EXHIBIT 10.125
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BROKER-DEALER AGREEMENT
by and among
DEUTSCHE BANK TRUST COMPANY AMERICAS,
as Auction Agent,
NELNET STUDENT LOAN CORPORATION-1,
as Issuer
and
X.X. XXXXXX SECURITIES INC.
and
UFS SECURITIES, L.L.C.,
as Co-Broker-Dealers
Relating to
NELNET Student Loan Corporation-1
Taxable Student Loan Asset-Backed Notes
$100,000,000 Senior Class 1998A-10 Auction Rate Securities(sm) (ARS(sm))
$100,000,000 Senior Class 1998A-11 Auction Rate Securities(sm) (ARS(sm))
$100,000,000 Senior Class 1998A-12 Auction Rate Securities(sm) (ARS(sm))
Dated as of November 1, 2002
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
Section 1.01. Terms Defined by Reference to the Indenture............................................ 1
Section 1.02. Terms Defined Herein................................................................... 1
Section 1.03. Rules of Construction.................................................................. 2
ARTICLE II
THE AUCTION
Section 2.01. Purpose: Incorporation by Reference of Auction Procedures and Settlement Procedures.... 2
Section 2.02. Preparation for Each Auction........................................................... 3
Section 2.03. Auction Schedule: Method of Submission of Orders....................................... 4
Section 2.04. Notices................................................................................ 5
Section 2.05. Service Charge To Be Paid to BD........................................................ 5
Section 2.06. Settlement............................................................................. 6
ARTICLE III
THE AUCTION AGENT
Section 3.01. Duties and Responsibilities............................................................ 6
Section 3.02. Rights of the Auction Agent............................................................ 7
ARTICLE IV
MISCELLANEOUS
Section 4.01. Termination............................................................................ 7
Section 4.02. Participant in Depository.............................................................. 8
Section 4.03. Communications......................................................................... 8
Section 4.04. Entire Agreement....................................................................... 8
Section 4.05. Benefits............................................................................... 9
Section 4.06. Amendment: Waiver...................................................................... 9
Section 4.07. Successors and Assigns................................................................. 9
Section 4.08. Severability........................................................................... 9
Section 4.09. Execution in Counterparts.............................................................. 9
Section 4.10. Governing Law.......................................................................... 9
EXHIBIT A SETTLEMENT PROCEDURES
EXHIBIT B-1 ORDER FORM
EXHIBIT B-2 TRANSFER FORM
EXHIBIT C NOTICE OF A FAILURE TO DELIVER
ii
BROKER-DEALER AGREEMENT
THIS BROKER-DEALER AGREEMENT dated as of November 1, 2002 by and among
NELNET STUDENT LOAN CORPORATION-1 (formerly known as Union Financial Services-1,
Inc.) ("Nelnet"), DEUTSCHE BANK TRUST COMPANY AMERICAS (together with its
successors and assigns, the "Auction Agent"), not in its individual capacity but
solely as agent of Zions First National Bank, as successor trustee (the
"Trustee") under a Second Amended and Restated Indenture of Trust dated as of
November 1, 1996, as amended (the "Amended Indenture") and the Series 1998
Supplemental Indenture of Trust dated as of December 15, 1998 (the "1998
Supplemental Indenture," and together with the Amended Indenture, the
"Indenture"), each by and between Nelnet and the Trustee pursuant to authority
granted to it in the Auction Agency Agreement dated as of December 15, 1998,
among Nelnet, the Trustee and the Auction Agent (the "Auction Agency
Agreement"), and X.X. XXXXXX SECURITIES INC. and UFS SECURITIES, L.L.C.
(together with their successors and assigns hereinafter collectively referred to
as "BD").
WHEREAS, Nelnet has previously issued (a) $100,000,000 of its Taxable
Student Loan Asset-Backed Notes, Senior Class 1998A-10, maturing on October 1,
2032, as Auction Rate Securities(sm), (b) $100,000,000 of its Taxable Student
Loan Asset-Backed Notes, Senior Class 1998A-11, maturing November 1, 2032, as
Auction Rate Securities(sm), (c) $100,000,000 of its Taxable Student Loan
Asset-Backed Notes, Senior Class 1998A-12, maturing December 1, 2032, as Auction
Rate Securities(sm) (the "ARS(sm)"); and
WHEREAS, the Indenture provides that the interest rate on the ARS for
each Interest Period after the Initial Period shall, except under certain
conditions, equal the Auction Rate which the Auction Agent advises as the result
of implementation of the Auction Procedures. Pursuant to Section 2.09 of the
Auction Agency Agreement, the Auction Agent has entered into this Agreement; and
WHEREAS, the Auction Procedures require the participation of one or
more Broker-Dealers;
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, Nelnet, the Auction Agent, as agent of the
Trustee, and BD agree as follows:
ARTICLE I
DEFINITIONS AND RULES OF CONSTRUCTION
SECTION 1.01. TERMS DEFINED BY REFERENCE TO THE INDENTURE. Capitalized
terms not defined herein shall have the respective meanings specified in or
pursuant to the Indenture and the Auction Agency Agreement.
