Exhibit 10.15
EXECUTION COPY
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AMENDED AND RESTATED
WAREHOUSE LOAN AND SECURITY AGREEMENT
among
NELNET EDUCATION LOAN FUNDING, INC.,
as Borrower,
XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION,
as Eligible Lender Trustee
ZIONS FIRST NATIONAL BANK,
as Trustee
THUNDER BAY FUNDING INC.,
as Lender
and
ROYAL BANK OF CANADA,
as Facility Agent and Alternate Lender
U.S. $450,000,000
Dated as of April 28, 2003
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TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS..................................................................... 2
Section 1.01. Certain Defined Terms.................................................. 2
Section 1.02. Other Terms............................................................ 25
Section 1.03. Computation of Time Periods............................................ 25
ARTICLE IA SALE OF PLEDGED COLLATERAL; ASSIGNMENT AND ASSUMPTIONS.......................... 25
Section 1.01A. Sale of Pledged Collateral.............................................. 25
Section 1.02A Assignment and Assumption............................................... 26
ARTICLE II THE FACILITY.................................................................... 26
Section 2.01. Advances............................................................... 26
Section 2.02. The Initial Advance and Subsequent Advances............................. 27
Section 2.03. Termination or Reduction of the Maximum Facility Amount................. 28
Section 2.04. Collection Account...................................................... 28
Section 2.05. Transfers from Collection Account....................................... 29
Section 2.06. Cash Reserve Account.................................................... 31
Section 2.07. Transfers from the Cash Reserve Account................................. 31
Section 2.07A. Escrow Account.......................................................... 32
Section 2.07B. Transfers from the Escrow Account....................................... 32
Section 2.08. Management of Collection Account, Cash Reserve Account and Escrow
Account................................................................. 33
Section 2.09. Pledged Collateral Assignment of the Transaction Documents.............. 34
Section 2.10. Grant of a Security Interest............................................ 34
Section 2.11. Evidence of Debt........................................................ 35
Section 2.12. Special Provisions Governing Advances................................... 35
Section 2.13. Payments by the Borrower................................................ 36
Section 2.14. Payment of Stamp Taxes, Etc............................................. 36
Section 2.15. Yield Protection........................................................ 36
Section 2.16. Extension of Termination Date........................................... 38
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TABLE OF CONTENTS
(continued)
PAGE
ARTICLE III CONDITIONS OF ADVANCES.......................................................... 38
Section 3.01. Conditions Precedent to Initial Advance................................. 38
Section 3.02. Conditions Precedent to All Advances.................................... 39
Section 3.03. Conditions Precedent to Effectiveness................................... 40
ARTICLE IV REPRESENTATIONS AND WARRANTIES.................................................. 40
Section 4.01. General Representations and Warranties of the Borrower.................. 40
Section 4.02. Representations of the Borrower Regarding the Trustee's Security
Interest................................................................ 42
Section 4.03. Representations of the Eligible Lender Trustee.......................... 43
ARTICLE V COVENANTS OF THE BORROWER....................................................... 43
Section 5.01. General Covenants....................................................... 43
Section 5.02. Acquisition, Financing, Collection and Assignment of Student Loans...... 48
Section 5.03. Enforcement of Financed Loans........................................... 48
Section 5.04. Enforcement of Servicing Agreements..................................... 49
Section 5.05. Enforcement of Student Loan Purchase Agreements......................... 49
Section 5.06. Enforcement of Indemnification Agreement................................ 50
Section 5.07. Financed Loans Serviced by Great Lake Servicing Corporation............. 50
Section 5.08. Administration and Collection of Financed Loans......................... 50
Section 5.09. Amendment of Form of Student Loan Purchase Agreement.................... 51
Section 5.10. Custodian............................................................... 51
Section 5.11. Prepayments and Refinancing............................................. 51
Section 5.12. Periodic Reporting...................................................... 52
Section 5.13. UCC Matters; Protection and Perfection of Pledged Collateral; Delivery
of Documents............................................................ 52
Section 5.14. Obligations of the Borrower With Respect to Pledged Collateral.......... 53
Section 5.15. Collateral Call......................................................... 53
Section 5.16. Guarantor Limitations................................................... 54
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TABLE OF CONTENTS
(continued)
PAGE
Section 5.17. Covenants of the Borrower Regarding the Trustee's Security Interest..... 54
ARTICLE VI EVENTS OF DEFAULT............................................................... 54
ARTICLE VII TRUSTEE AND ELIGIBLE LENDER TRUSTEE............................................. 57
Section 7.01. Acceptance of Trust..................................................... 57
Section 7.02. Trustee's Right to Reliance............................................. 58
Section 7.03. Compensation of Trustee................................................. 58
Section 7.04. Resignation of Trustee.................................................. 59
Section 7.05. Removal of Trustee...................................................... 59
Section 7.06. Successor Trustee....................................................... 59
Section 7.07. Manner of Vesting Title in Trustee...................................... 60
Section 7.08. [RESERVED].............................................................. 60
Section 7.09. Trustee Covenants with Respect to "Eligible Lender" Status.............. 60
Section 7.10. Trustee's Status as an "Eligible Lender"................................ 61
Section 7.11. Acceptance of Duties of Eligible Lender Trustee......................... 61
Section 7.12. Eligible Lender Trustee Covenants with Respect to "Eligible Lender"
Status.................................................................. 61
Section 7.13. Compensation of Eligible Lender Trustee................................. 61
Section 7.14. Resignation of Eligible Lender Trustee.................................. 62
Section 7.15. Removal of Eligible Lender Trustee...................................... 62
Section 7.16. Successor Eligible Lender Trustee....................................... 62
Section 7.17. Eligible Lender Trustee's Status as an "Eligible Lender"................ 63
ARTICLE VIII INDEMNIFICATION................................................................. 63
ARTICLE IX FACILITY AGENT.................................................................. 66
Section 9.01. Authorization and Action of Facility Agent.............................. 66
Section 9.02. Agency Termination...................................................... 66
Section 9.03. Facility Agent's Reliance, Etc.......................................... 66
Section 9.04. Facility Agent and Affiliates........................................... 67
Section 9.05. Advance Decision........................................................ 67
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TABLE OF CONTENTS
(continued)
PAGE
Section 9.06. Successor Facility Agent................................................ 67
ARTICLE X MISCELLANEOUS................................................................... 68
Section 10.01. Amendments and Waivers.................................................. 68
Section 10.02. Notices, Etc............................................................ 68
Section 10.03. No Waiver; Remedies..................................................... 68
Section 10.04. Binding Effect; Assignability; Confidentiality.......................... 68
Section 10.05. Survival................................................................ 69
Section 10.06. Governing Law; Severability............................................. 69
Section 10.07. Submission to Jurisdiction; Waiver of Jury and Bond..................... 70
Section 10.08. Costs, Expenses and Taxes............................................... 71
Section 10.09. Recourse Against Certain Parties........................................ 71
Section 10.10. Execution in Counterparts; Severability; Integration.................... 72
Section 10.11. Confidentiality......................................................... 72
Section 10.12. Section Titles.......................................................... 73
Section 10.13. Entire Agreement........................................................ 73
Section 10.14. No Petition............................................................. 73
Section 10.15. Limited Recourse; Subordination......................................... 74
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EXHIBIT A - FORM OF STUDENT LOAN PURCHASE AGREEMENT
EXHIBIT B - FORM OF VALUATION AGENT AGREEMENT
EXHIBIT C - REGULAR ADVANCE NOTICE
EXHIBIT D - SPECIAL ADVANCE NOTICE
EXHIBIT E - MONTHLY REPORT
EXHIBIT F - FORMS OF ASSET COVERAGE REPORT AND CASH RELEASE
CERTIFICATE
EXHIBIT G - COPIES OF CUSTODIAN AGREEMENTS
EXHIBIT H - FORM OF PARTICIPATION AGREEMENT
EXHIBIT I - CONDITIONS TO INITIAL ADVANCE
EXHIBIT J - CONDITIONS TO EFFECTIVENESS DATE
EXHIBIT K - FORM OF NOTICE OF RELEASE
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THIS AMENDED AND RESTATED WAREHOUSE LOAN AND SECURITY
AGREEMENT (this "Agreement") is made as of April 28, 2003, among NELNET
EDUCATION LOAN FUNDING, INC., f/k/a NEBHELP, INC., a corporation duly organized
under the laws of the State of Nebraska, as the borrower hereunder (the
"Borrower"); XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, a national
banking association, as eligible lender trustee (the "Eligible Lender Trustee");
ZIONS FIRST NATIONAL BANK, a national banking association, as an eligible lender
and trustee hereunder (the "Trustee"), THUNDER BAY FUNDING INC., a Delaware
corporation, as the lender hereunder (the "Lender"); ROYAL BANK OF CANADA, a
Canadian banking corporation, as the alternate lender hereunder (in such
capacity, the "Alternate Lender") and as agent of the Lender, the Alternate
Lender and the herein defined Liquidity Facility Providers and Credit Support
Providers (in such capacity, the "Facility Agent"); and NELnet STUDENT LOAN
WAREHOUSE CORPORATION-1, a corporation duly organized under the laws of the
State of Nevada, as the original borrower and assignor (the "Original Borrower")
(solely with respect to Article IA of this Agreement).
PRELIMINARY STATEMENTS
WHEREAS, the Original Borrower, the Trustee, the Lender, the
Alternate Lender and the Facility Agent entered into that certain Warehouse Loan
and Security Agreement dated as of February 1, 2002 (as previously amended, the
"Original Agreement"); and
WHEREAS, the Original Borrower has purchased from time to time
certain Eligible Loans (as hereinafter defined) in accordance with various
Student Loan Purchase Agreements (as hereinafter defined) (such purchases
constituting the "Transactions"); and
WHEREAS, the Borrower funded the Transactions through loans
made by the Lender and the Alternate Lender under the Original Agreement on the
terms and conditions set forth therein; and
WHEREAS, the Original Borrower desires to sell to the Borrower
all of its rights, title and interest in and to the Pledged Collateral and to
assign to the Borrower all of its rights and obligations under the Original
Agreement and the Transaction Documents (as hereinafter defined); and
WHEREAS, the Lender, the Alternate Lender and the Facility
Agent are willing to consent to such sale and assignment on the terms provided
herein; and
WHEREAS, the Borrower is willing to purchase the Pledged
Collateral and to accept and assume all of the Original Borrower's rights and
obligations under the Original Agreement and the Transaction Documents; and
WHEREAS, on or after the sale, assignment and assumption
provided for herein, the Borrower proposes to engage in Transactions; and
1
WHEREAS, the Borrower desires to fund the Transactions, either
at the time such Transactions are entered into or following the temporary
financing thereof under a Covered Indenture (as hereinafter defined), through
loans made by the Lender and the Alternate Lender on the terms and conditions
set forth herein;
WHEREAS, to provide liquidity support to the Lender in
connection with the loans made by it hereunder, the Lender and Royal Bank of
Canada have entered into the Liquidity Agreement (as hereinafter defined),
pursuant to which the Lender may, from time to time, assign all or a part of
such loans to Royal Bank of Canada and/or to certain other Liquidity Facility
Providers (as hereinafter defined) pursuant to the terms of the Liquidity
Agreement, and as a result of such assignment, such financial institutions would
become Secured Creditors hereunder; and
WHEREAS, to provide credit support to the Lender in connection
with the loans being made by it hereunder, the Lender and Royal Bank of Canada
have entered into a Credit Support Agreement (as hereinafter defined) pursuant
to which Royal Bank of Canada or certain other Credit Support Providers (as
hereinafter defined) have agreed to purchase undivided interests in loans not
purchased by the Liquidity Facility Providers, and as a result of such
assignment, such financial institutions would become Secured Creditors
hereunder.
NOW, THEREFORE, in consideration of the premises and the
mutual covenants and agreements herein contained, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms. Certain capitalized terms
used throughout this Agreement are defined above or in this Section.
As used in this Agreement and its exhibits, the following
terms shall have the following meanings (such meanings to be equally applicable
to both the singular and plural forms of the terms defined).
"Advance" means any Regular Advance, any Special Advance, any
Liquidity Advance, any Credit Support Advance and any Rollover Advance.
"Advance Date" means, with respect to any Advance, the date on
which such Advance is funded.
"Advance Percentage Calculation Report" means the report
prepared by the Valuation Agent and delivered to the Facility Agent and the
Borrower not later than four Business Days prior to each Advance, other than a
Special Advance or a Rollover Advance, setting forth the Maximum Advance
Percentage for the Eligible Loans to be financed with such Advance, in the form
attached as Exhibit A to the Valuation Agent Agreement. The Maximum Advance
Percentage determined pursuant to any Advance Percentage Calculation Report with
respect to any Financed Loans shall remain in effect
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with respect to such Financed Loans until the Advance Date immediately following
the delivery of the next Valuation Report delivered pursuant to Section 5.12
hereof.
"Adverse Claim" means a lien, security interest, charge,
encumbrance or other right or claim or restriction in favor of any Person (other
than, with respect to the Pledged Collateral, any lien, security interest,
charge, encumbrance or other right or claim or restriction in favor of the
Trustee for the benefit of the Secured Creditors).
"Affected Party" means the Lender, the Alternate Lender, each
Liquidity Facility Provider, each Credit Support Provider and any assignee or
participant of the Lender, the Alternate Lender, any Liquidity Facility Provider
or any Credit Support Provider.
"Affiliate" when used with respect to a Person means any other
Person controlling, controlled by or under common control with such Person. A
Person shall be deemed to control another person if the controlling Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of the other Person, whether through the ownership
of voting securities, membership interests or otherwise.
"Aggregate Market Value" means, as of any date of
determination, the sum of (a) with respect to assets in the Pledged Collateral
which are Financed Loans as of such date, (i) the outstanding Principal Balance
of such Financed Loans, as set forth in the most recently delivered Valuation
Report, multiplied by the Loan Valuation Percentage, plus, without duplication,
(ii) 100% of any accrued interest thereon, and all accrued and unpaid Special
Allowance Payments and interest subsidies, if any, thereon (other than the
portion thereof, if any, attributable to the Higher SAP Differentials) to such
date; (b) with respect to assets in the Pledged Collateral which are Permitted
Investments and other cash balances, if any, on deposit in the Collection
Account and the Cash Reserve Account, the principal balance thereof together
with all interest accrued thereon; and (c) payments on Financed Loans or other
assets received by a Servicer or the Borrower and not yet transferred to the
Trustee (other than the portion thereof, if any, attributable to the Higher SAP
Differentials); provided, however, if subsequent to any repayment or refinancing
pursuant to Section 5.11 hereof the Principal Balance of Defaulted Student Loans
exceeds 10% of the Principal Balance of all Financed Loans in "repayment
status", the Aggregate Market Value of all Defaulted Student Loans shall be
valued separately as Defaulted Student Loans on the related Valuation Date with
a Loan Valuation Percentage of 97% for the purposes of clause (a)(i) above.
"Agreement" means this Amended and Restated Warehouse Loan and
Security Agreement, as the same may be amended, restated, supplemented or
otherwise modified from time to time hereafter.
"Alternate Advance Rate" means the interest rate to be paid on
Regular Bank Advances, Liquidity Advances and Credit Support Advances. The
Alternate Advance Rate is the annual interest rate equal to either: (a) the sum
of the Base Rate and 2.0% if such Regular Bank Advance, Liquidity Advance or
Credit Support Advance is
3
the result of the occurrence of an Event of Default hereunder; (b) the sum of
the applicable LIBOR and 1.00% if such Regular Bank Advance, Liquidity Advance
or Credit Support Advance is not the result of the occurrence of an Event of
Default hereunder; (c) the sum of the Base Rate and 1.00% if (i) such Regular
Bank Advance, Liquidity Advance or Credit Support Advance is funded on less than
two (2) Business Days notice, or (ii) LIBOR cannot be determined, or (iii) it
shall be unlawful for the Liquidity Facility Provider or the Credit Support
Provider to obtain funds in the London interbank market to fund Advances; or (d)
the Base Rate, if the Facility Agent advised the Borrower that an Alternate
Interest Amount or a Liquidity Interest Amount based on LIBOR will not fully
reflect the cost to the Alternate Lender, the Liquidity Facility Provider or the
Credit Facility Provider, as applicable, of funding Advances based on LIBOR. The
Alternate Advance Rate shall be computed on the basis of the actual number days
in such interest period assuming a 360 day year, or if determined using the Base
Rate, on the basis of the actual number days in such interest period using a 365
or, when applicable, 366-day year.
"Alternate Interest Amount" means with respect to any
Calculation Period, an amount calculated by multiplying the average outstanding
Regular Bank Advances for such Calculation Period by the weighted average
Alternate Advance Rate for all Regular Bank Advances during such Calculation
Period.
"Alternate Lender" means Royal Bank of Canada, each Person who
accepts an assignment of Royal Bank of Canada's rights and obligations hereunder
pursuant to Section 10.04, and the successors and assigns of any of them. The
Alternate Lender may include one or more Persons following an assignment
pursuant to Section 10.04, and if more than one Person, each Person who is an
Alternate Lender will have the rights and obligations with respect to Advances
in the respective percentages specified in the agreement(s) governing such
assignment(s).
"Alternate Lender Termination Date" means June 1, 2003 (unless
such date is extended pursuant to Section 2.16(b) hereof).
"Asset Coverage Ratio" means, as of the date of any Valuation
Report, the ratio of (a) the Aggregate Market Value of assets in the Pledged
Collateral as of such date to (b) the Liabilities as of such date and rounding
to the nearest second decimal place.
"Asset Coverage Report" means, means a report furnished by the
Portfolio Administrator to the Valuation Agent, the Facility Agent and the
Borrower pursuant to Section 5.12(b) hereof, the form of which is attached as
Exhibit F hereto.
"Authorized Officer of the Borrower" means the Borrower's
president, chief financial officer, any vice president or assistant vice
president.
"Bankruptcy Code" means Title 11 of the United States Code (11
U.S.C. Section 101 et seq.), as amended from time to time, and any successor
statute.
"Base Rate" means the rate of interest most recently announced
by the Facility Agent as its prime rate. The Base Rate is not necessarily
intended to be the
4
lowest per annum rate of interest determined by the Facility Agent in connection
with extensions of credit. The Base Rate shall change from time to time as the
Facility Agent's prime rate changes.
"Benefit Plan" means any employee benefit plan as defined in
Section 3(3) of ERISA in respect of which the Borrower or any ERISA Affiliate of
the Borrower is, or at any time during the immediately preceding six years was,
an "employer" as defined in Section 3(5) of ERISA.
"Borrower" means Nelnet Education Loan Funding, Inc., f/k/a
NEBHELP, INC., a Nebraska corporation, and its successors and assigns.
"Business Day" means a day of the year other than a Saturday
or a Sunday on which banks are not authorized or required to close in New York
City or the city where the principal office of the Trustee is located (presently
Denver, Colorado); provided, however, if the term "Business Day" is used in
connection with LIBOR, means any day of the year on which dealings in dollar
deposits are carried on in the London interbank market.
"Calculation Date" means the fourth Business Day preceding
each Settlement Date.
"Calculation Period" means the calendar month preceding each
Settlement Date.
"Cash Reserve Account" means the special account created
pursuant to Section 2.06 hereof.
"Cash Reserve Requirement" means, as of any date of
determination, one-half of one percent (0.50%) of the Outstanding Facility
Amount as of such date.
"Closing Date" means February 14, 2002.
"Code" means the Internal Revenue Code of 1986, as amended, or
any successor statute and the regulations promulgated and rulings issued
thereunder.
"Collection Account" means the special account created
pursuant to Section 2.04 hereof.
"Collection Advance Subaccount" means a subaccount established
within the Collection Account pursuant to Section 2.04 hereof.
"Collections" means, (a) all revenue and recoveries of
principal and interest and other payments and reimbursements of principal and
accrued interest received with respect to any Financed Loan and any other
collection of cash with respect to such Financed Loan (including, but not
limited to, Interest Subsidy Payments, Special Allowance Payments, Indemnity
Payments, finance charges and payments representing the repurchase of any
Financed Loan or rebate of premium thereon pursuant to a Student
5
Loan Purchase Agreement) received or deemed to have been received pursuant to
Section 2.04 hereof; and (b) all other cash collections, tax refunds and other
cash proceeds of the Pledged Collateral.
"Commitment" means the obligation of each Liquidity Facility
Provider to fund Liquidity Advances pursuant to the terms of the Liquidity
Agreement.
"Consolidation Loan" means a loan made to an Eligible Borrower
pursuant to which the Eligible Borrower consolidates two or more of its PLUS/SLS
Loans, direct loans made by the Department of Education or Xxxxxxxx Loans in
accordance with the Higher Education Act.
"Covered Indenture" means, individually or collectively, each
of (a) the Trust Indenture dated as of November 15, 1985, as amended, by and
between the Borrower (successor to Nebraska Higher Education Loan Program), as
issuer, and Xxxxx Fargo Bank Minnesota, National Association, as successor
trustee; (b) the Trust Indenture dated as of December 1, 1986, by and between
the Borrower (successor to Nebraska Higher Education Loan Program), as issuer,
and Xxxxx Fargo Bank Minnesota, National Association, as successor trustee; (c)
the Trust Indenture dated as of July 1, 1988, by and between the Borrower
(successor to Nebraska Higher Education Loan Program), as issuer, and Xxxxx
Fargo Bank Minnesota, National Association, as successor trustee; (d) the Trust
Indenture dated as of June 1, 1993, by and between the Borrower (successor to
Nebraska Higher Education Loan Program), as issuer, and Xxxxx Fargo Bank
Minnesota, National Association, as successor trustee; and (e) the Trust
Indenture dated as of September 1, 1993, by and between the Borrower (successor
to Nebraska Higher Education Loan Program), as issuer, and Xxxxx Fargo Bank
Minnesota, National Association, as successor trustee, as each of the foregoing
has been and may be amended, modified or supplemented from time to time.
"CP" means the Commercial Paper Notes issued by the Lender
from time to time in the United States commercial paper market.
"CP Rate" means, with respect to each Regular CP Advance, the
per annum rate (or if such rate is quoted on a discount basis, the yield
equivalent of such amount expressed as a per annum rate), including dealer fees
and issuing and paying agency fees, borne by CP issued by the Lender with
respect to such Regular CP Advance. The Lender or the Facility Agent shall
provide the Borrower with notice of the CP Rate applicable to each Regular CP
Advance.
"Credit Support Advance" means a loan to the Borrower assigned
to the Credit Support Providers by the Lender pursuant to the Credit Support
Agreement, including any Rollover Advances funded by the Credit Support
Providers pursuant to the Credit Support Agreement.
"Credit Support Agreement" means the Credit Support Asset
Purchase Agreement, dated as of September 25, 1997, between the Lender and Royal
Bank of
6
Canada, as the same has been and may be amended, restated, supplemented or
otherwise modified from time to time.
"Credit Support Providers" means initially, Royal Bank of
Canada, as the provider of the commitment under the Credit Support Agreement,
and its successors and assigns, and any other financial institutions having a
short-term unsecured debt rating of at least "A-l", "P-l" and "F-l" by S&P,
Xxxxx'x, and Fitch, respectively, as assignees of the commitment of Royal Bank
of Canada pursuant to the terms of the Credit Support Agreement, or otherwise
providing all or a portion of a Credit Support Advance.
"Custodian" means, individually or collectively, NELnet Loan
Services, Inc., and each additional Servicer or bailee with which the Borrower,
the Eligible Lender Trustee and the Trustee have entered into a Custodian
Agreement.
"Custodian Agreement" means, individually or collectively, (a)
the Custodian Agreement, dated as of April 28, 2003, as amended or otherwise
modified from time to time, among the Borrower, the Eligible Lender Trustee, the
Trustee and NELnet Loan Services, Inc.; and (b) each additional or successor
custodian agreement entered into among the Borrower, the Eligible Lender
Trustee, the Trustee and a Custodian and approved by the Facility Agent.
"Custodian Fees" means the fees, expenses and charges of the
Custodian pursuant to a Custodian Agreement, except to the extent included in
Servicing Fees.
"Debt" of any Person means (a) indebtedness of such Person for
borrowed money; (b) obligations of such Person evidenced by bonds, debentures,
notes, letters of credit, interest rate and currency swaps or other similar
instruments; (c) obligations of such Person to pay the deferred purchase price
of property or services; (d) obligations of such Person as lessee under leases
which shall have been or should be, in accordance with GAAP, recorded as capital
leases; (e) obligations secured by an Adverse Claim upon property or assets
owned by such Person, even though such Person has not assumed or become liable
for the payment of such obligations; and (f) obligations of such Person under
direct or indirect guaranties in respect of, and obligations (contingent or
otherwise) to purchase or otherwise acquire, or otherwise to assure a creditor
against loss in respect of, indebtedness or obligations of other Persons of the
kinds referred to in clauses (a) through (e) above.
"Defaulted Student Loan" means any Student Loan (a) as to
which any payment, or portion thereof, is more than 270 days past due from the
original due date thereof, unless such Student Loan is a Higher Education Act
Student Loan and such Student Loan is in Deferment, (b) the Obligor of which is
the subject of an Event of Bankruptcy or is deceased or disabled, or (c) as to
which a continuing condition that with notice or the lapse of time or both would
constitute a default, breach, violation or event permitting acceleration under
the terms of such Student Loan (other than payment defaults continuing for a
period of not more than 270 days.)
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"Deferment" means the period permitted by the Higher Education
Act and the policies of the applicable Guarantor as being a period during which
a borrower under a Student Loan may postpone making payments of principal and/or
interest.
"Department of Education" means the United States Department
of Education, or any other officer, board, body, commission or agency succeeding
to the functions thereof under the Higher Education Act.
"Early Amortization Event" means the occurrence of any one of
the following events which has not been remedied to the satisfaction of the
Facility Agent within five Business Days (a) the outstanding Principal Balance
of Financed Loans constituting Proprietary Loans, computed as a percentage of
the Principal Balance of all Financed Loans, exceeds 20%; (b) the outstanding
Principal Balance of unsubsidized Xxxxxxxx Loans in either "enrolled" or "grace"
status, computed as a percentage of the Principal Balance of all Financed Loans,
exceeds 60%; (c) the outstanding Principal Balance of Financed Loans that are
thirty (30) or more days delinquent, computed as a percentage of the Principal
Balance of all Financed Loans in "repayment status", exceeds 23%; (d) the
outstanding Principal Balance of Financed Loans in "claim" status, computed as a
percentage of the Principal Balance of all Financed Loans in "repayment status",
exceeds 20%; or (e) the outstanding Principal Balance of Financed Loans in
"claim" status, computed as a percentage of the Principal Balance of Financed
Loans in "repayment" status, exceeds 15% on any two consecutive Settlement
Dates. The Trustee shall not be deemed to have actual knowledge of an Early
Amortization Event unless and until a Corporate Trust Officer of the Trustee has
received written notification from the Facility Agent or the Borrower.
"Effectiveness Date" has the meaning specified in Section 3.03
hereof.
"Eligible Borrower" means a borrower who is eligible under the
Higher Education Act to be the obligor of a loan for financing a program of
education at an Eligible Institution, including a borrower who is eligible under
the Higher Education Act to be an obligor of a loan made pursuant to Section
428A, 428B and 428C of the Higher Education Act.
"Eligible Institution" means (a) an institution of higher
education, (b) a vocational school or (c) any other institution which, in all of
the above cases, has been approved by the Department of Education and the
applicable Guarantor.
"Eligible Lender" means any "eligible lender," as defined in
the Higher Education Act, which has received an eligible lender designation from
the Guarantor with respect to Guaranteed Loans.
"Eligible Lender Trust Agreement" means the Eligible Lender
Trust Agreement dated as of April 28, 2003, between the Eligible Lender Trustee
and the Borrower, as the same may be amended, supplemented or modified from time
to time.
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"Eligible Lender Trustee" means Xxxxx Fargo Bank Minnesota,
National Association, as Eligible Lender, and its successors, which may at any
time be substituted in its place pursuant to this Agreement.
"Eligible Lender Trustee Fees" means the fees, expenses and
charges of the Eligible Lender Trustee, including legal fees and expenses.
"Eligible Lender Trustee Guarantee Agreements" means, (i) the
agreements for guarantee of Student Loans with federal reinsurance between the
Eligible Lender Trustee and the following Guarantors: Massachusetts Higher
Education Assistance Corporation; California Student Aid Commission; Connecticut
Student Loan Foundation; Colorado Student Loan Program; Education Assistance
Corporation; Educational Credit Management Corporation (TGAI); Finance Authority
of Maine; Georgia Higher Education Assistance Commission; Great Lakes Higher
Education Guaranty Corporation; Iowa College Student Aid Commission; Illinois
Student Assistance Commission; Kentucky Higher Education Assistance Authority;
Louisiana Office of Student Financial Assistance; Montana Guaranteed Student
Loan Program; Michigan Higher Education Assistance Authority; Missouri Student
Loan Program; Northwest Education Loan Association; New Jersey Office of Student
Assistance; Nebraska Student Loan Program (National); State Higher Education
Services Corporation (New York); Oklahoma Guaranteed Student Loan Program;
Office of Student Financial Assistance; Florida Department of Education; Oregon
State Scholarship Commission; Pennsylvania Higher Education Assistance Agency;
Student Loan Guarantee Foundation of Arkansas; Texas Guarantee Student Loan
Corporation; Tennessee Student Assistance Corporation; United Student Aid Funds
and U.S. Office of Education (FISL) and (ii) any other guarantee or agreement
issued by any Guarantor to the Eligible Lender Trustee, and any amendment to any
of the foregoing entered into in accordance with the provisions thereof and
hereof.
"Eligible Loan" means a Student Loan (or a beneficial or
participation interest therein):
(a) which was originated or acquired by the Borrower
(either directly or through a Participation Agreement) in the ordinary course of
its business and was originated in the United States, its territories or
possessions;
(b) that constitutes an account or payment intangible as
defined in the UCC as in effect in the jurisdiction that governs the perfection
of the interests of the Borrower therein and the perfection of the Trustee's
interest therein under this Agreement;
(c) the borrower for which is an Eligible Borrower;
(d) if such Student Loan is a subsidized Xxxxxxxx Loan,
such Student Loan qualifies the holder thereof to receive Interest Subsidy
Payments and Special Allowance Payments from the Department of Education; if
such Student Loan is a Consolidation Loan, such Student Loan qualifies the
holder thereof to receive Interest
9
Subsidy Payments and Special Allowance Payments from the Department of Education
to the extent applicable; and if such Student Loan is a PLUS/SLS or an
unsubsidized Xxxxxxxx Loan, such Student Loan qualifies the holder thereof to
receive Special Allowance Payments from the Department of Education to the
extent applicable;
(e) at the time of purchase with proceeds from an
Advance, is not a Defaulted Student Loan and has not been tendered at any time
to any Guarantor for payment;
(f) that provides or, when the payment schedule with
respect thereto is determined, will provide for payments on a periodic basis
that will fully amortize the Principal Balance thereof by its maturity, as such
maturity may be modified in accordance with applicable deferral and forbearance
periods granted in accordance with applicable laws, including the Higher
Education Act and any Guarantee Agreements, as applicable;
(g) that is denominated and payable only in United States
dollars;
(h) that together with the related Student Loan Note
therefor represents the genuine, legal, valid and binding payment obligation of
the related borrower, enforceable by or on behalf of the holder thereof against
such borrower in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, fraudulent conveyance and similar laws relating to
creditors' rights generally and subject to general principles of equity; and
that has not been satisfied, subordinated or rescinded and no right of
rescission, setoff, counterclaim or defense has been asserted or, to the
knowledge of the Borrower, overtly threatened in writing with respect to such
Student Loan;
(i) that (i) is the subject of a valid Guarantee
Agreement with an eligible Guarantor; (ii) with respect to which the Borrower is
not in default in any material respect in the performance of any covenants and
agreements made in the applicable Guarantee Agreement; and (iii) with respect to
which all amounts due and payable to the Department of Education or a Guarantor,
as the case may be, have been paid in full;
(j) that (i) is the subject of a valid Servicing
Agreement with a Servicer which, together with the Borrower and the Trustee, has
executed and delivered a Custodian Agreement; (ii) with respect to which the
Borrower is not in default in any material respect in the performance of any
covenants and agreements made in the applicable Servicing Agreement; and (iii)
with respect to which all amounts due and payable to the Servicer have been
paid in full;
(k) the payment terms of which have not been altered or
amended except in accordance with the Higher Education Act; and
(1) if such Student Loan is serviced by Great Lakes
Educational Loan Services, Inc., the outstanding Principal Balance of which when
added to the aggregate outstanding Principal Balance of all other Financed Loans
serviced by Great Lakes
10
Educational Loan Services, Inc. shall not exceed 10% of the aggregate
outstanding Principal Balance of all Financed Loans.
"ERISA" means the U.S. Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations promulgated and
rulings issued thereunder.
"ERISA Affiliate" means (a) any corporation which is a member
of the same controlled group of corporations (within the meaning of Section
414(b) of the Code) as the Borrower; (b) a trade or business (whether or not
incorporated) under common control (within the meaning of Section 414(c) of the
Code) with the Borrower or (c) a member of the same affiliated service group
(within the meaning of Section 414(m) of the Code) as the Borrower, any
corporation described in clause (a) above or any trade or business described in
clause (b) above.
"Escrow Account" means the special account created by Section
2.07A hereof.
"Event of Bankruptcy" shall be deemed to have occurred with
respect to a Person if either:
(a) a case or other proceeding shall be commenced,
without the application or consent of such Person, in any court,
seeking the liquidation, reorganization, debt arrangement, dissolution,
winding up, or composition or readjustment of debts of such Person, the
appointment of a trustee, receiver, custodian, liquidator, assignee,
sequestrator or the like for such Person or all or substantially all of
its assets, or any similar action with respect to such Person under any
law relating to bankruptcy, insolvency, reorganization, winding up or
composition or adjustment of debts, and such case or proceeding shall
continue undismissed, or unstayed and in effect, for a period of 60
consecutive days; or an order for relief in respect of such Person
shall be entered in an involuntary case under the federal bankruptcy
laws or other similar laws now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other
proceeding under any applicable bankruptcy, insolvency, reorganization,
debt arrangement, dissolution or other similar law now or hereafter in
effect, or shall consent to the appointment of or taking possession by
a receiver, liquidator, assignee, trustee, custodian, sequestrator (or
other similar official) for, such Person or for any substantial part of
its property, or shall make any general assignment for the benefit of
creditors, or shall fail to, or admit in writing its inability to, pay
its debts generally as they become due, or, if a corporation or similar
entity, its board of directors shall vote to implement any of the
foregoing.
"Event of Default" has the meaning assigned to that term in
Article VI hereof.
11
"Excess Coverage" means any amounts on deposit in the
Collection Account which, if paid to the Borrower pursuant to Section
2.05(c)(xi) hereof, would not result in (a) an Asset Coverage Ratio of less than
103% or (b) cause the Net Revenue to be less than zero, as determined by the
Valuation Agent.
"Facility Agent" means Royal Bank of Canada, a Canadian
banking corporation, and its successors and assigns, in its capacity as agent of
the Lender and the Alternate Lender hereunder, as agent of the Liquidity
Facility Providers pursuant to the Liquidity Agreement and as agent of the
Credit Support Providers pursuant to the Credit Support Agreement.
"Federal Reimbursement Contracts" means any agreement between
any Guarantor and the Department of Education providing for the payment by the
Department of Education of amounts authorized to be paid pursuant to the Higher
Education Act, including but not necessarily limited to reimbursement of amounts
paid or payable upon defaulted Financed Loans and other student loans Guaranteed
by any Guarantor and federal Interest Subsidy Payments and Special Allowance
Payments, if applicable, to holders of qualifying student loans guaranteed by
any Guarantor.
"FFEL Program" means the Federal Family Education Loan Program
authorized under the Higher Education Act, including Federal Xxxxxxxx Loans
authorized under Sections 427 and 428 thereof, Federal Supplemental Loans for
Students authorized under Section 428A thereof, Federal PLUS Loans authorized
under Section 428B thereof, Federal Consolidation Loans authorized under Section
428C thereof and Unsubsidized Xxxxxxxx Loans authorized under Section 428H
thereof.
"Financed Loans" means any Student Loans (or beneficial or
participation interests therein) financed with Advances under this Agreement
that were purchased by the Borrower from a Seller pursuant to a Student Loan
Purchase Agreement.
"Fitch" means Fitch, Inc. (or its predecessor or successors in
interest) if and so long as it has rated and is continuing to rate the CP of the
Lender, and otherwise means such other nationally recognized statistical rating
organization as may be designated by the Lender.
"GAAP" means generally accepted accounting principles as in
effect from time to time in the United States.
"Governmental Authority" means the United States of America,
any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Grant" or "Granted" means to pledge, create and grant a first
priority security interest in and with regard to property free and clear of all
Adverse Claims. A Grant of Financed Loans, other assets or of any other
agreement includes all rights, powers and options (but none of the obligations)
of the granting party thereunder.
12
"Guarantee" or "Guaranteed" means, with respect to a Student
Loan, the insurance or guarantee by the Guarantor, in accordance with the terms
and conditions of the Guarantee Agreement, of at least the minimum required by
law of the principal of the Student Loan and the coverage of the Student Loan by
the Federal Reimbursement Contracts providing, among other things, for
reimbursement to the Guarantor for losses incurred by it on defaulted Student
Loans insured or guaranteed by the Guarantor up to the minimum required by law
of such losses.
"Guarantee Agreements" means the Federal Reimbursement
Contracts, the Trustee Guarantee Agreements, the Eligible Lender Trustee
Guarantee Agreements and any other similar guarantee or agreement issued by a
Guarantor to the Trustee or the Eligible Lender Trustee, which pertain to
Student Loans.
"Guarantee Program" means the Guarantor's student loan
guarantee program pursuant to which the Guarantor guarantees or insures Student
Loans.
"Guaranteed Loan" means an Eligible Loan which is Guaranteed.
"Guarantor" means any entity authorized to guarantee Student
Loans under the Higher Education Act and with which the Trustee or the Eligible
Lender Trustee maintains in effect a Guarantee Agreement.
"Higher Education Act" means Title IV, Parts B, F and G of the
Higher Education Act of 1965, as amended or supplemented from time to time, and
all regulations and guidelines promulgated thereunder.
"Higher SAP Differential" means, for each Higher SAP Loan, the
difference between (i) the Special Allowance Payment actually received and (ii)
an estimate of the Special Allowance Payments that would have been received had
such Student Loan not qualified as a Higher SAP Loan (such estimate based on a
methodology described in Exhibit L hereto or such other methodology reasonably
acceptable to the Facility Agent).
"Higher SAP Loan" means a Student Loan (a) the acquisition of
which was previously financed by the Borrower with the proceeds of tax-exempt
bonds issued under a Covered Indenture and (b) which qualifies for Special
Assistance Payments as calculated under the Department of Education regulation
implementing Section 438(b)(l)(i) and (ii) of the Higher Education Act (20
U.S.C. 1087-1 (b)(l)(i) and (ii)), found at 34 C.F.R. 682.302.
"Indemnification Agreement" means the Indemnification
Agreement, dated as of February 1, 2002, between Nelnet and the Original
Borrower, as and amended by a First Amendment to Indemnification Agreement dated
as of April 28, 2003, among Nelnet, the Borrower and the Original Borrower, for
the benefit of the Borrower (as assignee of the Original Borrower) and the
Secured Creditors, as amended, modified or supplemented pursuant to the terms
thereof.
13
"Indemnified Amounts" has the meaning assigned to that term in
Article VIII hereof.
"Indemnity Payments" means any payment received by the
Borrower pursuant to the Indemnification Agreement.
"Independent Director" means a Person who (a) is not a
stockholder or other securityholder (whether direct, indirect or beneficial),
customer or supplier of the Borrower or any of its Affiliates; (b) is not a
director, officer, employee, former employee, Affiliate, member, manager or
associate of the Borrower or any of its Affiliates (other than in its capacity
as the Independent Director for the Borrower or any of its Affiliates); (c) is
not related to any Person referred to in clauses (a) or (b); and (d) is not a
trustee, conservator or receiver for the Borrower or any of its Affiliates
(other than in its capacity as Independent Director for the Borrower or any of
its Affiliates).
"Interest Period" means, for each Advance, the period
commencing on the Advance Date of such Advance and ending on (but excluding) the
Maturity Date of such Advance.
"Interest Subsidy Payments" means the interest subsidy
payments on Student Loans received from the Department of Education pursuant to
Section 428 of the Higher Education Act or similar payments authorized by
federal law or regulations.
"Investment" means, with respect to any Person, any direct or
indirect loan, advance or investment by such Person in any other Person, whether
by means of share purchase, capital contribution, loan or otherwise, excluding
commission, travel and similar advances to officers, employees and directors
made in the ordinary course of business.
"Lender" means Thunder Bay Funding Inc., a Delaware
corporation, and its successors and assigns.
"Liabilities" means the sum of (a) the Outstanding Facility
Amount, (b) all accrued Program Availability Fees, Program Usage Fees, the
Alternate Interest Amounts and Liquidity Interest Amounts applicable thereto and
(c) any accrued and unpaid fees, including Custodian Fees, Liquidity Fees,
Servicing Fees, Portfolio Administration Fees, Trustee Fees, Eligible Lender
Trustee Fees and any other fees payable by the Borrower pursuant to the
Transaction Documents, the Liquidity Agreement or the Credit Support Agreement.
"LIBOR" means for any Interest Period, the rate determined as
of the second Business Day before the first day of such Interest Period for
Eurodollar deposits of 30, 60 or 90 days as determined by the Facility Agent in
consultation with the Borrower which appears on Telerate Page 3750 (as defined
in the International Swaps and Derivatives Associations, Inc. 1991 Interest Rate
and Currency Definitions) or such other page as may replace Telerate Page 3750.
14
"Liquidity Advances" means a loan to the Borrower assigned by
the Lender to the Liquidity Facility Provider(s) pursuant to the Liquidity
Agreement, including any Rollover Advances funded by the Liquidity Facility
Provider(s) pursuant to the Liquidity Agreement.
"Liquidity Agreement" means the Liquidity Asset Purchase
Agreement, dated as of February 14, 2002, between the Lender and Royal Bank of
Canada, as the same has been and may be amended, restated, supplemented or
otherwise modified from time to time hereafter.
"Liquidity Facility" means, individually or collectively, (a)
the Liquidity Agreement and (b) any other such agreement entered into between
the Lender and any Person providing liquidity support for the CP issued to
finance the Financed Loans.
"Liquidity Facility Provider" means initially, Royal Bank of
Canada, as the provider of the Commitment under the Liquidity Agreement, and it
successors and assigns, and any other financial institutions having a short-term
unsecured debt rating of at least "A-" "P-" and "F-l" by S&P, Xxxxx'x, and
Fitch, respectively, as assignees of the Commitment of Royal Bank of Canada
pursuant to the terms of the Liquidity Agreement, or otherwise providing all or
a portion of the Liquidity Facility.
"Liquidity Fee" means fees payable to a Liquidity Facility
Provider pursuant to the terms of its Liquidity Facility and any other fees or
expenses of the Facility Agent or the Liquidity Facility Providers that the
Borrower may from time to time agree to pay.
"Liquidity Interest Amount" means an amount, with respect to
any Calculation Period, calculated by multiplying the average outstanding
Liquidity Advances and Credit Support Advances for such Calculation Period by
the weighted average Alternate Advance Rate for all Liquidity Advances and
Credit Support Advances for such Calculation Period.
"Liquidity Termination Event" means the earliest to occur of
the following: (a) any Liquidity Facility Provider then providing liquidity to
the Lender has its rating lowered below "A-l" by S&P, "P-l" by Moody's or "F-l"
by Fitch, unless a replacement Liquidity Facility Provider having ratings of at
least "A-l" from S&P, "P-l" by Moody's and "F-l" by Fitch is substituted within
30 days of such downgrade; (b) any Liquidity Facility Provider shall fail to
honor any of its payment obligations under the Liquidity Agreement; (c) the
Liquidity Agreement shall cease for any reason to be in full force and effect or
be declared null and void or (d) June 1, 2003 (unless such date is extended
pursuant to the Liquidity Agreement).
"Loan Valuation Percentage" as determined by the Valuation
Agent means (a) (i) the present value of the Net Revenue (using the Portfolio
Characteristics and the Valuation Report Assumptions or the Advance Percentage
Calculation Assumptions, as appropriate) divided by (ii) the outstanding
Principal Balance of the
15
Student Loans to be financed and/or the Financed Loans, as the case may be; plus
(b) 100%.
"Material Adverse Effect" means a material adverse effect on:
(a) the financial condition of the Borrower;
(b) the ability of the Borrower to perform its
obligations under this Agreement or any other Transaction Document; or
(c) the status, existence, perfection, priority or
enforceability of the interest in the Pledged Collateral.
"Maturity Date" means the specified maturity of each Advance,
which, unless otherwise extended by mutual agreement between the Facility Agent
and the Borrower, shall be the first Business Day of the calendar month
following the calendar month in which such Advance was made.
"Maximum Advance Amount" means an amount equal to the sum of
(a) the Loan Valuation Percentage, multiplied by the aggregate outstanding
Principal Balance of Eligible Loans proposed to be financed, and (b) accrued and
unpaid interest, Interest Subsidy Payments and Special Allowance Payments on
such Eligible Loans.
"Maximum Advance Percentage" means the rate, stated as a
percentage, of the aggregate outstanding principal amount of the Eligible Loans
financed or to be financed, as determined by the Valuation Agent, all as
calculated by the Valuation Agent pursuant to Article III of the Valuation Agent
Agreement. The Maximum Advance Percentage determined pursuant to any Advance
Percentage Calculation Report or set forth in any Valuation Report shall remain
in effect with respect to the applicable Financed Loans until the Advance Date
immediately following the delivery of the next Valuation Report delivered
pursuant to Section 5.12 hereof.
"Maximum Facility Amount" means, at any time, $450,000,000 as
such amount may be adjusted from time to time pursuant to Section 2.03 hereof;
provided, however, that at all times on or after the termination of the
Revolving Period, the "Maximum Facility Amount" shall mean the Outstanding
Facility Amount.
"Minimum Asset Coverage Requirement" means an Asset Coverage
Ratio of 100.25%.
"Monthly Report" means a report, in substantially the form of
Exhibit E hereto prepared by the Portfolio Administrator and approved and
furnished by the Borrower to the Trustee, the Valuation Agent and the Facility
Agent.
"Xxxxx'x" means Xxxxx'x Investors Service, Inc. (or its
predecessor or successors in interest) if and so long as it has rated and is
continuing to rate the CP of the Lender, and otherwise means such other
nationally recognized statistical rating organization as may be designated by
the Lender.
16
"Multiemployer Plan" means a "multiemployer plan" as defined
in Section 4001 (a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding five years contributed to by the Borrower or
any ERISA Affiliate on behalf of its employees.
"Nelnet" means Nelnet, Inc., a Nevada corporation, and its
successors and assigns.
"Net Revenue" means the projected net income to be received
from the Eligible Loans to be financed and/or the Financed Loans, as the case
may be, after taking into account financing costs, loan defaults and
delinquencies, fees and other charges, all as set forth in the Valuation Report
Assumptions.
"Notice of Release" means a notice of release of security
interest in a Financed Loan in substantially the form of Exhibit K hereto.
"Obligations" means all present and future indebtedness and
other liabilities and obligations (howsoever created, arising or evidenced,
whether direct or indirect, absolute or contingent, or due or 'to become due) of
the Borrower to the Lender, the Alternate Lender, the Liquidity Facility
Providers, the Credit Support Providers, the Trustee, the Eligible Lender
Trustee and/or any other Person, arising under or in connection with this
Agreement or any other Transaction Document or the transactions contemplated
hereby or thereby and shall include, without limitation, all liability for
principal of and interest on the Advances, closing fees, unused line fees, audit
fees, expense reimbursements, indemnifications, and other amounts due or to
become due under the Transaction Documents, including, without limitation,
interest, fees and other obligations that accrue after the commencement of an
insolvency proceeding (in each case whether or not allowed as a claim in such
insolvency proceeding).
"Obligor" means a Person obligated to make payments with
respect to a Student Loan including the student, the Guarantors and the
Department of Education.
