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EXHIBIT 10.1
MASTER REPURCHASE AGREEMENT
Dated March 27, 1998
Between
▇▇▇▇▇▇ COMMERCIAL PAPER INC.,
as Buyer
and
EDUCATIONAL FINANCE GROUP, LIMITED
as Seller
1. APPLICABILITY
From time to time for a period of 364 days from the date hereof, the
parties hereto may, subject to the terms hereof, enter into transactions in
which Education Finance Group, Limited ("Seller") agrees to transfer to ▇▇▇▇▇▇
Commercial Paper Inc., ("Buyer") all of Seller's right, title and interest in
and to certain Student Loans against the transfer of funds by Buyer, with a
simultaneous agreement by Buyer to transfer to Seller its right, title and
interest in and to such Student Loans at a date certain not later than the date
then set for termination of this Agreement pursuant to Section 20 herein, as
specified in the Confirmation, against the transfer of funds by Seller. Each
such transaction shall be referred to herein as a "Transaction" and shall be
governed by this Agreement and the related Confirmation, unless otherwise agreed
in writing. Each Transaction shall commence on the Purchase Date and terminate
on the Repurchase Date therefor and shall be limited to a maximum of 30 days,
after which, subject to Section 20 herein, the Buyer and Seller may agree to
roll such Transaction into a new Transaction which shall likewise have a maximum
term of 30 days. Pursuant to an agreement dated as of the date hereof (the
"Guarantor Agreement"), between Buyer and UICI (the "Guarantor"), the Guarantor
will fully and unconditionally guarantee the obligations of Buyer hereunder.
Buyer and Seller acknowledge that the Higher Education Act requires that legal
title to federally guaranteed student loans be held by an "eligible lender" as
defined in such act. Seller agrees, therefore, that prior to giving effect to
each Transaction relating to any Federal Student Loans, Seller shall hold the
beneficial interest in such Federal Student Loans pursuant to a Trust Agreement,
dated as of February 24, 1998 (the "EFG Trust Agreement," and the Trust created
thereby, the "EFG Trust"), between Seller and The First National Bank of
Chicago, as trustee (in such capacity, the "EFG Trustee"). In addition, Buyer
and Seller agree that each transfer of Federal Student Loans under this
Agreement shall, notwithstanding anything herein to the contrary, constitute a
transfer of all of the beneficial interest in such Federal Student Loans granted
to Seller under the EFG Trust and only of such beneficial interest, with the
legal title thereto being retained at all times by
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the EFG Trustee pursuant to the EFG Trust Agreement, together with a pledge of a
security interest in such Federal Student Loans (including a pledge of legal
title by the EFG Trustee) as provided in Section 6. Buyer and Seller further
agree that at all times hereunder with respect to each Transaction, The First
National Bank of Chicago, (i) as EFG Trustee shall retain legal title to the
Purchased Federal Student Loans for the benefit of Seller (which beneficial
interest the Seller transfers and pledges together with the other rights and
interests it holds in such loans, as described above, pursuant to each
Transaction to the Eligible Lender Trustee for Buyer's benefit), and (ii) as
Eligible Lender Trustee, shall hold the beneficial interest and security
interest in the Purchased Federal Student Loans described in the preceding
sentence under the Repurchase Trust Agreement for the sole and exclusive benefit
of Buyer under such agreement and, accordingly, all references herein to the
purchase or other transfer of any of Seller's right, title and interest in the
Purchased Federal Student Loans to, or the ownership or other retention of the
Purchased Federal Student Loans by, Buyer, or the granting of the security
interest therein pursuant to Section 6, shall be deemed to refer solely to such
Student Loans held in such capacity and manner, notwithstanding anything else in
this Agreement to the contrary. Notwithstanding anything in this Agreement to
the contrary, Buyer shall have no obligation to enter into any Transaction
hereunder.
2. DEFINITIONS
"Act of Insolvency" means, with respect to any Person and its Affiliates, (i)
the filing of a petition, commencing, or authorizing the commencement of any
case or proceeding under any bankruptcy, insolvency, reorganization,
liquidation, dissolution or similar law relating to the protection of creditors,
or suffering any such petition or proceeding to be commenced by another which is
consented to, not timely contested or results in entry of an order for relief;
(ii) the seeking the appointment of a receiver, trustee, custodian or similar
official for such party or an Affiliate or any substantial part of the property
of either, (iii) the appointment of a receiver, conservator, or manager for such
party or an Affiliate by any governmental agency or authority having the
jurisdiction to do so; (iv) the making or offering by such party or an Affiliate
of a composition with its creditors or a general assignment for the benefit of
creditors; (v) the admission by such party or an Affiliate of such party of its
inability to pay its debts or discharge its obligations as they become due or
mature; or (vi) that any governmental authority or agency or any person, agency
or entity acting or purporting to act under governmental authority shall have
taken any action to condemn, seize or appropriate, or to assume custody or
control of, all or any substantial part of the property of such party or of any
of its Affiliates, or shall have taken any action to displace the management of
such party or of any of its Affiliates.
"Additional Student Loans" means Student Loans provided by Seller to Buyer or
its designee pursuant to Section 4(a).
"Affiliate" means an affiliate of a party as such term is defined in the United
States Bankruptcy Code in effect from time to time.
"Agreement" means this Master Repurchase Agreement between Buyer and Seller, as
amended from time to time.
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"Business Day" means a day other than (i) a Saturday or Sunday, or (ii) a day on
which the Buyer or the New York Stock Exchange or banks located in Chicago,
Illinois are authorized or obligated by law or executive order to be closed.
"Buyer" has the meaning specified in Section 1.
"Collateral Amount" means, with respect to any Transaction, the amount obtained
by application of the applicable Collateral Amount Percentage to the unpaid
principal balance (such balance to include, in the case of Federal Student
Loans, accrued interest that is not then payable but is to be capitalized and
added to principal) for the Purchased Student Loans subject to such Transaction.
"Collateral Amount Percentage" means the amount set forth in the Confirmation
which, in any event, shall not be less than 105% for Purchased Student Loans.
"Collateral Deficit" has the meaning specified in Section 4(a).
"Computer Tape" means, with respect to each Transaction, a list in computer
readable form of the Purchased Student Loans, containing such information with
respect thereto as Buyer shall have requested.
"Confirmation" has the meaning specified in Section 3(a).
"DOE" means the U.S. Department of Education, and any successor thereto.
"EFG Trust" has the meaning specified in Section 1.
"EFG Trust Agreement" has the meaning specified in Section 1.
"EFG Trustee" has the meaning specified in Section 1.
"Eligible Lender Trustee" means The First National Bank of Chicago, in its
capacity as trustee under the Repurchase Trust Agreement.
"Event of Default" has the meaning specified in Section 13.
"Federal Student Loans" means student loans which are guaranteed as to principal
and interest by a guaranty agency pursuant to a Guaranty Agreement, under
pertinent provisions of the Higher Education Act.
"Guarantor" has the meaning specified in Section 1.
"Guarantor Agreement" has the meaning specified in Section 1.
"Guaranty Agreement" means each guaranty agreement entered into with a guaranty
agency under the Higher Education Act and covering one or more of the Purchased
Federal Student Loans or the ▇▇▇▇ Guaranty Agreement with respect to the
Purchased Private Student Loans.