SECTION 1.02. TERMS DEFINED HEREIN. As used herein and in the
Settlement Procedures (as defined below), the following terms shall have the
following meanings, unless the context otherwise requires:
"Auction" has the meaning specified in Section 2.01 hereof.
"Auction Agency Agreement" means the Auction Agency Agreement dated as
of December 15, 1998, among Nelnet, the Trustee and the Auction Agent relating
to the ARS.
"Auction Procedures" means the Auction Procedures that are set forth in
Appendix A to the 1998 Supplemental Indenture.
"Authorized Officer" means each Managing Director, Vice President,
Assistant Vice President, Secretary, Assistant Secretary and Assistant Treasurer
of the Auction Agent assigned to its Corporate Trust and Agency Group and every
other officer or employee of the Auction Agent designated as an Authorized
Officer for purposes of this Agreement.
"BD Officer" means each officer or employee of BD designated as a "BD
Officer" for purposes of this Agreement.
"Broker-Dealer Agreement" means this Broker-Dealer Agreement and any
substantially similar agreement between the Auction Agent and a Broker-Dealer.
"Holder" means the beneficial owner of any ARS.
"Settlement Procedures" means the Settlement Procedures attached hereto
as Exhibit A.
SECTION 1.03. RULES OF CONSTRUCTION. Unless the context or use
indicates another or different meaning or intent, the following rules shall
apply to the construction of this Agreement:
(a) Words importing the singular number shall include the
plural number and vice versa.
(b) The captions and headings herein are solely for
convenience of reference and shall not constitute a part of this
Agreement nor shall they affect its meaning, construction or effect.
(c) The words "hereof," "herein," "hereto" and other
words of similar import refer to this Agreement as a whole.
(d) All references herein to a particular time of day
shall be to New York City time.
ARTICLE II
THE AUCTION
SECTION 2.01. PURPOSE: INCORPORATION BY REFERENCE OF AUCTION PROCEDURES
AND SETTLEMENT PROCEDURES.
(a) On each Auction Date, the provisions of the Auction
Procedures will be followed by the Auction Agent for the purpose of
determining the Applicable ARS Rate
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for the next Interest Period. Each periodic operation of such
procedures is hereinafter referred to as an "Auction."
(b) Without prejudice to Section 3.01(a) hereof, all of
the provisions contained in the Auction Procedures and the Settlement
Procedures are incorporated herein by reference in their entirety and
shall be deemed to be a part of this Agreement to the same extent as if
such provisions were fully set forth herein.
(c) BD agrees to act as, and assumes the obligations of
and limitations and restrictions placed upon, a Broker-Dealer under
this Agreement. BD understands that other persons meeting the
requirements specified in the definition of "Broker-Dealer" contained
in the 1998 Supplemental Indenture may, with the prior written consent
of the Market Agent, execute Broker-Dealer Agreements and participate
as Broker-Dealers in Auctions.
(d) BD and other Broker-Dealers may participate in
Auctions for their own accounts. However, the Auction Agent may by
notice to BD and all other Broker-Dealers prohibit all Broker-Dealers
from submitting Bids in Auctions for their own accounts, provided that
Broker-Dealers may continue to submit Hold Orders and Sell Orders. The
Auction Agent shall have no duty or liability with respect to
monitoring or enforcing the requirements of this Section 2.01(d).
(e) BD agrees to act as, and assumes the obligations of,
and limitations and restrictions placed upon, a Broker-Dealer under
this Broker-Dealer Agreement. BD agrees to act as, and assume the
obligations of and limitations and restrictions placed upon, a
Broker-Dealer under Appendix A to the 1998 Supplemental Indenture.
SECTION 2.02. PREPARATION FOR EACH AUCTION.