"Original Borrower" means NELnet Student Loan Warehouse
Corporation-1, a Nevada corporation.
"Other Assets" means any assets (or interests therein) (other
than the Pledged Collateral) conveyed or purported to be conveyed by the
Borrower to another Person or Persons other than the Trustee for the benefit of
the Secured Creditors, whether by way of a sale, capital contribution or by
virtue of the granting of a lien.
"Outstanding Facility Amount" means at any time the aggregate
principal amount of outstanding Advances made to the Borrower under this
Agreement.
"Participation Agreement" means a participation agreement
between the Borrower and a Seller, substantially in the form attached as Exhibit
H hereto, for the purchase of participation interests in Eligible Loans.
17
"Payment Account" means the following:
Bank Name: Bankers Trust Company
ABA Number: #000-000-000
Account Name: Thunder Bay Funding Inc.
Account Number: 000-00-000
Attention: Xxx Xxxxxx (000) 000-0000.
"Permitted Investments" means (a) securities issued or
directly and fully guaranteed or insured by the United States government or any
agency or instrumentality thereof having maturities of no more than 90 days from
the date of acquisition; (b) time deposits and certificates of deposit having
maturities of no more than 90 days from the date of acquisition, maintained with
or issued by any commercial bank having capital and surplus in excess of
$500,000,000 and having a short-term rating not less than "A-l" or the
equivalent thereof from S&P, not less than "P-l" or the equivalent thereof from
Xxxxx'x and, if rated by Fitch, not less than "F-l" or the equivalent thereof
from Fitch; (c) repurchase obligations for underlying securities of the types
described in clauses (a) or (b) above with a term of not more than ten days and
maturing no later than 90 days after the date of acquisition; (d) commercial
paper (other than CP) maturing within 90 days after the date of acquisition and
having a rating of not less than "A-l" or the equivalent thereof from S&P, not
less than "P-l" or the equivalent thereof from Xxxxx'x and if rated by Fitch,
not less than "F-l" or the equivalent thereof from Fitch; (e) freely redeemable
shares in money market funds having a rating of "AAA-m" or "AAAM-G" from S&P,
"Aaa" from Xxxxx'x and, if rated by Fitch, "AAA" from Fitch; and (f) any other
investment approved in writing by the Facility Agent.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust, unincorporated
association, joint venture, government (or any agency or political subdivision
thereof) or other entity.
"Pledged Collateral" has the meaning specified in Section 2.10
hereof.
"PLUS/SLS" means a Student Loan originated under the authority
set forth in Section 428 A or B (or a predecessor section thereto) of the Higher
Education Act and shall include Student Loans designated as "PLUS Loans" or "SLS
Loans," as defined, under the Higher Education Act.
"Portfolio Administration Fee" means, for each Calculation
Period, a per annum fee payable monthly in arrears equal to 0.45% on the average
outstanding Principal Balance of the Financed Loans during such Calculation
Period and paid to the Portfolio Administrator.
"Portfolio Administrator" means Nelnet or its successors and
assigns.
"Principal Balance" means, with respect to any Student Loan or
any Financed Loan and any specified date, the original principal amount of such
Student Loan or Financed Loan, plus capitalized interest thereon, if any, minus
prior payments of
18
principal by or on behalf of the Obligor of such Student Loan or Financed Loan
as of such date.
"Program Availability Fees" means, for any Calculation Period,
an amount calculated by multiplying the unused portion of this Agreement (being
the Maximum Facility Amount less the average outstanding Advances for such
Calculation Period) by an annual rate equal to 0.165% per annum. The Program
Availability Fees shall be computed on the basis of the actual number days in
such Calculation Period and assuming a 360 day year.
"Program Usage Fees" means, for any Calculation Period, an
amount calculated by multiplying the average outstanding Regular CP Advances for
such Calculation Period by an annual rate equal to the sum of (a) the weighted
average CP Rate for all Regular CP Advances during such Calculation Period and
(b) 0.28%. The Program Usage Fees shall be computed on the basis of the actual
number days in such Calculation Period and assuming a 360 day year.
"Proprietary Institution" means a for-profit vocational
school, including a proprietary institution.
"Proprietary Loan" means a loan made to or for the benefit of
a student attending a Proprietary Institution.
"Quarterly Valuation Date" means the fourth Business Day
preceding each Settlement Date occurring in the months of March, June, September
and December.
"Records" means all documents, books, records, Student Loan
Notes and other information (including without limitation, computer programs,
tapes, disks, punch cards, data processing software and related property and
rights) maintained with respect to Financed Loans or otherwise in respect of the
Pledged Collateral.
"Regular Advance" means a Regular Bank Advance or a Regular CP
Advance.
"Regular Bank Advance" means a loan made to the Borrower
funded by the Alternate Lender, including any Special Advances or Rollover
Advances funded by the Alternate Lender.
"Regular CP Advance" means a loan made to the Borrower funded
by the Lender with CP, including any Special Advances or Rollover Advances
funded by the Lender with CP.
"Regulatory Change" means, relative to any Affected Party:
(a) after the date of this Agreement, any change in, or
the adoption, implementation, change in phase-in or commencement or
effectiveness of, any:
19
(i) United States federal or state law or foreign law
applicable to such Affected Party;
(ii) regulation, interpretation, directive, requirement or
request (whether or not having the force of law) applicable to such Affected
Party of (A) any court, governmental authority charged with the interpretation
or administration of any law referred to in clause (a)(i) above or of (B) any
fiscal, monetary or other authority having jurisdiction over such Affected
Party; or
(iii) generally accepted accounting principles or
regulatory accounting principles applicable to such Affected Party and affecting
the application to such Affected Party of any law, regulation, interpretation,
directive, requirement or request referred to in clause (a)(i) or (a)(ii) above;
or
(b) any change after the date of this Agreement in the
application to such Affected Party of any existing law, regulation,
interpretation, directive, requirement, request or accounting
principles referred to in clause (a)(i), (a)(ii) or (a)(iii) above.
"Requested Advance Amount" means the amount of the Advance
that is requested by the Borrower, not to exceed the Maximum Advance Amount.
"Requested Advance Percentage" means the rate, stated as a
percentage, of the aggregate Principal Balance of the Eligible Loans to be
financed by an Advance that is requested by the Borrower, not to exceed the
Maximum Advance Percentage.
"Revolving Period" means the period commencing on the Closing
Date and terminating on the earlier of (a) Termination Date and (b) the date of
any Liquidity Advance or any Credit Support Advance; provided, however, that so
long as no Event of Default or an event which with the lapse of time or the
giving of notice, or both, would constitute an Event of Default, shall have
occurred and be continuing, the Revolving Period may be reinstated at any time
prior to the occurrence of the Termination Date with the consent of the Facility
Agent.
"Rollover Advance" means a Regular Advance, a Credit Support
Advance or a Liquidity Advance, the funding of which would not and does not have
the effect of increasing the Outstanding Facility Amount.
"S&P" means Standard & Poor's Ratings Service, a division of
The XxXxxx-Xxxx Companies, Inc. (or its predecessor or successors in interest)
if and so long as it has rated and is continuing to rate the CP of the Lender,
and otherwise means such other nationally recognized statistical rating
organization as may be designated by the Lender.
"Schedule of Purchased Student Loans" means a listing of
certain Financed Loans of the Borrower delivered to and held by the Trustee
pursuant to Section 3.02(a) hereof and to the Facility Agent pursuant to Section
5.01(c)(vii) hereof (which Schedule may be in the form of microfiche or computer
file or other medium
20
acceptable to the Facility Agent or the Trustee, as applicable), as from time to
time amended, supplemented, or modified, which Schedule delivered to the Trustee
shall be the master list of all Financed Loans then compromising a part of the
Pledged Collateral pursuant to this Agreement.
"Secured Creditors" means, (a) to the extent there are Regular
CP Advances outstanding hereunder, the Lender, (b) to the extent there are
Regular Bank Advances outstanding, the Alternate Lender, (c) to the extent there
are Liquidity Advances outstanding, the Liquidity Facility Providers which have
funded the Liquidity Advances and (d) to the extent there are Credit Support
Advances outstanding, the Credit Support Providers which have funded the Credit
Support Advances.
"Sellers" means any entity which sells Eligible Loans or
participation interests in Eligible Loans to the Borrower pursuant to the terms
of a Student Loan Purchase Agreement.
"Servicer" means, individually or collectively, (a) NELnet
Loan Services, Inc., (b) Xxxxxx Mae Servicing L.P., (c) Great Lakes Educational
Loan Services, Inc., (d) Pennsylvania Higher Education Assistance Agency and (e)
any other organization with which the Borrower has entered into a Servicing
Agreement with respect to Eligible Loans, with the prior written approval of the
Facility Agent; provided, however, Xxxxxx Xxx Servicing L.P., Great Lakes
Educational Loan Services, Inc. and Pennsylvania Higher Education Assistance
Agency shall not service any Financed Loans until the Facility Agent has
approved in writing its respective Servicing Agreement.
"Servicer Event of Default" means (a) any Servicer shall fail
in any material respect to perform or observe any term, covenant or agreement
that is an obligation of such Servicer under its Servicing Agreement (other than
as referred to in clause (b) below) and such failure continues unremedied for 10
days after (i) written notice thereof shall have been given by the Borrower or
the Trustee to the Borrower or the Servicer or (ii) the Servicer has actual
knowledge thereof; (b) any Servicer shall fail to make any payment or deposit to
be made by it under its Servicing Agreement when due and such failure shall
remain unremedied for three Business Days; (c) any representation or warranty
made or deemed to be made by any Servicer (or any of its officers) under or in
connection with its Servicing Agreement or any information or report delivered
pursuant to its Servicing Agreement shall prove to have been false or incorrect
in any material respect when made; (d) an Event of Bankruptcy shall have
occurred with respect to a Servicer; (e) (i) any litigation (including, without
limitation, derivative actions), arbitration proceedings or governmental
proceedings (whether or not existing at the time of the execution hereof) not
disclosed in writing by the Borrower to the Facility Agent prior to the
execution and delivery of this Agreement is pending against a Servicer or any of
its Affiliates at the time execution hereof; or (ii) any material development
not so disclosed has occurred in any such litigation or proceedings so
disclosed, which in the case of clause (i) or (ii) above, in the opinion of the
Facility Agent, has a material adverse effect on the ability of such Servicer to
perform its obligations under its Servicing Agreement.
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"Servicing Agreement" means, individually or collectively, (a)
the Servicing Agreement, dated as of April 28, 2003, between the Borrower (as
assignee of the Original Borrower) and NELnet Loan Services, Inc.; (b) the
UNIPAC Service Corporation Guaranteed Student Loan Program Servicing Agreement
dated as of December 1, 1996, as amended, among the Borrower, the Servicer and
NEBHELP Capital Services, Inc.; and with the prior written consent of the
Facility Agent, any other servicing agreement between the Borrower and any
Servicer, as any such agreement may be amended or supplemented from time to time
with the prior written consent of the Facility Agent, under which the respective
Servicer agrees to administer and collect the Financed Loans.
"Servicing Fees" means any fees payable by the Borrower to a
Servicer with respect of servicing Financed Loans pursuant to the provisions of
its Servicing Agreement, including legal fees and expenses.
"Settlement Date" means the first Business Day of each month.
"Solvent" means, at any time, a condition under which:
(a) the fair value and present fair saleable value of
such Person's total assets is, on the date of determination, greater
than such Person's total liabilities (including contingent and
unliquidated liabilities) at such time;
(b) the fair value and present fair saleable value of
such Person's assets is greater than the amount that will be required
to pay such Person's probable liability on its existing debts as they
become absolute and matured ("debts," for this purpose, includes all
legal liabilities, whether matured or unmatured, liquidated or
unliquidated, absolute, fixed or contingent);
(c) such Person is and shall continue to be able to pay
all of its liabilities as such liabilities mature; and
(d) such Person does not have unreasonably small capital
with which to engage in its current and in its anticipated business.
For purposes of this definition:
(i) the amount of a Person's contingent or
unliquidated liabilities at any time shall be that amount
which, in light of all the facts and circumstances then
existing, represents the amount which can reasonably be
expected to become an actual or matured liability;
(ii) the "fair value" of an asset shall be the
amount which may be realized within a reasonable time either
through collection or sale of such asset at its regular market
value;
(iii) the "regular market value" of an asset shall
be the amount which a capable and diligent business person
could obtain for such asset from an interested buyer who is
willing to purchase such asset under ordinary selling
conditions; and
22
(iv) the "present fair saleable value" of an
asset means the amount which can be obtained if such asset is
sold with reasonable promptness in an arms-length transaction
in an existing and not theoretical market.
"Special Advance" means an Advance for the purpose of
acquiring Eligible Loans on an Advance Date other than a Settlement Date, the
principal amount of which Advance shall not exceed (i) the aggregate principal
amount of the Eligible Loans being purchased with such Advance, plus (ii)
accrued and unpaid interest and Special Allowance Payments on such Eligible
Loans.
"Special Allowance Payments" means special allowance payments
authorized to be made by the Department of Education by Section 438 of the
Higher Education Act, or similar allowances authorized from time to time by
federal law or regulation.
"Special Valuation Date" means any date within 7 days after
the receipt of a written request for a Valuation Report or an Asset Coverage
Report from the Portfolio Administrator or the Facility Agent.
"Xxxxxxxx Loan" means a loan made to an Eligible Borrower
designated as such that is made under the Xxxxxx X. Xxxxxxxx Student Loan
Program in accordance with the Higher Education Act.
"Stock" means all shares, options, general or limited
partnership interests, limited liability membership interests, or other
equivalents (regardless of how designated), participation or other equivalents
(however designated) of or in a corporation, partnership, limited liability
company or equivalent entity, whether voting or non-voting, including, without
limitation, common stock, warrants, preferred stock, convertible debentures or
any other equity security, and all agreements, instruments and documents
convertible, in whole or in part, into any one or more of all of the foregoing.
"Student Loan" means a Consolidation Loan, a PLUS/SLS Loan, a
Xxxxxxxx Loan or a Proprietary Loan.
"Student Loan Notes" means the promissory notes or other
writings evidencing the Student Loans.
"Student Loan Purchase Agreement" means either (a) a student
loan purchase agreement between the Borrower and a Seller, substantially in the
form attached as Exhibit A hereto, for the purchase of Eligible Loans or (b) a
Participation Agreement.
"Termination Date" means the earliest to occur of (a) June 1,
2005 (unless such date is extended pursuant to Section 2.16 hereof); (b) such
other date as may be agreed in writing by the Facility Agent and the Borrower;
(c) the date of termination of the Maximum Facility Amount pursuant to Section
2.03 hereof; (d) the date of the declaration or automatic occurrence of the
Termination Date pursuant to Article VI
23
hereof; (e) the occurrence of the Alternate Lender Termination Date or any
Liquidity Termination Event; and (f) the occurrence of an Early Amortization
Event.
"Transaction Documents" means, collectively, this Agreement,
the Valuation Agent Agreement, the Indemnification Agreement, all Servicing
Agreements, all Custodian Agreements, all Student Loan Purchase Agreements, all
Guarantee Agreements, the Eligible Lender Trust Agreement and all other
instruments, documents and agreements executed in connection with any of the
foregoing.
"Treasury Regulations" means any regulations promulgated by
the Internal Revenue Service interpreting the provisions of the Code.
"Trigger Rate" means, as to any Guarantor, such Guarantor's
default rate as defined in Section 428(c)(l)(B) of the Higher Education Act.
"Trustee" means Zions First National Bank, Denver, Colorado, a
national banking association, and its successor or successors and any other
corporation which may at any time be substituted in its place pursuant to this
Agreement.
"Trustee Fees" means the fees, expenses and charges of the
Trustee, including legal fees and expenses.
"Trustee Guarantee Agreement" means, collectively, (i) the
agreements for guarantee of Student Loans with federal reinsurance between the
Trustee and the following Guarantors: Nebraska Student Loan Program, Inc.;
United Student Aid Funds; Colorado Student Loan Program; Great Lakes Higher
Education Guaranty Corporation; Education Assistance Corporation; Kentucky
Higher Education Assistance Authority; Educational Credit Management
Corporation; Oklahoma Guaranteed Student Loan Program; Texas Guaranteed Student
Loan Program; and Student Loan Guarantee Foundation of Arkansas, Inc.; and (ii)
any other guarantee or agreement issued by any Guarantor to the Trustee, and any
amendment any of the foregoing entered into in accordance with the provisions
thereof and hereof.
"UCC" means the Uniform Commercial Code as from time to time
in effect in the specified jurisdiction.
"United States" means the United States of America.
"Valuation Agent" means RBC Xxxx Xxxxxxxx Inc., or any other
entity appointed as Valuation Agent by the Borrower and approved by the Facility
Agent, which approval shall not be unreasonably withheld.
"Valuation Agent Agreement" means the Valuation Agent
Agreement, dated as of February 1, 2002, and amended as of April 28, 2003, among
the Borrower (as assignee of the Original Borrower), the Lender, the Alternate
Lender, the Facility Agent and the Valuation Agent and any other valuation agent
agreement in the form attached as Exhibit B hereto among the Borrower, the
Lender, the Alternate Lender, the Facility
24
Agent and the Valuation Agent, as any such agreement may be amended or
supplemented from time to time with the prior written consent of the Facility
Agent.
"Valuation Date" means (a) each Quarterly Valuation Date and
(b) each Special Valuation Date.
"Valuation Report" means a report furnished by the Valuation
Agent to the Portfolio Administrator, the Facility Agent and the Borrower
pursuant to Section 5.12(a) hereof, the form of which is attached as Exhibit B
to the Valuation Agent Agreement. The Maximum Advance Percentage shall remain in
effect until the Advance Date immediately following the delivery of the next
Valuation Report delivered pursuant to Section 5.12 hereof.
"Valuation Report Assumptions" means the cash flow and related
assumptions set forth in Exhibit E to the Valuation Agent Agreement.
Section 1.02. Other Terms. All accounting terms not
specifically defined herein shall be construed in accordance with GAAP. All
terms used in Article 9 of the UCC in the State of New York and not specifically
defined herein, are used herein as defined in such Article 9.
Section 1.03. Computation of Time Periods. Unless otherwise
stated in this Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each mean "to but excluding."
ARTICLE IA
SALE OF PLEDGED COLLATERAL:
ASSIGNMENT AND ASSUMPTIONS
Section 1.01 A. Sale of Pledged Collateral.
(a) In consideration of the payment of $270,002,326.69
(which payment may be received in the form of an assumption by the Borrower of
the Original Borrower's obligation to repay Advances under this Agreement) by
the Borrower to the Original Borrower and the assumption by the Borrower
provided for in Section 1.02A hereof, the receipt and sufficiency of which are
hereby acknowledged, effective on the Effectiveness Date, the Original Borrower
hereby sells, assigns, conveys, grants and transfers to the Borrower, without
recourse, the Pledged Collateral. The Borrower hereby accepts the foregoing sale
and assignment. Following the sale of the Pledged Collateral, legal title to the
Financed Loans (both those sold and those to be acquired by the Borrower
hereafter) will be held by the Eligible Lender Trustee.
(b) From and after the Effectiveness Date, (i) the
Borrower shall assume all of the duties and obligations relating to the Pledged
Collateral and (ii) the Original Borrower shall relinquish its rights and be
released from its duties with respect to the Pledged Collateral.
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(c) The Original Borrower represents and warrants to the
Borrower that the Pledged Collateral is free and clear of any security interest,
lien, charge, pledge, equity or encumbrance of any Person claiming through or
under the Original Borrower, other than the lien created by this Agreement, the
rights and obligations with respect to which are assigned pursuant to Section
1.02A.
(d) As of the Effectiveness Date, the Lender, the
Alternate Lender, the Facility Agent and the Trustee hereby consent to such
sale.
(e) The Borrower and the Original Borrower intend that
the sale and transfer made under this Article IA shall constitute a sale and not
a loan. The Original Borrower shall indicate on its records the sale of the
Pledged Collateral. In the event, however, that a court of competent
jurisdiction were to hold that the transaction provided for in this Article IA
constitutes a loan and not a sale, it is the intention of the Borrower and the
Original Borrower that this Agreement shall constitute a security agreement
under applicable law and that the Original Borrower shall be deemed to have
granted to the Borrower a first priority security interest in such Pledged
Collateral to secure the obligations of the Original Borrower to repay the
amounts deemed to be a loan.
Section 1.02A Assignment and Assumption.
(a) In consideration of the Borrower's acceptance of the
obligations of the Original Borrower under this Agreement and the other
Transaction Documents the sufficiency of which is hereby acknowledged, effective
on the Effectiveness Date, the Original Borrower hereby assigns to the Borrower,
without recourse, and the Borrower hereby accepts and assumes all of the
Original Borrower's rights and obligations under this Agreement and the other
Transaction Documents.
(b) From and after the Effectiveness Date, (i) the
Borrower shall be a party to and be bound by all of the terms of this Agreement
and the other Transaction Documents and shall have the rights and obligations
(including, without limitation, with respect to Advances and the pledge of
Student Loans financed hereunder) of the Borrower thereunder and (ii) the
Original Borrower shall relinquish its rights and be released from its
obligations under this Agreement and the other Transaction Documents.
(c) As of the Effectiveness Date, the Lender, the
Alternate Lender and the Facility Agent hereby consent to such assignment and
assumption.
ARTICLE II
THE FACILITY
Section 2.01. Advances. On the terms and conditions
hereinafter set forth, the Alternate Lender agrees to make, and the Lender may,
in its sole discretion make, Advances to the Borrower from time to time up to an
aggregate principal amount outstanding at any one time not to exceed the Maximum
Facility Amount in effect at the time of such Advance. In addition to the other
terms and conditions hereinafter set forth, the Lender will not be obligated or
committed to make any Regular CP Advance and shall not make any such Advance (a)
unless the amount available for drawing by the
26
Lender under the Liquidity Facilities from Liquidity Facility Providers shall
equal or exceed 102% of the aggregate amount of the principal due on the
Outstanding Facility Amount (including any requested Advance) to the Lender; (b)
if the Lender is unable for any reason to raise funds in the United States
commercial paper market to make such Advances; (c) if the Lender, in good faith,
determines there is a general disruption in the United States commercial paper
market or the Lender's ability to access the commercial paper market; or (d) if
any Liquidity Facility Provider fails to honor its payment obligations under its
Liquidity Facility. Within the limits set forth in this Section and the other
terms and conditions of this Agreement, during the Revolving Period, the
Borrower may borrow, prepay and reborrow under this Section, hi addition, the
aggregate principal amount of any Advance, which is not a Rollover Advance,
during the Revolving Period shall not exceed the Maximum Advance Amount. All
Advances hereunder shall be denominated in and be payable in United States
dollars. All then outstanding Advances and other Obligations hereunder shall be
due and payable on June 1, 2005 (unless such date is extended pursuant to
Section 2.16 hereof) or such earlier date as provided in Article VI hereof. The
obligation of the Alternate Lender to make Advances hereunder shall expire on
the Alternate Lender Termination Date.
Section 2.02. The Initial Advance and Subsequent Advances.
(a) Any Advances made by the Lender or the Alternate
Lender during the Revolving Period will be made on a Settlement Date (unless
otherwise agreed by the Borrower and the Facility Agent or such Advance is a
Special Advance) at the request of the Borrower, subject to and in accordance
with the terms and conditions of Section 2.01 hereof and this Section. In
addition, during the Revolving Period, the Borrower may request up to eight (8)
Special Advances in each calendar month for the purpose of acquiring additional
Student Loans; provided, however, that no Special Advances may be requested to
be made on the four Business Days preceding any Settlement Date. After the
Revolving Period, the Lender and the Alternate Lender shall make only Rollover
Advances on a Settlement Date (unless otherwise agreed by the Borrower and the
Facility Agent) at the request of the Borrower, subject to and in accordance
with the terms and conditions of Section 2.01 hereof and this Section, solely to
the extent necessary to refund any maturing Advances.
(b) Subject to satisfaction of the conditions precedent
set forth in this Agreement, the Borrower may request an Advance hereunder by
giving written notice to the Lender, with a copy to the Trustee, in the form of
Exhibit C hereto not later than 12:00 noon, Eastern time, at least three
Business Days' prior to the proposed Advance Date; provided; however, that in
the case of a Special Advance, such written notice to the Lender, with a copy to
the Trustee, in the form of Exhibit D hereto need only be given not later than
12:00 noon, Eastern time, on the Business Day prior to the proposed Advance
Date. Each such notice shall specify (i) the aggregate amount of such Advance,
which shall be in an amount equal to or greater than $1,000,000, (ii) the
Advance Date (which may only be a Settlement Date unless otherwise agreed by the
Borrower and the Facility Agent or unless such Advance is a Special Advance),
(iii) if the Advance to be made is a Regular Bank Advance, a Liquidity Advance
or a Credit Support Advance, the applicable Alternate Advance Rate for such
Advance and (iv) the Requested Advance
27
Percentage, if applicable to the Advance, and the Requested Advance Amount
(which shall not be greater than the aggregate principal amount of the Eligible
Loans to be financed plus accrued and unpaid interest and Special Allowance
Payments on such Eligible Loans if such Advance constitutes a Special Advance).
On the Advance Date, the Alternate Lender shall and the Lender, in its sole
discretion, may upon satisfaction of the applicable conditions set forth in this
Agreement, make available to the Borrower in same day funds, the amount of such
Advance by payment to the account which the Borrower has designated in writing.
(c) Except as otherwise provided in Article VIII hereof
or elsewhere herein, principal and accrued Program Availability Fees, Program
Usage Fees, Alternate Interest Amounts and Liquidity Interest Amounts on the
Advances shall be payable solely from the Pledged Collateral and from payments
made or owing pursuant to the "Collateral Calls" made in accordance with Section
5.15 hereof. The Advances plus accrued Program Availability Fees, Program Usage
Fees, Alternate Interest Amounts and Liquidity Interest Amounts shall be paid at
the times specified in Section 2.13 hereof and may not be prepaid in whole or in
part on any day other than the applicable Maturity Date without the consent of
the Facility Agent.
(d) If as a result of a draw under the Liquidity
Agreement or the Credit Support Agreement a Regular CP Advance shall become a
Liquidity Advance or a Credit Support Advance on any day other than the first
day of an Interest Period, the Alternate Advance Rate applicable to such Advance
for the remainder of such Interest Period shall be the Alternate Advance Rate.
(e) Upon the occurrence and continuation of an Early
Amortization Event, no Advances will be made to the Borrower for the purpose of
purchasing additional Student Loans unless the Facility Agent, in its sole
discretion, determines to have such Early Amortization Event not cause the
Termination Date.
Section 2.03. Termination or Reduction of the Maximum Facility
Amount. The Borrower may, upon at least 60 days' written notice to the Facility
Agent (i) at any time, but only after the first anniversary of the Closing Date
or (ii) at any time prior to the first anniversary of the Closing Date if the
Facility Agent shall fail to respond (whether affirmatively or negatively) to
any written request for a waiver, amendment or modification to any of the
prohibitions set forth in any of Section 5.01(j), 5.04, 5.05, 5.06, 5.09 or 5.11
hereof within 30 days after the Facility Agent's receipt of such request,
terminate in whole or reduce in part the portion of the Maximum Facility Amount
that exceeds the Outstanding Facility Amount; provided, however, that each
partial reduction of the Maximum Facility Amount shall be in an aggregate amount
equal to $5,000,000 or an integral multiple thereof.
Section 2.04. Collection Account. On or prior to the date
hereof, the Borrower shall establish and maintain, or cause to be established
and maintained, the Collection Account. The Collection Account shall be
maintained as a segregated trust account in the trust department of the Trustee,
and shall be under the sole dominion and control of, and in the name of, the
Trustee. Any Collections (other than the Higher SAP
28
Differentials, if any) received by the Borrower, the Trustee, the Eligible
Lender Trustee, the student loan depositaries or co-depositaries, the
Custodians, the Sellers or the Servicers, or any agent thereof, as the case may
be, are to be transmitted to the Collection Account within two Business Days of
receipt. The Borrower shall direct the Eligible Lender Trustee and each
Servicer, Seller, Custodian, student loan depository or co-depositories, or
agent thereof, to transmit any Collections (other than Higher SAP Differentials,
if any) it receives with respect to the Financed Loans directly to the Trustee
for deposit to the Collection Account. Any Advances deposited to the Collection
Account shall be deposited into a separate account established within the
Collection Account (the "Collection Advance Subaccount"). Funds on deposit in
the Collection Account may be invested from time to time in Permitted
Investments in accordance with Section 2.08 hereof. The Trustee shall apply
funds on deposit in the Collection Account as described in Section 2.05 hereof.
The Trustee shall transfer from time to time moneys from the Escrow Account to
the Collection Account upon the written direction of the Borrower and the
approval of such direction by the Facility Agent, as provided in Section
2.07B(d).
Section 2.05. Transfers from Collection Account.
(a) On each date on which any principal or interest is
due with respect to any Advance, the Trustee shall promptly apply moneys held in
the Collection Account to pay to the Facility Agent the accrued and unpaid
Program Availability Fees, Program Usage Fees, Alternate Interest Amounts,
Liquidity Interest Amounts and principal amounts then due and owing as directed
in writing by the Borrower.
(b) On each Calculation Date, the Borrower shall cause
the Portfolio Administrator to prepare the Monthly Report and shall provide or
cause to be provided to the Portfolio Administrator all information necessary or
appropriate to accurately prepare such Monthly Report, all calculations, unless
otherwise specified, to be made as of the end of the current Calculation Period,
and cause the Portfolio Administrator to forward such Monthly Report to the
Trustee, the Facility Agent and the Valuation Agent.
(c) The Trustee, on each Settlement Date, shall apply the
moneys held by the Trustee in the Collection Account as directed by the Borrower
pursuant to the Monthly Report received by the Trustee, on which the Trustee may
conclusively rely, on such Settlement Date, in the following priority:
(i) pay to each Servicer and Custodian an amount equal to
the Servicing Fee and Custodian Fee which is accrued and unpaid as of
the close of business on the last day of the immediately preceding
Calculation Period; provided; however, the Borrower hereby certifies
that no Servicer which is an Affiliate of Nelnet shall be paid from any
moneys on deposit in the Collection Account which were derived from a
payment made pursuant to the Indemnification Agreement on behalf of
such Servicer and the Borrower agrees not to direct the Trustee to make
any such payment;
29
(ii) pay to the Facility Agent an amount equal to the
accrued and unpaid Program Availability Fees, Program Usage Fees,
Alternate Interest Amounts and Liquidity Interest Amounts which are
accrued and unpaid as of the close of business on the last day of the
immediately preceding Calculation Period;
(iii) pay to the Facility Agent an amount equal to the
maturing principal of all Advances, net of any new Rollover Advances,
in each case, due and owing as of such Settlement Date;
(iv) pay to the Facility Agent an amount equal to all
Liquidity Fees and other Obligations due and owing to the Lender, the
Alternate Lender, the Liquidity Facility Providers or the Credit
Support Providers as of such Settlement Date;
(v) pay to the Trustee and the Eligible Lender Trustee an
amount equal to the Trustee Fee and the Eligible Lender Trustee Fee, if
any, which is accrued and unpaid as of the close of business on the
last day of the immediately preceding Calculation Period;
(vi) transfer to the Cash Reserve Account the amount, if
any, necessary to restore the Cash Reserve Account to the Cash Reserve
Requirement;
(vii) pay to the Portfolio Administrator the Portfolio
Administration Fee which is accrued and unpaid as of the close of
business on the last day of the immediately preceding Calculation
Period;
(viii) pay to the Facility Agent, amounts designated by the
Borrower to reduce the amount of outstanding Advances;
(ix) pay any other Obligations which are accrued and
unpaid as of the close of business on the last day of the immediately
preceding Calculation Period with respect to the Financed Loans to the
Person owed such Obligation;
(x) pay as directed by the Borrower, an amount equal to
the estimated taxes owed by the Borrower that are payable prior to the
next Settlement Date and not previously paid, which relate to the net
income of the Borrower realized on the Financed Loans and other assets
in the Pledged Collateral; and
(xi) transfer to the Borrower (at the request of the
Portfolio Administrator pursuant to a Cash Release Certificate in the
form attached as Exhibit F hereto), on any Settlement Date following a
Quarterly Valuation Date, any amounts representing Excess Coverage;
provided, however, that upon the occurrence and continuation of an
Early Amortization Event or an Event of Default, no Excess Coverage
shall be released to the Borrower without the written consent of the
Facility Agent. The Trustee shall not be deemed to have actual
knowledge of an Early Amortization Event or an Event of Default unless
and until a Corporate Trust Officer of the Trustee has received written
notification from the Facility Agent or the Borrower.
30
(d) Any moneys allocated to the payment of Trustee Fees,
the Eligible Lender Trustee Fees, Liquidity Fees, Portfolio Administration Fees,
Servicing Fees, Custodian Fees, Advances, Program Availability Fees and Program
Usage Fees on Regular Advances, Alternate Interest Amounts, Liquidity Interest
Amounts and other Obligations pursuant to this Section shall be transferred to
the applicable payee, to the extent such Obligations are then due and payable as
directed by a written direction of the Borrower to the Trustee,
(e) Any Advances deposited to the Collection Advance
Subaccount shall be disbursed pursuant to a written direction of the Borrower to
the Trustee for the purpose of purchasing or financing Eligible Loans or
repaying Advances. The Trustee shall make the foregoing transfers in accordance
with this Section and may conclusively rely upon the written instructions
received from the Borrower without any duty to determine or examine the same.
Section 2.06. Cash Reserve Account. On or prior to the date
hereof, the Borrower shall establish and maintain, or cause to be established
and maintained, the Cash Reserve Account. The Cash Reserve Account shall be
maintained in a segregated trust account in the trust department of the Trustee
or another commercial bank designated by the Trustee, and shall be under the
sole dominion and control of, and in the name of, the Trustee. The Cash Reserve
Requirement shall be deposited to the Cash Reserve Account from proceeds of the
initial Advance and additional amounts shall be deposited to the Cash Reserve
Account pursuant to Section 2.05(c)(vi) hereof. Funds on deposit in the Cash
Reserve Account may be invested from time to time in Permitted Investments in
accordance with Section 2.08 hereof. The Trustee shall apply funds on deposit in
the Cash Reserve Account as described in Section 2.07 hereof. If amounts
available in the Collection Account are insufficient to restore the Cash Reserve
Account to the Cash Reserve Requirement on the immediately succeeding Settlement
Date, the Borrower shall satisfy such deficiency from other sources. If the
Borrower is either unable or unwilling to deposit such funds, the Facility Agent
may declare a Termination Date to have occurred.
Section 2.07. Transfers from the Cash Reserve Account. To the
extent there are insufficient moneys in the Collection Account to pay the
following amounts in accordance with the provisions of Section 2.05 hereof, the
Trustee shall transfer moneys held by the Trustee in the Cash Reserve Account,
to the extent available for distribution on the specified day, in the following
amounts and priority:
(a) on each date on which any principal, Program
Availability Fees, Program Usage Fees, Alternate Interest Amounts or Liquidity
Interest Amounts is due with respect to any Advance, the Trustee shall promptly
apply moneys held in the Cash Reserve Account to pay to the Facility Agent the
accrued and unpaid principal amounts, Program Availability Fees, Program Usage
Fees, Alternate Interest Amounts and Liquidity Interest Amounts then due and
owing as directed in writing by the Borrower; and
31
(b) on any Settlement Date, to the Collection Account for
the payment of accrued and unpaid fees and expenses described in Section
2.05(c)(i) through (v) hereof in the priority set forth in Section 2.05(c)
hereof.
Section 2.07A. Escrow Account. On or prior to the date
hereof, the Borrower shall establish and maintain, or cause to be established
and maintained, the Escrow Account. The Escrow Account shall be maintained in a
segregated trust account in the trust department of the Trustee or another
commercial bank designated by the Trustee, and shall be under the sole dominion
and control of, and in the name of, the Trustee. An amount equal to any Higher
SAP Differential received by the Borrower, the Trustee, the Eligible Lender
Trustee, the student loan depositaries or co-depositaries, the Custodians, the
Sellers or the Servicers, or any agent thereof, as the case may be, is to be
transmitted to the Escrow Account within two Business Days of receipt. The
Borrower shall, and shall direct such Servicer, Seller, Custodian, the Eligible
Lender Trustee, student loan depositary or co-depositaries, or agent thereof to,
transmit any Higher SAP Differentials it receives with respect to Financed Loans
which are Higher SAP Loans directly to the Trustee for deposit to the Escrow
Account. Funds on deposit in the Escrow Account may be invested from time to
time in Permitted Investments in accordance with Section 2.08 hereof. The
Trustee shall apply funds on deposit in the Escrow Account as described in
Section 2.07B hereof.
Section 2.07B. Transfers from the Escrow Account. The Trustee
shall apply moneys held in the Escrow Account at the following times and in the
following amounts as directed in writing by the Borrower (and, if an Event of
Default shall have occurred and be continuing, with the written approval of the
Facility Agent):
(a) unless an Event of Default shall have occurred and be
continuing, on any Settlement Date, to pay to the Borrower an amount
equal to the lesser of (i) the amount on deposit in the Escrow Account
and (ii) the Higher SAP Differential(s) held in the Escrow Account and
attributable to any Higher SAP Loan released from the Pledged
Collateral during the calendar month preceding such Settlement Date,
together with a pro rata share of investment earnings, if any, in the
Escrow Account as provided in Section 2.08 hereof;
(b) unless an Event of Default shall have occurred and be
continuing, on each Settlement Date, to pay an amount equal to the
difference between (i) the estimated taxes owed by the Borrower that
are payable prior to the next Settlement Date and not previously paid,
which relate to the net income of the Borrower realized on the average
daily balance of the Higher SAP Differentials held in the Escrow
Account since the last Settlement Date on which estimated taxes were
paid with respect to such amount and (ii) the amount paid to or at the
direction of the Borrower for such purpose pursuant to Section
2.05(c)(x);
(c) on any day on which the Department of Education or
other Governmental Authority were to demand repayment of the Higher SAP
Differential(s) with respect to any Financed Loans(s) which is a Higher
SAP Loan(s) (or all such Student Loans), to pay to or at the direction
of the Department of Education or such other Governmental Authority the
lesser of (i) the amount so demanded and (ii) the amount on deposit in
the Escrow Account;
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(d) if an Event of Default shall have occurred and be
continuing, on any Settlement Date, to transfer to the Collection
Account the amount that would otherwise have been paid to the Borrower
on such Settlement Date pursuant to Section 2.07B(a) above; and
(e) on the day on which all Obligations have been paid
hereunder, to pay to the Borrower all moneys (including investment
earnings) remaining in the Escrow Account.
Section 2.08. Management of Collection Account. Cash Reserve
Account and Escrow Account.
(a) All funds held in the Collection Account, the Cash
Reserve Account and the Escrow Account (or any subaccount thereof), including
investment earnings thereon, shall be invested at the direction of the Portfolio
Administrator in Permitted Investments having a maturity date not later than the
next date on which any distributions are to be made from funds on deposit in the
Collection Account and/or the Cash Reserve Account and/or the Escrow Account;
provided, however, that from and after the Termination Date or otherwise upon
the occurrence and during the continuance of any Event of Default, the Facility
Agent shall have the sole right to restrict the maturities of any investments
held in the Collection Account and/or the Cash Reserve Account and/or the Escrow
Account and to direct the withdrawal of any such investments held in the
Collection Account or the Cash Reserve Account (but not the Escrow Account,
except as provided in Section 2.07B(d)) for the purposes of paying the
Obligations, including principal on the Advances and any unpaid Program
Availability Fees, Program Usage Fees, Alternate Interest Amounts and Liquidity
Interest Amounts. All investment earnings (net of losses) on such Permitted
Investments shall be credited to and retained in the Collection Account or the
Cash Reserve Account, or the Escrow Account, as the case may be. On the Business
Day following each Settlement Date on which moneys in the Escrow Account are
paid to the Borrower pursuant to Section 2.07B(a) or transferred to the
Collection Account pursuant to Section 2.07B(d), a pro rata share (pro rata
based on the ratio of the amount to be applied pursuant to Section 2.07B(a) or
(d), as applicable, to the total amount in deposit in the Escrow Account) of
investment earnings (net of losses) on Permitted Investments in the Escrow
Account shall be paid to the Borrower or transferred to the Collection Account,
as applicable.
(b) The Collection Account, the Cash Reserve Account and
the Escrow Account shall be established with a securities intermediary (the
"Securities Intermediary") who shall agree with the Trustee (and Zions First
National Bank, as Securities Intermediary, hereby agrees with the Trustee) that
(i) the Collection Account, the Cash Reserve Account and the Escrow Account
shall be securities accounts of the Trustee, (ii) all property credited to
Collection Account, the Cash Reserve Account or the Escrow Account shall be
treated as a financial asset, (iii) the Securities Intermediary shall treat the
Trustee as entitled to exercise the rights that comprise each financial asset
credited to the Collection Account, the Cash Reserve Account or the Escrow
Account , (iv) the Securities Intermediary shall comply with entitlement orders
originated by the Trustee without the further consent of any other person or
entity, (v) except as otherwise provided in Section 2.08(a) hereof, the
Securities Intermediary shall not agree to comply
33
with entitlement orders originated by any person or entity other than the
Trustee, (vi) the Collection Account, the Cash Reserve Account, the Escrow
Account and all property credited to any such account shall not be subject to
any lien, security interest, right of set-off or encumbrance in favor of the
Securities Intermediary or anyone claiming through the Securities Intermediary
(other than the Trustee), and (vii) the agreement herein between the Securities
Intermediary and the Trustee shall be governed by the laws of the State of
Colorado. Each term used in this Section 2.08(b) and in Section 2.08(c) hereof
and defined in the Colorado Uniform Commercial Code (the "Colorado UCC") shall
have the meaning set forth in the Colorado UCC.
(c) No Permitted Investment in the form of an instalment
or certificated security as defined in the Colorado UCC in the possession of the
Trustee (i) shall be subject to a third party's security interest that could be
perfected without possession pursuant to Sections 9-312(e) & (g) of the Colorado
UCC, or (ii) shall constitute proceeds of any property subject to such third
party's security interest.
Section 2.09. Pledged Collateral Assignment of the
Transaction Documents. To secure the prompt and complete payment when due of the
Obligations and the performance by the Borrower of all of the covenants and
obligations to be performed by it pursuant to this Agreement and each other
Transaction Document, the Borrower (and the Eligible Lender Trustee, in its
capacity as titleholder to the Financed Loans) hereby assigns to the Trustee,
and Grants to the Trustee a security interest, in each case, for the benefit of
the Secured Creditors in accordance with their interests, in all of the
Borrower's (and the Eligible Lender Trustee's, in its capacity as title holder
of the Financed Loans) right and title to and interest in (but not the
obligations of) the Transaction Documents. The Borrower confirms and agrees that
the Trustee shall have, following an Event of Default, the sole right to enforce
the Borrower's rights and remedies under the Transaction Documents with respect
to the Pledged Collateral for the benefit of the Secured Creditors, but without
any obligation on the part of the Trustee or any other Secured Creditor or any
of their respective Affiliates, to perform any of the obligations of the
Borrower under the Transaction Documents.
Section 2.10. Grant of a Security Interest. To secure the
prompt and complete payment when due of the Obligations and the performance by
the Borrower of all of the covenants and obligations to be performed by it
pursuant to this Agreement and each other Transaction Document, the Borrower
(and the Eligible Lender Trustee, in its capacity as title holder to the
Financed Loans) hereby Grants to the Trustee on behalf of the Secured Creditors
(and their respective successors and assigns), a security interest in all of the
Borrower's and the Eligible Lender Trustee's right, title and interest in
accounts, general intangibles, payment intangibles, instruments, documents,
chattel paper, goods, moneys, letters of credit, letter of credit rights,
certificates of deposit, deposit accounts and all of the property and interests
in property, whether tangible or intangible and whether now owned or existing or
hereafter arising or acquired and wheresoever located arising from, consisting
of, or related to any of the following (collectively, the "Pledged Collateral"):
34
(a) all Financed Loans (including any beneficial
interests in Financed Loans);
(b) all revenues and recoveries of principal from
Financed Loans, including all borrower payments and reimbursements of principal
and accrued interest on default claims received from any Guarantor;
(c) any other Collections, Permitted Investments, funds
and accrued earnings thereon held in the various funds and accounts created
under this Agreement, including the Collection Account and the Cash Reserve
Account and the Escrow Account;
(d) all rights and remedies (but none of the obligations)
under each of the Transaction Documents;
(e) all other security interests or liens and property
subject thereto from time to time, if any, purporting to secure payment of such
Financed Loans, whether pursuant to the contract related to such Financed Loan
or otherwise;
(f) all Records relating to such Financed Loans; and
(g) all proceeds of any of the foregoing.
Section 2.11. Evidence of Debt. The Facility Agent shall
maintain a loan account (the "Loan Account") on its books in which shall be
recorded (a) all Advances owed to the Facility Agent (for the benefit of the
Lender, the Alternate Lender, the Liquidity Facility Providers or the Credit
Support Providers, as the case may be) by the Borrower pursuant to this
Agreement; (b) all payments made by the Borrower on all such Advances; and (c)
all appropriate debits and credits as provided in this Agreement including,
without limitation, all fees, charges, expenses and interest. All entries in the
Loan Account shall be made in accordance with the Facility Agent's customary
accounting practices as in effect from time to time. The entries in the Loan
Account shall be conclusive and binding for all purposes, absent manifest error.
Any failure to so record or any errors in doing so shall not, however, limit or
otherwise affect the obligation of the Borrower to pay any amount owing with
respect to the Advances or any of the other Obligations,
Section 2.12. Special Provisions Governing Advances. The
Borrower shall indemnify the Lender, the Alternate Lender, the Facility Agent,
the Liquidity Facility Providers and the Credit Support Providers, upon written
request (which request shall set forth in reasonable detail the basis for
requesting such amounts and which shall, absent manifest error, be presumed
correct and binding upon all parties hereto), for losses, expenses and
liabilities (including, without limitation, any loss (including interest paid)
sustained by it in connection with the liquidation or re-employment of funds
acquired to fund or maintain the Advances), that such Person may sustain: (a) if
for any reason other than the gross negligence or misconduct of the Lender, the
Alternate Lender, the Facility Agent, the Liquidity Facility Providers or the
Credit Support Providers (or any of them) a borrowing of any Advance does not
occur on a date specified therefor; (b)
35
if the Borrower elects, or is required by reason of a breach by the Borrower of
this Agreement, to prepay any Advance on a date other than the Maturity Date
applicable to that Advance; (c) as a consequence of any other default by the
Borrower to repay its Advances when required by the terms of this Agreement; or
(d) if the Lender assigns all or any part of its Advance(s) to a Liquidity
Facility Provider or a Credit Support Provider on a date that is not a
Settlement Date. Unless otherwise provided herein, the amount specified in the
written statement of the Lender, the Alternate Lender, the Facility Agent, the
Liquidity Facility Providers or the Credit Support Providers shall be payable on
demand after receipt by the Borrower thereof.
Section 2.13. Payments by the Borrower. All payments to be
made by the Borrower shall be made without set-off, recoupment or counterclaim.
Except as otherwise expressly provided herein, all payments by, or on behalf of,
the Borrower for the account of the Lender, the Alternate Lender, the Liquidity
Facility Providers or the Credit Support Providers, as the case may be, shall be
made to the Facility Agent, directly to the Payment Account, in United States
dollars. Such payments shall be made in immediately available funds so as to be
received by the Facility Agent no later than 1:00 p.m., Eastern time, on the
date specified herein. Payments shall be applied in the order of priority
specified in Section 2.05(c) hereof. Any payment which is received by the
Facility Agent later than 1:00 p.m., Eastern time, shall be deemed to have been
received on the following Business Day and any applicable interest or fee shall
continue to accrue.
Section 2.14. Payment of Stamp Taxes, Etc. The Borrower agrees
to pay any present or future stamp, mortgage, value-added, court or documentary
taxes or any other excise or property taxes, charges or similar levies imposed
by any federal, state or local governmental body, agency or instrumentality
(hereinafter referred to as "Other Applicable Taxes") relating to this
Agreement, any of the other Transaction Documents or any recordings or filings
made pursuant hereto and thereto and shall hold each of the Trustee, the
Eligible Lender Trustee, the Facility Agent, the Lender, the Alternate Lender,
the Liquidity Facility Providers and the Credit Support Providers harmless from
and against any and all liabilities with respect to or resulting from any delay
or omission to pay such Other Applicable Taxes.
