Contract
1 SLABS Participation Agreement SLABS PARTICIPATION AGREEMENT This SLABS Participation Agreement (the “Agreement”) is made and entered into as of the 5th day of May, 2020, by and between National Education Loan Network, Inc., a Nebraska corporation, and its affiliates and subsidiaries (collectively, “Nelnet”), and Union Bank and Trust Company, a Nebraska banking corporation and trust company, solely in its capacity as trustee of various grantor trusts known as Short Term Federal Investment Trusts or other grantor trusts (“UBATCO”). WITNESSETH: WHEREAS, Nelnet is or will be the owner of asset backed securities issued by entities other than Nelnet (collectively, the “SLABS”) in the form of bonds or notes collateralized by Federal Family Education Loan Program student loans or interests therein (“Eligible Loans”) guaranteed and reinsured to the maximum extent permitted pursuant to the Higher Education Act of 1965, as amended, and all regulations and rules promulgated thereunder (the “Act”), and title to such Eligible Loans is held by an eligible lender trustee as required under the Act; WHEREAS, Nelnet desires to sell, and UBATCO desires to purchase, an undivided participation interest in Nelnet’s beneficial interest in certain of the SLABS on the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the mutual promises contained herein, the parties hereto agree as follows: I. PURCHASE OF PARTICIPATION INTEREST IN SLABS Section 1.01. Purchase of Participation Interests. A. Nelnet shall sell (or cause to be sold), and UBATCO shall purchase, a participation interest in that portion of the SLABS which is collateralized by the fully guaranteed portion of the Eligible Loans with an aggregate unpaid principal balance in increments of $100,000.00 (unless otherwise agreed by the parties hereto), up to a maximum aggregate total of up to $100,000,000.00, or such total as the parties may otherwise mutually agree upon from time to time. UBATCO shall pay to Nelnet or its designee the purchase price of the participation interest to be sold herein, and such purchase price shall be equal to the lesser of (i) one hundred percent (100%) of the pro rata portion of the unpaid principal balances and accrued and unpaid interest thereon of the SLABS as described in the participation certificate with respect to such SLABS, (ii) the valuation determined by a third party valuation agent mutually agreed upon and designated by the parties, or (iii) such other price as may be negotiated between the parties based on the mutually agreed upon value of the interests in the SLABS. The participation interest described herein shall include the securities related to the SLABS, related bonds, promissory notes, offering memoranda, CUSIP records or documents, and reports received by or on behalf of Nelnet in connection with the SLABS. The participation interest purchased by UBATCO DocuSign Envelope ID: 6BACE3D7-C8B4-48BB-A941-13A02CCE2080
2 SLABS Participation Agreement shall represent a participation interest in each of the individual SLABS specifically identified in the participation certificate with respect thereto; UBATCO is not purchasing an interest in any fungible group of SLABS. The purchase price shall be paid by wire transfer of immediately available funds from UBATCO to Nelnet. Unless UBATCO gives prior written consent, any portion of the SLABS in respect of Eligible Loans pledged as collateral to secure payment of the SLABS, which is not guaranteed under the risk sharing provisions of the Act, shall be retained by Nelnet and shall not be participated to UBATCO hereunder. It is acknowledged that UBATCO will not purchase any participation interest in its own right, but rather only in its capacity as trustee on behalf of various grantor trusts. B. The sale and purchase of SLABS participations under this Agreement shall be without recourse against Nelnet. Nelnet and UBATCO acknowledge and agree that this Agreement results in a pro rata sharing of credit risk proportionate to the respective interests of Nelnet and UBATCO in the SLABS, both before and after any defaults with respect to such SLABS or the Eligible Loans pledged as collateral to secure payment of the SLABS. Section 1.02. Participation Certificates. On the date of the first sale of a participation interest with respect to a portfolio of SLABS, or thereafter as mutually agreed to by the parties, Nelnet shall execute and deliver (or shall cause to be executed and delivered) to UBATCO a participation certificate substantially in the form marked as Exhibit “A,” attached hereto and incorporated herein by this reference, evidencing a participating equitable ownership interest in the SLABS in that particular portfolio. Nelnet shall deliver or cause to be delivered to UBATCO in addition to the executed original of Exhibit “A” a schedule of the securities identifying such SLABS comprising the portfolio, title to which shall be retained by or on behalf of Nelnet. As Nelnet sells additional participation interests in SLABS to UBATCO, additional schedules identifying participated SLABS shall be issued accordingly. Section 1.03. Distribution of Payments