Thomas Jefferson School of Law Restructuring Support Agreement

8/10/2019 Thomas Jefferson School of Law Restructuring Support Agreement

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Re: Thomas Jefferson School of Law Restructuring Agreement

Disclosure Type: EVENT FILING

Other Event-based Disclosures: Restructuring Agreement

Issue: 130795

Securities: 130795XZ5, 130795YA9, 130795YB7, 130795YC5

Thomas Jefferson School of Law (TJSL) and a requisite approving percentage of bondholders haveagreed to a restructuring support agreement with the Trustee and bondholders representingapproximately 89% of the aggregate principal amount of the Bonds described more fully in theattached.


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THOMAS JEFFERSON SCHOOL OF LAW

OCTOBER 28, 2014 DISCLOSURE

This disclosure by the Thomas Jefferson School of Law (the Law School) provides noticethat a restructuring support agreement has been entered into among the Law School, the Trustee for

the Bonds, and those certain Bondholders that executed Bondholder Confidentiality Agreements (asdefined below). On October 28, 2014, the Law School, the Trustee and certain consentingBondholders who executed the Bondholder Confidentiality Agreements entered into a RestructuringSupport Agreement (the RSA) providing for the support by the parties of a transaction that willprovide for the cancellation of the Bonds and a restructuring of the Law Schools obligations relatedto the Bonds. The Law School is informed by the Trustee that Bondholders that have executed theRSA as of the date hereof comprise approximately 89% of all Bonds and approximately 87% of theSeries 2008A Bonds as of the date of this disclosure. Bondholders who executed the RSA as of itsdate, or who join the RSA pursuant to a joinder in the form attached to Exhibit A are referred toherein as Consenting Bondholders.

The RSA sets forth certain terms and conditions pursuant to which the Law School, theTrustee and the Consenting Bondholders will endeavor to effectuate a restructuring transaction. TheRSA is attached hereto as Exhibit A. Included as exhibits to the RSA are a Lease Term Sheet and aNotes Term Sheet (collectively, the Term Sheet) which describes the proposed restructuring of theBonds and the Law Schools related obligations, as well as other material terms. Capitalized termsnot otherwise defined in this disclosure shall have the meaning set forth in the RSA and Term Sheetunless the context requires otherwise.

Also attached hereto is certain other information provided by the Law School to the Trusteeand its advisors, including an appraisal of the Law Schools real property which is collateral for theLaw Schools obligations under the Loan Agreement and a multi-year pro forma financial projectionprepared by the Law School and shared with the Trustee and its advisors.

When implemented, the RSA will result in significant concessions by all Bondholdersregarding the Bonds and the Law Schools related obligations. The key elements of the RSA andrelated Term Sheet include: (1) a deed in lieu of foreclosure transaction involving a conveyance ofthe Law Schools real property in downtown San Diego to a special purposed vehicle for the benefitof the Bondholders in exchange for cancellation of all of the Bonds and related Law Schoolobligations, (2) execution of a lease of the building to the Law School, (3) simultaneous delivery bythe Law School of a deficiency note in the amount of $40 million bearing interest at 2% per annum,due and payable in seventeen (17) years subject to principal reduction in the event the lease term isreduced to a term less than contracted, (4) support from Lender to provide collateral to support aletter of credit reimbursement agreement should it become necessary and (5) provision of arelocation loan in the event the lease is terminated early. The RSA calls for implementation of the

transaction pursuant to certain Definitive Documents by November 15, 2014 (with the opportunity toextend such date to December 15, 2014). Implementation of the transaction is subject to numerousconditions identified in the RSA and the Term Sheet, some of which are described herein. The LawSchool cannot provide any assurance that the transaction can or will be implemented as contemplatedby the RSA or otherwise. The RSA, the Term Sheet and certain information previously shared withcertain Bondholders under the Bondholder Confidentiality Agreement are described more fullybelow.


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BONDS LIMITED TO APPROVED INSTITUTIONAL INVESTORS

Investors are reminded that transfer and ownership of the Bonds is limited to ApprovedInstitutional Buyers meeting the requirements of the Indenture for the Bonds. Pursuant to the RSA,sale or transfer of Bonds by Consenting Bondholders is further restricted. The Law School assumesall investors and Bondholders, Consenting Bondholders and persons acquiring any interest in the

transaction are such Approved Institutional Buyers. Investment in the Bonds and participation in theTransaction involves substantial elements of risk.

BACKGROUND

Trustee Interaction. Following the March 21, 2014 Investor Presentation (available onEMMA), the Law School was informed that the Trustee had engaged a restructuring advisor (ZolfoCooper, LLC) and restructuring counsel (Kirkland & Ellis LLP) to assist it in evaluating the financialcondition of the Law School and debt restructuring alternatives related to the Bonds. The LawSchool, the Trustee and certain of its advisors entered into confidentiality agreements with theTrustee and its advisors pursuant to which the Law School agreed to share certain information,

including confidential information, with the Trustee and its advisors to facilitate the debtrestructuring analysis and discussion.

Confidentiality Agreements. On June 30, 2014, the Law School and certain owners ofBonds, or investment managers or advisors with discretionary authority with respect to the Bondscomprising approximately eighty-nine percent (89%) of the aggregate principal amount of the Bonds(the Recipients) entered into confidentiality agreements substantially in the form attached hereto asExhibit B, as amended by eight consecutive Amendments (as amended, the BondholderConfidentiality Agreements). Pursuant to the Bondholder Confidentiality Agreements, the LawSchool agreed that certain Confidential Information (as defined in the Bondholder ConfidentialityAgreements) could be shared with Recipients and the Recipients agreed not to trade Bonds prior tothe public disclosure of any material nonpublic information provided to the Recipients. The Law

School is informed that the Trustee invited all Bondholders to execute a Confidentiality Agreement.

Pursuant to the Bondholder Confidentiality Agreements, the Law School agreed to provide apublic disclosure by October 31, 2014 of certain Confidential Material which had been disclosed bythe Law School to Recipients. The Law School is providing the Public Disclosure at this time inlight of the execution of the RSA and as required by the Bondholder Confidentiality Agreements.

Disclosures to Trustee, its Advisors and Recipients. Since April 2014, the Law School,the Trustee and each of their respective advisors have engaged in significant discussions regarding apotential restructuring of the Bonds. The Law School has shared all requested information regardingits operations and finances with the Trustee and its advisors, including an appraisal, cash flowprojections and pro forma financial projections.

The Law School has been informed by the Trustee and its advisors that in May 2014 ZolfoCooper prepared a report (the Zolfo Report) regarding its review and analysis of the Law Schooland its financial condition. The Law School is informed that the Zolfo Report has been shared withthe Recipients. The Law School has not received the Zolfo Report and, except for the excerptsreferenced below, is unaware of its contents. The Trustees counsel has informed the Law Schoolthat the only material nonpublic information shared by the Trustee and its advisors with theRecipients is the information attached hereto as Exhibit C and the restructuring transaction


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conditions pursuant to which the Law School and the Consenting Bondholders will work toeffectuate a restructuring transaction related to the Bonds and the Law Schools obligations under theLoan Agreement, Deed of Trust and related obligations (as defined in the RSA). Pursuant to theRSA, the Parties will effectuate the Transaction pursuant to the terms of the RSA including the termsand conditions set forth in the Term Sheet. To this end, each party has agreed to negotiate in goodfaith Definitive Documents implementing, achieving and relating to the Transaction which shallcontain terms and conditions consistent with the RSA and the Term Sheet, and to execute andotherwise support the Definitive Documents. All Definitive Documents shall be reasonablyacceptable in form and substance to the Requisite Consenting Bondholders, the Law School (solelyto the extent the Law School is party to such Definitive Document) and the Trustee (solely forpurposes of causing the implementation of the Transaction to be consistent with the Trustees dutiesunder the Indenture). The Law School understands that all Bondholders (other than those subject to aconfidentiality agreement with the Law School) will be given an opportunity to join the RSA as aConsenting Bondholder on the terms set forth in the RSA.

The Law School agrees in the RSA to support the Transaction, subject to compliance withapplicable law in all respects (including receipt of any and all regulatory consents or approvals as

may be required under California Corporations Code Section 5913 or otherwise), for so long as theRSA is not terminated in accordance with its terms, including using reasonable best efforts to work ingood faith to negotiate the Definitive Documents and consummate the Transaction and any othertransactions contemplated by the RSA.

The RSA is for a limited term expiring following the occurrence of certain events describedin the RSA including failure to implement the Transaction by the date(s) specified, and is subject totermination under certain circumstances described more fully in the RSA.