(a) Not later than 10:30 a.m. on each Auction Date for
the ARS, the Auction Agent shall advise BD by telephone of the All-Hold
Rate and the Maximum Rate.
(b) In the event that the Auction Date for any Auction
shall be changed after the Auction Agent has given the notice referred
to in clause (vi) of paragraph (a) of the Settlement Procedures, the
Auction Agent, by such means as the Auction Agent deems practicable,
shall give notice of such change to BD not later than the earliest of
(i) 9:15 a.m. on the new Auction Date, (ii) 9:15 a.m. on the old
Auction Date and (iii) 9:15 a.m. the next Interest Payment Date.
Thereafter, BD shall promptly notify customers of BD that BD believes
are Existing Holders of such change in the Auction Date.
(c) The Auction Agent from time to time may request BD to
provide it with the aggregate principal amounts of ARS specifically
held by each such BD as an Existing Holder and with a list of BD's
respective customers that BD believes are beneficial owners of ARS and
the aggregate principal amount of ARS beneficially owned by each such
customer. BD shall comply with any such request, and the Auction Agent
shall keep confidential any such information, including information
received as to the identity of Existing Holders and Potential Holders
in any Auction, and shall not disclose any such
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information so provided to any person other than the Trustee, Nelnet
and BD, unless the failure to disclose such information would be
unlawful or if the failure to do so would expose the Auction Agent to
any loss, liability, claim or damage for which the Auction Agent shall
not have previously received adequate indemnification satisfactory to
it.
SECTION 2.03. AUCTION SCHEDULE: METHOD OF SUBMISSION OF ORDERS.
(a) The Auction Agent shall conduct Auctions for the ARS
in accordance with the schedule set forth below. Such schedule may be
changed at any time by the Auction Agent with the consent of the
Trustee, which consent shall not be unreasonably withheld or delayed.
The Auction Agent shall give notice of any such change to BD. Such
notice shall be received prior to the close of business on the Business
Day next preceding the first Auction Date on which any such change
shall be effective.
TIME EVENT
By 9:00 a.m. Auction Agent obtains One-Month LIBOR
By 10:30 a.m. Auction Agent advises the Broker-Dealers of
the applicable All-Hold Rate and the applicable
Maximum Rate, as set forth in Section 2.03(b)(i) of
the Auction Agency Agreement.
9:30 a.m. - 12:30 p.m. Auction Agent assembles information communicated to it
by Broker-Dealers as provided in Section 2.02 of
Appendix A to the 1998 Supplemental Indenture.
Submission Deadline is 12:30 p.m.
Not earlier than 12:30 p.m. Auction Agent makes determinations pursuant to Section
2.02 of Appendix A to the 1998 Supplemental
Indenture. Submitted Bids and Submitted Sell Orders
are accepted and rejected in whole or in part and ARS
are allocated as provided in Section 2.02 of Appendix
A to the 1998 Supplemental Indenture.
By approximately 3:00 p.m. Auction Agent advises the Trustee of results of Auction and of the Auction
but no later than the Rate for the next Interest Period as provided in Appendix A to the 1998
close of business Supplemental Indenture. Auction Agent gives notice of Auction results as set
forth in Section 2.04(a) hereof.
(b) BD shall submit Orders to the Auction Agent in
writing in substantially the form attached hereto as Exhibit B. BD
shall submit separate Orders to the Auction Agent for each Potential
Holder or Existing Holder on whose behalf BD is submitting an Order and
shall not net or aggregate the Orders of Potential Holders or Existing
Holders on whose behalf BD is submitting Orders.
(c) BD shall deliver to the Auction Agent (i) a written
notice, substantially in the form attached hereto as Exhibit C, of
transfers of ARS, made through BD by an
4
Existing Holder to another person other than pursuant to an Auction and
(ii) a written notice, substantially in the form attached hereto as
Exhibit D, of the failure of any ARS to be transferred to or by any
person that purchased or sold ARS through BD pursuant to an Auction.
The Auction Agent is not required to accept any notice delivered
pursuant to the terms of the foregoing sentence with respect to an
Auction unless it is received by the Auction Agent by 3:00 p.m. on the
Business Day next preceding the applicable Auction Date.
(d) BD agrees to handle its customers' Orders in
accordance with its duties under applicable securities laws and rules.
SECTION 2.04. NOTICES.
(a) On each Auction Date, the Auction Agent shall notify
BD by telephone of the results of the Auction as set forth in paragraph
(a) of the Settlement Procedures. If requested by BD, the Auction Agent
shall as soon as practicable on the Business Day next succeeding such
Auction Date, notify BD in writing, if previously so requested, of the
disposition of all Orders submitted by BD in the Auction held on such
Auction Date.