"Higher Education Act" means the Higher Education Act of 1965, as amended,
together with any rules, regulations and interpretations thereunder of DOE or
the applicable guaranty agency.
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"Income" means, with respect to any Purchased Student Loan at any time, any
principal thereof when paid and all interest, guaranty payments, Subsidy
Payments or other distributions paid in respect of such Student Loan less any
related servicing fee(s) charged by the Servicer and any trustee fee(s) pursuant
to the Repurchase Trust Agreement.
"Loan Files" means the file customarily maintained for Student Loans by the
Seller's servicer.
"Market Value" means as of any date with respect to any Student Loans, the price
at which such Student Loans could readily be sold or securitized as determined
by Buyer in its sole discretion pursuant to Section 4; provided, however, that
Buyer shall not take into account, for purposes of calculating Market Value, any
Student Loan (i) which is a Federal Student Loan that is more than 120 days
delinquent or a Private Student Loan that is more than 90 days delinquent, or
(ii) with respect to which there is a breach of a representation, warranty or
covenant made by Seller in this Agreement and which breach has not been cured.
"Non-cash generating" means any Purchased Student Loan that is not generating
current cash flow exclusive of, in the case of Purchased Federal Student Loans,
special allowance payments.
"Obligor" means a borrower on a Student Loan or any other Person who is indebted
under the related Student Loan.
"Periodic Payment" has the meaning specified in Section 5(b).
"Person" means an individual, partnership, corporation, joint stock company,
trust or unincorporated organization or a governmental agency or political
subdivision thereof.
"Price Differential" means, with respect to any Transaction hereunder as of any
date, the aggregate amount obtained by daily application of the Pricing Rate for
such Transaction to the Purchase Price for such Transaction on a 360 day per
year basis for the actual number of days during the period commencing on (and
including) the Purchase Date for such Transaction and ending on (but excluding)
the Repurchase Date (reduced by any amount of such Price Differential previously
paid by Seller to Buyer with respect to such Transaction).
"Pricing Rate" means the sum of (i) the variable rate per annum described in the
Confirmation for determination of the Price Differential plus (ii) the
applicable Pricing Spread.
"Pricing Spread" means with respect to the portion of the Purchase Price of each
Transaction allocable to Federal Student Loans, (i) 50 basis points in the case
of a Transaction for which the Purchase Price was set at 100% of the aggregate
outstanding principal balance of the related Purchased Student Loans, (ii) 55
basis points in the case of a Transaction for which the Purchase Price was set
at 100.5% or less (but greater than 100%) of the aggregate outstanding principal
balance of the related Purchased Federal Student Loans, (iii) 60 basis points in
the case of a Transaction for which the Purchase Price was set at 101% or less
(but greater than 100.5%) of the aggregate outstanding principal balance of the
related Federal Purchased Student Loans, (iv) 65 basis points in the case of a
Transaction for which the Purchase Price was set at 102% or less (but greater
than 101%) of the aggregate outstanding principal balance of the related Federal
Purchased Student Loans and (v) 70 basis points in the case of a Transaction for
which the Purchase Price was set at 103% or less (but greater than 102%) of the
aggregate outstanding
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principal balance of the related Federal Purchased Student Loans; and with
respect to the portion of the Purchase Price of each Transaction allocable to
Private Student Loans, 85 basis points.
"Prime Rate" means the rate of interest published by The Wall Street Journal,
northeast edition, as the "prime rate".
"Private Student Loans" means student loans that are fully guaranteed against
non-payment of principal and interest by ▇▇▇▇.
"Purchase Date" means the date on which Purchased Student Loans are transferred
by Seller to Buyer or its designee as specified in the Confirmation.
"Purchased Federal Student Loans" means Purchased Student Loans that are Federal
Student Loans, which are and shall be held hereunder in the form provided for in
Section 1 are in the Repurchase Trust Agreement.
"Purchased Private Student Loans" means Purchased Student Loans that are Private
Student Loans.
"Purchased Student Loans" means the Student Loans (including any Additional
Student Loans) sold by Seller to Buyer in a Transaction, any Additional Student
Loans and any Substituted Student Loans.
"Purchase Price" means on each Purchase Date and for each Transaction, the price
at which the Purchased Student Loans for such Transaction are transferred by
Seller to Buyer or its designee, provided that in no event shall the Purchase
Price be greater than 103% of the unpaid principal balance (such balance to
include, in the case of Federal Student Loans, accrued interest that is not then
payable but is to be capitalized and added to principal) for such Purchased
Student Loans. It is agreed that the Purchase Price for any Student Loans will
not exceed the amount paid by Seller for the same Student Loans, but that in any
event it will include an amount equal to accrued and unpaid interest on the
Student Loans which is payable, and is not to be capitalized, on the next due
date therefor.
"Repurchase Date" means the date on which Seller is to repurchase the Purchased
Student Loans from Buyer which will be the first Business Day of the immediately
succeeding month after the Purchase Date, unless otherwise determined by
application of the provisions of Sections 3, 5 or 13.
"Repurchase Price" means the price at which Purchased Student Loans are to be
transferred from Buyer or its designee to Seller upon termination of a
Transaction, which will be determined in each case (including Transactions
terminable upon demand) as (i) the sum of the Purchase Price and the accreted
value as of the date of such determination of the Price Differential decreased
by (ii) all cash, Income and Periodic Payments actually received for such
Transaction to and including such date of determination by Buyer pursuant to
Sections 4(a), 5(a) and 5(b), respectively.
"Repurchase Trust Agreement" means the Repurchase Trust Agreement, dated the
date hereof, between the Buyer and the Eligible Lender Trustee.
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"Seller" has the meaning specified in Section 1.
"Servicer" means, with respect to any Student Loans, the entity servicing such
Student Loans, and identified as such on the Student Loan Schedule with respect
thereto.
"Servicing Agreement" has the meaning specified in Section 25.
"Servicing Records" has the meaning specified in Section 6.
"Student Loans" means Federal Student Loans and Private Student Loans.
"Subsidy Payments" means interest subsidy payments, special allowance payments
and any other payments of a similar nature made to the Seller pursuant to the
terms of the Higher Education Act.
"Substituted Student Loans" means any Student Loans substituted for Purchased
Student Loans in accordance with Section 9 hereof.
"▇▇▇▇" means The Education Resources Institute, Inc., a Massachusetts non-profit
corporation, and its successors.
"▇▇▇▇ Guaranty Agreement" means the agreement among ▇▇▇▇, the Eligible Lender
Trustee and Buyer pursuant to which the Purchased Private Student Loans are
fully guaranteed against non-payment of principal and interest by ▇▇▇▇.
"Transaction" has the meaning specified in Section 1.
"UCC" means the Uniform Commercial Code, as in effect from time to time in the
relevant jurisdiction.
3. INITIATION; CONFIRMATION; TERMINATION;
MAXIMUM TRANSACTION AMOUNTS
(a) An agreement to enter into a Transaction may be entered into orally or in
writing at the initiation of either Buyer or Seller. In any event, Buyer shall
confirm the terms of each Transaction by issuing a written confirmation to
Seller promptly after the parties enter into such Transaction in the form of
Exhibit I attached hereto (a "Confirmation"), and Seller shall thereupon provide
a copy of such written confirmation to the Trustee. Such Confirmation shall set
forth the description of the related Student Loans and shall identify Buyer and
Seller and set forth (i) the Purchase Date, (ii) the Purchase Price, (iii) the
Repurchase Date, unless the Transaction is to be terminable on demand, (iv) the
Pricing Rate applicable to the Transaction, (v) the amount of the related
Student Loans that are Federal Student Loans (and the Federal programs
represented and the amount represented by each) and the amount that are Private
Student Loans, (vi) the applicable Collateral Amount Percentages with respect to
such Student Loans and (vii) additional terms or conditions not inconsistent
with this Agreement. After receipt of the Confirmation, Seller shall, subject to
the provisions of subsection (c) below, sign the Confirmation and promptly
return it to Buyer. Each Transaction shall have a Purchase Price of at least
$1,000,000.