As part of the RSA, the Consenting Bondholders direct the Trustee to take no remedial actionor enforcement action of any sort against the Law School for failure to make any Required Payment(as defined in the Indenture) or perform other covenants with respect to Article 5 of the Loan

Agreement and Consent and Amendment Nos. 2 through 11 (notice of which is available on EMMAthrough previous Law School postings). As a result, during the term of the RSA, no remedial actionis expected to be taken against the Law School by or on behalf of the Trustee with respect to theBonds or the Loan Agreement or the Deed of Trust which secure the Bonds.

Under the RSA each Consenting Bondholder agrees not to transfer its bonds except toanother Consenting Bondholder (which includes any Consenting Bondholder included in thesignature pages to the RSA or any party that agrees in writing to be bound by the RSA and deliversto the School and the Trustee a Joinder in the form attached thereto as Exhibit A). The RSA containsprovisions for remedies in the event of a breach by certain Parties, including a right of specificperformance.

THE TERM SHEET

As a condition of the closing of the Transaction, all of the Bonds will be cancelled and theLaw School will be fully released of substantially all of its obligations under the Loan Agreement,the Indenture, the Deed of Trust and all related documents, including the Bonds, except for itsobligations resulting from the Transaction related to the Lease and the Notes.


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Pursuant to an SPV Term Sheet which the Law School understands is to be posted on EMMAconcurrently with this disclosure, the Consenting Bondholders have directed the Trustee to form aspecial purpose vehicle (the SPV), to which the School will not be a party, for purposes ofimplementing the Transaction on behalf of the Trustee and the Bondholders. The ConsentingBondholders agree in the RSA to negotiate an operating agreement for the SPV acceptable to boththe Requisite Consenting Bondholders and a majority of the Consenting Bondholders other than theRequisite Consenting Bondholders (as more fully set forth in the RSA) and the Trustee (solely forpurposes of causing the implementation of the operating agreement at the Closing to be consistentwith the Trustees duties under the Indenture). The Trustee acknowledges in the RSA that the SPVTerm Sheet is consistent with the Trustees duties under the Indenture. The Law School has notparticipated in the negotiation of the SPV Term Sheet and is not responsible for its terms orimplementation.

Under the Term Sheet, ownership of the land, building and personalty, including leaseholdimprovements, located at 1155 Island Avenue, San Diego, California will be conveyed to the SPVfollowing conveyance by the Law School of the property by deed in lieu of foreclosure, upon theterms and conditions set forth in and contemplated by the Term Sheet (as defined below) and as

separately agreed to by the Trustee and the Consenting Bondholders in the SPV Term Sheet.

Pursuant to the Lease Term Sheet, the Law School will lease back the Premises from theSPV, who will act as the landlord (the Landlord). In addition, pursuant to the Notes Term Sheet,the Law School will issue a note or notes in favor of the SPV, which will act as the lender (theLender), in the amount of $40,000,000, which is the agreed upon amount. Among other things, theNotes Term Sheet sets forth the terms of the Notes including security, interest rate, maturity,limitation of payments prior to maturity to certain amounts available from Excess Cash Flow, andcircumstances in which the principal amount of the Notes may be substantially reduced.

It also includes special provisions related to (i) an M&A Transaction, if any should occur,(ii) relocation costs if the lease terminates sooner than ten years, and (iii) limited financial support in

the event the Law School is required to post a letter of credit to support ongoing student loan fundingeligibility. Moreover, under the Notes Term Sheet, the Lender agrees to work in good faith with theLaw School to provide up to $1 million in cash at closing for certain marketing and public relationsactivities in part to address the negative publicity regarding its financial difficulties in 2014.

The Law School is heavily dependent upon students who finance their tuition through federalstudent financial aid programs. In the last three full academic years, over 90% of the revenues of theLaw School have been attributable to such student loans. To participate in such programs, the LawSchool must obtain and maintain accreditation by an accrediting agency recognized by the U.S.Department of Education, and certification by the Department of Education (DOE). As a result,the Law School is subject to extensive regulation by DOE, including the requirement to maintaincertain financial ratios. Any failure or delay by the DOE to provide funding is an Event of Defaultunder the Lease and the Notes. Although the Transaction is designed to permit the Law School tomeet the requirements of DOE for ongoing student eligibility for federal student financial aid underthe DOEs provisional certification standards, no assurance can be given that the Transaction will bestructured in a way that does result in such compliance or that, if the Transaction is entered into, theLaw School will maintain such compliance and eligibility.


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The Notes Term Sheet further contemplates payment by the Law School of an RSA ConsentFee in the amount of $2.5 million in cash to Lender (to be distributed as determined by theConsenting Bondholders).

Closing of the Transaction is subject to numerous conditions including receipt of allregulatory approvals, governmental and third party consents, negotiated representations and

covenants and fully negotiated Definitive Documents acceptable to the parties. While the TermSheet requires delivery of certain legal opinions by counsel to the Law School, no such opinions havebeen rendered by counsel in connection with entry into the RSA. Also, all expenses of the Lenderand Trustee in connection with the restructuring, the Notes and the ongoing administration of theNotes are to be paid by the Law School.

The Law School is subject to continuing review by the ABA and compliance with its rulesand guidelines, which are subject to change. The ABA retains the ability to evaluate law schools inconnection with their ongoing accreditation and, accordingly, no assurance can be given with respectto continuing accreditation. Maintenance of its existing accreditation is a condition ofimplementation of the Transaction and of the Lease and the Notes. As has previously been reported

by the Law School, in filings on EMMA, the ABA has given special scrutiny to the Law Schoolsfinancial condition and the Law School expects the Transaction and the RSA to be subject to furtherABA scrutiny and review.

The parties to the RSA have attempted to structure the RSA and the Term Sheet so that theTransaction will preserve the status of the Law School as a tax-exempt nonprofit corporation forfederal and state law purposes. Among other things, conveyance of the Property will require noticeto the California Attorney General and may be subject to the approval of the Attorney General.

Pro Forma Financial Projections. The Law School has prepared a ten year financialprojection (the Pre-Restructuring Financial Projections) attached hereto as Exhibit C projectingnet income available for debt service, based on certain assumptions and limiting factors. Such

information has not been prepared in accordance with generally accepted accounting principles(GAAP). The Pre-Restructuring Financial Projections are based on assumptions made by the LawSchool (on matters such as future enrollment, revenues and anticipated expenses), but there can be noassurance that actual enrollment, revenues and expenses will be consistent with such assumptions.For example, while the Law School believes its projections for the current fiscal year are reasonablebased on current enrollment, further job cuts must be implemented to achieve the revenueprojections.

The Pre-Restructuring Financial Projections have not been revised to reflect the terms of theRSA and therefore certain line items are no longer applicable such as Current D/S. In addition, thepro forma impact of the building lease, the excess cash flow sweep and the transaction fees andexpenses related to the restructuring have not been included in these projections.

Investors should note the following with respect to the Pre-Restructuring FinancialProjections:

1) Amounts reflected in the line item for Sublease Income will not be realizedpursuant to the Transaction and should be disregarded. Although the Notes Term Sheetallows the Landlord to sublet a portion of the premises with a resultant reduction in rent paidby the Law School, such amounts are not shown elsewhere in the projections.


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2) Amounts shown under the column Budget 2014 are based on projectionsinitially prepared in May 2014. This column reflects a variance from the Law Schoolsunaudited financial statements for the fiscal year ended June 30, 2014. Operating revenuesfor the year are estimated to have been approximately $950,000 less than the projection, andoperating expenses are estimated to have been approximately $40,000 less than shown in theprojection. Moreover, net income available for debt service for the year is estimated at $13.4million, approximately $900,000 less than shown in the projection. This variance is largelyattributable to legal and professional fees associated with the restructuring, as shortfalls insummer school revenues were largely offset by operating expense reductions against theamounts projected.

3) Amounts shown under the column for fiscal year 2015 are generallyconsistent in the aggregate with the Law Schools current expectations for fiscal year 2015.Operating revenues for 2015 assume an enrollment substantially consistent with currentenrollment, and a level of scholarship support on a basis substantially similar to currentscholarship levels. Operating expenses for fiscal year 2015 reflect the current expectations ofthe Law School for the Fiscal Year.

4) Projections of operating revenues and operating expenses for fiscal yearsbeginning in fiscal year 2016 reflect Law School expectations with respect to enrollment(declining initially and then stabilizing), tuition (at 2015 levels subject to modest increases inlater years), levels of scholarship and operating expenses subject to modest additionaldeclines in fiscal year 2016 and thereafter subject to modest annual increases. Income for theLLM Program is assumed at levels which assume the program is initiated (with ABAacquiescence) and in operation.

5) The Pre-Restructuring Financial Projections do not project revenues orexpenses beyond fiscal year 2024. Expenses beyond such period could be materiallydifferent from those projected for prior years, whether as a result of a change in the real

property occupied by the Law School or otherwise.