(b) BD shall notify each Existing Holder or Potential
Holder on whose behalf BD has submitted an Order as set forth in
paragraph (b) of the Settlement Procedures and take such other action
as is required of BD pursuant to the Settlement Procedures.
(c) The Auction Agent shall deliver to BD after receipt
all notices and certificates which the Auction Agent is required to
deliver to BD pursuant to Section 2 of the Auction Agency Agreement at
the times and in the manner set forth in the Auction Agency Agreement.
SECTION 2.05. SERVICE CHARGE TO BE PAID TO BD. On each Interest Payment
Date, for the term of this Agreement, the Auction Agent shall pay to BD,
pursuant to Section 3.05(b) of the Auction Agency Agreement, a service charge
for the succeeding Interest Period in an amount equal to the sum of the product
of (a) a fraction, the numerator of which is the number of days in each Auction
Period occurring during such Interest Period (or, in the case of the initial
Interest Period, the actual number of days elapsed since the date of delivery of
the ARS) and the denominator of which is 360; times (b) the Broker-Dealer Fee
Rate; times (c) the sum of (i) the sum of the aggregate principal amount of the
ARS that were (A) the subject of Submitted Bids of Existing Holders submitted by
BD and continued to be held as a result of such submission and (B) the subject
of Submitted Bids of Potential Holders submitted by BD and purchased as a result
of such submission; (ii) the aggregate principal amount of the ARS subject to
valid Hold Orders (determined in accordance with Appendix A to the 1998
Supplemental Indenture) submitted to the Auction Agent by BD; and (iii) the
principal amount of the ARS deemed to be subject to Hold Orders by Existing
Holders pursuant to Appendix A to the 1998 Supplemental Indenture that were
acquired by such Existing Holders through BD in the Auction for such Auction
Period. For purposes of clause (c)(iii) of the foregoing sentence, if any
Existing Holder who acquired ARS through BD transfers those ARS to another
Person other than pursuant to an Auction, then the Broker-Dealer for the ARS so
transferred shall continue to be BD; provided, however, that if the transfer was
effected by, or if the transferee is, a Broker-Dealer other than
5
BD, then such Broker-Dealer shall be the Broker-Dealer for such ARS. If for any
reason an Auction is not held on an Auction Date, there shall be no
Broker-Dealer Fee applicable with respect to such Auction Date. The
Broker-Dealer Fee Rate shall be .25 of 1% per annum. The Broker-Dealer Fee shall
be payable solely out of amounts received by the Auction Agent pursuant to the
Indenture.
The Broker-Dealer Fee Rate shall be the prevailing rate received by
broker-dealers for rendering comparable services to others. The Auction Agent
shall advise Nelnet, at Nelnet's request, at least annually of its view of such
then current prevailing rate. If the then current Broker-Dealer Fee Rate is not,
in the opinion of Nelnet and the Auction Agent, the prevailing rate, Nelnet
shall change the Broker-Dealer Fee Rate pursuant to the terms hereof and shall
notify the Auction Agent and the Broker-Dealer in writing thereof. Any change in
the Broker-Dealer Fee Rate shall be effective on the Auction Date next
succeeding such change.
SECTION 2.06. SETTLEMENT.
(a) If any Existing Holder on whose behalf BD has
submitted a Bid or Sell Order for ARS that was accepted in whole or in
part fails to instruct its Participant to deliver the ARS subject to
such Bid or Sell Order against payment therefor, BD shall instruct such
Participant to deliver such ARS against payment therefor and BD may
deliver to the Potential Holder on whose behalf BD submitted a Bid that
was accepted in whole or in part a principal amount of the ARS that is
less than the principal amount of the ARS specified in such Bid to be
purchased by such Potential Holder. Notwithstanding the foregoing terms
of this Section 2.06(a), any delivery or non-delivery of ARS which
represents any departure from the results of an Auction, as determined
by the Auction Agent, shall be of no effect unless and until the
Auction Agent shall have been notified of such delivery or non-delivery
in accordance with the terms of Section 2.03(c) hereof. The Auction
Agent shall have no duty or liability with respect to monitoring or
enforcing requirements of this Section 2.06(a).