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(b) Any Confirmation by Buyer shall be deemed to have been received by Seller on
the date actually received by Seller.
(c) Each Confirmation, together with this Agreement, shall be conclusive
evidence of the terms of the Transaction(s) covered thereby unless objected to
in writing by Seller no more than two (2) Business Days after the date the
Confirmation was received by Seller or unless a corrected Confirmation is sent
by Buyer. An objection sent by Seller must state specifically that such writing
is an objection, must specify the provision(s) being objected to by Seller, must
set forth such provision(s) in the manner that the Seller believes they should
be stated, and must be received by Buyer no more than two (2) Business Days
after the Confirmation was received by Seller.
(d) In the case of Transactions terminable upon demand, such demand shall be
made by Buyer or Seller by telephone or otherwise (in each case, confirmed by
fax), no later than 1:00 p.m. (New York time) on the Business Day prior to the
day on which such termination will be effective.
(e) On the Repurchase Date, termination of the Transaction will be effected by
transfer to Seller or its designee of the Purchased Student Loans (and any
Income in respect thereof received by Buyer not previously credited or
transferred to, or applied to the obligations of, Seller pursuant to Section 5)
against the simultaneous transfer of the Repurchase Price to an account of
Buyer. Buyer agrees to permit Seller to repurchase all or a portion of the
Purchased Student Loans in connection with a securitization or other financing
or in connection with a sale or transfer to any Person (or any eligible lender
on behalf of any such Person), in each case (other than Section 9) pursuant to
which Buyer is paid the allocable portion of Repurchase Price (and, in addition,
any amount due in accordance with the last sentence of Section 8), and with
respect thereto, Buyer shall issue a revised Confirmation for the remaining
Purchased Student Loans and, if Buyer and Seller so agree, establish a new
Repurchase Date.
(f) With respect to all Transactions hereunder the aggregate Purchase Price for
all Purchased Student Loans at any one time subject to then outstanding
Transactions shall not exceed $750,000,000.
(g) At least two Business Days prior to any Purchase Date or any substitution of
Student Loans pursuant to Section 9, the Seller shall deliver to Buyer via
electronic modem, computer tape or any other format as agreed to by Buyer the
information requested by the Buyer related to the Student Loans to be so
purchased or substituted.
(h) The Confirmation may specify any Repurchase Date for the related Transaction
agreed upon by Buyer and Seller; provided that in no event shall such date be
more than 30 days after the Purchase Date.
4. COLLATERAL AMOUNT MAINTENANCE
(a) If at any time the aggregate Market Value of all Purchased Student Loans
subject to all Transactions plus all cash delivered to Buyer is less than the
aggregate Collateral Amount for all such Transactions (a "Collateral Deficit"),
then Buyer may by notice to Seller require Seller to transfer to Buyer or its
designee Student Loans "Additional Student Loans") or cash, so that the
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cash and aggregate Market Value of the Purchased Student Loans, including any
such Additional Student Loans, will thereupon equal or exceed the aggregate
Collateral Amount.
(b) Notice required pursuant to subsection (a) above may be given by any means
of telecopier or telegraphic transmission. A notice for the payment or delivery
in respect of a Collateral Deficit must be met not later than 5:00 p.m. on the
same Business Day, local time of the party receiving the notice. Any notice
given on a Business Day after 9:00 a.m., local time of the party receiving the
notice, shall be met not later than 2:00 p.m. (New York time) on the next
Business Day. The failure of Buyer, on any one or more occasions, to exercise
its rights under subsection (a) of this Section shall not change or alter the
terms and conditions to which this Agreement is subject or limit the right of
the Buyer to do so at a later date. Buyer and Seller agree that a failure or
delay to exercise its rights under subsection (a) of this Section shall not
limit Buyer's rights under this Agreement or otherwise existing by law or in any
way create additional rights for Seller.
(c) In the event that Seller fails to comply with the provisions of this Section
4, Buyer shall not enter into any additional Transactions hereunder after the
date of such failure.
5. INCOME PAYMENTS
(a) Where a particular Transaction's term extends over an Income payment date,
Income on the Purchased Student Loans shall be the property of Buyer.
Notwithstanding the foregoing, so long as no Event of Default shall have
occurred and be continuing, Seller shall be entitled to all Income with respect
to Purchased Student Loans. Upon the occurrence and continuance of an Event of
Default, all Income with respect to Purchased Student Loans shall be paid to
Buyer and distributed to Buyer pursuant to Section 14 hereof.
(b) Notwithstanding that Buyer and Seller intend that the Transactions hereunder
be sales to Buyer of the Purchased Student Loans, Seller shall pay by wire
transfer to Buyer the accredit value of the Price Differential (less any amount
of such Price Differential previously paid by Seller to Buyer)(each such
payment, a "Periodic Payment") on the Repurchase Date.
(c) Buyer shall offset against the Repurchase Price of each such Transaction all
Income and Periodic Payments actually received by Buyer pursuant to Sections
5(a) and 5(b), respectively.
6. SECURITY INTEREST
(a) Buyer and the Seller intend that the Transactions hereunder be sales to
Buyer of Seller's right, title and interest in and to the Purchased Student
Loans and not loans from Buyer to Seller secured by the Purchased Student Loans.
However, in order to preserve Buyer's rights under this Agreement, in the event
that a court or other forum recharacterizes the Transactions hereunder as loans
and as security for the performance by Seller of all of Seller's obligations to
Buyer under this Agreement and the Transactions entered into pursuant to this
Agreement, Seller grants (which grant is made with respect to the Purchased
Federal Student Loans to the Eligible Lender Trustee for the benefit of Buyer) a
first priority security interest in the Purchased Student Loans, any proceeds
thereof, to the Servicing Agreements to the extent they pertain to the Purchased
Student Loans, and all servicing records pertaining to Purchased Student Loans,
owned by Seller, including but not limited to any and all files, documents,
records, data bases,
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computer tapes, copies of computer tapes, closing documentation, payment history
records, and any other records relating to or evidencing the servicing of
Purchased Student Loans (the "Servicing Records") and which grant includes as to
Federal Student Loans, the grant by the EFG Trustee, which the EFG Trustee
hereby makes at the instruction of the Seller, to the Eligible Lender Trustee of
a first priority security interest in legal title to the Federal Student Loans
and all other rights to the Purchased Federal Student Loans held by the EFG
Trust, and in each case all proceeds thereof.
(b) Seller shall pay all fees and expenses associated with perfecting Buyer's
security interest in the Purchased Student Loans, including, without limitation,
the cost of filing financing statements under the UCC, as and when required by
Buyer in its sole discretion.
7. PAYMENT, TRANSFER AND CUSTODY
(a) Unless otherwise mutually agreed in writing, all transfers of funds
hereunder shall be in immediately available funds.