Actual results realized by the Law School will vary from any projections, and such variancemay be material. Actual operating results may be affected by many factors, including, but notlimited to, increased costs (including occupancy costs), lower than anticipated revenues (as a resultof enrollment or otherwise), employee relations, changes in applicable government or academicregulation, changes in demographic trends, factors associated with education, competition forstudents, and changes in local or general economic conditions.

The Law Schools source of revenues with which to meet its payment obligations under theLoan Agreement or under the Transaction consist primarily of tuition and fee revenues from itsoperations. Future economic and other conditions, including, without limitation, the loss by the Law

School of its accreditation, destruction or loss of its facilities, including by reason of termination ofthe Lease, litigation, competition, changes in the demand for legal education offered by the LawSchool and increases in expenses may materially and adversely affect the revenues of the LawSchool and its ability to make payments on the Bonds or pursuant to the Transaction.

Failure to Implement RSA. If the parties fail to implement a Transaction pursuant to theRSA, the Law School expects that it will be in default of its obligations under the Loan Agreement(including its loan repayment obligations), and under the RSA with respect to the RSA Consent Fee.


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While the Law School would expect to continue to negotiate with the Trustee, its advisors andBondholders to achieve a workable solution, the Law School cannot predict what actions it or theTrustee or Bondholders may take with respect to the Bonds.

Tax Treatment. The Transaction will result in the cancellation of all of the Bonds includingBonds owned by persons who are not Consenting Bondholders. The Law School does not expect

that payments received under the Transaction will be exempt from taxation under Section 103 of theInternal Revenue Code or for purposes of state law. The Law School has not evaluated the taxexempt status of the Series 2008A Bonds, retroactive to the date of issuance and expresses no viewwith respect to the tax-exempt status of the Bonds as a result of the Transaction or with respect to anytax consequences to owners arising from the Transaction. The Law School can give no assurancethat tax consequences of the Transaction will not be material to investors in the Bonds. Investorsshould consult their tax advisors with respect to any and all tax consequences arising from theTransaction or the RSA, whether with respect to the Bonds or otherwise.

MISCELLANEOUS

Pending Litigation and Construction Remediation. There has been no material change tothe status of pending litigations from what was previously disclosed by the Law School except as setforth herein. TJSLs former outside counsel, Barry LePatner, initiated two lawsuits against theschool, USDC Case No. 13CV01950-H-JMA for fraud and breach of contract, and USDC CaseNo. 14CV0758-H-JMA for copyright infringement. The Law School reached an agreement with theLePatner entities to settle these cases for an aggregate payment of $700,000, a portion of which wasfunded from Trustee-held funds. The lawsuits have been dismissed.

Attached Disclosure Exhibits. Set forth as exhibits to this memorandum are theExhibits A-D, asreferenced above.

A. Restructuring Support Agreement, including Notes Term Sheet and Lease Term

Sheet

B. Form of Bondholder Confidentiality Agreements with Recipients

C. Excerpted materials from Zolfo Report (Pre-Restructuring Financial Projections)

D. CBRE Appraisal

FORWARD LOOKING STATEMENTS

The material set forth herein contains information material to Bondholders related toConfidential Information made available to the Trustee and its representatives but it does not purport

to contain all material information with respect to the Bonds or financial condition of the LawSchool. The information presented has been obtained from sources which are believed to be reliablebut is not guaranteed as to accuracy or completeness. This does not constitute an update of theOfficial Statement dated August 21, 2008, with respect to the Bonds but is presented as an updateregarding restructuring efforts of the Law School.

Material set forth in these materials may consist of, and the words or phrases, areexpected, will continue, is anticipated, estimate, project, forecast, expect, intend andsimilar expressions identify forward looking statements within the meaning of the private


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securities litigation reform act of 1995. Such statements are subject to risks and uncertainties thatcould cause actual results to differ materially from those contemplated in such forward-lookingstatements. Any forecast, including the Pre-Restructuring Financial Projections, subject to suchuncertainties. Inevitably, some assumptions used to develop the forecasts will not be realized andunanticipated events and circumstances may occur. Therefore, there are likely to be differencesbetween forecasts and actual results, and those differences may be material.

To estimate revenues and expenses, the Law School has made certain assumptions withregard to enrollment, net tuition, expenses and other matters in future years. The Law Schoolbelieves these assumptions to be reasonable for purposes of this presentation, but to the extent thatany of these assumptions fail to materialize, the net revenues available to pay debt service on theBonds, or payments with respect to the Transaction, including lease payments and Notes paymentswill, in all likelihood, be less than those projected herein.

The financial information presented has been prepared by internal staff of the Law Schooland has not been reviewed by outside auditors of the Law School. Some of the data presented intabular or summary form may be subject to more detailed requirements, exceptions or conditions; it

is presented in this fashion to facilitate the ongoing restructuring process.

The information and expressions of opinions herein are subject to change without notice anddelivery of this disclosure shall not, under any circumstances, create any implication that there hasbeen no changes in the affairs of the Law School since the date hereof. All summaries of the RSA,the Term Sheets or any terms of the Bonds or other documents are made subject to the provisions ofsuch documents, respectively, and do not purport to be complete statements of any or all of suchprovisions.

ALL PROJECTIONS, FORECASTS, ASSUMPTIONS, EXPRESSIONS OF OPINIONS,ESTIMATES AND OTHER FORWARD-LOOKING STATEMENTS ARE EXPRESSLYQUALIFIED IN THEIR ENTIRETY BY THIS CAUTIONARY STATEMENT.


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EXECUTION VERSION

RESTRUCTURING SUPPORT AGREEMENT

October 28, 2014

This RESTRUCTURING SUPPORT AGREEMENT (as amended, supplemented, orotherwise modified from time to time in accordance with the terms hereof, this Agreement),made and entered into by and among (i) Thomas Jefferson School of Law (the School), (ii) theTrustee (as defined herein) and (iii) each holder (a Bondholder and collectively, theBondholders), solely in its capacity as a Bondholder of any of the series 2008A tax-exemptbonds (the Tax-Exempt Bonds) or the series 2008B taxable bonds (the Taxable Bonds and,together with the Tax-Exempt Bonds, the Bonds), as applicable, issued pursuant to that certainIndenture dated as of August 1, 2008 (the Indenture) between the California StatewideCommunities Development Authority (the Authority) and UMB Bank (as successor trustee toThe Bank of New York Mellon Trust Company, N.A.) (the Trustee) that is (a) identified onthe signature pages hereto as a holder of claims (the Bond Claims) under that certain LoanAgreement dated as of August 1, 2008 (the Loan Agreement) between the Authority and theSchool, pursuant to which the proceeds of the Bonds were loaned to School or (b) joins this

agreement pursuant to a joinder in the form attached hereto as Exhibit A(each such Bondholder,a Consenting Bondholder and collectively, the Consenting Bondholders) sets forth certainterms and conditions pursuant to which the School will effectuate a restructuring transaction withthe support of the Trustee and the Consenting Bondholders. The School, the Trustee and each ofthe Consenting Bondholders are referred to herein collectively as the Parties and eachindividually as a Party.

RECITALS

WHEREAS, subject to the terms hereof, the Parties have agreed to support arestructuring transaction (the Transaction) pursuant to a deed in lieu of foreclosure transaction

consistent in all material respects with this Agreement and the Term Sheet (as defined below);

WHEREAS, the Consenting Bondholders have directed the Trustee to form a specialpurpose vehicle (the SPV), to which the School will not be a party, for purposes ofimplementing the Transaction on behalf of the Trustee and the Bondholders and transferringownership of the land, building and personalty, including leasehold improvements, located at1155 Island Avenue, San Diego, California to the SPV upon the terms and conditions set forth inand contemplated by the Term Sheet (as defined below) and as separately agreed to by theTrustee and the Consenting Bondholders;

WHEREAS, subject to the terms hereof, the Transaction will be implemented pursuant

to various agreements and related documentation that will be completed and executed, subject tothe consent of those Consenting Bondholders holding a majority of (a) the aggregate principalamount of Bonds and (b) the aggregate principal amount of Tax-Exempt Bonds, in each casecalculated as of such date the Consenting Bondholders make such a determination in accordancewith this Agreement and certified as accurate by the Trustee (the Requisite ConsentingBondholders);


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WHEREAS, the Parties are prepared to perform their obligations hereunder subject tothe terms and conditions of this Agreement; and

WHEREAS, in consideration of the promises, mutual covenants, and agreements setforth herein and for other good and valuable consideration, the receipt and sufficiency of whichare hereby acknowledged, each Party, intending to be legally bound, agrees as follows:

1. Proposed Restructuring

The Parties will effectuate the Transaction pursuant to the terms of this Agreement andthe terms and conditions set forth in: (a) the Lease Term Sheet, attached hereto as Exhibit B; and(b) the Notes Term Sheet, attached hereto as Exhibit C (collectively, including all annexesthereto, the Term Sheet), which Term Sheet is expressly incorporated by reference herein andmade a part of this Agreement as if fully set forth herein. For the avoidance of doubt, the TermSheet and the Transaction expressly exclude the formation and governance of the SPV, whichshall be subject to a separate term sheet agreed by the Consenting Bondholders (in the formagreed to between the Consenting Bondholders as of the date hereof, the SPV Term Sheet).