Section 2.15. Yield Protection.
(a) If any Regulatory Change (including a change to
Regulation D under the Securities Exchange Act of 1933, as amended) occurring
after the date hereof:
(i) shall subject any Affected Party to any tax, duty or
other charge with respect to any portion of the Obligations owned or funded by
it or with respect to its unused "Purchase Commitment" under the Liquidity
Agreement or the Credit Support Agreement, as applicable (the "Unused
Commitment") (other than taxes, duties or charges based on income or gross
receipts), or shall change the basis of taxation (other than taxes based on
income or gross receipts) of payments to the Affected Party of any yield on or
reductions to the Obligations owed to or with respect to the Obligations funded
in whole or in part by it or any other amounts due under this Agreement in
respect of any portion of the Obligations owned by or funded by it or its
obligations or rights, if
36
any, to fund Advances or in respect of its Unused Commitment (except for changes
in the rate of tax on the overall net income or gross receipts of such Affected
Party imposed by the United States of America, by the jurisdiction in which such
Affected Party's principal executive office is located and, if such Affected
Party's principal executive office is not in the United States of America, by
the jurisdiction where such Affected Party's principal office in the United
States is located);
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any reserve imposed by the Federal Reserve
Board), special deposit or similar requirement against assets of any Affected
Party, deposits or obligations with or for the account of any Affected Party or
with or for the account of any Affiliate (or entity deemed by the Federal
Reserve Board to be an affiliate) of an Affected Party, or credit extended to
any Affected Party;
(iii) shall change the amount of capital maintained or
required or requested or directed to be maintained by any Affected Party;
(iv) shall impose any other condition affecting any
portion of the Obligations owned or funded in whole or in part by any Affected
Party, or its obligations or rights, if any, to pay any portion of the Unused
Commitment or to provide funding therefor; or
(v) shall change the rate for, or the manner in which the
Federal Deposit Insurance Corporation (or any successor thereto) assesses
deposit insurance premiums or similar charges;
and the result of any of the foregoing is or would be:
(A) to increase the cost to or to impose a cost
on an Affected Party funding or making or maintaining any portion of the
Obligations, or any purchases, reinvestments or loans or other extensions of
credit under the Liquidity Agreement, the Credit Support Agreement or any
Transaction Document or any commitment of such Affected Party with respect to
the foregoing;
(B) to reduce the amount of any sum received or
receivable by an Affected Party under this Agreement, or under the Liquidity
Agreement, the Credit Support Agreement or any Transaction Document with respect
thereto; or
(C) in the sole determination of such Affected
Party, to reduce the rate of return on the capital of an Affected Party as a
consequence of its obligations hereunder, under the Liquidity Agreement or under
the Credit Support Agreement or arising in connection herewith to a level below
that which the Affected Party could otherwise have achieved;
then within 30 days after demand by such Affected Party (which demand shall be
accompanied by a statement setting forth in reasonable detail the basis of such
demand), the Borrower shall pay directly to such Affected Party such additional
amount or amounts as will compensate such Affected Party for such additional or
increased cost or such
37
reduction; provided such additional amount or amounts shall not be payable with
respect to any period in excess of 180 days prior to the date of demand by the
Affected Party unless (1) the effect of the Regulatory Change is retroactive by
its terms to a period prior to the date of the Regulatory Change, in which case
any additional amount or amounts shall be payable for the retroactive period but
only if the Affected Party provides its written demand not later than 180 days
after the Regulatory Change; or (2) the Affected Party reasonably and in good
faith did not believe the Regulatory Change resulted in such an additional or
increased cost or such a reduction.
(b) Each Affected Party will promptly notify the
Borrower, the Trustee and the Facility Agent of any event of which it has actual
knowledge which will entitle such Affected Party to any compensation pursuant to
this Section; provided, however, no failure or delay in giving such notification
shall adversely affect the rights of any Affected Party to such compensation
unless such failure or delay results in a Material Adverse Effect.
(c) In determining any amount provided for or referred to
in this Section, an Affected Party may use any reasonable averaging or
attribution methods that it (in its sole discretion exercised in good faith)
shall deem applicable and which it applies on a consistent basis. Any Affected
Party when making a claim under this Section shall submit to the Borrower and
the Facility Agent a statement as to such increased cost or reduced return
(including calculation thereof in reasonable detail), which statement shall, in
the absence of manifest error, be conclusive and binding upon the Borrower and
the Facility Agent.
Section 2.16. Extension of Termination Date.
(a) The Termination Date may be extended beyond June 1,
2005 by a written agreement among the Borrower, the Lender and the Facility
Agent, with notice to the Trustee and the Eligible Lender Trustee.
(b) The Alternate Lender Termination Date may be extended
beyond June 1, 2003 or the date to which it has then been extended by written
agreement of the Alternate Lender and the Borrower, provided that if the
Alternate Lender is comprised of more than one Person and all such Persons do
not agree to extend the Alternate Lender Termination Date, the Alternate Lender
Termination Date may be extended if (i) the rights and obligations of the
Alternate Lender who does not agree to extend are assigned to another Person
pursuant to Section 10.04 hereof or (ii) the Maximum Facility Amount is reduced
such that the Person(s) who remain the Alternate Lender are obligated to fund
the entire Maximum Facility Amount.
ARTICLE III
CONDITIONS OF ADVANCES
Section 3.01. Conditions Precedent to Initial Advance. The
initial Advance hereunder was subject to the condition precedent that the
Facility Agent shall
38
have received on or before the Advance Date the documents and opinions listed in
Exhibit 1 hereto, in form and substance satisfactory to the Facility Agent.
Section 3.02. Conditions Precedent to All Advances. Each
Advance (including the initial Advance) shall be subject to the further
conditions precedent that:
(a) The Eligible Loans are or were purchased pursuant to
a Student Loan Purchase Agreement in the form of Exhibit A or Exhibit I hereto
and a schedule of the Eligible Loans to be financed and copies of all schedules,
opinions, financing statements and other documents required to be delivered by
the applicable Seller are delivered to the Trustee;
(b) if any Eligible Loan to be financed was previously
financed by the Borrower in another facility (including under a Covered
Indenture), a Notice of Release with respect to such Eligible Loan(s) executed
by the secured party under such facility to be delivered to the Facility Agent
and the Trustee;
(c) at least four Business Days prior to the Advance Date
(other than with respect to a Rollover Advance or a Special Advance), the
Borrower shall have delivered to the Facility Agent and the Trustee (i) an
Advance Percentage Calculation Report from the Valuation Agent and (ii) only
upon request by the Facility Agent, copies of the relevant Student Loan Purchase
Agreement, together with a schedule of the Eligible Loans to be financed and
copies of all schedules, opinions, financing statements and other documents
required to be delivered by the applicable Seller as a condition of purchase
thereunder; and
(d) on the Advance Date, the following statements shall
be true, and the Borrower by accepting the amount of such Advance shall be
deemed to have certified that:
(i) the representations and warranties contained in
Article IV hereof are correct on and as of such day as though made on and as of
such date;
(ii) no event has occurred and is continuing, or would
result from such Advance, which constitutes an Event of Default or which, with
the giving of notice or the passage of time, or both, would constitute an Event
of Default;
(iii) on and as of such day, after giving effect to such
Advance, the Outstanding Facility Amount would not exceed the Maximum Facility
Amount;
(iv) no law or regulation shall prohibit, and no order,
judgment or decree of any Governmental Authority shall prohibit or enjoin, the
making of such Advances in accordance with the provisions hereof; and
(v) the Cash Reserve Requirement shall be satisfied.
Section 3.03. Conditions Precedent to Effectiveness. This
Agreement shall be effective on the date (the "Effectiveness Date") on which the
Facility Agent shall
39
have received the documents and opinions listed in Exhibit J hereto, in form and
substance satisfactory to the Facility Agent. Written notification of the
Effectiveness Date shall be given to the Trustee by the Facility Agent.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01. General Representations and Warranties of the
Borrower. The Borrower represents and warrants as follows:
(a) The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the State of Nebraska and is
duly qualified to do business, and is in good standing, in every jurisdiction in
which the nature of its business requires it to be so qualified.
(b) The execution, delivery and performance by the
Borrower of this Agreement and all Transaction Documents to be delivered by it
in connection herewith or therewith, including the Borrower's use of the
proceeds of Advances, are within the Borrower's organizational powers, (i) have
been duly authorized by all necessary organizational action, (ii) do not
contravene (A) the Borrower's articles of incorporation or bylaws; (B) any law,
rule or regulation applicable to the Borrower; (C) any contractual restriction
binding on or affecting the Borrower or its property; or (D) any order, writ,
judgment, award, injunction or decree binding on or affecting the Borrower or
its property, (iii) do not result in a breach of any indenture, agreement, lease
or other instrument to which the Borrower is a party, and (iv) do not result in
or require the creation of any lien, security interest or other charge or
encumbrance upon or with respect to any of its properties (other than in favor
of the Trustee for the benefit of the Secured Creditors with respect to the
Pledged Collateral); and no transaction contemplated hereby or by the other
Transaction Documents to which it is a party requires compliance with any bulk
sales act or similar law. This Agreement and the other Transaction Documents to
which it is named as a party have each been duly executed and delivered by the
Borrower.
(c) No authorization or approval or other action by, and
no notice to or filing with, any Governmental Authority is required for the due
execution, delivery and performance by the Borrower of this Agreement or any
other Transaction Document to which it is a party, except for the filing of
certain UCC financing statements, all of which financing statements have been
duly filed and are in full force and effect.
(d) This Agreement and each other Transaction Document to
which the Borrower is a party constitute the legal, valid and binding
obligations of the Borrower enforceable against the Borrower in accordance with
their respective terms, subject to (i) applicable bankruptcy, insolvency,
moratorium, or other similar laws affecting the rights of creditors; and (ii)
general principals of equity, whether such enforceability is considered in a
proceeding in equity or at law.
40
(e) There is no pending or, to the knowledge of the
Borrower, threatened, action or proceeding affecting the Borrower before any
Governmental Authority that may have a Material Adverse Effect.
(f) No proceeds of any Advances will be used by the
Borrower to acquire any security in any transaction which is subject to Section
13 or 14 of the Securities Exchange Act of 1934, as amended.
(g) The Pledged Collateral shall, at all times, be owned
by the Borrower (or the Eligible Lender Trustee) free and clear of any Adverse
Claim except as provided herein, and the Trustee, for the benefit of the Secured
Creditors, has a valid and perfected first priority security interest in such
Pledged Collateral. No effective financing statement or other instrument similar
in effect covering any Pledged Collateral shall at any time be on file in any
recording office except such as may be (i) filed in favor of the Trustee
relating to this Agreement, (ii) filed in favor of the trustee under a Covered
Indenture, but under which such trustee has released its security interest in
any Financed Loan financed hereunder, or (iii) terminated.
(h) As of the close of business on each Business Day, the
Outstanding Facility Amount shall not exceed the Maximum Facility Amount on such
Business Day.
(i) No Valuation Report (to the extent that information
contained therein is supplied by the Borrower), information, exhibit, financial
statement, document, book, record or report furnished or to be furnished by the
Borrower to the Facility Agent or the Trustee in connection with this Agreement
is or will be inaccurate in any material respect as of the date it is or shall
be dated or (except as otherwise disclosed to the Facility Agent in writing) as
of the date so furnished, and no such document contains or will contain any
material misstatement of fact or omits or shall omit to state a material fact
necessary to make the statements contained therein not misleading.
(j) The principal place of business and chief executive
office of the Borrower and the office where the Borrower keeps all the Records
are located at the address of the Borrower referred to in Section 10.02 hereof
or such other location as the Borrower shall have given notice of to the
Facility Agent pursuant to Section 5.13 hereof.
(k) The Borrower has no trade names, fictitious names,
assumed names or "doing business as" names or other names under which it has
done or is doing business.
(1) The Borrower is Solvent at the time of (and
immediately after) each "Advance" and each purchase of Eligible Loans made by
the Borrower.
(m) The Borrower is not an "investment company" or a
company "controlled" by an "investment company," within the meaning of the
Investment Company Act of 1940, as amended.
41
(n) The Borrower has directed (or caused to be directed)
all Servicers to transmit Collections on the Financed Loans and the other
Pledged Collateral to the Trustee for deposit to the Collection Account or
Escrow Account, as applicable.
(o) All representations and warranties of the Borrower
set forth in the Transaction Documents to which it is a party are true and
correct in all material respects.
(p) Each Student Loan to be financed with the proceeds of
any Advance constitutes an Eligible Loan as of the date of such Advance and of
the date purchased from a Seller pursuant to a Student Loan Purchase Agreement.
(q) The Borrower is not in violation of, or default
under, any law, rule, regulation, order, writ, judgment, award, injunction or
decree binding upon it or affecting the Borrower or its property or any
indenture, agreement, lease or instrument.
(r) The Borrower has incurred no Debt and has no other
obligation or liability which is not a limited obligation of the Borrower,
payable solely from a discrete and specific pool of collateral (which does not
include any of the Pledged Collateral).
Section 4.02. Representations of the Borrower Regarding the
Trustee's Security Interest. The Borrower hereby represents and warrants for the
benefit of the Trustee and the Secured Creditors as follows:
(a) This Agreement creates a valid and continuing
security interest (as defined in the applicable Uniform Commercial Code in
effect in the State of Nebraska) in the Pledged Collateral in favor of the
Trustee, which security interest is prior to all other liens, charges, security
interests, mortgages or other encumbrances, and is enforceable as such as
against creditors of and purchasers from the Borrower.
(b) The Higher Education Act deems the Financed Loans to
constitute "accounts" within the meaning of the applicable UCC for purposes of
perfecting a security interest in the Financed Loans.
(c) The Borrower, by and through the Eligible Lender
Trustee, owns and has good and marketable title to the Financed Loans free and
clear of any Adverse Claim.
(d) The Borrower has caused the filing of all appropriate
financing statements in the proper filing office in the appropriate
jurisdictions under applicable law in order to perfect the security interest in
the Financed Loans granted to the Trustee hereunder.
(e) All executed copies of each Student Loan Note that
constitute or evidence the Financed Loans have been delivered to the Trustee (or
its agent or bailee pursuant to a Servicing Agreement or a Custodian Agreement).
(f) Other than the security interest granted to the
Trustee pursuant to this Agreement and the security interest granted to the
trustee under a Covered Indenture
42
which has been released, the Borrower has not pledged, assigned, sold, granted a
security interest in, or otherwise conveyed any of the Financed Loans. The
Borrower has not authorized the filing of and is not aware of any financing
statements against the Borrower that include a description of collateral
covering the Financed Loans other than any financing statement (i) relating to
the security interest granted to the Trustee hereunder, (ii) relating to the
security interest granted to the trustee under a Covered Indenture, under which
such trustee has released its security interest in any Financed Loans financed
hereunder or (iii) that has been terminated. The Borrower is not aware of any
judgment or tax lien filings against the Borrower.
(g) The Borrower is a "registered organization" (as
defined in Section 9-102(a)(70) of the UCC) formed in the State of Nebraska and,
for purposed of Article 9 of the UCC, the Borrower is located in the State of
Nebraska.
Section 4.03. Representations of the Eligible Lender Trustee.
The Eligible Lender Trustee hereby represents and warrants for the benefit of
the Trustee and the Secured Creditors as follows:
(a) It is a national banking association duly organized
and validly existing in good standing under the laws of the United States. It
has all requisite corporate power and authority to execute and deliver this
Agreement.
(b) It is an "eligible lender" as such term is defined in
Section 435(d) of the Higher Education Act.
ARTICLE V
COVENANTS OF THE BORROWER
Section 5.01. General Covenants.
(a) Compliance with Laws; Preservation of Corporate
Existence. The Borrower will comply in all material respects with all applicable
laws, rules, regulations and orders and preserve and maintain its legal
existence, and will preserve and maintain its rights, franchises, qualifications
and privileges in all material respects.
(b) Sales, Liens, Etc. Except as otherwise provided
herein, the Borrower will not (or permit the Eligible Lender Trustee to) sell,
assign (by operation of law or otherwise) or otherwise dispose of, or create or
suffer to exist any Adverse Claim upon or with respect to, any Pledged
Collateral.
(c) General Reporting Requirements. The Borrower will
provide to the Facility Agent the following:
(i) as soon as available and in any event within 120 days
after the end of each fiscal year of the Borrower, a copy of the balance sheet
of the Borrower and the related statements of income, beneficial interest
holders' (or securityholders') equity and cash flows for such year, each
prepared in accordance with GAAP consistently applied
43
and duly certified by nationally recognized independent certified public
accountants selected by the Borrower;
(ii) as soon as possible and in any event within three
days after the occurrence of each Event of Default and each event which, with
the giving of notice or lapse of time or both, would constitute an Event of
Default, a statement of the Borrower setting forth details of such Event of
Default or event and the action which the Borrower has taken and proposes to
take with respect thereto;
(iii) promptly following receipt thereof, to the extent
requested by the Facility Agent, copies of all financial statements, settlement
statements, portfolio and other material reports, notices, disclosures,
certificates and other written material delivered or made available to the
Borrower by any Person pursuant to the terms of any Transaction Document;
(iv) promptly following the Facility Agent's request
therefor, such other information respecting the Financed Loans and the other
Pledged Collateral or the conditions or operations, financial or otherwise, of
the Borrower as the Facility Agent may from time to time reasonably request;
(v) with respect to each Guarantor, promptly after
receipt thereof as made available to the Borrower after request therefor, copies
of any audited financial statements of such Guarantor certified by an
independent certified public accounting firm and a written statement setting
forth the Trigger Rate of such Guarantor and the source of the Borrower's
representation thereof;
(vi) with respect to each Servicer and promptly after
receipt thereof after a good faith effort to obtain such material is made by the
Borrower, (A) copies of any annual audited financial statements of such
Servicer, certified by an independent certified public accounting firm; (B) on
an annual basis within 10 days after receipt thereof, copies of SAS 70 reports
for such Servicer, or, if not available, the annual compliance audit for each
Servicer required by Section 428(b)(l)(4) of the Higher Education Act; and (C)
to the extent not included in the financial information provided pursuant to
clauses (A) and (B) above, such Servicer's net dollar loss for the year due to
servicing errors;
(vii) upon request, a Schedule of Financed Loans
(indicating which Financed Loans are Higher SAP Loans);
(viii) as soon as available and in any event within 120 days
after the end of each fiscal year of Nelnet, Inc., copies of consolidated
financial statements for it and its consolidated subsidiaries, together with
stand-alone financial statements of the Borrower, each prepared in accordance
with generally accepted accounting principles, duly certified by independent
certified public accountants of recognized standing selected by it, including,
in the case of Nelnet, Inc., consolidating statements;
(ix) promptly after the filing or receiving thereof,
copies of all reports and notices with respect to any Reportable Event defined
in Article IV of ERISA which
44
the Borrower or any of its ERISA Affiliates files under ERISA with the Internal
Revenue Service, the Pension Benefit Guarantee Corporation or the U.S.
Department of Labor or which the Borrower or any of its ERISA Affiliates
receives from the Pension Benefit Guarantee Corporation;
(x) immediately upon becoming aware of a Servicer Event
of Default, written notice thereof;
(xi) as soon as possible and in any event within three
Business Days of the Borrower's actual knowledge thereof, written notice of (A)
any litigation, investigation or proceeding which may exist at any time which
could have a Material Adverse Effect; and (B) any material adverse development
in previously disclosed litigation, including in each case, if known to the
Borrower, any of the same against a Servicer; and
(xii) promptly after the occurrence thereof, written notice
of changes in the Higher Education Act or any other law of the United States
that could have a Material Adverse Effect or could materially and adversely
affect (A) the ability of a Servicer to perform its obligations under its
Servicing Agreement, or (B) the collectibility or enforceability of a material
amount of the Financed Loans, or any Guarantee Agreement or Federal
Reimbursement Contract with respect to a material amount of Financed Loans.
(d) Merger, Etc. The Borrower will not merge or
consolidate with, or convey, transfer, lease or otherwise dispose of (whether in
one transaction or in a series of transactions), all or substantially all of its
assets (whether now owned or hereafter acquired), or acquire all or
substantially all of the assets or capital stock or other ownership interest of
any Person, other than, with respect to asset dispositions, in connection
herewith.
(e) Nature of Business. The Borrower will engage in no
business other than (i) purchases, sales and financings of Eligible Loans and
(ii) the other transactions permitted or contemplated by this Agreement and its
articles of incorporation and bylaws as they exist on the Closing Date, or as
amended with the consent of the Facility Agent.
(f) Transaction Documents. The Borrower (i) will take
all action necessary to perfect, protect and more fully evidence the ownership
interest of the Borrower and the security interest of the Trustee in favor of
the Secured Creditors in the Financed Loans and Collections with respect thereto
and in the other Pledged Collateral and the Transaction Documents including,
without limitation, (A) filing and maintaining effective financing statements
(Form UCC-1) in all necessary or appropriate filing offices; (B) filing
continuation statements, amendments or assignments with respect thereto in such
filing offices; (C) filing amendments, releases and terminations with respect to
filed financing statements, as necessary; and (D) executing or causing to be
executed such other instruments or notices as may be necessary or appropriate;
and (ii) will take all additional action to perfect, protect and fully evidence
the security interest of
45
the Trustee, for the benefit of the Secured Creditors, in the Financed Loans and
other Pledged Collateral related thereto.
(g) Maintenance of Separate Existence. The Borrower will
do all things necessary to maintain its existence as a Nebraska corporation
separate and apart from all Affiliates of the Borrower, including, without
limitation, (i) practicing and adhering to corporate formalities, such as
maintaining appropriate books and records; (ii) maintaining two Persons who are
Independent Directors; (iii) owning or leasing pursuant to written leases all
office furniture and equipment necessary to operate its business; (iv)
refraining from (A) guaranteeing or otherwise becoming liable for any
obligations of any of its Affiliates, (B) having obligations guaranteed by its
Affiliates, (C) holding itself out as responsible for debts of any of its
Affiliates or for decisions or actions with respect to the affairs of any of its
Affiliates, and (D) being directly or indirectly named as a direct or contingent
beneficiary or loss payee on any insurance policy of any Affiliate; (v)
maintaining all of its deposit and other bank accounts and all of its assets
separate from those of any other Person; (vi) maintaining all of its financial
records separate and apart from those of any other Person; (vii) compensating
all its employees, officers, directors, consultants and agents for services
provided to it by such Persons, or reimbursing any of its Affiliates in respect
of services provided to it by employees, officers, directors, consultants and
agents of such Affiliate, out of its own funds; (viii) accounting for and
managing all of its liabilities separately from those of any of its Affiliates,
including, without limitation, payment directly by the Borrower of all payroll,
accounting and other administrative expenses and taxes; (ix) allocating, on an
arm's-length basis, all shared operating services, leases and expenses,
including, without limitation, those associated with the services of shared
consultants and agents and shared computer equipment and software; (x)
refraining from paying dividends or making distributions, loans or other
advances to any of its Affiliates more frequently than once during any calendar
month and, in each case, as duly authorized by its Directors and in accordance
with applicable law; (xi) refraining from filing or otherwise initiating or
supporting the filing of a motion in any bankruptcy or other insolvency
proceeding involving the Borrower or any other Affiliate of the Borrower to
substantively consolidate the assets and liabilities of the Borrower with the
assets and liabilities of any such Person or any other Affiliate of the
Borrower; (xii) maintaining adequate capitalization in light of its business and
purpose; and (xiii) conducting all of its business (whether written or oral)
solely in its own name.
(h) Transactions with Affiliates. The Borrower will not
enter into, or be a party to, any transaction with any of its Affiliates, except
(i) the transactions permitted or contemplated by this Agreement (including the
sale and purchase of Eligible Loans to or from Affiliates); and (ii) other
transactions (including, without limitation, the lease of office space or
computer equipment or software by the Borrower to or from an Affiliate) (A) in
the ordinary course of business, (B) pursuant to the reasonable requirements of
the Borrower's business, (C) upon fair and reasonable terms that are no less
favorable to the Borrower than could be obtained in a comparable arm's-length
transaction with a Person not an Affiliate of the Borrower, and (D) not
inconsistent with the factual assumptions set forth in the opinion letters
issued as of the Closing Date and the Effectiveness Date by Xxxxx Xxxx LLP to
the Secured Creditors relating to the issues of substantive consolidation.
46
(i) Debt; No Petition, (i) Except as provided in the
Borrower's articles of incorporation, the Borrower will not incur any Debt other
than Debt arising hereunder and Debt the payment of which is a limited recourse
obligation of the Borrower, payable solely from a discrete and specific pool of
Collateral (which does not include ant of the Pledged Collateral).
(ii) The Borrower will not incur any Debt or agree to any
obligation after the Effectiveness Date unless each creditor with respect to
such Debt or each Person to whom the Borrower may be obligated agrees not to
institute (or join any other Person in instituting) any bankruptcy proceedings
against the Borrower until one year and one day after all of the Borrower's Debt
shall have been repaid.
(j) Extension or Amendment of Transaction Documents.
Without the written consent of the Facility Agent, the Borrower will not (or
permit any of its agents to):
(i) cancel, terminate, extend, amend, modify or waive (or
consent to or approve any of the foregoing) any provision of any Transaction
Document;
(ii) cancel, terminate, extend, amend, modify or waive (or
consent to or approve any of the foregoing) any provision of the Indemnification
Agreement, any Student Loan Purchase Agreement, any Servicing Agreement, any
Custodian Agreement, any Financed Loan or any other instrument, document or
agreement included in the Pledged Collateral in any manner that (A) may reduce
the amount owing by the Obligor under a Financed Loan, by a Servicer, or defer
or extend the date scheduled for the final payment thereof, except for
extensions of past-due Financed Loans entered into by a Servicer in accordance
with the Higher Education Act in order to maximize Collections thereof; or (B)
may permit or result in the release of any portion of the Pledged Collateral;
(iii) take or consent to any other action that may impair
the rights of any Secured Creditor to any Pledged Collateral or modify, in a
manner adverse to any Secured Creditor, the right of such Secured Creditor to
demand or receive payment under any of the Transaction Documents; or
(iv) take or consent to any other action that may impair
the interests of the Borrower or its assignees to any Pledged Collateral or
modify, in a manner adverse to the Borrower or its assignees, the right of the
Borrower and its assignees to demand or receive payment under any of the
Transaction Documents.
(k) ERISA. The Borrower will not adopt, maintain,
contribute to or incur or assume any legal obligation with respect to any
Benefit Plan or Multiemployer Plan or permit any of its ERISA Affiliates to do
any of the foregoing.
(1) Servicers. The Borrower will not permit any Person
other than a Servicer to collect, service or administer the Financed Loans.
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(m) Eligible Loans Not Originated by Sellers. The
Borrower shall not purchase from a Seller pursuant to a Student Loan Purchase
Agreement any Eligible Loan that was originated by a Person other than the
applicable Seller unless the Borrower shall have taken (or caused to be taken)
all steps reasonably necessary to ensure that (i) after giving effect to such
purchase, the Borrower shall have acquired all legal and beneficial ownership in
such Financed Loan, free and clear of any Adverse Claim; and (ii) that the
Person that originated such Eligible Loan (and any transferee thereof other than
the Seller) shall have received reasonable equivalent value for the transfer of
such Eligible Loan made by it.
Section 5.02. Acquisition, Financing, Collection and
Assignment of Student Loans. The Borrower shall acquire or finance only Eligible
Loans (or beneficial interests therein) with proceeds of the Advances and shall
diligently cause to be collected all principal and interest payments on all the
Financed Loans and all sums to which the Borrower or Trustee is entitled
pursuant to any Student Loan Purchase Agreement, and all grants, subsidies,
donations, Special Allowance Payments and all defaulted payments Guaranteed by
any Guarantor which relate to such Financed Loans. The Borrower shall also make,
or cause to be made by the Eligible Lender Trustee, each Seller, Servicer and
Trustee, every effort to collect the Borrower's, the Eligible Lender Trustee's
or such Seller's, Servicer's or Trustee's claims for payment from the Department
of Education or any Guarantor as soon as possible, of all payments related to
such Financed Loans. The Borrower will assign or direct the assignment of such
Financed Loans for payment of guarantee benefits as required by applicable law
and regulations. The Borrower will comply with all United States and state
statutes, rules and regulations and any Guarantor's rules and regulations which
apply to such Financed Loans. The Borrower will not, and will not direct the
Trustee to, acquire or finance any Eligible Loan (including a Participation
Interest) for which it has notice or knowledge (a) of any Adverse Claims, liens
or encumbrances, (b) except to the extent that a Financed Loan may be not more
than 60 days delinquent, that any Financed Loan is overdue or has been
dishonored, (c) that any Student Loan Note contains an unauthorized signature or
has been altered, or (d) of any defense against or claim to the Financed Loans
on the part of any entity.
Section 5.03. Enforcement of Financed Loans. The Borrower
shall cause to be diligently enforced and taken all steps, actions and
proceedings reasonably necessary for the enforcement of all terms, covenants and
conditions of all Financed Loans and agreements in connection therewith,
including the prompt payment of all principal and interest payments and all
other amounts due the Borrower and Trustee, as applicable thereunder. The
Borrower shall not permit the release of the obligations of any Eligible
Borrower under any Financed Loan and shall at all times, to the extent permitted
by law, cause to be defended, enforced, preserved and protected the rights and
privileges of the Borrower, the Eligible Lender Trustee, the Trustee and the
Secured Creditors under or with respect to each Financed Loan and agreement in
connection therewith. The Borrower shall not consent or agree to or permit any
amendment or modification of any Financed Loan or agreement in connection
therewith which will in any manner materially adversely affect the rights or
security of the Trustee, the Eligible Lender Trustee or the Secured Creditors
(with respect to the rights of the Secured
48
Creditors, without the approval of the Facility Agent, which approval shall not
be unreasonably withheld). Nothing in this Agreement shall be construed to
prevent the Borrower, the Eligible Lender Trustee and Trustee, as applicable,
from settling a default or curing a delinquency on any Financed Loan on such
terms as shall be permitted by law.
Section 5.04. Enforcement of Servicing Agreements. The
Borrower shall cause to be diligently enforced and taken all reasonable steps,
actions and proceedings necessary for the enforcement of all terms, covenants
and conditions of all Servicing Agreements, including the prompt payment of all
principal and interest payments and all other amounts due the Borrower or
Trustee, as applicable, thereunder, including all grants, subsidies, donations,
Special Allowance Payments and all defaulted payments Guaranteed by any
Guarantor and/or by the Department of Education which relate to any Financed
Loans. The Borrower shall not permit the release of the obligations of any
Servicer under any Servicing Agreement and shall at all times, to the extent
permitted by law, cause to be defended, enforced, preserved and protected the
rights and privileges of the Borrower, the Eligible Lender Trustee and the
Trustee under or with respect to each Servicing Agreement. The Borrower shall
not consent or agree to or permit any amendment or modification of any Servicing
Agreement which will in any manner materially adversely affect the rights or
security of the Trustee, the Eligible Lender Trustee and the Secured Creditors
(with respect to the rights of the Secured Creditors, without the approval of
the Facility Agent, which approval shall not be unreasonably withheld), except
(a) as required by the Higher Education Act; (b) solely for the purpose of
extending the term thereof or adding to the Financed Loans serviced thereunder
Eligible Loans financed under an indenture or similar agreement other than this
Agreement; and/or (c) in any other manner, if such modification, amendment or
supplement so made without the prior written consent of the Facility Agent shall
not be effective with respect to the servicing of Financed Loans; provided,
however, that the Facility Agent shall respond as promptly as may be practicable
after receipt by the Facility Agent of a request of the Borrower for the
Facility Agent's consent to any modification, amendment or supplement of, or any
waiver with respect to, any provision of any Servicing Agreement.
Section 5.05. Enforcement of Student Loan Purchase
Agreements. The Borrower shall cause to be diligently enforced and taken all
reasonable steps, actions and proceedings necessary for the enforcement of all
terms, covenants and conditions of all Student Loan Purchase Agreements,
including, without limitation, the repurchase obligation thereunder, and shall
take all reasonable direction of the Facility Agent as to the enforcement of
such terms, covenants and conditions. The Borrower shall not permit the release
of the obligations of any Seller under any Student Loan Purchase Agreement or
the assignment by any Seller of any of its rights or obligations under any
Student Loan Purchase Agreement, and shall at all times, to the extent permitted
by law, cause to be defended, enforced, preserved and protected the rights and
privileges of the Borrower, the Eligible Lender Trustee and the Trustee under or
with respect to each Student Loan Purchase Agreement. The Borrower shall not
consent or agree to or permit any waiver of any provision of any Student Loan
Purchase Agreement or any amendment or modification of any Student Loan Purchase
Agreement which will in any manner
49
materially adversely affect the rights or security of the Trustee, the Eligible
Lender Trustee and the Secured Creditors (with respect to the rights of the
Secured Creditors, without the approval of the Facility Agent, which approval
shall not be unreasonably withheld); provided, however, that the Facility Agent
shall respond as promptly as may be practicable after receipt by the Facility
Agent of a request of the Borrower for the Facility Agent's consent to any
modification, amendment or supplement of, or any waiver with respect to, any
provision of any Student Loan Purchase Agreement.
Section 5.06. Enforcement of Indemnification Agreement. The
Borrower shall cause to be diligently enforced and taken all reasonable steps,
actions and proceedings necessary for the enforcement of all terms, covenants
and conditions of the Indemnification Agreement. The Borrower shall not permit
the release of the obligations of NELnet under the Indemnification Agreement and
shall at all times, to the extent permitted by law, cause to be defended,
enforced, preserved and protected the rights and privileges of the Borrower and
of the Trustee under or with respect to the Indemnification Agreement. The
Borrower shall not consent or agree to or permit any amendment or modification
of the Indemnification Agreement which will in any manner materially adversely
affect the rights or security of the Trustee and the Secured Creditors (with
respect to the rights of the Secured Creditors, without the approval of the
Facility Agent, which approval shall not be unreasonably withheld); provided,
however, that the Facility Agent shall respond as promptly as may be practicable
after receipt by the Facility Agent of a request of the Borrower for the
Facility Agent's consent to any modification, amendment or supplement of, or any
waiver with respect to, any provision of the Indemnification Agreement.
Section 5.07. Financed Loans Serviced by Great Lake Servicing
Corporation. The outstanding Principal Balance of Financed Loans serviced by
Great Lakes Educational Loan Services, Inc. shall not exceed 10% of the
aggregate outstanding Principal Balance of all Financed Loans.
Section 5.08. Administration and Collection of Financed
Loans. All Financed Loans shall be administered and collected either by the
Borrower or by a Servicer in a competent, diligent and orderly fashion and in
accordance with all requirements of the Higher Education Act, the Department of
Education, this Agreement, the Federal Reinsurance Agreements, the Trustee
Guarantee Agreements and any other guarantee agreement issued by any Guarantor
to the Trustee or the Eligible Lender Trustee. The Trustee shall not be
accountable or responsible in any manner whatsoever for any action of the
Borrower, the depository bank of any funds of the Borrower, the Facility Agent,
the Eligible Lender Trustee, or the Servicer or Custodian while the Servicer or
Custodian is acting as bailee or agent of the Trustee, with respect to the
Financed Loans, for actions taken in compliance with any instruction or
direction given to the Trustee, or for the application of funds or money by the
Servicer until such time as funds are received by the Trustee. The Trustee shall
have no duty to monitor or supervise any actions relating to the Servicer's
obligations under any Servicing Agreement.
Section 5.09. Amendment of Form of Student Loan Purchase
Agreement. The Borrower shall notify the Trustee, the Eligible Lender Trustee
and the Facility Agent
50
in writing of any proposed material amendments to the form of Student Loan
Purchase Agreement. No such amendment shall become effective unless and until
the Facility Agent has consented in writing thereto (which consent shall not be
unreasonably withheld).
Section 5.10. Custodian. Each Custodian shall hold the
Student Loan Notes in a safe and secure manner for purposes of perfecting the
security interest in and lien on such Financed Loans as herein provided. The
Student Loan Notes shall be held in a limited access vault facility with a
two-hour fire rating and shall be assigned a designation which is distinct from
other promissory notes held to secure any other financings of the Borrower, if
any, for which the Trustee acts in a fiduciary capacity.
Section 5.11. Prepayments and Refinancing. The Borrower or its
Affiliates has entered into, and intend to enter into in the future, upon 7
days' prior written notice to the Trustee and the Facility Agent, agreements
pursuant to which the Borrower or an Affiliate may borrow moneys thereunder, and
pledge Financed Loans or its interest therein (previously pledged hereunder) to
secure the same, or sell Financed Loans or its interest therein (previously
pledged hereunder), none of which agreements constitute or will constitute an
Adverse Claim on the Financed Loans continuing to be Pledged Collateral.
Notwithstanding any provision to the contrary herein, if and to the extent the
Borrower or an Affiliate so borrows money or sells Financed Loans or its
interest therein, upon either (a) payment in full of, or (b) deposit of cash
into a segregated account maintained with the Trustee for the sole benefit of
the Secured Creditors, and in which the Trustee is granted a valid and perfected
first priority security interest subject to no other lien, claim or encumbrance
in an amount equal to, all Advances and other Obligations relating to such
Financed Loans and the Pledged Collateral or any interest therein affected by
such action (together with all accrued and unpaid Trustee Fees, Eligible Lender
Trustee Fees, Program Availability Fees, Program Usage Fees, Alternate Interest
Amounts and Liquidity Interest Amounts thereon together with all Trustee Fees,
Eligible Lender Trustee Fees, Program Availability Fees, Program Usage Fees,
Alternate Interest Amounts and Liquidity Interest Amounts which would accrue
through the end of the related Interest Periods) such Financed Loans shall no
longer be security for the Advances. Notwithstanding anything to the contrary
contained herein, without the prior written consent of the Facility Agent, in no
event shall any such payments occur (i) unless the Borrower has provided the
Facility Agent with a Valuation Report acceptable to the Facility Agent and
dated not more than three Business Days prior to proposed prepayment date, (ii)
if, after giving effect to such repayment and the release of the Trustee's
security interest in or removal from the Pledged Collateral of the related
Financed Loans, an Event of Default (or an event that with the passage of time
or the giving of notice, or both, would constitute an Event of Default) or the
requirements giving rise to a collateral call under any provision of this
Agreement would exist or result therefrom; and (iii) on a day other than a
Settlement Date.
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Section 5.12. Periodic Reporting.
(a) The Borrower will cause the Valuation Agent to
deliver to the Portfolio Administrator and the Facility Agent:
(i) not later than each Valuation Date, a Valuation
Report setting forth, among other things, the Loan Valuation Percentage; and
(ii) not later than four Business Days prior to each
Advance (other than a Rollover Advance or a Special Advance), an Advance
Percentage Calculation Report.
(b) The Borrower will cause the Portfolio Administrator
to deliver to the Valuation Agent and the Facility Agent, not later than each
Valuation Date, an Asset Coverage Report setting forth the Aggregate Market
Value, the Liabilities and the Asset Coverage Ratio.
(c) The Borrower will cause to be provided to the
Facility Agent and the Valuation Agent, (i) not later than the third Business
Day prior to each Calculation Date, a summary of each servicer report setting
forth the material characteristics of the Financed Loans, all as of the last day
of the immediately preceding calendar month; and (ii) not later than one
Business Day prior to each Calculation Date, (A) the balances in the Collection
Account (including a breakout of principal and interest received with respect to
the Financed Loans and an itemization of any Higher SAP Differentials received),
the Cash Reserve Account and the Escrow Account; and (B) the Liabilities, all as
of the last day of the immediately preceding calendar month.
Section 5.13. UCC Matters; Protection and Perfection of
Pledged Collateral: Delivery of Documents. The Borrower will keep its principal
place of business and chief executive office, and the office where it keeps the
Records, at the address of the Borrower referred to in Section 4.01(j) hereof
or, upon 30 days' prior written notice to the Trustee and the Facility Agent, at
such other locations within the United States where all actions reasonably
requested by the Facility Agent to protect and perfect the interest of the
Borrower and the Secured Creditors in the Pledged Collateral have been taken and
completed. The Borrower will not make any change to its name or use any
tradenames, fictitious names, assumed names, "doing business as" names or other
names, unless prior to the effective date of any such name change or use, the
Borrower delivers to the Facility Agent such executed financing statements as
the Facility Agent may request to reflect such name change or use, together with
such other documents and instruments as the Facility Agent may request in
connection therewith. The Borrower agrees that from time to time, at its
expense, it will promptly execute and deliver all further instruments and
documents, and take all further action that the Facility Agent may reasonably
request in order to perfect, protect or more fully evidence the Trustee's
interest in the Pledged Collateral for the benefit of the Secured Creditors, or
to enable the Trustee or the Secured Creditors to exercise or enforce any of
their respective rights hereunder. Without limiting the generality of the
foregoing, the Borrower will upon the request of the Facility Agent: (a) execute
and file such financing or
52
continuation statements, or amendments thereto or assignments thereof, and such
other instruments or notices, as may be necessary or appropriate or as the
Facility Agent may request, (b) xxxx its master data processing records
evidencing such Pledged Collateral with a legend acceptable to the Facility
Agent, evidencing that the Trustee, for the benefit of the Secured Creditors,
has acquired an interest therein as provided in this Agreement and (c) make
available to the Facility Agent any records or documents relating to any Covered
Indenture as are necessary for the Facility Agent to determine that the Trustee
has a first priority perfected security interest in the Pledged Collateral free
of any Adverse Claims. A carbon, photographic or other reproduction of this
Agreement or any financing statement covering the Pledged Collateral, or any
part thereof shall be sufficient as a financing statement. If the Borrower fails
to perform any of its agreements or obligations under this Section, the Facility
Agent or any Secured Creditor may (but shall not be required to) itself perform,
or cause performance of, such agreement or obligation, and the expenses of the
Facility Agent or such Secured Creditor incurred in connection therewith shall
be payable by the Borrower upon the Facility Agent's or such Secured Creditor's
demand therefor. For purposes, of enabling the Facility Agent, any such Secured
Creditor and the Trustee to exercise their respective rights described in the
preceding sentence and elsewhere in this Agreement, the Borrower and the
Eligible Lender Trustee hereby authorize, and irrevocably grant a power of
attorney to, the Facility Agent, the Secured Creditors, the Trustee and their
respective successors and assigns to take any and all steps in the Borrower's
and/or Eligible Lender Trustee's name and on behalf of the Borrower and/or the
Eligible Lender Trustee necessary or desirable, in the determination of the
Facility Agent, the Secured Creditors or the Trustee, as the case may be, to
collect all amounts due under any and all Financed Loans and other Pledged
Collateral, including, without limitation, endorsing the Borrower's and/or the
Eligible Lender Trustee's name on checks and other instruments representing
Collections and enforcing such Financed Loans and other Pledged Collateral.
Section 5.14. Obligations of the Borrower With Respect to
Pledged Collateral. The Borrower will (a) at its expense, regardless of any
exercise by any Secured Creditor of its rights hereunder, timely and fully
perform and comply with all provisions, covenants and other promises required to
be observed by it under the Transaction Documents included in the Pledged
Collateral to the same extent as if Pledged Collateral had not been pledged
hereunder; and (b) pay when due any taxes, including without limitation, sales
and excise taxes, payable in connection with the Pledged Collateral. In no event
shall any Secured Creditor have any obligation or liability with respect to any
Financed Loans or other instrument document or agreement included in the Pledged
Collateral, nor shall any of them be obligated to perform any of the obligations
of the Borrower or any of its Affiliates thereunder. The Borrower will timely
and fully comply in all respects with each Transaction Document.
Section 5.15. Collateral Call. The Borrower shall maintain at
all times the Minimum Asset Coverage Requirement. If the Borrower is notified by
the Valuation Agent (with a copy to the Trustee) that the Asset Coverage Ratio
is below the Minimum Asset Coverage Requirement, the Borrower shall deposit
cash, Eligible Loans (valued at no greater than the aggregate Principal Balance
thereon) or Permitted Investments, within three Business Days, or such other
period as agreed to by the Facility Agent in writing, of
53
receipt of notice from the Valuation Agent, in the Collection Account or the
Pledged Collateral, as applicable, the amount specified by the Valuation Agent
as necessary to meet the Minimum Asset Coverage Requirement. If the Borrower is
either unable or unwilling to deposit such funds, the Facility Agent may declare
a Termination Date to have occurred.
Section 5.16. Guarantor Limitations. The Borrower shall not
permit any Financed Loan to be guaranteed by any guaranty agency or entity other
than (a) those specifically named in the definition of the term "Trustee
Guarantee Agreements" in Section 1.01 hereof or (b) any other guaranty agency or
entity specifically approved as a Guarantor by the Facility Agent in advance in
writing.
Section 5.17. Covenants of the Borrower Regarding the
Trustee's Security Interest. The Borrower hereby covenants for the benefit of
the Trustee and the Secured Creditors as follows:
(a) The Trustee shall not waive any of the
representations and warranties set forth in Section 4.02 hereof.
(b) The Borrower shall take all steps necessary, and
shall cause each Servicer to take all steps necessary and appropriate, to
maintain the perfection and priority of the Trustee's security interest in the
Financed Loans.