Received. Upon transfer of a participation interest with respect to particular portfolio SLABS, UBATCO shall be entitled to one hundred percent (100%) of payments and income received with respect to the participated portion of the SLABS contained in such participation certificate, less a fee (“Nelnet’s Fee”) deducted and paid to Nelnet equal to the difference between (i) the total of interest or other income received with respect to such SLABS contained in a participation certificate, less (ii) the amount equal to the product of (A) the annualized rate of 70 basis points (0.70%) over the one month London Inter-Bank Offered Rate (LIBOR), multiplied by (B) the average quarterly aggregate outstanding the participated portion of principal balances of the SLABS contained in the participation certificate. Nelnet shall pay for all administration costs, all servicing costs incurred by its servicing agent (“Servicer”) and any other costs incidental to or associated with ownership, administration, servicing, and collection of the SLABS; all such costs shall be deducted from and paid from Nelnet’s Fee. Nelnet’s Fee shall be payable to Nelnet on a quarterly basis. Nelnet agrees to account and deliver to UBATCO, all sums of principal, interest other income received by Nelnet on account of the SLABS during the term of the participation certificates. Nelnet shall forward such payments of UBATCO’s portion of income as are due to UBATCO in accordance with the terms of this Agreement no less frequently than on a quarterly basis, or as otherwise DocuSign Envelope ID: 6BACE3D7-C8B4-48BB-A941-13A02CCE2080
3 SLABS Participation Agreement mutually agreed upon by the parties hereto. Nelnet shall furnish or cause to be furnished to UBATCO a statement showing the amount of the balances of each of the SLABS covered by a participation certificate, and specific information on the individual SLABS as UBATCO may reasonably require from time to time, if reasonably available to Nelnet. UBATCO shall have access to inspect documents in connection with the SLABS covered by a participation certificate on a day-to-day basis. In no event shall any payments required under this Agreement be construed as fees to be paid in excess of any amounts as may be otherwise permitted under the SLABS or applicable laws and regulations. Section 1.04. Possession and Control of the SLABS. Nelnet shall cause all of the SLABS to be administered, serviced and collected in accordance with the requirements of the SLABS and applicable laws and regulations. Nelnet may engage one or more custodians to hold possession of the documentation related to the SLABS. The costs and expenses associated with the administration, servicing and collection of the SLABS shall be paid by Nelnet. Promissory notes, bonds, CUSIP records and other documents evidencing or relating to the Eligible Loans shall be retained by Nelnet or its custodian for the benefit of UBATCO. Nelnet shall segregate the SLABS in a separate portfolio for administration purposes for the benefit of UBATCO. After purchase of the participation interests pursuant to this Agreement, all actions and decisions concerning the SLABS so participated shall be made by Nelnet, subject to Nelnet conferring with UBATCO, and such decisions shall be binding upon UBATCO. Nelnet will maintain customary books and records relating to the SLABS participated hereunder, which shall be made available to UBATCO for inspection or copying. Section 1.05. Characteristics of SLABS. Each of the SLABS shall be secured by Eligible Loans pledged as collateral, and there is in force and effect for each of the Eligible Loans, a guarantee (to the maximum extent permitted under the Act of the principal and interest of each of the Eligible Loans) from a guarantee agency which has entered into a contract of federal reinsurance with the Secretary of Education as to the Eligible Loans. In addition, the Eligible Loans pledged as collateral to secure the SLABS shall have all of the characteristics which Nelnet warrants and represents in Section 2.03 of this Agreement. Each of the SLABS participated pursuant to this Agreement shall have been issued by an issuer other than Nelnet. Section 1.06. Volume of Participations. Nelnet shall cause the principal amount of SLABS participated hereunder not to exceed the aggregate amount as set forth in Section 1.01(A) hereof, and may reduce the principal amount of SLABS participated hereunder to the aggregate amount of $0. II. REPRESENTATIONS, WARRANTIES AND COVENANTS OF NELNET Nelnet hereby represents and warrants to UBATCO as follows: Section 2.01. Title to SLABS. Nelnet is the legal owner of the SLABS participated to UBATCO pursuant to this Agreement, and neither the SLABS nor participation interests therein are subject to any lien, pledge, participation, or encumbrance other than the participation interest being sold pursuant to this Agreement. Nelnet may, in its discretion, approve and accomplish any sale, assignment, transfer, encumbrance, or other disposition of the SLABS, following the sale of the participation interest contemplated herein, in which event Nelnet shall give prior written DocuSign Envelope ID: 6BACE3D7-C8B4-48BB-A941-13A02CCE2080