The Consenting Bondholders agree to negotiate in good faith an operating agreement for theSPV containing the terms set forth in the SPV Term Sheet, and any terms of the operatingagreement not set forth in the SPV Term Sheet must otherwise be reasonably acceptable to (i) theRequisite Consenting Bondholders, (ii) the Consenting Bondholders holding a majority of theBonds held by Consenting Bondholders other than the Requisite Consenting Bondholders and(iii) the Trustee (solely for purposes of causing the implementation of the operating agreement atthe Closing to be consistent with the Trustees duties under the Indenture; provided, however,that for the avoidance of doubt, by signing this Agreement the Trustee acknowledges that theSPV Term Sheet is consistent with the Trustees duties under the Indenture).

2. Effective Date

This Agreement shall be effective and binding on all Parties immediately upon theSchool obtaining the Schools, the Trustees, and the Requisite Consenting Bondholderssignatures (the Effective Date). Upon the Effective Date of this Agreement, the Term Sheetshall be deemed effective for the purposes of this Agreement, and thereafter the terms andconditions therein may only be amended, modified, waived, or otherwise supplemented as setforth in Section 16 herein. Within three business days of the Effective Date (the PublicDisclosure Date), the School shall publicly disclose all material non-public information, whichdisclosure shall be subject to approval by the Trustee and the Requisite Consenting Bondholders,after which all Bondholders (other than those Bondholders subject to a confidentiality agreementregarding this Transaction with the School) will have five (5) business days to join this

Agreement as a Consenting Bondholder pursuant to the joinder attached hereto as Exhibit A, andif so joined within such time period shall immediately be effective as against such joinedBondholder.

3. Term Sheet

The Term Sheet is expressly incorporated herein and is made part of this Agreement.The terms of this Agreement and the Term Sheet shall whenever possible be read in a


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complementary manner; provided that, to the extent there is a conflict between the body of thisAgreement and the Term Sheet, the conflicting term of the Term Sheet shall control and govern.

4. Definitive Documents

Each Party hereby covenants and agrees, severally and not jointly, to (a) negotiate ingood faith each of the documents implementing, achieving and relating to the Transaction(collectively, the Definitive Documents), which Definitive Documents shall contain terms andconditions consistent in all respects with this Agreement and the Term Sheet, and (b) subject tothe last sentence of Section 1, execute and otherwise support the Definitive Documents. AllParties shall have the right to review and comment on the Definitive Documents, and subject tothe last sentence of Section 1, such Definitive Documents shall be reasonably acceptable to theRequisite Consenting Bondholders, the School (solely to the extent that the School is party tosuch Definitive Document) and the Trustee (solely for purposes of causing the implementation ofthe Transaction to be consistent with the Trustees duties under the Indenture; provided,however, that for the avoidance of doubt, by signing this Agreement the Trustee acknowledgesthat the SPV Term Sheet is consistent with the Trustees duties under the Indenture), in form and

substance prior to executing such Definitive Documents (or in the case of the Trustee prior torelease of the lien of the Deed of Trust (as defined in the Indenture) and cancellation of the LoanAgreement, the Bonds and the Indenture).

5. Representations and Warranties of the Consenting Bondholders

Each Consenting Bondholder represents and warrants to the other Parties that, as of thedate hereof:

a. it has all requisite power and authority to enter into this Agreement and to carryout the transactions contemplated by, and perform its obligations under, this

Agreement and any other ancillary agreements, and the execution, delivery, andperformance by it of this Agreement and any ancillary agreements will not(i) contravene any applicable provision of any law, statute, rule or regulation, orany order writ, injunction, or decree of any court or governmental instrumentalityor violate any provision of its organizational documents or (ii) conflict with, orresult in a breach or constitute (with due notice or lapse of time or both) a defaultunder any material contractual obligations to which it or any of its subsidiaries isa party;

b. the execution and delivery of this Agreement and the performance of itsobligations hereunder have been duly authorized by all necessary action on its

part;

c. such Consenting Bondholder: (i) either (A) is the sole beneficial owner of theprincipal amount of Bond Claims set forth with its signature hereto, or (B) hassole investment or voting discretion with respect to the principal amount of BondClaims set forth with its signature and has the power and authority to bind thebeneficial owner(s) of such Bond Claims to the terms of this Agreement; and (ii)has full power and authority to act on behalf of, vote, and consent to matters


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concerning such Bond Claims and to dispose of, exchange, assign, and transfersuch Bond Claims, including the power and authority to execute and deliver thisAgreement and to perform its obligations hereunder;

d. subject to Section12,such Consenting Bondholder has made no assignment, sale,participation, grant, conveyance, pledge, or other transfer of, and has not enteredinto any other agreement to assign, sell, use, participate, grant, convey, pledge, orotherwise transfer, in whole or in part, any portion of its right, title, or interests inany Bond Claims that are subject to this Agreement that conflict with therepresentations and warranties of such Consenting Bondholder herein or wouldrender such Consenting Bondholder otherwise unable to comply with thisAgreement and perform its obligations hereunder;

e. this Agreement constitutes the legally valid and binding obligation of each suchConsenting Bondholder thereto, as applicable, enforceable against it inaccordance with its terms, except as enforcement may be limited by bankruptcy,insolvency, reorganization, moratorium, or other similar laws relating to or

limiting creditors rights generally or by equitable principles relating toenforceability;

f. such Consenting Bondholder is an Approved Institutional Buyer, as such term isdefined in the Indenture;

g. such Consenting Bondholder has sufficient knowledge and experience in financialand business matters with respect to the evaluation of this Agreement and theTerm Sheet to be able to evaluate the risk and merits of this Agreement and theTransaction;

h.

such Consenting Bondholder is able to bear the economic risks of this Agreementand the Transaction;

i. such Consenting Bondholder acknowledges that it has either been supplied withor been given access to information, including financial statements and otherfinancial information, to which a reasonable investor would attach significance inmaking investment decisions, and the Consenting Bondholder has had theopportunity to ask questions and receive answers from knowledgeable individualsconcerning this Agreement and the Term Sheet and the security therefor so that,as a reasonable lender, the Consenting Bondholder has been able to make itsdecision to enter into this Agreement;

j.

such Consenting Bondholder, in making an investment decision, is relying uponits own examination of the School and its properties and business;

k. such Consenting Bondholder understands that (a) the Agreement, the Term Sheetand other agreements contemplated by this Agreement have not been registeredwith any federal or state securities agency or commission, and (b) no credit ratinghas been sought or obtained with respect to any part thereof and that this


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Agreement and the Transaction, if implemented involves a high degree of risk;and

l. such Consenting Bondholder acknowledges and agrees that the School, itsofficers, employees and agents and the members of its governing board, past,present and future shall not have any liability to such Consenting Bondholder withrespect to any claim asserted by any other bondholder that may from time to timebecome a party hereto as a result of such Consenting Bondholder assigning ortransferring its claim notwithstanding any prohibition herein.

6. Representations and Warranties of the Trustee

The Trustee represents and warrants to the other Parties that, as of the date hereof:

a. it has all requisite power and authority to enter into this Agreement and to carryout the transactions contemplated by, and perform its obligations under, thisAgreement and any other ancillary agreements, and the execution, delivery, and

performance by it of this Agreement and any ancillary agreements will not(i) contravene any applicable provision of any law, statute, rule or regulation, orany order, writ, injunction, or decree of any court or governmental instrumentalityor violate any provision of its organizational documents or (ii) conflict with, orresult in a breach or constitute (with due notice or lapse of time or both) a defaultunder any material contractual obligations to which it or any of its subsidiaries isa party;

b. the execution and delivery of this Agreement and the performance of itsobligations hereunder have been duly authorized by all necessary action on itspart, including an appropriate direction by the Requisite Consenting Bondholders;

and

c.

this Agreement constitutes the legally valid and binding obligation of the Trusteeand is enforceable against the Trustee in accordance with its terms, except asenforcement may be limited by bankruptcy, insolvency, reorganization,moratorium, or other similar laws relating to or limiting creditors rights generallyor by equitable principles relating to enforceability.