ARTICLE VI
EVENTS OF DEFAULT
If any of the following events ("Events of Default") shall occur:
(a) the Borrower fails to pay any of its Obligations
under this Agreement or any of the other Transaction Documents when such
Obligations are due or are declared due and such failure shall remain unremedied
for one Business Day; or
(b) any representation or warranty made or deemed to be
made by the Borrower or the Eligible Lender Trustee (or any of their respective
officers) under or in connection with this Agreement or any other Transaction
Document, or other information or report delivered pursuant hereto or thereto
shall prove to have been false or incorrect in any material respect when made;
or
(c) the Borrower or the Eligible Lender Trustee shall
fail to perform or observe any other term, covenant or agreement contained in
any Transaction Document on its part to be performed or observed (other than in
Section 2.06 or 5.15 hereof) and any such failure shall remain unremedied for
three Business Days after written notice thereof shall have been received; or
(d) the Trustee, for the benefit of the Secured
Creditors, shall, for any reason, cease to have a valid and perfected first
priority security interest in any of the Pledged Collateral or the Borrower
shall, for any reason, cease to have a valid and
54
perfected first priority ownership interest in each Financed Loan and
Collections with respect thereto; or
(e) an Event of Bankruptcy shall have occurred with
respect to the Borrower; or
(f) entry of a judgment or judgments in the aggregate in
excess of $100,000 against the Borrower which are not (i) stayed, bonded,
vacated, paid or discharged within 30 days after entry; or (ii) fully covered by
insurance as to which the insurance carrier has acknowledged coverage to the
Borrower in writing within 30 days after entry; or
(g) (i) any litigation (including, without limitation,
derivative actions), arbitration proceedings or governmental proceedings
(whether or not existing on the date of execution hereof) not disclosed in
writing by the Borrower to the Facility Agent prior to the date of execution and
delivery of this Agreement is pending against the Borrower or an Affiliate
thereof; or (ii) any material development not so disclosed has occurred in any
litigation (including, without limitation, derivative actions), arbitration
proceedings or governmental proceedings so disclosed, which, in the case of
clause (i) or (ii) above, in the opinion of the Facility Agent, has a Material
Adverse Effect; or
(h) the Internal Revenue Service shall file notice of a
lien pursuant to Section 6323 of the Internal Revenue Code with regard to any of
the assets of the Borrower and such lien shall not have been released within 60
days, or the Pension Benefit Guarantee Corporation shall, or shall indicate its
intention to, file notice of a lien pursuant to Section 4068 of the Employee
Retirement Income Security Act of 1974 with regard to any of the assets of the
Borrower or any of its Affiliates and such lien shall not have been released
within 60 days; or
(i) a Servicer Event of Default shall have occurred or
any Servicing Agreement shall not be in full force and effect for any reason,
and, in either case, such Servicer or Servicing Agreement, as the case may be,
shall not be replaced by a Servicer or a Servicing Agreement, as the case may
be, acceptable to the Facility Agent within 60 days of such event; provided,
however, the foregoing event shall not be an "Event of Default" hereunder if
such Servicer Event of Default arises under a Servicing Agreement with a
Servicer that is not an Affiliate of the Seller and within the 30 days of the
occurrence of such event, all Financed Loans then serviced by such Servicer are
released from the Pledged Collateral in accordance with the terms of this
Agreement; or
(j) the Borrower shall fail to perform or observe the
covenants set forth in Section 2.06 or 5.15 hereof; or
(k) the occurrence of an event or circumstance that has a
Material Adverse Effect; or
(1) (i) one or more Liquidity Advances remain unpaid to
the Liquidity Facility Providers for 180 days after any drawing by the Lender
under the Liquidity Agreement, (ii) any Credit Support Advance (including any
Rollover Advances thereof)
55
remains funded by a Credit Support Provider for 180 days after such Credit
Support Advance is first made or (iii) any Regular Bank Advance (including a
Rollover Advance thereof) remains funded by the Alternate Lender for 180 days
after such Regular Bank Advance is first made; or
(m) the tangible book value of the assets (excluding
provisions for "good will") on a going concern basis of Nelnet and its
subsidiaries, on a consolidated basis, does not exceed the total amount of the
liabilities of Nelnet and its subsidiaries, on a consolidated basis, by at least
US $30,000,000; or
(n) Nelnet merges or consolidates its assets with any
other entity, or permits any subsidiary to merge or consolidate its assets with
any other entity, and such consolidated entity neither affirms all of the
Borrower's obligations under this Agreement nor demonstrates to the Facility
Agent that, after giving effect to such merger or consolidation, the tangible
book value of the assets (excluding provisions for "good will") on a going
concern basis of the consolidated entity and its subsidiaries, on a consolidated
basis, exceeds the total amount of the liabilities of the consolidated entity
and its subsidiaries, on a consolidated basis, by at least US $30,000,000; or
(o) Nelnet fails to perform any of its obligations under
the Indemnification Agreement; or
(p) information in any of the reports described in
Exhibits C, D, E or F hereto or in the reports described in the Valuation Agent
Agreement, shall prove to have been false or incorrect in any material respect
and such false or incorrect information shall remain uncorrected for three
Business Days after written notice thereof shall have been received;
then, and in any such event, the Facility Agent may, by notice to the Borrower
and the Trustee, declare the Termination Date to have occurred, whereupon all of
the Obligations shall become immediately due and payable, except that, in the
case of any event described in subsection (e) above, the Termination Date shall
be deemed to have occurred automatically upon the occurrence of such event and
all of the Obligations shall automatically become and be immediately due and
payable, without presentment, demand, protest or any notice of any kind, all of
which are hereby expressly waived by the Borrower. Upon any such declaration or
automatic occurrence, the Trustee and the Secured Creditors shall have, in
addition to all other rights and remedies under this Agreement or otherwise, all
other rights and remedies provided to a secured party under the UCC of the
applicable jurisdiction and other applicable laws, which rights shall be
cumulative. The rights and remedies of a secured party which may be exercised by
the Trustee and/or the Secured Creditors pursuant to this Article shall include,
without limitation, the right, without notice except as specified below, to
solicit and accept bids for and sell the Pledged Collateral or any part thereof
in one or more parcels at a public or private sale, at any exchange, broker's
board or at any of the Trustee's offices or elsewhere, for cash, on credit or
for future delivery, and upon such other terms as the Trustee or the Secured
Creditors may deem commercially reasonable. Any sale or transfer by the Trustee
and/or the Secured Creditors of Financed Loans shall only be
56
made to an Eligible Lender. The Borrower agrees that, to the extent notice of
sale shall be required by law, 10 Business Days' notice to the Borrower of the
time and place of any public sale or the time after which any private sale is to
be made shall constitute reasonable notification and that it shall be
commercially reasonable for the Trustee to sell the Pledged Collateral to an
Eligible Lender on an "as is" basis, without representation or warranty of any
kind. The Trustee shall not be obligated to make any sale of Pledged Collateral
regardless of notice of sale having been given and may adjourn any public or
private sale from time to time by announcement at the time and place fixed
therefor, and such sale may, without further notice, be made at the time and
place to which it was so adjourned. The Trustee shall be deemed to have notice
of an Event of Default only upon a Corporate Trust Officer of the Trustee being
notified, in writing, by the Borrower, the Facility Agent or a Secured Creditor
that such events have occurred. The Trustee shall be paid its outstanding
Trustee Fees prior to the distribution of any moneys received from the exercise
of any remedies pursuant to this Article.
ARTICLE VII
TRUSTEE AND ELIGIBLE LENDER TRUSTEE
Section 7.01. Acceptance of Trust. The Trustee hereby accepts
the trusts imposed upon it by this Agreement, and agrees to perform said trusts,
but only upon and subject to the following terms and conditions:
(a) Except during the continuance of an Event of Default,
(i) the Trustee undertakes to perform such duties and
only such duties as are specifically set forth in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Trustee;
and
(ii) in the absence of bad faith on its part, the Trustee
may conclusively rely, as to the truth of the statements and the correctness of
the opinions expressed therein, upon certificates or opinions furnished to the
Trustee and conforming to the requirements of this Agreement; but in the case of
any such certificates or opinions which by any provisions hereof are
specifically required to be furnished to the Trustee, the Trustee shall be under
a duty to examine the same to determine whether or not they conform as to form
with the requirements of this Agreement and whether or not they contain the
statements required under this Agreement.
(b) In case an Event of Default has occurred and is
continuing, the Trustee, in exercising the rights and powers vested in it by
this Agreement, shall use the same degree of care and skill in their exercise as
a prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
(c) No provision of this Agreement shall require the
Trustee to expend or risk its own funds or otherwise incur any liability or to
institute or defend any suit in respect hereof in the performance of any of its
duties hereunder, or in the exercise of any of its rights or powers, unless
adequately indemnified to its satisfaction.
57
(d) Whether or not herein expressly so provided, every
provision of this Agreement relating to the conduct or affecting the liability
of or affording protection to the Trustee shall be subject to the provisions of
this Section.
Section 7.02. Trustee's Right to Reliance. The Trustee shall
be protected in acting upon any notice, resolution, request, consent, order,
certificate, report, servicer's report appraisal, opinion or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties. The Trustee may consult with experts and with
counsel (who may be counsel for the Borrower, the Eligible Lender Trustee, the
Facility Agent or the Trustee), and the opinion of such counsel shall be full
and complete authorization and protection in respect of any action taken or
suffered, and in respect of any determination made by it hereunder, including
payment of moneys out of any fund or account, in good faith and in accordance
with the opinion of such counsel.
Whenever in the administration hereof the Trustee shall deem
it desirable that a matter be proved or established prior to taking, suffering,
or omitting any action hereunder, the Trustee (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on its part, rely upon
a certificate signed by an officer of the Borrower, the Eligible Lender Trustee,
the Portfolio Administrator, the Facility Agent or any Secured Creditor.
The Trustee shall not be liable for any action taken,
suffered, or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it hereby; provided,
however, that the Trustee shall be liable for its negligence or willful
misconduct in taking such action.
To the extent otherwise permitted by the terms of this
Agreement, the Trustee is authorized, to sell, assign, transfer, convey, or
repurchase Financed Loans in accordance with a request of the Borrower, the
Facility Agent or any Secured Creditor, provided that no such Financed Loan may
be sold, assigned, transferred, or conveyed to any Person who is not an Eligible
Lender. The Trustee is further authorized to enter into agreements with other
Persons, in its capacity as Trustee, in order to carry out or implement the
terms and provisions of this Agreement.
Section 7.03. Compensation of Trustee. The Borrower shall pay
to the Trustee from time to time pursuant to Section 2.05(c)(v) hereof
reasonable compensation for all services rendered by it hereunder, as set forth
in the letter agreement dated February 1, 2002, and also all its reasonable
fees, expenses, charges, and other disbursements and those of its attorneys,
agents, and employees incurred in and about the administration and execution of
the trusts hereby created. The Borrower further agrees to indemnify and hold the
Trustee harmless against any liability which it may incur in the exercise or
performance of its powers and duties hereunder. The Trustee may not change the
amount of its annual compensation without giving the Borrower at least 90 days'
written notice prior to the beginning of a calendar year and without the written
consent of the Facility Agent.
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Section 7.04. Resignation of Trustee. The Trustee and any
successor to the Trustee may resign and be discharged from the trust created by
this Agreement by giving to the Borrower, the Eligible Lender Trustee and the
Facility Agent notice in writing which notice shall specify the date on which
such resignation is to take effect; provided, however, that such resignation
shall only take effect on the day specified in such notice if a successor
Trustee shall have been appointed pursuant to Section 7.06 hereof (and is
qualified to be the Trustee under the requirements of Section 7.06 hereof). If
no successor Trustee has been appointed by the date specified or within a period
of 90 days from the receipt of the notice by the Borrower, the Eligible Lender
Trustee and the Facility Agent, whichever period is the longer, the Trustee may
(a) appoint a temporary successor Trustee having the qualifications provided in
Section 7.06 hereof; or (b) request a court of competent jurisdiction to (i)
require the Borrower to appoint a successor, as provided in Section 7.06 hereof,
within three days of the receipt of citation or notice by the court; or (ii)
appoint a Trustee having the qualifications provided in Section 7.06 hereof. In
no event may the resignation of the Trustee be effective until a qualified
successor Trustee shall have been selected and appointed. In the event a
temporary successor Trustee is appointed pursuant to (a) above, the Borrower may
remove such temporary successor Trustee and appoint a successor thereto pursuant
to Section 7.06 hereof.
Section 7.05. Removal of Trustee. The Trustee or any successor
Trustee may be removed (a) by the Borrower for cause or upon the sale or other
disposition of the Trustee or its trust functions or (b) by the Borrower without
cause so long as no Event of Default exists or has existed within the last 90
days, upon payment to the Trustee so removed of all money then due to it
hereunder and appointment of a successor thereto by the Borrower and acceptance
thereof by said successor.
In the event a Trustee (or successor Trustee) is removed, by
any person or for any reason permitted hereunder, such removal shall not become
effective until the successor Trustee has accepted appointment as such.
Section 7.06. Successor Trustee. In case at any time the
Trustee or any successor Trustee shall resign, be dissolved, cease to be an
"eligible lender" as defined in the Higher Education Act, or otherwise shall be
disqualified to act or be incapable of acting, or in case control of the Trustee
or of any successor Trustee or of its officers shall be taken over by any public
officer or officers, a successor Trustee may be appointed by the Borrower by an
instrument in writing duly authorized by resolution. In the case of any such
appointment by the Borrower of a successor to the Trustee, the Borrower shall
forthwith cause notice thereof to the Facility Agent.
Every successor Trustee appointed by the Borrower shall be a
bank or trust company in good standing, organized and doing business under the
laws of the United States or of a state therein, which has a reported capital
and surplus of not less than $50,000,000, be authorized under the law to
exercise corporate trust powers, be subject to supervision or examination by a
federal or state authority, and be an Eligible Lender.
59
Section 7.07. Manner of Vesting Title in Trustee. Any
successor Trustee appointed hereunder shall execute, acknowledge, and deliver to
its predecessor Trustee, and also to the Borrower and the Facility Agent, an
instrument accepting such appointment hereunder, and thereupon such successor
Trustee, without any further act, deed, or conveyance shall become fully vested
with all the estate, properties, rights, powers, trusts, duties, and obligations
of its predecessors in trust hereunder (except that the predecessor Trustee
shall continue to have the benefits to indemnification hereunder together with
the successor Trustee), with like effect as if originally named as Trustee
herein; but the Trustee ceasing to act shall nevertheless, on the written
request of the Borrower, or an authorized officer of the successor Trustee,
execute, acknowledge, and deliver such instruments of conveyance and further
assurance and do such other things as may reasonably be required for more fully
and certainly vesting and confirming in such successor Trustee all the right,
title, and interest of the Trustee which it succeeds, in and to the Pledged
Collateral and such rights, powers, trusts, duties, and obligations, and the
Trustee ceasing to act also, upon like request, pay over, assign, and deliver to
the successor Trustee any money or other property or rights subject to the lien
of this Agreement, including any pledged securities which may then be in its
possession. Should any deed or instrument in writing from the Borrower be
required by the successor Trustee for more fully and certainly vesting in and
confirming to such new Trustee such estate, properties, rights, powers, and
duties, any and all such deeds and instruments in writing shall on request be
executed, acknowledged and delivered by the Borrower.
Section 7.08. [RESERVED]
Section 7.09. Trustee Covenants with Respect to "Eligible
Lender" Status. The Trustee covenants as follows:
(a) the Trustee represents and warrants that it satisfies
the requirements to be an "eligible lender" as that term is defined in the
Higher Education Act and covenants that it will remain an "eligible lender" so
long as the Trustee remains Trustee under this Agreement; provided, however,
that the Trustee shall have no responsibility or liability hereunder if it fails
to remain as an "eligible lender" as a result of the actions or inactions of the
Borrower or any Servicer; and
(b) the Trustee shall take such actions, but only such
actions, with respect to being an "eligible lender" as shall be reasonably
requested by the Borrower; such actions do not include taking steps or
instituting suits, actions or proceedings necessary or appropriate for the
enforcement of all terms, covenants and conditions of all Financed Loans and
agreements in connection therewith, including the prompt payment of all
principal and interest payments and all other amounts due thereunder, for which
the Borrower is solely responsible.
Section 7.10. Trustee's Status as an "Eligible Lender". For
the purposes of this Agreement, all documents, agreements, understandings and
arrangements relating to this Agreement that are executed by the Trustee have
been executed by the Trustee with the understanding that it may be deemed to be
an "eligible lender" under the Higher Education Act. The Borrower hereby
acknowledges the fact that the Trustee may be
60
deemed an "eligible lender" under the Higher Education Act and thus may be
subject to certain liabilities because of such status and that the Trustee is
willing to accept the status of "eligible lender" hereunder as an accommodation
to the Borrower, and the Borrower hereby agrees that it will indemnify and hold
harmless the Trustee and its officers, directors, employees and agents for any
and all liability which may be incurred because of Trustee's status as an
"eligible lender" or because of the Trustee's entering into this Agreement or
any of the other Transaction Documents that results from the actions or
inactions of the Borrower or any Servicer. The Borrower agrees that it will not
seek recourse or commence any action against the Trustee or its officers,
directors, employees or agents or any of their personal assets for the
performance or payment of any obligation under the Higher Education Act.
Section 7.11. Acceptance of Duties of Eligible Lender
Trustee. The Eligible Lender Trustee hereby agrees to hold legal title to the
Financed Loans on behalf of the Borrower, and to perform its duties as Eligible
Lender of such Financed Loans, including under this Agreement and the other
Transaction Documents.
Section 7.12. Eligible Lender Trustee Covenants with Respect
to "Eligible Lender" Status. The Eligible Lender Trustee covenants as follows:
(a) the Eligible Lender Trustee will remain an "eligible
lender" so long as it remains Eligible Lender Trustee under the Eligible Lender
Trust Agreement and this Agreement; provided, however, that the Eligible Lender
Trustee shall have no responsibility or liability hereunder if it fails to
remain as an "eligible lender" as a result of the actions or inactions of the
Borrower or any Servicer;
(b) the Eligible Lender Trustee shall take such actions,
but only such actions, with respect to being an "eligible lender" as shall be
reasonably requested by the Borrower; such actions do not include taking steps
or instituting suits, actions or proceedings necessary or appropriate for the
enforcement of all terms, covenants and conditions of all Financed Loans and
agreements in connection therewith, including the prompt payment of all
principal and interest payments and all other amounts due thereunder, for which
the Borrower is solely responsible; and
(c) the Eligible Lender Trustee shall take such actions
with respect to being "Eligible Lender Trustee" as shall be reasonably requested
by the Trustee or the Facility Agent.
Section 7.13. Compensation of Eligible Lender Trustee. The
Borrower shall pay to the Eligible Lender Trustee from time to time pursuant to
Section 2.05(c)(v) hereof reasonable compensation for all services rendered by
it hereunder and under the Eligible Lender Trust Agreement, as set forth in the
Eligible Lender Trust Agreement, and also all its reasonable fees, expenses,
charges, and other disbursements and those of its attorneys, agents, and
employees incurred in connection with carrying out its duties contemplated
hereby and thereby. The Eligible Lender Trustee may not change the amount of its
annual compensation without giving the Borrower at least 90 days' written
61
notice prior to the beginning of a calendar year and without the written consent
of the Facility Agent.
Section 7.14. Resignation of Eligible Lender Trustee. The
Eligible Lender Trustee and any successor to the Eligible Lender Trustee may
resign and be discharged from its obligations with respect to the Financed
Loans, this Agreement and the Eligible Lender Trust Agreement by giving to the
Borrower, the Trustee and the Facility Agent notice in writing which notice
shall specify the date on which such resignation is to take effect; provided,
however, that such resignation shall only take effect on the day specified in
such notice if a successor Eligible Lender Trustee shall have been appointed
pursuant to Section 7.16 hereof (and is qualified to be the Eligible Lender
Trustee under the requirements of Section 7.16 hereof). If no successor Eligible
Lender Trustee has been appointed by the date specified or within a period of 60
days from the receipt of the notice by the Borrower, the Trustee and the
Facility Agent, whichever period is the longer, the Eligible Lender Trustee may
(a) appoint a temporary successor Eligible Lender Trustee having the
qualifications provided in Section 7.16 hereof; or (b) request a court of
competent jurisdiction to (i) require the Borrower to appoint a successor, as
provided in Section 7.16 hereof, within three days of the receipt of citation or
notice by the court; or (ii) appoint an Eligible Lender Trustee having the
qualifications provided in Section 7.16 hereof. In no event may the resignation
of the Eligible Lender Trustee be effective until a qualified successor Eligible
Lender Trustee shall have been selected and appointed. In the event a temporary
successor Eligible Lender Trustee is appointed pursuant to (a) above, the
Borrower may remove such temporary successor Eligible Lender Trustee and appoint
a successor thereto pursuant to Section 7.16 hereof.
Section 7.15. Removal of Eligible Lender Trustee. The Eligible
Lender Trustee or any successor Eligible Lender Trustee may be removed at any
time by the Borrower without cause, and upon 30 days' notice to the Eligible
Lender Trustee, the Trustee and the Facility Agent, and upon payment to the
Eligible Lender Trustee (or successor Eligible Lender Trustee) so removed of all
money then due to it hereunder and appointment of a successor thereto by the
Borrower and acceptance thereof by said successor.
In the event an Eligible Lender Trustee (or successor Eligible
Lender Trustee) is removed, by any Person or for any reason permitted hereunder,
such removal shall not become effective until the successor Eligible Lender
Trustee has accepted appointment as such.
Section 7.16. Successor Eligible Lender Trustee. In case at
any time the Eligible Lender Trustee or any successor Eligible Lender Trustee
shall resign, be dissolved, cease to be an "eligible lender" as defined in the
Higher Education Act, or otherwise shall be disqualified to act or be incapable
of acting, or in case control of the Eligible Lender Trustee or of any successor
Eligible Lender Trustee or of its officers shall be taken over by any public
officer or officers, a successor Eligible Lender Trustee (who may be the
Trustee) may be appointed by the Borrower by an instrument in writing duly
authorized by resolution. In the case of any such appointment by the Borrower of
a
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successor to the Eligible Lender Trustee, the Borrower shall forthwith cause
notice thereof to the Facility Agent and the Trustee.
Every successor Eligible Lender Trustee appointed by the
Borrower shall be a bank or trust company in good standing, organized and doing
business under the laws of the United States or of a state therein, which has a
reported capital and surplus of not less than $20,000,000, be subject to
supervision or examination by a federal or state authority, and be an Eligible
Lender.
Section 7.17. Eligible Lender Trustee's Status as an "Eligible
Lender". For the purposes of this Agreement, all documents, agreements,
understandings and arrangements relating to this Agreement that are executed by
the Eligible Lender Trustee have been executed by the Eligible Lender Trustee
with the understanding that it may be deemed to be an "eligible lender" under
the Higher Education Act. The Borrower hereby acknowledges the fact that the
Eligible Lender Trustee may be deemed an "eligible lender" under the Higher
Education Act and thus may be subject to certain liabilities because of such
status and that the Eligible Lender Trustee is willing to accept the status of
"eligible lender" hereunder as an accommodation to the Borrower, and the
Borrower hereby agrees that it will indemnify and hold harmless the Eligible
Lender Trustee and its officers, directors, employees and agents for any and all
liability which may be incurred because of Eligible Lender Trustee's status as
an "eligible lender" or because of the Eligible Lender Trustee's entering into
this Agreement or any of the other Transaction Documents that results from the
actions or inactions of the Borrower or any Servicer. The Borrower agrees that
it will not seek recourse or commence any action against the Eligible Lender
Trustee or its officers, directors, employees or agents or any of their personal
assets for the performance or payment of any obligation under the Higher
Education Act.
ARTICLE VIII
INDEMNIFICATION
Without limiting any other rights which the Trustee, the
Eligible Lender Trustee, the Facility Agent, the Lender, the Alternate Lender,
the Liquidity Facility Providers, the Credit Support Providers or any of their
respective Affiliates may have hereunder or under applicable law, and
notwithstanding any limitation on recourse to the Borrower set forth in this
Agreement, any of the other Transaction Documents, the Liquidity Agreement or
the Credit Support Agreement, the Borrower hereby agrees to indemnify the
Trustee, the Eligible Lender Trustee, the Facility Agent, the Lender, the
Alternate Lender, the Liquidity Facility Providers, the Credit Support Providers
and each of their respective officers, directors, employees, agents,
attorneys-in-fact and Affiliates from and against any and all damages, losses,
claims, liabilities and related costs and expenses, including reasonable
attorneys' fees and disbursements (all of the foregoing being collectively
referred to as "Indemnified Amounts") awarded against or incurred by any of them
arising out of or as a result of this Agreement, the Liquidity Agreement, the
Credit Support Agreement or the Pledged Collateral, excluding, however,
Indemnified Amounts to the extent resulting from the gross negligence or willful
misconduct of the
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Person seeking indemnification. Without limiting the foregoing, the Borrower
shall indemnify the Trustee, the Eligible Lender Trustee, the Facility Agent,
the Lender, the Alternate Lender, the Liquidity Facility Providers, the Credit
Support Providers and each of their respective officers, directors, employees,
agents, attorneys-in-fact and Affiliates for Indemnified Amounts relating to or
resulting from:
(a) any Financed Loan treated as or represented by the
Borrower to be an Eligible Loan which is not at the applicable time an Eligible
Loan;
(b) any representation or warranty made or deemed made by
the Borrower, any Servicer, Nelnet or any of their respective officers under or
in connection with this Agreement or any other Transaction Document, which shall
have been false or incorrect when made or deemed made or delivered;
(c) the failure by the Borrower or the Servicer to comply
with any term, provision or covenant contained in this Agreement or any other
Transaction Document, or with any applicable law, rule or regulation with
respect to any Pledged Collateral, or the nonconformity of any Financed Loan or
any other Pledged Collateral with any such applicable law, rule or regulation;
(d) the failure to vest and maintain vested in the
Trustee for the benefit of the Secured Creditors or to transfer to the Trustee,
a first priority security interest in any of the Pledged Collateral, free and
clear of any Adverse Claim (except as otherwise provided herein);
(e) the failure to file, or any delay in filing,
financing statements or other similar instruments or documents under the UCC of
any applicable jurisdiction or other applicable laws with respect to any Pledged
Collateral;
(f) any dispute, claim, offset or defense (other than the
discharge in bankruptcy of the Obligor) of the Obligor to the payment of any
Financed Loan or any Servicer to the payment of any obligation otherwise owing
under a Transaction Document (including, without limitation, a defense based on
such Financed Loan or obligation or the related Transaction Document not being a
legal, valid and binding obligation of such Person enforceable against it in
accordance with its terms);
(g) any failure of the Borrower to perform its duties or
obligations in accordance with the provisions of this Agreement or any other
Transaction Document or any failure by the Borrower to perform its respective
duties in respect of the Financed Loans;
(h) any breach of contract by the Borrower or any claim
or action of whatever sort arising out of or in connection with any Transaction
Document or the transactions contemplated thereby;
(i) the failure to pay when due any taxes, including
without limitation, sales, excise or personal property taxes payable in
connection with the Pledged Collateral;
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(j) any repayment by the Lender, the Alternate Lender,
the Liquidity Facility Providers or the Credit Support Providers of any amount
previously distributed in payment of Advances or payment of Program Availability
Fees, Program Usage Fees, Alternate Interest Amounts and Liquidity Interest
Amounts or any other amount due hereunder, in each case which amount any such
Lender, the Alternate Lender, the Liquidity Facility Providers or the Credit
Support Providers believes in good faith is required to be repaid;
(k) the commingling by the Borrower or any of its
Affiliates of Collections at any time with other funds;
(1) any investigation, litigation or proceeding expressly
related to this Agreement, the Liquidity Agreement, the Credit Support Agreement
or any other Transaction Document or the use of proceeds of Advances or the
Pledged Collateral or in respect of any Financed Loan;
(m) any failure by the Borrower to give reasonably
equivalent value to any Seller in consideration for the Financed Loans sold, or
deemed to have been sold, to it by such Seller, or any attempt by any Person to
void or otherwise avoid any such transaction under any statutory provision or
common law or equitable action, including, without limitation, any provision of
the Bankruptcy Code;
(n) any failure of the Borrower or any of its agents or
representatives to remit to the Trustee, Collections (including the Higher SAP
Differentials) of Financed Loans and other Pledged Collateral remitted to the
Borrower or any such agent or representative;
(o) any failure by Nelnet to perform its obligations in
accordance with the provisions of the Indemnification Agreement;
(p) any investigation, litigation or proceeding relating
to the Financed Loans which are Higher SAP Loans;
(q) any default by the Borrower under any Covered
Indenture or with respect to any other Debt adversely affecting the Borrower or
the Pledged Collateral; and
(r) the absence of "no petition" "limited recourse" or
"subordination" language in any other financing of the Borrower.
Any amounts subject to the indemnification provisions of this
Article shall be paid by the Borrower to the Trustee, the Eligible Lender
Trustee, the Facility Agent, the Lender, the Alternate Lender, the Liquidity
Facility Providers, the Credit Support Providers or their respective officers,
directors, employees, agents, attorneys-in-fact or Affiliates, as the case may
be, for the benefit of the applicable payee, within two Business Days following
written demand therefor.
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ARTICLE IX
FACILITY AGENT
Section 9.01. Authorization and Action of Facility Agent. The
Lender and the Alternate Lender hereby accept the appointment of and authorize
the Facility Agent to take such action as agent on their behalf and to exercise
such powers as are delegated to the Facility Agent by the terms hereof, together
with such powers as are reasonably incidental thereto. The Facility Agent
reserves the right, in its sole discretion, to take any actions and exercise any
rights or remedies under this Agreement and any related agreements and
documents. The Facility Agent agrees to give to the Lender and the Alternate
Lender prompt notice of each notice and determination and a copy of each
certificate and report (if such notice, report, determination, or certificate is
not given by the applicable Person to the Lender or the Alternate Lender) given
to it by the Borrower, any Seller, any Servicer, the Valuation Agent, or the
Trustee or the Eligible Lender Trustee, pursuant to the terms of this Agreement.
Except for actions which the Facility Agent is expressly required to take
pursuant to this Agreement, as the case may be, the Facility Agent shall not be
required to take any action which exposes the Facility Agent to personal
liability or which is contrary to applicable law unless the Facility Agent shall
receive further assurances to its satisfaction from the Lender and the Alternate
Lender that it will be indemnified against any and all liability and expense
which may be incurred in taking or continuing to take such action.
Section 9.02. Agency Termination. Subject to Section 9.06
hereof, the appointment and authority of the Facility Agent hereunder shall
terminate upon the payment to (a) the Lender and the Alternate Lender of all
amounts owing to Lender and the Alternate Lender hereunder and under the
Advances and (b) the Facility Agent of all amounts due hereunder and under the
Advances.
Section 9.03. Facility Agent's Reliance. Etc. Neither the
Facility Agent nor any of its directors, officers, agents or employees shall be
liable for any action taken or omitted to be taken by it as Facility Agent under
or in connection with this Agreement or any related agreement or document,
except for its own gross negligence or willful misconduct. Without limiting the
foregoing, the Facility Agent: (a) may consult with legal counsel, independent
public accountants and other experts selected by it and shall not be liable for
any action taken or omitted to be taken in good faith by it in accordance with
the advice of such counsel, accountants or experts; (b) makes no warranty or
representation to the Lender, the Alternate Lender, any Liquidity Facility
Provider or any Credit Support Provider and shall not be responsible to the
Lender, the Alternate Lender, any Liquidity Facility Provider or any Credit
Support Provider for any statements, warranties or representations made by the
Borrower, the Trustee, the Eligible Lender Trustee, any Seller, any Servicer,
any Guarantor, Nelnet or the Valuation Agent in connection with this Agreement
or any other Transaction Document; (c) shall not have any duty to ascertain or
to inquire as to the performance or observance of any of the terms, covenants or
conditions of this Agreement or any other Transaction Document on the part of
the Borrower, the Trustee, the Eligible Lender Trustee, any Servicer, any
Seller, any Guarantor, Nelnet or the Valuation Agent or to inspect the property
(including
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the books and records) of the Borrower, the Trustee, the Eligible Lender
Trustee, any Servicer, any Seller, any Guarantor, Nelnet or the Valuation Agent;
(d) shall not be responsible to the Lender, the Alternate Lender, any Liquidity
Facility Provider or any Credit Support Provider, as the case may be, for the
due execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement or any other instrument or document furnished pursuant
hereto; and (e) shall incur no liability under or in respect of this Agreement
by acting upon any notice (including notice by telephone), consent, certificate
or other instrument or writing (which may be by telex) believed by it in good
faith to be genuine and signed or sent by the proper party or parties.
Section 9.04. Facility Agent and Affiliates. The Facility
Agent and its Affiliates may generally engage in any kind of business with the
Borrower, the Trustee, the Eligible Lender Trustee, any Servicer, any Guarantor,
Nelnet, any Seller or the Trustee, any of their respective Affiliates and any
Person who may do business with or own securities of the Borrower, the Trustee,
the Eligible Lender Trustee, any Servicer, any Guarantor, Nelnet, any Seller or
the Trustee or any of their respective Affiliates, all as if Royal Bank of
Canada were not the Facility Agent and without any duty to account therefor to
the Lender, the Alternate Lender, any Liquidity Facility Provider or any Credit
Support Provider.
Section 9.05. Advance Decision. The Lender and the Alternate
Lender acknowledge that each has, independently and without reliance upon the
Facility Agent, and based on such documents and information as it has deemed
appropriate, made its own evaluation and decision to enter into this Agreement
and to make Advances hereunder. The Lender and the Alternate Lender also
acknowledge that each will, independently and without reliance upon the Facility
Agent or any of its Affiliates, and based on such documents and information as
it shall deem appropriate at the time, continue to make its own decisions in
taking or not taking action under this Agreement or any related agreement,
instrument or other document.
Section 9.06. Successor Facility Agent. The Facility Agent may
resign at any time by giving five days' written notice thereof to the Lender,
the Alternate Lender, each Liquidity Facility Provider, each Credit Support
Provider, the Borrower, the Eligible Lender Trustee, the Portfolio Administrator
and the Trustee. Upon any such resignation, the Lender and the Alternate Lender
shall have the right to appoint a successor Facility Agent approved by the
Borrower (which approval will not be unreasonably withheld or delayed). If no
successor Facility Agent shall have been so appointed and shall have accepted
such appointment, within sixty days after the retiring Facility Agent's giving
of notice of resignation, then the retiring Facility Agent may, on behalf of the
Lender and the Alternate Lender, appoint a successor Facility Agent. If the
successor Facility Agent is not an Affiliate of the resigning Facility Agent,
such successor Facility Agent shall be subject to the Borrower's prior written
approval (which approval will not be unreasonably withheld or delayed). Upon the
acceptance of any appointment as Facility Agent hereunder by a successor
Facility Agent, such successor Facility Agent shall thereupon succeed to and
become vested with all of the rights, powers, privileges and duties of the
retiring Facility Agent, and the retiring Facility Agent shall be discharged
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from its duties and obligations under this Agreement. After any retiring
Facility Agent's resignation hereunder as Facility Agent, the provisions of this
Article shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was an Facility Agent under this Agreement.
ARTICLE X
MISCELLANEOUS
Section 10.01. Amendments and Waivers. No amendment or
modification of any provision of this Agreement shall be effective without the
written agreement of the Borrower, the Lender, the Facility Agent and, to the
extent affected thereby, the Trustee and/or the Eligible Lender Trustee, and no
termination or waiver of any provision of this Agreement or consent to any
departure therefrom by the Borrower shall be effective without the written
concurrence of the Facility Agent. Any waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
Section 10.02. Notices. Etc. All notices and other
communications provided for hereunder shall, unless otherwise stated herein, be
in writing (including telex communication and communication by facsimile copy or
other electronic means) and mailed, delivered by nationally recognized overnight
courier service, telexed, transmitted or delivered by hand, as to each party
hereto, at its address set forth under its name on the signature pages hereof or
at such other address as shall be designated by such party in a written notice
to the other parties hereto. All such notices and communications shall be
effective, upon receipt, or in the case of (a) notice by mail, five days after
being deposited in the United States mails, first class postage prepaid; (b)
notice by telex, when telexed against receipt of answerback; or (c) notice by
facsimile or other electronic copy, when verbal communication of receipt is
obtained, except that notices and communications pursuant to Article II hereof
shall not be effective until received.
Section 10.03. No Waiver; Remedies. No failure on the part of
the Trustee, the Facility Agent or the Secured Creditors to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right hereunder preclude any other
or further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
Section 10.04. Binding Effect; Assignability;
Confidentiality. This Agreement shall be binding upon and inure to the benefit
of the Borrower, the Facility Agent, the Lender, the Alternate Lender, the
Liquidity Facility Providers, the Credit Support Providers, the Trustee, the
Eligible Lender Trustee and their respective successors and permitted assigns.
This Agreement and the rights and obligations of the Lender, the Alternate
Lender, the Liquidity Facility Providers and the Credit Support Providers
hereunder and interests herein shall be assignable in whole or in part
(including by way of the sale of participation interests therein or by
assignment by the Liquidity Facility Providers of any of its assigns of the
whole or any part of the Commitment) by the Lender, the Alternate Lender, the
Liquidity Facility Providers, the Credit Support
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Providers and their successors and assigns; provided, however, that the Lender,
the Alternate Lender, the Liquidity Facility Providers and the Credit Support
Providers shall not transfer or assign its interests in the Advances if
immediately after such transfer or assignment, the Advances would be owned by
more than 100 persons as described in Section 1.7704-l(h) of the Treasury
Regulations. The Borrower may not assign any of its rights and obligations
hereunder or any interest herein without the prior written consent of the
Facility Agent. The parties to each assignment or participation made pursuant to
this Section shall execute and deliver to the Borrower and the Facility Agent
for their acceptance and recording in their respective books and records, an
assignment or a participation agreement or other transfer instrument reasonably
satisfactory in form and substance to the Borrower and the Facility Agent (and
the Borrower hereby acknowledges that the form of assignment attached to the
Liquidity Agreement and the Credit Support Agreement shall be acceptable in form
and substance). Each such assignment or participation shall be effective as of
the date specified in the agreement or instrument only after the execution,
delivery, acceptance and recording as described in the preceding sentence. The
Lender, the Alternate Lender, the Liquidity Facility Providers and the Credit
Support Providers shall each notify the Borrower of any assignment or
participation thereof made pursuant to this Section. Subject to Section 10.11
hereof, none of the Lender, the Alternate Lender, the Liquidity Facility
Providers or the Credit Support Providers may, in connection with any assignment
or participation or any proposed assignment or participation pursuant to this
Section, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower and the Pledged Collateral
furnished to it by or on behalf of the Borrower, without either (a) first
obtaining the prior written consent of the Borrower, which consent shall not be
unreasonably withheld; or (b) delivering to the Borrower a written agreement
signed by the proposed assignee or participant, for the Borrower's benefit and
otherwise in form and substance reasonably acceptable to the Borrower pursuant
to which the proposed assignee or participant agrees to maintain the
confidentiality of the information concerning the Borrower and the Financed
Loans that may be provided to it by the Facility Agent, the Lender, the
Alternate Lender, the Liquidity Facility Providers or the Credit Support
Providers.
Section 10.05. Survival. The rights and remedies with respect
to any breach of a representation and warranty made by the Borrower pursuant to
Article IV hereof and the indemnification and payment provisions of Articles VII
and VIII hereof and Sections 2.15, 10.08, 10.09, 10.14 and 10.15 hereof shall be
continuing and shall survive the termination of this Agreement.
Section 10.06. Governing Law; Severability. This Agreement
shall be construed in all respects in accordance with, and governed by the
internal laws (as opposed to conflicts of law provisions) of the State of New
York. Whenever possible, each provision of this Agreement shall be interpreted
in such a manner as to be effective and valid under applicable law, but if any
provision of this Agreement shall be prohibited by or invalid under applicable
law, such provision shall be ineffective only to the extent of such prohibition
or invalidity, without invalidating the remainder of such provisions or the
remaining provisions of this Agreement.
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Section 10.07. Submission to Jurisdiction: Waiver of Jury and
Bond. THE BORROWER, THE LENDER, THE ALTERNATE LENDER AND THE FACILITY AGENT
HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR FEDERAL COURT
LOCATED WITHIN THE CITY OF NEW YORK, NEW YORK, AND IRREVOCABLY AGREE THAT ALL
ACTIONS OR PROCEEDINGS RELATING TO THIS AGREEMENT (OTHER THAN PROCEEDINGS WITH
RESPECT TO THE FORECLOSURE ON THE PLEDGED COLLATERAL WHICH MAY BE BROUGHT IN THE
JURISDICTION IN WHICH SUCH PLEDGED COLLATERAL IS LOCATED) SHALL BE LITIGATED IN
SUCH COURTS, AND THE BORROWER, THE LENDER, THE ALTERNATE LENDER AND THE FACILITY
AGENT EACH WAIVE ANY OBJECTION WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR
FORUM NON CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT AND EACH
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND CONSENTS THAT ALL
SUCH SERVICE OF PROCESS BE MADE BY MAIL OR MESSENGER DIRECTED TO IT AT THE
ADDRESS SET FORTH ON THE SIGNATURE PAGES TO THIS AGREEMENT AND THAT SERVICE SO
MADE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT OR FIVE
(5) DAYS AFTER THE SAME SHALL HAVE BEEN POSTED TO SUCH ADDRESS.
THE BORROWER, THE LENDER, THE ALTERNATE LENDER AND THE
FACILITY AGENT EACH ACKNOWLEDGE THAT THE TIME AND EXPENSE REQUIRED FOR TRIAL BY
JURY EXCEED THE TIME AND EXPENSE REQUIRED FOR A BENCH TRIAL AND HEREBY WAIVE, TO
THE EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY CLAIM OR CAUSE OF ACTION
(INCLUDING ANY COUNTERCLAIM) ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT, ANY OF THE TRANSACTION DOCUMENTS OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS OR OTHERWISE, AND WAIVE ANY BOND OR SURETY OR SECURITY UPON
SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE LENDER, THE
ALTERNATE LENDER OR THE FACILITY AGENT. NOTHING CONTAINED IN THIS SECTION SHALL
AFFECT THE RIGHT OF THE LENDER, THE ALTERNATE LENDER OR THE FACILITY AGENT TO
SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR AFFECT THE RIGHT OF
THE LENDER, THE ALTERNATE LENDER OR THE FACILITY AGENT TO BRING ANY ACTION OR
PROCEEDING AGAINST THE BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION TO THE EXTENT NECESSARY TO ENFORCE ITS LIENS AGAINST PROPERTY
LOCATED IN SUCH JURISDICTIONS. THE BORROWER WAIVES ANY RIGHT IT MAY HAVE TO
CLAIM OR RECOVER IN ANY LITIGATION REFERRED TO ABOVE ANY SPECIAL, EXEMPLARY,
PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO,
ACTUAL DAMAGES.
Section 10.08. Costs, Expenses and Taxes. In addition to the
rights of indemnification granted to the Trustee, the Eligible Lender Trustee,
the Facility Agent,
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the Lender, the Alternate Lender and the Liquidity Facility Providers and their
respective Affiliates under Article VIII hereof, and notwithstanding any
limitation on recourse set forth herein, the Borrower agrees to pay on demand
all reasonable costs, fees and expenses of the Trustee, the Eligible Lender
Trustee, the Facility Agent, the Lender, the Alternate Lender or the Liquidity
Facility Providers incurred in connection with the preparation, execution,
delivery, administration (including periodic auditing), or any amendment or
modification of, or any waiver or consent issued in connection with, this
Agreement, the Liquidity Agreement or any other Transaction Document, including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
for the Trustee, the Eligible Lender Trustee, the Facility Agent, the Lender,
the Alternate Lender or the Liquidity Facility Providers with respect thereto
and with respect to advising the Trustee, the Eligible Lender Trustee, the
Facility Agent, the Lender, the Alternate Lender and the Liquidity Facility
Providers as to their respective rights and remedies hereunder or thereunder,
and all costs, fees and expenses, if any (including reasonable counsel fees and
expenses), incurred by the Trustee, the Eligible Lender Trustee, the Facility
Agent, the Lender, the Alternate Lender or the Liquidity Facility Providers in
connection with the enforcement of this Agreement, the Liquidity Agreement and
the other Transaction Documents.
Section 10.09. Recourse Against Certain Parties. No recourse
under or with respect to any obligation, covenant or agreement (including,
without limitation, the payment of any fees or any other obligations) of the
Trustee, the Eligible Lender Trustee, the Facility Agent, the Lender, the
Alternate Lender, the Liquidity Facility Providers or the Credit Support
Providers as contained in this Agreement or any other agreement, instrument or
document entered into by it pursuant hereto or in connection herewith shall be
had against any administrator of the Trustee, the Eligible Lender Trustee, the
Facility Agent, the Lender, the Alternate Lender, the Liquidity Facility
Providers or the Credit Support Providers or any incorporator, affiliate,
stockholder, officer, employee or director of the Trustee, the Eligible Lender
Trustee, the Facility Agent, the Lender, the Alternate Lender, the Liquidity
Facility Providers or the Credit Support Providers or of any such administrator,
as such, by the enforcement of any assessment or by any legal or equitable
proceeding, by virtue of any statute or otherwise; it being expressly agreed and
understood that the agreements of the Trustee, the Eligible Lender Trustee, the
Facility Agent, the Lender, the Alternate Lender, the Liquidity Facility
Providers and the Credit Support Providers contained in this Agreement and all
of the other agreements, instruments and documents entered into by the Trustee,
the Eligible Lender Trustee, the Facility Agent, the Lender, the Alternate
Lender, the Liquidity Facility Providers or the Credit Support Providers
pursuant hereto or in connection herewith are, in each case, solely the
corporate obligations of the Trustee, the Eligible Lender Trustee, the Facility
Agent, the Lender, the Alternate Lender, the Liquidity Facility Providers or the
Credit Support Providers, as applicable, and that no personal liability
whatsoever shall attach to or be incurred by any administrator of the Trustee,
the Eligible Lender Trustee, the Facility Agent, the Lender, the Alternate
Lender, the Liquidity Facility Providers or the Credit Support Providers or any
incorporator, stockholder, affiliate, officer, employee or director of the
Trustee, the Eligible Lender Trustee, the Facility Agent, Lender, the Alternate
Lender, the Liquidity Facility Providers or the Credit Support Providers or of
any such administrator, as such, or any other them, under or by reason of any of
the
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obligations, covenants or agreements of the Trustee, the Eligible Lender
Trustee, the Facility Agent, the Lender, the Liquidity Facility Providers or the
Credit Support Providers contained in this Agreement or in any other such
instruments, documents or agreements, or which are implied therefrom, and that
any and all personal liability of every such administrator of the Trustee, the
Eligible Lender Trustee, the Facility Agent, the Lender, the Alternate Lender,
the Liquidity Facility Providers or the Credit Support Providers and each
incorporator, stockholder, affiliate, officer, employee or director of the
Trustee, the Eligible Lender Trustee, the Facility Agent, the Lender, the
Alternate Lender, the Liquidity Facility Providers or the Credit Support
Providers or of any such administrator, or any of them, for breaches by the
Trustee, the Eligible Lender Trustee, the Facility Agent, the Lender, the
Alternate Lender, the Liquidity Facility Providers or the Credit Support
Providers of any such obligations, covenants or agreements, which liability may
arise either at common law or at equity, by statute or constitution, or
otherwise, is hereby expressly waived as a condition of and in consideration for
the execution of this Agreement. The provisions of this Section shall survive
the termination of this Agreement.
Section 10.10. Execution in Counterparts; Severability;
Integration. This Agreement may be executed in any number of counterparts and by
different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which when taken together
shall constitute one and the same agreement. In case any provision in or
obligation under this Agreement shall be invalid, illegal or unenforceable in
any jurisdiction, the validity, legality and enforceability of the remaining
provisions or obligations, or of such provision or obligation in any other
jurisdiction, shall not in any way be affected or impaired thereby. This
Agreement contains the final and complete integration of all prior expressions
by the parties hereto with respect to the subject matter hereof and shall
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof, superseding all prior oral or written understandings.
Section 10.11. Confidentiality. The Trustee, the Eligible
Lender Trustee, the Facility Agent, the Lender, the Alternate Lender, the
Liquidity Facility Providers and the Credit Support Providers each agree to keep
confidential and not disclose any non-public information or documents related to
the Borrower or any Affiliate of the Borrower delivered or provided to such
Person in connection with this Agreement, any other Transaction Document or the
transactions contemplated hereby or thereby and which are clearly identified in
writing by the Borrower or such Affiliate as being confidential; provided,
however, that each of the Trustee, the Eligible Lender Trustee, the Facility
Agent, the Lender, the Alternate Lender, the Liquidity Facility Providers and
the Credit Support Providers may disclose any such information (a) to the extent
required or deemed necessary and/or advisable by such Person's counsel in any
judicial, regulatory, arbitration or governmental proceeding or under any law,
regulation, order, subpoena or decree; (b) to its officers, directors,
employees, accountants, auditors and outside counsel, in each case, provided
they are informed of the confidentiality thereof and agree to maintain such
confidentiality; (c) to or by any liquidity or credit provider for the Lender,
any potential liquidity or credit provider for the Lender, or any assignee or
participant or potential assignee or participant of any liquidity or credit
provider for the Lender,
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provided they are informed of the confidentiality thereof and agree to maintain
such confidentiality; (d) to any assignee, participant, or potential assignee or
participant of or with any Trustee, the Eligible Lender Trustee, the Facility
Agent, the Lender, the Alternate Lender, the Liquidity Facility Providers or the
Credit Support Providers, provided such Person agrees to be bound by the
confidentiality provisions hereof or similar hereto; (e) to bank examiners and
any other Person to whom the Trustee, the Eligible Lender Trustee, the Facility
Agent, the Lender, the Alternate Lender, the Liquidity Facility Providers and
the Credit Support Providers, any such liquidity or credit support provider or
assignee or participant is required by law, regulation, decree or order to make
such disclosure; (f) in connection with the enforcement hereof or of any of the
other Transaction Documents, the Liquidity Agreement or the Credit Support
Agreement; (g) to any rating agency rating the commercial paper notes of the
Lender; and (h) to such other Persons as may be approved by the Borrower.
Notwithstanding the foregoing, the foregoing obligations shall not apply to any
such information, documents or portions thereof that: (i) were of public
knowledge or literature generally available to the public at the time of such
disclosure; or (ii) have become part of the public domain by publication or
otherwise, other than as a result of the failure of the Trustee, the Eligible
Lender Trustee, the Facility Agent, the Lender, the Alternate Lender, the
Liquidity Facility Providers or the Credit Support Providers, or any of their
respective employees, directors, officers, advisors, accountants, auditors, or
legal counsel to preserve the confidentiality thereof.
Section 10.12. Section Titles. The section titles contained in
this Agreement shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreement between the parties.