(b) Neither the Auction Agent, the Trustee nor Nelnet
shall have any responsibility or liability with respect to the failure
of an Existing Holder, a Potential Holder or a Participant or any of
them to deliver ARS or to pay for ARS sold or purchased pursuant to the
Auction Procedures or otherwise.
ARTICLE III
THE AUCTION AGENT
SECTION 3.01. DUTIES AND RESPONSIBILITIES.
(a) The Auction Agent is acting solely as agent for the
Trustee hereunder and owes no fiduciary duties to any Person by reason
of this Agreement.
(b) Notwithstanding Section 3.01(a) above, the Auction
Agent undertakes to perform such duties and only such duties as are
specifically set forth in this Agreement, the Auction Agency Agreement
and Appendix A to the 1998 Supplemental Indenture, and no implied
duties, covenants or obligations shall be read into this Agreement
against
6
the Auction Agent by reason of anything set forth in the Prospectus
Supplement or any other offering material employed in connection with
the offer and sale of the ARS, or otherwise.
(c) In the absence of bad faith or negligence on its
part, the Auction Agent shall not be liable for any action taken,
suffered, or omitted or for any error of judgment made by it in the
performance of its duties under this Agreement. The Auction Agent shall
not be liable for any error of judgment made in good faith unless the
Auction Agent shall have been negligent in ascertaining (or failing to
ascertain) the pertinent facts necessary to make such judgment.
SECTION 3.02. RIGHTS OF THE AUCTION AGENT.
(a) The Auction Agent may conclusively rely and shall be
fully protected in acting or refraining from acting upon any
communication authorized by this Agreement and upon any written
instruction, notice, request, direction, consent, report, certificate,
share certificate or other instrument, paper or document believed by it
to be genuine. The Auction Agent shall not be liable for acting upon
any telephone communication authorized by this Agreement which the
Auction Agent believes in good faith to have been given by the Trustee
or by a Broker-Dealer or by their designated agents or representatives.
The Auction Agent may record telephone communications with such
Persons.
(b) The Auction Agent may consult with counsel of its own
choice, and the advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in reliance thereon.
(c) The Auction Agent shall not be required to advance,
expend or risk its own funds or otherwise incur or become exposed to
financial liability in the performance of its duties hereunder.
(d) The Auction Agent may perform its duties and exercise
its rights hereunder either directly or by or through agents or
attorneys, and shall not be responsible for any misconduct or
negligence on the part of, or for the supervision of, any agent or
attorney appointed by it with due care hereunder.
(e) The Auction Agent makes no representation as to the
adequacy or accuracy of this Broker-Dealer Agreement, the Auction
Agency Agreement (except as provided in Section 3.01(d) thereof), the
ARS, or any Prospectus Supplement or other offering material used in
connection with the offer and sale of the ARS.
ARTICLE IV
MISCELLANEOUS
SECTION 4.01. TERMINATION. Any party may terminate this Agreement at
any time upon five days' prior notice to the other party. This Agreement shall
automatically terminate upon the
7
delivery of certificates representing the ARS pursuant to Section 2.02(c) of
Appendix A to the 1998 Supplemental Indenture, the occurrence of a Payment
Default or upon termination of the Auction Agency Agreement.
SECTION 4.02. PARTICIPANT IN DEPOSITORY. Either (a) BD is, and shall
remain for the term of this Agreement, a member of, or Participant in, the
Depository; or (b) BD may designate a Participant to act on BD's behalf for
purposes of this Agreement. If BD wishes to designate a different Participant to
act on its behalf, BD shall give the Auction Agent at least two Business Days'
prior notice thereof.
SECTION 4.03. COMMUNICATIONS. Except for (a) communications authorized
to be made by telephone pursuant to this Agreement or the Auction Procedures;
and (b) communications in connection with the Auctions (other than those
expressly required to be in writing), all notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
or similar writing) and shall be given to such party, addressed to it, at its
address or facsimile number set forth below:
If to BD: X.X. Xxxxxx Securities Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. X'Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to BD: UFS Securities, L.L.C.
0000 Xxxxx 00xx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Auction Agent: Deutsche Bank Trust Company Americas
000 Xxxxx Xxx, 0xx Xxxxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Attention: Corporate Trust & Agency Services
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
or such other address or facsimile number as such party may hereafter specify
for such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of BD by a BD Officer and on behalf of
the Auction Agent by an Authorized Officer. BD may record telephone
communications with the Auction Agent.
SECTION 4.04. ENTIRE AGREEMENT. This Agreement contains the entire
agreement between the parties relating to the subject matter hereof, and there
are no other representations,
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endorsements, promises, agreements or understandings, oral, written or inferred,
between the parties relating to the subject matter hereof.