7. Representations and Warranties of the School

The School represents and warrants to the other Parties that, subject to compliance withapplicable law in all respects regarding the Definitive Documents and the Transaction,as of thedate hereof:

a. it has all requisite power and authority to enter into this Agreement and to carryout the transactions contemplated by, and perform its obligations under, thisAgreement and any other ancillary agreements, and the execution, delivery, andperformance by it of this Agreement and any other ancillary agreements will not(i) contravene any applicable provision of any law, statute, rule or regulation, orany order writ, injunction, or decree of any court or governmental instrumentality


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or violate any provision of its organizational documents or (ii) conflict with, orresult in a breach or constitute (with due notice or lapse of time or both) a defaultunder any material contractual obligations to which it or any of its subsidiaries isa party;

b. the execution and delivery of this Agreement and the performance of itsobligations hereunder have been duly authorized by all necessary action on itspart;

c. this Agreement constitutes the legally valid and binding obligation of the Schooland is enforceable against the School in accordance with its terms, except asenforcement may be limited by bankruptcy, insolvency, reorganization,moratorium, or other similar laws relating to or limiting creditors rights generallyor by equitable principles relating to enforceability; and

d. except as expressly provided in this Agreement, the execution, delivery, andperformance by it of this Agreement do not and shall not require any registration

or filing with, consent or approval of, or notice to, or other action to, with or by,any federal, state, or other governmental authority, or regulatory body.

8. Covenants of the Consenting Bondholders

Subject to the terms and conditions hereof and for so long as this Agreement has not beenterminated in accordance with its terms, each Consenting Bondholder shall support theTransaction and hereby agrees and covenants to:

a. support and take any and all reasonably necessary and appropriate actions infurtherance of consummation of the Transaction and this Agreement;

b. (i) vote or provide any consents required under the Loan Agreement and theIndenture with respect to its Bond Claims in favor of the Transaction on a timelybasis, and (ii) not change or withdraw such votes or consents (or cause or directsuch vote or consent to be changed or withdrawn);

c. use reasonable best efforts and work in good faith to negotiate the DefinitiveDocuments and consummate the Transaction and any other transactionscontemplated hereby;

d. not directly or indirectly seek, solicit, support, encourage, vote its Bond Claimsfor, consent to, take any action, or participate in any discussions regarding: (i) the

negotiation or formulation of any proposal, offer, refinancing, dissolution,winding up, liquidation, reorganization, plan of reorganization, sale process,merger, consolidation, business combination, joint venture, partnership, sale ofassets, or restructuring for the School other than the Transaction and ascontemplated by the Term Sheet, (ii) any other action that (x) would interferewith, delay, or postpone the consummation of the Transaction, or (y) isinconsistent in any material respect with, or is intended to frustrate or impedeapproval and consummation of, the Transaction;


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e. to the extent any legal or structural impediment arises that would prevent, hinder,or delay the consummation of the Transaction, negotiate in good faith appropriateadditional or alternative provisions to address any such impediment; provided thatthe economic outcome for the Consenting Bondholders, the anticipated timing ofthe Closing Date (as defined below), and other material terms of this Agreement

must be substantially preserved in any such alternate provisions;

f. with respect to Section 4.1 and Article V of the Loan Agreement and Consent andAmendment Nos. 2-10 and pursuant to Section 8.2 of the Loan Agreement andSection 7.05 of the Indenture, direct the Trustee to take no remedial orenforcement action of any sort against the School for failure to make the RequiredPayment (as defined in the Indenture) or perform other covenants with respectthereto until the termination of this Agreement; provided, however that the Schoolshall perform all actions necessary with respect to the Loan Agreement or theIndenture that are reasonably expected to be performed as of the Effective Date toimplement this Transaction and any failure to do so may be considered a cause fortermination under Section 9(g) hereof;

g. permit all disclosures in any filings by the School with any regulatory agency towhich the School may be subject (including, without limitation, the American BarAssociation (the ABA) and the Department of Education (the DOE)) of thecontents of this Agreement, including, but not limited to, the aggregate BondClaims held by all Bondholders; provided that, unless required by law,governmental, or regulatory authorities or any court of competent jurisdiction andupon notice to the affected Consenting Bondholder, such disclosures and/orfilings by the School shall not include the individual amount of each Bond Claimor the identity of each Consenting Bondholder;

h.

agree to the terms of indemnity attached here to as Exhibit D; and

i. comply with all of its obligations under this Agreement and the exhibits attachedhereto (which exhibits are incorporated herein by reference) unless compliance iswaived in accordance with Section16 of this Agreement.

9. Covenants of the Trustee

Subject to the terms and conditions hereof and for so long as this Agreement has not beenterminated in accordance with its terms, the Trustee shall support the Transaction and herebyagrees and covenants to:

a.

support and take any and all reasonably necessary and appropriate actions infurtherance of consummation of the Transaction and this Agreement;

b. use reasonable best efforts and work in good faith to negotiate the DefinitiveDocuments and consummate the Transaction and any other transactionscontemplated hereby;


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c. take any and all reasonably necessary and appropriate actions consistent with itsobligations under this Agreement and the Term Sheet in furtherance of theTransaction;

d. not take any action that is inconsistent in any material respect with, or is intendedto frustrate or impede approval and consummation of the Transaction describedin, this Agreement or the Term Sheet;

e. with respect to Section 4.1 and Article V of the Loan Agreement and Consent andAmendment Nos. 2-10 and pursuant to Section 8.2 of the Loan Agreement andSection 7.05 of the Indenture, pursuant to a direction from the RequisiteConsenting Bondholders, agree not to take any remedial or enforcement action ofany sort against the School for failure to make the Required Payment (as definedin the Indenture) or perform other covenants with respect thereto until thetermination of this Agreement; provided, however that the School shall performall actions necessary with respect to the Loan Agreement or the Indenture that arereasonably expected to be performed as of the Effective Date to implement this

Transaction and any failure to do so may be considered a cause for terminationunder Section 9(g) hereof;

f. agree to the terms of indemnity attached here to as Exhibit D;

g.

comply with all of its obligations under this Agreement and the exhibits attachedhereto (which exhibits are incorporated herein by reference) unless compliance iswaived in accordance with Section16 of this Agreement; and

h. notwithstanding anything contained in this Agreement or in any Exhibit hereto,nothing shall prevent the Trustee from exercising any discretion or performing

any action or refraining from taking any action in accordance with the terms ofthe Indenture and the Trustee will be entitled to all immunities, protections andprivileges afforded to it under the Indenture with respect to any of the foregoing.

10. Covenants of the School

Subject to the terms and conditions hereof and, subject to compliance with applicable lawin all respects regarding the Definitive Documents and the Transaction, for so long as thisAgreement has not been terminated in accordance with its terms, the School shall support theTransaction and hereby agrees and covenants to:

a. support and take any and all reasonably necessary and appropriate actions infurtherance of consummation of the Transaction and this Agreement;

b. use reasonable best efforts and work in good faith to negotiate the DefinitiveDocuments and consummate the Transaction and any other transactionscontemplated hereby;


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c. except as expressly provided in the Agreement, maintain the confidentiality of theidentity and, to the extent known, specific holdings of each ConsentingBondholder;

d. take any and all reasonably necessary and appropriate actions consistent with itsobligations under this Agreement and the Term Sheet in furtherance of theTransaction;

e. not take any action that is inconsistent in any material respect with, or is intendedto frustrate or impede approval and consummation of the Transaction describedin, this Agreement or the Term Sheet;

f. not pursue any transaction to sell, transfer, lease or otherwise dispose of all or anypart of its property or assets without the prior consent of the Requisite ConsentingBondholders;

g. limit the aggregate amount of payments made to Stifel Financial Corp. (Stifel)

on account of Stifels fees and expenses to no more than $250,000.00;

h. on the Closing Date, reimburse (i) all reasonable and documented fees, costs andexpenses of the Trustee including, but not limited to, fees and expenses of ZolfoCooper and counsel to the Trustee in connection with the Transaction and (ii) allreasonable and documented fees, costs and expenses of Bracewell & GiulianiLLP, Kasowitz Benson Torres & Friedman LLP and Klee, Tuchin, Bogdanoff &Stern LLP, each up to an amount of $115,000.00, solely through the EffectiveDate of this Agreement;

i. on the Closing Date, pay to those Consenting Bondholders that are signatories

hereto or have otherwise executed a Joinder hereto as of that date that is five (5)business days after the Public Disclosure Date a consent fee in an amount of $2.5million in cash (the RSA Consent Fee), which RSA Consent Fee shall bedistributed to such Consenting Bondholders on a pro rata basis (based upon theamount of Bonds held by each Consenting Bondholder as compared to the amountof Bonds held by all Consenting Bondholders);

j. to the extent any legal or structural impediment arises that would prevent, hinder,or delay the consummation of the Transaction, negotiate in good faith appropriateadditional or alternative provisions to address any such impediment; provided thatthe economic outcome for the Consenting Bondholders, the anticipated timing ofthe Closing Date (as defined below), and other material terms of this Agreementare substantially preserved in any such provisions; provided that such provisionsdo not impair the Schools ability to operate or deprive it of the benefits of thisAgreement; and

k. comply with all of its obligations under this Agreement and the exhibits annexedhereto (which exhibits are incorporated herein by reference) unless compliance iswaived in accordance with Section16 of this Agreement.