Section 10.13. Entire Agreement. This Agreement, including all
Exhibits, Schedules and other documents attached hereto or incorporated by
reference herein, together with the other Transaction Documents constitutes the
entire agreement of the parties with respect to the subject matter hereof and
supersedes all other negotiations, understandings and representations, oral or
written, with respect to the subject matter hereof.
Section 10.14. No Petition.
(a) Each of the Borrower, the Trustee and the Eligible
Lender Trustee hereby covenants and agrees that prior to the date which is one
year and one day after the payment in full of all outstanding CP of the Lender,
it will not institute against or join any other person or entity in instituting
against the Lender, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceeding under the laws of the United
States or any state of the United States.
(b) Each of the Lender, the Alternate Lender, the
Facility Agent, the Trustee and the Eligible Lender Trustee hereby covenants and
agrees that prior to the date which is one year and one day after the payment in
full of all outstanding Debt of the Borrower, it will not institute against or
join any other person or entity in instituting against the Borrower, any
bankruptcy, reorganization, arrangement, insolvency or
73
liquidation proceedings or other similar proceedings under the laws of the
United States or any state of the United States.
Section 10.15. Limited Recourse: Subordination.
(a) The obligations of the Borrower under this Agreement
are obligations solely of the Borrower and shall not constitute a claim against
the Borrower to the extent that the Borrower does not have funds sufficient to
make payment of such obligations. The Lender, the Alternate Lender, the Facility
Agent and each Affected Party acknowledge and agree that the Obligations are not
secured by any assets of the Borrower other than the Pledged Collateral pledged
to the Trustee (for the benefit of the Secured Creditors) pursuant to Section
2.10 hereof. In furtherance of and not in derogation of the foregoing, to the
extent the Borrower has entered or enters into other secured financings or
securitization transactions, the Lender, the Alternate Lender, the Facility
Agent and each Affected Party acknowledge and agree that they shall have no
right, title or interest in or to Other Assets. To the extent that,
notwithstanding the agreements and provisions contained in the preceding
sentences of this subsection, the Lender, the Alternate Lender, the Facility
Agent or any Affected Party either (i) asserts an interest or claim to, or
benefit from, Other Assets, or (ii) is deemed to have any such interest, claim
to, or benefit in or from Other Assets, whether by operation of law, legal
process, pursuant to applicable provisions of insolvency laws or otherwise
(including by virtue of Section 1111(b) of the Bankruptcy Code or any successor
provision having similar effect under the Bankruptcy Code), then the Lender, the
Alternate Lender, the Facility Agent and each Affected Party further acknowledge
and agree that any such interest, claim or benefit in or from Other Assets is
and shall be expressly subordinated to the indefeasible payment in full of all
obligations and liabilities of the Borrower which, under the terms of the
relevant documents relating to the financing or securitization of such Other
Assets, are entitled to be paid from, entitled to the benefits of, or otherwise
secured by such Other Assets (whether or not any such entitlement or security
interest is legally perfected or otherwise entitled to a priority of
distribution or application under applicable law, including insolvency laws, and
whether asserted against the Borrower), including the payment of post-petition
interest on such other obligations and liabilities. This subordination agreement
shall be deemed a subordination agreement within the meaning of Section 510(a)
of the Bankruptcy Code. The Lender, the Alternate Lender, the Facility Agent,
and each Affected Party further acknowledge and agree that no adequate remedy at
law exists for a breach of this Section 10.15 and the terms of this Section
10.15 may be enforced by an action for specific performance.
(b) The provisions of this Section 10.15 shall be for the
third party benefit of those entitled to rely thereon and shall survive the
termination of this Agreement.
(c) The Borrower covenants and agrees that if it enters
into financing or securitization transactions with respect to Other Assets, it
shall cause the appropriate documentation with respect thereto to include
provisions substantially similar to those contained in this Section 10.15
pursuant to which the Person(s) to which Other Assets are
74
conveyed disclaims (and subordinates) any interest it may have in the assets of
the Borrower other than the specific Other Assets related to such financing or
securitization.
75
IN WITNESS WHEREOF, the parties have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
THE BORROWER:
NELNET EDUCATION
LOAN FUNDING INC.
By: /s/ Xxxxx X. Xxxxxx
------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
c/o Nelnet, Inc.
000 Xxxxx 00 Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
THE LENDER:
THUNDER BAY FUNDING INC.
BY: ROYAL BANK OF CANADA, its
attorney-in-fact
By: /s/ Xxxx Xxxx
-------------------------------
Name: XXXX XXXX
Authorized Signatory
c/o RBC Capital Markets
One Little Falls Centre
0000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 or
(000)-000-0000
[Signature Page to Amended and Restated Warehouse Loan and Security Agreement]
And, with respect to any Advance
Request/Prepayment Notice, with a
copy to:
Global Securitization Services
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxx
Telephone: (000) 000-0000 Ext. 13
Facsimile: (000) 000-0000
e-mail: xxxxx@xxxxxx.xxx
THE FACILITY AGENT:
ROYAL BANK OF CANADA
BY: /s/ Xxxxxx Xxxxxxx
--------------------------------
Name: Xxxxxx Xxxxxxx
Authorized Signatory
c/o RBC Capital Markets
One Little Falls Centre
0000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 or
(000)-000-0000
And, with respect to any Advance
Request/Prepayment Notice, with a
copy to:
Global Securitization Services
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxx
Telephone: (000) 000-0000 Ext. 13
Facsimile: (000) 000-0000
e-mail: xxxxx@xxxxxx.xxx
[Signature Page to Amended and Restated Warehouse Loan and Security Agreement]
ALTERNATE LENDER:
ROYAL BANK OF CANADA
By: /s/ Xxxxxx Xxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxx
Authorized Signatory
By: /s/ Xxxx Xxxx
-------------------------------
Name: Xxxx Xxxx
Authorized Signatory
c/o RBC Capital Markets
One Little Falls Centre
0000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 or
(000)-000-0000
And, with respect to any Advance
Request/Prepayment Notice, with a
copy to:
Global Securitization Services
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
Attn: Xxxx Xxxx
Telephone: (000)000-0000 Ext. 13
Facsimile: (000) 000-0000
e-mail: xxxxx@xxxxxx.xxx
THE TRUSTEE:
ZIONS FIRST NATIONAL BANK
By: /s/ Xxxx Xxxx
-------------------------------
Xxxx Xxxx, Vice President
Zions First National Bank
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Corporate Trust Services
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
[Signature Page to Amended and Restated Warehouse Loan and Security Agreement]
THE ELIGIBLE LENDER TRUSTEE:
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION
By: /s/ Xxxxx X. Xxxxx
-------------------------------
Xxxxx X. Xxxxx
Corporate Trust Officer
Xxxxx Fargo Bank, Minnesota,
National Association
0xx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attention: Corporate Trust
Department
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
[Signature Page to Amended and Restated Warehouse Loan and Security Agreement]
THE ORIGINAL BORROWER (solely for
the purpose of Article IA
hereunder):
NELNET STUDENT LOAN
WAREHOUSE CORPORATION-1
By: /s/ Xxxxxxx Xxxxxxxxx
-------------------------------
Xxxxxxx Xxxxxxxxx,
Vice President
c/o Nelnet, Inc.
000 Xxxxx 00 Xxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
[Signature Page to Amended and Restated Warehouse Loan and Security Agreement]
EXHIBIT A
FORM OF STUDENT LOAN PURCHASE AGREEMENT
A-l
LOAN PURCHASE AGREEMENT
This Loan Purchase Agreement (the "Loan Purchase Agreement") made and
entered into as of this 28th day of April, 2003, by and between Nelnet Education
Loan Funding, Inc., f/k/a NEBHELP, INC., a Nebraska corporation (the
"Corporation") acting by and through Xxxxx Fargo Bank Minnesota, National
Association, not individually but as Eligible Lender Trustee (the "Trustee")
under the Trust Agreement or Eligible Lender Trust Agreement, as applicable from
time to time (as defined herein) and EFS Finance Co., a corporation organized
and existing under the laws of the State of Indiana, and having its principal
offices at 0000 Xxxxxxxxx Xxxxxxxx Xxxxxxxxx, Xxxxx 000, in the city of
Indianapolis, State of Indiana (the "Seller").
W I T N E S S E T H:
WHEREAS, the Corporation, by and through the Trustee, desires to
purchase from the Seller certain FFELP Loans (as defined below) to assist
students in obtaining a post-secondary education, title to which will be held by
the Trustee pursuant to the Trust Agreement or Warehouse Loan Agreement, as
applicable from time to time, and the Seller desires to sell certain FFELP Loans
to the Corporation, title to which will be held by and through the Trustee, in
accordance with the terms and conditions of this Loan Purchase Agreement; and
WHEREAS, the Corporation expects to finance from time to time its
purchase and ownership of the FFELP Loans purchased hereunder through the
funding made available under one or more of the Financing Agreements.
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties agree as follows:
Section 1. DEFINITIONS.
"Bond Insurer" means MBIA Insurance Corporation and its successors and
assigns.
"Borrower" means the student or parent obligor under an Eligible Loan.
"Certificate of Insurance" means a certificate of federal loan
insurance issued with respect to an Eligible Loan by the Secretary of Education
pursuant to the provisions of the Higher Education Act.
"Contract of Insurance" means an agreement between the Secretary of
Education and either the Trustee or the Seller providing for the insurance by
the Secretary of Education of the principal of and accrued interest on a FFELP
Loan to the maximum extent permitted under the Higher Education Act.
"Corporation" means Nelnet Education Loan Funding, Inc., f/k/a NEBHELP,
INC., a Nebraska corporation.
1
"Eligible Lender Trust Agreement" means the Eligible Lender Trust
Agreement dated as of April 28, 2003, between the Trustee and the Corporation.
"Eligible Loan" means a FFELP Loan authorized to be acquired by the
Corporation by and through the Trustee which (i) is either Insured or
Guaranteed; (ii) if such FFELP Loan is a subsidized Xxxxxxxx loan, qualifies the
holder thereof to receive Interest Subsidy Payments and Special Allowance
Payments; if such FFELP Loan is a consolidation loan authorized under Section
428C of the Higher Education Act, qualifies the holder thereof to receive
Interest Subsidy Payments and Special Allowance Payments to the extent
applicable; and if such FFELP Loan is a PLUS loan authorized under Section 428B
of the Higher Education Act, a SLS loan authorized under Section 428 A of the
Higher Education Act, or an unsubsidized Xxxxxxxx loan authorized under Section
428H of the Higher Education Act, such FFELP Loan qualifies the holder thereof
to receive Special Allowance Payments; (iii) complies with each representation
and warranty with respect thereto contained herein; and (iv) meets the other
criteria set forth in the Loan Purchase Regulations and is eligible for purchase
under the terms of the applicable Financing Agreement.
"Facility Agent" means Royal Bank of Canada, as the Facility Agent
under the Warehouse Loan Agreement, and any successor or assign.
"Federal Contracts" means all agreements between a Guarantee Agency and
the Secretary of Education providing for the payment by the Secretary of
Education of amounts authorized to be paid pursuant to the Higher Education Act,
including, but not limited to, reimbursement of amounts paid or payable upon
defaulted Eligible Loans and other student loans insured or guaranteed by any
Guarantee Agency and federal interest subsidy payments and Special Allowance
Payments, if applicable, to holders of qualifying student loans guaranteed by
any Guarantee Agency.
"FFELP Loans" means those specific loans acquired by the Trustee, on
behalf of the Corporation, from the Seller pursuant to this Loan Purchase
Agreement, inclusive of the promissory notes evidencing such loans and the
related documentation in connection with each thereof, which were originated
pursuant to the Federal Family Education Loan Program and the Higher Education
Act.
"Financing Agreement" means, collectively and individually, the
following: the Warehouse Loan Agreement; Trust Indenture between NEBHELP, INC.
as assignee and Norwest Bank Minnesota, National Association, as successor
trustee, dated as of December 1, 1986; the Trust Indenture dated as of June 1,
1993, between NEBHELP, INC. as assignee and Norwest Bank Minnesota, National
Association, as trustee; Trust Indenture between NEBHELP, INC. as assignee and
Norwest Bank Minnesota, National Association, as successor trustee, dated as of
November 15, 1985; Trust Indenture between NEBHELP, INC. as assignee and Norwest
Bank Minnesota, National Association, as successor trustee, dated as of July 1,
1988; Trust Indenture between NEBHELP, INC. as assignee and Norwest Bank
Minnesota, National Association, as trustee, dated as of September 1, 1993; and
Trust Indenture between NEBHELP, INC. as assignee and Norwest Bank Minnesota,
National Association, as trustee, dated as of May 1, 1997, as the same may be
amended, modified, supplemented, restated or otherwise altered, which is
utilized to finance, from time to time, the Corporation's purchase of the FFELP
Loans under this Loan Purchase Agreement.
2
"Guarantee" or "Guaranteed" means, with respect to a FFELP Loan, the
guarantee by the Guarantee Agency, in accordance with the terms and conditions
of the Guarantee Agreement, of the principal of and accrued interest on the
FFELP Loan to the maximum extent permitted under the Higher Education Act on
FFELP Loans which have been originated, held and serviced in full compliance
with the Higher Education Act, and the coverage of the FFELP Loan by the Federal
Contracts providing, among other things, for reimbursement to the Guarantee
Agency for losses incurred by it on defaulted Eligible Loans guaranteed by it to
the extent of the maximum reimbursement allowed by the Federal Contracts.
"Guarantee Agency" means a state agency or a private nonprofit
institution or organization which administers a Guarantee Program within a State
or any successors and assignees thereof administering the Guarantee Program
which has entered into a Guarantee Agreement with the Trustee on behalf of the
Corporation.
"Guarantee Agreement" means the Federal Contracts, an agreement between
a Guarantee Agency and either the Trustee or the Seller providing for the
Guarantee by such Guarantee Agency of the principal of and accrued interest on
Eligible Loans to Borrowers, made or acquired by the Trustee or the Seller from
time to time, and any other similar guarantee or agreement issued by a Guarantee
Agency to the Corporation or the Trustee pertaining to Financed Eligible Loans.
"Guaranteed Loans" means FFELP Loans that are Guaranteed.
"Guarantee Program" means a Guarantee Agency's student loan guaranty
program pursuant to which such Guarantee Agency guarantees or insures student
loans.
"Higher Education Act" shall mean Title IV, Parts B, F and G, of the
Higher Education Act of 1965, as amended or supplemented and in effect from time
to time, or any successor enactment thereto, and all regulations promulgated
thereunder and any directives issued by the Secretary of Education.
"Insurance" or "Insured" or "Insuring" means, with respect to a FFELP
Loan, the insuring by the Secretary of Education (as evidenced by a Certificate
of Insurance or other document or certification issued under the provisions of
the Higher Education Act) under the Higher Education Act of the principal of and
accrued interest on such FFELP Loan to the maximum extent permitted under the
Higher Education Act for FFELP Loans originated, held and serviced in full
compliance with the Higher Education Act.
"Insured Loans" means FFELP Loans which are Insured.
"Interest Subsidy Payments" means interest subsidy payments received
from the Secretary of Education pursuant to Section 428 of the Higher Education
Act or similar payments authorized by federal law or regulation.
"Loan Purchase Agreement" means this Loan Purchase Agreement including
all exhibits and schedules attached hereto, and any addenda, supplements or
amendments hereto.
3
"Loan Purchase Date" means the date as described in Section 2(b)
hereof.
"Loan Purchase Regulations" means the rules and regulations of the
Corporation, as may be adopted by the Corporation from time to time (with the
consent of any persons required under the terms of the applicable Financing
Agreement), which pertain to the Program, which shall incorporate all
requirements specified in any indentures or other financing arrangements to
which the Corporation is subject.
"Loan Transfer Schedule" means a written schedule on a form provided by
the Corporation or its servicing agent identifying the Borrower on the FFELP
Loans to be purchased hereunder.
"Master Note" means a Master Promissory Note in the form mandated by
Section 432(m)(1)(D) of the Higher Education Act, as added by Pub. L.
105-244, Section 427, 112 Stat. 1702 (1998) as amended by Public Law No: 106-554
(enacted December 21, 2000) and as codified at 20 U.S.C. Section 1082(m)(1).
"MPN Loan" means a FFELP Loan evidenced by a Master Note.
"Program" means the Corporation's Eligible Loan acquisition program
under which the Trustee will acquire Eligible Loans to assist students in
obtaining a post-secondary education.
"Secretary of Education" means the Commissioner of Education and the
Secretary of the United States Department of Education (who succeeded to the
functions of the Commissioner of Education pursuant to the Department of
Education Organization Act), or any officer, board, body, commission or agency
succeeding to the functions thereof under the Higher Education Act.
"Seller" means EFS Finance Co., an Indiana corporation, which is an
"eligible lender" under the criteria established by the Higher Education Act
that has received an eligible lender designation by the Secretary of Education
with respect to Insured Loans or from a Guarantee Agency with respect to
Guaranteed Loans, identified in the introduction to this Loan Purchase
Agreement, which is selling FFELP Loans to the Corporation hereunder or, if
Seller is not designated as an eligible lender under the Higher Education Act,
Seller holds beneficial ownership of FFELP Loans through its eligible lender
trustee, which is an eligible lender under the Higher Education Act.
"Special Allowance Payments" means special allowance payments
authorized to be made by the Secretary of Education pursuant to Section 438 of
the Higher Education Act or similar allowances authorized from time to time by
federal law or regulation.
"Trust Agreement" means one of the following, as applicable: Trust
Indenture between NEBHELP, INC. as assignee and Norwest Bank Minnesota, National
Association, as successor trustee, dated as of December 1, 1986; the Trust
Indenture dated as of June 1, 1993, between NEBHELP, INC. as assignee and
Norwest Bank Minnesota, National Association, as trustee; Trust Indenture
between NEBHELP, INC. as assignee and Norwest Bank Minnesota, National
Association, as successor trustee, dated as of November 15, 1985; Trust
Indenture between NEBHELP, INC. as assignee and Norwest Bank Minnesota, National
Association, as successor
4
trustee, dated as of July 1,1988; Trust Indenture between NEBHELP, INC. as
assignee and Norwest Bank Minnesota, National Association, as trustee, dated as
of September 1, 1993; and Trust Indenture between NEBHELP, INC. as assignee and
Norwest Bank Minnesota, National Association, as trustee, dated as of May 1,
1997.
"Trustee" means Xxxxx Fargo Bank Minnesota, National Association,
acting in its capacity as Eligible Lender Trustee under the Trust Agreement or
Eligible Lender Trust Agreement, as applicable, and not in its individual
capacity.
"Warehouse Loan Agreement" means the Amended and Restated Warehouse
Loan and Security Agreement dated as of April 28, 2003, by and among the
Trustee, the Corporation as Borrower, NELnet Student Loan Warehouse
Corporation-1, as original borrower, Zions First National Bank as Trustee, Royal
Bank of Canada as Alternate Lender and Facility Agent, and Thunder Bay Funding
Inc. as Lender.
Section 2. PURCHASE OF FFELP LOANS.
(a) Subject to the terms and conditions and in reliance
upon the representations, warranties and agreements set forth herein,
the Seller agrees to sell to the Trustee, acting on behalf of the
Corporation, and the Corporation, acting by and through the Trustee
under the Trust Agreement or Eligible Lender Trust Agreement, as
applicable, on behalf of the Corporation, agrees to buy from the
Seller, a portfolio of FFELP Loans which are Eligible Loans in the
aggregate unpaid principal amount as set forth in the Loan Transfer
Addendum in the form set forth in Exhibit A hereto. Additional
portfolios of FFELP Loans may be purchased from the Seller hereunder by
the Corporation by and through the Trustee from time to time in the
future, if the parties hereto execute and deliver a subsequent Loan
Transfer Addendum for each such purchase of a portfolio in the form set
forth in Exhibit A hereto, reflecting the aggregate unpaid principal
balance of Eligible Loans contained in such portfolio and the Loan
Purchase Date, and if the Seller executes and delivers to the
Corporation all documents required under Section 4 hereof as of the
applicable Loan Purchase Date. Any subsequent purchase of an additional
portfolio of FFELP Loans shall be governed in all respects by this Loan
Purchase Agreement together with the Loan Transfer Addendum pertaining
to such portfolio. The Seller shall deliver a Loan Transfer Schedule to
the Corporation, not less than thirty (30) days prior to the applicable
Loan Purchase Date. Consummation of the sale of each FFELP Loan shall
require execution and delivery to the Corporation of the Seller's
Closing Certificate in the form of Exhibit B hereto (and delivery of
the documents described in Exhibit B hereto), the blanket endorsement
and xxxx of sale as well as execution and delivery by the Seller in the
forms set forth in Exhibits C and D hereto, respectively. It is the
intention of the Seller that the transfer from the Seller to the
Trustee on behalf of the Corporation constitutes a true sale of the
FFELP Loans hereunder and that neither the interest in nor title to the
FFELP Loans shall become or be deemed property of the Seller for any
purpose under applicable law.
5
(b) Delivery and payment for the FFELP Loans shall take
place at a location and on a date (the "Loan Purchase Date") to be
specified by the Corporation. The applicable Loan Purchase Date shall
not be later than the date set forth in the Loan Transfer Addendum
pertaining to such FFELP Loans.
(c) Subject to the terms and conditions of this Loan
Purchase Agreement, the Corporation agrees to purchase the FFELP Loans
by and through the Trustee at a price equal to 100% of the outstanding
unpaid principal amount thereof on the Loan Purchase Date with proceeds
from the obligations issued pursuant to the Financing Agreement, or
such other amount agreed upon and specified in the Loan Transfer
Addendum as set forth in Exhibit A. The Seller shall be responsible for
reporting to the Secretary of Education and, if required by the
provisions of the Higher Education Act, offsetting against Interest
Subsidy Payments and Special Allowance Payments made to the Seller by
the Secretary of Education the entire amount of any origination fee
which is authorized to be charged by the Higher Education Act with
respect to the FFELP Loans sold hereunder. Additionally, the Seller
shall, as a condition to the purchase by the Corporation of any FFELP
Loan, be required to pay to the Corporation on the Loan Purchase Date
the amount of any such origination fee which has not at that time been
used to offset such Special Allowance Payments or Interest Subsidy
Payments, to the extent that the Special Allowance Payments or Interest
Subsidy Payments received by the Trustee in connection with such FFELP
Loans shall be affected. Seller shall continue due diligence servicing
in compliance with the Higher Education Act, at Seller's cost, up to
the applicable Loan Purchase Date; thereafter, servicing shall be paid
for by, and shall be the responsibility of, the Corporation.
(d) Subject to the terms and conditions of this Loan
Purchase Agreement, Seller shall sell to the Corporation, by and
through the Trustee, all Eligible Loans made to the same Borrower(s)
which are held by or on behalf of Seller (serial loans).
(e) If Seller originates or purchases a FFELP Loan which
is a consolidation loan under Section 428C of the Higher Education Act,
and the proceeds of such consolidation loan are used to repay the
principal and interest due on a FFELP Loan sold by Seller to the
Corporation hereunder, then Seller shall rebate the premiums paid by
the Corporation to Seller in connection with the purchase of said FFELP
Loan by paying to the Corporation an amount equal to the same
percentage of the principal balance of said FFELP Loan then outstanding
as was originally paid by the Corporation therefor.
Section 3. REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF THE
SELLER.
(a) With respect to FFELP Loans sold on a Loan Purchase
Date, the Seller hereby makes the representations and warranties set
forth in Exhibit E hereto as of such Loan Purchase Date. Each
representation, warranty, certification, covenant
6
and agreement contained in this Loan Purchase Agreement shall survive
the applicable Loan Purchase Date.
(b) The Seller shall not organize under the law of any
jurisdiction other than the State under which it is organized as of the
date hereof (whether changing its jurisdiction of organization or
organizing under an additional jurisdiction) without giving 30 days
prior written notice of such action to the Corporation. Before
effecting such change, the Seller shall prepare and file in the
appropriate filing office any financing statements or other statements
necessary to continue the perfection of the Corporation's interests in
the FFELP Loans.
Section 4. CONDITIONS OF PURCHASE. The Corporation's obligation to
purchase and pay for the FFELP Loans hereunder by and through the Trustee as of
the date hereof and any applicable Loan Purchase Date shall be subject to each
of the following conditions precedent:
(a) All representations, warranties and statements by or
on behalf of the Seller contained in this Loan Purchase Agreement shall
be true as of the date hereof and on the applicable Loan Purchase Date.
(b) Any notification to or approval by the Secretary of
Education or a Guarantee Agency required by the Higher Education Act or
a Guarantee Agreement as a condition to the assignment of the FFELP
Loans shall have been made or received and evidence thereof delivered
to the Corporation.
(c) The entire interest of the Seller in each FFELP Loan
shall have been duly assigned by endorsement in the form set forth in
Exhibit C hereto, such endorsement to be without recourse except as
provided in Section 6 hereof.
(d) Physical custody and possession of the FFELP Loans
(including all information and documentation which is described in the
Seller's Closing Certificate as specified in Exhibit B hereto) shall be
transferred in the manner directed by the Corporation.
(e) The Corporation and the Facility Agent shall receive
an opinion of the Seller's counsel, dated as of the date hereof
covering each sale of FFELP Loans, in form and substance satisfactory
to the Corporation, the Facility Agent and the Trustee with respect to
the Trust Agreement or Zions First National Bank as Trustee with
respect to the Warehouse Loan Agreement, as applicable, to the effect
that (i) this Loan Purchase Agreement has been duly authorized,
executed and delivered by the Seller and constitutes the legal, valid,
binding and enforceable obligation of the Seller, (ii) the blanket
endorsement and xxxx of sale required by this Loan Purchase Agreement
have been duly authorized, executed and delivered by the Seller, (iii)
with respect to all Insured Loans being acquired, the applicable
Contract of Insurance has been duly authorized, executed and delivered
by the Seller, (iv) with respect to all Guaranteed Loans being
acquired, the applicable Guarantee Agreement has been duly
7
authorized, executed and delivered by the Seller, and (v) assuming the
due execution and delivery thereof, each FFELP Loan constitutes the
legal, valid and binding obligation of the Borrower (and of each
endorser, if any) thereof, enforceable in accordance with its terms,
(vi) to the knowledge of the Seller's counsel, the execution and
delivery of this Loan Purchase Agreement, the consummation of the
transactions therein contemplated and compliance with the terms,
conditions and provisions of this Loan Purchase Agreement do not and
will not conflict with or result in a breach of any of the terms,
conditions or provisions of the charter, articles or bylaws of the
Seller or any agreement or instrument to which the Seller is a party or
by which it is bound or constitute a default thereunder, (vii) to the
knowledge of the Seller's counsel, the Seller is not a party to or
bound by any agreement or instrument or subject to any charter or other
corporation restriction or judgment, order, writ, injunction, decree,
law, rule or regulation which may materially and adversely affect the
ability of the Seller to perform its obligations under this Loan
Purchase Agreement, (viii) no consent, approval or authorization of any
government or governmental body, including, without limitation, the
Federal Deposit Insurance Corporation ("FDIC"), the Comptroller of the
Currency, the Board of Governors of the Federal Reserve System or any
state bank regulatory agency, is required in connection with the
consummation of the transactions contemplated in this Loan Purchase
Agreement, (ix) this Loan Purchase Agreement shall constitute a
security agreement under Nebraska law and shall be effective to create,
in favor of the Corporation, a perfected valid security interest in the
FFELP Loans subject to no prior liens, (x) if the Corporation and the
Seller are affiliates, that (A) if the Seller became a debtor under the
United States Bankruptcy Code, 11 U.S.C. Sections 101 et seq., as
amended (the "Bankruptcy Code"), (1) Section 541(a)(l) of the
Bankruptcy Code would not apply to deem the FFELP sold by the Seller to
the Corporation and the proceeds therefrom as property of the
bankruptcy estate of the Seller and therefore (2) Section 362(a) of the
bankruptcy Code would not apply to stay payment to the Corporation or
its assignees and (B) if the Seller became a debtor under the
Bankruptcy Code, a court would not disregard the separate identity of
the Corporation so that the assets of the Seller would be consolidated
with and become a part of the Seller's bankruptcy estate, and (xi) if
the Seller is a bank or savings association the deposits of which are
insured by the FDIC (a "Bank") and the FDIC were appointed as receiver
or conservator of such Bank, a court would not recharacterize the
transfer and assignment of the FFELP Loans to the Borrower as a pledge
to secure a borrowing rather than a sale of the FFELP Loans.
(f) Delivery by the Seller to the Corporation on or
before the date hereof of the following documentation: Seller's general
certificate in the form of Exhibit G hereto; Seller's Closing
Certificate in the form of Exhibit B hereto; blanket endorsement in the
form of Exhibit C hereto; xxxx of sale in the form of Exhibit D hereto;
UCC-1 Financing Statements evidencing the transfer from the Seller to
the Corporation and the Trustee on behalf of the Corporation, and UCC
lien searches sufficiently in advance of the date hereof so as to
permit review thereof by the Corporation to its satisfaction, if either
or both are requested by the Corporation or
8
a party to the Financing Agreement; and UCC termination statements or
releases, if any, releasing any security interest granted by the Seller
in any FFELP Loan.
(g) Delivery by the Seller to the Corporation, prior to
the Loan Purchase Date, of a fully executed and completed Loan Transfer
Addendum substantially in the form of Exhibit A hereto with respect to
FFELP Loans referred to in the xxxx of sale, and delivery of a Loan
Transfer Schedule as required in Section 2(a) hereof.
(h) Adequate funds are available to the Corporation from
an indenture or other financing agreement relating to the Corporation's
bonds and/or notes which will finance the purchase of FFELP Loans under
this Loan Purchase Agreement.
(i) Delivery by the Seller of a closing certificate dated
as of the date hereof in form and substance satisfactory to the
Corporation, Facility Agent and the Trustee with respect to the Trust
Agreement or Zions First National Bank as Trustee with respect to the
Warehouse Loan Agreement, as applicable, and a certificate dated as of
the date hereof of the a certificate in the form attached as Annex A to
the true sale/non-consolidation opinion of Xxxxx Xxxx LLP dated April
28, 2003.
Section 5. REJECTION OF FFELP LOANS.
(a) If (i) the Seller is unable to make or furnish the
representations and warranties required to be made or furnished by it
pursuant to this Loan Purchase Agreement as to a FFELP Loan or (ii) the
Corporation determines that the Seller is unable to fulfill one or more
covenants or conditions of this Loan Purchase Agreement as to a FFELP
Loan, or (iii) the Corporation, in its reasonable judgment, deems that
a FFELP Loan does not comply with the terms and conditions of this Loan
Purchase Agreement or is not being delivered in compliance with such
terms and conditions, or (iv) the Corporation, in its reasonable
judgment deems that a FFELP Loan is for any reason unacceptable to it,
then the Corporation, within thirty days of the Loan Purchase Date, may
refuse to accept and pay for such FFELP Loan (or any substitute FFELP
Loan offered by the Seller in lieu thereof).
(b) If the Corporation rejects a FFELP Loan, any such
FFELP Loan shall be returned to the Seller by registered mail (for
repurchase pursuant to Section 6 hereof if the student loan has
previously been purchased by the Corporation), together with a letter
identifying each returned FFELP Loan and stating the basis for its
return. The Corporation shall cause any FFELP Loan returned to the
Seller which has been endorsed to the Trustee to be endorsed by the
Trustee to the Seller in the form set forth in Exhibit F hereto.
The liability of the Corporation in connection with the loss of or
damage to any FFELP Loan to be returned to the Seller is limited to such loss or
damage occurring as a result of its gross negligence or willful misconduct in
handling or safekeeping FFELP Loans.
9
Section 6. REPURCHASE OBLIGATION. If:
(i) any representation or warranty made or
furnished by the Seller in or pursuant to this Loan Purchase
Agreement shall prove to have been materially incorrect;
(ii) the Secretary of Education or a Guarantee
Agency, as the case may be, refuses to honor all or part of a
claim filed with respect to a FFELP Loan (including any claim
for Interest Subsidy Payments, Special Allowance Payments,
Insurance, reinsurance or Guarantee payments) on account of
any circumstance or event that occurred prior to the sale of
such FFELP Loan to the Corporation by and through the Trustee;
(iii) on account of any circumstance or event that
occurred prior to the sale of a FFELP Loan to the Corporation,
by and through the Trustee, a defense is asserted by a
Borrower (or endorser, if any) of the FFELP Loan with respect
to Borrower's obligation to pay all or any part of the FFELP
Loan, and the Corporation, in good faith, believes that the
facts reported, if true, raise a reasonable doubt as to the
legal enforceability of such FFELP Loan;
(iv) a FFELP Loan is required to be repurchased
pursuant to subsection 5(b) hereof; or
(v) the instrument which Seller purports to be a
FFELP Loan is not, in fact, a FFELP Loan;
then the Seller shall repurchase such FFELP Loan or purported FFELP Loan upon
the request of the Corporation or the Facility Agent by paying to the
Corporation (or Zions First National Bank, as Trustee under the Warehouse Loan
Agreement, if required by the Facility Agent) the then outstanding principal
balance of such FFELP Loan or purported FFELP Loan multiplied by the percentage
used to calculate the purchase price specified in the applicable Loan Transfer
Addendum (or such greater amount as may be necessary to make the Corporation and
the Trustee whole in light of the purchase price originally paid by the
Corporation for such loan), plus interest and applicable Special Allowance
Payments with respect to such FFELP Loan or purported FFELP Loan from the Loan
Purchase Date to and including the date of repurchase, plus any amounts owed to
the Secretary of Education with respect to the repurchased FFELP Loan or
purported FFELP Loan, plus any attorneys' fees, legal expenses, court costs,
servicing fees or other expenses incurred by the Corporation and the Trustee in
connection with such FFELP Loan or purported FFELP Loan.
Section 7. NOTIFICATION TO BORROWERS. The servicing agent on behalf of
the Seller shall notify Borrowers under the FFELP Loans as required by the
Higher Education Act of the assignment and transfer to the Trustee of the
Seller's interest in such FFELP Loans and the Seller shall direct each Borrower
to make all payments thereon directly to the Corporation or as it may otherwise
designate.
10
Section 8. OBLIGATIONS TO FORWARD PAYMENTS AND COMMUNICATIONS.
(a) The Seller shall promptly remit, or cause to be
remitted, to the Corporation all funds received by the Seller after the
applicable Loan Purchase Date which constitute payments of principal or
interest (including Interest Subsidy Payments) or Special Allowance
Payments accrued after the applicable Loan Purchase Date with respect
to any FFELP Loan.
(b) The Seller shall immediately transmit to the
Corporation any communication received by the Seller after the
applicable Loan Purchase Date with respect to a FFELP Loan or the
Borrower under such a FFELP Loan. Such communication shall include, but
not be limited to, letters, notices of death or disability,
adjudication of bankruptcy and similar documents and forms requesting
deferment of repayment or loan cancellations.
Section 9. PAYMENT OF EXPENSES AND TAXES. Each party to this Loan
Purchase Agreement shall pay its own expenses incurred in connection with the
preparation, execution and delivery of this Loan Purchase Agreement and the
transactions herein contemplated, including, but not limited to, the fees and
disbursements of counsel; provided, however, that Seller shall pay any transfer
or other taxes and recording or filing fees payable in connection with the sale
and purchase of the FFELP Loans.
Section 10. INDEMNIFICATION. The Seller specifically acknowledges that
the Corporation, in obtaining financing, will be making representations and
warranties regarding the FFELP Loans based in part on the accuracy of the
Seller's representations and warranties in this Loan Purchase Agreement. The
Seller agrees to indemnify and save the Trustee, the Corporation, the parties to
the Financing Agreement and noteholders or Credit Support Provider under the
Financing Agreement (together with each of their respective successors,
assignees, officers, directors, agents and employees) harmless of, from and
against any and all loss, liability, cost, damage or expense, including
reasonable attorneys' fees and costs of litigation, incurred by reason of any
breach of the Seller's warranties, representations or covenants hereunder or any
false or misleading representations of the Seller or any failure to disclose any
matter which makes the warranties and representations herein misleading or any
inaccuracy in any information furnished by the Seller in connection herewith.
Section 11. SPECIAL PROVISIONS RELATING TO MPN LOANS.
(a) The Seller hereby represents and warrants that the
Seller is transferring all of its right title and interest in the MPN
Loans to the Corporation, that it has not assigned any interest in such
MPN Loans (other than security interests that have been released or
ownership interests that the Seller has reacquired) to any person other
than the Corporation, and that no prior holder of the MPN Loans has
assigned any interest in such MPN Loans (other than security interests
that have been released or ownership interests that such prior holder
has reacquired) to any person other than a predecessor in title to the
Seller. The Seller hereby covenants that the
11
Seller shall not attempt to transfer to any other person any interest
in any MPN Loan assigned hereunder.
(b) The Seller hereby authorizes the Corporation to file
a UCC-1 financing statement identifying the Seller as debtor and the
Corporation as secured party and describing the MPN Loans sold pursuant
to this Loan Purchase Agreement. The preparation or filing of such
UCC-1 financing statement is solely for additional protection of the
Corporation's interest in the MPN Loans and shall not be deemed to
contradict the express intent of the Seller and the Corporation that
the transfer of MPN Loans under this Loan Purchase Agreement is an
absolute assignment of such MPN Loans and is not a transfer of such MPN
Loans as security for a debt.
Section 12. OTHER PROVISIONS.
(a) The Seller shall, at its expense, furnish to the
Corporation such additional information concerning the Seller's student
loan portfolio as the Corporation may reasonably request.
(b) The Seller shall, at its expense, execute all other
documents and take all other steps as may be requested by the
Corporation or the Trustee from time to time to effect the sale
hereunder of the FFELP Loans.
(c) The provisions of this Loan Purchase Agreement cannot
be waived or modified unless such waiver or modification be in writing
and signed by the parties hereto, after written consent is obtained
from the Facility Agent. Inaction or failure to demand strict
performance shall not be deemed a waiver.
(d) This Loan Purchase Agreement shall be governed by the
laws of the State of Nebraska.
(e) All covenants and agreements herein contained shall
extend to and be obligatory upon all successors of the respective
parties hereto.
(f) This Loan Purchase Agreement may be simultaneously
executed in several counterparts, each of which shall be an original
and all of which shall constitute but one and the same instrument.
(g) If any provision of this Loan Purchase Agreement
shall be held, deemed to be or shall, in fact, be inoperative or
unenforceable as applied in any particular situation, such
circumstances shall not have the effect of rendering the provision in
question inoperative or unenforceable in any other situation or of
rendering any other provision or provisions herein contained invalid,
inoperative or unenforceable to any extent whatsoever. The invalidity
of any one or more phrases, sentences, clauses or paragraphs herein
contained shall not affect the remaining portions of this Loan Purchase
Agreement or any part hereof.
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(h) All notices, requests, demands or other instruments
which may or are required to be given by either party to the other
shall be in writing, and each shall be deemed to have been properly
given when served personally on an officer of the party to whom such
notice is given or upon expiration of a period of 48 hours from and
after the postmark thereof when mailed, postage prepaid, by registered
or certified mail, requesting return receipt, by overnight courier, or
by telecopy, addressed as follows:
If to the Corporation:
Nelnet Education Loan Funding, Inc.
000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to the Trustee at:
Xxxxx Fargo Bank Minnesota, National Association
Corporate Trust Services
6th & Marquette, X0000-000
Xxxxxxxxxxx, Xxxxxxxxx 00000
Attention: Xxxxx X. Xxxxx
Telephone: 000-000-0000
Facsimile: 000-000-0000
if to the Facility Agent:
Royal Bank of Canada
0000 Xxxxxxxxxxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Managing Director
If to the Seller, addressed in the manner as set forth in the first
paragraph of this Loan Purchase Agreement.
Either party may change the address and name of the addressee
to which subsequent notices are to be sent to it by notice to the
others given as aforesaid, but any such notice of change, if sent by
mail, shall not be effective until the fifth day after it is mailed.
(i) This Loan Purchase Agreement may not be terminated by
either party hereto except in the manner and with the effect herein
specifically provided for.
13
(j) Time is of the essence in this Loan Purchase
Agreement.
(k) This Loan Purchase Agreement may not be amended
without prior written consent of the Bond Insurer.
(1) This Loan Purchase Agreement shall not be assignable
by the Seller, in whole or in part, without the prior written consent
of the Corporation, the Bond Insurer and the Facility Agent.
(m) No remedy by the terms of this Loan Purchase
Agreement conferred upon or reserved to the Corporation is intended to
be exclusive of any other remedy, but each and every such remedy shall
be cumulative and in addition to every other remedy given under this
Loan Purchase Agreement or existing at law or in equity (including,
without limitation, the right to such equitable relief by way of
injunction) or by statute on or after the date of this Loan Purchase
Agreement.
(n) Acts to be taken by the Corporation with respect to
acquiring and holding title to FFELP Loans hereunder shall be taken by
the Trustee as directed by the Corporation, which qualifies as an
"eligible lender" trustee under the Higher Education Act, and all
references herein to the Corporation shall incorporate by this
reference the fact that the Trustee will be acquiring and holding title
to FFELP Loans on behalf of the Corporation, all as required under the
Higher Education Act.
(o) The parties hereto acknowledge that the Trustee with
respect to the Trust Agreement or Zions First National Bank as Trustee
with respect to the Warehouse Loan Agreement, as applicable, the
Facility Agent and other parties to the Financing Agreement, shall be
third party beneficiaries of this Loan Purchase Agreement with the
power and right to enforce the provisions thereof, and the Trustee with
respect to the Trust Agreement or Zions First National Bank as Trustee
with respect to the Warehouse Loan Agreement, as applicable, and any
such credit providers may become an assignee of the Corporation. The
foregoing creates a permissive right on the part of such third party
beneficiaries, and such third party beneficiaries shall be under no
duties or obligations hereunder.
(p) This Loan Purchase Agreement has been made and
entered into not only for the benefit of the Corporation and Seller but
also for the benefit of the Trustee with respect to the Trust Agreement
or Zions First National Bank as Trustee with respect to the Warehouse
Loan Agreement, as applicable, in connection with the financing of
Eligible Loans as defined in the Warehouse Loan Agreement, and upon
assignment by the Corporation to the Trustee with respect to the Trust
Agreement or Zions First National Bank as Trustee with respect to the
Warehouse Loan Agreement, as applicable, its provisions may be enforced
not only by the parties to this Loan Purchase Agreement but by the
Trustee with respect to the Trust Agreement or Zions First National
Bank as Trustee with respect to the Warehouse Loan Agreement, as
applicable. The foregoing creates a permissive right on behalf of the
Trustee with
14
respect to the Trust Agreement or Zions First National Bank as Trustee
with respect to the Warehouse Loan Agreement, as applicable, and
neither shall be under any duties or obligations hereunder.
This Loan Purchase Agreement shall inure to the
benefit of the Trustee with respect to the Eligible Lender Trust
Agreement and Zions First National Bank, as Trustee with respect to the
Warehouse Loan Agreement and its successors and assigns. Without
limiting the generality of the foregoing, all representations,
covenants and agreements in this Loan Purchase Agreement which
expressly confer rights upon the Trustee with respect to the Eligible
Lender Trust Agreement and Zions First National Bank, as Trustee with
respect to the Warehouse Loan Agreement shall be for the benefit of and
run directly to, the Trustee with respect to the Eligible Lender Trust
Agreement and Zions First National Bank, as Trustee with respect to the
Warehouse Loan Agreement, and the Trustee with respect to the Eligible
Lender Trust Agreement and Zions First National Bank, as Trustee with
respect to the Warehouse Loan Agreement shall be entitled to rely on
and enforce such representations, covenants and agreements to the same
extent as if it were a party hereto. The foregoing creates a permissive
right on behalf of the Trustee with respect to the Eligible Lender
Trust Agreement and Zions First National Bank, as Trustee with respect
to the Warehouse Loan Agreement, and neither the Trustee with respect
to the Eligible Lender Trust Agreement nor Zions First National Bank,
as Trustee with respect to the Warehouse Loan Agreement shall be under
any duties or obligations hereunder.
If there is an Event of Default (as defined in the
Warehouse Loan Agreement) under the Warehouse Loan Agreement and Zions
First National Bank as Trustee forecloses on its security interest on
the Eligible Loans, then Zions First National Bank shall assume all
duties and obligations of the Corporation hereunder.
Section 13. SECURITY INTEREST. The parties to this Loan Purchase
Agreement intend that the conveyance of the Seller's right, title and interest
in and to the FFELP Loans sold pursuant to this Loan Purchase Agreement (the
"Student Loans") shall constitute an absolute sale, conveying good title free
and clear of any liens, claims, encumbrances or rights of others from the Seller
to the Corporation. The parties to this Loan Purchase Agreement intend that the
arrangements with respect to the Student Loans shall constitute a purchase and
sale of such Student Loans and not a loan. In the event, however, that it were
determined by a court of competent jurisdiction that the transactions evidenced
by this Loan Purchase Agreement shall constitute a loan and not a purchase and
sale, the parties hereto intend that this Loan Purchase Agreement would
constitute a security agreement under applicable law and that the Seller shall
be deemed to have granted, and hereby does grant (subject to the condition
above), to the Corporation (and the Trustee) a first priority perfected security
interest in all of the Seller's right, title and interest, whether now owned or
hereafter acquired, in, to and under all accounts, general intangibles, chattel
paper, instruments, documents, goods, investment property, money, deposit
accounts, certificates of deposit, letters of credit, advices of credit and
other property consisting of, arising from or related to the following
collateral to secure the rights of the
15
Corporation hereunder and the obligations of the Seller hereunder (collectively,
the "Pledged Collateral"):
(a) all Student Loans;
(b) all revenues and recoveries of principal from Student
Loans, including all borrower payments and reimbursements of principal
and accrued interest on default claims received from any Guarantor;
(c) any other revenues and recoveries of principal and
interest and other payments and reimbursements of principal and accrued
interest received with respect to any Student Loan and any other
collection of cash with respect to such Student Loan (including, but
not limited to, Interest Subsidy Payments, Special Allowance Payments,
finance charges and payments representing the repurchase of any Student
Loan or rebate of premium thereon pursuant to this Loan Purchase
Agreement) received or deemed to have been received and all other cash
collections, tax refunds and other cash proceeds of the Pledged
Collateral held in various funds and accounts created under this Loan
Purchase Agreement;
(d) all other security interests or liens and property
subject thereto from time to time, if any, purporting to secure payment
of such Student Loans, whether pursuant to the contract related to such
Student Loans or otherwise;
(e) all documents, books, records and other information
(including, without limitation, computer programs, tapes, disks, punch
cards, data processing software and related property and rights)
maintained with respect to Student Loans otherwise in respect of the
Pledged Collateral; and
(f) all proceeds of the foregoing (including, but not by
way of limitation, all cash proceeds, accounts, accounts receivable,
notes, drafts, acceptances, chattel paper, checks, deposit accounts,
insurance proceeds, condemnation awards, rights to payment of any and
every kind, and other forms of obligations and receivables or other
liquidated property which at any time constitute all or part or are
included in the proceeds of any of the foregoing property).
The Seller agrees that from time to time, at its expense, it will
properly execute and deliver all further instruments and documents (including,
without limitation, UCC-1 financing statements and custodian agreements with the
Servicer), and take all further action that Corporation or Facility Agent may
reasonably request in order to perfect, protect or more fully evidence the
Corporation's or the Facility Agent's interest in the Pledged Collateral or to
enable the Corporation to exercise or enforce any of its rights hereunder.
Section 14. INFORMATION AND REPORTING. Seller shall furnish to the
Corporation: (a) upon execution of this Agreement, Seller's most recent audited
financial statement prepared in accordance with generally accepted accounting
principles and duly certified by nationally recognized
16
independent certified public accountants selected by Seller, as well as Seller's
most recent unaudited financial statement and balance sheet; (b) as soon as
available and in any event within 90 days after the end of each fiscal year of
the Seller, an updated audited financial statement prepared in accordance with
generally accepted accounting principles and duly certified by nationally
recognized independent certified public accountants selected by Seller; and (c)
such other financial information as the Corporation may reasonably request from
time to time. Seller shall verify and reconcile Eligible Loan disbursements and
cancellations of Eligible Loans sold hereunder, in such manner as the
Corporation may reasonably request from time to time. Seller shall furnish to
the Corporation a certificate of good standing and a certified copy of
resolutions of Seller's board of directors approving and authorizing execution
and performance of this Agreement and all ancillary documents with respect
thereto in a form reasonably satisfactory to the Corporation.