SECTION 4.05. BENEFITS. Nothing in this Agreement, express or implied,
shall give to any person, other than the Trustee, the Auction Agent and BD and
their respective successors and assigns, any benefit of any legal or equitable
right, remedy or claim under this Agreement.
SECTION 4.06. AMENDMENT: WAIVER.
(a) This Agreement shall not be deemed or construed to be
modified, amended, rescinded, cancelled or waived, in whole or in part,
except by a written instrument signed by a duly authorized
representative of the party to be charged.
(b) Failure of either party to this Agreement to exercise
any right or remedy hereunder in the event of a breach of this
Agreement by the other party shall not constitute a waiver of any such
right or remedy with respect to any subsequent breach.
(c) The Auction Agent may, but shall have no obligation
to, execute and deliver any amendment or modification hereto which
affects the Auction Agent's rights, powers or immunities hereunder.
SECTION 4.07. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon, inure to the benefit of, and be enforceable by, the respective successors
and permitted assigns of each of BD and the Auction Agent. This Agreement may
not be assigned by either party hereto absent the prior written consent of the
other party; provided, however, that this Agreement may be assigned by the
Auction Agent to a successor Auction Agent selected by the Trustee without the
consent of BD.
SECTION 4.08. SEVERABILITY. If any clause, provision or section of this
Agreement shall be ruled invalid or unenforceable by any court of competent
jurisdiction, the invalidity or unenforceability of such clause, provision or
section shall not affect any remaining clause, provision or section hereof.
SECTION 4.09. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in several counterparts, each of which shall be an original and all of which
shall constitute but one and the same instrument.
SECTION 4.10. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Broker-Dealer
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the date first above written.
DEUTSCHE BANK TRUST COMPANY
AMERICAS, as Auction Agent
By /s/ Xxxxxx X. Xxxxx Xx.
__________________________________________
Name Xxxxxx X. Xxxxx Xx.
________________________________________
Title Vice President
_______________________________________
X.X. XXXXXX SECURITIES INC., as Co-
Broker-Dealer
By /s/ Xxxxx X. X'Xxxxxx
__________________________________________
Xxxxx X. X'Xxxxxx, Vice President
UFS SECURITIES, L.L.C., as Co-
Broker-Dealer
By /s/ Xxxx X. Xxxxx
__________________________________________
Xxxx X. Xxxxx, Vice President
NELNET STUDENT LOAN
CORPORATION-1, as Issuer
By /s/ Xxxxx X. Xxxxxx
__________________________________________
Xxxxx X. Xxxxxx, Vice President
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EXHIBIT A
SETTLEMENT PROCEDURES
Capitalized terms used herein shall have the respective meanings
specified in the Indenture and the Broker-Dealer Agreement.
(a) Not later than 3:00 p.m. on each Auction Date, the
Auction Agent is required to notify by telephone the Broker-Dealers
that participated in the Auction held on such Auction Date and
submitted an Order on behalf of any Existing Holder or Potential Holder
of:
(i) the Auction Rate fixed for the next Interest
Period;
(ii) whether there were Sufficient Clearing Bids
in such Auction;
(iii) if such Broker-Dealer (a "Seller's
Broker-Dealer") submitted a Bid or a Sell Order on behalf of
an Existing Holder, whether such Bid or Sell Order was
accepted or rejected, in whole or in part, and the principal
amount of ARS, if any, to be sold by such Existing Holder;
(iv) if such Broker-Dealer (a "Buyer's
Broker-Dealer") submitted a Bid on behalf of a Potential
Holder, whether such Bid was accepted or rejected, in whole or
in part, and the principal amount of ARS, if any, to be
purchased by such Potential Holder;
(v) if the aggregate principal amount of ARS to
be sold by all Existing Holders on whose behalf such
Broker-Dealer submitted Bids or Sell Orders is different than
the aggregate principal amount of ARS to be purchased by all
Potential Holders on whose behalf such Broker-Dealer submitted
a Bid, the name or names of one or more other Buyer's
Broker-Dealers (and the Participant, if any, of each such
other Buyer's Broker-Dealer) acting for one or more purchasers
of such excess principal amount of ARS and the principal
amount of ARS to be purchased from one or more Existing
Holders on whose behalf such Broker-Dealer acted by one or
more Potential Holders on whose behalf each of such other
Buyer's Broker-Dealers acted;
(vi) if the principal amount of ARS to be
purchased by all Potential Holders on whose behalf such
Broker-Dealer submitted a Bid exceeds the amount of ARS to be
sold by all Existing Holders on whose behalf such
Broker-Dealer submitted a Bid or a Sell Order, the name or
names of one or more Seller's Broker-Dealers (and the name of
the agent member, if any, of each such Seller's Broker-Dealer)
acting for one or more sellers of such excess principal amount
of ARS and the principal amount of ARS to be sold to one or
more Potential Holders on whose behalf such Broker-Dealer
acted by one or more Existing Holders on whose behalf each of
such Seller's Broker-Dealers acted;
(vii) unless previously provided, a list of all
Applicable ARS Rates and related Interest Periods (or portions
thereof) since the last Interest Payment Date; and
(viii) the Auction Date for the next succeeding
Auction.