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11. Termination of Obligations

Except as otherwise provided herein, this Agreement shall terminate and all obligationsof the Parties hereunder shall terminate and be of no further force and effect, at 11:59 p.m.prevailing Eastern Time, on the date that is two (2) business days from the date on which therespective counsel to each Party receives written notice from the School or the RequisiteConsenting Bondholders, as applicable, of the occurrence of any of the events listed below (each,a Termination Event), during which two (2) business day period any Party shall have theopportunity and right to cure the Termination Event, as applicable, unless such TerminationEvent is waived in writing by the respective terminating Party:

a. by the written mutual written consent of the School and the Requisite ConsentingBondholders;

b. by the School, the Trustee (solely as to the Trustee being a Party hereunder, whichwill not affect any other Parties obligations to perform and abide by the termsand conditions of this Agreement) or the Requisite Consenting Bondholders, upon

a material breach by another Party of any of its respective representations,warranties, covenants, or agreements set forth herein;

c. by the School, the Trustee (solely as to the Trustee being a Party hereunder, whichwill not affect any other Parties obligations to perform and abide by the termsand conditions of this Agreement) or the Requisite Consenting Bondholders, if theTransaction is not consummated on or before November 15, 2014, subject tocustomary post-closing conditions, or such later date as may be reasonablyacceptable to the School and the Requisite Consenting Bondholders, but in noevent later than December 15, 2014;

d.

by the School, the Trustee (solely as to the Trustee being a Party hereunder, whichwill not affect any other Parties obligations to perform and abide by the termsand conditions of this Agreement) or the Requisite Consenting Bondholders, ifany court of competent jurisdiction or other competent governmental orregulatory authority issues a final and non-appealable order that is not subject to astay making illegal or otherwise restricting, preventing or prohibiting thetransactions contemplated by this Agreement and the Term Sheet;

e. automatically upon the commencement of a voluntary case under Title 11 of theUnited States Code, 11 U.S.C. 101, et seq (the Bankruptcy Code) or thecommencement of an involuntary case against the School under the Bankruptcy

Code;

f. by the School, the Trustee (solely as to the Trustee being a Party hereunder, whichwill not affect any other Parties obligations to perform and abide by the termsand conditions of this Agreement) or the Requisite Consenting Bondholders, if theABA, the DOE, the California Attorney General or other regulatory authorityissues a final decision restricting, preventing, or prohibiting the transactionscontemplated by this Agreement and the Term Sheet;


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g. automatically on the date that the Transaction has been consummated (theClosing Date); provided, however, that each of the Parties acknowledges andagrees that the releases provided in Section13 of this Agreement and the terms ofindemnification set forth on Exhibit D hereto are enforceable by each signatoryhereto and shall survive the termination of this Agreement due to or following the

consummation of the Closing Date; or

h. by the Requisite Consenting Bondholders or the Trustee (solely as to the Trusteebeing a Party hereunder, which will not affect any other Parties obligations toperform and abide by the terms and conditions of this Agreement) upon theoccurrence of an event, change, or occurrence from circumstances prevailing onthe Effective Date that, individually or together with any other event, change, oroccurrence, has a material adverse impact on the financial condition, business, orresults of operations of the School (a Material Adverse Effect).

Except as otherwise provided in Section 11(g) herein, upon termination of thisAgreement in accordance with its terms, this Agreement shall forthwith become void and of no

further force or effect, each Party shall be released from its commitments, undertakings, andagreements under or related to this Agreement, and there shall be no liability or obligation on thepart of any Party. Each Party shall have the rights and remedies that it would have had had it notentered into this Agreement, and shall be entitled to take all actions, whether with respect to theTransaction or otherwise, that it would have been entitled to take had it not entered into thisAgreement.

12. Transfer Restrictions

Each Consenting Bondholder agrees that so long as this Agreement has not beenterminated in accordance with its terms it shall not directly or indirectly (a) grant any proxies to

any person in connection with its Bond Claims to vote or provide any consents required withrespect to the Transaction, or (b) sell, assign, pledge, hypothecate, convey, or otherwise transferor dispose of or grant, issue or sell any option, right to acquire, voting, participation or otherinterest in any Bond Claims (each a Transfer), except to a party that is a ConsentingBondholder (which shall include any undersigned Bondholder or any party that agrees in writingto be bound by this Agreement and delivers to the School and the Trustee a Joinder in the formattached hereto as Exhibit A). For the avoidance of doubt, this Agreement shall in no way beconstrued to preclude any Consenting Bondholder from acquiring additional Bond Claims or anyother interests in the School; provided that any such additional Bond Claims or other interests inthe School shall, upon acquisition, automatically be deemed to be subject to all the terms of thisAgreement. Any Transfer of Bond Claims other than as set forth in this Paragraph12 is null and

void ab initio. The Consenting Bondholders and the School acknowledge that transfer andownership of any Bond Claims or other interest in the Definitive Documents will be restricted toApproved Institutional Buyers in the same manner that ownership and transfer of the Bonds is solimited and as otherwise may be required pursuant to applicable securities laws.


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13. Releases

Each Party agrees that the following release provisions shall be binding on the Partieshereto upon the consummation of the Transaction on the Closing Date.

a. Release of each Release Party by the School and School Release Parties

(i) Effective as of the Closing Date, the School and each of the Schoolscurrent and former officers, directors, principals, shareholders, members,trustees, partners, employees, agents, advisory board members, financialadvisors, attorneys, accountants, investment bankers, consultants,representatives, management companies, fund advisors and otherprofessionals, and each of their respective predecessors, successors,subsidiaries, assigns, affiliates, heirs, executors, estates, servants, andnominees (each, in their capacity as such, a School Release Party, andcollectively, the School Release Parties) hereby fully andunconditionally releases, acquits and forever discharges, (a) the School,

(b) each Consenting Bondholder (in its capacity as such), (c) the Trustee(in its capacity as such) ((b) and (c) together, the Trustee/BondholderReleasees), (d) each Trustee/Bondholder Releasees current and formerofficers, directors, principals, shareholders, members, trustees, partners,employees, agents, advisory board members, financial advisors, attorneys,accountants, investment bankers, consultants, representatives,management companies, fund advisors, co-investment funds, and otherprofessionals, and (e) with respect to each of the foregoing (b) through (d),each of their respective predecessors, successors, subsidiaries, assigns,affiliates, heirs, executors, estates, servants, and nominees (in theircapacity as such and with the Trustee/Bondholder Releasees, each a

Trustee/Bondholder Released Party and, collectively, theTrustee/Bondholder Released Parties, and collectively with theSchool Release Parties, the Released Parties), from any and all mannerof actions, causes of action, suits, investigations or similar proceedings,debts, dues, sums of money, accounts, reckonings, bonds, bills, specialties,covenants, contracts, controversies, agreements, promises, variances,trespasses, damages, judgments, extents, executions, claims, liabilities,claims for violations of federal or state securities laws, gross negligence,fraudulent conveyance, torts, demands and other relief and liabilitieswhatsoever, whether known or unknown, foreseen or unforeseen, fixed orcontingent, matured or unmatured, accrued or unaccrued, whether direct,

indirect or derivative, existing or hereafter arising, in law, equity orotherwise, based in whole or in part on any act, omission, transaction oroccurrence, including without limitation any claims, suits, demands andcauses of action (collectively, Claims), that, in each case, the SchoolRelease Parties had or may have had on or prior to the Closing Date,relating in any way to the School, including Claims arising out of, relatingto or accruing from their ownership and operation of, any paymentsreceived from or made to, the School, and all other relationships of the


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School with the Released Parties, including with respect and relating toevery agreement to which the School may have been or is a party with theReleased Parties, the Indenture or the transactions contemplated under thisAgreement or the Term Sheet (collectively, the School ReleasedClaims); provided that nothing contained herein shall release any

Released Party from its post-Closing obligations under the DefinitiveDocuments; provided further that nothing contained herein shall operate torelease any Released Party from Claims arising from or relating to any actor omission by any such Released Party that constitutes fraud; providedfurther that in the event that the Transaction is unwound either in aninsolvency proceeding or otherwise, all Claims will be reinstated. Thisrelease is hereby referred to as the School Release.