(b) On the Purchase Date for each Transaction, ownership of the Purchased
Student Loans shall be transferred to the Buyer or its designee (subject in the
case of Purchased Federal Student Loans, to the retention of legal title thereto
by the EFG Trustee in its capacity as "eligible lender" under the Higher
Education Act as in Section 1 set forth,) against the simultaneous transfer of
the Purchase Price to an account of Seller specified in the Confirmation.
Seller, simultaneously with the delivery to Buyer or its designee of the
Purchased Student Loans relating to each Transaction hereby sells, transfers,
conveys and assigns to Buyer or its designee without recourse, but subject to
the terms of this Agreement, all the right, title and interest of Seller in and
to the Purchased Student Loans, including all right, title and interest in and
to the Guaranty Agreements with respect thereto, all Subsidy Payments and all
federal guaranty or reinsurance payments with respect thereto and all proceeds
of each of the foregoing.
(c) Any Loan Files are and shall be held in trust by Seller's designated
servicer as bailee or custodian of the Eligible Lender Trustee for the benefit
of Buyer as the beneficial owner thereof as specifically designated in the
Repurchase Trust Agreement. The books and records (including, without
limitation, any computer records or tapes) of Seller and the Eligible Lender
Trustee pertaining to the Purchased Student Loans shall be marked appropriately
to reflect clearly the sale of the related Purchased Student Loan to Buyer.
8. REHYPOTHECATION OR PLEDGE OF PURCHASED STUDENT LOANS
Title to all Purchased Student Loans shall pass to Buyer (except that, with
respect to the Purchased Federal Student Loans, title shall be held of record by
the EFG Trustee as set forth in Section 1). Buyer shall have free and
unrestricted use of all Purchased Student Loans, subject to the requirement, in
the case of Purchased Federal Student Loans, that legal title thereto shall at
all times remain held by an "eligible lender" as defined in the Higher Education
Act. Nothing in this Agreement shall preclude Buyer from engaging in repurchase
transactions with the Purchased Student Loans or interests therein or otherwise
pledging, repledging, hypothecating, or rehypothecating the Purchased Student
Loans or interests therein, but no such transaction shall relieve Buyer of its
obligations to transfer Purchased Student Loans to Seller pursuant to Section 3.
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Nothing contained in this Agreement shall obligate Buyer to segregate any
Purchased Student Loans delivered to Buyer by Seller. In the event that there is
a material adverse change or other development in the repurchase markets which
results in Buyer being unable to finance its position through the repurchase
market with its traditional repurchase counterparties, Buyer may accelerate the
Repurchase Date for any outstanding Transactions following reasonable written
notice to Seller of the occurrence of such event. In addition, in the event that
any payment of the Repurchase Price occurs prior to the Repurchase Date set
forth in the applicable Confirmation, Seller shall pay upon demand any resulting
loss, cost or expense incurred by the Buyer, including, but not limited to, any
loss (including loss of anticipated profits), cost or expense incurred in
liquidating or employing deposits from third parties or other financing
arrangements with respect to its position in the Purchased Student Loans.
9. SUBSTITUTION
(a) Subject to Section 9(b), Seller may, upon five (5) Business Days' written
notice to Buyer, substitute other Student Loans for any Purchased Student Loans.
Such substitution shall be made by transfer to Buyer or its designee (such
transfer to be reflected on Schedule I hereto) of the Loan File of such other
Student Loans and transfer to Seller or its designee of the Purchased Student
Loans requested for release. After substitution, the substituted Student Loans
shall be deemed to be Purchased Student Loans subject to the same Transaction as
the released Student Loans.
(b) Notwithstanding anything to the contrary in this Agreement, Seller may not
substitute other Student Loans for any Purchased Student Loans (i) if after
taking into account such substitution, a Collateral Deficit would occur or (ii)
such substitution would cause a breach of any provision of this Agreement.
10. REPRESENTATIONS, WARRANTIES AND COVENANTS
(a) Each of Buyer and Seller represents and warrants to the other that (i) it is
duly authorized to execute and deliver this Agreement, to enter into the
Transactions contemplated hereunder and to perform its obligations hereunder and
has taken all necessary action to authorize such execution, delivery and
performance; (ii) it will engage in such Transactions as principal; (iii) the
person signing this Agreement on its behalf is duly authorized to do so on its
behalf and upon execution this Agreement will create a legal, valid and binding
obligation, enforceable in accordance with its terms; (iv) no approval, consent
or authorization of the Transactions contemplated by this Agreement from any
federal, state, or local regulatory authority having jurisdiction over it is
required or, if required, such approval, consent or authorization has been or
will, prior to the Purchase Date, be obtained; (v) the execution, delivery, and
performance of this Agreement and the Transactions hereunder will not violate
any law, regulation, order, judgment, decree, ordinance, charter, by-law, or
rule applicable to it or its property or constitute a default (or an event
which, with notice or lapse of time, or both would constitute a default) under
or result in a breach of any agreement or other instrument by which it is bound
or by which any of its assets are affected; (vi) it has received approval and
authorization to enter into this Agreement and each and every Transaction
actually entered into hereunder pursuant to its internal policies and
procedures; and (vii) neither this Agreement nor any Transaction pursuant hereto
are entered into in contemplation of insolvency or with intent to hinder, delay
or defraud any creditor.
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(b) Seller represents and warrants to Buyer that as of the Purchase Date for the
purchase of any Purchased Student Loans by Buyer from Seller and as of the date
of this Agreement and any Transaction hereunder and at all times while this
Agreement and any Transaction hereunder is in full force and effect:
(i) Seller represents and warrants that it is duly authorized under the
laws of the Commonwealth of Massachusetts to execute and deliver this
Master Repurchase Agreement and to provide funds for the origination of
Student Loans (in the case of Federal Student Loans, by an eligible
lender) hereunder, all necessary action on the part of the Seller for
the execution and delivery of this Agreement has been duly and
effectively taken and this Agreement is the valid and enforceable
obligation of the Seller in accordance with its terms.
(ii) Seller covenants that it will service or cause to be serviced all
Purchased Federal Student Loans in accordance with applicable
provisions of the Higher Education Act and all Purchased Private
Student Loans in accordance with applicable requirements of ▇▇▇▇.
(c) Seller represents and warrants to the Buyer that each Purchased Student Loan
sold hereunder and each pool of Purchased Student Loans sold in a Transaction
hereunder, as of the related Purchase Date conform to the representations and
warranties set forth in Exhibit III attached hereto and that each Student Loan
delivered hereunder as Additional Student Loans or Substituted Student Loans, as
of the date of such delivery, conforms to the representations and warranties set
forth in Exhibit III attached hereto. Seller further represents and warrants to
the Buyer that the Computer Tape with respect to each Purchased Student Loan is
complete, true and correct as of the last calendar day of each month. It is
understood and agreed that the representations and warranties set forth in
Exhibit III attached hereto shall survive delivery of the respective Loan File
to Buyer or its designee.
(d) On the Purchase Date for any Transaction, Buyer and Seller shall each be
deemed to have made all the foregoing representations with respect to itself as
of such Purchase Date.