(b) On each Auction Date, each Broker-Dealer that
submitted an Order on behalf of any Existing Holder or Potential Holder
shall:
(i) advise each Existing Holder and Potential
Holder on whose behalf such Broker-Dealer submitted a Bid or
Sell Order in the Auction on such Auction Date whether such
Bid or Sell Order was accepted or rejected, in whole or in
part;
(ii) instruct each Potential Holder on whose
behalf such Broker-Dealer submitted a Bid that was accepted,
in whole or in part, to instruct such Bidder's Participant to
pay to such Broker-Dealer (or its Participant) through DTC the
amount necessary to purchase the principal amount of ARS to be
purchased pursuant to such Bid against receipt of such
principal amount of ARS;
(iii) in the case of a Broker-Dealer that is a
Seller's Broker-Dealer, instruct each Existing Holder on whose
behalf such Broker-Dealer submitted a Sell Order that was
accepted, in whole or in part, or a Bid that was accepted, in
whole or in part, to instruct such Existing Holder's
Participant to deliver to such Broker-Dealer (or its
Participant) through DTC the principal amount of ARS to be
sold pursuant to such Bid or Sell Order against payment
therefor;
(iv) advise each Existing Holder on whose behalf
such Broker-Dealer submitted an Order and each Potential
Holder on whose behalf such Broker-Dealer submitted a Bid of
the Auction Rate for the next Interest Period;
(v) advise each Existing Holder on whose behalf
such Broker-Dealer submitted an Order of the next Auction
Date; and
(vi) advise each Potential Holder on whose behalf
such Broker-Dealer submitted a Bid that was accepted, in whole
or in part, of the next Auction Date.
(c) On the basis of the information provided to it
pursuant to paragraph (a) above, each Broker-Dealer that submitted a
Bid or Sell Order in an Auction is required to allocate any funds
received by it pursuant to paragraph (b)(ii) above, and any ARS
received by it pursuant to paragraph (b)(iii) above, among the
Potential Holders, if any, on whose behalf such Broker-Dealer submitted
Bids, the Existing Holders, if any, on whose behalf such Broker-Dealer
Submitted Bids or Sell Orders in such Auction, and any Broker-Dealers
identified to it by the Auction Agent following such Auction pursuant
to paragraph (a)(v) or (a)(vi) above.
A-2
(d) On each Auction Date:
(i) each Potential Holder and Existing Holder
with an Order in the Auction on such Auction Date shall
instruct its Participant as provided in paragraph (b)(ii) or
(b)(iii) above, as the case may be;
(ii) each Seller's Broker-Dealer that is not a
Participant in DTC shall instruct its Participant to (A) pay
through DTC to the Participant of the Existing Holder
delivering ARS to such Broker-Dealer following such Auction
pursuant to paragraph (b)(iii) above the amount necessary,
including accrued interest, if any, to purchase such ARS
against receipt of such ARS; and (B) deliver such ARS through
DTC to a Buyer's Broker-Dealer (or its Participant) identified
to such Seller's Broker-Dealer pursuant to paragraph (a)(v)
above against payment therefor; and
(iii) each Buyer's Broker-Dealer that is not a
Participant in DTC shall instruct its Participant to (A) pay
through DTC to a Seller's Broker-Dealer (or its Participant)
identified following such Auction pursuant to paragraph
(a)(vi) above the amount necessary, including accrued
interest, if any, to purchase the ARS to be purchased pursuant
to paragraph (b)(ii) above against receipt of such ARS; and
(B) deliver such ARS through DTC to the Participant of the
purchaser thereof against payment therefor.