(ii) Subject to the provisos in clause (i) above, the School Release Parties,effective from and after the Closing Date, expressly waives (A) all Claimsrelating in any manner to the School Released Claims which arise fromevents or conduct prior to the Closing Date, even if such Claims are notknown or suspected to exist in any of the School Release Parties favor,(B) any assertion that this School Release does not extend to Claimsarising from conduct that occurred prior to the Closing Date hereof andrelating in any manner to the School Released Claims which any of theSchool Release Parties did not know or suspect to exist in their favor onthe Closing Date, which if known by them, would have materially affectedthis School Release and (C) any and all provisions, rights and benefitsconferred by any law of any state or territory of the United States, orprinciple of common law with respect to Claims relating in any manner tothe School Released Claims.

(iii)

The School Release Parties shall not commence, aid, or participate in(except to the extent required by law or by order or legal process issued bya court or governmental agency of competent jurisdiction) any suit, legalaction or other proceeding to the extent based on any of the SchoolReleased Claims.

(iv) Each of the School Release Parties acknowledges that it has receivedindependent legal advice from its attorneys with respect to this SchoolRelease and further acknowledges that it and its counsel have hadadequate opportunity to make whatever investigations and inquiries theywish to make or have deemed necessary in connection with this School

Release.

(v) Each of the School Release Parties represents and warrants that it has notsold, assigned, transferred or conveyed all or any portion of the SchoolReleased Claims to any person or entity.

(vi) In the event that any suit, legal action or other proceeding is commencedagainst any of the School Release Parties by any person or entity


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(including, without limitation, any person or entity not a party to thisAgreement, any trustee or receiver, or any committee of creditors or otherparty-in-interest in any bankruptcy proceeding), the School ReleaseParties do not waive, release or discharge, shall retain, and may assert andpursue the School Released Claims, but only for defensive purposes

(including, without limitation, as counterclaims and crossclaims), and assetoffs, recoupments and/or similar remedies in such suit, legal action orother proceeding against the person or entity asserting the suit, legal actionor other proceeding and not as grounds for any affirmative recovery.

b. Release of each School Release Party by the Trustee/Bondholder ReleasedParties.

(i) Effective as of the Closing Date, each Trustee/Bondholder Released Partyhereby fully and unconditionally releases, acquits and forever dischargeseach School Release Party from any and all Claims that, in each case, theTrustee/Bondholder Released Parties had or may have had on or prior to

the Closing Date, relating in any way to the School, including Claimsarising out of, relating to or accruing from their ownership and operationof the business of, any payments received from or made to, the School,and all other relationships of the School with each of theTrustee/Bondholder Parties, including with respect and relating to everyagreement to which the School may have been or is a party with each ofthe Trustee/Bondholder Parties, the Indenture or relating in any way to thetransactions contemplated under this Agreement or the Term Sheet(collectively, the Trustee/Bondholder Released Claims); provided,that nothing contained herein shall release any School Release Party fromits post-Closing Date obligations under the Definitive Documents,

including for the avoidance of doubt the Notes or the Lease; providedfurther that nothing contained herein shall operate to release any SchoolRelease Party from Claims arising from or relating to any act or omissionby any such School Release Party that constitutes fraud; provided furtherthat in the event that the Transaction is unwound either in an insolvencyproceeding or otherwise, all Claims will be reinstated. This release ishereby referred to as the Trustee/Bondholder Release.

(ii)

Subject to the provisos in clause (i) above, each of the Trustee/BondholderReleased Parties, effective from and after the Closing Date, expresslywaives (A) all Claims relating in any manner to the Trustee/Bondholder

Released Claims which arise from events or conduct prior to the Closing,even if such Claims are not known or suspected to exist in theTrustee/Bondholder Released Parties favor, (B) any assertion that thisTrustee/Bondholder Release does not extend to Claims arising fromconduct that occurred prior to the Closing Date hereof and relating in anymanner to the Trustee/Bondholder Released Claims which theTrustee/Bondholder Released Parties did not know or suspect to exist intheir favor on the Closing, which if known by them, would have materially


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affected this Trustee/Bondholder Release and (C) any and all provisions,rights and benefits conferred by any law of any state or territory of theUnited States, or principle of common law with respect to Claims relatingin any manner to the Trustee/Bondholder Released Claims.

(iii) Each of the Trustee/Bondholder Released Parties shall not commence, aid,or participate in (except to the extent required by law or by order or legalprocess issued by a court or governmental agency of competentjurisdiction) any suit, legal action or other proceeding to the extent basedon any of the Trustee/Bondholder Released Claims.

(iv) Each of the Trustee/Bondholder Released Parties acknowledges that it hasreceived independent legal advice from its attorneys with respect to thisTrustee/Bondholder Release and further acknowledges that it and itscounsel have had adequate opportunity to make whatever investigation orinquiry it has deemed necessary in connection with thisTrustee/Bondholder Release.

(v) Subject to Section 12, each of the Trustee/Bondholder Released Partiesrepresent and warrant that they have not sold, assigned, transferred orconveyed all or any portion of the Trustee/Bondholder Released Claims toany person or entity.

(vi) In the event that any suit, legal action or other proceeding is commencedagainst any of the Trustee/Bondholder Released Parties by any person orentity (including, without limitation, any person or entity not a party tothis Agreement, any trustee or receiver, or any committee of creditors orother party-in-interest in any bankruptcy proceeding), the

Trustee/Bondholder Released Parties do not waive, release or discharge,shall retain, and may assert and pursue the Trustee/Bondholder ReleasedClaims, but only for defensive purposes (including, without limitation, ascounterclaims and crossclaims), and as setoffs, recoupments and/or similarremedies in such suit, legal action or other proceeding against the personor entity asserting the suit, legal action or other proceeding and not asgrounds for any affirmative recovery.

c. Release of each Trustee/Bondholder Released Party by each otherTrustee/Bondholder Released Party.

(i)

Effective as of the Closing, each of the Trustee/Bondholder ReleasedParties hereby fully and unconditionally releases, acquits and foreverdischarges each of the other Trustee/Bondholder Released Parties fromany and all Claims that, in each case, each Trustee/Bondholder ReleasedParty had or may have had on or prior to the Closing Date, relating in anyway to the School, including Claims arising out of, relating to or accruingfrom any payments received from or made to the School, and all otherrelationships of the School with each of the other Trustee/Bondholder


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Released Parties, including with respect and relating to every agreement towhich the School may have been or is a party with each of the otherTrustee/Bondholder Released Parties, the Indenture or relating in any wayto the transactions contemplated under this Agreement or the Term Sheet,(collectively, the Mutually Released Claims); provided that nothing

contained herein shall release any Trustee/Bondholder Released Partyfrom its post-Closing Date obligations under the Definitive Documents;provided further that nothing contained herein shall operate to release anyTrustee/Bondholder Released Party from Claims arising from or relatingto any act or omission by any such Trustee/Bondholder Released Partythat constitutes fraud; provided further that in the event that theTransaction is unwound either in an insolvency proceeding or otherwise,all Claims will be reinstated. This release is hereby referred to as theTrustee/Bondholder Mutual Release.

(ii) Subject to the provisos in clause (i) above, each of the Trustee/BondholderReleased Parties, effective from and after the Closing Date, expresslywaive (A) all Claims relating in any manner to the Mutually ReleasedClaims which arise from events or conduct prior to the Closing Date, evenif such Claims are not known or suspected to exist in theTrustee/Bondholder Released Parties favor, (B) any assertion that thisTrustee/Bondholder Mutual Release does not extend to Claims arisingfrom conduct that occurred prior to the Closing hereof and relating in anymanner to the Mutually Released Claims which the Trustee/BondholderReleased Parties did not know or suspect to exist in their favor on theClosing Date, which if known by them, would have materially affectedthis Trustee/Bondholder Mutual Release and (C) any and all provisions,rights and benefits conferred by any law of any state or territory of theUnited States, or principle of common law with respect to Claims relatingin any manner to the Mutually Released Claims.

(iii) Each of the Trustee/Bondholder Released Parties shall not commence, aid,or participate in (except to the extent required by law or by order or legalprocess issued by a court or governmental agency of competentjurisdiction) any suit, legal action or other proceeding to the extent basedon any of the Mutually Released Claims.

(iv) Each of the Trustee/Bondholder Released Parties acknowledges that it hasreceived independent legal advice from its attorneys with respect to this

Trustee/Bondholder Mutual Release and further acknowledges that it andits counsel have had adequate opportunity to make whatever investigationor inquiry it has deemed necessary in connection with thisTrustee/Bondholder Mutual Release.

(v) Subject to Section 12, each of the Trustee/Bondholder Released Partiesrepresent and warrant that they have not sold, assigned, transferred or


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conveyed all or any portion of the Mutually Released Claims to anyperson or entity.