11. NEGATIVE COVENANTS OF THE SELLER
On and as of the date of this Agreement and each Purchase Date and until this
Agreement is no longer in force with respect to any Transaction, Seller
covenants that it will not:
(a) take any action which would directly or indirectly impair or adversely
affect Buyer's rights in or the value of the Purchased Student Loans;
(b) pledge, assign, convey, grant, bargain, sell, set over, deliver or otherwise
transfer any interest in the Purchased Student Loans to any person not a party
to this Agreement nor will the Seller create, incur or permit to exist any lien,
encumbrance or security interest in or on the Purchased Student Loans except as
described in Section 6; or
(c) amend, alter, modify or change in any material way its underwriting
guidelines with respect to Purchased Student Loans without Buyer's consent.
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12. AFFIRMATIVE COVENANTS OF THE SELLER
For so long as this Agreement is in effect:
(a) Seller covenants that it will promptly notify Buyer of any material adverse
change in its business operations and/or financial condition.
(b) Seller shall provide Buyer with copies of such documentation as Buyer may
reasonably request evidencing the truthfulness of the representations set forth
in Section 10 and in Section 2 of the Guarantor Agreement, including but not
limited to resolutions evidencing the approval of this Agreement by the board of
trustees of Seller and/or Guarantor, and the Transactions contemplated hereby.
(c) Seller shall, at Buyer's request, take all action necessary to ensure that
Buyer will have a first priority security interest in the Purchased Student
Loans as and to the extent set forth in Section 6 and the Repurchase Trust
Agreement, including, among other things, filing such UCC financing statements
or other instruments as Buyer may reasonably request.
(d) Seller covenants that it will not create, incur or permit to exist any lien,
encumbrance or security interest in or on any of the Purchased Student Loans or
its beneficial interest therein (other than the security interest described in
Section 6) without the prior express written consent of Buyer. Seller shall
notify Buyer no later than one (1) Business Day after obtaining actual knowledge
thereof, if any event has occurred that constitutes an Event of Default with
respect to Seller or any event that with the giving of notice or lapse of time,
or both, would become an Event of Default with respect to Seller.
(e) Seller covenants to provide Buyer on or before the 15th day of each month
with respect to Purchased Student Loans, either by direct modem electronic
transmission, a computer diskette or any other format agreed to by Buyer, the
Computer Tape with respect to all Purchased Student Loans then subject to
Transactions.
(f) Seller covenants to provide Buyer with the following financial and reporting
information:
(i) within 90 days after the last day of its fiscal year, each of
Guarantor's and Seller's audited consolidated and consolidating
statements of income and statements of changes in cash flow for such
year and balance sheets as of the end of such year in each case
presented fairly in accordance with GAAP, and accompanied, in all
cases, by an unqualified report of a firm of "Big Six" independent
certified public accountants or any other nationally recognized
independent certified public accounting firm consented to by Buyer
(which consent shall not be unreasonably withheld);
(ii) within 60 days after the last day of the first three fiscal
quarters in any fiscal year, each of Guarantor's and Seller's
consolidated and consolidating statements of income and statements of
changes in cash flow for such quarter and balance sheets as of the end
of such quarter presented fairly in accordance with GAAP;
(iii) within 30 days after the last day of each calendar month, an
officer's certificate from the chief financial officer or treasurer of
the Seller addressed to Buyer certifying that, as of such calendar
month, (x) Seller is in compliance with all of the terms, conditions
and requirements of this Agreement, and (y) no Event of Default exists;
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(iv) within 30 days after the last day of each calendar month, notice
of all DOE audits of or any other actions of a material nature by the
DOE with respect to, Seller or any Affiliate thereof or, to the extent
it has knowledge thereof, of any Servicer or guarantor (including but
not limited to ▇▇▇▇) under any Guaranty Agreement, and, in each case,
notice of the results thereof (including, with respect to guarantors of
the Purchased Federal Student Loans, but not limited to, the rate of
reimbursement by the DOE for the guarantor under a Guaranty Agreement,
to the extent that such rate is below the maximum permitted under the
Higher Education Act (i.e., 98% with respect to Student Loans disbursed
on or after October 1, 1993 and 100% for loans disbursed prior
thereto));
(v) as promptly as practicable, copies of all reports or written
comments (including, without limitation, audit reports, management
letters and any other reports or communications with respect to the
internal control structure) relating to Seller or the Guarantor
submitted by its independent accountants;
(vi) not later than 11:00 a.m., New York City time, on the Business Day
after Seller becomes aware thereof, a report setting forth any material
changes or developments in the business of Seller, including, without
limitation, any material changes, developments or defaults under any
agreements;
(vii) as promptly as practicable (but in any event not later than three
(3) Business Days after filing), copies of all materials filed with
respect to the Guarantor with the Securities and Exchange Commission;
and
(viii) such other information as, from time to time, may reasonably be
requested by the Buyer.
(g) Seller and Guarantor shall each do all things necessary to remain duly
formed or incorporated, validly existing and in good standing as a partnership
or corporation, respectively, in its jurisdiction and maintain all requisite
authority to conduct its business in each jurisdiction in which it conducts
business; provided, that, Seller may merge, consolidate or otherwise reorganize
with or into an Affiliate for the purpose of converting to corporate form, so
long as Seller as constituted in such form shall have equity and a market value
of at least that of the Seller as a partnership immediately prior to such
conversion, and as a corporation, Seller shall continue otherwise to comply with
this subparagraph.
(h) Seller and Guarantor shall each comply with the requirements of all
applicable laws, statutes, rules, regulations and orders of, and all applicable
restrictions imposed by, all governmental authorities having jurisdiction over
its operations in respect of the conduct of its business and the ownership of
its property, except in the case of Guarantor where failure to do so would not
have a material adverse effect on its business or operations or on its ability
to perform its obligations under the Guarantor Agreement; provided, however,
that it shall not be required by reason of this Section 12(h) to comply
therewith at any time while it shall be contesting its obligation to do so in
good faith by appropriate proceedings, and if it shall have set aside such
reserves, if any, with respect thereto as are required by GAAP.
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(i) Seller shall not permit the Purchased Student Loans to contain (i) any
Federal Student Loan which is more than 120 days delinquent, (ii) any Private
Student Loan which is more than 90 days delinquent, (iii) more than 5% by
aggregate Purchase Price of Student Loans that are more than 30 days delinquent,
(iv) more than 2.5% by aggregate Purchase Price of Student Loans that are more
than 60 days delinquent, (v) any Federal Student Loan as to which the applicable
federal guarantor's obligation to make guaranty payments or the federal
reinsurance with respect thereto has for any reason been forfeited or qualified,
or (vi) any Private Student Loan as to which the obligation of ▇▇▇▇ to make
guaranty payments under the ▇▇▇▇ Guaranty Agreement has for any reason been
forfeited or qualified. Seller will deliver Additional Student Loans or
Substitute Student Loans as may be necessary to comply with this paragraph.
(j) Seller shall take all actions necessary to ensure that each Federal Student
Loan is subject to a Guaranty Agreement and that each Private Student Loan is
subject to a ▇▇▇▇ Guaranty Agreement.