4 SLABS Participation Agreement notice of such disposition to UBATCO and shall pay to UBATCO the pro rata interest of UBATCO in and to such SLABS subject to such disposition. Section 2.02. Validity of SLABS. Each of the SLABS is, to the knowledge of Nelnet, the valid and binding obligation of the issuer thereof, enforceable in accordance with its terms, except to the extent that enforceability may be affected by any applicable bankruptcy, insolvency, reorganization or other similar laws or enactments now or hereafter enacted by state or federal government affecting the enforcement of creditors rights generally, regardless of whether such enforceability is considered a proceeding in equity or at law. Section 2.03. Characteristics of Eligible Loans Securing SLABS. Payment of interest or principal on none of the SLABS as of the date of this Agreement shall be delinquent. To the knowledge of Nelnet, each of the Eligible Loans pledged as collateral to secure payment of the SLABS is guaranteed by a guarantee contract with a guarantee agency in accordance with the Act. Title to the Eligible Loans pledged as collateral to secure payment of the SLABS shall be held by an “Eligible Lender” under the Act during the terms of this Agreement. To the knowledge of Nelnet, each of the Eligible Loans pledged as collateral to secure payment of the SLABS complies with the representations and warranties as set forth in the offering disclosures related to the SLABS. Section 2.04. Authorization; Conflict. Execution, delivery and performance of this Agreement by Nelnet (i) have been duly authorized or ratified effective as of the date of execution by all necessary corporate action on the part of Nelnet; (ii) does not and will not contravene the laws of the State of Nebraska, providing for the organization and governing of Nelnet; (iii) does not and will not conflict with, or result in a violation of, any applicable laws or regulations; (iv) 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 Nelnet is a party whereby it or any of its property may be bound. III. REPRESENTATIONS AND WARRANTIES OF UBATCO. UBATCO hereby represents and warrants to Nelnet as follows: Section 3.01. Authorization; Conflict. The execution, delivery and performance of this Agreement by UBATCO (i) have been duly authorized by all necessary corporate action on the part of UBATCO; (ii) does not and will not contravene the laws of the State of Nebraska providing for the organization and governing of UBATCO; (iii) does not and will not conflict with, or result in a violation, any applicable laws or regulations; (iv) 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 UBATCO is a party whereby it or any of its property may be bound. DocuSign Envelope ID: 6BACE3D7-C8B4-48BB-A941-13A02CCE2080
5 SLABS Participation Agreement IV. TERM OF AGREEMENT Section 4.01. The term of this Agreement shall be 364 days from the date of execution of this Agreement. The term of this Agreement or any portions thereof, may be terminated earlier by UBATCO or Nelnet upon five (5) business days prior notice to the other party. This Agreement shall automatically renew for successive 364-day terms, without necessity of any further documentation, unless either party hereto gives notice to the other party of intent to terminate at the end of the then current term or renewal. Upon termination of the participation certificate, Nelnet shall have the option, without the obligation, to purchase back from UBATCO the participation interest in the SLABS comprising the terminated participation certificate for a purchase price equal the product of the purchase price percentage (as determined from the original purchase of the participation interest in Section 1.01(A) hereof), multiplied by the aggregate of the full unpaid principal balances and accrued and unpaid interest thereon of the participated portion of all the SLABS covered in the terminated participation certificate. In order to exercise such option to purchase, Nelnet must give written notice to UBATCO at least three days prior to termination of the participation certificate; if the option is exercised, such purchase shall be closed upon the termination of the participation certificate. In the event Nelnet does not exercise its option to purchase SLABS contained in any participation certificate, upon the termination of the participation certificate, Nelnet shall immediately transfer or cause its custodian to transfer to UBATCO or its designee legal title and any unparticipated beneficial interest to the underlying SLABS comprising the participation certificate, or Nelnet’s participation interest therein, and Nelnet shall immediately deliver or cause its custodian to deliver to UBATCO an executed xxxx of sale, possession of the promissory notes, bonds and SLABS files, all payments and income yielded from the underlying SLABS, and other documentation reasonably required by UBATCO and acceptable in form to UBATCO which is effective to transfer all of Nelnet’s right, title and interest in and to such underlying SLABS or Nelnet’s participation