(vi) In the event that any suit, legal action or other proceeding is commencedagainst any of the Trustee/Bondholder Released Parties by any person orentity (including, without limitation, any person or entity not a party tothis Agreement, any trustee or receiver, or any committee of creditors orother party-in-interest in any bankruptcy proceeding), theTrustee/Bondholder Released Parties do not waive, release or discharge,shall retain, and may assert and pursue the Mutually Released Claims, butonly for defensive purposes (including, without limitation, ascounterclaims and crossclaims), and as setoffs, recoupments and/or similarremedies in such suit, legal action or other proceeding against the personor entity asserting the suit, legal action or other proceeding and not asgrounds for any affirmative recovery.

d. Notwithstanding anything contained herein to the contrary, no person or entity

which is not a Party hereto will be entitled to enforce any of the releases set forthherein unless, prior to doing so, such person or entity affirms in writing that suchperson or entity is also bound by, and is giving the releases ascribed to suchperson or entity herein.

e. Each Party to this Agreement acknowledges and agrees that: (i) the releasesgranted herein are for valuable consideration, including, but not limited to, thetransactions contemplated by this Agreement and the payments associatedtherewith; and (ii) the transactions contemplated by this Agreement and thepayments associated therewith constitute reasonably equivalent value and fairconsideration as such terms are defined in and by Section 548 of the United States

Bankruptcy Code (as defined herein), the Uniform Fraudulent Transfer Act andthe Uniform Fraudulent Conveyance Act as adopted in any jurisdiction, and anysimilar statute under applicable law.

f. The Parties agree that in connection with the consummation of the Transaction,the Parties will provide a release in substantially the same form as this Section13in favor of the Authority, solely on the condition that the Authority (i) consents tothe Transaction as set forth herein and in the Term Sheet and (ii) agrees to providea mutual release in favor of each of the Released Parties.

14. Remedies

The Parties agree that any breach of this Agreement would give rise to irreparabledamage for which monetary damages would not be an adequate remedy. Each of the Partiesagrees that the School and the Consenting Bondholders, as the case may be, will be entitled toenforce the terms of this Agreement by decree of specific performance without the necessity ofproving the inadequacy of monetary damages as a remedy and to obtain injunctive relief againstany breach or threatened breach. The Parties agree that such relief will be their only remedy


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against the applicable breaching Party or Parties with respect to any such breach, and that in noevent will any Party be liable for monetary damages under or in connection with this Agreement.

15. Prior Negotiations

This Agreement supersedes all prior negotiations and documents reflecting such priornegotiations between and among the School and the Consenting Bondholders (and theirrespective advisors), with respect to the Transaction and any other subject matter hereof.

16. Amendments and Waivers

Except as otherwise provided herein, neither this Agreement nor the Term Sheet may bemodified, amended, or supplemented without the prior written consent of each of (a) the School,(b) the Requisite Consenting Bondholders and (c) the Trustee (solely to the extent suchmodification or amendment adversely affects the Trustee); provided that if any modification,amendment, or supplement treats a group of Consenting Bondholders in a manner which isdisproportionate and adverse to the treatment of another group of Consenting Bondholders, such

modification, amendment, or supplement shall also require the written consent of the ConsentingBondholders holding a majority of the Bonds in such adversely treated group. Any waiver ofany condition, term, or provision of this Agreement must be in writing and signed by the Partiesentitled to waive such condition, term, or provision.

17. Independent Analysis

Each Party confirms that it has made its own decision to execute this Agreement basedupon its own independent assessment of documents and information available to it, as it hasdeemed appropriate.

18.

Further Assurances

The Parties agree to execute and deliver such other instruments and perform such acts, inaddition to the matters herein specified, as may be reasonably appropriate or necessary, fromtime to time, to effectuate the agreements and understandings of the Parties.

19. Governing Law

This Agreement shall be governed by, and construed in accordance with, the internallaws of the State of New York. By its execution and delivery of this Agreement, each of theParties hereby irrevocably and unconditionally agrees for itself that any legal action, suit orproceeding against it with respect to any matter under or arising out of or in connection with this

Agreement or for recognition or enforcement of any judgment rendered in any such action, suit,or proceeding, may be brought in either a state or federal court of competent jurisdiction in theState of New York. By execution and delivery of this Agreement, each of the Parties herebyirrevocably accepts and submits itself to the nonexclusive jurisdiction of each such court,generally and unconditionally, with respect to any such action, suit, or proceeding.


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20. No Solicitation

Notwithstanding anything to the contrary, this Agreement is not and shall not be deemedto be an offer for the issuance, purchase, sale, exchange, hypothecation or other transfer ofsecurities or a solicitation of an offer to purchase or otherwise acquire securities for purposes ofthe Securities Act of 1933 and the Securities Exchange Act of 1934, each as amended, or in anyjurisdiction in which this Agreement would be contrary to applicable securities laws.

21. No Third-Party Beneficiary

This Agreement is intended for the benefit of the parties hereto and no other person shallhave any rights hereunder.

22. Relationship Among the Parties

Nothing herein shall be deemed or construed to create a partnership, joint venture, orother association between or among any of the Parties. Each Party agrees and understands that

neither this Agreement, the Term Sheet, nor the transactions contemplated hereby or thereby,creates or otherwise gives rise to any fiduciary duty or other duty of trust or confidence.

23. Counterparts

This Agreement may be executed in several counterparts, each of which shall be deemedto be an original, and all of which together shall be deemed to be one and the same agreement.Execution copies of this agreement may be delivered by electronic mail, facsimile, or otherwise,which shall be deemed to be an original for the purposes of this Agreement.

24. Headings

The headings used in this Agreement are for convenience of reference only and do notconstitute a part of this Agreement and shall not be deemed to limit, characterize, or in any wayaffect any provision of this Agreement, and all provisions of this Agreement shall be enforcedand construed as if no headings had been used in this Agreement.

25. Settlement Discussions

This Agreement and the Term Sheet are part of a proposed settlement of matters thatcould otherwise be the subject of litigation among the Parties hereto. Nothing herein shall bedeemed an admission of any kind. Pursuant to Federal Rule of Evidence 408 and any applicablestate rules of evidence, this Agreement and all negotiations relating thereto shall not be

admissible into evidence in any proceeding other than a proceeding to enforce the terms of thisAgreement.

26. Notices

All demands, notices, requests, consents, and other communications under thisAgreement shall be in writing, sent contemporaneously to each of the School and the ConsentingBondholders, and deemed given when delivered, if delivered by hand, or upon transmission, if


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delivered by email or facsimile, at the addresses and facsimile numbers set forth on Schedule 1hereto or the signature pages hereto, as applicable.

27. Representation by Counsel

Each Party hereto acknowledges that it has been represented by counsel (or had theopportunity to and waived its right to do so) in connection with this Agreement and thetransactions contemplated by this Agreement. Accordingly, any rule of law or any legal decisionthat would provide any Party hereto with a defense to the enforcement of the terms of thisAgreement against such Party based upon lack of legal counsel shall have no application and isexpressly waived.

28. Press Releases and Public Announcements

The Trustee and each Consenting Bondholder hereby consent to the disclosure by theSchool in any press release or as required by law or regulation of the execution and contents ofthis Agreement; provided, however, that except as required by law or any rule or regulation of

any governmental agency, the School shall not, without the applicable Consenting Bondholdersprior consent, (a) use the name of such Consenting Bondholder or their respective controlledaffiliates, officers, directors, managers, stockholders, members, employees, partners,representatives and agents in any press release or (b) disclose the individual holdings of suchConsenting Bondholder to any person. The School shall (a) consult with the advisors to theTrustee before the School issues any press release with respect to the transactions contemplatedby this Agreement, (b) provide to such advisors for review a copy of any such press release and(c) not issue any such press release prior to such consultation and review and the receipt of theprior consent of such advisors (not to be unreasonably withheld or conditioned).

29. Severability

Whenever possible, each provision of this Agreement shall be interpreted in such manneras to be effective and valid under applicable law, but if any provision of this Agreement is heldto be prohibited by or invalid under applicable law, such provision shall be ineffective only tothe extent of such prohibition or invalidity, without invalidating the remainder of such provisionor the remaining provisions of this Agreement. In the event that any part of this Agreement isdeclared by any court or other judicial or administrative body to be null, void or unenforceable,said provision survives to the extent it is not so declared, and all of the other provisions of thisAgreement remain in full force and effect only if, after excluding the portion deemed to beunenforceable, the remaining terms provide for the consummation of the transactionscontemplated hereby in substantially the same manner as originally set forth at the later of the

date this Agreement was executed or last

Thomas Jefferson School of Law Restructuring Support Agreement

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Transcript of Thomas Jefferson School of Law Restructuring Support Agreement