13. EVENTS OF DEFAULT
(a) If any of the following events (each an "Event of Default") occur, Buyer
shall have the rights set forth in Section 14, as applicable:
(i) Seller or Guarantor fails to satisfy or perform any material
obligation or covenant under this Agreement;
(ii) An Act of Insolvency occurs with respect to Seller or Guarantor;
(iii) Any representation made by Seller or Guarantor shall have been
incorrect or untrue in any material respect when made or repeated or
deemed to have been made or repeated;
(iv) Seller or Guarantor shall admit its inability to, or its intention
not to, perform any of its obligations hereunder;
(v) Any governmental, regulatory, or self-regulatory authority takes
any action to remove, limit, restrict, suspend or terminate the rights,
privileges, or operations of the Seller or Guarantor, which suspension
has a material adverse effect on the ordinary business operations of
Seller or Guarantor and which continues for more than five Business
Days;
(vi) Seller or Guarantor dissolves, merges or consolidates with another
entity (unless (A) it is the surviving party, (B) the entity into which
it merges has equity and a market value of at least that of the Seller
or Guarantor, respectively, immediately prior to such merger and such
entity expressly assumes the obligations, as applicable, of the Seller
hereunder or of the Guarantor under the Guarantor Agreement, as at the
time of such merger or (C) in the case of Seller as provided for in
Section 12(g)), or sells, transfers, or otherwise disposes of a
material portion of its business or assets, provided that a sale of
assets in connection with any securitization or similar type of
financing by Seller shall not constitute an Event of Default under this
subparagraph;
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(vii) Buyer, in its good faith judgment, believes that there has been a
material adverse change in the business, operations, corporate
structure or financial condition of Seller or Guarantor or that Seller
or Guarantor will not meet any of the Seller's obligations under any
Transaction pursuant to this Agreement, or any other agreement between
the parties;
(viii) Seller or Guarantor is in default under any material agreement
to which it is a party, provided, however, such a default shall not
constitute an Event of Default if the exercise of such remedies as are
available, as applicable, to Seller's or Guarantor's counterparty with
respect to such default would not result in a material adverse change
in the business operations or financial condition of the Seller or
Guarantor;
(ix) A final judgment by any competent court in the United States of
America for the payment of money in an amount of at least $10,000,000
is rendered against the Seller or Guarantor, and the same remains
undischarged or unpaid for a period of sixty (60) days during which
execution of such judgment is not effectively stayed;
(x) This Agreement (together, in the case of the Federal Purchased
Student Loans, with the Repurchase Trust Agreement) shall for any
reason cease to create a valid, first priority perfected security
interest in any of the Purchased Student Loans purported to be covered
hereby;
(xi) A Collateral Deficit occurs with respect to Seller, and is not
eliminated within the time period specified in Section 4(b);
(xii) The Guarantor shall terminate, revoke, rescind, disaffirm or fail
to honor any of its obligations or covenants under the Guarantor
Agreement or notice is received by Buyer from Guarantor of its
intention to take any of the aforementioned actions; or
(xiii) TERI's long term credit rating shall not be investment grade or
better as published by any one of ▇▇▇▇▇'▇ Investors Service, Inc.,
Fitch IBCA, Inc. and Standard & Poor's (provided, that no Event of
Default shall occur under this subparagraph for so long as (x) two of
the three aforementioned rating agencies continue to rate TERI's long
term credit rating investment grade or (y) no Private Student Loans are
included in the Purchased Student Loans).
(b) In making a determination as to whether an Event of Default has occurred,
the Buyer shall be entitled to rely on reports published or broadcast by media
sources believed by such party to be generally reliable and on information
provided to it by any other sources believed by it to be generally reliable,
provided that such party reasonably and in good faith believes such information
to be accurate and has taken such steps as may be reasonable in the
circumstances to attempt to verify such information.
14. REMEDIES
(a) If an Event of Default occurs with respect to Seller, the following rights
and remedies are available to Buyer:
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(i) At the option of Buyer, exercised by written notice to Seller
(which option shall be deemed to have been exercised, even if no notice
is given, immediately upon the occurrence of an Act of Insolvency), the
Repurchase Date for each Transaction hereunder shall be deemed
immediately to occur.
(ii) If Buyer exercises or is deemed to have exercised the option
referred to in subsection (a)(i) of this Section,
(A) Seller's obligations hereunder to repurchase all Purchased
Student Loans in such Transactions shall thereupon become
immediately due and payable,
(B) to the extent permitted by applicable law, the Repurchase
Price with respect to each such Transaction shall be increased
by the aggregate amount obtained by daily application of, on a
360 day per year basis for the actual number of days during
the period from and including the date of the exercise or
deemed exercise of such option to but excluding the date of
payment of the Repurchase Price as so increased, (x) the
greater of the Prime Rate or the Pricing Rate for each such
Transaction to (y) the Repurchase Price for such Transaction
as of the Repurchase Date as determined pursuant to subsection
(a)(i) of this Section (decreased as of any day by (I) any
amounts actually in the possession of Buyer pursuant to clause
(C) of this subsection, (II) any proceeds from the sale of
Purchased Student Loans applied to the Repurchase Price
pursuant to subsection (a)(xiii) of this Section, and (III)
any amounts applied to the Repurchase Price pursuant to
subsection (a)(iii) of this Section), and
(C) all Income on the Purchased Student Loans actually
received in the Collection Account pursuant to Section 5 shall
be applied to the aggregate unpaid Repurchase Price owed by
Seller.
(iii) After one Business Day's notice to Seller (which notice need not
be given if an Act of Insolvency with respect to Seller or Guarantor
shall have occurred, and which may be the notice given under subsection
(a)(i) of this Section), Buyer, to the extent permitted by the Higher
Education Act, may instruct the Eligible Lender Trustee to (A)
immediately sell, without notice or demand of any kind, at a public or
private sale and at such price or prices Buyer may reasonably deem
satisfactory any or all Purchased Student Loans subject to a
Transaction hereunder (including with respect to any Federal Student
Loans legal title thereto, and all rights therein held by the EFG
Trustee, in accordance with the Higher Education Act) or (B) in its
sole discretion elect, in lieu of selling all or a portion of such
Purchased Student Loans, to give Seller credit for such Purchased
Student Loans in an amount equal to the Market Value of the Purchased
Student Loans against the aggregate unpaid Repurchase Price and any
other amounts owing by Seller hereunder. The proceeds of any
disposition of Purchased Student Loans shall be applied first to the
costs and expenses incurred by Buyer in connection with the Event of
Default; second to consequential damages, including but not limited to
costs of cover and/or related hedging transactions; third to the
Repurchase Price; and fourth to any other outstanding obligation of
Seller or Guarantor or any Affiliate thereof to Buyer hereunder or
under any other agreement between Buyer and such parties or otherwise.
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(iv) The parties recognize that it may not be possible to purchase or
sell all of the Purchased Student Loans on a particular Business Day,
or in a transaction with the same purchaser, or in the same manner
because the market for such Purchased Student Loans may not be liquid.
In view of the nature of the Purchased Student Loans, the parties agree
that liquidation of a Transaction or the underlying Purchased Student
Loans does not require a public purchase or sale and that a good faith
private purchase or sale shall be deemed to have been made in a
commercially reasonable manner. Accordingly, Buyer may elect, in its
sole discretion, the time and manner of liquidating any Purchased
Student Loan and nothing contained herein shall (A) obligate Buyer to
liquidate any Purchased Student Loan on the occurrence of an Event of
Default or to liquidate all Purchased Student Loans in the same manner
or on the same Business Day or (B) constitute a waiver of any right or
remedy of Buyer. However, in recognition of the parties' agreement that
the Transactions hereunder have been entered into in consideration of
and in reliance upon the fact that all Transactions hereunder
constitute a single business and contractual relationship and that each
Transaction has been entered into in consideration of the other
Transactions, the parties further agree that Buyer shall use its best
efforts to liquidate all Transactions hereunder upon the occurrence of
an Event of Default as quickly as is prudently possible in the
reasonable judgment of Buyer.
