose of assisting in the negotiation,
completion, administration and/or evaluation of the Transaction, a sale referred
to in clause (iv) of Section 13.12(b) below or a securitization transaction
referred to in clause (v) of Section 13.12(b) below, as the case may be.
(b) Each of the Secured Parties agrees to keep all non-public information
with respect to the Borrower and its Affiliates, including, without limitation,
customer lists and origination processes and other intellectual property which
such Secured Party receives pursuant to the Transaction Documents (collectively,
the "Borrower Information") confidential and to disclose Borrower Information
only to (i) those of its officers, employees, agents, accountants, legal counsel
and other representatives of the Secured Parties, (ii) rating agencies, (iii)
its actual or potential assignees or Participants (provided that an assignment
or participation to such Person would be permitted pursuant to Section 10.01),
(iv) actual or potential purchasers of the Pledged Student Loans pursuant to a
sale contemplated by Section 8.02(c) and (v) actual or potential parties to, or
investors in, a securitization transaction to which all or a portion of the
Pledged Student Loans may become subject (the Persons described in clauses (i)
through (v) collectively, being the "Permitted Recipients"), which, in each
case, may have a need to know or review such Borrower Information for the
purpose of assisting in the negotiation, completion, administration and/or
evaluation of the Transaction, a sale referred to in clause (iv) above or a
securitization transaction referred to in clause (v) above, as the case may be;
provided that such Secured Party provides prior written notice to the Borrower
to the extent permitted by law and causes the such Permitted Recipient to comply
with the provisions of this Section 13.12(b).
53
(c) The provisions of Section 13.12(a) and Section 13.12(b), as
applicable, shall not apply to any Product Information or Borrower Information
that is a matter of general public knowledge or that has heretofore been made
available to the public by any Person other than such Permitted Recipient or
that is required to be disclosed by applicable law, regulation, subpoena or
other legal process or is requested by any authority with jurisdiction over the
Borrower, any Secured Party or Permitted Recipient or any of their respective
Affiliates.
(d) Notwithstanding the foregoing, the Product Information may be
disclosed by the Borrower or its Affiliates to any Person with the Agent's prior
written consent.
(e) Each party hereto agrees not to use the name of each other party
hereto in any press release or marketing materials without the prior written
consent of such other party; provided that the foregoing shall not apply to any
documents that are required by applicable law, rule or regulation to include
such other party's name and to be filed with the United States Securities and
Exchange Commission.
(f) The provisions of this Section 13.12 shall survive the termination of
this Agreement.
SECTION 13.13. Limitation of Liability. No claim may be made by the
Borrower, any of its Affiliates, or any other Person against the Lenders or the
Agent or their respective Affiliates, directors, officers, employees, attorneys
or agents for any special, indirect, consequential or punitive damages in
respect of any claim for breach of contract or any other theory of liability
arising out of or related to the transactions contemplated by this Agreement, or
any act, omission or event occurring in connection therewith; and the Borrower
hereby waives, releases, and agrees not to ▇▇▇ upon any claim for any such
damages, whether or not accrued and whether or not known or suspected to exist
in its favor.
SECTION 13.14. Actions to be Taken on Days other than Business Days. In
any case where any action is to be taken under this Agreement on any day other
than a Business Day, such action need not be taken on such day but instead may
be taken on the next succeeding Business Day with the same force and effect as
if taken on the date required under this Agreement.
[SIGNATURES BEGIN ON FOLLOWING PAGE]
54
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their respective officers thereunto duly authorized, as of the date first above
written.
MRU LENDING, INC., as the Borrower
By:
---------------------------------------
Name:
Title:
S-1
NOMURA CREDIT & CAPITAL, INC., as a Lender
By:
---------------------------------------
Name:
Title:
Commitment: $165,000,000
NOMURA CREDIT & CAPITAL, INC., as Agent
By:
---------------------------------------
Name:
Title:
S-2