17
IN WITNESS WHEREOF, the parties have hereunto set their hands as of the
day and year first above written.
EFS Finance Co. Nelnet Education Loan Funding, Inc., f/k/a
NEBHELP, INC.
By: /s/ [ILLEGIBLE] By: /s/ [ILLEGIBLE]
--------------------- ---------------------
Title: Vice President Title: President
18
EXHIBIT A TO LOAN PURCHASE AGREEMENT
LOAN TRANSFER ADDENDUM
This Loan Transfer Addendum (the "Addendum") is made and entered into
as of the_______________________day of_________________,________, by and between
Nelnet Education Loan Funding, Inc., f/k/a NEBHELP, INC. (the "Corporation") and
_____________________________(the "Seller").
WHEREAS, the parties hereto entered into that Loan Purchase Agreement
dated as of ________________________,__________, (the "Loan Purchase
Agreement"), and the Seller wishes to sell a portfolio of Eligible Loans (as
defined in the Loan Purchase Agreement) to the Corporation, pursuant to and in
accordance with the terms and conditions of the Loan Purchase Agreement.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, the parties hereto agree as follows:
1. Definitions. All capitalized terms in this Addendum shall have
the same meanings given to them in the Loan Purchase
Agreement, unless otherwise specifically stated herein.
2. Purchase of Eligible Loans. Subject to the terms and
conditions of the Loan Purchase Agreement and in reliance upon
the representations, warranties and covenants as set forth in
the Loan Purchase Agreement, the Seller agrees to sell to the
Trustee, as trustee under the [Trust] [Eligible Lender Trust]
Agreement on behalf of the Corporation, a portfolio of
Eligible Loans identified in the Loan Transfer Schedule
attached hereto, having an aggregate outstanding principal
balance of approximately $__________(the "Current Purchase
Portfolio").
3. Purchase Price. Subject to the terms and conditions of the
Loan Purchase Agreement, the Corporation agrees to purchase
the Eligible Loans in the Current Purchase Portfolio at a
purchase price equal to ________________% of the aggregate
unpaid principal balance thereon plus 100% of the accrued and
unpaid interest thereon, each as of the Loan Purchase Date set
forth in Section 4 hereof.
4. Loan Purchase Date. The Loan Purchase Date shall be no later
than ________, _____.
5. Representations and Warranties. The Seller hereby reconfirms
all the representations and warranties set forth in the Loan
Purchase Agreement as of the Loan Purchase Date set forth in
Section 4 hereof.
6. Effect on Loan Purchase Agreement. This Addendum sets forth
the terms of purchase and sale solely with respect to the
Current Purchase Portfolio. This Addendum shall have no effect
upon any other sale or purchase of any Eligible Loans
consummated or contemplated prior to or after the Loan
Purchase Date, and all other
19
terms, conditions and agreements contained in the Loan
Purchase Agreement shall remain in full force and effect.
Prior or subsequent purchases and sales of Eligible Loans
shall each be governed by a separate Loan Transfer Addendum.
7. Special Terms. [Reserved]
NAME OF SELLER: Nelnet Education Loan Funding, Inc., f/k/a
NEBHELP, INC.
By:_________________________ By:_________________________
Title:______________________ Title:______________________
20
EXHIBIT B TO LOAN PURCHASE AGREEMENT
SELLER'S CLOSING CERTIFICATE
(DO NOT COMPLETE)(the "Seller") does hereby certify that all
representations, warranties and statements by or on behalf of the Seller
contained in a certain Loan Purchase Agreement dated ______________,_______(the
"Agreement"), by and between the Seller and Nelnet Education Loan Funding, Inc.,
f/k/a NEBHELP, INC. (the "Corporation"), are true and correct on and as of the
Loan Purchase Date, without exception or qualification whatsoever;
FURTHERMORE, the Seller does hereby certify that the following
documents, where applicable to each FFELP Loan (as defined in the Agreement)
acquired under the Agreement, have heretofore been furnished to the Corporation
or are simultaneously herewith delivered in accordance with the instructions of
the Corporation, pursuant to subsection 4(d) of the Agreement:
Department of Education application or Guarantee Agency
application, as supplemented
Interim note(s) for each Loan that is not an MPN Loan
Payout note(s) for each Loan that is not an MPN Loan
Disclosure and Loan information statement
Certificate of Insurance and Contract of Insurance with
respect to each Insured Loan (or certified copy thereof)
Guarantee Agreement, Agreement for Participation in the
Guaranteed Loan Program and Notification of Loan
Approval by the Guarantee Agency with respect to each
Guaranteed Loan (or certified copy thereof)
Any other documentation held by the Seller relating to
the history of such Eligible Loan
Secretary of Education and Guarantee Agency Loan
Transfer Statements
Uniform Commercial Code financing statement, if any,
securing any interest in an Eligible Loan to be Financed,
and an executed termination statement related thereto
Evidence of Loan disbursement
Any other document required to be submitted with a claim to the
Guarantee Agency.
IN WITNESS WHEREOF, the undersigned has caused this Certificate to be
executed and delivered by an officer hereunto duly authorized as of the Loan
Purchase Date, __________________.
(DO NOT COMPLETE)
NAME OF SELLER
BY (DO NOT SIGN)
TITLE (DO NOT SIGN)
21
EXHIBIT C TO LOAN PURCHASE AGREEMENT
BLANKET ENDORSEMENT OF
STUDENT LOAN PROMISSORY NOTES
Pursuant to the Loan Purchase Agreement dated______________________,
the undersigned ("Seller"), by execution of this instrument, hereby endorses all
promissory notes purchased by Xxxxx Fargo Bank Minnesota, National Association,
as Eligible Lender Trustee (the "Trustee") under [an Amended and Restated
Warehouse Loan and Security Agreement among the Trustee, Nelnet Education Loan
Funding, Inc., f/k/a NEBHELP, INC. (the "Corporation"), Royal Bank of Canada as
Facility Agent and Alternate Lender, Zions First National Bank as Trustee, and
Thunder Bay Funding Inc., as Lender][Trust Agreement between the Trustee and
Nelnet Education Loan Funding, Inc., f/k/a NEBHELP, INC. (the "Corporation")].
This endorsement is in blank, unrestricted form. This endorsement is without
recourse, except as provided under the terms of the Loan Purchase Agreement. All
right, title, and interest of Seller in and to the promissory notes and related
documentation identified in the attached loan ledger are transferred and
assigned to Trustee on behalf of the Corporation.
This endorsement may be further manifested by attaching this instrument
or a facsimile hereof to each or any of the Promissory Notes and related
documentation acquired by the Trustee on behalf of the Corporation from Seller,
or by attaching this instrument to the loan ledger schedule, as the Corporation
may require or deem necessary.
Dated this_______day of_____________,________.
SELLER (DO NOT COMPLETE)
(DO NOT SIGN)
SIGNATURE OF AUTHORIZED OFFICER OF SELLER
22
EXHIBIT D TO LOAN PURCHASE AGREEMENT
XXXX OF SALE
FOR VALUE RECEIVED,_______________________________ (the
"Seller"), pursuant to the terms and conditions of that certain Loan Purchase
Agreement dated as of________________________________,_______ (the "Agreement")
between the Seller and Nelnet Education Loan Funding, Inc., f/k/a NEBHELP, INC.
(the "Corporation") does hereby grant, sell, assign, transfer and convey to
Xxxxx Fargo Bank Minnesota, National Association, solely in its capacity as
Eligible Lender Trustee (the "Trustee") on behalf of the Corporation and its
successors and assigns, all right, title and interest of the Seller in and to
the following:
(1) The loans described in Annex I attached hereto (the
"Loans"), including the guarantee of the Loans issued by a guarantee
agency pursuant to the Federal Family Education Loan Program (20 U.S.C.
Section 1071 et seq.);
(2) All promissory notes and related documentation
evidencing the indebtedness represented by such Loans; and
(3) All proceeds of the foregoing including, without
limitation, all payments made by the obligor thereunder or with respect
thereto, all guarantee payments made by any guarantee agency with
respect thereto, and all interest benefit payments and special
allowance payments with respect thereto made under Title IV, Part B, of
the Higher Education Act of 1965, as amended, and all rights to receive
such payments, but excluding any proceeds of the sale made hereby.
TO HAVE AND TO HOLD the same unto the Trustee on behalf of
the Corporation, its successors and assigns, forever. This Xxxx of Sale is made
pursuant to and is subject to the terms and provisions of the Agreement, and is
without recourse, except as provided in the Agreement.
IN WITNESS WHEREOF, the Seller has caused this instrument to
be executed by one of its officers duly authorized to be effective as of
the______________day of____________,________.
[NAME OF SELLER]
By: _________________________________
Title:_________________________________
23
EXHIBIT E TO LOAN PURCHASE AGREEMENT
REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS OF SELLER
A. Any information furnished by the Seller to the Corporation, or
the Corporation's agents with respect to a FFELP Loan, including the Loan
Transfer Schedule attached to the Loan Transfer Addendum, is true, complete and
correct.
B. The amount of the unpaid principal balance of each FFELP Loan
is due and owing, and no counterclaim, offset, defense or right to rescission
exists with respect to any FFELP Loan which can be asserted and maintained or
which, with notice, lapse of time or the occurrence or failure to occur of any
act or event could be asserted and maintained by the Borrower against the
Trustee or the Corporation as assignee thereof. The Seller shall have taken all
reasonable actions to assure that no maker of a FFELP Loan has or may acquire a
defense to the payment thereof. No payment of principal or interest with respect
to any FFELP Loan is, as of the date hereof, more than 60 days delinquent and no
applicable payment of principal or interest with respect to any FFELP Loan will,
at the applicable Loan Purchase Date, be more than 60 days delinquent. No FFELP
Loan carries a rate of interest less than, or in excess of, the applicable rate
of interest required by the Higher Education Act. If the Higher Education Act
permits Sellers to charge an interest rate less than the applicable rate of
interest, no FFELP Loan purchased hereunder bears interest at a rate lower than
the applicable rate of interest; provided, however, that the Corporation may
approve, in its sole discretion, in writing, interest reductions which are part
of a borrower repayment incentive program of Seller, the terms of which have
been fully described in detail and in writing to the Corporation.
C. Each FFELP Loan has been duly executed and delivered and
constitutes the legal, valid and binding obligations of the maker (and the
endorser, if any) thereof, enforceable in accordance with its terms.
D. Each FFELP Loan complies in all respects with the requirements
of the Higher Education Act and the Loan Purchase Regulations and is an Eligible
Loan, as that term is defined in the Loan Purchase Agreement.
E. The Seller or Seller's eligible lender trustee has applied for
and received the Secretary of Education's or a Guarantee Agency's designation,
as the case may be, as an "Eligible Lender" under the Higher Education Act, and
the Seller has entered into all agreements required to be entered into for
participation in the Federal Family Education Loan Program under the Higher
Education Act.
F. The Seller and the Seller's eligible lender trustee on behalf
of Seller is the sole owner and holder of each FFELP Loan and has full right and
authority to sell and assign the same free and clear of all liens, pledges or
encumbrances; no FFELP Loan has been pledged or assigned for any purpose; and
each FFELP Loan is free of any and all liens, charges, encumbrances and security
interests of any description. The Corporation has a valid and perfected first
priority security interest in the Pledged Collateral.
24
G. Each FFELP Loan is either Insured or Guaranteed; such
Insurance or Guarantee, as the case may be, is in full force and effect, is
freely transferable as an incident to the sale of each FFELP Loan; all amounts
due and payable to the Secretary of Education or a Guarantee Agency, as the case
may be, have been or will be paid in full by the Seller, and none of the FFELP
Loans has at any time been tendered to either the Secretary of Education or any
Guarantee Agency for payment.
H. There are no circumstances or conditions with respect to any
FFELP Loan, the Borrower thereunder or the creditworthiness of said Borrower
that would reasonably cause prudent private investors to regard any of the FFELP
Loans as an unacceptable investment, or adversely affect the value or
marketability thereof, the insurance thereof and any applicable Guarantee.
I. Each FFELP Loan was made in compliance with all applicable
local, State and federal laws, rules and regulations, including, without
limitation, all applicable nondiscrimination, truth-in-lending, consumer credit
and usury laws.
J. The Seller has carefully reviewed the Loan Purchase
Regulations supplied by the Corporation and has complied with the Loan Purchase
Regulations.
K. The FFELP Loans pursuant to the Agreement include all Eligible
Loans of any one Borrower held by the Seller.
L. The Seller has, and its officers acting on its behalf have,
full legal authority to engage in the transactions contemplated by the Loan
Purchase Agreement; the execution and delivery of the Loan Purchase Agreement,
the consummation of the transactions herein contemplated and compliance with the
terms, conditions and provisions of the Loan Purchase Agreement do not and will
not conflict with or result in a breach of any of the terms, conditions or
provisions of the charter, articles or bylaws of the Seller or any agreement or
instrument to which the Seller is a party or by which it is bound or constitute
a default thereunder; the Seller is not a party to or bound by any agreement or
instrument or subject to any charter or other corporation restriction or
judgment, order, writ, injunction, decree, law, rule or regulation which may
materially and adversely affect the ability of the Seller to perform its
obligations under the Loan Purchase Agreement and the Loan Purchase Agreement
constitutes a valid and binding obligation of the Seller enforceable against it
in accordance with its terms, and no consent, approval or authorization of any
government or governmental body, including, without limitation, the Federal
Savings and Loan Insurance Corporation, the Federal Deposit Insurance
Corporation, the Comptroller of the Currency, the Board of Governors of the
Federal Reserve System or any state bank regulatory agency, is required in
connection with the consummation of the transactions herein contemplated.
M. The Seller is duly organized, validly existing and in good
standing under the laws of its applicable jurisdiction and has the power and
authority to own its assets and carry on its business as now being conducted.
N. The Seller and any independent servicer have each exercised
due diligence and reasonable care in making, administering, servicing and
collecting the FFELP Loans, and the Seller has conducted a reasonable
investigation of sufficient scope and content to enable it duly to make
25
the representations and warranties contained in this Exhibit E. The Seller shall
be solely responsible for the payment of the costs and expenses incident to
origination of FFELP Loans, without any right of reimbursement therefor from the
Corporation.
O. With respect to all Insured Eligible Loans being acquired,
Insurance is in effect with respect thereto; the applicable Contract and
Certificates of Insurance are valid and binding upon the parties thereto in all
respects material to the security for any bonds and/or notes issued by the
Corporation; and the Seller is not in default in the performance of any of its
covenants and agreements made in respect thereof.
P. With respect to all Guaranteed Eligible Loans being acquired,
a Guarantee Agreement is in effect with respect thereto and is valid and binding
upon the parties thereto in all respects material to the security of the bonds
and/or notes issued by the Corporation to finance the FFELP Loans; and the
Seller is not in default in the performance of any of its covenants and
agreements made in such Guarantee Agreement.
Q. The Seller does not (i) discriminate by pattern or practice
against any particular class or category of students by requiring, as a
condition to the receipt of a student loan, that a student or his family
maintain a business relationship with the Seller, except as may be permitted
under applicable laws or (ii) discriminate on the basis of race, sex, color,
creed or national origin.
R. The FFELP Loans are a representative sample of all student
loans held by the Seller with respect to the educational institution attended
by, or the age, sex, race, national origin or place of residence of, the
Borrower to whom such loans were made, or with respect to any other identifying
characteristic of such Borrowers.
S. Each instrument transferred to the Corporation under the Loan
Purchase Agreement is a FFELP Loan which constitutes an Eligible Loan.
T. No promissory note evidencing an Eligible Loan bears any
apparent evidence of forgery or alteration or is otherwise so irregular or
incomplete as to call into question its authenticity.
U. Except as may have been disclosed by the UCC lien search
required by Section 4(f) hereof for the Seller, no other financing statements or
assignment filings naming the Seller as debtor or assignor under its legal name
or trade names has been filed.
V. The fair salable value of the assets on a going concern basis
of the Seller and its subsidiaries, on a consolidated basis, as of the time of
each sale of FFELP Loans hereunder is in excess of the total amount of their
liabilities.
26
EXHIBIT F TO LOAN PURCHASE AGREEMENT
ACKNOWLEDGMENT
The assignment of the within promissory note and related documents to
(DO NOT COMPLETE) under a Loan Purchase Agreement between ______________________
and ______________________________, dated as of___________________,________, did
not become effective thereunder, and no rights in the same have been conveyed
thereby.
Dated: (DO NOT COMPLETE)
27
EXHIBIT B
FORM OF VALUATION AGENT AGREEMENT
X-x
================================================================================
VALUATION AGENT AGREEMENT
among
RBC XXXX XXXXXXXX INC.,
as the Valuation Agent
NELNet STUDENT LOAN WAREHOUSE CORPORATION-1,
as the Borrower
THUNDER BAY FUNDING INC.,
as the Lender
and
ROYAL BANK OF CANADA,
as the Facility Agent and the Alternate Lender
Dated as of February 1, 2002
================================================================================
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Certain Defined Terms........................................... 2
Section 1.02. Computation of Time Periods..................................... 3
ARTICLE II
VALUATION AGENT; TERM OF AGREEMENT
Section 2.01. Appointment and Acceptance....................................... 3
Section 2.02. Performance by Other Parties..................................... 4
Section 2.03. Resignation and Discharge........................................ 4
Section 2.04. Term of Agreement................................................ 4
ARTICLE III
CALCULATIONS
Section 3.01. Maximum Advance Percentage Calculations.......................... 4
Section 3.02. Loan Valuation Percentage Calculations........................... 5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES................................................... 5
ARTICLE V
INDEMNIFICATION.................................................................. 6
ARTICLE VI
MISCELLANEOUS
Section 6.01. Confidentiality.................................................. 8
Section 6.02. Amendment........................................................ 8
Section 6.03. Governing Law.................................................... 8
Section 6.04. Notices.......................................................... 8
Section 6.05. Third Party Beneficiary.......................................... 10
Section 6.06. Assignment by the Lender......................................... 10
Section 6.07. Submission to Jurisdiction; Waiver of Jury and Bond.............. 10
Section 6.08. No Petition...................................................... 11
Section 6.09. Limited Recourse Nature of Transactions.......................... 11
Section 6.10. Execution in Counterparts........................................ 11
Section 6.11. Severability..................................................... 11
Section 6.12. Section Titles................................................... 12
Section 6.13. Entire Agreement................................................. 12
EXHIBIT A--FORM OF ADVANCE PERCENTAGE CALCULATION REPORT
EXHIBIT B--FORM OF VALUATION REPORT
EXHIBIT C--FORM OF REQUEST FOR VALUATION REPORT
EXHIBIT D--INITIAL LOAN SERVICING FEES
EXHIBIT E--VALUATION REPORT ASSUMPTIONS
ii
THIS VALUATION AGENT AGREEMENT (this "Valuation Agent Agreement") is
made as of February 1, 2002 by and among RBC XXXX XXXXXXXX INC., a corporation
duly organized under the laws of the State of Delaware (the "Valuation Agent").
NELNET STUDENT LOAN WAREHOUSE CORPORATION-1, a corporation duly organized under
the laws of the State of Nevada (the "Borrower"), THUNDER BAY FUNDING INC., a
Delaware special purpose finance company (the "Lender"), and ROYAL BANK OR
CANADA, a Canadian banking corporation, as the alternate lender (in such
capacity, the "Alternate Lender") and as agent of the Lender, the Alternate
Lender and the hereindefined Liquidity Facility Providers and Credit Support
Providers (in such capacity, the "Facility Agent").
PRELIMINARY STATEMENTS
WHEREAS, the Borrower, the Lender, the Alternate Lender, the Facility
Agent and Zions First National Bank, as trustee (the "Trustee"), have entered
into a Warehouse Loan and Security Agreement, dated as of February 1, 2002 (the
"Loan Agreement"), pursuant to which the Alternate Lender has agreed and the
Lender may agree to make loans to the Borrower from time to time subject to the
conditions set forth therein for the purpose of financing the purchase of
certain types of education loans (the "Eligible Loans", and when financed under
the Loan Agreement, the "Financed Loans"); and
WHEREAS, to provide liquidity support to the Lender in connection with
the loans made by it under the Loan Agreement, the Lender and Royal Bank of
Canada have entered into a Liquidity Asset Purchase Agreement, dated as of
February 1, 2002 (as amended or modified from time to time, the "Liquidity
Agreement"), between the Lender and Royal Bank of Canada, pursuant to which the
Lender may, from time to time, assign all or a part of such loans to Royal Bank
of Canada and or to certain other financial institutions as assignees of the
commitment of the Royal Bank of Canada (collectively, the "Liquidity Facility
Providers") pursuant to the terms of the Liquidity Agreement; and
WHEREAS, to provide credit support to the Lender in connection with the
loans being made by it under the Loan Agreement, the Lender and Royal Bank of
Canada have entered into a Credit Support Asset Purchase Agreement, dated as of
September 25, 1997 (as amended or modified from time to time, the "Credit
Support Agreement"), between the Lender and Royal Bank of Canada, pursuant to
which Royal Bank of Canada or certain other financial institutions as assignees
of the commitment of Royal Bank of Canada (collectively, the "Credit Support
Providers") have agreed to purchase undivided interests in loans not purchase by
the Liquidity Facility Providers; and
WHEREAS, the Loan Agreement provides that, in order to secure the
prompt and complete payment of all amounts due and payable thereunder, the
Borrower will grant to the Trustee, for the benefit of the Lender, the Alternate
Lender, the Liquidity Facility Providers and the Credit Support Providers, a
security interest in the Financed Loans, all revenue and recoveries of principal
from the Financed Loans and any other collections, funds and accrued earnings
held thereon held in the various funds and accounts created under the Loan
Agreement (collectively, the "Pledged Collateral"); and
WHEREAS, the maximum amount of funds the Lender, the Alternate Lender,
the Liquidity Facility Providers or the Credit Support Providers will make
available to the Borrower from time to time for the purpose of financing Student
Loans is in part based upon the characteristics of the Financed Loans and
certain other assumptions as described herein; and
WHEREAS, the Valuation Agent has agreed to perform certain calculations
relating to the Pledged Collateral, in accordance with the assumptions and
procedures described herein and at the times and under the circumstances
specified in the Loan Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Valuation Agent
Agreement and its exhibits, the terms set forth above and in this Section shall
have the meanings ascribed thereto (such meanings to be equally applicable to
both the singular and plural forms of the terms defined) unless a contrary
definition is given to such term in the Loan Agreement, in which case the
definition in the Loan Agreement shall be controlling.
"Advance Percentage Calculation Report" means the report prepared by
the Valuation Agent and delivered to the Facility Agent and the Borrower not
later than four Business Days prior to each Advance, other than a Rollover
Advance or a Special Advance, setting forth the Maximum Advance Percentage for
the Eligible Loans to be financed with such Advance, in the form attached as
Exhibit A hereto.
"Borrower Incentive Program" means any interest rate reduction program
applicable to any Financed Loans or Student Loans to be financed.
"Cash Flow Projections" mean the estimates prepared by the Valuation
Agent for the period commencing on the most recent date for which the Valuation
Agent has received the Portfolio Characteristics illustrating: (a) the income to
be received from the Financed Loans (excluding borrower interest, federal
interest subsidy and federal special allowance payments accrued thereon and
unpaid as of the date of the Portfolio Characteristics) and Permitted
Investments, including borrower principal and interest payments, federal
interest subsidy payments, federal special allowance payments, guaranty
payments, sale proceeds and investment earnings (collectively, the "Revenue"),
(b) the costs incurred in the financing of such Financed Loans, including
acquisition fees, debt service, servicing fees, valuation fees, trustee fees,
administrative fees, consolidation loan rebate and any other charges relating to
the financing, servicing and administration of such loans (collectively, the
"Expenses"), and (c) the periodic and cumulative Revenues less the periodic and
cumulative Expenses (the "Net Revenue").
"Cost of Funds" means the interest rate per annum used by the Valuation
Agent in the Cash Flow Projections for computing debt interest expense.
2
"Current T-Xxxx" means the most recent bond equivalent yield per annum
available to the Valuation Agent for the auction of 13-week U.S. Treasury Bills,
as set forth on the Department of the Treasury web site
(xxxx://xxx.xxxxxxxxxx.xxxxx.xxx/xx/xxxxxxx.xxx).
"Discount Rate" means the rates of discount per annum stipulated in the
Valuation Report Assumptions, as applicable, to be used by the Valuation Agent
in connection with its determination of the present value of Net Revenue.
"Loan Valuation Percentage" as determined by the Valuation Agent means:
(a) (i) the present value of the Net Revenue (using the Portfolio
Characteristics and the Valuation Report Assumptions) divided by (ii) the
outstanding Principal Balance of the Student Loans to be financed and/or the
Financed Loans, as the case may be; plus (b) 100%.
"Net Revenue" means the projected net income to be received from the
Student Loans to be financed and/or the Financed Loans, as the case may be,
after taking into account financing costs, loan defaults and delinquencies, fees
and other charges, all as set forth in the Valuation Report Assumptions.
"Portfolio Characteristics" means the information contained in the
reports provided to the Valuation Agent by or at the direction of the Borrower,
in a form acceptable to the Valuation Agent (such form could also include a
computer tape provided by any Servicer), prior to: (a) each proposed financing
of new Student Loans, and (b) each Valuation Date. Such reports shall set forth
all of the particular characteristics of Student Loans to be financed or
Financed Loans, as the case may be, necessary in order that the Valuation Agent
shall be able to perform the calculations required hereunder or under the Loan
Agreement, including, but not limited to breakdowns by loan type, borrower
interest rate, borrower status, special allowance margin, disbursement date,
remaining term by status, applicable loan servicer, guarantee level and
eligibility for, level of participation in and terms of any Borrower Incentive
Program.
"Valuation Report" means the report prepared by the Valuation Agent and
delivered to the Facility Agent and the Borrower pursuant to Section 5.12(a)(i)
of the Loan Agreement, in the form attached as Exhibit B hereto.
"Valuation Report Assumptions" means the cash flow and related
assumptions set forth in Exhibit E hereto.
SECTION 1.02. COMPUTATION OF TIME PERIODS. Unless otherwise stated in
this Valuation Agent Agreement, in the computation of a period of time from a
specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each mean "to but excluding."
ARTICLE II
VALUATION AGENT; TERM OF AGREEMENT
SECTION 2.01. APPOINTMENT AND ACCEPTANCE. The Borrower and the Facility
Agent hereby appoint RBC Xxxx Xxxxxxxx Inc. as Valuation Agent under this
Valuation Agent Agreement in connection with the Loan Agreement and RBC Xxxx
Xxxxxxxx Inc. hereby accepts
3
such appointment. For purposes of this Valuation Agent Agreement the principal
office of RBC Xxxx Xxxxxxxx Inc. shall be 0000 Xxxx Xxxxxxxxx Xx., Xxxxx 000,
Xxxxxxx, Xxxxxxx, unless otherwise indicated to the other parties hereto in
writing by RBC Xxxx Xxxxxxxx Inc.
SECTION 2.02. PERFORMANCE BY OTHER PARTIES. The Valuation Agent shall
be obligated to perform hereunder only upon performance in all material respects
by the Borrower (a) to provide statistical information to the Valuation Agent at
the times and in the manner described in the Loan Agreement and (b) of its
duties and responsibilities hereunder.
SECTION 2.03. RESIGNATION AND DISCHARGE.
(a) The Valuation Agent may at any time resign and be
discharged of the duties and obligations created by this Valuation
Agent Agreement by giving at least sixty (60) days' written notice to
the Borrower, the Facility Agent and the Trustee.
(b) The Valuation Agent may be removed upon at least
sixty (60) days' written notice to the Valuation Agent, at the
direction of the Borrower with the consent of the Facility Agent, by an
instrument signed by the Borrower and filed with the Valuation Agent,
the Facility Agent and the Trustee. Upon the occurrence of an Event of
Default (as defined in the Loan Agreement), the Facility Agent may
remove the Valuation Agent at any time.
Notwithstanding the foregoing, no resignation or removal of the
Valuation Agent shall be effective until a successor shall have been appointed
by the Borrower with the consent of the Facility Agent, which shall not be
unreasonably withheld, or by the Facility Agent after an Event of Default,
provided that such resignation by the Valuation Agent shall be effective upon
sixty days' written notice whether or not a successor has been appointed if and
when the Valuation Agent reasonably determines that one of the following shall
occur: (i) the Borrower is not diligently pursuing the appointment of a
successor Valuation Agent at the level of compensation generally paid in the
marketplace for the services to be performed by the Valuation Agent; (ii) the
Loan Agreement or the Liquidity Agreement has been amended or modified in such a
manner as would affect the Valuation Agent in general or its ability to properly
perform its duties hereunder without the consent of the Valuation Agent; or
(iii) any condition to performance by the Valuation Agent hereunder or under the
Loan Agreement has not been satisfied.
SECTION 2.04. TERM OF AGREEMENT. Unless otherwise terminated pursuant
to the provisions of Section 2.03 hereof, this Valuation Agent Agreement shall
terminate on February 1, 2005, unless extended to such later date as mutually
agreed to in writing by the Borrower, the Facility Agent and the Valuation
Agent.
ARTICLE III
CALCULATIONS
SECTION 3.01. MAXIMUM ADVANCE PERCENTAGE CALCULATIONS.
(a) Pursuant to the terms and at the times required in
the Loan Agreement, the Valuation Agent shall compute the Maximum
Advance Percentage by undertaking
4
certain analytical procedures with respect to the Eligible Loans to be
financed thereunder. The Maximum Advance Percentage shall be determined
by: (i) dividing (A) the present value of the Net Revenue (using the
Portfolio Characteristics and the Valuation Report Assumptions) by (B)
the outstanding principal balance of Eligible Loans to be financed, and
(ii) adding 100% to the resulting percentage.
(b) Not later than four Business Days prior to each
Advance that does not constitute a Special Advance or a Rollover
Advance, the Valuation Agent shall:
(i) perform Cash Flow Projections based upon the
Portfolio Characteristics and the Valuation Report
Assumptions;
(ii) calculate the Maximum Advance Percentage (as
defined herein and in the Loan Agreement) using the results of
the Cash Flow Projections described in Section 3.01(b)(i)
hereof; and
(iii) submit an Advance Percentage Calculation
Report to the Borrower, the Facility Agent and the Trustee in
the form attached as Exhibit A hereto.
SECTION 3.02. LOAN VALUATION PERCENTAGE CALCULATIONS.
(a) Pursuant to the terms and at the times required in
the Loan Agreement, the Valuation Agent shall compute the Loan
Valuation Percentage by undertaking certain analytical procedures with
respect to the Financed Loans.
(b) Within 30 days after the Valuation Agent's receipt of
a written request for a Valuation Report from the Portfolio
Administrator or the Facility Agent, in the form attached as Exhibit C
hereto, and in any case not later than the fourth Business Day
preceding each Settlement Date occurring in the months of March, June,
September and December (each a "Quarterly Valuation Date"), the
Valuation Agent shall:
(i) perform Cash Flow Projections based upon the
Portfolio Characteristics and the Valuation Report
Assumptions;
(ii) calculate the Loan Valuation Percentage
using the results of the Cash Flow Projections described in
Section 3.02(b)(i) hereof; and
(iii) submit the Valuation Report to the Borrower,
the Facility Agent and the Trustee in the form attached as
Exhibit B hereto.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Valuation Agent represents and warrants as follows:
5
(a) The Valuation Agent is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Delaware and is duly qualified to do business, and is in good standing,
in every jurisdiction in which the nature of its business requires it
to be so qualified.
(b) The execution, delivery and performance by the
Valuation Agent of this Valuation Agent Agreement is within the
Valuation Agent's organizational powers, has been duly authorized by
all necessary organizational action, does not contravene (i) the
Valuation Agent's articles of incorporation or bylaws, (ii) any law,
rule or regulation applicable to the Valuation Agent, (iii) any
contractual restriction binding on or affecting the Valuation Agent or
its property or (iv) any order, writ, judgment, award, injunction or
decree binding on or affecting the Valuation Agent or its property.
This Valuation Agent Agreement has been duly executed and delivered by
the Valuation Agent.
(c) No authorization or approval or other action by, and
no notice to or filing with, any Governmental Authority is required for
the due execution, delivery and performance by the Valuation Agent of
this Valuation Agent Agreement.
(d) This Valuation Agent Agreement constitutes the legal,
valid and binding obligations of the Valuation Agent enforceable
against the Valuation Agent in accordance with its terms, subject to
(i) applicable bankruptcy, insolvency, moratorium, or other similar
laws affecting the rights of creditors, and (ii) general principals of
equity, whether such enforceability is considered in a proceeding in
equity or at law.
(e) There is no pending or, to the knowledge of the
Valuation Agent, threatened, action or proceeding affecting the
Valuation Agent before any court, governmental agency or arbitrator
that may materially adversely affect the financial condition of the
Valuation Agent or the ability of the Valuation Agent to perform its
obligations under this Valuation Agent Agreement. The Valuation Agent
is not in default with respect to any order of any court, arbitrator or
any other Governmental Authority.
(f) Each document and report delivered by, or to be
delivered by, the Valuation Agent pursuant to the terms of Articles II
or III hereof shall be executed on behalf of the Valuation Agent by a
duly authorized officer of the Valuation Agent.
ARTICLE V
INDEMNIFICATION
(a) Without limiting any other rights which the Lender,
the Alternate Lender, the Facility Agent, the Borrower or any of their
respective Affiliates may have hereunder or under applicable law, and
notwithstanding any limitation on recourse to the Valuation Agent set
forth in this Valuation Agent Agreement, the Valuation Agent hereby
agrees to indemnify the Lender, the Alternate Lender, the Facility
Agent, the Borrower, the Trustee and each of their respective officers,
directors, employees, agents, attorneys-in-fact, Affiliates and assigns
(including without limitation the Liquidity Facility Providers and the
Credit Support Providers) from and against any and all damages, losses,
claims,
6
liabilities and related costs and expenses, including reasonable
attorneys" fees and disbursements (all of the foregoing being
collectively referred to as "Indemnified Amounts") awarded against or
incurred by any of them arising out of or as a result of this Valuation
Agent Agreement, excluding, however. Indemnified Amounts to the extent
resulting from the gross negligence or willful misconduct of the Person
seeking indemnification. Without limiting the foregoing, the Valuation
Agent shall indemnify the Lender, the Alternate Lender, the Facility
Agent, the Borrower, the Trustee and each of their respective officers,
directors, employees, agents, attorneys-in-fact. Affiliates and assigns
(including without limitation the Liquidity Facility Providers and the
Credit Support Providers) for Indemnified Amounts relating to or
resulting from:
(i) any representation or warranty made or
deemed made by the Valuation Agent, under or in connection
with this Valuation Agent Agreement, which shall have been
false or incorrect when made or deemed made or delivered:
(ii) the failure by the Valuation Agent to comply
with any term, provision or covenant contained in this
Valuation Agent Agreement; and
(iii) any failure of the Valuation Agent to
perform its duties or obligations in accordance with the
provisions of this Valuation Agent Agreement.
(b) Without limiting any other rights which the Valuation
Agent or any of its respective Affiliates may have hereunder or under
applicable law, and notwithstanding any limitation on recourse to the
Borrower set forth in this Valuation Agent Agreement, the Borrower
hereby agrees to indemnify the Valuation Agent and each of its
officers, directors, employees, agents, attorneys-in-fact and
Affiliates from and against any and all damages, losses, claims,
liabilities and related costs and expenses, including reasonable
attorneys' fees and disbursements (all of the foregoing being
collectively referred to as "Indemnified Amounts") awarded against or
incurred by any of them arising out of or as a result of this Valuation
Agent Agreement, excluding, however, Indemnified Amounts to the extent
resulting from the gross negligence or willful misconduct of the
Valuation Agent or its Affiliates. Without limiting the foregoing, the
Borrower shall indemnify the Valuation Agent and each of its respective
officers, directors, employees, agents, attorneys-in-fact and
Affiliates for Indemnified Amounts relating to or resulting from:
(i) any representation or warranty made or
deemed made by the Borrower under or in connection with this
Valuation Agent Agreement, which shall have been false or
incorrect when made or deemed made or delivered;
(ii) the failure by the Borrower to comply with
any term, provision or covenant contained in this Valuation
Agent Agreement; and
(iii) any failure of the Borrower to perform its
duties or obligations in accordance with the provisions of
this Valuation Agent Agreement.
Any amounts determined by a court of competent jurisdiction as a result of a
proceeding brought which is subject to the indemnification provisions of this
Article shall be paid by the Valuation Agent to the Lender, the Alternate
Lender, the Facility Agent, the Borrower or their respective
7
officers, directors, employees, agents, attorneys-in-fact. Affiliates or the
Liquidity Facility Providers, or by the Borrower to the Valuation Agent or its
officers, directors, employees, agents, attorneys-in-fact or Affiliates, as the
case may be, for the benefit of the applicable payee, within two Business Days
following written demand therefor.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01. CONFIDENTIALITY. Except as permitted by the Loan
Agreement, the Valuation Agent, the Lender, the Alternate Lender, the Facility
Agent and the Borrower each agree to keep confidential and not to disclose any
non-public information, calculations, exhibits or documents related to this
Valuation Agent Agreement or the Loan Agreement, without the express written
consent of the other parties thereto.
SECTION 6.02. AMENDMENT. This Valuation Agent Agreement may be amended
only by a written agreement signed by those parties hereto.
SECTION 6.03. GOVERNING LAW. this Valuation Agent Agreement shall be
governed by and construed in accordance with the laws of me State of New York.
SECTION 6.04. NOTICES.
(a) The Lender and the Alternate Lender agree to provide
written notice (which may be by facsimile or other electronic means) to
the Valuation Agent within three Business Days of the following: (i) a
new Facility Agent and (ii) the assignment by the Secured Creditors of
the Investment of the Lender or the Alternate Lender in the Advances to
the Borrower, such notice to include the amount of such assignment.
(b) All notices, requests or other communications to the
Valuation Agent, the Borrower, the Lender, the Alternate Lender, the
Facility Agent and the Trustee, including the notices required in
paragraph (a) above, shall be in writing (unless otherwise specified
herein) and shall be deemed to have been validly given or made when
delivered (via telecopy or by hand) or mailed, registered or certified
mail, return receipt requested and postage prepaid, addressed as
follows:
If to the Valuation Agent,
addressed to: RBC Xxxx Xxxxxxxx Inc.
0000 Xxxx Xxxxxxxxx Xx., Xxxxx 000
Xxxxxxx, XX 00000
Attn.: Xxxxxxx X. Xxxxxx
Telephone: (000)000-0000
Facsimile: (000)000-0000
If to the Borrower,
8
addressed to it at: NELnet Student Loan Warehouse Corporation-1
c/o National Higher Education Loan Program
000 Xxxxx 00 Xxxxxx
Xxxxx 000
Xxxxxxx. XX 00000
Attn.: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Lender,
addressed to it at: Thunder Bay Funding Inc.
x/x XXX Xxxxxxx Xxxxxxx
Xxx Xxxxxx Xxxxx Xxxxxx
0000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 or (000)-000-0000
If to the Alternate Lender,
addressed to it at: Royal Bank of Canada
c/o RBC Capital Markets
One Little Falls Centre
0000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 or (000)-000-0000
If to the Facility
Administrator,
addressed to it at: Royal Bank of Canada
c/o RBC Capital Markets
One Little Falls Centre
0000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxx Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000 or (000)-000-0000
If to the Trustee,
addressed to it at: Zions First National Bank
000 Xxxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attn.: Corporate Trust Department
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
9
Each entity listed above may change the address for service of notice
upon it by a notice in writing to the other entities named above. Each such
notice, request or communication shall be effective when delivered to the
address specified herein.
SECTION 6.05. THIRD PARTY BENEFICIARY. The Valuation Agent acknowledges
that the Borrower has granted a security interest in favor of the Trustee for
the benefit of the Secured Creditors all of the Borrower's right, title and
interest in. to and under this Valuation Agent Agreement. The Valuation Agent
consents to the grant of such security interest and agrees (a) that the
representations, warranties, covenants and other agreements of the Valuation
Agent contained herein (including, but not limited to, the Valuation Agent's
indemnity obligations hereunder) shall run directly to the Trustee and the
Secured Creditors and (b) that the Trustee and the Secured Creditors shall be
entitled to rely on and enforce such representations, warranties, covenants and
other agreements (including, but not limited to, the Valuation Agent's indemnity
obligations hereunder) to the same extent as if they were a party hereto. The
foregoing creates a permissive right on behalf of the Trustee and the Secured
Creditors, and the Trustee and the Secured Creditors shall be under no duties or
obligations hereunder.
SECTION 6.06. ASSIGNMENT BY THE LENDER. The Valuation Agent and the
Borrower acknowledge and agree that to the extent of any assignment by the
Lender of its right, title and interest in and to the Investment of the Lender
in the Advances to the Borrower pursuant to the terms of the Liquidity Agreement
or the Credit Support Agreement, the Liquidity Facility Providers and the Credit
Support Providers, as applicable, shall succeed to the rights and obligations of
the Lender hereunder and the Lender shall be released from such obligations
without any further act by the Borrower or the Valuation Agent.
SECTION 6.07. SUBMISSION TO JURISDICTION; WAIVER OF JURY AND BOND. EACH
OF THE BORROWER, THE LENDER, THE ALTERNATE LENDER. THE FACILITY AGENT AND THE
VALUATION AGENT HEREBY SUBMIT TO THE NON-EXCLUSIVE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED WITHIN THE CITY OF NEW YORK, NEW YORK, AND IRREVOCABLY
AGREE THAT ALL ACTIONS OR PROCEEDINGS RELATING TO THIS VALUATION AGENT AGREEMENT
SHALL BE LITIGATED IN SUCH COURTS, AND THE BORROWER, THE LENDER, THE ALTERNATE
LENDER, THE FACILITY AGENT AND THE VALUATION AGENT EACH WAIVE ANY OBJECTION
WHICH IT MAY HAVE BASED ON IMPROPER VENUE OR FORUM NON CONVENIENS TO THE CONDUCT
OF ANY PROCEEDING IN ANY PROCESS UPON IT, AND CONSENTS THAT ALL SUCH SERVICE OF
PROCESS BE MADE BY MAIL OR MESSENGER DIRECTED TO IT AT THE ADDRESS SET FORTH
HEREIN THAT SERVICE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL
RECEIPT OR FIVE DAYS AFTER THE SAME SHALL HAVE BEEN POSTED TO SUCH ADDRESS.
EACH OF THE BORROWER, THE LENDER, THE ALTERNATE LENDER, THE FACILITY
AGENT AND THE VALUATION AGENT ACKNOWLEDGE THAT THE TIME AND EXPENSE REQUIRED FOR
TRIAL BY JURY EXCEED THE TIME AND EXPENSE REQUIRED FOR A BENCH TRIAL AND HEREBY
WAIVE, TO THE EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY CLAIM OR CAUSE OF
ACTION (INCLUDING ANY COUNTERCLAIM) ARISING DIRECTLY OR INDIRECTLY OUT OF,
10
UNDER OR IN CONNECTION WITH THIS VALUATION AGENT AGREEMENT, ANY OTHER DOCUMENT,
INSTRUMENT OR AGREEMENT EXECUTED AND/OR DELIVERED IN CONNECTION HEREWITH OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, WHETHER WITH RESPECT TO
CONTRACT CLAIMS, TORT CLAIMS OR OTHERWISE, AND WAIVE ANY BOND OR SURETY OR
SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF THE
BORROWER, THE LENDER, THE ALTERNATE LENDER, THE FACILITY AGENT OR THE VALUATION
AGENT. NOTHING CONTAINED IN THIS SECTION SHALL AFFECT THE RIGHT OF ANY PARTY
HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW. EACH OF THE
BORROWER, THE LENDER, THE ALTERNATE LENDER, THE FACILITY AGENT AND THE VALUATION
AGENT WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LITIGATION
REFERRED TO ABOVE ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR
ANY DAMAGES OTHER THAN. OR IN ADDITION TO, ACTUAL DAMAGES.
SECTION 6.08. NO PETITION. Each of the Borrower and the Valuation Agent
hereby covenants and agrees that prior to the date which is one year and one day
after the payment in full of all outstanding CP of the Lender, it will not
institute against or join any other person or entity in instituting against the
Lender, any bankruptcy, reorganization, arrangement, insolvency or liquidation
proceedings or other similar proceeding under the laws of the United States or
any state of the United States.
SECTION 6.09. LIMITED RECOURSE NATURE OF TRANSACTIONS. Each of the
Borrower and the Valuation Agent hereby acknowledges and agrees that all
transactions with the Lender hereunder shall be without recourse of any kind to
the Lender. The Lender shall have no obligation to pay any amounts owing
hereunder unless and until the Lender has received such amounts pursuant to the
Loan Agreement. In addition, each of the Borrower and the Valuation Agent agrees
that the Lender shall have no obligation to pay any amounts constituting fees, a
reimbursement for expenses or indemnities (collectively, "Expense Claims") and
such Expense Claims shall not constitute a claim against the Lender (as defined
in Section 101 of Title 11 of the United States Bankruptcy Code), unless or
until the Lender has received amounts sufficient to pay such Expense Claims
pursuant to the Loan Agreement and such amounts are not required to pay the CP
of the Lender.
SECTION 6.10. EXECUTION IN COUNTERPARTS. This Valuation Agent Agreement
may be executed in any number of counterparts, each of which when so executed
and delivered shall constitute an original, but such counterparts together shall
constitute but one and the same instrument.
SECTION 6.11. SEVERABILITY. In the event any one or more of the
provisions of this Valuation Agent Agreement shall for any reason be held to be
illegal or invalid, such illegality or invalidity shall not affect any other
provisions of this Valuation Agent Agreement, and this Valuation Agent Agreement
shall be construed and enforced as if such illegal or invalid provisions had not
been contained herein.
11
SECTION 6.12. SECTION TITLES. The section titles contained in this
Valuation Agent Agreement are for convenience of reference only and shall be
without substantive meaning or content of any kind whatsoever and are not a part
of the Agreement among the parties hereto.
SECTION 6.13. ENTIRE AGREEMENT. This Valuation Agent Agreement,
including all Exhibits attached hereto or incorporated by reference therein
constitutes the entire Agreement among the undersigned with respect to the
subject matter hereof and supersedes all other negotiations, understandings and
representations, both oral and written, with respect to the subject matter
hereof.
12
IN WITNESS WHEREOF, the undersigned have caused this Valuation Agent
Agreement to be executed by their respective officers thereunto duly authorized,
as of the date first above written.
THE VALUATION AGENT:
RBC DAINRAUSCHER INC.
By /s/ Xxxxxxx X.Xxxxxx
-------------------------------------
Xxxxxxx X.Xxxxxx, Managing Director
THE BORROWER:
NELnet STUDENT LOAN WAREHOUSE
CORPORATION-1
By /s/ Xxxxxxx Xxxxxxxxx
--------------------------------------
Xxxxxxx Xxxxxxxxx, Vice President
THE LENDER:
THUNDER BAY FUNDING INC.
By: ROYAL BANK OF CANADA, its attorney-
in-fact.
