EXHIBIT 99.2
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement (the "Agreement") is made and
entered into as of the 1st day of April, 2004, by and among National Education
Loan Network, Inc., a Nevada corporation, as Administrator (the
"Administrator"), Xxxxx Fargo Bank, National Association, as indenture trustee
and eligible Lender trustee (the "Trustee"), and Nelnet Education Loan Funding,
Inc., a Nebraska corporation ("NELF").
RECITALS
A. Pursuant to the terms of the Indenture (as defined below), NELF
conducts a program of financing and holding loans made to borrowers under the
Federal Family Education Loan Program, the proceeds of which are used to defray
the costs of attendance at eligible post secondary educational institutions (the
"Loans").
B. NELF intends to issue its Student Loan Asset-Backed Notes (the
"Notes") pursuant to the terms of that certain Indenture of Trust dated as of
April 1, 2004, as amended (the "Indenture"), among NELF and the Trustee in its
capacity as indenture trustee and eligible lender trustee, to provide funds for
NELF's program of financing and holding Loans.
C. The Administrator employs highly qualified personnel capable of
providing professional administrative services for portfolios of Loans.
D. NELF now desires to engage the Administrator to provide certain
services to NELF in connection with the administration of NELF's portfolio of
Loans financed pursuant to the terms of the Indenture and subject to the terms
and conditions specified herein.
COVENANTS, REPRESENTATIONS AND WARRANTIES
The parties therefore agree as follows:
1. Services to be Provided. The Administrator agrees to provide, through
its officers and employees, the following administrative services to NELF:
(a) Respond to inquiries and requests made by borrowers,
educational institutions, Guarantee Agencies, the Trustee, and other
parties with respect to the Loans and respond to requests by NELF's
independent auditors for information concerning NELF's financial
affairs;
(b) Maintain financial records concerning the Trust Estate (as
defined in the Indenture) and, if furnished adequate information with
respect to financial affairs not related to the Loans, prepare and
maintain a general ledger and financial statements for NELF;
(c) Provide instructions required by the Indenture or otherwise
to the Trustee with respect to the administration of the Trust Estate;
(d) Furnish to NELF or the Trustee copies of reports received
with respect to the Loans, and prepare such additional reports with
respect to the Trust Estate, which are as required by the Indenture or
which NELF or the Trustee may reasonably request from time to time;
(e) Prepare, or cause to be prepared, and furnish to NELF annual
operating budgets, quarterly statistical reports and cash flow
projections as required under the Indenture;
(f) Direct the Trustee to make required distributions from the
funds as provided in the Indenture;
(g) Prepare, based on periodic data received from the Servicer,
and provide quarterly and annual distribution statements to the Trustee
and any related federal income tax reporting information;
(h) Establish, in consultation with the Remarketing Agents, the
terms of the Reset Rate Notes with respect to each reset period and such
other services to be performed by the Administrator pursuant to the
Remarketing Agreement;
(i) Provide information as NELF is required by (i) the Securities
Act of 1933, as amended, and the Securities Exchange Act of 1934, as
amended, to any requesting holder of Series 2004-2 Notes (as defined in
the Indenture), and (ii) Rule 144A(d)(4) of the Securities Act of 1933,
as amended to any requesting holder of Class A-5a Notes (as defined in
the Indenture);
(j) Direct the Trustee to sell or auction loans in the Trust
Estate when permitted;
(k) Arrange for Derivative Products on behalf of NELF and the
Trust Estate;
(l) Remove or appoint Remarketing Agents, Broker-Dealers, Market
Agents and Auction Agents;
(m) Determine the fair market value of Loans to be purchased or
sold by NELF from time to time;
(n) Such other services with respect to administration of the
Loans as NELF may reasonably request; and
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(o) Such other services required under the Indenture as NELF may
reasonably request.
It is expressly agreed that the Administrator will not engage legal or
accounting firms on behalf of NELF, and NELF will not be responsible for
compensating any such expenditures made by the Administrator.
2. Term. This Agreement shall expire on the maturity or defeasance of
all of the Series 2004-2 Notes (as defined in the Indenture).
3. Fees and Expenses.
(a) FEE SCHEDULE. NELF shall pay to the Administrator on the
first day of each calendar month following the execution of this
Agreement an amount equal to 18 basis points (0.18%) per annum of the
average outstanding principal balance of the Loans during the preceding
month for services provided by the Administrator pursuant to Section 1
of this Agreement.
(b) LIMITED OBLIGATION. The obligation of NELF to pay fees under
this Agreement is a limited obligation to be satisfied solely from
payments made by the Trustee to NELF under the terms of the Indenture.