(v) Buyer shall, without regard to the adequacy of the security for the
Seller's obligations under this Agreement, be entitled to the
appointment of a receiver by any court having jurisdiction, without
notice, to (or cause the Eligible Lender Trustee to) take possession of
and protect, collect, manage, liquidate, and sell the Purchased Student
Loans or any portion thereof, and collect the payments due with respect
to the Purchased Student Loans or any portion thereof. Seller shall pay
all costs and expenses incurred by Buyer in connection with the
appointment and activities of such receiver.
(vi) Seller agrees that Buyer may obtain an injunction or an order of
specific performance to compel Seller to fulfill its obligations as set
forth in Section 25, if Seller fails or refuses to perform its
obligations as set forth therein.
(vii) Seller shall be liable to Buyer for the amount of all expenses,
reasonably incurred by Buyer in connection with or as a consequence of
an Event of Default, including, without limitation, reasonable legal
fees and expenses and reasonable costs incurred in connection with
hedging or covering transactions, and Seller shall be liable for all
fees and charges of the Eligible Lender Trustee and the Servicers
whether incurred before or after an Event of Default.
(viii) Buyer shall have all the rights and remedies provided herein,
provided by applicable federal, state, foreign, and local laws
(including, without limitation, the rights and remedies of a secured
party under the UCC of the Commonwealth of Massachusetts, to the extent
that the UCC is applicable, and the right to offset any mutual debt and
claim), in equity, and under any other agreement between Buyer and
Seller or Guarantor.
(ix) Buyer may exercise one or more of the remedies available to Buyer
immediately upon the occurrence of an Event of Default and, except to
the extent provided in subsection (a)(iii) of this Section, at any time
thereafter without notice to Seller or
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Guarantor. All rights and remedies arising under this Agreement as
amended from time to time hereunder are cumulative and not exclusive
of any other rights or remedies which Buyer may have.
(x) In addition to its rights hereunder, Buyer shall have the right to
proceed against any assets of Seller which may be in the possession of
Buyer or its designee including the right to liquidate such assets and
to set off the proceeds against monies owed by Seller to Buyer pursuant
to this Agreement. Buyer may set off cash, the proceeds of the
liquidation of the Purchased Student Loans, and all other sums or
obligations owed by Seller to Buyer against all of Seller's obligations
to Buyer, whether under this Agreement, under a Transaction, or under
any other agreement between the parties, whether or not such
obligations are then due, without prejudice to Buyer's right to recover
any deficiency. Any cash, proceeds, or property in excess of any
amounts due, or which Buyer reasonably believes may become due, to it
from Seller shall be returned to Seller after satisfaction of all
obligations of Seller to Buyer.
(xi) Buyer may enforce its rights and remedies hereunder without prior
judicial process or hearing, and Seller hereby expressly waives any
defenses Seller might otherwise have to require Buyer to enforce its
rights by judicial process. Seller also waives any defense Seller might
otherwise have arising from the use of nonjudicial process, enforcement
and sale of all or any portion of the Purchased Student Loans in a
commercially reasonable manner as set forth in this Agreement, or from
any other election of remedies. Seller recognizes that nonjudicial
remedies are consistent with the usages of the trade, are responsive to
commercial necessity and are the result of a bargain at arm's length.
(xii) Buyer and Seller hereby agree that sales of the Purchased Student
Loans shall be deemed to include and permit the sales of Purchased
Student Loans pursuant to a securities offering.
(xiii) Notwithstanding the foregoing remedies, if the Event of Default
(other than an Event of Default under Section 13(a)(x)) arises from a
breach of any representation or warranty set forth in Exhibit III
attached hereto with respect to a Purchased Student Loan, then Seller
may elect, subject to Buyer's written consent (which consent shall not
be unreasonably withheld or delayed), to cure such default by
repurchasing such Student Loan or substituting for such Student Loan
within two (2) Business Days of such Event of Default, provided,
however, that Seller shall not have the right to make the foregoing
election if such breach causes a default with respect to Student Loans
that in the aggregate represent ten percent (10%) or more of the
aggregate Purchase Price of all Purchased Student Loans subject to then
outstanding Transactions. The repurchase price for any such repurchase
shall be the outstanding Repurchase Price allocable to such Student
Loan. Any such substitution shall be performed in accordance with
Section 9 of this Agreement.
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15. ADDITIONAL CONDITIONS
Seller shall, on the date of the initial Transaction hereunder and,
upon the request of Buyer, on the date of any subsequent Transaction, cause to
be delivered to Buyer, with reliance thereon permitted as to any Person that
purchases the Purchased Student Loans from Buyer in a repurchase transaction, a
favorable opinion or opinions of counsel with respect to the matters set forth
in Exhibit II attached hereto relating to the Transactions described herein. In
addition, Buyer shall have received the structuring fee and any evidence of
corporate authority of Seller as reasonably requested.
16. SINGLE AGREEMENT
Buyer and Seller acknowledge that, and have entered hereunto and will enter into
each Transaction hereunder in consideration of and in reliance upon the fact
that, all Transactions hereunder constitute a single business and contractual
relationship and that each has been entered into in consideration of the other
Transactions. Accordingly, each of Buyer and Seller agrees (i) to perform all of
its obligations in respect of each Transaction hereunder, and that a default in
the performance of any such obligations shall constitute a default by it in
respect of all Transactions hereunder, (ii) that each of them shall be entitled
to set off claims and apply property held by them in respect of any Transaction
against obligations owing to them in respect of any other Transactions hereunder
and (iii) that payments, deliveries and other transfers made by either of them
in respect of any Transaction shall be deemed to have been made in consideration
of payments, deliveries, and other transfers in respect of any other
Transactions hereunder, and the obligations to make any such payments,
deliveries, and other transfers may be applied against each other and netted;
provided, however, that the parties hereto acknowledge and agree that each
Purchased Student Loan is identified and unique and nothing in this Agreement
should limit or reduce Buyer's obligation to deliver the Purchased Student Loans
to Seller or Seller's obligation to sell the Purchased Student Loans to Buyer,
in each case as and when provided herein.
17. NOTICES AND OTHER COMMUNICATIONS
Unless another address is specified in writing by the respective party to whom
any written notice or other communication is to be given hereunder, all such
notices or communications shall be in writing or confirmed in writing and
delivered at the respective addresses set forth in the Confirmation.
18. ENTIRE AGREEMENT; SEVERABILITY
This Agreement together with the applicable Confirmation and the Repurchase
Trust Agreement constitutes the entire understanding between Buyer and Seller
with respect to the subject matter it covers and shall supersede any existing
agreements between the parties containing general terms and conditions for
repurchase transactions involving Purchased Student Loans. By acceptance of this
Agreement, Buyer and Seller acknowledge that they have not made, and are not
relying upon, any statements, representations, promises or undertakings not
contained in this Agreement or the Repurchase Trust Agreement (or to the extent
relevant, the EFG Trust Agreement). Each provision and agreement herein shall be
treated as separate and independent from any other provision or agreement herein
and shall be enforceable notwithstanding the unenforceability of any such other
provision or agreement.