By /s/ Sofia Shield
--------------------------------------
Sofia Shield, Manager
THE ALTERNATE LENDER:
ROYAL BANK OF CANADA
By /s/ Xxxxxx X. Xxxxx
--------------------------------------
Xxxxxx X. Xxxxx, Managing Director
13
THE FACILITY AGENT:
ROYAL BANK OF CANADA
By /s/ Xxxxxx X. Xxxxx
--------------------------------------
Xxxxxx X. Xxxxx, Managing Director
14
EXHIBIT A
FORM OF ADVANCE PERCENTAGE CALCULATION REPORT
In accordance with the Valuation Agreement, dated as of February 1,
2002, among RBC Xxxx Xxxxxxxx Inc., as valuation agent, NELnet Student Loan
Warehouse Corporation-1, as borrower. Thunder Bay Funding Inc., as lender, and
Royal Bank of Canada, as alternate lender and facility agent, RBC Xxxx Xxxxxxxx
Inc. has acted as Valuation Agent for purposes of preparing this Advance
Percentage Calculation Report. Based upon the Portfolio Characteristics and the
Valuation Report Assumptions (as defined therein), we hereby submit the
following summary of our calculations:
Date of Report:
Date of Proposed Advance:
Cut-off Date for Portfolio Characteristics:
A. Principal balance of loans to be financed $
B. Total Revenue $
C. Total Expenses $
D. Total Net Revenue (B - C) $
E. Present value of Net Revenue ("PV") $
F. PV AS A % OF LOAN PRINCIPAL BALANCE (E / A), PLUS 100%
("MAXIMUM ADVANCE PERCENTAGE") %
EXHIBIT B
FORM OF VALUATION REPORT
In accordance with the Valuation Agreement, dated as of February 1,
2002, among RBC Xxxx Xxxxxxxx Inc., as valuation agent. NELnet Student Loan
Warehouse Corporation-1, as borrower, Thunder Bay Funding Inc., as lender, and
Royal Bank of Canada, as alternate lender and facility agent, RBC Xxxx Xxxxxxxx
Inc. has acted as Valuation Agent for purposes of preparing this Valuation
Report. Based upon the Portfolio Characteristics and the Valuation Report
Assumptions (as defined therein), we hereby submit the following summary of our
calculations:
Valuation Date:
Date of Report:
Cut-off Date for Portfolio Characteristics:
A. Principal balance of loans $
B. Total Revenue $
C. Total Expenses $
D. Total Net Revenue (B - C) $
E. Present value of Net Revenue ("PV") $
F. PV AS A % OF LOAN PRINCIPLE BALANCE (E / A), PLUS 100%
("LOAN VALUATION PERCENTAGE")(1) %
_______________
(1) If subsequent to any repayment or refinancing pursuant to Section 5.11
of the Loan Agreement, the Principal Balance of Defaulted Student Loans exceeds
10% of the Principal Balance of all Financed Loans in "repayment status", the
Aggregate Market Value of all Defaulted Student Loans shall be valued separately
as Defaulted Student Loans on the related Valuation Date. Such separate
valuation has been used to prepare the Loan Valuation Percentage: Yes: _________
No: _________.
EXHIBIT C
FORM OF REQUEST FOR VALUATION REPORT
RBC Xxxx Xxxxxxxx Inc.
0000 Xxxx Xxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn.: Education Loan Finance Group
[and, if requested by the Facility Agent:
NELnet Student Loan Warehouse Corporation-1
000 Xxxxx 00 Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn.: Xxxxx Xxxxxx, Vice President]
Ladies and Gentlemen:
Pursuant to the terms of the Valuation Agent Agreement, dated as of
February 1, 2002, among RBC Xxxx Xxxxxxxx Inc., as valuation agent, NELnet
Student Loan Warehouse Corporation-1, as borrower, (the "Borrower"), Thunder Bay
Funding Inc., as lender (the "Lender") and Royal Bank of Canada, as alternate
lender and facility agent, and in particular Section 2.02(b) thereof, we hereby
request that you provide us with a Valuation Report.
[Such notice is also being provided at this time to the Borrower, in
order that they can prepare the Portfolio Characteristics and other information
required by you to compute the Loan Valuation Percentage.]
or, if requested by the Portfolio Administrator:
[The information required for you to prepare the Valuation Report,
including the Portfolio Characteristics and other information required to
compute the Loan Valuation Percentage is attached hereto.]
In accordance with the terms of the Valuation Agent Agreement, please
submit your report to us on or before [insert date], which is not less than 7
days from the later of (i) the date this notice has been provided to you and
(ii) the date the Portfolio Characteristics and other information required by
you to compute the Loan Valuation Percentage have been provided to you.
Sincerely,
[Royal Bank of Canada], or
[NELnet Inc.]
EXHIBIT D
INITIAL LOAN SERVICING FEES
I. STUDENT LOANS SERVICED BY NELnet LOAN SERVICES, INC.
XXXXXXXX, SLS CONSOLIDATION
PER ACCOUNT SERVICING FEES & PLUS LOANS LOANS
Enrolled $ 1.76(1) per month N/A
Grace $ 3.31(2) per month N/A
Deferment $ 3.31(2) per month $ 3.75 per month
Forbearance $ 3.31(2) per month $ 3.75 per month
Repayment $ 3.31(2) per month $ 3.75 per month
Default claim filing $15.00 per claim filed $15.00 per claim filed
------------------------
(1) Add $0.25 per month for any account with an Unsubsidized Loan
(2) Add $0.05 per month for any account with an Unsubsidized Loan
II. STUDENT LOANS SERVICED BY XXXXXX XXX SERVICING X.X.
XXXXXXXX, SLS CONSOLIDATION
PER ACCOUNT SERVICING FEES & PLUS LOANS LOANS
Enrolled
Grace
Deferment
Forbearance
Repayment
Default claim filing
III. STUDENT LOANS SERVICED BY GREAT LAKES SERVICE CORPORATION
XXXXXXXX, SLS
PER ACCOUNT SERVICING FEES & PLUS LOANS
Enrolled
Grace
Deferment
Forbearance
Repayment
Default claim filing
IV. STUDENT LOANS SERVICED BY PENNSYLVANIA HIGHER EDUCATION ASSISTANCE
AGENCY
XXXXXXXX, SLS CONSOLIDATION
PER ACCOUNT SERVICING FEES & PLUS LOANS LOANS
Enrolled
Grace
Deferment
Forbearance
Repayment
Default claim filing
D-2
EXHIBIT E
VALUATION REPORT ASSUMPTIONS
ROYAL BANK OF CANADA
THUNDER BAY FUNDING COMMERCIAL PAPER CONDUIT
[NELNET LOGO]
STUDENT LOAN WAREHOUSE FACILITY
PROPOSED MAXIMUM ADVANCE PERCENTAGE & LOAN VALUATION PERCENTAGE ASSUMPTIONS
CUMULATIVE DEFAULT RATES:
BLENDED AVERAGE IF
4-YR. SCHOOL 2-YR. SCHOOL PROP/VOTECH SCHOOL TYPE NOT KNOWN
Xxxxxxxx Loans 30.0% 45.0% 68.0% 37.3%
PLUS Loans 22.0% 28.0% 35.0% 24.6%
SLS Loans 25.0% 45.0% 68.0% 33.8%
Consolidation Loan 25.0% 45.0% 68.0% 33.8%
ALLOWABLE SEASONING CREDIT: 100.0% of actual seasoning
using a default curve of
40/20/15/10/5/55
DEFAULT SPEED: 70/20/10
REIMBURSEMENT LOSS: 1%
REIMBURSEMENT LAG: 540 Days
PAYMENT LAGS:
Government Payments 60 Days
Borrower Receipts Current 60%
30 Days 40%
DEFERMENTS: Actual percentage for 18 months for loans in Deferment status.
20% for 24 months of loans in School or Grace status.
FORBEARANCES: Actual percentage for 9 months for loans in Forbearance status.
15% for 12 months of loans in School or Grace status.
INCENTIVE PARTICIPATION:
For Automatic Debit Incentive Programs 20%
For Timely Payment Programs Attrition, if applicable:
12 Month Qualification Program 65% 65/45/30/20
24 Month Qualification Program 45% 45/30/20
36 Month Qualification Program 30% 30/20
48 Month Qualification Program 20% None
INTEREST RATES:
91-Day T-Xxxx For variable rate FFELP loans, the Current T-Xxxx
For fixed rate FFELP loans, the greater of (i) Current T-Xxxx
and (ii) the principal balance weighted average of the July 1 reset rates
that were in effect when the borrower interest rates were fixed
90-Day Financial CP T-Xxxx + 45 basis points
Thunder Bay Rate Actual Thunder Bay Interest Rate
Reinvestment Rate Actual GIC rate or T-Xxxx
All-In Cost of Funds Greater of 90-Day Financial CP + 28 bps or Thunder Bay Rate + 28 bps
Discount Rate Cost of Funds + 80 basis points for the portion of the portfolio that has 91 Day
T-Xxxx Based Special Allowance Payments
Cost of Funds + 20 basis points for the portion of the portfolio that
has 90 Day Financial CP Based Special Allowance Payments
CASH RELEASE LEVEL: 103.0%
CASH RESERVE LEVEL: 0.05%
4
EXECUTION COPY
FIRST AMENDMENT TO
VALUATION AGENT AGREEMENT
THIS FIRST AMENDMENT TO VALUATION AGENT AGREEMENT, dated as of
April 28, 2003 (this "Amendment") is by and among RBC XXXX XXXXXXXX INC., as
Valuation Agent (the "Valuation Agent"), NELNET EDUCATION LOAN FUNDING, INC.,
f/k/a NEBHELP, INC., as Borrower (the "Borrower"); THUNDER BAY FUNDING INC., as
Lender (the "Lender"); ROYAL BANK OF CANADA, as Alternate Lender (in such
capacity, the "Alternate Lender") and as agent for the Lender, the Alternate
Lender, the Liquidity Facility Providers and Credit Support Providers (in such
capacity, the "Facility Agent"); and NELnet STUDENT LOAN WAREHOUSE
CORPORATION-1, as original borrower (the "Original Borrower") (solely with
respect to Section 1 of this Amendment), and amends and supplements the
Valuation Agent Agreement, dated as of February 1, 2002 ( as amended to the date
hereof, the "Agreement"), by and among the parties hereto (other than the
Borrower). Capitalized terms used herein and not otherwise defined shall have
the meanings assigned to such terms in the Agreement.
RECITALS
WHEREAS, on the date hereof, the parties hereto, Xxxxx Fargo
Bank Minnesota, National Association, as Eligible Lender Trustee (the "Eligible
Lender Trustee") and Zions First National Bank, as Trustee (the "Trustee") are
entering into an Amended and Restated Warehouse Loan and Security Agreement (the
"Loan Agreement") which provides for, among other things, (i) the consent by the
Lender, the Alternate Lender and the Facility Agent to the Original Borrower's
sale of the Financed Loans and the collateral related thereto to the Borrower,
(ii) the assignment by the Original Borrower of all of its rights and
obligations under the Loan Agreement and the Transaction Documents and the
assumption by the Borrower of all such rights and obligations and (iii) certain
amendments to the Loan Agreement; and
WHEREAS, the parties to this Amendment desire to reflect
herein that the Borrower has assumed the rights and obligations of the Original
Borrower in the Agreement and to amend certain provisions of the Agreement to
conform to the amendments to the Loan Agreement; and
WHEREAS, pursuant to Section 6.02 of the Agreement, the
parties to the Agreement are permitted to amend the Agreement in writing.
NOW THEREFORE, in consideration of the premises and the
agreements contained herein, the parties to this Amendment agree as follows:
SECTION 1. Assignment and Assumption.
(a) In consideration of the Borrower's acceptance of the
obligations of the Original Borrower under the Agreement and the other
Transaction Documents, the sufficiency of which is hereby acknowledged,
effective on the date hereof, the Original Borrower hereby
assigns to the Borrower, without recourse and the Borrower hereby accepts and
assumes all of the Original Borrower's rights and obligations under the
Agreement.
(b) From and after the date hereof, (i) the Borrower
shall be a party to and be bound by all of the terms of the Agreement and shall
have the rights and obligations of the Borrower hereunder and (ii) the Original
Borrower shall relinquish its rights and be released from its obligations under
the Agreement.
SECTION 2. Amendments.
(a) All references to the "Borrower" or "NELnet Student
Loan Warehouse Corporation - 1" in the Agreement shall hereinafter refer to
Nelnet Education Loan Funding, Inc., a Nebraska corporation, and its successors
and assigns. All references to the "Loan Agreement" in the Agreement shall
hereinafter refer to the amended Loan Agreement referred to in the first WHEREAS
clause of this Amendment.
(b) The definition of "Cash Flow Projections" in Section
1.01 of the Agreement is hereby amended by deleting current clause (a) therein
and replacing it with the following:
(a) the income to be received from the Financed Loans
(excluding borrower interest, federal interest subsidy and
federal special allowance payments accrued thereon and unpaid
as of the date of the Portfolio Characteristics) and Permitted
Investments, including borrower principal and interest
payments, federal interest subsidy payments, federal special
allowance payments (other than Higher SAP Differentials, if
any), guaranty payments, sale proceeds and investment earnings
(collectively, the "Revenue"),
(c) The definition of "Net Revenue" in Section 1.01 of
the Agreement is hereby deleted in its entirety and replaced with the following:
"Net Revenue" means the projected net income
(excluding Higher SAP Differentials, if any) to be received
from Student Loans to be financed and/or the Financed Loans,
as the case may be, after taking into account financing costs,
loan defaults and delinquencies, fees and other charges, all
as set forth in the Valuation Report Assumptions."
(d) The definition of "Portfolio Characteristics" in
Section 1.01 of the Agreement is hereby amended by inserting the following
before the period at the end thereof:
and identification of Higher SAP Loans.
(e) Section 6.04 of the Agreement is hereby amended by
changing the notice address of the Borrower and adding a notice address of the
Eligible Lender Trustee, which shall read as follows:
If to the Borrower
addressed to it at: Nelnet Education Loan Funding, Inc.
2
c/o National Higher Education Loan
Program
000 Xxxxx 00xx Xxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Eligible
Lender Trustee
addressed to it at: Xxxxx Fargo Bank Minnesota, National
Association
0xx xxx Xxxxxxxxx Xxxxxx
Xxxxxxxxxxx, Xxxxxxxxx 00000-0000
Attn: Corporate Trust Department
Telephone: (000) 000-0000
Facsimile:(000)000-0000
SECTIONS 3. Conditions Precedent. The effectiveness of this
Amendment is subject to the conditions precedent that (a) this Amendment has
been duly executed and delivered by each of the parties listed on the signature
pages hereto and (b) the Effectiveness Date shall have occurred under the Loan
Agreement.
SECTION 4. Agreement in Full Force and Effect as Amended.
Except as specifically amended hereby, all of the terms and conditions of the
Agreement shall remain in full force and effect. All references to the Agreement
in any other document or instrument shall be deemed to mean such Agreement, as
amended by this Amendment. This Amendment shall not constitute a novation of the
Agreement, but shall constitute an amendment thereof. The parties hereto agree
to be bound by the terms and obligations of the Agreement, as amended by this
Amendment, as though the terms and obligations of this Amendment were set forth
in the Agreement.
SECTION 5. Prior Understandings. This Amendment sets forth the
entire understanding of the parties relating to the subject matter hereof, and
supersedes all prior understandings and agreements, written or oral.
SECTION 6. Counterparts. This Amendment may be executed in any
number of counterparts and by separate parties hereto on separate counterparts,
each of which when executed shall be deemed an original, but all such
counterparts taken together shall constitute one and the same instrument.
SECTION 7. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.
3
[Signature Page to Follow]
4
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed by their respective authorized officers as of the
day and year first above written.
THE VALUATION AGENT:
RBC XXXX XXXXXXXX INC.,
By: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
THE LENDER:
THUNDER BAY FUNDING INC.
By: Royal Bank of Canada, its attorney-in-fact
By: /s/ Xxxx Xxxx
-------------------------------------------
Name: Xxxx Xxxx
Title: Authorized Signatory
THE ALTERNATE LENDER:
ROYAL BANK OF CANADA
By: /s/ Xxxxx Xxxxxxx
-------------------------------------------
Name: Xxxxx Xxxxxxx
Title: Authorized Signatory
By: /s/ Xxxx Xxxx
-------------------------------------------
Name: Xxxx Xxxx
Title:
[Signature Page to First Amendment to Valuation Agent Agreement]
THE FACILITY AGENT:
ROYAL BANK OF CANADA,
By: /s/ Xxxxx Xxxxxxx
-------------------------------------------
Name: Xxxxx Xxxxxxx
Title: Authorized Signatory
THE BORROWER:
NELNET EDUCATION LOAN FUNDING, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
THE ORIGINAL BORROWER:
NELnet STUDENT LOAN WAREHOUSE CORPORATION-1
By: /s/ Xxxxxxx Noordoek
-------------------------------------------
Name: Xxxxxxx Noordoek
Title: Vice President
[Signature Page to First Amendment to Valuation Agent Agreement]
EXHIBIT C
REGULAR ADVANCE NOTICE
Nelnet Education Loan Funding, Inc. 2003 Amended Warehousing Financing with
Thunder Bay Funding Inc., as the Lender, and Royal Bank of Canada, as the
Alternate Lender Regular Advance Notice
Exhibit C
Date: [3 Business Days prior to date Advance is to be made]
In accordance with Section 2.02 of the Amended and Restated Warehouse Loan and
Security Agreement, dated as of April 28, 2003 (the "Agreement"), by and among
Nelnet Education Loan Funding, Inc., as borrower (the "Borrower"), Xxxxx Fargo
Bank Minnesota, National Association, as eligible lender trustee, Zions First
National Bank, as trustee (the "Trustee"), Thunder Bay Funding Inc., as lender,
Royal Bank of Canada, as facility agent and alternate lender and NELnet Student
Loan Warehouse Corporation-1, as original borrower (solely for the limited
purpose stated therein), the Borrower hereby requests an Advance in the amount
and as of the date provided below. This request is accompanied by an Advance
Percentage Calculation Report if required pursuant to Section 3.02 of the
Agreement.
Date of Advance ---------------------
Requested Alternate Advance Rate (if applicable) [Specify Alternate Advance Rate
based on LIBOR or Base Rate]
ADDITIONAL ADVANCES/ROLLOVER ADVANCES:
Total Required Additional Advances/Rollover
Advances as required pursuant to Exhibit E to
the Agreement ---------------------
New ADVANCES FOR THE FUNDING OF STUDENT LOANS:
Aggregate Amount of Student Loans to be
Financed Principal ---------------------
Maximum Advance Amount, as provided in the
Advance Percentage Calculation Report for
the most recently ended quarter %
Requested Advance Percentage, not to exceed the
Maximum Advance Amount provided above %
Amount of borrowing required for principal
funding (Student Loan Principal multiplied by
Requested Advance %)
---------------------
Amount of borrowing required for interest funding ---------------------
Total Amount of New Advances =====================
TOTAL ADVANCES =====================
(Sum of Additional Advances/Rollover Advances and Amount of
New Advances, provided above)
TEST OF FACILITY AMOUNT:
Total available Facility Amount ---------------------
C-l
LESS THE SUM OF:
Total outstanding Advances ---------------------
Total projected interest due on all outstanding
Advances ---------------------
Total outstanding Advances & interest ---------------------
Remaining facility amount =====================
Capitalized terms not otherwise defined herein shall have the meanings assigned
to them in the Agreement.
Please consider this proper authorization to transfer the Total Advances to be
Advanced in the Amount noted above to the Collection Advance Subaccount held by
the Trustee on [DATE OF ADVANCE]. Pursuant to Article III of the Agreement, I
hereby certify that Nelnet Education Loan Funding, Inc. has met the Conditions
precedent to all borrowings as required and as described in such article. I
further certify that to the best of my knowledge and belief, (i) the amounts
provided above are accurate and complete and (ii) no Event of Default or Early
Amortization Event under the Agreement has occurred and is continuing.
NELNET EDUCATION LOAN FUNDING, INC.
________________________
Authorized Officer
C-2
EXHIBIT D
SPECIAL ADVANCE NOTICE
Nelnet Education Loan Funding, Inc. 2003 Amended Warehousing Financing with
Thunder Bay Funding Inc., as the Lender, and Royal Bank of Canada, as the
Alternate Lender
Special Advance Notice
Exhibit D
Date: [One Business Day prior to date Advance is to be made]
In accordance with Section 2.02 of the Amended and Restated Warehouse Loan and
Security Agreement, dated as of April 28, 2003 (the "Agreement"), by and among
Nelnet Education Loan Funding, Inc., as borrower (the "Borrower"), Xxxxx Fargo
Bank Minnesota, National Association, as eligible lender trustee (the "Eligible
Lender Trustee"), Zions First National Bank, as trustee (the "Trustee"), Thunder
Bay Funding Inc., as lender, Royal Bank of Canada, as facility agent and
alternate lender, and NELnet Student Loan Warehouse Corporation-1, as original
borrower (solely for the limited purpose stated therein), the Borrower hereby
requests an Advance in the amount and as of the date provided below.
Date of Advance ----------------------
Requested Alternate Advance Rate (if applicable) [Specify Alternate Advance Rate
based on LIBOR or Base Rate]
Requested Advance Percentage ----------------------
NEW ADVANCES FOR THE FUNDING OF STUDENT LOANS:
Aggregate Amount of Student Loans to be
Financed Principal (not to exceed the
aggregate principal amount of Student
Loans to be financed) -------------------
Amount of borrowing required for interest
funding -------------------
Total Amount of New Advances -------------------
TEST OF FACILITY AMOUNT:
Total available Facility Amount -------------------
Less the sum of:
Total outstanding Advances -------------------
Total projected interest due on all
outstanding Advances -------------------
Total outstanding Advances & interest
-------------------
Remaining facility amount -------------------
Capitalized terms not otherwise defined herein shall have the meanings assigned
to them in the Agreement.
Please consider this proper authorization to transfer the Total Amount of New
Advances in the Amount noted above to the Collection Advance Subaccount held by
the Trustee on [DATE OF
D-l
ADVANCE]. Pursuant to Article III of the Agreement, I hereby certify that Nelnet
Education Loan Funding, Inc. has met the Conditions precedent to all borrowings
as required and as described in such article. I further certify that to the best
of my knowledge and belief, (i) the amounts provided above are accurate and
complete and (ii) no Event of Default or Early Amortization Event under the
Agreement has occurred and is continuing.
NELNET EDUCATION LOAN FUNDING, INC.
_____________________________
Authorized Officer
D-2
EXHIBIT E
MONTHLY REPORT
Nelnet Education Loan Funding, Inc. 2003 Amended Warehousing Financing with
Thunder Bay Funding Inc., as the Lender, and Royal Bank of Canada, as the
Alternate Lender
Monthly Report
Exhibit E
Calculation Date: [4th Business Day preceding each Settlement Date]
Calculation Period: [Calendar month preceding the Settlement Date]
Settlement Date: [First Business Day of each month]
Collection Date: [6th Business Day preceding the end of each month]
Interest Principal
Collections Collections Total
COLLECTIONS:
Interest Payments received by Servicers ------------- ------------ ---------
Government Interest & Special Allowance
Payments received (from DOE)
(other than Higher SAP
Differentials) ------------- ------------ ---------
Interest on Collection Account ------------- ------------ ---------
Interest on Cash Reserve Account ------------- ------------ ---------
Principal Payments received by Servicer ------------- ------------ ---------
Reimbursement of Origination Fees (DOE) ------------- ------------ ---------
Reimbursement of Guarantee Fees (guarantor or prior
lender) ------------- ------------ ---------
Adjustments & Misc. ------------- ------------ ---------
Higher SAP Differentials Interest on Escrow Account ------------- ------------ ---------
Total Interest & Principal Collections received during the period
from the prior Collection Date to the current
Collection Date occurring during this Calculation Period ------------- ------------ ---------
Required Additional Advances ---------
TOTAL COLLECTIONS AND ADDITIONAL ADVANCES ---------
Net of Higher SAP Differentials
PAYMENT WATERFALL (TOTAL COLLECTIONS AND ADDITIONAL ADVANCES NET OF
HIGHER SAP DIFFERENTIALS):
1. Accrued and unpaid Servicer Fees and Custodian Fees as of the close of
business on the last day of the immediately preceding Calculation Period ---------
2. Accrued and unpaid Program Availability Fees, Program Usage Fees,
Alternate Interest Amounts and Liquidity Interest Amounts due and owing as
of the close of business on the last day of the immediately preceding ---------
Calculation Period
3. Maturing Principal Amount of Advances net of any new Rollover Advance,
in each case, due and owning to the Facility Agent as of such Settlement
Date ---------
4. Accrued and unpaid Liquidity Fees and other Obligations owed to the
Lender, the Alternate Lender, the Liquidity Facility Providers and the
Credit Support Providers as of the Settlement Date ---------
E-1
5. Accrued and unpaid Trustee Fees and Eligible Lender Trustee Fees as of
the close of business on the last day of the immediately preceding
Calculation Period ------------
6. Amounts necessary to restore the Cash Reserve Account to the Cash
Reserve Requirement ------------
7. Accrued and unpaid Portfolio Administration Fees as of the close of
business on the last day of the immediately preceding Calculation Period ------------
8. Amounts designated by the Borrower to reduce the Amount of the
Outstanding Advances to the Facility Agent ------------
9. Accrued and unpaid Obligations as of the close of business on the last
day of the immediately preceding Calculation Period ------------
10. Estimated Taxes (other than on net income attributable to Higher SAP
Differentials) owed by the Borrower payable prior to the next Settlement
Date ------------
11. On the Settlement Date immediately following each Quarterly Valuation
Date, amounts representing the Excess Coverage Amount calculated pursuant
to the provisions of Exhibit F to the Agreement, and as further directed by
the Borrower ------------
Total Required Payments pursuant to Section 2.05(c) of the Agreement ================
Required Deposit to Escrow Account pursuant to Section 2.07A ------------
Required Withdrawals from Escrow Account pursuant to Section 2.07B ------------
Amounts allowed to be withdrawn from the Cash Reserve Account pursuant to
Section 2.07 ------------
[Attach a description of the characteristics of the Financed Loans,
including the aggregate outstanding principal balance of the Financed Loans
by loan type, borrower status, delinquency category and school type and
whether Higher SAP Loans]
The following calculations have been performed to evidence that an Early
Amortization Event has not occurred:
The outstanding Principal Balance of Financed Loans constituting
Proprietary Loans, computed as a percentage of the Principal Balance of all
Financed Loans, which shall be 20% or less, equals: ------%
The outstanding Principal Balance of unsubsidized Xxxxxxxx Loans in either
"enrolled" or "grace" status, computed as a percentage of the Principal
Balance of all Financed Loans, which shall be 60% or less, equals: ------%
The outstanding Principal Balance of Financed Loans that are thirty (30) or
more days delinquent, computed as a percentage of the Principal Balance of
all Financed Loans in "repayment status," which shall be 23% or less,
equals: ------%
The outstanding Principal Balance of Financed Loans in "claim" status,
computed as a percentage of the Principal Balance of all Financed Loans in
"repayment status," which shall be 20% or less, equals: ------%
The outstanding Principal Balance of Financed Loans in "claim" status,
computed as a percentage of the Principal Balance of Financed Loans in
"repayment" status, which shall be 15% or less, equals: ------%
E-2
As an authorized representative of Nelnet Education Loan Funding, Inc., I
hereby certify that to the best of my knowledge and belief (i) the amounts
provided above are accurate and complete as determined on the Settlement
Date and in accordance with the provisions of the Amended and Restated
Warehouse Loan and Security Agreement, dated as of April 28, 2003 (the
"Agreement"), by and among Nelnet Education Loan Funding, Inc., as
borrower, Xxxxx Fargo Bank Minnesota, National Association, as eligible
lender trustee, Zions First National Bank, as trustee, Thunder Bay Funding
Inc., as lender, Royal Bank of Canada, as facility agent and alternate
lender, and NELnet Student Loan Warehouse Corporation-1, as original
borrower (solely for the limited purpose stated therein), and (ii) no Event
of Default or Early Amortization Event under the Agreement has occurred and
is continuing.
Capitalized terms not defined herein shall have the meanings assigned to
them in the Agreement.
This Exhibit E shall constitute the written direction to the Trustee to
make the deposits and transfers set forth in Section 2.05(c) and Section
2.07B of the Agreement. The Trustee may conclusively rely on this Exhibit E
(including all attachments) and shall be under no duty to review or examine
the information set forth herein.
Nelnet, Inc., as Portfolio Administrator
________________________________________
Authorized Officer
Date:
________________________________________
APPROVED:
Nelnet Education Loan Funding, Inc., as Borrower
________________________________________
Authorized Officer
Date: __________________________________
E-3
EXHIBIT F
FORMS OF ASSET COVERAGE REPORT AND CASH RELEASE CERTIFICATE
NELNET EDUCATION LOAN FUNDING, INC. 2003 AMENDED WAREHOUSING FINANCING WITH
THUNDER BAY FUNDING INC., AS THE LENDER, AND ROYAL BANK OF CANADA, AS THE
ALTERNATE LENDER
ASSET COVERAGE REPORT
EXHIBIT F
AGGREGATE MARKET VALUE*:
(i) Outstanding principal balance of Financed Loans,
multiplied by the Loan Valuation Percentage(1)
(ii) Accrued and unpaid borrower interest, federal
interest subsidies and special allowance payments (other than Higher SAP
Differentials received)
(iii) Outstanding principal balance of Permitted
Investments, including accrued and unpaid interest thereon
(iv) Cash Balances in Collection Account and Cash
Reserve Account
(v) Payments on Financed Loans or other assets
received by the Servicer or the Borrower and not yet transferred to the
Trustee (other than Higher SAP Differentials)
(vi) The unamortized value of any prepaid expenses
TOTAL AGGREGATE MARKET VALUE
LIABILITIES*:
(i) Facility Amount Advances
(ii) Accrued and unpaid Program Availability Fees, Program
Usage Fees, Alternate Interest Amounts, Liquidity
Interest Amounts and Liquidity Fees
(iii) Any other accrued and unpaid fees:
(a) Custodian Fees
(b) Liquidity Fees
(c) Servicing Fees
(d) Trustee Fees and Eligible Lender Trustee Fees
(e) Portfolio Administration Fees
(f) Indemnities and Other Fees
Total Fees
TOTAL LIABILITIES
----------------------
(1) If subsequent to any repayment or refinancing pursuant to Section
5.11 of the Loan Agreement, the Principal Balance of Defaulted Student
Loans exceeds 10% of the Principal Balance of all Financed Loans in
"repayment status", the Aggregate market Value of all Defaulted Student
Loans shall be valued separately as Defaulted Student Loans on the related
Valuation Date.
F-l
ASSET COVERAGE RATIO (TOTAL AGGREGATE MARKET VALUE/TOTAL LIABILITIES) %
*Certain summary reports have been attached providing detailed calculations
for the amounts provided above, or are available upon request.
As an authorized representative of Nelnet Education Loan Funding, Inc., I
hereby certify that to the best of my knowledge and belief (i) the
calculation of the Asset Coverage Ratio is accurate and complete as
determined on the Calculation Date and in accordance with the provisions of
the Amended and Restated Warehouse Loan and Security Agreement, dated as of
April 28, 2003 (the "Agreement"), by and among Nelnet Education Loan
Funding, Inc., as borrower, Xxxxx Fargo Bank Minnesota, National
Association, as eligible lender trustee, Zions First National Bank, as
trustee, Thunder Bay Funding Inc., as lender, Royal Bank of Canada, as
facility agent and alternate lender, and NELnet Student Loan Warehouse
Corporation -1 (solely for the limited purpose stated therein), as
original borrower and (ii) no Event of Default or Early Amortization Event
under the Agreement has occurred and is continuing.
The Trustee may conclusively rely upon such calculations, certificates,
reports and other notices received as set forth herein and shall be under
no duty to determine or examine the same.
All capitalized terms not defined herein shall have the meanings assigned
to them in the Agreement.
NELNET EDUCATION LOAN FUNDING, INC,
____________________________
Authorized Officer
Date:_______________________
F-2
NELNET EDUCATION LOAN FUNDING, INC. 2003 AMENDED WAREHOUSING FINANCING WITH
THUNDER BAY FUNDING INC., AS THE LENDER, AND ROYAL BANK OF CANADA, AS THE
ALTERNATE LENDER
FORM OF CASH RELEASE CERTIFICATE
EXHIBIT F
Calculation Date (Quarterly): [Fourth Business Day preceding each
Settlement Date occurring in the months of March, June, September and December]
Settlement Date following each Quarterly Valuation Date: [First Business Day
of March, June, September and December]
Corporate Trust Officer
Zions First National Bank
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000
Pursuant to Section 2.05(c)(xi) of the Amended and Restated Warehouse Loan
and Security Agreement, dated as of April 28, 2003 (the "Agreement"), by
and among Nelnet Education Loan Funding, Inc., as borrower (the
"Borrower"), Xxxxx Fargo Bank Minnesota, National Association, as eligible
lender trustee, Zions First National Bank, as trustee, Thunder Bay Funding
Inc., as lender, Royal Bank of Canada, as facility agent and alternate
lender and NELnet Student Loan Warehouse Corporation - 1, as original
borrower (solely for the limited purpose stated therein), you are hereby
instructed to release funds in the amount of $____________ (the "Excess
Coverage Amount" ) to be transferred to the Borrower or any other Person as
directed by the Borrower (by wire transfer as directed by the Borrower) on
the Settlement Date of___________. The Excess Coverage Amount is the amount
of funds permitted to be withdrawn pursuant to Exhibit E to the Agreement
and as further permitted by the calculation of the Asset Coverage Ratio,
included herewith. Provided below is the calculation of the restated Asset
Coverage Ratio following the withdrawal of the Excess Coverage Amount.
Additionally, provided in connection with this Cash Release Certificate is
the Asset Coverage Ratio and the Valuation Report. As an authorized
representative of Nelnet Education Loan Funding, Inc., I hereby certify
that to the best of my knowledge and belief the calculation of the Excess
Coverage Amount and the restated Asset Coverage Ratio are accurate and
complete as determined on the Calculation Date; and I further certify that
any transfer hereunder shall not result in (i) Net Revenues of less than
$0, (ii) an Asset Coverage Ratio of less than 103% and (iii) an Event of
Default or a required collateral call pursuant to the provisions of the
Agreement.
All capitalized terms not defined herein shall have the meanings assigned
to them in the Agreement.
Restated Asset Coverage Ratio:
Total Aggregate Market Value
Less: Permitted Excess Coverage Amount ( )
Total Restated Aggregate Market Value
Total Liabilities calculated pursuant to Exhibit_____
Restated Asset Coverage Ratio %
Required Release Ratio 103.00%
NELNET EDUCATION LOAN FUNDING, INC.
_____________________________
Authorized Officer
Date:________________________
F-3
EXHIBIT G
COPIES OF CUSTODIAN AGREEMENTS
G-l
CUSTODIAN AGREEMENT
THIS CUSTODIAN AGREEMENT dated as of April 28, 2003 (this "Custodian
Agreement"), is by and among NELNET EDUCATION FUNDING, INC. (the "Borrower"),
XXXXX FARGO BANK MINNESOTA, NATIONAL ASSOCIATION, as Eligible Lender Trustee on
behalf of the Borrower (the "Eligible Lender Trustee"), ZIONS FIRST NATIONAL
BANK, as Trustee (the "Trustee"), and NELNET LOAN SERVICES, INC., as custodian
(the "Custodian").
WHEREAS, the Borrower, the Trustee, the Eligible Lender Trust Company,
Thunder Bay Funding Inc., and Royal Bank of Canada have entered into an Amended
and Restated Warehouse Loan and Security Agreement, dated as of April 28, 2003
(the "Loan Agreement"), pursuant to which the Borrower, through the Eligible
Lender Trustee as the Eligible Lender (as defined in the Loan Agreement), will
acquire student loans (the "Financed Loans"); and
WHEREAS, pursuant to the Loan Agreement, the Borrower has granted to
the Trustee, and its successors and assigns, a security interest in, among other
things, the promissory notes and certain other documents relating to certain
Financed Loans; and
WHEREAS, the Trustee has requested, and the Borrower has agreed, that
all Financed Loans (including all Financed Loans with respect to which the
Eligible Lender Trustee holds legal title) shall be placed in the possession of
the Trustee through its agent for the purpose of creating a security interest
and perfecting the Trustee's security interest in the collateral under the
Uniform Commercial Code; and
WHEREAS, the Borrower has entered into a Loan Servicing Agreement,
dated as of April 28, 2003 (the "Servicing Agreement"), with the Custodian, as
servicer; and
WHEREAS, the Borrower desires to contract for the Custodian to provide
the custodial services set forth herein; and
WHEREAS, the Borrower has directed the Trustee to enter into this
Custodian Agreement for the purpose of appointing the Custodian as its agent to
take possession and custody of the Deposited Loans (as defined below) and the
proceeds therefrom; and
WHEREAS, the Borrower will from time to time in the future deliver, or
cause the Eligible Lender Trustee to deliver, to the Custodian Financed Loans to
be serviced by the Custodian, as servicer;
NOW, THEREFORE, the Trustee and the Borrower hereby authorize the
Custodian to so hold all Deposited Loans as bailee and agent of the Trustee and
authorize the Custodian to perform the following functions, and duties in
connection therewith, and the Custodian agrees to perform such functions and
duties (in the case of the Custodian, as bailee and agent of the Trustee),
including perfecting and continuing the perfection of the Trustee's security
interest in the Deposited Loans:
1. DEFINITIONS. Unless otherwise defined herein, all capitalized
terms used herein, including the premises thereof, shall have the meanings
ascribed to such terms in the Loan Agreement.
"Deposited Loans" means all Financed Loans financed pursuant to the
Loan Agreement which now or at any time hereafter are serviced by or in the
possession of the Custodian, as servicer, pursuant to the Servicing Agreement as
well as all records and other instruments and documents relating thereto.
2. SAFEKEEPING OF THE DEPOSITED LOANS. The Custodian hereby
agrees to perform the following services for the Trustee with respect to the
Deposited Loans:
(a) To hold in its fireproof storage vault and under its
exclusive control the following documents with respect to each of the
Deposited Loans and shall use due care to preserve and protect the
same:
(i) the original promissory note or a copy of
the Master Promissory Note and documentation related to the
Deposited Loans issued pursuant to the Master Promissory Note;
(ii) the Notification of Loan Approval, if any,
from a Guarantor guaranteeing the Financed Loan; and
(iii) any further documentation required by the
Secretary of Education (the "Secretary"), if applicable, or
the applicable Guarantor.
provided, however, that to the extent permitted in accordance with the
rules and regulations of the Secretary and/or the applicable Guarantor,
the Custodian may retain any of such documentation (other than original
promissory notes) on microfilm or other electronic, image or similar
storage system.
(b) Upon the written demand of the Borrower or the
Trustee and in circumstances authorized in the Loan Agreement, the
Custodian shall deliver and immediately release to the Trustee any and
all of the Deposited Loans at the time held by Custodian, as well as
all related information and documents required to be held under the
Servicing Agreement.
(c) To furnish the Trustee semiannually a list containing
the names and social security numbers of the obligors of the Deposited
Loans, the unpaid principal balance of all Deposited Loans of each of
said obligors, and such other information with respect to the Deposited
Loans which is reasonably requested by the Trustee.
(d) To permit inspection at all reasonable times and upon
reasonable advance notice by the Borrower, the Trustee, the Eligible
Lender Trustee, a Guarantor, the Secretary and any governmental agency
having jurisdiction or their respective agents (including auditors) of
the Deposited Loans and the records of the Custodian relating thereto,
such inspection to include the right to examine and make copies of any
2
documents relating to the Deposited Loans and to interview personnel
involved in the servicing of the Deposited Loans.
(e) To furnish the Trustee from time to time upon written
request of the Trustee such reports as are required by the Servicing
Agreement.
(f) To furnish to the Trustee, at the request of the
Trustee or the Borrower, prior to the acquisition of any Student Loans,
a confirmation that all records, documents and other instruments
described in clause (a) above with respect to such Student Loans have
been received by the Custodian.
(g) To take any and all such other action with respect to
the Deposited Loans as the Trustee may, consistent with its rights and
obligations under the Servicing Agreement, reasonably request.
In accordance with the written direction of the Borrower, the Trustee
hereby appoints the Custodian as its agent solely to take physical possession
and custody of the Deposited Loans and the proceeds thereof in accordance with
the terms of this Custodian Agreement. The Custodian hereby accepts such
appointment, acknowledges receipt of notice of the security interest held by the
Trustee in the Deposited Loans and acknowledges that the Custodian is holding
possession of such Deposited Loans for the Trustee's benefit.
3. PAYMENTS IN RESPECT OF DEPOSITED LOANS. The parties hereto
agree that amounts received in respect of the Deposited Loans (including claim
payments from any Guarantor and Interest Subsidy Payments and Special Allowance
Payments) shall be promptly paid over to and deposited with the Trustee pursuant
to the Loan Agreement.
4. RELEASE OF COLLATERAL. The Custodian may release Deposited
Loans and all related information and documentation held by the Custodian only
as follows:
(a) the Custodian may release to the Borrower or to any
Person designated by the Borrower at any time any Deposited Loan that
has been paid in full;
(b) the Custodian may release to an applicable Guarantor
any Deposited Loan which is eligible for claim payment and with respect
to which a claim is (or is to be) filed; and
(c) the Custodian may, in accordance with the provisions
of Section 2(b) hereof, release to the Trustee the Deposited Loans and
any records, documents and instruments relating thereto, subject to the
provisions of the Servicing Agreement.
Except as described in this paragraph and except upon termination of
this Custodian Agreement, the Custodian will not release any Deposited Loans
unless the Custodian is in receipt of written authorization from the Trustee.
5. NO LIABILITY. Neither the Trustee nor the Eligible Lender
Trustee shall have any responsibility for loss or damage suffered by the
Borrower with respect to any Deposited Loan delivered or released pursuant to
this Custodian Agreement.
3
6. TERMINATION OF THIS CUSTODIAN AGREEMENT. This Custodian
Agreement shall remain in effect until the date on which either of the following
shall occur: (a) the Servicing Agreement shall have expired or otherwise been
terminated; or (b) upon satisfaction of all indebtedness of the Borrower the
payment of which is secured under the Loan Agreement, including indebtedness for
any penalties, costs of collection or other charges. Upon termination of this
Custodian Agreement for any reason other than full satisfaction of indebtedness
of the Borrower, the Deposited Loans then held by Custodian shall be forthwith
delivered to the party designated by the Trustee, subject to the terms of the
Servicing Agreement. Upon termination of this Custodian Agreement following
satisfaction of indebtedness of the Borrower, Deposited Loans and materials
relating thereto in the possession of the Custodian shall be delivered to the
Borrower or its designee. This Custodian Agreement shall not be subject to
termination other than as specifically provided in this paragraph.
7. INSPECTION RIGHTS. To the extent permitted by law, all records
maintained by the Custodian with respect to the Deposited Loans shall be
available for inspection or audit from time to time by the Trustee, the Eligible
Lender Trustee, the Lender, the Alternate Lender, the Liquidity Facility
Providers and the Credit Support Providers (each as defined in the Loan
Agreement) and the Borrower (or their respective designees) upon request of such
Person, made with reasonable advance notice to the Custodian, such availability
to include the right to examine and make copies of any documents relating to the
Deposited Loans, with costs of same not to be paid for by the Custodian.
8. FEES AND EXPENSES. The Custodian shall not receive any
additional compensation for acting as custodian hereunder outside of the fees
and expenses paid to the Custodian in its capacity as servicer pursuant to the
Servicing Agreement.
9. REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CUSTODIAN.
(a) The Custodian agrees to accept delivery of the
promissory notes and other documents pertaining to the Deposited Loans
and to have and maintain continuous and exclusive possession and
control over all documents evidencing the Deposited Loans delivered to
it under this Custodian Agreement.
(b) The Custodian shall exercise reasonable care and
diligence in the possession, retention and protection of the Deposited
Loans delivered to it hereunder. The Custodian accepts the custodial
duties and responsibilities imposed upon it hereunder and agrees to
perform such custodial duties and responsibilities in a sound and
prudent manner consistent in all respects with sound custodial
practices and principles.
(c) The Custodian shall at all times during the term of
this Custodian Agreement maintain insurance which shall include, but
not be limited to, dishonesty of employees or other crimes resulting in
the loss of the Deposited Loans and comprehensive general liability,
including personal injury and loss or damage to documents.
(d) The Custodian shall at all times maintain records
indicating the borrower name and Social Security number, at a minimum,
of all Deposited Loans which are
4
delivered to it to hold as Custodian pursuant to this Custodian
Agreement and indicating that such Deposited Loans have been pledged to
the Trustee.
10. MISCELLANEOUS.
(a) This Custodian Agreement shall be binding upon the
parties hereto and their successors, transferees and assigns, and shall
inure to the benefit of and be enforceable by all parties hereto and
their respective successors, transferees and assigns.
(b) The Custodian acknowledges and agrees that its
services under this Custodian Agreement are in addition to, and not in
lieu, of its services as servicer of the Deposited Loans under and
pursuant to the Servicing Agreement.
(c) This Custodian Agreement may be executed and
delivered in any number of counterparts, each of which, when so
executed and delivered, shall be an original; provided, however, that
such counterparts shall together constitute but one and the same
instrument.
(d) Any provision of this Custodian Agreement which is
prohibited, unenforceable or not authorized in any jurisdiction shall,
as to such jurisdiction, be effective to the extent of such
prohibition, unenforceability or nonauthorization without invalidating
the remaining provisions hereof or affecting the validity or
enforceability or legality of such provision in any other jurisdiction.
(e) THIS CUSTODIAN AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
COLORADO.
(f) All notices, requests, demands and other
communications under or in respect of this Custodian Agreement shall be
in writing and shall be delivered or mailed, first class, postage
prepaid, or sent by facsimile machine, to the parties at the following
addresses (or at such other address for a party as shall be specified
by the party to whom addressed):
If to the Borrower: Nelnet Education Loan Funding, Inc.
000 Xxxxx 00xx Xxxxxx
Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Phone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: NELnet, Inc.
0000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxx Xxxxxxxxx
0
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Trustee: Zions First National Bank
000 00xx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Attention: Corporate Trust Department
Phone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Eligible Lender Trustee: Xxxxx Fargo Bank Minnesota,
National Association
0xx Xxxxxx and Marquette Avenue, X0000-000
Xxxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxx
Phone: (000) 000-0000
Facsimile: (000) 000-0000
If to the Custodian: NELnet Loan Services, Inc.
0000 Xxxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xx Xxxxxxxx
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
6
IN WITNESS WHEREOF, the parties have signed this Custodian Agreement as
of the date first written above.
ZIONS FIRST NATIONAL BANK, as Trustee
under the Loan Agreement
By /s/ Xxxxx X. Xxxx
------------------------------
Xxxxx X. Xxxx, Vice President
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION, as Eligible
Lender Trustee
By /s/ Xxxxx X. Xxxxx
------------------------------
Xxxxx X. Xxxxx, Corporate Trust
Officer
NELNET LOAN SERVICES, INC.
By /s/ Xxxxx Xxxxxx
------------------------------
Xxxxx Xxxxxx, Chief Financial
Officer
NELNET EDUCATION LOAN FUNDING,
INC.
By /s/ Xxxxx Xxxxxx
------------------------------
Xxxxx Xxxxxx, President
7
EXHIBIT H
FORM OF PARTICIPATION AGREEMENT
H-l
PARTICIPATION AGREEMENT
This Participation Agreement is made and entered into as of the 28th
day of April, 2003, by and between NHELP-I, Inc., a Nevada corporation
("Lender") and Nelnet Education Loan Funding, Inc., f/k/a NEBHELP, INC., a
Nebraska corporation ("Participant").
WHEREAS, Lender is or will be the owner and holder of FFELP Loans (as
defined herein), or beneficial interests therein, originated by or on behalf of
Lender or acquired by Lender; and
WHEREAS, Lender desires to sell, and Participant desires to purchase,
an undivided 100% participation interest in certain FFELP Loans on the terms
and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and promises herein contained, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
"Agreement" means this Participation Agreement and any amendment or
supplement hereto.
"Borrower" means the student or parent obligor under an Eligible Loan.
"Certificate of Insurance" means a certificate of federal loan
insurance issued with respect to an Eligible Loan by the Secretary of Education
pursuant to the provisions of the Higher Education Act.
"Commitment Amount" means the aggregate outstanding principal balance
of FFELP Loans up to an amount determined by Participant, participation
interests in which are committed to be sold by Lender and purchased by the
Participant pursuant to this Agreement.
"Commitment Period" means the period of time commencing on the date
first set forth above and terminating 364 days thereafter, and renewing
thereafter for successive 364-day periods, unless either party gives written
notice of intent to terminate at least 30 days to the other party and to the
Facility Agent and the Trustee prior to the termination of the initial
Commitment Period or any renewal/extension Commitment Period. The Commitment
Period shall terminate immediately upon a default by Lender of any of its
obligations hereunder.
"Contract of Insurance" means an agreement between the Secretary of
Education and either the Eligible Lender Trustee or Lender providing for the
insurance by the
1
Secretary of Education of the principal of and accrued interest on a FFELP Loan
to the maximum extent permitted under the Higher Education Act.