Although NELF shall be obligated to pay to the Administrator the full
amount of all accrued fees, such payments shall be made exclusively from
amounts deposited from time to time in the Collection Fund. If NELF does
not have funds on hand to cover the full amount of the fees due under
this Agreement, then payment of the unpaid balance shall be deferred
until there are sufficient funds available from such sources to satisfy
part, or all, of the outstanding debt.
(c) REVISION OF FEES. The fee payable to the Administrator under
this Agreement may be revised on each June 1 during its term, subject to
any Rating Agency confirmation required under the Indenture. To alter
the fee, the Administrator must provide written notice of the proposed
new fee to NELF ninety (90) days prior to June 1. If the Administrator
and NELF cannot reach an agreement within sixty (60) days of the receipt
of the notice, either party may terminate this Agreement upon thirty
(30) days' written notice to the other party.
4. Appointment as Agent. NELF hereby appoints and designates the
Administrator as its agent for the purpose of managing and administering the
Trust Estate. In discharging its duties as agent of NELF hereunder, the
Administrator shall have authority to act at its own discretion, and shall not
be required to obtain specific instructions or direction with respect to a
particular matter from NELF; provided, however, that in no event shall the
Administrator be permitted to create or incur obligations on behalf of NELF
except as and to the extent specifically authorized by NELF in writing. Any
person dealing with the Administrator may conclusively presume and rely upon the
fact that actions taken by the Administrator on behalf of NELF with respect to
the Trust Estate are duly authorized, regular and binding upon NELF, without
further inquiry.
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5. Representations and Warranties of the Administrator. The
Administrator hereby represents and warrants to NELF as follows:
(a) DUE AUTHORIZATION. This Agreement has been duly authorized by
all necessary corporate action on the part of the Administrator and has
been duly executed by a duly authorized officer of the Administrator,
and constitutes a valid and binding agreement of the Administrator
enforceable in accordance with its terms, except as its enforceability
may be limited by bankruptcy, insolvency, moratorium, reorganization and
other laws affecting creditors' rights generally.
(b) DUE ORGANIZATION. The Administrator is a corporation duly
organized, validly existing in good standing under the laws of Nevada
and has the requisite corporate power to enter into and perform this
Agreement.
(c) CONFLICTING INSTRUMENTS. Neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated
hereby will violate or result in any violation of or be in conflict with
or constitute a default under any term of the Articles of Incorporation
or Bylaws of the Administrator, or of any judgment, decree or order of
any court or administrative body applicable to the Administrator, or any
term of any agreement or other instrument applicable to the
Administrator.
6. Representations and Warranties of NELF. NELF hereby represents and
warrants to the Administrator as follows:
(a) DUE AUTHORIZATION. This Agreement has been duly authorized by
all necessary corporate action on the part of NELF and has been duly
executed by a duly authorized officer of NELF, and constitutes a valid
and binding agreement of NELF enforceable in accordance with its terms,
except as its enforceability may be limited by bankruptcy, insolvency,
moratorium, reorganization and other laws affecting creditors' rights
generally.
(b) DUE ORGANIZATION. NELF is a bankruptcy remote, limited
purpose corporation duly organized, validly existing in good standing
under the laws of the State of Nebraska and has the requisite corporate
power to enter into and perform this Agreement.
(c) CONFLICTING INSTRUMENTS. Neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated
hereby will violate or result in any violation of or be in conflict with
or constitute a default under any term of the Articles of Incorporation
or Bylaws of NELF, or of any judgment, decree or order of any court or
administrative body applicable to NELF, or any term of any agreement or
other instrument applicable to NELF.
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7. Administrator Default.
(a) an "Administrator Default" under this Agreement will consist
of (i) the Administrator's failure to perform any of its duties under
this Agreement and the failure to cure such non-performance within 5
days after receipt of notice, or, if such default cannot be cured in
such time, the failure to give, within 10 days, such assurance of cure
as is reasonably satisfactory to NELF; or (ii) the occurrence of an
"Event of Bankruptcy" involving the Administrator, as described below.
An Event of Bankruptcy means either (x) the commencement of a voluntary
case or other proceeding seeking liquidation, reorganization or other
relief under any bankruptcy, insolvency or other similar law, or seeking
the appointment of a trustee, receiver, liquidator, custodian or other
similar official, making a general assignment for the benefit of
creditors, declaring a moratorium with respect to one's debts or failure
to generally pay one's debts as they become due, or (y) the commencement
of an involuntary case or other proceeding seeking liquidation,
reorganization or other relief under any bankruptcy insolvency or other
similar law, or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official, provided such action is
not dismissed within 60 days.