interest therein, to UBATCO, free and clear of any lien or encumbrances of any nature and without payment of further consideration; UBATCO shall pay to Nelnet any outstanding principal and interest representing previously unparticipated portions of such SLABS. If Nelnet exercises its option to purchase the participated SLABS as permitted above, Nelnet may deal in the same as it deems proper. The parties agree that this Agreement has not been undertaken for the purpose of recognizing gains or decreasing losses resulting from market value changes in the SLABS. In the event Nelnet sells, transfers or otherwise disposes of any of the SLABS participated hereunder or interests therein to any third party, UBATCO shall not be entitled to receive or share in any gain recognized upon such sale or any portion thereof. V. MISCELLANEOUS Section 5.01. Assignment. The rights of UBATCO under this Agreement are assignable or may be sub-participated, pledged, exchanged or otherwise disposed of in whole or in part, without the prior written consent of Nelnet, but any such disposition shall be solely to beneficiaries of the grantor trusts for which UBATCO serves as trustee on or after the date of this Agreement. The rights and obligations of Nelnet under this Agreement may not be assigned in whole or in part without the prior written consent of UBATCO. This Agreement shall be binding upon the parties hereto, and their permitted successors and assigns. DocuSign Envelope ID: 6BACE3D7-C8B4-48BB-A941-13A02CCE2080
6 SLABS Participation Agreement Section 5.02. Applicable Laws. This Agreement shall be governed by and construed in accordance with the laws of the State of Nebraska. Section 5.03. No Partnership. This Agreement shall not be construed to create a partnership or joint venture between UBATCO and Nelnet. The transaction evidenced by this Agreement is a participation transaction pursuant to which UBATCO and Nelnet are participating in the SLABS. Section 5.04. Amendment. This Agreement may be modified or otherwise amended only if such modification or amendment is in writing and signed by both NELnet and UBATCO. Section 5.05. Notices. All notices and other communications under this Agreement shall be deemed to have been duly given if emailed or delivered or mailed by regular United States mail, sufficient postage pre-paid, addressed as follows: If to Nelnet: National Education Loan Network, Inc. ATTN: Xxxxx X. Xxxxxx 000 X. 00xx Xxxxxx Xxxxx #000 Xxxxxxx, XX 00000 Email: xxx.xxxxxx@xxxxxx.xxx and if to UBATCO: Union Bank and Trust Company ATTN: Xxxx Xxxxx 0000 X. 00xx Xxxxxx Xxxxxxx, XX 00000 Email: xxxx.xxxxx@xxx.xxx or to any such address as either party may direct in writing delivered to the other party as set forth herein. Section 5.06. Continuing Representations. The warranties and representations of the parties contained in Articles II and III herein shall survive execution of this Agreement and bind the parties hereto as continuing covenants. [THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.] DocuSign Envelope ID: 6BACE3D7-C8B4-48BB-A941-13A02CCE2080
7 SLABS Participation Agreement IN WITNESS WHEREOF, the parties have caused this SLABS Participation Agreement to be executed by officers duly authorized as of the day first above written. National Education Loan Network, Inc., a Nebraska corporation By: ________________________________ Title: ________________________________ UNION BANK AND TRUST COMPANY, a Nebraska banking corporation and trust company, in Its Capacity as Trustee By: ________________________________ Title: ________________________________ DocuSign Envelope ID: 6BACE3D7-C8B4-48BB-A941-13A02CCE2080 1st VP Executive Chairman
8 SLABS Participation Agreement EXHIBIT A PARTICIPATION CERTIFICATE Pursuant to that certain SLABS Participation Agreement (the “Agreement”) dated May ___, 2020, by and between Union Bank and Trust Company in its capacity as trustee and National Education Loan Network, Inc., and its affiliates and subsidiaries (collectively, “Nelnet”), Nelnet hereby issues and delivers this Participation Certificate to evidence Union Bank and Trust Company as Trustee’s participation interests in student loan asset backed securities (“SLABS”), which are identified by the schedule marked as Schedule “A”, attached hereto and incorporated herein by this reference, which loans or participation interests therein are owned by or on behalf of Nelnet and designated a separate account, in accordance with 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. DATED the _____ day of __________, 2020. National Education Loan Network, Inc., a Nebraska corporation By: ________________________________ Title: ________________________________ Accepted this ____ day of ___________, 2020. UNION BANK AND TRUST COMPANY, a Nebraska banking corporation and trust company, in Its Capacity as Trustee By: ________________________________ Title: ________________________________ DocuSign Envelope ID: 6BACE3D7-C8B4-48BB-A941-13A02CCE2080
9 SLABS Participation Agreement SCHEDULE “A” Schedule of Student Loan Asset Backed Securities DocuSign Envelope ID: 6BACE3D7-C8B4-48BB-A941-13A02CCE2080