"Eligible Lender Trustee" means Xxxxx Fargo Bank Minnesota, National
Association, acting in its capacity as eligible lender trustee on behalf of the
Lender, and not in its individual capacity.
"Eligible Loan" means a FFELP Loan in which a participation interest is
authorized to be acquired by the Participant which (a) is either Insured or
Guaranteed; (b) if such FFELP Loan is a subsidized Xxxxxxxx loan, qualifies the
holder thereof to receive Interest Subsidy Payments and Special Allowance
Payments; if such FFELP Loan is a consolidation loan authorized under Section
428C of the Higher Education Act, qualifies the holder thereof to receive
Interest Subsidy Payments and Special Allowance Payments to the extent
applicable; and if such FFELP Loan is a PLUS loan authorized under Section 428B
of the Higher Education Act, a SLS loan authorized under Section 428A of the
Higher Education Act, or an unsubsidized Xxxxxxxx loan authorized under Section
428H of the Higher Education Act, such FFELP Loan qualifies the holder thereof
to receive Special Allowance Payments; (c) complies with each representation and
warranty with respect thereto contained herein; and (d) meets the other
applicable criteria set forth in the Loan Purchase Regulations and an undivided
participation interest in which is eligible for purchase under the terms of the
Warehouse Loan and Security Agreement.
"Facility Agent" means Royal Bank of Canada, as the Facility Agent
under the Warehouse Loan and Security Agreement, and any successor or assign.
"Federal Contracts" means all agreements between a Guarantee Agency and
the Secretary of Education providing for the payment by the Secretary of
Education of amounts authorized to be paid pursuant to the Higher Education Act,
including, but not limited to, reimbursement of amounts paid or payable upon
defaulted Eligible Loans and other student loans insured or guaranteed by any
Guarantee Agency and federal interest subsidy payments and Special Allowance
Payments, if applicable, to holders of qualifying student loans guaranteed by
any Guarantee Agency.
"FFELP Loans" means those specific loans in which a participation
interest is acquired by Participant from Lender pursuant to this Agreement,
inclusive of the promissory notes evidencing such loans and the related
documentation in connection with each thereof, which were originated pursuant to
the Federal Family Education Loan Program and the Higher Education Act.
"Guarantee" or "Guaranteed" means, with respect to a FFELP Loan, the
guarantee by the Guarantee Agency, in accordance with the terms and conditions
of the Guarantee Agreement, of the principal of and accrued interest on the
FFELP Loan to the maximum extent permitted under the Higher Education Act on
FFELP Loans which have been originated, held and serviced in full compliance
with the Higher Education Act, and the coverage of the FFELP Loan by the Federal
Contracts providing, among
2
other things, for reimbursement to the Guarantee Agency for losses incurred by
it on defaulted Eligible Loans guaranteed by it to the extent of the maximum
reimbursement allowed by the Federal Contracts.
"Guarantee Agency" means a state agency or a private nonprofit
institution or organization which administers a Guarantee Program within a State
or any successors and assignees thereof administering the Guarantee Program
which has entered into a Guarantee Agreement with Lender or the Eligible Lender
Trustee on behalf of Lender.
"Guarantee Agreement" means the Federal Contracts, an agreement between
a Guarantee Agency and either Lender or the Eligible Lender Trustee on behalf of
Lender providing for the Guarantee by such Guarantee Agency of the principal of
and accrued interest on Eligible Loans to Borrowers, made or acquired by Lender
or the Eligible Lender Trustee on behalf of Lender from time to time, and any
other similar guarantee or agreement issued by a Guarantee Agency to Lender or
the Eligible Lender Trustee on behalf of Lender pertaining to Eligible Loans.
"Guaranteed Loans" means FFELP Loans that are Guaranteed.
"Guarantee Program" means a Guarantee Agency's student loan guaranty
program pursuant to which such Guarantee Agency guarantees or insures student
loans.
"Higher Education Act" shall mean Title IV, Parts B, F and G, of the
Higher Education Act of 1965, as amended or supplemented and in effect from time
to time, or any successor enactment thereto, and all regulations promulgated
thereunder and any directives issued by the Secretary of Education.
"Insurance" or "Insured" or "Insuring" means, with respect to a FFELP
Loan, the insuring by the Secretary of Education (as evidenced by a Certificate
of Insurance or other document or certification issued under the provisions of
the Higher Education Act) under the Higher Education Act of the principal of and
accrued interest on such FFELP Loan to the maximum extent permitted under the
Higher Education Act for FFELP Loans originated, held and serviced in full
compliance with the Higher Education Act.
"Insured Loans" means FFELP Loans which are Insured.
"Interest Subsidy Payments" means interest subsidy payments received
from the Secretary of Education pursuant to Section 428 of the Higher Education
Act or similar payments authorized by federal law or regulation.
"Lender" means NHELP-I, Inc., a Nevada corporation, an "eligible
lender" under criteria established by the Higher Education Act that has received
an eligible lender designation by the Secretary of Education with respect to
Insured Loans or from a Guarantee Agency with respect to Guarantee Loans, which
is selling participation
3
interests in FFELP Loans to the Participant hereunder or, if Lender is not
designated as an eligible lender under the Higher Education Act, Lender holds
beneficial ownership of Eligible Loans through the Eligible Lender Trustee,
which is an eligible lender under the Higher Education Act.
"Lender's Retained Interest" means that portion of the income earned
with respect to Eligible Loans covered by the Participation Certificate which is
equal to zero basis points (0.00%), on an annualized basis, of the average
quarterly aggregate principal balance of Eligible Loans covered by the
Participation Certificate; provided, however, that if changes in the Higher
Education Act subsequently reduce the interest rates, Special Allowance Payments
or Interest Subsidy Payments, then Lender's Retained Interest shall be reduced
on a pro tanto basis.
"Loan Purchase Agreement" means the Loan Purchase Agreement including
all exhibits and schedules attached thereto, substantially in the form of
Schedule A hereto.
"Loan Purchase Regulations" means the rules and regulations of the
Participant, as may be adopted by the Participant from time to time, which
pertain to acquisition of participation interests hereunder, which shall
incorporate all requirements specified in any indentures or other financing
arrangements to which the Participant is subject.
"Master Note" means a Master Promissory Note in the form mandated by
Section 432(m)(1)(D) of the Higher Education Act, as added by Pub. L. 105-244,
Section 427, 112 Stat. 1702 (1998), as amended by Public Law No: 106-554
(enacted December 21, 2000) and as codified at 20 U. S. C. Section 1082 (m)(1).
"MPN Loan" means a FFELP Loan evidenced by a Master Note.
"Participant" means Nelnet Education Loan Funding, Inc., f/k/a NEBHELP,
INC., a Nebraska corporation, and its successors and assigns.
"Participation Certificate" means the master participation certificate
in the form attached hereto as Schedule B.
"Purchase Price" means 100% of the outstanding principal balance plus
100% of the accrued and unpaid interest thereon with respect to Eligible Loans
covered by the Participation Certificate, each as of the date of purchase.
"Secretary of Education" means the Commissioner of Education and the
Secretary of the United States Department of Education (who succeeded to the
functions of the Commissioner of Education pursuant to the Department of
Education Organization Act), or any officer, board, body, commission or agency
succeeding to the functions thereof under the Higher Education Act.
"Servicer" means Nelnet Loan Services, Inc.
4
"Servicing Agreement" means the agreement in which the Servicer is
engaged by Participant to administer and service Eligible Loans covered in the
Participation Certificate.
"Special Allowance Payments" means special allowance payments
authorized to be made by the Secretary of Education pursuant to Section 438 of
the Higher Education Act or similar allowances authorized from time to time by
federal law or regulation.
"Trustee" means Xxxxx Fargo Bank Minnesota, National Association,
acting in its capacity as eligible lender trustee the Eligible Lender Trust
Agreement between Trustee and Participant dated as of April 28, 2003, and not in
its individual capacity.
"Warehouse Loan and Security Agreement" means the Amended and Restated
Warehouse Loan and Security Agreement, dated as of April 28, 2003, among the
Participant, as borrower, NELnet Student Loan Warehouse Corporation-1, an
original borrower, the Trustee as eligible lender trustee, Thunder Bay Funding
Inc., as Lender, Royal Bank of Canada, as Alternate Lender Facility Agent, and
Zions First National Bank, as trustee, and any amendments or supplements thereto
made in accordance with its terms, which is utilized to finance Participant's
purchase of participation interests in the FFELP Loans hereunder.
ARTICLE II
PURCHASE OF PARTICIPATION INTEREST
2.01 PURCHASE OF PARTICIPATION INTEREST. Subject to the terms and
conditions and in reliance upon the representations, warranties and agreements
set forth herein, during the Commitment Period, Lender agrees to sell to
Participant, and Participant agrees to purchase from Lender, in an aggregate
amount up to a maximum of the Commitment Amount, an undivided participation
interest in 100.0% of the outstanding principal balance and accrued interest
thereon of Eligible Loans and a portion of the income generated by the Eligible
Loans as provided herein. Participant shall pay to Lender or its designee the
Purchase Price for the participation interest in each Eligible Loan purchased
hereunder, by wire transfer of immediately available funds, on such dates as the
parties may mutually agree upon. The participation interest acquired by
Participant shall include the promissory note and related documents in
connection with each participated Eligible Loan. The participation interest
purchased by Participant shall represent a participation interest in each and
every Eligible Loan specifically identified in the Participation Certificate
with respect thereto, and the parties agree that Participant is not purchasing
an interest in an undivided pool of Eligible Loans. It is the intention of
Lender, that the transfer from Lender to Participant constitutes a true,
absolute sale of the participation interest in Eligible Loans hereunder and that
the ownership of such participation interests shall not become or be deemed to
be property of Lender for any purposes under applicable law. Except as expressly
set forth in this Agreement, the sale of participation interests in Eligible
Loans shall be without
5
recourse to Lender in connection with Borrowers' default on such Eligible Loans.
If a Borrower defaults on an Eligible Loan, and the proceeds from the
liquidation of the Eligible Loan are insufficient to pay the interest accrued on
the Eligible Loan, interest shall be distributed on a pro rata basis between the
Participant and Lender based on the proportion of the basis points comprising
Lender's Retained Interest and the total basis points comprising the interest
rate on the Eligible Loan.
The Lender hereby authorizes the Participant to file a UCC-1 financing
statement identifying the Lender as debtor/seller and the Participant [and the
Trustee] as secured parties/buyers and describing the participation interest in
the Eligible Loans sold pursuant to this Agreement. The preparation or filing of
such UCC-1 financing statement is solely for additional protection of the
Participant's interest in the Eligible Loans and shall not be deemed to
contradict the express intent of the Lender and the Participant that the
transfer of Eligible Loans under this Agreement is an absolute assignment of
such Eligible Loans and is not a transfer of such Eligible Loans as security for
a debt.
2.02 PARTICIPATION CERTIFICATE. On the date of the initial sale of
a participation interest with respect to a portfolio of Eligible Loans
hereunder, or thereafter as mutually agreed upon by the parties hereto, Lender
shall execute and deliver to Participant the Participation Certificate
evidencing a 100% participation and beneficial ownership interest in Eligible
Loans in that portfolio as identified in Schedule A attached to the
Participation Certificate. Lender shall attach or cause to be attached to the
executed original Participation Certificate a schedule of the participated
Eligible Loans, legal title to which shall be retained by Lender (if an eligible
lender under the Higher Education Act) or by the Eligible Lender Trustee. As
Lender sells additional participation interests in Eligible Loans to Participant
hereunder, no more frequently than on a monthly basis, Lender shall issue (or
cause to be issued) supplemental schedules to Participant to be substituted and
attached to the Participation Certificate. The participation interest shall be
deemed to have been transferred to Participant upon payment of the Purchase
Price therefor, irrespective of whether such supplemental schedules are issued
by Lender. Lender shall also perform any reasonable or necessary acts to perfect
Participant's ownership of the participation interest in Eligible Loans
including, without limitation, providing notice to the Borrowers of the transfer
of the participation interest if Participant or Facility Agent determines such
acts are necessary to perfect such sale.
2.03 DISTRIBUTION OF PAYMENTS RECEIVED. Upon issuance of the
Participation Certificate with respect to a particular portfolio of Eligible
Loans, Participant shall be entitled to 100% of payments and income earned with
respect to the Eligible Loans covered by the Participation Certificate, less
Lender's Retained Interest which shall be deducted therefrom and paid to Lender
on a quarterly basis. Lender shall pay for all origination fees payable to the
Secretary of Education pursuant to the Higher Education Act, servicing fees
charged by Servicer pursuant to the Servicing Agreement and any other costs
incidental to or associated with origination, Guarantee, ownership,
administration, servicing and collection with respect to each of the Eligible
Loans
6
covered by the Participation Certificate. Lender agrees to account and deliver
to Participant, or cause to be delivered to Participant, all sums of principal,
interest, Special Allowance Payments, Interest Subsidy Payments or other income
received by Lender or Servicer on behalf of Lender on account of Participant's
participation interest in the Eligible Loans covered by the Participation
Certificate during the term of this Agreement, less Lender's Retained Interest.
Lender shall cause Servicer to furnish to Participant, on a monthly basis, all
reports issued by Servicer pursuant to the Servicing Agreement showing the
amount of the balances of each of the Eligible Loans covered by the
Participation Certificate and other information generated by Servicer, and such
other specific information on individual Eligible Loans covered by the
Participation Certificate as Participant may reasonably require from time to
time, subject to the abilities of Servicer. Participant shall have access to
inspect documents in connection with Eligible Loans covered by the Participation
Certificate at the Servicer on a day to day basis.
2.04 SERVICING AND CONTROL OF ELIGIBLE LOANS. Lender and
Participant shall cause Servicer to service and collect each of the Eligible
Loans covered by the Participation Certificate under the Servicing Agreement, in
accordance with the terms of the Higher Education Act, and any rules and any
regulations adopted by the applicable Guarantee Agency or the Secretary of
Education. Servicer shall act at the direction of Participant. Lender shall
promptly deliver the promissory notes and other documents evidencing or relating
to the Eligible Loans covered in the Participation Certificate to the Servicer
or its agent. The promissory notes and other documents evidencing or relating to
the Eligible Loans covered in the Participation Certificate shall be retained by
Servicer or its agent for safekeeping as custodian in connection with the
Servicing Agreement for the benefit of Lender and Participant. Servicer shall
segregate the Eligible Loans in a separate account for servicing purposes for
the benefit of Lender and Participant. During the term of this Agreement, Lender
shall not (and shall cause the Eligible Lender Trustee to not) pledge, encumber,
sell, transfer or otherwise dispose of any interest in any Eligible Loan covered
by a Participation Certificate, except as may be expressly permitted herein.
2.05 CONDITIONS OF PURCHASE. Participant's obligation to purchase
and pay for participation interests in Eligible Loans hereunder shall be subject
to each of the following conditions precedent:
(a) all representations, warranties and statements made
by Lender contained in this Agreement shall be true on the applicable
date of purchase;
(b) Participant, Facility Agent and Trustee shall receive
an opinion of Lender's counsel dated as of the date of the first sale
of Participation Certificates hereunder (covering such first sale and
any other sale of Participation Certificates), in form and substance
satisfactory to Participant, Facility Agent and Trustee, to the effect
that (i) this Agreement has been duly authorized, executed and
delivered by Lender and constitutes the legal, valid, binding and
enforceable obligation of Lender; (ii) the Participation Certificate
has been duly authorized, executed and delivered by Lender; (iii) with
respect to all Insured Loans in which participation interests are being
acquired, the applicable Contract
7
of Insurance has been duly authorized, executed and delivered by the
Lender; (iv) with respect to participation interests in all FFELP Loans
in which participation interests are being acquired, the applicable
Guarantee Agreement has been duly authorized, executed and delivered by
Lender; (v) assuming the due execution and delivery thereof, each FFELP
Loan in which a participation interest is acquired hereunder
constitutes the legal, valid and binding obligation of the Borrower
(and of each endorser, if any) thereof, enforceable in accordance with
its terms; (vi) to the knowledge of Lender's counsel, the execution and
delivery of this Agreement, the consummation of the transactions
therein contemplated and compliance with the terms, conditions and
provisions of this Agreement do not and will not conflict with or
result in a breach of any of the terms, conditions or provisions of the
charter, articles or bylaws of Lender or any agreement or instrument to
which Lender is a party or by which it is bound or constitute a default
thereunder; (vii) to the knowledge of Lender's counsel, Lender is not a
party to or bound by any agreement or instrument or subject to any
charter or other corporate restriction or judgment, order, writ,
injunction, decree, law, rule or regulation which may materially or
adversely affect the ability of Lender to perform its obligations under
this Agreement; (viii) no consent, approval or authorization of any
government or governmental body, including, without limitation, the
Federal Savings and Loan Insurance Corporation, Federal Deposit
Insurance Corporation, the Comptroller of the Currency, the Board of
Governors of the Federal Reserve System or any state banking regulatory
agency, is required in connection with the consummation of the
transactions contemplated in this Agreement; (ix) this Agreement shall
constitute a security agreement under State of Nebraska law and shall
be effective to create, in favor of the Participant, a valid, perfected
security interest in the Eligible Loans evidenced by each Participation
Certificate sold hereunder; (x) the Participant shall have a perfected
security interest in the participation interests in Eligible Loans
evidenced by the Participation Certificate subject to no prior liens,
(xi) if the Lender and the Participant are affiliates, that (A) if the
Lender became a debtor under the United States Bankruptcy Code, 11
U.S.C. Sections 101 et seq., as amended (the "Bankruptcy Code"), (i)
Section 541(a)(1) of the Bankruptcy Code would not apply to deem the
participation interests in Eligible Loans transferred by the Lender to
the Participant and the proceeds therefrom as property of the
bankruptcy estate of the Lender and therefore (ii) Section 362(a) of
the Bankruptcy Code would not apply to stay payment to the Participant
or its assignees and (B) if the Lender became a debtor under the
Bankruptcy Code, a court would not disregard the separate identity of
the Participant so that the assets of the Participant would be
consolidated with and become a part of the Lender's bankruptcy estate
and (xii) if the Lender is a bank or saving association the deposits of
which are insured by FDIC (a "Bank") and the FDIC were appointed as a
receiver or conservator of such Bank, a court would not recharacterize
the transfer and assignment of the participation interests in Eligible
Loans to the Participant as a pledge to secure a borrowing rather than
as a sale of the participation interests in Eligible Loans.
8
(c) delivery by Lender to Participant on or before the
applicable date of purchase of the Participation Certificate, original
or supplemental schedules to the Participation Certificate listing and
identifying each Eligible Loan in which a participation interest is
being transferred to Participant; UCC-1 Financing Statements evidencing
the transfer from Lender to Participant (and Trustee), UCC Lien
Searches, and UCC Termination Statements or Releases, if any, releasing
any security interest granted by Lender in any Eligible Loan covered by
the Participation Certificate; and
(d) adequate funds are available to Participant from the
Warehouse Loan and Security Agreement or otherwise which will finance
the purchase of participation interests in Eligible Loans under this
Agreement.
2.06 REPURCHASE OBLIGATION. If:
(a) any representation or warranty made or furnished by
Lender in or pursuant to this Agreement with respect to a FFELP Loan
shall prove to have been materially incorrect;
(b) the Secretary of Education or a Guarantee Agency, as
the case may be, refuses to honor all or part of a claim with respect
to a FFELP Loan (including any claim for Interest Subsidy Payments,
Special Allowance Payments, Insurance, reinsurance or Guarantee
Payments) on account of any circumstance or event that occurred prior
to the sale of such FFELP Loan to the Participant by and through the
Trustee;
(c) on account of any circumstance or event that occurred
prior to the sale of a FFELP Loan to the Participant by and through the
Trustee, a defense is asserted by a Borrower (or endorser, if any) of
the FFELP Loan with respect to a Borrower's obligation to pay all or
any part of the FFELP Loan, and Participant, in good faith, believes
that the facts reported, if true, raise reasonable doubts as to the
legal enforceability of such FFELP Loan; or
(d) the instrument which Lender purports to be a FFELP
Loan is not, in fact, a FFELP Loan;
then Lender shall repurchase the participation interest in such FFELP Loan or
purported FFELP Loan upon the request of Participant or the Facility Agent by
paying Participant or Zions First National Bank, as trustee under the Warehouse
Loan Agreement (if required by the Facility Agent) the then outstanding
principal balance of such FFELP Loan or purported FFELP Loan (or such greater
amount as may be necessary to make the Participant whole), plus interest and
applicable Special Allowance Payments with respect to such FFELP Loan or
purported FFELP Loan from the date of purchase of the participation interest
therein to and including the date of repurchase, plus any amounts owed to the
Secretary of Education with respect to the repurchased FFELP Loan or purported
FFELP Loan, plus any attorney fees, legal expenses, court costs, servicing
9
fees or other expenses incurred by Participant in connection with such FFELP
Loan or purported FFELP Loan, less Lender's Retained Interest with respect to
such FFELP Loan.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
3.01 LENDER'S REPRESENTATIONS AND WARRANTIES. Lender hereby
represents, warrants and covenants to Participant and Facility Agent as follows:
(a) Any information furnished by Lender to the
Participant, or the Participant's agents with respect to a FFELP Loan
is true, complete and correct.
(b) The amount of the unpaid principal balance of each
FFELP Loan is due and owing, and no counterclaim, offset, defense or
right to rescission exists with respect to any FFELP Loan which can be
asserted and maintained or which, with notice, lapse of time or the
occurrence or failure to occur of any act or event could be asserted
and maintained by the Borrower against the Eligible Lender Trustee or
the Participant as assignee thereof. Lender shall have taken all
reasonable actions to assure that no maker of a FFELP Loan has or may
acquire a defense to the payment thereof. No payment of principal or
interest with respect to any FFELP Loan is, as of the date hereof, more
than 90 days delinquent and no applicable payment of principal or
interest with respect to any FFELP Loan will, at the date of the
applicable Participation Certificate, be more than 60 days delinquent.
No FFELP Loan carries a rate of interest less than, or in excess of,
the applicable rate of interest required by the Higher Education Act.
If the Higher Education Act permits Lender to charge an interest rate
less than the applicable rate of interest, no FFELP Loan purchased
hereunder bears interest at a rate lower than the applicable rate of
interest; provided, however, that the Participant may approve, in its
sole discretion, in writing, interest reductions which are part of a
borrower repayment incentive program of Lender, the terms of which have
been fully described in detail and in writing to the Participant.
(c) Each FFELP Loan has been duly executed and delivered
and constitutes the legal, valid and binding obligations of the maker
(and the endorser, if any) thereof, enforceable in accordance with its
terms.
(d) Each FFELP Loan complies in all respects with the
requirements of the Higher Education Act and is an Eligible Loan.
(e) Lender or Eligible Lender Trustee has applied for and
received the Secretary of Education's or a Guarantee Agency's
designation, as the case may be, as an "Eligible Lender" under the
Higher Education Act, and Lender has entered into all agreements
required to be entered into for participation in the Federal Family
Education Loan Program under the Higher Education Act.
10
(f) Lender (and the Eligible Lender Trustee, if
applicable) is the sole owner and holder of each FFELP Loan and has
full right and authority to sell and assign the same free and clear of
all liens, pledges or encumbrances; no FFELP Loan has been pledged or
assigned for any purpose; and each FFELP Loan is free of any and all
liens, charges, encumbrances and security interests of any description.
The Participant has a valid and perfected first priority security
interest in the Pledged Collateral (as defined herein).
(g) Each FFELP Loan is either Insured or Guaranteed; such
Insurance or Guarantee, as the case may be, is in full force and
effect, is freely transferable as an incident to the sale of each FFELP
Loan; all amounts due and payable to the Secretary of Education or a
Guarantee Agency, as the case may be, have been or will be paid in full
by Lender, and none of the FFELP Loans has at any time been tendered to
either the Secretary of Education or any Guarantee Agency for payment.
(h) There are no circumstances or conditions with respect
to any FFELP Loan, the Borrower thereunder or the creditworthiness of
said Borrower that would reasonably cause prudent private investors to
regard any of the FFELP Loans as an unacceptable investment, or
adversely affect the value or marketability thereof, the insurance
thereof and any applicable Guarantee.
(i) Each FFELP Loan was made in compliance with all
applicable local, State and federal laws, rules and regulations,
including, without limitation, all applicable nondiscrimination,
truth-in-lending, consumer credit and usury laws.
(j) Lender has, and its officers acting on its behalf
have, full legal authority to engage in the transactions contemplated
by this Agreement; the execution and delivery of this Agreement, the
consummation of the transactions herein contemplated and compliance
with the terms, conditions and provisions of this Agreement do not and
will not conflict with or result in a breach of any of the terms,
conditions or provisions of the charter, articles or bylaws of Lender
or any agreement or instrument to which Lender is a party or by which
it is bound or constitute a default thereunder; Lender is not a party
to or bound by any agreement or instrument or subject to any charter or
other Participant restriction or judgment, order, writ, injunction,
decree, law, rule or regulation which may materially and adversely
affect the ability of Lender to perform its obligations under this
Agreement and this Agreement constitutes a valid and binding obligation
of Lender enforceable against it in accordance with its terms, and no
consent, approval or authorization of any government or governmental
body, including, without limitation, the Federal Savings and Loan
Insurance Participant, the Federal Deposit Insurance Participant, the
Comptroller of the Currency, the Board of Governors of the Federal
Reserve System or any state bank regulatory agency, is required in
connection with the consummation of the transactions herein
contemplated.
11
(k) Lender is duly organized, validly existing and in
good standing under the laws of its applicable jurisdiction and has the
power and authority to own its assets and carry on its business as now
being conducted.
(l) Lender and Servicer have each exercised (and shall
continue to exercise) due diligence and reasonable care in making,
administering, servicing and collecting the FFELP Loans, and Lender has
conducted a reasonable investigation of sufficient scope and content to
enable it duly to make the representations and warranties contained in
this Agreement. Lender shall be solely responsible for the payment of
the costs and expenses incident to origination of FFELP Loans, without
any right of reimbursement therefor from the Participant.
(m) With respect to all Insured Eligible Loans in which a
participation interest is being acquired, Insurance is in effect with
respect thereto; the applicable Contract and Certificates of Insurance
are valid and binding upon the parties thereto in all respects material
to the security for any bonds and/or notes issued by the Participant;
and Lender is not in default in the performance of any of its covenants
and agreements made in respect thereof.
(n) With respect to all Guaranteed Eligible Loans in
which a participation interest is being acquired, a Guarantee Agreement
is in effect with respect thereto and is valid and binding upon the
parties thereto in all respects material to the security of the bonds
and/or notes issued by the Participant to finance the FFELP Loans; and
Lender is not in default in the performance of any of its covenants and
agreements made in such Guarantee Agreement.
(o) Lender does not (i) discriminate by pattern or
practice against any particular class or category of students by
requiring, as a condition to the receipt of a student loan, that a
student or his family maintain a business relationship with Lender,
except as may be permitted under applicable laws; or (ii) discriminate
on the basis of race, sex, color, creed or national origin.
(p) The FFELP Loans are a representative sample of all
student loans held by Lender with respect to the educational
institution attended by, or the age, sex, race, national origin or
place of residence of, the Borrowers to whom such loans were made, or
with respect to any other identifying characteristic of such Borrowers.
(q) Each participation interest transferred to the
Participant under this Agreement is a participation interest in a FFELP
Loan which constitutes an Eligible Loan.
(r) The fair salable value of the assets on a going
concern basis of Lender and its subsidiaries, on a consolidated basis,
as of the time of each sale of
12
participation interests hereunder is in excess of the total amount of
their liabilities.
(s) Lender has carefully reviewed the Loan Purchase
Regulations supplied by the Participant and has complied, and shall
continue to comply, with all applicable Loan Purchase Regulations.
(t) Each FFELP Loan in which a participation interest is
purchased pursuant to this Agreement includes all Eligible Loans of any
one Borrower held by Lender.
(u) The Lender hereby represents and warrants that the
Lender is transferring all of its right tile and interest in the MPN
Loans to the Participant, that it has not assigned any interest in such
MPN Loans (other than security interests that have been released or
ownership interests that the Lender has reacquired) to any person other
than the Participant, and that no prior holder of the MPN Loans has
assigned any interest in such MPN Loans (other than security interests
that have been released or ownership interests that such prior holder
has reacquired) to any person other that a predecessor in title to the
Lender. The Lender hereby covenants that the Lender shall not attempt
to transfer to any other person any interest in any MPN Loan assigned
hereunder.
(v) No promissory note evidencing an Eligible Loan bears
any apparent evidence of forgery or alteration or is otherwise so
irregular or incomplete as to call into question its authenticity.
(w) Except as may have been disclosed by the UCC Lien
Search required by Section 2. 05(c) hereof for the Lender, no other
financing statements or assignment filings naming the Lender as debtor
or assignor under its legal name or trade names has been filed.
3.02 PARTICIPANT'S REPRESENTATIONS AND WARRANTIES. Participant
hereby represents and warrants to Lender that the execution, delivery and
performance of this Agreement by Participant (a) has been duly authorized or
ratified effective as of the date of execution by all necessary corporate action
on the part of Participant; (b) does not and will not contravene the laws of the
state of its incorporation providing for the organization and governing of
Participant; (c) does not and will not conflict with, or result in a violation
of, any applicable laws; and (d) does not and will not require any consent or
approval of any creditor or constitute a violation of or default under any
agreement or instrument to which Participant is a party or whereby any of its
property may be bound.
3.03 ORGANIZATIONAL JURISDICTION OF LENDER. The Lender shall not
organize under the law of any jurisdiction other that the State under which is
it organized as of the Closing Date (whether changing its jurisdiction of
organization or organizing under an additional jurisdiction) without giving 30
days prior written notice of such action to
13
the Participant. Before effecting such change, the Lender shall prepare and file
in the appropriate filing office any financing statements or other statements
necessary to continue the perfection of the Participant's interest in the FFELP
Loans.
ARTICLE IV
TERM
4.01 TERMINATION. The term of this Agreement shall be from the date
first set forth above until the termination of the Commitment Period. If Lender
or the Eligible Lender Trustee transfers title to a specific Eligible Loan
covered by the Participation Certificate to Participant, the participation
interest with respect to such transferred Eligible Loan shall terminate on the
date of such transfer. Immediately upon termination (without renewal) of this
Agreement and of the Participation Certificate, or any portion thereof, Lender's
Retained Interest, as then accrued and unpaid, shall be paid and if Participant
is not in material default of its obligations under this Agreement, Lender shall
immediately transfer to Participant or its designee legal title to the Eligible
Loans covered by the terminated portion of the Participation Certificate. At or
prior to such transfer of legal title, Lender shall execute and deliver to
Participant or its designee an executed Loan Purchase Agreement, together with
all documents of transfer in connection therewith, between Lender as Seller and
Participant or its designee as Purchaser, effective to transfer title to the
Eligible Loans covered in the terminated portion of the Participation
Certificate as of the termination of the participation, free and clear of any
liens, encumbrances, pledges, or security interests of any nature. Title to an
Eligible Loan which is partially disbursed as of the termination of this
Agreement shall be transferred as described in the preceding sentence as soon as
possible after such Eligible Loan is fully disbursed.
ARTICLE V
OTHER PROVISIONS
5.01 INDEMNIFICATION. Lender specifically acknowledges that the
Participant will be making representations and warranties regarding the Eligible
Loans based in part on the accuracy of Lender's representations and warranties
in this Agreement. Lender agrees to indemnify and hold Participant, the parties
to the Warehouse Loan and Security Agreement and noteholders or Credit Support
Providers under the Warehouse Loan and Security Agreement (together with each of
their respective successors, assigns. Officers, directors, agents and employees)
harmless from and against any and all loss, liability, cost, damage or expense
(including reasonable attorneys fees and costs of litigation) incurred by reason
of any breach of Lender's representations, warranties or covenants hereunder or
any false or misleading representations or any failure to disclose any matter
which makes the warranties and representations herein misleading or any
inaccuracy in any information furnished by Lender in connection herewith. This
indemnity obligation shall survive execution of this Agreement and termination
of the Commitment Period.
14
5.02 ASSIGNMENT. The rights of Participant under this Agreement may
be freely assigned or subparticipated, in whole or in part, without prior
written consent of Lender. The rights and obligations of Lender under this
Agreement may not be assigned in whole or in part without the prior written
consent of Participant and the Facility Agent. This Agreement shall be binding
upon the parties hereto, and their permitted successors and assigns. Lender
acknowledges that Participant has assigned all of its right, title and interest
in and to the Participation Certificate and this Agreement to Zions First
National Bank, as trustee under the Warehouse Loan Agreement under the Warehouse
Loan and Security Agreement with the power and right to enforce the provisions
thereof and hereof.
5.03 No PARTNERSHIP. This Agreement shall not be construed to
create a partnership or joint venture between Lender and Participant. The
transaction evidenced by this Agreement is a loan participation transaction
pursuant to which Lender and Participant are participating in the Eligible
Loans.
5.04 AMENDMENT. This Agreement may be modified or otherwise amended
only if such modification or amendment is in writing and signed by Lender,
Participant and Facility Agent. The parties agree to make such modifications or
amendments to this Agreement from time to time as may be reasonably necessary to
maintain compliance with the Higher Education Act.
5.05 NOTICES. All notices and other communications under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered with a written receipt from the recipient or mailed by certified
United States mail, sufficient postage pre-paid, or sent by nationally
recognized overnight delivery service such as Federal Express, addressed as
follows:
If to Lender: NHELP-I, Inc.
000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
If to Participant: Nelnet Education Loan Funding, Inc.
000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx
If to Facility Agent: Royal Bank of Canada
c/o RBC Capital Markets
One Little Falls Centre
0000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxx Xxxxxx
or to any such address as either party may direct in writing delivered to the
other party as set forth herein. Notice shall be effective (a) if mailed or
delivered, upon receipt,
15
refusal of receipt or the date marked as uncollected, or (b) if sent by
overnight delivery, the earlier of receipt of two business days after deposit
with the delivery service.
5.06 CONTINUING REPRESENTATIONS. The warranties and representations
of the parties contained in Article III hereof shall survive execution of this
Agreement and the Commitment Period and bind the parties hereto as continuing
covenants.
5.07 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nebraska.
5.08 COUNTERPARTS. This Agreement may be simultaneously executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
5.09 SEVERABILITY. If any provision of this Agreement shall be
held, deemed to be or shall, in fact, be inoperative or unenforceable as applied
to any particular situation, such circumstances shall not have the effect of
rendering the provision in question inoperative or unenforceable in any other
situation or of rendering any other provision or provisions herein contained
invalid, inoperative or unenforceable to any extent whatsoever. The invalidity
of any one or more phrases, sentences, clauses or paragraphs herein contained,
shall not affect the remaining portions of this Agreement or any part hereof.
5.09 NON-EXCLUSIVE REMEDIES. No remedy by the terms of this
Agreement conferred upon or reserved to Participant is intended to be exclusive
of any other remedy, but each and every other remedy shall be cumulative and in
addition to every other remedy given under this Agreement or existing at law or
in equity (including, without limitation, the right to such equitable relief by
way of injunction) or by statute on or after the date of this Agreement.
5.10 SERVICING. Each Eligible Loan covered by the Participation
Certificate shall be serviced pursuant to the Servicing Agreement for the life
of such loan by Servicer and shall not be removed from the servicing system of
Servicer, except as provided below. Lender agrees that each FFELP Loan
participated pursuant to this Agreement which is held by or on behalf of Lender
or any of Lender's affiliates after the date of this Agreement shall be serviced
by Servicer under a servicing agreement for a term of the life of such loan and
shall not be removed from the servicing system of Servicer; provided, however,
that Lender may engage a servicing agent other than Servicer only if Participant
and the Facility Agent approves such servicing agent in writing and the Borrower
attends an educational institution which expressly requires servicing of all
student loans made to its students to be performed exclusively by a servicing
agent other than Servicer, and provided further, however, that Participant may,
at its option, require transfer of servicing to a new servicing agent as
approved by Participant and the Facility Agent upon material default under the
Servicing Agreement or insolvency or filing of bankruptcy by Servicer.
16
5.11 TERMINATION OF AGREEMENT OR BANKRUPTCY OF LENDER. Upon the
termination of this Agreement or the filing of bankruptcy or receivership by
Lender, Lender shall cause title to each Eligible Loan covered by the
Participation Certificate to be transferred by Lender or the Eligible Lender
Trustee to Participant or its designee.
5.12 FURTHER ASSURANCES. Lender shall, at its expense, execute all
other documents and take all other steps as may be requested by Participant from
time to time to effect the sale of the participation interests in the FFELP
Loans hereunder.
5.13 INFORMATION. Lender shall, at its expense, furnish to
Participant such additional information concerning Lender's FFELP Loan portfolio
as Participant may reasonably request.
5.14 SECURITY INTEREST. The parties to this Agreement intend that
the conveyance of Lender's right, title and interest in and to the FFELP Loans
shall constitute an absolute sale, conveying good title free and clear of any
liens, claims, encumbrances or rights of others from Lender to Participant. The
parties to this Agreement intend that the arrangements with respect to the
participation interest in FFELP Loans shall constitute a purchase and sale of
such participation interests and not a loan. In the event, however, that it were
determined by a court of competent jurisdiction that the transactions evidenced
by this Agreement shall constitute a loan and not a purchase and sale, the
parties hereto intend that this Agreement would constitute a security agreement
under applicable law and that Lender shall be deemed to have granted, and hereby
does grant (subject to the condition above), to Participant a first priority
perfected security interest in all of Lender's right, title and interest,
whether now owned or hereafter acquired, in, to and under all accounts, general
intangibles, chattel paper, instruments, documents, goods, investment property,
money, deposit accounts, certificates of deposit, letters of credit, advices of
credit and other property consisting of, arising from or related to the
following collateral to secure the rights of Participant hereunder and the
obligations of Lender hereunder (collectively, the "Pledged Collateral"):
(a) all participation interests in FFELP Loans;
(b) all revenues and recoveries of principal from
participation interests in FFELP Loans, including all borrower payments
and reimbursements of principal and accrued interest on default claims
received from any Guarantor;
(c) any other revenues and recoveries of principal and
interest, other payments and reimbursements of principal and accrued
interest received with respect to any participation interests in FFELP
Loans, any other collection of cash with respect to such FFELP Loans
(including, but not limited to, Interest Subsidy Payments and Special
Allowance Payments) received and all other cash collections, tax
refunds and other cash proceeds of the Pledged Collateral;
17
(d) all other security interests or liens and property
subject thereto from time to time, if any, purporting to secure payment
of such participation interests in FFELP Loans, whether pursuant to the
contract related to such participation interests in FFELP Loans or
otherwise;
(e) all documents, books, records and other information
(including, without limitation, computer programs, tapes, disks, punch
cards, data processing software and related property and rights)
maintained with respect to participation interests in FFELP Loans
otherwise in respect of the pledged collateral; and
(f) all proceeds of the foregoing (including, but not by
way of limitation, all cash proceeds, accounts, accounts receivable,
general intangibles, notes, drafts, acceptances, chattel paper, checks,
deposit accounts, insurance proceeds, condemnation awards, rights to
payment of any and every kind, and other forms of obligations and
receivables or other liquidated property which at any time constitute
all or part or are included in the proceeds of any of the foregoing
property).
Lender agrees that from time to time, at its expense, it will properly
execute and deliver all further instruments and documents (including, without
limitation, UCC-1 financing statements and custodian agreements with the
Servicer), and take all further action that Participant or Facility Agent may
reasonably request in order to perfect, protect or more fully evidence
Participant's or Facility Agent's interest in the Pledged Collateral or to
enable Participant to exercise or enforce any of its rights hereunder.
5.15 INFORMATION AND REPORTING. Lender shall furnish to
Participant: (a) upon execution of this Agreement, Lender's most recent audited
financial statement prepared in accordance with generally accepted accounting
principles and duly certified by nationally recognized independent certified
public accountants selected by Lender, as well as Lender's most recent unaudited
financial statement and balance sheet; (b) as soon as available and in any event
within 90 days after the end of each fiscal year of the Lender, an updated
audited financial statement prepared in accordance with generally accepted
accounting principles and duly certified by nationally recognized independent
certified public accountants selected by Lender; and (c) such other financial
information as Participant may reasonably request from time to time. Lender
shall verify and reconcile Eligible Loan disbursements and cancellations of
Eligible Loans covered by the Participation Certificate, in such manner as
Participant may reasonably request from time to time. Lender shall furnish to
Participant a certificate of good standing and a certified copy of resolutions
of Lender's board of directors approving and authorizing execution and
performance of this Agreement and all ancillary documents with respect thereto
in a form reasonably satisfactory to Participant.
18
IN WITNESS WHEREOF, the parties have caused this Participation
Agreement to be executed by officers duly authorized as of the day first above
written.
Nelnet Education Loan Funding, Inc.,
f/k/a NEBHELP, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Xxxxx X. Xxxxxx, President
NHELP-I, Inc.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Xxxxx X. Xxxxxx, Secretary
Participation Agreement - NHELP-I
19
SCHEDULE A TO PARTICIPATION AGREEMENT
FORM OF LOAN PURCHASE AGREEMENT
20
SCHEDULE B TO PARTICIPATION AGREEMENT
FORM OF PARTICIPATION CERTIFICATE
PARTICIPATION CERTIFICATE
Pursuant to that certain Participation Agreement (the "Agreement")
dated April 1, 2003, by and between Nelnet Education Loan Funding, Inc., f/k/a
NEBHELP, INC. (the "Participant") and NHELP-I, Inc. (the "Lender"), Lender
hereby issues and delivers this Participation Certificate to evidence
Participant's participation interests in student loans guaranteed under the
Higher Education Act of 1965, as amended, which are identified by the schedule
marked as Schedule "A," attached hereto and incorporated herein by this
reference, which may be amended or supplemented from time to time, which loans
or interests therein are owned by Lender and are serviced by Nelnet Loan
Services, Inc. and designated a separate account, in accordance with the terms
of the Agreement. This Participation Certificate shall be governed, in all
respects, by the Agreement, the terms of which are incorporated herein by this
reference as if fully stated herein.
NHELP-I, Inc.
By__________________________________
Name________________________________
Title_______________________________
Accepted this_______________day of____________, 20_____.
Nelnet Education Loan Funding, Inc.,
f/k/a NEBHELP, INC.
By__________________________________
Name________________________________
Title_______________________________
Participation Agreement - NHELP-I
2
SCHEDULE A TO PARTICIPATION CERTIFICATE
SCHEDULE OF LOANS
Participation Agreement - NHELP-I
1
EXHIBIT I
CONDITIONS TO INITIAL ADVANCE
1. Executed copies of this Agreement, the Valuation Agent
Agreement, the Indemnification Agreement, each Student Loan Purchase
Agreement and Participation Agreement pursuant to which Student Loans are
to be sold to the Borrower, each Servicing Agreement pursuant to such
Student Loans are to serviced, each Custodian Agreement pursuant to such
Student Loans are to held and each Trustee Guarantee Agreement.
2. UCC-1 Financing Statements naming each Seller as debtor
and Borrower as secured party, and Borrower as debtor and Trustee as
secured party.
3. Officers' Certificates of the Borrower, Nelnet, the
Valuation Agent, the Lender, the Alternate Lender, the Facility Agent, the
Trustee, each Servicer, each Custodian and each Seller (including, in the
case of the Borrower and NELnet, articles of incorporation, by-laws, board
resolutions, good standing and incumbency).
4. Opinions of Counsel to the Borrower, Nelnet, the Trustee
and each Seller in forms acceptable to the Facility Agent.
5. A schedule of all Financed Loans as of the Closing Date.
6. All fees due and payable to the Lender, the Alternate
Lender and the Facility Agent on the Effectiveness Date.
7. Such other information, certificates, documents and
actions as the Lender, the Alternate Lender and the Facility Agent may
reasonably request.
8. Search report results dated a date reasonably near the
Closing Date listing all effective financing statements which name the
Borrower, or any Seller (under its present name or any previous names) in
any jurisdictions where filings are to be made under paragraph 2 above (or
similar filings would have been made in the past five years).
9. Financing Statement terminations on Form UCC-3 if
necessary, to release any liens.
10. Evidence of establishment of Cash Reserve Account and
Collection Account.
11. Valuation Reports.
I-1
EXHIBIT J
CONDITIONS TO EFFECTIVENESS DATE
1. Executed copies of this Agreement, the Valuation Agent
Agreement (as amended), the Indemnification Agreement (as amended), each
Student Loan Purchase Agreement (as amended, if applicable) and
Participation Agreement (as amended, if applicable) pursuant to which
Student Loans are to be sold to the Borrower, each Servicing Agreement (as
amended, if applicable) pursuant to such Student Loans are to serviced, the
Custodian Agreement, the Eligible Lender Trust Agreement, and each Eligible
Lender Trustee Guarantee Agreement.
2. UCC-1 Financing Statements naming (a) Borrower as debtor
and Trustee as secured party (b) Eligible Lender Trustee as debtor and
Trustee as secured party, (c) Original Borrower as Debtor, Trustee as
secured party and Borrower as assignor secured party, (d) Zions First
National Bank as eligible lender trustee, as debtor, Trustee as secured
party and Eligible Lender Trustee, as assignor secured party and (e) each
Seller as debtor, Trustee as secured party and Borrower as assignor secured
party.
3. Officers' Certificates of the Original Borrower, the
Borrower, Nelnet, the Servicer, the Custodian, the Eligible Lender Trustee,
and each Seller (including, in the case of the Borrower, articles of
incorporation, by-laws, board resolutions, good standing and incumbency).
4. Opinions of Counsel to the Original Borrower, the
Borrower, Nelnet, the Servicer, the Custodian, the Eligible Lender Trustee
and each Seller in forms acceptable to the Facility Agent.
5. A schedule of all Financed Loans as of the Effectiveness
Date.
6. All fees due and payable to the Lender, the Alternate
Lender and the Facility Agent on the Effectiveness Date.
7. Such other information, certificates, documents and
actions as the Lender, the Alternate Lender and the Facility Agent may
reasonably request.
8. Search report results dated a date reasonably near the
Effectiveness Date listing all effective financing statements which name
the Borrower, the Original Borrower or any new Seller (under its present
name or any previous names) in any jurisdictions where filings are to be
made under paragraph 2 above (or similar filings would have been made in
the past five years).
9. Financing Statement on Form UCC-3, terminating filing
made by Original Borrower as debtor for the benefit of Trustee as secured
party.
10. Evidence of establishment of Escrow Account.
11. Valuation Reports.
12. An executed copy of each Covered Indenture (including any
amendments).
13. Opinion of Xxxx Xxxxxx relating to Higher SAP Loans.
14. Financing Statements on Form UCC-3, if necessary in the
judgment of the Facility Agent, to amend any previous UCC filings, release
or assign any collateral under any previous UCC filings or terminate any
previous UCC filings,
15. MB1A consent to this Agreement and the transactions
contemplated hereby.
16. Confirmation by Rating Agencies of the Obligation
incurred by the Borrower under this Agreement.
X-x
EXHIBIT K
FORM OF NOTICE OF RELEASE
Zions First National Bank,
as Trustee
000 Xxxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: Corporate Trust Services
Royal Bank of Canada,
as Facility Agent
c/o RBC Capital Markets
One Little Falls Centre
0000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxx Xxxxxx
Ladies and Gentlemen:
Reference is made to the Trust Indenture dated as of [Date] (as
amended, the "Indenture"), by and between Nelnet Education Loan Funding,
Inc., as issuer (the "Issuer") and the undersigned, as trustee (the
"Trustee"). Capitalized terms used but not otherwise defined herein shall
have the meanings assigned to them in the Indenture.
The Issuer has directed us to release [Pledged Student Loans] from the
Trust Estate. The Issuer has satisfied the applicable conditions for release of
such Pledged Student Loans from the Indenture. We hereby notify you that the
Pledged Student Loans identified on Exhibit A attached hereto have been released
from the pledge of the Indenture as of the date specified below.
IN WITNESS WHEREOF, the undersigned has caused this Notice of Release
to be executed by its duly authorized officer as of the date specified
below.
XXXXX FARGO BANK MINNESOTA,
NATIONAL ASSOCIATION
By:________________________________
Name:
Title:
Date:_______________
K-l