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19. NON-ASSIGNABILITY
The rights and obligations of the Seller under this Agreement and under any
Transaction shall not be assigned by it without the prior written consent of
Buyer. Nothing herein shall restrict Buyer's ability to participate its
interests in this Agreement, to the extent permitted by law. Subject to the
foregoing, this Agreement and any Transactions shall be binding upon and shall
inure to the benefit of the parties and their respective successors and assigns.
Nothing in this Agreement express or implied, shall give to any person, other
than the parties to this Agreement and their successors hereunder, any benefit
or any legal or equitable right, power, remedy or claim under this Agreement.
20. TERMINABILITY
This Agreement shall terminate in 365 days unless the Buyer and Seller agree to
extend this Agreement for a period of 365 days therefrom, but will remain
applicable to any Transactions then outstanding until payment of the Repurchase
Price with respect thereto or any other amounts due hereunder.
21. GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE
INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICT OF
LAW PRINCIPLES THEREOF.
22. CONSENT TO JURISDICTION AND ARBITRATION
The parties irrevocably agree to submit to the personal jurisdiction of the
United States District Court for the Southern District of New York, the parties
irrevocably waiving any objection thereto. If, for any reason, federal
jurisdiction is not available, and only if federal jurisdiction is not
available, the parties irrevocably agree to submit to the personal jurisdiction
of the Supreme Court of the State of New York, sitting in New York County, the
parties irrevocably waiving any objection thereto. Notwithstanding the foregoing
two sentences, at either party's sole option exercisable at any time not later
than thirty (30) days after an action or proceeding has been commenced, the
parties agree that the matter may be submitted to binding arbitration in
accordance with the commercial rules of the American Arbitration Association
then in effect in the State of New York and judgment upon any award rendered by
the arbitrator may be entered in any court having jurisdiction thereof within
the City, County and State of New York; provided, however, that the arbitrator
shall not amend, supplement, or reform in any regard this Agreement or the terms
of any Confirmation, the rights or obligations of any party hereunder or
thereunder, or the enforceability of any of the terms hereof or thereof. Any
arbitration shall be conducted before a single arbitrator who shall be
reasonably familiar with repurchase transactions and the student loan industry
and secondary student loan market.
23. NO WAIVERS, ETC.
No express or implied waiver of any Event of Default by either party shall
constitute a waiver of any other Event of Default and no exercise of any remedy
hereunder by any party shall constitute a waiver of its right to exercise any
other remedy hereunder. No modification or waiver of any
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provision of this Agreement and no consent by any party to a departure here from
shall be effective unless and until such shall be in writing and duly executed
by both of the parties hereto. Any such waiver or modification shall be
effective only in the specific instance and for the specific purpose for which
it was given.
24. INTENT
The parties understand and intend that, to the maximum extent permitted by law,
this Agreement and each Transaction hereunder constitute a "repurchase
agreement" and a "securities contract" as those terms are defined under the
relevant provisions of Title 11 of the United States Code, as amended.
25. SERVICING
(a) Notwithstanding the purchase and sale of the Purchased Student Loans hereby,
Seller shall cause each Servicer to service the related Purchased Student Loans
for the benefit of Buyer and, if Buyer shall exercise its rights to pledge or
hypothecate the Purchased Student Loan prior to the related Repurchase Date
pursuant to Section 8, Buyer's assigns; provided, however, that the obligations
of Seller to service the Purchased Student Loans shall cease upon the payment by
Seller to Buyer of the Repurchase Price therefor. Seller shall cause each
Servicer to service the related Purchased Student Loans in accordance with the
servicing agreements and in compliance with all applicable federal and state
laws, including, in the case of Purchased Federal Student Loans, the Higher
Education Act and in the case of the Purchased Private Student Loans the
servicing guidelines of ▇▇▇▇.
(b) Upon the occurrence and continuance of an Event of Default, Buyer may, in
its sole discretion, sell the Purchased Student Loans to the extent of its
interest therein, subject to the servicing agreements relating to such Purchased
Student Loans and, in the case of Purchased Federal Student Loans, as permitted
by the Higher Education Act.
(c) Seller agrees that Buyer is the owner of all Servicing Records with respect
to the Purchased Student Loans. Seller covenants to safeguard such Servicing
Records and to deliver them promptly to Buyer or its designee at Buyer's
request.
(d) Seller shall cause each Servicer hereunder to execute a letter agreement
with Buyer acknowledging Buyer's security interest and agreeing that, upon
notice from Buyer that an Event of Default has occurred and is continuing
hereunder, it shall deposit all Income with respect to the Purchased Student
Loans in the account specified in Section 5(a).
26. MISCELLANEOUS
(a) Time is of the essence under this agreement and all Transactions and all
references to a time shall mean New York time in effect on the date of the
action unless otherwise expressly stated in this Agreement.
(b) Buyer shall be authorized to accept orders and take any other action
affecting any accounts of the Seller in response to instructions given in
writing or orally by telephone or otherwise by an officer of the Seller or any
other person authorized in writing by the Seller to act
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on behalf of the Seller, and the Seller shall indemnify Buyer and defend and
hold Buyer harmless from and against any and all liabilities, losses, damages,
costs, and expenses of any nature arising out of or in connection with any
action taken by Buyer in response to such instructions received or reasonably
believed to have been received from the Seller. Seller shall further indemnify
Buyer and defend and hold Buyer harmless for any and all amounts due to the
Eligible Lender Trustee under Section 10 of the Repurchase Trust Agreement or
otherwise pursuant to such agreement, and the Eligible Lender Trustee agrees to
look directly and exclusively to Seller for any and all such amounts. Seller
shall, in addition, prepare all quarterly reports that are required to be
delivered to the Eligible Lender Trustee pursuant to Section 15 of the
Repurchase Trust Agreement, and the Eligible Lender Trustee agrees to look
exclusively to Seller and not to Buyer for the production of such reports. Buyer
shall indemnify Seller and defend and hold Seller harmless against any and all
liabilities, losses, damages, costs, and expenses caused by Buyer's failure to
make a timely delivery of the Purchased Student Loans as required hereunder.
(c) If there is any conflict between the terms of a Confirmation or a corrected
Confirmation issued by the Buyer and this Agreement, the Confirmation or the
corrected Confirmation shall prevail, as applicable.
(d) This Agreement may be executed in counterparts, each of which so executed
shall be deemed to be an original, but all of such counterparts shall together
constitute but one and the same instrument.
(e) Seller agrees to reimburse Buyer for all reasonable costs and expenses of
Buyer in connection with this Agreement including, without limitation, (i) the
fees, expenses and disbursement of counsel to Buyer (up to $40,000), (ii) due
diligence expenses and (iii) on-going auditing fees (which shall be limited to
$10,000 annually absent a default under this Agreement).
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(f) The headings in this Agreement are for convenience of reference only and
shall not affect the interpretation or construction of this Agreement.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date set forth above.
▇▇▇▇▇▇ COMMERCIAL PAPER INC.,
Buyer
By:
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Title:
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Date:
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EDUCATIONAL FINANCE GROUP, LIMITED,
Seller
By:
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Title:
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Date:
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Acknowledged and agreed to:
THE FIRST NATIONAL BANK OF CHICAGO,
not in its individual capacity
but solely as Eligible Lender
Trustee and, with respect to
Sections 1, 6 and 7, as EFG
Trustee
By:
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Title:
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Date:
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