(e) On the first Business Day of the Interest Period next
succeeding each Auction Date:
(i) each Participant for a Bidder in the Auction
on such Auction Date referred to in paragraph (d)(i) above
shall instruct DTC to execute the transactions described under
paragraph (b)(ii) or (b)(iii) above for such Auction, and DTC
shall execute such transactions;
(ii) each Seller's Broker-Dealer or its
Participant shall instruct DTC to execute the transactions
described in paragraph (d)(ii) above for such Auction, and DTC
shall execute such transactions; and
(iii) each Buyer's Broker-Dealer or its
Participant shall instruct DTC to execute the transactions
described in paragraph (d)(iii) above for such Auction, and
DTC shall execute such transactions.
(f) If an Existing Holder selling ARS in an Auction fails
to deliver such ARS (by authorized book-entry), a Broker-Dealer may
deliver to the Potential Holder on behalf of which it submitted a Bid
that was accepted a principal amount of ARS that is less than the
principal amount of ARS that otherwise was to be purchased by such
Potential Holder. In such event, the principal amount of ARS to be so
delivered shall be determined solely by such Broker-Dealer. Delivery of
such lesser principal amount of ARS shall constitute good delivery.
Notwithstanding the foregoing terms of this paragraph (f), any delivery
or non-delivery of ARS which shall represent any departure from the
results of an Auction, as determined by the Auction Agent, shall be of
no effect
A-3
unless and until the Auction Agent shall have been notified of such
delivery or non-delivery in accordance with the provisions of the
Auction Agent and the Broker-Dealer Agreement.
A-4
EXHIBIT B-1
ORDER FORM
(Submit only one Order on this Order Form)
NELNET Student Loan Corporation-1
Taxable Student Loan Asset-Backed Notes
[$100,000,000 Senior Class 1998A-10 Auction Rate Securities]
[$100,000,000 Senior Class 1998A-11 Auction Rate Securities]
[$100,000,000 Senior Class 1998A-12 Auction Rate Securities]
Auction Rate Securities
Maturing __________ 1, 2032
("ARS")
EXHIBIT B-2
TRANSFER FORM
(To be used only for transfers made other than
pursuant to an Auction)
NELNET Student Loan Corporation-1
Taxable Student Loan Asset-Backed Notes
[$100,000,000 Senior Class 1998A-10 Auction Rate Securities]
[$100,000,000 Senior Class 1998A-11 Auction Rate Securities]
[$100,000,000 Senior Class 1998A-12 Auction Rate Securities]
Auction Rate Securities
Maturing __________ 1, 2032
("ARS")
We are (check one):
_____ the Existing Holder named below; or
_____ the Broker-Dealer for such Existing Holder; or
_____ the Participant for such Existing Holder.
We hereby notify you that such Existing Holder has transferred
$_________* ARS to __________________.
------------------------
*ARS may only be transferred in units of $100,000.
[NAME OF EXISTING HOLDER]
By __________________________________________
Name ________________________________________
Title _______________________________________
[NAME OF BROKER-DEALER]
By __________________________________________
Name ________________________________________
Title _______________________________________
[NAME OF PARTICIPANT]
By __________________________________________
Name ________________________________________
Title _______________________________________
2
EXHIBIT C
NOTICE OF A FAILURE TO DELIVER
(To be used only for failures to deliver
ARS sold pursuant to an Auction)
NELNET Student Loan Corporation-1
Taxable Student Loan Asset-Backed Notes
[$100,000,000 Senior Class 1998A-10 Auction Rate Securities]
[$100,000,000 Senior Class 1998A-11 Auction Rate Securities]
[$100,000,000 Senior Class 1998A-12 Auction Rate Securities]
Auction Rate Securities
Maturing __________ 1, 2032
("ARS")
Complete either I. or II.
I. We are a Broker-Dealer for ______________ (the "Purchaser"),
which purchased $____________________* of the ARS in the Auction held on
____________ from the seller of such ARS.
II. We are a Broker-Dealer for _______________ (the "Seller"),
which sold $_____________* of the ARS in the Auction held on _______________ to
the purchaser of such ARS.
We hereby notify you that (check one):
_____ the Seller failed to deliver such ARS to the Purchaser;
or
_____ the Purchaser failed to make payment to the Seller upon
delivery of such ARS.
[NAME OF BROKER-DEALER]
By __________________________________________
Name ________________________________________
Title _______________________________________
-----------------------
*ARS may only be transferred in units of $100,000.