(b) RIGHTS UPON ADMINISTRATOR DEFAULT. As long as any
Administrator Default remains unremedied, the Trustee, NELF or holders
of not less than 25% of the highest priority obligations outstanding
under the Indenture may terminate all the rights and obligations of the
Administrator. Following the termination of the Administrator, a
successor administrator will be appointed by the Trustee, NELF or the
holders of not less than 25% of the highest priority obligations
outstanding under the Indenture, with the consent of the Trustee (as
indenture trustee), and upon receipt of a confirmation that the
appointment of such successor administrator will not result in a
downgrade or withdrawal of the ratings then applicable to the Series
2004-2 Notes. The successor administrator will succeed to all the
responsibilities, duties and liabilities of the Administrator under this
Agreement. The successor administrator will be entitled to similar
compensation arrangements. If, however, a bankruptcy trustee or similar
official has been appointed for the Administrator, and no other
Administrator Default other than that appointment has occurred, the
bankruptcy trustee or official may have the power to prevent the
Trustee, NELF or the Registered Owners described above from effecting
the transfer.
(c) WAIVER OF PAST DEFAULTS. The holders of a majority of the
highest priority obligations outstanding in the case of any
Administrator Default which does not adversely affect the Trustee or the
holders of a majority of the highest priority obligations outstanding
under the Indenture may, on behalf of all Registered Owners, waive any
default by the Administrator. Therefore, so long as any Class A Notes
are outstanding, the Registered Owners holding Class A Notes have the
ability, except as noted, to waive defaults by the Administrator which
could materially and adversely affect the Registered Owners holding
Class B Notes. No waiver will impair the Registered Owners' rights as to
subsequent defaults.
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8. Termination. Subject to the sentence following hereafter, the
Administrator may resign from its duties hereunder, and NELF may remove the
Administrator, with or without cause, by giving sixty (60) days' prior written
notice of resignation to NELF or notice of removal to the Administrator, as
applicable. Such resignation or removal shall be ineffective until (i) a
successor administrator shall have assumed its duties under this Agreement and
(ii) the Rating Agencies confirm that appointment of the successor administrator
will not result in a downgrade or withdrawal of the Ratings then applicable to
the Series 2004-2 Notes.
9. Assignment. Neither this Agreement nor any rights or obligations
hereunder may be assigned by any party without the prior written consent of the
other.
10. Miscellaneous.
(a) This Agreement may not be modified, amended, altered or
supplemented except upon the execution and delivery of a written
agreement executed by both of the parties hereto.
(b) All notices, requests, claims, demands and other
communications hereunder required to be in writing shall either be
personally delivered or mailed by First Class Mail to the respective
parties as follows:
If to the Administrator:
National Education Loan Network, Inc.
000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
If to the Trustee:
Xxxxx Xxxxx, Assistant Vice President
Xxxxx Fargo Bank, National Association
Corporate Trust Services
6th & Marquette, X0000-000
Xxxxxxxxxxx, XX 00000
and if to NELF:
Nelnet Education Loan Funding, Inc.
000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxxxx
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or to such other address as either party may have furnished to the other
in writing in accordance herewith. Any notice under this Agreement will
be deemed to have been given when so delivered or mailed, except that
notices of change of address shall only be effective upon receipt.
(c) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Nebraska.
(d) CAPITALIZED TERMS. Capitalized terms used in this Agreement
that are not otherwise defined shall have the same meaning as those
terms used in the Indenture.
(e) OWNERSHIP OF SERIES 2004-2 NOTES. The Administrator or any
affiliate thereof may become the owner of Series 2004-2 Notes.
(f) NO PETITION. The parties hereto will not at any time
institute against NELF any bankruptcy proceeding under any United States
federal or State bankruptcy or similar law in connection with any
obligations of NELF hereunder.
(g) LIMITATION OF LIABILITY OF TRUSTEE. Notwithstanding anything
contained herein to the contrary, this Agreement has been executed by
the Trustee, not in its individual capacity, but solely in its capacity
as indenture trustee and eligible lender trustee, and in no event shall
the Trustee in its individual capacity have any liability for the
representations, warranties, covenants, agreements or other obligations
of NELF hereunder, as to all of which recourse shall be had solely to
the assets of NELF.
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IN WITNESS WHEREOF, the parties have caused this Administrative Services
Agreement to be executed on the day and year first above written.
National Education Loan Network, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxxx
-----------------------------------------
Title: Executive Director
Nelnet Education Loan Funding, Inc.
By: /s/ Xxxxx X. Xxxxxx
-----------------------------------------
President
Xxxxx Fargo Bank, National Association,
asndenture trustee and eligible
lender trustee
By: /s/ Xxxxx Xxxxx
-----------------------------------------
Title: Assistant Vice President
